The Owners - Strata Plan No 74835 v Pullicin

Does the Appeal Panel have power to make a costs order in the first instance Tribunal proceedings?

1. A party may appeal against an "internally appealable decision": NCAT Act, s 80(1). The Tribunal's internal appeal jurisdiction, so far as is relevant to these proceedings, is set out in s 32(1) of the NCAT Act: (1) The Tribunal has internal appeal jurisdiction over: (a) any decision made by the Tribunal in proceedings for a general decision or administrative review decision, and (b) any decision made by a registrar of a kind that is declared by this Act or the procedural rules to be internally appealable for the purposes of this section.
2. The owners corporation has appealed from the decision of the Tribunal to pay damages to Mr and Mrs Pullicin and sought leave to appeal from an aspect of the timing of the work order. The Tribunal has not made a "decision" about costs as described in s 32(1)(a) of the NCAT Act.
3. Section 32(2) gives the Tribunal "… the following jurisdiction in proceedings for the exercise of its internal appeal jurisdiction: (a) the jurisdiction to make ancillary and interlocutory decisions of the Tribunal in the proceedings, (b) the jurisdiction to exercise such other functions as are conferred or imposed on the Tribunal by or under this Act or enabling legislation in connection with the conduct or resolution of such proceedings."
4. Section 32(2)(a) gives the Appeal Panel power to make a costs order in the appeal proceedings because an ancillary decision is defined in s 4 of the NCAT Act to include "a decision concerning the awarding of costs in proceedings". Section 32(2)(b) gives the Appeal Panel the jurisdiction to exercise other functions "in connection with the conduct or resolution of such proceedings." The Appeal Panel is given a corresponding order making power in s 81(2). Under that provision, the Appeal Panel "may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal . . ."
5. These provisions give the Appeal Panel power to exercise functions, such as making a costs order, but only in relation to "the conduct or resolution of" the appeal proceedings. There was no decision about costs at first instance. The proceedings were adjourned, part heard. Consequently, despite our invitation for the parties to make submissions on the appropriate first instance costs order, the Appeal Panel does not have power to make such an order. Any outstanding issues relating to costs need to be determined by the Tribunal at first instance.

What legal principles apply to the awarding of costs on appeal?

1. The general rule in relation to costs in the Tribunal is that each party pays their own costs unless there are special circumstances warranting an award of costs: NCAT Act, s 60(1). However, that rule does not apply to these proceedings because the proceedings are in the Consumer and Commercial Division and the amount claimed or in dispute is more than $30,000. Clause 38(2)(a) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) provides that in those kinds of proceedings, the Tribunal may award costs in the absence of special circumstances. The same costs rule applies to internal appeals from such proceedings: NCAT Rules, cl 38A.
2. Clause 38 of the NCAT Rules gives the Tribunal a wide discretion to make an order for costs. It does not specify the factors the Tribunal may take into account in exercising the discretion. When courts and tribunals have a discretion to award costs, in the absence of any disentitling conduct, costs are usually awarded in favour of the successful party. But that is not an absolute rule: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 at [67] and [134].
3. Mr and Mrs Pullicin submitted that there should be no order as to the costs of the appeal. There were three bases for that submission. First, the owners corporation appealed from both the work order and the award of damages and advanced ten grounds of appeal. Only one of those grounds was that the Tribunal did not have jurisdiction to make an order for damages. Secondly, the jurisdiction issue was a new argument made for the first time on appeal. Thirdly, the appeal was listed for hearing concurrently with the appeal from the Tribunal's unreported decision in Vickery v The Owners - Strata Plan No 80412 (18 October 2019). At the hearing of the appeal, the owners corporation adopted the submissions of the owners corporation in relation to jurisdiction in that case. In all the circumstances, Mr and Mrs Pullicin submitted that it was 'manifestly unjust' to order them to pay the owners corporation's costs of the appeal.
4. The Appeal Panel also sought the parties' submissions on whether another possible basis for each party paying their own costs was that the appeal raised issues of public importance.

Appeal was from the work order, not just the jurisdiction to award damages

1. Mr and Mrs Pullicin's primary submission on costs was that the Appeal Panel has never determined the owners corporation's challenge to the work order. In those circumstances, there ought to be no order as to the costs of the appeal because it is not possible to properly apply the principles relevant to the exercise of the costs discretion.
2. We concluded, at [9] of the substantive decision, that the Tribunal does not have power to order damages or compensation for failure to comply with the duty in s 106(1) of the Strata Schemes Management Act. On that basis, we considered that it was unnecessary to consider any of the other grounds of appeal because those grounds depended on the Tribunal having jurisdiction to award damages.
3. Mr and Mrs Pullicin submitted that the owners corporation had, in grounds of appeal 2, 3, 8 and 9, appealed from the Tribunal's decision to make a work order. On our reading of the grounds of appeal, only ground 9 relates to the work order. That ground was that: The appellant seeks leave to appeal the Tribunal's decision to order the appellants to commence rectifications works at the earliest opportunity without regard to the progress of any claim by the appellant against Max Build.
4. We note that ground 9 does not relate to the making of the work order, just to the making of that order without regard to the progress of any claim against the builder. In its written submissions on costs, the owners corporation confirmed that it has never disputed the undertaking of the work the subject of the work order. The owners corporation did not address this ground in oral submissions except to say that it may be withdrawn.
5. In these circumstances, we do not accept Mr and Mrs Pullicin's submission that because the Appeal Panel has not determined the owners corporation's challenge to the work order, we cannot properly exercise the costs discretion. The owners corporation was entirely successful on appeal.

