Annandale Pharmacies (NQ) Pty Ltd v The Angliss Estate (Annandale) Pty Ltd (No. 2) [2019] QCAT 62

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: PARTIES: Annandale Pharmacies (NQ) Pty Ltd v The Angliss Estate (Annandale) Pty Ltd (No. 2) [2019] QCAT 62 ANNANDALE PHARMACIES (NQ) PTY LTD T/AS CHEMMART ANNANDALE (applicant) v THE ANGLISS ESTATE (ANNANDALE) PTY LTD (respondent) APPLICATION NO/S: RSL030-16 MATTER TYPE: Retail shop leases matters DELIVERED ON: 7 March 2019 HEARING DATE: On the papers HEARD AT: Brisbane DECISION OF: Senior Member Brown Member Judge Member McBryde ORDERS: The application for miscellaneous matters filed 6 March 2018 is refused. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – COSTS – where successful applicant in retail tenancy dispute seeks order for costs – where dispute related to specialist retail valuation – where consideration of s 102 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld) – whether the interests of justice require an order for costs – whether proceeding involved complexity – where applicant asserted a disparity in the financial circumstances of the parties – where applicant asserted respondent’s case weak – where interests of justice do not require an order for costs Queensland Civil and Administrative Tribunal Act 2009 (Qld), s 39, s 43, s 101, s 102 Coral Homes Qld Pty Ltd v Queensland Building Services Authority [2013] QCAT 510 (26 September 2013) Go & MJT Nominees Pty Ltd v Hollywells Homewares Pty Ltd & Anor [2010] QCA 368 (21 December 2010). -- 1 of 9 -- 2 Goodhue v Volunteer Marine Rescue Association Incorporated [2015] QCA 234 (20 November 2015) Joanne Baxter and Fifties Food Pty Ltd atf The Ninja Bear Trust t/as Subway Wynnum Central v Subway Realty Pty Ltd & Anor [2013] QCAT 316 Jones V Dunkle (1959) 101 CLR 298 Queensland All Codes Racing Industry Board v Abbott (No. 2) [2016] QCATA 49 (3 March 2016) McNab Constructions Australia Pty Ltd v Donovan Hill Pty Ltd & Ors [2014] QCATA 172 (9 July 2014) Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) [2010] QCAT 412 (25 August 2010) Tamawood Ltd & Anor v Paans [2005] 2 Qd R 101. Turner v Macrossan & Amiet Pty Ltd (No 2) [2016] QCAT 255 (5 February 2016). REPRESENTATION: Applicant: Cohen Legal Respondent: Cooper Grace Ward APPEARANCES: This matter was heard and determined on the papers pursuant to s 32 of the Queensland Civil and Administrative Tribunal Act 2009 (Qld). REASONS FOR DECISION [1] Annandale was successful in proceedings for a retail tenancy dispute arising out of a current market rental valuation. In addition to setting aside the valuation, we ordered that a further determination of current marked rent be undertaken.1 Annandale subsequently filed an application seeking its costs. The application for costs falls for determination. Costs in the tribunal [2] We accept the submission by Annandale, not disputed by Angliss, that the costs fall to be determined under the Queensland Civil and Administrative Tribunal Act 2009 (Qld) (‘QCAT Act’). [3] By s 100 of the QCAT Act, unless the QCAT Act or an enabling Act provides otherwise, parties to proceedings in the tribunal must bear their own costs. By s 102(1) of the QCAT Act the tribunal may order a party to pay all or some of another party’s costs if the tribunal considers the interests of justice require the making of such an order. In deciding whether to award costs, s 102(3) of the QCAT Act sets out a number of matters the tribunal may have regard to in considering whether an order for costs is required to be made: 1 Annandale Pharmacies (NQ) Pty Ltd trading as Chemmart Annandale v The Angliss Estate (Annandale) Pty Ltd [2017] QCAT 429 (21 November 2017). -- 2 of 9 -- 3 (a) whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party to the proceeding, including as mentioned in section 48(1)(a) to (g); (b) the nature and complexity of the dispute the subject of the proceeding; (c) the relative strengths of the claims made by each of the parties to the proceeding; … (e) the financial circumstances of the parties to the proceeding; (f) anything else the tribunal considers relevant.2 Consideration Section 102(3)(a) – whether a party to a proceeding is acting in a way that unnecessarily disadvantages another party [4] Annandale does not submit that Angliss acted in a way that caused Annandale unnecessary disadvantage. Section 102(3)(b) – the nature and complexity of the dispute [5] Annandale says that the dispute was complex and refers to the following in support of its submission: the ‘voluminous’ affidavit material filed by the parties; the detailed submissions prepared by the parties; the fact that the parties were legally represented, including at various interlocutory applications and directions hearings; the reliance by the parties upon expert evidence; the incurring of significant legal costs; that a failure to award costs would erode Annandale’s success in the proceedings. [6] In response, Angliss says that the proceedings were not complex, that the matter was determined on the papers and that each party relied upon an initial pleading, a statement of evidence and final submissions. [7] Annandale relies upon the parties being given leave to be legally represented in support of the submission that the matter was complex. Annandale says that Angliss, in its application for leave to be legally represented, submitted that the matter was likely to involve complex questions of law and that the tribunal would be assisted by legal representatives both in providing submissions on the interpretation of the Retail Shop Leases Act 1994 (Qld) and the valuer’s compliance with the Act, and in the efficient conduct of the hearing. [8] It is trite to observe that applications for leave to be legally represented are very often supported by submissions that a matter will involve some degree of complexity on the facts or the law. This is hardly surprising in the context of s 43 of the QCAT Act.3 We do not consider submissions made by a party in an application for leave to be represented to be overly persuasive in a consideration of costs under s 102 of the QCAT Act. We must be persuaded that the interests of justice require an order for 2 QCAT Act, s 102(3). 3 See QCAT Act, s 43(3)(b). -- 3 of 9 -- 4 costs based upon a consideration of all relevant matters including those matters set out in s 102(3). [1] Retaining legal representatives for a complex case may, in the absence of countervailing considerations, be a basis for awarding costs.4 It does not follow however from a grant of leave for legal representation that there will be an order for costs. A number of other factors must be taken into consideration including the nature and complexity of the proceedings, the relative strength of Annandale’s claim, whether legal representation was required to achieve a just result and the extent to which a party’s success in a proceeding is eroded by bearing their own costs.5 [9] It should be observed that the provisions of the RSL Act dealing with rent reviews are neither lengthy nor complex. The specialist retail valuer was required to comply with sections 28, 29 and 31 of the RSL Act which set out the matters to be considered by retail valuers, the requirement that the valuer be independent of the parties and the requirements of the determination. We found that the valuer had not made the determination in accordance with s 29(a)(i) of the RSL Act.6 We were not satisfied that the value: had not taken into consideration the value of the lessee’s goodwill or the fixtures or fittings in the premises7; had failed to take into consideration the parties submissions8; had given adequate reasons in support of his determination of the market rental9. [10] Whilst the parties filed extensive material in the proceeding, including lengthy submissions and expert evidence, the determination of the dispute turned principally upon the deficiencies in the valuation. There was nothing about the dispute that could be characterised as requiring the consideration or determination of novel questions of law. [11] We are not persuaded that the matter was sufficiently complex that the interests of justice require an order for costs. Section 102(3)(c) – the relative strength of the claims by the parties [12] Annandale says that the present proceeding is the second occasion on which it has been required to apply to set aside the rental determination under the lease. Annandale refers to its success in the earlier proceedings.10 Annandale refers to various similarities between the earlier valuation and the valuation in these proceedings. Annandale says that the failure by the valuer, in the earlier proceeding, to satisfy s 29(a)(i) of the RSL Act, and the failure by the valuer in the present proceedings to comply with the provision was a common deficiency that ‘was always evident.’ Annandale says that Angliss should have been aware of the weakness of its case in defending this particular ground of challenge to the valuation. 4 Tamawood Ltd & Anor v Paans [2005] 2 Qd R 101. 5 Turner v Macrossan & Amiet Pty Ltd (No 2) [2016] QCAT 255 (5 February 2016). 6 Annandale Pharmacies (NQ) Pty Ltd trading as Chemmart Annandale v The Angliss Estate (Annandale) Pty Ltd [2017] QCAT 429 (21 November 2017), [35]. 7 Ibid, [37]. 8 Ibid, [50]. 9 Ibid, [55], [57], [60]. 10 Annandale Pharmacies (NQ) Pty Ltd t/as Terry White Pharmacy v The Angliss Estate (Annandale) Pty Ltd [2014] QCAT 171 (2 May 2014). -- 4 of 9 -- 5 [13] In response, Angliss says that s 102(3)(c) of the QCAT Act requires a consideration of whether the unsuccessful party’s case is a weak one relative to the successful party’s claim, not whether the case is objectively weak. By s 102(3)(c) the tribunal may have regard to ‘the relative strengths of the claims made by each of the parties to the proceeding.’ The relative strengths to which the section refers requires a consideration of each party’s case by reference to both the other party’s case and the outcome of the proceeding including relevant findings by the tribunal. [14] Angliss says that the threshold for the relative weakness of a case to result in an order for costs is high. In support of this submission Angliss cites the decisions of the tribunal in Coral Homes Qld Pty Ltd v Queensland Building Services Authority (‘Coral Homes’)11 and Joanne Baxter and Fifties Food Pty Ltd atf The Ninja Bear Trust t/as Subway Wynnum Central v Subway Realty Pty Ltd & Anor (‘Joanne Baxter’)12. [15] Angliss refers to the following passage from Coral Homes: Section 100 presumes that ordinarily each party to a proceeding would bear that party’s own costs, irrespective of the result. On that basis there ought be no order for costs even if the Applicant were able to show that it would have almost certainly have succeeded on its application. That is, unless the interests of justice ought lead to a different result.13 [16] In Joanne Baxter the tribunal held: A claim is not vexatious simply because it is not a strong case or the claim wholly fails.14 [17] There is no threshold to be applied when considering the relative strengths of the parties’ cases in determining whether the interests of justice require an order for costs. That a party’s case may be one bound to fail can however be a relevant consideration in determining whether an order for costs is required in the interests of justice. [18] Angliss says that its claim was not so relatively weak that a costs order should be made, referring to the finding that the valuer had taken into consideration the parties submissions. Angliss says that it was reasonable for it to defend the validity of the valuation on the basis that it was approximately the same value as the first determination. [19] Despite Annandale’s success in the proceeding, it could not be said that Angliss’s case was hopeless or bound to fail. In the present dispute a different valuer was appointed, independent of the parties, to undertake a valuation of the market rent of the premises. He prepared his valuation accordingly. We found that the valuer had not complied with the requirements of the RSL Act and set aside the valuation. The error lay with the valuer in undertaking the valuation. [20] As to the submissions by Annandale that this was the second occasion on which it had challenged a market rental valuation and the suggested similarities between the valuations, we observe that in the final result a differently constituted tribunal found 11 [2013] QCAT 510 (26 September 2013). 12 [2013] QCAT 316. 13 [2013] QCAT 510 (26 September 2013) [36]. 14 [2013] QCAT 316 [22]. -- 5 of 9 -- 6 a valuation prepared by a different valuer, who was independent on the parties, failed to comply with the requirements of the Act for reasons different to those set out in the earlier decision. While there are some similarities between the deficiencies found in the present valuation and the earlier valuation, we do not place significant weight on any identified or perceived similarities in considering whether an order for costs is required to be made. [21] We find that the relative strengths of the parties’ cases is not a factor that requires an order for costs. Section 102(3)(e) – the financial circumstances of the parties [22] Annandale says that Angliss has a clear ability to meet a costs order in its favour, referring to the sale by Angliss of the shopping centre in 2018 for an amount of $33.5 million. In respect of its own financial position, Annandale’s submissions refer to its sales figures and customer numbers during the period 2006 to 2011. [23] Angliss says that Annandale has not demonstrated a sufficiently compelling financial impact to warrant a costs order. [24] As the appeal tribunal observed in Queensland All Codes Racing Industry Board v Abbott (No. 2) (‘Abott’): It is often the case in this Tribunal that the financial circumstances of the parties differ markedly. The Tribunal hears many disciplinary proceedings. In all cases, the regulatory body is funded by fees imposed on the registration to the profession or industry. In many cases, the registrant appears before the tribunal with little or no financial support and is prevented from earning in the profession the subject of the proceeding. That circumstance is not a reason for making an order for costs.15 [25] While these observations were made in the context of disciplinary proceedings, they nevertheless have direct relevance in the present case particularly considering the submission by Annandale as to the disparity in the financial circumstances enjoyed by the parties. The appeal tribunal in Abbott went on to make a number of observations regarding the decision in Tamawood Ltd & Anor v Paans 16 and specifically that the decision of the Court of Appeal in Tamawood was informed by two important points: The first was that the value of the order for compensation was eroded by Ms Paans’ costs of obtaining that order. The second consideration was the behaviour of Tamawood Homes prior to the commencement of proceedings which showed a continuing default.17 [26] Here, there is no suggestion that Angliss acted improperly and Annandale concedes this. [27] As to the relative financial circumstances of the parties we make the following observations. While Annandale refers in general terms to its corporate and business structure there is otherwise no evidence offered as to its financial circumstances. 15 [2016] QCATA 49 (3 March 2016) [18]. 16 Tamawood Ltd & Anor v Paans [2005] 2 Qd R 101. 17 [2016] QCATA 49 (3 March 2016) [18] [20]. -- 6 of 9 -- 7 Annandale refers to a decline in sales and customers however the figures it relies upon are not recent and appear to be at least 7 years old. [28] Annandale says that a Jones v Dunkel18 inference should be drawn against Angliss as a result of the failure by Angliss to explain its financial position. The rule in Jones v Dunkel has been explained by the Court of Appeal thus: The rule in Jones v Dunkel is not one that requires a party to call other witnesses in order to corroborate evidence of a witness that has been called by the party. It concerns the drawing of inferences. It enables a tribunal of fact more confidently to draw an inference of fact in favour of a party from the opposing party’s unexplained failure to call a witness whom that party would be expected to call in order to give evidence concerning the fact. However, as the New South Wales Court of Appeal in Morley v Australian Securities and Investments Commission recently reminded, if a party’s case is otherwise proved, the inference that the absent witness would not assist the party’s case does not detract from the proof.19 [29] While the rule in Jones v Dunkel is applicable in tribunals20 for the reasons that follow we do not accept Annandale’s submission that it has relevance in the present case. The application before the Tribunal is one for costs. The substantive proceeding has been determined. Applications for costs are generally decided on the basis of submissions by the parties, not evidence (although there may be occasions when evidence is warranted or necessary, for example where an order fixing costs is sought and evidence of legal costs incurred is required). Angliss does not appear to dispute either that the shopping centre has been sold or the purported sale price. What Angliss says is that reference to the sale price alone does not paint a complete picture of the commercial realities of the sale including whether it derived a profit or incurred a loss from the sale. There is insufficient material before us to form any concluded views regarding the sale of the shopping centre and the financial position of Angliss as a consequence thereof. [30] In any event, we accept that, on the material before us, there is a disparity in the relative financial circumstances of the parties. This is not uncommon in retail tenancy disputes where the lessor may be a significant property owner. Of itself however, this disparity is not a factor that compels an order for costs as being in the interests of justice. [31] We turn to the second point informing the decision in Tamawood as referred to by the appeal tribunal in Queensland All Codes Racing Industry Board v Abbott (No. 2): that the value of the compensation awarded to the successful party was eroded by the costs incurred in obtaining the order. Annandale, correctly in our view, submits that Tamawood, insofar as it relates to a consideration of the impact of costs upon a successful outcome, is not limited to parties of modest means. In Ralacom Pty Ltd v Body Corporate for Paradise Island Apartments (No 2) (‘Ralacom’)21 Alan Wilson J held: 18 (1959) 101 CLR 298. 19 Goodhue v Volunteer Marine Rescue Association Incorporated [2015] QCA 234 (20 November 2015) [28] (citations omitted) 20 Go & MJT Nominees Pty Ltd v Hollywells Homewares Pty Ltd & Anor [2010] QCA 368 (21 December 2010). 21 [2010] QCAT 412 (25 August 2010). -- 7 of 9 -- 8 26. Second, Keane JA was of the view that where the complexity of the matter justified legal representation, it would not be in the interests of justice to bar the successful party from recovering costs that were reasonably necessary to achieve a satisfactory outcome. 27. That conclusion must, here, be considered in the light of the difference between s 70 of the CCT Act and s 100 of the QCAT Act. Section 70 speaks of a ‘main purpose’, but s 100 mandates that parties shall bear their own costs. Section 70 contains, within itself, a reference to the condition or circumstance in which the main purpose may be subsumed to the interests of justice; s 100 has no such proviso, although it appears later, in s 102(1). 28. Under that subsection QCAT has a discretion to make a costs order ‘…if the tribunal considers the interests of justice require it…’. Section 102(3) says that, in deciding whether to award costs, the tribunal may have regard to matters not dissimilar to those set out in s 71 of the CCT Act including, in particular for present purposes, the nature and complexity of the dispute and the relative strength of each party’s claims. 29. Under the QCAT Act the question that will usually arise in each case in which costs are sought is whether the circumstances relevant to the discretion inherent in the phrase ‘the interests of justice’ point so compellingly to a costs award that they overcome the strong contra-indication against costs orders in s 100.22 [32] The primary consideration is whether the interests of justice require an order for costs. Annandale refers to the amount it expended in legal costs in the first proceeding. The relevance of costs incurred by Annandale in the earlier proceeding is unclear. In these proceedings, Annandale says that it has incurred legal costs of approximately $58,004. There is no material before us to support this submission. It might be assumed that the figure is based upon the amount paid by Annandale to its legal representatives although this is not made clear in the submissions. [33] As we have observed, there is no direct and detailed material before us as to the financial circumstances of the parties. There is no evidence that the payment of the legal costs by Annandale has caused it financial hardship nor the impact of those costs upon its financial position in the context of any ‘erosion’ of the benefit of the successful outcome achieved in the proceedings as a result of incurring costs. [34] On balance, we are not persuaded that the financial circumstances of the parties is a factor supporting a finding that the interests of justice require an order for costs. Section 102(3)(f) – anything else the tribunal considers relevant [35] Neither party submits that there are any other relevant matters. Submission by Angliss that the valuer should pay Annandale’s costs [36] Angliss submits that the valuer was in breach of the provisions of the RSL Act and that it is the valuer who has caused Annandale to incur costs. Angliss says that the 22 Ibid, [26] – [29] (citations omitted). -- 8 of 9 -- 9 valuer should pay Annandale’s costs. Angliss relies upon the decision in Ralacom23 where Alan Wilson J held: The general law recognises that it may be appropriate in some circumstances to order costs against parties not named on the record of proceedings, but who play an active role in the conduct of them. [37] McNab Constructions Australia Pty Ltd v Donovan Hill Pty Ltd & Ors24 was decided after Ralacom. In McNab the Appeal Tribunal held:25 Courts have consistently held that power to award costs (other than in the court of chancery) is a creature of statute and must be conferred expressly or by necessary implication. Power to make all such other orders as the case requires, have not been considered to create a necessary implication. A necessarily (sic) implication may not be readily implied. Section 102 of the QCAT Act provides only for the making of costs orders requiring a party to pay costs of another party. There is no provision for payment of costs under s 102 to non-parties. It contains no power for the Tribunal to make an order requiring a party, in this case, McNab Constructions to pay costs of non-parties, that is, the proposed joinder parties. Having regard to the plain words of s 102, there is no basis upon which it could be said that a necessary implication arises that costs may be awarded to non-parties.26 [38] The present proceeding is in the tribunal’s original jurisdiction. Parties to a proceeding in the original jurisdiction are the applicant; a person in relation to whom a decision of the tribunal is sought by the applicant; a person intervening in the proceeding under s 41; a person joined as a party to a proceeding under s 42; someone else an enabling Act states is a party to the proceeding.27 [39] The valuer is not one of the persons identified in s 39 of the QCAT Act as being a party. The valuer is therefore not a party to the proceeding. The only statutory provision upon which Angliss may rely in respect of an order for costs against the valuer is s 102(1) of the QCAT Act permitting an order for costs to be made against a party. As the valuer is not a party to the proceeding, there is no power in the tribunal to make an order for costs against the valuer. Conclusion [40] We are not persuaded that the interests of justice require an order for costs. The application for miscellaneous matters is refused. 23 [2010] QCAT 412 (25 August 2010) [19]. 24 [2014] QCATA 172 (9 July 2014). 25 Ibid, [29] – [30] (citations omitted). 26 The decision was affirmed on appeal in Donovan Hill Pty Ltd v McNab Constructions Australia Pty Ltd [2015] QCA 114 (23 June 2015). 27 QCAT Act, s 39. -- 9 of 9 --