Gates v The Owners - Strata Plan No 5165

[2024] NSWCATCD 53

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Gates v The Owners - Strata Plan No 5165 [2024] NSWCATCD 53

Hearing dates:

On the papers

Date of orders:

25 September 2024

Decision date:

25 September 2024

Jurisdiction:

Consumer and Commercial Division

Before:

G Blake AM SC, Senior Member

Decision:

(1)   The costs application of the respondent is dismissed.

(2)   Each of the applicants and the respondent are to pay their costs of the interim application.

Catchwords:

COSTS – costs application by the respondent – principles – withdrawal of interim application - no hearing on the merits – costs application dismissed

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), ss 5, 36, 45, 60

Fair Work Act 2009 (Cth), s 596

Strata Schemes Management Act 2015 (NSW), ss 102, 106

Uniform Procedure Rules 2005 (NSW), r 42.20

Cases Cited:

Balout v Bella Ikea Cronulla Pty Ltd (No 2) [2024] NSWSC 1173

BDK v Department of Education and Communities [2015] NSWCATAP 129

Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224

Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152

CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21

eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94

Fitzgerald v Woolworths Ltd [2017] FWCFB 2797; (2017) 270 IR 128

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

Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106

MacDermott v Wang [2022] NSWCATCD 71

New Island Developments Pty Ltd v New Island Investments One Pty Ltd (No 2) [2024] NSWSC 454

N & T Buildings Pty Ltd v Ball [2018] NSWCATAP 83

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

ONE.TEL Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270

The Owners – Strata Plan 5319 v Price [2020] NSWCATAP 245

Texts Cited:

None cited

Category:

Costs

Parties:

Judith Gates and Paul Carpenter (Applicants)
The Owners - Strata Plan No 5165 (Respondent)

Representation:

Solicitors:
Sarvaas Ciappara Lawyers (Applicants)
Kerin Benson Lawyers (Respondent)

File Number(s):

2024/00260610

Publication restriction:

Nil

REASONS FOR DECISION

Overview

1. On 16 August 2024, the application in these proceedings by the applicants, Judith Gates (Ms Gates) and Paul Carpenter (Mr Carpenter) and the then applicant Pete Williams (Mr Williams) against the respondent, The Owners - Strata Plan No 5165 (OSP5165), for interim orders under the Strata Schemes Management Act 2015 (NSW) (SSM Act) (the interim application) was dismissed.

2. On 21 August 2024, OSP5165 made an application for its costs of preparing for and attending the hearing of the interim application (the OSP5165 costs application).

3. I have decided that the OSP5165 costs application should be dismissed.

The hearing on the papers

4. On 16 August 2024, I relevantly made the following orders together with procedural orders in respect of any application for costs by OSP5165 (the 16 August 2024 orders):

“…

2 By consent, leave is granted to the parties to be represented by an Australian legal practitioner.

3. By consent, Pete Williams is removed as the third applicant.

4. The application by the applicant for an interim order is dismissed.

…

20 By consent, a hearing is dispensed with in respect of any application for costs by the respondent.

…”

5. On 21 August 2024, OSP5165 lodged the OSP5165 costs application which included its submissions incorrectly dated 20 March 2024 (the OSP5165 costs submissions) and the affidavit of Robyn Rix (Ms Rix) affirmed on 21 August 2024 (the 21 August 2024 Rix affidavit).

6. On 30 August 2024, Ms Gates and Mr Carpenter lodged the Applicants’ Submissions on Costs bearing that date (the applicants’ costs submissions).

7. On 6 September 2024, OSP5165 lodged the Respondent’s Submissions in Reply on Costs bearing that date (the OSP5165 costs submissions in reply).

The costs of the interim application

Introduction

8. The OSP5165 costs application is pursuant to s 60(2) of the NCAT Act. The determination of this application involves answering the following two questions:

1. whether there are special circumstances warranting an award of costs in favour of OSP5165;

2. if so, whether the discretion should be exercised to award costs.

9. Before determining the OSP5165 costs application, it is appropriate to set out the factual background, the applicable provisions of the NCAT Act and the relevant legal principles, and summarise the evidence of OSP5165 and the submissions of the parties.

The factual background

10. The strata scheme relating to strata plan no 5165 (scheme 5165), which was registered on 8 January 1971, comprises two 8 storey residential buildings with a total of 64 lots and common property at Narrabeen in New South Wales.

11. At all material times, Ms Gates, Mr Carpenter and Mr Williams have been the owner of lots 63, 33 and 11 respectively in scheme 5165.

12. At all material times, Ms Rix has been a member of the strata committee of OSP5165.

13. A dispute arose between Ms Gates, Mr Carpenter and Mr Williams on the one hand, and the majority of the owners in scheme 5165, on the other hand, as to proposed extensive remediation works to be undertaken in respect of all balconies of the two buildings.

The history of the proceedings and the hearing

14. On 15 July 2024, Ms Gates, Mr Carpenter and Mr Williams as the applicants commenced proceedings 2024/00260610 against OSP5165 as the respondent by their lawyers Sarvaas Ciappara Lawyers lodging an Application Notice together with Points of Claim (the Gates application) in which they:

1. in section A claimed:

1. the following interim orders:

“(a) Pursuant to section 231(1)(a) of the SSMA, an interim order pursuant to section 232(1)(a), (b), (e) and/or (f), and/or section 241 of the SSMA, that:

i. the Respondent does not enter into a contract with Fluid Building Services Pty Ltd as resolved by motion 4 at the Extraordinary General Meeting held on 5 June 2024.

ii. if a contract has already been entered into between the Respondent and Fluid Building Services Pty Ltd as resolved by motion 4 at the Extraordinary General Meeting held on 5 June 2024, the Respondent is to undertake no further actions under the contract and to take all steps to pause the undertaking of any works (including preparatory works) pursuant to the contract.

(b) Such interim orders above shall continue until final orders are made in these Proceedings.

(c) Costs are reserved.”

2. the following final orders:

“(a) Pursuant to sections 24(1), 87(1), 232(1)(a), (b), (e) and/or (f), and/or section 241 of the SSMA, that:

i. motion 4 and 7 resolved at the Extraordinary General Meeting held on 5 June 2024 is invalidated.

ii. the Respondent does not enter into a contract with Fluid Building Services Pty Ltd as resolved by motion 4 at the Extraordinary General Meeting held on 5 June 2024.

iii. any amount of the special levy raised by motion 7 at the Extraordinary General Meeting held on 5 June 2024 and already paid is to be refunded to lot owners as appropriate.

iv. any further general meeting of the Respondent with a motion for the purpose of approving works to balconies must take into consideration the circumstances of specific balconies including obtaining consent for work on lot property as appropriate and must consider 3 quotes.

(b) Costs.”

2. in section B relevantly set out the following facts and assertions:

“…

Extraordinary General Meeting on 5 June 2024

5. A notice for an extraordinary general meeting of the Respondent to be held on 5 June 2024 (EGM) was sent to owners on or about May 2024 (Agenda).

6. Motions 3, 4 and 5 of the Agenda related to proposed extensive remediation works to be undertaken in respect of all balconies at the Property by Fluid Building Services Pty Ltd (Fluid). Such works included re-waterproofing and re-tiling of all balconies, and replacement of existing balustrades.

7. Motions 6, 7 and 8 of the Agenda related to the raising of a special levy in an amount corresponding to the cost of the work in motions 3, 4 and 5 respectively.

8. A letter was received by the Respondent from Sarvaas Ciappara Lawyers acting on behalf of the lot owners of units 11, 33, and 63 on 5 June 2024 prior to the EGM. This letter outlined a number of concerns in respect of motions 3 to 8, including as follows:

a. The Respondent did not obtain 2 independent quotations for the proposed works as required by section 102(1) of the SSMA.

b. The costs referred to in the wording of motions 3 to 8 did not match the actual cost of the quotes as obtained by the Respondent and attached to the Agenda, and

c. The proposed works related to works for which the Respondent does not have authority to carry out - specifically, the proposed works relates to extensive works to all balconies at the Property and included works to be conducted in respect of lot property including but not limited to the balcony doors / walls, balcony tiles and balustrades.

9. Notwithstanding concerns as referred to in the preceding paragraph and raised at the EGM, motions 4 and 7 were resolved at the EGM.

10. Minutes for the EGM were prepared and distributed to lot owners following the EGM (Minutes).

11. A further letter was received by the Respondent from Sarvaas Ciappara Lawyers on 25 June 2024, further outlining concerns in respect of the resolved motions 4 and 7 of the EGM.

12. On 26 June 2024, the Applicants’ solicitor received an email from Bleddyn James (Secretary of the Respondent) which acknowledge receipt of the 25 June 2024 letter and a statement that the “Strata Committee believe they have acted in accordance with the Strata Schemes Management Act 2015”.

Motions 4 and 7 of the EGM

13. The final orders are sought by the Applicants including on the following basis:

a. The Respondent did not obtain 2 independent quotations for the proposed works as required by section 102(1) of the SSMA.

b. The costs referred to in the wording of motions 4 and 7 on the Agenda and the Minutes being the amount of $3,188,416.32, did not match the actual costs referred to in the proposed scope of works document provided by Fluid and enclosed to the Agenda of $4,423,927.25.

c. The proposed works includes remediation of all 64 balconies at the Property. The Respondent does not have the requisite authority and did not obtain consent from lot owners as appropriate to carry out the proposed works in respect of all 64 balconies at the Property for the following reasons:

i. The Respondent’s strata plan was registered before 1 July 1974 and was registered under the now repealed Conveyancing (Strata Titles) Act 1961 (NSW).

ii. The Conveyancing (Strata Titles) Act 1961 (NSW) was subsequently repealed in favour of legislation such as the Strata Schemes (Freehold Development) Act 1973 (NSW) and its successors, the practical effect is that the walls at the Property (including any balcony doors and windows) between a balcony and the lot form part of the lot and are not common property;

iii. Many balconies at the Property have been updated, remediated and re-tiled since 1971. Accordingly, the tiling of any such balconies form part of the lot property and not common property.

iv. The proposed works are for all 64 balconies and includes works to the balcony doors and walls, waterproofing and re-tiling of the balcony.

v. The Respondent does not have requisite authority to carry out the proposed works as approved by motions 4 and 7 at the EGM as part of the works relate to lot property and not common property, the Respondent has not obtained consent of the relevant lot owners.

d. The Respondent is likely to incur additional costs and suffer damages (including potential contractual damages) which would indirectly be payable / cause the Applicants’ loss, by reason of the Respondent not having authority to carry out the works as resolved by Motions 4 and 7 at the EGM.

14. In addition to the matters in the preceding paragraph, the interim orders are sought by the Applicants including on the following basis:

a. Urgent orders are necessary to preserve the status quo and prevent the Respondent from formally entering into a contract with Fluid Building Services Pty Ltd, which could prejudice and cause damage to be suffered by the Respondent and in turn the Applicant.

b. There are urgent considerations on reasonable grounds that justify the making of the interim orders.

c. No prejudice will be suffered by the Respondent in holding off undertaking works as proposed before the final hearing of this matter.”

15. On 16 July 2024, the Tribunal constituted by Principal Member Thode made procedural orders that the Gates application was to be listed on 16 August 2024 at 1.15pm for hearing so far as the interim application, and so far as orders sought on a substantive basis for directions, and for the provision of evidence and submissions for the interim application by the applicants and OSP5165 by 23 July 2024 and 30 July 2024 respectively (the 16 July 2024 orders).

16. On 24 July 2024, the applicants lodged a bundle of documents for the interim application (the Gates documents) comprising:

1. the Gates application without annexures to the Points of Claim (pages 1-8);

2. Applicants’ Outline of Submissions dated 23 July 2024 (pages 9-13);

3. Witness Statement of Tony Gates dated 23 July 2024 (pages 14-203).

17. On 30 July 2024, the strata committee of OSP5165 lodged a bundle of documents for the interim application comprising 20 pages and 14 attachments (the strata committee documents).

