Adendorff v The Owners - Strata Plan No. 16629 - [2021] NSWCATCD 76 - NSWCATCD 2021 case summary

NCAT Consumer and Commercial|2021-08-02

Applications

These applications concern a 2 storey commercial building in Coffs Harbour. There are 7 lots in the strata scheme comprising SP 16229. The applicant in files SC20/29714 and SC20/29716, Tracey Adendorff, and her husband Michael Adendorff ("the Lot Owners") are the owners of lot 6 in the strata plan. The Owners SP 16229 ("the Owners Corporation") is the respondent.
On 31 July 2020 the Tribunal made an interim order on file SC20/29714, staying motions 9, 10 and 11 passed at the AGM on 29 June 2020 until further order or the finalisation of SC20/29716.
On 13 August 2020, the Owners Corporation filed application SC20/34752. The Lot Owners are the respondents.
The Tribunal published its decision in respect of all 3 applications on 9 June 2021. Application SC 20/29716 was dismissed. The order made on 31 July 2020 on SC 20/29714 was revoked and the stay was lifted. On application SC 20/34752, the Owners Corporation was successful, and the Lot Owners were ordered to remove the works for which authorisation from the Owners Corporation had not been obtained.
The Tribunal provided for the parties to make submissions in respect of costs. The Owners Corporation filed submissions seeking that the Lot Owners pay its costs in respect of all three applications.
The Lot Owners have not filed any submissions in reply.
This is the decision in respect of the cost applications.

The law

The matter of costs is governed by s 60 of the Civil & Administrative Tribunal Act 2013 (NSW) ("NCAT Act") and Rule 38 of the Civil and Administrative Tribunal Rules 2013 (NSW) which provide as follows: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the 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) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (4) If costs are to be awarded by the Tribunal, the Tribunal may: (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 ) or on any other basis. (5) In this section:

"costs" includes: (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal. 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if: (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10 (2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000.

The effect of these provisions is that, unless Rule 38 applies or there are special circumstances, each party to the proceedings should pay their own costs. If Rule 38 applies, the Tribunal can award costs in the absence of special circumstances. The Tribunal has discretion as to whether to make an award of costs but must act judicially. Costs are awarded not to punish an unsuccessful party but to compensate a successful party.

Does Rule 38 apply?

There is no doubt that Rule 38 does not apply as there is no amount in dispute in these proceedings (see The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256). It follows that each party should pay its own costs unless there are special circumstances.

The Owners Corporation's submissions

The Owners Corporation says that it is entitled to an order that the applicant pay its costs because there are special circumstances as defined in s 60 (3) of the Civil and Administrative Tribunal Act 2013, and in particular: (b) whether a party has been responsible for prolonging unnecessarily the time taken to complete the proceedings
The Owners Corporation submits that the way in which the Lot Owners conducted the proceedings unnecessarily prolonged the time taken to complete the proceedings because: 1. The Lot Owners put forward a vast amount of material which the Owners Corporation was required to address. This included evidence in respect of the acrimony between lot owners, which was of little assistance to the Tribunal in determining the issues in dispute, and unnecessarily prolonged the proceedings. 2. The Lot Owners sought to rely upon a confidential report which was objected to by the Owners Corporation on the basis of relevance, and was not admitted into evidence 3. The Tribunal made an order on 11 September 2020 preventing the parties from filing or serving further expert evidence in reply. Contrary to that order, the Lot Owners served a further expert report, two days before the hearing. The Tribunal granted leave for the Lot Owners to rely on the evidence, but it was necessary for the hearing on 1 October 2020 to be adjourned. (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim which has no tenable basis in fact or law
The Owners Corporation submits that the Lot Owners were unsuccessful in their proceedings because their claims had no tenable basis, or were misconceived, for the reasons set out in the Tribunal's decision at para 23 - 24, 38 - 41, 50 and 65 - 66. (g) any other matter that the Tribunal considers relevant
The Owners Corporation submits that: 1. as it was entirely successful in the proceedings it is entitled to an order for its costs. 2. The Lot Owners did not explore all avenues for resolution before commencing these proceeding. The Owners Corporation requested further information but rather than supplying it, the Lot Owners commenced proceedings. 3. Mr Adendorff is a solicitor and a higher standard of conduct is expected of him. 4. The Owners Corporation is a relatively small scheme. Its annual operating budget in 2020 was $18,269.00. Whilst the Lot Owners have enjoyed a financial benefit from the solar panels, the Owners Corporation will now face a significant impost to meet the legal fees incurred.

Consideration

The starting point is that, unless the Tribunal is satisfied that there are special circumstances, each party should pay its own costs. In Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 the Appeal Panel cited with approval the meaning of the expression "special circumstances" that had been given to the same words in the former s.88 of the Administrative Decisions Act 1997 by the Court of Appeal in Cripps v G & M Dawson [2006] NSWCA 81. It determined that special circumstances are circumstances which are "out of the ordinary" but circumstances do not have to be "extraordinary or exceptional".
Thus I must first determine whether there are special circumstances, before moving on to consider the exercise of the discretion.
In considering the Owners Corporation's submissions: 1. I am not satisfied that the Lot Owners unnecessarily prolonged the proceedings. They sought leave at the hearing on 1 October 2020 to rely upon the expert evidence and were granted leave to do so. That necessitated an adjournment. There is however no evidence that it was unnecessary for that to happen. Ultimately the expert evidence did not persuade the Tribunal to accept the Lot Owners case, but that does not mean that it was unnecessary for it to be obtained. 2. I accept that there was evidence filed by the Lot Owners which was not admitted. However I am not satisfied that the raising of those issues prolonged the proceedings. At the hearing, the parties agreed that the Tribunal could make a finding of acrimony between the lot owners without the admission of the evidence. That admission shortened the hearing time. 3. It is true that the Lot Owners failed in their application, and in the defence of the Owners Corporation's application. That in itself does not amount to special circumstances. Whilst some of the submissions made by the Lot Owners had no tenable basis in fact or law, the case was an arguable case. The decision as to whether to order the removal of the solar panels and other unauthorised works required the Tribunal to balance the competing interests of the Lot Owners and the Owners Corporation. 4. The Owners Corporation submits that as it was entirely successful in the proceedings it is entitled to an order for its costs. This is not the correct starting point. Unless there are special circumstances, each party is required to pay its own costs. 5. The Owners Corporation submits that the Lot Owners did not explore all avenues for resolution before commencing these proceeding. The Owners Corporation gave evidence that it requested further information but rather than supplying it, the Lot Owners commenced proceedings. The Lot Owners gave evidence that they did not receive the letter from the strata manager. In addition, I take into account the poor and strained relationship between the parties, making settlement unlikely. 6. Where parties are unrepresented, that is an issue to be taken into account. As Mr Adendorff is a solicitor, it is presumed that he does not suffer from the disadvantage which unrepresented parties sometimes have. I am not satisfied however that this amounts to special circumstances. 7. The capacity of a party to pay costs or the size of the Owners Corporation's operating budget does not amount to special circumstances.
As I am not satisfied that there are special circumstances warranting a departure from the usual rule that each party pay its own costs, the application for costs is dismissed.

Orders

An order is made pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (NSW), dispensing with a hearing.
The costs applications are dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 September 2021

Civil and Administrative Tribunal Rules 2013(NSW)

Administrative Tribunal Act 2013(NSW)

Adendorff v The Owners - Strata Plan No. 16629

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Judgment (9 paragraphs)

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