Legal archive: reviews of court practice concerning Narva apartment associations

In the underlying dispute, OÜ Rosehill challenged the general meeting decisions of KÜ Kangelaste 3, now Narva linn, Kangelaste prospekt 3 korteriühistu, of 30 May 2011. According to this order, Viru Maakohus declared the decisions void, meaning without legal effect from the outset, and placed costs on the association. The present proceedings concerned only the monetary amount of recoverable costs. Of the 1,542 euros sought, the county court awarded the company 818.57 euros: 250 euros in court fees and 568.57 euros in legal assistance costs. The association sought a reduction of the total to 633.25 euros. It argued that some time spent reading court documents and the judgment was unnecessary, including because the company had not appealed the judgment. The circuit court upheld the order of 2 April 2014. The county court had examined the necessity and reasonableness of the representative’s work; the hourly rate of 105 euros was undisputed and considered reasonable. Assessment of necessary time was a matter of judicial discretion, and the circuit court found no overstepping of that discretion. It therefore did not reassess every task separately. Costs incurred in this appeal against the order are not recoverable. The order provided for an appeal within 15 days of service of a copy if the value of the appeal exceeded 200 euros. Payment of the awarded costs and entry into force of this order have not been established.

The claimants sought to invalidate the general meeting decisions of KÜ Kangelaste 3, now Narva linn, Kangelaste prospekt 3 korteriühistu, of 11 November 2009 or declare them void, meaning without legal effect from the outset. The dispute concerned an initiative group’s right to convene the meeting, voting, board elections and charges for non-residential premises. After the claims were dismissed, one claimant XX appealed; OÜ Rosehill did not. The association cross-appealed the allocation of costs. The circuit court confirmed the initiative group’s authority to convene the meeting and timely notice. Arguments about voting numbers and the minutes did not justify overturning the decisions. The court also took account of their subsequent confirmation by a valid 2010 meeting decision. Voidness of a separate 2011 decision did not itself render the 2010 decisions void. The court revised the reason why an agreement on special charges for OÜ Rosehill was void. The board’s representative could represent the association alone, but that did not confer authority to change the management charges set by the general meeting for particular members. Owners of non-residential premises were also association members. This judgment did not award an individual debt. The appeal and cross-appeal were dismissed. The conclusions and operative part of Viru Maakohus’s judgment of 20 June 2013 were upheld, with partial changes to the legal reasoning. Each side bears its own costs in both instances; the court took account, among other matters, of inconsistent conduct by the association. Entry into force has not been reverified.

KÜ Koidula-Maja N, now Narva linn, Koidula tn 7 korteriühistu, sought a debt for December 2009 to June 2012 from Packdale Logistic OÜ, formerly OÜ Õnneratas. The company relied on an agreement providing special terms for managing its non-residential premises and counterclaimed for its performance. The first-instance court awarded only part of the debt, treating the agreement as effective until its termination in 2011. The circuit court took a different view of the legal basis. An owner of non-residential premises is also an association member, and charges follow the law, articles and valid general meeting decisions. The board could not impose different obligations on one member by a separate agreement; the agreement was void, without legal effect from the outset. Differences had to follow clearly from the articles or a general meeting decision. The court checked the invoices: no water or electricity charges were claimed from the company, and heating was calculated as indirect heat using a 0.91% share. Reference to an earlier payment did not itself discharge the debt: the company had brought neither a repayment claim nor a set-off defence. The association’s claim was granted in full: 2,366.71 euros in principal and 641.80 euros in late-payment interest, totalling 3,008.51 euros*. The company’s counterclaim and cross-appeal were dismissed, and it bears costs in both instances. The award does not establish actual payment.

KÜ Kangelaste 3, now Narva linn, Kangelaste prospekt 3 korteriühistu, sought management charges from OÜ Rosehill for January 2010 to November 2012. The company relied on an agreement providing a special tariff for non-residential premises and challenged the meeting decisions and interest. The first-instance court awarded principal and interest; the company appealed. The circuit court upheld the principal of 15,896.65 euros. Charges were for the general meeting to determine; the chair’s authority to represent the association did not confer power to change one member’s tariff. The agreement was void in that respect. The court separately explained that the three-month period for challenging meeting decisions did not bar a defence of voidness, but the company had not explained or proved a specific defect in convening the meeting. The tariff was based on floor area, not actual consumption of services. The conclusion on interest was different. Its absence from earlier invoices did not by itself make the claim contrary to good faith. However, the association had itself made a special agreement and, through inconsistent conduct, reinforced the company’s understanding that the general tariffs did not apply to it. Previously accrued interest was therefore refused. For further delay, the court awarded 0.07% per day on the unpaid principal only from the judgment’s entry into force until full payment. The appeal succeeded in part: interest and costs were varied, with 62.3% of costs in both instances allocated to the company and 37.7% to the association. Actual payment and entry into force have not been reverified.

The claimant XX sought a declaration that the general meeting decision of KÜ Vana Loss, now Narva linn, Suur tn 8 korteriühistu, of 20 December 2012 was void. The amendment provided special heating charges for non-residential premises: meter readings plus a charge for indirect heat calculated using part of the floor area. The claimant considered this an unfair increase in other owners’ costs. The circuit court upheld dismissal of the claim. Voidness, meaning no legal effect from the outset, was assessed on the alleged ground of conflict with good morals. Harm to an individual owner’s interests alone did not establish that ground. The court considered the method to account for direct and indirect consumption, while the claimant’s evidence did not establish disproportion sufficient to make the decision contrary to good morals. The court distinguished that issue from possible unlawfulness in altering the heating system, which was outside the case. A breach of law likewise did not automatically mean voidness; no separate claim to invalidate the decision had been brought, and the time limit for doing so had expired. The case also did not decide whether the claimant could refuse particular invoices: a good-faith defence to collection would require separate assessment. The appeal was dismissed and the judgment of 28 November 2013 upheld. The claimant bears costs in both instances.

