Lot owner’s claim for appeal costs dismissed: no ‘special circumstances’ at NCAT

What happened

A lot owner had been ordered by the Tribunal's Consumer and Commercial Division on 16 October 2025 to pay costs in a strata dispute involving The Owners – Strata Plan No. 92648 and a large number of individual respondents. He appealed only against that costs order. On 26 May 2026 the Appeal Panel allowed the appeal in part and re-made the costs order so that he paid the respondents' costs only from a particular date onwards. The Appeal Panel then reserved the costs of the appeal itself and set a timetable for submissions if either side wanted a costs order.

The lot owner filed submissions seeking his costs of the appeal on 16 June 2026. The owners corporation and the other respondents filed submissions opposing that application on 7 July 2026. Both sides accepted the costs question could be decided on the papers, without anyone attending a hearing.

The lot owner's argument rested on correspondence between the two firms of solicitors between 28 October 2025 and 17 November 2025. In a letter of 28 October 2025 his solicitor had suggested one way the Appeal Panel might resolve the foreshadowed appeal was to award the respondents costs limited to those incurred after a particular date. He asked the respondents to quantify their costs. The respondents did not give the breakdown he asked for, but did indicate that 55 per cent of their claimed costs were incurred after the relevant date. He filed his notice of appeal on 11 November 2025 and did not press the quantification request again after 17 November 2025.

The appeal was listed on 3 December 2025 for hearing on 30 April 2026, and it was heard and completed on that first listed day. The respondents did not appear at the hearing and served written submissions the day before it. The lot owner did not serve his amended notice of appeal and submissions until 2 March 2026, later than the dates set in the directions.

What each side wanted

The lot owner asked for his costs of the appeal. He accepted that he had to show "special circumstances" under section 60 of the Civil and Administrative Tribunal Act 2013 (NSW), and accepted that amounts claimed as costs are not "amounts claimed or in dispute" for the purposes of rule 38(2)(b) of the NCAT Rules, so that route was not open to him. His case was that the respondents' failure to engage constructively in quantifying their costs unreasonably prolonged the proceedings and breached the duty to cooperate, and that if they had cooperated the appeal might not have been needed. He also pointed to the respondents not appearing at the appeal hearing and serving their submissions the day before it. The respondents said nothing they did had prolonged the appeal, that it was heard on the first listed date, that the delay in the proceedings had come from the lot owner's late filing, and that the correspondence relied on could not support a costs order.

What the tribunal decided

The Appeal Panel made two orders. First, it dispensed with a hearing under section 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW), deciding the costs dispute on the written submissions. Second, it dismissed the appellant's application for costs.

No money was ordered to be paid either way. The Appeal Panel also noted that section 104 of the SSMA (the strata schemes management legislation) prevented the owners corporation from passing any part of its costs of the proceedings on to the lot owner, so no order was needed about the respondents' solicitor's costs.

Why the tribunal decided it that way

The starting point at NCAT is that each party pays its own costs. Section 60(1) of the Civil and Administrative Tribunal Act says so, and the Tribunal can only award costs if it is satisfied there are "special circumstances". The Appeal Panel repeated that the party asking for costs carries the onus of showing circumstances that are "out of the ordinary", and that even if special circumstances exist the Tribunal still has to decide whether they warrant a costs order. It also noted that a costs order is meant to compensate, not to punish.

The Appeal Panel worked through the matters listed in section 60(3). The respondents had not conducted the proceedings in a way that unnecessarily disadvantaged the lot owner (s 60(3)(a)). They had not unreasonably prolonged the appeal (s 60(3)(b)): it was heard and finished on the first date it was listed, and if anything their non-appearance shortened it. There was no significant difference in the relative strengths of the two cases (s 60(3)(c)). The appeal, being limited to the exercise of a discretion about costs, was not complex (s 60(3)(d)). Neither side's case was frivolous, vexatious or lacking in substance (s 60(3)(e)) — the lot owner's partial success showed his was not, and the limited extent of that success showed the respondents' was not.

The central weakness was that no settlement offer was ever made. The lot owner conceded he could not say the respondents had unreasonably refused an offer, because he never made one. The Appeal Panel held that the respondents' refusal to itemise their costs did not stop him offering to settle the appeal on the basis of a partial costs order, with the amount to be agreed or assessed later — which is exactly the result the Appeal Panel eventually reached. Liability for costs and the amount of costs are different questions, and a disagreement about the amount is normally resolved by a costs assessment. He also stopped chasing the figures on 17 November 2025, more than five months before the hearing.

On the duty in section 36(3) of the Act to cooperate in the just, quick and cheap resolution of the real issues, the Appeal Panel said that to the extent the respondents fell short, so did the lot owner, and any distinction between them was "a distinction without a difference". Until he made an offer to settle, the respondents were not obliged to do more than they did. Special circumstances were therefore not established and the costs application was dismissed.

What this means if you are in a similar position

If you are in a similar position in a strata dispute at NCAT, this decision shows how hard it is to get your legal costs back. Each side normally pays its own way, and the Tribunal only looks at a costs order if the party asking can point to something out of the ordinary — for example, conduct that unnecessarily disadvantaged the other side or unreasonably dragged out the case. Winning, or partly winning, is not by itself enough.

The decision also shows how much weight the Tribunal puts on a written offer to settle. The appellant here had an idea of the outcome he wanted, raised it in a solicitor's letter, and ended up with something very like it, but because he never actually offered to settle on those terms he had nothing to point to when he asked for costs. The Appeal Panel's view was that an argument about how much the other side's costs came to was no reason to delay making an offer, because the amount can be sorted out later by agreement or by a costs assessor. It is also worth knowing that strata legislation can stop an owners corporation recovering its own costs of this kind of proceeding from an individual lot owner.

In most strata disagreements of this kind, the step people take first is a written complaint to the strata committee or owners corporation setting out the problem and what they want done about it, and only then an application to the Tribunal if the issue is not resolved.

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

Source: Chlochaisri v The Owners Strata Plan No. 92648 (No. 2) [2026] NSWCATAP 359 (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.