Frank v Department of Education, Training and Employment
[2014] QCAT 499
•8 October 2014
| CITATION: | Frank v Department of Education, Training and Employment & Anor [2014] QCAT 499 |
| PARTIES: | Hartmut Frank ATF Frank Family Trust t/as Franky’s Coffee Restaurant (Applicant) |
| v | |
| Department of Education, Training and Employment (First Respondent) and Moreton Bay Regional Council (Second Respondent) |
| APPLICATION NUMBER: | RSL125-12 |
| MATTER TYPE: | Retail shop leases matters |
| HEARING DATE: | On the papers |
| HEARD AT: | Brisbane |
| DECISION OF: | Member Howard |
| DELIVERED ON: | 8 October 2014 |
| DELIVERED AT: | Brisbane |
| ORDERS MADE: | 1. The application for costs made by the Department of Education Training and Employment is dismissed. |
| CATCHWORDS: | COSTS – whether in the interests of justice to make an order for costs |
APPEARANCES and REPRESENTATION (if any):
This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act).
REASONS FOR DECISION
Mr Frank lodged a Notice of Dispute with the chief executive under the Retail Shop Leases Act 1994 (Qld) (RSL Act) against the Department of Education, Training and Employment.[1] Mr Frank signed the Notice of Dispute on 28 November 2012. It was posted, and stamped as received on 3 December 2012. Under the RSL Act, the chief executive arranged mediation for the parties.[2] The dispute was not resolved at mediation (which occurred over February and March 2013), and a mediator then referred the Notice of Dispute to the Tribunal under the RSL Act[3] on about 12 March 2013.
[1]RSL Act, s 55 provides for lodgement of a Notice of Dispute with the chief executive.
[2]As required by RSL Act, s 56.
[3]RSL Act s 63.
On 12 July 2013, the Department filed an application to strike out the Notice of Dispute and an application for leave for legal representation.
On 27 August 2013, Mr Frank consented to the application against the Department of Education, Training and Employment being struck out. By then, Mr Frank had amended his Notice of Dispute to claim against the Moreton Bay Regional Council.
On 27 August 2013, I directed that any application for costs and supporting submissions made by the Department of Education, Training and Employment be filed in the Tribunal and served on Mr Frank by 3 September 2013 and that Mr Frank file any submissions in response by 10 September 2013. There were some extensions of time granted in respect of the filing of submissions and ultimately Mr Frank was to file his by 15 November 2013. The application for costs was then to be determined on the papers without an oral hearing after 15 November 2013.
Although some submissions were filed, a separate application for costs was not filed by the Department. The unfortunate and regrettable result has been that the application for costs was not considered until representatives for the Department more recently contacted the Tribunal.
The Department seeks an order for costs of and incidental to the proceeding as agreed within 14 days or failing agreement as assessed by a costs assessor on the District Court Scale of fees. Mr Frank opposes the application.
When can a costs order be made?
Section 100 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act) provides that generally each party to a proceeding bears its own costs. The presumption against costs contained in s 100 can be displaced by s 102 of the QCAT Act, which provides that costs may be awarded, when it is in the interests of justice to do so.
In deciding whether to award costs under s 102, the Tribunal may have regard to matters including whether a party in a proceeding acted in a way the unnecessarily disadvantages the other party to the proceeding; the relative strengths of the claims made by each of the parties to the proceeding; the financial circumstances of the parties to the proceeding; and anything else the Tribunal considers relevant.
The background to the claims
By September 2012, Crown Law on behalf of the State of Queensland, wrote to lawyers representing Mr Frank regarding the surrender of his lease and negotiation of compensation.[4] Mr Frank says that on 26 November 2012, his lawyers were advised by Crown Law that they had no further instructions from the State of Queensland. Then on Thursday 28 November 2012, Mr Frank signed the Notice of Dispute which was lodged with the chief executive. Mr Frank says that it was posted on 29 November. Then on Friday 30 November 2012 a notice of intention to resume was issued under the Acquisition of Land Act 1967 (Qld) (‘ALA’) in relation to the relevant lease. That notice of intention to resume was subsequently provided to Mr Frank.
[4]See attachment A to the Notice of Dispute lodged on 3 December 2012.
The Notice of Dispute sought orders for compensation consequent upon the lessor seeking a surrender of the lease in respect of which negotiations had been ongoing for 18 months.
