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- Unreported Judgment
QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL
Venga Pty Ltd trading as San Churro and Anor v YFG Shopping Centres Pty Ltd  QCAT 118
VENGA PTY LTD TRADING AS SAN CHURRO
ALETH pTY LTD AS TRUSTEE FOR THE CROWE FAMILY TRUST
yfg shopping centres pty ltd
Retail shop leases matter
23 April 2020
On the Papers
The First Applicant Venga Pty Ltd trading as San Churro and the Second Applicant Aleth Pty Ltd as trustee for the Crowe Family Trust are to pay to the Respondent YFG Shopping Centres Pty Ltd its costs of the proceeding fixed in the sum of $61,115.13 by 14 May 2020.
PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – GENERAL MATTERS – POWER TO AWARD GENERALLY – where applicants acted in such a way as to unnecessarily disadvantage the other party – where costs sought on an indemnity basis – where applicants withdrew application immediately before final hearing – where respondent awarded costs on the standard basis.
Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 100, s 102, s 106, s 107
Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225
Legal Services Commissioner v Bone  QCA 179
Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No2)  QCAT 412
REASONS FOR DECISION
- This matter was a dispute between a lessee and lessor conducted under Part 8 of the Retail Shop Leases Act 1994 (Qld) (RSL Act). The first applicant is a franchisor. It executed a lease on 22 May 2015. The second applicant is a franchisee which from the commencement of the lease traded from the premises the subject of the lease. The respondent is the lessor of the premises.
- The first applicant filed a Notice of Dispute in October 2017 alleging certain misrepresentations on the part of the lessor. The matter progressed through the Tribunal. On 18 September the second applicant was joined as a party to the proceedings.
- The claim seeks recovery of moneys under various heads, on the part of both applicants, in the order of $1,000,000.00. The respondent filed a response denying the allegations made against it.
- The matter was set down for hearing on 5 and 6 August 2019.
- On 29 July 2019 the applicants applied unsuccessfully to adjourn the hearing. On 2 August 2019 the applicants filed a notice of withdrawal of their application.
- The respondent now seeks its costs of the proceeding on an indemnity basis or alternatively on the Supreme Court scale on the standard basis. The respondent submits that the applicants’ claim was always bound to fail and the proceedings were vexatious. It is said that the manner in which the proceedings were commenced and continued by the applicants was unreasonable and involved a misuse of the processes of the Tribunal. The respondent submits that the applicants commenced a legally hopeless case without legal advice and only sought that advice on the eve of trial. Those factors are said to justify a costs order on an indemnity basis. If that submission is not accepted, then given the very significant compensation sought in the proceedings and the relatively complex nature of the proceedings, the respondent submits that the costs ought to be assessed on the basis of the Supreme Court scale.
- Mr Leahy the solicitor acting on behalf of the respondent filed an affidavit setting out a schedule of all the respondent’s costs and disbursements using Schedule 1 Scale of Costs - Supreme and District Court from the Uniform Civil and Procedure Rules 1999 (Qld) to the date at which the applicants withdrew their claims, in an amount of $76,485.20, inclusive of counsel’s fees and disbursements. Solicitor/own client costs for the respondent to 2 August 2019 are said to be $84,851.00 including counsel’s fees.
- The applicants concede that the respondent is entitled to its costs, on a standard basis, of preparing for the hearing. The applicants concede that the reason for withdrawal of the proceeding was legal advice received shortly before the hearing that their prospects were poor and it was impractical and uncommercial to seek an adjournment and file further evidence. They do not accept that any circumstances exist to justify an award of indemnity costs. Further they do not think it is in the interests of justice for the Tribunal to make an order that the applicants pay the respondent’s costs of the dispute resolution processes, including the compulsory conferences; the application for costs filed 23 August 2019; and retaining senior counsel. It is submitted that because of the poor financial position of the second applicant, it should not be made the subject of any order for costs.
- By section 106 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (QCAT Act), the Tribunal may make an order for costs at any stage of a proceeding or after the proceeding has ended. The general position in this Tribunal is set out in section 100 of the QCAT Act, that each party bear their own costs for the proceeding. However, pursuant to section 102 of the QCAT Act, the Tribunal has a discretion to award costs, if the Tribunal considers it in the interests of justice to do so.
- Having regard to the matters relevant to the exercise of my discretion, set out in s 102(3), I consider that:
- (a)the late withdrawal of the proceeding unnecessarily disadvantaged the respondent. I note the acknowledgement of the applicants that late withdrawal of the claims justifies an award of costs in favour of the respondent, at least in relation to its preparation for hearing. I accept the submission of the respondent that if the legal advice which led to withdrawal of the proceeding had been obtained earlier, very significant legal costs would have been avoided;
- (b)the proceeding involved some complex factual and legal issues. In recognition of this, both parties were granted leave by the Tribunal to be legally represented. On the basis of the size of the claims, the engagement of senior counsel by the respondent was reasonable;
- (c)the applicants claims were relatively weak, as acknowledged by their stated reason for withdrawing the claims before the hearing.
- (d)there is no dispute that the second applicant’s financial position is not strong. However, there is no evidence that either the first applicant or respondent are not financially sound, noting that they both conduct significant businesses. In the end I do not think that because a party can afford to bear legal costs it should do so where it was unreasonable that the costs were incurred in the first place.
- I acknowledge the applicants’ submission that resolution of retail shop lease disputes is intended to be inexpensive. However, it is the reality that more complex disputes involving large sums of money cannot be managed in an inexpensive way, if the parties are to protect their positions with the advantage of legal representation.
- Taking into account all these considerations and particularly that the respondent’s costs were unnecessarily incurred, I consider that circumstances relevant to my discretion point compellingly to a costs award.
- I do not consider that circumstances exist which justify an award of indemnity costs as sought by the respondent. The respondent submits that the proceedings were commenced and continued by the applicants for the ulterior purpose of applying pressure to the respondent to grant some form of rental abatement, that the proceedings were commenced and continued in wilful disregard of known facts and established law. It is said that the case was vexatious and involved a misuse of the processes of the Tribunal. The respondent says that this constitutes a special or unusual feature which would justify the making of an order for costs on the indemnity basis.
- The applicants submit that they had a genuine belief they would make out their case at hearing.
- Without a hearing, I am unable to make any findings on the papers as to such serious allegations as an ulterior motive in the applicants commencing and maintaining their claims or that there has been any misuse of the processes of the Tribunal.
- On the material before me I am unable to find that there has been such blameworthy conduct of the part of the applicants that an order for indemnity costs should be made. Merely conducting a case which has no or substantially no prospect of success is insufficient to justify an order for indemnity costs.
- I have concluded that the applicants withdrew their proceeding once it was clear to them that their prospects of succeeding in the hearing were poor. That decision could reasonably have been taken earlier. As it was not, unnecessary costs were incurred. In those circumstances, it is in the interests of justice that the respondent recover its costs of the proceeding on the standard basis.
- I do not accept the submission of the applicants that the parties should bear their respective costs up to the filing of statements in December 2018. I consider the respondent is entitled to recover its costs of the proceeding from the date of commencement of the proceedings.
Amount of costs
- As to what amount should be awarded for costs, the itemised schedule of costs incurred by the respondent is compiled by reference to the Supreme Court scale of costs. The applicants submit that if a costs order is to be made, it should be assessed on the Magistrate’s Court scale because that reflects the objects of the Tribunal to deal with matters in an economical way. I reject that submission. The over-riding concern is to award costs such that the interests of justice are met. It is not in the interests of justice that any award falls significantly short of the actual costs incurred by a party in a complex matter involving claims which far exceed the monetary jurisdiction of the Magistrates Court. No submissions are made about the various items of work claimed in the schedule.
- By section 107(1) of the QCAT Act if the Tribunal makes a costs order the Tribunal must fix the costs, if possible.
- When fixing costs, the Tribunal is not bound by any particular scale of costs, however the scales used by the civil courts in Queensland are a useful guide. I consider the Supreme Court scale of costs used by the respondent in its schedule to be helpful. In view of the size of the applicants’ claim, falling within the monetary jurisdiction of the Supreme Court, it is not unreasonable to utilize that scale.
- I accept that the work set out in the schedule has been performed.
- I accept that the entirety of Senior Counsel’s fees were reasonable and necessarily incurred and will award those costs in accordance with Senior Counsel’s tax invoices.
- Standard costs do not cover every item of work performed by a solicitor for a party. A percentage of costs incurred by a party do not relate to matters strictly necessary to defend a party’s rights but relate to communication and attendances particular to the relationship between a solicitor and their client.
- I will reduce the claimed sum of $50,910.20 by one third to account for solicitor/own client costs, bringing the recoverable solicitor’s costs to $33,940.13. The Schedule does not itemise the cost of the respondent bringing its application for costs. Given the extent of work involved in preparing the schedule, making extensive submissions and responding to the applicants’ extensive submissions I intend to award costs with respect to the application. I note the applicants’ submissions that the respondent was invited to negotiate its costs but did not do so. That is said to be a reason why the respondent’s costs of the application for costs should not awarded. The parties are obviously very far apart in relation to what might constitute an appropriate sum for the respondent’s costs. It seems unlikely to me that the issue could have been settled by negotiation. I do not consider it unreasonable for the respondent to seek an order for costs in the matter, nor to seek the assistance of senior counsel in relation to cost issues, given that senior counsel had been briefed in the matter.
- I consider the sum of $1,600.00 to be reasonable with respect to the costs of bringing the application. I have applied the quarter hourly rate of $80.60 referred to in item 16 of the relevant scale of costs over a period of 5 hours.
- The respondent has not sought in its schedule an amount for care and consideration. It has not been awarded. I also note that Senior Counsel did not charge a fee for the first day of hearing. They are matters to the advantage of the applicants.
- In all, I consider a reasonable amount to award to the respondent for costs of the proceeding is $35,540.13 plus senior counsel’s fees of $25,575.00, totalling $61,115.13.
- I do not accept the applicants’ submission that no order should be made against the second respondent because of an asserted power imbalance with the respondent. There is no evidence before me that the respondent has acted unreasonably toward the second applicant. Nor is there any evidence that it seeks a costs order to deter other tenants from entering into disputes with it and making application to the Tribunal. The joining of the second applicant to the proceeding increased the costs of the proceeding for the respondent.
- I order that the first and second applicants pay the respondent’s costs of the proceeding fixed in the sum of $61,115.13 by 14 May 2020.
 Colgate-Palmolive Company v Cussons Pty Ltd (1993) 46 FCR 225 at 233
 Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No2)  QCAT 412 at 29.
 See the discussion of the authorities and what is required to depart from the general rule of costs in Legal Services Commissioner v Bone  QCA 179 at  – .
 Ibid at .
 Although not applicable in the Tribunal it is of assistance to refer to Rule 702(2) of the Uniform Civil Procedure Rules for a statement as to the meaning of costs on the standard basis applicable in the civil courts.
- Published Case Name:
Venga Pty Ltd & Aleth Pty Ltd v YFG Shopping Centres Pty Ltd
- Shortened Case Name:
Venga Pty Ltd v YFG Shopping Centres Pty Ltd
 QCAT 118
23 Apr 2020