EB 9 & 10 Pty Ltd v The Owners SP 934 (No 2)

Case •

[2018] NSWSC 546

•

30 April 2018

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: EB 9 & 10 Pty Ltd v The Owners SP 934 (No 2) [2018] NSWSC 546
Hearing dates: Written submissions 18 and 23 April 2018
Date of orders: 30 April 2018
Decision date: 30 April 2018
Jurisdiction:Equity
Before: Kunc J
Decision:

Declaration made; plaintiff to pay the defendant’s costs of the proceedings

Catchwords: COSTS - Party/Party - Exceptions to general rule that costs follow the event - Whether Strata Schemes Management Act 2015 (NSW) made adequate provision for the enforcement of rights or remedies which plaintiff sought to enforce in Supreme Court – Application to Supreme Court for declarations to be discouraged where relief to the same effect available in NCAT - Strata Schemes Management Act 2015 (NSW), s 253
Legislation Cited: Strata Schemes Management Act 2015 (NSW)
Cases Cited: EB 9 & 10 Pty Ltd v The Owners SP 934 [2018] NSWSC 464
Category:Costs
Parties: EB 9 & 10 Pty Limited ACN 140 310 729 (Plaintiff)
The Owners — Strata Plan No 934 (Defendant)
Representation:

Counsel:
Dr E Peden (Plaintiff)
M R Pesman SC (Defendant)

  Solicitors:
Clarke Kann Lawyers (Plaintiff)
Chambers Russell Lawyers (Defendant)
File Number(s): 2016/16782
Publication restriction: No

Judgment

Summary

  1. The Court delivered its principal judgment in these proceedings on 12 April 2018: EB 9 & 10 Pty Ltd v The Owners SP 934 [2018] NSWSC 464 (the “Principal Judgment”). These reasons should be read in conjunction with the Principal Judgment and terms defined in those reasons have the same meaning in this judgment.

  2. At the time the Court delivered the Principal Judgment, it proposed to the parties these draft orders for their consideration (the “Draft Orders”):

  1. A declaration that the plaintiff is entitled to access the common property of Strata Plan 934 (the “Common Property”) located on the land identified as Folio Identifier CP/SP 934, located at 45-53 Macleay Street, Potts Point in the State of New South Wales, including for the purposes of parking vehicles in its Lot 89 being a car park space in Strata Plan 934.

  2. A declaration that the defendant is not entitled to restrict or impede the plaintiff’s access to and use of its Lot 89 in Strata Plan 934 via the Common Property by developing or impeding access to that strip of the Common Property which commences at the southern boundary of Lot 89 and extends 870mm into the Common Property and runs the entire length of the southern boundary of Lot 89 with the Common Property.

  3. The defendant pay the plaintiff’s costs of the proceedings.

  1. The parties were unable to agree on a form of orders to give effect to the Principal Judgment. Written submissions were provided and the parties agreed that the Court should deal with the remaining disputes about the form of the declarations and costs on the papers.

  2. The Court has concluded that only a declaration in terms of paragraph (2) of the Draft Orders should be made because, on the proven facts, that is all that is required to quell the dispute.

  3. In relation to costs, the Draft Orders reflected the proposition that costs follow the event. However, the Court accepts the defendant’s submission that this is a case where, for the purposes of s 253(2) of the Management Act, the Court should form the opinion that the taking of the proceedings in this Court was not justified because the Management Act made adequate provision for the enforcement of the rights and remedies which the plaintiff sought to enforce in these proceedings. Having formed that opinion, s 253(2) requires the Court to order the plaintiff to pay the defendant’s costs, notwithstanding the plaintiff’s success in the proceedings.

The plaintiff’s submissions in chief

  1. The plaintiff submitted that the Draft Orders should be made. In particular, it submitted that it had succeeded in the proceedings and that the ordinary rule of costs following the event should apply. It said that there were no disentitling circumstances that would have warranted a different result.

  2. In addition to the Draft Orders, the plaintiff sought an order under s 90 of the Management Act that, as a lot owner, it not be required to contribute to any payment of costs by the defendant in relation to the proceedings.

The defendant’s submissions

  1. The defendant submitted that only the declaration described in paragraph [49] of the Principal Judgment should be made, corresponding to paragraph (2) of the Draft Orders.

  2. The difficulty with the addition of any declaration in terms of paragraph (1) of the Draft Orders was said to be that it would invite further dispute because while the negative declaration would affect only the 870mm strip, the positive declaration would, in theory, provide a wider right in respect of the whole of the adjacent common property. It was submitted that the declarations would be inconsistent.

  3. As to costs, the defendant submitted that the plaintiff should pay the defendant's costs or, in the alternative, each party should pay its own costs.

  4. In support of the first option the defendant submitted that the plaintiff could, and should, have sought the relief from NCAT instead of this Court. Although the plaintiff had succeeded in obtaining some relief, this case fell within s 253 of the Management Act:

“253   Other rights and remedies not affected by this Act

(1)   Nothing in this Act derogates from any rights or remedies that an owner, mortgagee or chargee of a lot or an owners corporation or covenant chargee may have in relation to any lot or common property apart from this Act.

(2) In any proceedings to enforce any such right or remedy, the court in which the proceedings are taken must order the plaintiff to pay the defendant's costs if the court is of the opinion that, having regard to the subject-matter of the proceedings, the taking of the proceedings was not justified because this Act or Part 4 of the Community Land Management Act 1989 makes adequate provision for the enforcement of those rights or remedies.

(3)   The defendant's costs are to be as determined by the court.”

  1. While the defendant accepted that NCAT did not have power to grant a declaration, it argued that s 253 is not directed to the precise form of relief, but whether or not the Management Act made adequate provision for the enforcement of the relevant rights. NCAT could have enforced the plaintiff's rights by, for example, making an order binding the defendant not to alter the common property in the same terms as the declaration to be granted by the Court.

  2. Alternatively, the defendant submitted that in circumstances where the plaintiff had abandoned a large part of the relief sought at the outset of the hearing and obtained relief affecting approximately half of the area originally sought, the appropriate order was for each party to pay its own costs.

Plaintiff’s submissions in reply

  1. The plaintiff submitted that a declaration in terms of paragraph (1) of the Draft Orders was appropriate and not inconsistent with the declaration in paragraph (2) for two reasons.

  2. First, the declaration identified and declared for the benefit of the parties the plaintiff's non-exclusive right to access to all of the Common Property for any lawful purpose. This was necessary because of what were described as “the defendant's various steps that appear to deny that entitlement”.

  3. Second, the declaration in paragraph (2) prevented the defendant from making changes to the common property in a way that would prevent access to Lot 89. The declaration did not deal with the plaintiff’s right to access the remainder of the common property beyond the 870mm into the Area.

  4. In relation to costs, the plaintiff submitted that the Court had indicated it would grant declaratory relief. That relief had utility and there was no suggestion that the Court did not have jurisdiction to make declarations.

  5. Next, because the defendant accepted that NCAT did not have power to make a declaration, it was not open to the Court to form the "opinion that ... the taking of the proceedings was not justified because [the Management Act] makes adequate provision for the enforcement of those rights or remedies" for the purposes of s 253. There was no provision in the Management Act for a declaration and therefore there was not "adequate provision".

  6. The plaintiff also argued that to accede to the defendant's submission would mean a party was entitled to seek costs because it had argued in final submissions (but not in any pleading or transfer application) that a different forum would have been cheaper. Such a submission ought not be accepted, particularly in circumstances where the defendant had served expert evidence which was included in the court book but then not read.

  7. Finally, the plaintiff took issue with the defendant’s alternative submission that each party should be left to pay its own costs:

  1. The plaintiff did not "abandon a large part of the relief sought". Orders 3 and 4 in the relief claimed were abandoned, but those orders were effectively contained within orders 1 and 2 and based on the uncontested expert material, which was substantially accepted by the Court.

  2. The plaintiff had obtained substantive relief in one of the two alternatives put forward by its expert. It was not correct to characterise that as "relief affecting approximately half the area originally sought". The plaintiff had always sought a remedy of a right to use sufficient space in the common property in order to gain access to Lot 89. That was what the Court had ordered.

Resolution – the declarations to be made

  1. The Court accepts the defendant’s submissions that only the negative declaration proposed in paragraph 2 of the Draft Orders should be made. However, I have reached this conclusion for reasons slightly different to those propounded by the defendant.

  2. I do not accept the defendant’s submission that if the two declarations in the Draft Orders were to be made, they would be inconsistent. The answer to the present question is found in the discretionary consideration that declarations should only be made which are required to quell the dispute between the parties. In that regard, I do not accept the plaintiff’s submissions that the positive declaration is necessary because of “the defendant’s various steps that appear to deny that entitlement” and because the positive declaration would prevent the defendant from making changes to the common property which impeded the plaintiff’s non-exclusive right of access to Lot 84.

  3. The difficulty with the plaintiff’s submission is that the dispute between the parties was focused on access to the Area, being that part of the common property which was adjacent to Lot 84. There was, for example, never any suggestion that the plaintiff was not entitled to enter the carpark, drive through the common property (using the right of way — see paragraph [3] of the Principal Judgment) in order to park in Lot 84. Furthermore, the “various steps” that were ultimately the subject of the proceedings were clearly identified as the Building Proposal and the Garden Proposal (the metal chain incident having been resolved — see paragraph [17] of the Principal Judgment). These were confined to the Area. In other words, the Court is not satisfied that there was any dispute at a more general level in relation to the plaintiff’s non-exclusive right to use the common property and there is no suggestion in the evidence that the plaintiff’s entitlement to reasonable, non-exclusive use of other parts of the common property was in any way disputed or threatened by the defendant.

  4. The Court’s conclusion in relation to the question of declarations is found in paragraph [49] of the Principal Judgment. To give effect to that conclusion, and to quell the dispute which the parties presented to the Court, it is necessary only to make the negative declaration set out in paragraph (2) of the Draft Orders.

Resolution – costs

  1. Turning first to the defendant’s alternative submission, I am satisfied that, for the reasons given by the plaintiff (see paragraph [20] above), this is not a case where each party ought to pay its own costs. But for s 253(2) of the Management Act, I would have ordered the defendant to pay the plaintiff’s costs in accordance with the usual rule that costs should follow the event. The plaintiff succeeded in obtaining relief to vindicate the right which it claimed. There was no relevant disqualifying conduct. The fact the plaintiff obtained an order which was one of the narrower options identified in the expert evidence is not a reason to depart from the usual rule. I would also have made the order sought by the plaintiff under s 90 of the Management Act that, as a lot owner, it not be required to contribute to any payment of costs by the defendant in relation to the proceedings.

  2. However, the Court accepts the defendant’s submission that this is a case where, notwithstanding the plaintiff’s success, the Court is required by s 253(2) of the Management Act to order the plaintiff to pay the defendant’s costs. The Court has no discretion in the matter once it has formed the opinion referred to in s 253(2).

  3. It is necessary to identify the various components of s 253(2).

  4. First, it only applies “in any proceedings to enforce any such right or remedy”. This directs attention back to s 253(1), which refers to “any rights or remedies that an owner … may have in relation to any lot or common property apart from this Act”. Because the Management Act does not confer an express right to obtain the remedy of a declaration (see Division 4 of the Management Act setting out the orders that may be made by NCAT), the plaintiff was seeking a remedy “apart from” the Management Act. Furthermore, at least some of the rights which founded the plaintiff’s entitlement to relief (see paragraph [35] of the Principal Judgment) could also be described as “apart from” the Management Act, but it is neither necessary for me to decide this point, nor desirable given that it was not the subject of specific submissions.

  5. Second, in forming the requisite opinion, the court must have “regard to the subject-matter of the proceedings”.

  6. Third, the Court must be satisfied that (in this case) the Management Act, “makes adequate provision for the enforcement of those rights and remedies”. The rights and remedies are those which are “apart from this Act” (see paragraph [28] above). “Adequate provision” does not mean identical provision or relief to what might be available in another court. It means “sufficient for the purpose” of enforcing those rights or remedies.

  7. Fourth, only if the Court is satisfied of the matter identified in the preceding paragraph can it then go on to consider the causative link which must inform the requisite opinion, namely that the “taking of the proceedings was not justified because [the Management Act] makes adequate provision for the enforcement of those rights or remedies”.

  8. In its submissions in reply, the plaintiff (correctly):

  1. Did not suggest that this was a case to which s 253 did not apply because the right or remedy it pressed was not “apart from” the Management Act. It was “apart from” the Management Act for at least the reason I have set out in paragraph [28] above.

  2. Did not take issue with the defendant’s submission that NCAT could have enforced the plaintiff's rights by, for example, making an order binding the defendant not to alter the common property in the same terms as the declaration to be granted by the Court.

  1. I do not accept the plaintiff’s fundamental submission that it automatically follows that just because NCAT does not have a power to make a declaration (a proposition which the defendant has always accepted) it must be the case that the Management Act does not make “adequate provision” for the purposes of s 253(2). As I have said in paragraph [30] above, “adequate provision” does not mean identical provision or relief to what another court or tribunal could order. Rather, the question of adequacy must be determined by asking a question which will elucidate whether the Management Act provided a means sufficient for the purpose of enforcing the relevant rights or remedies: Could the plaintiff have obtained relief under the Management Act which would have enforced (in the sense of brought about in a legally binding way) the same outcome secured by the declaration which the Court has decided it will make?

  2. I accept the defendant’s submission that NCAT could have enforced the plaintiff’s rights which are secured by the declaration in paragraph (2) of the Draft Orders by making an order binding the defendant not to alter the common property in the same terms as the declaration, i.e. an order that “the defendant shall not restrict or impede the plaintiff’s access to and use of its Lot 89 in Strata Plan 934 via the common property by developing or impeding access to that strip of the common property which commences at the southern boundary of Lot 89 and extends 870mm into the common property and runs the entire length of the southern boundary of Lot 89 with the common property”.

  3. The power to make such an order is to be found in, at least, s 232(1)(a) of the Management Act:

“232 ORDERS TO SETTLE DISPUTES OR RECTIFY COMPLAINTS

(1) Orders relating to complaints and disputes The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following:

(a) the operation, administration or management of a strata scheme under this Act,

…

(f) an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.”

  1. Addressing the four steps identified in paragraphs [28] to [31] above, the Court finds:

  1. These were proceedings to enforce rights or remedies “apart from” the Management Act. The plaintiff did not suggest otherwise and see paragraph [28] above. The proceedings are therefore subject to s 253(2).

  2. The subject-matter of the proceedings was the identification and enforcement of the plaintiff’s non-exclusive right to have reasonable access over the Area (as part of the common property) to park a car in Lot 89.

  3. For the reasons set out in paragraphs [34] and [35] above, the Management Act makes adequate provision for enforcement of the rights and remedies asserted by the plaintiff in these proceedings.

  4. Having regard to the subject-matter of the proceedings identified in subparagraph (2) above, the Court is of the opinion that the taking of these proceedings was not justified because the Management Act does make adequate provision for enforcement of the rights and remedies asserted in these proceedings.

  1. Having made the findings set out in the preceding paragraph, s 253(2) requires the Court to order (“the court … must order”) the plaintiff to pay the defendant’s costs of the proceedings. The mandatory nature of s 253(2) reflects what I infer from Part 12 of the Management Act (“Disputes and Tribunal Powers”) is the clear policy of the strata scheme legislation that, wherever possible, strata title disputes should be resolved in NCAT. Whether proceedings brought elsewhere than NCAT are or are not “justified” in the sense that word is used in s 253(2) will depend on the resolution of the issue identified in paragraph [30] above. I should also record that the absence of discretion means that the Court cannot take into account the plaintiff’s discretionary argument recorded in paragraph [19] above, even if the Court were minded to do so.

  2. Looking at this case in a slightly different way, s 253(2) mandates an outcome which is just in the circumstances of this case. Although I was satisfied that the plaintiff was entitled to approach this Court for a declaration, in my view this was nevertheless a dispute which as a practical matter could and should have been dealt with in NCAT. If the Court had power to transfer the proceedings to NCAT (which it does not, a matter which requires the attention of law reform authorities), I would have done so. Approaching this Court for a declaration as a basis for engaging the jurisdiction of this Court, notwithstanding that relief which would bring about the same result is available from NCAT, is a practice which should be discouraged. Section 253(2) is a statutory means of discouraging such conduct.

Orders

  1. The orders of the Court are:

  1. The Court declares that the defendant is not entitled to restrict or impede the plaintiff’s access to and use of its Lot 89 in Strata Plan 934 via the common property of Strata Plan 934 (the “Common Property”) by developing or impeding access to that strip of the Common Property which commences at the southern boundary of Lot 89 and extends 870mm into the Common Property and runs the entire length of the southern boundary of Lot 89 with the Common Property.

  2. Pursuant to s 253(2) of the Strata Schemes Management Act 2015 (NSW), the plaintiff is to pay the defendant’s costs of the proceedings.

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Decision last updated: 30 April 2018

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Cases Cited

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Statutory Material Cited

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EB 9 & 10 Pty Ltd v The Owners SP 934 [2018] NSWSC 464