Civil and Administrative Tribunal New South Wales Medium Neutral Citation: The Owners – Strata Plan No 2341 v P & M Sachs Pty Ltd (No 2) [2023] NSWCATAP 23 Hearing dates: On the papers, last submissions received 18 October 2022 Date of orders: 1 February 2023 Decision date: 01 February 2023 Jurisdiction: Appeal Panel Before: D Robertson, Senior Member D Charles, Senior Member Decision: (1) Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) a hearing on the question of costs is dispensed with. (2) The respondent's application for costs is dismissed. Catchwords: COSTS – Civil and Administrative Tribunal Rules, rules 38 and 38A – "the amount claimed or in dispute" on an appeal is the amount in dispute on the appeal, not the amount claimed at first instance Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Rules 2014 (NSW) Cases Cited: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 Cripps v G&M Dawson Pty Ltd [2006] NSWCA 81 DHY v Public Guardian (No 3) [2022] NSWCATAP 34 Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 James v Department of Justice (Corrective Services NSW) (No 2) [2022] NSWCATAP 216 The Owners – Strata Plan No 2341 v P & M Sachs Pty Ltd [2022] NSWCATAP 304 Category: Costs Parties: The Owners – Strata Plan No 2341 (Appellant) P & M Sachs Pty Ltd (Respondent) Representation: Counsel: T Davie (Respondent) Solicitors: Appellant (Self-represented) JS Mueller & Co (Respondent) File Number(s): 2022/00126740 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: NA Date of Decision: 4 April 2022 Before: R Alkadamani, Senior Member File Number(s): SC 21/00107 REASONS FOR DECISION Introduction 1. By decision published on 19 September 2022 (The Owners – Strata Plan No 2341 v P & M Sachs Pty Ltd [2022] NSWCATAP 304) (the Primary Decision) the Appeal Panel refused leave to appeal and dismissed the appeal brought by The Owners – Strata Plan No 2341 against the decision of the Tribunal, published on 4 April 2022, requiring the Owners Corporation to pay P & M Sachs Pty Ltd the sum of $80,360. The owners did not challenge the decision in its entirety but sought that the amount of the judgment be reduced to $67,930. 2. These reasons for decision assume knowledge of, and should be read in conjunction with, the Primary Decision. 3. In the Primary Decision we made orders providing for the parties to make submissions in relation to the question of the costs of the appeal as follows: "(3) The respondent may, within 14 days of the date of publication of these reasons, file and serve submissions, not exceeding three pages, concerning the question whether there are special circumstances warranting an order for costs in respect of the appeal. (4) The appellant may file and serve submissions not exceeding three pages in response to any such submissions within a further 14 days. (5) Any submissions filed in accordance with orders 3 and 4 should address the issue whether the question of costs can be determined on the basis of the written submissions and without a further hearing. (6) If the respondent does not file submissions in accordance with order 3 there will be no order in relation to the costs of the appeal." 1. The respondent filed submissions on 30 September 2022 seeking an order that the appellant pay its costs of the appeal. 2. The appellant filed submissions in response, opposing any order for costs, on 18 October 2022. 3. Both parties consented to the question of costs being determined on the basis of the written submissions and without a further hearing. 4. We are satisfied that the issues for determination can be adequately determined in the absence of the parties by considering the written submissions. Accordingly, we will make an order pursuant to s 50 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) dispensing with a hearing. 5. Section 60 of the NCAT Act 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. (4) If costs are to be awarded by the Tribunal, the Tribunal may— (a) determine by whom and to what extent costs are to be paid, and (b) order costs to be assessed on the basis set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014) or on any other basis. (5) In this section— costs includes— (a) the costs of, or incidental to, proceedings in the Tribunal, and (b) the costs of, or incidental to, the proceedings giving rise to the application or appeal, as well as the costs of or incidental to the application or appeal. 1. Rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW) provide exceptions to the rule laid down in s 60, those rules provide: 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. 38A Costs in internal appeals (1) This rule applies to an internal appeal lodged on or after 1 January 2016 if the provisions that applied to the determination of costs in the proceedings of the Tribunal at first instance (the first instance costs provisions) differed from those set out in section 60 of the Act because of the operation of— (a) enabling legislation, or (b) the Division Schedule for the Division of the Tribunal concerned, or (c) the procedural rules. (2) Despite section 60 of the Act, the Appeal Panel for an internal appeal to which this rule applies must apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal. Respondent's submissions 1. The respondent submitted that rules 38 and 38A were applicable to the appeal and that, accordingly, there was no need for special circumstances before the Appeal Panel could make an award of costs. The respondent submitted in the alternative that there were special circumstances warranting an award of costs. 2. In relation to the application of rules 38 and 38A, the respondent submitted that the amount in dispute at first instance exceeded $30,000 (that is clearly the case, the decision at first instance required the appellant to pay the respondent the sum of $80,360), so that rule 38A requires the Appeal Panel to apply rule 38 in determining whether special circumstances are required before it may make an order for costs. 3. The respondent further submitted that "the amount claimed or in dispute" on the appeal was more than $30,000. The respondent submitted: "16. The respondent first submits that the disjunctive 'or' is significant. It is conceded that the amount eventually in dispute was the difference between $67,930 and $80,360. But the amount claimed was $80,360. The fact that it was claimed by the respondent is not, it is submitted to the point. It is not meaningful to speak of a 'claim' by an appellant in appeal proceedings. 17. The alternative proposition, that the Appeal Panel should only apply the first instance costs provisions as if the words 'claimed or' were omitted, should not, it is submitted, be accepted. This is not what the words say." 1. In relation to special circumstances, the respondent noted that, as Santow JA held in Cripps v G&M Dawson Pty Ltd [2006] NSWCA 81 at [60], special circumstances do not have to be "extraordinary or exceptional", it suffices if they are "out of the ordinary". 2. The respondent relied upon the following as constituting special circumstances: "(a) the appellant's position in the appeal and in the proceedings below had no tenable basis in fact or law or were otherwise misconceived or lacking in substance, in particular by relying on documents said to constitute significant new evidence that were not in fact such; (b) the appellant had refused or failed to comply with the duty imposed by s 36(3), particularly by failing to provide a clear and meaningful articulation of its position both at first instance and in the appeal, despite orders to file and serve points of claim and submissions; (c) the underlying cause of the dispute was the failure of the appellant owners corporation comply with its strict obligation to repair and maintain the common property and the failure to put forward with any clarity or at all any meaningful explanation for so doing." Appellant's submissions 1. The appellant submitted that the amount claimed or in dispute on the appeal was $12,430, that is the difference between $80,360 and $67,930. 2. In response to the matters relied upon by the respondent as constituting special circumstances, the appellant submitted: (a) "the appellant was able to produce a position where the appeal tribunal considered there was a tenable basis"; [The appellant referred to paragraphs 32, 33, 40, 41, 35 and 51 of the Primary Decision.] (b) "the appellant is not aware of any non-compliance with section 36(3)"; and (c) "The respondent's original claim relates to lost rental income while the owners corporation remediates the repair. The Owner's Corporation has spent over $500,000.00 to remediate the issue. A brief shortened history of the owners corporations actions can be found in (Appeals decision [22]) It is also outlined in the joint report. For the respondent to state there was no 'meaningful explanation' is without merit let alone offering this opinion as a special circumstance under section 60." 1. The appellant further submitted: "13. The prime motivation in the appellant case was the issue of the report being withheld by the respondent for four and half months which is not challenged by the respondent (Appeal Decision [57(3)]). Although not successful with this claim to not challenge could pose an avenue where lot owners and Owner Corporations could be taken advantage of." Consideration 1. We do not accept the respondent's submission concerning the meaning of "the amount claimed or in dispute". 2. It is necessary to recognise that rule 38 is applicable directly to first instance proceedings and rendered applicable to appeal proceedings by the operation of rule 38A. It is not necessary, or appropriate, to approach the construction of rule 38 in its application to appeal proceedings on the basis that all parts of the rule are intended to have some operation in that context. 3. As the Appeal Panel noted in Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 (Hanave (No 2)), at [63], rule 38 "says it applies if 'the amount claimed or in dispute in the proceedings' is more than $30,000". 4. As the Appeal Panel decisions in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 and Hanave (No 2) make clear, in applying rule 38 to an appeal, "the proceedings" are the appeal proceedings, not the proceedings determined by the decision from which the appeal is brought. 5. It may not be meaningful to speak of a claim by an appellant in appeal proceedings, but that is not a reason to construe rule 38 in the manner suggested by the respondent. 6. It is clear in our view that the amount in dispute in the appeal proceedings was only the amount of $12,430 by which the appellant sought to reduce the judgment against it. 7. It is therefore necessary that we find that there are special circumstances before we can make an order for costs. We turn to consider the matters relied upon by the respondent. No tenable basis and misconceived or lacking in substance 1. It is not sufficient, to establish that a claim had no tenable basis in fact or law, that the claim failed. 2. In James v Department of Justice (Corrective Services NSW) (No 2) [2022] NSWCATAP 216 (James (No 2)), at [13] – [14], the Appeal Panel addressed a submission to similar effect: 13 The respondent's submissions in this regard amounted, ultimately, to no more than the proposition that, the appeal having failed, it was thereby shown to have no tenable basis. 14 Section 60 (3) (c) requires more than this. As the Appeal Panel held in DYH v Public Guardian (No 3) [2022] NSWCATAP 34 at [17] – [19]: 17 The power to award costs in s 60 of the NCAT Act is to be understood in the context of the Act as a whole. One of the objects of the NCAT Act is "to ensure that the Tribunal is accessible and responsive to the needs of all of its users" (NCAT Act, s 3). A large proportion of its users are not legally trained and the general rule (which is modified for the Administrative and Equal Opportunity Division) is that a party has the carriage of the party's own case and is not entitled to be represented by any person, unless the Tribunal grants leave (NCAT Act, s 45(1); Sch 3, cl 9). The Tribunal is also obliged to ensure that the parties understand the nature of the proceedings and, if requested to do so, explain procedural matters to the parties (NCAT Act, s 38(5)). 18 The general rule set out in s 60(1) of the NCAT Act, that each party pay the party's own costs, was "designed to promote access to justice generally and to minimise the overall level of costs in tribunal proceedings as far as is practicable" (Choi v University of Technology Sydney [2020] NSWCATAP 18 at [41], citing Stonnington City Council v Blue Emporium Pty Ltd [2004] VCAT 1441 at [13]). The concern with access to justice, evinced in s 60(1), indicates that the Tribunal should not award costs too readily on the basis that one party's claim was stronger than the other party's claim (see NCAT Act, s 60(3)(c)). The relative strengths of the parties' claims is one factor to be taken into account, but a finding that a party's claim is weak does not necessarily mean that there are special circumstances warranting an award of costs (see Choi v University of Technology Sydney [2020] NSWCATAP 18 at [45]). 19 In this context, we consider that the power to award costs is to be exercised with some tolerance for self-represented litigants who do not understand legal concepts. That includes a lack of understanding of the rules governing the admission of fresh evidence and the question of what constitutes error for the purposes of an appeal. That approach is consistent with the principle that the discretion to award costs is to be exercised judicially "having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs" (Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 at [8]). 1. Equally, the fact that a claim has failed does not establish that it was misconceived or lacking in substance. As the Appeal Panel held in James (No 2), at [24] – [26]: 24 In Zucker v Burbank Montague Pty Ltd [2018] NSWCATAP 135 at [44] the Appeal Panel held that: 44 A finding that a claim is "not proved on the balance of probabilities" is not the same as a finding that a claim is "not tenable in fact or law". They are different concepts. The expression "no tenable basis in fact or law" relates to the common law tests developed and applied in Dey v Victorian Railways Commissioners (1949) 78 CLR 62 and General Steel Industries Inc v Commissioner for Railways (NSW) (1964) 112 CLR 125. For a claim to have no tenable basis in fact or law it must be so obviously untenable that it cannot possibly succeed: General Steel at 130. "Manifestly groundless" or "clearly untenable" are equivalent expressions. In our view, for the purpose of s 60(3)(c), it matters not whether a conclusion that a claim has no tenable basis in fact or law is reached in connection with an application for summary dismissal or after a full hearing on the merits. 25 In that case, at [50], the Appeal Panel adopted the statement of Ipp JA in The Owners Corporation of Strata Plan 4521 v Zouk & Anor [2007] NSWCA 231 at [45] that "lacking in substance" means "'not reasonably arguable'. That is, a meaning not dissimilar to 'frivolous, vexatious, misconceived'". 26 We do not consider that the appeal could properly be described as frivolous, vexatious, misconceived or lacking in substance in the sense outlined by the Appeal Panel in Zucker v Burbank Montague Pty Ltd. The grounds of appeal were not established, and it may fairly be said that the appeal had weak prospects of success. However, as the Appeal Panel stated in DYH v Public Guardian (No 3) [2022] NSWCATAP 34, at [18], the concern with access to justice evinced in s 60 (1) indicates that the Tribunal should not award costs too readily on the basis that one party's claim was stronger than the other party's claim, and a finding that a party's claim is weak does not necessarily mean that there are special circumstances warranting an award of costs. 1. We are not persuaded that the appellant's case had no tenable basis in fact or law, or was misconceived or lacking in substance. 2. As we found at [30] of the Primary Decision, the evidence of Mr Sachs and the documents exhibited to his statement constituted some evidence that the premises could not be occupied. Nevertheless, as we noted at [51], the evidence was "thin". We do not consider that the appellant's claim that there was no evidence that the respondent's lot was "uninhabitable" was not tenable or was misconceived. Failure to comply with section 36 (3). 1. We are not persuaded that the respondent's submission to this effect has any substance. 2. Section 36 of the 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. … (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, … 1. The appellant was not legally represented. 2. As the Appeal Panel held in James (No 2), at [28], citing DHY v Public Guardian (No 3) [2022] NSWCATAP 34, at [19]: 28 … "the power to award costs is to be exercised with some tolerance for self-represented litigants who do not understand legal concepts." The fact that the applicant was not represented was not irrelevant to the consideration whether there were special circumstances. 1. Save in very unusual circumstances, which are not present in this case, the conduct of a party at first instance will not be relevant to the question whether there are special circumstances warranting an award of costs in respect of an appeal. 2. We do not consider that there is any basis to conclude that the appellant failed to comply with its duty under s 36(3) in relation to the appeal. Underlying cause of the dispute 1. The material before the Appeal Panel does not enable us to draw the conclusions propounded by the respondent as its third basis for submitting that there are special circumstances. In particular, there is no basis upon which we could conclude that the proceedings were brought about through a deliberate, or even inadvertent, failure of the appellant to acknowledge its obligations. Conclusion 1. We are not persuaded that there are special circumstances warranting an award of costs in relation to the appeal. Accordingly, we cannot make an order for costs, and the respondent's application for costs must be dismissed. ORDERS 1. Our orders are: 1. Pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW) a hearing on the question of costs is dispensed with. 2. The respondent's application for costs is dismissed. 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 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 02 February 2023