Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Quo Warranto Pty Ltd v Goodman (No 2) [2023] NSWCATAP 142 Hearing dates: On the papers Date of orders: 30 May 2023 Decision date: 30 May 2023 Jurisdiction: Appeal Panel Before: K Rosser, Principal Member C Fougere, Principal Member Decision: (1) A hearing is dispensed with pursuant to s 50 (2) of the Civil and Administrative Tribunal Act 2013. (2) Jonathan Mark Goodman and Barbara Beth Goodman and William Theo Locke and Nicole Jeanne Locke are to pay the costs of The Owners – Strata Plan No. 15482 and Michael Braham Joel and Alexandra Joel in respect of the application for substantive orders (SC 21/18734), on the ordinary basis, as agreed or assessed. (3) The applications for costs are otherwise dismissed. (4) The Appeal Panel notes that in respect of the costs of the Owners Corporation, the appellant, the Owners Corporation and the fifth respondent are the successful parties in the Tribunal and appeal proceedings. Catchwords: COSTS – Appeal – Whether rule 38 or s 60 applies in Tribunal and appeal proceedings – special circumstances – exercise of discretion Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules 2014 (NSW) Strata Schemes Management Act 1996 (NSW) Supreme Court Act 1970 (NSW) Cases Cited: Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 Latoudis v Casey [1990] 170 CLR 534 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 Oshlak v Richmond River Council [1998] HCA 11 Quo Warranto Pty Ltd v Goodman [2022] NSWCATAP 315 The Owners - Strata Plan 20211 v Rosenthal [2019] NSWCATAP 49 The Owners – Strata Plan No 76830 v Byron Moon Pty Limited [2020] NSWCATAP 186 The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 Texts Cited: None cited Category: Costs Parties: Quo Warranto Pty Ltd (Appellant) Jonathan Mark Goodman and Barbara Beth Goodman (First Respondents) William Theo Locke and Nicole Jeanne Locke (Second Respondents) Strata Choice Pty Ltd (Third Respondent) The Owners – Strata Plan No. 15482 (Fourth Respondent) Michael Braham Joel and Alexandra Joel (Fifth Respondents) Representation: Counsel: Mr M Forgacs (First and Second Respondents) Solicitors: Atanaskovic Hartnell (Appellant) Bugden Allen Graham (First and Second Respondents) Speirs Ryan (Fifth Respondent) File Number(s): 2021/00325119 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 15 October 2021 Before: G Ellis SC, Senior Member File Number(s): SC 21/18734 reasons for decision Introduction 1. These reasons for decision concern applications for costs following determination in favour of the appellant of appeal proceedings 2021/325119 (appeal proceedings). The background to the dispute between the parties and our findings in respect of the issues relevant to the appeal are set out in our reasons for decision and are not repeated in these reasons for decision: see Quo Warranto Pty Ltd v Goodman [2022] NSWCATAP 315. 2. We made the following orders in the substantive appeal proceedings: (1) The appeal is allowed. (2) Order 1 made by the Tribunal on 15 October 2021 in SC 21/18734 is set aside. (3) Proceedings SC 21/18734 are dismissed. (4) If an application for costs is made, the following orders apply: (a) The application is to be filed and served, supported by evidence and submissions not exceeding five pages in length, within 14 days of the date of these orders; (b) Evidence and submissions in response to the costs application are to be filed and served 14 days thereafter; (c) Any material in reply is to be filed and served seven days thereafter. (d) In their submissions the parties are to address whether a hearing on costs should be dispensed with and costs determined on the papers. 1. As the appeal was successful, we decided to re-determine the costs of the proceedings at first instance (proceedings in the Tribunal below) in addition to the costs of the appeal: s 81(2) Civil and Administrative Tribunal Act 2013 (NCAT Act). 2. The appellant, the appellant on behalf of the fourth respondent (the Owners Corporation) and the fifth respondents (the Joels) applied for costs of the appeal proceedings and costs of the proceedings in the Tribunal below. The proceedings in the Tribunal below consisted of the application for substantive orders (SC 21/18734) (application for substantive orders) and the application for interim orders (SC 21/18736) (application for interim orders). 3. The first and second respondents (the Goodmans and the Lockes) were originally the unsuccessful parties to the application for interim orders and the successful parties in the application for substantive orders. They were the unsuccessful parties on appeal and, as a result of the appeal decision, ultimately the unsuccessful parties in both applications in the Tribunal below. They oppose the costs applications. 4. The third respondent, Strata Choice Pty Ltd, which was previously the Owners Corporation's compulsory strata manager, played no part in the appeal proceedings and has not made a costs application. 5. We note that in addition to costs of the appeal proceedings and the proceedings in the Tribunal below, the Joels also seek costs of appeal proceedings 2021/100358359, which were commenced by the Goodmans and the Lockes in respect of the Tribunal's costs order. That appeal was withdrawn on 16 October 2022. Those appeal proceedings were not before us and we have not been constituted as the Appeal Panel to determine the costs of that appeal. We have therefore not determined any costs application insofar as it concerns that appeal. 6. Submissions were provided by the parties in accordance with our orders. In their submissions, all parties initially argued that r 38 of the Civil and Administrative Tribunal Rules (the Rules) and not s 60 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) apply to both the proceedings at first instance and the appeal proceedings. Their position was therefore that special circumstances did not have to be established to warrant an order for costs. 7. Following publication of reasons for decision in Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 we gave the parties an opportunity to provide further submissions in the event that we found that special circumstances had to be established to warrant an order for costs. The parties provided further submissions in response to those orders. The appellant, the Owners Corporation and the Joels maintain that r 38 applies to both proceedings. The Goodmans and Lockes submit that s 60 is the relevant costs provision. 8. For the reasons set out below, we have made an order for costs in favour of Owners Corporation and the Joels in the application for substantive orders. The applications for costs are otherwise dismissed. 9. We have also found for the purposes of s 104 of the SSM Act that the Owners Corporation, the appellant and the Joels are the successful parties in all proceedings. This means that the Goodmans and the Lockes are the unsuccessful parties and therefore the Owners Corporation can only levy a contribution for the costs in respect of the application for interim orders and the appeal proceedings on the Goodmans and the Lockes. Submissions and evidence 1. In deciding the costs applications, we have had regard to the following: 1. The application for costs and the written submissions filed by the appellant on behalf of the appellant and the Owners Corporation dated 14 October 2022; 2. The application for costs and the written submissions filed by the Joels on 14 October 2022; 3. The submissions filed by the appellant on behalf of the Owners Corporation on 26 October 2022; 4. The submissions filed by the Goodmans and the Lockes on 28 October 2022; 5. The appellant's and the Owners Corporation's reply submissions filed on 4 and 7 November 2022; 6. The Joels' submission in reply filed on 4 November 2022; 7. The appellant's further submissions lodged on 3 January 2023; 8. The Joels' further submissions dated 6 January 2023; 9. The Goodmans' and Lockes' further submissions dated 25 January 2023; 10. The appellant's and the Owners Corporation's further submissions in reply dated 31 January 2023; 11. The Joels' further submissions in reply dated 31 January 2023; 12. Our reasons for decision in the appeal proceedings; and 13. The Tribunal's reasons for decision in respect of the application for interim orders and the application for substantive orders, as well as the Tribunal's costs decision. 1. Material filed by the parties attaches costs submissions provided to the Tribunal at first instance. Legislative provisions and legal principles in relation to costs Costs at first instance 1. The general rule in relation to costs in the Tribunal is that unless special circumstances are established, the parties pay their own costs: s 60(1) of the NCAT Act. 2. However, r 38 of the Rules modifies the application of s 60 in proceedings before the Consumer and Commercial Division of the Tribunal. 3. Rule 38 provides: 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. 1. Rule 38(2)(a) is not relevant to the present proceedings. 2. The meaning of the expression "amount claimed or in dispute" in r 38(2)(b) was considered in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 (Malachite). At [3]-[5] the Appeal Panel summarised the operation of the rule as follows: 3 Rule 38(2)(b) applies to the following proceedings: (1) Where the relief claimed in the proceedings is for an order to pay a specific amount of money, or an order to be relieved from an obligation to pay a specific amount of money, and that amount is more than $30,000; (2) Where an order is sought in the proceedings for the performance of an obligation (such as to do work), and the Tribunal has power to make an order to pay a specific amount of money, even if not asked for by the claimant, provided that: (a) there is credible evidence relating to the amount the Tribunal could award; and (b) that evidence, if accepted, would establish an entitlement to an order for an amount more than $30,000. 