The Owners - Strata Plan No 58841 v Kazal Bros Pty Ltd

CATCHWORDS : EQUITY [338]- Application for interlocutory injunction- Building within strata scheme subject to strata management statement- Defendant proposing to erect doorway contrary to architectural code in strata management statement- Defendant has obtained local government consent- Plaintiff has shown an arguable case- Plaintiff has delayed bringing the application- Absence of prejudice to plaintiff- No loss will be caused to plaintiff if work is performed- Defendant bears risk that court will order demolition of work at final hearing- Application declined on balance of convenience.

LEGISLATION CITED : Strata Schemes (Freehold Development) Act 1973, s 28W

CASES CITED : AG v Sheffield Gas Consumers Company (1853) 3 De GM & G 304; 43 ER 119 Owners Corp Strata Plan 69470 v Charbel CJ Pty Ltd [2004] NSWSC 1286

PARTIES : The Owners - Strata Plan No 5l8841 (P) Kazal Bros Pty Limited (D)

COUNSEL : Dr C J Birch SC (P) N Perram SC and R Lancaster (D)

SOLICITORS : David Le Page Solicitor (P) Clayton Utz (D)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2654/08 - THE OWNERS - STRATA PLAN NO 58841 v KAZAL BROS PTY LTD JUDGMENT 1 HIS HONOUR: The plaintiff is the owners corporation of one of a series of strata plans which are involved in a conglomerate of buildings situated 1-7 Macquarie Street, Sydney. The conglomerate consists of residential units and retail/commercial units. 2 As occurs with that sort of development, there is a strata management statement which is duly registered in accordance with Part 2 Division 2B of the Strata Schemes (Freehold Development) Act 1973. The strata management statement refers to an architectural code which is in schedule 3. Clause 6 of the statement says that the architectural code "helps to preserve the architectural integrity of Bennelong and Opera Quays". Bennelong and Opera Quays are the popular names of parts of the conglomerate. Clause 6.2 then reads: "The architectural code is in schedule 3 of this management statement. Subject to this management statement members, owners and occupiers must: (a) comply with the architectural code; and (b) obtain necessary consents from the Committee according to the architectural code." 3 There are definitions which indicate that the word "members" means essentially the owners corporations of the various strata plans and the word "owners" means lot owners. 4 The architectural code contains in clause 1 a statement of primary reasons for having an architectural code and that predominantly is to preserve the design integrity and architectural quality of the conglomerate and to maintain the high aesthetic standards that are said to make it such an attractive and desirable place to live and to uphold the property values of the owners. 5 Clause 1.2 of the architectural code says that members, owners and occupiers must comply with it and in particular, members, owners or occupiers who wish to change the external appearance must obtain all necessary consents from the committee. 6 Clause 10 is headed "The Façade" and says in clause 10.1 "Subject to this clause, members, owners and occupiers, must not: (a) ... ; (b) change, add to or remove elements of the facade." Clause 10.2 makes an exception in respect of members for maintaining, repairing or replacing the facade and one can see the reason for this when one looks at clause 59 of the main agreement which provides that the facade is a shared facility and the responsibility for maintaining, repairing and replacing the facade is shared between the committee and numbers 1, 3, 5 and 7 owners corporations. The plaintiff is the number 1 owners corporation. 7 Section 3 of the architectural code provides that applications to change the facade must proceed along certain lines. 8 The defendant wishes to erect a different type of doorway which would seem to amount to altering the facade. It has obtained certain local government consents which would appear to make it possible for it to construct those works. The plaintiff says that it has never had the consent of the committee in accordance with the architectural code to carry out an alteration to the facade which under clause 10 of the architectural code is prohibited unless a very specific procedure is put in place. 9 The defendant says that one has to be very careful about reading this strata management statement as, although it has the deceptive appearance that a plain English document often has, there are inconsistent provisions in it and one cannot just take the literal words of clause 10 and say: "Aha"; rather one must look at the various provisions and read them as a whole. When one does that, the plaintiff's construction of the document is not necessarily the correct one. 10 The defendant says that it has been indicating for some time that it intends to make this alteration. It further says that as at 11 April, and certainly on 14 April, the plaintiff was well aware of what was going to happen and yet the plaintiff continued to do nothing about approaching the court. The plaintiff sent to the defendant or its solicitors a draft statement of claim on 24 April, but it did not file the formal claim with the court until 6 May. 11 To complete that picture, the matter was