Security for costs in contested Class 3 strata renewal applications in the NSW Land and Environment Court

The Strata Schemes Development Act 2015 (NSW) provides an avenue for a dissenting owner (who has successfully applied to be a Respondent in an application to the NSW Land and Environment Court for an order giving effect to a strata renewal plan) to obtain an order to have its “reasonable costs of [the] proceedings” paid by the owners corporation – section 188(1).

In the recent case of The Owners – Strata Plan 49574 v Scorpio Holdings (Aust) Pty Limited & Ors [2018] NSWLEC 54 the court held it did not have the power to order security for costs against the owners corporation in favour of a dissenting owner. The Court held it could only make a costs order in a strata renewal application under section 188(1) if it was satisfied that the costs are “reasonable” and “of the proceedings”, and suggested it would be difficult for the Court to “determin[e] with any accuracy, at the commencement of proceedings, whether a dissenting owner’s costs that the owner prospectively anticipates it will face, will be both reasonable and, strictly, will arise out of the proceedings”.

Although the Court noted that it had the power to award security for costs in Class 3 applications pursuant to rule 42.21 of the Uniform Civil Procedure Rules 2005, it was not appropriate in a strata renewal application as the rule specifically related to an application for security for costs made by a defendant against a plaintiff (the defendant becoming a party to the proceedings as a result of a plaintiff’s notice of motion), rather than a respondent against an applicant (the respondent in strata renewal proceedings becoming a party of its own volition by formally objecting to the strata renewal plan and applying to be made a party to proceedings).