As discussed earlier, in the usual course after receiving the notice of dispute under the RSL Act, the chief executive, arranged for mediation between the parties. On 16 January 2013, Crown Law wrote to QCAT (although the matter was at that stage with the chief executive). It advised that the notice of intention to resume had been served; that s 43(1)(f) of the RSL Act (which was referred to in the Notice of Dispute) is not relevant due to Mr Frank’s ongoing occupation of the premises; and that there was no right to compensation under the RSL Act and no jurisdiction for QCAT to mediate compensation under the ALA. On 24 January 2013, lawyers for Mr Frank wrote to the chief executive responding to the assertion that QCAT did not have jurisdiction, raising several other sub-sections of s 43 of the RSL Act (which provides for compensation in prescribed circumstances). They requested that mediation proceed. As discussed earlier, in February and March 2013, the parties did participate in mediation although a resolution was not reached.
The mediation having been unsuccessful, the mediator referred the Notice of Dispute to QCAT under s 63 of the RSL Act on about 12 March 2013, having concluded that the dispute was within QCAT’s jurisdiction. I then made directions on 2 April 2013 for the Department to file and serve its Response to the Notice of Dispute by 3 May 2013. The parties were also directed to file their evidence to be relied upon at hearing by 31 May 2013 and 28 June 2013 respectively. A directions hearing was scheduled for 23 July 2013.
The Department advises that on 10 May 2013, a ‘taking of land notice’ pursuant to the ALA for the lease of the premises subject to the proceeding was published in the Government Gazette. From that date, Crown Law says the applicant’s interests in the lease converted to a right to claim compensation pursuant to the ALA.
On 9 May 2013, Mr Frank had signed an amended Notice of Dispute which was filed by post in the Tribunal on 14 May 2013. Although it abandoned relief sought under subsection s 43(1)(f) of the RSL Act, in its place compensation was sought under other subsections of s 43 relating to alleged representations concerning the continued operation of a library in adjacent premises, which the lessor had moved to close.
On 31 May 2013, the Department filed its Response to the amended Notice, asserting that there was no basis for the claim against it as the forerunner of the Moreton Regional Council, rather than the Department, was the lessor at the time the lease was entered into and at the time when the library premises was closed on 26 November 2010. The Department purchased the premises under a contract dated 23 December 2010. It sought orders dismissing the claim and for costs.
On 12 July 2013, the Department filed a strike out application. On 23 July 2013, Mr Frank was granted leave to further amend the Notice of Dispute to include the Moreton Bay Regional Council as a respondent.
As discussed earlier, I then made orders by consent on 27 August 2013 striking out the application against the Department.
The claim against the Moreton Bay Regional Council was subsequently resolved between it and Mr Frank.
The submissions of the Department
The Department submits that the proceedings against it were misconceived and doomed to fail from the outset. It submits further that the Department consistently advised the applicant that its application was misconceived, initially because s 43(1)(f) of the RSL Act did not operate as Mr Frank remained in possession and secondly after amendment making claims under s 43(1)(c) did not operate as against the respondent as it was not the lessor at the relevant time. It says that Mr Frank knew from as early as 11 January 2013 that the property had been bought from the Council in January 2011, and that therefore the respondent was not the lessor at the date when the library closed.
Further, the Department argues that there was an ulterior and improper motive for filing the QCAT proceeding, because prior to its lodgement negotiations were occurring in relation to the surrender of the lease. Further, it says in parallel with the proceedings in QCAT a compulsory acquisition process occurred. It says that in that process, Mr Frank made a claim for compensation pursuant to the ALA, including the whole sum sought in QCAT.
It further argues that it is significant that at all times Mr Frank has had either lawyers or Lease One representing it, and has therefore had the benefit of advice in relation to appropriate steps throughout the proceedings. Further, the Department argues that despite raising concerns with Mr Frank about the proceeding, it was forced to file the strike out application to bring the matter to a conclusion. It submits that it did so in a responsible and timely manner.
It argues that public monies have been expended in taking steps to attend to respond to QCAT directions. Therefore, the Department says that it has been put to considerable cost in meeting a claim which lacked prospects of success as filed and amended and that it is in the interests of justice that an order for costs be made in its favour.
Mr Frank’s submissions
Mr Frank submits that he made his claim clear from an early stage. He alleges that QCAT was ‘advised of the facts then known in January 2013 and it decided it had jurisdiction’. Correspondence was provided by the parties about jurisdiction. However, at that stage, the Notice of Dispute had been lodged with the chief executive and mediation had been arranged. As discussed earlier, the Notice of Dispute had not been referred to the Tribunal and was not before it. QCAT did not ‘decide that it had jurisdiction’. The dispute was listed for mediation as the RSL Act requires.
