Mediation
Mediation is worth considering for disputes in relation to community titles as it is more likely than legal action to enhance and preserve positive relationships.
Mediation is a voluntary process where trained mediators work with people to help them resolve their differences. A mediator can become involved in a dispute at the request of at least one of the parties. A mediator can write to invite the other party to discuss the problem and to participate in mediation. Because attendance is voluntary from both sides, any party may withdraw from the resolution process at any time.
The role of the mediator is to listen, ask questions and ascertain the facts, not to blame anyone or take sides. With all the information provided by the parties, the mediator helps people to put together an agreement. The agreement is not legally binding, but is made in good faith.
The advantages of mediation as a way to resolve disputes are:
- it can save on court and solicitor cost for both parties
- it can contribute to the early resolution of problems, thereby reducing stress and anxiety
- it allows both parties to take responsibility for their role and gives them the opportunity to resolve their own disputes
- mediation sessions are conducted in private, unlike court proceedings.
If no resolution can be worked out then an application may be made to the court to decide the matter.
Court Proceedings
What disputes can be taken to court?
The types of disputes that may be heard by the court are set out in section 142(1) of the Community Titles Act 1996 (SA) and are as follows:
- a breach of the Act or the corporation by-laws is alleged;
- an occupier claims to have been prejudiced by a wrongful act or omission of the corporation, management committee, the developer, or the owner or occupier of another lot;
- a member of a community corporation claims that a decision of the corporation or the management committee is unreasonable, oppressive or unjust;
- the community corporation and a corporation member, or two or more corporation members are in dispute about the occupation or use of a lot, or the position in which a cable, wire, pipe, sewer, drain, duct, plant or equipment should be laid or installed; or
- an order authorising a person to use force to enter a lot or a building on a lot is sought.
In addition, the court can also deal with the following issues:
- the striking out of a by-law that reduces the value of a lot or unfairly discriminates against the owner of a lot [s 38(1)];
- a community corporation or an owner or occupier of a lot who is a party to a development contract is entitled to take proceedings for the enforcement of the contract (including damages for breach of contract) against the developer and (if the contract is for the development of a development lot or a community lot) against the subsequent owner or owners of a lot [s 49(2)]. Proceedings are commenced in the Magistrates Court but may be transferred to the District Court or Supreme Court if appropriate [ss 49(2a) and 49(2)(b)];
- the Environment, Resources and Development Court may, on application by the community corporation or an owner of a lot (or certain other listed entities) amend the community plan to correct an error in the plan, to vary the lot entitlements or to make certain other amendments. The ERD Court may also hear an application to cancel the community plan [ss 67 and 69];
- the Magistrates Court may order the convening of a general meeting of the corporation.
Who can make an application to the court?
Those who can make an application are [s 141]:
- the corporation;
- the owner or occupier of a community lot;
- the owner or occupier of a development lot;
- a person who has contracted to purchase a community lot or a development lot;
- any other person bound by the by-laws of a community scheme, except for persons invited to or visiting the community land.
Which court hears disputes?
An application to resolve a dispute must usually be made to the Magistrates Court [s 142(2)]. An application is heard as a minor civil action [s 149A], unless it involves enforcement of a development contract under section 49(2); these matters are heard in the general claims jurisdiction of the Magistrates Court.
An applicant should use a Form 2- Originating Application, with a supporting affidavit.
If the matter is particularly complex or significant [s 142(5)], an applicant can seek the permission of the District Court to commence proceedings there [s 142(3)], or a party may seek to transfer a matter from the Magistrates Court to the District Court [s 142(4)].
A court may, on its own initiative or on an application by a party to the proceedings, transfer a matter to the Supreme Court on the ground that the application raises a matter of general importance [s 142(6)(a)]. Similarly, a court may, on its own initiative or on an application by a party to the proceedings, state a question of law for the opinion of the Supreme Court [s 142(6)(b)].
A court may decline to proceed with an application to resolve a dispute if it considers that it would be more appropriate for proceedings to be taken in another court or tribunal [s 142(15)].
Orders that can be made
If appropriate, the court may attempt to achieve settlement of the proceedings by agreement between the parties [s 142(8)(a)].
In an urgent case, the court can make an interim order to safeguard the position of any person pending its final decision.
The court has power to make a range of orders under section 142:
- the court may order that reports or other information be provided for the purposes of the proceedings. In addition, it can order that accounts be audited or that a person be reimbursed for the costs of having accounts audited [ss 142(8)(b) - (ba)];
- the court may [ss 142(8)(c)-(d)]:
- specify action that a party must take to remedy any default, or to resolve any dispute; or
- specify action that a party must refrain from doing;
- the court may give judgment on any monetary claim [s 142(8)(f)];
- the court may determine the position in which a cable, pipe, sewer, drain, duct, plant or equipment is to be laid or installed [s 142(8)(g)];
- the court may:
- make a declaration as to the validity of any decision or purported decision of the corporation [s 142(da)];
- vary or reverse any decision of the corporation, or of the management committee of the corporation or of a delegate of the corporation [s 142(8)(e)(ii)];
In relation to by-laws, the court may:
- make a declaration as to the validity of any by-law or purported by-law of the corporation [s 142(da)]
- alter the by-laws of the community scheme, and make any necessary consequential changes to the scheme description and development contracts [142(8)(e)(i)], but only [s 142(9)]:
- if the corporation is a party to the proceedings or the court is satisfied that the corporation has been given a reasonable opportunity to become a party to the proceedings; and
- if it appears to the court that the alteration could adversely affect a member of the corporation who is not a party to the proceedings, the court is satisfied that the member has been notified of the possibility that such an order could be made and has been given a reasonable opportunity to make submissions to the court in relation to the matter, and
- the court is satisfied that the order is essential to achieving a fair and equitable resolution of the matters in dispute.
In relation to contracts, the court may [s 142(8)(ea)]:
- vary, avoid or terminate a contract entered into (regardless of when it was entered into) between a community corporation and any of the developer, an associate of the developer, the body corporate manager, or an associate of the body corporate manager, but only:
- if the court is satisfied that the contract involves a breach of fiduciary duties or other duties under this Act [s 142(9a)].
The court may also [ss 142(8)(h)—(i), s 142(10)]:
- make orders as to costs
- make any incidental or ancillary orders
A person who fails to comply with an order under s 142 is, in addition to being liable to punishment for contempt [s 142(14)], guilty of an offence with a maximum penalty of $15 000 [s 142(13)].
Appointment of an Administrator
The Magistrates Court or the District Court may appoint an administrator to administer the affairs of the corporation [s 100(1)] in cases where governance has broken down to an extent that the group is not functioning. An administrator has, while the appointment remains in force, full and exclusive power to administer the affairs of the community corporation, including power to do anything for which a special or unanimous resolution of the corporation is required [s 100(2)].
An application to appoint an administrator may be made by [s 100(1)]:
- a community corporation;
- a creditor of a community corporation;
- the owner of a community lot or a development lot; or
- a person who holds a registered encumbrance over a community lot or a development lot.
It is important to get legal advice before seeking or opposing the appointment of an Administrator.
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