Jessica Investments Pty Ltd & Ors & Anor v Wood & Ors

Jessica Investments Pty Ltd & Ors & Anor v Wood & Ors - [2004] NSWSC 328 - NSWSC 2004 case summary — Zoe

1 By Notice of Motion filed on 12 March 2004 the First to Fourth Defendants seek an order that the Plaintiffs' Statement of Claim be struck out or, in the alternative, that the proceedings be stayed permanently or transferred to the Consumer, Trader and Tenancy Tribunal. 2 The proceedings arise out of a dispute between the developer of a large residential development called "Macquarie Links" near Campbelltown and the Defendants, who are residents of the estate. The First Plaintiff is the developer of the estate. On 24 February 1998 it registered Community Plan DP 270152 in respect of the estate and a Community Management Statement for that Plan pursuant to s.5(4) of the Community Land Development Act 1989 (NSW) and s.13 of the Community Land Management Act 1989 (NSW) (" CML Act "). 3 On 7 July 2000, a further subdivision within DP 270152 was effected by the registration of Neighbourhood Plan DP 285631. The First and Second Defendants are the registered proprietors of Lot 6 in that deposited plan, the Third and Fourth Defendants are the registered proprietors of Lot 7, and the Second Plaintiff is the registered proprietor of Lot 9. The First Plaintiff is the registered proprietor of certain lots in both deposited plans. 4 By their Statement of Claim the Plaintiffs allege that by virtue of s.13(1)(c) and (4) of the CML Act the Community Management Statement is binding upon it, the Second Plaintiff and the Defendants as proprietors of lots within the community scheme as if those parties had executed under seal mutual covenants to observe its provisions. The Defendants do not dispute that proposition. 5 The Plaintiffs then allege that the Defendants have breached certain by-laws contained in the Community Management Statement which have effect as covenants binding on the Defendants. For example, by-law 5.1 of the Statement relevantly provides that the proprietor of a lot must not, except with approval of the relevant Planning Committee, construct any structure on Association Property. In the present case, the Planning Committee gave the Defendants approval to construct a driveway not exceeding 3.6m in width over the strip of land between the roadway and the boundaries of the Defendants' properties fronting the street, which is Association Property as defined. The Defendants do not dispute that, in breach of this approval, they have constructed their driveways of a width substantially greater than 3.6m. There are other by-laws which require the consent of the Planning Committee to the construction of the Defendants' driveways and, again, the Defendants do not dispute that their driveways have been constructed in breach of the approvals which were given under those by-laws. 6 In short, the Defendants do not dispute that the relevant by-laws are binding upon them as covenants, that they have breached those covenants and that the Plaintiffs are entitled to the benefit of those covenants. 7 The Plaintiffs claim by way of relief a mandatory injunction requiring the Defendants to remove so much of their respective driveways as exceeds 3.6m in width, and damages for breach of covenant. 8 Mr Ashhurst, who appears for the Defendants, submitted at first that the Statement of Claim should be struck out because the Supreme Court had no jurisdiction to entertain a proceeding raising issues relating to a community scheme under the CML Act ; he submitted that, on the true construction of the Act, exclusive jurisdiction to entertain such a proceeding was vested, at least in the first instance, in the Consumer, Trader and Tenancy Tribunal, as provided by Part 4 of the CML Act . He conceded that there was no express provision in the CML Act which deprived the Supreme Court of its jurisdiction to try an action seeking relief by way of injunction and damages for breach of covenant, where the covenant was binding on the parties by reason only of s.13 CML Act , but he said that this was necessarily implied by the policy of the Act as evidenced by its provisions, particularly those in Part 4. 9 Mr Ashhurst's attention was drawn in the course of argument to the provisions of s.109(3) of the CML Act , which is in the following terms: "The Supreme Court may determine all matters arising in proceedings before it under this Act or the Community Land Develop-ment Act 1989 including any matter within the jurisdiction of the Land and Environment Court."

[4]

Prima facie, of course, that provision is directly contrary to Mr Ashhurst's submission. 10 Mr Ashhurst then submitted that these proceedings were not proceedings "under the Act" and that, therefore, s.109(3) did not apply. Mr Ashhurst was asked how it was that the CML Act operated to exclude the present proceedings from the Supreme Court's jurisdiction if they were not proceedings "under the CML Act" . With respect, I do not think that Mr Ashhurst was able to give a satisfactory answer. 11 In an application to strike out or dismiss proceedings summarily, it is not, of course, necessary to determine finally the question whether the CML Act deprives the Supreme Court of jurisdiction to entertain these proceedings. In the light of s.109(3), it seems to me that, to say the very least, there is a strong argument that the Supreme Court is not deprived of jurisdiction to entertain proceedings arising out of a community scheme, whether or not those proceedings arise under the CML Act . 12 Mr Ashhurst's main argument was founded upon the court's undoubted inherent power to refuse to entertain proceedings which are more appropriately dealt with by a specialised tribunal established for that purpose. 13 He pointed to the fact that earlier proceedings under Pt 4 of the CML Act had arisen between the Defendants and another party over the very same issue, that is whether the Defendants should be ordered to remove the excessive width of their driveways. The adjudicator in those proceedings had held that the proceedings should be dismissed because certain guidelines said to be relied upon by the applicant had not been made part of the Community Management Statement and were not, therefore, legally binding on the Defendants. Curiously, the adjudicator did not refer to the by-laws relied upon in the present case which the Defendants concede are binding on them. 14 Mr Ashhurst also pointed to the fact that the Defendants have now made their own application to the Tribunal under s.80 of the CML Act for an order revoking or varying the relevant provisions of the Community Management Statement so as to permit them to retain their driveways in their present form. He said that these proceedings would be futile, or at least could be significantly affected, if the Tribunal made the orders sought by the Defendants. The Defendants' application is set down for directions or for hearing on 7 June 2004 but it is not yet certain that they will be heard and determined on that day. 15 Mr Ashhurst further submitted that if the present Plaintiffs made an application to the Tribunal instead of to this Court for orders enforcing the present covenants they would be able to obtain satisfactory relief. He said that under s.71(3)(a) of the CML Act an adjudicator may order the Defendants to do "a specified act affecting the scheme" , which would empower the adjudicator to order the variation of the Defendants' driveways. He concedes that neither an adjudicator nor the Tribunal has express power under the CML Act to order the Defendants to pay damages for breach of their covenants, but he says that the same result may effectively be obtained by recourse to s.97E, which provides that if the Tribunal makes an order under s.97B requiring a person to pay a pecuniary penalty for contravening an order of the Tribunal, the Tribunal may specify in the order that the penalty or part of the penalty be paid to the applicant for the order as damages for work carried out by the applicant in relation to the subject matter of the proceedings. 16 In my opinion s.97E CML Act does not provide a remedy for the Plaintiffs which is in any way comparable for, or substitutable for, a right to damages for breach of covenant. The Act, in short, does not provide a significant remedy which this Court can grant if the Plaintiffs' case on damages is well founded. This is a cogent consideration against exercising a discretion to deprive the Plaintiffs of recourse to this Court. 17 It is possible that the Tribunal may accede to the defendant's application to vary the Community Management Scheme to make permissible driveways exceeding 3.6m in width. However, I do not think that that possibility is sufficient at this stage to warrant this Court refusing to entertain these proceedings further. It is highly probable that even if the Defendants' application to the Tribunal is not determined on 7 June 2004 it will be determined before these proceedings come on for final hearing. 18 At the final hearing, if the Tribunal has varied the management statement as the applicants seek, that circumstance may have a bearing on whether and to what extent this Court, in the exercise of its discretion, will grant a mandatory injunction. It may, but not necessarily will, also have a bearing as to the quantum of damages for breach of covenant. On the other hand, the Defendants may not succeed at all in the Tribunal. 19 I do not see why, in the exercise of the Court's discretion, the Plaintiffs should be deprived of this Court's jurisdiction or have these proceedings stayed when the results of the Defendants' application in the Tribunal can properly be taken into account in the disposition of these proceedings. 20 For these reasons I decline either to strike out or to stay these proceedings. The Notice of Motion will be dismissed with costs. - o0o -

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