He further submits that the proceedings were instituted in good faith, and although negotiations had been ongoing until 26 November 2012 about the vacation of the premises and compensation, Crown Law advised it had no further instructions.
Given that negotiations ceased then, Mr Frank considered his only alternative was to institute proceedings with a view to obtaining an outcome. He denies that there was any ulterior motive for doing so. At the stage he filed the Notice of Dispute, he says that there was no notice of intention to resume his interest in his lease, so the assertions that he did so for any reason associated with any claim under the ALA are misplaced.
Further, he says that a notice of intention to resume is merely that and does not always result in a concluded compulsory acquisition given that there is a right to object under the ALA and such notice can be withdrawn.
Further, Mr Frank says that the first time the Department raised the issue that it was not the correct party was when it filed its Response to the amended Notice of Dispute alleging that there was no basis for the claim against it as it was not the lessor at the relevant times.
Mr Frank further says that rather than advising of the inherent difficulties with the application at an early stage, the respondent actively participated without any suggestion that questioned whether it was the appropriate party until it filed its Response in May 2013. Mr Frank says he was not privy to arrangements between the previous owner of the building, now Moreton Bay Regional Council and the subsequent owner of the building and was not in a position to know which entity had control over what had occurred in relation to the building at the relevant time.
He says that although the Department asserted it was not the appropriate party it did not offer any explanation or documentation at an earlier stage to demonstrate that point.
He says that ultimately the proceedings in QCAT were struck out by consent because the State actually proceeded with the compulsory acquisition of Mr Frank’s interest in his lease and compensation was paid on 31 May 2013. He says that if this had not been the case he would have proceeded with the proceedings. He says that they were dismissed without delay thereafter.
I make the observation that when the matter was next listed for directions on 23 July 2013, Mr Frank sought directions that he be entitled to further amend his Notice of Dispute. By then, the Department had filed its strike out application on 12 July. Directions were made for Mr Frank to respond to that application by written submissions and for its hearing on the papers. Subsequently, as discussed earlier, on 27 August orders were made by consent striking out the application against the Department, and in respect of the costs, directions were made so that matter could be determined on the papers. The delays occasioned after that in receiving Mr Frank’s submissions occurred because Mr Frank was out of the country until early November 2013.
Mr Frank further submits that there is nothing particularly striking or complex in relation to the dispute, and that he is not in as strong a financial position as the State. The family trust operated the café/restaurant at the leased premises which was the principal source of income for the family. The State of Queensland is in a relatively stronger financial position than he is.
He submits that in all the circumstances there is no reason to depart from the usual position in respect of costs. Further, he notes that the Department seeks costs on the District Court Scale. He submits that if the Tribunal is minded to make costs orders that that scale is inappropriate as the Department was self-represented at various times during the proceedings. Further, he says it would be difficult to separate the costs of the ALA compensation and the QCAT proceedings in order to quantify costs.
Consideration of the issues
There appears to have been a misconception that the Notice of Dispute once lodged with the chief executive was before the Tribunal. The proceedings in the Tribunal did not commence until the referral from the mediator was accepted.[5]
[5]RSL Act s 63 and QCAT Act, s 34 and s 36.
The claim for compensation, as initially referred to the Tribunal, had been lodged by Mr Frank in the knowledge that the Department wished to negotiate a surrender of the lease on suitable terms. Crown Law, as its representatives, had advised in September 2012 that if an expeditious resolution could not be negotiated, then it expected a notice to issue under the ALA. However, it did not then have those instructions. It seems that when it did receive them and a notice of intention to resume was issued, Mr Frank was not advised of this. Instead Crown Law advised him that they had no further instructions. In the meantime, he had filed the Notice of Dispute.
The Department says that the claim Mr Frank made was unavailable under the particular sub-section of s 43 to which he referred. However, the Notice of Dispute nominates his representative as Lease 1, who are not lawyers but a retailer advocacy organisation. It was broad in its terms, but made it clear that Mr Frank filed the Notice because the lessor wanted early surrender of the lease and he sought compensation in these circumstances. Given that it was not prepared by lawyers, I do not consider it significant which particular provision the Notice referred to, although clarification would later have been expected after the matter was referred to the Tribunal.
