Appeal Panel - Internal CITATION: Trust Company of Australia Ltd (Stockland Property Management Ltd) v Skiwing Pty Ltd trading as Cafe Tiffany's (No 3) (RLD) [2005] NSWADTAP 31 APPELLANT PARTIES: Trust Company of Australia Ltd (Stockland Property Management Ltd) RESPONDENT Skiwing Pty Ltd trading as Cafe Tiffany's FILE NUMBER: 049023 HEARING DATES: 3/06/2005 SUBMISSIONS CLOSED: 06/03/2005 DATE OF DECISION: 06/23/2005 Skiwing Pty Ltd trading as Cafe Tiffany's v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94 DECISION UNDER APPEAL: BEFORE: Chesterman M - ADCJ (Deputy President); Molloy GB - Judicial Member; Weule B - Non Judicial Member CATCHWORDS: costs MATTER FOR DECISION: Costs FILE NUMBER UNDER APPEAL: 035036, 035053, 035066 DATE OF DECISION UNDER APPEAL: 05/20/2004 LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994 Calderbank v Calderbank [1975] 3 All ER 333 Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31 G & M Dawson Pty Ltd v Cripps & Ors (No 2) (RLD) [2005] NSWADTAP 3 CASES CITED: Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164 North Eastern Travelstops Pty Ltd v Bradley & Ors (No 2) (RLD) [2005] NSWADTAP 17 Skiwing Pty Ltd trading as Café Tiffany's v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94 Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43 Trust Company of Australia Ltd v Trust Company of Australia Ltd (Stockland Property Management Ltd) (RLD) [2005] NSWADTAP 9 APPELLANT REPRESENTATION: M Allars, barrister RESPONDENT A I Tonking, barrister ORDERS: The Appellant's application for an order for the costs of this appeal is dismissed REASONS FOR DECISION Introduction 1 In these reasons, we set out our decision on the costs of an appeal in which we delivered our judgment earlier this year. The Appellant is Trust Co of Australia Ltd (Stockland Property Management Ltd) (hereafter 'Stockland') and the Respondent is Skiwing Pty Ltd trading as Café Tiffany's (hereafter 'Skiwing'). 2 The appeal was brought by Stockland against a decision of the Tribunal delivered on 20 May 2004 (Skiwing Pty Ltd trading as Café Tiffany's v Trust Company of Australia Ltd (No 3) [2004] NSWADT 94). In it, the Tribunal held that Skiwing was entitled to succeed in two of three applications under the Retail Leases Act 1994 ('the RL Act') that it had filed against Stockland. The Tribunal awarded damages to Skiwing totalling $322,628.00 (subject to reduction in certain contingencies). 3 In a judgment dated 11 March 2005 (Trust Company of Australia Ltd v Trust Company of Australia Ltd (Stockland Property Management Ltd) (RLD) [2005] NSWADTAP 9), we allowed the appeal and set aside the damages award in favour of Skiwing. We held also, however, that two out of a number of issues that Skiwing had raised in a Notice of Contention should be remitted to the Tribunal for reconsideration. 4 In a subsequent hearing, we directed that the Tribunal should take no further steps in these proceedings, except in relation to costs, until the disposition of appeals from our judgment that both of the parties had lodged in the Court of Appeal. Relevant principles regarding costs 5 If costs are to be awarded, the requirement of 'special circumstances warranting an award of costs' set out in s 88(1) of the Administrative Decisions Tribunal Act 1997 ('the ADT Act') must be satisfied. Section 77A of the RL Act makes this provision applicable in retail tenancy proceedings conducted in the Tribunal. 6 According to the case-law on s 88(1) in its application to proceedings under the RL Act (see eg Gizah Pty Ltd v AXA Trustees Ltd (No. 2) [2001] NSWADT 164, Citadin Pty Ltd (No 2) v Eddie Azzi Australia Pty Ltd & General Pants Pty Ltd (RLD) [2001] NSWADTAP 31, Sotiropoulos v Mattana Coiffure Pty Ltd (No 2) (RLD) [2004] NSWADTAP 43 and North Eastern Travelstops Pty Ltd v Bradley & Ors (No 2) (RLD) [2005] NSWADTAP 17), this requirement of 'special circumstances' applies both to decisions made by the Tribunal at first instance and to Appeal Panel decisions. 'Special circumstances' have been defined as 'circumstances that are out of the ordinary, but without having to be extraordinary or exceptional'. It is not enough that the circumstances are 'special': they must also 'warrant' an order for costs. They may include factors connected with the nature of Appeal Panel proceedings. On account of the 'commerciality' of the Retail Leases Division, the interpretation of 'special circumstances' differs significantly from the interpretation that might be adopted in any other Division of the Tribunal. 7 Amongst the various types of situation that have been held to constitute 'special circumstances' in retail leases cases, two are relevant in the present case. 8 The first of these is where an unsuccessful appeal, or an unsuccessful defence to an appeal, is found to have lacked any real prospect of success and therefore to have been unmeritorious. Another formulation used in cases interpreting s 88 is as follows: where the case argued by a party has no tenable basis in fact or in law. 9 The second is where (a) the successful party in the proceedings has made an offer of compromise of the dispute before the conclusion of the proceedings; (b) the unsuccessful party has unreasonably rejected the offer; and (c) the terms of the offer were more favourable to the unsuccessful party than the orders made by the Tribunal. The Tribunal has held this situation to constitute 'special circumstances warranting an award of costs' by way of analogy with costs rules in the Supreme and District Courts and the principles laid down in Calderbank v Calderbank [1975] 3 All ER 333. The grounds of Stockland's application for the costs of this appeal 10 Ms Allars, counsel for Stockland, argued first that it should obtain an award for at least part of its costs on the appeal for the following reasons: (a) its appeal was 'meritorious', having succeeded on the two grounds of substance that it raised; (b) the appeal brought by Skiwing via its Notice of Contention was not 'meritorious' because it failed on most of the grounds put forward; and (c) Stockland had acted reasonably in defending Skiwing's appeal in so far as that appeal was successful. Except for the use of the term 'meritorious' in its second appearance, we agree, broadly speaking, with this description of the outcome of the appeal. 11 The second ground put forward by Ms Allars was based on correspondence between the parties proposing terms of settlement. On 3 December 2003, when the dispute between them had been on foot for some considerable time, Stockland offered to settle Skiwing's claims by paying it $25,000 inclusive of costs and interest. The letter making this offer described it as 'non-negotiable' and said that if it was rejected Stockland would 'vigorously defend' the proceedings and would seek indemnity costs. In the course of making a counter-offer on 10 February 2004 to accept $400,000 in satisfaction of its claims, Skiwing stated that Stockland's offer of $25,000 was 'not acceptable'. The result of our decision on Stockland's appeal was that Skiwing was held to have no grounds for recovering damages against Stockland. It followed, Ms Allars argued, that Skiwing should be held to have acted unreasonably in rejecting an offer of settlement that was more favourable to it than the ultimate decision in the proceedings. On this ground, she claimed, there were 'special circumstances warranting an award of costs' within the meaning of s 88(1) of the ADT Act. Our conclusions 12 In our judgment, both of these grounds must be rejected, for the following reasons. 13 As to the first ground, we agree that Stockland's appeal was 'meritorious' on account of its having succeeded. But it does not follow that the unsuccessful contentions raised by Skiwing were not 'meritorious', in the sense of lacking any merit in fact or in law. With regard to those contentions that succeeded at first instance, it is obvious that they had merit: cf the Appeal Panel's judgment, rejecting an application for costs by a successful appellant, in G & M Dawson Pty Ltd v Cripps & Ors (No 2) (RLD) [2005] NSWADTAP 3. Those contentions that did not succeed either at first instance or on appeal were at least arguable. None of the contentions put by Skiwing that we encountered on the appeal was open to easy determination. 14 Our response to the second ground is that, even if no appeals from our decision had been lodged in the Court of Appeal, we would still not be in a position to determine whether one of the necessary conditions was fulfilled. One of our orders disposing of the appeal was that certain matters in relation to which Skiwing had been successful should be remitted to the Tribunal for reconsideration. If Skiwing had succeeded on any of these matters, it might well have obtained an award of damages. If the amount of the award exceeded $25,000, it could no longer be said – as Ms Allars currently asserts – that the offer by Stockland that Skiwing rejected on 10 February 2004 was more favourable to Skiwing than the outcome of the proceedings. Yet a finding to this effect is essential if this ground of Stockland's application for costs is to succeed. 15 There being no other ground on which 'special circumstances' under s 88 might be said to arise, we dismiss Stockland's application for costs relating to this appeal. 16 We do not go so far, however, as to determine that there should be no order for costs on this appeal. As we have indicated, the claims between the parties have not been finalised in the Tribunal. Following the hearing and determination of the appeals lodged in the Court of Appeal, there remains the possibility of further proceedings in the Tribunal by way of remitter. The outcome of these proceedings in the Court and, potentially, the Tribunal might possibly provide a basis for one or other of the parties to obtain a costs order on this appeal. DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.