Loneragan v The Owners - Strata Plan No 16519 - [2020] NSWCATAP 283 - NSWCATAP 2020 case summary

NCAT Appeal Panel|2020-12-22

REASONS FOR DECISION

In a decision made on 25 August 2020, we dismissed an appeal brought by Mr Hugo Loneragan against a decision made by the Consumer and Commercial Division of the NSW Civil and Administrative Tribunal (NCAT): Loneragan v The Owners - Strata Plan No 16519 [2020] NSWCATAP 177. The respondent, The Owners - Strata Plan No 16519 ("Owners Corporation"), now applies for costs in respect of the proceedings at first instance and the appeal. Mr Loneragan opposes both applications.
The Owners Corporation contends that the applicable costs provision is rule 38A of the Civil and Administrative Tribunal Rules 2014 ("the Rules") because "the amount … in dispute" in the appeal exceeded $30,000. In the alternative, the Owners Corporation contends that if the Appeal Panel determines that the applicable cost provision is s 60 of the Civil and Administrative Tribunal Act 2013 (NSW) ("NCAT Act"), "special circumstances" are established which warrant an order for costs.
Mr Loneragan disagrees that "the amount … in dispute" in the appeal exceeded $30,000 and contends, therefore, that costs cannot be awarded under s 38A of the Rules. In addition, he disputes that special circumstances are established which warrant an order for costs under s 60 of the NCAT Act.
As permitted by s 50 of the NCAT Act, we determined the applications for costs made by the Owners Corporation "on the papers" because we were satisfied that the issues could be adequately determined by considering the parties' written submissions. Both parties consented to that course.
For the reasons that follow, we order Mr Loneragan to pay the Owners Corporation's costs of the appeal. In addition, we decline to determine the Owners Corporation's application for costs of the proceedings at first instance.

Consideration

As a consequence of the Special Resolution Levy, Mr Loneragan was required to pay $72,727 towards that levy: $400,000 ÷ 11 x 2. If Mr Loneragan had been successful in the appeal and we had made requested orders 1(a), 2 or 3, he would not have been required to pay that amount. If, in addition we had made requested order 1(b), Mr Loneragan would have been required to contribute towards repairs in the lesser sum of $4,418.18: $48,600 ÷ 11 x 2. (If, as the Owners Corporation asserts, Mr Loneragan holds a 25% entitlement of the strata scheme it may be that the amounts payable would be slightly higher than these estimates. Nothing turns on this.)
Applying that analysis, it is abundantly clear that there was "a realistic prospect" that had Mr Loneragan been successful in the appeal his "wealth" would be changed by more than $30,000. Either he would have been excused from the requirement to pay his share of the special levy, $72,727, or have been excused from that requirement and required to pay $4,418.18 towards repairs. In each scenario, self-evidently, the amount in dispute was more than $30,000. It follows that the discretion to award costs under r 38(2)(b) can be exercised.
The principles guiding the exercise of the discretion to award costs are well-established. The purpose of making a costs order is to provide compensation to the party in whose favour the order is made for the expense the party has been put to in prosecuting or defending legal proceedings. In general terms, this means that the successful party is entitled to an order for costs in its favour: Latoudis v Casey [1990] 170 CLR 534, [1990] HCA 59; Oshlak v Richmond River Council [1998] 193 CLR 72; [1998] HCA 11 ("Oshlak"). While there is a general discretion for costs, there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party, and nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: Thomson v Chapman [2016] NSWCATAP 6 at [71]. The proper exercise of the discretion requires the Appeal Panel to do justice between the parties and to exercise the discretion having regard to relevant considerations, and in a manner which is not arbitrary or capricious: Oshlak at [22].
Mr Loneragan did not suggest that in its conduct of the appeal the Owners Corporation engaged in any disentitling conduct. Nor did he nominate any other consideration which might tend against the exercise of the discretion to award costs. We have decided it is appropriate to exercise that discretion and to order Mr Loneragan to pay the Owners Corporation's costs in the appeal, as agreed or assessed.

Can the Appeal Panel make an order for the costs of the proceedings at first instance?

The Owners Corporation did not make an application for costs to the Tribunal for the proceedings at first instance. It requests that we determine its application for the costs of those proceedings.
The question of whether an Appeal Panel can award costs in relation to proceedings at first instance, where no decision in relation to costs was made by the Tribunal was considered in The Owners - Strata Plan No 74835 v Pullicin (Costs) [2020] NSWCATAP 49 ("Pullicin"). After considering at [5]-[8] the statutory framework governing NCAT's internal appeal jurisdiction, the Appeal Panel concluded at [9] that it lacked the power to determine an application for costs in relation to the proceedings at first instance: 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, .. 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.
The Owners Corporation contends that Pullicin was wrongly decided and the conclusion reached by the Appeal Panel is inconsistent with s 60(5)(b) of the NCAT Act. Section 60(5)(b) defines the term "costs" in s 60 to include "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".
The Owners Corporation argument fails to engage with the analysis of the Appeal Panel in Pullicin concerning the scope of the Appeal Panel's power in relation to matters that were not the subject of any decision by the Tribunal at first instance. Section 60(5)(b) of the NCAT Act does nothing more than clarify that the power to award costs in s 60 of the NCAT Act applies to both "the proceedings giving rise to the … appeal " and "the appeal" itself. It does not address whether the Appeal Panel has power to award costs in relation to the former in circumstances where the Tribunal did not make an order for costs.
We are not persuaded Pullicin was "plainly wrong". We decline to determine the Owners Corporation's costs application for the proceedings at first instance.

Orders

We make the following orders: 1. Mr Loneragan must pay the Owners Corporation's costs in the appeal, as agreed or assessed. 2. The Appeal Panel declines to determine the Owners Corporation's costs application for the proceedings at first instance.

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: 22 December 2020

Loneragan v The Owners - Strata Plan No 16519

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Judgment (6 paragraphs)

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