Randi Wiks Pty Ltd v Pokana Pty Ltd

[2003] NSWADTAP 27

Appeal Panel - Internal

CITATION:	Randi Wiks Pty Limited v Pokana Pty Limited (RLD) [2003] NSWADTAP 27
PARTIES:	APPELLANT Randi Wiks Pty Limited RESPONDENT Pokana Pty Limited
FILE NUMBER:	039017
HEARING DATES:	27/05/2003
SUBMISSIONS CLOSED:	05/27/2003
DATE OF DECISION:	07/18/2003
DECISION UNDER APPEAL:	Randi Wiks Pty Limited v Pokana Pty Limited
BEFORE:	Chesterman M - ADCJ (Deputy President); Fox R - Judicial Member; Weule B - Member
CATCHWORDS:	costs
MATTER FOR DECISION:	costs
FILE NUMBER UNDER APPEAL:	025062
DATE OF DECISION UNDER APPEAL:	03/11/2003
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Civil and Administrative Tribunal Act 1998 (Vic)
CASES CITED:	Randi Wiks Pty Ltd v Pokana Pty Ltd [2002] NSWADT205 Randi Wiks Pty Ltd v Pokana Pty Ltd (No. 2) [2003] NSWADT 4 Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT164 Calderbank v Calderbank [1975] 3 All ER 333 Barsoum v Glebe Administration Board (No. 2) [2002] NSWADT 174 Bar Ristretto Pty Ltd v Ansett Australia Ltd [2002] NSWADT 124 Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 Cozens v Brutus [1973] AC 854
REPRESENTATION:	APPELLANT E Cohen, barrister RESPONDENT S Jacobs, barrister
ORDERS:	Appeal dismissed

Introduction

1 This is an appeal against a decision by the Tribunal denying the Appellant an order for costs against the Respondent. This decision was given orally by Mr GB Molloy, Judicial Member, on 11 March 2003.

2 The principal relief initially sought by the Appellant company, in its role as Applicant in the proceedings, was a declaration that it was the occupier of premises at 123-125 Avoca Street, Randwick (‘the premises’) pursuant to a retail shop lease from the Respondent within the meaning of the Retail Leases Act 1994. The application was lodged on 22 May 2002. This, according to the Appellant’s submission in this appeal, was just after the Respondent, who was the owner of the premises, had allegedly forced entry into the premises and attempted to evict Mr Ostrovsky, the owner of the Appellant.

3 The Respondent opposed the application on a number of grounds. The principal ground of opposition was that, because the premises were not a retail shop as defined within this Act, the Tribunal did not have jurisdiction to hear the application.

4 On 18 October 2002, the Tribunal held in the Appellant’s favour on this issue of jurisdiction (Randi Wiks Pty Ltd v Pokana Pty Ltd [2002] NSWADT 205).

5 On 10 January 2003, the Tribunal held further that the Appellant was entitled to a declaration to the effect that it occupied the premises pursuant to a retail shop lease from the Respondent (Randi Wiks Pty Ltd v Pokana Pty Ltd (No. 2) [2003] NSWADT 4). Subject to some alterations, the terms of this lease were those of an agreement for lease which was exhibit IG2 in the proceedings.

6 The Tribunal also held on 10 January 2003 that the Appellant should provide the Respondent with an irrevocable bank guarantee in the sum of $16,185.84, should pay stamp duty on the lease to the Office of State Revenue and should pay two sums of money to the Respondent. These were (a) $1,259, being the Respondent’s costs of preparation of the lease, and (b) $9,892.61, being the cost to the Respondent of default on a prior lease by the Appellant.

7 Having invited the parties to prepare short minutes of orders consistent with these rulings, the Tribunal made final orders on 11 March 2003. It also heard and rejected, giving oral reasons ex tempore, the Appellant’s application for an order that its costs should be paid by the Respondent.

8 The present appeal is against the rejection of this application for an order for costs. For the sake of completeness, it should be added that the Respondent lodged an appeal against the Tribunal’s decisions of 18 October 2002 and 10 January 2003 relating to the lease and its terms. But it did not pursue this appeal.

