Couran Cove Resort Community Body Corporate v The Proprietors of Couran Cove Resort-Broadwater Villas GTP 106807 [2022] QSC 247

[1] There are several proceedings between the various parties involved in the Couran Cove Resort. This is one part of that internecine series of battles.[1]

[2] The present focus of the battle is a self-executing (or guillotine) order made on 8 September 2022. The plaintiff/applicant seeks to be relieved of the consequences of failing to comply with the guillotine order.

[3] The Couran Cove Resort is located on South Stradbroke Island. The resort is administered by a number of bodies corporate arranged in what the plaintiff's counsel describes as a layered scheme. Under that scheme the plaintiff is the overarching community body corporate incorporated pursuant to the Mixed Use Development Act 1993. The plaintiff body corporate comprises five lots and community properties. The defendant is one of the five constituent lots and is itself a body corporate established under the Building Units and Group Titles Act 1980 (BUGTA).[2]

[4] The plaintiff contends that this litigation represents the best opportunity to quell years of seemingly Hydra-like litigation and to resolve all material issues in dispute.[3] Hopefully, that contention is not too optimistic.

[5] The issues between the parties have some importance. There are disputes as to the payment for basic services such as electricity and water. In broad terms the disputes concern:

(a) the recovery of contributions raised by the plaintiff in various administration and sinking funds;

(b) certain levies raised by the plaintiff from members to pay two Supreme Court judgments against the plaintiff; and

(c) legal and other expenses incurred by the plaintiff.

[6] It is necessary to set out the chronology of this proceeding:[4]

17 June 2022 This proceeding was commenced by Originating Application.

4 July 2022 Consent orders were made which provide for an interim regime by the defendant to the plaintiff for on-going supply of basic services by the service providers and for the matter to proceed on pleadings. A statement of claim was to be filed and served by 1 August 2022. The proceeding was placed on the supervised case list.

Jul & Aug 2022 The plaintiff alleges that the defendant did not comply with its undertakings to the court pursuant to the 4 July order to pay for services. The plaintiff alleges that approximately $122,000 was owed and that it pursued that sum by a UCPR 444 letter on 8 September 2022.

15 August 2022 The plaintiff applied to extend time for the filing and service of its statement of claim and the defendant applied for an order requiring the statement of clam to be filed. The defendant's solicitor, Mr Mills, insisted on a full day hearing for the application and cross-applications. Rather than face that prospect, the plaintiff agreed to provide its statement of claim by 26 August 2022.[5]

26 August 2022 The plaintiff failed to file its statement of claim within time.

8 September 2022 Martin J heard the defendant's amended application for a 'guillotine' order. That order was not resisted by the plaintiff and the plaintiff agreed to pay the defendants' costs. The order of Martin J required filing and service of the statement of claim on the defendant by 12 September 2022 (the primary requirement).[6] The order also required delivery of the statement of claim, also by 12 September 2022, to various other persons described in an earlier order, as well as an affidavit deposing to delivery on those persons - (the secondary requirement).

12 September 2022 The plaintiff filed and served the statement of claim within time (i.e. the primary requirement). Mr McMahon, the plaintiff's solicitor, appears to have overlooked the secondary requirements until 3.40pm on 12 September 2022. Not all of the secondary matters were attended to by 4.00pm on 12 September 2022 (the extent of non-compliance is explained below).

12 September 2022 At 5.17pm the plaintiff served an application to extend time for compliance with the order of 8 September 2022. The plaintiff foreshadowed filing that application the following day. They offered a consent order which included an offer to pay the defendant's indemnity costs.

15 September 2022 The defendant did not respond to the offer and instead served six affidavits from persons who said they had not received a copy of the statement of claim. These affidavits revealed that the plaintiff had overlooked delivery of the statement of claim on some of the fourth respondents in proceeding BS 6866/20 and delivery on 32 lots owners represented by Mr Tony Duncan (see discussion below).

16 September 2022 Application part heard and adjourned to 20 September 2022.

20 September 2022 Application part heard by Crowley J and adjourned to 27 September 2022.

[7] It is necessary to examine the extent of the breach of the order of Martin J on 8 September 2022. Certainly, the statement of claim was prepared, and filed, and served on the defendant by 12 September 2022. The evident objective of the order was to progress the proceeding. That was substantively achieved.

[8] The non-compliance related to the secondary obligation to deliver copies of the statement of claim to other parties who may or may not have an interest. The reason for the non-compliance was the inadvertence of the plaintiff's solicitor, Mr McMahon. He overlooked the requirement and only appreciated its effect at 3.40pm on 12 September 2022. That, no doubt, led to some frantic attempts to deliver copies of the pleading to a number of persons - explained below.

[9] The order of 8 September 2022 required copies of the statement of claim to be delivered to "the persons described at paragraphs 2(b) of the consent orders made on 4 July 2022 in this proceeding". Paragraph 2(b) of the order of 4 July 2022 was as follows:

"(a) persons who have filed submissions in BUGTA proceedings 1466-2021;

(b) persons who were parties in BS 601/21;

(c) persons who were parties in BS 6866/20;

(d) persons who were parties in BS 6869/20; and

(e) persons described as 'Service Providers' in the Undertakings attached to the order of 4 July 2022.

[10] Counsel for the plaintiff explains the deliveries of copies of the statement of claim to the five categories in this way:

(a) all of the parties in proceeding BS 601/21 were delivered a copy of the statement of claim before the (4pm) deadline;

(b) the parties in proceeding BS 6866/20:

(i) were delivered a copy of the statement of claim 7 minutes, 9 minutes and 27 minutes late;

(ii) in respect of the fourth respondents, were delivered a copy of the statement of claim between 27 minutes and six days late.

(c) the parties in BS 6869/20 were delivered a copy of the statement of claim:

(i) before the deadline; or

(ii) seven minutes late.

(d) the parties in BUGTA application 1466 of 2021 were delivered a copy of the statement of claim before the deadline;

(e) the persons who made submissions in BUGTA application 1466 of 2021 were delivered a copy of the statement of claim;

(i) 5 or 7 minutes late;

(ii) in respect of one person - 3 days late;

(iii) in respect of one person - 4 days late;

(iv) alternatively, if Mr Duncan did not have ostensible authority, 4 to 11 days late.

(f) the affidavit of service was served 7 minutes late and filed some 19 hours late.

[11] It can be seen that the task of delivering copies of the pleading to the various parties to other litigation was a relatively onerous task - at least from a logistics points of view. It required identifying the relevant parties, and their email addresses. Some were readily available. Others were not.

[12] The non-compliance cannot be characterised as deliberate, or as part of a plan to delay the progress of the litigation. The non-compliance arose because of inadvertence and perhaps also a failure to appreciate the extent of the task.

[13] The extent of the onerous task is clear from the plaintiff's "aide memoire" - part of its written submissions in this proceeding (which also became an exhibit). That aide memoire comprises a table of the five categories of persons who were to have a copy of the statement of claim delivered to them. The table comprises five categories:

(a) the persons who filed submissions in BUGTA proceedings 1466-2021, namely six entities plus more than 30 entities referred to in Mr Tony Duncan's affidavit of 14 September 2022;

(b) the persons who were parties to proceeding BS 601/21 - two entities;

(c) the persons who were parties to proceeding BS 6866/20 - a list of 110 entities;

(d) the persons who were parties to proceeding BS 6869/20 - six entities;

(e) the entities that were Service Providers.

[14] In each case, the aide memoire identifies the date and time of delivery of the statement of claim as well as where that evidence is to be found in the vast array of material. The extent to which the defendant contests the aide memoire is not entirely clear. I note that the defendant appears to have adopted and amended the aide memoire.

[15] One issue raised by the defendant relates to the entities in the first category - persons who filed submission in BUGTA proceedings 1466-2021. In that BUGTA proceeding one submission was filed by a lawyer, Mr Tony Duncan, on behalf of himself and 32 other owners. Essentially, the defendant contends that the order of 4 July 2022 required that the statement of claim be delivered to Mr Duncan and to each of the 32 owners who he represented.

