Trowbridge v Morris [2010] NSWADT 18 (19 January 2010)

Last Updated: 1 February 2010

NEW SOUTH WALES ADMINISTRATIVE DECISIONS TRIBUNAL

CITATION:
Trowbridge v Morris [2010] NSWADT 18


DIVISION:
RETAIL LEASES DIVISION

PARTIES:
APPLICANT
Michael Charles Trowbridge

RESPONDENT
Voula Morris



FILE NUMBERS:
085161

HEARING DATES:
20 April 2009, 1 June 2009

SUBMISSIONS CLOSED:
14 September 2009



DATE OF DECISION:
19 January 2010

BEFORE:
Montgomery S - Judicial Member





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

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

TEXTS CITED:


APPLICATION:
Retail Leases Act -Claim for payment of money - costs

MATTER FOR DECISION:



REPRESENTATION:
APPLICANT
In person
RESPONDENT
J Laybutt, agent


ORDERS:
1. The applicant is to pay the Respondent an amount of $1,244.35
2. The applicant is to pay the Respondent’s costs, as agreed or assessed, of the hearing on 1 June 2009 and the written submissions filed on her behalf in accordance with the directions made on 1 June 2009.


Reasons for Decision:

REASONS FOR DECISION

1 This matter concerns premises known as Shop 8a in the Swansea Arcade at 172 Pacific Highway Swansea NSW ("the premises"). A lease for the premises dated 12 April 2005 ("the Lease") identifies Mr Trowbridge as the lessee and the Respondent as lessor. The term of the Lease was one year commencing 1 June 2005, and with a 2 year option period. The rent is stated to be $808.50 per calendar month with provision for an increase during the option period.

2 Mr Trowbridge conducted a chiropractic practice in the premises from July 2004 until 30 October 2008.

3 Mr Trowbridge lodged an application with the Tribunal under the Retail Leases Act 1994 ("the Act") on 15 August 2008. He identified his claim as a combined retail tenancy claim and unconscionable conduct claim: section 71 and 71A of the Act.

4 On 5 February 2009 Judicial Member Fox dismissed the unconscionable conduct claim. Consequently, the retail tenancy claim remained for determination. The matter came before me for hearing on 20 April 2009. The matter was not concluded on that date and was listed for further hearing on 1 June 2009. As the matter was again not concluded on that date I determined that the matter should be finalised on the basis of material filed without further hearing. I set a timetable to allow the parties to make further submissions. I directed that all material on which the parties relied be filed and served by 14 September 2009.

5 I note that Mr Trowbridge has continued to lodge further material after that date. I do not propose to take that further material into account.

Background
6 Mr Trowbridge purchased a chiropractic business conducted on the premises from Mr Craig Matthews effective 1 July 2004. Prior to the purchase, the landlord had consented to the transfer of the existing lease to Mr Trowbridge from Mr Matthews for the period from 1 June 2004 to 31 May 2005.

7 The parties entered the Lease on 12 April 2005. Mr Trowbridge subsequently exercised the option to renew the lease.

8 The issues in this matter arose from an incident on 21 February 2005 when the premises were flooded. The flooding followed heavy rain and was the result of a clogged box gutter over the premises. Rubbish caused water in the gutter to back up and flood the premises. The flooding resulted in damage to the ceiling of the premises and damaged carpet. It is common ground that the Respondent undertook to repair or replace both the ceiling and the carpet and advised Mr Trowbridge that he would not be charged rent until that was done. The Respondent maintains that it did not own the carpet in the premises. It seems that Mr Matthews most probably purchased the carpet and that he left it in the premises when Mr Trowbridge purchased the chiropractic business from him.

9 There was significant delay in completion of the work and there is dispute in regard to period in which rent was not payable. The Respondent removed the carpet on 23 February 2005 however; the carpet was not ultimately replaced until 20 June 2005.

10 Mr Trowbridge closed his office on 23 March 2005 in order for the Respondent to have a new ceiling installed. Mr Trowbridge says that the Respondent verbally agreed to compensate him for his lost income on that day.

11 Mr Trowbridge alleged that he suffered a loss of trade from a ‘loss of ambience and professional feel' and that a ceiling defect gave a degraded impression of the premises to his patients.

12 There is also dispute as to whether or not Mr Trowbridge is liable for rent arrears. The Respondent commenced a cross-claim seeking an amount of $1,244.35. This claim is based in a rental schedule provided on 1 April 2009. The Respondent asserts that rent was payable at the rate of $847 per month from 1 June 2006. This is said to be in accordance with the offer made by the Respondent and the fact that Mr Trowbridge did not seek appointment of a Specialist Retail Valuer in regard to the proposed rent as provided for in both the Lease and the Act. The Respondent that Mr Trowbridge has forfeited his opportunity to do so.

13 Mr Trowbridge disputes the Respondent’s assertion as to the rent that was payable under the Lease and in particular questions whether the Respondent was entitled to raise the rent from $808.50 to $847 per month commencing on June 2006. He does not appear to dispute the details in the rental schedule.

Mr Trowbridge’s case
14 I am not confident that I have fully understood Mr Trowbridge’s case. Despite instructions from Mr Fox and myself that Mr Trowbridge clarify his claims and substantiate them with evidence, the material that he submitted is disjointed and his unorganized submissions are mostly devoid of evidence. I found his arguments convoluted and confusing and it is also apparent that the Respondent has experienced difficulty in responding to a good deal of Mr Trowbridge’s case.

15 The application filed with the Tribunal sough orders in the following terms:

The applicant seeks the following orders (include the amount of any monetary claim):

1) Landlord prove that insurance was in effect as per section 4 of lease throughout my tenancy. If breached damages could in theory be up to $40,000. Actual damage for first water entry problem was approximately $7000.

2) Decide that landlord violated section 5 of the lease and unreasonably interfered with my use of the premises on both 22/2/05 and on 23/3/05. Monetary damage could theoretically be $5000.

3) Because of the way the evidence was mishandled by the landlord and then the explanation changed, the flood of my office should be ruled as negligent and the burden of proof be put on the landlord if the landlord wants to minimize their responsibilities for the office flood. If approximately $40,000 was awarded for breaching section 4 of the lease, no additional monetary award would be sought.
16 At the hearing on 20 April 2009, Mr Trowbridge attempted to clarify his claim. Some ten issues were identified. The majority of those issues were determined on the two hearing days and brief reasons were given in regard to each of those issues. I do not propose to revisit any of the issues that have been determined.

17 Mr Trowbridge claimed that he was entitled to:

- $300 for dealing with flooding issues on 22 February 2005;

- $271 for closing his office on 23 March 2005;

- $144 for cleaning and moving furniture to allow repair work on a number of separate days;

- $1,200 for dealing with carpet issues in March 2005; June 2005 and on 12 October 2007;

- a rent free period from 21 February 2005 to 20 June 2005;

- $4,000 lost income from 21 February 2005 to 20 June 2005;

- a rent reduction of 80% of $808.50 for the period 1 November 2007 to 30 September 2008

- a rent reduction of 80% of $890 for the period 1 October 2008 to 31 October 2008.

- $6,520 being moving costs that he incurred as a result of not being given sufficient notice to vacate the premises when a Notice to Quit served on him on 19 September 2008;

- $330 being costs incurred in relation to the Notice to Quit;

- $166.36 being surplus rent that he has paid;

- compensation for loss of business which he quantified at 5% of the $38,000 purchase price of the business.

18 On 20 April 2009 I determined that the Respondent was not liable for the damage caused to the premises by flooding on 21 February 2005. I also determined that the Respondent’s undertaking that Mr Trowbridge would not be charged rent until both the ceiling and the carpet were repaired or replaced is to be read as an undertaking to not charge rent until the repairs were done, provided that the repairs took no more than a reasonable amount of time. On the basis of the evidence concerning the Respondent’s efforts to undertake the repairs, I determined that Mr Trowbridge was entitled to a rent-free period from 21 February 2005 to 6 May 2005. I do not agree that Mr Trowbridge was entitled to any relocation related expenses.

19 I determined that Mr Trowbridge was entitled to an amount of $271 for closing his office on 23 March 2005 and $144 for cleaning and moving furniture to allow repair work. I also determined that Mr Trowbridge was entitled to an amount of $57 for dealing with carpet issues on 12 October 2007.

