Vithoulkas & Anor v Owners Corporation SP62254 & Anor

PARTIES : Owners Corporation SP62254 (First Defendant)

Consumer Trader & Tenancy Tribunal (Second Defendant) FILE NUMBER(S) : SC 30114/2003 Mr R Freeman (Plaintiffs) COUNSEL : Mr M S White (First Defendant) Mr S Aroney, McLachlan Chilton (Plaintiffs)

Mr A McLennan, SOLICITORS : Manion McCosker (First Defendant)

Submitting Appearnace (Second Defendant)

LOWER COURT CTTT JURISDICTION : LOWER COURT HB02/70076 FILE NUMBER(S) : HB02/70442 LOWER COURT Member Connelly JUDICIAL OFFICER :

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

30114/2003 - ANGELA VITHOULKAS & ANOR v OWNERS CORPORATION SP62254 & ANOR

JUDGMENT (Appeal decision of CTTT - costs) 1 MASTER: By amended summons filed 26 March 2004 the plaintiffs seek: firstly, a declaration that in making its determination dated 17 November 2003 the Consumer, Trader and Tenancy Tribunal (CTTT), erred in law and denied natural justice; secondly, an order that the decision be set aside; thirdly, an order staying the decision pending the determination of these proceedings or until further order; fourthly, an order that the first defendant pay the plaintiffs' costs of these proceedings 2 The plaintiffs are Angela Vithoulkas and Con Vithoulkas. The first defendant is the Owners Corporation SP62254. The second defendant is the CTTT. The plaintiffs relied on the two affidavits of Stephen Aroney sworn 18 December 2003 and 5 March 2004. The first defendant relied on an affidavit of Iain Alasdair McLellan sworn 3 February 2004. The third defendant filed a submitting appearance. 3 Section 65(3)(b) Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) (the Act) provides that relief can be granted by way of a judgment or order in the nature of prohibition, mandamus, certiorari, and a declaratory judgment or an injunction if in relation to the hearing or declaration of the matter, a party has been denied procedural fairness. 4 Section 67 of the Act allows for an appeal to be made to this court on a question of law. An appeal may only be made with leave of the court. A reference to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. The onus lies with the plaintiff to demonstrate that there has been an error of law. Section 67(3) of the Act provides that after deciding the question of the subject of an appeal the court may, unless it affirms the decision of the Tribunal on the question that should have been made by the Tribunal, remit its decision on the question to the Tribunal and order a rehearing of the proceedings before the Tribunal. 5 The plaintiffs are sister and brother. They are the proprietors of two penthouse apartments 11A and 11J respectively at 36-42 Princes Street, Brighton-Le-Sands. They commenced proceedings in the CTTT, Sydney Registry on or about 14 December 2001 against the developer of the apartments, Oceanview Group Holdings Pty Limited and the Builder, Joseph Elkoury and his company Elkoury Pty Limited. The claim related to defects, both within the lots and to the common property, which mainly involved water ingress into the apartments causing damage. 6 The issue to be decided was who should pay the costs of the Owners Corporation when the court decides to join the Owners Corporation as a party to the proceedings and subsequently rescinds that order.

Extension of time to appeal 7 The decision was filed on 17 November 2003 but the plaintiff did not receive a copy of that decision until 21 November 2003. The appeal was lodged on 18 December 2003. No issue was taken by the first defendant in relation to the delay. It is my view that an extension of time to lodge that appeal should be granted. 8 The plaintiffs appeal from the whole of the decision of the Tribunal whereby it was ordered that the plaintiffs pay the first defendant's costs of its joinder by the Tribunal to the proceedings (then pending before the Tribunal) and the refusal of the Tribunal to grant an application for the rehearing of the decision. The grounds of appeal are firstly, that the Tribunal Member failed to properly apply the fact that the plaintiffs had in fact brought to the attention of the Tribunal that the first defendant opposed the joinder of it to proceedings then pending before the Tribunal; secondly, that the learned Tribunal Member ordered the plaintiffs to pay the first defendant's costs of being joined by the Tribunal (having acted on its own motion, without any application or request from the plaintiffs to have the first defendant joined to the proceedings and that such order is ultra vires and beyond the Tribunal's power); thirdly, failed to take into account that part of the transcript of the proceedings recording the determination of the Tribunal to join the first defendant to the proceedings wherein the plaintiff informed the Tribunal of the first defendant's opposition to the joinder to the proceedings; fourthly, that the Tribunal Member took irrelevant considerations into account in deciding to order the plaintiffs to pay the costs of the joinder of the first defendant as a further respondent, specifically in that a letter forward by the first defendant's legal representatives to the plaintiffs' legal representatives dated 2 July 2002 stated that the first defendant did not want to be joined as an applicant to the proceedings then pending before the Tribunal, in circumstances where the Tribunal then proceeded to join the first defendant as a respondent and not an applicant; fifthly, the learned Tribunal Member may have erred in law in removing the Owners Corporation as a proper respondent having regard to the principles in the judgment of The Owners - Strata Plan No 43551 v Walter [2003] NSWSC 1177; sixthly, the learned Tribunal Member took irrelevant considerations into account and wrongly determined that the plaintiffs' actions in part cannot prima facie be maintained in respect of common property; seventhly, the plaintiffs were deprived of procedural fairness in that they sought to have the decision reheard before another Tribunal Member (in order to put before that Member reasons and submission as to why the decision was against the weight of evidence) and were denied that right conferred by s 68 of the Act; and eighthly, the Tribunal Member erred in law by finding as a fact that the plaintiffs' legal team had essentially misled the Tribunal by failing to disclose to the Tribunal a letter from the first defendant's solicitors dated 2 July 2002 and that such a finding was contrary to all evidence. Alternatively, such a finding could not be reasonably made had the Tribunal Member given proper regard to the evidence before him and before the Tribunal. 9 Section 28(1) of the Consumer Trader and Tenancy Tribunal Regulations 2002 (NSW) provides: "(1) If the Tribunal is of the opinion that a person has a sufficient interest in the dispute to which an application to the Tribunal relates but the person has not been served with notice of the application, the Tribunal may make an order directing that the person be joined either as an applicant or as a respondent, as appears to the Tribunal to be appropriate, and notice of the proceedings is to be served accordingly." 10 On 8 February 2002 the CTTT raised the issue of the joinder of the Owners Corporation as joint applicant with the parties. On 29 May 2002 the solicitors for the Owners Corporation wrote to the CTTT and stated that: "We are informed that the Tribunal and the parties to the existing applications are of the opinion that our client should be joined as an applicant in the present applications in an attempt to resolve at the one time the applicants' claims and the allocation of responsibility between the applicants (Angela Vithoulkas and Con Vithoulkas), the respondents (the vendor of the subject lots and the builder) and also the Owners' Corporation where common property is involved. We have been instructed to brief counsel, which we have done, to consider the present position and the implications for our client should it joint the present applications. It may be that it is more appropriate for a separate application to be made by our client and to seek to have it heard concurrently with the existing applications." 11 The solicitors were informing the CTTT that it was seeking advice as to whether it should be joined as an applicant. In the meantime, the solicitors for the plaintiffs wrote to the Owners Corporation and stated that they had written to the Tribunal requesting an order that the Owners Corporation be joined as a co-applicant in the proceedings and requested that they consent to being joined as a co-applicant. So in about June 2002 the plaintiffs wanted the Owners Corporation joined as a party to these proceedings. 12 On 2 July 2002 the solicitors for the Owners Corporation wrote to the solicitors for the plaintiffs stating: "We are instructed that our client does not wish to be joined in your client's application but rather, it intends bringing a separate application on its own account. It will have no objection to its application proceeding concurrently with that made by your clients if that is a course acceptable to the Tribunal and to the other parties involved." 13 This letter appears in the Tribunal Member's decision [at 8] and is reproduced later in this judgment. In short, the letter makes it clear to the plaintiff that the Owners Corporation did not wish to be joined to the plaintiffs' application but intended bringing a separate application on its own account.

The Tribunal's 2 September 2003 order joining the Owners Corporation as a party 14 On 2 September 2003 before Tribunal Member Thane, Mr Bambiotti (referred to as "X" in the transcript) Counsel who represented the plaintiffs stated at the outset that the plaintiffs would contest the defendant's application on jurisdiction and the Owners Corporation's opposition to the joinder, which would be the negative result of the mediation. Mr Bambiotti suggested that "If, on the other hand, the mediation went as I would expect - and the reason that I'm optimistic about the result of the mediation is that because we are part of the Owners Corporation we know the information they know." 15 Mr Bambiotti predicted that after the mediation he would be able to do one of two things, namely either announce that the Owners Corporation has been notified that it will join them against their will or secondly seek directions to determination of this issue as a preliminary point. The Tribunal Member then asked whether she could join the Owners Corporation anyway whether they like it or not (t 3.46). Mr Bambiotti then informed the Tribunal Member that pursuant to Regulation 28 if a person is interested in the outcome of proceedings the Tribunal has power to join that person. Then at page 4 of the transcript the Tribunal Member says: "There's no reason why they can't be joined in these proceedings whether they like it or not. It's quite clear that they have sufficient interest in the dispute. I'm not wanting this to drag on longer than it has to. Those are my concerns, as I'm sure are your concerns too." 16 Mr Bambiotti then stated: "I should say, Member, that there has been a barrage, is the only way I can describe the degree of correspondence between my instructing solicitors and the owners' corporation. What we had hoped in the view of saving, ultimately, in time and cost was to avoid a contested proceeding if possible, either contested on jurisdiction or contested on joinder. One of the ways that we could deal with it, Member, is that if you take the view on the material that you've seen and that you know, indeed, in terms of the structure of the Act that they ought to be joined, if you were to join them today and set the matter for directions, say, on 11 or 12 September, the mediation will have been over and they can turn up and tell you whether they're here as defendant or applicant." 17 At no time did Mr Bambiotti specifically disclose to the Tribunal Member that the Owners Corporation had written to his solicitor stating it opposed being joined as a party and considered taking separate proceedings. But at the outset he did mention the Owners Corporation's opposition to the joinder. 18 The Tribunal Member then made an order joining the Owners Corporation surprisingly as a respondent to the proceedings. On 5 February 2003 Tribunal Member Connelly made an order removing the Owners Corporation as a respondent in the proceedings on the application of the plaintiffs and the defendants (t 5-6 of 5 February 2003). I might add that after these decisions were made, a judgment by Master Macready in The Owners - Strata Plan No 43551 v Walter [2003] NSWSC 1177 was handed down which sheds some light on whether an owners corporation should be joined as an applicant in addition to the lot holders where there is a claim in relation to common property. On that day the Tribunal Member gave leave to the Owners Corporation and applicants to provide written submissions on costs and liberty to relist the matter (t 11). 19 The Tribunal Member dealt with the outstanding costs issue by way of written submissions. No application was made for the matter to be relisted. The plaintiff submitted that this constituted a denial of natural justice by not allowing the parties present oral argument. I do not think so. If the plaintiff wanted to make oral submission it could have sought to have the matter relisted. 20 The power to make the costs order appears in s 53(2) of the Act. It provides that the Tribunal may, in accordance with the regulations, award costs in relation to any proceedings. Regulation 20(4) provides that in any proceedings in respect of which the amount claimed or in dispute is more than $25,000.00, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit.

The Tribunal decision on costs 21 The Member in his reasons dated 17 November 2003 at [4] - [11] stated: "4. The issue before the Tribunal for determination is who or what should pay the costs of the owners corporation in respect of its joinder to these proceedings and subsequent removal from these proceedings.

The owners corporation were joined as a fourth respondent to these proceedings by a differently constituted Tribunal on 2 September 2002.

It is not clear from the transcript of that days proceedings why owners corporation was joined as a respondent.

It is however clear from the transcript that the presiding member (on that day) was of the view that the joinder could occur without the consent or otherwise of the owners corporation; the owners corporation were not formally on notice that such a course of action was contemplated on the day; the respondents (first, second and third) through their solicitors cautioned against such a joinder without the benefit of the owners corporation having been given notice of the proposed course of action and that the applicants while not pressing the joinder, did not advise the Tribunal that they (the applicants) through their solicitors were on notice that that the owners corporation did not consent to the joinder (as co-applicant) and proposed to commence separate proceedings against the respondents in respect of defective works to the common property.

The Tribunal refers to the letter of 2 July 2002 from the solicitors for the owners corporation to the solicitors for the applicants which inter alia is in these terms, "We are instructed that our clients does not wish to be joined in your client's application but rather it intends bringing a separate action on its own account."

That clear, concise and simple message was available to the applicants' legal representative and clearly should have been put to the presiding Tribunal member on the day.

It is arguable that the Tribunal member may have joined the owners corporation even if she was appraised of the content of the letter of 2 July 2002. It seems to me that is not an argument that can properly be made. The issue being not whether the member was minded to join the owners corporation of her own volition but rather whether all the known and relevant material was disclosed to the member before a decision was made.

The applicants' legal team were aware of information critically relevant to the issue at hand. The information should have been disclosed to the Tribunal. It was not. They had a duty as officers of the Court to disclose the information. " 22 The Tribunal Member then made an order that: "The cost of the Owners' Corporation of SP62254 incidental to an arising from these proceedings (02/70076 and 02/70443) for the period 3 September 2002 up to and including 5 February are to be paid by the applicants." 23 The power to make the costs order appears in s 53(2) of the Act. It states: "(2) The Tribunal may, in accordance with the regulations, award costs in relation to any proceedings." 24 Regulation 20(4) of the Consumer Trader and Tenancy Regulation provides: "(4) In any proceedings in respect of which the amount claimed or in dispute is more than $25,000, the Tribunal may award costs in relation to the proceedings in such circumstances as it thinks fit." 25 There is an unfettered discretion to award costs. The plaintiffs counsel, in the absence of the Owners Corporation, at the hearing should have made it clear to the Tribunal Member that the Owners Corporation did not consent its joinder. The opening statement was not sufficient to alert the Tribunal Member to the Owners Corporation's position and did not appraise her that the Owners Corporation was considering taking separate proceedings. 26 As Gleeson CJ in Ohn v Walton (1995) 36 NSWLR 77 at 79 stated: "When legislation confers a power to order costs it is, in the absence of any contrary indication, to be understood as conferring a power to be exercised for that purpose. Two things follow: 1. The usual rationale of making a costs order is that it is just and reasonable that the successful party should be reimbursed for costs incurred, in the absence of grounds connected with the charge or the conduct of the proceedings which make it unjust or unreasonable that there should be such reimbursement. 2. The test of whether an order for costs should be made against an unsuccessful plaintiff or complainant is not whether, in the circumstances, the defendant or respondent should be compensated." 27 It is my view that in the circumstances the decision of Tribunal Member Connelly was open to him. There is no error of law. Thus, there was no reason to disturb this decision upon rehearing. The decision of the Tribunal dated 9 December 2003 is affirmed. The appeal is dismissed. The order of Tribunal Member Connelly dated 17 November 2003 is affirmed. 28 As previously stated costs are discretionary. Costs normally follow the event. The plaintiff is to pay the defendants' costs as assessed or affirmed. 29 In Krslovic Homes v Timothy Sparkes & Ors [2004] NSWSC 374 Shaw J, after reviewing the cases on where it is appropriate to award costs, discussed the issue of a certificate under the Suitors' Fund Act 1951 (NSW) and decided that there is adequate foundation for regarding the proceedings before this Court in the nature of an appeal for the purposes of a Suitors' Fund Certificate [42] and [49]. It is my view that while it is unfortunate that a party was joined to proceedings and then released, and having regard to the authorities cited by Shaw J in Krslavic Homes, it does not merit an order that the Tribunal itself pay the costs but it is appropriate to make an order that a certificate of indemnity be granted to the plaintiffs in accordance with the Suitors Fund Act.

(1) The decisions made by the Tribunal on 17 November 2003 and 9 December 2003 are affirmed.

(4) The plaintiff is to pay the defendants costs as agreed or assessed.

(5) A certificate of indemnity be granted to the plaintiffs in accordance with the Suitors' Fund Act . **********

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