Spicer v Owners Corporation SP 64558

NCAT Appeal Panel|2015-08-17

eter Spicer (appellant) Ron Osborne (appellant) Michael Pain (appellant) Phillip Towzell (appellant) David Calver (appellant) Richard Hill (appellant) Bill Shields (appellant) David Mathlin (appellant) Peter Ledgerwood (appellant)

Owners Corporation Strata Plan 64558 (respondent) Representation: Counsel: Mr D Knoll (appellants) Mr V Kerr (respondent)

Solicitors: David Le Page Lawyers (appellants) Makinson d'Apice (respondent) File Number(s): AP 15/31524 Publication restriction: Unrestricted Decision under appeal Court or tribunal: Civil and Administrative Tribunal of New South Wales Jurisdiction: Consumer and Commercial Citation: Not applicable Date of Decision: 21 April 2015 Before: G Meadows, Senior Member File Number(s): SCS 13/50814

reasons for decision

This is an appeal against a decision and orders made in Consumer and Commercial Division proceedings SCS 13/50814. In those proceedings the applicant was the Owners Corporation Strata Plan 64558 who is the respondent to this appeal. The Owners Corporation sought orders under s 183 of the Strata Schemes Management Act 1996 (NSW) (SSMA) for the reallocation of unit entitlements.
The appellants in the present appeal, set out in Schedule A to the notice of appeal, were respondents to the application before the Tribunal. They appeared through David Le Page Lawyers as "contradictor" in opposition to the application.
The original application had been fixed for hearing on 29 August 2014. However, on 26 August 2014 the Owners Corporation filed a request to withdraw the application and, on that day, the following orders were made: The application is dismissed in accordance with s 55(1)(a) of the Civil and Administrative Tribunal Act 2013 as the applicant has withdrawn the application. The hearing of the 29/8/14 is vacated. Parties to attend on 28/8/14 for directions in relation to costs.
After the Tribunal made these orders, the appellants applied to the Tribunal to vary the orders and sought costs of the application. The appellants' application was heard by the Tribunal on 15 October 2014. This hearing involved two issues.
The first issue was whether or not the form of order which was made under s 55(1)(a) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) was an appropriate form of order by reason of the fact the proceedings had been commenced prior to the establishment of NCAT. The appellants said the proceedings were in fact governed by the Consumer, Trader and Tenancy Tribunal Act, 2001 (NSW) (CTTT Act) and the SSMA as it was prior to the amendments made by the Civil and Administrative Legislation (Repeal and Amendment) Act 2013 and orders should be made under that legislation.
The second issue was whether or not the Tribunal had power to make a costs order pursuant to s 192 of the SSMA and, if so, whether such an order should be made. Section 192 was the relevant section under which the Consumer, Trader and Tenancy Tribunal (CTTT) might award costs in connection with proceedings under the SSMA.
On 21 April 2015 the Tribunal published its reasons (Decision) and made the following orders: 1 The application is dismissed in accordance with s 185(3) of the Strata Schemes Management Act 1996 as the applicant has withdrawn the application. 2 Each party it to pay their own costs.
As is evident above, the Tribunal amended the original order for withdrawal made on 26 August 2015 so as to provide that the application was withdrawn under s 185(3) of the SSMA, a provision which applied both before and after the establishment of NCAT. However the Tribunal did not make any order for costs in favour of the appellants for the following reasons: 1. the original ground for dismissal could not be amended under s182 of the SSMA to include a ground that the proceedings were misconceived; 2. the proceedings were not misconceived and should not be dismissed on this basis; 3. even if the proceedings were misconceived, as a matter of discretion no order for costs should be made in favour of the appellants.
The Decision and the orders made on 21 April 2015 are the subject of this appeal.

Grounds of appeal and Reply

The appellants advanced twelve grounds of appeal, three for which leave was required and nine of which were said to raise questions of law. It is convenient to reproduce those grounds. The grounds for leave to appeal (to the extent that leave is found necessary) are as follows: 1. The Tribunal failed to find that the valuation certificate purportedly lodged under subsection 183(4) of the Strata Schemes Management Act 1996 was one upon which the Tribunal could not have relied to reallocate unit entitlements in a strata plan. 2. The Tribunal erred in deciding that a valuation certificate which did not comply with the rule in Spencer v Commonwealth (1907) 5 CLR 418 was one upon which the Tribunal could rely to reallocate unit entitlements in a strata plan, when the only evidence before it was of a valuation certificate which did not comply with that rule. 3. The Tribunal failed to find that, on the evidence, the application was misconceived. The grounds of appeal as to questions of law are as follows: 1. The Tribunal erred in deciding that s 190 of the Strata Schemes Management Act 1996 did not permit an order to be corrected to include as a ground for making the order that the Application was misconceived. 2, The Tribunal failed to properly construe the meaning of the term "misconceived" in connection with s 183 of the Strata Schemes Management Act 1996. The application before the Tribunal was misconceived because there was no circumstance in which the Tribunal could have made an order under s 183 in respect of the withdrawn application (before it was withdrawn). 3. The Tribunal erred in deciding that s 183 of the Strata Schemes Management Act 1996 does not require that a certificate specifying valuation at the relevant time of registration must be one upon which the Tribunal could have relied to reallocate unit entitlements in a strata plan. 4. The Tribunal erred in deciding that a valuation certificate which did not comply with the rule in Spencer v Commonwealth (1901) 5 CLR 418 was one upon which the Tribunal could rely to reallocate unit entitlements in a strata plan, when there was no evidence of such a certificate before the Tribunal. 5. The Tribunal erred in deciding that an Applicant is only to be ordered to pay costs when that applicant realises that its application is misconceived, when the test for whether an application is misconceived is an objective test. 6. The Tribunal erred in placing the onus of appreciating legal misconception on the Appellant's legal advisors. 7. The Tribunal should have decided that the withdrawn application (even before it was withdrawn) was misconceived. 8. The Tribunal should have made an order that none of the costs incurred by the Appellants in relation to Proceedings: JCS 13/50814 and this appeal, and the preparation of reports by Mr Keen are to be: a. the subject of any levy made against lots 65, 66, 68, 69, 70, 71, 72, 73 and 74; or b. paid out of the administrative fund, sinking fund or other existing assets of the Respondent Owners Corporation.
The appellants seek orders that the appeal be allowed, that the Owners Corporation be ordered to pay the appellants' costs of the proceedings before the Tribunal (and in relation to the appeal) as agreed or assessed. The appellants also seek an order pursuant to s 229 of the SSMA that none of the costs required to be paid by the Owners Corporation be paid from any levy made against the appellants or out of the administrative fund, sinking fund or other existing assets of the Owners Corporation.
The Owners Corporation, referred to in these reasons as the respondent, filed a Reply to Appeal that was in the following terms: The respondent replies to the grounds identified in the Notice of Appeal set out in Schedule C to the Notice of Appeal as follows (using the appellants' numbering): The appellants should not be granted leave to appeal because: 1. There was no basis upon which the Tribunal could have found in a hearing solely on costs in relation to the Application which had been withdrawn that the valuation certificate lodged with the Application was not one on which the Tribunal could have relied to reallocate unit entitlements in a strata plan. 2. The Tribunal did not err in deciding that it could rely upon the valuation certificate and did not in fact make that determination. 3. The hearing being one limited solely as to costs, the Tribunal did not and could not as a matter of law try the matter the subject of the withdrawn application, which the Tribunal would have needed to do to find that the Application was misconceived. As to the ground of appeal: 1. The Tribunal did not err in finding that s 190 of the Strata Schemes Management Act 1996 did not permit an order to be corrected to include as a ground for making the order that the Application was misconceived. Such a finding could only be made if the Application itself had been the subejct of a hearing, which could not have occurred because the Application had been withdrawn. 2. The Tribunal did not make any determination under s 183 of Strata Schemes Management Act 1996 and, accordingly, did not construe or fail to consture the meaning of "misconceived" in that section. Indeed, the word "misconceived" does not appear in s 183 at all. 3. The assertion that the Tribunal erred in deciding that in s 183 of the Strata Schemes Management Act 1996 the certificate specifying the valuation at the relevant time of registration must be one upon which the Tribunal could have relied to reallocate unit entitlements is misconceived and wrong, because the issue was irrelevant in the context of a costs hearing in circumstances where the Application had been withdrawn. 4. The assertion that the Tribunal erred in deciding that a valuation certificate which did not comply with the rule in Spencer v Commonwealth (1907) 5 CLR 418 was one upon which the Tribunal could rely to reallocate unit entitlements when there was no evidence of such a certificate before the Tribunal is misconceived and wrong. In any event, the issue is irrelevant in the context of a costs hearing in circumstances where the Application had been withdrawn. 5. The Tribunal did not err in deciding that an Applicant is only to be ordered to pay costs when the Application is misconceived because that is the plain and ordinary meaning of the section the subject of costs hearing, namely repealed s 192 of the Strata Schemes Management Act 1996. 6. The assertion that the Tribunal placed the onus of appreciating legal misconception on the Appellants' legal advisors is wrong and misconceived. 7. The assertion that the Tribunal should have decided that the withdrawn Application was misconceived is itself wrong and misconceived. Section 28(5)(h) of the repealed Consumer, Trader and Tenancy Tribunal Act is mandatory that the Tribunal must, if requested by the applicant, allow the applicant to withdraw the application. Once the Application was withdrawn, there is no basis upon which the Tribunal can decide that the Application was misconceived. 8. The Tribunal having made the only decision that was open it, namely, that each party pay their own costs, there was no basis upon which the Tribunal could make an order under s 229 of the Strata Schemes Management Act 1996. 9. Since the Tribunal could not make an order under s 229 of the Strata Schemes Management Act 1996, it follows that the Tribunal could not make an order in the terms set out in clause 9 of Schedule C of the Notice of Appeal. 10. The Respondent reserves its rights to raise further objections to the grounds of appeal at or before any hearing of this application.

Submissions

The parties filed written submissions and made oral submissions at the hearing on the appeal on 17 August 2015.

Ground 1

In relation to the first ground of appeal, namely that the Tribunal erred in concluding s 190 (1) of the SSMA did not permit the Tribunal to correct an order to include a ground for making an order that the application was misconceived, the appellant said the Tribunal fell into error for two reasons. Firstly, the orders made on 26 August 2014 were invalid because the respondent had not been provided with an opportunity to be heard and the hearing on 15 October 2014 should have been approached on the basis that the original decision was invalid or void. Secondly, s 190 empowered the Tribunal to correct the orders made 26 August 2014 by substituting one ground for another.
As to the first reason, the appellants asserted the Tribunal fell into jurisdictional error when making the orders on 26 August 2014 in that it failed to comply with s 35 of the Consumer Trader and Tenancy Tribunal Act, 2001 (CTTT Act) in that it failed to give the appellants an opportunity to be heard. The appellants referred to the High Court's decision in Refugee Review Tribunal, Re: Ex parte Aala (2000) 2004 CLR 82. Consequently, the original orders were void and the hearing on 15 October 2014 should have been approached as a fresh application.
As to the second reason, the appellants said in their written submissions dated 7 July 2015 at [16]: Correcting the grounds upon which an application is dismissed is as much a correction of an order as any other correction, and plainly falls within the s 190 power.
Further, the appellants submitted (at [19]) that "it cannot be correct to suggest that when an applicant withdraws an application, and as a consequence there is no hearing on the merits, the Tribunal is precluded from finding that the application was misconceived" and (at [20]) that such an approach would "predetermine issues before any application is even heard, firstly for an order under s 192, and secondly for the correction under s 190."
Finally, the appellants submitted that s 192 of the SSMA does not require costs orders to be made simultaneously with any dismissal order.

Ground 2 and 7

In these grounds the appellants assert the Tribunal did not properly construe the term "misconceived" in connection with the application that had been made under s 183 of the SSMA and should have decided it was misconceived, even before it was withdrawn.
The reason why the appellants say the application was misconceived was because the valuation certificate lodged by the respondent, purportedly pursuant to s 183 of the SSMA, did not comply with the rule in Spencer's case, a concession the appellants say the respondent made as recorded in [72] and [74] of the Decision. The appellant submitted that the Tribunal could only proceed to determine an application in favour of the respondent if there was a valuation that complied with this rule because it is a necessary pre-condition to making an order under s 183. In this regard the appellants referred to the decision of Santow J in Anderson Stuart v Treleaven (2000) 49 NSWLR 88 at [179]. Therefore the application was misconceived from its inception.
Further, the Tribunal was in error in speculating that a different certificate could be lodged or different evidence adduced. Rather, there was no evidence on which the Tribunal "could have determined that a properly conceived application was before it": appellant's written submissions at [30].
Finally, the fact that the application had been withdrawn was no bar to the Tribunal making an order for costs. The appellants rely on the decision of the Tribunal in Fredericksen v Port Stephens Veterans & Citizens Aged Care Ltd [2014] NSWCATCD 54 at [29].

Grounds 3 and 4

These grounds are that the Tribunal erred in deciding: 1. s 183 of the SSMA does not require that a certificate specifying the valuation at the time of registration must be one that the Tribunal could have relied upon to reallocate unit entitlements; and 2. the Tribunal could rely on a certificate that did not comply with the rule in Spencer's case to reallocate unit entitlements.
Again, the substance of the submissions raised in respect of these grounds was that an application accompanied by a certificate specifying the valuation that does not comply with the rule in Spencer's case is misconceived because it could not form the basis for the Tribunal to make an order under s 183 (1) of the SSMA.
Further, the Tribunal was not free to disregard the concession that the certificate did not comply with the rule in Spencer's case and in so far as the Tribunal at [73] sought to distinguish Spencer's case on the basis of the obiter comments of Basten JA in Sahade v Owners Corporation 62022 [2014] NSWCA 208 at [32] it was inappropriate to do so.

Grounds 5 and 6

The errors asserted in these grounds is that the Tribunal failed to apply an objective test as to whether an application was misconceived and rather determined that costs would only be payable if the applicant realised its application was misconceived. Therefore the appellants asserted the Tribunal's discretion miscarried. Further, the appellant said that the Tribunal places the onus on appreciating legal misconception on the appellants' legal advisors.
In developing these submissions the appellants say that the Tribunal was incorrect in so far as it rejected the claim that the proceedings were misconceived because the misconception could have been corrected. The appellants submitted that when they served their evidence the respondent "unilaterally abandoned its case" rather than taking steps to amend or restart its case and correct the misconception.
Further, having accepted that the "application was misconceived on the conceded basis" the appellants say that the discretion on costs miscarried because of an "error in principle or manifest misapprehension of fact". In making this submission the appellants referred to the High Court's decisions in McCauley v McCauley (1910) 10 CLR 434 and House v The King (1936) 55 CLR 499.
In part, the appellants said this arose from the Tribunal suggesting at [90] of the Decision that there was a duty on the appellants to point out why the proceedings were misconceived, whereas the appellants asserted the failure arose from the respondent's lawyer not lodging a certificate that complied with the rule in Spencer's case. In this regard the appellants say it was not for them to explain what misconceived means or to point out to the opponent the requirements for a complying certificate.
As to the Tribunal's reliance on the decision of Simpson J in Green v Schneller [2013] NSWSC 202, the appellants submitted: 1. the Tribunal misapplied that decision by, in effect, concluding the appellants were not only required to draw the misconception to the attention of the respondent but also to "enlighten" the respondent; 2. in any event, the Appellants, by their letters dated 10 January 2014 and 25 June 2015, did in fact draw the obstacle to the attention of the respondent, and 3. it was only after "the appellants provided their expert evidence and submissions that highlighted the misconception which undermined the valuation certificate" that the respondent withdraw the application.
Consequently, the discretion miscarried in so far as the appellants properly prepared their defence and where the respondent's lawyer who was a "strata law specialist" had failed to explain why the respondent's application was misconceived.

