Chippindale v Owners Corporation Strata Plan 7260

Supreme Court of NSW|2013-07-19|Before: Fullerton J

Judgment 1HER HONOUR: On 26 June 2012 Stapleton LCM dismissed the plaintiff's second amended statement of claim for $38,493, plus interest and costs, for services rendered under a written agreement dated 25 February 2008. At all relevant times the plaintiff was a builder trading as PLC Carpentry Services and the defendant was an Owners Corporation under the Strata Schemes Management Act 1996 ("the SSM Act"). 2The agreement upon which the plaintiff sued was alleged to have been made with the authority of the defendant under the hand of Mr O'Neal, the Secretary of the defendant at the relevant time. The plaintiff conducted his case on the basis of the authority asserted by Mr O'Neal in his defence of the cross-claim brought by the Owners Corporation and in his evidence to the effect that he had authority to enter into the contract as Chairman and Secretary of the Owners Corporation and/or was authorised in accordance with the resolutions of the Executive Committee of the Owners Corporation and/or because he was appointed "Executive" of the Owners Corporation by resolution of the Executive Committee. 3The Magistrate found that Mr O'Neal did not have the authority to contract on behalf of the Owners Corporation, whether on his own behalf or on behalf of the Executive Committee, and dismissed the plaintiff's claim in contract for that reason. 4Consequential upon dismissing the plaintiff's claim the Magistrate also dismissed the Owners Corporation's cross-claim against Mr O'Neal as the Secretary of the Owners Corporation and a cross-claim brought by him against Mr Joiner, another member of the Executive Committee of the Owners Corporation. The disposition of the cross-claims and the refusal of equitable relief are not the subject of any relief the plaintiff seeks by summons in this Court. 5The alternative equitable relief by way of quantum meruit was dismissed on the basis that the Owners Corporation did not request the plaintiff to provide the carpentry services and that the plaintiff took no steps, on his own behalf, to ascertain whether Mr O'Neal had authority to sign the letter of agreement and bind the Owners Corporation. The Magistrate found as a fact that the Owners Corporation, through its Executive Committee, knew nothing of the signed agreement until the plaintiff delivered an invoice two years after the date of the letter. 6The Magistrate also ordered that the plaintiff pay the defendant's costs, including the costs of the first cross-claim, on an indemnity basis from the commencement of proceedings. There is no appeal from that order. 7The proceedings in this Court are governed by ss 39 and 40 of the Local Court Act 2007 which provide that an appeal from a decision of the Local Court may only be taken as of right on a question of law and that questions of mixed fact and law require a grant of leave. 8The grounds of appeal (which I understand were drafted by the plaintiff who appears on his own behalf in the proceedings in this Court) assert what are said by to be multiple errors in the Magistrate's approach to the issues raised by the pleadings and in her reasoning to the conclusion that the agreement upon which the plaintiff sued was unenforceable. 9In the hearing before me the plaintiff condensed those grounds into what were said by him to be four errors of law, some of which are interrelated and some of which had a substratum of fact. To the extent that there is a question of mixed fact and law there is no objection by the defendant to leave being granted to consider that question. My interpretation of the errors the plaintiff sought to rely upon are as follows: (a) The Magistrate failed to comply with relevant provisions of the Uniform Civil Procedure Rules 2005 (UCPR) by failing to afford what the plaintiff described as "agreed facts" the full weight that the parties agreed they should carry and made findings of fact contrary to the agreed facts; (b) The Magistrate misconstrued the Minutes of the Annual General Meeting of 15 October 2007 and, in particular, the terms of Resolutions 11 and 12 of that meeting, when considering the source of Mr O'Neal's authority to bind the Owners Corporation; (c) The Magistrate wrongly applied the SMM Act when considering the question whether an individual member of an Owners Corporation can legally bind the owners of that corporation; and (d) The Magistrate was in error in refusing to disqualify herself from hearing the claim (or continuing to hear the claim) on the grounds of apprehended bias. 10I am satisfied the Magistrate's analysis of the evidence and her factual findings referable to the evidence, both for the purposes of construing relevant documents and generally (including the question whether she ought recuse herself from hearing the matter), do not disclose error. I am also satisfied that her Honour's judgment does not otherwise disclose the errors of law contended for by the plaintiff, inclusive of any error in refusing to disqualify herself from hearing the claim. What follows are my reasons for coming to that conclusion.

