Horan v The Owners - Strata Plan No. 68307 [2024] NSWCATAP 173 | Case summary

Consideration

Both parties agree that the costs application can be dealt with on the papers without a hearing. We will make an order dispensing with a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
Rule 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (Rules) applies to the application for costs in this appeal as the amount claimed or in dispute in the appeal was greater than $30,000 and r 38 applied to the proceedings at first instance; see r 38A of the Rules and The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256. In this regard, as noted above, the appellant sought additional damages of $115,119.04, the respondent disputing this claim. The fact the amount we awarded in favour of the appellant was slightly less than $30,000 does not affect this conclusion: Promina Design & Construction Pty Ltd v The Owners Strata Plan No 97449 (No 4) [2023] NSWCATAP 338 at [10]-[17]. Accordingly, s 60(1) does not apply and we do not have to be satisfied that 'special circumstances' exist under s 60(2) and (3) of the NCAT Act that are sufficient to make a costs order in the appeal.
Where r 38 applies, starting position is that a successful party should be entitled to an order for costs in their favour, such an order being compensatory in nature: Thompson v Chapman [2016] NSWCATAP 6 (Thompson) at [69] and following. However, as explained in Thompson, there are circumstances in which a different order may be made, including where offers of compromise, often referred to as "Calderbank" offers, had not been accepted.
In Thompson at [91], the Appeal Panel set out the principles in determining whether a Calderbank offer should lead to a different costs consequence, including any special order for costs: … From cases such as SMEC Testing Services Pty Ltd v Campbelltown City Council [2000] NSWCA 323 at [37], Miwa Pty Ltd v Siantan Properties Pty Ltd (No2) [2011] NSWCA 344 and Nu Line Construction Group Pty Ltd v Fowler [2012] NSWSC 816 at [48]. The following principles can be derived in respect of whether a special order for costs should be made: (1) there must be a real and genuine element of compromise; (2) the refusal must be unreasonable; (3) the reasonableness in rejecting an offer must be considered at the time the offer is made, not with the benefit of hindsight; (4) relevant factors in relation to whether the rejection was unreasonable include: (a) the stage of the proceedings at which the offer was received; (b) the time allowed to consider the offer; (c) the extent of the compromise offered; (d) the offeree's prospects of success, assessed at the date of the offer; (e) the clarity with which the terms of the offer were expressed; (f) whether the offer foreshadowed an application for indemnity costs in the event of each rejection.
In the present case, the appellant was successful, the amount of the award being increased from $9,325.19 to $46,616.26. As he was successful, prima facie an order for costs should be made in the appellant's favour.
The respondent says the usual position should be displaced because of various Calderbank offers made by the parties in the proceedings at first instance. The respondent says that the appellant should pay their costs of the appeal or, alternatively, each party should pay their own costs of the appeal.
We disagree for the following reasons: 1. As noted by both parties, we have not been asked to determine the issue of costs in the proceedings at first instance. Rather, the issue of costs of first instance remains to be resolved in the Consumer and Commercial Division where the Tribunal is apparently reserved. 2. Insofar as offers of compromise have been made in those proceedings, their relevance and effect in any determination of costs remains to be considered by the Tribunal in the first instance proceedings. Of course, taking account of the amount of damages we have determined the appellant was properly entitled to receive. 3. As to the appeal proceedings, we have not been referred to any offers that have been made in connection with the appeal. All the offers identified in paragraph 3-5 of the respondent's costs submissions were made prior to determination of the proceedings at first instance. There was no offer made in the appeal proceedings which could be said to have been unreasonably refused by the appellant.
The respondent also says that the manner in which the appellant conducted the appeal meant that the "responsibility for costs incurred in the appeal lay with [the appellant]".
First, the respondent says the appellant ran an "all or nothing" case in asserting that he was entitled to compensation for the whole 17 months which we referred to as the "Vacancy Period" in our Reasons. He "did not run an alternative case below that the lost opportunity could be calculated as a fraction of that 17 month vacancy period".
Secondly, having referred to our Reasons at [94] concerning the assessment of damages for a loss of opportunity, the respondent submitted at paragraphs 11-13 of the respondent's costs submissions: 11 … [The appellant] made no attempt to assist the Tribunal (or this Appeal Panel) with how that reasonable estimation could be done on the evidence led by him. Tellingly, neither in [the appellant's] submissions below nor his submissions in this appeal did [the appellant] even side (let alone, rely on) Sellars v Adelaide Petroleum NL (1994) 179 CLR 332 as to principles applicable to the assessment of damages for loss of opportunity. It thus formed a part of his damages case below. 12. Had [the appellant] ran (sic) a case below consistent with the principles articulated by this Appeal Panel at AP [59]-[69], then the damages assessment could have been done on the principles consistent with Sellars by the Tribunal below and this appeal would have been avoided. 13. Further, the [respondent] had never denied liability and the only issue taken by the [respondent] had been quantum. [The respondent] responded to the case presented by [the appellant] and was entitled to put [the appellant] to the onus of proving all the facts necessary to establish his loss. [The respondent] were even entitled to advance a case that if the breach had not occurred, Ms O'Donoghue would have voluntarily vacated … And [the appellant] would have returned to live in unit 23 (as … Is principal place of residence …)
We do not accept that, on appeal, the appellant ran a different case to that which he ran at first instance. As pointed out by the respondent, the issue on appeal ultimately involved the question of assessment of damages and whether the Tribunal was correct in its assessment of evidence concerning the lost opportunity. On appeal, the appellant did not pursue a claim for damages calculated by reference to the cost of his alternative accommodation during the Vacancy Period, a claim which had not been pursued in the proceedings at first instance. As with the proceedings at first instance, the issue remained whether an opportunity to rent the property had been lost, and if so, how would damages to be assessed.
As noted in the reasons of the Tribunal at first instance (at [38]-[39]), at all times there was a dispute about whether the appellant could recover damages for the whole of the Vacancy Period or a shorter period. The issue was whether the assessment of the Tribunal was correct. The appellant won on this issue and the original award was increased
As to the respondent's submission concerning any failure of the appellant at first instance to refer to the decision of the High Court in Sellars v Adelaide Petroleum NL (1994) 179 CLR 332; [1994] HCA 4 (Sellars), as we said in the Reasons, in our view the Tribunal erred in the manner in which it assessed damages, what was required to be proved on the balance of probabilities and what the evidence of particular witnesses established.
The appellant having articulated the claim he was making (namely a claim for damages for loss of opportunity to rent), it was for the Tribunal to identify the applicable legal principles, assess the evidence in support of the claim and determined the amount to be awarded. Each party had an opportunity to make submissions on all relevant authorities. However, any failure by the appellant to refer to a relevant authority could not, at least in the circumstances of this case, lead to a conclusion that such failure constituted conduct disentitling the appellant to an award for costs in the appeal.
The last submission of the respondent is that some adjustment should be made to any costs order to reflect the fact the appellant failed on a number of his grounds of appeal. Therefore, costs should have should be apportioned. On this point, in the respondent's costs submissions at paragraph 19, the respondent said: … the [respondent] should get their costs of successfully opposing all of [the appellant's] grounds of appeal and [the appellant] should not have his costs when the appeal was determined on a point that had never been put by him. The purposes of this apportionment exercise, as the Sellars point was only raised by the Appeal Panel at the outset of the appeal, therefore substantially the whole of the costs of appeal (including the appearance at the hearing of the appeal) is apportionable to the grounds [unsuccessfully] raised by [the appellant]. An award of costs of the whole of the appeal to [the respondent] is therefore not unjust and would properly compensated [the respondent] for the successful opposition of [the appellant's] grounds of appeal.
In making this last submission the respondent also says "[it] was only by fortunate coincidence that [the appellant] had his appeal determined on a point not advanced by him which resulted in a recalculation of his damages. That supplies another reason why [the respondent] should not have to bear the costs of [the appellant's] appeal". Reference was made to the decision of Weinstein J in El Ali v Beaini Enterprises Pty Ltd [2023] NSWSC 329 at [27].
The issue of making an order for costs based on success on particular issues has been considered in various decisions of this Tribunal, including the Appeal Panel. In doing so, the Tribunal has referred to the decision of the Court of Appeal in Bostick Australia Pty Ltd v Liddiard (No 2) [2009] NSWSCA 304. There, at [34], the Court said: 38 The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: • Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd (Court of Appeal, 6 July 1994, unreported). • In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. • If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. • Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). • A separable issue can relate to "any disputed question of fact or law" before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. • Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2), citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd (1993) 26 IPR 261 at 272. These principles were applied in City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 at [22] and most recently in Turkmani v Visvalingham (No 2) [2009] NSWCA 279.
In the present case, we decline to make an order for costs in respect of separate issues for the following reasons: 1. While there were multiple grounds of appeal put forward, generally these grounds required a consideration of what happened at the hearing, the evidence of the parties and how the Tribunal assessed this evidence. 2. Both parties relied on the significant volume of documents constituting the evidence, both the statements of witnesses and oral evidence, which were filed in this appeal. 3. Making submissions concerning this material as it related to the different grounds of appeal could not be said to have materially affected time taken to resolve the proceedings in such a manner as to warrant an order for costs based on issues.
It follows that the usual rule should apply and the appellant should have an order for costs of the appeal in his favour, such costs to be as agreed or assessed on an ordinary basis.
Finally, relation to the request by the appellant that the Appeal Panel make a notation for the purpose of s 104 of the SSMA and who the respondent may levy concerning the cost order we make, we decline to do so.
Section 104 provides: 104 Restrictions on payment of expenses incurred in Tribunal proceedings (1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it for an order by the Tribunal, levy a contribution on another party who is successful in the proceedings. (2) An owners corporation that is unsuccessful in proceedings brought by or against it for an order by the Tribunal cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund, but may make a levy for the purpose. (3) In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal.
As to its operation, the Appeal Panel in The Owners - Strata Plan No 62713 v Liberant [2022] NSWCATAP 80 said at [112]-[113]: 112 It is not a section conferring an order making power on the Tribunal. Rather, it is a prohibition on an owners corporation levying a successful lot owner in respect of the owners corporation own costs. Section 104 says nothing in respect of levying a successful lot owner in connection with monies payable by an owners corporation to that lot owner. 113 While the Tribunal may, as permitted by s 232(1) of the SSMA, make orders in connection with any dispute arising in the event an owners corporation contravenes this section, section 104 does not provide an independent order making power in connection with proceedings before the Tribunal.
While the failure of an owners corporation to comply with the requirements of s 104 may entitle an affected person to bring proceedings if a dispute arises, it is not appropriate we make any order or notation in relation to its operation unless and until this occurs.

Horan v The Owners - Strata Plan No. 68307

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