Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1 (4 January 2010)

Last Updated: 1 February 2010

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL

CITATION:
Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1


DIVISION:
RETAIL LEASES DIVISION

PARTIES:
Applicants:
Rucom Pty Limited and
Vladimir Dmitchenko

Respondents:
Mutiplex Latitude Retail Landowner Pty Limited
Brookfield Multiplex W S Retail Landowner Pty Limited and
AWPF Management No. 2 Pty Ltd
C B Richard Ellis Pty Ltd




FILE NUMBERS:
095044
099018

HEARING DATES:
on the papers

SUBMISSIONS CLOSED:
4 August 2009



DATE OF DECISION:
4 January 2010

BEFORE:
Molloy G - Judicial Member





LEGISLATION CITED:
Retail Leases Act 1994
Administrative Decisions Tribunal Act 1997

CASES CITED:
Alramon Pty Ltd v. Jonamill Pty Ltd (No 2) [2009] NSWADT302
Armstrong Jones Management Pty Limited v. Saies-Bond & Associates Pty Limited (No 2) [2007] NSWADT 58
Auelua v. Ministry of Transport [2009] NSWADT 134
Auto Panel Beaters & Radiators Pty Ltd (in liq) v. Barclays Services Pty Ltd (No 2) [2009] NSWSC 1308
AWFM Management Pty Limited v. Red Roll Pty Limited [2009] NSWADTAP
Barsoum v. Glebe Administration Board (No. 2) [2002] NSWADT 174
Building Professionals Board v. Ball (No 2) [2009] NSWADTAP 8
BE v. University of Technology, Sydney (GD) [2009] NSWADTAP 22
Bayne v. Blake (No 3) (2009) CLR 366
Buzrio Pty Ltd v. Consumer, Trader and Tenancy Tribunal (No 3) [2009] NSWSC 1132
Colleja v. Malli [2001] NSWADT 20
Colgate Palmolive Co v. Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225
Corrigan & Gibson v. Watson [2009] NSWADT 110
Cripps v. G & M Dawson Pty Ltd [2006] NSWCA 81
Denovan v. Tynan [2009] NSWADT 159
Gizah Pty Limited v. AXA Trustees Limited (No. 2) [2001] NSWADT 164
GN & Anor v. Public Guardian & anor [2009] NSWADTAP 6
Haralovic & Carr v. Law Society of NSW (No 2) [2007] NSWADT 97
Kyriacou v. Chief Commissioner of State Revenue [2009] NSWADT 175
Law Society of NSW v. Jayawardena [2008] NSWADT 187
Law Society of NSW v. Martin [2008] NSWADT 305
Liverpool City Council v. Estephen [2009] NSWCA 161
Ludon Investments No 7 Pty Ltd v. Barton [2009] NSWSC 1179
McGuirk v. Vice-Chancellor University of NSW (No 3) [2009] NSWADTAP 46
Nawi No. 3 Pty Ltd & Ors v. ING Management Ltd [2005] NSWADT 235
NSW Bar Association v. Archer (No.5) [2005] NSWADT 72
O’Neill v. Henry (No 2) [2009] NSWADT 294
Oshlack v. Richmond River Council [1998] 193CLR 72
Peng v. Chief Commissioner of State Revenue [2009] NSWADT 295
Potier v. Department of Corrective Services [2009] NSWADT 143
Profilio v. Coogee Bay Village Pty Ltd (No 2) [2009] NSWADT 319
Riskalla v. Consulate General of Portugal in Sydney [2009] NSWIRComm 209
Spuds Surf Chatswood Pty Limited v. P T Limited [2007] NSWADT 130
Salon Today Pty Limited v. MMIR Pty Limited [2009] NSWADT 71
Tennent v. Moukhlina (No 2) (costs) [2009] NSWADTAP Trust Company of Australia Ltd v. Craig & Ors [2005] NSWADT 65
Tuffy v. Vaughan (No 2) [2009] NSWADT 242
White ACT (in liq) v. G B White [2004] NSWSC 303
White ACT (in liq) v. G B White [2004] NSWSC 303 at [11]; and at [95]

TEXTS CITED:


APPLICATION:
Costs; indemnity costs

MATTER FOR DECISION:
costs


REPRESENTATION:
Applicant Representative:
P J King, Solicitor
Second and Third Respondent Representative:
N J Beaumont, Barrister


ORDERS:
The Applicants pay the costs as agreed or assessed of the Second and Third Respondents in the proceedings in the Tribunal and before the Appeal Panel, such costs to be assessed and paid on a indemnity basis


Reasons for Decision:

REASONS FOR DECISION

Background

1 By Application for Original Decision filed 18 March 2009 the First and Second Applicants sought various orders under various nominated sections of the Retail Leases Act 1994 (the Act). The Applicants asserted that the First Applicant was the lessee of retail shop premises, Shop 10.28 World Square Retail Sydney, that the Respondents had engaged in misleading or deceptive conduct in various aspects as specifically pleaded, asserted that the Respondents engaged in conduct was that unconscionable, and asserted loss and damage.

2 The Applicants also, on the same day, filed a Application for Urgent Interim Order seeking orders that the Respondents be restrained "from entering or taking possession of" the demised premises and "from terminating the lease" between the First Respondent and the First Applicant, the lease having commenced 1 June 2005 and terminating (on its terms) 31 May 2010.

