The Owners Corporation Strata Plan 70672 v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney

Supreme Court of NSW|2011-05-19|Before: Sackar J, Hudson P, Ms J, Ball J

Judgment 1The plaintiff, the Owners Corporation Strata Plan 70672 ("the Owners"), has commenced proceedings by way of an amended statement of claim filed 5 October 2010. A number of matters in the amended statement of claim have been stayed pursuant to an order of Ball J made on 30 August 2010. These matters arise in paragraphs 16 to 27 of the amended statement of claim and relate to claims for breach of contract in respect of insurance monies etc. 2His Honour however ordered that a number of issues be determined as separate questions. 3Counsel for the plaintiff and the defendant have adopted slightly varying formulations of the separate questions to be determined in the case. However, there is no material difference in the parties' articulation of the issues which are as follows: (i) Is the plaintiff bound by the terms of the SMS? (ii) Was the SMS registered in contravention of s28V(1)(a) of the Strata Schemes Freehold Development Act 1973 (NSW)? (iii) Is the SMS unjust and amenable to being set aside under s7(1)(a) of the Contracts Review Act 1980 (NSW)? (iv) Should the SMS be set aside for being unjust under the Contracts Review Act 1980(NSW)? (v) Can an expert appointed under clause 16 of the SMS to reapportion the ratios of shared costs paid under the SMS? (vi) Should the court amend the SMS under s28U(1)(b) of the Strata Schemes (Freehold Development) Act 1973 (NSW)?

The Background Facts 4The plaintiff is and was a body corporate formed on or about 5 September 2003 pursuant to sections 8 and 11 of the Strata Schemes Management Act, 1996 . The Owners are the proprietors of Lot 1 which is subdivided by Strata Plan 70672 and which comprises residential apartments ("the Cove" apartments) six levels of underground parking, the Belgian Beer cafe, and commercial offices. 5The defendants are the Trustees of the Roman Catholic Church for the Archdiocese of Sydney ("the Trustees") and are the proprietors of Lot 2 in DP 1053387, which comprises two buildings and seventy six car spaces on three levels of underground parking. 6The Strata Management Statement (SMS) for "the Cove," which was registered on 5 September 2003, was the subject of a lengthy negotiation and drafting process undertaken by the Trustees and Grocon (the developer of the site and the ultimate vendor of spaces in the development). 7The SMS establishes a decision making body called the Building Management Committee (BMC) which is comprised of the Owners and the Trustees. It also requires that all decisions of the Committee must be by unanimous resolution and that each owner is entitled to exercise only one vote. 8The SMS was drafted without any involvement of the Owners as that entity only came into existence after the SMS had been registered along with the Strata Plan on 5 September 2003. 9The SMS prescribes a certain apportionment of shared costs of the operation of the development. For all shared costs except the costs of insurance the proportion is 95:5, the Trustees bearing the latter proportion. 10On or about 6 March 2000 Mr Terrence Choi (a solicitor who gave evidence before me) and his wife exchanged contracts with Grocon for the purchase of apartment No. 303, which was to be described as "The Cove" apartment complex in the Rocks being Lot 70 of DP868946. The contract was the 1996 standard terms and conditions for the sale of land in New South Wales. Mr Choi purchased from the plan and at the time he exchanged contracts there was no building erected on the site. 11At the time he exchanged contracts however he acknowledged in his evidence that he read the contract carefully. 12One of the special conditions which he acknowledged he was aware of was in the following terms: "37. Differences in Documents 37.1 The purchaser may not make any objection, requisition or claim delay completion or rescind or terminate because: a. there is a difference between the draft of a document provided for in this contract (or a Replacement Document or New Document notified under clause 36) and the document that is actually registered or entered into (as the case may be); or b. the property or the Strata Parcel is affected by an easement or covenant that has not been provided for in this contract (whether or not a copy of the proposed document is attached) or notified to the purchaser under clause 36, unless the change in the document or the easement or covenant detrimentally affects the property to an extent that is substantial, in which case the purchaser may within fourteen (14) days after the vendor serves notices that the documents referred to in Schedule A are registered, rescind by written notice to the vendor. 37.2 Clause 37.1 is subject to clauses 24 and 38." 13He accepted that he also observed prior to exchange that attachment 4 to the contract was the Strata Management Statement for The Cove. He accepted that Schedule 1 to attachment 4 contained no detail as to the percentage figures and that they were otherwise blank. He accepted that he read the note at the bottom of the page to the following effect: "NOTE. Cost sharing will be determined on a fair and reasonable basis on the advice of relevant consultants." 14He also accepted that the blanks needed to be filled in by the time of completion. 15On 26 June he received a letter from Colliers Jardine informing him that over 90% of the apartments had by that stage already been sold. 16Mr Choi accepted that he knew at all relevant times that Mallesons Stephen Jaques (Mallesons) were acting for the developer Grocon and that a company in the Grocon Group was the vendor to him of the strata unit. 17In the years 2001 to 2003 the Trustees and Grocon negotiated the draft terms of the SMS that was ultimately registered on 5 September 2003. 18During this process the Trustees were represented by Makinson and d'Apice Solicitors. At all times Grocon was represented by Mallesons. 19On 2 November 2001 the Trustee's solicitors sent an email to the solicitors for Grocon regarding the amended deed of variation and draft SMS. The relevant clauses 20 and 21.1 were in the following terms: "20.1 the committee may subject to the Strata Scheme (Freehold Development) Act 1973 by unanimous resolution amend this statement. The owners shall call each amendment to be registered in the Land and Property Information Office as soon as practicable after the resolution has been passed. An amendment is binding on all persons bound by this statement. 21.1 the owners corporation and the strata lot owners and those deriving a right under this statement through or under them acknowledge that the rights and obligations of the owners represent a fair and equitable bargain between the parties including the owners of Lot 2 having provided part of the land which comprises Lot 1 and that the rights of the owners of Lot 2 may not be decreased and the obligations may not be increased except with the express consent of the owner of Lot 2." 20Grocon's solicitor asserted in their response of 13 February 2002 that the proposed clause 21.1 was inappropriate for a management statement. The Trustee's solicitor asserted that clause 21 was to remain and that its purpose was to minimise the possibility of any further Lot owner questioning the equity of the terms of the SMS. 21By 4 July 2002 Grocon's solicitor told the Trustee's solicitors that it accepted clause 21 in principle subject to some drafting changes. On 11 July the Trustee's solicitors informed Grocon's solicitors that but for one deletion clause 21.1 was acceptable. 22On 19 February 2003 the first draft of the SMS that apportioned the shared services costs between the Owners of Lot 1 and the Trustees as owners of Lot 2 in the 95:5 ratio was drawn. 23On 27 March 2003 Grocon communicated with Colin Ging and Partners the project managers for the Trustees on the development. It referred to a meeting held on 31 March 2003 and to the fact that the breakup of the shared services percentages had been calculated by Addicoat Hogarth Wilson (AHW) as experts and that the methodology used was "the normal property basis" being the office building areas as a percentage of the total. 24In March and April there were communications between Colin Ging and Partners and Grocon raising queries about the shared costs percentages. 25By 22 April the Trustees in an email to Grocon's solicitors insisted that clause 21.1 be reinstated as previously drafted on 19 February. On 6 May the solicitors for Grocon requested that the solicitors for the Trustees give consideration to the deletion of clause 21.1 altogether. However on 8 May the response was received from the Trustees' solicitors as follows: "12. Clause 21 was specially inserted to provide some protection for the position of the Church in case any application might be made by the Strata Scheme in the future to any court or tribunal to increase the contributions to be made by the Church in respect of Lot 2 to the common expenses of the committee. The clause therefore cannot be deleted or made reciprocal. It is only if the clause spells out the fact that the rights and obligations of the Church represent a fair and equitable bargain between the parties that this clause will protect the Church's position if the percentages are ever challenged." 