Strata – Interim Orders, Power and Obligations

18/11/2019

The general rule relating to disputes is that each party should be heard in relation to a dispute before any Orders are made.  However where there is an urgent need for an Order against a person or entity in the absence of that person, a Court or Tribunal may have power to make such order.

The NSW Civil and Administrative Tribunal (NCAT) has power to make Interim Orders (Section 231 of the Strata Schemes Management Act 2015 (SSM Act 2015)).

Section 231 gives the Tribunal power to make an Order if the Tribunal “is satisfied on reasonable grounds that urgent consideration justifying the making of the Order”. 

Ex parte Applications and undertakings as to damages

NCAT under Section 231 has power to make the Interim Order following a hearing where each party as an opportunity to put their case to NCAT before the decision is made.

NCAT has power to make Interim Order. 

An ex parte order is one made upon Application of a party such as an Owner’s Corporation or Lot Owner without giving prior notice to the proposed Respondent who is to be bound by the order.

Often a case at NCAT is commenced by an Owners Corporation against a Lot Owner making a claim of wrongdoing by the Lot Owner.

In such a case there are serious matters that must be considered and dealt with if the application is an Interim Application and in particular, an “ex parte application”

Obligations of Candour and Disclosure

Section 231(4) states:

“A person must not,** in or in connection with, a request for an interim order or for the renewal of an interim order make a statement that the person knows is false or misleading in a material respect”.

The law has been clear for many years for example in the case of Thomas A Eddison Limited v Bullock [2012] 15 CLR 679 at 681-2 Justice Isaacs said:

“It is the duty of a party asking for an injunction ex parte to bring under the Notice of the Court “(or NCAT)” all facts material to the determination of his right to that injunction and (it) is no excuse for him to say he was not aware of their importance.”

In a case of Jarrad t/as Arthur Anderson & Co v Email Furniture Pty Limited [1993] 32 NSWLR 662 at 676-677 the Court the said that the failure to make full disclosure will result in the injunction being dissolved, but does not prevent the making of a fresh Application with full disclosure.

Undertaking as to damages

In our view the party making the Application for an Interim Order (with the effect of an injunction resulting in a restraint or obligation to do something) should be obliged to give an undertaking as to damages.  This would cover any losses by the Respondent to the Application as a result of the injunction being made against the respondent if it is later held upon the determination of the matter that the Respondent has suffered losses as a result of an invalid injunction.

One example that comes to mind is that an injunction or interim order restraining work which prevents the operation of a business by either the Owner or a Lessee as a result of which the Owner suffers damages (which could be significant).  One would need to look at the consequence.  Even if there is a finding that the lot owner has breached some obligation under the SSM Act 2015 one would need to look at the consequences and remedies available for that breach as against the losses suffered as a consequence of making the Application. 

If for example the loss is $2,000 a week and the case takes months to be heard but in the end there is only a minor breach with a minor consequence it is our view that the person making the Application may be liable to pay the losses suffered by the other. 

In the case of Frigo v Culhaci in 1998 the NSW Supreme Court Appeal said:

“We cannot conceive of circumstances where an ex parte injunction should be granted otherwise than subject to an undertaking as to damages.  See generally Kerridge v Foley 1968 70 SR(NSW)”.

Obligation of Legal Adviser

In the Frigo v Culachi case the NSW Supreme Court of Appeal pointed out that it was the obligation of Counsel appearing for the party seeking the injunction to offer to the Court “the undertaking as to damages” even if the Court did not ask for the undertaking.  The Supreme Court of Appeal said the failure of Counsel to draw the matter to the attention of the Judge hearing the original application “represented a serious breach of Counsel’s duty to the Court” see general “LPP Lawyer’s Duty to Court 1998 114 LQR 63.”

Frigo v Culachi case also states that Counsel appearing should have been reminded the Judge hearing the application of the legal principles known to Counsel about an “undertaking as to damages” being the price of interlocutory relief at the suit of a private Plaintiff.

Interim Hearing is not final determination

At the interim stage there is no determination of the issues and as the Court said the price of obtaining any interim order at any stage is that the person or entity making the Application should give an undertaking as to damages. 

If you find yourself wishing to seek an Interim Order or you are subject to an Interim Order please contract Watson & Watson experienced Solicitors in commercial litigation matters including matters relating to strata issues and building and construction issues, to obtain advice in relation to such matters.

In a recent case the NCAT granted an interim order without an undertaking as to damages having been provided or offered by the Owners Corporation.

We were instructed on behalf of the Lot Owner on a return date of the Application when the Owners Corporation asked for an extension of the interim order for the injunction until the full hearing of the dispute.  The Owners Corporation refused to give an undertaking as to damages.  We made submissions to the Tribunal.  After various discussions and submissions (without a decision by the Tribunal) the Owners Corporation chose to withdraw their Application to Extend the Injunction.  There were also other issues in that case.

Every case depends on its own factual matters.

In our view if you are a lot owner and there is a matter of concern that the Owners Corporation is acting incorrectly it may in some circumstances be appropriate to write a letter setting out the reasons that you believe the Owners Corporation’s position is incorrect.  Great care is needed in this regard.

You should note that any breach of an Order of the Court has serious consequences.

If you are embroiled in a strata dispute with the Owners Corporation and an Interim Orders have been please contact Richard Watson Senior Strata Solicitor or his Personal Assistant Shereen Da Gloria to discuss your matter and seek clarification of any concerns or queries.  We would recommend that you seek appropriate timely advice.

This is only a preliminary view and is not to be taken as legal advice without first contacting Watson & Watson Solicitors on 9221 6011.