(2) An order under this section, when recorded under section 209, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).
21 There was some debate about whether an order by an Adjudicator can have retrospective effect, or whether a by-law would be effective until revoked. I will leave this question undecided; the power in subs 157(1)(a) to revoke an amendment may suggest that the order can be retrospective; the reference in subs (2) to the need to record the order may support the opposite view, and the explicit provisions of s 159 authorising a date for operation of an order earlier than the date on which the order is recorded, where the order is made on the limited ground referred to in s 159, suggest that orders made under other sections may not have retrospective effect.
22 The Supreme Court does not have power to act under s 157, unless perhaps in an appeal after decision by an Adjudicator. In my view the prospects of success in the application cannot be said to be strong. The stated ground is to the effect that Special By-law 4 gives the plaintiff exclusive rights in excess of those conferred on it by the Management Agreement. It seems to me that this ground is little to the point of the important question whether a Special By-law should not have been made, having regard to the interest of all owners of lots in the use and enjoyment of their lots for the common property. Most owners of lots own residential lots, and the use and enjoyment of their lots could not be affected by restrictions which apply to the relatively small number of lots the use of which Special By-law 5 could restrict. The restriction on use and enjoyment of the lots capable of commercial use is of a kind which s 49 does not forbid and subs 43(2) does not exclude. Plaintiff's counsel pointed out that having management conducted by a real estate agent with premises on the site can moderate the costs incurred for management services, and that there are advantages in inducing a real estate agent to take up the management task by offering exclusivity. This may be so; the contention is one for consideration by the Adjudicator. I am in no position to decide the application in advance and do not attempt to do so.
23 The application under s 157 was brought forward late in the controversy in circumstances which give it the air of contrivance, no order has been made on it, and this case should be decided on the present state of the by-laws.
24 On the undisputed evidence it is clear and it was not disputed that there is a threatened breach of Special By-law 4. The covenants of the defendants are negative in nature and, subject to any discretionary considerations, an injunction to restrain breaches is the appropriate remedy. Counsel for Mr and Mrs Fung put forward a number of discretionary considerations, going to the exercise of the Court's jurisdiction at all, and also to the choice of an injunction against his clients as the remedy.
25 On the discretionary question the plaintiff's counsel submitted that there clearly has been a breach of the Special By-law 4 and of the implied covenant, and the position should be established and Sunaust should have its position made clear as soon as is possible.
26 On the issue whether any injunction should be made against Mr and Mrs Fung the plaintiff's counsel submitted that the Court should take the view that it is clear that there had been a breach of the by-law and the covenant, and that it is within the power of Mr and Mrs Fung to release Sunaust Group from its apparent obligations or to ask or require Sunaust Group to leave the premises. Counsel submitted that it is not practically possible to enforce the lease or to claim rent because Sunaust Group has not been given what the Fungs contracted to give it, that is the opportunity to use the premises for a real estate agency among other things. It was contended that both parties to the lease are entitled to be released from it.
27 The evidence of Mr Lai shows that it would not be difficult for Mr and Mrs Fung to comply with any injunction even if they were required to bring the lease to an end to comply with the injunction. It is very improbable that there would be any difficulty in reaching some accommodation with Mr Lai. If performance of the lease by both of the parties to it were restrained by injunction there would be no prospect of performance of the lease being required by any equitable remedy, while the injunctive restraint would prevent either party restrained from showing any significant damage caused by any breach by the other. In any event Mr and Mrs Fung are responsible for the difficulty.
28 Mr Lai and Sunaust Group have not so far taken an aggressive stance. Mr Lai was given a clear misrepresentation about the operative controls of use of the premises by Pearl Wong on behalf of Mr and Mrs Fung; this may be a ground on which the lease may be rescinded. There are clearly remedies under the Trade Practices Act 1974 (Cth) s 52 as Ms Wong's conduct was misleading and deceptive, and there was a fundamental mistake about the premises being available to use as a real estate agency. In the presence of these facts Sunaust Group could have little difficulty in escaping from the lease.
29 Counsel for Mr and Mrs Fung contended that as a matter of discretion the Court should decline to exercise its jurisdiction, and should leave the controversy to be determined under the procedures provided for by the Strata Schemes Management Act 1996. Counsel pointed out that the powers under that Act extend to adjudication dealing with disputes, and to granting interim orders pending adjudication. He contended that Mr and Mrs Fung have a right to have their claim examined and adjudicated in accordance with the Act, and said that any injunction which prevented that happening would be a de facto removal of their statutory right to make that application. He pointed out that the claim is for a perpetual injunction. He accepted that the plaintiff's rights under the Management Agreement had been granted for valuable consideration, and that Mr and Mrs Fung could not and did not seek to interfere with those rights relating to caretaking duties and lots within the Regis Towers complex. Counsel referred to decisions in which this Court has declined to exercise jurisdiction and has left adjudication of disputes relating to strata schemes to decision by machinery provided for by earlier legislation, particularly the decisions of Kearney J in MacLeod v. Proprietors of Strata Plan No. 6544 [1980] 2 NSWLR 691 and Rolfe J in North Wind Pty Ltd v. The Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809.