3 That Application for Urgent Interim Order came on for hearing before me on 26 March 2009. The Applicants were represented by Mr King, solicitor, the First Respondent also represented by Mr King (by way of mention only), the Second and Third Respondents by Mr Beaumont of counsel and the Fourth Respondent by Ms Fisher, solicitor. I dealt with the application ex tempore. I noted that "at some point of time there were negotiations between the parties relating to the arrears and a Deed was entered into". I then made detailed reference to that Deed. Counsel for the Second and Third Respondents relied upon AWFM Management Pty Limited v. Red Roll Pty Limited [2009] NSWADTAP 3, asserting that in reliance thereof any representations that may have been made to the Applicants by the First Respondent did not flow through to the Second and Third Respondents as assignees. I observed that the Deed in its terms had expired and, importantly, I said, "The difficulties today confronting the Applicant are considerable. One might well ask, and no doubt it will be asked, why it is that the Applicant waited so long to come to this Tribunal". I then referred to a demand by the Second and Third Respondents of arrears of $122,111.36; a consequent threat "to terminate the lease by re-entry"; and then I took the view that in "matters like this on an urgent interim basis the Tribunal tries to act in a way that seeks to preserve the rights of the parties even if only on a temporary basis" consistent with the principles that I had previously set out in Spuds Surf Chatswood Pty Limited v. P T Limited [2007] NSWADT 130 at [60ff]. I formed the view that "a temporary injunction should be granted and the matter brought back in 14 days"; that such "would not unduly prejudice the Second and Third Respondents"; that such would preserve the lease for the time being of the First Applicant and would permit the Applicants to consider the material ... and the submissions carefully framed" by counsel for the Second and Third Respondents.

4 Importantly, I made this observation: "However I am unpersuaded that some sort of figure can be plucked out of the air unilaterally by an Applicant who seeks to assert that somehow or other some unconscionable conduct or misleading or deceptive conduct somehow entitles it not to pay the rent under the (lease) contract. This is particularly so in this case where the Applicant has delayed, in my opinion, bringing these proceedings, in circumstances where it could have easily brought those proceedings some many, many months ago if it wanted to assert that it was somehow entitled to a reduction of rent". I observed that the "Applicant waited, not only until after the expiry of the Deed, but also after it received a letter of demand on 10 March 2009. In those circumstances the plea by the Applicant that somehow it is entitled to remain in occupation at some sort of reduced rent ... fails, but that does not mean that the Applicant is otherwise unsuccessful today. If the Applicant wants to run this case it is going to have to put forward all of its material before the matter comes before the Tribunal on the next occasion".

5 I therefore made an Urgent Interim Order in terms of paragraphs 1 and 2 of the Applicant for Urgent Interim Order (set out above at [2]); directed that the Applicants pay to the Second and Third Respondents the sum of $15,330.00 no later than 7 April 2009; adjourned the further hearing of the Application for Urgent Interim Order until 9 April 2009; and made other consequent directions including reservation of the costs of the Second, Third and Fourth Respondents.

6 The proceedings then came back before me on 9 April 2009. The parties were similarly represented save that the First Respondent was represented by Mr J Collins. After hearing argument/submissions I again delivered an ex-tempore decision. By this time the Applicants had filed an Amended Application for Original Decision and I observed that "in order to meet the obstacles that were identified on the last occasion with regard to the Second and Third Respondents, the Applicant has sought to amend its pleadings by asserting as against the Second and Third Respondents conduct that it submits would result in relief being granted to it". I referred to a number of amendments in the Amended Application. In relation to two of those amendments (particularised as 3.3 and 3.4) I expressed the view that "on the material that has been placed before the Tribunal thus far the prospects of success in establishing those particulars which would result in relief granted are remote".

7 I then made reference to particulars 2.1(6), 2.1(7) and 2.1(8), observing that they asserted that the Second and Third Respondents induced the Applicants to enter into the Deed of Settlement. I expressed the further view that "there is precious little, if any, of a persuasive nature thus far put before the Tribunal that would indicate that the Tribunal should disregard or somehow read down the legal effect of the Deed." In particular I noted that in particular 2.1(7) it was asserted that there was a representation that the Deed of Settlement "was a genuine commercial agreement negotiated at arms-length" and I stated that I was "unable to understand how that could possibly be regarded as somehow misleading and deceptive or unconscionable". I expressed the view that it was, on the material before the Tribunal, a commercial agreement negotiated at arms-length, noting that the Applicants were represented and noting further that the person representing the Applicants "went to some trouble to make suggestions and alterations to the original draft deed such that one could conclude that some effort was made by the (First) Applicant and those representing it to make sure that the Deed was a deed that was one that they could comply with". I agreed with the submissions made by counsel for the Second and Third Respondents that the Deed as negotiated and entered into was "a very favourable Deed" and I was unable to see any argument "that would support a view that somehow or other there was some misleading conduct by the Second and Third Respondents in relation to the Deed". I went on to make this statement: "As I observed on the previous occasion 26 March 2009 the Deed is a very powerful document. It is a contract and it takes a lot in this Tribunal and in the court system to set aside or read down or somehow not enforce the terms of a negotiated contract, particularly in circumstances like this".

8 Counsel for the Applicant submitted "that somehow the Deed does not fully reflect the terms of the Heads of Agreement" (which were in evidence) and I expressed the view that I was unable to see that.

9 I then went on to make this observation: "This Division of this Tribunal is a commercial division and it deals with commercial matters. The Applicant has been in occupation of these premises for a long time. The Applicant may well have complained about various matters, some of which presumably are set out in the coloured photographs, but the Applicant, in my opinion, has delayed in relation to the Second and Third Respondents in bringing the matter to the Tribunal such that the balance of convenience, in my view, does not militate in favour of continuing the injunctions or urgent interim orders that I made on the last occasion". I then went on to observe: "I do understand, and strongly understand, the prejudice to the Applicant if the relief sought is not granted today, ie if the injunctions are vacated; but in regard to the Second and Third Respondents it is my view that the prospects of success are minimal and although the Applicants’ current financial position is parlous, to say the least, probably even dire, it seems to me that the force and effect of the Deed of Settlement has not been supplanted by the affidavit material thus far put before the Tribunal".

