Gordon v The Trustees of the Roman Catholic Church of the Diocese of Lismore

[2010] NSWADT 230

CITATION:	Gordon v The Trustees of the Roman Catholic Church of the Diocese of Lismore [2010] NSWADT 230 This decision has been amended. Please see the end of the decision for a list of the amendments.
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Thomas Frederick Gordon RESPONDENT The Trustees of the Roman Catholic Church of the Diocese of Lismore
FILE NUMBER:	095205
HEARING DATES:	10 May 2010
SUBMISSIONS CLOSED:	10 May 2010
DATE OF DECISION:	21 September 2010
BEFORE:	Bluth D - Judicial Member
CATCHWORDS:	Key-money
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Alramon Pty Ltd v Lifuli Pty Ltd (No. 2) [2010] NSW ADT 49 Kao v Lim (2003) NSW ADT 85 Basily & anor v Crichton & anor [2007] NSWADT 288 F&G Nominees Pty Ltd v Verdell Pty Ltd [2003] WASCA 290 Gillett and Another v Burke and Another [1997] 1 VR 81 Salon Today Pty Limited v M.M.I.R. Pty Limited [2009] NSW ADT 71 Shakespeare’s Pie Co v Multipye (2006) NSWSC 930 Warwick Entertainment Centre Pty Ltd v McKenzie & Anor [2000] WASCA 280 Whitemore Pty Ltd v O.F. Gamble Pty Limited (1991) 6 W.A.R. 110
REPRESENTATION:	APPLICANT B Donnithorne, solicitor RESPONDENT D MacFarlane, barrister
ORDERS:	1.The application for original Decision is dismissed 2.No order as to costs

REASONS FOR DECISION

1 The facts of this matter are relatively straightforward although the considerations of the issues are not so straightforward.

2 The applicant, a pharmacist, entered into lease negotiations with the respondent to conduct a pharmacy business at the premises known as Suites 1 and 3, St Vincent’s Hospital, Dalley Street, Lismore NSW. Mr Donnithorne, solicitor, appeared for the applicant and Mr MacFarlane of Counsel appeared for the respondent.

3 By letter dated the 11 September 2007 from the respondent to the applicant, the respondent indicated the conditions that would need to be met for the Board of the St Vincent’s Hospital to agree to the lease. Condition (ii) was that “the property shall only be reserved for you upon the payment of a security deposit (three months rent) and the lease commencing forthwith (i.e. 1 October 2007) with the payment of monthly rent in advance”.

4 By letter dated 19 September 2007 the applicant advised the respondent that the applicant did not have the licence which would permit him to conduct a pharmacy business and required approval from the Pharmacy Board of NSW. He stated in the letter:

“I cannot obtain that approval, or even lodge an application for approval, until I am in a position to show the Board that I have the right to occupy the premises if approval is obtained. Accordingly, I request either a lease, or an agreement to lease, that is conditional on the approval being granted.”

And, relevantly, he stated:

“If necessary, I am happy to pay a holding fee for the new area until the result of the application for approval is known (which should be by November 23 ^rd providing we can lodge the lease document by October 1 ^st ).”

5 The respondent replied to the applicant by letter dated 25 September 2007 stating:

“As to point (ii) we believe the cost of holding the property does not require the lodgement of the lease. Payment of a sum for holding the property is quite independent. If you do not require us to hold the property for you, please be kind enough to advise. If we do not hear from you by Friday the 28 ^th September 2007 we shall assume we are free to find other tenants.
If you do wish us to hold the property for you please deposit with us prior to the 28 ^th September next a bank guarantee of $27,000.00 for the first payment of our offered monthly rental referred to in paragraph (vii) i.e. $8,057.50.”

6 On 26 September 2007 the solicitors for the applicant wrote to the solicitors for the respondent stating inter alia “my client is prepared to compensate your client for keeping the premises available pending the outcome of the application for approval”.

7 Then, by letter dated 29 November 2007, the solicitors for the respondent wrote to the solicitors for the applicant enclosing the lease (and other documents) and including a request that the respondent pay “one (1) month’s lease holding payment being the sum of $8,470.00 (inclusive of GST)”.

