Lenux v The Owners - Strata Plan No 88786

Background to the appeal

1. In the substantive application made to the Tribunal by the Owners against Mr Lenux, the Owners sought orders that Mr Lenux remove unauthorised structures which had altered or affected common property and make good all damage to the common property caused by the unauthorised works. Following a hearing at which both parties presented evidence and made submissions, on 1 November 2022 the Tribunal made the orders sought by the Owners.
2. The lot owned by Mr Lenux is a two bedroom apartment across levels 7 and 8 of the building which comprises the strata plan. The works undertaken by the appellant were to enclose the mezzanine on level 8 and convert part of the dining room to a third bedroom. The Tribunal accepted that the works were carried out without the requisite approvals and rendered the building non-compliant with the Development Approval. The operation of the orders made by the Tribunal were deferred for a period to allow Mr Lenux to provide an exclusive use special by-law for consideration at the next General Meeting of the Owners. The by-law would authorise the structures in his lot.
3. In its orders the Tribunal also made provision for the Owners to make a costs application by 15 November 2022 and for Mr Lenux to provide any response to the application by 29 November 2022.
4. On 17 November 2022 the Owners wrote to the Tribunal seeking an extension of the timetable by two days, such an extension to be similarly afforded to Mr Lenux. The Owners provided a copy of its costs application in that email and filed a hard copy with the Tribunal before close of business the following day. A copy of the Owners' application was provided by the Owners to Mr Lenux on 17 November 2022 by email. The reason given for the lateness was that the strata committee only made a decision on 13 November 2023 to make a costs application.
5. On the evening of 17 November 2022 Mr Lenux wrote to the Tribunal objecting to the Owners request for an extension to the timetable. He also stated that once the date for submissions had passed "the [Owners] has been deemed to have given up their right to claim cost". Mr Lenux filed no submissions in response to those filed by the Owners.
6. On 1 December 2022 Mr Lenux lodged an internal appeal with the Appeal Panel in respect of the substantive decision of 1 November 2022. That appeal was dismissed on 10 February 2023.
7. We note that on 19 October 2022 Mr Lenux filed an application in the Consumer and Commercial Division against a decision of the Owners rejecting a by-law he had submitted. Those proceedings were settled on 17 February 2023 on the basis that the application was withdrawn, there was no order as to costs and the implementation of the Tribunal's decision of 1 November 2022 was further deferred to 1 July 2023.
8. The Tribunal's decision on costs which is the subject of this appeal was determined on 22 March 2023. In the decision, the Tribunal Member noted that no submissions had been received from Mr Lenux. He further stated that no explanation had been provided for the failure of Mr Lenux to comply with the Tribunal's directions about the filing of submissions.
9. The Tribunal then went on to consider whether, in accordance with s 60 of the CAT Act, there were special circumstances warranting an award of costs. The Member referred to the relevant provisions in the CAT Act including the factors set out in s 60(3) which the Tribunal may have regard to in determining whether there are special circumstances warranting an award of costs. He also referred to relevant judicial and Tribunal authorities on costs.
10. The Member then referred to the submissions made by the Owners on costs and accepted those submissions. He found that special circumstances had been made out and referred specifically to s 60(3)(c) of the CAT which provides that a factor to be taken into account in determining whether special circumstances exist is 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. The Member stated that costs had been incurred in the matter because of the refusal of Mr Lenux to accept he had undertaken works without the appropriate consents. He found it was appropriate to order costs.

Scope and nature of internal appeals

1. As noted above, s 80(2) of the CAT Act provides that an internal appeal from a decision of the kind in this appeal can be made as of right on any question of law, or with the leave of the Appeal Panel, on any other grounds. In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law.
2. The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 of the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice because (a) the decision under appeal was not fair and equitable, (b) the decision under appeal was against the weight of the evidence or (c) significant new evidence has arisen (being evidence not reasonably available at the hearing of the decision appealed from).
3. In Collins v Urban [2014] NSWCATAP 17 the Appeal Panel said, at [76], that a substantial miscarriage of justice for the purposes of cl 12(1) of Sch 4 of the NCAT Act may have been suffered where there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in (a) or (b) not occurred or if the fresh evidence under (c) had been before the Tribunal.
4. Even if an appellant establishes that they may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains a discretion whether to grant leave under s 80(2) of the NCAT Act. An appellant must demonstrate something more than that the Tribunal was arguably wrong: Pholi v Wearne [2014] NSWCATAP 78 at [32].
5. An appeal to the Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
6. We note that Mr Lenux lodged his appeal more than three weeks out of time. He has explained that he was overseas and only able to post the appeal application once he returned. The Owners have not objected to an extension and in the circumstances we extend the time to appeal.

Grounds of appeal

1. Mr Lenux states he seeks leave to appeal. The first ground is that the decision was not fair and equitable based on the late filing of the costs application by the Owners and a failure of the Tribunal to deal with his objection to the late filing before proceeding to determine the costs application.
2. Mr Lenux also submits that the decision was against the weight of the evidence. Under this ground he raises issues about the Member's decision in the substantive application and alleges the Member ignored evidence he had provided or failed to question evidence put forward by the Owners.
3. Mr Lenux also submits that significant new evidence has arisen that was not reasonably available at the time of the hearing. He refers to a report by Credwell Consulting Pty Ltd dated 17 March 2023 concerning matters the subject of the substantive application.
4. Mr Lenux also argues that the costs order disturbed an agreement made by the parties in other Tribunal proceedings.

Not fair and equitable

1. Mr Lenux's first ground is that the decision of the Tribunal was not fair and equitable. This ground is based upon the fact that the Owners filed their costs application after the due date. Mr Lenux states that the Tribunal made a procedural error in not granting leave to the Owners to file the costs application late and to amend the timetable or notifying the parties that he would accept the Owners' submissions. Mr Lenux states that, as there was no communication from the Tribunal, he formed a reasonable and logical belief that there was no need to respond to the late application and submissions. Mr Lenux also states that the explanation for why the submissions were late was untruthful and no meeting of the strata committee occurred.
2. Mr Lenux states that he was denied an opportunity to present his arguments and evidence in response to the Owners' costs submissions. Mr Lenux also accuses the Member of bias towards the Owners.
3. In Cominos v Di Rico [2016] NSWCATAP 5, at [13], the Appeal Panel noted that it may be difficult for self-represented appellants to clearly express their grounds of appeal. In Prendergast at [12] the Appeal Panel noted that where an appellant is not legally represented, it is necessary for the Appeal Panel to determine whether a question of law has in fact been raised, subject to any procedural fairness considerations that might arise to the respondent. In such circumstances and having regard to the guiding principle in s 36 of the NCAT Act, it is appropriate for the Appeal Panel to review an appellant's stated grounds of appeal, the material provided, and the decision of the Tribunal at first instance to examine whether it is possible to discern grounds that may either raise a question of law or a basis for leave to appeal.
4. The Tribunal was obliged to afford both parties procedural fairness: CAT Act s 38(2). Procedural fairness generally requires that the decision-maker must act without bias or an appearance of bias and that the process is fair. In addition, the Tribunal was required to ensure that the parties understood the nature of the proceedings and to take such measures as are reasonably practicable to ensure each party had a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: CAT Act s 38(5). A failure to afford a party procedural fairness is an error on a question of law: Prendergast at [13]. In our view, the matters raised by Mr Lenux in this ground concern an alleged denial of procedural fairness and thus raise a question of law.
5. There is no question that the Owners filed their costs submissions two or three days late. It is also correct that Mr Lenux objected to the late filing and did not file any submissions in response to the application. Other than sending the email objecting to the late filing, he made no other contact with the Tribunal about costs application. By the same token, Mr Lenux was never informed that any decision had been made by the Tribunal in relation to his objection to the late filing of the Owners' costs application.
6. Under s 38 of the CAT Act the Tribunal may determine its own procedure in relation to any matter for which that Act or the procedural rules do not otherwise make provision. In addition, under s 38(4) the Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. The Owners argue that these provisions give a broad discretion to the Tribunal to determine its own procedure, including as to timetables and the acceptance of submissions and evidence. That is certainly true but in its procedures the Tribunal must afford the parties procedural fairness and give them a reasonable opportunity to present their case and make submissions.
7. While no formal order was made by the Tribunal extending the time for the filing of the costs application and submissions, it is apparent that the Tribunal, at least at the time it made its costs decision, accepted the late filing.
8. However, it is also clear that Mr Lenux's objection to the granting of an extension of time to the Owners was not dealt with prior to the determination of the costs application. Neither Mr Lenux nor the Owners were advised prior to the making of the costs decision that the Owners' costs application had been accepted and an extension of time granted to the filing of that application. Nor was Mr Lenux advised that he also was granted an extension of time to respond to the application.
9. In our view it was incumbent upon the Tribunal to deal with the request by the Owners for an extension of time in which to make the costs application and the objection of Mr Lenux to the granting of any such extension. We note that Mr Lenux was not legally represented before the Tribunal and we are of the opinion that he reasonably formed the view that, until the request for the extension of time and his objection had been dealt with, the costs application was not properly before the Tribunal and he was not required to file his response. In determining the costs application without dealing with these matters Mr Lenux was deprived of an opportunity make submissions on the costs application and was denied procedural fairness. The appeal must be allowed on this basis.
10. Having allowed the appeal there is no need for us to deal with the other grounds of appeal raised by Mr Lenux. We note, however, that the matters raised by Mr Lenux relate primarily to the decision in the substantive proceedings made on 1 November 2022 and not to matters which are the subject of this appeal, that is, the costs decision. We note that the substantive decision was the subject of an appeal by Mr Lenux prior to the costs decision being made and that that appeal was dismissed. Another ground relied upon by Mr Lenux concerns an agreement reached in other proceedings and, again, does not raise matters arising out of the costs decision. We would not have granted leave to appeal on these grounds.

Disposition of the appeal

1. Mr Lenux has now made submissions in response to the costs application made by the Owners and both parties seek orders in relation to the costs application.
2. Mr Lenux does not appear to press his objection to the late filing by the respondent of the costs application. To the extent necessary, however, we extend the time for the making of the application. The Owners rely upon the costs submissions made in the Tribunal proceedings.
3. The Owners claim costs of the proceedings on the basis that there are special circumstances warranting the award of costs in accordance with s 60 of the CAT Act. Mr Lenux contends that no special circumstances exist.
4. As referred to previously, s 60 of the CAT Act regulates costs of proceedings in the Tribunal. Section 60 provides: 60 Costs (1) Each party to the 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.
5. As can be seen from that section, the ordinary rule is that each party to proceedings in the Tribunal pays their own costs. The Tribunal may, however, order a party to pay another party's costs if satisfied that there are special circumstances which warrant such an order. Special circumstances are circumstances that are out of the ordinary. It is not necessary to establish extraordinary or exceptional circumstances: see Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9].
6. If satisfied that there are special circumstances, the Tribunal must further be satisfied that they are circumstances warranting an award of costs. The exercise of the discretion requires the Tribunal "to weigh whether those circumstances are sufficient to amount to 'special' circumstances that justify departing from the general rule that each party bear their own costs": Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 at [81]; BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87at [9].
7. In the exercise of the discretion the Tribunal is to have regard to the facts upon which the finding of special circumstances was based and the principles applicable to the awarding of costs generally. Those principles are: costs are compensatory; an unsuccessful party bears the costs of the successful party; 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; and, whether a costs order should be made to reflect the fact that only some aspects of the case should properly be characterised as out of the ordinary: Brodyn Pty Ltd v Owners Corporation SP 73019 (No 2) [2016] NSWCATAP 224 at [24]-[25].
8. The Owners submit that the claims made by Mr Lenux were weak and had no tenable basis in fact or law whereas the Owners' claims were strong. The Owners refer particularly to the fact that claims made by Mr Lenux in relation to the mezzanine level, including safety issues, were not made out. Similarly, claims made by Mr Lenux that the works he had undertaken were approved by Council were not correct. The Owners state that the issues in the proceedings were not complex as there was no dispute that Mr Lenux had carried out the works and that the works had damaged common property. The Owners also pointed out that the Owners had been wholly successful before the Tribunal and Mr Lenux had been wholly unsuccessful.
9. Mr Lenux disputes the factual basis of the Owners' claims and contends that his case before the Tribunal was reasonably strong. It does appear that he did not claim he had Council approval for the works but submitted that the works were in fact an exempt development. Mr Lenux also states that the Owners were not wholly successful in their claim as the orders for him to remove certain structures and make good were deferred for a period to allow for a special by-law to be considered by the Owners.
10. We are satisfied that there are special circumstances warranting an award of costs as the claims by Mr Lenux had no tenable basis in fact or law within s 60(3)(e) of the CAT Act. As the Tribunal noted, an owner of a lot must not carry out work to the common property unless authorised to do so under Part 6 of the Strata Schemes Management Act 2015; or under a by-law made under Part 6 or a common property rights by-law; or a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular work. It was clear from the outset that Mr Lenux had not obtained the requisite authorisation to undertake the works and that the application to the Tribunal by the Owners must succeed. Costs were therefore incurred by the Owners in bringing an application to the Tribunal and prosecuting that application in circumstances where Mr Lenux refused to accept he had not obtained approval for the works carried out by him. We note his comments that the third bedroom was an exempt development, but he in fact provided no evidence to that effect, simply an extract from a website.
11. In their submissions the Owners also referred to s 60(3)(f) and contended that Mr Lenux had failed to comply with a duty imposed by s 36(3) of the CAT Act by not attending a directions hearing. We are not satisfied that this matter forms a basis to award costs.
12. Having been satisfied of the condition in s 60(2) of the NCAT Act that there are special circumstances warranting an award of costs in favour of the Owners, we are further satisfied that the discretion under this subsection should be exercised to award of costs in its favour of the proceedings as agreed or assessed. The Owners were wholly successful in their claims and Mr Lenux was wholly unsuccessful. That the Owners agreed to a deferral period to ascertain whether a special by-law could be agreed to does not change that position.

Orders 1. The time for the filing of the Notice of Appeal is extended to 15 May 2023. 2. Appeal granted. 3. In matter SC 22/21291 the respondent, Kevin Lenux, is to pay costs of and incidental to the proceedings on a party/party basis as agreed or as assessed in accordance with the Legal Profession Uniform Law Application Act 2014, such costs to be paid within 28 days of agreement or assessment.

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: 26 March 2024