The Owners - Strata Plan No. 54026 v Evans

Relevant law

1. The effect of s 60 of the Civil and Administrative Tribunal Act 2013 (the Act) is that s 60(1) provides that "Each party to proceedings in the Tribunal is to pay the party's own costs" but s 60(2) relaxes that default position by providing that "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". A non-exhaustive list of considerations is then set out in s 60(3): (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 the Tribunal considers relevant.
2. It is well-established that the adjective "special" requires circumstances that are out of the ordinary but do not need to be extraordinary or exceptional: Megerditchian v Kumond Homes Pty Ltd [2014] NSWCATAP 120, adopting what was said in Cripps v G & M Mawson [2006] NSWCA 84 at [60].
3. Since s 60(2) commences with the words "The Tribunal may award costs …", it is clear the Tribunal has a discretion which must be exercised. Thus, it is necessary to consider not only whether there are special circumstances but also whether those circumstances warrant an award of costs.
4. However, s 35 of the Act operates to make s 60 subject to r 38(2) of the Civil and Administrative Tribunal Rules 2014 (the Rules) which relevant provides: 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: … (b) the amount claimed or in dispute in the proceedings is more than $30,000.
5. When r 38 applies there is a general discretion to award costs and it is well established, by decisions such as News v Cotes [2019] NSWCATAP 186, Bonita v Shen [2016] NSWCATAP 159 and Thompson v Chapman [2016] NSWCATAP 6, that: (1) the starting point is that the usual order for costs should be in favour of the successful party, (2) the award is not to punish the unsuccessful party but to compensate the successful party for the costs incurred in the proceedings, and (3) departure from the usual order is permissible if the circumstances favour that course of action.
6. Simply stated, when r 38 applies it is not necessary to establish special circumstances and the usual order is that costs follow the event (ie follow the outcome of the case) unless there is disentitling behaviour by the successful party: Latoudis v Casey [1990] HCA 59, Oshlak v Richmond River Council [1998] HCA 11.
7. The question of whether r 38(2)(b) applies was considered in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite) which established that it is necessary for either: (1) the amount claimed to exceed $30,000; or (2) the amount in dispute to exceed $30,000; or (3) there to be credible evidence which, if accepted, would establish an entitlement to an order for more than $30,000. On the other hand, rule 38(2)(b) does NOT apply where either: (1) the proceedings do not involve a request for payment, or relief from payment, of $30,000 or less; or (2) the relief sought does not depend on a finding that an amount of money is owed.
8. Further, it is noted that s 36(1) of the Act of the sets the guiding principle as facilitating "the just, quick and cheap resolution of the real issues in the proceedings", s 36(3) requires parties and their lawyer to give effect to that principle, and s 36(4) provides: In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.

Consideration

1. The applicant chose to obtain legal representation and that resulted in written submissions that were 214 pages long (18 pages plus 196 pages of annexures) being filed, together with an affidavit in support that ran to 865 pages (9 pages plus 856 pages of annexures). It is noted that significant portions of those documents were plainly word-processed copies of documents lodged in similar, earlier proceedings. Even the submissions subsequently lodged for the applicant on costs were 20 pages long.
2. Being concerned at the hearing that the applicant was running up significant costs on a very straightforward matter, the Tribunal requested that any written submissions lodged in support of an application for costs indicate the amount of the applicant's costs. In those submissions, it was indicated that "the actual costs as at the date of this submission are approximately $24,000 (plus GST)" which is more than $26,000.
3. These proceedings did not involve a request for payment or relief from payment. The relief sought did not depend on a finding that an amount of money is owed. Accordingly, applying Malachite, the costs of these proceedings are governed by s 60 of the Act and not r 38 of the Rules. As a result, it is necessary to consider (1) whether there are special circumstances, and (2) if so, whether those circumstances warrant an order for costs.
4. The proceedings were commenced on 11 March 2022 and were finalised on 1 April 2022. There is nothing to suggest the respondent conducted the proceedings in a way that unnecessarily disadvantaged the applicant. Nor can it be said that the respondent prolonged the completion of the proceedings. As a result, paragraphs (a) and (b) of s 60(3) do not apply.
5. Moving to paragraph (c), the applicant had a strong case and the respondent consented to an access order on the first occasion when the application came before the Tribunal. However, the respondent did express valid concerns that were addressed in the orders that were made.
6. Since the proceedings were straightforward and simple, paragraph (d) is not applicable.
7. The proceedings were not frivolous, vexatious, misconceived or lacking in substance. Thus, paragraph (e) is not satisfied. There does not appear to have been any failure to comply with s 36(3) of the Act. Hence, paragraph (f) has no application.
8. Submissions were made, by reference to paragraph (g), as to the conduct of the respondent and the conduct of the applicant. It was contended that the respondent made unreasonable demands prior to the proceedings as a condition of her consent to access, including a claim for compensation of $30,059.62, and failed to articulate any reason why access should not be granted which "caused the owners corporation to incur unnecessary costs".
9. In relation to the conduct of the applicant, it was said there was a strict duty under s 106 of the Strata Schemes Management Act 2015 to repair and maintain common property and that the applicant was left with no option but to seek an order under s 124 of that statute. It was contended that there was a complex factual background, both as to the history of access being sought and the scale of the remedial work.
10. This was a straightforward application of a kindly not uncommonly encountered in the Tribunal. It only required the applicant to establish a reason why it needed access to the respondent's lot. Some evidence of the relevant owner's and/or occupier's failure or refusal to provide access is usually also provided. Applications for access orders are commonly made without any legal representation.
11. Even if the Tribunal takes into consideration the pre-application conduct of the parties, the length of the negotiations is the result not only of the requests of the respondent but also the failure of the applicant to commence proceedings. In this case, as soon as the respondent made demands which the applicant considered unreasonable, the applicant could and should have lodged an application which, given the clear urgency, would have been finalised much earlier than occurred. If that had been done, considerable time and cost would have been saved.
12. The documents submitted on behalf of the applicant for the hearing were plainly excessive and went far beyond what was reasonably necessary. Metaphorically speaking, the documents lodged in support of this application did not describe the forest: they described every tree in that forest.
13. The fact that an applicant chooses to retain a lawyer, and considerable costs are then incurred, does not necessarily mean that the respondent should be ordered to pay those costs. There is an irony in the applicant complaining that the respondent was claiming more than $30,000 from the applicant before access would be granted and the applicant now claiming more than $26,000 for access that was granted.
14. Just as the applicant's lawyer contended that the respondent's claims for compensation were unreasonable, the Tribunal considers the claims for costs to be unreasonable. The Tribunal considers that the costs incurred by the applicant in relation to a straightforward application for an access order were out of proportion to the subject matter of the proceedings.
15. Accordingly, the reasons why the Tribunal does not consider the applicant to be entitled to an order for costs are as follows. First, none of paragraphs (a) to (f) of s 60(3) of the Act appear to be satisfied in this case. Secondly, a consideration of the conduct of both parties does not justify a finding that there were special circumstances in this case. Thirdly, even if it could be said there were special circumstances, the Tribunal is not satisfied that the circumstances of this case warrant an order for costs being made as the costs are not proportionate to the nature of the proceedings.
16. In short, to make an order for costs in this case would be to sanction the litigation equivalent of a scorched earth policy which is contrary to the Tribunal's guiding principle, which has a statutory footing in s 36(1) of the Act.
17. The Tribunal is satisfied that there is no utility in conducting a hearing on the question of costs and it is noted that the applicant's submissions requested the Tribunal dispense with such a hearing.

Orders

1. For the reasons indicated above, the orders that will made are as follows: 1. The Tribunal dispenses with a hearing on the question of costs, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013. 2. Each party is to pay their own costs.

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: 22 July 2022