Tarleton & Peters Pty Ltd v EK Nominees Pty Ltd

[2010] NSWADT 248

CITATION:	Tarleton & Peters Pty Ltd v EK Nominees Pty Ltd [2010] NSWADT 248
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Tarleton & Peters Pty Ltd RESPONDENT E K Nominees Pty Ltd
FILE NUMBER:	105129
HEARING DATES:	16 September 2010
SUBMISSIONS CLOSED:	16 September 2010
DATE OF DECISION:	20 October 2010
BEFORE:	Fox R - Judicial Member
CATCHWORDS:	Commencement of Lease, (s8) - Costs of Interim Application, (s88 1A).
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail leases Act 1994
CASES CITED:	AT v Commissioner of Police [2010] NSWCA 131 Aspromonte Pty Ltd v Zagari [1999} NSWSC 83 Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 284 Helau & Ors v Bong Bong Pty Ltd [2006] NSWADT 128 Jewell Bay Pty Ltd v DPT Operator Pty Ltd (No2) [2010] 204 Lau v Westfield Limited [2005] NSWADT 165 Randi Wix Pty Ltd v Pokana Pty Ltd (No 2)[2003] NSWADT 4 Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1 Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd t/as Cafe Tiffany’s (No 4) [2005] NSWADTAP 32
REPRESENTATION:	APPLICANT Mr Kidd, barrister RESPONDENT Ms Sharpe, barrister
ORDERS:	1 Urgent interim application for order restraining Respondent from entering into lease, or allowing Harris Farm Markets to sell meat denied 2 Applicant’s application for costs denied, no order for costs 3 Parties referred to Retail Tenancy Unit for mediation 4 Applicant to file with RTU and serve list of points for mediation by 30th September 2010 5 Respondent to file with RTU and serve list of points in reply by 14th October 2010 6 Further Directions 11th November 2010.

REASONS FOR DECISION

1 This matter came before me on 2^nd September 2010 as an urgent interim application for an order that I restrain the Respondent from entering into a lease with Harris Farm Market which would allow it to sell meat from premises in the shopping centre known as St Ives Shopping Village. The Applicant is the lessee of other premises within the village from which it has conducted a butchery for many years. Harris Farm Market previously conducted a supermarket from its occupancy, and has recently commenced a fitout of adjacent premises from which it appears to have proposed to sell meat products.

2 The Applicant, in the Application for Original Decision, as a combined retail tenancy and unconscionable conduct claim, claimed that its’ lease gave it the sole right to sell meat, and sought appropriate declarations, restraining order and damages.

3 On 2^nd September Mr Kidd conceded that if a lease had already been executed between the Respondent and Harris Farm Market then he could not press his application for a “stay”. That led to M/s Sharpe from the bar table indicating that a lease had been signed on 23^rd August, the day before the Applications before me had been filed. Mr Kidd then sought formal proof of that, and I adjourned the matter for further hearing (of the Application for Urgent Interim Orders) on 16^th September.

4 On that day M/s Sharpe read the Affidavits of Antonio Marcocci, the secretary of the Respondent company, sworn 2^nd and 9^th September 2010. The Affidavits established the following:-

a.Harris Farm previously occupied shops 33 to 37 in the centre.

b.The lease for these had expired in February, and it remained in occupation under the holding over provisions.

c.It signed a lease (“the Lease”) on 3 ^rd August, which commenced on 1 ^st August, for shops 33 to 38. This lease was forwarded to the Solicitors for the Respondent on that day, with a request for 3 amendments, one of which appeared to be of substance.

d.It took possession of shop 38 on 6 ^th August and commenced the fitout.

e.On 11 ^th August the solicitor acting in the matter for the Respondent indicated by e-mail to the solicitor for Harris Farm that the substantial amendment was not acceptable.

f.Harris Farm was invoiced on 12 ^th August for the rent of the enlarged letting for the months of August and September. That invoice made no reference to an invoice which had been sent 15 ^th July, claiming the “old” rent for August.

g.Hoarding was erected around shop 38 on 16 ^th August.

h. Harris Farm paid the “old” rent on 23 ^rd August.

