The Owners of Strata Plan No 3397 v Tate - [2007] NSWCA 207

No judgment structure available for this case.

Reported Decision: (2007) Titles Cases 80 -119

New South Wales

Court of Appeal

CITATION: The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207

HEARING DATE(S): 11 May 2007

JUDGMENT DATE:
16 August 2007

JUDGMENT OF: Mason P at 1; McColl JA at 2; Harrison J at 78

DECISION: (1) Appeal allowed with costs. (2) Cross appeal allowed with costs. (3) Judgment and orders of Rolfe DCJ of 17 November 2005, save order 3(c) be set aside. (4) In lieu thereof, judgment for the respondent for $18,758.14 plus interest, such interest to run from the date of the overpayments. (5) Appellant to pay one-quarter of the respondent’s costs of the trial before Rolfe DCJ, and, pursuant to s 229 of the Strata Schemes Management Act 1996, such costs to be payable by contributions levied in relation to lots other than lots owned by the respondent. (6) Respondent to pay three quarters of the appellant’s costs of the trial before Rolfe DCJ. (7) The appellant and the respondent to have a certificate under the Suitors' Fund Act 1951 if otherwise entitled.

CATCHWORDS: STRATA SCHEMES – by-laws – proper construction of by-law giving exclusive use of common property (a lift) to a proprietor – terms and conditions attaching to exclusive use – costs attributable to the repair, maintenance, renewal and replacement of the lift – relationship between obligations imposed by by-law and obligation to meet levies for the upkeep of common property generally - STRATA SCHEMES – by-laws – principles of interpretation – to be construed consistently with statutory context – "series of enactments" by which proprietors in a body corporate administer their affairs – public purpose going beyond function of facilitating internal administration of body corporate – to be interpreted objectively by what they would convey to a reasonable person – court to take into account their constitutional function in strata scheme in regulating rights and liabilities of proprietors – tight rein to be kept on recourse to surrounding circumstances (D)

LEGISLATION CITED: Building Units and Group Titles Act 1980 (Qld)
Companies Act 1961
Harbours, Docks, and Piers Clauses Act 1847 (10 & 11 Vict. c. 27)
Interpretation Act 1987
Strata Schemes (Freehold Development) Act 1973 - s 58(7)
Strata Schemes Management Act 1996
Strata Titles Act 1973 - s 58(7)
Suitor's Fund Act 1951

CASES CITED: Antaios Cia Naviera SA v Salen Rederierna AB [1985] AC 191
Australian Coal & Shale Employees' Federation v Smith (1937) 38 SR (NSW) 48
Bailey (as executrix of the estate of the late Dr Harry R Bailey) v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399
Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693
Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389
Cotman v Brougham [1918] AC 514
Coulton v Holcombe (1986) 162 CLR 1
Dainford Ltd v Smith (1984) Q ConvR 54-140
Dainford Ltd v Smith [1985] HCA 23; (1985) 155 CLR 342
Doe d Murray, Bishop of Rochester v Bridges (1831) 1 B & Ad 847; 109 ER 1001
Egyptian Salt and Soda Co Ltd v Port Said Salt Association Ltd [1931] AC 677
Gentel v Rapps [1902] 1 KB 160
Holmes v Keyes [1959] Ch 199
Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 [1994] HCA 21; (1994) 179 CLR 597
Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15
Land Mortgage Bank of Victoria Ltd v Reid [1909] VLR 284
Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812; (2005) 56 ACSR 263
Lion Nathan Australia Pty Ltd (ACN 008 596 370) v Coopers Brewery Ltd (ACN 007 871 409) and Others [2006] FCAFC 144; (2006) 156 FCR 1
London Association of Shipowners and Brokers v London and India Docks Joint Committee [1892] 3 Ch 242
Margiz Pty Ltd v Proprietors Strata Plan No 30234 (1993) 30 NSWLR 364 at 372
MFI Properties Ltd v BICC Group Pension Trust Ltd [1986] 1 All ER 974
National Roads and Motorists' Association Ltd v Parkin [2004] NSWCA 153; (2004) 60 NSWLR 224
North Wind Pty Ltd v Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809
One.Tel Ltd v Australian Communications Authority [2001] FCA 54; (2001) 110 FCR 125
Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451
Puflett v Proprietors of Strata Plan No 121 (1987) 17 NSWLR 372
Re Taylor [1995] 2 Qd R 564
Ridis v Strata Plan 10308 [2005] NSWCA 246; (2005) 63 NSWLR 449
Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65
Sons of Gwalia Ltd v Margaretic; ING Investment Management LLC v Margaretic [2007] HCA 1; (2007) 81 ALJR 525
Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165
Upper Hunter County District Council v Australian Chilling and Freezing Company Limited [1968] HCA 8; (1968) 118 CLR 429
White v Betalli [2006] NSWSC 537
Young & Anor v Owners–Strata Plan No 3529 & Ors [2001] NSWSC 1135; (2001) 54 NSWLR 60

PARTIES: The Owners of Strata Plan No 3397 (Appellant / Cross Respondent)
Warwick Bannister Tate (Cross-Appellant / Respondent)

FILE NUMBER(S): CA 40921 of 2005

COUNSEL: G A Sirtes (Appellant / Cross-Respondent)
M D Young (Cross-Appellant / Respondent)

SOLICITORS: Robinson & Davies Pty Ltd (Appellant / Cross-Respondent)
Andreones (Cross-Appellant / Respondent)

LOWER COURT JURISDICTION: District Court

LOWER COURT FILE NUMBER(S): 2813 of 2004

LOWER COURT JUDICIAL OFFICER: Rolfe J

LOWER COURT DATE OF DECISION: 7 November 2005

- 1 -

CA 40921 of 2005

MASON P
McCOLL JA
HARRISON J
16 August 2007

The Owners of Strata Plan No. 3397 v Warwick Bannister Tate

Judgment

1 MASON P: I agree with Harrison J and with the additional remarks of McColl JA as to the approach to interpretation of by-laws.

2 McCOLL JA: This case concerns the question of the proper construction of an exclusive use by-law relating to common property made in 1989 pursuant to s 58(7) of the Strata Titles Act 1973, since re-named the Strata Schemes (Freehold Development) Act 1973 (the “1973 Act”). It involves the proper characterisation of such a by-law and the principles which should apply in its interpretation. The ability to make exclusive use by-laws in respect of the common property of strata schemes continues under Ch 2, Div 4 of the Strata Schemes Management Act 1996 (the “Management Act”).

3 I have had the benefit of reading Harrison J’s judgment in draft. I agree with the reasons Harrison J has given for disposing of the cross appeal. I agree with the orders his Honour proposes on the appeal for the following reasons.

4 I gratefully adopt his Honour’s recitation of the background facts and shall only repeat them to the extent necessary to give content to my reasons.

The primary judgment

5 Both counsel who appeared before the primary judge submitted the Court should approach the construction of Special By-Law 21 on the basis that it created contractual rights of exclusive use and enjoyment under s 58(7) of the 1973 Act “which should be interpreted in the ordinary way”. His Honour accepted this submission, referring to North Wind Pty Ltd v Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809. He then interpreted it by reference to its language and what he inferred were the surrounding circumstances in which it was made, an exercise directed to ascertaining the mutual intention of the parties to Special By-Law 21.

6 The primary judge took as his starting point the appellant’s entitlement to levy contributions determined by it in accordance with s 59 and s 68(i), (j), (k) and (p) of the 1973 Act. He next considered the development history of the Park Regis building. The precise passage appears in Harrison J’s judgment at par [91]. In summary, he referred to the fact that when the development was approved in 1966, or thereabouts, lifts 1 and 2 were only intended to serve the residential units and not the Park Regis Motel and its guests. He also had regard to the fact that by 1989 there had been no change in relation to the non-use of lifts 1 and 2 by the motel and its guests and that lift 4 did not go to the residential floors and the proprietor of that lift already had exclusive, de facto use of it. On that basis his Honour inferred that the intention of the proprietor of Lot 1 and the remaining owners in the strata plan was that the former would get exclusive use of lift 4 in substitution for the de facto exclusive use which had been enjoyed up to that point of time.

7 His Honour next referred to the respondent’s submission that:

8 His Honour then analysed the sub-clauses of Special By-Law 21, noting the potential overlap between category (ii)(a) and category (ii)(b) costs, an overlap avoided in his opinion by the category (ii)(a) requirement that the appellant identify the costs directly attributable to Lift 4 before they could be claimed. He noted that category (ii)(a) costs included costs for the renewal and replacement of Lift 4.

9 His Honour’s critical finding was expressed as follows:

“It follows from the above analysis that when the parties to By-law 21 made it, their mutual intention was that in order for the plaintiff to have exclusive enjoyment of Lift 4:

1. All costs for the renewal and replacement of Lift 4 identified to the proprietor of Lot 1 by the defendant were to be paid exclusively by that proprietor; none of such costs would therefore be directly payable by the remaining proprietors of Strata Plan 3397.

2 All costs for the repair, maintenance and running costs directly attributable to Lift 4 identified to the proprietor of Lot 1 by the defendant were to be paid exclusively by that proprietor; none of such costs would therefore be payable by the remaining proprietors of Strata Plan 3397.

3. Twenty-five per cent of all costs attributable to the running and routine maintenance servicing and repair of the lift system were to be payable by the proprietor of Lot 1.

Submissions

10 Mr G Sirtes, who appeared for the appellant on appeal, but not at trial, submitted that it could not have been the intention of those who made Special By-Law 21 to exempt the proprietor of Lot 1 who was obtaining exclusive use of Lift 4, which was only one part of the common property, from meeting statutory obligations as a lot owner in relation to another part of the common law property (the lift system maintaining lifts 1-3), which was not included within the scope of the Special By-Law. In other words he submitted that after Special By-Law 21 was made, the proprietor of Lot 1 had to meet the payments specified in it, but those payments did not impinge upon the obligations that proprietor had as a lot owner in respect of lifts 1-3.

11 He emphasised the statutory background to Special By-Law 21. He submitted that the body corporate did not have statutory authority to relieve anyone from their obligations in relation to common property other than that referred to in an exclusive use by-law and that a by-law which purported to do so would be ultra vires.

12 Mr Sirtes also submitted that it was not appropriate to seek to discern the meaning of Special By-Law 21 by applying principles of contractual interpretation. Rather, he contended, such principles have limited application in the case of a contract passed against the background of a statutory regime involving third parties.

13 Mr Sirtes illustrated the difference between the parties’ respective positions by what he described as the following “crude example”, which operated on the assumption that in any given year the costs of lift maintenance for all four lifts was $100,000.

14 On that assumption, as found by the primary judge, Special By-Law 21 limited the respondent’s total contribution for lift maintenance of all four lifts to 25%, i.e. $25,000 and he was exonerated from paying any amount towards the remaining $75,000, the burden of which fell on the remaining lot owners.

15 The appellant argued, however, that Special By-Law operated in the following manner:

(b) of the remaining $75,000.00, the respondent was liable to contribute $14,250, 19.38% of $75,000.00, as a lot owner required to maintain the building pursuant to Part 3, Chapter 3 of the Management Act.

16 In total on the appellant’s example, and on the approach for which it contended, the respondent was liable to contribute $39,250.00 of the costs of maintaining the lifts.

17 Mr M Young, who appeared for the respondent, contended that Special By-Law 21 should not be understood as involving a statutory right, but having regard to the fact that it operated as a covenant under the Act, operated, and should be interpreted, as a contract. Accordingly he argued that “if detailed semantic and syntactical analysis” of the by-law “led to a conclusion that flouted business commonsense, it must be made to yield to business commonsense”: Antaios Cia Naviera SA v Salen Rederierna AB [1985] AC 191 (at 201) per Lord Diplock. He contended that there could be no apparent commercial justification for a by-law which led to the proprietor of Lot 1 paying 44.382% of the cost of the lift system, merely for the privilege of conveying de facto exclusive use of Lift 4 into a legal entitlement thereto: cf MFI Properties Ltd v BICC Group Pension Trust Ltd [1986] 1 All ER 974 (at 977) per Hoffmann J.

18 Mr Young submitted that, properly understood, Special By-Law 21 was the exclusive source of the respondent’s obligation to contribute to the costs of all lifts in the lift system and capped his liability to contribute to those costs at 25%.

19 As to Mr Sirtes’ example, he pointed out that this was not, in fact, how the appellant had charged the respondent. Rather than the second calculation Mr Sirtes postulated (14(b) above), the appellant had taken the figure of $100,000 as the starting point for its second calculation, thus leading to the respondent being charged 44.328% of the costs of the lift system, an interpretation the primary judge had properly rejected.

20 Mr Sirtes conceded in reply that the appellant had not charged the respondent in accordance with his example, but contended this went to quantum only and the appellant’s fundamental argument, that the respondent’s liability was not capped at 25%, had been consistently maintained.

Legislative Framework

21 In 1989, when Special By-Law 21 was made, the proprietors for the time being of Strata Scheme 3397 constituted a body corporate with the powers, authorities, duties and functions conferred or imposed on it by or under the 1973 Act, or the by-laws: s 58.

22 The proprietors were obliged to pay administrative levies raised by the body corporate by way of contributions to meet its actual or expected liabilities incurred or to be incurred under s 68(1)(b) or for the payment of insurance premiums or any other liability: s 68(1)(j), 1973 Act. The proprietors were also obliged to contribute to amounts determined by the body corporate in accordance with s 68(1)(k) which amounts were to be paid into a sinking fund established pursuant to s 68(1)(m).

23 Once the body corporate had determined s 68(1)(j) and (k) contributions it levied those contributions on proprietors by serving notice in writing of the contributions payable by them in respect of their respective lots: s 59(1). The contributions were payable by the proprietors, in shares proportional to the unit entitlements of their respective lots: s 59(3).

24 Special By-Law 21 was made in accordance with s 58(7). That provision, and relevant ancillary provisions, provided:

“ 58 (1) Except as provided in this section the by-laws set forth in Schedule 1 shall be the by-laws in force in respect of each strata scheme.

….

(5) Without limiting the operation of any other provision of this Act, the by-laws for the time being in force bind the body corporate and the proprietors and any mortgagee in possession (whether by himself or any other person), or lessee or occupier, of a lot to the same extent as if the by-laws had been signed and sealed by the body corporate and each proprietor and each such mortgagee, lessee and occupier respectively and as if they contained mutual covenants to observe and perform all the provisions of the by-laws.

…

(i) a right of excusive use and enjoyment of; or

the whole or any specified part of the common property, upon conditions (including the payment of money, at specified times or as required by the body corporate, by the proprietor or proprietors of the lot or lots concerned) specified in the by-law; or

(a) provide that the body corporate shall continue to be responsible for the proper maintenance, and keeping in a state of good and serviceable repair, of the common property or the relevant part of it; or

(c) to the body corporate; or

shall, except to the extent that the by-law otherwise provides, be payable by the proprietors concerned proportionately according to the relative proportions of their respective unit entitlements.

….

Real Estate Property Act

(a) a by-law in those terms shall be deemed to have been made, and to take effect, on registration of the plan; and

(b) the by-law so made may be amended, added to or repealed in the same way as a by-law made by the body corporate in accordance with subsection (7).

(8) A by-law referred to in subsection (7), while it remains in force, continues to operate for the benefit of, and (subject to section 70(3)) is binding upon, the proprietor or proprietors for the time being of the lot or lots specified in the by-law.

(9) To the extent to which such a by-law makes a person directly responsible for the proper maintenance, and keeping in a state of good and serviceable repair, of any common property, it discharges the body corporate from its obligations under section 68(1)(b).

25 As I shall later explain, s 58(5) is an important guide to the interpretation of Special By-Law 21. It is not clear that s 58(8) added to s 58(5); it may be that it would facilitate the beneficiary of the exclusive use by-law enforcing it against third parties. Nothing appears to turn upon its inclusion in s 58 for the purposes of the present interpretative exercise.

26 A “special resolution” was a resolution passed at a duly convened meeting of a body corporate and against which not more than one-quarter in value of votes was cast, ascertained in accordance with cll 11(3) and (4) of Pt 1 of Schedule 2 or Cll 12(3) and (4) of Pt 2 of Schedule 2: s 3, 1973 Act. A person was entitled to vote in respect of any lot if he or she was the proprietor of the lot shown on the strata roll: cl 2(1), Pt 1 of Schedule 2. Clauses 11(3) and (4) of Pt 1 of Schedule 2 or cll 12(3) and (4) of Pt 2 of Schedule 2 (in respect to proprietors other than the original proprietor) provided that each person had one vote in respect of each lot in respect of which he or she was entitled to vote.

27 Part 5 of the 1973 Act, Disputes, created a scheme for the resolution of disputes in connection with strata schemes. It permitted the appointment of a Strata Titles Commissioner (s 97) and a Strata Titles Board, the latter being constituted by a Magistrate: s 98A. Section 120A enabled the Board to make orders with respect to exclusive use by-laws, either prescribing that they be made, amended or repealed. An order under s 120A, when recorded in accordance with s 141 in the Register of the Registrar-General, had effect, subject to any order of a superior court, as if its terms were a by-law: s 120A(4).

28 At the time Special By-Law 21 was made the proprietor of Lot 1 (the respondent’s predecessor in title) had a unit entitlement of 1004 units of the total of 5,780 units, or 19.382%, in the strata scheme. Special By-Law 21 was registered at the Land Titles Office on 8 November 1981 in accordance with subs 58(7B).

Consideration

29 The appellant is “a statutory corporation, created by Act of Parliament for a particular purpose [and] is limited, as to all its powers, by the purposes of its incorporation as defined in that Act”: Humphries v Proprietors Surfers Palms North Group Titles Plan1955 [1994] HCA 21; (1994) 179 CLR 597 at 604 per Brennan and Toohey JJ; Margiz Pty Ltd v Proprietors Strata Plan No 30234 (1993) 30 NSWLR 364 at 372; see Ridis v Strata Plan 10308 [2005] NSWCA 246; (2005) 63 NSWLR 449 (at [116] ff).

30 At the time the Special By-Law was made the appellant was the occupier of the common property in Strata Plan No 3397 by virtue of its management and control of the use of that area pursuant to s 54(3) and s 68(1)(a): Puflett v Proprietors of Strata Plan No 121 (1987) 17 NSWLR 372 at 375 per Lee J; that position continues under s 61(1)(a) of the Management Act: see Ridis v Strata Plan 10308 (at [117]). As Holland J explained in Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15 (at 24):

whether or not that part is susceptible of any use or enjoyment by that proprietor or of greater use or enjoyment by that proprietor than by any other.

Similarly, with respect to the provision of funds for the repair and maintenance of all or any part of the common property, the legislation provides for only one fund with contributions to be levied proportionately on all proprietors irrespective of any individual proprietor’s use and enjoyment thereof.

In my opinion, there flows from the scheme of the legislation as an incident of proprietorship of a lot a right in each proprietor to have the body corporate’s duty performed in relation to all of the common property at the cost and expense of all proprietors in proportion to unit entitlements.

31 As this passage indicates, at the time Special By-Law 21 was made the obligations of the proprietors of the body corporate reflected their unit entitlement, but bore no necessary relationship to their use or enjoyment of any part of the common property. Proprietors were obliged to contribute to the repair and maintenance of the common property whether or not they had, as a matter of fact, exclusive, partial or no use or enjoyment of it. To apply that proposition to the present case, all proprietors in the appellant were obliged to contribute to the maintenance and repair of Lift 4 even though, as the Park Regis was constructed, the lift primarily served the Motel floors, although it could also be used to access the car park on level 3.

32 Section 58(7) permitted a body corporate (i.e. the proprietors of the strata scheme) to alter that situation by passing a special resolution to make a by-law granting exclusive de jure use of a part of the common property to one, or several, proprietors. Section 58(7AA) mandated that any such by-law should either provide that the body corporate continued to be responsible for the maintenance and repair of the common property or the relevant part of it, or impose that responsibility on the proprietor or proprietors obtaining the benefit of the exclusive use by-law. If the beneficiary of the exclusive use by-law assumed that responsibility, the body corporate was discharged from its obligations under s 68(1)(b): s 58(9). It was left to the parties to determine whether the by-law would contain any other provisions, dealing, for example, with the renewal or replacement of the common property with which it dealt. In this case, the parties agreed that the direct costs renewal or replacement of Lift 4 were to be paid by the proprietor of Lot 1. Thus, to that extent, the body corporate was relieved of its s 68(1)(c) responsibility for Lift 4 and could not levy the other proprietors to contribute to such costs.

33 The primary judge reached his conclusion by applying principles of contractual interpretation, apparently unconstrained by the statutory framework in which Special By-Law 21 was made. For the reasons that follow, in my view that was not the correct approach and led his Honour into error. The question of the proper approach to interpreting the by-law turned on the nature of by-laws made under the 1973 Act.

34 There appear to be at least two available, and not necessarily inconsistent, views of the proper characterisation of strata scheme by-laws.

35 One is that such by-laws are delegated legislation, being instruments “made under an Act”: s 3, Interpretation Act 1987. According to D Pearce and S Argument, Delegated Legislation in Australia, 3rd ed, Butterworths, 2005 (at [1.7]), “[t]he term by-law is used to describe the legislation of a body having a limited geographical jurisdiction, and is the expression most commonly used for the primary legislative instruments made by local government authorities”. In Re Taylor [1995] 2 Qd R 564 (at 570), speaking in the context of exclusive use by-laws in a strata title scheme, Dowsett J said it was “the nature of a by-law that it deals with matters of internal regulation and operates in a particular context”.

36 If by-laws constitute delegated legislation, then they should be interpreted in accordance with principles of statutory interpretation: Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389 at 398. The statutory context will therefore be the first point of reference in interpreting the purpose or object underlying the Act (or instrument): One.Tel Ltd v Australian Communications Authority [2001] FCA 54; (2001) 110 FCR 125 (at [64]) per Hill J.

37 Although this case does not concern the validity of Special By-Law 21, it is appropriate to refer briefly to principles by which the validity of delegated legislation is determined to test the parties’ respective contentions as to its meaning. Critically, delegated legislation is subject to the inconsistency principle, that is to say it is invalid if it contradicts or is repugnant to, or inconsistent with, the Act under which it is made: Pearce and Argument (at [19.1]). The learned authors quote in support of this proposition the “most frequently cited statement of the law relating to repugnancy”, being Channell J’s statement in Gentel v Rapps [1902] 1 KB 160 (at 166) that:

It is repugnant if it expressly or by necessary implication professes to alter the general law of the land. …Again, a by-law is repugnant if it adds something inconsistent with the provisions of a statute creating the same offence;

38 Shepherdson J concluded that strata scheme by-laws were delegated legislation in Dainford Ltd v Smith (1984) Q ConvR ¶54-140 when considering model by-laws in force in respect of a building unit plan made pursuant to s 30(2) of the Building Units and Group Titles Act 1980 (Qld), a provision relevantly on all fours with s 58(2) of the 1973 Act.

39 Dainford concerned the question whether a vendor of a home unit who had contracted to grant to the proprietor for the time being of the unit the exclusive use of a car parking space on part of the common property pursuant to a by-law made under s 30(7) of the Building Units and Group Titles Act (relevantly on all fours with s 58(7) of the 1973 Act), had repudiated the contract because the by-law did not designate the car space directly or by reference to an identification otherwise made before or at the time of the making of the by-law. By-law 40 provided that “the proprietor for the time being of each lot in the building shall be entitled to the exclusive use ... of the car space or spaces the identifying number or numbers of which shall be notified in writing by [the vendor] to the Council of the Body Corporate within twelve months after the date of registration of the Plan”. The purchasers argued by-law 40 was invalid because it effected an unauthorised delegation of legislative power.

40 The Queensland Court of Appeal (Campbell and Shepherdson JJ, Campbell CJ dissenting) held the by-law was not a valid exercise of the s 30(7) power because the body corporate had sub-delegated to the vendor the power to identify the car space attached to the unit. That decision was reversed on appeal, Dainford Ltd v Smith [1985] HCA 23; (1985) 155 CLR 342 (Gibbs CJ, Wilson and Dawson JJ, Mason and Brennan JJ dissenting). All members of the Court approached the case on the basis that by-law 40 was an exercise of statutory power to be interpreted in accordance with principles relevant to delegated legislation: see Gibbs CJ (at 347 – 348), Mason J (at 351 – 352), Wilson J (at 355 – 359), Brennan J (at 361 – 363).

41 Wilson J, however, observed (at 359) that:

42 The question Wilson J posed was taken up by Dowsett J in Re Taylor, albeit without reference to Dainford. In Re Taylor the Registrar of Titles challenged the validity of exclusive by-laws purportedly made pursuant to s 30(7) of the Building Units and Group Titles Act 1980 (Qld). The body corporate applied for a determination of their validity. Dowsett J first considered whether the by-laws were properly so described. In concluding they were, he said (at 567):

London Association of Shipowners and Brokers v. London and India Docks Joint Committee

‘A by-law is not an agreement, but a law binding on all persons to whom it applies, whether they agree to be bound by it or not. All regulations made by a corporate body, and intended to bind not only themselves and their officers and servants, but members of the public who come within the sphere of their operation, may be properly called ‘by-laws’, whether they be valid or invalid in point of law …’

43 Having concluded the by-laws were properly so described, Dowsett J held (at 569 – 570) that they must be construed in the context of the authorised functions of the body in question and the legislation conferring the power to make them. He held, applying the inconsistency principle, that s 30(7) could not be invoked to extend the powers or functions of the body or to contradict a provision of the Act, at least in the absence of express or necessarily implied authority to do so. He concluded the exclusive use by-laws were invalid because they were inconsistent with express provisions of the Act.

44 The by-laws with which London Association of Shipowners and Brokers v. London and India Docks Joint Committee [1892] 3 Ch 242 dealt were purportedly made pursuant to s 83 of the Harbours, Docks, and Piers Clauses Act 1847 (10 & 11 Vict. c. 27) which enabled the company to make by-laws under its common seal for the use of its docks and property. The by-laws relevantly did not have effect unless confirmed in accordance with s 85; notices had to be given before they were confirmed (ss 86 and 87), and, when confirmed, they had to be published as directed by s 88. Once they were duly made, confirmed, and published, the by-laws become binding on all parties (s 89). They could only be altered by other by-laws similarly made and confirmed: see judgment (at 251 – 252).

45 It was of that power that Lindley LJ said (at 252), immediately before the passage Dowsett J quoted:

46 Exclusive use by-laws under the 1973 Act had both qualities to which Lindley LJ referred: they bound all those referred to in s 58(5) whether or not, in the case of proprietors of the strata scheme, they voted in favour of them and they had to be agreed to by at least 75% of those entitled to vote in respect of the common property in which they had a proprietary interest.

47 The presence of s 58(5) suggests an alternative characterisation of strata scheme by-laws, namely that they are a statutory contract, deemed to exist by statute and constituted by the “bundle of rights and liabilities” created by the 1973 Act, the model by-laws and any special by-laws, such as Special By-Law 21, made pursuant to s 58: cf Sons of Gwalia Ltd v Margaretic; ING Investment Management LLC v Margaretic [2007] HCA 1; (2007) 81 ALJR 525 at [30] per Gleeson CJ; at [191], [203], [205] per Hayne J (with whom Gummow J generally agreed).

48 Section 58(5) is clearly modelled on the deemed covenant provisions adopted in corporations law to ensure the memorandum and articles of association of a company bound “the company and the members thereof to the same extent as if they respectively had been signed and sealed by each member and contained covenants on the part of each member to observe all”: see Australian Coal & Shale Employees' Federation v Smith (1937) 38 SR (NSW) 48 at 54-55, cited by McHugh and Gummow JJ in Bailey (as executrix of the estate of the late Dr Harry R Bailey) v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399 at 434.

49 Section 58(5) is in substantially the same terms as s 33(1) of the Companies Act 1961 as in force at the time the 1973 Act was enacted. That subsection provided:

“33.

50 In Bailey (at 433 - 440), McHugh and Gummow JJ discussed the development of such legislative provisions. They observed (at 435) that “[i]n so far as the memorandum and articles, pursuant to such legislative provision, constitute a contract between the company and its individual members or between the members inter se, [it] is of an unusual type”. This was because, inter alia, its terms could be varied by special resolution without the agreement of both parties to the variation, the articles could not be rectified even if they did not reflect the common intention of the original signatories and they could only be amended with statutory authority. Their Honours cited (at 437) with apparent approval, Cussen J’s statement in Land Mortgage Bank of Victoria Ltd v Reid [1909] VLR 284 at 288 - 289 that:

51 After referring (at 437 – 438) to the line of authorities holding that that the memorandum and articles have no direct contractual effect insofar as they purport to confer rights or obligations on a member, otherwise than in the capacity of a member, their Honours observed (at 439):

Hickman

52 Finally, their Honours distinguished (at 439) between a “statutory contract” and a “special contract”, describing the latter as “a contract which is constituted otherwise than solely by the articles unsupplemented by any external facts…[one] which, in truth, is ordinary rather than ‘special’ in nature”. The latter, in their Honours’ view, was the proper description of the policy of professional indemnity insurance provided by the New South Wales Medical Defence Union Limited to Dr Bailey, in accordance with the terms of its articles of association. Brennan CJ, Deane and Dawson JJ (at 414) preferred to characterise the policy as a “special contract”, which they described as “distinct from the covenants … deemed to arise from the articles under the relevant companies legislation”.

53 In North Wind, Rath J appears to have understood s 58(5) to mean that an exclusive use by-law had the effect of a statutory contract. North Wind concerned the question whether the registered proprietor of a lot in a strata plan, who had the exclusive use and enjoyment of an area which formed part of the common property pursuant to a by-law made under s 58(7) of the 1973 Act, could obtain an injunction to restrain the defendant which had constructed, or was constructing, works which encroached into the air space above the exclusive use area. The defendant argued (see 811) that the Court had no jurisdiction to determine the issues raised by the summons because the 1973 Act contained detailed provisions dealing with disputes. It relied upon the principle that where a statute creates an obligation and enforces performance in a specified manner, the general rule is that performance cannot be enforced in any other manner: Doe d Murray, Bishop of Rochester v Bridges (1831) 1 B & Ad 847 (at 859); 109 ER 1001 (at 1006).

54 Rath J held (at 814) that the rights and obligations arising under the by-law were not within the principles stated in Doe d Murray, Bishop of Rochester v Bridges. In his Honour’s opinion the by-law had contractual effect because of the mutual covenants in s 58(5) and the Act contemplated the enforcement of those rights and obligations by the ordinary provisions of the law, including injunctive relief. He could find nothing in the Act which indicated that the statutory dispute provisions were exclusive of common law and equitable remedies, or inconsistent with the jurisdiction of the ordinary courts in regard to the enforcement of covenants and contractual rights. While he concluded, therefore, that the Court had jurisdiction, he declined to exercise it for discretionary reasons. His Honour did not discuss the principles which might apply to the interpretation of the by-law.

55 Subsequent decisions have held that Rath J’s characterisation of the exclusive use by-law as having contractual effect did not preclude the conclusion that such by-laws also confer a proprietary right, even though their “detailed articulation stems from the by-laws”: see Young & Anor v Owners–Strata Plan No 3529 & Ors [2001] NSWSC 1135; (2001) 54 NSWLR 60 (at [14] – [18]) per Santow J (as his Honour then was); White v Betalli [2006] NSWSC 537 (at [60]) per White J.

56 As I explained earlier in these reasons, the parties and the primary judge proceeded on the basis that because Rath J identified an exclusive use by-law as having contractual effect, the usual principles of contractual interpretation applied. However not all principles of contractual interpretation apply unreservedly to statutory contracts.

57 In National Roads and Motorists' Association Ltd v Parkin [2004] NSWCA 153; (2004) 60 NSWLR 224 Ipp JA (with whom Santow and Bryson JJA agreed) considered the extent to which such principles apply in construing the statutory contract formed by the articles of association of the National Roads and Motorists’ Association Limited (“NRMA”).

58 In NRMA, NRMA disputed the validity of two resolutions contained in a requisition calling the general meeting (and, hence, the validity of the requisition) on the grounds that they were ambiguous, alternatively, uncertain. It brought proceedings seeking a declaration that the requisition was void and that the directors of NRMA were therefore not required to call and hold the general meeting. Its argument, in substance, was that the objects and powers of a company must be defined in plain and unambiguous terms, that the proposed resolutions were ambiguous and that the mere existence of the ambiguities, because they concerned a proposed alteration to the constitution that would limit the company’s powers, rendered the resolutions void: see Ipp JA (at [34]). It argued that the Court should approach the question whether the proposed resolutions were ambiguous in accordance with the “stringent” test laid down by Lord Wrenbury in Cotman v Brougham [1918] AC 514 (a case dealing with legislation that concerning the objects specified in the memorandum of a company), rather than the “forgiving” test in Upper Hunter County District Council v Australian Chilling and Freezing Company Limited [1968] HCA 8; (1968) 118 CLR 429: see Ipp JA (at [31], [36]).

59 Ipp JA held (at [78], [88]) that the Upper Hunter test should be applied to determine which of two possible meanings was to be given to the words of a clause in the statutory contract constituted by the articles of association.

60 Ipp JA (at [72]) noted that the NRMA rendered its services in competition with other commercial entities and that its constitution must be construed in that context. Accordingly he applied (at [68], [75]) the “general principle” concerning the construction of articles of association, to regard them as a business document and construe them “so as to give them reasonable business efficacy, where a construction tending to that result is admissible on the language of the articles, in preference to a result which would or might prove unworkable”: Holmes v Keyes [1959] Ch 199 (at 215) per Jenkins LJ.

61 Although his Honour held (at [71]) that Egyptian Salt and Soda Co Ltdv Port Said Salt Association Ltd [1931] AC 677 was “fundamentally contrary to the proposition that there should be a special rule of construction relating to the powers of a company”, he did not regard all the usual principles of contractual interpretation as applying unreservedly to the articles. He held (at [86]) that extrinsic evidence should not be used in construing the company’s constitution. In doing so he followed the approach in Egyptian Salt and Soda Co Ltd where Lord Macmillan observed (at 682) that:

The intention of the framers of the memorandum must be gathered from the language in which they have chosen to express it

62 Ipp JA also referred to Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693 in which it was held was held that “the articles of association of a company constitute a statutory contract with its own distinct features”. Steyn LJ held (at 698) that “neither the company nor any member can seek to add to or to subtract from the terms of the articles by way of implying a term derived from extrinsic surrounding circumstances.” Dillon LJ was of the same view, as, too, was Sir Christopher Slade although the latter also held (at 699) that “evidence of surrounding circumstances may be admissible for the limited purpose of identifying persons, places or other subject matter referred to therein”.

63 National Roads and Motorists' Association Ltd v Parkin was applied by Finn J in Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812; (2005) 56 ACSR 263. Lion Nathan concerned the interpretation of the phrase “any transfer of shares” in article 38 of Coopers Brewery Ltd’s Articles of Association. As originally adopted, Coopers’ articles did not contain a definition of “transfer”, however such a definition was inserted at an extraordinary general meeting in 1995.

64 Finn J considered that the question of interpretation turned on the text of the article, as well as “the surrounding circumstances known to [Coopers and its members] and to the purpose and object of [Art 38]”, referring to Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 at [22]. He concluded that he could take the surrounding circumstances into account even if the article was not ambiguous or susceptible of more than one meaning, although as the following passages from his judgment reveal, he applied a caveat to their use.

65 In reaching his conclusion, Finn J considered the extent to which principles of contractual interpretation applied to the contract constituted by the memorandum and articles of association, saying:

Egyptian Salt and Soda Ltd v Port Said Salt Assn

[74] (iii) The function of a company’s constitution in informing those who dealt with it or who acquired shares in it, has in the past influenced in a direct way the principles of construction that have been applied to the constitution and, in particular, to the extent to which extrinsic materials were admissible as an aid to interpretation. Because third parties who dealt with a company would not have had access to information (other than the constitution itself) which might reveal the true meaning of a provision in the constitution, ‘[t]he intention of the framers of the [constitution] [had to] be gathered from the language in which they have chosen to express it’ : Egyptian Salt and Soda Co Ltd at 682.

…

[78] (vii) Until very recently there has been considerable controversy as to whether in the interpretation of contracts evidence of surrounding circumstances was admissible only if it first appeared that the language of the contract was ambiguous or whether it is admissible at the outset for the purpose of ascertaining the meaning of contractual language in its context … For the purposes of Australian law, while the above controversy took some time to be stilled: cf Royal Botanic Gardens and Domain Trust v South Sydney City Council (2002) 186 ALR 289 at [39]; it must now be accepted that the meaning of commercial contract is to be construed objectively by reference to what it conveys to a reasonable person: but see McLauchlan, ‘ Objectivity in Contract’ (2005) 24 UQLJ 481. This normally ‘requires consideration not only of the text of the documents, but also the surrounding circumstances known to [the parties], and the purpose and object of the transaction’: Pacific Carriers at [22]: see also Peden & Carter ‘ Taking Stock: the High Court and Contract Construction’ (2005) 21 JCL 172 at 180. …

Pacific Carriers

Acts Interpretation Act

‘… the modern approach to statutory interpretation (a) insists that the context be considered in the first instance, not merely at some later stage when ambiguity might be thought to arise, and (b) uses ‘context’ in its widest sense to include such things as the existing state of the law and the mischief which, by legitimate means such as those just mentioned, one may discern the statute was intended to remedy.’

CIC Insurance Ltd v Bankstown Football Club Ltd

Though the principles of statutory construction are not directly relevant to the present matter, in their congruence with the principles of contractual construction they reinforce my view that the Pacific Carriers’ principles provide the appropriate approach that ought be adopted in the construction of the pre-emptive rights regime of Coopers’ articles. Nonetheless I do recognise that a tight rein may well need to be kept on what should count as ‘surrounding circumstances’ when construing at least aspects of a company’s constitution

Codelfa

Buche v Box Pty Ltd

66 Applying his “tight rein” approach, the only surrounding circumstances Finn J considered were the pre-1995 articles, and the materials supplied to the 1995 extraordinary general meeting: see Lion Nathan (at [92]).

67 Finn J’s judgment was approved on appeal in Lion Nathan Australia Pty Ltd (ACN 008 596 370) v Coopers Brewery Ltd (ACN 007 871 409) and Others [2006] FCAFC 144; (2006) 156 FCR 1 (Weinberg, Kenny and Lander JJ).

68 Weinberg J accepted (at [56]) “the case for restraint in using surrounding circumstances as an aid to the construction of a corporate constitution remain[ed] a powerful one” and “that the rules of construction applicable to ordinary contracts should be applied with great caution when construing a company’s constitution”. He then said:

“[57] Despite the changes to company legislation to which Finn J referred, the statutory contract which s 140 of the Corporations Act deems to exist is, as his Honour recognised, very different from an ordinary contract. There are a number of sound reasons for adopting a different approach to its interpretation. It is a deemed contract, created by statute, without the normal elements of a contract having to be established, and without the usual defences being available to a defendant. Unlike ordinary contracts, it cannot be rectified, the rationale for that prohibition being so that third parties can be confident in relying upon it.

[58] In addition, as a number of cases have noted, a corporate constitution is by its nature more likely to be read and relied upon by a third party than an ordinary contract. …

69 Kenny J also accepted (at [97] – [101]) that the articles could be interpreted in accordance with principles of contractual interpretation applicable to commercial contracts, but noted that a court’s consideration of surrounding circumstances is “necessarily more constrained in the case of a corporate constitution than in the case of an ordinary commercial contract”. Her Honour said:

“[123] Lion Nathan has not persuaded me that the principles for construction as stated in Pacific Carriers and Toll have no application to corporate constitutions. It is true that the constitution of a company is a commercial contract, with special characteristics. A corporate constitution has what I have called a public dimension. It serves a public purpose and third parties will rely on it from time to time. It is not merely a private record of a private bargain; rather, a corporate constitution has statutory force : compare Re Blue Arrow Plc [1987] BCLC 585 at 590 per Vinelott J. While these considerations cannot be disregarded, they do not, it seems to me, provide a sufficient justification to remove corporate constitutions entirely from the range of commercial documents governed by the principles for construction outlined in Pacific Carriers and Toll.

