BETWEEN: SUSAN RUTH AIKMAN
Plaintiff
AND
THE OWNERS OF STRATA PLAN 48817 - 16 DOLPHIN DRIVE MANDURAH
First Defendant
SUSAN KNOWLES
JAMES FORBES
GARY WARNE
JULIE HEWSON
ALAN THOMAS
LLOYD PICKWELL
RYAN BARNETT
Second Defendants
ACCOMODATION WEST PTY LTD
Third Defendant
PAUL RAYMOND KING
PETER BRIAN RAKICH
Fourth Defendants
SOLOMON BROTHERS (A FIRM)
Fifth Defendant

Catchwords:

Interlocutory injunction - Urgent application by plaintiff for interlocutory mandatory injunction - Where interlocutory relief sought amounts to final relief sought in the action - Whether damages adequate remedy - Whether the plaintiff will suffer irreparable harm or injury if interlocutory injunctive relief not granted - Where not insignificant delay in bringing the application for interlocutory injunctive relief

Practice and procedure - Application for order for an expedited trial - Whether expedited trial will cause injustice to either party - Whether special factors involved that warrant expedition - Whether the parties have proceeded with due speed - Whether the substance of the litigation will be lost if orders for expedition not made - Whether expedited trial necessary to prevent the breach of fiduciary duties

Legislation:

Corporations Act 2001 (Cth)
Rules of the Supreme Court 1971 (WA)
Strata Titles Act 1985 (WA)

Result:

Application dismissed

Category: B

Representation:

Counsel:

Plaintiff:     Mr S Davies SC & Mr S K Shepherd
First Defendant              :     Mr A Mossop
Second Defendants        :     Mr A Mossop
Third Defendant            :     Mr A Mossop
Fourth Defendants         :     Mr A Mossop
Fifth Defendant              :     Mr C S Williams

Solicitors:

Plaintiff:     Goldsmith Lawyers
First Defendant              :     Clyde & Co
Second Defendants        :     Clyde & Co
Third Defendant            :     Clyde & Co
Fourth Defendants         :     Clyde & Co
Fifth Defendant              :     Solomon Brothers

Cases referred to in judgment:

Barrett v Duckett (1996) 14 ACLC 3101
Blythe v State of Western Australia [2008] WASCA 10
Breen v Williams (1996) 186 CLR 71
Carre v Owners Corporation ‑ Strata Plan 53020 [2003] NSWSC 397; (2003) 58 NSWLR 302
Cayne v Global Natural Resources PLC [1984] 1 All ER 225
Eastmark Holdings Pty Ltd v Kabraji [2013] NSWSC 1763
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303
Fels v Davies [2013] WASCA 42
Foss v Harbottle [1843] 2 Hare 461; 67 ER 189
Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296
Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41
Independent Corporate Service Ltd v Stevens [2002] WASC 280
JTA Le Roux Pty Ltd as trustee for the FLR Family Trust v Lawson [No 2] [2013] WASC 373
Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533
Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
National Australia Bank Ltd v Joyce [2012] WASC 224
NWL Ltd v Woods [1979] 3 All ER 614
Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1
Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25
Permanent Building Society (In Liq) v Wheeler (1994) 11 WAR 187
Pilmer v Duke Group (In Liq) (2001) 207 CLR 165
Re JL Manufacturing Co Ltd [1900] 2 Ch 753
Ross v Harbottle (1843) 2 Hare 461; 67 ER 189
Yara Australia Pty Ltd v Burrup Holdings Ltd [2010] FCA 1273

Table of Contents

1. Factual background

The parties
The defamation proceedings
The present action
The claims made by Ms Aikman in the present action

Ms Aikman's claim against the first defendant
Ms Aikman's claim against the second defendants
Ms Aikman's claims against the third and fourth defendants
Ms Aikman's claims against the fifth defendants
Ms Aikman's claim that she has standing
The claim of loss and damage
The relief sought by Ms Aikman in the present action
The defendants' case

2.     The interlocutory injunctive relief sought
3.     The principles applicable to applications for interlocutory injunctions
4.     Assessment of the strength of the plaintiff's case

Ms Aikman's claim that the first defendant had no power to pay the Legal Fees

Evidence as to how payment of the Legal Fees came to be made
Ms Aikman's case that the payment of the Legal Fees was not authorised under s 36(1)(a) of the ST Act as there was no obligation to pay
Ms Aikman's case that the payment of the Legal Fees was not necessary for, or incidental to, the purposes for which a strata company is constituted
The claims based on alleged breaches of fiduciary duties

(a) In so far as the first to fourth defendants are concerned, their relationships with the first defendant or the proprietors of the lots do not fall squarely, or at all, within the established categories of recognised fiduciary relationships

(b) In so far as the fifth defendant is concerned, the evidence adduced on the Application does not establish a prima facie case that the fifth defendant was retained by the first defendant and thereby stood in a fiduciary relationship

(c) Significant hurdles appear to stand in the way of establishing that the relationships in question constitute fiduciary relationships

(d) Many of the duties said to constitute fiduciary duties owed by the defendants are not in the nature of duties ordinarily identified as fiduciary duties

(e) There is no evidence to establish a prima facie case that the third, fourth or fifth defendants knew that payment of the Legal Fees was beyond the first defendant's power or was a breach of a fiduciary duty by the first defendant, or that the defendants were knowingly involved in assisting the other defendants to breach their fiduciary duties

Whether Ms Aikman has standing to bring the action
Conclusion as to the strength of Ms Aikman's claim

5. Balance of convenience factors

(a) Ms Aikman has not demonstrated that damages would be an inadequate alternative remedy

(b) Ms Aikman has not identified any irreparable harm or prejudice that she will suffer if the injunctive relief she seeks is not granted

6. Why interlocutory injunctive relief should not be granted
7. Why an order for an expedited trial should not be made

(a) No need for expedition was shown

(b) Likelihood of prejudice to the defendants

8. The plaintiff's objections to the first Getta affidavit

Conclusion

PRITCHARD J: The plaintiff, Ms Aikman, has applied by Chamber Summons for an order for an expedited hearing of this action (which was commenced on 9 September 2016) or, alternatively, for interlocutory injunctive relief (the Application). The interlocutory relief sought is set out below at [49].
At the conclusion of the hearing of the Application on 9 November 2016, I indicated that I was not persuaded that an order should be made for an expedited hearing. My reasons for that view are set out below at [192] - [208]. I reserved my decision in respect of the application for interlocutory injunctive relief (the Injunction Application). For the reasons set out below, the Injunction Application will be dismissed.
In these reasons for decision, I deal with the following matters:
1.Factual background;
2.The interlocutory injunctive relief sought;
3.The principles applicable to applications for interlocutory injunctions;
4.Assessment of the strength of the plaintiff's case;
5.Balance of convenience factors;
6.Why interlocutory injunctive relief should not be granted;
7.Why an order for an expedited trial should not be made; and
8.The plaintiff's objections to the first Getta affidavit.

Factual background

In support of the Application, counsel for Ms Aikman read affidavits sworn by Ms Aikman on 8 September 2016 (the first Aikman affidavit) and 19 October 2016 (the second Aikman affidavit) and an affidavit sworn by Mr Barrie Goldsmith, Ms Aikman's solicitor, on 2 November 2016.[1]
[1] ts 14.
Counsel for the first to fourth defendants read affidavits sworn by Mr Maciej Matuesz Getta, a solicitor employed by the first to fourth defendants' solicitors, on 1 November 2016 (the first Getta affidavit) and 3 November 2016 (the second Getta affidavit). Counsel for Ms Aikman objected to numerous paragraphs of the first Getta affidavit. Those objections are addressed at the end of these reasons.
Counsel for the fifth defendants read an affidavit affirmed by Ms Michelle Anne Taylor, a solicitor employed by the fifth defendants, on 1 November 2016 (the Taylor affidavit).
The parties' submissions largely focused on the factual material set out in, and documents annexed to, the first and second Aikman affidavits.

The parties

The following facts are not contentious. The first defendant is the strata company incorporated pursuant to the Strata Titles Act 1985 (WA) (the ST Act) in respect of a strata property at 16 Dolphin Drive, Mandurah, known as the Seashells Resort (the property). The property comprises numerous lots, some used by short‑stay visitors, others for commercial purposes, and others by long‑term residents.
Ms Aikman is the proprietor of one of the lots in the property.
The second defendants comprise the Council of Owners of the first defendant.
The first defendant levies the proprietors of the lots at the property (the proprietors) to accumulate and maintain a fund to cover the administrative expenses of the first defendant (the Administrative Fund), which is sometimes referred to as the Maintenance Fund, and a fund for more substantial expenses (the Reserve Fund).
The third defendant is a company engaged by the first defendant as the strata manager, on-site manager and caretaker of the property, pursuant to three agreements dated 17 March 2006: the Management Agreement, the On‑Site Managers Agreement and the Caretaking Agreement (collectively, the Agreements).[2]
[2] Annexure SRA5 to the first Aikman affidavit.
The first and second-named fourth defendants are a director and employee, respectively, of the third defendant, and both are also proprietors.
The fifth defendant is a firm of solicitors which acts for the third and fourth defendants in defamation proceedings brought by the third and fourth defendants against Ms Aikman in this Court (the defamation proceedings). Mr Williams is a partner in the fifth defendant and appeared as counsel for the fifth defendant at the hearing of the Application.

The defamation proceedings

It is necessary to say something about the defamation proceedings, because those proceedings have been the catalyst for the present action.
It appears that there is an ongoing dispute between some of the proprietors, and the second, third and fourth defendants in relation to the operation and maintenance of the property. That dispute has been manifested in proceedings commenced by some of the proprietors against the first defendant in the State Administrative Tribunal (SAT). It appears that in the course of the SAT proceedings a report was prepared by a firm of accountants pursuant to an order of the SAT (the Coombs Report). The Coombs Report contained expressions of opinion by its author in relation to the management of the property.
The third and fourth defendants allege that the Coombs Report contains statements about them which are defamatory and that some of the proprietors, including Ms Aikman, distributed the Coombs Report to other persons.
On 9 July 2015, the third and fourth defendants commenced the defamation proceedings against Ms Aikman. The defamation proceedings have been case managed by his Honour Kenneth Martin J. On 21 July 2016, his Honour listed the defamation proceedings for a five‑day trial commencing on 23 November 2016.

The present action

On 9 September 2016, Ms Aikman commenced the present action. Initially, she did so by filing an Originating Summons. In the week of 11 October 2016, the matter was referred to me for management in the CMC List. On 13 October 2016, I made orders that the action proceed on pleadings as if commenced by writ, and that Ms Aikman file and serve a Statement of Claim by 18 October 2016. Ms Aikman did so. The Statement of Claim has been amended twice since then, most recently on 27 October 2016. It was apparent from the submissions of counsel for Ms Aikman at the hearing of the Application that the Amended Statement of Claim will require further amendment to set out fully the case which Ms Aikman seeks to advance. The defendants have not yet filed defences.
There is no dispute that the legal fees incurred by the third and fourth defendants for the legal services performed by the fifth defendants in the defamation proceedings (the Legal Fees) have been paid out of the funds of the first defendant.[3] However, counsel for the first to fourth defendants did not make any concession as to the source of the payments (that is, whether they came from the Administrative Fund or elsewhere).[4] (I note that the ST Act does not preclude a strata company from establishing accounts other than the administrative fund or the reserve fund referred to in s 36 of the ST Act.[5])
[3] ts 7.
[4] ts 7.
[5] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [54] (Grove AJ, Malcolm CJ & Steytler J agreeing); Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [54] (Owen J).
There also does not appear to be any dispute that at the annual general meeting of the first defendant on 4 June 2015 (the 2015 AGM) it was resolved that there should be included in the budget for the first defendant's operations for the following year an allocation of $25,000 for 'Admin ‑ Legal and Debt Collection Fees' (the 2015 Resolution). It does not appear to be in dispute that an identical resolution for expenditure in the following year (the 2016 Resolution) was passed at the annual general meeting of the first defendant on 16 June 2016 (the 2016 AGM).
Ms Aikman's concern is that as a result of the 2015 Resolution and the 2016 Resolution, the funds of the first defendant (which include contributions levied from her as a proprietor) have been used by the first and second defendants to fund the defamation proceedings brought against her by the third and fourth defendants.

The claims made by Ms Aikman in the present action

Ms Aikman's action against each of the defendants, as presently pleaded, is summarised below.

Ms Aikman's claim against the first defendant

Ms Aikman alleges that the allowances included in the first defendant's budget by virtue of the 2015 Resolution and the 2016 Resolution were intended to, and did, cover legal costs and expenses incurred, or to be incurred, in connection with the defamation proceedings (that is, the Legal Fees).[6] Ms Aikman pleads that the defamation proceedings are, by their nature, personal to the third and fourth defendants, and that neither the first defendant nor the proprietors as a whole have any interest in the defamation proceedings.[7]
[6] Amended Statement of Claim [16], [23].
[7] Amended Statement of Claim [10].
Ms Aikman alleges that the defendants all knew or ought to have known that the purpose of the 'Admin ‑ Legal and Debt Collection Fees' allowance (the Allowance) in the first defendant's budget was to pay for legal costs and expenses to be incurred in the defamation proceedings or other defamation matters.[8]
[8] Amended Statement of Claim [17], [24].
Ms Aikman alleges that the 2015 Resolution and the 2016 Resolution were beyond the power of the first defendant because the payment of the Legal Fees was a payment made in breach of the first defendant's powers or duties as conferred by the ST Act or the by-laws of the first defendant.[9]
[9] Amended Statement of Claim [21], [28].

Ms Aikman's claim against the second defendants

Ms Aikman says that the second defendants owe fiduciary duties to the first defendant, and to the proprietors as a whole. She claims that those duties are: to be truthful and honest with the proprietors; to disclose such information as the second defendants are aware of in connection with the property or the rights and obligations of the proprietors; to provide reasonable and responsive answers to any questions asked or matters raised by any of the proprietors; and to act in the best interests of the proprietors as a whole, including as to the use and management of proprietor contributions to the Administrative Fund and the Reserve Fund.[10]
[10] Amended Statement of Claim [18].
Ms Aikman claims that those duties arose by virtue of the nature of the appointment of the second defendants, pursuant to s 44(1) of and Item 4(1) of sch 1 to the ST Act, and as a consequence of the second defendants' management and control of proprietor contributions to the Administrative Fund and the Reserve Fund.[11]
[11] Amended Statement of Claim [18].
Ms Aikman alleges that the second defendants breached the alleged fiduciary duties in that they were not truthful and honest with the proprietors (including at the 2015 and 2016 AGM) in relation to the use of proprietor contributions to the Administrative Fund or the Reserve Fund; they did not disclose that the Allowance in 2015 was to pay for the Legal Fees to be incurred in the anticipated defamation proceedings; they did not provide particulars of the anticipated defamation proceedings; they did not advise the proprietors that the first defendant was under no legal obligation to provide funding for the defamation proceedings; the answers given to questions from proprietors at the 2015 AGM and the 2016 AGM were not truthful and honest, or were not reasonable and were non‑responsive; they did not advise proprietors that the Allowance in 2015 and 2016 might not be sufficient to cover all of the Legal Fees to be incurred in the defamation proceedings; and the second defendants did not act in the best interests of the proprietors as a whole, in that there was no benefit to the proprietors as a whole in funding the defamation proceedings.[12]
[12] Amended Statement of Claim [19], [26].
Ms Aikman alleges that the same conduct constituted conduct which was misleading and deceptive in nature, or fraudulent.[13]
[13] Amended Statement of Claim [20].
Ms Aikman also alleges that the second defendants owed additional fiduciary duties to the proprietors to act in the best interests of the proprietors. The content of these additional duties was said to be that the second defendants were required not to pay any monies out of the Administrative Fund or the Reserve Fund other than for the purposes for which the first defendant was constituted or in the discharge of an obligation of the first defendant, and to hold the contributions paid by the proprietors for their benefit, for purposes prescribed by the ST Act and any by-laws.[14]
[14] Amended Statement of Claim [29].
Ms Aikman alleges that the second defendants breached these additional fiduciary duties in that they authorised or directed (whether directly or via the third defendant) the payment to the fifth defendant of monies towards the Legal Fees.[15] She alleges that the decisions by the second defendants to do so were in breach of their duties because it was not in the best interests of the proprietors for contributions levied from them to be paid for the benefit of the third and fourth defendants; because the money was not paid for a purpose for which the first defendant was constituted, or in the discharge of an obligation of the first defendant; and because the payment of the Legal Fees was not a purpose for which contributions by the proprietors could be applied pursuant to the ST Act or any by-laws.[16]
[15] Amended Statement of Claim [30].
[16] Amended Statement of Claim [31].

Ms Aikman's claims against the third and fourth defendants

Ms Aikman alleges that the third and fourth defendants owed fiduciary duties to the first defendant, and thus to each of the proprietors.[17] Those duties are said to have arisen in the circumstances; by virtue of the nature of the third defendant's retainer by the first defendant as the strata manager, and the relationship of the fourth defendants to both the first and third defendants; as a consequence of their roles in the use and management of monies in the Administrative Fund and the Reserve Fund; and as a question of law.[18]
[17] Amended Statement of Claim [32].
[18] Amended Statement of Claim [32].
Ms Aikman alleges that the fiduciary duties owed by the third and fourth defendants to the first defendant and to the proprietors were a duty not to submit claims for the payment of legal costs and expenses to the first or second defendants unless those costs and expenses were properly incurred for the purposes for which the first defendant was constituted, or in the discharge of an obligation owed by the first defendant to the third defendant; a duty not to assert that the third and fourth defendants were entitled to have the Legal Fees paid out of monies that were the property of the first defendant when they were not so entitled; and a duty not to accept such payment in respect of the Legal Fees out of the Administrative Fund or the Reserve Fund.[19]
[19] Amended Statement of Claim [32].
Ms Aikman alleges that the third and fourth defendants acted in breach of these fiduciary duties in that they submitted claims for payment of the Legal Fees when those costs were not properly incurred for the purposes of the first defendant, or in the discharge of an obligation owed by the first defendant to the third defendant; asserted that they were entitled to have the first defendant pay the Legal Fees when they were not so entitled; and accepted payment (directly or via the fifth defendants) for the Legal Fees from proprietor contributions to the Administrative Fund or the Reserve Fund.[20]
[20] Amended Statement of Claim [33].
In their submissions, counsel for Ms Aikman characterised the duties owed and breaches of duties committed by the third defendant somewhat differently. They submitted that the third defendant breached its fiduciary duties to the first defendant, and to the proprietors, to avoid a conflict of interest, in that the payment of the Legal Fees conferred a benefit on the third defendant and its employees (the fourth defendants) to the detriment of the first defendant, Ms Aikman and the other proprietors.[21] Counsel for Ms Aikman also submitted that the third defendant breached its fiduciary duty not to profit from its fiduciary relationship with the first defendant and the proprietors.[22]
[21] Plaintiff's Supplementary Submissions [4(b)].
[22] Plaintiff's Supplementary Submissions [4(b)].
In addition, counsel for Ms Aikman submitted that the first defendant's payment of the Legal Fees involved the receipt of funds by the third defendant, in the knowledge that the payment of the Legal Fees was made without power or in breach of fiduciary duties owed to the first or second defendants.[23] Counsel for Ms Aikman also submitted that the payments made for the benefit of the fourth defendants were made in circumstances where the fourth defendants were knowingly assisting in the payments being.[24]
[23] Plaintiff's Supplementary Submissions [4(b)].
[24] Plaintiff's Supplementary Submissions [4(c)].

Ms Aikman's claims against the fifth defendants

Finally, Ms Aikman alleges that the fifth defendants owed fiduciary duties to the first defendant, and thus to the proprietors.[25] She alleges that those fiduciary duties arose in all of the circumstances; as a consequence of its knowledge of the defamation proceedings and its knowledge that the first defendant was paying the Legal Fees; as a question of law; and/or by virtue of the fifth defendant having provided legal advice and assistance to the first and second defendants.[26]
[25] Amended Statement of Claim [34].
[26] Amended Statement of Claim [34].
Ms Aikman alleges that the fifth defendant has provided legal advice and assistance to the first and second defendants in connection with the defamation proceedings, other defamation actions and in connection with the 2015 AGM.[27] Ms Aikman alleges that it was the second defendants who instructed the fifth defendant to commence the defamation proceedings and who caused the first defendant to pay the Legal Fees charged by the fifth defendants.[28]
[27] Amended Statement of Claim [8].
[28] Amended Statement of Claim [8].
As for the 2015 AGM, Ms Aikman alleges that Mr Williams was invited to attend that AGM by the second defendants (and thus by the first defendant); that the fifth defendant entered into an engagement letter with the second defendants, and thus with the first defendant; that the fifth defendant submitted invoices to the second defendants for payment in connection with work done at the 2015 AGM; and that at the 2015 AGM, Mr Williams gave advice to the proprietors on voting proxies and on the publication of the Coombs Report.
Ms Aikman also alleges (and there is no dispute) that the fifth defendant provided legal advice and assistance to the third and fourth defendants in connection with the defamation proceedings and other defamation matters.[29]
[29] Amended Statement of Claim [8].
Ms Aikman alleges that the fiduciary duties owed by the fifth defendant to the first defendant, and thus to the proprietors, comprised a duty to act in the best interests of the proprietors; a duty to advise the proprietors of any matters that could adversely affect their interests; and a duty not to put itself in a position whereby it had a conflict of interest, or potential conflict of interest, and to take steps to avoid any such conflict.[30]
[30] Amended Statement of Claim [34].
Ms Aikman alleges that the fifth defendant acted in breach of its fiduciary duties in that it failed to act in the best interests of the proprietors in that it knew that the defamation proceedings were to be funded by the first defendant, when neither the first defendant nor the proprietors had any interest in those proceedings, yet the fifth defendant failed to advise the proprietors of that fact, and submitted invoices for its fees to the first defendant for payment when it knew that those fees were not properly payable by the first defendant.[31]
[31] Amended Statement of Claim [35].
Ms Aikman also alleges that Mr Williams failed to advise the proprietors at the 2015 AGM that the first defendant was not obliged to pay the Legal Fees; failed to advise that the payment of those Fees was an unnecessary financial burden on the proprietors; failed to advise that the defamation proceedings were a legal action against another proprietor; failed to advise the proprietors that his firm would be the beneficiary of the payment of those Fees; and that the fifth defendant was in a position of actual or potential conflict between its duties to the third and fourth defendants and its duties to the first and second defendants, yet the fifth defendant continued to act in the defamation proceedings and to receive payment of the Legal Fees from the first defendant.[32]
[32] Amended Statement of Claim [35].
In their submissions, counsel for Ms Aikman also submitted that the receipt by the fifth defendants of the payment of the Legal Fees involved a breach of the fiduciary duties the fifth defendant owed to the first defendant, in that it involved a conflict of interest arising from the fact that the fifth defendant acted for both the first defendant and the third and fourth defendants.[33] They also submitted that the payment of the Legal Fees involved a breach of the fifth defendant's fiduciary duty (presumably to the first defendant) not to profit from the fiduciary relationship. Finally, counsel submitted that the Legal Fees were received by the fifth defendant in the knowledge that the payments were beyond power or in breach of the fiduciary duties owed by the first or second defendants.[34]
[33] Plaintiff's Supplementary Submissions [4(c)].
[34] Plaintiff's Supplementary Submissions [4(c)].

Ms Aikman's claim that she has standing

Ms Aikman pleads that she has standing to bring the present action at common law pursuant to the exceptions to the rule in Foss v Harbottle.[35]The basis for that claim is that the conduct of which she complains is beyond the power of the first defendant; constitutes a fraud on the minority and that the wrongdoers are in control; that she brings the action bona fide in the interests of all of the proprietors; that there is no other remedy available; and that serious injustice would arise if she were precluded from pursuing the action.[36] Ms Aikman pleads that she brings the present action in the interests of all of the proprietors to prevent the unlawful or fraudulent use by the first and second defendants of funds that are the property of the proprietors for the personal financial benefit of the third and fourth defendants.[37]
[35] Foss v Harbottle [1843] 2 Hare 461; 67 ER 189.
[36] Amended Statement of Claim [9], [38], [39].
[37] Amended Statement of Claim [37].
In addition, Ms Aikman pleads that she has standing in her own right as a proprietor of one of the lots at the property with a proprietary interest (jointly with other owners) in the common property and as a contributor to the funds held by the first defendant.[38]
[38] Amended Statement of Claim [9].

The claim of loss and damage

Ms Aikman pleads that by virtue of the pleaded conduct of the defendants, she has suffered, and will continue to suffer, loss and damage.[39] There is no particularisation of that loss or damage in the Amended Statement of Claim and Ms Aikman does not seek relief in the form of the payment of any damages.
[39] Amended Statement of Claim [40].

The relief sought by Ms Aikman in the present action

Ms Aikman seeks the following relief:
A.An order that such monies as may be found by the Court to have been paid, whether directly or indirectly, to the fifth defendant by the first defendant as a result of the commencement or pursuit of any defamation claim by or in the name of the third or fourth defendants out of any fund held by, in the name or on behalf of the first defendant, be repaid forthwith by the fifth defendant to the first defendant.
B.An order restraining the first and second defendants from paying or authorising to be paid from any fund held by, in the name or on behalf of the first defendant, any monies on account of, in connection with or for the purpose of any defamation claim by the third or either of the fourth defendants; and
C.Such further or other order or orders as to the Court seems just.[40]

The defendants' case

The defendants have not yet filed defences. However, their likely defences, or at least the key parts thereof, could be discerned from the submissions of counsel at the hearing of the Application.

The interlocutory injunctive relief sought
[40] Amended Statement of Claim [41].

In the Application, Ms Aikman seeks the following interlocutory orders:
1.Until after judgment in this action, or further order, the first defendant, whether by itself, its officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining it from paying to the fifth defendant or any other legal practitioner any sum from its administrative fund or reserve fund (or any other fund held by it on behalf of the proprietors of 16 Dolphin Drive, Mandurah) for legal costs or expenses of the plaintiffs in CIV 2063 of 2015.
2.Until after judgment in this action, or further order, the second defendants, whether by themselves, their officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining them from arranging, authorizing or consenting to payment to the fifth defendant or any other legal practitioner any sum from the first defendant's administrative fund or reserve fund (or any other fund held by the first defendant on behalf of the proprietors of 16 Dolphin Drive, Mandurah) for legal costs or expenses of the plaintiffs in CIV 2063 of 2015;
3.Until after judgment in this action, or further order, the third and fourth defendants, whether by itself or themselves, its or their officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining them from arranging, authorizing or consenting to payment to the fifth defendant any sum from the first defendant's administrative fund or reserve fund (or any other fund held by the first defendant on behalf of the proprietors of 16 Dolphin Drive, Mandurah) for legal costs or expenses in CIV 2063 of 2015;
4.The fifth defendant, whether by themselves, their officers, servants, agents or otherwise, be restrained and an injunction is hereby granted restraining them from accepting any payment made directly or indirectly by the first defendant for legal services performed for the plaintiffs in CIV 2063 of 2015.
5.Within 7 days from the date of this order, the fifth defendant pay to the first defendant all sums paid to it by the first defendant or the third defendant in respect of any advice or work undertaken in relation to defamation proceedings threatened or actually commenced against any proprietor of Strata Plan 48817, 16 Dolphin Drive Mandurah or against Danae Coombs or Paramount Wealth Accountants in the period 2015 and 2016.
The latter order is in the nature of a mandatory injunction, in so far as it requires the fifth defendant to repay to the first defendant any sum it has received as payment for its legal services in the defamation proceedings (or related defamation matters).
Having regard to the terms of the relief sought, it is evident that the grant of that relief would equate to the grant of the final relief sought by Ms Aikman in the action itself.

The principles applicable to applications for interlocutory injunctions

The principles in relation to the grant of interlocutory injunctive relief are well established. They were recently set out by Newnes JA in Mineralogy Pty Ltd v Sino Iron Pty Ltd[41] where his Honour (with whom Corboy J agreed) said:
The two main enquiries that arise are whether the plaintiff has made out a prima facie case and whether the balance of convenience favours the grant of the injunction. The first inquiry as to a 'prima facie case' does not mean that the plaintiff must show that it is more probable than not that at trial the plaintiff will succeed. It is sufficient that the plaintiff show a sufficient likelihood of success to justify, in the circumstances, the preservation of the status quo pending the trial. How strong the probability needs to be depends upon the nature of the rights the plaintiff asserts and the practical consequences likely to flow from the orders the plaintiff seeks. The second inquiry is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the grant of such relief are related, not independent, questions: Warner-Lambert Co LCC v Apotex Pty Ltd [2014] FCAFC 59 [70].
[41] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87].
As Newnes JA also pointed out:[42]
It is clear that on an application for an interlocutory injunction the court does not 'undertake a preliminary trial, and give or withhold interlocutory relief upon a forecast as to the ultimate result of the case': Beecham, 622. But it is necessary for an assessment to be made of the strength of the plaintiff's probability of ultimate success. It is plain from the test described in Beecham and O'Neill that the plaintiff's probability of success at trial is a critical factor in the determination of such an application. In that respect, as the Full Court of the Federal Court observed in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 [59], it is not enough simply to conclude that the plaintiff has a 'prima facie' case. What is required is an assessment or evaluation of the case for the purpose of deciding whether the plaintiff has made out a prima facie case of sufficient strength to justify the grant of an interlocutory injunction and to enable the strength of the case to be taken into account in an assessment of the balance of convenience and justice: Samsung [87] - [88].
[42] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [102].
A further consideration to be taken into account is whether, if the injunction is not granted, the plaintiff will suffer irreparable injury for which damages will not be adequate compensation. As Edelman J observed in National Australia Bank Ltd v Joyce,[43] there has been some controversy over whether the adequacy of damages as an alternative remedy is a factor to be considered as part of the balance of convenience, or as a separate consideration in the overall exercise of discretion whether to grant injunctive relief. In my view, it is more appropriate to consider the adequacy of damages as part of the overall balance of convenience rather than as a discrete consideration.[44]
[43] National Australia Bank Ltd v Joyce [2012] WASC 224 [38].
[44] See the cases discussed in National Australia Bank Ltd v Joyce [2012] WASC 224 [39] ‑ [40] (Edelman J).
As I have already observed, order 5 of the orders sought in the Application constitutes a mandatory injunction to compel the fifth defendant to pay the first defendant any sums paid by the first or third defendants in respect of the Legal Fees. The test to be applied in the case of an application for a mandatory interlocutory injunction is no different from that in the case of a prohibitory interlocutory injunction.[45] Specifically, no different standard applies in terms of the degree of confidence that the court should have (in terms of the correctness of the order sought) before granting the injunctive relief which is sought. Instead, in every application for an interlocutory injunction, determining where the balance of convenience lies will involve a consideration of the consequences of granting or refusing the relief sought, including any injustice that might result from granting or denying relief. The fact that the relief sought is mandatory will often, although not always, tilt the balance of convenience in the defendant's favour.[46] One aspect of the balance of convenience considerations, which is particularly relevant in the present case, will be whether the grant of a mandatory order will amount to giving the plaintiff the final relief sought, but without affording the defendant a full hearing of the issue.[47] I will return to that issue later in these reasons.
[45] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [85] (Newnes JA, Corboy JA agreeing [117]).
[46] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [85] (Newnes JA, Corboy JA agreeing [117]), citing Meagher, Gummow and Lehane's Equity Doctrines and Remedies (5th ed) at [21-395].
[47] JTA Le Roux Pty Ltd as trustee for the FLR Family Trust v Lawson [No 2] [2013] WASC 373 [23] (Edelman J); NWL Ltd v Woods [1979] 3 All ER 614, 625 (Lord Diplock); Cayne v Global Natural Resources PLC [1984] 1 All ER 225, 233 (Kerr LJ); Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 536 (McClelland J); Yara Australia Pty Ltd v Burrup Holdings Ltd [2010] FCA 1273 [79] ‑ [86] (Barker J).

Assessment of the strength of the plaintiff's case

As is apparent from the outline above, Ms Aikman's case against the defendants has two primary planks. (For present purposes, I intend to ignore the claim based on misleading and deceptive conduct, which received no attention from counsel for Ms Aikman during the hearing of the application.)
The first plank of Ms Aikman's case concerns whether the first defendant acted beyond its power when it paid the Legal Fees. The second concerns the alleged breach of the fiduciary duties which are said to be owed by the first defendant to the proprietors, and by each of the second to fifth defendants to the first defendant and to each of the proprietors.
In order to succeed in the action, Ms Aikman will also need to establish that she has standing to bring the action.
For the reasons outlined below, and having regard to the evidence adduced on the Application, I have concluded that Ms Aikman's prospects of success on her case overall are only reasonable. That is because the claim that the payment of the Legal Fees was beyond the power of the first defendant appears to be reasonably strong, but not 'overwhelmingly' so, as senior counsel submitted.[48] It cannot be said that it is assured of success. However, Ms Aikman's claims that the defendants were subject to, and breached, fiduciary duties to the first defendant, or to the individual proprietors, are weak. Finally, Ms Aikman faces not insignificant difficulties in establishing that she has standing to pursue causes of action that the first defendant would ordinarily be entitled to pursue.

Ms Aikman's claim that the first defendant had no power to pay the Legal Fees

[48] ts 11.

Ms Aikman's case is that the Legal Fees were paid out of the Administrative Fund, but that the Administrative Fund could not be used for the payment of the Legal Fees because such payments did not fall within the permitted uses of an administrative fund prescribed by s 36(1)(a) of the ST Act, in particular because the payments were not made to discharge an obligation of the first defendant.[49] Subsection 36(1)(a) requires a strata company:
[T]o establish a fund for administrative expenses that is sufficient in the opinion of the company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company.
[49] Plaintiff's Supplementary Submissions [17] ‑ [22].
The first to fourth defendants say that it was not necessary for the payment of the Legal Fees to fall within the description in s 36(1)(a) of the ST Act, as that provision is not an exhaustive statement of the purposes to which funds from an administrative fund may be put, nor of the power of a strata company to expend funds.[50]
[50] ts 48.
In the alternative, the first to fourth defendants say that the payment of the Legal Fees constituted the performance of obligations of the first defendant pursuant to provisions in the Management Agreement, the On‑Site Managers Agreement and the Caretaking Agreement which require the first defendant to indemnify the third defendant (the indemnity provisions).[51]
[51] First to Fourth Defendants' Supplementary Submissions [12] ‑ [13].
However, the primary basis on which the first to fourth defendants say that the payment of the Legal Fees was authorised is in reliance on s 32(3)(d) of the ST Act.[52]
[52] ts 53.
Before turning to make a preliminary assessment of these arguments, it is appropriate to say something about the evidence in relation to how the payment of the Legal Fees came to be made.

Evidence as to how payment of the Legal Fees came to be made

Somewhat surprisingly, even allowing for the interlocutory nature of the Application, there was a dearth of evidence before the Court as to how the Legal Fees came to be paid. It was not disputed that the first defendant had paid the Legal Fees. The remittance advices which were in evidence[53] suggested that payment of the fifth defendant's invoices had been made by a transfer of funds from an account of the first defendant. However, there was no agreement or concession as to whether the Legal Fees were paid from the Administrative Fund. The source of the payment may be of some significance, because if the Legal Fees were not paid from the Administrative Fund, then no issue would arise as to the application of s 36(1)(a) of the ST Act.
[53] See, eg, Annexure MAT3 to the Taylor affidavit, 31.
Even if the Legal Fees were paid out of the Fund, that does not establish what was the underlying arrangement for the payment of the Legal Fees. Those arrangements are significant because they are relevant to the question whether the payment was made to discharge an obligation of the first defendant. By way of example, there was little evidence as to whether the Legal Fees were paid because the third defendant billed the first defendant for its costs in performing services under the Agreements (as appears to be suggested in the Amended Statement of Claim); or as to whether some agreement was reached between the second, third and fourth defendants that the first defendant would pay any invoices for the Legal Fees which were issued by the fifth defendant to the third and fourth defendants; or whether (as counsel for Ms Aikman submitted) the third defendant, acting in the capacity of the agent of the first and second defendants, retained the fifth defendant, as a result of which the first defendant was obliged to pay the Legal Fees.
One document which was in evidence, and on which counsel for Ms Aikman placed particular emphasis, was a letter dated 17 August 2016 from Torrens Legal, the solicitors for the first defendant, to Ms Aikman's solicitors.[54] That letter was written in response to a complaint from Ms Aikman's solicitors that the Legal Fees had been paid without authority. The first defendant's solicitors stated:
[54] First Aikman affidavit, 265 ‑ 266.
3.With respect we disagree with your position that there is no proper factual foundation for the Strata Company to have provided or to provide funds concerning the costs and expenses incurred by the [third and fourth defendants in the defamation proceedings].
4.The Proceedings concern allegations of defamatory statements and conduct towards [the third defendant] and its director and manager. Such statements have been made in the context of the performance by [the third and fourth defendants] of [the third defendant's] duties as the appointed strata manager, caretaker and on-site manager for Strata Plan 48817.
5.The agreements under which [the third defendant] has been appointed strata manager, caretaker and on-site manager for Strata Plan 48817 (Strata Agreements) each contain an indemnity provision concerning costs and expenses incurred by [the third defendant] in performing its duties under those agreements (Indemnity Provisions).
…
6.The provision of funds concerning the Plaintiffs' Costs have been made pursuant to the contractual obligation of the Strata Company contained in the Indemnity Provisions. They have not been provided pursuant to By-laws 25 or 26.
7.The [second defendants] consider that the Plaintiffs' Costs are costs and expenses properly incurred [by the third defendant] in carrying out its work pursuant to the Strata Agreements, and such costs and expenses that the Strata Company must indemnify [the third defendant] for, due to such reasons as:
7.1the alleged defamatory statements and conduct directly relating to the performance by [the third defendant] and its director and manager of [the third defendant's] duties under the Strata Agreements;
7.2the defamatory statements and conduct appearing to be continual and not an isolated incident; and
7.3the alleged defamatory statements and conduct appearing to unreasonably impact on:
7.3.1the circumstances / environment under which [the third defendant] and its employees are to perform [the third defendant's] duties under the Strata Agreements; and
7.3.2the resources reasonably required by [the third defendant] to perform its duties under the Strata Agreements.
8.Should the [third and fourth defendants] ultimately not be successful in the [defamation proceedings], the [second defendant] is of the view that the Indemnity Provisions will not have been applicable to the Plaintiffs' Costs and accordingly will take action to ensure that [the third defendant] reimburses the Strata Company for these.
While this letter suggests that the first defendant paid the Legal Fees because the second defendants considered that the first defendant was obliged to pay the Legal Fees, one might ordinarily expect that an obligation to indemnify for any such fees would be met by payment by the first defendant to the third defendant. However, the remittance advices issued by the fifth defendant, to which I have already referred, suggest that payment of the Legal Fees was made by the transfer of funds from the first defendant to the fifth defendant.
The upshot is that in order to succeed in the action, Ms Aikman will need to establish the circumstances in which payment of the Legal Fees was made. At present, the evidence is limited and the evidence which is before the Court clearly does not reflect the totality of the circumstances.

Ms Aikman's case that the payment of the Legal Fees was not authorised under s 36(1)(a) of the ST Act as there was no obligation to pay

Ms Aikman's case in respect of s 36(1)(a) of the ST Act holds some appeal. The indemnity provision in the Strata Management Agreement is in clause 15 of that Agreement and provides that:[55]
The Strata Company will indemnify the Strata Company Manager [ie the third defendant] for all costs and expenses (including legal costs) properly incurred in carrying out work pursuant to this Agreement.
[55] Annexure SRA5 to the first Aikman affidavit, 116.
Clause 10 of the On-site Managers Agreement is in similar terms,[56] and so too is clause 10 of the Caretaking Agreement.[57]
[56] Clause 10 of the On-site Managers Agreement provides that 'except where the On-site Manager [ie the third defendant] has been negligent or is in default of this Agreement, the Strata Company will indemnify the On-site Manager for all costs and expenses properly incurred by the On-site Manager in carrying out any duties of the Strata Company under this Agreement': see Annexure SRA5 to the first Aikman affidavit, 127.
[57] Clause 10 of the Caretaking Agreement provides that 'except where the Caretaker [ie the third defendant] has been negligent or is in default of this Agreement, the Strata Company will indemnify the Caretaker for all costs and expenses properly incurred by the Caretaker in carrying out the Caretaking Duties under this Agreement': see Annexure SRA5 to the first Aikman affidavit, 142.
Counsel for Ms Aikman submitted that:[58]
[O]n no reasonable view could it be said that the indemnity extends to an obligation to pay legal fees incurred by the third or fourth defendants in bringing [the] defamation proceedings in their own name and for their own benefit. Those costs are not costs incurred in carrying out the work or duties of the first defendant, either pursuant to the Management Agreement or either of the other agreements.
[58] ts 9.
At first blush, there appears to be some force to that submission. There appears to be even greater force to the submission by counsel for Ms Aikman that the indemnity provisions do not give rise to any obligation on the first defendant to indemnify the fourth defendants in respect of the Legal Fees.[59]
[59] Plaintiff's Supplementary Submissions [20].
In addition, counsel for Ms Aikman submitted that the letter from Torrens Legal (referred to at [69] above) indicated that the first defendant's solicitors accepted that the indemnity provisions would only apply if the third and fourth defendants succeeded in the defamation proceedings, and that, consequently, there could not be any obligation to pay those costs in advance of the outcome of the defamation proceedings.[60] Counsel for the first to fourth defendants submitted that to the extent that that letter contained any admission that there was no obligation on the first defendant to pay the Legal Fees, such an admission was 'as to the legal extent of the obligation to indemnify [which was] an opinion of law and therefore of little value'.[61] While the letter is not determinative of the question of liability, it does identify an alternative argument as to the operation of the indemnity provisions which assists Ms Aikman's case.
[60] Plaintiff's Supplementary Submissions [22].
[61] First to Fourth Defendants' Supplementary Submissions [17]; ts 57.
Despite the force of these considerations, I do not consider it beyond argument that Ms Aikman's case based on s 36(1)(a) of the ST Act will inevitably succeed, for three reasons.
First, the submissions of counsel for Ms Aikman assumed that the references to various items of expenditure in s 36(1)(a) are intended to limit the purposes for which payments may be made out of a strata company's administrative fund. However, as a strata company is not restricted to establishing only an administrative fund and a reserve fund,[62] it is not clear why the legislature would have been concerned to limit the purpose for which payments might be made out of either fund. An alternative view might be that s 36(1)(a) is simply concerned with ensuring that a strata company establishes an administrative fund which has sufficient funds to cover the sorts of operating expenses one would ordinarily expect for a strata company. If that is so, the power of a strata company to pay money out of its funds may derive from another provision in the ST Act.
[62] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [77].
Secondly, assuming that s 36(1)(a) does apply, the question is whether the payment of, or in respect of, the Legal Fees was made in the discharge of an obligation of the first defendant. I note that s 36(1)(a) refers to the discharge of an 'obligation' of the strata company. Consideration will be required at trial of what that term means, bearing in mind that the section refers to 'any' obligation of a strata company.
Thirdly, counsel for the first to fourth defendants submitted that the letter from Torrens Legal, when read in its entirety, expressed the view that the second defendants believed that an obligation to pay the Legal Fees presently existed.[63] That submission highlighted the distinction between the existence, in fact and law, of an obligation on the part of the first defendant to pay the Legal Fees, and a belief on the part of the second defendants that the first defendant was subject to such an obligation. If a strata company receives an invoice from a supplier requiring payment for the provision of goods or services, and that invoice is paid but is later found to have contained an error (because, for example, the goods or services were not, in fact, purchased by the strata company) one would not ordinarily characterise the making of the payment as being beyond the power of the strata company. That raises the question whether the remedy (if there is one) derives from a lack of power, or from a mistaken payment.

Ms Aikman's case that the payment of the Legal Fees was not necessary for, or incidental to, the purposes for which a strata company is constituted

[63] ts 57.

The first to fourth defendants' case is that the payment of the Legal Fees is within the power of a strata company pursuant to s 32(3)(d) of the ST Act. That provision provides that a strata company:
[M]ay do and suffer all things that bodies corporate generally may, by law, do and suffer and that are necessary for or incidental to the purposes for which a strata company is constituted.
Counsel for the first to fourth defendants submitted that the purposes for which a strata company is constituted are not expressly stated in the ST Act, but that one of the purposes for which a strata company may be constituted (as was the case here) was to provide hotel accommodation.
Counsel for the first to fourth defendants submitted that one of the purposes for which the first defendant exists is the management of the property so that it remains a desirable location for prospective guests. He submitted that in that respect, it was important to maintain the reputation of the property and that the professional business reputations of the third and fourth defendants reflected upon the property, the first defendant and the proprietors.[64] He submitted that protecting the reputations of the third and fourth defendants through the defamation proceedings would benefit the first defendant and the proprietors in that it 'maintains the confidence of existing [proprietors] in the current management and performance of the manager', 'publicly vindicates any allegations of improper management made against the third and fourth defendants' and 'maintains the value of each proprietor's lot as the reputation of the resort affects the value of the properties and the business'.[65] He submitted that the defamation proceedings, if successful, would assist in maintaining the value of the lots at the property by confirming that the proprietors:[66]
[H]ave a manager of good repute … who is properly able to undertake its functions.
And it reflects upon them that they … would employ as their manager an entity, and persons who are employed by the entity, of good character. And that explains, to an extent, why, in the context of the defamation proceedings, there is sought, as part of the relief, the prevention of further publications of the nature complained of against the [third and fourth defendants].
[64] First to Fourth Defendants' Supplementary Submissions [10].
[65] First to Fourth Defendants' Supplementary Submissions [10]; ts 55 ‑ 56.
[66] ts 44.
Ms Aikman's case is that the payment of the Legal Fees does not fall within the more general power of a strata company under s 32(3)(d) of the ST Act.[67]
[67] Plaintiff's Supplementary Submissions [15].
Counsel for Ms Aikman submitted that the payment of the Legal Fees could not be regarded as necessary for, or incidental to, the purposes for which a strata company is constituted. They submitted that the object of a defamation action was, by its nature, personal to the plaintiff to that action and, for that reason, it could not be said that the payment of the Legal Fees of the third and fourth defendants was a proper use of the power vested in the first defendant or in the second defendant.[68]
[68] Plaintiff's Supplementary Submissions [29] ‑ [30].
My preliminary assessment is that Ms Aikman's claim in respect of s 32(3)(d) faces a number of difficulties, for the following reasons.
First, there is little authority in respect of the meaning of s 32(3)(d). The provision was considered in by Owen J in Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1][69] and in an appeal from his Honour's decision in Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2].[70]While those decisions establish some principles in relation to the operation of s 32(3)(d), there remain a number of unanswered questions about the operation of that section, which will arise for consideration in the present case.
[69] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1.
[70] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25.
Secondly, the starting point in considering the power of a strata company is that such bodies corporate have the capacity of a company registered under the corporations legislation, and thus the capacity of a natural person.[71]
[71] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [46].

While a strata company may have the capacity of a natural person, that capacity can be exercised or utilised only in relation to things that are necessary for, or incidental to, the purposes for which the company exists.[72] A question arises as to whether the power of a strata company depends on the purposes for which that particular strata company was constituted.[73]
[72] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [49]; Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [22].
[73] Cf the Supplementary Submissions of the First to Fourth Defendants [8]; and see also Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [49] ‑ [50].
Thirdly, even if all strata companies are considered to be constituted for the same purposes, broad and flexible powers would need to be afforded to a strata company given that the ST Act caters 'for a diverse range of ventures ranging from a simple, two lot residence to mixed purpose developments to resort or hotel complexes' (as in this case).[74]
[74] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] (2000) 24 WAR 1 [49] and Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] (2001) 24 WAR 25 [18] ‑ [19], [22], [27].
In addition, the words 'necessary for or incidental to' themselves import some flexibility. The word 'necessary' does not mean 'essential', but refers to 'what reasonably is necessary in a common-sense way'[75] and to what is 'reasonably required' in order to accomplish the purposes.[76] 'Incidental' means 'casually met with, or occurring in fortuitous or subordinate conjunction with, something else', and 'must be judged by reference to the whole of the arrangements and to the intentions of the parties'.[77]
[75] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [59].
[76] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [28].
[77] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [61]; see also Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [29].
Fourthly, a related question is whether the purposes for which a strata company is constituted need to be discerned from the ST Act. In Metro Inn Apartments, Owen J concluded that the purpose behind the management agreement in issue in that case was referable to the strata company's obligation to manage and control the common property (under s 35(1)(b)) and its express power to make agreements for the provision of services and amenities to proprietors (s 37(1)(g)). However, his Honour accepted that the purposes for which a strata company is constituted were not expressly stated in the Act, but that the purposes of a strata company encompassed all of the duties, powers and functions of a strata company which were recognised in the ST Act.[78] (The Full Court reached the same conclusion.[79])
[78] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [51].
[79] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [27].
However, neither Owen J, nor the Full Court, considered (nor was it necessary to do so to resolve the issues in dispute) whether a purpose for which a strata company was constituted may include purposes not reflected in the duties, powers or obligations of a strata company which are expressly set out in the Act. As that particular question was not argued, it is not appropriate to express any view on it at this stage, save to say that there is nothing to suggest that the matter is unarguable.
Fifthly, even if the purposes for which a strata company is constituted must be discerned from the ST Act, the provisions of the ST Act make clear that a strata company is not established for the sole purpose of the management and control of the common property of a strata plan.[80] Furthermore, the ST Act gives a strata company the power to make by-laws of a wide variety[81] including by-laws which, at least at first blush, appear to be unrelated to the strata company's management of the common property of the strata plan.[82]
[80] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [53], [54] ‑ [57].
[81] Strata Titles Act 1985 (WA) s 42.
[82] See, for example, items 13 and 14 of sch 2A to the Strata Titles Act 1985 (WA).
Sixthly, it is clear that the pursuit of litigation is not antithetical to the purposes for which a strata company is constituted per se. The ST Act expressly contemplates that a strata company may be a party to litigation,[83] and may commence litigation itself (such as an action brought against a proprietor for the recovery of unpaid contributions to the funds of the strata company[84]). The question then arises whether it is the conduct of litigation generally, or the particular piece of litigation in which a strata company is involved, that must be necessary for or incidental to the purposes for which the strata company is constituted.
[83] See, eg, Strata Titles Act 1985 (WA) s 33(1).
[84] Strata Titles Act 1985 (WA) s 36(4)(c).
In the latter respect, counsel for Ms Aikman submitted that funding the defamation proceedings could not be regarded as necessary or incidental to the purpose of maintaining the reputation of the property as desirable hotel accommodation (assuming that that could constitute a purpose for which the first defendant was constituted). In essence, his submission was that if the defamation proceedings were dismissed, that outcome would be adverse to the interests of the first defendant in that it would destroy the confidence of the proprietors in the management of the first defendant and, in turn, may diminish the reputation of the property.[85] That submission goes to the merits of funding the defamation proceedings, rather than to the question whether funding those proceedings is within the power of the first defendant. Litigation inevitably carries the risk of loss and of the adverse consequences of that loss, including in costs.
[85] ts 104.
The absence of any authority in respect of these questions means that it is very difficult to assess the strength of Ms Aikman's claim in respect of the power of the first defendant under s 32(3)(d). Doing the best I can, her case is clearly arguable, but its prospects are far from assured.

The claims based on alleged breaches of fiduciary duties

In my preliminary assessment, Ms Aikman's claims of breaches of fiduciary duties face significant hurdles and, for that reason, this aspect of her claim is weak, for the reason that:
(a)In so far as the first to fourth defendants are concerned, their relationships with the first defendant or the proprietors do not fall squarely, or at all, within the established categories of fiduciary relationships;
(b)In so far as the fifth defendant is concerned, the evidence adduced on the Application does not establish a prima facie case that the fifth defendant was retained by the first defendant and thereby stood in a fiduciary relationship;
(c)Significant hurdles appear to stand in the way of establishing that the relationships in question constitute fiduciary relationships;
(d)Many of the duties said to constitute fiduciary duties owed by the defendants are not in the nature of duties ordinarily identified as fiduciary duties; and
(e)There is no evidence to establish a prima facie case that the third, fourth or fifth defendants knew that payment of the Legal Fees was beyond the first defendant's power or was a breach of a fiduciary duty by the first defendant, or that the defendants were knowingly involved in assisting the other defendants to breach their fiduciary duties.
Each of these matters are considered, in turn, below.

(a) In so far as the first to fourth defendants are concerned, their relationships with the first defendant or the proprietors of the lots do not fall squarely, or at all, within the established categories of recognised fiduciary relationships

In many respects, Ms Aikman's claims that the defendants stand in a fiduciary relationship with either the first defendant and/or the proprietors, are novel.
A fiduciary relationship between two parties is usually identified as one which is characterised by a duty, and corresponding expectation, of loyalty from one party (the fiduciary) towards the other (the beneficiary). Fiduciary obligations have been held to arise in the context of certain relationships, such as between partners, solicitor and client, principal and agent, director and company, and employer and employee.[86]
[86] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 68 (Gibbs CJ), 96 (Mason J), 141 (Dawson J).
Outside those well-established categories, determining whether fiduciary obligations arise will depend on the identification of criteria indicative of the existence of a fiduciary relationship. The law on fiduciary duties in Australia is not yet settled and there is not a precise or comprehensive set of circumstances or criteria by reference to which fiduciary obligations will be imposed.[87] The circumstances which may point towards a fiduciary relationship include the existence of a relationship of confidence, inequality of bargaining power, the scope for one party unilaterally to exercise a discretion or power which may affect the rights or interests of the other, and a dependence or vulnerability on the part of one party that causes that party to rely on another.[88] None of these circumstances or criteria is individually determinative of the existence of a fiduciary duty.[89] However, one critical feature which must be present is that the fiduciary undertakes or agrees to act for, or on behalf of, another person, in the interests of that other person, in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense, and to the exclusion of the fiduciary's own interest.[90]
[87] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 68 (Gibbs CJ), 141 (Dawson J); Breen v Williams (1996) 186 CLR 71, 92 (Dawson & Toohey JJ), 106 (Gaudron & McHugh JJ).
[88] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 96 ‑ 97 (Mason J), 141 ‑ 1422 (Dawson J); Breen v Williams (1996) 186 CLR 71, 107 (Gaudron & McHugh JJ).
[89] Breen v Williams (1996) 186 CLR 71, 107 (Gaudron & McHugh JJ); Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 69 ‑ 70 (Gibbs CJ); Pilmer v Duke Group (In Liq) (2001) 207 CLR 165 [136] (Kirby J).
[90] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 96 ‑ 97 (Mason J), 141 ‑ 142 (Dawson J); Breen v Williams (1996) 186 CLR 71, 91 ‑ 92 (Dawson & Toohey JJ); Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 [177] (Finn, Stone & Perram JJ).
The defendants dispute the existence of the pleaded fiduciary relationships. Counsel for the first to fourth defendants recognised that there were some similarities between the relationships in this case and recognised categories of fiduciary relationships (for example, the similarity between the relationship of the second defendants to the first defendants, and that of company directors to the company itself[91]) but did not concede the existence of any of the fiduciary relationships pleaded. Mr Williams disputed the existence of any fiduciary relationship between the fifth defendant and the first defendant or the proprietors. I will deal with the position of the fifth defendant separately below.
[91] First to Fourth Defendants' Supplementary Submissions [20].
Ms Aikman's claim that the third defendant stands in a fiduciary relationship to the first defendant is clearly the strongest of her claims, in that that relationship appears to be one of, or akin to that of, agent and principal. (The third defendant has all the powers, authorities, duties and functions of the first and second defendants, pursuant to the Strata Management Agreement.[92]) However, there was little evidence bearing on the existence of any criteria indicative of the existence of a fiduciary relationship as between the second defendants and the first defendant, or between the fourth defendants and the first defendant.
[92] Annexure SRA5 to the first Aikman affidavit, 114.
Ms Aikman's claim that the second to fifth defendants also owed fiduciary duties to each of the proprietors was even more novel. Leaving to one side the position of the first defendant, there was little evidence relevant to the question whether the second to fourth defendants had undertaken to act in the interests of each of the proprietors, to the exclusion of their own interests, so as to give rise to a fiduciary relationship.

(b) In so far as the fifth defendant is concerned, the evidence adduced on the Application does not establish a prima facie case that the fifth defendant was retained by the first defendant and thereby stood in a fiduciary relationship

Ms Aikman's case that the fifth defendant is subject to a fiduciary duty to the first defendant (and in turn to the proprietors, including Ms Aikman) requires Ms Aikman to demonstrate that the fifth defendant was retained by the first defendant. The evidence relied upon by Ms Aikman did not clearly establish that the fifth defendant was retained by the first defendant.
Counsel for Ms Aikman pointed to several aspects of the evidence which he submitted supported the existence of a retainer, whether expressly or by inference.
First, they pointed to a letter dated 14 May 2015 from the fifth defendants to the third defendant which set out the terms by which the third defendant engaged the fifth defendants to act for it in the defamation proceedings.[93] Counsel for Ms Aikman submitted that because the third defendant was an agent of the first defendant, and because the first defendant paid for the Legal Fees, the proper inference was that the third defendant, acting as agent for the first defendant, retained the fifth defendant to act as its lawyers in the defamation proceedings.[94] In short, senior counsel for Ms Aikman submitted that 'there is a live issue as to whether [the fifth defendant was] retained by the third defendant [or whether] the third defendants … [retained the fifth defendant] as agent of the first defendant'.[95]
[93] Annexure MAT1 to the Taylor affidavit.
[94] Plaintiff's Supplementary Submissions [38].
[95] ts 29.
Secondly, counsel for Ms Aikman submitted that evidence in relation to the 2015 AGM demonstrated that Mr Williams of the fifth defendant attended that meeting and provided legal services to the first defendant and probably also to the second defendant. They relied on the fact that Mr Williams attended the 2015 AGM and provided some advice to the meeting. Senior counsel submitted that this was explicable only on the basis that the third defendant, acting as the agent for the first defendant, engaged the fifth defendant.[96]
[96] ts 20.
He identified several passages in the minutes which he submitted were consistent with Mr Williams attending in the capacity of a lawyer retained by the first defendant. He placed particular emphasis, however, on an observation made at the commencement of the 2015 AGM by Ms Knowles, the chair of the first defendant's Council of Owners, who told the meeting that there were two lawyers present at the meeting (one of whom was Mr Williams) and that they had attended 'at the request of the [second defendants]'.[97]
[97] ts 23; Annexure SRA5 to the second Aikman affidavit, 28.
Counsel for Ms Aikman submitted that Ms Aikman had an 'extremely strong case'[98] that the third defendant had engaged the fifth defendant, but that the third defendant did so in its capacity as an agent for the first defendant. With the greatest of respect to counsel, that conclusion represents one inference from the facts, but that is not the only inference which is open on the evidence.
[98] ts 106.
Thirdly, counsel for Ms Aikman submitted that it was apparent that, whether or not it had been formally retained by the first defendant, the fifth defendant was, by the time of the 2015 AGM, providing advice to the first defendant and the second defendant, and to the proprietors more generally.[99]
[99] ts 25.
Fourthly, counsel for Ms Aikman submitted that the second defendants told the proprietors that the second defendants, on behalf of the first defendant, had given instructions to commence the defamation proceedings in the name of the strata company.[100] Counsel for Ms Aikman pointed to a letter from Ms Knowles to the proprietors dated 27 July 2016.[101] Although the defamation proceedings were not ultimately commenced in the name of the first defendant, senior counsel for Ms Aikman submitted that it was 'telling' that the chairman of the Council of Owners told the proprietors that the second defendants had given instructions to commence the defamation proceedings.[102]
[100] Plaintiff's Supplementary Submissions [43].
[101] Annexure SRA11 to the first Aikman affidavit, 254.
[102] ts 118.
Furthermore, senior counsel for Ms Aikman noted that that letter from Ms Knowles advised the proprietors that 'having received advice from our solicitors, [the fourth defendants] were joined in the action'. He submitted that the reference to the solicitors in that context was clearly a reference to the fifth defendant.[103]
[103] ts 29.
There was also some other evidence capable of supporting an inference that the fifth defendant provided advice to the first or second defendants in relation to issues arising from the alleged publication of the Coombs Report, or in relation to the defamation proceedings. In the minutes of the 2016 AGM, one of the proprietors sought 'clarification on the Coombs Report and was advised that this report was provided under the SAT Orders and was private and confidential to those proceedings. The strata manager read legal advice from [the fifth defendant] regarding the status'.[104]
[104] Annexure STA10 to the first Aikman affidavit, 250.
Fifthly, counsel for Ms Aikman pointed to the fact that the fifth defendants are currently retained to act for the first defendant in other proceedings.[105]
[105] Plaintiff's Supplementary Submissions [44].
The fifth defendant denies that it has been retained by the first defendant in the defamation proceedings, and says that it acts only for the third and fourth defendants in the defamation proceedings. According to Ms Taylor's affidavit,[106] the fifth defendant does act for the first defendant in other proceedings unrelated to the present dispute. Ms Taylor deposed to the fact that other than in respect of that matter, the fifth defendant 'has not entered into any engagement with any party to these proceedings other than the engagement' that was the subject of the letter from the fifth defendant to the third defendant dated 14 May 2015.[107]
[106] Taylor affidavit [10].
[107] Taylor affidavit [10]; Annexure MAT1 to the Taylor affidavit, 4.
The terms of that letter make clear that the fifth defendant was engaged to act on behalf of the third defendant. That letter contains nothing which suggests, expressly, that the third defendant was acting as the agent for the first defendant when it engaged the fifth defendant.
As for what occurred at the 2015 AGM, Mr Williams submitted that passages from the transcript of the 2015 AGM could not be read in isolation. He submitted that when read in context, the minutes made clear that he attended the meeting at the request of the second defendants, made some 'observations' through the Chair in relation to the question of proxy votes, but that when legal advice was required about the conduct of the meeting, that advice was sought from Mr Kipping (of Torrens Legal) who was also present.

(b) Ms Aikman has not identified any irreparable harm or prejudice that she will suffer if the injunctive relief she seeks is not granted

The fifth defendant submitted that the relief sought by Ms Aikman does not preserve the status quo, but rather 'upends' it.[131] At least in so far as the relief sought extends to an injunction to compel the fifth defendant to repay the Legal Fees, there is no doubt that the relief sought goes well beyond the maintenance of the status quo, and in effect seeks relief equating to final relief.
[131] Fifth Defendant's Submissions [35].
Counsel for Ms Aikman did not identify any irreparable harm to Ms Aikman if the injunctive relief she seeks is not granted.
When pressed as to why what amounts to the final relief sought should be granted at this interlocutory stage, senior counsel for Ms Aikman did not place any reliance on a claim to prejudice or to irreparable harm which she would suffer if the relief were not granted. Instead, he submitted that:[132]
Our primary case is against the first defendant ... that it has done it [paid the legal fees] outside power or it has done it [in] breach of duty. That's going to be a clean case. The first defendant doesn't have any capacity to pay with any real money because whatever money it has is our money. …
… The only way … we can get any real money i.e. real damages is in pursuing one of the defendants to pay the money back to the first defendant which is part of what this case is about. … In order to do that, rather than stopping this hearing now we're put in a position of having to run complex and uncertain ‑ potentially complex and certainly uncertain litigation and that's for this reason. … [W]hen we get down the line in cases like this inevitably … the third defendant will say, 'Well, look, maybe there was a conflict, but there was fully informed consent to the first defendant or the first defendant acquiesced in this' or those sort of defences. So the third defendant is then in a position to put up defences arising from the conduct of the first defendant … And all of that then has to be thought out.
[132] ts 33 ‑ 34.
Ultimately, senior counsel for Ms Aikman submitted that the best argument for the grant of interlocutory injunctive relief was the strength of Ms Aikman's case, and the admission by Torrens Legal (in the letter referred to at [69]) that the indemnity provisions only applied if the third and fourth defendants were successful in the defamation action. As he put it: 'so, on their own admission, they're not entitled to be paid this money now and they've taken it.'[133] Given my preliminary assessment of the strength of Ms Aikman's case on whether the first defendant acted beyond its power, I am unable to accept that the strength of that case is so compelling, of itself, as to warrant the grant of the relief sought on the Application.
[133] ts 35, 36.
For the sake of completeness, I should add a further observation. The timing of the Application, and the fact that Ms Aikman sought an expedited trial and determination of her action, gave rise to the impression that the Application was brought with the aim of disrupting the trial of the defamation proceedings. When I asked senior counsel about that issue, he submitted that it could not be inferred that the present application had been brought in an attempt to stop the trial of the defamation proceedings. He submitted that the reason for the Application (in so far as it sought an expedited trial) was 'to stop the wrong'.[134] He submitted that 'the strength of the case is such that what really should be restored is the status quo, the status quo being that they had no entitlement to have these fees paid'.[135] He submitted that 'it's certainly not our expectation that [the grant of interlocutory injunctive relief] will stop [the trial] in any way, shape or form'.[136] In the end, it is not necessary to form any concluded view about that matter, given my view as to the weight of other considerations relevant to the balance of convenience. Accordingly, I have not taken this factor into account in reaching a conclusion on the balance of convenience.

(c) Ms Aikman has delayed making an application for injunctive relief.

[134] ts 31.

[135] ts 32.

[136] ts 32.

A factor which weighs heavily against the exercise of the Court's discretion to grant injunctive relief in this case is the delay on Ms Aikman's part in bringing the action and this Application. Ms Aikman's case was that there was no delay, as it was not until late July 2016 that she became aware that the first defendant was paying the Legal Fees.
Ms Aikman deposed that:[137]
[W]hilst there was suspicion that owners' funds were being used to pay the personal legal costs and expenses of the third and fourth defendants I did not have admissible evidence of that until I received a letter dated 27 July 2016 from Sue Knowles.
[137] Second Aikman affidavit [11].
Ms Aikman also deposed that 'at no time prior to or during [the] course of the [2025 AGM] was I informed which specific legal matters or legal work were the subject of the budgetary allowance of $25,000.'[138] Similarly, she deposed that 'at no time prior to the [2016 AGM], or during the course of it, was I informed which legal matters or legal work were the subject of the budgetary allowance of $25,000'.[139]
[138] Second Aikman affidavit [7].
[139] Second Aikman affidavit [10].
Counsel for Ms Aikman submitted that although the proposed budget which was considered at the 2015 AGM contained an allowance for 'Admin-Legal and Debt Collection Fees' of $25,000, 'the meeting was not told in plain terms or otherwise that the legal expenses were for the purpose of funding defamation actions to be brought by the third and fourth defendants'.[140] Counsel for Ms Aikman also submitted that in discussion of the allowance for legal fees which was made in the budget approved at the 2016 AGM, the disclosure of the purpose for that allowance 'was oblique'.[141] He also submitted that it was 'clear from these materials … that the fact that the [first defendant] was going to pay for the legal costs of actually commencing Supreme Court proceedings against various owners was hidden and was not revealed'[142] and that there was a 'pattern of coyness that went all the way through'.[143] (I digress to observe that it was far from clear why there would have been a need for such 'coyness'.)
[140] Plaintiff's Supplementary Submissions [53].
[141] Plaintiff's Supplementary Submissions [59].
[142] ts 110.
[143] ts 110.
For the reasons set out below, I am satisfied that the evidence strongly supports the conclusion that Ms Aikman knew, or should have known, that the Legal Fees were intended to be paid from as early as the 2015 AGM; that that knowledge was confirmed by correspondence she received thereafter, and, in any event, by the matters discussed at the 2016 AGM; and that she nevertheless did not commence her action until September 2016. In any event, even if, prior to July 2016, Ms Aikman had only a suspicion that the Legal Fees were being paid by the first defendant, it was within her power to have required that the first defendant provide her with information to confirm what the position was, and yet she failed to do so. The evidence on which I have relied in reaching these conclusions is discussed below.
First, the Notice of the 2015 AGM was in evidence. It indicated that one of the matters to be considered as special business was that 'the budget of estimated expenditure from the Maintenance Fund for the period from 1 April 2015 to 31 March 2016 be adopted as presented.'[144] The proposed Maintenance Budget, which accompanied that Notice, indicated that it was proposed that an allowance for 'Admin - Legal and Debt Collection Fees' of $25,000 be made, and a note to that allowance indicated that it was 'anticipated legal costs'.
[144] Annexure SRA6 to the first Aikman affidavit, 147.
Secondly, an extract from the transcript of the 2015 AGM was in evidence.[145] Ms Aikman was present at that meeting, and it appears that she took an active role in asking questions about the items on the agenda. It is also apparent from the extract of the transcript in evidence that the Coombs Report, and its alleged defamatory content, was discussed in two contexts.
[145] Annexure SRA5 to the second Aikman affidavit, 26.
The first context for the discussion appears to have been concerned with what the second defendant intended to do in response to the allegations contained in the Coombs Report. In the context of that discussion, it appears that Ms Aikman[146] referred to the fact that those alleged to have distributed the Coombs Report had received correspondence from the fifth defendant in relation to the alleged defamatory publication.[147]
[146] The transcript records the person making that observation as 'Ms Hagman', but counsel accepted that that appeared to be an error, and that references to Ms Hagman should be understood as Ms Aikman (ts 113).
[147] Second Aikman affidavit, 72, 74.
The second context for the discussion in relation to the alleged defamatory publication of the Coombs Report concerned the proposed allowance in the first defendant's budget of $25,000 for 'Admin - Legal Costs'. A question was asked about the anticipated legal costs underlying that proposed allowance, and the following discussion ensued:
Mr … : We have got a $25,000 allowance for anticipated legal costs. I don't know what they are, but I do know you have an agenda item where you are actually ‑ 9(a) ‑ proposing to claim costs from opposing claims. … .
Mr … :Well, because we need ‑ firstly, we need to incur the cost and then if the - whatever legal action is taken is successful then it's recovered under the proposals under item number 9.
Mr … :So you are saying that those costs will be incurred as you go?
Mr … :Yes.
Mr … :And what are these legal actions relating to and what benefit is it to all the investors? I just want to be clear that we're not just throwing money away for something.
Ms Knowles:      They are in relation to distribution of material relating to the Coombs' report and allegations that have been made against certain individuals and Accommodation West and as a consequence they are defamatory.
Mr … :Fine. I don't believe they impact every investor in here … so I want to raise I have a concern with that.
Ms [Aikman]:     Don't you have professional indemnity?
Ms Knowles:      Your next question, sir?
Mr … :Well, I think before we start charging every investor, the parties involved should actually try and resolve it because the aim here is to get our costs down. …
Ms Knowles:      And, unfortunately, the actions and statements that have been made by certain individuals have caused this impose on the other owners and that's why action has had to be taken.
Mr … :Yes. Well, I don't know that the other owners are freely wanting to get involved in that because you also have a $7000 item related to SAT issues.'
The minutes of the 2015 AGM were also in evidence.[148] The minutes of the above discussion appear to be as follows:
Mr Botteon questioned legal costs in budget and potential recovery under Agenda item 9. The Chairman advised they related to distribution of material relating to coombs Report and allegations made against certain individuals and Accommodation West which are considered defamatory. He expressed concern at costs for owners and suggested the parties should resolve the issues.
[148] Annexure SRA7 to the first Aikman affidavit, 184.
The 2015 AGM minutes go on to indicate that the motion (that the budget of estimated expenditure from the Maintenance Fund for the period 1 April 2015 to 31 March 2016 be adopted as presented) was put and carried by 55 (59) votes to 7 (11).[149]
[149] Annexure SRA7 to the first Aikman affidavit, 185.
Thirdly, shortly after the 2015 AGM was held, and after the defamation proceedings were commenced on 9 July 2015, the Chairman of the second defendant, Ms Knowles, wrote to the proprietors. Her letter, dated 31 July 2015, was in evidence.[150] It stated, amongst other things:
This letter accompanies the minutes of the annual general meeting held in June, as the Council of Owners believe you should be informed of some of the events surrounding that meeting.
…
Budget
I draw your attention in the Minutes to the regrettable increase in the strata budget with respect to:
(a)The provision of legal fees associated with potential litigation;
(b)Additional strata management costs associated with the State Administrative Tribunal (SAT) matters, and
(c)Proposed audit fees.
[150] Annexure SRA8 to the first Aikman affidavit, 206.
That letter drew to the attention of the proprietors (including Ms Aikman) that the budget that was approved included a provision for legal fees associated with what was (as the time of the 2015 AGM) potential litigation. By the time that this letter was sent to the proprietors that litigation was no longer merely potential ‑ the defamation proceedings had been commenced. Ms Aikman was a defendant to those proceedings.
These three pieces of evidence strongly support the conclusion that by the time of the 2015 AGM in June 2015, and certainly by the time of Ms Knowles' letter of 31 July 2015, it must have been apparent to Ms Aikman that it was intended that the first defendant would meet the costs of the defamation proceedings that had been foreshadowed at the 2015 AGM. It may be, as counsel for Ms Aikman submitted, that the precise details of the defamation proceedings were not spelled out for those attending the 2015 AGM, but there can be no doubt that Ms Aikman was aware of the concern on the part of the second, third and fourth defendants that the alleged defamatory publication arising from the alleged dissemination of the Coombs Report should cease (and there was some evidence to suggest that she had received correspondence from the fifth defendant in relation to that matter in May 2015)[151] as she was named as a defendant to the writ in the defamation proceedings, and, presumably, was served with the writ shortly after 9 July 2015. Consequently, it is difficult to see how it would not have been apparent to Ms Aikman, by the end of July 2015, that the 'legal proceedings' for which allowance was made in the first defendant's budget at the 2015 AGM were the defamation proceedings.
[151] SRA11 to the first Aikman affidavit (at 254) indicates that following the alleged publication of the Coombs Report, the fifth defendants wrote to the parties alleged to have been responsible for that publication. One of those parties appears to have been Ms Aikman. A copy of the letter sent to another of the parties alleged to have disseminated the Coombs Report was also in evidence. It was sent on 29 May 2015: see SRA1 to the second Aikman affidavit.
In any event, that knowledge was confirmed by the discussions held at the 2016 AGM, and correspondence sent to the proprietors thereafter.
The Notice of the 2016 AGM was also in evidence. The items for discussion included the budget of estimated expenditure for the Maintenance Fund from 1 April 2016 to 31 March 2017, and a Variance Analysis on expenditure from 1 April 2015 to 31 March 2016. The proposed maintenance budget included an allowance of $25,000 for 'Admin ‑ Legal and Debt Collection Fees', and noted that the actual expenditure for the preceding year for that item was $46,239.32 (an increase of $21,239.32 above that allowed for tin the budget). The Variance Analysis for the year ended 31 March 2016 indicated that the variance was attributable to 'Supreme Court Orohoe / Aikman', which is clearly a reference to the defamation proceedings.
Even if Ms Aikman was not previously aware that the first defendant had been paying the Legal Fees, that position was made very clear from the point at which she received the Notice of the 2016 AGM and the accompanying documentation.
The minutes of the 2016 AGM were also in evidence.[152] The minutes record that Ms Aikman was present at that meeting, as was Mr Kipping, a solicitor who appears to have been acting for the first and second defendants. The minutes indicate that there was discussion of matters arising from the minutes of the 2015 AGM, including in relation to payment of the legal fees. According to the minutes of the 2016 AGM:[153]
[Mr Beyer] questioned the authority of the strata and council to pay legal fees for litigation brought against some owners when the by-laws as passed specify defensive action only that can be funded. He considered the actions which had been brought against the owners were personal actions and the by-law did not give authority to do so.
…
Mr Kipping stated his understanding that the costs question referred to where not taken under that by-law and referred to indemnities held under the strata management agreement and the actions taken relate to allegations and dealings made that surround the performance of works under the strata management agreement and that is the basis under which the strata company has funded the actions.
In response to comments from Mr Beyer the Chairman informed him that if he had objections to the manner in which the matters were being conducted there were avenues and vehicles for him to pursue these matters and invited him to do so but it was not the business of this meeting.
[152] Annexure STA10 to the first Aikman affidavit, 243.
[153] Annexure STA10 to the first Aikman affidavit, 245.
There was then discussion of the financial statements of the first defendant for the year ending 31 March 2016. The minutes indicate:[154]
Ms Aikman queried the amount of legal fees compared to budget. It was confirmed that the accrual mentioned above [this appears to be a reference to the accrual of unpaid audit and legal fees, brought to account but not paid as at 31 March 2016] was included in the amount shown under expenditure in the administration fund expenses.
[154] Annexure STA10 to the first Aikman affidavit, 246.
Finally, the minutes record the discussion of the proposed budget for the period 1 April 2016 to 31 March 2017. They record that the motion to adopt the budget as presented was put and carried.
The minutes also record that:[155]
Ms Aikman was given permission by the Chairman to read from a prepared statement regarding strata monies being spent regarding legal expenses.
[155] Annexure STA10 to the first Aikman affidavit, 249.
The minutes leave no doubt that by the time of the 2016 AGM, Ms Aikman was aware that the first defendant was paying the Legal Fees.
Ms Aikman says that the first occasion on which she was made aware that the first defendant was paying the legal costs of the third and fourth defendants in the defamation proceedings was when she received a letter dated 27 July 2016 from Ms Knowles to the proprietors.[156]
[156] Annexure SRA11 to the first Aikman affidavit, 252.
Upon the receipt of that letter, Ms Aikman's solicitors wrote to Ms Knowles demanding that the second defendant provide written undertakings not to continue to fund the defamation proceedings.[157] Torrens Legal responded to that letter, by a letter dated 17 August 2016.[158] (The terms of that letter are set out at [69].)
[157] Annexure SRA12 to the first Aikman affidavit, 257.
[158] Annexure SRA12 to the first Aikman affidavit, 265.
Nevertheless, the present action was not commenced until 9 September 2016.
No adequate explanation has been offered for the delay in commencing the action, and the Application, apart from Ms Aikman's knowledge about payment of the Legal Fees.
Finally, even if Ms Aikman merely had a 'suspicion' that the first defendant was paying the Legal Fees, it appears that it would have been open to her to exercise her right as a proprietor under s 43 of the ST Act, to make a written request of the first defendant to inspect the books of account of the first defendant or other records of the first defendant bearing on any payment to the fifth defendant. There was no evidence that she did so.

There was some evidence that Ms Aikman's solicitor had asked the first and fifth defendants to provide copies of the invoices for the Legal Fees.[159] However, there was no evidence as to when that request was made. It does not, in any event, appear to be a request made in the exercise of Ms Aikman's right of inspection under s 43 of the ST Act.
[159] First Aikman affidavit [34].

Why interlocutory injunctive relief should not be granted

I am not persuaded that the interlocutory injunctive relief Ms Aikman seeks should be granted. My preliminary assessment of the strength of her case overall is that it is merely reasonable. Her claims of breach of fiduciary duty are weak, and it is those claims that are relied upon to seek orders to compel the repayment of the Legal Fees.
The balance of convenience weighs heavily against the grant of injunctive relief, taking into account the fact that Ms Aikman has not demonstrated that she will suffer irreparable harm or prejudice if it is not granted or that damages would be an inadequate alternative remedy, and the fact that Ms Aikman has delayed in bringing the action and the Injunction Application. When those matters are considered as a whole, I am not persuaded that the strength of Ms Aikman's case is such as to warrant the grant of injunctive relief, notwithstanding where the balance of convenience lies. That is particularly so given that to grant the injunctive relief sought at this point will have the effect of giving Ms Aikman the final relief that she seeks, without the defendants having had the opportunity to advance a defence at a trial.
I have also considered whether an injunction should be granted simply to restrain the first defendant from paying any further Legal Fees. Ms Aikman's claim that the payment of the Legal Fees is beyond the power of the first defendant is reasonably strong, but even so, I am not persuaded that it is sufficiently strong as to warrant the grant of an injunction when the balance of convenience factors to which I have referred weigh against the grant of relief at this point.
The Injunction Application should be dismissed.

Why an order for an expedited trial should not be made

Initially, an order for an expedited trial was the relief that Ms Aikman sought 'first and foremost'.[160] However, by the time of the hearing of the Application, Ms Aikman's application for an expedited hearing was only faintly pressed, although not abandoned, by counsel.
[160] Plaintiff's Submissions [1].
There is no doubt that the Court has the power to order that an action should proceed to trial on an urgent basis, in an appropriate case. The Rules of the Supreme Court 1971 (WA) (RSC) now make express reference to the objects of eliminating delay and to the timely disposal of cases.[161] Particularly for cases in the Commercial and Managed Cases List (as this action is), the Court's processes are sufficiently flexible to facilitate an urgent hearing if that is required. But expedition, in and of itself, cannot be at the expense of the fair and just determination of the issues in dispute between parties.[162] In determining whether an action should proceed to trial on an urgent basis, in a case where that course is opposed, it will be necessary for the Court to weigh up the potential for injustice to the plaintiff and to the defendant if an order for an urgent trial is granted, bearing in mind that such an application will result in priority being given to the action in question, as opposed to other matters in the Court's list.[163]
[161] Rules of the Supreme Court 1971 (WA) O 1 r 4A and r 4B.
[162] Cf Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 [57].
[163] Cf Fels v Davies [2013] WASCA 42 [9].
As counsel for the fifth defendant submitted, Ms Aikman sought that the present action be determined with an 'extreme level' of expedition.[164]
[164] Fifth Defendant's Submissions [5].
As I have already indicated above at [2], I dismissed the application for expedition at the conclusion of the hearing of the Application. These are my reasons for having done so.

(a) No need for expedition was shown

For the reasons outlined at [150] - [152], I am not persuaded that Ms Aikman will suffer any, or any material, prejudice if an order for an expedited trial and determination of the action is not made.
Counsel for Ms Aikman submitted that a number of considerations would be relevant to whether the action should proceed to trial on an urgent basis, namely, whether this Court is the appropriate Court for the litigation; whether there were special factors involved which warrant expedition; whether the parties have proceeded with due speed; whether the parties are willing, if an expedited trial is ordered, to do all in their power to abridge the hearing time; other cases warranting equal or higher priority in the Court's available hearing time; and that what is involved is the fixing of the action for hearing on one occasion (so that if that hearing date has to be vacated, it will be difficult to justify a further expedited hearing date being set).[165]
[165] Plaintiff's Submissions [4].
Counsel for Ms Aikman pointed to five factors which warranted an expedited trial in this case. In my view, neither individually nor collectively do they warrant the significantly expedited hearing and determination that Ms Aikman seeks.
First, counsel for Ms Aikman submitted that the subject matter was one of considerable importance (involving allegations of financial impropriety on the part of the first to fourth defendants and breaches of fiduciary duty arising from a conflict of interest on the part of the fifth defendant).[166] Every case is significant for the litigants involved. This case is no different. But, as compared with other cases in the Court's list, this case does not have a special or unusual importance or significance which warrants the urgent hearing and determination which is sought.
[166] Plaintiff's Submissions [14].
Secondly, counsel for Ms Aikman submitted that the substance of the litigation would be lost if it were not heard quickly (in that the first defendant has no capacity to repay funds improperly paid out of the Administrative Fund).[167] For the reasons outlined above at [146] I do not accept that that is so.
[167] Plaintiff's Submissions [15].
Thirdly, counsel for Ms Aikman submitted that the payment by the first defendant of the Legal Fees 'causes significant disadvantage, even hardship, to the plaintiff'[168] in that 'absent an order for expedition … the consequence will be that the defamation trial will proceed in anything but a fair manner'.[169] There was absolutely nothing to suggest that the defamation trial itself will proceed in an unfair manner if the first defendant is not restrained from funding the defamation proceedings. If that really were likely, no doubt counsel for Ms Aikman would have drawn that to the attention of the trial judge in the defamation proceedings.
[168] Plaintiff's Submissions [16].
[169] Plaintiff's Submissions [16].
Furthermore, in view of the express disavowal by counsel for Ms Aikman that this Application was intended to in any way interfere with the defamation proceedings, the claim that the defamation trial will proceed in an unfair manner deserves no weight.
Fourthly, counsel for Ms Aikman submitted that the nature of the case warranted an expedited trial, in that the Court should not allow a fiduciary to continue to breach its duties and should act quickly to prevent foreshadowed breaches of fiduciary duties.[170] Given my preliminary assessment of the strength of Ms Aikman's claims of breaches of fiduciary duties, this factor does not warrant the extreme expedition that is sought.
[170] Plaintiff's Submissions [17].
Fifthly, it was submitted that the sums of money involved were of some significance and that Ms Aikman was effectively contributing towards the legal costs of her opponents in the defamation proceedings.[171] The total of the Legal Fees which have been paid, and are anticipated to be incurred, in the defamation proceedings are not insignificant. But to the extent that Ms Aikman can be said to be contributing to the costs of her opponents, it needs to borne in mind that the funds in the Administrative Fund (if that is in fact the source of the payment for the Legal Fees) represent the contributions of all of the proprietors. Ms Aikman's contributions would appear to comprise only a very small percentage of what is in that account.
[171] Plaintiff's Submissions [18].
In addition to my consideration of the factors above, it is my view that an expedited trial and determination of this action, in advance of the defamation proceedings, is not warranted, for two further reasons.

(b) Likelihood of prejudice to the defendants

Ms Aikman sought to have the present action prepared for trial, tried and determined prior to the commencement of the trial in the defamation proceedings, on 23 November 2016. In effect, then, what was sought was that the Court set a timetable to enable the completion of the pleadings, discovery, preparation of documentary and oral evidence, return of any subpoenas, trial, and the delivery of reasons, all within the 14‑day period between the conclusion of the hearing of the Application, and the commencement of the trial in the defamation proceedings.
Counsel for the first to fourth defendants submitted that it was difficult to see how those necessary steps could be completed prior to the commencement of the trial of the defamation proceedings.[172]
[172] First to Fourth Defendants' Submissions [25].
Counsel for the fifth defendant went further and submitted that it was a 'practical impossibility'[173] for the present proceedings to be heard and determined in that timeframe. I am inclined to agree, particularly as I doubt the accuracy of the two‑day estimate given by counsel for Ms Aikman of the likely duration of the trial, in view of the number and novelty of the issues, the fact that it is apparent that further evidence will be adduced at the trial, and the likelihood that witnesses will need to be cross examined. I agree with the submission of counsel for the first to fourth defendants that this case cannot be described as 'factually straightforward' or that it turns only on a point of construction or of law.[174]
[173] Fifth Defendant's Submissions [8].
[174] First to Fourth Defendants' Submissions [27].
Counsel for the defendants submitted that all of their clients would be prejudiced by the proceedings being progressed to trial with such undue haste.[175]
[175] First to Fourth Defendants' Submissions [26]; Fifth Defendant's Submissions [10].
In addition, in his first affidavit, Mr Getta deposed that there would be practical difficulties in accessing relevant witnesses in that period.[176]
[176] First Getta affidavit [61] ‑ [65].
In my view, to proceed to trial with the expedition that is sought would be very likely to give rise to prejudice to the defendants, in that they will have insufficient time to prepare their defences. An expedited timetable and trial should not be ordered at the expense of a just trial.

(c) Delay

For the reasons outlined above at [156] - [183], Ms Aikman's delay in commencing these proceedings weighs heavily against the grant of the orders for expedition which are sought.

The plaintiff's objections to the first Getta affidavit

For the sake of completeness, it is appropriate to briefly set out my conclusions in respect of the objections raised in respect of parts of the first Getta affidavit.
Before turning to those objections, it is appropriate to observe that objections to evidence are often made because affidavits are simply not drafted with the care and attention that the Court is entitled to expect. That appears to have been the case in respect of parts of the first Getta affidavit. At the same time, however, it is very common in this Court to see objections made to paragraphs of affidavits containing information which is not in dispute, or is inconsequential. Some objections of that nature were made in this case.[177] Even if an objection might, strictly speaking, be made in such a case, in a civil case it is difficult to see what point there is in spending time (and a client's money) in making, much less dealing with, objections to such material.
[177] For example, first Getta affidavit [5], [8], [39], [40], [42], [43], [45], [46], [47], [48].
Ms Aikman objected to paragraphs 5, 8, 9, 11, 20, 21, 22, 24, 29, 31, 32, 33, 38, 40, 42, 43, 44, 45, 46, 47, 48, 55, 56, 59, 60 and 63 of the first Getta affidavit on the ground that those paragraphs contained 'hearsay not on information and belief'. Most of those paragraphs set out what Mr Getta has been told by Mr Rakich (or by Mr Rakich and Mr King[178]). (It is not apparent why Mr Rakich and Mr King were unable to swear affidavits themselves, and depose to their first‑hand knowledge, which would have been the preferable course.[179] But that is not to the point for present purposes.)
[178] First Getta affidavit [63].
[179] Birch Investments Pty Ltd v Kiap Khee Lim (Unreported, WASC, Library No 7396, 12 July 1988) White J; Independent Corporate Service Ltd v Stevens [2002] WASC 280 [85].
The objections on the ground of hearsay should be dismissed. Most of the paragraphs to which objection is made on this basis do contain hearsay material but are admissible for the purposes of the present interlocutory application pursuant to O 37 r 6(2)(c) RSC. Under the Rules, an affidavit which contains hearsay must state the source or grounds of that information or belief,[180] and if it does not, statements of information and belief will be inadmissible.[181] With the exception of one or two paragraphs[182] (the contents of which appear to be inconsequential), Mr Getta either expressly refers to the source of his information and belief, or the source is tolerably clear from the immediate context.[183] While Mr Getta refers to the sources of his statements of information and belief, he does not, on each occasion, express in the preferable form[184] his belief that the information in question is true. However, at the outset of his affidavit, Mr Getta deposes that where he refers to sources of his information and belief, he believes the facts and circumstances deposed to are true on the basis that he has no reason to doubt that the sources are reliable.[185] I am satisfied that overall there has been compliance with the requirements of the Rules in respect of hearsay evidence.
[180] Rules of the Supreme Court 1971 (WA) O 37 r 6(3A); Blythe v State of Western Australia [2008] WASCA 10 [43] (the Court); Lewkowski v Bergalin Pty Ltd (Unreported, WASC, Library No 7675, 26 May 1989).
[181] Re JL Manufacturing Co Ltd [1900] 2 Ch 753, 754 (Lord Alverstone CJ).
[182] See first Getta affidavit [8], [31] ‑ [33].
[183] See, for example, the first Getta affidavit [29].
[184] See Blythe v State of Western Australia [2008] WASCA 10 [43] (the Court).
[185] First Getta affidavit [4].
Ms Aikman objects to paragraphs 9, 20, 23, 24, 25, 31, 32, 33, 34, 44, 45, 55, 59 and 60 on the basis that they constitute conclusions or argument. That objection should be upheld in respect of par 9, which sets out Mr Rakich's (irrelevant) view as to what Ms Aikman ought to have known in particular circumstances. The objections in respect of paragraphs 20, 23 ‑ 25, 31 ‑ 33, 55, 59 and 60 at first blush appear to have merit. However, in the end I have concluded that despite the poor drafting, what is really intended in those paragraphs is to identify the defence(s) that the first to fourth defendants presently propose to advance (going, as they do, to matters such as Ms Aikman's standing, the jurisdiction of the SAT to deal with claims of the kind made by Ms Aikman in this case, and the powers and duties of the first defendant). I have received these paragraphs solely for that purpose, and not as establishing the 'facts' set out therein.
Paragraphs 34, 44 and 45 do not constitute conclusion or argument. They contain facts which appear to be relevant to the question of the balance of convenience, the need for expedition, and to whether and when Ms Aikman had knowledge (and the extent of her knowledge) of the purpose for which funds levied for the payment of legal costs were to be paid (going to the question of delay in bringing the present application). They are admissible.
Paragraphs 10, 11, 22, 24, 59 and 60 are objected to on the grounds of irrelevance. Paragraphs 10, 11 and 22 are inadmissible on that basis. Paragraphs 24, 59 and 60 are admissible on the alternative basis (discussed at [213] above).
Paragraphs 28, 29, 30, 35, 36 and 39 are objected to on the basis that they constitute 'commentary on documents'. That objection is dismissed. It has no foundation in respect of paragraph 28, and while it is the case that, in the remainder of the paragraphs in question, Mr Getta refers to the particular information in the documents to which he wishes to draw the Court's attention, in my view, he does not do so in a manner that warrants the paragraph being excluded.

Conclusion

The Application will be dismissed.
I will hear from the parties as to the question of costs.

Details

AGLC: Aikman v The Owners of Strata Plan 48817 - 16 Dolphin Drive Mandurah [2016] WASC 380
Case: [2016] WASC 380
Decision Date: 18 NOVEMBER 2016

CaseChat Overview and Summary

The case of Aikman v The Owners of Strata Plan 48817 involves a dispute between Ms Aikman, a proprietor of a lot in the Seashells Resort, and several defendants, including the strata company, the council of owners, the strata manager, and a firm of solicitors. Ms Aikman seeks an interlocutory mandatory injunction to prevent the use of funds from the strata company to pay for legal fees related to defamation proceedings brought by the strata manager and an employee against her. The primary legal issues addressed by the court include whether damages would be an adequate remedy, whether Ms Aikman will suffer irreparable harm if the injunction is not granted, and whether the delay in bringing the application warrants refusal of the injunction.

The court considered that the relief sought by Ms Aikman in the interlocutory application was effectively the same as the final relief she sought in the action. The court noted that damages could be an adequate remedy for Ms Aikman, as she could seek reimbursement of the legal fees from the defendants if found liable. Additionally, the court found that the delay in bringing the application and the lack of evidence that Ms Aikman would suffer irreparable harm if the injunction was not granted were significant factors. The court concluded that it was not satisfied that the balance of convenience favoured Ms Aikman, and thus, the application for an interlocutory mandatory injunction was dismissed.

Further, the court assessed the application for an order for an expedited trial. It was determined that there were no special factors that warranted an expedited trial and that neither party would suffer injustice if the trial proceeded at the normal pace. The court found that the parties had not proceeded with due speed and that there was no risk the substance of the litigation would be lost if the trial was not expedited. Consequently, the application for an expedited trial was also dismissed. The final orders of the court reflected these conclusions, denying both the interlocutory mandatory injunction and the order for an expedited trial.

Orders

Orders of the court

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Background

Background to the litigation

Factual background In support of the Application, counsel for Ms Aikman read affidavits sworn by Ms Aikman on 8 September 2016 (the first Aikman affidavit) and 19 October 2016 (the second Aikman affidavit) and an affidavit sworn by Mr Barrie Goldsmith, Ms Aikman's solicitor, on 2 November 2016.[1][1] ts 14. Counsel for the first to fourth defendants read affidavits sworn by Mr Maciej Matuesz Getta, a solicitor employed by the first to fourth defendants' solicitors, on 1 November 2016 (the first Getta affidavit) and 3 November 2016 (the second Getta affidavit). Counsel for Ms Aikman objected to numerous paragraphs of the first Getta affidavit. Those objections are addressed at the end of these reasons. Counsel for the fifth defendants read an affidavit affirmed by Ms Michelle Anne Taylor, a solicitor employed by the fifth defendants, on 1 November 2016 (the Taylor affidavit). The parties' submissions largely focused on the factual material set out in, and documents annexed to, the first and second Aikman affidavits. The following facts are not contentious. The first defendant is the strata company incorporated pursuant to the Strata Titles Act 1985 (WA) (the ST Act) in respect of a strata property at 16 Dolphin Drive, Mandurah, known as the Seashells Resort (the property). The property comprises numerous lots, some used by short‑stay visitors, others for commercial purposes, and others by long‑term residents. Ms Aikman is the proprietor of one of the lots in the property. The second defendants comprise the Council of Owners of the first defendant. The first defendant levies the proprietors of the lots at the property (the proprietors) to accumulate and maintain a fund to cover the administrative expenses of the first defendant (the Administrative Fund), which is sometimes referred to as the Maintenance Fund, and a fund for more substantial expenses (the Reserve Fund). The third defendant is a company engaged by the first defendant as the strata manager, on-site manager and caretaker of the property, pursuant to three agreements dated 17 March 2006: the Management Agreement, the On‑Site Managers Agreement and the Caretaking Agreement (collectively, the Agreements).[2] [2] Annexure SRA5 to the first Aikman affidavit. The first and second-named fourth defendants are a director and employee, respectively, of the third defendant, and both are also proprietors. The fifth defendant is a firm of solicitors which acts for the third and fourth defendants in defamation proceedings brought by the third and fourth defendants against Ms Aikman in this Court (the defamation proceedings). Mr Williams is a partner in the fifth defendant and appeared as counsel for the fifth defendant at the hearing of the Application. It is necessary to say something about the defamation proceedings, because those proceedings have been the catalyst for the present action. It appears that there is an ongoing dispute between some of the proprietors, and the second, third and fourth defendants in relation to the operation and maintenance of the property. That dispute has been manifested in proceedings commenced by some of the proprietors against the first defendant in the State Administrative Tribunal (SAT). It appears that in the course of the SAT proceedings a report was prepared by a firm of accountants pursuant to an order of the SAT (the Coombs Report). The Coombs Report contained expressions of opinion by its author in relation to the management of the property.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

There is no dispute that the legal fees incurred by the third and fourth defendants for the legal services performed by the fifth defendants in the defamation proceedings (the Legal Fees) have been paid out of the funds of the first defendant.[3] However, counsel for the first to fourth defendants did not make any concession as to the source of the payments (that is, whether they came from the Administrative Fund or elsewhere).[4] (I note that the ST Act does not preclude a strata company from establishing accounts other than the administrative fund or the reserve fund referred to in s 36 of the ST Act.[5])[3] ts 7.[4] ts 7.[5] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [54] (Grove AJ, Malcolm CJ & Steytler J agreeing); Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [54] (Owen J). There also does not appear to be any dispute that at the annual general meeting of the first defendant on 4 June 2015 (the 2015 AGM) it was resolved that there should be included in the budget for the first defendant's operations for the following year an allocation of $25,000 for 'Admin ‑ Legal and Debt Collection Fees' (the 2015 Resolution). It does not appear to be in dispute that an identical resolution for expenditure in the following year (the 2016 Resolution) was passed at the annual general meeting of the first defendant on 16 June 2016 (the 2016 AGM). Ms Aikman's concern is that as a result of the 2015 Resolution and the 2016 Resolution, the funds of the first defendant (which include contributions levied from her as a proprietor) have been used by the first and second defendants to fund the defamation proceedings brought against her by the third and fourth defendants. Ms Aikman's action against each of the defendants, as presently pleaded, is summarised below. Ms Aikman alleges that the allowances included in the first defendant's budget by virtue of the 2015 Resolution and the 2016 Resolution were intended to, and did, cover legal costs and expenses incurred, or to be incurred, in connection with the defamation proceedings (that is, the Legal Fees).[6] Ms Aikman pleads that the defamation proceedings are, by their nature, personal to the third and fourth defendants, and that neither the first defendant nor the proprietors as a whole have any interest in the defamation proceedings.[7][6] Amended Statement of Claim [16], [23].[7] Amended Statement of Claim [10]. Ms Aikman alleges that the defendants all knew or ought to have known that the purpose of the 'Admin ‑ Legal and Debt Collection Fees' allowance (the Allowance) in the first defendant's budget was to pay for legal costs and expenses to be incurred in the defamation proceedings or other defamation matters.[8][8] Amended Statement of Claim [17], [24]. Ms Aikman alleges that the 2015 Resolution and the 2016 Resolution were beyond the power of the first defendant because the payment of the Legal Fees was a payment made in breach of the first defendant's powers or duties as conferred by the ST Act or the by-laws of the first defendant.[9] [9] Amended Statement of Claim [21], [28].

Actions

Citations

Aikman v The Owners of Strata Plan 48817 - 16 Dolphin Drive Mandurah [2016] WASC 380

Most Recent Citation

Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 13] [2016] WASC 403

Cases Citing This Decision

LEGAL PROFESSION COMPLAINTS COMMITTEE and GOLDSMITH [2022] WASAT 43
Citation 1 (Para 7)

…led on 18 October 2016. It had been amended twice by 27 October 2016.[8] [8] See Aikman v The Owners of Strata Plan 48817 - 16 Dolphin Drive Mandurah [2016] WASC 380 ( Reasons ) at [19].…
Liquorland (Australia) Pty Ltd v Director of Liquor Licensing [2021] WASC 221
Citation 2 (Para 2)

…to the action in question, as opposed to other matters in the Court's list. [2] Aikman v The Owners of Strata Plan 48817 - 16 Dolphin Drive Mandurah [2016] WASC 380. [3] As her Honour was then. [4] Aikman [188].…
Stanich v BankWest a Division of Commonwealth Bank of Australia [2019] WASC 357
Citation 3 (Para 6)

…s ‑ in particular by Prodale. [9] Foss v Harbottle (1843) 2 Hare 461; 67 ER 189; Aikman v Owners of Strata Plan 48817 – 17 Dolphin Drive Mandurah [2016] WASC 380 [133].…
Mineralogy Pty Ltd v Sino Iron Pty Ltd [No 13] [2016] WASC 403
Citation 4

…15) 1 WLR 771 Action Cycles Pty Ltd (recs and mgrs apptd) v Ross [2011] VSCA 411 Aikman v The Owners of Strata Plan 48817 - 16 Dolphin Drive Mandurah [2016] WASC 380 Ailakis v Olivero [No 2] [2014] WASCA 127 American Cyanamid Co v Ethicon Ltd [1975] AC 396 Anaconda Nickel Ltd v Tarmoola Australia Pty Ltd [2000] WA…
JANEBA and THE OWNERS OF BULIMBA GROVE VILLA STRATA PLAN 3266 [2021] WASAT 14
Citation 5 (Para 1)

…red reasonably required or legally ancillary: see observations by Pritchard J in Aikman v The Owners of Strata Plan 48817 - 16 Dolphin Drive Mandurah [2016] WASC 380 ( Aikman ) at [95].…

Cases Cited

Statutory Material Cited

Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105
Citation 1 (Para 1)

…ief are related, not independent, questions: Warner-Lambert Co LCC v Apotex Pty Ltd [2014] FCAFC 59 [70]. [41] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87].…
Warner-Lambert Company LLC v Apotex Pty Ltd [2014] FCAFC 59
Citation 2 (Para 1)

…d whether the balance of convenience favours the grant of such relief are related, not independent, questions: Warner-Lambert Co LCC v Apotex Pty Ltd [2014] FCAFC 59 [70]. [41] Mineralogy Pty Ltd v Sino Iron Pty Ltd [2016] WASCA 105 [87].…
Eastmark Holdings Pty Ltd v Kabraji [2013] NSWSC 1763
Citation 3

…trata Plan 53020 [2003] NSWSC 397; (2003) 58 NSWLR 302 Cayne v Global Natural Resources PLC [1984] 1 All ER 225 Eastmark Holdings Pty Ltd v Kabraji [2013] NSWSC 1763 Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 Fels v Davies [2013]…
Samsung Electronics Co Ltd v Apple Inc [2013] FCAFC 138
Citation 4 (Para 2)

…of such an application. In that respect, as the Full Court of the Federal Court observed in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 [59], it is not enough simply to conclude that the plaintiff has a 'prima facie' case. What is required is an assessment or evaluation of the case fo…
Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46
Citation 5 (Para 2)

…e Supreme Court 1971 (WA) O 1 r 4A and r 4B. [162] Cf Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 [57]. [163] Cf Fels v Davies [2013] WASCA 42 [9].…
JTA Le Roux Pty Ltd v Lawson [No 2] [2013] WASC 373
Citation 6 (Para 4)

…Gummow and Lehane's Equity Doctrines and Remedies (5th ed) at [21-395]. [47] JTA Le Roux Pty Ltd as trustee for the FLR Family Trust v Lawson [No 2] [2013] WASC 373 [23] (Edelman J); NWL Ltd v Woods [1979] 3 All ER 614, 625 (Lord Diplock); Cayne v Global Natural Resources PLC [1984] 1 All ER 225, 233 (Kerr LJ); K…
Fels v Davies [2013] WASCA 42
Citation 7 (Para 2)

…eduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Ltd [2013] HCA 46; (2013) 250 CLR 303 [57]. [163] Cf Fels v Davies [2013] WASCA 42 [9].…
National Australia Bank Ltd v Joyce [2012] WASC 224
Citation 8 (Para 3)

…equacy of damages as part of the overall balance of convenience rather than as a discrete consideration.[44] [43] National Australia Bank Ltd v Joyce [2012] WASC 224 [38]. [44] See the cases discussed in National Australia Bank Ltd v Joyce [2012] WASC 224 [39] ‑ [40] (Edelman J).…
Grimaldi v Chameleon Mining NL (No 2) [2012] FCAFC 6
Citation 9 (Para 3)

…(Mason J), 141 ‑ 142 (Dawson J); Breen v Williams (1996) 186 CLR 71, 91 ‑ 92 (Dawson & Toohey JJ); Grimaldi v Chameleon Mining NL (No 2) (2012) 200 FCR 296 [177] (Finn, Stone & Perram JJ).…
Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156
Citation 10 (Para 2)

…the determination of such an application. In that respect, as the Full Court of the Federal Court observed in Samsung Electronics Co Ltd v Apple Inc [2011] FCAFC 156; (2011) 217 FCR 238 [59], it is not enough simply to conclude that the plaintiff has a 'prima facie' case. What is required is an assessment or evalu…
Kyle and Hood and Ors [2010] FamCA 550
Citation 11 (Para 1)

…nted: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of convenience favours the g…
Blythe v The State of Western Australia [2008] WASCA 10
Citation 12 (Para 4)

…equirements of the Rules in respect of hearsay evidence. [180] Rules of the Supreme Court 1971 (WA) O 37 r 6(3A); Blythe v State of Western Australia [2008] WASCA 10 [43] (the Court); Lewkowski v Bergalin Pty Ltd (Unreported, WASC, Library No 7675, 26 May 1989). [181] Re JL Manufacturing Co Ltd [1900] 2 Ch 753, 75…
Australian Broadcasting Corporation v O'Neill [2006] HCA 46
Citation 13 (Para 1)

…unction was granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. Whether an applicant for an interlocutory injunction has made out a sufficient prima facie case and whether the balance of conven…
Duke Group Limited (in Liq) & Anor v Pilmer & Ors (No.6) No. Scciv-92-1874 [2004] SASC 147
Citation 14 (Para 3)

…on & McHugh JJ); Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 69 ‑ 70 (Gibbs CJ); Pilmer v Duke Group (In Liq) (2001) 207 CLR 165 [136] (Kirby J). [90] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 96 ‑ 97 (Mason J), 141 ‑ 142 (Dawson J); Breen v Willia…
Carre v Owners Corporation - SP 53020 [2003] NSWSC 397
Citation 15

…14 ACLC 3101 Blythe v State of Western Australia [2008] WASCA 10 Breen v Williams (1996) 186 CLR 71 Carre v Owners Corporation ‑ Strata Plan 53020 [2003] NSWSC 397; (2003) 58 NSWLR 302 Cayne v Global Natural Resources PLC [1984] 1 All ER 225 Eastmark Holdings Pty Ltd v Kabraji [2013] NSWSC 1763 Expense Reduction A…
Pilmer v Duke Group Ltd (In Liq) [2001] HCA 31
Citation 16 (Para 3)

…(1996) 186 CLR 71, 107 (Gaudron & McHugh JJ); Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 69 ‑ 70 (Gibbs CJ); Pilmer v Duke Group (In Liq) (2001) 207 CLR 165 [136] (Kirby J). [90] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 96 ‑ 97 (Mason J), 141 ‑ 142 (Dawson J); Br…
The Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [2001] WASCA 135
Citation 17 (Para 2)

…d referred to in s 36 of the ST Act.[5]) [3] ts 7. [4] ts 7. [5] Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 [54] (Grove AJ, Malcolm CJ & Steytler J agreeing); Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [N…
The Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [2000] WASC 293
Citation 18 (Para 2)

…01) 24 WAR 25 [54] (Grove AJ, Malcolm CJ & Steytler J agreeing); Owners of Metro Inn Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 1] [2000] WASC 293; (2000) 24 WAR 1 [54] (Owen J).…
Breen v Williams [1996] HCA 57
Citation 19 (Para 3)

…own interest.[90] [87] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 68 (Gibbs CJ), 141 (Dawson J); Breen v Williams (1996) 186 CLR 71, 92 (Dawson & Toohey JJ), 106 (Gaudron & McHugh JJ). [88] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 96 ‑ 97 (Maso…
Manser v Spry [1994] HCA 50
Citation 20

…n Apartments Strata Plan 11880 v Transmetro Corporation Ltd [No 2] [2001] WASCA 135; (2001) 24 WAR 25 Permanent Building Society (In Liq) v Wheeler (1994) 11 WAR 187 Pilmer v Duke Group (In Liq) (2001) 207 CLR 165 Re JL Manufacturing Co Ltd [1900] 2 Ch 753 Ross v Harbottle (1843) 2 Hare 461; 67 ER 189 Yara Australia…
Hospital Products Ltd v United States Surgical Corporation [1984] HCA 64
Citation 21 (Para 2)

…and client, principal and agent, director and company, and employer and employee.[86] [86] Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41, 68 (Gibbs CJ), 96 (Mason J), 141 (Dawson J).…
Beecham Group Ltd v Bristol Laboratories Pty ltd [1968] HCA 1
Citation 22 (Para 1)

…ighs, or is outweighed by, the injury which the defendant would suffer if an injunction was granted: Beecham Group Ltd v Bristol Laboratories Pty Ltd [1968] HCA 1; (1968) 118 CLR 618; Australian Broadcasting Corporation v O'Neill [2006] HCA 46; (2006) 227 CLR 57. Whether an applicant for an interlocutory injunc…
Grimaldi v Chameleon Mining NL & Anor [2012] HCATrans 187 [2012] HCATrans 187
Citation 23 (Para 3)

…Outside those well-established categories, determining whether fiduciary obligations arise will depend on the identification of criteria indicative of the existence of a fiduciary relationship. The law on fiduciary duties in Australia is not yet settled and there is not a precise or comprehensive se…
Independent Corporate Services Ltd v Stevens [2002] WASC 280
Citation 24 (Para 3)

…9] Birch Investments Pty Ltd v Kiap Khee Lim (Unreported, WASC, Library No 7396, 12 July 1988) White J; Independent Corporate Service Ltd v Stevens [2002] WASC 280 [85].…
Yara Australia Pty Ltd v Burrup Holdings Ltd [2010] FCA 1273
Citation 25 (Para 4)

…ER 225, 233 (Kerr LJ); Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 536 (McClelland J); Yara Australia Pty Ltd v Burrup Holdings Ltd [2010] FCA 1273 [79] ‑ [86] (Barker J).…
Cable and Wireless Optus Ltd v Telstra Corp Ltd [1998] FCA 1374
Citation 26 (Para 4)

…] 3 All ER 614, 625 (Lord Diplock); Cayne v Global Natural Resources PLC [1984] 1 All ER 225, 233 (Kerr LJ); Kolback Securities Ltd v Epoch Mining NL (1987) 8 NSWLR 533, 536 (McClelland J); Yara Australia Pty Ltd v Burrup Holdings Ltd [2010] FCA 1273 [79] ‑ [86] (Barker J).…

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