Chua v The Owners Strata Plan No 89866

[2019] NSWCATCD 85

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Chua v The Owners Strata Plan No 89866 [2019] NSWCATCD 85

Hearing dates:

6 August 2019

Date of orders:

8 August 2019

Decision date:

08 August 2019

Jurisdiction:

Consumer and Commercial Division

Before:

S Thode, Senior Member

Decision:

1. A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013.

2. The applicant shall pay the respondent's costs of the hearing thrown away by reason of the late withdrawal, limited to three hours attendance and three hours preparation, as agreed or assessed. 

3. The application for costs is otherwise dismissed. 

Catchwords:

COSTS - Strata Schemes - withdrawal of application - special circumstances 

Legislation Cited:

Civil and Administrative Tribunal Act 2013

Cases Cited:

Megerditchian v Kurmond Homes Pty L TD [2014] NSWCATAP 120

Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622; [1997 ] HCA 6

Category:

Costs

Parties:

Siew Lee Chua (Applicant);
The Owners - Strata Plan No 89866 (Respondent)

Representation:

Siew Lee Chua (Applicant)
DEA Lawyers (Respondent)

File Number(s):

SC 19/29171

Publication restriction:

Nil

REASONS FOR DECISION

Background

1. Proceedings SC 18/40601 were commenced on 18 September 2018. The applicant sought orders pursuant to s232 of the Strata Schemes Management Act 1996 for repair and maintenance of common property. The matter was listed for hearing on 15 April 2019. The Respondent was informed at the hearing that the application was “withdrawn” by the applicant. The applicant was ordered to pay the respondent’s costs of and incidental to the proceedings, such costs to be agreed or assessed.

2. The applicant appealed the costs orders.

3. On 4 June 2019 the Appeal Panel allowed the appeal and the costs order made on 15 April 2019 was set aside. The Appeal Panel ordered the parties to exchange submissions on the question of costs and remitted the matter for hearing on the question of costs only. The parties agreed that a hearing may be dispensed with and the matter comes before me today to be determined on the papers, without further need of parties to appear. I am satisfied that the application may be determined on the papers without further need of the parties to appear.

4. I have received written submissions from the respondent dated 19 June 2019.

5. I have received written submissions from the applicant dated 5 July 2019.

6. I have received submissions in reply from the respondent dated 12 July 2019.

Orders sought

7. The respondent seeks an order that the applicant pay the respondent’s costs of the proceedings.

The respondent’s submissions

8. The respondent submits that the Tribunal should find special circumstances pursuant to section 60 (3) of the act warranting an award of costs.

9. On 18 September 2018 the applicant filed a strata application in the Tribunal seeking orders under section 232 of the Strata schemes Management Act 2015 (the Act) relating to 3 matters:

1. a water leak into basement parking spaces;

2. a sticking front door;

3. issues concerning the fire separation of a riser in the building.

10. The application, insofar as it related to the fire separation issue, was already the subject of another application in the Tribunal by the applicant (file number SC 18/37156). That matter was dismissed by Senior Member S McDonald on 21 January 2019. It is submitted that by reason of the dismissal the application for the orders concerning the fire separation were not maintainable by operation of section 232 (3): “a person is not entitled to make an application for an order under this section if the person has commenced, and not discontinued, proceedings in connection with the settlement of a dispute or complaint the subject of the application”

11. The respondent further submits that at the first directions hearing on 24 October 2018 the parties were granted leave to be legally represented and the solicitor for the respondent raised the duplicity of proceedings with the Tribunal and the applicant formally withdrew the application in respect of the fire separation of a riser in the building.

12. In respect of the water leak issue, it is submitted that in November 2018 the respondent installed drip trays and plumbing above the applicant’s (and others’) car spaces to prevent water dripping into the car spaces.

13. On 18 December 2018 the solicitor for the respondent sent a letter by email to the applicant enquiring whether the applicant maintained her application in respect of a ‘sticking front door’.

14. On 11 January 2019 the applicant responded by email confirming ‘we will not proceed with the sticking front door issue for now’. It is submitted that therefore by 11 January 2019 the applicant was no longer pursuing 2 out of the 3 orders originally sought in the application. The third order was arguably incompetent by reason of section 232(3). It is submitted that the applicant should have withdrawn her application at this stage.

15. On 30 January 2019 there was a second directions hearing. The applicant requested an extension of time to file and serve her evidence by 5 February 2019. The respondent did not appear but was directed to file and serve its evidence by 19 February 2019. Despite an extension of time being granted, no further documents were served by the applicant. The original application served on the respondent included a building defects inspection notice and other documents supporting the contention that a leak was occurring in the garage.

16. On Tuesday, 9 April 2019, two months after the due date, the legal representatives of the owners corporation filed and served documents the respondent intended to rely upon at the hearing, although there had been no further evidence filed by the applicant.

17. On 9 April 2019 the respondent made an application for leave to be legally represented at the hearing which was scheduled to be held on Monday, 15 April 2019 at 1.15pm. The application discloses that the resolution appointing the solicitor was passed on 6 March 2019.

18. On Monday 15 April the solicitors for the respondent appeared at the hearing. There was no appearance for the applicant. The Tribunal granted the respondent leave to be legally represented. The Tribunal informed the respondent that the Tribunal had received an application for withdrawal dated 7 April 2019 and enquired as to whether the respondent received any notice of the proposed withdrawal. The respondent solicitor informed the Tribunal that the respondent had not received any notice of the proposed withdrawal and came to the hearing ready to defend the application.

19. The application was dismissed on the basis of its withdrawal and the Tribunal ordered the applicant pay the respondent’s costs of and incidental to the proceedings, such costs to be agreed or assessed.

20. On 9 May 2019 the applicant filed a notice of appeal. The applicant challenged the costs order made by the Tribunal. The notice of appeal states ‘the decision to withdraw my application was made on 7 April 2019. My husband helped me to send the application form and it was sent by registered post on 9 April 2019.’

21. In the notice of appeal the applicant acknowledges that the respondent installed drip trays above the car spaces; and that the owners corporation had engaged consultants to prepare a report detailing all defects within the building and that an inspection was conducted of the building between 10 October 2018 and 12 October 2018.

22. It is submitted that the applicant’s principal contention on appeal was that she was denied procedural fairness because she did not have an opportunity to make any submissions before the order for costs was made. The appeal was successful and the costs order was set aside and the question of costs remitted to the Tribunal.

23. Section 60 of the Civil and Administrative Tribunal Act prescribes that costs can be ordered if the Tribunal is satisfied there are special circumstances warranting such an order.

24. The respondent submits that the relevant special circumstances in these proceedings are the applicant’s late withdrawal of the application without notice to the respondent such that the respondent prepared for and appeared at the hearing even though the applicant had decided 8 days earlier to withdraw the application and failed to notify the respondent.

25. The respondent refers to the relevant principles applicable to a costs application in proceedings which have not been heard on the merits. The respondent refers to the principles enunciated in Re Minister for Immigration and Ethnic Affairs: Ex parte Lai Qin (1997) 186 CLR 622; [1997 ] HCA 6, in which McHugh J held:

‘in an appropriate case, a court will make an order for costs even where there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The court cannot try a hypothetical action between the parties… In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action…

26. It is submitted that the applicant has acted so unreasonably that the respondent should obtain the costs of the action; and the respondent submits that it was almost certain to have succeeded if the matter had been fully tried.

27. It is further submitted that the ‘request for withdrawal of application’ form signed by the applicant and dated 7 April 2019 was received by post by the Tribunal on 15 April 2019 (the date of the hearing). Immediately below the heading on the request for withdrawal form it states ‘you should advise the respondent of your intention to withdraw the matter’. It is submitted that there was no justification for the late withdrawal in circumstances where there had been no change in material circumstances since November 2018 when the owners corporation installed drip trays and plumbing to capture any water leaks into the applicant’s car space. The applicant ought to have taken steps at that time to withdraw the application, given the only matter that the applicant continued to pursue out of three orders originally sought, was the issue in relation to the water leaks into the car space, and that had been resolved.