The background facts and the Magistrate's findings of fact 11The proceedings concerned a block of home units at Hornsby ("the Hornsby property") registered as a strata title plan under the SSM Act. The property was, at all relevant times, under the management of the Owners Corporation as provided for under that Act. 12Under the SMM Act the owners of the lots in a strata scheme constitute the members of the Owners Corporation, which under s 11 of the Act, is constituted as a body corporate. In her reasons for judgment her Honour summarised the position as follows: [7] The SSM act provides for the management of a strata scheme and the orderly conduct of its business at the relevant time. On registration of a strata plan an owners corporation is established for the strata scheme. The owners corporation has principal responsibility for the management of the scheme: s 8. The owners of lots in the scheme constituted the members of the owners corporation which is a body corporate: s 11. At a general meeting of the owners corporation motions are decided according to a majority of votes cast: schedule 2. The owners corporation is required to appoint an executive committee to assist it in carrying out ita management functions: s 16. The executive committee is required to appoint a chairperson, secretary and treasurer who also held those offices for the owners corporation: s 18. A decision of the executive committee is taken to be a decision of the owners corporation: s 21. The function of the secretary is to attend to matters of an administrative or secretarial nature in connection with the exercise, by the owners corporation or the executive committee, of its functions: s 22. The business of the executive committee is to be conducted at meetings with a quorum and on the basis of motions put and voted upon. The executive committee is obliged to keep minutes of its meetings (including a minute of all resolutions passed) and publish those minutes for the information of the members of the owners corporation: Schedule 3. ... [14] ...The 'executive' is charged not to authorise works over $15,000. Under s 9 of the SSM Act the owners corporation may delegate its management function to an executive committee, a strata managing agent or a caretaker under Part 4A of the Act. ... 13At some time in 2007 a leak in the roof of the Hornsby property was detected which required repair or replacement at the expense of the Owners Corporation. 14On 15 October 2007 the Owners Corporation held its Annual General Meeting (AGM) where, according to the recorded minutes of that meeting, Mr O'Neal was elected as one of nine members of the Executive Committee for the ensuing year. On 19 October 2007 an Executive Committee Meeting (ECM) of the Owners Corporation was convened where Mr O'Neal was elected Chairman and Secretary. 15Item number 12 on the agenda for the AGM was entitled "Roof Replacement". It referred to four quotes that had already been obtained for the replacement of the roof which were summarised individually. 16The minutes of the AGM were recorded by the Strata Managing Agent and maintained as part of the records of the Owners Corporation. The decisions made by resolution at that meeting, referable to the various motions moved and passed by the members, were recorded in accordance with the obligations of the Executive Committee to publish those minutes for the information of the members under Clause 12 of Schedule 3 of the SSM Act. According to established protocols, the minutes were approved and adopted as accurate at the subsequent meeting. As the Magistrate noted, and correctly as a matter of law, the minutes of a corporation are prima facie an accurate record of the business of a meeting of the corporation subject to evidence to the contrary. 17The minutes of the AGM record the following: Motion No. 11 Restriction of Executive RESOLVED THAT the Executive be limited in their authority to exercise the duties of the Owners Corporation in the manner as determined by the members of the Owners Corporation at the meeting. The Executive is not to authorize works over $15,000.00 on any one item or occurrence. Motion No. 12 The Executive Committee will liaise with RO Steel and Lidoran in order to obtain the most economical and thorough roof quotation to proceed with. 18This would appear to be the prevailing state of affairs as at 15 October 2007 as concerned the repairs to, or replacement of, the roof at the Hornsby property and, importantly, subject only to reading into the wording of Motion 12 the words "resolved that" and into Motion 11 the word "committee" to be read with "Executive" (the approach taken by the Magistrate, and again correctly in my view), the position of the Owners Corporation at that date. Notably, according to Motion 11 there was an express monetary limit on the authority of the Executive Committee to authorise works and by Motion 12 it was authorised to seek quotations (for repairs to the roof at the Hornsby property), but from entities other than the plaintiff. 19The case the plaintiff sought to make in pursuit of his claim for relief in the court below hinged, in large part, upon the wording of these two resolutions as they appear in the minutes of the Owners Corporation. In so far as the appeal is concerned, given the way the plaintiff ultimately put his case, the minutes and her Honour's findings concerning them were also critical to the relief he seeks in this Court. 20The challenge to the Magistrate's construction of the documents, and the related question whether, by reference to them, Mr O'Neal had the authority to bind the Owners Corporation, is best understood by a review of the plaintiff's involvement with Mr O'Neal in relation to the re-roofing project both before and after the date of the agreement upon which he sued. Evidence concerning their relationship was before the Magistrate although, given the basis upon which the claim was dismissed, it was not the subject of any reasoned analysis in her judgment. In any event, as I understand it that evidence was not genuinely in dispute. 21It can be summarised as follows. 22Mr O'Neal first contacted the plaintiff in November 2003 and again in January 2005 to undertake a kitchen refurbishment at his unit within the Hornsby property. 23In late November or early December 2007, Richard Dutton, a real estate agent and property manager for the Hornsby property, contacted the plaintiff in relation to the re-roofing project. The plaintiff arranged to meet at Mr Dutton's office where the plaintiff and Mr O'Neal immediately recognised each other through their previous personal contact. Mr O'Neal told the plaintiff that he was the Secretary of the Owners Corporation and that he had been charged with the responsibility of collecting tenders for a new roof to be installed at the Hornsby property. 24During the meeting Mr O'Neal revealed that he had four tenders from different contractors ranging from $50,000 to $100,000. (I note that these quotes were obviously obtained some time before the AGM on 15 October 2007 as evidenced by their inclusion on the agenda.) 25From December 2007, the plaintiff made enquiries of Mr O'Neal with a view to obtaining documentation related to the tender and to inquire whether the tender process was still open. No documentation outlining the terms of the tender was supplied at that time. 26Between January and February 2008, the plaintiff met with Mr O'Neal on approximately eight occasions. At one meeting Mr O'Neal provided him with the four tenders obtained by the Owners Corporation. 27The plaintiff met with Mr O'Neal at the Hornsby property and provided him with two copies of the agreement dated 20 February 2008 which provided that if his tender were successful, all work to prepare the tender, as outlined in the agreement, would not attract any fees. The agreement was addressed to Mr O'Neal. A signed copy was tendered together with a letter also signed by him dated 25 February 2008 which, when read together, were relied upon by the plaintiff as constituting a binding contract. 28On 18 May 2008 an ECM was convened at which time Mr O'Neal was officially appointed as Secretary and Chairman. Nowhere in the minutes of that meeting is there any reference to either the plaintiff's tender for the re-roofing project or the agreement signed by Mr O'Neal in February 2008. 29On or about September 2008, Mr O'Neal informed the plaintiff that he had called an Extraordinary General Meeting (EGM) of the Owners Corporation for 29 October 2008 for the purpose of deciding upon the successful tender for the re-roofing project. Despite concerns as to whether the meeting had been validly called, it was decided by all present to utilise the meeting as an information session. At no time during that session was there any mention by Mr O'Neal of the signed agreement with the plaintiff. 30On 27 August 2009 the members of the Owners Corporation were provided with three quotes for the re-roofing project to be considered at the AGM on 9 September 2009. On 9 September 2009 the owners resolved to adopt the quote from RO Steel Roofing. Work was to commence in November 2009. 31From 25 November 2008 until 10 November 2009, Mr Joiner and Australian Property Managers Pty sent a total of five letters to Mr O'Neal seeking access to any documentation he held in relation to the property. These documents were provided on 19 February 2010 and 4 March 2010. 32On 25 May 2010 the Owners Corporation received a tax invoice from the plaintiff's company dated 12 May 2010 in the amount of $38,493.56 rendered in accordance with the agreement entered into with Mr O'Neal in February 2008. Upon receipt of the invoice the then Secretary of the Owners Corporation contacted the Treasurer of the Owners Corporation and the Strata Manager, to determine what, if any, authority Mr O'Neal had to contract with the plaintiff on behalf of the Owners Corporation. No documentation was found which validated Mr O'Neal's actions.

