respondent in SC 17/30985)
Josephine Hellstern (applicant in SC 17/34613
Source
Original judgment source is linked above.
Catchwords
respondent in SC 17/30985)
Josephine Hellstern (applicant in SC 17/34613
Judgment (7 paragraphs)
[1]
Introduction
On 30 April 2018, I made Orders in the proceedings constituted by File Nos. SC 17/30985 and SC 17/34613. I also gave Written Reasons to accompany the Orders in both proceedings.
The proceeding SC 17/30985 brought by Valerie Alison Ridley ("Ms Ridley") and Tristan James Tulloch ("Mr Tulloch") against The Owners - Strata Plan No. 328 (the "Owners Corporation"), Deborah Begg ("Ms Begg"), and Josephine Hellstern (Ms Hellstern"), were dismissed.
In the proceeding SC 17/34613 brought by Ms Begg, Ms Hellstern and Jason Terry McLachlan ("Mr McLachlan") against the Owners Corporation, I found that the Owners Corporation had acted unreasonably at an Annual General Meeting of the strata scheme on 28 February 2018 in not making a by-law in terms of the proposed by-law put to the meeting on that occasion by Ms Begg, Ms Hellstern and Mr McLachlan. Consistent with that finding, I made an order pursuant to s 149(1)(a) of the Strata Schemes Management Act 2015 (NSW) (the "SSMA") prescribing the making of a by-law in terms substantially similar (but to allow for some typographical errors) to the proposed by-law which had been put to the meeting.
At the request of the solicitor, Ms Chua, acting for Ms Begg, Ms Hellstern and Mr McLachlan, who had represented those parties at the hearing (with the Tribunal's leave), I made other orders and directions for written submissions and written submissions in reply in any applications for costs of the proceedings: see orders 3, 4 and 5 of 30 April 2018 in SC 17/34613 and orders 2, 3 and 4 of 30 April 2018 in SC 17/30985. Order 4.1 in SC 17/30985 and order 5.1 in SC 17/34613 also asked for the parties' written submissions and written submissions in reply to indicate whether the parties consented to a decision on costs being made 'on the papers': see s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act").
By written submissions dated 20 June 2018, the solicitors acting for Ms Begg, Ms Hellstern and Mr McLachlan exercised the liberty under the orders and directions of 30 April 2018 to apply for their clients' costs in both proceedings. They sought orders in or to the following effect on behalf of their clients:
1. In the proceedings constituted by File No. SC 17/34613, that:
1. the Owners Corporation pays the costs of Ms Begg, Ms Hellstern and Mr McLachlan on the indemnity basis as agreed or as assessed; and
2. If the Tribunal so orders, any moneys payable by the Owners Corporation be paid from contributions levied only in relation to the remaining lots on the strata scheme to the exclusion of the lots of Ms Begg, Ms Hellstern and Mr McLachlan, respectively, and in proportions equal to the unit entitlements of the respective remaining lots;
1. In the proceedings constituted by File No. SC 17/30985, Ms Ridley and Mr Tulloch pay the costs of "the respondents" on the indemnity basis as agreed or as assessed.
As to the order sought in SC 1730985, "the respondents" in those proceedings were, as indicated above, Ms Begg, Ms Hellstern and the Owners Corporation, respectively.
The Tribunal also received further correspondence on costs (dated 3 August 2018 and 16 August 2018) from the solicitors for Ms Begg, Ms Hellstern and Mr McLachlan.
By letter dated 15 August 2018 (received on 16 August 2018), the Tribunal received written submissions from Mr Tulloch as regards the application for costs of Ms Begg, Ms Hellstern and Mr McLachlan.
The Tribunal also received email correspondence from Ms Ridley on 14 August 2018 and 15 August 2018, respectively, which I read as submissions in response to the application for costs of Ms Begg, Ms Hellstern and Mr McLachlan.
Notwithstanding the terms of order 4.1 in SC 17/30985 and order 5.1 in SC 17/34613, none of the parties' written submissions address whether the Tribunal should dispense with a formal hearing on the question of costs. Nevertheless, I am satisfied that the issues for determination in the application for costs by Ms Begg, Ms Hellstern and Mr McLachlan in both proceedings can be adequately determined in the absence of the parties by considering the written submissions referred to. Accordingly, I find that this is an appropriate case to exercise the Tribunal's discretion under s 50(2) of the NCAT Act to dispense with a formal hearing requiring the parties to be present and to proceed to determine the application for costs on the papers.
[2]
General Principles on Costs
The starting point in any application for costs is that parties to proceedings in the Tribunal are to pay their own costs: see s 60(1) of the NCAT Act. Subsection 60(2) provides costs are awarded only if the Tribunal is satisfied that there are: "special circumstances warranting an award of costs".
Subsection 60(3) of the NCAT Act provides:
1. In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following:
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.
Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the "NCAT Rules") relates to costs in this Division of the Tribunal, the Consumer and Commercial Division. Rule 38(2) says that despite s 60 of the NCAT Act the Tribunal may award costs in the absence of special circumstances warranting such an award if the amount claimed is more than $10,000.00 but not more than $30,000.00 and the Tribunal has made an order under cl 10(2) of Sch4 of the NCAT Act in relation to the proceedings, or the amount claimed or in dispute in the proceedings is more than $30,000.00
The parties did not seek payment of a monetary amount in either proceeding. Furthermore, I have made no orders in the proceedings under cl 10(2) of Sch4 of the NCAT Act. In this respect, I do not find that the Owners Corporation, Ms Ridley or Mr Tulloch have conducted the proceedings in such a way that unreasonably disadvantaged the other parties. While Ms Begg, Ms Hellstern and Mr McLachlan were ultimately successful in both proceedings, their success did not arise from any failure on the part of the Owners Corporation, Ms Ridley or Mr Tulloch, to comply with an order or direction of the Tribunal.
I find that no case for an order for costs arises against the Owners Corporation, Ms Ridley or Mr Tulloch under Rule 38 of the NCAT Rules.
Accordingly, the Tribunal may only award costs in the proceedings if it is satisfied that there are: "special circumstances warranting an award of costs" within the meaning of s 60(2) of the NCAT Act.
The authorities consistently state that "special circumstances" are circumstances that are out of the ordinary; although they do not have to be extraordinary or exceptional circumstances: see, for example, Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21.
Being successful in proceedings is not, of itself, a special circumstance. There must be some additional factors present in the case to justify an award of costs: Citadin Pty Ltd (No. 2) v Eddie Azzi Australia Pty Ltd & General Pants Co Pty Ltd [2001] NSWADTAP 31 at [6].
Even if there are special circumstances, it may still not be appropriate for the Tribunal to award costs for discretionary reasons: Obeita v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 at [81]; Brodyn Pty Ltd v Owners Corporation - Strata Plan 73019 (No. 2) [2016] NSWCATAP 224 at [24].
The discretion to award costs is broad and unfettered, save that it must be exercised judicially: see, for example, Ruddock v Vardalis (No 2) (2001) 115 FCR 229, and also "according to rules of reason and justice, not according to private opinion … or even benevolence … or sympathy": Williams v Lewer [1974] 2 NSWLR 91 at [95].
An award of costs to a party is to compensate it where that party has been put to expense in bringing or defending a claim: see Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. An award of costs is made, not for the benefit of a losing party, but for the successful party. In Oshlack [1998] HCA 11, [67], McHugh J (in dissent but with the tacit agreement on this issue with other members of the Court) said:
The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended by, the unsuccessful party the successful party would not have incurred the expenses which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
By s 60(4) of the NCAT Act the Tribunal may also determine, if costs are awarded, the basis of assessment of costs including the indemnity basis, which is the basis of assessment sought in this instance by Ms Begg, Ms Hellstern and Mr McLachlan. However, the Tribunal's discretion to award indemnity costs is exercised in limited circumstances and it must be the subject of careful reasoning: see Mendonca v Tonna [2017] NSWCATAP 176 at [59] - [60], [62] - [64] and the cases cited therein by the Appeal Panel.
In Oshlack at [44], Gaudron and Gummow JJ stated that before the Court can order indemnity costs, it is necessary to find what their Honours described as: "some relevant delinquency on the part of the unsuccessful party". As McHugh J explained in the same case at [67], the indemnity costs order is made not to punish the unsuccessful party but because "[a]s between the parties, fairness dictates that the unsuccessful party" should bear those additional costs.
Where indemnity costs are ordered based upon a "relevant delinquency" it is normally a case of misleading a court or tribunal, or bringing proceedings for collateral or ulterior purposes and not for the purposes of having a court or tribunal adjudicate on the issues to which they give rise, or if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless: Wentworth v Rogers [1999] NSWCA 403; Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; Cultus Petroleum v OMV Australia [1999] NSWSC 435.
[3]
Special circumstances
I am not satisfied that there are special circumstances which warrant an award of costs against Ms Ridley, Mr Tulloch or the Owners Corporation in either proceeding. I note also that the costs order sought by Ms Begg, Ms Hellstern and Mr McLachlan would, if granted by the Tribunal, adversely affect all lot owners of the scheme to the exclusion of the applicants for costs.
Ms Begg, Ms Hellstern and Mr McLachlan argue that subsections 60(3)(a), (c) and (e) of the NCAT Act arise as "special circumstances" warranting a costs order in their favour.
In my opinion, the matters put in the cases for Ms Ridley, Mr Tulloch and the Owners Corporation in both proceedings called for careful consideration by the Tribunal. This is reflected in the Reasons for Decision which accompanied the Orders made on 30 April 2018.
In paragraph 15 of the Reasons, I observed that whether a refusal of consent is "unreasonable" within s 149 of the SSMA, called for an objective assessment of the relevant facts, matters and circumstances. Such assessment was made against an historical background. There was confusion and uncertainty about the rights of the applicants in SC 17/34613 (as owners of Lots 4, 8 and 12) to car parking on common property areas of the scheme; but such confusion and uncertainty had arisen because originally Special By-Law 3 of the strata scheme had granted the owners of Lots 4, 8 and 12 exclusive use of certain areas of the scheme's common property for car parking purposes, and then the said by-law was omitted during the transition to the Strata Titles Act 1973 and subsequently, the Strata Schemes Management Act 1996, when model by-laws were adopted.
The careful analysis which was required to determine the issues in dispute between the parties is also to be seen in the findings of fact at paragraphs 21(1) - 21(5) of the Reasons, which supported the Tribunal's objective assessment of 'unreasonableness'. Such assessment arose from my consideration of the lay and expert evidence, but particularly the evidence adduced and led by Ms Begg, Ms Hellstern and Mr McLachlan. In my opinion, that evidence was essential to advance their case for the Tribunal to exercise its discretion and to make an order in their favour under s 149 of the SSMA.
The applicants for a costs order submit that the other parties did not seriously engage with them as regards a series of opportunities to resolve the matters in dispute. There is no doubt, as in all Tribunal proceedings, that a conciliated outcome is to be encouraged (see s 37 of the NCAT Act); however, in the particular circumstances, I do not think it was unreasonable for the Owners Corporation, representing all lot owners of the scheme, and for Ms Ridley and Mr Tulloch, representing their individual interests, to have put the owners of Lots 4, 8 and 12 to proof of the lot owners' case for relief under s149 of the SSMA. I would not stigmatise the fact that Ms Ridley, Mr Tulloch or the Owners Corporation (at the Annual General Meeting) did not accept the lot owners' proposals for resolution, as frivolous or vexatious, or otherwise a basis for finding a special circumstance warranting a costs order.
Ultimately, for the Reasons given on 30 April 2018, the arguments of the Owners Corporation, Ms Ridley and Mr Tulloch were not accepted by the Tribunal; so that Ms Begg, Ms Hellstern and Mr McLachlan were successful in obtaining relief in terms of s 149 of the SSMA in File No. SC 17/34613. Further, in essence, the outcome of the application of Ms Ridley and Mr Tulloch in the other proceeding (File No. SC 17/30985) was tied to the Tribunal's decision in SC 17/34613 because the applicants in SC 17/30985 sought an order that Ms Begg and Ms Hellstern cease parking their vehicles on the common property of the scheme. Given the Tribunal's decision in the related proceeding, such application had to be dismissed. Nevertheless, I did not find that the arguments of the Owners Corporation, Ms Ridley and Mr Tulloch were so easily dismissed as obviously untenable or utterly hopeless or frivolous or otherwise lacking in substance and misconceived.
[4]
Costs on the indemnity basis
I am also not satisfied that there was any "relevant delinquency" in the conduct of the proceedings by the Owners Corporation, Ms Ridley or Mr Tulloch, or that the proceedings brought by the Ms Ridley and Mr Tulloch were totally hopeless and doomed to fail.
There was a loss of the contest of fact as to the reasonableness of the Annual General Meeting of the scheme and a majority of lot owners (including Ms Ridley and Mr Tulloch) not accepting the proposed by-law which had been put to that meeting by the owners of Lots 4, 8 and 12. As stated in the Reasons for Decision dated 30 April 2018, I accepted material aspects of the evidence adduced and led by Ms Begg, Ms Hellstern and Mr McLachlan and I made significant findings of fact which enabled an objective assessment of unreasonableness and the granting of appropriate relief under s 149 of the SSMA, albeit relief which had to take into account some typographical errors in the proposed by-law put to the Annual General Meeting of the scheme on 28 February 2018.
[5]
Conclusion
For the foregoing reasons, my determination of the application for costs by Ms Begg, Ms Hellstern and Mr McLachlan is that consistent with s 60(1) of the NCAT Act and in the exercise of the Tribunal's general discretion as to costs, each party is to bear their own costs of both proceedings.
[6]
Civil and Administrative Tribunal of New South Wales
[7]
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
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Decision last updated: 10 December 2018