Strata Plan No 48892 v Robert Gilbert Coshott - [2004] NSWLC 6

No judgment structure available for this case.

Local Court of New South Wales

CITATION: Strata Plan No 48892 v Robert Gilbert Coshott [2004] NSWLC 6

JURISDICTION: Civil

PARTIES: Strata Plan 48892
Robert Gilbert Coshott

FILE NUMBER: 7804/03

PLACE OF HEARING: The Downing Centre

DATE OF DECISION:
12/13/2004

MAGISTRATE: Magsitrate B A Lulham

CATCHWORDS: Levies - Corporation - recover outstanding levies - expenses incurred - Levy contribution - sinking fund - Federal Court costs - Independent unit Management - Strata Plan - Special Levy

LEGISLATION CITED: Bankruptcy Act
Corporation Act

CASES CITED: Port of Melbourne v Anshun Pty Ltd
The Proprietors Units Plan No 52 v Gold (1993) 44 FCR 123
The Proprietors of Strata Plan 425 v Sidwell (1987) NSW

REPRESENTATION: Ms P Koroknay instructed by David Le Page Solicitor
Mr Coshott in person
Hill Ryner & Company

ORDERS: 1. There will be judgment in favour of the plaintiff in the sum of $18,339.53 2. The defendant is ordered to pay interest on the outstanding levies calculated in the judgment in the sum of $3,061.18. 3. I will hear from the parties on the question of costs.

BACKGROUND TO DISPUTE

1 The plaintiff is the Owners Corporation under the Act (hereinafter referred to as “the Act”) in respect of premises 3 Pine Hill Avenue, Double Bay. The building consists of six units. The plaintiff alleged that the defendant was the registered proprietor of the property being Unit 2 and being Lot 2 in Strata Plan 48892 (hereinafter referred to as “Lot 2”). The plaintiff sued to recover outstanding levies in relation to Lot 2 totalling $14,233.60 together with interest to 7 October 2003 of $1,170.44, and the sum of $4,792.93 being a debt claimed pursuant to s 80(1) of the Act in respect of expenses incurred in recovering previous outstanding levies.

2 The levies claimed by the plaintiff are set out in paragraph 13 of the statement of Michael Eastwood tendered as Exhibit 1 as follows;

Periodic levy 01.06.01 – 31.08.01 $1,012.40

Periodic levy 01.09.01 – 30.11.01 $1,012.40

Periodic levy 01.12.01 – 28.02.02 $1,012.40

Periodic levy 01.03.02 – 31.05.02 $1,012.40

Periodic levy 01.09.02 – 30.11.02 $1,012.40

Periodic levy 01.12.02 – 28.02.03 $1,052.40

Periodic levy 01.03.03 – 31.05.03 $1,052.40

Periodic levy 01.06.03 – 31.08.03 $1,094.40

$4,960.00

$14,233.60

3 Interest on that amount pursuant to ss 79 and 80 of the Act was calculated as at 7 August 2003 to be $1,170.44.

4 The s 80(1) expenses were claimed as costs incurred in recovering earlier levies in the Local Court at Waverley and in bankruptcy proceedings in the Federal Court. The amount claimed was reduced to $4,105.93 as set out in the submissions from the plaintiff’s Counsel Ms Koroknay dated 30 September 2004. The sum of $4,105.93 was arrived at as follows;

1. Waverley proceedings

· Tax Invoice of Solicitors David Le Page

Exhibit 5 Annexure A $2,728.93

· Commercial Agents Fees $125.00

· Counsel’s Fees $970.00

$3,823.93

· Costs awarded by Local Court and

paid by defendant $1,003.00

· Credit of $350.00 due to the defendant

but which was included in Statement

· Credit of $250.00 claimed in

Statement of Claim but paid by

defendant in payment of $16,361.38 $250.00

$1,703.00

$2,120.93

2. Federal Court Proceedings

· David Le Page costs and

Disbursements as per Annexure A

Exhibit 5 $1,015.00

· Counsel Fees $870.00

$1,985.00

$4,105.93

5 The plaintiff’s claim was relatively straightforward. The plaintiff pleaded that the Owners Corporation had made the appropriate levies under the Act which the defendant had not paid. The plaintiff alleged that the legal and other expenses claimed in relation to the proceedings to recover previous levies were expenses recoverable from the defendant under s 80 of the Act. I will deal with the plaintiff’s claim in relation to the two items separately. I then propose to examine carefully the defendant's Defence. In relation to the levies, he put the plaintiff to strict proof that the levies had been properly made under the Act, and I will deal with each of the arguments which he made on that basis. I will also likewise look at the legal basis on which he based his defence to the claim for expenses under s 80. I propose at this stage to generally set out the basis of the defendant's defence.

6 In his Defence of 25 July 2003 the defendant, in paragraphs 1 and 2, did not admit that he was liable to pay levies to the plaintiff and said that the person liable to pay the amounts was Doug Link, the life tenant pursuant to a grant of probate.

7 In relation to the claim to the expenses claimed pursuant to the Waverley Local Court proceedings, the defendant pleaded that he had paid the sum of $1,103.00 plus a further $250.00 ordered to be paid by him as defendant in those proceedings, and that he should not be ordered to pay any additional costs. He pleaded that the plaintiff was unable to seek any additional costs on the principles of res judicata that the plaintiff could not bring these further proceedings on the basis of principles in Anshun v Port of Melbourne Authority.

8 He pleaded that the amount now claimed for costs in the Federal Court proceedings should have been sought in those proceedings before the Federal Court and that the plaintiff was now precluded from maintaining any action in respect of those costs pursuant to the principles in Anshun v Port of Melbourne Authority.

9 The legal basis and regime for the levy of contributions by the Owners Corporation are set out in ss 75, 76, 77, 78, 79 and 80 of the Act which sections provide as follows;

75. Estimates to be prepared of contributions to administrative and sinking funds

(1) An owners corporation must, not later than 14 days after the constitution of the owners corporation and at each annual general meeting after that, estimate how much money it will need to credit to its administrative fund for actual and expected expenditure:

(a) to maintain in good condition on a day-to-day basis the common property and any personal property vested in the owners corporation, and

(b) to provide for insurance premiums, and

(c) to meet other recurrent expenses.

(2) An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its sinking fund for actual and expected expenditure:

(a) for painting or repainting any part of the common property which is a building or other structure, and

(b) to acquire personal property, and

(c) to renew or replace personal property, and

(d) to renew or replace fixtures and fittings that are part of the common property, and

(e) to replace or repair the common property, and

(f) to meet other expenses of a capital nature.

(3) When estimating amounts needed to be credited to the administrative fund or the sinking fund the owners corporation must have before it, and take into account, a statement of the existing financial situation of the Act scheme and an estimate of receipts and payments.

76. Owners corporation to set levy for contributions to administrative and sinking funds

(1) The owners corporation must determine the amounts to be levied as a contribution to the administrative fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds.

(2) That determination must be made at the same meeting at which those estimated amounts are determined.

(3) The owners corporation must levy on each person liable for it such a contribution.

(4) If the owners corporation is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner a contribution to the administrative fund, determined at a general meeting of the owners corporation, in order to meet the expenses.

(5) A contribution is, if an owners corporation so determines, payable by such regular periodic instalments as are specified in the determination setting the amount of the contribution.

77 Effect of use of lot on insurance premiums

(Not applicable)

(1) An owners corporation levies a contribution required to be paid to the administrative fund or sinking fund by an owner of a lot by serving on the owner a written notice of the contribution payable.

(2) Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 77) by the owners in shares proportional to the unit entitlements of their respective lots.

(3) If, at the time a person becomes owner of a lot, another person is liable in respect of the lot to pay a contribution, the owner is jointly and severally liable with the other person for the payment of the contribution and interest on the contribution.

(4) A mortgagee or covenant chargee in possession of a lot (whether in person or not) is jointly and severally liable with the owner of the lot:

(a) for any regular periodic contributions to the administrative fund or sinking fund together with any interest on those contributions, and

(b) for any other contribution together with interest on that contribution if the mortgagee or covenant chargee has been given written notice of the levy of the contribution.

(5) Subsection (4) does not affect the liability of an owner of a lot for any contribution levied under this section.

(6) Regular periodic contributions to the administrative fund and sinking fund of an owners corporation are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not served on the owner.

79 Interest and discounts on contributions

(1) Any contribution levied by an owners corporation becomes due and payable to the owners corporation in accordance with the decision of the owners corporation to make the levy.

(2) A contribution, if not paid at the end of one month after it becomes due and payable, bears until paid simple interest at an annual rate of 10 per cent or, if the regulations provide for another rate, that other rate.

(3) However, an owners corporation may by special resolution determine (either generally or in a particular case) that a contribution is to bear no interest.

(4) An owners corporation may, by special resolution, determine (either generally or in a particular case) that a person may pay 10 per cent less of a contribution levied if the person pays the contribution before the date on which it becomes due and payable.

80. How does an owners corporation recover unpaid contributions and interest?

(2) Interest paid or recovered forms part of the fund to which the relevant contribution belongs.

10 The plaintiff relied on the evidence of Michael Eastwood, Strata Managing Agent, whose affidavit of 8 March 2004 was admitted as Exhibit 1. Mr Eastwood stated that he was a Strata Manager employed by Independent Management Pty Limited, which company was appointed Strata Schemes Management Act Managing Agent under an agreement dated 26 November 2002. Mr Eastwood produced the records of the Owners Corporation both for the period preceding 26 November 2002 and from that date when his employer was appointed Strata Managing Agent of the plaintiff. In that capacity Independent Unit Management exercised the functions of the Owners Corporation including its executive committee, its chairman, secretary and treasurer. Mr Eastwood produced documents which were annexed to his affidavit commencing at ME1 to ME17.

11 I propose to consider the plaintiff’s claim to recover the periodic levies by considering the objections made, conveniently, by the defendant in his outline submissions.

12 In Submission 1 the defendant submitted that the plaintiff must prove that s 78 of the Act had been strictly complied with in relation to each of the periodic contributions, the subject of these proceedings. He submitted that the plaintiff had adduced no evidence that s 78(1) had been complied with, and submitted that the assertion that the notices were sent but copies of those notices were not retained, cannot stand in light of the requirements of s 104 of the Act.

13 In relation to the periodic contributions required to be paid to the administrative fund or sinking fund, I reject those submissions. Whilst s 78(1) does require the Owners Corporation to serve ‘on the owner a written notice of the contribution payable’ s 78(6) specifically provides;

‘ Regular periodic contributions to the administrative fund and sinking fund of an owners corporation are taken to have been duly served on an owner of a lot even though notice levying the contributions was not served on the owner.’

14 It is clear that the scheme of the Act in relation to periodic contributions required to be paid to the administrative fund or sinking fund requires the amount to be levied to be determined at an annual meeting of the Body Corporate which meeting must estimate how much money will be required for each fund in accordance with s 75(1) and (2). The Act clearly intends that it is at that annual meeting that unit holders will have the opportunity to consider the estimates and to determine the contribution to be made and when the contributions are to be made. The Act clearly then casts the responsibility on the owner to pay the contributions as levied, even if notice levying the contributions was not served on the owner. The obligation is on the owner to ascertain the amount of, and the date for payment, of the levies and to then pay them. Mr Coshott made much of the fact that the Owners Corporation did not keep copies of the notices which were served. Contrary to his submission there is no requirement in s 104 of the Act, or any other section, requiring the Owners Corporation to retain a copy of such notices.

15 I will deal with the defendant's second submissions separately when dealing with the special levy.

16 The defendant submitted;

“No evidence has been adduced that 76(2) was complied with in respect of each of the 2001/02, 2002/3 and 2003/04 levies of administrative fund and sinking fund contributions.’

17 S 76(2) requires that the determination by the owners corporation of the amounts to be levied for the administrative fund and sinking fund must be made at the same meeting at which those estimated amounts are determined. Mr Coshott submitted that no evidence had been adduced that this section was complied with.

18 I reject that submission and I find on the evidence of the documents produced by Mr Eastwood at ‘ME7’ of his affidavit that estimations were decided at the general meeting for each of the years, including 2001/02. Before going to that evidence Ms Koroknay, Counsel for the plaintiff, helpfully referred to an excerpt from the judgment of Wood J in the Supreme Court decision The Proprietors of Strata Plan 425 v Sidwell (1987) NSW Title Cases 30-076. Justice Wood had this to say in the context of an exclusive use bylaw;

not to be strictly construed as those drafted by persons with legal qualifications or as appear in the minutes of major public companies

As a consequence the court should strive, applying common sense, to determine precisely what it is that the minutes purport to record

19 In my view such excerpt sets out the proper approach to be taken by a court when considering motions of a Owners Corporation. I intend to adopt that approach

20 Bearing that in mind, the minutes of the Annual General Meeting held on 1 May 2001 specifically state;

‘ That the contributions to the administrative fund are estimated in accordance with s 75(1) of the Act and determined in accordance with s 76(1) of the Act at $20,310.00.’

21 A similar resolution was passed in relation to the sinking fund. There can be no dispute in relation to the motions passed at that General Meeting. The motions were very precisely formulated and it is clear that included in the documents forwarded to members for the meeting, was a copy of a budget for the period from 1 March 2001 to 28 February 2002.

22 Included in the documents forwarded with the Notice advising of the General Meeting on 20 November 2002 was a proposed budget for 2002/03. The Resolution that was passed at the meeting in relation to contributions was Motion 6 which provided;

‘Resolved that the contributions be hereby determined for the twelve month period from the 1st December 2002;

1. To the administrative fund pursuant to s 76(1) of the Act in the sum of $20,310.00.

2. To the sinking fund pursuant to s 76(1) of the Act in the sum of $6,000.00

and that such contributions (3) be payable by four equal instalments the first of such instalments to be due and pay 1st December 2002 and subsequent instalments to be due and payable on 1st days of the months May, June and September 2003 and (4) be levied by notice from the Treasurer in accordance with s 78(1) of the Act.

23 Clearly s 76(2) of the Act requires the determination in relation to the levies must be made at the same meeting at which the estimated amounts are determined. It is obvious from the Resolution passed at the meeting that the amount levied for the administrative fund was $20,310.00 which was the exact amount of the estimated budget for the expenses forwarded to the members with the notice of the Annual Meeting. Even more significantly the proposed budget for the sinking fund was $5,000.00, but it is clear that the meeting must have considered that amount and determined that it was inadequate as the amount referred to in the motion as set out above, was $6,000.00.

24 Whilst the motion passed at the meeting of 20 November 2002 was not as well drafted as that at the previous annual meeting, I find that such evidence proved that the meeting did determine the amounts estimated as needed to be credited to the administrative and sinking funds to meet the estimated expenses, and then passed the required Resolution to raise those amounts in accordance with the Act.

25 In relation to the Annual General Meeting held on 1 May 2003 the documents provided in ‘ME7’ again indicate clearly that included in the notices forwarded to the members, was a proposed budget for 2002/2003. The amounts estimated as needing to be raised were $21,360.00 for the administrative fund and $6,000.00 for the sinking fund. At the meeting motions were passed providing for contributions to be levied to raise those exact amounts. Again the only inference open is that the members present at the Annual Meeting considered the estimated expenses prepared and put forward to the meeting, accepted the same and then passed the motion to raise the levies to cover the estimated amounts.

26 I am satisfied that the Owners Corporation has complied fully with the provisions of s 75 and s 76.

27 The defendant submitted that s 76(3) was not complied with. The section provides;

‘The Owners Corporation must levy on each person liable for it such a contribution.’

28 The documents produced by Mr Eastwood at ‘ME6’ prove the Owners Corporation made a levy on the defendant for the contributions. Those documents set out the statement of the defendant's account in relation to the contributions and indicates, for instance, that on 1 March 2001 the defendant was levied for $614.00 for the administrative fund and on the same day $120.00 for the sinking fund. The documents cover the period to 15 June 2003 and show that the administrative and sinking fund contributions were levied each three months. Each of the levies is in an amount in accordance with the Resolution passed at the Annual General Meeting. I am satisfied that s 76(3) was complied with.

29 In my view the defendant's fifth submission raises the same submissions as made in Submission No.3. In my view the submissions in Submission No.5 have been fully dealt with in what I have had to say in answer to Submission No.3.

30 Mr Coshott submitted that there is no provision in the Act providing for the levy of a ‘special levy’. He further submitted that there was no evidence adduced that there was a valid levying of a special levy. He submitted that s 78 does not provide for a special levy and if it did, then s 78 was not complied with.

31 I reject those submissions. In fact the power to levy a contribution for additional expenses is set out in s 76(4) which provides as follows;

‘If the Owners Corporation is subsequently faced with other expenses, it cannot at once meet from either fund, it must levy on each owner a contribution to the administrative fund, determined at a General Meeting at the Owners Corporation in order to meet the expenses.’

32 The defendant's submission that the Act does not provide for the levy of a ‘special levy’ is of no consequence. The fact is that although the words ‘special levy’ are not used in s 76(4), the levy raised pursuant to the section is referred to as ‘a special levy’ by the learned author Mr Alex Ilkin of the leading text ‘Strata Schemes and Community Schemes Management and the Law’ and is generally referred to in the industry as a ‘special levy’. Nothing turns on the name. There was ample evidence contained in Exhibit ‘ME7’ to Mr Eastwood’s affidavit that notice of the intention to pass a Resolution making the levy was given in the notice to members of the General Meeting to be held on 1 May 2003 and that the Resolution was duly passed in the following form;

‘Resolved to raise a special levy of $31,000.00 to fund the roof replacement due and payable by all lot owners according to unit and title payable on or before the 1st June 2003.’

33 The problem which confronted the plaintiff in the recovery of the defendant's proportion of the special levy, being the sum of $4,960.00 was in relation to proof of service of the levy. As indicated previously s 78 provides that an Owners Corporation levies a contribution required to be paid by serving on the owner a written notice of the contribution payable. Subsection 6 provides that the regular periodic contributions to the administrative fund and sinking fund are taken to have been duly levied on an owner, even though notice levying the contribution was not served on the owner.

34 S 78(6) is instructive in that it clearly indicates the intention of the legislature to cast an onus on the owners of each lot to ascertain the amount of the regular contributions and to pay them, does not require the serving of a notice by the Owners Corporation.

35 The requirement not to serve a notice does not apply to a special levy. However, all that the Act requires is the ‘serving on the owner a written notice of the contribution payable’. Neither the Act nor the Regulations set out any requirement as to any particulars to be included in the notice, or the form of the notice. Moreover, neither the Act nor the Regulations set out any time limit by which the notice has to be served.

36 S 236(3) of the Act provides;

‘ 236(3) Service where address is included in Strata role

If an address for the service of notices on a person is recorded in the Strata role, a document may be served on the person;

(a) by post at that address, or

(b) by leaving it at that address with some person apparently of or above the age of sixteen years.’

37 The evidence attached to Mr Eastwood’s affidavit ‘ME4’ records the name and address of the owner of Unit 2, Lot 2 in Strata Plan 48892 to be R.G. Coshott, address P.O. Box 200, Vaucluse NSW 2030.

38 The evidence of Mr Eastwood was that in accordance with the Resolutions that were passed at the Annual General Meeting on 1 May 2003 levy notices were printed on the dates indicated in the column titled ‘date’ on the Lot Statements and that in accordance with the usual practice of the firm, levy notices were set out by post shortly after they were printed to the address for service noted on the Strata Role. In the Lot Statement for Lot 2 at ‘ME6’, the date of 15 May 2003, is shown as the date of the Notice. Mr Eastwood’s evidence was then that a written notice of the contribution payable was forwarded by post on or about 15 May 2003 to the defendant at the address P.0. Box 200, Vaucluse.

39 Mr Eastwood was cross examined in relation to the service of the notice of the special contribution. He said that the managing agent did not keep a copy of the notice. He said it was computer generated. A copy of the notice could be regenerated from the computer, but only for a period of twelve months. Mr Eastwood said the notice were printed and were put out for posting. He said it was not his responsibility to physically post the notices, that being the responsibility of some other person employed by Independent Unit Management.

40 The evidence of Mr Eastwood was a little unsatisfactory. I would have expected him to give more evidence of the actual procedure within the office where he was employed, as to the procedure for the actual posting of the notices. I expected some further evidence from him as to whether he had any knowledge of the notice or of any of the other notices being returned.

41 Mr Coshott did not give evidence. He did not put to Mr Eastwood in cross examination that he did not receive that notice or any other notice. He did not plead in his defence that the notice had not been served.

42 I have come to the view that I am satisfied, on the balance of probabilities, that the notice was served in accordance with s 78. That section does not require the plaintiff to prove receipt of the notice by the defendant. It requires evidence of the service of the notice, and pursuant to s 236, the document may be served by post to the address notified in the Strata Role. I am satisfied that was done. I am satisfied I am able to draw an inference from all of the documents produced by Mr Eastwood, and particularly as to the documents prepared by his firm, that the documents were well maintained and that the company properly attended to the duties required of it, and such inference supports the evidence that the notice was posted by mail as deposed to by Mr Eastwood. The inference was that in a well run and organised office, letters put out by Mr Eastwood to be mailed by another employee, would be mailed.

43 Although satisfied on the question of service, I make the following further observations in relation to service. All s 78 requires is that the Owners Corporation serve on the owner a written notice of the contribution payable. There is no form of notice prescribed, nor is there any time limit as to the service of the notice. Although not relied upon by the plaintiff, it appears to me that the plaintiff may have been able to rely upon any letter from its agent or solicitors to the defendant which set out the amount claimed. Certainly if it was to be found that I am wrong on the question of service, then it would seem to me that there would be nothing to prevent the plaintiff from then serving on the owner a written notice of the contribution payable and then issuing fresh proceedings to recover the amount of the Special Levy.

DEFENDANT'S FURTHER WRITTEN SUBMISSIONS

44 The defendant submitted further written submissions dated 18 October 2004. In my view those submissions largely restated and amplified the outline of submissions which I have already dealt with. However, I propose to deal shortly with such further submissions. The defendant again submitted that s 78(1) required the Owners Corporation to serve on the owner a written notice of the contribution payable, and according to the defendant no affect is to be given to s 78(6) which provides;

‘Regular periodic contributions to the Administrative Fund and Sinking Fund of an Owners Corporation are taken to have been duly levied on an owner of a Lot even though notice levying the contributions was not served on the owner.’

45 I have already indicated that I accept that s 78(6) means exactly what it said. The finding which I have already made in relation to that section is supported by what author Ikin in Strata Schemes and Community Schemes Management and the Law says at p910;

‘ Although the Treasurer is required to serve contribution notices on the owner for all contributions determined by the Owners Corporation in the case of regular contributions (such as the usual quarterly levies) owners are taken to have been levied, even though a notice levying the contribution was not served on the owner. Owners are presumedly deemed to have notice of their contributions once the Resolution has been passed at meeting, even if they did not attend the meeting; s 78(6). This position is designed to avoid the Treasurer having to serve a separate notice before each contribution is due and also to defeat claims by owners alleging they never received a contribution notice when the Owners Corporation sues them to recover outstanding contributions.’

46 At pp 3 and 4 of his further submissions the defendant again relies on the argument that nowhere in the Act is there provision for the levying of ‘a special levy’. As I have already pointed out, although the words ‘special levy’ are not used in the Act, it is clear that the levy made pursuant to s 76(4) is generally known and referred to as ‘a special levy’.

47 The defendant submitted that s 76(4) ‘permits a further contribution to the Administrative Fund to be made between Annual General Meetings to meet unexpected expenses’. That submission is clearly wrong and factually wrong. S 76(4) refers to ‘expenses it cannot at once meet’ and provides that the Owners Corporation;

‘must levy on each owner a contribution to the Administrative Fund determined at a General Meeting of the Owners Corporation. ’

There is no restriction against a motion for a s 76(4) contribution being made at an Annual General Meeting which is clearly a General Meeting.

48 The further submission by the defendant that s 68(1) of the Act restricts payments out of the Administrative Fund to s 75(1) expenses, is again clearly wrong. S 68 provides;

‘ What money can be paid out of the Administrative Fund’

Sub-section 1 – An Owners Corporation must not pay any money from its Administrative Fund except for the purpose of

(a) Payments of the kind for which estimates have been made under s 75(1), or

(b) ---, or

(c) ---, or

(d) Other payments in connection with carrying out its functions under this Act or the bylaws, except payments of a kind referred to in s 71(1).

49 A levy under s 76(4) clearly does not come within the ‘payments of a kind referred to in s 71(1) and therefore clearly come within the definition in sub-section (d) of;

‘other payments in connection with the carrying out its functions’.

Clearly one of its functions is to maintain and repair the common property, which would include the repair or replacement of the roof.

The defendant's further submissions in relation to the wording of the Motions at the Annual General Meeting levying the rates have already been fully dealt with.

CONCLUSION

50 For all of the above reasons I am satisfied that the regular periodic contributions to the administrative fund, sinking fund and the special contribution were properly levied by the plaintiff.

51 In submission 6 Mr Coshott submitted that the plaintiff had not proved that he was the owner of Unit 2, Lot 2 Strata Plan 48892 at the date of the levy for the contributions, the subject of the claim.

52 To prove ownership the plaintiff relied on the following documents;

1. A certified copy of the Memorandum of Transfer dated 12 May 1995 Defute Pty Limited and Others to Robert Gilbert Coshott of property 2/SP 48892 (the subject unit).

2. Copy of Strata Role showing the defendant as the owner of Lot 2.

3. Copy notices pursuant to s 81 of the Strata Titles Act from solicitors acting for the vendor and solicitors acting for Mr Coshott.

4. Title Search issued on 2 August 2004 by the Department of Lands pursuant to s 96D of the Real Property Act 1900 showing the defendant as the owner of Lot 2 Strata Plan 48892 having been registered on the title as the owner on 15 May 1995.

53 In the dictionary of terms in the Act ‘owner’ is defined as follows;

‘Owner of a Lot in a freehold Strata Scheme means;

(a) except as provided by paragraph (b) a person for the time being recorded in the Register as entitled to an estate in fee simple in that lot, or;

(b) a person whose name has been entered on the Strata Role as an owner in accordance with s 98.’

54 S 98 provides;

‘(1) There must be recorded in the Strata Role in relation to a particular lot;

(a) The owners name an Australian address for service of notices or the name of the owner’s agent appointed in accordance with Part 3 of Chapter 4 and the agent’s Australian address for service of notices, and

(b) Information provided under s 118 or obtained from the register in connection with the Lot, and

(c) Information provided under s 119.’

55 S 118 provides;

‘ A person who has an interest in a Lot that, subject to this Act, gives a person a right to cast a vote either personally or by nominee at meetings of the Owners Corporation must notify the Owners Corporation in writing of that interest.’

S 119 makes provisions regarding the giving of notice by the owner if the lot is leased.’

56 On the question of ownership, both the plaintiff and the defendant tendered documents and as I understood it, sought to rely on such documents to establish a form of estoppel. The plaintiff for instance relied on the fact that it had obtained a judgment against the defendant in relation to the periodic payments for the years 1997, 1998 and 1999. The defendant relied on documents such as Exhibit 8 which indicated that at the Annual General Meeting held on Thursday 9 May 1996 the Owners Corporation permitted a Mr Doug Links to attend, and indeed to be elected to the Strata Council.

57 Mr Coshott also relied on a letter which he wrote to solicitors Messrs J. S. Mueller & Co dated 11 November 1998 and which was tendered as Exhibit 7. In that letter he indicated that he held Lot 2 as Trustee of the Estate of the Late M.A. Allritt. He suggested that the Will of the deceased had been interpreted by Hodgson J in the Supreme Court, and the Judge had found that Mr Doug Links had a life interest in the unit, Lot 2. On that basis Mr Coshott alleged that Mr Links was responsible for all outgoings on the unit, including the levies.

58 I am of the view that none of the letters or documents establish an estoppel upon which either party could rely. I do note that the search from the Department of Lands Exhibit 4 indicates that a caveat has been lodged on the Title by Douglas Links, Dealing No. 0357848.

59 There was nothing in the material tendered by Mr Coshott which would persuade me that the defendant was not the owner of the unit in accordance with the Act, and the person to whom the plaintiff was entitled to look for payment of the periodic contributions and special contribution. I am satisfied that it was an error for Mr Douglas Links, an occupier, to be elected to the Owners Corporation, and indeed that error was rectified with Mr Links being removed from the Owners Corporation as soon as it was realised that he was not the owner. No estoppel arises from the action of the Owners Corporation which would assist the defendant to prove ownership of the unit. I am satisfied the defendant is the owner of the unit and the person the plaintiff is entitled to sue.

60 The plaintiff therefore succeeds on its claim for the outstanding periodic levies and special levy in the sum of $14,233.60. Exhibit 6 was a calculation of the interest to 8 September 2004 at the rate provided by the Act, namely 10%. The calculations appear to me to be in order, except that interest was charged on the special levy of $4,960.00 from 1 June. The evidence indicated that the notice of the levy was posted some time after 15 May and interest does not run until a month from the date of service of the notice. In my view interest on the special levy should not commence until 1 July 2003. I calculate that there should be a reduction in the interest of an amount of $40.50, which would mean that the amount due for interest to 8 September 2004 is $2,687.82. I calculate the interest from 8 September 2004 to 13 December 2004 to be $370.46.

61 The plaintiff proceeded against the defendant to recover s 80 expenses in the amount of $4,105.93. I have previously set out the calculations showing that the amount claimed in relation to what is referred to as ‘the Waverley Local Court proceedings’ to be $2,120.93 and for the ‘Federal Court proceedings’ of $1,985.00.

62 S 80 of the Act is in the following form;

‘S 80 1. An owners Corporation may recover as a debt a contribution not paid at the end of one month after it becomes due and payable together with any interest payable and the expenses of the Owners Corporation incurred in recovering those amounts.’

63 Ms Koroknay, Counsel for the plaintiff submitted that s 80 of the Act created a statutory debt in relation to expenses incurred by an Owners Corporation in recovering unpaid levies and interest payable on unpaid levies. She relied on the fact that the legislature saw fit to provide for the recovery of ‘the expenses of the Owners Corporation incurred in recovering those amounts’. She submitted that significantly the legislature did not restrict the expenses recoverable to legal expenses. Ms Koroknay helpfully in her submissions referred to the following excerpt of the Second Reading Speech by the Minister the Honourable Mrs Lo Po;

“ When going to court to recover unpaid levies plus any interest due the Owners Corporation will now also be able to recover the cost of the action. It is unjust that the other owners in the scheme who have kept their levy payments up to date have to foot the bill for any court action against someone failing to pay up.”

64 Such excerpt in my view indicates a clear intention of the legislature that the expenses incurred in recovering outstanding levies are to be recoverable pursuant to s 80. Moreover, the statement by the Minister must refer to expenses other than, or in addition to, the costs normally awarded by the Court to successful parties in court proceedings. The party/party costs or the scale costs were already being awarded by Courts. When the Minister introduced s 80. The reference in her speech “will now be able to recover the costs of the action” must refer to costs other than those already able to be recovered.

65 In support of her submissions Ms Koroknay further referred to the decision of the Full Court in The Proprietors Units Plan No.52 v Gold (1993) 44 FCR 123. That case concerned s 48 of the Unit Titles Act 1970 ACT which section provided;

“ Where a corporation has incurred any expenditure or performed any repairs, works or act that is required or authorised by its Articles, or by or under this Act or any other law in force in the Territory to perform the expenditure, repairs, work or act having been rendered necessary by reason of any wilful or negligent or omission on the part of, or breach of any provision of its Articles by a member of the corporation, the amount of that expenditure or any money expended by it in performing the repairs, work or act is recoverable by it from the member as a debt.”

66 The Full Federal Court in Gold said in relation to s 48 at p 127;

“ In our opinion s 48, like many similar provisions, creates a statutory debt for which a member is liable as soon as the amount of the Owners Corporation’s expenditure has been ascertained. ”

67 In that case the Owners Corporation was seeking to recover the costs incurred by it in the Small Claims Court in Canberra in seeking to recover outstanding contributions from the defendant. The plaintiff Owners Corporation in that case was successful and the head note provides;

‘ 3. Thus the appellant’s expenditure of money in payment of the legal costs of covering arrears of levy contributions from the respondent was ‘rendered necessary’ within the meaning of that expression in s 48 of the Act by her breach of the Articles of the Corporation.

Per curiam. We reject the argument that the element of ‘reasonableness’ of incurring costs in litigation is only established by an order of the Court and the taxing of a proper bill.’

68 I am satisfied that although s 48 of the ACT Act is in different terms to s 80(1) of the Act in NSW, the principles applied by the court in Gold are applicable in this matter.

69 I now propose to set out a short summary of the Waverley Court Proceedings and the Federal Court Proceedings.

70 The plaintiff issued a Statement of Claim against the defendant to recover outstanding levies for the 1997, 1998 and 1999 years. The proceedings originally commenced at Kogarah and were transferred to the Local Court at Waverley. The hearing of the matter included the hearing of a Motion and a defended hearing. The costs and disbursements paid by the plaintiff in relation to those proceedings as set out previously in this judgment at p 3 totalled $3,823.93. The Court ordered the defendant to pay an amount of $1,703.00 for costs, leaving an amount outstanding for those expenses of $2,120.93. As already pointed out, s 80 referring to the recovery of expenses incurred does not refer to ‘reasonable expenses’. In my view there is no onus on the plaintiff to prove that the expenses incurred were reasonable. However, a court anxious to see justice done, would be reluctant to give judgment for expenses if it appeared to the court that such expenses were clearly unreasonable. In relation to the expenses for the Waverley Court proceedings, Petra-Aeron Rodriguez gave evidence and her statement was admitted as Exhibit 5. She was a paralegal employed by the solicitor for the plaintiff and that she had carriage of the Waverley matter under the supervision of the solicitor. She prepared an account for the costs and disbursements claimed by the solicitors in total amount of $2,728.93. She said that the account was prepared on the basis that her work was charged out at $200.00 per hour. On that basis the amount claimed for costs of $2,620.00 would be the equivalent of just over thirteen hours of work. I do not find the incurring of those hours unreasonable. The fees charged by Counsel appear most reasonable, and likewise the amounts claimed for disbursements. The proceedings were of course wholly successful in that the plaintiff recovered a judgment against the defendant for the amount sued for.

71 The plaintiff having obtained judgment in the Waverley Court proceedings instructed its solicitors to enforce the judgment. Exhibit 3, a letter from Ms Rodriguez to the Owners Corporation indicated that the solicitors proposed to issue a bankruptcy notice but a search indicated that a Creditors Petition was already issued against the defendant Robert Coshott. The solicitors arranged for Counsel Ms Koroknay to appear at the hearing of the Creditors Petition on 10 November 2000. Ms Rodriguez as Annexure B to her statement Exhibit 5 tendered a Bill of Costs in relation to the Federal Court proceedings of $1,115.00. The plaintiff paid Counsel fees of $870.00 in relation to those proceedings, giving a total of $1,985.00.

72 Annexed to the affidavit of Mr Eastwood is a copy of the Order made by Branson J in the bankruptcy proceedings against the defendant on 10 May 2001. Included in the accounts to be paid on behalf of the defendant as set out in Schedule 1 to the Order was the following entry;

‘Owners Corporation Strata Plan 48892 re Local Court judgment 11 April 2000 and levies 8 March 2001 and interest to 8 May 2001 - $16,361.38.’

73 Paragraph 31 of Mr Eastwood’s statement indicates that that amount was calculated as follows;

Judgment in Waverley Court proceedings

Interest on judgment in Waverley Court

proceedings $744.58

Costs award to Owners Corporation in

Waverley Court proceedings on 28 March $250.00

Unpaid levies due between 1.9.99 and 1.3.01

not the subject of any proceedings $7,699.93

Interest up to 8.5.01 on levies due between

1.9.99 and 1.3.01 $721.04

$16,361.38

74 Paragraph 7 of Judge Branson’s Order was in the following form;

‘C.K.B. Partners (the solicitors for Coshott) shall pay from the Security Fund to the person named in column 1 of schedule 2 such amount as does not exceed the amounts specified in column 2 of schedule 2 beside the name of the creditor as is authorised by that creditor and the respondent.’

75 In Schedule 2 the following entry occurs;

Owners Corporation Strata Plan 48892 claimed for

$4,792.93

76 That amount of $4,792.93 includes and covers the same items as the sum of $4,105.93 claimed in these proceedings.

77 The correspondence annexed to the affidavit of Mr Eastwood at ‘ME17 indicates that although the Order of Justice Branson was that the sum of $4,792.93 was to be paid to the plaintiff, the defendant subsequently disputed paying such amount as set out in his letters to the solicitors dated 6 July 2001 and 12 July 2001. The basis put forward by Mr Coshott in that correspondence for not authorising the payment were the same that he relies on in these proceedings. The letter from the solicitors for the plaintiff in these proceedings to the solicitors for the defendant indicated that the plaintiff consented to the release of the funds of $4,792.93 on the basis that it reserved its rights in relation to the recovery of those costs. Of course it is in relation to those costs that this part of these proceedings relate.

78 Mr Coshott submitted that the plaintiff was unable to bring these proceedings for the recovery of the expenses in relation to the Waverley Court proceedings because the court awarded an amount for the costs and disbursements in that matter, and that the matter is therefore res judicata. I reject that submission.

79 The plaintiff was successful as plaintiff in the Waverley Court proceedings. It was entitled to, and was awarded an amount, to cover party and party costs. That is the usual position with the cost order usually following the event. The successful party was entitled to its costs on a party and party basis. Such costs order would not cover the whole of the expenses incurred by the plaintiff in those proceedings as was indicated by the accounts subsequently rendered by the solicitors to the plaintiff. Such costs are usually referred to as solicitor and client costs. Those costs were expenses incurred by the plaintiff and were paid by the plaintiff and I have found such costs to be not unreasonable. I am therefore satisfied that pursuant to s 80, the plaintiff is able to recover the sum of $2,120.93 as an expense incurred in recovering the outstanding periodic levies. I am satisfied that it was not necessary for the plaintiff to seek to recover its costs at the Waverley Local Court hearing. I am satisfied that the plaintiff was entitled to issue separate proceedings to recover the costs. There is nothing in the wording of S 80 which would prevent such an action.

80 Mr Coshott submitted that if the plaintiff was entitled to recover the expenses it now seeks to recover, then it should have done so in the proceedings at the Waverley Court. In my view the words of s 80 do not require that to be done, and indeed the practical difficulty is that all of the expenses would not be known in the ordinary course until some time after the court proceedings. That was the position in the original Waverley Court proceedings.

81 In relation to the Federal Court proceedings, I am satisfied that the sum claimed of $1,985.00 was an expense within the meaning of s 80 incurred in recovering the outstanding levies. I find it was a very effective expense as it recovered not only the outstanding levies to 1999, but also the outstanding levies to 2001. The costs charged by the solicitors and counsel were most reasonable.

82 In opposing the order for payment by him of the expenses in both court proceedings the defendant sought to rely on the principle in Port of Melbourne Authority v Anshun Pty Ltd. That principle established that an estoppel could arise if the matter relied upon in the second action was so relevant to the subject matter of the first action that it would have been unreasonable not to rely on it.

83 In the Waverley Court proceedings the plaintiff could have sought an order for costs against the defendant on an indemnity basis. Whether or not the Magistrate would have granted such application will never be known. Certainly if the application was made and refused, then the plaintiff would still have been able to bring these proceedings under S 80.

84 For the reasons I have already given, I am satisfied S 80 gives a separate right of action to recover the expenses incurred.

85 Moreover, in the Federal Court proceedings the Order of the Judge was for the Waverley Court expenses, and the expenses incurred by the plaintiff in the proceedings in the Federal Court, to be paid out of the funds held by the solicitors for the defendant. The payment of that amount would have obviated the need for these proceedings to recover the outstanding expenses. The defendant refused to authorise the payment and put forward the arguments upon which he has relied in these proceedings. The plaintiff apparently took a decision that rather than incur the expenses which would be incurred in arguing those matters before the Federal Court, that it would pursue the matters in the Local Court as it was entitled to do.

86 The Anshun principle cannot apply to the Federal Court proceedings as an order was made by consent for the payment of the costs, but the defendant subsequently refused to authorise such payment. His reasons for doing so were the same reasons he has failed on in these proceedings. His refusal to authorise the payment was unreasonable as evidenced by the decision in this matter.

87 In discussing the submissions made by the defendant in relation to the s 80(1) expenses, I am satisfied that I have covered both the submissions made in the defendant's outline submissions and the further submissions made on 18 October 2004. I add however the following further observations.

88 I reject the submission made by the defendant that the interpretation which I have given to s 80(1) would result in a defendant being automatically liable for fanciful amounts in the example given by the defendant of fees for $100,000 to recover $1,000. In my view the Court is able, as I have done in this case, to generally consider the reasonableness of the amounts claimed, and indeed there is authority for that proposition from the headnote quoted in Gold’s case where the Court rejected the argument that the element of reasonableness can only be established by an order of the Court and the taxing of a proper bill.

89 In relation to the recovery of the Federal Court costs, the defendant submitted that proceedings under the Bankruptcy Act are not debt recovery proceedings and that therefore the expenses would not be recoverable pursuant to s 80(1). I reject that submission. For the reasons I have already given, the proceedings by the plaintiff in the Federal Court were ‘expenses of the Owners Corporation incurred in recovering those amounts’. The amounts were the outstanding contributions. I have already found that the proceedings in the Federal Court were a very practical effective means of recovering outstanding contributions and were also, I have found, cost effective as well.

90 I reject the defendant's submission that the total claim for the s 80(1) expenses ‘is grossly disproportionate and unjustified’. I was provided with details as to how the amounts were incurred and calculated. I found the amounts claimed to be not unreasonable.

91 For the above reasons I am satisfied that the plaintiff must succeed on its claim pursuant to s 80(1) for the amount sought in court pursuant to this aspect of the claim in the sum of $4,105.93.

CONCLUSION

92 It follows from the above findings and reasons that the plaintiff is successful on its claim and I would propose to make the following orders:

1. There will be judgment in favour of the plaintiff in the sum of $18,339.53.

2. The defendant is ordered to pay interest on the outstanding levies calculated in the judgment in the sum of $3,061.18.

93 I will hear from the parties on the question of costs.

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Citations

Strata Plan No 48892 v Robert Gilbert Coshott [2004] NSWLC 6

Most Recent Citation

The Owners - Strata Plan No 52098 v Khalil [2014] NSWLC 2

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The Owners - Strata Plan No 52098 v Khalil [2014] NSWLC 2

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Owners of Strata Plan 36131 v Dimitriou [2009] NSWCA 27

CITATION:	Strata Plan No 48892 v Robert Gilbert Coshott [2004] NSWLC 6
JURISDICTION:	Civil
PARTIES:	Strata Plan 48892 Robert Gilbert Coshott
FILE NUMBER:	7804/03
PLACE OF HEARING:	The Downing Centre
DATE OF DECISION:	12/13/2004
MAGISTRATE:	Magsitrate B A Lulham
CATCHWORDS:	Levies - Corporation - recover outstanding levies - expenses incurred - Levy contribution - sinking fund - Federal Court costs - Independent unit Management - Strata Plan - Special Levy
LEGISLATION CITED:	Bankruptcy Act Corporation Act
CASES CITED:	Port of Melbourne v Anshun Pty Ltd The Proprietors Units Plan No 52 v Gold (1993) 44 FCR 123 The Proprietors of Strata Plan 425 v Sidwell (1987) NSW
REPRESENTATION:	Ms P Koroknay instructed by David Le Page Solicitor Mr Coshott in person Hill Ryner & Company
ORDERS:	1. There will be judgment in favour of the plaintiff in the sum of $18,339.53 2. The defendant is ordered to pay interest on the outstanding levies calculated in the judgment in the sum of $3,061.18. 3. I will hear from the parties on the question of costs.