EB 9 & 10 Pty Ltd v The Owners Strata Plan 934 - [2018] NSWCA 288 - NSWCA 2018 case summary — Zoe

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EB 9 & 10 Pty Ltd v The Owners Strata Plan 934

[2018] NSWCA 288

Court of Appeal (NSW)|2018-11-06|Before: Meagher JA, Gleeson JA, Mr J, Kunc J

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At a glance

Source facts

Court

Court of Appeal (NSW)

Decision date

2018-11-06

Before

Meagher JA, Gleeson JA, Mr J, Kunc J

Catchwords

[1980] HCA 53 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
246 ALR 113 Royal Insurance Co Ltd v Mylius (1926) 38 CLR 477
[1926] HCA 49 Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397
[1967] HCA 31 The Owners Strata Plan 37762 v Pham [2006] NSWSC 1287 The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270

Source

Original judgment source is linked above.

Catchwords

[1980] HCA 53 Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334246 ALR 113 Royal Insurance Co Ltd v Mylius (1926) 38 CLR 477[1926] HCA 49 Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397[1967] HCA 31 The Owners Strata Plan 37762 v Pham [2006] NSWSC 1287 The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270

Judgment (23 paragraphs)

[1]

nze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242 Category: Principal judgment Parties: EB 9 & 10 Pty Ltd (Appellant) The Owners Strata Plan 934 (Respondent) Representation: Counsel: Mr J S Emmett (Appellant) Mr M Ashhurst SC with him Mr M R L Forgacs (Respondent)

[2]

Solicitors: Sachs Gerace Lawyers (Appellant) Chambers Russell Lawyers (Respondent File Number(s): 2018/154355 Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Citation: [2018] NSWSC 546 Date of Decision: 30 April 2018 Before: Kunc J File Number(s): 2016/16782

[4]

HEADNOTE [This headnote is not to be read as part of the judgment] A judge of the Supreme Court made a declaration that the owner of a lot in a strata scheme had, apart from the strata titles legislation, a right to reasonable use of a small strip of the strata scheme's common property to facilitate manoeuvring of a motor vehicle into and out of the lot. As contemplated by a provision of the strata titles legislation (s 253(2) of the Strata Schemes Management Act 2015 (NSW) or s 226(2) of the Strata Schemes Management Act 1996 (NSW)), the unsuccessful defendant (owners corporation) sought a costs order against the successful plaintiff (lot owner). The primary judge made the order, being of the opinion described in the section, that is, that, having regard to the subject-matter of the proceedings, the taking of the proceedings was not justified because the strata titles legislation made adequate provision for the enforcement of the lot owner's rights or remedies. The lot owner appealed, arguing that the primary judge was in error in forming that opinion. The Court held, dismissing the appeal with costs Barrett AJA; Meagher and Gleeson JJA agreeing: (1) The grant of declaratory relief "enforced" the lot owner's right to use common property as found by the primary judge. (2) An order in terms corresponding with those of the declaration could have been made by a Strata Schemes Adjudicator by reference to s 61(1) and s 138(1)(a) of the Strata Schemes Management Act 1996 (NSW). (3) Because of s 207 and s 208 of that Act and consequential availability of injunctive relief, such an order would have "enforced" the relevant right of the lot owner. (4) The strata titles legislation accordingly made "adequate provision" for the enforcement of the lot owner's right. (5) The primary judge correctly formed an opinion that, having regard to the subject-matter of the proceedings, the bringing of those proceedings was not justified because the strata titles legislation made such adequate provision.

[5]

Judgment

MEAGHER JA: I agree with Barrett AJA.
GLEESON JA: I agree with Barrett AJA.
BARRETT AJA: This appeal concerns the costs of Supreme Court proceedings in which the owner of a lot in a strata scheme was awarded declaratory relief against the scheme's owners corporation.
The plaintiff lot owner brought proceedings in the Equity Division of the Supreme Court. Although the plaintiff was awarded the declaration it sought, [1] the primary judge (Kunc J) ordered that the plaintiff pay the defendant's costs of the proceedings. [2] That reversal of the position that would have applied under the general rule that costs follow the event (rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW)) was seen by his Honour as required by s 253 of the Strata Schemes Management Act 2015 (NSW) (the "2015 SSM Act"), the terms of which are identical with those of s 226 of the Strata Schemes Management Act 1996 (NSW) (the "1996 SSM Act"). Each section provides: "Other rights and remedies not affected by this Act (1) Nothing in this Act derogates from any rights or remedies that an owner, mortgagee or chargee of a lot or an owners corporation or covenant chargee may have in relation to any lot or common property apart from this Act. (2) In any proceedings to enforce any such right or remedy, the court in which the proceedings are taken must order the plaintiff to pay the defendant's costs if the court is of the opinion that, having regard to the subject-matter of the proceedings, the taking of the proceedings was not justified because this Act or Part 4 of the Community Land Management Act 1989 makes adequate provision for the enforcement of those rights or remedies (3) The defendant's costs are to be as determined by the court."
The order made by the primary judge was expressed to be made under s 253 of the 2015 SSM Act. The parties agree, however, that, having regard to clause 7 of schedule 3 to that Act and the fact that the Supreme Court proceedings were commenced on 18 January 2016, the governing legislation was the 1996 SSM Act and that all matters in contention at first instance and in this appeal fall to be determined by reference to that Act. This was not fully appreciated by the parties and their advisers at trial [3] and was not drawn to the attention of the primary judge. The parties also agree that the costs order should be treated as if made under s 226 of the 1996 SSM Act.
In this Court, the lot owner, as appellant, contends that that the costs order should be set aside and replaced by an order that the owners corporation (present respondent) pay the lot owner's costs of the Supreme Court proceedings. [4]

[7]

The substantive decision

The relief sought by the appellant at trial was wholly declaratory. The court made a declaration as follows: "The Court declares that the defendant is not entitled to restrict or impede the plaintiff's access to and use of its [lot] in [the relevant strata plan] via the common property of [the strata plan] (the "Common Property") by developing or impeding access to that strip of the Common Property which commences at the southern boundary of [the lot] and extends 870mm into the Common Property and runs the entire length of the southern boundary of [the lot] with the Common Property."
The primary judge held that this form of declaration was appropriate and sufficient to quell the dispute that had arisen between the lot owner and the owners corporation. The circumstance that caused the appellant to sue was that the owners' corporation had installed a chain preventing movement of vehicles between the lot and the relevant part of the common property. The chain remained in place for about five months after the proceedings were commenced on 16 January 2016. Soon after removing the chain, the owners corporation took steps towards implementing proposals affecting a part of the common property that included the small area needed by the appellant for vehicle manoeuvring purposes. There were two such proposals, referred to as the "building proposal" and the "garden proposal". Each was progressed to a point at which a special resolution of the owners corporation to proceed had been passed (on 20 July 2016 in the case of the "building proposal" and on 10 November 2016 in the case of the "garden proposal"). With such internal approval in place, the proposal could have been progressed without notice to the appellant.
The appellant had a well-based apprehension that either proposal, if implemented, would prevent its use of the small area needed for vehicle manoeuvring. It sued accordingly. The primary judge held that the appellant had an entitlement to drive through the area but that the entitlement was limited by the appellant's statutory obligations not to interfere unreasonably with other lot owners' enjoyment of the common property. More will be said about that finding presently. The finding formed the basis for the grant of the declaration ultimately made.

[8]

The decision on costs

The primary judge decided the substantive matters in dispute on 12 April 2018. Questions about the form of the declaration that should be made to give effect to that decision and the question of costs were reserved for future consideration. The remaining questions became the subject of written submissions. The parties agreed that they should be determined on the papers. It is fair to say that the written submissions on costs were brief. The defendant (present respondent) raised the s 226(2) matter only in its written submissions.
The respondent argued that the appellant could, and should, have sought relief under the dispute resolution provisions of the strata titles legislation involving both Strata Scheme Adjudicators ("Adjudicators") and the Civil and Administrative Tribunal of New South Wales ("NCAT") instead of the Supreme Court; and that the court should be of the opinion that, having regard to the subject-matter of the Supreme Court proceedings, the taking of those proceedings was "not justified" because the legislation itself made "adequate provision" for the "enforcement" of the right or remedy vindicated in the Supreme Court proceedings.
In making that submission, the respondent accepted that the statutory scheme of dispute resolution did not allow the grant of declaratory relief as such. It argued, however, that the provision concerning costs is not concerned with the precise form of relief but with whether the strata titles legislation makes adequate provision for the enforcement of the relevant right. The respondent argued that the right could have been enforced under the statutory regime by, for example, an order binding the defendant not to alter the common property in the ways specified in the declaration made by the court. The appellant's riposte was that because the Act made no provision for the grant of declaratory relief, it did not make "adequate provision" for the enforcement of the appellant's right.
The primary judge accepted the submissions of the respondent. He noted, in the first place, that the costs provision only applies "in any proceedings to enforce any such right or remedy", that is, in terms of the section, a right or remedy "that an owner . . . may have in relation to any lot or common property apart from this Act". The right or remedy asserted by the appellant was of that character because the Act did not confer an express right to obtain the remedy of a declaration and the appellant was accordingly seeking a remedy "apart from" the strata titles legislation. Next, his Honour noted that the court must be satisfied that the strata titles legislation "makes adequate provision for the enforcement of those rights and remedies", being rights and remedies that a lot owner has "apart from" the Act. In the view his Honour took, "adequate provision" does not mean provision for relief identical to that which might be available elsewhere but, rather, provision "sufficient for the purpose" of enforcing "those rights or remedies". Finally, his Honour said that the question whether the "taking of the proceedings was not justified because [the Act] makes adequate provision for the enforcement of those rights or remedies" arises for consideration only if the court is satisfied that the Act does make such "adequate provision". After examining the scope of the statutory provisions for dispute resolution, his Honour concluded that it would have been open to NCAT to make an order making such "adequate provision". The terms of the order would have tracked those of the declaration in fact made - in essence, that the respondent owners corporation not alter the common property by developing or impeding access to the identified strip of land.

[11]

The appellant's submissions

The appellant's core contention is twofold: first, that the 1996 SSM Act did not make "adequate provision" for the enforcement of the rights and remedies secured to the appellant by the declaratory relief it obtained in the Supreme Court; and, second, that even if such "adequate provision" was made, uncertainties about the issue precluded the formation of an opinion that the forensic course taken by the appellant was "not justified".
The appellant says that no statutory provision enables an Adjudicator or NCAT to grant declaratory relief or to make an order that would satisfactorily deal with the dispute that arose between the parties. It identifies s 138 of the 1996 SSM Act as the only source of potentially applicable power but submits that that section would not have allowed any functionally equivalent result to have been achieved. Section 138 deals with powers of Strata Schemes Adjudicators. So far as relevant to this case, it provides: "General power of Adjudicator to make orders to settle disputes or rectify complaints (1) An Adjudicator may make an order to settle a dispute or complaint about: (a) an exercise of, or a failure to exercise, a function conferred or imposed by or under this Act or the by-laws in relation to a strata scheme, or (b) the operation, administration or management of a strata scheme under this Act. . . . (5) An application for an order under this section may be made only by an interested person."
The appellant notes that s 138 does not enable an Adjudicator to make a declaration or to grant an injunction. A power to order an injunction is conferred on an Adjudicator by s 169 but extends only to the enjoining of "a specific act with respect to a strata scheme". That, it is said, is insufficient to secure to a lot owner indefinite protection by way of permanent order in terms corresponding with those of the declaration the primary judge made.
The appellant further notes that, for the s 138 power to be exercisable, there must be a finding that there is a dispute or complaint about either the exercise of (or failure to exercise) a "function conferred or imposed by or under" the 1996 SSM Act or the strata scheme by-laws or the "operation, administration or management" of the strata scheme under the 1996 SSM Act. As Rothman J observed in The Owners Strata Plan 37762 v Pham [2006] NSWSC 1287, s 138 does not confer a "limitless jurisdiction"; nor does it allow the making of any order at all to settle any dispute or complaint. His Honour said that the words in paragraphs (a) and (b) of s 138(1) "confine the subject matter of the dispute and complaint and are words of limitation". The appellant says that the 1996 SSM Act confers no "function" of ensuring lot owners' access to common property and that if any relevant "function" is seen as arising from the owners corporation's ownership of the common property, it is a function that derives from the provisions of the Strata Schemes (Freehold Development) Act 1973 (NSW) creating such ownership, rather than from the 1996 SSM Act.
The appellant referred to provisions empowering NCAT to make certain orders, including s 184 which provides for referrals to NCAT of an application for an order that could be made by an Adjudicator. None of those provisions, it is said, advances the matter.
In summary, the appellant contends that neither an order made by an Adjudicator under s 138 nor any other order made under the SSM Act could, in practical terms, have produced substantially the same effects as the declaration the primary judge made; and that no other provision could assist. It follows, the appellant says, that there was no basis on which his Honour could, as contemplated by s 226(2), form an opinion that the bringing of the proceedings was not justified because the 1996 SSM Act made adequate provision for the enforcement of the relevant rights or remedies.

