QUEENSLAND – 2019
- We successfully resisted an application to the Registrar to set aside a bankruptcy notice issued for a body corporate. We were served with the application with less than three business days notice, but acted quickly to have the application dismissed with costs at the first hearing date. We were then served with an application to review that decision the afternoon before it was due to be heard by a Judge. Despite the prejudice of the short service, we appeared the next day to have the application dismissed and secured an indemnity costs order in favour of the body corporate.
- We successfully resisted an application to re-open a prosecution we made under the Justices Act aiming to set aside convictions, fines and costs orders secured in favour of a body corporate. On short notice, we successfully argued that the application was outside the Court’s jurisdiction and without merit. A costs order was made in favour of the body corporate.
- We counselled and assisted the committee of a very large strata community in its opposition to motions put forward by the building manager seeking a five year extension and the insertion of a Gallery Vie clause in to the management rights agreements. It was a drawn-out, contested and highly political campaign in the lead up to the AGM. The variations were refused by a significant majority at the general meeting.
- We acted for the body corporate of a premium residential strata community in response to an application made to QCAT by the building manager seeking a significant increase to the caretaking remuneration. We responded to the application primarily on the basis that the remuneration review was not binding. The matter settled favourably at a mediation on the basis.
- We assisted a committee of a new development take back control of their strata community. The strata manager was refusing to process any committee approved expenses unless the caretaker also authorised them, the caretaker was refusing to comply with reasonable directions from the committee about the performance of caretaking duties, and the strata manager was paying itself from body corporate funds for the provision of additional services without any committee approval.
- The body corporate resolved to change strata managers. We were then successful in multiple disputes before the Commissioner’s Office to compel the former strata manager to hand over all property and records to the new strata manager, and to resist a challenge by an ally of the caretaker to all business conducted at the general meeting. We obtained a rare costs order in favour of the body corporate for the dismissal of that application on the basis that it was vexatious and misconceived.
- We assisted a body corporate that had been subjected to a lot owner bombarding it with dozens of communications a day. We successfully argued that those communications amounted to a nuisance and obtained an adjudicator’s order to significantly restrict the way the lot owner could communicate with the committee, strata manager and individual committee members.
- When resolving disputes before the Commissioner’s Office, adjudicators have the power to make a costs order of up to $2,000 in favour of a respondent if an application is dismissed for being frivolous, misconceived, vexatious or without substance. These costs orders are very rarely made. In fact, over the course of 2017 – 2019 so far, our research identifies that only 15 of these costs orders have been made. We have obtained them for bodies corporate we acted for in 6 of those cases, which represents a 40% of these rare costs orders.
- We began acting for a committee of a new strata community shortly after the developer proposed a buyer of the 25 year management rights. At an early stage, we identified that the caretaking agreement was unbalanced unfair and unreasonable. Consequently, the committee refused to consent to the transfer of the management rights because it would lose the body corporate’s right to review the terms and remuneration payable under the agreement if it did so. The body corporate then authorised a review of the agreement. The developer filed applications in the Commissioner’s Office to challenge the reasonableness of the body corporate’s position. We successfully defended the body corporate in having the interim order application dismissed, and then negotiated a satisfactory outcome that led to significant improvements to the agreement.
NEW SOUTH WALES – 2019
Grace Lawyers’ litigation and insurance practice group acted for insurers and/or consumer in a number of product defect claims against manufacturers and sellers seeking to recover damages for property damage and personal injury ranging from a value of approximately $20,000.00 to $200,000.00. The claims typically related to faulty household electrical goods and motor vehicles and involved invoking the safety defect provisions of the Trade Practices Act 1973 (Cth) and The Australian Consumer Law in the Competition and Consumer Act 2010 (Cth) as well as the equivalent provisions of the Sale of Goods Act 1923 (NSW).
The matters generally involved complex issues of liability and causation and the extent to which a consumer was required to prove the actual defect in the fault item causing damage. Through a mixture of careful investigation work and targeted negotiation Grace Lawyers has been able to make substantial recoveries, including in circumstances where a significant amount of the evidence was lost or destroyed, in the order of between 50-90% of the claim amount.
Grace Lawyers’ litigation and insurance practice group acted for an insurer in relation to a property damage claim for approximately $330,000.00 arising from a fire caused by faulty insulation installed as part of the Commonwealth Government Home Insulation Program. The installer and its insurer denied liability and alleged contribution by the consumer (insured) and/or the original electrician who installed the wiring in the home. Proceedings were then required to be commenced in the ACT Supreme Court. The matter was made more complex by the fact that the two fire investigators from the ACT Fire & Rescue Service had apparently reached different conclusions on the cause of the fire. Two coronial inquiries were also conducted which also came to different conclusions. Peter Ton and junior lawyers assisting him was able to re-examine all of the documentary and forensic evidence and was able to establish that the two fire investigators were not in fact in conflict with each other and the basis on which one of the coronial inquiries had reached its conclusion on causation was wrong. After obtaining lengthy affidavits from all of the witnesses involved and supporting independent expert evidence, the third party insurer capitulated rather than risk losing entirely at hearing for an amount which represented 100% of the claim plus legal costs assessed on a party/party basis.
Grace has previously assisted Government Departments with internal corporate governance issues including the Defence Housing Authority (DHA) with internal management advice concerning the management and control of strata and community title properties owned, leased and/or managed by DHA as part of its portfolio. This work has involved a review of internal management procedures, legislative obligations, advice on risks and liabilities, training of staff on procedures and monitoring changes in internal management practices.
Grace has assisted Government in legislative review with staff sitting on various committees:
- IHAP: stakeholder groups on National Licensing issues. In this capacity drafting papers, policy documents and attending consultative forums representing various industry groups (Strata Community Australia, Urban Development Institute of Australia);
- CTTT: representing stakeholder groups on consultative committees in Strata and Community Titles and Building and Construction forums (Strata Community Australia);
- Owners Corporation Network (legal assistance): assisting OCN in providing legal and technical assistance in their dealings with various Government Departments over legislative reforms (i.e. for current issues being strata titles law review, home building review and planning law review)
Grace provides services to clients on the review of decisions of Local Councils and other Government departments involved in developments (for example Roads and Maritime Service). Grace assists clients in providing advice on planning law issues ( for example reviews of Councils on development applications, merit review assessments, prosecutions under planning law matters), licensing issues (liquor licensing, real estate and strata management licensing) and specialist Tribunal reviews (Consumer Trader and Tenancy Tribunal, Administrative Appeals Tribunal etc.).
Some examples are:
- Grace was engaged to assist a strata management business that was potentially in breach of its licensing requirements. The Office of Fair Trading had suspended the licensee and was considering litigation against the licensee and directors of the company. The initial instructions involved urgent meetings with investigators, drafting of advice and developing a business strategy for the management of the issues. At present the company assets have been sold, there have been claims made on the fidelity fund (where appropriate) and management has been removed from the business. All customers of the Agency have been reimbursed from assets of the sale.
- Grace was engaged by a strata scheme in Sydney Eastern Suburbs to defend action taken by Council to enforce a fire upgrade order issued under the relevant town planning laws. Council required a major upgrade to the building as a result of investigations undertaken by Council inspectors. Grace engaged relevant town planning experts and fire engineers to provide reports on the Council orders and the proceedings generally. An appeal against the decision was made to the L&E Court.
Through detailed and lengthy negotiations agreement was reached with Council to:
- Reduce the number of items in the orders
- Amend the required works to be in line with recommendations from the strata schemes experts
- Agree to a works program over a period of time
The result of Grace’s involvement was that the original orders of Council were amended and the costs reduced to the client and spread over a reasonable period of time for compliance whilst not impacting on any safety in the building (Council’s major concern).
- Grace was engaged by a boutique inner city development to oppose the use of premises as a restaurant. The premises had been used as a restaurant previously (existing use rights) and had exclusive possession over part of the common areas in the strata scheme to conduct business. A dispute arose over the use (and impact) of the common areas by the restaurant and a proposed increase in usage. The advice provided that the existing uses arrangements and the use of the common areas was challengeable together with being able to object to the new application to Council. The work involved a detailed review of the original development and the purpose of past and current approvals. Issues were found that past works were not properly approved, were conducted without certification and Liquor licences had been incorrectly approved and management documentation was inadequate. Following this review new management documentation was prepared and submissions made to Council on the new proposal (as a result of the changed position). The application was refused and the restaurant did not proceed. The strata scheme also was able to overturn all previous approvals including the use of the common areas.
- Grace was engaged by an inner city development to prevent the increased use of a boutique hotel. Advice was provided on the application and submissions made to Council on the application. Grace engaged various experts to provide reports for inclusion in the objections to the application which were later relied upon by Council in its decision. Numerous representations were made to Council and Council determined to approve the development application on grounds more favourable to the strata scheme.
Builders negligence leading case – Grace acted for the owners corporation in its claim against the builder in negligence before all levels of the Court system and ultimately the High Court. The claim related to an owners corporation’s right to sue a builder where there were no rights under the Home Building Act 1989 (Home Building Act). The Court held against the owners corporation in this instance but clarified all aspects of the law that applied to construction outside of the Home Building Act (Brookfield Australia Investments Pty Ltd (ACN 008 687 0630 v The Owners – Strata Plan No 61288 v (2014)).
Landmark case against Council – Grace acted for an owners corporation in Lane Cove where Council had been involved in a development of land. Council claimed that it was not a developer for the purposes of the Home Building Act but acted as Council in the development.
Grace brought a claim for defective work against Council and breaches of the warranties under the Home Building Act 1989 (NSW). Council defended the matter. Grace were successful in having a determination that the Council was in fact a developer and dismissed the argument in favour of the owners corporation with costs (The Owners – Strata Plan No 151721 v Lane Cove Council NSW Civil and Administrative Tribunal)
Forcing Referee report – Grace acted for an owners corporation and were successful in having the Supreme Court enforce a Referees report on construction defects against the liquidator and that indemnity be provided by the insurer under a home warranty certificate of insurance (The Owners – Strata Plan No 74571 v Sandstone Constructions Pty Limited, unreported).
Brookfield case revisited – Grace successfully defended an application to strike out an owners corporation’s claim for defective construction work under negligence and revisiting the earlier Brookfield decision (The Owners – Strata Plan No 70335 v Walsh Bay Finance Pty Ltd  NSWSC 1031)
Non apportionment of liability – Grace acted for the owners corporation against its developer/builder for construction defects and during the case an application was made to apportion liability to others. Grace were successful in having NCAT refuse such an application and liability rested with the original defendants (The Owners – Strata Plan No 73019 v Brodyn Pty Ltd, Titanium Group Pty Ltd, Auscore Constructions Pty Ltd  NSWCATCD 43).
Interests on costs application – Grace successfully argued that an owners corporation was entitled to interests on its substantial costs in proceedings (The Owners – Strata Plan No 74584 v Sezone  NSWSC 999).
Height of building – Grace successfully argued that a proper interpretation of the Building Code of Australia regarding effective heights of buildings was relevant to the claim and that the building required remedial works (The Owners – Strata Plan No 69312 v Rockdale City Council; The Owners – Strata Plan No 69312 v Allianz Aust Insurance  NSWSC 1244).
Misappropriated funds – Grace acted on behalf of two insurers and their mutual insured in relation to a claim involving misappropriated monies held on trust on behalf of the insured. The monies were stolen by way of forged cheques enabled by poor record keeping and accounting by the insured. The amount in question was $100,000. An inadequate “audit” had been completed by an accountant engaged by the insured. Grace conducted investigations and identified 41 cheques to be fraudulent based on a review of bank records and written statements obtained from various members of the owners corporation. The investigation was complicated by concurrent police and Bank investigations as well as recovery action by the insurers and insured. On presentation of Grace’s investigation report, Bank accepted Grace’s conclusions and paid the insurers/insured approximately 98% of the claim without further dispute.
Motor vehicle blind incline: Grace acted for an insurer in relation to a $265,000 motor vehicle claim where the insureds had died in a multi-vehicle collision in which a third party Prime Mover collided into the insured vehicle (and another in front of it). The insured had stopped behind the other third party vehicle just over a blind incline. The third party truck travelled over the blind incline and collided heavily into the rear of the insured vehicle – pushing it into another third party vehicle. The driver of that third party vehicle suffered extensive injuries causing him to lose all memory of the collision. A subsequent coroner’s investigation cleared the truck driver of any negligence (in our view wrongly) and made no findings in relation to any negligence by the insured and the other third party driver. Our team obtained the detailed written, expert and audio-visual evidence submitted by the police to the coroner and conducted our own investigations. It was Grace’s advice to the insurer that the collision was most likely the fault of the truck driver. Further, it was unlikely that the insured was at fault. This was based on evidence (seemingly overlooked by the coroner), that a number of other vehicles, including another truck, had been able to avoid the insured vehicle prior to the collision. The insurer accepted our advice and instructed us to defend any legal proceedings from the third party truck driver (if any). Grace then had communications with the third party solicitor (acting for the insurer of the Prime Mover) as to the reasons why the insured was not at fault. The third party insurer did not commenced legal proceedings.
Body-corporate by-laws: Grace acted for an insurer in relation to a claim against an owner’s corporation for rectification and damages arising out of an alleged typographical error in an exclusive use by-law. The result of the typographical error was that there were competing claims between the lot owner whose lot was (incorrectly) identified on the registered by-law and the lot owner who had been using the disputed area for some 30 years on the mistaken belief that she had the legal right to do so. The mistake had not been discovered for over 10 years and the previous two versions of the registered by-law had the “correct” lot number identified since about 1966. Due to the age of the claim, all relevant documents had either been lost or destroyed and witnesses had either past away or were no longer contactable. The relevant legislation had also been superseded on a couple of occasions in 1977 and 1996. Grace had to reconstruct the events since 1966 and determined the lot owner who had used the area did not have the legal right to do so since 1977, based on the operation of an obscure section of the transition provisions of the relevant superseded legislation and procedural defects in the original by-law. As a consequence the insurer accepted the claim and instructed Grace to defend the matter. The defence was entirely successful and cost orders were made in favour of the insurer, including a partial indemnity order.
Unauthorised works and weakness in the evidence: Grace acted for an insurer in relation to a claim that had been partially denied due to the insured conducting unauthorised works to the insured residential property thereby preventing the insurer from being able assess whether the claimed damages fell within the terms of the policy. The original assessment evidence was unclear on whether or not it was the case that the claim was unable to be assessed due to the insured’s conduct. The insured disputed the denial and claimed approximately $30,000 in damages, interest and legal costs. Grace investigated the claim and immediately identified the weakness in the assessment of evidence as well as the fact the effect of Section 54 of the Insurance Contracts Act 1984 (Cth) had not been considered. The insurer accepted our advice and recommendation to settle on the basis of its liability under Section 54. In fact, Grace was able to negotiate an early settlement after the first Court appearance that bettered its instructions at approximately 23% of the claimed amount.
Body corporate strict liability: Daniel Radman and Peter Ton acting for an insurer in relation to a public liability claim against an insured owner’s corporation for breach of the strict obligation to maintain the common property of the strata scheme. The $120,000 claim involved alleged water penetration into a unit. Up until this point in time, insurers and owners corporations had failed in defending such claims as the Supreme Court found the obligation on the owner’s corporation to be strict. This resulted in lot owners making inflated claims against owners corporations and their insurers for alleged property damage on the assumption there no defence. Grace advised that an early stage that the claim should be defended on the basis of causation and quantum. The insurer was ultimately successful at final hearing and on appeal to the Supreme Court on the basis the lot owner could not prove causation or quantum. This case together with another case conducted by Grace created a useful precedent that causation was a defence and lot owners are required to prove all aspects of quantum. The precedent was used on behalf of the insurer and insured’s to settle similarly inflated claims on favourable terms to the insurer.
