Introduction

Recovering legal costs in a strata dispute before the NSW Civil and Administrative Tribunal (NCAT) is rarely straightforward. The general rule is that each party pays their own costs, making a successful costs order an uncommon and significant outcome.

This guide explains how PBL Law Group secured a full costs order for a lot owner in a recent NCAT appeal, illustrating the legal principles and practical steps involved. For lot owners and strata committees, understanding when and how costs can be awarded is essential to managing the risks of strata litigation.

The General Rule in NCAT: Why Each Party Usually Pays Their Own Costs

In the New South Wales Civil and Administrative Tribunal, the standard legal framework for costs follows a straightforward principle. The general rule is that each party involved in a proceeding is responsible for paying their own legal costs, regardless of the outcome. This means that even if you are successful in your strata dispute, you will typically not be able to recover your legal expenses from the other party.

This principle is established under section 60(1) of the Civil and Administrative Tribunal Act 2013 (NSW). The primary purpose of this rule is to:

• Promote access to justice for all parties
• Ensure that NCAT remains a low-cost jurisdiction for resolving disputes

By having each party bear their own costs, the financial risks of bringing a claim are reduced. This approach encourages the resolution of strata issues without the fear of facing a large legal bill from the opposing side if the case is unsuccessful.

The Exception Proving Special Circumstances for a Costs Order

What are Special Circumstances & The Factors NCAT Considers

While the general rule is that each party pays their own costs, section 60(2) of the Civil and Administrative Tribunal Act 2013 (NSW) provides an important exception. NCAT has the power to award legal costs to a successful party if it is satisfied that “special circumstances” exist that warrant such an order. The party seeking the costs order bears the responsibility of proving that these circumstances are present.

The term “special circumstances” refers to situations that are out of the ordinary, though they do not need to be exceptional or extraordinary. To determine if special circumstances exist, section 60(3) of the Civil and Administrative Tribunal Act 2013 (NSW) provides a list of factors that the Tribunal may take into account, including:

Factor	Description
Unnecessary Disadvantage	Whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party.
Unreasonable Delays	Whether a party has been responsible for unreasonably prolonging the time taken to complete the proceedings.
Strength of Claims	The relative strengths of the claims made by each party, including whether a claim has no tenable basis in fact or law.
Nature and Complexity	The nature and complexity of the proceedings themselves.
Lacking in Substance	Whether the proceedings were frivolous, vexatious, or otherwise misconceived or lacking in substance.
Failure to Comply with Duty	Whether a party has refused or failed to comply with their duty to cooperate with the Tribunal and the other party.
Other Relevant Matters	Any other matter that the Tribunal considers relevant to the case.

By considering these factors, the Tribunal determines whether the circumstances are sufficiently out of the ordinary to justify a costs order.

Case Study: The Owners Strata Plan No 79633 v Graorovska (No 2)

Why the Owners Corporation Appeal Was Manifestly Weak & Lacking in Substance

This case study involves PBL Law Group’s successful representation of a lot owner, Ms. Violeta Graorovska. After Ms. Graorovska won her initial case, the owners corporation lodged an appeal against the Tribunal’s orders, which required it to perform works on the common property.

The appeal was not based on a credible legal argument but instead relied on serious and unfounded allegations. Specifically, the owners corporation claimed that:

• The Senior Member who conducted the original hearing had denied it procedural fairness through excessive judicial intervention
• The Senior Member was biased against them
• The solicitor for the lot owner had improperly influenced her evidence

The NCAT Appeal Panel, however, found no merit in any of these claims. In its decision, the Appeal Panel determined that the grounds for the appeal were “manifestly weak” and “lacked substance.” It clearly stated there was “no substance to any such allegations” and emphasised that such serious claims of procedural unfairness and bias should only be made if there is a proper basis for them.

Because the appeal was so clearly and obviously weak, it constituted a special circumstance under the Civil and Administrative Tribunal Act 2013 (NSW), justifying a departure from the usual rule that each party pays their own costs.

The Result: How PBL Secured a Full Costs Order for Our Client

Based on the manifestly weak nature of the appeal, PBL Law Group successfully argued that special circumstances existed, warranting an award of costs for our client. The NCAT Appeal Panel was persuaded by these arguments and ordered the owners corporation to pay Ms. Graorovska’s legal costs for the appeal proceedings.

The final order provides clear proof of this successful outcome. The Appeal Panel ordered:

“The Owners-Strata Plan No 79633 is to pay the costs of Violeta Graorovska in Appeal Panel proceedings AP 2021/00338769 and AP 2021/00365972 as agreed or assessed on the ordinary basis as set out in the legal costs legislation (as defined in section 3A of the Legal Profession Uniform Law Application Act 2014 (NSW)).”

This result demonstrates two important points:

• Even though costs are not typically awarded in NCAT, pursuing a meritless appeal can expose an owners corporation to a significant financial penalty
• Skilled legal representation is crucial in holding an opposing party accountable for unreasonable conduct

Key Lessons for Lot Owners & Strata Committees

Lessons for Lot Owners

This case provides a clear message for lot owners. If an owners corporation acts unreasonably, prolongs a dispute without merit, and forces unnecessary legal expense, there is a mechanism to hold them accountable. Lot owners have a pathway to recover legal costs when faced with such conduct from an opposing party.

Lessons for Strata Committees

For strata committees, this outcome serves as a cautionary tale. Pursuing weak or vexatious litigation, particularly appealing an NCAT decision that lacks substance, can expose the entire strata scheme to significant financial liability. This can quickly turn a dispute into a costly defeat for the owners corporation.

What Constitutes “Special Circumstances” for a Costs Order

The NCAT Appeal Panel’s decision highlights that certain actions can be considered “special circumstances” justifying a costs order. These actions include:

Action Constituting “Special Circumstances”	Description
Pursuing weak claims	Advancing an appeal or claim that has no tenable basis in fact or law is a key factor.
Making serious, unfounded allegations	Claiming procedural unfairness or bias against a Tribunal Member without a proper basis is viewed dimly by the Appeal Panel.
Causing unnecessary disadvantage	Forcing a lot owner to incur significant legal costs to defend a decision they have already rightfully won can be deemed unreasonable.

Ultimately, the case demonstrates that while each party is usually ordered to pay their own costs in NCAT, lodging a meritless appeal can lead to a significant financial penalty. Both lot owners and strata committees should seek sound legal advice before commencing or defending an appeal to understand the potential risks.

How PBL Law Group Can Help You Navigate NCAT Costs

Navigating the financial risks of a strata dispute in NCAT requires more than just legal knowledge; it demands strategic expertise. At PBL Law Group, we offer specialised assistance in managing both the legal and financial aspects of your strata disputes.

Our expertise includes:

• Identifying when an opposing party’s conduct meets the threshold for “special circumstances”
• Holding unreasonable parties accountable for their actions
• Protecting clients from unnecessary legal expenses
• Successfully representing lot owners, as demonstrated in the Graorovska case

Whether you are a lot owner facing a meritless claim from your owners corporation or a strata committee wanting to avoid the financial pitfalls of weak litigation, our team provides the guidance you need. We excel not only in winning the substantive issues in strata disputes but also in strategically managing the financial risks involved.

If you are dealing with an unreasonable opponent, contact PBL Law Group to discuss how we can protect your interests and pursue a costs order when the circumstances justify it.

Understanding “Special Circumstances” for NCAT Costs Orders

The Legal Factor (s 60(3) NCAT Act)	How it Applied in the Graorovska Case	PBL’s Strategic Insight for Your Case
(c) Relative strengths of the claims… no tenable basis in fact or law.	The Appeal Panel found the OC’s appeal grounds were “clearly and obviously weak”.¹	If the other party is pursuing an argument that has no real legal merit, a case can be built that their claim lacks a tenable basis, strengthening the position for a costs application.
(e) Proceedings were frivolous or vexatious or otherwise… lacking in substance.	The Panel concluded that because the grounds were “manifestly weak,” they “lacked substance”.¹	The assessment goes beyond legal arguments to overall conduct. Pursuing a hopeless case can be grounds for a costs order, and the Tribunal must be made aware of this conduct.
(a) Conduct that unnecessarily disadvantaged another party.	The OC’s weak appeal forced the lot owner (PBL’s client) to incur significant legal costs to defend a decision she had already rightfully won.	Any conduct by the opposing party that causes unnecessary delay or expense should be meticulously documented, as this can be used to support a claim for “special circumstances.”
(g) Any other matter the Tribunal considers relevant.	The OC made “serious allegations” against the Tribunal Member and PBL’s solicitor without a proper basis for doing so.¹	Making unfounded and serious allegations is viewed dimly by the Tribunal. Maintaining a reasonable and evidence-based approach strengthens a client’s position if the other side acts improperly.

Conclusion

While each party in an NCAT strata dispute is generally responsible for their own legal costs, the Graorovska case study demonstrates that a costs order can be secured when an opposing party’s unreasonable conduct, such as pursuing a meritless appeal, amounts to special circumstances. This outcome highlights the importance of understanding the legal framework and the potential for recovering expenses with skilled legal representation.

Managing the financial risks of a strata dispute requires strategic expertise, especially when faced with unreasonable opposition. For specialised assistance in managing your strata dispute and pursuing a costs order where circumstances warrant, contact PBL Law Group’s expert strata lawyers today to protect your interests.

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