Appeal lodged 26 months late: appellants ordered to pay costs, indemnity basis after an offer (NCAT, 2026)

What happened

The dispute arose in a riverside community scheme at Moama in southern New South Wales. A community scheme is a group of properties that share common land and is run by a community association, with smaller neighbourhood associations inside it. 1735 Pty Ltd owned a lot in the scheme, in the neighbourhood association ending in 149. The other appellants were Community Association DP 270580 and two individuals who had a governance or ownership interest in the company. The respondents were Neighbourhood Association 286149 and Neighbourhood Association 286150.

The original application to the Tribunal asked for a compulsory managing agent to be appointed to the scheme. On 8 August 2023 a Senior Member in the Consumer and Commercial Division dismissed that application for want of prosecution, meaning it was dismissed because it had not been pushed along with due despatch, and made a costs order in favour of the two neighbourhood associations.

The notice of appeal was not filed until 8 October 2025, about 26 months later. In a decision given on 29 April 2026 the Appeal Panel refused to extend the time for filing the appeal, and said that if it had extended time it would have refused the leave needed to appeal an interlocutory (interim, non-final) decision and would have dismissed the appeal. The Panel had found that the two individual appellants had no standing to appeal or to seek the original relief, that the company had an interest in only one of the two neighbourhood associations, and that the community association had taken no active part and had no orders made against it. The Panel also found the appeal had no practical use, partly because the managing agent had since changed, so the original application would have needed to be amended anyway.

Costs of the appeal were left to be dealt with afterwards. One neighbourhood association filed its costs submissions on 13 May 2026. The other was given extra time, until 17 June 2026, because its two committee members were deadlocked on whether to instruct lawyers and a general meeting was needed to break the deadlock; it filed on 16 June 2026. The appellants filed no costs submissions at all.

What each side wanted

The two neighbourhood associations asked for an order that the appellants, jointly and separately, pay their costs of the appeal on the ordinary basis up to 27 January 2026 and on the indemnity basis after that date, or failing that on the ordinary basis throughout. They also asked for orders under the Community Land Management Act 2021 (NSW) that the community association pay those costs, and its own appeal costs, out of a special levy that excluded the two neighbourhood associations, so that the successful associations did not end up funding the loser's bill. They relied on two settlement offers dated 26 January 2026, known as Calderbank offers, which invited the appellants to walk away from the appeal and which were rejected. The appellants put on no costs submissions, and no party asked for a costs hearing, so the Panel decided the question on the papers.

What the tribunal decided

The Appeal Panel ordered that the appellants and each of them pay the costs of the appeal of the respondents and each of them, as agreed or assessed, on the ordinary basis up to 27 January 2026 and on the indemnity basis after that date. "As agreed or assessed" means the exact figure is either agreed between the parties or worked out later by a costs assessor; the Panel did not fix a dollar amount. The ordinary basis is the usual, more limited measure of costs; the indemnity basis is a higher measure that compensates the winner more fully.

The Panel also noted that the first appellant, Community Association DP 270580, is obliged to comply with section 107 of the Community Land Management Act 2021 (NSW), which operates on its own to keep successful parties from having to contribute to the association's costs and expenses of the proceedings.

Finally, the Panel ordered under section 190 of the Community Land Management Act 2021 (NSW) that Community Association DP 270580 pay the costs order from a special levy which excludes Neighbourhood Association 286149 and Neighbourhood Association 286150.

Why the tribunal decided it that way

In NCAT, section 60 of the Civil and Administrative Tribunal Act 2010 (NSW) starts from the position that each party pays its own costs. The Tribunal can only award costs if it is satisfied there are "special circumstances" warranting an award. Special circumstances means circumstances out of the ordinary, though not necessarily extraordinary. Section 60(3) lists things the Tribunal may consider, including whether a party unnecessarily disadvantaged another party, whether a party unreasonably prolonged the proceedings, the relative strength of each side's claims, and whether the proceedings were misconceived or lacking in substance.

The Panel found special circumstances were amply demonstrated. The 26-month delay in bringing the appeal, with no adequate explanation, had unreasonably prolonged the proceedings and unnecessarily disadvantaged the two neighbourhood associations. The prospects of the appeal were low, and non-existent for the individuals and the community association, so the appeal was misconceived and, at best for the lot-owning company, lacking in substance because it did not focus on or support the company's standing against one of the associations or its case against either.

Once costs were available, the Panel applied the usual principle that costs follow the event: the successful party is normally compensated. The respondents had succeeded entirely, so they were entitled to costs at least on the ordinary basis. For the higher indemnity measure, the Panel applied the settled Calderbank principles: the offer must be a real and genuine compromise, and the refusal must have been unreasonable judged on what was known at the time, not with hindsight. Relevant factors include the stage of the case, the time allowed to consider the offer, the extent of the compromise, the offeree's prospects at the time, and the clarity of the offer. The Panel found each offer met those criteria. Giving up existing and likely costs orders was a significant compromise against the appellants' low or non-existent prospects, the offers came after the parties' material had been exchanged, and they stayed open for a reasonable period, so rejecting them was unreasonable. That is why costs switch to the indemnity basis from 27 January 2026, the day after the offers.

On who actually funds the bill, the Panel explained that community schemes have provisions equivalent to those for strata schemes. Section 107 of the Community Land Management Act 2021 (NSW) works of its own force, without any order, to quarantine successful parties from contributing to the association's own costs and expenses of the proceedings. Section 190 allows an order that the association raise the money by a special levy that leaves the successful parties out. Because the two neighbourhood associations had won outright, they were entitled to that protection both against the costs order the community association must satisfy and against the community association's own appeal costs.

What this means if you are in a similar position

If you are in a similar position in a strata or community scheme dispute, this decision shows two rules working together. The first is that NCAT normally expects each side to pay its own legal costs, and will only shift costs where there are special circumstances. Long, unexplained delay, running a case that cannot succeed, or bringing proceedings in the name of people who have no standing to bring them, are the kinds of things a tribunal can treat as out of the ordinary. The second is that a written settlement offer carries real weight. Where a genuine offer to resolve or walk away is refused and the refusing party then does worse than the offer, the costs can be assessed on the higher indemnity basis from around the date of the offer.

The decision also shows the point about who ends up paying. In a community or strata scheme, an owners corporation, community association or neighbourhood association that wins against its scheme is not expected to fund the scheme's loss through its own levies. Section 107 of the Community Land Management Act 2021 (NSW) does that automatically, and section 190 allows an order that the money be raised by a special levy that leaves the winners out. Standing matters too: in this case the Panel found the individuals and the community association had no standing to seek the relief, and that the one party with standing had not put up the material to support its case.

In disputes about how a scheme is being managed, most people begin by putting their concerns in writing to the strata committee, owners corporation or association, setting out what is wrong, what they want done and by when. If that does not resolve it, the next step people usually take is an application to the tribunal.

How to apply: our step-by-step guide to a NCAT application. More decisions: NCAT cases and strata and body corporate.

Source: Community Association DP 270580, Bares and 1735 Pty Ltd v Neighbourhood Association 286149 and Neighbourhood Association 286150 [No 2] [2026] NSWCATAP 292 (read the full decision). This summary was prepared from the published decision for general information. It is not legal advice, and the tribunal’s own reasons are the authoritative record.