The Owners - Strata Plan No 54026 v UniLodge Australia Pty Ltd

Submissions

1. It is common ground that s 60 of the NCAT Act applies to the application for costs. That is, each party is to pay their own costs. However, the Tribunal may award costs but "only if it is satisfied there are special circumstances warranting an award of costs".
2. It is also common ground that special circumstances mean out of the ordinary, but not extraordinary or exceptional.
3. Section 60(3) sets out the factors to which the Tribunal may have regard in determining whether there are special circumstances warranting an award for costs. The respondents rely on four factors identified in that subsection.

The relative strength of the party's claim or whether the claim was 'tenable': s 60(3)

1. The respondent submitted that the appellant's application for leave to appeal was untenable because: 1. all the grounds for seeking leave to appeal were rejected by the Appeal Panel; 2. the Appeal Panel determined there was no issue of principle, no question of public importance, no injustice which was reasonably clear and a factual findings that were unreasonably arrived at or work clearly wrong nor were there any other factors which would warrant the grant of leave; 3. the appellant had initially relied upon one ground that the decision was not fair and equitable. This ground was based on an affidavit filed by the appellant, which was refuted by an affidavit filed by the respondents. At its highest, the respondents say the appellant's claim was that the Tribunal Member at first instance "adopted a 'hostile' tone of voice and used 'dramatic facial expressions'". In making this submission, the respondents referred to the Reasons at [64] where the Appeal Panel noted that a transcript of the hearing had not been provided by either party. 4. the nature of the application for leave to appeal, to challenge an interlocutory decision which was not determinative of substantial rights, was inappropriate having regard to existing authority.
2. Consequently, relying on Guo v The Owners Strata Plan No. 70067 (No 2) [2018] NSWCATAP 135 at [13], the respondents say that the appeal had no prospects of success.
3. In reply, the appellant says the lack of success of itself does not mean the appeal is out of the ordinary. The respondent submits there "must be a 'high-level' of relative weakness on a party's case to justify cost order".
4. The appellant also points to the fact that there was competing evidence concerning the conduct of the hearing at first instance provided by the parties' lawyers. The fact of competition itself is an indication that the appeal was not out of the ordinary.

The appeal was frivolous, vexatious, misconceived or lacking in substance: s 60(e)

1. The respondents say that the appellant's appeal was lacking in substance because "it could not be seriously argued that the Tribunal was unable to deal with the issues raised in the proceedings and that at no point did the appellant even attempt to claim that the discretion to refuse the transfer application miscarried".
2. The respondents highlight the fact that the Appeal Panel concluded applications under ss 24, 25 and 237 of the Strata Schemes Management Act 2015 (NSW) (SSMA) were clearly within the power of the Tribunal, that the Supreme Court could not finally resolve an application brought under the SSMA and that the exercise of discretion by the Tribunal to decline the transfer was not itself subject to challenge by the appellant.
3. Consequently, the respondents submitted that "it could not be seriously argued that the Tribunal was unable to deal with the issues raised".
4. In response, the appellant says that the Appeal Panel did not characterise the appeal as misconceived. Rather, the Appeal Panel was not persuaded by the appellant's arguments. There was no finding that the appeal was "untenable, groundless, hopeless, fanciful, holy misconceived or doomed to fail". The proceedings could not otherwise be described as vexatious.
5. In reply, the respondents said the absence of findings in the primary decision do not preclude the Appeal Panel in an application for costs determining that the claim made lacked substance, provided such finding was not inconsistent with the primary reasons for decision.

Refusal or failure to comply with the duty imposed by s 36 of the NCAT Act: s 60(3)(f)

1. The respondents say that the application to transfer was made "a matter of days before a two-day (urgent) hearing fixed some 6 weeks earlier". Seeking to appeal the interlocutory decision having regard to the procedural history was indicative of the appellant failing to cooperate with the Tribunal in providing a just, quick and cheap resolution of the real issues in dispute. Reference is made to the Appeal Panel decision in Sahade v Owners SP No 62022 [2015] NSWCATAP 225 and the permissibility of considering earlier conduct.
2. The appellant says that the conduct of proceedings at first instance is not relevant to the determination of the present application. There is no conduct in the appeal proceedings which would demonstrate a relevant refusal or failure.

Other matters: s 60(3)(g)

1. The respondents say that the fact an unsuccessful party "subjects the successful party to a further round of litigation before the Appeal Panel, and does not succeed" is conduct that may be taken into account as a factor favouring an order for costs of the appeal. The respondents rely on the decision in BDK v Department of Education and Communities [2015] NSWCATAP 129 at [82].
2. In this case, the respondents submitted that the appellant was unsuccessful in the Tribunal at first instance and brought an appeal "to revisit the refusal" to transfer the proceedings. The respondents say that the "exercise by the appellant of an appeal right undermined (in the sense of prejudicing) the value of that outcome for the respondents".
3. The appellant says that BDK is distinguishable on the facts, that appeal concerning a challenge to a summary dismissal application and a finding that the proceedings were vexatious.

