Exit Distraction Free Reading Mode
- Unreported Judgment
Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106957 (No 3) QDC 238
DISTRICT COURT OF QUEENSLAND
Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106957 (No 3)  QDC 238
CATHEDRAL PLACE COMMUNITY BODY CORPORATE
THE PROPRIETORS CATHEDRAL VILLAGE BUP 106957
District Court at Brisbane
29 November 2019
7 November 2019
McGill SC DCJ
Declare that the Mixed Use Development Act 1993 on its true construction does not authorise the community body corporate to require the defendant to contribute to the cost of providing amenities or services, pursuant to an agreement entered into under s 176(c) of the Act, for the provision of such amenities or services to a lot, or to the proprietor or occupier of a lot, or to a parcel comprised in a building units plan, other than a lot or the proprietor or occupier of a lot within the building units plan administered by the defendant, or to the building units plan administered by the defendant.
HOME AND COMMERCIAL UNITS – Body corporate – financial administration of community body corporate – equitable relief to ensure compliance with statutory obligations – declaration and injunctions granted.
COSTS – Cost follow the event – each party had success on some events – whether costs to be on indemnity basis – effect of counterclaim – significance of particular circumstances of the case
Mixed Use Development Act 1993.
UCPR r 681
Alborn & Ors v Stephens  QCA 58 – cited.
Berenyi v Maynard  QSC 25 – considered.
BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2)  QSC 64 – cited.
Hamcor Pty Ltd v Marsh Pty Ltd  QCA 395 – cited.
Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd  1 Qd R 26 - applied.
Murdoch v Lake  QCA 269 – cited.
Thiess v TCN Channel Nine Pty Ltd (No 5)  1 Qd R 156 – considered.
P D Tucker for the plaintiff
S Couper QC for the defendant
Nicholsons Solicitors for the plaintiff
HWL Ebsworth for the defendant
- I delivered reasons for judgment on 21 December 2018, and invited some further submissions in relation to the appropriate relief. The circumstances of the matter are set out in those reasons; in essence the plaintiff is the community body corporate under the Mixed Use Development Act 1993 (“the Act”) in respect of a community which includes the defendant as one of the bodies corporate, and sought to recover unpaid contributions levied on the defendant under the Act. The defendant defended on various grounds, including that the plaintiff had not been properly performing its obligations as the community body corporate under the Act, in a way which meant the amounts being levied from the defendant were greater than they ought to have been. Aspects of that defence were upheld by me, but I concluded that, in view of the terms of the legislation and in the light of the authorities, any errors of this nature on the parts of the plaintiff did not invalidate the process of levying a contribution from the defendant, so the defendant was still liable to pay the amounts levied.
- After receiving further submissions, particularly in relation to the question of interest, and to the possibility of equitable relief, I delivered further reasons on 29 October this year, when I gave a money judgment for the plaintiff covering the amount proved to be owing by way of unpaid levies, together with interest by statute. I dealt at that stage with the submissions of the defendant seeking to resist such a judgment on equitable grounds, but did not deal with whether the defendant was entitled to some other equitable relief, in relation to the ongoing conduct of the plaintiff. There were however further submissions made in relation to that, and also in relation to the costs of the proceeding. When that judgment was delivered, I also delivered ex tempore reasons in which I made clear that any equitable relief granted to the defendant would be confined to relief arising out of matters I had already decided in the course of my earlier reasons, though I could make a declaration to encompass the basic principle of non-subsidisation which I have found to be inherent in the operation of the Act.
- Subsequently, on 22 November 2019 the defendant made an application for a stay of the money judgment against it pending the determination of proceedings before a referee under the dispute resolution mechanism available to it under the Act, by which the defendant sought the referee to reconsider the amounts levied on it during a number of years in the past, in the expectation that the result of that reconsideration would be that there would be an adjustment payable by the plaintiff to the defendant of as much as, or more than, the amount of the judgment. For reasons I then gave, that application was dismissed. That leaves the questions of whether I will grant any and what equitable relief on the defendant’s counterclaim, and what order for costs I will make in terms of the proceedings.
- For reasons I have already given, I consider that it is open to this Court to grant a declaration or an injunction in relation to the future conduct by the plaintiff of its administration under the Act, in effect requiring it properly to administer the body corporate in accordance with the Act in the future. It will be apparent from my earlier reasons that, although it did not invalidate the levying of contributions from the defendant, I did consider that the plaintiff had not been properly performing its obligation under the Act in the past, in certain respects. Having decided those matters in the course of dealing with the proceeding before me, I consider it appropriate to grant some form of relief to embody my conclusions. It was necessary for me to decide whether there had been some defect in the process of financial management on the part of the plaintiff in the past, in order to show that there was a real issue to be decided as to whether such an error had the effect of invalidating the contributions upon which the plaintiff was suing, the issue on which my decision ultimately turned.
- Having reached that point, however, it is I think desirable that I grant some relief by way of declaration embodying my basic conclusion about the proposition that the Act does not authorise the plaintiff to require the defendant to subsidise the provision of services and other benefits to the other bodies corporate within the community, or the owners or occupiers of lots within those other bodies corporate. There are two reasons for this. First, having reached that conclusion, it is appropriate that I embody the conclusion in some specific form of relief in order to give the plaintiff the opportunity to appeal against it if it wishes to do so. The plaintiff has essentially succeeded in its claim, and can hardly appeal against the money judgment it has obtained on the ground that I gave that judgment for the wrong reasons. On the other hand, if there is no specific relief granted against which the plaintiff can appeal, the plaintiff may find itself confronted with an issue of estoppel in later proceedings. Although I do not lack confidence in the correctness of my decision, it would I think be unfair to the plaintiff if it was confronted with a conclusion which it wished to challenge but was unable to do so.
- The other reasons for making such a declaration is to embody in clear and specific terms my view on the matter, so that it can be used in later proceedings as between the parties as a binding decision of a court of competent jurisdiction, if the plaintiff does not appeal. The defendant, having litigated and won the point, should not be put in the position of having to litigate it all over again in other proceedings. The court has jurisdiction to make a declaration under s 10 of the Civil Proceedings Act 2011, and s 69 of the District Court of Queensland Act 1967, and in the circumstances I consider it appropriate to make such a declaration. The counterclaim presents as a convenient vehicle for that declaration.
- The central conclusion that I came to about the operation of the Act in the first judgment was that, on the true construction of s 176(c) of the Act, it did not authorise a process of administration of the plaintiff which would involve the defendant having to contribute to the cost of the provision of amenities or services pursuant to an agreement under s 176(c) entered into by the plaintiff where the amenities or services were to be provided to a lot or to the proprietor or occupier of a lot or to a parcel comprised in a building units or a group titles plan, other than the lots, the proprietors or occupiers of the lots, or the parcel comprised in the building unit plan of the defendant. There is nothing specific to the defendant about this analysis of the Act; it would be just as correct to say that no particular residential body corporate is required to contribute to the cost of providing amenities or services to another residential body corporate, or to the lots or owners or occupiers of lots within it.
- It seems to me with respect that the real difficulty which arises in relation to the administration of the plaintiff is that there is a disconnect between the way in which a mixed use development is supposed to operate as indicated by the provisions of the Act, and the way in which the plaintiff is in fact functioning. Broadly speaking, what the Act contemplates is that, within a particular development, each body corporate will be essentially autonomous, looking after its own common property and its own lot owners, with the community body corporate responsible only for that part of the land covered by the development which is not part of the individual bodies corporate within it. It has limited, specific powers, but that is it, and the performance of the ordinary body corporate functions within each particular body corporate is a matter for that individual body corporate.
- Instead of that, the way the system appears to work in practice is that the individual bodies corporate have virtually nothing to do, whereas the plaintiff functions as a “super body corporate” which performs all of the body corporate functions for the whole development, except perhaps for the defendant. The evidence, so far as it goes, suggests that the plaintiff does not do anything very much for the defendant, or the owners of occupiers of the lots within it, no doubt because the amenities and services the plaintiff provides includes those ordinarily provided within a residential development. Whether the current scheme arose as a matter of convenience, or (as I suspect) it was set up by the developer in disregard of the terms of the Act in order to maximise the marketability of the management rights to the development, it is this disconnect which is inevitably the product of a seriously unsatisfactory situation within the overall development, because of the capacity of the residential bodies corporate to use their voting power within the plaintiff to, in effect, extract a subsidy from the lot owners within the defendant.
- There is some material which suggests that those administrating the plaintiff believe that they can get over this difficulty by extending the services which are provided to the residential bodies corporate, and the proprietors or occupiers of lots within them, to the defendant and the proprietors of occupiers of lots within it. For example, the plaintiff has security arrangements, which in the past, operated essentially only for the benefit of the residential bodies corporate, which extend to the area occupied by the defendant as well. That with respect misses my point.
- The problem is not that services or amenities are being provided only to people other than those who are proprietors or occupiers of lots within the defendant; the problem is that body corporate A, which for practical purposes means the lot owners within that body corporate, are being required to contribute to the cost of the provision of services or amenities to body corporate B, rather than just contributing to the cost, albeit the total cost, of the provision of amenities or services to body corporate A, or to the lot owners within body corporate A. Unless the levy ratios happened to correspond with the cost ratios for the provision of the relevant services or amenities, it may well be the case that one or more of the residential bodies corporate are also subsidising other bodies corporate; I have not investigated this. But the present dispute is concerned only with the position of the defendant, and accordingly any declaration I make should be famed with respect to the defendant’s position.
- In my opinion the appropriate formulation of a declaration is for me to declare that the Mixed Use Development Act 1993 on its true construction does not authorise the community body corporate to require the defendant to contribute to the cost of providing amenities or services, pursuant to an agreement entered into under s 176(c) of the Act, for the provision of such amenities or services to a lot, or to the proprietor or occupier of a lot, or to a parcel comprised in a building units plan, other than a lot or the proprietor or occupier of a lot within the building units plan administered by the defendant, or to the building units plan administered by the defendant.
- The defendant also sought injunctions in relation to the future financial administration of the plaintiff. These injunctions were in fairly broad terms, and covered it seemed to me a number of matters which I did not definitely decide in favour of the defendant in the course of my earlier reasons. It would not be appropriate for me to go beyond the conclusions which I reached in those reasons, and indeed not practical for me to do so, given that I am about to retire. I understand the defendant has commenced a proceeding in accordance with the statutory dispute resolution process, which in a sense can take up where I leave off. But there were some matters which were dealt with in my earlier reasons in relation to specific complaints of the defendant.
- One matter which was raised and discussed was the costs associated with what has been described as the restricted community property, for practical purposes the podium level of lot 4, which is part of the community property of the plaintiff. Because this level has been used to house a swimming pool and associated amenities available to all the residents of any of the residential bodies corporate, it is the subject of a scheme in a bylaw for the plaintiff to collect levies only on the residential bodies corporate to enable it to meet its budget for the maintenance of this area, in terms of both normal operating costs and anticipated periodic capital costs. One of the difficulties that emerged however, is that, from the way the plaintiff keeps its accounts, it is not obvious what costs have been allocated to the bylaw 27(c) process, and what have not. I rejected in my first reasons the proposition that there was no obligation on the plaintiff to account separately for costs associated with the restricted community property; in my opinion such an obligation arises under s 177(1)(c)(i)(b) of the Act. It also seems to me that it is impossible for the plaintiff to comply with its obligation under bylaw 27(c) unless it does keep such accounts.
- This being something I have decided, and being an obligation imposed by the Act, it seems to me that there can be no hardship to the plaintiff to require it to comply with this obligation, and to keep accounts in such a way as to show the operating costs and periodic capital costs associated with the restricted community property. It is only in that way that the body corporate can properly determine what amounts to collect by levies under bylaw 27(c).
- There was an issue about money spent by the plaintiff in maintaining and in improving the car park, including exclusive use car parks which are covered by bylaw 21, and car parks falling within the common property of some specific body corporate. One issue which arises here is that it seemed to be clear that the plaintiff does not have power to spend money effecting improvements on the common property of a residential body corporate, unless it is pursuant to a management agreement with that body corporate, in which case the matter would be covered by the non-subsidization principle. In relation to any works on community property carried out at the request of a member of the community body corporate, the matter is governed by s 161 of the Act, and the cost of that work must be paid for by the member or members of the community body corporate requesting the work.
- Section 161 does not apply to the community body corporate undertaking works on the common property of a member of the community body corporate, but it provides an indication of how such work could be appropriately regulated to ensure that the conduct of the plaintiff is in accordance with the declaration that I have made earlier. Accordingly, subject to considerations to be dealt with later, it would be appropriate to restrain the plaintiff from undertaking works on any part of the common property of a member of the community body corporate other than on the basis of recovering from that member of the community body corporate all the costs of undertaking the works. That would cover doing work on the parts of the car park which are within the common property of particular residential bodies corporate.
- I discussed costs incurred under the caretaking agreements in my first reasons, although I noted that there were limits to the extent to which I had investigated the question of cost allocation under those agreements. Besides, I expect that the current situation may well be different. One matter I did look at however was the cost involved in maintaining a gymnasium and sauna available to the occupiers of any of the lots within any of the residential bodies corporate but located within the common property of a particular residential body corporate. This gave rise to duties on the caretaker, under the last caretaking agreement I examined, including checking and cleaning the gym area and equipment daily, checking, inspecting and regulating the use of the sauna, and scrubbing out, disinfecting the sauna benches and testing the operation of the sauna: .
- One matter that I concluded in my previous reasons was that there was no basis under the Act or bylaws authorising the plaintiff to expend money on the purchase of gym equipment, or sauna equipment, for the establishment or continuation of a gymnasium and a sauna which is not within the community property of the plaintiff. The same applies to the provision of pot plants: . Consistently with my earlier reasons therefore it is appropriate for me to grant an injunction restraining the plaintiff from spending money on the provision of gymnasium or sauna equipment or on the operation of a gymnasium or sauna, or on the provision of pot plants, which are not within the community property of the plaintiff.
- The next matter dealt with was the question of the cost of painting the exterior of the buildings within the site as a whole. As I pointed out at , very little of this will be within the community property of the plaintiff, possibly none of it, and in so far as painting costs were incurred in painting parts of the common property of the individual bodies corporate, these are not expenses which were properly incurred other than on the basis of the recovery of the relevant costs from the body corporate concerned. If however I grant an injunction in the terms indicated earlier in relation to doing work on the common property of individual bodies corporate other than at the cost of that body corporate, that would cover any future situation where painting of body corporate common property of this nature were involved. This matter would therefore be covered by an injunction in those terms as well. Indeed, it would seem to me that any expenditure covered by that injunction would be in the same category, and necessarily involve expenditure incurred other than in accordance with the proper operation of the Act.
- I also referred to insurance costs, an area where there has been in the past some controversy between the parties, but ultimately concluded that this was something which needed to be determined on a case by case basis, something that I did not attempt to undertake. In those circumstances, it would not be appropriate for me to be granting any injunction dealing with the allocation of insurance costs.
Should an injunction be granted?
- These were the only specific matters dealt with when discussing the complaints of the defendant in relation to the administration of the plaintiff that I had analysed in connection with my earlier reasons. The next issue iswhether it is appropriate to grant injunctive relief. The defendant resisted the grant of injunctive relief, essentially on two bases. The first was that it was not shown that the plaintiff was not in its future administration acting, or at least attempting to act, in accordance with the conclusions I had arrived at in my judgment. The second reason was that the grant of injunctive relief would unduly restrain the necessity for flexibility in the financial administration of the plaintiff, because of the wide range of circumstances which could arise, and could thrust financial liability on the plaintiff in a way which for practical purposes would have to be, and could properly be, met in part by a levy on the defendant.
- As to the first of these objections, I am sceptical of the existence of any real intention on the part of the plaintiff to change its ways. Nothing very much seems to have been done to attempt to give effect to the conclusions that I expressed in my earlier decision. It was suggested by the current manager of the plaintiff that there was some difficulty in understanding my reasons for judgment, and for that reason the plaintiff had sought legal advice as to its interpretation, and as to what should be done to give effect to it. I am probably not the best person to pronounce upon the presence or otherwise of linguistic impenetrability in my reasons for judgment. The Court of Appeal has at times disagreed with my reasoning, but so far as I can recall it has never expressed any particular difficulty in understanding just what I was saying. But I suppose the fact that my reasons are comprehensible to members of the Court of Appeal does not necessarily mean that they will be as readily understood by those concerned in the administration of the plaintiff. What is more surprising is that it seems to have taken rather a long time for the plaintiff to work out that it was in need of assistance in the understanding of the reasons.
- There is also the consideration that, if the reasons were really found to be that difficult to understand, counsel involved in the matter for the plaintiff would presumably have been able to explain them quickly and without difficulty. On the whole the notion that the plaintiff has been left in some real degree of uncertainty as to just what it needs to do, in order to administer its affairs in the way I have indicated it should, is unconvincing, and suggests that the plaintiff is dragging its feet.
- The other matter which concerns me, and supports that view, is the response when the defendant complained about the way in which the 2019 budget was formulated, as not providing any evidence to show that the budget had been prepared in a way consistent with my reasoning. The plaintiff’s response was to seek particulars, as to just in what respect and why it was said that the budget did not comply with my analysis. This was a meaningless response, in circumstances where the difficulty arose precisely because the budget figures were not presented in a way which made it possible to determine whether that was the way in which the budget had been prepared. I am not an accountant and have only the slightest understanding of accountancy principles, but I certainly have great difficulty in understanding from the accounts and balance sheet provided by the plaintiff just how the plaintiff is said to be operating, or trying to operate, in accordance with my analysis.
- In the course of the recent application for a stay the defendant put before me what was said to be the current balance sheet of the plaintiff, essentially with a view to showing that the plaintiff’s financial situation was such as to give rise to concern about its ability to satisfy any remedy the defendant might ultimately obtain from a referee if the current judgment in favour of the plaintiff was satisfied. Ultimately I concluded that this was not something I needed to be concerned about, but I did notice that within that balance sheet the items “Levies billed – not yet due” and “Levies received – not yet billed” appear under the list of current assets and again under the list of liabilities, generally with different figures, except that the actual figure as at 11 July 2019 for the former levies is zero under both headings. Surely whatever these things are, they must be either assets or liabilities. There is also a set of accounts for the car park which appears to show the car park income as minus $49,084.70; are they paying people to park there? I do find it a little strange to be criticised for my lack of clarity by people who produce documents which are, at least superficially, so difficult for me to understand. I note that, as the defendant points out, the plaintiff has not had its accounts audited for some time, but this may be just a coincidence.
- On the whole, I find the plaintiff’s arguments unconvincing about this. In any case, what I have in mind are fairly limited and specific injunctions, which at the very least should provide clarity as to just what it is that the plaintiff needs to do, and not do, in respect of those matters covered by the injunctions, to give effect to my earlier reasons. In the circumstances, the plaintiff can hardly complain about that.
- The other matter was that the plaintiff required the necessary financial flexibility to be able to deal with particular situations which could arise from time to time, such as the need to pay bills in circumstances where rights of reimbursement are not productive of the necessary funds. The material before me does suggest that the defendant is not the only body corporate which has been failing to pay contributions when they were levied. A situation can certainly arise where it is necessary, in order to maintain the financial viability of a body corporate, or in this case a community body corporate, for money to be raised by way of levies from all members, or at least all members that are paying. Indeed, I would expect that prudent management would preserve a certain financial buffer for the community body corporate to come and go on. There is also always a possibility that a situation may arise where urgent expenditure is required which has to be levied specially on all members. For that reason, I would not contemplate an injunction in terms of sweeping as the declaration which I am making, or the injunctions sought by the defendant. If my declaration is to be enforced, it would be appropriate for this to occur in a specific way in relation to particular matters of dispute.
- Another matter which is well established is that the court should be reluctant to grant injunctions in terms which do not clearly define what can and cannot be done by the party subject to the injunction, or which can involve the court in a complicated continuing supervision of a party’s activities. The court cannot be expected by injunction to regulate in detail the day to day operations of something like a building contract or a commercial agreement, or for that matter the financial affairs of a body corporate. So much I accept. I would therefore only consider granting an injunction in clear and specific terms, so that even the plaintiff should not confront any difficulty in comprehending exactly what it can and cannot do, and so that there should be no particular difficulty in demonstrating whether or not the plaintiff is in breach of any such injunction. I accept these principles, but they are appropriately met by granting discreet and specific injunctions, rather than by refusing injunctive relief at all.
- I therefore propose to grant an injunction in the following terms:
- (a)The plaintiff, in performance of its obligation to keep proper accounts, account separately for all costs incurred for the maintenance of the restricted community property covered by bylaw 27, including normal operating costs and periodic capital costs.
- (b)The plaintiff be restrained, until further order, by itself its servants or agents, from undertaking any works on any part of the common property of a member of the community body corporate, other than on the basis that all the costs of undertaking the works be paid by that body corporate.
- (c)The plaintiff be restrained, until further order, by itself its servants or agents from the operating of a gymnasium or of a sauna, or from the provision of supplies or equipment for a gymnasium or for a sauna, or for the provision of cleaning, supervision maintenance or other services to a gymnasium or to a sauna, unless either:
- (i)The gymnasium or sauna is located wholly within the community property of the plaintiff; or
- (ii)The body corporate within which the gymnasium or sauna is located pays all costs involved in whatever the plaintiff does.
- The remaining issue is costs. I have received submissions on the question of costs of the claim, and some submissions on the costs of the counterclaim, but should not finalise the latter without hearing any further submissions the parties want to make after this judgment is delivered. With regard to the claim, the plaintiff has succeeded on the claim, and prima facie is entitled to its costs: UCPR r 681. That rule speaks about costs following the “event”, and there is authority that that refers to each distinct area of dispute within a proceeding: Interchase Corporation Ltd v Grosvenor Hill (Qld) Pty Ltd  1 Qd R 26 at 61. Commonly a successful plaintiff will not be deprived of all its costs even if the plaintiff has not succeeded on all issues, but there have been cases where courts have departed from that approach.
- One example of a case where the result was different was Thiess v TCN Channel Nine Pty Ltd (No 5)  1 Qd R 156, where on appeal the costs of a substantial defamation action were dealt with by reference to three “units of litigation”, being the essential defamatory aspects of the various publications. On one the plaintiff wholly succeeded, on one he wholly failed, and on one he substantially failed, and it was said that the latter two represented the “real core of the litigation”: p 209. Most of the hearing time was occupied by evidence relating to those issues. On appeal the court set aside an apportionment of two-thirds of costs to the plaintiff as unduly favourable, and ordered instead that the plaintiff pay one third of the costs of the defendant, an approach which, although approximate, was regarded as preferable to a more detailed order requiring more complex taxation of costs.
- Three things can be noted about that decision. Although there were a number of separate causes of action involved, the costs were not apportioned by reference to individual causes of actions. Second, the approach involved a broad brush exercise of discretion, directed to doing substantial justice between the parties in an efficient way. Third, the case was decided under the old rules, although in Interchase (supra) the Court said that no substantial change had been produced by the new rules.
- A recent example of this approach is the decision in Berenyi v Maynard  QSC 25, a decision of Philippides JA. The applicant sought judicial review of four decisions of the respondents relating to her employment, where it was found that there were two central issues before the court: whether the decision to terminate the applicant’s employment was amenable to judicial review, and (if so) whether there was any jurisdictional error as alleged by the applicant: . The applicant succeeded on the first, but failed on the second. Her Honour considered it was an appropriate case to treat each as an “event”, and noted that the first point, on which the applicant succeeded, was a distinct issue the subject of lengthy oral and written submissions. The issue involved questions of some complexity, and was strongly contested, and the decision potentially had significance beyond the particular case. Passages were cited from Murdoch v Lake (supra) and Hamcor Pty Ltd v Marsh Pty Ltd  QCA 395, a case involving the costs of an appeal. Although success on that issue was described as a Pyrrhic victory for the applicant, the respondent was ordered to pay the applicant’s costs of the first issue, while the applicant was ordered to pay the respondent’s costs of the second issue. There are other decisions which could be cited as example of this approach, all depending on their individual circumstances.
- I refer to my summary of the case at  –  of my first reasons. In the present case, the fact that levies had been issued and were unpaid was not disputed. The defendant’s claim that the plaintiff had been incurring expense for which it had been levying the defendant (and other members) in a way which was inconsistent with the Act and by laws was very much in dispute, and a large volume of evidence was included in a large (20 volume) trial bundle in relation to it. The plaintiff’s second contention, on which it ultimately succeeded, that the first issue did not matter and the defendant still had to pay, was certainly important, but involved little evidence, and a lesser part of the overall submissions. In terms of the time taken, and my reasons, the first issue was examined only to the extent necessary to conclude that there were real problems with the plaintiff’s approach, as a basis for considering whether they mattered for the purpose of the second issue. Indeed, the initial hearing was conducted on the basis that I would not hear detailed submissions in relations to all matters arising in relation to the first issue, but the matter would if necessary be addressed in more detail later. In the event, because of my conclusion on the second issue, I did not undertake that further examination of the first issue. So far as I did consider the first issue however, in essence the defendant was successful.
- The plaintiff succeeded on the second issue, and on one of the subsidiary issues, whether the levy notices were effective; on this point I held that, despite strenuous efforts on the part of whoever composed them, the notices were not sufficiently incomprehensible to be invalid on that ground. Two other subsidiary points were decided, whether bylaws providing for a swingeing rate of interest on unpaid levies, and dealing with the entitlement of the plaintiff to costs, were valid, were decided against the plaintiff, really on arguments of law; the former probably involved far more money that the plaintiff actually recovered by the judgment. The issue as to set-off raised legal questions about whether the defendant could obtain some monetary award arising from the deficiencies in the way the plaintiff had been administered, which was another attempt to avoid the obligation to pay the levies by relying on those deficiencies, which also failed; again this was largely a question of law.
- One could say that the plaintiff succeeded on the more important issues, but, on the basis of the volume of material put before me, I conclude that the great bulk of preparation was directed to the first issue, on which the defendant succeeded. Hence I consider that, in the circumstances of this case, it would be unfair and unjust to require the defendant to pay the plaintiff’s costs of the whole proceeding.
- There is another factor. In relation to the costs of the counterclaim, I consider that it would be open to the court to make an order that any costs ordered to be paid by the plaintiff be paid only by the body corporate members of the plaintiff other than the defendant, under the Act s 193. But it appears that that cannot be done for the costs of the claim, which is not a proceeding brought by a member against the body corporate. The effect of that is that the defendant will be required to contribute, in the usual proportion, to any order for costs in its favour against the plaintiff.
- One aspect of the preparation for trial can be used as an example of costs incurred in relation to issues on which the plaintiff was unsuccessful. The defendant put in evidence a substantial report by a Mr Lytras, in two parts. I have already said something elsewhere about the effect of this report in delaying the trial. I was told that the third report of Mr Hains made a difference because his earlier reports were inadmissible. I have not heard argument on this, but if the inadmissibility was cured by the third report, it must have been technical, and that it would at some stage be cured was plainly always foreseeable. But apart from that, the first part of the Lytras report was directed to a matter which could not be litigated in this proceeding, and was not, whether the figure adopted by the plaintiff as the basis for quantification of the levy on which it was suing was correct. That was not an issue, and I have already explained why this was irrelevant. Clearly the plaintiff should pay the costs associated with this part. The second part was directed to a matter which was relevant, but produced a conclusion that (somehow) the defendant should have been paying more all along even apart from the issue of incorrect apportionment, a conclusion which is completely contrary to that which I have arrived at from my analysis. The plaintiff should pay the costs of that part of the report too.
- A further complication is that, on 27 January 2011, the plaintiff offered to accept the levy amounts claimed of $188,352.71 if paid within thirty days, which involved foregoing interest and costs. The plaintiff has claimed that almost $23,000 in interest and costs had accrued by this time, so that, allowing for the fact that the plaintiff recovered less than the full amount claimed for the levies ($183,658.20) this involved a sufficient compromise to amount to a valid offer for the purposes of r 360, so that prima facie it is entitled to indemnity costs. I consider however that, if it is appropriate to exercise the discretion as to costs by reference to issues, another order may be appropriate because it would not be appropriate for the plaintiff to recover the costs of all of the issues on the indemnity basis.
- I should also say something about the counterclaim. At the time of the trial before me, the defendant’s current pleading was the amended defence and counterclaim filed 20 January 2015. The factual matters relied on were almost entirely those pleaded in the defence. It claimed repayment of the amount which the defendant had alleged in paragraph 6 of the defence it had overpaid in earlier levies to the plaintiff because of the incorrect way in which the plaintiff had been administered, on the basis that, by that overpayment, the plaintiff had been unjustly enriched. No additional facts were alleged in respect of this claim.
- The defendant then alleged that the plaintiff owed it a duty to exercise reasonable care in its administration, which it had breached, and that as a result the defendant had suffered loss in the amount of that same overpayment, and sought to recover it as damages for negligence. This involved pleading some additional facts, but the claim was essentially based on the nature of the relationship between the parties, and would have involved minimal evidence. There was a plea seeking to bring these claims within s 38(1) of the Limitation of Actions Act 1974, which involved some facts, relating to when the defendant discovered the true situation. There was then an allegation that the parties were in an accounting relationship, and sought the taking of an account, but again, that did not raise any (or any significant) additional facts.
- It follows that the counterclaim, as it stood then, involved questions of law, but raised minimal factual issues, and the cost should have been largely confined to the cost of counsel working up the necessary legal arguments. Compared to the costs of the claim, the costs of the counterclaim would have been insignificant. When the matter was argued before me last year, the claims of unjust enrichment and negligence were abandoned, and the defendant submitted that the defendant was entitled to equitable compensation for breach of fiduciary duty. This was said to be covered by the existing pleading of the existence of an accounting relationship, and that within the existing pleading paragraphs 1B, 3(f) and 6 of the defence, and paragraphs 3 and 11 of the counterclaim, pleaded the necessary matters of fact and law which gave rise to the fiduciary relationship. No application was made to amend the counterclaim.
- This change in approach did not raise any new factual issues, and the allegation of the existence of a fiduciary relationship is related to an allegation of an accounting relationship. No doubt some additional legal preparation was required by the plaintiff, but that would have involved just assembling the necessary authorities to show that the relationship between the parties did not give rise to a right to equitable compensation. In the event, I concluded that the relationship between the parties did not give rise to a positive duty of proper administration, breach of which would carry a right to compensation: .
- After I delivered my first reasons on 21 December 2018, the trial was adjourned for further submissions. In April the matter was listed for hearing on 16 May and I gave some directions. On that day, having heard submissions, I invited the defendant to amend the counterclaim to claim equitable relief, and the defendant served and provided to me what was properly characterised as a proposed amended counterclaim. On 29 October I delivered further reasons, giving judgment on the claim, and heard more submissions, as to whether I would grant leave to the defendant to amend the counterclaim. For reasons I then gave, I granted that leave, but foreshadowed that I would only be granting any relief to reflect matters I had already decided in the earlier reasons. There were further submissions, and some cross-examination, on 7 November, but otherwise the material was a number of affidavits filed since the hearing on 16 May.
- In the event I have granted some relief on the counterclaim, by way of declaration and injunction. That should be of benefit to the defendant in the future, and the relief was granted over the opposition of the plaintiff. Once the issue was confined to the question of whether I should reflect in some equitable relief such conclusions as I had arrived at in the course of my earlier consideration of the administration of this community body corporate, the defendant has been successful. The plaintiff is entitled to the costs of the counterclaim prior to 29 October, but the defendant should have the costs of the counterclaim since then. Although the amended counterclaim was always too wide, the excess was never a real issue in the proceeding.
- Broadly speaking, therefore, the plaintiff should have the costs of the second issue, about whether any defects in administration affected the enforcement of a contribution levied by the plaintiff, and the subsidiary issues of the availability of a set-off, and the original counterclaim. The defendant should have the costs of the first issue, whether there were defects in the administration of the plaintiff, and the subsidiary issues of the validity of the bylaws dealing with interest and costs, and the “new” counterclaim. The plaintiff’s costs of the second issue should be on the indemnity basis; otherwise, the costs should be on the standard basis. But my clear impression is that the bulk of preparation work in the course of conducting the proceeding, over these many years, has been associated with what I have called the first issue. That certainly produced the bulk of the work I had to do, in the course of my preparation of my first reasons for judgment. That would distort the exercise of weighing up success and failure as I have set it out.
- There is also the consideration that, if I just reflect that analysis in a series of orders for costs, it will involve a good deal of assessment, and leave much room for argument about the correct allocation of costs. Given the history of this matter, that is something to be avoided if possible. For that reason there is some attraction in just making no order as to costs, but on the whole that would not properly reflect an appropriate allowance for the significance of the weighting of the first issue, and the fact that the defendant would have to pay its share of the plaintiff’s costs anyway, as well as its share of any costs I order the plaintiff to pay it, unless I make an order under s 193.
- I therefore propose, subject to anything I have not already considered being raised as a result of any further submissions as to costs of the counterclaim, to order that the plaintiff pay the defendant its costs of the claim and counterclaim incurred in 2019, but that otherwise there be no order as to costs. The costs will be on the standard basis. There is no special significance of the cut-off date, except that it provides a convenient marker to isolate a segment of costs to be payable by the plaintiff which in my judgment will have the effect overall of allowing for the respective success on the issues, and their significance as causes of costs, and the other matters to which I have referred, in a way that will minimise the amount of assessment required. For the avoidance of doubt, I will add that the costs will be assessed on the standard basis, I am not making an order under s 193, and this order will not affect any costs already dealt with by other orders.
Affidavit of Anwoir sworn 28 October 2019, paras 36 – 41.
Without, I might add, the request or consent of the defendant: affidavit of Gilliland sworn 29 October 2019 paras 12, 13.
There is an error in that paragraph in my first reasons: I referred to pot plants “within the community property of one or more of the residential bodies corporate” but the residential bodies corporate do not have “community property”, which is an attribute of the plaintiff; they have “common property” and that is the expression I ought to have used at that point.
That advice was not obtained until 28 October 2019: Affidavit of Anwoir sworn 5 November 2019 Exhibit NA2 page 125.
A possible exception is in one case where the existence of a typo, rendering “not” for “now” did give rise to some puzzlement as to exactly what I was saying.
I do not think that this is what is meant by double entry bookkeeping.
Alborn & Ors v Stephens  QCA 58 at  per Muir JA; BHP Coal Pty Ltd v O & K Orenstein & Koppel AG (No 2)  QSC 64 at  per McMurdo J; Murdoch v Lake  QCA 269 at  per Morrison JA.
- Published Case Name:
Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106957 (No 3)
- Shortened Case Name:
Cathedral Place Community Body Corporate v The Proprietors Cathedral Village BUP 106957 (No 3)
 QDC 238
McGill SC DCJ
29 Nov 2019