The Owners - Strata Plan No 7114 v Northern Beaches Council

Case •

[2025] NSWCA 197

•

28 August 2025

No judgment structure available for this case.

Court of Appeal


Supreme Court


New South Wales

Medium Neutral Citation: The Owners – Strata Plan No 7114 v Northern Beaches Council [2025] NSWCA 197
Hearing dates: 30 June 2025
Date of orders: 28 August 2025
Decision date: 28 August 2025
Before: Ward P at [1]
Stern JA at [2]
Free JA at [3]
Decision:

Appeal dismissed with costs.

Catchwords:

CONTRACT — Local council licensed car parking spaces to owners corporation — Council claim for unpaid licence fees — Owners corporation cross-claim to recover licence fees paid under mistaken belief of obligation to pay — Construction of licence agreement — No mistaken payment — Owners corporation liable for unpaid licence fees

TORTS — Trespass and private nuisance — Roller door restricting potential incorporation of spaces into public car park — Loss of car park revenue — Substantial and unreasonable interference with rights of access and use – Obligations of owners corporation in respect of common property

LIMITATION OF ACTIONS — Unpaid electricity charges — Whether running account between the parties — Existence of running account not shown — No factual basis to consider different approach to operation of limitations period — Claim out of time

Legislation Cited:

Bankruptcy Act 1966 (Cth), s 122

Limitation Act 1969 (NSW), s 14

Strata Schemes Development Act 2015 (NSW)

Strata Schemes Management Act 1996 (NSW), s 44

Strata Schemes Management Act 2015 (NSW), s 153

Cases Cited:

Airservices Australia v Ferrier (1996) 185 CLR 483; [1996] HCA 54

Chiu v Healey [2003] NSWSC 857

EB 9 and 10 Pty Ltd v Owners – Strata Plan No 934 (2018) 97 NSWLR 227; [2018] NSWSC 464

Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 514; [2013] NSWCA 382

Hargrave v Goldman (1963) 110 CLR 40; [1963] HCA 56

Jeffery v Adams [2023] NSWSC 1270

Johnstone v Holdway [1963] 1 QB 601; [1963] 2 WLR 147

Meriton Apartments Pty Ltd v Owners Strata Plan No 72381 [2015] NSWSC 202

Oldham v Lawson (No 1) [1976] VR 654

Pettey v Parsons [1914] 2 Ch 653

Placer (Granny Smith) v Thiess Contractors [2003] HCA 10; (2003) 77 ALJR 768

Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd [2010] NSWCA 14

Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242

Trewin v Felton [2007] NSWSC 851

Transport for NSW v Hunt Leather Pty Ltd (2024) 115 NSWLR 489; [2024] NSWCA 227

Category:Principal judgment
Parties: The Owners – Strata Plan No 7114 (Appellant)
Northern Beaches Council (Respondent)
Representation:

Counsel:
J Knackstredt / W Nash (Appellant)
R Cheney SC / J Smith (Respondent)

Solicitors:
Bannermans Lawyers (Appellant)
HWL Ebsworth Lawyers (Respondent)
File Number(s): 2024/444769
 Decision under appeal 
Court or tribunal:
District Court of New South Wales
Jurisdiction:
Civil
Citation:

[2024] NSWDC 648

Date of Decision:
5 November 2024
Before:
Weber SC DCJ
File Number(s):
2022/284794

HEADNOTE

[This headnote is not to be read as part of the judgment]

The appellant is the owners corporation for the registered Strata Plan (Owners Corporation) for a mixed use building in Manly, known as the Manly National Building. The respondent, Northern Beaches Council (Council), is the owner of Lots 185 to 430, each of which is a car parking space. Council’s lots are located on levels 2 to 8 of the Strata Plan.

Under by-law 17 for the Strata Plan, Council is entitled to operate a public carpark using its lots. Council in fact operates, and has operated at all relevant times, a public carpark using only its lots on levels 2 to 7. Since at least 1996 Council has licensed to the Owners Corporation the 19 car parking spaces which are on level 8, being lots 412 to 430 (Licensed Lots). The Owners Corporation has made the Licensed Lots available for the use of residents and other authorised persons. There is a roller door separating levels 7 and 8 which regulates access to the Licensed Lots. The roller door is operated using fob keys which are controlled and distributed by the Owners Corporation.

Between June 1999 and January 2024, the respective rights and obligations of the parties concerning the Licensed Lots and certain areas of common property licensed by the Owners Corporation to the Council for use as part of the public carpark were governed by a deed (1999 Deed). The initial term of the 1999 Deed was for 10 years to 30 June 2009. Clauses 2.4 and 2.5 of the 1999 Deed contemplated a holdover arrangement beyond 30 June 2009. Until June 2016 each party paid to the other the applicable licence fee, adjusted annually in accordance with the terms of the 1999 Deed. After June 2016 each party stopped paying the other, but otherwise continued to act as if the 1999 Deed governed their relations, including by taking the benefit of the licences thereunder. The Owners Corporation terminated the 1999 Deed by written notice that took effect on 8 January 2024.

Council brought proceedings for the recovery of unpaid licence fees under the 1999 Deed from June 2016. Council also claimed damages for trespass and/or nuisance relating to the period after the expiry of the licence in January 2024, primarily on the basis that the Owners Corporation is responsible for the roller door which impeded Council in the exercise of its right to use the Licensed Lots as part of the public carpark.

The Owners Corporation sought to recover the licence fees that it paid between 30 June 2009 and June 2016, on the basis that in paying those fees the Owners Corporation was labouring under the mistaken belief that it was obliged to do so, when it was not. The Owners Corporation also sought damages in respect of the failure by Council to pay for electricity usage relating to the carpark prior to 23 March 2013.

The Court (Free JA, Ward P and Stern JA agreeing) held, dismissing the appeal:

As to grounds 1-4, concerning the obligation of the Owners Corporation to pay licence fees under the 1999 Deed.

1. On a proper construction of the 1999 Deed, for so long as the deed remained operative the Owners Corporation was obliged to pay the licence fee stipulated by the deed. In paying the licence fee between June 2009 and May 2016, Council was not labouring under any mistake: at [43]-[58].

As to grounds 5 and 6, concerning interference with Council’s right to access and use the Licensed Lots after 8 January 2024.

2. Following the termination of the licence over the Licensed Lots on 8 January 2024, the Owners Corporation had no right to use or occupy the Licensed Lots. The presence of the roller door, for which the Owners Corporation was responsible, amounted to a substantial and unreasonable interference with Council’s right to access and use the Licensed Lots: at [59]-[77].

Hargrave v Goldman (1963) 110 CLR 40; [1963] HCA 56, Jeffery v Adams [2023] NSWSC 1270, Pettey v Parsons [1914] 2 Ch 653, Chiu v Healey [2003] NSWSC 857, Transport for NSW v Hunt Leather Pty Ltd (2024) 115 NSWLR 489; [2024] NSWCA 227, Oldham v Lawson (No 1) [1976] VR 654, Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 514; [2013] NSWCA 382, referred to.

EB 9 and 10 Pty Ltd v Owners – Strata Plan No 934 (2018) 97 NSWLR 227; [2018] NSWSC 464, Trewin v Felton [2007] NSWSC 851, Johnstone v Holdway [1963] 1 QB 601; [1963] 2 WLR 147, considered.

3. In circumstances where Council was entitled to use those lots as part of the public carpark, it was appropriate for the primary judge to determine damages in the manner that he did, being by reference to the fees that could have been obtained if the Council had been able to put its property to such use, discounted to reflect the commercial vicissitudes: at [78]-[79].

Placer (Granny Smith) v Thiess Contractors [2003] HCA 10; (2003) 77 ALJR 768, referred to.

As to ground 7, concerning liability for damages in respect of electricity consumed by Council prior to 21 March 2013.

4. The primary judge was correct to conclude that the claim brought by the Owners Corporation in respect of electricity consumption prior to 21 March 2013 was out of time. Any obligation of Council to pay for electricity charges was not shown to have been managed as part of a running account between the parties. It follows that there is no factual basis to apply a different approach to the operation of the limitations period, as urged by the Owners Corporation, because the claim is in respect of a running account: at [80]-[92].

Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242, referred to.

Airservices Australia v Ferrier (1996) 185 CLR 483; [1996] HCA 54, Meriton Apartments Pty Ltd v Owners Strata Plan No 72381 [2015] NSWSC 202, Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd [2010] NSWCA 14, considered.

JUDGMENT

  1. WARD P: I have had the advantage of reading in draft the comprehensive reasons of Free JA, with which I agree. For those reasons the appeal should be dismissed with costs.

  2. STERN JA: I agree with Free JA.

  3. FREE JA: This appeal concerns car parking lots in a mixed use building in Manly, known as the Manly National Building. The building is the subject of registered strata plan no. 7114 (Strata Plan). The appellant is the owners corporation for the Strata Plan (Owners Corporation). The respondent, Northern Beaches Council (Council), is the owner of Lots 185 to 430 in the Strata Plan. Each of those lots is a car parking space, located on levels 2 to 8 of the Strata Plan.

  4. Council operates a commercial carpark accessible by members of the public (Public Carpark) using lots 185 to 383 and 389 to 411. These lots are confined to levels 2 to 7 of the Strata Plan. Since at least 1996, Council has licensed to the Owners Corporation 19 car parking spaces, being lots 412 to 430 (Licensed Lots), which are on level 8 of the Strata Plan. The Owners Corporation has made the Licensed Lots available for the use of residents and other authorised persons. There are other car parking lots on levels 8 and 9 of the Strata Plan which are owned by the Owners Corporation and other owners of lots in the Strata Plan. At an unknown time, a roller door was installed on the ramp separating levels 7 and 8 of the Strata Plan, corresponding to the upper limit of the area used for the Public Carpark. It has been in place at all times relevant for the purposes of resolving the disputes in this appeal. The roller door is operated using fob keys which are distributed by the Owners Corporation.

  5. The principal issue arising on the appeal is whether the Owners Corporation, having at all times taken the benefit of the licence to use and occupy the Licensed Lots, was obliged to make payments in return while the licence remained in force. For the reasons that follow, the primary judge was correct to conclude that the Owners Corporation was so obliged.

  6. In relation to the period following termination of the licence over the Licensed Lots, the primary judge was correct to conclude that Council is entitled to damages for the interference with its property rights stemming from the roller door precluding access to level 8. His Honour was also correct to treat the fees charged by Council to members of the public to use spaces in the Public Carpark as an appropriate measure of damages, subject to certain adjustments.

  7. In relation to the Owners Corporation’s claim against Council for unpaid electricity usage before 21 March 2013, the primary judge was correct to conclude that the claim was out of time. The Owners Corporation cannot avoid that conclusion by seeking to invoke principles relating to the treatment of running accounts. Any obligation of Council to pay for electricity charges was not shown to have been managed as part of a running account between the parties.

Relevant by-laws and contractual arrangements

  1. The operation of the Public Carpark and the treatment of Council’s lots has been governed by the by-laws for the property (By-Laws) and certain agreements that have been made at different times between Council and the Owners Corporation.

  2. By-Law 17 is in the following terms:

17 PUBLIC PARKING STATION

So long as the Council of the Municipality of Manly shall remain the proprietor of any of Lots 185 to 430 the said Council of the Municipality of Manly may operate at its cost a Public Parking Station in such lots. This By-law shall not be amended, added to or repealed except by a unanimous resolution of the owners corporation and with the concurring vote of the said Council of the Municipality of Manly.

  1. This By-Law has been in place since at least May 1978, although the numbering has changed. Council has operated the Public Carpark, charging members of the public fees for access, since at least that time.

  2. On 18 September 1996 Council and the Owners Corporation entered into a deed (1996 Deed). The recitals to the 1996 Deed relevantly record that Council had agreed to grant to the Owners Corporation a licence permitting it to have exclusive use and occupancy of the Licensed Lots for the term of the deed.

  3. The 1996 Deed was evidently a trial agreement and was made for a term of only one year: cl 1. However, by cl 3 the parties agreed that if, with the consent of Council, the Owners Corporation continued to use and occupy the Licensed Lots after the expiration of the term then it would do so as a licensee at will, upon the same terms and conditions as contained in the 1996 Deed, and on the basis that such holdover licence could be terminated by Council giving the Owners Corporation not less than 21 days written notice.

  4. The 1996 Deed also contained provisions relating to the operation of Council’s other lots in the Public Carpark. Clause 4 required the Owners Corporation to procure an amendment to the By-Laws (in the form annexed to the 1996 Deed) concerning Council’s car parking infrastructure on common property. This amendment was procured with the result that By-Law 34 became part of the By-Laws governing the property.

  5. Since the time of the 1996 Deed Council has installed and operated various items of infrastructure for the Public Carpark.