KÜ Energia 2 Narva, now Narva linn, Energia tn 2 korteriühistu sought a debt from OÜ Narva Elegant for building management, water and heating. The company argued that, as an owner of non-residential premises, it was not an association member and did not use its services; it had a separate entrance and independent heating. It also referred to damage allegedly caused by the association. The circuit court confirmed that ownership of non-residential premises in this building entailed association membership by law. Non-participation in its establishment and the absence of a signature on the articles did not change that. Floor-area management charges and water and heating calculations were supported by association decisions, invoices and suppliers’ documents. The court found no ground to reverse the award. The alleged countervailing loss was not assessed on the merits. The company had neither counterclaimed nor clearly sought set-off. The court expressly explained that a set-off defence could be made without a counterclaim, but it had to be explicit and substantiated. Merely mentioning damage did not amount to that defence. The appeal was dismissed and Viru Maakohus’s judgment of 6 August 2013 awarding 4,595.47 euros was upheld. The company bears costs in both instances; this does not establish actual payment.

The claimant XX sought an order requiring KÜ Suur Viis Narva, now Narva linn, Suur tn 5 korteriühistu to send members a retraction of statements in owners’ submission to a court. The county court granted the claim. The association appealed, arguing that the submission came from individual owners. The circuit court found that the association was the wrong defendant for this claim. An association and its members are separate participants in legal relations. The association’s right to represent common interests does not turn every submission signed by owners into its own statement. The court found no evidence that the association itself had published the disputed information. The court additionally held that the particular submission related to a specific court case and, in these circumstances, was not communication to a third party within the meaning of the provision applied. That conclusion does not confirm the truth of the disputed statements. Viru Maakohus’s judgment of 25 September 2013 was set aside and replaced with dismissal of the claim against the association. The claimant bears costs in both instances.

KÜ Puškini tn üheksateist, now Narva linn, A. Puškini tn 19 korteriühistu, obtained judgment by default in a debt claim against OÜ Hrustek because the company did not respond in time. OÜ Hrustek applied to set aside the default judgment and reopen proceedings. It appealed after the county court refused. This order does not explain the specific types of charges making up the debt. The circuit court agreed with the refusal. The company had not established circumstances objectively preventing it from responding, notifying the court or seeking an extension. The court assessed the capabilities of a legal entity with two board members; the general material submitted did not establish an actual obstacle. No circumstances prohibiting a default judgment had been established either. The appeal was dismissed and Viru Maakohus’s order of 7 October 2013 upheld. Proceedings were not reopened and the debt was not reconsidered on the merits. The company bears the costs of this appeal.

The claimant XX won a case against KÜ Ühtehoidev, now Narva linn, Kreenholmi tn 9 korteriühistu, declaring enforcement inadmissible. Costs of the main case were placed on the association. The claimant later sought quantification, but the court refused to admit the application because the deadline had passed. The circuit court agreed: the application was due by 25 March 2013 but was filed on 21 May. Refusal to restore that deadline had already become final without appeal. Learning later that proceedings had ended did not change the deadline; the court noted there was no duty to issue a separate notification of entry into force. However, the circuit court rejected the association’s argument that the appeal itself should not be admitted. The deadline for appealing refusal and the original application deadline were separate; the appeal was timely. After considering it, the court upheld the refusal of 31 May 2013. Each participant bears their own appeal costs. The claimant’s success in the main case was not reversed; the source does not explain the substantive basis of enforcement.

The claimant XX challenged three decisions of KÜ Kangelaste 3, now Narva linn, Kangelaste prospekt 3 korteriühistu, of 2 July 2010: recalling the board, electing a new board and approving the 2010 financial plan. The first-instance court declared the decisions void. The claimant appealed costs, while the association cross-appealed the finding of voidness. The circuit court found no proof of defective convening. Several days could not automatically be added to delivery of an invitation to a mailbox, and the claimant’s later explanation of receiving only oral notice contradicted the earlier position. The number of signatures on the registration sheet likewise did not prove extra votes for one participant. There was no basis to treat the decisions as void, without legal effect from the outset. Nevertheless, approval of the financial plan was invalidated on a different ground. Members had not received the 2009 report and balance sheet at least two weeks before discussing the new plan. A change of board and its lack of documents did not excuse that failure. The remaining claims were dismissed. The judgment of 11 December 2012 was set aside and replaced with partial success on the claim. The first-instance claim fee was allocated 33% to the association and 67% to the claimant; each side bears its own other first-instance and appeal costs.

Swedbank P&C Insurance AS paid insurance compensation after water entering through a roof damaged interior finishes. Relying on the claim transferred to it up to the amount paid, the insurer sued KÜ Rahu 28A, now Narva linn, Rahu tn 28a korteriühistu. The county court awarded 2,928.80 euros; the association appealed. The association argued that it had followed general meeting decisions, contracted for repairs and operated within its budget. It also relied on weather conditions as a cause of damage it could not prevent. The circuit court supported the finding that the association had to organise maintenance of the shared roof and was the proper defendant. Decisively on appeal, the association had not supplied material supporting its defences, although the insurer had disputed them and the association had opportunities to submit evidence. References to repairs and proper maintenance alone did not displace the established basis of liability. The appeal was dismissed and Viru Maakohus’s judgment of 11 January 2013 upheld. The association bears costs in both instances. The insurer had paid compensation before this dispute; the award against the association does not establish actual performance.