The Owners - Units Plan No 4421 v Geocon Constructors (ACT) Pty Ltd

[2025] ACTSC 68

SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY

Case Title:

The Owners - Units Plan No 4421 v Geocon Constructors (ACT) Pty Ltd

Citation: 

[2025] ACTSC 68

Hearing Date: 

28 February 2025

Decision Date: 

28 February 2025

Before:

Mossop J

Decision: 

(1)    The Fourteenth Defendant’s application in proceeding dated 7 January 2025 is dismissed.

(2)    The Fourteenth Defendant is to pay the costs of the application.

Catchwords: 

PRACTICE AND PROCEDURE – SUBPOENAS – Application for leave to file and issue subpoena on Owners Corporation relating to financial documents and minutes – where moving party claims forensic purpose of subpoena is to inform decision as to whether to apply for security for costs – where no security for costs application on foot – application unsupported by authority and current practice – granting application would encourage fragmentation of proceedings contrary to s 5A of the Court Procedures Act – application refused with costs

PRACTICE AND PROCEDURE – COSTS – where approach contemplated by Court Procedures Rules to parties’ costs of complying with subpoenas is in issue – r 6611 contemplates that parties usually bear own costs of compliance

CORPORATIONS – UNITS TITLE OWNERS CORPORATION – where Owners Corporation’s capacity to pay costs potentially in issue – different costs considerations for Owners Corporations than for other corporations – special levies and other recovery mechanisms available to ensure liabilities are met

Legislation Cited: 

Court Procedures Act 2004 (ACT), s 5A

Court Procedures Rules 2006 (ACT), rr 6611, 6601A, Div 2.17.8

Unit Titles (Management) Act 2011 (ACT)

Cases Cited: 

Owners – Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820

The Owners – Strata Plan No 87639 v Karimbla Properties (No4) Pty Ltd (No 2) [2025] NSWSC 107

The Owners – Units Plan 1917 v Koundouris [2014] ACTSC 269

Parties: 

The Owners - Units Plan No 4421 ( Plaintiff)

Geocon Constructors (ACT) Pty Ltd (First Defendant)

NG Landholdings No. 1 Pty Ltd (Second Defendant)

A.C.N 119 755 734 Pty Ltd (Third Defendant)

Vital Design Solutions Pty Ltd (Fourth Defendant)

Northrop Consulting Engineers Pty Ltd (Fifth Defendant)

O'Neill & Brown Fire Services Pty Ltd (Sixth Defendant)

O'Neill & Brown Plumbing Company Pty Ltd (Seventh Defendant)

Dysen Pty Ltd (Ninth Defendant)

Compendium Design Pty Ltd (Tenth Defendant)

Magnate Tiling Pty Ltd (Eleventh Defendant)

All Things in Concrete Pty Ltd t/a TLC Pumping Pty Ltd & Prestige Pools (Twelfth Defendant)

Nikolaos Georgalis (Thirteenth Defendant)

Darren Sault (Fourteenth Defendant)

Representation: 

Counsel

F Corsaro SC ( Plaintiff)

J Moffett (Fourteenth Defendant)

Solicitors

Chambers Russell Lawyers ( Plaintiff)

DLA Piper (Fourteenth Defendant)

File Number:

SC 506 of 2023

MOSSOP J:  

Introduction

1․These proceedings involve a claim by an Owners Corporation for a Units Plan against 14 persons or entities involved in the construction of the development to which the Units Plan relates.

2․Before the court is an application in proceedings by Darren Sault, the fourteenth defendant. The fourteenth defendant seeks leave under r 6601A(2) of the Court Procedures Rules 2006 (ACT) to file and cause the issue of a subpoena for production to the plaintiff. That subpoena is proposed to be in the form contained in an annexure to the affidavit of James Berg, the solicitor for the fourteenth defendant.

3․If issued in the form in which it appears in that annexure, the subpoena would compel the plaintiff to produce a range of documents relating to its finances in respect of the period 2020 to 2024, as well as all minutes of its general or other meetings.

Grounds of application

4․The fourteenth defendant makes this application on the basis of what its solicitor described as a “legitimate concern” as to the capacity of the plaintiff to satisfy an adverse costs order, if one was made. While he accepts that this is not relevant to a fact in issue in the substantive proceedings, he asserts that it is relevant to the question of costs, including an application for security for costs pursuant to Div 2.17.8 of the Court Procedures Rules.

5․In his affidavit, Mr Berg, the solicitor for the fourteenth defendant, states that he has “legitimate concerns over the Plaintiff’s ability to meet any costs order made against it particularly given the Plaintiff is an owners corporation”. Annexure A to the affidavit is a letter dated 30 October 2024 from the solicitors for the fourteenth defendant to the solicitors for the Plaintiff. Among other things, the letter asserted that the Amended Statement of Claim made “very broad allegations” against the fourteenth defendant and provided an estimate that the fourteenth defendant would incur $650,000 in costs in defending the proceedings.

6․Annexure B to the affidavit is a letter dated 1 November 2024 from the solicitors for the plaintiff to the solicitors for the fourteenth defendant. In that letter, the solicitors for the plaintiff, among other things, denied the insufficient particularity of the Amended Statement of Claim and asserted that there was “no reason to ground any belief that the Plaintiff will not be able to pay [the fourteenth defendant’s] … costs if ordered to pay them”. The plaintiff did not provide details of its financial position.

7․Annexure C to Mr Berg’s affidavit is a reply from the solicitors for the fourteenth defendant, stating that the plaintiff’s letter “fails to address [the fourteenth defendant’s] concerns” and foreshadowing this application.

Submissions

8․Counsel for the fourteenth defendant accepted that, although the question of the financial capacity of the plaintiff was not relevant to a fact in issue, there was nevertheless a legitimate forensic purpose for the issue of a subpoena because it would inform the fourteenth defendant’s decision as to whether or not to make an application for security for costs.

9․He submitted that, in light of the plaintiff’s refusal to provide information voluntarily, other means of obtaining documents, such as a notice to produce or notice for non‑party production, were not available to the fourteenth defendant.

10․Counsel submitted that the present application was intended to avoid the situation that arose in Owners – Strata Plan No 50530 v Walter Construction Group Ltd [2001] NSWSC 820, in which Bergin J made reference to the potential for the defendant — who had made an application for security for costs — to have served a notice to produce seeking records relating to the finances of the plaintiff.

11․Counsel submitted that the granting of leave would be consistent with s 5A of the Court Procedures Act 2004 (ACT) in allowing the issue of security to be investigated without the need for an application.

12․Recognising the potential for the plaintiff to raise funds from the owners of units within the Units Plan in accordance with the Unit Titles (Management) Act 2011 (ACT), counsel focused upon the potential for there to be a delay in the recovery of costs following a judgment in favour of the fourteenth defendant that might arise from the need to levy the members of the Units Plan. Counsel quite properly recognised that any such delay would be compensated by the fourteenth defendant’s entitlement to interest on an unpaid judgment for costs.

13․He submitted that — notwithstanding that r 6611, which allows an application to be made to recover the costs of compliance with a subpoena, did not apply where the recipient of the subpoena was a party to the proceeding — the court would impose such a requirement if it was to make a grant of leave to issue the subpoena at this stage. That submission sought to neutralise the difference between the costs position that would apply if a subpoena was issued in support of an extant application in proceedings seeking security, and the position which would apply if leave was granted in the present circumstances where no application for security was on foot.

14․Counsel accepted that, if the application was not successful, then costs would follow the event.

15․The plaintiff opposed the granting of leave to issue a subpoena, characterising what was proposed as a fishing expedition in circumstances where the request for financial disclosure was:

(a)not tied to any pleaded issue in the statement of claim;

(b)unrelated to any substantive defence available to the fourteenth defendant; and

(c)unnecessary for the determination of the claim currently before the court.

16․Counsel for the plaintiff pointed to the manner in which the issue had been dealt with in The Owners – Units Plan 1917 v Koundouris [2014] ACTSC 269 at [131], a passage which was referred to in the recent decision of Stevenson J in The Owners – Strata Plan No 87639 v Karimbla Properties (No4) Pty Ltd (No 2) [2025] NSWSC 107.

17․The submission was that the grant of leave could not be justified on the basis of a hypothetical future application, would result in unnecessary interlocutory dispute, and would delay the proceedings.

Consideration

18․Rule 6601A is an important control upon the use of a powerful court process in circumstances other than an upcoming final hearing.

19․The proposition underlying the fourteenth defendant’s application in the present case is that he should be entitled to use the process of the court to investigate a possible future interlocutory application relating to security for costs. It is notable that no previous authority was identified which indicated that such a course had been adopted in the past in this court. If it were an appropriate course, such applications would routinely be made in relation to corporate defendants in order to investigate the potential for making an application for security. I do not read the decision of Bergin J in Strata Plan No 50530 as supporting the proposition that compulsory processes can be used at any stage to obtain information relevant to the finances of a plaintiff. Rather, I read the relevant passage as simply saying that the defendant in that case had not obtained such material prior to the hearing of the application.

20․In my view, it is not appropriate in the circumstances to grant the leave requested.

21․First, as I recognised in Koundouris at [131], an Owners Corporation has the capacity to raise a special levy from owners of units in the Units Plan. The situation of an Owners Corporation is therefore to be distinguished from a Corporations Act corporation, which has the capacity to be more ephemeral by reason of the fact that it may have limited capital and may simply avoid liability by liquidation. The Owners Corporation is an essential attribute of a unit title development and has the capacity to raise money by special levies from the owners of units in the development. If liabilities are not paid, there is a capacity to have an administrator appointed in order to ensure liabilities are met by the processes available under the Act.

22․Second, as a practical matter, there are 433 unit owners. Even if the plaintiff was liable for the $650,000 of anticipated costs, that would amount to slightly more than $1500 per unit owner. Given the statutory scheme, the risk to the defendant is that there could be a delay in recovery, for which he would be compensated by interest. Insofar as it is possible to assess at the present stage, any claim for security for costs is not obviously strong because of the statutory scheme, the number of unit owners and the extent of the potential exposure to costs.

23․Third, it is not appropriate to encourage the development of interlocutory side issues in proceedings of this nature which, necessarily, are already, by reason of the number of parties, of some complexity. To permit a subpoena to be used to investigate a possible future application would encourage such an approach. It would do so in circumstances where the moving party was not subject to the discipline of having to put on an application in proceeding and being subject to the costs consequences of failing on such an application.

24․While I accept that it might be possible to avoid some of the costs unfairness by requiring an undertaking in relation to costs as a condition of the grant of leave, to do so would not be consistent with the approach to the use of subpoenas contemplated by the Rules, r 6611 of which provides that the costs of complying with a subpoena are not recoverable. They would only ordinarily become recoverable if forming part of the costs of responding to an application for security.

25․I do not accept the submission that allowing the present application would be consistent with s 5A because it would make the proceedings more efficient by not requiring an application to be made before information was obtained. As I have indicated, to allow the application in the circumstances of the present case would be to encourage the development of side issues, something which is inconsistent with the purpose of s 5A.

Orders

26․The orders of the Court are:

(1)The Fourteenth Defendant’s application in proceeding dated 7 January 2025 is dismissed.

(2)The Fourteenth Defendant is to pay the costs of the application.

I certify that the preceding twenty‑six [26] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Justice Mossop.

Associate:

Date: