Roberts v The Owners - Strata Plan No 4393 - [2023] NSWCATAP 243 - NSWCATAP 2023 case summary

NCAT Appeal Panel|2023-08-29

Introduction

In this matter Ms Roberts ("the appellant") appealed from a decision of the Consumer and Commercial Division of the Tribunal of 15 December 2022 solely in relation to an order for costs on an indemnity basis made against her.
For reasons published on 8 May 2023, we decided to allow an extension of time to appeal and dismissed the appeal in Roberts v The Owners - Strata Plan No 4393 [2023] NSWCATAP 119 ("our Decision").
The orders set a timetable for either party to make an application and provide submissions on costs.
The Owners - Strata Plan No 4393 ("the respondent)" lodged written submissions for costs on 17 May 2023 pursuant to the Civil and Administrative Tribunal Act 2013 (NSW), s 60 ("NCAT Act") and the Civil and Administrative Tribunal Rules 2014 (NSW), r 38 ("NCAT Rules"). The respondent seeks an order that the appellant pay its costs of the appeal and submits the costs decision could be made on the papers.
The Tribunal did not receive submissions from the appellant despite orders for same.
As we are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal, we will make an order pursuant to s 50(1)(c) of the NCAT Act dispensing with a hearing.

Legislation

The general provisions for costs in the Tribunal is s 60 of the NCAT Act which 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.
Section 60 is subject to the procedural rules (as defined in s 4(1) NCAT Act) which include the NCAT Rules. Rules 38 and 38A of the NCAT Rules provide: 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. 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of - (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
Rule 38A applies to the present appeal as it was lodged after 1 January 2016; the proceedings at first instance were brought in the Consumer and Commercial Division; and the first instance costs provisions included r 38 of the NCAT Rules which modified the operation of r 60.
Consequently, r 38A(2) requires us to also apply the first instance costs provisions which is s 60 as modified by r 38(2). This means we can award costs in the absence of special circumstances warranting such an award if the requirements in r 38(2)(a) or (b) are satisfied. As the Tribunal at first instance did not make an order under cl 10(2) of Sch 4 to the NCAT Act, r 38(2)(a) does not apply.
In summary we can award costs: 1. under r 38(2)(b) even in the absence of special circumstances if the amount claimed or in dispute in the proceedings is more than $30,000; or 2. under s 60(2) where the amount claimed or in dispute is $30,000 or more, but only if we are satisfied that there are special circumstances warranting the award.

Can costs be awarded under r 38 of the NCAT Rules?

The respondent submitted that we should make an order under r 38(2)(b) on the basis that the matter in the dispute in the Tribunal below was greater than $30,000. As noted in our Decision at [32], we inferred the amounts of money claimed in the substantive dispute was greater than $30,000, however that claim was settled so never determined by the Tribunal.
In Allen v TricCare (Hastings) Ltd [2017] NSWCATAP 25 ("Allen"), the Appeal Panel considered the application of r 38 as follows: "[43] In the case of an internal appeal, the 'amount claimed … in the proceedings' can be determined by considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any "amount claimed" for the purposes of r 38(2)(b)."
Further, the Appeal Panel at [57] stated as follows: "Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): (1) The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance; (2) The phrase 'in dispute' is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; (3) Whether 'the amount … in dispute' in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000; (4) The fact that the value of the property the subject of any appeal exceeds $30,000 does not, of itself, mean that 'the amount … in dispute' in that appeal is greater than $30,000."
Following Allen in the present case, the question about the application of rr 38 and 38A is the amount claimed or in dispute on the appeal, not what was claimed or in dispute at first instance and not, as the respondent submits, the amount in issue in the proceedings below.
Whatever the amount claimed or in dispute in the first instance proceedings, the appeal was only ever concerned with the order for costs. There is no evidence before us upon which we could ascertain the amount claimed for costs or the amount of that dispute within the meaning of r 38(2)(b). Consequently, we cannot be satisfied that r 38(2)(b) applies.

Can costs be awarded under s 60 of the NCAT Act?