A court can and should take account of the special characteristics of a company’s constitution, both generally and specifically, in the manner in which it applies these general principles. That is to say, it may be proper to place greater store by the constitutive text in construing a company’s constitution as opposed to a private contract

Stanham v National Trust of Aust (New South Wales)

In particular, the special or public dimension of a corporate constitution may sometimes constrain the ambit of the matters to which a court has regard

70 Lander J expressed similar views to Weinberg and Kenny JJ: see especially [232], [255] and [259].

Conclusion

71 The following propositions emerge from the foregoing discussion:

1. By-laws are the “series of enactments” by which the proprietors in a body corporate administer their affairs; they do not deal with commercial rights, but the governance of the strata scheme: Bailey ;

2. By-laws have a public purpose which goes beyond their function of facilitating the internal administration of a body corporate; cp, Parkin, Lion Nathan;

3. Exclusive use by-laws may be inspected by third persons interested in acquiring an interest in a strata scheme, whether, for example, by acquiring units, or by lending money to a lot proprietor; such persons would ordinarily have no access to the circumstances surrounding their making; their meaning should be understood from their statutory context and language: NRMA ; Lion Nathan .

4. By-laws may be characterised as either delegated legislation or statutory contacts: Dainford ; Re Taylor ; Bailey ; North Wind ; Sons of Gwalia;

5. Whichever be the appropriate characterisation, exclusive use by-laws should be interpreted objectively by what they would convey to a reasonable person: Lion Nathan ;

6. In interpreting exclusive use by-laws the Court should take into account their constitutional function in the strata scheme in regulating the rights and liabilities of lot proprietors inter se : Parkin ; Lion Nathan .

NRMA

Antaios Cia. Naviera S.A

,

Re Taylor

9. Caution should be exercised in going beyond the language of the by-law and its statutory context to ascertain its meaning; a tight rein should be kept on having recourse to surrounding circumstances: Lion Nathan.

72 The question of whether the by-laws constitute delegated legislation or a statutory contract was not fully argued. As the foregoing discussion reveals, the decision on their characterisation may be a distinction without a substantial difference from the interpretative perspective. It is not appropriate to express a final view on these issues. It is sufficient to say that on either approach the interpretation of Special By-Law 21 had to be approached on a basis which was consistent with the statutory scheme and that caution had to be exercised in considering surrounding circumstances.

73 The primary judge did not, with respect, apply the approach I have outlined. Again, it should be noted that his Honour approached the issue of interpretation on the basis for which both parties contended and his attention was not drawn to the authorities to which I have referred. However it was erroneous to apply principles of contractual interpretation unconstrained by the statutory framework under which Special By-Law 21 was made. The primary judge interpreted Special By-Law 21 in a way which was inconsistent with the 1973 Act, and in a manner, in my opinion, which was not authorised by that legislation.

74 Special By-Law 21 was made in the context of a statutory scheme which operated on the premise that lot proprietors shared the financial burden of the common property without regard to their entitlement to use any particular part of it. Further, s 58(7) only permitted an exclusive use by-law to impose conditions in respect of the common property with which it dealt. Thus Special By-Law 21 imposed extra obligations to contribute to the costs of Lift 4 on the proprietor of Lot 1 and, to that extent, relieved the other proprietors of their liability to maintain that part of the common property.

75 Special By-Law 21 dealt only with that proprietor’s liability to contribute to the costs of Lift 4 of which exclusive use was being obtained. That was an appropriate exercise of the s 58(7) power which was consistent with the statutory scheme. Special By-Law 21 said nothing about relieving the proprietor of Lot 1 from liability to contribute to the maintenance of the remaining lifts in the lift system. The burden of meeting those costs arose because of that proprietor’s unit entitlement of 19.382% and that liability continued. The fact that the proprietor of Lot 1 may have no need to access the remaining lifts was irrelevant: Jacklin. The primary judge’s interpretation did not have regard to these considerations and, in my view, unduly favoured the proprietor of Lot 1, at the expense of the other proprietors.

76 The other reason I have difficulty with the primary judge’s conclusion lies in his premise that Special By-Law 21 required a commercial, businesslike interpretation. While the by-law may have had a beneficial commercial effect for the proprietor of Lot 1, viewed objectively it was not a commercial transaction. Rather it was an adjustment of statutory obligations which conferred a proprietorial estate upon the proprietor of Lot 1 in respect of Lot 4 and, conversely, deprived the remaining proprietors in the strata scheme of the proprietary interest they had hitherto had in that part of the common property. The proprietorial nature of the by-law was indicated by its registration. The public nature of the by-law called for the interpretative exercise to focus on its language and statutory context rather than inferred intentions drawn from the de facto position concerning Lift 4 prior to the making of Special By-Law 21.

77 Finally I observe that in taking surrounding circumstances into consideration, the primary judge drew inferences from the original development approval in 1966 and the layout of the strata scheme in relation to lifts. No evidence was led before the primary judge concerning the actual making of Special By-Law 21. The papers and minutes of the meeting at which it was made were not tendered: cf Lion Nathan per Finn J (at [92]). It cannot be assumed that the surrounding circumstances his Honour considered relevant were so regarded by those who made Special By-Law 21. Consistently with the “tight rein” approach, those matters should not have been taken into account.

78 HARRISON J: The respondent purchased Lot 1 in Strata Plan 3397 in November 1990 and sold it in February 2004. Lot 1 is known as the "Park Regis Motel" and is part of a 44-storey building known as the "Park Regis" building at 27 Park St, Sydney. The appellant is the Owners Corporation, which manages the Strata Scheme under the Strata Schemes Management Act 1996 (“the Act”).

79 When the respondent purchased Lot 1, it had the benefit of Special By-Law 21. That by-law had been registered at the Land Titles Office on 8 November 1989 in accordance with the provisions of s 58(7) of the Strata Titles Act 1973. It is in the following terms:

"SPECIAL BY-LAW 21

The proprietor for the time being of lot 1 shall be entitled to the exclusive use and enjoyment of the lift known as Lift No. 4 on the following terms and conditions: -

(i) The Body Corporate shall be responsible for the proper maintenance and keeping in a state of good and serviceable repair and the cleaning, replacement and running costs of the lift;

(ii) Such proprietor shall pay to the Body Corporate such sums as are identified to it by the Body Corporate for the repair, maintenance, renewal, replacement and running costs of such lift such costs being: -

(a) those attributed directly to Lift No. 4;

(b) One quarter of the costs attributed to the running and routine maintenance, servicing and repair of the lift system.

80 It is uncontroversial, and his Honour, the trial judge, found that the intention of Special By-Law 21 was to give the proprietor of Lot 1 exclusive use and enjoyment of Lift 4 on the terms and conditions set out above.

81 Sometime in late 2001, the respondent formed the view that certain amounts paid by him from time to time to the Body Corporate as levies, which it had raised, purportedly in accordance with By-Law 21(ii), had been incorrectly calculated and that as a result he had made an overpayment. He sued to recover the overpayments as money had and received by the appellant to the use of the respondent and as moneys paid under a mistake of law. He also sought restitution, upon the basis that the appellant had been unjustly enriched by demanding and keeping the overpayments.

82 His Honour found in favour of the respondent and gave judgment in the amount of $179,399.24. The significant issue in the court below was the proper construction of Special By-Law 21. That remains the principal issue in this Court.

Background

83 The Park Regis building comprises a basement, ground floor and 43 upper floors. Approaching the building from street level, there are two separate entrances and lobby areas - one for the residential premises and the other for the motel. There are four lifts in the building in two pairs of two.

84 The area comprising Lot 1 is a small storage area at basement level, an area on the ground floor (described in the Strata Plan as "level 1"), extensive car parking spaces on level 2, some further car parking on level 3, and the motel accommodation that is located on levels 6-15 (inclusive) of the building. The other levels in the building from 16-44 (inclusive) are residential apartments with a pool and laundry facility on the roof.

85 During the period of the respondent’s ownership of the Park Regis Motel, Lift 4 served the basement, ground floor, levels 2 and 3 and levels 6-15. As his Honour noted, the respondent, as owner of Lot 1, did not strictly speaking have the exclusive use of Lift 4 in the sense that, occasionally, people other than motel guests or employees of the motel used it to gain access to the car park on level 3. In addition, motel guests occasionally used Lifts 1 and 2 to gain access to the roof level, or to come down from it, and the respondent admitted, for the purpose of the proceedings, that throughout the period 6 November 1998 until 25 February 2004, some employees and guests of the motel used Lift 3 as well.

86 The appellant did not request payments from the respondent pursuant to By-Law 21 until 19 March 1998. On that day it issued a levy notice requiring payment by the respondent of arrears of moneys due pursuant to By-Law 21 for the period 1 October 1996 to 1 March 1998. This was the first such notice received by the respondent. He paid it in full and continued to pay all similar levy notices that he received thereafter until he sold Lot 1 in February 2004.

87 The unit entitlement of Lot 1 was 1004 units out of a total of 5780 units in the Strata Scheme, or 19.382 per cent. The respondent made quarterly contributions to the Administrative Fund and Sinking Fund at this rate in accordance with levy notices issued to him from time to time.

88 It was the respondent's case in the court below that between 1 April 1998 and 1 July 2003, when all owners in Strata Plan 3397 were levied by the appellant, the levies included amounts relating to the lift system (including Lift 4), so that when the respondent paid his levies he was, in effect, complying with his obligations under By-Law 21 to the tune of 19.38 per cent. The respondent says, therefore, that by virtue of the By-Law 21, levies made upon him, such as the one on 19 March 1998, he was overcharged, because the By-Law 21 levy notices purported to claim from him 25 per cent of the running costs of the lift system, including Lift 4. The respondent contended that, in these circumstances, he was charged for and paid 44.382 per cent of the lift costs in relation to the whole building, including Lift 4, when, upon a proper construction of By-Law 21, he should not have been charged more than 25 per cent in total.

89 Counsel for the parties in the Court below urged upon his Honour, and he accepted, that he should approach the construction of By-Law 21 upon the basis that it had created contractual rights of exclusive use and enjoyment under s 58(7) of the Strata Titles Act 1973 which should be interpreted in what is Honour described as "the ordinary way". See North Wind Pty Ltd v Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809.

90 His Honour then observed (at 9-10): -

Strata Titles Act 1973.

91 His Honour then proceeded to record what he referred to as "the other surrounding circumstances" which he took into account. His Honour said this at page 10: -

92 The respondent submitted in the court below that when By-Law 21 was made, it could not have been intended that Lot 1 would have to contribute 44.382 per cent of the overall running costs of the lift system in order merely to convert the de facto exclusive use of Lift 4 to an actual legal entitlement to exclusive use, particularly when employees of the Park Regis Motel and its guests had hardly ever used Lifts 1, 2 and 3.

93 His Honour accepted that submission and proceeded to explain why he did so. He referred to the terms of the by-law. He said that before the appellant could recover from the respondent sums directly attributed to Lift 4, being repair, maintenance, renewal, replacement and running costs of that lift, in accordance with By-Law 21(ii)(a), it was obliged to identify those repair, maintenance and running costs which were directly attributable to Lift 4. His Honour said that, on the evidence, with one irrelevant exception, the appellant did not do this. The appellant merely sent to the respondent levy notices that captured his liability for the category (b) costs. His Honour observed that that was not surprising, given the inference that he drew on the evidence, that the lift maintenance company did not have a separate maintenance contract with the appellant for Lift 4, but only a contract for the maintenance of the lift system as a whole.

94 His Honour also observed that costs for the renewal and replacement of Lift 4 were included in category (a). He said, in his opinion, that the respondent was liable for such renewal and replacement costs of Lift 4 over and above those costs for which he was liable in respect of category (b) and the other category (a) costs to which he referred.

95 His Honour’s conclusions were then set out at pages 12-13. It is convenient for present purposes to record them in full as follows: -

1. All costs for the renewal and replacement of Lift 4 identified to the proprietor of Lot 1 by the [appellant] were to be paid exclusively by that proprietor; none of such costs would therefore be payable by the remaining proprietors of Strata Plan 3397.

2. All costs for the repair, maintenance and running costs directly attributable to Lift 4 identified to the proprietor of Lot 1 by the [appellant] were to be paid exclusively by that proprietor; none of such costs would therefore be payable by the remaining proprietors of Strata Plan 3397.

As a matter of common sense, it must follow that the parties who made By-Law 21 intended that 75 per cent of the balance of all such costs would be payable by the remaining proprietors of Strata Plan 3397. This gives By-Law 21 a commercial, businesslike interpretation. Otherwise, it would mean that on top of the liability to pay the 25 per cent of all costs attributable to the routine maintenance servicing and repair of the lift system, the proprietor of Lot 1 would still be required to contribute a substantial amount towards such costs based on Lot 1’s unit entitlement of 1004 out of the aggregate of 5780 merely to convert exclusive de facto use of Lift 4 to a legal entitlement of exclusive use. Plainly, that cannot have been the intention of the parties who made By-Law 21.

The appellant’s submissions

96 The appellant's contentions in this Court include the identification of errors said to have been made by his Honour in the italicised portion of the extract set forth in the preceding paragraph.

97 The appellant argued that his Honour’s interpretation of By-Law 21 was impermissible according to its plain meaning. It argued that the by-law was confined to the payment of levies by the owner of Lot 1 in relation to Lift No 4. The by-law said nothing about the pre-existing obligations of the lot owner to continue to pay levies imposed upon it in the normal course of events. It said nothing about the lot owner's obligation to pay levies for the maintenance of lifts 1, 2 and 3. The appellant argued that his Honour, in effect, interpreted By-Law 21 as if it were an exclusion clause, limiting the respondent’s statutory obligation to contribute to the upkeep of the common property.

98 The appellant also argued that his Honour was erroneously influenced by what he saw to be the lack of commercial sense in an owner of Lot 1 agreeing to pay 25 per cent of the costs incurred for the upkeep of all lifts, in return for the exclusive use of Lift 4 (whilst remaining liable for the payment of 19.382 per cent of the costs of the other three lifts), if all that he was to secure in return was a formalisation of the pre-existing de facto exclusive use of that lift. The appellant contends that, in this way, his Honour imputed an intention on the part of those who agreed to the by-law that it could not have meant that an owner of Lot 1 would be required to contribute something in the order of 44.382 per cent to the overall running costs of the lift system. In any event, the appellant submitted that the terms of By-Law 21 were sufficiently clear to obviate any need to resort to a consideration of surrounding circumstances as an aid to interpretation.

99 If it were the case that his Honour was justified in considering surrounding circumstances, the appellant submitted that his Honour erred by failing properly to consider what a reasonable person would have understood the words of the by-law to mean. In this respect, the appellant argued that his Honour approached the matter purely from the perspective of an hypothetical owner of Lot 1, instead of attempting to discern the objective intention of the parties.

100 Finally, the appellant contended that his Honour failed to have proper regard to the obligations imposed upon the respondent by the relevant provisions of the Act. The appellant argued that his Honour failed to have regard to the difference between liabilities imposed upon the respondent having the benefit of the exclusive use of Lift 4 (pursuant to s 53 of the Act) and his ongoing and separate liability for contributions as a lot owner pursuant to Divs 1 and 2 of Pt 3 of Ch 3 of the Act.

101 In this respect, the appellant argues that the "paramount obligation" of a lot owner is to pay amounts levied as contributions to the administrative and sinking funds. Section 76 of the Act requires an Owners Corporation to levy such contributions on each person liable. By-Law 21, by way of comparison, deals with the grant of the exclusive use and enjoyment of Lift 4 to the proprietor of Lot 1, and with the terms and conditions upon which such use and enjoyment is granted. The terms of By-Law 21 do not say, and should not be interpreted to mean, that the owner of Lot 1 is, or has been, in some way released from the obligations, imposed by law on all of the proprietors, to contribute to the repair and maintenance of the other three lifts.

The respondent’s submissions

102 The respondent identified what is said to have been the issue for his Honour in the following terms: did the by-law mean that the respondent had to pay 25 per cent extra (or 44.382 per cent in total) of "the costs attributed to the running and routine maintenance, servicing and repair of the lift system" ie 25 per cent extra to the 19.382 per cent he was already paying as part of his administrative fund levy for the same thing, or did it mean, as his Honour found, and the respondent contended, that he was literally required to pay 25 per cent of the "running and routine maintenance, servicing and repair of the lift system"?

103 The respondent submitted that his Honour’s interpretation of the by-law correctly followed proper principles of construction and that, read in the ordinary way in accordance with modern authority, his Honour’s analysis in the italicised portion of his judgment reproduced at par [20] above "is impeccable".

104 The respondent submitted that the owner of Lot 1 and the Owners Corporation, at the time of making the by-law, must be taken to have known that, in terms of unit entitlement, the owner of Lot 1 was already paying 19.382 per cent of the very costs referred to in (ii)(b) of the by-law through administrative fund levies. The respondent emphasised that the by-law does not say an "extra" one-quarter of the costs; it says "one- quarter", which was precisely the fraction of those costs that the respondent maintained he should have been paying. The respondent submitted that if the parties had intended that 44.382 per cent of such costs should have been paid, clear language to that effect would have been required.

The Statutory Regime

105 In 1989 the Strata Titles Act 1973 included the following relevant provisions: -

58 (1) Except as provided in this section the by-laws set forth in Schedule 1 shall be the by-laws in force in respect of each strata scheme.

(7)

(i) a right of exclusive use and enjoyment of; or

the whole or any specified part of the common property, upon conditions (including the payment of money, at specified times or as required by the body corporate, by the proprietor or proprietors of the lot or lots concerned) specified in the by-law; or

(7AA)

(a) provide that the body corporate shall continue to be responsible for the proper maintenance, and keeping in a state of good and serviceable repair, of the common property or the relevant part of it; or

(c) to the body corporate; or

shall, except to the extent that the by-law otherwise provides, be payable by the proprietors concerned proportionately according to the relative proportions of their respective unit entitlements.

(9) To the extent to which such a by-law makes a person directly responsible for the proper maintenance, and keeping in a state of good and serviceable repair, of any common property, it discharges the body corporate from its obligations under s 68(1)(b).

(10) Any moneys payable by a proprietor to the body corporate under a by-law referred to in subsection (7) or pursuant to subsection (9A) may be recovered, as a debt, by the body corporate in any court of competent jurisdiction.

59(1) A body corporate may levy the contributions determined by it in accordance with s 68(1)(j) and (k) and contributions referred to in s 68(1)(p) by serving on the proprietors notice in writing of the contributions payable by them in respect of their respective lots.

(7)

(a) becomes due and payable to the body corporate in accordance with the decision of the body corporate to make the levy;

. . .

68(1)

(a) control, manage and administer the common property for the benefit of the proprietors;

(i) the common property; and

(c) where necessary, renew or replace any fixtures or fittings comprised in the common property and any personal property vested in the body corporate;

. . .

(j) not later than fourteen days after the constitution of the body corporate and from time to time thereafter, determine subject to subsection (3) the amounts necessary to be raised by way of contributions for the purpose of meeting its actual or expected liabilities incurred or to be incurred under paragraph (b) or for the payment of insurance premiums or any other liability of the body corporate, other than amounts referred to in paragraph (k) or (p);

(i) . . .

(ii). . .

Consideration

106 In my opinion, Special By-Law 21 is not ambiguous or uncertain. Its words and their meaning are as clear when read in isolation as they are when read by the hypothetical reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time Special By-Law 21 was formulated.

