Victorian Civil and Administrative Tribunal|1999-08-31

Le Coz v Innominata Pty Ltd [1999] VCAT 1599 (31 August 1999)

Retail Tenancies List - Proceeding as to reasonableness of proposed assignment - Costs

For the Applicant: Mr Gorton of Counsel, instructed by Michael Rickards

[1] On 25 June 1999 I published reasons for decision which substantially adjudicated this matter in favour of the applicant tenant. She was seeking a Tribunal order either declaring that the respondent landlord was obliged to consent to a proposed assignment of her tenancy or requiring the landlord so to do.

[2] For reasons which I gave at paragraph 52 of the decisions, I did not at that stage pronounce final orders giving substantive relief because of some further uncertainty as to the quantum of certain legal costs of consent. The moment for that pronouncement has not arrived even today. Nevertheless, the parties have today put submissions before me as to what costs order should be made with respect to the hearing and my adjudication.

[3] Mr Gorton on behalf of the successful tenant submits that his client should have her costs and that the costs should be fixed in accordance with County Court Scale "D" . He said that this was the appropriate scale because a success for the applicant in this proceeding meant her ability to take the benefit of a $120,000 sale contract, which figure is within the range of County Court Scale "D". Mr Gorton seemed to flirt with making a submission that the costs should be fixed not as between party and party but rather as between solicitor and client but I did not understand him seriously to press the latter point. He says that the respondent landlord's case was unmeritorious and that amongst other things, it entailed an allegation of illegality made late and not withdrawn until the hearing of the matter. That in itself, in Mr Gorton's submission should have attracted a costs order.

[4] At the outset I should say that I reject that submission. True it is that the respondent amended its points of defence to allege illegality. The illegality alleged was that the $120,000 consideration payable as between the tenant and the proposed assignee amounted to illegal key money. This was not an allegation of fraud and the person representing the applicant at the directions hearing at which I gave leave for the amendment to be made was clearly as I recollect it, unintimidated by the allegation. The allegation was not pressed at the hearing and in the circumstances I am unpersuaded that it led to any significant increase or perhaps any increase at all in the costs which the tenant would otherwise have incurred.

[5] Mr Gorton then said that the reasons which I published dealt at length with a litany of points made by the landlord in opposition to the proposed assignment which I universally rejected. That in Mr Gorton's submission was indicative of a lack of merit in the landlord's case and the effect of the reasons that I gave entailed a specific finding that in the circumstances the landlord had acted unreasonably. That finding in itself said Mr Gorton, should lead to a costs order being made.

[6] Mr Best on behalf of the landlord opposed the making of any costs order. He submitted correctly that the question of costs is governed by Section 109 of the Victorian Civil and Administrative Tribunal Act 1998. Sub-section (1) of that Section creates a presumption that in the Tribunal, save where express provision is made to the contrary in an enabling enactment, costs lie where they fall. The balance of the Section's six sub-sections deal with exceptions to the general rule that the costs lie where they fall. The most material statement of those exceptions is to be found in sub-section (3). It states a series of considerations which may lead to a departure from the general principle and describes them in sub-paragraphs numbered (a) to (e).

[7] It was not suggested, as I understood Mr Gorton's submission, that the landlord had conducted this proceeding in a way that unnecessary disadvantaged the tenant by way of failing to comply with directions causing adjournments and the like and accordingly, sub-paragraph (a) is irrelevant.

[8] The balance of the sub-paragraphs may have some relevance and I will quote them in full:

"(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceeding;

(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 the Tribunal considers relevant."

[9] Mr Best said that there were two reported decisions upon the operation of Section 109, at least so far as it pertains to this List. One being a decision which I gave in the matter of Malthall v Illiopoulous and Bevendale Pty Ltd (No. 2) (1998) v ConvR 58-528 in which I said that given that the nature and complexity of proceedings was a factor relevant to a departure from the general rule laid down by Section 109(1) it might be thought the proceedings in this List, being by their nature commercial litigation, would generally attract an order on the basis of costs following the event despite the general principle to be found in sub-section (1).

[10] Secondly, a decision of Judge Davey in Stellbridge Pty Ltd v Hand Bags International Pty Ltd (1999) V ConvR 58 - 532 where he doubted the correctness of the approach which I had taken. His Honour said it was wrong to adopt a list by list approach or to suggest that Section 109 of the Victorian Civil and Administrative Tribunal Act 1998 did not apply in this List. In His Honour's view the proper course was in light of the presumption laid down by Section 109(1) to consider the relevant factors for the exercise of the costs discretion set out in Section 109 by reference to the facts of each individual proceeding. One could scarcely disagree with His Honour's comments in that regard, though with all respect it seemed to me that the implied criticisms of the approach that I had adopted in Malthall were perhaps a trifle unjust. The summary that I have given of what I said in Malthall indicated that far from suggesting that Section 109 did not operate in this List, I reached a view as to the incidents of costs in the List specifically by reference to the Section and in specific reliance on one of its provisions, namely Section 109(3)(d). Moreover, I was not seeking, though perhaps my language was a trifle inexact, to suggest that one did not have to look at the facts of each individual case. What I meant was merely that the nature of the proceedings in this List would, upon each individual analysis of them, be likely to lead to a particular result.

[11] Mr Best however, correctly observed that apart from any broad principles of this sort, the costs order made in Malthall was justifiable and should be regarded as justified by considerations that have no relevance at all to this proceeding. In Malthall I found that the case which the applicant tenant was seeking to mount was one which the Tribunal simply had no jurisdiction even to entertain. In those circumstances, it was proper to regard the proceeding as frivolous and vexatious and it must follow that if there was no jurisdiction even to entertain the claim, so far as this Tribunal was concerned, the claim made by the applicant had no tenable basis in law, thereby invoking Section 109(3)(c). What Mr Best says in that regard is, if I may say so, manifestly correct. I should say however that I am unrepentant for what I said in Malthall.

[12] Mr Best says that that approach, taken at its full flood, appears to negate the presumption that costs lie where they fall in Section 109(1). I disagree. Section 109 applies right across the conspectus of the Tribunal's jurisdiction, except where enabling enactments make specific provision to the contrary. It applies not just in the Civil Division but also in the Administrative Division. In its recent decision in Transport Accident Commission v Bausch [1998] 4 VR 249 the Court of Appeal has cited with approval a statement in the Federal Court relative to the jurisdiction of the Commonwealth Administrative Appeals Tribunal that in an administrative review application, which is the class of matter dealt with in the Administrative Division of this Tribunal, there is no between the parties and therefore, a simple application of the rules applicable to an adversary court proceeding is misconceived. Those remarks were echoed by the Court of Appeal in the matter of Transport Accident Commission v O'Reilly [1998] VSCA 106.

[13] The operation of the presumption of costs lying where they fall to be found in Section 109 must be judged by reference to the operation of the section right across the Tribunal's jurisdiction. The hearings in this List represent a relative handful compared to the totality of the proceedings in which Section 109 applies. Even if the ill-judged (in the view of some people) view which I adopted in Malthall were to prevail, viewed across its total operation, Section 109's presumption that costs lie where they fall is not subverted.

[14] Having said so much, it is obvious that a simple application of what I said in Malthall would lead to the making of the costs order sought by Mr Gorton. Nevertheless, I believe that independently of that, there are other reasons why in the circumstances, this costs order should be made. It cannot be said that the hearing before me took an inordinate length of time, nevertheless there were some 13 issues ventilated by the respondent and ventilated with the utmost vigour. The principal director of the assignee company, Mr Cotroneo was subjected to a most vigorous and intrusive cross-examination as to his financial affairs, those of his family and his career and I think some of the cross-examination no doubt prosecuted with the best of motives, was frankly a little belittling of him, suggesting as I understood it that he was a man unable to stand on his own feet without being propped up by his parents. I made a finding that the landlord had acted unreasonably and in my view the landlord's position which I found was ultimately unsustainable, was maintained with full and in my view, overfull vigour. Moreover, whilst Mr Best submitted to the contrary, saying that there were no complex issues of fact or law involved, I note that my reasons for decision occupy some 52 paragraphs and some 39 A4 pages. The issues raised did require a relatively elaborate analysis.

