Georgiev v The Owners - Strata Plan No. 71186

Submission in support of the costs application

1. In support of their application for costs, the respondents submit that there are a number of special circumstances in this case warranting an award of costs. These can be summarised as follows: 1. The respondents were wholly successful in relation to each of the applicants' 37 claims; 2. The orders sought had no tenable basis in fact or in law. The Tribunal found it had no jurisdiction to make 12 of the orders sought. A further 18 of the orders could not be made because they represented a misunderstanding of the relevant legislative provisions. Five of the orders sought were not founded on sufficient evidence. The remaining two had been dealt with on an interlocutory basis. 3. The claims were misconceived and lacking in substance; 4. The application was frivolous or vexatious because the applicants did not establish the legal elements necessitating the making of any of the orders sought. The applicants were motivated to override the wishes of the owners as a whole, and to constrain it to act only in accordance with the applicants' wishes; 5. In light of the number of orders sought, the multitude of legislative provisions cited, the volume of supporting material provided and the various interlocutory steps involved, the proceedings could be described as complex. Without the assistance of the respondent's experienced legal counsel, the Tribunal would have had to spend additional time and resources sorting through the documents and making sense of the claim. It would have been near impossible for the hearing to be concluded in one day. 6. The applicants conducted the proceeding in a way that unnecessarily disadvantaged the respondents and unreasonably prolonged the time taken to complete the proceedings. 7. The applicants had the benefit of the respondent's submissions from as early as April 2021 in which the serious flaws in the application were pointed out. Despite this, the applicants did not take steps to amend their claim or reduce or narrow its scope.

Response to costs application

1. The applicants say that each party should bear their own costs in accordance with s 60(1) of the NCAT Act.
2. The applicants have provided approximately 50 pages of submissions in response to the costs application. The bulk of the applicants' submissions address their dissatisfaction with the Tribunal's decision and processes, and with the respondents' conduct. They do not address the costs submissions made by the respondent in any helpful manner.
3. The applicants say that while the Tribunal may make an order as to costs it is not required to do so. They say that the respondents have not specified the exact amount of the costs in respect of which they are seeking orders and this makes it 'impossible' to apply the guidelines set out in section 36 of the NCAT Act and rule 38 of the NCAT Rules. They also say that the respondent has not indicated whether the owners corporation has passed a special resolution at a general meeting in respect of their legal costs. Finally, the applicants say that any legal costs incurred by the respondent are a result of their own decision to be legally represented and that they were not required to be legally represented under s 45 of the NCAT Act.

Legislative framework

1. Section 60 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) applies in respect of the Owners Corporation's costs application.
2. This section relevantly provides: 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.
3. Section 36 of the NCAT Act is also relevant. It states: (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it - (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal - (a) a party to proceedings in the Tribunal, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal. (4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings. (5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
4. Pursuant to s 36(3), the parties and their legal representatives are bound to co-operate with the Tribunal in giving effect to its guiding principle. Whether a party or its representative has refused or failed to comply with this duty may be of relevance in determining whether special circumstances exist: s 60(3)(f).
5. Clause 38 of the Civil and Administrative Tribunal Rules (NSW) 2014 modifies the application of s 60 in certain proceedings before the Consumer and Commercial Division of the Tribunal. However, cl 38 has no application in these proceedings.
6. Section 50 of the NCAT Act relevantly provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: … (c) if the Tribunal makes an order under this section dispensing with a hearing, or … (2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal. (3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules. …

Issues

1. The issues to be determined are: 1. Should an order be made dispensing with a hearing, pursuant to s 50(1)(c) of the NCAT Act? 2. Are there special circumstances warranting an award of costs? 3. If so, should a costs order be made in the respondents' favour?

Should an order be made dispensing with a hearing, pursuant to s 50(1)(c) of the NCAT Act?

1. The parties have had an opportunity to make submissions as to whether the issue of costs should be determined on the papers. Both parties have consented to the matter being determined on the papers.
2. I am satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. In my view, the parties would be put to unnecessary expense if a hearing on costs was held.
3. An order dispensing with a hearing under s 50(1)(c) of the NCAT Act has accordingly been made.

Have the respondents established that there are special circumstances warranting an order for costs?

1. For the purposes of s 60(2) of the NCAT "special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Cripps v G & M Mawson [2006] NSWCA 84 at [60].
2. In Alexander James Pty Ltd v Pozetu Pty Ltd (No. 2) [2016] NSWCATAP 75 at [14] the Appeal Panel stated: 14. An assessment whether circumstances are "special" involves the exercise of a value judgement carried out by way of comparison between what is not "special", and what is special. There are no scientific means by which the former can be ascertained. The evaluative process is necessarily one of impression informed by the particular provisions of section 60, which by sec 60(3)(f) incorporates also a consideration of section 36(3) of the Act.
3. In my view there are a number of circumstances in this case which constitute 'special circumstances' for the purposes of s 60(2).
4. Firstly, the sheer volume of orders sought by the applicants was out of the ordinary. The applicants sought 37 orders, two of which had been dealt with on an interlocutory basis and therefore were not dealt with as part of the substantive claim. That leaves 35 claims, all of which were dismissed.
5. Whilst a large number of orders sought might not always be enough to establish 'special circumstances', in this case I am satisfied that it does. This is because the applicants were not only wholly unsuccessful in relation to each claim, but because the majority of the claims (ie 30 out of 35) were dismissed because they were beyond the scope of the Tribunal's jurisdiction, or were based on a misconceived or flawed understanding of the operation of the relevant legislative provisions, or of the extent and nature of the Tribunal's powers under those provisions. The remaining few orders sought by the applicants were refused because the applicants provided no or insufficient evidence to support the claims. Indeed whilst the materials supplied by the applicants contained a raft of allegations, and included many hundreds of pages of documents and hours of video evidence, in most cases there was no evidence, or little or no probative evidence, to support the applicants' wide ranging allegations.
6. Where a party is unrepresented in Tribunal proceedings, it is not unusual for the party to misunderstand the nature of the Tribunal's powers or enabling legislation, or to seek orders which fall outside the scope of the Tribunal's jurisdiction. However, it is out of the ordinary for a party to make 35 claims, over 85% of which involve a misconceived or flawed understanding of the law. Moreover, in this case the applicants had the benefit of the respondents' solicitors' submissions, which outlined in detail many of the deficiencies in the applicants' case, for more than five months before the final hearing. Despite this, the applicants did not seek to amend, withdraw or narrow their claim or otherwise to address the serious flaws in the applicants' case which had been identified by the respondents.
7. In addition, the applicants' materials were so voluminous and convoluted that it made it very difficult to understand the claims and the basis for making them. This meant that the respondents' solicitors were put to the heavy burden of having to sift through and decipher hundreds of pages of documents and hours of video evidence in order to distil the applicants' submissions and attempt to understand the claim.
8. The applicants' poor presentation of their case, their inappropriate use of the Tribunal's processes, and their failure to address the serious flaws in their case identified early on by the respondents, were not consistent with the applicants' duty under section 36(3) of the NCAT Act to cooperate with the Tribunal in giving effect to its guiding principle, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
9. In effect, the applicants appear to have been using the Tribunal as a forum for airing their complaints and grievances, without due regard to the legislative framework in which the Tribunal operates.
10. In my view the above considerations are sufficient to constitute 'special circumstances' for the purposes at s 60(2) of the NCAT Act.
11. Given the above conclusion it is not necessary to address the other matters which the respondents say amount to 'special circumstances'.

Should a costs order be made in favour of the respondents?

1. It follows therefore that the Tribunal has a discretion as to whether to award costs. 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: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].
2. As the Appeal Panel said in Brodyn Pty Ltd v Owners Corporation - Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24] - [26]: Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account. These include: (1) Costs are compensatory: see Latoudis v Casey (1990) 170 CLR 334; (2) That an unsuccessful party bears the costs of the successful party: Oshlack v Richmond River Council [1998] HCA 11 at [134]; (3) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made; see eg Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304. 25. Further, in some circumstances where s 60 of the NCAT Act regulates an award for costs, a limited order for costs might be made to reflect the fact that only some aspects of the appeal should properly be categorised as out of the ordinary and to make a general order for costs in favour of a successful party might be inappropriate having regard to principle that absent special circumstances each party is to pay their own costs. See eg McPherson v Mace (No 2) [2016] NSWCATAP 198. 26. Overall, the Tribunal is to exercise its discretion in a manner that is fair and reasonable having regard to the circumstances of the particular case.
3. In this case the applicants were not only wholly unsuccessful, but the application was ultimately doomed to fail because the majority of the orders sought involved a misconceived or flawed understanding of the Tribunal's powers or of the operation of the SSMA or of the NCAT Act, and the remaining few orders sought were not supported by the evidence.
4. Moreover, the applicants were on notice of the serious flaws in their case for months before the final hearing but took no helpful steps to address these flaws.
5. In addition, the applicants' unusually complex and confusing presentation of their case put the respondents to the additional cost of having to wade through and decipher the applicants' claim in order to respond to it.
6. I am not persuaded by the applicants' arguments as to why a costs order should not be made. In particular I would comment that the Tribunal made an order early in the proceedings giving leave to the parties to be legally represented. Accordingly the respondents were well within their rights to engage legal representatives to assist them to understand and respond to the applicants' case.
7. In all of these circumstances I am satisfied that it is appropriate to make an order for the applicants to pay the respondents' costs in the proceedings.

Conclusion and orders

1. For these reasons I make the following orders: 1. A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013. 2. The applicants are to pay the respondent's costs of and incidental to the proceedings.

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: 15 March 2022