Rao Nallamouthou v The Owners-Strata Plan No 39988 (No 2)

[2025] NSWCATCD 21

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Rao Nallamouthou v The Owners-Strata Plan No 39988 (No 2) [2025] NSWCATCD 21

Hearing dates:

On the papers

Date of orders:

15 April 2025

Decision date:

15 April 2025

Jurisdiction:

Consumer and Commercial Division

Before:

G Sarginson, Deputy President

Decision:

(1) An oral hearing on the issue of costs is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

(2)    The costs application is dismissed.

Catchwords:

COSTS - special circumstances – whether established

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Civil and Administrative Tribunal Rules 2014 (NSW)

Strata Schemes Management Act 2015 (NSW)

Cases Cited:

Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116

Lu v The Owners-Strata Plan No 66347 [2025] NSWCATAP 2

Moseley v AB (No 2) [2017] NSWSC 1812

The Owners – Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273

Zhang v Chehade [2021] NSWCATCD 105

Texts Cited:

Nil

Category:

Costs

Parties:

Ratajeshwara Rao Nallamouthou (Applicant)
The Owners-Strata Plan No 39988 (First Respondent)
Zeljko Milic (Second Respondent)
Kirshan Kumar Khanna (Third Respondent)
Shashi Bhat (Fourth Respondent)
Marina Fugazzi (Fifth Respondent)

Representation:

Applicant (self-represented)
Second, Third, Fourth and Fifth Respondents (self-represented)

Solicitors:
Pobi Lawyers (First Respondent)

File Number(s):

2023/00382519

Publication restriction:

Nil

REASONS FOR DECISION

1. This is a costs application brought by the first respondent (the owners corporation) arising from a decision of the Tribunal in the substantive proceedings dated 21 November 2024.

2. The Tribunal is satisfied that an oral hearing on the issue of costs is unnecessary, and the issue of costs can appropriately and fairly be determined on the basis of the written submissions and documents of the parties. The parties were given, in previous procedural directions, an opportunity to make a submission as to whether or not an oral hearing on the issue of costs should be dispensed with.

3. The substantive decision comprises of 17 pages of written reasons. This cost decision is to be read in conjunction with the substantive decision.

4. The proceedings involved an application by a lot owner in a strata scheme for orders against the owners corporation; and additionally orders against strata committee members. The orders sought against the strata committee members were that they be disqualified from office under s 238 of the Strata Schemes Management Act 2015 (NSW) (SSM Act).

5. The orders sought against the owners corporation are set out at page 5 of the substantive decision. Those orders are relevantly involved access to records of the owners corporation; a “refund” of certain expenses the lot owner claimed had been wrongfully charged in respect of fire safety repairs; that the owners corporation take measures to prevent owners or occupants parking of common property; and an order relating to “discrepancies” in respect of hailstorm repairs to common property in December 2018.

6. The proceedings were commenced on 31 July 2023.

7. On 12 September 2023, the matter was listed for a directions hearing. Mr Pobi, solicitor, appeared for the owners corporation at the directions hearing. The proceedings were adjourned because a new strata manager had only recently been appointed, and the new strata manager was unable to deal with any disputes regarding access to strata records until it had had the opportunity to obtain the records from the previous strata manager, and liaise with the applicant. The Tribunal made clear at the directions hearing that if the owners corporation sought to be legally represented in the proceedings generally, it would have to make a formal written application to the Tribunal and the applicant lot owner needed to be given a reasonable opportunity to respond.

8. At that point in time, no orders were sought under s 238 of the SSM Act.

9. The matter was next listed for a directions hearing on 19 October 2023, before Wilson SM. Procedural directions were made for the filing and serving of documentary evidence by the parties, and other procedural issues, including granting leave to amend and joining strata committee members as parties. The owners corporation was only granted leave to be legally represented at that directions hearing, with Wilson SM stating in the directions that if the owners corporation sought leave to be legally represented in the proceedings generally, it was to apply for such an order in writing before the next directions hearing.

10. It does not appear that until 11 December 2023 the owners corporation, by its Solicitor, made a formal written application to the Tribunal to be granted leave to be legally represented in the proceedings under s 45 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). It may have orally raised this issue at directions hearings; or sent other previous correspondence to the Tribunal, but it appears the formal application was made in writing on 11 December 2023. Procedural directions were then made on 14 December 2023 for the parties to file and serve written submissions on the issue of legal representation. The applicant opposed the owners corporation being granted leave to be legally represented.

11. The matter was set down for a further directions hearing before Wilson SM on 22 December 2023. Orders were issued setting the matter down for a hearing, but no order was made in granting leave for legal representation in the written orders issued on that date.

12. However, Mr Pobi, Solicitor, wrote to the Tribunal Registry on 22 December 2003 stating that he had been granted leave to represent the owners corporation.

13. On 10 January 2024, Wilson SM issued amended orders under s 63 of the NCAT Act that included an order granting both parties leave to be legally represented. Although it is not entirely clear from the procedural history of the matter, it appears that leave for legal representation in the proceedings generally was granted on 22 December 2023, and there was an accidental oversight in the orders issued on that date by Wilson SM, which was rectified on 10 January 2024.

14. However, on any view of it, the owners corporation was not granted leave to be legally represented in the proceedings generally until late December 2023, as distinct from being granted leave on a limited basis for Mr Pobi to appear at various directions hearings.

15. The hearing occurred on 16 July 2024. The owners corporation was represented by Mr Pobi, Solicitor.

16. The lot owner was unsuccessful in obtaining any orders of the Tribunal, and his application was dismissed. The Tribunal gave detailed written reasons explaining its decision.

17. Pursuant to the orders made by the Tribunal in the substantive proceedings, the owners corporation filed an application for miscellaneous orders on 18 December 2024, seeking an order that the applicant lot owner pay its costs in the lump sum amount of $13,319.62.

18. The miscellaneous orders application included written submissions on the issue of costs; an affidavit of Mr Pobi that relevantly included tax invoices issued to the owners corporation by its legal representative in respect of acting for it, and advising, in the proceedings. The affidavit also attached correspondence sent by the owners corporation’s Solicitor to the applicant lot owner.

19. After receipt of the miscellaneous orders application, the Tribunal made procedural directions for each party to file and serve documents and submissions dealing with the costs application.

20. The lot owner filed and served submissions dated 28 January 2025, which contained various documents.

21. The owners corporation filed reply submissions dated 13 February 2025. The lot owner then filed further cost submissions and documents dated 7 April 2025. The Solicitor for the owners corporation wrote to the Tribunal proposing that the lot owner’s documents and submissions filed on 7 April 2025 be rejected, on the basis they had been filed and served outside the procedural timetable, and it would be procedurally unfair for the Tribunal to take those further cost submissions and documents into account.

22. In circumstances where the costs submissions and documents of the lot owner filed on 7 April 2025 have been filed and served outside the prescribed period for the filing and serving of cost submissions and documents, the Tribunal accepts that it would be procedurally unfair to the owners corporation to take those documents and submissions into account. There is no adequate explanation as to why the lot owner did not comply with procedural directions regarding filing and serving of his entire cost submissions and documents. It is not consistent with the just, quick, and efficient resolution of the real issues in the costs application; nor is it procedurally fair; to accept further cost submissions and documents of the lot owner after the owners corporation filed and served its cost submissions in reply.

23. However, the Tribunal has taken into account the cost submissions and documents of the lot owner dated 28 January 2025 (which were filed on 29 January 2025). The owners corporation has made submissions in reply to such documents and submissions.

24. Further, irrespective of any cost submissions or documents of the lot owner, it is the owners corporation who bears the onus of persuading the Tribunal that a costs order should be made.

Costs Submissions and Documents of Owners Corporation

25. The owners corporation’s submissions on the issue of costs is that there are “special circumstances” sufficient to depart from the usual order that each party bear its own costs for the following reasons: –

1. The lot owners claims had no tenable basis in fact or law (s 60(3)(c) NCAT Act).

2. The proceedings had a degree of complexity, “involving multiple directions hearing and extensive preparation, including the filing of affidavit evidence and submissions.” (s 60(3)(d) NCAT Act).

3. The lot owners claims were vexatious, misconceived and lacking in substance. The owners corporation submits that it should not have had to “expend significant time and resources to defend baseless claims.” (s 60(3)(e) NCAT Act).

4. The owners corporation submits that the circumstances are appropriate for the Tribunal to make a lump sum costs order because it is fair and equitable to do so; the costs are moderate; and supporting evidence by way of tax invoices to verify the costs incurred is provided.

26. Notably, despite the owners corporation submitting that the applicant’s claims were without any merit, to the extent that they are described as “baseless”, there is no correspondence referred to by the Solicitor by the owners corporation when it has written to the lot owner to point out the asserted lack of merit in the application; and putting the lot owner on notice that if the proceedings were not withdrawn within a specified period of time the owners corporation would seek costs (if and when it was granted leave to be legally represented in the proceedings).

27. The correspondence that the owners corporation Solicitor sent to the lot owner on the issue of costs was dated 15 December 2023 and 3 December 2024.

28. The letter of 15 December 2023 simply asserts that the owners corporation had spent significant legal costs “in these proceedings” and that the lot owner was being provided with “formal notice” that the owners corporation would seek to recover its costs. That letter does not invite the applicant to withdraw the proceedings without facing any cost penalty, nor does it provide details clearly setting out to the lot owner why the lot owners proceedings were without merit, and were doomed to fail. In substance, it is an assertion that the owners corporation will seek costs, and will rely upon the letter to support its costs application.

29. The letter of 3 December 2024 was sent after the decision of the Tribunal in the substantive proceedings. It makes an open offer that the owners corporation would accept the amount of $10,027.88 (inclusive of GST) for payment of its costs, and that if this offer was not accepted the owners corporation would seek a higher amount. The offer was open for a period of 7 days.

Submissions and Documents of Lot Owner

30. The cost submissions of the lot owner referred to alleged medical conditions of the lot owner, which are unnecessary to detail. The lot owner asserts that he is a self-represented litigant, and did not understand how or why the owners corporation had engaged a legal representation. The lot owner also asserts that he does not have the financial capacity to pay a costs order. However, he provided no evidence to verify his purported financial position.

31. Further, the lot owner made reference to being overseas for a period of time.

Reply Submissions of the Owners Corporation

32. The reply submissions of the owners corporation do not add, in any material way, to the submissions previously made by the owners corporation in support of the costs application. In those circumstances, it is unnecessary to set out those reply submissions.

Applicable Legal Principles

33. Section 60 of the NCAT Act states as follows:

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.

(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—

costsincludes—

(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.

34. The Appeal Panel of the Tribunal has considered on many occasions the applicable principles as to whether there are “special circumstances” to justify a costs order in favour of a party. The principles were concisely summarised in The Owners – Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6]-[15] as follows:

1. “Special circumstances” mean out of the ordinary but not to the degree of being exceptional or extraordinary.

2. A costs order is not made simply because one or more of the circumstances in s 60(3) of the NCAT Act is established. The special circumstances must be sufficient for the Tribunal to exercise its discretion in favour of making a costs order.

3. The party seeking costs bears the onus of persuading the Tribunal that the special circumstances are sufficient to justify departing from the usual principle in s 60(1) of the NCAT Act.

4. The discretion should be exercised judicially, with consideration that the usual principle is that by reason of s 60(1) of the NCAT Act each party bears its own costs, and the Tribunal must be persuaded to depart from that principle.

5. Whether there are sufficient special circumstances to justify a costs order is a question of fact and each case must be assessed according to its circumstances.

35. An example of where special circumstances were not sufficient to cause the Tribunal to exercise its discretion to make a costs order is Zhang v Chehade [2021] NSWCATCD 105.

36. Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) allows the Tribunal to make a costs order without “special circumstances” being established where the amount claimed or in dispute in the proceedings exceeds $30,000. Rule 38 does not apply in the circumstances of this matter.

37. If “special circumstances” are established which are sufficient to cause the Tribunal to exercise its discretion to depart from the usual principle that each party bear its own costs under s 60(1) of the NCAT Act, the Tribunal must also take into account other principles pertaining to the exercise of its powers.

38. Costs orders are made to compensate the successful party in litigation for the costs of bringing or defending the proceedings; not to punish the unsuccessful party. The overriding principle in any order for costs is that of doing justice between the parties in the particular case (Moseley v AB (No 2) [2017] NSWSC 1812 at [65]-[66)].

39. A further discretionary matter to take into account is the period from which the owners corporation was granted leave to be legally represented in the proceedings. As Blake SC PM stated in Lu v The Owners-Strata Plan No 66347 [2025] NSWCATAP 2 at [55](3):

“…It was unfair to Ms Lu that she should exposed to an order for costs for legal services provided on and prior to 2 October 2024 when it had not obtained an order that it have leave to 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 pursuant to 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 Pty Ltd v Ball [2018] NSWCATAP 83 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. …”

40. If the Tribunal is satisfied that there are “special circumstances” sufficient to exercise its discretion to make a costs order, it can, in appropriate circumstances, award costs on a lump sum basis (see, for example, Islam v Metricon Homes Pty Ltd [2018] NSWCATAP 116).

Consideration

41. The individual strata committee members who were the subject of the application under s 238 of the SSM Act were not legally represented in the proceedings. Only the owners corporation was legally represented, and it is the owners corporation who makes the costs application.

42. The Tribunal does not accept that the lot owner unreasonably prolonged the proceedings (s 60(3)(b)) or that the proceedings had particular factual or legal complexity (s 60(2)(d)). The matter had 3 directions hearings prior to its final hearing. That is not an excessive or unreasonable amount of directions hearings, and one of those directions hearings involved an adjournment in circumstances where a new Strata Manager had only recently been appointed. The appointment of a new Strata Manager is not the fault of the applicant. The legal and factual issues raised in the proceedings were not any more complex than many proceedings involving self-represented litigants, and the mere fact that there were 3 directions hearings does not establish they were of particular factual and legal complexity.

41. The remainder of the owners corporation’s costs submissions focus on the merits of the evidence and claims of the applicant lot owner (s 60(3)(c)), although they include an argument that the proceedings are frivolous, vexations or otherwise misconceived or lacking in substance (s 60(3)(e)).

42. The Tribunal accepts that some of the claims advanced by the applicant had limited merit and prospects of success. However, it is not satisfied that they were completely unarguable, or so without merit they satisfy the legal definition of being vexatious, misconceived, untenable in fact or law, or an abuse of process. To the extent they were arguably misconceived, that goes to the same issue, which is the strength of the case of the applicant lot owner for the orders sought.

43. In the substantive decision reasons, the Tribunal did not find that the applicant lot owner had no basis for seeking an order for the production of documents under s188 of the SSM Act. Rather, the Tribunal found that the applicant had not provided sufficient evidence of the documents he had been given access to compared to the documents he claimed he had not been given access to such that it was appropriate for an order to be made under s 188. It is self-evident from those reasons that the applicant lot owner had a factually and legally arguable basis for the s 188 order application, even if he ultimately failed to achieve success on that issue. Although there the applicant lot owner’s arguments and claims for other orders were much weaker than the s 188 application, when considered in totality the Tribunal is not satisfied that the claims were so weak as to satisfy the “special circumstances” test.

44. Even if “special circumstances” were established, the owners corporation has not established a discretionary basis for making a costs order in its favour.

45. In respect of the submissions by the owners corporation that the proceedings had little or no merit, it must be taken into account that the applicant was self-represented in the proceedings. It is not unusual in the Tribunal for self-represented litigants, particularly in strata proceedings, to fail to grasp complex legal principles, rather than focus on their subjective belief that the owners corporation had not acted in a correct manner in respect of the exercise of its duties and obligations. The arguments of the owners corporation need to be considered in that context.

46. Whilst the Tribunal does not suggest that an owners corporation who has had the benefit of legal advice cannot succeed in a costs application under s 60 of the NCAT Act without writing to the applicant and pointing out the inadequacies in the applicant’s claim, and giving the applicant the opportunity to withdraw the proceedings without facing an application for costs within a specified time, the failure of a legally represented the owners corporation to engage in such a course of action is a discretionary matter to take into account, when dealing with a costs application against a self-represented strata litigant.

47. The failure by the legally represented owners corporation to write to the applicant; point out the weaknesses in various claims advanced by the applicant, and to give the applicant opportunity to withdraw the proceedings without facing a costs penalty, is relevant to the exercise of the Tribunal’s discretion on the issue of costs, and has been taken into account.

48. As discussed previously, the onus is upon the owners corporation to persuade the Tribunal that there are sufficient “special circumstances” such that the Tribunal should exercise its discretion to depart from the usual principle that each party to bear its own costs under s 60(1) of the NCAT Act. It is not enough for the owners corporation to establish one, or more, of the matters under s 60(3) of the NCAT Act. There is a further step, which involves persuading the Tribunal to exercise its discretion if it is satisfied there are “special circumstances.” The applicant does not have to persuade the Tribunal that a costs order should not be made.

49. The owners corporation does not point to any other matters that may potentially be relevant, such as the applicant lot owner having brought multiple previous unsuccessful NCAT proceedings against the owners corporation that were found to lack merit. It is unnecessary in the circumstances of this matter to express a concluded view as to whether that would be a matter that could be taken into account under s 60(3)(g) of the NCAT Act.

50. In all the circumstances of this matter, the Tribunal is not satisfied that the owners corporation has established “special circumstances” of such a nature that it should exercise its discretion to make an order that the applicant pay the owners corporation’s costs of the proceedings. Accordingly, it is unnecessary to consider whether a lump sum costs order should be made, because the Tribunal is not satisfied that any costs order should be made favour of the owners corporation. It follows that each party bears its own costs under s 60(1) of the NCAT Act.

51. The costs application is dismissed.

ORDERS

1. An oral hearing on the issue of costs is dispensed with under s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

2. The costs application is dismissed.

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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: 29 May 2025