Grace undertakes work in the corporate law area for small business and Company Title buildings. Grace has acted in the sale of small business and providing advice on business structures and company arrangements. In its debt collection processes it carries out work for clients in pursuing companies for debts including winding up proceedings and schemes of company arrangements. By way of some examples Grace has acted in the following matters:
- Providing advice on the transfer from old system title to Torrens title of a company title building (although the final transfer was undertaken by another law firm). Following transfer the review/negotiation of a major $3Mil remedial program of works.
- The subdivision of a company title development into a strata scheme which involved the provision of advice on the constitutional requirements, drafting of amendments to the constitution, attending meetings, providing relevant taxation/duty advice on transfers of rights, preparation of all transfer/sale documents, negotiations with lenders (Banks etc.), preparation and involvement in town planning approvals (Council) and finalisation of all registration documents (and subsequent registration).
- Acting for sellers and purchasers of “onsite” Management rights (building management rights) in small and large scale developments. Acting in the preparation of contracts, negotiating contracts and finalisation of business sales. One example was a multistorey development consisting of a Hotel, individual residences, retail outlets and an onsite manager in the Sydney city CBD. The agreement was structured for all parties to deal with management of the entire complex for a 20 year period including requirements for reporting, computerisation and services to owners/residents in the complex.
- Acting for sellers and purchasers of small businesses. This involved the preparation of business sale contracts, negotiating and finalising agreements, business structuring and liaising with accountants and business advisors.
Strata Management Company: Peter Ton acted for a strata management company in relation to a claim by a disgruntled and vexatious tenant seeking damages of approximately $100,000. The tenant was assisted by her solicitor landlord as part of an overall attempt to discredit the executive committee of the scheme and the strata managing agent. The tenant commenced human rights proceedings in the Federal Court against the strata managing agent and executive committee members alleging a breach of a shopping list of provisions of various anti-discrimination legislation. The allegations and claims were fanciful but were likely to cause substantial cost to all parties concerned where recovery of cost orders was unlikely (the tenant had no financial capacity). Grace took the lead role in the proceedings by requesting detailed particulars to establish the unfounded nature of the claim, forcing the resistant tenant to answer the request for particulars (including obtaining Court orders where it was not the normal procedure) and foreshadowing a strike out application. This caused the tenant to agree to mediation in circumstances where the tenant was reluctant and had unfounded expectations about the value of her claim. At the mediation Grace was able to negotiate a settlement and obtain full release whereby a token payment was made by the client of $5,000 to avoid further legal costs.
Strata Managing Agent: Daniel Radman acted for an owners corporation in relation to a professional indemnity dispute with the insurer of its strata managing agent. The dispute was in relation to whether the strata managing agent could seek indemnity for issuing a defective certificate under Section 109 of the Strata Schemes Management Act 1996 (NSW) that resulted in a loss to them of over $100,000. The key aspect of the dispute was the interpretation of the strata managing agent’s indemnity clause, more particularly whether a strata managing agent could be indemnified when acting outside of his authority. After a lengthy legal argument and dispute involving the issues raised in Laresu Pty Ltd v Clark  NSWCA 180 the insurer abandoned its claim against the owners corporation.
Claim against negligent Solicitor: Daniel Radman acted for two individuals following the purchase of a hotel in Surry Hills, New South Wales affected by way of a complex company share purchase which included call and put options. Another solicitor had been engaged in relation to the purchase. The plaintiffs alleged the solicitor was negligent in his advice, the drafting of various documents and the failure to exercise an option which resulted in a loss to the Plaintiffs of about $535,000. This matter was strongly litigated by the insurer acting for the solicitor. After the preparation of all evidence (including expert accountants and legal evidence), all interlocutory steps (including discovery, strike out applications by the insureds’ solicitor and preparation of submissions and tender bundles for hearing), the matter settled prior to hearing and resulted in a settlement of over 70% of the claim in favour of the individuals.
Grace as part of its strata, property and construction areas of practice involved work under environmental laws. All work involving planning laws, development applications and construction work generally area dealt with by Grace as part of its services. Some examples area:
- Grace acted for a strata scheme in the Eastern suburbs of Sydney concerning the running of a number of apartments as brothels within the building. Grace provided advice on the options, acted for the strata scheme in its approach to Council and assisted Council (as expert advisors) in its action against the brothel owners before the Land & Environment Court. Ultimately the Court decided in favour of the Council (and the strata scheme) and set new law relating to the approval process when changing use of a lot in a strata scheme (Suzelle Antic v Waverley Council  NSWLEC 125)
- Grace acted for a strata scheme in a neighbourhood trees disputes concerning the damage caused to common areas as a result of tree roots. Grace provided advice, lodged the application, attended the inspections and made representation to the presiding Commissioner (L&E Court) which led to a decision in favour of the strata scheme including ongoing obligations.
- Grace as part of the Corporation law examples above (transfer of company title land to strata title) provides service to companies that are undertaking the transfer. This involves an application to Council (and any relevant appeals thereof) concerning the approval for the subdivision. Grace acts in providing advice, making any application and/or appearing at Council meetings or any merits or judicial review.
- Grace acts for land owners who have breached various planning law requirements and have been prosecuted or are in the process of being prosecuted by Councils. An example is where a strata scheme is issued with an order from Council for breaches of fire safety requirements or issued with an order to upgrade the building.
Injurious Falsehood: Grace has acted for corporate clients who have been defamed (injurious falsehood) by customers or in a strata context owner of lots in the strata scheme. This work has included the provision of advice, detailed complaint preparation and negotiated settlements. In one instance members of the executive committee of a strata scheme client had been ridiculed by owners within the strata scheme on a purpose built website. Following instructions Grace was able to have the website taken down, the issues resolved and an apology given to those members of the executive.
Misappropriated funds: Grace acted on behalf of two insurers and its insured in relation to a claim involving misappropriated monies held on trust on behalf the insured. The monies were stolen by way of forged cheques enabled by poor record keeping and management. The amount in question was $100,000. An “audit” had been done by an accountant engaged by the insured. Grace conducted investigations and identified 41 cheques to be fraudulent based on a review of bank records and written statements obtained from various members of the owners corporation. The investigation was complicated by concurrent police and Westpac investigations as well as recovery action by the insurers and owners corporation. On presentation, Westpac accepted the evidence produced by the insurers/insured and prepared by Grace and paid the insurers/insured approximately 98% of the claim without further dispute.
Grace acts on behalf of a number of strata and community schemes, finance, retail and wholesale trade and commercial clients which require debts to be recovered and as a last recourse by filing winding up proceedings against companies and bankruptcy proceedings against individuals. Grace prepares and serves on average 5 to 10 bankruptcy notices or statutory demands per week and about 40 winding up applications and 80 creditors petitions per year. 95% of matters are undefended and either result in full payment including the payment of legal fees based on the Court scale or the company being placed into liquidation and/or the individual into bankruptcy. When defended Grace acts, advises and appears as advocate in the Supreme and Federal Courts.
Some examples include:
- Grace acts in possession proceedings and repossessions on behalf of Liquidators and Trustees to take possession of properties which have vested in the liquidated company or bankrupt estate respectively. Preparing and filing all Court processes, over 95% of matters are undefended. Grace acts from the issue of the notice to vacate through to entering judgment, and obtaining possession after the issue of a writ/warrant of possession.
- In the matter of Andrew Aravanis as trustee of the bankrupt estate of Jane Kelly v Jane Kelly NSWSC 2012, Daniel Radman acted for the trustee in a matter in which he was the trustee of Ms Kelly’s bankrupt estate in which the only asset was property left to Ms Kelly from the deceased estate of her mother Ms Thompson. Ms Kelly was delaying the administration of the deceased estate which resulted in no disposition being made to Ms Kelly as beneficiary under the will and then to the trustee of her bankrupt estate. Setting new precedent in the area, Daniel advised and ran as advocate an application to remove Ms Kelly as executrix and to replace her with the trustee so the trustee has dual roles as trustee of the deceased estate and bankrupt estate. This application was successful and then resulted in Daniel assisting the trustee to repossess and realise the property in the deceased estate (by taking further Supreme Court Proceedings) which ultimately lead to a distribution to the bankrupt estate and the payment of 100% of creditors debts.
Failure to maintain: The Grace team acting for insurers and insureds in many matters defending property damage claims. Those matters usually involve an alleged failure to maintain common property resulting in damage being caused to lot property. The alleged defects varied from water ingress, collapse of walls, facials and render, failure to repair windows, doors or balconies and structural building failures resulting in damage. These claims range in value from $2,500 to $750,000. These matters involve the understanding and preparation of experts on a range of structural and design issues ranging to work undertaken by professionals such as engineers and architects through to builders, water proofers, tilers and fire consultants.
Vexatious claim: Peter Ton and another solicitor in his team acted for an insurer and the insured owners corporation in relation a vexatious claim for unspecified damages (likely in the $30,000 range) due to alleged personal injury resulting from a dispute about the use of common property. Grace identified immediately that the claim was speculative, confused and immediately recommended action be taken to strike out the claim. Peter acted as advocate at the interlocutory hearing and successfully obtained an order striking out the proceedings. An indemnity cost order was also obtained against the vexatious third party.
Strata Management Powers: The Owners – Strata Plan 5709 v Andrews  NSWCA 189 (”Andrews”). This case has set the law which is adopted throughout New South Wales as to how a strata manager is to conduct and manage a compulsory appointment under the provisions of section 162 of the strata Schemes Management Act 1996 (“The Act”). In circumstances where a strata scheme is not functioning properly, a person with standing can make an application to the Consumer Trader and Tenancy Tribunal for orders that the body corporate be divested of its decision making powers. However, once such orders are made, the Act is silent as to how a strata manager is to conduct their administration of the strata scheme under these compulsory powers. The matter of Andrews involved Grace Lawyers providing detailed advice to the strata scheme as to how it should conduct meetings, raise levies, conduct urgent emergency work and many other matters involving the administration of the strata scheme. Mr Andrews sought to challenge all of the decisions made by the strata scheme during the compulsory appointment period. The matter before the Court of Appeal unanimously held that the all of the decisions and the manner in which the scheme conducted itself during the compulsory administration period was proper. The Courts’ decision now provides precedent and a prescriptive guideline (where the Act is silent) about how a manager should conduct themselves (and make and record decisions) during the compulsory appointment period.
Unpaid Levies: In Ryan Catzel v The Owners – Strata Plan No 468  NSWSC 3701, Daniel Radman acted for the Owners Corporation in an Appeal from the Local Court. The Local Court proceedings involved a claim by the Owners Corporation for unpaid levies, interest and costs in which the Owners Corporation was entirely successful. Mr Catzel appealed the decision on the basis that there had been a denial of procedural fairness in the manner in which the Court exercised its discretion and that the Owners Corporation had failed to properly authorise the commencement of those proceedings pursuant to Section 80D of the Strata Schemes Management Act 1996. Clarifying what is necessary to provide authority to commence recovery proceedings, Grace advised and appeared as advocate in the Appeal which resulted in a decision confirming that the Owners Corporation had acted properly in relying upon a general resolution authorising the managing agent to commence levy recovery action on behalf of the Owners Corporation. Importantly, this allowed Owners Corporations throughout the jurisdiction to rely upon this decision in ensuring that proper authorisation had been provided for all levy recovery matters.
Statutory Demand: In the The Owners – Strata Plan No 17572 v Nomak Holdings Pty Ltd  NSWSC 1412, Daniel Radman acted for the Owners Corporation in relation to a Statutory Demand which had been issued to the debtor Company, (Nomak). Nomak failed to comply with a Statutory Demand within the time period available for it to do so however, when formal winding up proceedings were commenced against it, it sought to rely upon an attempt to make payment at a later date in order to avoid a winding up order. Other issues were raised by Nomak including service of the documents not resulting in receipt of documents. Grace successfully ran the application and in doing so confirmed firstly, that service could be effected by leaving a copy at the registered office and that non-receipt of documents would not nullify the service, and that an attempt to make payment of a debt after the presumption of insolvency is created will not be sufficient to avoid a winding up order on the basis of solvency.
Numerous Applications: Grace appeared on behalf of an Owners Corporation in several proceedings involving a lot owner, Mr McClymont. The proceedings were contested throughout the entire proceedings and judgement was entered in favour of the Owners Corporation in two separate claims within the small claim division of the Local Court. Mr McClymont went on to appeal these decisions in McClymont v Owners Strata Plan No 12139 (2009) 74 NSWLR 404. Mr McClymont appealed the decision of the Local Court on the basis that there had been some denial of natural justice. The Appeal was dismissed and the Court held that the actions of the Assessor sitting in the small claims division of the Local Court did not constitute a denial of natural justice.
The Owners Corporation proceeded to a bankruptcy notice. Mr McClymont made an application to have the Bankruptcy Notice set aside in the matter of McClymont & Ors v the Owners – Strata Plan No  FMCA 1079 on the basis that there had been a failure of the Owners Corporation in properly affecting authorisation to instruct Grace Lawyers to issue the bankruptcy notice. Mr McClymont raised technical arguments in relation to all steps taken by the Owners Corporation in properly authorising the proceedings. One such issue included, that the Owners Corporation had failed to comply with disclosure provisions under the Strata Schemes Management Act 1996. The Court found that even if this had been the case, this would not nullify the action taken by the Owners Corporation in taking legal action and merely had them in breach of their disclosure requirements. This decision is of some importance to Owners Corporations throughout the jurisdiction in that the effect of breaching disclosure requirements has been limited to avoid any nullification of related proceedings. Ultimately. The application to set aside the bankruptcy notice was dismissed. Various other applications and reviews were sought by Mr McClymont in relation to security of costs however each application was opposed by the Owners Corporation and ultimately dismissed. Mr McClymont proceeded to appeal this decision in McClymont v Owners – Strata Plan No 12139 (No 2)  FCA 479 on the grounds that the Owners Corporation was required to obtain approval pursuant to Section 80D of the Strata Schemes Management Act 1996 by failing to convene a meeting of the executive committee within the legislative requirements. The Court confirmed the decision of the Court below and dismissed the appeal. Ultimately, Mr McClymont sought leave to appeal in McClymont v Owners Strata Plan No 12139  HCASL which was refused and the litigation was finally concluded. However, Mr McClymont had commenced separate proceedings against the managing agent in McClymont v Strata Partners Pty Ltd  NSWSC 1077. The claim against the managing agent and to bring a speedy resolution to the matter, an application to strike out the proceedings was brought on behalf of the managing agent who was successful.
Terminate Schemes: Grace appeared on behalf of the Owners Corporation in Erling v The Owners – Strata Plan No 8891 & Ors  NSWSC 824 which involved an application to terminate the strata scheme and place it into liquidation. The importance of this decision was that is provided an outlined of what would be required in circumstances where there was a lack of consent of all lot owners to have a scheme placed into liquidation together with the practical realities in giving effect to a termination. As a result of this decision, lot owners and Owners Corporation now have a framework which they can use as a guide in determining whether it is appropriate to proceed with a termination of a strata scheme and the practicalities attached with doing so. Daniel Radman went on to act on behalf of the liquidator appointed to the termination of the Strata Scheme dealing with the total division of the asset and the distribution to all concerned parties while finalising all outstanding affairs achieving a result for each individual lot owner.
Appeals: Grace acted on behalf of the owners corporation Jagjit Singh v The Owners – Strata Plan No 11723  NSWSC 519 which confirmed the proposition that proceedings commenced in the District Court which are appeals from the CTTT and the Small Claims Division of the Local Court are considered “statutory actions” and do not fall within the meaning of section 127 of the District Court Act 1973 which would permit a further appeal to the Supreme Court or the Court of Appeal. The decision confirmed that the Supreme Court does not have jurisdiction to hear statutory appeals where the legislation has plainly conferred the jurisdiction to the District Court such as section 200 of the Strata Schemes Management Act 1996 and section 39 of the Local Court Act 2007 and dismissed an application by a lot owner to transfer proceedings in the Local Court pursuant to section 140 of the Civil Procedure Act 2005. This decision is now the leading authority in relation to the appellate jurisdiction of the District Court sitting in CTTT appeals and Local Court appeals, which was previously a very niche area of law.
Trustee: In Santamaria v Sweeney  NSWSC 1154, Daniel Radman appeared on behalf of a trustee in bankruptcy. The matter was highly contested and involved competing interest on real property which vested in the trustee upon appointment. At the time of appointment, the property had been sold above market value and in order to ensure the sale proceeded, various applications were required as the disputes between the trustee and the various cavaeators would not be settled. The trustee was able to secure urgent orders forcing the removal of caveats to allow settlement of the property to take place. Further to this, the trustee was successful in relying upon a decision which entitled a liquidator to all of its realisation costs to obtain further orders securing its costs of the application for the removal of the caveats in priority to any of the secured interests. This decision provides some certainty to trustees in knowing that their fees and expenses can be paid in priority when it relates to realisation action, before any competing interests.
Liquidator: Daniel Radman acted on behalf of the liquidator of Nupali Pty Ltd (In Liquidation) (Nupali) after it became apparent that all the assets of Nupali which consisting of three vacant blocks of land in Byron Bay valued in excess of $1,000,000.00 had been sold greatly undervalue for the purpose of defeating creditors (two blocks were sold for $1.00 each and the third property was sold for approximately $60,000.00). The assets were disposed of to a third party related entity that had no connection to the original director of Nupali and there was no evidence to suggest that there had been a relationship or an intention to defeat creditors. Daniel Radman appeared as advocate at 3 days of examinations of former directors and the parties to the transactions ultimately resulting in full admissions being made that there had been secret agreements as to what would consist of the consideration under the agreements and of the relationship between the parties. Subsequent interest had been created in the land which was previously unencumbered however, the result of the examinations allowed the liquidator to reach a settlement with the parties resulting in full payment of all debts owed to the creditors of Nupali reversing any effect of the undervalued transactions. Such a settlement would not have been possible without the information obtained at the examination hearings.
Debt Collection: Grace has been acting for an owners corporation in a levy recovery matter and has been involved in litigation with the defaulting lot owner for over 3 years. After successfully obtaining a judgment in the Local Court which was unsuccessfully appealed to the District Court, the owners corporation filed a creditor’s petition against the lot owner. The lot owner filed a notice of opposition to the creditor’s petition which was heard before the Federal Magistrates Court (now the Federal Circuit Court) (Owners Strata Plan No 11723 v Jagjit Singh and Sarbjit Kaur  FMCA 308). Grace was successful in defending the notice of opposition and a sequestration order was obtained.
Subsequently the sequestration order was appealed to the Federal Court of Australia. Following several unsuccessful interlocutory applications from the lot owner, Grace was eventually successful in striking out and dismissing the Notice of Appeal (see Singh v Owners Strata Plan No. 11723  FCA 538, Singh v Owners Strata Plan No 11723 (No 2)  FCA 900, Singh v Owners Strata Plan No 11723 (No 3)  FCA 1121 and Singh v Owners Strata Plan No 11723 (No 4)  FCA 1180). Grace also assisted the trustee in bankruptcy in obtaining possession of the property to which the levy arrears relate and acted on behalf of the trustee in defending two motions to set aside the judgment for possession. Grace obtained urgent orders from the Common Law Duty Judge to set aside an ex parte stay on the possession which was granted to the lot owner 2-3 days prior to eviction after the lot owner filed a motion to set aside the judgment with the Supreme Court Duty Registrar but failed to inform the Duty Registrar that the lot owner had filed the exact same notice of motion which was dismissed the day before. The lot owner recently filed an application for annulment and sought interim orders from the Federal Circuit Court restraining the trustee in bankruptcy from selling the property. The application for interim relief was refused by the Federal Circuit Court in the decision of Singh v Owners of Strata Plan 11723  FCCA 506. The refusal to restrain the trustee in bankruptcy from selling the subject property was appealed to the Federal Court and in its decision in Singh v Owners Strata Plan 11723  FCA 714 the Court confirmed that the operation of section 37(2) of the Bankruptcy Act 1966 (Cth) would not permit the Court to suspend the continuing administration of a bankrupt estate. The operation of section 37(2) of the Bankruptcy Act 1966 (Cth) has only been confirmed in 3 other reported decisions. Grace was later successful in having substantive application for annulment dismissed and is now assisting the trustee in obtaining a vexatious proceedings order against the lot owner pursuant to the Vexatious Proceedings Act 2008 (NSW).
