Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd (No 2) [2010] NSWADT 11 (11 January 2010)

New South Wales Administrative Decisions Tribunal

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Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd (No 2) [2010] NSWADT 11 (11 January 2010)

Last Updated: 1 February 2010

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL

CITATION:
Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd (No 2) [2010] NSWADT 11


DIVISION:
RETAIL LEASES DIVISION

PARTIES:
Applicant:
Meriton Properties Pty Ltd

1st Respondent:
DCM Leases-Five Pty Ltd

2nd Respondent
Wayne Douglas Plant




FILE NUMBERS:
085163

HEARING DATES:
on the papers

SUBMISSIONS CLOSED:
22 December 2009



DATE OF DECISION:
11 January 2010

BEFORE:
Chesterman M - Deputy President





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

CASES CITED:
Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45
Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81
Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164
Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd [2009] NSWADT 121
Plant v Meriton Properties Pty Ltd (RLD) [2009] NSWADTAP 62
Rose Holdings Pty Ltd v Chusap [2002] NSWADT 153
Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1
Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71
Smith trading as Flames Grill & Carvery v Trust Company of Australia Ltd [2008] NSWADT 10
Solomon v Singh (No 2) [2005] NSWADT 295
Solomon v Singh (No 3) [2006] NSWADT 120
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 265; [2004] HCA 52

TEXTS CITED:


APPLICATION:
Costs – Administrative Decisions Tribunal Act 1997, section 88

MATTER FOR DECISION:



REPRESENTATION:
Applicant Representative:
T Maltz, barrister
Respondent Representative:
No appearance


ORDERS:
1. The First Respondent is to pay the Applicant’s costs in the proceedings between them, as agreed or as assessed under the Legal Profession Act 2004.
2. The Applicant’s application for an order for costs against the Second Respondent is dismissed.


Reasons for Decision:

REASONS FOR DECISION

Introduction

1 This decision calls for the interpretation and application of the relatively novel criterion of ‘fairness’ that now regulates the Tribunal’s power to award costs in many matters falling within its jurisdiction.

2 On 26 May 2009, I delivered my decision in proceedings brought by the Applicant, Meriton Properties Pty Ltd (‘Meriton’), in proceedings brought under the Retail Leases Act 1994 (‘the RL Act’) against the First Respondent, DCM Leases-Five Pty Ltd (‘DCM’), and the Second Respondent, Mr Wayne Plant.

3 In that decision (Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd [2009] NSWADT 121), I held that DCM was liable to Meriton for damages totalling $114,944.56, principally on account of lost rent due under a retail shop lease (‘the Lease’) that Meriton had granted to DCM and had subsequently terminated. The grounds of termination were DCM’s failure to pay rent and its contravention of a clause in the Lease relating to trading hours.

4 My order against DCM was made ex parte since DCM had filed no documents in these proceedings and did not appear at the hearing.

5 I also held that Mr Plant, who was the sole director of DCM, was liable to Meriton for the same amount under a guarantee clause contained in the Lease (clause 39). Mr Plant had defended the claim brought against him. He had argued that, by virtue of the particular circumstances in which his signature appeared on another page in the Lease below a clause (Item 15 of the Lease Schedule) designating him as the guarantor, he did not, despite appearances, assume the legal obligations of a guarantor.

6 Shortly summarised, the most significant of these circumstances were as follows:-

(a) In a lease granted in 2001 by Meriton to a company associated with DCM, Meriton had not insisted on a guarantee by Mr Plant or any other director, on the basis that a guarantee was provided by the director of a franchisee company that took over occupation of the leased premises.

(b) In line, however, with an attitude conveyed by Meriton during negotiations for the Lease, the Lease document, when first sent to Mr Plant for execution, designated him as guarantor in Item 15 of the Lease Schedule, which was located near the end of the document.

(c) Before Mr Plant returned the Lease, bearing signatures by him at the foot of the Schedule and elsewhere in the Lease, he deleted his name from Item 15.

(d) When returning the Lease to Mr Plant for one further signature by him (on behalf of DCM) on page 2 of the document, Ms Wong, an in-house solicitor recently engaged by Meriton, stated in her covering letter that since Meriton did not agree with this deletion she had ‘reinstated’ Mr Plant as the guarantor.

(e) Mr Plant, through his personal assistant (Mr Scott), sent the Lease back to Ms Wong with his further signature as requested (but in pencil), and indeed sent it back a second time after complying with a request from her to sign again (in ink), without on either occasion objecting to his ‘reinstatement’ as guarantor or (it would seem) rereading the Schedule.

(f) Meriton then executed the Lease.

7 I ruled that even though Mr Plant had deleted his name from Item 15 of the Schedule at the time when he signed this part of the Lease, his subsequent conduct – notably, authorising Mr Scott on two occasions to return the Lease with further signatures by him even though the ‘reinstatement’ of his name as guarantor had specifically been drawn to his attention – caused him to be bound by the guarantee provisions contained in it. This appeared to me to follow particularly from the following statements of principle, on which counsel for Meriton placed strong emphasis, in the joint judgment of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 265; [2004] HCA 52 at [40 – 41]:-

[40] This Court, in Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451, has recently reaffirmed the principle of objectivity by which the rights and liabilities of the parties to a contract are determined. It is not the subjective beliefs or understandings of the parties about their rights and liabilities that govern their contractual relations. What matters is what each party by words and conduct would have led a reasonable person in the position of the other party to believe. References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction (Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]).

[45] It should not be overlooked that to sign a document known and intended to affect legal relations is an act which itself ordinarily conveys a representation to a reasonable reader of the document. The representation is that the person who signs either has read and approved the contents of the document or is willing to take the chance of being bound by those contents..., whatever they might be. That representation is even stronger where the signature appears below a perfectly legible written request to read the document before signing it.

Procedural aspects of the present application for costs

8 I noted in my decision (at [79]) that in its application to the Tribunal Meriton had applied for an order for costs against Mr Plant. I made the following direction on this matter:-

Any application for costs in the proceedings between the Applicant and the Second Respondent must be filed and served, with supporting submissions, within 28 days of the date of this decision. The opposing party must file and serve submissions in reply within a further 28 days. Unless reasons are advanced for a hearing to be conducted, the matter will be resolved ‘on the papers’, pursuant to section 76 of the Administrative Decisions Tribunal Act 1997.

9 On 19 June 2009, Meriton filed an application, with supporting submissions, for orders requiring DCM and Mr Plant to pay Meriton’s costs on an indemnity basis or, in the alternative, as between party and party.

10 On 23 June 2009, Mr Plant filed a Notice of Appeal against my decision that he was liable to Meriton as a guarantor under the Lease.

11 Following a hearing on 15 October 2009, the Appeal Panel delivered a judgment on 23 October 2009 dismissing Mr Plant’s appeal (Plant v Meriton Properties Pty Ltd (RLD) [2009] NSWADTAP 62). It also gave directions regarding the disposal of any application for the costs of the appeal.

12 On 14 December 2009, at my request, the Registrar wrote to Bowles Lawyers Pty Ltd (who acted for Mr Plant both at first instance and in the appeal proceedings), to DCM and to Meriton in the following terms:-

Meriton Properties Pty Ltd v DCM Leases-Five Pty Ltd and Wayne Douglas Plant

Retail Leases Division File No.: 085163

I refer to the decision of the Tribunal dated 26 May 2009 and the Applicant’s ‘Outline of submissions for Meriton/Applicant for costs’ filed on 19 June 2009.

I note the Respondent’s submissions in reply on the issue of costs are long overdue.

The Tribunal makes the following directions:

1. The Respondents are to file and serve any submissions in reply by 22 December 2009.

2. The issue of costs will be determined ‘on the papers’ thereafter.

If you have any further enquiries please contact us on 9223 4677.

13 At the time of preparing these reasons, neither DCM nor Mr Plant has filed submissions or sought to contact the Tribunal.

14 In these circumstances, I consider that I may properly determine Meriton’s application for costs orders against DCM and Mr Plant even though no opposing submissions have been received from either of these parties. They have well have believed that so long as Mr Plant’s appeal was unresolved there would be no requirement for them to file submissions opposing the application. But the Registrar’s letter of 14 December 2009 made it clear that if they wished to file such submissions they must do so within the time stipulated or must at least make contact with the Tribunal. They have taken neither of these steps.

Relevant legal principles

15 By virtue of section 77A of the RL Act, awards of costs in Tribunal proceedings under this Act are governed by section 88 of the ADT Act. So far as is relevant to the present decision, section 88 provides:-

(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:...

(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.

16 The current version of section 88, in which the criterion of ‘fairness’ stated in subsection (1A) has replaced a rule that in the absence of ‘special circumstances’ no costs might be awarded, became operative on 1 January 2009. As I noted in my earlier decision at [79], the new criterion is applicable to the present proceedings even though they were instituted before the amendment came into operation: see ADT Act, Schedule 5, clause 43(2)(i).

17 In cases applying the earlier criterion stipulated in section 88 (see for example Gizah Pty Ltd v AXA Trustees Ltd (No 2) [2001] NSWADT 164), it was consistently held that because of the ‘commerciality’ of the Retail Leases Division the interpretation of the phrase ‘special circumstances’ should differ significantly from the interpretation that might be adopted in any other Division of the Tribunal. In Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81, the Court of Appeal held that the costs of proceedings in the Tribunal under the RL Act, both at first instance and on appeal, should be awarded against the lessors. At [60], Santow JA said: ‘While a finding of "serious unfairness" is not a prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.’

18 Because the criterion is now one of ‘fairness’, as contrasted with the notion of ‘serious unfairness’ mentioned by Santow J, there are good grounds for believing that costs orders should be more readily obtainable. In Salon Today Pty Ltd v M M I R Pty Ltd [2009] NSWADT 71 (a case within the Retail Leases Division), the Tribunal advanced this proposition. At [72], it stated:-

What the Parliament has done, in its 1 January 2009 amendments, is recognise that there is a need for this Tribunal to be more flexible and widen the scope of a litigant’s entitlement to costs. This is a concept generally that is now accepted in this Division, and certainly touched upon by the Court of Appeal in Cripps, and the result of this re-assessment by the Parliament is a different test, a test of fairness, having regard to a number of parameters/factors.

19 In Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1, a very recent decision in proceedings under the RL Act, the Tribunal, after referring to the Gizah and Salon Today decisions, said (at [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, in addition, proceedings should only be commenced in this Tribunal after very careful consideration of the merits of the case:... 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?"

The grounds of Meriton’s application for costs

20 In its submissions, which were prepared by Mr Maltz of counsel, Meriton indicated that its application for costs was ‘primarily but not solely’ directed at Mr Plant.

21 The grounds of its application against DCM were that its case against DCM was ‘overwhelmingly strong’ and was ‘not even defended’. As indicated above, DCM did not file any reply or evidentiary material in these proceedings and did not appear at the hearing. It had due notice of the hearing since Mr Plant, its sole director, did appear in order to contest the case raised against him personally.

22 In submitting that an order for costs should also be made against Mr Plant, Mr Maltz drew attention to the general principles, summarised above at [16 – 19], that govern the interpretation of the new criterion of ‘fairness’ in proceedings under the RL Act. He relied also on four specific aspects of Meriton’s claim against Mr Plant.

23 The first of these was that in view of the ‘emphatic statements of principle’ by the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (see above at [7]), Mr Plant should ‘never have resisted meeting his obligations under the Lease’. He should have acknowledged that he was legally bound as a guarantor because (a) he had signed the Lease, (b) he had permitted Mr Scott, his personal assistant, to send the Lease back to Meriton and (c) he knew that when negotiating the terms of the Lease Meriton had insisted on obtaining a guarantee from him. He had, in short, ‘a very weak case from the start’. By virtue of subparagraph (c) of section 88(1A), this was a reason why it would be ‘fair’ to award costs against him.

24 Secondly, Mr Plant, through his counsel, had put forward two arguments that were clearly untenable. These were (a) that the Tribunal had no jurisdiction in proceedings against persons alleged to be guarantors under a retail shop lease and (b) that the Lease and the guarantee were separate documents. In this context, Mr Maltz again relied on subparagraph (c) of section 88(1A).

25 Thirdly, these proceedings related to a significant sum of money and some of the issues raised by counsel for Mr Plant – specifically, issues relating to the jurisdiction of the Tribunal, estoppel and ‘objective contractual analysis’ – were of ‘reasonable legal complexity’. By virtue of subparagraph (d) of section 88(1A), these were reasons why it would be ‘fair’ to award costs against him.

26 Fourth and finally, Meriton had a contractual entitlement to recover from Mr Plant, in his capacity as guarantor, the costs that it had incurred on account of DCM’s contraventions of the terms of the Lease. This followed from clauses 11.1(e)-(g) and clause 39 of the Lease. Mr Maltz relied here on the Court of Appeal’s decision in Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45, citing it as authority for the proposition that in a situation such as the present a lessor can enforce its separate contractual entitlement to recover such costs from a guarantor even if the court or tribunal has determined in its discretion that no costs should be awarded.

27 Mr Maltz based two separate arguments on the presence of these clauses in the Lease. One was that I should rule in this decision that Meriton is contractually entitled to recover its costs from Mr Plant and should make an order to this effect. The other was that I should treat the existence of Meriton’s contractual entitlement as a ‘relevant’ matter under section 88(1A)(e) and should exercise my discretion regarding costs in accordance with this entitlement, in order to prevent the need for Meriton to commence subsequent proceedings in order to recover its costs.

My conclusions

28 Meriton’s application for costs against DCM presents little difficulty. It is entitled to recover the costs that it incurred in obtaining its ex parte judgment against DCM. But since this aspect of the proceedings occupied only a very small proportion of the hearing, the amount of such costs will be small in comparison to all the costs that Meriton seeks.

29 Meriton’s application against Mr Plant is much less straightforward. Undoubtedly, the general principles (summarised above at [16 – 19]) that govern the interpretation of the criterion of ‘fairness’ in proceedings under the RL Act indicate that despite the presumption stated in subsection (1) of section 88 of the ADT Act – i.e., that each party should bear its own costs – the Tribunal should not be unduly reluctant in a case such as this to make the requisite finding under subsection (1A). To this extent, I agree with Mr Maltz’s submissions. The decision to be made chiefly depends, however, on the persuasiveness of the four specific submissions put by Mr Maltz.

30 As to the first of these submissions, I do not accept Mr Maltz’s characterisation of Mr Plant’s case as ‘very weak’. I recognise that, as indicated above at [7], Mr Plant’s attempt to deny liability under the guarantee provisions in the Lease failed chiefly because I held that the case fell within broad principles which were stated recently by the High Court in the Toll decision and are not open to question. But the circumstances of the case were quite unusual, notably in that when Mr Plant signed the Lease Schedule he believed that, since he had deleted his name from it, he was not assuming the responsibility of a guarantor. His intention at the time of signing was to commit the company of which he was sole director to the terms of the Lease, but to avoid any personal commitment. He acquired the status of guarantor solely because (a) Ms Wong took the step (which I described as ‘unconventional’ in my decision at [77]) of reinstating his name in the Lease Schedule and (b) in the course of subsequent dealings with the Lease document (in which Mr Scott acted as his agent) he did not object to this amendment even though she expressly referred to it in correspondence. Although I rejected the argument put by Mr Plant’s counsel that Mr Plant did not believe himself to be legally bound, and indeed was not legally bound, because he was never asked to sign a reprinted version of the Lease Schedule, this argument did, in my opinion, have some merit.

31 With reference to the second submission, I agree with the argument that Mr Plant’s objection to the Tribunal’s jurisdiction was unmeritorious, but would add that this objection was not pursued by his counsel at the hearing. I am less inclined to apply this description to Mr Plant’s contention that the Lease and the guarantee should be treated as separate documents. My reason is that, as pointed out in my decision at [73], the persons identified as the parties to the Lease at its commencement did not include the guarantor.

32 The third submission included a claim by Mr Maltz that some of the issues raised in this case were of ‘reasonable legal complexity’ (this being a factor of relevance under section 88(1A)(d)). I agree with this observation. In addition to the issues to which he referred – the jurisdiction of the Tribunal, estoppel and ‘objective contractual analysis’ – I would mention the scope and significance of Mr Scott’s role as agent for Mr Plant. Except as regards the Tribunal’s jurisdiction, I consider however that the ‘reasonably complex’ issues that arose prompted submissions that were at least arguable from Mr Plant’s counsel.

33 Furthermore, even though the proceedings raised such issues, they were not of great duration. Only one day of hearing was required. As I interpret section 88(1A)(d), it suggests that the ‘nature’ of proceedings refers inter alia to their length and that when proceedings are not particularly long that is a factor against awarding costs.

34 A further feature of these proceedings that should be taken into account under section 88(1A)(d) is that they are proceedings at first instance. In decisions under section 88 as it stood before the 2008 amendments, the Tribunal showed itself to be more willing to award costs in appeal proceedings (notably against an unsuccessful appellant) than against the losing party at first instance.

35 An important question of principle raised by Mr Maltz’s fourth submission is as follows. Given (a) that section 88 of the ADT Act (rendered applicable by section 77A of the RL Act) restricts the entitlement of a successful party in proceedings under the RL Act to recover its costs and (b) that under section 7 the provisions of the RL Act override those of any lease governed by the Act, can the lessor can rely on a contractual right conferred by the lease to recover its costs?

