Thalassa Pty Limited v Hawkesbury River Marina Pty Limited

[2005] NSWADTAP 48

Appeal Panel - Internal

CITATION:	Thalassa Pty Limited v Hawkesbury River Marina Pty Limited [2005] NSWADTAP 48
PARTIES:	APPLICANT Thalassa Pty Limited RESPONDENT Hawkesbury River Marina Pty Limited
FILE NUMBER:	059035
HEARING DATES:	28/07/2005
SUBMISSIONS CLOSED:	07/28/2005
DATE OF DECISION:	10/14/2005
DECISION UNDER APPEAL:	Thalassa Pty Limited v Hawkesbury River Marina Pty Limited (No 2) [2005] NSWADT 90
BEFORE:	Chesterman M - ADCJ (Deputy President); Fox R - Judicial Member; Fairweather R - Non Judicial Member
CATCHWORDS:	costs
MATTER FOR DECISION:	Principal matter
FILE NUMBER UNDER APPEAL:	045128
DATE OF DECISION UNDER APPEAL:	04/28/2005
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43 Thalassa Pty Limited v Hawkesbury River Marina Pty Limited (No 2) [2005] NSWADT 90 Thalassa Pty Limited v Hawkesbury River Marina Pty Limited [2005] NSWADT 50 Wood & Anor v Bergman (No 2) [2003] NSWADT 175
REPRESENTATION:	APPLICANT E Chrysostomou, barrister RESPONDENT D Spencer, solicitor
ORDERS:	1. The appeal is allowed; 2. The order of the Tribunal dated 28 April 2005 is set aside.

The costs order made by the Tribunal

1 The issue raised in this appeal, which is brought by the Applicant, a lessee, is whether the circumstances in which its case against the lessor under the Retail Leases Act 1994 (‘the RL Act’) was held to be unsuccessful were such as to warrant a costs order in the lessor’s favour.

2 The costs order was made by the Tribunal, constituted by Mr G Molloy, Judicial Member in a decision dated 28 April 2005 (Thalassa Pty Limited v Hawkesbury River Marina Pty Limited (No 2) [2005] NSWADT 90 – ‘the costs decision’). In that decision, the Tribunal made an order under s 88 of the Administrative Decisions Tribunal Act 1997 (‘the ADT Act’) that the Applicant, Thalassa Pty Limited, should pay all the costs incurred by the Respondent, Hawkesbury River Marina Pty Limited, in defending proceedings brought against it by the Applicant. In a previous decision (Thalassa Pty Limited v Hawkesbury River Marina Pty Limited [2005] NSWADT 50 – ‘the principal decision’) giving answers to four specific questions that had been formulated for preliminary determination, the Tribunal had held that these proceedings should be dismissed.

3 Between 1 August 1997 and 20 January 2003, the Applicant was the lessee of retail shop premises within a property owned by the Respondent and known as Hawkesbury River Marina (‘the Marina’). It carried on business as a café and delicatessen. Its claim against the Respondent was for the repayment of amounts totalling more than $165,000 that it had paid to the Respondent on account of outgoings. It alleged that various provisions of the RL Act limiting the amount that could be charged to it for outgoings were applicable to the lease on the basis that the Marina fell within the definition of a ‘retail shopping centre’ set out in s 3 of this Act.

4 The ground on which the Tribunal, in the principal decision, dismissed the Applicant’s claim was that the evidence did not in fact show the Marina to be a ‘retail shopping centre’.

5 In this decision, the Tribunal held also that even if this were not the case, the amount claimed by the Applicant would have been reduced by about two-thirds (see the costs judgment at [19] and [21]) by virtue of s 71 of the RL Act. This section provides that ‘a claim may not be lodged more than three years after the liability or obligation that is the subject of the claim arose’. Since the Applicant’s application to the Tribunal was filed on 3 November 2004, the Tribunal held that the only repayments that the Applicant could claim were those referable to payments of outgoings made on or after 3 November 2001. It rejected an argument by the Applicant that the three-year limitation period established by s 71 should be measured from the earlier date (8 December 2003) on which the dispute between the parties was referred for mediation to the Retail Tenancy Unit under s 66 of the RL Act.

6 None of the rulings in the principal decision has been challenged on appeal.

7 Section 88 of the ADT Act applies to proceedings under the RL Act by virtue of s 77A of the latter Act. It states that costs may be awarded only if the Tribunal ‘is satisfied that there are special circumstances warranting an award of costs’.

8 In essence, the reason why the Tribunal found this condition to be satisfied and awarded costs to the Respondent was that it considered ‘the whole basis’ of the Applicant’s case to have been ‘built on a very shaky (to put it at its highest) foundation’ (see the costs judgment at [34]). With reference specifically to the claim that the Marina was a ‘retail shopping centre’, it held that the evidence adduced by the Applicant failed to reach a ‘prima facie standard such that the basis or foundation for the advancement of legal argument … is properly founded’ ([28], and see similar observations at [29 – 31] and [36]). With reference to the issue raised by s 71 of the RL Act, the Tribunal held that by virtue of the ‘clear words’ of this section, the Applicant’s claim for more than $165,000 (with which it persisted despite ‘clear notice’ of the terms of the section) ‘could not possibly be sustained’ (see [32]).

9 Amongst the authorities cited by the Tribunal in the costs judgment was Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43. In that case at [7], the Appeal Panel, quoting from Wood & Anor v Bergman (No 2) [2003] NSWADT 175 at [13], held 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 [of the ADT Act] in favour of the successful respondent’.

10 Other authorities are to similar effect and provide a sound basis for the Tribunal’s broad approach to applying the criterion of ‘special circumstances’. It was not suggested in the appeal that this approach was erroneous.

11 In the costs judgment at [27], the Tribunal outlined three specific reasons for making the costs order under s 88:

27 In my opinion the following aspects of the case constitute “special circumstances” within the meaning of that phrase in the context of this Division:
1. The failure of the Applicant to adduce evidence that constituted or amounted to prima facie proof that the premises occupied by the chandlery were used wholly or predominately for the carrying on of one or more of the businesses specified in Schedule 1…

2. The failure of the Applicant to adduce persuasive evidence that the Marina was promoted as a shopping centre…

3. The failure of the Applicant, in the face of the clear words of Section 71(2) to modify or reduce its claim to meet the clear words of that Section.

12 In this decision at [34], the Tribunal summed up its conclusions as follows:

In this matter however I have found that there were three special circumstances and in my view those warrant an award of costs. Even if I am wrong about the second special circumstance in my opinion the first and the third on their own would warrant an award for costs.

13 In challenging the costs order, Mr Chrysostomou, counsel for the Applicant, focused on the particular criticisms made by the Tribunal of the evidence and arguments put before it by the Applicant. In considering his submissions, it is convenient to deal separately with each of the three ‘special circumstances’ relied on by the Tribunal.

The first ‘special circumstance’: deficiencies in the Applicant’s evidence regarding the manner of use of premises within the Marina occupied by a chandlery

14 In order to explain both the first and the second ‘special circumstance’, it is necessary to set out the definition of ‘retail shopping centre’ in s 3 of the RL Act. It is as follows:

retail shopping centre means a cluster of premises that has all of the following attributes:
(a) at least 5 of the premises are used wholly or predominantly for the carrying on of one or more of the businesses specified in Schedule 1,

(b) the premises are all owned by the same person, or have (or would if leased have) the same lessor or the same head lessor, or comprise lots within a single strata plan under the Strata Schemes (Freehold Development) Act 1973 or the Strata Schemes (Leasehold Development) Act 1986,

(c) the premises are located in the one building or in 2 or more buildings that are either adjoining or separated only by common areas or other areas owned by the owner of the retail shops,

(d) the cluster of premises is promoted as, or generally regarded as constituting, a shopping centre, shopping mall, shopping court or shopping arcade.

15 It seems to have been accepted that paragraphs (b) and (c) were satisfied in the case of the Marina. The issues in dispute were whether it had the attributes required by paragraphs (a) and (d). The Tribunal held that the Applicant’s case was unsuccessful on both of these issues.