Ground 9

This ground asserted the proper exercise of the discretion also meant the appellants should have had the benefit of an order under s 229 of the SSMA and thereby be relieved from the obligation to meet the costs payable by the respondent to the appellants out of any levy upon the appellant lot owners or from any fund or assets of the Owners Corporation to which they have contributed.
Further, although not a ground of appeal, the appellants submit that they should not, as lot owners, bear the costs of the Owners Corporation. Again the appellant says the source of power to make such an order is found in s 229 of the SSMA.

Respondent's submissions

The respondent raised in its submissions the preliminary issue of whether leave is required for the present appeal. The respondent contends that both orders made on 21 April 2015 are interlocutory orders and require leave to appeal.
In respect of the order dismissing the proceedings because the action is withdrawn, the respondent says that this order was not a decision finally determining the substantive rights of the parties. The respondent referred to the decision of Carr v Finance Corporation of Australia Ltd (No 1) (1981) 47 CLR 246. Rather, it was analogous to a decision to refuse leave or a dismissal because the action was frivolous, vexatious, an abuse of process or does not otherwise disclose a reasonable cause of action and therefore was interlocutory: see Re Luck [2003] HCA 70 at [9].
Similarly, the respondent said the costs order was merely consequential upon substantive claims and is also interlocutory: see Merit Protection Commissioner v Nonnenmacher [1999] FCA 274.
In relation to the grant of leave, the respondent submitted that the appellants have failed to demonstrate a substantial miscarriage of justice as required by clause 12 of schedule 4 of the NCAT Act and that leave should be refused. The respondent submitted that the decision was fair and equitable and not against the weight of evidence and that the Tribunal wrongly exercised its discretion having regard to the appellants' repeated failure to bring to the attention of the respondent the defects in its case despite "requests for elucidation".

Amendment of order dismissing application

In relation to the order dismissing the proceedings because the respondent withdrew the proceedings pursuant to s 28(5)(h) of the CTTT Act, the respondent submitted that s 190 of the SSMA did not provide power to vary the original order so as to provide for dismissal on the basis that the proceedings were frivolous, vexatious, misconceived or lacking in substance. The respondent says such a variation did not amount to a correction or clarification within the meaning of s 190. Rather it would be dismissal for a completely different reason.
Further, the respondent submitted that s 28(5)(h) requires the Tribunal to allow the respondent to withdraw its application and that an order dismissing the proceedings on this basis must be made under s 185(3) of the SSMA. The respondent relied on the reasoning of the Tribunal in Sorose Pty Ltd (in liq) v The Owners- Strata Plan 80638 (SCS 12/22798). Once made, the respondent said there was no power to dismiss the proceedings on some other basis. Further, to allow variation of such an order under s 190 and dismiss the proceedings on some other basis would ignore the request to withdraw.
In short, the withdrawal of proceedings under s 28(5)(h) requires the Tribunal to dismiss the application on this basis in which case there can be no hearing on the merits. While the appellants could have elected to apply to dismiss the proceedings as misconceived under s 185(4) prior to the final hearing or application to withdraw, this did not occur and the language of the legislation makes clear that the only order the Tribunal can make upon a request to withdraw the proceedings is to dismiss the proceedings on this basis.
As to the appellants' contention that the original order made 26 August 2014 was void because the Tribunal failed to give the appellants an opportunity to be heard prior to making that order, the respondent said there could be no denial of procedural fairness because the Tribunal was required to dismiss the proceedings. There was no application for dismissal under s 185(4)(b) at that time and therefore no prejudice could have been suffered.

Order for costs and exercise of discretion

In relation to the Tribunal's decision to refuse to make a costs order, the respondent made three submissions: 1. the application was not dismissed because it was misconceived and therefore the pre-requisite for making an order under s 192 of the SSMA was not satisfied; 2. in any event, the respondent's application was not misconceived; and 3. there was no error of principle or manifest misapprehension of fact which caused the Tribunal's exercise of discretion to miscarry.
In doing so, the respondent did not submit that the Tribunal was precluded from considering an application for costs under s 192 of the SSMA after the proceedings had been dismissed. The respondent referred to the decision of the Court of Appeal of the Supreme Court of New South Wales in The Owners Corporation of Strata Plan 4521 v Zouk [2007] NSWCA 23.
In relation to the case of Fredericksen to which the appellants had referred, the respondent said this decision was consistent with Zouk, that is the Tribunal was not deprived of jurisdiction to determine a question of costs subsequent to an application being withdrawn. However, the respondent pointed out that Fredericksen concerned an application for costs under s 53 of the CTTT Act.
The respondent said the precondition for making a costs order required that the proceedings had been dismissed because they were frivolous, vexatious, misconceived or lacking in substance. This required a finding of fact to this effect. However, because the reason for dismissal was that the application had been withdrawn, such a finding could not subsequently be made. Further, the respondent submitted that where there had been no determination on the merits, an enquiry into whether the proceedings were misconceived would involve "embark(ing) on the hypothetical exercise of determining whether the application was misconceived" for the purpose of determining costs, an approach the courts had consistently failed to adopt where proceedings had been discontinued: see Metro Chatswood Pty Ltd v CRI Chatswood Pty Ltd [2007] NSWSC 1120.
Secondly, in considering the application of s 192 of the SSMA, the Tribunal identified the question to be determined as being "whether or not the application would have been dismissed on the basis it was misconceived". The respondent said this was the wrong question. The question s 192 required the Tribunal to ask was whether the application should be dismissed because it was misconceived"?
The respondent submitted that the Tribunal incorrectly embarked on the hypothetical exercise and if it had identified the correct question it would necessarily have concluded the application was not in fact dismissed because it was misconceived.
As to the issue of whether or not the proceedings were in fact misconceived, the respondent submitted that the Tribunal was correct in deciding (at Decision [76]) that the application should not be dismissed and/or would not have been dismissed on the basis that it was misconceived. The respondent submitted that the appellants' submissions confused two issues, namely: 1. whether the certificate which accompanies an application for an order complies with s 183(4) of the SSMA; and 2. whether the Tribunal has before it, at the time of making the determination, evidence of the respective values of the lots to which it can have regard, as required by s 183(3).
The respondent submitted that the Tribunal was correct to conclude there were two distinct issues and that while any valuation evidence relied upon for the purpose of making a determination under s 183(3) of the SSMA may have been required to comply with the rule in Spencer's case: see Anderson Stuart, non-compliance with the rule in Spencer's case did not mean that the valuation certificate provided under s 183(4) was invalid.
Finally on this issue, the respondent said (written submissions dated 31 July 2015 at [83]) that the precise "concession" which it made was that: [T] he defects identified by the appellants (that Mr Keen had had regard to post-valuation date evidence, in contravention of the rule in Spencer) 'infected some only of' Mr Keen's valuations of the 74 separate lots… In other words, the concession was as to the method of Mr Keen's valuations (the s 183(3) issue), not as to whether the certificate, complied with the requirements of s183(4). The Tribunal correctly recognised that distinction at [R 72].
In relation to the exercise of discretion not to award costs, the respondent said there was no misapplication of the decision in Green. The respondent submitted that the reference to this case by the Tribunal was no more than recognising a principle that a relevant consideration in determining whether to award costs is whether a party has remained silent and not disclosed "an obvious and deadly point" which, if disclosed, might have caused the opposing party to act in a different manner and/or resulted in the proceedings being terminated.
In this regard the respondent submitted that the Tribunal found and was entitled to rely on the fact that the appellants refused to identify the content of the "obstacle" despite repeated requests from the respondent that they do so.

Levies for costs

The respondent accepted that the Tribunal could make an order under s 229 of the SSMA so as to provide that any costs which the respondent was ordered to be paid should be met from levies from Lot owners other than the appellants.
However, the respondent said that this power only applies in respect of orders for costs which the respondent must pay, not the respondents own costs.

Appellants' submissions in reply

It is necessary to briefly mention the matters in the appellants' submissions in reply not otherwise dealt with above.
Firstly, on the question of leave to appeal, the appellants say that the orders made by the Tribunal were not interlocutory and therefore leave is not required. Rather, the orders made "finally disposed of the rights of the parties as between themselves, subject only to an appeal, and consequently our final orders". Further, in the case of the costs order, leave is not required where the grounds of appeal were not restricted to costs.
In the alternative, the appellants submitted that it is fundamentally unfair and inequitable that the appellants should not be recompensed for the costs incurred in circumstances where the application is misconceived.
Secondly, the appellants submitted that insofar as the respondent asserted that a hearing on the merits was required to determine whether an application was misconceived, this is incorrect. The appellants were entitled to have their application for costs determined on applicable legal principles and on the evidence adduced at the costs hearing.

Consideration

This appeal relates to a decision of the Tribunal in its general jurisdiction, concerning an application made to the Tribunal seeking orders for the reallocation of unit entitlements in respect of Strata Plan SP 64558 pursuant to s 183 of the SSMA. As such, it is an internally appealable decision within the meaning of s 32 of the NCAT Act.
It is common ground that the Decision to which the appeal relates was required to be determined under the provisions of the CTTT Act and the enabling legislation which applied prior to the establishment of NCAT because the application had been commenced in the Consumer Trader and Tenancy Tribunal but determined by NCAT pursuant to the provisions in respect of "unheard proceedings" found in Schedule 1 of the NCAT Act.
The appeal was lodged in time.
The appeal raises the following issues: 1. Is leave to appeal required; 2. If leave is granted or is not otherwise required: 1. What order was the Tribunal permitted or required to make upon the request for withdrawal; 2. Did the Tribunal breach the rules of procedural fairness by failing to give the appellants an opportunity to be heard prior to the Tribunal making such an order; 3. Could, and if so should, the order made by the Tribunal on 26 August 2015 have been varied under s 190 of the SSMA, and if so, what orders should have been made; 4. Did the Tribunal have power to make an order for costs pursuant to s 192 of the SSMA on the basis that the substantive application was misconceived; 5. In refusing to make an order for costs, did the discretion of the Tribunal miscarry; 6. Should any order be made under s 229 of the SSMA in respect of costs, and if so what order should be made.

Is leave to appeal required

Leave is required to appeal an interlocutory decision: see s 80(2)(a) of the NCAT Act. If the decision is not an interlocutory decision or if the decision is an ancillary decision there is a right to appeal on a question of law. Otherwise leave is also required and, in the case of an appeal from a decision of the Consumer and Commercial Division, an appellant must also prove that it may have suffered a substantial miscarriage of justice: see s 80(2)(b) and cl 12 of Sch 4 of the NCAT Act.
So far as is relevant to these proceedings, an interlocutory decision is defined in s 4 of the NCAT Act to mean: interlocutory decision of the Tribunal means a decision made by the Tribunal under legislation concerning any of the following: …. (h) the summary dismissal of proceedings, (i) any other interlocutory issue before the Tribunal.
An "ancillary decision" is defined in s 4 of the NCAT Act as follows: ancillary decision of the Tribunal means a decision made by the Tribunal under legislation (other than an interlocutory decision of the Tribunal) that is preliminary to, or consequential on, a decision determining proceedings, including: (a) a decision concerning whether the Tribunal has jurisdiction to deal with a matter, and (b) a decision concerning the awarding of costs in proceedings.
In our view the decision in respect of the order to dismiss the proceedings was an interlocutory decision within the meaning of the NCAT Act. We hold this view for the following reasons.
Firstly, an order dismissing proceedings because they were "withdrawn" is not a final order in the sense that such an order does not "as a matter of law finally dispose of the rights of the parties, for it is open to the (applicant) to apply again" for an order under s 183 of the SSMA: see Carr at 248.
Secondly, the appellants had effectively sought dismissal of the proceedings on a "summary" basis. While there is no definition of "summary dismissal" in the NCAT Act, by analogy with the Civil Procedure Act 2005 and Part 13.4 of the Uniform Civil Procedure Rules 2005- Summary Disposal, "summary dismissal" as that expression is used in the NCAT Act would include dismissing the proceedings because they were "frivolous, vexatious, misconceived or lacking in substance".
Thirdly, even if an order dismissing the application did not amount to "summary dismissal" within the meaning of definition (h) of "interlocutory decision", the decision was otherwise a decision within the meaning of definition (i) as the decision was in respect of "any other interlocutory issue before the Tribunal". This is because: 1. the basis of the appellants' application was that the proceedings be dismissed as they were "misconceived" by reason of the failure to provide a certificate as required by s183(4) of the SSMA; 2. if made, an order dismissing the respondent's application on this basis would not finally dispose of the rights of the parties nor prevent the respondent from making a further application under s183; 3. in any event, such an order is akin to an order dismissing proceedings on the basis that the application is "frivolous, vexatious, an abuse of process of the court or does not disclose a reasonable cause of action". Such an order is in respect of the application or process filed, and is not a determination of substantive rights on the merits: See Re Luck at [9]-[10].
Because it is an interlocutory decision, it could not be an ancillary decision. The definition of ancillary decision expressly excludes an interlocutory decision: see Hammond v Ozzy's Cheapest Cars Pty Ltd t/as Ozzy Car Sales [2015] NSWCATAP 65 at [35].
Consequently leave to appeal is required under s 80(2)(a) of the NCAT Act. However, the appellants are not required to demonstrate they may have suffered a substantial miscarriage of justice because cl 12 0f Sch 4 of the NCAT Act only applies where leave is required pursuant to s 80(2)(b).
In respect of the order for costs, the position is less clear.
An order dismissing the proceedings is a decision that "determines the proceedings" because the proceedings are brought to an end. Even though the order dismissing the proceedings does not, as a matter of law, finally disposed of the rights of the parties a decision in respect of costs is a decision "consequential on a decision determining the proceedings.
On the other hand, it is somewhat anomalous that the rights of appeal in connection with a costs order should differ from the rights of appeal in connection with the primary decision which has been made.
Despite this apparent anomaly, in our view a cost decision made following the termination of proceedings, whether by reason of an interlocutory decision or not, is an ancillary decision is defined in the NCAT Act. The reasons are as follows: 1. A decision on costs is not expressly defined as an interlocutory decision; 2. The issue of who should pay the cost of proceedings when they are terminated is not otherwise a decision within the meaning of definition (i), namely a decision on "any other interlocutory issue before the Tribunal". It is not a decision about who should pay the costs of the application. Rather, following the termination of the proceedings, the decision on costs finally determines the rights of the parties in respect of who should pay the costs of the whole proceedings. In this sense it is not "interlocutory" in nature; 3. Even though the decision to dismiss the proceedings was itself an interlocutory decision, it is still a "decision determining proceedings" as that expression is used in the definition of ancillary proceedings because it brings those proceedings to an end (as opposed to finally determining the rights of the parties in respect of the dispute, the subject of the proceedings). Therefore the costs decision is "consequential on the decision determining the proceedings".
It follows that leave in respect of the decision on costs is only required to the extent the issues raised on appeal are not questions of law.
The principles applicable to determining whether or not leave should be granted are set out in Collins v Urban [2014] NSWCATAP 17. This case sets out the meaning of and circumstances in which a party may have suffered a substantial miscarriage of justice (at [65] - [79]) and the general principles applicable to the grant of leave to appeal ([80]-[84]).
In respect of the order dismissing the proceedings, in our view leave to appeal should be granted because the original order made 26 August 2014 and the final order made 21 April 2015 were not a form of order authorised to be made by the CTTT Act and the SSMA following the respondents' request to withdraw the proceedings. The correct form of order and our reasons for reaching this conclusion are set out below.
In relation to the order for costs, leave is not required on questions of law and the grounds of appeal raise such questions.

