The Owners - Strata Plan No 20427 v A Halliwell Nominees Pty Ltd - [2022] NSWCATAP 268 - NSWCATAP 2022 case summary

REASONS FOR DECISION

This is an application for costs made by the respondents in relation to a decision we made in The Owners - Strata Plan No 20427 v A Halliwell Nominees Pty Ltd [2022] NSWCATAP 225.
The substantive appeal proceedings were an appeal by the Owners Corporation against a decision of the Tribunal by which it declined to make orders requiring the restoration of common property and required the respondent lot owners to present to the Owners Corporation a common property rights by-law in relation to unauthorised works the respondents had undertaken.
On 8 July 2022, we dismissed the appeal and refused leave to appeal. We set aside order 1(3) made by the Tribunal on the basis that the respondents consented to the order being set aside. We also made directions for the exchange of submissions in relation to any application for costs. The directions also allowed for submissions to be made as to whether the parties consented to a hearing being dispensed with in relation to the costs application.
The respondents filed written submissions on 22 July 2022. The appellant filed written submissions in response on 29 July 2022 and the respondents filed submissions in reply on 5 August 2022. On 11 August 2022 the appellant sent further correspondence raising an objection to the consideration of paragraph 8 of the respondents submissions in reply on the basis that the issue had not been raised in submissions in chief. We have dealt with that correspondence below.
Neither party sought an oral hearing on the issue of costs. We are satisfied that it is appropriate to deal with the costs application on the papers as a hearing would impose further unnecessary costs to the parties. Accordingly, we have made an order dispensing with a hearing.
The respondents seek an order "that the appellant pay their costs of the proceedings, subject to their being exempt from any levy raised by the Owners Corporation to meet a costs order".

