Li v Williams (No 2)

[2005] NSWADT 275

CITATION:	Li v Williams (No 2) [2005] NSWADT 275
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Si Cheng Li RESPONDENT Jeffrey Williams
FILE NUMBER:	055080
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	07/26/2005
DATE OF DECISION:	12/02/2005
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Claim for relief against forfeiture
MATTER FOR DECISION:	Costs
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Gizah Pty Limited v. AXA Trustees Limited (No. 2) [2001] NSWADT 164 Petria Pty Limited v. Makhoul [2005] NSWADTAP 12 Randi Wiks Pty Ltd v Pokana Pty Ltd [2003] NSW ADTAP 27 Sotiropoulos v. Mattana Coiffure (No. 2) Pty Limited [2004] NSWADTAP 43 Thalassa Pty Limited v Hawkesbury River Marina Pty Limited [2005] NSWADTAP 48 Trust Company of Australia Ltd v Craig & Ors [2005] NSWADT 65 Wood & Anor v Bergman (No 2) [2003] NSWADT 175
REPRESENTATION:	APPLICANT In person RESPONDENT K Yardy, solicitor
ORDERS:	The Applicant is to pay the Respondent’s costs of two hours of time spent at the Tribunal by the solicitor for the Respondent

1 The Applicant is the lessee of two offices at the rear of the ground floor of 262 Liverpool Rd Ashfield (“the Premises”). The Respondent is the licensee of the Hotel that adjoins the Premises and is a director of a company that has owned one third of the freehold of the Premises as tenants in common since 14 July 2004. The premises are part of a larger title of land, which is occupied by businesses that include a hotel, solicitor's office, and an accountant's office.

2 In the substantive matter the Applicant asserted that the Lease is governed by the Retail Leases Act 1994 (“the Act”) and that therefore his claim is a "retail tenancy claim" in respect of which the Tribunal has jurisdiction in accordance with Section 72 of the Act. He sought an order pursuant to section 72(1)(c)(iv) of the Act that the Respondent refrain from taking any action in relation to a Notice to Quit.

3 The application was heard and determined on 20 June 2005. On that day I determined that the application should be dismissed for want of jurisdiction and the issue of costs was reserved. I subsequently provided written reasons for the decision. The facts of the case are referred to in those reasons. The Respondent has sought an order for costs and each party has filed written submissions in relation to the issue.

Principles Governing the Awards of Costs

4 Section 77A of the Act expressly provides that the Tribunal may award costs under Section 88 of the Administrative Decisions Tribunal Act 1997 (“the ADT Act”) in respect of proceedings commenced by an application under the Act.

5 Section 88 (1) of the ADT Act provides that the Tribunal may award costs in relation to proceedings in the Tribunal but only if it is satisfied that there are special circumstances warranting an award of costs.

6 There are two hurdles to overcome. It is firstly necessary to identify “special circumstances”. It is then necessary to determine whether they “warrant an award of costs” Gizah Pty Limited v. AXA Trustees Limited (No. 2) [2001] NSWADT 164 at [29]. Provided that “special circumstances” are found that would warrant the making of a costs order and there are no other disentitling factors, an order must be made Gizah at [33] and [34].

7 There have been a number of decisions in the Retail Leases Division of the Tribunal in relation to costs awarded by the Tribunal. These decisions give guidance on the interpretation and application of Section 88. The Appeal Panel has recently considered the issue in Sotiropoulos v. Mattana Coiffure (No. 2) Pty Limited [2004] NSWADTAP 43 and Petria Pty Limited v. Makhoul [2005] NSWADTAP 12 and Thalassa Pty Limited v Hawkesbury River Marina Pty Limited [2005] NSWADTAP 48.

8 It is plain that “special circumstances” are “circumstances that are out of the ordinary, but without having to be extraordinary or exceptional” and one needs to look for those circumstances that are “out of the ordinary” and then see whether they warrant an award of costs, whether in relation to the whole of the proceedings, part thereof or a proportion thereof.

The Respondent’s Submissions as to Costs

9 The Respondent submits that there are a number of issues in this matter that constitute "special circumstances". He says that the fact that the application has been dismissed for want of jurisdiction, would, initially, entitle the Respondent to a costs order under ordinary principles of law where costs follow the cause.

10 The Respondent's submission is that in all the circumstances of the matter, the Applicant's action was untenable as law. The commencement of proceedings against a party should only be carried out after the greatest of consideration to ensure that proceedings are not commenced in circumstances where they should not have been commenced. These proceedings should never have been commenced. He relies on views expressed by Molloy JM in Trust Company of Australia Ltd v Craig & Ors [2005] NSWADT 65 where he stated at 44:

“44 The applicant withdrew these proceedings and the proceedings have been dismissed. In those circumstances the common law makes it plain that a Respondent is entitled, absent disentitling factors, to a costs order. In my opinion, the withdrawal of proceedings is a circumstance out of the ordinary within the meaning that I gave to it in Gizah v AXA and within the meaning of subsequent decisions of this Tribunal. The commencement of proceedings against a party should only be carried out after the greatest of consideration to ensure that proceedings are not commenced in circumstances where they should not have been commenced. After all the amount in issue in this case was not small and the only reason given for the withdrawal of the proceedings in this case was “commercial reasons”. In my opinion the applicant should have thought very carefully on a commercial basis before commencing the proceedings in the Local Court or at all.”

