Lu v The Owners - Strata Plan No 66347 - [2025] NSWCATAP 2 - NSWCATAP 2025 case summary

NCAT Appeal Panel|2025-01-06|Before: Blake AM

Overview

This is an internal appeal from the decision of the Consumer and Commercial Division of the Tribunal made on 29 July 2024 in proceedings under the Strata Schemes Management Act 2015 (NSW) (SSM Act) awarding costs against the Appellant, Xiao Chun Lu (Ms Lu), and the Second Respondent, Zhi Peng Zhang (Mr Zhang), in proceedings brought against them by the First Respondent, The Owners - Strata Plan No 66347 (OSP66347), to produce documents and records under s 188 of the SSM Act.
On 19 November 2024, the Tribunal constituted by myself dismissed the appeal upon its withdrawal by Ms Lu.
OSP66347 has applied for an order that Ms Lu pay its costs of the appeal on the indemnity basis (the OSP66347 costs application).
I have decided that the OSP66347 costs application should be dismissed, and that each of Ms Lu and OSP66347 should pay their costs of the appeal.

The proceedings between the parties in the Tribunal

On 26 July 2023, OSP66347 as the applicant commenced proceedings SC 23/34254 under s 188 of the SSM Act against Mr Zhang and Ms Lu as the respondents to produce documents and records of OSP66347.
On 29 January 2024, the Tribunal constituted by Senior Member Sarginson made an order dismissing the proceedings upon their withdrawal by OSP66347.
On 29 July 2024, the Tribunal constituted by Senior Member Sarginson made a decision (the 12 July 2024 decision) which comprised the following orders (the 29 July 2024 orders) and reasons for those orders (the 29 July 2024 reasons): "(1) A hearing on the applications for recusal and costs is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). (2) The recusal application is dismissed. (3) The respondents, Zhi Peng Zhang and Xiao Chun Lu, are to pay the costs of the applicant, The Owners-Strata Plan No 66347, of Case Number 2023/00383996 (formerly SC 23/34254) as agreed, or assessed on the basis set out in the legal costs legislation (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014), for the period from 2 September 2023 up to and including 9 November 2023 and in respect of the application for costs, but not otherwise."

The history of the appeal

On 23 August 2024, Ms Lu as the appellant commenced proceedings 2024/00315052 against OSP66347 as the respondent by filing: 1. a Notice of Appeal together with accompanying documents in which she appealed against order 3 of the 29 July 2024 orders and sought an order that she is not to pay the costs of OSP66347. In section 5B headed "Grounds of Appeal" Ms Lu set out the following grounds of appeal: "The Tribunal has failed to provide adequate reasons for why the second respondent is required to pay costs as specified in Order 3. The Tribunal's discretion to depart from its usual principle in Section 60(1) of the NCAT Act to make a costs order was made in an error of law, failing to take into account that: ● The second respondent has followed procedural directions and provided all documents before the hearing; a statement was entered into evidence following procedure, and no new documents were produced by Ms Xiaochun Lu at the hearings on 1 September 2023 and on 9 November2023 - as stated otherwise in the decisions that influenced the outcome of the costs order. ● The orders have addressed the first respondent and second respondent together when determining costs, but at times, separately elsewhere in regard to evidence - would it not be reasonable to consider Ms Lu as a separate party from the first respondent under Section 60 of the NCAT Act in determining costs? ● The second respondent is not a party responsible for any further documents, or lack of documents submitted by other parties (e.g. the first respondent, or the 'representative of Lot 4') in the context of the case. It is therefore also irrelevant as to the method of filing and serving of evidence conducted by other parties, as a consideration in the matter of determining costs for Ms Lu, under Section 60(2)-(3) of the NCAT Act. ● We are also concerned with the understanding of facts, and the thereafter possibility that the law has been misapplied to the facts: there is clear documentary evidence to when Ms Lu ceased to be a strata committee member, written in the very statement admitted into evidence, that the written reasons for decision references in the same exact paragraph. There is insufficient evidence to support the understanding that the second respondent Ms Lu has acted so unreasonably to justify a process of litigation with no reasonable alternatives (mediation, as one example), that has warranted an award of costs. ● The Tribunal has not given sufficient reasons or evidence for how the second respondent Ms Lu has acted unreasonably, or how their conduct constitutes special circumstances under Sections 60(2)-(3) of the NCAT Act, or how they have met the Lai Qin test. ● The Tribunal has made an error of law in interpreting that Ms Lu has not produced all documents available to her based on her submitted statement. ● The Tribunal has not given reasons for how the applicant have acted reasonably, or may have acted unreasonably themselves in their determination of special circumstances under Sections 60(2)-(3) of the NCAT Act, and in understanding reasonability. ● It is an error in law to assume that a hypothetical proceeding under Section 188, or Sections 232 and/or 241 of the SSM Act to its conclusion would have produced any actual documents - and to use this hypothetical situation as justification for unreasonable behaviour in the matter of costs, without evidence that the second respondent Ms Lun has not complied with prior procedural directions. ● The decision of the applicants to withdraw, and their delay in clarifying their intention to withdraw to the Tribunal, should be given more consideration in determining reasonability." 1. an Application for stay of original decision pending appeal in which she sought a stay of order 3 of the 29 July 2024 orders (the Stay Application) for the following reasons: "Now I'm in a very stressful situation. feel not safe. very stressed"
On 28 August 2024, the Tribunal constituted by Principal Member Suthers listed the appeal for a callover and hearing of the Stay Application on 11 September 2024 at 2.15 PM, and by orders 2 and 3 made procedural orders for the lodgement and service of evidence and submissions by the parties for the Stay Application (the 28 August 2024 orders).
On 2 September 2024 at 5.07 PM, Ms Lu sent an email to the Appeal Registry, Premium Strata and OSP66347's Solicitors, attaching documents including updated grounds for the Stay Application as set out under the following headings (the updated Stay Application grounds): "1. Likelihood of Success on Appeal: 2. Irreparable Harm: 3. Balance of Hardships: 4. Public Interest:"
On 2 September 2024 at 5.09 PM, Ms Lu sent an email to the Appeal Registry, Premium Strata and OSP66347's Solicitors, attaching levy notices issued by Premium Strata on 1 August 2024 and 29 August 2024.
On 11 September 2024, OSP66347's Solicitors lodged a Notice of representation by a legal practitioner dated September 2024.
On 11 September 2024, the Tribunal constituted by Senior Member Sarginson adjourned the callover and hearing of the Stay Application to 2 October 2024 at 11.30 AM because it was inappropriate that he deal with them in view of him having made the 12 July 2024 decision.
On 19 September 2024, OSP66347's Solicitors lodged the following documents: 1. Respondent's Submissions "Re: Extension of Time for Stay Application" dated 19 September 2024 2. Respondent's Submissions "Re: Stay Application" dated 19 September 2024 (the 19 September 2024 OSP66347 stay submissions).
On 19 September 2024, the Tribunal constituted by Principal Member Suthers at the request of Ms Lu made procedural orders extending the time for compliance with orders 2 and 3 of the 28 August 2024 orders (the 19 September 2024 orders).
On 2 October 2024, the Tribunal constituted by myself made procedural orders for the hearing of the appeal including granting leave to the parties to be legally represented, by orders 4, 5 and 6 providing for the documents to be relied on by the parties, listing the appeal for hearing on 28 November 2024 at 10.15 am, dismissing the stay application and by order 12 reserving the costs of the stay application for determination by the Appeal Panel hearing the Appeal (the 2 October 2024 orders). I delivered oral reasons for the dismissal of the Stay Application after Ms Lu made oral submissions and I did not call upon OSP66347's solicitor to make any oral submissions.
On 9 October 2024, OSP66347 lodged its Reply to Appeal.
On 1 November 2024, the Tribunal constituted by myself made procedural orders for the hearing of the appeal, including granting leave to Ms Lu to lodge an Amended Notice of Appeal in which Mr Zhang is joined as an appellant or a respondent and extending the time for compliance with orders 4, 5 and 6 of the 2 October 2024 orders (the 1 November 2024 orders).
On 15 November 2024, Ms Lu lodged a request to withdraw the appeal.
On 19 November 2024, the Tribunal constituted by myself dismissed the appeal and made procedural orders for the determination of the foreshadowed costs application of OSP66347 providing by order 3 for the lodgement of the costs application, by orders 3, 4 and 5 for the lodgement of evidence and submissions by the parties, and by order 6 requiring the question of whether a hearing may be dispensed with to be addressed (the 19 November 2024 orders).
On 3 December 2024, OSP66347's solicitors lodged Respondent' Submissions dated 3 December 2024 which included the OSP66347 costs application (the 3 December 2024 OSP66347 costs submissions) and in which they indicated that OSP66347 also relied on the 19 September 2024 OSP66347 stay submissions and made an application in their letter dated 3 December 2024 to the Appeal Panel for an extension of time to comply with the 19 November 2024 orders.
On 6 December 2024, Ms Lu's solicitors lodged Appellant's Submissions on section 41 Application dated 6 December 2024.
On 9 December 2024, the Tribunal constituted by myself at the request of OSP66347 made procedural orders extending the time for compliance with orders 3, 4 and 5 of the 19 November 2024 orders.
On 16 December 2024, Ms Lu's solicitors lodged Appellant's Submissions in Reply in Costs dated 10 December 2024 (the 10 December 2024 Lu costs submissions).
On 17 December 2024, OSP66347's solicitors lodged Respondent' Reply Submissions dated 17 December 2024 (the 17 December 2024 OSP66347 costs submissions in reply).

The issues for determination

Mr Zhang is a party to this appeal pursuant to r 29 of the Civil and Administrative Tribunal Rules 2014 (NSW). As Ms Lu did not include Mr Zhang as a party in the Notice of Appeal, I have named him as the Second Respondent. As no claim for costs is being made against him, it has not been unnecessary to give him notice of the OSP66347 costs application.
The following issues arise for determination: 1. issue 1: whether a hearing of the OSP66347 costs application should be dispensed with; 2. issue 2: the OSP66347 costs application.

Issue 1: whether a hearing of the OSP66347 costs application should be dispensed with

In the 10 December 2024 Lu costs submissions, Ms Lu consents to a hearing of the OSP66347 costs application being dispensed with. OSP66347 has not addressed this issue in its submissions.
I am satisfied that that the issues for determination in relation to the OSP66347 costs application can be adequately determined in the absence of the parties by considering their evidence and written submissions. Accordingly, I have decided pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) to make an order dispensing with a hearing in relation to the OSP66347 costs application.

Introduction

The OSP66347 costs application is pursuant to s 60(2) of the NCAT Act on the basis of the existence of special circumstances within s 60(3)(b), (c), (e), (f) and (g). The determination of this application may involve answering the following two questions: 1. whether there are special circumstances warranting an award of costs in favour of OSP66347; 2. if so, whether the discretion should be exercised to award costs.
Before dealing with this issue, it is appropriate to set out the applicable provisions of the NCAT Act and legal principles, and to summarise the submissions of the parties.

The applicable provisions of the NCAT Act

Part 4 Division 1 (ss 35-38) contains introductory provisions dealing with the practice and procedure of the Tribunal. Section 36 deals with the guiding principle to be applied to practice and procedure, and relevantly provides: 36 Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it - (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. (3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal - (a) a party to proceedings in the Tribunal, …
Part 4 Division 3 (ss 44-48) contains provisions dealing with participation in proceedings in the Tribunal. Section 45 deals with representation of parties, and relevantly provides: 45 Representation of parties (1) A party to proceedings in the Tribunal - (a) has the carriage of the party's own case and is not entitled to be represented by any person, and (b) may be represented by another person only if the Tribunal grants leave - (i) for that person to represent the party, or (ii) in the case of representation by an Australian legal practitioner - for a particular or any Australian legal practitioner to represent the party. … (3) The Tribunal may at its discretion - (a) grant or refuse leave under subsection (1)(b), and (b) revoke any leave that it has granted. …
Part 4 Division 5 (ss 56-63) contains provisions dealing with participation in proceedings in the Tribunal. Section 60 deals with costs, and 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 - … (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, … (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. (4) If costs are to be awarded by the Tribunal, the Tribunal may - (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section - costs includes - (a) … (b) 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.

"Special circumstances" in s 60(2) of the NCAT Act

"Special circumstances" in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act: 1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27]; 2. mere success (or failure) of an application does not give rise to special circumstances: The Owners - Strata Plan 5319 v Price [2020] NSWCATAP 245 at [46].
As to the factor in s 60(3)(c) of the NCAT Act, in Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135 (Zucker) at [44] the Appeal Panel made the following observations: "[44] A finding that a claim is "not proved on the balance of probabilities" is not the same as a finding that a claim is "not tenable in fact or law". They are different concepts. The expression "no tenable basis in fact or law" relates to the common law tests developed and applied in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. For a claim to have no tenable basis in fact or law it must be so obviously untenable that it cannot possibly succeed: General Steel at 130. "Manifestly groundless" or "clearly untenable" are equivalent expressions. In our view, for the purpose of s 60(3)(c), it matters not whether a conclusion that a claim has no tenable basis in fact or law is reached in connection with an application for summary dismissal or after a full hearing on the merits."
As to the factor in s 60(3)(e) of the NCAT Act, in BDK v Department of Education and Communities [2015] NSWCATAP 129 (BDK) at [62]-[66], in which the appellant was self-represented as she had been in the decision below, the Appeal Panel said in relation to the identical expression in s 55(1)(b) of the NCAT Act: "[62] It will be seen that this Tribunal's power is somewhat differently expressed. The Tribunal's power refers not only applies to proceedings that are "frivolous" or "vexatious", but then applies to proceedings that are "misconceived" or "lacking in substance". Section 55(1)(b) does not have a generic catch-all category of "abuse of process" to pick up conduct in relation to the issuance and pursuit of proceedings that might, arguably, fall outside the four specific categories set out there. [63] In Alchin v Rail Corporation NSW [2012] NSWADT 142 Judicial Member Wright SC (as he then was) examined the meaning of the predecessor provision to s 55(1)(b) - s 73(5)(g)(ii) of the Administrative Decisions Tribunal Act 1977. As to the meaning of "misconceived" and "lacking in substance", he said: 25 The expressions used in s 92(1)(a)(i) of the ADA, namely "misconceived" and "lacking in substance" are found not only in the ADA but also in s 73(5)(g) of the ADT Act and similar legislation in other states. With respect to a similar provision found in the Equal Opportunity Act 1984 (Vic), Ormiston JA in State Electricity Commission of Victoria v Rabel [1998] 1 VR 102 at [14] said: "misconceived" and "lacking in substance" have not, so far as I am aware, been used in this context before though each expression is commonly used by lawyers, the one connoting a misunderstanding of legal principle and the other connoting an untenable proposition of law or fact. If one may discern, in these provisions, an attempt to express the powers of tribunals in non-technical language, then "misconceived" would represent a claim which did "not disclose a cause of action" …, whereas "lacking in substance" might be seen to represent a claim where the defendant could obtain summary judgment … 26 This approach of construing "misconceived" as including a misunderstanding of legal principle and "lacking in substance" as encompassing an untenable proposition of fact or law has been applied by the Tribunal in many decisions including, for example, Keene v Director-General, Dept of Justice and Attorney-General [2011] NSWADT 59 at [14], McDonald v Central Coast Community Legal Centre [2008] NSWADT 96 at [22] and Stanborough v Woolworths Ltd [2005] NSWADT 203 at [50]. [64] In the present case, the Tribunal referred to the frequently-cited explanation of this term by Roden J in Attorney-General v Wentworth (1988) 14 NSWLR 481 at 491: 1. Proceedings are vexatious if they are instituted with the intention of annoying or embarrassing the person against whom they are brought. 2. They are vexatious if they are brought for collateral purposes, and not for the purpose of having the court adjudicate on the issues to which they give rise. 3. They are also properly to be regarded as vexatious if, irrespective of the motive of the litigant, they are so obviously untenable or manifestly groundless as to be utterly hopeless. [65] It will be seen that Roden J's first category covers conduct that falls within the meaning of "frivolous", while his third category embraces the kind of cases to which the expressions "misconceived" and "lacking in substance" are directed (or, in the case of the UCPR categories, cases not disclosing a reasonable cause of action). [66] In our view a reasonably broad connotation should be given to the meaning of the four categories of conduct identified by s 55(1)(b). The intent of the provision, as we see it, is to seek to give the Tribunal a broad power to deal with abuses of its processes, and for them to be interpreted and applied in a power which captures any kind of abuse of process, that can reasonably be seen to fall within their compass. While "misconceived" and "lacking in substance" may be seen as relatively specific terms, we think a flexible, purposive interpretation can be adopted in determining whether proceedings are "frivolous" or "vexatious", conscious always of the gravity for an applicant or plaintiff of summary dismissal of proceedings."

The exercise of the discretion in s 60(2) of the NCAT Act

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: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].
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 at [48].
In The Owners - Strata Plan No. 47027 v Peter Clisdell Pty Ltd (No 2) [2018] NSWCATAP 46 at [44] the Appeal Panel decided it would not have exercised the discretion under s 60(2) of the NCAT for reasons which included that the respondent was not legally represented at the hearing of the appeal.

Proceedings without a hearing on the merits

In New Island Developments Pty Ltd v New Island Investments One Pty Ltd (No 2) [2024] NSWSC 454 (New Island Developments) at [18]-[20], Rees J recently explained the principles governing an application for costs in a case which has been resolved without a hearing on the merits: [18] In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625, McHugh J stated: "When there has been no hearing on the merits … a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order. In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits … The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. … Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. … If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings." [19] In One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548, Burchett J also observed at [6]: "… it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs." [20] One.Tel was followed in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302, where Davies AJA (Mason P and Meagher JA agreeing) noted that a judge may award costs where the matter does not proceed to judgment "generally … because the judge is satisfied that one party has had a substantial victory and the other a substantial loss, or that there has been a marked difference in the reasonableness of the actions taken by the parties, so that one party should be rewarded for its reasonable actions and the other should suffer a detriment in costs": at [5]. See likewise Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 at [26] to [30] (per Payne JA, Basten and Meagher JJA agreeing)."
The citation of Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6 (Lai Qin) in New Island Developments at [18] omits the following sentence immediately following the cited words in the second paragraph: "In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action."
In Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 (Nichols): 1. Payne JA (with Meagher JA at [13] agreeing) at [25] set out with approval the full passage in Lai Qin at 624-625 and at [30] observed: "If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings." 1. Basten JA at [8]-[9] observed: "… although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon. … once it is clear that there is a real dispute as to a significant fact in issue in the proceedings, it is inappropriate to determine that matter, other than in making an interlocutory ruling, by accepting one party's case without permitting the other party an opportunity to challenge the opposing party's witnesses."
The observations in Nichols at [8]-[9], [30] have very recently been applied in the context of the question under r 42.20(1) of Uniform Procedure Rules 2005 (NSW) whether there are grounds for the Court to "order otherwise" than that the plaintiff pay the defendant's costs of the proceedings in circumstances where the Court makes an order for the dismissal of proceedings: Balout v Bella Ikea Cronulla Pty Ltd (No 2) [2024] NSWSC 1173 at [51]-[52], [58] (Rees J).
The principles in Lai Qin and One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 (ONE.TEL) have been applied in the Tribunal: see, for example, Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106 at [45]-[48]. While withdrawal of proceedings in the Tribunal whether at first instance or on appeal, may in some circumstances, constitute sufficient "special circumstances" to justify a costs order, the mere fact that proceedings are withdrawn is not, of itself, a sufficient "special circumstance" to justify a costs order: MacDermott v Wang [2022] NSWCATCD 71 at [45(4)].

The 19 September 2024 OSP66347 stay submissions

In the 19 September 2024 OSP66347 stay submissions, OSP66347 relevantly submitted in response to the updated Stay Application grounds that Ms Lu's personal issues were irrelevant to the Stay Application.

The 3 December 2024 OSP66347 costs submissions

In the 3 December 2024 OSP66347 costs submissions, OSP66347 has relevantly made the following submissions: 1. Ms Lu has caused it to incur significant legal costs due to her failure to seek legal representation. She elected to commence the Appeal without seeking any legal advice and subsequently caused costs to increase by seeking to amend the Notice of Appeal, and the Stay Application. As soon as she engaged lawyers, she realised that the Appeal had no prospects of success and sought to have the Appeal withdrawn; 2. the following matters constituted special circumstances: 1. under the subheading "Vexatious conduct, prolonged proceedings, and failure to comply with duty under s36(3)", Ms Lu has conducted the Appeal in a way that it was unnecessarily disadvantaged by failing to comply with dates, failing to review documents sent to it, and by making submissions without any regard to prospects, or the applicable law, all of which required multiple appearances before the Tribunal and ongoing review of documents and preparation of written submissions; 2. under the subheading "Failure to Seek Legal Representation", to the extent that Ms Lu's conduct was due to being naive and unrepresented, her choice to commence the Appeal and proceed to appear before the Tribunal and lodge documents without obtaining legal advice was, in itself, a seriously prejudicial omission; 3. under the subheading "No tenable basis for Appeal, frivolous, vexatious, misconceived and lacking in substance", Ms Lu had no basis for bringing the Appeal given the 29 July 2024 reasons were detailed and the prior opportunities afforded to her to make submissions to the Senior Member. This was confirmed by her seeking to abandon the Appeal as soon as she obtained legal advice; 4. under the subheading "Any other matter the Tribunal considers relevant", as a result of the Appeal, it has incurred $30,000 in legal fees. If the lot owners are not given an opportunity to recover those costs from Ms Lu, this would result in her depriving it of a significant portion of its originally remedy despite the Appeal being withdrawn. Furthermore, if no costs order is made, then order 12 of the 2 October 2024 orders would be nullified. She should be made liable for costs on an indemnity basis for commencing litigation without any regard for the consequences.