The RSL Act binds all persons including the State.[6] If the lessor had not been, in effect, the State of Queensland which could utilise the provisions of the ALA, a lessee faced with a lessor seeking early termination of its lease would reasonably seek compensation under the lease provisions or the RSL Act provisions. This appears to have been Mr Frank’s intention having regard to the broadly framed original notice of dispute as lodged. He lodged this at a time when there was no notice of intention to resume, let alone a notice of taking of land. I accept that he was not to know of the subsequent actions to be taken in the following days to issue a notice of intention to resume, or 6 months later, that a resumption would in fact occur.
[6]RSL Act s 10.
Accordingly, it appears reasonable that Mr Frank continued with any claim he may have had for compensation under the RSL Act against the Department until the resumption on 31 May 2013.
Mr Frank had filed an amended Notice of Dispute in mid-May 2013, which made a more limited claim for compensation relating to the closure of the library. It is evident on the face of the Annexure to the Amended Notice that this was done in the knowledge that compensation under the ALA was imminent. It says, in effect, that it is a claim for compensation which could not be claimed under the ALA, for the effect of the lessor’s activities on the business of the lessee. The particular claim relating to the library closure and alleged representations was not articulated specifically in the original Notice of Dispute as lodged. It is not clear that it was not part of the broadly-framed original claim. It now appears the Moreton Bay Regional Council should always have been a respondent to that aspect of the claim.
However, Mr Frank says, that he did not become aware until the Department filed its Response on 31 May 2013, which was also the date of the settlement under the ALA, that the Department was not the correct respondent to the more limited claim articulated in the amended Notice of Dispute. His lease was entered into with the forerunner to the Moreton Bay Regional Council, as trustee under an instrument in 2006.[7] The alleged representations about the library continuing to operate could only have been made before the lease was entered into by its representatives. The claim alleges that the current lessor, the Department, moved to close the library causing disruption (and consequent loss) to its business which it alleges is compensable under s 43(1)(c), (in addition to the compensation available under the ALA).
[7]Lease document attached to the Notice of Dispute lodged on 3 December 2012.
A Title Search could have established the owner of the property at the relevant time. As against that, Mr Frank contends that the Department failed to make its position clear. However, once Mr Frank became aware that the Department was not the lessor at the appropriate time, he subsequently consented to the striking out of the application against it. The strike out application was lodged on 12 July 2013. By consent, the claim against the Department was struck out following the filing of submissions by the parties on 27 August 2013. It appears to me that following the filing of the Department’s Response, which coincided with the resumption and associated settlement under the ALA, the proceedings against the Department were reasonably promptly disposed of.
It seems to me that the only action of Mr Frank which might be criticised is his failure to withdraw the application against the Department in the weeks following the filing of the Response and before the Department incurred the costs of filing a strike out application. However, as against that, he reasonably wished to seek leave to amend his claim to include the proper respondent for the remaining claim under the RSL Act. He was granted leave to do so at the scheduled directions hearing on 23 July. Had he withdrawn the application earlier, it would have necessitated lodgement of another fresh Notice of Dispute and beginning of the entire process over again.
That said, if he had advised the Department of his intentions, it would no doubt not have incurred the costs of filing a strike out application and supporting submissions.
Mr Frank says, and I accept, that he has limited means, as compared to the Department. It is apparent from the file that Mr Frank has had some legal advice, although he does not have leave to be represented by lawyers: he has leave for Lease 1 to represent him pursuant to orders made on 27 August 2013. Further, the Department did not seek leave for legal representation until 12 July 2013.
The Department claims all costs of and incidental to the proceedings, although it did not seek leave for legal representation until 12 July 2013. It appears that the only steps it took in the proceeding after that date relate to the application for strike out. Therefore, in my view, if the interests of justice required the making of a costs order, any costs which might reasonably be awarded could only be the costs of filing the strike out application and associated costs.
Having regard to the overall history of the proceeding, I am not satisfied that Mr Frank began the proceedings with some improper motive as alleged. Nor is it apparent that he acted in a manner which unnecessarily disadvantaged the Department. Although there may have been some misconception about the claim against the Department as far as the claim relating to the library is concerned, I accept that Mr Frank would have continued with a claim for compensation under the RSL Act against the Department relating to early vacation and surrender of the lease had the resumption not occurred in May 2013. As it was, he continued, against another respondent in respect of the portion of the claim which had not been subsumed in the ALA resumption process. He acted reasonably promptly in consenting to the strike out application as concerns the application against the Department, once the resumption process was finalised, and it became that it was not the proper respondent to the remaining claim under the RSL Act.
On balance, having regard to the overall circumstances as discussed, I am not satisfied that the interests of justice require that a costs order be made in favour of the Department. I dismiss the application for costs.
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