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[2026] QSC 9
General information, not legal advice.
Supreme Court of Queensland
2026-01-27
Ryan J
Original judgment source is linked above.
REAL PROPERTY - STRATA AND RELATED TITLES - MANAGEMENT AND CONTROL - BODY CORPORATE: POWERS, DUTIES AND LIABILITIES - OTHER CASES -where plaintiff body corporate for a residential unit complex brought proceedings against the builder of the complex, in contract and negligence, in its own name, relying on section 36(3) of the Body Corporate and Community Management Act 1997 (Qld) - where defendant builder contended that the body corporate could not sue only its own name in contract because section 36(3) used the language of "subrogation" which had a technical legal (equitable) meaning which meant that the body corporate had to sue in the name of the original owner - where body corporate refused to join original owner - where body corporate instead applied for a declaration that it was entitled to bring proceedings in its own name on the proper construction of section 36(3) - where defendant builder brought an application for summary judgment on the contract claim on the basis that the plaintiff body corporate had no standing - whether the concept of subrogation in section 36(3) was to be understood in its technical legal sense
Section 27 Building Units and Group Titles Act 1980 (Qld) (BUGTA)
Section 14A, 14B, 35C Acts Interpretation Act 1954 (Qld)
ACN 002 402 146 (manager appointed) (in liq) (formerly known as Tome Bros Pty Ltd) v Ken Corssman & Co Pty Ltd (2023) 296 FCR 241, cited
Attorney General (NSW) v Brewery Employees Union of New South Wales [1908] HCA 94; (1908) 6 CLR 469, considered
Body Corporate for the Johnson CTS 49098 v Maxcon Constructions Pty Ltd [2024] QSC 65, considered
Body Corporate for Sun City Resorts CTS 24674 v Sunland Constructions Pty Ltd & Ors [2010] QSC 463, considered
Body Corporate for Sun City Resorts CTS 24674 v Sunland Constructions Pty Ltd & Ors (No 2) [2011] QSC 42, considered
Bofinger v Kingsway Group Ltd (2009) 239 CLR 269, cited
Burns v Crispino [2006] ACTSC 74; (2006) 202 FLR 135, cited
Etro Metroplex on Gateway CTS 39623 v Broad Construction Services (Qld) Pty Ptd & Others [2015] QDC 62 , considered
Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1985) 3 NSWLR 475, considered
Gill v Registrar-General (1991) 5 BPR 11,587 per Young J (affirmed in Registrar General v Gill (1994) 17 BPR 33,709), considered
King v Phoenix Assurance Co [1912] 2 KB 666, 670, cited
Lowbeer v De Varda [2018] FCAFC 115; (2018) 264 FCR 228, cited
Mascarello v Registrar-General of New South Wales (2018) 19 BPR 38,427, cited
New South Wales v Commonwealth Bank of Australia [2001] NSWSC 1067, considered
Orakpo v Manson Investments Ltd [1977] 1 WLR 347, cited
Registrar-General (NSW) v LawCover Insurance Pty Ltd [2014] NSWCA 214, considered
Tomkins Commercial and Industrial Builders Pty Ltd v Majella Towers One Pty Ltd and Body Corporate for Radius Apartments Community Titles Scheme 48720 ABN 14 912 930 741 [2017] QSC 202, considered
Travel Compensation Fund v Blair [2003] NSWSC 720, considered
Workcover (Queensland) v Seltsam Pty Ltd [2001] NSWCA 457; (2001) 53 NSWLR 518, considered
WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536, considered
D C Pearce, Statutory Interpretation in Australia, 10th edition, Lexis Nexis, Sydney, 2024
Mitchell and Watterson, Subrogation Law and Practice, Oxford University Press, 2007
[1] This matter concerned the construction of section 36(3) of the Body Corporate and Community Management Act 1977 (Qld) (the BCCMA).
[2] I am of the view that the word "subrogated", in the wider phrase "subrogated to the rights (if any) of the original owner under the contract", in section 36(3) of the BCCMA does not carry its technical legal meaning. It follows that section 36(3) permits the body corporate to bring a claim in contract in its own name. It is not required to join the original owner. I therefore grant the plaintiff's application; dismiss the defendant's application; and declare that -
(a) pursuant to section 36(3) of the Body Corporate and Community Management Act 1997 (Qld), a body corporate is, following its establishment, entitled to bring and continue proceedings in its own name with respect to the rights of the original owner under a contract to have work carried out on land that becomes scheme land to the extent the work affecting scheme land is on common property;
(b) the plaintiff is entitled to bring, and continue, the claims in this proceeding in its own name.
[4] In June 2014, Walker, a property development company, entered into a contract with the defendant building company, Devine, for the design and construction of a residential unit block complex (the Westmark Development). Practical completion was achieved on 26 August 2016. A community titles scheme for the Westmark Development was established on 24 August 2016 (the Westmark Scheme) and the plaintiff body corporate, Westmark, came into existence on that date.
[5] Westmark alleges that, after a significant rain event in April 2017, water leaked into 53 lots in the Westmark Scheme because of Devine's defective work on the common property exterior surfaces of the complex. On 7 March 2023, Westmark commenced proceedings, in its own name, against Devine, in contract and negligence.[1]
[6] Of course, Westmark was not a party to the design and construct contract. It relied upon section 36(3) of the BCCMA to bring the contract claim.
[7] Section 36(3) states (my emphasis):
(3) If, before a community titles scheme is established, a contract is entered into to have work carried out on land that becomes scheme land - (a) the body corporate is, on the establishment of the scheme, subrogated to the rights (if any) of the original owner under the contract to the extent that the contract applies to work affecting scheme land that is common property;
(b) a lot owner is, on the establishment of the scheme, subrogated to the rights (if any) of the original owner under the contract to the extent that the contract applies to work affecting scheme land that is the lot.
[8] In correspondence, Devine told Westmark that it had to join Walker to validly pursue the contract claim in accordance with what Devine said was the proper construction of section 36(3) of the BCCMA which required "subrogated" to bear its technical legal meaning.
[9] Westmark declined to bring an application to join Walker. Instead, on 25 September 2025, it brought an application for a declaration that it was entitled to bring the contract claim in its own name, arguing that the legislation did not require the word "subrogated" to be given its technical legal meaning because to do so would be contrary to the purpose of the section.
[10] The next day, 26 September 2025, Devine brought an application for summary judgment for the contract claim on the basis that Westmark had no standing.
[11] Both applications were before me. Each turned on the same questions of statutory interpretation - namely, whether the word "subrogated" in section 36(3) ought to be given its technical legal meaning; and whether the section permitted Westmark to bring a claim in its own name.
[13] There is little case law on section 36(3) or its equivalents in other jurisdictions.
[14] In broad terms, Devine made the following submissions:
(a) "Subrogation" is a technical legal term. It is an equitable remedy, not a right. It has the essential features of not being an assignment; and of requiring the enforcement of the rights of another to be in that other's name. As Devine put it in its written submissions:
[25] First, subrogation in equity in essence provides that a party has a right in equity to stand in the shoes of another party and to enforce the rights of another party in the name of that party [Lowbeer v De Varda [2018] FCAFC 115; (2018) 264 FCR 228 and Burns v Crispino [2006] ACTSC 74; (2006) 202 FLR 135].
[26] Second, while subrogation might be described as a form of transfer by operation of law it is actually a creature of equity which specifically does not depend on an assignment. While in some cases the term is used in the sense of a transfer of rights from one person to another [King v Phoenix Assurance Co [1912] 2 KB 666, 670], this is not the ordinary way in which the term is used [Lowbeer [43]].
[27] Third, "it is a matter to the core of the right of subrogation that a person exercising that right must sue in the name of the insured [or the claimant]" absent an express statutory right to sue in its own name [Seltsam [19], Lowbeer [44], NSW v Commonwealth Bank [90] - [91]; ACN 002 402 146 (manager appointed) (in liq) (formerly known as Tome Bros Pty Ltd) v Ken Corssman & Co Pty Ltd (2023) 296 FCR 241; Mascarello v Registrar-General of New South Wales (2018) 19 BPR 38,427]. Alternatively, the party having the benefit of the right of subrogation must make the claimant a party to the proceeding to exercise or enforce the relevant rights in its own name.
(b) When used in legislation, "subrogation" should be understood in its technical legal sense unless a contrary intention appears from its legislative context.
(c) Examples of a contrary intention may be found in section 448(4) of the Legal Profession Act 2004 (NSW) (the LPA) and section 177 of the Property, Stock and Business Agents Act 2002 (NSW) (the PSBAA) which expressly permit a subrogated claimant to bring a proceeding in its own name.[3]
(i) Section 448(4) of the LPA states (my emphasis): "The Law Society Council may exercise its rights and remedies under this section in its own name or in the name of the claimant."
(ii) Section 177(4) of the PSBAA states (my emphasis): "The Secretary may exercise the rights and remedies to which the Secretary is subrogated under this section in the name of the Secretary or in the name of the claimant concerned."
(d) In legislation, "subrogation" or its variants have usually been interpreted in an equitable sense, as in:
(i) Gill v Registrar-General (1991) 5 BPR 11,587 per Young J (affirmed in Registrar General v Gill (1994) 17 BPR 33,709) (Gill)
(ii) WorkCover Queensland v Seltsam Pty Ltd [2001] NSWCA 457; (2001) 53 NSWLR 518, [18] - [19] (Seltsam);
(iii) New South Wales v Commonwealth Bank of Australia [2001] NSWSC 1067, [88] ();
[15] In broad terms, Westmark made the following submissions:
(a) Referring to the way in which "subrogation" was defined by Mitchell and Watterson in Subrogation Law and Practice,[5] Westmark acknowledged that: (i) subrogation had a well understood legal meaning; (ii) it differed from an assignment; and (iii) it was not a cause of action, but an equitable remedy to enforce equitable rights. However, "subrogation" was used and applied in different legal contexts, and it was unhelpful to speak of it as a unified body of law (referring to Buckley LJ in Orakpo v Manson Investments Ltd [1977] 1WLR 347 at 357 and Bofinger v Kingsway Group Ltd (2009) 239 CLR 269).
(b) The presumption that "subrogation" was used in a statute in its technical sense gave way to a contrary intention. When one had regard to the purposes of the BCCMA and its intention to provide for "flexibility", the concept of subrogation in section 36(3) was unlikely to bear its technical meaning.
(c) LawCover, upon which Devine relied, concerned the statutory interpretation of a particular provision. Meagher JA was not stating a broad principle.
(d) The use of the word "subrogated" in section 36(3) is not at all referable to the equitable concept of subrogation. The context for the use of the word in the cases in [14](d) above is markedly different from the context in which the word is used in section 36 of the BCCMA. The [14](d) cases involved insurance or indemnity arrangements.
(e) Section 36(1) (set out below) states expressly that the body corporate is entitled to sue and be sued in relation to common property as if it were the owner of the common property. It is not temporally constrained. It does not say that it applies only to a cause of action which arises after the scheme is established. Thus, it is not correct to say that section 36 does not expressly permit the body corporate to sue in its own name in relation to rights to which it is subrogated by virtue of section 36(3).
(f) Section 36(1) is clearly directed at circumstances in which the body corporate would not otherwise have an in personam right to commence a proceeding or be sued. If the body corporate is a party to a contract, then it does not need section 36(1).
Principles of statutory interpretation - generally
[16] Applegarth J explained the general approach to statutory interpretation in Body Corporate for Sun City Resorts CTS 24674 v Sunland Constructions Pty Ltd & Ors [2010] QSC 463 (Sun City). Co-incidentally, his Honour was dealing with the same sub-section of the BCCMA, then numbered section 38(3). Drawing on well-known principles, his Honour said at [29]:
"The meaning of s 38(3) ... is to be determined by reference to its language and its context in the BCCM Act. The starting point is the text of the provision. The interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation. The purpose of the Act is to be found in the words of the statute, including its stated objectives, not distilled from some general policy which is applied without regard to the language of the statute."
[17] In Sun City, his Honour was required to determine, as a separate question,[6] whether section 38(3) had retrospective operation because the relevant contract upon which the body corporate sued was entered into prior to the commencement of the BCCMA. His Honour concluded that it did. His Honour was not expressly required to construe the word "subrogated" or any other word with a technical legal meaning.
[18] Also relevant to statutory interpretation is section 14A of the Acts Interpretation Act 1954 (Qld) (the AIA) which requires an interpretation that will best achieve the purposes of an Act to be preferred to any other interpretation; and section 14B of the AIA, which permits the use of extrinsic material to aid interpretation in the case of an ambiguous provision.
Principles of statutory interpretation in the case of words or phrases with technical legal meanings
[19] In the case of the interpretation of a word or phrase with a technical legal meaning, Professor D C Pearce, the author of Statutory Interpretation in Australia,[7] suggested that the approach to follow was best stated by O'Connor J in Attorney General (NSW) v Brewery Employees Union of New South Wales [1908] HCA 94; (1908) 6 CLR 469 at 531 as follows (my emphasis): [8]
"Where words have been used which have acquired a legal meaning it will be taken, prima facie, that the legislature has intended to use them with that meaning unless a contrary intention clearly appears from the context. To use the words of Denman J in R v Slator ((1881) 8 QBD 267 at 272): 'but it always requires the strong compulsion of other words in the Act to induce the Court to alter the ordinary meaning of a well-known legal term'."
[20] The learned author discussed cases in which it was held that the legal meaning of a words or a phrase was not intended.[9] Those cases included ones in which "in equity"; "in good faith"; and "duress" were held to bear their ordinary meanings.
[21] Professor Pearce then referred to the summary of the position by the Full Court of the Federal Court in WorkPac Pty Ltd v Skene [2018] FCAFC 131; (2018) 264 FCR 536 at [108], which included the following (my emphasis):
"Each case will turn on its own circumstances having regard to the legislative history of the particular statute under consideration and supervening jurisprudence. As Gleeson CJ cautioned in [Electrolux Home Products Pty Ltd v Australian Workers' Union [2004] HCA 40; (2004) 221 CLR 309] at [8], no doubt there are circumstances in which it is artificial, and unpersuasive, to attribute to Parliament a consciousness of a judicial interpretation which might have been placed upon an expression, perhaps years before and in a different context ..."
[22] Under the heading "Resolution of the Issue" the learned author set out what he considered to be the likely general attitude of the courts - namely, that expressed by Priestly JA in Gamer's Motor Centre (Newcastle) Pty Ltd v Natwest Wholesale Australia Pty Ltd (1985) 3 NSWLR 475[10] at 485 as follows (my emphasis):
"In considering the appropriate meaning of the words in their setting it is my view that if there is one ordinary and natural meaning of the words then that meaning must be given to them, but if as is the case here the words have a range of meanings, then the construction to be given to the words used must take into account the legal as well as the "ordinary" uses to which they have been put ... The object of the approach is not to find the legal as opposed to the 'ordinary' meaning, but to find from the range of legal and ordinary meanings, which in any event will seldom be in watertight compartments, the meaning best suited to the statutory document as a whole."
