Lafiatis v Makris (RLD)

[2007] NSWADTAP 62

Appeal Panel - Internal

CITATION:	Lafiatis & Anor v Makris (RLD) [2007] NSWADTAP 62
PARTIES:	APPELLANTS George Lafiatis and Vicky Lafiatis RESPONDENT Zois Makris
FILE NUMBER:	079031
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	27 September 2007
DATE OF DECISION:	22 October 2007
BEFORE:	Chesterman M - ADCJ (Deputy President); Molloy GB - Judicial Member; Weule B - Non Judicial Member;
CATCHWORDS:	costs
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	075035
DATE OF DECISION UNDER APPEAL:	05/24/2007
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31 Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164 Lau v Westfield Ltd (Westfield Eastgardens) [2005] NSWADT 165 Makris v Lafiatis [2007] NSWADT 143 Nawi No 3 Pty Ltd & Ors v ING Management Ltd [2005] NSWADT 235 Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43
REPRESENTATION:	APPELLANTS No appearance RESPONDENT S Konstantinidis, solicitor
ORDERS:	The Appellants are to pay the Respondent’s costs of and incidental to this appeal, including the costs reserved at the hearings on 13 June 2007 and 20 June 2007, assessed on a party-party basis.

The nature and progress of these appeal proceedings

1 This decision deals with the costs of an appeal which was dismissed for want of prosecution by the Appellants, George and Vicky Lafiatis.

2 In proceedings in the Retail Leases Division heard at first instance on 24 May 2007, the Tribunal made orders in favour of the Respondent to this appeal, Zois Makris. It did so in default of the appearance of Mr and Mrs Lafiatis, who were the Respondents in those proceedings. The orders included a number of declarations and orders for the payment of money, relating to a lease that the Tribunal found to have existed between Mr and Mrs Lafiatis, as lessors, and Mr Makris, as lessee. The lease was held by the Tribunal to be a retail shop lease within the meaning of the Retail Leases Act 1994 (‘the RL Act’).

3 On 7 June 2007, Mr and Mrs Lafiatis filed a Notice of Appeal and an Application for an Urgent Interlocutory Order staying the Tribunal’s orders.

4 At a hearing of this Application on 13 June 2007, both parties were represented by solicitors. The Appeal Panel, constituted by Acting Judge M Chesterman, Deputy President, made certain interim orders by way of stay of the Tribunal’s decision, directed that a further hearing take place on 20 June 2007 and reserved costs. The principal ground on which the stay orders were granted was that the solicitor for Mr and Mrs Lafiatis had had insufficient time in which to prepare his clients’ case.

5 At the adjourned hearing on 20 June 2007, Mr and Mrs Lafiatis were represented by counsel and Mr Makris by a solicitor. The Appeal Panel dissolved the interim orders made one week earlier, gave directions for the filing of evidence and submissions in the appeal, set the appeal down for further directions on 3 September 2007 and reserved costs. The directions included a requirement that Mr and Mrs Lafiatis file and serve their evidence and submissions within 35 days after delivery by the Tribunal of written reasons for the decision given on 24 May 2007.

6 On 28 June 2007, pursuant to a request under s. 89 of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’), the Tribunal published these reasons (Makris v Lafiatis [2007] NSWADT 143). The latest day indicated in the Appeal Panel’s directions for the filing of evidence and submissions by Mr and Mrs Lafiatis was accordingly 2 August 2007.

7 On 2 August 2007, the solicitors on the record for Mr and Mrs Lafiatis in these proceedings notified the Registry by letter that they had ceased to act. They requested that future correspondence be sent to Mr and Mrs Lafiatis at an address stated in the letter to be their last known address.

8 At the directions hearing on 3 September 2007, there was no appearance by or on behalf of Mr and Mrs Lafiatis. The Appeal Panel noted that they had still not complied with its direction for evidence and submissions to be filed. It directed as follows:-

1. That the appeal be listed on 18 September 2007 for dismissal on the ground of failure by the Appellants to prosecute it.

2. That the Registry notify Mr and Mrs Lafiatis by letter to their home address that if they did not appear at this hearing on 18 September 2007 their appeal would be dismissed.

9 On 3 September 2007, the Registry wrote accordingly to Mr and Mrs Lafiatis.

10 At the hearing on 18 September 2007, there was no appearance by or on behalf of Mr and Mrs Lafiatis. The Registry had not received any communication since 2 August 2007 from either of them or from any person on their behalf. The Appeal Panel was again constituted by Deputy President Chesterman, sitting alone.

11 On the application of Mr Konstantinidis of Konstan Lawyers, who appeared for Mr Makris, the Appeal Panel determined that it was validly constituted under ss. 24A(1)(h) and 24A(2)(a)of the ADT Act to make an order for summary dismissal of the appeal. It made an order to this effect on the ground of failure to prosecute.

12 At this hearing, Mr Konstantinidis applied also for an order that Mr and Mrs Lafiatis pay Mr Makris’s costs of the appeal, once again on the ground of failure to prosecute. The Appeal Panel determined, however, that it was not validly constituted to make such an order, since it did not fall within the categories of order listed in s. 24A(1) of the ADT Act. The Appeal Panel directed that the Registry should notify Mr and Mrs Lafiatis of this application for costs and the ground on which it was based, and should indicate that if they wished to make submissions in response, they should do so within seven days.

