Evans v The Owners – Strata Plan No. 40841

1. In the proceedings before the Tribunal Ms Evans claimed that the respondent had breached the obligations imposed by s 106(1) of the Strata Schemes Management Act 2015 (NSW) ("the SSMA") to repair and maintain various aspects of the common property. She also sought that repairs be undertaken, that she be awarded damages under s 106(5) of the SSMA arising out of the breach and that a compulsory strata managing agent should be appointed under s 237 of the SSMA. As noted above, the proceedings were dismissed and a costs order was made against Ms Evans.
2. In the appeal Ms Evans submitted that the Tribunal had erred on a number of grounds. These grounds primarily related to the Tribunal's decision with respect to noise emanating from an exhaust fan from one of the commercial premises on the ground floor and an alleged associated fire risk. Another ground was that the Tribunal erred in refusing to make orders for the appointment of a compulsory strata manager. She also submitted that the Tribunal erred in ordering her to pay the respondent's costs.
3. We did not find that the Tribunal had made an error on a question of law in relation to any of the grounds raised by Ms Evans. We also found that there was no basis upon which leave to appeal could be granted. We determined that the Tribunal had applied the correct legal principles and its conclusions were clearly open on the evidence before it.

1. The respondent seeks its costs of the appeal. In her submissions Ms Evans states that both parties should bear their own legal costs, although she seeks the cost of the experts she retained and relied upon in the Tribunal proceedings be met by the respondent. Ms Evans also seeks an order that she be "exempt from a contribution to the owner corporation's legal costs in this proceeding".

Which legislative provisions and legal principles apply to the costs application?

1. Under s 60(1) of the NCAT Act, each party to proceedings in the Tribunal is to pay the party's own costs. However, under s 60(2), the Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting such an award.
2. In proceedings commenced in the Consumer and Commercial Division, by reason of the operation of s 35 when read with par (a) of the definition of "procedural rules" and the definition of "Tribunal rules" in s 4(1) of the NCAT Act, s 60 is subject to the Civil and Administrative Tribunal Rules 2014 (NSW) ("NCAT Rules").
3. Rule 38 of the NCAT Rules relevantly provides:

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 -

...

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

1. Rule 38A of the NCAT Rules relevantly provides:

38A Costs in internal appeals

...

(2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.

1. In the Tribunal proceedings Ms Evans had claimed an amount of damages in excess of $229,000, although had failed to particularise this claim. Irrespective of the amount claimed, the claim for damages was dismissed by the Tribunal as it was made outside the limitation period. This finding was not challenged on appeal and the appeal was limited to other claims in the substantive proceedings in which no amount of money was claimed or in dispute.
2. The appeal was also against the costs decision at first instance. In relation to the costs decision, the Tribunal held that as the amount claimed in the substantive proceedings was in excess of $30,000, under rule 38, it was not necessary to consider whether special circumstances applied. The order of the Tribunal was that Ms Evans pay the respondent's costs.
3. At issue is what costs rules apply to these appeal proceedings. For the purposes of rule 38A of the NCAT Rules the amount claimed or in dispute is the amount in dispute on appeal, not the amount in dispute in the proceedings at first instance: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57]. Relevantly, at [43] the Appeal Panel held:

In the case of an internal appeal, the "amount claimed ... in the proceedings" can be determined by considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any "amount claimed" for the purposes of r 38(2)(b).

1. As any claim for damages had been in effect abandoned in the appeal, no amount of money in fact was claimed in the appeal from the substantive decision.
2. Ms Evans also appealed from the costs decision made by the Tribunal. According to the Tribunal's reasons the costs sought by the respondent in those proceedings were more than $30,000. That does not mean, however, that rule 38(2)(b) of the NCAT Rules applies. The quantum of costs the subject of an appeal in relation to costs orders is not an "amount claimed or in dispute in the proceedings": Dimitropoulos v Capital Construction Pty Ltd [2019] NSWCATAP 164 at [28]; RBV Builders Pty Ltd v Chedra (No 2) [2021] NSWCATAP 393 at [39] - [43].
3. As no amount was claimed in the appeal and the quantum of costs the subject of an appeal in relation to costs orders is not an amount claimed or in dispute in the proceedings, it follows that special circumstances are necessary before we could make an order in respect of the costs of the appeal.

1. In determining whether there are special circumstances warranting an award of costs, s 60(3) provides that the Tribunal may have regard to:

(1) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

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

(3) 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,

(4) the nature and complexity of the proceedings,

(5) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(6) whether a party has refused or failed to comply with the duty imposed by section 36(3),

(7) any other matter that the Tribunal considers relevant.

1. The onus to satisfy the Tribunal that there are special circumstances warranting an award of costs lies with the applicant for the costs order: Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5].
2. Special circumstances are those that are out of the ordinary, and they do not have to be extraordinary or exceptional: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81. Even if satisfied that there are special circumstances, the Tribunal must further be satisfied that they are circumstances "warranting an award of costs": Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [108].
3. The costs submissions of Ms Evans are somewhat confusing. On the one hand, she submits that each party should bear its own costs, but on the other states that there are "special circumstances". Those "special circumstances" seem to relate to the alleged conduct of the respondent in failing to act on the alleged fire risk from the exhaust fan and related ducting and not to matters concerning her appeal. As Ms Evans is not seeking that the respondent pay her costs of the appeal, the reference to "special circumstances" is misconceived, although we do note she seeks to be paid the costs of her experts and we will turn to that below.
4. For its part, the respondent submits that Ms Evans' conduct in pursuing the appeal was frivolous and vexatious. The appeal itself, it is submitted, simply had no basis. We do not consider that the appeal had no tenable basis in fact or law or that it was vexatious or frivolous. Many of the matters raised in the appeal were relatively complex and not necessarily without some merit.
5. The respondent states that Ms Evans' conduct in the appeal has been such that it has unnecessarily escalated costs, created delays and otherwise interfered with the respondent's ability to comply with its statutory duties, including the duty of repair and maintenance of common property. In particular, the respondent refers to the late lodgement of the appeal, the failure of Ms Evans to appear at a call over and that she failed to comply with directions and sought extensions of time.
6. While the appeal was filed late and, ultimately, we did not extend time for the lodgement of the appeal, the explanation for the delay given by Ms Evans was reasonable in that she believed that the appeal in relation to the substantive matter should be lodged once the costs decision was received so all matters could be dealt with at once.
7. There have been some delays in the appeal proceedings but we do not consider that the conduct of Ms Evans has been such that the respondent has been unnecessarily disadvantaged or that the proceedings have been unreasonably prolonged.
8. We acknowledge that there appears to be some animosity between the parties and that Ms Evans, even in her costs submissions, seeks to reagitate matters which have been found against her. However, we do not consider that her conduct has been so out of the ordinary or grossly unreasonable so as to attract the exercise of the Tribunal's power to award costs: see Cripps and Another v G & M Dawson Pty Ltd [2006] NSWCA 81 at [55].
9. Overall, we are not satisfied that there are special circumstances warranting a departure from the general rule that each party bear its own costs.
10. As to Ms Evans' submission that the respondent should pay the costs of her experts, we do not consider that such an order could or should be made in light of our conclusion that each party pay its own costs of the appeal. Ms Evans suggest that the respondent has obtained some benefit from the expert reports, but that is not a matter, even if it were true, that is relevant to our decision on costs.
11. Ms Evans also appears to seek an order that she be exempt from any requirement, as a lot owner, to pay her share of the legal costs of the respondent, presumably in accordance with her unit entitlement. That is not an order the Appeal Panel has power to make.

(1) Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) the Appeal Panel dispenses with a hearing on the question of costs.

(2) No order as to costs of the appeal, with each party to bear its own costs.

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.