18. On 31 July 2024, the Tribunal constituted by Principal Member Robertson extended the time for OSP5165 to comply with the 16 July 2024 orders to 2 August 2024.

19. On 2 August 2024, OSP5165 lodged a bundle of documents for the interim application comprising 24 pages and 30 attachments.

20. On 16 August 2024 at 1.15pm, the hearing of the interim application and the directions hearing took place. Mr V Zhu, a solicitor, represented the applicants. Ms A Benson, a solicitor, represented OSP5165. At the commencement of the hearing, I made an order by consent that the parties have leave to be legally represented. Before any evidence was adduced, Mr Zhu withdrew the interim application. After discussion with the parties, I then made the 16 August 2024 orders.

The applicable provisions of the NCAT Act

21. Part 4 Division 1 (ss 35-38) contains introductory provisions dealing with the practice and procedure of the Tribunal. Section 36 deals with the guiding principle to be applied to practice and procedure, and 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,

…

22. Part 4 Division 3 (ss 44-48) contains provisions dealing with participation in proceedings in the Tribunal. Section 45 deals with representation of parties, and relevantly provides:

45 Representation of parties

(1) A party to proceedings in the Tribunal—

(a) has the carriage of the party’s own case and is not entitled to be represented by any person, and

(b) may be represented by another person only if the Tribunal grants leave—

(i) for that person to represent the party, or

(ii) in the case of representation by an Australian legal practitioner—for a particular or any Australian legal practitioner to represent the party.

…

(3) The Tribunal may at its discretion—

(a) grant or refuse leave under subsection (1)(b), and

(b) revoke any leave that it has granted.

…

23. Part 4 Division 5 (ss 56-63) contains provisions dealing with participation in proceedings in the Tribunal. Section 60 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,

…

(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

…

(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

…

The relevant legal principles

“Special circumstances” in s 60(2) of the NCAT Act

24. “Special circumstances” in s 60(2) of the NCAT Act are circumstances that are out of the ordinary; they do not have to be extraordinary or exceptional circumstances: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32].

25. In considering whether special circumstances exist for the purposes of s 60(2) of the NCAT Act:

1. each case will depend upon on its own particular facts and circumstances: Brunsprop Pty Ltd v Joanne Hay & Wes Davies [2015] NSWCATAP 152 at [27];

2. mere success (or failure) of an application does not give rise to special circumstances: The Owners – Strata Plan 5319 v Price [2020] NSWCATAP 245 at [46].

26. As to the factor in s 60(3)(e) of the NCAT Act, in BDK v Department of Education and Communities [2015] NSWCATAP 129 (BDK) at [62]-[63], the Appeal Panel relevantly said in relation to the identical expression in s 55(1)(b) of the NCAT Act:

“[62] It will be seen that this Tribunal’s power is somewhat differently expressed. The Tribunal’s power refers not only applies to proceedings that are “frivolous” or “vexatious”, but then applies to proceedings that are “misconceived” or “lacking in substance”. Section 55(1)(b) does not have a generic catch-all category of “abuse of process” to pick up conduct in relation to the issuance and pursuit of proceedings that might, arguably, fall outside the four specific categories set out there.

[63] In Alchin v Rail Corporation NSW [2012] NSWADT 142 Judicial Member Wright SC (as he then was) examined the meaning of the predecessor provision to s 55(1)(b) – s 73(5)(g)(ii) of the Administrative Decisions Tribunal Act 1977. As to the meaning of “misconceived” and “lacking in substance”, he said:

25 The expressions used in s 92(1)(a)(i) of the ADA, namely “misconceived” and “lacking in substance” are found not only in the ADA but also in s 73(5)(g) of the ADT Act and similar legislation in other states. With respect to a similar provision found in the Equal Opportunity Act 1984 (Vic), Ormiston JA in State Electricity Commission of Victoria v Rabel [1998] 1 VR 102 at [14] said:

“misconceived” and “lacking in substance” have not, so far as I am aware, been used in this context before though each expression is commonly used by lawyers, the one connoting a misunderstanding of legal principle and the other connoting an untenable proposition of law or fact. If one may discern, in these provisions, an attempt to express the powers of tribunals in non-technical language, then “misconceived” would represent a claim which did “not disclose a cause of action” …, whereas “lacking in substance” might be seen to represent a claim where the defendant could obtain summary judgment …

26 This approach of construing “misconceived” as including a misunderstanding of legal principle and “lacking in substance” as encompassing an untenable proposition of fact or law has been applied by the Tribunal in many decisions including, for example, Keene v Director-General, Dept of Justice and Attorney-General [2011] NSWADT 59 at [14], McDonald v Central Coast Community Legal Centre [2008] NSWADT 96 at [22] and Stanborough v Woolworths Ltd [2005] NSWADT 203 at [50].”

The exercise of the discretion in s 60(2) of the NCAT Act

27. Where special circumstances are found to exist, the Tribunal has a discretion to exercise in deciding what, if any, order should be made. Relevant to the exercise of that discretion are those facts upon which the finding of special circumstances was based. However, those findings do not constitute the whole of the relevant matters to be considered in deciding what, if any, order for costs should be made. Rather, the principles applicable to awarding costs generally must also be taken into account: Brodyn Pty Ltd v Owners Corporation Strata Plan 73019 (No 2) [2016] NSWCATAP 224 at [24].

28. The discretion to award costs must be exercised judicially and having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs: eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48].

Proceedings without a hearing on the merits

29. In New Island Developments Pty Ltd v New Island Investments One Pty Ltd (No 2) [2024] NSWSC 454 (New Island Developments) at [18]-[20], Rees J recently explained the principles governing an application for costs in a case which has been resolved without a hearing on the merits:

[18] In Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624–625, McHugh J stated:

“When there has been no hearing on the merits … a court is necessarily deprived of the factor that usually determines whether or how it will make a costs order.

In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits … The court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. …

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. …

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.”

[19] In One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548, Burchett J also observed at [6]:

“… it is important to draw a distinction between cases in which one party, after litigating for some time, effectively surrenders to the other, and cases where some supervening event or settlement so removes or modifies the subject of the dispute that, although it could not be said that one side has simply won, no issue remains between the parties except that of costs. In the former type of case, there will commonly be lacking any basis for an exercise of the Court’s discretion otherwise than by an award of costs to the successful party. It is the latter type of case which more often creates problems, since there may be difficulty in discerning a clear reason why one party, rather than the other, should bear the costs.”

“[20] One.Tel was followed in Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302, where Davies AJA (Mason P and Meagher JA agreeing) noted that a judge may award costs where the matter does not proceed to judgment “generally … because the judge is satisfied that one party has had a substantial victory and the other a substantial loss, or that there has been a marked difference in the reasonableness of the actions taken by the parties, so that one party should be rewarded for its reasonable actions and the other should suffer a detriment in costs”: at [5]. See likewise Nichols v NFS Agribusiness Pty Ltd [2018] NSWCA 84 at [26] to [30] (per Payne JA, Basten and Meagher JJA agreeing).”

30. The citation of Re Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6 (Lai Qin) in New Island Developments at [18] omits the following sentence immediately following the cited words in the second paragraph:

“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.”

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

1. Payne JA (with Meagher JA at [13] agreeing) at [25] set out with approval the full passage in Lai Qin at 624-625 and at [30] observed:

“If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings.”

2. Basten JA at [8]-[9] observed:

“… 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.

… once it is clear that there is a real dispute as to a significant fact in issue in the proceedings, it is inappropriate to determine that matter, other than in making an interlocutory ruling, by accepting one party’s case without permitting the other party an opportunity to challenge the opposing party’s witnesses.”

