Lim v The Owners of Romlea Court Strata Plan 9317
[2019] WADC 35
•20 MARCH 2019
JURISDICTION : DISTRICT COURT OF WESTERN AUSTRALIA
IN CIVIL
LOCATION: PERTH
CITATION: LIM -v- THE OWNERS OF ROMLEA COURT STRATA PLAN 9317 [2019] WADC 35
CORAM: LEMONIS DCJ
HEARD: 20 FEBRUARY 2019
DELIVERED : 20 MARCH 2019
FILE NO/S: APP 96 of 2018
BETWEEN: LAY CHOO LIM
Appellant
AND
THE OWNERS OF ROMLEA COURT STRATA PLAN 9317
Respondent
ON APPEAL FROM:
Jurisdiction : MAGISTRATES COURT OF WESTERN AUSTRALIA
Coram: GCLM/7142/2017
File Number : MAGISTRATE M WALTON
Catchwords:
Appeal from Magistrates Court - Claim below minor cases jurisdictional limit
Legislation:
Magistrates Court (Civil Proceedings) Act 2004 (WA)
Strata Titles Act 1985 (WA)
Result:
Appeal allowed
Representation:
Counsel:
| Appellant | : | Mr C Cheng |
| Respondent | : | Mr P Monaco |
Solicitors:
| Appellant | : | Ally Legal |
| Respondent | : | GV Lawyers |
Case(s) referred to in decision(s):
Brocklehurst v Wolinski [2015] WADC 36
Metwally v University of Wollongong (1985) 60 ALR 68
Park v Brothers [2005] HCA 73
Rankilor v Etihad Airways PJSC [2019] WASCA 36
Whisprun Pty Ltd v Dixon [2003] HCA 48
LEMONIS DCJ:
The appellant appeals by appeal notice dated 25 September 2018 from a decision of the learned magistrate made 4 September 2018.
The appellant is the registered proprietor of the property at Unit 7, Romlea Court, 227 Scarborough Beach Road Doubleview (Property). The Property is Lot 7 on strata plan 9317. The respondent to the appeal (the claimant below) is the owners of the relevant strata plan, which by reason of the operation of the Strata Titles Act 1985 (WA) is a strata company.[1]
[1] Section 32 of the Strata Titles Act 1985.
The appeal is brought pursuant to s 40 of the Magistrates Court (Civil Proceedings) Act 2004 (WA). While the amount in question in the proceedings in the Magistrates Court was below the minor cases jurisdictional limit of $10,000[2], the proceedings were commenced and conducted as a general procedure claim. Therefore, the proceedings were not a minor case as defined by s 26 of the Magistrates Court (Civil Proceedings) Act. Accordingly, the limits on appeal set out in s 32 of the Magistrates Court (Civil Proceedings) Act do not apply.
[2] See the definition of minor cases jurisdictional limit in s 3(1) of the Magistrates Court (Civil Proceedings) Act 2004.
Introduction
Judgment was entered against the appellant in these terms:
Judgment is entered in favour of the Claimant against the Defendant in the sum of $4,207.52 plus interest at 15% pursuant to State (sic) Title Act 1985 in relation to the sum of $3,847.18 at the rate of 15% per annum from 28 April 2017 to 4 September 2018, plus allowable costs of $2,000 plus legal costs pursuant to section 31(3)(b) of the Magistrates Court (Civil Proceedings) Act 2004 fixed at $4,500.
The reference in the judgment to the State Title Act should be a reference to the Strata Titles Act 1985 (WA).
The description of the claim set out on the General Procedure Claim form was as follows:
The Claimant's Claim is for unpaid monies pursuant to section 36 of the Strata Titles Act 1985 (WA) for the land being Lot 7 on Strata Plan 9317 known as 'Romlea Court' which the Defendant has, despite repeated demand, failed, neglected or refused to pay.
PARTICULARS
(a)
Quarterly Admin Levies from 01/01/2016 to 01/04/2017
$1,460.00
(b)
Sinking Fund Levies from 01/01/2016 to 01/04/2017
$360.00
(c)
Electricity Consumption from 31/10/2015 to 13/11/2016
$1,862.68
(d)
Debt Recovery Costs to 08/02/2017
$164.50
(e)
Interest to 27/04/2017
$360.34
TOTAL
$4,207.52
As can be seen, the claim included amounts for quarterly administration levies, sinking fund levies, electricity consumption, debt recovery costs and interest.
This appeal is in respect of the amounts comprised within the judgment for electricity consumption and debt recovery costs, and the costs order. The appellant does not appeal in respect of the amounts comprised within the judgment for the quarterly administration levies and sinking fund levies.[3]
[3] Paragraphs 4, 5, 84 – 86 of appellant's submissions.
The respondent filed a notice of respondent's intention dated 3 October 2018 in accordance with r 53 of the District Court Rules 2005. The notice stated that the respondent intended to take part in the appeal and 'will argue the primary court's decision should be upheld on the grounds relied on by the primary court in its decision'. The respondent did not indicate in the notice that there were other grounds for upholding the primary court's decision.
At the hearing of the appeal, the respondent conceded the learned magistrate erred in finding against the appellant on the respondent's claim for electricity costs. The respondent also conceded there was no evidentiary basis to justify the respondent's claim for debt recovery costs. The respondent sought to uphold the judgment in respect of the claim for electricity costs on a ground which was not before the magistrate. At the hearing of the appeal, the respondent sought leave to amend its notice of intention to include this ground.
For the following reasons, I propose to:
1.Allow the appeal.
2.Refuse the respondent's application for leave to amend its notice of intention to rely on a new ground to uphold the learned magistrate's decision.
Statutory basis for the appeal
An appeal from a decision of a magistrate to the District Court is by way of rehearing. It is not a hearing de novo. Given the appeal is by way of a rehearing it is necessary for the appellant to demonstrate error in the court below. This error must be a legal, factual or discretionary error.[4]
[4] Brocklehurst v Wolinski [2015] WADC 36 (9 April 2015) [14] - [15].
Grounds of appeal
The appellant filed lengthy submissions in support of the appeal. The principal ground relied upon by the appellant is that the magistrate erred in finding that the electricity component of the claim was due by the appellant to the respondent by reason of the operation of s 35 and s 36 of the Strata Titles Act.
In respect of the electricity component of the claim, the learned magistrate's reasons are found at ts 103 in terms:
The claimant is a strata company, and the obligations of a strata company are set out in section 35 of the Act. I refer to that section and incorporate that into my decision. The claimant argues that the GPC of the claimant, as set out in paragraphs 3(a) through to (e), is based upon section 36 and 35 of the Act. So going through that, section 33, paragraph – sorry. Paragraph 3, subsection (a) of the statement and general procedure claim, the quarterly administration levies clearly fall within section 36; (b) sinking fund levies clearly fall within section 36.
Electricity consumption falls within section 36, because the obligations under section 35 set out the duties of a strata company. Electricity count for common property, given there's one meter and there's 15 submeters, the electricity count through the submeters is distributed fees or costs for electricity consumption based upon consumption, but it's passed on through the common property expenditure. So I'm satisfied that electricity consumption falls within 36 by a reading of section 35.
Relevantly, s 35(1)(b) of the Strata Titles Act imposes upon a strata company a duty to 'control and manage the common property for the benefit of all the proprietors'. Section 36(1)(a) requires the strata company to establish a fund for 'administrative purposes that is sufficient in the opinion of the company for the control and management of the common property, for the payment of any premiums of insurance and the discharge of any other obligation of the strata company'. Section 36(1)(b) provides that the strata company is to determine from time to time the amounts to be raised for the purposes described in s 36(1)(a) and the strata company is authorised by s 36(1)(c) to raise amounts so determined by levying contributions on proprietors.
The learned magistrate held in effect that the electricity costs were common property expenditure and therefore, because pursuant to s 35 the respondent had a duty to control and manage the common property, such costs were recoverable pursuant to s 36.
The respondent's case below was conducted on the basis that the primary meter was situated on common property with 15 individual submeters for each unit.[5]
[5] Magistrates Court, ts 16, 41 - 42, 58 - 59, 65, 92, 100.
The submeters were for the supply of electricity to each of the 15 units. The electricity charges associated with the consumption of electricity via each submeter related to the electricity consumption of the relevant unit. The electricity charges did not arise in respect of the management of the common property.
It follows that the learned magistrate made a mixed error of law and fact in applying those sections to the situation presented in this case. Accordingly, in my view it was appropriate for the respondent to concede the learned magistrate erred in finding the appellant was liable for the electricity costs pursuant to the operation of s 35 and s 36 of the Strata Titles Act.
New ground to uphold electricity consumption claim
The respondent sought to uphold the learned magistrate's decision by reference to by-law 3(3) of sch 1 of the by-laws appearing in the Strata Titles Act. This was not raised before the learned magistrate, whose reasons were clearly directed to the operation of s 35 and s 36 of the Strata Titles Act. Further, as set out above, the respondent's description of its claim on the General Procedure Form set out that its claim was pursuant to s 36 of the Strata Titles Act.
The possible application of cl 3(3) of the by-laws was first raised in the respondent's written submissions filed 15 February 2019.
A party is bound by the presentation of their case. In Metwally v University of Wollongong[6], Gibbs CJ, Mason, Wilson, Brennan, Deane and Dawson JJ stated:
It is elementary that a party is bound by the conduct of his case. Except in the most exceptional circumstances, it would be contrary to all principle to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.
[6] Metwally v University of Wollongong (1985) 60 ALR 68.
The circumstances in which a new point could be raised on appeal was also considered in Whisprun Pty Ltd v Dixon.[7] In the joint majority judgment of Gleeson CJ, McHugh and Gummow JJ, their Honours stated:
… It would be inimical to the due administration of justice if, on appeal, a party could raise a point that was not taken at the trial unless it could not possibly have been met by further evidence at the trial. Nothing is more likely to give rise to a sense of injustice in a litigant than to have a verdict taken away on a point that was not taken at the trial and could or might possibly have been met by rebutting evidence or cross-examination. Even when no question of further evidence is admissible, it may not be in the interests of justice to allow a new point to be raised on appeal, particularly if it will require a further trial of the action. Not only is the successful party put to expense that may not be recoverable on a party and party taxation but a new trial inevitably inflicts on the parties worry, inconvenience and an interference with their personal and business affairs.
[7] Whisprun Pty Ltd v Dixon [2003] HCA 48 [51], [52]; see also Park v Brothers [2005] HCA 73 [34].
Accordingly, even where there is no issue of further evidence, whether a new point may be raised on appeal depends on the interests of justice.
Analysis of new ground
Section 42(1) of the Strata Titles Act authorises a strata company to make by-laws regulating its affairs. Section 42(2) of the Strata Titles Act provides that the provisions set out in sch 1 and sch 2 shall be deemed to be by-laws of the strata company and may be amended, repealed or added to by the strata company. What, in fact, were the by-laws of the strata company was not in evidence before the learned magistrate. There did however appear to be general consensus before me that the by-laws contained in sch 1 were the respondent's by-laws.
Section 42(6) of the Strata Titles Act provides that the by-laws for the time being in force bind, relevantly, the proprietors or occupier or other resident of a lot.
The respondent seeks to rely on cl 3(3) of the by-laws. Clause 3(1) provides that where the supply of gas or electricity to a lot is regulated by means of a submeter, the strata company may require the proprietor or other occupier of the lot to pay to the strata company an amount as security for the payment of charges arising through the submeter.
Clause 3(3) provides:
If the proprietor or other occupier of a lot in respect of which a submeter is used for the supply of gas or electricity refuses or fails to pay any charges due for the supply of gas or electricity to that lot, the strata company may apply in payment of those charges all, or such part as is necessary, of any amount paid to the strata company by that proprietor or occupier under this by‑law, including any interest that may have accrued in respect of that amount.
During the hearing of the appeal, I raised with counsel for the respondent that while cl 3(3) authorised the strata company to apply the security paid under cl 3(1) in payment of charges due for the supply of electricity to the relevant lot, cl 3(3) did not appear itself to authorise the strata company to recover that amount from the lot owner. While it does appear from the use of the words 'refuses or fails' in cl 3(3) that there is an underlying obligation on the proprietor or other occupier of a lot to pay for electricity regulated by means of a submeter, the respondent in its submissions was not able to identify the source of that obligation.
Accordingly, the question as to whether on its proper interpretation, cl 3(3) imposed an obligation on the appellant to pay for the electricity costs was not sufficiently developed before me so as to enable me to determine that question.
In addition, an aspect of the appeal raised by the appellant was that the Property was leased by the appellant to a tenant and it was the tenant's (not the appellant's) obligation to pay the electricity. Further, the appellant says the tenant should have been a party to the proceedings.
This then raises the question as to whether the phrase 'or other occupier' in cl 3(3) and 'occupier or other resident' in s 42(6) are intended to impose an obligation on the tenant to pay the electricity costs charged through the submeter and whether, as a consequence, the tenant should have been joined to the proceedings. The respondent was not in a position at the hearing of the appeal to develop argument as to whether the operation of these phrases imposed a liability on the tenant for electricity costs.
In my view, it is not in the interests of justice to allow the respondent to amend its notice of intention to now rely on cl 3(3) to sustain it claim for electricity costs. I am of that view for these reasons:
1.how cl 3(3) operates in conjunction with the Strata Titles Act to impose the asserted obligation was not sufficiently developed by the respondent in argument so as to enable me to determine that question;
2.what, if any, liability, cl 3(3) imposes on a tenant for electricity consumption was not sufficiently developed by the respondent in argument so as to enable me to determine that question;
3.the respondent raised reliance on the new ground at a late stage of the appeal and only sought to amend its notice of intention during the hearing of the appeal. The appellant's submissions understandably did not address the point;
4.the respondent did not seek to adjourn the appeal to allow it to put on further submissions;
5.the status of the respondent's by-laws was not in evidence before the learned magistrate, so while there was general consensus at the hearing of the appeal they were in the terms of sch 1, that was not certain.
I therefore decline to grant the respondent leave to amend its notice of intention to rely on such a ground.
I should make clear that I do not make any determination as to whether cl 3(3) authorises the respondent to claim the electricity costs from the appellant, or whether there is any other provision of the by-laws or the Strata Titles Act which imposes such an obligation.
Debt recovery costs
Debt recovery costs of $164.50 were included within the judgment sum. The learned magistrate's reasons for the allowance of this claim[8] were as follows:
Debt recovery costs. It's not set out in the Strata Titles Act or bylaws, but it does set out in the annual general meeting in terms of debt recovery. Mr Monaco recently, of course, said there's strong argument for debt recovery costs, but is was a resolution of the annual general meeting, a meeting that Ms Lim is entitled to attend and voice her view.
[8] ts 103.
The respondent concedes there is no evidentiary basis for the learned magistrate's finding allowing the debt recovery costs.[9] This is consistent with my review of the material before the learned magistrate.
[9] Appeal ts 44.
The only reference I can find to such a resolution is in the minutes of the meeting on 26 October 2015 at item 9, which state:
Debt Collection
Owners who are not responding to reminder letters are to be issued a Letter of Demand from GV Lawyers.
This reference does not provide a basis entitling the respondent to recover debt recovery costs from the appellant.
I am of the view the learned magistrate erred in fact in finding the appellant liable for debt recovery costs.
Application to strike out the appeal
At the hearing of the appeal, the respondent applied for the court to strike out the appeal pursuant to s 43(3) of the Magistrates Court (Civil Proceedings) Act on the basis that the likely costs of the appeal to the parties would be disproportionate to the amount of the claim in, or the nature of, the case. Section 43(3) provides me with a discretion to strike out the appeal.
In making this application, the respondent relied upon the recent decision of the Supreme Court of Western Australia Court of Appeal in Rankilor v Etihad Airways PJSC[10], in particular at [20]. In my view, there are two significant differences between this matter and the relevant circumstances in Rankilor.
[10] Rankilor v Etihad Airways PJSC [2019] WASCA 36.
First, in Rankilor, the appellant had not filed her appellant's case and therefore the substantive costs of the appeal had not been incurred. Section 43(3) is directed to the costs likely to be incurred, not actually incurred.[11] It provides for a pre-emptive measure to protect against costs being incurred which are disproportionate to the amount of the claim or nature of the case. Here, the respondent's application to strike out was made during the course of the respondent's oral submissions. By the time the respondent's application was made, both sides had filed written submissions, the appellant's counsel had completed his oral submissions and the hearing was only expected to last approximately another half an hour or so. The substantive amount of the costs of the appeal had been incurred at the time the application was made. Therefore, the likely costs to be incurred at the time the application was made were not disproportionate to the amount of the claims the subject of the appeal.
[11] Rankilor [22].
Second, the respondent conceded the learned magistrate erred in granting judgment against the appellant for the electricity costs and debt recovery costs. I appreciate this concession does not impact on the question of proportionality.[12] However, I consider the respondent's concession, and that it was made after the appellant had filed her written submissions, are relevant factors in the exercise of my discretion. Accordingly, even if I had found the likely costs were disproportionate within the meaning of s 43(3), I would not exercise my discretion to strike out the appeal.
[12] Rankilor [22].
For those reasons, I decline to strike out the appeal pursuant to s 43(3) of the Magistrates Court (Civil Proceedings) Act.
Conclusion
I propose to allow the appeal.
Given my reasons and subject to what I say below regarding costs, I do not propose to determine the numerous other grounds of appeal relied on by the appellant. In relation to Ground 8, which asserted a failure to afford natural justice, it would have been necessary to determine this ground if the case below was a minor case.[13] However, as I explain above, the case below was conducted as a general procedure claim, not a minor case. Therefore, the limits on appeal set out in s 32 of the Magistrates Court (Civil Proceedings) Act do not apply.
[13] Section 32(3)(b) of the Magistrates Court (Civil Proceedings) Act 2004.
Consequence of allowing the appeal
The judgment amount included:
the sum of $1,862.68 referable to the electricity consumption; and
debt recovery costs are $164.50.
These amounts should be deducted from the judgment sum. Therefore, the principal sum becomes $1,820. The judgment should also be amended to include interest at the rate of 15% on the sum of $1,820 from 28 April 2017 to 4 September 2018 (494 days), which on my calculation equals $369.48. I cannot discern from the papers how the interest of '$360.34 to [27 April 2017]' as set out in the particulars to the General Procedure Claim is calculated. Accordingly, I will need to hear from the parties as to the adjustment required to that amount to take account of the principal sum being reduced to $1,820.
Costs
This leaves the question of costs.
Section 25(1) and (2) of the Magistrates Court (Civil Proceedings) Act provide as follows:
(1)The court may order a party to a case to pay the whole or a part of another party's costs in the case.
(2)A successful party is entitled to an order under subsection (1) that the whole of its costs in the case be paid by the unsuccessful party, unless the court considers there is good reason not to make such an order or subsection (5) applies.
As can be seen, the entitlement expressed in s 25(2) is subject to two possible qualifications. First, the court considers there is good reason not to make such an order. Second, where s 25(5) applies.
Relevantly for the purposes of this case, s 25(5) provides that where the claim is not more than the minor cases jurisdictional limit and the claimant (here, the respondent) did not elect to have the claim dealt with under the minor cases procedure, the Court may only make an order for costs if the order would be permitted by s 31 were the case being dealt with under the minor claims procedure. Section 25(5) applies to the circumstances of this case, thus the respondent must bring itself within s 31 to obtain an order for costs of the proceedings in the Magistrates Court.
Pursuant to s 31(2), a successful party is entitled to an order under s 25(1) in relation to the party's allowable costs, which are defined in s 31(1). Further, pursuant to s 31(3), the court may make an order under s 25(1) as to the payment of the party's other costs if satisfied of any of the criteria set out in s 31(3)(a), (b) or (c). The criteria set out in s 31(3)(a) is to the effect that due to exceptional circumstances an injustice would be done to the successful party if an order for costs was not made. The criteria set out in s 31(3)(b) is that the unsuccessful party's defence was wholly without merit. Section 31(3)(c) is not applicable in this case.
The learned magistrate made an order for allowable costs in the sum of $2,000. The learned magistrate also made an order for legal costs in the sum of $4,500 pursuant to s 31(3)(b) on the ground the defence was wholly without merit.
Section 43(7)(a) of the Magistrates Court (Civil Proceedings) Act allows me to set aside all or a part of the judgment. Further, s 43(7)(e) allows me make an order as to the costs in the Magistrates Court.
Given that I propose to allow the appeal, I consider I should set aside the order for costs made in the Magistrates Court. I am inclined to make a new order for costs, however I will need to hear from the parties as to whether that is the appropriate course, or whether I should refer the matter back to the learned Magistrate.
In the event I am to make the costs order, I make the following preliminary observations. During the hearing of the appeal, the appellant's counsel was at pains to reinforce that the appellant only contested the electricity consumption issue before the learned magistrate. In this respect, the appellant's counsel referred me to references in the transcript of the hearing before the learned magistrate to this effect at ts 6, 10, 14, 21, 69 and 85. On page 14, the appellant said: 'I will pay the strata levy and the sinking fund but I will not pay the electric bill'.
However, at ts 23 of the transcript of the hearing, when the learned magistrate put to the appellant whether or not she owed the quarterly admin levies, the appellant said 'No'. Further, on the same page, when the learned magistrate put to the appellant that she owed the sinking fund levies her response was 'maybe'. From what I can discern, the matter was next addressed at ts 69 when the appellant said she will pay the strata levies but not the electricity and at ts 85, where the appellant said her understanding is that she owes the strata levy.
Therefore, the appellant's position during the hearing in the Magistrates Court was, at best, equivocal. Further, it was necessary for the respondent to bring the claim against the appellant to recover the levies, which totalled $1,820. Also, the appellant's intention to defend filed in the Magistrates Court stated that she intended to defend the full amount of the claim.
These are matters which will bear on an assessment of the appropriate order for costs in the Magistrates Court proceedings.
I will hear further from the parties on the question of costs in the Magistrates Court proceedings in light of these reasons.
My preliminary view is the respondent should pay the appellant's costs of the appeal.
I propose to make the following orders on the appeal:
1.The appeal be allowed.
2.The judgment of the learned magistrate of 4 September 2018 be varied by deducting:
(i)the sum of $1,862.68 for electricity consumption;
(ii)the sum of $164.50 for debt recovery costs;
(iii)adjusting the interest claimed for the period to 27 April 2017 to take account of the deductions referred to at (i) and (ii) above;
(iv)to provide for the defendant to pay interest to the claimant in respect of the period from 28 April 2017 to 4 September 2018 in the sum of $369.48.
I certify that the preceding paragraph(s) comprise the reasons for decision of the District Court of Western Australia.
ED
Associate to Judge Lemonis19 MARCH 2019
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