Civil and Administrative Tribunal (NCAT) – Who pays the costs?

09/02/2018

One would have thought that the rules relating to costs would be simple.  Unfortunately they are not.  Each commentary that we have reviewed has dealt with costs without consideration of the whole of the provisions relating to costs.  Assumptions have been made which do not always apply.

Costs are a critical element in any proceedings that you may wish to bring or that are brought against you.  It is critical to understand the cost consequences of your actions or inactions.  Thereafter you can then consider what actions should be taken in relation to proceedings which you may wish to bring or proceedings commenced against you.

Most commentary in relation to costs refers to Section 60 of the Civil and Administrative Tribunal Act 2013.  Pursuant to Section 60:

1.        Each party to the proceeds in the Tribunal is to pay their own costs.

2.        However the Tribunal may award costs in relation to proceedings only if it is satisfied that there are special circumstances warranting an award for costs.

3.        There are some indicators as to what matters the Tribunal may have regard to when determining whether there are special circumstances warranting an award for costs.

The above of itself is not objective in the sense that consequence of action or inaction cannot be ascertained without proper consideration of all matters.

Further despite Section 60 pursuant to the Civil and Administrative Tribunal Rules 2014 (Rule 38) there are separate rules which apply to proceedings in the Consumer and Commercial Division of the Tribunal for which costs may be awarded in proceedings where no special circumstances exist if either:

i.         In some circumstances the amount claimed is between $10,000.00 and $30,000.00 and the Tribunal orders pursuant to Schedule 4 Clause 10.2; or

ii.        If the amount claimed is more than $30,000.00.

The Consumer and Commercial Division of NCAT deal with and hear matters amongst other matters, relating to:

1.        Strata Schemes Management Act 2015.

2.        Building claims under the Home Building Act.

In those circumstances if the claim is over $30,000.00 then the “successful party” usually receives an order that the unsuccessful party pay the “successful party’s” costs.

“What is a “successful” outcome?  We have been involved in 2 cases in which the issues were very similar, offers were made in very similar terms, the outcome was very similar, however in one set of the proceedings the Owner was ordered to pay the costs of the Builder and in the other the Builder was ordered to pay the costs of the Owner.  In one of the proceedings the Tribunal considered that the Owner was successful and in the other the Tribunal (with a different Member) considered that the Builder was successful.

Often where there is contest between two discordant parties the losing party decides to proceed with an internal appeal.

Costs in an appeal will depend upon when the appeal was lodged and the outcome of the appeal.

For appeals lodged after 1 January 2016 similar principles apply to the appeal hearing as applied to the original hearing.  The Appeal Panel can vary the order for costs in the original proceedings.

The problem is that there are serious questions of costs.  Accordingly, if the appeal is successful the costs ordered for the original case and the appeal may be in favour of the Appellant rather than the Respondent.  The consequences of the change in the cost decision can be severe, devastating and financially crippling.

There are other matters that may affect the costs order made by the Tribunal including offers made and rejected by either party or in some cases, the conduct of the party.

If you are unsure as to the “costs factor” in a potential claim and how it can impact on your case or you have any queries in relation the ambiguous question of “who is liable for costs” please do not hesitate to contact Richard Watson our experienced Strata Lawyer or his assistance Shereen Da Gloria to discuss your concerns.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 02 9221 6011.