| JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL STREAM : COMMERCIAL & CIVIL ACT : COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA) CITATION : SAHANA INVESTMENTS PTY LTD and 59 ALBANY HIGHWAY JOINT VENTURE PTY LTD [2013] WASAT 30 MEMBER : DR B DE VILLIERS (MEMBER) HEARD : 7 FEBRUARY 2013 DELIVERED : 28 FEBRUARY 2013 FILE NO/S : CC 71 of 2012 BETWEEN : SAHANA INVESTMENTS PTY LTD Applicant
AND
59 ALBANY HIGHWAY JOINT VENTURE PTY LTD
Respondent
Catchwords: Application for costs State Administrative Tribunal in essence an own cost jurisdiction Factors to consider before costs are awarded Legislation: Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA)
Planning and Development Act 2005 (WA), s 211(a)
State Administrative Tribunal Act 2004 (WA), s 87
(Page 2)
Result: The application for costs was dismissed
Summary of Tribunal's decision: The respondent, which was successful in defending claims against it under the Commercial Tenancy (Retails Shops Agreement) Act 1985 (WA), sought an order for costs. The respondent said that the case of the applicant was so hopeless and without merit that the normal costs regime of the State Administrative Tribunal, whereby parties are responsible for their own costs, should be waived. The respondent sought an order for indemnity costs amounting to $65,000.
The applicant argued that no cost order should be made since there was a fair contest of issues; the applicant's case was not hopeless or without merit; and that it was only by way of a decision of the Tribunal that certain aspects of the commercial relationship between the parties could be clarified.
The Tribunal agreed with the applicant and found that no costs order should be made. The issues before the Tribunal could not be regarded as trivial or without merit; the issue about unconscionable conduct raised elements that have not been the subject of previous decisions in the Tribunal; and the litigation assisted to clarify the status of the coffee service in a manner that was not clear prior to the hearing.
The application for costs was therefore dismissed.
Category: B
Representation: Counsel:
Applicant : Mr C Wallace
Respondent : Mr M Hotchkin
Solicitors:
Applicant : Lavan Legal
Respondent : Hotchkin Hanly
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Case(s) referred to in decision(s):
Bilek and Vata Investments Pty Ltd [2005] WASAT 153
Chew and Director General of the Department of Education and Training [2006] WASAT 248
Clifford and Shire of Busselton [2007] WASAT 89 (S)
Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135
Pearce & Anor and Germain [2007] WASAT 291 (S)
Quah & Anor AMP Life Limited [2005] WASAT 169
Sahana Investments Pty Ltd and 59 Albany Highway Joint Venture Pty Ltd [2013] WASAT 6
Summerville and Department of Education and Training & Ors [2006] WASAT 368 (S)
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REASONS FOR DECISION OF THE TRIBUNAL:
Issue 1 Whether costs should be awarded against the applicant pursuant to s 87 of the State Administrative Tribunal Act 2004 (WA) (SAT Act) and, if so, what quantum should be awarded.
Background 2 On 15 January 2013, the Tribunal dismissed an application brought by the applicant in the matter Sahana Investments Pty Ltd and 59 Albany Highway Joint Venture Pty Ltd[2013] WASAT 6. The dispute concerned several questions about the operation of a coffee service from within the office area of a building owned by the respondent. Five issues were raised by the applicant and the Tribunal dismissed each of the issues. In summary, the Tribunal found as follows: a) the tenancy of the applicant formed part of a retail shopping centre; b) the respondent had not been aware of the existence of the coffee service at the time the Caffissimo Café lease between the applicant and the respondent was entered into; c) the disclosure statement that formed part of the Caffissimo Café lease did not contain false or misleading information; d) as a result of the findings in b) and c) above, there was no need for the Tribunal to consider the question of whether the respondent had a duty, if it had known about the coffee service at the time the Caffissimo Café lease had been entered into, to include reference to the coffee service in the disclosure statement; e) the contention of the applicant that the respondent should be held liable for failing to disclose the existence of the coffee service to the applicant, even though the respondent only became aware of the operation of the coffee service after the Caffissimo Café lease had been entered into, was rejected; (Page 5)
3 The parties were given an opportunity to make submissions in regard to the application for costs. The respondent made a written submission dated 4 February 2013. A hearing on the costs application took place on 7 February 2013. At the hearing, both the respondent and the applicant made oral submissions. The Tribunal reserved its decision on 7 February 2013. 4 The Tribunal has taken all the submissions into account in making its decision.
Orders sought by the respondent 5 The respondent seeks an order for the respondent to pay the costs it had incurred in defending the application. The respondent says that it is of the view that an indemnity order may be justified in light of the case being so 'unreasonable and capricious'. The amount claimed is $65,000.
Statutory framework 6 Section 87(1) and s 87(3) of the SAT Act states as follows: Costs of parties and others (1) Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal. (2) … (3) The power of the Tribunal to make an order for the payment by a party of the costs of another party includes the power to make an order for the payment of an amount to compensate the other party for any expenses, loss, inconvenience, or embarrassment resulting from the proceeding or the matter because of which the proceeding was brought. 7 There is no provision in the Commercial Tenancy (Retail Shops Agreement) Act 1985 (WA) (CT(RS)A Act) that deals with costs, which means the SAT Act should guide the Tribunal in determining the application. (Page 6)
Submissions 8 The contentions on behalf of the respondent are, in essence, that although the Tribunal is, as a point of departure, an own costs jurisdiction, costs can and should be awarded where a matter is as unmeritorious as in this proceeding. The respondent says that: • there were attempts to settle the proceeding by consent; • settlement offers made by it were rejected by the applicant; • a partner in the firm of the legal representative of the applicant acknowledged in public that the applicant's case was 'weak'; • unnecessary adjournments to the proceeding were caused by the applicant; and • the case put forward by the applicant was 'hopeless' and unsupported by the facts before the Tribunal. 9 The contentions on behalf of the respondent are, in essence, that although the Tribunal does have the discretion to award costs, there are insufficient reasons in this proceeding for costs to be awarded. The applicant says that the principles on which the Tribunal are founded must be borne in mind, namely, to be accessible to justice without the risk of a costs order unless a case is clearly without merit. In this proceeding, the applicant says that: Mr Wallace also explained that the conduct of the firm's partner must be seen in light of the fact that the person did not have the carriage of the matter and therefore could not understand all the nuances that were under consideration. (Page 7)
Consideration 10 The Tribunal is, in essence, a jurisdiction where parties must expect to pay their own costs of proceedings. This principle is encapsulated in s 87(1) of the SAT Act and has been highlighted in many decisions of the Tribunal. Parties in proceedings before the Tribunal should, therefore, as a general rule, not expect a costs order to flow from a determination. 11 This principle, however, cannot be construed to mean that under no circumstances would costs be awarded, or that the Tribunal is statutory barred from making a costs order. Section 87(2) and s 87(3) of the SAT Act explicitly allow, and foreshadow, that the Tribunal may, in appropriate circumstances, award costs. 12 It is therefore well established that although the Tribunal does not, as a point of departure, award costs, it is within its discretion to award costs if the circumstances justify the making of such an order. 13 Both parties are therefore highlighting an element of truth in their respective submissions about the approach of the Tribunal in regard to costs. 14 The question is, when does the Tribunal award costs and when does it decline to do so? 15 Since its inception, several decisions have been handed down by the Tribunal in regard to costs: see, for example, Bilek and Vata Investments Pty Ltd [2005] WASAT 153; Quah & Anor and AMP Life Limited [2005] WASAT 169; Chew and Director General of the Department of Education and Training [2006] WASAT 248; Summerville and Department of Education and Training & Ors [2006] WASAT 368 (S); Clifford and Shire of Busselton [2007] WASAT 89 (S) and Gill & Ors and Wildnight Pty Ltd [2008] WASAT 135. 16 These and other decisions were analysed and discussed by the then Deputy President, Judge Chaney, in the matter of Pearce & Anor and Germain[2007] WASAT 291 (S) (Pearce). 17 In Pearce, his Honour set out the following principles for the consideration of costs applications by the Tribunal: 1) The starting point of the Tribunal is that it is a 'no cost' jurisdiction (at [8]). (Page 8)
2) The costs regime that was applicable to the previous Commercial Tribunal does not apply to the State Administrative Tribunal (at [11]). 3) The objectives of the State Administrative Tribunal are furthered by the Tribunal being essentially a 'no cost' jurisdiction (at [17]). 4) Where there is a genuine dispute and the respective rights are unclear and parties seek a determination, the 'starting point remains that each party should expect to pay their own costs' (at [24]). 5) The Tribunal does have the power to award costs, and it is not appropriate to 'delineate the particular circumstances' in which the discretion to award costs would be exercised favourably (at [22]). 6) Some of the factors (not an exhaustive list) that may contribute to the Tribunal making a costs order are, for example: i) a party has conducted itself unreasonably, particularly where the conduct leads to unnecessary costs to the other party; ii) a party has conducted itself inappropriately, particularly where the conduct leads to unnecessary costs to the other party; iii) where credibility of evidence is at the heart of a matter; iv) where the application undermines the integrity of proceedings under the relevant Act; v) the relative weakness of a case, it being incredible or implausible or 'obviously unmeritorious'; or vi) if a party has to embark in proceedings to 'vindicate its clear contractual entitlements' (at [22] [24]). 18 The Tribunal accepts these principles as a sound basis for determining the costs application by the respondent in this proceeding. It (Page 9)
is noted that these principles do not constitute a closed list as to when costs may be awarded, but they provide a useful basis whereupon costs applications could be considered, albeit in an unrestricted way. 19 When these principles are applied to the facts under consideration by the Tribunal and when the submissions put forward by the parties are properly considered, the Tribunal finds that there is insufficient justification to award costs in these proceedings. 20 The reasons that costs should not be awarded in these proceedings are briefly as follows: 21 Firstly, the own costs nature of the Tribunal as set out in s 87(1) of the SAT Act should be respected. There is insufficient justification to depart from that principle in light of the facts and the findings in this proceeding. 22 Secondly, the nature of the case put forward by the applicant may have had weaknesses but it was not in a category of lacking merit or being unreasonable or capricious. The adjournments granted do not justify cost orders since they contributed to more and better information being provided about the true nature of the dispute. The only aspect of the applicant's case that lacked substance was the contention that information that was not available at the time of the entering into the lease could be construed as falling within the requirements of false or misleading information. This contention, unmeritorious as it may have been, occupied minimal time and, as a consequence, does not justify a costs order. 23 Thirdly, some of the information on which the Tribunal made its findings of fact only became available as a result of, and during, the hearing. Without the benefit of the proceeding, the situation of the coffee service would continue to be clouded in uncertainty. 24 Fourthly, the agent of the respondent (Knight Frank Australia Pty Ltd), agreed, for a substantial time, that the coffee service was operating without proper approval hence the letters that were sent to the tenant, Monadelphous Engineering Associated Pty Ltd, about the closing down of the coffee service. Although the respondent adjusted its assessment of the legality of the coffee service in the course of the proceeding to clarify that it was of the view that the coffee service was an 'ancillary use' of the office area, the applicant was entirely justified to seek clarity as to the matters that were dealt with in the hearing. (Page 10)
25 Fifthly, the issues raised before the Tribunal, particularly those related to unconscionable conduct, were meritorious and had not been the subject of litigation before in the Tribunal. In fact, the various judgments to which the Tribunal was referred by the parties bore little relevance to the issues which, again, highlights the merit of having this matter determined. 26 Sixthly, the alleged failure by the applicant to pursue other avenues, such as lodging a complaint with the Town of Victoria Park or lodging a complaint pursuant to s 211(a) of the Planning and Development Act 2005 (WA) does not constitute a sufficient basis for the Tribunal to award costs. The nonacceptance of an offer to settle also does not, in light of the circumstances of this proceeding, justify a costs order. 27 Seventhly, the public comments allegedly made by a partner of the firm of the legal representative of the applicant at a Real Estate Institute of Western Australia training meeting may have been most surprising (if, indeed, the comments were made), but do not warrant the making of a costs order. The exact nature of the comments made, who made them, the forum where the comments were made, the circumstances and the reason for the making of the comments, and any related matter, may be the subject of further consideration by the applicant.
Conclusion 28 In conclusion, the Tribunal finds that the application for an order to costs should be dismissed.
Order 1. The application for costs is dismissed. |