Gannon v The Owners - Strata Plan No 14403 - [2013] NSWSC 1916

Supreme Court

New South Wales

Medium Neutral Citation: Gannon v The Owners - Strata Plan No 14403 [2013] NSWSC 1916
Hearing dates: 8 May 2013
Decision date: 19 December 2013
Jurisdiction: Common Law
Before: Hall J
Decision:
(1) Leave to appeal granted but such leave limited to the order sought in paragraph 1(b) of the Amended Summons;
(2) Leave to the parties to file and serve any affidavit evidence and provide further written submissions in respect of the quantum of expenses arising in respect of order 1 above in accordance with an agreed timetable.

Catchwords:
STRATA TITLES - appeal from Local Court - order made for unpaid levies "special levies" pursuant to s 76(4) of the Strata Schemes Management Act 1996 (SSM Act) - order made by Local Court for expenses incurred in recovering unpaid levies pursuant to s 80(1) of the SSM Act based on estimate of costs provided by owners corporation's solicitors

GROUND 1 - the Local Court erred in upholding the levy under s 76(4) - special levy validly raised by owners corporation by reason that it was faced with other expenses it could not at once meet from its administrative or sinking fund - evidence before Local Court that owners corporation had been issued with Fire Safety Order by the council - evidence that estimate provided to owners corporation by a consultancy as to cost of complying with the Order - evidence available that the financial position of owners corporation before special levy raised would not be sufficient to meet the cost of the estimate - s 76(4) must be considered in context of the SSM Act including ss 75, 75A and the other subsections of 76 - s 76(4) must be construed in terms of an "estimate" rather than a particular total cost - ground not made out
GROUND 2 - the Local Court erred in awarding expenses under s 80 of the SSM Act - owners corporation was entitled pursuant to s 80 to recover expenses incurred in recovering unpaid levies - evidence before Local Court insufficient to establish the proper quantum of expenses in relation to legal costs - appropriate course is for legal costs to be assessed - parties permitted to file affidavit evidence and submissions as to the quantum of s 80 expenses claimed in the Local Court
Legislation Cited: Legal Profession Act 2004
Local Court Act 2007
Strata Schemes Management Act 1996
Strata Schemes Management Regulation 2010
Cases Cited: Branson v Tucker [2012] NSWCA 210
Burrell Socliitors Pty Ltd v Reavill Farm Pty Ltd (No 2) (2011) 16 BPR 31
Catzel v The Owners, Strata Plan 468 [2011] NSWSC 370
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Merrill Lynch International (Australia) Ltd v Commissioner of Taxation (2001) 113 FCR 79
Nilsen Development Laboratories Pty Ltd v The Federal Commissioner of Taxation of the Commonwealth of Australia (1981) 144 CLR 616
The Owners - Strata Plan 36131 v Dimitrou (2009) 74 NSWLR 370
Wilson v State…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2013] NSWSC 1916
Decision Date: 19 December 2013

CaseChat Overview and Summary

In Gannon v The Owners - Strata Plan No 14403, the Court of Appeal reviewed the decision of the Local Court which had ordered the payment of unpaid levies and associated recovery costs by the respondent to the appellant. The Local Court had ruled that the appellant, as a body corporate, was entitled to recover unpaid levies as a "special levy" under section 76(4) of the Strata Schemes Management Act 1996 (SSM Act) and had also ordered the respondent to pay the costs of recovery under section 80(1) of the SSM Act. The respondent appealed the decision, arguing that the Local Court erred in upholding the levy and in awarding the recovery expenses.

The primary legal issue before the Court of Appeal was whether the Local Court correctly exercised its discretion under section 76(4) of the SSM Act in ordering the special levy and under section 80(1) of the SSM Act in awarding the recovery costs. The Court of Appeal considered whether the evidence before the Local Court was sufficient to establish that the special levy was necessary and that the costs awarded were reasonable. In its reasoning, the Court of Appeal held that the Local Court did not err in upholding the special levy as it was necessary for the owners corporation to meet an immediate expense that it could not cover from its funds. Additionally, the Court of Appeal found that the evidence was sufficient to allow the Local Court to award the recovery costs, even though it was based on an estimate, as the proper course for determining the exact amount of costs was for the parties to file affidavit evidence and submissions in the Local Court.

Consequently, the Court of Appeal dismissed the appeal and upheld the decision of the Local Court. The orders made by the Local Court regarding the payment of the special levy and the recovery costs were affirmed. The Court of Appeal also noted that the parties were permitted to file further evidence and submissions as to the quantum of the recovery costs in the Local Court.

Orders