11 He also refers to a number of aspects of the manner in which the Applicant conducted his case that has put the Respondent at a disadvantage. He argues that this is not a situation where there has been a failure to articulate the merits of the case, but a situation that the Applicant has seen a commercial opportunity to improve his position, and failed significantly. The Retail Leases Division has an inherent “commerciality": Randi Wiks Pty Ltd v Pokana Pty Ltd [2003] NSW ADTAP 27 at [12] and [28] and it is reasonable that commercial approaches to the awarding of costs apply. The Applicant was aware of the same and refused offers to settle the proceedings on better terms than he ultimately received, even though his original claim included a monetary payout.

12 The Respondent seeks legal costs for the day and urgent preparation of the application, as agreed or as assessed.

The Applicant’s Submissions as to Costs

13 The Applicant submits that there is no justifiable ground whatsoever for such 'special circumstances' to be established in this case. He says that Respondent forced the proceedings. From the beginning, the Applicant had tried many times to negotiate with the Respondent both orally and by writing, but the Respondent either ignored the attempts or refused to negotiate with the Applicant.

14 In relation to the Respondent’s allegation that the Applicant had rejected a number of offers, by the Respondent, the Applicant says that he had approached the Respondent for a compromise for some weeks before the proceeding. Nowhere did the Applicant refuse a meeting with the Respondent to discuss the matter. Rather, he says, the Respondent had consistently avoided settling the dispute. The Respondent's written offer to allow the Applicant to continue to occupy the premises until 1 August 2005 was made known to the Applicant by his own solicitor only within a minute of the hearing. There was no time for the Applicant to think and decide on the offer. The Applicant would have already reached an agreement with the Respondent before the proceeding if the offer ware made known to him earlier.

Findings

15 In Sotiropoulos the Appeal Panel, quoting from Wood & Anor v Bergman (No 2) [2003] NSWADT 175 at [13], held that ‘where an application to the Tribunal lacked any conceivable merit in fact or law, this could constitute “special circumstances” justifying a costs order under s 88 [of the ADT Act] in favour of the successful respondent’.

16 I do not consider that to be the case in this matter. Arguments by an unsuccessful party that are put forward in good faith and have a reasonable basis do not of themselves entitle a successful party to an order for costs. This is not a situation where the Applicant had an unarguable case. He raised an issue that had not previously been determined i.e. whether the type of business that the Applicant conducts on the Premises is a business described in Schedule 1 of the Act.

17 However, I am of the view that in the circumstances of this case the Applicant’s failure to accept the offer of compromise amounts to ‘special circumstances’ for the purposes of the ADT Act.

18 In Sotiropoulos the Appeal Panel stated at paragraph 9:

“9 In Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164, the Tribunal held that ‘special circumstances’ existed in that case where (a) the successful party in the proceedings had made an offer of compromise of the dispute before the conclusion of the proceedings; (b) the unsuccessful party had rejected the offer without good reason; and (c) the terms of the offer were more favourable to the unsuccessful party than the orders made by the Tribunal. It treated the situation as analogous with costs rules in the Supreme and District Courts and the principles laid down in Calderbank v Calderbank [1975] 3 All ER 333. This approach was approved by an Appeal Panel of the Tribunal in Randi Wiks Pty Ltd v Pokana Pty Ltd [2003] NSWADTAP 27 at [14 – 16, 28]. It has been applied in subsequent decisions: see eg Irresistible Frocks Salon Pty Ltd v Sparbac Pty Ltd and Roche Group Pty Ltd (No 2) [2004] NSWADT 72.”

19 In this case it is apparent that the Respondent had made an offer of compromise of the dispute that was more favourable to the Applicant than the orders made by the Tribunal and that the Applicant had rejected that offer. I accept the Applicant’s assertion that the offer was made at the last minute however I do not consider that the Applicant’s reason for rejecting the offer was reasonable in the circumstances.

20 In my view, the Applicant’s rejection of the Respondent’s offer amounted to “special circumstances” that “warrant an award of costs”. However, because of the lateness of the offer, the extent of the costs should be limited to the costs of conducting the hearing. In my view, the appropriate order is that the Applicant pay the Respondent’s costs of two hours of time spent at the Tribunal by the solicitor for the Respondent.

Order

The Applicant pay the Respondent’s costs of two hours of time spent at the Tribunal by the solicitor for the Respondent.