Further examples of matters which have included unusual orders are the following:
- Sweeney and Cronan as bankruptcy trustees v Girgis
- Sweeney and Van Der Velde as bankruptcy trustees v Hefel
- Aravanis as bankruptcy trustee v Thompson
- Aravanis as bankruptcy trustee v Hegarty
- Struthers as bankruptcy trustee v Rogers and Rogers
- Van Der Velde as bankruptcy trustee v Singh and Kaur
- Aravanis as bankruptcy trustee of Rita Lolicato v Gregory Hestor (tenant) – Victoria eviction
- Sutherland as bankruptcy trustee v Spinnochia
- Pascoe as bankruptcy trustee v Estacio (the mortgagee has failed at possession attempts)
Daniel Radman acted in one of the leading restraint of trade cases in New South Wales which held in favour of an employer’s right to enforce a restraint of trade against a former employee. The decision of Cactus Imaging Pty Limited v Glenn Peters  NSWSC 717 made a number of significant findings which have been used as guidelines in confidentiality and restraint of trade cases namely that:
- Information relating to plaintiff’s internal costs, pricing rates and parameters, marketing strategies, and features of special equipment is confidential if it is the subject of and protected by a confidentiality covenant in an agreement between an employer and employee
- A restraint on a former employee on the solicitation of customers and customer connection is valid and protects a legitimate interest of plaintiff in confidentiality of its pricing parameters and marketing strategies
- Where restraint on solicitation of customers by a former employee is supported by protection of confidential information as well as by protection of customer connection it can legitimately prohibit solicitation of existing clientele whether or not defendant serviced them, personally dealt and whether or not they were customers prior to defendant’s departure
- Non-recruitment or anti-poaching covenant (a covenant prohibits employee from soliciting other employees of plaintiff after his departure) is desirable and valid if supportable by a legitimate interest of employer including the protection of legitimate interest in confidential information, and also in staff connection
- A restraint period of 12 months (one year) can be and in this instance is reasonable. It held that where a restraint supported by legitimate interest in protection of whole of customer connection a significant proportion of which would take a year to establish relationship with replacement employee, and also in protection of confidential information which might remain useful for up to twelve months, and parties had agreed on twelve month restraint that a 12 month restraint was reasonable.
Grace acted for a defendant in an application under the Building and Construction Industry Security of Payment Act (SOP Act) concerning a Westfield’s Construction Project. The dispute arose over an application for payments to subcontractors under the project contracts (the sum being substantial). Following the provision of advice to the client and drafting of submissions for arbitration the client was required to pay 0.05% of the actual payment claim made.
Grace acted for a defendant under the SOP Act for payment claims. The plaintiff commenced arbitration on 3 occasions claiming over $70,000 each time. Following submissions and representations the head contractor client was required to pay $10,000 in total for all claims made.
Grace is engaged in many complex and diverse disputes involving mediation.
In the strata and community title general disputes area Grace is constantly engaged to assist parties in mediation before the Office of Fair Trading or external mediators. These mediations are attended by all Partners and Senior Associates (and Associates as part of their training regime). Under the strata and community title legislation all disputes must be mediated before any litigation is commenced, therefore all senior staff at Grace is regularly exposed to mediation.
In the building and construction area mediation (and at times expert determination) is conducted as part of the claims process. As Grace undertakes a large proportion of its work without Counsel all senior lawyers are exposed (and attend regularly) mediations of construction defect claims. By way of example in the month of December 2012 the construction team finalised over $11Mil of claims at mediation. This has continued in 2013 with the majority of claims lodged settled by mediation (without the need for formal hearing).
Grace was engaged by a strata scheme in an application by an owner under the Anti Discrimination Act for relief as a result of a dispute over access to the owners’ apartment. The owner required the strata scheme to construct a lift to access he apartment and the strata scheme declined. The matter was heard and conducted before the Administrative Decisions Tribunal and at first instance the strata scheme was unsuccessful (in now a leading case on the responsibilities of a strata scheme), however the owner was not fully successful in her endeavours. The strata scheme appealed the decision but entered into mediation to resolve the dispute. The parties reached settlement (confidential) that resulted in an easier access system being developed without the need for the installation of a lift (at major expense).
General Determinations: Grace acts in many cases involving expert determinations particularly in Construction Defects where experts are used by the Courts to determine technical aspects of the case. A further area Remedial Contract disputes involving complex reviews of technical specifications and contracted arrangements. Grace has prepared submissions, briefings and attended expert conclaves (on site) involving all parties in the dispute.
Stratum Determination: Partner Colin Grace has acted on occasions as an Expert in strata and community title disputes. In one example he was engaged in a dispute between owners in a stratum development and the contract of the onsite building manager. After following due process on information, evidence and a site visit the decision was made that the contract terms were being followed and that the breaches (if any) were minor.