(1994) 179 CLR 403
Gelder v The Owners - Strata Plan No. 38308 [2021] NSWCATAP 109
Jubian v Clark (No 2)
Source
Original judgment source is linked above.
Catchwords
(1994) 179 CLR 403
Gelder v The Owners - Strata Plan No. 38308 [2021] NSWCATAP 109
Jubian v Clark (No 2)
Judgment (4 paragraphs)
[1]
Introduction
These reasons for decision deal with applications for costs in respect of three applications brought pursuant to the Strata Schemes Management Act 2015 (SSMA). The decision in respect of the substantive dispute (the Primary Decision) was published on 19 July 2023 (amended subsequently pursuant to section 63 of the Civil and Administrative Tribunal Act 2013 (the CAT Act)).
These reasons for decision assume knowledge of, and should be read in conjunction with, the Primary Decision. Defined terms in the Primary Decision have the same meaning in these reasons.
Ms Finkelstein and Ms Cohen each filed and served written submissions.
Order 1 made in the Primary Decision appointed a strata managing agent (the Agent) to the owners corporation pursuant to s 237 of the SSMA. The filed written submissions on 9 January 2023. The Agent did not file submissions in respect of costs.
On 6 September 2023 Mr Shiper, a respondent to application SC 21/45784, and chairman of the strata committee at the time of the hearing and for some years beforehand, sought to file written submissions as to costs on behalf of the owners corporation.
By email dated 12 September 2023 the Agent informed Mr Shiper by email that the Agent did not authorise Mr Shipper to sign the costs submissions of 6 September 2023 on behalf of the owners corporation.
This matter was brought to the Tribunal's attention.
On 10 October 2023 the Tribunal afforded Mr Shiper an opportunity to dispute the authenticity of the contents of the Compulsory Managing Agent's email dated 12 September 2023. The Tribunal also indicated that, to the extent the submissions filed by Mr Shiper related solely to any issues as to costs sought against him personally as a party then Mr Shiper's submissions would be considered for that limited issue.
Mr Shiper did not dispute the authenticity of the contents of the Agent's email dated 12 September 2023 and the Tribunal was informed that costs were not sought against Mr Shiper.
Although Mr Shiper did not dispute the authenticity of the contents of the Agent's 12 September 2023 email, he filed a document submitting that costs were "sought entirely against the Owners (not the Owners Corporation generally)". The word "Owners" in those submissions was defined to mean the second, third and fourth respondents in proceedings SC 21/45784, namely, Mr Shiper, Mr Spackman and Mr Coplin. That contention was incorrect. Ms Finkelstein and Ms Cohen did not seek that any orders be made against Mr Shiper, Mr Spackman and Mr Coplin personally. Ms Finkelstein and Ms Cohen seek costs as against the owners corporation.
In those circumstances, the Tribunal informed the parties, including Mr Shiper, as follows:
[The Tribunal does] not intend to have regard to any submissions made 'for' the owners corporation unless filed by the owners corporation, which means submissions filed on its behalf by the managing agent appointed by the Tribunal pursuant to section 237 of the Strata Schemes Management Act 2015 ("the Agent"). This is because the owners corporation's powers are currently to be exercised by the Agent. Further, Ms Finkelstein's representatives have confirmed in writing that they do not seek costs orders against the Second, Third and Fourth Respondents with the consequence that there is no utility in those respondents filing submissions resisting orders which are not sought. Insofar as the submissions made by Mr Shiper resist orders sought against the owners corporation, the Agent has not authorised those submissions.
Ms Finkelstein's written submissions contended that it was appropriate that a hearing be dispensed with and that the costs issue be determined on the papers (see Ms Finkelstein's written submissions, [25]). Ms Cohen's written submissions adopted Ms Finkelstein's written submissions in this respect (see Ms Cohen's written submissions, [4]). I consider it appropriate, pursuant to s 50 of the CAT Act, to dispense with a hearing and determine the costs issue on the papers.
[2]
Consideration
Section 60 of the CAT Act provides as follows:
(1) Each party to proceedings in the Tribunal is to pay the party's own costs.
(2) The Tribunal may award costs in relation to proceedings before it only if it is satisfied that there are special circumstances warranting an award of costs.
(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following -
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
(f) whether a party has refused or failed to comply with the duty imposed by section 36(3),
(g) any other matter that the Tribunal considers relevant.
