CFI 027/2015 Body Corporate IT-UP-03 of The Index Tower Building v Associa Mena Association Services

February 18, 2016 court of first instance - Orders,Orders

Claim No. CFI 027/2015

THE DUBAI INTERNATIONAL FINANCIAL CENTRE COURTS

IN THE COURT OF FIRST INSTANCE

BEFORE JUSTICE ROGER GILES

BETWEEN

BODY CORPORATE IT-UP-03 OF THE INDEX TOWER BUILDING

Claimant

And

ASSOCIA MENA ASSOCIATION SERVICES

Defendant

ORDER WITH REASONS OF JUSTICE ROGER GILES

UPON the Claimant filing a Part 8 Claim on 6 October 2015

AND UPON reading the submissions and evidence filed and recorded on the Court file

AND UPON hearing Counsel for the Claimant and Counsel for the Defendant at a hearing on 17 February 2016

IT IS HEREBY ORDERED THAT:

1. The proceedings, CFI-027-2015 Body Corporate IT-UP-02 of the Index Tower Building v Associa Mena Association Services be dismissed.

2. There be no order as to costs.

Issued by:

Amna Al Owais

Deputy Registrar

Date of Issue: 18 February 2016

At: 1pm

SCHEDULE OF REASONS

1. The Claimant is the body corporate for the retail lot of a building, there being separate bodies corporate for the residential lot, the office lot and the common property of the building. It had appointed the Defendant as its body corporate manager. The management agreement provided that on its expiry, the Defendant would return what may be sufficiently described as the body corporate property.

2. The management agreement expired on 14 June 2015. The Claimant appointed a new manager, and asked the Defendant to transfer the body corporate property to it. The Defendant did not do so, nor did it comply with further such requests and ultimately a lawyers’ letter of 2 October 2015. Through its lawyers, the Defendant contended that the new manager had not been validly appointed and, more significantly, that under provisions governing the relations between the bodies corporate (and despite the Claimant’s purported appointment of a new manager), it had since been appointed as manager for all of the bodies corporate and so did not have to comply.

3. The Claimant brought these proceedings on 6 October 2015 as a Part 8 claim, essentially claiming an order for specific performance of the obligation to return the body corporate property. The witness statement filed on 21 October 2015 on behalf of the Defendant maintained the contentions abovementioned.

4. However, in circumstances to which I will return, in December 2015 and January 2016 the Defendant did transfer most of the body corporate property to the new manager. The Claimant was able by other means to obtain access to the remaining body corporate property residing in a database. Thus the proceedings became redundant.

5. Unfortunately, the parties could not agree on costs. The Claimant said there should be an order for costs in its favour. The Defendant said that no order for costs should be made, so that each party bore its own costs.

6. How is the disposition of costs to be decided when there has not been a decision on the substantive issues?

7. In BCT Software Solutions Ltd v C Brewer & Sons Ltd [2003] EWCA Civ 939 at [9] it was said that the judge should be slow to embark on the determination of disputed facts solely in order to come to a decision about costs. The present was not a case with disputed facts, but consistently with the overriding objective governing the Court and the parties in my view I should also be reluctant to decide issues of law or mixed law and fact of any complexity solely for that purpose.

8. The Defendant helpfully referred to the decision of McHugh J in the High Court of Australia in Re Minister for Immigration and Ethnic Affairs; Ex Parte Lai Qin [1997] HCA 6; (1997) 186 CLR 622, in which his Honour said:

“In an appropriate case, a court will make an order for costs even when there has been no hearing on the merits and the moving party no longer wishes to proceed with the action. The Court cannot try a hypothetical action between the parties. To do so would burden the parties with the costs of a litigated action which by settlement or extra-curial action they had avoided. In some cases, however, the court may be able to conclude that one of the parties has acted so unreasonably that the other party should obtain the costs of the action. In administrative law matters, for example, it may appear that the defendant has acted unreasonably in exercising or refusing to exercise a power and that the plaintiff had no reasonable alternative but to commence a litigation. Thus, for example, in R v Gold Coast City Council: Ex party Raysun Pty Ltd, the Full Court of the Supreme Court of Queensland gave a prosecutor seeking mandamus the costs of the proceedings up to the date when the respondent council notified the prosecutor that it would give the prosecutor the relief that it sought. The Full Court said that the prosecutor had reasonable ground for complaint in respect of the attitude taken by the respondent in failing to consider the application by the prosecutor for approval of road and drainage plans.

Moreover, in some cases a judge may feel confident that, although both parties have acted reasonably, one party was almost certain to have succeeded if the matter had been fully tried. This is perhaps the best explanation of the unreported decision of Pincus J in The South East Queensland Electricity Board v Australian Telecommunications Commission where his Honour ordered the respondent to pay 80 per cent of the applicant’s taxed costs even though his Honour found that both parties had acted reasonably in respect of the litigation. But such cases are likely to be rare.

If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the court will make no order as to the cost of the proceedings. This approach has been adopted in a large number of cases.” (citations omitted)

9. I understand the parties to have accepted this as the basis on which I should proceed. I received submissions on whether the Defendant had acted unreasonably in defending and continuing to defend the proceedings. The submissions did not go into the merits of the Defendant’s contention that it did not have to return the body corporate property.

10. If there were no more than that, having initially refused to return that property and defended the proceedings, the Defendant belatedly did what the management agreement said it should do, it could readily enough be said that the Defendant acted unreasonably. However, there is more to it. The circumstances in which the recent transfer of the body corporate property came about were as follows.

11. Under the DIFC Strata Title Law, Law No. 5 of 2007, the Registrar of Real Property may make orders in relation to breaches of that law or the bylaws, including orders requiring a person to take or refrain from taking any specified action (Article 98(1)(a)). The Claimant invoked this power. On 27 October 2015, the Registrar emailed a number of persons or entities, including the Claimant and the Defendant, saying that the email was “with reference to a number of ongoing disputes relating to” the building. Under the heading “Dispute at Retail Component Level” he set out a number of paragraphs which, perhaps not entirely clearly, amounted to saying that the new manager had been validly appointed, and said,

“The retail body corporate, through [the new manager], shall liaise with [the defendant] regarding the handing over of data relating to the management of the retail component.”

12. On 4 November 2015 the Defendant wrote to the Registrar stating that it was unclear as to the status and effect of what was said in this email, and suggesting that it did not appear to constitute an order or orders under the Strata Title Law. On 9 November 2015 the Registrar replied to the Defendant and others, including the Claimant, saying,

“Kindly treat our email dated 27 October 2015 as an order issued by the RoRP pursuant to art 98 of the Strata Law…”

13. Still the Defendant did nothing, but eventually on 4 December 2015 the Registrar issued a document, clearly an order made pursuant to the Strata Title Law, which specifically ordered the Defendant to hand over the body corporate property. That was apparently accepted by the Defendant. On 9 December 2015, some of the body corporate property was provided. Later in that month the new manager collected other material, and the remainder of the material was collected in mid-January 2016. This did not include the provision of access to the body corporate property residing on the database, but as I have said the Claimant was able by other means to obtain access to that material.

14. The Defendant submitted that it transferred the body corporate property to the new manager because the 4 December 2015 order of the Registrar required it to do so, when a lack of clarity in the Registrar’s earlier communications had been resolved by that clear order. It said that it could not be said that it acted unreasonably prior to that time unless by decision on the substantive issues it was determined to have been wrong in its contentions, and even then only if its contentions were so meritless that it was unreasonable to have maintained them. After the December order it acted, albeit not with alacrity, with sufficient despatch.

15. The Claimant submitted in substance that the Registrar’s orders demonstrated that the Defendant’s stance was unsound, and that the compliance with them should be regarded as making out unreasonableness in similar manner to the unadorned situation earlier instanced. I have difficulty with that submission. I do not know on what materials the Registrar acted or what moved him to the orders. They or at least the December order were binding on the Defendant. I do not feel able to give the compliance the weight suggested by the Claimant.

16. When the handing over of the body corporate property whereby the proceedings became redundant was the result of the outside force of the Registrar’s orders, I am not satisfied that the Defendant acted unreasonably in defending and continuing to defend the proceedings. No split of some part of the costs of the proceedings was suggested or is obvious. In my opinion, there should be no order as to costs.

17. I order that the proceedings be dismissed, and make no order as to costs.