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Cathedral Place Community Body Corporate v The Proprietors of Cathedral Village Building Units Plan[2016] QDC 234

Cathedral Place Community Body Corporate v The Proprietors of Cathedral Village Building Units Plan[2016] QDC 234

DISTRICT COURT OF QUEENSLAND

CITATION:

Cathedral Place Community Body Corporate v The Proprietors of Cathedral Village Building Units Plan [2016] QDC 234

PARTIES:

CATHEDRAL PLACE COMMUNITY BODY CORPORATE

(respondent/plaintiff)

v

THE PROPRIETORS OF CATHEDRAL VILLAGE BUILDING UNITS PLAN 106957

(applicant/defendant)

FILE NO:

BD 2754/10

DIVISION:

Civil

PROCEEDING:

Application in a pending proceeding

ORIGINATING COURT:

District Court at Brisbane

DELIVERED ON:

27 September 2016

DELIVERED AT:

Brisbane

HEARING DATES:

12 and 13 September 2016

JUDGE:

Dorney QC DCJ

ORDERS:

It is ordered that:

  1. The amended application filed 19 May 2016 is dismissed.
  2. Both parties have leave to file submissions on costs, if any, by 4pm on 30 September 2016.

CATCHWORDS:

Procedure – whether there should be a determination of separate questions – whether, if so, the questions proposed are appropriate

LEGISLATION CITED:

Building Units and Group Titles Act 1980

Mixed Use Development Act 1993 ss 6, 12, 15, 66, 166, 167, 173, 174, 176, 177, 182, 206, 206A, sch 5

Uniform Civil Procedure Rules 1999 rr 5, 483, 484

TEXTS CITED:

Pearce and Geddes, Statutory Interpretation in Australia, 8th ed, Lexis Nexis Butterworths, 2014.

CASES CITED:

Bass v Permanent Trustee Co Ltd (1998) 198 CLR 334

Bruce v Odhams Press Ltd [1936] 1 KB 697

Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 3) [2015] QSC 295

City of Swan v Lehman Brothers Australia Ltd (2009) 73 ACSR 86

Gas & Fuel Corporation of Victoria v Comptroller of Stamps [1964] VR 617

Humphries v Proprietors “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597

Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15

O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356

Owners Strata Plan No 57164 v Yau [2016] NSWSC 1056

Owners Strata Plan No 5709 v Andrews [2009] NSWCA 189

Proprietors of Rosebank GTP 3033 v Locke [2016] QCA 192

Reylan Pty Ltd v Lamag Holdings Pty Ltd (1991) NSW Title Cases 80-011

Ridis v Strata Plan 10308 (2005) 63 NSWLR 449

Smith & Anor v The Body Corporate of Strata Plan No 22669 (1997) BC9701781

Tepko Pty Ltd v Water Board (2001) 206 CLR 1

The Owners of Strata Plan No 3397 v Tate (2007) 70 NSWLR 344

Thiess Pty Ltd v FFE Minerals Aust Pty Ltd [2007] QSC 209

Vale v Daumeke & Ors [2015] VSC 342

COUNSEL:

P Tucker for the Plaintiff

C L Francis for the Defendant

SOLICITORS:

Nicholsons Solicitors for the Plaintiff

Piper Alderman for the Defendant

Introduction

  1. [1]
    Can the fact that there are some 8,500 documents disclosed but not yet examined have such an overall effect that this ­­­Court should not be satisfied that it is appropriate to make orders pursuant to rr 483 and 484 of the Uniform Civil Procedure Rules 1999 (“UCPR”) for the separate answering of certain questions in the proceeding and before the trial of the proceeding?  Although that is a significant simplification of the issues involved here, it does raise in a rather stark way the concern that courts have in such separate determinations. 
  1. [2]
    The plaintiff, Cathedral Place Community Body Corporate (“Cathedral Place”), is the “community body corporate” in a Mixed Use Scheme ­­constituted pursuant to the Mixed Use Development Act 1993 (“MUD Act”). The defendant, the Proprietors of Cathedral Village Building Units Plan 106957 (“Cathedral Village”), is one of six subsidiary bodies corporate in the Scheme of which the other five are residential bodies corporate.  It is a commercial body corporate.  The Scheme was constituted under Mixed Community Plan Number 106902 (“Plan”) registered in October 1998. 
  1. [3]
    What the applicant/defendant seeks by way of an amended Application filed 19 May 2016 is for the Court to give an answer to each of, now, eight questions (including two sub-questions) in an attached Schedule “A” thereto, “separately from all other questions in the proceeding and before the trial of the proceeding”, and that it be done “forthwith”.

Background

  1. [4]
    The five residential bodies corporate (“Residential Members”) are: Canterbury ­­­­& Westminster; Duhig; Kensington ­­­& Sandringham; Notre Dame; and Oxford ­­­& Cambridge.  Besides the MUD Act, the Scheme is governed by Cathedral Place’s By-Laws which were originally registered on the recorded date of 11 September 2000, bearing dealing number 704304428.  The present applicable By-Laws, which are attached to the minutes from the meeting containing the adoption of new By-Law 28, were registered on the recorded date of 1 September 2003. 
  1. [5]
    Of the 650 allocated unit lot entitlements in the Scheme, the applicant/defendant holds 143, giving Cathedral Village 22% of the voting entitlement. Incidentally, Cathedral Village holds 5.11% of the lot entitlements.
  1. [6]
    Section 66 of the MUD Act vests the community property in Cathedral Place.  Schedule 5 to that Act defines “community property” of the Scheme to mean the “community property lots of the Scheme”.  In turn, a “community property lot” of the Scheme is defined to mean “a lot shown on the community plan as community property”.
  1. [7]
    The Community Plan in evidence designates – at least on one copy of the plan for MCP 106902 - the relevant community property lot by a hatched section on that plan (being Lot 4). Additionally, by provisions such as s 176(e), Cathedral Place can “acquire and hold” personal property to facilitate the carrying out of its functions.
  1. [8]
    The Community Property lot includes:
  • property that is subject to exclusive use as defined by By-Laws 21 and 25 (“Exclusive Use Community Property”), such exclusive use being granted in favour of the Residential Members only [whereby By-Law 21 expressly provides that the relevant proprietors “shall be responsible, at their own expense, for the carrying out of the maintenance and upkeep responsibilities imposed upon” Cathedral Place pursuant to the Act “with respect to each such exclusive use area (save and except cleaning of such area)”]; and
  • property that is restricted community property as defined in By-Law 27 (“Restricted Community Property”) [whereby By-Law 27(b) restricts the entitlement to use such property to the proprietors, lessees or occupiers of a lot created by the registration of the various Building Unit Plans which cover the Residential Members, referred to as the “Authorised Persons”, and whereby By-Laws 27(c) to 27(e) (inclusive) expressly provide that, although Cathedral Place remains “responsible” for the “maintenance” of the Restricted Community Property, it “shall” establish a budget for such maintenance and strike a levy for the collection of sufficient funds to enable it to meet such budgeted costs, and that such levies “shall” be charged in stated proportions to the Residential Members only].
  1. [9]
    Cathedral Place is empowered, under s 176(c) of the MUD Act, to enter into various Management Agreements with each of the Residential Members - and did so in 2004. It has not been disputed that such Management Agreements appointed Cathedral Place as the manager to perform various management, maintenance and other services (in exchange for payment of the actual costs of all things done) and that such services affected the common properties of the respective Residential Members (“Common Properties”).  Such services included:
  • cleaning and maintenance (including mowing lawns, maintaining gardens and cleaning the pool);
  • carrying out maintenance and repairs to the Common Properties and personal property of the Residential Members;
  • negotiating contracts on behalf of the Residential Members affecting the Common Properties;
  • fire safety;
  • garbage removal; and
  • providing security services for the Common Properties, including 24-hour monitoring using security cameras and night patrols.
  1. [10]
    It has also not been disputed that those Management Agreements provided a framework for the payment by the Residential Members to Cathedral Place (see Clause 5.1 of the Standard Agreement). Clause 5.3 deals with payment in advance. Clause 5.4 deals with a reconciliation after the “actual costs” for the relevant year are determined. And Clause 5.5 deals with the division of shared costs. With respect to Clause 5.5, any concern that the “lot entitlement” referred to in that Clause was not with respect to voting is clarified by the reference to “Entitlement” in the original dealing number 702964545 registered as recorded on 21 October 1998.

Issues

  1. [11]
    Although both Cathedral Place and Cathedral Village have used different terminology in their considerations of the issues, I have synthesised those analyses as follows next.
  1. [12]
    Cathedral Place alleges, and, in consequence, claims:
  • in each of the years from 2004-2007, it levied contributions against each of its six Members (being the five Residential Members and Cathedral Village);
  • the levies were undercharged as against Cathedral Village because the levies were based on a lot entitlement of 5.11% rather than a voting entitlement of 22%; and
  • such “outstanding contributions”, together with interest and costs under By-Laws 19 and 20 are payable to it.
  1. [13]
    Cathedral Village contends that the MUD Act does not give to Cathedral Place power - and, therefore, any purported exercise of such power was not “proper” or “lawful” - to levy any contributions against Cathedral Village (and, even if empowered, that any such contributions could only be in shares proportional to its voting entitlement) which “relate to”:
  • matters beyond proper items of expenditure under s 177(1)(h) of the MUD Act;
  • the cost of maintaining or keeping in a state of good and serviceable repair “some or all” of the Restricted Community Property (“Restricted Community Property Costs”);
  • the cost of maintaining or keeping in a state of good and serviceable repair “some or all” of the Common Properties of the five Residential Members (“Common Property Costs”);
  • the cost of maintaining or keeping in a state of good and serviceable repair the Exclusive Use Community Property, save and except for cleaning (“Exclusive Use Costs”);
  • the costs for providing the management services in relation to the Management Agreements entered into between Cathedral Place and each of the five Residential Members (“Management Agreement Costs”); or
  • the Insurance premiums which relate to the Restricted Community Property and, or alternatively, the Common Property of the other Members.
  1. [14]
    There are certain issues raised which are generally irrelevant to the present determination (namely, whether any claims for levies were statute barred, whether the levy notices did not properly notify Cathedral Village of what to pay, whether the claims of interest were not properly authorised or were otherwise a penalty, whether claims for costs were not authorised, and whether levy notices were not authorised), apart from a general impact on the need for a trial in any event which equally applies to the other issues not embraced by the posited “questions”.
  1. [15]
    Cathedral Village also alleges: that, if it owes any levies (which is denied), then the amount is some $44,533.00; and that it has a set-off and counterclaim of $246,719.00 based on restitution and negligence (in respect of overpayments made between 1999 and 2010). There is also an estoppel alleged concerning Cathedral Place being precluded from relying upon any limitation period in respect of any overpayments made prior to 2004. Further, it has claimed that an account to be taken in respect of the period from 1999 to 2010.
  1. [16]
    Cathedral Place’s defence to the counterclaim is that:
  • the contributions levied against Cathedral Village were “properly” levied;
  • any duty of care to sustain the negligence claim did not exist, or if it existed, was not breached;
  • the levies were “properly” imposed by Cathedral Place; and
  • the claims made by Cathedral Village, insofar as they concern matters arising prior to 27 September 2004, are statute barred.

History of disclosure

  1. [17]
    Although there was some dispute during the hearing from the bar table about the number of Invoices and Receipts potentially relevant to this proceeding, it is common ground that no examination has yet taken place of those documents, with Cathedral Place contending that the delay in organising disclosure was due to more documents being identified than first anticipated.
  1. [18]
    Cathedral Place’s present position is that it concedes there is at least 8,500 documents in this category of unexamined documents.
  1. [19]
    While there is some continuing dispute raised by Cathedral Village about whether full disclosure has been made, I can only deal with the “facts” in this case as they are revealed to me so far.

Notice to Admit to Facts

  1. [20]
    It is undisputed that a Notice to Admit Facts was served by Cathedral Village on Cathedral Place and that that was done with an application such as this “in mind”. The Answer to the Notice to Admit Facts, dated 24 March 2016, only admits those in the paragraphs 1, 3, 4.1, 4.2 and 11 from the Notice to Admit Facts, dated 10 March 2016. In summary terms, those admissions simply cover the uncontroversial matters of the application of the relevant By-Laws, the proper identification of the Community Property (including the existence of the Exclusive Use Community Property and the Restricted Community Property), and the Management Agreements entered into with the five Residential Members.
  1. [21]
    From those documents and from the allegations contained in Cathedral Place’s latest Statement of Claim, Cathedral Village has composed a “Statement of Agreed Facts”. Quite obviously, some of the statements are, at least in part, statements of law, insofar as they deal, at least, with powers and duties (or obligations) under the MUD Act, with an impact on certain identified “facts”.
  1. [22]
    While Cathedral Place did not take issue with the “facts” as extracted from its Statement of Claim, it did take issue with paragraphs 10, 11 and 12 of that “Statement of Agreed Facts” (dated 28 April 2016). Those particular paragraphs dealt with “(e)ach of the Budgets”, although Ms Schultz’s affidavit raises doubts about certain particulars given with respect to the 2006-2007 Budget: at paragraph 3. Furthermore, those paragraphs were extracted from Cathedral Place’s Further and Better Particulars filed 17 August 2015. It was contended, correctly, by Cathedral Place that those particulars were not matters within the definition of pleadings to which responses were required under the UCPR. It is, as has been held, the purpose of particulars to “fill in the picture" of the plaintiff’s cause of action contained in the “pleaded material facts”: see White J in Thiess Pty Ltd v FFE Minerals Aust Pty Ltd [2007] QSC 209 at [35] quoting Scott LJ in Bruce v Odhams Press (citation omitted) at 712 – 713.  More importantly for the present discussion is that they are not evidence.  By any analysis, even accepting that the Management Agreements, by their contractual terms, attempt to generate a “revenue neutral” result, there are no agreed, or decided, facts concerning these “costs”.  While this particular dilemma appears not to have been addressed before in the context of deciding questions under rr 483 and 484, there is some merit in Cathedral Place’s point that they are not to be characterised as “agreed facts”, particularly when it is clear that the Invoices and Receipts can only be described in a generalised way before there has been any examination done of them.  The extent to which the “proposed” budgets are exhibited to material in this proceeding, most often they are simply one line entries, often dealing with a significant sum of money.  Because of that analysis and because of the way that the “budgets” have been pleaded (in paragraphs 4 and 5 of the Further Amended Statement of Claim) and thereafter responded to (in paragraph 1C of the Third Amended Defence and Counterclaim and in paragraph 1C of the Fourth Amended Reply and Answer), I intend to look at those proposed budgets as exhibited rather than consider paragraphs 10, 11 and 12 of the Statement of Agreed Facts.

MUD Act

  1. [23]
    The basic concepts of the MUD Act are set out in ss 6, 12 and 15.   It is not necessary for present purposes to spend further time on them, other than to note that s 15(4) states that the community body corporate (here, Cathedral Place) is responsible for, and may make, by-laws in relation to the ongoing management of the community property lots.  While s 182, concerning insurance, is noted, the real concern here is with those sections in Part 9, particularly Divisions 1, 2 and 3.  With respect to the By-Laws to be considered, parts of Part 10, Division 2 have relevance.  The By-Laws have not been detailed separately, being sufficiently identified and explored throughout these Reasons. 
  1. [24]
    The definitions in s 166, relevantly, state that “body corporate” means “community body corporate” and that “corporation” means “a community body corporate”: see the relevant paragraphs (a), respectively.
  1. [25]
    Importantly, s 167(9) states that:

“(9) The community body corporate –

  1. (a)
    has the powers and functions conferred on it under this Act or its by-laws; and
  1. (b)
    must do all things that are necessary and reasonable for –
  1. (i)
    the enforcement of its by-laws; and
  1. (ii)
    the control, management and administration of the community property.”
  1. [26]
    Section 167(10)(c) states that the community body corporate “is capable of suing and being sued in its corporate name”. Section 167(11) then goes on to state that, without limiting s 167(10), the community body corporate may –

   “(a)  sue and be sued on any contract made by it; or

  1. (b)
    sue for any damage or injury to the community property; or
  1. (c)
    be sued for any matter connected with the community property; or
  1. (d)
    take the legal action necessary to enforce its by-laws.”
  1. [27]
    The voting entitlements referred to in s 173 become the express subject of s 174. Section 174, in its relevant parts, states:

“174 Levies by bodies corporate on members

  1. (1)
    A body corporate may levy –
  1. (a)
    the contributions determined by it under s 177(1)(h); and
  1. (b)
    any amount determined under s 177(2) in relation to the contributions;

by giving its members written notice of the contributions payable by them.

  1. (2)
    Contributions must be levied, and are payable by the members of the body corporate, in shares proportional to their voting entitlements at the time the contributions are levied.

…

  1. (3)
    A contribution –
  1. (a)
    is payable to the body corporate in accordance with its decision to make the levy; and

…

  1. (c)
    may be recovered as a debt by the body corporate in a court of competent jurisdiction.

…”

  1. [28]
    Section 176 contains further provisions regarding powers. It states:

“176 Miscellaneous powers of bodies corporate

  1. (1)
    A body corporate may –

…

  1. (c)
    enter into an agreement for the provision of amenities or services by it or another person to –
  1. (i)
    a lot; or
  1. (ii)
    the proprietor or occupier of a lot; or
  1. (iii)
    a parcel comprised in a building units or group titles plan; and

…”

  1. [29]
    Turning to the duties of a body corporate, s 177 is as follows:

“177 Duties of bodies corporate

  1. (1)
    A body corporate must –
  1. (a)
    control, manage and administer for the benefit of its members –
  1. (i)
    the community property… held by it;

…

  1. (b)
    properly maintain and keep in a state of good and serviceable repair–
  1. (i)
    the community property…held by it, including any improvements on the community property…; and
  1. (ii)
    any personal property vested in it; and

…

  1. (c)
    arrange for insurance under section 182;

…

  1. (h)
    …whenever necessary…determine the amounts necessary in its opinion to be raised by way of contributions –
  1. (i)
    for the purpose of meeting its actual or expected liabilities incurred or to be incurred under paragraph (b); or
  1. (ii)
    for the payment of insurance premiums, rates or any other liability of the body corporate (other than amounts referred to in paragraph (l)); and
  1. (i)
    on first determining the amounts mentioned in paragraph (h), establish a fund –
  1. (i)
    into which must be paid all amounts received by it …; and
  1. (ii)
    into which may be paid in the amounts paid by the body corporate by way of discharge on insurance claims; and
  1. (j)
    levy under section 174, on each person liable, a contribution to raise the amounts mentioned in paragraph (h); and

…

  1. (l)
    if the body corporate –
  1. (i)
    becomes liable to pay an amount that it is unable to pay immediately; and
  1. (ii)
    is not required under paragraph (j) to levy contributions to meet the liability;

levy contributions under section 174 to raise the amount;

…

  1. (3)
    The body corporate may disburse amounts from its fund only for the purpose   of—
  1. (a)
    carrying out its powers and functions under this Act or its by-laws; or
  1. (b)
    meeting a liability mentioned in subsection (1)(l).
  1. (4)
    A determination made by the body corporate under subsection (1)(h) may specify that the amounts concerned are to be raised by specified regular periodic contributions.

…”

  1. [30]
    With respect to by-laws, s 206 provides for the making of the by-laws, called “property by-laws”, for the control, management, administration, use or enjoyment of the community property: see s 206(1). Section 206(4) states that the property by-laws bind, relevantly, both Cathedral Place and Cathedral Village, as well as other legal persons such as proprietors of lots, a mortgagee in possession and a lessee or occupier of such a lot. By s 206(6), a property by-law may apply to all the community property or a particular part of the community property specified in the by-law. And s 206(7) states that a property by-law “does not affect the operation of any other Act or law”.
  1. [31]
    With respect to restricted community property by-laws, s 206A empowers the community body corporate to make such by-laws. In particular, s 206A(5) contains both duties (or obligations) and powers. Section 206A(5)(a) states that the by-law that restricts the use of any part of the community property must include not only a description of the restricted community property and details of the persons entitled to use it but also “the conditions on which the persons may use the restricted community property”: see subparagraph (iii). In turn, s 206A(5)(b) states that the by-law that restricts the use of any part of the community property “may” include “provisions about imposing and collecting levies from the persons entitled to use the restricted community property”: see subparagraph (iv).

UCPR requirements

  1. [32]
    A number of recent decisions have been brought to my attention concerning the application of rr 483 and 484 of the UCPR.
  1. [33]
    In Callide Power Management Pty Ltd & Ors v Callide Coalfields (Sales) Pty Ltd & Ors; CS Energy Ltd v Callide Coalfields (Sales) Pty Ltd & Ors (No 3) [2015] QSC 295, Flanagan J relevantly turned his attention to r 483.  He indicated that he would allow the application “primarily due to considerations of utility and economy, case management and the interests of justice”: at [2].  After referring to the influence of r 5 of the UCPR, Flanagan J referred to a summary of relevant principles by Rares J in City of Swan v Lehman Brothers Australia Ltd (citation omitted): at [45].  Those principles included that:
  • all issues of fact and law should be determined at the one time;
  • a party seeking the determination of separate questions must satisfy the court that it is “just and convenient” for the order to be made;
  • the order must be made on “concrete facts”, either established or agreed, for the purposes of quelling a controversy between the parties so as to produce a conclusive or final judicial determination of the issue, which is of a real, not hypothetical, importance to the determination of the controversy;
  • there are special problems where the separate issue involves a mixed question of fact and law, although it may still be able to be decided as a separate issue (though care must be taken in precisely formulating the question and specifying the facts upon which it is to be decided);
  • generally speaking, an issue will not be appropriate for separate determination if it is simply one of two or more alternative ways in which an applicant or plaintiff frames its case and its determination would leave other significant issues unresolved; and
  • it is relevant to consider whether:
    • the separate questions will contribute to the saving of time and cost by substantially narrowing the issues for trial or even lead to the disposal of the proceeding;
    • they will contribute to the settlement of the proceeding;
    • they will give rise to significant contested factual issues both at the time of the hearing of the preliminary question and at the time of the trial;
    • there will be any significant overlap between the evidence adduced on the hearing of the separate question and a trial; and
    • the questions will prolong, rather than shorten, the proceedings.           
  1. [34]
    With respect to this matter generally, Flanagan J finally commented that a cautious approach should be adopted: at [46].
  1. [35]
    In Vale v Daumeke & Ors [2015] VSC 342, Derham AsJ was concerned with the Victorian analogue to r 483.  It was noted that, ordinarily, all issues of fact and law in a proceeding will be determined at the one time by the court following a trial.  After referring to a “great many decisions relating to the matters to be considered in the exercise of the discretion to order the separate trial of questions in a proceeding”, it was further noted that all had recognised “that much depends on the facts at hand”: at [31].  Despite that, it was held there are principles, relevant matters and cautions identified that provide guidance in the exercise of the discretion: also at [31].  They were then listed.  I will refer only to those that Flanagan J has not canvased and which are relevant to the present proceeding.  Such include that:
  • where the only question is one of mixed fact and law, it is necessary that the question can be precisely formulated (ensuring that the terms used have clear meaning) and that all of the facts that are, on any fairly arguable view, relevant to the determination of the question are ascertainable “either as facts assumed to be correct for the purposes of the ­preliminary determination, as agreed facts or as facts to be judicially determined”;
  • the separate determination of the question should not be attempted where there is uncertainty inherent in the definition of the facts upon which the substantive question must be determined;
  • care must be taken in utilising the procedure provided for in the rules to avoid the determination of issues not ‘ripe’ for separate and preliminary determination – for example, where it is simply one of two or more alternative ways in which the applicant frames its case, and the determination of the issue would leave significant other issues unresolved;
  • if the questions involve issues of fact that need to be determined or proved, and the Court cannot see, on the basis of the material presently before it, that the facts can be properly determined, it is inappropriate to make the order; and
  • in some cases, perhaps most cases, it will be inappropriate to order the trial of preliminary questions before discovery of documents relevant to the questions, and before resolving grounds restricting production and inspection of them, such as client legal privilege or public interest immunity;

: at [31].

  1. [36]
    Reference was then made by Derham AsJ to the comments by Kirby and Callinan JJ in Tepko Pty Ltd v Water Board (citation omitted): at [32].  Those concerned the “potential pitfalls” associated with preliminary trials of separate issues.  Derham AsJ remarked that that particular case was one of a claim in negligence sounding in pure economic loss and that the comments need to be viewed with that in mind.  The “following valuable general points” were, nevertheless, made:
  • the attractions of trials of issues, rather than of cases in their totality, are often more chimerical than real, since common experience demonstrates that savings in time and expense are often illusory, particularly when the parties have needed to make full preparation and the factual matters relevant to one issue are relevant to others, and they all overlap;
  • a party whose whole case is knocked out on a trial of a preliminary, or single issue, may suspect, however unjustifiably, that an abbreviated course was adopted and a decision reached in the court’s (rather than the parties') interests;
  • there is an additional potential for further appeals to which the course of the trial on separate issues may give rise; and
  • single-issue trials should only be embarked upon when their utility, economy, and fairness to the parties “are beyond question”.
  1. [37]
    While many other authorities have been brought to my attention, I conclude that the relevant concerns are cogently expressed in those three lists of relevant factors.

The “questions”

  1. [38]
    The Amended List of Separate Questions (contained in Schedule “A”) contains definitions which I conclude, of themselves, do not raise significant concerns apart from the specific concerns about the certainty of relevant “facts”.
  1. [39]
    It should also be noted that Question 9 has been abandoned for the purposes of this application.
  1. [40]
    Each of the remaining questions are prefaced by reference to one, or more, discrete provisions of the various sections which deal with the powers and duties (or obligations) of Cathedral Place and each then incorporates a factual scenario for the final determination of a mixed question of fact and law.
  1. [41]
    Although Cathedral Place, particularly in its oral submissions, attacked the use of the word “can” “or” “are” as to the capacity part of the question – rather than the more commonly used “whether” – I do not conclude that such use would be, of itself, a precluding matter. Of more concern to me is the contention raised by Cathedral Place that the answers to questions, especially those to Questions 1 to 6 (inclusive) are open to be answered not only by the words “Yes” or “No” but also by a word such as “Potentially”; or, as referenced by Bass v Permanent Trustee Co Ltd (1998) 198 CLR 334 at 360 [59], “Inappropriate to Answer”.  Quite obviously, the last of the alternatives to those answers would not quell the relevant controversy. 
  1. [42]
    A further criticism of the framing of the questions is the reference, particularly in Questions 7 and 8 (concerning the making of levies), to “contributions that relate to”.  These questions are conceded by Cathedral Village to be corollaries of earlier questions.  The objection is based upon the interpretation of the italicised phrase as meaning a relationship of “broad import”: see O'Grady v Northern Queensland Co Ltd (1990) 169 CLR 356, per Toohey and Gaudron JJ.  That matter does concern me because of its potentiality to characterise contributions as excluded contributions when to exclude them could preclude Cathedral Village having a potential liability to so contribute even though the unexamined documents might trigger a possible liability in certain postulated circumstances outside the usual ambit of such contributions.  This also raises the difficulty of discerning what each actual exercise of the power of levying involved.  Since Cathedral Village has alleged unlawfulness in such exercises (presumably with the consequence of invalidity), it would seem to have the onus of proving that the “presumption of regularity” – noted by Hodgson JA in Owners Strata Plan No 5709 v Andrews [2009] NSWCA 189 at [59] not to operate “very strongly” in such circumstances – did not apply and that other sources of power, or exceptions to otherwise applicable limitations on power, were not available to be relied on by Cathedral Place.
  1. [43]
    A final criticism by Cathedral Place of the words used, particularly in Questions 1 to 6 (inclusive), concerns the reference to particular different kinds of costs “payable” in circumstances where there might well be, on the final facts established at trial, the application of other statutory provisions. These last two criticisms have substantial overlap.
  1. [44]
    I will address these questions after I do consider the powers and duties (or obligations) in the context of the proposed budget line items. It is to be done in the acknowledgement that there is common ground that the Invoices and Receipts have not been examined as to their correct characterisation and, thereafter, placed in the proper category of contribution.

Interpretation of powers and duties (or obligations)

  1. [45]
    As to the proper interpretative approach, applying even more so to by-laws, I accept that it should be that which was outlined by Cohen J in Smith & Anor v The Body Corporate of Strata Plan No 22669 (1997) BC9701781 where reference was made to Reylan Pty Ltd v Lamag Holdings Pty Ltd (1991) NSW Title Cases 80-011, per Waddell CJ in Eq.  It is to the effect that the object of the provisions relating to the obligations of the body corporate require it to make timely provision by levies for its actual and expected liabilities “in an orderly and common sense way by levying regular contributions for both the administrative and sinking funds and avoiding any necessity to levy large one-off amounts” and that, “awkward though the language of the provisions is, it was not, I think, intended to impose on the body corporate unduly legalistic standards”: at 14.  Later, after referring again to that quotation, Cohen J stated that the “intention” of the relevant Act “is to facilitate the need for the raising of funds for necessary expenses, and not to create technical difficulties”, adding that “it may sometimes be necessary to use one fund for purposes which strictly relate to another fund, so that there is a degree of flexibility”, since it “would be an impossible situation for body corporate if a levy could be found to be invalid because there could be found items which should have been characterised as relating to a different fund to that levied” and it “would also be quite contrary to the clear intention of the Act”: at 21.  But those extracts must be seen in the context that while not achieving invalidity, such errors in the details may provide grounds for making an application for, or reaching an agreement concerning, a variation: also at 21.
  1. [46]
    As for the distinction contended for by Cathedral Place between a provision which regulates the exercise of a power and that which provides the source of the power, such that an error in the exercise of that regulation does not invalidate the levy struck for the contribution, my intention is to ­­­consider the submission as it is exemplified by the interplay between s 206A of the MUD Act and By-Law 27, with the former asserted to be a source of power and the latter asserted to be a regulation of that power.  Cathedral Place’s contended application of that principle to those provisions would mean that, for example, an “error” in the charging of a levy struck to meet the budgeted costs of maintenance of, say, part of the Restricted Community Property by, for instance, charging Cathedral Village as well, would not invalidate the use of s 206A.  But Owners Strata Plan No 57164 v Yau [2016] NSWSC 1056 does not help with this, not only because the “failure” (generating non-compliance) there was simply with respect to “notice” provisions but also because Darke J made express reference to an identified “remedy…provided”: at [95].  I am further concerned that this consequence was not developed in argument.  For instance, if no relief or remedy is available, does the distinction no longer hold?  Or, for instance, would irregularity simply give rise to no invalidity but, nevertheless, a right in Cathedral Village still to contest it by other courses of action (which have not yet been identified but could involve processes undertaken pursuant to s 214A of the MUD Act)?  But, even if it might so remove it from the characterisation of invalidity, it has not been examined whether it might be open to Cathedral Village to seek to recover any such sum in litigation such as conducted in this proceeding or whether such processes are within another entity’s “exclusive jurisdiction”.  Accordingly, I would not intend to rely upon this “distinction” as a sole reason not to determine any question with which it might be associated, since nothing has been identified for my benefit as the foundation for its valid levying here.  But, in eventually deciding this application, it does become unnecessary to resolve this matter (for other reasons which will be discussed later).
  1. [47]
    What is, though, incidentally raised by a consideration of By-Law 27 is the issue of what is in the ambit of the term “maintenance”. If, as Ridis v Strata Plan 10308 (2005) 63 NSWLR 449, per McColl JA, has held (namely, that to “maintain” is something different from keeping the subject matter “in repair” – at 483 [158]), the costs outside of maintenance such as day-to-day cleaning, ordinary operating costs and any costs relating to the control, management and administration of the Restricted Community Property might be able to be levied against all subsidiary bodies corporate.  Accordingly, it would be necessary to look at the actual Invoices and Receipts in order to categorise costs associated with the Restricted Community Property as one of “maintenance” only, if the question connected to the application of By-Law 27 were to be answered as presently framed.  This has relevance as to whether any decisive advantage flows from a legal determination at this time when the time and costs of this task will need to be faced anyway.   
  1. [48]
    More concerns are raised with respect to contributions levied that concern Management Agreement Costs under s 176(c) of the MUD Act and By-Law 24(a).  Without the need to refer to inferior court or tribunal authority, it is strongly arguable that this is wider than, for instance, more limited body corporate legislation.  Section 174(4)(a) refers to the obligation to pay, and the right to recover “as a debt”, contributions determined “in accordance with (Cathedral Place’s) decision to make the levy”.  The duty cast on Cathedral Place under s 177(1)(h) refers to the purpose of meeting its “actual or expected liabilities incurred or to be incurred” under s 177(1)(b) or the payment of any other liability of it.  As considered in Andrews, if an “owners corporation” determines that the levy will not, in fact, be paid by some members (for example, because of bankruptcy) the amount of the necessary levy will be that much greater on the others: at [44].  As was then added, by reason of the provision analogous to s 174(2) of the Act, such contributions as required to be paid proportionately.  While it is acknowledged that Clause 5.1 of such Management Agreements obliges the subsidiary body corporates to pay the “actual costs”, since Clause 6.1 permits contractual obligations to be entered into with third parties, Cathedral Place has argued that a default by such a third party could trigger the right to seek to levy a contribution from members other than the contracting subsidiary body corporate.  While no such “event” has been identified, it remains a possibility that the unexamined Invoices and Receipts might yield a positive response, perhaps as to a “temporary shortfall”. 
  1. [49]
    As for By-Law 21, in The of Owners Strata Plan No 3397 v Tate (2007) 70 NSWLR 344, it was held that an exclusive use by-law, to the extent to which it imposed “further obligations” on a member, “relieved” the other members of their liability to maintenance: at 363 [74].   Nevertheless, as Tate also held, the fact that a particular member may have no need for a non-exclusive “service” or “utility” is irrelevant: at 363 [75].  Only by a document-by-document examination can each contested item of expenditure in the budget (the subject of the relevant contribution levy) be categorised.  Plus, in the final analysis, it is, as its terms state, with respect to “responsibilities imposed upon” Cathedral Place “pursuant to” the MUD Act (which go only to “maintenance and upkeep” and, therefore at least arguably, are not as extensive as s 177(1) embraces, even in part).  
  1. [50]
    Further with respect to the various Management Agreements, even though there can be no doubt that By-Law 24(a) permits such agreements to be entered into between Cathedral Place and the subsidiary body corporates and even though such an agreement must be an agreement “relating to” the provision by Cathedral Place of “management, cleaning and security services for the buildings and common property” of such subsidiary bodies corporate, there is nothing in the express provisions of either By-Law 24 or any provision in the MUD Act which limits the costs associated with the services so provided to be costs which become “contributions” which are to be solely levied against each separately contracting subsidiary body corporate, despite the contractual obligations undertaken.  See, also, By-Law 23(a) and its empowering provision, s 176(c).  But, even if that were to be so - as just discussed above - if there is some service which is so provided by Cathedral Place which remains unpaid, the principle governing the overall responsibility (with its associated liabilities) of Cathedral Place as the community body corporate at least arguably raises the question of what entity should then bear the costs of contributions to be levied to meet the contracted obligation to the third party providing the “service”, since as expressed by McHugh J in Humphries v Proprietors “Surfers Palms North” Group Titles Plan 1955 (1994) 179 CLR 597, where a body corporate (which must include a community body corporate) has power to enter into an agreement which creates obligations on it, the relevant Act – and in this respect it is no different from the MUD Act – “imposes an unlimited liability on the proprietors” for all such “liabilities properly incurred by the body corporate”: at [616].
  1. [51]
    Another concern is the width of the term “any other liability” of the community body corporate as provided for in s 177(1)(h)(ii) of the Act.
  1. [52]
    Cathedral Village has argued that the term should be construed according to the principle of ejusdem generis.  While the authors of Statutory Interpretation in Australia[1] suggest that the courts should think carefully before rejecting the ejusdem generis principle as a cannon of construction, it is clear from some cases that they earlier had canvassed, such as Gas & Fuel Corporation of Victoria v Comptroller of Stamps [1964] VR 617 (which dealt with a definition of “purchase price” being “the total amount payable under the agreement for or by way of interest or insurance or other charge”), that there are specific instances where the cannon of construction is rejected, even though as a matter of general construction, arising from the context and subject matter of the legislation, some general restriction could be found: at [4.31].
  1. [53]
    In the present proceeding, s 177(1)(h)(i) of the Act (which limits those liabilities to ones incurred or to be incurred with respect of the community property and any personal property vested in Cathedral Place) taken with s 177(1)(h)(ii) – which incorporates, necessarily, the duties under s 177(1)(a), as determined in Proprietors of Rosebank GTP 3033 v Locke [2016] QCA 192 at [93], plus those liabilities “assumed” through the exercise of powers conferred - strongly supports the interpretation that “any other liability” is not circumscribed by a genus which applies to “insurance premiums” or “rates”.  As Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15 shows, the “duty of control, management, administration, repair and maintenance” is imposed by legislation on the body corporate to which it applies: at 24, per Holland J.  Rather, it does refer somewhat expansively to other liabilities of the Community Body Corporate [with the necessary exclusion of s 177(1)(l)].  Furthermore, s 182 is wide in its scope anyway [see, for example, s 182(1)(c) regarding the stated “possibility”] and there is clearly power in Cathedral Place to levy contributions if, for example, there were to be a deficiency in any public liability cover.  But, addressing a different but not too dissimilar provision in the Building Units and Group Titles Act 1980 (“BUGTA”), Philipides JA in Locke held that the “opinion” to be formed is not an opinion that a liability should be incurred but, rather, that, “if properly incurred”, it should be met, because it was not “an intended source of an (unlimited) authority to spend money”: at [137].
  1. [54]
    On such a reasonably arguable interpretation of “liability”, it would be open, if one or more of the 8,500 Invoices and Receipts should deal with such a liability - even it is a liability to a third party pursuant to an obligation arising from an Agreement with a subsidiary body corporate - that the provisions of s 174(2) might mean that a “contribution” could be so levied and payable by Cathedral Village.
  1. [55]
    As for the argument that arose about specific gymnasium equipment (which was undisputedly accepted as being property of Cathedral Place, although presently attached to the common property of one of the subsidiary body corporates), I reject Cathedral Place’s argument that that would cause concern about whether the relevant Invoices and Receipts might deal with damage resulting from the use (howsoever caused) of such equipment such that the liability of Cathedral Place (and any insurance for which a contribution was levied, being undoubtedly also a liability of Cathedral Place) might be, on the questions to be answered, outside the contributions for which Cathedral Village would have a liability to meet for any such contribution levied.