The 10 December 2024 Lu costs submissions

In the 10 December 2024 Lu costs submissions, Ms Lu has relevantly made the following submissions: 1. the chronology of relevant events as evidenced in annexed documents was: 1. from 23 August 2024 until 21 October 2024, she was unrepresented; 2. between 22 and 28 October 2024, she was hospitalised; 3. on 30 October 2024, her solicitors sought the consent of OSP66347's solicitors to a proposed extension of the timetable, which was not forthcoming; 4. on 1 November 2024, the Tribunal made the 1 November 2024 orders; 5. on 4 November 2024, her solicitors wrote to OSP66347's solicitors indicating her intention to withdraw the appeal and sought OSP66347's consent that there be no order as to costs (the 4 November 2024 Yeoman Letter). No response was received; 6. on 15 November 2024, she lodged a request to withdraw the appeal; 1. her primary contention - which is not clearly articulated in the notice of appeal - was that she, being independent from Mr Zhang, ought not be adversely bound by his conduct of the late production of materials done without her knowledge; 2. the Tribunal should refrain from assessing her prospects of success on the grounds of appeal filed by an unrepresented litigant in circumstances where amendments were sought to be made once represented, but unable to be completed within a relatively short timeframe. She has not surrendered to the strengths of OSP66347's position, but withdrawn so as to avoid the cost of litigation, in keeping with the guiding principle. This is supported by her seeking to resolve the underlying costs order on a commercial basis. The appeal was withdrawn at a relatively early stage and OSP66347 was promptly notified of her intentions on 4 November 2024; 3. she acted reasonably in commencing the appeal, having a legitimate contention with order 3 of the 29 July 2024 orders despite the inability to articulate that in the manner required of legal proceedings, which is not unusual for an unrepresented party. The appeal was withdrawn in circumstances where there was insufficient time to file an amended notice of appeal; 4. the Lai Qin exceptions have not been made out and that the proper exercise of discretion is that there be no order as to costs. If the Appeal Panel is against her in that regard, OSP66347 must discharge its onus of establishing special circumstances. The withdrawal of the appeal is not sufficient, of itself, to establish special circumstances to justify a costs order; 5. as to the matters submitted to constitute special circumstances in the 3 December 2024 OSP66347 costs submissions: 1. under the subheading "Vexatious: s 60(3)(e)", this is an assertion made by OSP66347; 2. under the subheading "Unreasonably prolonged the time to complete proceedings: s60(3)(b)" (which OSP66347 submitted had occurred when the matter was stood down in the list at the second callover so that she could review materials she indicated were not received), affording a litigant procedural fairness does not amount to an unreasonable prolongation of time to complete proceedings, which in any event did not impact the time to complete the proceedings; 3. under the subheading "Failure to comply with the guiding principles: s60(3)(f)" (which related to matters prior to the grant of legal representation on 2 October 2024), it is not uncommon for unrepresented litigants to be unfamiliar with the Tribunal's processes. OSP66347's opposition to the Stay Application is incongruous with it having failed to make any demand, claim or provide any quantification of its costs the subject of order 3 of the 29 July 2024 orders; 4. under the subheading "Failure to obtain legal representation", this submission should not be entertained as it is contrary to s 45(1)(a) of the NCAT Act; 5. under the subheading "No tenable basis in fact or law", the fact that she withdrew her appeal does not demonstrate that the appeal had no tenable basis in fact or law. It is not reasonably open to the Appeal Panel to make such a finding in circumstances she had sought leave to amend the appeal grounds, but was unable to do so within the timeframes given; 6. under the subheading "By reason of the respondent incurring legal costs", the amount of costs incurred in the proceedings has no bearing on the exercise of discretion to award costs, nor are there any supporting materials before the Appeal Panel; 1. in the absence of submissions in support of indemnity costs, the Appeal Panel cannot make findings necessary to enliven its jurisdiction to award indemnity costs; 2. OSP66347's refusal to engage with her on the resolution and/or amount of the costs of the appeal amounts to disentitling conduct, weighing in favour of a refusal to make an order for costs in its favour.

The 17 December 2024 OSP66347 costs submissions in reply

It is unnecessary to summarise the 17 December 2024 OSP66347 costs submissions in reply as OSP66347 in substance reiterated the 3 December 2024 OSP66347 costs submissions.

Whether there are special circumstances warranting an award of costs in favour of OSP66347

I am not satisfied that there are special circumstances warranting an award of costs in respect of the appeal in favour of OSP66347 within s 60(2) of the NCAT Act for the following reasons: 1. OSP66347 has not established that Ms Lu has been responsible for prolonging unreasonably the time taken to complete the proceedings within s 60(3)(b) of the NCAT Act. The Stay Application was listed for hearing and decided on 2 October 2024; 2. having regard to the principles in Zucker at [44] and BDK at [62]-[66], OSP66347 has not established that Ms Lu made a claim that had no tenable basis in fact or law within s 60(3)(c) of the NCAT Act, or the appeal was vexatious, misconceived or lacking in substance within s 60(3)(e) of the NCAT Act. There was no analysis by OSP66347 as to how each ground of appeal in the Notice of Appeal was so obviously untenable that it could not possibly succeed, or either involved a misunderstanding of legal principle or an untenable proposition of law or fact; 3. I accept that Ms Lu failed to comply with OSP66347 with the 2 October 2024 orders resulting in the extensions of time of one week made by the 1 November 2024 orders. However, I do not accept that OSP66347 has established that this failure constituted special circumstances within s 60(3)(f) of the NCAT Act; 4. I do not accept that OSP66347 has established that the failure Ms Lu to seek legal representation prior to 21 October 2024 constituted special circumstances within s 60(3)(g) of the NCAT Act. She had no obligation to do so.
It follows that the OSP66347 costs application should be dismissed, and an order should be made that Ms Lu and OSP66347 are to pay their costs of the appeal to give effect to the position in s 60(1) of the NCAT Act.

If so, whether the discretion should be exercised to award costs

As I have not been satisfied of the condition in s 60(2) of the NCAT Act that there are special circumstances warranting an award of costs in respect of the appeal in favour of OSP66347, this question does not arise for determination. I would have decided not to exercise the discretion to award costs in respect of the appeal in favour of OSP66347 for the following reasons: 1. having regard to the principles in Lai Qin at 624-625 and Nichols at [30], I am not satisfied that Ms Lu either acted unreasonably in commencing and maintaining the appeal until 19 November 2024, or even though she acted reasonably in so doing she was almost certain to have failed if the appeal had been determined on the merits; 2. having regard to the principles in ONE.TEL at [6], I am not satisfied that Ms Lu effectively surrendered to OSP66347 in withdrawing to the appeal; 3. I would not have awarded costs prior to 2 October 2024 in favour of OSP66347 as it failed to make, and failed to provide any explanation for its failure to make, an application it have leave to be legally represented prior to that date. There is no evidence that any person on its behalf gave notice to Ms Lu that such an application would be made at the callover. It was unfair to Ms Lu that she should exposed to an order for costs for legal services provided on and prior to 2 October 2024 when it had not obtained an order that it have leave to be legally represented and had not given notice to them of its proposed application that it be legally represented. I accept that the making of an order for leave for a party to be represented by an Australian legal practitioner pursuant to s 45(1)(b)(ii) of the NCAT Act is not a precondition to the making of a costs order in favour of that party as held in N & T Buildings Pty Ltd v Ball [2018] NSWCATAP 83 at [11]-[12]. However, the making of such an order may be taken into account in the exercise of the discretion to award costs. In these circumstances, of relevance are the observations of the Fair Work Commission Full Bench (Hatcher VP, Dean DP, Commissioner Wilson) in Fitzgerald v Woolworths Ltd [2017] FWCFB 2797; (2017) 270 IR 128 at [57] in relation to the failure of the respondent to have obtained leave for legal representation under s 596 of the Fair Work Act 2009 (Cth) (which is analogous to s 45 of the NCAT Act): "[57] … Mr Fitzgerald's main complaint about Woolworths' representation was that … he could not reasonably have anticipated that he would subsequently face a costs application that included the fees charged for Mr Bennett's attendance at the hearing. That point has a degree of substance, notwithstanding that Woolworths had in earlier correspondence placed Mr Fitzgerald on notice that he might face a costs application should he proceed with his application. …" 1. I would not have made a costs order in favour of OSP66347 prior to 2 October 2024 as Ms Lu was self represented; 2. I would not have awarded costs in favour of OSP66347 subsequent to 4 November 2024 it has not achieved a better result by not accepting the offer of settlement in relation to the costs of the appeal made by Ms Lu in the 4 November 2024 Yeoman Letter.

Orders

I make the following orders: 1. A hearing of the costs application of the first respondent is dispensed with. 2. The costs application of the first respondent is dismissed. 3. Each of the appellant and the first respondent is to pay their costs of the appeal.

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: 06 January 2025

Uniform Procedure Rules 2005(NSW)

Equal Opportunity Act 1984(Vic)

Lu v The Owners - Strata Plan No 66347

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Judgment (19 paragraphs)

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Cases Cited (26)