De-La-Garde v The Owners Strata Plan No. 3260

[2022] NSWCATCD 178

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

De-La-Garde v The Owners – Strata Plan No. 3260 [2022] NSWCATCD 178

Hearing dates:

7 and 8 July 2022

Date of orders:

25 October 2022

Decision date:

25 October 2022

Jurisdiction:

Consumer and Commercial Division

Before:

D Moujalli, Senior Member

Decision:

The respondent to pay 60% of the applicant’s costs of the proceeding on the ordinary basis, as agreed or assessed.

Catchwords:

COSTS – exercise of discretion to award costs where proceeding has settled without a hearing on the merits – defect in common property – repair of common property

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), ss 36 and 60

Civil and Administrative Tribunal Rules 2014, r 38(2)(b)

Strata Schemes Management Act 2015 (NSW), ss 106, 232, 237 and 241

Cases Cited:

Ashlin v The Owners-Strata Plan No 50705 [2021] NSWCATAP 413

Dehsabzi v The Owners – Strata Plan No. 83556 [2019] NSWCATAP 65

Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425

Hertslet v Doherty [2016] NSWCATAP 46

Hoare and Ors v The Owners-Strata Plan No 73905 [2018] NSWCATCD 45

James and Ors v Surf Road Nominees Pty Ltd and Ors [No 2] [2005] NSWCA 296

Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186

Linney v The Owners - Strata Plan No. 11669 [2021] NSWCATCD 123

Lockrey v Rosewall [2022] NSWCATCD 27

Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84

Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622

Ridis v Strata Plan 10308 [2005] NSWCA 246; (2005) 63 NSWLR 449

Seiwa Australian Pty Ltd v Owners Strata Plan 25042 [2006] NSWSC 1157

Stolfa v Owners Strata Plan 4366 [2009] NSWSC 589

The Owners Strata Plan SP 20211 v Rosenthal [2018] NSWCATAP 243

The Owners Strata Plan No 80412 v Vickery [2021] NSWCATAP 98

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Darren De-La-Garde (Applicant)

The Owners – Strata Plan No 3260 (Respondent)

Representation:

Counsel:
Applicant: J P Knackstredt
Respondent: A Byrne

Solicitors:
Applicant: Sachs Gerace Lawyers
Respondent: J S Mueller & Co

File Number(s):

SC 21/46693

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. This matter was listed before the Tribunal for final hearing on 7 and 8 July 2022.

2. On 8 July 2022, the Tribunal made orders by consent disposing of all the issues in contention between the parties save for the question of costs.

3. The applicant, Darren De-La-Garde, has applied for an order that the respondent, the owners corporation of Strata Plan No 3260, pay his costs of the proceeding on an indemnity basis. The respondent contends that there should be no order as to costs so as to give effect to the intent that each party is to bear their own costs.

4. I have decided that that the respondent should be ordered to pay the applicant’s costs of the proceeding, but only limited to 60% of those costs on the ordinary basis, for the reasons set out below.

The Factual and Procedural Background

5. In determining the question of costs, I have had regard to the following:

1. The matters stated by the applicant in the application lodged with the Tribunal on 12 November 2021 (the Original Application);

2. The Draft Amended Application served by the applicant on or about 1 June 2022;

3. The Draft Furter Amended Application served by the applicant on 6 July 2022;

4. The applicant’s substantive submissions in the proceeding dated 7 June 2022 (Applicant’s Substantive Submissions);

5. The respondent’s substantive submissions in the proceeding dated 27 June 2022 (Respondent’s Substantive Submissions);

6. The applicant’s substantive reply submissions in the proceeding dated 6 July 2022 (Applicant’s Substantive Reply Submissions);

7. The applicant’s costs submissions dated 12 August 2022 (the Applicant’s Costs Submissions);

8. The respondent’s costs submissions dated 15 August 2022 (the Respondent’s Costs Submissions);

9. The applicant’s costs reply submissions dated 29 August 2022 (the Applicant’s Costs Reply Submissions); and

10. The respondent’s costs reply submissions dated 29 August 2022 (the Respondent’s Costs Reply Submissions).

6. I note that both parties in their costs submissions invited me to consider the written submissions made by the parties on the substantive issues in the proceeding: see Applicant’s Costs Submissions [4] and Respondent’s Costs Submissions [4]). Accordingly, I have done so.

7. I set out below the salient facts, as they appear to me, discerned from the above materials in relation to the question of costs.

8. The applicant is the owner of lot 8 in the strata scheme constituted by Strata Plan 3260.

9. It is common ground between the parties that the applicant’s unit has been subject to water penetration from about February 2020 due to a defect or failure in the common property of the strata premises: Respondent’s Substantive Submissions: [4], [18] and [19].

10. On 12 November 2021, the applicant lodged the Original Application with the Tribunal. The orders sought in the Original Application included:

1. An order for the appointment of a compulsory strata managing agent pursuant to s 237 of the Strata Schemes Management Act 2015 (NSW) (SSMA);

2. An order pursuant to s 229 of the SSMA requiring the compulsory strata managing agent to rectify the common property adjacent to the applicant’s lot so as to redress the defect or failure that was causing water penetration to the applicant’s lot;

3. Alternatively, an order pursuant to s 241 of the SSMA requiring the respondent to rectify the common property adjacent to the applicant’s lot so as to redress the defect or failure that was causing water penetration to the applicant’s lot; and

4. An order pursuant to s 106(5) of the SSMA requiring the respondent to pay damages to the applicant.

11. On 6 December 2021, the Tribunal made extensive procedural directions for the preparation of the Original Application for hearing. The directions included orders for the provision of written evidence by the parties, including lay and expert evidence, the preparation of a joint experts’ report, the provision of outlines of submissions and the preparation of a tender bundle. The time for compliance with the orders was extended on several occasions. The written evidence was compiled and served by the parties. The written evidence can be fairly described as voluminous and ultimately comprised several lever-arch folders.

12. On or about 13 April 2022, the parties were notified that the matter was listed for final hearing for 2 days commencing on 7 July 2022.

13. On or about 1 June 2022, the applicant served the Draft Amended Application. This included a claim for “alternative accommodation costs” which the applicant was claiming based on his contention that his lot had become uninhabitable.

14. On 6 July 2022, ie, the day before the hearing commenced on 7 July 2022, the applicant served the Draft Further Amended Application. The Draft Further Amended Application sought orders for a regime of rectification works to the common property. The Original Application sought a rectification order based on a scope of works by reference to the expert evidence relied upon by the applicant. The Draft Further Amended Application, however, proposed the appointment of an independent structural engineer to formulate a scope of works for the rectification of the common property.

15. At the hearing on 7 July 2022, counsel for each of the parties provided an opening on behalf of their respective clients and identified the written evidence on which the parties would seek to rely upon. However, no material was formally received into evidence, yet alone tested in cross-examination. That is because settlement discussions then took place between the parties.

16. On 8 July 2022, the Tribunal made orders by consent disposing of all the issues in contention between the parties save for the question of costs. The orders made by consent provided for, amongst other things, a regime for the selection and appointment of a structural engineer to formulate a scope of works for the rectification of the common property, the selection and engagement of a contractor to perform the rectification work and an order for the rectification of the common property to be undertaken by the respondent in accordance with the scope of works formulated by the engineer.

17. It was agreed that the question of costs was to be determined on the papers and orders were made for the provision of written submissions on costs by the parties.

The applicable statutory provisions

18. Section 36 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) relevantly 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.

…

Section 60 of the NCAT Act deals with costs and relevantly 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.

19. Rule 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 provides as follows:

38   Costs in Consumer and Commercial Division of the Tribunal

(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.

20. Section 106 of the SSMA provides as follows:

106   Duty of owners corporation to maintain and repair property

(1)  An owners corporation for a strata scheme must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation.

(2)  An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation.

(3)  This section does not apply to a particular item of property if the owners corporation determines by special resolution that—

(a)  it is inappropriate to maintain, renew, replace or repair the property, and

(b)  its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

(4)  If an owners corporation has taken action against an owner or other person in respect of damage to the common property, it may defer compliance with subsection (1) or (2) in relation to the damage to the property until the completion of the action if the failure to comply will not affect the safety of any building, structure or common property in the strata scheme.

(5)  An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.

(6)  An owner may not bring an action under this section for breach of a statutory duty more than 2 years after the owner first becomes aware of the loss.

(7)  This section is subject to the provisions of any common property memorandum adopted by the by-laws for the strata scheme under this Division, any common property rights by-law or any by-law made under section 108.

(8)  This section does not affect any duty or right of the owners corporation under any other law.

21. Section 232 of the SSMA relevantly provides:

232   Orders to settle disputes or rectify complaints

(1) Orders relating to complaints and disputes 
The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following—

(a)  the operation, administration or management of a strata scheme under this Act…

22. Section 241 of the SSMA relevantly provides:

241   Tribunal may prohibit or direct taking of specific actions

The Tribunal may order any person the subject of an application for an order to do or refrain from doing a specified act in relation to a strata scheme.

23. Section 237 of the SSMA relevantly provides:

237   Orders for appointment of strata managing agent

(1) Order appointing or requiring the appointment of strata managing agent to exercise functions of owners corporation The Tribunal may, on its own motion or on application, make an order appointing a person as a strata managing agent or requiring an owners corporation to appoint a person as a strata managing agent—

(a)  to exercise all the functions of an owners corporation, or

(b)  to exercise specified functions of an owners corporation, or

(c)  to exercise all the functions other than specified functions of an owners corporation.

(2) Order may confer other functions on strata managing agent The Tribunal may also, when making an order under this section, order that the strata managing agent is to have and may exercise—

(a)  all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or

(b)  specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or

(c)  all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions.

(3) Circumstances in which order may be made The Tribunal may make an order only if satisfied that—

(a)  the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or

(b)  an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or

(c)  an owners corporation has failed to perform one or more of its duties, or

(d)  an owners corporation owes a judgment debt.

Consideration

24. In the Original Application, one of the orders sought by the applicant was an order for the payment by the respondent of damages pursuant to s 106(5) of the SSMA in a total sum in excess of $30,000.

25. Pursuant to r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014, the Tribunal does not apply s 60 of the NCAT Act to matters allocated to the Consumer and Commercial Division of the Tribunal where the amount claimed or in dispute is more than $30,000 but rather has an unfettered discretion in relation to costs, although that discretion must be exercised consistently with judicial principle: see Lam v Steve Jarvin Motors Pty Ltd [2016] NSWCATAP 186 at [206].

26. A number of principles have been developed by the Courts to guide the discretion as to costs where a proceeding settles without a hearing on the merits.

In Hertslet v Doherty [2016] NSWCATAP 46, the Appeal Panel undertook a comprehensive review of the relevant authorities and said at [31]:

…

(2) Where proceedings are settled and no order for costs has been agreed, it is generally appropriate that each party bear their own costs: Re Minister for Immigration and Ethnic Affairs (Cth); Ex parte Lai Qin[1997] HCA 6 at [7]- [9]; [1997] HCA 6; (1997) 186 CLR 622 at 624–5 per McHugh J.

(3) There are at least three exceptions to the principle in (2) above:

(a) where one of the parties has acted so unreasonably that the other party should obtain the costs of the action;

(b) where the court is confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried;

(c) where the court is confident that, although both parties have acted reasonably, the consent orders agreed to by the parties amount, in effect, to a surrender or capitulation by one of the parties.

27. In Dehsabzi v The Owners – Strata Plan No. 83556 [2019] NSWCATAP 65 at [14], the Appeal Panel said:

When a matter has been decided without a hearing and there has been no hearing on the merits, the factor that usually determines costs, being the success of one of the parties, is absent. In Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia Ex Parte Lai Qin (‘Lai Qin’), McHugh J described circumstances in which the discretion to make a costs order may be exercised in the absence of a hearing on the merits. One circumstance described by McHugh J is where one of the parties has acted so unreasonably that the other party should be awarded costs. Another circumstance described is where although both parties have acted reasonably, "one party was almost certain to have succeeded if the matter had been fully tried". His Honour goes on to note that "such cases are likely to be rare."

