Body Corporate for Sierra Grand v Tran and Royston [2018] QMC 11

MAGISTRATES COURTS OF QUEENSLAND CITATION: Body Corporate for Sierra Grand v Tran and Royston [2018] QMC 11 PARTIES: BODY CORPORATE FOR SIERRA GRAND CTS 38268 v TEO TRAN and THOMAS ARTHUR ROYSTON FILE NO/S: 52218-52223 and 52224/16 PROCEEDING: Application for Summary Judgment ORIGINATING COURT: Southport Magistrates Court DELIVERED ON: 4 July 2018 DELIVERED AT: Southport HEARING DATE: 11 May 2018 MAGISTRATE: A.H. Sinclair ORDER: Applicant Plaintiff granted summary judgment on its claim and on the Defendants’ counterclaim in each matter. CATCHWORDS: REAL PROPERTY - BODY CORPORATE – debt disputes – related disputes – jurisdiction of Adjudicator/Commissioner – unpaid levies – equitable set off and counterclaims for negligence AUTHORITIES: Section 167(3) Body Corporate and Community Management (Accommodation Module) Regulation 2008 Sections 35, 36, 152, 154, 229, 229A(3), 281 Body Corporate and Community Management Act 1997 Uniform Civil Procedure Rule 1999 r. 292, 293, 372, 443, 444 Body Corporate of the Lang Business v Green [2008] QSC 318 Chen v ANZ [2001] QSC 043 Deputy Commissioner of Taxation v Salcedo [2005] QCA 227 Forsyth v Gibbs [2009] 1 Qd R 403 James & Anor v BC Aarons CTS 11476 [2002] QSC 386 Lynvale Pty Ltd as Trustee v Body Corporate for Surf Edge CTS 34002 [2017] QDC 191 MAGOG (NO. 15) Pty Ltd v The Body Corporate for the Moroccan [2010] QDC 70 Sierra Grand [2016] QBCCMCmr 516 Wardley Australia Limited v Western Australia (1992) 175 -- 1 of 18 -- 2 CLR 514 COUNSEL: K.S. Howe for the Applicant / Plaintiff B. Strangman for the Respondents / Defendants SOLICITORS: OMB Solicitors for the Applicant / Plaintiff MacGregor O’Reilly for the Respondents / Defendants Introduction [1] The Plaintiff Body Corporate sues the Defendants who are spouses, for just over $366k of levies unpaid on their 7 units since 2016 on seven separate claims. [2] The Defendants’ counter-claim and seek to set off actions in negligence (common law and statutory duty) and equitable set off which they say overwhelm the entirety of the claims. [3] There is no dispute that the Body Corporate levies are otherwise payable except for a small indeterminate sum under s.167 of the Accommodation Module. [4] The Body Corporate applied for summary judgment just a week from the listed 3 day trial. Neither party was ready for trial despite directions made some months ago to allow for a resolution of these issues. [5] I have reached the conclusion that the Applicant Plaintiff is entitled to summary judgment on both its claim and the Defendants’ Counterclaim. [6] That is because: a. the Defendants’ counterclaim is not maintainable at law as they have suffered no damage in order to found a cause of action that could act as a counterclaim or set off; and b. even if it were, the appropriate amount of damages or set off is nil; and c. even if there were a cause of action and damages, any negligence set-off cannot be joined to the Plaintiff’s proceedings and must be determined elsewhere because it is not a ‘related dispute’ under s.229A; and d. the potential equitable set off fails as it is not sufficiently related to be could be viewed as part of the debt dispute itself. It is also not a ‘related dispute’; and e. The s.167 argument was and remains subject to Chapter 6. The Law Standard of proof -- 2 of 18 -- 3 [7] An applicant for summary judgment must show that the respondent has no prospects and there is no need for trial. The amounts in dispute here are significant to both parties as are the material already generated and the prospective length of a trial to ventilate these issues. It can only therefore be in the clearest of cases that the Plaintiff could persuade the Court of what it must; that these matters do not require a trial. Relevant legislation [8] Rule 292 and 293 apply to Plaintiff’s summary judgment application in relation to the claim and the counterclaim respectively and provide: 292 Summary judgment for plaintiff (1) A plaintiff may, at any time after a defendant files a notice of intention to defend, apply to the court under this part for judgment against the defendant. (2) If the court is satisfied that— (a) the defendant has no real prospect of successfully defending all or a part of the plaintiff’s claim; and (b) there is no need for a trial of the claim or the part of the claim; the court may give judgment for the plaintiff against the defendant for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate. 293 Summary judgment for defendant (1) A defendant may, at any time after filing a notice of intention to defend, apply to the court under this part for judgment against a plaintiff. (2) If the court is satisfied— (a) the plaintiff has no real prospect of succeeding on all or a part of the plaintiff’s claim; and (b) there is no need for a trial of the claim or the part of the claim; the court may give judgment for the defendant against the plaintiff for all or the part of the plaintiff’s claim and may make any other order the court considers appropriate. Relevant legal principles [9] The application of the test for summary judgment is set out in Deputy Commission of Taxation v Salcedo [2005] 2 Qd R 232 where the President said: “Nothing in the UCPR, however detracts from the well established general principle that issues raised in proceedings will be determined summarily only in the clearest of cases.” Background [10] The central dispute between the parties appears to originate from the installation of air-conditioning for all units proposed in 2014. The male Defendant sought to stop it with the female Defendant’s support and failed. -- 3 of 18 -- 4 [11] They now: a. plead that the special levy relating to the costs of installing air conditioning units does not comply with s.167 of the Accommodation Module because it doesn’t recover the costs from the users of that system (which is every lot but theirs). b. allege that there was negligence in the installation causing fire risk and that this has affected their property values. (This was raised squarely in submissions but not specifically pleaded as a separate issue). c. plead that the Body Corporate has been negligent in not maintaining fire safety systems (FSS) within the common property more generally. It is not pleaded when this occurred i.e. before or after they purchased their units. It is alleged that the total value of this neglect is $15 million for the whole building or $103k per unit. [12] The Plaintiff asserts there is no factual dispute and that as a matter of law there is no defence and no need for trial on it as a defence or counterclaim because: a. the issue of non-compliance with s.167 is a dispute under Chapter 6 of the Act and subject to the ‘exclusive jurisdiction1’ of the Body Corporate Commissioner. They allege that precisely this issue has been determined before and the Defendant is issue estopped from raising it here or anywhere. b. There was no negligence in the installation of the air-conditioning and even if there was there is no damage because the Defendants have not sold. c. There was no negligence in the maintenance of the fire safety system and even if there was there is no damage because the Defendants have not sold. [13] The Defendant’s response to the Plaintiff is that: a. The dispute they have about s.167(3) is a ‘related dispute’ and this Court can consider it as such or an equitable set-off. b. There is damage in negligence and to support an equitable set-off because their property values have been affected by the installation. c. There is damage in negligence and to support an equitable set-off because their property values have been affected by the failure to maintain. [14] The Plaintiff says: 1 See James & Anor v BC Aarons CTS 11476 [2002] QSC 386 per Holmes J as the Chief Justice then was and upheld in [2003] CA 329. -- 4 of 18 -- 5 a. It is not a related dispute because unlike Lynvale2 and MAGOG 3 there is no actual damage to offset. b. That a loss of value is not the measure of damages. c. That the claim for equitable set off is doomed as being speculative, late and without bona fides. 4 d. That it is not an equitable claim that ‘goes directly to impeach’ the plaintiff’s demands or are ‘so closely connected’ that it would be manifestly unjust to allow the plaintiff to enforce payment without considering the counterclaim. d. While the Body Corporate has a statutory duty to maintain5 it is with the Commissioner’s exclusive jurisdiction because it is not a ‘related dispute’ which is the only permissible set-off or counterclaim. Facts [15] For the purposes of this application I assume that the Defendants can prove every allegation of fact contained in their Amended Defence and Counterclaim to support it. [16] It is not in dispute that each of the Defendants owned their units for some time before the issues they complain of came to their attention. It is not in dispute that they each still own their lots. [17] Other relevant matters appear from the decision of Adjudicator Schmidt in Sierra Grand [2016] QBCCMCmr 516.: a. “Sierra Grand” was established in 2008 in Surfers Paradise on the Gold Coast. It is a 31 storey building containing 239 lots. b. The Applicant was Mr Royston. The Plaintiff was the Respondent. Ms Tran was an affected person as were all other owners. She made a submission in support of his arguments. c. Mr Royston applied for several 2 motions at a 15 January 2016 EGM to be declared invalid. d. One of these related to a 28 August 2014 AGM. e. One related to Motion 3 which included: THAT the body corporate resolves to: 2 Lynvale Pty Ltd as Trustee v Body Corporate for Surf Edge CTS 34002 [2017] QDC 191 3 MAGOG (NO. 15) Pty Ltd v The Body Corporate for the Moroccan [2010] QDC 70 4 I do not consider those as appropriate grounds for summary judgment even if they are correct. 5 Sections 35, 36(1), 152, 154 BCCM Act -- 5 of 18 -- 6 1. Decommission each of the air-conditioning systems servicing the lots and/or common property on levels 3 to 30 (“the Existing Airconditioning Systems”); and 2. Install an alternate air-conditioning system in each lot only on each of levels 3 to 30 to replace the Existing Airconditioning Systems (“the Replacement Airconditioning Systems”); and 3. Dispose of the Existing Airconditioning Systems once they have become decommissioned; and 4. Fix a special contribution in the amounts detailed below; and … To be funded by a Special Sinking Fund levy being $517.35 gross per lot entitlement including GST … [18] The issues before the Adjudicator included the following: a. “[16] Mr Royston argues that the air conditioning units/system within the lots are owned by the lot owners. The work contained in Motion 3, continues Mr Royston, is not the body corporate’s responsibility per section 20 of the Act and therefore should not be paid for by all owners. He states the proposed works are: a. Solely related to supplying air-conditioning to individual lots; and b. Located within the boundaries of individual lots and c. Located other than within a boundary structure.” b. He argues i. That the units service the lots and there was no agreement with lot owners; and ii. That this had been decided in a previous application by Ms Tran in her favor in Sierra Grand [2015] QBCCBCmr 447. In that case the 2014 motions were invalid because there was no individual owner agreement to the system that was proposed at that time which serviced only one lot. c. The 2016 proposal was for a system where the condenser was on common- property and served ‘heads’ in multiple units. d. “[35] Based on the description of the system proposed to be installed by Motion 3 of the January 2016 EGM, it is clearly different to what Motion 15 of the 2014 AGM proposed. The Notice of Meeting for the January 2016 EGM explains the differences and provides an explanation of the background and recent developments since the 2014 AGM in the “Committee Comment Schedule”. Mr Royston’s assertions that the works proposed in Motion 3 are: a. Solely related to supplying air-conditioning to individual lots; and b. Located within the boundaries of individual lots; and -- 6 of 18 -- 7 c. Located other than within a boundary structure. are clearly incorrect. [36] It appears to me as though Mr Royston’s reliance on the previous decision in relation to application 0833-2014 is misconceived and without substance. Motion 15 of the 2014 AGM and Motion 3 of the 2016 EGM proposed entirely different things.” The Pleadings [19] The Amended Defence and Counterclaim includes the following: 4. As to the allegations in paragraphs 4AD, 4BD, and 4CD of the Further Amended Statement of Claim the Defendant: a. admits that the contribution instalments were not paid: b. denies any obligation to pay the contributions instalments in paragraph 4AD, on the basis that the special sinking fund contribution contained an allowance for the cost of installing air-conditioning plant and associated installation works within the boundary of lot property, as opposed to common property, and the Plaintiff failed to comply with s167 of the Accommodation Module by not recovering that cost from the users of those lots that the Plaintiff installed air-conditioning plant and associated installation works within: and c. further, denies anv obligation to pay the contribution instalments in paragraph 4AD, 4BD, and 4CD by reason of the matters referred to in paragraphs 14 to 49 of this Amended Defence. [20] Section 167 only applies if the air-conditioning system are as pleaded within the boundaries of the lots and other than within a boundary structure. These are the very contentions which the Adjudicator rejected as ‘clearly incorrect’. It is irrelevant to this court whether that decision was correct or not. It stands outside this jurisdiction. [21] Paragraphs 14 to 40 are essentially the plea of the cause of action in common-law and statutory duty. Assuming they both existed and were breached by the pleaded failure to maintain the ‘Fire Safety System’, what is the pleaded damage? [22] Paragraphs 41 to 45 plead that there has been no levy struck to maintain the FSS and claim that as the damage, they should be compensated by being paid the amount that they should already themselves have paid if the Body Corporate had imposed the levies. [23] There are no specific paragraphs in the pleading about the air-conditioners not being installed properly and this causing loss in value. -- 7 of 18 -- 8 [24] Paragraph 46 to 49 plead in the alternative a loss of value and attribute it to the failure to maintain. A drop in value of $103k per unit is the pleaded loss and damage in the alternative. Consideration The Section 167 Issue [25] Chapter 6 of the BCCM Act establishes an ‘exclusive jurisdiction’ for the dispute resolution process about disputes which include those between the Body Corporate and a lot owner. [26] In James v Anor v The Body Corporate Aarons Community Titles Scheme 11476 [2002] QSC 386 Justice Holmes6 held:- "Chapter 6, as already outlined, creates the positions of commissioner, adjudicators and mediators, and provides for case management and for management and adjudication in such a way as to constitute, in my view, a comprehensive code for dispute resolution." [27] In Green, Justice Dabuney said that in the absence of the clearest words, the inherent jurisdiction of the Supreme Court were diminished by Chapter 6.7 [28] After that decision and the decision in MAGOG, Section 229A was inserted. [29] Chapter 6 is entitled “Dispute Resolution” and includes sections 229 and 229A which read (in full): 229 Exclusivity of dispute resolution provisions (1) Subsections (2) and (3) apply to a dispute if it may be resolved under this chapter by a dispute resolution process. Notes— 1 For a dispute about a body corporate decision under section 47A , see section 47AA . 2 For disputes about a decision of a body corporate committee under section 410 , or a body corporate decision under section 411 , see section 412 (5). (2) The only remedy for a complex dispute is— (a) the resolution of the dispute by— (i) an order of a specialist adjudicator under chapter 6 ; or (ii) an order of QCAT exercising the tribunal’s original jurisdiction under the QCAT Act; or (b) an order of the appeal tribunal on appeal from a specialist adjudicator or QCAT on a question of law. (3) Subject to section 229A , the only remedy for a dispute that is not a complex dispute is— 6 As the Chief Justice then was 7 Body Corporate of the Lang Business v Green [2008] QSC 318 at [40]-[42] -- 8 of 18 -- 9 (a) the resolution of the dispute by a dispute resolution process; or (b) an order of the appeal tribunal on appeal from an adjudicator on a question of law. (4) However, subsections (2) and (3) do not apply to a dispute if— (a) an application is made to the commissioner; and (b) the commissioner dismisses the application under part 5 . (5) Also, subsections (2) and (3) do not limit— (a) the powers of QCAT under the QCAT Act to— (i) refer a question of law to the Court of Appeal; or (ii) transfer a proceeding, or a part of a proceeding, to the Court of Appeal; or (b) the right of a party to make an appeal from QCAT to the Court of Appeal under the QCAT Act. 229A Disputes about particular debts (1) A claim to recover a debt the subject of a debt dispute that is a claim under the Queensland Civil and Administrative Tribunal Act 2009 , schedule 3 , definition minor civil dispute, paragraph 1(a) is, under paragraph 2 of that definition, a minor civil dispute. (2) Subsection (1) does not affect a body corporate’s right to start proceedings in a court of competent jurisdiction to recover a debt the subject of a debt dispute. (3) To remove any doubt, it is declared that an adjudicator does not have jurisdiction in a debt dispute. (4) A dispute resolution process does not apply to a debt dispute or a related dispute to a debt dispute once a proceeding to recover the debt the subject of the debt dispute is started before QCAT or in a court of competent jurisdiction. (5) If— (a) a dispute resolution process has started for a debt dispute or a related dispute to a debt dispute; and (b) a proceeding to recover the debt the subject of the debt dispute is subsequently started before QCAT or in a court of competent jurisdiction; the dispute resolution process is at an end. (6) A dispute is a related dispute to a debt dispute if— (a) the subject matter of the dispute is related to the subject matter of the debt dispute; and (b) there are proceedings in a court or before QCAT to recover the debt the subject of the debt dispute; and (c) the commissioner considers that the dispute and the debt dispute are connected in a way that makes it inappropriate for the dispute to be dealt with by a dispute resolution process. (7) In this section— debt dispute means a dispute between a body corporate for a community titles scheme and the owner of a lot included in the scheme about the recovery, by the body corporate from the owner, of a debt under this Act. [30] Are these the clear words required by Justice Daubney? His Honour Judge Smith considered them in Lynvale at the invitation of the Body Corporate. -- 9 of 18 -- 10 [31] At Page 4 of the challenged decision of the learned Magistrate appears the following: “I am of the view [the owner’s] equitable dispute is not a ‘debt dispute’. Similarly, I am satisfied the equitable dispute is not a ‘related dispute’ as the commission has not been asked to consider if the equitable dispute and the debt dispute are connected” and he footnoted Section 229A(6)(c). [32] The appeal Judge was undoubtedly alive to the issue of whether all 3 limbs of s.229A(6) had been met and appears to have decided they were not8 without expressly stating so. [33] For my own part, the work of Sections (4) and (5) in removing a ‘debt dispute’ and the ‘related dispute’ from the ‘dispute resolution provisions’ in Chapter 6, can only apply to what can properly be called a ‘related dispute’ by applying the definition. [34] That is defined in (6) and has 3 elements, all expressed in mandatory terms. [35] The final element can only be met if the commissioner had formed some view. That would be impossible if they were unaware of the potential ‘related dispute’ and had expressed it. [36] There is no evidence before me that the commissioner is aware of the issues raised in the counterclaim. [37] In my view, the legislature intended by the plain words it used, to exclude persons in the position of the defendant from offsetting overdue levies before a Court unless: a. the subject matter of both disputes is related; and b. the commissioner considers it appropriate. [38] To hold otherwise would mean section 229A(6)(c) would be robbed of any meaning or purpose. [39] Chapter 6 was clearly implemented because it was thought to be a more appropriate way of resolving such disputes without recourse to expensive and time-consuming litigation. [40] The requirement that the ‘subject matter’ of each dispute be related is further illustrative. It is not sufficient that the same two parties are in dispute about something. The subject matter of any debt dispute as defined has to be whether the debt is properly payable. To be a related dispute, it must also go to that issue. [41] His Honour dealt with the Lynvale matter on the basis that the dispute in question was not a ‘related dispute’9 but that as an equitable set off it had merged with the disputed amount itself. 10 8 At [24] -- 10 of 18 -- 11 [42] That was on the basis that: a. the need to levy the amounts sought would itself not have occurred if proper provision has been made in the first place; and b. repairs for damage caused by the failure to maintain above and beyond the maintenance itself was caused; and c. the appellant was actually out of pocket in having paid for them. [43] The equitable set-off in this case does not claim there was any failure of the Body Corporate which has actually put the defendants out of pocket at all yet and certainly no claim beyond the costs of doing the maintenance which they say should have been done (at their expense) already. [44] Unlike Lynvale, it is not pleaded that any of this ‘non-maintenance’ happened before the Defendants became lot owners. Air-conditioning Contributions [45] Applying section 229 to the dispute about the air-conditioning contributions: a. It could be resolved under Chapter 6. b. It is not a complex dispute c. It was not dismissed under part 5 [46] This there is no remedy this Court can give in relation to that issue unless section 229A applied. I have decided it does not. [47] Even if I am mistaken about section 229A(6)(c), applying that section to the dispute about the air-conditioning contributions: a. The Plaintiffs claim is a debt dispute under subsections (2) and (6). b. The subject matter of both the section 167 argument and that part of the levies which relate to the special levy are related. c. Some small part of the air-conditioning contribution could be a ‘related dispute’ under s.229A. d. The Plaintiff’s submission were that this was issue estopped by the proceedings before the Adjudicator. [48] It is immediately obvious that the Defendants repeat the factual basis for their objection to the air-conditioning units which was rejected in Sierra Grand [2016] QBCCMCmr 516. That is to say, despite the Adjudicator finding in their paragraph [16] quoted above, the Defendant’s counterclaim and set off each relies on that 9 At [24] -- 11 of 18 -- 12 finding being wrong. The Adjudicator upheld the validity of Motion 3 including the levy set out in it. [49] It would be splitting hairs to argue that this pleading related to the recovery of part of the fees rather than validity of the motion and that the same argument could be had in relation to the levies it having been lost in relation to the motion. The resolution of both matters involved making a decision about exactly what the air- conditioning system entailed including the very core factual allegations in paragraph 4 of the defendants most recent pleading. The organization with the jurisdiction to hear and determine the subject matter of that issue has done so. [50] There was no appeal. That would be the appropriate avenue to challenge that finding. It cannot be challenged by a quasi-appeal here seeking to re-litigate this issues in this jurisdiction. The Counterclaim in as much as it relates to the s.167 issue is a matter that can now only be challenged under subsection 229(5) and that means this Court cannot determine it. [51] This is not a matter of issue estoppel per se but simply an application of s.229. It can never fall under s.229A because under (6)(a) it is not a ‘related dispute’ but the same dispute and it can only be challenged by an appeal that lies elsewhere. The Negligence Issues Exclusivity [52] Section 281 was mentioned in argument but is ultimately irrelevant. It is the only limitation on the value of orders an adjudicator could make. [53] It only applies if the adjudicator is satisfied the applicant ‘has suffered damage to property because of a contravention of the Act’. No actual damage to property of the Defendant’s is alleged. All that is pleaded is a loss of value. [54] If the Defendants were to apply to have the Body Corporate’s obligation to maintain enforced by an order, an adjudicator could order it to maintain the FSS. They have not sought to do so. [55] Likewise, they could have and have not sought any orders about the Body Corporate needing to chase-up the contractors or to have additional work done to mitigate what is pleaded as an increased fire safety risk as a result of poor workmanship. Failure to Maintain FSS [56] Applying section 229 to the dispute about the failure to maintain the FSS: a. It could be resolved under Chapter 6. 10 See Denham at 4.29-4.30. -- 12 of 18 -- 13 b. It is not a complex dispute c. It was not dismissed under part 5 [57] This there is no remedy this Court can give in relation to that issue unless section 229A applied. [58] If I am wrong about s.229A(6)(c), then applying s.229A to the dispute about the failure to maintain the FSS: a. The Plaintiffs claim is a debt dispute under subsections (2) and (6). b. The subject matter of the failure to maintain argument is an argument that the Body Corporate should have done something and levied to pay for it and has not, causing loss. c. The male Defendant has sworn no levy has been struck or provision made for the alleged failure to maintain. d. Any failure before or since to comply with any standard of maintenance is not ‘related’ to the payment of levies. Indeed, Mr Royston’s complaint is that the work has not been done and there are no provisions to pay for it by levies or any other means. e. Since the levies to be recovered are not for the maintenance, the subject matter of the debt dispute is not related to the subject matter of the FSS dispute. f. The FSS issue could never be a related dispute under s.229A Poor Installation of Air-conditioning [59] Any failure of the Body Corporate to supervise the air-conditioning contractors, to achieve proper fire safety is a dispute between the parties. [60] It is not pleaded or even asserted how these claims are ‘related disputes’ as required under s.229A. The issue of the poor installation of the air-conditioning was raised in submissions, not pleadings however before summary judgment can be given on a set of pleadings, there should be no possibility they could be fixed.11 [61] This there is no remedy this Court can give in relation to that issue unless section 229A applied. [62] Even if I am wrong about s.229A(6)(c), applying section 229A to the dispute about the failure to install the air-conditioning properly causing a loss of value: a. The subject matter of the failure to chase up the installers argument is an argument that the Body Corporate should have done something and has not causing a loss in value. 