The Owners - Strata Plan No 55773 v Roden - [2020] NSWCATAP 197 - NSWCATAP 2020 case summary

NCAT Appeal Panel|2020-09-29|Before: Armstrong J

reasons for decision

These reasons relate to an application for costs made by the successful appellant (Owners Corporation) against Mr Roden.
The substantive appeal concerned an application made by Mr Roden to have a by-law in strata scheme SP 55773 prohibiting the keeping of animals declared invalid because it was harsh, unconscionable or oppressive and contravened section 139(1) of the Strata Schemes Management Act 2015 (NSW) (SSMA). Mr Roden was successful in the proceedings at first instance, the Tribunal making a declaration of invalidity in his favour. However, following a hearing on 11 December 2019, the Appeal Panel allowed the appeal by the Owners Corporation and made orders in its favour. The Appeal Panel set aside the declaration made by the Tribunal at first instance and dismissed Mr Roden's application. The Appeal Panel published reasons for its decision: The Owners - Strata Plan No 55773 v Roden; Spiers v The Owners - Strata Plan 77953 [2020] NSWCATAP 95 (Principal Reasons).
In doing so, the Appeal Panel made directions to allow the parties to make any applications for costs in consequent of the order for which the Appeal Panel had made.
The Owners Corporation has sought costs orders in its favour in respect of the proceedings at first instance and in respect of this appeal.

Mr Roden's reply submissions

Mr Roden filed multiple submissions which included statements from other lot owners saying that Mr Roden should not be burdened with costs. These submissions included: 1. Submissions forwarded by email dated 31 July 2020, about which the Owners Corporation filed reply submissions saying that directions for the provision of evidence by way of statutory declaration had not been complied with; and 2. A further submission lodged by Mr Roden dated 2 September 2020 which did provide a statutory declaration by him and further submissions concerning a complaint that he had made that the commencement of the appeal proceedings had not been properly authorised by the Owners Corporation.
In relation to the issue of complexity, Mr Roden variously said: 1. Without agreeing or disagreeing that proceedings were complex, the Owners Corporation had failed to establish this matter. 2. The fact there was a new law did not mean the proceedings were complex.
In relation to the issue of prolonging proceedings, Mr Roden submitted that his conduct did not result in unnecessary time, costs and expense. In this regard he said that all hearings were "held on the originally nominated date and in allotted time except for two delays which were both requested by the appellant". These were to move the original hearing in proceedings at first instance and a request for the appellant to hold an extraordinary general meeting in April 2019.
As to Mr Roden's failed adjournment application, he says it was neither misguided or vexatious.
Mr Roden then referred to the history of general meetings of the Owners Corporation concerning proposed resolutions and what had transpired.
In relation to s 60(3)(g), Mr Roden said that the Chairperson of the Owners Corporation, Ms Ramensky, had acted unilaterally without the approval of the Owners Corporation or strata committee in commencing the appeal proceedings. Mr Roden asserted permission had not been given by the Owners Corporation to appeal, a matter required by s 103 of the SSMA and/or s 105 of the SSMA (which relates to disclosure of matters relating to legal costs) had not been complied with.
Mr Roden said that at subsequent general meetings of the Owners Corporation there was no ratification of the Chairperson's actions. Reliance was placed on the English decision in Easton Construction Co Limited v National Trust Co Limited [1914] AC 197, in particular the speech of Lord Atkinson at 213.
Consequently, Mr Roden submits that the facts of what occurred concerning commencement of the appeal places in issue "who is the 'real party'". While there was no question the Owners Corporation was properly a party in the first instance proceedings, the position on appeal is different. In this regard, Mr Roden says Ms Ramensky should pay the costs.
Finally, Mr Roden referred to the decision of the High Court Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 and an article "Cost Shifting Who Pays for Litigation [1995] ALRC 75". He appeared to assert that the present proceedings were in the nature of a test case. As such, Mr Roden submitted that there are sufficient special circumstances to justify departure from any ordinary rule as to costs. By this we took him to submit that no orders should be made in the present case against him by reason of the nature of these proceedings.

Consideration

Neither party suggested a hearing was required on the question of costs. The parties have made written submissions in respect of the application. The application can be determined on basis of these submissions and we are satisfied an order should be made dispensing with the hearing.
In order to make an award for costs in the present proceedings the Appeal Panel, and the Tribunal at first instance, must be satisfied there are special circumstances: NCAT ACT, s 60(2). This means circumstances which are out of the ordinary, but not necessarily extraordinary or exceptional; Megerditchian at [11]. Factors to consider in determining whether special circumstances exist are those set out in s 60(3) of the NCAT Act.
In its submissions the Owners Corporation refers to various factual matters supporting its contention that special circumstances exist and that an order for costs should be made in its favour. These include: 1. The parties in both proceedings at first instance and at appeal were given leave to be legally represented; 2. In the proceedings at first instances Mr Roden had unsuccessfully sought an order in favour of Mr and Mrs Cranney who were not parties to his proceedings. 3. In connection with the Cranneys, there were separate proceedings commenced by the Owners Corporation, application SC 19/33300, in which orders were sought for the removal of the Cranneys' dog and that a penalty be imposed under s 147 of the SSMA.
When the Owners Corporation lodged its appeal, Mr Roden opposed a stay of the orders made at first instance declaring the by-law invalid and foreshadowed an application to be made by Mr and Mrs Cranney to be joined in the appeal. This application was made, but not pursued, by the Cranneys.
Subsequently, Mr Cranney's firm CE Cranney & Co became Mr Roden's lawyers. In addition, the Cranney's Counsel, Mr O'Brien, who had appeared for the Cranneys in their joinder application, subsequently appeared for Mr Roden including at the final hearing of the appeal.
In respect of the appeal, Mr Roden's application to adjourn was unsuccessful.
The appeal was heard over a full day concurrently with an appeal concerning the Spiers and The Owners - Strata Plan 77953.

Section 60(3)(b) - were the proceedings at first instance or on appeal unreasonably prolonged?

We are not satisfied the proceedings were prolonged by Mr Roden at first instance or at appeal.
While interlocutory applications were made, this often occurs in proceedings before the Tribunal, and in this case, did not result in the proceedings being unreasonably delayed
In respect of the interlocutory application concerning the Cranneys' dog, this was dismissed, there being no application from the Cranneys themselves in connection with this issue. Despite this fact, and even if this application by Mr Roden may have been misconceived, there is no evidence that this application delayed a final resolution of the substantive proceedings.
As to the joinder application in the appeal, this was made by the Cranneys and ultimately not pursued by them. This is not an issue to be visited on Mr Roden in connection with the appeal, a matter which we will return to below.
In relation to the adjournment application in the appeal, this was unsuccessful and did not delay the completion of the hearing of the appeal.

Section 60(3)(g) - other matters the Tribunal considers relevant

In relation to the submissions of the Owners Corporation on this aspect, we do not accept its submission that Mr Roden used his proceedings as a "back-door" means of assisting the Cooper's to be established. While his application may have been misconceived, it seems clear from the documents, to which we have been referred in the course of the appeal, including in relation to costs, that there is a difference in opinion between the lot owners of the Owners Corporation whether the existing by-law should be repealed and whether pets should be permitted. In those circumstances, it is certainly not out of the ordinary for different lot owners, in addition to the parties in the proceedings, to take an interest in the proceedings and seek to have their views put forward either directly or indirectly.
In so far as the Cranneys sought to have their issues agitated in these proceedings and to be joined to these proceedings, particularly in relation to the appeal, it seems to us that these are not matters which, of them themselves, would warrant a finding of special circumstances. Accordingly, these contentions are not made out.

Section 60(3)(d) - nature and complexity of the proceedings

As is evident from the Principal Reasons, there had been at least three decisions at first instances that had determined by-laws that prohibit the keeping of animals that were harsh, unconscionable or oppressive and that those by-laws contravened s 139(1) of the SSMA and should be declared invalid.
At the time of hearing this appeal and the appeals in Spiers and Cooper, there were no decisions of the Appeal Panel concerning the meaning and operation of s 139(1) and/or the effect this new provision had on the powers of an Owners Corporation to make by-laws in respect of a strata scheme in relation to the keeping of pets. As is evident from the Principal Reasons, the decisions of the Tribunal at first instance had considered what had been described as "a basic right of habitation" and raised issues concerning the proprietary rights of lot owners which could be not be displaced by by-laws in a strata scheme. These issues included both a consideration of previous strata legislation in New South Wales as well as strata legislation in Queensland. The factual circumstances of the by-law, Mr Roden's acquisition of his lot, the history of the meetings of the Owners Corporation, and what had occurred in the strata scheme, were not of themselves complex. However, the statutory construction issues, including the operation of the transitional provisions when the SSMA was introduced, were complex.
While the grant of legal representation under s 45 of the NCAT Act is not, of itself, a fact which demonstrates complexity the proceedings, the issues which have been addressed are, self-evidently, complex in nature and warranted orders being made in proceedings at first instance and on appeal for each party to be legally represented.
In these circumstances, and because there are no decisions of the Appeal Panel nor any Court dealing with these issues, we are satisfied in the proceedings at first instance and in the appeal that special circumstances exist warranting an award of costs in favour of the Owners Corporation.

Appeal not validly brought by Owners Corporation

In reaching this conclusion, we should make some brief comments concerning Mr Roden's submission that the appeal was not authorised by the Owners Corporation.
The substantive appeal has been determined and no issue as to the validity of the proceedings or the ability of the Owners Corporation to prosecute the appeal was brought prior to the Appeal Panel publishing its principal reasons. It is not appropriate for us to now embark on an enquiry whether or not the proceedings were properly commenced, particularly as there may be a factual dispute about this matter any subsequent actions of the Owners Corporation that may operate to ratify any actions if this were unauthorised.
In any event, as made clear by the Court of Appeal when considering s 80D of the former Strata Schemes Management Act 1996 (NSW) (1996 Act), even if the matter asserted by Mr Roden is correct (a matter about which we express no opinion) those facts would not invalidate the proceeding in which we have determined: 2 Elizabeth Bay Road Pty Limited v The Owners - Strata Plan No 73943 [2014] NSWCA 409; (2014) NSWLR 488. There, the Court of Appeal considered s 80D of the 1996 Act, the predecessor section to s 103 of the SSMA. The former s 80D was in same terms as s 103 of the SSMA. The Court determined that s 80D did not render the proceedings invalid: per Basten JA at [5], Barrett JA at [51] and Leeming JA at [105].
Accordingly, we reject Mr Roden's submission on this point.

What costs orders should be made?

It is necessary to consider each of the proceedings at first instance and the appeal separately. In relation to the proceedings at first instance, the Appeal Panel has authority to deal with the question of costs: NCAT Act, s 81(2).

