Owners Corp Strata Plan v Charbel CJ Pty Ltd

[2004] NSWSC 1286

CITATION:	Owners Corp Strata Plan v Charbel CJ Pty Ltd [2004] NSWSC 1286
HEARING DATE(S):	1-3 December 2004
JUDGMENT DATE:	10 March 2005
JURISDICTION:	Equity
JUDGMENT OF:	Burchett AJ at 1
DECISION:	Injunction to be granted pursuant to Short Minutes.
CATCHWORDS:	Strata Title - effect of Strata Management Statement under legislation - whether lessees from strata lot owners were bound - whether premises were used as "fast food outlet" contrary to the Statement - meaning of "fast food outlet" - meaning of "owner" - indefiniteness of word - construction from context - negative covenant extending to lessees - whether condition of development approval overrode Strata Management Statement - extent of injunctive relief where breach restrained was of a specific character and a general injunction might catch breaches of a quite different kind.
LEGISLATION CITED:	Strata Schemes (Freehold Development) Act 1973 (NSW) Retail Leases Act 1994 (NSW) Statutory Interpretation in Australia 5 ed. (2001) at sec.4.27 Lewison, The Interpretation of Contracts, 3 ed. (2004) at sec.7.15
CASES CITED:	Pepsi Seven-up Bottlers Perth P/L v Commissioner of Taxation (1995) 62 FCR 289 Gantry Aquisition Corp v Parker & Parsley Petroleum Aust. P/L (1994) 51 FCR 554 at 569 Zed v Fullerton (1944) 17 MPR 417 at 419 Smith v Packhurst (1740) 3 Atk.135 at 136; 26 ER 881 at 882 Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 290 at 397 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490 at 509 Glofield Properties Ltd v Morley (No.2) (1989) 59 P&CR at 19 Forestview Nominees P/L v Perpetual Trustees WA Ltd (1995) 133 ALR 465 at 491 Hemingway Securities Ltd v Dunraven Ltd [1995] 1 EGLR 61 at 62 Opua Ferries Ltd v Fullers Bay of Islands Ltd [2003] 3 NZLR 740 Trade Practices Commission v Glo Juice Co P/L (1987) 73 ARL 407 at 412-413, 418 Commodore Business Machines P/L v Trade Practices Commission (1990) 92 ALR 563 at 574 Bankstown City Council v Alamdo Holdings Pty Ltd [2004] NSW CA 35 at [89]-[108]
PARTIES :	Owners Corporation Strata Plan 69470 - Plaintiff Charbel CJ Pty Limited & Idya Pty Limited - Defendants
FILE NUMBER(S):	SC 1607/2004
COUNSEL:	Dr C Birch SC (Counsel for Ptf) P W Taylor SC (Counsel for D1) P Bolster (Counsel for D2)
SOLICITORS:	Roper & Steggall for the Plaintiff Elias Gates & Associates Pty Ltd for the First and Second Defendants

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BURCHETT AJ

10 March 2005

File No. 01607/2004

OWNERS CORPORATION STRATA PLAN 69470 (Plaintiff)
CHARBEL CJ PTY LIMITED AND IDYA PTY LIMITED (Defendants)
JUDGMENT

1 In this matter, the plaintiff alleges that each of the defendants is in breach of a number of obligations imposed upon it by virtue of a Strata Management Statement which took effect under S28W of the Strata Schemes (Freehold Development) Act 1973 (NSW) in respect of strata plans relating to a building at 43-45 North Steyne, Manly. No objection is taken to the joinder of the claims against the two defendants in the one action. The principal relief sought against each of the defendants is an injunction to restrain the breaches alleged, and in particular, the conduct of a “fast food outlet” contrary to clause 19.1(a) of the Strata Management Statement.

2 The defences seek to meet the claims both at the factual level whether the premises in question were fast food outlets and at the level of the proper construction and application of the provision of the Strata Management Statement in question, the defendants denying that this provision had any application to them.

3 The building at 43-45 North Steyne, Manly is a modern building, consisting of a number of storeys, facing the beach, from which it is separated by a roadway. At the back, there is a lane utilised for services such as garbage collection, known as Henrietta Lane. The building has a central foyer giving access by lift to residential apartments of a fairly high standard, their value being up to about 1.5 million dollars. At street level, facing North Steyne, there is on each side of the central foyer a commercial unit suitable for use as a restaurant, or for some other business use such as a shop.

4 Two strata plans appertain to the building, one for the owners of the residential lots and the common property related to them, and the other for the owners of the lots comprising the commercial premises each of which is referred to in the Strata Management Statement as the “Retail Shop”, those owners being described as the “Retail Owners”, and the common property related to the retail shops. The Strata Management Statement, as envisaged in the Strata Schemes (Freehold Development) Act, is designed to regulate the relations between the residential owners and the retail owners respectively.

5 The nature of the business to the right of the foyer, as one faces the building, is indicated by a prominent bright sign advertising its name, “Sea King Cafe”, and proclaiming that it sells “Seafood” and “The Best Fish & Chips In Town”. The business on the other side of the foyer similarly announces itself by the word “Oporto”, flanked on each side by the same words: “Fresh Grilled Chicken & Burgers”. Oporto is the name of a fairly well known and extensive chain selling chicken meals to eat at the premises where they are sold or to take away.

6 At each of these premises, there are tables and chairs with metal legs, of a type commonly seen in cafes, the tables having laminated or similar tops. Service counters are provided at the back of the shop in both cases, and in some side positions. Although table service is provided on some occasions, I accept broadly the evidence of Mr Asomatianos, a licensed private investigator who attended both premises on 20 December 2003 and again on 30 November 2004, for a total period of over 6 hours, evidence which indicates that quite often a customer, having placed an order at the counter and paid for a meal in advance, collects it personally and takes it to a table. Drinks may also be procured from a refrigerator. In each case, the seating capacity is of the order of perhaps 30 people.

7 Specifically in the case of Sea King, Mr Asomatianos, on his earlier visit, noted that it specialised in fish and chips and also sold ice cream, soft drinks and salads. There were eight or ten tables, which he described as made of plastic and metal, with plastic and metal chairs and padded benches along the walls to a capacity of 25 people. There were “built in garbage bins for use by the patrons as well as a wheely bin”. Customers placed their orders at the service counter and food was supplied in disposable packaging or, in the case of larger meals, such as fish and chips, on a plate for eat-in customers. There was provision for customers to obtain individual portion packs of salt and pepper, plastic cutlery and serviettes. At one side, there was a large fridge. Behind the service counter, an illuminated menu was displayed. Upon a customer approaching the counter, Mr Asomatianos’s observation was that the order was entered on a computerised register system and transferred to the food preparation area; the customer was asked whether the order was to eat in or take away; payment was made and a receipt given with an order number; drinks and ice creams were collected by the customer and paid for with the order; the customer awaited preparation of the order; and the number of the completed order was called out, whereupon the customer collected it. Drinks were supplied in the original packaging, not in a glass. In the case of take-away food, the customer collected the order in disposable containers branded “Sea King Seafood” and might take it away, or on occasions sit and consume it at one of the tables.

8 On Mr Asomatianos’s second visit, he noted some changes including the provision of coffee cups and plates on top of the coffee machine. Curiously, one change to which he referred, the presence of a promotional sign approximately 1.5 to 2 metres in height, was the subject of conflict between his evidence and that of the principal witness for the defendant. I was left quite uncertain what the correct explanation of this discrepancy might be, but, having observed Mr Asomatianos under cross-examination, I do not think it reflected on his evidence generally in any case. As I have made clear, I consider the substance of his evidence is to be accepted. On the second occasion, Mr Asomatianos observed that a plate and a metal knife and fork were being used for meals served at the premises, though not universally, and that a plastic pack of tartare sauce, fresh lemon and satchels of ordinary salt were also provided. Drinks were made available to customers, who took them themselves from the refrigerator cabinet, but meals were brought to the tables. It was a quiet time in the shop, from 2pm. Mr Asomatianos ordered two meals that afternoon, and each of them was delivered within 5 minutes.

9 The printed material which constituted the menu of Sea King Seafood Café contains a series of illustrations that look like photographs in colour of fish and chip meals, calamari rings and chips, combinations of sea foods and chips, fish burgers and grilled fillets of fish. Some of the illustrations show simply the food without a container or plate of any kind, while others show it in what appears to be a cardboard container. It is generally accompanied by a piece of lemon and a plastic pack describing itself by a label as “squeeze-on tartare sauce”. Each menu page has on it the words “EAT IN OR TAKE AWAY” (or “TAKEAWAY”) and indicates that the establishment is open 7 days a week from 10 am to 10 pm. The illustrated meals are in some cases accompanied by a bottle of Mount Franklin water, Coca Cola or Fruitopia, but without a glass.

10 Mr Chedid, who described himself as the director of the first defendant, gave evidence that the business of Sea King Seafood “opened for retail trading as a seafood outlet on Friday 11 July 2003 specifically specialising in the preparation and sale of freshly cooked seafood meals for patrons to eat on the premises or if they wished have packaged for eating off the premises.” He acknowledged that the lease to the first defendant set out the permitted use as “Seafood restaurant and takeaway in compliance with by laws of the Building and the Strata Management Statement”. It was expressly said to him that he would be restricted to compliance with the Strata Management Statement. Mr Chedid said in his affidavit that “[m]ore than fifty per cent of the custom of the restaurant is from eat-in patrons and generally during the busy periods of the day the seating in the eat-in area is fully occupied”. Coffee is made by the staff and served at tables. While I accept, as I have indicated, Mr Asomatianos’s account of his observations on the occasions on which he visited the premises, it appears from Mr Chedid’s affidavit of 29 November 2004 that his current practice is to have his staff serve meals for eat-in customers on plates with knives and forks. However, the evidence indicates that some customers order a take-away product and then take it to a table to eat from the package. Also, customers generally obtain their own drinks (except in the case of coffee). Photographs annexed to Mr Chedid’s own affidavit clearly show people eating at tables with drinks in bottles, but without glasses.

11 Mr Chedid gave evidence in cross-examination concerning the preparation of the food at Sea King. Each morning before 10 am, he would clean, cut and prepare the fish in pieces of suitable size to be cooked for customers. Then, when an order is taken, the fish is floured and placed in the boiling oil, or grilled, as the case may be. The chips are purchased by him in 15 kilo boxes of McCane French Fries ready prepared as frozen chips, which again are fried when the order is taken.

12 Turning to the second defendant, the food it supplies features the special “Oporto” chicken recipes, accompanied by chips. Gelato, coffee, soft drinks and salads are also sold. The eating area is equipped with built-in garbage bins, apparently for use by patrons. There is a supply point where patrons can obtain individual portion packs of condiments, sauces, salt and pepper, but there did not appear, when Mr Asomatianos attended on the earlier occasion, to be any cutlery of any kind. Food was supplied in disposable packaging, but coffee was supplied in coffee cups for eat-in customers. The menu prominently displayed “Meal Deals” and “Packs”. The procedure for handling orders was similar to that which Mr Asomatianos observed at Sea King: the order was entered on a computerised system by a staff member and transferred to the food preparation area; the customer was asked whether he wished to eat in or take away; payment was made at the time of the placing of the order; drinks and other available parts of the order were supplied; a numbered radio transmitting device was given to the customer who then awaited preparation of the order; and the transmitting device vibrated and flashed to indicate when the order was ready for collection from the service counter, whereupon the customer collected the order.

13 The food was presented in disposable packaging – greaseproof paper, cardboard boxes or plastic cups. In the case of an eat-in order, the customer collected it on a tray which had a paper place-mat, and then selected a table and chair. In the case of a take-away order, the customer collected it in a plastic or paper bag branded with the Oporto name and logo, but might sit at a table instead of actually taking it away. Menus were in the nature of a promotional flyer retained by the customer.

14 On his second visit, Mr Asomatianos noticed a sign indicating “BYO welcome, no corkage.” He ordered a meal to eat in, and also a Pepsi which the girl handed to him. She gave him too a buzzer, telling him it would buzz when the meal was ready. He sat at one of approximately ten tables; at the other nine, groups of people who were eating each had a tray with food on greaseproof wrapping paper. None of the tables had plates, crockery or cutlery. There was a coffee machine with paper and crockery cups on it. Within less than seven minutes, the buzzer sounded, so he went to the service counter where he picked up a tray with two portions in greaseproof wrappers on it, one of chips and one of chicken. He noticed “numerous groups of people coming in to place take-away orders”.

15 Mr Iqbal, the managing director of the second defendant, was challenged by Mr Shamia in late October, 2003, as to whether he had not read in his lease that he “was not allowed to have fast food” and whether “the developer” had not told him “there was not to be any fast food”. He did not deny either proposition, but contented himself with asserting: “We are not fast food”. Indeed, his initial application to take the lease was refused on this very ground, but he persisted with it, persuading the lessor the Oporto chicken outlet he would operate would not be a fast food outlet. The lease in fact contained a clause similar to that in the first defendant’s lease, clearly intended to implement cl. 19.1(a) and the by-laws. Mr Iqbal gave evidence that the Oporto business trades from 9 am to 10 pm from Sundays to Thursdays and from 9 am to approximately 2.30 am on Fridays and Saturdays. He described it as a restaurant, which provided Portuguese style chicken meals to be eaten in the restaurant, and at the customer’s request packaged to be taken away. There were 13 tables furnished with 30 chairs, and meals were served on crockery plates utilising stainless steel cutlery. In this respect, Mr Iqbal was plainly in conflict with the evidence of Mr Asomatianos, but he did not specifically deny that the situation was as described by Mr Asomatianos at the time when Mr Asomatianos visited the premises. The same observation may be made about the way in which Mr Chedid met similar evidence of Mr Asomatianos. I do not doubt that cutlery has been obtained, although it has not always and consistently been used. Another matter on which Mr Iqbal challenged the evidence of Mr Asomatianos was as to the number of persons whose orders were taken between the times 5.25 pm and 5.59 pm on 20 December 2003. But it was not clear to me, to use the common cliché, that apples were being compared with apples in Mr Iqbal’s evidence. Although he seemed to assert that everyone in a group of people would commonly order individually, I do not believe that this would happen anything like invariably when two or three people, perhaps belonging to the same family or perhaps involving a boyfriend and girlfriend, would come in together to purchase snack meals, each costing very little. It is, at any rate, obvious that it would be wrong to assume, as Mr Iqbal’s evidence did, that the number of orders recorded would equal the number of persons entering the Oporto premises and going up to the counter.

16 Mr Iqbal agreed with Mr Asomatianos’s description of the ordering procedure in general, and that upon activation of the electronic device, in busy times, the customer would reapproach the front counter to obtain the meal; but he said that in quieter times the meal would be taken to dine-in customers and the tag collected. In evidence, Mr Iqbal described the start of the cooking process in the following words:

“As soon as we receive delivery after marination we start the first three chickens…[and] it takes about 45 minutes to cook the chicken.”

That is done in an oven. But they are not then ready to be served. They are taken out to be placed in a warmer. When the order comes, the chicken is taken from the warmer and placed on a char grill where it is grilled for one and a half minutes on each side of the chicken. The chicken is, of course, cut into appropriate pieces for the order and treated with the appropriate condiments. Chips are produced as Mr Chedid described in respect of his own operation. Chicken burgers are cooked when ordered.

17 In respect of each of the businesses, the first question that arises is whether the shop where it is conducted is used “as a fast food outlet” within the meaning of cl.19.1 of the Strata Management Statement, headed “Retail Use”, para. (a) of which provides:

(a) The Residential Owners and the Retail Owners acknowledge that the Retail Shops may be used and open for trade as restaurants or other commercial use in accordance [with] current trading hours approved by Manly Council. The owners of the Retail Shops must not use the Retail Shops as a fast food outlet.

18 The expression “fast food” is well established in the English language, both here and overseas. It is to be found, for instance, in Schedule 1 of the Retail Leases Act 1994 (NSW), and is used in combination with the word “outlets” by Hill J in Pepsi Seven-Up Bottlers Perth Pty Limited v Commissioner of Taxation (1995) 62 FCR 289 to describe types of establishment that include those belonging to the Pizza Hut chain and hamburger stores. In The Oxford English Dictionary, 2d ed. (1989), vol. V, it is stated to have originated in the United States, and is defined, according to the well known method of that dictionary, with examples of the usage from which the meaning has been derived, as follows:

“ Fast food. Orig. U.S . Also fast-food, fastfood. [f. FAST a. + FOOD sb .] a . Used attributively with reference to catering outlets where foods are kept hot and ready to serve, or partially prepared so that they can be served quickly.
1951 Fountain & Fast Food Service Oct. 39/1 The partners have become old hands at spotting the type of conventioneer that will patronize their fast food service. 1960 Fast Food July 17/2 Fast food type restaurants do the lion’s share of business for breakfast and noon meals eaten out. 1968 N.Y. Times 23 June III. 2/3 Another star performer in the fast-food field has been A-G Foods, which ..operates a string of quick-service restaurants. 1975 New Yorker 14 Apr. 80/1 Supermarkets and fast-food shops are gaining great ground. 1978 Tucson Mag. Dec. 6/3 Nothing but a glorified, garlic-flavoured fastfood operation with the poorest example of Italian cuisine. 1984 Verbatim X. III . 20/2 Fastfood eateries often dispense plastic ‘silverware’.

b. The type of food served in these restaurants; convenience food which can be prepared quickly at home.
1954 ( title ) Fountain and fast food. 1960 Fast Food Feb. 48/1 Delicate scallops are really fast food..because they come ready to cook. 1977 Times 6 June 2/5 ‘Fast food’ requires no preparation by the customer. Traditional ‘fast food outlets’ like fish-and-chip shops are being superseded by Chinese, Indian, Kebab and fried chicken houses. 1980 Guardian 24 May 19/8 Fastfoods have managed to get rid of their junk tag and cash in on new attitudes to leisure. 1985 Times 11 Nov. 3 /4 ( heading ) £ 1,000 for a British fast food.”

Similarly although less comprehensively, in the Macquarie Dictionary , revised 3d ed. (2001), the expression is defined:

“ fast food noun food for sale, as chicken, chips, hamburgers, etc., which can be provided without delay.”

19 It would, of course, be wrong simply to apply a dictionary definition in a mechanical way, which failed to draw from the whole clause all that is actually expressed by the language defined when used as it is used in cl. 19.1(a). As I put it in Gantry Acquisition Corp. v Parker & Parsley Petroleum Australia Pty Ltd (1994) 51 FCR 554 at 569:

“[N]o word [and the same applies to an expression such as ‘fast food’] has a meaning which remains rigidly fixed, however it is used. A word is not a locked box with static contents; it is more like a living cell, changing as it responds to the environment, which is its context.”

But nothing in the context or use here can move the meaning away from the essential ideas of quick service and of the style of food and establishment associated with that quick service. Both Sea King Seafood and Oporto exhibit these characteristics. In the words of one of the quotations selected by the Oxford Dictionary, both are “quick-service restaurants”, and they serve the type of food to be found in such restaurants – fish and chips, or chicken or hamburgers with chips. Another of the Oxford Dictionary’s illustrative quotations refers, as the traditional paradigm of “fast food outlets”, to “fish-and-chip shops” and goes on to mention “fried chicken houses”, while the Macquarie Dictionary takes “chicken, chips, hamburgers, etc. which can be provided without delay” for its exemplification of “fast food”. Neither of the Defendants’ restaurants is the kind of place where wine and conversation enrich the long slow savours of anticipation while in the kitchen the aim is to create something special to titillate the appetite of the most exacting deipnosophist. What each Defendant conducts puts the emphasis on quickness, which requires standardisation of procedures in the manner seen in connection with an assembly line. In the case of Sea King Seafood, ready cut pieces of fish and chips facilitate immediacy since cooking times are very short. In the case of Oporto, partial pre-cooking of chickens produces the same result.

20 I conclude that the premises of Sea King Seafood and Oporto are used as fast food outlets.

21 The next question is whether the Defendants, who occupy the premises where they conduct their businesses as lessees, are bound to observe the restriction imposed by cl. 19.1(a) of the Strata Management Statement.

22 The Strata Management Statement is given effect, as I have already remarked, by s.28W of the Strata Schemes (Freehold Development) Act 1973. Section 28W provides (in part):

(1) A registered strata management statement, as in force for the time being, relating to the management of a building has effect as an agreement under seal containing the covenants referred to in subsection (2) entered into by each person who for the time being is:
(a) a body corporate of a strata scheme for part of the building, or
(b) a proprietor, mortgagee in possession or lessee for the time being of any of the lots in such a strata scheme, and

(c) any other person in whom the fee simple of any part of that building or its site (being a part affected by the statement) is vested for the time being, or the mortgagee in possession or lessee of any such part.

(2) The covenants referred to in this section are:
(a) a covenant by which those persons jointly and severally agree to carry out their obligations under the registered strata management statement as from time to time in force, and
(b) a covenant by which those persons jointly and severally agree to permit the carrying out of those obligations.

……………………………

(5) A strata management statement has no effect to any extent to which it is inconsistent with any condition imposed on a development consent relating to the site of the building to which the statement relates, with a by-law or an order under Chapter 5 of the Strata Schemes Management Act 1996 or with any other Act or other law.
(6) Except as may be provided otherwise by this Act or the regulations, a provision in any instrument under which the agreement is excluded, modified or restricted is void.

23 Additionally, the Strata Management Statement has been incorporated in the By-laws made in relation to each of the two strata plans in respect of the building. Clause 15 of the By-laws for SP69470 (the strata plan for the residential part of the building) provides:

“Strata management statement
(a) The strata management statement contains by-laws which affect the strata scheme.
(b) The owner and the Owners Corporation must comply with the strata management statement.
(c) If there is any inconsistency between the terms of the strata management statement and these by-laws, the strata management statement will prevail.
(d) A breach of the terms contained in the strata management statement amounts to a breach of these by-laws.”

Clause 15 of the By-laws for SP69948 (the strata plan for the commercial part of the building) is in identical terms. Clause 17 of those by-laws stipulates that “[t]he owner of a lot may not duplicate or copy” security keys issued to him, and “the owner must immediately notify the strata manager” when a security key is damaged, lost or stolen, obligations from which (particularly the former) the lessee can hardly have been intended to be excluded. Both sets of by-laws contain an interpretation clause (cl.21 of SP 69470 and cl.24 of SP69948) in the following terms:
“In these by-laws unless the contrary intention appears:
………
(c) a reference to a person includes a reference to the person’s executors, administrators, successors, substitutes (including, with [ sic – quaere scilicet without] limitation persons taking by novation and assign [ sic ]”.

It will be appreciated that “substitutes” is a wide word that could well cover lessees as shopkeepers or restauranteurs substituted for their lessors; and “including” implies that some of a class are specified but there are also others unspecified, so that if “with limitation” were read as literally correct para. (c) would be self-contradictory, a good reason to think there is a falsa demonstratio , “with” being simply a mistake for “without”. An additional reason for the same conclusion is that “without limitation” is a familiar phrase in legal documents, with a significance that perfectly fits the sentence, whereas “with limitation” not only does not fit in with “including”, but is in itself unclear and quite outside any ordinary English idiom. It appears, therefore, that the By-laws, in which the Strata Management Statement is incorporated, apply (by cl. 21(c) ) to lessees.

24 The Strata Management Statement itself begins with Part 1, headed “PARTIES BOUND”, which is in the following terms:

“This statement has effect as an agreement under seal binding:

(a) the Owners;

(b) a proprietor, mortgagee in possession or lessee [emphasis added] for the time being of any of the lots either in the Residential Flat Building or the Retail Shops; and
(c) any other person in whom the fee simple of any part of the Building or its site (being a part affected by this Statement) is vested for the time being, or the mortgagee in possession or lessee of any such part.”

There follows Part 2, headed “Definitions and Interpretation”, which opens (somewhat clumsily, but quite intelligibly) with the words “In this Statement, unless a contrary intention occurs” and then proceeds to provide, inter alia, the following definitions:

““Residential Owner” means the owner of the Residential Lot or (after registration of the Residential Strata Scheme) the owners corporation of the Residential Flat Building.
“Retail Owner” means the owner of the Retail Lot or (after registration of the retail strata scheme) the owners corporation of the Retail Shops.
“Retail Shops” means the two (2) commercial lots fronting 43-45 North Steyne, Manly and the utility lot being Lots 1, 2 and 3 in the strata plan constituted on registration of the retail strata plan.”

25 It is now possible to consider the correct construction of cl.19.1(a) which was set out earlier in these reasons. Is the obligation in the second sentence a free-standing obligation affecting only “owners”, leaving lessees free to ignore it, or is it a qualification upon a permission to use the premises, relevantly, “as restaurants”?

26 The main weight of the Defendants’ contention that they, as lessees, are not affected by the prohibition against a “fast food outlet” must be borne by the literal words “owners of the Retail Shops” as the identification of the parties bound. It is pointed out that elsewhere in the Strata Management Statement there are references to occupiers and, occasionally, even to lessees. But this argument loses some of its force when it is appreciated that the Strata Management Statement commences (in Part 1) with a general statement of an intention that its provisions should bind a “lessee for the time being of…the Retail Shops”, and as well a lessee of any part of the building. The High Court has repeatedly warned that the expressio unius maxim “applies only when the intention it expresses is discoverable upon the face of the instrument… It is ‘a valuable servant, but a dangerous master’”: see the cases collected in Pearce and Geddes, Statutory Interpretation in Australia, 5 ed. (2001) at sec. 4.27.

27 Clause 19.1(a) does not, in fact, use language in a strict manner. The first sentence has the Retail Owners “acknowledg[ing]” that the Retail Shops may be used as restaurants and in other ways, which is really a right conferred on them and acknowledged by the Residential Owners; and in the second sentence, the precision of defined expressions is suddenly abandoned by the use of the word “owners” with a small “o”. The Defendants’ argument treats that word as equivalent to a reference to an owner in fee simple, in contrast to a lessee. But no owner of a lot in a strata plan has more than a limited interest, by virtue of the inherent nature of a stratum in a building, and a lessee owning the goodwill of the business of a shop is also an “owner”, who may without impropriety in the use of language be described as an owner of the shop. In Zed v Fullerton (1944) 17 MPR 417 at 419, Baxter CJ of the Supreme Court of New Brunswick said:

“At common law ‘owner’ is an indefinite expression and may mean any one who has any interest.”

Having referred to earlier Canadian authority, the Chief Justice continued (at 420):

“The tenant of the appellant being in possession of the demised premises under a verbal lease is during his term the owner of that interest.”

28 The most striking feature of the drafting of cl.19.1(a) seems to me to be its unity. It is one provision, though expressed in two sentences, the second being plainly a qualification upon the width of the first. This explains the rather loose use of the word “acknowledge” – if in the opening sentence the acknowledgment can only really relate to the Residential Owners, there is a corresponding acknowledgment by the Retail Owners in the following sentence, so there really is an acknowledgment by each, even if not very happily expressed. When the clause is read in that light, no sensible basis appears for restricting the qualification to the operation of the shops by the owners themselves, while leaving lessees – and if lessees, why not also mortgagees in possession? - entirely unrestricted. To understand it as doing so would be to defeat the plain apparent meaning expressed by the two sentences together, to “constru[e] words in such a manner as shall destroy the intent” of the instrument in which they are embedded, the error condemned in a great statement of Willes L.C.J in Smith v Packhurst (1740) 3 Atk. 135 at 136; 26 ER 881 at 882. It would be consistent with a fair and reasonable operation of the provision in accordance with its apparent purpose to read it as intended to apply, whether by its own force or by virtue of Part 1 of the Statement, to lessees as well as to the defined Retail Owners. In Commissioner for Railways (NSW) v Agalianos (1955) 92 CLR 390 at 397, Dixon CJ said:

“The context, the general purpose and policy of a provision and its consistency and fairness are surer guides to its meaning than the logic with which it is constructed.”

See also Project Blue Sky Inc v Australian Broadcasting Authority (1998) 153 ALR 490 at 509; and specifically as regards contracts, Lewison, The Interpretation of Contracts, 3 ed. (2004), at sec. 7.15; Glofield Properties Ltd v Morley (No.2) (1989) 59 P&CR 14 at 19, per Nourse LJ with whom Stocker and Taylor LJJ agreed. That the general purpose and policy of cl. 19.1(a) relates to the protection of the residential owners from a particular kind of use of the shops is in keeping with the reasoning in Forestview Nominees Pty Ltd v Perpetual Trustees WA Ltd (1995) 133 ALR 465 at 491, where Carr J said:

“There is no express exclusion of any tenant or any other holder of an interest in the burdened land from the burden of the covenant and it would be very surprising to find such an exclusion. Such an exclusion would run contrary to the obvious intent of the parties that the burdened land would not be used for the retail and display purposes referred to……. In equity there would not, in my view, be any doubt that the burden of the covenant would run with the remaining land… and thus bind any lessee … or occupant.”

29 Indeed, if, quite apart from the statutory force given to the Strata Management Statement, the second sentence of cl. 19.1(a) were sought to be enforced as a negative covenant upon the Tulk v Moxhay principle, the passage I have quoted from Forestview Nominees and the judgment of Jacob J in Hemingway Securities Ltd v Dunraven Ltd [1995] 1 EGLR 61 at 62 would support the liability of a lessee on the basis that in equity the covenant ran with the land and would bind a lessee, at least where (as here) the lessee had notice of it. However, I need not pursue that point since I find cl.19.1(a), upon its true construction, binds the lessees pursuant to s.28W.

30 I should notice that, for the Defendants, it was submitted the Court should not, on the basis of evidence of circumstances extrinsic to the Strata Management Statement, accept the Plaintiff’s construction of the document. The proposition was that a strata management statement is in the nature of a public document, to be distinguished from a private contract in the construction of which evidence of background facts known to the parties may be admissible: Opua Ferries Ltd v Fullers Bay of Islands Ltd [2003] 3 NZLR 740. There, the Privy Council held (at 750) that a timetable relating to the registration of a ferry must “speak for itself” and, excluding background circumstances, their Lorships asked:

“What then would an ordinary member of the public make of the information contained in the timetable?”

But I do not think the foregoing discussion of the interpretation of cl. 19.1(a) departs from this approach.

31 It was also submitted, for the second defendant, that the approval of its development application in respect of the use of its premises for “Oporto Chicken” overrode cl.19.1(a) by virtue of s. 28W(5) of the Strata Schemes (Freehold Development) Act. This subsection must, of course, be read with s. 28S(2) and Sched. 1C, para. 1 of which provides that a strata management statement “must not be inconsistent with” either “the conditions imposed on a development consent relating to the site of the building to which the statement relates“ or any Act or law. But an approval of drawings for the layout of a restaurant within one lot in the relevant strata plan is not, in my opinion, a “condition imposed on a development consent relating to the site of the building to which the [strata management] statement relates”, nor is it inconsistent with a statement limiting the use of the restaurant so as to exclude its use as a fast food outlet. It should not be overlooked that Mr Iqbal, on behalf of the second defendant, was not seeking an approval for a fast food outlet, but for a restaurant which he was asserting would not operate as such an outlet. In his affidavit, he swore “the development application was as a restaurant”.

32 In addition to injunctions restraining each of the Defendants from conducting a fast food outlet upon its premises referred to in the proceedings, the plaintiff sought injunctions to require each Defendant to remove its signage from the exterior of the building and to take all necessary steps to prevent the emission of smells, fumes and gases from its kitchen and cooking facilities that unreasonably interfere with the use and enjoyment of the residential lots.

33 So far as the matters complained of are part of the activities of the conduct of a fast food outlet, in which I have held each Defendant has engaged, relief must be granted.

34 But so far as these two claims are put forward independently, I should deal with them, though briefly. The issue of the signage raises two distinct questions: whether the relevant provisions of the Strata Management Statement apply to anything affixed to a façade that projects beyond the front street boundary of the area embraced by the strata plans; and whether, in any case, the signs infringe the Plaintiff’s rights. The projecting façade was constructed with the consent of the Council on Council land acquired for road widening purposes, but not presently required. It is, of course, attached to the building proper, and, in my opinion, only a somewhat fantastic reading of the Strata Management Statement and By-laws could exclude it from the application of the relevant provisions. If it is excluded, one may ask whether any accidental encroachment would automatically stultify similar provisions. But the point is of limited importance because I am not satisfied, on the evidence, that any of the signs does infringe except on the basis that it is part of an infringing use of the shop itself which it advertises.

35 I turn to what may be compendiously described as smells. The evidence establishes quite clearly, I find, that odours invade the foyer areas so as to interfere with the normal use of their homes by the residential owners and their tenants. The Defendants endeavoured to show these smells may have come from Henrietta Lane, and the first Defendant alternatively suggested (on the basis, substantially, of the evidence of one residential owner) that smells referred to as chicken fat smells emanated solely from the second Defendant’s premises. I am, however, satisfied, on all the evidence, that the smells complained of do not emanate from Henrietta Lane, but from the premises of each Defendant. I am persuaded by the evidence generally of the Plaintiff’s witnesses about the smells they individually detected, except that I do not think a complaint that a particular smell came from a residential owner’s air conditioner was accurate. However, I think it is very probable the situation with regard to smells was a more or less inevitable consequence of the carrying on of fast food outlets, and not a consequence of the defective performance of any normal activities associated with the conduct of a restaurant. That being so, and as I hold injunctive relief should be granted to restrain the conduct of fast food outlets, I do not think it would be appropriate to grant separate injunctions in respect of the smells. If I were to do so, and the Defendants did afterwards conduct restaurants that complied with cl.19.1(a) but still gave rise to complaints of smells, the very situation would arise the possibility of which the Court refused to countenance in Trade Practices Commission v Glo Juice Co Pty Ltd (1987) 73 ALR 407 at 412-413, 418; and see Commodore Business Machines Pty Ltd v Trade Practices Commission (1990) 92 ALR 563 at 574.

36 In my opinion, the proper course is to issue injunctions to restrain each Defendant from conducting a fast food outlet in the relevant premises in terms analogous to those approved in Bankstown City Council v Alamdo Holdings Pty Ltd [2004] NSW CA 35 at [89] – [108], per Spigelman CJ, with whom Giles and Ipp JJ. A. agreed. I direct the Plaintiff to bring in, on a date to be fixed, short minutes of orders appropriate to reflect these reasons. The Defendants must pay the Plaintiff’s costs, including any reserved costs.

Last Modified: 07/16/2007