Dirani v Tarabay and anor (No.2) [2008] NSWADT 94

CITATION: Dirani v Tarabay and anor (No.2) [2008] NSWADT 94

DIVISION: Retail Leases Division

APPLICANT Hussein Dirani

PARTIES: FIRST RESPONDENT Elie Tarabay

SECOND RESPONDENT Houda Tarabay

FILE NUMBER: 075024

HEARING DATES: On the papers

SUBMISSIONS CLOSED: 3 January 2008

DATE OF DECISION: 20 March 2008

BEFORE: Fox R - Judicial Member

CATCHWORDS: Costs

MATTER FOR DECISION: Costs

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

Abigroup Limited v Sandtara Pty Limited [2002] NSWCA 45 CASES CITED: Rose Holdings Pty Limited v Chusap [2002] NSWADT 153 Smith t/as Flames Grill & Carvery v Trust Company of Australia Pty Limited [2008] NSWADT 10 Soloman v Singh (No.3)[2006] NSWADT 120

APPLICANT B Lane, solicitor REPRESENTATION: RESPONDENTS G Penhall, solicitor

ORDERS: No order for costs.

REASONS FOR DECISION 1 Pursuant to my order of 23 November 2007, Mr Lane has made submissions in support of an order for costs, and nothing has been heard from Mr Penhall. Mr Lane relied on clause 5 of the Deed of Assignment to claim the costs of the litigation. This clause (the full text of which appeared in my reasons on the substantive issue) contained the "usual" indemnity against costs of assignment. 2 I briefly considered a similar claim in Rose Holdings Pty Limited v Chusap [2002] NSWADT 153, when I described an argument in support of a claim for an order for costs, because a covenant in the lease made such a provision for indemnity, as Gilbertian. That matter concerned a lease, the text of which had been agreed before the operation of the Retail Leases Act 1994. It seemed to me to be the stuff of comic opera to propose that the plain effect of section 77A of the Retail Leases Act 1994 and section 88 of the Administrative Decisions Tribunal Act 1997 (which is to relieve the Applicants and Respondents from the risks of a costs order if unsuccessful unless there are special circumstances warranting an award of costs) could simply be reversed by a pre-existing contract. 3 The issue has been subsequently considered; the detail of those considerations may be found in the discussion of Deputy President Chesterman in Smith t/as Flames Grill & Carvery v Trust Company of Australia Pty Limited [2008] NSWADT 10, a decision which was published after Mr Lane made his submissions. As the Deputy President pointed out, the matter is not without its difficulties in view of the Court of Appeal decision in Abigroup Limited v Sandtara Pty Limited [2002] NSWCA 45, however, he went on to hold that the claim for a cost entitlement arising out of an indemnity clause in the Lease must fail because section 7 of the Retail Leases Act 1994 operates to void it. It is worthwhile to repeat the text of section 7 in full: "This Act operates despite the provisions of a lease. A provision of a lease is void to the extent that the provision is inconsistent with a provision of this Act. A provision of any agreement or arrangement between the parties to a lease is void to the extent that the provision would be void if it were in the lease." 4 Smith considered an indemnity clause as contained in the Lease. The matter now before me, of course, is not an indemnity clause in a Lease, it is in the separate Deed of Assignment. However that is quite plainly caught by the very wide net cast by the last sentence of section 7, and so the reasoning of Smith applies to render inoperative the indemnity clause so far as it purports to effect an entitlement to claim costs (of litigation in the Tribunal) which the Tribunal would otherwise be prohibited from awarding by section 88 of the Administrative Decisions Tribunal Act 1997. 5 Mr Lane argued that the provisions for indemnity as such created the special circumstances. This argument was specifically rejected by Molloy JM in Soloman v Singh (No.3)[2006] NSWADT 120. 6 As I understood Mr Lane's submissions, he gave an alternative proposition:- that because the cost of the litigation will eat up much of the damages recovered (30 percent), that of itself amounted to special circumstances. Whilst I sympathise with that argument, and note Mr Lane's closing observation: "The Applicant who has been successful in the proceedings should not be denied a substantial part of his verdict by having to meet payment of his own legal costs" that cannot hold in the face of the clear legislative policy as expressed in section 88 of the Administrative Decisions Tribunal Act 1997 and as discussed at paragraph 100 in Smith. 7 If such a result had arisen because the matter had proceeded to a full hearing, despite a request by the Applicant that it be decided on the papers, then special circumstances might have been found within the illustrations given in the Tribunal's published Practice Note number 12 and perhaps summarised as – method of conducting the hearing. But of course that is not the case, the parties very properly in view of the amount of money at issue, agreed that the matter be dealt with on the papers, and so adopted by far the cheapest way of resolving it. 8 I am not persuaded that there are special circumstances, and propose to make no order for costs. Order No order for costs.