The Owners - Strata Plan No. 77109 v Gokani-Robins Pty Ltd

Consideration

1. The application for costs raises four issues: 1. Should an order be made dispensing with a hearing? 2. Does r 38 apply to these proceedings? 3. If r 38 does not apply, are there special circumstances warranting an order for costs and, if so, should an order for costs be made and on what terms? 4. In respect of costs of the stay application, the subject of the December Costs Order, should these costs be included in any order now made? 5. Can, and if so should, orders be made under ss 104 or 232 of the SSMA concerning the levying of costs of the appellant and/or the respondents?

Should an order be made dispensing with a hearing?

1. The respondents said a hearing was not required. The appellant's position was that if certain issues of fact require a determination, a hearing is necessary if an order is to be made for a lump sum amount. Otherwise, the appellant consented to the costs application being dealt with on the papers.
2. We do not propose to make a lump sum award for costs in any event. Further, it is clear the parties have expended significant monies on these proceedings today. There is no reason why a further hearing is necessary.
3. We will make an order under s 50(2) of the NCAT Act to dispense with a hearing of the costs application.

Does r 38 apply to these proceedings?

1. In their submissions in reply, the respondents say that r 38 applies because of r 38A. Relevantly, r 38A provides: 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 - … (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.
2. That is, r 38 will apply to the appeal if it applied to the proceedings at first instance.
3. Rule 38 relevantly provides: 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.
4. The respondents submit "the relevant issue is whether 'the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the rights claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000 and the evidence of the appellant itself is that it exceeds the threshold amount". Reliance is placed on the decision of the Appeal Panel in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 (Allen) at [57].
5. We do not accept this submission. The test is not whether there is a change in wealth. The issue is whether "the amount claimed or in dispute in the proceedings is more than $30,000".
6. As explained in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite), the language of r 38(2)(b) is not in terms that requires the Tribunal to determine whether the wealth of a party will change by more than $30,000. It does not involve a process of determining the value of a right. Rather, the rule applies where "the amount claimed or in dispute is more than $30,000": Malachite at [3]-[5] and [75]-[111]; see also The Owners - Strata Plan No 20427 v A Halliwell Nominees Pty Ltd (No 2) [2022] NSWCATAP 268 at [20]-[21].
7. Further, if this submission is correct, and there was an amount claimed or in dispute greater than $30,000 in the proceedings at first instance (as that expression is used in r38(2)(b)), then the Tribunal never had jurisdiction to determine the proceedings because the Local Court proceedings raise the same issue. This was because of Sch 4 cl 5(7). As explained in the Primary Decision at [6]-[9] this was not the case- the applicants (now respondents in this appeal) sought an order declaring the relevant by-law invalid. There was no amount claimed or in dispute in the proceedings in the Tribunal. Therefore r 38 never applied to those proceedings and r 38A has no application to this appeal.
8. It follows that s 60 applies and the respondents must establish special circumstances.

If r 38 does not apply, are there special circumstances warranting an order for costs and, if so, should an order for costs be made and on what terms?

