World Best Holdings Limited v Sarker (No 2) (RLD)

[2009] NSWADTAP 55

Appeal Panel - Internal

CITATION:	World Best Holdings Limited v Sarker (No 2) (RLD) [2009] NSWADTAP 55
PARTIES:	APPELLANT World Best Holdings Limited RESPONDENT Abul Sarker
FILE NUMBER:	089031
HEARING DATES:	On the papers
SUBMISSIONS CLOSED:	11 May 2009
DATE OF DECISION:	29 September 2009
BEFORE:	O'Connor K - DCJ (President); Perrignon R - Judicial Member; Weule B - Non-Judicial Member
CATCHWORDS:	COSTS – Respondent’s application for costs of appeal – Appellant’s appeal unsuccessful – Appellant already ordered to pay costs at first instance – Discretion to Award Costs where Fair to do so – Costs awarded
FILE NUMBER UNDER APPEAL:	045136 and 045137
LEGISLATION CITED:	Administrative Decisions Tribunal Act 1997 Administrative Decisions Tribunal Amendment Act 2008 Retail Leases Act 1994 Victorian Civil and Administrative Tribunal Act 1998
CASES CITED:	Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 Sarker and anor v World Best Holdings Limited and anor (No 4) [2008] NSWADT 75 Sarker and anor v World Best Holdings Limited and anor (No 5) [2008] NSWADT 179 Vero Insurance Ltd v Gombac Group Pty Ltd [2007] VSC 117 World Best Holdings Limited v Sarker (RLD) [2009] NSWADTAP 13
REPRESENTATION:	APPELLANT R Angyal SC / P Biber, Lawyer RESPONDENT M Ashhurst SC / S Roppolo, solicitor, Kemp Strang
ORDERS:	Appellant to pay the respondent’s costs of the appeal, as agreed or assessed

REASONS FOR DECISION

1 The respondent, a lessee, was successful at first instance in proceedings before the Retail Leases Division of the Tribunal: see Sarker and anor v World Best Holdings Limited and anor (No 4) [2008] NSWADT 75. The Tribunal ordered the lessor to pay the lessee’s costs: see Sarker and anor v World Best Holdings Limited and anor (No 5) [2008] NSWADT 179. The lessor’s appeal to the Appeal Panel has been unsuccessful: World Best Holdings Limited v Sarker (RLD) [2009] NSWADTAP 13.

2 The respondent has applied for the costs of the appeal. The appellant opposes the application. In its final orders dealing with the substantive appeal, the Appeal Panel gave directions for the exchange of submissions in respect of the costs application, and indicated that it would determine the application without a further hearing, as permitted by the Administrative Decisions Tribunal Act 1997 (ADT Act), s 126. The exchange of submissions was completed by 11 May 2009.

3 The appellant had advised separately on 9 April 2009 that it had appealed to the Court of Appeal against the Appeal Panel’s decision, and forwarded a sealed copy of the notice of appeal. The Appeal Panel enquired of the parties whether they wished to have the Appeal Panel dispose of the costs application in these circumstances. They indicated a desire for that to occur (correspondence July-August 2009). This decision deals with the costs application.

4 The power to order costs in retail leases proceedings in the Tribunal is a reserve power. The general rule is that costs are to be borne by the parties. See Retail Leases Act 1994, s 77A; and the ADT Act, s 88.

Discretion

5 Section 88 includes an exception giving the Tribunal power to award costs. Under the original form of the provision this discretion was to be exercised ‘only if it [the Tribunal] is satisfied that there are special circumstances warranting an award of costs’ (s 88(1)).

6 An amendment was made by the Administrative Decisions Tribunal Amendment Act 2008, No 77 (enacted 28 October 2008) which took effect on 1 January 2009 (see s 2(1), as to Sch 1 [33], see further Govt Gaz No 147, 14.11.2008, p 10928; Govt Gaz No 158, 19.12.2008).

7 This appeal was heard in 2008, when the former version of s 88 was in force, and determined in 2009, after the amendments took effect. Clause 43(2) of Schedule 5 to the ADT Act provides that those amendments ‘extend to applications and proceedings that were made or commenced, but not finally determined, before’ 1 January 2009. It follows that the amendments to s 88 apply in respect of this appeal.

8 While the respondent’s original written submissions referred to the old s 88 as the operative provision, in our view the considerations advanced there apply equally to the discretion as re-cast by the new s 88.

9 The discretion is now cast (s 88(1A)) as one for the Tribunal to exercise ‘only if it is satisfied that it is fair to do so having regard to’ a series of factors. They are:

‘(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.’

10 The new standard is similar to the one applicable in the Victorian Civil and Administrative Tribunal, and in turn to retail leases disputes in that State: see Victorian Civil and Administrative Tribunal Act 1998, s 109; for recent commentary, see Vero Insurance Ltd v Gombac Group Pty Ltd [2007] VSC 117 at [18]-[23] per Gillard J.

11 These factors listed in the amended provision are similar to those that appeared in the Tribunal’s old Practice Note 12 that provided guidance in relation to what might be considered to be ‘special circumstances’ under the previous provision. The new standard now calls for attention to be given to what is ‘fair’. It may be, as the respondent submits in his submissions in reply, that the new standard presents a lesser hurdle than the old standard.

12 The respondent refers to the fact that he was successful in establishing special circumstances at first instance. The appellant’s submission is that the considerations that influenced the Tribunal below ought not be taken into account by the Appeal Panel. This appeal, it is contended, is a separate set of proceedings, and any judgement as to what is fair by way of a costs order should be taken independently of what may have moved the Tribunal below. These proceedings were conducted, it is contended, in a reasonable way, so none of the factors listed in (a) above come into play. Similarly it is contended that none of the factors listed in (b), (c) and (d) come into play.

13 The factors listed in the new s 88 are mainly focused on first instance, or trial level, proceedings in the Tribunal. Some care must be taken in reading the Victorian authorities which only relate to the exercise of the discretion at first instance, as VCAT does not have an internal Appeal Panel.

14 It is, in our view, relevant in considering an application for the costs of an appeal to have regard to the outcome in relation to costs at first instance.

15 Though not determinative, the making of a costs order at first instance, when the ordinary rule is that there be no costs order, is a factor which weighs in favour of making the same order on appeal if the appeal is unsuccessful. In our view, the analogy the respondent draws in its submissions with the approach of the Court of Appeal in Cripps v G & M Dawson Pty Ltd, cited in the extract from the Tribunal’s reasons which follows, is apt.

16 It is unnecessary to repeat all of the Tribunal’s reasons here. However, it is appropriate to set out the last part of the Tribunal’s assessment (Sarker v World Best Holdings Limited (No.5) [2008] NSWADT 179):

‘112 World Best’s behaviour during the period of four months following the first termination notice departed substantially from what one might regard as the normal behaviour of a lessor which, having evicted a lessee on the grounds of alleged breaches of the lease, is required by an interim order to permit the lessee to remain in the premises pending resolution of the dispute between them. Its behaviour at other times, notably the conduct of its centre manager at the second substantive hearing in making factual allegations which were both false and distinctly improbable, was likewise ‘out of the ordinary’.

113 The Tribunal is also satisfied that these ‘special circumstances’ are such as to ‘warrant’ an order for costs. This conclusion is based principally on a finding that, in line with the principles stated by Santow JA in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60], World Best ‘so acted as by [its] conduct to give rise to special circumstances; that is, circumstances that were clearly out of the ordinary and grossly unreasonable so far as the … tenant was concerned’. Those circumstances produced a situation where it would be ‘seriously unfair’ not to award costs.

114 In addition, as already noted, different aspects of the conduct of World Best and of Ms James provide the foundation for findings that World Best (a) attempted to deceive the Tribunal on matters of central importance in the proceedings, (b) acted at different times and in different ways so as to prolong unreasonably the time taken to complete the proceedings, (c) filed or defended interlocutory applications for an ‘ulterior and collateral’ purpose and (d) filed or defended interlocutory applications in circumstances where the stance that it adopted was unmeritorious. Having regard to the cases dealing specifically with the interpretation of section 88, to the further authorities discussed above at [80] and [82] and to the matters listed in the Tribunal’s Practice Note No. 12, these are features of this case that further support the conclusion that costs should be awarded under section 88.’

17 At the heart of the present case is the lessor’s decision to allow the lessee to take up a lease, and commence trading, on the basis of a broadly expressed permitted use. The permitted use overlapped with an exclusive use already granted to an existing trader and lessee. The lessor faced threats of legal action from the other lessee. The lessor then took various steps to curtail the lessee’s tenancy. It is the case that the lessee’s performance of the ordinary covenants was problematic in certain respects. Nonetheless the lessor took increasingly hostile action against the lessor, so that the lessee was, in the view of the Tribunal below (findings not upset on appeal), not given any real chance to get his business up and going. In the circumstances, the lessee should not have been put to the cost of the hearing below, or of the unsuccessful appeal.

18 In our view, it is fair to make in relation to the appeal a similar order to that made by the Tribunal below in relation to the hearing at first instance.