28. The respondent submits that having regard to section 60(3)(e), the late withdrawal of the application without notice to the respondent was unreasonable and gives rise to special circumstances warranting an order that the applicant pay the respondent’s costs of and incidental to the proceedings as agreed or assessed.

29. The respondent consents to the determination of the application for costs on the papers and for a hearing to be dispensed with under section 50(2) of the NCAT Act.

The applicant’s submissions

30. The applicant relies on written submissions filed 5 July 2019.

31. The applicant concedes that on or about 28 November 2018 drip trays were attached to the concrete slab above the applicant’s car space to prevent drip water dripping onto her car, causing damage. However, that measure was described to the applicant as temporary until expert evidence was received and considered by the owners corporation.

32. At the first directions hearing before the Tribunal a solicitor for the applicant appeared but was not granted leave to legally represent the owners corporation. The applicant states there was no appearance by the owners corporation at the second directions hearing on 30 January 2019. Between early February 2019 and on or about 7 April 2019 the applicant observed a worsening situation with cracking and water penetration through the concrete slab.

33. The applicant relies on her statutory declaration declared on 4 July 2019. She deposes that on 7 April 2019 the applicant and her husband discussed and considered whether other owners should join the proceedings given that the water penetration problem was clearly affecting several lot owners. The applicant decided to withdraw the proceedings and to post the notice to the Tribunal by registered mail dated 9 April 2019. The applicant believed that the registered post had been received by the Tribunal on or by 12 April 2019 because early that morning tracking information was sought in relation to the delivery of the withdrawal notice.

34. The applicant denies that special circumstances warranting an award of costs have been established and submits that the circumstances relied upon by the respondent are not “out of the ordinary”. The applicant acknowledges that the circumstances of the case do not have to be extraordinary or exceptional before a cost order may be made: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120, at [11] citing Santow JA in Cripps v G & M Mawson [2016] NSWCA 84 at [60].

35. The applicant submits that she complied with section 36 (1) of the NCAT Act and that she at all times facilitated the just, quick and cheap resolution of the real issues in the proceedings. The applicant states that by withdrawing the proceedings she complied with s36 (4) which provides that ‘the practice and procedure of the Tribunal should be implemented 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’. It is further submitted that the applicant acted according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms (section 38(4)).

36. It is submitted that the applicant was obliged to lodge an application for orders of the Tribunal following a failure or at least a delay by the owners corporation to take effective action to remedy a building defect which permitted water dripping through a concrete slab onto her car occasioning damage and raising the possibility of ongoing damage. A temporary remediation had been affected but no permanent solution had been deployed. Lot owners, including the applicant, may well be obliged take further proceedings in the Tribunal to require the owners corporation to comply with its strict duty to maintain and repair common property pursuant to section 106 of the SSM Act. It is submitted that the delay in the withdrawal and the failure to provide notice has been fully explained in the statutory declaration affirmed by the applicant.

37. It is submitted that no order for costs should be made because the solicitor for the respondent filed and served documents on 9 April 2019, 6 days before the hearing, when the respondent should have provided all documents by 19 February 2019. Had the hearing proceeded, the applicant would not have had reasonable opportunity to review and prepare a response to the evidence.

38. It is submitted that the owners corporation, despite confirming the existence of an expert report, did not provide the applicant with such a report setting out what, if any, steps would be taken to rectify the defects in the building. Had the respondent provided such a report, the applicant may well have withdrawn her application earlier.

39. On 9 April 2019 the applicant filed a withdrawal of the application by registered post. She submits this was a prudent course to take, and the applicant was not of the view that she had to attend the hearing on 15 April 2019 at 1.15pm.

40. The applicant further deposes that she was not aware that she had to forward a copy of the withdrawal notice to the owners corporation. She submits English is not her first language and she was not experienced in the procedures of the Tribunal. It is submitted that there is no delinquency or recalcitrance on her part and therefore each party should pay its own costs of and incidental to the application.

The respondent submissions in reply

41. The respondent submits that the applicant was aware that lawyers had been appointed on behalf of the owners corporation because minutes of a general meeting of the owners corporation held on 6 March 2019, at which the applicant was present by proxy, disclose a resolution was passed accepting a costs agreement issued by solicitors for the respondent. The applicant therefore knew that lawyers for the owners corporation would appear at the hearing.

