Community Corporation 41170 Inc v CEG Direct Securities P/L (No 2)
[2019] SADC 197
•9 December 2019
District Court of South Australia
(Civil)
COMMUNITY CORPORATION 41170 INC v CEG DIRECT SECURITIES P/L (No 2)
[2019] SADC 197
Judgment of His Honour Judge Slattery (ex tempore)
9 December 2019
CORPORATIONS - BODIES CORPORATE OTHER THAN COMPANIES AND ASSOCIATIONS - RIGHTS, OBLIGATIONS AND LIABILITIES
This action involves claims connected with the construction of a 17-level building on the corner of Hutt Street and South Terrace, Adelaide. The plaintiff is Secondary Community Corporation 41170 Inc, which was incorporated under the Community Titles Act 1996. Under that Act, Primary Corporation 41169 Inc was also first incorporated prior to the subdivision of portions of the building. A secondary community corporation plan was established upon the deposit of a secondary community plan with the Land Titles Office. This plan involved the division of portions of the building into strata lots and common property. The plaintiff also enacted bylaws at the time of the deposit of the secondary plan in accordance with the requirements of the Act.
The defendant made loans to the developer of the building secured by First Mortgage. Until sale of the lots, the developer was the registered proprietor of the strata lots. Upon transfer on sale, the new lot owners became the registered proprietors of the lots and also members of the plaintiff as the secondary corporation which was responsible for the maintenance of, inter alia, portion of the common property of the building for which it was responsible.
The building is incomplete due to the failure of the developer. On 19 March 2018, the defendant was appointed the controller of the developer’s lots for Part 5.2 of the Corporations Act 2001 (Cth) and became the mortgagee in possession of the unsold lots held in the name of the developer. The defendant set about selling the lots of which it took possession as well as undertaking works which were the responsibility of the primary corporation.
In carrying out the works, the defendant failed to inform the plaintiff of its appointment in contravention of the bylaws of the corporation and of the Act.
The plaintiff claims under the operation of the Act and in particular under s 3, that the defendant is an owner of the lots of which it was mortgagee in possession and it is susceptible to claims upon it for contributions resolved to be paid by the members of the corporation at meetings conducted by the plaintiff secondary corporation.
In the period between March 2018 and October 2018, the defendant disavowed being an owner of any lot of which it was mortgagee in possession and therefore disclaimed any liability as an owner.
In the period between November 2017 and 31 October 2018, the plaintiff corporation resolved to impose levies upon the owners of lots connected with expenses incurred for work done and other outgoings to do with the building. Under the Act, if proper notice is given to the owner of the content of the proposed resolutions, the fact of the meeting and there is compliance with the other requirements of the Act, then an obligation in debt immediately arises upon each owner who or which are included in any such resolution of the plaintiff corporation, to pay a proportionate share of the costs thereof.
Due to the conduct of the defendant, the agent of the plaintiff did not give the defendant the appropriate notice about the holding by the plaintiff of meetings of the lot owners held on 26 May 2018 and 2 August 2018 at which resolutions were passed for levies to be imposed upon the owners of the lots. These levy decisions and other resolutions made at the meeting of which the defendant received proper notice remain unpaid by the defendant.
The plaintiff first contends that the defendant is a debtor of the plaintiff for the full amount of its claim pursuant to s 114 of the Act. In the alternative, the plaintiff contends that under the operation of s 142(7) and (8) of the Act that the court, acting according to equity, good conscience and the substantial merits of the case and without regard to technicalities and legal forms, has jurisdiction to make formal orders against the defendant for full payment for all of the levies claimed by the plaintiff, irrespective of whether, under the Act or under the bylaws, the defendant received notice of such meetings.
The defendant counterclaims, inter alia, for orders that the plaintiff has been unjustly enriched at its expense as a result of, inter alia, expenditures by it upon the building and for losses it allegedly sustained as a result of it not being able to obtain approvals for the development of levels 11 and 12 of the building due to fire safety issues.
Held:
1. The defendant was an owner of the lots of which it was mortgagee in possession under the operation of s 3 of the Act from no later than 19 March 2018;
2. The defendant is liable to pay all levies imposed by the plaintiff corporation where the corporation has observed and complied with those bylaws and the Act in respect of such levies;
3. Section 142(7) and (8) of the Act do not create an additional plenary power in the court to ameliorate the operation of the Act and the bylaws of the corporation under which the amount properly levied upon an owner becomes due and payable to the plaintiff corporation. Section 142(7) and (8) of the Act enables the court to have full regard to issues of substance that accrue before it.
4. The defendant is not answerable to the plaintiff in relation to levies imposed at meetings of the plaintiff in respect of which it had no prior notice as required by s 114 of the Act and reg 20 of the Regulations to the Act.
5. The plaintiff is entitled to judgment against the defendant for all levies and other charges accrued as a result of all of the meetings of the secondary corporation apart from the meetings of 26 May 2018 and 2 August 2018.
6. The plaintiff is entitled to a judgment in its favour in the amount of $123,590.24.
7. The defendant’s counterclaim is dismissed for the following reasons:
i. The Act and the Regulations and bylaws operate as a charter of rights, obligations and duties between lot owners and it is a complete code in relation to questions of risk and obligation between a corporation and an owner;
ii. It is inappropriate and unnecessary to impose any remedy and restitution over and above the statutory scheme because such a claim would operate inconsistently with the statutory purpose of the Act which includes an obligation upon the community corporation to operate in accordance with the charter of rights and duties created by the Act;
iii. Under the Act, there is a direct liability of a member of the corporation and risks are known and applied in accordance with the requirements of the Act. An obligation should not be imposed or accepted except in accordance with the structure established under the Act;
iv. The operation of the Act defeats any specific restitutionary claims of the defendant because any such order cannot be in conflict with the overriding policy of the Act;
v. In the alternative, the defendant’s counterclaim must fail because it is based upon the unifying legal concept of unjust enrichment but there must be some identifiable basis upon which it is said that one party was unjustly enriched to the detriment of the other. There is no pleading or evidence about how any such alleged enrichment occurred or was at the expense of the defendant.
Community Titles Act 1996 (SA) s 3, s 6, s 7, s 8, s 9, s 10, s 11, s 12, s 13, s 34, s 39, s 43, s 74, s 81, s 114, s 135, s 142, s 155; Corporations Act 2001 (Cth) Part 5.2, s 43; District Court (Civil) Rules 6DCCR 23(2); Evidence Act s 53; Development Act s 71(2) and (3), referred to.
Griggs v Norris Group of Companies (2006) 94 SASR 126; Mann and Anor v Paterson Constructions Pty Ltd [2019] HCA 32, discussed.
Community Corporation 41170 Inc v CEG Direct Securities Pty Ltd (No 1) [2019] SADC 185; Colliery Employees’ Federation v Northern Proprietors’ Association [1904] AR (NSW) 182; Qantas Airways Ltd v Gubbins [1992] 28 NSWLR 26; Trittenheim Pty Ltd v H&H Gill Nominees Pty Ltd (1994) 63 SASR 434; Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611; Eagle Star Insurance Co Limited v Yuval Insurance Co Limited [1978] 1 Lloyd’s Rep 357; Sea Ory v Betamore Pty Ltd (In Liq.) (1993) 60 SASR 393; Ainsworth v Albrecth (2016) 261 CLR 167; Lampson (Australia) Pty Ltd v Fortescue Metals Group Limited (No 3) [2014] WASC 162; Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 65, considered.
COMMUNITY CORPORATION 41170 INC v CEG DIRECT SECURITIES P/L (No 2)
[2019] SADC 197
In this action, the plaintiff which is a secondary community corporation under the Community Titles Act 1996 (SA) (the ‘Act’) seeks to recover from the defendant a debt alleged to be due under s 114 of the Act and an amount of unpaid contributions, instalments and interest from the defendant. That section provides as follows:
114—Contributions by owners of lots
(1)A community corporation must, in general meeting, fix the amount it requires by way of contributions from the owners of community lots.
(2)The amount must be fixed by an ordinary resolution of the corporation and not by the management committee.
(3)Subject to this Act, the share of an amount fixed under subsection (1) to be contributed by the owner of each lot is proportional to the lot entitlement of the lot unless otherwise provided by a unanimous resolution of the corporation.
(4)…
(5)A contribution, or an instalment of a contribution, is payable on the day specified for payment in a notice served by the corporation on the owner of the lot.
(6)The notice must—
(a) …
(b) be served on the owner at least 14 days before the date for payment.
(7)Payment of a contribution, instalment or interest is enforceable jointly and severally against the owner or owners of the lot and the subsequent owner or owners of the lot.
(8)A contribution, instalment or interest may be recovered as a debt.
Alternatively, the plaintiff seeks orders under s 142 of the Act that the defendant is liable to make payments of the same amounts. The defendant is a mortgagee in possession of various secondary community lots. Section 142 of the Act relevantly provides as follows:
142—Resolution of disputes etc
(1)An application may be made under this section—
(a) if the applicant claims that a breach of this Act or of the by-laws of the community scheme has occurred; or
…
(d) if a dispute arises—
(i) between a community corporation and a member of the corporation; or
(ii) …
in relation to—
(iii)any aspect of the occupation or use of a lot; or
…
…
(7)A court, in hearing and determining an application under this section, should act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms, and is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks fit.
(8)A court may, in respect of an application under this section—
…
(c) order that a party take such action as is, in the opinion of the court, necessary to remedy any default, or to resolve any dispute, and is specified in the order; or
(d) …
(da) make a declaration as to the validity of—
(i) …
(ii) any decision or purported decision of the corporation; or
(f) give judgment on any monetary claim; or
(g) …
(h) make orders as to costs; or
(i) make any incidental or ancillary orders.
The action concerns a property at 318 South Terrace Adelaide, which is also now known as 267 Hutt Street. The fee simple estate in that property was owned by South 2015 Pty Ltd (the ‘Developer’). This property was later subdivided into a primary community plan and a primary corporation, Community Corporation 41169 Inc, was established.
Then there was a deposit of a secondary community plan. The plaintiff, Community Corporation 41170 Inc, was then established upon the deposit of that secondary community plan. That plan divided strata lot 2000 in community plan 41169 into strata lots and common property.
The defendant was a lender to the Developer and took as security for monies loaned a registered first mortgage over the property. As the result of the establishment of the secondary community plan, the allotments into which that plan was divided as strata lots and common property were transferred to the Developer. As at March 2018, a number of secondary community lots had been sold and were transferred by the Developer to new owners as secondary community lot holders. Those owners in turn became members of the plaintiff. The Developer maintained legal and beneficial title to those secondary community lots that had not been transferred to the new owners.
When the primary community plan and the secondary community plan were deposited with the Registrar General at the Lands Titles Registration Office, the primary corporation, Community Corporation 41169 Inc, became the registered proprietor of the property described within the primary community plan. At the time that the secondary community plan was deposited with the Registrar General, the secondary corporation became the registered proprietor of lot 2000 in the primary corporation. The Developer became the sole owner of lots 1, 2, 3 and 4 in the primary plan and the sole owner of all of the lots in the secondary plan. The proprietorship of the lots in the secondary plan changed at the time that they were transferred by the Developer to the new owners of those lots.
On or about 19 March 2018, the defendant was appointed the controller of the Developer under Part 5.2 of the Corporations Act 2001 (Cth) and it took possession of the secondary community lots that remained owned by the Developer under the terms of its mortgage. These lots were numbers 102, 103, 106, 108, 203, 208, 303, 401, 402, 403, 404, 502, 602, 604, 702, 704, 705, 801, 803, 1004, 1101, 1102 and 1201. Since March 2018, a number of those lots have been sold by the defendant as mortgagee in possession. The details of the lots sold are set out below.
This action concerns money that the plaintiff alleges is owed to it by the defendant in respect of the community lots over which the defendant exercised its rights under the mortgage to take control as mortgagee in possession and other obligations devolving upon the owners of lots who are members of the plaintiff corporation. The claims of the plaintiff are said to arise under the operation of the Act.
Before proceeding further with these reasons, it is necessary to identify the evidence before the court. At trial, the plaintiff was represented by Mr Mitchell of counsel. In judgment No 1 in this matter,[1] I referred to the orders made under 6DCCR 23(2) of the District Court (Civil) Rules for the removal of solicitors from the file. At trial, the defendant was represented by Mrs L Dent, who informed me that she was a finance officer of the defendant. At trial, the plaintiff tendered 10 exhibits. Exhibit P1 was the second affidavit of Mr David Chapman sworn 26 November 2019. It consisted of three volumes. These volumes contained documentation connected with the establishment of the primary corporation and the secondary corporation, meetings of those corporations, correspondence with owners, records of resolutions and minutes of meetings, corporate records generally of the plaintiff corporation and all associated material concerning the establishment of the primary corporation, the plaintiff as the secondary corporation and the steps as required under the Act. There was no cross examination on this affidavit. I accept the contents of this affidavit as having been proved. As well, the affidavit contains business records and under s 53 of the Evidence Act those records are evidence of the facts recorded on the face of the documents. They were not challenged by the defendant. I accept the facts deposed to and the content of the exhibits as proved to my satisfaction on the balance of probabilities.
[1] Community Corporation 41170 Inc v CEG Direct Securities Pty Ltd (No 1) [2019] SADC 185.
The plaintiff also read Exhibit P2, the third affidavit of Mr David Chapman sworn 29 November 2019. The exhibits to this affidavit comprise invoices in relation to each of the lots of the corporation, owners’ statements and associated documentation. These relate to notification to the owners of amounts due and owing and payable by them following the resolutions which are recorded in the documents exhibited to the second affidavit of Mr Chapman, Exhibit P1. There was no cross examination on this affidavit. I am similarly satisfied that the documents exhibited to the affidavit, Exhibit P2, constitute business records and are proof of the facts disclosed on the face of the documents. There was no challenge to any aspect of this evidence. I also accept the evidence including under s 53 of the Evidence Act as proved to my satisfaction on the balance of probabilities.
Exhibit P3 is the second affidavit of Mr David Wilckens. Mr Wilckens is, together with his wife, an owner of apartment 1001 in the building and is the presiding officer of the plaintiff. In this affidavit, Mr Wilckens addresses a number of issues arising from the pleadings of the defendant, and especially the fire safety issues. Mr Wilckens’ evidence is pertinent to the question of whether or not any fire safety issues that have arisen in relation to any floor of the building have any effect upon any other floor of the building and in particular levels 11 and 12.
The exhibits to the affidavit comprise letters from engineers, fire safety reports, planning consents, quotes for a sinking fund, correspondence in relation to the sinking fund, correspondence with Otis Elevator Company, invoices rendered by BCH Services Pty Ltd to the defendant, correspondence between solicitors and email chains between Mr Wilckens and Mr Ventrice. There was no cross examination of Mr Wilckens on this affidavit. There was no challenge to the content of the exhibits within the documents. I am satisfied that all of the documents exhibited to this affidavit are business records and may be accepted into evidence as proof of their own facts pursuant to s 53 of the Evidence Act. I accept the facts deposed to and the content of the exhibits as proved to my satisfaction on the balance of probabilities.
Exhibits P4, P5 and P6 are affidavits of Mr Samuel Morphett, solicitor, emails from Mr Morphett to Mr Ventrice and emails from Mr Harry Lane, solicitor, to Mr Ventrice. Mr Lane deposes to a number of matters in Exhibit P7. Again, there was no cross examination of any of the deponents to the affidavits Exhibits P4 and P7 nor was there any challenge to the content of the affidavits and the exhibits thereto all of which I am satisfied constitute business record or records of correspondence. There was no challenge to the receipt by the court of this material. Insofar as the content of this material contained business records, I am similarly satisfied that s 53 of the Evidence Act facilitates the acceptance of that material into evidence. Otherwise, I accept the content of this material as proved to my satisfaction on the balance of probabilities.
Exhibits P8 and P9 are an email dated 23 November 2017 from Mr Chapman at Whittles to Mr Sghirripa of the Developer. These contained notices, minutes and budgets for the primary corporation for a meeting held on 23 November 2017. There was no challenge to the acceptance of this material into evidence. In my opinion, the documentation constitutes business records in any event.
Exhibit P9 constitute an email dated 23 November 2017 from Mr Chapman of Whittles to Mr Sghirripa enclosing a notice plus minutes and budget of the secondary corporation preparatory to a meeting on 23 November 2017. There was no challenge to the tender of this material. I am satisfied on the balance of probabilities that this material should be received into evidence and I am also satisfied that it constitutes business records of the primary corporation (Exhibit P8) and the secondary corporation (Exhibit P9). Exhibit P10 was a “Table of Contributions and Interest” for the period from 12 December 2017 to 20 November 2019 prepared by the plaintiff. I discuss this document later in greater detail. There was no challenge to the receipt of this document into evidence. There was no cross examination on Exhibits P8, P9 or P10.
The defendant elected not to call any evidence and elected not to make any submissions at the close of evidence.
All of the work in relation to the creation of the primary corporation and the secondary corporation was undertaken in conjunction with the Developer and Mr David Chapman on behalf of the firm Whittles Strata Management (‘Whittles’) as the agent for the plaintiff. Each of the primary corporation and the secondary corporation held inaugural general meetings and these occurred on 23 November 2017. There was some dispute about this date because the minutes of the meetings at which the resolutions occurred were wrongly dated 1 November 2017.[2] I am satisfied on the evidence that the correct position is that the inaugural general meetings occurred on 23 November 2017. Notwithstanding the incorrect date upon the minutes, the resolutions made at the inaugural general meetings are binding on the primary corporation and the secondary corporation and therefore the members of both corporations as the owners of the lots.[3]
[2] Exhibit P1, vol 2, tab 20-24; Second Affidavit of David Chapman filed 26 November 2019 at [45].
[3] Exhibit P1, vol 3, tab 43; Second Affidavit of David Chapman filed 26 November 2019 at [45], [46].
At the inaugural general meetings, a resolution was made that there be an initial contribution by the owners of the community lots to the plaintiff’s administration fund. These were fixed at the amount of $46,250 including GST per quarter. It was also resolved that there be contributions to the repair and maintenance costs of a car stacker located within the car park of the property. These were set at $5,000 including GST per quarter and those contributions were to be made by all of the community lot holders who were entitled to use the car stacker. If there was a shortfall, it would be met by a special levy raised by Whittles with the authority of the corporation. Interest was chargeable upon any outstanding debt under s 114(4) of the Act up to a rate of 15% per annum; that rate was fixed at the inaugural general meeting and it has not changed.
The minutes of the meeting of 23 November 2017 were ratified at a general meeting of the plaintiff on 26 May 2018. At that meeting, the plaintiff also resolved to raise a special levy for payment for legal advice and building inspections. A further extraordinary general meeting was held on 2 August 2018. The plaintiff corporation resolved to accept the minutes of the meeting of 26 May 2018 and agreed to raise a special levy for insurance premiums in the amount of $30,000. It was also resolved to raise two special levies to fund the plaintiff’s sinking fund in two amounts of $100,000.
There was a further extraordinary general meeting of the plaintiff on 15 October 2018 which resolved that the plaintiff would raise a special levy of $244,000 inclusive of GST to fund the commissioning and completion of a car stacker. At an annual general meeting of the plaintiff on 25 September 2019, the plaintiff resolved to increase the administrative fund contribution, the total of the sinking fund contribution and to fix the total car stacker fund contributions.
Section 3 of the Act defines an ‘owner’ as follows:
Owner—
(a)in relation to land (excluding a lot) means a person who is registered as the proprietor of an estate in fee simple in the land or, where a mortgagee is in possession of the land, means the mortgagee to the exclusion of the registered proprietor of the land;
(b) in relation to a lot (other than a lot referred to in paragraph (c)) means—
(i) a person who is registered as the proprietor of an estate in fee simple in the lot; or
(ii) if the fee simple is divided into a life estate with a remainder or reversionary interest—the person registered as the proprietor of the life estate to the exclusion of the proprietor of the remainder or reversionary interest; or
(iii) if a mortgagee is in possession of the lot—the mortgagee to the exclusion of the persons referred to in subparagraphs (i) and (ii);
(c)in relation to a primary or secondary lot that has been divided by a secondary or tertiary plan, means the secondary or tertiary corporation established on deposit of the plan in the Lands Titles Registration Office;
From 19 March 2018 the defendant as mortgagee in possession of the abovementioned lots, became the owner of them for the purposes of the Act.
The plaintiff lodged Community Bylaws for the Registrar General of Deeds under the Act.[4] Those Bylaws, in some respects, are similar to the constitution of a corporation, they bind the corporation, the strata lot holders, the occupiers and any person entering the community parcel. They relate to the control and management of the common property and strata lots and may only be amended or revoked by special resolution of the corporation under s 39 of the Act.[5] The expression ‘strata lot holder’ is defined to mean the owner of a strata lot. At all material times, the defendant was the owner of the strata lots of which it was mortgagee in possession until it sold these lots.
[4] Exhibit P1, p 81 et seq.
[5] 39—Variation of by-laws
Paragraph 30 of the bylaws provides as follows:
30. CONTACT DETAILS
30.1 A Strata Lot Holder must notify the Corporation:
a. of its any occupier’s telephone number, facsimile number and email address;
and
b. immediately of any change in the address, telephone number, facsimile number and email address of the Strata Lot Holder or occupier.
30.2 A Strata Lot Holder must notify the Corporation immediately of any change in the ownership or occupancy of the Strata Lot.
These obligations in the bylaws reflect the requirements of s 135 of the Act which provides as follow:
135—Register of owners of lots
(1)A community corporation must maintain a register of the names of the owners of the community lots which shows—
(a) the owner's last contact address, telephone number and email address known to the corporation; and
(b) the owner's lot entitlement.
(2)A corporation must keep a record of the information used to compile the register for the period required by the regulations.
It is noteworthy that there is continual reference within both the bylaws and the content of s 135 of the Act to “owners” or “owner”. There is an apparent and obvious reason for this: the corporation must, like any corporation, be aware of its members and as one example, to be familiar with the persons or entities to whom notices and documentation are to be sent.
I consider that the content of paragraph 30.2 of the bylaws has a particular significance. There is no temporal specification of the time during which a Strata Lot Holder is required to notify the corporation. There are two possibilities of who is to notify the corporation: the original Strata Lot Holder or the subsequent holder. Although it is not necessary to decide that issue, the preponderance of evidence is that the original holder must notify the corporation of any change in ownership or occupancy of the strata lot. This enables the strata corporation to keep proper records and control of its affairs. Logically, the outgoing owner would wish to terminate its liability under the scheme at the earliest time. The bylaws form rules that must be complied with by the strata lot holders.
When the defendant took possession as mortgagee in possession of the lots then, under the Act, it became the “owner” of those lots and so became responsible to make payments to the plaintiff in respect of them. It also became obliged to notify the corporation immediately of the change in ownership. The same obligation fell upon the incoming purchaser. The defendant did not give notice to the primary corporation or the secondary corporation of any relevant change in the ownership details. The plaintiff did not receive any immediate notification that the defendant was acting as mortgagee in possession, that there had been a change in ownership of the lots and it was not advised of the name of the new owner of those lots.[6]
[6] See Exhibit P1, vol 1, tab 9 and Exhibit P1, vol 1, tab 8.
At the time that the May and August 2018 extraordinary and general meetings were held, the plaintiff corporation was not aware of the change in ownership of the relevant lots of which the defendant was mortgagee in possession. The agent Mr Chapman was aware that the defendant had exercised its rights as mortgagee and that the Developer had been placed in liquidation. A confusion arose in the mind of Mr Chapman about the defendant’s position as owner. This confusion was caused by the assertion of Mr Ventrice of the defendant which were wrong at law. I will deal with these matters later in these reasons.
During 2017, 2018 and 2019, where there was to be a meeting of the plaintiff, it was necessary to comply with a number of requirements. These include the giving of notice for the meeting, the detail of the proposed business of the metting and any other supporting material. I will assess later the very high need for certainty and completeness about these matters when, for example, the corporation deals with its lot owners and seeks payment from them. In that context, the matter of primary importance is to know who are the members of the corporation. The failure of the defendant to notify the plaintiff was a breach of the bylaws and of s 43 of the Act which provides as follow:
43—Persons bound by by-laws
(1)The following persons are bound by the by-laws of a community scheme—
(a) the community corporation;
(b) the owners and occupiers of the community lots and the development lot or lots (if any) comprising the scheme;
(c) persons entering the community parcel.
(2)If the by-laws are the by-laws of a primary scheme and a primary lot is divided by a secondary plan or a primary lot is divided by a secondary plan and a lot created by that plan is divided by a tertiary plan, the following persons are also bound by the by-laws—
(a) the secondary corporation and (where applicable) the tertiary corporation;
(b) the owners and occupiers of the community lots and the development lots (if any) created by the secondary plan and (where applicable) the tertiary plan.
(3)If the by-laws are the by-laws of a secondary scheme and a secondary lot is divided by a tertiary plan, the tertiary corporation and the owners and occupiers of the community lots and the development lots (if any) created by the tertiary plan are also bound by the by-laws.
The general meetings of May and August to which I have already referred, were convened under Division 2 of Part 9 of the Act. Section 81 of that division provides as follow:
81—Convening of general meetings
(1)A general meeting (other than the first statutory general meeting) may be convened—
(a) by the presiding officer, treasurer or secretary of the corporation; or
(b) by any two members of the management committee of the corporation; or
(c) by a member or members of the corporation—
(i)the value of whose lot entitlement or combined lot entitlements is 20 per cent or more of the aggregate value of all the lot entitlements; or
(ii)who holds, or who together hold, 20 per cent or more of the total number of community lots in the scheme; or
(d) on the order of the Magistrates Court (made on the application of a person of a class specified in section 141).
(2)A meeting (including the first statutory general meeting) is convened by giving written notice of the day, time and place of the meeting to all members of the corporation at least 14 days before the date of the meeting.
(2a)A member may not nominate another person to be given notices referred to in subsection (2) on his or her behalf (although nothing prevents the community corporation from agreeing to provide notices to such a person in addition to the member).
(3)The day, time and place of the meeting must be reasonably convenient to a majority of the members of the corporation.
(4)The notice convening a general meeting must set out the agenda for the meeting.
(5)The agenda must include—
(a) the text of any unanimous or special resolutions to be moved at the meeting; and
(b) a motion confirming the minutes of the previous general meeting; and
(c) in the case of the first statutory general meeting—the matters required to be dealt with by section 80(2); and
(d) in the case of an annual general meeting—
(i)presentation of the accounts for the previous financial year; and
(ii)in the case of a corporation that is required to have its annual statement of accounts audited—the appointment of an auditor of the accounts for the current financial year; and
(iii)contributions to be paid by members for the current financial year; and
(iiia)presentation of statements required under section 113; and
(iiib) presentation of copies of all insurance policies required under Part 10 Division 2; and
(iv)such other matters as are required by regulation.
When convening those meetings it was necessary for the corporation to give written notice to the owners of the lot entitlements of the day, time and place of the meeting at least 14 days before the date of that meeting. It is not in dispute that in relation to the inaugural general meeting, the requirements of s 81 of the Act have been observed. No contrary evidence has been led on this topic and no contrary proposition has been put on this or any other topic by the defendant and there is no evidence before the court to suggest that the appropriate 14 day notice was not delivered. The only three persons involved in the meeting were Mr Sam Sgherza and Mr Daniel Sghirripa of the Developer and Mr Chapman from Whittles. It is to be presumed that in the absence of evidence of the contrary, the inaugural meeting was regularly held in accordance with the requirements of that Act. There is no evidence to the contrary and I will proceed accordingly. There is no basis to challenge any of the resolutions made at the inaugural general meeting of the plaintiff held on 23 November 2017. It also follows that for s 114 of the Act, particular levies became payable by owners upon compliance with the requirements of that section of the Act. These levies then became debts due and payable to the corporation.
In this action, there are four keys issues for resolution. They are as follow.
1The status of the inaugural general meetings and the validity and binding nature of the resolutions passed at those meetings;
2The resolutions passed at the extraordinary general meetings of the plaintiff held on 26 May 2018 and at the following annual general meeting on 2 August 2018;
3The status of the contribution notices served by the plaintiff under s 114 of the Act; and
4The defendant’s case in relation to a reduced monetary judgment based upon:
a.The fire safety notice allegations;
b.No certificate of occupancy for levels 11, 12 and 13;
c.The sinking fund levy; and
d.The unjust enrichment claims.
A review of the pleadings shows that the defendant does not contest that the property was held as an estate in fee simple by the Developer prior to its subdivision. The defendant also does not dispute that this property was subdivided by a primary community plan being Community Plan 41169. The property was disposed as an existing heritage protected building fronting onto South Terrace called Davaar House. At the rear or to the north of Davaar House was constructed a 17 level building. The common property of the primary corporation comprised the two car stackers to the south of the property, at the mid-basement level, ramps, stairs and lifts and at the ground floor level, the yard, the verandah, Davaar House, the surrounding yards and store, the lifts, a bin lift and a further yard. At the rear or to the north of the property was Davaar Lane which is a right of way. Thereafter, in relation to the 17 levels, the primary corporation’s common property consisted of the lifts and, where appropriate, the stairwell.
Under the secondary corporation plan C41170, the common area of the secondary corporation is described as the mid-basement level, the upper basement level,[7] the first floor and in the plans which follow in that corporation plan. Reference is made to Exhibit P1, p 59. This is the first floor plan under the Community Corporation C41170 Inc. The lobby area is the common property of the secondary corporation. The lift is the responsibility of the primary corporation as its common property. The units are then owned by each of the individual lot owners. There are single units, two-storey units and larger units depending upon the various plans of the building. For example, the 10th floor plan[8] shows three very large units, the 11th floor plan shows two very large units and the 12th floor plan shows one very large unit with an adjacent pool and terrace. Each of the units has specific or joint rights to what are called subsidiary areas, which are generally to be found in the common areas below the ground floor. As an example, the description of unit 1201 discloses that it includes 17 subsidiary areas comprising three carparks, three balconies, a pool, two terraces, a three storey service area, disabled carpark, bike and hardwaste storage area, building services and storage area and bicycle parks. On the 13th floor the building comprises a store, a terrace and a service area.
[7] Exhibit P1, vol 1, p 58.
[8] Exhibit P1, vol 1, p 69.
On page 74 of Exhibit P1, there is set out the lot entitlements sheet for the Community Corporation 41170 Inc. The aggregate entitlement for the units is 10,000 units. Each unit is allotted a lot entitlement according to the size of the unit so that pro rata, the biggest unit has the biggest lot entitlements. It follows that unit 1201 has 932 lot entitlements of a total of 10,000. There is no dispute between the parties that the property was subdivided by the primary Community Plan 41169 and that Community Corporation 41169 Inc is the primary corporation for the properties. There is no dispute that the plaintiff was established upon the deposit of the secondary community plan which divided strata lot 2000 in Community Plan 41169 into strata lots and common property. The only minor contention in relation to this matter was the date of the inaugural general meetings and as I have earlier found, that meeting took place on 23 November 2017.
There is no dispute and I find that the plaintiff is a community corporation within the meaning of the Act and that Whittles were appointed to assist the primary corporation and the plaintiff with the day to day management of the property. Whittles has always acted as the community corporation manager on behalf of the plaintiff. Mr David Chapman is the person from Whittles who has acted in the role as agent for both the primary corporation and the plaintiff corporation.[9] There is no dispute between the parties that in securing loans made by it to the Developer, the defendant took a mortgage dated 17 March 2006 registered over the property and that by March 2018, a number of the secondary community lots had been transferred by the Developer to new owners. These persons had become the secondary community lot owners and members of the plaintiff. Any other community lots that were not transferred to new owners were held in the name of the Developer. These lots were transferred into the name of the Developer upon the deposit of the community plans.[10]
[9] See generally Exhibit P1, Second Affidavit of Chapman and Exhibit P2, the Third Affidavit of Chapman.
[10] See Exhibit P1, tab 7 and the titles transferred in Exhibit P1, tab 8.
I am satisfied on the evidence that on or about 19 March 2019 the defendant was appointed as the controller of the Developer for Part 5.2 of the Corporation Act having exercised its rights as mortgagee. I am also satisfied that on that day, it took control as mortgagee in possession of all of the secondary community lots of which the Developer remained as registered proprietor.[11] I am similarly satisfied that for s 3 of the Community Titles Act, from that date, and as the mortgagee in possession, the defendant became the owner of those community lots, to the exclusion of the Developer as registered proprietor.[12]
[11] Cf. Exhibit P1, tab 7.
[12] See Exhibit P3, Second Affidavit of Wilckens at [62] and [63] and Exhibit DEW23 to that affidavit; Exhibit P1, tab 9; Exhibit P1, tab 41; the affidavit of the solicitor Mr Morphett sworn 22 November 2019 Exhibit SAM1.
I have earlier described that the defendant became mortgagee in possession of lots 102, 103, 106, 108, 203, 208, 303, 401, 402, 403, 404, 502, 602, 604, 702, 704, 705, 801, 803, 1004, 1101, 1102 and 1201. I will call these the Developer’s lots. In the evidence, at Exhibit P1 tab 9, the plaintiff proves that a number of these properties have been sold by the defendant as mortgagee in possession exercising its power of sale. They are lot 304 on 18 May 2018; lot 902 on 25 May 2018; lot 601 on 30 May 2018; lot 603 on 1 June 2018; lot 301 on 28 June 2018; lot 209 on 28 June 2018; lot 1003 on 21 June 2018; lot 302 on 29 June 2018; lot 306 on 27 August 2018; lot 503 on 31 August 2018; lot 703 on 29 August 2018; lot 701 on 23 November 2018; lot 202 on 4 December 2018; lot 704 on 7 February 2019*; lot 401 on 15 January 2015*; lot 204 on 6 February 2019; lot 207 on 11 February 2019; lot 106 on 25 February 2019*; lot 803 on 29 March 2019*; lot 203 on 29 March 2019*; lot 109 on 1 April 2019; lot 403 on 4 April 2019*; and lot 108 on 15 May 2019*. Those sales which are asterisked disclose those purchases where the claimed contribution remain outstanding. Therefore, for all of the other lots where a sale has occurred by the defendant, the claimed contributions have been paid. This is inconsistent behaviour by the defendant because the payments made for those levy contributions, as a matter of inference, must have formed part of the settlement arrangements for the purchase of those units. In the ordinary course, they are outstanding liabilities to be disclosed by the vendor and are to be paid at the time of settlement. There is no explanation in evidence by the defendant why those limited number of lots that were sold did not discharge the outstanding contributions. I am satisfied on the evidence that an inference arises that the defendant knew of these claims of the plaintiff, accepted its liability for them and attended to the payment of them at settlement accordingly. I am similarly satisfied that there was no refusal to make these payments as the defendant was prepared to acknowledge its liability to make payment for them.
The Developer also continued to remain the registered proprietor of some of the lots under the primary community plan. The defendant therefore became the “owner” and mortgagee in possession of lot 1 in the primary Community Plan C41169 and the lots of which the Developer was registered proprietor in the secondary Community Plan C41170. These are described in Exhibit P1 annexure 1. I find on the evidence before me that the lots that I have described above as having been sold were sold by the defendant exercising its power of sale. There is no explanation in the evidence about why the outstanding contributions in relation to the asterisked sales have not been discharged.
I have earlier found that the inaugural general meeting occurred on 23 November 2017. At that time, ordinary resolutions were made about that administrative fund contributions, the car stacker fund contributions, the interest rate at 15% and final notice fees. Although the defendant did not give evidence, it put in contention in its pleadings the fact and validity of these resolutions. The only reason appears to be that the minutes are wrongly dated 1 November 2017. I have already found on the evidence before the court that 23 November 2017 was the date of the meeting.[13] In the course of evidence, the plaintiff also tendered Exhibits P8 and P9. These are the primary minutes and budgets for the primary and secondary corporation. Exhibit P9 is the minutes and budget for the secondary corporation sent by Mr Chapman to Mr Sghirripa. Exhibit P8 are the primary minutes and budget for the Corporation 41169 sent by Mr Chapman to Mr Sghirripa. The evidence satisfies me that the date of the meeting was 23 November 2017. On the resolution of that matter, the objection of the defendant falls away.
[13] Exhibit P1, paragraphs 16-46; Exhibit P1, tabs 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22 and 23.
I am further satisfied on the evidence that an extraordinary general meeting of the plaintiff occurred on 26 May 2018. At that meeting, the minutes of the inaugural general meeting were accepted and ratified. Resolutions were made for the imposition of the special levy for inspections and advice and for the first instalment of the administrative fund contribution. I am satisfied that the resolutions as recorded in the minutes in the document associated with the inaugural general meeting, the extraordinary general meeting of 26 May 2018 and 2 August 2018 were effective to fix the amounts that the plaintiff required to be paid as contributions and instalments of interest on community lots under s 114 of the Act. I will deal separately with the meetings of 26 May 2018 and 2 August 2018.
The inaugural general meeting and the subsequent meetings were held in order to comply with the requirements of s 114(1) of the Act which stipulates that a community corporation must in general meeting fix the amount it requires from the owners of community lot by ordinary resolution as prescribed under s 3 of the Act. I am satisfied on the evidence before me that a series of minutes has been prepared and ratified recording the business of these particular meetings. They are as follows:
1Exhibit P1, tab 43 which is the minutes of the inaugural general meeting held 23 November 2017;
2Exhibit P1, tab 47 which is the minutes of the extraordinary general meeting held 26 May 2018;
3Exhibit P1, tab 49 which is the minutes of the extraordinary general meeting held 2 August 2018;
4Exhibit P1, tab 51 which is the minutes of the extraordinary general meeting held 15 October 2018; and
5Exhibit P1, tab 55 which is the minutes of the annual general meeting held 25 September 2019.
In his evidence, Mr Chapman informed the court of having taken these minutes[14] and about their ratification. I accept the evidence of Mr Chapman. It was not challenged by cross examination. No evidence in contradiction of that evidence of Mr Chapman was led by the defendant.
[14] Exhibit P1, Second Affidavit of Chapman [47]-[59]; [104]-[118]; [119]-[131]; [132]-[142]; [151]-[159].
I have earlier discussed the general requirements of the Act concerning the proper convening of meetings. Under s 81(2) of the Act, it is necessary that notice be provided to all members in writing of the day, time and place for the meeting and the same section prescribes the requirements of the content of the notice. The persons to whom notice is to be given are the members of the Corporation. Section 74 of the Act provides that owners for the time being of the community lots are the members of the corporation and the expression ‘owners’ is defined in s 3 to mean those persons who are registered proprietors or mortgagee in possession to the exclusion of the person who is named as registered proprietor. The evidence before me satisfies that with the exception of the meetings of 26 May 2018 and 2 August 2018, there has been service upon the defendant of the required notice with respect to each meeting called by the plaintiff.[15]
[15] Exhibit P1, Second Affidavit of Chapman [47] – [59]; Exhibit P1, Tab 45; Exhibit P1, Tab 46; Exhibit P1, Tab 48; Exhibit P1, Tab 50; Exhibit P1, Tab 54.
I have also earlier discussed the evidence concerning the absence of notice by the defendant to the plaintiff of the change of ownership of the relevant lots to which I have earlier described in detail. As a result, all of the notices that were prescribed under the Act were served by Mr Chapman at the last known address of the Developer as per s 155 of the Act which provides as follows:
155—Service
(1)A notice to be served on a person under this Act may be served as follows—
(a) by giving it to the person or an agent of the person; or
(b) by leaving it for the person with someone apparently over the age of 16 years at his or her place of residence or at any place at which he or she carries on business; or
(c) by posting it to the person at his or her last known address; or
(ca) if the person consents to receiving the notice by email—by transmitting the notice by email to the email address provided by the person for that purpose; or
(d) where the person is the owner or occupier of a lot—by fixing the notice in the manner prescribed by regulation in a prominent position on the lot.
(2)Where a notice is to be served on the owner of a lot and the owner has died, the notice may be served on the executor or administrator of the owner's estate or, where an executor or administrator has not been appointed, by fixing the notice in the manner prescribed by regulation in a prominent position on the lot.
(3)If there are two or more owners or occupiers of a lot, a notice will be taken to have been served on all of them if it is served on any one of them.
(4)A community corporation must keep—
(a) a letter box, with the name of the corporation clearly shown on it, for postal delivery to the corporation at the community parcel; or
(b) where there is no postal delivery to the community parcel—a post office box.
(5)A document may be served on the community corporation—
(a) by placing it in the corporation's letter box; or
(b) by post addressed to the corporation or to the presiding officer, treasurer or secretary at the postal address of the corporation.
After a period of time, and by 20 July 2018, communication was being made directly with Mr Ventrice advising the defendant of the meetings and requesting Mr Ventrice to identify if he was the best person to whom notices should be sent. Mr Ventrice disavowed that the defendant was an owner and disclaimed any responsibility as an owner. There was a denial of any liability as a result. That applies to the September 2018 Annual General Meeting and all meetings which followed. The plaintiff contends that there has been service upon the defendant for s 155 of the Act as a result. I have earlier set out the content of s 155. Particular reference is made to s 155(1)(c) where a notice under the Act may be served by posting it to the person at his or her last known address. However, there is an apparent logical flaw in the plaintiff’s argument. The service was upon the developer at its last known place of address. The liquidator’s staff informed Mr Chapman that the developer was not an owner and that service should be upon the defendant. Mr Chapman was misled because of the actions of Mr Ventrice. There is no explanation about why advice was not then sought by Mr Chapman given this legal and factual impasse.
The plaintiff contends that the Act must be read in a facilitative way and that service in the manner contended for is sufficient service to bind the defendant. In assessing this submission, it becomes necessary to consider the whole of the operation of the Act. In so doing, I consider that it is first necessary to state that the Act is a remedial statute. The scope of the Act is set out in Part 2 and in particular ss 6 and 7. The nature of the Act described under s 6 is that it provides for the division of land into lots and common property and a lot created by division is a community lot or a development lot. Then in s 7 there is a description of land, primary lots and secondary lots and for s 8 development lots. Section 9 describes strata division, s 10 the community corporations which in this case are the primary and secondary corporations, s 11 sets out the scheme descriptions. Section 12 describes the bylaws; s 13 prescribes stage development and development contracts. Part 3 of the Act deals with division of land by plan of community division. It sets out requirements for the application of the division, lot entitlements, deposits of community plans and common property. Then Part 4 sets out the scheme descriptions and s 30 sets out the requirement for a scheme description and in particular any persons whose consents are required.
Part 5 then deals with bylaws from s 34. It is compulsory that the first bylaws of the community scheme are the bylaws filed with the community plan by the Registrar General when depositing the plan in the Lands Titles Office. This emphasises the significance of bylaws. As I put to counsel in argument, and only by analogy, they may be understood in a similar (not identical) fashion with the constitution of corporation for the Corporations Act 2001 (Cth). The bylaws are required to deal with a number of matters and persons bound by the bylaws are set out s 43. These include the owners and occupiers of community lots (s 43(2)(b)).
Development contracts are then dealt with in Part 6. Part 7 deals with amendment, amalgamation and cancellation of plans and these include an involvement of the ERD Court in making orders for amendments of plans. Part 8 then deals with the division of the primary parcel and then Part 9 deals with the community corporation. Under s 77 of Part 9, if a community corporation defaults in payment of a monetary liability, the liability is enforceable against the members of the corporation jointly and severally. Consistently, s 78 provides that the Corporations Act does not apply. Therefore, there is a difference to be identified between the community corporation for the purposes of Part 9 of the Act and the Corporations Act. Other obligations include the procedure for the convening of general meetings (s 81), voting and conduct of meetings, duties of disclosure, management committees and duties of members generally. Consistent with the status of the community corporation, Part 10 of the Act recognises the power of the corporation to maintain the integrity of the community scheme including the power to enforce duties of maintenance and repair, in relation to alterations and additions, in relation to insurance, in relation to easements, and in relation to leasing of common property and lots.
Financial management of corporations is then dealt with in Part 11. Section 114 which has been discussed on a number of occasions earlier in these reasons is set out within Part 11 as part of the suite of provisions relating to financial management.
As can be seen, a difference is to be observed between a member of the body corporate for the Corporations Act and a member of a corporation of the Community Titles Act. The liability of the member under the Community Titles Act is joint and several. Members are required to comply with the bylaws, to make contributions as required, and to conduct the affairs of the corporation through the instruments as prescribed under the Act.
The thrust of the Act is that the corporation itself is not put on inquiry in relation to the members of the corporation. Rather, the members of the corporation are separately required to involve themselves in the affairs of the corporation or comply with the resolutions of the corporation. They are also required under the bylaws with which they must comply, to notify the corporation of any change in proprietorship or detail of the ownership of the lot or any lessee of a lot. The plaintiff corporation is therefore entitled to rely upon the accuracy of its record. It is not put on inquiry about whether there has been particular changes in the ownership of lots because it may rely upon its own record of lot owners having regard to the requirements upon lot owners to notify it of any changes. This is the basis upon which the plaintiff contends that a posting to a lot owner, as is known and understood by the corporation, at that person’s last known address is proper service for s 155 of the Act. This is so, it is said, even though the person may be the previous owner but that is not known by the corporation. This is because the identity of the owner as the person and therefore the address of that person remains the last known address of the owner for the purposes of delivery of documentation and that pertains until such time as there is a change. I will deal with that argument later.
In its defence in response to the claims of the plaintiff about amounts payable under notices issued pursuant to s 114 of the Act, the defendant raises issues in relation to a sinking fund, a request for information in relation to the sinking fund that was not provided, a failure to supply a certificate of occupancy for lots 1101, 1102 and 1103 and the effect of a fire safety notice. The plea concerning the notices issued pursuant to s 114 deal with amounts that are payable (usually at the developer’s cost) for the administrative fund contributions, the car stacker fund contributions, the special levy-inspections/advice, the sinking fund contributions, the special levy-car stacker from time to time as required and also in relation to interest, final notice fees and debt recovery fees.
Notwithstanding these pleas, there is no plea about any effect upon the discretion of the Court, there is no challenge to the notices and there is no challenge in the evidence before me to the evidence of Mr Wilckens in his affidavit (Exhibit P3) that all of the details were forwarded to the defendant. I am unable to make any specific findings about any of the matters raised in the defence because the defendant elected not to give evidence in relation to them. Once the level of the contribution has been fixed by a resolution under s 114(1), the liability upon the owner arises. That liability attaches to each lot in a share proportional to the lot entitlements pursuant to s 114(3).
I am satisfied that on the plaintiff’s evidence, the only resolutions that can be in contest are those made on 26 May and 2 August 2018. The question for my consideration is whether the plaintiff has strictly complied with the requirements of s 114 and Regulation 20 of the Act about giving notice of the meeting and the proposed resolutions. Conversely, if it did not do so, what is the result.
I am satisfied that the first quarterly contributions were due and payable because the relevant documents were served upon the developer and the resolutions were properly made. At that time, the defendant was not the owner. I am also satisfied on the evidence that the plaintiff then resolved to change the period and due date for those contributions and this did not require notice in order for the amount to become payable under s 114 of the Act. A further invoice was issued on 7 May 2018 but that does not affect the resolution in relation to the first quarterly contributions made prior to the time that the defendant became the owner.
Then a number of contribution notices were raised and these were served on the last on known address of the developer. They were: -
1On 25 May 2018 – a special levy for inspection/advice;
2On 20 June 2018 – a quarterly administration contribution levy;
3On 20 June 2018 – a quarterly car stacker contribution (to applicable lots);
4On 9 August 2018 – a special levy in relation to insurance;
5On 9 August 2018 – a sinking fund (first claim);
6On 9 August 2018 – a sinking fund (second claim);
7On 20 September 2018 – a quarterly administration fund contribution claim;
8On 20 September 2018 - a quarterly car stacker contribution; and
9On 27 November 2018 – a special levy/car stacker (to applicable lots).
The only documents directed to and received by the defendant were a bundle of overdue statements.[16] These did not provide the information as prescribed under s 114 preparatory to the calling of meetings and the passing of resolutions for the payment by owners of these amounts as levies, contributions to sinking funds and administration fund contributions. The plaintiff submits that all of this occurred because of the defendant’s own breach of the bylaws in failing to advise of the change of ownership. The plaintiff requests that the Court exercise its jurisdiction under s 142 of the Act because it says it has a just claim to the full amount of this debt and it should not be defeated by these technical difficulties.
[16] Exhibit P1, Tab 42.
I have earlier mentioned the positive aspects raised by the defendant in response to the claim under s 114. I am satisfied on the evidence that the fire safety notice did not apply to levels 11, 12 and 13.[17] The rectification work that is required relates only to levels one to ten and this was within the authority and the auspices of the secondary corporation. I am also satisfied that the sinking fund issue is to be understood as was explained by Mr Wilckens in his evidence.[18] The sinking fund was required under s 114(3) to be raised from the owners in accordance with lot entitlement and determined in accordance with the unimproved value of the lot. There were no certificates of occupancy in relation to 1101, 1102, 1201. The evidence before the Court is that there could not be occupation of those three lots because there is nothing there to occupy. As well, the corporation is not required to provide a certificate of occupancy for those areas when the owner of them is in default in making payments of amounts required to be paid under s 114 of the Act. The plaintiff contends that the amount outstanding currently is in the order of $390,000 and this amount is due and payable by the defendant.[19]
[17] Exhibit P3, [15] – [39].
[18] Exhibit P3, [40] – [57].
[19] Exhibit P2, Third Affidavit of Chapman.
The defendant raises within its pleadings rights of set off and counterclaim. Before considering those matters, it is first necessary to consider what claim I accept has been proven and respect of which a judgment may be given in favour of the plaintiff. Once that is done, I will then consider questions of set off and counterclaim.
The plaintiff’s claim is put on two bases the first, that notwithstanding the plaintiff did not deliver relevant notices to the defendant as required by the Act, the defendant remains liable for the claims as reflected in those notices, they having been delivered to the developer as the last known address of that person. This is based upon the contention of the plaintiff that as the Act is a remedial statute, it must be read in a broad and generous way and undue technicalities should not delay a claim of an entity in the position of the plaintiff corporation. Alternatively, the plaintiff claims that these matters arise for determination under s 142 of the Act and in the exercise of the discretion of the court under s 142(7) and (8) the Court may give a judgment on any monetary sum. I may hear and determine this application and in doing so I should act according to equity, good conscience, and the substantial merits of the case without regard to technicalities and legal forms. I am not bound by the rules of evidence but may inform myself on any matter in such manner as I think fit.
The plaintiff contends that in reaching my decision I may take into account the behaviour of the defendant in and about the events that occurred in 2018 after it became the owner of the allotments that were earlier identified as the developer’s lots. As mortgagee in possession, the defendant has sold a large number of these lots and upon settlement of a number of these lots, there has been a discharge of the claimed liability owed on those lots. On some of the sales there has not been any discharge of liability. The plaintiff contends that in reaching my decision, I may take into account both the provisions of the Act in relation to, for example service under s 155 of the Act as well as the remedial nature of the Act and then the conduct of the defendant, in particular the continuous disclaimer by Mr Ventrice of any interest as an owner in any of the allotments. That conduct of Mr Ventrice was demonstrably false. I am satisfied that a substantial portion of the conduct of the plaintiff allegedly in failure of the strict technical obligations under the Act was contributed to by the conduct of the defendant and in particular Mr Ventrice as I have found. It is in that background that I turn to consider the operation of Part 14 of the Act.
Part 14 of the Act deals with resolution of disputes and under s 141(a), a community corporation may apply for relief. Therefore, the community corporation may make application for a form of relief that usually will be connected with a right arising under an Act or at Common Law. Any application is required to be made under s 142 of the Act and there are a number of bases upon which an application for relief may be made under that section. Section 142(1)(d) provides that an application for relief may be made if a dispute arises between a community corporation and a member in relation to any aspect of the occupation of use of a lot.[20] The section and the Part makes clear that Parliament intends for s 142 to have a broad operation. The application for relief may be made in respect of a dispute. That dispute can arise in connection with any aspect of the occupation or use of a lot. When regard is had to the scheme of the Act that I have set out above, the broad form of expression ‘any aspect’ should not be read down. An aspect of the occupation of a lot will, in context, include all levies payable by a lot owner. That is because those levies are an aspect of the occupation of the lot when regard is had to the scheme the Act. In light of the findings of fact that I have made, the defendant is an owner of a community lot. Under s 174(1) of the Act, as an owner, it is a member of the corporation. Any dispute about any aspect of the occupation of the defendant as an owner and member of the corporation is a dispute that arises between the plaintiff corporation and the defendant as a member of the corporation for s 142(1)(b)(i). I am therefore satisfied that the issue before the Court is one that attracts the jurisdiction under s 142 of the Act, as it is an application for relief under s 141(a) of the Act.
[20] s 142(1)(d)(i) and (3).
Section 142(7) reads as follows:
A court, in hearing and determining an application under this section, should act according to equity, good conscience and the substantial merits of the case, without regard to technicalities and legal forms, and is not bound by the rules of evidence but may inform itself on any matter in such manner as it thinks fit.
I refer first to the preamble phrase ‘… in hearing and determining an application under this section…’. I have found that the application before the Court is an application under s 142. I am called upon to hear and determine that application. I am therefore required to proceed judicially to identify the legal relationships between the parties, the substance of the dispute and to make a determination of that dispute and to grant any relief that I see fit.[21] In doing so, I am required to act according to equity, good conscience and the substantial merits of the case without regard to technicalities and legal forms. I am not bound by the rules of evidence. I may inform myself on any matter in such manner as I think fit.
[21] Section 141(a) of the Act.
This form of expression has been considered by superior courts on a number of occasions and there is now considerable guidance as to the approach that I should take when exercising this jurisdiction. The relevant authorities are helpfully gathered in the decision of White J in Griggs v Norris Group of Companies.[22] The breadth of this formulation allows me to do what I believe to be ‘… right and fair and honest between man and man…’.[23] The meaning of these words will vary according to context. They are not terms of art and they have no fixed legal meaning independent of the statutory context in which they are found.[24]
[22] (2006) 94 SASR 126 at [29].
[23] Colliery Employees’ Federation v Northern Proprietors’ Association [1904] AR (NSW) 182 at 185 per Cohen J.
[24] Qantas Airways Ltd v Gubbins [1992] 28 NSWLR 26 at 30 per Gleeson CJ and Handley JA; Trittenheim Pty Ltd v H&H Gill Nominees Pty Ltd (1994) 63 SASR 434 at 442 per Olsson J.
I have earlier explained the statutory context of this Act. I have explained that it is a remedial Act and its structure is intended to facilitate the establishment and conduct of the business of community corporations and the resolution of disputes arising therein. In approaching my task here, and as I have already said, I am required to act judicially and to determine the enforcement of the rights of the parties as part of that judicial function. I do not have an ‘arbitral (function)… in establishing new rights and entitlements…’.[25]
[25] Griggs at [35] per White J.
The words “hearing and determining the application” provide the limits of the jurisdiction that I will exercise and so are not words of additional jurisdiction. This is the way the content of the sub-section provides the roadmap about the way in which jurisdiction is to be exercised. The words are ‘…facultative and… not restrictive…’[26] and enable me to have regard ‘…more generally to commercial considerations than would be done if the matter were heard in court…’.[27] In Griggs at [38] White J said as follows:
[38] The third general observation is that the direction that the IR Court and Commission are governed in the exercise of their jurisdiction by equity, good conscience etc relates both to matters of procedure and substance. The reference to “substance” indicates that the IR Court and Commission are to have regard to equity, good conscience and the substantial merits of the case in relation to the issues of substance which arise in matters before them and not just in the matters of evidence or procedure which may arise. Further, the presence of s 154(1)(b) and s 154(2) indicates that s 154(1)(a) is intended to encompass more than the ability to receive evidence not otherwise admissible in courts of law and more than a requirement to observe the requirements of procedural fairness.
[26] Minister for Immigration and Multicultural Affairs v Eshetu (1999) 197 CLR 611 at [49] per Gleeson CJ and McHugh J.
[27] Eagle Star Insurance Co Limited v Yuval Insurance Co Limited [1978] 1 Lloyd’s Rep 357 per Goff LJ and Sea Ory v Betamore Pty Ltd (In Liq.) (1993) 60 SASR 393 at 414 per Duggan J.
I am unable to detect any difference between s 154 of the IERA considered by White J in Griggs and s 142(7) of the Act. I do not consider that the expression in s 154(1)(a) of the Court being ‘governed in matters of procedure and substance…’ to be any different to the expression ‘…a court in hearing and determining an application under this section’.
I accept, as did White J in Griggs, that the exercise of jurisdiction whilst acting according to equity, good conscience and the substantial merits of the case relates to both matters of procedure and substance which may arise in this matter. That is the way that I will proceed.
The powers that I may exercise are prescribed within s 142(8). The relevant powers that attract jurisdiction in this matter are as follows:
Section 142(8)
A court may, in respect of an application under this section –
(a) …
(b) …
(ba) …
(c) Order that a party takes such action as is, in the opinion of the court, necessary to remedy any default, or to resolve any dispute and its specified in the order;
(d) …
(da) Make a declaration as to the validity of –
(i)…
(ii)Any decision or purported decision of the corporation; or
(e) …
(ea) …
(f) Give judgment on any monetary claim; or
(g) …
(h) Make orders as to costs; or
(i) Make incidental or ancillary orders.
I do not consider that the content of s 142(8)(i) provides any extension of jurisdiction in this matter. Incidental or ancillary orders is an expression well understood.
The principal submission of the plaintiff was that but for the technicality that arose concerning the May and August 2018 meetings, the plaintiff’s claim would otherwise have been for a statutory debt. The plaintiff claims in the alternative for an order for judgment in the amount of its claim. It does so in recognition of the technical difficulties presented by the circumstances as they pertained in May, June, July and August of 2018. It seeks a monetary judgment because the claims in relation to the sums payable in answer to the resolutions passed at those meetings are only affected by mere technicalities. Those technicalities arose because of the conduct of the defendant through Mr Ventrice. At that time, Mr Ventrice disavowed any ownership of the defendant of any lot of which the defendant was mortgagee in possession and disclaimed any liability as an owner. In this, he was incorrect. On behalf of the defendant, Mr Ventice indicated that he would not be attending at any meeting because the defendant is not an owner. He purported to suggest that he did not know what an “EGM” was at that time. As a result, the documentation was served upon the registered proprietor of the lot which had been excluded as an owner under the operation of s 3 of the Act purportedly in fulfilment of the s 155 obligation.
It is known that the defendant took possession of the identified lots on or about 19 March 2018 and became an owner of them to the exclusion of the developer. As a result, and under the bylaws of both corporations, the defendant was required to give notice of the change in ownership but failed to do so and so the register of owners kept with the agent Whittles was not updated. I am satisfied that there was an onus upon the defendant as the owner of the lots of which it took possession as mortgagee in possession to notify the plaintiff of those changes. It failed to do so and then later contributed to the confusion in the mind of Mr Chapman of Whittles about who was the correct recipient of the notices as the owner. It was during this time that Mr Chapman received conflicting information from the liquidator and from the defendant. That is the reason why Mr Chapman acted to serve the documentation on the developer’s last known address under s 155 of the Act.
Also, the defendant made quite clear in correspondence that it would not be attending any meeting as an owner. It was informed, directly and indirectly, that the plaintiff considered that the defendant was an owner but on behalf of the defendant, Mr Ventrice immediately responded by saying that the defendant would not be exercising any rights as an owner, that the defendant was not an owner and would not purport to be an owner. The defendant apparently only saw its role as the controller to sell the lots in respect of which it was mortgagee in possession. One feature of this approach which I have mentioned earlier is that in respect of a number of the units that have been sold, the debts that were outstanding and which were the subject of the resolutions on 26 May and 2 August 2018 have been paid at the time of settlement. It follows that although the defendant disavowed any liability as an owner for s 3 of the Act and disclaimed any financial responsibility, it recognised its obligation and liability to discharge the monetary obligations arising under the resolutions passed at those meetings when purporting to give good title in the lot to the new purchaser. Despite all of that, the position of the defendant did not change. Mr Ventrice vehemently denied any aspect of being an “owner” for the Act at any time, announced that he would not attend any meeting.
On 29 October 2018, overdue statements were sent to the defendant. These sought payment of the amounts alleged to be payable. However, the amounts due were said to be overdue and no date for payment 14 days hence were sent. Even though there were not in strict compliance with the requirements of a contribution notice under s 114(6) and the Regulations under the Act, these documents did not require payment inside of the 14 days provided for under that section and the Regulations.
I have earlier described the factual position concerning the defendant as communicated through Mr Ventrice. I am satisfied that even if proper notice was given, the defendant would not have attended the meetings because it disavowed that it was an owner. Through the process of sale of different lots as mortgagee in possession, it has attended to the payment of the amounts due in respect of a majority of the units sold, it has attended to the payment of the amounts resolved and required to be paid as decided at those two meetings of 26 May and 2 August 2018. In one sense, the defendant has taken an inconsistent position. It could not have transferred clear title in the lot without having discharged that liability if that was its choice. This would avoid the purchaser becoming the debtor in its place. If that is the correct position then on one argument no prejudice is suffered because the liability of the defendant may fall upon the purchaser. Due to the absence of submissions on the point, I am not able to express a concluded view on this issue. There is no evidence about the position(s) of the purchasers.
At the time those meetings were held, the defendant had come under an obligation to make the contributions as they were prescribed at the meeting conducted by the developer on 12 December 2017. The defendant had not made payment of these amounts under those contribution notices. Finally, all of the details in relation to those debts were provided to the defendant by no later than November 2018 but again, until settlement of the relevant lots, the defendant refused to make any payment. It is apparent that a decision was made by the defendant to forestall the discharge of these financial obligations until settlement of the sale of the lots. This is what has occurred. That was a decision for the defendant but it does not ‘lie in the mouth’ of the defendant to then complain that having known of the meetings, having refused to attend and having known of its financial obligations arising from those meetings that it is somehow not answerable to the plaintiff corporation for those financial obligations. As I have described earlier in these reasons, it has discharged a substantial portion of those amounts from the sale of the lots. It would not have done so if it was not otherwise of the view that it was a liability that had to be discharged. As a liability to be discharged, it was incumbent upon the defendant to discharge the amount in order to give good title. That is what the defendant has done in the majority of cases.
The plaintiff further submits that, in effect, the defendant calls in aid its own breach of the bylaws. As I have earlier explained, the operation and binding effect of the bylaws are recognised within the Act. Those bylaws require advice of a change in ownership including contact detail and other information. There is no evidence to suggest that the defendant did not know of that requirement and I would not accept or act upon such a proposition. I proceed on the basis that the defendant was well aware of the requirement to observe the bylaws, to give notice of the change of owner and to remove any possibility of confusion in the mind of the corporation and its agents. It failed to do so and deliberately so. In my view, it cannot call in aid its own breach of the bylaws in order to avoid a monetary obligation which it may have as an owner.
Under s 141 of the Act, it is necessary for the plaintiff corporation to apply for relief. In this claim, the relief sought by the plaintiff is in the alternative: a claim for a statutory debt under s 114 of the Act or alternatively for judgment on any monetary claim together with costs and other orders. It relies upon s 142 of the Act, the approach that the court is required to take under s 142(7) and the orders that a court may make under s 142(8) of the Act. The plaintiff points to the power under s 142(8)(c) for the court to make an order that the defendant takes action necessary to remedy any default or, under s 142(8)(da) to make any declaration about any decision or purported decision of the corporation.
I have given careful consideration to all of the arguments and submissions of the plaintiff. Notwithstanding the strength of the case put by the plaintiff, I am satisfied that the requirements of s 114 of the Act and Regulation 20 under the Act must be strictly complied with by the corporation. If an owner has not received all the notices prescribed under the Act, then that owner should not be liable for the debts that arise and accrue as result of the resolutions passed at such a meeting. I consider that the reasons for holding this view are obvious. Under the operation of the section and the regulations, an owner would be put on notice of the intention of the corporation to, for example, impose a particular levy upon it for one thing or another connected with the building. Once that meeting of the corporation is held, the resolution is passed and documentation produced, the lot owner becomes indebted to the corporation and the debt becomes enforceable against that lot owner, without more. These are significant operational provisions which substantially affect the legal rights and interests of a lot owner. If it be the case that the lot owner decides to ignore the material provided to it, then that is the decision for the lot owner. The lot owner would then be visited with the consequences of the decision of the corporation and would be required to comply with any demand made upon it resulting from any resolutions made by the corporation at its meeting. A lot owner must have the opportunity to be heard, to have notice of the proposed resolution, be in a position to fully appreciate the effect upon it of the proposed resolution, have the opportunity to decide whether to attend at the meeting and vote in a particular way and, if it does, have the opportunity to be heard at the meeting. This is only part of the process contemplated under the Act. I consider that it would be anathema to that process for a lot owner, in the position of this defendant, to be visited with those consequences in the absence of compliance with the requirements of the Act. One of the aims of the Act is to ensure that full information is provided to the lot owner, that decisions are made in a fully informed way and that the business of the corporation and its continued existence, is guaranteed because of the structure in which the decisions are made.
I do not consider that the powers under s 142(8) can be exercised, as it were, in a vacuum. If it were the case that Parliament intended for the court to have the discretion to waive compliance with, for example, s 114 and Regulation 20, then it would have provided that power. It has not done so. Although I would not read down the power in s 142(7), when considering the substantial merits of the case, it is still necessary for me to have full regard to the statutory structure in which the issue arises. That statutory scheme is prescribed in the Act and the Regulations. There is no power to waive compliance with that scheme and, concomitantly, I am not satisfied that the failure to comply with the requirements of the Act and so the imposition of an obligation upon the defendant of the statutory debt or monetary claim, is consistent with the substantial merits of the case.
As I have said at the outset, the provision does not give me any extra power although that may be a useful additional broadening of the powers under the section. That being so, I am unable to find that there is any basis upon which I would make an order that the defendant should be required to pay the full amount of the plaintiff’s claim or that I should make any declarations as to a purported decision of the corporation.
It follows that I am unable to accede to the plaintiff’s primary submission. I am not in a position to make an order for the payment of the full amount of the plaintiff’s claim. I refer in particular to Exhibit P10. The summary on the last page of the exhibit sets out the total amounts of the claim inclusive of the full amounts allegedly due and payable by the defendant and those claims in respect of which there has been compliance with the requirements of the Act. Before additional interest, that claim is in the amount of $122,738.
In its defence and counterclaim, the defendant pleads that it has caused its agent, BCH Services Pty Ltd to complete necessary works for the occupancy of the basement areas of August Towers and to provide access, essential services and amenities to August Towers. These works are set out in schedule A to the counterclaim. The first claim relates to the commissioning of lifts. That is an expense of the primary corporation. The second relates to remedial works to lifts, the third relates to the commissioning of smoke and management systems in the basement area as well as fire systems and carpark ventilation systems. All of these are the responsibility of the primary corporation. Then a claim is made for repairs and remedial work to Davaar Lane. That is the lane immediately to the north of the building. It is relevant because of a right of way. It does not form part of the works. It is not referable to anything done by, to or for the plaintiff corporation. There are claims for line-marking to the basement, fire sprinkler installation to the basement carparking, sweeping and scrubbing of the basement carpark, cellular upgrade to the lift, calls for lifts services, additional smoke detectors required to be fitted to the basement area and building intercom systems. They are all matters that are the responsibility of the primary corporation. Claims are also made for remedial works to the paved footpath areas to Hutt Street. This is not responsibility of the plaintiff secondary corporation nor are further remedial works to paved footpath areas in Hutt Street, clearing basement and cleaning walls of the basement areas. As I have earlier described, these basement matters are all connected with the primary corporation. They may well be matters in respect of which the primary corporation may make a claim against the secondary corporation but that has not occurred. Those claims fail at the outset because they are claims properly brought against the primary corporation.
The defendant then pleads that the plaintiff was aware of the appointment of BCH Services Pty Ltd and the works carried out by it. The particularity, pleaded by the defendant, are emails between the plaintiff and the defendant, the minutes of extraordinary general meeting of 2 August 2018 and the management committee minutes dated 2 August 2018. Notwithstanding the denial of liability by the defendant in relation to what transpired at the 2 August 2018 meeting, it now relies upon those minutes as the basis for a counterclaim against the claim of the plaintiff. The difficulty that stands in the way of the defendant is that these are not particulars of how a corporation became aware of particular works. Also, the defendant pleads that on 2 August 2018, the plaintiff approved two special levies for building and maintenance issues in the amount of $200,000 for the replacement of the bottom slats on the garage roller door, sign writing for Davaar Place garage entrance, flush and paint walls to car stacker, enhance main entrance foyer, generator to car stacker pumps and lift car interior upgrade. Reliance is placed upon the minutes of the extraordinary general meeting of the plaintiff corporation of 2 August 2018 and the attached sinking fund budget of July 2018. In the same fashion, the defendant relies upon the record of the meeting which it refused to attend as proof, allegedly, of the knowledge of the plaintiff about work to be done.
The defendant then pleads that no certificate of occupancy has been issued in respect of areas on levels 11, 12 and 13 even though the defendant has obtained development approval for the completion of those levels. The defendant says it is not able to undertake the works on levels 11, 12 and 13 because of outstanding rectification work required under a fire safety notice issued by the Adelaide City Council under s 71(2) and (3) of the Development Act. I have earlier dealt with that allegation. I reject it. There is no factual basis to support it. The fire safety notice related to works to be done on levels 1-10. The evidence before the court satisfies me that a program for the completion of those works by the plaintiff has been submitted to council and has been accepted. This has addressed that issue and the notice cannot work as a bar to progressing the work to be done by the defendant. I find that it cannot be said that any works planned for levels 11, 12 and 13 have been forestalled by anything to do with the fire safety notice referred to in the pleadings.
Then in support of its unjust enrichment claim, the defendant pleads that the works in the Schedule of Works to which I have earlier made reference, directly facilitated access and amenities for the owners in the tower, or otherwise for work carried out for the benefit of the primary corporation. The defendant pleads that the plaintiff was aware of and acquiesced in the work done by the defendant, the plaintiff obtains some benefit from those works and it is unjust for the plaintiff to obtain that benefit. Alternatively, there is a plea that the sinking fund budget the subject of the plaintiff’s claim does not form part of the secondary community plan. The evidence before the court satisfies me that this pleading is factually incorrect.
In the further alternative, the defendant pleads that the plaintiff’s conduct in seeking to levy contributions against areas which are not complete namely levels 11, 12 and 13, where no certificate of occupancy has been issued is unjust or oppressive. In the further alternative, the defendant seeks an order that pursuant to s 142(8)(da)(ii) and (e)(ii), orders are sought that the decisions of the plaintiff are invalid and should be reversed. In the further alternative, the defendant pleads that it is entitled to a monetary judgment against the plaintiff by counterclaim.
For the reasons which follow, I consider that the whole of the defendant’s counterclaim should be dismissed. I have earlier expressed the view that having regard to the nature of the Act, its contents and its remedial purpose, the Act and its Regulations and bylaws operate as a “charter of rights, obligations and duties” between the lot owners.[28] The breadth of the Act means that it is a complete code in relation to questions of risks and obligation between a corporation and an owner and should be read so as to exclude restitutionary claims.[29] Consistent with what fell from the High Court in Mann,[30] I consider that because of the nature and breadth of the operation of the Act, it is inappropriate and unnecessary to also impose any remedy in restitution. I consider that such a claim would operate inconsistently with the statutory purpose of the Act which, as I have described, includes an obligation upon the community corporation to operate in accordance with the charter of rights and duties created by the Act. This includes certainty about allocation of risks and obligations where proper notice has been received and with the consent of owners. I am satisfied that if any remedy in restitution was imposed by an order of the court, there would be the immediate creation of uncertainty within the bodies operating under the terms of the Act having regard to their existing allocation of risks and responsibilities for the financial obligations of the corporation arising from time to time. This applies to both existing and future owners and for mortgagees and prospective mortgagees who may request and be provided with information.
[28] Ainsworth v Albrecth (2016) 261 CLR 167 at [59] per French CJ, Bell, Keane and Gordon JJ.
[29] Mann and Anor v Paterson Constructions Pty Ltd [2019] HCA 32 (per Gageler J at [59]; per Nettle, Gordon, Edelman JJ, Kiefel CJ, Bell and Keane JJ agreeing) at [158].
[30] n 29.
The nature of the corporate status of the community corporation and its members as a lot owner is different from, for example, the position of, say, shareholders under a corporation under the Corporations Act 2001 (Cth). Under the Act, there is a direct liability of the member of the corporation and risks are known and applied in accordance with the requirements of the Act. In short, an obligation would not be imposed or accepted except in accordance with the structure established under the Act. Any expenditure requires a resolution of the corporation, payment into a sinking fund and approval by an ordinary resolution of the corporation. When regard is had to the full panoply of powers and responsibilities, checks and balances and regulations under the Act, I am satisfied that there is no room for restitutionary claims.
If I am wrong about that view, I am also of the view that the Act itself operates to defeat any specific restitutionary claim of the defendant. Any order for restitution cannot be in conflict with the overriding policy pursuant to which the transaction is made illegal. There is no suggestion of illegality in any of the transactions. It relies upon a value allegedly transferred to the plaintiff by the defendant after the expenditure of money by it. Those monies are alleged to have been expended on behalf of the community corporation for the improvements. However, all of this work was done in the absence of compliance with the formalities required by the Act with respect to such expenditure and work. In my opinion, this is a further example of the inconsistent approach of the defendant. On the one hand, it may seek to take advantage of the failure to comply with the strict technical requirements of the Act whereas on the other, without having complied with those strict technical requirements, it seeks the allocation to it of the benefit of its expenditure.
Alternatively, I am of the view that the claim must fail. This is because it is based upon the unifying legal concept of unjust enrichment but there must be some identifiable basis upon which it is said that one party was unjustly enriched to the detriment of the other. It is at least necessary to identify that the defendant has been enriched at the expense of the plaintiff which enrichment is unjust.[31] There is no pleading and no evidence led about how any such alleged enrichment occurred or was at the expense of the defendant and there is no pleading or evidence of any unjust factor. There is no evidence that the work was undertaken and payments made in respect of it at the request of the plaintiff and at its highest, it is alleged to be unjust in the circumstance because of some unpleaded reliance upon an assertion of awareness of the plaintiff about the work being undertaken. This is insufficient to make out a claim for unjust enrichment having regard to the judgment of the High Court in Mann.[32] I have also earlier assessed the schedule attached to the pleadings of the defendant and I am unable to identify any basis under the Act or under any resolution of the corporation giving rise to any claim for the work done. There is nothing in the nature of the pleading and no evidence was led on the point identifying the nature of the work done, the connection to the plaintiff and the injustice of the plaintiff not making some form of contribution to the work.
[31] Lampson (Australia) Pty Ltd v Fortescue Metals Group Limited (No 3) [2014] WASC 162 at [51].
[32] At n 29.
I also consider that it is arguable that there was no enrichment at the expense of the defendant as mortgagee in possession. That is, there is no evidence that any of the work was done at the expense of the defendant, of the actual value of the work, of the amount paid by the defendant or any other detail in relation to it.
Any payment by a developer is in discharge of the developer’s obligations and debts and were not the obligations of the community corporation. Secondly, as has occurred, the mortgagee in possession would recover costs from the sale of the lots and so any work done would be at its expense. There is no basis on the evidence to determine what difference there would be if, for example, the work had not been done and the developer or the defendant as mortgagee in possession had attempted to sell the lots. If there is a difference, it may not be capable of ascertainment.
I am also of the view that at its highest, all that could be said of the defendant’s counterclaim is that there has been a conferral of the benefit but the defendant has failed to establish some entitlement to recover.[33] This was not a case of free acceptance but only an alleged liability arising on the basis of knowledge and acquiescence by the plaintiff. There is no evidence to justify such an assertion.
[33] Lumbers v W Cook Builders Pty Ltd (in liq) (2008) 232 CLR 65 per Gummow, Hayne, Crennan and Kiefel JJ at [80].
In the whole of those circumstances, especially where the defendant led no evidence on any basis in response to the plaintiff’s claim and in support of its counterclaim, there is no basis to make any finding that the plaintiff has in any way been enriched by anything done by the defendant. There is no basis to make any finding that any such enrichment (which did not exist) has come at the expense of the defendant. There is therefore no basis to make any finding that the enrichment must be unjust. No basis has been pleaded or proved that the plaintiff did not take the reasonable opportunity open to it to reject proffered services (of the defendant).[34]
[34] Ibid at [53] per Gleeson CJ.
It follows that there is no factual basis, nor any legal basis for the defendant to make out any claim for unjust enrichment. The counterclaim is dismissed.
Annexure A to the second statement of claim sets out the particularity of the plaintiff’s monetary claim. In the second defence, at paragraph 23, the defendant denies that the plaintiff was entitled to the relief sought.
At trial, the plaintiff tendered in evidence 10 exhibits. I refer in particular to Exhibit P1, the second affidavit of David Chapman sworn 26 November 2019; Exhibit P2, the third affidavit of David Chapman sworn 29 November 2019; Exhibit P3, the second affidavit of David Wilckens sworn 28 November 2019; and Exhibit P4, affidavit of Samuel Antony Morphett sworn 22 November 2019.
The material contained within these exhibits proves on the balance of probabilities the content of Annexure A to the second statement of claim. I am satisfied that upon a review of the tendered court material, the claims made in relation to these items are appropriate and are substantiated. Greater particularity in relation to them is then contained within Exhibit P10 entitled ‘Table of Contributions and Interest’. This document summarises the material within the exhibit in relation to each of the relevant lots and there is a schedule at the end of the document is a summary of the amount owing by the defendant as well as the method of calculation.
I am satisfied on the evidence before the court that in relation to each of the lots the particularity of which is described on the face of each page of Exhibit P10, that the amounts therein claimed are substantiated within the documentation annexed to the affidavits in Exhibits P1, P2, P3, P8 and P9. There is further material contained within Exhibit P4, the affidavit of Samuel Antony Morphett sworn 22 November 2019 concerning promotion of the sales of various portions of the building and especially the units on levels 11 and 12.
I am satisfied that when reference is made to Annexure A and the detail provided in relation to lots 102, 103, 108, 203, 208, 303, 401, 402, 403, 404, 502, 602, 604, 702, 704, 705, 801, 803, 1004, 1101, 1102 and 1201, that these claims are proved on the balance of probabilities based on the evidence before the court. Exhibit P10 also discloses some detail that reflects the fact of sale of particular units. I refer to the front page of Exhibit P10. Detail is set out in relation to lot 106. The last entry concerns a final notice sent on 18 February 2019 in the amount of $44.00. There are no entries after 18 February 2019. That is to be contrasted with the position for lots 102 and 103 where the entries end at 20 November 2019. The evidence is that, for example, lot 106 has been sold in or about February 2019 and that the obligations that have accrued prior to that time have been discharged. These include the financial obligations accruing between 28 May 2018 and 20 September 2018 which are those obligations that the defendant contend are not payable in any event because of what it contends to be a breach of the requirements of s 114 and Regulation 20 of the Act. A similar position pertains for lot 108 which is also reflected on the first page of Exhibit P10.
Exhibit P10 discloses that in respect of each of the units that have been sold and amounts are outstanding, then those amounts are recorded. This reflects the change of position of the defendant as I have set out above. For a majority of sales, there has been a discharge of the liability. In a small number of the sales, there has been no discharge of liability. Where sales have occurred and there has been no discharge of liability, then the outstanding liability is recorded on the face of Exhibit P10. An example is lot 106.
For the reasons that I have earlier expressed in respect to the limitation upon my discretion under the Act, I am satisfied that the detail recorded on Exhibit P10 shows overall, the total contributions payable by the defendant to the plaintiff is as at 20 November 2019 and the total fees and interest payable as a debt for s 114 of the Act is in total $123,590.24.
I am satisfied that on the whole of the evidence before the court, that sum of $123,590.24 is due and payable by the defendant to the plaintiff as a statutory debt. I am satisfied that the defendant has not made out its defence. I would dismiss the defendant’s counterclaim.
I am therefore satisfied that the substantial merits of the case overwhelmingly favour the plaintiff, I have not taken a technical or unduly technical view of these matters and I am satisfied that the plaintiff has made out its case both at law and in fact.
I am satisfied that the plaintiff is entitled to a judgment in its favour under s 144 or alternatively under s 142 of the Act in the amount of $123,590.24.
In the circumstances, there will be orders as follows:
1Judgment in favour of the plaintiff under s 114 of the Act in the amount of $123,590.24;
2Interest at the rate of $15.00 per centum per annum at the rate of $50.79 per day;
3The defendant’s counterclaim is dismissed;
4I will hear the parties further in relation to the calculation of interest and in relation to costs.
(1)Subject to section 87(2), by-laws may be varied by special resolution of the community corporation.
(2)Within 14 days after the passing of a resolution varying the by-laws or the making of an order by a court varying a by-law, the corporation must lodge with the Registrar‑General—
(a) a copy of the by-laws as varied; and
(b) a copy of the resolution or order; and
(c) the fee prescribed by regulation.
(3)The Registrar-General may extend the period for lodgement in the case of variation of the by-laws by a court order but not in the case of variation by resolution.
(4)In the case of variation of the by-laws by resolution, the corporation must provide evidence to the satisfaction of the Registrar-General that the variation was made by a special resolution of the corporation.
(5)Copies of the resolution and the by-laws as varied must be certified in accordance with the regulations.
(5a)The certified copy of the by‑laws must be endorsed with a certificate, in the form prescribed by regulation, from the person who prepared the by‑laws or an officer of the community corporation certifying that the by‑laws have been correctly prepared in accordance with this Act.
(6)If the requirements of this Part are satisfied, the Registrar-General must file the certified copy of the by-laws with the plan of community division in substitution for the copy previously filed with the plan.
(7)If a community corporation fails to comply with the requirements of this section in relation to the variation of the by-laws by a court order, a member of the corporation may comply with them on its behalf.
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