Body Corporate Scheme for Arila Lodge v Thompson [2019] QDC 272

DISTRICT COURT OF QUEENSLAND CITATION: Body Corporate Scheme for Arila Lodge Community Titles Scheme 14237 v Thompson [2019] QDC 272 PARTIES: BODY CORPORATE SCHEME FOR ARILA LODGE CTS 14237 (plaintiff) v EMMA THOMPSON (defendant) FILE NO: 2865 of 2018 DIVISION: Civil PROCEEDING: Application ORIGINATING COURT: District Court of Queensland DELIVERED ON: 11 November 2019, ex tempore DELIVERED AT: Brisbane HEARING DATE: 11 November 2019 JUDGE: Porter QC DCJ ORDER: Application filed 25 October 2019 1. Paragraph 1 of the Amended Claim filed 3 April 2019 be struck out. 2. The plaintiff file and serve a Third Amended Statement of Claim within 28 days which: a. Makes amendments necessary to address the striking out of paragraph 1 of the Amended Claim; and b. Makes amendments necessary to plead the remaining claim calculated up to the date of filing the pleading. 3. The plaintiff have leave to file a Further Amended Claim within 28 days to give effect of paragraphs 1 and 2(b) of this order. 4. The defendant serve a proposed Third Amended Defendant within 28 days after service of the Third Amended Statement of Claim. 5. Within 14 days after the service of the proposed Third Amended Defence, the plaintiff notify the defendant in writing whether, and if so in what -- 1 of 10 -- 2 respects, the plaintiff opposes leave being granted for filing the proposed pleading. 6. If agreement is not reached on the question of leave, the defendant is to prepare an application for leave to amend supported by affidavit material and serve it on the plaintiff and send a copy by email to Porter QC DCJ by 28 January 2020. 7. The matter will be managed by Porter QC DCJ until further order. 8. Any interlocutory application should be notified by email to his Honour’s associate and the other side before filing and so far as is reasonably possible, will be heard by his Honour at a time he allocates. 9. The application is otherwise dismissed. 10. The defendant pay 2/3 of the plaintiff’s costs of the application on the standard basis. Application filed 6 November 2019 11. The application be dismissed with no order as to costs. CATCHWORDS: PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – PLEADINGS – STRIKING OUT – where the defendant applied for the striking out of the whole of the plaintiff’s further amended statement of claim – where the further amended statement of claim contains allegations which relate to part of the claim upon which summary judgment has previously been awarded – whether the further amended statement of claim ought be struck out in its entirety – whether parts of the further amended statement of claim ought be struck out due to the relevant cause of action having merged in the summary judgment. PROCEDURE – CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS – ENDING PROCEEDINGS EARLY – SUMMARY DISPOSAL – SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS – where the defendant applies for summary dismissal of the plaintiff’s claim – where the basis for the defendant’s summary dismissal application was not pleaded – whether summary dismissal ought be awarded. COUNSEL: B Strangman for the plaintiff A Abaza (solicitor) for the defendant SOLICITORS: Grace Lawyers for the plaintiff Andrew P Abaza for the defendant -- 2 of 10 -- 3 [1] In this matter the plaintiff is suing the defendant for unpaid body corporate levies and legal costs claimed as recovery costs payable as a debt under reg 145 of the Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld). The plaintiff obtained summary judgment for the part of its claim that relates to levies in the Magistrates Court some time ago. The judgment was confirmed on appeal by Butler DCJ. From then on the proceedings remained on foot in relation to the recovery costs. They are brought in this court because the amount of those costs now exceeds the Magistrates Court limit. [2] I have two applications before me filed by the defendant. The first was filed on 25 October 2019 and the second was filed on 6 November 2019. APPLICATION FILED 25 OCTOBER 2019 [3] This application seeks four categories of relief. The first, in paragraph 1 of the application, is that the further amended statement of claim be struck out in its entirety, “upon admission that the claim therein for $17,751.00 has been paid”. The second, in paragraph 2 of the application, is that summary judgment be entered on the defence. The third, in paragraphs 3, 4, 5 and 6 of the application, is that various paragraphs of four affidavits filed in these proceedings be struck out. The fourth is that there be a claim for three people who are characterised as defendants (but are not), to account for various amounts paid in respect of the dispute between the body corporate plaintiff and the defendant. Strike Out Application [4] The defendant contends that the whole of the further amended statement of claim should be struck out. As it emerged, there were two grounds for this. The first, which seemed immediately obvious to me, was that the further amended statement of claim contains allegations which relate to the part of the claim relating to the levies upon which summary judgment has been given. [5] It seems to me correct that allegations in a pleading relating solely to the part of a claim or defence for which summary judgment has been given, should be deleted from the statement of claim or defence, as the case may be, following the judgment for part of the claim. [6] That is because there is no longer any cause of action in relation to that part of the claim which can be asserted, nor indeed any defence that can be raised. The cause of action from the plaintiff’s perspective, has merged in the judgment. However, where dealing with a plaintiff with success on summary judgment, that consideration relates only to relief in the claim and to allegations in the statement of claim which are only relevant to the part of the claim which has been the subject of success. On any view, only part of the further amended statement of claim falls into that category. The defendant’s application fails to identify those parts of the statement of claim which should properly be struck out on this basis. [7] Neither party has grappled with this. Accordingly, I am not in a position to determine what paragraphs should be struck out, in giving effect to the principle that that part of the claim upon which success has occurred should no longer give rise to live issues in the proceedings. -- 3 of 10 -- 4 [8] It is reasonable to think that some, and perhaps a lot, of what is already pleaded will remain in the statement of claim, given that the claim that is going forward is for recovery costs in respect of the claim which has itself been the subject of the summary judgment. There will therefore be a close link between the two matters. [9] I also note that some of the matters which will be the subject of issue estoppels in the summary judgment should, it seems to me, still be pleaded in the statement of claim so that it identifies the facts upon which the continuing relief is to be based. [10] It would only be if those matters were not admitted or denied in the defence that the question of issue estoppel would arise. In that case the reply would raise the issue estoppel. So where it is evident that an issue estoppel arises from the summary judgment, those matters should be, if pleaded, the subject of an admission, and although it is not strictly required in the pleading, it might be wise to flag the facts relied upon that are said to fall into that category. [11] The second basis for the strike-out was directed at striking out the whole of the statement of claim. That was on the basis that the statement of claim did not plead a cause of action known to the law because it failed to plead that the recovery costs identified in the pleading had been incurred with the approval of appropriate internal management procedures. [12] This argument was put on the basis of the pleading not disclosing a cause of action at all. That raises quite different considerations from those that arise where other grounds for strike-out are raised, such as ambiguity, internal inconsistency and other matters of form. An allegation that a pleading should be struck out as failing to disclose a cause of action attracts the care that must be exercised in a General Steel Industries Inc v Commissioner for Railways (NSW)1 sense in concluding that a cause of action is not made out. [13] Where the issue which impugns the pleading is something which could be corrected by a further pleading, that consideration is less compelling. Nonetheless, the onus is on the defendant to make out the fact that no cause of action is disclosed. That onus remains a heavy one. [14] Here the basis upon which it is said the pleading does not disclose a cause of action is said to be because the pleading does not identify resolutions by the body corporate committee necessary to authorise the incurring of the debts which are said to comprise the recovery costs, which are in this case legal costs. [15] The difficulties I have with that proposition are twofold. First, based on the limited statutory analysis put before me in the submissions that were filed 28 October 2019, particularly at paragraph 12, I am not persuaded that a resolution of any specific kind was required in respect of these specific categories of costs, but, in any event, it seems highly unlikely to me that the pleading of such a resolution is necessary to plead a proper cause of action. [16] Facts which are conditions precedent to a cause of action, rather than part of the elements of the cause of action, usually impose an onus on the defendant to raise by way of defence. Where the cause of action is created by statute, this frequently involves subtle questions of construction relating to the statutory provisions. 1 (1964) 112 CLR 125. -- 4 of 10 -- 5 Discharging this onus also involves determining whether exculpatory or conditions that can be found in other parts of the statute, or indeed in the same section in some cases, are elements of the cause of action, or are matters in respect of which the onus lies on the defendant. In the latter category it is uncontentious that those are matters which ought to be pleaded by way of defence. [17] Here the regulation that creates the cause of action sued on is regulation 145 of the relevant module, which does not, on its face, include any requirement that the costs be those which have been incurred consistent with some internal management rules about setting limits for committee spending and so on. [18] No analysis of the law was put before me dealing with the extensive authority in the way this issue is approached and how this particular statute would be construed to persuade me to a different view from that which seems to me to follow on the face of the section. Therefore I am not persuaded that as a matter of pleading it was necessary to plead resolutions to enter into costs agreements or to incur the costs of recovery. I should say that as a matter of first principles it seems to me unlikely that such a pleading would be necessary, given that the purpose of these provisions is to simplify the process of body corporates recovering levies and the costs which are the lifeblood of a body corporate. [19] In any event, that is a secondary consideration. I am far from satisfied that, as a matter of pleading, the statement of claim had to plead something in the nature of the resolutions to enter into costs agreements or to incur the costs of recovery in order to properly plead a claim under Reg. 145. That is not to say it cannot be raised in the defence, but as a pleading point it fails. [20] It seemed to me therefore that the plaintiff had this little piece of success on paragraph 1. That is that paragraph 1 of the amended claim has to be struck out because it advances a claim for relief which is merged in a judgment. It is difficult to see, however, though, how that manifests itself in any necessary further amendments. However, it seems from the submissions that were filed in response to the defendant’s successful point, that the plaintiffs have not considered how to plead in a manner which takes into account their previous success on the claim and limits itself to facts that are relevant only to the new claim. [21] Therefore it seems appropriate that I order the plaintiff to file a further amended statement of claim, which makes amendments necessary to address the striking out of paragraph 1 of the amended claim, whatever they might be. Beyond that, which as Mr Strangman rightly points out, falls far short of striking out the whole pleading, paragraph 1 of the application should be dismissed. Summary Judgment Application [22] Paragraph 2 of the application sought summary judgment on the defence. Mr Abaza’s oral arguments took the matter no further than the argument advanced in the supplementary submissions filed on 28 October 2019. It is therefore, since he persisted with them, necessary for me to deal with those submissions in respect of summary judgment. [23] I should say first, that paragraph 2 of the application is defective in form. As I said during argument, an application is to identify the relief sought. It is not to include evidence. It is not to include the text of statutory provisions. In fact, it should not -- 5 of 10 -- 6 refer to statutory provisions at all, except to identify the provision relied upon for specific relief, if necessary. [24] The application should not include material facts said to support the relief. It is not a pleading. Nor should it include reasoning in support of the relief sought. It is not an outline. Failure to limit an application to the relief sought undermines the purpose of the application, which is to permit the other party and the court quickly and efficiently to identify the orders that are sought. [25] Paragraph 2 of the application does not limit itself to the relief sought. It is unacceptable that a party would depart from such a simple and well-known rule of civil litigation. It is tempting to strike out paragraph 2 of the application on this basis alone. However, it is not necessary to take that step because I think paragraph 2 should be dismissed, in any event, as a matter of substance. [26] The basis of the summary judgment application in paragraph 2 of the application is a complicated argument over many pages, which seems to boil down to the contention that the retainer or retainers which gave rise to three lots of costs were not between the plaintiff and the relevant solicitors, but the plaintiff and identified third parties. [27] The present and insuperable problem with this as a summary judgment point is that none of this has been pleaded. It is true that a court may consider granting summary judgment on an unpleaded case. However, just because a court can do something does not mean that it will. The court might consider granting summary judgment on an unpleaded case where it can be demonstrated that there is no possibility of injustice to the other party of the point being raised outside the pleadings. That might occur where the point is a purely legal one and it can be convincingly demonstrated that no factual matter could possibly address it. . [28] Further, a court will be very cautious in reaching that conclusion, given that summary judgment in this context necessarily occurs before the other side has even had a full opportunity to consider the point in the way it would if it had the opportunity to see it properly pleaded and to take instructions. [29] This is definitely not a case where proceeding without a pleading of the point raised could possibly be justified. Its central proposition that the retainer agreement or agreements were not with the body corporate innately demonstrates that factual issues could arise. The most obvious factual issue is the prospect that retainers, even if entered into formally by persons in names other than the body corporate, did so as agents for the plaintiff. [30] There seemed to be more points raised in the submissions, but this alone is sufficient to dismiss the application. In my view the prospects of summary judgment were so weak in this context that that application should never have been brought. The claim for relief in paragraph 2 is dismissed. [31] I should not leave paragraph 2 without noting an evolution of the argument that occurred today. That is that paragraphs 30 to 33 of the pleading should be struck out because they do not sufficiently plead the material facts necessary to make out the conclusory allegation that the plaintiff reasonably incurred costs in attempting to recover the unpaid instalment contributions from the defendant in the certain amount. -- 6 of 10 -- 7 [32] Indeed, it went further than that, and the plaintiff pointed out that the evidence that has now been filed includes an amount that goes well beyond the $171,889.68 identified in the pleading. [33] It does not seem to me that I can be satisfied that the current pleading is inadequate, to the extent it identifies costs up to $171,889.68, in circumstances where those costs, the costs agreement that gave rise to them and the surrounding circumstances, are included either in the pleading itself or the extensive attachments which include the costs agreement and a very detailed itemised bill of the kind that could actually proceed to a costs assessment. That bill looks to me like a document produced by a costs assessor. [34] The pleading, also cannot be impugned on the basis that affidavits have been filed claiming more money than the money shown there, or claiming costs on a basis that is not shown there. If the pleading is not amended when it comes to trial, the amount would be limited to $171,889.68 and the issues in dispute would be limited to those in the pleading and the attachments. [35] However, it also seems to me that I could not be satisfied that the pleading technically, where it has not been challenged up to this point, and given the detail in the attachments, failed properly to plead the reasonably incurred costs. However, it seems to me that, in any event, if the plaintiff now intends to press its application for the much higher amount it has now identified, the pleading needs to be amended along with the claim to bring the pleading up-to-date. [36] In doing so the plaintiff should also consider, not from an technical point of view, but from the perspective of the importance of a pleading as a document which truly identifies the issues in dispute in a way that allows them to be apprehended quickly by a judge and resolved at trial, pleading more detail as to the components that make up the allegations in paragraphs 31 to 33. [37] While I am not persuaded that the current pleading is inadequate, it is necessary that the plaintiff bring its claim up-to-date if it intends to do so. I direct this to occur. Application to Strike Out Affidavits [38] I now turn to paragraphs 3 to 6 of the application. The claim for relief in those paragraphs is that four identified affidavits be struck out. These paragraphs are also defective in form, descending into argument, including what appear to be allegations of fact. These paragraphs again obscure the role of an application in the efficient conduct of civil proceedings. [39] Further, while it identifies numerous separate grounds for objection to the affidavits, it does not identify which paragraphs of the affidavit relate to those particular grounds of objection. It therefore includes much material it should not and omits particulars of the relief sought. [40] There is a fundamental difficulty anyway with the relief sought. Paragraphs 3 to 6 raise the kind of objections which would be taken at trial. There is no trial on foot nor any listed. The plaintiff did not read any of the challenged material. [41] As the plaintiff correctly submitted, now is not the time to take the kind of objections made in paragraphs 3 to 6. Indeed, in the absence of the parties joining issue on -- 7 of 10 -- 8 particular matters at a trial or other hearing, it is impossible to see how the objections could be correctly determined. This court has a residual power to prevent abuse of its processes. It is also seems to me theoretically possible for a court in a civil proceeding to hear an application analogous to a s. 590AA Criminal Code 1899 (Qld) application, for the resolution of disputed evidential questions prior to trial. [42] However, that is not what is sought to be done in this case and could not be because of the evolving nature of the pleadings. In any event, the application was not drafted, prepared or argued in a way that would make that kind of application possible. [43] Mr Abaza rightly, I think, did not contend that I could conclude that the affidavits were themselves an abuse of process, in the sense of being an abuse of Judge Smith’s order of 23 April 2019 for the filing of evidence-in-chief by affidavit. His submission was more in the character of a cri de coeur, that the material was so extensive and so difficult in many cases to link to a specific issue in the pleadings as to make the material oppressive. That is not the gravamen of paragraphs 3 to 6 of the application, although it is raised in respect of the affidavit of Mr Carlson of 1009 pages. [44] In any event, the difficulty with that point is that the affidavit has to be seen in the context of the proceedings as a whole, where a summary judgment for the costs at one-tenth of what they are said now to be was overturned on appeal for lack of detail. That seems to provide the context for the response. [45] That is relevant in this sense: it seems difficult to me in that case to see what has happened here as being designed to crush the defendant by excruciating detail. Indeed, that kind of tactic, to the extent it happens, is usually one employed by defendants or parties with very substantial resources. [46] That is definitely not the case in respect of the plaintiff. It seems to me that in the circumstances, so far as I can decide them at this stage in this application, I am unpersuaded that there was any attempt to be oppressive and that this was a bona fide attempt to respond to the issues in the case. [47] That is not to say that it is a sufficient response, but the fact remains that if most of the evidence is irrelevant and Mr Abaza for the defendant sees that to be so, he can simply ignore it. It is true that there is a trial management process that is called for, given the state of the affidavits now, the burden of which I am content to take up. However, it is not a basis for striking out anything particularly where, as I have said, Mr Strangman is not seeking to adduce the evidence. Paragraphs 3 to 6 of the application are therefore dismissed. Application for Account [48] Paragraph 7 of the application seeks final relief in the form of an account, in circumstances where no counterclaim exists and the relief is sought against so-called defendants who are not defendants. As an interlocutory application in this case, it is an abuse of process and is dismissed. Conclusion [49] The upshot of all of that is that I make orders in terms which provide for the striking out of the amended paragraph 1 of the amended claim and the amendments that I have identified should be made to the claim and the statement of claim. -- 8 of 10 -- 9 APPLICATION FILED 6 NOVEMBER 2019 [50] I thought initially that this application was concerned with leave to withdraw admissions that had been made in the existing defence or a previous defence. It turned out I was wrong about that. Rather, the defendant understandably took the view that given the matter had been set down for trial, leave was required to amend its defence. Given there are likely to be some amendments to the statement of claim, and perhaps quite a few, it is reasonable to think that the defence in its current form will also change. [51] I had thought that would make that application obsolete. I was only partly correct. Mr Strangman contends that a number of the matters for which leave was sought were new matters occurring after the trial had been adjourned and at this late stage, given the prejudice to the parties, the interests of justice, and the issues identified in Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175 and similar cases. [52] It was impossible for me to decide that argument today.However, I have directed that the defence be served but not filed, with an opportunity for the plaintiff to articulate Aon type objections. I will direct that if those objections are raised and cannot be resolved, I will determine them by an application. In the event that agreement is reached on the form of the defence, of course, the parties can notify their consent and I will make an order for leave without an appearance. It might be a triumph of hope over expectation to think that could happen. [53] What I want to also make clear so I do not forget it when I am reading these reasons again sometime in the future, is that both parties ought to think with very great care about the role of Aon and similar cases and their principles as they apply to this case. This case is now costing a great deal more than could possibly be justified by either party. If good Aon points are taken by either side and are successful on an application, costs orders will follow, and in the kind of complex application that would involve, I would imagine the costs will be substantial. In those circumstances, however, it is appropriate to dismiss the application filed 6 November 2019 with no order as to costs. COSTS OF APPLICATION FILED 25 OCTOBER 2019 [54] In respect of this application, the defendant has had very, very modest success indeed. It did have substantive success on its one legal proposition as to the fate which would befall claims for relief and associated allegations where part of a claim has been the subject of a summary judgment. [55] It failed, however, on all the other points that it raised. It had some limited theoretical success in respect of the prospect of further bringing the pleading up-to-date, but in respect of the amount claimed for the reasonable costs the plaintiff could have rested on its current pleading. The defendant’s modest success is really a function of me trying to ensure that the full claim is advanced. It may be the plaintiff chooses to abandon the balance, although this seems unlikely. In any event, that was a response to a matter that was, in any event, raised in writing only this morning. [56] In the context of the very complex arguments which I have already dealt with, it seems to me therefore that the defendant has had modest success on paragraph 1 of its application and has failed on everything else. Nonetheless, the plaintiff was brought -- 9 of 10 -- 10 here to deal with paragraph 1 and the plaintiff seemed to have to be brought to court for the point to be made. However, that is very small success compared to the extraordinary complexity of all the other application that was brought and, of course, the defective form of the application filed 25 October 2019. I should say one would be tempted to strike out the application, in any event, due to the defects in its form. [57] In those circumstances I intend to order that the defendant pay two-thirds of the plaintiff’s costs of the application filed 25 October 2019 on a standard basis. -- 10 of 10 --