11 Chen v ANZ [2001] QSC 043 at [1] -- 13 of 18 -- 14 b. The Defendant has sworn no levy has been struck or provision made for the alleged failure to chase up the installers. c. Since the levies to be recovered are not for the installation already done but for what is alleged to be the requirement to spend more time and effort or funds to have the job rectified, the subject matter of the debt dispute is not related to the subject matter of the installation dispute. d. The levies charged were for work done and paid for. The unrelated dispute is about whether it was well done or whether the Body Corporate needs to do something more to get the job completed. e. The air-conditioning contribution could never be a related dispute under s.229A Equitable Set-Off [63] Is there, as pleaded, an equitable set-off that may be ‘about recovery’ 12? [64] As set out in Forsyth v Gibbs13, there must be a connection between the claim and the cross-claim so as to impeach the claim so as to make it unfair for the claim to be allowed without taking account of the cross-claim.14 [65] Neither of these is related to the payment of the levies. They are not in the terms used by the Court of Appeal in Forsyth v Gibbs “been either integral or even collateral to the” levies. [66] As Lord Denning said in Federal Commerce & Navigation Co Ltd v Molena Alpha Inc :15 [I]t is not every cross-claim which can be deducted. It is only cross-claimes that arise out of the same transaction or are closely related with it. And it is only cross- claims which go directly to impeach the plaintiff’s demands, that is, so closely connected with his demands that it would be manifestly unjust to allow him to enforce payment without taking into account the cross-claim.” [67] What is cross-claimed is that more work should have been done already (at the Defendant’s expense) and it has not been done. It is not pleaded that any failure to do this work preceded the Defendants becoming responsible for its costs. That fact also further distinguishes this case from Lynvale. 12 See Lynvale at [9] 13 Forsyth v Gibbs [2009] 1 Qd R 403 14 See also Denham at 4.09 to 4.11 15 [1978] 1 QB 927, 974,975 -- 14 of 18 -- 15 [68] The pleadings do not disclose how the non-charging for work yet to be done can impeach the claim for levies charged and payable for other purposes. [69] The equitable set off, even if available on the pleadings as they stand, cannot be made out as part of the debt dispute itself. They are not an equitable set off. They are therefore subject to s.229A. [70] There is no need for trial. There is nothing for this Court resolve in this case. Damage [71] An essential element of a cause of action in either common-law negligence or breach of statutory duty is a pleading of damage. [72] Actual damage is required. Speculative or contingent damage will not suffice. 16 [73] Where there has been no sale it would risk compensating an owner in cash now for a loss that might never be realized. [74] Until the loss of value, temporally attributable to the failures pleaded is crystalized by a sale or some other positive detriment being visited upon the Defendant, any failure to maintain or supervise remains only a potential source of loss and not a loss. [75] To illustrate: a. any maintenance might be completed before any sale. b. the purchaser might be unaware of the issue and so not deduct anything from the purchase price. c. the installers insurer might pay for the repairs. [76] Negligence (common law of statutory duty) requires loss to be actionable. Where money is spent a loss has accrued. Where a value has dropped no loss has yet arisen. To hold otherwise would mean that every Body Corporate would become the guarantor for every unit owner’s property values and they could set off any or all levies based on a valuation decrease attributable to inaction or a failure to maintain. [77] I consider that as there is no damage there is no cause of action. Failure to Maintain FSS [78] I consider there could be damage in any event because the proper measure of damages is the cost of repairs. The purpose of damages is put the parties back as nearly as possible to the position as if the tort had not been committed. -- 15 of 18 -- 16 [79] It seems fairly obvious that where any work required can be done and it will restore any breach of duty, that is the appropriate measure of damages. [80] It seems equally obvious that where the Defendants case is that they should have been levied and this work should have been done, that if those things were to happen tomorrow, they would not be out of pocket. They would suffer no loss because they would be paying tomorrow what they already should have paid. [81] While it would be a matter for evidence, a Court might also require some convincing evidence that as a factual basis, there was a change of value attributable to a failure to maintain and levy that reduced the value by more than the amount of that levy. [82] If there is work to be done that should have been done, it will have to be paid for by the owners at the time rather than the owners when it should have been done. The Defendants are part of that group of owners at both points of time. There is no actual loss in the sense of money having to be paid and no real loss because they (if they turn out to be right) should have paid it already. [83] I find they have no prospects of