Oaks Hotels & Resorts (NSW) No. 2 Pty Limited v The Owners Strata Plan 45205

[2009] NSWSC 219

CITATION:	Oaks Hotels & Resorts (NSW) No. 2 Pty Limited v The Owners Strata Plan 45205 [2009] NSWSC 219
HEARING DATE(S):	4/03/09, 13/03/09
JUDGMENT DATE :	31 March 2009
JURISDICTION:	Equity Division Commercial List
JUDGMENT OF:	Einstein J
DECISION:	Declaration and orders to be made staying Tribunal proceedings.
CATCHWORDS:	Consumer, Trader and Tenancy Tribunal Act 2001 - Anterior proceedings brought before District Court - Construction of section 22 (7) of Act
LEGISLATION CITED:	Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) Fair Trading Tribunal Act 1987 (NSW) Trade Practices Act, 1974 (Cth)
CATEGORY:	Procedural and other rulings
CASES CITED:	Cohen-Hallaleh v Cyril Rosenbaum Synagogue [2003] NSWSC 395 R v The Judges of District Court Holden at Brisbane; Ex parte Kruger Enterprises [1982] Qd R 623 Westfield Concrete v Fair Trading Tribunal [2001] NSWSC 267
PARTIES:	Oaks Hotels & Resorts (NSW) No. 2 Pty Limited (Plaintiff) The Owners Strata Plan 45205 (Defendant)
FILE NUMBER(S):	SC 50035/09
COUNSEL:	Mr M Cohen (Plaintiff) Mr Corsaro SC, Mr Young (Defendant)
SOLICITORS:	HWL Ebsworth Lawyers (Plaintiff) Andreones Pty Limited (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

Einstein J

Tuesday 31 March 2009

50035/09 OAKS HOTELS & RESORTS (NSW) NO. 2 PTY LIMITED ACN 114 193 065 v THE OWNERS – STRATA PLAN 45205

JUDGMENT

The state of these proceedings

1 These proceedings commenced before this Court on 4 March 2009 with an application for ex parte injunctive relief which sought to restrain, until the conclusion of the proceedings or further order, the termination of a deed by which the plaintiff contended that it had been appointed and acted as the caretaker of the commercial building known as Hyde Park Plaza located at 38 College St, Sydney. That application was acceded to.

2 The short reasons for the making of the orders which followed included the following:

The background facts and circumstances supporting the plaintiff’s claim for this urgent interlocutory relief are as follows:

i Prior to 1993, Hyde Park Plaza was owned and operated by Mirvac Hotels Pty Ltd as a Hotel complex, and in 1993 it was converted to strata title, at which time Mirvac entered into a Building Management Agreement with the Defendant. See paras 4 & 5 of the Baskett affidavit.

ii Since September 2004, the complex has been operated by the Plaintiff or entities associated with it, and its controlling owner, Oaks Hotels and Resorts Limited, a public listed company which operates some 39 such properties in Australia, New Zealand and the emirate of Dubai. See paras 2 & 8 of the Baskett affidavit.

iii On 22 September 2005, the Plaintiff and the Defendant entered into a Deed of Engagement, by which the appointment of the Plaintiff was ratified, subject to earlier doubts arising from orders made in the Consumer, Trader and Tenancy Tribunal of NSW (the “CTTT”). See paras 11 - 13 of the Baskett affidavit and Ex. GB-9 thereto.

iv On 14 January 2008, the Plaintiff commenced proceeding numbered 16 of 2008 in the Commercial List of the District Court of NSW, at Sydney, for damages for breach of contract, being moneys due by the Defendant under the Deed of Engagement. See para 15 of the Baskett affidavit and Ex. GB-10 thereto.

v On 4 March 2008, the Defendant filed its Cross Claim in the District Court proceeding, alleging, inter alia, breach of fiduciary duty, breach of contract and contravention of the Trade Practices Act, 1974 (Cth.), and that the Deed of Engagement was void. See para 15 of the Baskett affidavit and Ex. GB-10 thereto.

vi On 11 March 2008, the Plaintiff exercised the option to renew conferred on it by cl. 33 of the Deed of Engagement for a further term of 5 years upon expiry of the then current Deed on 31 December 2008. See para 14 of the Baskett affidavit.

vii On 28 May 2008, the Defendant purporting to act in general meeting, resolved to commence a proceeding before the CTTT, seeking orders that the agreement between the parties be terminated. See para 20 of the Baskett affidavit and Ex. GB-13 thereto.

viii On 7 August 2008, the Defendant purported to commence proceeding numbered SCS 08/40746 in the CTTT. See para 22 of the Baskett affidavit and Ex. GB-15 thereto.

ix On 26 September 2008, the Plaintiff confirmed this exercise of the option to renew, which was acknowledged by the Defendant by later email. See para 14 of the Baskett affidavit and Ex. GB-9A thereto.

x On 11 February 2009, the Defendant purported to serve an undated Notice of Breach dated 10 February 2009 upon the Plaintiff, which upon the most conservative calculation of the running of time, expires on 4 March 2009. See para 23 of the Baskett affidavit and Ex. GB-16 thereto.

xi On 2 March 2009, the Plaintiff responded in writing to the purported Notice of Breach served by the Defendant. See para 24 of the Baskett affidavit and Ex. GB-17 thereto.

xii On 3 March 2009, the Plaintiff indicated to the Defendant that in the absence of a satisfactory response to the reply, the current application would be made to the Court.