26By 13 May it seems agreement had been reached between the respective solicitors about the wording of clause 21.1. Between the middle of May and early June there were numerous email communications between Colin Ging and Partners and Grocon, the solicitors for the Trustees and the solicitors for Grocon, all concerning the shared costs schedule. 27One item which excited particular attention was whether or not the costs for a concierge in the building would be shared. On 22 May Colin Ging and Partners (consultants retained to administer on shared costs) communicated with the solicitors for the Trustees. This indicates that after discussion between Colin Ging and Partners and Grocon it was agreed that Lot 2 would not contribute anything towards the concierge costs associated with Lot 1. It was noted that Lot 1 would not offer any services to the benefit of Lot 2 as these services were going to be dealt with directly by other personnel. In other words, it was contemplated by the parties to be a fair basis for apportioning costs given the anticipated scenario that the concierge would not be offering any services to the benefit of Lot 2, that is, the Trustees' Lot. 28On 26 May Grocon's solicitors communicated with the Trustees' solicitors and attached a table which purported to set out Grocon's then offer as to how the costs ought to be shared over a number of services. 29By 5 June the Trustees' solicitors sent an email to Grocon's solicitors indicating the final agreement of 95:5. It showed in fact that the shared costs would be 88.8% for apartments, 3% for Grocon's office, 3.2% for the restaurant (95% for the Owners), 5% for the Quadrant building and 0% for the Presbytery (the Trustees). 30On 15 August the solicitors for Grocon wrote to Mr Choi. He was informed that Grocon had lodged the strata plan for the property for registration. He was also told that the plan number SP70672 had been allocated to the plan as lodged for registration. He was reminded in the letter that pursuant to clause 31.4 the purchaser may not serve notice of any defects or faults in the property other than Special Faults before Completion. He was also informed that the land and property information service (LPI) would not have any microfilm recorded copies of the plans and documents registered until several days after registration. He was told: "We do not propose to provide you with a copy of the registered documents when we advise you of notice of registration." 31Mr Choi accepted in his evidence that he read the letter and believed that the above paragraph also conveyed that Grocon did not propose to provide a copy of the SMS. 32On 2 September 2003 the deposited plan 1053387 known as The Cove development was registered. 33On 5 September 2003 the SMS was registered. On the same day Mr Choi received a letter from Grocon's solicitors informing him that the strata plan had been registered and that the vendor wished to complete the contract by 26 September. The letter stated: "Please note that we will not be providing you with copies of the registered strata plan or title documents as we understand that they are readily available for searching from the LPI." 34Mr Choi agreed again in evidence that when he read that letter he understood that the 14 day window of opportunity under Clause 37 of the Contract was triggered. He also agreed that he had noted that copies of relevant documents were not going to be provided to him and that he assumed that they were readily available by searching the LPI. He agreed those documents would have included the SMS. He accepted however that he did not undertake a search to view the SMS. He agreed that if he had been interested in any of the documents he could have made his own searches at the LPI but did not do so. He also accepted that from at least 15 August onwards he clearly understood that the vendor was not going to provide a copy of the SMS as registered. He accepted that he knew all along that there would have to be a change to schedule 1 of the draft SMS because when he viewed it originally it was left blank. 35Mr Choi said he did not regard such a change to the SMS (that is, a filling out of the blanks) as material because he would not be able to ascertain whether the percentages were correct and he would simply have to rely upon the fair and reasonable statement by an expert. He claimed that he would not have known one way or the other whether the percentages were accurate in inaccurate. Mr Choi conceded that he accepted before completion that the SMS would be changed at the very least by inserting the percentage figure where previously there had been blanks. He said he did not turn his mind to that. He said however that he had been clearly told and understood that the vendors' solicitors were not going to give him a copy of the document as registered for completion and on two occasions he had every opportunity to obtain a copy if he had chosen. 36I should observe that the parties to this litigation have since around the middle of 2008 been unable to reach agreement on a number of outstanding costs. This has led to the Trustees making a series of ex gratia contributions to shared costs from time to time.

The Legislative Scheme 37The Conveyancing (Strata Titles) Act 1961 (NSW) was seemingly the first scheme of its kind in the world. Prior to that a variety of methods were used for the ownership of subdivided units, including 99 or 999 leases, company title or schemes of tenancy in common. By the end of the 1950's, it became apparent that these schemes were inadequate to fulfil the demands for residential and commercial accommodation in a growing Sydney as well as changing commercial and financial requirements. In the second reading speech of the Act, the Minister for Justice outlined that: "Every home-unit enterprise, however simple the development, depends on some form of management...The logical development of a flat scheme is for the development to be replaced by a management company, the members consisting of the flat owners. A management company has to be run by someone. Should this involve serious expense, that might not be thought desirable for very small block of flats. However, the importance of management is immediately apparent once the number of flats in a block exceeds two. The lot owners are then concerned with common parts - a common entrance, staircase, and probably a common garden. These have to be cleaned, lighted and maintained. The maintenance of the roof and main structure of the building in a matter of common concern...In order to avoid a most complicated document, it seems essential that some legislation be enacted to clarify the position in regard to valuation and rating, approvals by local and town planning authorities, and the creation of necessary rights and easements, which, of course, cannot be simply and adequately provided for by normal conveyancing procedures." 38The 1961 Act provided that a strata plan would be registered which would define the land, set out the separate lots and define the boundary of each lot by reference to the floor, walls and ceilings. Upon registration, each lot would be dealt with in the same manner and form as any land held under Torrens title, creating more security of title for the owner than previously. Upon registration, the proprietors of the lots would become a body corporate charged with the general management of the building (see section 14, 1961 Act). This would occur without any of the initial expense seen in the instances of forming a company and all its powers and duties are set out in the schedules of the Act and the regulations. 39In 1973, the Strata Titles Bill was introduced to rectify perceived deficiencies in the 1961 Act, as noted in the second reading speech. The Bill preserved the general principles of incorporation of the body corporate as was present in the 1961 Act. It was noted that nothing in the Bill derogated from the rights and remedies that a body corporate may have, including those in equity. 40In 1992, the 1973 Act was amended. The second reading speech to the Strata Titles (Part Strata) Amendment Bill contains the following statement: "To protect intending purchasers a developer will be obliged to adopt up-front disclosure provisions, set out in a strata management statement to be lodged with the plan. A new division 2B is to be inserted in the Strata Titles Act to deal with such statements, which under the proposed new section 28W are to take effect as agreements under seal entered into by the various interested persons and entities using the building, whether as owners, mortgagees in possession, lessees or bodies corporate of strata schemes...the legislation will also encourage developers to disclose in a management statement any other matters which might add to the commercial viability of the development. To aid in the marketing of the development it will be in a developer's interest to include such matters as security and the control of noise levels. Again, the new schedule 1C will address these matters." 41The Preamble to the Strata Schemes (Freehold Development) Act 1973 states that it is: "An Act to facilitate the subdivision of land into cubic spaces and the disposition of titles thereto; to amend the Real Property Act 1900, the Conveyancing Act 1919, the Local Government Act 1919, the Land Tax Management Act 1956 and certain other Acts in certain respects; to repeal the Conveyancing (Strata Titles) Act 1961 and certain other Acts; and for the purposes connected therewith." 42Division 2B of the 1973 Act, introduced in 1992, is the following terms: "Division 2B Strata Management Statements 28R Requirement for strata management statement 1)The Registrar-General must not register a plan as a strata plan creating a stratum parcel unless the Registrar-General also registers a strata management statement for the building and site concerned. ... 28S Formal requirements 1)A strata management statement and any amendment of such a statement must be in the approved form. 2)A strata management statement as in force from time to time must comply with Schedule 1C and that Schedule applies to any such statement. 3)The Registrar-General may register a strata management statement and an amendment of such a statement by making such recordings in the Register as the Registrar-General considers appropriate. 4)The Registrar-General may refuse to register a strata management statement or any amendment of such a statement if the application for registration fails to comply with any requirement made by this Act or the regulations or is not accompanied by the prescribed fee. 28T Registration of strata management statement 1)If a strata management statement has been registered in accordance with this Division, the Registrar-General must record in the folio of the Register relating to the body corporate of the strata scheme concerned and the common property (if any): a)The existence of the statement and of any subsequent amendment of it that is registered from time to time, and b)Such information relating to the statement and any amendment of it as the Registrar-General considers appropriate. 2) the Registrar-General must make a like record in the folio of the Register: a) For each of the bodies corporate for a strata scheme for part of the building concerned, and b) for each part of the building or site concerned that does not form part of a stratum parcel. 28U Amendment of strata management statement (1) A registered strata management statement may be amended only if the amendment is: (a) supported by a special resolution of the body corporate for each strata scheme for part of the building concerned and by each person in whom is vested an estate in fee simple in any part of that building or its site that is not included in a stratum parcel, or (b) ordered under this or any other Act by a court, or (c) consequential on the revocation or modification, under section 103 of the Environmental Planning and Assessment Act 1979 , of a development consent. (2) An amendment of a strata management statement does not have effect under this Division unless it is recorded in the folio of the Register: (a) for each of the bodies corporate for a strata scheme for part of the building concerned, and (b) for each part of the building or site concerned that does not form part of a stratum parcel. 28V Signing of strata management statement (1) The Registrar-General may register a strata management statement or any amendment of such a statement only if the statement or amendment: (a) is lodged with a certificate given by the secretary of the body corporate for each strata scheme (if any) for a part of the building concerned certifying that the statement is supported by a special resolution of the body corporate, and (b) has been signed by each person in whom is vested an estate in fee simple, recorded in a folio of the Register kept under the Real Property Act 1900 , in a part of the building or its site that is not included in a stratum parcel (whether or not it is included in a proposed stratum parcel), and (c) has been signed by every mortgagee, chargee or covenant chargee under a mortgage, charge or covenant charge recorded in a folio of that Register recording such an estate. (2) In addition, the Registrar-General may refuse to register a strata management statement or an amendment of such a statement unless there have been lodged in the office of the Registrar-General written consents to the registration of the statement or amendment signed by (or by an agent authorised by) such one or more of the following as the Registrar-General determines: (a) the lessee under any lease, or the judgment creditor under any writ, recorded in any such folio or in the folio of the Register relating to any common property affected by the statement or amendment, (b) the caveator under a caveat affecting any estate or interest of any such registered proprietor, mortgagee, chargee or covenant chargee or under a caveat affecting any such common property. (3) The Registrar-General may, in a particular case, dispense with any signature required by or under this section without giving notice to any person. 28W Effect of strata management statement (1) A registered strata management statement, as in force for the time being, relating to the management of a building has effect as an agreement under seal containing the covenants referred to in subsection (2) entered into by each person who for the time being is: (a) a body corporate of a strata scheme for part of the building, or (b) a proprietor, mortgagee in possession or lessee for the time being of any of the lots in such a strata scheme, and (c) any other person in whom the fee simple of any part of that building or its site (being a part affected by the statement) is vested for the time being, or the mortgagee in possession or lessee of any such part. (2) The covenants referred to in this section are: (a) a covenant by which those persons jointly and severally agree to carry out their obligations under the registered strata management statement as from time to time in force, and (b) a covenant by which those persons jointly and severally agree to permit the carrying out of those obligations. (3) The agreement ceases to have effect under this Division: (a) in relation to a person who is described in subsection (1) (b) or (c), on that person ceasing to be a person so described, and (b) in relation to all of the persons described in subsection (1), on termination of all strata schemes to which the strata management statement relates. (4) Subsection (3) does not prejudice or affect any obligation that was incurred by a person, or any right that accrued to a person, under the agreement while the agreement was in force. (5) A strata management statement has no effect to any extent to which it is inconsistent with any condition imposed on a development consent relating to the site of the building to which the statement relates, with an order under Chapter 5 of the Strata Schemes Management Act 1996 or with any other Act or other law. (6) Except as may be provided otherwise by this Act or the regulations, a provision in any instrument under which the agreement is excluded, modified or restricted is void. (6A) Without limiting subsection (6), a provision of a strata development contract relating to a strata scheme is void to the extent (if any) that it is inconsistent with any provision of a strata management statement relating to that scheme. (7) A covenant entered into under the agreement does not merge in a transfer of a lot. (8) Chapter 5 of the Strata Schemes Management Act 1996 applies to or in relation to matters arising under the agreement. (9) Except as provided by subsection (8), nothing in this section affects any right or remedy that a person may have under a strata management statement apart from a right or remedy under this Division. 43The Preamble to the Strata Schemes Management Act 1996 states that it is: "An Act to provide for the management of strata schemes and the resolution of disputes with strata schemes; and for other purposes." 44The relevant provisions of that Act state: 8 Who manages a strata scheme? (1) On the registration of a strata plan for a strata scheme, there is established an owners corporation for the strata scheme in accordance with Part 2. (2) An owners corporation for a strata scheme has the principal responsibility for the management of the scheme. 11 Constitution of owners corporation (1) The owners of the lots from time to time in a strata scheme constitute a body corporate under the name "The Owners-Strata Plan No X" (X being the registered number of the strata plan to which that strata scheme relates). (2) An owners corporation is declared to be an excluded matter for the purposes of section 5F of the Corporations Act 2001 of the Commonwealth in relation to the whole 45The Strata Schemes Management Act 1996 was introduced to address shortcomings in the strata scheme law at the time, taking account of the many changes that had occurred in the development of strata buildings since the 1970's. In the second reading speech the Minister said: "Once, strata schemes were limited to the traditional blocks of flats found in many city and regional locations around this state. This is not the case any more. Strata title developments now include buildings used for a diverse range of purposes, including commercial and office buildings, industrial complexes, shopping centres, mixed-use developments and retirement villages. Villas and town houses have been developed under strata title. There has also been a proliferation of two-lot strata schemes. Many of these events could not have been envisaged when the Act was originally drafted." 46The 1996 Act was to deal with the management and administration of strata schemes rather than the development and subdivision. The 1973 Act dealt with the development and subdivision and management and dispute issues. The 1996 Act made changes to the role of bodies corporate in administering their schemes, more flexible by-law arrangements, more appropriate dispute resolution methods and streamlined meeting procedures.