(4) If costs are to be awarded by the Tribunal, the Tribunal may -
(a) determine by whom and to what extent costs are to be paid, and
(b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis.
(5) In this section -
costs includes -
(a) the costs of, or incidental to, proceedings in the Tribunal, and
(b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal.
Pursuant to s 60(1) of the CAT Act, each party to proceedings in the Tribunal is to pay their own costs. That is the starting position.
Notwithstanding s 60(1), pursuant to s 60(2) the Tribunal "may" order a party to pay costs. Consequently, s 60(2) provides the Tribunal with a discretion to award costs. The discretion must be exercised judicially.
The Tribunal's discretion to award costs can be exercised "only" if the Tribunal is satisfied that there are "special circumstances warranting an award of costs". The power to exercise the discretion conferred by s 60(2) is not engaged unless the Tribunal is satisfied that there are "special circumstances warranting an award of costs".
In Kadsielski v Guca 1 Pty Limited [2018] NSWCATAP 223 the Appeal Panel stated at [14] - [16] in relation to the issue of costs and s 60:
14 First, special circumstances are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional (see for instance CPD Holdings Pty Limited t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21). It suffices if the circumstances are "out of the ordinary": Ingate v Andrews [2018] NSWCATAP 170.
15 Secondly, each case depends upon its own particular facts: Gizah Pty Limited v AXA Trustees Limited (No 2) [2001] NSWADT 164, and will depend upon the circumstances of the individual case: Brunsprop Pty Limited v Joanne Hay & Wes Davies [2015] NSWCATAP 152.
16 Thirdly, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to the proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Limited v Naomi Dickinson [2015] NSWCATAP 94.
The words "special circumstances warranting an award of costs" require the Tribunal to assess matters that inform the exercise of the Tribunal's discretion to award costs. The exercise of the Tribunal's discretion to award costs is informed by the purposes of an award of costs. In Cachia v Hanes [1994] HCA; (1994) 179 CLR 403 the High Court (Mason CJ, Brennan, Deane, Dawson and McHugh JJ), in considering the purpose of a costs order, said at 410:
It has not been doubted since 1278, when the Statute of Gloucester (6 Edw.I c.1.) introduced the notion of costs to the common law, that costs are awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation.
The purpose of an award of costs is not to punish the unsuccessful party: BNT Constructions Pty Ltd v Allen [2017] NSWCATAP 186 at [67].
The purpose of a costs order informs the types of circumstances which the Tribunal may take into account in assessing whether there are "special circumstances warranting an award of costs". Many of the relevant circumstances are set out in s 60(3).
The meaning of "no tenable basis in fact or law" in s 60(3)(c) was considered in Wynne Avenue Property Pty Limited v MJHQ Pty Limited [2018] NSWCATAP 197. In that decision the Appeal Panel said at [36]:
[36] The language of s 60(3)(c) of the NCAT Act was whether the claim or defence had "no tenable basis in fact or law"; not whether WAP's potential defence was "likely to succeed". Whether a defence is "likely to succeed" is a much higher threshold to cross than "no tenable basis in fact or law". In our view, by itself, mounting a defence which is not likely to succeed would not be sufficient to warrant a conclusion that there were special circumstances within the meaning of s 60(2).
The mere fact that a party has been successful or unsuccessful does not of itself constitute "special circumstances" under s 60. This necessarily follows from s 60(1). In Jubian v Clark (No 2); Clark v Jubian (No 2) (2016) NSWCATAP 153 the Appeal Panel said at [29]:
…the mere fact a party was unsuccessful in their appeal does not of itself give rise to special circumstances warranting an order for costs in favour of the other party. The same applies where the appealing party was successful in their appeal. That is, a successful appeal does not of itself give rise to special circumstances warranting an order for costs in favour of the successful party.
The Primary Decision dealt with two broadly, although not totally, separable claims.
One claim sought the appointment of a strata managing agent pursuant to s 237 of the SSMA. This relief was pursued by Ms Finkelstein and Ms Cohen and resisted by the owners corporation. Related to this claim for relief was the relief sought in Ms Finkelstein's application against Mr Shiper, Mr Spackman and Mr Coplin pursuant to s 238 of the SSMA.
The other claim for relief was an order pursuant to s 149 of the SSMA. This relief was sought by Ms Finkelstein in her application in respect of work carried out by her without approval of the owners corporation in or on the common property. The issues raised by this claim were relevant to the owners corporation's application which sought orders to the effect that Ms Finkelstein remove or make good unapproved work by her comprising alteration or addition to the common property. The issues raised by this claim was not relevant to Ms Cohen's application.
I will first consider the issue of costs in relation to the claims arising under s 237 of the SSMA.
Ms Finkelstein's written submissions recalled many of the findings made in the Primary Submissions and contended that special circumstances within the scope of subsection 60(3)(c) and (e) of the CAT Act had been established.
The Primary Decision sets out the extent to which the owners corporation was not functioning satisfactorily. The strength of the case for the appointment of a strata managing agent pursuant to s 237 of the SSMA was very strong from the commencement of the applications of Ms Finkelstein and Ms Cohen and, as circumstances presented at the time of hearing, likely inevitable. In this respect I particularly refer to the failures to comply with the duty imposed by s 106 of the SSMA and the failures to comply with its statutory obligations dealt with at [98] - [106] of the Primary Decision, in combination with the absence of any cogent explanation for those failures.
I find that special circumstances within the meaning of subsection 60(3)(c) have been established.
I also find that it is appropriate to make an order for costs against the owners corporation and in favour of Ms Finkelstein and in favour of Ms Cohen. The circumstances are that the owners corporation was not functioning satisfactorily in many important respects, as detailed in the Primary Decision. The proceedings involved more than two hearing days and extensive written submissions. Ms Finkelstein and Ms Cohen's applications for the appointment of a strata managing agent have been demonstrably established, to the extent that I am comfortable characterising the relative strength of their claim, in comparison to the weakness of the owners corporation's opposition, as comprising special circumstances within the meaning of s 60(3)(c). There have no doubt been legal costs incurred in the proceedings. Consider it appropriate in those circumstances that Ms Finkelstein and Ms Cohen be "awarded by way of indemnity (or, more accurately, partial indemnity) for professional legal costs actually incurred in the conduct of litigation": Cachia v Hanes [1994] HCA; (1994) 179 CLR 403 at 410.
I do not consider it necessary to determine whether subsection 60(3)(e) of the CAT Act has been established. I also note that Ms Finkelstein's submissions did not separate the factors relied on for the purposes of subsections 60(3)(c) from those relied on for the purposes of subsection 60(3)(e).
In addition to the above matters, Ms Cohen also contended that, by reason of the failure to comply with the Consent Orders in proceedings SC 20/21170 meant that special circumstances within the meaning of subsection 60(3)(b) were established in respect of the proceedings the subject of the Primary Decision. I do not accept this submission. The failure to comply with the Consent Orders was one of the reasons for the subsequent proceedings brought by Ms Cohen, namely, SC 21/50115. But the failure to comply with the Consent Orders did not prolong or delay the finalisation of SC 21/50115.
Ms Cohen also contended that the owners corporation's failure to comply with a Summons to Produce hampered her ability to properly determine the dispute and was conduct disadvantaging a party. However, even if that were so, Ms Cohen's submissions did not identify the costs consequence arising from, or occasioned by, that conduct. If that conduct was relied on to make a costs order for the whole of Ms Cohen's application, then such an order would go beyond providing an indemnity (or partial indemnity) for the costs incurred in respect of, or occasioned by, the conduct of which complaint is made, namely, the failure to comply with a Summons to Produce and the evidentiary or legal matters that flowed from that conduct.
I now turn to consider the dispute relating to Ms Finkelstein's unapproved work in, or on, the common property and the owners corporations application for the removal of that work and the making good of the common property.
Ms Finkelstein points to the absence of a valid or cogent reason for not passing the by-law (see Primary Decision at [264] and [269]), the findings in relation to the structural and building adequacy of the unauthorised works and contends "there was negligible prospect of the Tribunal finding that there was some good reason for refusing the bylaw" (Ms Finkelstein's written submissions, [20(b)]).
The reasons recorded by the owners corporation at the meeting that considered the common property rights by law did not articulate a basis for not approving the work on the common property.
However, the owners corporation did obtain a report from Mr Roberts, a building expert, that disclosed areas of concern. Those concerns included non-compliance with AS1684 and concerns with some of the unapproved work.
