GARMAN NOMINEES PTY LTD and SCOPE PROPERTY GROUP PTY LTD
[2024] WASAT 32 (S)
•1 AUGUST 2024
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
STRATA TITLES ACT 1985 (WA)
CITATION: GARMAN NOMINEES PTY LTD and SCOPE PROPERTY GROUP PTY LTD [2024] WASAT 32 (S)
MEMBER: MS C BARTON, MEMBER
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 1 AUGUST 2024
FILE NO/S: CC 1716 of 2022
BETWEEN: GARMAN NOMINEES PTY LTD
Applicant
AND
SCOPE PROPERTY GROUP PTY LTD
Respondent
FILE NO/S: CC 440 of 2023
BETWEEN: THE OWNERS OF DAMPIER ARCADE, STRATA PLAN 13207
Applicant
AND
GARMAN NOMINEES PTY LTD
Respondent
Catchwords:
Practice and procedure - Costs - Commercial tenancy - Retail shop lease - Question arising under a lease - Strata titles scheme - Resolution of a scheme dispute - Conduct of parties
Legislation:
Commercial Tenancy (Retails Shops) Agreements Act 1985 (WA), s 3(3), s 6, s 6(1)(b)(iii), s 16, s 16(1)
State Administrative Tribunal Act 2004 (WA), s 9(a), s 9(b), s 51(1), s 60(2), s 87, s 87(1), s 87(2), s 87(3)
Strata Titles Act 1985 (WA), s 197(1), s 197(4)
Result:
Applications dismissed
Category: B
Representation:
CC 1716 of 2022
Counsel:
| Applicant | : | TM Petherick & JL Cahill |
| Respondent | : | P Monaco |
Solicitors:
| Applicant | : | Petherick Cottrell Lawyers |
| Respondent | : | GV Lawyers |
CC 440 of 2023
Counsel:
| Applicant | : | P Monaco |
| Respondent | : | TM Petherick & JL Cahill |
Solicitors:
| Applicant | : | GV Lawyers |
| Respondent | : | Petherick Cottrell Lawyers |
Case(s) referred to in decision(s):
Chew and Director General of the Department of Education and Training [2006] WASAT 248
Garman Nominees Pty Ltd and Scope Property Group Pty Ltd [2024] WASAT 32
Gill and Wildnight Pty Ltd [2008] WASAT 135
Legal Services and Complaints Committee and Young [2023] WASAT 108
Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S)
Medical Board of Western Australia and Kyi [2009] WASAT 22
Panegyres v Medical Board of Australia [2020] WASCA 58
Pearce & Anor and Germain [2007] WASAT 291 (S)
Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [2008] WASAT 302
Rae and Prima Homes Nominees Pty Ltd [2020] WASAT 24
Summerville and Department of Education & Training [2006] WASAT 368 (S)
Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
On 13 May 2024, GV Lawyers, the solicitors acting for the respondent in CC 1716 of 2022 and the applicant in CC 440 of 2023 filed applications for costs against Garman Nominees Pty Ltd (Garman Nominees).
In CC 1716 of 2022, Garman Nominees was unsuccessful in its application pursuant to s 16(1) of the Commercial Tenancies (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act) against Scope Property Group Pty Ltd (Scope Property) in respect of two questions arising under a retail shop lease. Scope Property is the lessor and Garman Nominees is the lessee of Lot 11 and Lot 13 of the strata scheme known as Dampier Arcade (Scheme). The retail shop lease, the subject of the proceeding, was assigned to Scope Property when it became the registered proprietor of Lot 11 and Lot 13 on 21 August 2020 (Lease).
The Tribunal concluded in CC 1716 of 2022 that Garman Nominees was not entitled to the relief sought because Scope Property was under no statutory obligation to provide a disclosure statement on the assignment of the Lease and the default notice for certain repair work was given to Garman Nominees on proper grounds (Default Notice).[1]
[1] See Garman Nominees Pty Ltd and Scope Property Group Pty Ltd [2024] WASAT 32.
In a separate but related proceeding,[2] the Owners of Dampier Arcade Strata Plan 13207 (Strata Company) sought to resolve a scheme dispute against Garman Nominees pursuant to s 197(4) of the Strata Titles Act 1985 (WA) (ST Act), being a dispute about the failure of Garman Nominees to remove, at its cost, structures erected on common property appurtenant and adjoining Lot 11. The Tribunal concluded in CC 440 of 2023 that the scheme dispute should be resolved in favour of the Strata Company because Garman Nominees was utilising common property of the Scheme in the absence of an exclusive use by-law and without the authority of a lease or licence granted by the Strata Company. The Tribunal ordered Garman Nominees to remove the structures affixed to common property, at its cost, and deliver up vacant possession of the relevant areas to Scope Property.
[2] On 16 August 2023, the Tribunal ordered that CC 1716 of 2022 and CC 440 of 2023 are to remain as separate proceedings but be heard and determined together pursuant to s 51(1) of the State Administrative Tribunal Act 2004 (WA).
Following orders made by the Tribunal on 22 April 2024, I am to determine the costs applications entirely on the documents pursuant to s 60(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act).
For the reasons that follow, I have decided that the parties should bear their own costs and will dismiss the applications for costs by Scope Property and the Strata Company. In arriving at my decision, I have considered the written submissions filed by GV Lawyers on 13 May 2024 (on behalf of Scope Property and the Strata Company) and the responsive written submissions filed by the solicitors acting for Garman Nominees on 29 May 2024.
The issues for determination
The following issues arise for determination:
(1)is Scope Property, the respondent in CC 1716 of 2022, entitled to an award of costs in its favour?; and
(2)is the Strata Company, the applicant in CC 440 of 2023, entitled to an award of costs in its favour?
The statutory framework and relevant principles
The parties to a proceeding before the Tribunal are expected to bear their own costs, unless otherwise specified in the SAT Act, the enabling Act or an order of the Tribunal under s 87 of the SAT Act.[3] The Tribunal can, at its discretion, make an order for the payment of all or any of the costs of another party under s 87(2) of the SAT Act.[4]
[3] SAT Act, s 87(1).
[4] SAT Act. s 87(2).
The principles relevant to the exercise of the Tribunal's discretion under s 87(2) of the SAT Act are well established. In Western Australian Planning Commission v Questdale Holdings Pty Ltd [2016] WASCA 32 (Questdale), the Western Australian Court of Appeal observed that s 87(2) of the SAT Act is to be construed in the context that the legal rationale for an order for costs is to compensate the party in whose favour it is made and not to punish the party the subject of the order.[5] This rationale is evident in s 87(3) of the SAT Act which provides that the power of the Tribunal to make an order for the payment of costs includes 'the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought'. The discretion to award costs is to be exercised judicially; not arbitrarily or capriciously or so as to frustrate the legislative intent.[6]
[5] Questdale at [51].
[6] Questdale at [51].
If a party has failed to prosecute a matter, commenced frivolous proceedings, or acted in a vexatious manner, then such conduct is relevant to the exercise of the Tribunal's discretion under s 87(2) of the SAT Act, particularly where the conduct results in unnecessary costs being incurred by the other party.[7] In Medical Board of Western Australia and Kyi [2009] WASAT 22 (Kyi), Justice Barker referred to the general principles regarding costs in Summerville and Department of Education & Training [2006] WASAT 368 (S) and observed as follows:[8]
… If a party has conducted itself in such a way as to unnecessarily prolong the hearing, has acted unreasonably or inappropriately in its conduct of the proceedings, has been capricious, or the proceedings in some other way constitute an abuse of process, then this may give rise to an exercise of the discretion to award costs. This encompasses a situation where proceedings should not have been maintained against a party because it is clearly untenable and no reasonable person would have believed they could be successful[.]
[7] Questdale at [64]; Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce) at [22].
[8] Kyi at [73].
