This matter was heard by me on 4-7 July 2016, 26 August 2016, 21 October 2016 and 3 November 2016. Subsequently the parties lodged further written submissions dated 17 and 28 November 2016. Judgment has been reserved.
The case concerns a dispute between two strata plans over payments to be made to the Building Management Committee [1] constituted to manage the building in which they are located and the proper interpretation of the Strata Management Scheme. [2]
The Plaintiff asserts that in the event that its claim is not "actioned" within the meaning of s 4 of the District Court Act 1973 (NSW), then it, and the contribution claim falls within the Court's jurisdiction under s 134(1)(h) of the 1973 Act. [3]
The Plaintiff asserts that the debt claim is a claim for specific performance of the Defendant's obligations, under cl 15.6 of the SMS and therefore not embraced by s 134(1)(b) of the 1973 Act. [4]
s 134(1)(h) of the 1973 Act provides:
134 Jurisdiction in equity proceedings
(1) The Court shall have the same jurisdiction as the Supreme Court, and may exercise all the powers and authority of the Supreme Court, in proceedings for:
(h) any equitable claim or demand for recovery of money or damages, whether liquidated or unliquidated (not being a claim or demand of a kind to which any other paragraph of this subsection applies), in an amount not exceeding the Court's jurisdictional limit.
The Defendant contended that this Court has no jurisdiction, power or authority to determine the Plaintiff's claim for contribution or grant the relief sought in [5] of the Amended Statement of Claim on the basis that the claim is not one falling within s 134(1)(h) of the 1973 Act or any other jurisdictional provision of the 1973 Act. [5]
The Defendant argues that there is no authority for the proposition that an order for specific performance is an "equitable claim or demand for recovery of money or damages" within the terms of s 134(1)(h) of the 1973 Act. It argues that an order for specific performance is not an order for recovery for money or damages and would therefore would not fall within s 134(1)(h) of the 1973 Act. Reference was made to the decision of McDougall J in Ciccarelli v Cavasinni Developments. [6]
The Plaintiff concedes that there is no authority directly on the question on whether a claim for equitable contribution is within the scope of s 134(1)(h) of the 1973 Act, however it argues that it is plainly an equitable claim or a demand for money, albeit that the money to be recovered is to be applied for a specific purpose namely the account of the BMC. [7] In support of its argument, the Plaintiff relies on Commonwealth Bank of Australia v Hadfield. [8]
The Plaintiff further relies on the decision of Rolfe DCJ in Central Management Holdings Pty Ltd and Aphelion Marketing Pty Ltd v Nauru Phosphate Royalties Trust [9] where his Honour held that a claim for a liquidated amount arising from a claim for relief for specific performance was within the Court's jurisdiction under s 134(1) (h) of the 1973 Act. [10]
The Plaintiff further argued that Ciccarelli provides no guidance.
There is also an issue of potential relief.
The Defendant draws attention to the fact that pursuant to cl 15.7(a) of the SMS, any alleged shortfall in contributions is said to be a debt due and owing to the BMC, which relevantly, is a non-entity in legal terms and not to the Plaintiff.
The Plaintiff's position is that on the proper construction of the SMS, that the phrase "debt due and owing to the BMC" in cl 15.7(a) of the SMS must be construed as "a contractual obligation on the part of the delinquent owners' corporation enforceable by its co-member of the BMC." [11] It argues that is not an obligation to pay the money to the Plaintiff's own account but rather, to the account of the BMC. To this extent, the Plaintiff contends that the flexibility offered by s 90 of the Civil Procedure Act 2005 (NSW) [12] and UCPR r 36.1 enables the Court to fashion the appropriate order to achieve the contractual end contemplated. [13]
The Defendant contends that the nature of the power in s 90 of the 2005 Act requires the Plaintiff to be a creditor and the nature of the case in damages requires that the Plaintiff has suffered loss. It contends that at most, the Plaintiff has been held out of its money due to any shortfall in contribution and would be entitled to interest on that amount. [14]
In short the parties have joined issue as to the capacity of this Court to dispose of the proceedings pursuant to the power in s 90 of the 2005 Act. Neither party has pointed to any authority on point.
[2]
Recent Court of Appeal authority
On 21 February 2017, the Court of Appeal constituted by Beazley ACJ and Macfarlan JA granted leave to appeal in the matter of Huang v Drumm. [15] In Huang v Drumm, the Applicant raised claims (inter alia) that the Respondent acted in breach of trust and had breached a fiduciary duty. The Applicant contended that the District Court did not have the jurisdiction to entertain the claim. [16] The Court stated:-
"[4] There is no settled authority on that question, although there are a number of decisions which have referred to it. It is only necessary, for present purposes, to refer to the decision of Brereton J in McDonough v The Owners Strata Plan No 57504 [2014] NSWSC 1708 in which his Honour, at [10], considered that a claim for equitable compensation for breach of trust is a claim to which s 134(1)(e) applies, and therefore is excluded from s 134(1)(h), such that the District Court does not have jurisdiction unless the relevant trust fund is less than $20,000 in value or amount." [17]
On 3 April 2017, in Mahommed v Unicomb, the Court of Appeal considered the operation of s 144(2) of the 2005 Act and its interaction with s 134(1)(h) of the 1973 Act. [18] Ward JA (with whom Macfarlan JA and McDougall J agreed) held at [52], [55]:-
"[52] The findings made in the Dismissal Judgment as to the lack of jurisdiction to hear and dispose of the equitable claims raised in the amended statement of claim meant that the District Court was at that stage bound to transfer the proceedings to the Supreme Court (see McDonough per Brereton J at [10]). The fact that Mr Mahommed did not seek such an order (and indeed appears to have resisted an invitation to make an application for the matter to be transferred to the Supreme Court) is not to the point. Section 144(2) is mandatory in its terms. Moreover, it encompasses the situation not only where the District Court reaches a decision that it lacks jurisdiction to deal with claims in its equitable jurisdiction but also where there is a doubt as to that matter (as must here be the case in light of the subject matter of the forthcoming appeal in Huang) …
[55] It is apparent, from the Dismissal Judgment, that this was a case in which the primary judge was bound to transfer the proceedings to the Supreme Court. Mr Mahommed was seeking to prosecute, among other causes of action, equitable claims of a kind which he maintained fell within the jurisdiction conferred by s 134. Her Honour decided that the Court's equitable jurisdiction under s 134 of the District Court Act did not extend to the hearing and determination of the equitable claims in the proceedings commenced by Mr Mahommed. That was sufficient to enliven the operation of s 144 of the Civil Procedure Act." [19]
Her Honour observed that Huang v Drumm had yet to be resolved. Ward JA added:-
"[58] In those circumstances it is not appropriate (nor is this case a suitable vehicle) to consider the arguments raised as to the scope of the equitable jurisdiction to entertain the equitable claims made by Mr Mahommed. That is particularly so in light of the recent grant of leave to appeal in Huang on the issue considered in McDonough as to the interaction between s 134(1)(e) and s 134(1)(h) of the District Court Act; and in circumstances where this Court would benefit from more considered argument and assistance on the jurisdictional questions raised. Nor is it appropriate, in light of the decision to transfer the matter to the Supreme Court, to express opinions on the balance of the issues raised on the present application, including as to the complaint as to denial of procedural fairness (though to the extent that it is based on the observations made in relation to the manner in which default judgment was sought that was not determinative of her Honour's decision) … " [20]
[3]
Orders
Following the decision in Mahommed v Unicomb, I relisted the matter before me on 7 April 2017 in order to ascertain the position of the parties.
Counsel for the Plaintiff concedes that an order should now be made to refer the matter to the Supreme Court pursuant to s 144(2) of the 2005 Act. Counsel for the Defendant does not oppose this course subject to the Court deciding that the Court may lack jurisdiction.
In Bushby v Dixon Holmes du Pont Pty Ltd, Rein J held that this Court would be justified in making an order under s 144 of the 2005 Act where there is a "divergence of views on the question of its jurisdiction." [21]
In McDonough v The Owners Strata Plan No 57504, [22] Brereton J in obiter remarks stated that where at the "very least" it is arguable that the District Court did not have jurisdiction under s 134(1)(h), that the Court is bound to transfer proceedings under s 144(2) of the 2005 Act. [23]
In Mahommed v Unicomb, Ward JA stated that in circumstances where there was lengthy debate and where there was at least "a doubt as to jurisdiction to determine the equitable claim[s] raised on the pleadings" the District Court is bound to transfer the proceedings to the Supreme Court. [24]
Both parties acknowledge that there is no settled authority on the capacity of s 134(1)(h) of the 1973 Act to embrace that part of the Plaintiff's claim to which it relates.
The parties' submissions further demonstrate the question of jurisdiction is arguable.
s 144(2) of the 2005 Act does not require this Court to express a view as to the merits of those arguments but rather to acknowledge a circumstance that the Court may lack jurisdiction to hear and dispose of the proceedings.
I am satisfied that it is appropriate to do so, and accordingly I order that the proceedings be transferred to the Supreme Court pursuant to s 144(2) of the 2005 Act.
[4]
Endnotes
Hereinafter referred to as "BMC"
Hereinafter referred to as "SMS"
Hereinafter referred to as the "1973 Act"
Plaintiff's Preliminary Written Submissions dated 16 September 2016 at [121]
See Further Amended Defence filed 4 July 2016 at 20
[2004] NSWSC 788 at [87] (McDougall J)
Plaintiff's Submissions in Reply dated 19 October 2016 at [23]
(2001) 53 NSWLR 614; [2001] NSWCA 440
[2006] NSWDC 7
[2006] NSWDC 7 at [32] (Rolfe DCJ)
Plaintiff's Submissions in Reply dated 19 October 2016 at [3]
Hereinafter referred to as the "2005 Act"
Plaintiff's Submissions in Reply dated19 October 2016 at [4]
Defendant's Written Submissions dated 12 October 2016 at [11]
[2017] NSWCA 29
[2017] NSWCA 29 at [2] (Beazley ACJ and Macfarlan JA)
[2017] NSWCA 29 at [3] - [4] (Beazley ACJ and Macfarlan JA)
[2017] NSWCA 65
[2017] NSWCA 65 at [52] and [55] (Ward JA with whom Macfarlan JA and McDougall J agreed)
[2017] NSWCA 65 at [58] (Ward JA with whom Macfarlan JA and McDougall J agreed)
[2017] NSWCA 65 at [57] (Ward JA with whom Macfarlan JA and McDougall J agreed)
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: 11 July 2017