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McDonough v Owners Strata Plan No 57504

McDonough v Owners Strata Plan No 57504

Case [2014] NSWSC 1708 2 December 2014

Equitable Compensation

Breach of Trust

Trustee Obligations

Property Law

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Supreme Court

New South Wales

Medium Neutral Citation: McDonough v The Owners Strata Plan No 57504 [2014] NSWSC 1708
Hearing dates: Friday, 21 November 2014
Decision date: 02 December 2014
Jurisdiction: Equity Division
Before: Brereton J
Decision:
Summons for transfer of proceedings from District Court dismissed with costs

Catchwords: PROCEDURE - inferior courts - New South Wales - District Court - transfer of proceedings - equitable jurisdiction of District Court - whether claim for equitable compensation for breach of trust within s 134(1)(e) and thus excluded from s 134(1)(h) - held, it is
REAL PROPERTY - strata title - management and control - duty of owners corporation to maintain common property - trustee obligations of owners corporation - whether claim for equitable compensation for failure to maintain common property maintainable - held, it is not
Legislation Cited: (NSW) Civil Procedure Act 2005, s 140, s 144
(NSW) District Court Act 1973, s 134
(NSW) Strata Schemes Management Act 1996, s 62
Cases Cited: Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 [2014] HCA 36
Commonwealth Bank of Australia v Hadfield [2001] NSWCA 440; (2001) 53 NSWLR 614
Lin v The Owners - Strata Plan No 50276 [2004] NSWSC 88
Lubrano v The Proprietors of Strata Plan No 4038 (1993) 6 BPR 13,308
Nicita v Owners of Strata Plan 64837 [2010] NSWSC 68
The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270
Ridis v Proprietors of Strata Plan 10308 [2005] NSWCA 246; (2005) 63 NSWLR 449
Seiwa Pty Ltd v The Owners of Strata Plan 35042 [2006] NSWSC 1157; (2006) 12 BPR 23,673
Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 216 CLR 515
Category: Principal judgment
Parties: Lynn Marea McDonough (plaintiff)
The Owners Strata Plan No. 57504 (defendant)
Representation: Counsel:
M Sneddon (plaintiff)
F Hicks (defendant)
Solicitors:
Gillard Consulting Lawyers (plaintiff)
Doyle Edwards Anderson Lawyers (defendant)

File Number(s): 2014/294323

Judgment

HIS HONOUR: On 21 February 2013, the present defendant Owners Corporation commenced proceedings in the Local Court against the present plaintiff Ms McDonough, who was the proprietor of Unit 602 in the strata plan, for arrears of strata levies payable in respect of her lot. Ms McDonough filed a cross-claim for damages for an alleged breach of (NSW) Strata Schemes Management Act 1996, s 62, and sought the transfer of the proceedings to the District Court on the ground that her cross-claim exceeded the jurisdictional limit of the Local Court. On 12 November 2013, Ms McDonough filed an amended cross-claim in the District Court proceedings, still claiming damages for alleged breaches of s 62.

On the eve of the hearing of the District Court proceedings, which was appointed for 30 July 2014, Ms McDonough paid the outstanding levies, so that only her cross-claim remained for determination. The cross-claim relied on a line of first instance cases which had held that an owners corporation's duty under s 62 to maintain the common property was owed to each…

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.

Continue reading McDonough v Owners Strata Plan No 57504

Details

AGLC: McDonough v Owners Strata Plan No 57504 [2014] NSWSC 1708
Case: [2014] NSWSC 1708
Decision Date: 02 December 2014

CaseChat Overview and Summary

In the case of McDonough v Owners Strata Plan No 57504, the dispute arose between a unit owner and the owners corporation of a strata scheme. The plaintiff, McDonough, sought equitable compensation for the alleged failure of the owners corporation to maintain common property, specifically the roof of the building. The case was heard in the New South Wales District Court, which had to determine whether such a claim fell within the equitable jurisdiction of the court.

The primary legal issue before the court was whether a claim for equitable compensation for breach of trust by the owners corporation was within the equitable jurisdiction of the District Court, and thus excluded from its general jurisdiction under s 134(1)(h) of the District Court Act 1973 (NSW). Additionally, the court needed to decide if the owners corporation had a duty to maintain common property and whether the plaintiff could maintain a claim for equitable compensation for the failure to do so.

The court held that the equitable jurisdiction of the District Court did encompass claims for equitable compensation for breach of trust. However, it was noted that the claim was essentially one for damages for breach of statutory duty, which is a remedy at common law. As such, the claim did not fall within the equitable jurisdiction of the District Court and was excluded from its general jurisdiction under s 134(1)(h). Furthermore, the court found that the owners corporation did have a duty to maintain common property, but the plaintiff's claim for equitable compensation for the failure to maintain the property was not maintainable. Instead, the appropriate remedy would have been a claim for damages for breach of statutory duty. Consequently, the court dismissed the plaintiff's claim.

Orders