Arjunan v Neighbourhood Association DP No 285853 - [2024] NSWCA 123 - NSWCA 2024 case summary — Zoe

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Arjunan v Neighbourhood Association DP No 285853

[2024] NSWCA 123

Court of Appeal (NSW)|2024-05-15|Before: Neighbourhood Association DP, Bell CJ, Kirk JA, Association No DP

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2024-05-15

Before

Neighbourhood Association DP, Bell CJ, Kirk JA, Association No DP

Catchwords

[2009] NSWCA 27 Potier v Attorney General in and for the State of New South Wales (2015) 89 NSWLR 284

Source

Original judgment source is linked above.

Catchwords

[2009] NSWCA 27 Potier v Attorney General in and for the State of New South Wales (2015) 89 NSWLR 284

Judgment (15 paragraphs)

[1]

Background and Procedural History

Mr Arjunan and Ms Kannapiran are the owners of one of 15 lots (Lot 2) in a deposited plan managed by the Neighbourhood Association. A management statement was registered for the deposited plan on 30 April 2004 and was binding pursuant to s 14(4) of the Community Land Management Act 1989 (NSW) (CLMA).
On 15 November 2011, the Neighbourhood Association resolved to amend its management statement by passing the following by-law which became binding: "(a) The Neighbourhood Association may recover as a debt a contribution, levy or other debt owed by a proprietor not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the Neighbourhood Association incurred in recovering those amounts. … (c) For the purposes of recovering unpaid contributions the Executive Committee of the Neighbourhood Association may: (i) engage the legal services of a debt collection agency, obtain legal advice and/or retail legal representation; (ii) commence, pursue, continue or defend any Court, Tribunal or other proceedings against any Owner, mortgagee in possession and/or former lot owner in relation to all matter [sic.] arising out of the recovery of unpaid contributions and the recovery of other debts, including penalties, interests, legal and other costs." (Emphasis added.)
The managing agent of the Neighbourhood Association has, at least since 2011, been O'Connors Strata & Property Specialists Pty Ltd (O'Connors). The Neighbourhood Association entered into a new management agreement with O'Connors, the Association Agency Agreement (the Agency Agreement), on 4 December 2018. Clause 5 of that agreement provides that O'Connors may "authorise the taking of legal proceedings to recover outstanding levies/contributions … and costs from a lot owner."

[2]

Proceedings in the Local Court

On 20 January 2020, the Neighbourhood Association commenced proceedings in the Small Claims Division of the Local Court against Mr Arjunan and Ms Kannapiran claiming the liquidated sum of $2,795.91 for unpaid levies required to be paid under Part 4 of Schedule 1 of the CLMA together with interest thereon pursuant to s 20A of the CLMA as well as costs incurred by the Neighbourhood Association to 17 January 2020 in seeking to recover the unpaid levies. The claim for costs was expressed to have been made pursuant to the Neighbourhood Association's by-laws. The defence filed by Mr Arjunan and Ms Kannapiran on 14 February 2020 alleged that the levies were excessive.
The question whether the levies were excessive was a matter within the jurisdiction of the NSW Civil and Administrative Tribunal (NCAT). As such, on 19 May 2020, Mr Arjunan and Ms Kannapiran commenced proceedings in NCAT challenging the amount of the levies. The Local Court proceedings were held in abeyance whilst the NCAT proceedings were on foot. The NCAT proceedings were dismissed on 1 October 2020, as was a subsequent appeal against the dismissal. Various costs orders were made against Mr Arjunan and Ms Kannapiran in relation to the NCAT proceedings.
The minutes of a Special General Meeting of the Neighbourhood Association held on 24 November 2020 attended by representatives of Lots 5, 8, 9 and 10 as well as proxies from Lots 13, 2 and 3 and a representative of O'Connors, who acted as chairperson, record that the NCAT proceedings between the Neighbourhood Association and Mr Arjunan and Ms Kannapiran were discussed. A motion was also passed that Grace Lawyers be engaged to defend the NCAT proceedings and that O'Connors would liaise with and provide instructions to Grace Lawyers. The same resolution provided for "payment of all of Grace Lawyers' reasonable costs in acting for the Neighbourhood Association as disclosed in the costs agreement and costs disclosure between Grace Lawyers and the Neighbourhood Association dated 13 November 2020".
On 1 December 2020, Mr Arjunan and Ms Kannapiran filed a notice of payment in the Local Court confirming they had paid $2,760.04, being the total debt claimed by the Neighbourhood Association plus interest up to 4 December 2020. Thereafter, the only issue for the Local Court to determine was the costs of the proceedings.
Mr Arjunan and Ms Kannapiran argued before the Local Court that they were not liable for the costs of the Neighbourhood Association on the basis that Grace Lawyers had not been validly appointed to act on its behalf, the costs were not claimable as they could have been claimed in NCAT such that recovery was prohibited by s 120(2) of the CLMA and that the costs were excessive and disproportionate to the amount claimed. This argument occurred on 2 December 2021, occupying most of the day.
On 2 December 2021, Magistrate Milledge awarded the Neighbourhood Association costs of $28,348. Her Honour held that Grace Lawyers had been validly retained by the Neighbourhood Association and were authorised to recover costs against lot owners and that the costs were claimable. Magistrate Milledge also held that, consistent with Owners of Strata Plan 36131 v Dimitriou (2009) 74 NSWLR 370; [2009] NSWCA 27 (Dimitriou), the by-law entitled the Neighbourhood Association to all costs reasonably incurred, so long as the amount was also reasonable, and that the costs claimed fulfilled these requirements. Her Honour also rejected the argument that costs recovered were required to be proportionate.

[5]

Notice of Motion before Rothman J

On 26 May 2022, Rothman J dismissed a further motion filed by Mr Arjunan and Ms Kannapiran on 19 April 2022 seeking to re-open the decision of Hamill J, a declaration that Grace Lawyers were invalidly appointed and leave to amend their summons as well as various orders as to costs: Arjunan v Neighbourhood Association DP No 285853 [2022] NSWSC 746. His Honour granted leave to amend the summons to include an order for the costs of the proceedings but otherwise dismissed the Amended Motion filed on 19 April 2022. Rothman J held at [25]-[27] that: "It seems that the plaintiffs now seek to re-agitate issues that were agitated before Hamill J, on the basis of what is said to be new evidence that was not taken into account or was not tendered before his Honour. In large measure, the substantive issue that was before Hamill J was stood over to be argued at the time that the substantive appeal would be heard. There is no suggestion that the evidence that is sought to be relied upon now was not available to the plaintiffs at the time that the matter was heard by Hamill J. Of course, the hearing before Hamill J and the decision of his Honour was an interlocutory hearing. Nevertheless, his Honour determined to finality the issue of the validity of the AGM. To the extent that his Honour was wrong, there is a right of appeal to the Court of Appeal. There has been no appeal from his Honour's judgment."
Rothman J also noted at [23] that a series of NCAT proceedings had been instituted by Mr Arjunan and Ms Kannapiran. His Honour added the following: "[54] The previous proceedings relating to the validity of annual general meetings about which the plaintiffs have complained were determined by NCAT. I do not have the judgments of NCAT before me or their decisions. I do not know whether the issue raised in relation to the validity of prior AGMs is the same issue that is sought to be agitated in these proceedings. If it were, it may well be subject to arguments about … issue estoppel… … [56] The matters that have been sought to be agitated on the Motion are not appropriate matters to be dealt with on a preliminary basis. They are either matters that ought to be resolved, if at all, at the substantive hearing of the appeal from the Local Court, or resolved by NCAT; and, if they make an error of law, ultimately by this Court on appeal."

[6]

Appeal to Adamson J

The appeal from the Local Court decision was brought pursuant to ss 39 and 40 of the Local Court Act 2007 (NSW) (the Local Court Act) before Adamson J. An appeal directly to the Supreme Court from the Local Court is confined to "a question of law" or, with the leave of the Court, "a question of mixed law and fact." Mr Arjunan and Ms Kannapiran sought to raise four grounds of appeal before Adamson J, namely: "(1) the Court below applied the wrong law in determining the relevant principles; (2) the Court below erred in finding that Grace Lawyers were authorised by the association to act as its legal representatives, as the AGMs at which the motions were passed did not have a Chairperson and were conducted outside the time allowed for such meetings; (3) costs were not recoverable by reason of s 120(2) of the [Community Land Management Act 1989 (NSW)]; and (4) the costs were disproportionate and were, therefore, not recoverable."
On 9 November 2022, Adamson J dismissed the appeal brought against the Local Court decision and ordered that Mr Arjunan and Ms Kannapiran pay the Neighbourhood Association's costs of the proceedings: the Local Court appeal decision. In summarising the interlocutory applications made by Mr Arjunan and Ms Kannapiran, her Honour noted that the 19 April 2022 motion dismissed by Rothman J "sought to re-agitate the issues which had been ventilated before Hamill J": at [39].
Adamson J refused leave to appeal in relation to ground 2, it raising a mixed question of fact and law. Her Honour's reasoning at [47]-[49] was as follows: "The lot owners argued in the Court below, and in this Court, that the resolutions made by the association appointing Grace Lawyers were invalid because the minutes did not record that there was a Chairperson at the AGMs at which the resolutions were passed and, more generally, that the association became 'defunct' from 2018 onwards. They argued, accordingly, that Grace Lawyers had no authority to act on behalf of the association in the Court below or in this Court. The lot owners were unable to identify any statutory requirement that there be a Chairperson at the AGMs of the association. They argued that cl 57 of Pt 3 of sch 6 had the effect of mandating the presence of a Chairperson. This is not its effect. All cl 57 does is to provide that a general meeting of a neighbourhood association is valid even if attended only by a chairperson, subject to there being a quorum (as there may be if there are sufficient proxies, or the chairperson owns sufficient lots). I am not persuaded that there was any non-compliance with the Act such as to impugn the validity of the resolutions made by the association on 4 December 2018 and 30 October 2019 to appoint Grace Lawyers to act on its behalf to recover contributions and costs from defaulting lot owners. However, even if there had been, it does not follow that the resolutions are invalid. Parliament has expressed its intention through s 82 of the Act that non-compliance does not automatically invalidate a meeting or a particular resolution. Rather, it is a matter for the Tribunal, on application, to determine whether any non-compliance ought result in invalidity. No such application was made to the Tribunal. The Local Court had no jurisdiction to entertain such [an] application."
Her Honour also refused leave in respect of ground 3 on the basis that it "was without merit and was based on a misapprehension of the effect of the statutory provisions": at [54]. Her Honour's reasoning at [51]-[53] was as follows: "The lot owners relied on s 120(2) of the Act in support of their contention that the association was not entitled to recover its costs of recovering outstanding contributions and costs from them. The lot owners' submission is based on a misreading of s 120(2). Section 120(3) provides that s 120(2) only applies if the Court is of the opinion that the taking of the proceedings (by the association against the lot owners in the Local Court) was not justified because the Act made adequate provision for enforcement of the respective rights and remedies. The Act does not provide for unpaid contributions or costs to be recovered as a debt. The source of the association's power to recover unpaid contributions (other than those varied by the Tribunal under s 83 of the Act) is the by-law. The Tribunal has no jurisdiction to order payment of costs incurred in recovering unpaid contributions (other than those it has varied). The Local Court has jurisdiction with respect to claims for debt up to $100,000: ss 29(1)(a), 29A and 30(1)(a) of the Local Court Act. Thus, it was necessary for the association to bring proceedings in the Court below to recover, relevantly, the costs to which it was entitled having regard to the by-law. In these circumstances, s 120(2) provided no basis for the Local Court to refuse to order judgment or order that the lot owners pay the costs of the hearing on 2 December 2021."
In dismissing grounds 1 and 4 of the appeal, Adamson J reasoned that, although the costs were arguably disproportionate, the Local Court had applied the correct principles and the Neighbourhood Association was entitled to recover all costs reasonably and properly incurred: at [45].

[7]

Notice of Motion before N Adams J

On 21 November 2022, Mr Arjunan and Ms Kannapiran filed a Notice of Motion seeking the following orders: "1. The judgment in favour of the defendant on 9 November 2022 be set aside and varied. 2. That enforcement action be stayed until the application to set aside judgment is decided. 3. That the application for a stay of enforcement be dealt with on an urgent ex parte basis in chambers. 4. Grant leave to appeal … where it is required and allow the appeal. 5. Set aside and vary the decision of the Court below on the grounds of appeal. 6. Declare that the AGMs held from 2018 to 2021 were invalid and their resolutions are all invalid. 7. Declare that Grace Lawyers has acted without authority in these proceedings [in the] Local Court and Supreme Court and therefore their cost claim dismissed [sic.]. 8. Declare that by-law 13 of the NHA is invalid. 9. Declare that the O'Connor agent has been acting without a valid agency agreement. 10. Dismiss legal cost [sic.] claimed and awarded against Grace Lawyers who acted without authority [in] the proceedings in the Court below and the Supreme Court of New South Wales. 11. Defendant to pay the plaintiff [sic.] costs of and incidental to the summon [sic.] and motion. 12. All cost orders by [the] Local Court and NSWSC be subject to cost assessment and proportional."
On 28 November 2022, the Neighbourhood Association's lawyers wrote to Mr Arjunan and Ms Kannapiran explaining that the Notice of Motion was unlikely to succeed and inviting them to withdraw it by a stipulated date. Mr Arjunan and Ms Kannapiran did not withdraw the Notice of Motion.
On 1 December 2022, N Adams J dismissed the Notice of Motion and ordered that Mr Arjunan and Ms Kannapiran pay the Neighbourhood Association's costs on an ordinary basis: Arjunan v Neighbourhood Association No DP 285853 [2022] NSWSC 1663. Her Honour referred to the powers to set aside or vary judgments contained in rr 36.15-36.17 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPRs).
Her Honour was not satisfied that the judgment of Adamson J was made irregularly or illegally or against good faith such that it could be set aside pursuant to UCPR r 36.15: at [18]. Nor was her Honour satisfied that any of the conditions precedent were satisfied to warrant Adamson J's judgment being set aside in accordance with UCPR r 36.16(2): at [17]. Although N Adams J acknowledged that the Notice of Motion had been filed within 14 days of judgment being entered, consistent with r 36.16(3A), her Honour reasoned at [21]-[24] that: "The only remaining power is under UCPR r 36.16(3) which limits the court's power to set aside or vary a judgment insofar as it dismisses proceedings. The effect of that subsection is that even if the plaintiffs could establish some basis to vary the judgment or order, no variation could be made that would change the result. To put that another way, the plaintiffs' proceedings were dismissed and UCPR r 36.16 prohibits any variation to that result. A further fundamental difficulty with this notice of motion is the application of the principal of finality. Although it is to be accepted that these rules provide a limited departure from the principle of finality, the fact remains that there is a public interest in maintaining the finality of litigation. The public interest requires great caution in the exercise of the power, especially where the variation sought would have the practical effect of reopening the proceedings to enable a significant rehearing. I am satisfied that that is what the plaintiffs seeks [sic.] to do in this case. Even if [they were] permitted to do so, the fact remains that the result would have to remain the same. Ms Parker submitted that not only were the plaintiffs informed by Rothman J that you cannot seek a variation of a decision of another judge in this division, they were also told by the Registrar at the directions hearing on 28 November. To the extent that the plaintiffs are disgruntled with the decision of Adamson J, they can seek leave to … appeal to the Court of Appeal against that decision. … I am not satisfied that there is any basis to set aside or vary the order given the scope of r 36.16(3). Orders 2, 3, 4 and 5 are all orders in which this court is functus and should be raised in the Court of Appeal … In relation to orders 6 and 7 this court is functus … They have already been determined by Hamill J and Rothman J. As for orders 8 and 9 they are new matters that Ms Parker submits have not been raised before and are not matters that I would have jurisdiction to determine in any event on a notice of motion after the proceedings have been finalised. Orders 10, 11 and 12 pertain to costs. I have no jurisdiction to dismiss the costs claim in the Supreme Court. Costs follow the event and that is an order connected with the primary judgment. Nor is there a proper basis for me to order that there be cost assessment of the Local Court and Supreme Court proceedings…"
In relation to the costs of the proceedings, her Honour said that although it was "regrettable" that Mr Arjunan and Ms Kannapiran had proceeded in the face of the letter sent by the Neighbourhood Association's lawyers, "there [was] no reference to UCPR r 36.16(3) in the letter and [in light of] a factual dispute about whether it was drawn to the plaintiffs' attention before the Registrar", her Honour did not order that costs be paid on an indemnity basis: at [33].

[8]

Proceedings in the Court of Appeal

On 6 February 2023, Mr Arjunan and Ms Kannapiran sought leave to appeal from the decisions of Adamson J and N Adams J. Five grounds of appeal were raised which can be summarised as follows: 1. That Adamson J incorrectly applied the case of Dimitriou which concerned the Strata Schemes Management Act 1996 (NSW) (SSMA) and not the CLMA; 2. That Adamson J, in finding that the by-law was valid, overlooked that s 14(2) of the CLMA precluded the making of the by-law; 3. That Adamson J erred in relation to the alleged invalidity of AGMs, resolutions and the solicitors' retainer; 4. That Adamson J erred in holding that s 120(2) of the CMLA did not provide a basis on which the Court should have ordered the Neighbourhood Association to pay the applicants' costs; and 5. That the Local Court's costs decision miscarried on the basis that invoicing requirements were not satisfied and aspects of the costs were excessive.
Grounds 3 and 4 broadly corresponded to grounds 2 and 3 before Adamson J.
During the hearing of the leave application, a further ground of appeal was raised, being that N Adams J erred in construing UCPR r 36.16(3A) as subject to r 36.16(3)(b).
On 28 April 2023, the Court of Appeal Registrar refused leave to issue a subpoena addressed to the Neighbourhood Association and O'Connors returnable before 3 May 2023 pursuant to UCPR r 7.3. The basis for the subpoena, which sought a range of documents including documents in relation to an investigation conducted by the Department of Fair Trading (the Department) concerning the Neighbourhood Association's legislative compliance, the Neighbourhood Association's insurance cover, the retainer of Grace Lawyers and meetings and membership of the Neighbourhood Association, was said to be that the recipients had "deliberately withheld" documents and "misled the court".
Leave to appeal was refused by Ward P and Mitchelmore JA on 19 May 2023: Arjunan v Neighbourhood Association DP No 285853 [2023] NSWCA 103 (Arjunan (No 1)). Their Honours reasoned at [3] that: "… In relation to the decision of Adamson J, the limited merits of the applicants' arguments are outweighed by the amount of money in issue, noting that the proposed appeal to this Court would be the second appeal afforded on at least some of the proposed grounds if leave were granted. As to the decision of N Adams J, that decision was interlocutory in nature and the applicants have now had an opportunity to agitate before this Court such arguments as they sought to make before her Honour. Further, and contrary to the applicants' submission that the issues are of general importance to community associations, there are no issues of principle or general importance that would support a grant of leave."
In relation to ground 3 of the proposed appeal it was held at [35] that: "… in order to succeed on an appeal on this ground, whether on the basis of the absence of a chairperson or the absence of an executive committee said to render the association 'defunct', the applicants would need to demonstrate not only that there was non-compliance with the requirements of the Act, but also that such non-compliance would result in invalidity of the resolutions made. Having regard to the amount in issue and the reasons set out above, the prospects of the applicants succeeding on both of these issues do not warrant a grant of leave."
Ward P and Mitchelmore JA added at [46]: "On any view, the expenditure of nearly $30,000 to recover a debt of under $3,000 is disproportionate and should not be encouraged. Nevertheless, the course adopted by the applicants of challenging this costs outcome has been misconceived and their complaints against the respondent and its lawyers were not pursued in the appropriate forum."
Mr Arjunan and Ms Kannapiran were ordered to pay the Neighbourhood Association's costs of the application for leave to appeal, except in respect of a Notice of Motion filed by the Neighbourhood Association on 17 March 2023 seeking an order that the appeal be dismissed pursuant to UCPR r 51.41.

[9]

2 June 2023 Notice of Motion

On 2 June 2023, Mr Arjunan and Ms Kannapiran filed a notice of motion seeking first, to set aside and vary the orders made by Ward P and Mitchelmore JA, second, orders granting leave to appeal and allowing the appeal, and third, the issuance of the subpoena which the Registrar had refused leave to issue on 28 April 2023. That notice of motion was dismissed by Ward P and Mitchelmore JA on 3 August 2023: Arjunan v Neighbourhood Association DP No 285853 (No 2) [2023] NSWCA 176 (Arjunan (No 2)).
The Court treated the Notice of Motion as "an application to reopen and to vary orders that the Court" had made on 19 May 2023 and held that because the Notice of Motion was filed within 14 days of judgment being entered, the Court had power to reopen the matter and vary the orders, as if the orders had not been entered: UCPR rr 36.16(1) and (3A). However, the Court then held that this power was "not to be exercised for the purpose of allowing arguments that have already been considered by the Court to be reagitated, or because the applicant has failed to present the argument in all its aspects or as well as it might have been put": at [5].
The principal basis upon which Mr Arjunan and Ms Kannapiran argued that the orders of the Court in Arjunan (No 1) should be set aside and varied was the existence of what were asserted to be "newly discovered facts" discerned from records of the investigation conducted by the Department in relation to the Neighbourhood Association. In particular, Mr Arjunan and Ms Kannapiran relied on the Department having recorded that, contrary to reg 4C(3) of the Property, Stock and Business Agents Regulation 2014 (NSW), the Association Agency Agreement had been executed on behalf of O'Connors by an agent who did not hold a licence and whose address and licence number were not specified. Mr Arjunan and Ms Kannapiran submitted that this aspect of the Department's records, as well as the fact that another person employed at O'Connors did not hold a "Class 1 licence", meant that, as was advanced by ground 3 of their appeal heard by Adamson J, the appointment of Grace Lawyers was invalid, illegal and void.
Ward P and Mitchelmore JA held that the fact that a licence number and address were not specified on the Association Agency Agreement arose on its face (at [14]) and that Mr Arjunan and Ms Kannapiran had been in possession of that agreement, as well as a Witness Statement and Affidavit of the other O'Connors employee, for some time: at [12]. Their Honours also referred to their earlier reasons in Arjunan (No 1) at [35] (set out at [45] above) in holding that UCPR r 36.16 would not permit reopening Arjunan (No 1) "to reagitate the same matters with different emphasis": at [12]-[13].
Ward P and Mitchelmore JA held at [15] that Mr Arjunan and Ms Kannapiran's contention that the Court had "overlooked" important submissions they had made in relation to ground 4 of their proposed appeal "did no more than reagitate points that were made on the leave application".
In relation to ground 5 of their proposed appeal, Mr Arjunan and Ms Kannapiran contended that, during the leave application, the Neighbourhood Association gave false oral evidence as to it recouping the costs of the debt recovery pursuant to its insurance policy whilst also claiming those costs in the Local Court. Ward P and Mitchelmore JA held at [18] that there was no basis established for that allegation nor any basis for the Court to reconsider its decision on ground 5.
The Court then held that, in submitting they were denied natural justice, Mr Arjunan and Ms Kannapiran were effectively reagitating submissions they had already made in relation to grounds 1, 3 and 5 of their proposed appeal, none of which articulated a denial of natural justice or a basis upon which the Court would entertain a reopening of its decision: at [19].
In relation to the subpoena sought by Mr Arjunan and Ms Kannapiran, the Court held that no error had been identified in the Registrar's decision to refuse leave to issue that subpoena. It was also held that, in any event, as the proceedings had concluded there was "no utility in issuing the subpoena": at [22].

[10]

17 August 2023 Notice of Motion

On 17 August 2023, Mr Arjunan and Ms Kannapiran filed a further Notice of Motion seeking to set aside and vary the orders made in Arjunan (No 2) pursuant to UCPR r 36.16(3A).
On 28 August 2023, the Registrar of the Court of Appeal made directions, including a direction that Mr Arjunan and Ms Kannapiran be required to show cause why a "Teoh direction" (similar to that made in Teoh v Hunters Hill Council (No 4) (2011) 81 NSWLR 771; [2011] NSWCA 324) should not be made. The Neighbourhood Association advised the Court that it sought a Teoh direction.
On 8 November 2023, in Arjunan (No 3), Ward P and Mitchelmore JA dismissed the Notice of Motion filed on 3 August 2023 and made a Teoh direction in the following terms: "If Mr Kannapiran Chinna Arjunan or Ms Thangam Kannapiran files any further application against Neighbourhood Association DP No 285853 in respect of the matters litigated in the Supreme Court of New South Wales or the Court of Appeal seeking, in substance, leave to appeal from the orders of Adamson J of 9 November 2022 or N Adams J of 1 December 2022, or leave to reopen the orders of the Court of Appeal made on 19 May 2023, 3 August 2023, or 8 November 2023, the Registrar shall promptly vacate the return date, notify the parties, and refer the papers to a judge nominated by the President to determine, in Chambers, whether the Court should fix a new return date and notify the parties, or whether Mr Kannapiran Chinna Arjunan or Ms Thangam Kannapiran should be invited to show cause in writing why the Court should not, in Chambers, summarily dismiss the proceedings as vexatious and an abuse of process."
In holding that there was no basis to re-open its decision in either Arjunan (No 1) or Arjunan (No 2) or to vacate any of the costs orders made, the Court reasoned at [16] that: "The applicants advance a series of arguments in their submissions filed on 14 September 2023, including that the respondent committed an abuse of process by misleading the court, withholding evidence, using false and misleading evidence and breaching s 56(3) of the Civil Procedure Act 2005 (NSW). The arguments, which we have summarised below, have already been the subject of consideration by this Court in either or both of Arjunan (No 1) and Arjunan (No 2). The [applicants'] dissatisfaction with the manner in which this Court has dealt with those arguments does not constitute a basis on which to set aside or vary the orders in Arjunan (No 2)."
The Court also held at [28] that: "The arguments that the applicants have been denied procedural fairness, having not been heard on the purportedly 'new' and 'overlooked' evidence, and that consequently the case has not been finally determined is without merit. As the respondent submitted, the applicants are attempting to reagitate issues that have already been determined."
As to the making of the Teoh direction, Ward P and Mitchelmore said at [32]-[35] that: "The applicants submit that the 17 August 2023 notice of motion is competent and not frivolous or vexatious because: it is necessitated by the respondent withholding evidence (namely, details of an insurance claim and a report from the Department of Fair Trading); the fact that evidence has been withheld or overlooked means the case has not been finally determined and the consequent lack of procedural fairness presents reason to reopen the case; and the 'right of the respondent' is not adversely affected as it has received insurance for its legal costs. The applicant's submissions on the Teoh direction then set out the matters dealt with above at [17]-[22]. The arguments relied upon have been dealt with and rejected above (and in Arjunan (No 1) and Arjunan (No 2)). The procedural history the Court has outlined above demonstrates a persistent refusal on the part of the applicants to accept the orders of the various courts that have considered [their] complaints on multiple occasions. In so far as the applications in this Court are concerned, the Court observed … in Arjunan (No 1) that the proposed appeal from Adamson J 'would be the second appeal afforded on at least some of the proposed grounds if leave were granted': at [3]. The 17 August 2023 notice of motion is the second notice of motion filed in this Court by the applicants pursuant to r 36.16(3A) of the UCPR, the first of which was similarly dismissed largely on the basis that the application did no more than reagitate points that were made on the leave application, which the Court addressed in Arjunan (No 1). The applicants' demonstrated refusal to accept the orders of the Court is vexatious, oppressive and unfair to the respondent; and thus amounts to an abuse of process. To permit these proceedings to continue would bring the administration of justice into disrepute; a central tenant of the judicial system is that controversies, once resolved, are not to be reopened (other than in very limited circumstances): Proietti v Proietti [2023] NSWCA 132 at [36]; D'Orta-Ekenaike v Victoria Legal Aid (2005) 223 CLR 1; [2005] HCA 12 at [34] (Gleeson CJ, Gummow, Hayne and Heydon JJ). If the applicants persist, notwithstanding the making of the Teoh direction, in bringing in substance the same application as has already been considered and dismissed, then consideration may need to be given as to why the matter should not be referred to the Attorney-General for his consideration as to whether to make an application for the applicants to be declared vexatious litigants."

[13]

Consideration

Mr Arjunan and Ms Kannapiran had a right to appeal from the decision of the Local Court and exercised that right. This resulted in the decision of Adamson J.
Prior to that decision, they had sought relief by way of two Notices of Motion before Hamill J and Rothman J. Although those motions were interlocutory in nature, both effectively sought declaratory relief in relation to the legality of Grace Lawyers acting for the Neighbourhood Association. Although both decisions provide some context and gave an insight or forecast of what was later to transpire, we have not included them in our consideration of the degree of frequency of proceedings for the purposes of s 8(1)(a) of the VPA. An allowance should be made for the fact that Mr Arjunan and Ms Kannapiran were self-represented, and do not appear fully to have understood certain procedural matters. These proceedings also preceded the exercise of their right of appeal to a single judge of the Supreme Court from the Local Court.
In our view, the proceedings which can be characterised as "vexatious" (for reasons explained below) are those before N Adams J and the Notices of Motion of 2 June, 17 August, 29 November 2023 and 5 January 2024.
By way of written submissions filed on 3 May 2024, Mr Arjunan and Ms Kannapiran appeared to submit that each of the proceedings filed by them does not meet the definition of "vexatious proceedings" pursuant to s 6 of the VPA on the basis that those proceedings were instituted to address matters which were, as set out in a lengthy table attached to their submissions, "inadvertently or by oversight not considered" by the Court.
This was a familiar form of submission. It had been made (and rejected) before Stern JA, for example, her Honour noting at [15] that: "The applicants first contend that this Court, in Arjunan (No 3), overlooked or did not consider material evidence, arguments or submissions and erred by treating the applicants' contentions as seeking to reagitate issues already dealt with. That contention is without merit. In Arjunan (No 3) the Court identified the applicants' arguments, evidence and principles, and identified where, in previous decisions, the applicants' contentions had already been considered and rejected."
The same pattern may be seen in Arjunan (No 2) where the heading to [15] of the judgment is "Overlooking significant points on proposed Ground 4". Their Honours recorded and rejected the submission which continued indomitably to be made by Mr Arjunan in this hearing.
Each of these proceedings identified in [72] above fell, in our opinion, within the meaning of s 6 of the VPA. They were vexatious insofar as they sought to litigate anew matters that already had, or could have been, litigated in the earlier decisions, namely the decision of Adamson J and the decision of Ward P and Mitchelmore JA, refusing leave to appeal. This is a classic example of vexatiousness and an abuse of process.
They also meet the definition of vexatious proceedings in s 6(c) of the VPA, namely proceedings instituted or pursued "without reasonable ground". This is because each seeks to use UCPR r 36.16 for an impermissible purpose, namely as a means of canvassing substantive decisions rather than for the more limited purpose to which that provision is directed.
Mr Arjunan and Ms Kannapiran plainly did not and do not accept the decisions of Adamson J and that of Ward P and Mitchelmore JA, refusing leave to appeal. Such non-acceptance does not, however, give a party any entitlement to continue to bring proceedings in order to secure a different result, and UCPR r 36.16 does not give a party licence to do so. As this Court explained in State of New South Wales v Hollingsworth (No 2) [2023] NSWCA 283 at [17]: "As is well-established, the power conferred by UCPR, r 36.16 is to be exercised 'sparingly and with caution' having regard to the importance of the finality of litigation, and 'does not give a licence to disgruntled litigants to re-agitate, in the hope of obtaining a more favourable outcome, issues that have been determined against them': Majak v Rose (No 5) [2017] NSWCA 238 ("Majak") at [12]-[13] (Leeming and Simpson JJA, Emmett AJA). The purpose of the power is 'to permit readily identifiable, readily rectifiable, inadvertent errors to be corrected without the complication and expense of an appeal': Majak at [12]."
Although Mr Arjunan contended that certain matters had not been dealt with or addressed in earlier proceedings, a review of those decisions amply demonstrates that that was either not so or, alternatively, the matters which it was contended should have been considered had no merit or were misconceived. One example of this was Mr Arjunan's reliance on s 89 of the Community Land Management Act 2021 (NSW) which did not apply to the Neighbourhood Association in respect of the proceedings in the Local Court which had been commenced before its passage: see cl 6 of Sch 3.
In substance, each notice of motion involved an attempt to canvass the earlier decisions: in one case, the decision of Adamson J, and in the other cases, the decision of Ward P and Mitchelmore JA, refusing leave to appeal.
It is telling that, in one of the notices of motion, it was sought to rely on what was said to be fresh evidence by way of justifying a re-opening. This implicitly recognised that Mr Arjunan and Ms Kannapiran could not simply repeat arguments previously made. But this attempt to justify a re-opening failed because the Court did not accept that there was any fresh evidence and concluded, in effect, that the application involved a canvassing of the earlier decision to refuse leave to appeal: Arjunan (No 2) at [12]-[14].
It was also sought to contend that there had been fraudulent conduct by lawyers or the managing agent, as a means of opening up earlier decisions. That attempt was also rightly rejected by Ward P and Mitchelmore JA as lacking any proper basis: Arjunan (No 2) at [18]. Such arguments were repeated before this Court by Mr Arjunan.
In supplementary written submissions, received on 16 May 2024, Mr Arjunan again focussed on grounds 3 and 4, as referred to in the proposed grounds of appeal considered by Ward P and Mitchelmore JA in refusing leave to appeal. Mr Arjunan's written contention was that, "had all the proceedings … considered the facts and law [as] submitted by us as discussed above, the decision would be different." This submission was revealing.
It was not for this Court, on its consideration of whether or not an order should be made under the VPA, to hear and consider detailed and, with respect, at times confused or misconceived submissions about the intricacies of the CLMA and its application and that of the SSMA to a neighbourhood association, although that was the path upon which Mr Arjunan's submissions inevitably drew the Court. Rather, the task of this Court, in accordance with the well established four stage approach noted at [13] above, is to consider whether the identified earlier decisions fall within the definition of vexatious proceedings in s 6 of the VPA.
For the reasons given above, they do. We note, parenthetically, that, although we have reached this decision independently, the same characterisation was given to the notice of motion determined by Stern JA as well as the notice of motion dealt with by Ward P and Mitchelmore JA in Arjunan (No 3).
These five proceedings, brought in a short space of each other, also meet in our view the description of "frequently instituted … proceedings" as used in s 8(1)(a) of the VPA as expounded in the authorities. In particular, since the refusal of leave to appeal, four motions have been filed in an extremely short space of time, in similar or overlapping form, all directed to the same end, namely canvassing the decision to refuse leave to appeal.
That leaves for consideration the fourth step, namely whether the Court should exercise its discretion to make a vexatious proceedings order. In our opinion, it should do so. In reaching this conclusion, the Court is, of course, conscious that such a decision is exceptional and caution must be exercised.
The conduct of Mr Arjunan on his own behalf and on behalf of Ms Kannapiran exemplifies a determination to persist in his fight which, on one level, is understandable, but on another level, wholly unjustifiable. Resources of senior judges have been absorbed by the persistent attempts to litigate until success is achieved. That is also utterly burdensome to the Neighbourhood Association which has continuously been drawn into Mr Arjunan's unremitting applications.
It is notable that the Rothman J referred to the impermissibility of seeking to reagitate arguments in an application under r 36.16 when Mr Arjunan and Ms Kannapiran made their first reopening application, with respect to the decision of Hamill J. So, too, did N Adams J in her decision on the application to reopen the decision of Adamson J. And so did Ward P and Mitchelmore JA, along with Stern JA, with respect to the three applications to reopen made in this Court. That has not deterred the making of yet another application. It is apparent that Mr Arjunan and Ms Kannapiran are likely to continue making such applications on the basis of their refusal to accept an outcome with which they disagree.
As cases such as Proietti demonstrate, a vexatious proceedings order may be tailored to the circumstances of the particular case. The vexatious proceedings have all been associated with the circumstances giving rise to the orders of the Local Court. The order set out below limits the restraint on future litigation in this Court to the subject matter comprehended by the suite of decisions referred to in the order, including this decision. Given the subject matter limitation of the order, and the persistence of the attempts to reopen the orders made, this is not a case in which it is appropriate to impose a temporal limitation.
Finally, the motion filed on 5 January 2024 should be dismissed, being simply another attempt to reagitate issues already addressed by this Court.

Parties

Applicant/Plaintiff:

Arjunan

Respondent/Defendant:

Neighbourhood Association DP No 285853

Legislation Cited (9)

Community Land Management Act 1989(NSW)ss 14, 20A, 120

Property, Stock and Business Agents Regulation 2014(NSW)reg 4C

Strata Schemes Management Act 1996(NSW)

Land Management Act 1989(NSW)

Vexatious Proceedings Act 2008(NSW)ss 4, 6, 8

Community Land Management Act 2021(NSW)s 89

Local Court Act 2007(NSW)ss 39

Uniform Civil Procedure Rules 2005(NSW)rr 7.3, 36.15-36.17

Civil Procedure Act 2005(NSW)

Cases Cited (24)

w South Wales v Hollingsworth (No 2) [2023] NSWCA 283 Teoh v Hunters Hill Council (No 4) (2011) 81 NSWLR 771; [2011] NSWCA 324 Teoh v Hunters Hill Council (No 8) [2014] NSWCA 125 Category: Principal judgment Parties: Mr Kannapiran Chinna Arjunan Ms Thangam Kannapiran Neighbourhood Association DP No 285853 Representation: Counsel:

JUDGMENT

THE COURT: On 28 March 2024, Ward P made orders listing this matter in order to hear and consider, of the Court's own motion, whether there should be a vexatious proceedings order made in respect of Mr Kannapiran Chinna Arjunan and Ms Thangam Kannapiran pursuant to s 8 of the Vexatious Proceedings Act 2008 (NSW) (VPA).
The factual background and procedural history of the litigation will be set out in greater detail later in these reasons. For present purposes, it is sufficient to state that each of the proceedings instituted by Mr Arjunan and Ms Kannapiran relate to a judgment in the sum of $28,348 entered against them on 2 December 2021 in the Local Court in favour of the Neighbourhood Association DP No 285853 (the Neighbourhood Association). That judgment sum was referable to costs incurred by the Neighbourhood Association in seeking to recover unpaid levies from Mr Arjunan and Ms Kannapiran in relation to a lot owned by them in a deposited plan managed by the Neighbourhood Association.
Mr Arjunan and Ms Kannapiran appealed directly to the Supreme Court from the decision of the Local Court. Before the appeal came on for hearing before Adamson J (as her Honour then was), Mr Arjunan and Ms Kannapiran filed two notices of motion seeking, inter alia, declaratory relief in relation to the retainer of the Neighbourhood Association's lawyers, Grace Lawyers, and their entitlement to charge the fees which represented the Association's legal costs which were ordered to be paid by Mr Arjunan and Ms Kannapiran in the Local Court proceeding. Both of these notices of motion were dismissed, as was the substantive appeal to Adamson J: Arjunan v Neighbourhood Association DP No 285853 (No 3) [2022] NSWSC 1524 (the Local Court appeal decision).

Statutory framework and authorities

Pursuant to s 8(1)(a) of the VPA, an authorised court may make a vexatious proceedings order in relation to a person if satisfied that "the person has frequently instituted or conducted vexatious proceedings in Australia" (emphasis added). In making such an order, the Court may have regard to proceedings instituted or conducted in any Australian court or tribunal, orders made by any Australian court or tribunal and evidence of the decision, or finding of fact, of any Australian court or tribunal hearing such proceedings or making such orders: s 8(2).
"Vexatious proceedings" are defined in s 6 of the VPA as including: "(a) proceedings that are an abuse of the process of a court or tribunal, and (b) proceedings instituted to harass or annoy, to cause delay or detriment, or for another wrongful purpose, and (c) proceedings instituted or pursued without reasonable ground, and (d) proceedings that are conducted to achieve a wrongful purpose, or in a way that harasses, or causes unreasonable annoyance, delay or detriment, regardless of the subjective intention or motive of the person who instituted the proceedings."
"Proceedings" are defined in s 4 of the VPA as including: "(a) any civil proceedings, criminal proceedings or proceedings before a tribunal, and (b) any cause, matter, action, suit, proceedings, trial, complaint or inquiry of any kind within the jurisdiction of any court or tribunal, and (c) any proceedings taken in connection with or incidental to proceedings pending before a court or tribunal, and (d) any interlocutory proceedings or applications, or procedural applications, taken in connection with or incidental to civil proceedings, criminal proceedings or proceedings before a tribunal, and (e) any calling into question of a decision, whether or not a final decision, of a court or tribunal, and whether by appeal, challenge, review or in another way."
Pursuant to s 8(4) of the VPA, the Court may make a vexatious proceedings order of its own motion. It has done so on numerous occasions. Section 8(7) of the VPA provides that: "…The Supreme Court may make any one or more of the following vexatious proceedings orders in relation to a person: (a) an order staying all or part of any proceedings in New South Wales already instituted by the person, (b) an order prohibiting the person from instituting proceedings in New South Wales, (c) any other order that the Court considers appropriate in relation to the person."
The principles applicable to the making of a vexatious proceedings order by the Court of its own motion were most recently outlined by this Court in Proietti v Proietti [2024] NSWCA 48 (Proietti) (see, also Macatangay v New South Wales [2012] NSWCA 374 (Macatangay) and Teoh v Hunters Hill Council (No 8) [2014] NSWCA 125). In Proietti at [25], the Court said: "As was also pointed out in Collier at [45] [Collier v Attorney General (NSW) [2023] NSWCA 273], determining whether to make a vexatious proceedings order against a person involves four steps of analysis (see also Zepinic v Chateau Constructions (Aust) Ltd [2018] NSWCA 317 at [13]-[15] (Zepinic)): '(1) identify the 'proceedings' the subject of the application which are said to be vexatious; (2) determine which, if any, of those proceedings is vexatious within the meaning of s 6 of the Act; (3) determine (relevantly) whether the person has 'frequently' instituted or conducted vexatious proceedings in Australia within the meaning of s 8(1) of the Act; (4) determine the manner in which the discretion granted by s 8 is to be exercised (if at all).'"
Earlier in Proietti at [17]-[20], the Court surveyed case law in relation to the word "frequently" as used in s 8(1)(a) of the VPA, including noting Leeming JA's observation in Potier v Attorney General in and for the State of New South Wales (2015) 89 NSWLR 284; [2015] NSWCA 129 at [118] that the word "frequently" represented a "relatively low threshold." In Proietti at [114], the Court held that the five proceedings commenced in a seven month period following the High Court's refusal of a grant of special leave to appeal, and which repeatedly sought to re-agitate issues already decided, met this threshold.