Purcell v The Owners - Strata Plan No 908; The Owners - Strata Plan No 908 v Purcell

The relevant principles as to costs

1. Section 60 of NCAT Act provides: 60 Costs (1) Each party to proceedings in the Tribunal is to pay the party's own costs. (2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs. (3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following: (a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings, (b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings, (c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law, (d) the nature and complexity of the proceedings, (e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance, (f) whether a party has refused or failed to comply with the duty imposed by section 36 (3), (g) any other matter that the Tribunal considers relevant. (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) the costs of, or incidental to, proceedings in the Tribunal, and (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.
2. Rule 38 of the Civil and Administrative Tribunal Rules 2014, NSW (NCAT Rules) provides: 38 Costs in Consumer and Commercial Division of the Tribunal (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if-- (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000.
3. If it is found that r 38 is not enlivened, then the standard position under s.60 of the NCAT Act is not displaced for the purposes of determining the costs of the proceedings: see Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25.
4. "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]
5. 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. 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]. 3. 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]. 4. Where "special circumstances" are found to exist, the Tribunal has discretion to exercise in deciding what, if any, order should be made. The use of "may" in the opening words of s 60(3) indicates that there remains a discretion not to award costs even if the factors are present, to see if they point to the existence of "special circumstances" in the situation under consideration: Diaspora Holdings Pty Ltd v Owners SP 68608 [2019] NSWCATAP 250 at [17]. 5. 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 considered: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].
6. The discretion to award costs generally is broad and unfettered, save that it must be exercised on a principled and judicial basis, avoiding arbitrariness and serving the need for consistency: see, for example, Northern Territory v Sangare [2019] HCA 25; (2019) 265 CLR 164 at [24], and also "according to rules of reason and justice, not according to private opinion … or even benevolence … or sympathy": Williams v Lewer [1974] 2 NSWLR 91 at [95]. The Tribunal's power is 'unfettered' in the manner described in Wright v Foresight Constructions Pty Ltd [2011] NSWCA 327 at [36]: A power conferred in these terms is "unfettered" in the sense that the Tribunal may make such order as it thinks appropriate, so long as it acts in accordance with the subject matter, scope, and purpose of the power. In relation to the award of costs in litigation, the accepted purpose is where costs are awarded in favour of one party, to compensate that party for the expense incurred in respect of the litigation.
7. An award of costs is made, not for the benefit of a losing party, but for the successful party. In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72, McHugh J (in dissent but with the tacit agreement on this issue with other members of the Court) said at [67]: The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended by, the unsuccessful party the successful party would not have incurred the expenses which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation.
8. Furthermore, the situation which arises in the proceedings is different from most costs' applications as there was no contested hearing on the merits of the parties' various disputes. Other than the question of costs of the proceedings, the parties agreed to Consent Orders which had the effect of resolving all underlying disputes between them; specifically, the parties consented to orders for works in respect of Window Repair to Lot 10, for any works required to repair damage if caused to adjacent common property by the Window Repair works, and for painting at the Owners Corporation's cost, of the interior timber trims of the new bathroom and kitchen windows in Lot 10.
9. In such a situation, reference to the case of Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 (Lai Qin) is material. In that case, McHugh J stated at 186 CLR 624 - 625 (footnotes excluded): In most jurisdictions today, the power to order costs is a discretionary power. Ordinarily, the power is exercised after a hearing on the merits and as a general rule the successful party is entitled to his or her costs. Success in the action or on particular issues is the fact that usually controls the exercise of the discretion. A successful party is prima facie entitled to a costs order. When there has been no hearing on the merits, however, 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 and the moving party no longer wishes to proceed with the action. 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. 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 administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council; Ex parte Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans. 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. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant's taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare. 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. This approach has been adopted in a large number of cases.
10. The Tribunal may also determine by whom and to what extent costs are to be paid and may order costs on either the ordinary basis or an indemnity basis: s 60(4) of the NCAT Act.

The parties' submissions as to costs

1. The parties made no submissions specifically addressing costs on the indemnity basis, and in any event, on the available evidence, I cannot discern a proper basis for awarding costs on the indemnity basis.
2. To support an application for its costs of the interim orders application, the Owners Corporation argued that there were "special circumstances" within s 60(3)(c) (a claim that has no tenable basis in fact or law) and within s 60(3)(e) (the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance): see the Owners Corporation's written submissions dated 5 September 2023 at [21] - [38]. It submitted that the Lot Owner had failed to make out a case for urgency; her application was incomplete and could not satisfy the requirements of s 237 of the SSMA (accordingly, the interim orders application had no prospects of success); and furthermore, the Lot Owner's case was frivolous, vexatious, and otherwise misconceived and lacking in substance, as the Owners Corporation was in the process of completing the kitchen and bathroom window replacement within Lot 10.
3. In addition to subsections (c) and (e) of s 60(3), to support the application for its costs of the substantive orders application and the cross application, the Owners Corporation further argued that there were "special circumstances" within s 60(3)(b) (prolonging unreasonably the time taken to complete the proceedings) and s 60(3)(g) (any other matter that the Tribunal considers relevant). It submitted (see the Owners Corporation's written submissions dated 5 September 2023 at [39] to [69]) that the Owners Corporation's costs up to 24 April 2023 in the substantive orders application were "thrown away" by reason of the Lot Owner's amended application filed on that date; that by reason of offers made in correspondence between the parties' legal representatives, the parties could, and should, have resolved their disputes as early as 30 June 2023; and that the Lot Owner had obstructed access to Lot 10 for works to be completed, which the Owners Corporation said had resulted in delays in obtaining and filing evidence, and had thereby prolonged the proceeding and seen further costs being incurred unnecessarily. To prove "special circumstances" within s 60(3)(c) and s 60(3)(e) of the NCAT Act in respect of the application for costs in the substantive orders application and the cross application, the Owners Corporation relied upon the matters it had submitted under those subsections for the interim orders application.
4. To establish "special circumstances", to support her application for costs in the substantive orders application and the cross application, the Lot Owner argued that s 60(3)(c) of the NCAT Act applied. The Lot Owner submitted that the Owners Corporation's defence of the substantive orders application was untenable, because her claim for Window Repair of Lot 10 was "almost certain to have succeeded if the matter had been fully tried": see the Lot Owner's written submissions dated 5 September 2023 at [20(a)(i) - (vi)]. To support that submission in her costs' application, as well as to answer the Owners Corporation's submissions as regards the applicability of s 60(3)(c) and s 60(3)(e) for its costs' application, the Lot Owner relied upon the evidence in her affidavit of 22 April 2023, which was that from about 2018 onwards, she had requested the Owners Corporation take action to replace the leaking and rotting windows and window frames in Lot 10; that on 30 January 2023, the bathroom window of Lot 10 dislodged and smashed into the ground below; that the Lot Owner immediately brought this incident to the attention of the strata manager; that temporary repairs were effected comprising of thin plastic being taped to the bathroom window frame, but that a more permanent fix was not then forthcoming from the Owners Corporation.
5. The Lot Owner further submitted that the cross application had no tenable basis in fact or law within the meaning of s 60(3)(c) because the Lot Owner had already consented to access to Lot 10: see the Lot Owner's written submissions dated 5 September 2023 at [21] and the correspondence referred to therein.
6. Additionally, the Lot Owner submitted that there are other relevant matters within the meaning of s 60(3)(g) to support "special circumstances" for her costs' application: see [20(b)] of the Lot Owner's written submissions dated 5 September 2023. The other relevant matters include that the substantive orders application was necessary because the Owners Corporation had been on notice of the water ingress issues with the windows in Lot 10 as early as 2018 and the issues were ongoing when the proceedings were brought to the Tribunal on 3 March 2023, and it was also the case that the Lot Owner's action had benefited other lot owners of the scheme, who are now having their common property windows fixed consistent with the Owners Corporation's statutory obligation to properly maintain and keep the common property in a state of good and serviceable repair (SSMA, s 106(1)).

Consideration of the parties' various costs' applications

Generally

1. Neither party pressed any claim against the other party for a monetary amount.
2. Referring to r 38(2)(a) of the NCAT Rules, no orders were made in the proceedings under cl 10(2) of Sch4 of the NCAT Act. No party conducted the proceedings, in my opinion, in such a way that unreasonably disadvantaged the other party.
3. Materially, the tenor of the parties' written submissions as to costs, was that if the Tribunal is to depart from the usual position in s 60(1) of the NCAT Act, it must be satisfied that there are "special circumstances" warranting an order for costs. I agree. I find that r 38 of the NCAT Rules is not enlivened in the proceedings.
4. Having considered the procedural history of the proceedings, and the parties' written submissions as to costs, and the written evidence referred to in the said submissions, I do not find there are "special circumstances" within s 60 of the NCAT Act.
5. I find that there is nothing out of the ordinary in the proceedings.
6. I now turn to consider the parties' specific submissions as to costs in each proceeding, as outlined above.

Interim orders application

1. The Owners Corporation sought an order for its costs of the proceeding constituted by file no SC 23/10509. The issue of the costs of that proceeding was reserved until the finalisation of the substantive orders application: see the Reasons published on 22 March 2023 at [15].
2. However, I am not satisfied that there are "special circumstances", whether within the meaning of s 60(3)(c), s 60(3)(e), or otherwise, warranting a costs' order. While the interim orders application was dismissed, that occurred because for the Reasons given [at 14(a)-(d)], the available evidence could not satisfy the Presiding Senior Member that the grounds required under s 231 of the SSMA for interim orders, were made out. The Lot Owner may have failed to convince the Tribunal of the urgency of the Window Repair at the hearing on 17 March 2023 (the Reasons were published 5 days later), but that does not diminish the fact that the Lot Owner had complained to the Owners Corporation about the state of repair of her bathroom and kitchen windows for a period of 5 years, and that on 30 January 2023, the Lot Owner's bathroom window fell out of the frame and crashed to the ground below: see the affidavit of Danielle Gai Purcell affirmed on 22 April 2023 at [7] - [35]. It cannot be said in those circumstances, that there was no tenable, or even no reasonable, basis, for the Lot Owner bringing her interim orders application in March 2023 upon urgent grounds. Directions for the exchange of evidence were made on 17 March 2023 in the substantive orders application to facilitate the progression of that proceeding to a formal hearing on all matters in dispute as soon as practicable. Furthermore, the Presiding Senior Member observed in his Reasons at [14(e)] that a failure to perform repairs for this strata scheme may have significant consequences, irrespective of litigation being on foot, and that it would not be in the interests of the Owners Corporation or the lot owners of the scheme, for there to be a failure by the Owners Corporation to comply with the mandatory obligation in s 106(1) of the SSMA.
3. For those reasons, I find that the appropriate order in respect of the costs of the interim orders application is that there be no order as to costs, with the intent that each party is to bear their own costs of the proceeding.

Are there "special circumstances" in the Owners Corporation's application for its costs of the substantive orders application and the cross application?

1. Considering the evidence in the Lot Owner's affidavit affirmed on 22 April 2023, and considering the Presiding Senior Member's observations in the Reasons published on 22 March 2023 for the hearing of the interim orders application on 17 March 2023, I am not persuaded that the substantive orders application can be stigmatised as having no tenable basis in fact or law (within the meaning of s 60(3)(c)), or as frivolous, vexatious, or otherwise misconceived or lacking in substance (within the meaning of s 60(3)(e)). Ultimately, by the Consent Orders made on 22 August 2023, the Lot Owner, in fact, achieved an outcome pertinent to a part of what she had sought in the substantive orders application, being the replacement of the kitchen and bathroom windows in Lot 10.
2. Nor do I accept that there is a proper basis within the meaning of s 60(3)(b) of the NCAT Act for finding that the Lot Owner prolonged unreasonably the time taken for the proceedings. This is because I am not persuaded, as the Owners Corporation submitted, that the amendment to the substantive orders application on 24 April 2023 did, in fact, prolong the proceeding, and even if it did prolong the proceeding, whether the Lot Owner's action in lodging the amended application was unreasonable. In my view, the amended application identified the real issues in dispute, without expanding the scope of those disputes. I find that the lodgement of the amended application by the Lot Owner was consistent with the Tribunal's guiding principle (i.e., the just, quick, and cheap resolution of the real issues in the proceedings), as well as providing the parties and their legal representatives, with the opportunity to comply with their obligation to the Tribunal (NCAT Act, s 36(3)), which is to cooperate in giving effect to the Tribunal's guiding principle.
3. The Lot Owner's refusal to accept an offer made by the Owners Corporation on 30 June 2023 may have had the effect of prolonging the course of the proceeding, but I do not find that it was an unreasonable act on the Lot Owner's part, having regard to the form of the Consent Orders which were made on 22 August 2023. In the context of complaints about Window Repair in Lot 10 which dated back to in or about early 2018, and in the further context of the incident on 30 January 2023, when the bathroom window of Lot 10 dislodged and smashed into the ground below, it was not unreasonable, in my determination, for the Lot Owner six (6) months following the incident on 30 January 2023, to reject a four (4) month deadline for window works to be completed in her Lot 10.
4. As to the cross application, I am not satisfied that there are any "special circumstances" to warrant a costs' order in the Owners Corporation's favour. I accept that the proceeding was brought because there was some evidence of difficulties (and consequent delay) for the Owners Corporation and its contractors, in obtaining access to Lot 10, during late April and early May of 2023: see the witness statement of Whitney Wang dated 9 May 2023, which was attached to the cross application lodged by the Owners Corporation on 9 May 2023; see also attachment 8 (page 87) to the witness statement of Whitney Wang dated 26 May 2023. However, I do not find that the evidence in Mr Wang's statements is "ample evidence … of (the Lot Owner's) unwillingness to provide access to her lot" (emphasis added), as the Owners Corporation submitted: see the Owners Corporation's written submissions dated 5 September 2023 at [61] and [65]; and which is apt to establish that the Lot Owner had no tenable defence to the proceeding. In this regard, I accept the Lot Owner's evidence (see the affidavit of Danielle Gai Purcell affirmed 30 June 2023) that the Owners Corporation's contractors, Mirage Constructions and Windows 1, had arranged appointments with the Lot Owner, 4 to 5 days prior to the cross application being filed, and that those appointments went ahead as scheduled on 12 May 2023 (in fact, 3 days after the cross application had been brought).
5. For those reasons, I do not find that there are any "special circumstances" in the Owners Corporation's application for its costs of the substantive orders application or the cross application.

Are there "special circumstances" in the Lot Owner's application for its costs in the substantive orders application and in the cross application?

