Feedback Deli Pty Ltd v The Owners - Strata Plan No 36613

Preliminary

1. At the conclusion of the Decision we gave directions for submissions as to costs. We indicated that we proposed to deal with the costs application on the papers and without a hearing. However, we stated that any party who thought a different course should be followed should address that issue in their submissions.
2. The respondent agreed that this costs decision should be determined on the papers and without a hearing pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act). This course was not opposed by the appellants.
3. As we are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering their written submissions, we direct that a hearing be dispensed with pursuant to s 50(2) of the NCAT Act.

The costs rule

1. The relevant provision of the NCAT Act dealing with costs is s 60. That section 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.
2. In considering this costs rule, the Appeal Panel has repeatedly noted: 1. special circumstances are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21. 2. each case depends upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152. 3. the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94.
3. For recent examples of the application of these principles, see ZIV v ZIZ [2 019] NSWCATAP 78 at [12] and ZKS v ZKT [2019] NSWCATAP 72 at [13].

The Submissions

1. The starting point is the appellants' submissions filed 14 January 2019. The appellants accept that special circumstances must be established to warrant an award of costs. They say that that the manner in which the respondent conducted the proceedings in the Tribunal is relevant. They submit that the respondent failed to discharge its duty under s 36(3) of the NCAT Act. Relevantly, that section provides that a party to proceedings in the Tribunal and an Australian legal practitioner or other person who is representing the party is under a duty to co-operate with the Tribunal to give effect to the guiding pri nciple (namely to facilitate the just, quick and cheap resolution of the real issues in the proceedings: NCAT Act, s 36(1)).
2. The appellants submit that the respondent's duty included a duty on the part of a party or its Counsel to correct the Tribunal as to a material matter about which the party or its Counsel knew or should have known that the Tribunal was misinformed. Further, it includes a duty not to put or to press claims that the party or its Counsel knows or should have known to have no tenable basis.
3. In this context, the appellants contend that the respondent knew or should have known that the Senior Member misunderstood the bases of the appellants' application for order No. 3. The order sought was that notwithstanding Special By-Law 14, the Owners Corporation not obstruct or impede the visitors or invitees to Shop 3 and customers of the restaurant business conducted in Shop 3 in their proper use of the common property toilets on the ground floor of the building.
4. The appellants submit that the respondent should have advised the Senior Member of his misunderstanding, consistent with its duty under s 36 of the Act to co-operate with the Tribunal in determining the real issues in the case. That advice, the appellants submit, would have led to the joinder of the second appellant as an applicant, and would have avoided the need for the subject appeal. In this context, the appellants submit that there is no credible doubt that, but for the Senior Member's concern that Order 3 would contradict a perceived duty on the part of an Owners Corporation to enforce by-laws, said to reside in s 135 of the Strata Schemes Management Act 2015, he would have ordered the joinder of the Second Appellant as an applicant.
5. The respondent opposes the appellants' application for costs, and say that that no order for the costs of the appeal should be made, and that each party should bear their own costs of the appeal. The respondent submits that the appellants did not sustain the principal basis for the appeal, namely that they were denied procedural fairness. The respondent further submits that the appellants' application for costs is misconceived because the Appellants rely entirely on what took place before the Tribunal at the hearing of the joinder application. It is in that context that the respondent submits that the appellants ought to pay its costs of responding to the appellants' costs application.
6. The respondent submits that the appellants "utterly failed" to identify any circumstances on which a special order for the costs of the appeal could properly be made, and that they failed to deal with the costs implications arising from the fact that they did not sustain the principal basis for the appeal, namely that they were denied procedural fairness. The respondent submits that the appellants' application for costs is misconceived because the application relies entirely on what took place before the Tribunal at the hearing of the joinder application.
7. The respondent further submits that the appellants' legal representatives have made allegations of professional misconduct in connection with that hearing which have no tenable basis, and are frivolous and scandalous. In this respect, the respondent refers to Liang v University of Technology, Sydney [2019] NSWCATAP 17, especially at [19].
8. For those reasons, the respondent seeks an order pursuant to s 60(2) of the NCAT Act that its costs incurred in connection with the appellants' costs application are to be paid by the third appellant Mr Lipschitz in a lump sum or, alternatively, as agreed or assessed on the indemnity, or alternatively ordinary, basis under the Legal Profession Uniform Law Application Act 2014. In the event the appellants' application for costs is dismissed, the respondent seeks an order that Mr Lipschitz should pay its costs of that application on the indemnity basis.
9. The appellants responded by submissions dated 18 January 2019. They deny that any allegations of professional misconduct were made. They reiterate that the Senior Member considered that the joinder application was futile because he considered that the application was bound to fail. They submit he did so on a misconception as to the basis of the application. They submit that this was a misconception which the respondent, thoroughly familiar by then with the basis of the application, should have corrected. This they submit was inconsistent with the Respondent's obligation under s 36 to co-operate with the Tribunal in identifying and resolving the real issues in the proceedings.
10. The final reply submissions were that of the respondent. Suffice it to say the respondent continued to assert its primary submissions and to reject the appellants' reply submissions.

Consideration

1. There are two issues to decide. The first is whether or not the appellants have established special circumstances as defined in s 60 of the NCAT as warranting an award of costs.
2. We are not satisfied that the appellants have established special circumstances. We see nothing out of the ordinary in the grounds of appeal or the conduct of the appeal that warrant a finding of special circumstances. The principal basis on which the appellants relied at the hearing of the appeal was that they were denied procedural fairness, the allegation being that the Senior Member did not alert their solicitor to s 135 of the Strata Schemes Management Act 2015 and the implications it might have to the joinder application. In the Decision we rejected that proposition.
3. There was no legal or factual complexity that might make this case out of the ordinary and, as far as we are aware the appeal was dealt with in ordinary timeframes, the hearing of the appeal not taking up excessive time. Nor could it be said that any party prolonged unreasonably the time taken to complete the proceedings. Similarly, it could not be said that the respondents' conduct prolonged the proceedings or in any relevant sense adversely affected its efficient resolution.
4. The only factor which the appellants can point to is that they succeeded on the utility point, but we are not satisfied that this alone constitutes special circumstances.
5. In summary, we are not satisfied that the appellants have established special circumstances. The appellants' application for costs is dismissed.
6. The second issue is whether the respondent should have its costs of defending the appellants' application for costs. The respondent submits that the appellants' application for costs was, at best, hopeless and, at worst, a gross misuse of public and private resources.
7. In our view, this overstates the situation. The application for costs, while weak, was not entirely hopeless or without merit, and we do not accept, as claimed by the respondent, that all of the appellants' submissions on their application for costs were irrelevant to that application.
8. In summary, we are not satisfied that the respondent has established special circumstances warranting an award of costs. Its application is also dismissed.

Orders

1. For the above reasons, we make the following orders: 1. A hearing be dispensed with. 2. The appellants' application for costs of the appeal is dismissed. 3. The respondent's application for costs 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. 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: 17 April 2019