Frouta Pty Ltd v Chehade

[2015] NSWCATCD 95

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Frouta Pty Ltd v Chehade [2015] NSWCATCD 95
Hearing dates:	9 June 2015, on the papers
Decision date:	01 September 2015
Jurisdiction:	Consumer and Commercial Division
Before:	D Bluth, Senior Member
Decision:	1. The applicant shall pay the costs of the respondents’ incidental to the proceedings including the submissions on costs as agreed and failing agreement within 28 days of the date of this order as assessed under Part 4.3, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW).  2. The costs agreed or assessed under Order 1 of these orders shall be payable within 14 days of agreement or assessment.
Catchwords:	Costs, whether there are special circumstances under s 60 of the Civil and Administrative Tribunal Act 2013, Rule 38(3) of the Civil and Administrative Tribunal Rules 2014
Legislation Cited:	Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014
Cases Cited:	Cripps v G & M Dawson [2006] NSWCA 81 Gaynor v Burns [2015] NSWCATA P150
Category:	Costs
Parties:	Frouta Pty Ltd (applicant) Bassam Chehade and Hussam Chehade (respondents)
Representation:	Solicitors: M Pelosi (applicant) One Group Legal (respondents)
File Number(s):	COM 15/13559 and COM/13563
Publication restriction:	Nil

reasons for decision

1. In this matter, Frouta Pty Limited (the applicant) filed two applications - one application for an urgent interim order and a second application for an original decision. Both applications have been dismissed.

2. Bassam Chehade and Hussam Chehade (the respondents) contend that the applicant should pay the respondents' costs in respect of the two applications.

History of the Matter

3. The applicant, as tenant, and the respondents, as landlord, entered into a lease on or about 16 May 2013 (the Lease) of premises known as part 226 Chapel Road, Bankstown (the premises). The use of the premises was as a fruit shop.

4. The applicant complained to the respondent about the state of repair of the premises and Bankstown City Council conducted regular food safety inspections of the premises and issued to the applicant various notices to have the premises repaired. The applicant requested the respondents to undertake those repairs.

5. On or about 9 December 2014, the applicant purported to exercise an option to renew the Lease. In or about December 2014, the applicant arranged for an expert building consultant to prepare a condition report as to the state of disrepair of the premises. The condition report was provided to the respondents with a request that the premises be repaired. The respondents refused to repair the premises.

6. Subsequently, there was correspondence between the parties and their legal advisors between December 2014 and February 2015 regarding the state of repair of the premises, the council notices and whether the respondents were going to repair the premises.

7. On or about 22 February 2015, the respondents entered the premises and locked the applicant out of the premises alleging that the applicant was 22 days in arrears in rent. The applicant disputes the entitlement of the respondents to exercise any lockout rights.

8. As a consequence of the lockout, the applicant was unable to recover various items of personal belongings, including air conditioning units, fridge motors, computers, cash registers and stock from the premises and further, the stock was perishable.

9. On or about 11 March 2015, the applicant's legal advisors wrote to the respondents' legal advisors noting that the respondents had called on the bank guarantee and had received the proceeds of the bank guarantee, which the applicant alleged the respondents were not entitled to do.

NCAT Proceedings

10. On 17 March 2013, the applicant filed these proceedings in the Tribunal seeking various orders, including interim relief against the respondents for relief against forfeiture of the lease, return of the bank guarantee sum of $45,028.29, that the respondents refrain from releasing or otherwise giving up position of the premises to any other party, and that the respondents make good the premises by repairing the defects.

11. On 19 March 2015, the Tribunal advised the parties that the application for interim orders had been determined on the papers and refused. The applicant asserts it was not given an opportunity to make submissions or present evidence in respect of those interim orders sought and subsequently refused.

12. On 26 March 2015, the applicant's legal advisors wrote to the Tribunal detailing the applicant's reasons for asserting that the refusal to make the interim orders sought was made on erroneous assumptions and requesting that the matter be relisted to give the applicant an opportunity to be heard and make proper submissions.

