Salon Today Pty Ltd v M M I R Pty Ltd

[2009] NSWADT 71

CITATION:	Salon Today Pty Limited v. M.M.I.R. Pty Limited [2009] NSWADT 71
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Salon Today Pty Limited RESPONDENT M.M.I.R Pty Limited
FILE NUMBER:	085041
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	10 March 2009
DATE OF DECISION:	2 April 2009
BEFORE:	Molloy G - Judicial Member
CATCHWORDS:	Costs
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Evidence Act 1995 Retail Leases Act 1994
CASES CITED:	Armstrong Jones Management Pty Limited Pty Ltd v. Saies-Bond & Associates Pty Limited (No. 2) [2007] NSWADT 58 Barsoum v. Glebe Administration Board (No. 2) [2002] NSWADT 174 Calderbank v. Calderbank [1975] 3 All ER 333 Chauran v. Demertjis [2008] NSWADT 304 Cripps v. G & M Dawson Pty Limited [2006] NSW CA81 Gizah Pty Limited v. AXA Trustees Limited (No2) [2001] NSWADT 164 Harbourside Catering Pty Limited v. TMG Developments Pty Limited [2005] NSWADT 238 Law Society v. Martin [2008] NSWADT 305 Law Society v. Jayawardena [2008] NSWADT 187 Marinas v. Jeweller [2000] NSWCA282 Petria Pty Limited v. Makhoul [2005] NSWADT AP12 Restuccia v. Entasil Pty Limited (No. 2) [2008] NSWADT 313 Randi Wicks Pty Limited v. Pokana Pty Limited (RLD) [2003] NSWADRTAP 27 Salon Today Pty Limited v. M M I R Pty Limited [2008] NSWADT 260 Solomon v. Singh (No. 3) [2006] NSWADT 120 Sotiropoulos v. Mattana Coiffure Pty Limited (No 2) (RLD) [2004] NSWADT AP43 Trust Company of Australia Limited v. Craig [2005] NSWADT 65
REPRESENTATION:	APPLICANT Craig Bolger, instructed by Gwynne Thompson RESPONDENT Peter Holmes, instructed by Heard & McEwan
ORDERS:	The Respondent pay the Applicant’s costs incurred from and after 27 June 2008, and including the costs of this costs application, on an indemnity basis as agreed or assessed.

Background

1 By Contract made 15 May 2007 and completed on or about 26 June 2007 the Respondent purchased a property situate at 241-243 Princes Highway Corrimal (“the property”).

2 The property consisted of four separately let shops, one of which (Shop 1 (“the premises”)) was let to and occupied by the Applicant pursuant to a registered lease.

3 The property is situate on the corner of Princes Highway and Railway Street Corrimal. Constructed around and outside the actual land was a verandah, supported by a series of poles erected upon the footpath in Princes Highway and Railway Street. The verandah is constructed above the footpath, which is owned by the Wollongong City Council. Above the verandah is a bullnose corrugated iron roof over and protecting the verandah and affixed to the facia of the verandah (below the floor line of the verandah) the Applicant had affixed certain signage which had been in place for many, many years.

4 The Respondent sought to have the Applicant remove that signage so that the Respondent could affix to the facia its signage advertising/identifying the upper portion of the building and the verandah as the Respondent’s Indian restaurant.

5 For the reasons set out in my decision Salon Today Pty Limited v. M M I R Pty Limited [2008] NSWADT 260 I determined that the Respondent was not entitled to cause the Applicant to remove its signage from the facia; I declared that the Applicant was entitled to maintain and display its current external signage; I restrained the Respondent “from doing or performing any act that does or may interfere with the said signage”; and I declared that the relief granted was “as a consequence of a contractual right vested in the Applicant” pursuant to a consent given under one of the clauses to the registered lease.

6 As a consequence of that decision, from which there has been no appeal, and the leave granted therein, the Applicant applies to the Tribunal for an order that the Respondent pay its costs of the proceedings.

Orders Sought

7 The Applicant seeks three costs orders, framed in the alternative:

a) That the Respondent pay the Applicant’s costs (as agreed or assessed) of the proceedings (as a whole).

b) Further and or in the alternative, that the Respondent pay the Applicant’s costs as agreed or assessed of the proceedings from 16 July 2008 on an indemnity basis.

c) Further in the alternative that the Respondent pay the Applicant’s costs as agreed or assessed, of the proceedings from 16 July 2008.

8 The date “16 July 2008” is selected because it was on that date that the Applicant asserts that the Respondent rejected an offer of settlement in circumstances where it is further asserted that such rejection was “unreasonable in the circumstances”.

9 The Application is resisted by the Respondent.

Caselaw

10 It is convenient at this point to identify certain relevant decisions of this Tribunal, and elsewhere, that pertain to (in my opinion) to the issues that I am called upon to decide. I set these cases out below and shall refer to them in more detail later:

a) Gizah Pty Limited v. AXA Trustees Limited (No2) [2001] NSWADT 164.

b) Barsoum v. Glebe Administration Board (No. 2) [2002] NSWADT 174.

c) Calderbank v. Calderbank [1975] 3 All ER 333.

d) Sotiropoulos v. Mattana Coiffure Pty Limited (No 2) (RLD) [2004] NSWADT AP43.

e) Petria Pty Limited v. Makhoul [2005] NSWADT AP12.

f) Trust Company of Australia Limited v. Craig [2005] NSWADT 65.

g) Cripps v. G & M Dawson Pty Limited [2006] NSW CA81.

h) Solomon v. Singh (No. 3) [2006] NSWADT 120.

i) Harbourside Catering Pty Limited v. TMG Developments Pty Limited [2005] NSWADT 238.

j) Chauran v. Demertjis [2008] NSWADT 304.

k) Law Society v. Jayawardena [2008] NSWADT 187.

l) Law Society v. Martin [2008] NSWADT 305

m) Marinas v. Jeweller [2008] NSWCA 282

n) Restuccia v. Entasil Pty Limited (No. 2) [2008] NSWADT 313.

o) Armstrong Jones Management Pty Limited Pty Ltd v. Saies-Bond & Associates Pty Limited (No. 2) [2007] NSWADT 58.

Applicant’s Submissions

11 The Applicant filed two sets of submissions, one in chief 13 October 2008 and another by way of response 4 December 2008. The gravamen of the submissions is that on two occasions the Applicant put forward a commercial resolution of the issues which, having regard to the decision of the Tribunal, should have been accepted and in any event were more favourable to the Respondent than the terms of the Orders made by the Tribunal.

12 As I pointed out in my Decision 15 December 2008 there were a number of issues originally brought before the Tribunal by the Applicant. Two of those issues were subsequently settled and the only remaining issue that could not be resolved was the signage. The initial Application for relief was filed 10 March 2008, coupled with an Application for Urgent Interim Order seeking certain relief relating to the hot water system, the airconditioning motors and the signage. The two first issues were resolved. In order to clarify the pleadings by way of identification of the signage issue the Applicant filed an Amended Application 17 June 2008 and it was that Application that was the subject of my Decision 15 December 2008.

13 In support of the original Application the Applicant filed an affidavit of one of its directors (Mr Johnson) 26 March 2008. That affidavit set out clearly and concisely the evidence/case for the Applicant and annexed all appropriate material including and, in particular, the letter of consent from the agent 12 January 2005, written with the authority of the then owners. Thus, it was plain, as at 26 March 2008, that the Applicant asserted, not only a term and condition of the original lease (“Lease 1”) but also consent granted under its current lease (“Lease 2”). The current lease, Lease 2, commenced 23 December 2004; the signage clause is clause 6.3.4 which prohibits the Applicant, as tenant/lessee, from displaying signs or advertisements on the outside of the property … unless the landlord consents and also provides that the “landlord cannot withhold consent unreasonably”; and it must have been plain, from at least 26 March 2008 or shortly thereafter, that the letter from the agent 12 January 2005 was, at the very least, a consent under Clause 6.3.4.

14 Thus, so it seems to me, upon a reasonable analysis of the Applicant’s claim as articulated in the affidavit 26 March 2008, there was in fact consent granted under the lease acquired by assignment by the Respondent.

15 The Respondent filed a detailed affidavit by one of its directors Mr Singh, 14 May 2008. Although clearly the Respondent had before it the Johnson affidavit 26 March 2008, there was almost no reference to it at all. In particular, there was no reference at all to the agent’s letter 12 January 2005, nor to clause 6.3.4.

16 A number of further affidavits were then filed. One was of Mr Glass 20 May 2008, filed 21 May 2008, one of the original owners of the property and the vendor to the Respondent – this affidavit made it plain that the agent’s letter 12 January 2005 was, not only written with the consent of the then owners, but was also a “consent to signage rights and that such rights were a condition of” the then current lease. Mr Glass also stated that the Respondent “definitely did not ever have any discussions, correspond or raise requisitions with the owners to clarify whether there was any arrangement with the Applicant as to signage rights”. There was a further affidavit of Mr Johnson 27 May 2008 in which he confirmed that the signage rights “were consented to and confirmed by the lessor in writing to (the Applicant) on 12 January 2005 by the lessor’s agent …”.

17 Nextly there was filed by the Respondent an affidavit of Mr Comelli 15 July 2008. The substance of his affidavit was that he, as one of the agents appointed to sell the property in 2005 and 2006, was not aware of the signage rights granted by the then owners to the Applicant; he was not aware of the agent’s letter 12 January 2005 and was not aware of that letter when he was trying to sell the property in 2005 and 2006. Lastly, there were two affidavits of Mr Johnson sworn 30 and 31 July 2008 filed by the Applicant which, from the point of view of this decision, do not take the matter much further.

18 The point of the above recitation is to demonstrate that as and from at latest 21 May 2008 (the date of filing of the Glass affidavit) the Respondent was aware, or should have been aware, that the case for the Applicant was that, at the very least, consent had been given under clause 6.3.4 of the lease (Lease 2) under which the Applicant occupied the premises and which lease had been assigned to the Respondent at the time of its purchase of the property. And, importantly, there was absolutely no cross-examination of Mr Glass; the agent was not called; the assertions made relating to consent were not challenged and it was plain that at all times the Respondent was aware that the signage had been in place since about 2000 at least.

19 In my opinion and having regard to ordinary principles that ordinarily apply where costs follow the event, there would ordinarily have been a costs order in favour of the Applicant.

20 However, that is not the costs regime in this Tribunal. Costs are governed by Administrative Decisions Tribunal Act 1997, Section 88. I shall deal with this further below.

Offers of Compromise

21 The Applicant made two offers to the Respondent in an endeavour to resolve the outstanding issue of signage. The first offer was made by letter 3 July 2008. This offer was made “without prejudice save as to costs” (presumably in an endeavour to fall within the Calderbank principles) and was in the following terms:

“(i) Salon Today is permitted to maintain its signage on the fascia of the building in the following areas:

a) Princes Highway frontage

b) Front of building

c) Railway Street frontage.

ii) Salon Today will remove its signage from the fascia of the building as follows:

a) Railway Street frontage – see annexure “A” (a photograph was attached.

b) Salon Today’s signage on Princes Highway, front of building and remaining area on Railway Street fascia will not be removed,

iii) Salon Today will be permitted by MMIR Pty Limited to amend its existing signage to include details removed on release of their signage marked in annexure “A” …

iv) MMIR Pty Ltd will recognise in writing by way of executed consent order:

a) Continuation of and ongoing consent to Salon Today’s signage on Princess Highway, front of building and remaining area on Railway Street fascia; and

b) That such consent will not be withdrawn by MMIR Pty Limited either during the remainder of the lease term or during any option lease term exercisable or exercised by Salon Today or an assignee.

v) Each party pays their own costs; and

vi) Upon satisfaction of all the above, the proceedings to be discontinued.

22 A photo of the building with the proposed signage alterations was attached. Next follows two paragraphs:

“This offer is made as a genuine compromise of Salon Today’s application before the Tribunal and the existing rights under the Lease noting that consent was granted by the Lessor to Salon Today’s existing signage firstly under the former lease that commenced on 23 December 1999 and then pursuant to the existing lease that commenced 23 December 2004 as confirmed in the letter from the then lessor’s agent dated 12 January 2005.

The offer is made on a without prejudice basis and is open to be accepted until 17 July 2008”.

Reference was made to Section 88 and Armstrong Jones.

23 Clearly, on its terms, this was an offer to resolve the dispute which was, in my respectful opinion, reasonable and certainly was more favourable to the Respondent than the terms of the Orders made by the Tribunal.

24 In any event, the offer was rejected. On 16 July 2008 the offer was “rejected on the basis that it is not a genuine compromise of (the Applicant’s) alleged existing rights” and did “not go far enough to resolve this matter”. This letter in reply 16 July 2008 went on to make a counter-offer. It is not necessary to make detailed reference to this because the counter-offer was not more favourable to the Applicant than the terms of the Orders made by the Tribunal. However, the Applicant responded 8 August 2008, similarly “without prejudice save as to costs”, noting that the counter-offer “is unacceptable for reasons already stated in (the Johnson) affidavit” and a further “and final offer to resolve the dispute concerning signage” was put in the following terms:

i) Salon Today is permitted to maintain its signage on the fascia of the building in the following areas;

a) Princes Highway frontage;

b) Front of building;

c) Railway Street frontage.

ii) Salon Today will remove its signage from the fascia of the building as follows:

a) Railway Street frontage – see annexure “A” (reference to a photo)

b) Princes Highway frontage – see annexure “B” (reference to a photo).

c) Salon Today’s signage on the corner of Princes Highway and Railway Street front of building and remaining areas in Railway Street and Princes Highway fascias will not be removed.

iii) Salon Today will be permitted by MMIR Pty Limited to change its remaining signage to include details removed on release of their signage marked in annexures “A” and “B” to MMIR Pty Limited.

iv) MMIR Pty Limited will recognise in writing by way of duly executed consent order:

a) The continuation of conditions of signage and on-going consent to Salon Today’s signage with the exception that all such conditions and ongoing consent now to refer to Salon Today’s signage to remain on corner of Princes Highway and Railway Street front of building and remaining areas on Railway Street and Princes Highway fascias.

b) That such condition and consent will not be withdrawn by MMIR Pty Limited either during the remainder of the lease term or during any option lease term exercisable or exercised by Salon Today or an assignee.

v) Each party pays their own costs; and

vi) Upon satisfaction of the above the proceedings to be discontinued.”

25 This letter went on to assert:

“This offer is made as a genuine compromise of Salon Today’s application before the Tribunal and existing rights under the lease noting that consent was granted by the lessor to Salon Today’s existing signage firstly under the former lease that commenced on 23 December 1999 and then pursuant to the existing lease that commenced 23 December 2004 as confirmed in the letter from the then Lessor’s agent dated 12 January 2005. … the offer is made on a without prejudice basis and is opened to be accepted until 31 August 2008.”

Reference was again made to Section 88 and Armstrong Jones.

26 The letter of offer was, by letter 29 August 2008 from the solicitors for the Respondent, “not accepted”. There was no counter-offer and, so far as I can see no further discussions.

27 The Applicant asserts that the Respondent’s letter 29 August 2008 was a rejection, was unreasonable in the circumstances and that the terms of the Applicant’s letter 8 August 2008 were more favourable to the Respondent than the terms of the Orders made by the Tribunal.

28 The Applicant also noted, on a number of occasions, that the Respondent failed to file a Reply in the proceedings and that the “ground of defence raised by the Respondent (at hearing) to justify its position “lacked any real prospect of success”. It was further submitted that the Respondent by its conduct forced the Applicant into commencing the proceedings and seeking the orders to restrain any interference with and removal of its signage. The Respondent’s refusal to accept the evidence of the Applicant, the previous agent and the landlord (lessor) that at minimum consent had been provided to the Applicant’s signage under clause 6.3.4 of the (then current lease) was untenable. The Respondent did not put any evidence in reply or response that placed this in issue and did not require either the former agent (Mr Huxley) or landlord (Mr Glass) for cross examination. The conduct of the Respondent caused the Applicant to incur costs in bringing the proceedings in circumstances where the reasons posited by the Respondent lacked any real prospect of success.

Respondent’s Submissions

29 The Respondent firstly relied upon an affidavit sworn 19 November 2008 from its current solicitor Mr Holmes. The Applicant has objected to me reading that affidavit and has also objected to me reading the affidavit of Mr Comelli 15 July 2008, the latter on the basis that it was not admitted into evidence at the hearing. Quite frankly, on a costs application, I can see no particular objection to reading this type of material – it barely goes to any issue in question in the original proceedings and may throw some light upon the question of costs. If there was some matter of real controversy raised in this additional material then that would be a matter for cross-examination and argument. However, it seems to me from a perusal of the material, there is very little of a controversial nature. The Holmes affidavit 19 November 2008 really does not seem to take the matter further because the only additional material asserted is an attempt to interview Mr Comelli for his affidavit.

30 The Respondent submitted that the resolution of the hot water and airconditioning issues was “evidence of the Respondent’s attempts to act fairly and reasonably”. Detailed submissions were made with regard to the signage dispute, primarily on the basis that it was not clear from the evidence when the Respondent first became aware of the existence of the Huxley letter. It was submitted that until the Huxley letter was disclosed the Respondent was “under the understanding that the Applicant’s position relating to signage was based on the basis that the signage rights set out” in the original lease (Lease 1); the Respondent relied on the second lease (Lease 2) (which contained clause 6.3.4) and that the material indicates that the earliest the Huxley letter became known to the Respondent was shortly after 26 March 2008 on the filing of the first Johnson affidavit.

31 More importantly, the Respondent argued that the Applicant “did not have permission from Wollongong City Council to attach signage” to the fascia over the airspace owned by the council. The airspace argument, it was asserted, “was not unreasonable in the circumstances”. The Respondent submitted that “at the hearing of the signage dispute, by then with knowledge of the Huxley letter, the issue of consent was more confined to a technical argument relating to the indefeasibility of title created by the registration of the current lease (Lease 2) which contained no consent to signage having been granted by the former owners to the Applicant. Both the argument as to indefeasibility of title and the Airspace Deed argument were neither without merit or hopeless from their inception. As such it cannot be said, in the Respondent’s submission, that the Respondent’s position throughout was without merit or unreasonable”.

32 It was submitted that, as I noted in my Judgment, the Respondent’s strongest argument was the Airspace Deed argument. This raised legal argument and technical questions of construction and law.

33 The Respondent submitted that “the appropriate order in this case is that there be no order as to costs on the basis that even if special circumstances are made out they do not warrant an order for costs”. It was submitted that the “conduct of the Respondent and the technical nature of the positions advanced throughout the litigation by it, combined with:

i) its genuine attempts at settlement of the matter at an early stage;

ii) the late provision of the Huxley letter;

iii) the orders made 14 March 2008 in relation to costs (this related to there being no order for costs in relation to the hot water and airconditioning issues); and

iv) the fact that its arguments were ultimately unsuccessful

should not lead to an award of costs against it at any stage prior to the making of the second or third offer”. It was submitted that the offer made 3 July 2008 “was reasonably rejected” and it was submitted that in the event the Tribunal was inclined to make an order for costs in relation to the subsequent offer then any such order “should be limited to the payment of the Applicant’s costs, as agreed or assessed, from 29 August 2008, this being the date the second offer was rejected by the Respondent”.

Amended Application

34 It will be remembered that, as a consequence of the settlement of the hot water and airconditioning issues, the Applicant filed on 10 March 2008 an Amended Application. In relation to the signage issue the original Application 10 March 2008 sought, inter alia, a declaration that the Applicant, pursuant to the registered Lease made 23 December 2004 (“Lease 2”), and reciting the term of 5 years with two options for renewal, “and/or as a result of representations made by or on behalf of the lessor, and/or by acquiescence, consent and /or conduct of the lessor is entitled to … maintain and display external signage in relation to the business of the Applicant in its present location during the term of the lease without interference from the Respondent”.

35 The Amended Application sought orders in or to the same effect, but in the following terms:

1. An order permitting the Applicant pursuant to the lease … to maintain and display external signage in relation to the business of the Applicant on the fascia of the … premises until the expiry of the Applicant’s lease (which includes any options to renew).

2. An order preventing the Respondent from doing or performing any act so as to interfere with the external signage in relation to the business of the Applicant as on the fascia of the demised premises until the expiry of the Applicant’s Lease (which includes any options to renew”.

The Applicant also sought a costs order against the Respondent.

36 In my Judgment 15 December 2008 I observed at [41] that in my view “the evidence is overwhelming to support the contention that (the second lease, Lease 2) should be rectified by inserting therein a clause in terms of Clause 10.8 of (the first lease, Lease 1). However, rectification was not sought by the Applicant …” and, at [63] I observed that “it would be unwise to make orders that would include any leases entered into pursuant to the option to renew. I have expressed my opinion above relating to rectification and about the binding nature of the contract between the parties. However times move along and, although I think the Applicant’s argument in respect of the continuation of the entitlement has more than considerable merit, I am reluctant to travel down that path simply because there was no submission made to me, one way or the other, orally or in writing, relating to that aspect of the case” (my emphasis).

37 That observation in [63] has not been challenged in any of the written submissions relating to costs. It is an important observation because the case was not conducted as a rectification argument. Certainly, although the pleadings supported the argument, the actual argument advanced from the bar table did not range over the rectification issue. Similarly, nothing was put to me on behalf of the Respondent in relation to this issue such that the argument for or against rectification, although clearly supportable on the evidence (in my view), was not fairly put nor argued and in those circumstances I thought I unwise and perhaps unfair to embark myself upon a consideration of rectification without the benefit of argument.

The Offer 3 July 2008

38 This offer I have set out in full at [21-22] above. I have also observed [23] that the offer in its terms was made favourable to the Respondent than the terms of the Orders made by the Tribunal.

39 By letter 16 July 2008 the Respondent regarded the offer as “rejected” and the Respondent made a counter proposal.

The Offer 8 August 2008

40 This offer I have set out in detail at [24] above. It was clearly capable of acceptance within its terms. By the time this offer was made the Respondent had before it all evidence including, and in particular, the evidence of Mr Glass and the letter from Mr Huxley, all of which were unchallenged. It must therefore have been plain that there had been a consent properly granted by the then owners/lessors under clause 6.3.4 of Lease 2. In my view that should have been the end of the matter. The Respondent should have recognised, particularly where on its own evidence it made no enquiries from the vendor/lessor regarding any consents being granted under Clause 6.3.4 having regard to the obvious fact (which I set out in detail in my Judgment) that the Respondent was clearly aware of the existence, for many, many years, of the signage, that more than likely there was a contract between the vendor/lessor and the Applicant pursuant to the lease which was being acquired by the Respondent. It could not be argued, and it was not, that such a contract did not exist – the Huxley letter was unchallenged and the Glass affidavit was unchallenged and neither were required for cross-examination, and no submission was made that the consent was not properly granted or that the Huxley letter was invalid. Once all that is accepted then it is plain that there was a consent under Clause 6.3.4 and, whatever may have been the position relating to the verandah and the airspace, that contractual consent was binding on the Respondent.

41 The only issue, so it seems to me, about the 8 August 2008 offer is paragraph (iv)(b). It will be remembered that this sub-paragraph requires a consent order to the effect that the consent granted in the Huxley letter “will not be withdrawn by (the Respondent) during the remainder of the lease term or during any option lease term exercisable or exercised by (the Applicant) or an assignee”. This was, of course, part of the original Application and the Amended Application, both of which were then before the parties as at the date of this offer. Notwithstanding the fact that there was no rectification argument advanced at hearing in my opinion that should not operate against the 8 August 2008 offer simply because of what ultimately happened at the hearing. The offer was clearly acceptable within its terms and, in my view, should have been accepted. I have no doubt in concluding that the offer was more favourable to the Respondent than the terms of the Orders ultimately made by me. I regard the 8 August 2008 offer as a Calderbank offer capable of acceptance but rejected by the Respondent.

Calderbank

42 This type of offer arose out of a 1975 English Decision which has generally been adopted in Australia. Although Calderbank was decided in the context of a matrimonial cause the general view has been that such offers are available in most jurisdictions. They are now certainly available in this Tribunal. There is no need for me to refer in detail to the history of Calderbank – Her Honour Beasley JA in her paper “Calderbank offers” presented to the Australian Lawyers Alliance, Hunter Valley Conference 14-15 March 2008, covers all of this in detail. In addition, I examined the law generally in Barsoum at [28]-[43].

43 What is significant is this? Although both the offers 3 July 2008 and 8 August 2008 extended the offer “during the remainder of the lease term or during any option lease term exercisable or exercised by (the Applicant) or an assignee” it is important to observe that the Respondent, in rejecting both offers, made no submission that the offers would be accepted should that term be withdrawn. In my opinion, and in the light generally of conciliation/mediation/settlement principles, that would have been a reasonable response which would have resolved all the issues that were debated before me, although leaving open a rectification argument should the Applicant wish to have pursued that. As I observed above, no rectification argument was advanced at hearing. Consequently, it is open to me to conclude that the Respondent, acting responsibly, could well have responded seeking excision of the words to which I have made reference, thus moving the matter forward with a view to resolving the issue.

44 It also seems to me that the principle behind Calderbank has in fact moved on. In Barsoum at [32], I made the observations that “offers made ought to be properly considered and when rejected the rejecting party must understand that a costs order may flow if the rejecting party does not obtain a more favourable verdict”. I made reference to a number of authorities, noted the wide effect of Evidence Act 1995, Section 131(2)(h) (which itself is not limited to Calderbank offers), and noted that the offer made in Barsoum did not suffer from the defect as the offer in Marinis.

45 If it is suggested that because of the additional terms of the offers 3 July and 8 August 2008 those offers would not constitute Calderbank offers, then it my opinion, the offers were themselves factors to be taken into account within the general principle that in considering whether a costs order ought to be made against an unsuccessful party the Court or Tribunal should look at the offers that had been made, whether “Calderbank” or otherwise, and then assess their relevance to whether or not such a costs order ought to be made.

46 There are two other aspects that I would seek to address at this stage. Firstly, the Respondent at the hearing conducted an argument in or to the effect that the Applicant did not have authority from the local council to erect or maintain the signage in question simply because it was the local council that had the authority to determine what was erected over its own land. This argument was raised at hearing (it will be remembered that the Respondent did not file any Reply) and was dealt with at hearing, and dismissed. Having regard to the findings that I made relating to the consent under the lease, the content of the Deed with the local council and the location of the signage, it was plain to me that the airspace argument was misconceived and could not survive rigorous examination.

47 Secondly, even if I am wrong in categorising the letter 8 August 2008 as a Calderbank offer, it was in any event an offer that was quite capable of acceptance and would have, if accepted, disposed of all the issues between the parties. At the risk of repeating myself, by the date of this offer all the relevant material had already been filed and served such that the Respondent was clearly, or should have been, au fait with the gravamen of the Applicant’s case, such that it should have been plain to the Respondent that a proper consent had been granted under the lease as a matter of contract. I have made the point before, in Barsoum, that an open offer made at hearing that was not accepted, in circumstances where the offeree is ultimately unsuccessful in the proceedings, is “a factor to be taken into account in determining whether the offeree acted unreasonably”. I examined this situation and the law generally relating to Calderbank and other offers in Barsoum at [28]-[43] – I adhere to the views therein expressed, I repeat them, and it is plain to me that the offer made 8 August 2008 was an offer that clearly falls within the principles that I enunciated in Barsoum.

48 It has been stated before – see Gizah and Armstrong Jones and elsewhere - that this Division of this Tribunal is a commercial division in that it deals with the commercial relations between lessors and lessees in particular commercial circumstances. It is for that reason that the Retail Leases Act requires, as does the Tribunal, that parties engage in mediation in a genuine attempt to resolve their differences. Indeed, it is now common (if it ever was uncommon) for attempts to be made, prior to litigation and in the course of litigation, by parties and their lawyers to resolve cases without the issues going to a full hearing. Indeed, lawyers, even before the advent of modern accredited mediators, have been mediating and resolving cases since time immemorial. So, in this case, where an offer was made that should have been accepted at a time when all the evidentiary material was before the Respondent and where most of that evidentiary material was unchallenged, the unqualified rejection of that offer would constitute, at the very least “special circumstances” within the former Administrative Decisions Tribunal Act Section 88.

Change in the Law

49 During the course of the hearing up to the date of my Decision 15 September 2008 the law required (Retail Leases Act Section 77A and Administrative Decisions Tribunal Act Section 88) that 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”.

50 There are numerous decisions on what constituted “special circumstances warranting an award of costs”. There is no need for me to refer to all of those decisions but reasonable guidance may be found in Gizah, Barsoum, Sotiropoulos, Petria Pty Limited, Trust Co v. Craig, Harbourside Catering Pty Limited, Armstrong Jones, Chauran and Restuccia. I refer to those decisions by way of guidance and authority for what is meant by the words “special circumstances warranting an order for costs”.

51 It is also important to refer to Cripps and Solomon v. Singh (No. 3). In Solomon I examined the observations of the Court of Appeal in Cripps and noted (at [33]) that in my opinion the Court of Appeal in Cripps “was extending the range of “special circumstances” thus far accepted by the Tribunal but only to the extent of accepting that conduct of a party which causes the commencement of proceedings that is so unmeritorious and so lacking in justification and was so unarguable wrong that it could not possibly be justified, constituted “special circumstances” to warrant a costs order against that party in respect of those proceedings which the innocent party so grossly wrong was obliged to commence. The conduct was so connected with the proceedings in the Tribunal that it fell within the general principles thus far enunciated in previous decisions of the Tribunal”. Also, in Solomon I observed (at [42]) that in Barsoum I dealt extensively with Calderbank, I adhered to the views that I expressed in Gizah and Barsoum and noted that “no criticism of my approach was made by the Appeals Panel in Randi Wicks Pty Limited v. Pokana Pty Limited (RLD) [2003] NSWADRTAP 27”.

