Kaye v The Owners - Strata Plan No 4350 - [2022] NSWCATAP 248 - NSWCATAP 2022 case summary

NCAT Appeal Panel|2022-07-28|Before: Knoll AM

Introduction

In this matter the appellants appealed from a decision of the Consumer and Commercial Division of the Tribunal (Tribunal) of 29 November 2021 in matter SC 20/47053 (First Instance Decision).
For reasons published on 25 May 2022, we decided that the Tribunal had made an error of law in the First Instance Decision. However, we decided to confirm the orders made by the Tribunal: Kaye v The Owners - SP 4350 [2022] NSWCATAP 173 (Appeal Decision).
At the conclusion of the Appeal Decision, we gave the parties the opportunity to provide submissions on costs.
Submissions dated 7 June 2022 were received from the respondent, and submissions dated 23 June 2022 from the appellant.
The respondent seeks an order that the appellant pay its costs as agreed or as assessed. The appellant opposes that order, and submits that the application for costs is dismissed.
Both parties agree that the relevant costs rule is that in s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), that is that the applicant for costs, the respondent, must establish that there are special circumstances warranting an award of costs.
Both parties also agreed that the application for costs can be determined on the papers. As we are satisfied that the issue of costs 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, we will make an order pursuant to s 50(1)(c) of the NCAT Act dispensing with a hearing.
For the following reasons we have decided to order the appellant to pay the respondent's costs of the appeal, including the application for a stay, as agreed or as assessed. However, the costs of the First Instance proceedings should be determined by Senior Member Sarginson who constituted the Tribunal at first instance.
In the reasons that follow we have assumed a knowledge of the Appeal Decision and we employ definitions set out in that decision.

Preliminary matter - should the Appeal Panel make a costs order in relation to the First Instance Decision?

The respondent seeks its costs of the First Instance proceedings, what it refers to as the Interim Proceedings, and its costs of the appeal. For all applications, the respondent says that there are special circumstances warranting an award of costs.
The decision in the First Instance Proceedings was published on 29 November 2021. The Tribunal dismissed the appellant's application and issued a work order requiring the respondent to undertake certain by 1 April 2022.
The Tribunal also made the following orders: 3. Any party seeking to make a costs application is to write to the Tribunal and the other party giving notification of such an application by 14 days from the date of this decision. 4. If a costs application is made, the Tribunal will issue directions for the filing and serving of written submissions on the issue of costs. 5. If no such application is made each party shall bear its own costs in accordance with s 60 (1) of the Civil and Administrative Tribunal Act 2013 (NSW).
The respondent says it made an application to the Tribunal on 10 December 2021 in accordance with orders (3) and (4), but that the Tribunal did not make any subsequent orders in relation to the application.
The respondent submits that the Appeal Panel may consider an award for costs in the First Instance Proceedings and Interim Proceedings because they are "the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal": NCAT Act, s60(5)(b).
Relying on ss 36 and 60(5) of the NCAT Act, in particular s 36(2), the respondent submits that it is suitable and efficient that its applications for costs in all proceedings be considered at the same time.
We do not think it appropriate to make costs orders in relation to the First Instance proceedings. These proceedings were heard over two days in April and June 2021, following which written submissions were received and considered, resulting in a 42 page decision. We think that the original Senior Member is best placed to determine whether special circumstances are warranted.
In any event, as the Appeal Panel noted in The Owners - Strata Plan No 74835 v Pullicin (Costs) [2020] NSWCATAP 49: 5 A party may appeal against an "internally appealable decision": NCAT Act, s 80(1). The Tribunal's internal appeal jurisdiction, so far as is relevant to these proceedings, is set out in s 32(1) of the NCAT Act: (1) The Tribunal has internal appeal jurisdiction over: (a) any decision made by the Tribunal in proceedings for a general decision or administrative review decision, and (b) any decision made by a registrar of a kind that is declared by this Act or the procedural rules to be internally appealable for the purposes of this section. 6 The owners corporation has appealed from the decision of the Tribunal to pay damages to Mr and Mrs Pullicin and sought leave to appeal from an aspect of the timing of the work order. The Tribunal has not made a "decision" about costs as described in s 32(1)(a) of the NCAT Act. 7 Section 32(2) gives the Tribunal "… the following jurisdiction in proceedings for the exercise of its internal appeal jurisdiction: (a) the jurisdiction to make ancillary and interlocutory decisions of the Tribunal in the proceedings, (b) the jurisdiction to exercise such other functions as are conferred or imposed on the Tribunal by or under this Act or enabling legislation in connection with the conduct or resolution of such proceedings." 8 Section 32(2)(a) gives the Appeal Panel power to make a costs order in the appeal proceedings because an ancillary decision is defined in s 4 of the NCAT Act to include "a decision concerning the awarding of costs in proceedings". Section 32(2)(b) gives the Appeal Panel the jurisdiction to exercise other functions "in connection with the conduct or resolution of such proceedings." The Appeal Panel is given a corresponding order making power in s 81(2). Under that provision, the Appeal Panel "may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal . . ." 9 These provisions give the Appeal Panel power to exercise functions, such as making a costs order, but only in relation to "the conduct or resolution of" the appeal proceedings. There was no decision about costs at first instance. The proceedings were adjourned, part heard. Consequently, despite our invitation for the parties to make submissions on the appropriate first instance costs order, the Appeal Panel does not have power to make such an order. Any outstanding issues relating to costs need to be determined by the Tribunal at first instance. (Emphasis added)
In the First Instance Proceedings, the Tribunal has already given preliminary directions as to submissions on costs, and indeed given a preliminary view in the event that no submissions were made. As there was no decision about costs at first instance, but some directions have been given, in our view, any application for costs should be reagitated before the original decision maker, Senior Member Sarginson.

The Interim Proceedings

In our view, it is artificial to separate what the respondent describes as the Interim Proceedings from the appeal itself. It is apparent that the Interim Proceedings are the appellants application for a stay of the First Instance Decision.
The facts are that: 1. the Tribunal published the First Instance Decision on 29 November 2021; 2. the appellant filed its Notice of Appeal and an application for a stay of the First Instance Decision on 22 December 2022; 3. following a callover and stay hearing on 21 January 2022, the application for a stay was refused that day.
In our view, the Interim Proceedings are "part and parcel" of the appeal, and any application for costs of the stay are dependent on the outcome of the application for the costs of the appeal.
We turn now to the relevant statutory provisions and principles.

Relevant statutory provisions and principles

Section 60 of the NCAT Act 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.
As the Appeal Panel stated in Anderson v The Owners - Strata Plan No. 61034 (No 2) [2019] NSWCATAP 108: 9 In Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], the Appeal Panel cited with approval the meaning of the expression "special circumstances" that had been given to the same expression in the former section 88 of the Administrative Decisions Tribunal Act 1997 (NSW) by the Court of Appeal in Cripps v G & M Mawson [2006] NSWCA 84, per Santow JA at [60], Mason P and Brownie AJA agreeing. That is, special circumstances are "circumstances that that are out of the ordinary" but the circumstances do not have to be "extraordinary or exceptional". 10 The authorities considering the meaning of the expression "special circumstances" were also reviewed in CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]. It was again stated that "special circumstances" are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional. Further, 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. 11 Each situation is to be assessed on a case by case basis to see whether or not special circumstances exist so as to warrant the award of costs. In Alexander James Pty Ltd v Pozetu Pty Ltd (No. 2) [2016] NSWCATAP 75 [14]- [16] the Appeal Panel stated in connection with the issue of 'special circumstances': "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. 15. Having regard to the nature of the proceedings on appeal as we have described them, we are of the opinion that they intrinsically, and by reason of their complexity, both as to fact and law, justify them being characterised as special, warranting an award of costs in favour of the successful appellants. Counsel for the second appellant likened the proceedings to those commonly encountered in the Supreme Court of NSW. Their complexity was increased because of the position taken by the respondent, and it was necessary in the course of the appeal proceedings and for the purpose of determining them, to deal with circumstances in which an equitable lease would come into effect, the duty of fidelity and its application and the nature and effect of an option to renew a lease. These appeal proceedings could have only been prosecuted and defended appropriately by legal practitioners, and this attests to their complexity. 16. Relying on the provisions of section 60(3)(d), we conclude that there are special circumstances in the appeal proceedings warranting an award of costs in favour of the successful appellants against the respondent and we shall so order."
That said, each case depends upon on its own particular facts: Gizah Pty Limited v AXA Trustees Limited (No. 2) [2001] NSWADT 164, and will depend on the circumstances of the individual case: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152.

The respondent's submissions

The respondent relies on the following factors in support of its application.
First, the strength of the appellant's grounds of appeal: s 60(3)(c). While conceding that the appellant was successful in their first ground of appeal as the Appeal Panel found that the Tribunal erred when it did not consider the reasons for refusing to make the first version of the by-law at the September 2020 EGM, the Tribunal the Appeal Panel went on to consider the evidence before the Tribunal and found, in addition to the reasons the Tribunal found, that the respondent was reasonable in refusing to make the first version of the by-law at all three meetings, and the second version of the by-law at the September 2020 meeting.
The respondent submits that the appeal was always going to fail because the reasons for refusing to make the first version of the by-law at the September 2020 meeting were substantially the same as the previous two meetings and there was sufficient evidence filed supporting this position. In particular, it notes that the Appeal Panel confirmed the Tribunal's finding that the offer to carry out works to the roof area above lot 3 was not compensation for the exclusive use of the common property area.
As to the appellant's second ground of appeal, the respondent notes that the Appeal Panel rejected the appellant's second ground of appeal and accepted the respondent's position that a by-law may only be prescribed if the owners corporation has unreasonably refused to make it in the first instance.
Secondly, the nature and complexity of the appeal: s 60(3)(d). Here the respondent notes: 1. that in relation to the stay, the respondent had undertaken that the status quo of the roof above lot 3 would not change whilst the appeal was on foot; and that ultimately, the appellant failed to make their case out for a stay and thereby the Respondent to the cost of defending the same; 2. the respondent was put to the unnecessary costs of responding to the Appeal Proceedings; 3. the appellant's second ground of appeal was obtuse and doomed to fail. Nevertheless, it required a careful consideration and response.
Thirdly, the failure of the appellant to comply with s 36 of the NCAT Act, namely the just, quick and cheap resolution of the real issues in dispute. Here the respondent submits: 1. the Appeal Panel ultimately conducted its own analysis on the reasons for each of the versions of the by-law at each meeting, and came to the view that not only was it the lack of consideration offered by the appellant that made it reasonable for the respondent to refuse to make the by-law (which is the primarily reason the Tribunal considered the Respondent was not unreasonably), but they found that other reasons, each of which was provided in evidence by the Respondent in response to the first version of the by-law at each the three meetings, were reasons that were not unreasonable; 2. had the appellant considered the fact that but for an omission by the Tribunal to properly consider the reasons for refusing the first version of the by-law at the September 2020 meeting, the outcome of the Appeal was going to be substantially the same, parties, in particular the respondent, would have been spared the costs in relation to and incidental of the proceedings.
Finally, the respondent submits that if it is wrong as to the application of any of the paragraphs of sub-section 60(3) of the NCAT Act as summarised above, each and any of those reasons may nevertheless be a matter that the Tribunal would find to be relevant to the awarding of costs in the respondent's favour.

The appellant's submissions

The appellant's submissions in relation to the costs of the appeal may be summarised as follows.
First, in relation to the strength of the appeal, the appellant submits that, in relation to respondent's submission that the first ground of the appeal was always going to fail, that that submission is misconceived, and that the Appeal Panel considered when determining what orders it should make in light of its finding as to an error of law, the Appeal Panel considered reasons of the respondent in refusing to make the by-law other than compensation for the first time.
The appellant submits the fact that the respondent ultimately achieved a confirmation of the First Instance Proceedings decision following a finding of an error of law is not out of the ordinary or would otherwise sound as a special circumstance.
The appellant further submits that the outcome in relation to the second ground of appeal is not out of the ordinary or would otherwise sound as a special circumstance, particularly given that no adverse findings in relation to the strength of the claims made by the appellants were made in the appeal.
Secondly, in relation to the nature and complexity of the appeal, the appellant submits that the respondent's submissions are misconceived, and the fact that the appellants were not successful in their application for a stay or in relation to the second ground of appeal is not illustrative of the complexity of the proceedings, nor was any application for a stay out of the ordinary. Nor was the fact that the position of the appellant was not ultimately altered by the outcome in the appeal.
Thirdly, the appellant submits that any submission that they refused or failed to comply with their duties under s 36(3) of the NCAT is misconceived, and that there is no evidence of any breach.

Consideration

As was the case in Gelder v The Owners - Strata Plan No 38308 [2021] NSWCATAP 109, the proceedings at first instance and on appeal concerned a dispute over valuable property rights in a strata scheme: see Gelder at [10]. In Gelder the Appeal Panel considered that the proceedings were clearly of a complex nature and the issues were of significance to both parties.
In Gelder the Appeal Panel stated at [13] that the nature of the dispute and its importance to the parties is a matter relevant to the determination of special circumstances as falling within s 60(3)(g) of the NCAT Act. As with Gelder, we consider that the complexity of this dispute parties and its significance to the parties could be fairly described as out of the ordinary.
We note that the Appeal Decision was over 40 pages in length.
We note that both parties sought and obtained leave to have legal representation, both at first instance and on appeal. That legal representation included both solicitors and experienced counsel. The fact of representation, of itself, would not establish special circumstances.
And, while the appellant identified an error of law, ultimately it was unsuccessful in their appeal.
When all these matters are considered cumulatively, we find that the respondent has established special circumstances.
Having decided that special circumstances exist, the next issue is whether we should, in the exercise of our discretion, award costs. In Brodyn Pty Ltd v Owners Corporation - Strata Plan 73019 (No 2) [2016] NSWCATAP 224 the Appeal Panel said: 24 Further, where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. 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]; … 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.
We note that 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.
In our view, having found that special circumstances are established, and having considered the principles applicable to awarding costs generally, including that costs are compensatory, we consider that this is a matter in which costs should be awarded.

Orders

The Appeal Panel orders: 1. A hearing is dispensed with. 2. The appellant is to pay the respondent's costs as agreed or as assessed.

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: 28 July 2022

Administrative Decisions Tribunal Act 1997(NSW)

Kaye v The Owners - Strata Plan No 4350

At a glance

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Judgment (9 paragraphs)

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Legislation Cited (2)

Cases Cited (13)

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