42. It is apparent that the application for withdrawal was not posted to the Tribunal until after the respondent had served on the applicant the documents it intend to rely upon at the hearing. The statutory declaration of the applicant dated 4 July 2019 confirms the application for withdrawal was posted at 4:29 PM on 9 April 2019. The respondent had earlier that day served, by email, the respondent’s evidence and an application for leave to be legally represented at the hearing. The respondent submits that the applicant provided the Tribunal with no explanation why she did not notify the respondent of the withdrawal of the application.

43. It is submitted that the applicant’s conduct was unreasonable within the meaning of Lai Qin and the applicant should be ordered to pay the respondent’s costs of and incidental to the proceedings as agreed or assessed

Jurisdiction

44. 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.

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.

45. Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) provides that despite s 60, the Tribunal may award costs in proceedings if the amount claimed or in dispute is more than $30,000. This is not such a claim.

Should an order for costs be made in the respondent’s favour?

46. As noted above, the applicant’s claim was withdrawn under covering letter dated 7 April 2019, posted on 9 April 2019.

47. I am not persuaded that this application was conducted in a way that unnecessarily prolonged the proceedings. The matter was listed for directions on only two occasions. The application was filed on 18 September 2018 and withdrawn in April 2019, with no appearance by the respondent owners corporation on 30 January 2019. The matter was finalised expeditiously.

48. There is no question that the Tribunal only granted leave to the Respondent to be legally represented on the morning of the hearing, being 15 April 2019. It is not unreasonable for an applicant to assume that an application for legal representation by an opposing party would be rejected if it was brought at the hearing, having regard to the guiding principle pursuant to section 45 of the Act that each party represent itself. Indeed, it is more probable than not that leave would be refused in circumstances where an application for legal representation:

1. is brought only on the morning of the hearing;

2. the single remaining issue in the case is not complex;

3. is opposed by a self-represented litigant; and

4. has previously been denied by the Tribunal at a directions hearing on 24 October 2018.

49. I have had regard to the authority of Lai Qin. The assessment undertaken by his Honour Justice McHugh, as he then was, questioned the strength of the parties’ case in circumstances where the applicant had been granted a visa only 7 days after she commenced proceedings, thus rendering the proceedings nugatory. The critical question I have to determine is whether the applicant acted so unreasonably in not informing the respondent that the application was withdrawn that it would be proper for the applicant to pay the whole or part of the respondent’s cost of the proceedings.

50. In determining whether or not the applicant acted reasonably, it is necessary to mention some further facts in the matter. The applicant unilaterally withdrew the application only allowing three working days’ notice. The postal rule provides that a postal article will be presumed to be received by the recipient on the seventh working day after having been posted. The applicant failed to inform the other side of her intention to withdraw the application in a timely manner, necessitated the attendance of the respondent at the hearing. On balance I am satisfied that the respondent has failed to comply with the duty imposed by section 36(3) (pursuant to s60(3)(f)) and find special circumstances established.

51. However, in taking into account “any other matter that the Tribunal considers relevant” I am of the view that the respondent should not be compensated for preparation of evidence by a legal representatives in light of the fact that the applicant filed no evidence in support of her case, and in circumstances when the respondent’s evidence was filed and served three months out of time without any explanation. On balance I find that the respondent should be reimbursed for the cost of attendance at the hearing at 1.15pm (allowing three hours hearing time). Further, having regard to the respondent’s submission that the hearing was limited to a single issue because the “applicant was no longer pursuing two out of the three orders that had been sought in the application” (see respondent’s submissions paragraph 8) I am satisfied that the preparation time for the hearing of the matter, against the unrepresented applicant, with only a single issue in dispute should be limited to three hours also.

52. The application for costs is otherwise dismissed.

Orders

53. I make the following orders:

54. A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013.

55. The applicant shall pay the respondent’s costs of the hearing thrown away by reason of the late withdrawal, limited to three hours attendance and three hours preparation, as agreed or assessed.

56. The application for costs is otherwise dismissed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar

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

Decision last updated: 22 July 2021