New argument made for the first time on appeal

1. Where a party has succeeded on appeal, on a point not taken below, a court may exercise the discretion not to award costs of the appeal to that party: Nassif v Fahd [2007] NSWCA 308; Tagget v Sexton (2009) 255 ALR 522; [2009] NSWCA 91 at [89]; Malick v Lloyd (1913) 16 CLR 483 at 492; Conder v Silkbard Pty Ltd [199] NSWCA 459 at [37]. Mr and Mrs Pullicin are correct when they submit that the owners corporation did not raise the jurisdiction issue at first instance. However, the following series of events explains why that was the case.
2. At the time the Tribunal handed down its decision, there was Appeal Panel authority (­The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15 (Shum)) that the Tribunal had power to award damages for breach of the statutory duty in s 106(1) of the Strata Schemes Management Act. The owners corporation did not dispute the correctness of that decision before the Tribunal. The owners corporation raised the jurisdiction issue for the first time in its submissions on appeal. By that time, the Appeal Panel had delivered the decision in Shih v The Owners - Strata Plan No 87879 [2019] NSWCATAP 263 (Shih). That decision concluded that the Tribunal did not have power to order damages for breach of the statutory duty.
3. Following the delivery of the decision in Shih on 26 October 2019, the appeal hearing scheduled for 26 November 2019 was adjourned to allow the parties to address the issue of jurisdiction. It was not until the Appeal Panel handed down the decision in Shih that there was any authority to support the owners corporation's ground of appeal. In those circumstances, failure to take the point before the Tribunal does not amount to conduct justifying a departure from the usual costs rule.

Adopting a third parties' submissions

1. Thirdly, Mr and Mrs Pullicin submitted that they should not have to pay the owners corporation's costs because a third party argued the jurisdiction points and the owners corporation adopted its submissions. On 10 December 2019, the appellant in the Vickery case filed submissions addressing the jurisdiction issue. The owners corporation in the present proceedings filed no further written submissions on the question of jurisdiction, but they gave oral submissions at the hearing.
2. We agree with the owners corporation's submission that Mr and Mrs Pullicin do not know the extent of the work that the owners corporation undertook in respect of the argument on jurisdiction. That work was said to include extensive legal research and conferral with the appellant in the Vickery case. The owners corporation cannot be criticised for not unnecessarily duplicating written or oral submissions made by a third party in related proceedings. Minimising their costs does not amount to disentitling conduct justifying a departure from the usual costs rule.

Public importance of the question

1. We invited the parties to make further submissions on the issue of whether each party should pay their own costs on appeal because this is an issue of public importance.
2. In Oshlack v Richmond River Council (1998) 193 CLR 72 an environmental activist unsuccessfully challenged a council's development approval. In the Land and Environment Court, Stein J decided not to order Mr Oshlack to pay the council's costs. The High Court upheld that decision. Among the factors Stein J took into account were that Mr Oshlack had nothing to gain from the litigation and that he was motivated to preserve the habitat of endangered fauna on the proposed development site.
3. In Attrill v Richmond River Shire Council (1995) 38 NSWLR 545 the appellants were owners of dairy farms. They sought injunctive relief and damages from the Council for the effects of flooding. There was a conflict of authority within the Equity Division of the Supreme Court as to the meaning of s 582A of the Local Government Act 1919 (NSW). It fell to the Court of Appeal to determine whether the Council was immune from liability under that provision. The Court concluded that the provision gives immunity to the Council and the appellants were therefore unsuccessful. In ordering that each party pay its own costs, Kirby P (Clarke JA agreeing) held that: The issue raised on appeal is one of importance to local government. There has been a division of opinion within the Supreme Court. The determination of that dispute in this Court is in the public interest.
4. These proceedings involve a commercial dispute between private entities - an owners corporation and a lot owner. Mr and Mrs Pullicin had a great deal to gain from a positive outcome. While owners corporations and lot owners have an interest in the law being settled and predictable, this is not public interest litigation in the sense that term is generally understood. Even if it could be characterised in that way, the discretion to award costs is a broad one and we do not consider that any element of public interest or significance to the State justifies departing from the usual costs rule.

Should costs be awarded on an indemnity basis?

1. The owners corporation sought an order that the Mr and Mrs Pullicin pay their costs on an indemnity basis. No reasons were given in relation to the Appeal Panel proceedings which would justify costs being awarded on that basis.

Orders 1. Mr and Mrs Pullicin are to pay The Owners - Strata Plan No 74835's costs of these proceedings as agreed, or if not agreed, as assessed.

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: 17 March 2020