[12]

The respondent's submissions

The respondent submitted that s 138 empowers an Adjudicator to make an order regulating the use of common property. The owners corporation is charged by the 1996 SSM Act with the management and control of the common property. Section 61(1)(a) identifies "the management and control of the use of the common property of the strata scheme concerned" as something that the owners corporation has "for the benefit of the owners". Section 61 provides: "What are the key management areas for a strata scheme? (1) An owners corporation has, for the benefit of the owners: (a) the management and control of the use of the common property of the strata scheme concerned, and (b) the administration of the strata scheme concerned. (2) The owners corporation has responsibility for the following: (a) maintaining and repairing the common property of the strata scheme as provided by Part 2, (b) managing the finances of the strata scheme as provided by Part 3, (c) taking out insurance for the strata scheme as provided by Part 4, (d) keeping accounts and records for the strata scheme as provided by Part 5. (3) Other functions of an owners corporation are included in Part 6."
The respondent also points to s 65A(1) and s 65B. Section 65A(1) provides: "Owners corporation may make or authorise changes to common property (1) For the purpose of improving or enhancing the common property, an owners corporation or an owner of a lot may take any of the following action, but only if a special resolution has first been passed at a general meeting of the owners corporation that specifically authorises the taking of the particular action proposed: (a) add to the common property, (b) alter the common property, (c) erect a new structure on the common property."
Section 65B is in these terms: "65B Owners corporation may grant licence to use common property (1) An owners corporation may grant a licence to an owner of a lot to use common property in a particular manner or for particular purposes if the owners corporation has approved the granting of the licence by special resolution passed at a general meeting of the owners corporation. (2) A licence may be granted subject to terms and conditions."
Each of s 65A(1) and 65B empowers an owners corporation to take certain actions if a special resolution has first been passed at a general meeting of the owners corporation specifically authorising the particular action. It was submitted that exercise of a s 65A(1) power is properly regarded as a function conferred by the Act on an owners corporation. As to s 65B, it was submitted that a result essentially equivalent to that obtained in the Supreme Court proceedings could have been achieved by a statutory order for the creation of a licence.
The respondent further submitted that, read in the light of each of s 61(1)(a), s 65A(1) and s 65B, s 138 empowers an Adjudicator to make an order corresponding in substance with the declaration made by the primary judge, being an order to the following effect: "Order that the owners corporation is not to restrict or impede the lot owner's access to and use of its lot via the common property by developing or impeding access to that strip of the common property which [full description of strip]."
The respondent argues that, had such an order been made by an Adjudicator under s 138, there would have accrued to the appellant an ability to "enforce" the order that corresponded with the ability to "enforce" that accrued to the appellant by reason of the making of the declaration that the primary judge made. The respondent refers, in that connection, to s 207 and the decision of this Court in The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; 17 BPR 33,789.

[13]

The appellant's right

The primary judge characterised the "right or remedy" asserted by the appellant in the Supreme Court proceedings as one of the "rights or remedies that an owner … of a lot … may have in relation to … the common property apart from this Act", that is, the 1996 SSM Act. His Honour's characterisation is not challenged in this Court. After reviewing provisions of the 1996 SSM Act and the Strata Schemes (Freehold Development) Act, he held that an owners corporation could not exercise its rights in relation to common property "in a way which derogates from any owner's right to use the common property for reasonable access to his or her lot". The relevant rights of the owners corporation included those allowing implementation of the "garden proposal" and the "building proposal". His Honour left somewhat at large the precise source of the identified right of a lot owner but made three things plain: first, that one cannot point to any particular provision of the 1996 SSM Act as the direct source of the right; second, that the relationship of principal and agent that the SSFD Act creates between the owners corporation and a lot owner with respect to common property [5] (and the consequential status of that property as trust property or quasi trust property in which each lot owner has an equitable interest [6] ) plays a central role in the analysis; and, third, that certain unexpressed but implied rights of owners may be "divined" from provisions of the 1996 SSM Act and the Development Act, taken as a whole. This unchallenged analysis made by the primary judge warrants the conclusion that the right of the appellant upon which its case was founded is a right that arises and exists "apart from" the 1996 SSM Act.
Having regard to the terms of the declaration the primary judge made, the right that the appellant was found to have had apart from the 1996 SSM Act was, in summary, a right to have the owners corporation desist from exercise of its rights in relation to the common property so as to impede or restrict the appellant's ability to drive over the relevant strip of land to obtain reasonable access the lot. It will be convenient to use this summary description of the right in the discussion that follows.

[14]

Did the Supreme Court proceedings "enforce" the appellant's right?

It is necessary to decide whether the Supreme Court proceedings in which the appellant sought and obtained purely declaratory relief were, as referred to in s 226(2), proceedings to "enforce" the right just described.
What s 75 of the Supreme Court Act 1970 (NSW) calls "binding declarations of right" are in the nature of final relief binding on the parties and operating as a res judicata or issue estoppel. Such declarations can only be made by reference to some concrete situation of controversy defined by facts found by the court or agreed by the parties: Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334; [1999] HCA 9 at [48]-[49]. It is that feature that distinguishes a declaration from an advisory opinion about a hypothetical possibility: Jackson v Slattery (1984) 1 NSWLR 599 at 608-609. It is no obstacle to the grant of declaratory relief that the concrete situation of controversy relates to future actions. Relief in the nature of a quia timet declaration is available to establish what, according to existing rights and obligations, the parties' positions will be if some defined event happens, at least where it is reasonably foreseeable that the event may happen. Thus, in Woolmington v Bronze Lamp Restaurant Pty Ltd [1984] 2 NSWLR 242, the court declared that one party was entitled to be discharged from a particular liability owed to the other if and when a third party made a particular payment to that other party. A like declaration was made more recently in Clark v Matton Developments Pty Ltd [2016] QSC 251.
The making of a declaration benefits parties because the declaration constitutes a binding determination of their rights and obligations existing independently of the grant of the relief itself. The declaration discloses and confirms the parties' rights and obligations, as distinct from creating them. A plaintiff who has obtained a binding declaration of right cannot resort to any form of execution of the declaration. It cannot obtain a writ for the levy of property or a charging order; nor is a party who acts inconsistently with a declaration liable to be dealt with for contempt of court. But it does not follow that a plaintiff who seeks and obtains purely declaratory relief does not "enforce" the right the existence of which the declaration confirms. In Australian Conservation Foundation Inc v The Commonwealth (1980) 146 CLR 493; [1980] HCA 53 at CLR 527-8, Gibbs J referred to the general principle that "a private person, who is in the same situation as any other member of the public, has no standing to claim either an injunction or a declaration to enforce a public right or duty" (emphasis added). In ordinary parlance, therefore, the obtaining of a declaration alone may be regarded as a means of "enforcing" a right. [7]
The status of a declaration as a means of "enforcing" the underlying right is, to my mind, put beyond doubt when regard is had to the steps that are available in consequence of the obtaining of the declaration. As in the present case, a declaration will often state the successful plaintiff's right in a way making it clear that certain future conduct of the defendant will amount to an invasion of that right. It is commonplace for a plaintiff to seek not only a declaration but also an injunction enjoining the conduct in question. Sometimes, an injunction will be refused as a matter of discretion, even though a declaration is made and grounds for a grant of injunctive relief are shown. In Port of London Authority v Cairn Line of Steamships Ltd [1913] 1 KB 497, for example, Scrutton J awarded a declaration against a shipping company but declined to grant an injunction "because I have no doubt that the defendants will comply with the declaration made". In other cases, the award of a declaration may be accompanied by an express grant of liberty to apply for further relief as may be needed: see, for example, Watt v Mortlock [1964] Ch 84 at 88. An express grant of liberty to apply is, however, not necessary. In Royal Insurance Co Ltd v Mylius (1926) 38 CLR 477; [1926] HCA 49, Isaacs J said (with the concurrence of Knox CJ and Starke J) at CLR 497: "Every order for declaration of right carries with it liberty to apply, and, if the defendant acts contrary to it, the Court on a proper application, and on proper notice, may enforce it."
This implied term of a grant of declaratory relief was noted by this Court in Triden Contractors Pty Ltd v CE Heath Casualty and General Insurance Ltd [1996] NSWSC 517; 9 ANZ Ins Cas 61-356. In Phillips v Walsh (1990) 20 NSWLR 206, the matter was put thus by McLelland J (at 210) in a passage approved by Gleeson JA in Boutros v Nationwide Capital Pty Ltd [2013] NSWCA 246 at [49]: "In a final order, liberty to apply is often expressly reserved as authority tomake a subsequent application for the purpose of dealing with a matterinvolved in or arising in the course of working out the order; but the absenceof an express reservation of liberty to apply does not preclude such anapplication."
Liberty to apply enables the court to grant further relief for the purpose of giving effect to and working out the order that it has already made. The implication of such liberty in a case where final relief by way of declaration alone has been granted reflects an aspect of a final order of a superior court of record noted by the Full Federal Court in Remington Products Australia Pty Ltd v Energizer Australia Pty Ltd [2008] FCAFC 47; 246 ALR 113 where reference was made to the observation of Drummond J in Australian Competition & Consumer Commission v The Shell Company of Australia Limited (1997) 72 FCR 386 at 395 that such a court does not become functus officio merely upon the making and entry of the judgment or order that determines the rights of the parties: the court retains power to make in the same suit supplemental orders in aid of the enforcement and working out of the orders determining the parties' rights.
Where a binding declaration of right alone is made, the grant of that relief puts the successful plaintiff in a position from which it may further invoke the assistance of the court in order to compel the defendant to act in a way that will cause the terms of the declaration to be observed and fulfilled. The making of the declaration therefore causes the right of the plaintiff that the declaration has exposed to be "enforced" not merely according to the ordinary parlance already noticed but also because the declaration carries within it an entitlement of the plaintiff to obtain specific and coercive relief in further vindication of the right should the need to do so arise.
The declaratory relief granted in the Supreme Court proceedings had the twofold character of an authoritative statement of the legal rights and obligations of the appellant and the respondent and a foundation for the obtaining of injunctive relief by the appellant. The right of the appellant in respect of the common property that the primary judge identified as existing "apart from" the 1996 SSM Act was "enforced" by means of the Supreme Court proceedings in which the appellant obtained purely declaratory relief; and the remedy of declaration was enforced because of its inherent capacity to produce, through subsequent steps in the same proceedings, coercive relief precluding invasion of the right confirmed the status of the statement itself as a means of "enforcement".

[15]

"Adequate provision"

Section 226(2) refers to enforcement of either a "right" or a "remedy". The notion of enforcement of a "right" is probably more commonly encountered than that of enforcement of a "remedy". In general terms, one obtains a "remedy" in vindication of a "right" and it is the obtaining of the "remedy" that constitutes enforcement of the "right". But there may be circumstances in which it is meaningful to speak of enforcement of a "remedy" as such. While a money judgment for debt represents a "remedy" that enforces the underlying right to be paid, the "remedy" of a debt judgment may be enforced by various means calculated to extract money from the pocket of the judgment debtor.
The relevant "right" of the appellant existing apart from the 1996 SSM Act was, as stated, the right to have the owners corporation desist from acting in relation to the common property so as to impede or restrict the appellant's ability to drive over the relevant strip of land to obtain reasonable access to its lot. The Supreme Court "enforced" that right by the making of the declaration which was, at the same time, the appellant's "remedy". Any injunction obtained in reliance on the earlier making of the declaration would enforce both the "right" and the "remedy".
Because the declaration made by the primary judge thus constituted a means of enforcing both the right and the remedy of the appellant, it is necessary to determine whether the 1996 SSM Act made "adequate provision" for the enforcement of the right or the remedy. [8] That raises the question whether the 1996 SSM Act and the dispute resolution regime it created made any provision for the appellant to "enforce" its right or remedy.
By posing the question whether the 1996 SSM Act made "adequate provision" for the enforcement of a right or remedy existing outside the statutory scheme, s 226(2) directs comparison of the ways in which it is possible to "enforce" the right or remedy under the statutory scheme with the ways in which the external litigation allowed it to be "enforced". If the statute provides access to means of enforcement that are, from the perspective of the person who has the right or remedy, at least as effective as the means achievable through external litigation, the conclusion must be that the 1996 SSM Act makes such "adequate provision". It may be, at least in the abstract, that a finding of "adequate provision" will be available even if the means of enforcement available under strata titles legislation are, by comparison, less secure or less effective. A principle of practical equivalence is likely to apply. For present purposes, however, I concentrate on the question whether the statutory scheme provided for the appellant means of enforcement of its relevant right or remedy at least as effective, from the appellant's standpoint, as the means available through the Supreme Court proceedings that the appellant actually took - ultimately, as discussed above, availability of injunction ordered by a court exercising equitable jurisdiction.

[16]

Could a relevant order have been made under the 1996 SSM Act?

The respondent postulates the making of an order by an Adjudicator in the terms set out at [29] above, that is: "Order that the owners corporation is not to restrict or impede the lot owner's access to and use of its lot via the common property by developing or impeding access to that strip of the common property which [full description of strip]."
Counsel for the respondent submitted that procedures made available by the 1996 SSM Act would have enabled the appellant to obtain from an Adjudicator an order in those terms and, through (or, at least, with the aid of) that order, to "enforce" its relevant right.
Such an order would, in substance, bind the owners corporation to desist from exercise of its rights as the owner of the legal estate in the common property, as well as its statutory rights in relation to the common property, in any way that impeded or restricted the appellant's ability to drive over the relevant strip of land to obtain reasonable access to the lot. Because of the inconsistency between the appellant's right and the owners corporation's rights that would exist in the absence of the order, the situation would be one of dispute. That being so, the respondent submitted that the postulated order could be made by an Adjudicator under s 138 by reference to one or more of the three provisions already mentioned, being s 61(1), s 65A(1) and s 65B. [9] For reasons that I am about to explain, I do not accept that either s 65A(1) or s 65B would represent a firm foundation for making the postulated order under s 138 but am of the opinion that the order could be made by reference to s 61(1).
The functions of an owners corporation under s 65A(1) are positive functions entailing what amounts, in concept, to the carrying out of building and similar work affecting common property. The section authorises the taking of "action". Negative conduct in the form of desisting from impeding or restricting a lot owner's access to its lot via part of the common property would not constitute the taking of any "action" referred to in s 65A(1). The postulated order compels inaction, not action. Specifically, negative conduct by way of desisting would not amount to adding to, altering or erecting a new structure on the common property.
Nor, in my opinion, would s 65B support an Adjudicator's order in the terms postulated. The Supreme Court proceedings established that the appellant had, apart from the 1996 SSM Act, what I have summarised as a right to have the owners corporation desist from exercise of its rights in relation to the common property so as to impede or restrict the appellant's ability to drive over the relevant strip of land to obtain reasonable access to the lot. Because the appellant has that right apart from the 1996 SSM Act, it does not need any licence from the owners corporation to use that part of the common property. A licence is, in concept, permission to do something that one has no lawful right to do in the absence of the permission. It is not meaningful to contemplate the grant by the owners corporation to a lot owner of a licence to use common property in a way permitted by an independent and pre-existing legal right of the owner as against the corporation.
When it comes to s 61(1), however, the position is different. By virtue of s 8, an owners corporation has "the principal responsibility for the management of the strata scheme". By s 61(1), the corporation has "the management and control of the use of the common property of the strata scheme". The postulated order, if made, would regulate exercise of the function of managing and controlling the use of common property. It would be of that character because it would require the owners corporation, in managing and controlling the common property, to respect the appellant's right to limited use of the identified strip and, to that end, to avoid and, so far as reasonably lies within its power, prevent use impeding or restricting exercise of the appellant's right. This "control" of the owners corporation's "use" would, as referred to in the opening words of s 61(1), be for the benefit of the owners as a whole. This is because it would cause the common property (owned at law by the owners corporation and in which each lot owner has an equitable interest) to be administered with due regard to the appellant's right and would protect both the lot owners and the corporation of which they are members from complicity in invasion of that right. The order would therefore be within s 138(1)(a) as an order quelling a dispute or complaint about exercise of the owners corporation's s 61(1)(a) function of managing and controlling, for the benefit of the owners, the use of the common property. There would be a dispute of that kind because of the conflict between the appellant's claim to be entitled to limited use of the identified strip and the owners corporation's right of use which is an incident of its entitlement to possession as legal owner grounding a right of action in trespass. Nothing in The Owners Strata Plan 37762 v Pham (above) is at odds with this analysis.
In the present case, a combination of s 138 and s 61(1) would have provided a foundation for the making of the postulated order by an Adjudicator on the application of the appellant.
Counsel for the appellant emphasised in submissions that s 172 limits the life of an Adjudicator's order to two years. To be more precise, the section provides that an order (other than an interim order) made by an Adjudicator ceases to have any force or effect on the expiration of the period of two years that commences on the making of the order. This, however, is "[e]xcept to the extent that the order otherwise provides". Where an order created or recognised an indefinitely continuing right of a lot owner, therefore, the order itself could displace the two-year limit that would otherwise affect its operation.

[17]

Would such an order under s 138 "enforce" the appellant's right?