What order was the Tribunal required to make upon the request for withdrawal

There is no dispute in these proceedings that the respondent applied to withdraw its application shortly prior to a final hearing and that on 26 August 2014 the Tribunal made an order dismissing the proceedings pursuant to s55(1)(a) of the NCAT Act. This section provides: 55 Dismissal of proceedings (1) The Tribunal may dismiss at any stage any proceedings before it in any of the following circumstances: (a) if the applicant or appellant (or, if there is more than one applicant or appellant, each applicant or appellant) withdraws the application or appeal to which the proceedings relate,
Section 55(1)(a) recognises an independent right of an applicant to withdraw proceedings and gives the Tribunal a discretionary power to make an order dismissing the proceedings to give effect to the withdrawal.
However, the Tribunal had no power to make this order because the proceedings had been commenced in the CTTT and were unheard proceedings within the meaning of cl 6 of Sch 4 of the NCAT Act. Clause 7 of Sch 4 applied to the determination of those proceedings: Pending proceedings before existing tribunals transfer to NCAT (1) Unheard proceedings in an existing tribunal are taken, on and from the establishment day, to have been duly commenced in NCAT and may be heard and determined instead by NCAT. (2) ….. (3) For the purposes of subclauses (1) and (2): (a) NCAT has and may exercise all the functions that the relevant existing tribunal had immediately before its abolition, and (b) the provisions of any Act, statutory rule or other law that would have applied to or in respect of the proceedings had this Act and the relevant amending Acts not been enacted continue to apply.
The effect of cl 7(3)(b) is that the SSMA and the CTTT Act continue to apply to the proceedings. The effect of cl 7(3)(a) is that the Tribunal was authorised to "exercise all the functions that the relevant existing Tribunal had immediately before its abolition" (cl7(3)(a).
It follows that the Tribunal had no power to make an order pursuant to s55(1)(a) of the NCAT Act dismissing the proceedings.
Rather, the Tribunal was required to exercise the functions of the CTTT and make orders in accordance with the legislation applicable to the CTTT.
At [52] - [53] of the Decision the Tribunal recognised this fact and said: 52 The parties agree my order of 26 August 2014 was made in error pursuant to the CAT Act. It is also agreed that this application is to be determined pursuant to s 28(5)(h) of the now repealed CTTT Act and the relevant sections of Part 5 of the SSM Act. 53 Section 28(5)(h) of the CTTT Act provided that the Tribunal must, if requested by the applicant, allow the applicant to withdraw the application. In contrast to s 55(1)(a) of the CAT Act, s 28(5)(h) of the CTTT did not provide any power to dismiss or in some other formal manner determined the application sought to be withdrawn. In Sorose (at [33]-[34]) I found that the Tribunal must undertake some formal procedure to achieve withdrawal and that the only source of power for such an order is contained in s 185 of the SSM Act.
In Sorose the CTTT came to two conclusions.
Firstly, the CTTT determined that where a request was made by an applicant to withdraw proceedings brought under the SSMA, the source of power to terminate the proceedings was by way of an order for dismissal pursuant to s185 of the SSMA.
Secondly, it determined that when a party withdraws an application the application does not cease to exist and that the CTTT could, after a request had been made to withdraw proceedings, determine an application for costs.
In our view, subject to the CTTT having power to make an order for costs and any preconditions for the exercise of that power having been established, the mere fact an applicant applies to withdraw proceedings in the CTTT does not preclude the CTTT (or in this case the Tribunal exercising the powers of the CTTT) from making an order for costs. In this regard the proceedings do not "cease to exist".
However, in our opinion the Tribunal was in error in concluding: 1. there was no order making power provided by s28(5)(h) of the CTTT Act to bring the proceedings to an end; and 2. that the proper order to be made when proceedings under the SSMA were withdrawn was an order dismissing the proceedings pursuant to s185 of the SSMA.
To the extent the decisions of Sorose and Mowemo PtyLtd v OC SP 74481 [2013] NSWCTTT 308 are to the contrary, in our view those decisions are incorrect and should not be followed.
The reasons for this view are as follows.
A withdrawal of proceedings is an administrative action initiated by an applicant that brings the proceedings to an end otherwise than by the Tribunal making an order granting final relief as permitted by any enabling legislation or making an order for dismissal in consequence of an interlocutory application or final hearing on the merits. In this regard, withdrawal is akin to discontinuance of court proceedings by a plaintiff in the sense that it is a unilateral action by the plaintiff to terminate the proceedings.
In this regard UCPR Rule 12.1 provides: 12.1 Discontinuance of proceedings ….. (1) The plaintiff in any proceedings may, by filing a notice of discontinuance, discontinue the proceedings, either as to all claims for relief or as to all claims for relief so far as they concern a particular defendant: (a) with the consent of each other active party in the proceedings, or (b) with the leave of the court. (2) A notice of discontinuance: (a) must bear a certificate by the plaintiff, or by his or her solicitor, to the effect that the plaintiff does not represent any other person, and (b) except where it is filed with the leave of the court, must be accompanied by a notice from each party whose consent is required by subrule (1) to the effect that the party consents to the proceedings being discontinued in accordance with the notice of discontinuance. (3) If any such consent is given on terms, those terms are to be incorporated in the notice of consent. ….
The fact that discontinuance of court proceedings under Rule 12.1 is an administrative process not determinative of any issues in the proceedings is made clear by UCPR rule 12.3: 12.3 Effect of discontinuance … (1) A discontinuance of proceedings with respect to a plaintiff's claim for relief does not prevent the plaintiff from claiming the same relief in fresh proceedings. (2) Subrule (1) is subject to the terms of any consent to the discontinuance or of any leave to discontinue.
Similarly, the fact that withdrawal of proceedings under s 28(5)(h) is an administrative action as a means to terminate the proceedings is indicated by s 86 of the CTTT Act which provides that: 86 Regulations (1) The Governor may make regulations, not inconsistent with this Act, for or with respect to any matter that by this Act is required or permitted to be prescribed or that is necessary or convenient to be prescribed for carrying out or giving effect to this Act. (2) Without limiting the generality of subsection (1), the regulations may make provision for or with respect to the following: (a) the initiation, lapsing and withdrawal of proceedings, …..
However, unlike discontinuance of court proceedings, consent or leave is not required under s 28(5)(h). Having regard to the objects of the CTTT Act, the relative informality of the process of bringing applications and the fact that parties usually pay their own costs, this is hardly surprising.
Also unlike discontinuance, the CTTT Act does not prescribe the mode of withdrawal whereas the UCPR provides it to be done by filing a notice of discontinuance: see UCPR 12.1(2) above.
The question is whether, in the absence of a regulation, withdrawal is effected by an order in these terms or by an order dismissing the proceedings under s 185 of the SSMA.
In our view withdrawal is effected by an order that the proceedings are withdrawn as authorised by the CTTT Act and not by order for dismissal under s 185 of the SSMA.
This is the mode identified in Sorose (at [33]) as the means by which withdrawal was effected in proceedings generally in the CTTT where s 28(5)(h) applies. Further, in the absence of a process fixed by regulation under s 86 of the CTTT Act, the fact such an order can be made to this effect is evident from an examination of s 28 of the CTTT Act.
Section 28 of the CTTT Act provides: 28 Procedure of Tribunal generally (1) The Tribunal may, subject to this Act, determine its own procedure. … (3) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. …. .(5) The Tribunal: ….. (f) may adjourn proceedings to any time and place (including for the purpose of enabling the parties to negotiate a settlement), and (g) may dismiss any proceedings if the applicant fails to attend a hearing, and (h) must, if requested by the applicant, allow the applicant to withdraw the application, and (i) may dismiss any proceedings if it considers the proceedings to be frivolous or vexatious or for any other reason that appears to it sufficient, and (j) may order that any proceedings are to be stayed.
These are procedural powers to enable the CTTT to regulate its processes and the applications that are brought. They are an independent source of powers which, together with powers given by the enabling legislation granting jurisdiction to hear and determine particular disputes and make specific orders, enables the CTTT to perform its functions. The powers in s 28(5) include the power to adjourn, stay and dismiss proceedings, each of which affects the progress of a claim to a final hearing. The powers include the power to make directions: see s 29 of the CTTT Act and the power to impose conditions in respect of an order or decision: see s 47 of the CTTT Act. While the CTTT Act does not expressly say that the CTTT exercises these powers by "order", the language of the legislation makes clear it is able to do so: see eg s 29 and s 52.
Consistent with this view, the Tribunal may make an order that the proceedings are withdrawn, such form of order reflecting the power given.
A comparison of the provisions of the CTTT Act, the SSMA and enabling legislation applicable to building claims supports these conclusions.
In the case of proceedings to which s 28(5)(h) applies, the Tribunal must allow the applicant to withdraw the application. However s 28(5)(h) does not apply in all cases. Indeed, until the amendment of s 28(7) it did not apply to applications under the SSMA at all. In respect of proceedings in the CTTT commenced prior to January 2012 the CTTT also had no power to: 1. dismiss proceedings under s 28(5)(f) where an applicant fails to attend; or 2. dismiss the proceedings under s 28(5)(g) if the Tribunal considered the proceedings to be frivolous or vexatious or for any other reason that appeared sufficient.
In respect of powers to dismiss the proceedings, these were found in s 185 of the SSMA which provides: 185 Dismissal of application on certain grounds (1) (Repealed) (2) If the ground for an application for an order under this Part is: (a) the absence of a quorum at a meeting, or (b) a defect, irregularity or deficiency of notice or time, the Tribunal may, by order, dismiss the application if the Tribunal believes that no substantial injustice has resulted. (3) The Tribunal may, by order, dismiss an application for an order under this Part on any other ground that the Tribunal considers appropriate. (4) Without limiting the generality of subsection (3), the Tribunal may, by order, dismiss an application for an order under this Part if: (a) the application is frivolous, vexatious, misconceived or lacking in substance, or …
Prior to January 2012, s 185(3) would have allowed dismissal of the claim on the application of an applicant who did not wish to continue with a claim but no express right to withdraw proceedings was given to an applicant by s185. Further, as made clear by the language of s 185, orders for dismissal under s 185 are discretionary.
For building claims s 28(5)(h) also does not apply. Section s 28(8) of the CTTT Act provides: (8) Subsection (5) (h) does not apply in relation to proceedings on a building claim arising under Part 3A of the Home Building Act 1989.
However there is an express power for a person to withdraw a claim. Section 48I of the Home Building Act, 1989 (HB Act provides: 48I Application for determination of building claim (1) Any person may apply to the Tribunal for the determination of a building claim. (2) A building claim may be withdrawn by the claimant at any time. (3) If, immediately before a building claim was made, the claimant was subject to the requirements of a rectification order under Division 2, the building claim may not be withdrawn except with the leave of the Tribunal. (4) When granting leave to the withdrawal of a building claim referred to in subsection (3), the Tribunal may restore the rectification order referred to in that subsection.
In this case, the CTTT still made an order that the application is withdrawn but did so under s48I of the HB Act. Unlike s28(5)(h), the HB Act does not require that the Tribunal to allow a building claim to be withdrawn and, in the case of an application to which subs 48I(3) applies, leave is required in any event.
However the position in respect of claims under the SSMA changed following the amendments to s 28(7) of the CTTT Act, which came into force in January 2012. These changes apply to the present proceedings and removed the previous exclusion of the operation of s 28(5)(h) of the CTTT Act to proceedings under the SSMA. Section 28(7) now provides: (7) Subsection (5) (g) and (i) does not apply in relation to proceedings arising under the Strata Schemes Management Act 1996 or the Community Land Management Act 1989.
Consequently, the source of power to enable an applicant to withdraw proceedings was expressly regulated by s 28(5)(h).
The reasons why Sorose is incorrect in concluding s 185 remained a source of power to dismiss an application after the amendments to s 28(7) of the SSMA are as follows: 1. s 185(3) provides power to dismiss applications "on any other ground that the Tribunal considers appropriate"; 2. the language of s 185 includes power to make orders on those grounds in s 28(5)(g) and (i) of the CTTT Act; 3. the order making power conferred by s 185 of the SSMA is discretionary in its terms and uses the word "may"; 4. to the extent s 185(3) of the SSMA permits dismissal of proceedings on a discretionary basis if they are withdrawn, it would have been unnecessary to amend s 28(7) of the CTTT Act; 5. the language of s 28(5)(h) is mandatory in its terms. It is therefore inconsistent with the language of s185(3); 6. the interpretation proposed would allow the Tribunal to dismiss the application on grounds other than that mandated by s 28(5)(h).
Rather, as explained above, termination of the proceedings is properly made by order of the Tribunal under the CTTT Act to the effect that the "proceedings are withdrawn on the application of the applicant pursuant to s 28(5)(h) of the CTTT Act".
Further, the reason why an order for dismissal could not be made under s 185 of the SSMA when proceedings are withdrawn under s 28(5)(h) is explained by considering what Ipp JA said in Zouk at [42]-[44]: 42 The wording of s 192(a) and (b) is the same as that of s 185(4)(a) and (b). The use of the phrase "lacking in substance" in s 185 (concerning applications) is significant and bears on the meaning of the same phrase in s 192. 43 Section 185 is closely connected to s 186 and cannot properly be understood without reference to that section. Section 186(1) provides that before making an order (except an order for a stay of proceedings), the Tribunal must investigate the application for the order. By s 186(2), in any such investigation the Tribunal is not bound by the rules of evidence, may inform itself on any matter in such manner as it thinks fit, and must act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. By s 186(3), the Tribunal need not hold a hearing in order to decide an application unless there is an appearance by a person entitled or required to appear before it. By s 186(4), a hearing need not be formal. 44 Section 185 provides that, having conducted an investigation under s 186, the Tribunal may on various grounds dismiss an application. Amongst those grounds are the grounds set out in s 185(4)(a) and (b) which - as I have noted - are essentially in the same words as s 192(a) and (b).
As Ipp JA makes clear at [43], an order for dismissal can only be made after an "investigation" by the Tribunal under s 186 of the SSMA. That section provides: 186 Investigations and proceedings before the Tribunal (1) Before making an order (except an order for a stay of proceedings), the Tribunal must investigate the application for the order or, in the case of an appeal, the grounds for the appeal. ….
Unlike the position where an order for dismissal is made under s 185, upon the applicant withdrawing the proceedings, there is no requirement for any "investigation", whether by formal hearing of otherwise. Rather, the Tribunal is obliged to allow the applicant to withdraw the proceedings.
It follows from what we have said that order 1 made 21 April 2015 was made without power and is void: see Minister for Immigration and Multicultural Affairs v Bhardwaj [2002] 209 CLR 597 per Gaudron and Gummow JJ at [51]-[53].
Therefore the appeal in respect of that order should be allowed and in lieu the following order should be made pursuant to s 81(1) of the NCAT Act : 1. The proceedings are withdrawn on the application of the applicant pursuant to s 28(5)(h) of the CTTT Act.

