Santai v The Owners - Strata Plan No. 77971 - [2010] NSWSC 628

CITATION: Santai v The Owners - Strata Plan No. 77971 [2010] NSWSC 628

HEARING DATE(S): 13/5/10

JUDGMENT DATE :
17 June 2010

JURISDICTION: Equity Division
Commercial List

JUDGMENT OF: McDougall J at 1

DECISION: Limited declaratory relief granted; amended summons otherwise dismissed, reserve costs for further argument.

CATCHWORDS: STRATA TITLES – whether agreement is a “caretaker agreement” – power to make by-laws – validity of by-laws – by-laws and necessary degree of connection. - CONTRACTS – illegal and void contracts – whether grant of rights was illegal because party did not hold licence as required by statute – whether contract void or unenforceable because of illegality – impermissible delegation of the owners corporation’s functions. - PRACTICE AND PROCEDURE – discretionary grounds for granting declaratory relief – Court’s obligation to deal with issues before it in light of s 56 of the Civil Procedure Act 2005 (NSW).

LEGISLATION CITED: Civil Procedure Act 2005 (NSW)
Property, Stock and Business Agents Act 2002 (NSW)
Strata Schemes Management Act 1996 (NSW)
Strata Schemes (Freehold Development) Act 1973 (NSW)
Supreme Court Act 1970 (NSW)

CATEGORY: Principal judgment

CASES CITED: Carney v Herbert [1984] 3 NSWLR 85
Fitzgerald v FJ Leonhardt Pty Limited (1997) 189 CLR 215
Houghton v Immer (No. 155) Pty Ltd (1997) 44 NSWLR 46
Hurst v Vestcorp Ltd (1988) 12 NSWLR 394
Nelson v Nelson (1995) 184 CLR 538
Owners-Strata Plan No 56443 v Regis Towers Real Estate Pty Ltd (2003) 58 NSWLR 78
Owners Strata Plan No. 61643 v 183 on Kent Management Pty Limited [2007] NSWSC 281
White v Betalli (2006) 66 NSWLR 690
White v Betalli (2007) 71 NSWLR 381
Yango Pastoral Company Pty Limited v First Chicago Australia Limited (1978) 139 CLR 410

PARTIES: Santai Pty Ltd (First Plaintiff)
Consolidated Domain Resorts Pty Ltd (Second Plaintiff)
Casuarina Rec Club Pty Ltd (Third Plaintiff)
The Owners - Strata Plan No 77971 - Santai (Defendant)

FILE NUMBER(S): SC 2009/298685

COUNSEL: E A J Hyde (Plaintiffs)
J B Simpkins SC / P J Bambagiotti (Defendant)

SOLICITORS: Norton Rose (Plaintiffs)
Leverage Australia Pty Ltd (Defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
COMMERCIAL LIST

McDOUGALL J

17 June 2010

2009/298685 SANTAI PTY LIMITED v THE OWNERS – STRATA PLAN NO. 77971

JUDGMENT

1 HIS HONOUR: The defendant (the Owners Corporation) is the owners corporation of a strata scheme known as the Santai resort. It has entered into some four agreements with one or other of the plaintiffs. The Owners Corporation has purported to terminate two of those agreements by written notice, and has made plain its intention to seek to terminate each of the agreements. The plaintiffs seek declaratory relief as to the validity and enforceability of the agreements, and (in respect of the two termination notices) injunctive relief to restrain the Owners Corporation from acting on those notices.

The agreements and the issues

2 I will describe briefly each of the agreements, and set out what I understand to be the issues in relation to each of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2010] NSWSC 628
Decision Date: 17 June 2010

CaseChat Overview and Summary

The dispute in Santai v The Owners - Strata Plan No. 77971 concerned the validity of certain by-laws made by the owners corporation of a strata titled property. The plaintiffs, Santai, were lot owners within the strata scheme, and they challenged the legality and enforceability of the by-laws enacted by the owners corporation. The case was heard in the Supreme Court of New South Wales.

The central legal issues before the court involved the interpretation and validity of the by-laws, specifically whether they constituted a "caretaker agreement" under the Strata Titles Act 1985 (NSW), and if the by-laws were consistent with the necessary degree of connection required by the legislation. Additionally, the court examined whether the grant of rights within the by-laws was illegal due to a statutory requirement for a licence, rendering the contract void or unenforceable. The court also considered whether the by-laws represented an impermissible delegation of the owners corporation’s functions.

The court found that the by-laws were not a "caretaker agreement" and were within the power of the owners corporation to enact. It held that the by-laws did not contravene the necessary degree of connection required by the legislation, thus they were valid. The court further ruled that the grant of rights within the by-laws was not illegal because the party involved did not hold the required licence, as the statute did not mandate the licence for the specific rights granted. Consequently, the contracts were enforceable. The court also determined that the by-laws did not represent an impermissible delegation of the owners corporation's functions. The court exercised its discretion to grant declaratory relief, emphasising its obligation to deal with all issues before it in accordance with s 56 of the Civil Procedure Act 2005 (NSW).

The court declared that the by-laws were valid and enforceable, and that the owners corporation had not acted outside its statutory powers in enacting them.

Orders