Proprietors of Development Unit Plan 04/22 v Proprietors of Unit Plan 2004/048; Proprietors of Unit Plan 2004/048 v Proprietors of Development Unit Plan 04/22 & Anor

CROSS APPEAL - COST OF CROSS APPEAL - costs follow the event.

Proprietors of Development Unit Plan 04/22 v Proprietors of Unit Plan 2004/048 [2019] NTSC 75

Police Administration Act 1978 (NT) s 162

Unit Titles Act 1975 (NT) s 36, s 45

Appellant (First Cross-Respondent): Minter Ellison Lawyers

Second (Cross-Respondent): Maher Raumteen Solicitors

Proprietors of Development Unit Plan 04/22 v Proprietors of Unit Plan 2004/048; Proprietors of Unit Plan 2004/048 v Proprietors of Development Unit Plan 04/22 & Anor (No.2) [2020] NTSC 07

[1] On 3 October 2019 the Court made orders dismissing the appeal in this matter, allowing the cross-appeal in part and dismissing a notice of contention.[1] Costs orders made by the Local Court were quashed and in their place the following orders were made:[2]

• (i) The plaintiff is to bear its own costs of the proceedings in the Local Court, save that this order is not intended to prevent the plaintiff from recovering 24 per cent of its costs from the defendant, should the plaintiff proceed to recover that expense.
• (ii) Value Inn Pty Ltd is to pay the defendant's costs of these proceedings in the Local Court including the costs of the application for costs against the non-party. For the avoidance of doubt, this does not include a contribution to the 24 per cent recoverable from the defendant by plaintiff.
• (iii) Failing agreement, costs are to be taxed at 100 per cent of the Supreme Court scale.

[2] In terms of the costs of the appeal in this Court, the Proprietors of Unit Plan 2004/048 ('the respondent') was entirely successful on appeal, failing only on an argument that the Local Court lacked jurisdiction to grant declaratory relief.

[3] The question of awarding costs is a matter for the Court's discretion. The discretion must be exercised judicially. There is no reason in this instance for the Court to depart from the general rule that costs follow the event.

[4] There is however, a complication. By the application of ordinary principles, an order for costs would be expected to be made against the appellant. However, as the successful respondent is a member of the appellant corporation ("the DVP"), without some protection, the successful respondent would be paying a portion, probably in the order of a 24 per cent contribution towards the appellant's costs. To make a general order for costs in these circumstances, with potentially adverse consequences for the respondent, would not do justice between the parties. To permit such a consequence positively offends against any notion of doing justice between the parties. Of course if such a consequence is mandated by law as the appellant appears to argue,[3] then the exercise of the discretion to award costs, including an order on contribution by another party, would be constrained accordingly. I do not think the discretion is so constrained.

[5] The appellant submits the DVP's entitlement to recover contributions for its expenses from the respondent is a right created by s 36(1) of the Unit Titles Act 1975 (NT) ('Unit Titles Act'). The appellant notes that the DVP's expenditure recoverable under the Unit Titles Act is its actual expenditure on solicitor and client costs and any adverse costs order, not its costs calculated according to the rules for indemnity and standard costs in order 63 of the Supreme Court Rules 1987 (NT). The appellant argues an adverse costs order which excluded the properly levied contribution from the respondent would remove the DVP's statutory right.

[6] I disagree that s 36(1) is to be applied in this way so as to be tantamount to excluding or at the very least restricting the Court's jurisdiction to make an appropriate order for costs or the recovery of that expense. Perhaps it would be more accurate to apply the section in a manner which ensures a just costs order as between members of the corporation involved in litigation over the very subject matter of expenses. In this instance when the corporation has clearly acted against the interests of a particular member by maintaining an appeal against them on the very question of expenses. The question of legal costs as between members of the corporation is not dealt with by s 36(1) of the Unit Titles Act and certainly not with the clarity that would be expected if the section were tantamount to ousting the costs powers of the Court in particular types of dispute.

[7] It is a fair point, as the appellant submits,[4] that the Court's discretion to award the costs of a proceeding is "subject to... any other law in force in the Territory".[5] However, s 36(1) of the Unit Titles Act does not deal with legal costs arising from disputes as between the members of a corporation. It is for example, quite unlike s 162(4) of the Police Administration Act 1978 (NT) which mandates the payment of solicitor client costs in the event of an unsuccessful tort claim against police. That is an example of a law which clearly constrains the power of the Court to award particular forms of costs orders by mandating that solicitor client costs will apply. Section 36(1) does not in my view constrain the discretion to award costs, including the making of orders where appropriate as to the contribution to those costs between the members of the corporation who have been in dispute.