Part 6 of the 1996 SSM Act is headed "Enforcement of orders of Adjudicators and Tribunal and certain notices". With the exception of s 226, no substantive provision of the Act uses the word "enforcement" or "enforce" in relation to orders made under the statutory dispute resolution regime. The species of so-called "enforcement" dealt with by Part 6 is confined to the imposition of pecuniary penalties [10] for contravention of orders. The maximum pecuniary penalty is 50 penalty units, that is, $5,500 - a sum that, depending on circumstances, someone intent on contravening an order might consider a reasonable price to pay. Part 6 "enforcement" would in no way avail a lot owner who had obtained an order under s 138 requiring, in effect, that the owners corporation recognise and respect a right of the owner in relation to common property and accommodate the exercise of that right by refraining from impeding or restricting the lot owner's access. It would do no more than swell the State's revenues. The search for means by which the lot owner could "enforce" the right, in the sense of securing compliance with it, requires attention to other provisions of the legislation including, in particular, s 207 and s 208.
The effect of a s 138 order imposing a requirement on an owners corporation is dealt with in s 207 which is in these terms: "Effect of certain orders (1) The terms of the following orders, to the extent to which they impose a requirement on an owners corporation, are taken to have effect as a resolution of the owners corporation to do what is needed to comply with the requirement: (a) an order under section 138 in which an Adjudicator declares that the order is to have effect as a decision of the owners corporation, (b) an order under section 140, 140A, 142, 143, 147, 148, 149 or 154 (except subsection (3)). (2) The owners corporation must cause the terms of an order referred to in subsection (1) to be recorded in its minute book on receipt of a copy of the order served on the owners corporation by the principal registrar."
An Adjudicator who makes an order under s 138 imposing a requirement on an owners corporation may thus make an accompanying declaration that the order is to have effect as a decision of the owners corporation. While s 207(1)(a) makes it clear that the Adjudicator may make such a declaration in respect of a s 138 order of that kind, there is no explicit provision about the circumstances in which or considerations by reference to which such a declaration might be made. But where the subject matter of the order concerns the position of a single lot owner as against the owners corporation in respect of common property (and therefore, in a practical sense, as against the remainder of the lot owners each of whom has an equitable interest in that property), it is reasonable to expect that an Adjudicator would make such a declaration.
If an Adjudicator makes a s 207(1)(a) declaration in relation to an order imposing a requirement on the owners corporation, s 207(1) gives to the order the character of "a resolution of the owners corporation to do what is needed to comply with the requirement". Section 207(2) directs that the owners corporation record the terms of the order in its minute book, thus causing it to be recorded with motions passed at meetings of the owners corporation (s 102). There is no explicit provision that an owners corporation must abide by or implement a resolution of the owners corporation in terms recorded in its minute book. Relevant to that, however, is s 208 the pertinent parts of which are: "Resolution purporting to alter effect of order (1) The owners corporation may amend or revoke an order referred to in section 207 only by a unanimous resolution or as provided by subsection (2). (2) If an order referred to in section 207 specifies a period during which a resolution of an owners corporation purporting to alter the effect of the order would be inoperative, such a resolution passed during that period has no force or effect unless: (a) it is a unanimous resolution, or (b) it is passed on a motion submitted to a general meeting after being authorised, by order, by the Tribunal."
Section 208 thus specifies a special procedure for amendment or revocation of an order referred to in s 207. By force of s 208(1), the order may be amended or revoked only by a "unanimous resolution". Perhaps unsurprisingly, the dictionary to the 1996 SSM Act defines "unanimous resolution" as "a resolution which is passed at a duly convened general meeting of an owners corporation and against which no vote is cast".
Assume that, according to the processes laid down by s 138 and s 207, an Adjudicator makes, on a lot owner's application, both an order imposing on the owners corporation a requirement benefiting the lot owner and a declaration that the order is to have effect as a resolution of the owners corporation. The lot owner thereby achieves the benefit of what is, in effect, a deemed resolution of the owners corporation to do whatever is necessary to comply with the requirement, that is, in the case of a requirement not to impede or restrict the lot owner's access over some part of the common property, to desist from impeding or restricting such access. The deemed resolution is incapable of being revoked or amended unless, at a duly convened general meeting of the owners corporation, every person exercising voting rights votes to approve the revocation or amendment. That unanimity condition ensures that the lot owner in question cannot be deprived of the benefit of the deemed resolution against the lot owner's will. There is secured to the lot owner by legislation what is effectively a "veto" power.
Translating that conclusion to the present case, it can be said that, if the appellant, relying on the existence of the right in respect of common property identified by the primary judge, had applied to an Adjudicator for an order in the terms postulated by the respondent, a combination of s 61(1) and s 138 of the 1996 SSM Act would have enabled the Adjudicator to make that order; that the Adjudicator would also have had power both to declare that the order was to have effect as a resolution of the owners corporation and, by a term of the order itself, to displace the two year duration otherwise applicable to it; and that, if the Adjudicator had acted in these ways, the appellant would have occupied, by operation of statute, a position from which it could prevent the making of an internal decision of the respondent owners corporation to free itself from the strictures of a deemed internal decision (statutorily imposed through the making of the Adjudicator's order) the terms of which corresponded with those of the Adjudicator's order.
Once that point had been reached, the 1996 SSM Act itself would not, in terms, have assisted the appellant to "enforce" the appellant's right. Nor would the Act, from the appellant's perspective, have assisted "enforcement" of the "remedy" represented by the Adjudicator's order. But it does not necessarily follow that no further avenues of enforcement of the order would have existed. Referring to the effect of s 207 on a s 138 order requiring positive action by an owners corporation, Tobias AJA said in The Owners Strata Plan 50276 v Thoo (above, at [211]) with my concurrence and that of Preston CJ of LEC: "[A]n order made by an Adjudicator under s 138 that the owners corporation perform its duty under s 62(2) to renew or replace a particular part of the common property takes effect as a resolution of the owners corporation with which it is bound to comply. If it fails to do so, the obvious remedy would be a mandatory injunction."
Translated to the present circumstances, this statement implies that, if the appellant obtained a s 138 order in the negative terms postulated, an injunction enjoining threatened obstruction (or compelling removal of obstruction created in contravention of the order) would be available to the appellant through application to the Supreme Court. It is necessary to explore the rationale for the conclusion as to the availability of injunctive relief.
If an Adjudicator had made the postulated order under s 138, the right of the appellant declared by the primary judge would have been identified as the source of what is, by operation of the 1996 SSM Act, effectively a species of statutory right. The statute would have created the appellant's power of "veto" already identified. In the absence of a unanimous resolution (and, therefore, the appellant's explicit consent or abstention), that power would be impermissibly overridden if, for example, the owners corporation proceeded to implement the "building proposal" or the "garden proposal" and thereby precluded reasonable use of the strip of common property by the appellant to obtain access to its lot.
An injunction will lie in aid of a statutory right if the statute itself either expressly or by necessary inference confers a private right on an individual to enforce a statutory obligation. As this Court pointed out in King v Goussetis (1986) 5 NSWLR 89 at 93, the answer to the question whether a statute confers a private right depends on "the nature, scope and terms of the statute, including the nature of the evil against which it is directed, the nature of the conduct prescribed, the pre-existing state of the law, and, generally, the whole range of circumstances relevant upon a question of statutory interpretation". The quoted words come from the judgment of Kitto J in Sovar v Henry Lane Pty Ltd (1967) 116 CLR 397; [1967] HCA 31 at CLR 405. It was recently said in Minister for Local Government v Blue Mountains City Council [2018] NSWCA 133 at [90], by way of summary, that an injunction to enforce a statutory scheme may be obtained by a directly affected party with standing.
Of particular relevance are observations of Darke J in The Owners Strata Plan 47027 v McGinn [2018] NSWSC 1230, a case concerning internal administration of an owners corporation and whether a particular person had authority to act for it. Proceedings were brought by the owners corporation and a lot owner who claimed to be part of the duly elected committee. They sought, among other relief, an injunction restraining the person in question from acting for the corporation. On the issue of standing and the availability of injunctive relief, Darke J said (at [75]), referring to King v Gousselis: "I am further satisfied that the plaintiffs have standing to seek the relief claimed in the proceedings. The relief is directed to the enforcement of rights under the 2015 Act [ie, the 2015 SSM Act], so that the affairs of the owners corporation are conducted in accordance with the legislative regime and not subverted by actions contrary to that regime. The nature of the statute clearly indicates that the owners corporation itself (and, if necessary, a representative of lot owners in the strata scheme) has the right to seek enforcement of the statutory regime concerning the management of the scheme. At the very least, the plaintiffs have a special interest, over and above that held by ordinary members of the public, in such enforcement."
The strata titles legislation shows an intention that owners corporations and lot owners will conduct themselves in accordance with the legislative regime and not subvert it. Central to the statutory scheme is the notion that demarcations of function, limits on power and constraints on conduct that the legislation creates within the corporation and in relation to the operation of the scheme will be observed. A specific right of the owners corporation or a lot owner to have the other desist from particular action may not be stated in express terms but the existence of a legislative restriction that will be exceeded by that action is sufficient to provide access to equitable jurisdiction as an means of correction and enforcement. Section 208 subjects an owners corporation to a legislative restriction unless a unanimous resolution has been passed. Where the unanimous resolution rule protects the position of a particular lot owner, that owner has a clear and separate personal interest in the observance of that rule and the affairs of the corporation will not be conducted in accordance with the legislative regime unless the rule is obeyed.
Had an Adjudicator made the postulated order under s 138, the appellant would have achieved the status of a person directly affected by any departure or threatened departure from the statutory scheme in the form of conduct of the owners corporation, in the absence of a unanimous resolution, that impeded or restricted access to its lot contrary to that order. The appellant's interest would have been clear and its standing to sue for an injunction would have been established. The postulated order would therefore have had the twofold character of an authoritative statement of the parties' legal position and a foundation for the obtaining of injunctive relief by the appellant. In that way, the Adjudicator's order would represent means of enforcement substantially equivalent to the declaration made in the Supreme Court proceedings.

[18]

The s 226(2) comparison

The task directed by s 226(2) is formation by the court of an opinion whether, having regard to the "subject-matter" of the proceedings before it, the taking of those proceedings was "not justified" because the 1996 SSM Act itself makes "adequate provision" for the enforcement of the plaintiff's rights or remedies existing apart from the Act.
Applications by trustees for judicial advice are routinely framed by asking whether the trustee will be "justified" in taking a particular course. By making an application in those terms, a trustee seeks reassurance as to the overall appropriateness of the relevant course of action in the whole of the circumstances at hand, having regard to the interests that the trustee is bound to serve. In the same way, s 226(2), by employing a "justified" criterion, is concerned with the appropriateness (or inappropriateness), in the whole of the circumstances, of the pursuit of the particular court proceedings rather than proceedings under the statutory scheme of dispute resolution, with the question of appropriateness (or inappropriateness) being judged by reference to the results, in terms of "enforcement" of the relevant right or remedy, that the respective procedural avenues can produce, having regard to the "subject-matter" of the dispute.
The "subject-matter" of the Supreme Court proceedings was something different from the right by reference to which the appellant sued and the remedy it sought. The distinction between the two is drawn by s 226(2) itself. Where there are no pleadings, the "subject-matter" of the proceedings can only be identified by looking at the claims for relief made in the summons and the essential facts by reference to which the entitlement to that relief is asserted. Here, the claims were claims for declaratory relief securing the appellant's right to reasonable use of a small area of common property for vehicle manoeuvring purposes and the relevant facts were that the owners corporation had by means of the chain (removed after the proceedings were commenced) interfered with the exercise and enjoyment of that right and later, by progressing the "building proposal" and the "garden proposal", shown an intention of doing so again. The proceedings thus had the objective of establishing the existence of an indefinitely continuing entitlement of the appellant to enjoy reasonable access to the particular part of the common property, unobstructed by actions of the owners corporation to impede that access by physical means.
The appellant's grounds of appeal advance three further reasons why the primary judge should not have formed an opinion that, according to the expressed statutory criteria, the taking of proceedings in the Supreme Court was "not justified": first, the respondent did not raise the s 226(2) and jurisdictional issues until closing submissions and after contending that relief should be refused because there was no controversy to be quelled; second, the precise scope of s 138 of the 1996 SSM Act and the capacity of that section to support a grant of relief effectively equivalent to that granted by the court was unclear; and, third, proceedings for relief under s 138 of the 1996 SSM Act would be conducted according to the 1996 SSM Act as in force immediately before its repeal.
None of these reasons is at all persuasive. As to the first, it is true that the particular matter relevant to costs was not raised until after the substantive issues had been decided and the question of the precise terms of relief and the question of costs had been reserved for further consideration. But there was no reason for the matter of s 226(2) to be raised by the respondent at some earlier time. It was not under the slightest duty to say at the outset, in effect, "Please be informed that if you initiate these Supreme Court proceedings and win, we will be seeking costs against you in accordance with the statute." The law was there for all to see. As to the second matter, it is irrelevant that there may have been doubt in some minds about the capacity of the statutory dispute resolution regime to produce an essentially like means of enforcement. The fact that the Supreme Court proceedings were contested showed that there was no consensus that the appellant's right would be exposed by that form of litigation either. The opinion referred to in s 226(2) is to be formed according to a rational legal analysis. As the decision of the primary judge and these reasons themselves show, rational legal analyses supporting the opinion were always available. The third matter raised by the appellant seems to be, in essence, that there is something undesirable about deciding legal rights according to superseded legislation. Where, as here, subsequent legislation, by means of transitional provisions, continues the operation of the superseded legislation in relation to the legal rights in issue, application of that legislation is in no way undesirable. It represents due administration of the law.
The three particular objections taken by the appellant are without substance. When regard is had to the "subject-matter" of the Supreme Court proceedings and to a comparison of the means of enforcement of the right and remedy that accrued to the appellant through the Supreme Court proceedings with the means achievable by the appellant through s 138 and s 61(1) of the 1996 SSM Act, there is a clear and sound basis for the formation of the opinion specified in s 226(2).

