Xie v PSMG Pty Ltd trading as Professional Strata Management Group

Consideration

The lot owner in Zhang purported to commence proceedings as the secretary for the owners corporation and sought both interim and substantive orders. The application for interim orders was dismissed after a hearing. He was described as a self-represented litigant with a genuine grievance but without knowledge of the applicable legal principles. He sought orders under s 72 and s 181 of the Strata Schemes Management Act 2015 (NSW) (the SSMA) but the Tribunal indicated that it would consider whether an order should be made under s 237.
It was considered that, while Mr Zhang sought interim orders that could not be made, he raised issues that were genuine and arguable, the proceedings were not sufficiently unusual or lengthy to establish special circumstances, and that the circumstances of that case were not sufficient to warrant an award of costs.
Gorbunov was a case where an interim application was dismissed, subsequent to obstacles having been identified (1) at a directions hearing, and (2) in submissions provided by the owners corporation prior to the hearing of that interim application. It was noted that the applicant in that case had "brought multiple strata proceedings to the Tribunal about the same factual and legal issues".
A costs order was made in respect of the interim application but not the substantive application which were listed for directions but were withdrawn. It was noted that the substantive application was unlikely to succeed but said: "The [owners corporation] correctly identified the issue with the renewal early and presumably did not, or should not, have expended resources on defending the renewal given its lack of prospects".
The applicant purported to lodge the first interim application, dated 4 July 2023, on behalf of the strata committee. He named the strata managing agent as the respondent and sought an order under s 181(1) of the SSMA. It is noted that s 181(1) provides as follows: If the strata committee of an owners corporation gives a notice to a person who has possession or control of property (including records) of the owners corporation requiring the person to deliver the property to the strata committee, the person must, not later than 14 days after the notice is given, deliver that property to a member of the strata committee specified in the notice.
After the agent's request for an adjournment was refused on 25 July 2023, this application was the subject of directions on 28 July 2023 and, when it came back before the Tribunal on 25 August 2023, was withdrawn.
This application resembles the situation in Zhang in that the proceedings were (1) commenced by the secretary, purporting to do so on behalf of the strata committee, (2) who was self-represented at that time, (3) who also relied on s 181 of the SSMA, and (4) who plainly harboured a genuine concern. However, unlike Zhang, this interim application was withdrawn and not dismissed after a hearing. The basis for this application is a matter which appears to be part of the yet to be determined substantive application, namely a desire to terminate the agent. There is nothing to suggest that this applicant had commenced prior proceedings, as was the case in Gorbunov. The agent's suggestion that this application should have been commenced by the owners corporation is a matter which, like Gorbunov, should not have caused the agent to incur any significant costs defending it.
Such circumstances do not constitute special circumstances and, even if they did, those circumstances are not such as to warrant an order for costs. It is noted that there was no determination on the merits and that will not be known until the substantive application is heard and determined. The conduct of the applicant is considered reasonable for a self-represented litigant who reads s 181(1) of the SSMA.
The second interim application, which was received by the Tribunal on 19 July 2023, was also said to have been made by the strata committee. It sought to restrain the agent from acting on behalf of the owners corporation, including not proceeding with a meeting to be held the next day, ie 20 July 2023.
Like the first interim application, the second interim application was (1) commenced by the secretary, purporting to do so on behalf of the strata committee, (2) who was self-represented at that time, (3) who plainly harboured a genuine concern, (4) whether that concern was valid depends on the outcome of the pending substantive application, and (5) the agent's suggestion that this application should have been commenced by the owners corporation is a matter which, like Gorbunov, should not have caused the agent to incur any significant costs defending it. This application does not resemble Gorbunov in that it does not raise the same legal and factual issues in separate proceedings: it plainly arose because the agent continued to act and was a second interim application lodged while a substantive application was still on foot.
Again, the Tribunal does is not persuaded there are special circumstances and, even if it could be said there were, those circumstances are not such as to warrant an order for costs. As with the first interim application, it is noted that there was no determination on the merits and that will not be known until the substantive application is heard and determined. The conduct of the applicant is considered reasonable in withdrawing this interim application before it was heard and, as with the first interim application, that withdrawal did not constitute capitulation because the substantive application was maintained and is proceeding to a contested hearing.
The third interim application, which was lodged on 17 October 2023, named Mr Xie as applicant and the agent as respondent. It was based on what the applicant claimed had occurred at an extraordinary general meeting on 29 September 2023. This application did not proceed to a directions hearing. Instead, a letter set dates by which documents were to pe provided by the parties and, when it first came before the Tribunal on 1 December 2023 orders were made to add the owners corporation as a respondent and to remove the agent as a respondent.