13. On 9 April 2015, mediation took place which was not successful.

14. On 28 April 2015, the matter was listed for directions in the Tribunal. The applicant advised the Tribunal that events had overtaken the original orders sought in the application filed and the Tribunal ordered the applicant to amend the application to take into account what new orders were required.

15. According to the submission from Mr M Polosi, solicitor for the applicant, shortly thereafter the applicant encountered difficulties with his legal representation. Despite its best efforts to resolve these issues with its legal representation, the applicant was not legally represented when the matter came before the Tribunal again on 9 June 2015. On that occasion the applicant's director appeared in person and requested the Tribunal adjourn the matter to allow the director an opportunity to arrange for proper legal representation and brief counsel to appear at any hearing that was to be set down.

16. The Tribunal refused the application to allow a further adjournment and advised the applicant that, as it had not amended its application notwithstanding the earlier orders on 28 April 2015, if it wished to reconstitute its application, the applicant should file new proceedings when the applicant was ready. In these circumstances the applications were dismissed.

Costs Application

17. The respondents contend that the applicant should pay the respondents' costs. On 9 June 2015, the parties were asked to make submissions regarding costs and these submissions have now been filed with the Tribunal and the matter is to be assessed on the papers.

Relevant Law

18. Section 60 of the Civil and Administrative Tribunal Act 2013 (CATA) governs the question of costs. It provides as follows:

60    Costs

(1)   Each party to proceedings in the Tribunal is to pay the party's own costs.

(2)   The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.

(3)   In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:

(a)   whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

(b)   whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c)   the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d)   the nature and complexity of the proceedings,

(e)   whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f)   whether a party has refused or failed to comply with the duty imposed by section 36(3),

(g)   any other matter that the Tribunal considers relevant.

(4)   If costs are to be awarded by the Tribunal, the Tribunal may:

(a)   determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or any other basis.

(5)   In this section 'costs' includes:

(a)   the costs of, or incidental to, proceedings in the Tribunal, and

(b)   the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.

19. Section 36 of the CATA provides as follows:

36   Guiding Principle to be applied to Practice and Procedure

(1)   A guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.

(2)   The Tribunal must seek to give effect to the guiding principle when it:

(a)   exercises any power given to it by this Act or the procedural rules, or

(b)   interprets any provision of this Act or the procedural rules.

(3)   Each of the following persons is under a duty to cooperate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with the directions or orders of the Tribunal:

(a)   a party to the proceedings in the Tribunal,

(b)   an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.

(4)   In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.

(5)   However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects of principles for which that legislation provides in relation to the exercise of those functions.

20. Finally, the Tribunal Rules under the Civil and Administrative Tribunal Rules 2014 at Rule 38 provides:

38   Costs in consumer and commercial division of Tribunal

(1)   This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the consumer and commercial division of the Tribunal.

(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if:

(a)   the amount claimed or a dispute in the proceedings is more than $10,000.00 but not more than $30,000.00 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or

(b)   the amount claimed or in dispute in the proceedings is more than $30,000.00.

21. In a recent decision by the Appeal Panel in Gaynor v Burns [2015] NSWCATA P150 after reciting section 60 of the CATA, the Appeal Panel at paragraphs 16-19 considered 'special circumstances' as it appears in s 60(2). At paragraph 19 the Appeal Panel stated as follows:

19 in Cripps v G & M Dawson [2006] NSWCA 81 Santow JA considered the words 'special circumstances' as they appeared in s88(1) of the Administrative Decisions Tribunal Act 1997 (NSW) (repealed). That provision enabled the Tribunal to award costs in relation to proceedings before it only if it was satisfied there were 'special circumstances warranting an award of costs'. Santow JA sets out the Tribunal's statement of relevant principle at [18-19] of its reasons and concluded that the Tribunal had erred in its application of those principles in failing to find 'special circumstances' explaining at 60

60    it is not necessary to determine whether in the circumstances the appellant committed equitable fraud. In my view it sufficies that the conduct of Cripps and Jones in relying upon their status as the registered proprietors of the freehold and the doctrine of indefeasibility of title to wrongly deny registration and consequently assignment of the lease, so acted as by their conduct to give rise to special circumstances; that is, circumstances that were clearly out of the ordinary and grossly unreasonable so far as the respondent tenant was concerned. On the one hand, the Tribunal correctly concluded that the respondent, through no fault of its own, has been placed in the situation where it has been forced to pursue this litigation. Yet it still failed to find special circumstances. With respect, I consider that the Tribunal was in error in failing to conclude that special circumstances here applied. For this reason, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. While a finding of 'serious unfairness' is not a prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.'

