Administrative Decisions Tribunal New South Wales Medium Neutral Citation: Bardot v Horowitz [2013] NSWADT 283 Hearing dates: Decision on the papers Decision date: 09 December 2013 Jurisdiction: Retail Leases Division Before: Hon G Mullane, Judicial Member Decision: 1) The Application of Bessie Mahalia Bardot filed 27 August 2013 is dismissed 2) The Applicant must pay the Respondent's costs of and incidental to opposing the application, such costs to be as agreed or as assessed. Catchwords: Unconscionable conduct claims - out of time, cross claim not made in previous proceedings by lessor- abuse of process lessee Legislation Cited: Retail Leases Act, 1994 Cases Cited: Johnson v Gore Wood and Co. [2002] 2 AC; Barrow v Bankside Agency Ltd [1996] 1 SLR 257; Henderson v Henderson (1843) 67 ER at 319; Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589. Category: Principal judgment Parties: Bessie Mahalia Bardot (Applicant ) Alexander Horowitz (Respondent) Representation: B Bardot (Applicant in person) Horowitz & Bilinsky Lawyers (Respondent) File Number(s): 135112 reasons for decision INTRODUCTION 1The Application raises three claims, all of which are described as unconscionable conduct claims. 2The Respondent landlord seeks to have the Application dismissed with costs. He raises three Grounds, which are: 1) The Application has been lodged out of time; 2) The Applicant failed to raise these claims in previous proceedings between the same parties regarding the Landlord's claims for rental arrears and other claims under the lease;and 3) The claims subject to these proceedings properly belong to the Tenant; not the Applicant. BACKGROUND 3The dispute between the parties arose from a retail lease. The Respondent was the landlord. The tenant was not the Applicant. It was a company Ratnasabapathy Pty Ltd of which the Applicant was a Director. The lease was for a term of 5 years from 1 July 2007 and was in respect of a retail shop in Crown Street, East Sydney. The Applicant was a Covenantor to the lease. 4Clause 77 of the lease provides for the Covenantors to be jointly liable with the tenant in respect of the tenant's covenants in the lease, including payment of rental. 5The tenant breached its obligation to pay the rental and the Landlord entered into possession of the premises on about 15 December 2009. There were subsequently proceedings in the Tribunal by the Landlord against the Covenantor (the Applicant in these proceedings) in respect of arrears of rental and interest, and expenses for a new lease. 6In those proceedings, on 11 October 2012, the Covenantor told the Tribunal that she had a cross-claim against the Landlord. The Tribunal ordered her to: 1) file and serve a Notice of NSW Based Representation of a solicitor or agent acting on her behalf by 26 October 2012; and, 2) file and serve her cross-claim, if any, by 9 November 2012. 7The Covenantor did not comply with either of those orders. 8Those proceedings were heard by the Tribunal and the decision of 4 March 2013 ordered the Covenantor to pay a total of $51,287.00 for rental arrears, expenses for the fresh lease to a new tenant, and interest. The Covenantor was also ordered to pay the Landlord's costs. 9The Covenantor appealed the decision of 4 March 2013. At the hearing on 30 July 2013, the Appeal was dismissed, the prior decision was confirmed and the Covenantor was ordered to pay the Landlord's costs of the appeal. 10The Covenantor filed this application on 27 August 2013. GROUND 1: IS THE APPLICATION OUT OF TIME? 11The Landlord re-entered and took possession of the premises on about 15 December 2009. 12The claims raised by the Applicant in the Application are in relation to conduct on or prior to the Landlord taking possession of the premises. Section 71A of the Retail Leases Act, 1994 provides: 71ALodging of unconscionable conduct claims with Tribunal (1) A lessor or lessee, or former lessor or lessee, under a retail shop lease or former retail shop lease may lodge an unconscionable conduct claim with the Tribunal for determination of the claim. (2) A claim may not be lodged more than 3 years after the alleged unconscionable conduct occurred. (3) In this section: lessor or lessee under a retail shop lease or former retail shop lease includes a person who is a guarantor or covenantor under a lease or former lease. 13Claims raised by the Covenantor clearly arose more than 3 years before she filed the Application on 17 August 2013. The application is out of time. 14Section 71B(1) provides that an unconscionable conduct claim may be lodged more than three years, but no later than six years after the alleged unconscionable conduct, if, on application and submissions by the party, the Applicant satisfies the Tribunal that it is "just and reasonable to make the order". 15The Applicant has made no such application. 16Even if the claims made by the Covenantor were not unconscionable conduct claims, but retail tenancy claims, there are similar provisions regarding retail lease claims in section 71 and s71B that would be fatal to the application as it would be outside the limitation period of three years and no application under s 78B has been made. 17The application should therefore be dismissed. GROUND 2: THE COVENANTOR FAILED TO RAISE THESE CLAIMS IN PREVIOUS PROCEEDINGS 18The second claim of the Covenantor Applicant is for compensation of $167,413.00 for stock, plant and equipment in the premises, which the Covenantor alleges was offered to the Landlord before the Landlord's re-entry as satisfaction of the claim for unpaid rent, was located in the premises when the Landlord re-entered, and has been retained by the Landlord. It was open to the Covenantor to have raised this issue in the earlier proceedings as a defence or cross claim to the rental claim. But she did not. 19There is a long line of authority that emphasises the need to bring finality to civil disputes litigated in a court (or tribunal) which includes principles of abuse of process, res judicata and issue estoppel. It has been held by the House of Lords that: The underlying public interest is the same: that there should be finality in litigation and that a party should not be twice vexed in the same matter. This public interest is reinforced by the current emphasis on efficiency and economy in the conduct of litigation, in the interests of the parties and the public as a whole. (Johnson v Gore Wood and Co. [2002] 2 AC 1 at 31 per Lord Bingham.) 20In that case a company had sued on a claim against a defendant and settled. Then a shareholder of the company sued the same defendant based upon substantially the same facts. At [27] Lord Bingham quoted with approval a passage from the decision of the Court of Appeal in Barrow v Bankside Agency Ltd [1996] 1 SLR 257 at 260: The rule in Henderson v Henderson (67 ER at 319) requires the parties, when a matter becomes the subject of litigation between them in a court of competent jurisdiction, to bring their whole case before the court so that all aspects of it may be finally decided (subject, of course, to any appeal) once and for all. In the absence of special circumstances, the parties cannot return to the court to advance arguments, claims or defences which they could have put forward for decision on the first occasion but failed to raise. The rule is not based on the doctrine of res judicata in a narrow sense, nor even on any strict doctrine of issue or cause of action estoppel. It is a rule of public policy based on the desirability, in the general interest as well as that of the parties themselves, that litigation should not drag on forever and that a defendant should not be oppressed by successive suits when one would do. That is the abuse at which the rule is directed. 21The House of Lords said that applying the rule involved: "A broad, merits-based judgment focusing attention on the crucial question whether, in all the circumstances, a party is misusing or abusing the process of the Court by seeking to raise before it [and] issue which could have been raised before." 22The Respondent relies upon the High Court decision of Port of Melbourne Authority v Anshun Pty Ltd (1981) 147CLR589 at 602, as authority for the proposition that a party cannot raise an issue in subsequent proceedings in circumstances in which it is unreasonable for the issue not to have been raised in the first proceedings. 23That decision related to a situation where an owner and hirer of plant were sued for damages arising out of the use of the plant. Liability was apportioned between the Defendants. The owner then brought a separate action seeking to rely upon a contractual indemnity by the hirer against loss caused to the owner from use of plant. The High Court held that it was unreasonable for the indemnity issue not to have been raised in the first proceedings and the owner was estopped from bringing the second claim because of that. 24Whilst claims 1 and 3 by the Covenantor are not so closely related to the rental issue, the second claim, being in respect of the value of stock, plant and equipment allegedly retained by the Landlord, is clearly a cross-claim that the Covenantor should have raised in the first proceedings but failed to do so. In all the circumstances, including the Order for the Covenantor to file her cross-claim, it is unreasonable and an abuse of process for the Covenantor to now raise separate proceedings in respect of that claim. THE THIRD GROUND: THE CLAIMS THE SUBJECT OF THE APPLICATION PROPERLY BELONG TO THE LESSEE COMPANY 25The first ground relates to conduct of the Landlord alleged to have frustrated a sale of the business (and transfer of the tenancy). The Covenantor refers to the business as her business. However, it was the company that owned the lease and it appears the company owned the business being conducted on the premises. There is no evidence of any sublease. 26Similarly, the Third Ground in the Application, "Leased building to buyer I introduced to him", seems to allege that the Landlord, "aggravated" a proposed sale of the business and the lease and then leased the premises to the company that had been the proposed purchaser. Again, on the face of the document, it appears the claim might be made by a tenant but is not open to the Applicant Covenantor to make, because she was not the tenant and did not own the business. 27The Second Claim of the Covenantor in the Application on the face of it is subject to the same defect in that she seeks credit for $167,413.00 being the alleged value of stock, plant and equipment she alleges was "given as payment for outstanding rent". But she does not allege that such stock, plant and equipment was hers. It would appear on the face of it that the tenant was the owner and the claim is a claim that should have been made by the tenant and can't succeed. 28This ground succeeds in relation to all 3 claims in the application. CONCLUSION 29All 3 grounds of the Landlord's application to dismiss the Covenantor's application succeed and the Covenantor's application must be dismissed. COSTS 30The Respondent seeks costs. Section 77A of the Retail Leases Act 1994, gives the Tribunal power to award costs under s88 of the Administrative Decisions Tribunal Act 1997. 31Section 88 provides that generally each party to proceedings is to bear the party's own costs, but then says in ss88(1A), that a costs order can be made if the tribunal is satisfied: "That it is fair to do so having regard to" the relevant matters listed in ss88(1A). 32Under that provision the Tribunal now takes into account the following: i) The Covenantor failed to comply with a Direction of the Tribunal made in the previous proceedings regarding any cross-claims and has not disclosed any reasonable excuse; ii) The Covenantor failed to comply with the requirement of the section s71B, that she file an application for an order by the Tribunal that her claim can be lodged out of time; iii) The covenantor's application is out of time and prohibited by the Retail Leases Act 1994; and iii) The Applicant Covenantor did not raise any of the claims as a defence or cross claim in the previous proceedings and it would be unfair and unreasonable for her now to be able to raise further proceedings on those issues. 33Given the above reasons, it is fair that the Applicant pay the Respondent's costs. ORDERS 34The Orders of the Tribunal therefore are: 1) The Application of Bessie Mahalia Bardot filed 27 August 2013 is dismissed; 2) The Applicant must pay the Respondent's costs of and incidental to opposing the application, such costs to be as agreed or as assessed. ********** 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. Decision last updated: 09 December 2013