Regis Towers Real Estate Pty Ltd v Kin Fung

[2000] NSWSC 438

Reported Decision: (2001) NSW ConvR 55-960

New South Wales

Supreme Court

CITATION:	REGIS TOWERS REAL ESTATE PTY LTD v. KIN FUNG & ORS [2000] NSWSC 438
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2193/00
HEARING DATE(S):	17/05/00
JUDGMENT DATE:	25 May 2000
PARTIES :	Regis Towers Real Estate Pty Ltd - Plaintiff Kin Fung - First defendant Margaret Mary Fung - Second defendant Stephen Lai - Third defendant Owners Strata Plan No 56443 - Fourth defendant Sunaust Group Pty Ltd - Fifth defendant
JUDGMENT OF:	Bryson J at 1

COUNSEL :	M Broun QC/V Bedrossian - Plaintiff C Freeman - First and Second defendants
SOLICITORS:	Broun Abrahams - Plaintiff Raymond M Wong - First and Second defendants Lin Tang & Co - Third and Fifth defendants Blessington Judd - Fourth defendant
CATCHWORDS:	STRATA TITLE - special by-laws giving owner of lots and complex manager exclusive right to conduct real estate business on premises - lease entered by another owner in contravention of by-laws - lessee not notified of special by-laws by lessor as required - application to restrain use under lease as real estate agency - owners of lots in complex bound as between each other by by-laws - presumption of regularity in making of special by-laws - whether court should decline to exercise jurisdiction - whether lot owner had a right to have dispute adjudicated under machinery in legislation - whether exclusive right excessive - whether any injunction should have effect only against lessee
LEGISLATION CITED:	Conveyancing Act 1919 s 23D Real Property Act 1900 s 42(1) Strata Titles Act 1973 Strata Schemes Management Act 1996 ss 43, 44, 46(1), 49, 53, 157, 159, 226
CASES CITED:	Bapson Pty Ltd v Puyeti Pty Ltd (1990) NSW Titles Cases 80-002 MacLeod v Proprietors of Strata Plan No 6544 [1980] 2 NSWLR 691 North Wind Pty Ltd v Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809 Proprietors of Strata Plan 1627 v Schultz (1978) 2 BPR 97-129 Solerno v Proprietors of Strata Plan 424724 (1997) 8 BPR 97-648 Sydney Diagnostic Services Pty Ltd v Hamlena Pty Ltd (1991) 5 BPR 97-367
DECISION:	See para 48

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

THURSDAY 25 MAY 2000

2193/2000 REGIS TOWERS REAL ESTATE PTY LTD v. KIN FUNG & 4 ORS

JUDGMENT

1   HIS HONOUR: Lot 643 Strata Plan 61369 is a lot in 40-50 Campbell Street, Sydney, part of a large strata development known as the Regis Towers complex. Lot 643 has a street frontage and is suitable for use as an office or shop. It is not suitable for residential purposes. Its registered proprietors, subject to a mortgage, are the first and second defendants Mr Kin Fung and Mrs Margaret Mary Fung. As lessors they have granted a lease to Sunaust Group Pty Ltd which is the fifth defendant; both parties have executed the lease but it has not been registered. The lease grants a term of two years commencing on 22 March 2000, with an option to renew for three years, and incorporates provisions of Memorandum Y517839. The covenants incorporated include the following:

IV. FURTHER COVENANTS BY THE LESSEE The lessee further covenants and agrees: (a) the lessee shall not without the consent in writing of the lessor use or occupy the premises otherwise than as nominated in Schedule Two of this Lease; such consent shall not unreasonably be refused AND PROVIDED THAT the lessee pay to the lessor for any such consent a premium of five hundred dollars ($500) in addition to a reasonable sum for any legal or other expenses incurred by the lessor.

