15 Management relied on Pt 4A of Chapter 2 of the SSM Act. That part deals with "Others Assisting in Management - Caretakers". Part 4A was introduced into the Act by the Strata Schemes Management Amendment Act 2002, which commenced on 10 February 2003. However, cl 12(1) of Schedule 4 to the SSM Act provides as follows:
" 12 Effect of certain common property management agreements
(1) Any agreement that was in force immediately before the commencement of Part 4A of Chapter 2 that, if entered into after that commencement, would be a caretaker agreement is taken to be a caretaker agreement appointing a caretaker."
16 For reasons that will become apparent, I conclude that Pt 4A does not assist Management; accordingly, it is unnecessary to set out what were said to be the relevant provisions of that Part.
The Inaugural General Meeting
17 The inaugural general meeting was held on 2 March 2000. In the usual way of such things, it appears to have been controlled by the developer of the strata scheme. The minutes record that, among other things, the following business was transacted:
" …
2. MANAGING AGENT:
(a) RESOLVED that BCS Strata Management Pty Ltd trading as Body Corporate Services be:
(i) appointed as strata managing agent under section 27 of the Strata Schemes Management Act 1996; and
(ii) delegated all of the functions of the owners corporation, executive committee and office bearers under section 28 of the Strata Schemes Management Act 1996.
(b) RESOLVED that the common seal be affixed to the agency agreement tabled at this meeting incorporating the instruments of appointment of and delegation to BCS Strata Management Pty Limited t/a Body Corporate Services.
…
7. SERVICES AGREEMENT
RESOLVED that the Services Agreement between Strata Plan No. 61643 and Stamford on Kent Management Pty Ltd in the form of the agreement tabled and being exhibit "B" to the minutes of this meeting executed by the owners corporation affixing the common seal to it in accordance with section 238 of the Strata Schemes Management Act 1996."
18 Management was then known as Stamford on Kent Management Pty Ltd.
The Agreement
19 Recital C to the Agreement noted the agreement of the parties that the Owners Corporation would engage Management (which was called "the Manager" in the Agreement) and Management would accept the engagement, to provide the services set out on the terms contained in the Agreement.
20 Clause 2 constituted the appointment. It provides as follows:
" 2. APPOINTMENT OF MANAGER
2.1.1 The Owners Corporation appoints the Manager and the Manager accepts the appointment to carry out the duties and provide the services comprised in the Required Works, the Additional Works, the Owners Services and the Letting Services for a period of five (5) years commencing on the Commencement Date upon the terms and conditions of this Agreement."
21 The "Required Works" to which reference was made in clause 2.1 are the works set out in Schedule 1 to the Agreement. I return to that schedule in para [25] below. It is not necessary to consider the definitions of Additional Works, Owners Services or Letting Services.
22 Clause 3 specified the duties and powers of Management. It included the following:
" 3. DUTIES AND POWERS OF MANAGEMENT
3.1 The Manager must by its employees, agents or subcontractors take all reasonable steps to:
(a) perform the Required Works; and
(b) perform such other acts and things as are reasonably necessary and proper in the performance of the Required Works.
In doing so the Manager must have regard to the obligation of the Owners Corporation under any Strata Management Statement.
…
3.4 Nothing in this Agreement requires the Manager to or confers any right on the Manager to:
(a) exercise any of the functions of the Owners Corporation or of the Treasurer of the Owners Corporation relating to the receipt or expenditure of, or the accounting for, money of the Owners Corporation or the keeping of the books of account of the Owners Corporation; or
(b) perform any function, duties or powers which may only be carried out by the holder of a strata managing agent's licence under the Agents Act."
23 Clause 4 specified duties of the Owners Corporation in relation to the Agreement. It includes the following:
" 4. DUTIES OF OWNERS CORPORATION
4.1 The Owners Corporation must provide the Manager with copies of all documents necessary to enable the Manager to perform its duties. These include, without limiting the obligations of the Owners Corporation, all documents or plans identifying the location and specifications of any services or amenities installed or erected on or forming part of the Common Property.
4.2 The Owners Corporation must give the Manager all access to the Common Property as the Manager may require to efficiently perform its duties and provide services under this Agreement.
4.3 The Owners Corporation must not, during the term, employ or contract with any other person to perform any function or duty or provide any service comprised in the Required Works, the Additional Works, the Owners Services and the Letting Services that the Manager is entitled to perform or provide under this Agreement. This does not prevent the Owners Corporation from appointing a strata managing agent licensed as a strata managing agent under the Agents Act to carry out functions, duties or services which the Manager cannot legally carry out without such a licence.
…
4.7 The Owners Corporation must, from time to time, appoint a member of the Council for the Owners Corporation or a strata managing agent as its representative to communicate with, receive request from and liaise with the Manager, on behalf of the Owners Corporation. The Owners Corporation must ensure that that person, or their nominated substitute, is at all times available to give instructions promptly in relation to anything on which the Manager seeks instructions. The Owners Corporation is bound by instructions given by the person so appointed or nominated."
24 Clause 5 made it plain that the "Required Works" were those set out in Schedule 1.
25 Schedule 1 listed some 22 categories of "duties". Although the parties did not refer to all of them, I think that it is desirable to reproduce the schedule in full:
"*1. Supervise and arrange for the maintenance, cleaning and repairs to the Common Property so as to keep the Common Property in good order and repair.
*2. Report promptly with quotations to the Owners Corporation on required repairs, replacement or renewal of things on the Common Property and all matters known to the Manager causing any hazard or danger and to arrange for remedial action where practicable.
3. Have regard to all By-Laws in force from time to time in respect to the Strata Scheme.
*4. Arrange for and supervise a program for the regular cleaning of driveways, foyers, stairs, hallways, doors and windows (other than internal doors and windows of Lots in the Strata Plan), utility rooms, car parking areas, amenities and other areas of the Common Property within, upon and around the building.
5. Implement a program reasonably designed to ensure all lighting on the Common Property is operative and efficient and arrange for the maintenance and replacement of lighting when necessary.
*6. Arrange for the maintenance of machinery and plant and equipment located on the Common Property.
7. Regularly inspect the internal and external areas of Common Property (including equipment plant and machinery forming part of the Common Property) and report to the Owners Corporation in respect of the condition of the Common Property including that equipment plant and machinery.
8. Advise the Owners Corporation in the preparation of its annual budget with respect to items involving the repairs and maintenance or renewal and replacement of the Common Property.
*9. Make recommendations to the Owners Corporation for the management, maintenance and care of the building.
10. Implement a program reasonably designed to ensure all drains running from or serving the Common Property are kept clear and functioning efficiently.
11. Implement a program reasonably designed to ensure all fire fighting equipment is operative and efficient and arrange for inspection of same from time to time to ensure it complies with the requirements of the Fire Brigades of New South Wales.
12. When necessary arrange for the treatment and supply of insecticides for the Common Property.
13. Arrange for the supply and erection of such signs and notices on Common Property as may be necessary for the proper and efficient control, management, use and enjoyment of Common Property and in particular carparking signs and notices.
*14. Supervise control and regulation of the parking of motor vehicles on Common Property.
15. Organise and supervise the removal of all garbage, rubbish, refuse and waste from the Common Property.
*16. Arrange for and supervise such licensed security guards and concierges as the Owners Corporation may employ and to act as coordinator of those security guards and concierges.
17. Supervise, control and regulate any employees or contractors of the Owners Corporation (other than any strata managing agent).
18. Advise the Owners Corporation of any correspondence, reports, enquiries and complaints relating to the Common Property and the performance of the Manager's duties.
*19. Comply with and carry out all reasonable and lawful directions by the Owners Corporation to the Manager in relation to its duties under this Agreement.
20. Keep in its possession and control Security Keys and whenever it is necessary to surrender possession or control of Security Keys to any person then the Manager agrees to take all reasonable steps to implement a system to recover possession or control of the Security Keys from the person to whom possession or control was surrendered.
21. Supervise the observance of the Special By-Laws and in doing so the Manager is authorised by the Owners Corporation to require due compliance with the Special By-Laws.
*22. As far as the Manager can reasonably and lawfully do, to keep order on the Common Property and take such precautions as it sees fit to safeguard Common Property against unlawful entry or accident or damage."
26 The asterisk denotes duties that were, or were said to be, substantially the same as duties (under a different but not dissimilar agreement) considered by Hamilton J in Owners - Strata Plan No 51487 v Broadsand Pty Ltd [2002] NSWSC 770 (Broadsand).
The issue
27 The issue between the parties is whether, by the Agreement, the Owners Corporation delegated any of its "functions" to Management. It was common ground that if that question should be answered "yes", the delegation was not (in the language of s 13(3)) one "specifically authorised by" the SSM Act.
Approach to the question of interpretation
28 The Owners Corporation relied on the decision of Hamilton J in Broadsand, and on the earlier decision of the Court of Appeal in Gillett v Halwood Corporation Ltd & Ors (26 March 1998, unreported; BC9800883). Management relied on the decision of the Court of Appeal (Hodgson JA, with whom Handley and McColl JJA agreed) in Owners - Strata Plan No 56443 v Regis Towers Real Estate Pty Ltd (2003) 58 NSWLR 78.
29 The agreements considered by the Court of Appeal in Gillett and by Hamilton J in Broadsand were made when the Strata Titles Act 1973 (the ST Act) was in force, and fell to be considered according to the relevant provisions of that Act. Those provisions included, in s 78(1), authorisation for a body corporate in general meeting and by written instrument to appoint a managing agent and to delegate to "him" all or some of the powers, authorities, duties and functions of the body corporate. Sub section (1A) restricted, in a presently immaterial way, that power of delegation. Sub section (1AA) prohibited the appointment of a managing agent unless the appointee were the holder of a strata managing agent's licence issued pursuant to the relevant legislation.
30 Clause 2 of the statutory by-laws set out in schedule 1 to the ST Act authorised the council of a body corporate (the equivalent of what is now the executive committee of an owners corporation) to "employ for or on behalf of the body corporate such agents and servants as it thinks fit in connection with the exercise and performance of the powers, authorities, duties and functions of the body corporate."
31 Thus, in broad outline, the scheme comprised in those provisions of the ST Act resembled the scheme comprised in ss 13 and 28 of the SSM Act.
32 In Gillett, Priestley JA observed at BC 43 that the scheme set out in s 78(1) of the ST Act appeared to involve a two step procedure of, firstly, appointment and, secondly, delegation. However, his Honour doubted whether an appointment without any delegation would have any content; and said that for any appointment to have "definite content" it must include "the delegation to the appointee … of at least one of the body corporate's powers, authorities, duties and functions." It may be noted that ss 27 and 28 of the SSM Act contemplate appointment in writing and delegation, either by that instrument or by some other instrument, of functions.
33 Priestley JA contrasted s 78(1) of the ST Act and cl 2 of the statutory by-laws. His Honour said at BC 45 that the contrast between the concept of appointing a delegate (s 78(1)) and employing agents and servants (cl 2 of the statutory by-laws) "… points clearly to the intended different functions of the two powers; the former is directed to the appointment of an agent in the nature of an independent contractor, over whom the body corporate will not have the power of control that an employer has over an employee; the latter is directed to the creation of an employment relationship, in the course of which the council will have the power of an employer to control directly the way in which its employed agent or servant carries out the employment … . In a s 78(1) case, the managing agent will exercise one or more delegated powers etc of the body corporate, for the body corporate. In a by-law 2 case the body corporate will itself be exercising powers etc by the direct controlled employment of an agent or servant."
34 At BC 46, his Honour noted that "the distinction I have sought to describe is sometimes difficult to apply". He posed the alternative choices as being whether the contract in question involves "an attempted delegation" or whether it puts in place "a relationship subject to the greater control implied by by-law 2". His Honour said that the elucidation of this sometimes difficult distinction was to be achieved by looking at what the delegate or agent "is authorised and required to do under the [agreement of appointment] and the degree of authority it is given".
35 Thus, his Honour concluded, "there can be no managing agency without delegation." That conclusion must be considered in the context of the ST Act which (unlike the SSM Act) did not define a "managing agent"; although it should be noted that Handley JA said (at BC 4 of his Honour's reasons) that the term "managing agent" should have the definition accorded to it in the Auctioneers and Agents Act 1941 (as it then stood).
36 Handley JA agreed with Priestley JA, although his Honour gave additional reasons. His Honour's additional reasons did not, I think, add to what Priestley JA had said on this topic.
37 Powell JA agreed with Priestley JA and with the further observations of Handley JA (and I note that Priestley JA in turn agreed with the further observations of Handley JA).
38 In Broadsand, Hamilton J referred to the relevant passages of the judgment in Gillett. He concluded (see para [29]) that the agreement under consideration by him "constituted an appointment of the company … as managing agent and delegation to it of at least some of … the powers, authorities, duties and functions of the [body corporate]." His Honour said that "the agreement on its proper construction creates a relationship within which the agent is to perform the agreement on its part as a contractor acting independently, perhaps with some small and specific limitations, and not as an employee subject to the degree of supervision and direction inherent in the employment relationship."
39 In para [30], Hamilton J referred to "the mishmash of generality and particularity" in the schedule there under consideration (a description that could be applied to schedule 1 to the Agreement). However, his Honour noted that the first item of the schedule that he was considering imposed "a requirement to manage, supervise and arrange for the maintenance, cleaning and repair of the common property in terms which closely echo those specifying the duties of wide and general ambit imposed on the body corporate by s68(1)(a) and s68 (1)(b) of the [ST Act]". His Honour considered that the first duty was not to be read down or qualified by reference to subsequent and more particular duties, which of themselves might indicate that the relationship was that "of employee status".
40 The approach taken by Hamilton J was to consider all the terms of the agreement. That is the approach directed, as his Honour observed, by the well known statement of Gibbs J in Australian Broadcasting Commission v Australasian Performing Right Association Limited (1973) 129 CLR 99 at 109, to the effect that, in seeking to ascertain the intention of the parties from the words of their contract, the whole of the contract must be considered and an attempt must be made to render every part "all harmonious one with another."
41 Gibbs J referred to the observation of Lord Wright in Hillas & Co Ltd v Arcos Ltd (1932) 147 LT 503 at 514, that the courts should construe commercial contracts "fairly and broadly, without being too astute or subtle in finding defects". His Honour observed at 110 that this principle "should not … be understood as limited to documents drawn by businessmen for themselves and without legal assistance." Barwick CJ expressed a similar view in The Council of the Upper Hunter County District v Australian Chilling and Freezing Co Limited (1968) 118 CLR 429 at 437: in searching for the parties' intention, "no narrow or pedantic approach is warranted, particularly in the case of commercial arrangements."
42 The agreement considered by the Court of Appeal in Regis Towers was one made after the commencement of the SSM Act. Hodgson J said at 91 [29] that "what is prohibited by s13(3) of the Act is the engaging of another person or corporation to undertake significant decision-making and control in relation to the various areas of responsibility of an owners' corporation." At 91 [30] his Honour contrasted the performance of duties with the giving of general authority to make decisions or exercise control. At 92 [35], his Honour stated the "crucial question" as follows:
"It seems to me that this is the crucial question in this case: namely, has the owners corporation by these provisions given over sufficient decision-making and control in relation to its maintenance and repair functions to amount to delegation of some of those functions?".
The parties' submissions
43 For the Owners Corporation, Mr F C Corsaro SC pointed to the similarities between schedule 1 of the present Agreement and schedule 1 of the agreement considered by Hamilton J. He submitted that the change in the legislation had not changed the basic test; and that, just as Hamilton J had concluded overall that there was a delegation in Broadsand, so I should conclude overall that there was a delegation in this case.
44 For Management, Mr P R Gray SC pointed to the agreement considered by the Court of Appeal in Regis Towers. He submitted that even powers of the width there considered did not lead to the conclusion that there was a delegation; and that the same conclusion should follow in this case.
45 Mr Corsaro referred to s 62 of the SSM Act: in particular, the obligations of maintenance and repair of common property and personal property. He submitted that cl 1 of schedule 1 to the Agreement was a delegation of the Owners Corporation's duty under s 62(1). This, he submitted, followed in particular from the duty to "arrange for" the specified matters.
46 Mr Gray pointed to the following obligations relating (either exclusively or in part) to maintenance. He referred in particular to cls 2, 8 and 9, submitting that these qualified, or defined the limits of, the duty to supervise and arrange that was the subject of cl 1. He referred also to cl 19, whereby the Owners Corporation retained, so he submitted, the power to direct Management in the performance of all its duties under the Agreement.
47 Further, Mr Gray pointed to the apparently wide terms of the equivalent power considered by the Court of Appeal in Regis Towers, which included (as appears from the reasons of Hodgson JA at 85 [15]) a duty to "[m]aintain and care for the strata scheme and attend to the gardening, cleaning and building maintenance of the building and common property … and … [to] use its best endeavours to maintain the common property of the building in a good state of repair … ".
48 Hodgson JA referred at 92 [30] to the various ways in which the respondent in that case was subject to the control or direction of the appellant. A similar observation can be made in this case. Although Management is given the duty of supervising and arranging for maintenance etc, cls 2 and 9 indicate the continuing involvement of the Owners Corporation in the direction of that process; and cl 19, as I have said, confirms that the Owners Corporation has not given away control over the process.
49 Mr Gray relied further on cl 3.4(b). He accepted that it was for the Court, and not the parties, to characterise the transaction. This is correct; see for example the decision of the High Court of Australia in Radaich v Smith and Another (1959) 101 CLR 209. However, he submitted that cl 3.4(b) remained relevant in at least two ways: