The appellants appealed from an interlocutory decision of the Consumer and Commercial Division of the Tribunal made on 10 June 2020. We dismissed the appeal: see Wang v MacDermott [2021] NSWCATAP 75 (Principal Decision). These reasons should be read in the context of the reasons given in our Principal Decision.
[2]
Background to the Appeal
The interlocutory hearing before the Tribunal was limited to the question of whether the respondent had "standing" to seek relief under s 238 of the Strata Schemes Management Act 2015 (SSMA) against two of the appellants.
The respondent contended that he was an "interested person" within the meaning of s 226(1)(d) of the SSMA and was entitled to bring an application under s 238 of the SSMA as an "occupier of a lot".
The individual appellants are each members of the Strata Committee of the Owners Corporation, which was the third respondent. The appellants contended that the respondent was in not in "lawful" occupation of the lot in which he was residing in the strata scheme. The appellants contended that s 4 of the SSMA provides that an "occupier of a lot means a person in lawful occupation of the lot" and not merely in possession. The respondent's deceased mother formerly owned the lot. At the time of the filing of the Application in the Tribunal, the respondent was his mother's sole surviving beneficiary and sole surviving executor under her will. The respondent had not applied for probate of the will.
The Tribunal found that the respondent had standing to bring that part of his Application seeking relief under s 238 of the SSMA. It directed the costs of the interlocutory hearing be reserved until the determination of the substantive proceedings. We granted leave to the appellants to appeal from that interlocutory decision. As we have said, we dismissed the appeal.
The Tribunal also dismissed parts of the respondent's Application seeking declarations under s 229 of the SSMA and ancillary or consequential orders and declarations under ss 229, 232 and 241 of the SSMA. We considered this and held that the Tribunal erred in dealing with these matters as they were outside the scope of the orders made for the interlocutory hearing. We therefore quashed Orders 2 and 3 made by the Tribunal.
As to the costs of the appeal, in our Principal Decision at [97] to [104], we gave the following reasons for making a provisional costs order (Order 4) that the respondents costs, be his costs in the substantive proceedings:
97. We have not heard fully from the parties with respect to the costs of the appeal. There have been some submissions on costs exchanged, both in writing and orally.
98. The respondent has been successful on the appeal.
99. The respondent primarily seeks an outcome to ensure that the members of the Executive Committee and not the Owner's Corporation would be liable to pay his costs (if any) of the appeal.
100. The interlocutory hearing and this appeal was only concerned with the respondent's entitlement to bring a claim under s 238 SSMA. We are mindful that the respondent has foreshadowed making an amendment to his Application before the substantive proceedings dealing with those matters which were the subject of Orders 2 and 3, that we have quashed.
101. We note that the costs of the hearing before the Tribunal have been reserved pending the outcome of the substantive proceedings.
102. We are presently of the view that the costs of the appeal should be the respondent's costs in the substantive proceedings.
103. The intent of that order is that if the respondent succeeds in the later substantive proceedings on his claim under s 238 of the SSMA, then he should be entitled to claim his costs of this appeal (subject of course to establishing an entitlement and coming within the provisions of s 60 of the NCAT Act). If he is unsuccessful in his s 238 claim in the substantive proceedings, then there is to be no order made with respect to the costs of this appeal.
104. These costs orders are therefore separate to any other orders for costs that may follow from the outcome of the substantive proceedings.
Our Principal Decision provided for the provisional costs order to become final 14 days after our reasons were published, unless a party notified the Registry and the other party in writing, that some other costs order was to be sought.
In the event that either party sought a different costs order, we directed that the Registry should make orders for the filing and service of any submissions and evidence to resolve the issue of costs and for the parties to indicate whether they consented to us dispensing with a hearing on the question of costs, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NCAT Act).
[3]
Submissions on Costs
By a letter dated 29 March 2021, the respondent informed the Registry and the appellants that he sought a different order to the provisional costs order made by us in Order 4 of our Principal Decision. The respondent later served written submissions dated 7 April 2021 that were received in the Registry on 14 April 2021. In his letter of 29 March 2021, the respondent provided his consent for us to dispense with a hearing on the question of the costs of the appeal.
In his submissions on costs dated 7 April 2021, the respondent said that paragraph 99 of our Principal Decision set out above, "does not accurately describe the costs orders actually sought in paragraph 86 of my submissions dated 18 August 2020." The respondent submitted:
In paragraph 86, I sought no order at all that any party pay my costs.
In his submissions dated 7 April 2021, the respondent clarified the order as to costs which he sought, namely:
"… an outcome to ensure that no owners corporation funds (to which I personally contribute 20%) were spent on an appeal where all six grounds of appeal have now been dismissed…"
The respondent sought three types of costs orders, namely that:
1. The first, second and third appellants (i.e. the individual appellants) personally pay their own costs of and incidental to the appeal;
2. The individual appellants personally pay the cost of the owners corporation, being the fourth appellant (and including the cost of the appellants' unsuccessful stay application heard on 23 July 2020); and
3. Order 4 made by the Tribunal on 10 June 2020 to reserve the costs of the interlocutory hearing, be quashed.
The respondent has expressly eschewed making any claim for his own costs.
On 29 April 2021, the appellants' solicitors served written submissions in which they opposed the respondent's request for a different costs order and stated that they did not consent for us to determine the question of costs in the absence of a hearing. The appellant's submissions referred to "submissions filed by the respondent on 29 March 2021" but it is reasonably clear that the appellants were intending to refer to the respondent's submissions dated 7 April 2021.
[4]
Appellants' Submissions
The appellants contended:
1. The respondent's submissions were "complex" and raise "new legal arguments" in relation to the apportionment of costs and contain "new lay evidence" so that we should not dispense with an oral hearing;
2. As an unrepresented litigant the respondent is not entitled to an award of costs: citing the Appeal Panel's decision in Hammond v Ozzy's Cheapest Cars Pty Ltd t/as Ozzy Car Sales [2015] NSWCAP 65 (Hammond) referring to Cachia v Hanes [1994] HCA 14; (1994) 179 CLR 43 at [107] and Profitability Consulting Pty Ltd v Thorpe [2018] NSWCATAP 41;
3. The respondent is not entitled to a costs order in his favour in the absence of "special circumstances" under s 60(2) of the NCAT Act and he cannot establish one or more of the grounds in s 60 (3) of the NCAT Act to establish that there were any "special circumstances";
4. If an order was made in favour of the respondent, the appellants opposed any costs order being made against any members of the Strata Committee personally.
[5]
Respondent's Submissions
As we have set out above, the respondent sought an outcome so that no owner's corporation funds were spent on the unsuccessful appeal. If costs were to be awarded against all of the appellants, the respondent submitted that would be unfair to the owners of the five lots in the strata scheme because the funds held by the owner's corporation "on trust" would be spent on proceedings that were of no benefit to them. The respondent also submitted that it would be unfair to the owners corporation itself because it was joined in the proceedings by the appellants over the respondent's objection, no orders were sought against it by the respondent in his Application and the owner's corporation had taken no active part in the proceedings or in the appeal.
The respondent also filed submissions in reply on 13 May 2021.
The respondent contended in his reply that:
1. Given the Application was filed "over fifteen months ago" a hearing should be dispensed with "in order that further delay in the hearing of the Application might be avoided";
2. "Special circumstances" have been established by reason of several matters, including the following:
1. the appeal was used by the appellants as a "tactic" to delay the hearing of the substantive proceedings and this was part of the same tactic used by the appellants in raising the interlocutory question for determination which was over the objection of the respondent;
2. the appeal had no proper basis in law and a definition and meaning of "lawful occupation" was easily found in a dictionary. He described the appeal as saying not much more than "even if the respondent is a lawful occupier of Lot 3 he is not, in some unspecified way, an "interested person" under s 226(1)(d) of the SSM Act"; and
3. the appellants have consistently refused to engage with him and discuss the issues raised by his Application, either before the filing of the Application or after it was filed;
1. the issues in the interlocutory proceeding and in the appeal are quite separate to the issues for determination in the substantive proceedings. It would therefore be "unjust" to "merge" the costs orders in respect of proceedings that involve quite different matters;
2. the costs of the appeal should be payable by the members of the Strata Committee personally because the Application brought by the respondent is predicated on those members acting unlawfully to the detriment of the strata scheme.
