Arjunan v Neighbourhood Association DP No 285853

Arjunan v Neighbourhood Association DP No 285853 - [2022] NSWSC 1524 - NSWSC 2022 case summary — Zoe

[4]

The Act

Section 13(3) of the Act provides that a neighbourhood management statement is binding on, relevantly, all lot owners. Section 14 provides that an association may amend its management statement as long as the amendment is not inconsistent with the Act. An amendment has no effect until it is registered: s 14(4).
Section 20(13) of the Act provides that the association may recover a contribution, together with any interest from, relevantly, a lot owner, as a debt. Section 20A provides that, subject to specified exceptions, outstanding contributions bear interest at 10 per cent per annum.
Part 4 of the Act makes provision for disputes. Section 62 of the Act, which is in Pt 4, relevantly provides that the proprietor of a neighbourhood lot may apply for an order under Division 4 for settlement of a dispute or complaint.
Division 4 of Pt 4, entitled "Orders by Tribunal" confers various powers on the New South Wales Civil and Administrative Tribunal (the Tribunal), including: 1. to vary a management statement if it considers a provision of the management statement not to be in the best interest of the association's members or the proprietors of lots within the scheme to which the management statement relates (s 80); 2. to invalidate, by order, a resolution passed at a meeting of an association if the Act was not complied with (s 82); and 3. to vary contributions or their manner of payment if it considers the contribution to be too much (or too little) or that the manner of payment is unreasonable, and, in such cases, to order payment of a different amount or that the contribution be paid in a different manner (s 83).
Section 120 of the Act relevantly provides: "120 Other rights and remedies not affected (1) Nothing in this Act detracts from any rights or remedies that - (a) an association, or … (c) the proprietor … of … a neighbourhood lot, or … may have in relation to any such lot, or any association property or common property, apart from this Act and the Strata Schemes Development Act 2015 and the Strata Schemes Management Act 2015. (2) In any proceedings to enforce a right or remedy preserved by subsection (1), the Court must, if of the opinion referred to in subsection (3), order the plaintiff to pay the costs of the defendant as determined by the Court. (3) Subsection (2) applies only if the Court is of the opinion that, having regard to the subject-matter of the proceedings and the circumstances of the case, the taking of the proceedings was not justified because this Act, or the Strata Schemes Management Act 2015, makes adequate provision for enforcement of the rights and remedies."
Part 3 of sch 5 of the Act makes provision for the first annual general meeting (AGM) of neighbourhood associations. Clause 36 provides that the chairperson of the neighbourhood association, if present, is to preside at the meeting. If the chairperson is not present, those who are present and entitled to vote must elect one of their number to preside. Such person, while presiding at the meeting, has all the functions of the chairperson.
Part 3 of sch 6 of the Act makes provision for subsequent meetings of neighbourhood associations, other than the first AGM. Clause 57 provides that as long as there is a quorum, a general meeting of a neighbourhood association is validly held even if it is attended only by the chairperson.

[10]

The proceedings brought by the lot owners in the Tribunal

As the question whether the levies were excessive was within the jurisdiction of the Tribunal, the lot owners, on 19 May 2020, commenced proceedings in the Tribunal pursuant to s 83 of the Act to challenge the amount of the contributions. Their application was dismissed on 1 October 2020. An appeal against this dismissal was also dismissed. Various costs orders were made by the Tribunal against the lot owners which do not arise for consideration in the proceedings in this Court.
Following the dismissal of the Tribunal proceedings, the association proceeded with its claim in the Local Court. The Local Court proceedings had been in abeyance while the proceedings in the Tribunal had been on foot.
An assessor in the Small Claims Division of the Local Court transferred the proceedings to the General Division as the amount claimed increased such that it exceeded the limit in the Small Claims Division.
On 1 December 2020, the lot owners filed a notice of payment in the Court below which confirmed that, by 13 November 2020, they had paid $2,760.04, which was the total amount claimed in the statement of claim plus interest of $136.86 at 10% up to 4 December 2020. Accordingly, the only issue remaining was as to the reasonableness of the costs, the lot owners having not admitted that the amount claimed was payable (paragraph 2(g) of the defence). This was confirmed by a notation on the court file made on 4 February 2021, which said: "Dear Dr Arjunan the Court file was noted that the claim paid in full. Outstanding issues is costs of the proceedings. That is the issue for determination by the small claims assessor on 25 February. The court has received your notice of payment filed 1 February and your amended submission filed on 2 February. So as the claim has been paid the only issue for the Court to determine is the costs of the proceedings there appears to be no basis on which amended defence would be required. The Court has granted leave for you to appear via telephone."
At the hearing in the Court below on 2 December 2021, the association tendered evidence from its legal representatives, Ms Parker and Mr Radman, both of Grace Lawyers, and Kathleen O'Hea, an employee of O'Connors. No objection was made to this evidence and no witness was cross-examined. Their evidence included: 1. the minutes of the association's AGMs on 4 December 2018, 30 October 2019 and 22 December 2020 at which it was resolved that Grace Lawyers be retained for particular tasks, including to act on behalf of the association in the proceedings in the Court below; 2. a costs agreements and disclosures dated 20 January 2020 and 11 January 2022 between Grace Lawyers and the association; and 3. descriptions of work done in the Local Court proceedings, invoices for such work and a schedule of invoices up to the hearing of the Local Court proceedings on 4 December 2021.
The lot owners did not adduce evidence in the Court below. Rather, they relied on detailed written submissions. As the lot owners were not represented, the Court below allowed them to rely on their submissions, in effect, as if they constituted evidence.

[13]

The first and fourth grounds: alleged application of the incorrect law

These grounds can be addressed together. In substance, the lot owners argued that s 20(13) of the Act covered the field and that, as it made provision only for the recovery of contributions and interest, the by-law was invalid in so far as it purported to authorise the recovery of costs. Further, the lot owners argued that Dimitriou had no application since it concerned the Strata Schemes Management Act and the by-law was invalid as it was inconsistent with the Act.
There is nothing in the wording or context of s 20(13) which gives rise to the implication that only contributions and interest can be recovered. Nor is there anything in s 14 to indicate that variations to management statements cannot include a provision that the costs of recovery are a debt due to the association. I note that the lot owners did not seek to have the by-law revoked or varied by the Tribunal pursuant to s 80 of the Act. This Court does not have jurisdiction to revoke or vary the by-law under s 80: cl 5(3) of Sch 4 of the Civil and Administrative Tribunal Act 2013 (NSW).
In Dimitriou, the Court of Appeal was required to consider the meaning of "expense" in s 80 of the Strata Schemes Management Act. Hodgson JA (Basten JA and Handley AJA agreeing) held that the word "expense" extended to legal costs and disbursements incurred in recovering contributions but only to the extent that they had been proved to have been reasonably incurred and reasonable in amount.
Basten JA considered that the same principles as apply to the costs and disbursements of mortgagees would apply under s 80 of the Strata Schemes Management Act. His Honour said at [65]: "Similar issues can arise in respect of the recovery of costs under mortgages and other finance transactions. In such cases, the amount recoverable will turn upon the proper construction of the contractual provision … With respect to a mortgagee, the entitlement to recover all costs reasonably and properly incurred in protecting or enforcing a security has long been a principle of general law, not dependent upon the existence of an express contractual term … It is usual practice nowadays for there to be a clause in a standard form mortgage entitling the mortgagee to recover all its costs …" [Citations omitted.]
The by-law is to similar effect as s 80 of the Strata Schemes Management Act. Thus, the association was entitled to recover all costs reasonably and properly incurred. By reason of IIB, such costs were recoverable even if they were disproportionate to the amount claimed.
The Court below correctly applied these principles in the present case. Thus, although the costs were arguably disproportionate, they were not, on that basis, irrecoverable since they were found to have been reasonably and properly incurred.
As ground 1 turned on a question of law, leave is not required. However the ground has not been made out.

[16]

Other matters

The lot owners also contended that the association's "defence" should have been struck out because of alleged non-compliance with the directions of this Court. They referred me to Kimber v Owners of Strata Plan No 48216 (2017) 258 FCR 575; [2017] FCAFC 226 (Kimber) at [79] in which the Full Federal Court (Logan, Kerr and Farrell JJ) criticised a practitioner who was found not to have considered all relevant documents filed by the applicant in that case. That the same firm acted for the respondent in Kimber as acted for the association in the present case does not make Kimber germane to the issues in the present case.
A summons to appeal or for leave to appeal against a decision of the Local Court requires the plaintiff, in this case, the lot owners, to file an affidavit in accordance with Uniform Civil Procedure Rules 2005 (NSW) (UCPR), r 50.14. UCPR, r 50.14 requires the affidavit to exhibit the relevant order or orders, the transcript of the proceedings in the Court below and copies of exhibits, affidavits or other documents that the plaintiff wishes to be considered at the proposed appeal.
The lot owners filed a court book which did not include the transcript of the proceedings in the Court below (which incorporated the reasons) and some exhibits which the association wished this Court to consider. Accordingly, the association filed its own court book, which included the transcript and other exhibits. Thus, this Court had available all the material which was before the Court below as well as the transcript.
Thus, any non-compliance by either party with the directions of the Court (about which it is unnecessary to adjudicate) did not affect the final hearing or inhibit the parties in the submissions which they wished to make.
The lot owners further argued that the association was in breach of the orders of the Local Court because it continued to rely on evidence up until the hearing of the substantive matter in the Local Court. Dr Arjunan sought to characterise the late evidence as "no evidence" and argued that this was a question of law on the basis of Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32 (Kostas).
It was inevitable that the association's evidence would have to be updated until the actual hearing date, given the nature of its claim, which was for the cost of recovery of the costs. Thus, it was not possible for the association to adduce evidence of the costs it had actually incurred up to and including 2 December 2021 (being the date of the hearing) until 2 December 2021 itself. The association's evidence was, thus, served in tranches to keep the lot owners up to date as to the amount of costs, which equated to the amount claimed. In these circumstances, the association ought not be held to have been non-compliant with the directions of the Local Court, as the Court below appreciated when Mr Radman (who appeared for the association in the Court below and in this Court) explained the reason for the up-dated evidence.
While a "no evidence ground" raises a question of law (Kostas at [90] (Hayne, Heydon, Crennan and Kiefel JJ)), evidence which is progressively served and is admitted without objection by a court (as occurred in the Court below) cannot be characterised as a lack of evidence.

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (19 paragraphs)

Parties

Legislation Cited (6)

Cases Cited (9)

Cited By (7)