Owners of Strata Plan 36131 v Dimitriou

(1) Scope of "expenses" 62 The word "expenses" is likely to have a variable meaning, depending on context. The immediate statutory context in s 80 is that of expenses incurred in recovering contributions payable to an owners corporation. It refers to money laid out for that purpose. Recovery of a debt may involve the employment of an agent and may require proceedings in a court of competent jurisdiction. There is no reason to suppose that s 80 does not envisage the kind of expenses involved in usual debt recovery processes. 63 It follows that the answer to question (1) above must be in the affirmative. However, it does not follow that an owners corporation is entitled to recover all expenses incurred by it for the identified purpose.

(2) Recoverability of legal costs 64 To the extent that legal expenses form part of the recoverable debt, they should be limited to such expenses as are properly incurred and reasonable in amount. That is consistent with the general law rule with respect to mortgagee's costs noted below; nor should Parliament be assumed to have authorised the recovery of costs which exceeded that measure. For these reasons and those given by Hodgson JA, question (2) should be answered 'yes'. 65 Similar issues can arise in respect of the recovery of costs under mortgages and other finance transactions. In such cases, the amount recoverable will turn upon the proper construction of the contractual provision: see, eg, Ringrow Pty Ltd v BP Australia Pty Ltd [2006] FCA 1446 (Rares J). With respect to a mortgagee, the entitlement to recover all costs reasonably and properly incurred in protecting or enforcing a security has long been a principle of general law, not dependent upon the existence of an express contractual term: see In re Shanahan (1941) 58 WN (NSW) 132 at 134 (Street J). The principle applied in Shanahan was not novel: it is commonly sourced to Detillin v Gale (1802) 7 Ves Jun 583; 32 ER 234 (Lord Eldon LC) and Cotterell v Stratton (1872) LR 8 Ch App 295 (Lord Selborne LC): see Tyler, Young and Croft, Fisher & Lightwood's Law of Mortgage (2nd Aust ed, 2005) at 40.1. It is usual practice nowadays for there to be a clause in a standard form mortgage entitling the mortgagee to recover all its costs; the enforcement of such terms and their interrelationship with costs rules in courts and tribunals was considered in Gomba Holdings (UK) Ltd v Minories Finance Ltd (No. 2) [1993] Ch 171 (EWCA) (Scott LJ). (The Court in Gomba (at 194) held that there was a procedure available within the Court for taxation of non-litigation costs, albeit on the contractual basis. In addition, the Court held that it had power to disallow a mortgagee's costs, as part of the power of a court of equity to fix the terms on which relief will be allowed.) 66 In the present case, there is no relevant extraneous contractual relationship between the owners and the owners corporation of a strata scheme. Indeed, if there were such a contractual arrangement, it could not have effect contrary to the provisions of the Strata Schemes Act: s 245.

(3) Costs not recoverable in other jurisdictions 67 Amounts payable to lawyers are subject to various forms of regulation which might, absent statutory exclusion, limit the nature or amount of the expenses recoverable under s 80. The conclusion (accepted by all members of this Court) that recoverable costs are limited to those reasonable in amount and properly and reasonably incurred, suggests that they may be subject to assessment under the relevant Legal Profession Act. That consideration will be addressed below. It is convenient first to consider the interrelationship of s 80 with other provisions dealing with legal costs in courts and the Tribunal. 68 Since August 2005, costs in the Local Court, District Court and Supreme Court are said to be "in the discretion of the court" and the court has "full power to determine by whom, to whom and to what extent costs are to be paid": Civil Procedure Act 2005 (NSW), s 98(1)(a) and (b). Further, a party to proceedings "may not recover costs from any other party otherwise than pursuant to an order of the court": s 98(2). Those provisions are, however, subject to "rules of court and to this or any other Act". The question is whether the Strata Schemes Act otherwise provides, so as to limit or remove the power of a court to determine the costs payable in proceedings before it. 69 In order to determine the scope of s 80 with respect to legal costs, it is necessary to consider it in its historical context. Legislation prior to the Strata Schemes Act permitted recovery of contributions and interest, but did not refer to expenses. Accordingly, the operation of s 80 must be considered against a well-known and well-established regime for recovery of legal costs in litigation existing when the Strata Schemes Act was enacted in December 1996. 70 In substance the question raised has two elements. The first is whether, to the extent that the term "expenses" includes legal costs incurred in litigation, the amount recoverable is limited to such amounts as are recoverable under an order of the court in which the litigation has been brought. The second issue concerns the extent to which s 80 is intended to impinge on the protections available to those required to pay legal costs. In relation to the first issue, it appears to have been assumed that expenses incurred in recovering the contributions and interest included expenses incurred in the Tribunal and in the Small Claims Division of the Local Court, the former at least involving a form of satellite litigation to the debt recovery proceedings and the latter an earlier stage of the debt recovery proceedings in a jurisdiction in which very limited costs were recoverable. Indeed, as will be noted shortly, costs were not recoverable in the Tribunal either, by virtue of other provisions of the Strata Schemes Act itself. 71 The proper construction of s 80 should not necessarily be limited to consideration of provisions applicable in the Local Court and the Tribunal. If questions can arise in relation to costs in the Tribunal, they can, by parity of reasoning, arise in relation to costs awarded or not awarded in this Court, on an appeal from the Tribunal (see s 200), or in proceedings by way of judicial review. Similarly, as noted in the Second Reading Speech of the Strata Schemes Management Bill (Hansard, Legislative Assembly, 13 November 1996, p 5915) strata title developments "now include buildings used for a diverse range of purposes, including commercial and office buildings, industrial complexes, shopping centres, mixed-use developments and retirement villages". It must have been anticipated that arrears of contributions in respect of some schemes would exceed the jurisdiction of a Local Court, requiring that debt recovery proceedings be brought in a court of competent jurisdiction, the next stage in the hierarchy being the District Court. 72 In 1996, the power in the Supreme Court to award costs was to be found in s 76 of the Supreme Court Act 1970 (NSW), in the following terms: " 76 Costs (1) Subject to this Act and the rules and subject to any other Act: (a) costs shall be in the discretion of the Court; (b) the Court shall have full power to determine by whom and to what extent costs are to be paid; and (c) the Court may order costs to be assessed on the basis set out in Division 6 of Part 11 of the Legal Profession Act 1987 or on an indemnity basis." 73 The District Court had a provision to similar effect: see District Court Act 1973 (NSW), s 148B. A provision in relevantly identical terms was also found in the Local Courts (Civil Claims) Act 1970 (NSW) (the "Civil Claims Act"), s 34(1). However that provision was subject to an additional constraint in the following terms: "(1A) Except as may be provided by the rules, a court sitting in its Small Claims Division has no power to award costs to or against a party to proceedings in the Division." 74 Unlike other provisions then in force, s 34(1A) was not expressed to be "subject to any other Act". Only a small amount was recoverable pursuant to the rules, which as at 1 June 2006, appeared to permit an amount of no more than $759: Legal Professional Regulation 2005 (NSW), Sch 2, Pt 3, item 2 and Local Courts (Civil Procedure) Rules 2005 (NSW), r 14. 75 In respect of provisions other than the Civil Claims Act as then in force, the construction question was whether s 80 of the Strata Schemes Act constituted the provision of another Act, to which the costs provisions were expressly made subject by their own Acts. The question with respect to the Small Claims Division was whether s 80 impliedly repealed s 34(1A) of the Civil Claims Act to the extent that the claims involved contributions, interest and expenses under the Strata Schemes Act. The range of amounts of arrears foreseeable in 1996 must have included amounts within the jurisdiction of the Small Claims Division. It might therefore seem surprising that a variation of s 34(1A) was to be effected by a side-wind, rather than an express provision to that effect. 76 It is also curious that when dealing with disputes, in Ch 5 of the Strata Schemes Act, Parliament made specific provision in relation to costs without adverting to what, on the case for the Owners Corporation, were internally inconsistent provisions. The dispute settlement provisions in Ch 5, Part 4 of the Strata Schemes Act covered disputes with respect to the operation, administration or management of a strata scheme, which could readily be seen to cover the levying of contributions: see ss 138(1)(b), 148 and 149. With respect to costs of proceedings before an adjudicator, the Act provided: " 176 Adjudicator not to make order with respect to certain matters (1) An Adjudicator may not, in connection with an application under this Part, make an order for the payment of costs." 77 The Strata Schemes Act (as enacted) provided for appeals to be taken from an order made by an adjudicator to the Strata Schemes Board, constituted under Ch 6, Part 3. The Board had, relevantly for present purposes, the same powers as those of an adjudicator: with respect to costs, the Act made the following provision: " 192 Orders relating to costs The Board may not make any order for the payment of costs except as specifically authorised by this Act or in relation to an order dismissing an application because: (a) the application is frivolous, vexatious, misconceived or lacking in substance, or (b) a decision in favour of the applicant is not within the jurisdiction of the Board." 78 In 1997 this provision was amended to make it clear that it applied to appeals to the Board, as well as applications to it: Statute Law (Miscellaneous Provisions) Act 1997 (NSW), Sch 1.23 [12] and [13]. The note to that amendment (after item [20]) is inconsistent with the proposition that costs of such proceedings might be automatically recoverable under s 80. The Board was replaced by the Residential Tribunal, established by the Residential Tribunal Act 1998 (NSW). The Residential Tribunal was then replaced by the Tribunal, created by the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW). It is noteworthy that the costs provision in the 2001 Act (s 53) expressly excludes from its operation proceedings under the Strata Schemes Act. 79 A possible means of reconciling ss 192 and 80 is that s 80 constitutes specific authorisation for the purposes of s 192. As a means of reconciliation, that course would introduce a further anomaly, in that it would not permit the reconciliation of s 80 with s 176. In any event, such a course would appear not to be open: s 80 makes no reference to costs incurred before the Board on an appeal from an adjudicator. Nor was such a construction proposed by either party. 80 Similar language of 'specific authorisation' is used in the Trade Practices Act 1974 (Cth), s 51(1)(b) and under the Environment Protection and Biodiversity Conservation Act 1999 (Cth), ss 16(2) and 43A, considered in, respectively, The Paul Dainty Corp Pty Ltd v The National Tennis Centre Trust [1990] FCA 163; 22 FCR 495, 523 ff (Woodward, Northrop and Sheppard JJ) and Minister for Environment and Heritage v Greentree [2004] FCA 741; 138 FCA 198 at [138] ff (Sackville J); see also New Zealand Apple and Pear Marketing Board v Apple Fields Ltd [1991] 1 NZLR 257 (PC) at 263-265 (Lord Bridge of Harwich) dealing with specific authorisation of restrictive trade practices under the Commerce Act 1986 (NZ). These authorities, dealing with quite different provisions, provide limited assistance in the present context. Closer to the present case is a decision of the Full Court of the South Australian Supreme Court in Advance Resource Services Pty Ltd v Charlton [2008] SASC 118; 100 SASR 388. In considering a provision of the Fair Work Act 1994 (SA), s 173, which provided that the Court or the Commission "may only make orders for costs where specifically authorised to do so", Bleby J stated that "the only authority then vested in the court to award costs was contained in s 185", which expressly dealt with the award of costs: at [129]. This his Honour described as something "expressly prescribed by the Act": at [140]. Although differing in the outcome, Layton J took a similar approach on the point of construction: at [254]-[255]. (Doyle CJ did not address the issue.) 81 No doubt it is difficult to obtain any clear assistance with respect to the interrelationship of the provisions currently under consideration, except that the reasoning is broadly inconsistent with finding a specific authorisation in a provision which does not expressly refer to costs at all. Section 80 is not directed to a court or tribunal, nor does it deal in any sense specifically with legal costs. If it were necessary to reach a conclusion on this point of construction, I would not be satisfied that s 80 is specific authorisation for the purposes of s 192. However, as no reliance was placed upon this construction, this means of reconciliation need not be considered further. 82 A second possibility is that the reconciliation of s 80 with the constraints imposed by ss 176 and 192 of the Strata Schemes Act may be approached on the basis that the former is a specific provision, relevant only to a particular class of cases, whereas the latter operates generally with respect to proceedings in the Tribunal. However, such arguments tend to be malleable: s 80 applies to "expenses" generally, including, no doubt, legal costs incurred otherwise than in the course of litigation and in litigation in any jurisdiction. The provisions governing the Tribunal are restricted to the costs of litigation in that one jurisdiction. Questions of generality and specificity are not necessarily useful in resolving such internal inconsistencies. The principle giving priority to the specific over the general is said to reflect parliamentary "intention", but such questions are better resolved by reference to statutory principles, such as purposive construction: see The Ombudsman v Laughton [2005] NSWCA 339; 64 NSWLR 114 at [19]-[25] (Spigelman CJ) and my comments at [40]. 83 The apparent anomaly in having costs in the Tribunal or before an adjudicator recovered as "expenses" incurred in recovering contributions, pursuant to s 80, in circumstances where neither the adjudicator nor the Tribunal had power to award costs with respect to proceedings before them, may be resolved in one of five ways. 84 The first possible reading is that the term "expenses" does not in any circumstance include legal costs: that was the reading preferred by Ms Dimitriou. For reasons given above, it should be rejected. A second possibility is to read down the term "expenses" in s 80, so as not to include costs of proceedings before the Tribunal or before an adjudicator. This reading is open but unsatisfactory because it raises a question as to why the implication should be limited to such costs and would not extend to costs which were not recoverable in court proceedings or which a court had expressly declined to award. A third possibility (perhaps a variation of the second) is that s 80, although covering legal expenses generally, does not extend to costs incurred in the resolution of disputes under Ch 5, because they are assumed not to be expenses "incurred in recovering" unpaid contributions. Thus, although disobedience of an order requiring payment of contributions may result in the imposition of a pecuniary penalty and an order for payment of costs, it is only the latter orders which are enforceable as a Local Court judgment: Ch 5, Pt 6. A fourth possibility is that "expenses" includes legal costs otherwise recoverable. A fifth reading is that the entitlement of an owners corporation in respect of expenses includes all legal costs, whether awarded or refused by a court or tribunal or merely unavailable by reason of other provisions. The absence of power to award such costs is then irrelevant because the exercise of such a power would in any event play no part in the statutory scheme. The last is the interpretation preferred by the Owners Corporation: it is only this last construction that will suffice to overturn the judgment of Malpass AsJ. 85 The proposed construction of s 80, which would allow recovery of legal costs even when they were not available in the Tribunal in which proceedings had been brought, is not consistent with other provisions in the same Act. Reading the Act as a whole, the preferable construction is that s 80 either permitted recovery of costs limited to the debt recovery proceedings or it permitted the recovery of costs which were themselves recoverable by order of a court of competent jurisdiction. On either view the decision of the Associate Justice should be upheld, because the amount permitted by way of expenses included costs in the Tribunal. 86 The next question is whether s 80 permitted the recovery of costs incurred in the Small Claims Division. If the proceedings had been completed in that Division, the Court would not have been entitled to award in favour of the Owners Corporation, even if entirely successful, more than a small part of the legal costs which would have been reasonably incurred. For the purposes of the present argument, the fact that the proceedings were not completed in the Division is irrelevant. The jurisdiction of the Division was exceeded in part because of arrears which accrued after the proceedings before the Division had been stayed and partly because of the costs in dispute to which the Owners Corporation claimed entitlement. 87 If s 80 were to have had the operation proposed by the Owners Corporation, it must have effected an implied repeal in part of s 34(1A) of the Civil Claims Act. As explained by Griffiths CJ in Goodwin v Phillips [1908] HCA 55; 7 CLR 1 at 7, "where the provisions of a particular Act of Parliament dealing with a particular subject matter are wholly inconsistent with the provisions of an earlier Act dealing with the same subject matter, then the earlier Act is repealed by implication". Further, the well-known caution sounded by Fullagar J in Butler v Attorney-General (Vic) [1961] HCA 32; 106 CLR 268 at 275 is to be borne in mind: "The books contain, of course, plenty of examples of an implied repeal - total or partial - of an earlier statute by a later statute of the same legislature. But it is a comparatively rare phenomenon, and it has been said again and again that such a repeal will not be held to have been effected unless actual contrariety is clearly apparent." 88 The approach to assessing "contrariety" is, of course, different from that with respect to inconsistency under the Constitution, s 109 and may be different again from that with respect to the application of ss 68 and 79 of the Judiciary Act 1903 (Cth): see Kelly v Saadat-Talab [2008] NSWCA 213; 251 ALR 398 at [2]-[9] (Allsop P) and [43]-[47] (Handley AJA), Ipp JA agreeing with both. 89 This relevant test is not easy to apply in the present circumstances. Section 80 does not refer in express terms to legal costs, but merely picks them up as one part of a broader concept, namely expenses. By contrast, legislation governing courts invariably makes express provision with respect to the powers of the court in relation to legal costs. Because a provision allowing a person to recover expenses generally may be found (as here) to pick up and include legal costs, there is, nevertheless, no necessary contrariety with a statute conferring power on a court not to award such costs or prohibiting the tribunal or court from awarding costs. These provisions can be read together so that s 80 is limited to costs otherwise recoverable. Such a limitation is already acknowledged by limiting the costs to those reasonable in amount and reasonably incurred. Accordingly, there would have been no implied repeal of s 34(1A) by the enactment of the Strata Schemes Act. 90 Further, the Owners Corporation relied upon a statement by the Minister in the Second Reading Speech with respect to the Strata Schemes Act. Because it may be accepted that there is ambiguity or obscurity with respect to the meaning of s 80, it is permissible to have regard to extrinsic material: Interpretation Act 1987 (NSW), s 34(1). As in most cases, the question is whether the material assists. In the present case, the passage relied upon by the Owners Corporation in support of its construction of s 80 was as follows (Hansard, Legislative Assembly, 13 November 1996, p 5920): "When going to court to recover unpaid levies plus any interest due, the body corporate will now also be able to recover the cost of the action. It is unjust that the owners in the scheme who have kept their levy payments up to date have to foot the bill for any court action against someone failing to pay up. The bill recognises that there are many self-run strata schemes and that the office bearers often take on time-consuming responsibilities on behalf of their body corporate." 91 The conjunction of ideas in these three sentences suggests at least that the Minister's mind was not focused on legal costs alone. Provision for payment for services provided by office-bearers is found in s 25; such payments are presumably recoverable under s 80, if incurred in recovering contributions from an owner. Further, there is simply no advertence to the possible limits on legal costs which might be recoverable under s 80, namely the accepted exclusion of unreasonable and unnecessary costs. At best, this passage is silent on the critical question. 92 Turning to the external costs provisions, other than that applicable in the Small Claims Division, the question is whether s 80 purports to be a statutory provision which overrides the general provisions relating to costs in the various courts. (It has been noted that those provisions now find their equivalents in s 98(1) of the Civil Procedure Act, which further provides that a party to proceedings "may not recover costs from any other party otherwise than pursuant to an order of the court": s 98(2).) The question is whether the Strata Schemes Act otherwise provides, so as to limit or remove the power of a court to determine the costs payable in proceedings before it. Unless s 80 overrides ss 176 and 192 of its own Act and impliedly repealed s 34(1A) of the Civil Claims Act, it would be anomalous to give it effect, by implication only, in the District and Supreme Courts. Such a construction should be rejected. With respect to a limitation on the power of this Court, for example, to decline in its discretion to refuse costs to a successful owners corporation, a more explicit provision is required. If the Owners Corporation is correct, and the costs in this Court are costs incurred in recovering contributions, a grant of leave subject to a condition as to costs would be entirely ineffective. 93 Thus, if costs can be recovered under s 80, despite other statutory provisions precluding recovery or court orders to similar effect, a Local Court, satisfied (for example) that costs incurred in the Tribunal and in judicial review proceedings in the Supreme Court challenging a decision of the Tribunal, were costs incurred in recovering a contribution, could give judgment for those costs despite an inconsistent order of this Court. That is at least an implausible conclusion. It can be avoided only if s 80, in its application with respect to legal costs, is subject to other statutory provisions (and court orders thereunder), with respect to recovery of those costs. That approach is to be preferred. 94 This construction is fortified by reference to the context in which s 80 must be understood to operate, namely the highly regulated scheme with respect to lawyer's fees and disbursements. 95 When s 80 was enacted in 1996, the relevant control was to be found in the Legal Profession Act 1987 (NSW). Part 11 of that Act, as relevant for present purposes, had two effects. The first was to impose an obligation on lawyers to disclose identified matters with respect to their costs, together with an estimate of likely costs, before they were retained to provide the legal services sought: ss 175-179. Secondly, Part 11 provided a mechanism by which clients, or others liable to pay legal costs, could obtain an assessment of the proper amount of the costs payable: Div 6, ss 199-208. 96 As between an owners corporation and its lawyers, there is no reason to suppose that these provisions of the Legal Profession Act 1987 did not operate: indeed, by an amendment which commenced in February 2005, s 230A of the Strata Schemes Act assumes that disclosures will be made to an owners corporation in respect of the costs of legal services and obliges the owners corporation to provide a copy of the disclosure statement to each owner and executive committee member. There is also no reason to suppose that the provisions relating to assessment of costs do not apply equally both to the owners corporation and to an owner in litigation with it. 97 Under the Legal Profession Act 1987, there were (as there are under the current Legal Profession Act 2004 (NSW)) two classes of persons who could apply for costs to be assessed. One was a "client who is given a bill of costs", pursuant to s 199. The other was a person liable to pay, or entitled to receive, costs "as a result of an order for the payment of an unspecified amount of costs made by a court or a tribunal", pursuant to s 202(1) (emphasis added). 98 Once it is accepted (as all members of this Court accept) that the costs recoverable are limited to those reasonable in amount and reasonably incurred, even the fifth reading of s 80 (identified above at [30*]) must be subject to some qualification. If the court in which recovery was sought were not that in which part of the recovery costs was incurred, that court might (although not in this case) hesitate to fix the quantum of those costs. But if, as in this case, the court acknowledges no such inhibition and specifies the amount, then the mechanism for assessment of those costs under the Legal Profession Act, will be unavailable. Its retention will depend on (a) the owner appreciating that (unusually) assessment of costs must precede a judgment, (b) his or her appreciation that an interlocutory application must be made to defer judgment pending an assessment under the Legal Profession Act and (c) the judge or magistrate exercising a discretionary power not to proceed to judgment in a specified amount. It is unlikely that s 80 was intended to curtail in this way the rights of those who might have to pay legal costs, to have those costs assessed in accordance with the Legal Profession Act. 99 Anderson v Bowles [1951] HCA 61; 84 CLR 310 involved the aftermath of proceedings by which a landlord had managed to eject his tenant, so as to recover possession of premises, but only after varied and extensive legal proceedings and a delay of one year. The landlord then brought proceedings alleging that the former tenant was liable to him for loss of mesne profits and for the legal costs incurred by him in recovering possession: at 316-317. In relation to the recovery of costs, the landlord relied upon early cases permitting the recovery of costs as a head of damages. Although the entitlement to claim damages was acknowledged, the High Court rejected the proposition that the costs of the ejectment proceedings could be included in circumstances where the statute provided that no costs should be allowed: at 323. The joint judgment (Dixon, Williams, Fullagar and Kitto JJ) continued: "This is a legislative declaration that the parties to proceedings for the recovery of possession or proceedings arising thereout shall not be liable to one another for the costs of those proceedings. In the face of this legislative declaration can costs be properly included in the damages or mesne profits? It is a general rule that where it is sought to include costs incurred in other proceedings in the damages arising upon a cause of action, costs shall not be included, if as a matter of judicial determination or by a positive rule of law they are treated as costs which should be borne by the party suing. Accordingly it is not possible to recover as part of such damages the difference between party and party costs awarded to the plaintiff in the original litigation and the costs as between solicitor and client which he has incurred: Barnett v Eccles Corporation [[1900] 2 QB 423 at 428]. Further, if costs are expressly withheld by the court in the original proceeding none can be recovered in the action for damages brought by the plaintiff from whom they were so withheld: Loton v Devereux [(1832) 3 B & Ad 343; 110 ER 129] …. The legislature having determined that costs shall not be recoverable in proceedings of the character now in question, it would be contrary to the principles which these cases exemplify if they were included in the damages and thus were made recoverable by a side wind." 100 This principle was applied by this Court in Russell v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2008] NSWCA 217 at [48]. It is not directly applicable in this case, which concerns the interrelationship of statutory provisions with respect to costs, rather than the possibility of recovering costs under the general law; nevertheless, the reasoning supports a conclusion that the generality of the term "expenses" in s 80 should not be given an expansive reading to the extent of its potential literal reach.

Conclusion - recovery of legal costs 101 The Owners Corporation was not entitled to recover from Ms Dimitriou any costs incurred by it in the proceedings in the Tribunal. That conclusion follows on one of two bases: either the costs did not fall within s 80 because the section applies only to costs incurred in recovery proceedings or because they were costs which were not, in accordance with the express terms of the Strata Schemes Act, recoverable from the other party: s 192. 102 The Owners Corporation was entitled to recover legal costs incurred in the Local Court proceedings, but only to the extent that the rules permitted the recovery of such costs. That was because the mere entitlement to recover "expenses" did not carry with it a right to recover all legal costs properly and reasonably incurred in circumstances where the court in which the proceedings were brought could not or did not permit recovery of all such costs. To permit additional recovery would be to set at nought the terms of the Civil Claims Act or, in relation to other courts, the order of the court which was not the subject of an appeal. Thus question (3) is answered by affirming alternative (a). 103 I am conscious that this conclusion is at odds with that reached by the Full Court of the Federal Court sitting on appeal in the ACT, with respect to the operation of the Unit Titles Act 1970 (ACT), s 48, which was to similar effect as s 80: The Proprietors Units Plan No 52 v Gold (1993) 44 FCR 123 (Gallop, Ryan and O'Loughlin JJ). Section 48 was in different terms to s 80, but included within its broad operation an entitlement for an owners' corporation which had "incurred any expenditure … rendered necessary by reason of any wilful or negligent act or omission on the part of … a member of the corporation" to recover that expenditure as a debt. Having recovered outstanding contributions from the member in the Small Claims Court, the corporation took further proceedings to recover legal costs paid to its solicitors. No order for costs was available in the Small Claims Court by reason of a prohibition in the Small Claims Act 1974 (ACT), s 29(1), which was to similar effect as s 34(1A) of the Civil Claims Act, referred to above. The Full Court held that the owners' corporation was entitled, under s 48, to recover the legal costs. 104 The ACT legislation under consideration was undoubtedly to similar effect as the legislation in this State; however, it was not in identical terms and the legislative history may well have been different. Although the decision in Gold provides a guide to this Court, it cannot control the outcome in the present case and should not be "slavishly" followed: Marshall v Director-General, Department of Transport [2001] HCA 37; 205 CLR 603 at [62] (McHugh J), applied in Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2008] HCA 5; 233 CLR 259 at [31] (Gleeson CJ, Gummow, Hayne, Heydon and Crennan JJ). The conclusion reached in Gold was undoubtedly open on a literal reading of the language of the statute, as is a similar conclusion in the present case. A different conclusion flows in this case from consideration of the broader statutory context and the legislative history, as indicated above. That analysis was not undertaken in Gold. For this reason, I would decline to apply its conclusion in the present case.

(4) Claims to be brought in one proceeding 105 An issue was raised in the course of argument as to the significance of the term "together with" in s 80. That phrase suggested that the primary right of recovery was with respect to the unpaid contributions but that the right extended to interest and expenses. It has been suggested that the claims for interest and expenses, which follow those words, must be brought in the same proceedings as the claim for contributions. That is apparently because a claim for interest and expenses could not be brought "together with" a claim for unpaid contributions, if the contributions had already been recovered. 106 The issue does not arise in the present case and therefore need not be determined. Nevertheless, as views have been expressed in relation to it, I would also express the view that the words do not bear the weight of any such implication. In a practical sense any claim for interest or expenses must be consequential upon a claim for unpaid contributions. However, it would be a startling result if a late payment of contributions, without proffering accrued interest or expenses incurred to that time, would render the remaining debt unrecoverable by an owners corporation. 107 The phrase "together with" undoubtedly connotes a form of connection or association, but not one necessarily requiring the contemporaneous exercise of the power of recovery. The language is expansive: the section confers a power to recover contributions "and extends to" any interest and relevant expenses. In this respect, the conclusion reached by Cooper AJ in Coshott v The Owners of Strata Plan No 48892 [2006] NSWSC 308 at [81]-[86] was correct. Question (4) should be answered, no. However, nothing would seem to turn on this for the outcome of the appeal.

Conclusions 108 In so far as the Magistrate allowed the outstanding contributions, together with interest on a particular contribution, and in so far as he awarded costs for the proceedings from 1 May 2006, no error has been demonstrated. The amount in dispute is the figure of $5,830.30 on account of "expenses". It is not in doubt that this figure included legal costs up to 1 May 2006. For most of that period, the matter was either in the Small Claims Division or in the Tribunal. The matter was not removed to the General Division until 9 February 2006. In the Small Claims Division, a limited sum would have been allowed by way of costs. It is clear that the bulk of the costs claimed were either fees incurred with respect to the Tribunal proceedings or fees incurred with respect to the debt recovery proceedings in the Local Court, which were not recoverable in that Court. 109 A further complaint made by Ms Dimitriou was that, by including costs in the debt, a claim which would otherwise have been within the Small Claims Division became transferable to the General Division, with adverse costs consequences for her. While there is some merit in that complaint, it is sufficient to note that, pursuant to s 80 as properly construed, the claim made by the Owners Corporation filed in September 2005 was well within the Small Claims Division jurisdiction. If the matter were transferred to the General Division because of an inappropriately inflated claim, the limitation on costs recoverable in the appropriate jurisdiction, namely the Small Claims Division, would be a factor to be taken into account by the Magistrate in awarding costs of the proceedings. 110 The Magistrate undoubtedly allowed legal costs incurred in the Tribunal and legal costs which exceeded those recoverable in the Small Claims Division. He did that because of his Honour's error with respect to the construction of s 80. Accordingly, the Associate Justice was correct to make orders setting aside the decision of the Magistrate and remitting the matter to the Local Court. 111 Because I would differ in part from the reasons of the Associate Justice, whilst upholding his orders, I think it appropriate to include with the orders a declaration as to the legal principle. Because that was not sought by either party and was not discussed in the course of the appeal, I would give liberty to the parties to propose any variation of these orders by notice of motion filed within 14 days of the judgment. 112 The orders I propose are as follows:

(2) Declare that, in s 80 of the Strata Schemes Management Act 1996 (NSW), the term "expenses" incurred in recovery of contributions and interest may include "legal costs" as defined in the Legal Profession Act 2004 (NSW), but not including any amount which could not, was not or would not be ordered by a court or tribunal of competent jurisdiction to be paid to an owners corporation as costs incurred in recovery of contributions and interest.

(4) Order the applicant to pay the respondent's costs of the proceedings in this Court. 113 HANDLEY AJA: In this matter I have had the benefit of reading the reasons for judgment of Hodgson JA and Basten JA in draft. They have set out the provisions of the Strata Schemes Management Act 1996 (the Strata Act), the history of the proceedings, and the arguments of the parties which I need not repeat. The questions are of some public importance and I agree that leave to appeal should be granted. 114 The case turns on the construction of s80(1) of the Strata Act which relevantly provides: "An owners corporation may recover as a debt a contribution not paid … together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts." 115 Four questions have been argued:

(2) If so, does the section confer a right to recover legal expenses which are not otherwise recoverable under an order of the relevant court or tribunal, or because no such order was or could be made?

(4) Can an owners corporation (corporation) bring proceedings to recover its expenses if the arrears of contributions and any interest thereon have already been paid? What in other words is the effect of the phrase "together with" in the section?

(1) Expenses 116 Legal expenses are expenses and are the very kind of expense the corporation is likely to incur in recovering overdue contributions from the owner of a strata lot. Various other expenses were mentioned in argument but while these would also be recoverable they are likely to be minimal in comparison with the legal expenses. The fact that the corporation may incur other kinds of expense does not, in my judgment, justify reading down the plain words of the section. Hodgson JA and Basten JA agree on this issue and so do I.

(2) Is the right conferred cumulative? 117 In the present case the corporation's legal expenses were incurred partly in the Small Claims Division of the Local Court, partly in the Consumer Trader and Tenancy Tribunal (the Tribunal), and partly in the general division of the Local Court. The decision of the magistrate on liability was given on 17 August 2006, and his final decision on quantum on 18 January 2007. At the relevant times the Local Court (Civil Claims) Act 1970-1994 (Civil Claims Act) was in force. Section 34(1A) provided that a court sitting in its Small Claims Division has no power to award costs "except as may be provided by the rules". The provision made in the rules was extremely limited. 118 Section 192 of the Strata Act, which has not relevantly been amended provides that the Tribunal may not make an order for costs except as specifically authorised in the section or elsewhere in the Act. The Tribunal dismissed the respondent's challenge to the contributions levied by the corporation but made no order as to costs. 119 The magistrate's judgment in favour of the corporation for its expenses of recovering the unpaid contributions and interest included the legal expenses paid to its solicitors for the proceedings in the Small Claims Division of the Local Court, and the proceedings in the Tribunal where the corporation successfully defended the validity of its contributions. Evidently the magistrate was satisfied that the expenses of the corporation in the Tribunal were incurred in recovering the unpaid contributions and the interest thereon. 120 The question is how the right to recover expenses conferred by s80(1) is to be reconciled with the restrictions on the making of costs orders in the Small Claims Division of the Local Court and in the Tribunal. 121 In my judgment the answer is to be found in the characterisation of these apparently overlapping provisions. Section 34(1A) of the Civil Claims Act applies to all claims in the Small Claims Division, the great majority of which would not fall within s80(1). Likewise s192 of the Strata Act applies to all proceedings in the Tribunal which include many other kinds of applications by the owner of a lot or a corporation. 122 The principle that general provisions do not qualify special provisions applies when it is necessary to reconcile provisions in the same statute: Perpetual Executors and Trustees Association of Australia Ltd v FCT (1948) 77 CLR 1, 29; R v Wallis (1949) 78 CLR 529, 549-50. In my judgment the general provision in s192 of the Strata Act dealing with the power of the Tribunal to make orders for costs does not qualify or limit the special provision in s80(1) which enables a corporation to recover as a debt the expenses it has incurred in recovering unpaid contributions. In my judgment no question of implied repeal arises. Section 80(1) does not enable the Tribunal to make an order for costs where a contribution is challenged, nor does s 192 limit the application of s 80. The two provisions can stand together. 123 This does not mean that expenses incurred by a corporation in the Tribunal in successfully defending a contribution it has levied on its lot owners will necessarily be incurred in recovering the contributions. The magistrate's finding of fact, or of mixed fact and law, on this issue was not challenged on this ground. The Court does not have before it the magistrate's reasons, if any, for entering the final judgment on 18 January 2007 or the evidence on which that judgment was based. Much may turn on the nature of the dispute before the Tribunal, whether the challenge was a bona fide one on reasonable grounds, whether it related to the whole or only part of the contribution, whether the lot owner paid the amounts that could not be in dispute, and other relevant matters. 124 In my judgment, in agreement with Hodgson JA, s192 of the Strata Act does not support any general principle that costs incurred by a corporation in the Tribunal in successfully defending its contributions can never, as a matter of law, be expenses incurred by it in recovering those contributions. 125 Section 34(1A) of the Civil Claims Act was in force when the Strata Act was passed in 1996. Here again the Court must reconcile the restriction in the former with the entitlement in the latter. In this instance the Court is concerned with a general provision in the earlier Act and a special provision in the later. There would have been no need for s80(1) if a corporation which recovered unpaid contributions in the Local Court or its Small Claims Division could obtain costs orders which entitled it to recover most of the legal expenses it had incurred. Clearly this was not the case and the Minister said as much in the passage from his Second Reading Speech quoted by Hodgson JA (para [29]). 126 The situation attracts the rule in Heydon's Case (1584) 3 Co Rep 7a at 7b [76 ER 637, 638]. The mischief, and the appointed remedy have already been identified and it is thus the duty of the Court "to make such construction as shall suppress the mischief and advance the remedy". See also FEDFA v BHP Co Ltd (1911) 12 CLR 398, 436-7. These principles have been given statutory effect in ss34 and 35 of the Interpretation Act 1987. 127 In my judgment, again in agreement with Hodgson JA, s80(1) confers a right on a corporation to recover these expenses in the principal judgment of the court, independently of any costs orders that may or may not be made. Again in my judgment no question of implied repeal arises. Section 80(1) does not amend s 34(1A) so as to enable the Small Claims Division to make an order for costs it could not otherwise make. It allows the Division to give judgment for a debt which includes an amount for legal expenses. 128 This is a substantive right which is cumulative upon any other right to a costs order: compare Westminster City Council v Porter [2003] Ch 436, 452 para [7]. Because the rights are cumulative the corporation can enforce its more beneficial right under s80(1) but must give credit for payments received under any costs order. 129 The concept is a familiar one. Well known examples include the equitable or contractual rights to costs of mortgagees and trustees which are generally cumulative on costs orders made by a court: Gomba Holdings Ltd v Minories Finance Ltd [1993] Ch 171 CA, 194-5.

(3) The measure of recovery 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 meruit. 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.

(4) Together with the expenses 137 There has been some difference of judicial opinion on whether s80(1) confers an independent right to recover expenses incurred in recovering contributions or only a composite right to recover those expenses with contributions and interest. The question does not strictly arise in this case because the judgment in favour of the corporation included amounts of all three kinds. However since differing views have been expressed by other members of the Court I should also express my own. 138 In my judgment the ordinary meaning of "together with" requires the linked subjects to both be present at the relevant time. If I say that I went up the mountain together with Jack and Jill I intend to convey that we went up as a group at the same time. This view is supported by authority. 139 In Grindell v Brendon (1859) 28 LJCP 333 the court had to consider s11 of the Bills of Sale Act (17 & 18 Vic c36) which provided that every bill of sale "together with" an affidavit of the time of such bill of sale being made should be filed with an officer of the Court of Queens Bench. Williams J, giving the principal judgment, said (at 335): "We are all of opinion that the Act requires the bill of sale and the affidavit to be filed at the same time." 140 In Re Joel [1943] Ch 311 the Court of Appeal held that a gift by will of a leasehold house "together with its contents" was a single gift and the legatee could not disclaim the gift of the house and retain the contents. Lord Greene MR giving the judgment of the Court said (at 324) that the ordinary meaning of "together with is 'in union with', 'in company with'". 141 In my opinion there is nothing in s80(1) or its context which displaces this ordinary meaning. An overdue contribution will immediately attract interest, and if a corporation has to commence proceedings for recovery of overdue contributions an amount of interest will have already have accrued, and some expenses of recovery will already have been incurred. 142 Payment of the contribution and interest after proceedings were commenced will not terminate the right of the corporation to continue those proceedings to recover its expenses because it had a complete cause of action to recover those items when the proceedings were commenced. 143 The corporation will have to prove the quantum of its recovery expenses at the trial including those which have accrued since the proceedings were commenced but this creates no difficulty. Injured plaintiffs regularly have to prove the out of pocket expenses they incurred while their case was pending. 144 I agree with the orders proposed by Hodgson JA. **********

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