To finally nail this one down, here is a response from our sponsors Bannerman Lawyers.
If an Owners Corporation is unsuccessful in proceedings, there are different costs consequences that may apply depending on whether proceedings are commenced in the NCAT or the Courts.
Costs can be categorised into two main types:
- The Owners Corporation’s costs of the proceedings, including legal costs and expert costs; and
- The Owners Corporation’s costs of complying with any substantive orders made by the NCAT or the Court including orders to pay damages.
Costs in the NCAT
If the Owners Corporation is unsuccessful in NCAT proceedings against a lot owner, it must raise a special levy, excluding the successful owner from liability to contribute, to fund the Owners Corporation’s costs of the proceedings. This is automatic and does not require an order of the Tribunal, pursuant to Section 104 of the Strata Schemes Management Act 2015 (“SSMA”), as extracted below:
104 Restrictions on payment of expenses incurred in Tribunal proceedings
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An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it for an order by the Tribunal, levy a contribution on another party who is successful in the proceedings.
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An owners corporation that is unsuccessful in proceedings brought by or against it for an order by the Tribunal cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund, but may make a levy for the purpose.
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In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal.