Quest Rose Hill Pty Ltd v White

Supreme Court of NSW|2010-10-12|Before: Ward J

CITATION : Quest Rose Hill Pty Ltd v White [2010] NSWSC 1190

DECISION : Notice of Motion dismissed with costs.

CATCHWORDS : PRACTICE AND PROCEDURE - motion to vary principal judgment pursuant to r36.16 UCPR - motion dismissed with costs

Contracts Review Act 1980 (NSW) LEGISLATION CITED : Strata Schemes Management Act 1996 (NSW) Uniform Civil Procedure Rules 2005

Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300; (1993) 111 ALR 385 Bostik Australia Pty Limited v Liddiard (No 2) [2009] NSWCA 304 Bowen Investments Pty Limited v TAB Corp Holdings Limited (No 2) [2008] FCAFC 107 Compagnie Noga d'Importation et d'Exportation SA v Abacha [2001] 3 All ER 513 Corbett Court Pty Limited v Quasar Constructions (NSW) Pty Limited [2008] NSWSC 1423 Cretazzo v Lombardi (1975) 13 SASR 4 Dodds Family Investments Pty Limited v Land Industries Pty Limited (1993) 26 IPR 261 Fexuto v Bosnjak Holdings Pty Limited (No 3) (1998) 30 ACSR 20 Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421 Golding v Vella (No 2) [2001] NSWSC 731 Hodge v TCN Channel 9 (No 2) [2006] NSWSC 1272 James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 CASES CITED : Leallee v the Commissioner of the NSW Department of Corrective Services [2009] NSWSC 518 Lavender View v North Sydney Council (No 2) [1999] NSWSC 775 McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306 Oshlak v Richmond River Council (1998) 193 CLR 72 Roache v News Group Newspapers [1992] TLR 551 Sahab Holdings Pty Ltd v Registrar-General and Anor [No 3] [2010] NSWSC 403 Short v Crawley (No 40) [2008] NSWSC 1302 Standard Commodities Pty Limited v Societe Cocinter Department Centragel [2005] NSWSC 493; (2005) 54 ACSR 496 Timms v Clift [1998] 2 Qd R 100 Uniline Australia Ltd (ACN 010 752 057) v Sbriggs Pty Ltd (ACN 007 415 518) and Another (No 2) [2009] FCA 920; (2009) 82 IPR 56 Vella v Mineo [2006] NSWSC 233 Wentworth v Rogers [2002] NSWSC 921 Windsurfing International Inc v Pettit (1987) AIPC 90-441

Quest Rose Hill Pty Ltd (Plaintiff) Bernard Keith White (First Defendant) Stuart Gerald Maile (Second Defendant) Tracey Alison Maile (Third Defendant) PARTIES : Boban Kocoski (Fourth Defendant) Davone Inthachanh (Fifth Defendant) Peter Nicholas Viler (Sixth Defendant) Frederick Charles Naylor (Seventh Defendant) Lynette Gail Naylor (Eighth Defendant)

J Van Aalst (Plaintiff) COUNSEL : P W Gray SC (First to Eighth Defendants)

Lodhia Lawyers (Plaintiff) SOLICITORS : David Le Page Solicitor (First to Eighth Defendants) D Bentley (Owners SP 64025)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

09/288819 QUEST ROSEHILL PTY LTD V BERNARD KEITH WHITE JUDGMENT 1 HER HONOUR: On 24 August 2010 I handed down my reasons for judgment in these proceedings. Declaratory and other consequential relief had been sought by Quest Rosehill Pty Ltd (Quest) in relation to the construction of a clause contained in registered leases in identical terms entered into by it on 22 December 2000 as lessee in respect of six lots in an apartment building at Rosehill from which the business of letting serviced apartments under a 'Quest' franchise is operated. The relevant clause (clause 13.2) was one by which, in its terms, the lessor irrevocably appointed Quest as the attorney of the lessor (to the exclusion of the lessor) for certain purposes. (Similar relief was sought in relation to a corresponding provision in Deeds of Covenant entered into between, inter alios, Quest and purchasers of lots in the building from the original lessor.) 2 As noted in my reasons for judgment, the building in question was converted into apartments and a strata plan was registered in respect of the building by the developer, Roseprop Pty Limited, which was the original lessor. The Owners Corporation was established in February 2001. It granted a lease of the common property to Quest for a term of 5 years expiring on 22 February 2006. As at the date of the hearing that lease had not been renewed. While the Owners Corporation is not a party to the proceedings, it was joined as a respondent to a notice of motion filed by Quest on 15 May 2009 seeking to restrain the Owners Corporation from permitting certain motions to be moved on at the 2009 annual general meeting. That motion has not been heard. Undertakings were proffered by the Owners Corporation on a without prejudice basis until further order. When the subsistence of the extant notice of motion and the question of the discharge of the undertakings were raised last week, by the solicitor acting for the Owners Corporation, Mr Bentley, I was informed by Counsel for Quest (Mr Van Aalst) that Quest wished to press the motion but was not in a position then to do so and that it would be unfair to Quest to require it to do so. I adjourned the hearing of that application to today. In the meantime, I have been advised that Quest no longer presses that motion (something which is perhaps not surprising given that it seeks to restrain the moving of motions that have already been passed and voted on at an annual general meeting of the Owners Corporation, albeit that the resolutions so passed are the subject of the subsisting undertakings).

3 The defendants ("the Landlords") had cross-claimed seeking declarations that clause 13 of each of the leases was illegal and contrary to public policy and/or void and/or unenforceable. Relevantly, for present purposes, they also sought a declaration (C) that, "notwithstanding the terms of clause 13" and notwithstanding the attendance and/or voting by Quest purportedly on behalf of the lessors at any meeting of the Owners Corporation and/or any meeting of the executive committee, the Landlords were entitled to vote at meetings of the Owners Corporation and, if elected, to vote at meetings of the executive committee. A similar declaration (F) was sought in relation to clause 4 of the Deeds of Covenant (which relevantly corresponded with the wording of declaration (C)). Further challenges were made to the respective lease and Deed provisions under the Contracts Review Act 1980 (NSW) and there was an allegation of lack of good faith on the part of Quest, its directors and officers, in exercising the powers given to Quest under clause 13 of the leases or under clause 4 of the Deeds of Covenant. 4 In my reasons for judgment I made the observation that there had been a somewhat high-handed attitude taken by or on behalf of Quest (as to the ability of Quest to act as it wished in relation to the Owners Corporation or executive committee meetings) and that this attitude appeared to have been met with an equally robust response from the Landlords who had denied the validity of clause 13 for all purposes. However, at the outset of the hearing in June, a more balanced stance was adopted by Quest and it was acknowledged by Mr Van Aalst that the powers given to Quest under clause 13.2 of the leases were limited by reference to clause 13.1 and clause 13.5. 5 The limitations, so acknowledged, on the scope of the power of attorney granted under clause 13.2 had not been expressly pleaded, though Mr Van Aalst has pointed to the fact that two of the declarations sought (paragraphs 5 and 8 of the prayers for relief) were expressed in terms that recognised that the right of each Landlord to exercise his or personal right to vote was (para 5) "subject to and conditional upon" or (para 8) "subject to" the exercise of that right "in accordance with the reasonable directions given by" Quest. (The declaration sought in paragraph 5 also refers in general terms to the right to vote being "subject to the limitations and provisos expressed in clause 13 of the Lease".) 6 I set out at paragraph [20] of my judgment, the conclusions I had reached in relation to the various issues for determination. In summary, I was not satisfied that clause 13 of the leases and clause 4 of the Deeds of Covenant were illegal, unenforceable or unjust for the purposes of the Contracts Review Act. I considered that the substantive claims for relief made in the cross-claim (which Mr Van Aalst had recognised formed the basis of the Landlords' defence to the claims for relief made by Quest) should be dismissed. However, I saw no utility in making declarations in the form sought by the Landlords (at least to the extent that they restated what was in the relevant lease provisions and, in the case of some, as they related to any renewed lease terms). 7 I did consider that there would be some utility (in circumstances where Quest or its director seemed in the past to have asserted, or proceeded on the basis, that clause 13.2 conferred an unconditional and unqualified right on the part of Quest to do whatever it liked) in the making of declarations as to the proper construction of clause 13 and as to the implied obligations arising from clause 13.2. 8 I set out in my reasons (at [201]) the declarations I considered would be appropriate for that purpose, as follows: 1. A declaration that upon a proper construction of clause 13 in each of the registered leases entered into between Roseprop as lessor and Quest as lessee (identified in the schedule to the Amended Statement of Claim): (i) in the exercise of the power of attorney granted to it Quest is obliged to act in accordance with the obligations imposed by clause 13.5; (ii) Quest's right to exercise the said power is limited by the restriction that it be for the purposes of securing the performance by the Landlord under clause 13 (namely, that the Landlord vote in accordance at any particular Owners Corporation meeting or meeting of a committee of the Owners Corporation in accordance with a reasonable direction given by Quest); (iii) that a reasonable direction for the purposes of clause 13.1 is one which is for either of the purposes specified in that clause (namely that it be for the purpose of allowing Quest or others within the classes identified in that clause better to conduct such business as Quest may be conducting in the premises in accordance with the lease from time to time or that it be to ensure compliance with the Landlord's covenants under the lease); and (iv) in any event, any exercise by Quest of the said power must be in compliance with the requirements from time to time of the Strata Schemes Management Act 1996 (NSW) or other applicable legislation. 2. A declaration that, notwithstanding anything to the contrary in clause 13 of the said leases or clause 4 of the Deeds of Covenant entered into by the Landlords, the Landlords are entitled to attend and vote at any meeting of the Owners Corporation and/or of the executive committee of the Owners Corporation and, if elected to the latter, to vote at meetings of the latter (though it is noted that the manner in which that vote may be cast may be the subject of a valid direction pursuant to clause 13.1 of the leases). 3. A declaration that there is an implied obligation on the Landlords, for so long as the power of attorney granted under clause 13 of the leases is operative and binding to take reasonable steps in order to ensure that there is compliance with any requirements on voting imposed by the Strata Schemes Management Act so as to permit Quest to have the benefit of the rights granted under that clause. 9 Those declarations are clearly predicated on the grant of a power of attorney having been effected under clause 13 of the leases. 10 Save for the above declarations, I considered that the appropriate relief would be to dismiss the remaining claims made in both the cross-claim and the amended statement of claim and I indicated that I would hear the parties as to costs. 11 The matter did not come back before me until 12 October 2010 (after, I might add, I had pressed for it to be listed for the purpose of making final orders). On that occasion, Quest filed in court a notice of motion (a copy of which had earlier been provided to my associate) seeking an order pursuant to Part 36.16(1) of the Uniform Civil Procedure Rules 2005 (NSW) that the judgment be varied in four respects:

(a) that in paragraph 111 the reference to clause 13 be amended to read clause 13.2; (b) that in paragraph 199 the second sentence (containing my statement that there was no resistance by Quest to the declarations sought in paragraphs (C) or (F) of the cross-claim) be deleted (to correct what Mr Van Aalst contends was my misapprehension of the plaintiff's case); (c) that in paragraph 200 there be an amendment (presumably, though the precise amendment was not identified, to retract) to the statement I had made to the effect that there was little utility in making declarations to the extent that they simply restated the relevant provisions of the lease (to correct what Mr Van Aalst submits was the misapprehension that the declarations simply restated the lease provisions); and (d) to substitute, for the proposed declarations in paragraph 201, two new declarations put forward by Quest. 12 For the Landlords, Mr Gray SC proposed a minor amendment to the wording of the proposed declaration 1(iii) but sought no variation to the judgment. 13 In relation to costs, Mr Gray sought an order that there be no order as to costs (on the basis that both sides had been partially successful); Mr Van Aalst sought an order for costs of the proceedings in his client's favour or, at the least, an order for the costs of the cross-claim (and submitted in this context that the Amended Statement of Claim should not be dismissed, though conceding that this issue was pressed solely in the context of the application for costs).

14 I have already set out the background to the matter in my earlier reasons for judgment and do not need to repeat that here. I turn first to the issues raised on Quest's motion before dealing with the question of costs. Paragraph 111 15 The amendment sought to this paragraph is put simply on the basis that this is of importance when considering the variations sought in (b) and (c) of the notice of motion in relation to paragraphs 199 and 200 of the judgment. In paragraph 111, I had said: What clause 13 does, in my view, is to appoint Quest as the Landlord's attorney (that expression including proxy) for the stated purpose(s). With that appointment would surely come the implied obligation on the parties to do what is necessary to enable the proxy rights so conferred to be validly exercised in accordance with any procedural requirements under the legislation. Therefore, to the extent that it is necessary for a Landlord or Quest to submit duly executed notices or forms to the Owners Corporation in order to comply with the statutory requirements for the valid exercise of a vote as proxy, that fact of itself does not seem to me to negate or contravene the Act. It simply means that further steps need to be taken before any vote is validly cast by the attorney acting as the Landlord's proxy. [emphasis added to indicate where amendment is now sought.]

16 That paragraph, in context, followed my reference to a submission by Mr Gray that clause 13 was not in the prescribed form for appointment of a proxy and thus could not be said to constitute a valid proxy appointment for the purposes of the Strata Schemes Management Act 1996 (NSW). I had earlier in the judgment set out the text of clause 13 in full (at [39]) and had noted elsewhere (see for example at [7]) that it was clause 13.2 by which Quest was appointed as the attorney of the lessors. I find it hard to see that any confusion would have arisen as to what part of clause 13 I considered had effected the relevant appointment. However, I accept the criticism made of the imprecision of this paragraph and for clarity will amend the reasons for judgment to insert the precise reference to clause 13.2.

Paragraph 199 17 The amendment to paragraph 199 is more controversial. In that paragraph, I said as follows: In the event, the declarations sought by the Landlords as to the illegality and/or unenforceability of the relevant clauses and the like are not open on the findings I have made. However, there was no resistance by Quest to the making of a declaration in the terms claimed in paragraph C or F of the Cross-Claim and in light of the disputes which have arisen in the past there may be some utility in granting such declarations. [Again I have emphasised the part to which variation is sought] 18 The reason I say this is controversial (even apart from the fact that the deletion sought appears to be not just of my observation as to Quest's lack of resistance to certain declarations but also as to my view as to the utility in granting certain declarations - a matter going to the ultimate exercise of my discretion in relation to relief and thus appearing to seek to re-agitate that issue) is that it is my clear recollection (and I had noted this on my copy of the cross-claim at the time) that Mr Van Aalst in opening submissions had accepted, in substance, that these declarations reflected the position for which Quest contended (namely, that, notwithstanding the attendance and/or voting by Quest purportedly on behalf of the Landlords at any meeting of the Owners Corporation and/or meeting of the executive committee, the Landlords were entitled to vote at meetings of the Owners Corporation and, if elected to the executive committee, were entitled to vote at meetings of the executive committee). I say "in substance" because I accept that the actual wording of the declarations in (C) and (F) commences with the introductory words "A declaration that notwithstanding the terms of clause [13 or 4, as the case may be]…". In suggesting that there was no resistance by Quest to the making of a declaration in the terms claimed in (C) or (F), I had not been intending to refer to those introductory words (and I observe that Mr Van Aalst himself seems to have acknowledged in his written submissions on the present application that those are prefatory words - see para 5 of his Outline of Submissions on this application). Rather, I had intended to refer to the substance of the declaration without reference to those words. I am quite prepared to amend paragraph 199 to make that clear. 19 However, Mr Van Aalst wishes me to go further and to delete the whole of the second sentence. He submits that paragraph 199 misapprehends Quest's defence to the cross claim. He contends that the declarations sought in prayers (C) and (F) must be construed in the light of the declaration sought in (B) (that clause 13 in each lease was void and/or unenforceable) and refers to paragraphs 31 to 33 and paragraphs 36, 38 to 41 of the pleaded cross-claim. He notes that Quest's defence (to paragraphs 31 and 33 of the Cross Claim) was to repeat paragraph 8 in its Statement of Claim (paragraph 10 in its Amended Statement of Claim), pleading, in summary, the grant of the power of attorney under clause 13 (which, consistently with the basis on which he sought an amendment to paragraph 111 of the judgment, he concedes should have been a reference to clause 13.2). He goes on to refer to the denial of the allegations in paragraphs 36 to 41 of the cross claim and to the allegations pleaded in paragraph 10 of Quest's defence to the cross claim (that being an allegation of estoppel by convention or by deed). 20 Mr Van Aalst draws a distinction here between the grant of the power of attorney and the exercise of that power; and presses for declaratory relief of the kind sought in prayer 1 of the Amended Statement of Claim as quelling the dispute as to the lawfulness of the former. 21 When pressed, what Mr Van Aalst now says is that had the declarations in question ((C) and (F) of the Cross Claim) been prefaced with the words "subject to" the terms of clause 13 or clause 4, as the case may be, (and not "notwithstanding" the terms of those clauses) then that would accurately reflect Quest's position. He was not prepared to accept that without any reference to the limitations identified by him in opening to the operation of clause 13.2 the declaratory relief sought by the Landlords in these two declarations accorded with Quest's position. 22 The relevant exchange (on which I had formed the understanding expressed in paragraph 199) commenced at about T 28.24: VAN AALST: …If we can go specifically to the cross-claim. We will go to the relief claimed… (C) is (read). Now that doesn't bring in anything to do with internal management problems. HER HONOUR: No. VAN AALST: It is an entitlement. Then (d) is concerned -- HER HONOUR: You wouldn't argue against that declaration, would you? [and to my recollection I had there interrupted Mr Van Aalst and was referring back to (C) not (D) which must logically be the case in light of his answer to that question] VAN AALST: No. It is our case, a part of our case . …(F) declaration notwithstanding the terms of cl 4 of the deed and notwithstanding attendance and voting by the cross-defendant purportedly on behalf of the cross-claimants at meetings, the cross-claimants are entitled to vote. That's similar to above. I don't have a problem with that. The restraint on that is cl 13. That protects my client. At the same time its limitations protect the landlord. … (My emphasis) 23 Mr Van Aalst says that he must have misunderstood the question I had there put to him, as to accept the substance of (C) and (F) (even assuming the words "notwithstanding the terms of" the clauses were excised therefrom) was wholly inconsistent with Quest's case. 24 The precise nature of the limitations on the Landlords' right to vote or the exercise of that right to vote (as emphasised by Mr Van Aalst) was not articulated with consistency during the hearing. Mr Van Aalst at one stage submitted that there would only be an obligation on the Landlords to comply with directors given to them by Quest if the Landlords (subjectively) considered then to be reasonable - T 31.15 (a proposition I did not accept). He now presses for a declaration that the power of attorney was subject to Quest giving reasonable directions within a reasonable time in accordance with which it required the Landlords to vote. 25 On the present application, Mr Van Aalst's initial response, when I indicated that I had based my comment in paragraph 199 on my understanding of what he had said to me in submissions, was that there must have been an error in the transcript. (Mr Gray's recollection, I must say, accorded with mine as did my contemporaneous note.) Mr Van Alst then submitted that if that is what he had said, then it was in error. 26 Ultimately, I doubt that anything of substance turns on Quest's resistance or lack of resistance to those particular declarations as sought by the landlords. I think the proposed declarations that I foreshadowed in my judgment made my construction of clause 13.2 clear in this respect (and, indeed, they broadly, incorporate the limitations on the operation of clause 13.2 which Mr Van Aalst has emphasised). I did not base my view as to their utility on whether or not there had been resistance to them from Quest. 27 I have outlined above in some detail the sequence of events which occurred because it seems to me that this may be relevant when coming to consider the costs of the present application. I say this because I was left with the distinct impression that a motivating purpose in Quest seeking this amendment was to bolster its submission that it should have its costs of the proceedings and, if so, I consider that to be an inefficient use of court time. In other words, if (as I think to be the case) nothing substantive (in terms of the declaratory relief sought) turns on this issue then I fail to see why costs needed to be incurred in raising it. 28 Further, insofar as Mr Van Aalst seems now to be seeking to retract (or, to be charitable to him, clarify) a concession made by him in the initial hearing, I note what was said by Mason CJ in Autodesk Inc v Dyason (No 2) [1993] HCA 6; (1993) 176 CLR 300; (1993) 111 ALR 385 (at 387):

However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to re-argue their cases. 29 Accordingly, save as indicated in the amendment I propose to make to paragraph 199 (to make it clear that I was not suggesting that Quest accepted that the terms of clause 13.2 would otherwise have had any contrary application), I do not accede to Mr Van Aalst's motion for variation of this paragraph of the judgment.

Paragraph 200 30 The third variation which is sought is to paragraph 200 in which I said: As to the declarations that have been sought by Quest, to the extent that they simply restate the relevant provisions I see little utility in making such declarations . Further, to the extent that they purport to address the position of any renewed term I do not consider it appropriate (in light of what I have said earlier) to make such declarations. I consider that it would be sufficient to make declarations in a more limited compass to address the disputes which have emerged as to the limitations on the exercise of the relevant powers (which largely do not seem to have been disputed by Mr Van Aalst) and to reflect the above reasoning. I set out below the declarations which I propose to make and will hear submissions from Counsel as to their terms and as to any further orders which should be made, including as to costs. (again, I have emphasised the part in respect of which correction is sought) 31 Mr Van Aalst submitted that I had been mistaken in finding that the plaintiff in its Amended Statement of Claim had "simply restated the relevant provisions". With respect to Mr Van Aalst, I made no such express finding in paragraph 200. Rather, I observed that, to the extent that there was no more than a restatement of the relevant provisions, I saw no utility in the making of such declarations. Not all of the declarations sought fell in the "restatement" category (as must have been obvious from the fact that the declarations sought in paragraphs 3 and 4 go to the implied obligations said to arise from the relevant provisions and the declaration in paragraph 8 goes to an alleged estoppel, none of which purports to restate the lease provisions). Indeed, on reflection (given that the declaration in paragraph 2 relates to the intention to be inferred from the lease provision there described) it might fairly be said that it is only the declaration in paragraph 1 that amounts to a restatement of the lease terms. 32 Nevertheless, in that regard I remain of the view that paragraph 1 effectively does no more than restate the lease provisions and that there is no utility in declaring that to be the case. For the court to say that the proper construction of a clause is that it says what on its face it says seems to me to be superfluous. 33 In this regard, Mr Van Aalst focussed, in his submissions on the present application, in relation to the relief claimed in prayer 1. He did not suggest that there was any relevant difference in the wording of the declaration there sought from that contained in the lease provision other than by the use of the past tense of the verbs "to nominate" and "to appoint". He submits that there is utility in a declaration that, as a matter of law upon the proper construction of clause 13.2, it had the consequence that upon the grant of the lease, the Landlords thereby lawfully irrevocably nominated and appointed Quest their attorney (the clause in question providing that "the Landlord irrevocably nominates and appoints" Quest to be their attorney), subject to the provisos expressed in that clause. 34 It is submitted that the effect of such a declaration, and the tenor of that relief, would be to declare that the power was granted (T1.34) as opposed to addressing the exercise of the power. If there were a live issue as to the time that the appointment was made then I might concede that there is some force to that submission but that is not the case here. 35 In any event, Mr Van Aalst seems to go further than seeking a declaration as to the grant of the power. In his submissions on this application, it is said that Quest, in this declaration, is concerned to obtain the court's declaration that the grant of the power is lawful. The utility of such a declaration (ie that the grant of the power is lawful) is said to be that it will bring an end to the continuous disputes as to whether Quest was validly appointed as the Landlords' attorney under clause 13.2. 36 With respect, I cannot see how that dispute has not already been quelled. My reasons for judgment and overall findings seem to me to make it clear that clause 13.2 did effect an irrevocable appointment of Quest as the Landlords' attorney on the terms of that clause. Therefore, as between the parties, that particular controversy has surely been well and truly quelled. 37 There was certainly an issue as to the validity of the clause raised by the Landlords. I have determined that issue in favour of Quest. A declaration of the kind sought by Mr Van Aalst adds nothing further to my findings or to the dismissal of the claim by the Landlords for a declaration as to the illegality or unenforceability of the relevant clause. Therefore, I remain unpersuaded that there is any utility in the making of the declaration sought in prayer 1 (or the alternative version now proffered) on that basis. 38 Insofar as Mr Van Aalst also now submits that a declaration in terms of his revised prayer 1 would have some utility because it will declare the irrevocable nature of the appointment, Mr Gray noted that his own submissions at the hearing proceeded on the basis that the power of attorney so granted was irrevocable (though he did raise in the alternative an argument that it was not irrevocable at common law). In any event, those matters were squarely addressed in my reasons and it does not seem to me that there is any further utility in a separate declaration as to what is already dealt with in my reasons for judgment (see [80]-[90]). I have already indicated that, had it been necessary to determine the issue (which I did not consider it was), I would have determined that the powers of attorney given by clauses 13 of the lease and clause 4 of the Deed were irrevocable, at common law, as they purport to be. That should amply quell any dispute as to that issue between these parties, particularly having regard to the basis on which the case was conducted on behalf of the Landlords on this point. 39 The balance of the declarations which I declined to make are not now pressed (and I note that there were in any event additional issues with at least some of those in that they purported to address the position of any renewed term of the lease - a difficulty to which I had adverted to in paragraphs [122] - [135] of my judgment) other than as to the form of the declaration in relation to the implied obligations that I accepted arose from the grant of the power of attorney. I consider that further below. 40 At [197]-[198] I referred to the court's wide discretion to grant declaratory relief but observed that it had also been noted (Forster v Jododex Australia Pty Ltd [1972] HCA 61; (1972) 127 CLR 421, at 435-436) that judicial pronouncements ought not be issued unless there are circumstances that call for their making (Forster v Jododex, at 435-436) and that the utility of declaratory relief could be measured in terms of the effectiveness of the declaration in quelling the dispute between the parties. 41 I am not persuaded that there should be any amendment to my reasons as to the inutility I perceive in the declaration sought in prayer 1 of the Amended Statement of Claim in this regard (and it follows that I am not persuaded that there should be an amendment to the declarations as sought in the fourth variation considered below). Paragraph 201

42 Mr Van Aalst seeks declarations, in lieu of those proposed in paragraph 201 of the judgment, that: 1. A declaration that to secure performance by the defendants of their obligations under clause 13 of their leases (which are indentified [sic] in the schedule to the amended statement of claim), they irrevocably appointed the plaintiff (its directors and officers) their attorney under clause 13.2 to act, attend and vote at all meetings of the Owners Corporation of strata plan 64025 and at meetings of the executive committee, subject to the plaintiff providing (within a reasonable time) to each defendant reasonable directions in accordance to which it required them to vote pursuant to clause 13.1 if the leases. 2. A declaration that upon the appointment of the plaintiff the attorney of the defendants under clause 13.2 there arose an implied obligation on the plaintiff and defendants to do and cause to be done what was and is reasonably necessary by each of them to enable the proxy rights conferred under the Strata Scheme Management Act 1996 as amended, to be validly exercised in accordance with the requirements of that Act. 43 Other than the amendment to specify the precise subclause of clause 13 which constituted the appointment of Quest as the attorney (ie clause 13.2) it is not clear to me (nor did Mr Van Aalst explain) how it is that his proposed declaration 2 is to be preferred to the version I had put forward. 44 As to his proposed declaration 1, it suffers from the same problem I saw in the declarations originally put forward, which is that I do not see the utility of it in the circumstances where I have dismissed the challenge to the legality or validity of the relevant clause. Insofar as Mr Van Aalst is now seeking to have a review or re-agitation of the application which was before me in this regard, that falls foul of what was said by Rix LJ in Compagnie Noga d'Importation et d'Exportation SA v Abacha [2001] 3 All ER 513, to the effect that, other than in circumstances where there is a clear error of fact or law which may be corrected without imposing on the parties the need for an appeal, it would be the antithesis of justice according to law and would subvert the appeal process for the trial judge to open up reconsideration of his or her judgment (an observation to which Barrett J had referred with apparent approval in Wentworth v Rogers [2002] NSWSC 921). I am not persuaded that there was any relevant misapprehension on my part of Quest's case in relation to the operation of clause 13.2 so as to enliven the jurisdiction to vary the judgment. 45 Insofar as I invited submissions as to the wording of the proposed declarations, I have had an opportunity to consider the submissions put respectively by Mr Van Aalst and by Mr Gray. Having regard to the matters set out above, I am not persuaded that the alternative declarations proposed by Mr Van Aalst should be made in preference to the ones that had been foreshadowed. Turning to the amendment that Mr Gray has submitted should be made, this relates to declaration 1(iii). The amendment sought to that declaration is italicised below:

A declaration that upon a proper construction of clause 13 in each of the registered leases entered into between Roseprop as lessor and Quest as lessee (identified in the schedule to the Amended Statement of Claim):

… (iii) that a reasonable direction for the purposes of clause 13.1 is one which is both objectively reasonable and also (on a basis or bases sufficiently identified) for either of the purposes specified in that clause (namely that it be for the purpose of allowing Quest or others within the classes identified in that clause better to conduct such business as Quest may be conducting in the premises in accordance with the lease from time to time or that to ensure compliance with the Landlord's covenants under the lease); and …

46 Mr Gray submits that this will avoid any suggestion that a reasonable direction need be no more than one which is for either of the purposes specified in clause 13.1. In other words, it must also be objectively reasonable (as indicated in my reasons at [51] of my judgment). Mr Van Aalst opposes such an amendment on the basis that it is unclear and states a legal conclusion. He submitted that it would be likely to sow the field for further dispute between the parties. (It seems to me that the seeds for that have already well and truly been sown - and that his client may bear some measure of blame for that having occurred, though that is of no relevance to the application for variation of the judgment.) 47 I consider that there is force in Mr Gray's submission that, as presently worded, the proposed declaration might suggest that there is no requirement for objective reasonableness and might, in effect, be seen as providing a definition of the meaning of reasonable direction in this context. That was not what I had intended. I set out at [51] of my reasons my view that if a direction was not objectively seen to be reasonable then it could not be a direction with which the Landlords were obliged to comply. I think it is appropriate to amend the proposed declaration to remove any doubt as to what I had intended. 48 That said, I do not think it necessary to include the further statement or requirement that the basis or bases for the direction be sufficiently identified in the direction. It may be that the purpose of the direction could be established by reference to the subject matter of the direction itself or by reference to other evidence (without a statement of purpose as such forming part of the direction). Equally, it may be that if there is no stated basis for the making of a direction then that would be a matter going to the objective reasonableness of the direction. 49 Accordingly, I will make the declarations contained in paragraph 201 but with the one amendment to declaration 1(iii) as follows:

(iii) that a reasonable direction for the purposes of clause 13.1 is one which is objectively reasonable and is for either of the purposes specified in that clause (namely that it be for the purpose of allowing Quest or others within the classes identified in that clause better to conduct such business as Quest may be conducting in the premises in accordance with the lease from time to time or that to ensure compliance with the Landlord's covenants under the lease); Costs 50 As noted earlier, Mr Van Aalst contended that Quest had been successful and that costs in the normal course should follow the cause (though the outworking of that principle of course depends on what one treats as the relevant cause or event). He further submits that, as the Landlords were not successful in any of the relief sought in the cross-claim (an assertion with which Mr Gray takes issue), the cross-claim should be dismissed with costs. 51 Mr Gray, on the other hand, submits that there should be no order as to costs on the basis that (as I think I had indicated orally was my view when handing down my judgment) there had been a partial measure of success for both sides. He relies on Windsurfing International Inc v Pettit (1987) AIPC 90-441 and submits that the 'practical result' or 'event', for the purposes of the ordinary costs rule, in this case is that there has not been complete success for either side. He submits that the making of declarations similar to those sought in (C) and (F) of the cross-claim (and the findings which are to the contrary of the stance adopted by Quest and Mr Bailey prior to the hearing) means that the Landlords have in fact obtained some of the relief sought in the cross-claim. 52 Relevantly, for present purposes, it is submitted that it was not until one working day prior to the hearing that Quest had modified its stance as to its entitlements under clause 13.2 and that had Quest acknowledged (prior to the institution of the proceedings or at least within a reasonable time prior to the hearing) the incorrectness of the position hitherto maintained by it in relation to the exercise of the power of attorney, it may be that there would have been no need for the Landlords to mount the cross-claim or at least that the proceedings could have been resolved prior to the hearing. 53 In particular, Mr Gray places weight on the conduct of Quest, and its director, Mr Bailey, prior to the institution of the proceedings which it is said had significantly contributed to the dispute and noted my observation that the Landlords were justified in resisting the stance that Mr Bailey had taken [168]. 54 The evidence before me indicated that Quest's position, prior to the institution of the proceedings, as to its contractual entitlements had been pitched at a level which could not be sustained. On 18 March 2009, Quest's lawyers had confirmed that it was Quest's contention that Quest was entitled, under the powers of attorney granted by each lot owner in the leases to Quest, to attend and vote as their attorney at all meetings of the Owners Corporation and at the meetings of its executive committee and that, under the powers of attorney, Quest had the power to appoint and/or dismiss the Owners Corporation's strata manager. No limitation on that power was suggested at that stage. Further, Mr Bailey deposed in his affidavit of 14 May 2009 that as a business owner, on behalf of Quest he required to be able to direct the Owners Corporation and the strata manager on matters relating to the management and capital expenditure. Again, this was emphasised in a letter dated 14 May 2009 from Quest's lawyers. 55 There is a distinction (which Mr Van Aalst on this application was keen to impress upon me) between the grant of the power of attorney (dealt with in clause 13.2) and the Landlords' entitlement to vote (the exercise of which might be the subject of a direction as contemplated in clause 13.1). Prayer 1 of the relief claimed by Quest, in its terms, goes to the grant of the power of attorney not to the manner in which the Landlords might be required contractually to exercise their vote (or the circumstances in which, in default of compliance with such a direction, Quest might be entitled to use its power of attorney for that purpose). Prayer 1 did not suggest that the grant of the power of attorney was subject to any limitations other than the provisos expressed in clause 13.2 itself. Prayers 5 and 8, which did refer to the giving of reasonable directions (and thus implicitly acknowledged that the reasonableness of any direction was a matter which might relevantly affect the entitlement or exercise of a right to vote) relate solely to the right of the Landlords to vote at meetings. (I raise this distinction because Mr Van Aalst relied on the recognition in these declarations of a limitation arising by reason of the requirement for there to be reasonable directions as indicating that Quest had at all times recognised that limitation.) 56 The fact that the prayers for relief made reference in those two places to the right to vote being subject to (and in one case conditional upon) its exercise being in accordance with Quest's reasonable directions does not necessarily indicate any watering down of the position that Quest was then still seemingly adopting that it could rely on the power of attorney as it thought fit and in its absolute discretion (and there was no affidavit by Mr Bailey recanting from his previous position). Accordingly, I think it not unreasonable that the Landlords were concerned to ensure that there be recognition of the limitations to which the power of attorney was subject. 57 Mr Van Aalst, in the submissions made at hearing, adopted the position that clause 13 does not exclude the statutory right to vote (whether in person or by proxy); it simply gives Quest the right to give a reasonable direction to a Landlord as to how to vote (and to exercise the power of attorney if necessary to ensure compliance by the Landlord with such a direction). However, Mr Gray points out that a distinction may be drawn between the right to vote being 'subject to' or 'conditional upon' the giving of a direction and the right to vote being required in certain circumstances to be exercised in a particular way. He submits that prayers 5 and 8 of the relief as had been claimed by Quest are predicated on a direction having been given by Quest (such that in the absence of a direction, reasonable or otherwise, there would be no right to vote). This, as he correctly observes, is something I did not find. 58 As noted in paragraph 192 of my judgment, I am of the view that the fact that clause 13.2 appoints Quest as the attorney (and/or proxy) of the Landlord and empowers Quest to vote to the exclusion of Quest voting in person is not an abandonment or abdication of any statutory right to vote; rather, it in effect acknowledges that there is a right to vote. The Landlords have simply agreed to a contractual regime whereby they will permit Quest to vote for them or on their behalf in certain circumstances. 59 In any event, whether or not the declarations sought as to the entitlement to vote are to be read in the light for which Mr Gray contends, it seems to me clear that they are directed at a separate (though related in a practical sense) issue from the central proposition as to whether there was any relevant limitation on the power of attorney granted under clause 13.2. Therefore I do not think it can be suggested that the declarations I indicated that I was prepared to make are ones which Quest had effectively conceded from the outset. 60 Turning then to the principles applicable when awarding costs, there is recognised to be a broad discretion in relation to the award of costs (Oshlak v Richmond River Council (1998) 193 CLR 72), though the general rule is that costs follow the event. As indicated in Windsurfing, that requires one to determine what is in fact the relevant 'event'. 61 In Corbett Court Pty Limited v Quasar Constructions (NSW) Pty Limited [2008] NSWSC 1423, Hammerschlag J noted that the general rule can, in the discretion of the court, be displaced in appropriate cases (citing White J in Short v Crawley (No 40) [2008] NSWSC 1302, at [25]-[32]) and went on to give examples of circumstances where the general rule may be displaced. 62 In an appropriate case a costs order may be moulded to reflect the degree of success on distinct issues (Lavender View v North Sydney Council (No 2) [1999] NSWSC 775 per Rolfe J; Uniline Australia Ltd (ACN 010 752 057) v Sbriggs Pty Ltd (ACN 007 415 518) and Another (No 2) [2009] FCA 920; (2009) 82 IPR 56 per Greenwood J; Leallee v the Commissioner of the NSW Department of Corrective Services [2009] NSWSC 518, per Price J; Sahab Holdings Pty Ltd v Registrar-General and Anor [No 3] [2010] NSWSC 403, per Slattery J, at [36] referring to the decision of Waddell J in Windsurfing for that proposition). 63 Mr Gray referred to the observation by Jacobs J in Cretazzo v Lombardi (1975) 13 SASR 4, at 16 to the effect that litigants should not be discouraged from canvassing all material issues for fear of an adverse costs order (his Honour saying, at 12, that "The ultimate ends of justice may not be served if a party is dissuaded by the risk of costs from canvassing all issues, however doubtful, which might be material to the decision of the case."). Mr Gray also placed reliance on what I had said in McLaughlin v Dungowan Manly Pty Ltd [2010] NSWSC 306, at [22] and [24] in that regard. 64 In this case, in terms of the overall outcome of the proceedings, neither side obtained what might be said to be its optimal outcome - it might be said that while the Landlords were unsuccessful in ridding themselves of the restrictions posed by the clause 13.2 grant of the power of attorney Quest was, in turn, compelled to recognise limitations on the exercise of that power (and on the way in which it could insist upon the exercise of voting power by the Landlords) which it had hitherto refused to recognise or had acted in a fashion inconsistently therewith). In the present case, it is difficult to imagine that Mr Bailey's dogmatic stance as to the ambit of the power of attorney granted to Quest would have altered but for the challenge raised in the Landlords' cross-claim raised in defence to the proceedings brought by Quest. 65 The fact that Quest seems to have had a Damascene conversion just prior to the hearing in this regard does not alter the fact that hitherto it had seemingly trumpeted its ability to override the wishes of the Landlords (albeit in the absence of any, let alone any reasonable, directions) and that this might well be said to have coloured the response of the Landlords to the demands which led up to the commencement of the proceedings.

66 In Golding v Vella (No 2) [2001] NSWSC 731, at [8], Barrett J said, in a case where each side had enjoyed a measure of success, that:

It is not necessary and perhaps unwise, to be too technical about measuring success on the various issues pleased: "one does not look at issues as if they were pleader's issues, but approaches the matter with a broad brush": Fexuto Pty Ltd v Bosnjak Holdings Pty Ltd (No 3) (1998) 30 ACSR 20, at 22, per Young J. (See also Vella v Mineo [2006] NSWSC 233, where there was an appointment of costs by Hall J, taking into account the different outcome on separate issues.) 67 I have previously had occasion to refer to what was said in the English Court of Appeal in Roache v News Group Newspapers [1992] TLR 551 (as cited by the Queensland Court of Appeal in Timms v Clift [1998] 2 Qd R 100) where the question as to who was to be seen as the successful party "in the event" was posed as being a question as to "[w]ho, as a matter of substance and reality, had won? Had the plaintiff won anything of value or anything he could not have won without fighting the action through to a finish? Had the defendant substantially denied the plaintiff the prize which the plaintiff fought the action to win?" 68 Here, there was some overlap between the declarations granted and various of the declarations sought by the respective sides - I indicated I would make declarations which recognised the limitations on the power of attorney granted under clause 13.2 (which, though conceded at the hearing had been vigorously opposed or at least disregarded in practice prior to the hearing) and I indicated I would make declarations which recognised the implied obligations of the Landlords arising out of the lease and Deed provisions (to the benefit of Quest). I also noted the potential limitation of the powers of attorney to the position prior to any renewal of the original leases. In those circumstances I remain of the view that both sides have had a measure of success.

69 The exercise of the court's discretion as to costs ultimately requires an assessment of what is fair in all the circumstances. In Bowen Investments Pty Limited v TAB Corp Holdings Limited (No 2) [2008] FCAFC 107 Finkelstein and Gordon JJ said (at [5]):

Costs are in the court's discretion. Fairness should dictate how that discretion is to be exercised. So, if an issue by issue approach will produce a result that is fairer than the traditional rule, it should be applied. citing also Hodge v TCN Channel 9 (No 2) [2006] NSWSC 1272 and Standard Commodities Pty Limited v Societe Cocinter Department Centragel [2005] NSWSC 493; (2005) 54 ACSR 496.

70 In Dodds Family Investments Pty Limited v Land Industries Pty Limited (1993) 26 IPR 261, also cited by the Court of Appeal in James v Surf Road Nominees Pty Limited (No 2) [2005] NSWCA 296 (at [36]), Gummow, French and Hill JJ said (at 272):

Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion for the trial judge. Mathematical precision is illusory and the exercise of the discretion will often depend upon matters of impression and evaluation. 71 Similarly, in Bostik Australia Pty Limited v Liddiard (No 2) [2009] NSWCA 304, the Court of Appeal, referring to Dodds and James v Surf Road Nominees, at [36], recognised that where there is a mixed outcome in proceedings the question of appointment is very much a matter of impression depending upon "matters of impression and evaluation". 72 Here, as noted earlier there has been very much a mixed outcome. Adopting the broad brush advocated in Fexuto v Bosnjak Holdings Pty Limited (No 3) (1998) 30 ACSR 20, by Young J (as his Honour then was), and consistent with the impression I had at the time I published my reasons (that each party had had a measure of success) I am of the view that the appropriate order is for each party to bear its own costs. I am left with the unshakeable impression that had both sides adopted a more reasonable approach their dispute would not have needed to be litigated at all and that, in a practical sense, the outcome of the litigation was a draw. 73 I should add that Mr Van Aalst urged that I not make an order dismissing the Amended Statement of Claim, seemingly on the basis that whatever the form of the declarations to be made Quest had had a measure of success on those matters and that this should be recognised as the 'event' in respect of which the costs order should follow. He frankly conceded that the submission that there should be no dismissal of the Amended Statement of Claim went solely to the question of costs. It seems to me that the procedural effect of dismissing those of the claims for relief not otherwise dealt with in some fashion by the declarations I am prepared to make is not the factor which determines the outcome on costs. So that there is no doubt as to the disposal of the proceedings it is appropriate for me to make clear that, save as dealt with in the declarations I will now make, each of the Amended Statement of Claim and the Cross-Claim is dismissed.

Orders 74 In accordance with the above reasons, I publish an amended principal judgment revising paragraph [111] to amend the reference to clause 13 to read clause 13.2 and revising paragraph 199 to delete the word "However" at the start of the second sentence and insert the words "Other than in respect of the prefatory words…". Otherwise I make no amendment to the judgment and I dismiss the motion to vary the judgment. I consider that the costs of that motion should be borne by Quest. 75 Accordingly, I now make the following declarations and orders: 1. A declaration that upon a proper construction of clause 13 in each of the registered leases entered into between Roseprop Pty Limited as lessor and Quest Rosehill Pty Limited ("Quest") as lessee (identified in the schedule to the Amended Statement of Claim in these proceedings): (i) in the exercise of the power of attorney granted to it Quest is obliged to act in accordance with the obligations imposed by clause 13.5; (ii) Quest's right to exercise the said power is limited by the restriction that it be for the purposes of securing the performance by the Landlord under clause 13 (namely, that the Landlord vote in accordance at any particular Owners Corporation meeting or meeting of a committee of the Owners Corporation in accordance with a reasonable direction given by Quest); (iii) that a reasonable direction for the purposes of clause 13.1 is one which is both objectively reasonable and is for either of the purposes specified in that clause (namely that it be for the purpose of allowing Quest or others within the classes identified in that clause better to conduct such business as Quest may be conducting in the premises in accordance with the lease from time to time or that to ensure compliance with the Landlord's covenants under the lease); and (iv) in any event, any exercise by Quest of the said power must be in compliance with the requirements from time to time of the Strata Schemes Management Act 1996 (NSW) or other applicable legislation. 2. A declaration that, notwithstanding anything to the contrary in clause 13 of the said leases or clause 4 of the Deeds of Covenant entered into by the Landlords, the Landlords are entitled to attend and vote at any meeting of the Owners Corporation and/or of the executive committee of the Owners Corporation and, if elected to the latter, to vote at meetings of the latter (though it is noted that the manner in which that vote may be cast may be the subject of a valid direction pursuant to clause 13.1 of the leases). 3. A declaration that there is an implied obligation on the Landlords, for so long as the power of attorney granted under clause 13 of the leases is operative and binding to take reasonable steps in order to ensure that there is compliance with any requirements on voting imposed by the Strata Schemes Management Act so as to permit Quest to have the benefit of the rights granted under that clause. 4 Each party bear its own costs other than with respect to the notice of motion filed in court by Quest on 12 October 2010 (the Landlords' costs of which motion are to be paid by Quest).

Save as above, the proceedings including the cross-claim and the notice of motion filed in court on 12 October 2010 be dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Strata Schemes Management Act 1996(NSW)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (31 paragraphs)

Parties

Legislation Cited (3)

Cases Cited (24)

Cited By (7)