16 The first ‘special circumstance’ arose out of the Applicant’s evidence regarding paragraph (a). It was accepted throughout that as from the commencement of the Applicant’s lease at least four of the premises in the Marina were used wholly or predominantly for the carrying on of one or more businesses falling within Schedule 1 of the RL Act. The Applicant sought in two ways to establish that there were in fact five such premises, so as to satisfy the requirements of paragraph (a).

17 First, it relied on the existence of premises, constituting a ‘combined area’, that the Tribunal, in the principal decision at [29], described in the following terms:

… the “combined area was and still is operated as the administration office for various businesses, which included the operation of water taxis, the hire of boats, the businesses from workshops 2, 3 and 4 (namely the outboard engine workshop, the diesel workshop and the shipwright’s workshop referred to above) the sale of “chandlery” items and the storage of various materials and items required in relation to all (those) businesses”.

18 In the principal decision, however, at [30] and [38 – 39], the Tribunal rejected the Applicant’s submissions (a) that the hiring of boats was ‘equipment hire’, this being a category of business listed in Schedule 1 to the RL Act; and (b) that a chandlery is the equivalent of a hardware business, ‘hardware shops’ being a category of business listed in the Schedule.

19 More significantly for present purposes, the Tribunal held in the same decision at [41] that the evidence of the Applicant ‘fell well short of even prima facie proof’ that the ‘combined area’ was used ‘wholly or predominantly’ for the one type of business – namely, a chandlery – that could arguably have been said to fall within Schedule 1. It reiterated this view in the costs judgment at [5], adding as follows:

To merely point to the sale of bait and fishing rods and odd items that may be available in hardware shops does not discharge and goes nowhere near discharging the requirement to demonstrate whole or predominant use.

20 In the costs decision at [28 – 30], it expanded further on this assessment of the Applicant’s evidence, explaining why the shortcomings in the evidence constituted a sound reason for holding that ‘special circumstances’ existed warranting an award of costs in the Respondent’s favour:

28 Even if one accepted that the chandlery was caught by Schedule 1 then the evidence of the Applicant “fell well short of even prima facie proof of” whole or predominate use of the premises. In my opinion it is not an argument to assert that because there was an arguable point relating to the word “chandlery” or an arguable point relating to the meaning of the word “premises” within the ambit of the Retail Leases Act then these were important issues for the development or clarification of the law such that no costs order should be made. All of those arguments were predicated on the evidentiary base or foundation that the premises, howsoever described or defined, were used wholly or predominately for a Schedule 1 use. Without that at least prima facie evidence the other, and no doubt interesting arguments, had in fact no basis in evidence – after all, this is not a Tribunal that deals with aspects of philosophy or academic questions removed from the real world of evidence. There is, in my view, an absolute obligation upon an Applicant, before commencing proceedings, to at least be reasonably sure that the evidence that it proposes to adduce will at least reach a prima facie standard such that the basis or foundation for the advancement of legal argument (in this case on the meaning of “chandlery” and “premises”) is properly founded such that the whole court case is not merely an academic exercise. In my view the evidence in this matter fell far short of providing that proper basis or foundation.

29 There is an absolute obligation on a moving party to ensure that the evidence supports the submissions. That basic principle applies in all jurisdictions. In my view this was not a case where a party could say that on the facts adduced one view or the other was available to the Tribunal such that the Tribunal would have to decide between competing evidence, but rather the evidence demonstrated that the Applicant did not reach even prima facie proof of whole or predominate use.

30 In this regard it is important to understand that the Respondent, in the circumstances as I have outlined above, made it plain from the very beginning that not only was the matter, if agitated, to be strenuously defended but also the issue of whole or predominate use was a key core issue – in these circumstances the Applicant was on clear notice that it needed to look very carefully at its evidence to be sure that its evidence would, at the very least, constitute prima facie proof of such use. These are serious matters which are costly to conduct and which required (in my opinion) considerable attention in order to meet and overcome the evidentiary hurdles required to be met and overcome in order to form the foundation of the Applicant’s case.

The second way in which the Applicant sought to establish that five, not four, premises in the Marina were used wholly or predominantly for one or more Schedule 1 businesses was to argue that one of the four businesses acknowledged to be in this category – a liquor and convenience store – in fact occupied two premises.

21 The Tribunal’s treatment of this contention in the principal decision, at [20] and [23 – 26], must be quoted at length:

20 Fourthly, there was a liquor/convenience store. This occupied premises delineated as shops 15 and 16 and office No. 10. There was considerable debate on whether those premises comprised one or two premises for the purposes of the Act. There is no definition of “premises” in the Act. The word is of particular importance because of the definitions of “retail shop”, “retail shop lease” and “retail shopping centre”, all of which refer to “premises”. In my opinion it is important to firstly address this question: what are “premises” for the purposes of the Act? I am not aware of any law or decision on this issue, other than the long-running saga of Manly Council v. Malouf which started as [2002] NSWADT 200, on appeal [2003] NSWADTAP 12, on appeal to the Supreme Court then to the Court of Appeal [2004] NSWCA 299, which concerned vacant land governed by the Roads Act, 1993 . The issue in this case was entirely different from the issue now before me. Neither counsel was able to further assist me in this regard. However, it seems to me plain that the answer is to be found in the description of leased areas given by the lessor. There is no need for me, in the context of the facts of this case, to launch into a dissertation on the meaning of “premises”. Obviously, “premises” is a word of general meaning but in each case requires a definition consistent with its use. The meaning of the word must fit into the particular context in which it is being used in the Act. Here we are dealing with areas leased to a tenant. An area needs to be defined by reference to a plan or a shop number such that there can be no argument over precisely what area the tenant is entitled to occupy pursuant to the lease contract. It is all a matter of contract. So, when looking at the Act one needs to look at the way in which the lessor/ landlord has delineated the areas of the building to be occupied by the tenant(s) and those areas are then individually described as “premises”. Consequently, a tenant can occupy one premises or more than one premises such that it is each delineated or specified area that forms a “premises” for the purposes of the Act. So, for example, in the definition of “retail shopping centre” one finds the words “a cluster of premises” that has, inter alia, “at least 5 of the premises are used wholly or predominately …”. In order to make sense of that provision one would have to find a building that has at least 5 delineated areas which somehow form, or are part of, a “cluster”. In order to determine the delineated areas one needs to look at the lessor’s plans and see which areas have been delineated by the lessor. If the plans show at least 5 specifically delineated areas then each of those areas constitute a “premises” so that even if there is only one tenant for all of the 5 individually delineated areas that would not alter the fact that there were 5 premises. I observe that if there is no plan then one may have to look at the leases to identify with particularity the area(s) tenanted….

23 The evidence further discloses that the liquor and convenience store was divided into two portions, one delineated for the specific sale of liquor (pursuant to the Liquor Act 1982) and the other for the sale of food and other items. The evidence showed that on days when liquor was not allowed to be sold the liquor area was cut or covered off by use of blankets. On all other occasions the liquor area was available within Shop 15 and persons who wished to purchase liquor would take their purchases to the single counter/central register – presumably a purchaser could purchase liquor and other items but, as I understood it, the liquor would be calculated and recorded separately in the register as required under the Liquor Act 1982.

24 It was strongly submitted by counsel for the Applicant that I should regard the separate area used for the sale of liquor as separate premises for the purposes of the Act, it being urged upon me that the Liquor Act 1982 required such an area to be defined and separated for the purposes of the off licence and that in itself pointed to there being two separate premises. In addition, because accounting for liquor must be kept separate then I should regard the two areas within Shop 15 as being two separate premises, both uses (the convenience store and the liquor store) constituting separate businesses.

25 It is not uncommon for a business to operate a number of businesses from the one premises. In particular, it is not uncommon to find licensed defined premises within the one shop area. For example, one may find liquor being sold in a hardware shop. It does not follow however that the premises should be regarded as two separate premises for the purposes of the Act. In my opinion, once one adopts the view that I have expressed above, namely that the “premises” are defined by the lessor and can be found in the lessor’s leasing plans and the definition of “property leased” in the actual lease itself, then the fact that there are separately licensed premises within those premises does not create two separate premises for the purposes of the Act.

26 It therefore follows that Shop 15 should be regarded as one premises for the purposes of the Act.

22 In the costs judgment, at [14 – 15], the Tribunal summarised this reasoning, indicating that it had rejected the Applicant’s argument on this issue. It did not comment on the quality of the evidence that the Applicant had adduced.

23 It should be added that the Tribunal also held that a laundromat in the Marina was not a business within Schedule 1. It is not clear whether the Applicant had argued otherwise.

The second ‘special circumstance’: deficiencies in the evidence showing that the Marina was promoted or generally regarded as a shopping centre

24 In the principal decision, the Tribunal dealt in the following way with the Applicant’s argument that the Marina was ‘promoted as, or generally regarded as constituting, a shopping centre’ within the meaning of paragraph (d) of the definition of ‘retail shopping centre’.

25 At [45], it first rejected the submission that the issue was concluded in the Applicant’s favour by the fact that the Respondent, in its Disclosure Statement relating to the lease to the Applicant, described the leased premises as forming part of a ‘retail shopping centre’. It then rejected similar submissions relying on the following matters: (a) that the Applicant was required to contribute to an advertising/promotion levy; (b) that the core trading hours were daylight hours; and (c) that the Applicant was contractually required to use the words ‘Hawkesbury River Marina’ in all advertising for the business that it conducted at the leased premises.

26 The principal decision continued as follows, at [45]:

The reliance on the advertising material to which I have made reference does not, in my view, result in a finding that the “cluster of premises (was) promoted as, or generally regarded as constituting, a shopping centre etc”. No submission was made to me that would support a contention that this building was “generally regarded as constituting” a shopping centre. The best that the Applicant could say was that the building was so promoted. I am unable to see anything in the material that would encourage me to draw that conclusion. There is no doubt that the various premises within the Marina building offered a wide range of items and activities but it is crystal clear (in my opinion) that the Marina was marketed, not as a place to go for shopping but rather as a place to go for enjoyment, particularly marine enjoyment, where one could go for boating services, something to eat and drink, to sit in enjoyable surroundings on the water. That is a far cry from being a “shopping centre” as one would generally regard those words. In my opinion it is a matter of fact to be deduced from the evidence and in my opinion the Applicant has not satisfied me that the cluster of premises was promoted as a shopping centre.

27 In the costs judgment at [6], the Tribunal quoted extracts from this paragraph. At [31], it elaborated as follows on its conclusion that the failure of the Applicant to adduce persuasive evidence that the Marina was promoted as a shopping centre constituted a second ‘special circumstance’:

31 Nextly ( sic ), in my view the material (evidence) adduced by the Applicant in support of its contention that the Marina was promoted as a shopping centre fell far short of proof of that submission. Not a great deal of time was spent on this aspect at the hearing and I can understand an argument to the effect that the material in evidence was sufficient, on a prima facie basis to support the submission. However, and notwithstanding that understanding, in my opinion the material fell far short of supporting that contention and in the context of this Division that failure constituted “special circumstances”.

28 In the principal decision at [51 – 53], the Tribunal explained as follows its decision regarding s 71:

51… The Respondent contends that the Applicant is restricted by Section 71. The Applicant agrees that Section 71 has effect but submits that the relevant date is 8 December 2000 being three years prior to when the matter was referred to the Retail Tenancy Unit on 8 December 2003.

52 In my opinion the answer to this question is very simple and is to be found within the terms of Section 71 itself…. It is plain in my view that the claim is a claim within Division 3, is a claim within the definition of “retail tenancy claim” in Section 70 and only becomes a claim when it is in fact lodged with this Tribunal for determination. A retail tenancy claim is a totally different animal from a dispute which is referred to mediation. I have made reference above to the sections of the Act which deal with mediation of disputes. A dispute is not a retail tenancy claim. Although it is true that a retail tenancy dispute “may not be the subject of proceedings before any court unless or until the Registrar has certified in writing that mediation under this Part has failed to resolve the dispute or matter or the court is otherwise satisfied that mediation under this part is unlikely to resolve the dispute or matter” (Section 68(1)) such that it is often said, incorrectly in my view, that mediation is a pre-requisite to filing a retail tenancy claim, the fact is that a retail tenancy claim is a specific action that is taken by a party to this Tribunal and in my view Section 71(2) … applies by reference to the date on which the Applicant files its claim in this Tribunal. In the instant case that date was 3 November 2004 such that the Applicant is prohibited by Section 71 from agitating any claim that pre-dates 3 November 2001.

53 The Applicant submitted that dating Section 71 from the date of filing of the Application in this Tribunal would be unfair/inequitable because any delay in mediation, or refusal to mediate, or refusing to settle would result in a consequent reduction of the amount for which the Respondent would be otherwise liable. Be that as it may, Section 71 is, in my opinion, quite clear and operates as I have stated above.

29 In the costs decision at [32], the Tribunal commented as follows on this ruling:-

32 Finally, there is the Section 71 issue. The claim by the Applicant sought a refund from the Respondent of some $165,000.00, asserted to be over-payments and based upon the evidentiary foundation of the premises forming part of a retail shopping centre. In other words, the whole of the Applicant’s case was based on that submission (which only goes to underline the views that I have expressed above). It could not be said that the quantum in issue was not inconsiderable. Consequently, it was a serious issue to be tried. However, the claim for that amount in my view flew in the face of the clear words of Section 71(2). And it was not as if the Applicant was not on notice – the Respondent (through its lawyers) had given clear notice (as I have outlined above) that Section 71 applied and therefore the amount sought to be recovered could not possibly be sustained. This notwithstanding, the Applicant persisted in its submission that the full amount was payable, alternatively that Section 71(2) operated from the date of referral to the Retail Tenancy Unit. In my view both contentions could not possibly survive a proper understanding of Section 71(2) in its very plain words, such that their agitation constituted “special circumstances”.

30 In his submissions to us, Mr Chrysostomou acknowledged that by virtue of s 113(2) of the ADT Act, he was bound to establish to our satisfaction that the Tribunal’s reasoning in making the costs order was erroneous in law. It was not sufficient to persuade us solely that the Respondent’s application for costs should not have succeeded on its merits.

31 Having given careful consideration to relevant aspects of the two decisions by the Tribunal, we have reached the conclusion that the Tribunal’s reasoning in the costs decision is indeed vulnerable to challenge on grounds of error of law. In explaining this conclusion, it is again convenient to treat separately each of the three ‘special circumstances’.

32 The first ‘special circumstance’. The Tribunal’s determination that the first ‘special circumstance’ existed was based on its finding (see the costs decision at [28]) that the evidence put forward by the Applicant ‘fell far short of providing’ the proper ‘evidentiary base or foundation’ for the proposition that the premises in which the chandlery business operated was used wholly or predominantly for a Schedule 1 use’. This evidence, the Tribunal said, should have at least reached ‘a prima facie standard’.

33 In this part of its reasoning, the Tribunal failed, however, to take account of the fact that the Applicant’s argument regarding the premises where the chandlery operated was not the only means whereby it sought to establish that the Marina satisfied the requirements of paragraph (a) of the definition of ‘retail shopping centre’ in s 3 of the RL Act. It advanced an alternative argument that was entirely independent of its argument relating to the chandlery. This was that other premises within the Marina that were occupied by the liquor and convenience store should be counted as two premises, not one only. Success in either of these lines of argument would have meant that the issues raised by paragraph (a) would have had to be determined in the Applicant’s favour.

34 In the principal decision, the Tribunal rejected this alternative argument (see the passage quoted above at [22]). But neither in this decision nor in the costs decision (see above at [23]) did it indicate that the Applicant put forward wholly inadequate evidence or legal submissions on this issue. To quote again the phrase that we have cited from Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43, the Tribunal said nothing to suggest that this specific element of the Applicant’s case ‘lacked any conceivable merit in fact or law’.

35 In the submissions, both written and oral, that were put to us by Mr Spencer on behalf of the Respondent, we did not discern any contention dealing specifically with this aspect of the costs decision.

36 For these reasons, we find that the Tribunal erred in law in deciding that the first ‘special circumstance’ existed. We agree with the following proposition put to us by Mr Chrysostomou in his written submissions:

The proper issue for the Tribunal to identify in ascertaining whether or not special circumstances existed would be to determine whether or not all of the Appellant’s arguments in respect of the definition of retail shopping centre … were so hopeless as to constitute special circumstances. The Tribunal cannot identify one discrete element and ignore the other submissions in determining whether special circumstances existed.

37 The second ‘special circumstance’. The Tribunal’s finding that a second ‘special circumstance’ existed was based on the Applicant’s failure to adduce ‘persuasive evidence’ in support of its submission that the Marina was ‘promoted as’ a shopping centre, within the meaning of paragraph (d) of the definition of ‘retail shopping centre’ in the RL Act.

38 The Tribunal did not, however, consider this deficiency in the Applicant’s evidence to be of the same order as the deficiency in the evidence regarding the manner of use of the premises occupied by the chandlery. In the costs decision at [31], it stated that the evidence ‘fell far short of proof of’ the submission that the Marina was promoted as a shopping centre. It repeated this at the end of paragraph [31]. But it interposed this observation:-

Not a great deal of time was spent on this aspect at the hearing and I can understand an argument to the effect that the material in evidence was sufficient, on a prima facie basis to support the submission.

39 Furthermore, in the costs decision at [34] the Tribunal made the following significant comment:

Even if I am wrong about the second special circumstance in my opinion the first and the third on their own would warrant an award for costs.

40 We have found it difficult to interpret the Tribunal’s findings that (a) the Applicant’s evidence on this issue ‘fell far short of proof’ of the relevant submission, but that (b) at the same time it was – or might have been – ‘sufficient, on a prima basis to support the submission’. But taking into account the Tribunal’s own admitted doubts as to whether the ‘second special circumstance’ was in fact made out, we believe that the Tribunal must at least have assessed the Applicant’s case on this issue as ‘arguable’, if not ‘reasonably arguable’. It may be that the description ‘sufficient, on a prima facie basis’ refers to the Applicant’s evidence considered in isolation, whereas the finding that it ‘fell far short of proof’ represents an assessment of it alongside competing evidence and submissions advanced by the Respondent.

41 To characterise the Appellant’s case on this issue as ‘arguable’ does not, in our view, contradict the Tribunal’s statement that its evidence was not ‘persuasive’. More importantly, it cannot be said that an ‘arguable’ case is one that lacks ‘any conceivable merit in fact or law’. In so ruling, we disagree with Mr Spencer’s statement, in his written submissions, that ‘a finding that a party has failed to bring forward “persuasive evidence” is almost tantamount to finding that a party has simply failed to bring forward any evidence on a critical or important issue’.

42 In view of these doubts and uncertainties – including those expressed by the Tribunal itself – we cannot treat the second ‘special circumstance’, standing alone, as providing sufficient grounds to warrant a costs order against the Applicant. If the Tribunal in fact believed otherwise, that would be an error of law.

43 The third ‘special circumstance’. The Tribunal held that the third of the three ‘special circumstances’ warranting a costs order was constituted by the Applicant’s persistence in its submission that the full amount that it claimed was payable, notwithstanding the clear words of s 71 of the RL Act. The Tribunal held that this provision unambiguously ruled out this submission, and ruled out also the Applicant’s ancillary submission that the three-year limitation period should be measured from the date on which the dispute between the parties was referred for mediation to the Retail Tenancy Unit, not from the date when proceedings were commenced in the Tribunal.

44 We do not in any way dispute the Tribunal’s view of the effect of s 71. But in our opinion the Tribunal, when describing in the costs decision the Applicant’s stance on this question, departed significantly, and to the Applicant’s detriment, from the description that it had given in the principal decision.

45 In the principal decision, at [51], the Tribunal said:

The Respondent contends that the Applicant is restricted by Section 71. The Applicant agrees that Section 71 has effect (emphasis added) but submits that the relevant date is 8 December 2000 being three years prior to when the matter was referred to the Retail Tenancy Unit on 8 December 2003.

46 In the costs judgment, the relevant observations of the Tribunal (at [31]) were these:

The claim by the Applicant sought a refund from the Respondent of some $165,000.00… In other words, the whole of the Applicant’s case (emphasis added) was based on that submission…. However, the claim for that amount in my view flew in the face of the clear words of Section 71(2). And it was not as if the Applicant was not on notice… This notwithstanding, the Applicant persisted in its submission that the full amount was payable [emphasis added], alternatively that Section 71(2) operated from the date of referral to the Retail Tenancy Unit.