2   The lease has no Schedule Two but in its only annexure contains the following provisions:

3. USE OF PREMISES: Real Estate Agents office/mortgage originator.

3   The first and second defendants control a company which owns the neighbouring Lot 644, where a printing business is conducted. 4   The plaintiff company owns Lots 149, 454, 488 and 650 in the strata plan. The plaintiff’s business is to conduct management of the Regis Towers complex and also a real estate business; its business involves management of the leasing of many residential and commercial strata units on behalf of their respective owners and real estate sales agency, as well as management of the whole complex for the Owners Corporation in the interest of all owners. By a Deed dated 20 April 1999 the plaintiff agreed to purchase the management rights from the developer Merriton Apartments Pty Ltd, and by a Management Agreement dated 6 August 1999 the Owners Corporation appointed the plaintiff caretaker. Clause 4 of the Management Agreement authorises the plaintiff to provide some real estate agency services as agent for the owners of lots in the building; this permission is further regulated by cll 5 and 7, and cl 6 provides:

6. The Owners Corporation must not permit the use of the common property or any of the Lots for the provision of these services, except according to the terms of this Agreement.

5   The plaintiff’s real estate agency business is wider than the area of protection of cl 6, and the plaintiff acts as selling agent whether or not properties are in the Regis Towers complex. Mr John Rose is the real estate licensee in charge of its business. 6   In addition to by-laws adopted on registration of the Strata Plan the Owners Corporation has adopted Special By-laws 1 to 6 inclusive. Special By-law 5 was adopted by a registered Change of By-laws executed on 1 September 1999 and registered soon after, and substituted new Special By-laws 1, 2, 3 and 4 for earlier Special By-laws and added Special By-law 6. Special By-laws 1 and 4 are in these terms:

SPECIAL BY-LAW 1. - Empower Caretaker-Manager Agreement

(1) In addition to its powers under the Act, the Owners Corporation has the power to appoint and enter into an agreement with a Caretaker-Manager to provide management, leasing, security, cleaning and operational services for the strata scheme.
(2) The Caretaker-Manager’s duties may include:

(a) Caretaking, supervising and servicing the common property to a standard consistent with use of lots in the scheme as high class residential apartments;
(b) Supervising the cleaning, repair, maintenance, renewal or replacement of common property and any personal property vested in the Owners Corporation;
(c) Providing services to the Owners Corporation owners and occupiers including, without limitation, the service of a handy person, room cleaning and servicing, food and non-alcoholic drink service;
(d) Providing a letting property management and sales service;
(e) Supervising Owners Corporation employees and contractors;
(f) Providing security services to the Owners Corporation;
(g) Providing cleaning, pool cleaning and gardening services to the Owners Corporation;
(h) Supervising the strata scheme generally; and
(i) Anything else that the Owners Corporation agrees is necessary for the operation and management of the strata scheme.


(3) The Caretaker-Manager must comply with instructions from the Owners Corporation about performing its duties, subject to the Caretaker-Manager Agreement.
(4) The Owners Corporation cannot, without the written consent of the Caretaker-Manager, enter into more than one agreement under this by-law at any one time, or revoke or amend this by-law without the written consent of the Caretaker-Manager or his lawful successors or assigns.

…

SPECIAL BY-LAW 4. - Non Competition

(1) The owner or occupier of a lot must not in his lot or on the common property, except with the written consent of the owners of Lots 149, 454, 488 and 650, conduct or participate in the conduct of a business which provides services in the nature of:-

(a) The business of a letting agent; or
(b) The business of a pooled rent agency; or
(c) The business of on-site caretaker, security, cleaner; or
(d) any other business activity that is either:-

(i) An activity identical or substantially identical with any of the services relating to the management, control and administration of the parcel referred to in Special By-law 1 and/or the Caretaker-Manager Agreement; and/or
(ii) An activity identical or substantially identical with any of the services provided to owners and occupiers of lots referred to in Special By-law 1, and/or the Caretaker-Manager Agreement; and/or
(iii) Any activity identical or substantially identical with any of the services relating to the letting of lots referred to in Special By-law 1, and/or the Caretaker-Manager Agreement.

7   Before they entered into the lease of Lot 643 Mr and Mrs Fung gave a disclosure statement in writing to the proposed lessee, who acknowledged this by signing a copy on 16 March 2000. The disclosure statement referred to the permitted use of the premises as “retailing shop (subject to Council’s approval)”. Mr Lai, the third defendant, is the director of Sunaust Group Pty Ltd who managed this part of its business and is the licensed real estate agent who actually conducts the operations of Sunaust Group. After Mr Lai had seen that the shop was vacant and telephoned a number shown in a notice on the front window, he told Pearl Wong, who said that she represented the landlord of Lot 643, that “I am going to use it as a real estate agent” to which she replied “It should be O.K. The landlord will give consent.” This appears to have happened on 15 March. The disclosure statement was sent on the following day. On 22 March 2000 neither of Mr and Mrs Fung was aware of the Special By-laws adopted on 1 September 1999, and they did not know there was a restraint to the effect of Special By-law 4. As a result Mr Lai was not made aware that there was a Special By-law relating to the conduct of a real estate business in the Regis Towers complex. He first learnt of the restriction when Mr John Rose told him by telephone on 5 April 2000 that Lot 643 was not able to be used by Sunaust Group as a real estate agent office. The real estate operations have been very restricted since these proceedings were commenced. 8   Sunaust Group made an application to Sydney City Council for development consent; the application was dated 11 April 2000 and the detailed description of the development was “As an office of real estate agents & mortgage originator”. The application was made without the written consent of Mr and Mrs Fung. There is a signature at the space provided for the registered owners but that is in fact Mr Lai’s signature, and he did not then have their authority to make the application. It was by implication the duty of Mr and Mrs Fung as lessors to give their consent to that application and, although they did not sign the document, they have not objected to it. 9   These proceedings were commenced by Summons on 20 April 2000. At that time the plaintiff did not know the identity of Sunaust Group as the proposed tenant, and the fifth defendant was added as a party by Amended Summons on 3 May 2000. The Owners Corporation was the fourth defendant to the Summons; the Owners Corporation took the position of a submitting defendant and the proceedings against it were dismissed on 3 May 2000. On 3 May 2000 Windeyer J made an appointment for the hearing to take place before me on 17 May. 10   The Amended Summons filed on 3 May claimed: (1) that the first and second defendants be restrained from permitting their premises to be used for a real estate agent’s office, and specified a number of classes of services the provision of which was to be restrained; and (2) that Mr Lai and Sunaust Group be restrained from operating a real estate agent’s office, again specifying services to be restrained. 11   In correspondence while the hearing was pending, solicitors for Mr and Mrs Fung contended that there was no basis for the relief sought against them, and the following assurance was given: “If the fifth defendant vacates the property, our clients will not place any other tenant in the premises contrary to the by-laws or pending any change to the by-laws.” 12   Sunaust Group has not vacated the property. Mr Lai gave evidence stating the company’s position plainly; until confronted with the litigation Sunaust Group intended to use the premises, in the terms stated in the Development Application, as an office of real estate agents and mortgage originator. Mr Lai’s evidence included the following passage: “5. We have so far refrained ourselves from conducting any real estate business in the leased premises notwithstanding this meant loss of our real estate business.” He said that he has been assured on many occasions by Pearl Wong to the effect that he can use the premises as a real estate office “but do not touch the three buildings managed by the Regis Towers Real Estate.” His evidence also shows that he would agree to have the lease assigned to any other business provided that Sunaust Groups rental and fitting costs incurred so far were covered and he says, “8. On behalf of my company and myself, I offer undertaking to the plaintiff that we will not seek to carry on business in breach of the by-laws.” 13 Mr Lai’s evidence shows in effect that if use as a real estate agent is in breach, Sunaust Group would like to get out of the premises and they seek to be released or to assign the lease. In the meantime Sunaust Group is, on the face of the lease, incurring liability for rent, and is incurring expense relating to its occupation, but has not been able to make the use of the premises which it contemplated and told Pearl Wong about from the first phone call onwards. 14 Part 5 of the Strata Schemes Management Act 1996 relates to by-laws and Div 2 is entitled “How are the by-laws enforced?”. Section 44 is in these terms:

44 Who is required to comply with the by-laws?

(1) The by-laws for a strata scheme bind the owners corporation and the owners and any mortgagee or covenant chargee in possession (whether in person or not), or lessee or occupier, of a lot to the same extent as if the by-laws:

(a) had been signed and sealed by the owners corporation and each owner and each such mortgagee, covenant chargee, lessee and occupier; and
(b) contained mutual covenants to observe and perform all the provisions of the by-laws.


(2) There is an implied covenant by the lessee in a lease of a lot or common property to comply with the by-laws for the strata scheme.

(3) In this section, lessee means, in relation to a lot in a strata leasehold scheme, a sublessee of the lot.