8 The lease included clause 11 which stated as follows:

“11. National Health Act 1953 – Section 90 Licence
(a) This lease is conditional in all respects upon the Lessee being granted approval from Medicare Australia and the Pharmacy Board of New South Wales to the Lessee supplying pharmaceutical benefits on the premises under Section 90 of the National Health Act 1953. The Lessee must operate pursuant to the said License, subject to the terms and conditions contained in the Pharmacy Services Agreement executed contemporaneously with the lease and dated 4 ^th December 2007.
(b) The lessee in applying to Medicare Australia and the Pharmacy Board of NSW for a License to supply pharmaceutical benefits in the premises must do so pursuant to a short distance application as prescribed in Schedule 1 Part 1 Rule 104 of the National Health (Australia Community Pharmacy Authority Rules) Determination 2006.”

9 The fee of $8,470.00 was paid by Hevilla Pty Limited as trustee for the Gordon Family Trust (“Hevilla”) on 4 December 2007 to Hannigans Lawyers. A trust receipt was issued by Hannigans Lawyers being Trust Receipt No. 7862 stating that the fee was received from Hevilla, the amount of the fee and the purpose being “holding fee” (one month).

10 The lease commenced on 5 December 2007. Subsequently the pharmacy business of the applicant was sold and the lease transferred to the new owner of the pharmacy business. A query was raised by the solicitors for the applicant to the solicitors for the respondent regarding the status of the holding fee payment of $8,470.00 (the payment) made on 4 December 2007.

11 The solicitors for the respondent by letter dated 9 May 2008 to the solicitors for the applicant advised as follows:

“The holding fee payment to which you refer was made by your client on a non-refundable basis given the nature of the payment was to have our client hold the premises vacant on behalf of your client pending your client’s application to the Pharmacy Board for licence approval. Accordingly the holding fee is not refundable to your client.”

12 The applicant then made an application to this Tribunal for mediation in respect of a range of issues which ultimately was narrowed down to the following issue, whether the payment made by the applicant to the respondent on the 4 December 2007 constituted “key-money” within the meaning of Section 14 of the Retail Leases Act 1994 (RLA).

13 The first matter that required attention was the fact that the receipt for the payment was made out to “Hevilla Pty Limited as trustee of the Gordon Family Trust” (see paragraph 9). The applicant had not made the payment and the question arose as to the basis on which the applicant was making the claim for refund of money it had not paid.

14 After a short adjournment, Mr Donnithorne advised the Tribunal that all moneys pursuant to the lease had been paid by Hevilla Pty Limited as trustee for the Gordon Family Trust and this was the way the applicant conducted its business. Notwithstanding this method of conducting its affairs, the applicant cannot be the applicant for the refund as it had not made the payment. The correct applicant should have been Hevilla Pty Limited as has been suggested by Mr MacFarlane. While this is a technical defect in the application, I allowed the matter to proceed on the basis that such technical defect could be resolved by appropriate orders should the applicant be successful in its claim.

15 With regards to the issue of whether the payment was “key-money”, the relevant sections of the Retail Leases Act 1994 are:

Section 3 – Definitions:
key-money means any money paid to or at the direction of a lessor or lessor’s agent, by way of a premium, non-repayable bond or otherwise, or any benefit that is conferred on or at the direction of a lessor or lessor’s agent, in connection with the granting, renewal, extension of assignment of the lease (and a reference in this Act to the payment of key-money includes a reference to the conferral of any such benefit).

Section 14:
Key-money and lease preparation expenses prohibited
(1) a person must not, as lessor or on behalf of the lessor, seek or accept the payment of key-money or lease preparation expenses in connection with the granting of a retail shop lease and any provision of a retail shop lease is void to the extent that it requires or has the effect of requiring the payment of key-money or lease preparation expenses in connection with the granting of the lease.

(2) if a person contravenes this section:
(a) the person is guilty of an offence and liable to a penalty not exceeding 100 penalty units, and
(b) (whether or not the person is convicted of an offence under paragraph (a)) the lessee is entitled to recover from the lessor as a debt any payment made or the value of any benefit conferred by the lessee and accepted by or on behalf of the lessor in contravention of this section.
(3) This section does not prevent a lessor:
(a) (Repealed);
(b) from receiving payment of rent in advance, or
(c) from securing performance of the lessee’s obligations under the lease by requiring the provision of a security bond or other bond or a guarantee from the lessee or any other person (such as a requirement that the directors of a company that is the lessee guarantee performance of the company’s obligations under the lease), or
(d) from seeking and accepting payment for goodwill of a business from a purchaser of the business, but only to the extent that the goodwill is attributable to the conduct of the business by the lessor, or
(e) from seeking and accepting payment for plant, equipment, fixtures or fittings that are sold by the lessor to the lessee in connection with the granting of the lease, or
(f) from seeking and accepting payment for the grant of a franchise in connection with the granting of the lease.

16 Whilst these issues appear to be simple, the consideration as to what exactly is key-money in the context of Section 14 requires a thorough analysis of the case law and legislation not only in this State but also in other States which have similar provisions to section 14.

17 The RLA was introduced in NSW in 1994. In the second reading speech the then Minister for Small Business Mr Chapple in introducing the Bill to Parliament stated:

"Key-money, the practice of seeking an entry premium in addition to rent, and rachet rents, rents that can only ever vary upwards, are two practices that are outlawed by the bill".

18 There have only been a few cases on Section 14 in NSW. The first case is Kao v Lim (2003) NSW ADT 85. The proceedings related to the “Dragon Inn” restaurant located in Tuncurry Plaza, Tuncurry. The applicant sought recovery of $25,000.00 paid to the landlord. The facts of the case are clouded but ultimately it came down to the fact that the sum of $25,000.00 was paid in connection with the purchase of the business from the landlord and that the payment made which was stated to be an early licence fee to allow the purchaser into possession of the business before contracts were exchanged and before any lease document had been signed, fell within the exception regarding the payment made to a landlord consistent with the payment of goodwill under Section 14(3)(d). Judicial Member Montgomery held at paragraph 52:

“…it is my view that any irregularity associated with the payment has been rectified by the fact that the Sale of Business Agreement has been amended to reflect the amount in issue and the fact of the payment of additional stamp duty to reflect the high sale price of the business. These facts suggest to me that it was the intentions of the parties that the payment of $25,000.00 was in relation to the sale of the business and not in connection with the granting of the Lease.”

19 In unreported decision of Austin J in the Supreme Court of NSW Shakespeare’s Pie Co v Multipye (2006) NSWSC 930 a similar result occurred with respect to payment of the sum of $100,000.00 which was ultimately determined to be a franchise fee payment alleged to be a sham. His Honour found that the transaction was not a sham. His Honour stated at paragraph 98 of the judgement:

“In my opinion, the evidence does not provide any plausible basis for regarding the characterisation in the documents as a sham. The transaction was not one in which Georgie Porgie, as proprietor of the Mr Goodpie business, sought to deceive Multipye into paying what Georgie Porgie knew was illegal key-money, and the evidence provides no basis for believing that Systems (and certainly not the Pie Company) knowingly participated in any such deception.”
The correct characterisation of the payment is that it was exempted from the key-money prohibition by Sections 14(3)(f) with respect to payment of a franchise fee.

20 In Basily & anor v Crichton & anor [2007] NSWADT 288 Judicial Member Higgins considered whether a payment by a tenant infringed Section 40 of the RLA being the section on key-money on assignment.

21 Section 40 states:

Key-money on assignment prohibited
(1) A person must not, as lessor or on behalf of a lessor, seek or accept the payment of key-money in connection with the granting of consent to the assignment of a retail shop lease and any provision of a retail shop lease is void to the extent that it requires or has the effect of requiring the payment of key-money in connection with the granting of consent to the assignment of the lease.
(2) …
(3) This section does not preclude any right of the lessor to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with such a consent. The lessee is entitled to have those expenses substantiated by the lessor before making such a payment.

22 The case before Judicial Member Higgins related to the lessee conducting a restaurant business from premises that fell within the jurisdiction of the RLA. The lessee sold the business and a new lease was entered into between the purchasers of the business and the landlord Crichton. In granting the new lease to the purchasers Crichton demanded that the lessee pay:

a)agent’s fees of $2,030.75 to the landlord’s agent; and
b)solicitor’s costs of $1,320.00 to the landlord’s solicitors.

23 Basily paid the amount demanded and then sought orders before the Tribunal for repayment of these amounts on the basis that they were payments made contrary to Section 40 of RLA. Judicial Member Higgins found at paragraphs 14 and 15:

“14. In the written submissions Crichton said that the basis on which agent’s fees were requested was set out in a letter dated 12 February 2007 from their solicitor to the Basily’s solicitor. The relevant paragraph stated as follows:
“We note that the average monthly rent inclusive of GST and outgoings is $4,061.57 per calendar month. Our client would require this amount to be paid for the month commencing 17 December 2006 and 17 January 2007 and in addition as the Lessor’s costs of approving this tenancy a further sum of $4,061.57 payable to Raine & Horne.”

15. The amount of agent’s fees was subsequently halved to the amount the amount that is now claimed. Notwithstanding the reduction it is clear from the above that this fee was calculated on the basis of the then monthly rental payable under the lease and did not represent what Crichton had incurred in connection with their consent to the assignment. On this basis I find that the agents fees were in effect “key-money” in that it was money paid at the direction of Crichton in connection with the granting of the assignment of the lease. A demand and acceptance of such a payment is an offence, but for the purpose of this application it is also a payment that Basily was not required to make and should be refunded by Crichton.”

24 Further, in relation to the solicitor’s costs, Judicial Member Higgins was satisfied that such costs fell within Section 39(2) of the Act which states:

39. Grounds on which consent to assignment can be withheld
(2) This section does not preclude any right of the lessor to require payment of a reasonable sum in respect of any legal or other expenses incurred in connection with the consent, so long as the lessor has substantiated those expenses to the lessee at the request of the lessee.

25 The meaning of key-money in the Victorian Retail Tenancies Act 1986 (VRT Act) and in the Western Australian legislation being the Commercial Tenancy (Retail Shops) Agreement Act 1984 have received judicial interpretation and these cases have proven to be of greater assistance.

26 The relevant section under the VRT Act, is section 9 which states:

9(1) A provision in a retail premises lease is void if it entitles the landlord or a person claiming through the landlord to get from the tenant:
(a) any key-money; or
(b) any consideration for the goodwill of the business.

27 Section 9(4) of the VRT Act confers on tenants a right to recover any amount paid pursuant to a provision made void by section 9(1).

28 Section 3(1) of the VRT Act contains the following definition of “key-money”:

(a) money that a tenant is to pay; or
(b) any benefit that a tenant is to confer – by way of a premium or something of a like nature in consideration of the granting of agreeing to grant a lease or consenting to an assignment of the lease or to the sub-leasing of the premises to which a lease relates … ;

29 These sections were considered in the Court of Appeal of Victoria in Gillett and Another v Burke and Another [1997] 1 VR 81, a decision of Tadgell, Ormiston and Smith JJ.

30 The facts of this case were that the owners of retail premises being a hotel took a lease from the landlord in 1988. The tenants wished to sell the hotel business conducted on the premises at the request of the landlord to grant an option to renew. The landlord and tenant entered into an agreement in 1989 that contained the following clause:

“That in consideration of a payment of the sum of thirty five thousand dollars ($35,000.00) by the Lessee to the Lessor not later than the 28 ^th day of February 1989 the Lessor hereby agrees to grant to the Lessee an option for a further term of four years Lease to commence from the 26 ^th day of November 1991 and expire on the 25 ^th day of November 1995.”

31 The tenant sold the hotel business and out of the proceeds of sale paid the landlord the sum of $35,000.00 to secure an option as part of the sale. The tenant asserted that the payment of the $35,000.00 was key-money within the meaning of the VRT Act and sued the landlord to recover such sum under Section 9(4) of the VRT Act. A County Court Judge held for the tenant against the landlord on the basis that such payment was key-money within the terms of the VRT Act.

32 The Court of Appeal looked at the decision of Whitemore Pty Ltd v O.F. Gamble Pty Limited (1991) 6 W.A.R. 110 and in particular the judgment of Rowland J for guidance notwithstanding that it was a dissenting judgment. In that case, the parties had entered into an option agreement whereby the appellant had agreed to grant the respondent an option to extend the term of an existing lease for a further eight years in consideration of the payment by the respondent to the appellant in the sum of $150,000.00.

33 Smith J at page 22 of Gillett’s case stated:

“The majority analysis of the concept in (the Whitemore case) was that in its ordinary meaning a premium was an amount paid in addition to rent. A premium was said by Malcolm CJ at 120 to be an amount paid by way of capital sum over and above the market rent. Pidgeon J at 123-4 appeared to accept the proposition that key-money was a capital sum paid in addition to rental.

Rowland J however took a different approach. He stated at 133 that while the Act was social legislation aimed at stopping the exploitation of those with little or no bargaining power, it did not purport to abolish the doctrine of consideration. His starting point, therefore, was that where a payment is made in consideration of a promise to grant something in the future it will have that quality unless someone who wishes to do so shows that such consideration was not lawful. His Honour referred to authorities dealing with rent restriction legislation in England…”

34 Smith J at page 23 stated:

“In the present case, the learned trial judge’s analysis of the concept of “premium” was carried out in the context of his conclusion that term A provided a consideration be paid for the granting of or agreeing to grant a lease. His Honour took the view that any consideration over and above the payment of rent should be regarded as a premium in the ordinary meaning of that term. … The task that was presented to him was to define the term “premium” and the phrase “something of a like nature” and apply those definitions to the facts before him.

Bearing in mind the purposes of the legislation and the definition of “key-money” I find the analysis of Rowland J persuasive. The Act is attempting to protect small tenants with little bargaining power. The definition of “key-money” extends beyond “premiums” as such to “something of a like nature” and thus its meaning was intended to be different from the traditional meaning of a payment for the grant of the lease or assignment of a lease. The problem is to identify the sense in which the word “premium” is used in its statutory context and to identify the criteria intended by the legislature to be used in identifying “something of a like nature”. Some indication of the purpose of the legislation is to be found in the parliamentary debates… From this material, it is reasonable to conclude that an objective was to prevent landlords using their bargaining strength to demand a payment in addition to market rental. That objective appears most clearly …

Rowland J’s approach requires a demonstration of a detriment to the tenant or proposed tenant and:
(a) the payment of something over and above the true or lawful rental; or
(b) the payment of something for which there is no real consideration; or
(c) a consideration that is so out of proportion to the benefit that it cannot be a true consideration.
This approach requires the substance of the transaction to be considered and this may require an extensive, but manageable, investigation.”

35 After conducting that analysis, Smith J concluded at page 24:

“In all the circumstances, it cannot be shown that there was a detriment to the plaintiffs. On the contrary they received a net cash benefit. It cannot be shown that the consideration paid was not a true consideration. I am satisfied that the defendants and third party have demonstrated that on the evidence before the learned trial judge, it was not established that the consideration for the option was a premium.”

36 Having determined that the payment in the Gillett case was not a premium, further consideration was given as to whether it was “key-money” within the definition of section 9(1) of the VRT Act. The analysis by Smith J at page 24 and following looked at the obligations of both the tenant and the landlord in connection with the agreement for payment of $35,000.00 to grant the option. When looking at the construction of that agreement there was no obligation placed on the tenant to pay however they could pay if they wanted an option. No obligation was placed on the tenant so therefore it could not said the landlord could sue the tenant for the money.