1999 Deed

  1. On 22 June 1999 Council and the Owners Corporation entered into a further deed (1999 Deed). The recitals to the 1999 Deed record the following context (noting that within the deed, and subject to some exceptions, Council is referred to as “Owner” and the Owners Corporation is referred to as “Corporation”):

D.   The Owner has agreed to license to the Corporation being the Proprietors of Strata Plan 13245 for the exclusive use of that Corporation or other Proprietors of Lots in that Strata Scheme or other persons authorised by the Corporation the exclusive right to use of 19 car parking spaces on level 4A known as spaces 1-19 on that level (both numbers inclusive) being Lots 412 to 430 (both numbers inclusive) in Strata Plan 13245 (the "Corporation Lots").

E.   The Corporation aforesaid has agreed to permit the Owner to install certain fittings and machinery in the common property of the strata scheme to allow the Owner to efficiently manage the carpark and to grant a licence to the Owner of those areas of the common property upon which such fittings and machinery are installed.

F.   The Owner has established a commercial public car park on Lots 185 to 383 (both numbers inclusive) and Lots 389 to 411 (both numbers inclusive) in Strata Plan 13245 (the "Car Park") so as to provide to members of the public generally paid car parking at commercial rates.

  1. Clause 2 of the 1999 Deed relevantly provides:

2.1   The Corporation hereby grants to the Council a licence for a term of ten (10) years from the date of commencement to operate within the carpark lots as hereinbefore defined a Public Carparking facility and for the purpose of operating that facility to have access to and use of and to permit carparking clientele access to and across the common property of the Strata Scheme.

2.2   The Owner shall have the right to install control equipment, boomgates, payment stations and all associated fixtures on or adjacent to the common property of this Strata Scheme upon those areas of the common property delineated in the plans annexed to this Deed and marked "A".

…

2.4   This Licence Agreement shall commence on the Date of Commencement and subject to Sub- Clause 2.5 shall terminate on the Date of Termination.

2.5   Should the Owner continue to operate the Business after the expiration of the Management Period such continued operation shall, subject to the Corporation's rights of termination set out elsewhere in this Deed, continue from month to month at the Corporation's discretion and shall be upon the same terms and conditions herein set out from month to month determinable by not less than one (1) month's prior notice in writing from either party.

…

2.7   In consideration of the grant of the Carpark Management rights and the licensing of the associated common property areas the Council shall pay to the Corporation an annual licence fee of Two thousand dollars ($2,000) per annum payable annually in advance, the first payment to be made on the date of commencement of this Agreement and thereafter on each anniversary of the commencement of this Agreement during the term thereof.

  1. “Business” is defined in cl 1.1 of the 1999 Deed to mean the operation of a commercial car park at the Car Park. “Car Park” is defined to mean the areas described in Item B of Schedule 1. Those areas include all of the Council owned lots on levels 2 to 7 of the Strata Plan, but do not include the Licensed Lots on level 8.

  2. Clause 21 of the 1999 Deed provides:

21.   Corporation's Private Usage Rights

21.1   This clause relates to Lots 412 to 430 both numbers inclusive (the Corporation Lots).

21.2   The Owner is the registered proprietor of the Corporation Lots.

21.3   In consideration of the payment by the Corporation to the Owner of an annual licence fee of Twenty eight thousand five hundred dollars ($28,500) the Owner grants to the Corporation the unrestricted right to use and occupy the Corporation Lots.

21.4   The Corporation Lots are excluded from the Public Carpark to be operated by the Owner pursuant to this Agreement.

21.5   The annual licence fees will be paid annually in advance the first payment to be made on the day of the commencement of this Agreement and thereafter on each anniversary of the commencement of this Agreement during the term.

  1. It can be seen that the 1999 Deed, like the 1996 Deed, restricts the extent of the carpark that Council would otherwise be entitled to operate under By-Law 17. Under By-Law 17 Council may use all of the parking space lots that it owns, including the Licensed Lots, in the Public Carpark. Under the 1999 Deed the Licensed Lots are excluded from the Public Carpark and instead made the subject of the grant of a licence to the Owners Corporation.

  2. By cl 24 of the 1999 Deed, the Owners Corporation gave a number of covenants and accepted a number of obligations affecting the use of the Licensed Lots and the operation by Council of the Public Carpark. By cl 24.3 the Owners Corporation promised to use its best endeavours not to permit any person or corporation to park a motor vehicle in any of the Licensed Lots “other than a person or a corporation who is the owner or tenant or resident or employed by the owner, tenant or resident of any other Strata Lot in the Strata Scheme”. That promise recognised implicitly that through the Owners Corporation use of the Licensed Lots by other proprietors of lots in the Strata Plan was permitted. That is consistent with recital D to the 1999 Deed in its description of the exclusive use of the Licensed Lots intended to be authorised by the licence.

  3. By cl 24.6 the Owners Corporation agreed that it will promptly repair, at its own expense and in a proper and workmanlike manner, any damage caused to any part of the Licensed Lots. By cl 24.7 the Owners Corporation indemnified the Council from any claim, suit, action or remand which might be made against it arising out of damage or injury to person or property which might occur within the Licensed Lots or arise out of the operation of the 1999 Deed.

  1. Clause 2.4, as set out above, dealt with the question of termination of the 1999 Deed by providing that the “Licence Agreement” shall, subject to cl 2.5, terminate on the Date of Termination. Despite “Licence Agreement” being capitalised it is not a defined term. “Date of Termination” is defined in the 1999 Deed to mean “the Date of Termination of the Management Period set out in Item C of Schedule 1”. “Management Period” is not itself defined and item C of Schedule 1 does not refer to a “Management Period”. It refers only to a “licence period” of 10 years and a date of termination of 30 June 2009.

  2. The 1999 Deed was in fact not terminated until 8 January 2024. Termination occurred on that date pursuant to a notice of termination sent by the Owners Corporation on 28 November 2023. The notice was stated to be issued pursuant to cl 2.5 of the 1999 Deed and gave the last day of operation of the 1999 Deed to be 8 January 2024.

  3. The notice further stated that the Owners Corporation took the view that the 1996 Deed remained in effect, and as a result the Owners Corporation was not at that time requiring the Council to remove its carpark infrastructure from the common property.

  4. Throughout the period from 1999 to January 2024 Council operated the Public Carpark on its lots and through the installation and operation of infrastructure on common property. That continued beyond January 2024 and at the point of trial. Meanwhile, at all times between 1999 and January 2024 the Owners Corporation used its licence over the Licensed Lots, including by permitting other owners of lots within the Strata Plan to access and use the Licensed Lots. It continued to exercise effective control over those lots beyond January 2024, despite the termination of the licence under the 1999 Deed, through the operation of the roller door separating levels 7 and 8.

  5. The relevant changes that did occur over time concerned payments in respect of these arrangements. Under the 1999 Deed, the Owners Corporation was obliged to pay an annual licence fee, which is described in cl 21.3 of the deed as the consideration for Council’s grant of the licence for the unrestricted right to use and occupy the Licensed Lots. The annual licence fee was originally $28,500, but was subject to increases in accordance with the formula prescribed in cl 3 of the 1999 Deed. Council was likewise obliged under cl 2.7 to pay the Owners Corporation an annual fee in consideration of the grant to it of the “Carpark Management rights” and the licensing of the associated common property areas. The fee was originally $2,000, subject also to increases in accordance with the formula in cl 3.

  6. Throughout the period from 1 July 1999 to June 2016, the parties acted on the basis that the 1999 Deed governed their relations. That included each party making payments of the fees payable respectively under cll 2.7 and 21.3 of the 1999 Deed, as adjusted annually.

  7. For some time prior to June 2016, correspondence passed between Council and the Owners Corporation about whether the arrangements between the parties were fair and whether Council was making an adequate contribution to expenses including cleaning expenses and electricity costs. From June 2016 the Owners Corporation stopped paying the licence fee described in cl 21.3 of the 1999 Deed. At around the same time, and apparently in response to the position adopted by the Owners Corporation, Council ceased paying the fee that it was ostensibly required to pay under cl 2.7 of the 1999 Deed. The primary judge found that despite this mutual cessation of payments, the parties otherwise continued to act from June 2016 on the basis that the 1999 Deed remained on foot. This remained the case until 8 January 2024 when the termination of the 1999 Deed took effect.

Claims in the proceedings below

  1. In the proceedings below Council claimed in debt in respect of the unpaid licence fees for the period from June 2016 to 8 January 2024. The total claim in respect of such unpaid fees was $419,732.14. In relation to the Owners Corporation’s continuing use and occupation of the Licensed Lots after the termination of the 1999 Deed, Council sought damages for trespass or, alternatively, nuisance. The claim focused on the roller door which is in place between levels 7 and 8 of the Strata Plan, and which thereby regulates access to the Licensed Lots on level 8. Council’s contention was that the roller door served in effect to preserve the Owners Corporation’s use and occupation of those lots and deny Council the ability to use the Licensed Lots as an extension of the Public Carpark.

  2. Council sought to calculate its damages on the trespass and/or nuisance claim by reference to the monthly fee charged by Council for members of the public to access a parking space in the Public Carpark, being $411. That equated to total damages for the Licensed Lots of $7809 per month, running from the date of termination of the 1999 Deed in January 2024. From that time Council issued invoices to the Owners Corporation on a monthly basis purporting to charge the standard commercial rate for each of the Licensed Lots. None of those invoices was paid. By the conclusion of the trial below, Council accepted that it had no contractual right to demand payment of such amounts, but argued that the invoiced amounts correspond to the loss which it suffered by reason of the wrongful conduct of the Owners Corporation in blocking access to the Licensed Lots, which denied Council the opportunity to exploit those lots as part of the Public Carpark. This amount was also justified as reflecting an appropriate measure of damages for the unlawful use and occupation of the Licensed Lots by the Owners Corporation (and persons authorised by it).

  3. The Owners Corporation denied that it was under an obligation to pay any licence fees from June 2016. Indeed, the Owners Corporation was bold enough to argue that under the 1999 Deed, properly construed, the obligation for it to pay the licence fee had ceased on 30 June 2009, this being the date of termination specified in the 1999 Deed. From that date, according to the Owners Corporation, it remained entitled to use and occupy the Licensed Lots, but it had no ongoing obligation to pay a licence fee. The Owners Corporation advanced this construction notwithstanding that it accepted that the 1999 Deed otherwise continued to operate beyond 30 June 2009 and until 8 January 2024, when the Owners Corporation itself issued a notice of termination under the 1999 Deed.

  4. Moreover, the argument was made notwithstanding that the Owners Corporation had in fact paid the licence fee between 30 June 2009 and June 2016 in accordance with the terms of the 1999 Deed (including the annual adjustments). The Owners Corporation sought to explain this apparent inconsistency by arguing that the payments made between 30 June 2009 and June 2016 were paid as a consequence of a mistaken belief on its part that the fees were payable under the 1999 Deed. It sought the repayment of those moneys by way of restitution.

  5. Part of the Owners Corporation’s case below was to contend that the 1996 Deed had, upon the termination of the 1999 Deed, been revived and thereafter governed the relations of the Council and the Owners Corporation. By the time of trial this claim was only faintly advanced. His Honour concluded that from the time of the 1999 Deed onwards, there was no basis to conclude that the respective rights and obligations of the parties were governed by the 1996 Deed. The Owners Corporation did not seek to resuscitate this argument on appeal.

  6. As to Council’s claim in trespass and/or nuisance for the period after 8 January 2024, the Owners Corporation argued that no trespass or nuisance was established in circumstances where the Owners Corporation had offered to provide to Council a fob key or keys which would enable users to open the roller door. The Owners Corporation also took issue with the lack of evidence demonstrating that residents and others authorised by the Owners Corporation had continued to use the Licensed Lots after 8 January 2024.

  7. The Owners Corporation cross-claimed for $29,652.82, being the fees said to be owed by Council under cl 2.7 of the 1999 Deed from June 2016 (when Council stopped paying the fee) until the termination of the deed in January 2024. Council ultimately accepted that it was obliged to pay those unpaid fees. The primary judge confirmed in his reasons that the Owners Corporation was entitled to the sum which it claimed in this regard, which may be set off against the judgment to which the Council was found to be entitled.

  8. The Owners Corporation also cross-claimed for unpaid electricity costs incurred by Council prior to 21 March 2013. On that date, a separate meter was installed which measured electricity consumption which the parties agreed was attributable to the operation of the Public Carpark (and payable by Council). Following the installation of the meter Council paid the electricity charges by direct payments to the relevant electricity provider, once the account with that provider was put into the name of Council. The Owners Corporation argued that Council’s failure to pay for electricity before that date was a breach of contract, on the basis that the By-Laws imposed a contractual obligation on Council to pay for electricity used in the operation of the Public Carpark.

  9. The Owners Corporation advanced certain other claims at trial relating to cleaning costs and the installation of infrastructure on common property. Those claims were not reagitated on appeal and in those circumstances, it is unnecessary to describe them in any more detail.

Determination of claims by the primary judge

  1. The primary judge upheld Council’s claim that it was entitled to unpaid licence fees under the 1999 Deed in respect of the Licensed Lots for the period between June 2016 and 8 January 2024. That conclusion was reached on the basis that the 1999 Deed remained in force until its termination on 8 January 2024 and upon its proper construction the Owners Corporation was obliged to pay the licence fee, pursuant to cl 21.3 and adjusted in accordance with the formula in cl 3. His Honour found that the parties by their conduct must be taken to have agreed to carry on their relationship as being governed by the 1999 Deed.

  2. The primary judge rejected the proposition that the Owners Corporation had paid the licence fees in the period from 30 June 2009 to June 2016 under a mistake of law. This is because, his Honour concluded, the Owners Corporation was under a legal obligation to pay those licence fees and there was no mistake in that regard. It followed that the Owners Corporation was not entitled to restitutionary relief in respect of those payments.

  3. The primary judge upheld Council’s claim in trespass, or alternatively nuisance. This was on the basis that the roller door between levels 7 and 8 interfered with Council’s right to access and use Licensed Lots on level 8. It was also the means by which the Owners Corporation, through its distribution of fob keys, facilitated residents continuing to access and use the Licensed Lots despite the lack of permission from the Council. Such ongoing usage was illustrated by photographs of vehicles occupying the Licensed Lots over the course of three days in May 2024.

  4. His Honour accepted that the fee which Council could have charged to members of the public to access and use the Licensed Lots, by way of monthly licences, was an appropriate measure of the damage suffered as a result of the interference with Council’s property rights, given Council was unable to incorporate the Licensed Lots into the Public Carpark. The primary judge applied a reduction of 20% to reflect commercial vicissitudes, on the basis that it was not realistic to assume that during the period of the interference Council would have always been able to lease all of the 19 lots.

  5. The primary judge rejected the Owners Corporation’s claim for unpaid electricity usage prior to 21 March 2013. His Honour concluded that that there was no contractual basis for the Owners Corporation to demand payment for such usage, and even if there was such a basis the claim would be statute barred.

The contractual obligation of the Owners Corporation to pay the licence fee for the Licensed Lots prior to 8 January 2024

  1. On appeal the Owners Corporation contends that on the proper construction of the 1999 Deed it had no obligation to pay licence fees in respect of the 1999 Deed.

  2. There was some debate in the submissions of the parties in this Court about the proper interpretation of the reasoning of the primary judge, in particular whether his Honour relied only on the proposition that the 1999 Deed continued to operate as an agreement to be inferred from conduct, or also found that as a matter of construction the 1999 Deed continued to apply of its own force prior to termination. It is unnecessary to resolve this debate in circumstances where the appeal was argued, appropriately, on the basis that the ultimate question is whether his Honour was correct to conclude that the Owners Corporation was subject to a contractual obligation to pay the licence fee under the 1999 Deed.

  3. Ground 1 of the appeal squarely raised the issue of whether the 1999 Deed, on its proper construction, obliged Council to pay for the licence in respect of the Licensed Lots which it continued to enjoy until termination of the deed. As Mr Knackstredt, who appeared with Mr Nash for the Owners Corporation, properly conceded, if the Owners Corporation fails on ground 1 of the appeal, then ground 2 (attacking the conclusion based on a course of dealing) falls away. So too does ground 3, which is predicated on the argument that the Owners Corporation had made payments under a mistake of law.

  4. For the reasons which follow, ground 1 of the notice of appeal must fail. His Honour correctly concluded that the Owners Corporation had a contractual obligation to pay the licence fee under the 1999 Deed. That obligation continued until the deed was terminated on 8 January 2024.

  5. On appeal, as at trial, the Owners Corporation’s argument proceeded on the basis that the 1999 Deed did govern the respective rights and obligations of the parties during the period from 2009 to 8 January 2024. That is consistent with the Owners Corporation’s own conduct, up to and including the point at which Council issued a notice of termination of the 1999 Deed, expressly as a notice of termination under cl 2.5 of that deed. It is also consistent with the Owners Corporation’s necessary reliance on cl 21.3 of the 1999 Deed as being the source of the licence over the Licensed Lots. The Owners Corporation did not contend that there was any other lawful justification for its use and occupation of that property prior to 8 January 2024.

  6. The constructional argument advanced by the Owners Corporation reduces to the proposition that the parties intended that the obligation for the Owners Corporation to pay a licence fee in respect of the Licensed Lots ceased altogether on 30 June 2009, but the licence itself continued beyond that date, together with all of the other rights and obligations of the parties, until the ultimate termination of the 1999 Deed in January 2024.

  7. That is a surprising and commercially improbable construction for an agreement of this kind. Of course, it is always possible that the parties to an agreement might strike such a bargain and formulate such terms. The difficulty for the Owners Corporation is that there is no textual or contextual support for the notion that this is what occurred with the 1999 Deed.

  8. The Owners Corporation focuses on the words of cl 21.5, which refer to the annual licence fee being paid annually on each anniversary of the commencement of the agreement “during the term”. While acknowledging that “term” is not defined, the Owners Corporation contends that irrespective of any holding over of the agreement under cl 2.5 it should be read as referring to the period ending on the “date of termination” specified in item C of Schedule 1 to the 1999 Deed, being 30 June 2009.

  9. That construction of cl 21.5 is impossible to reconcile with the 1999 Deed, read as a whole. Clause 2.4 provides that the “Licence Agreement” shall “commence on the Date of Commencement and, subject to Sub-Clause 2.5, shall terminate on the Date of Termination”. The qualification – “subject to Sub-Clause 2.5” – is obviously critical. Sub-clause 2.5 provides that if the Council continues to operate “the Business” after the expiration of the “Management Period” then such continued operation shall, relevantly, “be upon the same terms and conditions herein set out from month to month determinable by not less than one (1) month’s prior notice in writing from either party”.

  10. There are infelicities in drafting in these passages, including the use of capitalised terms that are not defined. But they are not infelicities of the kind that ultimately obscure the intention of the parties, as objectively ascertained from the terms and context of the agreement.

  11. Given the intended interaction between cll 2.4 and 2.5, the “Management Period” must be read as a reference to the period of 10 years from the date of commencement to the date of termination. This was not a matter disputed by the Owners Corporation.

  12. It is also plain from the context that the “Licence Agreement”, where referred to in cl 2.4, is the 1999 Deed itself. To the extent that the Owners Corporation urged a narrower reading, treating this as a reference only to the grant of the licence by the Owners Corporation to Council to operate the Public Carpark, that argument is rejected. On that reading, the 1999 Deed is silent as to the duration of the balance of the agreement. That would mean that significant rights and obligations, including responsibility for payment of rates and taxes (cl 10), Council’s obligation to allow residents in the building to gain unobstructed access through the Carpark without the payment of any fee (cl 11), the status of the Licensed Lots (cl 21), the obligations created in respect of care and maintenance of the Licensed Lots (cll 23.1 and 24.6) and the indemnities granted in respect of that property (cl 24.7), are of uncertain duration and seemingly could not extend beyond the “Date of Termination”.

  13. This construction is also impossible to reconcile with the Owners Corporation’s own reliance on the 1999 Deed as the source of the licence to use the Licensed Lots beyond 2009, and through to 2024. If the licence did not extend by reason of the holding over provision in cll 2.4 and 2.5, there is nothing else in the 1999 Deed that was said to confer such an ongoing licence. The Owners Corporation could not coherently argue that the continued operation of “the Business”, as referred to in cl 2.5 of the 1999 Deed, entailed only the licence in favour of Council in respect of its Public Carpark. The Owners Corporation accepted and indeed embraced the proposition that where cl 2.5 refers to the continued operation of the Business “upon the same terms and conditions herein set out” that encompasses all of the rights and obligations of the parties under the 1999 Deed. The reason that does not entail any obligation under cl 21.3 to pay for the licence over the Licensed Lots beyond 30 June 2009, according to the Owners Corporation, is that on its proper construction that obligation ceased on that date regardless of any holding over.

  14. Once it is appreciated that cll 2.4 and 2.5 allow for the holding over of all of the rights and obligations of the parties under the 1999 Deed beyond the initial date of termination of 30 June 2009, the intended operation of cll 21.3 and 21.5 is clear. Where cl 21.5 refers to the obligation to pay the annual licence fee on each anniversary of the commencement of the agreement “during the term”, that is no more complicated than meaning for so long as the 1999 Deed remains in operation. That reading is harmonious with cl 21.3 which describes the payment of the annual licence fee as consideration for the grant by Council of the unrestricted right to use and occupy the Licensed Lots. The construction urged by the Owners Corporation is at odds with this concept, given that it involves the licence continuing indefinitely beyond 30 June 2009, but payments ceasing at that time. That is a commercially unlikely outcome, particularly in the context of an agreement in which the Owners Corporation was paying a substantial amount annually, at a rate more than ten times the amount payable by Council for its licence under cl 2.1 (which, on the Owners Corporation’s argument, would continue to be payable for so long as the deed remained in operation). The construction proffered by the Owners Corporation would give a peculiar asymmetry to the obligations of the parties after June 2009. It is not a sufficient answer to this point to say, as the Owners Corporation does, that Council had the right to bring the agreement to an end with notice during that time.

  1. The Owners Corporation says that if the parties had intended to extend the obligation to pay in cl 21.3 beyond 30 June 2009 they could have done so more explicitly. That submission tends to overlook that there is no ambiguity or complexity in cl 21.3 that required the parties to be any more explicit. For so long as the 1999 Deed remained in operation, the Owners Corporation would continue to have the benefit of the licence over the Licensed Lots and it would continue to be obliged to pay for that licence. That outcome is achieved by specifying that there is an obligation to pay “during the term”. Given the natural meaning of those words, there was no need to be any more explicit.

  2. For these reasons, the operation of the 1999 Deed in relation to the Licensed Lots is ultimately straightforward. For so long as the 1999 Deed remained in operation, the Owners Corporation continued to enjoy the benefit of the licence and it remained subject to pay the annual licence fee on each anniversary of 1 July. That was the contractual position between 2009 and June 2016, during which time the Owners Corporation paid the licence fee. It was not labouring under any mistake of law when it did so. That remained the contractual position between June 2016 and 8 January 2024. The Owners Corporation during that period continued to rely on the licence, but wrongly refused to pay for it. The primary judge was correct to conclude that in the circumstances Council was entitled to damages for breach of contract in that regard.

The primary judge was correct to award damages in respect of interference with Council’s rights in respect of the Licensed Lots after 8 January 2024

  1. Turning to the position after 8 January 2024 when the 1999 Deed was terminated, the Owners Corporation challenged the award of damages in respect of trespass and/or nuisance on a number of bases. It contended that the primary judge erred in finding that the Owners Corporation had permitted the use of the Licensed Lots after 8 January 2024, and was responsible for trespass and/or nuisance in respect of those lots [ground 5 of notice of appeal]. It also challenged the quantification of damages, on the basis that Council had failed to establish that any quantifiable loss had been suffered by reason of the alleged trespass and/or nuisance [ground 6 of notice of appeal].

  2. As explained above, the primary judge awarded Council damages on the basis that there had been a substantial interference with its property rights over the Licensed Lots which denied Council the opportunity to charge members of the public to access and use those lots. In those circumstances, the loss of such fees, calculated by reference to the monthly fee charged to members of the public minus a 20% reduction to reflect commercial vicissitudes, was an appropriate measure of damages.

  3. In reaching these conclusions, his Honour did not differentiate explicitly between the claim in trespass and the claim in nuisance. As a matter of substance, his Honour’s findings appear to establish the necessary elements of both causes of action. The trespass took the form of the Owners Corporation’s continued use and occupation of the Licensed Lots, through facilitating the ongoing use of the parking spaces by residents. The roller door, though not itself located on Council’s property, constituted a nuisance because it was an unlawful and substantial interference with the quiet enjoyment by Council of the Licensed Lots in circumstances where Council had a right to access those lots using the ramp to level 8: see Hargrave v Goldman (1963) 110 CLR 40 at 59, 62; [1963] HCA 56. While Council argued on the appeal that the retention of the roller door by the Owners Corporation also constitutes a form of trespass, it did not explain how that can be so in circumstances where this involved no act encroaching on Council’s property. It is unnecessary to consider that characterisation any further in circumstances where, for the reasons set out below, nuisance is established.

  4. In relation to the ongoing use of the Licensed Lots themselves after 8 January 2024, the Owners Corporation challenged the sufficiency of the evidence to support a finding of trespass. The Owners Corporation did not appear to take issue with the proposition that if residents and other persons authorised by the Owners Corporation continued to use the Licensed Lots after 8 January 2024, just as they had prior to that date when such use was licensed, that would constitute an actionable trespass for which the Owners Corporation was responsible. The question was instead whether or not this had been shown to have occurred.