Analysis of proposed budgets

  1. [56]
    Part of the background to this analysis is that Cathedral Village has obtained two expert accountancy reports from Vincents Accountants, dated, respectively 12 April 2011 and 15 January 2015. These reports, to various degrees, seek to allocate (from Cathedral Place’s accounting records) annual expenditure as between: Cathedral Place’s unrestricted Community Property; the Restricted Community Property; and costs in respect of services provided to or in respect of the common property of the five residential bodies corporate.
  1. [57]
    For its part, Cathedral Place has obtained expert accountancy reports from Carthills Accountants. According to Cathedral Village’s written submissions – which were not challenged during the hearing – reports dated February 2010 (for Cathedral Place) and May 2010 (for Cathedral Village) produced “completely different results”. Perhaps unsurprisingly, Cathedral Place has now engaged Mr Lytras. So far, this expert has not produced an expert’s report.
  1. [58]
    As noted earlier, these various proposed budgets (which take the relevant financial period from 1 September of one year to 31 August of the next) contain “one line” figures under various headings. An example of this is for the proposed annual budget for 1 September 2006 to 31 August 2007 where there are various “INCOME” amounts.  Each of the two amounts are, respectively, for an “Unrestricted” Administration Fund and a “Restricted” Administration Fund.  On the other hand, the expenditure refers generally to an Administration Fund, although there are handwritten notations on copies of the documents in question stating that certain of those “costs” are “Restricted”.
  1. [59]
    But, as also referred to earlier, it is not possible to say that, even with respect to those one line items of expenditure that are said to be restricted, there might not be an Invoice and Receipt which places them in the category of being “potentially” a cost which Cathedral Place could have validly decided was a contribution which could be validly levied on Cathedral Village. Cathedral Village has highlighted the September 2005 to August 2006 “Budgets” as showing that the expenditure claimed to be directly referable to the income from the Management Agreements substantially exceeds it, concerning both the residential Common Properties and the Restricted Community Property. But Cathedral Place’s response is that such “facts” illustrate the problem of the absence of categories having been yet determined for the unexamined Invoices and Receipts. While it may be possible that, after a complete examination of all primary source documentation, it is not such a problem, the difficulty about the “facts” which may flow from the examination of the 8,500 Invoices and Receipts is that it cannot be known at the present time what characterisation – and, therefore, categorisation - they will bear. Despite Cathedral Village’s contention that it is simply speculation which underlines this “potential”, it is not so farfetched or fanciful that proper attention should not be given to it as a possibility that deserves some examination. This also has consequences for the assertions by Cathedral Village that significant costs could be saved if the questions were to be determined in the way that it seeks. As explored during oral argument, Cathedral Village does not contend that each such Invoice and Receipt need not be examined, if only because each must be categorised according to its correct characterisation. If this procedure has to be done, it is not difficult to see that any expert accountancy report will be deficient unless it is able to have recourse to the results of that undertaking. The further problem is that if these particular questions are answered in a way that draws forth the answer of “potentially”, it is difficult to see that that would be of particular “guidance” to any expert. With respect to the use of that term “guidance”, I have concluded, as I indicated during argument, that the use of that term by Cathedral Village was directed simply to the better utilisation for the purposes of an expert report of eliminating a number of “assumptions” that the expert would otherwise have to make in determining the report’s conclusions.

Discussion

  1. [60]
    As is obvious from the analysis of the matters of uncertain characterisation, the beneficial utility of a separate determination is not presently demonstrated, especially where I have major concerns about any significant economy being achieved in the context of a necessary examination of the 8,500 – being a significant reduction from the 40,000 originally projected - Invoices and Receipts. I have noted the objections to both Mr Jiear’s and Ms Schultz’s affidavits and, therefore, I have ignored all matters of an argumentative or inadmissible nature. It is also important that r 5 of the UCPR has a “just” aspect as well.  The advantages that a court supervision might give (through case management), if a successful application for such directions were to be made, in terms of close control of present, and further, disclosure and the prospect of timely hearing dates when the case is in a state of trial preparedness, convince me that the relevant factors, including fairness, can be best achieved by deciding not to exercise the discretion to permit any separate decision making to occur.  This is in the undisputed context that a trial, based on what remain as a large number of issues, will have to be heard whatever the outcome here, in which the expert evidence marshalled by both parties will need to consider the correct categorisation of those Invoices and Receipts.

Conclusions

  1. [61]
    This is, thus, not an appropriate case for the determination of separate questions to be decided. It means that it is unnecessary to consider the full terms of the 8 Questions any further than that on which I have touched earlier.
  1. [62]
    As to costs, since the applicant/defendant has not succeeded, I form the preliminary view that it should pay the costs of the application on the standard basis. But, in fairness, I will give both parties leave, in a short time compass, to address the issue, briefly, if they so decide.

Footnotes

[1] Pearce and Geddes, Statutory Interpretation in Australia, 8th ed, Lexis Nexis Butterworths, 2014.

Close

Editorial Notes

  • Published Case Name:

    Cathedral Place Community Body Corporate v The Proprietors of Cathedral Village Building Units Plan 106957

  • Shortened Case Name:

    Cathedral Place Community Body Corporate v The Proprietors of Cathedral Village Building Units Plan

  • MNC:

    [2016] QDC 234

  • Court:

    QDC

  • Judge(s):

    Dorney DCJ

  • Date:

    27 Sep 2016

Appeal Status

Please note, appeal data is presently unavailable for this judgment. This judgment may have been the subject of an appeal.

Cases Cited

Case NameFull CitationFrequency
Bass v Permanent Trustee Co Ltd (1998) 198 CLR 334
2 citations
Jump To
Cite 1 - (1998) 198 CLR 334
Cite 2 - (1998) 198 CLR 334
Bruce v Odhams Press Ltd (1936) 1 KB 697
2 citations
Jump To
Cite 1 - (1936) 1 KB 697
Cite 2 - (1936) 1 KB 697
But Owners Strata Plan No 57164 v Yau [2016] NSWSC 1056
2 citations
Jump To
Cite 1 - [2016] NSWSC 1056
Cite 2 - [2016] NSWSC 1056
Callide Power Management Pty Ltd v Callide Coalfields (Sales) Pty Ltd (No 3) [2015] QSC 295
2 citations
Jump To
Cite 1 - [2015] QSC 295
Cite 2 - [2015] QSC 295
City of Swan v Lehman Brothers Australia Ltd (2009) 73 ACSR 86
3 citations
Jump To
Cite 1 - (2009) 73 ACSR 86
Cite 2 - (2009) 73 ACSR 86
Cite 3 - (2009) 73 ACSR 86
Gas and Fuel Corporation of Victoria v Comptroller of Stamps [1964] VR 617
2 citations
Jump To
Cite 1 - [1964] VR 617
Cite 2 - [1964] VR 617
Humphries & Anor v Proprietors 'Surfers Palms North' Group Titles Plan 1955 (1994) 179 CLR 597
2 citations
Jump To
Cite 1 - (1994) 179 CLR 597
Cite 2 - (1994) 179 CLR 597
Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15
2 citations
Jump To
Cite 1 - [1975] 1 NSWLR 15
Cite 2 - [1975] 1 NSWLR 15
O'Grady v Northern Queensland Co Ltd (1990) 169 C.L.R, 356
2 citations
Jump To
Cite 1 - (1990) 169 C.L.R, 356
Cite 2 - (1990) 169 C.L.R, 356
Owners Strata Plan No 5709 v Andrews [2009] NSWCA 189
2 citations
Jump To
Cite 1 - [2009] NSWCA 189
Cite 2 - [2009] NSWCA 189
Reylan Pty Ltd v Lamag Holdings Pty Ltd (1991) NSW Title Cases 80-011
2 citations
Jump To
Cite 1 - (1991) NSW Title Cases 80-011
Cite 2 - (1991) NSW Title Cases 80-011
Ridis v Strata Plan 10308 (2005) 63 NSWLR 449
2 citations
Jump To
Cite 1 - (2005) 63 NSWLR 449
Cite 2 - (2005) 63 NSWLR 449
Tepko Pty Ltd v Waterboard (2001) 206 CLR 1
2 citations
Jump To
Cite 1 - (2001) 206 CLR 1
Cite 2 - (2001) 206 CLR 1
The Owners of Strata Plan No 3397 v Tate (2007) 70 NSWLR 344
2 citations
Jump To
Cite 1 - (2007) 70 NSWLR 344
Cite 2 - (2007) 70 NSWLR 344
The Proprietors - Rosebank GTP 3033 v Locke [2016] QCA 192
2 citations
Jump To
Cite 1 - [2016] QCA 192
Cite 2 - [2016] QCA 192
Thiess Pty Ltd v FFE Minerals Australia Pty Ltd [2007] QSC 209
2 citations
Jump To
Cite 1 - [2007] QSC 209
Cite 2 - [2007] QSC 209
Vale v Daumeke & Ors [2015] VSC 342
2 citations
Jump To
Cite 1 - [2015] VSC 342
Cite 2 - [2015] VSC 342

Cases Citing

Case NameFull CitationFrequency
Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106 957 [2018] QDC 2751 citation
1

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