Smith v The Owners - Strata Plan 51017 - [2020] NSWCATAP 161 - NSWCATAP 2020 case summary

NCAT Appeal Panel|2020-07-29

Reasons for decision

This is an application for costs, made by the respondent, the Owners - Strata Plan 51017, in regard to the appeal and an application for a stay lodged by the appellant, Wayne Smith. The appellant is an owner of a lot in the Strata Plan 51017 and has not been legally represented in his appeal and application for a stay.
The appellant lodged his Notice of Appeal and application for a stay on 21 April 2020. Seven days later and prior to the first call-over, on 28 April 2020, the appellant advised the Tribunal and the respondent that he was withdrawing his appeal and application for a stay.
On 29 April 2020, the Appeal Panel made an order dismissing the appellant's appeal under s 55(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). The Appeal Panel also made an order that any application for the costs of the appeal was to be lodged and served within 7 days.
On 6 May 2020, the respondent filed and served its application for costs and requested the matter be heard on the papers. In its application for costs, the respondent said it was only seeking an amount of $3,800.00, being 60% of the actual costs incurred.
On the following day (7 May 2020), the Appeal Panel made an order that, within 7 days, the respondent was to file and serve a 'bill in itemised form representing the costs it says it has incurred in defence of the appeal and in response to the application for a stay'. An order was also made for the appellant to file and serve his submissions in response - in particular whether costs should be allowed, the amount that should reasonably be allowed in the event an award of costs were to be made by the Appeal Panel and his views as to whether the Appeal Panel should proceed to dispense with a hearing on the respondent's cost application.
On 14 May 2020, the respondent filed and served two tax invoices it received from its legal representative in this appeal and stay application. The first invoice, dated 30 April 2020, was for the sum of $5,401.00. The second invoice, dated 12 May 2020, was for the sum of $1,936.00.

Costs

The parties accept that the general rule, set out in s 60(1) of the NCAT Act, applies to an award of costs in this appeal: Dyldam Developments Pty Ltd v The Owners - Strata Plan No 85305 (No 2) [2019] NSWCATAP 272, at [12] and [13]. That is, unless the respondent establishes that there are special circumstances warranting an award of costs, each party is to pay its own costs of the appeal and the application for a stay.
In deciding whether there are special circumstances, the Tribunal may have regard to the factors in s 60(3), which are as follows: (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.
Section 36 of the NCAT Act 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, (b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
If costs are to be awarded, s 60(4) and (5) provides as follows: (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.
The respondent contends that there are special circumstances warranting an award of costs as the appellant's appeal and application for a stay had no tenable basis in fact or law and was also misconceived or lacking in substance. The appellant does not accept that there are special circumstances warranting an award of costs as he immediately withdrew his appeal and application for a stay once he was informed that he had brought his challenge in the wrong jurisdiction. However, the appellant went on to say that if the Appeal Panel were to find there were special circumstances an award of no more than $920 should be made.

Background

In November 2017, the appellant commenced proceedings against the respondent in the Consumer Commercial Division of the Tribunal. Those proceedings were commenced, under s 149 of the Strata Schemes Management Act 2015 (NSW), and sought an order with respect to a common property rights by-law.
On 19 March 2018, at the hearing of his application before the Tribunal, in the Consumer and Commercial Division, the applicant withdrew his application. On the same day the respondent made an application for its costs in regard to the application. The Tribunal heard and determined that application on the same day and made an order, under s 60 of the NCAT Act, in the following terms: I order the applicant to pay the respondents costs of and incidental to the application he had made on 28 November 2017, as agreed or assessed.
In his Notice of Appeal, the appellant identified this as the decision the subject of his appeal. However, in his Notice of Appeal, under the heading 'GROUNDS OF APPEAL', the appellant stated that he was seeking to appeal the cost assessment rather than the decision of the Tribunal. Attached to the appellant's Notice of Appeal were written submissions setting out the appellant's arguments as to why the costs assessment was not reasonable.
On 22 April 2020, the day after the appellant lodged his appeal, the Appeal Panel made an order, in chambers, listing the appeal for call over and a hearing of his stay application on 30 April 2020.
On 28 April 2020, the respondent filed and served its Reply to Appeal and written submissions in regard to the application for a stay. In its Reply, the respondent sought dismissal of the appeal and the stay application and an order for its costs in responding to the proceedings. The respondent noted that the appellant in effect was seeking a review of the determination made by the cost assessor in regard to the cost order of the Tribunal, made on 19 March 2018. The respondent conceded that, if time were extended, the Appeal Panel had jurisdiction to 'review' the original cost order made by the Tribunal. However, the Tribunal had no jurisdiction to review the determination made by the cost assessor.
In its written submissions attached to its Reply to Appeal, the respondent noted the following: 1. following the order made by the Tribunal on 19 March 2018, the respondent's costs was referred for assessment; 2. on 11 March 2020 a Certificate of Determination of Costs was issued and an amount of $9,090.80 was awarded to the respondent in regard to the 19 March 2018 order of the Tribunal, with an additional $1,515.26 for the costs incurred by the costs assessor. Hence, the total amount awarded to the respondent was $10,606.06; and 3. on 7 April 2020, the appellant transferred the total amount awarded to the strata managing agent of the respondent.

Submissions of the parties in relation to costs

As we have already noted, the respondent contends that there are special circumstances in this case, as the appellant's appeal and application for a stay had no tenable basis in law and it was misconceived and lacking in substance for the following reasons: 1. the appeal was lodged more than two years out of time and required an order that time be extended under s 41 of the NCAT Act: NCAT Rules, r 25(4)(c) which provides that an appeal from the 19 March 2018 decision of the Tribunal had to be lodged within 28 days of the appellant being notified of the decision; 2. the appellant's Notice of Appeal did not identify a question of law, or address the question of leave to appeal on any other ground: NCAT Act s 80(2); 3. the Tribunal (including the Appeal Panel) has no jurisdiction to review the 11 March 2020 costs assessment determination made under the Legal Profession Uniform Law Application Act 2014 (NSW). The appellant's right of appeal from that determination was to the District Court: Legal Profession Uniform Law Application Act, s 89 and Uniform Civil Procedure Rules, rule 50.3(1)(a); and 4. the amount in dispute (i.e. the costs assessment determination) has already been paid.
In his submissions the appellant said he: 1. lodged his appeal because he felt that the cost decision in favour of the respondent was unfair and unreasonable; 2. he was not legally represented and did not understand that the Tribunal was not able to deal with the 'challenge' (i.e. the costs assessment determination); 3. he received notice of hearing from the Tribunal on 23 April 2020. That notice had a hearing date of 30 April 2020; 4. on 27 April 2020 he received a letter from the respondent's solicitor telling him to withdraw his 'challenge' because the Tribunal was the wrong jurisdiction to hear his claim - as he promptly withdrew his appeal and application for a stay on the following day and was surprised to receive an email from the solicitors of the respondent, on 6 May 2020, that they would be filing written submissions on costs later that day as the respondent had 'an obligation to its insurer' to act prudently in these matters; and 5. opposed an award of costs on the following grounds: 1. as far as he was aware, no order had been made for the respondent to be legally represented and without leave being granted no cost order could be made- it was noted that the respondent's itemised invoices made reference to correspondence to the Tribunal seeking leave for the respondent to be legally represented - those references having been entered in the invoices for 24 and 27 April 2020; and 2. having formed the view that the Tribunal did not have jurisdiction 'there was no further analysis of my claim' required. Hence, the the preparation of affidavits and further submissions by the respondent were unnecessary even if he had not immediately withdrawn his appeal and application for a stay as the respondent had in any event foreshadowed a dismissal application when the matter was listed for a call over on 30 April 2020.
As we have already noted, in the event we were to find that the respondent had established the existence of special circumstances that warranted an award of costs, the appellant submitted that an award should not exceed $920.00 which is the first amount itemised on the tax invoice of 30 April 2020. That amount was for work done on Friday 24 April 2020, which included: 1. reviewing the appellant's Notice of Appeal and application for a stay, 2. teleconference with the strata manger, emailing the client and seeking instruction; and 3. drafting a letter to the appellant requesting that he withdraw his appeal and application for a stay.
On the following Monday, the appellant received the letter from the solicitor of the respondent and immediately withdrew his application. It was the appellant's contention that there was no need for the respondent to undertake any further work in the intervening period from having drafted the letter requesting that he withdraw his appeal etc.

Consideration

It is accepted that special circumstances are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].
The fact that a party is unsuccessful in his or her claim does not of itself give rise to special circumstances: Jubian v Clark (No 2): Clark v Jubian (No2) [2016] NSWCATAP 153, at [29]
If satisfied that there are special circumstances, the Tribunal must further be satisfied that they are circumstances 'warranting an award of costs': Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103. The exercise of the discretion requires the Tribunal 'to weigh whether those circumstances are sufficient to amount to "special" circumstances that justify departing from the general rule that each party bear their own costs': BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87at [9].
There is no dispute that the Tribunal has no jurisdiction to review a determination of a costs assessor and on this basis the appellant's appeal and application for a stay had no tenable basis in law and was misconceived and lacking in substance. However, the question is whether, in the circumstances of this case, this amounted to 'special circumstances' that warrant an award of costs in the respondent's favour. In our view they do not for the following reasons: 1. the appellant was unrepresented and clearly misunderstood that the Tribunal had no further role in regard to the determination of a costs assessor in regard to a costs order of the Tribunal, made under s 60 of the NCAT Act; 2. the appellant being dissatisfied with the determination of the costs assessor, and believing the Tribunal was the appropriate forum to have the determination reviewed, did not unnecessarily delay in bringing his appeal; 3. prior to lodging his appeal, the appellant paid the respondent the amount determined by the costs assessor he was required to pay; and 4. the appellant acted immediately on being informed that his appeal and application for a stay were misconceived in that the Tribunal had no jurisdiction to review the determination of the cost assessor.
Had the applicant not acted immediately in withdrawing his appeal and application for a stay, we might have come to a different conclusion.
In light of our finding it is unnecessary to deal with the appellant's argument that the respondent had not been granted leave to be legally represented: NCAT Act, s 45. However, we note that the appellant and the respondent were both legally represented before the Tribunal in the Consumer and Commercial Division.

Decision and orders

For the reasons set out above, we are not satisfied that there are special circumstances warranting an award of costs in favour of the respondent. Hence, the respondent's application for costs is dismissed and the general rule in s 60(1) of the NCAT Act applies and each party is to pay their own costs of the appeal and the appellant's application for a stay.
The Appeal Panel orders: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 a hearing on the question of costs of the appeal is dispensed with. 2. The respondent's application for costs is dismissed.

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 July 2020

Smith v The Owners - Strata Plan 51017

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Judgment (7 paragraphs)

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Cases Cited (8)