32. The observations in Nichols at [8]-[9], [30] have very recently been applied in the context of the question under r 42.20(1) of Uniform Procedure Rules 2005 (NSW) whether there are grounds for the Court to “order otherwise” than that the plaintiff pay the defendant’s costs of the proceedings in circumstances where the Court makes an order for the dismissal of proceedings: Balout v Bella Ikea Cronulla Pty Ltd (No 2) [2024] NSWSC 1173 at [51]-[52], [58] (Rees J).

33. The principles in Lai Qin and One.Tel Ltd v Deputy Commissioner of Taxation (2000) 101 FCR 548; [2000] FCA 270 (ONE.TEL) have been applied in the Tribunal: see, for example, Knox v Bollen; Bollen v Knox [2018] NSWCATAP 106 at [45]-[48]. While withdrawal of proceedings in the Tribunal whether at first instance or on appeal, may in some circumstances, constitute sufficient “special circumstances” to justify a costs order, the mere fact that proceedings are withdrawn is not, of itself, a sufficient “special circumstance” to justify a costs order: MacDermott v Wang [2022] NSWCATCD 71 (MacDermott) at [45(4)].

The evidence of OSP5165

The 21 August 2024 Rix affidavit

34. In the 21 August 2024 Rix affidavit, Ms Rix has given the following evidence:

1. her membership of the strata committee of OSP5165 ([1]);

2. her knowledge of the interim application on or about 16 July 2024 ([2]);

3. the strata committee prepared the strata committee documents with guidance from Kerin Benson Lawyers ([3]);

4. the concern of the strata committee about the serious consequences to OSP5165 should the interim orders be made ([4]):

“Those consequences included:

a. Potentially being sued by more lot owners who were suffering water ingress due to the Owners Corporation’s failure to maintain and repair the common property as one lot owner already had done so;

b. Potentially losing the builder’s window to conduct the works, and, if this was lost, a potential increase in costs should material be more expensive; and

c. Potentially losing the builder altogether requiring another tender and potential price increase for the works.”

5. her opinion as to the support of the majority of the owners for the proposed remedial works ([5]):

“It is my firm opinion following:

a. Several information sessions held with owners about the works from 29 November 2023 to 18 December 2023;

b. A resolution to undertake the works at a general meeting on 20 December 2023;

c. An invitation to tender being sent out on 25 January 2024;

d. Three tender responses being received between 21 to 23 February 2024;

e. Presentations by remedial builders to lot owners on 27 February 2024;

f. A resolution to engage Fluid as the builder at the AGM on 21 March 2024;

g. At the came 21 March 2024 AGM resolutions to conduct the works agreed at the 20 December 2023 general meeting (but not the balcony works) and to raise a special levy for this work; and

h. A further information session about the balcony works on 22 May 2024 with lot owners.

There was an overwhelming level of support for the resolution to appoint Fluid. There was also majority support at the general meeting on 5 June 2024 to proceed with a specific type of waterproofing for the balconies and to raise special levies for the balcony work.”

6. she attached the email correspondence between Mr Zhu and Ms Benson from 13 to 16 August 2024 ([6]) which included the email of Mr Zhu to Ms Benson sent on 15 August 2024 at 2.54pm in which he advised that the applicants were no longer pressing for the orders in the interim application (the 15 August 2024 at 2.54pm Zhu email).

The OSP5165 costs submissions

35. In the OSP5165 costs submissions, OSP30102, after referring to part of the history of the proceedings and legal principles, has made the following submissions:

1. special circumstances exist as a matter of fact in that:

1. the applicants were themselves legally represented throughout and it is entirely reasonable in these circumstances for it to seek legal advice and representation, in fact due to the weighty issues and the potential consequences for it the Involvement of legal representatives was appropriate, if not necessary;

2. the applicants filed the Gates application on 15 July 2024, on 16 July 2024 the hearing of the interim application was scheduled for 16 August 2024 at 1.15pm yet it was not until the 15 August 2024 at 2.54pm Zhu email that Mr Zhu advised Ms Benson that they would no longer press the interim orders; and

3. the applicants were made aware on 13 August 2024 that it was legally represented;

2. the applicants’ conduct caused it to incur unnecessary legal costs in preparing for a hearing that was not required and thus disadvantage, and did not facilitate the just, quick and cheap resolution of the real issues in the proceedings as required by s36(3)(a) of the NCAT Act;

3. the interim application was misconceived and relatively weak with poor prospects of success, and, if the orders were made would have caused it substantial prejudice for the following reasons:

1. the underlaying issue was the conduct of balcony repair work. There was evidence in the documents filed with the Gates application of the need for this repair work yet the applicants did not provide any expert (or lay) evidence that the works were either not required or that the scope of work was inappropriate;

2. the applicants did not provide any evidence that if two quotations for the balcony repair works were required and that it breached s 102(1) of the SSM Act (to which it responds that there were three tender responses received between 21 to 23 February 2024, and voted on at the general meetings held on 21 March 2024 and 5 June 2024) that:

1. the breach adversely affected any person; or

2. compliance with s 102(1) of the SSM Act would not have resulted in a failure to pass the resolution or affected the result of the election;

whereas it had provided evidence that the three tender responses had been discussed at two informal meetings shared with the lot owners on 27 February 2024 and 13 March 2024 and that in fact the failure to pass the resolution would have adversely affected another lot owner who had taken proceedings against it and it would be liable under s 106(5) of the SSM Act for damages suffered by lot owners due to the failure to repair and maintain the common property balconies;

3. further, it is noted that non-compliance with s 102(1) of the SSM Act does not automatically negate a resolution. In fact, the consequence is that under s 102(1) of the SSM Act the owners corporation would have had to advise why it could not obtain two quotations;

4. in these circumstances, the Tribunal’s discretion to award costs under s 60 of the NCAT Act should be exercised.

The applicants’ costs submissions

36. In the applicants’ costs submissions, the applicants have made the following submissions:

1. the Tribunal should have regard to specified facts including:

1. OSP5165’s solicitors did not seek leave to legally represent OSP5165 until the interim / directions hearing on 16 August 2024;

2. no hearing of the interim application or determination of the issues in dispute took place;

2. there are no special circumstances warranting a cost order, and no cost orders should be made, for the following reasons:

1. since leave for legal representation was not granted until the directions hearing on 16 August 2024, no costs order should be made for costs incurred prior to the date of leave being granted for legal representation. To do so would unfairly prejudice the applicants;

2. there has been no determination by the Tribunal of the interim application and the issues in dispute, and as such there has been no “event” from which costs should flow and no justification for the exercise of the discretion as explained in Lai Qin at 624;

3. the mere fact that proceedings are withdrawn is not, of itself, a sufficient “special circumstance” to justify a costs order as explained in MacDermott at [45(4)];

4. irrespective of whether the applicants pressed for interim orders, the parties would have had to attend the directions hearing on 16 August in any case for the making of procedural orders which did occur. As such, there are no “special circumstances” warranting a cost order for attendance on 16 August 2024.

The OSP5165 costs submissions in reply

37. In the OSP5165 costs submissions in reply, OSP5165 has reiterated its submissions in the OSP5165 costs submissions. It has additionally made the following submissions:

1. the absence of leave to be legally represented until 16 August 2024 should not be a barrier to the Tribunal making an order for costs in its favour for those costs incurred with respect to legal advice and assistance and referred to N & T Buildings Pty Ltd v Ball [2018] NSWCATAP 83 (N & T Buildings) at [21];

2. order 4 of the 16 August 2024 orders constitutes a decision of the Tribunal in respect of which an award of costs can be made;

3. the withdrawal of the interim application was essentially a capitulation and acknowledgement that the application for interim orders was misconceived and lacking reasonable prospects of success. The applicants failed to establish a prima facie case and failed the test of “balance of convenience” in that the orders would not have been made due to the injury which it would have been suffered that would have far outweighed any inconvenience suffered by them if the interim orders were not made.

Consideration

Whether there are special circumstances warranting an award of costs in favour of OSP5165

38. I accept that order 4 of the 16 August 2024 orders constitutes a decision of the Tribunal within s 5(1)(a) of the NCAT Act in respect of which an award of costs can be made.

39. I am not satisfied that there are special circumstances warranting an award of costs in respect of the interim application in favour of OSP5165 within s 60(2) of the NCAT Act for the following reasons:

1. OSP5165 did not demonstrate that the applicants conducted the interim application in a way that unnecessarily disadvantaged OSP5165 within s 60(3)(a) of the NCAT Act. While the applicants lodged the Gates documents one day later than the date specified in the 16 July 2024 orders, OSP5165 did not establish that it was prejudiced by this delay. Further, it was OSP5165 which made the choice to be legally represented. I do not accept that the withdrawal of the interim application by the 15 August 2024 at 2.54pm Zhu email in the circumstances unnecessarily disadvantaged OSP5165;

2. OSP5165 did not demonstrate that the interim application was misconceived or lacking in substance within s 60(3)(e) of the NCAT Act. OSP5165 advanced no submissions as to why the walls of the lots of scheme 5165 (including any balcony doors and windows) between the balcony and the lot, the tiling of any re-tiled balconies of scheme 5165, do not form part of the lot and are common property. Further, there was no persuasive evidence that there would be delay occasioned by the making of the orders in the interim application as there was no evidence that the contractor had been engaged to undertake the proposed remedial works;

3. OSP5165 did not demonstrate that the applicants breached the duty in s 36(3)(a) of the NCAT Act by their withdrawal of the interim application on 15 August 2024 such as they might have done if they had deliberately delayed communication their withdrawal.

40. It follows that the OSP5165 costs application should be dismissed, and each of the applicants and OSP5165 are to pay their costs of the interim application pursuant to s 60(1) of the NCAT Act.

If so, whether the discretion should be exercised to award costs

41. As I have not been satisfied of the condition in s 60(2) of the NCAT Act that there are special circumstances warranting an award of costs in respect of the interim application in favour of OSP5165, this question does not arise for determination. I would have decided not to exercise the discretion to award costs in respect of the interim application in favour of OSP5165 for the following reasons:

1. having regard to the principles in Lai Qin at 624-625 and Nichols at [30], I am not satisfied that the applicants either acted unreasonably in making the interim application, or even though it acted reasonably in making the interim application they were almost certain to have failed if it had been determined on the merits;

2. having regard to the principles in ONE.TEL at [6], I am not satisfied that the applicants effectively surrendered to OSP5165 in withdrawing to the interim application;

3. OSP30102 failed to make, and failed to provide any explanation for its failure to make, an application that it be legally represented prior to the hearing on 16 August 2024. There is no evidence that any person on its behalf gave notice to the applicants that such an application would be made at the hearing. It was unfair to the applicants that they are exposed to an order for costs when OSP5165 had not obtained an order that it be legally represented and had not given notice to them of its proposed application that it be legally represented. I accept that the making of an order for leave for a party to be represented by an Australian legal practitioner s 45(1)(b)(ii) of the NCAT Act is not a precondition to the making of a costs order in favour of that party as held in N & T Buildings at [11]-[12]. However, the making of such an order may be taken into account in the exercise of the discretion to award costs. In these circumstances of relevance are the observations of the Fair Work Commission Full Bench (Hatcher VP, Dean DP, Commissioner Wilson) in Fitzgerald v Woolworths Ltd [2017] FWCFB 2797; (2017) 270 IR 128 at [57] in relation to the failure of the respondent to have obtained leave for legal representation under s 596 of the Fair Work Act 2009 (Cth) (which is analogous to s 45 of the NCAT Act):

“[57] … Mr Fitzgerald’s main complaint about Woolworths’ representation was that … he could not reasonably have anticipated that he would subsequently face a costs application that included the fees charged for Mr Bennett’s attendance at the hearing. That point has a degree of substance, notwithstanding that Woolworths had in earlier correspondence placed Mr Fitzgerald on notice that he might face a costs application should he proceed with his application. …”

Orders

42. I make the following orders:

1. The costs application of the respondent is dismissed.

2. Each of the applicants and the respondent are to pay their costs of the interim application.

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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: 04 April 2025