[24] In approaching the issues for me in this case, I have been guided by the principles stated above.
[25] The dictionary meanings of "subrogate" and "subrogation" include the following:
Oxford English Dictionary (6th ed, 2007) 'subrogate'.
1. gen. a Elect or appoint in office as a substitute. b Substitute (a thing) for another.
2. LAW. Substitute (a person) for another in respect of a right or claim; cause to succeed to the rights of another.
2. LAW. The substitution of one party for another in respect of a right or claim.
Macquarie Dictionary (9th ed, 2023) 'subrogate'.
1. To put into the place of another; substitute for another.
2. Civil Law to substitute (a claim against one person) for a claim against another person, or transfer (a lien originally imposed on one piece of property) to another piece of property.
2. Insurance the right of an insurer, following the payment of a claim to the insured, to recover monies from a third party responsible for the loss.
[26] On its face, "subrogated to" in section 36(3) is capable of bearing its legal technical meaning or its ordinary meaning, which encompasses notions of substitution or transfer. I am to take it that the legislature intended it to bear its technical legal meaning, unless I detect a clear intention to the contrary. Such a contrary intention may be revealed upon a consideration of the historical context of the provision; the stated objectives of the legislation; and its purposes.
[27] Section 3 of the BCCMA explains that its primary object is "to provide for flexible and contemporary community based arrangements for the use of freehold land, having regard to the secondary objects".
[28] The BCCMA's secondary objects are set out in section 4 and relevantly include (my emphasis) -
(e) to ensure that bodies corporate for community titles schemes have control of the common property and body corporate assets they are responsible for managing on behalf of owners of lots included in the schemes;
(f) to provide bodies corporate with the flexibility they need in their operations and dealings to accommodate changing circumstances within community titles schemes;
(g) to provide an appropriate level of consumer protection for owners and intending buyers of lots included in community titles schemes;
[29] In recognition of the variety of property developments covered by the BCCMA, the Act is supported by four separate sets of regulations, called "modules". The Standard Module applies to the Westmark Scheme.
[30] Section 36 falls within Division 1 General Provisions, of Part 3, Common Property of the BCCMA. It, and section 35, a related section, state (my emphasis):
(1) Common property for a community titles scheme is owned by the owners of the lots included in the scheme, as tenants in common, in shares proportionate to the interest schedule lot entitlements of their respective lots.
(2) Subsection (1) applies even though, under the Land Title Act, the registrar creates an indefeasible title for the common property for a community titles scheme.
(3) An owner's interest in a lot is inseparable from the owner's interest in the common property.
(4) If the occupier of a lot is not the lot's owner, a right the owner has under this Act to the occupation or use of common property is enjoyed by the occupier.
(5) The way the body corporate for a community titles scheme (scheme A) may enjoy the occupation and use of the common property for a community titles scheme for which scheme A is a subsidiary scheme is subject to the community management statement for each scheme for which scheme A is a subsidiary scheme.
(6) If a body corporate is authorised under this Act to enter into a transaction affecting common property, it may enter into the transaction, and execute documents related to the transaction, in its own name, as if it were the owner of an estate of fee simple in the common property.
(1) The body corporate for a community titles scheme may sue and be sued for rights and liabilities related to the common property as if the body corporate were the owner of the common property.
If a person, including the owner of a lot included in the community titles scheme, damages the common property, the body corporate may sue to recover the loss arising from the damage.
(2) For common property other than common property for which an entity other than the body corporate is the occupier, the body corporate may sue and be sued as if the body corporate were the occupier.
If a person is injured while on the common property (other than common property for which an entity other than the body corporate is the occupier), an action claiming failure by the occupier to exercise a proper standard of care lies against the body corporate.
(3) If, before a community titles scheme is established, a contract is entered into to have work carried out on land that becomes scheme land -
(a) the body corporate is, on the establishment of the scheme, subrogated to the rights (if any) of the original owner under the contract to the extent that the contract applies to work affecting scheme land that is common property; and
(b) a lot owner is, on the establishment of the scheme, subrogated to the rights (if any) of the original owner under the contract to the extent that the contract applies to work affecting scheme land that is the lot.
[31] The other sections of the Division deal with the creation of common property.
[32] To further discern the purpose of the BCCMA, I was provided with the explanatory notes for the Body Corporate and Community Management Bill 1997.
[33] The notes relating to section 38 (now section 36) state (my emphasis):
Clause 38 allows the body corporate of a community titles scheme to sue and be sued for rights and liabilities related to the common property as if the body corporate were the owner of the common property.
[34] One of Westmark's arguments in support of the non-technical interpretation of "subrogated to the rights ..." was that a non-technical interpretation supported the flexibility that the BCCMA intended to bring to body corporate regimes. In that regard, I note that when the Bill was read a second time, on 30 April 1997, the Honourable H W T Hobbs, then Minister for Natural Resources, observed that the legislation had been a long time coming. He explained that the Labor government's attempt to draft an act to replace the Building Units and Group Titles Act 1980 commenced in 1991. But the legislation arising out of that attempt, the BUGTA 1994, was "unceremoniously dump[ed]" on the back of criticisms about its "impracticality and inflexible response to very diverse concerns". The Minister said that the Bill's primary objective was to provide for flexible arrangements for the application of a community living concept on freehold land. Flexibility was necessary because different laws were needed to govern a 500-room resort from those which were needed to govern a six-pack or duplex apartment. The means of achieving this flexibility was the creation of "a legislative structure that comprise[d] an umbrella Act supported by separate regulatory modules, [each] tailor made for specific types of development (namely, predominately owner occupied buildings (Module 1); holiday letting/serviced apartment schemes (Module 2); commercial/non-residential developments (Module 3); and small schemes (Module 4).
[35] Section 36 of the BCCMA replaced section 27 of the BUGTA. Section 27 is entitled "Constitution of bodies corporate". Subsections (7) and (8) state (my emphasis):
(a) sue and be sued on any contract made by it; and
(b) sue for and in respect of any damage or injury to the common property caused by any person, whether a proprietor or not; and
(c) be sued in respect of any matter connected with the parcel for which the proprietors are jointly liable.
(8) In any case in which work is carried out for the purpose of constructing or preparing the common property the body corporate, upon registration of the plan, shall be deemed to have been a party to an enforceable contract for the carrying out of such work, and may sue in respect of that contract.
[36] It will be recalled that Devine argued (in effect) that introducing the concept of subrogation into section 36(3) was intended to create a change to the "deeming" brought about by section 27(8) of the BUGTA - but Devine was not able to discern why such a change was considered necessary. Nor was anything mentioned about the need for change in the Explanatory Notes or the second reading speech.
[37] For completeness, I note that Explanatory Notes were not routinely prepared for bills until the early 1990s and, therefore, there are no Explanatory Notes for the BUGT Bill. The second reading speech for the BUGT Bill commenced on 25 March 1980 and resumed on 17 April 1980. Of potential relevance to this matter is a comment by the Minister for Justice and Attorney General[13] during the second reading speech of the BUGT Bill that each proprietor would have his own civil rights against the developer in respect of defects in his own unit but that the body corporate was the correct body to take action in respect of defects in the common property.[14]
[38] Westmark submitted that an intention that "subrogated" was not to bear its legal technical meaning could be discerned from the following:
(a) Subrogation is a remedy rooted in a desire to avoid unconscionability or double recovery. Sections 35 and 36 are not remedial in any sense.
