Wilson v Zeaiter

(a) Install underlay and carpeting on top of the existing tiles in Lot 12 of SP21390, other than in the kitchen, laundry, lavatory and bathroom areas, in a manner that will ensure that those floors achieve a 6 star rating under the Association of Australian Acoustic Consultants Guideline (AACGA) for Apartment and Townhouse Acoustic Rating; or

(b) Otherwise treat the floors in Lot 12, other than in the kitchen, laundry, lavatory and bathroom areas, in a manner that will ensure that those floors achieve a 6 star rating under the AACGA for an Apartment and Townhouse Acoustic Rating.

(2) Pursuant to s.241 of the SSMA, that within a further one month the Respondent is to permit the Applicant's acoustic expert to enter Lot 12 to certify whether the acoustic properties of the floor coverings within Lot 12 (except in the kitchen, laundry, lavatory and bathroom areas) meet the 6 star AACGA rating.

(3) Pursuant to s.241 of the SSMA, order that the Respondent is to permit the Applicant's acoustic expert to access Lot 12 to carry out the acoustic testing on at least seven days written notice.

1. In its reasons for decision, the Tribunal at paragraph [46] of the principal judgment stated that it 'was not minded to make a costs order' on the facts and circumstances of this case, and that the usual order was that each party pay its own costs of the proceedings.
2. The Tribunal however made a timetable in respect of written submissions on costs if either party sought a costs order against the other. The successful Applicant has availed herself of that opportunity and has sought an order for costs against the Respondent, which the Respondent resists.
3. The parties have agreed before the costs application to proceed by written submissions and on the papers and without the need for a hearing pursuant to s.50(2) of the Act.

1. The Tribunal received the following written submissions and documents from the parties:

(1) Applicant's costs submissions dated 23 March 2025 of Mr Patrick Lin of counsel (6 pages) plus a 13 page bundle of correspondence and documents; and

(2) Respondent's submissions in reply on costs dated 7 April 2025 (7 pages).

1. The successful Applicant, Ms Caryn Wilson, seeks an order requiring the unsuccessful Respondent, Mr James Zeaiter, to pay her costs of the proceedings for two reasons:

(1) First, before initiating proceedings in the Tribunal, the Applicant had requested in writing that the Respondent install carpet over the tiles in Lot 12, but the Respondent declined. The Applicant submits that if that had occurred at that time, there would have been no need for the Tribunal proceedings that ensued; and

(2) The Respondent conducted the proceedings in a manner inconsistent with the duty to promote the just, quick and cheap resolution of the dispute pursuant to s.36 of the Act.

1. The Applicant also relies upon the following facts which they submit arise from the correspondence submitted in their bundle of documents. These include:

(1) First, that on 18 April 2023, the Applicant's solicitor sent the Respondent a letter informing him about the alleged noise;

(2) The letter requested access for the Applicant's acoustic engineer to conduct and acoustic test on the floor in Lot 12. No consent for access was ever received;

(3) On 4 May 2023, the Applicant's solicitors sent a further letter to the Respondent requesting that he treat the floor to prevent disturbance to the Applicant's peaceful enjoyment;

(4) The parties proceeded unsuccessfully to mediation in August 2023 at which the matter did not settle; and

(5) Immediately prior to the hearing on 26 September 2024, the Applicant's solicitors again asked the Respondent for access to Lot 12 to conduct an expert acoustic report, but this was denied.

1. The Applicant was successful but claims that the circumstances in which she was successful constituted 'special circumstances' for the purposes of s.60(3)(a), s.63(b) and s.60(3)(f) of the Act.
2. The Applicant seeks an order as a result that the Respondent pay the Applicant's costs of and incidental to proceedings on a party/party basis and as agreed or assessed, including the costs of this costs application.

1. The Respondent opposed the costs order sought by the Applicant and sought an order that each party bear their own costs of the proceeding.
2. The Respondent submitted that there was nothing in the Applicant's costs submissions which provided sufficient ground for the Tribunal to make an award of costs, including that the Applicant had failed to adequately demonstrate the existence of any 'special circumstances' to permit the Tribunal to make such an order.

1. Section 60(3) of the Act sets out in a non-exhaustive manner what the Tribunal may have regard to in determining whether there are special circumstances. These include:

"(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."

1. Section 36(3) of the Act refers to the guiding principle of the Tribunal namely, that each party and its solicitor are under a duty to co-operate with the Tribunal to facilitate the "just, quick and cheap resolution" of the real issues in the proceedings.
2. Rule 38 of the Civil and Administrative Tribunal Rules, which applies only to the Consumer and Commercial Division, states:

"(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 - _

(a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or

(b) the amount claimed or in dispute in the proceedings is more than $30,000.00."

1. As stated above, the primary rule for costs in the Tribunal is that the parties to the litigation are responsible for their own costs: s.60(1) of the Act.
2. The Tribunal has the discretion to award costs if it is satisfied that there are 'special circumstances' that warrant an order for costs: s.60(2) of the Act.
3. Section 60(3) of the Act sets out in a non-exhaustively what the Tribunal may have regard to in determining whether there are special circumstances. These are outlined in full above.
4. The onus is on the party seeking a variation to the usual costs order to prove on the balance of probabilities that there are special circumstances warranting an award of costs in their favour if s.60 of the Act is relied upon, and in so doing to clarify which paragraph of s.60(3)(a)-(g) of the Act is relied upon.
5. If no paragraph of s.60(3)(a)-(g) of the Act is relied upon then the party seeking a variation to the costs order should be precise and clear on the other matters or conduct upon which it relies to persuade the Tribunal to make such an order and, where relevant, adduce evidence of the alleged conduct. That may occur by correspondence (including settlement or Calderbank offers) or a short affidavit deposing to the specific circumstances.
6. From paragraph 14 of the Applicant's costs submissions, the Applicant appears to rely upon the following three paragraphs of s.60(3) to base her costs application. They are:

(1) s.60(3)(a): whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings;

(2) s.60(3)(b): whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings; and

(3) s.60(3)(f): whether a party has refused or failed to comply with the duty imposed by section 36(3).

1. The evidence before the Tribunal in support of these three relevant factors are found in a letter dated 18 April 2023 from the Applicant's strata lawyers, Alex Ilkin, to the Respondent and in a subsequent letter with greater detail dated 4 May 2023.
2. Both of these letters were written when Mr Ilkin represented the Applicant and approximately 10 months before proceedings were commenced in the Tribunal.
3. The first letter dated 18 April 2023 cannot be considered a letter of offer or a Calderbank offer. It was in the nature of a demand to allow the Applicant's acoustic engineer to enter Lot 12 owned by the Respondent in order to conduct a tapping test on its floor.
4. The letter dated 18 April 2023 outlined the type of tests which the Applicant's expert proposed to conduct and the reasons for them. Relevantly, it is worth recalling that the Respondent had purchased Lot 12 in May 2007, some 17 years beforehand, and the floor of Lot 10 had been fully tiled, including the kitchen, laundry, family room and both bedrooms, since his purchase. The Respondent gave evidence at the hearing that he did not install the tiles and purchased the investment strata unit in 2007 with tiled floors as he did not want the ongoing maintenance of carpet in the property.
5. Also relevantly, the Applicant purchased and moved into Lot 10 in about March 2022 but had no noise complaints until October 2022 when the current tenants, Mr and Mrs Bra and their family, moved in.
6. The letter from the Applicant's lawyer, Mr Alex Ilkin, to the Respondent dated 4 May 2023 is a more comprehensive communication. It required the Respondent to lay thick underfelt and carpet on the floor of Lot 12 'to return the level of noise impact through the flooring to the same level that applied prior to laying new floor tiles'. It is apparent from this communication that there were some factually incorrect assumptions in the letter dated 4 May 2023. They include:

(1) First, that the tiles on the floor of Lot 12 had only been put in at or prior to the new tenants occupying Lot 12 in October 2022; and

(2) That the floors the bedroom , living and dining rooms in all of the 16 lots in SP21390 were carpeted when the strata plan was registered in 1984 and that the Respondent's treatment of the floors in Lot 12 was a departure from this. As evidence came out in the Tribunal hearing on 26 September 2024, this was incorrect. At paragraph [25] of the Tribunal's decision dated 11 March 2025, the Tribunal noted that although the Respondent was not certain, he considered that Lot 12 was probably fully tiled either at the time of its construction in 1982 or at some point between 1982 and 1987, and that he had not carried out any major modifications to Lot 12 since purchasing it in 2007, except for installing a split system air conditioner in March 2022. In the letter dated 4 May 2023, the Applicant's solicitor required the Respondent to treat the floor to return the level of noise impact to its original state; and to do so within 14 days. It was drafted as a letter of demand rather than a Calderbank letter or letter of offer and relied upon facts and assumptions which were proven at the hearing to be incorrect.

(3) The balance of the bundle of correspondence and evidence were emailed communications suggesting that the Applicant may seek interim orders from the Tribunal in order to obtain access to Lot 12 for the Applicant's expert to carry out acoustic testing on the floors of Lot 12. As far as the Tribunal is aware, that did not occur but it was still being raised as a likelihood as recently as the day of the hearing on 26 September 2024, when there were discussions. At the commencement of the hearing, the Applicant's counsel initially asked the Tribunal for an adjournment and for orders to be made so that access to Lot 12 could be had for acoustic testing purposes, before electing to proceed with the hearing on the evidence that the Applicant had.

(4) Put simply, the Applicant never formally sought or obtained these access orders for an inspection of Lot 12 by her expert. Ultimately, she did not require them as the acoustic evidence from within Lot 10 was sufficient to be successful in the proceedings.

(5) For these reasons, the Tribunal does not consider either of these letters amounts to a formal Calderbank offer which the Respondent could have accepted prior to the commencement of proceedings, in order to obviate the need for proceedings. Ultimately, the matter was successful based on the acoustic expert's reports of the Applicant obtained on 14 March 2023 and 17 May 2024, but which do not appear to have been served on the Respondent until proceedings in the Tribunal were commenced and in accordance with directions made in those proceedings.

1. Apart from the two letters referred to above, the evidence proffered by the Applicant in support of the relevant factors in s.60(3)(a), (b) or (f) is limited.
2. The proceedings were filed on 4 March 2024 and obtained a hearing date on 26 September 2024, six months later. The acquisition of a hearing date six months after filing is, in the modern Tribunal, a fairly quick pathway. It is difficult with such a timetable to understand how and in what way the Respondent 'prolonged unreasonably the time taken to complete the proceedings' and the Applicant's written submissions are sparse on this point.
3. The Applicant submits that she was successful and that she received the very orders sought in her letter dated 4 May 2023 which requested that the Respondent treat the floor to prevent disturbing her peaceful enjoyment. The Applicant's letter of demand required the laying of underfelt, underlay and carpet in Lot 12 within 14 days, whereas the Tribunal ordered this to occur on 11 March 2025 and within three months, an altogether more reasonable timeframe. For this reason alone, it is difficult to say that the terms of the order which the Applicant received in the Tribunal's decision dated 11 March 2025 were no less favourable than the draft orders contained in her solicitor's letter dated 4 April 2023.
4. The Applicant at paragraph [18] of her written submissions acknowledges that her letter dated 4 May 2023 was not labelled a Calderbank offer, but submits that it was still an offer because the intent of the letter was to invite agreement. Also, there are the factual matters above that are incorrect such as that Lot 10 had always been tiled and that the only thing that had changed between March 2022 (when the Applicant bought and moved into Lot 10) and October 2022 (when the new tenants moved into Lot 12) was not anything physical to Lot 12 but just the change of tenants.
5. The Applicant also submitted that the failure of the Respondent to allow the Applicant's expert to inspect Lot 12 or to take acoustic soundings within Lot 12 was unreasonable and supports the failure to comply with the duty imposed by section 36(3) of the Act. The Tribunal disagrees with this for two reasons. First, the Applicant never formally sought access orders for their expert to take acoustic readings in Lot 12 and secondly, the Applicant succeeded in the proceedings without the need for acoustic readings from Lot 12.
6. It is not unusual in proceedings of this type and at the first directions hearing - which is a convenient and cost effective time for the Applicant to seek such access orders - given the subject matter of the proceedings being considered by the Tribunal and the directions to be made to prepare the matter for a final hearing. The Tribunal will usually grant such orders at a first directions hearing as part of the preparation for hearing but no such orders were sought.
7. In summary, the Tribunal does not consider that the Applicant has established 'special circumstances' sufficient to justify a costs order in her favour. There can be no doubt that the Applicant was successful in the proceedings. But that of itself does not constitute special circumstances. In CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]- [31], the Appeal Panel stated that 'special circumstances' must be 'out of the ordinary, but they do not need to be extraordinary or exceptional'.
8. Finally, the Tribunal has investigated costs circumstances in the above cases upon which it relied in respect of the principal decision. Although clearly each case is based on its own facts and evidence, it is noteworthy that in Sui v Jiang [2024] NSW CATAP 128 and at first instance in Jiang v Sui [2023] NSW CATCD 127, no costs order was made either at first instance or before the Appeal Panel.
9. In Feletti v Eales [2018] NSW CATCD 66, legal representation was afforded both parties at first instance but on the basis that there would be no application for costs made by the successful party against the unsuccessful party at the conclusion of the hearing. These proceedings ultimately went on appeal, but the Appeal Panel declined to make any costs order in respect of the appeal.
10. For all of these reasons, the Tribunal considers that the appropriate order for costs is that which was indicated to the parties at [46] of the Tribunal's decision dated 11 March 2025 namely that each party pay its own costs. Having regard to the costs application that has been made, the Tribunal proposes to dismiss that costs application on the basis that each party shall pay her or its own costs of the proceedings.
11. The Tribunal so orders.

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.