Costs at first instance

Having found the proceedings were complex and that "special circumstances" exist to warrant an award of costs, the Tribunal has a general discretion in respect of costs. In these circumstances costs are compensatory and the starting position is that costs should follow the event.
In Bonita v Shen [2016] NSWCATAP 159, when considering the general discretion to award costs under r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW), the Appeal Panel said at [60]-[64]: 60 The Appeal Panel in Thompson referred to the decisions of the High Court in Latoudis v Casey (1990) 170 CLR 534 and Oshlack v Richmond River Council (1998) 193 CLR 72. 61 In Latoudis McHugh J said at 567: An order for costs indemnifies the successful party in litigious proceedings in respect of liability for professional fees and out-of-pocket expenses reasonably incurred in connection with the litigation: Kelly v. Noumenon Pty Ltd (1988) 47 SASR 182, at p 184. The rationale of the order is that it is just and reasonable that the party who has caused the other party to incur the costs of litigation should reimburse that party for the liability incurred. The order is not made to punish the unsuccessful party. Its function is compensatory. Thus, in civil proceedings an order may, and usually will, be made even though the unsuccessful party has nearly succeeded or has acted reasonably in commencing the proceedings. 62 In Oshlack McHugh J said at 97: The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party[96]. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation. 63 While McHugh J was in the minority in Oshlack (which related to an individual seeking to remedy or restrain a breach of the Environmental Planning and Assessment Act, 1979 (NSW), being proceedings authorised by s 123 (1) of that Act), the majority in that case did not disagree with the general principle but rather whether, in the particular circumstances of the case, an order for costs should be made against the unsuccessful plaintiff, Oshlack. 64 On the other hand, where there is a general discretion to award costs there is no absolute rule that the successful party must receive the costs. In Thompson the Appeal Panel said at [71]-[72]: 71 Where there is a general discretion for costs there is no absolute rule that, absent disentitling conduct, a successful party is to be compensated by the unsuccessful party nor is there any rule that a successful party might not be ordered to bear the costs of an unsuccessful party: see Oshlack … per Gaudron and Gummow JJ at 88 and Kirby J at 121-123. 72 The factors to be considered in awarding costs in a particular case are not to be confined as to do so would constrain the general discretion. However it is clear from the authorities that factors that might influence whether the usual order for costs should apply and, if so, to what extent include: (1) Whether, by reason of the relative success of the parties on different issues and the time taken to determine those that an order for costs based on issues should be made; see for example Bostick Australia Pty Ltd v Liddiard (N0 2) [2009] NSWCA 304; and (2) Whether, by reason of the nature of the proceedings the usual rule should otherwise be displaced in whole or in part: see Oshlack … per Gaudron and Gummow JJ at 41-44.
Mr Roden relied upon the decision of the Appeal Panel of Wright v Commissioner of Police (Costs) [2015] NSWCATAP 69 (Wright). There, the Appeal Panel said at [7]: The ordinary rule, as noted, is that each party bear their own costs of proceedings at the Tribunal. A feature of tribunal statutes, including this Tribunal's statute, is a less draconian approach than is seen in the courts as a question of costs, where the usual rule is that costs follow the event. Consequently, little weight is usually attached at first instance in tribunals as to the outcome of proceedings as a special circumstance that might, of itself, justify an award of costs.
We agree with the proposition stated by the Appeal Panel in Wright. However, as stated above this is not a matter where the fact of success, of itself, constitutes special circumstances. Further, there is no basis to conclude in respect of the proceedings at first instance (or indeed on appeal) that the position adopted by Mr Roden in relation to the substantive issues was unjustified or that the commencement of the proceedings by him was untenable. The state of the decisions of the Tribunal indicates such a conclusion would be wrong. The fact that Mr Roden was subsequently unsuccessful in the appeal does not alter this fact.
On the other hand, we do not think that the "test case" submission is a reason for departing from the position that an order for costs should be made in favour of the Owners Corporation.
The fact is that the proceedings were complex and they were out of the ordinary because of the absence of Appeal Panel or court decisions. There was a substantial difference of opinion between the lot owners in the Owners Corporation concerning the validity of the by-law. Having regard to the position adopted by the parties, these proceedings were necessarily brought to the Tribunal to determine the validity of the particular by-law in the context of both the complex question of law and the facts as existed in connection with Mr Roden's keeping of an animal on his lot.
It follows that an order should be made in favour of the Owners Corporation that Mr Roden pay the costs of the proceedings at first instance, as agreed or assessed on an ordinary basis.
These costs will include the costs of his unsuccessful application for interim relief at first instance seeking an order in connection with the Cranneys' dog.

Costs of appeal

The position on appeal is slightly different.
For the reasons stated above, the proceedings on appeal were also complex and an order for costs should be made in favour of the Owners Corporation. However, any costs order should exclude the costs in connection with the time taken to deal with the application by the Cranneys to be joined as a party to the appeal. In our view the order for costs should exclude costs associated with this application.
It was the Cranneys who made an application to be joined as parties then chose not to pursue it. No application for costs was made by the Owners Corporation against the Cranneys in connection with their application.
This may have caused additional costs to both parties. However these are not costs that should be attributed to Mr Roden or which he should pay. The fact Mr Roden chose to support the Cranneys' application does not affect this position.
Accordingly, in relation to the appeal, we will make an order that Mr Roden pay the costs of the appeal as agreed or assessed on an ordinary basis, such costs to exclude any costs associated with the application by the Cranneys to be joined as parties to the appeal.

ORDERS

The Appeal Panel makes the following orders: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW), a hearing of the costs application is dispensed with. 2. In respect of the application SC 18/37522, the applicant, Mr Roden, is to pay the costs of the respondent, The Owners - Strata Plan No 55773, such costs to be agreed or assessed on an ordinary basis. 3. In respect of this appeal, the respondent is to pay the costs of the appellant in respect of the appeal, such costs to be agreed or assessed on an ordinary basis. 4. The costs of the appeal payable pursuant to order 3 are to exclude costs of the Owners Corporation in connection with the application by Mr and Mrs Cranney to be joined as parties to the appeal.

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: 29 September 2020

Strata Schemes Management Act 1996(NSW)

(Repealed) Strata Schemes Management Act 2015(NSW)

The Owners - Strata Plan No 55773 v Roden

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