15 It was not disputed that the unregistered lease is a lease within the meaning of subs 44(2). It is a lease at law and not merely an equitable lease as it appears to comply with s 23D of the Conveyancing Act 1919, although it is not protected by s 42(1)(d) of the Real Property Act 1900; see also s 53. Mr and Mrs Fung, and also Sunaust Group, are bound as by covenant to the plaintiff to observe and perform all the provisions of the by-laws or (for Sunaust Group) to comply with the by-laws, and these statutory covenants are enforceable at the suit of the plaintiff. 16 Section 46 is entitled “How does a lessee get information about the by-laws?”. Subsection (1) is in these terms:

(1) If a lot or common property in a freehold strata scheme is leased, the lessor must provide the lessee with a copy of the by-laws, and any strata management statement affecting the lot or common property, within the time and in the manner required by this section.

17 It is plain as a matter of fact that Mr and Mrs Fung, who did not know of the Special By-laws, did not provide Sunaust Group with a copy of the By-laws, and were in breach of s 46(1). By leasing the property without first finding out and telling the lessee what the by-laws provided at the time, they did not obey the law and they did not observe a reasonable standard of care, in the interest of themselves, the lessee or other owners, and the fact that there were unaware of what the by-laws provided for cannot excuse them in any way or improve their position. Their counsel contended that as they did not know of the by-laws it should not be assumed that the amendments to the by-laws are valid. The prima facie position is that the Special By-laws were made and registered in a regular manner, and I act on the presumption of regularity in the absence of any evidence that they were not. 18 On 11 May 2000 Mr and Mrs Fung filed a written application for an order by a Strata Schemes Adjudicator under the Strata Schemes Management Act seeking “an order that the by-law be repealed (s 157) and/or an order declaring the by-law to be invalid (s 159)”. These reasons were given as:

Our complaint relates to the attached Change of By-Laws dated 1 September 1999 and in particular Special By-law (non-competition).

Regis Towers Real Estates Pty Ltd (“The Company”) is the owner of Lots 149, 454, 488 and 650 as referred to in paragraph 1 of the Special By-law 4. In proceedings instituted by it in the Supreme Court of New South Wales, that company seeks an injunction restraining us from leasing Lot 643 for use by our tenant as a real estate agency.

Also attached for your information is a copy of the Service Agreement between the company and the Owners Corporation of Strata Plan 56443 dated 6 August 1999. We believe that the Special By-law referred to above gives the company exclusive rights in excess of those intended by the Service Agreement and in such circumstances, the Special By-law should be repealed or otherwise declared invalid.

19 Notification of an application of this kind to interested persons is the responsibility of the Registrar of the Strata Schemes Board, who must consider to whom and how notice is to be given. Mr and Mrs Fung did not advise other parties to these proceedings of the application, or of evidence relating to it, until some time on the day before the hearing day. 20 Section 157 is entitled “Order revoking amendment of by-law or reviving repealed by-law.” Subsection 157(1) is in these terms:

(1) An Adjudicator may make one of the following orders if the Adjudicator considers that, having regard to the interest of all owners in a strata scheme in the use and enjoyment of their lots or the common property, an amendment or repeal of a by-law or addition of a new by-law should not have been made or effected by the owners corporation:

(a) an order that the amendment be revoked,
(b) an order that the repealed by-law be revived,
(c) an order that the additional by-law be repealed.

(2) An order under this section, when recorded under section 209, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).

