The Owners-Strata Plan No 68307 v Horan (No 4)

Catchwords: COSTS – application for miscellaneous matters – ancillary proceedings – costs – rr 38 and 38A Civil and Administrative Tribunal Rules 2014 (NSW) – s 60 Civil and Administrative Tribunal Act 2013 (NSW) – amount in dispute in appeal proceedings – costs in favour of successful party in the ancillary proceedings

Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW)
Civil and Administrative Tribunal Rules 2014 (NSW)
Strata Schemes Management Act 2015 (NSW)

Cases Cited: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25
FZK v Secretary, Department of Communities and Justice (No 4) [2025] NSWCATAP 278
Horan v The Owners – Strata Plan No. 68307 [2024] NSWCATAP 118
Horan v The Owners – Strata Plan No. 68307 (No 2) [2024] NSWCATAP 173
Horan v The Owners-Strata Plan No 68307 (No 3) [2026] NSWCATAP 133
Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186
Sze Tu v Lowe [2015] NSWCA 91
The Owners Corporation Strata Plan No 63341v Malachite Holdings Pty Ltd [2018] NSWCATAP 256
Vella v Mir (No 3) [2020] NSWCATAP 17
White House Developments Pty Ltd v The Owners - Strata Plan No 70276 (No 2) [2025] NSWCATAP 92
Windsurfing International Inc v Pettit [1987] AIPC 90-441

Texts Cited: None cited

Category: Costs

Parties: Michael David Horan (Appellant)
The Owners-Strata Plan No 68307 (Respondent)

Representation: Counsel:
N Y H Li (Respondent)
Solicitors:
Bannermans Lawyers (Appellant)
Kerin Benson Lawyers (Respondent)

File Number(s): 2023/00458569

Publication restriction: Nil

REASONS FOR DECISION

1. This is a costs application arising from the miscellaneous matters application dealt with in a decision of the Appeal Panel dated 24 April 2026 (Horan v The Owners-Strata Plan No 68307 (No 3) [2026] NSWCATAP 133 (Horan (No 3)**).

2. The factual background of the matter is set out in Horan No 3 and does not bear detailed repetition. Both parties have been legally represented at all relevant times.

3. Briefly, a lot owner (Mr Horan) successfully sued the owners corporation for damages under ss 106(5) and 232 of the Strata Schemes Management Act 2015 (NSW) (SSM Act) in Tribunal proceedings before Gracie SM. Gracie SM ordered the owners corporation pay Mr Horan’s costs of the Tribunal proceedings as agreed or assessed, but gave the owners corporation the opportunity to make an application to vary the costs order. The owners corporation took the opportunity availed to them.

4. However, for reasons set out in Horan No 3, the application to vary the Tribunal’s costs orders at first instance was not dealt with.

5. Mr Horan appealed the decision of the Tribunal, primarily on the basis that Gracie SM had applied the wrong legal principle to the assessment of damages, causing Mr Horan to be undercompensated for his loss of opportunity in renting the lot and deriving income. Unsurprisingly, considering that Mr Horan obtained an order in his favour on the issue of costs in the first instance proceedings, the costs orders of Gracie SM were not a subject of the appeal.

6. The Appeal Panel (Harrowell DP and Sarginson SM) allowed the appeal and increased the award of damages (Horan v The Owners – Strata Plan No. 68307 [2024] NSWCATAP 118).

7. The Appeal Panel subsequently ordered the owners corporation pay the lot owner’s appeal costs as agreed or assessed (Horan v The Owners – Strata Plan No. 68307 (No 2) [2024] NSWCATAP 173) .

8. The owners corporation then made a miscellaneous matters application to the Appeal Panel. That application purported to be an internal appeal of Gracie SM not determining the application to vary the costs order made at first instance.

9. In Horan No 3, I determined that the Appeal Panel had no jurisdiction to consider the application, as there was no internally appealable decision under ss 32 and 80 of the NCAT Act in respect of the undetermined application to vary the costs order, and that the owners corporation could reinvigorate the application that had been made to the Tribunal to vary the costs order. The application for miscellaneous matters was dismissed on the basis there was no jurisdiction.

10. The orders made by the Appeal Panel in Horan No 3 gave the parties the opportunity to make an costs application in respect of the miscellaneous matters application.

11. Both parties have made an application for costs. Both parties have provided written submissions. Neither party seeks a hearing on the issue of costs, and both parties are content with the costs application being dealt with ‘on the papers’ under s 50(2) of the NCAT Act. In any event, the written submissions of both parties provide an adequate opportunity to be heard on the issue of costs, and the determination of the costs application in the manner accommodated by s 50(2) of the NCAT Act is both procedurally fair and consistent with the guiding principle under s 36(1) of the NCAT Act.

12. I am satisfied that a hearing on the issue of costs should be dispensed with under s 50(2) of the NCAT Act.

Mr Horan’s Costs Submissions

13. Mr Horan’s costs submissions are dated 8 May 2026.

14. Mr Horan submits that rr 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) applies, and the Appeal Panel can order costs to the successful party without Mr Horan needing to establish “special circumstances” under s 60(2)-(3) of the NCAT Act.

15. The reason rr 38 and 38A of the NCAT Rules applies to the miscellaneous matters application is that the owners corporation:

“…effectively sought orders of relief from a pre-existing costs order of the Tribunal, being order 4 of the First Instance Decision. If the orders as sought in the Miscellaneous Application were made, this would relieve the Respondent from having to comply with order 4 of the First Instance Decision…”

16. Mr Horan submits that his costs in the first instance Tribunal proceedings were $39,595.07 and that, by making the miscellaneous matters application, the owners corporation was seeking to be relieved from payment of that amount. The owners corporation cites Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 at [57] and The Owners Corporation Strata Plan No 63341v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 at [90] in support of its argument that rr 38 and 38A of the NCAT Rules applies to the miscellaneous matters application.

17. In the alternative, if rr 38 and 38A of the NCAT Rules do not apply, Mr Horan submits that “special circumstances” exist under s 60(2) of the NCAT Act sufficient to cause the Appeal Panel to exercise its discretion to depart from s 60(1) of the NCAT Act and order the owners corporation pay his costs of the miscellaneous matters application. The “special circumstances” are:

18. The miscellaneous matters application was manifestly weak as there were no variation orders of Gracie SM to be appealed and the owners corporation had never lodged a Notice of Appeal with the Appeal Panel in respect of the costs decision of Gracie SM; or the purported failure of Gracie SM to deal with the application to vary the Tribunal costs orders (s 60(3)(c) of the NCAT Act);

19. The nature and complexity of the proceedings, which involved arguments pertaining to the jurisdiction of the Appeal Panel to determine the miscellaneous matters application (s 60(3)(d) of the NCAT Act); and

20. The proceedings were misconceived or lacked substance (s 60(3)(e) of the NCAT Act).

Owners Corpration’s Costs Submissions

18. The owners corporation’s costs submissions are dated 22 May 2026 and comprise of 4 pages.

19. At [2] the owners corporation submits that it “does not take a position” whether r 38(2)(b) of the NCAT Rules applies to the miscellaneous matters application it lodged.

20. The owners corporation submits that it should be awarded costs of the miscellaneous matters application because it was the successful party. It submits that it “obtained in substance the orders which it sought, being directions to the Tribunal to determine the Owners underdetermined costs application dated 5 December 2023” (at [2]).

21. The submissions refer to authorities dealing with what is meant by “costs follow the event”, with “the event” being the practical result of a particular claim (Windsurfing International Inc v Pettit [1987] AIPC 90-441 at 37-861-37,862; Sze Tu v Lowe [2015] NSWCA 91 at [39].

22. At [11]-[14] the owners corporation elaborates upon its argument that it was the successful party. It submits that the Appeal Panel in Horan No 3, although “declining to find that there was a constructive decision capable of supporting an appeal” found “the costs application below had not been determined and ought to be determined”. According to the owners corporation, that was sufficient to achieve, in substance, the “practical result” it was seeking. Mr Horan “failed” because “the Owners costs application will be determined”.

23. At [15]-[18], the owners corporation submits there are no discretionary reasons not to award it costs of the miscellaneous orders application.

Applicable Costs Principles

24. Section 60 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) states as follows:

60 Costs

(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.

25. Rules 38 and 38A of the NCAT Rules state:

38 Costs in Consumer and Commercial Division of the Tribunal

(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—

…

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

38A Costs in internal appeals

(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

26. Where rr 38 and 38A of the NCAT Rules apply, the Appeal Panel has a discretion to award costs under s 60(4) of the NCAT Act that is not constrained by s 60(1)-(3). Rules 38 and 38A of the NCAT Act, when applicable and taken together, “displaces” s 60(1)-(3) of the NCAT Act (Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 at [201]), or “modifies the application of” s 60(1)-(3) (Vella v Mir (No 3) [2020] NSWCATAP 17 at [26]).

27. For the purpose of rr 38 and 38A of the NCAT Rules, the “determinative factor” is the amount claimed or in dispute on appeal, not merely the amount claimed or in dispute in the proceedings at first instance (TriCare (at [57](1)).

28. When rr 38 and 38A of the NCAT Rules apply, the starting point is, not that each party bears its own costs, but the principle that costs follow the event and the successful party is entitled to be awarded costs to compensate it for the costs it has incurred, subject to well-established exceptions such as disentitling conduct. The discretion must be exercised judicially (Vella v Mir (No 3) [2020] NSWCATAP 17 at [28]-[29]; Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 at [206]).

29. The Appeal Panel stated in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 (TriCare) stated at [43] that the “amount claimed” in appeal proceedings involved:

“[43]…considering what orders the appellant seeks on the appeal. If those orders sought include an order that the respondent pay a sum of more than $30,000, expressly or impliedly, then the Tribunal should conclude that the amount claimed in those proceedings was more than $30,000. If the substantive orders sought do not involve any express or implied claim to any amount, it is difficult to see how there is any “amount claimed” for the purposes of r 38(2)(b).”

30. At [57] in TriCare the Appeal Panel stated the “amount…in dispute” in appeal proceedings involved:

“[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;

(4) The fact that the value of the property the subject of any appeal exceeds $30,000 does not, of itself, mean that “the amount … in dispute” in that appeal is greater than $30,000.”

31. In The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite), the Appeal Panel stated at [109]-[111]:

“[109] Rule 38(2)(b) applies to the following proceedings:

(1) Where the relief claimed in the proceedings is for an order to pay a specific amount of money, or for an order to be relieved from an obligation to pay a specific amount of money, and that amount is more than $30,000;

(2) Where an order is sought in the proceedings for the performance of an obligation (such as to do work) and the Tribunal has power make an order to pay a specific amount of money even if not asked for by the claimant, provided that

(a) there is credible evidence relating to the amount the Tribunal could award; and

(b) that evidence, if accepted, would establish an entitlement to an order for an amount more than $30,000.

[110] Rule 38(2)(b) may also apply to proceedings where the orders sought in the proceedings depend upon the claimant proving there is a debt owed in order to establish an entitlement to the relief sought, and that amount is in dispute and is more than $30,000.

[111] Rule 38(2)(b) does not apply to proceedings:

(1) Where a claim for relief in the proceedings (not being a claim for an order to be paid or be relieved from paying a specific sum) may, as a consequence of that relief being granted, result in the loss of any property or other civil right to a value of more than $30,000; or

(2) Where there is a matter at issue amounting to or of a value of more than $30,000 but:

(a) no direct relief is sought and no order could be made in the proceedings requiring payment or relief from payment of an amount more than $30,000; or

(b) the relief sought does not depend on there being a finding that a specific amount of money is owed.

32. In Malachite at [90] the Appeal Panel stated:

“[90] In cases where an amount is claimed by an applicant, an award of money may be made. In cases where an applicant seeks relief from payment, no amount is claimed as an order for payment is not sought. Rather, an order is made for relief from payment. However, “the amount in dispute” is the specific amount from which relief from payment is sought, there being a dispute about whether the applicant for relief is liable to pay the particular sum or should otherwise be relieved from the obligation to pay. In each case, “the amount” is identified and, where it is greater than $30,000, r 38(2)(b) is engaged.”

33. If s 60(1)-(3) of the NCAT Act apply, the applicable principles are summarized in FZK v Secretary, Department of Communities and Justice (No 4) [2025] NSWCATAP 278 (FZK (No 4)) at [31]-[41], [52] as follows:

“[31] The usual rule is that a party is to pay their own costs of proceedings but, as the legislation makes clear, the Tribunal may make an order for costs if satisfied that there are ”special circumstances”: s 60(2) NCAT Act.

[32] Six leading principles are apposite.

[33] First, special circumstances are circumstances that are out of the ordinary. It is not necessary to establish extraordinary or exceptional circumstances: see Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11] quoting Cripps v G&M Dawson Pty Ltd [2006] NSWCA 81 per Santow JA at [60]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].

[34] Secondly, the onus is on the party seeking an order for costs to satisfy the Tribunal that there are special circumstances warranting an award of costs in its favour: see McEwan v Port Stephens Council (No 2) [2022] NSWCATAP 386 at [38].

[35] Thirdly, the Tribunal is to consider whether the circumstances are sufficient to amount to special circumstances that justify departing from the general rule that each party bear its own costs: BPU v NSW Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]. The mere existence of one of the enumerated factors in s 60 of the NCAT Act will not of itself be sufficient to warrant the conclusion that there are special circumstances.

[36] Fourthly, each case will depend on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay and Wes Davies [2015] NSWCATAP 152 at [27].

[37] Fifthly, mere success (or failure) of an application does not give rise to special circumstances: The Owners – Strata Plan 5319 v Price [2020] NSWCATAP 245 at [46].

[38] Sixthly, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48].

[39] Overall, what is required is for the Tribunal to exercise its discretion in a manner which is fair and reasonable having regard to the particular circumstances of a particular case.

[40] The decision to award costs pursuant to s 60(2) of the NCAT Act involves, in effect, two decisions. The first is the Tribunal’s satisfaction that there are special circumstances warranting an award of costs. The satisfaction involves a degree of subjectivity and thus, in a broad sense, may be described as a discretionary decision (as described in respect of similar legislative provisions in a different statutory context in Coal and Allied Operations Pty Ltd v Australian Industrial Relations Commission (2000) 203 CLR 194; [2000] HCA 47 at [20] per Gleeson CJ, Gaudron and Hayne JJ). If the Tribunal has regard to any matters as set out in s 60(3) of the NCAT Act, the matters must be given due weight.

[41] As s 60(2) of the NCAT Act makes clear, if the requisite satisfaction is reached, the Tribunal ”may” make the order. Satisfaction as to the existence of special circumstances merely enlivens the discretion to award costs rather than mandating an award of costs: Al-Aaraj v Commissioner of Police, NSW Police Force (No 2) [2025] NSWCATAP 166 at [40]; Brodyn Pty Ltd v Owners Corporation - Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [32]. This necessitates the making of a second decision (which we term the overall discretion) as to whether in all the circumstances, an award for costs should be made.

…

[52] An award of costs is intended to be compensatory and not punitive: Latoudis v Casey (1990) 190 CLR 534 at 567; [1990] HCA 59; Grasso v The Owners – Strata Plan No. 52399 [2022] NSWCATAP 91 at [12(6)].”

Does Rule 38(2)(b) Apply?

34. Mr Horan submits that r 38(2)(b) applies to the appeal, because the owners corporation was seeking to vary the amount of the costs order made by Gracie SM at first instance, which in substance sought to reverse that order and substitute orders that Mr Horan pay the owners corporation’s costs to 20 February 2023, and from 20 February 2023 on an indemnity basis.

35. The owners corporation has made no submission that the costs of Mr Horan of the first instance proceedings were not an amount exceeding $30,000. It has made no submission that the amount in dispute in the appeal proceedings involving the miscellaneous matters application is uncertain or unable to be quantified (Malachite at [99]-[101]).

36. The submission of the owners corporation that it “does not take a position” on the operation of rr 38 and 38A of the NCAT Rules to this costs dispute is unhelpful. Parties and representatives have an obligation under s 36(3) of the NCAT Act to cooperate with the Tribunal to give effect to the guiding principle of the Tribunal for the just, quick and cheap resolution of the real issues in dispute. For a legally represented party to remain silent on the important legal issue as to what costs principles apply may not rise to the level of breaching s 36(3) of the NCAT Act, but it is of no assistance in the determination of this costs dispute.

37. Further, by focussing its submissions on the assertion that it is the “successful party” who should be awarded costs because of the principle that costs follow the event, without any reference to ss 60(1)-(3) of the NCAT Act, the owners corporation appears to adopt the position, by implication from its silence on ss 60(2)-(3) of the NCAT Act, that r 38(2)(b) of the NCAT Rules applies in respect of the costs of the miscellaneous matters application. The principles that the owners corporation seeks apply are the principles that arise from r 38(2)(b) of the NCAT Rules, not ss 60(1)-(3) of the NCAT Act.

38. Considering there is no challenge to the submission of Mr Horan that his costs at first instance exceed $30,000, and the owners corporation sought in the miscellaneous matters application to, in substance, appeal against and have determined by the Appeal Panel the application to vary the costs orders made by Gracie SM at first instance, [57](3) of TriCare is satisfied.

39. Further, because the relief claimed by the owners corporation in the miscellaneous matters application is to be relieved of the obligation to pay a specific amount of money in the sense that the costs amount sought by Mr Horan has been quantified (even if it has not yet been the subject of costs assessment); and there is no contest that the amount the owners seeks to be relieved upon for payment exceeds $30,000, [90] and [109](1) of Malachite applies. The use of the words “an order to be relieved from an obligation to pay a specific amount of money” in [109](1) of Malachite must be read in the context of what was said at [90] regarding the amount “in dispute”.

Who Is the Successful Party?

40. I accept the submission of Mr Horan that he was the successful party in the miscellaneous matters application, and reject the submission of the owners corporation that it was the successful party.

41. The miscellaneous matters application was to the Appeal Panel. It argued the Appeal Panel had the power to consider the application to vary the costs orders made by the Tribunal at first instance, and to do so by way of an appeal from a decision of the Tribunal. For the reasons set out in Horan No 3, I found the Appeal Panel had no jurisdiction and the miscellaneous matters application was dismissed.

42. The submission by the owners corporation that it “got what it sought” by reason of the comments in Horan No 3 at [85]-[89] regarding the owners corporation taking measures to have the matter re-listed before the Tribunal overlooks the fact that the owners corporation could have taken such measures itself, rather than lodging a miscellaneous matters application to the Appeal Panel. The practical result of the dismissal of the miscellaneous matters application for want of jurisdiction is that Mr Horan was the successful party in the miscellaneous matters application, not the owners corporation.

What Would be The Outcome if s 60(1)-(3) of the NCAT Act Applied?

43. If the principles in ss 60(1)-(3) of the NCAT Act applied, I would be satisfied that there are “special circumstances” under ss 60(2)-(3) of the NCAT Act sufficient to cause the exercise of discretion that the owners corporation pay Mr Horan’s costs of the miscellaneous matters application by reason of the relative strengths of the arguments of the parties (s 60(3)(c) of the NCAT Act).

44. The miscellaneous matters application was brought over 18 months after the owners corporation had made the application to the Tribunal to vary the costs orders at first instance (Horan No 3 at [83]-[86]) and the miscellaneous matters application and the submissions of the owners corporation made no reference to the Appeal Panel decision in White House Developments Pty Ltd v The Owners - Strata Plan No 70276 (No 2) [2025] NSWCATAP 92, which was delivered more than 4 months prior to the miscellaneous matters application. Both parties have been, at all relevant times, legally represented and there are sufficient discretionary reasons to conclude that there are special circumstances of a nature that are sufficient to cause the exercise of the discretion to depart from the principle in s 60(1) of the NCAT Act.

ORDERS

1. A hearing on the issue of costs is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW).
2. The Owners-Strata Plan No 68037 is to pay the costs of Michael David Horan of and incidental to the miscellaneous matters application lodged on 11 September 2025 as agreed or assessed.

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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