The Owners - Strata Plan No 70798 v Bakkante Constructions Pty Limited (No 2)

[2013] NSWSC 1284

Supreme Court

New South Wales

Medium Neutral Citation:	The Owners - Strata Plan No 70798 v Bakkante Constructions Pty Limited (No 2) [2013] NSWSC 1284
Hearing dates:	On the papers
Decision date:	09 September 2013
Before:	Pembroke J
Decision:	See paragraph [12]
Catchwords:	CIVIL PROCEDURE - costs - follow the event and may be awarded for a discrete stage of ongoing proceedings STATUTORY CONSTRUCTION - Strata Schemes Management Act - Section 229 - meaning of 'brought by owners corporation against a lot owner' - not applicable on the particular facts
Legislation Cited:	Civil Procedure Act 2005 (NSW) Strata Schemes Management Act 1996 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	George Zoltan Ajkay v Hickey & Co Pty Limited [2011] NSWSC 822 Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Category:	Costs
Parties:	The Owners - Strata Plan 70798 - plaintiff Bakkante Constructions Pty Limited - first defendant William Andrew Zankin - second defendant
Representation:	Counsel: F Corsaro SC with P Bambagiotti - for the plaintiff M Pesman - for the first defendant K Rees SC - for the second defendant Solicitors: Chambers Russell Lawyers - for the plaintiff Turnbull Bowles Lawyers - for the first defendant Jane Crittenden Lawyer - for the second defendant
File Number(s):	2011/275811

Judgment

1. In my principal judgment [2013] NSWSC 848 I held that the executive committee of the owners' corporation had breached Section 80D of the Strata Schemes Management Act 1996 by invalidly commencing these proceedings. At the hearing the first defendant adopted a limited role while the second defendant, Dr Zankin, substantially advanced the case for invalidity. He was wholly successful and now seeks to recover costs from the plaintiff in accordance with [88] of my judgment.

1. Since my judgment on 19 July 2013, the plaintiff has purported to ratify its decision to commence the proceedings and now seeks the determination of additional questions arising out of that attempted ratification. It contends that an order for costs should not be made until these further questions have been resolved and the validity of the ratification has been determined.

Application for costs on a party-party basis

1. There is, of course, full discretion to determine by whom, to whom and to what extent costs are to be paid: Civil Procedure Act s 98(1). The proper exercise of that discretion will normally require an order that costs 'follow the event'. See Uniform Civil Procedure Rules 2005 Rule 42, Latoudis v Casey [1990] HCA 59; (1990) 170 CLR 534 at 566-7 and Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72. An aspect of the discretion is that a court may order that costs be paid for a discrete period or stage of a proceedings.

1. The costs of the five-day hearing in June are clearly separable from the costs of the plaintiff's motion filed after judgment was delivered. As the second defendant was successful on all of the separate questions determined at the principal hearing, and the plaintiff failed on each of those questions, Dr Zankin has a justifiable and reasonable expectation of being awarded his costs related to that hearing. The fact that the plaintiff now seeks to agitate fresh questions, arising out of a purported ratification that occurred after judgment, is of limited discretionary significance.

1. A costs order provides an important additional measure of compensation to a vindicated party who is compelled to undertake the expense of litigation to establish or defend his or her rights. In my view, the award of costs to a successful party following the hearing of separate questions represents good policy. It is not a cast-iron rule of course, and may sometimes need to be tempered by the circumstances of the particular case. But it is appropriate in this case. I repeat what I said in Ajkay v Hickey and Co Pty Ltd [2011] NSWSC 822 at [22]:

Section 98 of the Civil Procedure Act makes it clear that the Court has the power to make an order for costs at any stage of the proceedings. And the general rule is that "costs follow the event". The determination of a separate question is an "event": Loiero (aka Lero) v Adel Sportswear Pty Limited (No. 2) [2010] NSWSC 1208 (Ball J). It matters not that the balance of the proceedings may produce a different outcome. A party that succeeds on an issue that is sufficiently significant to justify an order for separate determination, should usually have its costs of that issue - whether or not it resolves the whole proceedings: Floruit Holdings Pty Ltd v Sebastian - Builders & Developers Pty Ltd [2009] NSWCA 411 (Bergin CJ in Eq), (Allsop P and Young JA agreeing).

1. For those reasons, I have concluded that, in the exercise of my discretion, that the plaintiff should pay the costs of the second defendant that were reasonably incurred in the conduct of the June hearing. This does not include the costs of the summary dismissal application made by the second defendant in March. That application was misguided and should not have been made.

Section 229 relief

1. The second defendant also seeks an order pursuant to Section 229 of the Strata Schemes Management Act that, in levying the contributions to pay the costs order in his favour, the owners' corporation may not levy his lots. Although I am sympathetic to the logic of this application, it does not have a sound statutory basis.

1. Section 229 provides:

Costs in proceedings by owners against owners corporation

(1)   This section applies to proceedings brought by one or more owners of lots against an owners corporation or by an owners corporation against one or more owners of lots (including one or more owners joined in third party proceedings).

(2)   The court may order in proceedings that any money (including costs) payable by an owners corporation under an order made in the proceedings must be paid from contributions levied only in relation to such lots and in such proportions as are specified in the order.

(3)   If a court makes such an order the owners corporation must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of contributions paid in accordance with that levy.

1. Section 229 does not give the Court a general power. It is limited to proceedings 'brought' by an owners corporation against a lot owner, and vice versa. When these proceedings were commenced, they were brought by the owners corporation against a building company and no one else. Dr Zankin was not originally a party to the proceedings.

1. Somewhat irregularly, he sought to participate in the proceedings by filing a notice or motion (as a non-party) seeking an order that the plaintiff's claim be summarily dismissed. At the hearing of his notice of motion, I made clear that it was misguided and that his objective would be better served if I directed that he be joined as the second defendant and that certain questions be fixed for final hearing. This provided a more satisfactory jurisdictional platform for the advancement of his contentions.

1. In the result, Dr Zankin was joined in the proceedings as a result of an order of the court made almost two years after the commencement of the proceedings. He was not joined by the owners corporation. These circumstances make it clear why this is not a case that falls within the scope of Section 229 - from both a literal and purposive perspective. They were not 'brought' by the owners corporation against a lot owner. The joinder of Dr Zankin was not the result of an exercise of choice made by the plaintiff. It is therefore inappropriate to make an order for relief under Section 229.

Orders

1. I order the plaintiff to pay the second defendant's costs of and incidental to the hearing that commenced on 13 June 2013, excluding any costs of the second defendant associated with his application for summary dismissal.

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Decision last updated: 10 September 2013