Subway Realty Pty Ltd v Nekon Pty Ltd (No 2) [2013] NSWADT 276

Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Subway Realty Pty Ltd v Nekon Pty Ltd (No 2) [2013] NSWADT 276 Hearing dates: On the papers Decision date: 29 November 2013 Jurisdiction: Retail Leases Division Before: K Rickards, Judicial Member Decision: The Applicants are to pay the Respondent's costs of the hearing and the written submissions following the hearing upon a party/party basis as are assessed or agreed. Catchwords: Costs Legislation Cited: Administrative Decisions Tribunal Act 1997; Retail Leases Act 1994 Cases Cited: AT v Commissioner of Police [2010] NSWCA 131 Jones and Anor v Ekermawi (No. 2) (EOD) [2013] NSWADTAP 18 Adwell Holdings Pty Ltd v Ull Pty Ltd [2010] NSWADT 166 Category: Costs Parties: Subway Realty Pty Ltd and Strokers Pty Ltd (Applicants) Nekon Pty Ltd (Respondent) Representation: Costs M Klooster (Applicants) D Pritchard SC (Respondent) Cordato Partners (Applicants) Uther Webster & Evans (Respondent) File Number(s): 125144

REASONS FOR DECISION 1On 17 October 2013 the Tribunal dismissed the application made in these proceedings and allowed the parties the opportunity to make any submissions as to costs, failing which there would be no order as to costs. 2Both parties have filed written submissions in relation to costs. The Applicants submit that the parties should bear their own respective costs of the proceedings. The Respondent seeks an order for costs in its favour upon an indemnity basis up to the date of hearing and thereafter upon a party/party basis for the hearing date; it may be presumed that this application for costs also seeks to include the costs of written submissions later required to be made by the Respondent. 3Section 88(1) of the Administrative Decisions Tribunal Act 1997 provides that parties are to bear their own costs of proceedings unless the Tribunal is satisfied that it is "fair" to order that one party should pay another party's costs. 4The factors which the Tribunal may take into account in determining whether it is "fair" to make a costs order are set out within section 88(1A), as follows: (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. 5It can be seen, particularly having regard to the ambit of section 88(1A)(e) above, that the Tribunal is given a wide discretion as to the matters which it may take into account in considering whether a costs order should be made. 6In relation to the requirement that the Tribunal must be satisfied that it is "fair" to make a costs order, Basten JA in AT v Commissioner of Police [2010] NSWCA 131 observed as follows: 33 That approach does not diminish the force of the general principle that each party should bear its own costs in the Tribunal, a principle applicable at both first instance and before the Appeal Panel. Although an order varying the general rule may be made "only if" the relevant criterion is satisfied in a particular way, there is a relatively low hurdle for an applicant seeking an order. The criterion of "fairness" will take into account the compensatory purpose of an award of costs, which will generally favour the successful party. The circumstances in which fairness may be identified are indicated by the specific attributes listed in sub-s (1A), but subject to the generality of paragraph (e), read in its context. Other considerations will no doubt include the nature of the jurisdiction of the Tribunal which is invoked and the objects identified in s 3(b)-(g) of the Tribunal Act. 7The stated objects of the Administrative Decisions Tribunal Act 1997 include, at section 3(b) and (c): "b. To ensure that the Tribunal is accessible, its proceedings are efficient and effective and its decisions are fair; c. To enable proceedings before the Tribunal to be determined in an informal and expeditious manner, ...." The effect and implementation of these provisions was discussed by President O'Connor in Jones and Anor v Ekermawi (No. 2) (EOD) [2013] NSWADTAP 18: "(7) The neutral costs rule of the Tribunal serves the goal of access that has underpinned the creation of tribunals of the present kind ... (8) Therefore the tribunal should, and we believe does, exercise great circumspection around making first instance costs orders ..." 8It is relevant to note that the Appeal Panel in Jones was dealing with an application brought within the Equal Opportunity Division of this Tribunal. Although the principle of accessibility underpins the fundamental presumption that each party in any Tribunal proceedings should bear its own costs, there are many decisions of this Tribunal which confirm that, in considering whether it is "fair" to award costs in proceedings brought within the Retail Leases Division, the commercial nature of such proceedings is a relevant factor mitigating toward a costs order being made. An example of this approach is contained within the Tribunal decision in Adwell Holdings Pty Ltd v Ull Pty Ltd [2010] NSWADT 166: "(22) The proceedings are commercial in nature, arising from two parties who are acting in trade and commerce. One significant effect of the amendment to section 88 is that the notion of 'fairness' is to broaden the basis upon which the costs might be awarded, particularly in a jurisdiction which is commercial in nature." 9In the present proceedings, careful consideration has been undertaken of the submissions made by each of the parties. Having reviewed those submissions in the light of the findings set out within the principal decision, it is considered appropriate that a partial costs order should be made. 10The Respondent submits that success of itself is a material matter relevant to consideration of a costs order. While this may often be a threshold factor, there must be something more than simply a party's success to establish that it is fair to make a costs order in its favour. 11The original claims made by each of the parties, when the respective supporting evidence is examined, can be accepted as tenable. However, an important factor to be taken into account is the distinct change of direction taken by the Applicants at the outset of the hearing. 12At the commencement of the hearing, the Applicants abandoned their contention that the letter between the parties dated 7 September 2011 was a binding agreement between them, and instead claimed that the Tribunal should make an order pursuant to section 72(1) of the Retail Leases Act 1994 (the "RL Act") that there be "modification" of the new lease proposed to be entered into by the parties. It was claimed that this modification should be in accordance with the terms of the above letter dated 7 September 2011. Two new grounds were put forward in support of this claim for modification: the Respondent had engaged in misleading and deceptive conduct, and; it was also estopped from seeking to have the parties enter into any new lease which did not provide a licensed seating area on terms in conformity with those of the 7 September 2011 letter. 13After review of the provisions of section 72 of the RL Act, it was held that this Tribunal does not have the power to "modify" a lease as was sought by the Applicants. 14Notwithstanding the above finding, an examination of the evidence was undertaken to determine whether any false or misleading behaviour on the part of the Respondent had occurred which might justify such an order, or whether the Respondent was now estopped from not providing a licensed seating area to the Applicants upon the terms as sought. 15The new arguments which were relied upon by the Applicants at the hearing were ultimately unsuccessful, but were not untenable. It is not the failure of the Applicants' case which should attract a costs order but the fact that these new grounds were raised at such a late stage and without any prior notice. The Respondent had prepared for a hearing which involved issues which were fundamentally different to those which were actually presented by the Applicants. It should be noted that, when appraised of this new case, the Respondent initially proposed an adjournment but eventually elected to proceed upon the basis that it would be given an opportunity to make further written submissions after the hearing. 16The new grounds upon which the Application was based at the hearing could have been addressed at a much earlier stage by the Respondent if they had previously been notified. There is no satisfactory explanation as to why this significant change took place at such a late stage and why it was not notified to the Respondent or to the Tribunal before the hearing commenced. A not insignificant amount of additional work was subsequently required to be undertaken on the part of the Respondent in meeting this change and then preparing written submissions which probably could have been avoided. 17In summary, although the evidence remained the same, the Respondent had to meet what was almost an entirely new case on the day of the hearing without prior notice and had to then prepare written submissions to deal with this new case. It is therefore considered fair that the Respondent should pay the Applicants' costs of the hearing day, and its written submissions following hearing.