Jafari v Lituma Pty Limited (No 2) [2006] NSWADT 225

CITATION: Jafari v Lituma Pty Limited (No 2) [2006] NSWADT 225

DIVISION: Retail Leases Division

FIRST APPLICANT AND SECOND RESPONDENT PARTIES: Zahra Jafari FIRST RESPONDENT AND SECOND APPLICANT Lituma Pty Limited

FILE NUMBER: 055016 and 055024

HEARING DATES: On the papers

SUBMISSIONS CLOSED: 11/02/2005

DATE OF DECISION: 08/01/2006

BEFORE: Higgins S - Judicial Member

CATCHWORDS: Costs

MATTER FOR DECISION: Costs

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

Gizah Pty Ltd v AXA Trustees Limited (No. 2) [2001] NSWADT 164 Jafari v Lituma Pty Limited [2005] 64 Lituma Pty Ltd v Jaffari (RLD) [2005] NSWADTAP 37 CASES CITED: Petria Pty Ltd v Makhoul [2005] NSWADTAP 12 Prasad v Fairfield City Council (RLD) [2002] NSWADTAP 2 Sarip Investment Pty Ltd v Uno Uno Pty Ltd [2004] NSWADT 27 Singh v Solomon & Ors (No 2) (RLD) [2005] NSWADTAP 58

FIRST APPLICANT AND SECOND RESPONDENT In person REPRESENTATION: FIRST RESPONDENT AND SECOND APPLICANT J Grellman, solicitor

ORDERS: The respondent's application for costs of the applicant's application for an urgent interim order is dismissed

