Ex Parte Lai Qin [1997] HCA 6(1997) 186 CLR 622(1997) 143 ALR 1(1997) 71 ALJR 533 (28 February 1997)Owner's Strata Plan 63094 v Council of the City of Sydney (2009) 165 LGERA 17[2009] NSWSC 141Owners Strata Plan 62327 v Vero [2009] NSWSC 908Newcastle Wallsend Coal Co Pty Ltd v Industrial Relations Commission (NSW) (2006) 153 IR 386
Judgment (8 paragraphs)
[1]
Background
Proceedings SC 18/50517 were commenced on 22 November 2018. The Owners Corporation (the applicant) sought interim and substantive orders that Kollco Pty "as the developer" (the respondent) provide a series of documents to the applicant pursuant to section 17 of the Strata Schemes Management Act 2015 (the Act).
Section 16 and 17 of the Act relevantly prescribes:
16 Documents and records to be provided to owners corporation at first AGM
(1) An original owner or lessor of a strata scheme required to convene a meeting under this Division must, not later than 48 hours before its first annual general meeting, deliver to the owners corporation the following:
(a) all plans, specifications, occupation certificates or other certificates (other than certificates of title for lots), diagrams, depreciation schedules and other documents (including policies of insurance) relating to the parcel or any building on the parcel,
(b) without limiting paragraph (a), all planning approvals, complying development certificates and related endorsed plans, approvals, "as built" drawings, compliance certificates (within the meaning of the Environmental Planning and Assessment Act 1979 ), fire safety certificates and warranties relating to the parcel or any building, plant or equipment on the parcel,
(c) the certificate of title for the common property, the strata roll and any notices or other records relating to the strata scheme,
(d) the initial maintenance schedule,
(e) any interim report or final report of a building inspector prepared under Part 11 and relating to any building on the parcel,
(f) any other document or item relating to the parcel or any building, plant or equipment on the parcel that is prescribed by the regulations for the purposes of this section.
Maximum penalty: 100 penalty units.
(2) An original owner or lessor is only required under this section to deliver to the owners corporation a thing if that thing is in the possession or control of the original owner or lessor or may be obtained by the original owner or lessor by taking reasonable steps to do so.
(3) This section does not require an original owner or lessor to deliver to the owners corporation any documents that exclusively evidence rights or obligations of the original owner or lessor and that are not capable of being used for the benefit of the owners corporation or any of the other owners.
17 Tribunal may order initial documents to be provided
The Tribunal may, on application by an owners corporation, order an original owner or lessor required to convene a meeting under this Division to provide to the owners corporation a thing that was required to be but was not delivered to the owners corporation in accordance with this Division.
Strata plan 93392 was registered on 19 June 2017. The respondent was required to deliver the documents set out in section 16 to the applicant not later than 48 hours before the first annual general meeting of the applicant:
The applicant submits that contrary to the requirements of section 16 the documents were not provided to it. The applicant was obliged to commence proceeding, filing two separate applications seeking substantive and interim orders for the urgent production of documents in time for the annual general meeting. The matter settled at the first return date and the respondent consented to the production of all outstanding documents.
The applicant seeks an order for costs of and incidental to the proceedings.
In submissions filed on 23 January 2019 in support of its application for costs, the legal representative of the applicant states the following:
On 10 August 2018 the strata manager for the applicant wrote to the respondent seeking production of the documents in accordance with section 16 of the Act.
On 21 August 2018 the strata manager for the applicant again wrote to the respondent informing the respondent that certain documents were not provided in time for the annual general meeting.
The applicant retained solicitors. Correspondence dated 16 November 2018 was sent to the respondent again seeking production of outstanding documents. The respondent was informed that unless production of all remaining documents was forthcoming by 23 November 2018, the applicant intended to commence legal proceedings and if necessary seek to recover any legal costs incurred.
On 29 November 2018 the Tribunal sent a Notice of Hearing and Directions hearing to the parties, the registered address of the respondent, informing the parties that the application for interim orders would be listed for hearing on 21 December 2018, and the application for substantive orders would be listed for directions.
The application form informed the respondent that the owners corporation had obtained advice from a building consultant advising the owners corporation of certain defects. The application form further informed the respondent that the time limitation period to initiate legal proceedings in relation to the defects would expire shortly. By reason of the impending time limitation period expiring the owners corporation urgently required the production of all documents.
At the hearing on 21 December 2018 both applications were resolved by consent. The parties agreed to the following orders:
On or before 23 January 2019, the respondent is to produce to the applicant those documents identified in section 4 of the building specialist inspection report of Mr Sean Moore dated 18 December 2018 as having not been produced, subject to the qualifications on production set out in section 16(2) of the Strata schemes Management Act 2015.
2 Costs are reserved and the following timetable made:
2.1 the applicant to file and serve any submissions on costs by 8 January 2019;
2.2 the respondent to respond by 15 January 2019; and
2.3 the applicant to reply by 17 January 2019.
2.4 the parties have leave to file their submissions electronically.
[2]
The applicant's submissions
The applicant filed written submissions dated 8 January 2019. The owners corporation submitted that because the developer respondent agreed to provide all documents to the applicant, the application was 100% successful and that there was "simply no defence".
It was further submitted that the respondent unnecessarily prolonged the matter as the owners corporation requested documents on multiple occasions as set out in correspondence of 10 August 2017, 21 March 2018 and 16 November 2018 with no satisfactory result. The respondent failed to produce a number of documents and failed to comply with the requirements of section 16(2) of the Act. The last correspondence informed the respondent that unless all documents that remained outstanding were produced by 23 November 2018, the applicant would commence proceedings
It was further submitted that the respondent failed to provide the documents and that it was not until the "last minute" at the hearing that the respondent agreed to provide the documents. As a result and without justification or defence, the applicant unnecessarily incurred legal costs and the owners corporation submitted that by reason of the delay the conduct of the respondent was "blatant and shameless".
For these reasons the Tribunal should be persuaded that special circumstances apply and the respondent be ordered to pay the applicant's costs of the proceedings.
[3]
The respondent's submissions
The respondent maintains that the applicant's application for costs should be dismissed. It contends the appropriate order is that each party pay its own costs of the proceedings.
In its written submissions of 15 January 2019 the respondent submitted that it took all reasonable steps to provide the documents to the applicant. The respondent developer engaged a "superintendent" for production of documents to the builder, who in turn was asked to provide the documents to the applicant's initial strata manager. On 22 February 2018 the respondent provided documents, by way of USB stick, to Mr Clive Brooks, the then chairman of the Owners Corporation SP 94916. The respondent understood it had discharged its duty pursuant to s 16 of the Act, and produced all relevant documentation required by the applicant.
After receiving notification from the solicitor for the applicant dated 22 November 2018 that not all documents had been produced, the respondent provided documents via a "dropbox" in an attempt to satisfy the requirements of the applicant.
The respondent submits it has supplied documents required to satisfy its obligation under the Act. Further, the respondent submits it can only supply such documents as are "within its control" or which it may obtain by taking reasonable steps to do so. The respondent has used its best endeavours to comply with the request of the applicant in the supply of the documents.
The respondent submits that a significant volume of documents was provided to the applicant's representatives prior to the first hearing.
The respondent further submits that whilst the interim and substantive applications were provided by the solicitors for the applicant to the solicitors for the respondent on 22 November 2018, there was no indication in those documents as to the first mention date or directions hearing and no notification was received by the respondent or its legal representatives as to the date of the first directions hearing.
As a consequence the respondent was not aware of the requirements for evidence to be filed until the solicitors for the applicant provided a copy of the orders made at the first directions hearing by email to the solicitor for the respondent on 12 December 2018. The respondent's response to the application was to continue to co-operate and provide documentation sought and to use its best endeavours to satisfy the obligations and to obtain access to relevant documentation. It was submitted that the respondent's approach to the application was and has always been to attempt to comply with any outstanding request, notwithstanding its belief that the relevant documents had been provided to the strata manager and/or Mr Clive Brooks, chairman, as outlined above.
The respondent does not concede that the consent orders constitute "100% success" for the applicant as contended in the applicant's submission.
By consenting to the orders made the respondent exhibited its intention to achieve an expeditious and satisfactory outcome for the parties.
The respondent submits that it understood the necessary documents to have been delivered to the initial strata manager prior to the first meeting and subsequently to the chairman of the owners corporation on 22 February 2018.
It is the respondent's submission that there has been no conduct by it in respect of the proceedings which falls within the determining features as set out in s60(3) or that would otherwise warrant a determination by the Tribunal that "special circumstances" exist which would give rise to an adverse cost order.
In the event that an order for costs is made, the respondent submits that cost should be minimal and exclude any costs incurred in the provision of the report of Sean Moore of Safe House Property Consultants as the commission of the report was unnecessary in the circumstances of the application and did little more than identify what documents may be expected to be handed over, which are matters which could have been covered by evidence of the strata managers.
The respondent submits that had the matter proceeded to hearing of the substantive proceedings, the evidence of the respondent would have been available for consideration of the Tribunal supporting the contention is made in the submissions. In the proceedings before the Tribunal there does not appear to be a sufficiency of evidence from the applicant to support its submission as to an entitlement to an order for costs.
[4]
The applicant's submissions in reply
The applicant filed reply submissions dated 16 January 2019.
The applicant states in reply that the respondent made a number of allegations with no supporting evidence and filed no sworn evidence. The only sworn evidence before the Tribunal was the evidence filed by the applicant in the proceedings which, the applicant submits, demonstrates that the respondent failed to provide a substantial number of documents before proceedings were commenced.
It is submitted that the Tribunal can consider the Tribunal file and be satisfied that a notice of hearing, directions for the exchange of evidence and final orders were sent to the correct address for the respondent. The submission made by the respondent that it consented to orders at the hearing in order to "obviate the necessity to conduct a hearing" should be rejected by the Tribunal.
It is submitted that the applicant had been requesting documents from the respondent for more than a year before the commencement of proceedings. The Tribunal should take into account that until proceedings were commenced outstanding documents were not forthcoming. The applicant further submits that the report of Sean Moore was necessary to prove that certain missing documents would have been prepared as part of the building work i.e. that the documents existed.
[5]
Jurisdiction
Section 60(1) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) requires parties to pay their own costs unless the Tribunal is satisfied that special circumstances warrant an award of costs: s 60(2) of the NCAT Act. It is common ground that the applicant must establish special circumstances.
I must also consider, among other things, the situation that applies in proceedings that have been determined without a hearing on the merits.
[6]
Should an order for costs be made in the applicant's favour?
As noted above, the applicant's claim was settled by way of consent orders without evidence being taken in respect of that claim. Accordingly, the claim was not heard and determined on the merits.
Where proceedings have been decided without a hearing on the merits, the factor that usually determines whether a costs order should be made - that is, the success of one of the parties - is necessarily absent.
In Re Minister for Immigration & Ethnic Affairs (Cth); Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622; (1997) 143 ALR 1; (1997) 71 ALJR 533 (28 February 1997) (Lai Qin), McHugh J described circumstances in which the discretion to make a costs order may be exercised in the absence of a hearing on the merits. One circumstance described by McHugh J is where one of the parties has acted so unreasonably that the other party should be awarded costs [at 624]. The other circumstance described is where a judge feels confident that although both parties have acted reasonably, "one party was almost certain to have succeeded if the matter had been fully tried" [at 625].
The issue of costs in cases where the substantive issue in dispute has been resolved without a hearing on the merits was also considered by Burchett J in 55 In ONE.TEL Ltd v Deputy Commissioner of Taxation [2000] FCA 270; (2000) 101 FCR 548, (ONE.TEL Ltd) who stated, at 553 [6]:
"…it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court's discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs. …"
The issue I need to determine is whether the conduct of the respondent was so unreasonable to warrant an order for costs. I am persuaded that this is such a case. I conclude that the appropriate order is that the respondent pay the applicant's costs of the interim and substantive applications as agreed or assessed on the ordinary basis for the reasons that follow.
The applicant concedes it must establish special circumstances on section 60 of the Act which states:
'(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.'
The authorities as to what constitutes "special circumstances" are well settled. In CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 an Appeal Panel stated that special circumstances do not need to be exceptional or extraordinary. At paragraph [32] of that decision the Appeal Panel stated:
'The authorities are consistent in stating that "special circumstances" are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances. Accordingly the question for decision is whether the conduct of the appeal by CPD is out of the ordinary and warrants the Appeal Panel ordering CPD to pay Mr and Mrs Baguley's costs.'
The applicant submits that there are special circumstances as referred to in section 60(3) and relies in particular on subsections (c) and (b) .
It is the applicant's contention that the respondent had no tenable basis in fact or law to defend the proceedings. The applicant submits that no defence was filed despite an order by the Tribunal that the respondent file and serve all documents it sought to rely upon by 17 December 2018. I am satisfied that no defence was filed, and that nothing in the respondent's submissions provides a sufficient or reasonable explanation, supported by evidence, why the documents could not be produced before the Annual General Meeting in August 2017 or, for that matter, at any time before proceedings were commenced in November 2018. The respondent complains that it was unaware of its obligation to file and serve evidence, however, the notice of directions hearing and the directions for exchange of evidence was sent to the registered address of the company. It was incumbent upon the respondent to file and serve any evidence by 17 December 2018.
The applicant has filed and served evidence, namely the expert report of Shawn Moore, dated the 10 December 2018, annexing the expert code of conduct, the affidavit of Leo Edigio Paternoster deposed on 6 December 2018 and the affidavit of Roy Christopher Darby, deposed on 7 December 2018. I am satisfied on the uncontested untraversed evidence of the applicant, that the respondent failed to provide a series of documents in time for the Annual General Meeting in 2017 or at any time before proceedings were commenced. The Missing Handover Documents referred to in the affidavits of Messrs Paternoster and Darby identify the missing documents such as critical architectural plans, engineering plans and specifications, documents in relation to sound and fire insulation as well as air conditioning specifications, and, importantly, occupation and construction certificates. No reasonable evidence, explaining the failure to produce documents, has been filed by the respondent. There is no evidence to support the contention that documents were served on the chairperson. Similarly I cannot come to a concluded view whether the respondent was reasonable in its belief that a "dropbox" provided to the applicant contained all relevant documents. It clearly did not.
I find that there is no reasonable or satisfactory explanation why the statutory requirement pursuant to s16 of the Act has not been complied with or why the documents could not have been produced before proceedings were commenced. In reference to s 60(3)(c), I am satisfied that the respondent had no tenable basis in fact or law justifying the non-compliance with the requirements of the Act.
By way of summary, in the absence of evidence from persons preparing the documents, I cannot arrive at a view that the respondent acted reasonably in its belief that all documents had been handed over. I have had regard to the authority of Chapman v Luminis Pty Ltd [2003] FCAFC 162, the Full Court of the Federal Court of Australia, repeating the proposition that there should not be something in the nature of a hypothetical trial, but noting that sometimes the court could make an order for costs without engaging in that exercise. The court instanced two ways in which that could happen: one involved an examination of the reasonableness of the conduct of the parties and the other involved the court being confident that one party was almost certain to have succeeded if a matter had been fully tried (see also Owner's Strata Plan 63094 v Council of the City of Sydney (2009) 165 LGERA 17; [2009] NSWSC 141; Owners Strata Plan 62327 v Vero [2009] NSWSC 908; Newcastle Wallsend Coal Co Pty Ltd v Industrial Relations Commission (NSW) (2006) 153 IR 386; [2006] NSWCA 129 (in this last case, both parties had acted reasonably, but the proceedings had been rendered futile by circumstances beyond their control) and Britannia Pty Ltd v Parkline Constructions Pty Ltd [2009] NSWCA 32). Having regard to conduct of the respondent and their repeated failure to provide a complete set of documents I am of the view that the applicant had little choice but to commence proceedings to compel the production of documents particularly in light of the fact that time was of the essence as a time limitation period was expiring imminently. The conduct of the respondent was therefore unreasonable, and the applicant was almost certain to have succeeded if the matter had been fully tried.
[7]
Orders
I make the following orders:
The respondent shall pay the applicant's costs of and incidental to both applications SC 18/50517 and SC 18/50514 on the ordinary basis as agreed or assessed.
[8]
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
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Decision last updated: 09 May 2019