Court of Appeal
New South Wales
Case Title: The Owners Strata Plan 50276 v Thoo Medium Neutral Citation: [2013] NSWCA 270 Hearing Date(s): 20, 21 May 2013 Decision Date: 22 August 2013 Before: Barrett JA at [1];
Tobias AJA at [22];
Preston CJ of LEC at [227].Decision: 1.Appeal allowed.
2.Cross-Appeal dismissed.
3.Set aside Declarations 1, 2, 3, 4, 5 and 6 and Orders 7 and 8 made by Slattery J on 22 August 2011 and Orders 1 to 5 made by his Honour on 4 December 2012.
4.Order that the Third Further Amended Statement of Claim be dismissed.
5.Order that the First Respondent pay the Appellants' costs of the proceedings before Slattery J and of the Appeal but have with respect to the latter a certificate under the Suitors' Fund Act 1951, if otherwise qualified.
6.Direct that the parties indicate, in the light of the foregoing reasons for judgment, the consequential effect on Orders 12, 13 and 14 made on 22 August 2011 and Orders 6 and 7 made on 4 December 2012 by the filing of written submissions within 14 days of the publication of these reasons, in the event that the parties cannot reach agreement as to the disposition of those Orders.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Catchwords: STRATA PLANS - duty of owners corporation to renew or replace mechanical exhaust ventilation system pursuant to Strata Schemes Management Act 1996, s 62(2) - whether duty extended to installing additional system to service plaintiff's lot - whether proprietary right of plaintiff in common property imposed such a duty - validity of special resolution pursuant to s 62(3) of the 1996 Act determining that it was inappropriate to renew or replace system - whether special resolution constituted a fraud on the minority Legislation Cited: Consumer, Trader and Tenancy Tribunal Act 2001
Factories, Shops and Industries Act 1962
Local Government Act 1958 (Vic), s 588
Retail Leases Act 1994, Sch 1
Strata Schemes (Freehold Development) Act 1973, ss 18, 20, 21, 24, 25, 26, 27
Strata Schemes Management Act 1996, ss 3, 11, 12, 61, 62, 65A, 65B, 65C, 117, 138, 207, 226; Sch 3
Strata Schemes Management Amendment Act 2004
Strata Titles Act 1973, ss 68, 105, 146; Part 5Cases Cited: Arthur Yates & Co Pty Ltd v Vegetable Seeds Committee [1945] HCA 55; (1945) 72 CLR 37
Associated Provincial Picture Houses Ltd v Wednesbury Corporation [1948] 1 KB 223
Biviano v Natoli (1998) 43 NSWLR 695
Bull v Bull [1955] 1 QB 234
Byrne v Australian Airlines Ltd [1995] HCA 24; (1995) 185 CLR 410
City of Heidelberg v McPherson [1964] VR…
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- Case
- [2013] NSWCA 270
- Decision Date
CaseChat Overview and Summary
The primary legal issues before the court were whether the Owners Strata Plan 50276 had a statutory duty under the *Strata Schemes Management Act 1996* (NSW) to renew or replace the mechanical exhaust ventilation system, and whether this duty extended to installing an additional system for the respondent's lot. The court also considered whether the respondent's proprietary right in the common property imposed such a duty, and the validity of a special resolution passed by the owners corporation that deemed it inappropriate to renew or replace the system, including whether this resolution constituted a fraud on the minority.
The court's reasoning focused on the interpretation of sections 62 and 75 of the *Strata Schemes Management Act 1996*. Section 62(2) outlines the duty to renew or replace fixtures and fittings that are part of the common property, while section 75(2) details the purposes for which a sinking fund may be used, including renewing or replacing fixtures and fittings that are part of the common property and meeting other expenses of a capital nature. The court noted that section 75(2)(d) reflected the content of section 62(2). The court also considered section 65A, which permits an owners corporation to make or authorise changes to common property if a special resolution has been passed.
The appeal was allowed, and the cross-appeal was dismissed. Declarations and orders made by the primary judge were set aside, and the respondent's third further amended statement of claim was dismissed. The respondent was ordered to pay the appellants' costs of the proceedings at first instance and on appeal, with a certificate under the *Suitors' Fund Act 1951* available if otherwise qualified. The parties were directed to file written submissions regarding the consequential effect on certain outstanding orders.
Orders
Orders of the court
1.Appeal allowed.
2.Cross-Appeal dismissed.
3.Set aside Declarations 1, 2, 3, 4, 5 and 6 and Orders 7 and 8 made by Slattery J on 22 August 2011 and Orders 1 to 5 made by his Honour on 4 December 2012.
4.Order that the Third Further Amended Statement of Claim be dismissed.
5.Order that the First Respondent pay the Appellants' costs of the proceedings before Slattery J and of the Appeal but have with respect to the latter a certificate under the Suitors' Fund Act 1951, if otherwise qualified.
6.Direct that the parties indicate, in the light of the foregoing reasons for judgment, the consequential effect on Orders 12, 13 and 14 made on 22 August 2011 and Orders 6 and 7 made on 4 December 2012 by the filing of written submissions within 14 days of the publication of these reasons, in the event that the parties cannot reach agreement as to the disposition of those Orders.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]
Background
Background to the litigation
Full text does not contain this section.
Evidence
Evidence Before The Court
Full text does not contain this section.
Decision
Reasons for decision
Full text does not contain this section.
Ratio Decidendi
Legal Principle Established
Sections 65A, 65B and 65C were inserted into the 1996 Act by the Strata Schemes Management Amendment Act 2004 (NSW). Section 65C deals with the duties of an owners corporation in relation to fire safety inspections and is not presently relevant. However, s 65A is of some significance to the issues in the present appeal and relevantly provides as follows:65A Owners corporation may make or authorise changes to common property(1) For the purpose of improving or enhancing the common property, an owners corporation or an owner of a lot may take any of the following action, but only if a special resolution has first been passed at a general meeting of the owners corporation that specifically authorises the taking of the particular action proposed:(a) add to the common property,(b) alter the common property,(c) erect a new structure on the common property.(2) A special resolution that authorises action to be taken under subsection (1) in relation to the common property by an owner of a lot may specify whether the ongoing maintenance of the common property once the action has been taken is the responsibility of the owners corporation or the owner.(3) If a special resolution under this section does not specify who has the ongoing maintenance of the common property concerned, the owners corporation has the responsibility for the ongoing maintenance. Part 3 of Chapter 3 deals with the finances of a strata scheme. They were described by McColl JA in Ridis in the following terms:[108] ... Section 68(1)(a) relevantly provides that an owners corporation must not pay money from its administrative fund except for payments of the kind for which estimates have been made under s 75(1). Section 75(1)(a), which appears in Div 2 (Levy of Contributions) requires an owners corporation not later than fourteen days after its constitution, and at each annual general meeting thereafter, to estimate how much money it would need to credit to its administrative fund for actual and expected expenditure "to maintain in good condition on a day-to-day basis the common property and any personal property vested in the owners corporation ...". The note to s 75 (which does not form part of the Act: s 7) states: Recurrent expenses would include such regular expenses as ... carpet cleaning, lawn mowing services and the like and minor expenses relating to maintenance of the common property. [109] Section 69(1) requires an owners corporation to establish a sinking fund. Section 71(1)(a) provides that an owners corporation must not pay any money from its sinking fund except for the purpose of making payments of the kind for which estimates have been made under s 75(2). Section 75(2) provides:75 Estimates to be prepared of contributions to administrative and sinking funds...(2) An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its sinking fund for actual and expected expenditure:(a) for painting or repainting any part of the common property which is a building or other structure, and (b) to acquire personal property, and (c) to renew or replace personal property, and (d) to renew or replace fixtures and fittings that are part of the common property, and (e) to replace or repair the common property, and (f) to meet other expenses of a capital nature. Note: Expenses of a capital nature would include expenses in relation to major repairs or improvements to the common property or personal property of the owners corporation, such as painting of a building or replacement of roofing, guttering or fences and the like. (Emphasis added).I note that s 75(2)(d) reflects the content of s 62(2).