recovery in their counterclaim or set off whether it is heard with the debt dispute or not. [84] Even it were a barely maintainable cause of action, the damage would be nil so there would be no set off. Poor Installation of Air-conditioning [85] Is there actionable loss and damage resulting from the alleged failure of the Body Corporate to have the air-conditioners installed properly? That is, has this dropped the value of the Plaintiffs units and is that actionable? [86] A Court might question whether there is any damage because it is not too late for the Body Corporate to recover from the contractor. There is no expiry of a limitations period in play. [87] All that is relied on is [71] to [72] of Lynvale. That case is distinguishable because actual money was spent on making actual repairs that arguably included things the Body Corporate should have done and did not. Here it is the opposite. No-one has spent anything. That is the very essence of the claim of negligence and the right to set off. [88] In MAGOG, money was spent or to be spent on repairs and there was a concrete actual loss of rent proven. 16 Wardley Australia Limited v Western Australia (1992) 175 CLR 514 at 526, 527 and 531. While this case is in relation to negligent advice the principles stated are applicable at common law to all negligence cases. -- 16 of 18 -- 17 [89] Either the work here was done properly (no loss) or it wasn’t. [90] If it wasn’t done properly and was paid for, the Body Corporate can enforce its contractual rights against the installers. If it actually pays someone else to rectify and levies for it, there is loss. If it allows itself to become statute barred there is a loss. Until either of those, there is no loss and therefore no actionable damage. [91] If it wasn’t done properly and the scope of works was still met, there is no actionable loss because the extra work will have to be done and be levied for. [92] Here, no cost has been incurred by the Defendants as a result of the quality of the workmanship. They are not out of pocket. Conclusions [93] The conclusions I have reached are: As to the Defence A. Special Levy a. The issue of whether the air-conditioners serviced more than one lot was determined by the Adjudicator. b. Whether the Body Corporate should recover from the other owners is not a ‘related dispute’ to the payment of the levy. c. It is part and parcel of the same dispute and the remedy lies in appeal elsewhere. This court is excluded from that process. d. There is no set-off or counterclaim over which this Court has jurisdiction. B. Air-conditioning installation negligence. a. Any failure of the Body Corporate to follow up with the contractors about the quality of the installation (whether it caused fire safety issues or not) is not at all related to the payment of any of the levies, even the special levy. b. It is a new dispute about what the Body Corporate should do next. c. It is exclusively a matter for the BCCM and is not a ‘related dispute’ d. There is no set-off or counterclaim over which this Court has jurisdiction. e. There is no damage and so no loss and no cause of action. C. Fire Safety System Negligence -- 17 of 18 -- 18 a. Any failure of the Body Corporate to maintain anything (whether it caused fire safety issues or not) is not at all related to the payment of any of the levies, even the special levy. b. It is a new dispute about what the Body Corporate should do next. c. It is exclusively a matter for the BCCM and is not a ‘related dispute’ d. There is no set-off or counterclaim over which this Court has jurisdiction. e. The proper measure of damage is the cost of fixing the problem, not the loss of value. f. There is no loss where all that has happened is that the repairs will be done later where as if they had been done on time the levy for that work would already have been payable. g. There is no damage and so no loss and no cause of action. As to the Counterclaim i. There is no cause of action maintainable for either common law or statutory negligence, there being no loss and therefore no damage. ii. Even if there were, the only appropriate measure of damages is nil and so there is no need for trial. [94] It seems to me that there are no factual matters that need resolving between the parties and no need for trial to dispose of the matters as pleaded. [95] The Respondents say rule 444 was not complied with. It does not apply because of r. 443. This application is not under r.372 but 292. [96] The Plaintiff is entitled to summary judgment on each of its claims against each defendant. [97] The Plaintiff is further entitled to summary judgment on the counterclaims against it. [98] I will hear the parties as to costs. A.H. Sinclair Magistrate Southport -- 18 of 18 --