30 In MacLeod's case Kearney J said, at para 25, pp 695-696, referring to Pt V of the Strata Titles Act 1973:
On this question of discretion I consider that the subject matter of the proceedings is such that it ought to be the subject of an application to the Commissioner rather than being prosecuted in this Court. While the matter may eventually reappear in the court on appeal from a decision of the board, nevertheless the Act clearly evinces the intention that these matter should originate with the Commissioner under Pt V, and that the Court should entertain such proceedings only where special circumstances such as extreme urgency in effect necessitate the intervention of the Court. Further, any need to follow the above course arises from the plaintiffs' own neglect to prosecute their appeal from the Commissioner's decision.
31 In referring to the intention evinced by the former Act, Kearney J referred to s 146 of the Strata Titles Act 1973 with which his Honour dealt at pp 693 and 694. Generally similar provision is now made by s 226 of the Strata Schemes Management Act 1996. Kearney J's decision was a discretionary decision, and it was given where the underlying controversy related to problems arising from water penetration through the roof. The plaintiffs sought an order that the Body Corporate repair part of the roof being common property in a proper and workmanlike manner so as to render it impervious to water penetration, and to repair the interior of the plaintiff's lot damaged by water coming through the roof. See pp 691-692. As much experience shows, building disputes and disputes in which supervision in detail of building work is required are not well suited for equitable remedies. In the present case the facts for practical purposes are not disputed and adjudication is required on the effect of conduct and the interpretation of documents, and there are no corresponding inconveniences for determination of the litigation by the Court.
32 In the North Wind case Rolfe J was of the view that the dispute, which also included the controversy relating to building work which it was contended should be done, and what in detail should be done, was one to which the procedure under the Strata Titles Act 1973 was particularly appropriate. See pp 815-816.
33 It is not uncommon for the Court to determine controversies which could be referred to adjudication under strata titles legislation, without declining jurisdiction on discretionary grounds. Examples are Solerno v. Proprietors of Strata Plan 424724 (1997) 8 BPR 97-648 (Windeyer J), Bapson Pty Ltd v. Puyeti Pty Ltd (1990) NSW Titles Cases 80-002 (Waddell CJ in Eq) and Sydney Diagnostic Services Pty Ltd v. Hamlena Pty Ltd (1991) 5 BPR 97-367 (Court of Appeal). See too Proprietors of Strata Plan 1627 v. Schultz (1978) 2 BPR 97-129. This court has exercised jurisdiction from time to time, the cases do not show any general reluctance, and the reported cases where jurisdiction has been declined relate to detailed disputes about building work.
34 In my opinion the procedure under the Strata Schemes Management Act is not well accommodated to commercial disputes and the urgency imposed by economic interests, and is primarily directed and suited to disputes relating to home units. In my view it is in the interests of all concerned that I should hear and determine the present litigation and establish the positions of the parties.
35 The present proceedings have aspects of urgency in that it is plain, and is not open to substantial dispute, that unless there is an injunction Special By-law 4 will not be complied with; the form of the defendants' own documents show that clearly enough. It is likely that if an injunction is refused the conduct which the plaintiff seeks to restrain would occur and its business interests would be affected thereby.
36 Counsel for Mr and Mrs Fung contended that it was for consideration on the discretion to decline jurisdiction that, as he put it, "what is occurring by circumventing the Strata Schemes Management Act is to remove the opportunity for Mr and Mrs Fung from exercising their rights under that Act." It was contended that the defendants are significantly prejudiced in that they are unable to bring a cross-claim relying on s 157, and that the parties are forced to go to two different jurisdictions and unnecessarily to multiply proceedings. This observation was based on there being no opportunity in these proceedings to seek alteration of the by-laws in a cross-claim, as that power is not conferred on the Court. I do not regard this observation as to the point, as the right to seek to vary the by-laws can be pursued and a decision obtained on it in due time. That right is not injured or affected by a decision on the rights of the parties as they now stand in the unamended form of the by-laws. The application to the Adjudicator will have whatever merits it has whether or not parties have in the meantime been required to comply with their present obligations. The Court is asked to act in these proceedings on the right which the parties have now.
37 If the by-law were to be altered in the future Mr and Mrs Fung would have the opportunity to ask the Court to dissolve or vary any injunction, even a perpetual injunction, and the possibility that there may be an alteration is adequately protected by reserving liberty to apply in that event, and in that way qualifying the perpetual nature of the injunction. These submissions appeared to make some complaint about the plaintiffs using remedies under the general law, but as those remedies are especially preserved by subs 226(1) of the Strata Schemes Management Act, this is not an appropriate subject for complaint. It was then said that the application for relief is premature, but there is no substance in this contention, as the plaintiff has offered proofs which show that there already has been a breach, and that it is reasonable to fear continuing breach.
38 In assessing the weight of the opportunity to apply for alteration of Special By-law 4 for a discretionary refusal of jurisdiction it is significant and very adverse to the submission that the application under s 157 was made very recently, when the controversy was well advanced, and with a strong air of contrivance illustrated by the plaintiff's not having been told of it until the day before the hearing. It is unlikely that this event would have happened in a sincere application, which would have been pursued openly and would have been prefigured in the correspondence which passed while the proceedings were pending, in which possible outcomes were discussed.
39 It was also contended that there is no occasion to impose an injunction on Mr and Mrs Fung, and that the orders as framed are too wide. It was submitted that it would be sufficient to impose restraint on Sunaust Group. The defendants' counsel contended that these defendants have a prima facie enforceable lease which they entered into for valuable consideration, and that an injunction would cause them to act in breach of it. He contended, apparently on the basis that the previous submission justified the contention, that the injunction should be directed only against the tenant. These submissions were not well founded or readily comprehensible; if the plaintiff is entitled to relief, it should have relief against all involved in the threatened breaches of covenant. The statement in Mr and Mrs Fung's solicitors' letter of 12 May 2000 about what they would do if the fifth defendant vacated the property is not a reason in substance why they should not be restrained.
40 Counsel also observed that the by-laws do not extend to preventing the business of mortgage originator being carried on. As it was clearly contemplated and intended by the lessors and the lessee and Mr Lai that the business of real estate agent would be carried on, this observation had no force.
41 The fact that Mr and Mrs Fung might be placed in breach of their contract with Sunaust Group if restrained from breach of covenant by permitting activities by others, was put forward as a consideration of hardship against making an injunction. In my view it is a consideration of no weight, as it is a disadvantage which they imposed on themselves. When the plaintiff complains of a breach of an obligation to it, it is not a significant consideration adverse to granting the remedy that the first defendants have later entered into an inconsistent contractual obligation.
42 Submissions on behalf of Sunaust Group were generally to the effect that Sunaust Group was prepared to comply with its obligations as determined by the Court, but is in a difficult position now as it is in occupation and obliged to pay rent and other outgoings, but has been kept standing without carrying on a real estate agency until these proceedings are decided. As shown in Mr Lai's affidavit, Sunaust Group would be happy for someone else to take an assignment and would seek to be recompensed for its costs and expenses. The position of Sunaust Group and the impact on it of the delay in resolution of the dispute are considerations against declining to exercise jurisdiction and against leaving resolution to some future determination by an Adjudicator.
43 Plaintiff's counsel pointed out that all difficulties arise out of Mr and Mrs Fung not having complied with s 46, and not having found out and given notice of what is in the by-laws. It is very unlikely that there would have been a lease or that Sunaust Group would have taken any interest in the premises if Mr Lai had known of the by-laws, whether or not the by-laws are amended by some decision in the future.
44 Plaintiff's counsel contended that the substance of the dispute before me relates to costs and liabilities as among the defendants. As I observed during the argument I do not propose to establish in detail what is to happen among the defendants or to try to solve every problem which the facts apparently present. There is no cross-claim and I propose to hear and determine the plaintiff's claim.
45 The plaintiff has a clear right to a remedy against the first and second defendants and there is no substantial discretionary reason why the injunction should go only against the fifth defendant or only against the third and fifth defendants.
46 For these reasons I propose to order an injunction as claimed, while reserving liberty to apply to vary or dissolve the injunction in the event that Special By-law 4 is altered by order of the Adjudicator.
47 I have not yet considered questions of costs.
48 Order:
(1) Injunctions as claimed in claims 1 and 2 of Amended Summons filed on 3 May 2000.
(2) Reserve to each party liberty to apply to dissolve or vary the injunctions if there is an alteration in Special By-law 4 Strata Plan 61369.
(3) Costs reserved.