1. In the substantive orders application, the Lot Owner submitted that she is the successful party in the sense of having obtained the Owners Corporation's (enforceable) consent to meet the Owners Corporation's statutory duty under s 106(1) of the SSMA, and further, that this case is a rare instance (as referred to by McHugh J in Lai Qin) where the discretion to award costs in the absence of a hearing on the merits, is engaged.
2. I do not accept the submission that the Owners Corporation's defence of the substantive orders application, had no tenable basis in fact or law, within s 60(3)(c) of the NCAT Act.
3. In my determination, both parties compromised their positions when the Consent Orders were made on 22 August 2023. The Tribunal's Orders of 22 August 2023 are not in and to the effect of the orders sought by the Lot Owner in her amended application lodged on 24 April 2023. The agreed works within the scope in Order 1 were to be done by a contractor who had been engaged by the Owners Corporation during the proceedings, and not by the Lot Owner's preferred contractor. The Tribunal made no order under s 237 of the SSMA, whether it was the relief sought by the Lot Owner in her original application filed on 3 March 2023, or even the more limited relief (as to the function of a compulsorily appointed manager, and as to the period of the order), that was put by the Lot Owner in her amended application filed on 24 April 2023. For its part, the Owners Corporation always maintained a position in the proceedings up to the making of the Consent Orders on 22 August 2023, that it had complied with its strict duty (SSMA, s 106(1)) to repair and maintain the common property of the strata scheme; that it had carried out works on the common property during 2022 (see the witness statement of Evelyn Maack dated 16 March 2023 at [3] - [5], as attached to the Owners Corporation's submissions in the interim orders application); and that by 1 August 2023, it had completed the installation of the bathroom and kitchen works referred to in the quotation of Windows 1 dated 22 May 2023, and that it had engaged a painting contractor to complete the internal and external repainting of the new common property windows in the Lot 10 kitchen and bathroom (see the witness statement of Whitney Wang dated 26 May 2023).
4. In all the circumstances, I am not satisfied that this is a case where either party acted unreasonably in prosecuting or defending the various actions; or that one party was almost certain to have won their case had there been a hearing of the proceedings; or that one party has effectively surrendered to the other party.
5. Nor do I agree with the Lot Owner's submission that the Owners Corporation had no tenable basis in fact or law (NCAT Act, s 60(3)(c)) to bring the cross application. As indicated, I accept Mr Wang's evidence as regards there being some difficulties (and consequent delay) for the Owners Corporation and its contractors, in obtaining access to Lot 10, during late April and early May of 2023, and that this circumstance was the impetus for the Owners Corporation to bring the cross application. Mr Wang, the strata managing agent, was not privy to the correspondence between the Lot Owner and the contractors arranging the 12 May 2023 appointments. In that context, I cannot be satisfied that the action of the Owners Corporation in instituting the cross application on 9 May 2023, was unnecessary and therefore, unwarranted.
6. Furthermore, in my opinion, it was not untenable, or even, unreasonable, for the Owners Corporation's to keep its cross application on foot until the making of the Consent Orders on 22 August 2023. This is so even allowing for the matters put by the Lot Owner's solicitors in their correspondence dated 16 May 2023 and 1 June 2023, respectively, to the Owners Corporation's solicitors, which were, in essence, demands for the Owners Corporation to withdraw the cross application; but without the Lot Owner offering to consent to orders in the substantive orders application, that there be access to Lot 10 in favour of the Owners Corporation. Again, in the context of Mr Wang's evidence as to there being earlier difficulties (and consequent delay), access to Lot 10 was always going to be necessary to give effect to any orders which required the Owners Corporation to investigate and address issues of common property repair in and around the Lot Owner's lot.
7. For those reasons, I do not find that there are any "special circumstances" in the Lot Owner's application for her costs of the substantive orders application or the cross application.

Exercising the Tribunal's Costs' Discretion

1. Furthermore, even if "special circumstances" within any of paragraphs (a) - (g) (inclusive) of subsection 60(3) of the NCAT Act had been established on the available evidence (which, for the reasons given, they are not), having regard to all the considerations referred to above, I would have declined to exercise the discretion to award costs to either party in any event.
2. Similarly, I am not satisfied that this is an instance where the Tribunal should make, as the Lot Owner submitted, an order under s 90 of the SSMA.
3. Because there was no contested hearing on the merits, the allegations, and the counter-allegations, of the parties in the proceedings, but particularly as to whether (or not) there had been compliance by the Owners Corporation with s 106(1) of the SSMA, were left untested. In any case, as I have already stated, I do not find that any of the considerations referred to in Lai Qin to warrant a costs' order (where there has been no contested hearing on the merits), operate in the circumstances. For the reasons referred to, I am not satisfied that the parties acted unreasonably in commencing, or in defending, the proceedings. To the extent it is acceptable to speculate as to what orders the Tribunal would have made if the proceedings had not been resolved by consent on 22 August 2023, the most likely outcome is that I would have made orders of a similar kind to those which were ultimately consented to by the parties.

Conclusion

1. Given those findings, the appropriate orders of the Tribunal are:
2. The applications for costs by the parties in the proceedings constituted by file nos. SC 23/10509, SC 23/10510, and SC 23/21771, are dismissed.
3. No order as to costs, with the intent that each party is to bear their own costs of the proceedings.

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: 09 August 2024