Were the appellants entitled to an opportunity to be heard prior to making such an order?

In light of the views we have expressed above, it is unnecessary to determine this issue. Nevertheless, it seems to us that as there is a mandatory obligation on the Tribunal to allow an applicant to withdraw proceedings, there is no obligation to hear a party before making such an order.

Could, and if so should, the order made by the Tribunal on 26 August 2015 have been varied under s 190 of the SSMA, and if so, what orders should have been made

It follows from our reasoning and conclusion above at [120] that the Tribunal had no power to vary its earlier order and that the order it should have made was that "The proceedings are withdrawn on the application of the applicant pursuant to s 28(5)(h) of the CTTT Act..

Was there power to make an order for costs pursuant to s 192 of the SSMA because the application was misconceived

The power to award costs is a statutory power and depends on the terms of the applicable legislation: Zouk at [26]. Relevantly, s192(a) provides: 192 Orders relating to costs The Tribunal 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 or appeal because: (a) the application or appeal is frivolous, vexatious, misconceived or lacking in substance, or …
There is no doubt that the making of orders determining proceedings following a hearing does not deprived the Tribunal of power to determine an application for costs under s192 made subsequently to the order dismissing the proceedings: see Zouk at [28]. The mere fact the decision dismissing an appeal does not expressly identify a ground set out in s 192(a) does not prevent a subsequent determination being made in an application for costs provided the reasons for doing so are not inconsistent with the reasons given by the Tribunal for dismissing the application: Zouk at [37]-[38].
However the question arises whether s 192 permits the Tribunal to make an order for costs where an order is made following a request to withdraw proceedings made under s 28(5)(h) of the CTTT Act.
Generally, in proceedings before the CTTT, parties are to pay their own costs. The award of costs is regulated by s 53 of the CTTT Act which provides: 53 Costs (1) Subject to this section and the regulations, the parties in any proceedings are to pay their own costs. (2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. (3) If costs are to be awarded by the Tribunal in accordance with the regulations, 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 Division 11 of Part 3.2 of the Legal Profession Act 2004 or on any other basis. …
Regulation 20 of the Consumer, Trader and Tenancy Tribunal Regulation 2009 (CTTT Regulation) is in the following terms: 20 Costs generally (1) This clause applies to the awarding of costs by the Tribunal as provided by section 53 of the Act. (2) The Tribunal may award costs in relation to proceedings in respect of which the amount claimed or in dispute is not more than $10,000, or in respect of which no amount is claimed or in dispute, only if the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs. (3) In any proceedings in respect of which the amount claimed or in dispute is more than $10,000 but not more than $30,000, the Tribunal may award costs in relation to the proceedings only if: (a) the Tribunal is satisfied that there are exceptional circumstances that warrant the awarding of costs, or (b) the Tribunal has made an order under section 30 (2) of the Act in relation to the proceedings. (4) In any proceedings in respect of which the amount claimed or in dispute is more than $30,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit. (5) Despite any other provision of this clause, the Tribunal may order: (a) that the costs of proceedings on an application for rehearing of a matter are, if the applicant fails to attend the hearing of the application, to be paid wholly or in part by the applicant, or (b) that the costs of any proceedings that the Tribunal considers to be frivolous, vexatious, misconceived or lacking in substance, or that otherwise should not be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings. (6) The amount of any costs under subclause (5) is to be substantiated in accordance with directions given by the Chairperson or, in the absence of such directions, in such manner as the Tribunal thinks fit.
Aside from claims where the amount in issue is greater than $30,000 (where a general discretion applies), the power to award costs is dependent upon: 1. a party demonstrating there are exceptional circumstances; or 2. the Tribunal considering the proceedings to be frivolous, vexatious, misconceived or lacking in substance, or that otherwise should not be heard or proceeded with, be paid wholly or in part by the person who instituted the proceedings.
The power to award costs in such cases is not linked to the form of order which is made to resolve or terminate the proceedings. However, CTTT Regulation, cl 20(3)(b) provides an exception in which the making of an order for costs is dependent upon the Tribunal making an order under s 30(2) of the CTTT Act. This sections provides: 30 Proceedings causing disadvantage (1) This section applies if the Tribunal is of the opinion that a party in any proceedings is conducting the proceedings in such a way that unreasonably disadvantages another party in the proceedings by any conduct (including by failing to comply with an order or direction of the Tribunal). (2) The Tribunal may: (a) if the party causing the disadvantage is the applicant - order that the proceedings (or part of the proceedings) be dismissed or struck out, or (b) if the party causing the disadvantage is not the applicant: (i) determine the proceedings (or part of the proceedings) in favour of the applicant and make any appropriate orders, or (ii) order that the party causing the disadvantage be struck out of the proceedings (or part of the proceedings).
In this case, the power to make an order for costs only arises where an order has been made under s 30(2).However, under s 53(5) "(t)his section does not apply in relation to proceedings under the Strata Schemes Management Act 1996 or the Community Land Management Act 1989."
In this appeal it is not in dispute the SSMA only entitles the Tribunal to award costs where an application is dismissed and the Tribunal makes a finding that "the application.. is frivolous, vexatious, misconceived or lacking in substance.". see s 192(a) and Zouk at [38]. That is, the power to award costs is linked to the order for dismissal.
However in our view, the Tribunal should have ordered that the proceedings be withdrawn. If this had occurred there would have been no order for dismissal and the provisions of s 192 would not have been enlivened.
Unlike the circumstances in Zouk, in the present case there had been no hearing prior to the time when the application to withdraw was made and no order for dismissal. Rather, the Tribunal was required to allow the proceedings to be withdrawn and could not thereafter have proceeded with the "investigation" required as a prerequisite to any order for dismissal.
The present case is not one where an application for costs was made in circumstances where there had been a hearing on the merits, an order for dismissal made and the successful party wished to advance reasons consistent with the primary decision as to why an award for costs should be made in its favour. Nor is it a case where there was a pre-existing application by the appellants that the proceedings were misconceived and should be dismissed, in which case a costs order might have been sought. In such cases the Tribunal is simply determining costs issues in respect of dismissal orders already made or the subject of an unresolved existing application.
In our view the appellants' argument seeks to disconnect the application for costs from the reason why the order terminating the proceedings was required to be made. The appellants contend that even though the applicant was entitled to withdraw the application and the Tribunal was obliged to give effect to that request, the appellants were entitled to establish that an order should be made on a different basis, namely that the proceedings were misconceived. Seen in this way, it is not an application for costs based on a decision to dismiss the proceedings because they were misconceived but rather an application to dismiss the proceedings as misconceived and have the respondent pay the appellants' costs.
Further, if the appellants' submission is correct, it would mean that the respondent would be deprived of a right to withdraw the proceedings prior to a final hearing and allow the appellants to agitate any issues they wished as to why the proceedings should be dismissed. Such an outcome would be inconsistent with the plain language of s 28(5)(h) of the CTTT Act.
At [58]-[63] the Tribunal reaches a contrary conclusion. In our view the Tribunal was in error in the following respects: 1. The Decision at [59] presuppose the proceedings are dismissed under s 185 and that it was open to the Tribunal on any application for costs to make additional findings to support the order for dismissal. However, the order terminating proceedings must be made for the reason that the applicant has withdrawn the proceedings and there is no discretion. 2. Contrary to the Decision at [60] (3)-(5) there could be no "investigation" by hearing or otherwise once the proceedings are withdrawn because there was no relevant pre-existing application to dismiss the proceedings as misconceived nor had there been a hearing on the merits prior to this time. 3. Contrary to the Decision at 60, a finding that the proceedings could have been dismissed because they were "misconceived" would be inconsistent with the reason why the proceedings must be dismissed. That is the applicant has exercised its statutory right to terminate the proceedings under s 28(5)(h) without determination of any of the substantive rights of the parties.
Whether or not the position would have been different if an application for dismissal had already been made or there had already been a hearing prior to the application to withdraw is unnecessary to decide. In those circumstances it may be arguable that there was a pre-existing power to dismiss the proceedings and/or the prerequisites under s 186 of the SSMA for making an order for dismissal under s 185 had been met.
It follows the Tribunal had no power to make an order for costs in favour of the appellants under s 192 of the SSMA in the present case.
Even if we are wrong on this point, in our view the proceedings were not misconceived.
The filing of a certificate as required by s 183(4) is a requirement when making an application. Unlike: 1. an application for adjudication under the SSMA, which requires proof of mediation before the Registrar accepts an application: see s 125 of SSMA; or 2. section 48J of the HB Act, which requires the building claim must be investigated before the Registrar accepts the application, 3. there is no bar to the Tribunal accepting the application. While the application may be susceptible to being dismissed, the proceedings are not a nullity.
The requirements of s 183(4) and (5) are: (4) Application to be accompanied by valuation An application for an order must be accompanied by a certificate specifying the valuation, at the relevant time of registration or immediately after the change in the permitted land use, of each of the lots to which the application relates. (5) Qualifications of person making valuation The certificate must have been given by a registered valuer under the Valuers Act 2003 authorised under that Act to make such a valuation (a qualified valuer).
There is no dispute that a certificate was given by an appropriately qualified person. Rather, the appellants submit the certificate was "invalid" and therefore the application was misconceived as the requirements under s 183(4) were not met. The submission is based on the proposition that the valuation was flawed because it did not meet the rule in Spencer's case. This rule relates to a requirement to ignore circumstances subsequently arising to the date when a valuation was made.
In our view this rule has no relevance to determining whether the applicant has complied with s 183(4) of the SSMA. There is no reference to the need for a valuation to comply with the rule in Spencer's case in s 183(4) nor is there any suggestion that a certificate that turns out to be based on an incorrect valuation method or that otherwise provides evidence of value that is not ultimately accepted by the Tribunal is invalid or that in such circumstances the requirements of s184(4) would not be met. Rather, all that is required is that the certificate specify certain information as set out in subs(4) and that it be given by a qualified valuer: see s 183(5).
The certificate is not conclusive evidence of the matters it asserts and therefore there is no reason to conclude that any error in the certificate would render it "invalid". The correctness of this conclusion is evident from a consideration of the obligations on the Tribunal in making any order: 183 Order for reallocation of unit entitlements (1) Tribunal may make order allocating unit entitlementsThe Tribunal may make an order allocating unit entitlements among the lots that are subject to a strata scheme in the manner specified in the order. (2) Circumstances in which order may be madeAn order may be made only if the Tribunal considers that the allocation of unit entitlements among the lots: (a) was unreasonable when the strata plan was registered or when a strata plan of subdivision was registered, or (a1) was unreasonable when a revised schedule of unit entitlements was lodged at the conclusion of a development scheme, or (b) became unreasonable because of a change in the permitted land use, being a change (for example, because of a rezoning) in the ways in which the whole or any part of the parcel could lawfully be used, whether with or without development consent. (3) Matters to be taken into consideration In making a determination under this section, the Tribunal is to have regard to the respective values of the lots and (if a strata development contract is in force in relation to the strata scheme) to such other matters as the Tribunal considers relevant.
The task of the Tribunal is to determine if the original unit allocation was unreasonable. In doing so it is to have regard to "the respective values of the lots", not the values ascribed to those lots in the certificate. The fact the Tribunal is to determine the issue of value, which may be contested, is clear from Anderson Stuart. In making such determinations the rule in Spencer's case may be relevant and may lead to the conclusion that a valuation was flawed. However that does not mean a certificate is "invalid" for the purpose of s 183(4).
The mere fact that particular expert evidence may fall short in proving a fact required because in some respects the process of reasoning or approach may have some error does not mean the proceedings are misconceived, at least not where the evidence could be corrected or supplemented. There was no suggestion that a relevant valuation could not have been provided, nor that at a final hearing cross examination of the opponent's expert could not have provided the necessary evidence. Rather, it is a matter for final hearing.
The fact a concession was made at the hearing of the application for costs to the effect that some lots were valued on a basis contrary to Spencer's case does not alter our view. If leave to adduce fresh evidence was refused, the expert would have been required to correct any incorrect opinion at the "eleventh hour": see previous CTTT Expert Code of Conduct and NCAT Procedural Direction 3- Expert Witnesses.
Consequently, we agree with the Tribunal's conclusion at [76] that the proceedings were not misconceived.
The Tribunal then dealt with the issue of the assumption it was wrong and that the proceedings were misconceived: Decision at [77]. In doing so it said at [83] "I am satisfied that the application is misconceived on the conceded basis that the expert valuer's certificate had regard to "circumstances subsequently arising'".
In so far as this was a finding the proceedings were misconceived, we disagree.
However the Tribunal's approach illustrates the point we have made above that the real issue was the adequacy of evidence which would need to be evaluated at a final hearing.
The lack of evidence may mean the proceedings were lacking in substance. In this regard the question is whether a particular case was reasonably arguable: Zouk at [45]. However this was not the proposition raised before the Tribunal or on appeal- the appellants relying on the proceedings being misconceived. It seems to us that misconception relates to the nature of the proceedings either by reference to them being in a form that is not permitted or seeking relief that could not be granted.
In the present case the nature of the claims made by the respondent were not a misconception of any legal requirement for the making of a claim, they did not seek impermissible orders and they were brought in conformance with the legislative provisions as we have determined apply in connection with providing a certificate from a qualified valuer.
The concession was really no more than an acknowledgement that on 26 August 2014 when the proceedings were withdrawn, there was an error in the expert evidence. However it was not a concession that a case was not reasonably arguable nor was it a concession that evidence, whether by cross examination or otherwise, could not have been obtained.
There are many reasons why parties decide to terminate an application by withdrawal or discontinuance. However s 186 of the SSMA required an "investigation" before an order could be made to dismiss an application under s 185. This is a fundamental requirement to enliven the power to award costs. This did not occur. There was no concession that the proceedings were misconceived or that the claim was not reasonably arguable. The Tribunal did not evaluated all the evidence that was provided and because there was no investigation or hearing on the merits it was not open to the Tribunal to dismiss the proceedings as otherwise misconceived under s 185 in these circumstances.
Speculating about what could have happened if applications to adjourn the hearing or adduce further evidence had been made or the matter proceeded to a hearing on the evidence as filed illustrates the problem with the appellants' appeal. Once it is accepted that the proceedings were not invalid, even if the certificate was flawed, there is no basis to conclude the proceedings were misconceived.

In refusing to make an order for costs, did the discretion of the Tribunal miscarry

It is unnecessary to consider this issue having regard to the conclusions we have reached.

Should any order be made under s 229 of the SSMA in respect of costs, and if so, what order

Section 229 of the SSMA provides: 229 Costs in proceedings by owners against owners corporation (1) This section applies to proceedings brought by one or more owners of lots against an owners corporation or by an owners corporation against one or more owners of lots (including one or more owners joined in third party proceedings). (2) The court may order in proceedings that any money (including costs) payable by an owners corporation under an order made in the proceedings must be paid from contributions levied only in relation to such lots and in such proportions as are specified in the order. (3) If a court makes such an order the owners corporation must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of the contributions paid in accordance with that levy.
There is no dispute that the Tribunal is a "court" for the purpose of this section. It applies to proceedings brought by or against an owners corporation.
Section 229(2) enables the Tribunal, in respect of "any money (including costs) payable by an owners corporation under an order made in… proceedings", to make an order that such money be paid from contributions levied against such lots and in such proportions as the Tribunal may determine.
In our view, this provision only applies to monies payable by an owners corporation pursuant to an order of the Tribunal. It does not apply to the costs an owners corporation is obliged to pay its own lawyers pursuant to any contract to provide legal services.
Consequently, all lot owners, including the respondents, remain liable to pay levies in respect of the Owners Corporation's legal costs.
While the appellants may have been entitled to such an order if they had been successful on the appeal, no order for costs was made in their favour, no costs are payable by the respondent pursuant to an order made in proceedings and therefore there is no basis to make an order under s 229 of the SSMA.

Conclusion and Orders

It follows from what we have said above that the form of order 1 should be corrected and leave to appeal should be granted in respect of the challenge to this order. Otherwise the appeal should be dismissed.
Accordingly the Appeal Panel makes the following orders; 1. Grant leave to appeal the decision in respect of order 1 made 21 April 2015; 2. Order 1 made 21 April 2015 set aside and in lieu thereof the following order is made: The proceedings are withdrawn on the application of the applicant pursuant to s 28(5)(h) of the CTTT Act. 1. The appeal is otherwise dismissed. 2. Any application for costs in relation to the appeal is to be filed and served within 14 days from the date of these orders. Any application is to include written submissions and any other material to be relied upon in support of the application. 3. The party against whom any application for costs is made must file and serve any submissions and material in reply within 21 days from the date of these orders. 4. The applicant for costs is to file any submissions in reply within 28 days from the date of these orders. 5. The submissions by the parties are also to address the question of whether or not any application for costs should be dealt with on the papers and whether the Tribunal should make an order to allow this to occur. 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: 13 January 2016

Consumer, Trader and Tenancy Tribunal Act 2001(NSW)

Consumer, Trader and Tenancy Tribunal Regulation 2009(NSW)

Civil and Administrative Legislation (Repeal and Amendment) Act 2013(NSW)

Strata Schemes Management Act 1996(NSW)

At a glance

Court

Decision date

Source

Judgment (25 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (17)

Cited By (5)