In this matter, Loretta Suiwen Shen (the applicant) is the lessor of the premises at Shop No [****] in a complex called the Quadrant Broadway, Ultimo (the premises). Sarah Bonita (the first respondent) is the lessee under a lease of the premises (the lease). The applicant filed an Application for an Original Decision against the first respondent and against Joshua Lie (the second respondent) and Timothy Go, as guarantors. Proceedings were not continued against Timothy Go.
On 25 June 2015 the Tribunal published my Reasons in Loretta Suiwen Shen v Sarah Bonita, Joshua Lie and Timothy Go (2015) NSW CATCD49.
In those Reasons, I found that the first respondent breached the lease and damages were owing. Order number 2 stated:
Subject to written submissions, no orders as to costs.
The applicant has now made a written submission seeking 75% of her costs and the first and second respondents have made a short submission to the contrary that each party pay their own costs.
[2]
Applicant's Submission
The applicant submitted that whilst costs are discretionary, it is usual for a cost order to follow a decision. Costs are not a punishment or a reward but in the nature of an indemnity to the successful party. The applicant submitted that she acted reasonably to recover rental that was owed to her consequent upon the default by the first and second respondents.
The applicant noted that the respondents' main defence to the claim was that no outstanding rent was owed because the lease was destroyed. The lease was not registered on title at the Land and Property Information Office. The respondents' main defence was that, as the lease was for a term of more than three years and was unregistered, upon the registration of the transfer of the property from the previous owner to the applicant, the effect of section 42(1)(d) of the Real Property Act 1990 (the indefeasibility provisions) destroyed the lease thereby rendering the tenancy a periodic tenancy from month to month. An alternate defence was that the first respondent was not the lessee, but rather, the lessee was the second respondent who operated the restaurant in the premises. The respondents vacated upon giving one month's notice and stated that only rent for 1 month was due and owing.
The arguments regarding destruction of the lease were not accepted and I found that the lease survived in accordance with section 117 of the Conveyancing Act 1919. This meant that the respondents breached the lease and were liable for damages consequent on the breach, which were greater than one month's rent. I also rejected the contention made by the first respondent that she was not the true lessee and consequently the lease was void.
The second aspect of the respondents' defence was that the applicant had not undertaken appropriate mitigation of damages in seeking to relet the premises and therefore the outstanding rental claimed by the applicant should be limited to reflect such failure and not for the balance of the term of some thirteen months. I agreed to that defence, in particular because of the provisions of clause 12.6 in the lease which was the Law Society Commercial Lease, and limited the further rent claimed to four months.
The applicant submits that any relief from a cost order to which the applicant would be entitled should be limited to recognition that the respondents were successful on the mitigation point.
[3]
Respondents' Submissions
The two respondents made a very simple submission. They considered the Reasons for any decision as wise and that therefore there should be no order as to costs to the applicant as legal costs are to be borne by each party.
[4]
NACT Proceedings
The hearing went for a day. The applicant and the first respondent were represented by respective Counsel. The second respondent represented himself although in the main he relied on arguments by Counsel for the first respondent. The defences were forcefully put by Counsel relying on a series of cases in Western Australia.
[5]
Relevant Law
Section 60 of the Civil and Administrative Tribunal Act 2013 (CATA) governs the question of costs. It provides as follows:
60 Costs
(1) Each party to proceedings in the Tribunal is to pay the party's own costs.
(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.
(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to 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) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
(f) whether a party has refused or failed to comply with the duty imposed by section 36(3),
(g) any other matter that the Tribunal considers relevant.
(4) If costs are to be awarded by the Tribunal, the Tribunal may:
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on the basis set out in Division 11 of Part 3.2 of the Legal Profession Act 2004 or any other basis.
(5) In this section 'costs' includes:
(a) the costs of, or incidental to, proceedings in the Tribunal, and
(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
Rule 38 of the Tribunal Rules under the Civil and Administrative Tribunal Rules 2014 provides:
38 Costs in consumer and commercial division of Tribunal
(1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the consumer and commercial division of the Tribunal.
(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if:
(a) the amount claimed or a dispute in the proceedings is more than $10,000.00 but not more than $30,000.00 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or
(b) the amount claimed or in dispute in the proceedings is more than $30,000.00.
In a recent decision by the Appeal Panel in Gaynor v Burns [2015] NSWCATA P150 after reciting section 60 of the CATA, the Appeal Panel at [16-19] of its reasons considered 'special circumstances' as it appears in s 60(2). At [19], the Appeal Panel stated as follows:
19 in Cripps v G & M Dawson [2006] NSWCA 81 Santow JA considered the words 'special circumstances' as they appeared in s88(1) of the Administrative Decisions Tribunal Act 1997 (NSW) (repealed). That provision enabled the Tribunal to award costs in relation to proceedings before it only if it was satisfied there were 'special circumstances warranting an award of costs'. Santow JA sets out the Tribunal's statement of relevant principle at [18-19] of its reasons and concluded that the Tribunal had erred in its application of those principles in failing to find 'special circumstances' explaining at 60
60 it is not necessary to determine whether in the circumstances the appellant committed equitable fraud. In my view it sufficies that the conduct of Cripps and Jones in relying upon their status as the registered proprietors of the freehold and the doctrine of indefeasibility of title to wrongly deny registration and consequently assignment of the lease, so acted as by their conduct to give rise to special circumstances; that is, circumstances that were clearly out of the ordinary and grossly unreasonable so far as the respondent tenant was concerned. On the one hand, the Tribunal correctly concluded that the respondent, through no fault of its own, has been placed in the situation where it has been forced to pursue this litigation. Yet it still failed to find special circumstances. With respect, I consider that the Tribunal was in error in failing to conclude that special circumstances here applied. For this reason, it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional. While a finding of 'serious unfairness' is not a prerequisite to determining that there are special circumstances, it is nonetheless a highly relevant consideration.'
The Appeal Panel in Gaynor ordered that the appellant pay the costs of the respondent incidental to that appeal.
In this matter, the applicant submitted that the respondents should pay 75% of her costs relying on sections 60(3)(c) and 60(3)(d) of CATA and Rule 38 of the Tribunal Rules that the defences to the claim failed. Rule 38(2)(b) is relevant because the amount of damages ordered was in excess of $30,000.00.
The applicant says that as a result of the respondents' breach of the lease, the applicant had to be legally represented and was required to test the respondents' claims and challenges to the assertions made that the lease was destroyed and further that the first respondent was not the lessee. The issue of whether the lease was destroyed was complex and required analysis of conflicting views.
Whilst the applicant was overall successful, the applicant recognised that she was not completely successful on the question of damages flowing from the breach of lease as she failed to adequately mitigate when reletting the premises. The resolution of the competing arguments was complex and the respondents' position was not without judicial support from decided cases, particularly from Western Australia.
[6]
Resolution of the issue of costs by the Tribunal
Ultimately it is a balancing act as to how to adjudge the percentage of costs the applicant should be entitled. In the circumstances, I determine that 60% is appropriate taking into account the complexity of the matters to be resolved and counter veiling arguments regarding validity of the lease.
As noted at [68] in Gaynor, the Appeal Panel stated as follows
68. While we accept we could make an order for a specific sum to be paid within a specified time period, there is simply no evidence before us to enable us to make an informed assessment of a proper quantum of costs to be paid. Rather, we propose to provide the parties an opportunity to reach agreement on costs within 20 days of publication of these reasons, failing which costs may be assessed under the Legal Profession Uniform Law Application Act 2000 (NSW) Part 4.3 Div 7 as provided in s60(4) of the CATA. The costs shall be payable 14 days after assessment or agreement.
I propose to follow similar orders by the Appeal Panel in this matter.
[7]
Orders
1. The first and second respondents shall pay 60% of the costs of the applicant incidental to the proceedings including the submissions on costs as agreed and, failing agreement, within 28 days of the date of this order as assessed under Part 4.3, Div 7 of the Legal Profession Uniform Law Application Act 2014 (NSW).
2. The costs agreed or assessed under order (1) of these orders shall be payable within 14 days of agreement or assessment.
D Bluth
Senior Member
Civil and Administrative Tribunal of New South Wales
29 October 2015
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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: 11 November 2015
Parties
Applicant/Plaintiff:
Shen
Respondent/Defendant:
Bonita, Lie & Go
Legislation Cited (3)
Administrative Decisions Tribunal Act 1997(NSW)
Legal Profession Uniform Law Application Act 2000(NSW)