The Owners - Strata Plan No. 44999 v Premier Holdings Corp Pty Limited and Gregg Ritchie and Partners Pty Limited (No 2)

[2012] NSWSC 303

Supreme Court

New South Wales

Medium Neutral Citation:	The Owners - Strata Plan No. 44999 v Premier Holdings Corp Pty Limited and Gregg Ritchie and Partners Pty Limited (No 2) [2012] NSWSC 303
Hearing dates:	8 February 2012
Decision date:	30 March 2012
Jurisdiction:	Equity Division
Before:	Black J
Decision:	Orders made in accordance with Short Minutes of Order, as agreed by the parties, to give effect to judgment. Orders made as to costs.
Catchwords:	COSTS - Court's discretion as to costs under s 98(1) of Civil Procedure Act 2005(NSW) - Whether there is a reason to depart from the usual order as to costs under r 42.1 of Uniform Civil Procedure Rules 2005 (NSW)
Legislation Cited:	- Auctioneers and Agents Act 1941 (NSW) - Civil Procedure Act 2005 (NSW) s 98(1) - Conveyancing Act 1919 (NSW) ss 12, 88B - Property, Stock and Business Agents Act 1941 (NSW) - Strata Titles Act 1973 (NSW) s 78(1AA) - Uniform Civil Procedure Rules 2005 (NSW) r 41.1
Cases Cited:	- Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Texts Cited:	- G E Dal Pont, Law of Costs, 2 ed, 2009
Category:	Costs
Parties:	The Owners - Strata Plan No 44999 (Plaintiff) Premier Holdings Corp Pty Limited (First Defendant) Gregg Ritchie & Partners Pty Limited (Second Defendant)
Representation:	Counsel: G. Sirtes SC/P. Lane (Plaintiff) R. Brender/A. Ahmad (Second Defendants) Solicitors: Robinson & Davies Pty Limited (Plaintiff) A I Legal (Defendants)
File Number(s):	10/337148

Judgment

1. These proceedings were heard before me on 8 February 2012. I delivered judgment on 6 March 2012 and held that a Management Agreement dated 31 October 1996 ("Management Agreement") providing for the provision of certain services to the Owners Corporation of Strata Plan No 44999 ("Owners Corporation") was unenforceable by reason of s 78(1AA) of the Strata Titles Act 1973 (NSW) and that subsequent assignments of that Management Agreement were also not effective in law. I indicated my preliminary view that the Second Defendant, Gregg Ritchie & Partners Pty Ltd ("GRP") which had appeared and defended the proceedings, should pay the Owners Corporation's costs of the proceedings. I also directed the parties to submit Short Minutes of Order to give effect to the judgment. The parties have agreed as to the form of declarations which should be made reflecting my judgment and I make those declarations below.

Costs

1. GRP submits that the Court should order that each party bear their own costs of the proceedings. GRP points to the width of the Court's discretion as to costs under s 98(1) of the Civil Procedure Act and to the principle recognised in Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 that a successful party will be disentitled to an order for costs if its conduct justifies that course. GRP also points to the observation in G E Dal Pont, Law of Costs, 2 ed, 2009 at [8.51] that:

"A successful litigant who has been guilty of misconduct or a wrongful act relating to the litigation or the circumstances leading up to it may be deprived of costs ... Misconduct or wrongful conduct in this context should not be viewed in restrictive terms."

1. GRP submits that they were brought into the proceedings by the 'lax' and blameworthy conduct of the Owners Corporation, in entering into the Management Agreement outside its power and in contravention of s 78(1AA) of the Strata Titles Act. GRP's submissions fairly acknowledge that blame should also be attributed to the unlicensed entity and subsequent assignees for carrying out functions which required the holding of the relevant licence. However, in my view, the original contravention arose, not from any conduct of the Owners Corporation, but wholly from the failure of the original party to the Management Agreement, Castle Pines Management Pty Limited to hold a strata managing agent's licence. As GRP acknowledges, subsequent assignees including GRP have also not held such a licence.

1. There was no suggestion at the hearing, and there is in my view no basis for a suggestion, that the Owners Corporation was knowingly party to any unlawful conduct, particularly when the obligation to hold a licence was imposed upon Castle Pines Management Pty Limited and the compliance with that obligation was a matter within that entity's control. I had expressly rejected, in my substantive judgment, GRP's submission that the Owners Corporation should be treated as responsible for any relevant illegality, in circumstances where it was the obligation of the managing agent to comply with the requirements of the Auctioneers and Agents Act 1941 (NSW), subsequently renamed the Property, Stock and Business Agents Act 1941 (NSW).

1. GRP also relies on the fact that, on registration, Strata Plan 44999 was registered in conjunction with a restriction as to user registered pursuant to the Strata Titles Act and s 88B of the Conveyancing Act 1919 which burdened Lots 1-40 with a restriction that it not be occupied unless the Owners Corporation had entered into a Management Agreement and a Deed for Provision of Services with Castle Pines Management Pty Limited in a specified form. I do not consider that the restriction on user advances matters, since it appears that the Owners Corporation complied with its terms; the restriction as to user was subsequently removed from title in June 2007 (CB pp 92-97); and, as noted above, it was the failure of Castle Pines Management Pty Ltd to hold the requisite licence which had the result that the Management Agreement was unenforceable.

1. GRP also contends that it was a bona fide purchaser for value of the rights under the Management Agreement without notice of the illegality. There is no evidentiary basis for that contention, since GRP led no evidence in the proceedings as to the state of its knowledge at the time it acquired the relevant rights.

1. GRP's submission that there should be no order for costs in favour of the Owners Corporation is also undermined by the fact that the Owners Corporation also succeeded on a second ground, namely that the assignment of the relevant rights was ineffective in law both because it did not comply with the requirements of the Management Agreement for such an assignment and because notice of the relevant assignments had not been given to the Owners Corporation under s 12 of the Conveyancing Act. This success was sufficient to establish that GRP was not entitled to assert the rights as against the Owners Corporation and the Owners Corporation would have succeeded on that basis alone. There was plainly no fault on the part of the Owners Corporation in respect of this aspect of the case.

1. There was also no misconduct by the Owners Corporation in or in connection with the commencement or conduct of the proceedings which were conducted in an efficient and appropriate manner.

1. With one qualification, I consider that GRP has not demonstrated any reason for departing from the usual order as to costs contemplated by Uniform Civil procedure Rules 2005 (NSW) r 42.1, namely that costs should follow the event. The Owners Corporation sought relief in the proceedings; it was successful in obtaining that relief, on several grounds, over GRP's opposition; and it should have its costs of the proceedings. The qualification is that GRP was not joined as party to the proceedings until 1 September 2011 and that the first defendant, which did not appear but also did not submit to the orders sought by the Owners Corporation, should pay the costs of the Owners Corporation until GRP was joined in the proceedings.

Declarations and orders

1. Accordingly, the Court:

1. DECLARES that the Management Agreement dated 31 October 1996 ("Management Agreement") between the Plaintiff and Castle Pines Management Pty Limited was and is unenforceable.

2. DECLARES that the purported assignments of the rights under the Management Agreement to the First Defendant and the Second Defendant were ineffective.

3 ORDERS that the First Defendant pay the Plaintiff's costs of the proceedings up to and including 2 September 2011 and the Second Defendant pay the Plaintiff's costs of the proceedings after that date, as agreed or as assessed.

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Decision last updated: 11 April 2012