(3) Costs not recoverable in other jurisdictions
67 Amounts payable to lawyers are subject to various forms of regulation which might, absent statutory exclusion, limit the nature or amount of the expenses recoverable under s 80. The conclusion (accepted by all members of this Court) that recoverable costs are limited to those reasonable in amount and properly and reasonably incurred, suggests that they may be subject to assessment under the relevant Legal Profession Act. That consideration will be addressed below. It is convenient first to consider the interrelationship of s 80 with other provisions dealing with legal costs in courts and the Tribunal.
68 Since August 2005, costs in the Local Court, District Court and Supreme Court are said to be "in the discretion of the court" and the court has "full power to determine by whom, to whom and to what extent costs are to be paid": Civil Procedure Act 2005 (NSW), s 98(1)(a) and (b). Further, a party to proceedings "may not recover costs from any other party otherwise than pursuant to an order of the court": s 98(2). Those provisions are, however, subject to "rules of court and to this or any other Act". The question is whether the Strata Schemes Act otherwise provides, so as to limit or remove the power of a court to determine the costs payable in proceedings before it.
69 In order to determine the scope of s 80 with respect to legal costs, it is necessary to consider it in its historical context. Legislation prior to the Strata Schemes Act permitted recovery of contributions and interest, but did not refer to expenses. Accordingly, the operation of s 80 must be considered against a well-known and well-established regime for recovery of legal costs in litigation existing when the Strata Schemes Act was enacted in December 1996.
70 In substance the question raised has two elements. The first is whether, to the extent that the term "expenses" includes legal costs incurred in litigation, the amount recoverable is limited to such amounts as are recoverable under an order of the court in which the litigation has been brought. The second issue concerns the extent to which s 80 is intended to impinge on the protections available to those required to pay legal costs. In relation to the first issue, it appears to have been assumed that expenses incurred in recovering the contributions and interest included expenses incurred in the Tribunal and in the Small Claims Division of the Local Court, the former at least involving a form of satellite litigation to the debt recovery proceedings and the latter an earlier stage of the debt recovery proceedings in a jurisdiction in which very limited costs were recoverable. Indeed, as will be noted shortly, costs were not recoverable in the Tribunal either, by virtue of other provisions of the Strata Schemes Act itself.
71 The proper construction of s 80 should not necessarily be limited to consideration of provisions applicable in the Local Court and the Tribunal. If questions can arise in relation to costs in the Tribunal, they can, by parity of reasoning, arise in relation to costs awarded or not awarded in this Court, on an appeal from the Tribunal (see s 200), or in proceedings by way of judicial review. Similarly, as noted in the Second Reading Speech of the Strata Schemes Management Bill (Hansard, Legislative Assembly, 13 November 1996, p 5915) strata title developments "now include buildings used for a diverse range of purposes, including commercial and office buildings, industrial complexes, shopping centres, mixed-use developments and retirement villages". It must have been anticipated that arrears of contributions in respect of some schemes would exceed the jurisdiction of a Local Court, requiring that debt recovery proceedings be brought in a court of competent jurisdiction, the next stage in the hierarchy being the District Court.
72 In 1996, the power in the Supreme Court to award costs was to be found in s 76 of the Supreme Court Act 1970 (NSW), in the following terms:
" 76 Costs
(1) Subject to this Act and the rules and subject to any other Act:
(a) costs shall be in the discretion of the Court;
(b) the Court shall have full power to determine by whom and to what extent costs are to be paid; and
(c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis."
73 The District Court had a provision to similar effect: see District Court Act 1973 (NSW), s 148B. A provision in relevantly identical terms was also found in the Local Courts (Civil Claims) Act 1970 (NSW) (the "Civil Claims Act"), s 34(1). However that provision was subject to an additional constraint in the following terms:
"(1A) Except as may be provided by the rules, a court sitting in its Small Claims Division has no power to award costs to or against a party to proceedings in the Division."
74 Unlike other provisions then in force, s 34(1A) was not expressed to be "subject to any other Act". Only a small amount was recoverable pursuant to the rules, which as at 1 June 2006, appeared to permit an amount of no more than $759: Legal Professional Regulation 2005 (NSW), Sch 2, Pt 3, item 2 and Local Courts (Civil Procedure) Rules 2005 (NSW), r 14.
75 In respect of provisions other than the Civil Claims Act as then in force, the construction question was whether s 80 of the Strata Schemes Act constituted the provision of another Act, to which the costs provisions were expressly made subject by their own Acts. The question with respect to the Small Claims Division was whether s 80 impliedly repealed s 34(1A) of the Civil Claims Act to the extent that the claims involved contributions, interest and expenses under the Strata Schemes Act. The range of amounts of arrears foreseeable in 1996 must have included amounts within the jurisdiction of the Small Claims Division. It might therefore seem surprising that a variation of s 34(1A) was to be effected by a side-wind, rather than an express provision to that effect.
76 It is also curious that when dealing with disputes, in Ch 5 of the Strata Schemes Act, Parliament made specific provision in relation to costs without adverting to what, on the case for the Owners Corporation, were internally inconsistent provisions. The dispute settlement provisions in Ch 5, Part 4 of the Strata Schemes Act covered disputes with respect to the operation, administration or management of a strata scheme, which could readily be seen to cover the levying of contributions: see ss 138(1)(b), 148 and 149. With respect to costs of proceedings before an adjudicator, the Act provided:
" 176 Adjudicator not to make order with respect to certain matters
(1) An Adjudicator may not, in connection with an application under this Part, make an order for the payment of costs."
77 The Strata Schemes Act (as enacted) provided for appeals to be taken from an order made by an adjudicator to the Strata Schemes Board, constituted under Ch 6, Part 3. The Board had, relevantly for present purposes, the same powers as those of an adjudicator: with respect to costs, the Act made the following provision:
" 192 Orders relating to costs
The Board may not make any order for the payment of costs except as specifically authorised by this Act or in relation to an order dismissing an application because:
(a) the application is frivolous, vexatious, misconceived or lacking in substance, or
(b) a decision in favour of the applicant is not within the jurisdiction of the Board."
78 In 1997 this provision was amended to make it clear that it applied to appeals to the Board, as well as applications to it: Statute Law (Miscellaneous Provisions) Act 1997 (NSW), Sch 1.23 [12] and [13]. The note to that amendment (after item [20]) is inconsistent with the proposition that costs of such proceedings might be automatically recoverable under s 80. The Board was replaced by the Residential Tribunal, established by the Residential Tribunal Act 1998 (NSW). The Residential Tribunal was then replaced by the Tribunal, created by the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW). It is noteworthy that the costs provision in the 2001 Act (s 53) expressly excludes from its operation proceedings under the Strata Schemes Act.
79 A possible means of reconciling ss 192 and 80 is that s 80 constitutes specific authorisation for the purposes of s 192. As a means of reconciliation, that course would introduce a further anomaly, in that it would not permit the reconciliation of s 80 with s 176. In any event, such a course would appear not to be open: s 80 makes no reference to costs incurred before the Board on an appeal from an adjudicator. Nor was such a construction proposed by either party.
80 Similar language of 'specific authorisation' is used in the Trade Practices Act 1974 (Cth), s 51(1)(b) and under the Environment Protection and Biodiversity Conservation Act 1999 (Cth), ss 16(2) and 43A, considered in, respectively, The Paul Dainty Corp Pty Ltd v The National Tennis Centre Trust [1990] FCA 163; 22 FCR 495, 523 ff (Woodward, Northrop and Sheppard JJ) and Minister for Environment and Heritage v Greentree [2004] FCA 741; 138 FCA 198 at [138] ff (Sackville J); see also New Zealand Apple and Pear Marketing Board v Apple Fields Ltd [1991] 1 NZLR 257 (PC) at 263-265 (Lord Bridge of Harwich) dealing with specific authorisation of restrictive trade practices under the Commerce Act 1986 (NZ). These authorities, dealing with quite different provisions, provide limited assistance in the present context. Closer to the present case is a decision of the Full Court of the South Australian Supreme Court in Advance Resource Services Pty Ltd v Charlton [2008] SASC 118; 100 SASR 388. In considering a provision of the Fair Work Act 1994 (SA), s 173, which provided that the Court or the Commission "may only make orders for costs where specifically authorised to do so", Bleby J stated that "the only authority then vested in the court to award costs was contained in s 185", which expressly dealt with the award of costs: at [129]. This his Honour described as something "expressly prescribed by the Act": at [140]. Although differing in the outcome, Layton J took a similar approach on the point of construction: at [254]-[255]. (Doyle CJ did not address the issue.)
81 No doubt it is difficult to obtain any clear assistance with respect to the interrelationship of the provisions currently under consideration, except that the reasoning is broadly inconsistent with finding a specific authorisation in a provision which does not expressly refer to costs at all. Section 80 is not directed to a court or tribunal, nor does it deal in any sense specifically with legal costs. If it were necessary to reach a conclusion on this point of construction, I would not be satisfied that s 80 is specific authorisation for the purposes of s 192. However, as no reliance was placed upon this construction, this means of reconciliation need not be considered further.
82 A second possibility is that the reconciliation of s 80 with the constraints imposed by ss 176 and 192 of the Strata Schemes Act may be approached on the basis that the former is a specific provision, relevant only to a particular class of cases, whereas the latter operates generally with respect to proceedings in the Tribunal. However, such arguments tend to be malleable: s 80 applies to "expenses" generally, including, no doubt, legal costs incurred otherwise than in the course of litigation and in litigation in any jurisdiction. The provisions governing the Tribunal are restricted to the costs of litigation in that one jurisdiction. Questions of generality and specificity are not necessarily useful in resolving such internal inconsistencies. The principle giving priority to the specific over the general is said to reflect parliamentary "intention", but such questions are better resolved by reference to statutory principles, such as purposive construction: see The Ombudsman v Laughton [2005] NSWCA 339; 64 NSWLR 114 at [19]-[25] (Spigelman CJ) and my comments at [40].
83 The apparent anomaly in having costs in the Tribunal or before an adjudicator recovered as "expenses" incurred in recovering contributions, pursuant to s 80, in circumstances where neither the adjudicator nor the Tribunal had power to award costs with respect to proceedings before them, may be resolved in one of five ways.
84 The first possible reading is that the term "expenses" does not in any circumstance include legal costs: that was the reading preferred by Ms Dimitriou. For reasons given above, it should be rejected. A second possibility is to read down the term "expenses" in s 80, so as not to include costs of proceedings before the Tribunal or before an adjudicator. This reading is open but unsatisfactory because it raises a question as to why the implication should be limited to such costs and would not extend to costs which were not recoverable in court proceedings or which a court had expressly declined to award. A third possibility (perhaps a variation of the second) is that s 80, although covering legal expenses generally, does not extend to costs incurred in the resolution of disputes under Ch 5, because they are assumed not to be expenses "incurred in recovering" unpaid contributions. Thus, although disobedience of an order requiring payment of contributions may result in the imposition of a pecuniary penalty and an order for payment of costs, it is only the latter orders which are enforceable as a Local Court judgment: Ch 5, Pt 6. A fourth possibility is that "expenses" includes legal costs otherwise recoverable. A fifth reading is that the entitlement of an owners corporation in respect of expenses includes all legal costs, whether awarded or refused by a court or tribunal or merely unavailable by reason of other provisions. The absence of power to award such costs is then irrelevant because the exercise of such a power would in any event play no part in the statutory scheme. The last is the interpretation preferred by the Owners Corporation: it is only this last construction that will suffice to overturn the judgment of Malpass AsJ.
85 The proposed construction of s 80, which would allow recovery of legal costs even when they were not available in the Tribunal in which proceedings had been brought, is not consistent with other provisions in the same Act. Reading the Act as a whole, the preferable construction is that s 80 either permitted recovery of costs limited to the debt recovery proceedings or it permitted the recovery of costs which were themselves recoverable by order of a court of competent jurisdiction. On either view the decision of the Associate Justice should be upheld, because the amount permitted by way of expenses included costs in the Tribunal.
86 The next question is whether s 80 permitted the recovery of costs incurred in the Small Claims Division. If the proceedings had been completed in that Division, the Court would not have been entitled to award in favour of the Owners Corporation, even if entirely successful, more than a small part of the legal costs which would have been reasonably incurred. For the purposes of the present argument, the fact that the proceedings were not completed in the Division is irrelevant. The jurisdiction of the Division was exceeded in part because of arrears which accrued after the proceedings before the Division had been stayed and partly because of the costs in dispute to which the Owners Corporation claimed entitlement.
87 If s 80 were to have had the operation proposed by the Owners Corporation, it must have effected an implied repeal in part of s 34(1A) of the Civil Claims Act. As explained by Griffiths CJ in Goodwin v Phillips [1908] HCA 55; 7 CLR 1 at 7, "where the provisions of a particular Act of Parliament dealing with a particular subject matter are wholly inconsistent with the provisions of an earlier Act dealing with the same subject matter, then the earlier Act is repealed by implication". Further, the well-known caution sounded by Fullagar J in Butler v Attorney-General (Vic) [1961] HCA 32; 106 CLR 268 at 275 is to be borne in mind:
"The books contain, of course, plenty of examples of an implied repeal - total or partial - of an earlier statute by a later statute of the same legislature. But it is a comparatively rare phenomenon, and it has been said again and again that such a repeal will not be held to have been effected unless actual contrariety is clearly apparent."
88 The approach to assessing "contrariety" is, of course, different from that with respect to inconsistency under the Constitution, s 109 and may be different again from that with respect to the application of ss 68 and 79 of the Judiciary Act 1903 (Cth): see Kelly v Saadat-Talab [2008] NSWCA 213; 251 ALR 398 at [2]-[9] (Allsop P) and [43]-[47] (Handley AJA), Ipp JA agreeing with both.
89 This relevant test is not easy to apply in the present circumstances. Section 80 does not refer in express terms to legal costs, but merely picks them up as one part of a broader concept, namely expenses. By contrast, legislation governing courts invariably makes express provision with respect to the powers of the court in relation to legal costs. Because a provision allowing a person to recover expenses generally may be found (as here) to pick up and include legal costs, there is, nevertheless, no necessary contrariety with a statute conferring power on a court not to award such costs or prohibiting the tribunal or court from awarding costs. These provisions can be read together so that s 80 is limited to costs otherwise recoverable. Such a limitation is already acknowledged by limiting the costs to those reasonable in amount and reasonably incurred. Accordingly, there would have been no implied repeal of s 34(1A) by the enactment of the Strata Schemes Act.
90 Further, the Owners Corporation relied upon a statement by the Minister in the Second Reading Speech with respect to the Strata Schemes Act. Because it may be accepted that there is ambiguity or obscurity with respect to the meaning of s 80, it is permissible to have regard to extrinsic material: Interpretation Act 1987 (NSW), s 34(1). As in most cases, the question is whether the material assists. In the present case, the passage relied upon by the Owners Corporation in support of its construction of s 80 was as follows (Hansard, Legislative Assembly, 13 November 1996, p 5920):
"When going to court to recover unpaid levies plus any interest due, the body corporate will now also be able to recover the cost of the action. It is unjust that the owners in the scheme who have kept their levy payments up to date have to foot the bill for any court action against someone failing to pay up. The bill recognises that there are many self-run strata schemes and that the office bearers often take on time-consuming responsibilities on behalf of their body corporate."
91 The conjunction of ideas in these three sentences suggests at least that the Minister's mind was not focused on legal costs alone. Provision for payment for services provided by office-bearers is found in s 25; such payments are presumably recoverable under s 80, if incurred in recovering contributions from an owner. Further, there is simply no advertence to the possible limits on legal costs which might be recoverable under s 80, namely the accepted exclusion of unreasonable and unnecessary costs. At best, this passage is silent on the critical question.
92 Turning to the external costs provisions, other than that applicable in the Small Claims Division, the question is whether s 80 purports to be a statutory provision which overrides the general provisions relating to costs in the various courts. (It has been noted that those provisions now find their equivalents in s 98(1) of the Civil Procedure Act, which further provides that a party to proceedings "may not recover costs from any other party otherwise than pursuant to an order of the court": s 98(2).) The question is whether the Strata Schemes Act otherwise provides, so as to limit or remove the power of a court to determine the costs payable in proceedings before it. Unless s 80 overrides ss 176 and 192 of its own Act and impliedly repealed s 34(1A) of the Civil Claims Act, it would be anomalous to give it effect, by implication only, in the District and Supreme Courts. Such a construction should be rejected. With respect to a limitation on the power of this Court, for example, to decline in its discretion to refuse costs to a successful owners corporation, a more explicit provision is required. If the Owners Corporation is correct, and the costs in this Court are costs incurred in recovering contributions, a grant of leave subject to a condition as to costs would be entirely ineffective.
93 Thus, if costs can be recovered under s 80, despite other statutory provisions precluding recovery or court orders to similar effect, a Local Court, satisfied (for example) that costs incurred in the Tribunal and in judicial review proceedings in the Supreme Court challenging a decision of the Tribunal, were costs incurred in recovering a contribution, could give judgment for those costs despite an inconsistent order of this Court. That is at least an implausible conclusion. It can be avoided only if s 80, in its application with respect to legal costs, is subject to other statutory provisions (and court orders thereunder), with respect to recovery of those costs. That approach is to be preferred.
94 This construction is fortified by reference to the context in which s 80 must be understood to operate, namely the highly regulated scheme with respect to lawyer's fees and disbursements.
95 When s 80 was enacted in 1996, the relevant control was to be found in the Legal Profession Act 1987 (NSW). Part 11 of that Act, as relevant for present purposes, had two effects. The first was to impose an obligation on lawyers to disclose identified matters with respect to their costs, together with an estimate of likely costs, before they were retained to provide the legal services sought: ss 175-179. Secondly, Part 11 provided a mechanism by which clients, or others liable to pay legal costs, could obtain an assessment of the proper amount of the costs payable: Div 6, ss 199-208.
96 As between an owners corporation and its lawyers, there is no reason to suppose that these provisions of the Legal Profession Act 1987 did not operate: indeed, by an amendment which commenced in February 2005, s 230A of the Strata Schemes Act assumes that disclosures will be made to an owners corporation in respect of the costs of legal services and obliges the owners corporation to provide a copy of the disclosure statement to each owner and executive committee member. There is also no reason to suppose that the provisions relating to assessment of costs do not apply equally both to the owners corporation and to an owner in litigation with it.
97 Under the Legal Profession Act 1987, there were (as there are under the current Legal Profession Act 2004 (NSW)) two classes of persons who could apply for costs to be assessed. One was a "client who is given a bill of costs", pursuant to s 199. The other was a person liable to pay, or entitled to receive, costs "as a result of an order for the payment of an unspecified amount of costs made by a court or a tribunal", pursuant to s 202(1) (emphasis added).
98 Once it is accepted (as all members of this Court accept) that the costs recoverable are limited to those reasonable in amount and reasonably incurred, even the fifth reading of s 80 (identified above at [30*]) must be subject to some qualification. If the court in which recovery was sought were not that in which part of the recovery costs was incurred, that court might (although not in this case) hesitate to fix the quantum of those costs. But if, as in this case, the court acknowledges no such inhibition and specifies the amount, then the mechanism for assessment of those costs under the Legal Profession Act, will be unavailable. Its retention will depend on (a) the owner appreciating that (unusually) assessment of costs must precede a judgment, (b) his or her appreciation that an interlocutory application must be made to defer judgment pending an assessment under the Legal Profession Act and (c) the judge or magistrate exercising a discretionary power not to proceed to judgment in a specified amount. It is unlikely that s 80 was intended to curtail in this way the rights of those who might have to pay legal costs, to have those costs assessed in accordance with the Legal Profession Act.
99 Anderson v Bowles [1951] HCA 61; 84 CLR 310 involved the aftermath of proceedings by which a landlord had managed to eject his tenant, so as to recover possession of premises, but only after varied and extensive legal proceedings and a delay of one year. The landlord then brought proceedings alleging that the former tenant was liable to him for loss of mesne profits and for the legal costs incurred by him in recovering possession: at 316-317. In relation to the recovery of costs, the landlord relied upon early cases permitting the recovery of costs as a head of damages. Although the entitlement to claim damages was acknowledged, the High Court rejected the proposition that the costs of the ejectment proceedings could be included in circumstances where the statute provided that no costs should be allowed: at 323. The joint judgment (Dixon, Williams, Fullagar and Kitto JJ) continued:
"This is a legislative declaration that the parties to proceedings for the recovery of possession or proceedings arising thereout shall not be liable to one another for the costs of those proceedings. In the face of this legislative declaration can costs be properly included in the damages or mesne profits? It is a general rule that where it is sought to include costs incurred in other proceedings in the damages arising upon a cause of action, costs shall not be included, if as a matter of judicial determination or by a positive rule of law they are treated as costs which should be borne by the party suing. Accordingly it is not possible to recover as part of such damages the difference between party and party costs awarded to the plaintiff in the original litigation and the costs as between solicitor and client which he has incurred: Barnett v Eccles Corporation [[1900] 2 QB 423 at 428]. Further, if costs are expressly withheld by the court in the original proceeding none can be recovered in the action for damages brought by the plaintiff from whom they were so withheld: Loton v Devereux [(1832) 3 B & Ad 343; 110 ER 129] ….
The legislature having determined that costs shall not be recoverable in proceedings of the character now in question, it would be contrary to the principles which these cases exemplify if they were included in the damages and thus were made recoverable by a side wind."
100 This principle was applied by this Court in Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217 at [48]. It is not directly applicable in this case, which concerns the interrelationship of statutory provisions with respect to costs, rather than the possibility of recovering costs under the general law; nevertheless, the reasoning supports a conclusion that the generality of the term "expenses" in s 80 should not be given an expansive reading to the extent of its potential literal reach.