36 In the Tribunal’s decision in Smith trading as Flames Grill & Carvery v Trust Company of Australia Ltd [2008] NSWADT 10, a case in which I was the Presiding Member, this question was answered in the negative. The relevant paragraphs of the decision are as follows:-

86 In the Tribunal’s opinion, it is clear law that a contractual provision which, on its proper interpretation, obliges one party to pay to another party the costs incurred by that other party in legal proceedings operates independently of any award of costs that a court or tribunal has made or might make with respect to those proceedings. Such a provision may entitle the party claiming under it to recover a larger sum than he or she has obtained, or would obtain, under an order of the court or tribunal. It may, for instance, entitle this party to recover indemnity costs even though the court or tribunal has ordered, or might in the future order, that only party-party costs are to be paid, or indeed that the parties should pay their own costs. Even if the clause is an indemnity clause, however, the costs recovered under it are limited to costs ‘properly incurred’ in the proceedings.

87 These principles were stated and applied by the Court of Appeal in Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45. The Court upheld a decision of the District Court to the effect that a lessor under a commercial lease (not, it should be noted, a retail lease governed by the RL Act) could rely on an indemnity clause in the lease to recover from the lessee the costs, assessed on a solicitor-client basis, that it had incurred in protracted proceedings in the Supreme Court, subject to the deduction of costs already paid by the lessee pursuant to orders made by that Court.

88 In his judgment, Stein JA stated, at [8], that neither the existence of a power in the court to order costs nor the making of an order for costs extinguished or overrode a contractual right to costs. At [12], he said:-

The authorities discussed earlier make it clear that [the lessor’s] contractual right of indemnity for all costs remains independently of the court’s orders. By seeking costs in the Supreme Court, the [lessor] did not lose or surrender its contractual rights.

89 This principle that contractual rights to costs of litigation operate independently of the rights of litigants to invoke the powers of the relevant court or tribunal to make a costs order has been applied in a number of other cases decided in the Court of Appeal or the Supreme Court:...

93 None of the cases mentioned so far, however, involved provisions akin to ss. 7 and 77A of the RL Act and s. 88(1) of the RL Act. In the present proceedings, the existence of s. 7 requires the Tribunal to determine whether clauses 7.3b (if it is indeed applicable to the costs of these proceedings) and 10.3 of the Lease are ‘inconsistent with’ the provision in s. 77A that the Tribunal may award costs in proceedings under the Act so long as the requirement of ‘special circumstances’ in s. 88(1) of the ADT Act is satisfied. If this is the case, the principle (stated in the heading to s. 7) that ‘this Act overrides leases’ is brought into play and the two clauses are void to the extent of the inconsistency.

94 So far as the Tribunal as presently constituted is aware, three Tribunal decisions, each relating to a lease governed by the RL Act, have addressed this issue.

95 In Rose Holdings Pty Ltd v Chusap [2002] NSWADT 153, the lessor sought costs under a clause in the lease while conceding that there existed no ‘special circumstances’ that would warrant an order under s. 88(1). The Tribunal, while indicating that a ‘contract liability’ claim might well have been arguable, determined in the exercise of its discretion under s. 88(1) that no costs should be awarded. The discussion (at [41 – 44]) was relatively brief.

96 In Solomon v Singh (No 2) [2005] NSWADT 295 (‘Solomon 2’), clause 27.2 of the lease, which was being enforced against a guarantor of the lessee’s obligations, stated:-

The Guarantor is liable for and indemnifies the Landlord against all liability or loss arising from and cost incurred in connection with a breach or non-compliance by the Tenant of any of the Tenant’s obligations in this or in any extension or renewal of this lease.

97 At [75], the Tribunal, constituted by Judicial Member Molloy, held that this clause was sufficiently clear in its terms to establish contractual liability against the guarantor for costs incurred in the proceedings, together with other costs arising from the lessee’s default. But at [78], it expressed the opinion, having referred to s. 77A of the RL Act and s. 88 of the ADT Act, that ‘the law does not permit this Tribunal to make an order for costs of proceedings before it even if the lease contract creates an indemnity in favour of a lessor, in the face of Section 88’. At [79 – 80], it indicated that costs predating the commencement of proceedings within the Tribunal might be caught by clause 27.2 and would therefore be recoverable if properly proved. It noted that the effect of s. 77A and s.88 had not been addressed in submissions made to it. Its orders included a declaration that, unless the matter were re-listed for further argument, the lessor could not recover legal costs relating to the proceedings in the absence of an application and an order pursuant to s. 88.