13 On 20 September 2007, the Registry, in a Notice of Decision and an accompanying letter, communicated to Mr and Mrs Lafiatis the terms of both the order dismissing the appeal and the directions regarding Mr Makris’s application for costs.

14 Since that date, the Registry has received letters dated 21 September and 9 October 2007 from Southern Cross Realty International Pty Ltd (‘Southern Cross’), purporting to represent Mr and Mrs Lafiatis. These letters contain statements to the effect that the parties to these proceedings have reached a settlement in terms differing from the orders made by the Tribunal on 24 May 2007, that Mr Makris would forward confirmation of these terms ‘in due course’ and that in the course of negotiations for this settlement he had advised Southern Cross that he ‘no longer required the involvement of his solicitors’.

15 Enclosed with the earlier of these two letters was a copy of a ‘final offer’ made by Mr Makris to Mr and Mrs Lafiatis and a letter from Southern Cross to Konstan Lawyers stating that ‘the landlord’ accepted the terms of this offer with some qualifications.

16 The later letter included a statement that as a result of the settlement Southern Cross believed that ‘no further application by Mr. Zois Makris should be entertained’. It also contained an express indication that Southern Cross had received a copy of a letter dated 28 September 2007 sent by Mr Kotowicz, a solicitor employed by Konstan Lawyers, to the Registry.

17 In this letter dated 28 September 2007, Mr Kotowicz advised the Registry that following a consultation with Mr Makris he was instructed to indicate that the purported settlement was ‘not genuine’, for reasons set out in the letter, and that Mr Makris was ‘still making his application for the costs of the appeal’. The reasons advanced in support of the claim that the settlement was not genuine included an assertion that it had been brought about by duress.

18 Other than the two letters from Southern Cross, the Registry has received no communication from Mr or Mrs Lafiatis or from any person on their behalf since it sent to them the Notice of Decision and the accompanying letter, both dated 20 September 2007.

The question whether the costs application should now be determined

19 In these circumstances, the Appeal Panel considers that it may and should proceed to determine the application for costs made by Mr Konstantinidis on behalf of Mr Makris at the hearing on 18 September 2007.

20 The Panel’s reasons for so concluding are as follows. It infers from Southern Cross’s letter of 9 October 2007 that Mr and Mrs Lafiatis have been made aware of the making of this costs application, whether through receiving the Registry’s communications dated 20 September 2007 or by other means. It finds that they have had ample time in which to prepare and file submissions in response to this application, or at least to apply for further time in which to take these steps. It notes that at no time since this application was made have they replied on their own behalf to the communications sent to them by the Registry or indicated that a solicitor or other agent is authorised to represent them. It notes also that the Tribunal has not been formally advised by Mr Makris that the matter is settled, that the solicitors acting for him have denied the assertion to this effect by Southern Cross and that neither the letters from Southern Cross nor the material accompanying them constitutes clear evidence of a settlement. Finally, it points out that if in fact a settlement has already been reached (or is at some future time reached) by the parties, involving departure from any or all of the Tribunal’s orders, such a settlement can include a term to the effect that the Appeal Panel‘s decision on the costs of the appeal is not to be enforced.

The question whether costs should be awarded

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

22 According to the case-law on s 88(1) in its application to proceedings under the RL Act (see eg Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81, 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), this requirement of ‘special circumstances’ applies both to decisions made by the Tribunal at first instance and to Appeal Panel decisions. ‘Special circumstances’ have been defined as ‘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. They may include factors connected with the nature of Appeal Panel proceedings. 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. While a finding of ‘serious unfairness’ or ‘grossly unreasonable conduct’ on the part of the party resisting an order for costs is not a prerequisite to determining that there are ‘special circumstances’, it is a highly relevant consideration.

23 Amongst the various types of situation that have been held to constitute ‘special circumstances’ in retail leases cases, one is of direct relevance to the present case. This is where a party has filed an application or sought to defend proceedings, thereby causing the opposing party to incur costs in preparing for litigation, then has withdrawn the application or the defence without any sufficient justification for so doing. In a number of decisions (see eg Lau v Westfield Ltd (Westfield Eastgardens) [2005] NSWADT 165 and Nawi No 3 Pty Ltd & Ors v ING Management Ltd [2005] NSWADT 235), this behaviour by a party has been held to constitute ‘special circumstances warranting an award of costs’.

24 In the present case, Mr and Mrs Lafiatis did not withdraw their appeal, but failed despite due notice of the Appeal Panel’s directions to file required documents or to appear at the times and places set down for hearings. Their conduct falls within the principles stated in the cases just cited. It constitutes ‘special circumstances warranting an award of costs’.

25 In accordance with normal principles, this award should embrace pre-trial proceedings, such as the two hearings relating to the application by Mr and Mrs Lafiatis for interim relief, as well as the substantive hearing at which they did not appear.

26 The Appeal Panel orders that the Appellants pay the Respondent’s costs of and incidental to these appeal proceedings, including the costs reserved at the hearings on 13 June 2007 and 20 June 2007, assessed on a party-party basis.