Mittiga v Community Corporation - [2012] SASC 202

SUPREME COURT OF SOUTH AUSTRALIA
(Magistrates Appeals: Civil)
MITTIGA v COMMUNITY CORPORATION 20582 INC
[2012] SASC 202
Judgment of The Honourable Justice Stanley
14 November 2012
MAGISTRATES - APPEAL AND REVIEW - SOUTH AUSTRALIA - APPEAL TO SUPREME COURT
PROCEDURE - INFERIOR COURTS - SOUTH AUSTRALIA - MAGISTRATES COURT
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS - CROSS-CLAIMS: SET-OFF AND COUNTERCLAIM - SET-OFF - WHAT MAY BE SET-OFF - EQUITABLE SET-OFF
Appeal against order for summary judgment of the Magistrates Court – respondent claimed sum from appellant for unpaid levies, expenses, fees and other costs owed pursuant to the Community Titles Act 1996 (SA) (the Act) – summary judgment ordered as there was no dispute between the parties as to the amount owing - parties have since agreed that the amount for which judgment was entered in the Magistrates Court had been erroneously calculated - parties agree that, should the appeal be dismissed, the judgment amount should be amended.
Before the matter came on for hearing in the Magistrates Court, the appellant unsuccessfully attempted to obtain a resolution of the corporation to amend the entitlement lots – following this the appellant instituted proceedings in the District Court seeking an order to amend the community plan to vary the lot entitlements – appellant submitted that the magistrate was in error in granting summary judgment due as District Court could still amend the community plan and vary the lot entitlements retrospectively – further submitted that the Court was empowered to grant remedies that constituted an equitable set-off – submission based on s 59(4)(c) or s 142(8) of the Act.
Held: appeal allowed for the purpose of amending the judgment amount.
Magistrate was correct in making order for summary judgment and in concluding that there was no real question to be tried.
The defence of equitable set-off is not arguable – appellant’s claim to obtain relief by way of order for payment of an amount ‘overcharged’, whether pursuant to s 59 or 142 of the Act, is not a claim that impeaches the respondent’s title to demand payment pursuant to s 114 of the Act – if lot entitlements were to be varied, the variation would only operate prospectively – a successful application to the District Court to vary the lot entitlements therefore cannot affect the appellant’s liability to the respondent in respect of past contributions – the closeness of the connection between the appellant’s liability and her claim for relief is not in itself sufficient to set up an equity by way of defence.
Community Titles Act 1996 (SA) s 20, s 59, s 114, s 142, referred to.
Spencer v the Commonwealth (2010) 241 CLR 118; Ceneavenue Pty Ltd v Martin (2008) 106 SASR 1; Aries Tanker Corporation v Total Transport Ltd (1977) 1 All ER 398; Walker v Secretary of the Department of Social Security (1995) 56 FCR 354; Forsyth v Gibbs [2009] 1 Qd R 403; Piggott v Williams (1821) 56 ER 1027, discussed.
James v Commonwealth…

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: [2012] SASC 202
Decision Date: 14 November 2012

CaseChat Overview and Summary

Mittiga sought to appeal a summary judgment order made by the Magistrates Court of South Australia, whereby the respondent, Community Corporation, was awarded $38,219.46 in unpaid levies, expenses, fees and other costs. The respondent claimed this sum from Mittiga, the registered proprietor of one of the units in the community title development at 191 Greenhill Road, Parkside, under s 114 of the Community Titles Act 1996 (SA). Mittiga had been disputing the correctness of the lot entitlement number assigned to her lot, alleging that she had been overcharged by nearly 30% in contributions to the corporation, leading to her ceasing to pay contributions. The primary issue before the court was whether the magistrate was correct in granting summary judgment as there was no real question to be tried. Mittiga submitted that the magistrate was in error as the District Court could still amend the community plan and vary the lot entitlements retrospectively. Furthermore, Mittiga submitted that the Court was empowered to grant remedies that constituted an equitable set-off. The court held that the magistrate was correct in concluding that there was no real question to be tried. Mittiga’s claim for relief under s 59(4)(c) or s 142(8) of the Act cannot constitute an equitable set-off, as it would be unconscionable that the respondent’s claim be enforced without taking account of Mittiga’s cross-demand. The court found that equitable set-off arises where a person against whom a claim is made can show some equitable ground for being protected against that demand. In this case, there was no real question to be tried, and the magistrate was correct in granting summary judgment. The appeal was dismissed.

Orders

Orders of the court

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Background

Background to the litigation

This is an appeal from an order for summary judgment in the amount of $38,219.46. The order was made by the Magistrates Court on 1 August 2012. The respondent claimed the sum from the appellant for unpaid levies, expenses, fees and other costs owed by the appellant to the respondent, pursuant to s 114 of the Community Titles Act 1996 (SA) (the Act).Background The respondent is a body corporate incorporated pursuant to the Act for the community title development located at 191 Greenhill Road, Parkside (the development). It is a residential apartment building. The appellant is the registered proprietor of one of the units in the development, unit no. 508. Pursuant to the Act, a community plan for the development was lodged with the Registrar-General and deposited on 13 June 2000. The community plan included plans of the development and attached a lot entitlement sheet. The lot entitlement sheet set out the lot entitlements of each of the units in the development. The lot entitlement is a number assigned to each unit in the development. It determines the shares in which lot owners make monetary contributions to the maintenance of the corporation. The lot entitlement of the appellant, like the lot entitlement of all other unit owners, is prescribed on the lot entitlement sheet. For some time the appellant has been in dispute with the respondent over the correctness of the lot entitlement number assigned to her lot. Pursuant to s 20 of the Act, the lot entitlement is a number assigned to the lot, that bears in relation to the aggregate of the lot entitlements of all of the community lots defined in the community plan (within a tolerance of plus or minus 10 percent), the same proportion that the value of the lot bears to the aggregate value of those lots. The appellant contends that the lot entitlement number assigned to her lot does not comply with the requirements of s 20. Her existing unit entitlement is fixed at 334. The appellant engaged professional valuers, Propell National Valuers, who prepared two valuation reports, dated 2 February 2011 and 14 December 2011, in which they assessed, on a comparative basis, the lot entitlements of the corporation. The valuers concluded that the correct lot entitlement of the appellant should be 257 not 334. In other words, the valuation reports suggest that the appellant has been paying nearly 30 percent more by way of contributions to the corporation than her correct lot entitlement would require. The appellant has complained about this “overcharging” since about 2004. She alleges that she has been overcharged an amount in excess of $20,000 in the period since she acquired her unit. It appears nothing satisfactory to the appellant was done by the corporation or its managers in relation to her complaint. In response, she simply stopped paying contributions. This led to the action in the Magistrates Court by the respondent to recover the monies it alleged she owed. The proceedings in the Magistrates Court were brought pursuant to s 114 of the Act. It provides: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.…(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) A corporation may, by ordinary resolution—(a) permit contributions to be paid in instalments specified in the resolution;(b) fix (in accordance with the regulations) interest payable in respect of a contribution, or an instalment of a contribution, that is in arrears.(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) include information required by regulation; and(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.…(12) An amount paid by a person under this section is not recoverable by the person from the corporation when he or she ceases to be the owner of the lot.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

The respondent submitted that the learned magistrate was correct in the approach he took. The appellant’s application in the District Court seeking to vary the unit lot entitlements could not operate retrospectively. It is an entirely separate action from the claim in the Magistrates Court. It could not act as an equitable set-off. The test for equitable set-off is that there must be such a close connection between the claim and the cross-claim which is said to impeach the plaintiff’s claim that it would be positively unjust that there should be recovery by the plaintiff without deduction for the amount of the cross-claim. A sufficient connection does not exist in this case because the District Court is not empowered to order a payment to the appellant by the respondent to adjust for any “overcharging” in circumstances where any amendment it might make to the community plan to vary the lot entitlements would operate prospectively. Summary judgment The power to order summary or final judgment is one that should be exercised with great care, and should never be exercised unless it is clear that there is no real question to be tried.[1][1] Fancourt v Mercantile Credits Ltd (1983) 154 CLR 87 at 99. As the High Court emphasised recently in Spencer v The Commonwealth,[2] albeit in the context of an application for summary dismissal, the test to be applied is one of demonstrated certainty of outcome.[3] [2] (2010) 241 CLR 118.[3] (2010) 241 CLR 118 at 140 [55].Consideration In order to succeed on appeal the appellant must establish that the learned magistrate erred in concluding that summary judgment was warranted because there was no real question to be tried on the principal action. As Debelle J said in Ceneavenue Pty Ltd v Martin:[4]The expression “no real question to be tried” connotes such factors as whether the defendant really has a bona fide defence, and that the defendant does not have an arguable defence which ought to be fairly tried. The defendant must show that he is not wasting the court’s time or abusing the court’s procedures to delay or defeat a just claim by the plaintiff. In this context, the word “real” is intended to distinguish a bona fide defence from one that is fanciful or spurious or an abuse of process seeking to delay and defeat the plaintiff’s just claim. The onus of satisfying the court that the application should be granted lies on the applicant. When considering whether that onus has been discharged, the court will look to the cogency of the defence as raised by the defendant.(Citations Omitted).[4] (2008) 106 SASR 1 at 20 [78]. In my view the learned magistrate was correct in concluding that there was no real question to be tried. The appellant sought to defeat the application for summary judgment on the basis that she relied on an equitable set-off of the liability she otherwise owed to the respondent by way of contributions calculated or assessed in accordance with the existing lot entitlements. That equitable set-off was based on a claim for an order for payment pursuant to s 59(4)(c) or s 142(8) of the Act.

Ratio Decidendi

Legal Principle Established

As the High Court emphasised recently in Spencer v The Commonwealth,[2] albeit in the context of an application for summary dismissal, the test to be applied is one of demonstrated certainty of outcome.[3] [2] (2010) 241 CLR 118.[3] (2010) 241 CLR 118 at 140 [55].Consideration In order to succeed on appeal the appellant must establish that the learned magistrate erred in concluding that summary judgment was warranted because there was no real question to be tried on the principal action. As Debelle J said in Ceneavenue Pty Ltd v Martin:[4]The expression “no real question to be tried” connotes such factors as whether the defendant really has a bona fide defence, and that the defendant does not have an arguable defence which ought to be fairly tried. The defendant must show that he is not wasting the court’s time or abusing the court’s procedures to delay or defeat a just claim by the plaintiff. In this context, the word “real” is intended to distinguish a bona fide defence from one that is fanciful or spurious or an abuse of process seeking to delay and defeat the plaintiff’s just claim. The onus of satisfying the court that the application should be granted lies on the applicant. When considering whether that onus has been discharged, the court will look to the cogency of the defence as raised by the defendant.(Citations Omitted).[4] (2008) 106 SASR 1 at 20 [78]. In my view the learned magistrate was correct in concluding that there was no real question to be tried. The appellant sought to defeat the application for summary judgment on the basis that she relied on an equitable set-off of the liability she otherwise owed to the respondent by way of contributions calculated or assessed in accordance with the existing lot entitlements. That equitable set-off was based on a claim for an order for payment pursuant to s 59(4)(c) or s 142(8) of the Act. In my view the appellant’s claim for relief under those provisions cannot constitute an equitable set-off. Equitable set-off arises where a person against whom a claim is made can show some equitable ground for being protected against that demand.[5][5] Rawson v Samuel (1841) 41 ER 451 per Lord Cottenham LC at 458; Hill v Ziymack (1908) 7 CLR 352. To establish an equitable set-off as claimed by the appellant, which should more precisely be described as the equitable defence of set-off, the appellant must have an equity which impeaches the respondent’s title to demand payment. The mere existence of a cross-demand is not sufficient. While historically there has been some doubt, it now appears settled that the “impeachment” test correctly states the current position in Australian law.[6] [6] James v Commonwealth Bank of Australia (1992) 37 FCR 445 at 457 – 462; Lord v Direct Acceptance Corporation (1993) 32 NSWLR 362 at 367; Norman v FEA Plantations (2011) 195 FCR 97 at 112 – 116. It has been suggested that the test for the existence of the defence is that it would be unconscionable that the plaintiff’s claim be enforced without taking account of the cross-demand. Dr I C F Spry QC, in his article Equitable Set-Offs,[7] describes the test as requiring a relationship between the claim of the plaintiff at law and the claim of the defendant that the right of the plaintiff should be regarded in equity as dependent on the satisfaction of the claim of the defendant. [7] (1969) 43 ALJ 265.