Wynne Avenue Property Ltd v MJHQ Pty Ltd

Dispense with a hearing

1. Both parties submitted that we should dispense with any further hearing of the costs questions pursuant to the power to do so under s 50 (2) of the NCAT Act. We are satisfied that it is appropriate to so order.

Submissions

1. MJHQ submits that: 1. WAP's argument that no statutory lease regulated by the Retail Leases Act 1994 (NSW) (the RLA) existed between the parties because there was no consensus as to terms had "zero merit". 2. WAP knew that the license agreement (as so named) between the parties was caught by the RLA and that to assert otherwise would be ridiculous. 3. The argument WAP subsequently raised for the first time in answer to the costs application based upon the Helou decision was not a genuine argument. It was nothing more than an artificial argument "to cover the tracks of WAP's conduct to avoid a costs order". 4. WAP knew that its "tenancy at will" contention was "phony". It was a "ruse" accompanied by a backup plan, namely a "scheme" to evict MJHQ by the demolition notice if the one month notice approach did not work. 5. At the time WAP agreed to the consent orders in August 2017 it made a tactical decision not to assert that there was no agreement between the parties because it wanted to rely upon such an agreement to issue a demolition notice under it. 6. WAP acted unreasonably in instructing lawyers to issue the termination notice without explanation and by not responding to MJHQ's enquiry as to the basis of the termination notice, thereby forcing a tenant to incur costs. 7. Rather than accepting MJHQ's legitimate position of a five year retail lease term as set out in MJHQ's letter of 31 May 2017, WAP "stridently and persistently" went about its business of eviction without concern for the costs MJHQ would need to incur to protect its legitimate interest. WAP took the risk of a challenge and adverse costs and eventually "facing certain defeat, it capitulated on 9 August 2017". 8. The decisions in Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 and Zeaiter Corporate Holdings Pty Ltd v Satchitanantham (No. 2) [2009] NSWADT 70 supported its application. This included support for the costs application even if WAP's argument based upon Helou was characterised as very weak, rather than untenable. The Appeal Panel's decision in SCC (Sam Construction Company) Pty Ltd v Wingate [2017] NSWCATAP 222 also supported its application - a case in which a litigant was put to the needless expense of litigation. 9. WAP's argument that it made a commercial decision on 9 August 2017 acting reasonably and in good faith should be rejected. It took an unreasonable position which provoked the commencement of proceedings, refusing to withdraw its termination notice or give explanations. 10. It was relevant that the proceedings were a retail lease matter in the Consumer and Commercial Division of NCAT. Because of the complexity of such matters parties can be expected to have legal representation and the commercial flavour implied a risk of costs unlike that present in other divisions.
2. WAP's submits that: 1. The first instance proceedings were resolved at the first directions hearing consistent with the duties of WAP to act in a manner that was conducive to the just, quick and cheap resolution of the proceedings. 2. WAP considered it had a defence to the asserted lease arising from unilateral changes being made to the agreement. In its submissions to the Tribunal at first instance it contended that the "executed version of the Licence Agreement" included a number of unilateral and unauthorised amendments by the applicant which were not accepted by WAP by way of deleting key commercial terms. WAP submitted that the required consensus as to terms was not arrived at. WAP said that for commercial and other reasons, that defence was not pursued and WAP conceded the claim. 3. To award costs to MJHQ would be the antithesis of encouraging parties to reach an early settlement or resolution of the proceeding. Such a step would be contrary to the underlying principles set out in s 36 of the NCAT Act. 4. So far as the costs of the appeal are concerned, these should be paid by MJHQ because it strenuously opposed the appeal in the face of errors that were clear and self-evident from reading the reasons. There were special circumstances warranting an order that MJHQ pay the costs of the appeal because WAP's case on appeal was significantly stronger than MJHQ's opposition. WAP relied upon s 60(3)(c) of the NCAT Act.
3. MJHQ provided extensive further written submissions which, in part, went beyond submissions in reply. However, they were, essentially, consistent with its submissions at first instance. The submissions included: 1. WAP "deliberately chose to use silence as a technique to bluff the applicant as a sort of game". 2. If MJHQ is left to pick up the costs, WAP's behaviour will deter lessors and lessees from accessing the Tribunal. 3. A failure to grant indemnity costs sends a clear signal that landlords can behave badly and "try it on". 4. To a reasonable person it would seem unreasonable and unfair that a lessor of a shopping centre could issue an invalid notice to quit to a lessee after decades of paying rent, then refuse to explain itself when asked, then provide no admissible evidence when legally challenged, then completely capitulate.
4. The submissions of WAP in reply included: 1. MJHQ's essential point was, apparently, that WAP did not explain why it asserted no retail lease existed when asked to do so after the notice of termination was issued and before the making of consent orders. Regardless of any fault to be attributed to WAP, MJHQ had not established that if an explanation had been provided MJHQ would not have incurred the costs of bringing proceedings. WAP submitted that MJHQ's submissions concerning the weakness of the Helou defence suggest that an explanation would have made no difference. 2. The Helou defence did have merit because a consensus as to essential terms was needed in order for there to be a retail lease under the RLA. WAP relied upon the decisions in Aspromonte Pty Ltd v Zagari [1999] NSWSC 831; Randi Wixs Pty Ltd v Pokana Pty Ltd (No. 2) [2003] NSWADT 4; Burbridge v Vosedo Pty Ltd [2005] NSWADT 8 at [44]; Spud Surf Chatswood Pty Ltd v PT Ltd [2012] NSWADTAP 2 at [191]. WAP submitted that the crossing out of various written terms of the licence agreement indicated that there was no requisite consensus. WAP pointed out that there had been no argument advanced or enquiry undertaken in relation to the facts concerning this issue. 3. WAP objected to MJHQ's reliance on evidence contained in a transcript of subsequent Tribunal proceedings between the parties consisting of parts of a cross-examination in which Counsel for WAP, putting questions to a witness called by MJHQ on the basis that an agreement had been entered into. In any event, WAP submitted that MJHQ's submissions based upon that cross-examination was without substance because it occurred after the consent orders were made in this case which orders acknowledged that a valid agreement had been entered into.