4 Rule 38(2)(b) may also apply to proceedings where the orders sought in the proceedings depend upon the claimant proving there is a debt owed in order to establish an entitlement to the relief sought, and that amount is in dispute and is more than $30,000. 5 Rule 38(2)(b) does not apply to proceedings: (1) Where a claim for relief in the proceedings (not being a claim for an order to be paid or be relieved from paying a specific sum) may, as a consequence of that relief being granted, result in the loss of any property or other civil right to a value of more than $30,000; or (2) Where there is a matter at issue amounting to or of a value of more than $30,000 but: (a) no direct relief is sought and no order could be made in the proceedings requiring payment or relief from payment of an amount more than $30,000; or (b) the relief sought does not depend on there being a finding that a specific amount of money is owed. 1. Therefore, if the amount claimed in proceedings is more than $30,000, r 38(2) is satisfied. Where no amount is claimed, it is necessary to consider whether there is an amount in dispute, which is a more complex issue. As set out in Malachite at [90] and following, an amount is in dispute if it is necessary to determine the amount for the purpose of granting or withholding relief. 2. Having considered the comments in Allen v TriCare (Hastings) Ltd [2017] NSWCATAP 25 (Allen) at [48] and following, the Appeal Panel in Malachite concluded that r 38 was not concerned with a "change in wealth" (as is the case when leave to appeal is sought under s 101(2)(r) of the Supreme Court Act 1970 (NSW)) but rather with the "amount in dispute": see also Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 at [40]. In this regard, unlike r 38, s 101(2)(r) of the Supreme Court Act refers to "value". Subsections 101(2)(r)(i) and (ii) use the expressions "involves a matter at issue amounting to or of the value of $100,000 or more" and "involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more". Costs of appeal proceedings 1. Rule 38A provides: 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. 1. Therefore, by operation of r 38A(2), on appeal from a first instance decision to which r 38 applies, r 38 also applies to the appeal. As determined in Allen, the appeal proceedings are to be treated as separate proceedings for the purpose of the application of the rule: see Allen at [37]. Consequently, there must be an amount claimed or in dispute in the appeal proceedings which is greater than $30,000: see Allen at [42]. Otherwise, as stated by r 38, s 60 is not displaced and costs may only be awarded if there are special circumstances warranting such an award. Special circumstances 1. Section 60(3) of the NCAT Act states: (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. 1. Special circumstances for the purposes of s 60(3) of the NCAT Act are circumstances that are out of the ordinary. They do not need to be exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60]; Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. Whether special circumstances exist is a question of fact and each case must be assessed according to its circumstances: Wynne Avenue Property Ltd v MJHQ Pty Ltd (No 2) [2019] NSWCATAP 68 at [57]; The Owners - Strata Plan 20211 v Rosenthal [2019] NSWCATAP 49 at [15]. 2. Even if it is satisfied that there are special circumstances, the Tribunal must be satisfied that they are circumstances "warranting an award of costs"; that is, the Tribunal has a discretion as to whether to make such an award. The exercise of the costs discretion requires the Tribunal to weigh whether those circumstances are sufficient to amount to special circumstances that justify departing from the general rule that each party bear their own costs: Obieta v Australian College of Professionals Pty Ltd [2014] NSWCATAP 38 at [81]. Costs under r 38 1. Where r 38 applies in either Tribunal proceedings or appeal proceedings, the usual principles concerning costs apply. That is, in general terms, the successful party is entitled to an order for costs in its favour, subject to certain limited exceptions generally involving misconduct on the part of that party: see, for example, Latoudis v Casey [1990] 170 CLR 534 and Oshlak v Richmond River Council [1998] HCA 11). However, even where r 38 applies, the Tribunal still has a discretion in relation to costs. Issues 1. The issues for determination are: 1. Should a hearing on costs be dispensed with? 2. Does r 38(2)(b) or s 60 apply to the proceedings before the Tribunal? 3. How should the costs discretion be exercised in the Tribunal proceedings? 4. Does r 38(2)(b) or s 60 apply to the appeal proceedings? 5. How should the costs discretion be exercised in the appeal proceedings? Consideration Should a hearing on costs be dispensed with? 1. Section 50 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) relevantly provides: 50 When hearings are required (1) A hearing is required for proceedings in the Tribunal except: … (c) if the Tribunal makes an order under this section dispensing with a hearing, or … (2) The Tribunal may make an order dispensing with a hearing if it is satisfied that the issues for determination can be adequately determined in the absence of the parties by considering any written submissions or any other documents or material lodged with or provided to the Tribunal. (3) The Tribunal may not make an order dispensing with a hearing unless the Tribunal has first: (a) afforded the parties an opportunity to make submissions about the proposed order, and (b) taken any such submissions into account. (4) The Tribunal may determine proceedings in which a hearing is not required based on the written submissions or any other documents or material that have been lodged with or provided to the Tribunal in accordance with the requirements of this Act, enabling legislation and the procedural rules. … 1. The parties were given an opportunity to make submissions concerning whether costs could be determined on the papers. None of the parties sought an oral hearing. 2. We are satisfied that the issue of costs can be adequately determined in the absence of the parties by considering the parties' written submissions. The parties would be put to unnecessary expense if required to argue the costs application at a hearing. An order under s 50(2) of the NCAT Act has accordingly been made. Does r 38 or s 60 apply to the proceedings before the Tribunal? Application for interim orders 1. None of the parties submitted that the application for interim orders and the application for substantive orders form part of the same proceedings. 2. The application lodged by the Goodmans and Lockes seeking interim orders was not provided in the appeal bundle and is therefore not before us. However, we have considered the reasons for decision in that application, which was decided on 24 May 2021, the same date on which the application for substantive orders was listed for directions. 3. The Tribunal noted that the Goodmans and Lockes, the compulsory strata manager, the Owners Corporation and the Joels were represented at the hearing. The appellant in these proceedings (which was the fourth respondent in the Tribunal proceedings) did not appear. 4. In its reasons for decision dismissing the application for interim orders, the Tribunal stated at [8]: In the application for interim orders, the applicant seek the Tribunal make [sic] an interlocutory injunctive order under ss 231 and 241 of the SSMA that prevents the owners corporation taking legal action in a Court to recover unpaid levies arising from the said levy notice against the respective applicants, but forces the owners corporation to bring proceedings in the Tribunal under s 86 of the SSMA to recover the said monies. 1. We conclude that no amount was claimed or in dispute in respect of the application for interim orders. Rather, what was in dispute was whether the Owners Corporation should be restrained from commencing proceedings to recover payment of the Goodmans' and the Lockes' contributions to the special levy. The relief sought did not require a calculation of the contributions the Owners Corporation was potentially seeking to recover. We conclude from this that s 60 applies to the costs of the application for interim orders. Application for substantive orders 1. The application for substantive orders lodged by the Goodmans and the Lockes sought the following orders: 1. That the First Respondent [Strata Choice Pty Ltd] revoke a decision made by it on 30 November 2020 that contributions to a levy for $950,000 be payable on 19 January 2021, and issue notices of contributions for the levy payable by owners in shares which accord with the unit entitlements determined by order of the NSW Civil & Administrative Tribunal on 16 December 2020. 2. That the First Respondent procure the Second Respondent [the Owners Corporation] to amend the levy register, including charges for interest and recovery costs, for the owners' lots accordingly. 1. The application made it reasonably clear that the Goodmans and the Lockes did not dispute that the amount of $950,000 was required to repair and maintain the common property. Rather, what they disputed was the proportion of the levy they were required to pay. The Goodmans and the Lockes took the view that their contribution should be calculated in accordance with the unit entitlements determined by the Tribunal on 16 December 2020 and not the unit entitlements in force as at 30 November 2020, being the date on which the special levy was struck. 2. According to submissions lodged by the Joels dated 6 January 2023, the Goodmans and the Lockes lodged points of claim in accordance with procedural directions made by the Tribunal. The points of claim were not included in the Appeal Bundle filed by the appellant. However, extracts of the points of claim are set out in the Joels' 6 January 2023 submissions. The Goodmans and the Lockes have not disputed the accuracy of these extracts. In such circumstances, we accept that the Joels' submissions accurately set out the relevant parts of the Goodmans' and the Lockes' points of claim. 3. At [37] to [41] of the points of claim, the Goodmans and the Lockes stated: 37 The Applicants contend, for the purposes of s 87 of [the Strata Schemes Management] Act that the amount levied on 30 November 2020, being $950,000 was excessive as it was unreasonable to levy that amount and its quantum was excessive. In circumstances where an application to vary the lot owner unit entitlements was on foot and the striking of the levy would, if the application to vary unit entitlements was successful, result in the applicants having paid more than $150,000 in excess of their proper share towards maintenance of the common property. 38 The Tribunal should order that the amount of the levy be varied to $0.00 with a notation that in light of the determination of the application to vary unit entitlements it may be re-struck. 39 Alternatively the Applicants contend, for the purposes of s 87 of [the] Act, that the manner of payment of the amount of $950,000 as determined by the First Respondent is unreasonable, as it requires payment of contributions by owners in shares which NCAT has accepted is unreasonable, for the purposes of s 236(1)(a) of the Act and which NCAT ordered, for that reason, to be reallocated. 40 The Tribunal has authority under s 87 of the Act to order that contributions of a different amount be paid, or that contributions be paid in a different manner. That section empowers the Tribunal to order that contributions be paid by owners in accordance with the schedule of unit entitlements that the Tribunal has ordered apply. 41 The Tribunal should order, pursuant to s 87(2) of the Act, that the amount which the First Respondent has determined be levied on owners be payable by owners in shares proportional to the unit entitlements that the Tribunal has ordered apply. 1. In their points of claim the Goodmans and the Lockes in effect sought an order to be relieved from an obligation to pay a specified amount of money; that is, the difference between their contribution to the levy calculated under the previous unit entitlements and the revised unit entitlements. This was in circumstances where they were legally represented. We conclude that in seeking an order for relief from payment, the Goodmans and the Lockes. squarely placed an amount in dispute. 2. In relation to the difference between the contributions as calculated in accordance with the previous unit entitlements and those calculated in accordance with the revised unit entitlements, the Tribunal at first instance found that the difference in contributions ranged from $57,000 to $96,000: see the Tribunal's reasons for decisions in the application for substantive orders at [64]. This was not disputed in the appeal proceedings. Therefore, based on the relief sought by the Goodmans and the Lockes, the amount in dispute in the application for substantive orders exceeded $30,000. 3. We are accordingly satisfied that r 38 applies to the application for substantive orders. How should the costs discretion be exercised in the Tribunal proceedings? Application for interim orders 1. The Tribunal dismissed the application for interim orders. Relevantly, the Tribunal found that: 1. Urgent considerations did not warrant the making of an interim order; 2. While it was not clear how the Goodmans and the Lockes would be able to successfully argue that the Tribunal had the power to go behind a decision of the compulsory strata manager to strike a special levy and if so, how it was arguable that the unit entitlements at the time the decision to impose the levy was made did not apply, for the purpose of the interlocutory application, it accepted that there was a serious issue to be tried; and 3. The balance of convenience was not in favour of making the orders sought. 1. The appellant has not made any specific submissions as to why special circumstances warrant an order for costs in its favour in respect of the application for interim orders. As noted previously, the appellant, although a party to the proceedings in the Tribunal below, played no part in those proceedings. The appellant has not demonstrated that special circumstances warrant an order for costs of the application for interim orders in its favour. The appellant's application for costs of the application for interim orders is refused. 2. We are not satisfied that special circumstances warrant making an order for costs in favour of the Owners Corporation because the submissions made on behalf of the Owners Corporation do not establish special circumstances. While the Goodmans' and the Lockes' application for interim orders was unsuccessful, this does not of itself establish the existence of special circumstances. There is nothing out of the ordinary about an application for interim orders being unsuccessful because the applicant does not establish that urgent considerations warrant the making of the orders. The Owners Corporation's application for costs of the application for interim orders is refused. 3. The Joels argue that special circumstances warrant an order for costs of the application for interim orders because: 1. The application for interim orders was frivolous because the application did not meet the urgency requirements; and 2. The application had no tenable basis in fact or law. 1. We are not satisfied that the application for interim orders meets the standard required for an application to be considered frivolous, or for a finding that it had no tenable basis in fact or law. The Tribunal made no such finding in dismissing the application for interim orders and it is not a conclusion that we are prepared to reach in the context of this costs application. 2. In addition, the interim order sought was an order that could only be made against the Owners Corporation. The Joels were at all relevant times legally represented and would presumably have been advised of this. The Joels were under no obligation to participate in the proceedings seeking interim orders. Given that the Owners Corporation – then under compulsory management – was also legally represented, it was open to the Joels to leave defence of the proceedings to the Owners Corporation. 3. We conclude that the appropriate exercise of the costs discretion is for the parties to be ordered to pay their own costs. We note that we would have exercised the costs discretion in the same manner even if it had been argued and we had found that the application for interim orders and the application for substantive orders were the same proceedings. This is because s 104 of the SSM Act will have a practical effect on who is liable to pay the Owners Corporation's costs. We have dealt with this issue below. Substantive proceedings 1. We have found that r 38 applies to the application for substantive orders. As noted above, the starting position where r 38 applies is that costs follow the event. This is subject to any disentitling conduct by the costs applicant. 2. We are not satisfied that the costs discretion should be exercised in favour of the appellant for the following reasons. 3. The appellant chose not to participate in the proceedings in the Tribunal below. Costs are awarded to indemnify a successful party in litigation, not by way of punishment of an unsuccessful party (Latoudis v Casey (1990) 170 CLR 534 (Latoudis) per McHugh J at 567 and Oshlack v Richmond River Council (1998) 193 CLR 72 (Oshlack) per McHugh J at 97). In proceedings in which a party does not participate, such as this, there is nothing in respect of which the "successful" party has to be indemnified for. 4. Further, we note that the appellant is critical of the other parties in the proceedings for not bringing to the attention of the Tribunal the Appeal Panel's decision in The Owners – Strata Plan No 76830 v Byron Moon Pty Limited [2020] NSWCATAP 186 (Byron Moon). In Byron Moon, which was published more than 12 months before the Tribunal's decision at first instance, the Appeal Panel specifically found that the Tribunal did not have the power to make an order of the kind sought by the Goodmans and the Lockes either under s 87 or s 232 of the SSM Act. In its submissions in the appeal proceedings, the appellant cites this decision and states: [The] Tribunal sadly simply does not appear to have been referred to the Byron Moon decision by either the [Goodmans' and the Lockes'] counsel or (surprisingly) by any of those appearing for the [strata manager, the Owners Corporation or the Joels]. 1. All parties, including the appellant, had an obligation to assist the Tribunal to resolve the real issues in dispute in the proceedings in a manner which was just, quick and cheap: s 36(3) NCAT Act. Had the appellant participated in the proceedings in the Tribunal below and complied with this obligation, it could have brought the Byron Moon decision to the attention of the Tribunal members and other parties to the proceedings. Had it done so, it is possible that a different outcome at first instance would have been arrived at. 2. The Joels took an active role in the proceedings in the Tribunal below and were legally represented. While it is unfortunate that they did not refer the Tribunal to the Byron Moon decision, there is nothing in the material before us which leads us to conclude that the Joels' conduct of the proceedings precludes them from being awarded costs. We are satisfied that an order for costs of the application for substantive orders should be made favour of the Joels. 3. As for the Owners Corporation's costs application, from the Tribunal's reasons for decision in respect of the application for substantive orders, we conclude that the Owners Corporation submitted that the Tribunal had no power to make orders under s 87 or s 232, which indicates that it properly engaged with the Tribunal's power to make the orders sought even if it did not refer the Tribunal to the Byron Moon decision. There is nothing in the submissions provided to support a conclusion that the Owners Corporation's conduct of the proceedings disentitles it to an order for costs. We have therefore made an order for costs in favour of the Owners Corporation. Does r 38 or s 60 apply to the appeal proceedings? 1. We have found that r 38 applies in respect of the application for substantive orders. The operation of r 38A means that r 38 applies in the appeal proceedings. However, the appeal proceedings are separate proceedings for the purpose of the application of the rule. Therefore, there must be an amount greater than $30,000 claimed or in dispute in the appeal proceedings for an award of costs to be made in the absence of special circumstances warranting such an award. If that is not the case, s 60 is not displaced and costs may only be awarded if special circumstances warrant an award of costs: see Allen at [38] and [42]. 2. The appellant's ground of appeal were: 1. Section 87 of the SSM Act confers no power to make order 1 made by the Tribunal. 2. Section 232 of the SSM Act has not been enlivened to confer power on the Tribunal to make order 1. 3. Order 1 made by the Tribunal is wrong in law, being contrary to express provisions of the SSM Act. 4. The Tribunal took into account irrelevant considerations. 5. The Tribunal failed to take into account relevant considerations. 1. As noted in the reasons for decision in the substantive appeal proceedings, we considered that the appellant's submissions were lengthy, discursive and because of this at times difficult to follow. From the grounds of appeal, we determined that the appellant was submitting that: 1. The Tribunal has no jurisdiction to vary a contribution to a levy under s 87 of the SSM Act; 2. The Tribunal has no jurisdiction to vary a contribution under s 232 of the SSM Act; 3. If the Tribunal does have jurisdiction to make an order either under s 87 or under s 232, the discretion to do so miscarried. 1. The appellant's representative confirmed that these were the issues to be determined on the appeal. 2. In our view, it is clear from the grounds of appeal that no amount was claimed or in dispute in the appeal proceedings. Rather, what was in dispute was: 1. The Tribunal's power to grant the relief sought to the Goodmans and the Lockes under s 87 and/or s 232 of the SSM Act; and 2. If the Tribunal had the power to grant the relief sought, whether the discretion to do so had miscarried. 1. The fact that the Goodmans' and the Lockes' underlying application was dismissed as a consequence of the successful appeal does not mean that an amount was claimed or in dispute in the appeal proceedings. Section 60 is therefore not displaced. Costs can only be awarded if special circumstances warrant such an order. How should the costs discretion be exercised in the appeal proceedings? 1. From [9] of the appellant's submission filed on 3 January 2023, we understand the appellant to submit that the relevant special circumstances are: 1. The nature and complexity of the proceedings; 2. The costs applicants would not be properly compensated without an order for costs, in circumstances where the proceedings had significant financial consequences; 3. The appellant made other substantial submissions including as to whether the Tribunal's discretion had miscarried and whether leave to appeal should be granted, even though the Appeal Panel did not need to deal with these submissions; 4. The costs applicants did not engage in any disentitling conduct. 1. The Joels do not make any specific submissions in respect of special circumstances operating in the appeal proceedings. 2. We are not satisfied that special circumstances warrant an order for costs of the appeal proceedings in favour of any of the costs applicants. 3. First, the appeal proceedings were concerned with issues of statutory interpretation. Once the appellant's grounds of appeal and the issues in the proceedings were clarified, our task was limited to one of statutory interpretation. Statutory interpretation is a relatively common feature of proceedings involving the SSM Act, both at first instance and on appeal. The appeal proceedings, while not straightforward, were not particularly complex. To the extent that they had a degree of complexity, this arose from the history of the various proceedings before the Tribunal at first instance, and not from the nature or inherent complexity of the appeal proceedings. Overall, neither the nature of the appeal proceedings, nor their degree of complexity are such as to constitute special circumstances warranting an order for costs. 4. Second, the fact that the outcome of the appeal proceedings had significant financial consequences for the appellant (and, for that matter, for the other lot owners), does not constitute special circumstances. That litigation will have financial consequences for those involved is a common incident of litigation. It is not out of the ordinary. 5. Third, the appellant's claim that it did not engage in "disentitling conduct" does not constitute special circumstances. The lack of disentitling conduct would be relevant if r 38 applied to costs of the appeal proceedings and would also be relevant to the exercise of the discretion if special circumstances were established. However, the appellant's conduct of the appeal proceedings is not of itself a special circumstance. 6. Overall, we conclude that the appellant has not established that special circumstances warrant an order for costs in its favour. The appellant has not made any specific submissions in respect of the Owners Corporation's application for costs of the appeal. In any event, the material before us does not lead to a conclusion that special circumstances warrant an order for costs in favour of the Owners Corporation. Moreover, we note that the Owners Corporation played no part in the appeal proceedings, which weighs against there being special circumstances warranting an order for costs of the appeal being made in favour of the Owners Corporation. 7. In respect of the Joels' application for costs of the appeal, the Joels have made no submissions concerning special circumstances warranting an order for costs of the appeal proceedings. We are not satisfied that special circumstances warrant an order for costs in their favour. 8. The applications for costs of the appeal proceedings are refused. Section 104 of the SSM Act 1. The appellant, the Owners Corporation and the Joels are the successful parties in the proceedings in the Tribunal below (both in respect of the application for interim orders and the application for substantive orders). The Goodmans and the Lockes are the unsuccessful parties. 2. Section 104 of the SSM Act provides: 104 Restrictions on payment of expenses incurred in Tribunal proceedings (1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it for an order by the Tribunal, levy a contribution on another party who is successful in the proceedings. (2) An owners corporation that is unsuccessful in proceedings brought by or against it for an order by the Tribunal cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund, but may make a levy for the purpose. (3) In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal. 1. The effect of s 104(1) is that the Owners Corporation cannot, in respect of its costs and expenses of the proceedings in the Tribunal below or in relation to the appeal proceedings, levy a contribution on the appellant or the Joels. As the Goodmans and the Lockes are the unsuccessful parties in the proceedings, they are the only lot owners on whom the Owners Corporation can levy a contribution to pay its costs and expenses. Conclusion 1. We conclude that the proper exercise of the costs discretion is that the Goodmans and the Lockes should pay the costs of the Owners Corporation and the Joels in respect of the application for substantive orders (SC 21/18734), on the ordinary basis, as agreed or assessed. 2. The applications for costs are otherwise dismissed. 3. As noted above, for the purposes of s 104 of the SSM Act, the Owners Corporation, the appellant and the Joels are the successful parties in both the Tribunal proceedings and the appeal proceedings. The practical effect of this is that while the appellant and the Joels will pay their own costs, they are not obliged to contribute to the Owners Corporation's costs. The Owners Corporation can only levy a contribution in respect of its costs and expenses on the unsuccessful parties; that is, on the Goodmans and the Lockes. Orders 1. A hearing is dispensed with pursuant to s 50 (2) of the Civil and Administrative Tribunal Act 2013. 2. Jonathan Mark Goodman and Barbara Beth Goodman and William Theo Locke and Nicole Jeanne Locke are to pay the costs of The Owners – Strata Plan No. 15482 and Michael Braham Joel and Alexandra Joel in respect of the application for substantive orders (SC 21/18734), on the ordinary basis, as agreed or assessed. 3. The applications for costs are otherwise dismissed. 4. The Appeal Panel notes that in respect of the costs of the Owners Corporation, the appellant, the Owners Corporation and the fifth respondent are the successful parties in the Tribunal and appeal proceedings. ********** 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: 30 May 2023