22. In the circumstances, the Appeal Panel in Gaynor ordered that the appellant pay the costs of the respondent incidental to that appeal.

23. The respondents have submitted that the applicant should pay their costs relying on sections 60(3)(a) and 60(3)(c) of CATA stating that the claim of the applicant was misconceived and/or opportunistic. I note that the claim as originally formulated was not proceeded with by the applicant. The applicant was given an opportunity to amend the claim but never did so. The applications were dismissed as the Tribunal cannot allow matters to remain unprosecuted.

24. The respondents say that pursuant to s 60(3)(g), as a result of the applicant's claims the respondents had to be legally represented and were put to test the applicant's claims and challenge the assertions made. This then required the applicant to reconsider its claims and apply for amendment. In the meantime written statements from each respondent prepared by the respondents’ lawyers were filed.

25. In response, the applicant submits that the matter was complex surrounding a retail lease and in circumstances in which that retail lease came to be ended. Since filing the proceedings the dispute between the parties has evolved and as a result of correspondence between the parties the issues in dispute have, according to the submissions from the applicant, now been narrowed. Further, the submission for the applicant indicates that applicant was preparing to amend the application to narrow the issues when it ran into difficulties with its legal representation and it is now preparing fresh proceedings to seek orders on the limited issues in dispute.

Resolution of the issue of cost by the Tribunal

26. The Tribunal notes that the application originally contained a claim for relief against forfeiture to restrain the respondents from entering the premises and taking possession and seeking restoration of the bank guarantee of $45,028.29 purportedly forfeited by the applicant. Consequently, the amount claimed or in dispute in the proceedings is more than $30,000.00 and therefore Rule 38(3) of the Tribunal Rules applies. Despite s 60 of the CATA, the Tribunal may award costs in proceedings to which the Rule applies, even in the absence of special circumstances warranting such an award. The Tribunal finds that Rule 38(3) applies and allows the respondents their costs.

27. Further, it is the Tribunal's view that in this case special circumstances do apply in any event, even if Rule 38(3) did not apply, in that the respondents have been put to the expense of obtaining legal representation to defend these claims and now the claims have been dismissed. As suggested by Santow JA in Cripps followed by the Appeal Panel in Gaynor, for special circumstances to apply it suffices that the circumstances are just out of the ordinary. They do not have to be extraordinary or exceptional. The Tribunal accepts that out of the ordinary is in circumstances where a party is put to the expense of defending a claim that is ultimately dismissed. As Santow JA found in Cripps, the respondents Mr Bassam Chehade and Mr Hussam Chehade were put to the expense of defending the litigation and should be compensated for their costs.

28. Accordingly, the Tribunal orders that the applicant pay the respondents' costs. As noted at paragraph 68 in Gaynor the Appeal Panel stated as follows

68. While we accept we could make an order for a specific sum to be paid within a specified time period, there is simply no evidence before us to enable us to make an informed assessment of a proper quantum of costs to be paid. Rather, we propose to provide the parties an opportunity to reach agreement on costs within 20 days of publication of these reasons, failing which costs may be assessed under the Legal Profession Uniform Law Application Act 2000 (NSW) Part 4.3 Div 7 as provided in s60(4) of the CATA. The costs shall be payable 14 days after assessment or agreement.

29. Consequently, I propose to follow similar orders by the Appeal Panel in this dispute.

Orders

1. The applicant shall pay the costs of the respondent’s incidental to the proceedings including the submissions on costs as agreed and failing agreement within 28 days of the date of this order as assessed under Part 4.3, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW).

2. The costs agreed or assessed under order (1) of these orders shall be payable within 14 days of agreement or assessment.

D Bluth

Senior Member

Civil and Administrative Tribunal of NSW

1 September 2015

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 01 October 2015