Randi Wixs Restaurant Pty Limited v Kennedy

[2006] NSWADT 177

CITATION:	Randi Wixs Restaurant Pty Limited v Kennedy [2006] NSWADT 177
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Randi Wixs Restaurant Pty Limited RESPONDENT Cain Kennedy
FILE NUMBER:	055028
HEARING DATES:	10/11/2006
SUBMISSIONS CLOSED:	02/07/2006
DATE OF DECISION:	06/14/2006
BEFORE:	Fox R - Judicial Member
CATCHWORDS:	Costs
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Randi Wixs Pty Limited v Pokana (No. 2) 2003 NSW ADT 4 Cripps v G. M. Dawson Pty Limited [2006] NSWCA 81
REPRESENTATION:	APPLICANT M Roper, solicitor RESPONDENT S Alexander, solicitor
ORDERS:	Applicant to pay Respondent’s costs on party/party basis for work done in preparation for and at directions hearing of 10 November 2005 – but not for the subsequent written submissions in support of costs order

1 The Applicant commenced these proceedings on 2nd March 2005. The matter in issue is a retail shop lease effected between the Applicant and a predecessor in title to the Respondent, pursuant to Orders made by Judicial Member Molloy in Randi Wixs Pty Limited v Pokana Pty limited (No 2) [2003} NSWADT 4 (“the previous matter”). The Applicant alleged that Judicial Member Molloy’s orders directed a rent in an amount which included GST, and that the lease as executed and registered on the title, pursuant to those Orders, stated that same GST inclusive amount as the rent, and then added the GST.

2 The orders actually sought included, as well as rectification of the lease, declaration as to liability for GST, refund of money paid, repairs to the premises, and damages for loss of revenue flowing from the failure to repair. All of these would appear to fall within Section 72 of the Retail Leases Act (as it then applied), with the exception of the rectification, which can only be by consent of the parties (S72 (1)(e)).

3 The first Directions hearing was on 31 March 2005, when the matter was adjourned by consent, and the same thing happened on 14 April and 26 May, when it was again adjourned, apparently without demur from the Respondent, to 23 June. By this time the mediation between the parties had failed, and some days before 23 June the Respondent had served a Notice to Quit for failure to pay rent, and the Applicant sought a Stay on that day. After oral submissions I granted the Stay, and took the opportunity to consider the Reasons for Decision in the previous matter, to try to understand the issue between the parties. Having done that I concluded that the evidence in the Affidavit of Charlotte Henry Jones, dated 17 June 2002 might well be the key to the resolution of the dispute, and I directed the parties to:-

“ file letter by their legal representatives either confirming that the rental information contained in the Affidavit of Charlotte Henry Jones was raised at mediation and was unable to be resolved, or else indicating that it was not raised. I make this direction in compliance with the spirit of Section 67 of the Act, and specifically pursuant to Section 74(1)”

4 It became clear that this aspect of the matter had not been raised in the mediation, and I made a further referral to mediation on 4 August, and listed it for further Directions on 1st September, continuing the previous Stay. At the request of the parties, because they were in discussions, there was a further adjournment to 29 September. On that day the parties pressed for a hearing date, and I raised the question of the limit effected by S72 (1)(e). In the interim, a further Notice to Quit had been served, and I adjourned the matter to 10 November, and ordered as follows:-

“Notice to Quit dated 20th August 2005’ the operation of which was extended to today, be stayed for 21 days – being specifically to allow the Applicant to commence proceedings in an appropriate Court to seek rectification of the Lease”

5 On 10 November 2005 the Respondent sought an order for costs. The Applicant was by that time poised to commence proceedings in the Supreme Court, seeking orders not dissimilar to those it sought in this Application. I directed written submissions, and these were to hand by 7 February 2006.

6 The issue, of course, is whether there was anything in the Applicant’s conduct of the matter which amounted to the special circumstances which must be found before the discretion to award costs arises. Tribunal Practice Note 12 gives an indication of conduct which can attract a costs order. Furthermore, there are now many decisions which explore this unique aspect of the Tribunal’s power, the latest of which appears to be that of the Court of Appeal in Cripps v G M Dawson Pty Ltd [2006] NSWCA 81 in which is given a very convenient starting point for consideration. In describing the conduct of the party in prospect for a costs order, it was said:- “While a finding of “serious unfairness” is not a prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.”

7 The Respondent’s submissions were disarmingly simple:- “The Applicant has brought this matter in the wrong jurisdiction because it did not properly consider the law”. This presumably refers specifically to S72 (1)(e).

8 Were it the case that the Applicant, for instance, had issued proceedings in the Tribunal for an Order for the payment of money, the amount of which, on any view of the matter, was always likely to be well in excess of the jurisdictional limit, and, after the first Directions hearing, and well before any mediation, it discontinued to start again in the District Court, the Respondent’s argument might well have found favour.

9 There would, in that example, be special circumstances: such an Applicant would have made “a claim that has no tenable basis ... in law” in this Tribunal.

10 It is simply not fair in a commercial context to put the Respondent to it’s costs of a matter when all of the work done is virtually duplicated when the same (or very similar) facts and issues are ventilated in another forum, when a thoughtful preliminary examination of the Applicant’s case would have made it obvious that the desired remedy was not available in the abandoned forum. I suppose it to be trite to say that there is a general rule that an applicant, who discontinues proceedings because they were commenced in the wrong jurisdiction, does so on pain of a costs order. I can see no reason why a similar result should not apply in the Tribunal, despite it’s very different costs regime. It would be seriously unfair to the respondent to hold otherwise.

11 The Applicant, however, does not concede that it commenced in the wrong jurisdiction. It does so on the ground that it sought much more than an order for rectification. The detail of that which was sought is outlined in the beginning of these reasons, and it seems to me that all of the other six or so orders sought could be granted pursuant to Section 72.

12 The Applicant goes on to place reliance on the fact that the Respondent twice during the preliminaries served a Notice to Quit (for failure to pay the full amount of the rent required by the disputed lease), and that the Tribunal twice made interlocutory orders to prevent those Notices having effect, and allowed the Applicant to remain in possession. It goes on to say:- “The conduct of the proceedings by the Applicant has not caused any disadvantage to the Respondent…”[save for] “…the adjournment request made on 29th September 2005, to enable the Applicant to consider its position.” I am satisfied that this latter proposition by the Applicant is entirely correct.

13 The fact that the Defendant also did not raise the S72(1)(e) point must also have some bearing on the matter.

14 A further aspect which has troubled me, which was not really raised by either party, is the fact that the Tribunal has wide and comprehensive powers which might well have addressed all of the needs of the Applicant in relation to the Lease, had it, after further evidence, found in it’s favour. It clearly has the power to direct the repayment of monies overpaid, and just as clearly has the power to declare: -“the rights and liabilities of the parties under law, whether any consequential relief is or could be claimed or not” (Section 72(f)(iii)).

15 The result appears to be that the Tribunal could make orders “setting” the rent and the GST liability as between the parties, a result which might not fall short of formal rectification of the lease. From this viewpoint, in the Respondent’s favour, there may well have been no proper reason for the Applicant to abandon its action in this forum.

16 Yet another consideration which is relevant, and favours the Applicant, is the fact that the parties have acquitted themselves of their obligation under Section 67 to have a mediation, so clearing the way for the Supreme Court proceedings to proceed without that interlocutory step having to be taken again.

17 The Applicant argued that it was justified in coming to the Tribunal because the dispute arose out of a previous ruling of the Tribunal. That argument fails, because of the obvious point that the Lease now in issue was executed other than pursuant to the specific orders and leave granted by Judicial Member Molloy. Had the Applicant at the end of the previous matter returned to the Tribunal to have the Lease “endorsed”, the point might well have been raised and resolved then, or there might have been jurisdiction under the “slip” rule

18 On balance, mainly because of the Respondent’s attempts at ending the lease during the proceedings, I am not satisfied that a costs order should be made for the action which the Applicant took up to and including 29 September 2005, when I raised the aspect of jurisdiction now in issue. However, beyond that point it seems to me that the Applicant’s conduct fell directly within the parameter approved by Santow JA in Cripps cited earlier in these reasons, in that the continuation of the matter beyond that day was seriously unfair to the Respondent. The Applicant should pay the costs of the Respondent on a party party basis for the work done in preparation for and appearance at the Directions hearing of 10 November 2005.

19 I make no order for costs in relation to the submissions for these orders. The point in issue is not without its difficulties, and seems to me to have been quite open to persuasive argument for and against, so the general “no costs” rule should apply to that aspect.