The grounds of the Tribunal’s decision regarding costs

9 In his decision of 11 March 2003 regarding costs, Mr Molloy referred to s 88 of the Administrative Decisions Tribunal Act 1997 (hereafter ‘s 88’). Subsection (1), which is the important provision for present purposes, is as follows:-

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.

10 Under s 88(3), this power to award costs does not apply in proceedings for an original decision, such as the present proceedings, unless the enactment conferring jurisdiction provides for the awarding of costs. The relevant enactment here is the Retail Leases Act 1994. As Mr Molloy noted in his decision of 11 March 2003, s 77A of this Act does so provide.

11 Mr Molloy pointed out that, while the normal common law principle governing costs in civil cases is that they ‘follow the event’, s 88 lays down a different principle, namely, that the Tribunal must be ‘satisfied’ that there are ‘special circumstances warranting an award of costs’.

12 In considering the meaning of ‘special circumstances’, Mr Molloy referred to Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164, a decision of his own as a Tribunal Member. He made specific mention of a passage in that judgment (at [29]) indicating that ‘special circumstances’ means ‘circumstances that are out of the ordinary, but without having to be extraordinary or exceptional’.

13 Mr Molloy also agreed with a submission by Ms Cohen, counsel for the Appellant, that the Retail Leases Division was a ‘unique division’ within the Tribunal. As he indicated, the significance of this observation is explained in his judgment in Gizah, at [22] and [33 – 34]. It is that this Division deals with commercial disputes between parties who are engaged in trade and commerce for reward. Whereas in the context of appeals from administrative decisions the requirement of ‘special circumstances’ might be interpreted so as not to discourage proceedings by a private individual on account of the risk of an adverse costs order, no such consideration should apply in the context of retail lease disputes. The ‘commerciality’ of the Retail Leases Division calls for an interpretation quite different from that which might be adopted in any other Division of the Tribunal.

14 The principal ground for awarding costs considered by Mr Molloy in his decision of 11 March 2003 was as follows. The Appellant, in its application commencing these proceedings, had, in effect, offered to resolve its dispute with the Respondent on the basis that it was granted a lease of the premises on terms set out in a document accompanying the application. This document ultimately became exhibit IG11 in the proceedings. But the terms of the lease agreement which the Tribunal held to have arisen between the parties, as set out in exhibit IG2, were, in the Appellant’s submission, less favourable to it than those of exhibit IG11. It followed that the Respondent had, in effect, rejected an offer to settle the dispute which was more favourable to it (the Respondent) than the orders actually made by the Tribunal. By analogy with the rules of various courts and the well-known principles laid down in Calderbank v Calderbank [1975] 3 All ER 333, there were accordingly special circumstances justifying an award of costs – indeed of indemnity costs – against the Respondent.

15 Mr Molloy indicated that in the Gizah case, and also in another decision handed down by him under s 88, Barsoum v Glebe Administration Board (No. 2) [2002] NSWADT 174, he had accepted this line of argument. He had awarded indemnity costs against a party who had rejected an offer of compromise, on the ground that, since the orders made by him in the proceedings were less favourable to this party, there were ‘special circumstances’ within s 88.

16 Mr Molloy held in the present case, however, that the ‘analysis’ needed to determine whether the terms of IG2 (the lease held to have arisen) were less favourable to the Respondent than those of IG11 (the lease sought in the application) would require ‘an extraordinary expenditure of time and effort’. It could well involve ‘expressions of opinion’. In the circumstances, he said, it was not warranted and should not be embarked upon.

17 Mr Molloy referred also to a submission by Ms Cohen that a number of factors listed in s 109 of the Victorian Civil and Administrative Tribunal Act 1998 provided guidance in the interpretation of s 88. In this connection, she relied on dicta of this Tribunal, referring to the Victorian provision, in Bar Ristretto Pty Ltd v Ansett Australia Ltd [2002] NSWADT 124 at [23]. Mr Molloy observed, however, that the criterion in this provision is one of ‘fairness’, which is quite distinct from the requirement of ‘special circumstances’ laid down in s 88.

18 He held in addition that while there may have been breaches by the Respondent of Tribunal orders or directions for the filing of evidence, that was ‘not an uncommon event in litigation’ and that there had not been ‘a prejudice of the sort that would amount to “special”’.

19 Mr Molloy held next that costs could not be awarded to the Appellant under s 88 simply because the Appellant had been successful, both on the issue of jurisdiction and on the merits of the application.

20 Finally, Mr Molloy held that costs should not be awarded simply because, if the Appellant had taken its case to the Supreme Court and been had successful, it would most probably have obtained an order for costs.

21 Mr Molloy acknowledged that if no costs order were made the Appellant’s victory in the case would be ‘pyrrhic’. He also expressed some sympathy for it, indicating that he understood the financial difficulties confronting it. But for the reasons just outlined, he held that the Appellant had failed to establish that there were special circumstances warranting an order for costs in its favour, as required by s 88.

The Appellant’s arguments on appeal

22 At the appeal hearing, Ms Cohen elaborated on the arguments set out above. In particular, she identified a number of ways in which, in her submission, the terms of IG2 were more favourable to the Appellant than those of IG11. These related to provisions governing, amongst other things, the payment of outgoings, variation of rental due to alterations and compliance with regulations and by-laws. She also pointed out that, as a result of the Tribunal’s orders, the Appellant had the benefit of a ruling that the lease was subject to the Retail Leases Act 1994 and had the protection of a disclosure statement.

23 In this connection, Ms Cohen drew to the Panel’s attention a passage in the judgment of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation (1996) 138 ALR 425 at 451. It was cited with approval by Mr Molloy in his judgment in Barsoum v Glebe Administration Board (No. 2) [2002] NSWADT 174 at [33]. It is as follows:-

There should be a prima facie presumption in the event of the offer [ie, an offer of compromise] not being accepted and in the event of the recipient of the offer not receiving a result more favourable than the offer, then the party receiving the offer should pay the costs of the other party on an indemnity basis from the date of the making of the offer.
24 Ms Cohen also raised a new argument, deriving from the statement in s 3(b) of the Administrative Decisions Tribunal Act 1997 that one of the objects of this Act is to ensure that the Tribunal is ‘accessible’. She contended that it would not be ‘accessible’ to tenants if, after a landlord had engaged in oppressive and illegal conduct, the tenant could not obtain an order for costs. The alleged conduct of the Respondent to which she referred was, as mentioned above at [2], that of forcing entry to the leased premises and attempting to remove Mr Ostrovsky from them.

The Appeal Panel’s conclusions

25 Mr Jacobs, counsel for the Respondent, made lengthy written and oral submissions, from which a number of contentions may be distilled. The Appeal Panel has concluded that, broadly speaking, these contentions are correct and should be accepted in preference to those of the Appellant. In the remainder of this judgment, therefore, it is convenient simply to set them out in turn, adding the Panel’s own observations on the various issues raised.

26 Mr Jacobs’ opening contention was that the Appellant had not identified any error of law, or indeed any error at all, within Mr Molloy’s judgment of 11 March 2003 regarding costs. The significance of identifying a question of law is that, under s 113(2) of the Administrative Decisions Tribunal Act 1997, appeals as of right may only be made on questions of law. The leave of the Appeal Panel is required if the appeal is to ‘extend to’ a review of the merits of the decision under appeal.

27 Mr Jacobs argued that in his judgment Mr Molloy had applied the correct legal principles in deciding that there were no ‘special circumstances’, within the meaning of s 88, that would warrant an award of costs. The evidence which he considered, and with which he was well familiar, was such that his decision could not be said to be unreasonable, in the sense that no tribunal could reasonably reach it. He had carefully applied his mind to all the relevant criteria. Furthermore, since the meaning of ‘special circumstances’ was to be given its normal meaning, the question whether the facts that had been proved before him constituted ‘special circumstances’ was not a question of law, but one of fact. In this connection, Mr Jacobs cited the judgments of Lord Reid, Lord Morris and Lord Kilbrandon in Cozens v Brutus [1973] AC 854, at 861, 863 and 866 respectively.

28 The Appeal Panel agrees with these arguments. On carefully reviewing Mr Molloy’s judgment, it sees no error in his outline of the legal considerations that must apply in determining whether ‘special circumstances’ exist within the meaning of s 88. It agrees also that, unless an error of this nature was present or his decision on the facts was shown to be wholly unreasonable, an appeal against his finding that no ‘special circumstances’ existed would not be an appeal on a question of law within the meaning of s 113(2).

29 In response to Ms Cohen’s argument based on the Respondent having fared less well under the Tribunal’s judgment than if it had granted the lease initially claimed by the Appellant, Mr Jacobs raised four contentions.

30 The first of these was that the legal principles on which Ms Cohen’s argument was based, stemming from the rules of various courts and from the case of Calderbank v Calderbank [1975] 3 All ER 333, all presuppose that a formal offer of compromise, clearly identified as such, has been made. This is an offer by a party, as distinct from some part of a statement of claim or other initiating process, to settle for something less than the party has initially asserted to be its lawful entitlement. In the present case, the Appellant made no such formal offer. It merely filed its application in the Tribunal.

31 The Panel agrees with this argument. It would add that, if Ms Cohen’s argument were correct in relation to civil proceedings in a court (where costs normally follow the event), it would open the way for successful plaintiffs to obtain indemnity costs in any case where they obtained a more favourable outcome than they claimed at the outset. Such a situation may arise for no other reason than that a plaintiff has amended its initial statement of claim so as to include (for example) an additional liquidated debt, and has obtained judgment for the full amount claimed in the amended statement.

32 Secondly, Mr Jacobs argued that there was no credible expert evidence to support the Appellant’s claim that the ‘dollar value’, for the lessee, of the terms of IG2 (the lease ultimately found to have arisen) was greater than the ‘dollar value’ of IG11 (the lease which it initially sought from the Tribunal).

33 In agreeing with this argument of Mr Jacobs, the Panel would make four observations. The first is that this is, in its opinion, a matter on which the Appellant should bear the onus of proof, both at first instance and on appeal. Secondly, although the Panel asked Ms Cohen at the appeal hearing to specify more precisely than in her written submission the ways in which IG2 was more beneficial to the Appellant than IG11, she did not do so. The claim that IG2 was more beneficial was simply asserted, without any support from expert or lay evidence or detailed argument. Thirdly, the Panel has made its own examination of the terms of the two documents. While it cannot claim to have carried out the detailed analysis, involving the ‘extraordinary expenditure of time and effort’ to which Mr Molloy referred in his judgment, it is satisfied that there are no immediately evident reasons for saying that IG2 was more favourable to the Appellant than IG11. Specifically, it rejects the Appellant’s argument that the Appellant was more favourably treated with respect to the payment of outgoings. Fourthly, the Panel does not accept Ms Cohen’s argument that the Appellant received an additional benefit under the Tribunal’s declaration that a lease existed in so far as this declaration also confirmed that the lease (IG2) was subject to the Retail Leases Act 1994. The Panel’s view is that this feature of the lease arose as a matter of law from the terms of the Act. It was equally a feature of the lease initially sought (IG11).

34 Mr Jacobs’ third contention on this issue was that Mr Molloy had adopted a sound approach in dealing with it. As indicated above at [28], the Panel agrees.

35 Fourthly, Mr Jacobs contended in his written submission that the four ancillary orders made on 11 March 2003, requiring the Appellant to provide a bank guarantee and to make certain payments, constituted a benefit to the Respondent which it would not have obtained if it had simply accepted the ‘offer’ contained in the Appellant’s application to the Tribunal. The terms of these four orders are set out in para [6] above.

36 At the appeal hearing, it was however put to Mr Jacobs by the Panel that three of these four orders did in effect form part of the Appellant’s ‘offer’ to take a lease contained in its application to the Tribunal. These were the orders requiring the provision of a bank guarantee, payment of the stamp duty on the lease and payment of the Respondent’s costs of preparation of the lease, Mr Jacobs appeared to concede this.

37 The remaining order made by Mr Molloy was that the Appellant should pay the sum of $9,892.61 to the Respondent. This represented the cost to the Respondent of default on a prior lease by the Appellant. In the relevant judgment at first instance (Randi Wiks Pty Ltd v Pokana Pty Ltd (No. 2) [2003] NSWADT 4), Mr Molloy stated, at [41], that Mr Ostrovsky had said during evidence that ‘he did not wish to pay those costs because he had no break up of [them]’. Mr Molloy went on to hold that the Appellant had however agreed to pay them, and accordingly ordered that they be paid.

38 On account of this finding of an element of resistance by the Appellant, the Panel accepts Mr Jacobs’ argument that Mr Molloy’s order for the payment of $9,892.61 by it would have to be brought into account in any detailed assessment of whether or not it obtained a more favourable outcome from the Tribunal than it initially claimed. This provides a further reason for rejecting Ms Cohen’s argument that the outcome should be found to have been more favourable.

39 In response to the submission by Ms Cohen based on the alleged analogy between the terms of s 88 and the those of s 109 of the Victorian Civil and Administrative Tribunal Act 1998, Mr Jacobs simply submitted, in line with Mr Molloy’s ruling on the matter, that the tests differed as between the two provisions. While s 88 required a finding of ‘special circumstances’, s 109 laid down a criterion of ‘fairness’.

40 The Panel agrees that this distinction is crucial. It notes that in the judgment relied on by Ms Cohen, Bar Ristretto Pty Ltd v Ansett Australia Ltd [2002] NSWADT 124 at [23], the Tribunal stated only that in a number of its decisions on costs under s 88, it had ‘drawn attention to’ the Victorian provision. It did not say that this provision gave direct guidance as to the interpretation of s 88. Nor, in the ensuing paragraphs of its judgment, did it in any sense ‘apply’ the Victorian provision in ruling that, on the facts before it, an order for costs should be made under s 88.

41 In response to the contention by Ms Cohen that the Respondent had unnecessarily prolonged the proceedings through not complying fully with the Tribunal’s directions, Mr Jacobs argued that Mr Molloy had not discerned any resulting prejudice. He claimed also that various acts and omissions of the Appellant had had a similar effect. The Panel’s conclusion is that there are no grounds for overruling Mr Molloy’s decision on this matter, as he was well placed to assess the competing arguments.

42 In response to the argument that costs should be awarded to the Appellant under s 88 because it had been successful, both on the issue of jurisdiction and on the merits of the application, Mr Jacobs argued that this of itself did not constitute ‘special circumstances’. The arguments of the Respondent had been put forward in good faith and had a reasonable basis. It was not as if they had persisted with an unarguable case. The Panel endorses this view.

43 Mr Jacobs replied to Ms Cohen’s argument that, if the Appellant had taken its case to the Supreme Court and been successful, it would most probably have obtained an order for costs. He contended that, even if this assumption that costs would be awarded were correct, the Appellant had to accept that by choosing to sue in the Tribunal it had potentially obtained a number of advantages. These included the greater informality of proceedings in the Tribunal and, most significantly, the fact that if it were unsuccessful it would most likely not have been ordered to pay the Respondent’s costs.

44 The Panel agrees with this argument. If s 88 were to be consistently interpreted so as to produce costs outcomes comparable to those in the Supreme Court, the phrase ‘special circumstances’ would be deprived of all meaning.

45 In this context, the Panel also draws attention to s 75 of the Administrative Decisions Tribunal Act 1998. In effect, this provision gives to a respondent the absolute right to transfer a matter commenced in a court, where costs normally follow the event, to this Tribunal, where orders for costs are only made in ‘special circumstances’.

46 Finally, Mr Jacobs contended that the fact that one of the objects of this Act, as set out in s 3(b), was that the Tribunal should be ‘accessible’ did not imply that costs should regularly follow the event in disputes between landlords and tenants. If this were the case, the Tribunal, he said, would be less, not more, accessible to tenants, because if they were unsuccessful they would have to pay the costs of opposing landlords. The Panel agrees.

47 In so far as this argument of Ms Cohen referring to ‘accessibility’ was based on an assertion that the Respondent had acted oppressively and illegally in its dealings with the Appellant, Mr Jacobs’ response was that no finding to this effect had been made by Mr Molloy. The Panel agrees, adding that it could not of its own accord make any such finding.

48 For the foregoing reasons, the decision of the Tribunal at first instance rejecting the Appellant’s application for costs should be upheld. The appeal must be dismissed.