Stefopoulos v Manikas (No 3)

[2004] NSWADT 172

CITATION:	Stefopoulos v Manikas (No 3) [2004] NSWADT 172
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Alex Stefopoulos RESPONDENT Dimitri Manikas & Georgina Manikas
FILE NUMBER:	035064
HEARING DATES:	17/06/2004
SUBMISSIONS CLOSED:	07/27/2004
DATE OF DECISION:	08/17/2004
BEFORE:	Montgomery S - Judicial Member
APPLICATION:	Costs
MATTER FOR DECISION:	Costs
LEGISLATION CITED:	Retail Leases Act 1994
CASES CITED:	Alessa Pty Ltd v Total & Universal Pty Ltd [2001] NSWADT 150 Charteris v General Manager, Leichhardt Municipal Council [2001] NSWADTAP 12 Gizah Pty Ltd v AXA Trustees Ltd (2) [2001] NSWADT 164 Raethel -v- the Director General Department of Education and Training [2000] NSWADT 56 Randi Wiks Pty Ltd v Pokana Pty Ltd [2003] NSWADTAP 27 Sarip Investment Pty Ltd v Uno Uno Pty Ltd [2004] NSWADT 27 Stefopoulos v Manikas (no.2) [2004] NSWADT 127 Wood and Anor v Bergman (No. 2) [2003] NSWADT 175
REPRESENTATION:	APPLICANT B Howes, solicitor RESPONDENT J Pappas, barrister
ORDERS:	The Applicant is to pay two thirds of the Respondents’ costs. Those costs are to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987.

1 In the substantive matter, Mr. Alex Stefopoulos (“the Applicant”), as lessee of for premises located at 15 Monaro Street, Queanbeyan, ("the Premises") sought certain orders against Dimitri Manikas & Georgina Manikas ("the Respondents ") as the lessors of the Premises. The Premises were used as a takeaway food shop known as Queanbeyan Takeaway.

2 In determining the substantive matter I made the following orders:

“1.The Application is dismissed.

2. Each party is invited to file written submissions in relation to the issue of costs. Any submissions on behalf of the Respondents are to be filed and served within 14 days of the date of this decision. Any submissions on behalf of the Applicant are to be filed and served within a further 14 days of the date of the filing and service of the Respondents’ submissions.”

3 The reasons for decision in the substantive matter are recorded in Stefopoulos v Manikas (no.2) [2004] NSWADT 127. Pursuant to Order 2, the Respondents have sought an order for costs. The parties each provided submissions in relation to the costs application. This determination is made on the basis of the written submissions without the need for the parties to attend.

Relevant Legislation

4 The Tribunal’s power to award costs in relation to proceedings before it is governed by section 88 of the Administrative Decisions Tribunal Act 1987 (“the ADT Act”). Section 88 of the ADT Act provides:

“88 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.

(2) The Tribunal may:

(a) determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on any other basis.

(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.

(4) In this section, costs includes:

(a) costs of or incidental to proceedings in the Tribunal, and

(b) the costs of or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.”

5 Pursuant to section 88(3) of the ADT Act, the 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. Section 77A of the Retail Leases Act 1994 (“the Act”), which is the enactment conferring jurisdiction, provides:

“77A Tribunal may award costs

The Tribunal may award costs under section 88 of the Administrative Decisions Tribunal Act 1997 in respect of proceedings commenced by an application made under this Part.”

6 The Tribunal therefore has discretion to order costs if satisfied that there are "special circumstances" which justify the award. In Gizah Pty Ltd v AXA Trustees Ltd (2) [2001] NSWADT 164 the Tribunal defined "special circumstances" as "circumstances that are out of the ordinary, but without having to be extraordinary or exceptional". In that case the Tribunal added:

"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".

7 Those observations from Gizah do not, however, mean that costs should simply follow the event but they do mean that "special circumstances" might more readily be found in a retail tenancy dispute.

8 In this case the Respondents seeks the whole of the their legal costs and disbursements. Mr Pappas urges that those costs and disbursements be assessed pursuant to Schedule 4 of the Supreme Court Act 1933 (ACT) on the basis that both parties were represented by ACT based solicitors and both parties briefed counsel based in the ACT.

The Respondents’ submissions

9 Mr Pappas asserts that there are numerous features of this matter which taken alone or in combination are capable of establishing the necessary "special circumstances". His submissions fall into three categories (a) the Applicant’s delay in commencing the action and his failure to comply with directions; (b) the manner in which the Applicant’s case was prosecuted; and (c) the Applicant’s performance as a witness.

10 Mr Pappas argues that the applicant delayed commencement of action and then proceeded in a dilatory fashion failing or refusing to supply particulars of the claim; failing to furnish his solicitor with instructions in a timely manner and prevaricating as to whether or not the Application would proceed or would be abandoned in favour of proceedings in the Supreme Court of New South Wales. In support of this submission Mr Pappas set out a chronology of the various mention dates and directions made but with which the Applicant either did not comply or did not fully comply. I note that I consider this an accurate chronology of those issues.

11 In essence, Mr Pappas asserts that as a consequence of the failure to comply with directions there was significant delay, hearing dates vacated and the need for additional direction hearings. He further asserts that this resulted in inconvenience and additional cost to the Respondents.

12 The Applicant abandoned his claim for a declaration and damages in relation to allegedly unconscionable conduct on the first day of the hearing of the Application. No reason was ever advanced by the Applicant why that relief was abandoned. Mr Pappas argues that the Applicant’s conduct in this regard is akin to that considered in Sarip Investment Pty Ltd v Uno Uno Pty Ltd [2004] NSWADT 27. In that matter the Tribunal considered the abandonment of a cross-claim by a respondent immediately prior to the commencement of the hearing. Judicial Member Molloy ordered the respondent to pay the applicant’s costs of and incidental to those proceedings.

13 Mr Pappas urges that in the absence of any explanation this Tribunal should conclude that the claim in relation to unconscionable conduct was "misconceived, unsupportable and not maintainable".

14 Mr Pappas also points to the fact that almost four years had passed between the date upon which the applicant was excluded from the premises and the hearing of the Application, and that notwithstanding the amount of time that has passed, the Applicant did not adduce expert evidence as to either the alleged "substantial interference" with his business or in support of the sum of damages which he sought.

15 With respect to the Applicant’s performance as a witness Mr Pappas points to the views that I expressed at paragraph 50 of my reasons for decision in the principal matter. I stated:

“50 As to the Applicant’s claim for damages for the loss of its business, I agree with Mr Pappas’s submission as to the weight to be given to the Applicant’s evidence. In this regard, I note that under cross-examination the Applicant at various times was evasive, combative and unresponsive. Some aspects of his evidence were self-serving while some responses were obstructive. In view of his behaviour, the Applicant's evidence is of limited assistance to the Tribunal. The Applicant's recollection of the actual events cannot be relied upon as faithful to the truth.”

16 He argues that the Respondents were forced to answer, at considerable expense, an inflated claim for damages based almost entirely upon the Applicant’s evidence. In addition the proceedings were prolonged by the Applicant's evasive, combative and non-responsive demeanour in the witness box with the need to constantly re-focus his attention to questions asked and to pursue answer with some diligence because of the applicant's tendency to either qualify answers, evade questions or profess a failure to understand even after an answer had been given and given after apparently careful consideration.

17 Mr Pappas also points to the Applicant's particulars in relation to the payment of rental and asserts that they were false and that there can have been no other purpose in doing so but to suggest that he was not in arrears of rent when he was excluded from the premises in September 2000. Under cross-examination the applicant conceded not only that he was in arrears but that he had been in arrears for a long time. While he initially denied any knowledge of an offer that he could go back into possession of the premises upon payment of the arrears of rental, legal costs and other expenses and the provision of a bank guarantee the Applicant later conceded those matters.

18 The decision in the substantive matter turned largely upon an acceptance of the proposition that the applicant had been properly excluded from the premises in accordance with the terms of the lease. Mr Pappas asserts that the applicant's failure to acknowledge the force of that argument and the his persistence in seeking to recover the value of his lost business in contra-distinction to any damage which he may have been able to establish arising from interference with the conduct of the business up to but not beyond 11 September 2000, is clearly a "special circumstance" which not only prolonged the proceedings but caused them to be fought on largely irrelevant issues. Mr Pappas further asserts that effectively there was no case for the Respondents to answer. The Respondents elected to give no evidence in reply to the allegations made. A simple testing of the Applicant’s case otherwise defeated those allegations that were not fundamentally flawed.

19 Accordingly, Mr Pappas argues that the Respondents have established "special circumstance" and that the Tribunal should be satisfied that an award of costs is warranted in this matter.

The Applicant’s submissions

20 Mr Howes provided submissions in reply on behalf of the Applicant. He submitted that the action was commenced within the time frame allowed by law and that of itself should be sufficient to dispose of the argument that the Applicant delayed the commencement of the action. As to the submission that the Applicant’s case was prosecuted in a dilatory fashion, Mr Howes submitted that in one particular instance the vacation of hearing dates were entirely suitable to the Respondent's Counsel and in any event no additional cost has been or could have been incurred as a result of any delays in the interlocutory process. As to the performance of the applicant in the witness box Mr Howes submitted that it was in trying circumstances and without the contrast of the respondents evidence.

21 Mr Howes asserts that whether the matter might be transferred to the Supreme Court was a relevant consideration for the Applicant because that Court had the capacity to consider unconscionable conduct. Those were matters that the applicant was entitled to consider. He further asserts that it was abandoned in a timely manner and at no significant cost to the respondent.

22 With respect to Mr Pappas’ assertion that effectively there was no case for the Respondents to answer, Mr Howes points to the views that I expressed at paragraph 49 of my reasons for decision in the principal matter. I stated:

“49 There can be little doubt that the Respondents had an obligation to maintain the roof in good order nor can there be any doubt that they failed to undertake the necessary work to ensure that the roof did not leak. This was a factor that was within the Respondents’ control. There can also be little doubt that the failure to maintain the roof in a reasonable condition caused disruption or had an adverse effect on the Applicant’s trading. There is some doubt about the extent of that disruption or effect but it is possible that it was significant. However, there is no evidence on which I can make a finding as to the extent of any loss or damage was suffered by the Applicant as a consequence of any breach of section 34(l)(d) of the Act.”

23 Mr Howes points to this statement as supporting the Applicant’s position that prior to his eviction from the premises he had put the Respondents on notice as to the problem that existed in relation to the building and sought that it be rectified and/ or that the issue of the leaking roof be the subject of mediation. The Respondents declined to affect any repairs to the roof on the basis that it was not their responsibility, however, the Respondents admitted in closing submissions that the roof was their responsibility notwithstanding the earlier and continued denial to that point. Mr Howes submits that the Respondents’ continued denial of responsibility allowed for interference with the Applicant’s business.

24 Mr Howes asserts that it is significant that the Applicant requested mediation in relation to the roof prior to the eviction and that prior to the commencement of proceedings the Applicant again sought a mediation so as to avoid the costs of proceedings. Mr Howes submits that at all times the Respondents refused to deal with the issue and the only avenue available to the Applicant, in terms of establishing his rights, was through the Tribunal.

25 Mr Howes urges that the Tribunal reject the Respondents’ submission that the fact that they did not give evidence is somehow indicative of the weakness of the Applicant’s case. He asserts that it was a forensic decision of the Respondents’ counsel more likely based on the notion that the Respondents would not fare so well under cross examination.

26 Mr Howes submits that the Applicant's case was not without merit and it is clear that there was interference and a failure to effect any repair to the roof, that the disruption to the business could have been significant and that this could amount to a breach of the covenant of quiet enjoyment. The refusal of the Respondents to take some action or to mediate at any time cannot be ignored. In his submission the findings in relation to the Applicant are to be balanced against the other findings of the Tribunal and it is submitted when so done do not lead to a finding so out of the ordinary as to justify a costs order.

27 Mr Howes urges that if the Tribunal find that the Applicant should pay costs then the costs are to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987.

Findings

28 The issue of whether costs are to be awarded has been considered in numerous cases before this Tribunal. Section 88 of the ADT Act lays down a principle that is distinct from that at common law. While the common law principle in civil cases is that costs 'follow the event', section 88 provides that the Tribunal must be satisfied that there are special circumstances warranting an award of costs.

29 In Charteris v General Manager, Leichhardt Municipal Council [2001] NSWADTAP 12 it was stated at paragraph 90:

"The power to award costs is circumscribed. In keeping with the position found in many modern statutory tribunals, the usual rule is that costs are not to be awarded. This is a measure that has at least two objectives - one, to remove an impediment to the exercise of important rights that the Tribunal has been established to see protected where appropriate; two, to discourage the use of lawyers. In these ways the goals of affordable, accessible justice are seen as being supported. But circumstances can arise in proceedings where a party should be given some compensation by way of a costs order. The `special circumstances' power allows the Tribunal to take that action.

30 In Gizah Pty Ltd v AXA Trustees Ltd, Judicial Member Molloy stated at paragraph 29:

“I am of the opinion that in order to satisfy the test of "special circumstances" one must find circumstances that are out of the ordinary, but without having to be extraordinary or exceptional, and those special circumstances would warrant an award of costs.

31 That view has been quoted with approval by several decisions of this Tribunal, most recently in Wood and Anor v Bergman (No. 2) [2003] NSWADT 175. In that decision Deputy President ADCJ Chesterman also referred to other observations in Gizah Pty Ltd v AXA Trustees Ltd (No. 2) and observed that they were quoted with approval by an Appeal Panel of the Tribunal in the recent decision in Randi Wiks Pty Ltd v Pokana Pty Ltd [2003] NSWADTAP 27. The Deputy President stated at paragraphs 11 and 13:

“11 It is recognised that the Retail Leases Division is unique within the Tribunal, in that it alone deals with commercial disputes between parties who are engaged in trade and commerce for reward. In Gizah , at [22] and [33 - 34], the significance of this for costs orders was explained as follows. 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.”

“13. The proposition, however, that 'special circumstances' should be interpreted differently within this Division, because it deals with relationships of a commercial character, does not imply that costs should simply follow the event. This was made clear in Alessa Pty Ltd v Total & Universal Pty Ltd [2001] NSWADT 150 at [4].”

32 It was further stated by the Deputy President at paragraphs 14:

“14. In Alessa , it was said also, at [5-6], that where an application to the Tribunal lacked any conceivable merit in fact or law, this could constitute ‘special circumstances’ justifying a costs order under s 88 in favour of the successful respondent. It would be a situation where refusal to grant such an order would be ‘seriously unfair’. In such a case, the purpose of the costs order would be to prevent the ‘gross abuse’ of the Retail Leases Act by frivolous, vexatious and misconceived proceedings.”

33 The question to be determined is whether in the circumstances of this case there are special circumstances that warrant the making of an order for costs. The expression “'special circumstances” is to be given its normal meaning. The circumstances must be seriously beyond the usual or ordinary pursuit of a claim so that it would be seriously unfair to a party not to be awarded some or all of its costs where it has been successful. The question of whether the facts that had been proved constituted “special circumstances” is a question of fact: Randi Wiks Pty Limited v Pokana Pty Limited at paragraph 27.

34 The primary submissions on behalf of the Respondents relate to the Applicant’s conduct of the proceedings and that the application was wholly without merit.

35 In Raethel -v- the Director General Department of Education and Training [2000] NSWADT 56 the President of the Tribunal considered that it would be an error to use the power to award costs for punitive purposes rather than for compensatory purposes. However, I do not understand Mr Pappas’s submission to be on that basis. He asserts that the Respondents have suffered financially as a consequence of being forced to respond to an application that was without merit and that was prosecuted in a dilatory fashion.

36 To a degree I agree with Mr Pappas’s submission. It is my view that the Applicant’s legal advisors prosecuted the matter in the way they did based on instructions they received. Had they received instructions that accorded with the Applicant’s ultimate evidence they may well have adopted a different approach and the proceedings would have consumed far less time. As it was, the Applicant’s approach not only prolonged the proceedings but it caused them to be fought on largely irrelevant issues.

37 I also agree that the application was prosecuted in a dilatory fashion. Again, no blame can be placed on the Applicant’s legal advisors for this. It was clearly a result of their inability to obtain proper or any instructions.

38 Nevertheless, this is not a situation where the Applicant had an unarguable case. There were clear findings against the Respondents. The Applicant failed because of lack of evidence of the damage suffered to his business as a consequence of any breach of section 34(l)(d) of the Act by the Respondents. It is probable that the lack of evidence was a result of the difficulties that the Applicant’s legal advisors faced in obtaining instructions.

39 I agree that to force another party to litigation, where that party’s claim was without merit, could amount to special circumstances to give rise to an award of costs. However, I do not accept that the principle is totally applicable in the circumstances of this matter. In my view, the Applicant had an arguable case in relation to the leaking roof and was entitled to pursue that issue. His ultimate failure on the point does not amount to "special circumstances". I do however consider it applicable to the main thrust of the Applicant’s case i.e. his application for damages from the loss of his business. This part of the application was without merit.

40 I note that the Applicant has not made any application for a costs order in relation to the Respondents' motion to strike out the claim on the basis of lack of jurisdiction. However, in my view some weight must be given to the time involved in that part of the proceedings in light of the fact that the Respondents failed on the application.

41 In my view, the whole of the circumstances of the prosecution of the case and the lack of merit in the primary application amount to special circumstances warranting an award of costs. However, those costs should not be to the extent urged by Mr Pappas. In the circumstances, the Applicant should pay two thirds of the Respondents’ costs. Those costs are to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987.

Orders

The Applicant is to pay two thirds of the Respondents’ costs. Those costs are to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987.