Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd (No 2)

1. [1]

   HIS HONOUR: The plaintiff, Sing Kian Gan, and the defendant, Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd, were tenant and landlord, respectively, of premises which operated as a restaurant at Shop 3, 228-230 Hanvaylee Parade, Kensington (“the premises”).

2. [2]

   The plaintiff became the tenant when, on 15 March 2012, a registered lease under the Retail Leases Act 1994 (NSW) (“the RLA”) (“the lease”) for the premises was assigned from the former tenant, Kaki Kima Restaurant Pty Ltd, to the plaintiff.

3. [3]

   The lease was for a period of five years commencing on 25 April 2009 and terminating on 24 April 2014. There was an option for renewal for an additional five year term.

4. [4]

   The option to renew the lease was exercised by the plaintiff, by a letter dated 24 February 2014. The defendant confirmed the plaintiff’s exercise of that option. However, in the circumstances which then unfolded, on 24 July 2014, the defendant terminated the plaintiff’s lease of the premises by re-entry.

5. [5]

   The termination of the lease was the genesis of proceedings brought by the plaintiff and the defendant under the RLA before the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal (“the Tribunal”): see, as to the jurisdiction of the Tribunal sitting in that Division, s 16(1)(b), Sch 1 Pt 1cl 13(2)(a) and Sch 4 Pt 3 of the Civil and Administrative Tribunal Act 2013 (NSW) (“the CAT Act”). Both parties brought, what was described in their originating processes as a “retail leases application” pursuant to s 71(1) of the RLA on 20 July and 11 September 2015, respectively.

6. [6]

   The Tribunal constituted by Principal Member, Mr D Patten, delivered its decision with respect to the applications on 20 April 2016: Gan v Shop, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATCD (unreported, decision dated 20 April 2016) (“Gan No 1”). The application by the plaintiff was dismissed. The application by the defendant was granted, in part, and an order for $19,696.47 was made against the plaintiff.

7. [7]

   The plaintiff filed a notice of appeal against the decision of the Tribunal constituted by the Principal Member on 26 April 2016. That was an internal appeal brought under Pt 6 Div 2 of the CAT Act (the matter was within the internal appeal jurisdiction of the Tribunal pursuant to s 32(1)(a) of the CAT Act).

8. [8]

   By a decision made by the Appeal Panel on 13 September 2016, constituted by two senior members of the Tribunal, Mr P Durack SC and Mr J McAteer (“the Appeal Panel”), orders were made dismissing the appeal: Gan v Shop 3, 228-230 Hanvaylee Parade Kensington Pty Ltd [2016] NSWCATAP 210 (“Gan No 2”).

9. [9]

   By a summons filed on 8 November 2016, the plaintiff sought leave to appeal the whole of the decision of the Appeal Panel. Whilst not specifying the provisions of the CAT Act relied upon to bring the appeal, the nature and form of the appeal conveyed that it was brought under s 83(1) of the CAT Act.

10. [10]

    By a judgment delivered 29 September 2017, the Court refused leave to bring the appeal. The plaintiff was found to have successfully identified questions of law with respect to grounds 3 and 7 and, in some respects, 4, 5 and 6, but had failed to establish a proper basis for the grant of leave to appeal.

11. [11]

    The Court recorded that no submissions were advanced by the plaintiff in support of grounds 1 and 2 of the appeal (and consequently did not make submissions in that respect). Ground 2 was merely a general or catch all ground, challenging the dismissal of the plaintiff’s claim. Without more, it was devoid of any real content. Ground 1 concerned the assessment of damages to the defendant (and costs) and did not raise a question of law.

12. [12]

    As to the question of costs, the Court made orders and directions as follows:

13. [13]

    In accordance with those directions, the defendant filed an application as to costs and short written submissions, in respect of same, on 26 October 2017. The plaintiff filed submission in reply on 6 November 2017.

14. [14]

    The application in relation to costs was as follows:

15. [15]

    No party sought the matter to be listed for oral hearing. Hence, that issue is to be determined upon the written submission of the parties.

16. [16]

    This judgment concerns that application for costs.

RELEVANT PRINCIPLES

1. [17]

   The general rule as to costs is set out in s 98 of the Civil Procedure Act 2005 (NSW) (“CPA”) and Pt 42 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), namely, that costs follow the event.

2. [18]

   Section 98(4) of the CPA relevantly provides:

3. [19]

   The principles regarding s 98(4) are referred to Hamod v New South Wales [2011] NSWCA 375 at [813]-[820] (per Beazley JA, with whom Giles and Whealy JJA agreed). The relevant part of that judgment is extracted below:

4. [20]

   The defendant placed reliance upon the principles informing the discretion to make a lump sum costs order set out in Sedgwick v Varzonek (No 2) [2015] NSWSC 1613 and in Sedgwick v Varzonek (No 3) [2015] NSWSC 1982 (per Slattery J). Two principles concerning the operation of s 98(4)(c) which may be extracted from those judgments are as follows:

   1. (1)

      Although s 98(4)(c) has been described as particularly suited to complex litigation, the rule is expressed in general terms and is not limited to the cases of that type: Australasian Performing Rights Association Ltd v Marl [1999] FCA 1006 at [3] (Burchett J). The power to award a gross sum order under s 98(4)(c) instead of assessed costs is exercised whenever the circumstances warrant its exercise; the purpose of the rule is to avoid the expense, delay and aggravation arising out of taxation: Beach Petroleum NL v Johnson (No 2) (1995) 57 FCR 119.

   2. (2)

      The Court has an unconfined discretion under s 98(4): “the Court may make an order…” [emphasis added] including a lump sum costs order. Cases such as Harrison v Schipp [2002] NSWCA 213; 54 NSWLR 738 and Hadid v Lenfest Communications Inc [2000] FCA 628 make clear that lump sum costs orders are not limited to existing categories of case but may be made where the circumstances require: Sedgwick v Varzonek (No 3) at [9].

Submissions of the Defendant

1. [21]

   The defendant made the following submissions:

   1. (1)

      That the unsuccessful plaintiff should pay the defendant’s costs ought not be in dispute, pursuant to r 42.1 of the UCPR.

   2. (2)

      That an additional order be made as to costs awarded as a specified lump sum, pursuant to s 98(4)(c) of the CPA for the following reasons:

2. [22]

   The defendant relied on the affidavit of Anthony John Khalil Herro sworn 26 October 2017. The derivation of the amount of specified lump sum costs sought is explained in Mr Herro's affidavit. The affidavit of Mr Herro provided details regarding the plaintiff’s bankruptcy circumstance as well as an estimation of the quantum of costs incurred to date. Mr Herro then discounted the estimated quantum of costs amount by 20% as a result of solicitor client work which, he noted, would not be recoverable on a party-party basis.

Submissions of the Plaintiff

1. [23]

   The plaintiff’s submissions in reply were as follows:

   1. (1)

      The Court has found that the plaintiff's appeal raised fairly arguable questions of law for the consideration of this Court. In the judgment on 29 September 2017, the Court found the plaintiff had successfully identified questions of law in relation to grounds 3 and 7 and, in some respects, 4, 5 and 6.

   2. (2)

      The costs should follow the event.

   3. (3)

      The plaintiff agrees with the defendant's cost order that costs be awarded as a specific lump sum, pursuant to s 98(4)(c) of the CPA.

   4. (4)

      As to Mr Herro’s affidavit, the plaintiff submitted:

CONCLUSION

1. [24]

   There is an overwhelming case for the award of costs in this matter based upon the principle stated in r 42 of the UCPR that costs will follow the event. No contrary submission was advanced by the plaintiff. Leave was refused for all grounds of the appeal, bought by the plaintiff. Notwithstanding questions of law having been raised with respect to some grounds, no ground was made out.

2. [25]

   I also consider the defendant has established a proper basis for a gross sum costs order rather than an assessment of costs. Again, the plaintiff does not dispute such a determination. However for more abundant caution, I would note that in reaching that conclusion I have also accepted the defendant’s grounds for the same, as summarised at [17(2)] above (the first and second contention so far as it is supported by summarised sub-grounds (a) and (b), (ii), (iv), and (v).

3. [26]

   No dispute was raised by the plaintiff as to the receipt of evidence from the defendant. The plaintiff did not dispute that bankruptcy proceedings are afoot but challenged the amount appearing within the “Bankruptcy Notice” when compared with the evidence in these proceedings as to non-payment. The evidence gives ample basis for the first contention (I do not accept that the trustee in bankruptcy is unlikely to accept proof of debt in the absence of a certificate of determination after a formal assessment). Given the course of the proceeding in the Tribunal and this Court, there is ample basis to the second contention that there will be irrecoverable costs from an assessment process.

4. [27]

   Finally, I consider, having regard to the aforementioned principles as to the ruling of a gross sum that, on the evidence before the Court, the amount claimed by the defendant, represents a logical, fair and reasonable amount after allowing for appropriate discounts.

DIRECTION

1. [28]

   The defendant shall bring in short minutes of order reflecting this judgment by 4pm on 19 December 2017.