This application raised additional allegations in relation to the conduct of the agent. As with the earlier interim applications, this was a self-represented applicant, seeking to raise genuine concerns, the validity of which has not yet been determined as part of the substantive application which awaits a final hearing. It would be clear to a lawyer that this application should have named the owners corporation as the respondent, not the agent, with the result that significant legal costs should not have been incurred between 17 October 2023, when it was lodged, and 1 December 2023, when the agent was removed as a respondent.
Given the similarities to Zhang, consistent with what was said in that case, the Tribunal is not satisfied this the third interim application involved special circumstances that warrant a departure from the default position that each party should bear their own costs of proceedings in the Tribunal.
The substantive application, lodged on 4 July 2023, mirrored the interim application by (1) purporting to be commenced by the strata committee, (2) naming the agent rather than the owners corporation as the respondent, and (3) relying on s 181(1) of the SSMA.
There was a first directions hearing on 28 July 2023 when orders were made for Points of Claim and Points of Defence to clarify what were the allegations sought to be raised and what was the defence to those allegations. A second directions hearing on 25 August 2023 added orders for the provision of the documents upon which the parties intended to rely at the hearing.
On 1 December 2023, as with the third interim application, the owners corporation replaced the agent as the respondent to this application.
This application involves a blend of the features of two interim applications in that its commencement mirrors the first interim application and the removal of the agent as a respondent resembles the third interim application.
As with the earlier interim applications, this was a self-represented applicant, seeking to raise genuine concerns, the validity of which has not yet been determined since the substantive application which awaits a final hearing. It would be clear to a lawyer that this application should have named the owners corporation as the respondent, not the agent, with the result that significant legal costs should not have been incurred between 4 July 2023, when it was lodged, and 1 December 2023, when the agent was removed as a respondent.
This is another application in which the position was clear, such that substantial costs should not have been incurred. Consistent with the interim applications, the Tribunal is not persuaded that the circumstances attending this application were such as to warrant an order that the applicant pay the costs of the agent.
It is not necessary to consider the applicant's submissions that there has been disentitling conduct, and whether the alleged conduct was disentitling would require a determination of the substantive application. Further, the question of whether the agent has insurance which responds to these applications is not considered relevant in the present circumstances.
It is important to note two further matters which relate to all four applications. First, the Tribunal is intended to be a place where aggrieved persons can bring their claims and have the real issues resolved in a just quick, and cheap manner: s 36(1) of the NCAT Act. The procedures of the Tribunal should be such as to enable self-represented litigants to air their grievances in a low-cost manner and with a default position that each party is to bear their own costs.
These applications reveal that real grievances have been raised since (1) there are a number of other lot owners who have been added as interested parties, thereby suggesting this is not a case where there is only one disgruntled lot owner who is, metaphorically speaking, 'swimming against the tide', and (2) the matters upon which these applications were based are to be the subject of a contested hearing which will include considering whether a different strata managing agent should be appointed.
Secondly, s 36(4) of the NCAT Act imposes a statutory goal on the Tribunal which is expressed in the following terms: 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.
There is little the Tribunal can do to stop parties from running up costs, other than to conduct proceedings as efficiently as possible. It does not matter whether the agent requested or tolerated the level of costs that have been incurred: it is sufficient to note that the agent is now seeking an order for costs of just under $50,000 for work done on applications said to have no tenable basis in fact or law and to be misconceived or lacking in substance. That involves an inconsistency because if these applications where such as to justify those descriptions, then why have legal costs of more than $49,000 been incurred without any of these applications progressing beyond directions hearings or having had any interim or final hearing?
It is difficult to see how the amount of costs incurred by the agent was a matter in reply to the applicant's submissions and no details were provided that would explain how the total of $49,112.46 arose. However, the details that were provided served to show that during the month of November in 2023, by which time the first and second interim applications had been withdrawn, and the third interim application and substantive application were plainly going to involve replacing the agent with the owners corporation as the respondent, the agent was invoiced $16,627.73.
Further, after the agent was removed as a respondent on 1 December 2023, Annexure 1 to the witness statement of Tianyi Liu suggests that the agent was invoiced a further amount of $9,609.60.
It is open to a party to incur whatever costs they wish but that does not mean that the other party should pay those costs, especially when they disproportionate to the work that was reasonably required when proceeding named the wrong respondent.
The Tribunal considers costs of $49,112.46 to be clearly disproportionate in the circumstances of these matters, and that provides an additional reason why the Tribunal considers its discretion should be exercised against making any order in relation to the costs of either these four applications or this application for costs as between the applicant and the agent. To make an order for a self-represented litigant to pay almost $50,000 in respect of proceedings which have yet to be heard would be contrary to both s 36(1) and s 36 (4) of the NCAT Act.

At a glance

Court

Decision date

Source

Judgment (9 paragraphs)

Parties

Legislation Cited (2)

Cases Cited (9)