28. I also note the following observations of Basten JA in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [8]:

… although it is possible to make an order for costs against one party if it can be shown that it has invited the litigation by its unreasonable behaviour, or has unreasonably pursued the litigation, such an order should only be made where that judgment is manifest by reference to known circumstances, not in dispute between the parties. If the question cannot be answered without reviewing large swathes of evidence and resolving, on a tentative basis, disputed questions of fact, the task should not be embarked upon.

29. I am mindful that I should not “try a hypothetical action” (see Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624) for the purpose of determining costs in circumstances where evidence has been served but not received into evidence, yet alone tested in cross-examination.

30. It does not, however, appear to me to have been in dispute in this proceeding that the applicant’s lot had been damaged from water penetration caused by a defect in the common property. The respondent conceded, correctly in my opinion, that it should have rectified the defect in the common property which was causing damage to the applicant’s unit: Respondent’s Substantive Submissions [19]. The necessary rectification works had not been carried out when the applicant commenced the proceeding and that remained the case until the orders were made by consent on 8 July 2022. I therefore fail to see how it could have been in dispute that this placed the respondent in breach of the statutory duty imposed by s 106 of the SSMA to “properly maintain and keep in a state of good and serviceable repair the common property”.

29. It is has been repeatedly stated that the duty imposed by s 106(1) of the SSMA is strict and absolute: see Ridis v Strata Plan 10308[2005] NSWCA 246; (2005) 63 NSWLR 449; Seiwa Pty Ltd v Owners Strata Plan 25042[2006] NSWSC 1157 at [3] –[5]; Stolfa v Owners Strata Plan 4366 [2009] NSWSC 589 at [63]; The Owners Strata Plan SP 20211 v Rosenthal[2018] NSWCATAP 243 at [35]; The Owners Strata Plan No 80412 v Vickery[2021] NSWCATAP 98 at [36]; Ashlin v The Owners-Strata Plan No 50705 [2021] NSWCATAP 413 at [76]. As Brereton J said in Seiwa at [5] “it follows that as soon as something in the common property is no longer operating effectively or at all, or has fallen into disrepair, there has been a breach” of the relevant duty.

30. It follows from the above that if the matter had been tried, it was almost certain that the applicant would have succeeded in obtaining an order for the rectification of the common property by the respondent. It cannot be disputed that the Tribunal has the power to order the respondent to repair common property in circumstances where the respondent is in breach of the statutory duty imposed by s 106 of the SSMA. The source of the Tribunal’s power to make an order for the repair of common property is derived from ss 106, 232 and/or 241 of the SSMA: see Linney v The Owners - Strata Plan No. 11669 [2021] NSWCATCD 123 at [132].

31. The respondent contends that the Tribunal would not have made a rectification order based on a scope of works by reference to the expert evidence served by the applicant: see Respondent’s Substantive Submissions [22] – [30]; Respondent’s Costs Submissions [10(a)], [26] and [28]; Respondent’s Costs Reply Submissions [3] and [4]. This is not a self-evident proposition. To properly test the proposition would require me to review the expert evidence served by the applicant and that would run the risk of transgressing the limits stipulated by the Courts on reviewing evidence for the purpose of determining a costs application.

32. The critical weakness in the respondent’s argument, however, is that even assuming that the Tribunal would not have made a rectification order based on a scope of works by reference to the applicant’s evidence, I find it hard to imagine that the Tribunal would have declined to make any rectification order in circumstances where it could not be disputed that the respondent was in breach of s 106(1) of the SSMA and is likely to have been in such breach since about February 2020: see Respondent’s Substantive Submissions [4], [18] and [19]. If the applicant’s expert evidence did not identify an appropriate scope of works, the Tribunal could have made orders, as part of a regime for rectification works, requiring the respondent to engage a suitably qualified person to investigate the precise nature of the defect in the common property and for such a person to formulate a scope of works to remedy the defect. An order could have been made for the respondent to repair the common property by reference to a scope of works formulated in this manner.

