Edwards T/A Sublime Body Spa v Longton [2005] RSLT 2

[2005] RSLT 2 THE RETAIL SHOP LEASES ACT In the matter of Dispute 30/04 KRISTEN ELIZABETH EDWARDS (T/A SUBLIME BODY SPA) - Claimant and COLIN LONGTON (AS POWER OF ATTORNEY FOR MARY JANE JOYCE LONGTON) - Respondent DECISION ON COSTS Coram: Mrs Anne Forbes Mr Trevor Davies Mr Malcolm Macrae Given in Brisbane on 16 August 2005. -- 1 of 7 -- Edwards-v-Longton Decision on Costs 2 1. The Respondent landlord seeks costs of and incidental to the hearing of this dispute, which was referred to the Tribunal under s 64(2)(a)(i) of the Retail Shop Leases Act 1994 (“the Act”). The Claimant tenant alleged that the Respondent failed to comply with a mediation agreement. The hearing in January 2005 occupied the best part of two days. Each party gave evidence; each was cross- examined and called other witnesses. On 23 February 2005 the Tribunal dismissed the claim. 2. In her original notice of dispute, lodged on 19 April 2004, the Claimant alleged that she was suffering financial loss caused by air-conditioning that was not in accordance with her entitlements under the subject lease. She sought compensation. 3. The dispute was referred to mediation, which was conducted on 12 May 2004. Mr George Smith, a professional business adviser of some ten years’ experience, then represented the Claimant. The Respondent’s representative was Mr Colin Longton, under power of attorney for his elderly mother. An agreement reached that day was expressed to be “in full satisfaction and discharge of their [sic] claim”. So far as is now material, it provided that the Respondent would spend, within three months, a maximum amount of $1,500 on the air-conditioning system, and would allow the Claimant three months’ remission of rent. 4. The Respondent now claims costs on the basis that the Claimant’s conduct in prosecuting her claim in the Tribunal was “frivolous and vexatious” within the meaning of s 91(3)(a) of the Act. SECTION 91 5. The general rule is that parties to proceedings in this Tribunal bear their own costs. However, s 91(3)(a) enables an order to be made against a party who, in the opinion of the Tribunal, has pursued a “frivolous or vexatious” dispute. The purpose of this provision, according to the Memorandum which accompanied the 1999 amendments to the Act, is “to allow the Tribunal to order costs … where [the]intention is clearly to prolong or impede access to justice rather than genuine resolution of a dispute”. 6. In relation to costs the words “frivolous” and “vexatious” are often used interchangeably, as in s 91. The courts have not found it necessary or desirable to define them as terms of legal art.1 In ordinary parlance they denote a claim that lacks bona fides, that is unworthy of serious consideration, or is designed to harass or waste time or money. 2 They characterise a claim which burdens an opponent, although it has no reasonable prospects of success. 1 The Atlantic Star [1974] AC 436 at 464-468. 2 Cairns Australian Civil Procedure 4 th ed 1996, 246. -- 2 of 7 -- Edwards-v-Longton Decision on Costs 3 7. The correct approach to an application for costs in a jurisdiction where costs do not normally follow the event is considered in the joint judgement of McMurdo P and Atkinson J in Mudie v Gainriver Pty Ltd (No 2) [2002] QCA 546 at paras [31] to [37], from which these proposition emerge: (i) It is not necessary that there be special or exceptional circumstances before an order may be made; (ii) “Vexatious” means productive of serious, unjustified trouble and harassment; and (iii) The question whether particular proceedings are vexatious depends on the circumstances of the case, including public policy considerations and the interests of justice. 3 8. It may be inferred that the reference to public policy considerations includes the public interest in reasonable and economic use of judicial resources. THE HEARING 9. The primary issue was the status of the agreement of 12 May 2004. If it remained in force it followed that the tenant’s claim had merged in a contract of compromise, and was no longer a cause of action in its own right. The Tribunal’s decision was to that effect.4 Accordingly, the only question was whether the Respondent had failed to comply with the agreement, and, if so, whether any loss or damage resulted to the Claimant. 5 10. Nevertheless, the entire history of the lease was aired in copious material filed by the parties. That history is set out in paragraphs 16 to 60 of our original Decision and need not be repeated here. Oral evidence was also given by the Claimant, by Mrs Wendy Edwards and other witnesses called for cross examination. As a representative without legal training, Mrs Edwards was given considerable latitude in the presentation of the Claimant’s case, during which she canvassed the Respondent’s obligations under the lease, as distinct from the compromise agreement. 11. In essence the Tribunal found that:- • Within a month of the mediation agreement of 12 May 2004 the Claimant complained to the Registrar of the Tribunal that the Respondent would not comply with the agreement; 3 See also Oceanic Sun Line Special Shipping Company Inc v Fay (1997-1998) 165 CLR 197 per Deane J at 247. 4 Decision 23 February 2005, paragraph 10. 5 Decision paragraph 62. -- 3 of 7 -- Edwards-v-Longton Decision on Costs 4 • Within a month of the mediation agreement the Respondent directed air- conditioning specialists who had installed the system (Coolco Pty Ltd) to remedy it, if necessary; • On 16 June 2004 Coolco relocated the air-conditioning outlets; • On 17 June 2004 Mrs Edwards demanded that the adjustments be reversed; • Mr Scott of Coolco tested the unit in March 2004 and again in January 2005 and certified that it was operating correctly at all times from 1 March 2004; • On 22 June 2004 the Respondent’s solicitor made an open offer to install another split-cycle unit in the premises and to waive rent for the initial three months of the term and to charge rent a half rates for the next six months; • On 22 June 2004 the Claimant made a counter offer; • On 29 June 2004 Mr Scott of Coolco Pty Ltd visited the premises to arrange installation of a new unit, but met resistance from Mrs Edwards as to its placement; • On 1 July 2004 the Claimant’s agent Mr Smith advised her by letter that under to her lease and according to his experience the Respondent was not obliged to tailor air-conditioning to her particular requirements; • In the same letter Smith advised the Claimant that she should accept the Respondent’s offer as in his (Smith’s) opinion she would not be successful in further proceedings before the Tribunal; • On 16 July 2004, the Claimant raised the original dispute at a directions hearing, but at the same time informed the Chairman that she accepted the Respondent’s offer of June 22 2004. The Chairman then advised her to confirm her acceptance in writing; • On 11 August 2004 the Respondent’s solicitor asked the Claimant for a written acceptance, but none was ever forthcoming; • Between 7 September and 27 September 2004 the parties, their representatives and Mr Scott (from Coolco) met several times to finalise installation of the new unit; • However, the Claimant continued to insist on installation of a “ducted split-cycle system” as described in the lease. Scott repeatedly assured the Claimant that the existing system answered that description; -- 4 of 7 -- Edwards-v-Longton Decision on Costs 5 • On 15 September 2004 another directions hearing was held. The Respondent’s solicitor then submitted that his client’s obligations under the compromise agreement had been fully performed. Nevertheless, without any admission of liability, he was willing to discuss the placement of an additional system; • On 29 September 2004 the Respondent wrote to the Claimant urging her to nominate a position for installation of the additional system; • On the same day Mrs Edwards purported, as agent of the Claimant, to accept the Respondent’s offer of 22 June 2004 (above); • On 7 October 2004 Mr Scott told the Respondent that he would install the system wherever the Tenant wished, once she gave the “go-ahead”; • In fact the Claimant never gave the Respondent or Mr Scott any such instruction. Questioned about this at the hearing her only explanation was: “It had gone on too long.” • Soon afterwards the Claimant removed her stock and equipment from the premises and ceased to trade. She left a notice informing the public that lack of air conditioning had forced the closure, and that she would return when the Respondent improved the system; • On 3 November 2004 the Respondent offered to waive substantial arrears of rent then accrued, and to allow the Claimant to “walk away” from her lease. In the absence of any response, the Respondent formally terminated the lease in December 2004; • Mr Scott testified that in his expert opinion a supplementary system was quite unnecessary, and that it was merely offered “to appease the tenant” who, in his view, was “mucking him around”; • The existing system was set, in accordance with Australian Standards specifications, to operate in a maximum ambient temperature of 33 degrees Celsius. CONCLUSIONS The Claimant was, or should have been aware that the real issue at the hearing in January 2005 was the status of, and compliance with the compromise agreement reached at mediation. At the conclusion of that hearing the Tribunal was well satisfied that, so far from breaching that agreement, the Respondent went above and beyond it, in genuine efforts to satisfy the Claimant. On 22 June 2004 the Respondent (by Mr Longton) offered to provide, entirely at his expense, an additional air conditioner. He was under no obligation to do so pursuant to lease, or according to the settlement agreement. -- 5 of 7 -- Edwards-v-Longton Decision on Costs 6 In the months following the Respondent’s offer of 22 June 2004 the Claimant was substantially in arrears of rent. Despite this, and despite difficulties experienced in trying to meet her demands, the Respondent continued to offer a new air conditioning system, if only she would say where it should be installed. The Claimant rejected Mr Smith’s advice to accept this concession, and ignored his warning against further legal action. It is true that Mr Smith is not a legal practitioner, but he is an experienced business adviser 6 , who was freely chosen by the Claimant to act on her behalf. His unequivocal warning should have dissuaded the Claimant from persisting with her claim. For these reasons we are satisfied that the Claimant’s conduct in these proceedings was not directed to genuine resolution of a dispute, but was “productive of serious and unjustified trouble and harassment” 7 to the Respondent, so as to be frivolous or vexatious within the meaning of s 91(3)(a). Accordingly we find that the Claimant is liable in costs to the Respondent. QUANTUM The Respondent claims costs as follows: Professional costs incurred by the Respondent to her former solicitors [Wilson and Associates] ……………………………….. $4,588.82; Costs due to her present solicitors [Pilgrim Geddes]……… $8,910.00. Mr Geddes (solicitor for the Respondent) explained that she transferred her retainer to his firm because it was more experienced in retail-trade litigation. His costs are for attendance at a directions hearing, preparation of a response to the Claimant’s amended claim, preparation of material for trial and two day’s appearance on hearing. He pointed out that the Claimant did not confine her case to the issue of the mediation agreement, but produced approximately 170 pages of material, often of little or no relevance, to which the Respondent had to respond. He stated that there was no significant duplication of effort due to the change of solicitors. Several directions hearings were held between July and December 2004, at one of which the Chairman explained to the Claimant’s representative that the hearing would initially be confined to the matter of the mediation agreement. Despite this express direction the Claimant lodged an amended Notice of Dispute and filed about 170 pages of material, most of it irrelevant to the issue for trial defined by the Tribunal. Meanwhile the amount of her claim ascended to $249,000. 6 Statement of George Smith 31.3.2005 attached to the Respondent’s submissions on costs. 7 Mudie v Gainriver Pty Ltd (No 2) [2002] QCA 546 at paras [31] to [37]. -- 6 of 7 -- Edwards-v-Longton Decision on Costs 7 With due respect to the Respondent solicitors, we are unable to accept that no duplication of costs resulted from her change of legal representatives. We do not consider that s 91 is a warrant for assessing costs on an indemnity or solicitor-client scale. We are, however, satisfied that the Claimant should make a significant contribution to the costs resulting from her unreasonable, not to say wanton, prolongation of this dispute. Our order should include costs for the period from 22 June 2004 (when Mr Longton made the supplementary offer) to and including the hearing in January 2005. Doing the best we can, we fix costs payable by the Claimant to the Respondent in the amount of five thousand dollars [$5,000.00] IT IS ORDERED THAT: 1. The Claimant pay to the Respondent by way of costs the sum of $5,000.00 within 30 days of service of this order upon the Claimant. Anne Forbes Chairman -- 7 of 7 --