Consideration

1. The present application for costs concerns an unsuccessful application for leave to appeal.
2. NCAT Act permits, with leave, a challenge to an interlocutory decision. As with all applications to which s 60 applies, the starting position is that each party is to pay their own costs. The fact the application is made to the Appeal Panel does not, of itself, constitute special circumstances, namely circumstances that are out of the ordinary.
3. Further, the lack of success in an application for leave to appeal is relevant but not, of itself, sufficient to demonstrate special circumstances.
4. Rather, the Tribunal must have regard to all relevant matters to determine there are special circumstances warranting an order for costs.
5. Four grounds were raised in the application for leave to appeal. These were: 1. that the Tribunal erred in concluding the Supreme Court did not have jurisdiction to hear the dispute. Reasons at [23]; 2. that the Tribunal was incorrect in determining it possessed jurisdiction to hear the dispute; Reasons at [33]; 3. that the Tribunal incorrectly determined issues of apprehended bias: Reasons at [50]; and 4. that the Tribunal denied the appellant procedural fairness or that the appellant was denied natural justice by reason of the Tribunal pre judging the issues for determination in the application or other conduct of the Member during the hearing: Reasons at [58].
6. The grounds themselves inform the nature of the dispute between the parties and provide context in which to evaluate the application for costs. In this regard, there was a challenge to the Tribunal refusing to exercise its discretion to transfer the proceedings to the Supreme Court under Sch 4 cl 6 of the NCAT Act.
7. Grounds 1 and 2 were rejected because the Appeal Panel found, in the context of the orders sought in the proceedings first instance, that 1. the Tribunal at first instance correctly concluded: 1. the Tribunal had jurisdiction to make an order under s 237 of the SSMA (which relates to appointment of strata managing agent); 2. the Supreme Court did not have power to make an order under that section; and 1. in determining such a dispute, which related to the management of the strata scheme and whether or not it was properly functioning, that the Tribunal might have authority to determine issues concerning the validity of proxies relied upon at a general meeting of the Owners Corporation.
8. Ground 3 was rejected because any challenge on the grounds of bias is properly to be made in respect of the particular decision-maker who is appointed to adjudicate the dispute, not the Tribunal in general. Consequently, the general assertion that the Tribunal was biased because one of its part time members (who is an engineer) has provided an expert report independently of any Tribunal proceedings and/or may be required to give evidence in proceedings before the Tribunal concerning that report was not a reason to transfer the proceedings to the Supreme Court.
9. In respect of ground 4, the Appeal Panel said in the Reasons at [64]-[67]: 64 In the present case, no submissions have been made about what conduct was inappropriate. No submissions have been made as to why the decision of Damjanovic is relevant in circumstances where both parties are legally represented. At best the Appeal Panel is being asked, in the absence of a transcript of the hearing, to conclude the hearing process of an interlocutory application miscarried on the basis of competing evidence of the lawyers in attendance concerning the Senior Member's demeanour and what was said. 65 This ground is asserted despite the fact that the parties had filed written submissions- presumably setting out their respective contentions in respect of the various matters for determination- and despite the fact that the Tribunal is not a court and is able to inform itself in such manner as it thinks fit (subject to the requirement to afford natural justice and to allow a party a reasonable opportunity to be heard): see s 38(1) and 38(5)(c) of the NCAT Act. 66 The decision that has been made by the Tribunal is an interlocutory decision to refuse a transfer application. The application was rejected because the Tribunal found, on the information then available that (sic) it, that the Tribunal could deal with the issues raised in the proceedings and make orders to finalise the dispute under the SSMA. There is no claim the discretion to refuse the transfer application miscarried. 67 In these circumstances this ground is not established.
10. Having regard to these conclusions, I accept that the respondents' submission that the lack of success in the context of the grounds raised constitutes circumstances which are out of the ordinary. My reasons are as follows.
11. As explained in the Reasons, the Tribunal at first instance had before it an application under s 237 of the SSMA. It clearly had power to adjudicate on the question of whether a strata managing agent should be appointed by the Tribunal and could make such an order if satisfied of the matters in s 237(3).
12. It was obliged to determine this application, whether or not the Supreme Court was able to determine any proxy dispute. This determination by the Tribunal may include dealing with any issues concerning the validity of proxies.
13. In circumstances where there was no general challenge to the exercise of the discretion to refuse the transfer application and in circumstances where the appellant did not suggest the Supreme Court had power to make orders under s 237 of the SSMA, in my opinion appellant's case for leave to appeal the interlocutory decision was weak. Further, having regard to the issues raised in the manner in which the application for leave to appeal was presented, it was unlikely a transfer order would be made by the Appeal Panel because the Tribunal was required to deal with the application under 237 of the SSMA as well as the applications under ss 24 and 25 of the SSMA.
14. In reaching this conclusion, I do not accept that the proceedings were frivolous vexatious or misconceived. Also, I do not accept that, in respect of the application for leave to appeal, the appellant or its legal advisors have acted in a manner contrary to the requirements of s 36(3) of the NCAT Act.

Orders

1. Having found special circumstances, the appellant nonetheless submits that an order for costs should not be made in the exercise of the Appeal Panel's discretion. Reference is made to the decision in Rae v Commissioner of Police, New South Wales Police Force (EOD) [2011] NSWADTAP 30, a decision of the former Administrative Decisions Tribunal, where Judge O'Connor at [7]: The making of costs orders may discourage people from hearing their grievances. The primary rule reinforces these public interest objectives. The exception is not to be lightly applied.
2. In this regard the appellant submitted: Nothing about the application for leave to appeal was so clearly out of the ordinary or unusual as to amount to a 'special circumstances' that enlivens the exception.
3. Having found special circumstances, there is still a discretion to be exercised as to whether an order for costs should be made and, if so, on what terms.
4. I am satisfied my discretion should be exercised in favour of the respondents and that an order for costs should be made against the appellant on an ordinary basis.
5. The submissions provided by the appellant do not provide a reason to refrain from making an order for costs in circumstances where the power to do so is enlivened by the findings I have made. In this regard the decision in Rae was made in the context of proceedings under the Anti-Discrimination Act 1977 (NSW) and the considerations that might apply in such proceedings when determining issues of cost.
6. The Appeal Panel makes the following orders: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act, 2013 a hearing of the application for costs is dispensed with. 2. The appellant is to pay the respondents' costs of the application for leave to appeal as agreed or assessed on an ordinary basis.

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 May 2020