5 Miss Sharpe argued that the above circumstances effected a Retail Shop Lease pursuant to s8 of the Retail Leases Act 1994. That section indicates that a Retail Shop Lease commences when the tenant:-

“enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first)”

and goes on to say that if the lease is “executed” by both parties before those two possibilities, then the lease has been entered into when that execution has taken place.

6 Mr Kidd, I think rightly, proposed that there was no entry under the Lease, because as a matter of contract, it had not been agreed, and for the same reason, whatever payment had been made, could not be rent under the Lease. In this latter regard the fact that the amount paid was the “old” rent was significant.

7 In evidence, as annexure E to the later Marcocci affidavit was a reconciliation statement for August which indicated that as at 12^th August Harris Farm was in credit for almost $11,000.00 because it had overpaid in July, and for that date claimed the “new” rent of $74,769.99. The 23^rd August payment of the “old” rent of $76,234.61 led to the account being in credit for almost $12,500.00, and showed that the September rent liability of approximately $90,000.00 would have been resolved by a payment of $77,639.61.

8 S8 cannot be applied in these circumstances without regard to the s3 definition of “Retail Shop Lease”, being any grant for value of a right of occupation for a scheduled business purpose, whether oral or written, express or implied, exclusive or otherwise. That wide “net”, it seems to me, can give rise to a situation where a retail shop lease comes into effect to the surprise of all involved (see for instance Helau & Ors v Bong Bong Pty Ltd [2006] NSWADT 128). That is also what happens when there is entry prior to the final documentation; the statute creates what seems to be appropriate to describe as an interim retail shop lease which is eventually “overlaid” by the actual signed document. The terms of that interim statutory creature will depend on the individual circumstances of each matter.

9 In the present circumstances I have no evidence to indicate that the entry on 6^th August was pursuant to any agreement other than the Lease offered up by Harris Farms on 3^rd August, and that seems to me to bring an interim statutory lease into existence on 6^th August when there was entry and the fitout commenced. The many terms of the Lease which were not in issue were part of that statutory construct, and that interim creature will be rescinded by consent of the parties when they sign the document which they acknowledge to be the lease intended to govern the continuing occupancy of the site.

10 I note that my view does not fully accord with the views of Hodgson CJ in Eq as expressed in Aspromonte Pty Ltd v Zagari [1999} NSWSC 831, which seem to indicate that there must be consensus as to every term of the lease for s8 to operate to create that lease by entry or payment, although that decision does accept that the statutory lease can be overridden by subsequent action of the parties. I also note that Mr Kidd’s argument stems from that case, on the basis that there was no consensus as to all the terms. Against that are the views of this Tribunal (which, with respect, is the preferred position) in Randi Wix Pty Ltd v Pokana Pty Ltd (No 2)[2003] NSWADT 4, to the effect that s8 overcomes the need for a concluded contract, and that the terms of the statutory occupancy can be found by reference to the extrinsic evidence.

11 It follows that the entry on 6^th August triggered s8 and so, there was a lease of the premises occupied by Harris Farm some weeks before the Applicant filed the present Application. As Mr Kidd conceded right from the start, that fact indicates strongly against any kind of stay order, and that Application is refused.

12 M/s Sharpe claimed costs, and immediately made written submissions in support. She relied on the decision of the Court of Appeal in AT v Commissioner of Police [2010] NSWCA 131 which indicates that the criterion of “fairness” is a relatively low hurdle, and combined that with the “commercial nature” distinction of this Division made by Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd t/as Cafe Tiffany’s (No 4) [2005] NSWADTAP 32. If I understood the argument correctly, it suggested that a very slight preponderance would be sufficient to render it fair to award costs in favour of a party. It then went on to raise the question asked in Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1 “why should the other party have to pay those expenses when the proceedings should not have been commenced in the first place?”

13 Mr Kidd’s submissions on costs went to the facts set out in the affidavit of Nicholas Peters sworn 24^th August. It annexed the email by which the Applicant first sought clarification from the Respondent of the proposals for the refurbishment of the Harris Farm premises, and the prospect of the sale of meat from those. It was sent 3^rd August, three days before the entry by Harris Farm which established the statutory lease. That was followed on 12^th August by a letter from the Applicant’s solicitor seeking an indication whether fresh meat was to be included in the authorised use for the expanded premises. There had been no response of any kind by 24^th August, the day when these proceedings were taken. In fact, there was no response at all until the 2nd September directions hearing, that being by way of the first Marcocci affidavit.

14 The argument was that these circumstances showed that the Applicant’s behaviour in bringing the Urgent Interim Application was “reasonable and responsible” whilst the Respondent’s was unreasonable.

15 S88 of the Administrative Decisions Act, as far as relevant, states

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 or 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 fact or law,
(d) the nature and complexity of the proceedings,
(e) any other matter that the Tribunal considers relevant.

16 There is no suggestion of any of the “delinquency” identified in ss1A (a) or (b). The matter before me falls squarely within ss1A (c).

17 The fact that this is an interim application is, in my view, a factor which falls within ss1A(d).

18 It seems to me that only a few of the many decisions of the Tribunal which have considered either the previous s88 threshold of “special circumstances” or the present one of “fairness” have dealt with an interim application. Whether it is fair to saddle the eventually successful party with the whole or part of the possibly quite substantial cost of achieving that successful result may be a very different judgment to that same question applied to an urgent interim application.

19 As a matter of logic in interlocutory matters the questions which must be asked are:-

a. should costs be reserved, so leaving the decision to the final decision maker, or
b. should the matter be resolved by an immediately effective decision limited to that part of the litigation?

If it is fair that an order be made forthwith, then

c. is it fair for the (interim) successful party bear the costs? If that is not fair, so bringing an entitlement to costs of that part of the matter,
d. should those costs be immediately payable (perhaps leading to a separate costs assessment) or
e. should that question of quantum be left to the end of the litigation, to be resolved in the final costs order (which might mean that there is only one costs assessment.

20 No doubt, the weaker the case put by the interim applicant, the more likely it is that it will be seen to be fair that there be a costs order in favour of the opponent (bringing with it the question of immediate or later payment). The stronger the case put, the more likely it is that the order will be seen to be fair in favour of the applicant, (raising the same question of immediate or later payment). If the matter is more evenly balanced then there still has to be a decision whether that issue be closed immediately by ands order dismissing the application for an order, or should it be left to the end?

21 In my recent decision of Jewell Bay Pty Ltd v DPT Operator Pty Ltd (No2) [2010] 204 at para 11, I suggested that the decision to award costs would involve the decision maker in awarding “points” in respect of the arguments and counter arguments raised. If that is correct, then the question of whether to award costs in interim matters should be a decision for the interim decision maker, rather than the “final” decision maker. Obviously the interim decision maker is best placed immediately, on making the decision, to assess the relative strengths and weaknesses of the opposing arguments (and, for that matter, the levels of delinquency of the parties up to that point).

22 Another matter to be taken into account is the fact that interim applications are almost never decided on tested evidence, a factor which militates quite strongly in favour of leaving the issue to be “costs reserved”, so it can be considered when all the facts have been established.

23 Yet another matter to be taken into account (whether under ss1A (d) or (e)) is the fact that these matters by their very nature often involve only a couple of hours’ argument, and so, relatively, do not involve a great amount claimed as costs.

24 Because in this Tribunal the costs question is one of a discretion having to be exercised (as opposed to simply allowing them to follow the event), guidance can be found in decisions relating to indemnity costs orders, because these, too, are matters of discretion. A convenient statement of the law is found in Colgate Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 428 at 256:-

4. In consequence of the settled practice which exists, the court ought not usually make an order for the payment of costs on some basis other than the party and party basis. The circumstances of the case must be such as to warrant the court in departing from the usual course.

*[Which in this Tribunal is that there be no “automatic” order for costs]*

That has been the view of all judges dealing with applications for payment of costs on the indemnity or some other basis whether here or in England. The tests have been variously put. The Court of Appeal in Andrews v Barnes (39 Ch D at 141) said the court had a general and discretionary power to award costs as between solicitor and client ``as and when the justice of the case might so require'’. Woodward J in Fountain Selected Meats appears to have adopted what was said by Brandon LJ (as he was) in Preston v Preston ([1982] 1 All ER at 58) namely, there should be some special or unusual feature in the case to justify the court in departing from the ordinary practice.

*[Which in this Tribunal means to find that it is fair that there be a costs order]*

5. Notwithstanding the fact that that is so, it is useful to note some of the circumstances which have been thought to warrant the exercise of the discretion. I instance the making of allegations of fraud knowing them to be false and the making of irrelevant allegations of fraud (both referred to by Woodward J in Fountain and also by Gummow J in Thors v Weekes (1989) 92 ALR 131 at 152 evidence of particular misconduct that causes loss of time to the court and to other parties (French J in Tetijo); the fact that the proceedings were commenced or continued for some ulterior motive (Davies J in Ragata) or in wilful disregard of known facts or clearly established law (Woodward J in Fountain and French J in J-Corp);the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (Davies J in Ragata); an imprudent refusal of an offer to compromise (eg Messiter v Hutchinson (1987) 10 NSWLR 525 ; Maitland Hospital v Fisher (No 2) (1992) 27 NSWLR 721 at 724(Court of Appeal); Crisp v Kent (SC(NSW)(CA), 27 Sept 1993, unreported) and an award of costs on an indemnity basis against a contemnor (eg Megarry V-C in EMI Records). Other categories of cases are to be found in the reports. Yet others to arise in the future will have different features about them which may justify an order for costs on the indemnity basis. The question must always be whether the particular facts and circumstances of the case in question warrant the making of an order for payment of costs other than on a party and party basis.
6. It remains to say that the existence of particular facts and circumstances capable of warranting the making of an order for payment of costs, for instance, on the indemnity basis, does not mean that judges are necessarily obliged to exercise their discretion to make such an order. The costs are always in the discretion of the trial judge. Provided that discretion is exercised having regard to the applicable principles and the particular circumstances of the instant case its exercise will not be found to have miscarried unless it appears that the order which has been made involves a manifest error or injustice

Some of these considerations are formally listed in ss1A, and the others are encompassed by ss1A (e).

25 Having considered all of the above, and in view if the fact that there is little controversy about the fact that the 3^rd August e-mail was sent, so squarely raising the Applicant’s concerns, and the complete failure to reply, I am satisfied that Mr Kidd’s argument must prevail. It simply would not be fair that the Applicant be penalised with a cost order arising out of a very proper attempt a protecting its’ position. In this regard I also take into account that Mr Kidd initially conceded that if a lease of the premises was in existence, his application could not succeed, and so limited the issue to the existence of a lease. The fact that the lease found to have arisen was not the writing initially claimed by the Respondent on 2^nd September, but was a s8 construct, the existence of which depended on evidence not made available in the first Marcocci affidavit, in my view, is also of relevance.

26 In Lau v Westfield Limited [2005] NSWADT 165 I said, in respect of the former s88:- “...once proceedings are on foot, it behoves the parties to be vigilant for the point where the pursuit of the proceedings becomes untenable (for whatever reason) because that is the point where special circumstances may commence to arise”.

That is still a very relevant consideration to establish the point where it becomes fair for a costs order to be made, but is one which in my view should be applied sparingly in matters properly found to be urgent. Thus the fact that the details which led to my conclusion that a s8 statutory lease came into effect were made available in the second Marcocci affidavit, which was filed 9^th September 2010 do not persuade me that the Applicant should not have pressed it’s application on 16^th September.

27 The Respondent’s application for costs of this interim application is denied.