1. Special circumstances means circumstances out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].
2. As noted above, seventeen reasons were advanced as to why there are special circumstances why costs should be made.
3. Reasons 1, 4 and 6 can be dealt with together. They are: Reason 1: Appellant wholly unsuccessful (ss 60(3)(c), 60(3)(e)) a. The Appellant led 12 grounds of appeal, each of which were rejected by Appeal Panel. The grounds raised by the Appellant were completely lacking in substance b. The Appellant's claim could not possibly have succeeded, to the point that its claim had no tenable basis in fact or law. c. A substantial disparity between the strength of the Respondents' claim and the weakness of the Appellant*s claim must exist before an order for costs will be fair. Having regarding the all the issues, submissions and evidence filed by the parties, those circumstance are quite clearly made in out in this instance. … Reason 4: Appellant on clear notice (ss 60(3)(c). 60 3)(e), 60(3)(g) ) The Appellant was, or should have been, on clear notice as to the issues with its case (especially having engaged legal advisors), including from the following sources of authority: a. General Member Harvey: specifically advised the legal advisors for the parties in the Local Court (being the same legal advisors to the parties in the Appeal) that she was a General Member of NCAT and was content to take the extraordinary step of adjourning the Local Court proceedings for as long as necessary to allow the validity of SBL 17 to be determined by NCAT b. General Member George: the Primary Decision was well-reasoned and in line with the relevant authorities. There was no proper basis to Appeal the decision. In addition: c. Some regard ought to be had to the information contained in the Respondents' application at first instance, submission at first instance, Reply to Appeal, Submissions in Opposition to the Application for a Stay dated 21 September 2022, RS 28/I0/22 etc. a)1 of which have remained unchanged in substance throughout. d. There is no precedent available from the thousands of cases decided by NCAT that could support SBL 17 being found to be valid but numerous cases of by-laws far less egregious than SBM 17 being found invalid. In short, the Appellant had every opportunity to assess its case and elected to proceed regardless, to the substantial prejudice of the Respondents. … Reason 6: Proceedings by Appellant misconceived (s 60(3)(e)) a That the Appellant's claim was so wide-reaching and well resourced, but rejected by the Appeal Panel in every aspect, is indicative of how critically deficient its case was. The case of the Appellant was very weak, to the point being misconceived. b. The Respondents' refer in particular to paragraphs [21], [64], [73] and [81] of the of the Appeal decision.
4. We do not accept the proceedings were misconceived, vexatious or otherwise misconceived or lacking in substance. Further, it could not be said the appeal had no tenable basis in fact or law. Nor, in our opinion could it be said that the relative strengths of each party's case gave rise to circumstances which are out of the ordinary and for which an order for costs should be made despite s 60(1).
5. The fact a person exercises a right in respect of appeals from decisions first instance pursuant to s 80(2)(b) of the NCAT Act is not, of itself, out of the ordinary.
6. Challenges to by-laws based on s 139(1) of the SSMA are relatively recent as is the interaction of that section with s 136(2). There are no series of decisions to which we were referred that would suggest the circumstances about which the Tribunal at first instance and the Appeal Panel adjudicated had been the subject of any previous determinations either by this Tribunal or by the Supreme Court of New South Wales. These matters count against a conclusion that special circumstances based on factors (c) and (e) been made out in connection with this reason.
7. Reason 2 is as follows: Reason 2: Appellant exacerbated proceedings (ss 60(3)(a), 60(3)(c), 60(3)f)) a. The Appellant led lengthy submissions in support of each of its grounds of appeal b. The submissions made were not logical, supported by the evidence, statute, case law or precedent c. A number of submissions of the Appellant were a second attempt to make submissions already considered in relation to the validity of SBL 17 or a rehashing of the same submissions. d. The above occurred in a context where the Appellant led in excess of 1,500 pages in evidence in support of its case, all of which needed to be considered but none of which provided any particular probative evidence to establish its case.
8. The submissions referred to and/or the suggestion of "rehashing of the same submissions" are references to the submissions made in the proceedings at first instance and on appeal. There is nothing out of the ordinary about parties to an appeal referring to submissions made in the proceedings at first instance or repeating those submissions where, on appeal, they contend the submissions were correct and/or the original decision maker was in error.
9. The material submitted for the appeal, while bulky, primarily consisted of the evidence from the proceedings at first instance and authorities relied upon by the appellant. Having regard to the fact the Notice of Appeal sought to appeal as of right on a question of law and otherwise to seek leave, it is unremarkable that all evidence from the proceedings at first instance was presented as part of the bundle material.
10. Despite this, the submissions on appeal were not unusually long or prolix and no suggestion is made in this application for costs that the appellant has been "responsible for prolonging unreasonably the time taken to complete the [appeal] proceedings": cf s 60(3(b).
11. In making these comments, we do not wish to be seen as discouraging parties, particularly where legally represented, from removing from appeal bundles documents provided in the proceedings at first instance that are irrelevant to the appeal and/or upon which no reliance is to be placed.
12. Reasons 3 and 5 can be dealt with together. They are as follows: Reason 3: Appellant legally represented(ss 60(3){c), 60(3)(g)) a. The Appellant undertook its case with the assistance of both solicitors and counsel such that its claims could not have been prosecuted at any higher level. Despite that, the Appellant failed to convince the Appeal Panel of any aspect of its claim. b. The matter was conducted in line with ordinary commercial litigation with significant financial upside for the Appellant and which would have led to permanent advantage for the Appellant were it successful. Costs should follow the event in such circumstances. … Reason 5: Appellant very well resourced (ss 60(3)(d), 60(3)(g)) The Appellant was able to conduct the Appeal in such an exhaustive manner as it is extremely well resourced, collecting close to $1,000,000 per annum in ordinary levies alone from 113 commercial lots. It has put the Respondents to considerable cost in seeking to, firstly, instigate the Appeal and, secondly, the manner in which it elected to do so. It would be unfair and prejudicial for the Appellant to not now reimburse the Respondents for their costs of (entirely successfully) meeting the Appeal.
13. The submission in respect of Reason 3 supports our view that there was nothing out of the ordinary about this appeal. The fact a party is legally represented is not, of itself, sufficient to establish special circumstances: Sahade at [38].. The fact one party may gain a commercial or other advantage from any litigation again is not out of the ordinary. Quite the contrary, in adversarial proceedings it is usually the consequence.
14. As to being well resourced, both parties engaged lawyers and made detailed submissions to support their client's respective positions. There is nothing out of the ordinary about these proceedings in respect of this matter.
15. Reasons 7, 8, 9, 10, 11, 12 and 16 can be dealt with collectively. These reasons were: Reason 7: Appellant ignored the Primary Decision (s 60(5)(a)) - the Respondents repeat Item 51 of RS 28/10/22. Reason 8: Appellant ignored the Respondents' concerns regarding the loss of its proprietary rights despite no stay of the Primary Decision being granted (ss 60(3j(a), s 60(3){Q) - the Respondents repeat Item 52 of RS 28/10/22. Reason 9: Appellant was easily able to address the Respondents' concerns regarding the loss of its proprietary rights but elected not to do so (ss 60(3)(a), 60(3)(g)- the Respondents repeat Item 13 of RS 28/10/22 and note the Appellant cleared in a few minutes at the hearing below the Appeal Panel what it failed to do for weeks beforehand. Reason 10: Appellant failed to comply with Orders of the Appeal Panel dated 6 September 2022 (ss 60(5)(ay 60(3)(g) - the Respondents refer to Item 4.b of its Submissions in Support for Costs of the Application for a Stay made by the Appellant dated 4 October 2022. Reason 11: Appellant failed to comply with Undertaking 1 and Undertaking 2 made to the Appeal Panel on 23 September 2022 (ss 60(3)(a), 60(3)(g)) a. The Respondents repeat Items 33-55 of RS 28/10/22. b. The Respondents refer to Paragraphs 8-10 or the Affidavit of Anand Kantilal Gokani dated 6 April 2023 ("Gokani 06/04/23") in that regard. The Appellant continues to fail to observe these undertakings despite the decision in the Appeal. Reason 12: Appellant failed to comply with Order 10 and Order 11 of Orders 26/09/22 (ss 60(3)(a), 60(3)(g)) a. The Respondents repeat Items 54-56 of RS 28/10/22. b. The conduct complained of continues even to this date. The Respondents refer to Paragraphs 11-13 of Gokani 06/04/23 in that regard. Reason 16: Seriousness of issue (s 60(3)(g)) - the Applicant has been readily applying SBL l7 for ten years and steadfastly refused to accept the seriousness entailed with of denying valid proprietary rights despite multiple Orders requiring the same to be addressed.
16. Special circumstances are said to arise because the appellant had failed to comply with the Tribunal's orders in the proceedings at first or undertakings given to the Appeal Panel.
17. Costs orders are not made to enforce other orders. Costs orders are compensatory, and are not made to penalise an unsuccessful party: see Latoudis v Casey (1990) 170 CLR 534; [1990] HCA 59 per Mason CJ at 543 and McHugh J at 567; Oshlack per Brennan CJ at 75.
18. Any non-compliance with orders under the SSMA can be enforced using the provisions of s 247A of the SSMA or the enforcement provisions found in the NCAT Act.
19. It follows these reasons do not establish special circumstances.
20. Reason 13 states: Reason 13: Prior to determination of the Appeal, the Appellant amended SBL 17 (ss 60 (3)(a), 60(3)(c), 60(3)(e), 60(3)(g)) a. The Respondents repeat Items 54-56 of RS 28/ I0/22 and otherwise refer to Paragraphs 5-7 of Gokani 06/04/23 in that regard. b. It was completely illogical to amend SBL 17 for the specific reason of limiting the Respondents' prospects for success in the appeal yet ask the Appeal Panel to conclude the Primary Decision was erroneous in finding SBL 17 to be invalid. c. The Appellant did not have a genuine belief that SBL 17 was lawful and that the bringing of the Appeal a genuine attempt to achieve a different result. Had that been the case, the Appellant would not have sought to amend SBL 17 to minimise the risk of being unsuccessful on Appeal.
21. The holding of a meeting subsequent to the decision in the proceedings at first instance was not the subject of proceedings before the Tribunal nor the Appeal Panel. The fact that the Owners Corporation might have sought to amend a special by-law following the decision is not relevant to determining whether there should be an award of costs in respect of this appeal. Even if it was a relevant factor, the fact steps are taken outside the processes of the Tribunal to minimise the risk to the Owners Corporation in the event it was unsuccessful in this appeal does not give rise to circumstances warranting making an order for costs in this case.
22. Reasons 14 and 15 were: Reason 14: Numerous grounds for Appeal did not properly reflect an error on a question of law (ss 60(3)(c), 60(3)(d), 60(3)(e)) - the Appellant, being legally represented, ought to have properly engaged with this, which would have refined the grounds for appeal. Reason 15: Approach of Appellant to straightforward relevant factual situation excessive (s 60(3)(d)) - the Respondents repeat Items 60-63 of RS 28/10/22."
23. It seems to us that whether a by-law, on its proper construction, contravenes s 139(1) and is susceptible to being declared invalid under s 150 of the SSMA raises a question of law as does the interrelationship between s 136(2) and s 139(1) of the SSMA. The Court of Appeal in Cooper v The Owners - Strata Plan No 58068 [2020] NSWCA 250, when considering an appeal from the Appeal Panel regulated by s 83 of the NCAT Act (which only permits appeal is on a question of law with leave) did not suggest otherwise.
24. While there may have been a lack of precision in articulating such a question, the manner in which the appeal proceeded was not affected by this fact and none of the factors in ss 60(3)(c), (d), or (e) are made out.
25. As to reason 15, this submission overlaps with earlier submissions concerning the volume of material, the financial capacity of the appellant and its general approach to these proceedings.
26. This appeal was hard fought by both parties. Both parties have provided detailed submissions, sometimes repetitive as reflected in the costs application. However, these facts do not make the present proceedings out of the ordinary or give rise to special circumstances warranting an order for costs.
27. Finally, in respect of reason 17, we accept the respondents did nothing to exacerbate the just, quick and cheap resolution of the real issues in dispute. As the respondents were legally represented, having regard to the terms of s 36(3) of the NCAT Act, this is quite ordinary and is expected.
28. It follows from the above that we are not satisfied there are special circumstances warranting an order for costs in the present proceedings or that an order for costs should be made in this case.

In respect of costs of the stay application, the subject of the December Costs Order, should these costs be included in any order now made?

1. In respect of the December Costs Order, there is no basis to interfere with or alter this order.

Can, and if so should, orders be made under ss 104 or 232 of the SSMA concerning the levying of costs of the appellant and/or the respondents?

1. The final issue to deal with is whether an order can and should be made under ss 104 or 232 of the SSMA in respect of the appellant's costs of this appeal.
2. As the appellant was unsuccessful in these appeal proceedings, s 104 of the SSMA provides who can be levied in respect of the appellant's costs. This is a mandatory provision. However, it does not permit the Tribunal to make an order under that section: Jacinta at [176] and following; The Owners - Strata Plan No 62713 v Liberant [2022] NSWCATAP 80 (Liberant) at [107]-[114].
3. Having determined this appeal, it will be for the appellant to raise any appropriate levies and/or adjust any levies previously raise insofar as it is necessary to comply with s 104. As noted in Liberant and Jacinta, if there is a failure to comply with any statutory obligation, the respondents may have a right to make further application of this Tribunal and seek orders under s 232. Hopefully, this will not be necessary.
4. Otherwise, as no order for costs is to be made by us in favour of the respondents, no issue arises as to who should be levied for those costs.

Orders

1. The Appeal Panel makes the following orders: 1. A hearing of the application for costs is dispensed with pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW). 2. The application for costs is dismissed.

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: 21 June 2023