Bentley and anor v Minka Holdings Pty Ltd [2008] NSWADT 126

CITATION: Bentley and anor v Minka Holdings Pty Ltd [2008] NSWADT 126

DIVISION: Retail Leases Division

PARTIES: APPLICANT Raymond Leslie Bentley and Pui Yee Bentley

FILE NUMBER: 085004

HEARING DATES: 17 March 2008

SUBMISSIONS CLOSED: 14 April 2008

DATE OF DECISION: 30 April 2008

BEFORE: Rickards K - Judicial Member

CATCHWORDS: Costs

MATTER FOR DECISION: Costs

LEGISLATION CITED : Retail Leases Act 1994

CASES CITED: Cripps and Another v G & M Dawson Pty Ltd and Another (2006) NSWCA 81

APPLICANT In person REPRESENTATION: RESPONDENT R Condell, agent

ORDERS: The Respondent is to pay a sum of $1,858.07 to the Applicants within twenty-eight days.

REASONS FOR DECISION Introduction 1 In about August 2006 the Applicants purchased a business known as "King Neptune Café" conducted from retail shop premises at Shop A, 203 Castlereagh Street, Sydney. 2 The Respondent is the owner of those retail shop premises and the Applicants became the tenants of the premises. 3 The premises were managed by the agents, Tim Green Commercial and the direct manager responsible for the shop premises was Kelly Baker. 4 These proceedings were originally commenced by the Applicants on 18 January 2008, seeking orders that the original Bank Guarantee provided by them pursuant to their obligations under the lease agreement be returned and that the Respondent pay the costs of the Applicants which had been incurred by them in seeking the return of that document. The subject Bank Guarantee with appropriate written release given by the Respondent was provided by Kelly Baker to the Applicants' solicitors on 14 February 2008. Accordingly, the only remaining issue to be determined in these proceedings is whether or not the Respondent should pay the costs sum of $1858.07 claimed by the Applicants in seeking return of the Bank Guarantee. 5 These proceedings were listed for hearing on 17 March 2008, but it was apparent that some material had not been served, and determination of this issue was then ordered by me to take place upon papers filed. The Applicants have filed and served an affidavit of the Applicant Pui (known as "Becky Bentley") sworn 25 February 2008 ("the Bentley Affidavit"), an affidavit of the Applicants' solicitor Chris Lai dated 25 February 2008 ("the Lai Affidavit") and submissions filed on 10 April 2008. In turn, the Respondents have filed and served an affidavit of Kelly Baker sworn 7 April 2008 ("the Baker Affidavit"), which also includes a number of submissions, which the Respondent wishes to be considered in determining the issue of costs. 6 In relation to the actual amount of costs sought, the Bentley Affidavit attaches a costs disclosure from the solicitor Chris Lai dated 2 November 2007 together with a statement of account dated 25 February 2008, which in turn attaches an itemised time sheet. The submissions made in the Baker Affidavit on behalf of the Respondent in relation to the actual amount of costs claimed are that Kelly Baker saved the Applicants money in handling the assignment herself and not sending it to the Respondent's solicitor, the solicitor's Tax Invoice charged for "attending to numerous calls from Mrs Bentley" when Kelly Baker in fact had spoken to Mr Bentley on numerous occasions, and that it is "unreasonable that costs can be claimed for phone calls Mrs Bentley made when Mr and Mrs Bentley did not communicate". 7 Upon this threshold matter, I do not consider that such submissions hold any weight in relation to the question of whether the charges made or the total amount of the Tax Invoice is excessive. In any event, there is no delineation within the time sheet attached to the Tax Invoice as to whether the solicitor had spoken by telephone to either the male or the female Applicant. Although no submission has been made as to the hourly rate claimed, I find that the rate of $250 is a proper and reasonable charge. Accordingly, for the purpose of determining this matter, I find that the amount claimed of $1,858.07 is a proper and reasonable charge for the legal work performed in seeking return of the Bank Guarantee. Sale of the Business and Assignment of the Lease 8 During 2007, the male Applicant became quite ill and in October 2007 underwent open-heart surgery. A decision was made to sell the business. On 15 November 2007 the Applicants' solicitor mailed and faxed a letter to Kelly Baker advising that the business was proposed to be sold to a company called Lily Gourmet Pty Ltd ("Lily Gourmet") and provided relevant information concerning Lily Gourmet. A request was made for urgent advice as to whether the Respondent consented to the proposed assignment. Further, a request was made that this matter receive urgent attention, in view of the Applicants' circumstances. 9 By fax dated 21 November 2007 Kelly Baker advised "we confirm that the landlord consents to the assignment of the above lease to Lily Gourmet Pty Ltd which has an expiry date of 31 August 2008 … Should your client wish to proceed please draft an assignment document which satisfies the conditions set out in Clause 17 of the current lease and fax to me for approval by the landlord …." In the Baker Affidavit, Kelly Baker says that such approval was only "in principle" but no such qualification was apparently communicated to the Applicants or to their solicitor. 10 Kelly Baker was away on leave until 26 November 2007. In the interim, by letter dated 23 November 2007, the Applicants' solicitor provided a draft Deed of Assignment and confirmed that Lily Gourmet would be providing its own replacement Bank Guarantee for the sum of $21,655.74 in favour of the Respondent. The letter also advised that the rent for December would be paid in full on 5 December 2007 "when the matter settles" and that the Deed of Assignment was being executed by Lily Gourmet and by the Applicants upon the assumption that the Deed of Assignment was approved by the Respondent. 11 By letter dated 4 December 2007 the Applicants' solicitor forwarded the Deed of Assignment duly executed by Lily Gourmet, its guarantor, and by the Applicants, two cheques in payment of rent for the month of December 2007, and a new Bank Guarantee on behalf of Lily Gourmet in favour of the Respondent to replace the Bank Guarantee given by the Applicants. A request was made to release the existing Bank Guarantee to the Applicants upon settlement of the sale of business, which was now advised to be scheduled to take place on Monday, 10 December 2007. The Applicants' solicitor sent a further letter by mail and fax to Kelly Baker on 5 December 2007 reminding her that the settlement was to take place on 10 December 2007 and seeking early confirmation that all was in order for settlement to proceed. A further request was also made for an executed copy of the Deed of Assignment. 12 On 7 December 2007 the Applicants' solicitor telephoned Kelly Baker. The solicitor says that Kelly Baker told him that the deed would be executed by the Respondent and that settlement could proceed. In response, within the Baker Affidavit, Kelly Baker says that she told the solicitor that the Respondent "may have a problem with some of the wording in the Deed of Assignment which I have not received an executed copy of back from the landlord as yet (sic)". Kelly Baker says that she told the solicitor that he could advise the Applicants as he wished but that the lease was not "officially" assigned as yet. Unfortunately, again, no such qualification or statement of objection of assignment of the lease was ever communicated on behalf of the Respondent. A letter sent by the Applicants' solicitor to Kelly Baker on 10 December 2007 confirmed that settlement had taken place and again requested return of the Applicants' Bank Guarantee. 13 The Applicants' solicitor again wrote to Kelly Baker on 17 December 2007 seeking return of the Bank Guarantee and the executed Deed of Assignment. 14 The Applicants' solicitor says that he then spoke to Kelly Baker on 18 December 2007 wherein she agreed to mail out the Bank Guarantee and the Deed of Assignment on that day. In the Baker affidavit, Kelly Baker refutes this and says that the conversation was only about the Deed of Assignment and that she merely said that she would "try to get it signed and mail(ed) off to him today". 15 Two days later, on 20 December 2007, Kelly Baker says that she met with the Respondent's secretary and was advised that even though the Deed appeared to be acceptable, the Respondent wished to consult a solicitor about it. This attendance presumably followed a further letter from the Applicants' solicitor, which had been faxed that day to Kelly Baker asserting that there had been a promise that the original Bank Guarantee and Deed of Assignment would be sent to him on 18 December 2007. Kelly Baker then sent a further fax to the Applicants' solicitor on 20 December 2007 advising that the Respondent was still awaiting advice from its solicitor before signing the Deed of Assignment and that until the Deed was signed the Bank Guarantee could not be released. It was therein stated that Kelly Baker was hoping to "receive confirmation from the landlord as soon as possible and will advise when completed". 16 Notwithstanding the foregoing assurance, it appears from the Baker affidavit that both Kelly Baker and the landlord then went on leave on the following day 21 December 2007, and that no further attention was given to this matter until 14 January 2008 when Kelly Baker returned from leave. In the intervening period, the Applicants' solicitor sent a long letter on 24 December 2007 reciting the history of events, which had taken place, and forcefully requesting urgent return of the Deed of Assignment and the Bank Guarantee. By further letter dated 11 January 2008, the Applicants' solicitor advised that an Application would be filed with this Tribunal unless the Bank Guarantee was returned by 14 January 2008. At that time, the Applicant's solicitor warned that an order for costs would also be sought. 17 Following her return from leave, Kelly Baker forwarded a fax on 14 January 2008 to the Applicants' solicitor stating that she had received a copy of the executed Deed of Assignment from the Respondent and that she anticipated that the Bank Guarantee could be collected by the Applicants from her office or from the Respondent's solicitors' office either on the following day or the day after, and that the precise arrangements in this regard would be advised on 15 January 2008. 18 On the following day, 15 January 2008, Kelly Baker apparently enquired of the Respondent's solicitors as to the whereabouts of the Bank Guarantee and was told that the "file" had been delivered to a Ms Haralabidis at Mars Property. Kelly Baker then sent an email to Ms Haralabidis asking whether she held the Bank Guarantee. In turn, Ms Haralabidis checked the documents held by her and confirmed that there had been files sent to her but that there was only a copy of the Bank Guarantee; the solicitors were asked to check in their safe custody system. This suggestion to check the safe custody system should have been obvious to the solicitors, and the suggested search was successful. The Bank Guarantee was confirmed as having been found by the solicitors on 22 January 2008. Kelly Baker says that she received the Bank Guarantee on the following day. By this time, the Applicants' solicitor had filed an Application with this Tribunal on 18 January 2008, which was then served. On 24 January 2008 Kelly Baker sent a fax to the Applicants' solicitor advising that the Bank Guarantee had now been located and could be collected from her office, and that she was now providing the executed Deed of Assignment. 19 Unfortunately, neither the Respondent nor Kelly Baker had considered the terms of the Bank Guarantee, which required written confirmation from the Respondent that the guarantee could be released. The Applicants collected the Bank Guarantee but were unable to obtain release of the secured funds from the bank, and Kelly Baker was advised on 29 January 2008 of this difficulty, following which she undertook to have such written release urgently executed by the Respondent. A new matter then intervened. Kelly Baker had received a letter from Sydney Water advising that the required grease trap service due in November 2007 had not been notified as having been completed, and threatening action if this was not remedied. Kelly Baker cites this development as the reason for further delay in supplying release of the Bank Guarantee, as she was now distracted in having Lily Gourmet enter into a new agreement for servicing of the grease trap. 20 It is apparent from the documents filed that Kelly Baker drafted a letter of release on 5 February 2008 and then had the letter executed by the Respondent, but this release was then not furnished to the Applicants' solicitor until 14 February 2008, which was the day that these proceedings first came before this Tribunal for directions. Factors to be Considered 21 Section 88(1) of the Administrative Decisions Tribunal ACT 1997 provides that "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 there are special circumstances warranting an award of costs". 22 Consideration of what constitutes "special circumstances" in order to justify an order for costs has been the subject of a number of decisions of this Tribunal, and was also considered by the Court of Appeal in the leading judgment of Santow AJ in Cripps and Another v G & M Dawson Pty Ltd and Another (2006) NSWCA 81. 23 In Cripps, the Court of Appeal dealt with a factual situation where both the Tribunal below and the Court of Appeal found that one party through no fault of its own had been placed in the situation where it had been forced to pursue litigation. The Court of Appeal expressly held that the Tribunal was in error in failing to conclude that such a situation did not constitute "special circumstances" (see paragraph 60 of the judgment). 24 I am satisfied that the circumstances surrounding these proceedings do constitute "special circumstances" justifying an order for costs. 25 The Respondent through Kelly Baker has asserted a number of matters concerning the Applicants, which in my view do not bear upon the issue, which has to be determined. Examples of such assertions are that the Applicants were generally "quite demanding and unco-operative tenants", that they had "not once paid their rent on time", and that they frequently telephoned Kelly Baker's office and had potential buyers of the business do likewise. 26 Unfortunately, the above assertions do no more than perhaps provide some explanation for the excessive and inappropriate delay which I find has occurred in this matter, and do not provide a legal excuse. 27 The Applicants through their solicitor first made request for assignment of lease on 15 November 2007. Despite the Respondent through Kelly Baker indicating consent to such assignment on 21 November 2007 and a draft document being provided shortly thereafter, a deed executed by the Respondent was not furnished to the Applicants until 24 January 2008, over eight weeks later. 28 The Bank Guarantee was not released until 14 February 2008, despite request being made and a replacement Bank Guarantee supplied on 4 December 2007, which is a delay in excess of nine weeks. 29 Fault for the above delays should not necessarily be attributed to Kelly Baker or to the office of the managing agent generally, but there is simply insufficient explanation or justification as to why such a delay occurred even allowing for the intervention of the Christmas New Year period, and the stated wish of the Respondent to consult its solicitor concerning the Deed of Assignment. 30 The fact that the servicing of the grease trap at the premises had apparently not occurred in November 2007 is not a matter justifying delay in supplying release of the Bank Guarantee when assignment of the lease had already occurred, a new tenant was already in possession of the premises and paying rent, and a new Bank Guarantee was in place. 31 The Applicants through their solicitor gave the Respondent ample warning of their intention to commence proceedings and to seek costs in the event that the release of the Bank Guarantee was not forthcoming, and yet the Respondent failed to take such step. To fail to do so, in all of the circumstances, is unreasonable and left the Applicants with no alternative but to proceed with the Application seeking orders in respect of the Bank Guarantee and costs. The fact that the Bank Guarantee was still not provided until approximately one month after the commencement of these proceedings is of itself an additional circumstance warranting an order for costs in this matter. 32 Accordingly I make the order as set out below: Order The Respondent is to pay a sum of $1,858.07 to the Applicants within twenty-eight days.