The Owners-Strata Plan No 43551 v Walter Construction Group Limited

Court of Appeal (NSW)|2004-09-15|Before: Spigelman CJ, Ipp JA, McColl JA, Coll JA

CITATION : The Owners-Strata Plan No 43551 v Walter Construction Group Limited [2004] NSWCA 429 HEARING DATE(S) : 15 September 2004 JUDGMENT DATE : 23 November 2004

JUDGMENT OF : Spigelman CJ at 1; Ipp JA at 53; McColl JA at 54 DECISION : Leave to appeal granted, appeal allowed.

CATCHWORDS : Practice & Procedure - Standing of owners corporation to sue in negligence with respect to common property - Meaning of section 227 of the Strata Scheme Management Act 1996 - Nature of an owners corporation's statutory agency Strata Schemes Management Act 1996 LEGISLATION CITED : Strata Schemes (Freehold Development) Act 1973 Interpretation Act 1987 Supreme Court Rules 1970 Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 609 Carre v Owners Corporation -Strata Plan 53020 [2003] NSWSC 397; (2003) 58 NSWLR 302 Kennedy v de Trafford [1897] AC 180 Lin v The Owners - Strata Plan No 50276 [2004] NSWSC 88 CASES CITED : Management Corporation Strata Title Plan No 1938 v Goodview Property Pty Limited (2000) 44 SLR 576 Margiz Pty Ltd v Proprietors Strata Plan No 30234 (1993) 30 NSWLR 364 Pinkstone v R [2004] HCA 23 Proprietors of Strata Plan No 6522 v Furney (1976) 1 NSWLR 413 Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 78 ALJR 628 Young, Swinbank & FAI General Insurance Co Ltd v Murphy & Allen [1996] 1 VR 279 PARTIES : The Owners Strata Plan No 43551 (Appellant) Walter Construction Group Limited (Respondent) FILE NUMBER(S) : CA 41196/03 COUNSEL : Mr F Corsaro SC / Mr Young (Appellant) Mr M Pembroke SC / Mr R Dubler (Respondent) SOLICITORS : Andreones Pty Ltd Lawyers (Appellant) Corrs Chambers Westgarth (Respondent)

LOWER COURT Supreme Court JURISDICTION : LOWER COURT 055051/01 FILE NUMBER(S) : LOWER COURT Master Macready JUDICIAL OFFICER :

17 - IN THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL 41196/03

SPIGELMAN CJ IPP JA McCOLL JA

Tuesday 23 November 2004 THE OWNERS-STRATA PLAN No 43551 v WALTER CONSTRUCTION GROUP LIMITED Judgment 1 SPIGELMAN CJ: The Appellant seeks leave to appeal from a judgment of Master Macready on a separate question in proceedings instituted in the Technology and Construction List of the Supreme Court. As will presently appear, significant questions of law arise and leave to appeal should be granted. 2 The Appellant is constituted as an owners corporation under s11 of the Strata Schemes Management Act 1996 ("the Management Act") and, accordingly, is a body corporate for purposes of the Strata Schemes (Freehold Development) Act 1973 ("the Freehold Development Act"). Upon registration of Strata Plan No 43551 on 30 March 1993, the "common property" in the strata plan vested in the Appellant pursuant to the sections I will hereinafter set out. 3 The Appellant is the owners corporation of a ten storey residential building in Bondi Junction, Sydney. The Respondent was the builder and, according to the statement of claim issued by the Appellant, was guilty of negligence in and about the construction of the building. 4 There are 52 lots in the strata plan. Twenty-nine of the 52 lots were sold after 2 November 1994, when at least some of the alleged defects had become manifest. The Respondent's case is that the lot owners who acquired their lots after this date have no relevant cause of action against the builder and that, therefore, the Appellant has no cause of action. 5 The Respondent argued, successfully, before the Master that the Appellant had no standing to institute the proceedings. 6 On the pleadings, the Respondent put in issue the Appellant's standing. Under Pt 31 r 2 of the Supreme Court Rules, the Court ordered, in accordance with the Respondent's Notice of Motion, that certain paragraphs of the Defence be separately determined. The Master identified the issue to be: "Does the plaintiff, as an owners corporation, have standing to sue in its own name in respect of the alleged defects to the common property?" 7 Although this summary was not criticised on the appeal, it is pertinent to set out the particular paragraphs of the defence that were separated by Court order, adding par [14] by way of introduction: "[14] Further and in answer to the whole of the Plaintiff's claim the Defendant says: [15] By s18(1) of the Strata Schemes (Freehold Development) Act 1973 (NSW) (the Strata Schemes Act) the common property in strata plan no: 43551 (the Strata Plan) was vested in the Plaintiff upon registration of the Strata Plan pursuant to the terms of the Strata Schemes Act. [16] By s21 of the Strata Schemes Act the Plaintiff is only capable of dealing with the common property the subject of the Strata Plan in accordance with the provisions of the Strata Schemes Act. [17] By s20 of the Strata Schemes Act the estate or interest of the Plaintiff in the common property the subject of the Strata Plan vested in it pursuant to s18(1) is to be held by the Plaintiff as agent for the proprietors of each of the lots the subject of the Strata Plan as tenants in common in shares proportional to the unit entitlements of their respective lots (the Statutory Agency). [18] By virtue of s227 of the Strata Schemes Management Act 1996 (NSW) (the Strata Schemes Management Act) the Plaintiff only has standing pursuant to the Statutory Agency to bring proceedings in respect of the common property the subject of the Strata Plan on behalf of the proprietors of the lots in the Strata Plan (the Proprietors) where all of the proprietors of the lots are jointly entitled to take proceedings against the person whom the Plaintiff proposes to take proceedings. [19] Some or all of the alleged defects the subject of the Plaintiff's notice of contentions were in existence prior to the Proprietors' purchase of the lots in the Strata Plan. [20] The Proprietors are not the original proprietors of the lots in the Strata Plan. [21] The Proprietors have purchased their lots at different times. [22] Accordingly, the Proprietors do not share a common interest in the alleged cause of action pleaded against the Defendant in respect of the common property the subject of the Strata Plan in that each Proprietor's entitlement to take proceedings against the Defendant in negligence is severally dependent upon: (a) a duty of care arising between the Defendant and each Proprietor; (b) each Proprietor demonstrating he, she or it relied on the Defendant at the time of a duty of care arising between the Defendant and the Proprietor; (c) each Proprietor purchasing the lot or lots without knowledge of the defects the subject of the Statement of Claim or such defects not being reasonably discoverable at the time of purchase. [23] In the premises, the Defendant says that the Proprietors are not jointly entitled to take proceedings on the cause of action pleaded against the Defendant. [24] Accordingly, by virtue of the provisions of the Strata Schemes Act and the Strata Schemes Management Act pleaded above, the Plaintiff does not have standing to bring the current proceedings on behalf of the Proprietors against the Defendant. [25] The Defendant says that some or all of the Proprietors have purchased their lots with knowledge of the defects the subject of the Statement of Claim or at a time when such defects were reasonably discoverable and/or without relying upon the Defendant's care or still as building, and hence would not have a cause of action in tort against the Defendant in respect of such defects. [26] In the premises, the Plaintiff is not entitled pursuant to the Statutory Agency to bring proceedings on behalf of such Proprietors to recover damages in tort as pleaded in the Statement of Claim herein in respect of their interest in the common property in the Strata Plan." 8 Two issues arise on this pleading:

In each case, the pleading concludes with an assertion that the Appellant cannot bring proceedings on behalf of the owners. 9 However, the statement of claim does not assert a right to bring proceedings on behalf of the owners. It asserts an ability on the part of the Appellant to proceed in its own right: "6. In carrying out the works the defendant had in contemplation that: a. on registration of the strata plan the common property of the Building would be vested in the plaintiff; and b. in the event that the construction works were not carried out in a proper and workmanlike manner the plaintiff would be a member of a class of person who would suffer loss and damage as a consequence. 7. As a consequence of the matters pleaded in paragraph 5. above, and all the circumstances of the case, including, without limitation: (a) the fact that the defendant, in its capacity as a builder of a strata development, would, or ought to, have been aware of the implications of the Strata Schemes (Freehold Development) Act 1973 (NSW) in that, upon registration, the plaintiff, as owners' corporation, would become the owner of the common property and would thereby suffer loss and damage as a result of defective works; (b) reliance by the plaintiff on the defendant; (c) the fact that the plaintiff was in no position to protect itself against the defendant's default; and (d) the fact that, as between the parties, the building works were entirely within the defendant's control, the defendant owed the plaintiff a duty to exercise reasonable care in carrying out the construction works." 10 The statement of claim goes on to allege breach of duty and consequential loss. The Respondent denies duty, breach and that loss was caused by breach of duty. However, these paragraphs of the Defence were not the subject of the order for separate determination. This is of significance with respect to some of the submissions made by the Respondent in this Court.

The Statutory Right to Sue 11 The Appellant relies on the express statutory right to sue found in s227 of the Management Act which provides: "227(1) This section applies to proceedings in relation to common property. (2) If the owners of the lots in a strata scheme are jointly entitled to take proceedings against any person or are liable to have proceedings taken against them jointly, the proceedings may be taken by or against the owners corporation. (3) Any judgment or order given or made in favour of or against the owners corporation in any such proceedings has effect as if it were a judgment or order given or made in favour of or against the owners. (4) A contribution required to be made by an owner of a lot to another owner in relation to such a judgment debt is to bear the same proportion to the judgment debt as the unit entitlement of the contributing owner bears to the aggregate unit entitlement." 12 The Master rejected the Appellant's case on s227 on the basis that the words "jointly entitled" in s227(2) require all lot owners to have the right to take the relevant proceedings. He referred to the judgment of the Singapore Court of Appeal in Management Corporation Strata Title Plan No 1938 v Goodview Property Pty Limited (2000) 4 SLR 576; see (2001) 75 ALJ 217, but noted that the relevant section of the Singapore statute differed from that of New South Wales, by providing that: "Where all or some of the subsidiary proprietors of the lots … are jointly entitled." 13 The Appellant submitted that the New South Wales section should be understood in the same way, so that it encompassed a joint entitlement which did not require all lot owners to have the same cause of action. The Appellant also invoked the principle of statutory interpretation that the plural includes the singular and referred to s8 of the Interpretation Act 1987. However, there are indicators in s227, and in the statutory scheme of which it forms part, that the Appellant's contentions are incorrect including, so far as it is necessary to do so, a contrary indication for purposes of the application of s8 of the Interpretation Act 1987. 14 First, there is the repetition of the definite article in s227(2) which commences with the words "if the owners of the lots …". If the terminology had been "if owners of lots" or even "if the owners of lots", then there may have been a suggestion that an indeterminate number of owners in any combination could be represented by the owners corporation. The repetition of the definite article in the two places identified indicates that the section applies only in the circumstances where all the owners of all lots have a common interest. 15 Furthermore, with respect to the enforcement of any judgment in favour of the owners corporation, s227(3) gives it the effect of a judgment in favour of "the owners". This is clearly a reference back to the phrase "the owners of the lots" in s227(2). This third deployment of the definite article reinforces my conclusion. 16 The second reason for reaching this conclusion is the express provision contained in s227(4) as set out above. That subsection is concerned with the situation in which a judgment is made against the owners corporation and, by force of subs(3), has effect as if it were made against "the owners". The successful plaintiff in such proceeding would have an order enforceable, it appears, against all or any of the owners of the lots. If enforcement action is taken against some only of the owners that would give rise to a right of contribution by those owners against other owners. 17 Subsection (4) indicates that any such contribution is to be made on the basis of the proportion that the "unit entitlement of the contributing owner" bears to the "aggregate unit entitlement". The phrase "aggregate unit entitlement" is defined in Pt 1 of the dictionary as: "aggregate unit entitlement of lots subject of a strata scheme means the sum of the unit entitlements of those lots." 18 This definition refers to the "lots" in the "strata scheme" as a whole. Section 227(4) does not refer to the sum of the "unit entitlements" of the lot owners seeking contribution and of the lot owners from whom contribution is sought. Subsection (4), accordingly, operates on the assumption that all lot owners are the subject of the relevant judgment debt. 19 The final reason for concluding that s227 applies only to action on behalf of all of the owners is the fact that, by subs(1), the section applies only to proceedings in relation to common property. This is usually a matter in which all owners of lots have an identical interest. Subsection (2) applies not only where owners assert a 'joint entitlement' to take proceedings but also where a third party can take proceedings against owners "jointly". Although the present case is of the former character, it is difficult to envisage circumstances in which a third person can take proceedings in relation to common property that does not affect all owners of lots in the strata scheme. 20 For these reasons, in my opinion, s227 does not confer standing on the owners corporation to sue in its own right in the circumstances of this case.

Statutory "Agency" 21 Alternatively the Appellant submits that it is entitled to sue without relying on s227 of the Management Act. This proposition was based on two alternative approaches. First, the Appellant asserts it is entitled to sue in a representative capacity for loss suffered by the owners of the lots. Secondly, it asserts that it is entitled to sue on its own behalf for loss suffered by the owners corporation as the legal owner of the common property. 22 I have set out above, pars [25] and [26] of the Defence that relate to this matter. They appear to me to give rise to only the first of the ways in which the Appellant asserts a right to sue. Paragraph [26] of the Defence refers only to the "statutory agency". 23 In this regard it is relevant to note that s226(1) of the Management Act provides: "226(1) Nothing in this Act derogates from any rights or remedies that … an owners corporation … may have in relation to … the common property apart from this Act." 24 The nature of the relationship between the owners corporation and the owners of the lots is set out in the following provisions of the two Acts. 25 Section 11(1) of the Management Act provides: "11(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)." 26 The relevant sections of the Freehold Development Act are s18(1), s20 and s24: "18(1) Upon registration of a strata plan any common property in that plan vests in the body corporate for the estate or interest evidenced by the folio of the Register comprising the land the subject of that plan but freed and discharged from any mortgage, charge, covenant charge, lease, writ or caveat affecting that land immediately before registration of that plan." "20 The estate or interest of a body corporate in common property vested in it or acquired by it shall be held by the body corporate as agent: (a) where the same person or persons is or are the proprietor or proprietors of all of the lots the subject of the strata scheme concerned - for that proprietor or those proprietors, or (b) where different persons are proprietors of each of two or more of the lots the subject of the strata scheme concerned - for those proprietors as tenants in common in shares proportional to the unit entitlements of their respective lots." "24(1) In any dealing or caveat relating to a lot, a reference to that lot includes a reference to any estate or interest in common property which is vested in the body corporate as agent for the proprietor of that lot without express reference to the common property and without that dealing or caveat being recorded in the folio of the Register comprising the common property. (2) The beneficial interest of a proprietor of a lot in the estate or interest in the common property, if any, held by the body corporate as agent for that proprietor shall not be capable of being severed from, or dealt with except in conjunction with, the lot." 27 The special nature of an owners corporation, and the need to identify its role within the parameters of the Freehold Development Act and the Management Act, is emphasised by s110(3) of the Management Act which provides that s50(1)(d) of the Interpretation Act 1987 does not apply to an owners corporation. The significance of this exclusion, and of the applicable paragraphs of s50(1), is manifest in the terms of s50 which are: "50(1) A statutory corporation: (a) has perpetual succession, (b) shall have a seal, (c) may take proceedings and be proceeded against in its corporate name, (d) may, for the purpose of enabling it to exercise its functions, purchase, exchange, take on lease, hold, dispose of and otherwise deal with property, and (e) may do and suffer all other things that bodies corporate may, by law, do and suffer and that are necessary for, or incidental to, the exercise of its functions." 28 An owners corporation has functions and powers conferred by the two Acts. Of particular significance are the functions relating to common property. 29 First, s21 of the Freehold Development Act provides: "21 Common property shall not be capable of being dealt with except in accordance with the provisions of this Act." 30 It is also relevant to note certain provisions of Ch 3, which is headed Key Management Areas. 31 Section 61(1) provides: "61(1) An owners corporation has for the benefit of the owners: (a) the management and control of the use of the common property of the strata scheme concerned, and (b) the administration of the strata scheme concerned. (2) The owners corporation has responsibility for the following: (a) maintaining and repairing the common property of the strata scheme as provided by Part 2, …" 32 In Pt 2 appears s62 which provides: "62(1) An owners corporation must properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in the owners corporation. (2) An owners corporation must renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the owners corporation. (3) This clause does not apply to a particular item of property if the owners corporation determines by special resolution that: (a) it is inappropriate to maintain, renew, replace or repair the property, and (b) its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme." 33 Part 3 of Ch 3 is concerned with the finances of a strata scheme. Sections 66 and 69 impose obligations upon an owners corporation to establish, respectively, an administrative fund and a sinking fund. 34 Section 75 makes provision for levies on owners. By ss67(1)(a) and 70(a) contributions levied on and paid by owners for payment into the respective funds must be paid into the funds. Section 68 and s71 state that moneys must not be paid out of either of the funds save for the purposes specified, respectively, in the two sections. 35 The pleading in the Defence which gives rise to what the Respondent calls a "statutory agency" is based on the reference in s20 and s24 of the Freehold Development Act, quoted above, to the fact that the owners corporation holds the common property "as agent" for proprietors. 36 The Respondent's contention, which succeeded before the Master, was that, as an "agent", the owners corporation was not entitled to sue on behalf of a disclosed principal. The Appellant's case was that the owners corporation under the statutory regime was analogous to the situation of a trustee who can act on behalf of beneficiaries. 37 The Master accepted the Respondent's contentions in the following passage: "[15] In support of the proposition that in the case of a disclosed principal an agent cannot sue on behalf of his principal reference was made to the principles referred to in Bowstead and Reynolds on Agency in art. 99. This dealt with the situation in contract. Reference was also made to " Parties to an Action " by A V Dicey where under rule 83 it was pointed out that a servant cannot sue for a mere injury to a master. The general rule on enforcement of a contract by an agent is that the agency can only bring an action to enforce the contract in the name of the principal with the consent of the principal. The agent himself has no cause of action and no interest in the subject matter of the suit. See Campbell v Pye (1954) 54 SR (NSW) 308 at 309. The person whose right has been violated is the most appropriate person to bring the suit. See Gray v Pearson (1870) LR5CP568 at 574 & 576. An exception will arise where the agent is expressly authorised in the agency agreement to bring an action in his or her name in which case the agent can bring the action and be named as plaintiff. See Netage Pty Ltd v Cantley (1985) 6 IPR 200 at 212. [16] The cause of action in the present case is for economic loss being any diminution in the value of the lot holders undivided interest as tenants in common in the common property. Prima facie it is hard to see how, unless there is any special exception, an agent can sue for the benefit of loss claimed by a disclosed principle whether in tort or contract. [17] The very inclusion in the Act of section 227, confirms the basic underlying principle to which I refer. Section 227, in the case where on the face of the Act there is a clear agency relationship, creates an exception in respect of the common property. Section 228, which deals with a situation (damage to property comprised in a unit where there is danger to the support of other units) in which the other provisions of the Act do not provide for agency, creates the agency and provides the exception allowing the Owners Corporation to take proceedings." 38 The Master gave weight to the inclusion of s227 in the Management Act. Notwithstanding the preservation of other rights by s226(1), the Master characterised the section as "an exception in respect of the common property" in the context of a "clear agency relationship". 39 Although an owners corporation suing as a trustee may not require the additional power conferred by s227(2), nor indeed may a person choosing to sue the legal owner of title require statutory authority, it cannot be said that the matter covered by s227(3) is unnecessary. That subsection has the effect of making a judgment or order enforceable against the owners, together with the provision in subs(4) for contribution between owners. This is a modification of the position at law. 40 Section 227 creates a specific statutory regime establishing a system of interconnected mutual rights and obligations, some of which would not exist at law. The inclusion of s227 in the statutory scheme is not a basis for an inference that none of the matters to which it refers could exist at law. 41 The use of the word "agent" in s20 is not of itself determinative of the nature of the relationship. As Lord Herschell observed in Kennedy v de Trafford [1897] AC 180 at 188: "No word is more commonly and constantly abused than the word 'agent'". This aphorism is frequently referred to with approval. (See the authorities collected in Pinkstone v R [2004] HCA 23 at footnote 34.) 42 In my opinion, the word "agent" in s20 and s24 is not used in the technical sense of the law of agency. The characterisation of the relationship for purposes of determining standing to sue turns on an assessment of the whole statutory scheme, including the powers and duties with respect to common property set out above. There is a tension between the use of the word "agent" and of the words "beneficial interest' in s24(2). The fact that the statute vests title in the owners corporation is particularly significant. 43 In Carre v Owners Corporation - Strata Plan 53020 [2003] NSWSC 397; (2003) 58 NSWLR 302 Barrett J referred to the words "beneficial interest" in s24(2) and said: "[28] …The statute seems clearly enough to proceed on the footing that each proprietor of a lot is to be regarded as the equitable owner of an undivided interest as one of several tenants in common in the estate or interest of which the owners corporation is the legal owner. … [29] It is clear from the statutory scheme that an owners corporation is in no sense the beneficial owner of common property. Its ownership is always in a representative capacity identified by the Act as that of 'agent', with the lot proprietors, as the owners in equity of undivided interest of tenants in common, each identified as having a 'beneficial interest'. The restrictions upon alienation and other dealings and the provisions with respect to repair, renewal and replacement proceed on the assumption that common property exists for the benefit of the lot proprietors as a general body. … As was observed in Houghton v Immer (No 55) Pty Ltd (1997) 44 NSWLR 46, by Handley JA (with whom Mason P and Beazley JA concurred), a provision that vests this common property in an owners corporation as 'agent' for lot proprietors makes the proprietors equitable tenants in common." 44 Gzell J said in Lin v The Owners - Strata Plan No 50276 [2004] NSWSC 88: "[7] The notion of an agency in this context is odd. If common property is vested in the owners corporation for the benefit of the lot owners, one would expect the relationship to be that of trustee and beneficiary rather than that of agent and principal. That something more than the relationship of principal and agent was intended by the legislation was clear from the terms of the Strata Schemes (Freehold Development) Act 1973, s 24(2) which spoke of the beneficial interest of a proprietor of a lot in the estate or interest in the common property held by the body corporate as agent for that proprietor. [8] It is not surprising, then, that the nature of the interest of a lot owner in the common property has been described as an equitable interest as a tenant in common with other lot owners ( Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46 at 56) and as a proprietary right ( Young v Owners - Strata Plan No 3529 (2001) 54 NSWLR 60 at 46)." 45 I agree with these observations of Barrett J and Gzell J. It is not appropriate to characterise the statutory role of an owners' corporation solely in terms of an agency at common law. 46 The institutions of trust and agency are not mutually exclusive. It is a distinguishing characteristic of the former that a trustee, unlike an agent, must have trust property vested in it. Where an agent has actual title to property, then the agent will be a trustee, albeit one who is bound to follow the directions of the principal with respect to the property. (See Scott on Trusts (4th ed) Vol 1 p95; Jacobs Law of Trusts in Australia (6th ed) 1997 par 210; Ford and Lee Principles of the Law of Trusts par 1200.) 47 The doctrine upon which the Respondent successfully relied before the Master is a rule applicable to contracts and is to the effect that, in the case of a disclosed principal, an agent cannot sue a third party on the contract. The Master applied this rule to the case of a tort on the basis that the cause of action was one for "the diminution in the value of the lotholders undivided interest as tenant in common in the common property". This does not accurately reflect the Appellant's pleading which particularises its loss as "The diminution in value of the building and/or the cost of rectifying defects". 48 In any event, inability to sue in contract does not determine whether the legal owner of property can sue with respect to damage to the property. In this regard, the statutory scheme does not suggest that the Appellant suffers from any incapacity. In my opinion, it should be treated as a trustee would be treated in this respect. Section 226(1) preserves any such right (see also Margiz Pty Ltd v Proprietors Strata Plan No 30234 (1993) 30 NSWLR 364 at 372), including the right of a trustee to sue in tort for damage to trust property. (See the authorities referred to in Young v Murphy [1996] 1 VR 279 at 290-291.) 49 As the legal owner, the owners corporation may sue in its own right. This was determined by Needham J in Proprietors of Strata Plan No 6522 v Furney (1976) 1 NSWLR 413 a decision under the Strata Titles Act 1973. Although s147 (the equivalent of s227) did not apply, the owners corporation nevertheless had standing to seek a declaration as legal owners of the common property on the basis of s146 (now s226). His Honour said at 414, after concluding that s147 was not applicable: "However, s146 (1) says: 'Nothing in this Act derogates from any rights or remedies that a proprietor or mortgagee of a lot or body corporate may have in relation to any lot or the common property apart from this Act.' Under the Act the common property is vested in the body corporate by s18 'for the estate or interest evidenced by the folio of the Register comprising the land the subject of that plan immediately before its registration'. Section 18(2) requires the Registrar-General to issue in the name of the body corporate a certificate of title of any common property in that strata plan. It seems to me that, as registered proprietor of the common property, the body corporate would have rights equivalent to the rights of any other registered proprietor to protect its interests or to have the Court declare the extent of its interest, the extent of its powers and liabilities. I think that s146 protects the ordinary incidents which attach to the ownership of land registered under the Real Property Act 1900. One of those rights, it seems to me, is a right to approach the Court to make declarations under s75 of the Supreme Court Act, 1970. Accordingly, I am of the opinion that these proceedings are competent, and that the Court is entitled to make orders which would declare the rights and responsibilities and liabilities of the plaintiff under its strata plan and under the Act." 50 The Master distinguished this case on the basis that it was an application for a declaration. This does not appear to me to be a material point of distinction. Indeed, Needham J, as quoted, expressly referred to the right to a declaration as "one of those rights" which are an ordinary incident of ownership. The Appellant's pleading of duty, breach and damage, manifests another such incident. 51 The Respondent does not seek to uphold this aspect of the Master's reasons. The Respondent relied on the authorities on recovery for economic loss, particularly Bryan v Maloney [1995] HCA 17; (1995) 182 CLR 604 and Woolcock Street Investments Pty Ltd v CDG Pty Ltd [2004] HCA 16; (2004) 75 ALJR 628, for the propositions that the proprietors who purchased after the defects became manifest had no right of action and that the Appellant has suffered no loss. However, such issues as arise in this regard do so under the Respondent's denial of duty, breach and damage. They do not arise under the paragraphs ordered to be separately determined. 52 I propose the following orders:

The Respondent to pay the Appellant's costs of the separate question and the appeal. 53 IPP JA: I agree with Spigelman CJ. 54 McCOLL JA: I agree with Spigelman CJ. **********

Last Modified: 11/29/2004 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.

Strata Schemes (Freehold Development) Act 1973(NSW)

Strata Schemes Management Act 1996(NSW)

At a glance

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Judgment (12 paragraphs)

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Legislation Cited (2)

Cases Cited (15)