As noted above, while the ordinary position in matters before the Tribunal is that parties bear their own costs, having established that r 38 does not apply, we can make an order for costs if there are "special circumstances" which warrant the award of costs.
The Appeal Panel in Grasso v Owners of Strata Plan No 52399 [2022] NSWCATAP 91 at [12] set out some of the relevant principles concerning an award of costs in special circumstances: "1. An application for costs can only succeed before the Tribunal if it can be shown that 'the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional.': Santow JA in Cripps v G & M Mawson [2006] NSWCA 84 at [60] in relation to s 88 (1) of the Administrative Decisions Tribunal Act 1997, which, by analogy, is a useful statement applicable in this Tribunal; 2. 'An assessment whether circumstances are "special" involves the exercise of a value judgement carried out by way of comparison between what is not "special", and what is special.': See Alexander James Pty Ltd v Pozetu Pty Ltd (No.2) [2016] NSWCATAP 75 at [14]; 3. the nature and complexity of the appeal proceedings is the relevant consideration; not the nature and complexity of the proceedings at first instance: see Sahade v Owners SP No 62022 [2015] NSWATAP 225 at [38]; 4. the power to award costs is a discretionary power vested in the decision maker: see Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 62 at 65; [1997] HCA 6; 5. the exercise the discretion requires a tribunal 'to weigh whether those circumstances are sufficient to amount to "special circumstances" that justify departing from the general rule that each party bear its own costs': see The Owners - Strata Plan No 63731 v B&G Trading Pty Ltd (No2) [2020] NSWCATAP 273 at [13]; 6. an order for costs is intended to compensate the successful party: it is not intended to be punitive in nature: Oshlak v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72; Hamod v State of New South Wales (2002) 188 ALR 659; [2002] FCA 424; [2002] FCAFC 97; and 7. the discretion to award costs is to be exercised judicially: Nguyen v Perpetual Trustee Co Ltd [2015] NSWCATAP 264 at [94].
The respondent relied upon two considerations which it contended gave rise to the special circumstances warranting an award of costs as follows: 1. 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 (s 60(3)(c)); and 2. whether the proceedings were misconceived or lacking in substance: s 60(3)(e).
In relation to s 60(3)(c) the Appeal Panel in Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135 ("Zucker") equated the words of s 60(3)(c) with the common law test applied for summary dismissal of proceedings. The Appeal Panel said at [44]: "… 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."
Without endorsing the Appeal Panel's conclusion in Zucker that the words of s 60(3)(c) "relate" to the common law test, we nevertheless accept that "manifestly groundless" and "clearly untenable" are equivalent expressions to the statutory test.
In relation to s 60(3)(e) the Appeal Panel in Feng v Ozwood (Australia) Pty Ltd [2020] NSWCATAP 42 said at [12]: "The term 'lacking in substance' is not defined by the NCAT Act. Commenting on the meaning of that term in an equivalent but not identical statutory provision to s 60(3)(e), in The Owners Corporation of Strata Plan 4521 v Zouk & Anor [2007] NSWCA 23, the Court of Appeal concluded at [45], that the term 'lacking in substance' should be construed to mean 'not reasonably arguable'. We adopt that meaning."
Evaluations of the matters set out in s 60(3)(c) and (e) in a case such as the present are necessarily impressionistic and incapable of fine analysis or detailed explanation.

Relative strength of claims including whether a claim was not tenable in fact or law

The respondent submitted that the fact that the appellant failed to successfully substantiate the grounds upon which the appeal was brought, is a factor we should have regard to. The respondent contended that on a fair reading of our Decision, it was entirely successful in the appeal.
We note the appellant's appeal was limited solely to an appeal from Order 2 of the Tribunal below - the order that she pay the respondent's costs of the proceedings and that those costs were to be assessed on an indemnity basis. The substantive dispute before the Tribunal at first instance was resolved by settlement between the parties such that no decision on the substantive merits of the dispute was made. The grounds upon which the appeal was brought were: 1. The decision below did not address or grapple with key parts of the appellant's costs argument. 2. The decision below was unreasonable, as to the decision to award costs generally and further on the indemnity basis, and it was a decision not able to be reasonably reached on the facts. 3. The decision below was based on a finding that the appellant had engaged in wilful misconduct which affected the whole of the proceedings when there was no basis for that finding, whether as to fact of her engaging in wilful misconduct or the effect of such conduct on the whole of the proceedings. 4. the decision below was wrong in law in its application of r 38 of the Rules.
As an appeal from an "ancillary decision", the appellant was required to demonstrate that these grounds constituted a question of law under s 80(2)(b) of the NCAT Act and seek leave on any other ground that constituted a substantial miscarriage of justice within the meaning of Sch 4 cl 4 of the NCAT Act (as set out at [43] of our Decision).
The respondent says that in the appeal, the appellant failed to identify with precision in the grounds of appeal, or written or oral submissions, any of the grounds of error within House v the King (1936) 55 CLR 499 but had relied on alleged errors which were simply not applicable on an appeal from a costs decision. On this basis, so it was contended by the respondent, the appellant failed to meet the minimum standard of being able to identify errors of law or errors that require leave to appeal: the appellant merely gave a narrative as to why she disagreed with the decision below.
While we acknowledge that the appellant was not successful on her appeal, it cannot be said that her appeal was completely untenable.
The appellant's arguments regarding the first ground of appeal were based on the first of the House v The King errors (as set out in our Decision at [54]) - an alleged error of principle or application of the law. While we did not accept the arguments made, including for the reason that the appellant's submission failed to grapple with the factual findings made by the Tribunal as to why special circumstances existed, it was not entirely lacking strength or untenable particularly as indemnity costs are infrequently ordered in the Tribunal and turn on their particular facts.
Grounds 2 and 3 were partly based on an inaccurate reading of the transcript, misconstruction of the reasons of the Tribunal and in substance an attack on factual findings. They were in our view not entirely unarguable (subject to what we say at [37]-[39] below) as to constitute a basis for finding special circumstances.
In respect of Ground 4, the appellant formulated this ground on the basis that the Tribunal misapplied r 38. The appeal ground was not untenable, just not formulated with precision. The subject of an appeal is the grounds of appeal and we were limited on the appeal by those grounds: Ferella v Chief Commissioner of State Revenue (2014) 96 ATR 875; [2014] NSWCA 378 at [22]. However, we noted that the Tribunal said nothing about the exercise of the costs discretion that arose if r 38 applied. As we said at [36] of our Decision, that "was an error of law in that the Tribunal failed to exercise its jurisdiction (because it did not decide the point) or it failed to give reasons. Either way, the Tribunal fell into error." However, given the way the ground had been formulated, we could not determine the ground as the decision did not explain how r 38 had in fact been applied.
Overall we are not satisfied that the claims advanced by the appellant in the costs appeal, even though extremely weak, had no tenable basis in fact or law or that they lacked sufficient strength as to warrant a finding that special circumstances exist for the grant of a costs order against the appellant.

Misconceived or lacking in substance

As noted in our Decision at [107], Ground 2 of the appeal, which included a challenge to the part of the order that costs be paid on an indemnity basis, was not addressed in written or oral submissions and we treated it as abandoned on the appeal. We also said the ground was wrong.
The respondent contended that the failure to address a ground of appeal is a serious failing and one which is out of the ordinary. We agree. However, it was only part of Ground 2 that we treated as abandoned and, not infrequently, parts of arguments are not pressed at hearing.
The respondent did not direct much attention in its reply or submissions to this ground given the absence of argument by the appellant. While the failure by the appellant to address this part of Ground 2 is out of the ordinary, on balance, in the exercise of our discretion, we are not satisfied that it gives rise to special circumstances within s 60 NCAT Act, which would justify costs being ordered against the appellant.

Conclusion

For the reasons given above, we are not satisfied that r 38 applies, nor that there are special circumstances warranting an award for costs.
In the result, we dismiss the respondent's application for costs.

Orders

We make the following orders: 1. A hearing on costs is dispensed with. 2. The parties are to pay their own 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: 29 August 2023

Roberts v The Owners - Strata Plan No 4393

At a glance

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Decision date

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Judgment (10 paragraphs)

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Legislation Cited (2)

Cases Cited (21)

Cited By (1)