[6]
Dispensing with a hearing
Given the extensive written submissions now received by both parties, we are satisfied that we have adequate material to determine the question of the costs of the appeal in the absence of a hearing.
We are also mindful that this was an appeal from an interlocutory decision and the Tribunal is yet to hear the substantive proceedings in the dispute between these parties.
We have had regard to the "guiding principle" to be applied in respect of matters of practice and procedure set out in s 36 of the NCAT, which provides:
36. Guiding principle to be applied to practice and procedure
(1) The "guiding principle" for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings.
(2) The Tribunal must seek to give effect to the guiding principle when it -
(a) exercises any power given to it by this Act or the procedural rules, or
(b) interprets any provision of this Act or the procedural rules.
(3) Each of the following persons is under a duty to co-operate with the Tribunal to give effect to the guiding principle and, for that purpose, to participate in the processes of the Tribunal and to comply with directions and orders of the Tribunal -
(a) a party to proceedings in the Tribunal,
(b) an Australian legal practitioner or other person who is representing a party in proceedings in the Tribunal.
(4) In addition, the practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the cost to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings.
(5) However, nothing in this section requires or permits the Tribunal to exercise any functions that are conferred or imposed on it under enabling legislation in a manner that is inconsistent with the objects or principles for which that legislation provides in relation to the exercise of those functions.
We are satisfied that in applying the guiding principle of s 36, that it is appropriate to dispense with an oral hearing and we so order under s 50 (2) of the NCAT Act.
[7]
Power to Award Costs
The power to make a costs order in favour of a party is governed by the provisions of section 60 of the NCAT Act which provides:
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.
By reason of the provisions of section 60(1), there is a presumption that each party will pay its own costs. Ordinarily, the respondent would only be entitled to a favourable costs order if we were satisfied that there are "special circumstances" which would warrant us putting aside that presumption and justify the making of such an order: s 60(2).
Broad guidance for determining whether such circumstances exist is provided in the provisions of subsection (3), although by reason of subsection (3) (g), the matters set out are not circumscribed. In the exercise of our discretion we may take into account "any other matter that the Tribunal considers relevant". The requirement that must govern the exercise of our discretion is that the circumstances, which apply to the proceedings and for which a costs order is sought, are "special."
Section 60 of the NCAT Act is qualified by the Civil and Administrative Tribunal Rules 2014 (the NCAT Rules): see s 35 of the NCAT Act. The NCAT Rules provide that where proceedings are brought in the Consumer and Commercial Division of NCAT, as in this case, and the amount claimed or in dispute in those proceedings is more than $30,000, the Tribunal may award costs even in the absence of "special circumstances": r 38(2)(b) of the NCAT Rules.
In this matter, given the interlocutory issue and that the substantive proceedings themselves do not directly involve a quantifiable sum of money, the applicable costs provision remains s 60 of the NCAT Act.
Despite making submissions about his entitlement to claim personal costs such as disbursements, the respondent does not seek an order for costs in his favour notwithstanding his success both before the Tribunal and on the appeal. He seeks an order which is simply adverse to the first, second and third (individual) appellants so that they pay their own costs of the appeal and the costs of the owners corporation as the fourth appellant.
The appellants' are not seeking a particular costs order. The appellants are simply opposing the respondent's application but on the assumption that he is seeking an order for payment of his costs. The appellants have approached the matter on the basis that the respondent is limiting his claim for a costs order against only the first, second and third appellants and not against the owners corporation. Despite some confusion resulting from the respondent's unusual position and some of the submissions made by the respondent about the type of "costs" to which he would be entitled, we are satisfied that is not what the respondent is seeking by way of a cost order.
[8]
"Special Circumstances"
Both parties made submissions as to whether there were "special circumstances" warranting a departure from the statutory presumption in s 60 of the NCAT Act that each party pay their own costs.
In Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135, the Appeal Panel described "special circumstances" at [37]:
Special circumstances" are circumstances that are out of the ordinary. They do not have to be extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11], citing Santow JA in Cripps v G & M Mawson [2006] NSWCA 84 at [60].
Of course, each case needs to be considered on its own merits.
The respondent raised as a special circumstance for our consideration an allegation that the appellants have consistently refused to engage with him and discuss the issues raised by his Application. We have not received evidence from either of the parties on this issue. We have therefore not taken this matter into account as a special circumstance in our decision on costs.
A costs order may, in certain circumstances, depart from the usual order that the successful party/parties has its/their costs paid by the unsuccessful party/parties. However, and notwithstanding the broad nature of s 60(4)(a) of the NCAT Act and against whom a costs order may be made, we see no basis for making an order that the first, second and third appellants, pay either their own costs of the appeal (which will, in any event be inherent in our making no order) and/or the costs of the fourth appellant.
There is some considerable practical difficulty with the outcome sought by the respondent, since the owners corporation was also an unsuccessful appellant and it was not separately represented from the other three appellants.
There are several other reasons for us not making the orders sought by the respondent.
Firstly, the substantive proceedings are yet to determine whether the conduct of any members of the Strata Committee may be such as to warrant the making of any costs orders against them personally.
Secondly, we do not agree with the respondent that the appeal had no proper basis in law and was untenable. In part, that is why we granted the appellants leave to appeal. The issues raised involved questions of law of some complexity and, as far as we were aware, the Tribunal had not determined them before. As we have held in our Principal Decision, since the appeal was from an interlocutory decision of the Tribunal, leave to appeal was always required, irrespective of there being questions of law that arose for our consideration.
Thirdly, in the circumstances of which we are presently aware, such an order as sought by the respondent would appear to be unduly punitive. A costs order is primarily to compensate a successful party and not punish an unsuccessful party: Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 per McHugh J at [67].
Fourthly, whether the owner's corporation has been improperly or unnecessarily joined as a party to the proceedings is a matter to be determined in the substantive proceedings and not by us on appeal. Prima facie, it would seem that the owner's corporation has a legitimate interest in the outcome of the respondent's Application, although whether it should be separately represented or file a submitting appearance may be for others to consider. As far as we are aware, there was no order made by the Tribunal when the owners corporation was joined in the proceedings to require the other appellants to indemnify the owners corporation for its costs. There is insufficient reason based on our knowledge of the matter for us to treat the fourth appellant any differently to the three individual appellants when making an order as to costs.
We also mention that although the respondent as the owner of Lot 3 is liable for 20% of strata contributions to the owners corporation, he would not in the event of a costs order being made in his favour against the appellants be liable to contribute towards the appellants' costs. Section 104 of the SSMA provides in the case of proceedings in the Tribunal (including on appeal):
104. Restrictions on payment of expenses incurred in Tribunal proceedings
(1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it for an order by the Tribunal, levy a contribution on another party who is successful in the proceedings.
(2) An owners corporation that is unsuccessful in proceedings brought by or against it for an order by the Tribunal cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund, but may make a levy for the purpose.
(3) In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal.
We raise these matters for the consideration of the parties in light of their submissions to us and given the order of the Tribunal reserving the costs of the interlocutory hearing.
In our view, and for the reasons set out above, the respondent would have been entitled to have his costs, if any, of the appeal paid by the appellants had he sought such an order. Those costs would have included the costs of the appellants' unsuccessful application for a stay on 23 July 2021, as that was a matter incidental to the appeal.
However, as such an order was not sought and the respondent has expressly eschewed a costs order on the appeal being made in his favour. For the reasons we have explained above, we decline to make the form of the cost order sought by the respondent.
We will therefore make no order as to the costs of the appeal.
Finally, we do not propose to interfere with the Tribunal's order to reserve the costs of the interlocutory hearing. The respondent has not submitted what order he seeks instead of Order 4 made by the Tribunal if we were to quash it. We assume the respondent is seeking the same type of costs order that he sought in respect of this appeal. Therefore, we see no reason to disturb the order reserving the costs of the interlocutory hearing before all issues have been finally determined by the Tribunal.
[9]
Orders
We make the following orders:
1. Order under s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW) to dispense with a hearing of the respondent's application for costs.
2. Make no order as to the costs of the appeal.
[10]
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 June 2021