Kondos v Citadin Pty Limited [RLD]

[2003] NSWADTAP 7

Appeal Panel - Internal

CITATION:	Kondos & Anor -v- Citadin Pty Limited [RLD] [2003] NSWADTAP 7
PARTIES:	APPELLANT Angelo Kondos and the Lease Police Pty Limited RESPONDENT Citadin Pty Limited
FILE NUMBER:	029052
HEARING DATES:	07/02/2003
SUBMISSIONS CLOSED:	02/07/2003
DATE OF DECISION:	03/17/2003
DECISION UNDER APPEAL:	Ultraglen Pty Limited -v- Citadin Pty Ltd [2002] NSWADT 220
BEFORE:	O'Connor K - DCJ (President); Donald BG - Judicial Member; Weule B - Member
CATCHWORDS:	costs - excerise of discretion - special circumstances - power to order costs against advocate
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	015118
DATE OF DECISION UNDER APPEAL:	11/01/2002
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 District Court Act 1973 Retail Leases Act 1994
CASES CITED:	Damjanovic v Maley (2002) 55 NSWLR 149 Aiden Shipping Ltd v Interbulk Ltd [1986] 1 AC 965 Knight and Anor v FP Special Assets Ltd and Ors (1992) 174 CLR 178 (HCA) Alessa Pty Ltd v Total and Universal Pty Ltd [2001] NSWADT 150 Bar Ristretto v Ansett Australia Ltd [2002] NSWADTAP 124
REPRESENTATION:	APPELLANT In person RESPONDENT M Cleary, barrister
ORDERS:	1. Appeal dismissed; 2. Appellants (namely, Angelo Kondos and The Lease Police Pty Ltd) to pay the respondent $3600 as compensation for the respondent’s costs in connection with both the original proceedings and the appeal.

1 The Retail Leases Division of the Tribunal (Fox JM) ordered the professional representatives of the applicant in proceedings brought under the Retail Leases Act 1994 (RLA) to pay the respondent’s costs of the proceedings (to the extent detailed in the order): see order in Ultraglen Pty Ltd v Citadin Pty Ltd [2002] NSWADT 220, decision delivered 1 November 2002. The professional representatives were identified as Angelo Kondos and his employer The Lease Police Pty Ltd (‘The Lease Police’).

2 It is commonplace in the Tribunal, including in this Division, for applicants to appear without representation. Sometimes applicants have agents who are not legally qualified represent them. This case falls into the latter category. It will often assist the conduct and resolution of proceedings if applicants come to the Tribunal with some kind of well informed representation, legal or otherwise.

3 Section 71 of the Administrative Decisions Tribunal Act 1997 (the Tribunal Act) deals with representation before the Tribunal. It reflects a more relaxed approach to non-lawyer representation than is found in the ordinary courts where leave to appear must be obtained by a non-lawyer representative (see, e.g. District Court Act 1973, s 43(1)(b)). Section 71, as material, provides:

‘ 71. Representation of parties
(1) A party to proceedings before the Tribunal may:
(a) appear without representation, or
(b) be represented by an agent, or
(c) ...
(2) Despite subsection (1), the Tribunal may order that the parties to the proceedings before it may not be represented by an agent of a particular class for the purpose of the presentation of oral submissions to it (whether in relation to the whole proceedings or any part of the proceedings) if the Tribunal considers it appropriate to do so.
(3) In making an order under subsection (2), the Tribunal is to have regard to the following matters:
(a) the complexity of the matter and whether it involves a question of law,
(b) whether each party has the capacity to present the party's case by oral submissions without representation,
(c) the stage that the proceedings have reached,
(d) the type of proceedings,
(e) such other matters as the Tribunal considers relevant.
...’.

4 It will be seen that a party has a right to appear by way of an ‘agent’, and no distinction is drawn between a legally qualified advocate and one who is not legally qualified: s 71(1). On the other hand, the Tribunal has a power to order that parties to the proceedings may not be represented by an agent ‘of a particular class for the purpose of the presentation of oral submissions to it.’ This power is yet to receive any close scrutiny in this Tribunal. When read in conjunction with the list of factors given in sub-s (3) the Tribunal would appear to have a broad power to curtail the appearance before it of advocates, both legally trained and not legally trained, especially if the matter is a complex one. Cases in the Retail Leases Division often have a degree of legal and factual complexity. See generally Damjanovic v Maley (2002) 55 NSWLR 149 on factors relevant to the exercise of the discretion not to grant leave to appear to non-lawyers in the ordinary courts, esp per Stein JA at [69]-[88].

5 In this case the Tribunal did not seek to restrain the right of audience of The Lease Police and Mr Kondos. The Lease Police holds itself out as an advocacy and advice service to tenants in shopping centres. It has frequently filed proceedings in this Tribunal on behalf of retail tenants; and appeared on their behalf.

6 Because of the way they handled the case on this occasion, they were met with a costs application from the respondent, which was successful.

7 Mr Kondos and The Lease Police now appeal pursuant to s 113 of the Tribunal Act against the order, contending that it involved a miscarriage of discretion of such a degree that it amounted to an error of law.

8 The background to the order in issue is as follows. On 27 November 2001 an application for relief under the RLA was filed. In the box requiring the applicant to be named, two names appeared, the first being ‘Beth Hourigan as ‘Guarantor to the Lease’ and the second being ‘Ultraglen Pty Ltd CAN 075 548 293’. The respondent was named as ‘Citadin Pty Ltd c/o Skygarden Centre Management, Level 12, 77 Castlereagh St Sydney NSW 2000’.

9 The application is signed by Angelo Kondos ‘for an on behalf of Ultraglen Pty Ltd’. The application contains no information as to what the nature of the dispute is, what shopping centre it relates to, and what the business was that was carried on by Ultraglen or Ms Hourigan. There is an assertion that ‘the matter’ cannot be successfully mediated. There is a statement that a mediation was held on 23 February 2000 and an issue of unpaid rent. There is also reference to a settlement deed having been signed at the time, and it is claimed that is was signed ‘under duress’ and the applicant was unrepresented.

10 The application then claimed that the lessee had a right to compensation under s 10 of the RLA (pre-lease representations), and that various statutory implied terms were not complied with by the lessor. The order sought was for $300,000 (the statutory maximum for proceedings under the RLA), as well as for an order that money paid under the settlement agreement be refunded ($5,000) and order that a further sum due under the agreement not be paid ($25,000).

11 On 14 December 2001 the solicitors for the respondent wrote to Mr Kondos, and stated that Ultraglen was in liquidation, and questioned his authority to proceed with the application. The solicitors advised:

‘In the absence of a valid authority from the liquidator we propose at the first opportunity to dismiss the application and seek an order for costs against you personally for breach of warranty of authority.’

They continued:

‘We invite you to withdraw the application forthwith as an abuse of process.’

12 On the letterhead of ‘The Lease Police Pty Ltd’ Mr Kondos replied by letter dated 18 December 2001:

‘We act for Beth Hourigan as guarantor to a former lease. Please read section 63(1) Interpretation party or former party of the Retail Tenancies Act 1994. As this constitutes valid authority and we have clear instructions from Ms Hourigan this matter will proceed.’

13 The solicitors for the respondent replied by letter dated 19 December 2001 reiterating its concern that the representative had not produced ‘authority to act for Ultraglen Pty Ltd and Hourigan in her capacity as a director of Ultraglen Pty Ltd’.

14 Then on 16 January 2002, the day before the directions hearing to be held before Mr Fox on 17 January 2002, a document headed ‘Amended Application’ was filed in the Registry by Mr Kondos ‘for and on behalf of Elizabeth Joy Hourigan’. This document named Ms Hourigan as the applicant and described her as ‘Status: Guarantor’. It attached the same limited details of the claim as had been part of the claim lodged in the name of Ultraglen Pty Ltd.

15 At the hearing on 17 January 2002 the respondent presented a letter to it from Adrian S Duncan, Joint and Several Liquidator to Ultraglen Pty Ltd (In Liquidation), stating that he has not consented to the continuation of these proceedings nor has he consented to Mr Kondos or The Lease Police representing Ultraglen.

16 The respondent made a submission to the Tribunal requesting that the application be dismissed, and that there be an order for costs in their favour. The usual rule in proceedings in the Retail Leases Division is that each party bears their own costs: RLA, s 77A adopts the rule in s 88 of the Tribunal Act 1997, which is as follows:

‘ 88. Costs
(1) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that there are special circumstances warranting an award of costs.
(2) The Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis.
(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.
(4) In this section, "costs" includes:
(a) costs of or incidental to proceedings in the Tribunal, and
(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.’

17 As can be seen the Tribunal may depart from the ‘no costs’ rule in ‘special circumstances’. There are now several rulings in the Tribunal going to what might amount to ‘special circumstances’ in the context of retail lease claims both at the Divisional level and in the case of appeals to the Appeal Panel. Those rulings have indicated that such matters as the bringing of unmeritorious claims, failing to accept reasonable settlement offers and causing unnecessary adjournments may result in an adverse costs order. There have been no cases where an order has been made against a ‘non-party’.

