Australia: Who Pays The Legal Costs Of Retail Lease Litigation In The ADT?

Last Updated: 4 February 2009

The 'No costs' nature of the retail leases jurisdiction is often a significant consideration in deciding whether or not to commence or defend claims in the Administrative Decisions Tribunal.

Recent changes to the Administrative Decisions Tribunal Act 1997 (NSW) have altered this dynamic and made adverse legal costs orders more likely.

Up until 31 December 2008, section 88 of the Act provided that the Tribunal may award costs in relation to proceedings before it, but only if it is satisfied that there are "special circumstances" warranting an award of costs.

This changed significantly on 1 January 2009, section 88 being amended to provide:

'88. Costs

(1) Each party to proceedings before the Tribunal is to bear the party's own costs in the proceedings, except as provided by this section.

(1A) Subject to the rules of the Tribunal and any other Act or law, the Tribunal may award costs in relation to proceedings before it but only if it is satisfied that it is fair to do so having regard to the following:

(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantage the other party to the proceedings by conduct such as:

  1. failing to comply with an order or direction of the Tribunal without reasonable excuse, or
  2. failing to comply with this Act, the regulations, the rules of the Tribunal or any relevant provisions of the enactment under which the Tribunal has jurisdiction in relation to the proceedings, or
  3. asking for an adjournment as a result of a failure referred to in subparagraph (i) or (ii), or
  4. causing an adjournment, or
  5. attempting to deceive another party or the Tribunal, or
  6. vexatiously conducting the proceedings;

(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings;

(c) the relative strength of claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law;

(d) the nature and complexity of the proceedings;

(e) any other matter that the Tribunal considers relevant.'

Much ink was spilt by members of the ADT as to what comprised 'special circumstances warranting an award of costs' under the old version of section 88. As those words no longer appear in the Act and the new section 88 extends to applications and proceedings commenced but not finally determined before 1 January 2009, that bank of authority now seems academic.

The new section 88 expands the circumstances in which a party may be ordered to pay its opponent's legal costs. It also enhances accessibility to the criteria to be applied by the Tribunal, previously a mystery to the uninitiated.

However, in enabling the Tribunal to take into account 'any other matter that the Tribunal considers relevant', the new subsection 88(1A)(e) leaves the door wide open to complexity and uncertainty. This, in time, will give rise to the development of a new bank of authority as to whether the Tribunal should be satisfied that it is fair to order legal costs. In the interim, we are left to speculate.

Robert Riddell t (02) 9931 4940 e
Mark Woolley t (03) 9612 8282 e
Lui Scipioni t (03) 9612 8247 e

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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