KOSTAS v HIA INSURANCE SERVICES PTY LTD (t/as Home Owners Warranty) [2010] HCA 32

In August 1999, Kostas hired a builder to undertake significant renovations to his home.  By June 2000, disputes had started, thus prompting Kostas to purport to terminate the building contract. He made a claim with the builder’s insurer, HIA Insurance Services Limited. The claim was rejected. Kostas took HIA to the Consumer, Trader and Tenancy Tribunal in September 2000 where it found (in May 2005) that Kostas had not properly terminated the contract with the builder. It was found that, as the builder had applied for two extensions of time (which were in accordance with the contract and had not been disputed) the termination was invalid.

Kostas appealed this decision in the Supreme Court of NSW under Section 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 (NSW) on the basis that there wasn’t adequate evidence to support the findings of the Tribunal. This appeal was upheld by the Supreme Court and the Tribunal’s decision was overturned. HIA then appealed to the NSW Court of Appeal. They stated that, as Section 67 requires an appeal to be made in relation to a “question with respect to a matter of law”, the successful appeal was invalid on a “no evidence” ground as it was not a question in relation to a matter of law and thus was outside the jurisdiction of the Supreme Court.

Upon further appeal to the High Court of Australia, the decision of the Supreme Court was restored. It was found that Section 67 permits a court hearing an appeal from the CTTT (the District Court of NSW) to consider, as a question of law, whether there is any or any sufficient evidence to support a finding, even a finding of fact.

The significance of this case can be seen in its effect on appeals from the CTTT to the District Court. Not only does this case define specifically what a question of law is and what a question of fact is, it will also significantly increase the number and scope of these appeals.

OWNERS OF STRATA PLAN 36131 v DIMITRIOU [2009] NSWCA 27

Ms Dimitriou owned a lot in a residential strata scheme in Fairfield, in Sydney’s West. On 1 August 2002, the Owners Corporation concerned with the residential scheme took Ms Dimitriou to the Local Court seeking $1,214.93 in outstanding levies. However, after multiple rounds in lower courts and tribunals, said claimed amount was seen to rise to $12,437 .85 in new Local Court proceedings – a tenfold increase from the original amount, and only $4,452.88 of this claim related to actual levies, with the balance being made up of legal and strata management fees.

Under Section 80 of the Strata Schemes Management Act (1996) (NSW) an owners corporation may recover as a debt a contribution not paid at the end of one month after it becomes due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts. Thus, while Ms Dimitriou admitted to outstanding levies when the matter got to the Local Court for hearing, the fight then became about the right of an Owners Corporation to recover costs under NSW strata management legislation.  Ms Dimitriou was successful in the Local Court.

However, on the 25th February 2009, the Owners Corporation appealed the decision in the NSW Court of Appeal where it was found that legal costs could be claimed by strata management under Section 80 if pursued in the same proceedings. These costs were also required to be ‘reasonable’, meaning costs were reasonably incurred, of a reasonable amount and incurred specifically in relation to recovering outstanding levies.

While many elements of the NSW Court of Appeal decision are ambiguous, what the case did ensure was that Owners Corporations can now be certain that they have the standing to recover legal costs incurred in pursuing outstanding contributions on top of the original debts.