20 These amounts are to be off-set against the benefit that Mr Trowbridge gained from the rent free period.

21 The remainder of Mr Trowbridge’s claim was dismissed.

22 In my view, there is no merit to Mr Trowbridge’s claim in regard to a loss of ambience and professional feel. The photos that are said to support his claim show no significant damage. There was only a slight bowing in one sheet of gyprock. Evidence provided by Peter Owens, the incoming tenant who leased the premises from 1 June 2009 supports that view. There were no stains or cracks on the ceiling that would cause any concern to his patients or result in loss of business.

The Respondent’s case
23 The Respondent’s cross-claim remains for determination. The Respondent has also applied for an order for costs in the matter. Each of the parties has filed written submissions in regard to the claim. This decision deals only with those outstanding issues.

24 As noted above, the Respondent asserts rent arrears of $1,244.35. The claim is quantified on the basis of the rent schedule prepared by the Respondent’s agent, Mr Laybutt. It is not in dispute that Mr Laybutt provided a copy of that schedule to Mr Trowbridge on 1 April 2009.

25 The Respondent concedes that Mr Trowbridge exercised the option in accordance with the terms of the Lease. The rent is stated to be $808.50 per calendar month with provision in clause 35A(b) for a variation of the rent during the option period to an amount representing the current market rent of the premises.

26 Clause 35A(b) of the Lease provided for determination of the applicable rent by a specialist retail valuer if the parties do not agree as to the market rent.

27 Annexure A to the Lease provides that the rent increment for the second year of the option period is to be calculated on the basis of the Consumer Price Index.

28 By letter dated 17 April 2006 the Respondent advised Mr Trowbridge that the rent for the premises would increase to $847 per calendar month from 1 June 2006. It appears that Mr Trowbridge does not accept that the notified increase was an amount representing the current market rent of the premises. However, there has been no determination of the applicable rent by a specialist retail valuer. Mr Trowbridge has presented no evidence to contradict the Respondent’s evidence that the increases were reasonable.

29 Mr Laybutt’s rent schedule is calculated on the basis that the rent payable on the premises increased to $847 per calendar month from 1 June 2006. Thereafter, rent was increased on the basis of the CPI. The applicable amount for the period 1 June 2007 to

30 30 September 2008 is said to be $866 per calendar month and the applicable amount for the period 1 October 2008 to 31 October 2008 is said to be $890 per calendar month.

31 Mr Laybutt also provided evidence in regard to other premises in close proximity to the premises in support of his assertion that the rent increases were reasonable.

32 On the basis of the asserted rental payable, Mr Laybutt’s calculated that Mr Trowbridge was required to pay a total rent of $24,910. The Respondent’s records show that Mr Trowbridge in fact paid an amount of $23,665.65. This leaves arrears of $1,244.35.

33 I note that Mr Laybutt’s calculations were made on the basis of payments made after 1 June 2006. I do not understand the Respondent to be asserting that there were rent arrears prior to that date. However, I note that the record of payments does not record any rent being paid between 31 January 2005 and 21 June 2005.

34 In light of my finding that Mr Trowbridge was entitled to a rent-free period from 21 February 2005 to 6 May 2005, the Respondent would have been entitled to claim that rent was payable for the period 6 May 2005 to 21 June 2005. I understand the Respondent to be seeking an order that the amounts found to be owing to Mr Trowbridge are to be off-set against the rent that would have been payable for the period 6 May 2005 to 21 June 2005 and that no additional claim is made above the identified arrears of $1,244.35.

35 Mr Trowbridge has not disputed the Mr Laybutt’s schedule with respect to the payments attributed to him. However, he seems to be suggesting that his rent should have remained pegged at $808.50 until he agreed to an increase on 1 October 2008. This claim appears to be based on his assert of the consequences flowing from the flooding of the premises in February 2005.

Discussion
36 As I have indicated above, I have found much of Mr Trowbridge’s case difficult to comprehend. He has stated that he did not seek legal advice. If he had done so, it is probable that he would have been advised to not pursue most of his claim. The consequence of his decision to pursue the claim is that all concerned have been put to considerable expense that could have been avoided and should have been avoided.

37 If Mr Trowbridge disputes the Respondent’s rent schedule he could have presented evidence to contradict it. He has not done so. If he asserts that the rent that the Respondent asserted was payable does not represent the current market rent of the premises, he could have presented evidence to contradict it. He has not done so.

38 It is apparent that in July 2008 Mr Trowbridge intended to seek appointment of a Specialist Retail Valuer. That issue was not pursued. I do not propose to undertake that role. The matter is to be determined on the basis of the material presented to the Tribunal.

39 In the circumstances of this matter, on the evidence available to me, it is my view that the rent payable on the premises is as asserted by the Respondent. That is, the rent payable increased to $847 per calendar month from 1 June 2006. The applicable amount for the period 1 June 2007 to 30 September 2008 was $866 per calendar month and the applicable amount for the period 1 October 2008 to 31 October 2008 was $890 per calendar month.

40 It is also my view that Mr Laybutt’s rent schedule should be accepted as an accurate record of the payments made by Mr Trowbridge.

41 I accept that Mr Trowbridge’s rent was in arrears of $1,244.35. As noted above, I have found that Mr Trowbridge is entitled to some of the amounts that he has claimed. I agree that the $472 found to be owing to Mr Trowbridge is to be off-set against the rent that would have been payable for the period 6 May 2005 to 21 June 2005. When that is done, it is clear that the amount of rent the Respondent has foregone exceeds the amount payable to Mr Trowbridge. Therefore, there need be no deduction from the arrears owed to the Respondent.

42 It follows that Mr Trowbridge should pay the Respondent an amount of $1,244.35.

Costs
43 Mr Laybutt applied for an order for costs in relation to the proceedings. He made the following submissions on the issue:

I would like to give Mr Trowbridge the benefit of the doubt that his original application, though ill advised, poorly presented and without any merit, was not intended to be vexatious and retaliatory.

However, despite clear instructions from Mr Fox and Mr Montgomery to clarify his claims and substantiate them with real evidence, Mr Trowbridge continued to submit his claims in the form of a diatribe, Each submission became more vexatious with every claim that was rejected by the Tribunal. He resorted to unfounded personal attacks on me, my staff and the Landlord.

This matter commenced 11 months ago and has been the subject of an Urgent Interim Application, four or five Directional Hearings, two full Hearings in Newcastle Court House and this continuing written Hearing. While I acknowledge any person's right to a fair hearing of their grievances, I believe that Mr Trowbridge, as an educated person, could only continue to submit his unmeritorious claims in such a poorly presented manner if his intention was to be frivolous and vexatious.

... it is unfair for [the Respondent] to incur these costs when the application submitted by Mr Trowbridge was without merit and unnecessarily protracted by his retaliatory intentions.

44 Mr Trowbridge did not make any submissions in reply to the Respondent’s application for costs.

45 Section 88 of the Administrative Decisions Tribunal Act 1997 deals with question of costs which arise for determination from and after 1 January 2009. Section 88 provides:

88 Costs

(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 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.

(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 or incidental to the proceedings giving rise to the application, as well as the costs of or incidental to the application.

46 Section 88 was most recently considered by Judicial Member Molloy in Rucom Pty Ltd and Anor v Multiplex & Ors [2010] NSWADT 1 in which he identified some important principles that had been stressed in earlier decisions. At paragraphs [35] – [37] he observed:

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?"

47 I agree with those views.

48 This is a matter in which careful consideration of the merits of the case appears to have been absent.

49 I do not believe that Mr Trowbridge’s application was intended to be vexatious and retaliatory. However, in the most part it was misconceived. As a result of Mr Trowbridge’s determination to pursue his application after the hearing on 20 April 2009 in circumstances where it was doomed to failure, he has been responsible for prolonging unreasonably the time taken to complete the proceedings. The volume of material that he has filed has put the Respondent to unnecessary time and expense.

50 It is my view that it would be unfair to the Respondent if she had to bear those expenses after that date. I therefore order that Mr Trowbridge is to pay the Respondent’s costs, as agreed or assessed, of the hearing on 1 June 2009 and the written submissions filed on her behalf in accordance with the directions I made on that day.

Costs
1. The applicant is to pay the Respondent an amount of $1,244.35.
2. The applicant is to pay the Respondent’s costs, as agreed or assessed, of the hearing on 1 June 2009 and the written submissions filed on her behalf in accordance with the directions I made on that day.