The Questions Are the Owners Bound by the Terms of the SMS? 47It can be seen that in 1961 it was the intention of the legislature that the body corporate would only come into existence upon the registration of a strata plan. This has been a feature of the relevant legislation that followed. 48The first submission made for the Owners is that the SMS is not binding on them as it was not executed by or on their behalf. I am unable to accept this argument as the legislation in my view is clear. It expressly envisages a body corporate coming into existence only upon registration of the strata plan, which must be accompanied by an SMS in approved form. The negotiations between the various entities and which lead to the final form of the SMS as registered will not and cannot involve the body corporate. S28W of the Freehold Development Act 1973 deems an SMS to be an agreement under seal between a body corporate of a strata scheme and any other person in whom the fee simple or any part of the site is vested. Indeed, Beazley JA, in Idya Pty Ltd v Anastasiou , said: "The provisions of s28W...overcome[s] problems of privity by statutorily imposing a contractual relationship on certain entities who would otherwise not be bound by the terms of the SMS." 49The terms of the SMS also reflect the legislative provisions. Clause 1.2 of the SMS states that the SMS has effect as an agreement under seal binding the Owners (1.2(a)); a proprietor, mortgagee in possession or lessee of any Lot in such a strata scheme (1.2(b)) and any other persons in whom the fee simple of any part of the building concerned, or the mortgagee in possession or lessee of any such part (1.2(c)). 50The Freehold Development Act 1973 and the SMS therefore make clear that the Owners, as is the case with any other relevant party such as a mortgagee in possession or lessee of any lot in a strata scheme, is bound by the terms of the SMS, although not privy to its creation. 51The submission of the Owners - that it is not bound by the terms of the SMS on the basis that they were not involved in its execution - must therefore be rejected. Was the SMS registered in contravention of s28V(1)(a) of the Strata Schemes Freehold Development Act 1973 (NSW)? 52The Owners submit that the SMS was registered in contravention of s28V(i)(a) because there was no special resolution of the body corporate with the accompanying certificate as required by the section. 53Division 2B of the Act deals with important procedural requirements in relation to an SMS. 54It is plain that the provisions in the division seek to deal not only with the initial registration of an SMS but any subsequent amendment to it. 55Clearly, s28R deals only with the initial registration. S28S deals with the formal requirements for the initial registration and any amendment. S28T governs the duties of the Register-General in relation to the keeping of proper records and applies with equal force to the initial and/or any amended SMS. S28W refers to the binding force of an SMS and clearly on its terms again covers the initial SMS and any subsequent amendment, whereas s28U only deals with an amendment to an SMS after its initial registration. 56S28V deals with the initial registration and any subsequent amendment. S28V(i) makes that abundantly clear. This provision, in my view, importantly deals with who it is who has authority to make application for the registration of an SMS, or an amendment thereto. 57It is of course otherwise clear that upon the original application for registration there is no body corporate unless and until the registration of both the SMS and the strata plan. Upon registration of the SMS and the plan the body corporate comes into existence (s8 1996 Act). But until that moment no such body exists nor could it therefore have anything to do with the initial registration process. 58In order to give s28V a sensible meaning, s28V(1)(a), (b) and (c) must be looked at as intending to cover both the initial registration of the SMS and any amendment, hence each sub-provision will only have force and effect if relevant. The words "if any" make that construction tolerably clear. 59This means that s28V(i)(a) will have application only if relevant, namely only if a body corporate exists with a secretary. There will of course always be a person or persons in whom the fee simple is vested (s28V(i)(b), but there may or may not be a mortgagee etc: s28V(1)(c). 60In my opinion therefore the provision should be construed as meaning that relevant persons or entities (if they exist) must satisfy the Registrar by certificate or signature (that is that they are able by reason of their status to authorise the application for registration). This is again made plain by reference to the certificate in (a), the signatures in (b) and (c). This construction is supported by further reference to the "written consents" in s28V(2). It is also to be observed that "in a particular case" the Registrar may dispense with "any signature required by..." and hence is able to register an SMS or its amendment without written authority by way of a relevant signature. 61The initial SMS was not therefore in my opinion registered in contravention of s28V(1)(a).

Should the SMS be set aside for being unjust under the Contracts Review Act 1980 (CRA) (NSW)? 62It is accepted by the Trustees that the CRA would theoretically apply to an SMS. I agree. 63In s4 of the CRA the term "unjust" for the purposes of the Act includes "unconscionable, harsh or oppressive, and "injustice" shall be construed in a corresponding manner." 64s7 of the CRA is in the following terms: a)7 Principal relief (1) Where the Court finds a contract or a provision of a contract to have been unjust in the circumstances relating to the contract at the time it was made, the Court may, if it considers it just to do so, and for the purpose of avoiding as far as practicable an unjust consequence or result, do any one or more of the following: (a) it may decide to refuse to enforce any or all of the provisions of the contract, (b) it may make an order declaring the contract void, in whole or in part, (c) it may make an order varying, in whole or in part, any provision of the contract, (d) it may, in relation to a land instrument, make an order for or with respect to requiring the execution of an instrument that: (i) varies, or has the effect of varying, the provisions of the land instrument, or (ii) terminates or otherwise affects, or has the effect of terminating or otherwise affecting, the operation or effect of the land instrument. (2) Where the Court makes an order under subsection (1) (b) or (c), the declaration or variation shall have effect as from the time when the contract was made or (as to the whole or any part or parts of the contract) from some other time or times as specified in the order. (3) The operation of this section is subject to the provisions of section 19. 65s9 of the CRA is in the following terms: (1) In determining whether a contract or a provision of a contract is unjust in the circumstances relating to the contract at the time it was made, the Court shall have regard to the public interest and to all the circumstances of the case, including such consequences or results as those arising in the event of: (a) compliance with any or all of the provisions of the contract, or (b) non-compliance with, or contravention of, any or all of the provisions of the contract. (2) Without in any way affecting the generality of subsection (1), the matters to which the Court shall have regard shall, to the extent that they are relevant to the circumstances, include the following: (a) whether or not there was any material inequality in bargaining power between the parties to the contract, (b) whether or not prior to or at the time the contract was made its provisions were the subject of negotiation, (c) whether or not it was reasonably practicable for the party seeking relief under this Act to negotiate for the alteration of or to reject any of the provisions of the contract, (d) whether or not any provisions of the contract impose conditions which are unreasonably difficult to comply with or not reasonably necessary for the protection of the legitimate interests of any party to the contract, (e) whether or not: (i) any party to the contract (other than a corporation) was not reasonably able to protect his or her interests, or (ii) any person who represented any of the parties to the contract was not reasonably able to protect the interests of any party whom he or she represented, because of his or her age or the state of his or her physical or mental capacity, (f) the relative economic circumstances, educational background and literacy of: (i) the parties to the contract (other than a corporation), and (ii) any person who represented any of the parties to the contract, (g) where the contract is wholly or partly in writing, the physical form of the contract, and the intelligibility of the language in which it is expressed, (h) whether or not and when independent legal or other expert advice was obtained by the party seeking relief under this Act, (i) the extent (if any) to which the provisions of the contract and their legal and practical effect were accurately explained by any person to the party seeking relief under this Act, and whether or not that party understood the provisions and their effect, (j) whether any undue influence, unfair pressure or unfair tactics were exerted on or used against the party seeking relief under this Act: (i) by any other party to the contract, (ii) by any person acting or appearing or purporting to act for or on behalf of any other party to the contract, or (iii) by any person to the knowledge (at the time the contract was made) of any other party to the contract or of any person acting or appearing or purporting to act for or on behalf of any other party to the contract, (k) the conduct of the parties to the proceedings in relation to similar contracts or courses of dealing to which any of them has been a party, and (l) the commercial or other setting, purpose and effect of the contract. (3) For the purposes of subsection (2), a person shall be deemed to have represented a party to a contract if the person represented the party, or assisted the party to a significant degree, in negotiations prior to or at the time the contract was made. (4) In determining whether a contract or a provision of a contract is unjust, the Court shall not have regard to any injustice arising from circumstances that were not reasonably foreseeable at the time the contract was made. (5) In determining whether it is just to grant relief in respect of a contract or a provision of a contract that is found to be unjust, the Court may have regard to the conduct of the parties to the proceedings in relation to the performance of the contract since it was made. 66For the purposes of a court considering whether or not to grant relief under the CRA and whether it considers it just to do, this question must necessarily be viewed in the context of the relevant statutory regimes. 67The Owners allege that the SMS was unjust and amenable to review under the CRA for the following reasons: (a) the Owners did not sign the SMS nor did anyone else on its behalf (b) as at 5 September 2003, the Owners did not exist (c) the Owners Corporation had no opportunity to negotiate the terms of the SMS or to obtain legal advice in respect of the SMS. It was handed fait accompli. It was bound by someone else's contract, the preparation of which It had nothing to do with. (d) the parties' bargaining power was manifestly unequal because the Owners had no voice (e) contrary to s.28V(1)(a) of the Act, the SMS had not been supported by a special resolution of the body corporate of SP 70672 (f) the inclusion of clause 21 in the SMS was not reasonably necessary for the protection of the legitimate interests of the Trustees; and (g) the lot owners in SP 70672 who purchased off-the-plan were not provided with, nor notified of, the material terms of the SMS, namely, clauses 19 to 21, nor schedule 1 (the latter which specifies the 95:5 contributions to shared costs). 68Because of my earlier reasons (e) above is no longer relevant. 69The CRA is a piece of remedial legislation that must be construed liberally: West v AGC (Advances) Ltd , per McHugh JA at 631 and Beneficial Finance v Karavas at 277 per Meagher JA at 277. 70The definition of "unjust" includes notions of unconscionability, harshness and oppression (section 4). Injustice has a corresponding meaning. As McHugh JA pointed out in West , the definition is not exhaustive. As His Honour said at 620-621: "The definition of "unjust" in s4 is not exclusive. It is in my opinion a mistake to think that a contract or one of its terms is only unjust when it is unconscionable, harsh or oppressive. Contracts which fall within any of those categories will be "unjust." But the latter expression is not limited to the so-called "tautological trinity." 71The primary focus of the court in determining if a contract or a provision is unjust is to "have regard to the public interest and to all of the circumstances of the case": s9(i). 72S9(2) sets out specific matters to which to the extent that they are relevant the court is to have regard. 73Under s7(i) a contract may be unjust in the circumstances existing when it was made. A contractual provision may be unjust simply because it imposes an unreasonable burden on the claimant when it was not reasonably necessary for the protection of the legitimate interests of the party seeking to enforce the provision: s9(2)(d). Injustice may flow because the claimant did not have the capacity to make an informed or real choice of whether or not to enter the contract: ss9(2) (a), (e), (f), (g), (i) and (j). 74The contract may be unjust because its terms, consequences or effects are unjust. This is called substantive injustice. Or it may be unjust because of the unfairness of the methods used to make it. This is called procedural injustice. 75The court is entitled to have regard to the circumstances of the case subject to s9(4) and the public interest. 76McHugh JA in West v AGC said at 621 that: "Any contract or contractual provision not excluded from the operation of the Act and which the court considers is unjust at the time when it was made may be the subject of relief under the Act.......... If a contract or one of its provisions is neither unfair nor unreasonable so far as the applicant is concerned it is difficult to see how the existence of inequality in bargaining power or lack of independent advice, for example, can render the contract or a provision of the contract unjust." 77As McHugh JA pointed out at page 621 D-E, it is the contract that must be unjust and not the transaction. 78A party will not cause injustice to another unless the contract or one of its provisions is the product of unfair conduct on his part either in the terms which he has imposed or in the means which he has employed to make the contract. 79As can be seen from the circumstances and/or factors the Owners relies upon for relief under the CRA almost all turn upon the fact that plaintiff was absent from the negotiations which lead to the final form of the SMS by which it is bound (see: (a),(b),(c) and (d) above). 80The fundamental difficulty with this argument is that the legislation contemplates that very process and outcome. It is only upon the registration of a strata plan and the SMS and that the plaintiff exists. Until registration therefore it cannot expect to participate in negotiations, nor could putative purchasers. 81Whilst the Owners are subjected to obligations by reason of the contractual status of the SMS, they also clearly acquire contractual rights. 82The legislation does not contemplate lot owners who purchase off the plan being parties to the contract until they become a proprietor for example pursuant to S.28W(1)(b). Proprietor is defined in section 5 of the Act to mean a person recorded in the Register as entitled to an estate in fee simple or a person recorded in the strata roll as a proprietor pursuant to S.98 of the 1996 Act. 83There is no issue here but that the SMS in my opinion complied with all the formal requirements of the Act. 84The shared costs agreement was arrived at after these arms length negotiations and with the input of independent consultants. It was not arrived at for example peremptrorily or more importantly arbitrarily. 85It was negotiated at arms length with Grocon who had to make the terms of the contract attractive to putative purchasers and had a clear commercial interest in aligning itself with those purchasers. 86Absence of the owners from the negotiations cannot in my view amount to unfairness in those circumstances, without more. 87It was perfectly legitimate for the Trustees in my opinion in the negotiations to look after their own commercial interests in order to fix their financial obligations so as to create economic certainty into the future. This is a perfectly legitimate commercial goal to achieve. It is not a result by them of some superior bargaining position, but it is quite the contrary given the arms length nature of the negotiations. 88It is not suggested here that a split of 95:5 is in and of itself an unfair bargain but rather because of the way in which costs have escalated the Owners are desirous of having the split changed to approximately 83:17. 89Developments of this type are generally financially highly complex transactions which are intended to have long term and far reaching implications. The statute expressly contemplates the whole transaction relevantly and necessarily will be conducted in the absence of the very entity the process ultimately brings to life, namely the Owners. Although it cannot be gainsaid that the Trustees clearly understood that incoming purchasers would be contractually bound by the SMS it cannot be unfair for it to have focussed on its own commercial interest. All incoming purchasers would be advised by their respective lawyers that they would be bound by such an arrangement and would know, like Mr Choi, the legal consequences of purchasing and in particular the effect of s28W. 90Unfairness in commerce, without more, will not for example constitute unconscionable conduct: see Gummow and Hayne JJ in ABC v Lenah Game Meats Pty Ltd where their Honours said at [80] that: "The common law does not respond by providing a generalised cause of action whose main characteristic is the scope it allows, under high-sounding generalisations for judicial indulgence of idiosyncratic notions of what is fair in the market place. Rather, the common law provides particular causes of action and a range of remedies. The rights and remedies strike varying balances between competing claims and policies." 91French, Jacobson and Graham JJ said in Clough Engineering Ltd at [131]: "Equity does not provide a remedy on one respect of conduct in trade or commerce which in the opinion of a judge is unfair." 92There are no complaints made by the Owners or for that matter Mr Choi about Grocon's conduct as vendor. This is the case notwithstanding the Owners assert that the shared costs were not clearly stipulated for example. 93There is also no basis in my view for suggesting that Grocon and the Trustees negotiated the SMS and the amendment provisions (clause 20) in a manner inconsistent with or in breach of the regime proscribed by the legislative regime. Schedule 1C of the Act specifies that the SMS include any information required by the regulations and must not be inconsistent with the conditions imposed on a development consent relating to the site of the building to which the statement relates or with any other Act or law. 94If Mr Choi is the paradigm of the off-the plan purchaser in order to indicate the unfairness to which such individuals were allegedly subjected he provides very little or no evidentiary support for this submission in my opinion. 95First, Mr Choi accepted that he knew that the blanks in the SMS (where the percentage figures of the shared costs were to be inserted) were left blank and were to be filled in at the time of completion. He conceded in cross examination to also knowing that clause 37 of the contract gave him a fourteen day window to terminate the contract in circumstances where the document when registered affected the property to an extent which was "substantial." He also conceded to knowing that Mallesons, the firm acting for Grocon, would not provide him with copies of the strata plan when it became available but that he could obtain them himself by searching the LPI. The cumulative effect of Mr Choi's concessions is clear. I think he fairly conceded that he was aware that the shared costs percentages would be filled in at a later date; that he could search the LPI for the percentages if he was at all concerned about them; and that if he did, and was troubled by the breakdown, he may be capable of terminating under clause 37. Leaving questions of termination and rescission aside (which I need not determine), the position is therefore that the off the plan purchasers were nonetheless provided with a number of avenues of becoming informed of relevant matters and there was nothing inherent in this process contrary to the Strata Schemes Freehold Development Act 1973 , or in my opinion capable of being unfair in the relevant respect or characterised as unconscionable in the relevant respect.

Should the SMS be set aside for being procured in unconscionable circumstances? 96Although couched in the language of Amadio it is clear that the absence of the Owners from the negotiation process is in my view at the core of the claim for relief. 97The Owners identify the following facts: (a) one party ("the weaker party") was labouring under a special disability vis-a-vis the stronger party; (b) by reason of the special disability, the weaker party was unable to protect its own interests and consequently, there was an absence of any reasonable degree of equality between the parties; (c) the stronger party knew of the weaker party's disability (d) the stronger party took advantage of the opportunity presented by the weaker party's special disability; and (e) in the circumstances, the stronger party's conduct is unconscientious. 98The considerations outlined above on the CRA equally apply when one considers whether the notion of unconscionability has any application. 99In Stern v McArthur Mason CJ said at page 503: "Furthermore, to accept the respondents submission and extend relief against forfeiture to instances in which no exceptional circumstances are established would be to eviscerate unconscionability of its meaning. The doctrine is a limited one that operates only where the vendor has, by his conduct, caused or contributed to a situation in which it would be unconscionable on the vendors part to insist on the forfeiture of the purchasers interest. Priestley JA thought that "it would be unreasonable and unconscionable...to permit [the vendors] to shut [the purchasers] out from ownership (my emphasis), and consequently allowed relief against forfeiture. But, contrary to his Honour's view, the jurisdiction to grant relief against forfeiture does not authorise a court to reshape contractual relations into a form the court thinks more reasonable or fair where subsequent events have rendered one side's situation more favourable." 100In Tanwar Enterprises Pty Ltd v Couchi and Others Gleeson CJ, McHugh, Gummow, Hayne and Heydon JJ observed at page 324: "The terms "unconscientious" and "unconscionable" are, as were emphasised in Australian Competition and Consumer Commission v C G Berbatis Holdings Pty Ltd, used across a broad range of the equity jurisdiction. They describe in their various applications the formation and instruction of conscience by reference to well developed principles. Thus, it may be said that breaches of trust and abuses of fiduciary position manifest unconscientious conduct; but whether a particular case amounts to a breach of trust or abuse of fiduciary duty is determined by reference to well developed principles, both specific and flexible in character. It is to those principles that the court has first regard rather than entering into the case at the higher level of abstraction involved in notions of unconscientious conduct in some loose sense where all principles are at large." 101Kitto J in Blomley v Ryan said to a similar effect: "The fact that the defendant's condition was the result of his own self-indulgence could make no difference, for, as was shown in Cooke v Clayworth, the principle applied is not one which extends sympathetic benevolence to a victim of undeserved misfortune; it is one which denies to those who act unconscientiously the fruits of their wrongdoing." 102Mason J said in Amadio at [462]: "It is not to be thought that relief will be granted only in the particular situations mentioned by their Honours. It is made plain enough, especially by Fullagar J., that the situations mentioned are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created. I qualify the word "disadvantage" by the adjective "special" in order to disavow any suggestion that the principle applies whenever there is some difference in the bargaining power of the parties and in order to emphasize that the disabling condition or circumstance is one which seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party." 103Deane J in Amadio made the following remarks at [474 - 475]: "The equitable principles relating to relief against unconscionable dealing and the principles relating to undue influence are closely related. The two doctrines are, however, distinct. Undue influence, like common law duress, looks to the quality of the consent or assent of the weaker party (see Union Bank of Australia Ltd. v. Whitelaw [1906] VicLawRp 119; (1906) VLR 711 at p 720; Watkins v. Combes [1922] HCA 3; (1922) 30 CLR 180, at pp 193-194; Morrison v. Coast Finance Ltd. (1965) 55 DLR (2d) 710, at p 713 ). Unconscionable dealing looks to the conduct of the stronger party in attempting to enforce, or retain the benefit of, a dealing with a person under a special disability in circumstances where it is not consistent with equity or good conscience that he should do so. The adverse circumstances which may constitute a special disability for the purposes of the principles relating to relief against unconscionable dealing may take a wide variety of forms and are not susceptible to being comprehensively catalogues. In Blomley v. Ryan (1956) 99 CLR, at p 405, Fullagar J. listed some examples of such disability: "poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary". As Fullagar J. remarked, the common characteristic of such adverse circumstances "seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other." 104At [480]-[481] Deane J also said: "Relief against unconscionable dealing is a purely equitable remedy. The concept underlying the jurisdiction to grant the relief is that equity intervenes to prevent the stronger party to an unconscionable dealing acting against equity and good conscience by attempting to enforce, or retain the benefit of, that dealing. Equity will not, however, "restrain a defendant from asserting a claim save to the extent that it would be unconscionable for him to do so. If this limitation on the power of equity results in giving to a plaintiff less than what on some general idea of fairness he might be considered entitled to, that cannot be helped" (per Lord Greene M.R., Wrottesley and Evershed L.JJ., In re Diplock (1948) 1 Ch 465 at p 532)". 105On the question of entrenching and acknowledgment of the fair and equitable bargain under clause 21.1 of the SMS, it has to be borne in mind that clauses 20 and 21 were the result of arms length negotiations between the substantive parties. Secondly, it cannot be unconscionable in the relevant sense for the Trustees to seek to achieve economic certainty into the future by containing, absent unanimous resolution, the level of shared costs that it will bear in the relevant respect. Further, the circumstances in which the 95:5 was negotiated was in the context where the parties relied upon a determination by consultants as to the relevant proportions for the purposes of their negotiations. 106I do not consider on the facts of this case it can be said that the Owners were at a special disadvantage in accordance with the authorities vis-a-vis the Trustees. Nor do I consider that the Trustees have taken unfair advantage of some superior bargaining power. 107A person is not placed in a position of relevant disadvantage simply because of an inequality of bargaining power. Taking advantage of unequal bargaining power without more will not lead to relief. It is only when there is an unconscientious exploitation of the other person's inability to look after his or her interest, that will. Can an expert appointed under clause 16 of the SMS reapportion the ratios of shared costs paid under the SMS? 108The Owners seek an order that the Trustees participate in an expert determination process to reapportion the parties liabilities to shared costs. 109It is contended that clause 16 of the SMS permits such a process. 110Clause 16 is in the following terms: 16.1: Except for debts, persons bound by this statement must deal with disputes about this statement according to this clause. This includes disputes about: (a) the Committee or an officer of the Committee failing to comply with the provisions about Meeting or Emergency Meeting requirements; or (b) resolutions of the Committee 16.2 A person bound by this statement may serve notice of a dispute on another Owner or a person bound by this statement. The notice must: (a) describe what the dispute is about; and (b) identify the provisions of this statement that apply to the dispute; and (c) state the parties to the statement which are involved in the dispute; and (d) set out the facts and other circumstances constituting the dispute; and (e) attach copies of correspondence and other documents mentioned in the dispute notice; and (f) contain particulars of the amount in dispute (if any) 16.3 If the parties do not resolve their dispute within 28 days from the time of giving or receipt of the notice referred to in clause 16.2, either party may give the other party notice that: (a) the dispute must be referred to a Strata Schemes authority pursuant to Chapter 5 of the Strata Schemes Management Act (NSW) 1996 or to an independent expert for determination; and (b) If the dispute is being referred to an independent expert for determination, the parties must appoint an expert to determine the dispute 16.4 If the parties cannot agree on an expert within 7 days after a notice is served, then the parties must ask the president of the Law Society of New South Wales to determine the qualifications an expert requires to make a determination about the dispute (eg engineering, architectural or legal qualifications). 16.5 The parties must ask the Chairperson of a professional body of persons having the qualifications determined (eg the Royal Australian Institute of Architects, the Association of Consulting Engineers Australia or the Law Society) to: (a) appoint an expert who has the qualifications required to determine the dispute; and (b) determine the expert's remuneration 16.6 A party may require the expert to make an agreement with that party to preserve the confidentiality of information gained by the expert in performing their functions under this clause. 16.7 The parties must instruct the expert: (a) to act as an expert and not as an arbitrator (b) to proceed in the way, and determine the rules for the conduct of the expert determination, as the expert thinks fit without being bound to observe the rules of natural justice or the rules of evidence (c) to consider the documents and other information and materials which the parties give the expert and which, in the experts opinion, are relevant to determining the dispute; and (d) that he or she need not, but may, obtain and refer to other documents, information and materials and (e) to determine the dispute and give written reasons for the decision within one month of being appointed. 16.8 The experts determination is final and binding on the parties. No owner is entitled to commence or maintain any action, whether by way of legal proceedings or arbitration, relating to any dispute until it has been referred and determined as provided in this clause 16 111Two other provisions are relevant: clauses 20 and 21. 112Clause 20 of the SMS is in the following terms: "The Committee may, subject to the Strata Schemes (Freehold Development) Act 1973, by Unanimous Resolution amend this statement. The Owners shall cause each amendment to be registered at the Land and Property Information Office as soon as practicable after the resolution has been passed. An amendment is binding on all persons bound by this statement." 113Clause 21 provides that: "Subject to clause 20, the Owners Corporation and the Strata Lot Owners and those deriving a right under this statement through or under them acknowledge that the rights and obligations of the Owners represent a fair and equitable bargain between the parties and that the rights of the Owner of Lot 2 may not be decreased and the obligations may not be increased except with the express consent of the Owner of Lot 2." 114The question of whether the Trustees' are so obliged to participate in an expert process on shared costs of course turns on the proper construction of clause 16 in the context of the SMS as a whole including relevantly clauses 20 and 21. 115The importance of the terms of a contract which it is asserted authorises an expert to make a determination on some issue cannot be overemphasised. If a determination is not made in accordance with the contact it may well be set aside. 116In Legal & General Life of Australia Ltd v A Hudson Pty Ltd McHugh J A (as he then was) said at 335D and G: "In my opinion the question of whether a valuation is binding upon the parties depends in the first instance upon the terms of the contract express or implied...While mistake or error on the part of the valuer is not by itself sufficient to invalidate the decision or the certificate of valuation, nevertheless the mistake may be of a kind which shows that the valuation is not in accordance with the contract." 117Clause 16.1 ("except for debts") requires the parties to deal with "disputes about this statement according to this clause "which includes disputes about" the Committee failing to comply with the provisions about Meeting or Emergency Committee requirements; or (b) resolutions of the Committee". 118The Committee is known as a "building management committee "(cl.2.1(e)). The Committee is comprised of the "Owners" i.e. the Owners Corporation and the owner of Lot 2 from time to time (cl 3.1). 119The "Owners" must comply with decisions of the Committee which are properly the subject of a Committee decision "under this statement" and "made according to the processes specified in this statement" (cl.4.2). The Committee is empowered only to make decisions "according to this statement", at a properly convened meeting and by "Unanimous resolution" (cl 4.3). 120Clause 20 of the SMS permits the Committee subject to the Freehold Development Act to amend the SMS by unanimous resolution. Clause 21 which is to be read subject to clause 20 makes plain that in the absence of the consent of the Trustees it's rights (which clearly includes it's obligations to pay the relevant proportion of shared costs under cl.15) cannot be increased except by unanimous resolution under that clause. 121The SMS is in my view clear on the question of any purported increase in shared costs and the agreed mechanism for it to occur. Either there is a unanimous resolution or there is not (cl.20) and/or there is consent to increase or decrease or there is not (cl.21). If either state of affairs is present or absent in my view is simply not a dispute "about this statement" pursuant to clause 16.1. There is therefore in my view nothing for the expert relevantly to do. The Trustee's case is that clause 20 allows the SMS to be amended only by unanimous resolution and most importantly, clause 21 of the SMS forbids an expert to make a decision on shared costs because any rights and obligations between the parties (including shared costs) are expressly agreed as being fair between the parties. I agree. 122Bergin J in The Owners Strata Plan 78102 v The Owners Strata Plan 78101 & Ors held that an expert should be appointed to determine the appropriate apportionment of shared costs in accordance with the terms of the SMS. In that case, Bergin J was required to construe clause 6.4 of the SMS which provided that "disputes regarding proportions...be determined in accordance with clause 18". The SMS in that case was markedly different from the SMS here. In that case an express function of the BMC under the SMS was to "change, add or adjust Shared Costs", whereas no such function is provided for in the SMS here. Further, the SMS in The Owners Corp Strata Plan 78102 expressly provided for an expert to determine disputes "regarding proportions" and the "adjustments to be made" under clause 6.4, whereas no clause of the present SMS makes reference to proportions. In addition, that SMS expressly provided under clause 6.3 for the proportions of shared costs to be varied by unanimous resolution and for the experts determination to be "final and binding." Here, there is no such provision in the SMS that disputes regarding apportionment of shared costs are to be submitted for expert determination and no clause specifically deals with the process for amendment to shared cost proportions. 123In this context the scope of clause 16 must be read in line with clauses 20 and 21 of the SMS. 124I do not consider clause 16 permits the question of shared costs be referred for an expert determination. Should the court amend the SMS under s28U(1)(b) of the Strata Schemes (Freehold Development) Act 1973 (NSW)? 125The Owners Corporation alternatively seek an amendment pursuant to s28U(1)(b) of the Strata Schemes Freehold Development Act 1973 (NSW). 126In order to have an SMS registered it's form and content must meet a number of formal requirements (see schedule 1C of the 1973 Act). One of those requirements is that the SMS contain a procedure by which it can be amended (schedule 1C (2)(c)). Further, as I have already observed, it is clear by reason of the force of S28W the SMS has effect as an agreement under seal. 127S28U only deals with an amendment to an SMS, after its initial registration. 128The primary means by which the legislature clearly intended the SMS to be amended is by the means such mechanism contained in the SMS. In other words the legislature in my view has left amendment largely to the contract of the parties. 129At such proposed amendment must of course be supported by a special resolution of the body corporate and the person(s) in whom the estate in fee simple is vested. 130An amendment may also occur as a result of a revocation or modification of a development consent pursuant to S.103 of the Environmental Planning and Assessment Act 1979 . 131The register is of crucial importance because the recording for example of an amendment under this section is a necessary step before the amendment has effect. See also S28U2(a) and (b). 132It is submitted by the Owners that a court can order an amendment by reason of S28U(1)(b). I agree but I think the provision is very limited in its effect. 133The words " ordered by this or any other Act by a court " in my mind clearly mean that the court will only be able to order an amendment if specifically empowered to do so. 134The "other Act" referred to in my view could not be a reference to the CRA as has been suggested by the Owners. This is clear in my view for a number of reasons. First, S28U as I have said only deals with amendment and nothing else. The CRA which it is accepted has at least theoretical application here of course if a case for relief is made out can order various forms of relief not constrained merely to amendment. It makes no sense in my mind that by (b) the legislature was intending to refer to the CRA but only to a court's ability pursuant to that legislation to order an amendment. In other words a power only to entertain an application for very limited relief. There is no warrant for such a construction and I must say I find that construction untenable partly because it would require an obvious reading down of the CRA. 135Rather the words of s28U(1)(b) must mean that for the court to order an amendment it must be expressly empowered to do so. 136I have been referred to sections 50 and 51 of the 1973 Freehold Act, as examples of provisions by which a court may order amendments to an SMS. 137Section 50 of the Act (1973) deals with the situation when a building is destroyed or damaged. An application to the Supreme Court can be made under this section and in particular S.50(4) for a variation of the existing strata scheme or a substitution of a new strata scheme. This means that if the application is successful in substance an amendment to the plan and the SMS for the purposes of the registration of the new scheme would follow as a consequence. 138Section 51 of the Act on the other hand applies when it is sought to terminate a strata scheme. Under that section the order "shall include directions for or with respect to the following matters:" "(b2) the termination or amendment of any strata management statement that relates to the parcel or the amendment of any other strata management that relates to the building concerned" 139It can be seen that both sections authorise the court to make orders amending an SMS in certain specific circumstances. 140I am of the view that unless a court is specifically charged with authority to amend the SMS by this or any other Act (if any) the question of amendment is otherwise a matter for the parties pursuant to their contract. That of course does not exclude relief being granted under the CRA which in substance may well lead to an amendment by reason of the particular relief granted. 141No other legislation (other than sections 50 and 51 of this Act) has been referred to by either party. That may be none has been found or none exists. If the later I would regard the provision as making nonetheless perfect sense. The mere fact there may be no other legislation other than this Act is not contrary as what I regard to be the correct construction of the provision. 142The Owners submit that s28U(1)(b) is an "enabling provision" that is enlivened in this case. They rely on the obiter remarks of Bergin CJ in Eq in Owners - Strata Plan 78102 v Owners - Strata Plan 78101 where Her Honour stated that: "The fact that the SMS is a registered document available for inspection seems to me to support the proposition that the court has a broad power to amend an SMS in circumstances that justify such an amendment. However, as I have said, that is not a a matter that requires final decision at this stage." 143To call section 28U(1)(b) an "enabling provision" is, however, somewhat misleading. On the one hand, s28U(1)(b) clearly and unequivocally extends to the court the power to order an SMS amendment where it is provided for under the Act or any other Act. As such, the provision "enables" the SMS to be amended, but only where it is otherwise authorised pursuant to another provision of the Act or other legislation. The terms of s28U(1)(b) clearly does not create a general discretion or even hint at what criteria might provide a basis for an amendment. Rather, the provision functions as a procedural mechanism authorising the amendment to be made where a substantive basis for doing so can be pointed to such as sections 50 and 51. 144I would therefore answer the questions posed in the following manner: (i)Is the plaintiff bound by the terms of the SMS? Yes (ii)Was the SMS registered in contravention of s28V(1)(a) of the Strata Schemes Freehold Development Act 1973 (NSW)? No (iii)Should the SMS be set aside for being unjust under the Contracts Review Act 1980(NSW)? No (iv)Should the SMS be set aside for being procured in unconscionable circumstances? No (v)Can an expert appointed under clause 16 of the SMS can reapportion the ratios of shared costs paid under the SMS? No (vi) Should the court amend the SMS under s28U(1)(b) of the Strata Schemes (Freehold Development) Act 1973 (NSW)? No

Orders 145I would invite the parties to prepare short minutes to give effect to my judgment. 146I order that the plaintiff pay the costs of the proceedings.

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. Decision last updated: 29 August 2011

Strata Schemes Freehold Development Act 1973(NSW)

Strata Schemes (Freehold Development) Act 1973(NSW)

Conveyancing (Strata Titles) Act 1961(NSW)

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