Lindeman v Stonehaven Proprietary Limited

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S ECI 2022 02412

BETWEEN:

GLENDA WILHELMINA LINDEMAN	Plaintiff
and
STONEHAVEN PROPRIETARY LIMITED (ACN 004 369 591)	Defendant

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JUDGE:	Matthews J
WHERE HELD:	Melbourne
DATE OF HEARING:	13 July 2023
DATE OF RULING:	19 September 2023
CASE MAY BE CITED AS:	Lindeman v Stonehaven Proprietary Limited
MEDIUM NEUTRAL CITATION:	[2023] VSC 556

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PRACTICE AND PROCEDURE – Application for permanent stay of proceeding – Whether dispute concerns a neighbourhood matter – Whether Company Titles (Home Units) Act 2013 (Vic) applies – Whether dispute is more appropriately dealt with by the Victorian Civil and Administrative Tribunal – Application for permanent stay granted.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr A Lindeman
For the Defendant	Mr G Jegatheesan	Terrill & Holmes Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Background......................................................................................................................................... 2

Factual background...................................................................................................................... 2
Procedural background................................................................................................................ 6

Relevant law........................................................................................................................................ 7

Submissions...................................................................................................................................... 10

The so-called ‘trigger’ issue....................................................................................................... 12
Status of the Deed as a service agreement under the CTHUA............................................ 13
Constitutional issue.................................................................................................................... 15
Application of the PLA............................................................................................................... 17
Collateral issues........................................................................................................................... 21

Consideration.................................................................................................................................... 25

Does the dispute come within the CTHUA?........................................................................... 25
Is the Defendant a service company?............................................................................. 25
Is the Deed a service agreement?.................................................................................... 26
Is the dispute a neighbourhood dispute, ie is it about neighbourhood matters?.... 27

Are there issues to be determined that are not neighbourhood matters?.......................... 29
Collateral review................................................................................................................ 29
The ‘trigger’ issue.............................................................................................................. 30
Management or executive decisions............................................................................... 31
Section 84 of the PLA........................................................................................................ 31
The constitutional issue.................................................................................................... 34
The other collateral issues................................................................................................ 34

Applying section 12 of the CTHUA to this case..................................................................... 36

Conclusion......................................................................................................................................... 37

HER HONOUR:

Introduction

This decision concerns an application for a stay of the proceeding by the Defendant, which is the registered proprietor of 692 Orrong Road, Toorak (the Premises), an apartment complex also known as ‘Stonehaven’.

The Plaintiff, who is the registered owner of Unit 7 at the Premises, seeks by way of originating motion dated 24 June 2022 various forms of relief for alleged non-compliance with a deed of agreement between the Defendant and the owners of Unit 1-8 at the Premises. The original dispute relates to the suppression of noise, nuisance and the keeping of animals at the Premises.

The Defendant, by way of affidavit dated 21 September 2022, seeks a stay of the proceeding (Stay Application) on the basis that the matter relates wholly to a neighbourhood dispute pursuant to the Company Titles (Home Units) Act 2013 (CTHUA) and would, therefore, be more appropriately dealt with by the Victorian Civil and Administrative Tribunal (the Tribunal). The Plaintiff resists the Stay Application.

By order made on the Court’s own motion on 19 December 2022 by McDonald J, this proceeding was referred to me for hearing and determination pursuant to r 77.05 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic), as I was an associate justice at the time this hearing first commenced on 19 December 2022. On 14 June 2023, after the first two occasions the Stay Application was heard but prior to the adjourned dated for the continuation of it, I was appointed as a judge of this Court.

The Plaintiff relies on:

(a) her affidavits sworn 29 June 2022 (1st Lindeman Affidavit), 10 October 2022 (2nd Lindeman Affidavit) and 24 January 2023 (3rd Lindeman Affidavit);

(b) an Outline of Argument dated 14 October 2022;

(c) a Reply to Submissions dated 11 November 2022;

(d) Supplementary Submissions dated 9 February 2023; and

(e) Consolidated Submissions dated 24 June 2023.

The Defendant relies on:

(a) the Affidavit of Michael John Holmes sworn 21 September 2022 (Holmes Affidavit);

(b) an Outline of Submissions dated 28 October 2022;

(c) Supplementary Submission dated 20 February 2023;

(d) Submissions in Reply dated 14 June 2023; and

(e) Consolidated Submissions dated 14 June 2023.

In addition, the parties relied on the oral submissions of counsel at the hearings on 19 December 2022, 24 February and 13 July 2023.

For the reasons that follow, the Defendant’s Stay Application will be granted.

Background
Factual background

The following summary of the factual background in this matter is taken from the affidavits filed by the parties. However, the making of this decision did not involve a fact-finding exercise, as this decision concerns the Stay Application and not the substantive proceeding. In any event, the facts were mostly not in dispute between the parties. As such, I have not laid out the facts in any great detail.

The Plaintiff is the registered proprietor of Unit 7 of the Premises, where she has lived for more than 24 years.[1]
[1] 1st Lindeman Affidavit, [1].

Stonehaven is a shared ownership arrangement in which eight owners hold a strata title to the interior living spaces of their respective units as well as equal shares in the corporate entity, Stonehaven Proprietary Limited, which is the Defendant. The corporate entity is, in turn, the registered proprietor of the Premises.[2]
[2] 1st Lindeman Affidavit, [2].

The contractual terms and conditions between the Defendant and each unit owner are contained within a Deed of Agreement (the Deed), with each unit owner signing a separate Deed between themselves and the Defendant. A copy of the most recent Deed between the Plaintiff and the Defendant was exhibited to the 1st Lindeman Affidavit.[3]   Importantly, the Second Schedule to the Deed contains a prohibition on ‘any animal or bird’ being kept on the land,[4] as well as a requirement that certain floor coverings be used to prevent nuisance or annoyance by noise to neighbouring units.[5]
[3]           1st Lindeman Affidavit, [3]; Exhibit GWL-1.
[4]           1st Lindeman Affidavit, [3]; Exhibit GWL-1, clause 4.
[5]           1st Lindeman Affidavit, [3]; Exhibit GWL-1, clause 8.

The Plaintiff’s unit shares a common wall with Unit 6, as well as a common set of rear steps and a common covered veranda.

The Plaintiff outlines in the 1st Lindeman Affidavit a number of grievances she has had with the occupants of Unit 6 arising from:

(a) historic renovations to Unit 6 that:

(i) removed carpeting throughout the Unit;

(ii) converted the third bedroom into a laundry-bathroom with a shower installed on the common wall; and

(iii) installed external air conditioning and water heating units;[6]
[6] 1st Lindeman Affidavit, [11]–[12].

(b) the presence of a dog at Unit 6 in early January 2022;[7] and

(c) a ‘piercing noise’ coming through the common wall on 18 February 2022;[8]

all of which the Plaintiff believes are in breach of the Deed between the owner of Unit 6 and the Defendant.

[7] 1st Lindeman Affidavit, [20]–[22].

[8] 1st Lindeman Affidavit, [23].

The Plaintiff deposes that when she brought the issue of pets at the Premises to the attention of the directors of the Defendant in early 2022, she was told that provisions of the Residential Tenancies Act 1997 (RTA) operated to annul the ‘no pet rule’ contained in the Deed. The Plaintiff subsequently elevated her claim and asked that the Defendant provide independent legal advice supporting its position regarding pets. On or about 25 February 2022, the Plaintiff was provided with a copy of a solicitor’s letter by the Defendant to this effect.

After being unable to resolve these matters to her satisfaction with the Defendant’s directors, the Plaintiff commenced proceedings in this Court on 24 June 2022, seeking orders that:[9]
[9] Plaintiff’s Originating Motion.

1.The Deed of Agreement and related Undertakings concerning suppression of noise and prohibition on keeping or permitting to be kept of animals are valid and neither the provisions in the Company Titles (Home Units) Act 2013 or Residential Tenancies Act 1997 render the relevant parts of the Deed or Undertakings void or inoperable.
2.In relation to complaints by the plaintiff to the defendant of alleged breaches of the Deed of Agreement and related Undertaking(s), concerning suppression of noise and nuisance and keeping or permitting to be kept of any animal(s), the defendant must take immediate steps to remedy or mitigate the said alleged noncompliance.
3.The defendant must further compile and introduce a system or systems to ensure any new potential purchaser, occupier or tenant, of one of its Home Units, is fully informed of all rights and obligations under its Deed of Agreement and where applicable any related Undertakings before such new purchaser, occupier or tenant legally commits to any such proposed purchase, lease or tenancy;
4.The defendant must further introduce a system or systems which record all steps taken to inform any new potential purchaser, occupier or tenant, of one of its Home Units, of all rights and obligations arising under its Deed of Agreement before such purchaser, lessee or tenant commits to such Home Unit.
5.The defendant must also introduce and publish to existing and new owner(s), tenant(s) or occupier(s) the steps necessary for compliance with the covenants in the Deed of Agreement as well as the steps which will be taken to enforce any non-compliance with the terms of its Deed of Agreement.
6.For such order(s) as may be necessary under Part 2F.1 of the Corporations Act 2001 (Cth, ss 232 to 235 inclusive).
7.The defendant be ordered to pay the reasonable legal costs of the plaintiff to be agreed or in default of agreement to be fixed by the Court.

In response, the Defendant seeks a stay of the proceedings on the basis that the matter relates wholly to a neighbourhood dispute under the CTHUA and would, therefore, be more appropriately dealt with by the Tribunal.[10]
[10] Holmes Affidavit, [10].

In the 2nd Lindeman Affidavit, the Plaintiff says that although the occupant of Unit 6 vacated the Premises on 14 August 2022, the Plaintiff still intends to pursue the matter in court.[11] The Plaintiff says that she remains concerned about further breaches because:

(a) nearly all of the previous tenants of Unit 6 have ‘tortured if not broken’ the rules contained within the Deed,[12] and

(b) other owner-tenants at the Premises appear to either own pets or allow visitors to bring pets to the Premises.[13]

[11] 2nd Lindeman Affidavit, [2].

[12] 2nd Lindeman Affidavit, [5].

[13] 2nd Lindeman Affidavit, [3]–[4].

In the 3rd Lindeman Affidavit, the Plaintiff says that title searches over the units at the Premises revealed the existence of mutual registered restrictive covenants for Units 3, 5, 6 and 8 that contain prohibitions on, inter alia:

(a) doing or allowing to be done anything which might be a nuisance or annoyance to neighbouring units;

(b) use of machine equipment which might interfere with wireless reception;

(c) storage of dangerous materials or commercial materials or goods, and

(d) use of the unit as a shop or place of business.[14]

[14] 3rd Lindeman Affidavit, [2]–[16].

The Plaintiff says that she continues to be adversely prejudiced in relation to the quiet enjoyment of her unit by nuisance and/or annoyance caused by:

(a) the absence of adequate floor coverings in Unit 6;

(b) the conversion of the third bedroom in Unit 6 into a laundry-bathroom with a shower installed on the common wall; and

(c) the failure or refusal of the Defendant to support her in relation to the alleged breaches of the Deed, Undertakings or restrictive covenants.

Procedural background

As noted above, the Plaintiff commenced the proceeding by way of originating motion on 24 June 2022. She filed a summons for directions on 16 September 2022, following which Keith JR made directions on 27 September 2022 for the filing of affidavit material and submissions, listing the proceeding for hearing on 25 November 2022 before an associate justice on an estimate of two hours. That hearing was adjourned administratively to 19 December 2022 before me.

The Defendant having made its Stay Application, the hearing on 19 December 2022 commenced with that application. After hearing submissions from the parties’ counsel, the Plaintiff through her counsel sought an adjournment of the hearing in order to consider her position regarding registered covenants and to adduce evidence in that regard. I made orders adjourning the Stay Application part heard to 24 February 2023, for the Plaintiff to file and serve any affidavit upon which she wishes to rely in respect of registered covenants affecting her property, reply affidavits from the Defendant, and short supplementary submissions from the parties.

On 24 February 2023, the hearing of the Stay Application resumed. During the course of that hearing and following the lunch adjournment, the parties informed the Court that they had agreed to pursue a possible compromise of the matters in dispute. The Plaintiff sought an adjournment of the Stay Application for a period of three months, and the Defendant neither consented to nor opposed this. I adjourned the hearing of the Stay Application part heard for a period of three months. If the parties were not able to resolve the matters between them, then by 24 April 2023 the Plaintiff was to file and serve any consolidated submissions on the Stay Application and within two weeks of their receipt the Defendant was to file and serve any consolidated submission in response, with the resumed hearing date to be fixed thereafter. These dates were subsequently extended at the request of the parties, and the hearing of the Stay Application resumed on 13 July 2023.

Relevant law

The CTHUA confers jurisdiction on the Tribunal to hear and determine neighbourhood disputes affecting company title corporations and service companies for building subdivisions.[15]
[15] Company Titles (Home Units) Act 2013 s 1.

Section 5 of the CTHUA provides as follows:

(1) Subject to subsection (3), for the purposes of this Act a neighbourhood dispute is a dispute that—
(a) relates only to a neighbourhood matter or matters; and
(b) affects a company title corporation or a service company.
(2) For the purposes of subsection (1), a dispute affecting a company title corporation or a service company includes, but is not limited to, a dispute as to whether an obligation imposed by a rule of a company title corporation or service company or by a term of a service agreement has been met.

(3) A neighbourhood dispute does not include a dispute—
(a) relating to the sale, transfer or forfeiture of a share or shares in a company title corporation or service company; or
(b) relating to the lease of a unit that is part of land owned by a company title corporation; or
(c) relating to a licence to use a unit that is part of land owned by a company title corporation; or
(d) relating to the winding up of a company title corporation or service company; or
(e) in relation to which a party to the dispute claims relief under Part 2F.1 of the Corporations Act.

Section 4 of the CTHUA provides that for the purposes of the Act, a neighbourhood matter is any matter that is set out in the Schedule to the CTHUA. Relevantly, the Schedule includes the following as ‘neighbourhood matters’:

(a) keeping animals or birds in units or on residual land;[16]
[16] Company Titles (Home Units) Act 2013 sch 1 cl 3.5.

(b) behaviour of shareholders, occupiers of units and their invitees;[17] and

(c) noise and other nuisances caused by shareholders, occupiers of units and their invitees;[18] and

(d) compliance with nuisance control provisions contained in the rules of company title corporations and service companies and in service agreements.[19]

[17] Company Titles (Home Units) Act 2013 sch 1 cl 6.1.

[18] Company Titles (Home Units) Act 2013 sch 1 cl 6.2.

[19] Company Titles (Home Units) Act 2013 sch 1 cl 6.3.

Section 6 of the CTHUA provides that, subject to the CTHUA, the Tribunal may hear and determine a neighbourhood dispute.

Section 12 of the CTHUA is entitled ‘More appropriate forum’ and provides as follows:

(1) This section applies if a person—
(a) commences proceedings in a court; and
(b) the proceedings arise wholly from a neighbourhood dispute in respect of which VCAT has jurisdiction under this Act.

(2) The court must stay the proceedings if—
(a) the proceedings could be heard by VCAT under this Act; and
(b) the court is satisfied that the proceedings would be more appropriately dealt with by VCAT.

(3) In determining whether proceedings would be more appropriately dealt with by VCAT, the court must consider—
(a) whether, having regard to the likely costs and duration of the proceedings and any other matters the court considers relevant, a party is reasonably likely to gain a material advantage if the proceedings are determined by VCAT; and
(b) whether that advantage is outweighed by a material disadvantage that would be reasonably likely to be suffered by another party if the proceedings were determined by VCAT.

(4) If proceedings are stayed under this section, any party to the proceedings may apply to VCAT for an order with respect to the dispute or matter on which the proceedings were based.

Section 15 of the CTHUA, entitled ‘Court jurisdiction’, provides as follows:

Nothing in this Act is intended to prevent a court exercising jurisdiction conferred under the Corporations Act in relation to a dispute that relates to a neighbourhood matter.

Certain provisions found in Division 2 of the Property Law Act 1958 (Vic) (PLA) were also raised by the Plaintiff as being relevant to this case.