33. I do not consider it to have been reasonable on the part of the respondent to oppose a rectification order simply because it did not consider the scope of works proposed by the applicant to be appropriate. Under s 36 of the NCAT Act a party and its lawyers are under a duty to co-operate with the Tribunal for the purpose of achieving the “just, quick and cheap resolution of the real issues in the proceedings”. This requires a party to participate reasonably in the processes of the Tribunal to seek to identify and narrow the real issues for determination. Rather than propose steps to determine an appropriate scope of works for a rectification order, the respondent opposed the making of such an order until the final hearing. Having regard to the absolute nature of the obligation imposed on the respondent by s 106(1) of the SSMA, it was unreasonable for the respondent to oppose the making of a rectification order until the final hearing.

34. In its costs submissions, the respondent deals at length with the applicant’s proposed amendments to the application, including a Draft Further Amended Application served on the night before the commencement of the hearing: see Respondent’s Costs Submissions [9], [12], [13], [15], [26], [27] and [29]; Respondent’s Costs Reply Submissions [3]. It is not clear to me how these proposed amendments are relevant to the central questions of whether the applicant was almost certain to succeed in obtaining a rectification order and whether the respondent acted unreasonably in opposing a rectification order until the final hearing.

35. None of the amendments proposed by the applicant can alter the following facts: the applicant sought an order for the rectification of the common property in the Original Application filed on 12 November 2021 (see [4] of the Annexure to the Original Application); at the commencement of the proceeding there was a failure or defect in the common property causing damage to the applicant’s lot; the defect or failure in the common property had not been rectified when the orders were made on 8 July 2022; and the respondent was in breach of the obligation imposed by s 106(1) of the SSMA from the commencement of the proceeding.

36. The proposed amendments to the Original Application cannot therefore alter the conclusion that the applicant was almost certain to succeed in obtaining a rectification order if the matter was fully tried and that the respondent acted unreasonably in opposing a rectification order until the final hearing.

37. The respondent contends that it should have had an opportunity to oppose the amendments proposed by the applicant: Respondent’s Costs Reply Submissions [3(b)]. I do not accept this submission. First, the making of a rectification order was clearly available on the Original Application. Secondly, it is not clear on what basis the amendments proposed in the Draft Further Amended Application in so far as they related to rectification of the common property could have been opposed. There could be no dispute that the respondent had a duty to rectify the common property. In circumstances where there was a dispute between the parties as to the appropriate scope of works, it is difficult to see how this impasse could be resolved other than by the appointment of an expert to formulate an appropriate scope of works. This is what was proposed in the Draft Further Amended Application. It is not clear to me what, if anything, was being proposed by the respondent to redress its continuing breach of s 106(1) of the SSMA.

38. It therefore appears to me that the amendments proposed by the applicant were an attempt to refine the terms of a rectification order which the Tribunal was almost certain to make if the matter was fully tried. If a work or rectification order is to be made by the Tribunal, such an order should be framed in a way that can achieve as much precision as possible so as to avoid any confusion or uncertainty as to what the party subject to the order is required to do: Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 at [113]. I consider that the applicant acted reasonably in seeking to achieve this by proposing amendments to the terms of the rectification order sought in the Original Application and the respondent acted unreasonably in simply opposing the making of a rectification order rather than proposing appropriate terms for such an order until the final hearing.

39. In the costs submissions, the parties contest the extent of the damage caused to the applicant’s lot by the defect in the common property. The applicant alleges, amongst other things, that the unit became uninhabitable because of the water penetration and the development of mould: Applicant’s Costs Submissions [3]. The respondent contests what it describes as the “habitability allegations”: Respondent’s Costs Reply Submissions [6] – [9]. The respondent also contends that the applicant has made “sensational and loose allegations” about the extent of damage to his unit and the impact it has had on his medical condition: Respondent’s Costs Submissions [35]. The respondent also contends that the applicant has impeded access or otherwise hindered its ability to carry out rectification works: Respondent’s Costs Submissions [35]; Respondent’s Costs Reply Submissions [4].

40. As the evidence on the above matters has been untested, I cannot determine the extent of the damage to the applicant’s unit, the allegations relating to its habitability and the precise reasons for why the respondent remained in breach of its duty under s 106(1) of the SSMA until the final hearing of the matter.

41. More importantly, however, it is not necessary for me to resolve the evidentiary contest in relation to the above matters for the purpose of determining costs. Irrespective of the extent of the damage to the applicant’s unit, it cannot be in dispute that there was damage to the applicant’s unit caused by a failure or defect in the common property which placed the respondent in a continuing breach of its duty under s 106(1) of the SSMA. In circumstances where the respondent has never sought an order for access, if such an order was required to rectify the common property, I fail to see how it can be an adequate answer or defence by the respondent to its breach of s 106(1) of the SSMA to contend that the applicant has hindered it in carrying out the necessary rectification work – the respondent appears to have acknowledged as much: Respondent’s Substantive Submissions [18].

42. For all of the above reasons, there is a sufficient basis to conclude that the applicant was almost certain to succeed in obtaining a rectification order if the matter was fully tried and that the respondent acted unreasonably in opposing a rectification order until the final hearing.

43. I therefore consider that the exceptions recognised in Lai Qin apply to the present circumstances so as to provide a basis to exercise the discretion as to costs by making a costs order in favour of the applicant.

44. However, I do not consider that the respondent should be required to pay all of the applicant’s costs. That is because in the Original Application, the applicant also sought orders for the appointment of a compulsory strata managing agent under s 237 of the SSMA and the payment of damages under s 106(5) of the SSMA. I am not prepared to conclude in respect of these claims that the applicant was almost certain to succeed if the matter had been fully tried or that the respondent acted unreasonably in contesting these parts of the Original Application. An order for the appointment of a compulsory strata managing agent is a serious measure not to be taken lightly: see Hoare and Ors v The Owners-Strata Plan No 73905 [2018] NSWCATCD 45 at [199]; Lockrey v Rosewall [2022] NSWCATCD 27 at [14] to [15]. A damages claim can raise difficult evidentiary issues, especially in relation to quantum. I am therefore not persuaded that these were not legitimately contestable aspects of the application.

45. The portion of the costs attributable to that part of the Original Application seeking a rectification order in relation to the common property cannot be measured with mathematical precision. This requires an impressionistic and evaluative judgment: James and Ors v Surf Road Nominees Pty Ltd and Ors [No 2] [2005] NSWCA 296 at [36]. I consider the need to repair the common property to be a critical aspect of the proceeding. Until there is rectification of the common property, there would be ongoing damage suffered by the applicant, the parties would remain in disputation and there would be a continuing breach of the s 106(1) of the SSMA by the respondent. This issue also necessitated the service of expert evidence by the applicant and extensive consideration of how a rectification order was to be framed so as to identify clearly and precisely the work to be done. Having regard to these factors, I consider that it is just and reasonable to require the respondent to pay 60% of the applicant’s costs.

46. The applicant seeks an order that costs be paid on an indemnity basis.

47. I have found that the respondent acted unreasonably in opposing a rectification order until the final hearing. However, in determining the question of indemnity costs, it is appropriate to have regard to the conduct of the litigation as a whole. Viewed from this perspective, there are a number of factors which weigh against making an indemnity costs order.

48. First, framing the terms of the rectification order was not a straight-forward matter as the parties were in disagreement as to identifying and defining the scope of works for a rectification order. Secondly, the agitation of an order for the appointment of a compulsory strata manager by the applicant is likely to have distracted the parties from the need to co-operate with a view to formulating appropriate terms for a rectification order. Thirdly, I have also found that the application did raise reasonably contestable issues in relation to the application for the appointment of a compulsory strata manager and the claim for damages.

49. Having regard to the above factors, on balance, I am not persuaded that there is a sufficient basis to make an order that costs be paid on an indemnity basis.

Conclusion and Orders

52. For the above reasons, the Tribunal orders the respondent to pay 60% of the applicant’s costs of the proceeding on the ordinary basis, as agreed or assessed.

**********

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

Amendments

12 September 2023 - Formatting amendments.

Decision last updated: 12 September 2023