The Magistrate erred by re-interpreting agreed facts and, in addition, misconstrued the minutes of the AGM of 15 October 2007 - including in particular Motion 11 and Motion 12 33In rejecting the construction of Motion 11 which was asserted by Mr O'Neal and relied upon by the plaintiff, and construing the resolution meaningfully so as to identify the Executive as the Executive Committee with the omission of "Committee" being, in her Honour's view, a typographical error, her Honour observed: Under s 9 of the SSM Act, the owners corporation may delegate its management function to an executive committee, a strata managing agent or a caretaker under Part 4A of the Act. There is no position of 'executive' under the SSM Act. I am satisfied from the references to 'executive committee' in other parts of the minutes and by reference to s 9 that a mistake was made in that 'committee' was not recorded in the minute of the resolution of the motion after 'executive'. Resolution 11 should be construed as if it included 'committee' after each 'executive'. 34Her Honour also drew support for that construction from the language in s 21(2)(b) of the SMM Act which provides that the Executive Committee may not make: a decision on any matter or type of matter that the owners corporation has determined in general meeting is to be decided only by the owners corporation in general meeting. 35In rejecting the plaintiff's submission (again in reliance upon Mr O'Neal's evidence) to the effect that Motion 12 was a directive and not a resolution, evidenced by the absence of the words "Resolved that", her Honour held that the omission of those words was also the likely result of a typographical error that was simply not detected when the minutes were adopted. In that connection, she apparently accepted the evidence of Mr Joiner to the effect that a resolution had been passed, more or less on the same terms as the words recorded in the minutes, despite the fact that words "resolved that" did not appear in Motion 12 as they did in respect of the other motions passed at the meeting. Her Honour was entitled as a matter of law to receive that evidence. In fact, it is not suggested on appeal, or in the court below, that she was not (see the discussion in "Cross On Evidence" (9th edition) 2013 by JD Heydon at [41130]). 36The plaintiff submitted that her Honour erred in finding (as a fact) that the form in which the minutes were expressed was, in all probability, the result of either a typing error or a typing omission as this was contrary to the agreed facts. The plaintiff further submitted that in concluding that a typographical error had been made when the minutes were prepared, the Magistrate failed to address or deal with the fact that the same error was in the form in which both matters were noted as agenda items. While the presence of the term "Executive" on the agenda does provide some support for the interpretation for which the plaintiff contended, it remained open for the Magistrate to infer that a typographical error in the agenda was transposed into the recorded minutes. In any event, the plaintiff failed to persuade the Magistrate that the term "Executive" should be interpreted in the way contended for by Mr O'Neal, namely as a source of unrestrained authority for him to act on behalf of the Owners Corporation and to bind it contractually. It was open to her Honour to reject Mr O'Neal's evidence having made an adverse finding as to his credit. 37Counsel for the defendant tendered a document entitled "Agreed Statement of Issues in Dispute and Agreed Facts and Chronology of Events" which was marked Exhibit 1 on the appeal. It was signed by counsel for the defendant in the lower court. Although there was provision for a signature by the plaintiff's counsel the version of the document that was tendered was unsigned. The plaintiff said (from the bar table) that he had agreed to an amended version of the document and that the tendered version included facts with which he did not agree. I informed the plaintiff that if he was not able to provide the Court with the filed version, countersigned by his counsel, that I would proceed on the basis that the agreed facts document reflected the parties' positions in the lower court. The plaintiff did not provide the Court with an alternate version of the agreed facts. 38The agreed facts are in the form of a chronological table. The agreed facts referable to 15 October 2007, the day of the AGM, are as follows: AGM of SP7260 held. O'Neal was elected as one member of the nine member Executive Committee. It was resolved to limit the authority of the Executive Committee to approve works up to an amount of $15,000. Further resolved that the Executive Committee liaise with RO Steel and Lidoran in order to obtain the most economic and thorough roof quotation. 39Contrary to the plaintiff's submissions, it is not that the Magistrate did not afford the agreed facts the weight that might otherwise attach to them under the UCPR. Rather, it seems to me, having regard to her ultimate findings, she has taken the agreed facts into account, even if she did not say so expressly, in concluding that the resolutions, properly construed, did not support the position for which the plaintiff contended. I can discern no error in her Honour's reasoning or the conclusion she reached based upon that reasoning.

The Magistrate applied the SMM Act in error when considering the question whether an individual member of an Owners Corporation can legally bind the owners of that corporation and/or in her reasons for judgment she found that that Mr O'Neal had authority 40As to the second ground of appeal, the plaintiff submitted that properly understood her Honour's reasons for judgment reflect an acceptance that Mr O'Neal had an authority to act on behalf of the Owners Corporation. In referring to paragraph 8 of her judgment the plaintiff submitted that her Honour only addressed whether Mr O'Neal had authority to sign the agreement as Chairman and Secretary of the Owners Corporation, not whether he had authority in accordance with Resolutions 11 and 12 of the AGM on 15 October 2007 and, further, that she did not deal with the submission that he was appointed "Executive" of the Owners Corporation. This submission is contrary to any fair reading of her Honour's published judgment which, in my view, is clear, reasoned and correct in law. 41In addition, I am unable to discern any error in her Honour's recitation of relevant provisions of the SMM Act or their application to the issues that arose for consideration. Her Honour's interpretation of the legislation is entirely consistent with the decision of the Court of Appeal in Quarante Pty Ltd v The Owners Strata Plan No 67212 [2008] NSWCA 258.

The Magistrate acted under a perceived bias towards the defence 42The plaintiff submitted that her Honour displayed actual bias before the hearing in the Local Court and during the currency of the proceedings. I have not found it necessary to set out in detail the basis upon which the plaintiff submitted that her Honour was in error in failing to recuse herself, save for noting that at the commencement of the hearing counsel for the plaintiff applied to her Honour to do so on account of an apprehension of bias by reason of her Honour having heard and determined a number of notices of motion in advance of the hearing. 43Following a short adjournment, her Honour dismissed the application concluding as follows: As I have mentioned, in this case on two occasions I have made rulings dismissing notices of motion. On each occasion it was uncontested factual situation to the best of my recollection. It was simply an application of the law in relation to the particular issues in each notice of motion. This is common enough in the management of the Court's business. To my mind it would not to a hypothetical reasonable observer suggest that there was any bias on my part in regard to the final determination of the matter it of course being a question of fact as well as law. 44A later application that she recuse herself after she refused an adjournment to permit the question of her alleged bias to be litigated in this Court was also refused. 45The defendants submitted, and I accept, that on either of the alternate bases identified by the plaintiff as revealing error in the Magistrate refusing to recuse herself, no error has been shown (see Michael Wilson & Partners Ltd v Nicholls [2011] HCA 48; 244 CLR 427). In addition, it was submitted by the defendant that the plaintiff's assertion of bias (actual or apprehended) was grounded in opinion and speculation, or simply had no basis (or no reasonable basis) in fact. Self evidently, adverse factual findings resolving the issues in dispute between the parties (irrespective of whether that finding is in conflict with the submissions of the plaintiff) provides no basis for the plaintiff to allege that bias has infected her Honour's judgment on the substantive issues.

Orders: 461. The summons is dismissed. 2. The plaintiff is to pay the defendant's costs.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 July 2013

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