Civil and Administrative Tribunal New South Wales Medium Neutral Citation: BNK Café Restaurant Pty Ltd v The Owners – Strata Plan No 33676 (No 2) [2023] NSWCATAP 249 Hearing dates: On the papers Date of orders: 31 August 2023 Decision date: 31 August 2023 Jurisdiction: Appeal Panel Before: S Thode, Principal Member M Deane, Senior Member Decision: 1. A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013. 2. The application for an award of costs of the appeal is dismissed with the intent that each party bear its own costs. Catchwords: COSTS– costs of appeal – appellant's position not advanced as a result of successful appeal – s 60 of the Civil and Administrative Tribunal Act 2013 – no special circumstances – application for costs of the appeal dismissed. Legislation Cited: Civil and Administrative Tribunal Act 2013 Civil and Administrative Tribunal Rules 2014 Strata Schemes Management Act 2015 Cases Cited: Cripps v G & M Mawson [2006] NSWCA 84 Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 ZHH v ZHI (No 2) Texts Cited: None Category: Principal judgment Parties: BNK Café Restaurant Pty Ltd (Appellant) The Owners – Strata Plan No 33676 (Respondent) Representation: Solicitors W van Ede Solicitor JS Mueller & Co (Appellant) (respondent in the costs application) J Bannerman Solicitor Bannerman Lawyers (Respondent) (applicant in the costs application) File Number(s): 2022/00346277 Publication restriction: None Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: N/A Date of Decision: 24 October 2022 Before: C Paull Senior Member File Number(s): SC 21/51371 SC 22/18081 ReaSONS FOR DECISION Background 1. On 16 June 2023 we dismissed the appellant's appeal against two decisions of the Tribunal in SC 22/18081 and SC 21/51371. Senior Member Paull dismissed an application by the appellant to retrospectively amend a by-law to authorise extensive electrical works carried out by the appellant on common and lot property. In proceedings brought by the respondent the Tribunal ordered the appellant to remove the electrical works and to reinstate common property. 2. The appellant appealed against both decisions. 3. In dismissing both appeals we made a preliminary decision that each party should pay its own costs. In the event that the parties sought costs orders the parties were directed to provide submissions. Material before the Appeal Panel: 1. In considering the issue of costs of the appeal we have received the following materials provided by the parties. 1. From the respondents: 1. the submissions dated 23 June 2023; and 2. submissions in reply dated 2 August 2023. 1. From the appellant – written submissions dated 24 July 2023. Should the costs of the appeal being determined without a hearing? 1. Subsections 50 (2) to (4) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) provide: (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. In this case the parties were asked to indicate their views as whether the costs of the appeal can be decided on the papers. The parties agreed that the issue of costs could be dealt with on the papers. Having reviewed all the materials we are satisfied that the costs of the appeal can be readily determined in the absence of the parties by considering the materials lodged by them. We therefore dispense with a hearing. Costs – the applicable law 1. Costs of an appeal are to be determined in accordance with s 60 of the NCAT Act and r 38A of the NCAT Rules. 2. Section 60 provides: (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. Rule 38A (with r 38) provides an exception to section to s 60 with respect to certain matters in the Consumer and Commercial Division. They do not apply in the present case. Section 60 does. 2. The Tribunal's power to award costs is discretionary. The respondent's submissions regarding costs of the appeal 1. In short, the respondent contends that the appeal was hopeless because: 1. The appeal panel confirmed that the electrical works were not ancillary works as defined under the special by law and that therefore the works were never authorised (see submissions page 3 paragraph 10). 2. The Appeal Panel found that the appellant's expert report was not relevant to the ultimate issue of whether electrical works were authorised under the by law; 3. The Appeal Panel found that the assertion that the owners corporation provided no reasons for its refusal to amend the by-law was incorrect. 4. The Appeal Panel concluded that there was no error on a question of law or an error for which the leave of the Appeal Panel was required. 5. The respondent says that it wrote to the appellant on 23 January 2023 demanding that the appeal be withdrawn immediately because it "failed to identify an error of law or an error of fact for which could form a basis for an appeal of the decision". Consideration 1. We do not think it plain that the initial application seeking the retrospective approval of the owners corporation to amend a special by law was made unreasonably, or that the conduct of the proceedings was unreasonable and for the reasons that follow we have decided to dismiss the application for cost. 2. The Appeal Panel of the Tribunal has considered the applicable legal principles under ss 60 (1) and (2) of the NCAT Act on many occasions. 3. The principles in respect of costs orders under s 60 were summarised in The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd (No 2) [2020] NSWCATAP 273 at [6]-[15] (B & G Trading (No 2)) as follows: 6. The general rule set out in s 60(1) was (citing Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]): '… 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].' 7. In Feng v OzWood (Australia) Pty Ltd [2020] NSWCATAP 42 the Appeal Panel said, at [8], that the discretion to award costs had to be exercised judicially: '...having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]–[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (No 2) [2016] NSWCATAP 168 at [16].)' 8. Section 60(2) says that the Appeal Panel may award costs to a party 'only if' satisfied there are special circumstances warranting an award of costs. 9. Section 60(3) sets out a non-exclusionary list of factors to which an Appeal Panel may have regard in determining whether special circumstances warranting an award of costs exist. 10. 'Special circumstances' are circumstances that are out of the ordinary, but need not be those which are exceptional or extraordinary: Cripps v G & M Dawson Pty Ltd [2006] NSWCA 81 at [60] (Santow J); Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [32]; Commissioner for Fair Trading v Edward Lees Imports Pty Ltd (No 2) [2019] NSWCATAP 222 at [8]; Edwards v Commissioner for Fair Trading, Department of Customer Service (Costs) [2019] NSWCATAP 249 at [9]; Youssef v NSW Legal Services Commissioner (Costs) [2020] NSWCATOD 115 at [107]. 11. However, it does not follow that a costs order should be made simply because one or more of the factors in s 60(3) are made out. 12. Even if satisfied that there are special circumstances, the Appeal Panel must further be satisfied that they are circumstances 'warranting an award of costs' – Fitzpatrick Investments Pty Ltd v Chief Commissioner of State Revenue [2015] NSWCATAD 103 at [21]; Youssef at [108]. 13. The exercise of the 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': BPU v New South Wales Trustee and Guardian (Costs) [2016] NSWCATAP 87 at [9]; Obieta v Australian College of Professionals Pty Ltd (2014) NSWCATAP 38 at [81]; Khalaf v Commissioner of Police [2019] NSWCATOD 178 at [29]; Alliance Motor Auctions Pty Ltd v Saman [2018] NSWCATAP 137 at [35]. 14. He who asserts must prove, and so the party seeking the costs order bears the onus of proving that special circumstances exist - Styles v Wollondilly Shire Council [2017] NSWCATAP 108 at [5] under the heading 'Costs'. 15. 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 [2019J NSWCATAP 49 at [15]. 1. The respondent submits that there are sufficient 'special circumstances' to make a costs order in its favour because: 1. the appellant conducted the appeal proceedings in way that unnecessarily disadvantaged the owners corporation because there were no grounds for the appeal "causing the owners corporation to incur unnecessary costs to defend an appeal which had absolutely no prospects of success" (s60(3)(a) and (c)); 2. the proceedings were frivolous or vexatious on the basis that there were no grounds for the appeal (s60(3)(e)); 3. The works undertaken by the appellant were not authorised, were of a significant nature and intruded on another lot. Consequently, the owners corporation should be compensated for its costs in trying to comply with its strict duty under s 106(1) of the Strata Schemes Management Act 2015 (SSMA) (s60(3)(g)) (see respondent's submissions [21] – [35]). 1. The appellant submitted that the respondent's submissions did not show any basis for special circumstances justifying an award of costs and that each party should bear its own costs in the appeal. 2. In reply, the respondent submitted that the appellant had misunderstood the submissions. 3. In respect of the appeal, we are not satisfied that appeal was so weak, lacking in merit or unarguable that it falls into the category of 'special circumstances.' Further, the appeal was not conducted in a manner by the appellant that caused delay or disadvantage to the owners corporation. The appeal proceedings were not of great legal or factual complexity and only involved the interpretation of a singular special by law. The appellant's arguments in support of the appeal were not misconceived or frivolous or vexatious. This was not an appeal that was unusual or out of the ordinary. 4. In our view the appeal, while dismissed, was not so hopeless that it warrants an order for costs. The appellant was entitled to test the decision of Senior Member Paull, particular in light of the fact the issue of the poorly drafted by-law remains unresolved. The appellant was entitled to have the by law interpreted by the Tribunal and reviewed by the Appeal Panel. It was not unreasonable of the appellant to seek appellate review in circumstances where the appellant's options to connect to a reasonable electricity supply remain costly and limited and it was open to appellant to seek orders that the works it undertook were carried out in accordance with special by law 12. 5. In light of the limited options available to the appellant to provide electricity to its restaurant it was not unreasonable to seek review under s149 of the SSMA and to test the proposition that the owners corporation unreasonably refused to amend the by law in accordance with the appellant's proposal of 25 January 2021. The application was unsuccessful. In respect of the appeal, we are of the view it was a reasonable step to take to seek to review the Tribunal's decision, as the other options proposed by the respondent's expert such as connecting low voltage power supply directly to the street, direct connection to an existing site substation, constructing a dedicated substation for lot 33, are all complex options that will prove costly and are arguably subject to council approval. In light of the options proposed by the respondent it was not unreasonable to seek review of the Tribunal's interpretation of the by-law by the Appeal Panel. 6. The mere fact that the appeal was unsuccessful is not determinative of special circumstances. There are no special circumstances demonstrated by the respondent which would justify us departing from the usual position, that each party bear their own costs of the appeal. 7. The "special circumstances" in s 60 of the NCAT Act that are required to justify a costs order when rules 38 and 38A do not apply means circumstances that are out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11]. Even where special circumstances are found to exist, there remains a discretion whether, and in what form, a costs order should be made. 8. The expression "special circumstances" was considered by the Court of Appeal in the context of section 88(1) of the Administrative Decisions Tribunal Act 1997 (NSW). Santow JA said in Cripps v G & M Mawson [2006] NSWCA 84 at [60]: "I consider that the Tribunal was in error in failing to conclude that special circumstances apply here. For this purpose it suffices that the circumstances are out of the ordinary. They do not have to be extraordinary or exceptional." 1. In that case the Court of Appeal awarded costs on the basis that the conduct of the appellant was out of the ordinary and grossly unreasonable. There is no such egregious conduct on the part of the appellant in this case. 2. We are not satisfied that any of the criteria in s 60(3) are established that warrants a costs order being made in the appeal. We have found that the respondent did not unreasonably refuse the making of an amendment of the by law and confirmed the order for the appellant to remove and reinstate the common property. Notwithstanding these findings, we are not satisfied that the appeal could be described as being untenable, frivolous, vexatious nor misconceived as required by ss 60(3)(c) or (e). 3. There is nothing in the parties' conduct of the appeal, nor the proceedings below, which suggests that it was conducted in a manner that would constitute special circumstances. We are not satisfied that the appellant was responsible for unreasonably prolonging the time taken to complete the proceedings. 4. Where the appellant and the respondent were both legally represented and have to incur costs of litigation, that, in itself, does not create a special circumstance. This is because there was nothing particularly complex about the appeal, which, caused the parties to retain legal representation (see ZHH v ZHI (No 2) [2018] NSWCATAP 193 at [5]). 5. There are no special circumstances meriting an award of costs under s 60. This means that each party is to pay their own costs of the appeal. Orders 1. The Appeal Panel makes the following order with respect to costs: 1. A hearing on costs is dispensed with in accordance with s 50(2) of the Civil and Administrative Tribunal Act 2013. 2. The application for an award of costs of the appeal is dismissed with the intent that each party bear its own costs. ********* 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: 31 August 2023