Costs of the Appeal

Section 60 (1) of the Civil and Administrative Tribunal Act 2013 (NCAT Act), requires that each party bear their own costs. However, pursuant to s 60 (2) of the NCAT Act, a cost order can be made if "special circumstances" are established.
Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NCAT Rules) states: (1) This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal. (2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if- (a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or (b) the amount claimed or in dispute in the proceedings is more than $30,000.
Rule 38A of the NCAT Rules states: (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of- (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
In respect of Rule 38A, in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 the Appeal Panel set out the following principles at [57]: 57 Adapting these principles to the circumstances of the present appeals and having regard to the specific wording of r 38, it appears to us that in applying r 38(2)(b): (1) The determinative factor is the amount in dispute in each appeal, not the amount in dispute in the proceedings at first instance; (2) The phrase "in dispute" is to be construed as meaning truly in dispute or at issue or, inversely, not unrealistically in dispute; (3) Whether "the amount … in dispute" in each appeal is more than $30,000 depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000 …
In Strata 778 Pty Ltd v Enright (No 2) [2020] NSWCATAP 71, referring to the above passage from Allen, the Appeal Panel stated at [21]-[23]: Thus, what the Appeal Panel must consider is whether the amount claimed or in dispute exceeds $30,000 in the Appeal Panel proceedings in respect of whether there is a realistic prospect that the wealth of the appealing party (the landlord) would be changed by more than $30,000 dependent upon the outcome of the appeal. Accordingly, the mere fact that the amount claimed or in dispute in the original proceedings exceeded $30,000 does not invoke r 38A of the NCAT Rules. For the provisions of s 60 (1) (2) and (3) of the NCAT Act not to apply, we must be satisfied that there is a realistic prospect the wealth of the landlord would be changed by more than $30,000 by reason of the outcome of the appeal.
The respondents submit that by reason of r 38A of the NCAT Rules, they are entitled to a costs order without "special circumstances" being established. The basis of the submission is that the amount claimed or in dispute in the original proceedings exceeded $30,000. The respondents submit that the Tribunal at first instance made a finding to that effect.
The appellant submits that it is not correct that rule 38 applied to the first instance proceedings or that the Tribunal made such a finding. They submit that, whilst the first instance costs decision involved a finding that rule 38 applied, that was made in relation to the proceedings SC 20/21282 which was a separate application made to the Tribunal by the respondents. Proceedings SC 20/21282 were an application made by the respondents against the appellant seeking orders for compensation in an amount greater than $30,000.00. That application was dismissed and did not form part of the appeal.
The decision appealed against in this case arose in respect of an application that had been made by the appellant against the respondents. As noted above, a separate cross application had been made by the respondents and the reasons for decision in the primary proceedings dealt with both sets of proceedings. However, the appellant only appealed the decision in relation to its primary application (SC 20/06967).
In the primary application the appellant had sought an order requiring the removal of the unauthorised works and the restoration of the common property. The appellant had also sought consequential orders for the respondents to pay for the works and provide to the appellant a copy of documentation providing details of the works done as a part of the restoration order. Orders were also sought for leave to return to the Tribunal, in the event the orders were not complied with, to seek orders to enable the owners corporation to carry out the works and recover the cost of carrying out the work from the respondents.
The Notice of Appeal filed by the appellant raised three grounds of appeal said to involve questions of law. Firstly, that there was no proper evidence before the Tribunal that the making of a reinstatement order would or had the effect of inviting the respondents to repeat the mischief. Secondly, that the Tribunal's exercise of its discretion not to make a re-instatement order miscarried in that it considered irrelevant considerations; and it failed to consider relevant considerations. Thirdly, that the Tribunal "erred as a matter of law" in finding that "a building alteration plan for the purposes of s 19 of the Strata Schemes Development Act 2015 (NSW) would need to and could be registered to reflect the alterations to the building. The appellant also sought leave to appeal.
We are not satisfied that any amount exceeding $30,000 was claimed or in dispute in the appeal proceedings. In effect, the appellant was alleging in the appeal that the Tribunal had erred in failing to make the orders for the lot owners to remove the unauthorised works at their own expense, which the appellant had sought. There was not a realistic prospect that the wealth of the Owners Corporation would have been changed by more than $30,000 if it were successful in the appeal. While the initial application had included orders for leave to return to the Tribunal in the event the orders were not complied with, the appeal related to the primary orders which the appellant was seeking, that orders should have been made for the lot owners to remove the unauthorised work and restore the common property.
In their written submissions in reply the respondents identified the order which had been sought by the Owners Corporation in the initial proceedings as follows: 1. that the respondents return the roof, southern wall and dining atriums to their original forms, including removing the bathrooms constructed in the loft areas, so that SP20427 in form and appearance is consistent with DA117/82 approved by Council on 2 February 1982, with the works to be managed by an architect selected by the Owners Corporation; 2. reimbursement of $14,90l.18.
The respondents also refer to evidence, provided by the appellant, of a building agreement between the Owners Corporation and G4 Building Group, under which the cost of roof modification and replacement totalled $345,000. The respondents submit that this constituted evidence which demonstrates that the value of the amount in dispute far exceeded $30.000.
In The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256As the Appeal Panel held at [86]: the expression "the amount claimed or in dispute in the proceedings" used in r 38(2)(b) suggests that the rule is concerned with the relief being directly sought in the proceedings in respect of a specific amount. It does not speak of any property or other civil right that might be at issue or any question of valuation in relation to such rights.
We reject the respondents' submissions that, because the value of the works which would have been required under the work order sought by the appellant would have been more than $30,000, rule 38 was applicable. Malachite does not stand for that proposition. Rather, that decision establishes that rule 38 is concerned with the relief being directly sought in the proceedings, not the value of the work required to comply with the orders sought.
The respondents also refer to the Appeal Panel decision in Marinko v The Owners - Strata Plan No 7596 [2022] NSWCATAP 187 to support their position that rule 38 applies to this appeal. In Marinko a finding had been made in the primary proceedings that rule 38 was applicable in relation to costs. The Appeal Panel accepted that, as the appeal sought the same orders, or orders to similar effect, as the primary proceedings, if rule 38 had been applicable at first instance, rule 38A would have applied in the appeal. However, the Appeal Panel in Marinko found that despite the finding made at first instance that rule 38 applied in the primary proceedings, rules 38 and 38A were not applicable in the appeal proceedings. The Appeal Panel explicitly stated at [121]. Contrary to the view taken by the Tribunal in the Costs Decision, in our view there was not, in the proceedings at first instance, an amount claimed or in dispute exceeding $30,000.
The Appeal Panel in Marinko also adopted the propositions stated in Allen and Malachite as referred to above. We reject the submission of the respondent that the decision in Marinko supports the position that rule 38A applies in this appeal.
We are not satisfied either that there is a realistic prospect the wealth of the Owners Corporation could have been changed by more than $30,000 by reason of the outcome of the appeal or that any amount exceeding $30,000 was claimed or in dispute in the proceedings at first instance or on appeal. Accordingly rules 38 or 38A are not applicable in this appeal. We are satisfied the provisions of s 60 of the NCAT Act governs the question of costs in these appeal proceedings.
The respondents made a brief submission, in the alternative, that "special circumstances" would be established under s 60 (2) of the NCAT Act because of the unusual and complex nature of the issues raised in these proceedings at first instance and on the appeal. As raised in paragraph 4 above, on 11 August 2022 the appellant sent correspondence raising an objection to the consideration of paragraph 8 and the respondents' reliance upon s 60 of the NCAT Act, as it was not raised in their submissions in chief.
"Special circumstances" are circumstances that are out of the ordinary, but not necessarily exceptional or extraordinary. The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: Mergerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].
Even considering the brief submission of the respondent, we do not find that these appeal proceedings raised unusual or complex issues and would not be satisfied on that basis that the respondents have established special circumstances which warrant the making of an order for costs in their favour and dismiss the application in any event.
On that basis the respondents' application for costs is dismissed.

The Owners - Strata Plan No 20427 v A Halliwell Nominees Pty Ltd

At a glance

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Judgment (4 paragraphs)

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Legislation Cited (3)

Cases Cited (6)

Cited By (1)