Casuarina Rec Club Pty Limited v The Owners - Strata Plan 77971

The appeal concerned the validity of by-laws made by the Owners – Strata Plan 77971, which authorised a "Facilities Agreement" with Casuarina Rec Club Pty Limited. The dispute centred on whether these by-laws fell outside the powers of the Owners' Corporation under the *Strata Schemes Management Act 1996* (NSW). The matter was heard in the Court of Appeal of New South Wales.

The primary legal issue before the Court of Appeal was whether the by-laws, which purported to authorise an agreement for facilities located some distance from the strata property, were validly made under the enabling legislation. This required the court to consider the scope of the Owners' Corporation's power to make by-laws and the test for determining when a by-law might be considered outside those powers.

The Court of Appeal adopted a liberal construction of the power to make by-laws, stating that limitations on this power should be found within the *Strata Schemes Management Act 1996* itself. The court held that for a by-law to be valid, there must be a clear nexus between its subject matter and the use or occupation of the strata property. While acknowledging that no precise rule exists to determine this nexus, the court emphasised that a very strong case must be made out to declare an original by-law invalid. Applying these principles, the court found that the by-laws authorising the "Facilities Agreement" were valid.

Consequently, the Court of Appeal allowed the appeal, declared the by-laws and the "Facilities Agreement" valid, and varied the previous orders made by McDougall J. The respondent was ordered to pay the costs of the appeal and was granted a certificate under the *Suitors Fund Act 1951* in respect of those costs, if eligible.