Relevant facts

1. The facts concerning the application are quite limited because there has been no hearing or subsequent determination as to the merits of MJHQ's original application seeking to uphold its position that it had a retail lease for a term of 5 years.
2. MJHQ went beyond a submission that WAP had no tenable defence. It made assertions, without supporting evidence, about WAP's knowledge, motives and planning concerning its notice of termination and agreement to the consent orders, including that the notice was a "try on", a "bluff", a "ruse" and that WAP knew that its pre-litigation claim about MJHQ's occupancy was hopeless.
3. We set out the facts below. However, at the outset, we point out that, in our opinion, there is no adequate factual basis upon which we could make such serious adverse findings against WAP. The fact that (adopting MJHQ's words) WAP capitulated at the first directions hearing is not a sufficient basis upon which to draw the inferences for which MJHQ contends, particularly in circumstances where WAP point to a case which, as will be seen below, we are not prepared to dismiss as untenable and where there has been no decision on the merits of that case.
4. Apart from issues as to WAP's state of mind and the agreed terms of MJHQ's occupancy of the premises, the facts and circumstances are uncontroversial.
5. In about August 1992, Mr Scarano and his family, trading under the name of Ronis, commenced retailing as a discount variety store from Shop 52 in the Burwood Plaza. At this time, WAP was not the owner of the premises.
6. Subsequently, on or about 30 March 2015 (see 9 August 2017 consent orders) MJHQ, a family company of Mr Scarano's, entered into what was described in the written agreement as a Licence Agreement with WAP for the occupancy of these premises. At that time, WAP had only recently become the owner of the plaza. Prior to that Licence Agreement, MJHQ had a formal lease with the prior owner of the premises the term of which had expired.
7. There was no evidence about the circumstances concerning the change in the terms of MJHQ's occupancy, nor was there any evidence as to the negotiations with respect to the Licence Agreement.
8. A copy of the Licence Agreement was exhibited at Tab 7 of an affidavit sworn by Mr Guiseppe Scarano on 20 July 2017, in support of an application to the Tribunal for interim orders sought in respect of WAP's notice of termination. Mr Scarano deposed that on 6 March 2015 (not 30 March 2015 as referred to in the consent orders) MJHQ and WAP entered into an occupancy agreement and stated that a copy was at Tab 7.
9. Without further evidence, on the face of this document, uncertainties arise as to its status and as to the scope of the terms contained in it that was agreed upon. This is because of a number of matters.
10. In the first place, the final page contains provision for execution on behalf of the parties but whilst a signature appears on behalf of the licensee there is no signature on behalf of the licensor. Signatures of a director and secretary of one of the parties appear on the second page of the document but the signature of the director appears to be very similar to the signature on behalf of MJHQ on the letter dated 31 May 2017 referred to below.
11. The copy also reveals initials alongside some clauses where amendments and, in some instances, comments have been made. In one instance, an amendment has not been initialled (concerning the duration of the agreement). The initials appear to be those of only one person.
12. In all instances except one, the amendments include the ruling through of a part of the document (seven provisions are affected by such rulings). In addition, in some instances, there also appears additional wording marked in bold such as "Existing Bank Guarantee only offered". In one instance (the provision concerning the marketing levy), in addition to a ruling out of some wording there is added words (not in bold) "not agreed". In the one instance where there is no ruling out, the words in bold "Notice to vacate of 2 months is required by MJHQ Pty Ltd" is added next to "One (1) month" on the subject of the duration of the agreement.
13. The provisions affected by these changes concerned duration of the agreement, a marketing levy, a bank guarantee, payment of the monthly fee by bank cheque, installation and removal of chattels, a deposit from the licensee, a director's guarantee from the licensee and licensee's works.
14. From about 6 March 2015, MJHQ paid what was described in the Licence Agreement as a monthly licence fee.
15. Under cl 11 of the Licence Agreement, the licensee acknowledged that the licensor had granted a licence only and the relationship of landlord and tenant had not been created.
16. Under cl 25 of the Licence Agreement, it was agreed that if the licensee occupied the premises beyond the end date then the licensee did so as a monthly tenant and that the licensor in its absolute discretion might determine the agreement forthwith by notice in writing. It was also agreed that the licensee did not have any right to extend the duration of the agreement.
17. The Licence Agreement included a term concerning demolition: cl 30. Under that term, if the licensor wanted to demolish, renovate or reconstruct the shopping centre, or part of it containing the premises, the licensor was obliged to give the licensee 30 days' notice to terminate the Licence Agreement and vacate the premises.
18. On or about 3 April 2017, WAP and a company called Upright Builders Pty Ltd agreed to a letter of acceptance for proposed fit out work at the Burwood Plaza. This letter referred to a proposed new tenancy combining shops 48, 52 and 53.
19. By letter to WAP and the Centre Manager of Burwood Plaza dated 31 May 2017, MJHQ gave notice of an election pursuant to s 6A(4) of the RLA (as it then was) for the provision of a five year term for its occupancy of the premises. The letter stated that "[I]n our view, a five-year lease pursuant to the RLA commenced on 6 March 2015 and will terminate on 5 March 2020".
20. Earlier in the letter it had been said that MJHQ had an unbroken period of occupancy from 6 March 2015 "pursuant to an occupancy agreement ("the Licence Agreement") under which it paid "rent" every month. The letter then went on to attach the Licence Agreement and stated that they believed the "above occupancy arrangement" was caught by s 16 of the RLA that conferred upon the lessor and lessee a minimum five year term.
21. According to the affidavit from Mr Scarano, this letter followed upon a telephone conversation with representatives of the Centre Manager concerning the validity of the Licence Agreement and the lack of a s 16 certificate.
22. We have not seen any direct response to this letter.
23. By letter from the Centre Manager (Colliers International (NSW) Pty Ltd) to MJHQ dated 30 June 2017, Colliers, as agent for WAP, stated that MJHQ were occupying the premises under a licence that constituted a tenancy at will. The letter stated that this was terminable by either party providing one month's written notice of termination. The letter went on to give notice of termination and required MJHQ to vacate the premises on or before 31 July 2017.
24. MJHQ replied by letter dated 3 July 2017. MJHQ said that notwithstanding any rights it had under the RLA pursuant to its letter dated 31 May 2017 the license agreement stipulated that two months' notice to vacate was required in any event. The letter stated that should the lessor take any unilateral self-help measures the letter would be tendered in support of a claim for indemnity costs. MJHQ said that if the purported termination notice was not withdrawn it would have no choice but to seek a restraining order and a declaration.
25. By letter to WAP and Colliers dated 10 July 2017, MJHQ said that it had asked for a meeting to discuss the termination notice and subsequent correspondence but there had been no response. MJHQ concluded by saying that if it was not notified in writing that the purported termination notice was withdrawn by close of business on 12 July 2017 MJHQ would be left with no choice but to seek orders, declarations and indemnity costs forthwith.
26. In a letter from Holding Redlich, solicitors for WAP, to MJHQ dated 11 July 2017 it was said that they were instructed that MJHQ's occupation of the premises constituted a tenancy at will. It was said that, as a consequence, the licence was terminable by either party providing one month's written notice of the termination. The letter confirmed that MJHQ was required to vacate the premises on or before 31 July 2017 and that if proceedings were commenced they were instructed to accept service. The letter concluded by inviting any further queries.
27. By letter from MJHQ to Holding Redlich and the Centre Manager dated 13 July 2017, MJHQ asked to be informed of the legal basis for the requirement that it vacate on or before 31 July 2017. It was said that the letter would be used on the question of costs.
28. In a letter from MJHQ to Holding Redlich and Colliers dated 18 July 2017, MJHQ pointed out that it had asked for confirmation as to the legal basis MJHQ was required to vacate Shop 52 on or before 31 July 2017. MJHQ said that as at 18 July 2017 neither a letter withdrawing the notice nor an answer to the question as to the legal basis of the notice had been provided. MJHQ said that such conduct was not reasonable. It said that the letter would be used on the question of costs.
29. On 20 July 2017, MJHQ lodged a retail leases application in the Tribunal. The application sought, amongst other relief, a declaration that the Licence Agreement was a retail shop lease pursuant to the RLA for a five year term, terminating on 5 March 2020, a declaration that the purported termination notice dated 30 June 2017 was not a valid termination notice, an order restraining WAP or Colliers from threatening to, or taking, possession of the premises and an order that WAP pay the costs of the proceedings on an indemnity basis.
30. Also on 20 July 2017, MJHQ lodged with the Tribunal an application for interim orders. MJHQ sought an urgent order restraining WAP or Colliers from threatening to, or taking, possession of the premises. That application was supported by the affidavit sworn by Mr Scarano of MJHQ referred to above. On that day, MJHQ also applied for mediation.
31. On 21 July 2017 the Tribunal made orders in chambers permitting MJHQ to remain in occupation of the shop pending determination of the application. Both applications were adjourned for hearing on 9 August 2017.
32. On 9 August 2017 both applications were resolved by consent. Consent orders were made as follows: By Consent, the Tribunal: (1) Declares that the Licence Agreement made on 30-Mar-2015 commencing on 09-Mar-2015 is a retail shop lease pursuant to the Retail Leases Act 1994 with a commencement date of 06-Mar-2015 and a terminating date of 05-Mar-2020. (2) Declares that the tenancy termination notice dated 30-Jun-2017 is of no effect. (3) Notes that the Licence Agreement referred to in order 1 above is in the form of the copy attached to these orders. (4) If any party wishes to apply for costs in relation to this application and application number COM 17/32110, that party is to provide written submissions in support of that application to the other party and the Tribunal no later than 23-Aug-2017. (5) Any party wishing to dispute any application for costs made by the other party is to provide written submission in support of that dispute to the other party and the Tribunal no later than 06-Sep-2017. (6) If any party wishes to provide written submissions in reply, such submissions are to be provided to the other party and the Tribunal no later than 13-Sep-2017. (7) The decision on costs is to be made on the papers. (8) These orders apply to both matter number 17/32109 and 17/32110.
33. On or about 25 August 2017, WAP issued a notice of termination of the lease of Shop 52 pursuant to cl 33 of the lease and s 35 of the RLA on the basis that WAP proposed to renovate and reconstruct part of the Burwood Plaza. The notice stated that WAP required vacant possession of the premises by 25 February 2018. One of the documents annexed to this notice was the letter of acceptance with Upright Builders Pty Ltd dated 3 April 2017.
34. MJHQ commenced new proceedings in the Tribunal concerning the validity of the notice of termination issued on or about 25 August 2017. We are not dealing with those proceedings.
35. By reasons issued on 23 January 2018, the Tribunal gave its decision on MJHQ's costs application in which it ordered that WAP pay MJHQ's legal costs of and incidental to the applications concerning the notice dated 30 June 2017 on an indemnity basis.
36. This decision was overturned by us on appeal.
37. On 16 October 2018, in the separate proceedings we have referred to, the Tribunal heard MJHQ's application concerning the validity of the notice of termination issued on or about 25 August 2017. At that hearing, Mr Guiseppe Scarano was cross-examined. Questions were put to him by Counsel for WAP on the premise that an agreement had been entered between WAP and MJQH in respect of the premises in March 2015.

Costs - the law

1. There is no dispute between the parties that for MJHQ to succeed on this application it must obtain an exercise of the Tribunal's discretion in its favour on the basis that "special circumstances warranting an award of costs" have been established, as required by s 60 of the NCAT Act.
2. Sections 60(2) and (3) of the NCAT Act provide: 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.
3. On these applications, MJHQ expressly relies upon ss 60(3)(c), (e) and (g). We also treat it as relying upon s 60 (3) (d) in so far as it submitted that the fact that these were retail lease proceedings in the Consumer and Commercial Division of the Tribunal was a factor in favour of the costs order which it sought.
4. In determining whether there are the required special circumstances it is not necessary to find that the circumstances are extraordinary or exceptional: SCC (Sam Construction Company) Pty Ltd v Wingate [2017] NSWCATAP 222 at [19]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Zeaiter Corporate Holdings Pty Ltd v Satchitanantham (No2) [2009] NSWADT 70 at [37].
5. The discretion to award costs under s 60 should be exercised having regard to the underlying principle that parties before the Tribunal are ordinarily to bear their own costs: SCC at [23].
6. The Tribunal has a discretion whether or not to award costs even where it finds that special circumstances warranting such an award do exist: see the word "may" in s 60 (2). In exercising the costs power, the Tribunal must seek to give effect to the guiding principle to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 36(2) (a) of the NCAT Act.
7. Each case must be assessed according to its circumstances. We have not found the application of the law to the facts in any one of the cases to which we have been referred to be of any particular assistance. In this regard, for example, we looked closely at the circumstances in Cripps v G&M Dawson Pty Ltd [2006] NSWCA 81. This was a case relied upon by MJHQ. It was a case in which special circumstances were found against lessors who by their grossly unreasonable conduct had forced a tenant to pursue litigation. However, the circumstances were not analogous to the present.
8. We have considered the remarks of the now superseded Administrative Decisions Tribunal in Zeaiter, referred to by MJHQ, that the interpretation of special circumstances differs significantly in the Retail Leases Division from that in other divisions of that former Tribunal on account of the commerciality of that division: at [37]. These remarks were made before the establishment of NCAT. Furthermore, they concerned the application of the then applicable version of s 88(1) of the Administrative Decisions Review Act - a version that, whilst referring to special circumstances, was in different terms to s 60 of the NCAT Act.
9. We must, of course, follow the terms of s 60 of the NCAT Act. It is also relevant to have regard to Rule 38 of the Civil and Administrative Tribunal Rules 2014 concerning costs in the Consumer and Commercial Division (CCD) of the Tribunal. This rule modifies the ordinary position that each party bears its own costs and provides that despite s 60 the Tribunal may award costs in the CCD even in the absence of special circumstances where the amount claimed in the dispute exceeds certain sums. Relevantly, no exception to the ordinary rule is specified because the matter is a retail lease proceeding or, more specifically, because it involves an issue concerning the termination of a retail lease. This is so even though a party to proceedings for the exercise of a Division function for the purposes of the RLA is entitled to be represented in the Tribunal by an Australian lawyer without requiring the leave of the Tribunal: cl 7 (b) of Schedule 4 of the NCAT Act.
10. We did not understand MJHQ to submit that because the matter is a retail lease proceeding in the CCD that fact alone satisfied the requirement in s 60 (2) that there be special circumstances warranting a costs order. We think it was correct not to do so in view of the legislative provisions to which we have just referred. What amounts to special circumstances involves a much broader consideration having regard to the presence (or absence) of one or more of the matters set out in s 60 (3) of the NCAT Act. This, of course, includes, but is not limited to, the nature and complexity of the proceedings: s 60 (3) (d).
11. By s 60(4) of the NCAT Act the Tribunal may also determine, if costs are awarded, the extent and basis of the assessment of costs. This includes the indemnity basis, which is the basis of assessment sought in this instance by MJHQ. The Tribunal's discretion to award indemnity costs is exercised in limited circumstances and it must be the subject of careful reasoning: see Mendonca v Tonna [2017] NSWCATAP 176 at [59] - [60], [62] - [64] and the cases cited therein by the Appeal Panel.

The Helou defence

1. We examine the Helou defence, ultimately, raised by WAP in more detail below but we are not persuaded that it was untenable. Nor are we persuaded that it was very weak.
2. We find ourselves unable to arrive at conclusions to the contrary because of the absence of established facts about the agreed terms of MJHQ's occupancy arising out of the uncertainties concerning the Licence Agreement to which we have already referred.
3. There are pointers that the Helou defence was not a strong one. Namely, the length of occupancy, the payment of a monthly amount by MJHQ under the regulation of the Licence Agreement, the effect of relevant provisions of the RLA, the lack of expression of the defence before and after the commencement of proceedings and the prompt abandonment by WAP of its notice of termination by its consent to the 9 August 2017 orders. However, in our opinion, in the circumstance we have referred to, these factors are not sufficient to draw the conclusions about the merits for which MJHQ contends.
4. In considering the defence in more detail, we start with the relevant provisions of the RLA (as then applied): 3 Definitions ….. retail shop lease or lease means any agreement under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purpose of the use of the premises as a retail shop: (a) whether or not the right is a right of exclusive occupation, and (b) whether the agreement is express or implied, and (c) whether the agreement is oral or in writing, or partly oral and partly in writing. …. 6A Application of Act to short-term leases (1) Generally, Act not to apply to short-term leases Subject to subsection (2), this Act does not apply to a lease of a retail shop for a term of less than 6 months without any right for the lessee to extend the lease (whether by means of an option to extend or renew the lease or otherwise). (2) Exception for successive, extended or renewed leases for more than one year If the lessee has been in possession or entitled to be in possession of the retail shop without interruption for more than one year (whether by means of a series of 2 or more leases or by means of an extended or renewed lease or leases, or by any combination of those means), this Act applies to: (a) the lease on and from the day on which the lessee has been in possession or entitled to be in possession of the shop for more than one year, and (b) any succeeding lease or leases of the shop to the lessee, where possession or entitlement to possession is not interrupted. ….. (4) Operation of provisions for minimum 5 year term Section 16 (1) and (2) do not apply to the lease referred to in subsection (2) (a) unless the lessee notifies the lessor in writing during the term of the lease that the lessee elects to have the benefit of section 16. However, in that case, any period for which the lessee has already been in possession or entitled to possession of the retail shop without interruption is taken to be included in the term of the lease. ….. 7 This Act overrides leases This Act operates despite the provisions of a lease. A provision of a lease is void to the extent that the provision is inconsistent with a provision of this Act. A provision of any agreement or arrangement between the parties to a lease is void to the extent that the provision would be void if it were in the lease. 8 When the lease is entered into (1) For the purposes of this Act, a retail shop lease is considered to have been entered into when a person enters into possession of the retail shop as lessee under the lease or begins to pay rent as lessee under the lease (whichever happens first). (2) However, if both parties execute the lease before the lessee enters into possession under the lease or begins to pay rent under the lease, the lease is considered to have been entered into as soon as both parties have executed the lease. ….. 16 Minimum 5 year term (1) The term for which a retail shop lease is entered into, together with any further term or terms provided for by any agreement or option for the acquisition by the lessee of a further term as an extension or renewal of the lease, must not be less than 5 years. An agreement or option is not taken into account if it was entered into or conferred after the lease was entered into. (2) If a lease is entered into in contravention of this section, the validity of the lease is not thereby affected but the term of the lease is extended by such period as may be necessary to prevent the lease contravening this section. Note. For example, if a lease is entered into for a term of 3 years, its term is extended by 2 years to 5 years. If a lease is entered into for a term of 2 years with an option for a further 1 year after that initial 2 years, the term of the lease is extended to 4 years (with the option for a further 1 year after that initial 4 years). (3) This section does not apply to a lease if a lawyer, or a licensed conveyancer, not acting for the lessor certifies (before, or within 6 months after, the lease was entered into) in writing that: (a) the lessee or prospective lessee requested the lawyer or conveyancer to give the certificate, and (b) the lawyer or conveyancer has explained to the lessee or prospective lessee the effect of subsections (1) and (2) and that the giving of the certificate will result in this section not applying to the lease. If the certificate is given within 6 months after the lease was entered into, then, without affecting the validity of the lease, subsection (2) ceases to apply to the lease and the extension of the term of the lease effected by that subsection accordingly ceases to be operative. ….. 35 Demolition (1) If a retail shop lease provides for termination of the lease on the grounds of proposed demolition of the building of which the retail shop forms part, the lease is taken to include provision to the following effect: (a) The lease cannot be terminated on that ground unless and until the lessor has provided the lessee with details of the proposed demolition sufficient to indicate a genuine proposal to demolish that building within a reasonably practicable time after the lease is to be terminated. (b) The lease cannot be terminated by the lessor on that ground without at least 6 months written notice of termination.
5. Drawing upon some support from passages from the decision of the plurality of the High Court in Gynch v Polish Club Limited [2015] HCA 23; 255 CLR 414, including at [33], albeit a decision involving different issues on different facts, MJHQ was able to identify a reasonably clear case that by reason of the operation of the RLA, in the events that occurred, it had a retail lease within the meaning of the RLA for a term of five years from 6 March 2015 and that this was the status of its occupancy at the time of the termination notice given by WAP on 30 June 2017.
6. However, the existence of such a case did not eliminate as untenable WAP's contention to the contrary based upon two propositions.
7. First, that what the Appeal Panel said in Helou (at [82]) was good law, namely: 82 In the Tribunal's opinion, the foregoing cases establish the following propositions regarding s 8(1). First, a person who is already in possession of retail shop premises pursuant to a pre-existing tenancy not covered by the Act may be said notionally to 'enter into possession… as lessee under the lease' without vacating and re-entering the premises, once an agreement for a new lease falling within the Act is concluded. Secondly, the commencement of a lease by virtue of entry into possession or payment of rent by the lessee may occur under s 8(1) even though no formal deed or agreement of lease is ever executed, so long as the parties have reached 'consensus' as to the terms of the lease. Thirdly, in order to reach this 'consensus', so as to give rise to the requisite 'lease relationship', it is not necessary that the parties reach agreement on all the terms of the right of occupation. This is an implicit consequence of the broad definition of 'lease' in s 3, embracing 'any agreement', express or implied, and whether oral, in writing, or partly oral or partly in writing, 'under which a person grants or agrees to grant to another person for value a right of occupation of premises for the purposes of the use of the premises as a retail shop'. [Our emphasis]
8. We note that these propositions were in part founded upon a passage from the judgment of Hodgson CJ in Eq (as he then was) in Aspromonte Pty Ltd v Zagari [1999] NSWSC 831 where he said (at [52]): 52 I remain of the view that s. 8(1) [of the RLA] discloses an intention that there can be entry into a retail shop as lessee and payment of rent as lessee under a lease, where these events occur at a time when there is consensus as to the terms of such a lease but not yet any written lease entered into.
9. Despite this authority, and relying upon the decision of the Appeal Panel in Spuds Surf Chatswood Pty Ltd v PT Ltd (RLD) [2012] NSWADTAP 2, MJHQ submits, categorically, that consensus is not a prerequisite for an agreement within the meaning of s 6 of the RLA.
10. However, the decision in Spuds adopted and applied Hodgson CJ's requirement for a consensus: at [191] - [192]. On the facts in Spuds the Appeal Panel upheld the Tribunal's decision that a consensus did exist at the time when possession was taken by the tenant even though there were some minor matters upon which the parties had not reached agreement and no formal document was ever executed.
11. In so finding, the Appeal Panel in Spuds referred without disapproval to other cases, including Helou, which had applied the consensus test and arrived at different conclusions on the facts; at [185] - [190].
12. We also note that the decisions of the High Court and of the NSW Court of Appeal in Gynch were not concerned with a consideration of the Helou consensus test.
13. The second proposition was that there was a lack of the requisite consensus in this case - a proposition that was supported by the changes to the Licence Agreement document to which we have already referred and the absence of any evidence of an expression of acceptance by WAP of those changes.
14. These propositions raised a question for determination at a hearing of the merits in this matter, if the matter had not been resolved by the consent orders, whether the requisite consensus had been achieved. The answer to that question, in our opinion, was and remains unclear.
15. MJHQ seek to rely upon passages in the transcript of the cross-examination of Mr Giuseppe Scarano at a hearing on 16 May 2018 about the validity of the demolition notice in subsequent proceedings. WAP object to the evidence on the basis that there was no leave for the presentation of further evidence. We disagree. We allow the evidence because the orders made in respect of the re-determination permitted the presentation of additional documentary evidence.
16. However, we fail to see how this material assists MJHQ. The transcript contains a number of questions from Counsel for WAP, expressed in conclusionary terms, which assume the existence of an agreement in respect of MJHQ's occupancy by the entry into the Licence Agreement. For present purposes, we are prepared to accept (without deciding) that the questions were inconsistent with a contention by WAP that there was no requisite consensus in accordance with the Helou defence.
17. MJHQ submit that these passages show "the folly" of WAP's consensus argument and that WAP had a further significant hurdle to overcome which it knew about when it capitulated on 9 August 2017.
18. We do not agree. The questioning on 16 May 2018 was consistent with the consent orders made on 9 August 2017 which included a declaration that the Licence Agreement made on 30 March 2015 was a retail shop lease. None of the questions reveal the existence of some evidence known to WAP before the making of the consent orders demonstrating that the lack of consensus argument was an untenable argument.
19. In the circumstances pointing to the existence of an arguable defence, we are not able to arrive at any conclusions (unfavourable or favourable to WAP) as to why WAP agreed to the consent orders. This is so despite the assertions in submissions by WAP, but without supporting evidence, that it did so for commercial and other unspecified reasons.
20. We add some further remarks about MJHQ's submissions that WAP's agreement to the consent orders was a tactical decision being part of a "scheme" to evict MJHQ by one means or another. It was a part of this submission that WAP knew when it issued the notice that its claim that it was entitled to terminate upon one month's notice was without merit. We have already said that we do not accept that submission. One possibility is that, for one reason or another, by the time of the consent orders, WAP had come to appreciate that in order to pursue its renovation objectives its better and more straightforward case, involving no litigation about the Licence Agreement, was to issue a demolition notice and, in doing so, accept that there was a retail lease on the terms of the Licence Agreement. Whilst this might be regarded as tactical, it is not obvious that this would in itself be sufficient to warrant the making of an award of costs in MJHQ's favour under s 60 of the NCAT Act.
21. It is unnecessary for us to decide that question because we have already concluded that we are not prepared to make any findings about WAP's thinking.
22. We should add that MJHQ did not submit that even if WAP was correct about the consensus issue MJHQ's rights were greater, or something other, than those of a tenancy at will terminable upon one month's notice and that to contend otherwise was untenable.

Other factors concerning alleged special circumstances

1. With some justification, MJHQ criticise WAP for not explaining the grounds for its claim when invited to do so. As already indicated, we have had regard to this fact in our consideration of the strength of WAP's claim to terminate upon one month's notice.
2. Dealing with this as a separate factor, we agree with WAP's submission that there is no sufficient basis to conclude that had WAP explained its position MJHQ would not have commenced the Tribunal proceedings and would, therefore, have avoided the costs it incurred.
3. In this respect, we note that what MJHQ wanted and needed was for the notice of termination to be withdrawn: see MJHQ's first two letters about the notice dated 3 and 10 July 2017.
4. As MJHQ submitted to the Tribunal at first instance: 20 The applicant could not have offered a Calderbank style compromise. There were no damages to speak of; the applicant needed a remedy in the terms clearly contemplated by the interim and substantive applications and the Act as its entire business was at stake.
5. Whilst, subsequently, an explanation was sought it seems unlikely that this would have caused MJHQ to abandon the protection of the tenure that it had sought to establish by its notice of election given at the end of May 2017. This conclusion is further supported by the dismissive reaction to the Helou defence as revealed by MJHQ's submissions about costs.
6. Accordingly, we do not regard this factor as amounting to "any other matter" relevant to the making of a costs order within the meaning of s 60 (3) (g) of the NCAT Act.
7. As to the nature and complexity of the proceedings, we have already addressed the law concerning this issue. In our opinion: 1. The commercial nature of the proceedings and the entitlement of the parties to legal representation go some of the way, but by no means all of the way, to establish special circumstances. 2. Complexity as a factor did not support the existence of special circumstances, all the more so in view of the early resolution of the proceedings well before the existence of any factual or evidentiary complexity came to light. There are many cases that come before the Tribunal in a range of fields that involve greater complexity than what was revealed in the short time that this litigation was on foot.

Encouragement of early resolution of proceedings

1. The making of the consent orders on 9 August 2017 meant that the proceedings were quickly disposed of. A drawn out, costly case, was avoided. The time devoted to the matter by the Tribunal was kept to a minimum. These are consequences that should be encouraged.
2. But an adverse costs order here might serve to discourage other litigants from agreeing to consent orders at an early stage lest it be interpreted adversely to them on the question of costs. Litigants might think it would be more palatable to run a case in the expectation of demonstrating, at least, an arguable position in respect of which the ordinary cost rule would apply, or anticipating that they would be in a stronger position to resist a costs order against them, including an indemnity costs order.
3. This is a factor against the making of the costs order sought by MJHQ in the circumstances of this case where we have disagreed that WAP's position was untenable and rejected contentions about its knowledge and intentions. We see this as an aspect of the requirement to consider the guiding principle in s 36 of the NCAT Act in the consideration of the exercise of the costs power in s 60.

Indemnity costs

1. It follows from the above reasons that we reject the application for an order that costs be paid by WAP on an indemnity basis.

Costs of the appeal

1. Contrary to WAPs submission, we have decided that there should be no order in respect of the costs of the appeal with the intent that each party should bear their own costs.
2. WAP submits that there are special circumstances warranting an order that MJHQ pay their costs of the unsuccessful appeal. In this regard, WAP submit that, when regard is had to the legal issues raised by its appeal, there was no tenable basis upon which the orders made at first instance could be maintained.
3. Alternatively, WAP submit that its case on appeal was significantly stronger than MJHQ's contentions. It submits that the errors of law we found were clear and self-evident from reading the relevant passages in the reasons and that to ignore them was the antithesis of the guiding principles in s 36 of the NCAT Act.
4. In the events that we have dealt with in these reasons, in our opinion, it was not unreasonable for MJHQ to contend that it should have an award of costs of the proceedings at first instance. Nor do we think it was unreasonable for it to seek to maintain the orders that it obtained despite the errors of law that we found existed, particularly in circumstances where it was not out of the question that the Appeal Panel might uphold the costs orders regardless of the errors of law. It is expecting a lot of a party, particularly, a party that was not represented by a legally qualified person to, so to speak, "rollover" on the appeal once the legal deficiencies were pointed out to them.

Orders

1. For the above reasons the order is that 1. A hearing of the costs application be dispensed with. 2. There be no order as to the costs of the proceedings at first instance and of the appeal.

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: 26 March 2019