BNK Café Restaurant Pty Ltd v The Owners - Strata Plan No 33676 - [2023] NSWCATAP 249 - NSWCATAP 2023 case summary

Consideration

We do not think it plain that the initial application seeking the retrospective approval of the owners corporation to amend a special by law was made unreasonably, or that the conduct of the proceedings was unreasonable and for the reasons that follow we have decided to dismiss the application for cost.
The Appeal Panel of the Tribunal has considered the applicable legal principles under ss 60 (1) and (2) of the NCAT Act on many occasions.
The principles in respect of costs orders under s 60 were summarised in The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6]-[15] (B & G Trading (No 2)) as follows: 6. The general rule set out in s 60(1) was (citing Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]): '… designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable: Choi v University of Technology Sydney [2020] NSWCATAP 18 at [41].' 7. In Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 the Appeal Panel said, at [8], that the discretion to award costs had to be exercised judicially: '...having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (No 2) [2016] NSWCATAP 168 at [16].)' 8. Section 60(2) says that the Appeal Panel may award costs to a party 'only if' satisfied there are special circumstances warranting an award of costs. 9. Section 60(3) sets out a non-exclusionary list of factors to which an Appeal Panel may have regard in determining whether special circumstances warranting an award of costs exist. 10. 'Special circumstances' are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]. 11. However, it does not follow that a costs order should be made simply because one or more of the factors in s 60(3) are made out. 12. Even if satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances 'warranting an award of costs' - Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21]; Youssef at [108]. 13. The exercise of the discretion requires the Tribunal 'to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs': BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalaf v Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35]. 14. He who asserts must prove, and so the party seeking the costs order bears the onus of proving that special circumstances exist - Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5] under the heading 'Costs'. 15. Whether special circumstances exist is a question of fact and each case must be assessed according to its circumstances: Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 at [57]; The Owners - Strata Plan 20211 v Rosenthal [2019J NSWCATAP 49 at [15].
The respondent submits that there are sufficient 'special circumstances' to make a costs order in its favour because: 1. the appellant conducted the appeal proceedings in way that unnecessarily disadvantaged the owners corporation because there were no grounds for the appeal "causing the owners corporation to incur unnecessary costs to defend an appeal which had absolutely no prospects of success" (s60(3)(a) and (c)); 2. the proceedings were frivolous or vexatious on the basis that there were no grounds for the appeal (s60(3)(e)); 3. The works undertaken by the appellant were not authorised, were of a significant nature and intruded on another lot. Consequently, the owners corporation should be compensated for its costs in trying to comply with its strict duty under s 106(1) of the Strata Schemes Management Act 2015 (SSMA) (s60(3)(g)) (see respondent's submissions [21] - [35]).
The appellant submitted that the respondent's submissions did not show any basis for special circumstances justifying an award of costs and that each party should bear its own costs in the appeal.
In reply, the respondent submitted that the appellant had misunderstood the submissions.
In respect of the appeal, we are not satisfied that appeal was so weak, lacking in merit or unarguable that it falls into the category of 'special circumstances.' Further, the appeal was not conducted in a manner by the appellant that caused delay or disadvantage to the owners corporation. The appeal proceedings were not of great legal or factual complexity and only involved the interpretation of a singular special by law. The appellant's arguments in support of the appeal were not misconceived or frivolous or vexatious. This was not an appeal that was unusual or out of the ordinary.
In our view the appeal, while dismissed, was not so hopeless that it warrants an order for costs. The appellant was entitled to test the decision of Senior Member Paull, particular in light of the fact the issue of the poorly drafted by-law remains unresolved. The appellant was entitled to have the by law interpreted by the Tribunal and reviewed by the Appeal Panel. It was not unreasonable of the appellant to seek appellate review in circumstances where the appellant's options to connect to a reasonable electricity supply remain costly and limited and it was open to appellant to seek orders that the works it undertook were carried out in accordance with special by law 12.
In light of the limited options available to the appellant to provide electricity to its restaurant it was not unreasonable to seek review under s149 of the SSMA and to test the proposition that the owners corporation unreasonably refused to amend the by law in accordance with the appellant's proposal of 25 January 2021. The application was unsuccessful. In respect of the appeal, we are of the view it was a reasonable step to take to seek to review the Tribunal's decision, as the other options proposed by the respondent's expert such as connecting low voltage power supply directly to the street, direct connection to an existing site substation, constructing a dedicated substation for lot 33, are all complex options that will prove costly and are arguably subject to council approval. In light of the options proposed by the respondent it was not unreasonable to seek review of the Tribunal's interpretation of the by-law by the Appeal Panel.
The mere fact that the appeal was unsuccessful is not determinative of special circumstances. There are no special circumstances demonstrated by the respondent which would justify us departing from the usual position, that each party bear their own costs of the appeal.
The "special circumstances" in s 60 of the NCAT Act that are required to justify a costs order when rules 38 and 38A do not apply means circumstances that are out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. Even where special circumstances are found to exist, there remains a discretion whether, and in what form, a costs order should be made.
The expression "special circumstances" was considered by the Court of Appeal in the context of section 88(1) of the Administrative Decisions Tribunal Act 1997 (NSW). Santow JA said in Cripps v G & M Mawson [2006] NSWCA 84 at [60]: "I consider that the Tribunal was in error in failing to conclude that special circumstances apply here. For this purpose it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional."
In that case the Court of Appeal awarded costs on the basis that the conduct of the appellant was out of the ordinary and grossly unreasonable. There is no such egregious conduct on the part of the appellant in this case.
We are not satisfied that any of the criteria in s 60(3) are established that warrants a costs order being made in the appeal. We have found that the respondent did not unreasonably refuse the making of an amendment of the by law and confirmed the order for the appellant to remove and reinstate the common property. Notwithstanding these findings, we are not satisfied that the appeal could be described as being untenable, frivolous, vexatious nor misconceived as required by ss 60(3)(c) or (e).
There is nothing in the parties' conduct of the appeal, nor the proceedings below, which suggests that it was conducted in a manner that would constitute special circumstances. We are not satisfied that the appellant was responsible for unreasonably prolonging the time taken to complete the proceedings.
Where the appellant and the respondent were both legally represented and have to incur costs of litigation, that, in itself, does not create a special circumstance. This is because there was nothing particularly complex about the appeal, which, caused the parties to retain legal representation (see ZHH v ZHI (No 2) [2018] NSWCATAP 193 at [5]).
There are no special circumstances meriting an award of costs under s 60. This means that each party is to pay their own costs of the appeal.

BNK Café Restaurant Pty Ltd v The Owners - Strata Plan No 33676

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Judgment (8 paragraphs)

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Legislation Cited (1)

Cases Cited (19)