18 At the hearing, the Tribunal dismissed the application. The respondent then sought an order for costs not only against the applicant but also one against Mr Kondos and The Lease Police. The Tribunal ordered that Ultraglen pay the respondent’s costs. It expressed doubts about whether Ms Hourigan had given authority for the action. The Tribunal reserved on the question of further costs orders in the alternative against Mr Kondos and The Lease Police. The Tribunal gave them time to make submissions in reply to respondent’s application.

19 There was no issue at the appeal that it is open to the Tribunal to make an order for costs against a non-party. In his reasons, Mr Fox accepted the submissions of the respondent on this point. Because, so far as we are aware, this is the first time such an order has been made, we make some brief observations on the point. The relevant provision is s 88(2)(a) of the Tribunal Act, which, to reiterate provides: ‘The Tribunal may: (a) determine by whom and to what extent costs are to be paid, ...’.

20 This text follows exactly the terms of s 5 of the Supreme Court of Judicature Act 1890 (United Kingdom), which has been held to permit the making of costs orders against non-parties: see generally the discussion in Aiden Shipping Ltd v Interbulk Ltd [1986] 1 AC 965 at 975 & ff (HL) per Lord Goff; approved Knight and Anor v FP Special Assets Ltd and Ors (1992) 174 CLR 178 (HCA), in dealing with similar provisions in the costs rules of the Queensland Supreme Court.

21 We agree, for the reasons given by the Tribunal, that s 88(2)(b) of the Tribunal Act confers power to make orders for costs against non-parties including lay advocates.

22 We note that in Damjanovic v Maley, cited earlier, Stein JA (with whom Mason P and Sheller JA agreed) expressed the view, in passing, at [75]: ‘In appropriate cases a legal practitioner may be ordered to pay costs. The position is far less clear in relation to a non party lay advocate. There may extreme circumstances where the conduct of a lay advocate could attract an adverse costs order.’

23 The question that was before the Tribunal in this case was whether there were such ‘extreme circumstances’; or to use the language of s 88 - such ‘special circumstances’. The Tribunal was exercising a discretion available to it. Mr Kondos and The Lease Police object to the way the discretion was applied.

24 The Tribunal asked whether they had 'vexatiously conducted the proceeding'. This is a permissible way to approach the question. A less stringent test could have been applied: see Alessa Pty Ltd v Total and Universal Pty Ltd [2001] NSWADT 150 where the test was stated to be whether the circumstances of the application are seriously beyond the usual or ordinary pursuit of a claim so that it is seriously unfair to a party in proceedings before the Tribunal not to be awarded some or all of its costs where it has been successful.

25 Obviously, the expression ‘special circumstances’ allows the Tribunal to take into account a wide variety of factors. These factors must be beyond those reasonably connected with the usual or ordinary pursuit of a claim.

26 It was plainly open to the Tribunal to have concerns about the justification for these proceedings and the fairness of putting the respondent to the costs of mounting a defence. The claim as filed contained little information shedding light on the nature of dispute. The information that was given was of a kind likely to arouse concern as to the appropriateness of the claim. The application refers to the occurrence of a mediation and the existence of a settlement agreement. With no apparent basis, it then makes a claim for damages to the limit of the jurisdiction, $300,000. It transpired that there was no question that the company named as applicant was in liquidation at the time the proceedings were commenced. The objections made by the solicitors for the respondent to the initiation of these proceedings then, it is reasonable to conclude, lead to The Lease Police and Mr Kondos seeking to amend their application to remove the company as a party and instead state that a person who had been a director of the company (and was identified as a guarantor), Ms Hourigan, was the applicant. There was nothing on file to show that Ms Hourigan had given any authority to Mr Kondos or The Lease Police to mount the action.

27 At the hearing of the appeal it emerged that Mr Kondos’s main objection to the decision against him was in respect of the suggestion that he did not have the liquidator’s permission to commence the action. He said that he had told the Tribunal that he had phoned the liquidator and got his approval orally. The Tribunal said at paras [13] and [14] of its reasons:

‘13 In January all of this clearly established that the proceedings were commenced without the consent of the Liquidator. My note of the evidence is "Kondos says that he had written to the Liquidator for approval, but received nothing in writing in response".
14 This point was not taken further in the written submissions made by the Lease Police.’

28 On hearing Mr Kondos’ objection, the Appeal Panel indicated to him that it would examine the tape of the proceedings. We have now been advised that there is no recording made of Retail Leases Division directions hearings. The only record is a short note made by the member held on file which is consistent with what was said in the reasons.

29 For the moment, we will proceed on the assumption that what Mr Kondos says is accurate; rather than basing our analysis on the member’s file note and subsequent statement at para [13] of the reasons.

30 Mr Kondos’s submission is that he was denied procedural fairness in not having consideration given to his evidence as to what passed between him and the liquidator, and in not being given an opportunity to put on evidence in relation to the bona fides of his commencement of the action.

31 There was some discussion at the appeal hearing of the question of whether a Court approval is needed in relation to the bringing of claims by a company in liquidation. The position is that liquidator approval only is required. Court approval is required in the opposite situation - where a solvent party seeks to sue a company in liquidation: Corporations Act 2001 (Commonwealth), s 471B. (A failure by a lessee to procure such an approval before suing a lessor in liquidation was one of the considerations that gave rise to a costs order against the lessee in Bar Ristretto v Ansett Australia Ltd [2002] NSWADTAP 124.)

32 Mr Kondos was clearly on notice, by virtue of the respondent’s solicitor’s letters and by virtue of the submissions filed, when he came to the Tribunal on 17 January 2002, that the absence of a liquidator’s authority was a matter of great concern to the respondent. He did not come prepared to substantiate the existence of an authority in a way appropriate to such a serious issue: with a clear statement in writing on the matter from the liquidator, including a statement as to whether there was a time when he might have had a verbal authority. Following the Directions hearing, he did not address this issue in the written submissions given to Mr Fox to assist his deliberations on the question of a costs order against him.

33 We are satisfied that there were ample grounds for Mr Fox to conclude as he did. In our view Mr Kondos and The Lease Police had ample opportunity to put before Mr Fox material or evidence that might exculpate them from the kind of adverse decision that he made. They did not take that opportunity.

34 Mr Kondos and The Lease Police say more generally that the order against them is manifestly unreasonable and unfair, in that they were at all times acting in good faith and seeking to do the best for a client who could not afford to go to lawyers.

35 We have little doubt that had a solicitor conducted himself or herself in a similar manner, they would have been met by a similar application, and, in addition, issues of the adequacy of their professional conduct may have arisen. The importance of the role of professional discipline in ensuring adherence to proper norms of conduct in litigation is recognised in Damjanovic v Maley at [74]-[75] per Stein JA.

36 Mr Kondos and The Lease Police present as professional advocates. They operate, we accept, as a resource to tenants in circumstances where tenants may not have the resources to turn to lawyers and do not have the experience to represent themselves with confidence. We accept that services of the kind offered by professional advocates who happen not to be lawyers can be of value to people who otherwise have nowhere else to turn.

37 But it is critical to the operation of a Tribunal of this kind that these advocates deal with the Tribunal in a responsible way, and do not expose respondents to expenses that go beyond the defence of litigation reasonably commenced.

38 Applied to this proceeding, there needed to be particular clarity as to the status of the company named as the applicant, and as to the existence of any consent to bring proceedings when in liquidation. Moreover there were other factors of significance in this case that are negative to the position of Mr Kondos and The Lease Police. The proceedings may well have been invalid (see RLA s 68) on other grounds including - that there had been a settlement agreement, and there was no certificate of failed mediation accompanying the filing. The claim was for a very substantial amount with no particulars. In a professionally drawn claim (albeit one drawn by non-lawyers) there should have been basic information given in support, one, of why the Tribunal should entertain a claim that had apparently been resolved, two, why it should entertain a claim without the necessary certificate of failed meditation, and, three, why such a high amount of damages was being claimed. A respondent is entitled to ask for some explanation of the case against it.

39 In a Tribunal of this kind, the shortcomings we have mentioned might be forgiven where an applicant of little acumen in these matters files the claim. The problem might be dealt with by the giving of detailed directions.

40 But this was not the case here. The filing was made and pursued by a professional advocate. The matters to which we have referred are ones that, in our view, should have occurred to a professional advocate seeking to access the dispute resolution mechanisms of the RLA in a responsible way.

41 We are satisfied that the Tribunal did not err in law in its exercise of the discretion as to costs.

42 It follows, equally, that the appellants should pay the respondents’ costs of this appeal.

43 Having reviewed the file and the appeal papers, we note that the respondent’s appeal submission was very largely a repeat of the successful submissions made to Mr Fox.

44 In our view, it is not desirable that there be more costs incurred in connection with the process of establishing the precise costs incurred by the respondent. We have noted the various attendances by the respondent’s legal representatives at the Tribunal, and the extent of the written submissions, which was reasonable.

45 Accordingly we propose to vary Mr Fox’s order so as to fix a precise amount.

46 In our view, an amount of $3600 should be paid by the appellants to the respondent to compensate the respondent for its costs in connection with both the original proceedings and the appeal.

ORDERS

1. Appeal dismissed.

2. Appellants (namely, Angelo Kondos and The Lease Police Pty Ltd) to pay the respondent $3600 as compensation for the respondent’s costs in connection with both the original proceedings and the appeal.