[16] There is no reason for reading the order of 4 July 2022 as requiring the delivery to be effected by, in effect, going behind Mr Duncan's submission and to require separate delivery to each person represented by Mr Duncan. First, the order required that the plaintiff "deliver a copy ... upon ... any other person who have filed submissions in 1466-2021". That requires delivery to the persons who filed submissions. Secondly, the order of 4 July 2022, merely required delivery and thereby notice to non-parties. Contrary to Mr Mills' submissions, or at least the underlying premise behind Mr Mills's submissions, it was not a requirement for personal service or even a requirement tantamount to service. Third, Mr Duncan's submission was made on behalf of himself and a number of people. I am unable to see why delivery to Mr Duncan was not effective as delivery to those he represented in the same way as his submission was an effective submission on their behalf in the BUGTA proceeding.

[17] The order of 4 July 2022 required both formal service of the statement of claim, as well as delivery of copies to other parties who may have had an interest because of the connected nature of various proceedings. The requirement of delivery was a practical step and should not be equated with the requirements of formal service. If formal service had been required then the order would have required service.

[18] Incidentally, for the defendant, Mr Mills made much of the fact that "Enyo Lawyers never presumed or believed that Tony (Duncan) had authority to receive documents (in this proceeding)." It is doubtful there is any clear evidence of what Enyo Lawyers did or did not believe. And, even if there were, there is no basis on which their belief was relevant. The central question was whether delivery was performed in accordance with the order of 4 July 2022.

[19] Thus, in my view, delivery to Mr Duncan was sufficient delivery to those persons he represented for the purposes of the order of 4 July 2022.

The Contest as to Delivery to M Kelly & C Carrigan

[20] The defendant contests that there was valid delivery to "M Kelly & C Carrigan - Fourth Respondent". This is the aide memoire line entry 105 on page 19. The plaintiff says that it posted the statement of claim to these persons at their Coorparoo address at approximately 2.48pm on 16 September 2022 - that is, some four days late. The defendant's challenge is:

"Neither of these persons names or addresses appear on the Eco Lodge Roll relied upon.

What are the sources of information and belief as to their address?"

"As stated previously, this was posted by express post at approximately 2.48pm on 16.09.2022. (JJJ-2, p. 70)

This has been confirmed as being delivered to the recipients. (Fourth Affidavit of Tseng [40])."

[22] The confirmation of receipt of the statement of claim is sufficient to establish delivery in accordance with the order.

[23] The defendant's objection seemed to relate to whether or not, as in a substituted service process, there is what is described as 'suitable, sufficient or reliable evidence' to satisfy the court that the Coorparoo address is the current address for "M. Kelly and C. Carrigan". Again, that is an error in approach. The order of 4 July 2022 does not require service, or substituted service. It does not require the court to conduct an inquiry into whether the court can be satisfied that the relevant address was 'suitable, sufficient or reliable'. It merely required delivery to the relevant persons. That has been shown.

[24] Several witnesses were cross-examined. They were persons to whom the statement of claim was delivered. All conceded delivery, albeit late delivery. None gave any evidence of being prejudiced by the belated delivery. There is no other evidence of prejudice caused by the late delivery.

[25] The defendant contends that the underlying agreement between the parties on 8 September 2022, as recorded in the cross-undertakings, has fallen away. They say that the parties to this litigation and the Service Providers do not consider that they are bound by those cross-undertakings. Electricity has been disconnected.

[26] That all may be true, however, it is beside the point. The plaintiff wishes to litigate the three specific issues identified at the outset. It breached a guillotine order but, subject to being excused for that breach, is now ready to proceed. It hardly matters that interim undertakings, designed to continue to provide services, are in tatters. Those interim undertakings might be re-negotiated or the parties may deal directly with service providers. The status of the interim undertakings does not seem to me to be a reason for having this proceeding come to a halt.

[27] There is, it seems, an element of pointlessness to the present battle in any event. Even if the plaintiffs were not excused, there would have been no decision on the merits and there are no limitation issues. Subject to issues of abuse of process, it would be open to the plaintiff to commence afresh.

[28] By an application filed on 27 October 2022, within this application, the defendant sought to reopen its case and to tender further evidence and to make further submissions. Principally, the application sought to place into evidence two decisions of referees, in the BUGTA proceedings. They were decisions of 18 October 2022 in BUGTA proceedings 0453-2022 and 0456-2022.

[29] In support of this application Mr Mills filed and served an affidavit of Mr O'Connor sworn on 28 October 2022. The two referee decisions appear at pages 382 and 421 of the exhibits to that affidavit, which runs to nearly 800 pages. Of course, it is strange that, in an application to re-open, Mr Mills sought not simply to rely on the two referees' decisions but on an 800-page affidavit which exhibits those decisions and many, many other documents.

[30] The court has a discretion to re-open evidence and to re-open submissions where the interests of justice will be served by doing so. As Bradley J explained in Davies v Davies (No. 1)[7] an applicant needs to identify exceptional circumstances because of the requirement of finality in litigation. Counsel for the plaintiff also referred the court to Rockett v The Proprietors - The Sands Building Units Plan No. 82[8] where a judicial decision involving other parties was doubted to be "facts" justifying a re-opening. In any event, the judicial decision was held not to be probative.

[31] The "facts" or evidence sought to be considered here are all said to fall into the category of fresh evidence which was unavailable, or not reasonably discoverable, at the time of this application.[9]

Re-opening to Permit Tender of the Two Decisions

[32] Here, it is a struggle to identify the relevance of the two BUGTA referee decisions. It seems clear that the decisions are not directly related to the court's decision as to whether it is appropriate to excuse the plaintiff's non-compliance with the guillotine order. Rather, the decisions are said to relate to the veracity of the plaintiff's proceeding (assuming the breach of the guillotine order is excused and the litigation proceeds).

[33] I have read the defendant's outline of submissions of 31 October 2022. In particular, I have noted the explanation of the relevance of the referee decisions at paragraphs [9] to [14] of the outline. None of these submissions make clear how the referee decisions are relevant.

[34] The central point seems to be that the referee decisions would somehow be binding on this court, or perhaps persuasive, when this court comes to decide the issues in the statement of claim. I am unable to see how that can be so. I am unable to see how the referees' decisions could even be admitted as evidence.

[35] Apart from anything else, the referee's decision in BUGTA proceeding 0453-2022 involved CCH Development No. 1 Pty Ltd as applicant and Couran Cove Resort Eco Lodges Body Corporate (Eco Lodges)[10] as respondent. Neither of those parties are parties to this proceeding. Mr Mills sought to say that at issue was a resolution made by the plaintiff at a meeting on 14 December 2021. But, as Mr Kidston points out, the attack at the core of the referee's decision was not that particular resolution by the plaintiff but rather another resolution made in another scheme on another date.

[36] The referee's decision in BUGTA proceedings 0456-2022 involved WN Developments Pty Ltd as trustee for King Street Unit Trust. The respondent was Eco Lodges. Again, the parties to that proceeding are different to the parties here. The scheme is a different scheme and the attack is on the validity of an EGM of Eco Lodges on 6 March 2022 rather than a meeting of the plaintiff on 14 December 2021.

[37] Even assuming the referee's decisions could be regarded as admissible evidence in this proceeding, that hardly assists the defendant.

[38] The application by the plaintiff to be excused from its breach of guillotine order is not an opportunity for the defendant to argue the merits of the plaintiff's substantive claim. It is true that a claim subject to a guillotine order would not be revived where it could be shown that the plaintiff's claim was hopeless or doomed to fail. But no evidence sought to be tendered falls into that category.

[39] On that basis, Mr Mills' attempts to litigate the merits of the plaintiff's proposed claim should be resisted. This is not the opportunity for the defendant to make, what is in effect, an application for summary judgment. Apart from anything else no proper notice has been given of such an application.

Re-Opening to Permit Evidence of an Application

[40] Mr Mills proposed that further evidence be admitted. The evidence was of an application made on 7 October 2022 by three companies against the defendant. The application was made in BUGTA proceeding 1031-2022. The relevant and probative value of that application by the three companies, according to Mr Mills' is that:

(a) the purpose of the application was to "stymie" the ability of the defendant to pay for legal services;

(b) part of the application for ex parte interim orders is "seriously misleading";

(c) it opens the real issue as to whether a third party, Mr McIntosh or Mr Napoli, should be ordered to personally pay the costs of the parties to this proceeding.

[41] That summary rather demonstrates that proposed new material has little, if anything, to do with the application now before the court. Certainly, I am unable to see how the proposed material, even if sustained and supported by evidence, has any bearing on the application to excuse the non-compliance with the guillotine order. Instead, the new material seeks to open new battlegrounds, namely:

(a) A serious (but unproven) allegation that applications made in certain BUGTA proceedings have been made for an ulterior purpose and may be an abuse of the process of that court;

(b) A serious (but unproven) allegation that an application made in that BUGTA proceeding was seriously misleading;

(c) A prospect that, in the future, an application may be made to have certain individuals pay for the costs of this proceeding.

[42] None of those matters are relevant, or shown to be relevant, to the present application.

[43] The final category of evidence sought to be added is described as evidence as to the payment by the plaintiff of the fees of Darren Philip to disconnect the electricity and water.

[44] Mr Mills challenges the plaintiff's assertion that it was the service providers who disconnected various utility services. Mr Mills contends that the proposed new evidence shows that the plaintiff paid Mr Philip for disconnection services. The first problem is that the bundle of invoices (MOC-29 to MOC-36 to Mr O'Connor's affidavit - pages 757 onwards) appear to be a mixture of irrelevant documents. Some related to other services (pages 757 to 761) or to another scheme (Eco Lodges - pages 764 to 767). Even if relevant, the fact that an electricity contractor's bill is met by the plaintiff does not demonstrate that it was the plaintiff who arranged or caused the disconnection. Even ordinary consumers may be required to meet disconnection fees and their payment of those fees can hardly be said to be evidence that they caused the disconnection.

[45] In so far as there is some relevant evidence, these are plainly contested areas. If it becomes relevant to decide who caused a disconnection of utility services, then the court will need to decide that issue. However, the fact that there may be a contested issue about who caused the disconnection does not seem to me to be relevant to the present application.

[46] Consequently, I refuse the application to re-open the evidence. The proposed new evidence is not shown to be relevant.

[47] Pursuant to Uniform Civil Procedure Rules 1999, rules 7, 367(b) or 668 the plaintiff ought be permitted an extension of time for compliance with the guillotine order. That is because, the delays here are relatively insignificant, the nature of the default is minor and accidental, and the role of the court in these situations is not to punish for transgressions but rather to decide the real issues between the parties.[11]

[48] Further, there is no evidence of prejudice to the defendant, or to the non-parties to whom the statement of claim was to be delivered. The application to extend time was immediately foreshadowed and made, and the proceeding is in its infancy. This is not a case where there has been a lengthy history of delay or where trial dates have been put in jeopardy.

[49] Indeed, a substantial difficulty with the present application has been the defendant's determination to litigate substantive issues rather than meeting the application to extend time.

[50] For those reasons, the defendant's application for leave to re-open its case will be refused and the time for compliance with the guillotine order (i.e. order 1 made on 8 September 2022) will be extended to 27 September 2022. I will hear the parties on any further directions and on costs.

[1] Mr McMahon's affidavit (at [6]) identifies 11 current proceedings.

[2] The summary in this paragraph is a paraphrased version of the background explained in paragraphs [8] to [11] of the plaintiff's submissions.

[4] This summary is taken from the plaintiff's summary at paragraphs [16] and following of its submissions.

[5] The plaintiff's material had explained various reasons for the delay in pleading.

[6] I use "primary" and "secondary" merely as a label. The intention is not to give the requirements of the orders any ranking.

[7] [2019] QSC 293 at [7]- [10].

[8] [2001] QCA 99; [2002] 1 Qd R 307 at [7], [8].

[9] See Kenny J in Inspector-General in Bankruptcy v Bradshaw [2006] FCA 22 at [24].

[10] This entity is one of the five constituted body corporates mentioned at the outset.

[11] See Mentech Resources Pty Ltd v MCG Resources Pty Ltd [2012] QCA 197 at [35].