G & M Dawson Pty Limited v Cripps & Ors (No 3) (RLD)

[2005] NSWADTAP 24

Appeal Panel - Internal

CITATION:	G & M Dawson Pty Limited v Cripps & Ors (No 3) (RLD) [2005] NSWADTAP 24
PARTIES:	FIRST APPELLANT G & M Dawson Pty Limited FIRST RESPONDENTS Michael Lance Cripps, Executor of the Will of the late Kerrie Frances Cripps & Maddona Kaye Jones SECOND APPELLANT H G & R Securities Pty Limited SECOND RESPONDENTS Michael Lance Cripps, Executor of the Will of the late Kerrie Frances Cripps & Madonna Kaye Jones THIRD APPELLANTS Michael Lance Cripps, Executor of the Will of the late Kerrie Frances Cripps & Madonna Kaye Jones THIRD RESPONDENT G & M Dawson Pty Limited
FILE NUMBER:	059011, 059013, 059020
HEARING DATES:	19/04/2005
SUBMISSIONS CLOSED:	04/19/2005
DATE OF DECISION:	06/02/2005
DECISION UNDER APPEAL:	G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14
BEFORE:	Chesterman M - ADCJ (Deputy President); Rickards K - Judicial Member; Weule B - Non Judicial Member
CATCHWORDS:	costs - relevant considerations - leave to appeal out of time - relevant/irrelevant considerations
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	025079
DATE OF DECISION UNDER APPEAL:	02/03/2005
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Real Property Act 1900 Retail Leases Act 1994
CASES CITED:	Alessa Pty Ltd v Total & Universal Pty Ltd [2001] NSWADT 150 Charteris v General Manager, Leichhardt Municipal Council (No 2) [2001] NSWADTAP 39 Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31 Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274 G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14 G & M Dawson Pty Limited v Cripps & Ors (RLD) [2004] NSWADTAP 38 G & M Dawson Pty Limited v Cripps & Ors (No 2) (RLD) [2005] NSWADTAP 3 Fire and All Risks Insurance Co Ltd v Callinan (1978) 140 CLR 427 Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164 Prasad & Anor v Fairfield City Council (RLD) [2002] NSWADTAP 2 Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43 Stenham Nominees Pty Ltd v Trust Company [2002] NSWADT 234 Wood & Anor v Bergman (No 2) [2003] NSWADT 175
REPRESENTATION:	FIRST APPELLANT, THIRD RESPONDENT: S Reuben, barrister FIRST & SECOND RESPONDENTS, THIRD APPELLANTS D Robertson, barrister SECOND APPELLANT C Champion, barrister
ORDERS:	1. Leave is granted to the Appellants in the Third Appeal to appeal out of time; 2. Each of the three appeals is dismissed; 3. No orders for costs on these appeals

Introduction

1 These reasons set out our decisions on three appeals relating to costs and interest. They all relate to a single judgment of the Tribunal (G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14). As was the case in this judgment, we will describe the parties by reference to their respective roles in the proceedings at first instance.

2 The first judgment in these proceedings was delivered on 23 December 2003 (G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274). The Tribunal was constituted by Mr S Montgomery, Judicial Member. It granted a declaration that the Applicant in the proceedings (G & M Dawson Pty Limited) had a valid and subsisting lease, governed by the Retail Leases Act 1994 (‘the RL Act’), which it could assert against the title of the First Respondent (then Kerrie Frances Cripps) and the Second Respondent (Madonna Kaye Jones) to land at Sutherland.

3 This lease had been granted in November 2000 to the Applicant by the Third Respondent (H G & R Securities Pty Limited), the predecessor in title of the First and Second Respondents. In breach, however, of a contractual obligation binding them, these two Respondents had failed during the ensuing months to secure registration of the lease in the course of completing their purchase of the land. In the course of holding to this effect, the Tribunal found that their conduct in this regard amounted to ‘fraud’ within the meaning of s 42 of the Real Property Act 1900.

4 The Tribunal held also that the Applicant was entitled to recover the sum of $3,115.00 from the First and Second Respondents as damages for unreasonably withholding consent to an assignment of the lease. An agreement to take over the lease, having been negotiated by the Applicant with an intending purchaser of its business at the premises in Sutherland for a price of $130,000.00, was rescinded by the purchaser on 28 June 2002 on account of the refusal of consent by the First and Second Respondents. This sum of $3,115.00 was the amount of legal costs incurred by the Applicant on the failed sale of its business.

5 In this judgment, the Tribunal dismissed a claim for damages, arising from the same set of events, that the Applicant had brought against the Third Respondent. It observed that any damages that it might have ordered the Third Respondent to pay to the Applicant would have been recoverable under a cross claim that had been instituted by the Third Respondent against the First and Second Respondents. It did not, however, make a formal order embodying this ruling.

6 An appeal by the Applicant against the Tribunal’s assessment of the damages payable to it by the First and Second Respondents came before the present Appeal Panel. In a judgment delivered on 8 September 2004 (G & M Dawson Pty Limited v Cripps & Ors (RLD) [2004] NSWADTAP 38), we allowed the appeal and substituted an amount of $105,115.00 for the amount of $3,115.00 awarded by the Tribunal. The additional amount of $102,000.00 represented the difference between $130,000.00, the price stipulated in the failed agreement to sell the business in June 2002, and $28,000.00, the price actually obtained by the Applicant on a sale of the equipment of the business on 7 April 2003.

7 In our judgment, having been informed that the First Respondent had died, we also gave leave to the Applicant to substitute Michael Lance Cripps, the executor of her will, as First Respondent. We remitted to the Tribunal as initially constituted the issues of (a) the costs of the hearing at first instance and (b) the interest, if any, to be paid on the amount ordered to be paid to the Applicant.

8 On 1 February 2005, we delivered a further judgment dismissing an application by the Applicant for an order that the First and Second Respondents should pay the costs of the appeal (G & M Dawson Pty Limited v Cripps & Ors (No 2) (RLD) [2005] NSWADTAP 3).

9 The judgment now under appeal (G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14) was delivered on 3 February 2005. In this judgment, the Tribunal, again constituted by Mr Montgomery, held as follows: (a) it dismissed an application by the Applicant for an order that the First and Second Respondents should pay its costs of the proceedings at first instance; (b) it dismissed applications by the Third Respondent for a similar costs order against the Applicant, and for a costs order against the First and Second Respondents; and (c) it ordered that the First and Second Respondents were jointly and severally liable to pay to the Applicant interest from 28 June 2002 on the whole of the amount ($105,115.00) that they had been ordered to pay to it in the proceedings, subject to due allowance being made for any amount already paid.

10 With one exception, all of these orders of the Tribunal have been challenged in the present appeals. The exception is that the Third Respondent has not appealed against the order dismissing its application for a costs order against the Applicant.

11 It is convenient to discuss separately each of the three appeals.

FIRST APPEAL: THE APPLICANT’S APPEAL ON COSTS

Relevant principles regarding costs

12 If costs are to be awarded, the requirement of ‘special circumstances warranting an award of costs’ set out in s 88(1) of the Administrative Decision Tribunal Act 1997 (‘the ADT Act’) must be satisfied. Section 77A of the RL Act makes this provision applicable in retail tenancy proceedings conducted in the Tribunal.

13 According to the case-law on s 88(1) in its application to proceedings under the RL Act (see eg Alessa Pty Ltd v Total & Universal Pty Ltd [2001] NSWADT 150, Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164, Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31 and Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43), ‘special circumstances’ are ‘circumstances that are out of the ordinary, but without having to be extraordinary or exceptional’. It is not enough that the circumstances are ‘special’: they must also ‘warrant’ an order for costs. On account of the ‘commerciality’ of the Retail Leases Division, the interpretation of ‘special circumstances’ differs significantly from the interpretation that might be adopted in any other Division of the Tribunal. But this does not mean that costs should simply follow the event.

The Tribunal’s ruling against the Applicant

14 In its judgment (G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14), the Tribunal, having summarised these costs principles, stated at [18] that ‘serious unfairness’ is not an essential ingredient of ‘special circumstances’ It went on to say at [19] that ‘unreasonable conduct that is out of the ordinary and conduct which is grossly unreasonable can attract the exercise of the Tribunal’s power’.

15 It then referred to a submission by the Applicant that it would be ‘seriously unfair’ for it not to be awarded costs against the First and Second Respondents, since their failure to consent to the assignment of the lease forced it to resort to litigation in order to secure recognition of its legal rights. At [20], it observed that, regrettably, the Applicant had indeed been ‘forced’ to pursue this litigation, ‘through no fault of its own’.

16 The Tribunal then held, however, at [20] that, as the First and Second Respondents had contended, the Applicant could only succeed in its application for costs if ‘the circumstances surrounding the conduct of the case’ amounted to ‘special circumstances’. As the Tribunal noted at [10], this submission by the Respondents relied on statements by the Appeal Panel in Charteris v General Manager, Leichhardt Municipal Council (No 2) [2001] NSWADTAP 39. The Tribunal expressed agreement also with the Respondents’ contention, based on Citadin (No 2) at [7], that ‘costs orders are not a sanction to reprove unreasonable conduct that has led to an application for relief’.

17 For these reasons, the Tribunal held at [21] that the requirement of ‘special circumstances warranting an award of costs’ in s 88(1) of the ADT Act had not been satisfied.

The arguments raised on appeal

18 The principal argument made to us by Mr Reuben, counsel for the Applicant, was that the Tribunal erred in holding that in a case brought under the RL Act ‘special circumstances’ could only be constituted by matters relating to the conduct of the case. He maintained that this limitation on the scope of ‘special circumstances’ was not required by the terms of s 88(1) or by prior decisions of the Tribunal.

19 Mr Reuben argued that the decision in Charteris, on which the Tribunal had relied, was not in point because it was a case brought within the General Division of the Tribunal, not a case under the RL Act. He referred to Wood & Anor v Bergman (No 2) [2003] NSWADT 175 as one of a number of authorities indicating that, as we have already said, the interpretation of ‘special circumstances’ in proceedings under the RL Act is different from the interpretation that may apply in other Tribunal proceedings.

20 The next proposition in Mr Reuben’s argument was that the conduct of the First and Second Respondents, which the Tribunal had characterised as ‘fraud’ within the meaning of s 42 of the Real Property Act 1900 and which included also breaches of the provisions regarding consent to assignment in ss 39 and 41 of the RL Act, involved total disregard of the Applicant’s legal rights and was therefore ‘unlawful’, ‘out of the ordinary’ and ‘grossly unreasonable’. It would, he said, be ‘seriously unfair’ to the Applicant if costs were not awarded to it, so as to compensate it for the costs incurred by being compelled to bring proceedings in the Tribunal. He added that because compensation rather than ‘reproof’ was involved, the submission by the Respondents based on Citadin (No 2) did not relate to this case.

21 In this connection, Mr Reuben cited the Tribunal’s judgment in Stenham Nominees Pty Ltd v Trust Company [2002] NSWADT 234, together with the references in that judgment to Prasad & Anor v Fairfield City Council (RLD) [2002] NSWADTAP 2, as authority for the proposition that conduct by a party which is ‘grossly unreasonable’, or which is ‘unreasonable’ and ‘out of the ordinary’, can attract the exercise of the Tribunal’s power to impose a costs sanction.

22 The first and principal issue raised by Mr Reuben – whether in a case under the RL Act ‘special circumstances’ can only be constituted by matters relating to the conduct of the proceedings – is an important one. We agree with him that the words of s 88 of the ADT Act do not impose expressly any such limitation and that Tribunal decisions have consistently recognised that the categories of ‘special circumstances’ are not closed.

23 We agree also that the principal authority relied on by the First and Second Respondents, Charteris v General Manager, Leichhardt Municipal Council (No 2) [2001] NSWADTAP 39, does not conclude the issue in their favour.

24 This is not only because the interpretation of ‘special circumstances’ in retail leases cases differs from the interpretation to be adopted in cases, like Charteris, that were brought within the General Division of the Tribunal. A further reason is the Appeal Panel in Charteris did not categorically state that ‘special circumstances’ could only be constituted by matters relating to the conduct of the proceedings. In distinctly more cautious terms, it said at [18], in dismissing an appeal from the Tribunal’s refusal to award costs:-

As to the meaning of ‘special circumstances’, the Tribunal expressed caution as to allowing a costs application to become a vehicle for undertaking a general review of the conduct of an agency towards an applicant. It is plain that the Tribunal saw ‘special circumstances’ warranting intervention as circumstances ordinarily being related to the conduct of the litigation (our emphasis).

25 At [22], it added:-

We reiterate the view expressed by the President sitting at first instance that caution must be observed in allowing costs applications to become a vehicle for the general scrutiny of the conduct of one of the parties prior the commencement of the litigation (our emphasis):…

26 In Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31 – which unlike Charteris was a case under the RL Act – the Appeal Panel at [7] expressed the same view, but again not in categorical terms:-

On the other hand, the Tribunal has so far resisted submissions that adverse costs orders be made as a sanction to reprove allegedly unreasonable conduct by a government agency which has led to a citizen having no option but to apply to the Tribunal for relief, and in so doing incurring professional costs:…

27 Although, however, Mr Reuben’s argument might appear at first sight to derive support from two retail leases cases that he cited – Prasad & Anor v Fairfield City Council (RLD) [2002] NSWADTAP 2 and Stenham Nominees Pty Ltd v Trust Company [2002] NSWADT 234 – a close examination of them reveals that this is not so.

28 In the relevant passage ([35 – 41]) from Prasad, the Appeal Panel, in stating that unreasonable conduct by a party might provide grounds for a costs order, indicated more than once that it was thinking only of conduct within the proceedings. At [36], it used the phrase ‘conduct in the litigation’. At [40], it referred to ‘occasions in the course of the litigation’ and ‘the reasonable conduct of litigation’.

29 In Stenhouse at [15], the Tribunal commenced its explanation of its decision to reject a costs application by the successful lessee in the following terms:-

In the ordinary course the Tribunal’s assessment of a costs application would occur after it had heard the substantive case, and was in a position to form a view as to the reasonableness of the way in which the parties had conducted themselves in the proceedings.

30 A clearer rejection of the proposition advanced by Mr Reuben is to be found in a more recent decision regarding costs in RL Act proceedings. In Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43, the Appeal Panel dealt with a submission by a lessor that one of the grounds apparently relied on by the Tribunal in awarding costs against him at first instance was its finding that he had been guilty of ‘tardiness’ in remedying serious defects in the condition of the leased premises. The Appeal Panel observed as follows at [33]:-

Finally, we consider that, to the extent that the Tribunal’s reference to ‘tardiness’ on the part of [the lessor] indicates that it was prepared to treat behaviour unconnected with the conduct of the proceedings as relevant to determining ‘special circumstances’, it was in error.

31 As this brief quotation shows, the broad questions of principle and policy raised by this issue relating to the scope of ‘special circumstances’ were not discussed by the Panel in Sotiropoulos. There has not in fact been such a discussion in any retail leases decision of which we are aware.

32 Having given the issue our own careful consideration, we would share the disinclination, shown by the Tribunal in all the cases that we have cited, to assess the reasonableness and probity of the conduct of an unsuccessful party that has given rise to litigation, and to make a finding of ‘special circumstances warranting an award of costs’ on the basis of this conduct if it is found to have been unlawful, ‘grossly unreasonable’ or in some other way manifestly improper. In our opinion, it is the task of the substantive orders made in litigation in the Tribunal, not a costs order, to provide sufficient remedies in respect of such conduct to the aggrieved party.

33 In a high proportion of cases brought in the Tribunal, whether in its jurisdiction under the RL Act or in other jurisdictions, the conduct of the losing party giving rise to the proceedings will have been unlawful, unreasonable and/or improper. To determine in each case whether the degree of unlawfulness, unreasonableness and/or impropriety present was sufficiently serious to warrant a costs order under the s 88 criterion of ‘special circumstances’ would require value judgments of extreme difficulty and the drawing of wholly unsatisfactory distinctions.

34 The present case illustrates this difficulty. Mr Reuben submitted that the Tribunal’s finding of ‘equitable fraud’ against the First and Second Respondents provided a sufficient basis for holding that the criterion of ‘special circumstances’ was satisfied. In response, Mr Robertson, counsel for these Respondents, pointed out that the finding was of ‘fraud’ for the purposes only of a statutory concept enacted in s 42 of the Real Property Act 1900 as one of the exceptions to the indefeasibility of the title of a registered proprietor. It was, he asserted, fraud in a technical sense only, totally distinct from the notion of fraud in ordinary speech, which connotes disreputable and dishonest conduct.

35 Whether or not there is or should be a firm principle that the range of relevant factors under s 88 cannot extend to the parties’ conduct outside the scope of the litigation, we consider in any event that in the present case, the conduct of the First and Second Respondents themselves, as outlined in the Tribunal’s findings, was not unlawful, improper or unreasonable to such a degree as to constitute ‘special circumstances’. The failure to register the lease to the Applicant was an omission on the part of their solicitor, not of them personally. There was no evidence that they encouraged this omission or participated in any other way in the process of registering the documents involved in transferring to them the title to the land at Sutherland.

36 The other conduct of the First and Second Respondents that might constitute ‘special circumstances’ is their continued assertion up to and during the present proceedings that their title to the land should not be subject to the lease and their consequent refusal of consent to the assignment of the lease. They maintained this stance, presumably, on the advice of their lawyers that they were legally entitled to do so. If it was wholly unwarranted, it might amount to ‘special circumstances’. But this would be because, as outlined below in our discussion of the Third Respondent’s appeal on costs, it relates directly to their conduct within the scope of the litigation. This line of argument therefore provides no support for the submission by Mr Reuben with which we are now dealing.

37 For these reasons, our conclusion is that the Tribunal was correct in rejecting the Applicant’s claim for costs in so far as it was based on allegedly unlawful, improper and/or unreasonable conduct of the First and Second Respondents outside the scope of the litigation.

38 The remaining argument put to us by Mr Reuben was that ‘special circumstances’ were present by virtue of the rejection of an offer of settlement made by the Applicant, contained in a letter dated 4 April 2003 from its solicitors to the solicitors for the First and Second Respondents. The principal terms proposed were that these two Respondents should consent to the making of the declaration sought by the Applicant and pay to it the sum of $102,000 plus costs.

39 The existence of this offer was made known to the Tribunal in the Applicant’s submissions on costs. The Tribunal presumably had it in mind when saying, in its judgment at [9], that ‘there was no offer of compromise that was clearly more favourable to them [the First and Second Respondents] than the ultimate determination of the Tribunal’.

40 We agree with this observation. While the offer required a payment some $3,000 less than the amount ordered in the proceedings, it also stipulated that the Applicant’s costs should be paid. Being for this reason less favourable overall than the Tribunal’s order, its rejection could not constitute ‘special circumstances’ within the principles that have been developed with reference to offers of compromise (as to which, see eg Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43 at [9], [16 – 29]).

41 For the foregoing reasons, we dismiss the Applicant’s appeal on costs. We make no order as to the costs of this appeal.

SECOND APPEAL: THE THIRD RESPONDENT’S APPEAL ON COSTS

The Tribunal’s ruling

42 As already indicated, the Third Respondent did not appeal against the Tribunal’s refusal to grant to it an order for costs against the Applicant. It appealed only against the refusal of a costs order against the First and Second Respondents.

43 As explained at [14 – 15] in the Tribunal’s judgment on costs and interest (G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14), the Third Respondent claimed costs from the First and Second Respondents on an indemnity basis. Its grounds were twofold: (a) that their conduct had been unmeritorious, deliberate and high-minded, in the sense outlined by the Federal Court in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 at 233-234, and (b) that under a clause in the contract of sale of the leased premises, they were bound to indemnify the Third Respondent for, among other things, all ‘costs, charges, expense, outgoings or payments’ incurred by it in consequence of any ‘breach, inaction or default of any obligation’ imposed on them as lessors.

44 The Tribunal’s judgment contains no express grounds for its decision rejecting both of these lines of argument.

The arguments raised on appeal

45 The first proposition put to us by Ms Champion, counsel for the Third Respondent, was in all material respects the same as Mr Reuben’s first proposition: namely, that ‘special circumstances’ were not limited to those arising from the conduct of the case. For the reasons already given, we do not accept this argument.

46 Ms Champion argued next that, when due account was made of the state of knowledge and the conduct of Mr Holt, the solicitor for the First and Second Respondents, resulting in their failure to register the lease to the Applicant, it was evident that the defences which these two parties raised in the proceedings were unmeritorious and lacked any tenable basis in law or fact. As appeared from correspondence passing between the parties’ solicitors and the bank to which the First and Second Respondents mortgaged the property on their purchase of it, these defences contradicted the oral evidence given in the proceedings by Mr Holt. This, she said, included acknowledgments on his part that the onus had been on him to discharge his clients’ obligation under the contract of sale to register the lease to the Applicant, that he had failed to do so and that he had also failed to take steps that were available to him to rectify the situation.

47 Relying on well-established authority (see eg Alessa Pty Ltd v Total & Universal Pty Ltd [2001] NSWADT 150 at [5 – 6]), Ms Champion submitted that the lack of any tenable defence constituted ‘special circumstances warranting an order for costs ’ under s 88 of the ADT Act. It was through reasoning along these lines, she said, that grossly unreasonable or improper conduct by a party, resulting in litigation against it, might amount to ‘special circumstances’.

48 For the First and Second Respondents, Mr Robertson submitted that, as was clear from the lengthy and fully reasoned decision of the Tribunal at first instance (G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274), his clients had raised legitimate defences which called for the determination of ‘real issues’. Specifically, he maintained that Mr Holt’s evidence did not go so far as to acknowledge that the First and Second Respondents were under a contractual obligation to register the lease.

49 Mr Robertson argued also that this submission by Ms Champion – viz, that ‘special circumstances’ arose from the lack of merit in the defences raised by his clients – had not been argued to the Tribunal in its hearing on costs.

50 In our judgment, the Tribunal was made sufficiently aware of the Third Respondent’s submission along these lines, since this submission had described the conduct of the First and Second Respondents as ‘unmeritorious’. But we would uphold Mr Robertson’s argument that, when all aspects of the proceedings against these Respondents are taken into account, it cannot be said that they raised and persisted with defences that had no tenable basis in fact and in law.

51 In so far as those proceedings involved the question of quantifying the damages payable by the First and Second Respondents to the Applicant, this argument by Mr Robertson is clearly correct. As we said in our judgment on the costs of the appeal (G & M Dawson Pty Limited v Cripps & Ors (No 2) (RLD) [2005] NSWADTAP 3 at [22]), that question, being one on which we differed from the Tribunal at first instance, was ‘far from straightforward’.

52 If this is not enough in itself to justify rejecting Ms Champion’s submission, we would add that nothing in the Tribunal’s reasoning leading to its ruling that the First and Second Respondents were liable to the Applicant, or in our assessment of the issues which it had to resolve to reach this conclusion, supports the proposition that the defences mounted by these two Respondents were clearly unmeritorious. Both the evidence and the legal issues put before the Tribunal called for careful and detailed analysis.

53 For these reasons, we do not accept Ms Champion’s submission that the requirement of ‘special circumstances’ was satisfied in this case by virtue of a lack of any real merit in the defences raised by the First and Second Respondents.

54 Ms Champion also argued to us that the Third Respondent was entitled to its costs under an indemnity clause in the contract of sale. The Tribunal briefly referred to this clause (see [42] above). Mr Robertson’s response was that, in its jurisdiction to award costs under s 77A of the RL Act and s 88 of the ADT Act, the Tribunal had no power to enforce a contractual obligation of this nature.

55 We agree with Mr Robertson. If the Third Respondent wishes to enforce any entitlement that it may have to recover its costs under this clause, it must do so by means of an action for breach of contract, rather than a claim under these two statutory provisions.

56 It appears to us that, technically speaking, the Tribunal may have erred in law through not formally ruling on the two lines of argument regarding costs that the Third Respondent put to it. But if this is so, we would not be disposed to grant leave under s 113(1)(b) of the ADT Act for this appeal to extend to the merits. The reason is that, on the grounds that we have just set out, we consider that these arguments must be rejected.

57 A subsidiary argument made by Ms Champion was that since most of the five-day hearing before the Tribunal had been occupied with issues not involving the Third Respondent, it should have at least an order for part of its costs. In reply, Mr Robertson argued that the Respondent did in fact participate in the proceedings throughout the period of the hearing.

58 We have no evidence on which to assess the factual merits of Ms Champion’s submission. As far as we can tell, it was not put to the Tribunal at its hearing on costs. For these reasons, we must reject it.

59 In the result, the Third Respondent’s appeal on costs must be dismissed. We make no order as to the costs of this appeal.

THIRD APPEAL: THE FIRST AND SECOND RESPONDENTS’ APPEAL ON INTEREST

The Tribunal’s decision

60 In its judgment on costs and interest (G & M Dawson Pty Limited v Cripps, Jones & Anor (No 2) [2005] NSWADT 14), the Tribunal held at [22] that the Applicant was entitled to interest on the total amount ($105,115.00) of the damages ordered to be paid by the First and Second Respondents. It ordered that interest be paid at the applicable District Court rate as from 28 June 2002, being the date on which the intending purchaser of the Applicant’s business rescinded the agreement that it had concluded with the Applicant.

61 In so ordering, the Tribunal appears to have accepted arguments put by the Applicant, which are noted in the judgment at [8]. These were (a) that the purpose of the Tribunal’s discretion to award interest was to permit a successful party to be properly compensated for the loss that it had suffered and (b) that in this case the loss suffered by the Applicant related to ‘having been held out of possession of $102,000 since the date of the failed sale in June 2002’.

62 The Tribunal rejected an argument by the First and Second Respondents, outlined in its judgment at [12]. This was that interest should not be awarded on all of the amount ($102,000) within the award of damages that represented the value to the Applicant of the lost opportunity to sell its business.

63 These Respondents had claimed that there should be no interest on any of the amount of $102,000 prior to 8 April 2003 because, as the Tribunal had stated in its first judgment (G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274 at [99 – 101]), the Applicant did not suffer any cash loss until this time. The reason for this stemmed from the fact that the equipment used in the Applicant’s business had been subject to a hire purchase agreement with AGC Ltd. The Applicant would have had to pay out this agreement in June 2002 if the failed contract to sell the business at that time had been completed. In fact, however, it was not until 7 April 2003, when the Applicant actually succeeded in selling the equipment, that it was compelled to borrow any money in order to pay out the agreement with AGC.

64 The First and Second Respondents claimed also that for the period after 8 April 2003 the amount on which interest should be awarded should be reduced by $32,023.87, being the net profit which the Tribunal, in its first judgment at [98 – 101], had found to have been derived by the Applicant through conducting the business between July 2002 and April 2003.

The arguments raised on appeal

65 The First and Second Respondents filed this appeal 16 days after the time allowed for an appeal expired (see s 113(3)(a) of the ADT Act, which specifies a time limit of 28 days after the parties have received written reasons for the decision under appeal).

66 Mr Robertson applied for leave under s 113(3)(b) for the appeal to proceed, submitting that no prejudice was occasioned by the delay. Mr Reuben did not oppose this application. We accordingly granted the leave sought.

67 Section 72A(1) of the RL Act, under which the Tribunal made its award of interest, provides the Tribunal may order the payment of interest ‘on the whole or any part of’ the principal sum awarded ‘for the whole or any part of the period between when the cause of action arose and when the order takes effect’.

68 In challenging the Tribunal’s decision on interest, Mr Robertson submitted that in determining what interest should be paid on an award of damages, a court or tribunal must take careful account of the ‘time of manifestation’ of the loss being compensated. He cited the following sentence in the judgment of Stephen, Mason, Jacobs, Murphy and Aickin JJ in Fire and All Risks Insurance Co Ltd v Callinan (1978) 140 CLR 427 at 433. This is a High Court case dealing with interest on damages for personal injuries:-

A money award is the only compensation which the law can provide in respect of the suffering of those detriments and if interest is to be awarded “on the whole or any part of that sum for the whole or any part of the period” between the arising of action and judgment,… a proper exercise of discretion must necessarily involve the paying of due regard to the time of manifestation and to the duration of the various detriments in question.

69 Mr Robertson argued that, as the Tribunal’s findings made clear, the Applicant suffered no cash loss at all until the sale of its equipment on 7 April 2003 and indeed derived profit totalling $32,023.87 through its operation of the business between 28 June 2002 and that date. On a correct application of the principle stated by the High Court, the interest to be awarded should, he said, take account of these matters, which showed that the true loss actually suffered by the Applicant was significantly less than the full amount awarded and the time of manifestation of its loss was significantly later than 28 June 2002.

70 The principal argument advanced by Mr Reuben was that the issues of what profit, if any, was derived from the Applicant’s business between June 2002 and April 2003 and what amount was payable at any given time to AGC were quite distinct from the calculation of the award of $102,000.00 that had been ordered in the Applicant’s favour as compensation for its loss of opportunity to sell the business in June 2002. It was this amount, he said, which should attract an award of interest and it was not appropriate to take account of other factors affecting the Applicant’s financial situation after this loss had been sustained.

71 It was put to Mr Robertson by a member of the Appeal Panel that his argument took no account of the fact that, if in accordance with their obligations the First and Second Respondents had given consent to the proposed assignment of the lease in June 2002, the Applicant would at that time have assigned the lease, sold the business and paid out the hire purchase agreement. Being no longer engaged with running this business, it would have been in a position to derive profit from other business activities.

72 Mr Robertson’s response was that it was not at all clear that the Applicant would have derived any such profit. He referred to a passage in the Tribunal’s first judgment (G & M Dawson Pty Limited v Cripps, Jones & Anor [2003] NSWADT 274 at [89]) where reference was made to ‘health issues’ affecting one of the owners of the Applicant and to the role that these issues played in ‘impacting on’ the Applicant’s ability to run its business after June 2002.

73 In our judgment, the crucial aspect of the component of $102,000 within the award of damages to the Applicant is that it constituted damages for its deprivation of a cash payment of $130,000 that it would have received in June 2002 but for the wrongful conduct of the First and Second Respondents.

74 The figure that we actually awarded under this head was $102,000. We deducted the amount of $28,000 ultimately received by the Applicant on the sale of its equipment in April 2003 from the initial loss sustained, in order to assess more accurately the value of the lost opportunity.

75 We made no deductions for business profits earned by the Applicant during the intervening period. This is in our view the correct approach, because there was no means of calculating what profit the Applicant might have earned from other business activities in which it could have engaged after disposing of its business at Sutherland in June 2002 and receiving the projected payment of $130,000 from the intending purchaser. We did not find convincing the response that Mr Robertson offered when we raised this issue.

76 In Fire and All Risks Insurance Co Ltd v Callinan, the issue before the High Court was the awarding of interest on damages for personal injuries. The Court’s concern was to ensure that a judgment in a plaintiff’s favour should not include interest on an amount awarded under any head of damage unless at the time of judgment the plaintiff had already experienced the relevant ‘detriment’. It was in this context that the Court emphasised the need to pay ‘due regard to the time of manifestation and to the duration of the various detriments in question’.

77 In this case, the relevant ‘detriment’ suffered by the Applicant was its loss of an opportunity to sell its business. It suffered that detriment on 28 June 2002, the date on which the intending purchaser rescinded the contract of sale. We have assessed the value of that loss at $102,000. It was therefore appropriate, in our view, for the Tribunal to award interest under s 72A(1) of the RL Act on the whole of that component of the damages awarded (as also on the accompanying component of $3,115, regarding which there was no dispute) as from 28 June 2002, subject to due allowance being made for any amount already paid.

78 For these reasons, the First and Second Respondents’ appeal on interest is dismissed. We make no order as to the costs of this appeal.