52 It is important to recognise that in litigation parties have an obligation to carefully analyse the issues and the evidence at all times during the course of the proceedings. This point was made, and forcefully made, by the Tribunal in Law Society of NSW v. Jayadwardena [2008] NSWADT 187 and Law Society of NSW v. Martin [2008] NSWADT 305. There is a very good reason for this: often during the course of litigation, new evidence emerges, or the law changes, or a different approach is taken, such that a party asserting a particular viewpoint ought to carefully, and consistently, examine their case to see whether it “stacks up” against the (in particular) evidence to be led by the other party. This case now in issue was clearly one of those – the evidence was clearly before the Respondent in circumstances where the Respondent did not challenge that evidence, did not seek to cross-examine the relevant witnesses, such that the evidence stood, was logical and would have been, and was, accepted by the Tribunal. In this the Respondent should have accepted the fact that there was in fact a consent granted under Lease 1 and granted under Lease 2. The evidence was overwhelming to that effect and the Respondent led no evidence to the contrary. In those circumstances the Respondent had an obligation to re-assess its position and should have accepted the 8 August 2008 offer and in any event should have accepted the evidentiary position as advanced by the Applicant.

53 However, and be all the above as it may, the law changed as at 1 January 2009. On that date the Administrative Decisions Tribunal Amendment Act 2008 No. 77, came into effect. Relevantly, on the question of costs, Section 88(1) was amended and new sub-sections inserted in lieu in the following terms:

“Section 88 Costs:

(1) Each party to proceedings before the Tribunal is to bear the party’s own costs in the proceedings, except as provided by this section.

(1A) 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 it is fair to do so having regard to the following:

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:

(i) failing to comply with an order of direction of the Tribunal without reasonable excuse, or

(ii) failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provision of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or

(iii) asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or

(iv) causing an adjournment, or

(v) attempting to deceive another party or the Tribunal, or

(vi) vexatiously conducting the proceedings,

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in facto or law,

(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant.”

54 In addition, a new Part 11 was inserted which, by section 43(2) made it plain that the amendment made to Section 88 (as set out above) extended “to applications and proceedings that were made on or commenced, but not finally determined, before the commencement of the substantive amendment concerned”.

55 As I read the 2008 Amendment Act the new Section 88(1) and (1A) applies to the instant case simply because the proceedings have been “not finally determined” before 1 January 2009 in that although the substantive issues between the parties had been determined there remained outstanding the issue of costs such that it cannot be suggested that the application and proceedings have been “finally determined”.

56 I invited both parties to make further submissions as a result of the coming into effect of the 2008 Amendment Act. Both parties took advantage of that invitation but no party submitted that the amendments to section 88 do not have full force and effect in relation to the matter now before me.

57 The Respondent made detailed submissions. It is convenient to deal with those submissions simply because of the conclusions that I have otherwise reached above. Firstly, the Respondent agreed that the current application had not been finally determined and as such the provisions of section 88 as amended apply.

58 Secondly, because of the opening words of section 88(1) – “each party to proceedings before the Tribunal is to bear the party’s own costs in these proceedings, except as provided by this section” - that choice of wording is “intended to strengthen the underlying philosophy that the overriding principle in relation to costs is that each party before the Tribunal pays their own costs”.

59 Thirdly, it was submitted in considering making an award of costs the Tribunal is directed by the legislature to examine the factors set out in sub-section (1A) and noted that sub-clauses (a)(i) – (vi); (b) and (c) “mirror the matters that the Tribunal was previously directed to consider in determining whether or not “special circumstances” apply”. I think that is a fair submission. It is plain from the recital of authority above, and Practice Note 12, and other authorities, that the type of matters referred to in those sub-sections of section 88(1A) would fall within “special circumstances”; although it is important to remember that there were two hurdles to overcome – firstly, one had to find “special circumstances” and then find that such found special circumstances warranted an award of costs. In other words, there could be “special circumstances” but taking the proceedings as a whole or portions of the proceedings such would not warrant making an order for costs.

60 The Respondent submitted that the new section 88 includes provision in sub-section (1A) that permitted the Tribunal to consider additional matters, namely:

“(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant”.

61 The Respondent noted, correctly, that Practice Note 12 has not been withdrawn and submitted that the aspects of that Practice Note which relate to the old Section 88 are “no longer of any relevance given the conclusion of the matters found in sub-section 1(A)(a)(i)-(vi)”. The Respondent accepted “that matters which might previously have constituted “special circumstances” sufficient to warrant an award of costs under the former Section 88 may be considered by the Tribunal pursuant to section 88(1A)(e) of the 2008 Amending Act. I, with respect, agree. So, it was submitted, in determining the costs application I am enjoined to consider solely those factors listed in section 88(1A) in determining whether or not it is in fact “fair” that costs be awarded.

62 The Respondent then went through each of the various paragraphs of sub-section (1A). Reference was made to Practice Note 8 and it was submitted that nowhere in that Practice Note “is there a requirement stipulated that a Respondent to an application filed in (this Division) to file a reply or response in any form”. It was submitted that the Tribunal “has not been made a court of strict pleading” and that the “underlying philosophy” of the Tribunal is that it “be capable of providing quick and cheap justice”. It was submitted that the purpose of the Tribunal was to determine “disputes, simply, cheaply and quickly”, that matters before the Tribunal are to be conducted in an “open and accessible forum guided by the principles of natural justice” and that the intention of the Parliament was “to provide ready access to justice to a wide range of litigants in relation to a broad range of issues which affect contemporary society”. It was not intended “to establish a Tribunal that requires the parties to conduct detailed analysis of their respective positions so as to determine whether or not the argument they intend to advance is in fact “tenable” from the outset in the sense that it has a high probability of success or is more than likely to succeed. There was, it was said, “an underlying philosophy of the legislation to provide open access to persons aggrieved by administrative (or other) decisions”.