107 For presently relevant purposes, the by-law consists of two parts. First, it grants to the proprietor of Lot 1 for the time being exclusive use and enjoyment of the lift known as Lift No 4. Secondly, it sets out a mechanism for the calculation of the price, or consideration, which the proprietor of Lot 1 will be required to pay for the continued use and enjoyment of that exclusive right.

108 For reasons which no doubt seemed logical and sensible to those involved at the time, that price, or consideration, was not set as a fixed sum. There may have been a number of reasons for taking this approach, such as a desire to maintain a relationship between that price, or consideration, and costs which the Owners Corporation might have been expected to incur to repair and maintain the lifts in the building on an annual basis. Whatever may have been the reason, or reasons, for choosing this method of calculation, or even if there were no reasons, they form no part of the present enquiry.

109 In my opinion, because the by-law (unfortunately) expresses the price, or consideration, to be paid by the proprietor for the time being of Lot 1, for the exclusive use and enjoyment of Lift 4, not as a fixed sum, but in terms of costs, there has arisen a tendency, evident in some of the arguments in this Court and in the Court below, to treat the payment of the price, or consideration, as discharging what is in truth a separate and different obligation upon the proprietor for the time being of Lot 1 to pay levies raised by the Owners Corporation in the normal course. This tendency has, perhaps understandably, been heightened by the fact that levies raised in this way are clearly, or at least usually, calculated by reference to the actual or anticipated outgoings of the Owners Corporation, including, relevantly, costs incurred for the repair and maintenance etc of lifts. It has been suggested that the obligation to pay both the price, or consideration, and the obligation to pay levies in the normal course, amount (unfairly) to a double payment.

110 The various formulations of the respondent’s case before his Honour would appear to have arisen in this way. Whether described as an overpayment, or as money had and received, or as resulting in an unjust enrichment, they all proceed upon the basis that the respondent has paid twice for the same thing.

111 For the reasons that follow, I do not think that this is correct. The original parties to the formulation of the by-law could no doubt have calculated the price, or consideration, not as a function of costs but as a fixed sum, possibly with annual CPI increases. The proprietor for the time being of Lot 1 would have been obliged to pay that sum for the continued exclusive use and enjoyment of Lift 4, and could not have been heard to complain that he also had an obligation to pay other levies raised by the Owners Corporation from time to time. Indeed, the words of clause (ii) of the by-law speak in terms of “such sums as are identified” to the proprietor of Lot 1 by the Body Corporate. In my opinion, the use of that word serves clearly to emphasise that the obligation upon the proprietor of Lot 1 is not an obligation to pay those costs, but to pay a price, or consideration, calculated conveniently, but in any event irrelevantly, by reference to those costs.

112 Inherent in the respondent's arguments would appear to be the proposition that the by-law somehow operates, or should operate, as a partial exoneration or discharge of his obligation to contribute his share of the costs of the Owners Corporation by the payment of other levies calculated by reference to his unit entitlement in the ordinary way. In my opinion, the terms of By-Law 21 do not have this effect, and if they were intended to have this effect they should have said so.

113 The fact that the proprietor of Lot 1 has become entitled to maintain a right to the exclusive use and enjoyment of Lift 4 by paying a price calculated, in the case of (ii)(a), as the costs directly attributed to Lift 4, and in the case of (ii)(b), as an arithmetical function of the total cost of maintenance of all lifts in the building, does not mean that he is "overpaying" just because he is required, in addition to the payment of those sums, to contribute via his annual levies, to the cost of the upkeep of the other three lifts in the building. The obligations discharged by the payment of those two sums are different obligations and do not overlap.

114 I have already referred at par [90] to that part of his Honour's judgment where he refers to the need for the court to consider the chosen language, and the surrounding circumstances in which By-Law 21 was made, in order to determine, objectively, the mutual intention of the parties. These principles were not a matter of dispute between the parties in this appeal. See, for example, Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at 461-462 [22]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at 179 [40]; Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65 [103] -[106].

115 In Ryledar (supra) [107] - [108] Tobias JA said the following:

: Lion Nathan Australia Pty Ltd v Coopers Brewery

"31. However, that does not mean that when the Court begins the task of construction it puts the words of the document aside and endeavours first to ascertain the commonly known factual context and purpose of the transaction, often only by resolving a strenuous contest between the parties. The Court does not, once it has found the commonly known factual context and purpose, then look at the words of the contract and, if they do not readily accommodate the context and purpose so found, force them to do so by a process of interpretation.

32. When the Court is construing a commercial contract, it begins with the words of the document: there it often finds expressed the factual context known to both parties and the common purpose and object of the transaction. But the court is alive to the possibility that what seems clear by reference only to the words on the printed page may not be so clear when one takes into account as well what was known to both parties but does not appear in the document. When that is taken into account, the words in the contract may legitimately have one or more of a number of possible meanings. It is then the Court’s task to identify which of the possible meanings represents the parties’ contractual intention.

33. However, when a party to a contract argues that the known context and common purpose of the transaction gives the words of the contract a meaning which, by no stretch of language or syntax they will bear then, in truth, one has a rectification suit, not a construction suit.

116 When one has regard to the circumstances in this case, in my opinion they include, and persuasively suggest, that the proprietor of Lot 1 at the time when the by-law was formulated was demonstrably intent upon converting an informal, exclusive use of Lift 4 into a legal and enforceable right to the same thing. The disadvantages of the former, and the significant advantages of the latter, seem to me to be so obvious as to require no elaboration. The readjustment and entrenchment of the right of exclusive use and enjoyment of Lift 4 by the proprietor of Lot 1 was patently valuable to that proprietor, particularly having regard to the type of business conducted at those premises. The payment of a price to secure it, over and above the proportionate cost of maintaining Lift 4, would appear to me, as a matter of "common sense", to conform to "a commercial, businesslike" approach.

117 The relevant statutory provisions also reinforce this. Special By-Law 21 is a by-law made in accordance with s 58(7) of the Act conferring on the proprietor of Lot 1 a right of exclusive use and enjoyment of a specified part of the common property. The by-law provides that the body corporate should be responsible for the proper maintenance and keeping in a state of good and serviceable repair of Lift 4, as well as its cleaning, replacement and running costs in accordance with the alternative described in s 58(7AA)(a) of the Act. Conversely, but significantly, the by-law does not impose on the proprietor of Lot 1 the responsibility for that maintenance or upkeep in accordance with s 58(7AA)(b). Section 58(9), therefore has no application in the present case and does not operate to discharge the body corporate from its obligations under s 68(1)(b) to maintain the lift, or to keep it in a state of good and serviceable repair.

118 However, as a condition - indeed, the only condition - for the conferring on the proprietor of Lot 1 of a right of exclusive use and enjoyment of Lift 4 pursuant to s 58(7)(a)(i), the proprietor of Lot 1 was obliged to pay money as "specified in the by-law". The moneys specified in the by-law as payable by the proprietor of Lot 1 are the costs attributed directly to Lift 4 and one quarter of the costs attributed to the running and routine maintenance, servicing and repair of the lift system. These monies could be recovered by the body corporate from the proprietor of Lot 1 as a debt in accordance with s 58(10) of the Act.

119 Therefore, to the extent that the body corporate, by the express terms of By-Law 21, retained its s 68(1)(b) responsibility for the proper maintenance and keeping in a state of good and serviceable repair and the cleaning, replacement and running costs of Lift 4 (ie "the lift"), it retained the corresponding responsibility to pay for it. However, as a condition of the grant of excusive use and enjoyment of Lift 4 on the proprietor of Lot 1, it required and obliged that proprietor, and that proprietor agreed, by the terms of the by-law, to pay the cost of meeting that responsibility. The body corporate thereby became entitled to recover it from the proprietor of that lot as a debt pursuant to s 58(10). No other levy upon proprietors of the strata scheme was necessary and they all became thereby relieved of any burden of the costs of Lift 4 as long as the proprietor of Lot 1 complied with the terms of the by-law.

120 Nothing in the terms of the by-law, and nothing in the Act, relieved either the body corporate of its obligation to meet the costs of repair, maintenance, renewal, replacement and running for the remaining three lifts, or the proprietor of Lot 1 of its obligation to continue to contribute its proportionate share of such costs of the remaining three lifts, in accordance with levy notices issued by the body corporate from time to time for this purpose. In my opinion, this meant that the respondent became and remained liable for the payment of both 25 per cent of the costs of the lift system for the building in accordance with Special By-Law 21, as well as his proportionate 19.382 per cent of the remaining 75 per cent of such costs as one of several proprietors in the Owners Corporation.

The Cross Appeal

121 The respondent has filed a cross appeal in which he seeks to argue that his Honour erred in the way in which he dealt with the respondent’s claim for interest. In light of the view I have formed about the result of this appeal, the precise issue raised on the cross appeal does not need to be considered. However, by reason of a concession made by the appellant concerning an amount that it now says is repayable to the respondent, it becomes necessary to revisit that issue. This is explained below.

122 One of the principal matters dealt with by the respondent in his submissions is what is said to be an error in the way that the appellant's submissions purport to treat one of his Honour’s significant findings. The relevant passage to which attention is drawn is to be found at p 16 of his Honour’s judgment, and is as follows: -

123 In order to expose the error, the respondent drew attention to certain paragraphs of the applicant’s submissions in this Court in which $100,000 is assumed, by way of example, to represent the total cost for one year to maintain all four lifts in the building. In the context of this example, the appellant argued that the Owners Corporation approached the respondent’s obligations in the following manner:

48.1 from the $100,000 lift costs, it levied 25 per cent of these costs to the respondent pursuant to his obligations under By-Law 21;

48.2 from the remaining $75,000, it struck a levy against the respondent, as a lot owner required to maintain the building pursuant to Part 3 of Chapter 3 of the Act, of a further sum of 19.38 per cent of $75,000 (i.e. $14,250).

124 Relying upon the passage quoted at par [47], the respondent submitted that this analysis is erroneous. The respondent submitted that the relevant portion of the example set forth in par [48.2] should read, "from the same $100,000, it struck a levy against the respondent . . . of a further sum of 19.38 per cent of $100,000 (i.e. $19,380)”.

125 In the respondent's submission, this is a significant difference for the reason that, if it is correct, the respondent was being levied 44.382 per cent of the whole costs attributed to the running and routine maintenance, servicing and repair of the lift system as a whole, a circumstance tending to suggest (according to this submission) that the appellant’s interpretation of the by-law was, in effect, uncommercial and that his Honour's opinion of the by-law, as one in need of “a commercial, businesslike interpretation”, ought to be adopted. The respondent maintained that submission in this Court as supporting his Honour's conclusions. Indeed, the respondent argued, relying upon Coulton v Holcombe (1986) 162 CLR 1, that the appellant ought to be bound by the conduct of its case in the Court below and, in effect, ought not to be permitted in this Court to argue for some less onerous and burdensome alternative interpretation of the by-law.

126 However, as will by now be apparent from what appears above, I am of the opinion that his Honour’s interpretation of the by-law is incorrect. It follows from this result, therefore, that the respondent has been overcharged, but only by an amount equal to 19.382 per cent of his one-quarter share of the costs of the lifts as a whole, for which he was otherwise levied, for the excusive use and enjoyment of Lift 4, in accordance with the terms of By-Law 21. According to the appellant's concession, the amount of that overcharge is $18,758.14.

127 The respondent sought to argue on the cross appeal that his Honour should have awarded interest on the whole of the amount overpaid. The effect of the conclusion I have come to, having regard to the appellant’s concession, is that the respondent's arguments on the question of interest may be conveniently transposed to the smaller sum.

128 The respondent argued in this Court that his Honour fell into error in awarding interest only from the date of a letter written by the respondent to the Owners Corporation on 9 September 2002 in which, as his Honour found, the respondent "was making clear to the body corporate that they had overcharged him". He argued that the primary purpose of an award of interest is compensatory and is payable, and ought to have been awarded, in any circumstances where the respondent had been kept out of his money or denied the opportunity to earn interest upon it or otherwise to utilise his overcharged payments from the date or dates he made them. The respondent argued that his Honour's discretion miscarried.

129 The respondent offered, in his submissions in this Court, to bring in an updated calculation of interest. Such interest would ordinarily run from the date upon which the cause of action arises. In the present case, being an action to recover money paid under a mistake, that would mean that interest would run from the respective dates upon which the appellant received the overpaid amounts.

130 The appellant made no submissions in this Court on the cross appeal. Even having regard to the discretionary nature of a judicial decision concerning the award of interest under the statute, I can see no reason why the respondent would not have become entitled to an award of interest on the amount found by his Honour to have been overcharged or, correspondingly, to an award of interest on such smaller sum as the appellant now concedes was overpaid, in circumstances where its appeal to this Court were allowed.

Costs

131 It was submitted on behalf of the respondent that, whatever the outcome of the present appeal, this Court should not dismiss the plaintiff’s case in the court below as the appellant did not challenge the finding that it had overcharged the respondent, but instead sought merely to argue that the extent of the overcharging was less that found by Rolfe DCJ. Even though the appellant’s submissions in reply do not concede that contention, they do not put it directly in issue either. However, the appellant’s Notice of Appeal asked for an order that the respondent pay three quarters of the appellant’s costs of the trial, presumably based upon an estimation of the time occupied by the issue of interpretation of the by-law. Counsel for the respondent did not propose a smaller proportion. In my opinion, those proportions are appropriate.

Orders

132 In my opinion, this Court should make the following orders:

interest, such interest to run from the date of the overpayments.

Strata Schemes

Management Act

1996

Suitors' Fund Act

1951

**********

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Citations

The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207

Most Recent Citation

Stamford Property Services Pty Ltd v City of Sydney [2015] NSWLEC 1189

Cases Citing This Decision

60

Quarante Pty Ltd v The Owners Strata Plan No 67212 [2008] NSWCA 258

The Owners of Strata Plan No 3397 v Tate (No 2) [2008] NSWCA 50

Waterways Authority of New South Wales v Coal & Allied (Operations) Pty Limited [2007] NSWCA 276

Cases Cited

26

Statutory Material Cited

8

Humphries v Proprietors “Surfers Palms North” Group Titles Plan 1955 [1994] HCA 21

Ridis v Strata Plan 10308 [2005] NSWCA 246

Humphries v Proprietors “Surfers Palms North” Group Titles Plan 1955 [1994] HCA 21

CITATION:	The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207
HEARING DATE(S):	11 May 2007
JUDGMENT DATE:	16 August 2007
JUDGMENT OF:	Mason P at 1; McColl JA at 2; Harrison J at 78
DECISION:	(1) Appeal allowed with costs. (2) Cross appeal allowed with costs. (3) Judgment and orders of Rolfe DCJ of 17 November 2005, save order 3(c) be set aside. (4) In lieu thereof, judgment for the respondent for $18,758.14 plus interest, such interest to run from the date of the overpayments. (5) Appellant to pay one-quarter of the respondent’s costs of the trial before Rolfe DCJ, and, pursuant to s 229 of the Strata Schemes Management Act 1996, such costs to be payable by contributions levied in relation to lots other than lots owned by the respondent. (6) Respondent to pay three quarters of the appellant’s costs of the trial before Rolfe DCJ. (7) The appellant and the respondent to have a certificate under the Suitors' Fund Act 1951 if otherwise entitled.
CATCHWORDS:	STRATA SCHEMES – by-laws – proper construction of by-law giving exclusive use of common property (a lift) to a proprietor – terms and conditions attaching to exclusive use – costs attributable to the repair, maintenance, renewal and replacement of the lift – relationship between obligations imposed by by-law and obligation to meet levies for the upkeep of common property generally - STRATA SCHEMES – by-laws – principles of interpretation – to be construed consistently with statutory context – "series of enactments" by which proprietors in a body corporate administer their affairs – public purpose going beyond function of facilitating internal administration of body corporate – to be interpreted objectively by what they would convey to a reasonable person – court to take into account their constitutional function in strata scheme in regulating rights and liabilities of proprietors – tight rein to be kept on recourse to surrounding circumstances (D)
LEGISLATION CITED:	Building Units and Group Titles Act 1980 (Qld) Companies Act 1961 Harbours, Docks, and Piers Clauses Act 1847 (10 & 11 Vict. c. 27) Interpretation Act 1987 Strata Schemes (Freehold Development) Act 1973 - s 58(7) Strata Schemes Management Act 1996 Strata Titles Act 1973 - s 58(7) Suitor's Fund Act 1951
CASES CITED:	Antaios Cia Naviera SA v Salen Rederierna AB [1985] AC 191 Australian Coal & Shale Employees' Federation v Smith (1937) 38 SR (NSW) 48 Bailey (as executrix of the estate of the late Dr Harry R Bailey) v New South Wales Medical Defence Union Ltd [1995] HCA 28; (1995) 184 CLR 399 Bratton Seymour Service Co Ltd v Oxborough [1992] BCLC 693 Collector of Customs v Agfa-Gevaert Ltd [1996] HCA 36; (1996) 186 CLR 389 Cotman v Brougham [1918] AC 514 Coulton v Holcombe (1986) 162 CLR 1 Dainford Ltd v Smith (1984) Q ConvR 54-140 Dainford Ltd v Smith [1985] HCA 23; (1985) 155 CLR 342 Doe d Murray, Bishop of Rochester v Bridges (1831) 1 B & Ad 847; 109 ER 1001 Egyptian Salt and Soda Co Ltd v Port Said Salt Association Ltd [1931] AC 677 Gentel v Rapps [1902] 1 KB 160 Holmes v Keyes [1959] Ch 199 Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 [1994] HCA 21; (1994) 179 CLR 597 Jacklin v Proprietors of Strata Plan No 2795 [1975] 1 NSWLR 15 Land Mortgage Bank of Victoria Ltd v Reid [1909] VLR 284 Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd [2005] FCA 1812; (2005) 56 ACSR 263 Lion Nathan Australia Pty Ltd (ACN 008 596 370) v Coopers Brewery Ltd (ACN 007 871 409) and Others [2006] FCAFC 144; (2006) 156 FCR 1 London Association of Shipowners and Brokers v London and India Docks Joint Committee [1892] 3 Ch 242 Margiz Pty Ltd v Proprietors Strata Plan No 30234 (1993) 30 NSWLR 364 at 372 MFI Properties Ltd v BICC Group Pension Trust Ltd [1986] 1 All ER 974 National Roads and Motorists' Association Ltd v Parkin [2004] NSWCA 153; (2004) 60 NSWLR 224 North Wind Pty Ltd v Proprietors - Strata Plan 3143 [1981] 2 NSWLR 809 One.Tel Ltd v Australian Communications Authority [2001] FCA 54; (2001) 110 FCR 125 Pacific Carriers Ltd v BNP Paribas [2004] HCA 35; (2004) 218 CLR 451 Puflett v Proprietors of Strata Plan No 121 (1987) 17 NSWLR 372 Re Taylor [1995] 2 Qd R 564 Ridis v Strata Plan 10308 [2005] NSWCA 246; (2005) 63 NSWLR 449 Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65 Sons of Gwalia Ltd v Margaretic; ING Investment Management LLC v Margaretic [2007] HCA 1; (2007) 81 ALJR 525 Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 Upper Hunter County District Council v Australian Chilling and Freezing Company Limited [1968] HCA 8; (1968) 118 CLR 429 White v Betalli [2006] NSWSC 537 Young & Anor v Owners–Strata Plan No 3529 & Ors [2001] NSWSC 1135; (2001) 54 NSWLR 60
PARTIES:	The Owners of Strata Plan No 3397 (Appellant / Cross Respondent) Warwick Bannister Tate (Cross-Appellant / Respondent)
FILE NUMBER(S):	CA 40921 of 2005
COUNSEL:	G A Sirtes (Appellant / Cross-Respondent) M D Young (Cross-Appellant / Respondent)
SOLICITORS:	Robinson & Davies Pty Ltd (Appellant / Cross-Respondent) Andreones (Cross-Appellant / Respondent)
LOWER COURT JURISDICTION:	District Court
LOWER COURT FILE NUMBER(S):	2813 of 2004
LOWER COURT JUDICIAL OFFICER:	Rolfe J
LOWER COURT DATE OF DECISION:	7 November 2005