37 Simply put if the tenant didn’t pay the $35,000.00 they didn’t get the renewal of lease. In these circumstances, the payment of $35,000.00 was determined not to be key-money within the VRT Act because the payment did not constitute a detriment to the tenant, the evidence showing it to be consideration for an option to renew which increased the sale price of the hotel business conducted by the tenant.

38 The relevant section dealing with key-money in the Western Australian legislation Commercial Tenancy (Retail Shops) Agreements Act 1985 (CTAA Act) is section 9 which states:

(1) Subject to subsection (2), a provision in a retail shop lease to the effect that the landlord or a person claiming through him is entitled to, or may require from the tenant:
a)any key-money; or
b)any consideration in respect of the goodwill of the business,
is void.

39 The term “key-money” is defined in Section 3 of the CTAA Act to mean:

(a) money that is to be paid by, or at the request or direction of, a tenant; or
b)any benefit that is to be conferred by, or at the request or direction of, a tenant,
by way of premium or something of a like nature in consideration of the granting of, or agreeing to grant, a lease or the renewal of a lease or the consenting to an assignment of a lease or the sub-leasing of the premises the subject of a lease.

40 The issue was whether a payment for a share in plant and equipment was key-money because the actual agreement for lease and payment was a sham. This came up for decision of the Full Court of the Western Australian Court of Appeal in Warwick Entertainment Centre Pty Ltd v McKenzie & Anor [2000] WASCA 280 in the decision of Wallwork, Parker & Miller JJ.

41 The case before the Court of Appeal was an appeal from the judgement of His Honour, Judge Viol of the District Court who in turn had dismissed an appeal from the decision of the commercial tribunal given on 26 September 1997. In its decision, the tribunal had found that a sum of $65,000.00 paid by the respondent to the appellant was a premium paid for the granting of the lease of premises and therefore “key-money” within the meaning of Section 9(1) of the CTAA Act.

42 The Court of Appeal followed the Victorian decision in Whitemore above in that the correct analysis was to look at the substance of the transaction and whether in effect the agreement was in fact a sham. At paragraph 28, Miller J stated that, after a full review of the Whitemore case the learned judge pointed out that “quite correctly … the respondents (and the Tribunal) relied upon the dicta in Whitemore (supra) i.e. that the substance in reality of the transaction must be looked at not simply its form.”

43 The transaction in the Warwick case was viewed as a sham and consequently the payment made by the tenant was held to be key-money within the terms of the CTAA Act.

44 A second Western Australian decision is in F&G Nominees Pty Ltd v Verdell Pty Ltd [2003] WASCA 290.

45 In that case the parties entered into a deed relating to an extension of a lease. Clause 3 of the deed provided:

“3. The Lease shall from and including the 1st June 1989 be deemed to be amended in the manner hereinafter provided:
a)the Lessee shall pay to the Lessor a once only payment of $120,000.00 on 1st June 1989
b)the annual rental to be paid from and including the 1st June 1989 shall be $78,500 per annum to be paid in part in the manner specified in clause 1 of the first extension”

46 McKechnie J at paragraphs 70 to 75 stated as follows:

“70. The object and purpose of the Commercial Tenancy (Retail Shops) Agreements Act 1985 is to regulate commercial tenancy agreements.
71. A clearly expressed purpose of the Act is to outlaw the practice of requiring payment of key-money as consideration for entering into a lease when that payment is unconnected with the normal terms and conditions of a commercial lease. The method by which Parliament seeks to accomplish that purpose is to deem all such arrangements as void – with a consequent right of recovery.
72. The entitlement to key-money must be found in a provision in a retail shop lease including the expansion given under s3(2) of the Act. Whether an identified provision in a lease is or is not key-money must be determined by reference to all the facts and cannot be decided solely on the words used. To do otherwise would be to render the application of the Commercial Tenancy Retail Shops (Agreements) Act subject to the ingenuity of the drafter of the lease. It would also leave out of account oral arrangements for key-money carefully excluded from a written agreement.
73. There is a direct analogy with rent control legislation. In Palser v Grinling [1948] AC 291, Viscount Simon at 310:
“The [Rent Restriction] Act is not to be evaded … by a merely colourable use of words which do not correspond with what is really provided.”
74. In Elmdene Estate Ltd v White [1960] AC 528 Viscount Simonds at 538:
“…it has been said before and it must be said again, that in the consideration of questions arising under the Rent Acts the Court must look at the substance and reality of a transaction, not to form… .”
75. Examining the substance and reality of the transaction, not its form, was the approach taken by Anderson C in O F Gamble Pty Ltd v Whitemore Pty Ltd (1989) 2 WAR 327 and confirmed by the Full Court (Malcolm CJ, Pidgeon J – Rowland J dissenting) in Whitemore Pty Ltd v O F Gamble Pty Ltd (1991) 6 WAR 110 at 119.”

47 The Court concluded upon the evidence presented to it and looking at the substance of the transaction that in fact the payment was key-money and fell foul of the legislation.

48 Considering all the matters referred to in the cases, I am guided in particular by the judgment of Rowland J in Whitemore’s case, approved by the Court in Gillett’s case, that while the Act was social legislation (Rowland referring to the Western Australian Act but the same can be said in relation to the New South Wales Act especially given the matters raised by the Minister in the second reading speech in Parliament) aimed at stopping the exploitation of those with little or no bargaining power, the Act does not purport to abolish the document consideration and in particular having examined the nature of the transactions in both Gillett’s case and F & G Nominees case.

49 In the present case, the arrangement between the applicant through Hevilla Pty Limited and the respondent being the Roman Catholic Church Lismore was that if Hevilla Pty Ltd had not made the payment, being the holding fee, then the respondent could not seek to recover that holding fee as it was not a binding arrangement and the parties are at liberty without having paid the holding fee to not be bound by any arrangement and consequently no lease would spring up.

50 Given that is the nature of the transaction, then it is my view that the payment is not key-money within Section 14 of the RLA and consequently not refundable. The issue of the correct applicant then falls away because there is no breach of the Act.

COSTS

51 Mr Macfarlane on behalf of the respondent made an application should the respondent be successful for costs to be awarded to the respondent pursuant to the Tribunal’s power to award Costs, under section 88 of the Administrative Decisions Tribunal Amended Act 2008, contrary to the general philosophy regarding costs in this Division of the Tribunal that each party before the Tribunal pay their own costs.

52 The application for the Tribunal for the award of costs in the main rested on the basis that the applicant had mounted a general all embracing Application for Original Decision including claims of unconscionable conduct by the respondent and all these claims were abandoned bar the claim under section 14 which was litigated before me.

53 My attention was drawn to at least two decisions on costs in the Tribunal, Salon Today Pty Limited v M.M.I.R. Pty Limited [2009] NSW ADT 71 AND Alramon Pty Ltd v Lifuli Pty Ltd (No. 2) [2010] NSW ADT 49, both decisions of Judicial Member Molloy.

54 In Alramon Judicial Member Molloy at paragraphs 15 and 16 stated:

“Firstly, there is no need to set out in detail Section 88 neither is there any need to review in detail the now established law on this Section. All of this is adequately set out in the most recent decision of Council of the Law Society of NSW v Dimitriou (No 2) [2010] NSWADT 37, at [10-11]. In my opinion there is no need to repeat that material.
Reference can also be made to Dimitriou at [18]. There is again no repeat that paragraph. It is plain that the primary principle in Section 88(1) “is that each party to proceedings should…. bear that party’s own costs”. It is also plain that an “award of costs is an exception to this general principle”. It must follow that “in order to obtain a costs order in this Tribunal one must fit the parameters within s88(1A)”.”

55 Having considered the criteria in Section 88(1A) I am not persuaded that the case should require me to make an exception to the overriding philosophy referred to earlier and award costs. Consequently I deny the application for costs by the respondent.

56 I make the following orders:

1. The Application for Original Decision is dismissed.
2. No order as to costs.

29/09/2010 - typographical error - Paragraph(s) 51