98 In Solomon v Singh (No 3) [2006] NSWADT 120, the lessor in Solomon 2 applied for costs under s. 88. It is apparent from the judgment that the invitation given in Solomon 2 for re-arguing the question addressed in the Tribunal’s declaration was not taken up. At [28], the Tribunal, constituted again by Judicial Member Molloy, rejected the lessor’s contention that the existence of clause 27.2 of the lease amounted in itself to ‘special circumstances’ warranting an award under s.88. The Tribunal suggested that in fact clauses of this nature, far from being ‘special’, were ‘quite ordinary and common’.

99 Two noteworthy features of these three Tribunal decisions are that they did not refer either (a) to Abigroup Ltd v Sandtara Pty Ltd [2002] NSWCA 45, where the ‘independence’ of contractual rights to recover litigation costs from curial determinations on costs was emphasised, or (b) to s. 7 of the RL Act, which directly raises the possibility that contractual rights of this nature might, in the present context, be void to the extent of inconsistency with statutory provisions governing curial determinations. In the discussion in Solomon 2, however, the existence of s. 7 did appear to have been implicitly taken into account.

100 In the present case, the Tribunal’s conclusion on this matter, reached as in Solomon 2 without the benefit of full argument, is in line with the conclusion in that case. In the Tribunal’s opinion, to permit contractual provisions such as clause 10.3 of the Lease in the present case to operate according to their terms in relation to costs incurred in Tribunal proceedings under the RL Act would be to contravene the policy evidently underlying Parliament’s decision to subject these proceedings to the costs regime established by s. 88 of the ADT Act. This policy is one of letting the costs of such proceedings lie where they fall except where ‘special circumstances warranting an award of costs’ are shown to have existed. By virtue of s. 7 of the RL Act, the statutory policy must prevail and both clause 3.7b (if it applies at all to the costs of these proceedings) and clause 10.3 are void to the extent of any inconsistency.

37 In the present case, this same question of principle must again be determined without the benefit of full argument. An important difference between this case and Smith is that, as mentioned earlier, the requirement of ‘special circumstances’ in section 88 has been replaced by a criterion of ‘fairness’. The question whether the existence of a contractual entitlement to costs constitutes ‘special circumstances’ (see paragraph [98] of the foregoing passage quoted from Smith) is therefore no longer relevant. But in my opinion, the adoption of a new criterion in section 88 does not disturb the ruling of primary importance in this passage. If contractual entitlements to costs in retail shop leases were permitted to operate according to their terms in relation to costs incurred in Tribunal proceedings under the RL Act, this would contravene the policy underlying Parliament’s decision to subject those proceedings to the costs regime established by section 88.

38 For these reasons, I do not accept Mr Maltz’s contention that I should order that Meriton is contractually entitled to recover its costs from Mr Plant. I am also not persuaded by his alternative contention that I should exercise my discretion regarding costs in accordance with this entitlement. Entitlements of this nature are commonly conferred on lessors under retail shop leases. It appears to me that to accede to this contention would be to undermine the legislative policy outlined in the preceding paragraph of this judgment.

39 The broad outcome of these deliberations is that a significant disparity in the relative strengths of Meriton’s and Mr Plant’s cases, being a factor to be taken into consideration under section 88(1A)(c), is the only specific matter of any importance that Mr Maltz has identified in these proceedings within the list contained in section 88(1A). I have rejected his assertion that Mr Plant’s case was weak to the extent that it had ‘no tenable basis in fact or in law’.

40 There will, of course, always be some disparity between the strengths of the cases of the successful party and the unsuccessful party in litigation. The mere existence of such a disparity is not enough to displace the presumption, stated in section 88(1) of the ADT Act, that in Tribunal proceedings to which section 88 applies each party should pay their own costs. The key question is whether such disparity as exists is of sufficient scale to have this effect.

41 The difficult decision that I have to make now is accordingly whether the disparity in the relative strengths of the parties’ cases in the present proceedings, considered in the light of the general principles (outlined above) governing the interpretation of section 88, is substantial enough to justify departing from the presumption stated in section 88(1) and making an order for costs against Mr Plant.

42 After a deal of hesitation, I have concluded that this is not the case. Meriton has not persuaded me that it would be ‘fair’ to make such an order. Its application for a costs order against Mr Plant should be dismissed.