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Costs orders in the commissioner’s office

By Frank Higginson03 Feb 2012

The commissioner’s office is designed as a no cost jurisdiction. This means the general intent is that costs are not awarded against the losing party in any litigation - which is different from almost all other jurisdictions in which litigation can be undertaken. For good reasons, adjudicators do not want to discourage people from using this service with threats of costs orders.

The limited basis on which costs can be awarded is designed to compensate a party affected by an application that is dismissed for being frivolous, vexatious, misconceived or without substance. Costs orders in this jurisdiction are therefore very rarely given.

We were recently involved in advising a body corporate on an application made by a lot owner.  Our client ended up obtaining a costs order against that lot owner.

The building in question was 30 years old, was near the coast and, as may be expected, the balcony balustrades had deteriorated. Specialist engineers confirmed this. Over a number of years, the committee worked towards replacing the balustrades. It was a project worth more than $2m that was subject to a number of different tenders, recommended by an engineer, managed by an architect and supported by the body corporate’s insurer.

On numerous occasions, the committee consulted lot owners on the style and colour of the proposed balustrading and answered any queries they might have. About 90% of the votes taken in a general meeting supported the project and the raising of the required special levies.

Most of us know that you cannot please all of the people all of the time - especially in a body corporate.  A few days before the balustrading project was due to commence, a lot owner applied for an interim order to stop it. This was despite the issue having been 'alive' for quite some years, the tenders being accepted and everything ready for the work to commence. The application was based on a disagreement with the need for the works.  There was no argument about the process or the legality of the steps taken by the body corporate.

There is an art to responding to an application of this nature. There are definitely legal issues that need to be addressed, but there are also other considerations, including addressing the concerns of the owner in a reasonable and balanced way. Coming across as a bully in any material before the commissioner is not likely to endear a body corporate to the adjudicator.

Instead of cutting their losses or reconsidering their position, the lot owner then engaged solicitors to help with a formal reply to submissions made. That reply escalated the dispute, but did not raise any serious prospect of the committee’s approach being invalid.

Ultimately, the adjudicator found in favour of the body corporate, dismissed the application and ordered that the lot owner contribute towards the body corporate’s legal costs.

It goes to show that bodies corporate and their committees should not have to wholly bear the costs of responding to applications that are without basis. Making sure this point is made in any submission is very important on the issue of costs.

When facing an application, it is important to get on the front foot as soon as possible with detailed and complete submissions and material.