No Strata Mediation Costs For You

The Owners – Strata Plan No 21563 v Rutherford [2023] NSWCATAP 326

GoStrata’s CaseWatch is a short, sharp and easy-to-understand review of important and interesting Court and Tribunal decisions affecting Australian strata title stakeholders.

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Quick Read

This 2023 decision by the NCAT Appeal Panel is the end of about a dispute in a Marrickville strata title building about damages for rent losses and legal costs payable to a strata owner for water entry into their strata lot.  An earlier NCAT decision for damages under s 106(5) included the strata owner’s legal costs of mediation [which is compulsory] but the strata building objected saying the r 60 forced parties to pay their own mediation costs. So, the issue was whether mediation costs were excluded from s 106(5) damages and/or from s 60 costs orders. After considering the costs provisions under strata and other laws, how legal costs were treated in different situations as well as the NSW Supreme Court decisions in Fligg v The Owners Strata Plan 53457 and Nicita v Owners of Strata Plan 64837], the NCAT Appeal Panel decided that that although some pre or extra litigation costs [like for mediation] could be recovered as damages depending on how they arose and were characterised, mediation is a necessary pre requisite of an NCAT application so the costs are incidental to the proceedings [not damages] and r 60 makes them unrecoverable.  So, it reduced the amount payable by the strata building by the amount of the mediation costs. The decision is legally technical but practically important for NSW strata stakeholders who end up at NCAT since it excludes their costs of dealing with mandatory mediation from any NCAT damages or costs orders. So, everyone mediates at their own risk and cost.

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Implications

The key implications of this strata case are as follows.

• There’s a difference between a strata owner’s legal costs to deal with strata building duty breach and legal costs that are incidental to conducting litigation about it.

• Sometime legal costs can be recovered as damages under s 106{5) as happened in Fligg’s Case and Lipman’s Case and in other situations.

• S 60 also has a wide definition for legal costs orders in relation to NCAT applications.

• But r 60 about strata mediation says that each party pay must their own costs of mediation.