[8] Additionally, the respondent argues that while instituting the appeal was within the power of the appellant, seeking to recover monies from, and having declarations made against the respondent, was an act which related to the other unitholders only, such that the Court could indicate that pursuant to s 45 of the Unit Titles Act none of the amount ordered against the appellant would be recoverable by the appellant from the respondent.[6] I agree this is a proper basis on which to restrict the recovery of any costs awarded against DVP to the other unit holders on behalf of whom the appeal was instituted and argued.

[9] The appellant points out the Local Court Judge rejected a submission to the effect that other unit holders, Lot 7541 ("Hostel") was the party benefitting from the litigation in the Local Court.[7] The Local Court Judge's finding that Value Inn Pty Ltd, and not the Hostel, was the entity which would have benefited from the litigation in the Local Court was not disturbed on appeal. Additionally as Value Inn Pty Ltd is not a "proprietor", s 45 of the Unit Titles Act cannot apply.[8] That was the case in terms of the action before the Local Court. Despite some significant urging to the contrary by both the respondent[9] and surprisingly on behalf of the appellant,[10] I am unable to find, whether by inference or otherwise, that Value Inn Pty Ltd was the driver and beneficiary of any appeal. It is acknowledged this possibly is the case but the material on appeal was not directed to resolving that issue on appeal. It is quite different to the position before the Local Court. Further, it may be noticed that Value Inn Pty Ltd was separately represented throughout the appeal. I agree with submissions made by Value Inn Pty Ltd that the Court cannot simply proceed on the basis that the findings of the Local Court Judge attach to the carriage of the appeal and cross-appeal.[11]

[10] The appeal must have been initiated, progressed and argued on behalf of the other unitholders - Hostel and Basement. The appeal cannot be considered to have been for the benefit of the respondent, it must have been for the benefit of one or the other of the Hostel and Basement. Unlike the circumstances before the Local Court, s 45 of the Unit Titles Act does operate to restrict the recovery of the appellant's costs ordered to the other proprietors. The costs cannot be recovered from the respondent.

[11] The Proprietors of Unit Plan 2004/048 ('the cross-appellant') was successful in obtaining a costs order against a third party, Value Inn Pty Ltd ('the second cross-respondent') in respect of the Local Court action. Save that it is appreciated the order is subject to appeal, there is no dispute that as things stand, the cross-appellant should recover its costs of the cross-appeal from the second cross-respondent.

1. The appellant is to pay the respondent's costs of the appeal without recovering any of the expenditure for those costs from the respondent.
2. The second cross-respondent is to pay the cross-appellant's costs of the cross-appeal.
3. Failing agreement, costs are to be taxed.

[12] I will hear the parties on whether there should be any stay of the orders given the appeal.

[1] Proprietors of Development Unit Plan 04/22 v Proprietors of Unit Plan 2004/048 [2019] NTSC 75.

[2] Proprietors of Development Unit Plan 04/22 v Proprietors of Unit Plan 2004/048 [2019] NTSC 75 at [113].

[3] Proprietors of Development Unit Plan 04/22, 'Appellant's Submissions as to Costs', 6 December 2019 at [9]-[10].

[4] Proprietors of Development Unit Plan 04/22, 'Appellant's Submissions as to Costs', 6 December 2019 at [9].

[5] _Supreme Court Rules_2007 (NT) r 63.03.

[6] Proprietors of Unit Plan 2004/048, 'Respondent's Submissions on Costs', 15 November 2019 at [3].

[7] Proprietors of Development Unit Plan 04/22, 'Appellant's Submissions as to Costs', 6 December 2019 at [9].

[8] Proprietors of Development Unit Plan 04/22 v Proprietors of Unit Plan 2004/048 [2019] NTSC 75 at [95] and [96].

[9] Proprietors of Unit Plan 2004/048, 'Respondent's Submissions on Costs in reply to Value Inn Pty Ltd, 5 December 2019 at [5].

[10] Proprietors of Development Unit Plan 04/22, 'Appellant's Submissions as to Costs', 6 December 2019 at [5]-[7], [11].

[11] Value Inn Pty Ltd, 'Submissions of the Second Cross-Respondent as to Costs', 21 November 2019 at [3].