Section 84(1) provides that the Court shall have power, on the application of any person interested in any land affected by any restriction arising under covenant or otherwise as to the user thereof or the building thereon, by order wholly or partially to discharge or modify any such restriction upon being satisfied of certain factors and provided that no compensation shall be payable in respect of the discharge or modification.

Under s 84(2), the Court has the power, on the application of any interested person, to declare:

(a) whether or not in any particular case any land is affected by a restriction imposed by any instrument; or

(b) what upon the true construction of any instrument purporting to impose a restriction is the nature and extent of the restriction thereby imposed and whether the same is enforceable and if so by whom.

Where any proceedings, by action or otherwise, are taken to enforce a restrictive covenant, any person against whom the proceedings are taken may in such proceedings apply to the Court under s 85 for an order to be made under s 84.

Submissions

Both parties made submissions in relation to the Plaintiff’s substantive application as well as the Defendant’s Stay Application. Pursuant to orders made by me on 24 February 2023, and later extended on 6 June 2023, the parties filed consolidated submissions on the Stay Application. As the Defendant is the party seeking a stay of the proceeding, its submissions would ordinarily be done first. However, it was agreed between the parties that the Plaintiff would file her consolidated submissions first and that the Defendant would file its consolidated submissions in reply. As such, I will summarise the submissions in this order where appropriate. Despite the orders for consolidated submissions, both parties still referred to their earlier submissions, hence the need for me to consider all of them.

The Defendant submits that the proceeding should be stayed pursuant to s 12 of the CTHUA on the basis that:

(a) the proceeding can be heard by the Tribunal under the CTHUA; and

(b) the proceeding would be more appropriately dealt with by the Tribunal.[20]

[20] Defendant’s Outline of Submissions, [2].

The Defendant submits that the proceeding is a neighbourhood dispute as understood under the CTHUA because:[21]
[21] Defendant’s Outline of Submissions, [8]–[13].

(a) the Defendant is a service company pursuant to the CTHUA;

(b) the Plaintiff is a registered owner who holds a stratum title to the interior living space of a unit at the Premises and owns an equal share in the Defendant;

(c) the principal aspect of the Plaintiff’s complaint concerns the implementation of a Deed entered into by the Defendant and each of the registered unit owners at the Premises. In particular, the Plaintiff complains about the alleged lack of enforcement by the Defendant of the terms of the Deed that prohibit the keeping of animals or birds on the land and/or require floor coverings and the regulation of noise;

(d) the Deed is a service agreement under the CTHUA, being an agreement entered into by the proprietor of a stratum estate and the service company as to their respective rights and obligations;

(e) the proceeding arises from a dispute as to whether an obligation imposed by the Deed has been met; and

(f) The matters complained of are neighbourhood matters pursuant to the schedule of the CTHUA.

The Defendant submits that the proceeding can be heard and determined by the Tribunal for the reasons outlined above as well as because the Tribunal has the power to grant the Plaintiff the declaratory and injunctive relief she seeks.[22]
[22] Defendant’s Outline of Submissions, [20].

Lastly, the Defendant submits that the proceeding would be more appropriately dealt with by the Tribunal because:

(a) per Tilley v No 352 Toorak Road Pty Ltd [2016] VSC 608 (unreported) (Tilley) at [37], it is the preferred jurisdiction for the determination of such disputes;

(b) jurisdiction was confered upon the Tribunal for disputes of this kind in order to provide a cheaper and more informal option than would otherwise be available; and

(c) the Plaintiff raises no relevant prejudice that she would suffer if the proceeding was stayed and her dispute brought in the Tribunal.

In her submissions, the Plaintiff identifies a number of issues to which the Defendant responds in its own submissions. I will address each of these in turn.

The so-called ‘trigger’ issue

The Plaintiff submits that the ‘trigger’ event for her action against the Defendant is the Defendant’s claim that the operation of the RTA, and in particular the ‘statutory deemed consent under tenancy laws’ to the keeping of pets, overrides the rules contained within the Deed.[23]
[23] Plaintiff’s Consolidated Submissions, [1].

The Plaintiff submits that, as a matter of statutory construction, specific legislation overrules general legislation dealing with the same subject matter and that, therefore, the CTHUA, as a piece of specific legislation, overrules the RTA as a piece of general legislation. The Plaintiff submits that, in light of this proposition, there is no basis in law for the suggestion that the RTA either ousts or invalidates the ‘no animal or bird’ provision contained in the Deed.[24]
[24] Plaintiff’s Outline of Argument, [7]–[8].

According to the Plaintiff, whether or not the RTA operates to negate anything in the Deed has no direct relevance to the provisions of the CTHUA. Instead, the Plaintiff submits, the ‘deemed consent’ relating to pets contained within the RTA raises issues of statutory interpretation and constitutional authority as to whether the Victorian Parliament can control how corporations, such as the Defendant, conduct their internal affairs.[25]
[25] Plaintiff’s Consolidated Submissions, [4].

The Plaintiff submits that the Tribunal has no authority to alter the rules of a corporation such as the Defendant and would therefore be powerless to grant the relief sought by the Plaintiff.[26]
[26] Plaintiff’s Outline of Argument, [10].

The Plaintiff submits that the Defendant’s ‘tactic’ of characterising the Plaintiff’s case as a neighbourhood dispute as defined by the CTHUA is ‘misconceived and misleading’ in the context of a stay application.[27] The Plaintiff further submits that the ‘tactic’ of ignoring the ‘trigger’ as being a live issue cannot and should not be accepted by the Court.[28] The Plaintiff’s submissions in this regard are somewhat hard to decipher.
[27] Plaintiff’s Consolidated Submissions, [2].
[28] Plaintiff’s Consolidated Submissions, [3].

The Plaintiff submits that, in the absence of any factual contest for the existence of the ‘trigger’ issue by the Defendant, the Plaintiff should be held to have validly invoked the Court’s jurisdiction as well as demonstrated an entitlement to declaratory relief.

The Defendant makes no submissions in relation to the so-called ‘trigger’ issue.

The Plaintiff submits, both in her written submissions as well as orally via counsel at the hearing on 13 July 2023, that the Defendant’s failure to respond to this issue constitutes an ‘abandonment’ of the issue and, therefore, an implied acceptance of its validity.[29] The Defendant rejects this submission.
[29] Plaintiff’s Reply to Defendants’ Submissions, [1].

Status of the Deed as a service agreement under the CTHUA

The Defendant submits that the Deed is a ‘service agreement’ as defined in s 3 of the CTHUA and s 4 of the TLA and therefore falls within the ambit of ss 5(1)(b) and 5(2) of the CTHUA.[30]
[30] Defendant’s Outline of Submissions, [11].

The Plaintiff submits that, even if the Defendant is correct that the Deed is a ‘service agreement’ under the CTHUA, the Deed is also either a ‘stratum title arrangement’ or the ‘rules of a service company’ pursuant to s 98B of the TLA, the consequence of this being that the covenants contained within the Deed can only be altered with either the written consent of each registered proprietor or by an order of a court.[31]
[31] Plaintiff’s Consolidated Submissions, [18]–[19].

The Plaintiff submits that the TLA should take priority over the CTHUA in this case because:

(a) the operation of s 3(1) of the TLA[32] states that:
[32] Plaintiff’s Consolidated Submissions, footnote 12.

Except so far as is expressly enacted to the contrary no Act or rule of law, so far as inconsistent with this Act, shall apply or be deemed to apply to land under the operation of this Act; but save as aforesaid any Act or rule of law relating to land, unless otherwise expressly or by necessary implication provided by this or any other Act, shall apply to land under the operation of this Act whether expressed so to apply or not;

(b) the rule against retrospectivity applies, given that the Deed’s operations predate the enactment of the CTHUA;[33]
[33] Plaintiff’s Outline of Argument, [12]; Plaintiff’s Consolidated Submissions, [18].

(c) a court order under s 98B of the TLA would ‘fit comfortably’ within the exclusions to the powers of the Tribunal contained in ss 8(1)(d) and (e) of the CTHUA, namely that the Tribunal does not have the power to make an order:[34]
[34] Plaintiff’s Consolidated Submissions, [19].

(iv) varying the rules of a company title corporation or service company; or

(v) declaring that any rule of a company title corporation or service company is, or is not, void;

(d) there are Constitutional constraints that prevent the Victorian Parliament from regulating the internal activities of corporations.

The Defendant denies that s 98B of the TLA applies to the rights and obligations contained within the Deed, highlighting that the chapeau to s 98B provides (emphasis added by the Defendant):[35]

Notwithstanding anything to the contrary in any Act or law, no amendment or alteration of the memorandum or articles or rules of a service company operating in relation to a building subdivision, which amendment or alteration affects the allotment or issue of shares or other like interests in the service company or the rights privileges (including rights of voting) attached to any such shares or other interests, shall be made except …

[35] Defendant’s Consolidated Submissions, [14].

The Defendant submits that the provisions within the Deed are not the rules of the service company, as they do not govern the operation of the service company as a body corporate. Instead, it is submitted, the provisions of the Deed prescribe the respective rights and obligations of the registered owners, on the one hand, and the Defendant (as the service company) on the other.[36]
[36] Defendant’s Consolidated Submissions, [15].

The Defendant further submits that if s 98B of the TLA prohibited the amendment or alteration of terms of a service agreement other than in accordance with that section, there would be no work for ss 8(1)(d) and (e) of the CTHUA (empowering the Tribunal to make an order varying the term of a contract or agreement, or declaration that a term of a contract or agreement is void or not void) to do.[37]
[37] Defendant’s Consolidated Submissions, [17].

Constitutional issue

The Plaintiff refers to the Second Reading Speech for the CTHUA on 20 February 2013:[38]

under the Corporations Act, the Supreme Court and other courts are the only fora to deal with disputes that may arise between members of a company and the company itself
…
The Bill proposes that VCAT will have jurisdiction to hear and determine neighbourhood disputes that relate only to a neighbourhood matter or matters.

[38]Company Titles (Home Units) Bill 2013, Second Reading Speech, the Hon PR Hall Minister for Higher Education, 20 February 2013 (Hansard p 418), emphasis added by the Plaintiff.

The Plaintiff submits that the Defendant’s failure to enforce the terms of the Deed, or to confirm the Deed’s legal status, after repeated requests by the Plaintiff to do so qualifies the matter as a dispute between the Plaintiff as a member of the Defendant company and the Defendant as a company.[39] I assume, although she does not state, that the Plaintiff submits that the matter therefore cannot be heard by the Tribunal.
[39] Plaintiff’s Consolidated Submissions, [22].

The Plaintiff submits that while the meaning of ‘rule’ within the TLA is at large, it is defined in s 3 of the CTHUA as (abbreviation added by the Plaintiff):

A by-law, rule or regulation made by the company title corporation … in accordance with its constitution … but does not include a term of a service agreement.

The Plaintiff notes that the word ‘term’ is not defined and submits that the definitions of the words ‘service agreement’ and ‘service company’ are ‘problematic’. The import and implication of these submissions are unclear.

The Plaintiff submits that an examination of the execution clause contained within the Deed shows that it was signed by a director and secretary of the Defendant and ‘sealed’ in accordance with the Defendant’s Constitution. According to the Plaintiff, this form of execution, as well as ‘presumption of regulatory’, support the conclusion that the obligations contained within the Deed were created in accordance with the Defendant’s constitution.[40]
[40] Plaintiff’s Consolidated Submissions, [27].

The Plaintiff goes on to submit that the subject matter of the obligations contained in the Second Schedule of the Deed also qualifies as a by-law, rule or regulation made by the Defendant in accordance with its constitution.[41]
[41] Plaintiff’s Consolidated Submissions, [27].

In its Consolidated Submissions, the Defendant summarises its submissions on the issue of constitutionality in this way:[42]

(a) the Defendant is a service company and the Deed is a service agreement under the terms of the CTHUA and the TLA; and

(b) in those circumstances, the provisions of the Deed are not carved out from the Tribunal’s jurisdiction pursuant to ss 8(1)(d) and (e) of the CTHUA by reason of the Deed being ‘a rule of a company title corporation or service company’.

[42] Defendant’s Consolidated Submissions, [18].

The Plaintiff submits that the Defendant’s position that the obligations contained within the Deed are the terms of a service agreement, rather than the rules of a service company, is undermined by the fact that:[43]
[43] Plaintiff’s Consolidated Submissions, [28].

(a) the Deed is unlikely to qualify as a ‘service agreement’ under the CTHUA;

(b) certain obligations contained within the Deed — in particular the restrictions on ‘pets’, ‘nuisance’ or ‘annoyance’ — are of general application and therefore operate beyond the immediate parties to the Deed; and

(c) certain obligations contained within the Deed, when read in context, extend to all members of the family of the Owner(s) as well as to his/her assigns, successors in title, tenants and/or any other person(s) entering an owner’s unit with his/her consent.

Application of the PLA

A large portion of the Plaintiff’s submissions address whether provisions of the PLA relating to the construction of covenants and the power for the Court to modify or otherwise deal with restrictive covenants affecting land apply in the present case. The Plaintiff’s submissions are somewhat muddled in this regard but I will attempt to summarise them as best I can.

The Plaintiff first submits that the obligations contained within the Deed represent ‘covenants’ which are justiciable under ss 84 and 85 of the PLA.[44]
[44] Plaintiff’s Consolidated Submissions, [30].

The Plaintiff relies on DP Gibson’s observations in Hill v Campaspe SC (includes Summary) (Red Dot)[45] that the enforcement of covenants is not a matter for the Tribunal and must instead be achieved by applying to the Supreme Court for an injunction.[46] The Plaintiff contends that, therefore, her proceeding belongs in this Court.
[45] [2011] VCAT 949 (Hill v Campaspe).
[46] Plaintiff’s Consolidated Submissions, [32].

The Plaintiff further submits that, having regard to the obligations of the Defendant’s directors both under the Deed and under the legal duties of directors contained within the Corporations Act, the conduct of the directors in failing to enforce the terms of the Deed or confirm their legal status was ‘disingenuous’, particularly when s 85 of the PLA allowed the Defendant’s directors to apply for a Court ruling in relation to the construction or modification of the covenants.[47]
[47] Plaintiff’s Consolidated Submissions, [34].

The Plaintiff also relies on the observations of Senior Member A Vassie in Huang v Mellington Management Pty Ltd trading as Select Owners Corp Management (Owners Corporations)[48] that ‘management or executive decisions’ are not listed as neighbourhood matters in the Schedule to the CTHUA and that a dispute about them is not a ‘neighbourhood dispute’.[49]
[48] [2014] VCAT 1436 (17 November 2014) (Huang) at [10].
[49] Plaintiff’s Consolidated Submissions, [35].

On the subject of whether or not the covenants contained within the Deed run with the land, the Plaintiff points to s 80(4) of the PLA, which provides that:[50]

For the purposes of this section, a covenant runs with the land when the benefit or burden of it, whether at law or in equity, passes to the successors in title of the covenantee or the covenantor, as the case may be.

[50] Plaintiff’s Consolidated Submissions, [36].

The Plaintiff also relies on the ratio of Gillard J in Fitt & Anor v Luxury Developments Pty Ltd where His Honour said:[51]

A restrictive covenant is an agreement creating an obligation which is negative or restrictive forbidding the commission of some act. In its most common form it is a contract between neighbouring land owners by which the covenantee determined to maintain the values of his property or to preserve the enjoyment acquires a right to restrain the other party, namely, the covenantor, from using his land in a certain way.

[51] [2000] VSC 258 (Fitt & Anor) at [54]. Plaintiff’s Consolidated Submissions, [37].

The Plaintiff submits that the ‘very wide nature and scope’ of the Court’s jurisdiction under Division 2 of the PLA is expressed in s 84(2) which states that the Court shall have power on the application of any interested person (emphasis added by the Plaintiff):[52]

(a) to declare whether or not in any particular case any land is affected by a restriction imposed by any instrument; and

(b) to declare what upon the true construction of any instrument purporting to impose a restriction is the nature and extent of the restriction thereby imposed and whether the same is enforceable and if so by whom.

[52] Plaintiff’s Consolidated Submissions, [38].

The Plaintiff submits that, on the basis of what was said in Fitt & Anor together with the wording of s 84, there can be no doubt that the obligations contained within the Deed are covenants.[53]
[53] Plaintiff’s Consolidated Submissions, [39].

The Plaintiff submits that these covenants ‘run with the land’ because, pursuant to paragraph 5 of the Deed, if an Owner wishes to transfer their interest in the land, the Defendant shall only release them from liability in respect of the observance or performance of the covenants contained within the Deed upon the successor in title executing a deed with the Defendant to observe and perform the conditions covenants and agreement on the Owner’s part therein.[54]
[54] Plaintiff’s Consolidated Submissions, [40].

In her Supplementary Submissions, the Plaintiff also submits that the registered restrictive covenants for Units 3, 5, 6 and 8 mirror, in part, the obligations contained within the Deed, in particular the ‘nuisance’ covenant. The Plaintiff submits that, to the extent that the restrictions contained within the Deed expand on those contained in the registered restrictive covenants, the specificity of the former should be held to complement the generality of the latter.[55]
[55] Plaintiff’s Supplementary Submissions, [2]–[3].

Finally, the Plaintiff submits that, even if the terms of the Deed do not classify as ‘covenants’ for the purpose of the PLA, the words ‘or otherwise’ in s 84(1) extend the Court’s jurisdiction to cover the terms of the Deed, given that they represent restrictions contained in an instrument, and that this interpretation is supported by the wording of s 84(2)(a) which empowers the Court to declare whether or not in any particular case any land is affected by a restriction imposed by an instrument (emphasis added by the Plaintiff).[56]
[56] Plaintiff’s Consolidated Submissions, [45].

The Defendant accepts that the powers under s 84 of the PLA are only able to be exercised by a Court, and not by the Tribunal.[57] However, the Defendant submits that it does not follow that the provisions of the Deed cannot be determined by the Tribunal under the CTHUA in circumstances where those provisions constitute ‘neighbourhood matters’.[58]
[57] Defendant’s Consolidated Submission, [19].
[58] Defendant’s Consolidated Submission, [20].

The Defendant submits that, in contrast to the facts in Hill v Campaspe, the provisions of the Deed are not registered on title to the land. The Defendant further submits that the Deed does not represent a contract between neighbouring landowners, as the Plaintiff submits, but is instead a contract between each of the registered proprietors of the land and the Defendant as a service company.[59]
[59] Defendant’s Consolidated Submission, [21].

The Defendant submits that the covenants contained within the Deed do not ‘run with the land’ as they do not ‘concern or touch the land’.[60] Instead, it is submitted, the covenants relating to keeping animals on the land and not causing nuisance or annoyance to other owners are personal in nature and do not affect the intrinsic value of the land.[61]
[60] Rogers v Hosegood [1900] 2 Ch 388, 395 (Farwell J).
[61] Defendant’s Consolidated Submission, [22]–[23].

The Defendant submits that the covenants do not bind the successors in title to the benefited land as evidenced by clause 5 of the Deed which, the Defendant submits, provides a chain of indemnity where the covenantor will only be released from its obligations under the Deed upon a successor in title executing a deed on the same terms. The obligation is personal to the covenantor.[62]
[62] Defendant’s Consolidated Submission, [24].

On the subject of whether the existence of a nuisance covenant registered on title to Units 3, 5, 6 and 8 works to ‘elevate’ the obligations contained within the Deed, the Defendant submits that it does not for several reasons, namely that:

(a) the title searches produced by the Plaintiff identified no restrictive covenant that could be reasonably understood as prohibiting an owner from keeping or permitting to be kept on their land any animal or bird as provided for in the Deed;[63]

(b) there is nothing in the registered covenant concerning nuisance requiring unit holders to maintain a certain level or type of floor coverings as compared to the undertaking contained in the Deed;[64] and

(c) the Plaintiff’s failure to exhibit title searches for Units 1 and 2 means that the Court cannot be satisfied that the nuisance covenant is common to all of the units at the Premises.[65]

[63] Defendant’s Supplementary Submission, [8].

[64] Defendant’s Supplementary Submission, [9].

[65] Defendant’s Supplementary Submission, [10].

Collateral issues

The Plaintiff submits that for the Tribunal to have jurisdiction in this case the dispute must relate only to a neighbourhood matter per s 5 of the CTHUA (emphasis added by the Plaintiff).[66] The Plaintiff further submits that, per the ruling in Director of Housing v Sudi,[67] the Tribunal’s power to deal with ‘single’ issue disputes is overridden where there are collateral issues to be litigated.[68]
[66] Plaintiff’s Outline of Argument, [3].
[67] [2011] VSCA 266 (Sudi).
[68] Plaintiff’s Outline of Argument, [3].

The Plaintiff submits that this case is not limited to being a ‘neighbourhood matter’ because it involves:

(a) the aforementioned ‘trigger’ issue;[69]
[69] Plaintiff’s Consolidated Submissions, [12(a)].

(b) the possible operation of s 98 of the Transfer of Land Act 1958 (TLA), which prohibits the amendment or alteration of the memorandum or articles or rules of a service company operating in relation to a building subdivision — which amendment or alteration affects the allotment or issue of shares or other like interests in the service company or the rights or privileges attached to any such shares or other interests — without either the written consent of each registered proprietor or an order made by a court;[70]
[70] Plaintiff’s Consolidated Submissions, [12(b)].

(c) which of the TLA or CTHUA should take priority in this matter;[71]
[71] Plaintiff’s Consolidated Submissions, [12(b)].

(d) the application of s 84 of the PLA, which grants the Court the power to deal with restrictive covenants affecting land;[72]
[72] Plaintiff’s Consolidated Submissions, [12(c)].

(e) the failure or refusal of the Defendant to enforce the covenants contained within the Deed;[73]
[73] Plaintiff’s Consolidated Submissions, [12(d)].

(f) the failure or refusal of the Defendant to seek independent legal advice or clarification of the validity of the covenants by way of legal proceedings;[74]
[74] Plaintiff’s Consolidated Submissions, [12(d)].

(g) multiple uncontested contraventions of the ‘no pet rule’ by the owners of Units 2, 3, 5 and 6, a failure which the Plaintiff submits constitute a breach of the duties or care and diligence and good faith owed by the directors of the Defendant and contained in ss 180 and 181 of the Corporations Act;[75]
[75] Plaintiff’s Consolidated Submissions, [12(e)].

(h) the question of law as to whether, as a matter of statutory interpretation, the CTHUA was intended to operate retrospectively, given that the Deed predates the enactment of the CTHUA;[76]

(i) discrimination faced by the Plaintiff in being forced to bring proceedings to validate the plainly stated terms contained within the Deed;[77] and

(j) personal prejudice suffered by the Plaintiff resulting from the Defendant’s failure to enforce the terms of the Deed.[78]

[76] Plaintiff’s Consolidated Submissions, [12(f)].

[77] Plaintiff’s Outline of Argument, [4].

[78] Plaintiff’s Outline of Argument, [5].

In response, the Defendant submits that the comments of the Court of Appeal in Sudi relied on by the Plaintiff for her assertion regarding collateral review are not applicable to this proceeding as there is no administrative decision the validity of which the Plaintiff seeks to impugn.[79] Instead, the Defendant submits that its decisions are private, not public, in nature, and are therefore generally not amenable to administrative review.
[79] Defendant’s Consolidated Submissions, [9].

The Defendant accepts that the Tribunal does not possess general civil jurisdiction, that its powers are derived from statute and that, therefore, the Tribunal will only have jurisdiction to hear the matter if the dispute relates to a ‘neighbourhood matter’.[80] However, the Defendant rejects the Plaintiff’s assertion that the ‘collateral issues’ listed in paragraph 80 above change the nature of the dispute from a neighbourhood dispute capable of being determined by the Tribunal to a dispute falling outside of the jurisdiction of the Tribunal and requiring determination by this Court.[81]
[80] Defendant’s Consolidated Submissions, [10].
[81] Defendant’s Consolidated Submissions, [10].

In this regard, the Defendant submits that:

(a) in relation to the ‘trigger’ issue:[82]
[82] Defendant’s Consolidated Submissions, [11(a)].

(vi) the provisions of the RTA that regulate the circumstances in which a landlord may withhold consent to a renter keeping a pet on a rented premises is a matter the Tribunal can and should have regard to when considering the validity of any term of the Deed but are not something that changes the nature of the dispute; and

(vii) the Plaintiff’s submission on the constitutionality of the RTA’s deemed consent rule is untenable because: first, the RTA is plainly not legislation enacted for the purpose of regulating the conduct of the affairs of corporations and is wholly within State legislative competence; and, second, corporations are routinely required to regulate their operations in order to comply with the laws of the State within which they operate;

(b) s 98B of the TLA does not apply to the Deed for the reasons set out in paragraph 51 above;

(c) for the reasons set out in paragraphs 75 to 77 above, the terms of the Deed are not restrictive covenants that run with the land and therefore remain determinable by the Tribunal pursuant to the terms of the CTHUA;[83]
[83] Defendant’s Consolidated Submissions, [11(c)].

(d) in relation to the Plaintiff’s complaints regarding alleged breaches of the Corporations Act by the Defendant’s directors:

(i) the proceeding is not one brought pursuant to s 232 of the Corporations Act, which sets out a statutory regime for the making of orders to remedy ‘oppression’ as understood under s 232, or in accordance with the Supreme Court (Corporations) Rules 2013, which prescribe how proceedings for relief under the Corporations Act are to be brought;[84]
[84] Defendant’s Outline of Submissions, [15]–[17].

(ii) the Plaintiff has failed to particularise her claim of oppression, and has merely requested relief ‘as may be necessary’ pursuant to ss 232 and 235 of the Corporations Act;[85] and
[85] Defendant’s Outline of Submissions, [17].

(iii) the Plaintiff’s complaints are peripheral at best and no obstacle to the Tribunal determining the substance of the dispute under the CTHUA;[86]

(e) there is no issue of retrospectivity as the CTHUA does not provide that rights and obligations are changed with effect prior to the commencement of the legislation and instead merely establishes a statutory pathway for the regulation and determination by the Tribunal of disputes under the CTHUA;[87] and

(f) to the extent that the Plaintiff complains of any alleged discrimination, this is a matter which the Tribunal must consider in exercising its jurisdiction.[88]

[86] Defendant’s Consolidated Submissions, [11(d)].

[87] Defendant’s Consolidated Submissions, [11(e)].

[88] Defendant’s Outline of Submissions, [18].

Consideration
Does the dispute come within the CTHUA?
Is the Defendant a service company?

Under s 3 of the CTHUA and s 4 of the TLA, a ‘service company’, in respect of a building subdivision, is:

a company or other body corporate which was or is formed or incorporated or which operates or is intended to operate for the purpose of carrying out the common purposes of the proprietors of the several stratum estates in the subdivision including, without limiting the generality of the foregoing, the provision of common services, the maintenance repair and insurance against fire of the building or buildings as a whole and the control and maintenance of the residual land but does not include an owners corporation within the meaning of the Owners Corporations Act 2006.

The Deed describes the Defendant as ‘the Service Company’. The obligations of the Defendant contained within the Deed include:

(a) insuring the Premises against loss and damage;

(b) maintaining and repairing paintwork, electrical wiring, drainage pipes, roofing, gardens, common areas, hallways, stairways, etc; and

(c) paying any necessary rates and charges.

These terms outline the common purposes of the proprietors and the Defendant is obligated to carry them out. Neither party submits that the Defendant was formed for any purpose other than that of carrying out the common purposes of the unit owners at the Premises. In my view, it is clear that the Defendant is a ‘service company’ for the purposes of ss 5(1)(b) and 5(2) of the CTHUA.

Is the Deed a service agreement?

Under s 3 of the CTHUA and s 4 of the TLA, a ‘service agreement’, in relation to a building subdivision, is:

an agreement entered into or to be entered into by the proprietor of a stratum estate in the subdivision and the service company as to their respective rights and obligations in relation to or in connexion with any of the purposes referred to in the interpretation of ‘service company’.

What is not in contention between the parties is that:

(a) each of the registered proprietors at Stonehaven holds a strata title to the interior living spaces of their respective units.

(b) each unit owner has signed a separate Deed between themselves and the Defendant.

Under the terms of the Deed:

(a) Each unit owner is subject to certain obligations, such as:

(viii) paying any relevant services charges and contributions; and

(ix)observing and performing the covenants set out in the Second Schedule to the Deed.

(b) The Defendant grants unit owners certain rights, such as:

(i) free and open access to common hallways and stairways;

(ii) unobstructed access to essential services such as gas, electricity and telephone lines;

(iii) the right to use common areas at the Premises such as laundry, clotheslines and gardens; and

(iv) the full and free use of their unit, and from time to time.

(c) The Defendant as a service company takes on certain obligations, as outlined at paragraph 85 above.

On a simple reading of the terms of the Deed, it is plain to me that the Deed is a service agreement — ie, an agreement entered into by the proprietor of each Stonehaven unit owner on the one hand and the Defendant as a service company on the other. Per the wording of s 3 of the CTHUA, the Deed outlines each party’s respective rights and obligations in relation to or in connexion with the purposes of the Defendant as a service company as described in paragraph 85 above.

I do not accept the Plaintiff’s submissions that the Deed is also either a ‘stratum title arrangement’ or the ‘rules of a service company’. As the Defendant submits, the provisions of the Deed do not govern the operation of the Defendant as a body corporate. Instead, the Deed prescribes the respective rights and obligations of the registered owners on the one hand, and the Defendant (as the service company) on the other. As such, the Deed is a ‘service agreement’ pursuant to s 3 of the CTHUA and s 4 of the TLA and therefore falls within the ambit of ss 5(1)(b) and 5(2) of the CTHUA.

Is the dispute a neighbourhood dispute, ie, is it about neighbourhood matters?

The relevant provisions of the Deed are those pertaining to a prohibition on ‘any animal or bird’ being kept on the land, as well as the requirement that certain floor coverings be used to prevent nuisance or annoyance by noise to neighbouring units.

Non-compliance with these provisions has formed the basis of various complaints made by the Plaintiff to the Defendant. When renovations were made to Unit 6, floor coverings were removed, a bedroom that shares a common wall with the Plaintiff’s units was converted into a laundry-bathroom with a shower installed on the common wall, and external air conditioning and water heating units were installed. Although some of the Plaintiff’s concerns were addressed between the Plaintiff, the Defendant and the previous tenant of Unit 6, Mr R Gronow, the Plaintiff remains concerned about suppression of noise by future tenants. Furthermore, the Plaintiff deposes to having seen various pets at the Premises in breach of the ‘no pets’ rule contained in the Deed.

The Defendant submits that these matters are neighbourhood matters.

The Schedule to the CTHUA sets out a number of matters that, for the purposes of the Act, are a ‘neighbourhood matter’. Relevantly, neighbourhood matters include matters relating to, among other things, the keeping of animals or birds, the behaviour of unit occupiers or their guests, noise and other nuisances, and compliance with nuisance control provisions contained in a service agreement.

To my mind, the matters that form the basis of the present dispute are plainly neighbourhood matters. The keeping of animals or birds is explicitly listed in the Schedule to the CTHUA, as are matters that relate to noise and nuisance and means of ensuring compliance with any control mechanisms relating to noise or nuisance. As such, the dispute is a neighbourhood dispute pursuant to s 5 of the CTHUA.

I do not accept the Plaintiff’s submission that the Defendant’s characterisation of the Plaintiff’s case as a neighbourhood dispute is ‘misconceived’ or ‘misleading’. The obligations contained within the Deed clearly relate to neighbourhood matters as defined in the CTHUA and affect the Defendant as a service company. This conclusion is supported by s 5(2) of the CTHUA, which provides that a dispute affecting a service company includes a dispute as to whether an obligation imposed by a term of a service agreement has been met. As I have already concluded, the Defendant is a service company and the Deed is a service agreement. As such, s 5(2) applies in relation to the other Stonehaven unit owners’ alleged non-compliance with the terms of the Deed signed between themselves and the Defendant.

However, a question remains as to whether the dispute relates only to neighbourhood matters, or whether it also involves matters that fall outside of s 5 of the CTHUA and therefore outside of the Tribunal’s jurisdiction. This issue is considered below.

Are there issues to be determined that are not neighbourhood matters?
Collateral review

As an administrative tribunal, the jurisdiction of the Tribunal is derived entirely from statute.[89] As such, the Tribunal does not possess general civil jurisdiction.[90] This was not in contention between the parties.
[89]Sudi, [19].
[90]Sudi, [36].

The Plaintiff submits that the Tribunal’s power to deal with ‘single’ issue disputes is overridden where there are collateral issues to be litigated. However, this submission appears to be based on a misreading of Sudi.

In Sudi, the Director of Housing had previously applied to the Tribunal under s 344(1) of the RTA for an order for possession of premises occupied by the respondent. Bell J, as President of the Tribunal, held that in such a proceeding the Tribunal has the power to review the lawfulness of the Director’s decision to make the application to the Tribunal, ultimately concluding that the application decision was unlawful under s 38(1) of the Charter of Human Rights and Responsibilities Act 2006 (Vic) (Charter).[91] The Tribunal dismissed the application and the Director of Housing appealed the decision.
[91]Sudi, [59].

The power to review the lawfulness of an administrative decision is also referred to as ‘collateral review’. As stated by Weinberg JA in Sudi at [221]-[222]:

The term ‘collateral review’, when used in relation to an attack upon the validity of government action, normally means a challenge to such validity that is made not by way of administrative review, but in response to a proceeding said to be jurisdictionally flawed. Collateral review takes place in proceedings that are not designed for handling them, and before courts or tribunals that may not have experience, or expertise, in dealing with issues of public law.
‘Collateral review’, in relation to the validity of government action, is therefore a term that is generally used in contrast to ‘direct challenge’. It is to be contrasted with judicial review, whereby the validity of government action is impugned through an application for prerogative relief, or the equivalent of such relief, for example a suit for declaratory or injunctive relief to restrain conduct said to be unauthorised.

In assessing whether or not the Tribunal has the power to conduct collateral review, either under the RTA, the Charter or the Victorian Civil And Administrative Tribunal Act 1998 (Vic), Warren CJ, Maxwell P and Weinberg JA concluded that it does not.[92] However, this decision has little bearing on the Defendant’s Stay Application or this proceeding. First, consideration by the Tribunal of various factors that may be relevant to the Plaintiff’s complaint — such as the applicability of particular legislation, questions of statutory interpretation, or issues of possible discrimination and personal prejudice — would not classify as collateral review. Second, as the Defendant submits, there is no administrative decision the validity of which the Plaintiff seeks to impugn. Instead, the decisions of the Defendant are private in nature and cannot be made subject to administrative review. As such, no issues of ‘collateral review’ arise in the present case.
[92]Sudi, [284].

The ‘trigger’ issue

Many of the Plaintiff’s submissions describe the Defendant’s reliance on the statutory deemed consent to the keeping of pets contained in the RTA as having ‘triggered’ her action against the Defendant. It is submitted that the CTHUA should take priority over the RTA in this matter and that there is no basis in law for the suggestion that the RTA either ousts or invalidates the ‘no animal or bird’ provision contained in the Deed.

However, the existence of such a statutory deemed consent under tenancy law does not alter the nature of the dispute to one that relates to matters other than neighbourhood matters under the CTHUA. As such, the Defendant’s reliance in February 2022 on the statutory deemed consent has no direct relevance to the Defendant’s Stay Application.

The Defendant makes no submissions in relation to the so-called ‘trigger’ issue. This is understandable, given that nothing really turns on the Plaintiff’s submissions on this topic for the purposes of the Stay Application. I do not accept the Plaintiff’s submissions that the Defendant’s failure to respond to this issue constitutes an ‘abandonment’ of the issue and, therefore, an implied acceptance of its validity. There is no authority cited to support such a proposition and I reject it.

That the Tribunal may need to consider the RTA and its provisions regarding the keeping of animals on the leased premises by the tenant in dealing with the Plaintiff’s complaints about the Defendant’s alleged failure to ensure the provisions of the Deed are complied with does not transform this dispute into something that is not a neighbourhood dispute or mean that it is not only a neighbourhood dispute.

Management or executive decisions

In her submissions, the Plaintiff attempts to frame the dispute as arising from the Defendant’s decisions to adopt a ‘head in the sand’ position in relation to the enforcement of the terms of the Deed.[93]
[93] Plaintiff’s Consolidated Submission, [34].

The Plaintiff points to Senior Member Vassie’s finding in Huang as authority for the proposition that ‘management or executive decisions’ are not neighbourhood matters, as they are not listed in the Schedule to the CTHUA. In Huang, Senior Member Vassie found that the Applicant’s complaints did not correspond neatly with any of the neighbourhood matters set out in the Schedule, and were instead complaints about the incorrect management decisions of the Respondent service company. However, as I have concluded above at paragraph 96, the issues that form the basis of the present dispute are plainly neighbourhood matters, as they fall plainly within several of the matters listed in the Schedule to the CTHUA.

Therefore, I reject the Plaintiff’s submission that this dispute involves management or executive decisions and are not neighbourhood matters.

Section 84 of the PLA

The Plaintiff, through her submissions, seeks to characterise the obligations contained in the Deed as restrictive covenants that run with the land. This line of argument was run, evidently, in an attempt to bring the terms of the Deed within the ambit of the PLA and, therefore, outside of the Tribunal’s jurisdiction.

It is well established that, in order to be enforceable, a restrictive covenant must ‘run with the land’ so as to bind successors in title.[94] This requirement is also contained in s 80(4) of the PLA, which states that a covenant will run with the land when the benefit or burden of it, whether at law or in equity, passes to the successors in title of the covenantee or the covenantor. Whether or not a particular covenant runs with the land is, in each case, a question of intention to be determined by the Court on the construction of the particular document, and with due regard to the nature of the covenant and the surrounding circumstances.[95]
[94] Tulk v Moxhay (1848) 2 Ph 774.
[95]Rogers v Hosegood [1900] 2 Ch 388, 396.

The Plaintiff submits that the obligations contained in the Deed run with the land because, pursuant to paragraph 5 of the Deed, an outgoing unit owner will only be released from liability when the successor in title executes a replacement deed. However, in my view, this submission misses the point entirely. If the obligations contained within the Deed were, in fact, covenants that run with the land, there would be no need for paragraph 5 to be included in the terms of the Deed; the obligations contained within would bind the successor in title regardless. Instead, the inclusion of paragraph 5 makes it clear that the obligations contained within the Deed were not intended to bind the successor in title. A new unit owner is only bound by the obligations contained within the new deed signed between themselves and the Defendant. A new unit owner is not, however, bound by the terms of the deed signed between the previous owner and the Defendant. This remains true even if the terms of the two deeds are identical.

As the Plaintiff submits, Gillard J states in Fitt & Anor at [54] that a restrictive covenant, in its most common form, ‘is a contract between neighbouring land owners by which the covenantee determined to maintain the values of his property or to preserve the enjoyment acquires a right to restrain the other party, namely, the covenantor, from using his land in a certain way’ (emphasis added by me). However, as I have concluded at paragraph 91, the Deed is a service agreement between individual Stonehaven unit owners and the Defendant. The terms of the Deed do not form a contract between the Stonehaven unit owners. Instead, the obligations contained in the Deed are, as the Defendant submits, personal to each registered proprietor.

It is important to note that the provisions of the Deed are not registered on title and nor is the Deed referred to on the title. The Plaintiff submits that the general wording of the restrictive covenants registered against Units 3, 5, 6 and 8 should be informed by the more specific wording of the obligations contained within the Deed. However, there is no authority cited for this assertion. Instead, covenants are to be interpreted by reference to their terms without reference to any extrinsic material; they are to be interpreted according to what is ascertainable from the register of titles.[96]
[96]Westfield Management Ltd v Perpetual Trustee Co Ltd (2007) 233 CLR 528 (‘Westfield’); Deguisa v Lynn (2020) 268 CLR 638.

In Westfield, the High Court held that, at least in the case of Torrens title land, general principles as to the use of extrinsic evidence in certain circumstances in questions of the construction of contracts do not apply to the determination of interests in land. The High Court expressed the view that to allow extrinsic evidence in the construction of a dealing would be inconsistent with the operation of the Torrens system:

The third party who inspects the Register cannot be expected, consistently with the scheme of the Torrens system, to look further for extrinsic material which might establish facts or circumstances existing at the time of the creation of the registered dealing and placing the third party (or any court later seized of a dispute) in the situation of the grantee.[97]

[97] Westfield, 539 (citations omitted).

Although Westfield was not a case concerning a restrictive covenant,[98] the principles enunciated there apply to cases construing covenants.[99] As such, the wording of the registered restrictive covenants cannot and should not be informed by the wording of the obligations contained in the Deed.
[98]In Westfield, the relevant dealing was an easement granting a right of way under one commercial building in Sydney to another.
[99] Re Hunt, [26].

Thus, the Plaintiff’s reliance on s 84 of the PLA so as to contend that her dispute does not concern only a neighbourhood matter fails for two reasons. First, and most importantly, s 84 of the PLA has no application here as the covenants in the Deed do not run with the land. Second, the registered covenants relied upon do not fall to be interpreted in accordance with the Deed.

The constitutional issue

The Plaintiff submits that the way in which the Deed was executed (ie, signed by a director and secretary of the Defendant and ‘sealed’ in accordance with the Defendant’s constitution) as well as the subject matter of the obligations contained within classify each term of the Deed as a ‘rule’ as defined in s 3 of the CTHUA. As best I can decipher, the supposed implication of these submissions is that the obligations contained within the Deed must fall within the exceptions to the Tribunal’s jurisdiction contained in ss 8(1)(d) & 8(1)(e) of the CTHUA. I do not accept these submissions.

Under s 3 of the CTHUA, the word ‘rule’ is defined as (abbreviation and emphasis added by me):

A by-law, rule or regulation made by the company title corporation … in accordance with its constitution … but does not include a term of a service agreement.

As I have already concluded, the Deed is a service agreement between individual Stonehaven unit owners and the Defendant. It is abundantly clear from the terms of the Deed that the Deed does not constitute the rules of the Defendant company. As such, the obligations contained within the Deed do not classify as the rules of a service company for the purpose of the exceptions to the Tribunal’s jurisdiction contained in ss 8(1)(d) & 8(1)(e) of the CTHUA.

The other collateral issues

Having considered the above issues, I will now briefly address the remaining ‘collateral issues’ raised by the Plaintiff.

Firstly, in regards to whether or not s 98B of the TLA — which relates to the amendment of the rules of a service company — is of any relevance to the dispute, I conclude that it is not. At the risk of repeating myself, the Deed is a service agreement between individual Stonehaven unit owners and the Defendant. As such, the obligations contained within do not classify as the rules of a service company and s 98B of the TLA, therefore, has no application here.

Secondly, in regards to whether or not the CTHUA was intended to operate retrospectively, I accept the Defendant’s submission that this is a non-issue.

According to Dixon CJ in Maxwell v Murphy (1957) 96 CLR 261 at 267:

The general rule of the common law is that a statute changing the law ought not, unless the intention appears with reasonable certainty, to be understood as applying to facts or events that have already occured in such a way as to confer or impose or otherwise affect rights or liabilities which the law had defined by reference to the past events.

However, as the Defendant submits, the CTHUA does not alter rights or liabilities with effect prior to the commencement of the legislation. Instead, the CTHUA simply establishes a statutory pathway for the regulation and determination by the Tribunal of disputes under the CTHUA. As such, no issues of retrospectivity arise.

Under s 10 of the CTHUA, in making an order the Tribunal must consider (emphasis added by me):

(a) the conduct of the parties;

(b) an act or omission or proposed act or omission by a party;

(c) the impact of a resolution or proposed resolution of a company title corporation or service company on the shareholders as a whole;

(d) whether a resolution or proposed resolution of a company title corporation or service company is oppressive to, unfairly prejudicial to or unfairly discriminates against a shareholder or shareholders;

(e) any other matter VCAT thinks relevant.

As such, I consider that the alleged conduct of the Defendant in:

(a) failing or refusing to enforce the covenants contained in the Deed,

(b) failing or refusing to seek independent legal advice, or

(c) failing or refusing to clarify the validity of the covenants by way of legal proceedings

as well as any potential discrimination or personal prejudice suffered by the Plaintiff are matters which the Tribunal not only has the power to consider but must consider when assessing the Plaintiff’s complaint. For this reason, I do not accept the Plaintiff’s submissions that these ‘collateral issues’ take the dispute outside of the Tribunal’s jurisdiction.

I accept the Defendant’s submissions, summarised in paragraph 83(d) above, in respect of the Plaintiff’s allegations (made only in submissions) regarding breach of the directors’ duties in the Corporations Act and the apparent reliance in the Originating Motion on ss 232-235 of the Corporations Act. The Originating Motion does not even mention directors’ duties or the provisions of the Corporations Act concerning them, and seeks no relief in that regard. Further, this proceeding would be incompetent in respect of such matters, including by reason of the fact that the relevant directors are not parties. Insofar as Part 2F.1 of the Corporations Act is concerned, paragraph 6 of the Originating Motion is perfunctory at best, for the reasons submitted by the Defendant. The purported reliance on the Corporations Act by the Plaintiff appears to me to be nothing more than an attempt to take her neighbourhood dispute outside the ambit of the CTHUA and to oust the jurisdiction of the Tribunal.

Applying section 12 of the CTHUA to this case

Section 12 of the CTHUA — which sets out when the Tribunal will be considered a more appropriate forum — applies where a person commences proceedings which arise wholly from a neighbourhood dispute in respect of which the Tribunal has jurisdiction under the CTHUA. As I have concluded above, the dispute between the Plaintiff and the Defendant over the alleged breach of the obligations contained within the Deed by certain Stonehaven unit owners and the non-enforcement of these obligations by the Defendant is a neighbourhood dispute in respect of which the Tribunal has jurisdiction.

Pursuant to s 12(2), I am required to stay the present proceedings if the proceedings could be heard by the Tribunal under the CTHUA and I am satisfied that the proceedings would be more appropriately dealt with by the Tribunal.

Firstly, for the reasons set out above, I conclude that the proceedings can indeed be heard by the Tribunal under the CTHUA. The Plaintiff submits that several factors bring the matter outside of the Tribunal’s jurisdiction. However, for the reasons set out above, I do not accept these submissions.

Secondly, I accept the Defendant’s submissions that the proceeding would be more appropriately dealt with by the Tribunal. Per Lansdowne AsJ’s ruling in Tilley:

(a) the Tribunal is the preferred jurisdiction for resolution of neighbourhood disputes;[100] and

(b) jurisdiction was conferred on the Tribunal to provide a cheaper and more informal option than what would otherwise be available.[101]

[100]Tilley, [36].

[101]Tilley, [45].

Furthermore, the Plaintiff raises no relevant prejudice that she would suffer if the proceedings were stayed and her dispute heard by the Tribunal.

Thirdly, I do not consider that either party is reasonably likely to gain a material advantage or suffer a material disadvantage if the proceedings are determined by the Tribunal.

Conclusion

For the reasons outlined above, the Defendant’s Stay Application is granted.

The parties are directed to confer and to provide my Chambers, by no later than 25 September 2023, proposed orders to give effect to this ruling, including in respect of costs. In that regard:

(a) if the form of orders and costs are agreed, then signed minutes to that effect should be provided; and

(b) if these are not agreed, then the parties are to provide their proposed orders (including costs) and a short written outline of no more than 3 pages (including annexures) as to why their form of orders should be preferred.

I will then make orders to give effect to the ruling regarding the Stay Application, including as to costs, on the papers after 25 September 2023.

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Citations

Lindeman v Stonehaven Proprietary Limited [2023] VSC 556

Cases Citing This Decision

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Cases Cited

6

Statutory Material Cited

0

Director of Housing v Sudi [2011] VSCA 266

Breskvar v Wall [1971] HCA 70

Calvert v Badenach [2015] TASFC 8

[2023] VSC 556

19 September 2023