No Strata Mediation Costs For You

The Owners – Strata Plan No 21563 v Rutherford [2023] NSWCATAP 326

Quick Read

This 2023 decision by the NCAT Appeal Panel is the end of about a dispute in a Marrickville strata title building about damages for rent losses and legal costs payable to a strata owner for water entry into their strata lot. An earlier NCAT decision for damages under s 106(5) included the strata owner’s legal costs of mediation [which is compulsory] but the strata building objected saying the r 60 forced parties to pay their own mediation costs. So, the issue was whether mediation costs were excluded from s 106(5) damages and/or from s 60 costs orders. After considering the costs provisions under strata and other laws, how legal costs were treated in different situations as well as the NSW Supreme Court decisions in Fligg v The Owners Strata Plan 53457 and Nicita v Owners of Strata Plan 64837], the NCAT Appeal Panel decided that that although some pre or extra litigation costs [like for mediation] could be recovered as damages depending on how they arose and were characterised, mediation is a necessary pre requisite of an NCAT application so the costs are incidental to the proceedings [not damages] and r 60 makes them unrecoverable. So, it reduced the amount payable by the strata building by the amount of the mediation costs. The decision is legally technical but practically important for NSW strata stakeholders who end up at NCAT since it excludes their costs of dealing with mandatory mediation from any NCAT damages or costs orders. So, everyone mediates at their own risk and cost.

Implications

There’s a difference between a strata owner’s legal costs to deal with strata building duty breach and legal costs that are incidental to conducting litigation about it.
Sometime legal costs can be recovered as damages under s 106{5) as happened in Fligg’s Case and Lipman’s Case and in other situations.
S 60 also has a wide definition for legal costs orders in relation to NCAT applications.
But r 60 about strata mediation says that each party pay must their own costs of mediation.
The NSW Supreme Court didn’t consider r 60 and pre litigation mediation costs in Fligg’s Case and Lipman’s Case.

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Full Report & Case Details

textThis 2023 decision by the NCAT Appeal Panel is the end of about a dispute in a Marrickville strata title building about damages for rent losses and legal costs payable to a strata owner for water entry into their strata lot.

In an earlier case NCAT ordered the strata building to pay damages under section 106(5) of the Strata Schemes Management Act 2015 and legal costs under section 60 of the Civil and Administrative Tribunal Act 2013 to the strata owner.

But a new issue arose after that decision about the legal costs. That’s because the legal costs claimed by the strata owner included costs for the mediation conducted by the NSW Office of Fair Trading in this dispute and the strata building argued that they were pre-litigation costs that were not recoverable. Those costs totalled $3,856 and were described as pre litigation legal advice.

Before anyone can make most NCAT applications, they must attempt mediation of the dispute under section 227 of the Strata Schemes Management Act 2015 so this is a necessary step. And regulation 60 of the Strata Schemes Management Regulation 2016 says that the parties to a mediation are to pay their own costs.

The primary issues in the case were whether regulation 60 of the Strata Schemes Management Regulation 2016 meant that mediation costs could not be included either as damages under section 106(5) of the Strata Schemes Management Act 2015 or as costs under section 60 of the Civil and Administrative Tribunal Act 2013. A secondary issue arose about how to characterise different kinds of legal costs.

In making its decision the NCAT Appeal Panel reviewed the strata and NCAT laws and the NSW Supreme Court decisions in [Fligg v The Owners Strata Plan 53457 [2012] NSWSC 230 and Nicita v Owners of Strata Plan 64837 [2010] NSWSC 68 and concluded.

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Keywords

#NSW #NCATAppealPanel #costs #damages #mediation #2023 #SSMA2015 #106(5) #s227 #SSMR2016 #r60 #CATA2013 #s60