IIB Australia Pty Ltd v Owners Strata Plan 76024

Supreme Court of NSW|2014-11-19|Before: Schmidt J

Judgment 1The plaintiff, IIB Australia Pty Ltd, the owner of a strata unit at Kingscliff, seeks to appeal an interlocutory order as to costs made by Dakin LCM in November 2013, as well as the final judgment given in May 2014. Allegations of bias and refusal to hear the case advanced for IIB, by its director, Mr Dyason, were advanced in the summons commencing the proceedings. This judgment deals with motions brought by IIB and the first defendant, an owners corporation under the Strata Schemes Management Act 1996 (NSW). 2The Local Court proceedings concerned a claim for unpaid contributions levied by the Owners' Corporation on IIB in respect of the Kingscliff unit. The sum claimed was $22,635.07. In November 2013 the Local Court ordered an assessment of expenses, including legal costs, under s 80(1) of the Strata Schemes Management Act by the Manager, Costs Assessment of this Court. On 17 April 2014 a certificate for party/party costs of the assessment of $1,540 was issued by a costs assessor and by a second certificate, IIB was required to pay $65,633.51 as the first defendant's fair and reasonable costs. 3The orders sought in the summons commencing these proceedings included that the appeals be allowed; that the Local Court proceedings be declared null and void; that they be dismissed with costs in favour of IIB; that the respondents' legal advisers pay damages to the Owners; that the respondents and their legal advisers pay damages to IIB for stress suffered by Mr Dyason and by members of the Dyason Family Trust, the Trustee of which is the plaintiff company. 4The difficulties with the claims advanced by IIB in that summons are apparent. The written submissions advanced for IIB suggested, however, that it wanted to argue that it was denied natural justice in the Local Court proceedings. That was confirmed at the hearing, when Mr Dyason explained that part of IIB's complaint was a failure to give reasons for the decisions made in the Local Court. Those matters were not pleaded, although they were more directly raised in a second summons, filed, finally without objection at the hearing, by way of amendment of the existing summons. 5Attention was, however, drawn by the Attorney General, then the second defendant, to the provisions of Rule 7.1(3) of the Uniform Civil Procedure Rules 2005 (NSW), which permits a company like IIB to carry on proceedings in this Court by a director "only if the director is also a plaintiff in the proceedings". 6While Mr Dyason suggested that he would fix this problem by making himself a plaintiff, that course is only available on proper application for leave to amend the summons, an application which could only be granted if Mr Dyason is a proper plaintiff, that is, if he personally has an arguable cause of action against the defendants (see Tanamerah Estates Pty Ltd (as the trustee for Alexander Superannuation Fund) v Tibra Capital Pty Ltd [2013] NSWCA 266 at [15] - [16]). That Mr Dyason has any personal interest in what lay between the parties in the proceedings before the Local Court the subject of this appeal, is not apparent. Even though on its case IIB is the trustee of a family trust, that does not disclose that Mr Dyason himself has any arguable cause of action against the defendants. 7No objection was finally taken to Mr Dyason's appearance for IIB on the hearing of the motions. That he would be granted leave to appear on the hearing of IIB's claim, if it proceeded, was not conceded. Accordingly, I granted Mr Dyason leave to appear for IIB on the hearing of the motions. If the proceedings are pursued further, Mr Dyason will have to obtain further leave to represent IIB. The evidence that a sequestration order was made against him by the Federal Court in April 2014, will be relevant to such an application.

IIB's motion 8By motion filed in November 2014, IIB sought an order restoring the Local Court as second defendant in the proceedings. 9It emerged at the hearing that Mr Dyason believed that IIB had filed a further summons in the proceedings, entitled "summons (supervisory jurisdiction)", but that had not, in fact, occurred. Nor had that document been served. That summons sought orders quashing or setting aside the Local Court's orders; it sought leave to commence the proceedings and sought judicial review of the orders made by the Local Court. Bias was also again there alleged. 10When the other parties were provided with a copy of that document, by consent I allowed the summons (supervisory jurisdiction) to be filed, on the basis that it was accepted that IIB also wished to advance the claims there articulated. 11The Local Court had earlier filed a submitting appearance, but had been removed as a party by consent at a hearing before the Registrar, where it seems some misunderstanding had arisen on Mr Dyason's part. 12In the result, finally there was no objection to the Local Court being restored as a party and the Attorney General confirmed that it had submitted to the Court's jurisdiction. 13IIB also sought an order that the Attorney General file a defence on behalf of the Local Court, "setting down the Magistrate's reasons for his Honour's decision". Mr Dyason explained that one of his complaints was that the Magistrate had failed to give reasons for his decision. That is in issue. 14That application must be refused. As the Attorney General submitted, it is misconceived. The Rules do not require that a defence be filed to a summons. Further, as I explained to Mr Dyason, the Attorney General cannot give reasons for the decisions the subject of the appeal. That is a matter for the presiding Magistrate. 15If that is a claim which IIB wishes to pursue in these proceedings it must be advanced in the summons, where that complaint is not as yet clearly articulated. 16IIB will have to file an amended summons, which restores the Local Court as a defendant. It should also have the opportunity at that time to revisit the summons, so that all claims which it seeks to advance are clearly stated in the one document; that the grounds on which each of those claims is advanced, are there clearly identified; and that the leave which IIB requires, if its claims are to be advanced, is there clearly sought. 17Contrary to the submissions advanced for the Owners Corporation, the allegation of bias is not the only question of law raised by the summonses. In so far as IIB seeks to appeal an interlocutory order or matters which raise mixed questions of fact and law, however, IIB must seek and obtain leave under s 40 of the Local Court Act 2007 (NSW) to advance those claims. That leave must be sought in the summons.

The first defendant's motion 18By motion filed in October 2014 the Owners Corporation sought an order that the appeal be dismissed as incompetent; that in the alternative that certain grounds of appeal be struck out; and that there be an order for security for costs. 19The Attorney General neither consented to nor opposed that motion. It was opposed by IIB.

IIB's appeal may not be dismissed 20Under s 39 of the Local Court Act an appeal lies to this Court from the Local Court only on a question of law and in the case of a mixed question of law or fact, or an interlocutory judgment or order, only with the leave of the Court (s 40). 21The appeal was brought outside the 28 day time limit fixed by Rule 50.3(1) and IIB has not sought an extension of time to appeal under Rule 50.3(2). The further summons filed at the hearing does refer to leave appeal, but not an extension of time to appeal. Unless leave to appeal out of time is sought and granted, the appeal will fail. 22Commencing the appeal without seeking such leave does not, however, mean that the proceedings are a nullity. The Owner's Corporation submitted that leave to appeal out of time will not be granted because the plaintiff has never paid the sum ordered by the Local Court. That cannot be accepted, because the Local Court's judgment has been stayed until this appeal has been determined. 23As was submitted for the Owners Corporation, the opportunity to seek leave to appeal out of time would not be granted, if that would work an injustice. The Owner's Corporation sought to establish that injustice by the course taken by IIB in bringing an appeal first to the District Court and then to the Court of Appeal. 24It was submitted to be relevant that as an owners corporation which depends on contributions from lot owners to carry out its statutory functions on behalf of all lot owners, the cost and delay of those errors had been to its prejudice, with the result that it was now owed some $125,624.60, an amount which continues to grow. Considerable further costs would be pursued in resisting claims which were doomed to fail. In the result the plaintiff would not be granted leave to appeal out of time, even if it were pursued. 25There is no question that IIB wrongly approached the District Court and the Court of Appeal before pursuing these proceedings, thereby unnecessarily incurring costs which on Mr Dyason's submissions, it is not in a position readily to pay. The result is that these proceedings were brought out of time and the summons is still deficient and needs to be revisited, as I have explained, and that further considerable costs will be incurred, if IIB is permitted to pursue its present course. 26On the case advanced for Mr Dyason, IIB is not in a position to retain legal advice. It is apparent that the course taken is the result of errors he has made, not being legally qualified. 27Despite these obvious errors and the costs which have resulted, I am not satisfied that now denying IIB the opportunity to pursue its case is what justice demands in all of the circumstances which have arisen, given the serious errors of law now alleged, including a denial of natural justice and failure to give reasons. 28Despite the procedural errors on IIB's part, the Owner's Corporation has been aware of IIB's desire to appeal the Local Court's orders and the general nature of the complaints it sought to advance, albeit the complaint sought to be raised as to bias may not have been clearly articulated in the Local Court. It may not be overlooked that the further summons raises serious complaints, clearly invoking the Court's supervisory jurisdiction, as the defendants properly accepted. 29The case advanced for the Owner's Corporation was that IIB's claims had no prospects of success. The test on a strike out application such as this is that discussed in General Steel Industries Inc v Commissioner of Railways (NSW) [1964] HCA 69; 112 CLR 125 at 129. What the Owner's Corporation had to establish was that IIB's claims are so obviously untenable, that they cannot possibly succeed; that they are manifestly groundless; and that they do not admit of argument. 30In its written submissions, prepared prior to the filing of the further summons, the Owner's Corporation submitted that IIB's case before the Local Court had been hopeless, because there was never any issue that the levies it pursued were unpaid, all that was in issue was the recovery of expenses provided for by statute, which had been properly assessed. Further, the only question of law raised on appeal was bias. That had not been relied on in the Local Court and, it was submitted, "the plaintiff had failed to put any material before the Court which could possibly amount to bias". 31That submission mis-states the onus which arises on a strike out application such as this. It is for the Owners Corporation to establish that IIB's case is hopeless. It has not met that onus. While not clearly articulated by the summons, one of the complaints IIB seeks to pursue is a failure to give reasons for orders made. Allegations of denial of procedural fairness, natural justice and bias are alleged. No decisions, it appears, on the evidence led were delivered in the Local Court proceedings. Reasons given appear, if at all, it seems, only in transcript. 32Part of the transcript tendered suggests that what was originally in issue was a claim for unpaid levies of some $457 plus costs of recovery claimed finally to amount in total to a sum of $70,509.78, including the cost of the proceedings in the Local Court. At issue was whether the Owners Corporation had established at trial, where it had led expert evidence which IIB had challenged, that the expenses it pursued had been reasonably incurred and were for a reasonable amount, on a quantum merit basis. 33 At the further hearing on 19 November 2013, during discussion of written submissions filed for the Owners Corporation, Dakin LCM raised the possibility that he would not resolve what the parties had joined issue over, but would of his own motion refer the costs claimed for assessment under the Legal Profession Act 2004 (NSW). That was raised by his Honour on the basis of observations made in Owners of Strata Plan 36131 v Dimitriou [2009] NSWCA 27; 74 NSWLR 370. 34That case involved an appeal from Malpass AsJ, who had upheld an appeal from a Magistrate's determination under s 80 of the Strata Schemes Management Act 1996, as to the costs and disbursements reasonably incurred by an owners' corporation. There Handley JA observed at [130] - [136]: "130 I also agree with Hodgson JA that a corporation is only entitled to recover its expenses if they were reasonably incurred and reasonable in amount. The expenses must be fair and reasonable in terms of the rates charged and the work done. The corporation's conduct in commencing recovery proceedings must also be reasonable. A corporation may not be entitled to recover the expenses of proceedings commenced the day after the contribution became due against a lot owner with a reasonable payment record who promptly pays the contribution. 131 Since the question does not squarely arise in this case I prefer to express no view on whether the entitlement of a corporation is to costs on the ordinary basis or the indemnity basis. 132 The corporation must be prepared to prove by evidence at the trial that the expenses claimed were reasonable in amount and were reasonably incurred. Its claim to such expenses is in the nature of a quantum merit. 133 A lot owner facing a claim for recovery expenses incurred by a corporation, is a third party payer (s350(9) of the Legal Profession Act 2004), and as such entitled under s350(1) to have the costs assessed by a costs assessor provided the appropriate steps are taken before the Court gives judgment. 134 If the lot owner fails to take those steps in time it will still be open to the Court of its own motion or on the application of either party to refer a claim for legal expenses to a costs assessor. It can give an interlocutory judgment for the corporation for those expenses as defined in the judgment and exercise the power in s353(2) to direct the Manager Costs Assessment to refer for assessment the legal expenses payable under that part of the judgment. Final judgment for the legal expenses as assessed can be entered later when the certificate of the costs assessor (s368) becomes available. 135 These provisions enable quantum disputes under s80(1) to be resolved, if necessary, by a costs assessor before final judgment is given for the recovery expenses. 136 Thus the construction of s80(1) favoured by Hodgson JA and myself will not expose a lot owner to claims for legal costs which cannot be reviewed by a costs assessor and it is not necessary to adopt a restrictive construction of the section to avoid that result." 35It was conceded by the Owners Corporation that referral of its claim for assessment under the Legal Profession Act was open to Dakin LCM, given Handley J's observations. That was not conceded by IIB, for whom Mr Dyason submitted that what the parties had joined issue over at the hearing, had to be decided by the Local Court. 36The parties' written submissions were not in evidence but the case advanced by Mr Dyason in oral submissions was that while there was no issue that IIB's levies had been unpaid for a time and that costs had been expended in their pursuit, the Owners Corporation had failed to establish its case as to the reasonableness of the costs it claimed to have incurred, on the evidence it had led at trial by the expert evidence it had called from an assessor, Mr Campbell. Accordingly, he objected to what his Honour had proposed, which he complained would involve the parties in additional expense, by pursuit of an assessment process. 37An unfortunate exchange ensued, when the Owners Corporation's solicitor proposed to draft orders over the luncheon adjournment, before Mr Dyason had the opportunity to put his submissions. "HIS HONOUR: That is, there was no input from you. Now, think about this over lunch though: If the matter goes to assessment, which I'm inclined to, at this stage, as a preliminary view, finalise the view that it does seem to me that it's certainly specifically addressed in the decision of Dimitriou and recognises the limitations on this court's capacity to quantify, it's likely that there will be further costs. Now, if the assessment goes against IIB, there'll be more money payable. DYASON: I understand. HIS HONOUR: On terms. DYASON: I understand that, your Honour but - I'm sorry to be argumentative but I've got to come back to he who asserts must prove. It's not my job to prove their costs. I can't prove their costs. Even if I send in the third party, he's still going to get the run around when he gets there. HIS HONOUR: My preliminary view is this: They have incurred costs, they are expenses for the purpose of section 80. DYASON: Yes. HIS HONOUR: Your behaviour and conduct has served to drive those costs up. DYASON: Because I required proof. HIS HONOUR: They are entitled to recover those costs. The issue is what is the quantum they are entitled to recover. Now, that is all but a judgment. DYASON: If they'd proved their costs we wouldn't have been here a year ago. HIS HONOUR: Well- DYASON: I asked for proof of costs from the outset. HIS HONOUR: You put -- DYASON: It's not me that's continued the action here, your Honour. HIS HONOUR: You put people to proof, Mr Dyason. That involves expense. Now, you've put them to proof, you're entitled to do it but there are consequences, that's in your costs, but whether or not those costs amount to $70,000 plus at this stage is the issue for this court. I can't make it any simpler than that. DYASON: And they haven't explained the difference between the 40 and the 70. HIS HONOUR: They have. There's no documents that have been provided but- DYASON: No proof. No proof. HIS HONOUR: They specifically reserve the right in the statement -- DYASON: Proof. Of course they do. But they must prove. HIS HONOUR: The rights are specific - look, it is an issue for me, how the - costs have been incurred, Mr Dyason, between that original amount and running the hearing. I'm not told how that's calculated, other than to say additional attendances and preparing for the hearing and then running the hearing. But I am concerned you're not following what I'm saying to you. The issue is the quantum. DYASON: Proved quantum. What was reasonable as the quantum. HIS HONOUR: Mr Dyason, I can't make it any clearer than what I have. DYASON: No, all right, okay. But the -- HIS HONOUR: We're not hearing all of your submissions now. DYASON: No. HIS HONOUR: Mr Dyason, it's quarter past 1. I said I'm not hearing all your submissions now. DYASON: I wasn't going to give you the rest of it. HIS HONOUR: Good. You'll have the opportunity. Mr Deward, please, what- DEWARD: Your Honour, if we come back after lunch with the form of an order to put to your Honour, would that assist your Honour? HIS HONOUR: I've had your disrespect and I've had it for the last time. DYASON: All right. HIS HONOUR: They have proved they have incurred expenses. DYASON: Yes but they -- HIS HONOUR: They have not proved the extent of those expenses. DYASON: Reasonableness. HIS HONOUR: Now, I am going to go off the bench and cool down. You've upset me to the extent that I don't think it's appropriate I say anything further. Your disrespect, really, I'm doing a job, Mr Dyason. DYASON: No disrespect is intended, your Honour, but -- HIS HONOUR: It may not be intended, Mr Dyason, but it's the consequence of what you say -- DYASON: -- on the other hand -- HIS HONOUR: Stop arguing with me. The effect is -- DYASON: I thought I was entitled to an opinion. HIS HONOUR: Well, that's - do I need to warn you about where you are and need to warn you about contempt? Because I am here, not to argue with you, not to get in a slanging match with you, to try and make a decision according to law. And you telling me what you think and talking over the top of me does not assist me to do that. Now, it's not appropriate I take any further action until I've had the opportunity to have some lunch and cool down. Think about your position." 38On resumption his Honour read the written submissions which Mr Dyason had earlier filed. There was then what may be described as a running commentary from the Owners' Corporation's solicitor, when his Honour raised questions with Mr Dyason, including in relation to provisions of the Regulations and alleged breaches of s 80D of the Strata Schemes Management Act, which on IIB's case meant that certain legal expenses claimed were not recoverable. 39Section 80D precludes an owners corporation from seeking legal advice or the provision of any other legal services, or initiating legal action, for which any payment may be required, unless a resolution is passed at a general meeting of the owners corporation approving the seeking of the advice or services or the taking of such action. 40This aspect of IIB's case appears to have received no attention at the hearing and seems not to have been considered or resolved. 41Dakin LCM observed at one point had he had a problem with the $70,000 costs bill "for the type of work involved in this matter". Later his Honour found, after discussing problems with the expert evidence called by the Owner's Corporation from Mr Campbell, who had assessed the costs and observing that IIB had had no opportunity to have any input into his assessment, that by his approach to the litigation and his cross-examination of Mr Campbell, that Mr Dyason had driven up costs. 42Dakin LCM then pressed Mr Dyason to agree to having the matter referred for assessment of costs under the Legal Profession Act. Mr Dyason's approach caused his Honour to observer at one point: "Oh, this is hopeless, with the greatest of respect. I don't know whether Mr Dyason understands what I've said to him or whether he accepts the assessment. I can't get a 'Yes' or No'." 43Mr Dyason replied that he had said yes, but then his Honour asked Mr de Waard to formulate "a minute of consent", which he said he would ask Mr Dyason to sign and if he didn't, "I won't refer it". After further discussion, when Mr Dyason said he was prepared to sign such a document, subject to wording, the matter adjourned. 44On resumption, there was no agreement about the orders Mr de Waard had prepared. His Honour then said: "Well, that's noted but I intend to make an interlocutory judgment for the interest. I am satisfied that that has been proved beyond reasonable - on the balance of probabilities, I'm sorry. I do not see the necessity for that wording. I will give formal reasons, they'll be brief but the formal reasons that I am ordering, it is to determine, in accordance with the authority of Strata Plan 36131 v Dimitriou, whether the costs were a reasonable amount and were reasonably incurred. That's an issue and to do anything else would be inconsistent with my finding. Expenses had been incurred but whilst I have no issue with the evidence of Mr Campbell, indeed it is the only issue as to reasonableness, I am of the view that his evidence is more akin to a review than a proper determination of what is reasonable in the circumstances. That is better determined by assessment in accordance with the authority of Dimitriou. So, that is the purpose of making the order, Mr Dyason, rather than me giving reasons as to the minute of order which will lead to the assessment taking place." 