ACN 079830595 Pty Ltd t/as Jolly Joe's Fish 'n' Chips v Wallis Lake Fisherman's Co-Operative Ltd

7 On or about 5 June 2008 the Appeal Panel made a decision which dismissed the appeal and refused leave to extend the appeal to a review of the merits of the decision. Directions were made for the provision of submissions as to costs, but it appears that submissions were not received because the respondent appealed the matter to the Supreme Court.

8 On 5 September 2008 the Supreme Court heard the appeal with the result that the appeal was allowed, and the orders of both the Appeal Panel and the President of the ADT were set aside. The defendant was ordered to pay the costs of the appeal, and the proceedings were remitted to the Tribunal for determination according to law.

9 The matter came before the currently constituted Tribunal on 30 March 2009, and the ultimate orders made by the Tribunal were that the respondent pay to the applicant the sum of $36,778.00 in damages, $5,781.10 being the loss of sales and equipment costs, and $6,000.00 damages for unconscionable conduct. The only question before the current Tribunal was the assessment of damages. In total the respondent was ordered to pay the sum of $48,559.00 which was exclusive of interest and costs.

10 The Supreme Court costs were the subject of an order by the Supreme Court, and do not require consideration by this Tribunal. Accordingly, this decision pertains to the costs of the parties before the Tribunal.

Law 11 The Tribunal is required to have regard to the terms of s.88 itself, which provides as follows:- Section 88 Costs Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.

(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,

(e) any other matter that the Tribunal considers relevant.

(a) determine by whom and to what extent costs are to be paid, and

(b) order costs to be assessed on a basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis.

(3) However, the Tribunal may not award costs in relation to proceedings for an original decision unless the enactment under which the Tribunal has jurisdiction to make the decision provides for the awarding of costs .

(4) In this section, "costs" includes: (a) costs of or incidental to proceedings in the Tribunal , and (b) the costs of or incidental to the proceedings giving rise to the application , as well as the costs of or incidental to the application . 12 The proceedings are commercial in nature, arising from the relationship between two parties who are acting in trade and commerce. One significant effect of the amendment to s.88 is that the notion of 'fairness' is to broaden the basis upon which costs might be awarded, particularly in a jurisdiction that is commercial in nature. In Salon Today Pty Ltd v MMIR Pty Ltd [2009] NSWADT 71, the Tribunal said: "What the Parliament has done…is to recognise that there is a need for this Tribunal to be more flexible and widen the scope of a litigant's entitlements to costs. This is a concept generally that is now accepted in this Division [Retail Leases Division]…." (paragraph [72]) 13 The Tribunal considered the nature of the Retail Leases Division in the context of costs in Rucom Pty Ltd and Anor v Multiplex and Ors [2010] NSWADT 1. Having reviewed the authorities, Judicial Member Molloy said at paragraph 37: "So, it is plain to me, that not only is this Division a commercial division dealing with commercial issues between lessors and lessees in a retail lease environment, but, and in addition, proceedings should only be commenced in this Tribunal after very careful consideration of the merits of the case: see Trust Company of Australia Ltd v Craig [2005] NSWADT 65 at [44]. After all, commencing proceedings without such consideration inevitably results in considerable expense being incurred by the other party and one might not unreasonably ask: "why should the other party have to bear those expenses when the proceedings should not have been commenced in the first place?" 14 Adverting to s.88, the applicant pointed to a number of factors which it said supported a finding that it was fair that it had its costs paid by the respondent. 15 The applicant addressed the conduct of the respondent, submitting that it had pursued a course of "bullying and coercive behaviour" which was "premeditated" and "carefully orchestrated to make life as difficult for [Mr Morris] as possible." This conduct began before the applicant was ejected from the premises and, it was said, continued throughout the proceedings before the Tribunal. The applicant said that there were several directions hearings that were adjourned on the application of the respondent, who said that they had insufficient information with which to prepare their response. On one occasion, the respondent did not attend a directions hearing.

16 It was submitted that the hearing before the first Tribunal took three days principally because the respondent spent most of the first day arguing for an adjournment of the matter and the bulk of the remaining days cross examining the applicant's director, Mr Morris, on his claim for financial loss.

17 The applicant also pointed to what it said was the failure of the respondent to engage in any meaningful way in settlement discussions. It is noted that at least three offers to settle were made by the applicant and the respondent made two offers. With the exception of the first offer made by the applicant during mediation in 2006, in which it offered to accept the sum of $50,000.00 none of the offers of either party came within a reasonable range of the final result. It is not entirely clear whether that offer (of $50,000.00) was expressed to be inclusive or exclusive of costs, since it was made during mediation. The applicant's written submissions on costs assert it was exclusive of costs on page 4, but inclusive of costs on page 8. The Tribunal is prepared to accept that given that the offer was made in the very early stages of the litigation when costs were likely to have been relatively small, the sum of $50,000.00 was reasonable.

18 The applicant made a submission that the costs of the proceedings for the applicant were out of proportion to the final result but through no fault of its own. Once again, the applicant cited the conduct of the respondent.

19 The respondent on the other hand contended that it should have its costs paid by the applicant because: a)the applicant was late in serving its relevant financial records just prior to the (first) hearing

b)those financial records largely related to the losses of Mr and Mrs Morris, not the applicant company and were therefore irrelevant

c)the applicant was unsuccessful in the Supreme Court and the fact that a rehearing on the question of damages was required was due to the way in which the applicant, rather than the respondent, had presented and pressed its case. 20 Turning to the terms of s.88 itself, subsection (a) entitles the Tribunal to consider whether either party has conducted itself in a manner which has unnecessarily disadvantaged another party. A review of the history of the matter leads to the conclusion that both parties have been responsible for some delay in the matter reaching a conclusion. The applicant was slow in providing its financial evidence and the respondent caused a number of directions hearings to be adjourned. The fact that a matter was the subject of an appeal and that some evidence was rejected as irrelevant are matters which arise in the ordinary course of litigation and do not, without more, amount to conduct which unnecessarily disadvantages a party and I am not persuaded that they are matters which invoke the subsection. 21 The next subsection relates to whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings. The hearing before the first Tribunal took three days - 2 and 3 April 2007 and 21 June 2007. The applicant's director Mr Morris was cross examined extensively, principally on his financial records. Whilst this cross examination was protracted, I am not satisfied that it was unnecessary or prolix, particularly since the quantum of damages was a critical part of the applicant's case.

22 It might be said that both parties were responsible for some delay- the applicant in filing and serving its evidence and the respondent in conducting the hearing but I am not persuaded that the conduct of either was such that it could be said that they were responsible for unreasonably prolonging the case.

23 The fact that the respondent lodged an appeal to the Appeal Panel and then to the Supreme Court does not, of itself, attract the operation of the subsection, particularly in circumstances where the second appeal was successful.

24 The third subsection relates to the relative strengths of the claims made by each of the parties. The respondent says that the applicant was largely unsuccessful, pointing to the difference between the damages claimed and the damages awarded. I do not agree with this approach. The applicant was successful in its claim for damages and was successful in proving unconscionable conduct. The fact that the quantum of damages was reduced on appeal does not derogate from the original findings on liability. Both parties had arguable cases and both advanced them robustly but not unreasonably.

25 The Tribunal may also have regard to the nature and complexity of the proceedings. It may have regard to any other matter which it considers relevant.

26 The Tribunal observes that in 2006, at mediation, the applicant made an offer to settle the proceedings which was realistic and reasonable at a time when the costs of both parties would have been at their least.

27 The applicant was successful in its retail tenancy and unconscionable conduct claim. The applicant lost what had been a profitable business which had operated for a number of years.

28 The respondent was successful on appeal only in respect to damages and the damages which were ordered as a result of the rehearing were within $2000.00 of the amount for which the applicant offered to settle the proceedings in 2006.

29 In all of the circumstances, the Tribunal considers that it is fair to award the applicant its costs in the proceedings, on the ordinary basis (that is, party-party).

30 The applicant sought an order for interest. The award of interest, permitted by virtue of s. 72A of the Retail Leases Act 1994 is discretionary. It is compensatory and not punitive: Grogan v Thiess Contractors Pty ltd [2000] NSWSC 1101.

31 In the circumstances the Tribunal is satisfied that the applicant should be entitled to recover interest on damages which represented the loss to him of his business, occasioned by the respondent's unconscionable conduct. The respondent paid the award of damages on 10 March 2010 by setting off against the judgment sum the amount of assessed costs awarded to it in the Supreme Court proceedings. In other words, the applicant received the sum of $20,391.10. The applicant seeks an order that interest be calculated from the date of the decision of the first Tribunal.

32 I consider that it is appropriate to order interest on the judgment amount awarded by this Tribunal from the date of the decision of the first Tribunal until the date it was paid. That is, interest is awarded on the sum of $48,559.00 from 14 December 2007 until 10 March 2010.

33 The applicant also sought an order for interest on costs. It was said in submissions that the applicant's costs have not been paid since late 2007/ early 2008. The Tribunal is reluctant to have regard to matters in submissions about which there is no evidence, particularly as the matter is being determined on the papers.

34 The principal rationale underpinning an order for payment of interest on costs is to compensate the successful litigant for having relevantly been out of pocket from having arranged payment of legal costs to its legal representatives during the course of lengthy proceedings: McWilliams Wines Pty Ltd v Liaweena (NSW) Pty Ltd (1993) 32 NSWLR 190 at 192.

35 More recently in Grogan v Thiess Contractors Pty Ltd, Barr J confirmed (at paragraph 12) that the legislative purpose behind s 95(4) 'is not to penalise but to recompense a litigant for being out of pocket whilst the other side has had the use of the money.' Furthermore, in Grogan Barr J stated (at paragraph 11) that factors that the Court may take into account in deciding whether to award interest on costs include: 'the amount of costs paid, the length of time the claimant has been out of pocket before recovery, whether during the time between commitment and assessment the respondent has been relieved of the need to borrow at interest or has obtained the advantage of leaving monies invested at interest and how the parties have conducted themselves during the litigation.'"

36 In the absence of evidence as to the amount of costs paid, the length of time that the applicant has been out of pocket and in view of the comments made herein about the conduct overall of the parties, I am not persuaded that it is appropriate to make an order for interest on costs. 37 Therefore the final orders will be: i)respondent to pay the applicant's costs of the proceedings in the Tribunal ii)respondent to pay interest on the final judgment sum of $48,559.00 from 14 December 2007 until 10 March 2010.

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.