mentioned before me yesterday, 8 May, and directions were made so that the matter could be heard today on 9 May. The reason why that had to happen was that the defendant has entered into arrangements for its tenant to make the premises available so that the work can be done starting on Sunday 11 May and that the development consent it has obtained will expire unless the work is substantially completed by some time early in June. 12 The defendant says that it acknowledges that a court could hold that the plaintiff has shown an arguable case, but if that be the case then the arguable case is at the low range of arguability and that the court in its discretion, because: (a) of the weakness of the plaintiff's case; (b) delays in coming before the court; and (c) the absence of any prejudice should not give interlocutory relief. 13 As usual, I explored before the case began as to whether we could have a final hearing, but I was told that that was not possible, nor could it really be predicted with certainty when the case would be ready for final hearing. 14 In the course of discussion between counsel and myself, various possibilities were canvassed as to whether we could short-circuit the hearing. One proposal was that the plaintiff was prepared to seek an injunction in such a form as would not inhibit the defendant from substantially commencing the work for which it had the development consent so that the consent would not lapse. The principal problem with that is that it is very difficult indeed to know when one is just changing the format of the door what would be sufficient to constitute substantial commencement. 15 The second possibility is that the defendant give an undertaking that it would demolish the work if it was ultimately held that the plaintiff was entitled to succeed. The defendant was not prepared to give such an undertaking. It seems to me that, however, whether the undertaking is given or not, the court may (or may not in the exercise of its discretion when deciding the matter) grant an order that the work done be demolished if the plaintiff ultimately succeeds, and there were various other matters canvassed which it is unnecessary to go into, but none of them meant that I could not make a decision on the interlocutory application. 16 Section 28W of the Strata Schemes (Freehold Development) Act 1973 in subsection (1) says: "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 ... (b) a proprietor ... of any of the lots in such a strata scheme …" 17 Subsection (2) says that the covenants referred to are covenants by which those bound jointly and severally agree to carry out their obligations under the registered strata management scheme. Subsection (5) is as follows: "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 ...". 18 There has been argument at a preliminary level as to the applicability of subsection (5). This would appear to be one of the key points to be decided at the final hearing. On one side it is put that the defendant has a development consent and that that development consent permits the work. It is a higher law than the strata management statement. Subsection (5) shows that it has an overriding effect. The consent is one relating to the site, the words "relating to" being words of very broad import. 19 On the other side for the plaintiff it is put that it can be seen from the structure of s 28W that there is a difference between a consent relating to the building and a consent relating to the site, and that it could not be the situation that a consent to one unit holder would have the effect of displacing the whole strata management scheme so that the one unit holder could, without any involvement of the committee, thwart what it notionally agreed to in the strata management statement. 20 Dr Birch SC, who appears for the plaintiff, drew my attention to the decision of Burchett AJ in Owners Corp Strata Plan 69470 v Charbel CJ Pty Ltd [2004] NSWSC 1286 in which Burchett AJ said at [31] that the approval of drawings for within one lot of a strata plan, "is not, in my opinion, a 'condition imposed on a development consent relating to the site of the building to which the [strata management] statement relates'…". His Honour was speaking in terms of s 28S(2) and schedule 1C paragraph 1 of the Strata Schemes (Freehold Development) Act, but the words have obvious relevance to 28W(5). 21 Whilst often on applications for interim injunctions if questions of law or construction present themselves, the court makes a decision, the lore is that judges are reluctant to do so if a case has been brought on at short notice or if there is a contention that it is only after an analysis of the full facts and circumstances and the background that one can meaningfully make a decision of construction then the court may postpone it. I think that lore applies. 22 For some reason or other, although the affidavit of the plaintiff's solicitor was sworn a day or so ago, I only received the documents when the case was called on this morning and I have not had a full opportunity as I have been running a busy duty list to look at every nook and cranny and, as I can see the possibility of both arguments, it would not be appropriate or just to make a decision on the construction, but I will accept the proposition that the plaintiff does show an arguable case. 23 I have seen enough of the strata management statement, however, to appreciate the points made by Mr Perram SC and Mr Lancaster for the defendant that when one examines it, the strata management statement is not as clear as one might first think. 24 Accordingly, I bear in mind, whilst there is an arguable case, it is not the strongest case. I will not yield to the temptation of ranking it between one and ten, but it is clearly not a lay down misere for the plaintiff on questions of construction. 25 That is a matter that one takes into account on the balance of convenience. 26 The court also takes into account questions of delay. Dr Birch says that when a solicitor is acting for a committee, it is far more difficult to get instructions than it is when one is acting for a single available individual and that there is no real prejudice or significance in the fact that the plaintiff certainly knew about the proposal on 14 April yet took ten days or more to bring the matter to the court's attention. I believe there is significance in the delay because judges have said time and time again that interlocutory applications for injunction are to be brought as soon as possible. 27 Now, I understand that court proceedings are very costly and I understand and indeed endorse people not coming to court unless they really have to, but the courts have made it clear that you just cannot wait till the very last moment before bringing proceedings and sending drafts of a statement of claim as a last ditch effort to avoid coming to court really does not improve the position if one knows that the defendant is just not going to be coming to the negotiating table. 28 Apart from the delay when the proposal was obviously going to be implemented, there is also the fact that the consent to do this work was given almost two years ago and that the parties would know that sooner or later there was going to be some attempt to do it, yet the plaintiff does not seem to have galvanised itself into action until the last moment. Those are matters that I need to take into account. 29 Thirdly, it is put that there is an absence of prejudice. Dr Birch quite candidly said that the real reason for wishing to thwart the defendant's intentions is not so much a form of doors or the appearance of the facade, but because this is a first step in converting a restaurant into a bar or drinking shop. That has not been denied by Mr Perram, though he does say that a whole number of steps will have to be taken before there can be any use of the premises as a drinking shop including local government consents to change of use and that shows that the present intended activity of the defendant does not prejudice the plaintiff except as a small step towards the ultimate goal. The doing of the work will not affect the plaintiff as such, nor is there any complaint that the beauty of the building will be at all affected by what happens. 30 Ordinarily the motive of a party in seeking an injunction is not a matter which the court takes into account if there is a legal or equitable right. However, there seem to be two exceptions to that rule, as set out in Kerr on Injunctions, 6th ed, pp 134 and 545, and they are: (a) where a suit is instituted purportedly to vindicate a public right and the court can see that it is really to protect the plaintiff's private interests; and (b) where a person is seeking an injunction against a company as a mere puppet of a rival company, then motives are relevant and are to be taken into account when considering as a matter of discretion whether to grant an injunction. 31 The present case does not come squarely within either of those exceptions, but it gets close to the first and I think that the first, which is based, of course, on the words of Knight-Bruce LJ in AG v Sheffield Gas Consumers Company (1853) 3 De GM & G 304, 311; 43 ER 119, 122 has some, though relatively slight, value in the present case. 32 That is because what is going to happen is that if the defendant performs the works, it will not cause the plaintiff any loss at all. The only loss it could be is that if the work goes ahead and the plaintiff succeeds at the final hearing, the court may think in its discretion that it should not order a mandatory injunction for the work done to be demolished. 33 That together with the fact that the actual work does not cause the plaintiff loss and what I have said from the Sheffield Gas case is a relatively light matter compared with the prejudice to the defendant if an injunction is granted in that it has made arrangements which will be costly to undo, its development consent is shortly to run out and that if it is wrong it bears the risk that the court will order demolition of the work. 34 Accordingly, in my view, I should not grant any interim injunction. 35 The costs of the interlocutory application should be defendant's costs in the cause. 36 I vacate any reference to the matter being returnable on 4 June and stand the matter over to the Registrar's list at 9.15am on Monday 19 May. 37 I return the exhibits PX01 to PX21 and DX101 to 115 on the basis they will be returned to the court at the proper time.

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