Each of the matters set out in the submissions in support of the application for this interlocutory relief have substance in terms of the Court being satisfied that the plaintiff has established that it has a serious issue to be tried.

Furthermore, the plaintiff has satisfied the Court, albeit at an interlocutory level, that the balance of convenience favours the grant of the urgent injunctive relief.

For those reasons the plaintiff has made out its entitlement for the orders sought for interlocutory injunctive relief, the plaintiff’s solicitor having proffered to the Court the usual undertaking as to damages.

3 The proceedings were next before the Court on 6 March 2009 when consent orders were made removing the District Court proceedings to the Supreme Court and giving directions to the parties in terms of treating with the requirements of the Commercial List: thus the Statement of Claim was to stand as the Plaintiff’s Commercial List Statement, the Defence was to stand as the Defendant's Commercial List Response, the Statement of Cross-Claim was to stand as the Defendants Cross-Summons and Commercial List Cross-Claim Statement and the Defence to the Cross-Claim was to stand as the Plaintiff’s Commercial List Cross-Claim Response.

4 The same directions dealt with the requirements for the parties to complete inspection of documents by early March 2009 and dealt with the serving of affidavits and expert evidence by the respective parties.

5 The Consent Short minutes stood over until 13 March 2009, a claim for orders 4 and 5 in the summons

[respectively seeking in order 4 a declaration, pursuant to section 22 (7) of the Consumer, Trader and Tenancy Tribunal Act 2001 , that the Tribunal is without jurisdiction to hear or determine proceedings number SCS 08/40746

and in order 5, an order that proceeding SCS 08/40746 in the Tribunal be stayed permanently]

The events of 13 March

6 On 13 March the defendant appeared and submitted that they remained entitled to put the plaintiff to proof of its continued entitlement to the injunctive relief which had been ordered ex parte.

7 At the same time the plaintiff moved for the making of orders and declarations 4 and 5 set out above.

8 Following extensive submissions from both parties on that occasion the court permitted the parties to exchange further written submissions, following which judgment on the respective applications would be reserved.

9 In the course of making its submissions the plaintiff sought leave to amended summons to seek declaratory relief to the effect that the notice of breach was invalid. The court grants leave to so amend the summons.

10 The plaintiff further sought leave to reopen its evidence to enable the receipt of the following:

i. the affidavit of service of Mr Hocking sworn on 3 March 2009;

ii. the tender of the letter from Messrs Andreones to dated 4 March 2009 Ebsworth;

iii. a Notice of Meeting of the Executive Committee of the Defendant dated 20 November 2008;

iv. Minutes of the Meeting of the Executive Committee of the defendant conducted on 20 November 2008.

11 That leave is granted.

The issues

12 The first short issue concerned whether or not in the circumstances where the orders had been made until further order, the plaintiff required to burden an onus of proof to make good the serious case and balance of convenience parameters requisite for continuation of ex parte injunctive relief. In my view that burden rested upon the plaintiff.

13 The next issue is whether or not that burden was discharged. I was satisfied that the plaintiff had on this occasion again discharged the requisite onus of proof, generally for broadly the same reasons, as had been given on an ex parte basis.

The CTTT issues

14 A particularly significant question of principle concerned the constraints upon the CTTT's grant of jurisdiction under the Consumer, Trader and Tenancy Tribunal Act 2001.

15 Relevantly:

Section 21 (1) of the Act provides:

The Tribunal has such jurisdiction to decide matters, and such powers to make orders and otherwise exercise any function in connection with any such decisions, as is conferred on it by this or any other Act

16 The width of its jurisdiction is then circumscribed by the provisions of sections 22 (3), (5), (7), and (8):

(3) If, at the time when an application was made to the Tribunal in accordance with this Act, no issue arising under the application was the subject of a dispute in proceedings pending before a court, a court has no jurisdiction to hear or determine such an issue;

(5) Subsection (3) does not prevent a Court from hearing and determining any proceedings in which it is claimed that any order, determination or ruling of the tribunal is invalid for want of jurisdiction or from making any order as a consequence of that finding;

(7) If, at the time when an application is made to the tribunal in accordance with this Act, an issue arising under the application was the subject of a dispute in proceedings pending before a court, the Tribunal, on becoming aware of those proceedings, ceases to have jurisdiction to hear or determine the issue;

(8) Subsection (7) ceases to apply to the extent to which the proceedings concerned dismissed or quashed by the court, or by another court, for want of jurisdiction or without deciding the issue on its merits, or withdrawn.

17 In R v The Judges of District Court Holden at Brisbane; Ex parte Kruger Enterprise [1982] Qd R 623, at 627-628, MacPherson J dealt with the meaning of the phrase "the issue in dispute" in the Queensland legislation which is broadly similar to the CTTT Act. The holding was that the issue in dispute is not itself the relief sought by the cause of action. That is to say, these are separate and distinct concepts which not interchangeable.

18 In Westfield Concrete v Fair Trading Tribunal [2001] NSWSC 267 at [24 and following] James J construed section 22 (7) of the Act (then known as the Fair Trading Tribunal Act) by holding [at 27] that an "issue" is at least capable of meaning a point or question in dispute in a particular legal proceeding between the parties to that proceeding. As His Honour observed, if the word "issue" in subsection (7) of section 22 is interpreted in that way, then subsection (7) has a sensible operation. The effect of subsection (7) would be:

"that the Tribunal ceases to have jurisdiction to hear and determine an issue arising under an application to the Tribunals, if the same issue is the subject of a dispute between the same parties in proceedings in a court between the same parties which were commenced before an application to the Tribunal was made"

19 In 2003 Justice Barrett was called upon to determine a similar question: Cohen-Hallaleh v CyrilRosenbaum Synagogue [2003] NSWSC 395.

20 Justice Barrett held at the purpose of section 22 (7) was to avoid the risk of concurrent findings by the CTTT and a "Court" (as defined by section 22 (1) and 22 (2) with respect to a particular "issue. His Honour held that for the section to operate, more must be shown than that the proceedings in the respective forums concern the same subject. His Honour held that it must be seen that the disposition of each will require determination of the same question.

21 The burden of the defendant's submissions have been that a comparison of the District Court proceedings and the proceedings before the Tribunals shows that there is no commonality in the orders sought in each proceeding. To that end the defendant has submitted that in the Tribunal proceedings, only one order is sought: termination of the Building Management Agreement whereas in the District Court proceedings, no such order is sought.

22 In the Application filed in the CTTT in proceeding numbered SCS 08/40746 on 7 August 2008, the defendant propounded an application to terminate the agreement between itself and the plaintiff. The grounds relied upon (while not without some uncertainty) appear to fall in to the following categories of conduct that the plaintiff is alleged to have exhibited:

(a) misleading, deceptive and negligent

(b) making false and misleading statements


(c) failing to perform its duties

(d) not acting in the best interests of the Owners Corporation

(e) charging a fee “of around $390,000” was unreasonable, unfair, unconscionable and harsh.

(f) breach of fiduciary duty (included in later points of claim dated 22 February 2009)

23 In answer to the plaintiff’s simple claim in debt filed in the District Court proceeding, the defendant alleged upon its Defence filed on 4 February 2008 that:

(a) by para 8(c), the applicable fee as at 16 January 2008 was $385,865.04

(b) otherwise does not admit the existence of the agreement and puts the Plaintiff to proof

(c) the agreement is void and unenforceable by reason that it has not been executed – which is quite at odds with the objective facts – see Ex. GB-9

24 The defendant also propounded a Cross-Claim filed in the District Court proceeding on 4 March 2008, which (also while not without some uncertainty) put the whole of the agreement between it and the plaintiff in issue, and alleged:

(a) by para 11, that the Deed governing contractual relations was unexecuted, does not admit that an agreement was made, but if it was made it was in any event void and unenforceable

(b) by para 12(d) & 13(c), that a term was implied into the Deed that the plaintiff would perform its duties in the best interests of the Owners Corporation

(c) by para 14, that the Plaintiff owed the Defendant fiduciary duties, including to serve the interests of the owners corporation with undivided loyalty

(d) by para 15, that the Plaintiff owed the Defendant a duty to take reasonable care in providing services to the Defendant

(e) by para 24(a), breached the Deed; by para 24 (b) breached fiduciary duties; and by para 24(c) acted negligently

(f) by para 26(b), made representations to the Defendant in trade or commerce

(g) by para 32(a), that such representations were misleading or deceptive contrary to s. 52 of the Trade Practices Act, 1974 (Cth)

(h) by para 32 (c) & (d), that the Plaintiff breach fiduciary duties owed to the Defendant

(i) by para 34(e), that the Plaintiff breached common law or fiduciary duties on terms which were uncommercial

(j) by para 36, that the Plaintiff failed to advise that it was charging for work at uncommercial and unreasonable rates.

25 It is plain that the facts alleged to be in issue by the defendant’s pleaded allegations in the District Court proceeding comprehend all of the grounds upon which the Application in the CTTT is founded.

26 Plainly enough the mischief with which the legislature was dealing in enacting section 22 (7) was to avoid the prospect of the CTTT dealing with the very same issue as is the subject of a dispute which has already arisen before a Court.

27 There may be occasions when there is no bright line distinction capable of being drawn in terms of what is and what is not properly characterised as an issue in dispute.

28 In the present circumstances the finding is that section 22 (7) is engaged.

29 It follows that by reason that the Application in the CTTT was commenced after the allegations were filed in the District Court proceeding, that by operation of s. 22 of the Act, no jurisdiction was attracted by the Application filed by the defendant on 7 August 2008.

30 In the circumstances the declaration within prayer 4 of the Summons and the consequential order within prayer 5 therein, are appropriate to be made.

31 The plaintiff is to bring in short minutes of order.

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