63 The Respondent made further quite detailed submissions about a number of evidentiary aspects. Firstly, it conceded that Calderbank or other “without prejudice” offers made by one or other party in the course of proceedings may be relevant for the Tribunal to consider. See, in particular, Armstrong Jones, Barsoum, Practice Note 12 and my observations above. The Respondent submitted that the offer 3 July 2009 could not possibly fall within any of the principles set out in the authorities. However, in relation to the 8 August 2008 offer it was submitted that the agent’s letter was a critical document. It was submitted that “its earlier disclosure may well have dramatically changed the situation and it is unfair to the Respondent for the Applicant to simply say it was under no obligation to disclose this document at an earlier point when it was in its possession and its possession alone” (see below at [64-65]). It was submitted that the Tribunal “readily accepted Mr Singh’s (a director of the Respondent) evidence that the Respondent “had no notice of the Applicant’s alleged signage rights when it purchased the property” and reference was made to paragraph [42] of the Decision 15 September 2008. With respect, that is a mis-analysis of paragraph [42]. One has to read the whole of paragraph [42] coupled with [43].

64 There was considerable criticism of the way in which the evidence of the Applicant was presented, the way the Applicant pleaded its case in the initial Application for Original Decision (which was “totally misconceived”) and the failure of the Applicant to lead all of its evidence up-front (so to speak). This, as I understood the argument, arose out of the fact that the original Application pleaded only Lease 2 10 December 2004 but not Lease 1 23 December 1999, all of which was more properly set out in the Amended Application filed 17 June 2008. In addition the Respondent submitted that the “Huxley letter is a critical document. Its earlier disclosure may well have dramatically changed the situation and is unfair to the Respondent for the Applicant to simply say that it was under no obligation to disclose this document at an earlier point when it was in its possession and its possession along”. The difficulty with that submission is simply this – the Huxley letter 12 January 2005 was disclosed in the affidavit of T J Johnson sworn 26 March 2008 and filed that day, disclosed as annexure “B”. Thus, as and from about 26 March 2008 it cannot be properly said that the Respondent was not aware of the terms of the “Huxley letter”. Furthermore, the Johnson affidavit sets out in fairly clear terms the situation relating to Mr Huxley. In addition, the Huxley affidavit itself sworn 26 March 2008 was before the Respondent and Mr Huxley was not cross-examined.

65 But perhaps the most important factor is this: the former owner of the property Mr Glass swore an affidavit 20 May 2008, filed 27 May 2008. This was a key affidavit. That affidavit confirmed firstly, that at the time of Lease 1 “the signage rights were given to the Applicant with consent of the owners of the property and included in … Lease 1. These include rights for the present signage”; secondly Mr Glass referred to Lease 2 (which was the lease acquired by the Respondent when it purchased the property), stated that the consent of the owners to the signage rights, although omitted in the preparation of the lease document, “had not been withdrawn” and, importantly, the owner’s agent Mr Huxley “was authorised by the owners to confirm our on-going consent to signage rights and that such rights were a condition of … Lease 2”.; and thirdly, Mr Glass deposed that at “the time of the Respondent’s inspection of the property, exchange of Contracts for Sale to settlement and thereafter, the Respondent definitely did not have any discussions, correspond or raise requisitions with the owners to clarify whether there was any arrangement with the Applicant as to signage rights”.

66 The important point is this: the Huxley letter, the Huxley affidavit and the Glass affidavit were firstly, all before the Respondent on or about 27 May 2008; secondly, the Respondent was aware  acutely aware  of the existence of the signage since 2000 and must have reasonably assumed that, somehow or other, the Applicant had permission from the owner/vendor from whom it (the Respondent) acquired the property; thirdly the Respondent elected not to cross-examined Mr Huxley nor the owner Mr Glass, such that the evidence of consent was never in issue. I attempted to make that plain in my decision. It was all a matter of contract. Lease 2 contained a contractual provision which entitled the Applicant to erect the signage with consent. The consent had been given. The Respondent knew the consent had been given simply because of the affidavit evidence to which I have just made reference. That knowledge was before the Respondent at latest on or around 27 May 2008. Yet, for reasons not entirely clear to me, the Respondent persisted with its resistance to the claims of the Applicant, rejected the very reasonable settlement offers and raised the airspace Deed argument, which, for reasons set out in my Decision in my opinion had no merit.

67 The airspace argument I dealt with in my decision at paragraphs [50]-[60]. At [58] I expressed the view that the Airspace Lease “has nothing to do with the rights (if any) of the Applicant to attach its signs to the fascia around the outside and below the verandah”. At [59] I made reference to an unchallenged conversation with a council officer in or to the effect that “your signage does not require council’s consent” and at [60] I observed that once “it is accepted that the balcony structure, its supports, the roof and the fascia board are legal structures then it seems to me as a matter of contract (and again I would respectfully emphasise the words “as a matter of contract”) that the lessor, being the owner of the building and the owner of the structure can properly legally give consent to the signage in issue”.

68 And, finally, I specifically make reference to my summary/conclusions at [61].

69 The importance of these references in this: new Section 88 does indeed start from the proposition that each party is to bear their own costs in proceedings before this Tribunal. However, that is not the be all and end all of the matter. What the Parliament has done is take away the requirement for “special circumstances”, which has been interpreted (in my view) too restrictively throughout the various Divisions of this Tribunal (but rather less restrictively in this Division), and has introduced a concept of fairness such that the Tribunal “may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to” a number of specified parameters/factors. But the importance is this: the two-step approach of “special circumstances warranting an order for costs” is now replaced by a fairness test having regard to a number of parameters/factors. A fairness test is a much more just test.

70 It is important to remember that this Tribunal, like all Courts and Tribunals, deals with disputes between parties. Over hundreds of years courts have endeavoured to protect the interests of the party who is successful in the litigation on the basis that the successful party would not have had to travel down the litigious path and incur legal costs had it not been for the actions of the unsuccessful party. In other words, there are two sides (at least) to every argument and courts have been at pains to protect the interests of the successful party.

71 There is good reason for this: not every successful party can afford litigation and afford to throw away, without recovery, its costs incurred in litigation where it is successful. There are plenty of people, ordinary people, who become involved in litigation in the various Divisions of this Tribunal , often through no fault of their own, and who are entitled, in my opinion, in appropriate circumstances, to recover their costs when they are successful. It is also important to remember that all successful litigants are not necessarily economically well heeled - many are not - and the Parliament has, in my opinion, recognised that and sought to create a wider and fairer test for awards for costs.

72 What the Parliament has done, in its 1 January 2009 amendments, is recognise that there is a need for this Tribunal to be more flexible and widen the scope of a litigant’s entitlement to costs. This is a concept generally that is now accepted in this Division, and certainly touched upon by the Court of Appeal in Cripps, and the result of this re-assessment by the Parliament is a different test, a test of fairness, having regard to a number of parameters/factors.

73 As I have stated above I agree that Section 88(1A)(a) sets out various aspects of litigation that would generally have fallen into the concept of “special circumstances”. [It is important to remember that these various sub-sections may or may not, depending upon the circumstances, result in a costs order – they are simply matters for consideration].

74 Nextly, Section 88(1A)(b) probably falls into the same category – this is a factor that the Tribunal would have considered in any event and which, in the wash-up, may have entitled a party to a costs order in whole or in part.

75 Section 88(1A)(c) is slightly different. This, it seems to me, is a new concept in which the Tribunal is enjoined to look at “the relative strengths of the claims by each of the parties” and those words are not restricted or circumscribed by the words that follow: “including whether a party has made a claim that has no tenable basis in fact or in law” – those following words can be regarded as an example but are not restrictive of the opening words of this sub-clause. So, one of the parameters that the Tribunal is entitled to look at is “the relative strengths of the claims made by each of the parties” and those words, in my opinion, expand considerably the factors that the Tribunal can take into account when considering whether “it is fair” to award costs. A good example is this case: here, all the material was fairly before the Respondent as at on or about 27 May 2008 in circumstances where the Respondent, not only rejected settlement offers but also elected not to cross-examine those witnesses whose evidence established a contract. That, it seems to me, and standing alone, would result in an award for costs simply because it would be fair to do so from the point of view of the Applicant who had properly disclosed all this material, could not get a settlement out of the Respondent, and then had to embark upon a full hearing in circumstances where the evidence of a contract for the signage was unchallenged.

76 Then one moves to Section 88(1A)(d): again, this is a new parameter: “the nature and complexity of the proceedings”, and that may well be a factor that the Tribunal ought to bear in mind when looking at the concept of fairness.

77 But the real key to understanding the Section 88 amendments is Section 88(1A) (e): “any other matter that the Tribunal considers relevant”. These are very, very wide words, quite deliberately chosen by the Parliament, which quite clearly enjoin this Tribunal to look very carefully at the concept/principle of fairness and to widen the scope, without restriction, of the various aspects of the litigation – indeed, all the aspects of the litigation – that may result in a finding that the Tribunal is satisfied that it is fair to award costs. In my opinion it would be wrong to attempt to restrict Section 88(1A)(e).

78 That is not to say, by any means, that the usual principle in the Supreme and District Courts that “costs follow the event” is now to be adopted by this Tribunal. It is not. Costs can only be awarded under Section 88, but plainly the aspects of the litigation that need to be examined by the Tribunal to determine whether it is fair to award costs have been more than considerably expanded by the Parliament and ought, in fairness to the successful party, be embraced by this Tribunal. The test is, as always, “relevance”.

Conclusions

79 In my opinion the actions of the Respondent in persisting with its resistance to the Applicant’s claims in the circumstances where the evidence of a contract for the signage was fairly placed before the Respondent at latest on or about 27 May 2008, where the Respondent did not challenge any of that evidence, where the Respondent knew of the existence of the signage since about 2000 and when it purchased the property failed to make any requisitions relating to that signage, are factors to be taken into account under Section 88(1A). In these circumstances, the Applicant having been totally successful, it seems to me that this Tribunal should be satisfied that it is fair to make an award of costs in favour of the Applicant pursuant to Section 88(1A) (c) and (e).

80 In my opinion that award of costs should date from 27 June 2008, being a date sufficiently after 27 May 2008 (the filing of the Glass affidavit) and 17 June 2008 (the filing of the Amended Application) which would have given the Respondent time to reasonably consider the evidentiary material that it ultimately did not challenge.

81 In making this determination I have borne in mind the settlement offers communicated to the Respondent and, although I have formed a positive view about the settlement offer 3 July 2008 and a positive view about the settlement offer 8 August 2008, in my opinion the plain fact of the failure of the Respondent to appreciate the strength of the Applicant’s case on the question of contract, not re-assess its position having regard to the evidence, not challenge its evidence on the issue of consent, and thereby put the Applicant through a hearing where consent turned out to be a non-issue, is the determining factor. Although this decision is not quite the same as the reasoning in Barsoum the general principle I think properly applies.

82 The Orders of this Tribunal should be that the Respondent pay the costs of the Applicant, as agreed or assessed as and from 27 June 2008, subject to what follows.

Indemnity Costs

83 The Applicant has sought an order in the alternative that costs be agreed or assessed “on an indemnity basis”. There is, it seems to me, no reason why costs cannot be assessed on that basis. I dealt with this in some detail in Barsoum at [52]-[56]. Barsoum, as I have pointed out above, was a case very similar to the instant case now before me. In Barsoum an open offer was made on the first day of the hearing – see [41]-[43]. At [55] I pointed out that “at that stage there was an opportunity given by the (successful party) for the (unsuccessful party) to re-assess his position and withdraw from the proceedings upon payment of the $10,000.00 offered”. I referred to various authorities and formed the opinion that in the circumstances of Barsoum the costs be agreed or assessed on an indemnity basis.

84 I am unable to see any difference in this case. It is not to the point that there were other arguments advanced by the Respondent; the point is that the matter could have been easily resolved had the Respondent properly assessed the evidence (that was ultimately unchallenged) and which clearly was evidence, not pointing to but rather of, the contract/consent given under Lease 2. None of the arguments raised by the Respondent went to challenge that contract/consent and once it was established that consent had in fact been properly granted by the Lessor under Lease 2, then that was really the end of the whole matter.

85 The Applicant has been put to the expense of time, legal costs and no doubt trauma in circumstances where the Respondent should have accepted that consent had been granted under the very lease that it had acquired when it purchased the building.

86 In my opinion this is a clear case for costs to be agreed/assessed on an indemnity basis.

Orders

1. The Respondent pay the Applicant’s costs incurred from and after 27 June 2008, and including the costs of this costs application, on an indemnity basis as agreed or assessed.