In cross examination Mr Roberts conceded his views as to structural adequacy should, in effect, yield to those of an engineer, Mr Blaszczakiewicz. Although the Tribunal ultimately found compliance with AS1720.1 had been established, the concerns and opinions expressed by Mr Roberts did not completely lack merit. Nor we they so lacking in merit as to be properly characterised as untenable, fanciful or vexatious. During the hearing the owners corporation's opposition to a common property rights by-law was to a material extent founded on Mr Roberts' concerns and opinions and its position was not untenable or bound to fail.
I am not persuaded that special circumstances within the meaning of subsection 60(3) have been established in respect of the owners corporation's opposition to Ms Finkelstein's s 149 application.
The above findings give rise to a further question, namely, the proper costs order. That issue arises because I am not satisfied that it would be appropriate to order the owners corporation to pay, on the ordinary basis, all of Ms Finkelstein's costs.
Although it was generally possible to separate the s 237 claims for relief from the s 149 claim for relief, there was limited overlap. It is open to the Tribunal to only award Ms Finkelstein costs incurred by her in respect of the s 237 claims. However, that would probably make the task of assessment very complicated. I consider a more appropriate order to be one which provides a discount broadly referrable, and solely referrable, to the s 149 claim for relief. The appropriate discount is a matter of judgment and impression rather than exact calculation.
Having presided over the proceedings and determined them, I consider that 35% reflects an appropriate discount.
The observations concerning Ms Finkelstein's s 149 claim for relief do not affect Ms Cohen application for costs. Ms Cohen's costs are solely referrable to the s 237 application brought by her.
The framing of the relevant costs orders will be similar to the orders made in Gelder v The Owners - Strata Plan No. 38308 [2021] NSWCATAP 109.
One of the orders sought by Ms Finkelstein is as follows (see paragraph 24(iv)):
An order that none of the costs payable under the preceding orders, be paid from any levy that includes money contributed by Annabel Sophie Finkelstein or Brittany Chloe Cohen with the intention that the owners corporation promptly, and by no later than 42 days after the making of this order of the costs being agreed or assessed (whichever is the later), raise a special levy for contributions on lots other than Lots 5 and 6 to pay the costs payable under the preceding orders.
Ms Finkelstein's submissions observe that, amongst other orders, a similar order was made in Gelder v The Owners - Strata Plan No. 38308 [2021] NSWCATAP 109. I accept that similar orders have been made by the Tribunal but the time limitation of 42 days from the latter of the date of these orders or agreement as to quantum of costs or assessment, as proposed by Ms Finkelstein, was not a component of the orders in Gelder v The Owners - Strata Plan No. 38308 [2021] NSWCATAP 109. I accept that the costs of Ms Finkelstein and Ms Cohen should be paid relatively promptly after any agreement as the quantum of costs or assessment of costs, mainly because Ms Finkelstein and Ms Cohen have incurred the costs and likely already paid, at least a portion, and perhaps all, of the costs incurred. However, I am not persuaded that at this point in time an order should prescribe 42 days as the limit for raising a special levy. I will make an order in terms akin to the relevant order in Gelder v The Owners - Strata Plan No. 38308 [2021] NSWCATAP 109.
[3]
Orders
For the reasons indicated above, the orders will be as follows:
1. An order pursuant to section 50 of the Civil and Administrative Tribunal Act 2013 (NSW) dispensing with a hearing.
2. An order that The Owners - Strata Plan No 5172 pay 65% of Annabel Sophie Finkelstein's costs of and incidental to proceedings SC 21/45784, on the ordinary basis, such costs if not agreed to be assessed on the basis set out in the legal costs legislation, (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014 (NSW)).
3. An order that The Owners - Strata Plan No 5172 pay Brittany Chloe Cohen's costs of and incidental to proceedings SC 21/50115, on the ordinary basis, such costs if not agreed to be assessed on the basis set out in the legal costs legislation, (as defined in s 3A of the Legal Profession Uniform Law Application Act 2014 (NSW)).
4. An order that The Owners - Strata Plan No 5172 not levy a contribution on the owner of Lot 5 or the owner of Lot 6 for the owners corporations costs and expenses in proceedings SC 21/38767, SC 21/45784 and SC 21/50115.
5. An order that none of the costs payable under the preceding orders be paid from any levy that includes money contributed by the owner of lot 5 or the owner of lot 6 with the intention that the owners corporation promptly raise a special levy for contributions for such costs and expenses and such contribution not be levied on Lot 5 and Lot 6 to pay the costs payable under the preceding orders.
[4]
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: 08 August 2024