Trust Company of Australia Ltd v. Craig

[2005] NSWADT 65

CITATION:	Trust Company of Australia Ltd v Craig & Ors [2005] NSWADT 65
DIVISION:	Retail Leases Division
PARTIES:	APPLICANT Trust Company of Australia Ltd RESPONDENTS Vincent Craig, Loretta Craig, Samantha Bunting and Heydon Bunting
FILE NUMBER:	045076
HEARING DATES:	8/02/2005
SUBMISSIONS CLOSED:	02/08/2005
DATE OF DECISION:	03/24/2005
BEFORE:	Molloy GB - Judicial Member
APPLICATION:	Costs
MATTER FOR DECISION:	Principal matter
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994
CASES CITED:	Calderbank v. Calderbank [1976] Fam 93 Caltex Refining Co Pty Ltd v. The Maritime Services Board of NSW (1995) 36 NSWLR 552 Capolingua v. Phylum Pty Ltd (1991) 5 WAR at 377 Dingwall v. Matar [2002] NSWADT 52 Dunnett v. Railtrack PLC [2002] 2 All ER850 Frocks Salon Pty Ltd v. Sarbac Pty Ltd and Anor (No. 2) [2004] NSWADT72 Gizah Pty Ltd v. AXA Trustees Ltd (No 2) [2001] NSWADT 164 Hurst v. Leeming [2002] E WHC1051 Kolavo v. Pitsikas and Conomos [2003] NSWCA 59 Law Society v Gallagher [1999] NSWADT8. Leicester Circuits Ltd v. Coates Brothers PLC [2003] EWCA Civ 333 Randi Wixs Pty Limited v.Pokana Pty Limited (No. 2) [2003] NSWADT 4 Sotiropoulos v. Mattana Coiffure Pty Ltd (Np. 2) 2004 NSWADTAP 43 Studer v. Boettcher [2000] NSWCA 263
REPRESENTATION:	APPLICANT R Nagpal, solicitor RESPONDENTS L Craig, in person
ORDERS:	ORDERS MADE 24/3/2005; 1. The applicant pay the costs of the respondent as assessed or as agreed, such not to include the costs of the transfer of the proceedings from the Local Court Downing Centre to the Gosford Local Court

1 On 8 February 2005 I delivered an ex tempore decision on an application by the Respondents seeking an order that the Applicant pay their costs.

2 The Applicant has applied for written reasons pursuant to Administrative Decisions Tribunal Act 1997 Section 89(3). I considered complying with sub-section (4) and supplying a transcript of my oral reasons (ie the ex tempore decision) but having regard to some references therein to legal principles unsupported by authority and references to case law to which I did not at the time have access I have thought it more appropriate and of more assistance to the parties to provide written reasons (sub-section (5)).

3 In providing these written reasons I have adopted, almost in its entirety, my oral reasons delivered 8 February and to which I have added some case references and made consequent amendments to the transcript. In so doing I indicate that I am entirely happy with my ex tempore decision and this judgment merely incorporates it as appropriate and makes consequent amendments and changes to tense.

4 The proceedings before the Tribunal on 8 February 2005 is an application by the respondents seeking an order that the applicant pays their costs. The application itself is contained in a Submission filed in this Tribunal on 26 October 2004. This Submission was made pursuant to leave granted by His Honour Acting Judge Chesterman on 23 September 2004 when at that point the application before this Tribunal was withdrawn and dismissed but upon certain terms.

5 The Submission for costs filed 26 October 2004 seeks an order that the applicant pay $600 which was paid by the respondent to the applicant pursuant to an order made by the Gosford Local Court on 18 June 2004, the circumstances of which I shall deal with later in this judgment.

6 The respondent further seeks the payment of $1265, said to be:

“legal fees paid to solicitors for advice and for representing us in the proceedings in the Downing Centre Court. Copies of invoices are attached.”

7 In relation to the sum claimed of $1,265.00 I indicated during the course of argument that in my opinion on the material supplied to me by the respondent I was unable to make, even if I was inclined so to make in their favour, a costs order in a fixed sum as claimed, the reason being simply that the two memoranda of solicitor’s professional costs, one dated 30 January 2004 and the second dated 26 March 2004, are not in sufficient detail that would enable me to judicially make an assessment for the purposes of making a finding of costs without a formal assessment. There is sufficient authority for that in the Court of Appeal decision of Caltex Refining Co Pty Ltd v. The Maritime Services Board of NSW (1995) 36 NSWLR 552 and a decision of mine in the Legal Services Division of this Tribunal in Law Society v Gallagher [1999] NSWADT8. So in that event, should the Respondents be successful in their application, then any costs order would be the subject of assessment.

8 The applicant before this Tribunal is Trust Company of Australia Ltd which as a plaintiff commenced proceedings in the Local Court, Downing Centre, Sydney, Small Claims Division, by Statement of Liquidated Claim filed 18 December 2003, matter number 13502/03. In those proceedings, Trust Company sought an order that the then defendants, who are the respondents in this Tribunal, pay to it the sum of $8910 said to be

“the amount due and payable for making good the premises”

which were premises owned by the then plaintiff and leased from it by the then defendants.

9 The pleadings in the Small Claims Division alleged that the defendants failed to make good the premises leased to them, either in breach of the lease itself or in breach of a deed of surrender of lease and as a consequence of the defendants’ breach

“the plaintiff has and will suffer loss and damage or make good costs arising as a result of the defendants’ breach.”

10 Those proceedings in the Local Court were upon the application of the defendants transferred from the Downing Centre to the Gosford Local Court. The order was made on 16 April 2004. The matter was listed in the Gosford Local Court on 18 June 2004 for directions.

11 On the material before me, including the detailed oral submissions made 8 February 2005, it would seem that subsequent to the transfer to the Gosford Local Court and before the matter came on for directions on 18 June 2004 the defendants sought legal advice and were advised, correctly so in my opinion, that the proceedings were within the jurisdiction of this Tribunal. Indeed there is a significant body of opinion to the effect (in my view) that the proceedings should have been commenced in this Tribunal anyway because they were proceedings, as I understand it, arising out of a retail lease and always within the jurisdiction of this Tribunal.

12 As far as I can see it, the learned magistrate at Gosford Local Court formed the opinion that the proceedings should have been transferred from the Downing Centre Local Court to this Tribunal and should not have been transferred to the Gosford Local Court. With that opinion, if so expressed that way, I would respectfully agree. The Gosford Local Court magistrate made an order that the defendants pay the plaintiff’s costs of and incidental to the transfer to the Gosford Local Court which the learned magistrate assessed at $600 and which costs have been paid. The matter was then transferred to this Tribunal.

13 Pausing at this point, I am of the respectful opinion that the decision of the learned magistrate at Gosford was correct. I am not persuaded that any order that he made for the payment of costs should be upset in any way because, although I am of the view that the file once transferred to this Tribunal becomes part of the papers of this Tribunal and within the jurisdiction of this Tribunal, the order made by the learned magistrate in my view was quite correct.

14 In any event I am not persuaded that I would have the power to upset that order or to make an order that would otherwise circumvent or negative that order in the manner suggested by the respondents or the subject of this application to the effect that the applicant in this Tribunal, being the plaintiff in the Local Court, ought somehow to refund or repay or pay to the respondent that $600.

15 As far as that part of the application is concerned, in my opinion it should fail. I observe, however, that I formed that opinion very close to the commencement of this hearing and that little time has been spent on it. I expressed to the parties early in the hearing that I had the view that the $600 was a non-event.

16 The matter then was transferred to this Tribunal on 13 June, came before this Tribunal on 29 July and was referred to mediation. Mediation was unsuccessful because, as I have heard from the bar table, the applicant (the plaintiff in the Local Court proceedings) refused to mediate having formed that the view that there was no prospect of a successful mediation.

17 It has been submitted to me with great force by counsel for the applicant (the respondent to this costs application) that mediation is voluntary and that therefore somehow I should not bring that into account in concluding whether a costs order should be made. With that submission I would respectfully disagree.

18 In my ex tempore decision 8 February 2005 I said this:

“Because this matter is being dealt with ex tempore today, I do not have with me references to cases in which it has been held in recent times that the failure to mediate may well result in a costs order. There is, however, ample authority for that proposition and there is also ample authority for the view that it is the duty of parties to attempt genuine mediation and indeed in the case of lawyers for parties, they should urge upon their clients mediation of commercial disputes”

19 In support of the above propositions regarding mediation and costs consequences I refer to Capolingua v. Phylum Pty Ltd (1991) 5 WAR at 377; Dunnett v. Railtrack PLC [2002] 2 All ER850; Hurst v. Leeming [2002] E WHC1051 and Leicester Circuits Ltd v. Coates Brothers PLC [2003] EWCA Civ 333; and see also Studer v. Boettcher [2000] NSWCA 263 as to the duty of legal practitioners involved in the mediation process.

20 As I said in Gizah Pty Ltd v. AXA Trustees Ltd (No 2) [2001] NSWADT 164 this Division of this Tribunal deals with commercial disputes. The Retail Leases Act1994 contains provision for mediation and in my opinion the failure to mediate or a failure to mediate genuinely is a ground for considering whether a costs order should be made.

21 On 9 August 2004, the Registrar issued a Certificate of Failed Mediation and the matter came back before this Tribunal on 26 August 2004 for directions. On that occasion (I was told from the bar table by counsel for the Applicant) an offer was made by the applicant that it would withdraw the proceedings with no order for costs. There was some debate from the bar table about whether that offer was made or whether it was not or whether it was understood in that fashion. But having been told that that was the nature of the offer and those were its terms I am content to accept that as the statement of what happened on 26 August.

22 In my opinion, however, that really is a non-offer. It is certainly not an offer that can amount to a compromise within the general principles of Calderbank v. Calderbank [1976] Fam 93 and other decisions that have been referred to in this Tribunal. Indeed it is a prejudicial offer to the respondent because if in fact the respondent is entitled to a costs order in the usual circumstances where it generally follows as night follows day that where a plaintiff withdraws its proceedings a defendant is entitled to an order for costs, if accepted it would not only be severely prejudicial to a respondent and is not a compromise of the Applicant’s position.

23 So the offer to withdraw with no order for costs in my opinion is not really an offer that, having not been accepted, would disentitle the respondent for a costs order in their favour if so entitled.

24 On 23 September the matter came back before the Tribunal for directions. On that occasion the applicant formally withdrew the proceedings and the Tribunal noted that the application was withdrawn/dismissed without prejudice to the respondent’s rights to file any application they may wish relating to a matter arising in these proceedings. It was also without prejudice to the right of the applicant to file a defence or counterclaim in response to any such application. Consistent with those directions, the respondent has applied to this Tribunal for costs.

25 It is significant in my view to observe that the applicant’s reasons for withdrawing the proceedings in this Tribunal were stated to be “commercial reasons”.

26 It was submitted to me that the respondent’s submissions for costs do not set out “special circumstances” within the meaning given to that phrase in the Administrative Decisions Tribunal Act 1997 Section 88. It was also submitted that the withdrawal of the proceedings was not prejudicial to the respondents.

27 I do not quite understand either of those submissions. It may well be technically that in their submissions for costs the respondents have not set out with precision what they allege are “special circumstances” within the Act. The respondents were not represented – they appeared in person by one of them as their duly authorised agent. If represented they probably would have set out in detail what they submitted should be regarded as “special circumstances”. But in any event, during the course of discussion at the hearing, that has been fleshed out such that it was plain that the real issue is whether, in all the circumstances, there are “special circumstances” having regard to the withdrawal of the proceedings.

28 I also do not understand how it could be suggested that the withdrawal of proceedings is not prejudicial. Obviously, proceedings instituted against somebody are prejudicial to that party insofar as a party is put to costs and expense and trouble of dealing with those proceedings.

29 But it does not necessarily follow that this respondent is entitled to costs where the respondent is unrepresented. Normally the case is that an unrepresented party is not entitled to an order for costs because costs are generally regarded as legal costs, not just the costs of inconvenience or whatever suffered by an unrepresented litigant – see my decision in Dingwall v. Matar [2002] NSWADT 52 at [10]-[13].

30 However, in this case, the respondents have tendered two memoranda of professional charges by two firms of lawyers in total $1265 and it may well be that upon an assessment properly itemised and properly costed, a costs assessor may well form the opinion that all or part of the costs as charged by those lawyers to the respondents are costs to which they are properly entitled should this Tribunal make an order in their favour, particularly if they represent advice tendered (upon instructions) to the respondents pertaining to the proceedings. The obtaining of legal advice by an unrepresented litigant may well be a cost recoverable upon assessment. The fact that a party ultimately appears in person does not, of itself disentitle that party to recovery of his/her legal costs incurred during the currency of the proceedings. Such legal costs are not dissimilar in principle to legal costs properly recoverable if a party, originally legally represented, later is self represented – such change does not disentitle that party from being the recipient of a favourable costs order. It is all a matter for assessment.

31 I have already averred to and indicated that the claim for $600 is an amount which I am not prepared to order be paid. The only amount therefore that requires consideration is the amount of $1265 which is said to be:

“legal fees paid to solicitors for advice and for representing us at the proceedings in the Downing Centre Court.”

32 Counsel for the applicant has strongly submitted that I should not or cannot make a costs order in relation to those sums. His submission is that those costs were allegedly incurred as part of the Local Court proceedings and predate the transfer to this Tribunal. He also submitted that the respondents could have raised the matter at the Local Court level and in any event his submission is that the Local Court proceedings, commenced as they were in the Small Claims Division, are limited to fixed costs only and an order for costs made in this Tribunal in the sum as claimed would defeat the purpose of the Small Claims Division. His submission was that the start date for costs in this Tribunal was 29 July 2004 when the matter first came before this Tribunal for directions and at that point, and to use his words, the Tribunal started with a “clean slate” and the meter was at zero dollars.

33 With respect to those submissions I respectfully do not agree. Firstly, in my opinion, the proceedings should not have been commenced in the Local Court Small Claims Division in the first place. The claim was clearly within the jurisdiction of this Tribunal with no argument being put to me to the contrary. Indeed they would not have been transferred to this Tribunal by the learned magistrate at Gosford if they were not within the jurisdiction of this Tribunal. There was no argument to the contrary. In those circumstances, in my opinion, the proceedings should have been commenced in this Tribunal.

34 Secondly, once transferred to this Tribunal the matter is taken out of the Small Claims Division regime and in my opinion becomes part of the jurisdiction of this Tribunal from the commencement of the proceedings in the Local Court Small Claims Division. It is common in those circumstances, and in circumstances generally where proceedings are transferred from a court to this Tribunal, that the parties agree, alternatively the Tribunal orders, that the pleadings, such as they may be at that point, at the time of transfer become part of the effective pleadings in this Tribunal.

35 Indeed there are some occasions where there is really no need to re-plead or file any formal application because all the material is already on the court file that has been transferred. It would therefore be otiose and unnecessarily expensive for the parties to, effectively, re-plead where the material is already pleaded and no party is prejudiced.

36 In these circumstances, it seems to me that this Tribunal has the authority and jurisdiction to make costs orders that go back to the commencement of the proceedings if such costs orders are warranted in the circumstances.

37 The real question is: are costs orders warranted in the circumstances of this case? I have said before that in my view I cannot make an order, even if I was minded to make an order in favour of the Respondent, for a fixed sum, for the reason that in my view the material filed on 26 October 2004 does not set out with clarity and particularity in sufficient itemised form to enable this Tribunal to judicially assess the reasonableness of the charges. The bills of costs as tendered are in very general form only. They are not itemised or particularised and in my view, although they demonstrate prima facie at least that the respondents have obtained legal advice in respect of these proceedings, they are not in sufficient detailed form to enable a judicial assessment.

38 It is unfortunate that that is the case because if this Tribunal is minded to make a costs order in favour of the respondents, having regard to the quantum of costs that are sought, it would be very easy for this Tribunal to carry out a short assessment process and form an opinion as to the reasonableness of the amount or amounts that should be allowed and therefore thereby finalise the issues between these parties without formal assessment.

39. If the Tribunal is minded to make a costs order in favour of the respondents then the respondents will need to travel down the costs assessment path and in my opinion they should obtain legal advice before proceeding further. But the real question is in the circumstances whether there are special circumstances warranting an order for costs.

40 Costs orders are made in this Division only within the terms of s 88 of the Administrative Decisions Tribunal Act 1997. The principles that apply to the making of those costs orders are set out adequately in my original judgment of Gizah v AXA to which I have made reference. Those principles, if I may say with respect, have been followed and applied in numerous cases and recently in Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) 2004 NSWADTAP 43. In Gizah I made it plain that special circumstances were:

“circumstances that are out of the ordinary but without having to be extraordinary or exceptional.”
That definition has been accepted in this Division as being correct.

41 Special circumstances that may justify a costs order are referred to in Practice Note 12 of this Tribunal. But the Practice Note makes it clear (if it needs to be made clear) that the examples given in that Practice Note are not exhaustive.

42 There is no need for me here to review or trawl through all the law about “special circumstances”. It is now plain that in this Tribunal, in this Division, special circumstances fall within the principles set out in Gizah, also Irresistible Frocks Salon Pty Ltd v. Sarbac Pty Ltd and Anor (No. 2) [2004] NSWADT72 and Randi Wixs Pty Limited v.Pokana Pty Limited (No. 2) [2003] NSWADT 4, and no doubt other cases as well.

43 The categories of special circumstances are not closed by any means. One of those categories is commencement of proceedings that are untenable at law and the Court of Appeal in Kolavo v. Pitsikas and Conomos [2003] NSWCA 59 has made that point adequately clear.

I should make this point clear: if circumstances would otherwise justify a costs order under ordinary principles that does not of itself mean that they are not “special circumstances”. “Special circumstances” if so found, also sound in costs under ordinary principles. Provided that the circumstances are “out of the ordinary but without having to be extraordinary or exceptional” then they qualify for the appellation “special circumstances”, whether or not they would also qualify for circumstances that would also justify a costs order under ordinary principles.

44 The applicant withdrew these proceedings and the proceedings have been dismissed. In those circumstances the common law makes it plain that a Respondent is entitled, absent disentitling factors, to a costs order. In my opinion, the withdrawal of proceedings is a circumstance out of the ordinary within the meaning that I gave to it in Gizah v AXA and within the meaning of subsequent decisions of this Tribunal. The commencement of proceedings against a party should only be carried out after the greatest of consideration to ensure that proceedings are not commenced in circumstances where they should not have been commenced. After all the amount in issue in this case was not small and the only reason given for the withdrawal of the proceedings in this case was “commercial reasons”. In my opinion the applicant should have thought very carefully on a commercial basis before commencing the proceedings in the Local Court or at all.

45 In my view, the withdrawal of the proceedings in the circumstances of this case amounts to “special circumstances” within the meaning of the Act and the respondent is entitled to a costs order in their favour, subject to appropriate assessment, if the respondents can satisfy a costs assessor that they are so entitled, bearing in mind the fact that they have appeared unrepresented. There is sufficient evidence before me to indicate that they have obtained legal advice during the course of the proceedings and it may well be that a costs assessor will be persuaded that all or part of that legal advice, if properly particularised, was reasonable as their own costs in these proceedings.

46 Finally, I wish to make it plain that in the circumstances of this case the failure of the Applicant to engage in mediation also constitutes “special circumstances” justifying a costs order against it.

Orders:

I make the following order:

1. The applicant pay the costs of the respondent as assessed or as agreed, such not to include the costs of the transfer of the proceedings from the Local Court Downing Centre to the Gosford Local Court.