  5. The primary judge did make a finding to this effect, and had evidence in the form of photographs showing a number of vehicles parked in the relevant spaces over the course of three days in May 2024. That evidence must be assessed in its broader context. As far as residents and other authorised persons seeking to use those lots were concerned, it appears that nothing relevantly changed after 8 January 2024. Such persons had access cards which allowed them to enter the boom gates for the Public Carpark at the entry level and fob keys issued by the Owners Corporation that allowed them to open the roller door and thereby gain access to level 8. Before 8 January 2024 users of this kind were entitled to use the Licensed Lots and there was no evidence of any relevant change in instructions or permission after 8 January 2024. In the circumstances, there was a proper basis to find that trespass in the form of ongoing use of the Licensed Lots did occur.

  6. However, that is something of a distraction from the more significant factual circumstance that formed the basis of Council’s claim for damages and the findings of the primary judge allowing that claim. That was the continued presence of the roller door separating levels 7 and 8. There is no dispute about the relevant facts in that regard. The Owners Corporation was responsible for the roller door, which remained in place beyond 8 January 2024. The roller door precluded access to the Licensed Lots except for those who had been provided with a fob key by the Owners Corporation. The roller door is located on common property, which Council, as an owner of lots in the Strata Plan, has the right to traverse in order to gain reasonable access its lots: see discussion in EB 9 and 10 Pty Ltd v Owners – Strata Plan No 934 (2018) 97 NSWLR 227; [2018] NSWSC 464 (EB 9 and 10 Pty Ltd) at [33]-[34].

  7. The roller door presented a material obstacle to the incorporation of the Licensed Lots into the Public Carpark, including by way of longterm licences to park on a month-to-month basis, because it prevented access to level 8 unless it was opened using a fob key.

  8. The Owners Corporation submits that if Council wished to provide members of the public with access beyond the roller door after 8 January 2024, it could have requested fob keys from the Owners Corporation, presumably with a view to providing those fob keys to any members of the public who wished to use that part of the carpark, including those who paid for a long term licence to park in one of the Licensed Lots. There was no evidence at trial about any request of this kind having been made. Nor was there evidence about the practicality of such arrangement in terms of Council’s desire to incorporate the Licensed Lots into the existing Public Carpark.

  9. The Owners Corporation urged that the characterisation of this interference turns on whether or not Council still enjoys reasonable access to its lots. The Owners Corporation sought to rely in this regard on EB 9 and 10 Pty Ltd as describing the extent of its obligations in relation to the roller door. In that case Kunc J was not concerned in terms with a claim in nuisance. The issue that arose directly was the right of a lot owner within the strata scheme to use common property to access its parking space lot, and the corresponding limits of the powers of the owners corporation in its management of common property. The case arose in circumstances where the owners corporation was proposing to exercise its rights over common property to install certain structures, and the plaintiff complained that this apprehended activity was not an authorised exercise of the owners corporation’s powers under the Strata Schemes Management Act 2015 (NSW) and the Strata Schemes Development Act 2015 (NSW).

  10. The plaintiff sought declarations that it was entitled to access the common property for the purposes of parking its vehicles and that the owners corporation was not entitled to restrict or impede such access. In finding that the plaintiff was entitled to declaratory relief of this kind, Kunc J held that the owners corporation cannot exercise its rights over the management of common property in a way that derogates from the right of lot owners to make use of common property to obtain reasonable access to their lots.

  11. EB 9 and 10 Pty Ltd was thus concerned with the principles by which different rights over common property are to be reconciled. The owner of an individual lot was asserting a right over the common property that was jeopardised by the action the owners corporation was proposing to take in the exercise of its powers of management over that common property. The decision identifies a relevant limit in the powers of an owners corporation in this regard, which limit is concerned with the preservation of “any owner’s right to use the common property for reasonable access to his or her lot”: at [34].

  12. Although the matter was not argued explicitly by reference to concepts of nuisance, reference was made to s 153 of the Strata Schemes Management Act 2015, which relevantly provides that an owner of a lot in a strata scheme must not use or enjoy the lot in a manner or for a purpose that causes a nuisance to the occupier of any other lot. As Kunc J observed at [34], it would be a strange result if the owners corporation was entitled to act in relation to common property by creating a nuisance in circumstances where individual lot owners cannot so act in relation to their own property.

  13. The outcome in EB 9 and 10 Pty Ltd aligns with the approach that has been adopted in easement cases, where an obstruction that interferes with access to the dominant tenement in a real and substantial way has been held to constitute an actionable nuisance: Trewin v Felton [2007] NSWSC 851 at [73]; Jeffery v Adams [2023] NSWSC 1270 at [134]. In each of those cases, as in EB 9 and 10 Pty Ltd, the right of access arising from the easement was described as an entitlement to “reasonable access”.

  14. In Trewin v Felton, Brereton J referred to Pettey v Parsons [1914] 2 Ch 653 in which the Court of Appeal held that the servient owner, whose land was burdened by a private right of way, was entitled to erect a fence and an unlocked gate, in circumstances where that preserved the right of the owner of the dominant tenement to reasonable access to and from the right of way. In Chiu v Healey [2003] NSWSC 857 Young CJ in Eq referred to the right to “reasonable access” to a right of way.

  15. In Trewin v Felton the issue was the erection of a fence and gate on a right of way. Brereton J, at [36], construed the authorities as establishing that the ordinary position is that “the servient owner is entitled to fence the right of way, provided that sufficient points of access through gates are allowed to permit reasonable user of the right of way … Further, the servient owner may gate the right of way, provided that the gate does not unreasonably obstruct user of the right of way”. On the question of locking such gates, Brereton J at [81] concluded that the principle to be drawn from the authorities was that “generally speaking, a servient owner may erect a gate across a right of way, provided that it is not a substantial obstruction and is left unlocked”. There may also be cases where a locked gate is consistent with reasonable access. Brereton J proceeded to refer to Johnstone v Holdway [1963] 1 QB 601; [1963] 2 WLR 147, in which the Court of Appeal held that there was no substantial interference with the right of way in circumstances where the owner of the servient tenement erected a gate with a combination lock, and offered the combination for the lock to the owner of the dominant tenement. The fact that the dominant owner had the means to open the lock and access the gate was decisive.

  16. The Owners Corporation might contend for a relevant analogy in this regard, given that it has offered to make fob keys available to Council. However, that is not a satisfactory answer in the present case because of the special nature of the lots as forming part of a public carpark. This is relevant both to the question of whether “reasonable access” is maintained and to the question of whether the conduct of the Owners Corporation involves an interference that is objectively unreasonable: Transport for NSW v Hunt Leather Pty Ltd (2024) 115 NSWLR 489; [2024] NSWCA 227 at [118]-[120]. It is also relevant to the characterisation of the interference as being “substantial”, given that this falls to be assessed using commonsense, including what the Court considers to be the ideas of reasonable people, the nature of the location of the land, as well as the character, duration and time of the interference and the effect of the interference: Oldham v Lawson (No 1) [1976] VR 654 at 655 (Harris J).