45The orders to be made were then discussed. What was finally ordered was not in evidence, but appears to have been an order for assessment of the expenses claimed by IIB, which had been the subject of Mr Campbell's evidence, as well as the costs of the Local Court proceedings. 46IIB's case on appeal that the course taken involved appellable error and various of the other failures raised on the further summons, is plainly arguable. 47To that point, the parties had joined issue, not only over whether certain expenses had been reasonably incurred and were reasonable, but whether the Owners Corporation had a right to recover them, given the provisions of s 80D. It had led expert evidence from Mr Campbell, which it appears, IIB successfully challenged, his Honour apparently not being satisfied on Mr Campbell's evidence, that the order sought could be made. Instead of giving judgment on the matters over which parties had joined issue, his Honour exercised the power given by s 353(2) of the Legal Profession Act which permits a court to direct the Manager, Costs Assessment "to refer for assessment costs payable as a result of an order made by the court or tribunal". 48The matter was stood over for judgment in March when final orders were made. The reasons for the conclusions reached and the findings made in November, appear however, never to have been given. 49In the result, on the evidence led on this application it is not possible to conclude that the onus which falls on the Owners Corporation under the General Steel test has been satisfied. The complaints advanced by IIB as to the orders made and the way in which the proceedings were conducted have not been shown to be untenable, manifestly groundless, not arguable and doomed to fail. 50It follows that the application to dismiss the summons must be refused.

Security for costs 51There is no question about the Court's power to order security under s 1335 of the Corporations Act 2001 (Cth) and Rule 42.21(1)(d), the plaintiff being a corporation. Rule 51.50 is not relevant. It applies to the Court of Appeal. The first defendant sought an order for security of $58,000, that being estimated by Ms Wheatland, the first defendant's solicitor, to be the costs which would be incurred if the hearing proceeds. 52While that figure was not accepted by Mr Dyason, he did not challenge the basis on which this sum was calculated. It is apparent that a hearing on the matters raised on this motion will raise further considerable costs, which it appears that IIB is, in reality, not in a position to meet. 53IIB has two directors, Mr Dyason, its shareholder and Mr Liu, who resides in Singapore. On the case advanced by Mr Dyason, It is the trustee of a family trust. On the evidence it owns two properties, the units at Kingscliff and a property at Tumbulgum. The directors appear to own no real property in New South Wales or Queensland personally and the Tumbulgum property is the subject of a caveat, in which it is claimed that the transfer of the property to it from the former registered proprietor is void under s 120 of the Bankruptcy Act 1966 (Cth) as a related party transfer for less than market value. 54The Kingscliff property, it appears from emails sent by Mr Dyason in January 2012, annexed to Ms Wheatland's affidavit, was rented, but generated little income; it had been purchased for $900,000, but was then only worth $400,000; it secured a $500,000 overdraft; and Mr Dyason intended to put it on the market. He also claimed that his wife and family trust owned other properties, but in January 2013 he requested that IIB's position be considered to be one of hardship. 55I am satisfied that the evidence does establish grounds for concern that the plaintiff will be unable to pay the Owners Corporation's costs if it is successful in its defence of the summons IIB wishes to pursue. 56IIB has a paid up capital of only $2, established by the ASIC search in evidence. There do not appear to be sufficient, unencumbered, assets to meet any order for costs made in favour of the Owner's Corporation and no evidence that IIB has any rights of indemnity form the family trust, in any event, which could be satisfied out of trust assets. 57In Transocean Capital Pty Ltd v AFSIG Pty Ltd [2006] NSWSC 806; 202 FLR 270, Barrett J concluded at [41] in relation to a company in a similar financial position to that of IIB: "41 The discretionary question should be approached by reference to a number of factors referred to in the judgment of Beazley J in KP Cable Investments Pty Ltd v Meltglow Pty Ltd (1995) 56 FCR 189. They are set out in a well known passage at pp.197 to 198 which I need not repeat. Consideration of those criteria in this case leads to the conclusion that security should be ordered. In particular:

The defendants have not been guilty of delay.
The plaintiff's impecuniosity has not been caused in any way by the defendants.
The defendants' application for security cannot be said to be oppressive.
No one standing behind the plaintiff has come forward with any offer of support or indemnity." 58This is a similar case, however the requirements of Part 59 of the UCPR apply and must be considered in this case. Part 59 applies to proceedings under s 65 and s 69 of the Supreme Court Act 1970 and other proceedings in the Court's supervisory jurisdiction. Rule 59.11 provides: "59.11 Security for costs (1) A plaintiff is not to be required to provide security for costs in respect of judicial review proceedings except in exceptional circumstances. (2) ... (3) This rule has effect despite rule 42.21." 59The Owners Corporation submitted that exceptional circumstances were here established by the course which IIB has pursued, before bringing its appeal to this Court; by the production of the further summons only at the hearing on 19 November, by which the Court's supervisory jurisdiction was invoked; by the fact that there were separate costs review proceedings on foot; by the indulgence granted to IIB when Mr Dyason was permitted to appear; his apparent concession that if IIB lost, it would have no money to pay costs; and the steps which the Owners Corporation had had to pursue, to recover contributions form a recalcitrant owner. 60Exceptional circumstances were established in Mazzei v Industrial Relations Commission [2000] NSWCA 104 where the orders the subject of the application had not been stayed. Here, however, IIB has obtained a stay of the Local Court's orders and does pursue judicial review grounds in these proceedings, in the circumstances earlier outlined. 61I am not convinced that IIB's errors in earlier bringing proceedings in the District Court and the Court of Appeal can establish the exceptional circumstances which must exist, before security is ordered in this case. The fact that IIB is not in a position to meet a costs order, cannot itself amount to the exceptional circumstances required to be established, before such security may be ordered. The Rule, after all, contemplates that a plaintiff may be in a position where ordinarily, security would be ordered. 62Nor does the fact that the proceedings concern an owners corporation's recovery of contributions from an owner establish the necessary exceptional circumstances. On the little evidence led on this application, given what appears to have been in issue as to a small amount of outstanding fees and the very considerable expenses sought to be recovered, defence of what was claimed seems understandable. Whether the Owner's Corporation was entitled to pursue recovery of those expenses, given the provisions of s80D, while raised by IIB appears not to have been considered or resolved. 63In the result, I am satisfied that security may not be ordered and the Owners Corporation's motion must be dismissed.

Orders 64As earlier discussed IIB will have to amend its summons to include all matters sought to be advanced, including those not specifically or clearly yet pleaded. The usual order is that IIB will have to bear the costs thrown away as the result of that amendment. 65The Owners Corporation's motion must be dismissed. The usual order as to those costs is that it must bear IIB's costs, as agreed or assessed. 66Accordingly, I order that: (1)The Local Court is joined as the second defendant to the proceedings, with the result that the Attorney General becomes the third defendant. (2)IIB has leave to file a further amended summons on or before 31 January 2015. (3)IIB must pay the Owners Corporation's costs thrown away as the result of that amendment. (4)The Owners Corporation's motion is dismissed. (5)The Owners Corporation must bear IIB's costs of its motion, as agreed or assessed.

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: 19 December 2014

Strata Schemes Management Act 1996(NSW)

Legal Profession Act 2004(NSW)

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