Whilst the presumptive position is that each party will bear their own costs, in essence, the question for the Tribunal is whether it is fair and reasonable in the circumstances of the case that a party should be reimbursed for the costs it has incurred.[9] Generally, an award of costs will not be made where there is a genuine dispute between the parties, or a party's rights are unclear,[10] unless, during the course of the proceeding, the party has conducted itself in a manner that is unreasonable, inappropriate, or capricious or impairs the attainment of the Tribunal's objectives.[11]
[9] Legal Services and Complaints Committee and Young [2023] WASAT 108 at [39]; Questdale at [51].
[10] Gill and Wildnight Pty Ltd [2008] WASAT 135 at [20]; Pearce at [24].
[11] Questdale at [54]. Pearce at [22]; Chew and Director General of the Department of Education and Training [2006] WASAT 248 at [85].
The onus of proof is on the party seeking a costs order in its favour.[12]
[12] Questdale at [51].
A guide to the type of information that would assist the Tribunal to properly assess a claim for costs is set out in the following passage from Panegyres v Medical Board of Australia [2020] WASCA 58:[13]
The Tribunal should, however, ensure that it is in a position to evaluate and assess the Board's claim as to costs. At the least this requires that the Tribunal be appropriately informed as to the work done and time taken as is claimed for and the rates which are said to apply to that work. The detail required in this respect is a matter for the Tribunal. It may take the form of an affidavit attaching the tax invoices as charged. Alternatively, the Tribunal may consider it appropriate to require a short form bill of costs[.]
[13] At [415].
An assessment of costs should be approached in a broadbrush fashion and should not descend into the minutiae of small items of expenditure.[14] Although a robust approach is applied in the assessment of costs, the Tribunal must be satisfied that the costs claimed by a party are reasonable and necessary.[15] Further, the Tribunal must be satisfied that the costs claimed are not excessive in nature.[16]
[14] Perth Central Holdings Pty Ltd and Doric Constructions Pty Ltd [2008] WASAT 302 at [67].
[15] Marvelle Investments Pty Ltd and Argyle Holdings Pty Ltd [2010] WASAT 125 (S) at [48] - [49].
[16] Rae and Prima Homes Nominees Pty Ltd [2020] WASAT 24 at [69].
Summary of the parties' contentions
Scope Property is seeking an order against Garman Nominees for its legal costs in proceeding CC 1716 of 2022 in the sum of $30,829.02. It is also claiming the sum of $8,800 for the attendance of its directors, Mr Shaun Quinlan and Mr Robert Engelhard, at mediation on 16 March 2023 and at the final hearing on 23 November 2023 (where they appeared as witnesses for Scope Property). Scope Property was ultimately successful in the proceeding commenced by Garman Nominees, pursuant to s 16(1) the CTRSA Act, in respect of two questions arising under the Lease.
Scope Property contends that the issues in dispute were complex and, consequently, the matter justified the engagement of a legal representative.[17] In respect of its purported failure to provide a disclosure statement, Scope Property says that Garman Nominees overlooked that the Lease had been assigned, and, in any event, adduced no evidence that it had suffered pecuniary loss as a result of the omission.[18] Further, Scope Property observed that two of the three matters that were the subject of the Default Notice had been addressed by Garman Nominees before it commenced the proceeding.[19]
[17] Scope Property submissions on costs dated 13 May 2024, para 19(d).
[18] See CTRSA Act, s 6(1)(b)(iii).
[19] Scope Property submissions on costs dated 13 May 2024, para 21.
In reply, Garman Nominees contends that it was the first occasion the Tribunal had considered the central issue for determination in the proceeding (whether a disclosure statement is required on the assignment of a retail shop lease).[20] According to Garman Nominees, a tenable argument exists that the obligation to provide a disclosure statement runs with the assignment and, consequently, the failure of the previous landlord to provide a disclosure statement is a matter for which Scope Property is responsible (because it obtained the reversionary interest in the premises as the new landlord).[21] Consequently, Garman Nominees says that the application was not so 'incredible', 'implausible', or 'obviously unmeritorious' that costs should be awarded in favour of Scope Property.[22]
[20] Costs submissions of Garman Nominees dated 29 May 2024, para 26.
[21] Costs submissions of Garman Nominees dated 29 May 2024, para 28(b).
[22] Costs submissions of Garman Nominees dated 29 May 2024, para 29.
The Strata Company is also seeking an order against Garman Nominees for its legal costs in the sum of $8,711.47. The Strata Company was successful in proceeding CC 440 of 2023 against Garman Nominees in respect of the resolution of a scheme dispute pursuant to s 197(4) of the ST Act. The Strata Company contends that Mr Gareth Davies, a director of Garman Nominees, was aware that the structures located on common property were being used exclusively by Garman Nominees.[23] The Strata Company says that this contention is supported by the findings of the Tribunal in its reasons for decision and the unequivocal information from the valuer engaged by Garman Nominees.[24]
[23] Strata Company submissions on costs dated 13 May 2024, para 20.
[24] Strata Company submissions on costs dated 13 May 2024, para 20.
In contrast, Garman Nominees contends that it had an arguable case because the structures that were the subject of the proceeding, and affixed to common property, had been in the same location for over 15 years and prior to it taking possession of the lot.[25] Consequently, Garman Nominees considers that it should not be required to bear the cost of removing the structures. Garman Nominees observed that similar cases determined by the Tribunal involved structures that were affixed to common property after the lessee had entered into possession and, therefore, there was a 'genuine absence of authorities' in relation to the issue.[26]
[25] Costs submissions of Garman Nominees dated 29 May 2024, para 18.
[26] Costs submissions of Garman Nominees dated 29 May 2024, paras 19 - 20.
Exercise of discretion in this case
The fact that a party is unsuccessful or fails on a contention advanced during the course of the final hearing does not automatically support the making of a costs order unfavourable to that party. The presumptive position is that each party will bear their own costs in a proceeding before the Tribunal.[27] Although the Tribunal is a 'no cost' jurisdiction, the Tribunal has power under s 87(2) of the SAT Act to order the payment by a party of all or any of the costs of another party unless otherwise specified in the enabling Act. Relevantly, neither the CTRSA Act nor the ST Act make provision for the award of costs in Tribunal proceedings.
[27] SAT Act, s 87(1).
In exercising my discretion under s 87(2) of the SAT Act, it is relevant whether, and to what extent, the party who bears the onus on costs can establish that the other party's conduct has impaired the attainment of the Tribunal's objectives.[28] In dealing with matters within its jurisdiction, one of the Tribunal's objectives is to achieve the resolution of questions, complaints, or disputes, fairly, and according to the substantial merits of the case.[29] A further objective is to act speedily and with as little formality and technicality as is practicable and to minimise the costs to the parties.[30]
Disposition - Scope Property's costs application
[28] Questdale at [54].
[29] SAT Act, s 9(a).
[30] SAT Act, s 9(b).
Garman Nominees commenced proceeding CC 1716 of 2022 pursuant to s 16 of the CTRSA Act. In effect, s 16 of the CTRSA Act provides an avenue for parties to a retail shop lease to resolve matters in dispute or questions requiring clarification by applying to the Tribunal for a determination. The meaning of the expression 'question arising under a retail shop lease' for the purposes of s 16 of the CTRSA Act is defined broadly. It includes a question arising in relation to any communication, including a disclosure statement, and extends to any matter that is in dispute between the landlord and tenant in connection with a lease whether or not that matter is dealt with by the terms of the lease.[31]
[31] CTRSA Act, s 3(3).
Whilst Garman Nominees was ultimately unsuccessful, I do not consider that the two questions arising under the Lease that it sought to have answered by the Tribunal were without merit, untenable or vexatious. It was necessary for the Tribunal to construe s 6 of the CTRSA Act to determine whether, on the assignment of a retail shop lease, a landlord has a statutory obligation to provide a disclosure statement to a tenant. It was also necessary for the Tribunal to construe the terms of the Lease to determine whether there were proper grounds for Scope Property to give Garman Nominees the Default Notice.
I do not consider it would be fair or reasonable to make an award of costs in favour of Scope Property in circumstances where Garman Nominees legitimately sought a determination from the Tribunal about whether it was responsible for certain repair work, the subject of the Default Notice, which it considered was the responsibility of Scope Property under the terms of the Lease. Further, in my view, failing to make an award of costs in this case does not undermine the integrity of proceedings commenced under s 16 of the CTRSA Act because the parties were genuinely in dispute about the status of certain structures located outside the boundaries of the lettable area and essential to the lessee's business. Garman Nominees also sought clarification from the Tribunal about whether it should have been given a disclosure statement before the assignment of the Lease (which may have alerted it to the status of the structures).
Having regard to the conduct of Garman Nominees during the course of the proceeding, I am not satisfied that it impaired the attainment of the Tribunal's objectives, for example, by delaying the resolution of the matter by requesting an extension of time to comply with the Tribunal's orders, without a proper basis, or failing to comply with them at all.
Scope Property bears the onus of establishing a proper basis for a costs order in its favour but, for these reasons, I find that the onus has not been discharged.
Consequently, I will decline to make an award of costs in favour of Scope Property and will dismiss the application for costs in proceeding CC 1716 of 2022. Whilst it is unnecessary for me to consider whether Scope Property should be awarded costs for the attendances of Mr Quinlan and Mr Engelhard, I observe that it would be unusual for a company, which is a party to a Tribunal proceeding, to be compensated for the time its directors spend as witnesses at a final hearing unless they are engaged as independent experts.
Disposition - the Strata Company's costs application
The Strata Company commenced proceeding CC 440 of 2023 pursuant to s 197(1) of the ST Act for the resolution of a scheme dispute. The Strata Company sought orders against Garman Nominees, the occupier of Lot 11 of the Scheme, to remove certain structures erected on common property appurtenant and adjoining Lot 11. The structures are required by Garman Nominees to operate its supermarket business and had been affixed to common property of the Scheme for more than a decade, prior to Garman Nominees taking possession of the lot. The Strata Company was ultimately successful in the proceeding.
Section 197(1) of the ST Act provides an avenue for a scheme participant to apply to the Tribunal for the resolution of a scheme dispute where the parties are unable to resolve the dispute through the Scheme's by-laws or other internal processes. Given the significant length of time that the structures had been affixed to common property of the Scheme, and the reliance placed on them by Garman Nominees, it is not surprising that the parties were in dispute about whether there was a proper basis for the structures to remain.
For the reasons stated earlier, I am not satisfied that Garman Nominees impaired the attainment of the Tribunal's objectives or conducted itself in a manner that unnecessarily prolonged the proceeding or was capricious. In my view, Garman Nominees was entitled to defend the proceeding given the significance of the structures to its business and the uncertainty it faced regarding the use of the common property for those structures. In defence of the proceeding, I consider that Garman Nominees acted reasonably and appropriately.
Consequently, in the circumstances of this case, I do not consider it would be fair or reasonable for the Strata Company to be compensated for the costs it incurred in the proceeding.
For these reasons, I will decline to make an award of costs order in favour of the Strata Company and will dismiss the application for costs in proceeding CC 440 of 2023.
Conclusion
The presumptive position is that each party to a proceeding before the Tribunal will bear their own costs. However, the Tribunal may order a party to pay all or any of the costs of another party pursuant to s 87(2) of the SAT Act. In the circumstances of these proceedings, I do not consider that it would be fair or reasonable for Scope Property or the Strata Company to be compensated for the costs they have incurred.
Accordingly, I will dismiss the costs application filed by GV Lawyers for Scope Property in CC 1716 of 2022 and the Strata Company in CC 440 of 2023.
Orders
CC 1716 of 2022
The Tribunal orders:
1.The application for costs is dismissed.
CC 440 of 2023
The Tribunal orders:
1.The application for costs is dismissed.
I certify that the preceding paragraph(s) comprise the reasons for decision of the State Administrative Tribunal.
MS C BARTON, MEMBER
1 AUGUST 2024
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