Dubbo Holdings Pty Ltd and ors v Johnson and ors [2008] NSWADT 292

CITATION: Dubbo Holdings Pty Ltd and ors v Johnson and ors [2008] NSWADT 292

DIVISION: Retail Leases Division

APPLICANTS Dubbo Holdings Pty Ltd Treetops Scenic Pty Ltd Holilon Pty Ltd Shane Roxby PARTIES: RESPONDENTS Robert Allan Johnson Rugirit Sung-Ad Penchana Pty Ltd Gianfranco Miccoli Barbara Miccoli

FILE NUMBER: 085058

HEARING DATES: 17 October 2008

SUBMISSIONS CLOSED: 17 October 2008

DATE OF DECISION: 28 October 2008

BEFORE: Rickards K - Judicial Member

CATCHWORDS: Principal relief - costs

LEGISLATION CITED : Administrative Decisions Tribunal Act 1997 Retail Leases Act 1994

Randy Wixs Pty Ltd v Pokana Pty Ltd [2003] NSW ADTAP 27; Gizah Pty Ltd v AXA Trustees Ltd (no 2) [2001] NSW ADT 164; TEXTS CITED: Mohammed v Shorecolt Pty Ltd [2004] NSW ADT 88; Irresistible Frocks Salon Pty Ltd v Sparbac Pty Ltd & Roche Group Pty Ltd (no 2) [2004] NSW ADT 72; Prasad and Another v Fairfield City Council [2002] NSW ADT AP 2

APPLICANT D Jenkins, barrister REPRESENTATION: RESPONDENT No Appearance

ORDERS: 1 The Respondent Robert Allan Johnson is to pay to the Applicants the sum of $11,785.43 2. The Respondent Robert Allan Johnson is to pay the Applicants' reasonable costs of these proceedings as are agreed or assessed.

REASONS FOR DECISION 1 The Applicants seek payment of arrears of rent and outgoings payable by the Respondent Robert Allan Johnson (hereafter simply referred to as "the Respondent") in respect of property known as shops 6 and 4(b) Ground Floor East Point, The Junction, NSW ("the premises") pursuant to a lease which commenced on 1 June 2005 and terminated on 31 May 2008 ("the Lease"), and an ancillary licence agreement to occupy and use an area adjacent to the premises. 1 When these proceedings were first commenced there was a 2nd Respondent who apparently is or was the partner of the Respondent, but the Applicants have previously given notice that they do not wish to continue against this 2nd Respondent and therefore the Application as against the 2nd Respondent may be treated as dismissed with no other orders. In addition, there were previously 3rd, 4th and 5th Respondents in these proceedings who were guarantors under the Lease, but the claim against those Respondents has been resolved and a Notice of Discontinuance filed. Those other Respondents have agreed with the Applicants to pay a significant portion of the arrears of rent and outgoings claimed in the subject Application. 2 These proceedings were last listed for directions on 18 September 2008 before Judicial Member Fox. The Respondent was represented and was in default of previous directions made and accordingly at the same time that the proceedings were listed for hearing on 17 October 2008, an order was made that the Respondent was to file and serve all evidence by 12.00 noon on 8 October 2008. 3 By letter dated 30 September 2008, the Respondent's solicitors McDonald Johnson advised that they no longer act upon his behalf. On 13 October 2008, the Tribunal registry was contacted by the Respondent's sister, who advised that the Respondent did not intend to file any evidence and that he would not be appearing at the hearing. 4 When this matter came before me for hearing on 17 October 2008, I caused an officer of the Tribunal registry to attempt to make further contact with the Respondent. I have been informed that during the course of the telephone conversation which ensued, the Respondent's sister again advised that the Respondent would not be attending the hearing and asked that notification of any orders be made to the Respondent's address which had been provided to the registry. 5 In the above circumstances I am satisfied that the Respondent was fully aware of his obligations to file any evidence upon which he sought to rely prior to the hearing and that he was aware that these proceedings were listed for hearing and would proceed on 17 October 2008, notwithstanding his absence. 6 I am also satisfied that both the Lease and the licence agreement entered into between the parties are retail shop leases in that they relate to premises used predominantly as a restaurant which is a use as set out within Schedule 1 of the Retail Leases Act 1994, and that accordingly the Tribunal has jurisdiction to deal with the relief sought. 7 I have taken into account the submissions made on behalf of the Applicants and the contents of the supporting affidavits of Peter Bale, Mandy Russell and David Allchin which have been admitted into evidence, together with the relevant annexed documents including the Lease, the licence agreement and the relevant business records of the Applicants. I accept the submission made on behalf of the Applicants that, after deduction of the amount of arrears already confessed to by the Respondent in the Local Court at Newcastle and the amount paid or agreed as payable by the other former Respondents as outlined in paragraph 2 above, the amount of $11,213.43 is outstanding together interest in the sum of $572.00 calculated at the rate of 10% from 13 April 2008 to the date of hearing. Accordingly, I am satisfied that a total sum of $11,785.43 is due and payable by the Respondent in respect of arrears and interest. 8 The Applicants seek an order that the Respondent pay their costs. 9 Pursuant to section 77A of the Retail Leases Act 1994, the Tribunal may award costs under section 88 of the Administrative Decisions Tribunal Act 1997 in respect of proceedings. In turn, section 88 of the Administrative Decisions Act 1997 requires the Tribunal to be satisfied that there are "special circumstances" warranting an award of costs. The question of whether "special circumstances" exist is a question of fact (see Randy Wixs Pty Ltd v Pokana Pty Ltd [2003] NSW ADT AP27). The commercial nature of matters before the Retail Leases Division calls for an interpretation quite different from that which might be adopted in other divisions of this Tribunal (see Gizah Pty Ltd v AXA Trustees Ltd [no 2] (2001) NSW ADT 164 and also Randy Wixs [supra] ), but this does not mean that costs should simply follow the event. 10 Turning to the circumstances of these proceedings, the mere fact that arrears payable by the Respondent have been outstanding for a lengthy period of time does not constitute "special circumstances" warranting an order for costs. The Respondent has not filed any Reply or any other evidence, but this also does not of itself entitle the Applicants to an order for costs, and I here repeat reasons given in Mohammed v Shorecolt Pty Ltd (2004) NSW ADT 88 paragraphs 31 to 37, and also repeat a relevant part of the decision of the Tribunal in Irresistible Frock Salons Pty Ltd v Sparbac Pty Ltd & Roche Group Pty Ltd (no 2) [2004] NSW ADT 72 as follows: "(44) Irresistible sought a costs order against Sparbac . It claimed that Sparbac's failure to appear was cogent evidence to its having no arguable defence to Irresistible's claim. But we do not think that this necessarily follows. There are a number of other reasons why a respondent to proceedings who has been served with initiating process may not file an appearance. Furthermore, it cannot be said that the phenomenon of a party failing to appear is so 'out of the ordinary' that it might constitute 'special circumstances' … [45] Yet another consideration of significance is that, if we were to accept Irresistible's argument, we would be conveying the message that any party that chose not to appear in Tribunal proceedings within this Division, and thereby suffered a default judgment to be entered against it, would in the ordinary course be liable to pay the costs of the applicant. In a jurisdiction in which the prima facie presumption is that costs orders should not be made, it would be unfortunate if respondents who were otherwise inclined not to appear were induced to file an appearance and offer some sort of defence to the claim solely to avoid a costs order". 11 The Applicants' submissions as to costs do however go beyond a mere assertion that the Respondent has declined to be involved in the proceedings. Rather, the Applicants assert the following matters as justifying "special circumstances": a. the Applicants re-entered the premises on 14 January 2008. The subject proceedings were commenced on 31 March 2008 and despite the Respondent being represented at a number of intervening directions hearings and indicating that a dispute did exist to at least part of the Applicants' claim, there now appears to be no dispute and the time and work devoted to this matter by the Applicants has been wasted. b. in particular, the previous legal representative for the Respondent continued to indicate to the Tribunal that the Application was to be defended and sought adjournments of the proceedings for the purpose of having material filed on behalf of the Respondent. c. notwithstanding the above representations, there has never been any reply or evidence filed. d. the Tribunal ordered mediation to take place but the Respondent declined to attend mediation, after initially raising no objection before the Tribunal. 12 A relevant and useful observation was made by the Appeal Panel in Prasad and Another v Fairfield City Council (2002) NSW ADT AP2 that: "(36) As we see it, the principle for which section 88 stands is that each party bear their own costs if their conduct in the litigation has been reasonable. If that standard of reasonable conduct is adhered to, then no costs order should be made against the unsuccessful party". 13 Given the period of time which has ensued since these proceedings were commenced, the continued participation in the proceedings by a legal representative on behalf of the Respondent including a number of occasions when adjournments were granted to permit the filing of evidence on behalf of the Respondent, the advice given on behalf of the Respondent that rent arrears were in issue, the failure by the Respondent to participate in mediation and the non- compliance by the Respondent with directions made by the Tribunal, I find that the conduct of these proceedings on behalf of the Respondent has been unreasonable to such an extent that "special circumstances" do exist. Accordingly, the Respondent should pay the Applicants' costs of these proceedings. ORDERS 1. The Respondent Robert Allan Johnson is to pay to the Applicants the sum of $11,785.43 2. The Respondent Robert Allan Johnson is to pay the Applicants' reasonable costs of these proceedings as are agreed or assessed.

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