Ren v Strata Corporation 12753 Inc - [2024] SASCA 120

SUPREME COURT OF SOUTH AUSTRALIA
(Court of Appeal: Civil)
REN v STRATA CORPORATION 12753 INC
[2024] SASCA 120
Judgment of the Honourable Justice Bleby (ex tempore)
9 October 2024
HIGH COURT AND FEDERAL COURT - HIGH COURT OF AUSTRALIA - APPELLATE JURISDICTION - PROCEDURE - STAY OF PROCEEDINGS - PENDING SPECIAL LEAVE APPLICATION
Application for a stay pending an application for special leave to appeal to the High Court of Australia.
On 29 August 2024, the Court of Appeal dismissed an appeal from a single Judge of the District Court under the Strata Titles Act 1988 (SA).
The dispute relates to the appellant’s conversion of a one-bedroom unit into a five-bedroom apartment over which she granted leases or licences for parts therein. The trial Judge found the erections of walls for this purpose were ‘prescribed works’ for which the appellant failed to obtain the requisite authorisation. This lack of necessary authorisations extended to her granting of leases or licences over parts of the unit.
The trial Judge ordered the applicant to restore the unit to its original state, to refrain from carrying out any further prescribed works without authorisation, to give notice to any tenants that they would be required to vacate, and to refrain from entry into any leases or licences over any part of the unit.
The Court on Appeal upheld the substance of those orders while extending their timeframe; the applicant was given from 9 December 2022 until 28 September and 28 October 2024 to give the requisite notice of lease or licence termination to her tenants and restore the unit to its original condition, respectively.
The applicant now applies for a stay of those orders pending an application of special leave to appeal against the decision of the Court of Appeal to the High Court. The respondent sought the costs of defending that application.
Held, refusing the application for a stay of the orders pending the application for special leave to appeal:
1.There is little prospect that the judgment of the Court of Appeal will attract a grant of special leave to appeal.
2.As to the balance of convenience, the burden to the applicant of having to remediate now cannot be said to be greater than the burdens to the respondent Strata Corporation of the applicant not doing so for a few months more.
3.The applicant is to pay the respondent’s costs of the stay application by way of lump sum, fixed at $7,000 in lieu of an order for indemnity costs.

Strata Titles Act 1988 (SA) ss 29, 29(1)(b), 41A(9), 44(2)(b)(ii); Judiciary Act 1903 (Cth) s 35A, referred to.
Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [No 1] (1986) 161 CLR 681, applied.
Ren v Strata Corporation 12753 Inc [2024] SASCA 106; Strata Corporation 12753 Inc v REN [2022] SADC 134, discussed.

REN v STRATA CORPORATION 12753 INC
[2024] SASCA 120
Court of Appeal – Civil

BLEBY JA (ex tempore): This is, in substance, an application to stay orders made by the District Court under the Strata Titles Act 1988 (SA) (‘the Act’), as varied on appeal by the Court of Appeal, pending an application for special leave to appeal to the High Court of Australia.
The history and trial of the matter
The Court of Appeal summarised the history of the matter as follows:[1]
The respondent is the Strata Corporation of property in strata plan 12753 at 21 Pulteney Street, Adelaide SA 5000 (‘the Strata Corporation’); a building comprised of 52 residential units known as the Mansions on Pulteney (‘the Mansions’). The appellant is the registered proprietor of unit 24 (‘the unit’) in that building and a member of the Strata Corporation. The unit was initially designed as a one-bedroom apartment. The appellant erected partition walls within the unit to create five separate bedrooms and proceeded to grant leases or licences in respect of each of the bedrooms, without the authorisation of the Strata Corporation.
The Strata Corporation instituted proceedings in the District Court on the ground that the appellant had breached ss 29(1)(b) and 44(2)(b)(ii) of the Act by, respectively, failing to obtain authorisation from the Strata Corporation to carry out ‘prescribed works’ on the unit and grant any lease or licence over part of the unit. The Strata Corporation sought orders that the appellant restore the unit to its original state and refrain from leasing or licencing any part of the unit; and a declaration that any lease or licence already granted was void.
On 11 November 2022, the trial Judge found the appellant had breached both ss 29(1)(b) and 44(2)(b)(ii) of the Act and declared any lease or licence agreements entered into by the appellant in respect of the unit void.[2]
[1] Ren v Strata Corporation 12753 Inc [2024] SASCA 106 at [1]-[3].
[2] Strata Corporation 12753 Inc v Ren [2022] SADC 134.
The trial judge made orders pursuant to s 41A(9)(c) of the Act, requiring the applicant to carry out any necessary building works to restore the unit to its original state by 30 April 2023. He also ordered that the applicant refrain from carrying out any further prescribed works on the unit until the Strata Corporation authorised such works by special resolution. He ordered that the applicant give any tenants occupying the unit notice that they must vacate the premises by 31 January 2023. He further ordered that the applicant refrain from entering into any lease or licence agreement over any part of the unit unless authorised under s 44(2)(b)(ii) of the Act.
The appeal to the Court of Appeal
The applicant appealed to the Court of Appeal on seven grounds. On 29 August 2024, the Court of Appeal refused leave to appeal on Ground 2, which related to costs, and otherwise dismissed the appeal. The Court made orders extending the time that the applicant was required to give notice to tenants occupying the unit to 28 September 2024 and extending the time for the applicant to restore the unit to its original state to 28 October 2024.
Relevantly for present purposes, Ground 4 of the appeal to the Court of Appeal complained that the Strata Corporation was estopped from commencing proceedings in the District Court and sought relief under s 41A of the Act. The applicant’s essential contention was that she had proceeded with the purchase of the unit because she had been led to believe by the Strata Manager, Ms Ellis, that she could proceed with the plans she had for the property. The Court traced the history of the dealings between the applicant and the Strata Corporation. It concluded, on the basis of the evidence of the dealings between the applicant, her agent and the Strata Corporation:[3]
Accordingly, given the trial Judge’s uncontested findings that the Strata Corporation advised the appellant’s real estate agent and previous owner before settlement that the renovation required approval by special resolution, and that the management committee would not vote in favour of the renovations (as supported by the email of 4 September 2018), as well as the assertion by Ms Ellis that she told the appellant the same over the telephone, we do not consider that there was any basis to find that the appellant was led to believe she could carry out her proposed renovations to the unit, or that she proceeded with the purchase on that basis. Before settlement the appellant’s agent was warned, and after settlement the appellant was warned. There was no legal or factual basis to find that the respondent was estopped from pursuing proceedings in the District Court or defending this appeal.
[3] [2024] SASCA 106 at [72].
Ground 5 of the appeal complained that the trial judge had erred in finding that the putting up of internal walls constituted the alteration of a building and the erection of a structure and was ‘prescribed work’ for the purposes of s 29 of the Act. Section 29 provides:
29—Alterations and additions
(1)     Subject to subsection (1a), a person must not carry out prescribed work in relation to a unit unless the person is authorised to do so—
(a)where all the units comprised in the strata scheme consist of non‑residential premises—under the articles of the strata corporation; or
(b)in any case—by special resolution of the strata corporation.
(1a)   Subsection (1) does not apply to—
(a)prescribed work carried out in compliance with a direction under section 23 of the Housing Improvement Act 1940; and
(b)prescribed work carried out on a unit in a strata scheme consisting only of 2 units if the work is approved development under the Planning, Development and Infrastructure Act 2016.
(1b)   Where a person carries out prescribed work referred to in subsection (1a)(b), the strata corporation may, by notice in writing to the owner of the unit, require the owner to carry out, within a reasonable period fixed in the notice, specified work to remedy any structural deficiency caused by the work.
(2)     Where a person acts in contravention of subsection (1), the strata corporation may, by notice in writing to the unit holder, require him or her to carry out, within a reasonable period fixed in the notice, specified work—
(a)to remedy any structural deficiency caused by the work; or
(b)to restore the unit to its previous state.
(6)     In this section—
prescribed work in relation to a unit means—
(a)the erection, alteration, demolition or removal of a building or structure;
(b)the alteration of the external appearance of a building or structure.
The applicant contended that the putting up of internal walls was not prescribed work as, first, the external appearance of the building was not altered and second, that the internal alterations were temporary and therefore did not meet the definition of a ‘structure’. The Court of Appeal held that there was no legislative requirement that the work must be permanent to constitute the alteration of a building or the erection of a structure. It further held that in any event, as almost any alteration of a building or erection of a structure could be reversed, to import a requirement of permanency would defeat the purpose of the legislation.
The Court of Appeal was satisfied that the installation of large stud walls adjoining the floor and ceiling constituted the erection of a structure and an alteration of the building and was prescribed work for the purposes of s 29. In circumstances where it was satisfied that there was ‘overwhelming evidence’ that the Strata Corporation had not passed any special resolution authorising the building works, it found that the trial judge had made no error in finding that the applicant was in breach of the Act.
The proposed grounds of appeal to the High Court
The applicant has now applied for special leave to appeal to the High Court of Australia. The application for special leave articulates three grounds of appeal. These are to the following effect:
1.that the Court of Appeal misclassified non-structural stud partition walls as ‘prescribed work’ within the meaning of s 29 of the Act;
2.that the Court of Appeal erred in failing to apply the doctrines of estoppel, waiver, acquiescence and laches, which should have precluded the Strata Corporation from revoking leasing rights after nearly 30 years of acquiescence; and
3.that the Court of Appeal misapplied the doctrines of estoppel, waiver, acquiescence and laches to bar the Strata Corporation from enforcing a reversion to the original one-bedroom configuration under s 29 of the Act.
The principles applicable to an application for a stay pending an application for special leave to appeal to the High Court are well understood. In Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1), Brennan J said:[4]
In each case when the Court is satisfied a stay is required to preserve the subject-matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of a stay will cause loss to the respondent; and fourthly, where the balance of convenience lies.
[4] Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (No 1) (1986) 161 CLR 681 at 685.
The second of these considerations can be put to one side, as the applicant is seeking in a stay in this Court. As to the third, there is no strict evidence before me that a grant of a stay would cause loss to the respondent. Perhaps all that can be said is that the power of authorisation of the Strata Corporation under s 29 of the Act is conferred in order to maintain the integrity of the strata scheme. On the findings of the Court of Appeal, the non-remediation of the unit has the capacity to damage the integrity of that scheme. There is also evidence, however, of continued risk to the respondent, which I will address on the topic of the balance of convenience. Ultimately, the position of non-remediation of the unit redirects attention to how likely it is that the Court of Appeal’s decision will be overturned.
The prospects of a grant of special leave on the proposed grounds of appeal
I turn, then, to whether there is a substantial prospect that special leave to appeal will be granted. It is helpful here to consider the factors prescribed by s 35A of the Judiciary Act 1903 (Cth) to which the High Court may have regard when considering whether to grant special leave to appeal:
35A Criteria for granting special leave to appeal
In considering whether to grant an application for special leave to appeal to the High Court under this Act or under any other Act, the High Court may have regard to any matters that it considers relevant but shall have regard to:
(a) whether the proceedings in which the judgment to which the application relates was pronounced involve a question of law:
(i)that is of public importance, whether because of its general application or otherwise; or
(ii)in respect of which a decision of the High Court, as the final appellate court, is required to resolve differences of opinion between different courts, or within the one court, as to the state of the law; and
(b) whether the interests of the administration of justice, either generally or in the particular case, require consideration by the High Court of the judgment to which the application relates.
Proposed Ground 1 raises a question of construction of s 29 of the Act and specifically the meaning of ‘prescribed work’. The question of interpretation appears relatively straightforward. The applicant relies on what she claims to be exemptions in various ‘national building regulations’ which, she submits, exempt structures such as the one in question from requirements of planning and building approval. As I understand the argument on this ground, she submits that s 29 should be interpreted in conformity with these provisions, so as to ensure national consistency. However, whether or not the applicant is correct in her submission as to the effect of the interstate provisions she cites, the present case is concerned with the powers of a Strata Corporation. It is not concerned with the application of planning laws and the exemption of types of work from planning and building approvals.
I do not think that Proposed Ground 1 enjoys much, if any, prospect of success. Neither do I think it raises a question of public importance. It may be accepted that s 29 has general application in the State. However, the applicant has not identified anything indicating that it has any wider importance or that there are competing constructions that require determination by the High Court.
Ground 2 invokes various equitable defences to the Strata Corporation’s exercise of its powers on the basis of what the applicant claims to be a 30-year practice of the Strata Corporation allowing the leasing of units as ‘rooming houses’. For example, the applicant submits that the Strata Corporation has, by its inaction over a 30-year period, waived its right to enforce the restrictions on granting a lease or licence over part of a unit under s 44 of the Act, in circumstances where the city council has approved the current use of the unit in question.
In a similar vein, the applicant contends that the Strata Corporation is estopped from exercising its powers on the basis of the Strata Corporation allowing the practice of rooming and, in her case, issuing her with five keys for her ‘five‑bedroom configuration’.
The applicant invokes doctrines of acquiescence and laches, on account of inaction by the Strata Corporation, to similar effect.
Without going into the capacity of equity to prevent the Strata Corporation from exercising its statutory powers in the interests of the unit holders, the immediate difficulty confronting the applicant is that this contention does not appear to have featured at trial or before the Court of Appeal. The estoppel ground considered by the Court of Appeal related to the applicant’s engagement with Ms Ellis in 2018 and 2019. There do not appear to be any findings of fact about the practice of the Strata Corporation for the last 30 years, as the issue was not raised.
In that circumstance, and in circumstances where this ground raises no question of public importance, I do not think that there is any real prospect that Ground 2 will attract a grant of special leave to appeal.
Proposed Ground 3 reflects, in part, the estoppel ground that the applicant raised before the Court of Appeal. However, it goes further in raising for the first time various other equitable defences to the Strata Corporation exercising its powers to require a remediation of the unit to its original configuration. Putting to one side the expansion of the argument, this ground is, in my view, rendered unarguable by the trial judge’s findings of fact. I have already quoted the Court of Appeal’s summary of the effect of those findings of fact. As the Court of Appeal found, the trial judge’s findings left no legal or factual basis to find that the respondent was estopped from pursuing proceedings in the District Court.
The applicant casts the issue on the special leave application as whether the Strata Corporation is prevented, by operation of the various equitable doctrines, from enforcing a reversion to the original configuration under s 29. The essence of the question is the same as it was in the Court of Appeal. As the Court of Appeal found, the trial judge’s findings of fact stand implacably in the way of the applicant succeeding on this issue. Moreover, the applicant’s contentions on this ground simply invoke well-known equitable principles to facts as found. They do not raise any question of public importance. I consider the prospect of a grant of special leave to be negligible.
Other issues raised by the applicant
The applicant has filed an affidavit and written submissions in support of her application. By these documents, the applicant raises several issues in addition to the matters addressed above. Put briefly, they incorporate the following:
·the action taken by the respondent, and the orders of the District Court, are against the applicant personally, and not in her capacity as trustee of the Si Ren Trust. The orders are thereby ‘unsound’ and unenforceable;
·the orders require a change in use of the unit in question. That change requires formal council approval under the Development Act 1993 (SA) and the Development Regulations. Without this, the orders are ‘unlawful’. In this regard, I note that council approval was granted for the current use of the unit;
·the respondent Strata Corporation has not established by-laws to revoke existing leasing rights, and as such cannot prevent a unit holder from leasing their property;
·there is no practical or legal necessity for the orders, which ‘undermines’ their validity;
·the respondent has ‘misused’ the orders of the court to deactivate the fob access of the additional key fobs, which has targeted the tenants, ‘restricting their access without basis’. This shows a pattern of bad faith and retaliation and, together with the failure to establish by-laws restricting leasing rights, ‘indicates a lack of genuine regulatory intent’;
·the solicitors for the respondent misled the court by omitting key facts;
·these omissions constituted ethical and legal violations of the Australian Solicitors Conduct Rules by the respondents’ solicitors;
·the litigation was initiated without the consent of a majority of unit holders, contrary to the Strata Title Agreement;
·the litigation constituted a misuse of Strata funds;
·the respondent’s conduct constituted a misuse of litigation for business advantage and is ‘inherently unenforceable’;
·the respondent’s conduct may constitute a breach of the Australian Consumer Law and may otherwise incur criminal liability.

This is not an exhaustive list of every contention now raised by the applicant. It is not necessary to explore the contentions raised in the applicant’s affidavit or her written submissions further. To the extent that those contentions relate to the proposed grounds of appeal, I have addressed them. Otherwise, they are not raised as grounds of appeal on the application for special leave to appeal. They did not form part of the issues before the Court of Appeal. In substance, they appear fanciful. They do not contribute to the application for a stay pending determination of the application for special leave to appeal.
The balance of convenience
Finally, there is the balance of convenience. I accept that were the applicant to succeed in her appeal to the High Court, a failure to have obtained a stay will be to her prejudice, as she will have had to remediate the unit to its original configuration in the meantime. On the other hand, the Strata Corporation has the benefit of two judgments in its favour and continues to be burdened with an unremediated unit.
The nature of that burden is the subject of an affidavit by Lynne Kaye Veness, secretary to the Strata Corporation. Ms Vaness’s affidavit speaks to the compromise of safety standards by reason of the current configuration. There is a risk of further damage to the building as a State Heritage Place, and in particular the roof, and risk to the insurance of the building due to excessive demand on hot water services by reason of the excessive occupation of the unit. In this regard, the South Australian Civil and Administrative Tribunal (SACAT) handed down a decision on 11 June 2024 dismissing the applicant’s application for review of the decision of the Housing Safety Authority to issue a housing improvement order in respect of the unit.[5] Relevantly, SACAT held that the lack of an electrical certificate of compliance in respect of the electrical defects in the bathroom and kitchen, the lack of adequate ventilation in the kitchen and the fact that one room disposed as a bedroom was smaller than the minimum prescribed size for a bedroom, amounted to defects which could demonstrate that the premises are unsafe or unsuitable for human habitation.
[5] Ren v Housing Safety Authority (No 2) [2024] SACAT 40.
Determination of the application for special leave will likely take a few months at most. I consider that factor, and the burden to the applicant of having to remediate the unit immediately, are considerations that favour the applicant. However, the burden to the applicant of having to remediate now cannot be said to be greater than the burdens to the respondent Strata Corporation of the applicant not doing so for a few months more.
Conclusion
In any event, for the reasons discussed above, I think that the applicant’s prospects of success on her special leave application are so remote as to be negligible. In the present case, that consideration strongly outweighs any matters that can be said to be either neutral or to some degree in the applicant's favour on the application for a stay. The applicant has not demonstrated that the respondent should be kept from the benefit of its judgments at trial and on appeal on account of the application for special leave.
I refuse the application for a stay of the orders of the trial judge as modified by the Court of Appeal.
Costs
The respondent sought an indemnity costs order or an order for costs as a lump sum in lieu of indemnity costs. The basis for an indemnity costs order lay in a 26 September 2024 letter from Botten Levinson, solicitors for the respondent, to the applicant. By that letter, the solicitors for the respondent advised of their client’s intention to apply for indemnity costs in the event that the application was prosecuted. The letter explained clearly the futility of the application on the basis reflected in these reasons. I am satisfied that on its face, the letter establishes a basis for an indemnity costs order. I would have been satisfied to make such an order had the respondent not now sought the payment of a lump sum in lieu.
I am satisfied that a lump sum costs order in lieu of indemnity costs, discounted to a small degree, should be made. The applicant is to pay the respondent a fixed amount of $7,000 for its costs of the stay application.