Supreme Court New South Wales

• Medium Neutral Citation: Owners Strata Plan 4003 v Mustafa (No 2) [2012] NSWSC 848
• Hearing dates: 27 July 2012
• Decision date: 27 July 2012
• Jurisdiction: Common Law
• Before: Beech-Jones J

Decision

See [10]

• Catchwords: COSTS - Orders
• Legislation Cited: Strata Scheme Management Act 1995 - s 229
• Cases Cited: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72
• Category: Costs
• Parties: The Owners - Strata Plan 4003 (Plaintiff); Eray Mustafa (Defendant)
• Representation: Counsel: Mr C.P. Locke (Plaintiff); Ms P.E. Koroknay (Defendant); Solicitors: Bronwyn Smith Lawyers (Plaintiff); David Le Page (Defendant)
• File Number(s): 2012/018137

Judgment

1 On 6 July 2012 I handed down judgment on the plaintiff's appeal from a decision of the Local Court dismissing its proceeding against the defendant (Owners Strata Plan 4003 v Mustafa (2012) NSWSC 780) ("Mustafa (No 1)"). I stated the appeal would be allowed and stood the matter over to allow the parties time to calculate interest and make submissions on the form of order and costs. They both took that opportunity. As foreshadowed in Mustafa (No 1) at 35 the parties agreed on a calculation for interest in the sum of $9,493.42. It follows that there will be a judgment in favour of the plaintiff in the sum of $35,670.45.

2 The next issue is the form of costs order concerning the proceedings in the Local Court. The plaintiff seeks an order for indemnity costs on the basis that the defendant had no real defence to those proceedings and merely put it to proof of its claim. I do not consider that an order for indemnity costs in the Local Court is warranted.

3 I described the course of that hearing in Mustafa (No 1) at paragraphs 1 to 11. At the hearing in the Local Court both parties modified their position and there was a dispute over a small amount. The defendant was completely successful on all of those issues. In this court it only retained its success on one issue, namely expenses: Mustafa (No 1) at 36. However, nothing in his conduct of proceedings in the Local Court amounted to any form of delinquency that would warrant an order for indemnity costs against him: see Oshlack v Richmond River Council (1998) 193 CLR 72 at 44 per Gaudron and Gummow JJ.

4 Subject to the next point, I propose to order that the costs in the Local Court be payable on a party/party basis.

5 The defendant contends that the plaintiff's costs in the Local Court should not include any costs or disbursements referable to the report of Mr Peter Dawkins dated 30 August 2011. I agree. There was no need for such a report in those proceedings and it did not advance the plaintiff's case. The defendant also sought to exclude part of the costs of an affidavit of a Mr Torpey, sworn 31 August 2011. I do not consider that is justified.

6 The plaintiff also sought an order for indemnity costs in relation to the appeal to this court. It contended the appeal was indefensible and noted the defendant neither conceded the appeal nor paid the disputed amount. It is true that the plaintiff's complaint about the failure of the Local Court to award the undisputed amount was unanswerable. However, the defendant only barely resisted that part of the appeal. He was successful in relation to defending that part which concerned expenses. Most importantly, he did not oppose this court resolving all matters in dispute when it became clear the appeal would be allowed: Mustafa (No 1) at 14. Again I do not consider that any matter has been shown that would warrant an order for indemnity costs.

7 The defendant sought an order that any costs incurred by the plaintiff in the proceedings in the Local Court and in this court over and above the costs recovered from him, be paid from contributions levied from lots other than his own. This morning it was clarified that this order was not sought pursuant to s 229(2) of the Strata Scheme Management Act 1996, but pursuant to the powers conferred on this Court by the Civil Procedure Act 2005.

8 I leave aside the question of whether the court has power to make such an order other than pursuant to 229(2). Absent such an order, the defendant as a lot owner would be obliged to pay his proportionate share of the deficiency between the costs recovered from him pursuant to the orders I make and the costs actually incurred by the plaintiff. I see no reason why he should not be so obliged. One way or another, any liabilities of the body corporate must be borne by the owners, of which he is one. It is to be remembered that he will receive a partial benefit from his own payment of the judgment debt as that will replenish funds in the body corporate. It will be obliged to use them for the purposes of the body corporate as a whole. His obligation to contribute to any deficiency between the costs incurred by the plaintiff in bringing these proceedings and the party/party costs recovered from him, all flow from his participation in the ownership of the body corporate. That obligation is distinct from the costs order he incurs as an unsuccessful litigant.

9 Finally, this morning the plaintiff sought an order for there to be liberty to apply for further orders in respect of the costs it might incur in enforcing judgment against the defendant. The necessity for there to be liberty to apply was said to follow from the decision in Owners of Strata Plan 36131 v Dimitriou (2009) 74 NSWLR 370. An order in that form was not opposed.

10 Accordingly, the orders of the court are:

(1)  Appeal allowed.

(2)  Set aside the orders made by the Local Court on 21 December 2011 in proceedings number 2011/030357 in relation to the plaintiff's statement of claim.

(3)  Verdict for the plaintiff in the sum of $35,670.45 inclusive of interest.

(4)  The defendant pay the plaintiff's costs of proceedings number 2011/030357 in the Local Court on a party/party basis, other than such costs and disbursements as are referable to the preparation and filing of the report of Mr Peter Dawkins sworn 30 August 2011.

(5)  The defendant pay the plaintiff's costs of these proceedings.

(6)  The plaintiff to have liberty to apply for further orders in respect of the costs incurred by the plaintiff in enforcing judgment against the defendant.

(7)  The defendant to have a certificate under the Suitors' Fund Act 1951 for the cost of these proceedings, if otherwise qualified.

(8)  The exhibits be returned after 28 days.

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Amendments

01 August 2012 - Incorrect paragraph reference - amended to "See [10]"
Amended paragraphs: Orders (cover sheet)

Decision last updated: 01 August 2012