Worrall v The Owners - Strata Plan No 43357

Provisions governing the application

1. The second issue which requires determination, is whether, as the Respondent contends, its costs application is governed by the provisions of Rule 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules) or, as the Appellant contends, by s 60 of the CAT Act. On the facts of this case, the determination of this issue assumes considerable practical significance.
2. The Respondent made a number of submissions in support of its contention that Rule 38 of the Rules governed the proceedings at first instance, resulting in Rule 38A of the Rules governing the costs of the appeal. Rule 38 of the Rules applies to costs in the Consumer and Commercial Division of the Tribunal in the circumstances identified in the Rule. The proceedings which gave rise to the Appellant's appeal were proceedings in the Consumer and Commercial Division of the Tribunal.
3. Rule 38(2) provides that, despite s 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 award" if the amount "claimed or in dispute in the proceedings is more than $30,000" (Rule 38(2)(b)).
4. Rule 38A of the Rules provides that if Rule 38 governed the costs of the proceedings at first instance, Rule 38 governs the costs of an appeal from a decision in those proceedings - the appeal panel "must apply the first instance cost provisions when deciding whether to award costs in relation to the internal appeal". The issue is thus what provisions governed the costs of the proceedings at first instance.
5. The Respondent submitted that "the amount in dispute in the proceedings can be determined by considering what orders the Appellant seeks on the appeal". The Respondent further submitted that the amount in dispute "can be assessed considering the implied effect on the wealth of the parties" in reliance upon Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25, at 57 (TriCare).
6. The Respondent relied upon the statement in TriCare that whether the amount in dispute was more than $30,000: "depends on whether there is a realistic prospect that in each appeal the wealth of the appealing party would be changed by more than $30,000 or, put another way, whether the right claimed by the appealing party, but denied by the decision at first instance, prejudices that party to an amount in excess of $30,000".
7. The Respondent also relied upon Vella v Mir (No 3) [2020] NSWCATAP 17 at [28] and [29], in which it was said that the discretion conferred by Rule 38 must "be exercised judicially", and that the "appropriate starting point for the exercise of discretion" is that in general terms "a party who is successful is entitled to an order for costs in its favour, subject to exceptions generally involving misconduct on the part of that party".
8. By reference to the relief sought in the Appellant's Notice of Appeal of 14 October 2021, the Respondent submitted that, had the Appellant been successful, her wealth would have been improved by well in excess of $30,000, and possibly by as much as $135,000 plus GST.
9. The Appellant disputed that Rule 38, and thus Rule 38A of the Rules governed the present application, and submitted that s 60 of the CAT Act applied.
10. The Appellant submitted, in rejecting the contentions of the Respondent with respect to the operation of Rule 38A of the Rules, that so doing would be: inappropriate under circumstances where no damages was claimed by the Appellant on appeal. There were no damages, losses or even an amount that were "in dispute", and the subject matter of the appeal relevantly related to how the by-laws of the scheme, the Strata Plan, and the Common Property Memorandum operated to delegate obligations for repair and maintenance of certain items of the common property.
11. It was further submitted that, in the appeal, there was "no dispute about the amount of the quotes sought, or the scope of works to be undertaken for the rectification works. These matters were not to be determined on appeal". It was thus submitted that: "These orders [2 to 5 of the orders of the Tribunal at first instance] had nothing whatsoever to do with the appeal and are not relevant to the appeal proceedings. It would be inappropriate for the Appeal Panel to consider these issues with respect to this costs application, particularly where there is no dispute as to the payment of any sum of any amount of money on appeal."
12. On 7 December 2021, for the reasons it published, the Tribunal at first instance made an order that the Appellant pay some of the Respondent's costs of the proceedings at first instance.
13. In the course of its reasons, the Tribunal at first instance recorded at [15] that it did not "consider that the terms of rule 38(2)(b) are satisfied in the circumstances of this case" and that: "Although the Applicant sought, in her application as filed, compensation for losses allegedly arising from the Respondent's failure to repair and maintain the common property, the Applicant did not identify the amount claimed and did not press the claim to compensation at the hearing. In the absence of any specification of the amount sought by the Applicant, it is impossible to say that the amount in issue in respect of the claim to compensation exceeded $30,000."
14. The Tribunal further recorded at [16] that the Applicant had "sought orders that the Owners Corporation carry out work, the cost of which would exceed $30,000" but nevertheless did not "consider that it could be said that the relief sought by the Applicant involved a claim for an amount in excess of $30,000". Neither party appealed against the costs decision of the Tribunal at first instance.
15. Neither party referred to the costs decision at first instance in their submissions filed some months later. Contrary to the contentions of both parties, whether Rule 38A is enlivened on appeal is directly referable to what occurred with respect to costs at first instance.
16. There is no doubt that, had the Tribunal at first instance applied Rule 38 to the costs dispute determined by it, Rule 38A would be enlivened in this application. In circumstances where the Tribunal at first instance heard and determined a costs application, and found that Rule 38 did not apply, even if it were permissible, which we doubt (Blair v Curran [1939] HCA 23;(1939) 63 CLR 464, at [532]), we would not, in the circumstances of this case, do other than adopt the same approach to the provisions governing the costs of the appeal as that which the Tribunal at first instance adopted. In those circumstances, it is necessary to refer to the submissions of the parties with respect to s 60 of the CAT Act.

Consideration

1. Section 60(1) of the CAT Act provides that each party to the proceedings in the Tribunal is to pay the party's own costs. Section 60(2) of the CAT Act provides that 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". What amounts to special circumstances has been considered in a number of cases.
2. The Appeal Panel in Kadsielski v Guca 1 Pty Limited [2018] NSWCATAP 223 at [14]-[16] stated that: "14 First, special circumstances are circumstances that are out of the ordinary, they do not have to be extraordinary or exceptional (see for instance CPD Holdings Pty Limited t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21. It suffices if the circumstances are "out of the ordinary": Ingate v Andrews [2018] NSWCATAP 170. 15 Secondly, each case depends upon its own particular facts: Gizah Pty Limited v AXA Trustees Limited (No 2) [2001] NSWADT 164, and will depend upon the circumstances of the individual case: Brunsprop Pty Limited v Joanne Hay & Wes Davies [2015] NSWCATAP 152. 16 Thirdly, the discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to the proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Limited v Naomi Dickinson [2015] NSWCATAP 94."
3. The Respondent submitted (23-24) that the Appellant was "responsible for prolonging the time taken to complete the proceedings". Section 60(3)(b) of the CAT Act, upon which the Respondent relies refers to a party having "been responsible for prolonging unreasonably the time taken to complete the proceedings".
4. As is not in doubt, the filing of any appeal prolongs the time taken to complete the proceedings. Section 60(3)(b) requires that such prolonging has been unreasonable. Nothing to which the Respondent refers establishes that the Appellant "unreasonably" prolonged the proceedings. The late filing of evidence upon which the Appellant sought to rely did not delay the scheduled hearing of the appeal, nor did it extend the duration of the appeal. The Respondent's successful resistance of the Appellant's application to rely upon further evidence confirms that its late filing did not prejudice the Respondent. We thus do not consider that s 60(3)(b) of the CAT Act assists the Respondent to establish special circumstances pursuant to s 60(2) of the CAT Act.
5. The Respondent relied upon s 60(3)(c) and s 60(3)(e) of the CAT Act in support of its claim. As is not in doubt, the contention that a party has made a claim that has no tenable basis in fact or law involves "a high threshold to reach" (Yelda v Sydney Water Corporation; Yelda v Vitality Works Australia Pty Limited [2021] NSWCATAD 177). A complaint will be lacking in substance when it can be demonstrated that there exists no factual basis for an allegation (Langley v Niland & Anor (1981) 2 NSWLR 104, Chalker v Murrays Australia Pty Limited [2016] NSWCATAD 282). The mere fact that the Appellant was wholly unsuccessful, and the Respondent wholly successful, does not necessarily indicate that the Appellant's arguments had no tenable basis in fact or law (MSP Consulting & Building Constructions Pty Limited v Karkoulas (No 2) [2016] NSWCATAP 183).
6. We are not persuaded that the contentions advanced by the Appellant in the appeal had no tenable basis in fact or law, or were extremely weak. Although unsuccessful, the Appellant's case on appeal involved agitating grounds which were entitled to, and were afforded, proper genuine and realistic consideration by the Appeal Panel. We are not satisfied that the nature of the contentions advanced by the Appellant have been shown to be out of the ordinary for proceedings of this type. Nor are we satisfied that absence of merit of the Appellant's case constitutes a special circumstance warranting an award of costs. Nor do we accept the Respondent's contention that any ground of appeal agitated by the Appellant was "misconceived".
7. The Respondent relied upon s 60(3)(g) of the CAT Act, which provides that the Appeal Panel may have regard to any other matter which it considers relevant. We do not accept the Respondent's contention that the Appellant's refusal to consent to an extension of the timetable for filing submissions advances its claim with respect to special circumstances.
8. In its costs decision, the Tribunal at first instance considered each of the offers to settle which have been relied upon in this application.
9. We do not accept that Offers of Compromise or "Calderbank offers" with respect to the proceedings at first instance advance the Respondent's claim with respect to special circumstances. If they had relevance, that would have been with respect to the costs of the proceedings at first instance. Had there been Calderbank offers with respect to the appeal, they may have assumed significance with respect to special circumstances, but no such offers have been provided to us.
10. For the reasons recorded above, we are not persuaded that the Respondent has established special circumstances warranting an award of costs.
11. The order staying the costs proceedings at first instance previously made in the appeal should be discharged. It has been overtaken by events and, the appeal being dismissed, has no foundation.

Decision

1. For the reasons above we make the following orders: 1. A hearing on the issue of costs is dispensed with. 2. The Respondent's application for the costs of the appeal is dismissed. 3. Each party is to pay its own costs of and incidental to the appeal. 4. The order staying the costs proceedings at first instance is discharged.

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: 10 June 2022