21 There was some debate about whether an order by an Adjudicator can have retrospective effect, or whether a by-law would be effective until revoked. I will leave this question undecided; the power in subs 157(1)(a) to revoke an amendment may suggest that the order can be retrospective; the reference in subs (2) to the need to record the order may support the opposite view, and the explicit provisions of s 159 authorising a date for operation of an order earlier than the date on which the order is recorded, where the order is made on the limited ground referred to in s 159, suggest that orders made under other sections may not have retrospective effect. 22 The Supreme Court does not have power to act under s 157, unless perhaps in an appeal after decision by an Adjudicator. In my view the prospects of success in the application cannot be said to be strong. The stated ground is to the effect that Special By-law 4 gives the plaintiff exclusive rights in excess of those conferred on it by the Management Agreement. It seems to me that this ground is little to the point of the important question whether a Special By-law should not have been made, having regard to the interest of all owners of lots in the use and enjoyment of their lots for the common property. Most owners of lots own residential lots, and the use and enjoyment of their lots could not be affected by restrictions which apply to the relatively small number of lots the use of which Special By-law 5 could restrict. The restriction on use and enjoyment of the lots capable of commercial use is of a kind which s 49 does not forbid and subs 43(2) does not exclude. Plaintiff’s counsel pointed out that having management conducted by a real estate agent with premises on the site can moderate the costs incurred for management services, and that there are advantages in inducing a real estate agent to take up the management task by offering exclusivity. This may be so; the contention is one for consideration by the Adjudicator. I am in no position to decide the application in advance and do not attempt to do so. 23 The application under s 157 was brought forward late in the controversy in circumstances which give it the air of contrivance, no order has been made on it, and this case should be decided on the present state of the by-laws. 24 On the undisputed evidence it is clear and it was not disputed that there is a threatened breach of Special By-law 4. The covenants of the defendants are negative in nature and, subject to any discretionary considerations, an injunction to restrain breaches is the appropriate remedy. Counsel for Mr and Mrs Fung put forward a number of discretionary considerations, going to the exercise of the Court’s jurisdiction at all, and also to the choice of an injunction against his clients as the remedy. 25 On the discretionary question the plaintiff’s counsel submitted that there clearly has been a breach of the Special By-law 4 and of the implied covenant, and the position should be established and Sunaust should have its position made clear as soon as is possible. 26 On the issue whether any injunction should be made against Mr and Mrs Fung the plaintiff’s counsel submitted that the Court should take the view that it is clear that there had been a breach of the by-law and the covenant, and that it is within the power of Mr and Mrs Fung to release Sunaust Group from its apparent obligations or to ask or require Sunaust Group to leave the premises. Counsel submitted that it is not practically possible to enforce the lease or to claim rent because Sunaust Group has not been given what the Fungs contracted to give it, that is the opportunity to use the premises for a real estate agency among other things. It was contended that both parties to the lease are entitled to be released from it. 27 The evidence of Mr Lai shows that it would not be difficult for Mr and Mrs Fung to comply with any injunction even if they were required to bring the lease to an end to comply with the injunction. It is very improbable that there would be any difficulty in reaching some accommodation with Mr Lai. If performance of the lease by both of the parties to it were restrained by injunction there would be no prospect of performance of the lease being required by any equitable remedy, while the injunctive restraint would prevent either party restrained from showing any significant damage caused by any breach by the other. In any event Mr and Mrs Fung are responsible for the difficulty. 28 Mr Lai and Sunaust Group have not so far taken an aggressive stance. Mr Lai was given a clear misrepresentation about the operative controls of use of the premises by Pearl Wong on behalf of Mr and Mrs Fung; this may be a ground on which the lease may be rescinded. There are clearly remedies under the Trade Practices Act 1974 (Cth) s 52 as Ms Wong’s conduct was misleading and deceptive, and there was a fundamental mistake about the premises being available to use as a real estate agency. In the presence of these facts Sunaust Group could have little difficulty in escaping from the lease. 29 Counsel for Mr and Mrs Fung contended that as a matter of discretion the Court should decline to exercise its jurisdiction, and should leave the controversy to be determined under the procedures provided for by the Strata Schemes Management Act 1996. Counsel pointed out that the powers under that Act extend to adjudication dealing with disputes, and to granting interim orders pending adjudication. He contended that Mr and Mrs Fung have a right to have their claim examined and adjudicated in accordance with the Act, and said that any injunction which prevented that happening would be a de facto removal of their statutory right to make that application. He pointed out that the claim is for a perpetual injunction. He accepted that the plaintiff’s rights under the Management Agreement had been granted for valuable consideration, and that Mr and Mrs Fung could not and did not seek to interfere with those rights relating to caretaking duties and lots within the Regis Towers complex. Counsel referred to decisions in which this Court has declined to exercise jurisdiction and has left adjudication of disputes relating to strata schemes to decision by machinery provided for by earlier legislation, particularly the decisions of Kearney J in MacLeod v. Proprietors of Strata Plan No. 6544 [1980] 2 NSWLR 691 and Rolfe J in North Wind Pty Ltd v. The Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809. 30 In MacLeod’s case Kearney J said, at para 25, pp 695-696, referring to Pt V of the Strata Titles Act 1973:

On this question of discretion I consider that the subject matter of the proceedings is such that it ought to be the subject of an application to the Commissioner rather than being prosecuted in this Court. While the matter may eventually reappear in the court on appeal from a decision of the board, nevertheless the Act clearly evinces the intention that these matter should originate with the Commissioner under Pt V, and that the Court should entertain such proceedings only where special circumstances such as extreme urgency in effect necessitate the intervention of the Court. Further, any need to follow the above course arises from the plaintiffs’ own neglect to prosecute their appeal from the Commissioner’s decision.

31 In referring to the intention evinced by the former Act, Kearney J referred to s 146 of the Strata Titles Act 1973 with which his Honour dealt at pp 693 and 694. Generally similar provision is now made by s 226 of the Strata Schemes Management Act 1996. Kearney J’s decision was a discretionary decision, and it was given where the underlying controversy related to problems arising from water penetration through the roof. The plaintiffs sought an order that the Body Corporate repair part of the roof being common property in a proper and workmanlike manner so as to render it impervious to water penetration, and to repair the interior of the plaintiff’s lot damaged by water coming through the roof. See pp 691-692. As much experience shows, building disputes and disputes in which supervision in detail of building work is required are not well suited for equitable remedies. In the present case the facts for practical purposes are not disputed and adjudication is required on the effect of conduct and the interpretation of documents, and there are no corresponding inconveniences for determination of the litigation by the Court. 32 In the North Wind case Rolfe J was of the view that the dispute, which also included the controversy relating to building work which it was contended should be done, and what in detail should be done, was one to which the procedure under the Strata Titles Act 1973 was particularly appropriate. See pp 815-816. 33   It is not uncommon for the Court to determine controversies which could be referred to adjudication under strata titles legislation, without declining jurisdiction on discretionary grounds. Examples are Solerno v. Proprietors of Strata Plan 424724 (1997) 8 BPR 97-648 (Windeyer J), Bapson Pty Ltd v. Puyeti Pty Ltd (1990) NSW Titles Cases 80-002 (Waddell CJ in Eq) and Sydney Diagnostic Services Pty Ltd v. Hamlena Pty Ltd (1991) 5 BPR 97-367 (Court of Appeal). See too Proprietors of Strata Plan 1627 v. Schultz (1978) 2 BPR 97-129. This court has exercised jurisdiction from time to time, the cases do not show any general reluctance, and the reported cases where jurisdiction has been declined relate to detailed disputes about building work. 34 In my opinion the procedure under the Strata Schemes Management Act is not well accommodated to commercial disputes and the urgency imposed by economic interests, and is primarily directed and suited to disputes relating to home units. In my view it is in the interests of all concerned that I should hear and determine the present litigation and establish the positions of the parties. 35 The present proceedings have aspects of urgency in that it is plain, and is not open to substantial dispute, that unless there is an injunction Special By-law 4 will not be complied with; the form of the defendants’ own documents show that clearly enough. It is likely that if an injunction is refused the conduct which the plaintiff seeks to restrain would occur and its business interests would be affected thereby. 36 Counsel for Mr and Mrs Fung contended that it was for consideration on the discretion to decline jurisdiction that, as he put it, “what is occurring by circumventing the Strata Schemes Management Act is to remove the opportunity for Mr and Mrs Fung from exercising their rights under that Act.” It was contended that the defendants are significantly prejudiced in that they are unable to bring a cross-claim relying on s 157, and that the parties are forced to go to two different jurisdictions and unnecessarily to multiply proceedings. This observation was based on there being no opportunity in these proceedings to seek alteration of the by-laws in a cross-claim, as that power is not conferred on the Court. I do not regard this observation as to the point, as the right to seek to vary the by-laws can be pursued and a decision obtained on it in due time. That right is not injured or affected by a decision on the rights of the parties as they now stand in the unamended form of the by-laws. The application to the Adjudicator will have whatever merits it has whether or not parties have in the meantime been required to comply with their present obligations. The Court is asked to act in these proceedings on the right which the parties have now. 37 If the by-law were to be altered in the future Mr and Mrs Fung would have the opportunity to ask the Court to dissolve or vary any injunction, even a perpetual injunction, and the possibility that there may be an alteration is adequately protected by reserving liberty to apply in that event, and in that way qualifying the perpetual nature of the injunction. These submissions appeared to make some complaint about the plaintiffs using remedies under the general law, but as those remedies are especially preserved by subs 226(1) of the Strata Schemes Management Act, this is not an appropriate subject for complaint. It was then said that the application for relief is premature, but there is no substance in this contention, as the plaintiff has offered proofs which show that there already has been a breach, and that it is reasonable to fear continuing breach. 38 In assessing the weight of the opportunity to apply for alteration of Special By-law 4 for a discretionary refusal of jurisdiction it is significant and very adverse to the submission that the application under s 157 was made very recently, when the controversy was well advanced, and with a strong air of contrivance illustrated by the plaintiff’s not having been told of it until the day before the hearing. It is unlikely that this event would have happened in a sincere application, which would have been pursued openly and would have been prefigured in the correspondence which passed while the proceedings were pending, in which possible outcomes were discussed. 39 It was also contended that there is no occasion to impose an injunction on Mr and Mrs Fung, and that the orders as framed are too wide. It was submitted that it would be sufficient to impose restraint on Sunaust Group. The defendants’ counsel contended that these defendants have a prima facie enforceable lease which they entered into for valuable consideration, and that an injunction would cause them to act in breach of it. He contended, apparently on the basis that the previous submission justified the contention, that the injunction should be directed only against the tenant. These submissions were not well founded or readily comprehensible; if the plaintiff is entitled to relief, it should have relief against all involved in the threatened breaches of covenant. The statement in Mr and Mrs Fung’s solicitors’ letter of 12 May 2000 about what they would do if the fifth defendant vacated the property is not a reason in substance why they should not be restrained. 40 Counsel also observed that the by-laws do not extend to preventing the business of mortgage originator being carried on. As it was clearly contemplated and intended by the lessors and the lessee and Mr Lai that the business of real estate agent would be carried on, this observation had no force. 41 The fact that Mr and Mrs Fung might be placed in breach of their contract with Sunaust Group if restrained from breach of covenant by permitting activities by others, was put forward as a consideration of hardship against making an injunction. In my view it is a consideration of no weight, as it is a disadvantage which they imposed on themselves. When the plaintiff complains of a breach of an obligation to it, it is not a significant consideration adverse to granting the remedy that the first defendants have later entered into an inconsistent contractual obligation. 42 Submissions on behalf of Sunaust Group were generally to the effect that Sunaust Group was prepared to comply with its obligations as determined by the Court, but is in a difficult position now as it is in occupation and obliged to pay rent and other outgoings, but has been kept standing without carrying on a real estate agency until these proceedings are decided. As shown in Mr Lai’s affidavit, Sunaust Group would be happy for someone else to take an assignment and would seek to be recompensed for its costs and expenses. The position of Sunaust Group and the impact on it of the delay in resolution of the dispute are considerations against declining to exercise jurisdiction and against leaving resolution to some future determination by an Adjudicator. 43 Plaintiff’s counsel pointed out that all difficulties arise out of Mr and Mrs Fung not having complied with s 46, and not having found out and given notice of what is in the by-laws. It is very unlikely that there would have been a lease or that Sunaust Group would have taken any interest in the premises if Mr Lai had known of the by-laws, whether or not the by-laws are amended by some decision in the future. 44 Plaintiff’s counsel contended that the substance of the dispute before me relates to costs and liabilities as among the defendants. As I observed during the argument I do not propose to establish in detail what is to happen among the defendants or to try to solve every problem which the facts apparently present. There is no cross-claim and I propose to hear and determine the plaintiff’s claim. 45 The plaintiff has a clear right to a remedy against the first and second defendants and there is no substantial discretionary reason why the injunction should go only against the fifth defendant or only against the third and fifth defendants. 46 For these reasons I propose to order an injunction as claimed, while reserving liberty to apply to vary or dissolve the injunction in the event that Special By-law 4 is altered by order of the Adjudicator. 47 I have not yet considered questions of costs. 48 Order:

(1) Injunctions as claimed in claims 1 and 2 of Amended Summons filed on 3 May 2000.
(2) Reserve to each party liberty to apply to dissolve or vary the injunctions if there is an alteration in Special By-law 4 Strata Plan 61369.
(3) Costs reserved.

Last Modified: 09/26/2000