Eliezer v The Owners - Strata Plan No. 51682 - [2020] NSWSC 1596 - NSWSC 2020 case summary

Supreme Court of NSW|2020-11-05|Before: Garling J

The Original Proceedings in the Supreme Court

On 27 April 2015, Supriya Eliezer ("the plaintiff") commenced proceedings in this Court by Statement of Claim seeking relief with respect to proceedings which had been commenced in the Local Court against her by the first defendant to the proceedings in this Court, namely The Owners - Strata Plan 51682 (the "Owners Corporation").
The relief sought in these initial proceedings in this Court was a declaration that the Local Court proceedings were an abuse of process and an order that the Local Court proceedings be permanently stayed. Consequential relief including damages, interest and costs were also sought. This initial claim also named as the second, third and fourth defendants the Strata Manager and two of its employees, and as the fifth to eleventh defendants, various individuals who were lot owners in the strata plan in which the plaintiff was also a lot owner. None of the second to eleventh defendants were parties to the Local Court proceedings.
The Statement of Claim in the Court initially relied on five separate causes of action. The first two were directed towards the Local Court proceedings, namely one for malicious prosecution, and the second for abuse of process. The third cause of action was in fraud, relating to the conduct of the third and fourth defendants in raising strata levies and claims for expenses pursuant to s 80 of the relevant legislation, both of which, it was said by the plaintiff, underlay the Local Court proceedings. Further causes of action included a cause of action for fraud on the minority and civil conspiracy against all of the defendants, and a cause of action against the fifth to eleventh defendants (inclusive) of aiding and abetting the torts of malicious prosecution, abuse of process, fraud and civil conspiracy.

The Hearing before N Adams J

A Notice of Motion filed on 9 December 2016 was heard by N Adams J on 15 March 2017. The plaintiff authorised her husband, Mr Joseph Eliezer, to appear for her. He also appeared in his own right. The defendants were variously represented by lawyers and indicated to the Court that they opposed the relief sought in the Motion.
N Adams J heard submissions from all parties and reserved her decision. On 22 March 2017, her Honour refused to grant the relief sought in the Motion and refused, in particular, leave to file the Amended Statements of Claim which were being propounded by the plaintiff. Her Honour ordered the plaintiff to pay the defendants' costs of the Motion.
Her Honour, in addition to those orders sought in the Motion, made some further procedural orders. These had the substantive effect of allowing the plaintiff to seek leave to file any further amended Statement of Claim, and also allowing the defendants leave to file any Notice of Motion seeking to have the proceedings summarily dismissed. Her Honour granted leave for those two Motions to be returnable at the same time.
Her Honour's reasons, which are to be found at Eliezer v The Owners Strata Plan No 51682 [2017] NSWSC 278, comprehensively explain why she refused the relief which the plaintiff sought and the consequence of that refusal, namely an order for costs which in the customary way reflected the failure of the plaintiff on the Motion.

The Hearing before Johnson J

In 9 May 2017, Johnson J, sitting as the Duty Judge, heard a Motion filed by the plaintiff seeking a stay on the orders made by N Adams J pending the hearing and determination of an appeal, and also a stay more generally on the proceedings.
It became apparent during that hearing, at which the both plaintiff and lawyers for the defendants appeared, that no Notice of appeal had in fact been filed against the orders of N Adams J, although a Notice of Intention to appeal had been filed. It was also clear that the time for the filing of a notice of appeal against the orders of N Adams J had not completely elapsed.
His Honour, in an ex tempore judgment, refused to make the orders sought by the plaintiff and ordered that, as the unsuccessful party, she pay the costs of the other parties to that proceeding: see Eliezer v The Owners - Strata Plan No 51682 and Ors [2017] NSWSC 581.

The Motion for Summary Dismissal

On 16 May 2017, the defendants filed a Notice of Motion seeking summary dismissal of the proceedings. They also sought alternative relief by way of an application to strike out the original Statement of Claim filed on 27 April 2015 to the extent that it had not been dealt with earlier in the proceedings.
That matter came before me for hearing on 15 June 2017. Mr Joseph Eliezer appeared, with the authority of the plaintiff, to put submissions on her behalf. The defendants were variously represented by lawyers. The hearing of the matter occupied a significant part of the day. At the end of the day, I delivered an ex tempore judgment. I made orders granting the relief sought by the defendants and summarily dismissed the proceedings, which had been commenced in April 2015. My reasons are to be found at Eliezer v The Owners Strata Plan No 51682 [2017] NSWSC 783.
In my reasons, I noted that there was no legal basis for a tortious claim for malicious prosecution. This was essentially because, upon the assumption that such tort existed, the underlying proceedings (being those in the Local Court) had not been terminated at all, let alone terminated in favour of the plaintiff. I also found, for the reasons which I gave, that the tort of abuse of process was not able to be made out. This was because, essentially, there was nothing pleaded or provided in evidence about the fact of the Local Court proceedings, their commencement and maintenance and their part resolution which indicated the existence of any collateral purpose whatsoever. I found that the pleadings were not capable on their face of demonstrating any collateral purpose which could give rise to the tort relied upon.
I concluded that, with respect to both causes of action that were sought to be propounded, the Statement of Claim in the proceedings did not disclose any reasonable cause of action and that summary dismissal was the appropriate remedy. I ordered that, in accordance with the usual rule, the plaintiff should pay the defendants' costs of the proceedings.

Application for Leave to Appeal

The plaintiff sought leave to appeal against the judgments of N Adams J and me. On 7 December 2017, that application for leave was heard. The Court of Appeal refused to grant leave to appeal and dismissed the plaintiff's summons seeking leave to appeal.
Of the judgments, the Court of Appeal said that they were clearly correct and did not reveal any error including any error of general principle. The Court of Appeal ordered that the plaintiff pay the first respondent's costs, i.e. the costs of the Owners Corporation. However, the Court of Appeal declined to order that the plaintiff pay the costs of the other defendants on the basis that the contents of the submissions before it, which had been filed, reflected, in effect, one active opponent.

The Current Motion filed on 18 August 2020

This somewhat lengthy history is the context against which it is necessary to consider the Notice of Motion filed by the plaintiff on 18 August 2020, with which this judgment deals. That Motion was filed three years or more after the costs orders were made by each of N Adams J, Johnson J and myself. It sought the following orders: "1. Pursuant to the grounds in UCPR 36.15(1) that the order for costs in motions decided on 5 March 2017, 9 May 2017 and on 15 June 2017 be varied such that the order for costs does not apply in favour of the second, third, fourth, fifth, sixth, seventh, eighth, ninth, tenth and eleventh defendant. 2. Any application by the said defendants for costs assessments based on the above costs orders be stayed. 3. Any other order as the Court sees fit."
The plaintiff in her oral submissions made it plain that she was contending that r 36.15(1) of the Uniform Civil Procedure Rules 2005 ("UCPR") had application to the costs orders on the basis that each of those orders was made against good faith.
At this point, it is appropriate to set out the contents of r 36.15. It reads: "1. A judgment or order of the Court in any proceedings may on sufficient cause being shown, be set aside by order of the Court if the judgment was given or entered, or the order was made, irregularly, illegally or against good faith. 2. A judgment or order of the Court in any proceedings may be set aside by order of the Court if the parties to the proceedings consent."
There was no consent given by the defendants to the relief which the plaintiff seeks.

Principles and Authorities - r 36.15 UCPR

It is a fundamental principle of litigation that the decisions of a Court are final. As the High Court of Australia said in Burrell v The Queen [2008] HCA 34; (2008) 238 CLR 128 at [15] to [16], the principal qualification to that general principle of finality is provided by the appellant system. Leaving aside that appellant system, the principle of finality finds reflection in the restrictions upon reopening of final orders after they have been formally recorded. I observe that one of the primary bases which justify the principle of finality in litigation is the general public interest.
Rule 36.15 was considered by the Court of Appeal in Perpetual Trustees Australia Limited v Heperu Pty Ltd (No.2) [2009] NSWCA 387; (2009) 78 NSWLR 190. In a unanimous judgment, at [32], the Court referred to the decision of the High Court of Australia in Burrell and noted that the principle of finality of litigation was of importance. At [33] and [45], the Court noted that in dealing with provisions relating to the reopening of perfected orders, any such power needed to be construed having regard to the principle of finality of litigation. The Court observed at [17] with respect to r 36.15(1) that: "The rule applies with particular force to default or consent judgments and orders, and those given or made ex parte. It can only have limited application to judgments and orders made or entered after a hearing of the merits at which all parties were represented and fully heard."
Davies J in Zakaria v Noyce [2012] NSWSC 981 also had occasion to consider the meaning of the phrase "against good faith" as it is found in r 36.15. His Honour drew attention to the decision of the New South Wales Court of Appeal in Coles v Burke (1987) 10 NSWLR 429, where the phrase was considered by Kirby P, with whom Samuels and McHugh JJ agreed. His Honour said of the phrase, "Irregularity, illegally or against good faith" that it would be constituted by: "misconduct or dishonourable conduct of the person who procured the judgment which it is suggested undermines the authority of that judgment warranting the exceptional course for which [the rule] provides."
After drawing attention to this authority, Davies J said at [22] of Zakaria the following: "The significant matter is that for a judgment to be set aside as having been entered against good faith there must be misconduct or dishonourable conduct by the person who procured the judgment. The matter is directed, not to the Court or the judge who entered the judgment, but to the party who is responsible for bringing it about. Ordinarily such a judgment would be a default judgment or a consent judgment contingent upon the performance of some event. To the extent that the rule is, in that sense, confined to the behaviour of the other party it sits uneasily with the judgment obtained after a hearing at which the complaining party is present and/or represented."
I also note that r 36.15 provides that, even if conduct against good faith is established, sufficient cause needs to be shown before the judgment or order is set aside. Bryson JA in Kendell v Carnegie [2006] NSWCA 302; (2006) 68 NSWLR 193 noted at [45] that the requirement of "sufficient cause": "recognised the need for finality by protecting judgments or orders from being set aside for slight or uncertain causes."

Discernment

Against these authorities and principles, it is necessary to consider the submissions of the plaintiff. The submissions of the plaintiff are to be found in three places: in part in the documents which she has filed containing those submissions; in part in her affidavits, where assertions and arguments are put as to how one would categorise the conduct of the defendants; and in part from her oral submissions to the court.
I have considered carefully each of the submissions. I have also considered them in the context of the Local Court proceedings commenced by the Owners Corporation to recover levies and expenses, which is described in the affidavits. I have further considered the submissions in the context of the asserted conduct of each of the individuals, namely, the third and fourth defendants in their capacity as employees of the Strata Manager, and the fifth to eleventh defendants in their role as fellow lot owners.
The first thing to be observed is that the plaintiff relies in part on the conduct of one or more of the defendants which occurred after the last of the three orders, the subject of this Notice of Motion, were made - namely after 15 June 2017. For example, the plaintiff draws to attention what she describes as a spate of cases brought against her in the Local Court after the occurrence of orders that had been made, and which are the subject of challenge. She has drawn attention to the fact that she would describe the conduct of the defendants as involving potential breaches of the Australian Consumer Law, and suggests, by way of summary with respect to that conduct, that the defendants are using those proceedings to silence her dissent.
It is unnecessary for me to make any factual determination as to whether those submissions and events, including their description, are correct or not. Assuming for the purpose of this proceeding that they are correct, they are nevertheless irrelevant to the application which the plaintiff has brought. That is because the Court needs to determine whether the orders ought to be set aside or varied, having regard to the conduct of the impugned parties, the defendants, which led up to the obtaining of the orders which are said to be against good faith. Any conduct which occurred after the orders were obtained is not of itself capable constituting conduct against good faith which is relevant to the orders which are sought to be set aside.
The remaining conduct does not establish a lack of good faith in either the Local Court proceedings (to the extent relevant) or the proceedings in the Supreme Court.
The plaintiff also submits that the Court should conclude that the defendants' conduct was against good faith because of what she described as systemic racism. The plaintiff asserts that the nature of the conduct engaged in by the Owners Corporation in particular, in commencing proceedings against her and for the outstanding levies and expenses, was the consequence of systemic racism because no such proceeding had ever been taken against any other lot owner. She submits that other conduct of the lot owners, unconnected to the Local Court proceedings, indicates systemic racism.
The plaintiff submits that the inference that the defendants' conduct is racially motivated is reasonably open. She submits that the defendants have acted against good faith, and have breached their duty to the court by bringing proceedings where race is one of the underlying reasons. To the extent such a complaint can be proved and established, it relates to the proceedings brought by the Owners' Corporation in the Local Court.
Those proceedings in the Local Court were not the proceedings brought in this Court. It is to be recalled that the proceedings brought in this Court, which gave rise to the three orders for costs, were proceedings commenced by the plaintiff. These proceedings were against a range of defendants many of whom were not parties to the proceedings in the Local Court, including the individual lot owners and the employees of the Strata Manager. The defendants, as each of them were entitled to do, sought orders of a procedural kind in this Court, which were open to them and which they persuaded the Court were the appropriate orders to be made. There is no basis established for any suggestion in these proceedings that the orders for costs were obtained against good faith because of any systemic racism in these proceedings.
Broadly speaking, the plaintiff also relies upon a series of other allegations against the solicitors and the parties, in whose favour the costs orders have been made. These allegations were broadly that these parties either misled the court in the various interlocutory proceedings, such as by asserting that there was no malice on their part towards the plaintiff and no collateral or improper purpose in bringing proceedings against her, or that the parties conducted themselves in a way at the property where the plaintiff was living which forced her to move out of her property, leaving it vacant and causing significant financial harm to her.
As well, the plaintiff draws attention to a range of other matters which she submits constituted professional misconduct on the part of the solicitors. However, as is apparent from her affidavit which sets out such assertions, those assertions relate to variously the Local Court claim or the District Court proceedings on appeal from that Local Court claim.
The detail of the plaintiff's submissions clearly reveal that she feels strongly, and submits, that the entirety of the proceedings brought in the Local Court, and on appeal in the District Court, were inappropriate proceedings to be brought, were unfair to her and were brought because she was not compliant with the ways in which the Owners Corporation went about raising levies and charging expenses. She maintains - and, I am sure, honestly believes - that she has been singled out by the Owners Corporation inappropriately for legal action.
The evidence before me is insufficient to prove those matters on the balance of probabilities.
However, to further consider the matter, I will assume, for the purpose of reaching my conclusion on this application, that all of what the plaintiff asserts is true and that she has been the subject of inappropriate conduct or perhaps misconduct in the Local Court and District Court proceedings.
Even if that is established, in my view it cannot constitute a conclusion that in these proceedings, in the making of the orders for costs which are challenged, the Court made orders of a kind which were given against good faith as r 36.15 requires. As is apparent from the published reasons of each of N Adams J, Johnson J and myself, the orders for costs, which are the only orders the subject of this Motion, were each made in interlocutory proceedings where the plaintiff was the unsuccessful party. In the first two cases, the plaintiff brought motions in which she was wholly unsuccessful, and on the third occasion - namely, the orders which I made - the defendants brought proceedings for summary dismissal and they were successful in persuading the court to grant that relief. Rule 42.1 of the UCPR provides as follows: "Subject to this Part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
That rule is the basis for the usual order in this Court that costs ordinarily follow the event, unless there are circumstances brought to the Court's attention at a time prior to the orders being made which merit the making of a different order.
Each of the orders for costs which are sought to be the subject of variation by the present Motion brought by the plaintiff were the ordinary orders that costs follow the event. They were conventional. A careful examination of the reasons of the judges who made those orders does not suggest that there was any reason to make those orders other than the fact that the plaintiff was the unsuccessful party. In other words, there was no evidence referred to, or submissions made, that any other costs order was warranted.
I am wholly unpersuaded that there is any evidence or material which is capable of establishing that these orders were made against good faith. Particularly is this so when the principal orders disposing of each of the Motions are not challenged or sought to be set aside. It follows, recognising the principle of finality in litigation, that there is no basis established for the plaintiff to obtain the relief which she seeks in the present Motion filed 18 August 2020. that that Notice of Motion must be dismissed.

Costs of the Notice of Motion

The second to fourth defendants applied for costs of the Motion; and the fifth to eleventh defendants also applied for their costs of the Motion. The plaintiff resisted an order for costs against her in relation to all defendants.
In the case of the second to fourth defendants, the plaintiff submitted that much of the affidavit evidence which they relied upon was rejected and their written submissions did not address the substance of the arguments which she made.
With respect to the fifth to eleventh defendants, the plaintiff submitted that they have made no separate case in resisting the orders than the second to fourth defendants did, they made no oral submissions and have put in and filed no written submissions. Accordingly, she submits, she should not be ordered to pay the costs of the fifth to eleventh defendants.
The circumstances of the fifth to eleventh defendants are different from those of the second to fourth defendants. The fifth to eleventh defendants, by simply adopting the arguments put by other defendants have, in my opinion, not done anything which merits an order for costs in their favour. Whilst they have opposed the orders being sought, they have not taken any active role in the hearing of this motion other than to have their solicitor attend. He made no submissions. In those circumstances, the proper order for costs is that the fifth to eleventh defendants (inclusive) pay their own costs of the Notice of Motion.
In my view, the second to fourth defendants are entitled to their costs. They have actively resisted the plaintiff's Notice of Motion, there has been no disentitling conduct of the kind to which the plaintiff has referred and, in my view, costs should follow the event.
Accordingly, the orders of the Court are: 1. Notice of Motion filed 18 October 2020 by the plaintiff is dismissed; 2. The plaintiff is to pay the costs of the second to fourth defendants (inclusive); 3. The fifth to eleventh defendants (inclusive) are to pay their own costs of the Notice of Motion.

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: 12 November 2020

Eliezer v The Owners - Strata Plan No. 51682

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