10 I vacated as and from 9 April 2009 the orders that I had previously made 26 March 2009; I dismissed from the proceedings the Second and Third Respondents; I granted leave (if leave was required) to urgently appeal the decision; I adjourned the proceedings as against the First and Fourth Respondents; I reserved the costs of the Second and Third Respondents; and I stayed the implementation of the vacation of the orders made 26 March 2009 until 15 April 2009.

11 The Applicants appealed on 4 May 2009. The Application for leave to appeal against the interlocutory order and an Application for Urgent Interlocutory Order, both before the Appeal Panel, were withdrawn at hearing. His Honour the President, Judge K O’Connor, formerly made the following orders:

"1. Application for leave refused.

2. Application for Urgent Interlocutory Order dismissed.

3. Appeal dismissed."

12 An Application by the Second and Third Respondents for costs of the appeal was partially granted: His Honour made the following additional orders:

"1. Application granted as to counsel’s costs in respect of today’s proceedings. The amount of these costs, less agreed by the parties, is to be assessed under the Legal Profession Act 2004.

2. Application as it relates to solicitor’s costs remitted to Tribunal for consideration when it determines the Applicants’ application (ie Second and Third Respondents’) in respect of those proceedings which it has reserved."

As I read those Orders counsel’s fees in respect of the appeal hearing 4 May 2009 have been dealt with; but the solicitor’s costs of the appeal of the Second and Third Respondents and the costs generally of the proceedings before the Tribunal reserved by me 9 April 2009 now fall to be determined by me. The Second and Third Respondents have applied for costs.

Principles to be Applied

13 The Tribunal has, on a number of occasions, already dealt with the operation of Administrative Decisions Tribunal Act Section 88. This is the Section that deals with question of costs which arise for determination from and after 1 January 2009, save, that for matters completed prior to 1 January 2009, except argument relating to costs, the "old" s.88 applies – see Building Professionals Board v. Ball (No 2) [2009] NSWADTAP 8 at [56] and Tennant v. Moukhlina (No 2) (Costs) (RLD) [2009] NSWADTAP 74. Reference can be made to Corrigan & Gibson v. Watson [2009] NSWADT 110, Salon Today Pty Limited v. MMIR Pty Limited [2009] NSWADT 71, BE v. University of Technology, Sydney (GD) [2009] NSWADTAP 22, Potier v. Department of Corrective Services [2009] NSWADT 143, Denovan v. Tynan [2009] NSWADT 159, Auelua v. Ministry of Transport [2009] NSWADT 134, McGuirk v. Vice-Chancellor University of NSW (No 3) [2009] NSWADTAP 46, Peng v. Chief Commissioner of State Revenue [2009] NSWADT 295, O’Neill v. Henry (No 2) [2009] NSWADT 294, Tuffy v. Vaughan (No 2) [2009] NSWADT 242, Alramon Pty Ltd v. Jonamill Pty Ltd (No 2) [2009] NSWADT302 and Profilio v. Coogee Bay Village Pty Ltd (No 2) [2009] NSWADT 319 at [11-16]. There are no doubt many other decisions of this Tribunal impinging upon the principles to be applied when deciding whether or not to award costs in this Tribunal pursuant to the "new" Section 88.

14 Section 88 is in the following terms:

"88(1) Each party to proceedings before the Tribunal is to bear the party’s own costs in the proceedings, except as provided by this section.

(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that it is fair to do so having regard to the following:

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings by conduct such as:

(i) failing to comply with an order of 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 facto or law,

(d) the nature and complexity of the proceedings,

(e) any other matter that the Tribunal considers relevant."

(2) The Tribunal may:

(a) determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs.

(4) In this section, costs includes:

(a) costs of or incidental to proceedings in the Tribunal, and

(b) the costs of and incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application."

Submissions of Respondents:

15 The Second and Third Respondents submit that "it is entirely fair (and appropriate) that the Applicants pay the costs" of the Second and Third Respondents. They observe that the Applicants did not even offer, as a condition of relief "to pay the ... outstanding rent due" but were seeking "with no proper basis to set aside (the) Deed of Settlement which was in truth highly favourable to them". That approach was "commercially irrational". It was submitted that in those circumstances the principle set out in Corrigan, with reference to s.88(1)(a)(c), is a reference to a "substantial disparity between the strength of one claim and the weakness of its competitor" (at [28]) and, so it was submitted, in this case there was a "high level of weakness in the case for the Applicants such that it would be "fair to award costs" to the Second and Third Respondents ("the Respondents") as the stronger side.

16 The primary submission of the Respondents was in or to the effect that the "proceedings were always misconceived". They pointed to the fact that the Tribunal vacated the initial orders for urgent interim relief, that the proceedings were summarily dismissed (as against the Respondents) and the appeal was "on the eve of its hearing" abandoned by the Applicants in circumstances where it must be assumed that the Applicants recognised the absence of any prospects on the appeal. It was submitted that it could not be "fair to put a party to the costs, expense and trouble of defending proceedings in the Tribunal and in the meantime precluded from validly exercising its rights, where the proceedings are ultimately shown to be ... misconceived. The most important factor relied upon by the Respondents was "the lack of merit of the proceedings".

17 The Respondents relied upon a number of further submissions. Firstly they complained about the failure of the Applicants to set out the orders sought and to provide adequate particulars. Thus, it was said, that may have contributed "to the adjournment of the proceedings for two weeks, pending amendments and further evidence, thereby unnecessarily disadvantaging the Respondents". Dealing with this submission now, in my view in all the circumstances and having regard to what actually happened, this submission must be rejected.

18 Secondly, and on a similar basis, it was submitted that in the factual circumstances "the Tribunal felt it had no choice but to grant, in effect, a short adjournment against the possibility that there may yet emerge a case of some merit, but that did not occur (and the) failure of the Applicants to put forward their whole case thus unnecessarily disadvantage the Respondents, by vexing them (and the Tribunal) with a further and unnecessary hearing". Again, I am of the view that submission must be regarded as part of the conduct of the Applicants. The conduct of the Applicants, particularly in this Division, should be considered, as I do below, as part of the reasoning on whether or not the Tribunal should make a finding that it is fair to make an award of costs. Such an award may well, in the circumstances of this case, fall under s.88(1A)(c), (d) and/or (e). I shall deal with this further below.

19 It was further submitted that there was an attempt by the Second Applicant to assert, on oath, that the Deed had not been the subject of negotiation and that, having regard to my findings above [6-9] that evidence must have been wrong and that it is "a serious matter". I am not prepared to make any finding relating thereto – the Second Applicant did not give any oral evidence, neither was he cross examined and, as such, this submission must fail.

20 Nextly it was submitted that the "Applicants vexatiously conducted the proceedings" but I am unable to make any finding in that respect, and no particulars were provided by the Respondents. However, I do make reference to this aspect below in relation to the Vexatious Proceedings Act 2008.

21 It was then submitted that the Applicants "unreasonably prolonged the time taken to complete the proceedings because, had they presented their case and evidence (such as it was) in a clear and open way on the first occasion, then the tribunal would have been in a position to dismiss it summarily at that time". There is some strength in that submission.

22 The Respondents submitted, as their "central issue", that the "case of the Applicants had no tenable basis in fact or law ... (and this was) ultimately acknowledged by the Applicants themselves who abandoned the appeal on this very basis". It was submitted that, even leaving this aside, "the case of the Respondents was far stronger than that of the Applicants and this is an independent ground to exercise the discretion" under s.88(1A)(c).

23 It was nextly submitted that s.88(1A)(d) was brought into play because "the nature of the proceedings were such that the Respondents had no realistic alternative but to defend them. The Respondents simply wished to exercise a contractual right arising out of (the) negotiated Deed of Settlement following mediation. They were restrained from exercising that right in circumstances where ultimately no tenable basis was found by the Tribunal to exist from precluding them from doing so". In addition, it was submitted, that the Applicants "sought without foundation to upset a mediated settlement" and that such action "should be discouraged by an award of costs".

24 Finally, with regard to the costs of the appeal, the Respondents noted that the Appeals Panel had already ordered counsel’s costs for the day to be paid by the Applicants. It was submitted that all the submissions made in relation to the costs at first instance "apply with even greater strength in the case of the appeal" and that was "because the Applicants had, by then, the benefit of the reasons of the Tribunal of which they should have taken proper note but instead they chose, by taking a deliberate forensic risk, to commence the appeal and seek a stay of the order vacating the interim injunction in circumstances where it appears they had not properly given consideration to whether or not it had any reasonable prospects of success. The appeal was the abandoned on the day of the hearing on the basis that it was accepted, on the advice of counsel, that the proceedings (the appeal) were without prospects (of success)."

25 Finally the Respondents sought an order for indemnity costs pursuant to Section 88(2)(b).

Submissions of the Applicants

26 Detailed written submissions were made on behalf of the Applicants. They submitted that it was necessary to move the Tribunal for urgent interim orders because of the threat of the Respondents "giving notice that they required payment of arrears and rent and outgoings in the sum of $122,111.36 by 5.00pm on 18 March 2009, otherwise ... (the Respondents) intended to terminate the lease by re-entering the premises". It was observed that the "business operating from the premises was and remains the Second Applicant’s sole means of income and livelihood".

27 Nextly, the Applicants relied upon the affidavit of the Second Applicant which asserted a history. There were allegations of representations, receipt of correspondence "alleging arrears and seeking payment thereof by 22 December 2008", offers and no response thereto, later summary rejection and no counter proposal or any further attempt to negotiate the matter, assertions of demands for "an incorrect amount of arrears of rent and outgoings", a failure by the Respondents to "propose any form of alternative dispute resolution" and a failure by them to "make any attempt to engage in negotiations", and a consequent assertion that "the Applicants had no alternative but to commence the proceedings for urgent interim relief". The Applicants relied upon the grant of that relief and asserted that had their "application been devoid of merit, it is submitted that the application would have been dismissed on that date. The fact that the opposite occurred indicates that there was merit" to the application.

28 The Applicants went further: they submitted that they had "no alternative but to commence proceedings in order to prevent the Respondents from taking possession of the premises" and that the Respondents "made no attempt to enter into negotiations with the Applicants prior to (the commencement of proceedings) despite the Respondents having received a proposal from the Applicants’ solicitor some six weeks prior to summarily rejecting the Applicants’ proposal. The Applicants also submitted that when the matter came back before the Tribunal on 9 April 2009, the hearing on that day was "lengthy" and lasted approximately 2 hours" and although the application was dismissed a stay was granted such that this "again underlines the proposition that the Applicants’ case had substantial merit".

29 The Applicants relied upon assertions relating to further offers made 30 April 2009 which resulted ultimately in the Respondents making "an offer to settle the dispute" and this resulted in the Applicants "withdrawing the appeal". It was asserted that the letter offering to settle the dispute 1 May 2009 "was the first occasion on which the Respondents made any meaningful attempt to enter into negotiations to settle the dispute. It (was) submitted that the Respondents would not have made such an offer to settle the dispute between the parties if not the Respondents themselves believed the Applicants’ case had merit ... such offer was not made ... until after the Applicants had commenced proceedings".

30 Reliance was placed upon s.88(1A)(e) and it was submitted "that the disparity between the parties’ financial circumstances is a relevant factor", the Applicants’ financial circumstances being "parlous" compared (presumably) to the financial position of the Respondents such that the "consequence of having to bear any order for costs ... would have the effect of crushing the Applicants ... (and this) can hardly be considered to be fair and reasonable".

31 It was submitted that of "even greater significance is the fact that as at the date of the submissions the Applicants remain in possession of the premises, with the knowledge and consent of the Respondents. Effectively, this means the Applicants have succeeded in their application to prevent the Respondents from carrying out their threat to take possession of the premises. Clearly, the material that the Applicants had filed and served in the (Tribunal) proceedings had the effect of convincing the Respondents that the Respondents should not in fact terminate the lease and to permit the Applicants to remain in possession of the premises. Because the Applicants have been successful in their endeavours to retain possession of the premises, despite the Respondents submitting ... (that) the Applicants should be evicted, it is in fact the Respondents who should be paying the costs of the Applicants of such proceedings. Clearly (it was further submitted) the actions of the Respondents in, on the one hand prolonging and complicating the proceedings by opposing at every stage of the proceedings the Applicant’s endeavours to retain possession of the premises, and on the other hand continuing to permit the Applicants to remain in possession of the premises up to the present time, it is the Respondents who have engaged in an abuse of the proceedings of the Tribunal".

32 It was then submitted that the "misbehaviour of the Respondents is compounded by their refusal to enter into any negotiations with the Applicants for the period 27 January 2009 until after the commencement of the proceedings, quite apart from the delay on the part of the Respondents and even communicating with the Applicants or their solicitor following the issue of the offer to the Respondents’ solicitors of 27 January 2009".

33 The Applicants submitted "that the order for costs made by the Appeal Panel on 4 May 2009 should be set aside, and the Respondents be ordered to pay the Applicants’ costs of the proceedings on an indemnity basis". A brave application.

Submissions of Respondents in Reply

34 The Respondents challenged a number of the factual assertions made by the Applicants, in particular relating to the negotiations. There is no need to trawl through those counter-assertions and the various items of correspondence. In my opinion it is probably irrelevant for the reasons that I propose to set out below. Any analysis of offers and counter-offers would require, not only more evidence than is currently before the Tribunal, but also an assessment of the commerciality of those offers/counter-offers and whether they were realistic or not in all the circumstances. But I am not sure what precise relevance they would have to an application for costs in relation to an application which, ultimately, failed. Indeed, one of the difficulties confronting the Tribunal in seeking to (if appropriate) investigate, make findings and conclusions on, the history, correspondence and attendances between the parties outside of the Tribunal proceedings, is that there is assertion and counter-assertion in the written submissions such that, in my view, one only needs to look at the proceedings themselves. A good example is the assertion by the Applicants that by letter 1 May 2009 the Respondents "made an offer to settle the dispute" and that, as a result, "the Applicants advise that they would be withdrawing the appeal" and the counter-assertion that "the true position is that, following the dismissal of the appeal by consent, the Applicants requested (through their solicitor) the opportunity to stay in possession for two months so they might try to sell the business (and this) was agreed to, subject to the reservation of all rights under the lease ..".

Tribunal’s Opinion

35 In my opinion it is firstly relevant to hark back to the nature of this Division of this Tribunal. This was clearly set out in Gizah Pty Limited v. AXA Trustees Limited (No. 2) [2001] NSWADT 164 at [33] where this statement was made:

"The Retail Leases Division of this Tribunal deals with commercial matters. All parties to a retail lease are parties engaged in trade and commerce for reward. As such they must be regarded as commercial persons and is not to the point that one or either of them is unrepresented".

And the Tribunal referred to Colleja v. Malli [2001] NSWADT 20 where that Tribunal "identified the commerciality of retail leases and the Tribunal’s role in dealing commercially and at law with matters brought before it".

36 Nextly, in Salon Today Pty Limited v. MMIR Pty Limited [2009] NSWADT 71 I made this observation at [48]:

"It has been stated before – (see Gizah and Armstrong Jones Management Pty Limited v. Saies-Bond & Associates Pty Limited (No 2) [2007] NSWADT 58) and elsewhere - that this Division of this Tribunal is a commercial division in that it deals with the commercial relations between lessors and lessees in particular commercial circumstances. It is for that reason that the Retail Leases Act requires, as does this Tribunal, that parties engage in mediation in a genuine attempt to resolve their differences. Indeed, it is now common (if it ever was uncommon) for attempts to be made, prior to litigation and in the course of litigation, by parties and their lawyers to resolve cases without the issues going to a full hearing. Indeed, lawyers, even before the advent of modern credited mediators, have been mediating and resolving cases since time immemorial".

37 So, it is plain to me that, not only is this Division a commercial division dealing with commercial issues between lessors and lessees in a retail lease environment, but, and in addition, proceedings should only be commenced in this Tribunal after very careful consideration of the merits of the case: see Trust Company of Australia Ltd v. Craig [2005] NSWADT 65 at [44]. After all, commencing proceedings without such consideration inevitably results in considerable expense being incurred by the other party and one might not unreasonably ask: "why should the other party have to bear those expenses when the proceedings should not have been commenced in the first place?"

38 Although a great amount of effort was made by both parties in their respective written submissions to trawl through correspondence, offers, counter-offers and the like, in my view in the circumstances of this case none of that bears upon the issue to be decided in this case. The plain fact of the matter is that the Applicants commenced proceedings against the Second and Third Respondents in circumstances where those proceedings as commenced had absolutely no merit at all having regard to the decision of the Appeals Panel in Red Roll. There was no challenge to the correctness of that decision such that the assertions made against the Second and Third Respondents, as pleaded, clearly had no merit.

39 It is not to the point that the Tribunal granted a temporary injunction on 26 March 2009 – a careful study of the ex tempore Judgment indicates plainly that the urgent interim order was granted purely to preserve the lease for the time being and for the Applicants "to consider the material that is now being served upon the Applicant and the submissions carefully framed by Mr Beaumont" (of counsel for the Second and Third Respondents); thus it cannot be properly asserted that somehow the Applicants had some victory on 26 March 2009 – rather, it was plain that Red Roll applied but a little breathing space was given to the Applicants consistent with Spuds Surf in circumstances where there was no undue prejudice to the Second and Third Respondents. Furthermore, the Tribunal was singularly unimpressed with the argument that "somehow or other some unconscionable conduct or misleading or deceptive conduct somehow entitles (an Applicant) not to pay the rent under the contract" and where there had been more that considerable delay in bringing the proceedings.

40 The Tribunal did not, at that stage, deal in detail with the Deed of Settlement. This was dealt with more thoroughly on 9 April 2009 and my observations ex-tempore relating thereto are set out above.

41 However, it is probably worth re-visiting the Deed on this question of costs, bearing in mind that both my decisions 26 March 2009 and 9 April 2009 were delivered ex tempore.

42 The Deed is a formally prepared document. The parties are the Second and Third Respondents and the First and Second Applicants. The Second Applicant is the guarantor. The document makes quite specific reference to the lease, recites that the First Applicant leases the premises and "is currently (in) arrears of its obligations to pay rent, outgoings and marketing expenses owing under the lease" and, more importantly, recites that the parties "have agreed to settle their disputes in respect of the lease including but not limited to the surrender of the lease by the (First Applicant) ... on the conditions of this Deed."

43 Clause 2 makes quite specific provisions for the surrender of the lease. The First Applicant is required to surrender the lease and provide vacant possession of the premises as at 1 August 2008 unless it "averages an excess of $45,000.00 plus GST sales for the months of February to June 2008 (inclusive)". There was not the slightest evidence of that provision having been complied with by the First Applicant. Clause 2 went on to provide that the First Applicant was to provide vacant possession prior to 1 August 2008 if it failed to make a payment required by clause 5.2 and such default exceeded 14 days or it breached any essential term of the Deed or the lease and such default remained outstanding for 14 days. Clause 5.1 provided that the rental arrears were to be "quarantined" until the earlier of 1 August 2008 or the date on which the first Applicant sells the business. There were quite specific and detailed provisions in clause 5, in particular clause 5.2 dealing with rent from June 2007 until the surrender date; and there was not the slightest suggestion that those provisions had been complied with by the First Applicant. Indeed, in the case of a breach, clause 5.4 applied and the landlord (Second and Third Applicants) could, by notice, "terminate the effect of this clause 5, in which case this clause 5 is of no effect and the relevant parts of the lease continue according to their terms".

44 So, pausing at this point, the Deed was clearly a document intended to make quite specific provision, in the face of more than considerable arrears, for the First Applicant to remain in occupation of the premises but subject to quite generous terms.

45 There were more important consequent clauses. Not only did the Second Applicant guarantee and indemnify the Second and Third Respondents but clause 9 provided quite clear and explicit releases. In particular clause 9.2 indemnified the Second and Third Respondents "against any cost, expense, claim, liability or loss of any kind and all damages and actions paid, incurred or suffered by (them) in respect of any breach by (the First Applicant’s) obligations under this Deed"; and perhaps most importantly, clause 9.3 provided: "With effect from the date of this Deed the (First Applicant) releases the (Second and Third Respondents) from all existing claims and actions arising under the lease and the subject matter of the lease". Clause 12.8 provided for further assurances.

46 As I observed shortly in my ex tempore Judgment 9 April 2009 it would be difficult, if not impossible, for the Applicants to overcome the terms of this Deed and, in particular, the terms of clause 9.3, bearing in mind that they were in serious arrears under the lease and the Deed arose as a result of mediation and a more than generous approach by the Second and Third Respondents to enable the First Applicant to remain in the premises subject to quite specific payments, all negotiated at arm’s length and in a commercial milieu, which would enable the First Applicant to ultimately sell its business.

47 It is not the job of this Tribunal to "buy into" the commercial agreements that parties enter into freely or voluntarily. In the case before this Tribunal there was not the slightest persuasive evidence that would lead this Tribunal to a contrary view and, indeed, it was plain that before the Applicants entered into the Deed they had appropriate advice, they knew what they were doing and were, understandably, attempting to trade-out of their difficulties in order to sell the business.

48 There is really no need for me to refer further to the Deed, except to say that the Applicants seemed to wish to avoid referring to it as a contractual document to which they were clearly bound. In their Application for Original Decision filed 18 March 2009 they referred in detail to the lease of the demised premises but made no reference at all in the pleadings, or in the relief sought, to the Deed. Similarly, in their Application for Urgent Interim Order no reference is made to the Deed. Following upon the hearing 26 March 2009, the submissions made thereat by counsel for the Second and Third Respondents and my observations in my ex tempore Judgment of that date, the Applicants filed an Amended Application for Urgent Decision 7 April 2009. I made reference to this document and the amendments in my ex tempore Judgment 9 April 2009, but it is worth observing that in the particulars as pleaded, 2.16, 2.17 and 2.18, the Applicants sought to assert some for of inducement extended to the Applicants to enter into the Deed by some form of misrepresentation, asserted that the Deed "fails to take into account the inability of the Applicants to sell the business operating from the premises because of the ongoing deficiencies and problems in the promotion and management" of the Centre and also asserted that the Deed "fails to take into account the absence of commercial bargaining power on the part of the applicants arising from the applicant’s lack of financial capacity to absorb losses that the applicants would incur in the event that the Applicants were forced to abandoned the premises". I observed in my decision 9 April 2009 that there was "precious little, if any, evidence of a persuasive nature thus far put before this Tribunal that would indicate that the Tribunal should disregard or some how read down the legal effect of the Deed".

49 The other amendments were contained in particulars 3.3 and 3.4; the first asserted a failure by the Respondents to appoint a specialist retail valuer when the Applicants alleged that the rent and outgoings were "well in excess of the fair rental value of the premises"; and 3.4 asserted that the Respondents "have taken advantage of the unequal bargaining power of the applicants relative to the respondents" by imposing rents and outgoings "well in excess of the fair rental value of the premises" and where the Respondents "have unfairly used their disproportionate bargaining power relative to the applicant to induce the Applicants to enter into a Deed of Settlement containing such a oppressive and onerous terms upon the applicant leaving the applicant to default under the terms of the said Deed of Settlement".

50 I have substantially recited the additional particulars in the Amended Application in order to throw more light upon these particulars as perhaps was thrown in my Judgment 9 April 2009. I am clearly of the view that the amended particulars are not supported by any "evidence of a persuasive nature" and fly in the face of the terms of the Deed and the opinion that I formed, and adhere to, that "the Deed as negotiated and entered into was a very favourable Deed".

51 It seems to me that the initial failure to plead, or even make passing reference to, the Deed of Settlement in the original Application, would have constituted a "special circumstance" under the former Section 88 Administrative Decisions Tribunal Act. Certainly, in my view, that failure falls clearly within the prohibition requiring a party to conduct the proceedings in this Tribunal in a way that does not "unnecessarily disadvantage another party to the proceedings" and, if that conduct does not fall within Section 88(1)(a)(iv), (v) or (perhaps) (vi), it certainly falls within (e) because it is plain and obvious, and has been the practice for as long as one can reasonably remember, that where a party seeks urgent interim relief of the nature available in this Tribunal, or injunctive relief in a Court, there is an absolute obligation on that party to put all relevant matters before the Tribunal/Court so that the Tribunal/Court can properly exercise its discretion and make a judgment on the balance of convenience.

52 Nextly, if it is thought that somehow those omissions were cured by the filing of the Amended Application then, for the reasons I have set out above, that argument must also fail. And, if support is needed for that expression of opinion then one only needs to look at what happened in the Appeal Panel when the Applicants/appellants simply abandoned the appeal.

53 The result of all this is that, in my respectful opinion, the Applicants simply never had any arguable case against the Second and Third Respondents, those Respondents were obliged to seek legal advice; were represented in this Tribunal and on appeal by counsel (properly so in my view); the Appeals Panel dismissed the proceedings and made an order that counsel’s fees of the Second and Third Respondents be paid by the Applicants and otherwise as recited above.

54 Clearly the Appeals Panel was satisfied that it was "fair" to order the Applicants/appellants to pay counsel’s fees on the appeal. In my opinion, it is similarly "fair" to make an order to the effect that the Applicants pay the Second and Third Respondents costs of and incidental to the appeal and of and incidental to the hearing before the Tribunal. In my view it would be demonstrably unfair not to make such an order in all the circumstances.

55 Although decided under the former s.88 I briefly refer to NSW Bar Association v. Archer (No.5) [2005] NSWADT 72 where the Tribunal had no difficulty at all in making an order that the Bar Association pay the costs of a person to whom a summons/ subpoena was issued in circumstances where the terms of that summons were oppressive and "required the production of numerous documents that were irrelevant to the proceedings" (at [16]) and that was held to constitute "special circumstances warranting an award of costs". It seems to me that commencing proceedings, or (indeed) maintaining those proceedings when the prospects of success were, at all times, minimal or non-existent, would not only constitute "special circumstances" but would fall clearly within s.88 as it came into operation on 1 January 2009. In addition, I would refer to Haralovic & Carr v. Law Society of NSW (No 2) [2007] NSWADT 97 where that Tribunal made this observation at [30]: "A recognised category of "special circumstances" – see eg Trust Company of Australia Ltd v. Craig & Ors [2005] NSWADT 65 at [44-45] and Nawi No. 3 Pty Ltd & Ors v. ING Management Ltd [2005] NSWADT 235 at [23] – is where a party, having commenced a proceeding in the Tribunal, withdraws it without good reason before the commencement of the hearing. This is not an "ordinary" circumstance, and the fact that the other party or parties have been put to significant expense in conducting preparations that turn out to be unnecessary has been held sufficient to "warrant" a costs order". In GN & Anor v. Public Guardian & anor [2009] NSWADTAP 6, that Appeal Panel made this observation at [27]: "In our view, section 88(1), stating the normal requirement that the parties to proceedings before the Tribunal will bear their own costs, is consistent with the objects stated in section 3. The Tribunal’s discretion to award costs is the exception to the general position, and this may only be exercised where it is fair to do so having regard to the matters referred to in paragraphs (a) to (e) of section 88(1A)". See also Kyriacou v. Chief Commissioner of State Revenue [2009] NSWADT 175 at [38].

56 Finally, in my view there is also good ground for awarding costs – this is to be found in s.88(1A)(a)(iv), and (b) and (c) and (d). If the Applicants had properly pleaded their case then they would have recognised a serious problem in the terms of the Deed and it is quite likely that the proceedings would not have been brought at all, certainly as against the Second and Third Respondents.

57 There is a discussion in Kyriacou at [42ff] regarding the effect of the Vexatious Proceedings Act 2008. The relevant definition section is s.6. The section is inclusive only such that the categories of whether legal proceedings are vexatious or not is not closed. However, s.6(b) includes within the definition "proceedings instituted or pursued without reasonable ground" – the failure to plead a defining document, namely the Deed of Settlement, and the launching and maintenance of the proceedings in the teeth of the clear and precise terms of the Deed, a document clearly binding on the parties, clearly falls within s.6(c) (although not within s.8(1)(a)), offends proper legal conduct, and in itself justifies a costs order.

58 With regard to the costs of the appeal it seems to me that "an appeal involves a second round of proceedings in the Tribunal. The liberality that is usually shown in not awarding costs at first instance in the Tribunal does not apply with equal force to the exercise of the right of appeal. Both sides are put to considerable further expense" (Tennant at [66]). In this case the appellants lost at first instance and lost again on appeal. As the Appeals Panel said in Tennent at [67], and turning the nomenclature around, had "the Applicants been the losing party at first instance and proceeded to appeal and lost, we would have been inclined to make a full costs order against the Applicants at both levels". That observation, changed around slightly to suit this case, applies equally, and with considerable force, in the current proceedings.

Indemnity Costs ?

59 The Second and Third Respondents have applied for an award of costs on an indemnity basis. The Tribunal clearly has power to make such an award: see s.88(2)(a); Barsoum v. Glebe Administration Board (No. 2) [2002] NSWADT 174; and Peng v. Chief Commissioner of State Revenue [2009] NSWADT 295 at [104-116]. It is clearly discretionary and, as such, must be exercised judicially. There is no need for me to review the law in detail: suffice it to say that in order to support an award of indemnity costs the Tribunal needs to be satisfied that there is "a sufficient or unusual feature", or some "relevant delinquency" bearing a relevant relation to the conduct of the case – see for example Colgate Palmolive Co v. Cussons Pty Ltd [1993] FCA 536; (1993) 46 FCR 225 at 233-234; Oshlack v. Richmond River Council [1998] 193CLR 72; White ACT (in liq) v. G B White [2004] NSWSC 303 at [11]; and Liverpool City Council v. Estephen [2009] NSWCA 161 at [95]. A more interesting example, which demonstrates the wide discretion available to courts and tribunals, can be found in indemnity costs orders being made against defendants who have filed submitting appearances where their conduct brought about the need for the litigation: see Buzrio Pty Ltd v. Consumer, Trader and Tenancy Tribunal (No 3) [2009] NSWSC 1132; and even where proceedings are dealt with ex parte: see Riskalla v. Consulate General of Portugal in Sydney [2009] NSWIRComm 209. One can detect, I think, in all these decisions the general thrust of the Court of Appeal in Cripps v. G & M Dawson Pty Ltd [2006] NSWCA 81 at [52-60].

60 It is not a sufficient base for an award of indemnity costs that a party is successful in the litigation: a good recent example of the application of that principle is to be found in the decision of Forster J in Auto Panel Beaters & Radiators Pty Ltd (in liq) v. Barclays Services Pty Ltd (No 2) [2009] NSWSC 1308.

61 Although it is true that the categories of conduct, "sufficient or unusual feature" or "relevant delinquency" are not closed (see Colgate Palmolive at [257]) it is plain that indemnity costs orders are most regularly awarded where litigation is commenced with no reasonable prospects of success. There are a number of cases where such awards have been made where the cases could be generally regarded as "hopeless", or with no chance of success, or categorised as being "without substance", "groundless", "fanciful or hopeless", no reasonable prospects of success or so weak as to be futile. Reference can be made to the recent decision of Hoeben J in Ludon Investments No 7 Pty Ltd v. Barton [2009] NSWSC 1179 at [45-46]. Although it is true that a weak case will not ground an indemnity costs award, where the matter raised has been decided previously then that would generally result in an indemnity order – see Bayne v. Blake (No 3) (2009) CLR 366.

62 In the case before this Tribunal the arguments initially raised by the Applicants were clearly covered by the decision in Red Roll and were also clearly covered by the Deed of Settlement to which I have made detailed reference above. The only reason why the Applicant "succeeded" in obtaining an urgent interim order on the first occasion was simply to enable them to get a grip on the arguments that were raised at the Tribunal by the Respondents. There was not the slightest suggestion that the case raised by the Applicants had any merit; but rather, perhaps with a generosity of spirit, the Tribunal wished to preserve the status quo to enable the Applicants to, perhaps, articulate their case in a more persuasive fashion having regard to the arguments that were raised.

63 When the matter came back on the second occasion 9 April 2009 the arguments sought to be advanced were, quite frankly, hopeless. For the reasons I have set out above there was not the slightest jot of evidence that would have supported the amendments and no real attempt was made to address the real argument/discussions that were ventilated on the first occasion. The Tribunal had no difficulty at all in dismissing in the Application for Urgent Interim Order and dismissing from the proceedings the Second and Third Respondents.

64 The Applicants then sought to appeal, but when "push came to shove" the appeal was simply abandoned, with the orders as set out above.

65 I wish to repeat the point that has been made on at least two prior occasions in this Tribunal: parties have an obligation to carefully, and consistently, examine their case and, where it doesn’t "stack up" then find some way of vacating the field of battle: see, for example Law Society f NSW v. Jayawardena [2008] NSWADT 187; Law Society of NSW v. Martin [2008] NSWADT 305 at [76]; and Salon Today at [51-52].

66 It seems to me that the course/conduct of these proceedings as against the Second and Third Respondents clearly justifies, not only a costs order against the Applicants but also an order that those costs be assessed and paid on an indemnity basis.

67 Finally, and for completeness, the application by the Applicants that the Second and Third Respondents pay their costs is dismissed.

The Usual Order

68 It is usual for the Tribunal, when making a costs order to use the words "costs to be agreed or assessed" without reference to the method of assessment. In more recent times the Tribunal has used words in or to the effect "...costs to be agreed or assessed in accordance with the Legal Profession Act 2004" – see for example, Kyriacou at [50]. Perhaps this has arisen because of the terms of s.88(2)(b). In my opinion the "usual order" for agreement/assessment is in accordance with the Legal Profession Act 2004, as it has been since the introduction of the Costs Assessment Scheme – see Law Society of NSW v. Gallagher [1999] NSWADT 8 – and thus the making of an order for the payment of costs "as agreed or assessed" simply means "as agreed or assessed in accordance with the Legal Profession Act 2004".

Orders

The Applicants pay the costs as agreed or assessed of the Second and Third Respondents in the proceedings in the Tribunal and before the Appeal Panel, such costs to be assessed and paid on a indemnity basis.