El Khouri v Owners Corporation SP6534

Supreme Court of NSW|2024-04-19|Before: Elkaim AJ

JUDGMENT - REVISED

I gave my principal decision in this matter on 28 February 2024 (Perpetual Corporate Trust Ltd v Owners Corporation SP6534; El Khouri v Owners Corporation SP6534 [2024] NSWSC 173). My orders included reserving issues "in respect of costs, interest, and the cost of recovering unpaid levies."
On 8 April 2024 I gave my decision on the issues that had been reserved (Perpetual Corporate Trust Ltd v Owners Corporation SP6534; El Khouri v Owners Corporation SP6534 (No 2) [2024] NSWSC 358) (the costs judgment).
Adopting the same abbreviations used in the above two judgements, on 13 March 2024 the Owners Corporation filed a notice of motion requesting the setting aside or variation of some of the orders I had made on 28 February 2024.
On 18 April 2024, the Owners Corporation gave the Court notice that it would rely on an amended notice of motion in which variations of my orders were sought but none of the orders were to be set aside. A number of alternative variations to my orders were posed. I gave leave in Court today for filing of the amended notice of motion.
Although the motion is restricted to the action between the Executors and the Owners Corporation, on 15 April 2024 the solicitor for Perpetual sent an email to my Associate asking me to consider a matter arising from [39] of my decision given on 8 April 2024 (the costs judgment). My Associate replied the following day pointing out that Perpetual was not involved in the notice of motion filed by the Owners Corporation but was nevertheless invited to make submissions at the hearing of the motion. To that end Ms Robinson appeared today on behalf of Perpetual.

The paragraph 39 issue

Paragraph 39 states: "Perpetual also sought orders that any monies payable by the Owners Corporation by way of costs should be from strata contributions levied against all of the owners of the lots in the premises other than Lot 11. A similar order was sought in respect of the payment of the Owners Corporation's own costs."
The costs orders that I made did not exempt Lot 11 from any obligation on the Owners Corporation to pay costs. This was an omission on my part.
The matter arising from [39] of the costs judgment falls, I think, within the bounds of the slip rule (Uniform Civil Procedure Rules 2005 (NSW), r 36.17). Further, although the email came from Perpetual it does concern an order made in the Executors v Owners Corporation matter (the costs judgment) matter.
To illustrate the obviousness of the omission, I refer to two paragraphs in my principal judgment: "231. Perpetual submitted that the levies were excessive or unreasonable because: (1) the levies included a component of fees to enable the Owners Corporation to pursue legal action. As the legal action is against the Executors and Perpetual it is somewhat unreasonable for Lot 11 to effectively fund legal proceedings against itself; and" ... 236. I think the levy is unreasonable and unjust. It requires the owner of Lot 11 to fund litigation against themselves. As in this case the litigation is complex and prolonged. It has been defended by Lot 11. It is an extraordinary result that Lot 11 could be funding the opposing party to the proceedings, namely the Owners Corporation."
The submissions made by Perpetual and the Executors concerning costs is consistent with my finding at [236] of the principal judgment.
It is also consistent with the approach taken in Moallem v Consumer, Trader and Tenancy Tribunal and Others [2013] NSWSC 1700 at [33] and in Owners Strata Plan number 50411 and Others v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5 from [167] onwards.
Accordingly, I propose to make the orders sought in paras 4 and 5 of the short minutes of order put forward on behalf of the Executors but with the amendment that the orders are made pursuant to s 98 of the Civil Procedure Act 2005 (NSW) and not s 90(2) of the Strata Scheme Management Act 2015 (NSW). The reason I have done that is that Perpetual does not fall within the scope of the latter section.

Amended Notice of Motion

Turning, now to the amended notice of motion, the Owners Corporation relied on the powers conferred by r 36.16 or, alternatively, the slip rule, r 36.17 (UCPR).
Dealing first with the variation to order (1). The point has been taken that the certificate that I envisaged that the Owners Corporation be granted pursuant to By-law 30.4 would be inconsistent with my findings that the critical obligations had not been complied with. The issuing of such a certificate, to the extent that it purported to be pursuant to By-law 30.4 would be to put forward a falsity. I think that my not having taken that point into account amounts to an error under the slip rule giving me the ability to vary the order.
The variation was opposed by the Executors because they wished to have the benefit of the certificate, in particular to the extent that it facilitates a sale of the property. I sympathise with their position, but I do not see that I can order the giving of a certificate in the circumstances I just outlined.
Accordingly, I will vary order (1) as requested in order 1(a) of the amended notice of motion, except that I will allow the Executors a little extra time to issue a strata interest notice.
The proposed variation to order (2) I will make by consent. In respect of order (7), I think that the variation is sensible to the extent that it is simply providing a safety net mechanism in case the New South Wales Civil and Administrative Tribunal should decline to make an order removing cl 30.3 of By-law 30.
Although, not included in the amended notice of motion, the Owners Corporation has also sought an order that the Executors pay interest on costs as from the date when the costs were incurred. Section 101 of the Civil Procedure Act allows for an order to that effect. I note that in DSHE Holdings v Aboud [2022] NSWSC 91 Ball J at [50] made an order to that effect and noted at [51] that, "It is common now for the Court to order that interest be calculated from the time the costs were actually paid. Such an order is consistent with the compensatory nature of an order for costs ..." In particular, bearing in mind that this matter has been going on for some time, I think that such an order is appropriate.

Orders

So, the orders I make today are as follows. The orders made on 28 February 2024 in proceedings 2018/00093444 (Executors v Owners Corporation) are varied in this way: 1. Order 1 is varied to read: Pursuant to s 22 of the Strata Schemes Management Act 2015 (NSW), that by 31 May 2024 the plaintiffs issue to the defendant a strata interest notice. 2. Order 2 is varied to read: The plaintiffs are to pay the defendant $590,707.61 pursuant to s 145 of the Strata Schemes Management Act 2015 (NSW). 3. The parties have liberty to apply in the event that the New South Wales Civil and Administrative Tribunal declines to make an order removing cl 30.3 of By-law 30. 4. The plaintiffs are to pay interest on the costs (including disbursements): 1. at the rate applicable from time to time under r 36.7 of the Uniform Civil Procedure Rules 2005 (NSW); 2. on the allowed percentage (as defined below) of each amount of costs and disbursements actually paid by the Owners Corporation; and 3. from the date of payment of each such amount until such time as costs due under these orders have been paid. 1. Then, as part of the order, the allowed percentage means Y over X times 100% where: 1. X equals the total amount of costs and disbursements which the party has paid or is liable to pay in connection with these proceedings; 2. Y equals the total amount of costs and disbursements which either: 1. is allowed to the party in connection with these proceedings; or 2. is ordered to be paid to the party pursuant to any order made under s 98(4) of the Civil Procedure Act 2005 (NSW).
Then in accordance with the orders that I said would be made in respect of the exclusion of Lot 11, I make the following orders: 1. An order Pursuant to s 98 of the Civil Procedure Act 2005 (NSW), that money payable by the Owners Corporation SP6534 under order (1) made on 8 April 2024 in proceedings 2022/00098817 be paid from contributions levied only against Lots 1, 2, 3, 4, 5, 6, 7, 8, 9 and 10, that is to the exclusion of Lot 11. 2. Pursuant to s 98 of the Civil Procedure Act 2005 (NSW), that the Owners Corporation SP6534 is not to levy a contribution on Lot 11, nor to use any contribution from Lot 11 in any administrative fund, sinking fund, or other existing asset, for the purpose of meeting its own solicitor client costs in proceedings 2018/00093444 or 2022/00098817 3. Each party is to pay its own costs of the notice of motion dealt with today.

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: 07 May 2024

Strata Scheme Management Act 2015(NSW)

(Uniform Civil Procedure Rules 2005(NSW)

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