Much Ado About Nothing Much

NSW Supreme Court sends a small dispute about an expert back to the Local Court to get it right ... and the long running strata dispute behind it continues

This strata case comes about in slightly unusual circumstances.

Maddrell Management was the onsite manager at Strata Scheme 62893 under a long term contract that provided that if the parties could not agree about the review of charges in year 5 they could get an expert appointed by the NSW Law Society to independently decide.  They couldn't agree and Troy Peisley, a lawyer, was appointed as the independent expert.  Maddrell Management and Strata Scheme 62893 paid Peisley $30,000 and supplied requested information but no final decision was ever made by him.

So they sued Peisley for the return of the $30,000 and in December 2009 the Local Court decided in thier favour and ordered the return of the payment.

Peisly appealed the decision to the NSW Supreme Court and it had to consider whether the Local Court properly decided things.  In particular, whether the way the case ran and was argued (as a claim for total failure of consideration) was correct or not and whether it excluded Peisley's equitable defences: that he had detrimentally changed his position by doing most but not all of the work.

You see, Peisley never argued that he didn't provide the final determination.  Rather, he argued that he could not finish it because Maddrell Management and Strata Scheme 62893 did not supply the required information, his instructions had been suspended and/or withdrawn and that theses thing prevented Maddrell Management or Strata Scheme 62893 from getting their money back.

So, the Court had to decide whether the dispute was about breach of contract or restitution, whether the Local Court understood that and whether the Local Court decided it on the correct principles.

The NSW Supreme Court agreed with Peisley that case had been wrongly decided.

The Court decided when the Local Court prevented Peisley arguing his defence grounds it was wrong; he should have been allowed to do so and the Local Court shoudl have considered them when deciding the case.  The mistake occurred because Maddrell Management and Strata Scheme 62893 had not described the legal framework of the case in the documents and framed it's case during the hearing as a contract case: saying that Peisley failed to supply what contractually agreed (the final determination) and therefore the whole contract failed.  

In fact the correct legal formulation of the claim was that actually about unjust enrichment by Peisley for being paid for work that was not done (or completed) and restitution of the aprt of the payment that he was not fairly entitled to keep.  This is an equitable claim and, as such, involves notions of fairness for all parties.

The Court reviewed the transcripts and the decision from the Local Court and concluded that this was never properly recognised at the hearing,  It also decided that the result may have been different if the correct legal principles were applied.  

So, it overturned the Local Court decision and referred the case back to the Local Court to be re-heard following the correct principles.

This decision provides some important lessons for everyone as follows.

1. In this case, the claiming parties failed to clearly identify the legal bases for their claim and this led to confusion in the presentation of thier case.  So, make sure legal actions are well prepared and the base principles are clear.
2. When using experts to determine things make sure the required information is clear and is all supplied.  And, be careful about suspending the expert's work.
3. Try to keep things in proportion since it's likely in this case the amounts spent  by the parties with Peisley, the first Local Court case, the appeal and a second Local Court case is more than the difference between them over the year 5 charges review.
4. If you have to run Court cases do so properly and carefully by getting the best advice and representation you can find.

I guess everyone involved in this dispute ended up arguing more and more about less and less.


This is another of my Casewatch - a service reviews important strata and community title cases in an easy to understand way for strata stakeholders 

Francesco ...