Bawa v The Owners-Strata Plan No 72125 No 2

1. It is uncontroversial that the respondent must establish "special circumstances" under s 60 (2) of the NCAT Act to obtain a costs order in its favour, both in respect of the primary proceedings and the appeal.
2. Section 60, relevantly, provides:

(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.

1. As was stated by the Appeal Panel in Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42:

8 The term "special circumstances" is not defined by the NCAT Act. It has been interpreted to mean circumstances that are out of the ordinary but not necessarily extraordinary or exceptional. The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs....

....

12 The term "lacking in substance" is not defined by the NCAT Act. Commenting on the meaning of that term in an equivalent but not identical statutory provision to s 60(3)(e), in The Owners Corporation of Strata Plan 4521 v Zouk & anor. [2007] NSWCA 23, the Court of Appeal concluded at [45], that the term "lacking in substance" should be construed to mean "not reasonably arguable". We adopt that meaning.

.....

14 That the appeal was ultimately unsuccessful does not establish that the appeal was not reasonably arguable. Here, however, a combination of factors leads us to conclude that was the case....

15 The conclusion that the appeal was not reasonably arguable does not dispose of the question of whether the power to award costs should be exercised. The presumption underlying s 60 of the NCAT Act is that each party will bear their own costs. Where special circumstances are found to exist, s 60 does not mandate that costs be awarded. It simply enlivens the discretion to do so. That discretion must be exercised having regard to the "guiding principle": to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s 36(2) of the NCAT Act. It requires a balance to be struck between the "chilling effect" of too readily ordering costs against unsuccessful appellants and the need to ensure that parties conduct their cases in such a way that costs are not unnecessarily incurred by bringing demonstrably unmeritorious appeals.

1. In The Owners Strata Plan No 79633 v Graorovska (No 2) [2022] NSWCATAP 245 the Appeal Panel stated:

20 We are satisfied that the appeal grounds advanced by the owners' corporation were manifestly weak under s 60 (3) (c) of the NCAT Act and accordingly lacked substance under s 60 (3) (e) of the NCAT Act.

1. In the primary proceedings the appellant made the following claims under the Strata Schemes Management Act (NSW) (2015) (SSMA):

(1) An order under s 85 to prevent the owners corporation charging interest for late payment of contribution.

(2) An order under s 87 to reduce the amount he was required to pay as contributions.

(3) An order under s 237 (incorrectly, stated to be a claim under s238) to remove the Strata Manager.

(4) An order under s 187 (1) (d) for compensation.

1. The Tribunal dismissed each of these claims. The dismissal of these claims was upheld on appeal.
2. In our substantive decision we examined in some detail the nature of these claims, the material we had been shown in support of them and the reasons the Tribunal gave for dismissing the claims. For present purposes, it is sufficient for us to outline the following matters.
3. The SSMA (in s 85 (8)) confers a power on the Tribunal to order that no interest was chargeable on a specified contribution. However, whilst the power was conditional upon the Tribunal being satisfied that "the owners corporation should reasonably have made a determination not to charge interest for the late contribution", the appellant had not sought such a determination from the owners corporation.
4. Pertinently, in relation to this claim the Tribunal stated:

15 The burden of proof under s 85 (8) sits on the applicant. He has not satisfied me that the owners corporation should, in his particular case, reasonably have made a determination not to charge interest for his late contributions. I adopt the written reasons set out by Mr Radman on this particular section. I am not satisfied that the grounds exist in the materials put to the Tribunal for the Tribunal to make an order, therefore I decline to make an order under section 85.

1. The SSMA (in s 87 (1)) conferred a power on the Tribunal to make an order for payment of contributions of a different amount of the SSMA. However, the Tribunal found that this power applied to the collective amount levied and did not provide a power to alter a single lot owner's contribution due to reasons that were personal to that lot owner. On appeal, we agreed with that conclusion
2. The Tribunal is empowered to make an order appointing a person as a strata managing agent (under s237 (1)). However, the Tribunal was not satisfied that the appellant had established grounds for the making of such an order. On appeal, we found no appealable error in relation to that conclusion.
3. Pertinently, in relation to this claim the Tribunal stated that a decision to remove a strata manager was one that was not to be taken lightly and:

21 The applicant seeks the removal on the basis that the strata manager has failed to deal with matters identified in paragraphs 1 to 13 of his written submissions; has misled the applicant; has continually harassed him and has damaged his reputation while the applicant has been making instalment payments. The applicant does not proffer the name of any person he suggests should be appointed as strata manager. The applicant also does not come with the consent in writing of any person he proposes to be appointed as strata manager by the Tribunal. He merely asked that the Tribunal remove the strata manager.

22 Again, I have read and I agree with the detailed submissions made by Mr Radman in respect of his application. Again, I consider the application to be misconceived and I decline to make the orders sought.

1. Section 187 provided no basis for the making of an order for compensation has sought by the appellant.
2. In conclusion, the Tribunal said (at [26]) that it was satisfied it had jurisdiction under the SSMA to consider the applications made under ss 85, 87 and 237. However, it said that "for the reasons that I have identified above, the applicant has not demonstrated to the Tribunal that there are adequate grounds for the Tribunal to make those orders on this occasion."
3. The Tribunal then turned to deal with the respondent's application for costs on the basis that "special circumstances" warranted the making of such an order. In deciding that the costs application should succeed the Tribunal reasoned:

32 The respondent draws the Tribunal's attention to the decision of Member Ringrose in previous proceedings between these parties, heard on 30 November 2021 and decided on 11 July 2022. That decision concerns a surprisingly similar application made by the applicant in July 2021, seeking orders under section 85 and 87 of the SSM Act on a similar basis-that is, to prevent the owners corporation charging interest for late payment and ordering the amount of contributions or the manner of payment of contributions to be made by the applicant.

33 The applicant has identified that he is unable to bear a costs order, but that is not a factor that weighs in determining whether or not, as a matter of principle, the respondent should be entitled to compensation by way of a costs order.

34 Having regard to the applicant's application and the materials filed by both parties, I'm satisfied that, as it was in the hearing before Member Ringrose, the claims made by the applicant in these proceedings had a very low strength and very low prospects of success. I'm also satisfied that the proceedings were, as I've indicated earlier misconceived in relation to the Tribunal's powers under sections 85, 87 and 237, as well as the section "187 (1) (d)" that was referred to.

33 In the circumstances of this case, including the fact that there have been previous Local Court debt recovery claims and previous applications of similar effect before the Tribunal that were not successful, I am satisfied that there are special circumstances that warrant an award of costs in these proceedings. I therefore consider it is appropriate to make an order for the applicant to be (sic) the respondent's costs as agreed or assessed, and I will make a costs order in the matter accordingly.

1. On appeal, we found that Tribunal had erred in its reliance upon the previous claims the subject of the decision of Member Ringrose because it failed to recognise that the claims under s 85, 87 and 237 of the SSMA had not been disposed of on their merits. As to this, our reasons included:

66 We agree with the respondent that the appellant must demonstrate error of the kind referred to in House v King. We also agree that the Tribunal, correctly, identified the law to be applied.

67 However, in our opinion, the Tribunal erred by taking account of and, apparently, attaching considerable significance to the "surprisingly similar application" made by the appellant in 2021 which had not been successful. As expanded upon below, when the earlier decision is properly understood, it seems to us that the Tribunal allowed itself to be guided by irrelevant facts.

68 The reasons for decision by Member Ringrose were included in the respondent's bundle on appeal. Those reasons disclose that the appellant, in July 2021, commenced a similar application to the present proceedings in respect of the OC's claim for an amount of unpaid levies, legal costs and interest payments. The claim included a claim for an order under s 85 of the SSM that the OC be prevented from charging interest for the late payment of contributions and a claim under s 87 of the SSM for an order to alter the amount of contributions (at [10] of the reasons). The claim also came to include a claim for compensation for harassment and intimidation by demands for the payment of these charges (at [16]) and a claim under s 238 for the removal of the Strata Manager (at [49]). A variety of other orders was also sought.

69 However, pertinently, for present purposes, the reasons of Member Ringrose disclose that none of the claims under s 85, 87 and 238 were disposed of by reference to the merits of those claims, including by reference to conclusions from the Tribunal as to the meaning and scope of those provisions.

70 Instead, having come to identify a series of "final orders" sought by the appellant (at [95]), which we note differ considerably from the orders sought in these proceedings, the Tribunal said (at [102]):

102 Although the respondent's solicitors have made submissions concerning ss 85 and 87 of the Strata Schemes Management Act, those submissions relate to matters which are to be determined in the Local Court. It would be inappropriate in the circumstances for the Tribunal to proffer an opinion on a matter which is to be dealt with in a different jurisdiction. It is noted that Principal Member Rosser made orders that the applicant shall provide submissions detailing why the issues in relation to defences to payments could not and should not be properly dealt with by the Local Court. The applicant has failed to provide such submissions and accordingly, again it would be inappropriate to deal with these issues in the Tribunal.

71 As to the claim in the earlier proceedings under s238, the Tribunal, earlier in its reasons, had stated that it would not deal with the claim for removal of the Strata manager because this claim had only been raised in reply (at [49]).

72 For the purposes of the claim for costs in the primary proceedings, the manner in which the previous Tribunal dealt with the claims under ss 85, 87 and 238 was significant because it demonstrates that there were no conclusions by the earlier Tribunal showing the appellant that his claims under these provisions were either misconceived or confronted fundamental obstacles for the reasons identified by the Tribunal in these proceedings. This is in a context where there is complexity about the provisions which are not easy for a lay person to understand, there was no suggestion that the appellant fabricated his claim of financial hardship or that he did not have a genuine grievance about the amount he was being charged. [Our emphasis]

73 In these circumstances, in our opinion, for the Tribunal to give weight to the earlier proceedings and their outcome, but without recognising the manner in which the claims had been disposed of, meant that it allowed itself to be guided by an irrelevant consideration or it mistook the facts in an important respect.

74 Accordingly, in our opinion, the exercise of the discretion miscarried.

75 If we be wrong about the discretion having miscarried in this way, then, in our opinion, the Tribunal's reasons for decision were inadequate because they did not explain why the reasons it gave about the earlier proceedings was a significant factor in the exercise of the discretion (as to inadequacy of reasons see further below).

Submissions about costs of the primary proceedings

1. The respondent submits that there are "special circumstances" warranting an order that the appellant pay its costs of the primary proceedings having regard to the matters referred to in s 60 (3) (c) and s 60 (3) (e). The respondent also relied upon s 60 (3) (g).
2. The respondent did not rely upon the matters referred to in s 60 (3) (a) or s 60 (3) (b).
3. Following submissions as to the reasons why the Tribunal had dismissed the primary proceedings, in relation to s 60 (3) (c) and (e) the respondent submitted (written submissions in chief):

19. Overwhelmingly, the Appellant failed to supply any probative evidence to support his claims for relief in the primary proceedings. The Appellant's rambling submissions were entirely lacking of evidence or substantive argument such that the Member could find no basis on which the appellant could be entitled to relief.

20. The Respondent submits that the Appellant's position in the primary proceedings was so lacking in substance, misconceived and had such low prospects of success that there was no possible basis on which the Appellant's application could succeed.

21. The Respondent submitted that this basis is in and of itself sufficient to constitute special circumstances warranting an award of costs.

1. We note the respondent added to its submissions as to why the Tribunal dismissed the claim under s 87 that the appellant's claim for relief under that section was unsupported by evidence (a footnote reference to the Tribunal's reasons were supplied but this reference did not concern the decision under s 87). The Tribunal did not give this as a reason for rejecting the claim under s 87.
2. In relation to s 60 (3) (g), the respondent submitted that the 2021 proceedings (referred to above) and the outcome of those proceedings should be considered in favour of an award of costs to the respondent. It submitted that if the appellant was dissatisfied by the outcome of the 2021 proceedings he should have pursued an appeal rather than pursuing a near identical application years later and that the course he chose required the respondent to incur unnecessary legal costs. It submitted that, at a minimum, the appellant knew or should have known of the low prospects of success, yet chose to proceed for a second time in the primary proceedings. It submitted that, in any event, the outcome of the 2021 proceedings was neither the sole or primary reason for the award of costs in the primary proceedings.
3. As to the exercise of the discretion on the basis that "special circumstances" existed, the respondent submitted that the discretion should be exercised in its favour because the purpose of a cost order was to compensate a successful party and the respondent had not engaged in any disentitling conduct that would deprive it of a costs order.
4. The appellant's written submissions, although lengthy (14 pages), contained very little of any relevance to the costs questions now before us. He submitted that special circumstances warranting an order for costs had not been established. He submitted that the fundamental reason for lodging his application in the Tribunal was to obtain accurate information regarding the correct levy amount and that the respondent had failed to provide correct information which had necessitated his application. He also submitted that a decision to impose costs on the appellant would lead to severe financial difficulties affecting his family.
5. One of the appellant's submissions about costs was that the respondent's submission should not be considered because it was not open to the respondent to make new and different submissions about costs. However, it is apparent from this submission that the appellant, for whatever reason, misunderstood the steps that the Appeal Panel had taken in its substantive decision to set aside the costs order and make directions for new submissions to be provided.
6. The appellant also made a number of assertions about the 2021 proceedings in support of a submission that the respondent was improperly relying upon these proceedings in support of its costs application. For the reasons below, it is unnecessary for us to address any of these assertions.

1. The respondent did contend that the 2021 proceedings were relevant to its costs application. However, the fact remains that there was no decision in those proceedings on the merits of the matters which the appellant subsequently raised in the primary proceedings.
2. It is apparent that the respondent placed emphasis upon a submission that special circumstances existed warranting the making of a costs order for reasons that are independent of the 2021 proceedings. In our view, the respondent was correct to take this approach because the 2021 proceedings can have no bearing upon the costs application for the reasons that we gave in the substantive decision (as set out above).
3. In essence, the respondent submitted that the appellant's claims were so lacking in substance that there were no possible bases upon which they could succeed. In this connection, we also understood the respondent to rely upon the statements by the appellant to the effect that the true purpose of his proceedings was to verify the correctness of the amount of the contributions he had been required to pay. I In our substantive decision we pointed out that this was not how the proceedings had been framed (at [45]).
4. However, in our view, this puts the matter too generally. It also fails to recognise the difficulty confronting the appellant as an unrepresented litigant seeking to frame a grievance about the size of the amount of his levy for contributions in the face of provisions of the SSMA that are not without complexity - a grievance that the respondent does not contend was not genuinely held (see our remarks to this effect in the substantive decision at [72]).
5. In expanding upon the first of these points, we note the following:

(1) Whilst the Tribunal in the primary proceedings did refer to the appellant's claims as misconceived, the reasons given in respect of each of the claims (apart from the claim under s187 which no one has suggested occupied any material time in the conduct of the primary proceedings) do not support a conclusion that the claims were hopeless, let alone that they were known or ought to have been known to be to be hopeless. Rather, the overall conclusion of the Tribunal was that the appellant had "not demonstrated to the Tribunal that there are adequate grounds for the Tribunal to make those orders on this occasion" (at [26] of the reasons).

(2) It is not clear to us that the claims under ss 85 and 87 were not reasonably arguable.

(3) The claim under s 237 was entirely fact dependent. The Tribunal did not express itself in terms that the material it was provided with was incapable of justifying the orders sought. Furthermore, although we referred to such material as we have seen as being of a high level of generality, we were not supplied with all of the evidentiary material put forward by the appellant in support of the order (a matter we referred to in paragraphs [12] and [13] of our substantive decision), nor did the respondent embark upon the task (no doubt, a fairly extensive one) of attempting to show by reference to the whole of the material that it was incapable of justifying the order sought.

(4) Even if the appellant had the underlying purpose of verifying the correctness of the amount charged as a contribution, it does not follow that the claims were baseless. Furthermore - correctly, in our view - the respondent did not submit that the claims were made for an improper purpose or were not genuine claims.

(5) The respondent made reference to what it said were "rambling" submissions from the appellant in the primary proceedings but we were not shown these submissions. In any event, the respondent did not contend that this resulted in any of the factors in s 60 (3) (a) and (b) being satisfied.

1. Overall, even if we were to conclude that each of the appellant's claims in the primary proceedings were weak or of low strength, given the nature of the claims, their complexity and the fact that the appellant was an unrepresented litigant, we would not have been satisfied that the circumstances were so out of the ordinary as to be regarded as "special circumstances".
2. Accordingly, we have decided that the respondent's application for costs of the primary's proceedings should be rejected.

1. As to the costs of the appeal, again it was uncontroversial that the respondent needed to establish "special circumstances" in order to enliven the discretion to award costs. As to "special circumstances", the respondent relied upon the factors in s 60 (c), (e) and (g).
2. The respondent made the following submissions in support of its contention that there were "special circumstances" and that the discretion should be exercised to award the respondent its costs of the appeal:

(1) On appeal, the appellant made extensive submissions which were often rambling and unintelligible. The appellant made broad complaints about the conduct of the Member in the primary proceedings. The submissions failed to identify what evidence was being relied upon to support the appeal. The nature of these submissions caused the respondent to incur significant costs to review and respond to the material.

(2) The respondent relied upon the Appeal Panel's conclusion that the evidentiary material submitted by the appellant on the appeal was either at a high level of generality or was of no relevance given the opinions the Tribunal expressed about the meaning of the application of the relevant provisions of the SSMA.

(3) The appellant had sought to rely upon conduct of the Member in the primary proceedings but without providing the transcript or sound recording is directed.

(4) The true aim of the appellant in both the appeal and the primary proceedings was to verify the amounts he had been levied, despite the manner in which he had framed his proceedings. This approach was misconceived.

(5) The appeal was baseless, requiring the respondent to incur significant legal costs to deal with issues raised which were frequently repeated, lacked focus and were found to lack any merit.

(6) The 2021 proceedings was a relevant matter as provided for in s 60 (3) (g) of the NCAT Act and should be considered in respect of an award of costs in favour of the respondent.

(7) On the basis that "special circumstances" had been established, the discretion should be exercised in favour an award of costs for the same reasons as put forward in respect of the costs of the primary proceedings (see above).

1. Again, we note that the respondent did not seek to rely upon the factors concerning "special circumstances" set out in s 60 (3) (a) and (b).

1. As outlined in our substantive decision (at [33]), there were 8 grounds of appeal.
2. One of these grounds of appeal succeeded. That was Ground 7,, which concerned the order that the appellant pay the respondent's costs of the primary proceedings. Given the prominence of this ground of appeal, the respondent should not receive its costs of the appeal referable to this issue. For example, as we noted in our substantive decision (at [62]), the appellant devoted a considerable part of his written submissions on appeal to his challenge to the costs order.
3. As appears from our reasons for rejecting six of the grounds of appeal (Grounds 1, 2, 3, 6, 7 and 8), these grounds of appeal were clearly flawed and were bound to fail, principally, because the respondent did not provide any evidentiary basis for the contentions. Even without legal representation, this was a basic flaw which the appellant should have recognised by careful attention to the grounds of appeal as he expressed them, to the outline about the matters to be attended to in bringing an appeal set out on the NCAT website and to the directions made for the conduct of the appeal.
4. With respect to these grounds of appeal, therefore, we consider that the factors referred to in s 60 (3) (c) and (e) of the NCAT Act have been established, in the sense that these were grounds in respect of which there was no tenable basis in fact and that they were lacking in substance.
5. Having said this, however, this basic flaw in each of these six grounds was readily identifiable (even though the appellant did make quite a number of lengthy and irrelevant submissions) with the consequence that these grounds of appeal could be shortly disposed in both submissions and by the Appeal Panel.
6. Ground 4 was a central part of the appeal. It concerned the meaning and scope of ss 85 and 87 of the SSMA. Although we found that the Tribunal had, correctly, interpreted these provisions, we do not take the view that the appellant's position was one that was bound to fail. Nor, do we take the view that his position was an unreasonable one in circumstances where he had no legal representation. We do not consider that the factors in s 60 (3) (c) or (e) have been established in respect of this ground of appeal.
7. We have already dealt with the contentions about the appellant's true aim of his proceedings (see paragraph 34 (4) above).
8. There is one other factor that we consider relevant to our exercise of the discretion under the costs power in respect of the costs of the appeal.
9. After the hearing of the appeal, the legal costs incurred by the respondent arose from two matters. First, a potential deficiency in the Tribunal's reasons raised by the Appeal Panel because of the Tribunal's approach in respect of a number of issues where it stated that it adopted the submissions of the appellant (see at [89] to [102] of our substantive decision). The second matter arose from the appellant's success with his challenge to the order that he pay the appellant's costs of the primary proceedings.
10. In view of this, we do not consider that there were "special circumstances" causing costs to be incurred by the respondent subsequent to the hearing of the appeal.
11. As a consequence of the factors we have referred to in paragraphs 40 to 49 above, in our view, the appellant should be ordered to pay 10% of the appellant's costs of the appeal up to and including the hearing on 28 November 2024, as agreed or assessed.

1. For the above reasons, we make the following orders;

(1) Pursuant to s 52 (2) of the Civil and Administrative Tribunal Act 2013 (NSW), a hearing of the respondent's costs applications is dispensed with.

(2) The appellant is ordered to pay 10% of the respondent's costs of the appeal up to and including the hearing on 28 November 2024, as agreed or assessed.

(3) The respondent's application for its costs of the primary proceedings to be paid by the appellant is 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.