(b) The relevant purpose of the BCCMA is "flexibility". "One could hardly think of a better indicator of that than [sections 35(1) and 35(6)]" which gave to the body corporate "rights and obligations which the body corporate would not otherwise have ..." Section 36(3) ought not to be construed independently of section 35; nor independently of sections 36(1) and (2); nor independently of the purposes in sections 3 and 4. In the light of sections 3, 4 and 35, "subrogated" in section 36(3) ought to be viewed as a "statutory modification of the ordinary consequences of privity of contract" to allow for the flexibility intended by the BCCMA.
(c) Section 36(3) provided for rights and obligations of the body corporate which it would not otherwise have because of privity of contract.
(d) The general powers in sections 36(1) and (2) gave "effect to the mechanical or operational way in which the attribution in subsection (3) is framed".
(e) Section 36(1) applies whenever the cause of action arises. Indeed, the sub-sections of section 36 could be re-arranged - with sub-section 36(3) followed by sub-sections 36(1) and (2) - without affecting the meaning or effect of the section.
[39] Westmark also contended that its construction was consistent with section 203 of Module 1 which says:
203 Body corporate's power to take action to remedy defective building work - Act, s 162 [SM s 213]
(1) If building work carried out for the owner of a lot included in the community titles scheme is defective, the body corporate may bring a proceeding under the Queensland Building and Construction Commission Act 1991 or another law to have the defect remedied.
(2) If a body corporate brings a proceeding under this section, the body corporate is subrogated to the contractual and other rights of the person for whom the building work was carried out.
[40] In my view, nothing in section 203 suggests that the body corporate may not pursue a claim in relation to defective building work in its own name. In my view, subsection 203(2) avoids the consequences of privity of contract when it comes to the building work for the purpose of the body corporate's proceedings under subsection 203(1).
[41] I found it helpful to consider, in its full context, the explanation of subrogation by Mitchell and Watterson referred to by Westmark.
[42] Westmark quoted part of the definition set out in [1.01] of the text. The balance of the definition and the paragraphs which follow elaborate upon it (my emphasis):
[1.01] 'Subrogation' literally means 'substitution'; the word derives from the same Latin root as the more familiar word 'surrogate'. In English law the term 'subrogation' denotes a process by which one party is deemed to have been substituted for another, so that he can acquire and enforce the other's rights against a third party for his own benefit. It is often said that a subrogated claimant 'stands in the shoes' of the party whose rights he is deemed to have acquired.
[1.02] Subrogation rights can be acquired by contract. They can also be awarded as a remedy for unjust enrichment. Thus, in Banque Financiere de law Cite v Parc (Battersea) Ltd, Lord Hoffman explained that 'subrogation may arise either from the express or implied agreement of the parties or by operation of law'. An example of contractual subrogation is where an insured gives his insurer a subrogation receipt, entitling the insurer to pursue the insured's right of action against a third party: this constitutes 'a contractual arrangement for the transfer of rights'. However in his Lordship's view, the term 'subrogation' is also used:
to describe an equitable remedy to reverse or prevent unjust enrichment which is not based upon any agreement or common intention of the party enriched and the party deprived.
[1.04] Subrogation rights do not merely derive from several different sources. They also work in several different ways, depending on the relationship between the parties, and on the question whether the rights to which a subrogated claimant is deemed to have acquired were previously extinguished by payment."
[43] Obviously, in the present case, the developer's rights have not been extinguished by payment by the body corporate or anyone else. Thus, consistently with the view expressed in [1.04], it is reasonable to conclude that the right of subrogation acquired by the body corporate in this case may work differently from the right of subrogation acquired in a case in which the subrogated claimant has extinguished the original claimant's rights.
[44] The authors explained that the text considered three different types of subrogation: (i) subrogation to extinguished rights; (ii) subrogation to subsisting rights: insurers' claims; and (iii) subrogation to subsisting rights: special insolvency regimes. None of those three types of subrogation is in contemplation in section 36(3).
[45] In the chapter headed "Practical Points", the authors considered the name in which the remedy was to be claimed in relation to each type of subrogation dealt with in their text. In summary, at [9.10] the authors said (my emphasis):
" ... First, where it is certain that the claimant's payment has not extinguished the creditor's rights, the claimant should bring proceedings in the creditor's name. Secondly, where it is certain that the claimant's payment has extinguished the creditor's rights, the claimant should bring proceedings in his own name, although in cases where he can recover on the ground of secondary liability, he may alternatively sue in the creditor's name if he wishes to do so. Thirdly, where it is uncertain whether the claimant's payment has extinguished the creditor's rights, the claimant should play safe by suing the defendant in his own name but joining the creditor as a party, and asking the court for an order that the creditor lend his name to the proceedings if this is necessary."
[46] Of course, in the present case, there has been no payment to any creditor (that is, the developer) by the body corporate and these "rules" about the name in which the subrogated claimant may sue do not assist.
[47] I considered the cases which dealt with the use of the word "subrogated" (or its variants) in legislation in detail.
[48] As the following discussion reveals, the cases upon which Devine relied for support of its argument that the concept of subrogation in section 36(3) ought to be given its technical legal meaning (set out in [14](d) above) concerned legislation which governed the conduct of certain professionals (lawyers or real estate agents or travel agents) or organisations (the NSW Titles Office or employers) and which (a) gave a claimant who had suffered loss because of the conduct of one of those professionals, or the organisation, or the employer, recourse to a fund to compensate them for their loss; and which (b) empowered the administrator of the fund to pursue the third party by way of subrogation to the rights of the original claimant. The relevant provision of the BCCMA is not concerned with schemes of that kind.
[49] In more detail: Seltsam concerned losses sustained by a worker, compensated for by WorkCover. NSW v CBA concerned losses caused by real estate agents, compensated for out of a fund. Blair concerned losses caused by travel agents, compensated for out of a fund. (The relevant legislation is set out in the discussion of Seltsam, NSW v CBA and Blair below.) Gill and LawCover concerned subrogated rights given by legislation to the Registrar-General of New South Wales (the RG). As Basten JA explained in LawCover, the Real Property Act 1900 (the RPA) provides for the transfer of title to land by registration of the transfer. Sometimes, that system can cause a person to suffer loss or damage, for example, if a person is deprived of land by fraud. The RPA creates a statutory fund from which compensation is payable. A person with a claim for compensation may bring proceedings against the RG. The RG then has a statutory right of subrogation to any rights or remedies the claimant may have against third parties with respect to the loss, as per section 133(2) of the RPA which says (my emphasis): "If administrative proceedings or court proceedings are commenced in relation to a claimant's compensable loss, the Registrar-General is subrogated to the claimant in respect of the claimant's rights and remedies against any person is relation to that loss."
[50] Gill v The Registrar General: Both Westmark and Devine relied on this case for its explanation of subrogation as an equitable doctrine. The context for that explanation included the extinguishment by payment of the original claimant's right by the entity subrogated to that right.
[51] Mrs Gill was a client of a solicitor named Hawkins. She left her certificate of title with him. He dishonestly used it to borrow money, secured on her property, from a company called Fairstar. Mrs Gill made a claim on the Law Society, which paid out Fairstar, removing the mortgage from Mrs Gill's title. In Mrs Gill's name, the Law Society sued the RG under section 127 of the RPA for damages to be paid out of the fund administered by the RG under the RPA. The RG said he was not liable because the mortgage had been discharged before proceedings were commenced against him. Mrs Gill could not then be said to have suffered loss or damage as a consequence of the registration of Fairstar as the proprietor of the mortgage. The Law Society argued that, as a general principle, a person's cause of action is not defeated by the mere fact that an insurer has already indemnified the person for the loss. The insurer is subrogated to the insured's right against the party primarily responsible in contract or tort for the amount of the damage. The Law Society succeeded. It was entitled to sue the RG.
