Costs and conduct: a lesson from White House (No. 2)

The recent decision in White House Developments Pty Ltd v The Owners – Strata Plan No 70276 (No 2) [2025] NSWCATAP 92 (White House (No. 2)) highlights that parties who are dissatisfied with their costs orders following a decision by NCAT must file a formal appeal, rather than seek variation through informal or separate applications. This case illustrates how a party’s outcome for costs orders can be impacted by procedural missteps in appealing costs orders in NCAT.

History

White House Developments Pty Ltd (WHD) acquired a commercial lot to operate an art gallery in a mixed commercial and residential strata scheme. In 2022, WHD commenced proceedings against the Owners – Strata Plan No. 70276 (the Owners) involving a variety of work orders and money orders. The Tribunal dismissed all of WHD’s claims except for one work order and decided that WHD was to pay 80% of the Owners’ costs on the ordinary basis (First Instance Costs Order).^[1]

The First Appeal

WHD appealed the first decision to the Appeal Panel in NCAT and succeeded in part (First Appeal). Accordingly, the Appeal Panel made an additional work order in favour of WHD and ordered that the Owners pay one quarter of WHD’s costs of the appeal (Appeal Costs Order).^[2] The Appeal Panel also made an order that any of the parties who sought to vary the costs in the Appeal Costs Order must make an application and lodge and serve the appropriate evidence and submissions (Order 5).^[3]

The Second Appeal

Following the First Appeal, both parties applied to vary costs orders from different proceedings:^[4]

• The Owners applied to vary the Appeal Costs Order and sought an order that either WHD pay three quarters of the Owners’ costs of the appeal or that each party bears its own costs; and
• WHD applied to vary the First Instance Costs Orders and sought for WHD to pay only 60% of the Owners’ costs.

Although both parties applied to vary costs orders, neither party’s applications were made in accordance with the requirements of Order 5. Hence, both parties failed to make a proper application that could be considered by the Appeal Panel. In order for the Appeal Panel to make a proper determination on the parties’ applications, it treated both costs applications as applications to reopen the appeal (Second Appeal).^[5]

Variation of Costs Orders: WHD and the Owners’ Arguments

The following arguments were considered by the Appeal Panel.

WHD

WHD argued that the Appeal Panel could vary a costs order after an appeal decision without a formal appeal against the costs pursuant to s 81 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).^[6]WHD submitted that, since first instance costs orders depend on the substantive decisions, they are considered “ancillary orders” under the definition in s 4(1) of the NCAT Act, and, therefore, should be considered when parties make an internal appeal.^[7]

The Owners

The Owners argued that since it succeeded on three of the four grounds of the First Appeal, it had the dominant outcome and thus, that outcome should be reflected on the costs order. Alternatively, if the view is taken that both parties have had some success in the First Appeal, the Owners each party should pay its own costs.^[8]

Established Principles in Costs Orders

In considering the parties’ arguments, the Appeal Panel establishes significant legal principles relating to:

• NCAT’s power to reopen appeals in the absence of a proper notice of appeal, and
• costs orders in decisions involving mixed success.

NCAT’s power to reopen appeals

The Appeal Panel confirmed that the breadth of procedural power conferred to it under section 38 of the NCAT Act includes the power to reopen a decision to determine an issue it had failed to address.^[9] Such a conclusion flows from the obligation imposed on NCAT by section 36(1) of the NCAT Act, for the facilitation of just, quick and cheap resolution.^[10] Hence, to even consider WHD’s application, the Appeal Panel treated it as though it were an application to reopen the First Appeal, and in doing so, acknowledged that such treatment was an exercise in its discretion.^[11]

• Costs order at first instance

The Appeal Panel cannot, however, make the same determination if, in the absence of a proper notice of appeal, a party makes an application to vary a costs order made in the proceedings at first instance. The Appeal Panel determined that its powers are limited to determining particular decisions, which are the subject of the appeal.^[12] Although the Appeal Panel agreed with WHD that a costs decision at first instance is an “ancillary decision,” it considered that a separate internal appeal must be made against the decision so that the Appeal Panel can exercise its discretionary power under s 81 of the NCAT Act. The Appeal Panel considered WHD’s argument and determined that, since their attempt to challenge the First Instance Costs Order was bound to fail, it dismissed WHD’s claim.^[13]

• Reopening appeals in absence of formal applications

Additionally, the Appeal Panel confirmed that it can reopen an appeal even if it was not sought by either party.^[14] Both the Owners’ and WHD’s application to vary different costs orders were treated by the Appeal Panel as such in order to consider the variety of the parties’ costs applications. Thus, the Appeal Panel could make a proper decision on the parties’ applications despite the absence of a formal appeal to the decision subject to the First Appeal.

Mixed Success

Courts and Tribunals do not usually apportion costs by differentiating between particular issues in proceedings, but rather generally in relation to the outcome of the proceedings as a whole.^[15] However, the Appeal Panel’s decision and reasoning in the Second Appeal demonstrates a departure from this usual practice and recognition that apportionment can reflect the relative success of the parties.^[16] As such, the Appeal Panel rejected the Owners’ application by recognising that the costs order fairly reflected WHD’s partial success in the First Appeal^.[17] 

The Appeal Panel’s Decision

In considering the arguments of both parties, the Appeal Panel made the decision to dismiss both appeals and made the following orders:

• WHD pay 80% of the Owners’ costs in the First Instance Costs Order; and
• the Owners pay one quarter of WHD’s costs as in the Appeal Costs Order.

An Important Lesson Learnt: Costs and Conduct

Whilst NCAT does not usually award costs, it may make an order for costs if it is satisfied that there are special circumstances or the costs claimed or in dispute amount to over $30,000.^[18] Practitioners are reminded that proper procedures must be followed when appealing costs orders and to seek and acquire leave to do so.

The key takeaway of White House (No. 2) is the conduct of a party in NCAT proceedings matters. NCAT will not tolerate parties who continuously apply to vary costs orders in separate and informal applications without consideration of the proper procedures. Although WHD succeeded in part in the First Appeal, this did not in and of itself grant it leave to appeal costs orders made in the first instance decision. Separately, NCAT confirms that mixed success on significant issues can result in apportionment of costs.

Conclusion

The Appeal Panel’s decision shows us that it is imprudent to have multiple costs order applications defined by reference to issues arising out of one set of proceedings. It also shows us that fairness is an important consideration by NCAT in its costs decisions; parties who may have mixed success in major issues can be apportioned a costs order.

NCAT will prioritise procedural clarity and cannot exercise its jurisdiction without given an opportunity to do so. Therefore, parties who seek to vary a costs order should do so properly.

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John-Paul Panarello is Associate with Kerin Benson Lawyers Pty Ltd.

Mary Tabaco is Graduate Lawyer with Kerin Benson Lawyers Pty Ltd.

 

Endnotes

[1] See White House Developments Pty Ltd v The Owners – Strata Plan No 70276 (No 2) [2025] NSWCATAP 92 at [3] (White House (No. 2).

[2] See White House Developments Pty Ltd v The Owners – Strata Plan No 70276 [2025] NSWCATAP 68 at [159] and [160](4).

[3] At [160](4).

[4] See White House (No. 2) at [2]-[5].

[5] At [5], [30] and [37].

[6] At [42] citing Jones v Mega Awesome Kapow Constructions Pty Ltd (No. 2) [2024] NSWCATAP 184.

[7] See s 80 of the NCAT Act.

[8] At [26].

[9] At [38] citing Sunaust Properties Pty Ltd t/as Central Sydney Realty v The Owners – Strata Plan No 64807 [2023] NSWCA 188 at [160].

[10] See Sunaust Properties Pty Ltd t/as Central Sydney Realty v The Owners – Strata Plan No 64807 at [162].

[11] At [160].

[12] See White House (No. 2) at [42].

[13] At [46].

[14] At [5].

[15] Judicial Commission of New South Wales’ Civil Trials Bench Book, at [8-0020] in citing Cretazzo v Lombardi (1975) 13 SASR 4 at 12.

[16] See Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304.

[17] See White House (No. 2) at [30].

[18] See s 60 of the NCAT Act; and rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW).