Firstly I understand NCAT awards costs in exceptional circumstances.
I think you misunderstand. This is not about “costs” awarded by NCAT, it’s about expenses incurred by the owners corp in pursuit of a case that they have lost. The principle behind Section 104 of the Act is to ensure that owners don’t have to contribute towards the expenses incurred in a losing case taken against them, or a winning case taken by them which the owners corp defends in vain.
You’re right that in NSW NCAT only awards costs in exceptional circumstances. However the law has already established that owners who win cases against their owners corps don’t have to pay any of the expense accrued by the owners corp in running the case.
Since they would be doing that if the expenses were simply paid out of the Admin Fund, Section 104 says thay have to be paid by a special levy which excludes the winning owner.
Let’s say your strata manager has charged you $5k for running a case against a legitimate claim by an owner, and that strata manager has hired a lawyer who’s charged $10k for their services.
If the owners corp loses, the law says they have to cover the $15k expenses by a special levy that, by implication, excludes the winning owner.
Some strata lawyers I have spoken to weren’t even aware of this until recently. Now that it’s out there, it may make strata committees think twice before taking frivolous NCAT action against owners with whom they disagree, if they have to explain to the other owners why they suddenly have raised a special levy to pay for a failed case.
In this specific case, the strata manager and committee have effectively conceded that they can’t charge the owner for the expenses but are now trying to nickel and dime it by only excusing him from paying some, not all of the expenses.
This is what section 104 of the Act says:
(1) 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.
(2) 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.
(3) In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal.