TLF NOMINEES PTY LTD and NGUYEN
[2014] WASAT 143
•23 OCTOBER 2014
JURISDICTION : STATE ADMINISTRATIVE TRIBUNAL
ACT: COMMERCIAL TENANCY (RETAIL SHOPS) AGREEMENTS ACT 1985 (WA)
CITATION: TLF NOMINEES PTY LTD and NGUYEN [2014] WASAT 143
MEMBER: MR D AITKEN (MEMBER)
HEARD: DETERMINED ON THE DOCUMENTS
DELIVERED : 23 OCTOBER 2014
FILE NO/S: CC 800 of 2014
BETWEEN: TLF NOMINEES PTY LTD
Applicant
AND
TIEN LONG NGUYEN
THI AI NGUYEN
Respondents
Catchwords:
Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) Costs where no hearing on the merits Principles to be applied
Legislation:
Commercial Tenancy (Retail Shops) Agreement Act 1985 (WA), s 16(1), s 25D(1)
Legal Profession Act 2008 (WA)
State Administrative Tribunal Act 2004(WA), s 87(1), s 87(2)
Legal Practitioners (State Administrative Tribunal) Determination 2012 (WA)
Result:
Order made that respondents pay costs to the applicant
Summary of Tribunal's decision:
The respondents gave notice to the applicant of the termination of the lease of premises occupied by the applicant, to take effect one month after the date of the notice and required vacant possession of the premises on that date. The basis for the notice was that the respondents contended that they had not approved an assignment of the lease to the applicant and had also not agreed to an extension of the lease, which had expired.
The applicant applied to the Tribunal for the determination of the questions raised by the notice in relation to the lease and whether the respondents' termination of the lease was lawful. The applicant also sought an interim order prohibiting the respondents from terminating the lease and evicting the applicant from the premises.
The day after the application was filed the respondents notified the applicant that they would not contest the matter and that they would rescind the notice of termination and sign a Deed of Assignment and Extension of Lease which had been provided to them previously by the applicant's lawyer.
The applicant withdrew the proceeding, but sought an order that the respondents pay its costs.
The Tribunal examined the principles which apply in relation to the costs of parties in a proceeding under the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) and applied those principles to the circumstances of this proceeding.
The Tribunal decided to exercise its discretion under s 87(2) of the State Administrative Tribunal Act 2004 (WA) to make an order that the respondents pay costs to the applicant.
Category: B
Representation:
Counsel:
Applicant: Mr P Le
Respondents : Mr P May
Solicitors:
Applicant: Peter Legal
Respondents : Peter May Commercial Lawyer
Case(s) referred to in decision(s):
Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194
Chew and Director General of the Department of Education and Training [2006] WASAT 248
Pearce & Anor and Germain [2007] WASAT 291 (S)
Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622
REASONS FOR DECISION OF THE TRIBUNAL:
Introduction
This is the decision of the Tribunal regarding an application made at the conclusion of this proceeding by the applicant for an order that the respondents pay its costs.
The applicant commenced the proceeding by making an application (the application) under s 16(1) of the Commercial Tenancy (Retail Shops) Agreements Act 1985 (WA) (CTRSA Act) seeking a determination of the following questions:
1.Whether the respondents had approved an assignment of lease to the applicant;
2.Whether the respondents had approved an extension of lease to the applicant; and
3.Whether the respondents’ termination of the lease was unlawful.
Background
The background to the proceeding, which I have taken from the documents filed with the application, is as follows:
•The respondents are the owner and landlord of the premises known as Units 1 and 2, 191 Bulwer Street, Perth (the premises).
•On 14 November 2011 the applicant purchased the business known as Jasmine Beauty Clinic from Ms Ngoc Le Duong, which was being carried on at the premises.
•Ms Duong had leased the premises from the respondents for a period of five years commencing on 1 June 2007 with two options to extend the lease for further terms of five years each (the lease).
•Settlement of the sale of the business was due to take place on 24 November 2011.
•On 14 November 2011 the applicant's lawyer, Mr Peter Le of Peter Legal sent a letter to the respondents' managing agent, APFX enclosing a copy of the Agreement for Sale of Business and a copy of a company extract of the applicant and requesting approval from the respondents for the assignment of the lease to the applicant.
•On 25 November 2011 Mr Le sent an email to Mr Dean Rafferty of APFX attaching a proposed Deed of Assignment of Lease and saying that the settlement date had passed and asking whether settlement could be achieved by 1 December 2011.
•Settlement of the sale of the business took place on 1 December 2011.
•On 2 December 2011 Mr Le sent an email to Mr Rafferty confirming that he had been told in a conversation that morning that the respondents had approved the assignment of the lease. Mr Le also said in that email that he would arrange for Ms Duong and the applicant to sign the Deed of Assignment of Lease and then forward it for signing by the respondents.
•On 6 December 2011 Mr Le sent a letter to APFX enclosing a cheque from the applicant for the security bond under the lease.
•On 13 December 2011 Mr Le sent a letter to APFX enclosing the Deed of Assignment of Lease for the respondents to sign.
•On 16 and 31 January 2012 Mr Le sent facsimiles to APFX following up on the signing the Deed of Assignment of Lease by the respondents.
•Sometime in February, March or April 2012 APFX ceased as the managing agent and Acton Central was appointed as the new managing agent of the respondents.
•On 23 April 2012 Mr Le sent an email to Mr Hugh Bamford of Acton Central following up on the signing of the Deed of Assignment of Lease by the respondents.
•On 19 June 2012 Mr Le sent another email to Mr Bamford following up on the signing of the Deed of Assignment of Lease and saying that there should now also be an Extension of Lease for the period of five years commencing on 1 June 2012.
•On 25 June 2012 Mr Bamford sent an email to Mr Le saying that those documents had been drafted and sent to the respondents for signing.
•On 23 October 2013, apparently in response to a follow up by Mr Le, Ms Julie Mills of Acton Central sent an email to Mr Le which stated that the respondents were currently having a valuation completed for their bank and the lease to the applicant was 'a huge part of that'. She further stated that she recognised the lease 'without the documents' and would get the matter sorted out as quickly as she could.
•On 10 February 2014 Ms Mills sent an email to Mr Le stating that she had spoken with one of the respondents and sent emails to him. She indicated that the documents which had previously been sent to the respondents had been lost and requested Mr Le to prepare documents for signing by the respondents.
•On 4 March 2014 Mr Le sent a Deed of Assignment and Extension of Lease to Ms Mills.
•On 22 May 2014 Ms Mills sent a letter (notice of termination) to the applicant stating that the respondents had not received an application for assignment of the lease before the applicant took possession of the premises, which was a breach of the lease and that the option to extend the lease had not been exercised and that Ms Duong held the premises as a monthly tenant. The letter then stated that the respondents gave notice that the lease would terminate on 23 June 2014 and required vacant possession of the premises on or before that date.
The proceeding
On 16 June 2014, the applicant filed the application, which included the seeking of an urgent interim order prohibiting the respondents from terminating the lease and evicting the applicant from the premises. Because the application sought an urgent interim order it was not necessary for the applicant to provide a certificate from the Small Business Commissioner under s 25D(1) of the CTRSA Act.
On 23 June 2014 the Tribunal listed the matter for hearing of the application for an interim order and for directions on the substantive application.
On 17 June 2014, Acton Central sent a letter to the applicant stating that the respondents would not contest the matter and that the respondents would rescind the notice of termination and sign the Deed of Assignment and Extension of Lease that Mr Le had provided to them.
On 19 June 2014, Mr Le sent a letter to the Tribunal enclosing a copy of the letter from Acton Central to the applicant and stated that the applicant would not withdraw the proceeding until the Deed of Assignment had been signed, and that there was also the issue of the legal costs unnecessarily incurred by the applicant.
With the consent of the parties, the hearing listed for 23 June 2014 was vacated and the matter was relisted for 15 July 2014 to enable the parties to finalise the signing of the Deed of Assignment and to endeavour to resolve the issue of the costs sought by the applicant.
On 14 July 2014, the Tribunal received a letter dated 11 July 2014 from Acton Central stating that the respondents had signed the Deed of Assignment and extension of lease documents and provided them to the applicant. The letter also stated that the applicant had advised that it would not discontinue the matter because the respondents had not paid the legal costs which it had incurred and requested deferral of the hearing listed for 14 July 2014 to enable the respondents to seek advice.
On 14 July 2014, the Tribunal received a letter from Mr Le stating that the applicant wished to withdraw the application for the interim order and agreed to the deferral of the directions hearing on the substantive application in respect of the applicant's costs. The Tribunal made an order for the withdrawal of the application for an interim order and vacated the directions hearing listed for 14 July 2014 and relisted that for 28 July 2014.
On 25 July 2014, Mr Peter May Commercial Lawyer, filed a notice of legal representation for the respondents and requested that the directions hearing listed for 28 July 2014 be postponed to the following day. Mr Le consented to that postponement.
At the directions hearing on 29 July 2014, Mr May stated that the respondents opposed the applicant's claim for costs. The Tribunal gave leave to the applicant to withdraw the substantive application and ordered that it be withdrawn, with liberty to the applicant to apply for costs by filing and giving to the respondents a schedule of costs claimed and supporting submissions and for the respondents to file submissions in opposition. The Tribunal further ordered that it would determine the application for costs on the documents and, if costs are to be awarded, fix the amount of those costs.
Application for costs
The applicant has applied for costs of $2,279.50 comprised of $2,200 for legal fees and $79.50 for the filing fee to commence the proceeding. The amount for the legal fees is stated to be for four hours of work at $550 per hour inclusive of GST, which the applicant says was the time taken to prepare the substantive application and the supporting statement and evidence filed with that application.
Applicant's contentions
The applicant contends that the Tribunal ought to make an order that the respondents pay its costs because the application made by the applicant was unnecessary and the applicant has incurred unnecessary costs because the notice of termination was without foundation and unjustified. The applicant refers to the communications with the respondents' managing agents during the past two years and makes the point that the respondents did not contest the application and signed the Deed of Assignment and Extension of Lease shortly after the applicant filed the application with the Tribunal.
The applicant says that it would be unjust for the applicant not to recover its costs and for the respondents to simply be able to walk away from the proceeding without any consequences due to their unjustified termination of the lease.
Respondents' contentions
The respondents contend that a genuine dispute arose between the parties as to whether the lease had been assigned to the applicant and whether the lease had been extended or had expired. The respondents say that upon the commencement of the proceeding, they sought urgent legal advice and, as a result, the respondents decided that there were no issues in contention and that they would sign the Deed of Assignment and Extension of Lease and the dispute was resolved without the requirement of a hearing. The respondents say that at the time the proceeding was commenced, they held a genuine belief that the lease had expired and had not been assigned, based on the advice they had received from their managing agent, and that their conduct, in all the circumstances, was reasonable and appropriate. The respondents say that there have been no appropriate or exceptional circumstances warranting the Tribunal from departing from its position of being a no costs jurisdiction. The respondents cite the decisions of the Tribunal in Chew and Director General of the Department of Education and Training [2006] WASAT 248 (Chew) and Pearce & Anor and Germain [2007] WASAT 291 (S) (Pearce) as support for those contentions.
The respondents also say that there has been no hearing on the merits and in those circumstances, the Tribunal cannot try a hypothetical action between the parties for the purposes of determining who should be awarded costs by reference to who might have won if the matter had proceeded. The respondents cite a statement by McHugh J of the High Court of Australia in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 (Lai Qin) at 624 and a statement by Hill J of the Federal Court of Australia in Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194 (Aust-Home) at 201 as support for those contentions.
The respondents further contend that, in any event, the costs claimed by the applicant are unreasonable to the extent that a total of four hours is claimed without any detail of how that time was spent and the rate per hour claimed exceeds the rate applicable to the Tribunal.
Statutory framework
Section 87(1) and s 87(2) of the State Administrative Tribunal Act 2004 (WA) (SAT Act) state:
(1)Unless otherwise specified in this Act, the enabling Act, or an order of the Tribunal under this section, parties bear their own costs in a proceeding of the Tribunal.
(2)Unless otherwise specified in the enabling Act, the Tribunal may make an order for the payment by a party of all or any of the costs of another party or of a person required to produce a document or other material on the application of the party under section 35.
The enabling Act in this matter is the CTRSA Act and it does not contain any provision regarding the costs of parties. Therefore the issue of costs is to be determined under the provisions of s 87(1) and s 87(2) of the SAT Act.
Should the Tribunal exercise its discretion to award costs to the applicant?
The approach of the Tribunal to costs in proceedings under the CTRSA Act was considered by Deputy President Judge Chaney, as he then was, in Pearce. At [8], [22] and [24] of Pearce his Honour states as follows:
8.As the Tribunal has reaffirmed on numerous occasions, the starting point in relation to costs in the Tribunal is that the Tribunal provides a 'no costs jurisdiction' see s 87(1) of the State Administrative TribunalAct 2004 (WA) (SAT Act). Notwithstanding that general position, s 87(2) of the SAT Act confers on the Tribunal a broad jurisdiction to award costs in appropriate cases.
22.In Summerville, Barker J observed that s 87 does not identify factors to be taken into account by the Tribunal in exercising its jurisdiction under s 87(2), and it is not appropriate for the Tribunal to attempt finally to delineate the particular circumstances in which the discretion to award costs will be exercised. Costs orders have most commonly be (sic) made in the Tribunal in circumstances of the type identified by Deputy President Judge Eckert in Chew and Director-General of the Department of Education and Training [2006] WASAT 248 at [85], being circumstances where a party has conducted itself unreasonably or inappropriately, particularly where that conduct gives rise to unnecessary costs being incurred by the other party.
24.In my view, the approach that should be taken to costs in proceedings under the CTRSA Act should reflect the approach explained by Barker J in Summerville. That is consistent with the reliance by the Tribunal in Bilek on the proposition drawn from Australia's Country Homes, that decisions on costs might serve to promote certainty and responsibility in parties to their contractual responsibilities. That does not mean that there is a presumption that costs will follow the event. Rather, where it is necessary for a party to a retail shop lease to take proceedings in the Tribunal to vindicate its clear contractual entitlements, and to incur costs in doing so, it will 'often not be unreasonable for an award of costs to be made'. The position is the same where costs are incurred in defending an obviously unmeritorious claim. Where, however, there is a genuine dispute between the parties to a lease, their respective rights are unclear and one or both seek determination of their rights in the Tribunal, the starting point remains that each party should expect to pay their own costs, unless there are circumstances of the type identified in Chew.
I do not accept the contention of the respondents that there was a genuine dispute between the parties in this matter. Following the correspondence between Mr Le and APFX initially, and subsequently, Acton Central from 14 November 2011 until 4 March 2014, (when Mr Le sent a Deed of Assignment and Extension of Lease to Acton Central at the request of Ms Mills), it was a complete turn of events when Acton Central sent the notice of termination to the respondents on 22 May 2014. If there had been a genuine dispute between the parties, I would expect the respondents, through their managing agents, to have raised the issues referred to in the notice of termination, years prior to the date on which that was sent; in the case of APFX, in December 2011 and, in the case of Acton Central, in April or May 2012, or at the very latest, in June 2012.
I am also unable to accept the contention of the respondents that they held a reasonable belief, based on advice from their managing agent, that the lease had expired and had not been assigned to the applicant. The email from Mr Bamford of Acton Central to Mr Le on 25 June 2012, stated that the documents for the assignment and extension of the lease had been drafted and sent to the respondents for signing. Also, the email from Ms Mills of Acton Central to Mr Le ,on 23 October 2013, stated that the respondents were having a valuation completed for their bank and that the lease to the applicant was a huge part of that. She further stated that she recognised the lease to the applicant even though the documents had not been signed and she would get that sorted out as quickly as she could.
I accept the contention of the respondents that, where there has been no hearing on the merits, the Tribunal cannot try a hypothetical action between the parties for the purpose of determining an award of costs by reference to who might have won if the matter had proceeded to a hearing. However, it is still possible for the Tribunal to exercise its discretion under s 87(2) of the SAT Act, to award costs in such a situation if one of the parties has acted so unreasonably that the other party should be awarded costs. The cases cited by the respondents make this clear.
In Lai Qin McHugh J, at 624, refers to the general rule in litigation (which does not apply to proceedings before the Tribunal by reason of s 87(1) of the SAT Act) that, after a hearing on the merits, the successful party is prima facie entitled to a costs order. His Honour then states that in an appropriate case, a court will make an order for costs where there has been no hearing on the merits, if the court concludes that one of the parties has acted so unreasonably that the other party should obtain the costs of the action.
In Aust-Home, Hill J, at 201, makes similar comments. His Honour states that where neither party desires to proceed with litigation, the court should be ready to facilitate the conclusion of the proceeding by making a costs order. His Honour then states that it will rarely, if ever, be appropriate where there has been no trial on the merits for the court to determine the outcome of a hypothetical trial; however in a particular case it might be appropriate for the court, in the exercise its discretion to make an order for costs, to consider the conduct of a respondent, prior to the commencement of the proceeding where such conduct may have precipitated the litigation.
The above comments in Lai Qin and Aust-Home are consistent with the comments of Chaney J in Pearce.
Applying the principles stated by Chaney J in Pearce, I have decided that I should exercise the discretion under s 87(2) of the SAT Act to make an order that the respondents pay costs to the applicant because:
•It was unreasonable for the respondents' managing agent, Acton Central, without any prior warning, to send the notice of termination to the applicant on 22 May 2014 purporting to terminate the lease with effect on 23 June 2014, in light of the email sent by Mr Bamford of Acton Central to the applicant's lawyer, Mr Le, on 25 June 2012 and the emails sent by Ms Mills of Acton Central to Mr Le on 23 October 2013 and 10 February 2014.
•It was necessary for the applicant to commence the proceeding and seek an interim order to protect and vindicate its entitlements under the lease when it received the notice of termination. The notice of termination created a very serious situation for the applicant because it was told that the lease would terminate and that it must vacate the premises by no later than 23 June 2014. It is not unreasonable in those circumstances for an award of costs to be made in favour of the applicant. It was also necessary for the applicant to provide sufficient information with its application to enable the Tribunal to determine whether to make the interim order sought.
•The costs incurred by the applicant in preparing and filing the application under s 16(1) of the CTRSA Act, seeking both substantive orders and an interim order, including the preparation of the statement in support of the application and the provision of the accompanying documents, were unnecessary, in light of the response of the respondents' managing agent, Acton Central the day after the application was filed stating that the respondents would not contest the matter and would sign the Deed of Assignment and Extension of Lease.
What amount of costs should be awarded to the applicant?
The applicant has not provided any detail regarding how the four hours claimed was spent in the preparation of the application and the applicant's supporting statement and the collation of the 18 accompanying documents. Nevertheless, it is apparent that a considerable amount of time needed to be spent on that task and I accept the four hours of time claimed as being reasonable. As I have already stated, it was necessary for the supporting statement and accompanying documents to contain sufficient details to support the application for an interim order.
The respondents have contended that the rate claimed for the legal costs of $550 per hour inclusive of GST, exceeds the rate applicable to the Tribunal. I presume that this is a reference to the Legal Practitioners (State Administrative Tribunal) Determination 2012 (WA), which provides for a maximum rate of $374 per hour inclusive of GST, for a practitioner who has been admitted for five years or more.
Whilst that determination does not apply to party/party costs it does restrict the rates which can be charged by a legal practitioner to a client for work done for the purposes of a proceeding in the Tribunal, unless the practitioner has a costs agreement with his or her client, made in accordance with the provisions of the Legal Profession Act 2008 (WA). The applicant has not provided any evidence of such a costs agreement between itself and Mr Le.
The Legal Practice Board of Western Australia Directory of Certificated Legal Practitioners states that Mr Le was admitted to practice on 21 December 2001.
In the circumstances, I have decided that the rate of $374 per hour inclusive of GST, is an appropriate rate at which to calculate the costs to be awarded to the applicant for four hours of legal work by Mr Le, which is an amount of $1,496.
In addition, to that I have decided to award the cost of the filing fee of $79.50, which takes the total amount to $1,575.50.
I therefore fix the amount of $1,575.50 as the costs to be awarded to the applicant.
I have decided to allow the respondents the period of 28 days to pay those costs to the applicant.
Order
I will therefore make the following order:
1.By 20 November 2014 the respondents shall pay the amount of $1,575.50 to the applicant.
I certify that this and the preceding [37] paragraphs comprise the reasons for decision of the State Administrative Tribunal.
___________________________________
MR D AITKEN, MEMBER
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