Westbury v The Owners – Strata Plan No 64061

[2020] NSWCATEN 2

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Westbury v The Owners – Strata Plan No 64061 [2020] NSWCATEN 2

Hearing dates:

On the papers

Date of orders:

16 December 2020

Decision date:

16 December 2020

Jurisdiction:

Enforcement

Before:

Armstrong J, President
Boland AM ADCJ, Deputy President
M Harrowell, Deputy President

Decision:

The application by Mr Christopher Ian Harrigan to be joined as a party to these proceedings is dismissed.

Catchwords:

PRACTICE AND PROCEDURE – s 44 of the Civil and Administrative Tribunal Act 2013 – joinder of a party – necessary and proper – considerations relevant to determining who is a necessary and proper party

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Corporations Act 2001 (Cth)

Strata Schemes Management Act 2015 (NSW)

Trustee Act 1925 (NSW)

Cases Cited:

Armidale Dumaresq Council v Attorney General (NSW) (No 1) [2007] NSWSC 557

BL & GY International Co Ltd v Hypec Electronics Pty Ltd; Colin Anthony Mead v David Patrick Watson and Ors [2001] NSWSC 705

Commissioner of Police, New South Wales Police Force v Fine [2014] NSWCA 327

Dwyer v Burns Philp Trustee Company Limited, SC (NSW), 17 February 1989 (unreported)

John Alexander’s Clubs Pty Ltd v Whitecaps city Tennis Club Ltd [2010] HCA 19, (2010) 241 CLR 1

News Ltd v Australian Rugby Football League Ltd [1996] FCA 870; (1996) 64 FCR 410

Victoria v Sutton [1998] HCA 56, (1998) 195 CLR 291

Texts Cited:

Nil

Category:

Procedural and other rulings

Parties:

Garth Westbury & Margaret Westbury (Applicants)
The Owners – Strata Plan No 64061 (Respondent)
Christopher Ian Harrigan (Applicant for joinder)

Representation:

Counsel:
M Bradford (Applicants)

Solicitors:
Alex Ilkin Strata Lawyers (Applicants)
Strata Specialist Lawyers (Respondent)
Bannermans Lawyers (Applicant for joinder)

File Number(s):

PC 20/23524

Publication restriction:

Nil

REASONS FOR DECISION

Introduction

1. These reasons are in respect of an application by Mr Christopher Harrigan to be joined as a party to civil penalty proceedings. The proceedings relate to an application by Garth and Margaret Westbury (the Westburys) for payment of a monetary penalty by the Owners – Strata Plan 64061 (the respondent).

2. The penalty application is made pursuant to s 77 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), the Westburys seeking the imposition of a civil penalty under s 72(3) of that Act. The proceedings have been brought by the Westburys with the consent of the Solicitor General of New South Wales (as a person authorised by the Attorney General of New South Wales to give that consent), as permitted by s 75(b) of the NCAT Act.

3. The Westburys allege that the respondent contravened an order made by the Tribunal under the Strata Schemes Management Act 2015 (NSW) (SSMA) in connection with the carrying out of repairs to common property which affect their lot 2 in Strata Plan No 64061.

4. The respondent had a managing agent appointed under s 237 of the SSMA. That agent was Jameson & Associates Unit Services Pty Ltd trading as Jamesons Strata Management (Jamesons). Jamesons was appointed on 17 October 2018 for a period of two years. Jamesons appointed solicitors (Strata Specialist Lawyers) to represent the respondent.

5. The penalty application was listed before the Tribunal, exercising its enforcement jurisdiction, for hearing on 5 August 2020. The Tribunal reserved its decision.

The joinder application

6. Subsequent to the hearing on 5 August 2020, Mr Christopher Harrigan applied to be joined as a respondent to the proceedings (joinder application).

7. By letter dated 9 September 2020, Mr Harrigan sought the following orders:

1. That a representative of the group of owners - Mr Chris Harrigan - be joined to proceedings as an interested person as that term is defined in s 226 of the SSMA.

2. That Mr Harrigan be granted leave to be legally represented.

3. That the Westburys and the respondent provide a copy of all documents filed and served in the proceedings within 7 days.

4. That Mr Harrigan be granted leave to file any submissions within 7 days of receiving the documents referred to in (3) above.

8. Mr Harrigan said he is seeking to represent the owners of lots 1, 4, 5, 6, 7, 9, 10, 11, 13, 15, 16, 17, 18, 20 and 22. Mr Harrigan is the owner of lot 18, the other lots are owned by different individuals.

9. Directions were made by the Tribunal on 22 September 2020 to facilitate the determination of that application. In doing so, pursuant to s 50(2) of the NCAT Act, by consent the Tribunal made an order dispensing with a hearing of the joinder application. In addition, the Tribunal noted the respondent neither consented to nor opposed the joinder application.

10. Mr Harrigan and the Westburys filed evidence and submissions in relation to the joinder application.

11. The evidence included an affidavit from Mr Harrigan affirmed 12 October 2020. That affidavit deposed to the history of the dispute between the Westburys and the respondent and other matters, including:

1. the appointment of Jamesons as a compulsory strata managing agent,

2. communications from Mr Cunio, the solicitor for the respondent, including an email dated 15 June 2020 advising the penalty application had been filed;

3. requests for access to the books and records of the respondent by Mr Harrigan who said he was a member of a group titled “Sherwood Advocacy Group”;

4. the carrying out of remedial work to lot 2 and enquiries made by the Sherwood Advocacy Group about this matter; and

5. request made by and information provided to the Sherwood Advocacy Group about the engagement of lawyers for the purpose of appearing at the penalty application and about the penalty application generally.

12. At paragraphs 59 and 60 of his affidavit, Mr Harrigan says:

59 Had I been notified by the Owners Corporation of the proceedings in matter PC 20/23524 and provided with sufficient information in relation to the nature of the allegations and the inadequacy of the Owners Corporation’s response in a timely manner, I would have made an application to be joined to the proceedings as an Applicant prior to 3 June 2020.

60 However, as such notification was not provided to myself or the other members of the Sherwood Advocacy Group by the Owners Corporation, after many unsuccessful attempts to find further information by every channel I could think of, I instructed my solicitor to make an application to join the proceedings as an Applicant on 9 September 2020.

13. Various documents referred to by Mr Harrigan are exhibited to his affidavit.

Mr Harrigan’s submissions

14. Mr Harrigan submissions can be summarised as follows:

1. Any penalty imposed and payments made by the respondent will be from funds contributed by the owners in accordance with s 83 of the SSMA.

2. Mr Harrigan, as the owner of Lot 18, will be affected if any orders are made.

3. The rules of natural justice require that a person whose rights or interests may be affected by an order should be given an opportunity to be heard and should be joined to the proceedings to permit him to make submissions in relation to the orders sought. Reference is made to the decision of the High Court in Victoria v Sutton [1998] HCA 56, (1998) 195 CLR 291 (Sutton) at [77].

4. The principle to be applied in determining whether a party is a necessary party is whether orders will be made “directly affecting the rights or liabilities of a non-party”. Reference is made to the High Court decision in John Alexander’s Clubs Pty Ltd v Whitecaps city Tennis Club Ltd [2010] HCA 19, (2010) 241 CLR 1 (John Alexander) at [131].

5. Mr Harrigan says he has “not being adequately apprised of the subject matter of this dispute” and that he wants to be joined “in order to endeavour to protect himself, and other Lot owners from the consequences of a penalty order”. In this regard he wishes to understand the scope of what is alleged, the material supporting the allegation, the defences raised and to make “submissions raising additional matters if required”.

6. Mr Harrigan relies on the decisions said to be analogous situations concerning joinder of a party. These are:

1. Armidale Dumaresq Council v Attorney General (NSW) (No 1) [2007] NSWSC 557 (Armidale Dumaresq Council), where a local area interest group was joined in an application by a trustee under the Trustee Act, 1925 (NSW) (Trustee Act); and

2. BL & GY International Co Ltd v Hypec Electronics Pty Ltd; Colin Anthony Mead v David Patrick Watson and Ors [2001] NSWSC 705 (Hypec), where a shareholder was joined in proceedings concerning a company in liquidation.

15. In making these submissions Mr Harrigan says that the strata scheme has been under compulsory management since 17 October 2018. Consequently “the action, or lack thereof, by the owners corporation is, in practical terms, wholly attributable to the compulsory managing agent, rather than the owners corporation”. Inter alia, Mr Harrigan submits that this fact “should be considered as a mitigating factor given liability for the payment of the penalty will ultimately rest with the lot owners, who cannot exercise any decision-making functions of the owners corporation to give effect to the orders”.

16. On this last point, reference is made to s 57(1) of the SSMA. This section provides:

57   Breaches by strata managing agent

(1)  If a strata managing agent has been delegated a function by an owners corporation and a breach of the duty by the owners corporation would constitute an offence under a provision of this Act, the agent is guilty of an offence under that provision (instead of the owners corporation) for any breach of the duty by the agent occurring while the delegation remains in force.

17. A submission is made to the effect that Jamesons “should be entitled to be joined to the proceedings as well, in order to put forward their position”.

Consideration

18. The NCAT Act permits joinder of a person to any proceedings. Relevantly,
    s 44 is in the following terms:

44   Parties and intervention

(1)  The Tribunal may order that a person be joined as a party to proceedings if the Tribunal considers that the person should be joined as a party.

(2)  The Tribunal may order that a person be removed as a party to proceedings if the Tribunal considers that the person has—

(a)  been improperly or unnecessarily joined, or

(b)  ceased to be a proper or necessary party.

19. Section 44(1) provides a wide discretion to join a person as a party. Its scope is to be read in conformity with subsection 44(2), which relates to removal of a party: Commissioner of Police, New South Wales Police Force v Fine [2014] NSWCA 327 (Fine) at [38]. That subsection refers to a “proper or necessary party”.

20. In Fine at [39], the Court of Appeal noted that a “party whose interest are affected by a decision including by reference to a statutory interest, may be a necessary party to proceedings”. Whether a party is a proper party ranges from those “whose interests were affected by the decision” who would usually be made a party and those who might be described as a “mere inter-meddler” who would neither be a necessary nor proper party: Fine at [40]. That is, joinder as a proper party depends on the particular circumstances of the case.

21. Of the first, namely those that are necessary and should ordinarily be joined, the decision of the High Court in Sutton is relevant. At [77]-[78] the plurality, said (citations omitted):

77 The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. That practice also assists in avoiding duplication of hearings on the same issues and in avoiding the spectre of inconsistent decisions by courts or the judges of the same court. In Pegang Mining Co Ltd v Choong Sam Lord Diplock, delivering the opinion of the Judicial Committee of the Privy Council, said:

"In their Lordships' view one of the principal objects of the rule is to enable the court to prevent injustice being done to a person whose rights will be affected by its judgment by proceeding to adjudicate upon the matter in dispute in the action without his being given an opportunity of being heard ... a better way of expressing the test is: will his rights against or liabilities to any party to the action in respect of the subject matter of the action be directly affected by any order which may be made in the action?"

78 The test for determining whether a person is a necessary party has usually arisen in the context of a person seeking to join proceedings rather than a failure to join a relevant person. But the same principle must apply in both situations. Thus, in News Ltd v ARL, the Full Federal Court held that an order "which directly affects a third person's rights against or liabilities to a party should not be made unless the person is also joined as a party. If made, the order will be set aside." The Full Court pointed out that O 6 r 7 of the Federal Court Rules which states that proceedings will not be defeated by a misjoinder or non joinder was "intended to give effect to the abolition of the plea of abatement". The Court said that the rule was directed "to cases where there is a curable defect, for example the misnaming of a party".

22. A similar approach was adopted by the High Court in John Alexander. At [131]-[132] the Court said (citations omitted):

131 Walker Corporation submitted that where a court is invited to make, or proposes to make, orders directly affecting the rights or liabilities of a non-party, the non-party is a necessary party and ought to be joined. That submission is correct. The Court of Appeal's orders directly affected Walker Corporation. The majority of the Court of Appeal (Macfarlan JA, Giles JA concurring) erred when it held to the contrary.

132 In News Ltd v Australian Rugby Football League Ltd the Full Federal Court (Lockhart, von Doussa and Sackville JJ) said:

"Where the orders sought establish or recognise a proprietary or security interest in land, chattels or a monetary fund, all persons who have or claim an interest in the subject matter are necessary parties. This is because an order in favour of the claimant will, to a corresponding extent, be detrimental to all others who have or claim an interest."

23. The decision of the Full Federal Court in News Ltd v Australian Rugby Football League Ltd[1996] FCA 870; (1996) 64 FCR 410 is instructive in the present case. The Full Court was hearing and determining an appeal by News Ltd and others (who commenced a new “super” league) and the Australian Rugby Football League (ARF). The trial Judge found it was unnecessary to join players and coaches who participated in the super league on the basis their rights were not directly affected because the ARF sought an order for damages for unlawful inducement of breaches of the players’ and coaches’ contracts. The Full Court at 525E-F to 727D explained why:

1. orders sought that News Ltd and others pay damages to the ARF did not directly affect the players and coaches who contracted with super league entities, but

2. orders which restrained certain players and coaches from conducting or participating in super league competitions did have a direct effect on their rights.

24. Because the trial Judge did not join the players and coaches as parties, the Full Court set aside the orders that directly affected their rights.

25. The reasoning of the Full Court at 525 B has particular resonance to this application. Their Honours explained:

In our opinion, the question should be decided according to the test proposed by Lord Diplock. The test involves matters of degree, and ultimately judgment, having regard to the practical realities of the case, and the nature and value of the rights and liabilities of the third party which might be directly affected. The requirement that a third party's rights against, or liability to, any party to the proceedings be directly affected is an important qualification that recognises that many orders of a court are likely to affect other people to a greater or lesser extent. This is particularly so with remedies in the nature of an injunction: see Silktone Pty Ltd v Devreal Capital Pty Ltd (1990) 21 NSWLR 317, at 322, per Kirby P. The requirement of a direct effect on rights or liabilities differentiates the case where a person ought to be joined, from other cases where the effect of the order on non-parties can be characterised as only indirect or consequential.

26. In the present case, any penalty imposed does not directly affect Mr Harrigan or other lot owners. The fact that he may be liable to contribute to any penalty and costs that might be imposed is not properly characterised as a direct effect. Rather, it arises from the operation of the SSMA, particularly s 83. Mr Harrigan’s position is akin to a shareholder of a company who does not, by reason of a prosecution or civil penalty application against the company, have a general right to be joined or otherwise participate or intervene in such proceedings.

27. In these circumstances, we do not accept Mr Harrigan is a necessary party or that he should be joined on this basis.

28. On the other hand, a party may be a proper party where, in the particular circumstances of the case, it is appropriate for them to be joined. As made clear by the authorities to which we have referred above, an indirect interest might be a relevant factor in determining whether a party is a proper party but it is not conclusive.

29. Mr Harrigan referred us to two cases. The first was Armidale Dumaresq Council. In that case the Court exercised its discretion to join the Friends of the Old Teachers College, Armidale Inc. That case involved an application under s 81 of the Trustee Act, which permitted the Court to approve the disposition of trust property by the trustee. The Trustee proposed selling part of an art collection exhibited in the Armidale area because it was no longer financially viable to keep the whole collection without the infusion of funds. The Association opposed the making of such orders.

30. Having referred to various authorities concerning trust disputes, Young CJ in Eq said at [9]-[10]:

9 Pulling all these strings together, it would seem to me that where one has a charity with a particular local focus and the Attorney-General is leaving it in the hands of the Court to decide and the charity is for the benefit of the public in that particular locality that the Court ought to examine the views of those in the locality who have strong feelings.

10 There is a limit to this. Those strong feelings should not be allowed to increase the costs nor to delay the matter unduly. However, despite what Ms Mahony for the trustees says, I cannot see how their intervention at this stage could delay the matter unduly. The applicant must, however, be responsible for its own costs and also for any increases in the costs caused as a result of its participation.

31. Possible delays and the effect on the hearing process were relevant considerations. However, in that case the decisive factor was that the Attorney General did not propose to take an active role in the proceedings. Hence there was no contradictor.

32. That circumstance does not exist here.

33. The second case was Hypec. That case involved an application by Mr Mead (a shareholder and former director of Hypec Electronics Pty Ltd (in Liquidation)) to intervene in and conduct proceedings on behalf of the company. There had been a default judgment against the company of approximately $7.6m which Mr Mead sought to set aside and a continuing claim against him as second defendant. At the same time, the liquidator of the company was separately seeking to recover $4.9m from Mr Mead concerning a directors’ loan account and moneys used to purchase a property owned by Mr Mead and his former wife (with whom he had engaged in substantial litigation).

31. The Court made an order permitting Mr Mead to intervene. It did so engaging the inherent jurisdiction of the Court. Such jurisdiction is not a source of power of this Tribunal, which is created by statute. It doing so, the Court found at [75] there was “at least the real possibility of it being established that during the relevant period, Hypec Electronics made a substantial overpayment in relation to goods said to have been sold and delivered by BL to Hypec Electronics” and that the “claims sought to be litigated by Hypec Electronics appear at least on the materials and evidence adduced on the applications, to have a solid foundation in terms of giving rise to a serious dispute”. The Court also found there were real questions raised as to the involvement of Mr Mead and his former wife in these matters.

32. However, in our view Hypec is of little or no relevance to the present application. Mr Mead was already a party to the proceedings in which he was seeking to intervene on behalf of the company and set aside the default judgment which had been obtained. The application was made in circumstances where the liquidator was, apparently, taking no steps to set aside the default judgment which had formed the basis of a statutory demand on which the winding up order and the appointment of the liquidator had been made. Rather, the liquidator was separately pursuing Mr Mead to recover his directors’ loan account.

33. In relying on the decision in Hypec, Mr Harrigan referred to s 237(2) of the Corporations Act 2001 (Cth), which concerns the Court allowing a person to bring proceedings on behalf of a company or to intervene in proceedings. That Act does not apply to an owners corporation: s 8(2) of the SSMA. As to the broader assertion that the respondent “is not properly taking responsibility for the case”, we will return to that matter below.

34. Another example of where a person with an indirect interest might be given leave to intervene or be joined is where the person who is directly affected or having the primary obligation to defend proceedings is not properly presenting the case: Dwyer v Burns Philp Trustee Company Limited, SC (NSW), Waddell CJ in Eq 17 February 1989 (unreported) (Dwyer).

35. In Dwyer, his Honour considered the then Pt 8 r 8 of the Supreme Court Rules and the requirement that a party should be joined where it is “necessary to ensure that all matters in dispute in the proceedings may be effectually and completely determined and adjudicated upon”. That case involved an application by one of fifteen beneficiaries of the estate to be joined in proceedings brought by a plaintiff seeking provision out of the estate of her deceased husband. The beneficiary sought to be joined to represent fourteen of the beneficiaries, the other being the plaintiff. The defendant, Burns Philp, was the appointed administrator of the estate. His Honour said:

The expression “effectually and completely determined” should be given a wide meaning and has been linked in decided cases to the necessity of ensuring that the rules of natural justice are observed. In other words, if the court were satisfied that the defendant was not properly presenting the case against both aspects of the plaintiff’s application, it would be necessary within the meaning of the rule to join those 14 beneficiaries.

39. However, his Honour rejected the application saying:

It seems to me that it is not established on the evidence that the defendant would not carry out the onerous duty which it bears to represent the interests of the estate in both aspects of the proceedings.

40. At the time of the civil penalty hearing Jameson was authorised under the SSMA to “stand in the shoes” of the respondent. It instructed a lawyer to appear on behalf of the respondent and has made submissions concerning the conduct of the respondent. However, there is no evidence to which we have been referred that would suggest that the evidence originally placed before the Tribunal at the hearing on 5 August 2020 was inadequate or that there was any relevant failure to make submissions in support of the respondent’s position.

41. Rather, the application which is presently made is for access to the information previously provided to the Tribunal so as to enable Mr Harrigan to consider whether he should intervene and, if so, what should be the nature and extent of such intervention.

42. In these circumstances, it is difficult to see what such intervention might involve and why it is appropriate Mr Harrigan be joined as a party.

43. Mr Harrigan referred to the proposed consent orders tendered to the Tribunal in the penalty application, wherein the parties sought the imposition of an agreed penalty. He did so in the context of suggesting there was an admission of contravention that was, in some way, inappropriate and amounted to a “capitulation”. However, no suggestion is made by him that the orders of the Tribunal to which the penalty application relate were complied with by the due date nor has Mr Harrigan provided expert evidence to support such a claim. To the contrary, the documents attached to his affidavit suggest that rectification works are continuing and remain incomplete. Further, there was no explanation about why the approach taken by the respondent in placing evidence before and making submissions to the Tribunal was relevantly inadequate.

44. It is clear there has been a long running dispute between various lot owners concerning carrying out of rectification works to the Westburys’ property. The orders the subject of the penalty application were in evidence before us. At the time of the hearing before us it was accepted that the appointment of the strata manager was properly made by the Tribunal under s 237(3) of the SSMA. That is, the Tribunal was satisfied that:

1. the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or

2. an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or

3. an owners corporation has failed to perform one or more of its duties, or

4. an owners corporation owes a judgment debt.

45. Against this background, absent some cogent reason for joining Mr Harrigan, it seems to us such joinder would unnecessarily protract the proceedings. This is particularly so in circumstances where there are ongoing disputes between various lot owners or groups of lot owners concerning the strata scheme which appear to include what rectification works should be done in relation to the Westburys’ lot and adjacent common property.

46. In these circumstances, we are not satisfied Mr Harrigan is a proper party.

47. Significantly, the evidence before us discloses that Mr Harrigan was aware of the civil penalty proceedings as early as June 2020 but took no steps to be joined prior to the hearing of the application. This delay militates against the exercise of discretion in his favour to now join him as a party. If he is now joined a re-opening of hearing may be necessary, with further delays and costs incurred.

48. It follows that the joinder application should be dismissed.

Other matters

49. We briefly deal with two further submissions made by Mr Harrigan.

50. Mr Harrigan says he is an interested person as defined in s 226 of the SSMA. This fact is irrelevant to proceedings brought under s 77 of the NCAT Act for the imposition of a civil penalty arising from the failure to comply with an order of the Tribunal. The SSMA does not confer any right on an interested person to bring or be joined as a party in civil penalty proceedings brought under the NCAT Act, rather the section deals with the right of an interested party to bring proceedings under the SSMA.

51. Mr Harrigan also makes reference to s 57(1) of the SSMA. That section says:

57   Breaches by strata managing agent

(1)  If a strata managing agent has been delegated a function by an owners corporation and a breach of the duty by the owners corporation would constitute an offence under a provision of this Act, the agent is guilty of an offence under that provision (instead of the owners corporation) for any breach of the duty by the agent occurring while the delegation remains in force.

52. Section 57(1) has no relevance for two reasons. First, the present penalty application arises under the NCAT Act, being a civil penalty application. It is an application arising from a contravention of an order of the Tribunal. It is not a prosecution for an offence under the SSMA arising from a breach of duty under that Act. Secondly, the section only operates where a “strata managing agent has been delegated a function by an owners corporation”. There has been no relevant delegation by the respondent in the present case. Rather, the strata managing agent was appointed by order of the Tribunal under s 237 of the SSMA.

Orders

53. We make the following order:

1. The application by Mr Christopher Ian Harrigan to be joined as a party to these proceedings is dismissed.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Decision last updated: 16 December 2020