Even if you win a strata
claim in the Supreme Court of NSW, you may lose by being
ordered to pay the owners corporation’s legal costs
The general rule is that a successful litigant is entitled
to have their legal costs paid by the unsuccessful party.
But there are exceptions.
One exception is if the proceedings are in the NSW Civil and
Administrative Tribunal (NCAT) where the rule is that legal
costs are rarely awarded:
Each party to proceedings in the Tribunal is to pay
the party's own costs.
The Tribunal may award costs in relation to
proceedings before it only if it is satisfied that there
are special circumstances warranting an award of costs.
Civil and Administrative Tribunal Act 2013 (NSW)
Another exception, which applies specifically to strata
disputes, is found in the Strata Schemes Management Act
2015 (NSW) which reverses the general rule that costs
follow the event:
In any proceedings to enforce any such right or
remedy, the court in which the proceedings are
taken must order the plaintiff to pay the defendant's
costs if the court is of the opinion that, having
regard to the subject-matter of the proceedings, the
taking of the proceedings was not justified because
this Act … makes adequate provision for the enforcement
of those rights or remedies.
The intent of s 253(2) is to discourage a strata owner and
an owners corporation from going to Court without first
using the Tribunal (NCAT) to determine a strata dispute. S
253(2) penalises them if they go to Court first and are
successful in their claim by ordering them to pay the legal
costs of the unsuccessful party, as well as their own legal
But s 253(2) does not explicitly state that a strata owner
or owners corporation must always use NCAT first. What it
does state is that they must use NCAT first if the Strata
Schemes Management Act provides for the “subject-matter
of the proceedings” and “makes adequate provision for
the enforcement of those rights or remedies”.
The Court of Appeal of the Supreme Court of New South Wales
has recently considered s 253(2) in the decision of EB 9
& 10 Pty Ltd v The Owners Strata Plan 934  NSWCA
288 (28 November 2018) (Barrett AJA; Meagher and Gleeson JJA
agreeing). This is an analysis.
What was the subject-matter
of the proceedings in EB 9 & 10 P/L v SP 934?
EB 9 & 10 P/L owned a strata lot in a strata scheme at Potts
Point, near Kings Cross, Sydney. It was a valuable car
parking space, the boundaries of which were marked by
painted lines on the concrete pavement.
The owners corporation had taken steps to limit the
manoeuvrability of vehicles entering and exiting the car
parking space, by installing a chain along one boundary
(which was later removed) and by progressing a “building
proposal” and a “garden proposal” to build a physical
barrier close to and along that boundary.
The problem was that it was not possible for EB 9 & 10 P/L
to park even an average sized car in the car parking space
without manoeuvring up to 800 mm over the boundary line
where the chain had been or the building or garden proposals
were to be built.
EB 9 & 10 P/L initiated proceedings in the Supreme Court of
NSW, without first using the Tribunal (NCAT), because the
Tribunal did not have the power to make the declaratory
orders it sought. It was successful, and the Supreme Court
of NSW made these orders:
- “The Court declares that the [owners corporation] is
not to restrict or impede the access to and use [by EB 9
& 10 P/L] of its [car parking] lot via the common
property by [allowing access to a strip 870 mm over the
common property along the entire boundary]
- Pursuant to s 253(2) of the Strata Schemes
Management Act 2015 (NSW) [EB 9 & 10 P/L] is to pay the
[owners corporation’s] costs of the proceedings.”
For an analysis of the primary judge’s decision, refer to my
An Owners Corporation cannot restrict access
to a car space in a strata scheme
EB 9 & 10 P/L appealed order (2), that it pay the owners
corporation’s legal costs.
Did the Strata Schemes
Management Act 2015 make “adequate provision” for the
enforcement of the right to access the car parking space?
The Court of Appeal focused on s 8 and s 61(1) of the
Strata Schemes Management Act 1996 (NSW), which it
accepted were equivalent to s 9 of the 2015 Act. Section 9
is as follows:
The owners corporation for a strata scheme has the
principal responsibility for the management of the
The owners corporation has, for the benefit of the
owners of lots in the strata scheme:
- the management and control of the use of the
common property of the strata scheme; and
- the administration of the strata scheme.
The Court of Appeal held that this provision gave the owners
corporation the power over the subject-matter of these
proceedings, which was to prevent a use of the common
property which impeded or restricted the right of EB 9 & 10
P/L to use its car parking space.
The Court of Appeal held that the Tribunal (NCAT) could have
made an order in these terms:
“Order that the owners corporation is not to restrict
or impede the lot owner’s access to and use of its lot
via the common property by developing or impeding access
to that strip of the common property which [full
description of strip].”
It noted that an order made by the Tribunal would have
effect as a resolution of the owners corporation and would
not be able to be amended or revoked except by unanimous
resolution under s 207 and s 208 of the 1996 Act (s 245 of
the 2015 Act).
The Court of Appeal considered that such an order would give
standing to sue for an injunction, if need be, to enforce
The Court of Appeal concluded that ‘adequate provision’ was
“The Adjudicator’s order [in NCAT] would represent
means of enforcement substantially equivalent to the
declaration made in the Supreme Court proceedings.”
The Court of Appeal concluded that the primary judge
correctly formed the opinion that:
“adequate provision” for enforcement was available to
the appellant under the strata titles legislation and
that the appellant was “not justified” in taking the
Supreme Court proceedings.
The Court of Appeal ordered that the appeal be dismissed and
that the appellant pay the respondent’s costs of the appeal.
Unless there is very good reason, the Tribunal (NCAT) should
be the first port of call for strata disputes. The Tribunal
will allow legal representation, if complex issues of fact
or law are likely to arise, but will not award legal costs
except in special circumstances.
If the Supreme Court is the first port of call, even if a
party is successful, they risk being ordered to pay not only
their own legal costs but also the legal costs of the