Harasty v The Owners - Strata Plan No 13031 - [2023] NSWCATAP 233 - NSWCATAP 2023 case summary

NCAT Appeal Panel|2023-05-08

Background to appeal

This appeal arises from a decision of the Consumer and Commercial Division made on 10 February 2023. The Tribunal made an order for costs against the appellants in an application for interim orders.
The original proceedings arose from an application for interim relief for an order under s 231(a) of the Strata Schemes Management Act 2015 (the SSMA). The appellant sought orders that "neither the respondent, nor the strata committee shall engage a consultant for the purpose of a scoping study relating to redevelopment or collective sale of the strata scheme".
In the application for substantive orders the appellant sought to invalidate motion 21 passed at an annual general meeting convened on 29 October 2022. The owners corporation resolved to engage a consultant to do a "scoping study" investigating a full redevelopment of the scheme authorising a cost of the report of up to $25,000. The appellant applied for orders invalidating the March 21 resolution but also sought urgent interim orders restraining the strata scheme from retaining the consultant to prepare a report.
The application for interim orders was entirely unsuccessful and on 14 December 2022 the Tribunal disposed of it in the following terms: Both parties have leave to be legally represented The application for interim relief is dismissed. If the respondent seeks costs, it should file and serve submissions as to costs by 23 December 2022. The applicant may respond by 23 January 2023. The respondent may reply by 30 January 2023.
The appellant did not appeal the dismissal of the application for interim orders.
The Tribunal considered and published reasons on the question of costs on 10 February 2023. The hearing in respect of the question of costs was dispensed with pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act).
The Tribunal ordered the appellant to pay the respondent's costs of the application as agreed or assessed

The Notice of Appeal

The appeal was commenced on 10 March 2023 and was therefore filed in time We refer to the Amended Notice of Appeal filed on 11 April 2022 and Annexures.
The critical ground of appeal is set out at page two of the Amended Notice of Appeal and in written submissions.
It is convenient to set out the appellant's single ground of appeal in full: 1. The Tribunal erred in law in failing to provide proper reasons for its decision that "there was no issue that special circumstances are established" except by reference to its decision on the interim application that "the applicant's' submissions… But all without merit or substance" (a) which no proper reasons were provided, or (b) which failed to address the case raised by the applicant that the respondent had no power to obtain a "scoping study of the redevelopment of the entire property "as part of a full redevelopment), on the basis that the examination of options included the common property, and that the examination was supported by the overwhelming majority of owners, or (c) which failed to take into account a relevant consideration: namely, the possibility that "full redevelopment" included (or might be chosen or intended by the respondent to include) redevelopment of the entire property, which fresh evidence has been discovered after the interim hearing, or (d) … which erred in law in applying an incorrect test the making of an interim order under section 231 of the Strata Schemes Management Act 2015, or (e) which was made without the applicants having been given a proper and reasonable opportunity to reply to the respondent's evidence, served on 12 December 2022

Reply to Appeal

In its Reply to Appeal filed on 26 April 2023 the owners corporation supports the costs orders made on 10 February 2023. By way of summary, the owners corporation says that the sole ground for appeal is without merit, that adequate reasons for the award of costs were given by the Tribunal and that the Tribunal was not required to provide more detailed reasons on the issue as the appellant expressly "conceded" the issue of special circumstances.

Applicable legal principles governing appeals

Section 80 of the NCAT Act provides as follows: "(1) An appeal against an internally appealable decision may be made to an Appeal Panel by a party to the proceedings in which the decision is made. Note. Internal appeals are required to be heard by the Tribunal constituted as an Appeal Panel. See section 27(1). (2) Any internal appeal may be made - (a) in the case of an interlocutory decision of the Tribunal at first instance - with the leave of the Appeal Panel, and (b) in the case of any other kind of decision (including an ancillary decision) of the Tribunal at first instance - as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. (3) The Appeal Panel may - (a) decide to deal with the internal appeal by way of a new hearing if it considers that the grounds for the appeal warrant a new hearing, and (b) permit such fresh evidence, or evidence in addition to or in substitution for the evidence received by the Tribunal at first instance, to be given in the new hearing as it considers appropriate in the circumstances."
A Division decision is a primary decision of the Consumer and Commercial Division. The costs decision is an "ancillary" decision.

Ancillary orders

This is an appeal from final orders (as distinct from interlocutory orders) as to costs.
This means that the costs decision appealed from is an ancillary decision of the Tribunal: see the definition of "ancillary decision" in s 4(1) of the NCAT Act. Therefore, the appellant has a right to appeal that ancillary decision on any question of law under s 80(2)(b) of the NCAT Act but must seek leave to appeal on any other ground.
This being an appeal from a decision made in the Consumer and Commercial Division of the Tribunal, leave to appeal may only be granted (per Schedule 4 cl 4 of the NCAT Act) if the Appeal Panel is satisfied that the appellant may have suffered a substantial miscarriage of justice because - the decision of the Tribunal under appeal was not fair and equitable, or the decision of the Tribunal under appeal was against the weight of evidence, or significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
There is a further hurdle to overcome in relation to the granting of leave to appeal. In Collins v Urban [2014] NSWCATAP 17 at [83]-[84] it was held that the general principles to apply to an application for leave to appeal are that: the appellant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at or that there was a bona fide challenge to an issue of fact.
Ordinarily it is appropriate to grant leave to appeal only in matters that involve: 1. issues of principle; 2. or questions of public importance or matters of administration or policy which might have general application; 3. or an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; 5. or the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
Costs decisions fall into the category of discretionary decisions and therefore the appellant must establish an error of the type described in House v The King (1936) 55 CLR 499; [1936] HCA 40, namely that the Tribunal: 1. made an error of legal principle; 2. made a material error of fact; 3. took into account some irrelevant matter; 4. failed to take into account, or gave insufficient weight to, some relevant matter; 5. or arrived at a result so unreasonable or unjust as to suggest that one of the foregoing categories of error had occurred, even though the error in question did not explicitly appear on the face of the reasoning.
The appellant did not identify with any precision which House v The King error he was alleging in his grounds of appeal, his written submissions or oral submissions. Be that as it may, we have addressed the issues raised by the appellant as best we understand against the submissions but in terms of a House v The King error.
In addition, the single ground of appeal does not address on what basis the discretionary aspect of the decision should be overturned. An Appeal Panel differently constituted recently discussed the "constrained" or "deferential" standard of appellate review that applies in an appeal of this nature (see Roberts v The Owners - Strata Plan No 4393 [2023] NSWCATAP 119 [54] - [56]).
It is not enough that an Appeal Panel might conclude that it would have exercised the discretion to award costs differently if the discretion had been conferred on it in the first instance because (adopting the language of the High Court in Norbis v Norbis (1986) 161 CLR 513 at 518; [1986] HCA 17) the question involved (being costs) lends itself to differences of opinion which, within a given range, are legitimate and reasonable answers to the question posed.
Further still, because costs decisions fall within the category of matters of practice and procedure there is the "added restraint" and "particular caution" which an Appeal Panel should exercise in reviewing such a decision (McInnes v Rheem Australia Pty Limited [2021] NSWCA 89).

The Costs Legislation

The relevant costs provisions are set out in the Tribunal decision. In accordance with s 60 of the NCAT Act, each party to proceedings in the Tribunal is to pay the party's own costs but the Tribunal may award costs in relation to proceedings before it if it is satisfied that there are special circumstances warranting an award of costs.
In determining whether there are special circumstances warranting an award of costs the Tribunal may have regard to whether a party is conducted proceedings in a way that unnecessarily disadvantaged another party to the proceedings; whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings; the relative strengths of the claims made by each parties, including whether a party has made a claim that has no tenable basis in fact or law; the nature and complexity of the proceedings, whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance; whether a party has refused or failed to comply with the duty imposed by section 36 (3) and any other matter that the Tribunal considers relevant.
Special circumstances 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].
The Tribunal published written reasons for its decision on 10 February 2023. At [19] the Tribunal stated: 19 There is no issue that special circumstances are established. As I noted in the interim decision: I am not going to set out my views on each and every one of the applicant's submissions. In my view they are all without merit or substance, even if considered cumulatively.
In the exercise of its discretion the Tribunal made the following critical findings at [22] ● costs are compensatory; ● the applicant was completely unsuccessful [in the interim application] and the application lacked merit, ● the respondent was put to unnecessary expense and defending an unmeritorious claim,
Accordingly, the Tribunal saw no reason why the respondent was not entitled to its costs.

Ground of Appeal

The appellant submits that the appeal must succeed because the Tribunal provided inadequate reasons for its decision on costs.
In its written submissions at [5] the appellant states that NCAT is a Tribunal that is obliged to provide adequate reasons for its decisions, including discretionary decisions, although the level of necessary detail will vary: Johnson v Dibbin Gatsby v Gatsby [2018] NSWCATAP 45; New South Wales Land and Housing Corporation v Orr [2019] NSWCA 31 per Bell P at [67] - [70]. Bell P observed at [71] that the minimum characteristics that a decision of NCAT must possess as a useful starting point are supplied by s 62(3) of the NCAT Act including at s 62(3)(c) "the reasoning processes that lead the tribunal to the decisions it made".
The appellant submitted on page 8 of the appeal bundle that the Tribunal erred in law in failing to provide proper reasons for its decision and that the finding that the interim application was "without merit" but no proper reasons for this finding were provided.

Consideration

We consider that the bulk of the appellant's submission address the Tribunal's decision to dismiss the interim application, rather than the Tribunal's decision to award costs. The appellant submitted that the Tribunal was "misled" by the respondent who submitted that the owners corporation had "no power to develop the lots or to investigate a development in relation to the lots" and because the Tribunal was misled, it applied the wrong test and the interim application was wrongly decided. Further, the appellant submitted that the decision would not have been made if the appellant had been given a proper and reasonable opportunity to reply to the respondent's evidence that was served late on 12 December 2022.
The appellant confirmed he is not appealing the decision to dismiss the interim application. We note that any appeal against the dismissal would, in any event, be significantly out of time.
For the reasons that follow we have decided to dismiss the appeal against the costs decision. We do not consider that the reasons to award costs to the respondent were inadequate. The Tribunal set out the submissions put by the parties in support of their case for costs. The Tribunal decided that the application was unmeritorious and that costs should follow the event. The Tribunal arrived at its findings in an orthodox manner and we consider that the decision to award costs to the wholly successful party was a fair result and it is not in the interests of justice to review the result, see Collins v Urban.
We are of the view that the particulars of appeal raised by the appellant are irrelevant to the disposition of the appeal. The appellant's lengthy written submission address the merit of the substantive application, currently reserved. The issue determinative of an application for interim orders is whether urgent relief should be granted. The urgency denoted by the appellant for the making of interim orders was set out in the interim application form. Setting out the reasons for seeking an injunction the appellant stated as follows: The respondent passed motion 21 at the AGM convened on 29 October 2022 which contains a resolution authorising the incoming strata committee to engage a consultant to do a scoping study on a full redevelopment with the cost of up to $25000. The applicant has applied for orders invalidating motion 21 of the 2022 AGM (substantive orders). If the tribunal makes such orders but the respondent has already engaged a consultant pursuant to the then invalidated resolution the substantive orders would be otiose. An interim order ought to be made to preserve the status quo.
The supporting affidavit of Rick Harasty of 25 November 2023 tendered in support of the application for interim relief also failed to set out any urgency that may warrant the making of interim orders. Further, in its submissions supporting the application for interim orders the appellant failed to identify any urgent consideration and the appellant failed to address the relevant legal test: whether the interim orders should be made because the balance of convenience favours the appellant. The appellant made no submission on the issue of prejudice either to the owners corporation or the appellant. Indeed it is apparent from the submissions that the prejudice to the appellant, if a report was obtained, would be minor given that only a relatively small proportion of the cost of the report would be payable by the appellant. In conclusion, the Tribunal dismissed the application for interim orders because the appellant failed to satisfy the relevant test whether the application denoted urgency.
Having concluded that there was no urgency the Tribunal was entitled dismiss the application and was correct in his conclusion that the application for interim relief was "entirely unmeritorious".
We consider the discretionary aspect of the appeal was not addressed by the appellant. In our view, the Tribunal was correct to conclude that the application for interim orders was entirely unmeritorious and this was relevant to the exercise of the discretion to award costs to the successful respondent. The Tribunal's reasons indicate relevant facts concerning why the discretion was exercised in favour of the respondent and no error within the meaning of The House v King has been established. In these circumstances we are not satisfied that the discretion miscarried.
Citing the failure by the appellant to address the critical issue of urgency, it was a proper exercise of the Tribunal's discretion to award costs to the successful party. The substantive application remains reserved. In the event that the appellant is successful in his substantive application he may make the appropriate application for costs.
It follows from the above that we are satisfied the discretion did not miscarry and the order awarding costs to the respondent should not be set aside.

Costs of the appeal

There is no amount claimed or in dispute in the appeal proceedings, the issues in the appeal being whether an order for costs was made in error.
In such a case, special circumstances would need to be established. We consider there is nothing out of the ordinary in this appeal and each party should pay their own costs of this appeal.
We will make a conditional order to this effect and allow the parties to file and serve evidence and submissions within seven days if they contend a different order should be made. Any submissions should deal with whether an order should be made dispensing with a hearing.

Orders 1. Leaved to appeal refused. 2. Appeal dismissed. 3. No order as to costs. 4. If either party seeks a different costs order, order 3 above ceases to have effect and the following orders apply: 1. The costs applicant is to file and serve any evidence and submissions in support of the different costs order within seven days of the date of publication of these orders; 2. The costs respondent is to file and serve any material in response to the application within seven days thereafter; and 3. In their submissions, the parties must address whether the Appeal Panel should dispense with a hearing and determine the costs application on the basis of the written material provided.

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 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

Amendments 22 August 2023 - amended spacing on coversheet. 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: 22 August 2023

(NSW), Civil and Administrative Tribunal Rules 2014(NSW)

Harasty v The Owners - Strata Plan No 13031

At a glance

Court

Decision date

Source

Judgment (12 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (12)

Cited By (1)