47 In this context, two other matters were drawn to our attention by Mr Chrysostomou.

48 One of them was that the four specific questions for preliminary determination that formed the subject-matter of the principal decision, including two relating to the impact of s 71, were formulated by the Tribunal itself, ‘in concert with counsel for both parties’ (see the decision at [13]). The two questions relating to s 71 were in these terms:

C. Is the Applicant prohibited by Retail Leases Act Section 71 from agitating any claim that pre-dates 3 November 2001?

D. Is the relevant date in C above 8 December 2000?

49 The other was that in two letters sent by the Respondent’s solicitors to the Applicant’s solicitors during January 2004 – i.e., some ten months before the commencement of Tribunal proceedings – the Respondent’s solicitors maintained that the limitation period stipulated in s 71 was operative by reference to the date of filing of ‘the Application’, meaning, inevitably, the application for mediation. In the costs decision at [11 – 12], the Tribunal referred to these letters, but did not comment that at this stage the Respondent’s solicitors appeared to have been interpreting the section according to one of the lines of argument ultimately urged on the Tribunal by the Applicant.

50 We agree with a contention, put by Mr Spencer, that the mere fact that a preliminary question of law – such as the question posed here by s 71 – is formulated by the Tribunal, with or without counsel’s assistance, does not inevitably produce the conclusion that a party’s submissions relating to it could not subsequently be held to be lacking in merit. At most, the Tribunal’s participation in formulating the question implies that the arguments on both sides are likely to have some merit.

51 Our primary concern with the Tribunal’s finding of this third ‘special circumstance’ is however that it appears, in the costs judgment, to have been based on a characterisation of the stance adopted by the Applicant during the hearing of the preliminary questions that is at odds with the Tribunal’s own characterisation of this stance in the principal judgment. It takes no account of what in the earlier judgment the Tribunal described as the Applicant’s ‘agreement’ – i.e., concession – that ‘Section 71 has effect’. If, as this concession suggests, the issue genuinely in dispute was the date from which the three-year limitation period stipulated in s 71 should be measured, then having regard to the view on this issue implicitly conveyed by the Respondent’s solicitors in their letters of January 2004, the Tribunal in the costs decision overstated the degree to which the Applicant ‘persisted’ in claiming the whole amount initially sought and undervalued the Applicant’s entitlement to seek an express determination by the Tribunal as to the appropriate date.

52 In our opinion, this failure in the costs judgment to reflect the true circumstances of the dispute regarding s 71 must be regarded as an error of law justifying our intervention.

53 We would make the further comment that if, contrary to what we have just held, the Tribunal’s determination based on the third ‘special circumstance’ is not vulnerable to challenge on grounds of error of law, we do not see how, standing alone, this ‘circumstance’ could support the costs order made by the Tribunal against the Applicant. This was an award of the costs of the whole hearing. But in contrast to the matters out of which the first and second ‘special circumstances’ were held to arise, the issue posed by s 71 was not determinative of the whole dispute between the parties. The Tribunal’s decision against the Applicant on this issue reduced the amount of its potential claim by about two-thirds, but did not dispose of the claim. If, as the Tribunal said, it was an issue easily settled by the ‘clear words’ of s 71, it cannot have occupied a substantial proportion of the hearing of the preliminary questions, or of the expense incurred by the parties in preparing for the hearing.

Our orders

54 We should add that we have given careful consideration to submissions by Mr Spencer to the effect that (a) the question of what constitutes ‘special circumstances’ under s 88 of the ADT Act must be approached with due regard to the need for flexibility of interpretation and (b) an Appeal Panel should not overturn a costs decision at first instance unless one or more errors are manifest. We are satisfied, however, that the problems with the Tribunal’s reasoning that we have identified do constitute errors of law and cannot be put to one side by virtue of broad considerations such as these.

55 Our orders, in the light of the foregoing, must be that the appeal is allowed and the order of the Tribunal dated 28 April 2005 is set aside.