Strata Corporation No 13975 Inc v Jm Properties Pty Ltd
[2006] SADC 37
•7 April 2006
DISTRICT COURT OF SOUTH AUSTRALIA
(Civil)
STRATA CORPORATION NO 13975 INC v JM PROPERTIES PTY LTD
Judgment of Her Honour Judge Simpson
7 April 2006
REAL PROPERTY - STRATA AND RELATED TITLES AND OCCUPANCY
Recovery of unpaid strata contributions levied against unit holder of three units - defence raised issues of validity of articles of strata corporation and unreasonable, oppressive, unjust and unfair nature of the articles - issues raised on defence litigated in other proceedings - defendant unsuccessful - Held - defence not made out -strata corporation entitled to judgment.
Strata Titles Act 1988 s 25; s 27, referred to.
PROCEDURE - MISCELLANEOUS PROCEDURAL MATTERS
Amendment of pleadings after trial - agreement by parties that decision in another action ([2006] SADC 12) would be determinative of plaintiff's claim for recovery of debt against defendant - application by defendant before entry of judgment against it for leave to amend defence and for consequential orders for inspection of documents and particulars - Held: no basis demonstrated on which to grant applications - grave injustice to plaintiff if applications granted - applications dismissed.
District Court Rules 1992 r 53.01; r 67.01(6), referred to.
In re Norman (1886) 16 QBD 673; Duncan v Vinidex Tubemakers Ltd unreported [1999] SASC 157; Gilbertson v State of South Australia and anor (No 2) (1976) 72 LSJS 491; Urban Transport Authority (NSW) v Nweiser (1992) 28 NSWLR 471; Cornwall v Rowan (2004) 90 SASR 269; Hines v Mediterranean Shipping Company SA (2001) 80 SASR 268, applied.
STRATA CORPORATION NO 13975 INC v JM PROPERTIES PTY LTD
[2006] SADC 37
The plaintiff, Strata Corporation No 13975 Inc (‘the Strata Corporation’), is a body corporate created under the Strata Titles Act 1988 (‘the Act’) on the deposit of a strata plan in respect of property known as the Renaissance Arcade, situated in the Central Business District of Adelaide in South Australia. The defendant, JM Properties Pty Ltd (‘JM Properties’), is the registered proprietor and unit holder of three of the nine units, Units 4, 5 and 6, in the Renaissance Arcade. All unit holders are members of the Strata Corporation pursuant to section 18 of the Act.
The functions of the Strata Corporation are set out in section 25 of the Act as follows:
(a) to administer and maintain the common property for the benefit of the unit holders; and
(b) to administer all other property of the corporation; and
(c) to enforce the articles of the corporation.
This is an action brought by the Strata Corporation for the recovery of unpaid contributions as a debt from the unit holder of the units in respect of which the contribution is payable. In this case, the contributions have been levied against JM Properties as the unit holder of Units 4, 5 and 6.
The Strata Corporation’s power to raise money from unit holders is provided for by section 27 of the Act:
(1) A strata corporation may raise such funds (including reserve funds for future expenditure of a capital nature) as it thinks necessary.
(2) For the purpose of raising funds the strata corporation may, by resolution, levy contributions against all unit holders.
(3) The contributions--
(a)will be proportional to the unit entitlements of the various units; or
(b)will be determined on such other basis as the strata corporation decides by unanimous resolution.
(4) If a contribution is not paid on or before the date on which it becomes due and payable in accordance with a resolution of the strata corporation, it bears interest at a rate fixed by the corporation.
(5) The strata corporation may recover an unpaid contribution (and interest on any such contribution), as a debt, from the unit holder of the unit in respect of which the contribution is payable (whether or not that person was the unit holder when the liability arose).
(6) If the strata corporation carries out work that wholly or substantially benefits a particular unit or group of units, the corporation may, subject to any agreement to the contrary, recover the cost of that work as a debt from the unit holder or unit holders of the unit or units.
(7) Where the cost referred to in subsection (6) is recoverable from two or more unit holders, the extent of their liability will be proportioned according to the unit entitlements of their respective units.
(8) An amount paid by a person under this section is not recoverable by the person from the strata corporation when he or she ceases to be a unit holder.
Contributions are levied by the Strata Corporation, in accordance with section 27 of the Act and the Articles of the Strata Corporation, which were adopted by unanimous resolution at the first meeting of the Strata Corporation on 18 December 1996 and lodged with the Registrar-General at the Lands Titles Registration Office on 13 February 1997.
Article 17 determines the basis on which contributions are levied as follows:
The registered proprietor of each unit shall be liable to pay to the strata corporation all contributions and levies for common repairs, cleaning, maintenance, insurance, replacements, management, administration, marketing and other common costs and expenses incurred by the Strata Corporation in respect of the property comprising the strata plan in the following percentages:
Unit 1 6.0%
Unit 2 7.5%
Unit 3 20.5%
Unit 4 23.0%
Unit 5 9.5%
Unit 6 9.0%
Unit 7/8 11.0%
Unit 9 13.5%
100.0%
The Strata Corporation has by resolution levied contributions against all unit holders, including JM Properties. At general meetings, the vote exercisable by each unit holder on a resolution is equivalent to the unit entitlement of each unit.
In particular, the vote exercisable by JM Properties at general meetings is as follows:
Unit 4 2.4%
Unit 5 2.8%
Unit 6 1.7%
Total 6.9%
Contributions from each unit to the outgoings of the Strata Corporation are based on the percentages provided for by Article 17.
The defence to this action has been by challenge to the validity of the Articles, or in the alternative, based on the unreasonable, oppressive, unfair and/or unjust nature of the Articles in their operation in relation to JM Properties.
By its Amended Defence, filed on 23 December 2003, JM Properties claimed that:
1.The first general meeting of the Strata Corporation on 18 December 1996, and a resolution passed at the meeting to adopt Articles, together with every subsequent meeting and resolution of the Strata Corporation since 18 December 1996, were in breach of the Act, unconstitutional, invalid, null and void;
2.On or about 3 July 2002, JM Properties complained to the Strata Corporation and each unit owner about the unreasonableness, oppression, injustice, unfairness, irregularities and inequity to JM Properties under the Articles of the Strata Corporation and in particular in relation to the grossly disproportionate percentages of strata corporation contributions and levies;
3.On or about 9 July 2002, JM Properties made it clear to the strata manager that unless the inequities in the Strata Corporation contributions and levies were rectified and/or decided to the satisfaction of JM Properties, then there would certainly exist a dispute to be resolved pursuant to section 41A of the Act;
4.That while JM Properties had been aware of the provisions in the Articles relating to its liability for contributions, it had not been aware that:
·there would be an increase in building insurance costs to the extent realised
·it would be liable to contribute to capital works in a sum of about $250,000 in accordance with the Articles, which were ambiguous in their application to liability for capital works contributions
·the Act and the Articles did not differentiate between operational and capital expenditure contributions or
·the Strata Corporation would ‘approve’ certain resolutions, including a resolution to pay the representatives of unit holders for attendance at meetings.
5. JM Properties had commenced proceedings on 8 July 2003 in Action No 1030 of 2003 against the Strata Corporation and other unit holders in which it had sought the following relief:
A declaration that:
(a)A decision of the Strata Corporation, or its management committee, had been unreasonable, oppressive or unjust within the meaning of section 41A(1)(c) of the Act;
(b)A dispute had arisen between the Strata Corporation and JM Properties in relation to an aspect of the occupation or use of a strata unit;
(c)A dispute had arisen between JM Properties and other unit holders in relation to an aspect of the occupation or use of a strata unit;
(d)The purported general meeting of the Strata Corporation on 18 December 1996, and all of the subsequent purported meetings of the Strata Corporation had been in breach of the Act, unconstitutional, invalid, null and void;
(e)All of the purported resolutions passed at any of the purported meetings of the Strata Corporation had been in breach of the Act, unconstitutional, invalid, null and void;
(f)The Articles had never been lawfully created in accordance with the Act or at common law and were therefore unconstitutional, null and void; and
(g)The claim for contributions and levies which the Strata Corporation claimed to be due and payable by JM Properties in this action had no legal basis and was therefore unenforceable.
The relief sought by JM Properties was for a declaration that the Articles were invalid, null and void, or in the alternative, for an order altering the Articles of the Strata Corporation to change the percentages provided for in Article 17 and an order that Article 19[1] be deleted, such orders to have retrospective operation from 19 July 2002, or such other date as JM Properties may be advised.
[1] Article 19 provides: If the strata corporation carries out work that wholly or substantially benefits a particular unit or group of units the corporation shall recover the cost of that work as a debt from the unit holder or unit holders of the unit or units.
A declaration was sought in the Amended Defence to this action that the Strata Corporation had never provided to JM Properties the full particulars of the claim in this action.
Paragraph 10 of the Amended Defence stated that if JM Properties succeeded against the Strata Corporation and the other unit holders in Action No 1030 of 2003, then the final judgment in that action may act as a complete defence or set off to the claim of the Strata Corporation in this action and may also result in the Strata Corporation owing monies to JM Properties in relation to the Strata Corporation expenses, contributions and levies already paid by JM Properties.
It was asserted by JM Properties that the amount of unpaid contributions it owed to the Strata Corporation, if any amount at all, depended on the resolution of the issues which were to be determined in Action No 1030 of 2003.
At the time of filing the Amended Statement of Claim in this action on 29 August 2003, the amount claimed by the Strata Corporation was in the sum of $70,814.69, which was the amount due and payable in accordance with the resolutions of the Strata Corporation to 14 August 2003.
Interlocutory hearings in relation to the two actions were heard together from 8 August 2003, when the Master noted that orders for discovery had been made in Action No 1030 of 2003 and to the extent that there was separate discovery in these proceedings, made an order for discovery within six weeks of that date. Documents filed thereafter in Action No 1030 of 2003 in many instances relate also to this action.
It was agreed between the parties that resolution of this action depended on and would be determined by the outcome of Action No 1030 of 2003, the Strata Corporation reserving its position in respect of the quantum of the claim as at the date of judgment, in the event JM Properties failed in that action.
JM Properties has failed in Action No 1030 of 2003. I refer to and incorporate in this judgment the reasons for judgment in Action No 1030 of 2003, published on 16 February 2006. ([2006] SADC 12)
It remains to enter judgment for the Strata Corporation against JM Properties in the claim for the recovery of unpaid contributions levied against JM Properties. Affidavit evidence was received in relation to the quantum of the unpaid contributions as at the date of judgment.
Application to Amend the Defence
On 28 February 2006, JM Properties sought an adjournment in order to inspect documents said to be relevant to the issue of quantum in this action. Counsel for JM Properties sought access to invoices, or ‘source material’, which made up the budgets forming the basis for the calculation of strata contributions. The matter was adjourned to 22 March 2006 to allow for that to take place.
The affidavit sworn by the solicitor for the Strata Corporation, Mr Berg, on 20 March 2006, confirms that the Strata Corporation resolved at its meeting on 28 February 2006 that all and any books of the Strata Corporation be made available to JM Properties or its representatives for inspection to be undertaken in the following seven days. There is no evidence to suggest that JM Properties did not have the opportunity to make whatever inspection it was so advised within that time. I was told that inspection took place on 3 March 2006.
On 21 March 2006, JM Properties filed an affidavit of Mrs Balalis, director of JM Properties, sworn the same day. The affidavit relies solely on a facsimile dated 21 March 2006, exhibited to the affidavit, sent by the solicitor for JM Properties to the solicitors for the Strata Corporation. It states that Mrs Balalis and Mr Bullock, the property manager and agent of JM Properties, inspected a folder of documents of the Strata Corporation labelled ‘Accounts paid by Strata Corporation 13975 Inc’, in which accounts were arranged in chronological order.
JM Properties, through Mrs Balalis and Mr Bullock, raised queries in relation to:
1.Whether some invoices, included in the folder, had been paid by the Strata Corporation in respect of other properties, although recognising accounts may simply have been misfiled in the folder they inspected;
2.Whether some invoices should have been charged to individual unit holders, rather than the Strata Corporation;
3.Whether some invoices reflected excessive management or mismanagement; and
4.Whether some invoices were related to the costs of litigation.
No inspection of the financial accounts of the Strata Corporation was apparently undertaken by those advising JM Properties.
On 21 March 2006, by Notice for Specific Directions, JM Properties sought leave to amend the Third Further Amended Statement of Claim in Action No 1030 of 2003 and the Amended Defence in this action. In the event, the application to amend the pleadings in Action No 1030 of 2003 was not pursued.
The proposed amendments to the Amended Defence are:
7AFurther and in the alternative, that the decision of the plaintiff or of the management committee to treat certain items of expenditure and/or outgoing (sic) as being properly payable as costs and expenses pursuant to the Articles was wrong in that:-
(1) In certain respects there were items of expenditure and/or outgoings which wholly or substantially benefited a unit or group of units (not being the units owned by the defendant) and the plaintiff or the management committee failed to recover the cost of such work as a debt from the unit holder or unit holders of the unit or units which received such benefit;
(2) The plaintiff represented that certain items of expenditure and/or outgoings were relevant to the Renaissance Arcade when they were costs and/or expenses incurred by a different property; and
(3) The plaintiff treated costs associated with litigation against the defendant as costs and expenses pursuant to the Articles and/or otherwise properly payable by the defendant.
27B (sic)Further and in the alternative, the budgets set for the Strata Corporation were incorrectly set in that they were based on the preceding year(s)’ actual expenses, which actual expenses were in respect of certain items of expenditure and/or outgoings not properly payable as Strata Levies, in that:-
(1) There were items of expenditure and/or outgoings which wholly or substantially benefited a unit or group of units (not being the units owned by the defendant) and the plaintiff or the Management Committee failed to recover the cost of such work as a debt from the unit holder or unit holders of the unit or units which received such benefit;
(2) The plaintiff represented that certain items of expenditure and/or outgoings were relevant to the Renaissance Arcade when there were costs and/or expenses incurred by a different party; and
(3) The plaintiff treated costs associated with litigation against the defendant as costs and expenses pursuant to the Articles, mainly but not exclusively being the Chairman’s expenses and/or otherwise treated costs associated with litigation as being properly payable by the defendant.
…
9.11 In the alternative:-
9.11.1an order that the sums claimed by way levy by the plaintiff is to be determined by account and inquiry by a Master; and
9.11.2an order varying or reversing decisions of the Strata Corporation or the Committee of Management to levy contributions from the plaintiff in the sum claimed.
JM Properties now seeks to re-open in this action, by way of further investigation, issues which have been the subject of the hearing in Action No 1030 of 2003, which, it was agreed, was to determine the outcome in this action.
By Notice for Specific Directions filed on 4 April 2006 JM Properties sought directions, to be consequent on the proposed amendments, on the following:
JM Properties to have:
1. Inspection of:
(i) Documents in folders marked “Accounts Paid by Strata Corporation 13975”
(ii) Inspection of all other books and records, including the financial accounts of the Strata Corporation in relation to tax invoices “Accounts Paid by the Strata Corporation” and
(iii) Inspection of the file of the Chairman.
2. Particulars in writing as to:
(i) Recovery of any costs properly the responsibility of another unit holder -
§Items so recovered
§Date of items so recovered
§Amount recovered
(ii)The basis for the calculation of payment to the Chairman of $77,890.69 from strata contributions
(iii)The basis for payment of $187,553.85 to the Chairman in respect of litigation costs
between 1 July 2005 and 1 July 2006
(iv) Tax Invoices raised by the Chairman, and in particular, distinguishing between costs to the Strata Corporation and costs associated with litigation.
Pursuant to r 53.01 of the District Court Rules 1992, an amendment may be made at any time with leave, subject to r 67.01(6), which provides:
No further interlocutory order shall be made under this Rule after the making of the order to proceed to trial unless special circumstances shall be shown to exist which require such order to be made in the interests of justice.
The words “special circumstances” are “wide, comprehensive, and flexible words,” …and “no Court can or ought to lay down any exhaustive definition of them." (In re Norman (1886) 16 QBD at 673, referred to in Duncan v Vinidex Tubemakers Ltd unreported [1999] SASC 157)
There is no dispute that leave may be given to a party to amend the pleadings at any time, even after judgment, if the circumstances of the case require it, although to do so is unusual. (Gilbertson v State of South Australia and another (No 2) (1976) 72 LSJS 491 at 492, 494)
The issues in this case are:
1. Whether JM Properties should be given leave to amend the defence and call evidence in this action, when this litigation has been conducted on the basis that all issues relevant to the defence of this action, save and except for a final calculation of the quantum of the debt to be recovered, given the fact of ongoing liability, would be decided by the determination of Action No 1030 of 2003;
2. Whether the interests of justice are better served by dismissing the application or allowing the amendments to the defence and evidence to be called on those matters in this action, a course not contemplated by the parties;
(Urban Transport Authority (NSW) v Nweiser (1992) 28 NSWLR 471 at 478; Cornwall v Rowan (2004) 90 SASR 269 at 388-390; Hines v Mediterranean Shipping Company SA (2001) 80 SASR 268 at 274)
and
3. Whether in fact the proposed amendments raise issues which were not before the court in Action No 1030 of 2003.
Those advising JM Properties have made assertions and expressed opinions, including opinions about ‘excessive management or mismanagement’ and the possibility that some accounts have been wrongly paid. The fact that those assertions have been passed on by the solicitor for JM Properties in a letter to the Strata Corporation’s solicitors cannot afford them any particular weight. The proposed amendments amount to a repetition of issues, raised in a similar way, and dealt with in Action No 1030 of 2003.
They are the result of speculation and are unsupported by evidence. Information is sought in relation to invoices which those advising JM Properties are unable to classify without assistance from management of the Strata Corporation. Those acting on behalf of JM Properties have assumed that because some accounts apparently relating to another property were in the folder which was the subject of inspection, the accounts may have been wrongly paid by the Strata Corporation. As they have recognised, accounts in relation to other properties may have been misfiled in the folder inspected by Mrs Balalis and Mr Bullock.
Four of the five accounts identified in the schedule prepared by Mr Bullock as possibly relating to another property, are for the period between 9 October 2001 and 1 July 2003. Of the seventy-six documents listed by Mr Bullock in the schedule he prepared, at least sixty of them relate to the period before the hearing of Action No 1030 of 2003.
Financial statements, including details of outgoings paid by the Strata Corporation, relating to a period largely covered by the documents in the schedule, invoices in relation to chairman’s fees and litigation fees, and independent audit reports of outgoings were tendered in Action No 1030 of 2003, to which no reference has been made by those now advising JM Properties.
It is not asserted that there is evidence currently available to JM Properties which raises any query about the sufficiency, or accuracy or otherwise of the evidence received in Action No 1030 of 2003 in relation to the budget of the Strata Corporation, or the method by which contributions are calculated.
Amongst other documents relating directly to the budget and outgoings of the Strata Corporation, and to the liability of JM Properties for strata contributions, the following documents were tendered in evidence in Action No 1030 of 2003:
·Book of Financial Reports, including Income and Expenditure Budget for financial years ending 30 June 2002, 2003, 2004 and 2005, prepared by Mr Bullock and the lawyers for JM Properties and tendered by JM Properties[2]
·Tenant Transaction Reports, setting out the record of contributions and levies payable and paid by JM Properties to the Strata Corporation in respect of each of Units 4, 5 and 6 for the period 1 February 2002 to 9 February 2005[3]
·Tenant Statements for Units 4, 5 and 6[4]
·Independent Audit Reports of KPMG Chartered Accountants for the financial years ended 30 June 2001, 2002, 2003 and 2004 in relation to the outgoings of the Strata Corporation[5]
·Insurance Policy and Certificates[6]
·Folder of Invoices re litigation and management fees[7].
[2] Exhibit P121
[3] Exhibit SC16
[4] Exhibit SC31
[5] Exhibit SC23; XXN on the topic at T837-838
[6] Exhibits SC24, SC33
[7] SC18
There was no challenge in Action No 1030 of 2003 to that evidence, including no challenge to the basis for the inclusion of particular items, or a class of item, in the annual budgets of the Strata Corporation. As I have noted above, the financial statements of the Strata Corporation were tendered by JM Properties as part of its case.
JM Properties has had the fullest opportunity to raise the issues referred to in the proposed amendments in the hearing of Action No 1030 of 2003. The proposed amendments repeat matters raised in that action and which were, or could have been, the subject of evidence at the hearing of it.
There were extensive amendments to the pleadings in Action No 1030 of 2003 up to and including the trial. The Third Further Amended Statement of Claim included reference to the following issues, by way of example:
Ps Paragraph
43 Issue
16 Inclusion of capital works in strata contributions, the amount of legal fees, the proportion of contributions levied against unit holders in respect of budgeted costs, including building insurance, air-conditioning operating and maintenance costs 18.3 Legal fees and chairman’s costs, building insurance, financial reporting, unclear financial statements, trust account, financial management 19
27.38Overall level of budgeted expenditure for common expenses, legal fees, management expenses, energy costs, capital works, repairs and maintenance, failure to recover costs from adjoining owner 20
27.39
29.15-29.17Wrongful application by the Strata Corporation of monies paid by JM Properties as contributions to payment of legal fees 21 Repairs to or replacement of air-conditioning chiller 25 25.6-25.12
Failure of the Strata Corporation to keep proper accounting records in respect of monies received and expended, including records of trust money, failure to arrange for trust account and audit, failure to prepare statements of accounts in respect of each accounting period, failure to furnish particulars of contributions payable by each unit, including details of arrears, failure to provide details of expenditure
27.8-27.9 27.37 Refusal or failure of the Strata Corporation to provide to JM Properties copies of minutes of meetings, financial statements and a proper breakdown of the Article 17 contributions and levies and copies of tax invoices in relation to contributions and levies, including electricity, air-conditioning and energy costs, or to deal with common energy costs, and allowing the costs of cooling the internal area of some units as a common expenses under Article 17 27 27.10-27.11
Decision to include capital works as an Article 17 contribution and failure to provide a breakdown of budget estimates for capital works
27 27.25
Failure to distinguish between items properly levied as Article 17 contributions and those which are not
7.4
27 27.26
Sets out Article 19
Refusal or failure of the Strata Corporation to properly define and administer Article 1929 29.11.2
Order sought deleting Article 19
27.30-27.32 27.36 Decision of the Strata Corporation regarding payment of excessive legal fees and chairman’s fees 27 27.33
Failure of the Strata Corporation to have a proper financial reporting package and to properly report to unit holders on a regular basis with clear financial statements including clear balance sheets, profit and loss statements reconciliation statements, and appropriation reports for administration and sinking fund accounts and owner balances
Mr Tierney gave evidence at the hearing regarding the standard monthly financial reports, including a comparison between budget and actual expenditure, tabled at Strata Corporation meetings.[8] Amongst other documents relating to the financial transactions of the Strata Corporation, on which the budget and strata contributions are based, Creditors Transaction Reports were tendered[9], and bundles of invoices relating to litigation fees and management fees.[10] Mr Tierney was cross-examined about the preparation of the budget and the fees in respect of litigation.[11]
[8] T 735 et seq
[9] SC17
[10] SC18
[11] T784 et seq
There was the fullest opportunity afforded to JM Properties in the hearing of Action No 1030 of 2003 to explore the basis for strata contributions levied against it, including the question of mismanagement, excessive management, chairman’s fees, recovery of costs for work benefiting other unit holders and whether or not payments in respect of litigation expenses had been charged as, or paid from Article 17 contributions.
In relation to proposed paragraph 7A(1), it is inconsistent with other pleadings.
Article 19 provides:
If the strata corporation carries out work that wholly or substantially benefits a particular unit or group of units the corporation shall recover the cost of that work as a debt from the unit holder or unit holders of the unit or units.
JM Properties sought the deletion of Article 19 in Action No 1030 of 2003, although the Act itself makes in effect the same provision in section 27(6). Leaving aside any inconsistency in the pleadings, the issue was raised in Action No 1030 of 2003, where in paragraph 27.26 of the Third Further Amended Statement of Claim, JM Properties alleged that the decisions of the Strata Corporation were unreasonable, oppressive or unjust, in particular, on account of “its refusal or failure to properly define and administer Article 19”. That allegation, or any fact which might have supported it, was not established.
Notwithstanding the issues raised on the pleadings, it has been no part of the relief sought by JM Properties, in either action, that an order be made varying or reversing a decision of the Strata Corporation, although there is provision for that relief in section 41A(9)(e)(ii) of the Strata Titles Act 1988.
The proposed amendments raise a question about whether or not items or classes of items have been wrongly included in the outgoings of the Strata Corporation, outgoings which have been the subject of resolution at general meetings of the Strata Corporation, on which JM Properties, like every unit holder is entitled to vote, and by which JM Properties, like every unit holder, is bound. JM Properties has failed in its challenge to the validity of the resolutions passed at general meeting by the Strata Corporation. It is bound by them pursuant to the Articles and the Act.
The outgoings paid by the Strata Corporation are subject to an annual independent audit, and auditors’ reports were tendered.[12] The liability of JM Properties for contributions remains ongoing as long as it is a unit holder and member of the Strata Corporation. If there is a query about any individual item in the outgoings of the Strata Corporation since the date of the evidence tendered in Action No 1030 of 2003, it can more properly be raised with the management of the Strata Corporation, and in any event is subject to independent audit. It cannot be appropriate to delay the litigation indefinitely, or at all, on account of queries raised by those advising JM Properties, and there is, in any event, no basis on which to do so.
[12] SC23
There is no basis on which to give leave to JM Properties to amend the defence and call evidence at this stage of the litigation. There has been no explanation proffered for the failure at trial to address, further than was done, in whatever way it wished, the issue of the strata contributions owed by JM Properties; whether for example by cross-examination of Mr Tierney, by calling for the production of ‘source material’ over and above that tendered at trial, or by the tender of evidence by JM Properties.
It is not appropriate to allow the proposed amendments to provide a foundation, otherwise absent, to justify now an application for orders for discovery and inspection of documents and provision of particulars from the Strata Corporation in relation to the basis on which strata contributions are levied against unit holders, including JM Properties.
No particular circumstances are pointed to by JM Properties which could constitute “special circumstances”, no matter how broadly those words are interpreted.
JM Properties conducted the litigation, as did all the parties, on the basis that all issues relevant to liability and quantum in this action were before the court in Action No 1030 of 2003.
Allowing the proposed amendments and the calling of evidence at this stage of the litigation would result in injustice and grave prejudice to the Strata Corporation, the other members of which are also the defendants in Action No 1030 of 2003, for which no order as to costs, or other order, could compensate. In any event, as matter of fact, the issues now pleaded in the proposed amendments were, or could have been, before the court at trial.
The application for leave to amend the Amended Defence is refused. The application by Notice for Specific Directions filed on 4 April 2006 is dismissed.
Quantum
The Strata Corporation tendered two affidavits of Mr Peter Tierney, Retail Property Manager, sworn on 5 December 2005 and 23 February 2006 respectively, to establish the quantum of unpaid contributions levied against JM Properties as at the time of judgment. Exhibited to the affidavits, are Arrears Reports in respect of Units 4, 5 and 6, the units held by JM Properties.
Mr Tierney’s affidavit of 23 February 2006, together with the Arrears Reports and the report of Mr Mark LeCornu, Principal, MRL Group Pty Ltd, Chartered Accountants, of 23 February 2006, exhibited to it, set out the amounts owed by JM Properties in respect of the three units as at 1 March 2006, together with a calculation of interest on the arrears as follows:
Unit Strata Contribution Special Levy (A) Special Levy (B) Special Levy Total Interest on Strata Contribution Interest on Special Levy Total Interest Unit 4 $101,722.46 $5,100.39 $9,495.26 $14,595.65 $3,600.72 $764.84 $4,365.56 Unit 5 $33,813.53 $5,950.64 $11,077.79 $17,028.43 $921.24 $892.32 $1,813.56 Unit 6 $29,552.26 $3,612.73 $6,725.81 $10,338.54 $731.01 $541.76 $1,272.77 Total $165,088.25 $14,663.76 $27,298.86 $41,962.62 $5,252.97 $2,198.92 $7,451.89
I accept the evidence of Mr Tierney deposed to in his affidavits and the reports exhibited to them.
A further affidavit, sworn on 3 April 2006 by Mr Andrew Blake, a member of the firm of Jones Lang LaSalle and responsible for supervising Mr Tierney as Property Manager of the Strata Corporation, deposes to the strata levies for the month of April charged to unit holders, including JM Properties as follows:
Unit 4 $7380.81
Unit 5 $3048.65
Unit 6 $2888.14
$13317.60
JM Properties has not at any time produced evidence which contradicts or qualifies the evidence of the Strata Corporation in relation to quantum, which evidence I accept.
I have found in Action No 1030 of 2003 that JM Properties, as a unit holder in the Strata Corporation, is generally liable for special levies raised by the Strata Corporation in accordance with the Articles and the Act. In fact, JM Properties has not paid any amount by way of special levy in respect of the litigation.
As the unsuccessful party, JM Properties accepts that it is liable to pay the costs of the Strata Corporation of this action and the costs of the Strata Corporation and the other unit holders and members of the Strata Corporation of Action No 1030 of 2003 on a party and party basis. The basis on which costs are to be paid in the latter action is the subject of an application by some of the defendants for costs on a scale other than party and party and is not yet determined.
Including the special levies in the judgment in this action would allow the Strata Corporation to recover the share of JM Properties, as a unit holder, of the full costs of the Strata Corporation in this action and in Action No 1030 of 2003, as a component of the judgment sum.
However, JM Properties is not only a unit holder, it is the opposing party in the litigation. Although potentially less advantageous to the Strata Corporation, the recovery of the costs of the litigation should be by way of orders for costs against JM Properties in each of the actions. If agreement is not reached on the quantum of costs, the costs will be subject to taxation.
Judgment will therefore be entered for the Strata Corporation against JM Properties only in respect of unpaid contributions levied against it up to and including the date of this judgment. No additional sum for interest is sought over and above that calculated by Mr LeCornu to 28 February 2006.
The plaintiff, Strata Corporation 19375 Inc, is to have judgment against the defendant, JM Properties Pty Ltd, in the sum of $178,405.85, together with interest fixed in the lump sum of $5,252.97.
The defendant is to pay the plaintiff’s costs of the action, to be taxed, if not agreed.
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