[52] As to the doctrine of subrogation, Young J said (citations omitted, my emphasis):[15]
"Where a person insures property against loss or damage by act, including tortious act of another, the insured is obliged to account to the insurer for the recovery of anything from the tortfeasor where the insured has been paid the full amount of his or her loss. However, it is important to realise that this occurs either because of a specific provision in the contract of insurance, or alternatively, because of the equitable doctrine of subrogation. In the instant case, what is referred to is the statutory right of subrogation rather than any contractual or equitable right. However one must be careful because, as Lord Diplock said in Orakpo v Manson Investments Ltd ..., the word "subrogation" embraces more than a single concept in law. However, for reasons I gave in Cid v Cortes ..., one cannot place that much reliance on Orakpo's case as a guide to the law of subrogation in Australian law."
[53] After stating that when the word "subrogation" is used in a statute it is given its technical legal meaning unless the contrary intention appears,[16] Young J went on to quote from Sheldon's Law of Subrogation[17] for the meaning of subrogation as a technical term of the law. That text emphasised that rights of subrogation arise as a consequence of the person asserting such a right having paid a debt which ought to have been discharged by another (my emphasis):
"Subrogation ... is the substitution of another person in the place of a creditor, so that the person is whose favour it is exercised succeeds to the rights of the creditor in relation to the debt. The substitute is put in all respects in the place of the party to whose rights he is subrogated ... It is treated as the creature of equity, and is so administered as to secure real and essential justice without regard to form, and is independent of any contractual relations between the parties to be affected by it. It is broad enough to include every instance in which one party pays a debt for which another is primarily answerable, and which, in equity and good conscience should have been discharged by the latter; but it is not to be applied in favour of one who has, officiously and as a mere volunteer, paid the debt of another, for which neither he nor his property was answerable, and which he was under no obligation to pay; and it is not allowed where it would work any injustice to the rights of others.
" ... It is said to be a legal fiction, by force of which an obligation extinguished by a payment made by a third person is treated as still subsisting for the benefit of this third person, that by means of it one creditor is substituted to the rights, remedies, and securities of another. The party who is subrogated is regarded as constituting one and the same person with the creditor whom he succeeds. It takes place for the benefit of the person who, being himself a creditor, pays another creditor whose debt is preferred to his by reason of privileges or mortgages, being obliged to make the payment, either as standing in the situation of a surety, or that he might move a prior encumbrance from the property on which he relies to secure his payment."
[54] His Honour later said that subsequent decisions had shown "that a person is entitled to the benefit of the principles of subrogation if that person believes that it had a legal obligation to pay or even if it considers its commercial reputation obliged it morally to pay". While the Law Society discharged Mrs Gill's claim before it needed to do so, that did not disqualify it from benefiting under the law of subrogation.
[55] Turning to the relevant section, his Honour said (my emphasis):
"Accordingly, when s 61 of the Legal Practitioners Act 1898 speaks of the Law Society being subrogated 'to all the rights and remedies of the claimant ...' it seems to me that what the section envisages is that within limits which I will explore in answer to the second question, as between the claimant, the Law Society and the other person, the obligation which was in fact extinguished by the payment made by the Law Society is to be treated as still subsisting. On this basis the Law Society is to be treated as one with Mrs Gill and as a person who has an interest in land within the meaning of s 127 of the Real Property Act 1900."
[56] WorkCover Queensland v Seltsam: This case concerned the interpretation of section 278(7) of the WorkCover Queensland Act 1996 (Qld) which states:
(7) If a person who has received compensation has not recovered, or taken proceedings to recover, damages for the injury from another person, other than the worker's employer -
(a) WorkCover is entitled to be indemnified for the amount of the compensation by the other person to the extent of that person's liability for the damages, so far as the amount of damages payable for the injury by that person extends, and
(b) to that end, WorkCover is subrogated to the rights of the person for the injury.
"Compensation" is defined in section 10 of the Act as follows:
"Compensation" is compensation under this Act, that is, amounts for a worker's injury payable under chapters 3 and 42 by WorkCover or a self-insurer to a worker, a dependant of a deceased worker or anyone else, and includes compensation paid or payable under a former Act.
[57] Thus, the operation of section 278(7) depends upon the claimant - the worker - having received compensation from someone other than the person liable for their damages - such as Workcover or a self-insured employer.
[58] At first instance, the primary judge held that WorkCover had to commence relevant proceedings in the name of the worker - it having been subrogated to the worker's rights. It had not done so, and the primary judge dismissed its claim. In reaching that conclusion, the primary judge noted that, prior to 1990, when section 278(7) was introduced, the workers compensation authority could sue in its own name. The word "subrogated" was introduced by amendments in 1990 and the primary judge reasoned that a fundamental change must have been intended.
[59] An appeal from the decision of the primary judge was allowed and it was held that WorkCover could sue in its own name.
[60] On appeal, Young J acknowledged that it must be presumed that the word "subrogation" was introduced thoughtfully and for some reason - although it was difficult to see the reason in this case. His Honour also acknowledged that, because "subrogation" had an accepted technical meaning, the court usually assumed that it was intended that the word be understood in that technical sense.[18]
[61] His Honour observed that there were cases in which the term "subrogation" had been employed in the sense of a transfer of rights from one person to another. His Honour observed that the dictionary definition of the word was "put in the place of another" which was "a relatively rare use of the term in law".[19] His Honour thought the use of the word "subrogation" in the statute was peculiar. The right given to Workcover in the previous legislation was a right to sue on a statutory indemnity in its own name. For most purposes, the statutory right of indemnity was a different claim from the worker's claim. His Honour discussed the "normal" situation with "subrogation" and the strangeness of the situation under consideration. His Honour said that subrogation "normally" applied when a claimant had been paid out (my emphasis):[20]
"Normally, with subrogation, one has the situation of a person such as an insurer paying out an insured in a situation where the insured has a right against the third party. When that occurs, the insurer is subrogated to the right possessed by the insured. That is the usual case of subrogation. However, in the instant case, we have a situation where the word "subrogation" is used in connection not with the right of the worker but with a completely independent right, the right of the authority and that seems very strange."
[62] Ultimately, his Honour was persuaded by the arguments of senior counsel for WorkCover that the phrase "to that end" in the section disclosed "the handmaiden status" of section 278(7)(b) to aid the indemnity right given in section 278(7)(a). His Honour said, at [30]:
"The phrase ['to that end'] suggests that the right of indemnity exists but to assist the indemnity WorkCover is given rights of subrogation. Furthermore, the phrase 'to that end' shows that the subrogation is only a limited subrogation. It is not subrogation to the worker's action, but rather subrogation to the rights of the worker to the extent that it is necessary to aid the WorkCover indemnity as, for instance, by entitling WorkCover to give notices of action to the appropriate people so that rights under s 278 will not be lost. That, to my mind, gives the answer or a good answer to the question as to why the concept of subrogation was introduced in 1990 which otherwise would be a great problem. As I have said it is clear that even on this construction it is not a panacea for all problems but it does go a certain way to relieve them."
[63] New South Wales v Commonwealth Bank of Australia: The issue here was the whether the word "subrogate" in section 79 of the Property Stock and Business Agents Act 1941[21] took on the meaning it had in the standard textbooks on equity or insurance law or a "special" meaning. At the relevant time, section 79 of the 1941 Act stated: "On payment out of the fund of moneys in settlement in whole or in part of any claim under this Act, the Council shall be subrogated, to the extent of such payment, to all the rights and remedies of the claimant against the licensee, or the former licensee ... in relation to whom the claim arose, or any other person".
[64] In this case, a real estate agent's trust account was with the Commonwealth Bank of Australia (CBA). The real estate agent made unauthorised withdrawals from it and gambled the money away. The Property Services Council (the PSC) was a statutory corporation, representing the Crown. It paid compensation to those who had suffered loss because of the agent's use of the money they had placed in the agent's trust account. However, before the proceedings commenced, the PSC was abolished. The plaintiff, New South Wales, sought to recover the money paid out by the PSC from the CBA, relying on section 4 of the Crown Proceedings Act 1988 (NSW).
[65] It was held that rights of subrogation did not vest in the Crown, suing as New South Wales. Any subrogation rights accrued to the PSC, which had been abolished. And even if such subrogation rights vested in the Crown, they could not be enforced in the name of the State of New South Wales. While there were cases which provided illustrations of the use of the word "subrogation" in the sense of the transfer of rights from one person to another, there was a strong presumption that when the word was used in a statute, it was used in its technical sense. Nothing about the context warranted a contrary view. Any claim had to be brought in the name of the original claimant.
[66] Registrar-General (NSW) v LawCover Insurance Pty Ltd: Ms Pedulla lost her title to land because of the fraud of her brother and his wife. Their fraudulent transfers were effected by a solicitor, Mr Yee.
[67] Ms Pedulla commenced proceedings against the RG. The RG joined Mr Yee, claiming damages pursuant to his right of subrogation. Ms Pedulla amended her claim to include a claim against Mr Yee.
[68] From 1 July 2011, Mr Yee had a professional indemnity insurance policy with LawCover. Under the policy, Mr Yee was indemnified against any claims made against him unless the claim arose from a dishonest or fraudulent act or omission.
[69] In Ms Pedulla's proceedings, the RG set out to establish that Mr Yee was not dishonest or fraudulent and was therefore covered by his LawCover policy, which meant the RPA fund was not liable for the loss. The primary judge concluded that the RG had not proven that Mr Yee was not dishonest.
[70] The primary judge entered two separate judgments against Mr Yee. One in favour of Ms Pedulla. The other in favour of the RG. The entry of separate judgments reflected the primary judge's understanding that the RG acquired an independent cause of action against Mr Yee which it could enforce in its own name. On appeal, that was held to be incorrect.
[71] As Meagher JA explained, there was only one cause of action in negligence against Mr Yee and that was Ms Pedulla's action. The fact that the RG was subrogated to that right of action did not enable it to bring an independent action against Mr Yee or obtain judgment against him in its own name.
[72] What was relevant to the matter before me was Meagher JA's discussion of the meaning of "subrogated" in section 133(2). His Honour said that the context made it plain that "subrogated" in section 133(2) was used in its well-understood legal sense. Later, his Honour said (my emphasis):
[43] The right of action to which the indemnified is subrogated must be asserted in the name of the person indemnified ... It is not uncommon for statutory schemes, which establish funds from which applicants can be paid compensation for loss, to confer rights of subrogation on the fund or its administrator ...
[44] Some of these statutes ... contain express provisions enabling a party to exercise the rights to which it is subrogated "in its own name or in the name of the claimant". In the absence of such a provision the party having the benefit of the right of subrogation cannot exercise or enforce the relevant rights in its own name in an action to which the claimant has not also been made a party.
[45] Section 133(4) ... is not a provision enabling the subrogated party to bring an action against a third party in its own name, without also joining the claimant on the Fund as a party. That subsection is concerned only with the circumstance that existing court proceedings have been brought against the Registrar-General in accordance with s 132. If the Registrar-General forms the 'opinion' that the claimant has an action against any other person in respect of the compensable loss which is the subject of the proceedings, it may 'join' that person as a party to them. That provision enables the Registrar-General to exercise a right of subrogation in that way before there has been a judgment awarding compensation or a payment from the Fund. It does not at that or any other time enable the Registrar General to enforce the right of action in its own name in separate proceedings and without the claimant also being joined as a party in the manner described by Lord Goff in Esso Petroleum.
[73] Travel Compensation Fund v Blair & Ors: The Travel Compensation Fund (the TCF) was established as a cooperative scheme for the regulation of travel agents and to provide a fund to protect the consumers of the services of travel agents. At the relevant time, the financial collapse of several travel agents resulted in the TFC making about $11 million in payments out of the fund to about 12,000 claimants. Under section 40(3) of the Travel Agents Act 1986 (NSW) (the TAA), the TCF had a statutory right of subrogation as follows: "Where a payment is made to a claimant under the compensation scheme by reason of an act or omission by a person carrying on business as a travel agent, the compensation scheme trustees are subrogated to the rights of the claimant in relation to the act or omission". [22]
[74] Under section 52 of the TAA, the TCF was entitled to sue in its own name, something which Lehane J in Travel Compensation Fund v Travel Guide Pty Ltd (in liq) thought was odd, given the use of the word "subrogated".[23]
[75] The TCF sought leave to amend several suits it brought against several travel agent companies and their directors. [24] Leave was opposed for reasons which included an argument that in the absence of an assignment of rights, the TCF was not entitled to commence and maintain the claims it wished to incorporate into its suits by way of amendment.
[76] Ultimately, leave to amend was granted, subject to certain matters. For my purposes, the judgment is relevant for Einstein J's statements about subrogation. Einstein J accepted that the use of the word "subrogated" in legislation invoked the concept of subrogation as it was understood at general law, subject to indications to the contrary in the legislation. The TCF trustees stood in the shoes of the claimants and had the benefit of the claimant's rights. When a subrogated right is pursued, it is the right of the claimant being litigated. Einstein J also discussed the difference between subrogation and assignment. An assignee may keep the fruits of the litigation, even if that exceeded what was paid for them. In contrast, a person pursuing subrogated rights is only entitled to recover the amount they have paid - with the original claimant entitled to keep the remainder.
[77] To conclude that analysis: while these cases provide support for the proposition that the technical meaning of "subrogation" in a statute is presumed, subject to an apparent contrary intention, the cases did not assist Devine because -
(a) they concerned subrogation as a statutory "remedy" to replenish a fund (or the like) which had paid out "the debt of another" owed to the original claimant. Westmark paying the developer, Walker, on the basis that Walker is owed something by Devine, is not in contemplation here - under the BCCMA or otherwise;
(b) they acknowledged that there are cases in which the word "subrogated" has been interpreted to mean a transfer of rights; and
(c) in WorkCover Queensland v Seltsam it was held that "subrogation" did not bear its technical legal meaning because there was no obvious reason to introduce the legal technical concept of "subrogation" into that particular legislative scheme.
[78] I was referred by both parties to several other cases. Most concerned an explanation of subrogation as a remedy. While I consulted them all, those which I considered in detail are discussed below.
[79] ACN 002 402 146 Pty Ltd (manager appointed) (in liq) (formerly known as Tome Bros Pty Ltd) v Ken Crossman & Co Pty Ltd [2023] FCAFC 35 (Tome): This was another case concerning the Travel Compensation Fund. It was also another case Devine relied upon for what it said about the use of the word subrogation in legislation - that is, that in interpreting a statutory subrogation provision, the statute ought to be construed so as to achieve the same end as the equitable principle. But as the case also explained, quoting from Gleeson CJ in Registrar-General v Gill (1994) 17 BPR 33,709 at 33,713, the equitable principle "aim[s] to adjust the interests of the three parties, such as a creditor, a debtor and an insurer or a surety, in such a way as to avoid the unconscionable result of double recovery by the creditor or inequitable discharge of the liability of the debtor". In other words, the situation in contemplation in Tome is not the situation in contemplation here.
[80] Lowbeer v Dr Varda and Lowbeer v Tov-Lev [2017] FCCA 1658: This case emphasised the significance of indemnification to the concept of subrogation in equity. The Court said:
[43] ... Subrogation is not an assignment by operation of equity. In England, it has been described by Lord Diplock as a transfer "by operation of law", without "assignment or assent of the person from whom the rights are transferred": Orakpo v Manson Investments Ltd [1978] AC 95 at 104. The essence of subrogation in equity is that a party has a right in equity to stand in the shoes of another party and to enforce the rights of the other party in the name of that party. This might be described as a form of transfer by operation of law, but the essential character of subrogation is that it does not depend on an assignment. Further, as the High Court has said in Bofinger at [97], it does not depend upon the bilateral dealings with the party indemnifying and the party being indemnified. Subrogation will even operate in equity to revive a right that has been extinguished (such as a right to a security discharged by payment): Saraceni v Mentha [No 2] at [238]. Therefore, it is not properly characterised as a form of assignment. It is a right to enforce that which might have been enforce by the indemnified party if there had been no performance of the obligation to indemnify.
[44] The essence of subrogation is that the rights that were held by the indemnified party may be enforced by the subrogated party in the absence of an assignment: Di Mella v Rudaks [2008] SASC 345; (2008) 102 SASR 582 ...
[81] Sun City: As noted above, in the separate question determination in Sun City, Applegarth J was not required to determine whether "subrogated" in section 38(3) bore its technical legal meaning or not. Nor was he required to answer that question in a subsequent application by the body corporate for leave to amend its claim and its statement of claim, in Body Corporate for Sun City Resorts CTS 24674 v Sunland Constructions Pty Ltd & Ors (No 2) [2011] QSC 42.
[82] In the first Sun City case, his Honour observed that section 38(3) effectively replaced section 27(7) of the BUGTA, and created new rights. His Honour said (my emphasis):
[38] ... [Section 27(7) BUGTA] ceased to apply upon the commencement of the BCCM Act, which contained a different substantive provision in relation to the conferral of rights upon a body corporate following the establishment of a community titles scheme, namely s 38(3) ...
[41] Section 38(3) does not alter the legal nature of the contract that provided for work to be carried out on land that becomes scheme land. It does not alter the rights and liabilities of the parties to that contract. Instead, it creates new rights in a body corporate to be subrogated to the rights, if any, of the original owner under the contract.
[42] The provision governs the future operation of an existing contract by creating a statutory right to be subrogated upon the establishment of a community titles scheme. It assumes that a past event has happened, namely entry into a contract to have work carried out, and creates a further particular right in the body corporate. In this regard the Act is not "retrospective" in the sense discussed in the High Court authorities that approve [Coleman v Shell Co of Australia Ltd [1943] NSWStRp 41; (1943) 45 SR (NSW) 27]. The Act takes the rights of the parties to an existing contract as a fact and creates an entitlement to be subrogated to those rights.
[83] It will be recalled that equitable subrogation is a remedy not a right.
[84] Also, in the Sun City cases, there did not appear to be any challenge to the proposition that the developer's rights had been transferred to the body corporate under section 38(3).
[85] In the 2011 case, Sunland Constructions opposed leave to amend on the basis that no useful purpose would be served by allowing a claim for damages for breach of contract to proceed because the last day of the limitation period was 30 June 2004 and the claim was not filed until 8 July 2004. Sunland Constructions argued that the claim was statute barred. The body corporate argued that section 38(3) transferred contractual rights to the body corporate and its effect was that the limitation period began to run against the body corporate when section 38(3) took effect upon the establishment of the scheme and the creation of the body corporate on 27 July 1998. Sunland Construction argued that the rights to which the body corporate was subrogated were subject to all defences, including limitation of action defences, and that the body corporate could not be placed in a better position than the party to whose rights it was subrogated.
[86] His Honour concluded that those arguments involved important questions of law. His Honour was not persuaded that the body corporate's claim for breach of contract was clearly met by a limitation defence such that it would be futile to allow its claim for damages for breach of contract to proceed.
[87] In accordance with the authorities, I proceeded on the following basis:
(a) The language of section 36(3), in its incorporation of the concept of "subrogation", is on its face ambiguous in the sense that "subrogated to" may bear its technical legal meaning; or it may not, in which case it would incorporate concepts of transfer or substitution.
(b) However, because "subrogation" is a word with a technical legal meaning, when it is used in legislation, it must be taken to bear that meaning unless a contrary intention clearly arises.
(c) The meaning of "subrogated to" in section 36(3), and whether the legislature intended it to bear its ordinary, rather than its technical legal meaning, is to be determined by reference to the language of the section; its context in the BCCMA; and the purpose of the BCCMA.
(d) The interpretation of section 36(3) which would best achieve the purpose of the BCCMA is to be preferred over any other interpretation.
[88] As my above analysis of the cases and texts shows, subrogation as a technical legal concept is available as an equitable remedy in situations in which an original claimant, who has suffered loss at the hands of a third party, has been paid out for/compensated for its loss by the subrogated claimant. The concept of subrogation entitles the subrogated claimant to pursue the third party, in the name of the original claimant, to recover the loss. However, the cases and texts also acknowledge that the concept of subrogation is sometimes used in other contexts to mean substitution or to involve a transfer of rights.
[89] Although section 36(3) of the BCCMA replaced the concept of "deeming" in the former section 27 of the BUGTA with the language of "subrogation", and it may be prima facie assumed that the language was chosen purposefully, I could discern no reason why the legislature would introduce the equitable concept of subrogation into its long awaited update from the BUGTA to the BCCMA. If there was a particular reason why the legislature intended to introduce the equitable concept of subrogation into the BCCMA, it was reasonable to expect it to be mentioned in the Explanatory Notes to the Bill. But the notes say nothing about it. Nor is it mentioned in the second reading speech.
[90] Subrogation, as a technical legal concept, provides an equitable remedy to reverse or prevent unjust enrichment. It does not create a right. Yet section 36 is headed "Rights and responsibilities for common property". Thus, the section heading does not suggest that the use of the phrase "subrogated to" was intended to bear its equitable meaning: cf section 35C of the AIA. Further, section 36(3) of the BCCMA does not contemplate a risk of unjust enrichment of the original owner nor circumstances in which the body corporate might require an equitable remedy.
[91] The cases in which the concept of "subrogation" in legislation was given its meaning in equity - Gill, NSW v CBA, LawCover, Blair and Tome - involved matters in which an original claimant had been paid out by the subrogated claimant/compensation fund. That is not what is in contemplation in the BCCMA. In no way is the body corporate like the administrator of the relevant funds in those cases. The body corporate is under no obligation to pay out the original owner for any loss. Indeed, loss suffered by the original owner is not a pre-requisite to the body corporate's "subrogation" as it was in the legislation under consideration in those cases.
[92] Meagher JA's statements to the effect that a subrogated party may not exercise or enforce relevant rights in its name in the absence of a provision permitting it to do so were clearly not intended as statements of general principle. The type of legislation under consideration by his Honour was different from the BCCMA.
[93] In my view, among its other purposes, the BCCMA intended to place the body corporate in control of the common property and to use its control in such a way as to achieve an appropriate level of community protection for owners of lots in community titles schemes, as well as efficiencies. Thus, by section 35(1), the common property is owned by the lot owners as tenants in common. However, by section 36(1) the body corporate may sue and be sued for rights and liabilities related to the common property as if it were the owner of the common property. And by section 36(2), the body corporate may sue and be sued as if it were the occupier of the common property.
[94] Clearly the first two subsections of section 36 are intended to achieve efficiencies and to allow for a single entity - the body corporate - rather than multiple lot holders as tenants in common, to enforce rights or to bear responsibilities as if the body corporate were the owner or occupier of the common property.
[95] Devine contended that section 36(1) and 36(2) applied only after the scheme had been established and that section 36(3) applied beforehand. Westmark contended that section 36(1) was not temporally constrained. It applied to contracts entered into prior to, as well as after, the establishment of the scheme and facilitated the body corporate's pursuit of the original owner's rights to which the body corporate was subrogated under section 36(3).
[96] The Explanatory Notes deal with section 36 as a whole. They do not differentiate between sections 36(1) and 36(2) and section 36(3). The relevant note simply states, "Clause [36] allows the body corporate to sue and be sued for rights and responsibilities related to the common property as if it were the owner".
[97] In my view, Westmark's submissions about the interaction between the subsections is to be preferred particularly in the absence of any discernible reason as to why the remedy of subrogation was introduced into the BCCMA. Westmark's interpretation allows the subsections of section 36 to be read as a cohesive whole. Westmark's interpretation is also consistent with section 203 of Module 1.
[98] The conclusion that section 36 confers rights (and that the phrase "subrogated to" in it is not to be understood in its equitable sense) is consistent with Applegarth J's understanding of the section in Sun City. It will be recalled that his Honour said that it created new rights in a body corporate.
[99] Accordingly, I concluded that the technical legal concept of subrogation had not been imported into section 36(3). I concluded that the legislation evinces a contrary intention and that the concept of subrogation and the phrase "subrogated to" is used in the context of the section transferring the rights of the original owner to the body corporate.
[100] Westmark's arguments prevailed. Devine could not succeed in its application for summary judgment on the basis that Westmark does not have standing.
[101] The final question for me was whether I ought to make the declaration sought by Westmark.
[102] In opposing the declaration, Devine referred to the history of the matter and to orders made by Sullivan J on 29 July 2025, which did not contemplate Westmark's application. On that date, Devine informed his Honour that if Westmark did not apply to join the original owner, it would bring an application for summary judgment. Devine urged me to simply decide its application first, in which case the declaration would be unnecessary because my decision on its application would resolve the controversy over the meaning of section 36(3) one way or the other.
[103] Westmark submitted that it brought its application to quell the controversy between the parties which existed at the time. Although Devine foreshadowed an application for summary judgment, it was not obliged to bring such an application.
[104] I decided to take the simple approach of deciding the applications in the order in which they were filed. On that basis, Westmark succeeded and was entitled to its declaration.
[1] Westmark filed a second amended statement of claim on 26 February 2025.
[3] This legislation was referred to in Registrar-General (NSW) v LawCover Insurance Pty Ltd.
[4] Devine submitted that the deeming in section 27(7) was effectively an assignment. Westmark said that indeed it was not. This was not something I had to resolve.
[5] Oxford University Press, 2007, at [1.01].
[6] Under rule 483 of the Uniform Civil Procedure Rules 1999 (Qld).
[7] 10th edition, Lexis Nexis, Sydney, 2024.
[10] Upheld by a majority of the High Court in [1987] HCA 30; (1987) 163 CLR 236.
[12] And in Thomas Australia Wholesale Vehicle Trading Co Pty Ltd v Marac Finance Australia Ltd (1985) 3 MSWLR 452.
[14] The BUGTA's contents were summarised in the Record of Legislative Acts (Government Printer, 1980). The summary contained nothing of relevance to the question for me.
[21] As it was drafted prior to its amendment on 1 August 1997.
[22] Observed to be an important mechanism by which the fund might be replenished, as might be said in the case of any similar fund.
[23] [1997] FCA 54; (1997) 72 FCR 371, at 373-374 - referred to in the submissions of the first defendant in Travel Compensation Fund v Blair & Ors.
[24] Section 40(4) of the Travel Agents Act 1986 (NSW) provided: "Where the rights conferred by subsection (3) on the compensation scheme trustees are exercisable against a body corporate, those rights are enforceable jointly against the body corporate and the persons who were its directors at the time of the act or omission and severally against the body corporate and each of those directors."
Body Corporate for Westmark Milton CTS
Devine Constructions Pty Ltd [2026] QSC 9
(2023) 296 FCR 241
(1908) 6 CLR 469
(2009) 239 CLR 269
(2006) 202 FLR 135
(1985) 3 NSWLR 475
(2018) 264 FCR 228
(2001) 53 NSWLR 518
(2018) 264 FCR 536
(2004) 221 CLR 309
(2008) 102 SASR 582
(1987) 163 CLR 236
(1997) 72 FCR 371
(iv) Registrar General (NSW) v LawCover Insurance Pty Ltd [2014] NSWCA 214, [41] (LawCover); and
(v) Travel Compensation Fund v Blair [2003] NSWSC 720, [52] (Blair).
(e) In terms of the legislative history of the provision, the section which 36 replaced, section 27 of the Building Units and Group Titles Act 1980 (Qld) (the BUGTA) (discussed below), relied upon the concept of "deeming".[4] "Deeming" and "subrogation" are very different concepts. Although Devine could not suggest a reason why the concept of subrogation was introduced into the legislation, it was a "word of art" and ought to be given its technical legal meaning.
(f) Requiring Westmark to join the developer did not mean that the developer had to be actively involved in the proceedings. It was not as if Westmark had to drag an unwilling party to court.
(g) Joining the developer had two benefits. It stopped a multiplicity of actions, and it enabled the parties to use "the normal and orthodox processes which apply to a civil case" so as to ensure that all issues were enlivened. It would be more cumbersome for the body corporate to have to call the developer as a witness because the developer would not be under the same obligations as a party, including obligations as to disclosure/discovery. (I pause to note that, on one view, that seems inconsistent with the submission about not dragging an unwilling party to court.)
(h) As to the need to read the section in the context of the BCCMA: the difference between the wording in section 36(2) (set out below) and 36(3) was telling in favour of Devine's arguments. As was the difference between section 35(6) (set out below) and section 36(3). Section 35(6) used the language one would expect if the legislation intended to permit the body corporate to sue in its own name. Different language was used in section 36(3).
(i) Responding to one of Westmark's arguments about the need to read the whole of the Act consistently: Section 203 of the 2008 Module (set out below) only applied to situations which arose after the scheme had been established - that is, it might apply to sections 36(1) or 36(2) but not to section 36(3).
(j) Although Westmark is subrogated to the rights of Walker by virtue of section 36(3), the section does not give Westmark standing to commence proceedings in its own name. Westmark should have joined Walker as a party. No contrary intention appears in the BCCMA.
(k) In relation to the contract claim, Westmark had no standing and Devine was therefore entitled to summary judgment in its favour on that claim.
(g) The mischief which section 36(3) appears to be directed at is a disinterested (or unable) original owner failing to enforce its rights in relation to a contract concerning the common property. The section aims to preserve those rights in the body corporate so that it may bring proceedings to enforce them.
(h) The preferable construction of the section is that it permits the body corporate to pursue an action to enforce the rights to which it was subrogated in its own name.