[15] Mr Best submitted it would be unfair that his client should bear any costs burden because it had a case which was manifestly arguable and not clearly without substance. There were a number of respects in which I have made findings and adopted approaches which as far as I know have not been the subject of any authoritative guidance from any superior court. I have to acknowledge it is conceivable that another or more authoritative adjudicator may have come to a different view to the one that I adopted. Included amongst those matters is the possibility that the references referred to in the lease and in the Retail Tenancies Reform Act 1986 could be doubled up so that the one document could operate as a reference for more than one purpose. Another contentious issue was whether merely referring the landlord to an individual who might provide a statement or testimonial by word of mouth, constituted the giving of a reference. Further, there are a substantial number of authorities referred to in my reasons which were cited to me. In many respects they state matters that are perhaps trite and well established. However, the total effect in my view is to create a proceeding that is attended by complexity both in fact and of law.

[16] In those circumstances I believe that independently of any view taken as to the nature of proceedings in this List generally and the nature of this proceeding as a dispute between landlord and tenant as to commercial premises this is a matter attended by substantial complexity, both of fact and law.

[17] In all those circumstances I think that the successful tenant should have her costs and that they should be fixed in accordance with the scale submitted by Mr Gorton.

[18] I have just completed giving my reasons why the respondent should be required to pay the applicant's costs of this proceeding. I had indicated an acceptance of Mr Gorton's submission that those costs should be fixed in accordance with County Court Scale "D".

[19] At that point Mr Best rose and said that he had abstained from making submissions as to the scale upon the basis that he would have a further opportunity to make those submissions which I then heard. He said that in the case of Malthall to which I made some reference in my substantive reasons, I adopted the annual rental as a guide to which scale to apply and I found that it fell within County Court Scale "D". The annual rental here Mr Best observes, is the sum of $30,000. Application of a similar criterion would lead to the matter being adjudicated in the Magistrates' Court and therefore according to its scales.

[20] In my view this is not an appropriate approach to take. The proper approach in my view is to consider the value of the property which is in dispute. The reference to the annual rental in Malthall was not intended to exclude from consideration the total rent which was payable throughout the term of the lease. Rather, it was sufficient by reference to the annual rental to show that the property in dispute brought the matter within the range of the highest County Court Scale, without enquiring as to what further rental was payable in future years.

[21] Here, Mr Cook, the landlord's principal director, gave evidence that he confidently expected that the annual rental of these premises would be increased to $80,000 when a review to market was completed shortly. I did not see fit to doubt that evidence and Mr Cotroneo the director of the proposed assignee, produced figures which as I understood them, indicated that he supposed the rental would be increased to $60,000. In either event, those figures in themselves would be sufficient to bring the matter within the range of County Court Scale "D".

[22] Moreover, as Mr Gorton has observed there is a $120,000 sale contract which will be completed or otherwise on the basis of the outcome of these proceedings. I have forgotten just how many further years to run in this lease but there are more years and there is an option. In my view it is proper to regard this proceeding as having at least $50,000 and more at stake with respect to it and accordingly I will proceed to make the order in the form which I did, despite the further matters which have been raised by Mr Best.

[23] I should also note one further submission which he made, to which I should have dealt with earlier in my costs ruling and that was that it would be proper to take into account the fact that the lease in dispute here is one governed by the 1986 Retail Tenancies Act. The provisions under that statute were that disputes were to be referred to arbitrators and that there was to be no costs consequences save where a party acted frivolously and vexatiously, that is as a statement of the situation that existed under the 1986 Act manifestly correct. Parliament however has seen fit to refer this matter now to this Tribunal, costs in which are governed by Section 109 of the Victorian Civil and Administrative Tribunal Act. Parliament presumably intended that Section 109 would apply to the costs of such proceedings and I have already explained why in my view the application of that section leads to the orders which I have indicated.

Civil and Administrative Tribunal Act 1998

Tenancies Reform Act 1986

Le Coz v Innominata Pty Ltd [1999] VCAT 1599

At a glance

Court

Decision date

Source

Judgment (30 paragraphs)

Le Coz v Innominata Pty Ltd [1999] VCAT 1599 (31 August 1999)

Parties

Legislation Cited (2)