REASONS FOR DECISION Background 1 This is an application by the respondent lessor seeking an order for its costs of the applicant's application, of 25 August 2005, for an urgent interim order. The order sought by the applicant lessee included an order that she be granted possession of the leased premises. The respondent had locked the applicant out of the leased premises in late January 2005 on the grounds that she had failed to comply with the terms of a Deed of Release, executed on 26 November 2004 ("the November 2004 Deed"). As a result of that lockout the applicant commenced these proceedings in the Tribunal and the respondent made a counterclaim against the applicant. 2 When the matter first came before the Tribunal the respondent raised a preliminary point in respect to the proper construction of the November 2004 Deed. With the consent of the parties, the Tribunal determined this construction issue as a preliminary matter: see Jafari v Lituma Pty Limited [2005] NSWADT 64. The construction issue was determined in favour of the applicant and the respondent appealed to the Appeal Panel. On 21 July 2005, the Appeal Panel delivered its decision and dismissed the appeal: see Lituma Pty Ltd v Jaffari (RLD) [2005] NSWADTAP 37. In dismissing the appeal the Appeal Panel affirmed the orders that had been made by the Tribunal, with one variation of substance, which is not necessary to repeat in these reasons for decision. It was as a result of this decision that the applicant sought to re-enter possession of the leased premises. 3 The applicant's application for an interim order was ultimately settled on 22 September 2005, without the matter being fully argued or the Tribunal being required to make a determination. In settling the matter the applicant was given possession of the premises. Notwithstanding this agreement, the respondent made an application for its costs in respect to the interim order application. In this regard the respondent filed an affidavit of James Frederick Werner Grellman, sworn on 22 September 2005 (Mr Grellman's affidavit"). Mr Grellman is the respondent's solicitor. Subsequently, Mr Grellman filed written submissions in support of the respondent's cost application. 4 An affidavit of Farshad Amirbeaggi, sworn on 22 September 2005, was filed for the applicant ("Mr Amirbeaggi's affidavit"). At the time Mr Amirbeaggi was the applicant's solicitor and while he opposed the respondent's application for costs, the applicant did not file any written submissions. Principles governing costs 5 The Tribunal has no inherent power to award costs however, it has been given such a power under s.88(1) of the Administrative Decisions Tribunal Act 1997 ("ADT Act"). In respect to proceedings for an original decision (see s.7 of the ADT Act), which includes proceedings under the Retail Leases Act 1994 ("RL Act"), s.88(3) of the ADT Act provides that the Tribunal only has such a power where the enactment pursuant to which the Tribunal is given jurisdiction to make such a decision also gives the Tribunal jurisdiction to make an award of costs. S.77A of the RL Act is such a provision as it expressly gives the Tribunal power to make an award of costs under s.88(1) of the ADT Act. 6 The power to award costs under s.88(1) is a discretionary power, which can only be exercised where the Tribunal is satisfied that there are "special circumstances" that warrant an award of costs. This means that in order to obtain a cost order an applicant for costs has two hurdles to overcome. The first hurdle is to establish that the circumstances of the application constitute "special circumstances" and the second hurdle is to establish that the identified "special circumstances" warranted an award of costs: see Gizah Pty Ltd v AXA Trustees Limited (No. 2) [2001] NSWADT 164 at [29]. 7 "Special circumstances" have been defined as "circumstances that are out of the ordinary, but without having to be extraordinary or exceptional". On account of the "commerciality" of the Retail Leases Division of the Tribunal, it has been held that the interpretation of "special circumstances" differs significantly from the interpretation that might be adopted in any other Division of the Tribunal: see Singh v Solomon & Ors (No 2) (RLD) [2005] NSWADTAP 58 at [12] and Petria Pty Ltd v Makhoul [2005] NSWADTAP 12. 8 Practice Note 12 (reissued on 11 May 2005) sets out the following as examples of "special circumstances" which may warrant an order for costs under s.88(1) of the ADT: "Whether a party has conducted the proceedings in the way that disadvantaged another party to the proceedings by conduct such as: (i) failure to comply with an order or direction of the Tribunal without reasonable excuse; (ii) failing to comply with this Act, the regulations, the rules or enabling enactment; (iii) asking for an adjournment as a result of (i) or (ii); (iv) causing an adjournment; (v) attempting to deceive another party or the Tribunal; (vi) vexatiously conducting the proceedings; (vii) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings; and (viii) 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. 9 In Prasad v Fairfield City Council (RLD) [2002] NSWADTAP 2 at [38] the Appeal Panel held that where a party to a retail leases matter has acted inconsistently with the reasonable conduct of litigation this may constitute "special circumstances warranting an order for costs". In that case, the Appeal Panel cited the making of unnecessary preliminary applications or any unnecessary delay in the progress of an application, which had the effect of elongating the litigation and making it more costly as an example of what was generally regarded as being inconsistent with the reasonable conduct of litigation. 10 It is also accepted that the categories of special circumstances are not closed and that each case must depend on its own particular facts: see Sarip Investment Pty Ltd v Uno Uno Pty Ltd [2004] NSWADT 27 at [30]. Respondent's submissions 11 The essence of the respondent's submissions is that the delay by the applicant in searching for the original of a Bank Guarantee, in favour of the respondent and dated 28 February 2005 and a copy of a Certificate of Currency of Public Liability Insurance constituted "special circumstances". It was pointed out that it had been the applicant's failure to provide these documents within the time prescribed in the November 2004 Deed, which had given rise to the dispute between the parties in the first instance (see para [15] of Jafari v Lituma Pty Limited [2005] 64). 12 That is, the respondent contended that the conduct of the applicant in respect to its interim order application was "irresponsible" and vexatious, which caused the respondent to unreasonably incur costs in connection with that application and that it also delayed the prosecution of the substantive proceedings. Evidence 13 According to the correspondence attached to Mr Grellman's affidavit the sequence of events, which followed the delivery of the decision of the Appeal Panel on 21 July 2005, were as follows: (a) on 4 August 2005, Mr Amirbeaggi, of Yates Beaggi Lawyers wrote to Mr Grellman of Thorntons Lawyers noting that the respondent accepted the decision of the Appeal Panel delivered on 21 July 2005 and requesting that the applicant be given immediate possession to the leased premises. Attached to that letter was a copy of a Westpac Bank Guarantee, dated 26 February 2005, in favour of the respondent for a sum of $13,479.00; (b) on 10 August 2005, Mr Grellman of Thornton's Lawyers wrote to Mr Amirbeaggi of Yates Beaggi Lawyers stating that the respondent would give the applicant possession of the premises on 6 conditions specified in the letter. Those conditions included an original Bank Guarantee of $15,345.62 and a copy of a Certificate of Currency of Public Liability Insurance. In his affidavit Mr Grellman also gives an account of his conversations with a Relationships Manager at Westpac on that particular day. The essence of that conversation was that Westpac would only pay on the presentation of the original of the bank guarantee. However, there was no mention of this in the letter; (c) on 23 August 2005, Mr Amirbeaggi, of Yates Beaggi Lawyers wrote to Mr Grellman of Thorntons Lawyers enclosing by way of service a copy of the applicant's application for an urgent interim order, which he stated was listed for hearing at 12 noon on 25 August 2005; (d) on 24 August 2005, Mr Grellman of Thornton's Lawyers wrote to Mr Amirbeaggi of Yates Beaggi Lawyers advising that he had been informed that a photocopy of the Bank Guarantee was not satisfactory as the bank would only pay on the presentation of the original; (e) on or about 29 August 2005, the applicant provided Mr Grellman with a further copy of the Bank Guarantee which had been re-stamped and dated 25 August 2005. Mr Grellman of Thornton's Lawyers again wrote to Mr Amirbeaggi of Yates Beaggi Lawyers and advised that this Guarantee was also not acceptable; (f) on 8 September 2005, Mr Grellman of Thorntons Lawyers wrote to Westpac requesting the issue of a new original Bank Guarantee and undertaking not to all on the 28 February 2005 Guarantee; (g) on 14 September 2005, Mr Amirbeaggi, of Yates Beaggi Lawyers wrote to Mr Grellman of Thorntons Lawyers. Attached to that letter was a cheque for the shortfall in the Bank Guarantee and a copy Certificate of Currency of Public Liability Insurance; (h) on 16 September 2005, Westpac wrote to Mr Grellman of Thorntons Lawyers advising that the bank would issue a new Bank Guarantee on the payment of a $500.00 establishment fee; and (i) on 21 September 2005, Mr Amirbeaggi, of Yates Beaggi Lawyers wrote to Mr Grellman of Thorntons Lawyers and enclosed the original of the 28 February 2005 Bank Guarantee. 14 In his affidavit, Mr Amirbeaggi said that on 21 September 2005 he had also made enquiries with Westpac in respect to the Bank Guarantee. On the suggestion of Mr Grellman he had also searched his files, in particular an affidavit of the applicant, to see if he could locate the original of the 28 February 2005 Bank Guarantee. He was not able to locate it but he made further enquires with counsel who had been briefed in respect to the hearing and appeal of the preliminary matter. On making those enquiries he was informed that counsel had the original. He then immediately took steps to recover it and provide it to Mr Grellman. 15 The applicant's application for an interim order came before the Tribunal on 8 and 22 September 2005. Although she had filed her application at directions hearing of the substantive matter on 25 August 2005, it was not heard on that occasion or on 8 September 2005. On 8 September 2005, orders were made for the filing of evidence in respect to the applicant's interim order application and 22 September was also an adjourned date for directions in the substantive application. Consideration 16 The essential question for determination is whether the conduct of the applicant, in particular her solicitor, in failing to make an immediate search for the original of the 28 February 2005 Bank Guarantee was such that it constituted "special circumstances" as set out in s.88(1) of the ADT Act. For the reasons set out below, in my opinion, the conduct of the applicant in respect to her application for an interim order does not constitute "special circumstances". 17 While the respondent is correct in stating that the original dispute between the parties arose as a result of the applicant's failure to provide it with a Bank Guarantee and a Certificate of Currency of Insurance, aspects of that dispute were resolved, in favour of the applicant, following the parties acceptance of the decision of the Appeal Panel on 21 July 2005. It is also noted that in an endeavour to meet these particular requirements of the November 2004 Deed, in March 2005, the applicant provided the Tribunal and the respondent with a copy of the 28 February 2005 Bank Guarantee and a letter from an insurance broker in respect to public liability insurance. At the time, counsel for the respondent argued that the Bank Guarantee was not acceptable to the respondent, as it had been issued at the request of a person other than the applicant. I am in no way critical of, nor do I make any finding in respect to the position adopted by the respondent at that time. I have mentioned it only in the context of finding that at this time there was no issue about the respondent being provided with the original of the Bank Guarantee. Nor was the inadequacy of the letter from the insurance broker raised in any formal way. 18 It was not until 10 August 2005, in response to the applicant's request to be given possession of the premises that the respondent said it would agree to the request so long as it was given the original of the Bank Guarantee and a Certificate of Currency of Insurance. However, it was not until 24 August 2005, after the applicant's solicitor had forwarded a copy of the applicant's proposed application for an interim order, that the respondent explained why it required the original Bank Guarantee. The correspondence between the solicitors of the respective parties suggests that the applicant had been unable to find the original of the 28 February 2005 Bank Guarantee, as she took steps to try and resolve the issue by having a copy of the 28 February 2005 Bank Guarantee re-stamped and re-dated by the issuing bank. Had the original not been located, the correspondence also suggests that the parties were in the process of resolving the issue by having a new Bank Guarantee issued. However, the applicant's conduct in filing an application for an interim order, in my opinion, was reasonable. As mentioned above, the applicant's interim order application was filed at a time when the substantive application was before the Tribunal at the first directions hearing following the delivery of the decision of the Appeal Panel. The application was not dealt with at that time and following this the applicant's interim order application only came before the Tribunal on one occasion (i.e. 8 September 2005) for the purpose of making orders as to the filing of evidence as it appeared that the parties had differing views on whether an original of the Bank Guarantee was required. 19 While it was clearly an oversight by Mr Amirbeaggi not to have inquired earlier as to the location of the original Bank Guarantee, in my opinion, there is no evidence to suggest that this was deliberate or due to an indifference by him. Once he was alerted to the fact that the original may have been attached to an affidavit of the applicant, he acted immediately. Had he delayed further, the position may have been different. Accordingly, having regard to all the circumstances surrounding the applicant's application for an interim order, I find that the conduct of the applicant did not constitute "special circumstances". 20 The Tribunal orders that the respondent's application for costs of the applicant's application for an urgent interim order is dismissed.