[19]

Resolution of the appeal

Under the mistaken impression that the issue of costs was governed by the 2015 SSM Act (something about which neither party takes issue, particularly in light of the substantial similarity of relevant provisions of the two Acts), the primary judge concluded that a method of enforcement generally equivalent to that made available by the declaration he made could have been achieved by means of an order of NCAT under s 232 of 2015 the Act to "settle a complaint or dispute about" either "the operation, administration or management of a strata scheme" under that Act or "an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act." On that basis, he formed an opinion that "adequate provision" for enforcement was available to the appellant under the strata titles legislation and that the appellant was "not justified" in taking the Supreme Court proceedings. On the analysis I have made by reference to the applicable legislation (the 1996 SSM Act), that positive opinion should have been formed on the basis of provisions of the 1996 SSM Act analogous with but not in all respects identical with those of the 2015 Act relied on by the primary judge and by a slightly different and more detailed process of reasoning. But the opinion was, as to its essential substance, the correct opinion.
By virtue of s 75A(5) of the Supreme Court Act 1970 (NSW), this appeal is by way of rehearing. The Court of Appeal has the powers and duties of the court from which the appeal is brought (s 75A(6)) and may give any judgment or make any order that ought to have been given or made or which the nature of the case requires (s 75A(10)). This Court is therefore able to substitute its own opinion on the evaluative question posed by s 226(2) but will not intervene unless persuaded that the conclusion reached at first instance involved specific error or was plainly wrong or wholly erroneous: Mobilio v Balliotis [1998] 3 VR 833.
For the reasons I have stated, I am not so persuaded. This Court should make orders as follows: 1. Appeal dismissed. 2. The appellant pay the respondent's costs of the appeal.

[20]

Endnotes

EB 9 & 10 Pty Ltd v The Owners Strata Plan 934 [2018] NSWSC 464.
EB 9 & 10 Pty Ltd v The Owners Strata Plan 934 (No 2) [2018] NSWSC 546.
The respondent's submissions on costs at first instance were made by reference to both s 253 of the 2015 SSM Act and s 226 of the 1996 SSM Act. The appellant referred to the 2015 SSM Act alone.
The appellant contends and the respondent accepts that, because the costs order, as made, was not as to costs "in the discretion of the Court", no requirement for leave to appeal arises under s 101(2)(c) of the Supreme Court Act 1970 (NSW).
Upon registration of the strata plan, s 18(1) of the Strata Schemes (Freehold Development) Act 1973 (NSW) caused the common property to be vested in the owners corporation and s 20(b) caused the owners corporation to hold the common property "as agent for" the lot owners "as tenants in common in shares proportional to the unit entitlements of their respective lots". Section 24(2) made the "beneficial interest" of a lot owner in the common property held by the owners corporation as agent for that owner incapable of being severed from, or dealt with except in conjunction with the lot.
The nature of a lot owner's interest in the common property, as recognised by French CJ in Brookfield Multiplex Ltd v Owners Corporation Strata Plan 61288 (2014) 254 CLR 185; [2014] HCA 36 at [10], was summarised by White JA in McElwaine v The Owners Strata Plan 75975 [2017] NSWCA 239; (2017) 18 BPR 37,207 at [37] in these terms: "The interest of a lot owner in the common property is an equitable interest as a tenant in common with other lot owners. The relationship between the owners corporation as legal owner of the common property and the lot owners as beneficial tenants in common is that of trustee and beneficiary or analogous thereto".
See also, for example, the reference in Navarro v Spanish-Australian Club of Canberra ACT Inc (1987) 87 FLR 390 at 397 to "declarations to enforce" the rules of a club.
The reference in s 226(2), in the alternative, to Part 4 of the Community Land Management Act 1989 (NSW) is irrelevant to this case and may be ignored.
The sections are set out at [25] to [27] above.
In headings to sections of the 1996 SSM Act, what the sections themselves refer to as "pecuniary penalties" are described as "civil penalties". Such penalties are within the definition of "fine" in s 105 of the Fines Act 1996 (NSW) and are recoverable by the State accordingly under that Act.

EB 9 & 10 Pty Ltd v The Owners Strata Plan 934

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (23 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (26)