Plaintiff in person
File Number(s): 2016/000302402
[3]
ex tempore judgment - revised
I am considering an application for security for costs in proceedings seeking leave to appeal from a decision of the Appeal Panel of the Civil and Administrative Tribunal (NCAT).
By s 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW) a party to an "internal appeal" from a tribunal member to an appeal panel further may appeal further against any decision made by the tribunal in the proceedings to the Supreme Court, with leave, on a question of law.
It is common ground between the parties that, as leave is required, this is not a matter to which the provisions of r 50.8 of the Uniform Civil Procedure Rules 2005 (NSW) apply. (Nor is UCPR 42.21 invoked.) This follows from the decision of McColl JA, sitting as a single judge of appeal, in Charara v Integrex Pty Ltd [2010] NSWCA 342. However, her Honour held that the court in the exercise of its inherent jurisdiction could consider an application for security for costs in proceedings seeking leave to appeal. Her Honour held at [15] (omitting citations), after reviewing the relevant authorities:
"It is clearly established that there is an inherent jurisdiction in the Court to order security for costs.
This, apparently, arises out of the Court's
"inherent power to regulate their own practice and procedure to procure proper and effective administration of justice and prevent abuse of process" (Citing Rajski v Computer Manufacture and Design Pty Limited [1982] 2 NSWLR 443 per Holland J at 447.)
At [17] her Honour said (omitting citations):
"Both Holland J's decision in Rajski and the matters to which I have referred in Iskandar, indicate the exceptional nature of the case in which the court, in exercise of its inherent jurisdiction, would consider ordering security for costs. Although Holland J referred to the jurisdiction as being one "to prevent abuse of process", I do not understand the jurisdiction to be confined to such cases -- as is apparent from Green. The factors informing the discretion cannot be stated exhaustively - the only limitation is that the discretion be exercised judicially by determining "how on the whole, justice will be best served": King v The Commercial bank of Australia Ltd."
The parties have accepted that this statement of principle is applicable to the here. I should also point out, by way of amplification of the type of matters which may be considered relevant in exercising the inherent jurisdiction, that Mr Herro, solicitor, who appears for the applicant, referred me to the decision of Beazley J (as the President then was) in KP Cable Investments Pty Limited v Meltglow Pty Limited (1995) 56 FCR 189; [1995] FCA 76. At pages 196-198 her Honour set out a number of "guidelines", as she put it, informing the exercise of the general discretion. It is not necessary to set out the seven matters her Honour identified from her review of the authorities.
Essentially, I think it does no injustice to Mr Herro's argument, to say that he relied principally upon what I will call guidelines 1 and 2. The first is that applications for security must be brought promptly. I think there is no issue in this case that the defendant has acted reasonably to bring the application at an early time. The second guideline relates to the strength of the plaintiff's case. Omitting citations, her Honour said:
"…regard is to be had to the strength and bona fides of the applicant's case are relevant considerations. As a general rule, where a claim is prima facie regular on its face and discloses a cause of action, in the absence of evidence to the contrary, the court should proceed on the basis that the claim is bona fide with a reasonable prospect of success."
Mr Herro submits that the defendant is acting reasonably and not seeking to stultify the plaintiff's appeal. He points out that the plaintiff's claim has been considered at two levels of NCAT: at first instance by Senior Member Patten (Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATCD 2 (unreported, decision dated 20 April 2016)) and on appeal by an Appeal Panel constituted by P Durack SC and Senior Member McAteer (Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATAP 210). Mr Gan has been unsuccessful at both levels.
Mr Herro's argument is that given the concurrent adverse findings below and in the face of what he describes as an inherently weak case, the court should exercise its discretion to order security for costs. In making this submission, Mr Herro points out that considerable costs have already been incurred by the defendant and although these are matters in which costs orders may be available in NCAT, it is not apparent that Mr Gan is in a position to pay the costs that have already been incurred let alone the further costs of the appeal. Moreover, he has failed to pay the damages ordered to be paid by Senior Member Patten in a comparatively modest sum of $19,696.47 even though there is no stay in place in respect of that order. However, as I have said, central to the argument is the contention that the appeal is inherently weak in accordance with Beazley J's second guideline.
Mr Gan is not legally represented but appears for himself. He joins issue with Mr Herro's assessment of the strength of his case and he submits that I should conclude that the grounds he seeks to advance are questions of law which he says enjoy, at least, reasonable prospects of success. He also argues that nothing should be inferred from his failure to pay the damages and costs so far because he has challenged them and argues that those orders have been wrongly made against him.
It is necessary to look at the strength of the plaintiff's case. However, in doing so I bear in mind that this is neither a full hearing of the appeal, nor an application for summary dismissal on the grounds that the appeal is completely untenable, although some of Mr Herro's arguments went close to that submission. The grounds of appeal can only be considered in a summary, or broadbrush, fashion in an interlocutory application like this. That kind of summary or even cursory consideration can be no substitute for a litigant's day in court even if he or she loses then. I do not mean to suggest that Mr Herro's argument was "cursory".
I think it is correct to say, as Mr Herro argues, that there are essentially four matters raised by Mr Gan's summons seeking leave to appeal under section 83 Civil and Administrative Tribunal Act 2013 (NSW). They can be grouped in this way, as Mr Gan has done in his written submissions in relation to the appeal:
1. wrongful termination of the lease;
2. errors relating to the review of rent under section 31 of the Retail Leases Act 1994 (NSW);
3. his claim for conversion; and
4. his claim for damages for unconscionable conduct under s 62B of the Retail Leases Act 1994 (NSW).
The argument in relation to wrongful termination has two aspects. The first aspect is a matter of interpretation of cl 9.4 of the lease. Materially, it is in the following terms.
"The lessor may terminate this lease at its discretion by giving to the lessee notice in writing or re-entry:
9.4.1 if an event of default occurs."
I think it is fair to say, in broad terms, that the Appeal Panel construed that clause as providing two options: termination can occur either by notice in writing, or by the lessor re-entering the premises without notice.
Mr Gan argues that that interpretation is erroneous and he says that the proper construction of the clause is that notice must be given whether or not the lessor proposes to re-enter and take possession of the demised premises.
As Mr Herro acknowledges, this matter clearly raises a question of law involving, as it does, the interpretation of a legal document. It may well be that given that the two levels of NCAT experienced in this work has taken the same interpretation suggests that the argument made by Mr Gan is not strong. However, I would not regard it as hopeless. It does seem to me to be a fairly arguable construction given the need to give a commercial lease a businesslike and commercial construction and operation.
The second aspect of that first matter relates to the validity of the notices that were, in fact, given. To some extent, with respect, that issue was sidestepped below in as much as the construction given to clause 9.4 made it unnecessary for those issues to be addressed.
Mr Herro argues that the notices are valid and in any event, if necessary, compliant with section 129 of the Conveyancing Act 1919 (NSW). It is argued that given the terms of the lease, that provision was not applicable. However, again, this does seem to fairly raise a question of law and I am not satisfied that question of law is not fairly arguable.
Turning to the second point, there does seem to be an elision in Mr Gan's understanding of the licensed valuer's determination of 30 June 2014 and his argument in relation to the operation of s 31 of the Retail Leases Act 1994 (NSW). The decision went against him below substantially because it was held on appeal that questions about the meaning to be ascribed to the valuer's determination did not give rise to a question of law. Moreover, at first instance, the principal member considered that there was no distinction between a current market rent and a current market rental value for the purposes of the legislation. Although there is, of course, force in the contention that the meaning to be ascribed to the valuer's determination does not give rise to a question of law, the meaning and operation of s 31 of the Act clearly does. I could not say that argument was hopeless.
Mr Gan attempts to demonstrate how the issues of conversion and unconscionability arose out of his points of claim before the Principal Member. It is well for me to bear in mind that he lost before the appeal panel on these grounds because the appeal panel held that they had not been raised at first instance. Applying the well-known principles governing when a point may be raised for the first time on appeal, the appeal panel refused Mr Gan leave to raise these points essentially because the determination of those matters would involve additional evidence. Where a new point on appeal requires additional evidence, the appellate court or tribunal will not allow it to be raised for the first time on appeal.
Reviewing the material to which Mr Gan has drawn my attention, I must say that I am not satisfied that these arguments were fairly raised before Principal Member Patten. Mr Gan, I think, effectively concedes as much because he says, not unreasonably, as a lay person he did not then appreciate how he should characterise the claims he wished to advance. The claim in conversion essentially relates to the loss of the value of an expensive fit-out of the premises, including a commercial kitchen which he values at about $300,000. Moreover, he wished to claim damages from the defendant to, as it were, claw back what he characterised as an additional benefit received by the defendant from its taking the benefit of the fit-out in negotiating the new lease of the premises.
The unconscionability argument is somewhat different and it really relates, I think, as it was put to me today, to the failure of the landlord or the lessor, to negotiate with him in good faith to enable him to extract himself, if I can put it that way, from the lease over time by finding a willing buyer for the business.
As I said, that ground, too, was rejected by the Appeal Panel because it had not been frankly raised at first instance and would necessarily involve the consideration of evidence not led at the first hearing.
I should record, as it has been drawn to my attention, that Principal Member Patten did permit Mr Gan to advance a claim for damages for breach of an implied obligation of good faith in the commercial lease. This is set out at [28] and [29] of his reasons. At paragraph 28, Principal Member Patten characterised the claim in this way:
"[From the formulation of the claim by Mr Gan] … "The applicant claims $400,000, subject to any order or adjustment by the Tribunal Member deems just and equitable for a prompt closure to prevent further loss and damage, to place the [applicant] to his original position for him to quickly recover and rebuild his sole restaurant business, employment and income before the breach and repudiation of the lease/contract by [the lessor]."
That claim was rejected because the Principal Member found that the termination by the landlord was lawful. He also made a contingent finding that there was no evidence that the landlord had not acted in good faith in dealing with Mr Gan in the circumstances leading to the termination of the lease.
It may well be that in some circumstances there is not a great deal of difference between a claim formulated by reference to concepts of unconscionability, statutory or otherwise, and one formulated by reference to a duty, or an obligation, to act with good faith but, it seems to me, that one of the things that was not advanced in that formulation of the case in good faith was the aspect of loss of the value of the commercial fit-out.
The question of the removal of Mr Gan's property generally was ventilated at first instance and is dealt with at [32] and [33] of the Principal Member's decision where he seems to find that, in fact, Mr Gan was in breach of his make-good obligations in relation to the fit-out and that he had, in fact, received notice to remove his property. Although stopping short of making a finding in that regard, [58] of the Appeal Panel's decision is, it must be said, largely to the same effect and, once again, that seems to be a contingent finding.
I have set this out in some detail because it was argued by Mr Herro and Mr Gan in some detail. The question really comes down to what questions of law those matters give rise to for the purpose of an appeal by leave to this court. This could be, I suppose, be characterised as an error on the part of the Appeal Panel inasmuch as Mr Gan's real argument was that the case he presented to the Principal Member was not seriously and fully considered. That may, of course, in some circumstances amount to a question of law. However, looking at the material for myself, I would have to say that there is much force in Mr Herro's argument that that ground of appeal is at best weak. However, having reviewed the matters put forward as questions of law, I am satisfied that Mr Gan's appeal does at least raise questions of law for the consideration of this court.
I am satisfied that some of the questions are fairly arguable and it is unnecessary and, indeed, inappropriate to take it any further than that. One understands the frustration of the defendants, perhaps, having won twice, to be faced, as it were, a third time by yet another appeal. However the statute provides an additional avenue of appeal to this court and as is acknowledged by Mr Herro, Mr Gan is entitled to avail himself of that statutory right of appeal provided, of course, he persuades a judge to grant leave. Typically, that will be determined at a concurrent hearing and will largely depend on the strength of the legal arguments advanced.
I am also satisfied that an order for security would have the effect of stultifying Mr Gan's appeal. The Court, of course, is open to all members of the community and, accepting that from time to time impecuniosity can be a source of forensic oppression, an individual should not be denied access to the Court solely because he or she is of limited financial resources.
For those reasons, I am not satisfied that a case for security has been made out. To adopt the language of Rich J in King v Commercial Bank of Australia Ltd (1920) 28 CLR 289; [1920] HCA 62 referred to by McColl JA in Charara, I am not satisfied that "on the whole justice will be best served" by making an order for security for costs and I dismiss the application.
I list the matter for directions before the Registrar at 9am on Wednesday 22 March 2017 for allocation of a hearing date if the Registrar is satisfied that the matter is otherwise ready to proceed.
[4]
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Decision last updated: 13 March 2017