  17. By-Law 17 is a relevant part of the context for assessing each of these overlapping concepts. Pursuant to By-Law 17 Council has an entitlement to use the lots on level 8 (together with the rest of its parking space lots) as a public carpark. What constitutes reasonable access to a parking space for a resident in the building may not constitute reasonable access where the purpose of such access is to facilitate members of the public coming and going, either casually or on a more settled basis. While providing a fob key to a resident in the building to open a security door may be consistent with reasonable access to the resident’s parking space, that is not the case with members of the public.

  18. The Owners Corporation has failed to demonstrate that it had an entitlement to deal with common property of a kind that made it reasonable to maintain the roller door, despite the adverse impact on the rights of Council to enjoyment of the 19 lots that it owns on level 8 of the strata plan. The Owners Corporation emphasised that it had sound reason to create a secure barrier between the Public Carpark and the areas reserved for residents and other authorised persons above level 7. That justification has resonance for the period when the Owners Corporation held a licence over the Licensed Lots, and Council had effectively suspended its entitlement to use the Licenced Lots as part of the Public Carpark. But the justification disappeared after 8 January 2024. Although the Owners Corporation still had a legitimate interest, after that time, in the security of the areas beyond the Council’s lots, that does not justify maintaining a roller door between levels 7 and 8.

  19. For these reasons, the roller door constituted a real and substantial interference with Council’s right to enjoy the Licensed Lots, given Council has the right to reasonable access over the ramp to those lots. The act of the Owners Corporation in maintaining the roller door has the necessary characteristic of being an unreasonable interference with Council’s use and enjoyment of its land: Gales Holdings Pty Ltd v Tweed Shire Council (2013) 85 NSWLR 514; [2013] NSWCA 382 at [138].

  20. As to the attack on the primary judge’s quantification of damages, the Owners Corporation did not dispute at the level of principle that if Council suffered a financial loss because of its inability to use the Licensed Lots as part of the Public Carpark that would be compensable. Instead, the Owners Corporation argues that the evidence was insufficient to demonstrate that Council had suffered any such loss. The Owners Corporation refers in this regard to evidence, sourced from the Parking Operations team from the Public Carpark that the peak period of use is on weekdays around midday, when around 55% of the carpark is occupied. At such times, according to the evidence, 22% of the carpark is occupied by casual parking vehicles and 33% of the carpark is occupied by the vehicles of customers who have contracts to park there. The Owners Corporation submits that this evidence reveals a lack of demand for additional parking spaces.

  21. That submission should be rejected. The evidence about occupancy rates does not negative the possibility that Council could have obtained revenue from offering the Licensed Lots for long-term parking contracts, rather than casual occupancy. That was the predicate of Council’s damages claim, which was calculated by reference to the monthly charge for such contracts. The evidence referred to by the Owners Corporation does not purport to explain the number of spaces available for such non-casual parking or the levels of demand relative to such supply. It may be accepted in favour of the Owners Corporation that this tends to highlight the lack of detail in the evidence to substantiate Council’s claims. However, the primary judge was alive to the point that Council’s claims about the revenue that it could have made from the Licensed Lots were based on overly optimistic assumptions. His Honour’s response was to apply a 20% reduction to address commercial vicissitudes. The Owners Corporation has not advanced a submission to the effect that this was an illegitimate approach. Nor has it sought to cavil with the amount of the reduction applied by the primary judge. The Owners Corporation has instead pressed the more ambitious argument that Council had wholly failed to prove any loss. That submission should be rejected. While the evidence of Council had significant limitations, bearing in mind the principles governing the quantification of damages where a plaintiff cannot adduce precise evidence of its loss (see Placer (Granny Smith) v Thiess Contractors [2003] HCA 10; (2003) 77 ALJR 768 at [38]), his Honour was correct to accept the basic premise of Council’s damages case, while applying a discount for commercial vicissitudes.

The primary judge correctly rejected the Owners Corporation’s claim for unpaid electricity usage prior to March 2013

  1. The Owners Corporation argued on appeal that there was a proper contractual basis for its claim for damages in respect of Council’s use of electricity prior to 21 March 2013, and that its claim was not statute barred. The Owners Corporation argued that its claim arose from By-Law 17, which operated as a contract between it and the Council. It relies in this regard on s 44 of the Strata Schemes Management Act 1996 (NSW) which applied in the relevant period and had the effect of giving contractual force to the By-Laws, as between Council and the Owners Corporation: see Trentelman v The Owners – Strata Plan No 76700 (2021) 106 NSWLR 227; [2021] NSWCA 242 at [183].

  2. It is convenient to start with the limitations issue, which in my view is decisive. As the Owners Corporation accepted, the relevant limitation period for a contractual claim of this kind is six years, running from the date on which the cause of action first accrued to the Owners Corporation: s 14(1) of the Limitation Act 1969 (NSW). The Owners Corporation implicitly accepted that in the ordinary course, having regard to the allegation that Council was contractually obliged to pay for the electricity at or around the time that it consumed such electricity, the limitation period for any claim by the Owners Corporation for the period prior to 21 March 2013 had expired before the Owners Corporation commenced its cross-claim. The argument advanced by the Owners Corporation to avoid this conclusion is that the limitation period does not operate in this way in the present case because the obligation on the part of Council to pay for electricity costs was part of a running account maintained between Council and the Owners Corporation. That alleged state of affairs was said to enliven a principle that when a party makes a payment on a running account, that resets the limitation period in respect of obligations that are the subject of that running account.

  1. It is unnecessary to consider whether that statement of principle, expressed at such a level of abstraction, is sound. That is because the factual premise of the argument is wrong. The Owners Corporation failed to demonstrate that the payment of electricity costs by Council was in fact ever treated by the parties as part of a running account.

  2. The concept of a running account was considered in Airservices Australia v Ferrier (1996) 185 CLR 483 at 504-505; [1996] HCA 54, where the determinative issue was whether certain payments made by Compass Airlines to Airservices Australia were preferential payments within the meaning of s 122 of the Bankruptcy Act 1966 (Cth). The analysis of particular payments for the purposes of s 122 was held to be affected by the operation of a running account between Compass Airlines and Airservices Australia. This is on the basis that the inferences that can be drawn from particular payments for the purposes of s 122 of the Bankruptcy Act, are apt to be different where there are facts answering the description of a running account: at 504.

  3. Dawson, Gaudron and McHugh JJ at 504-505, comprising the majority, identified the “essential feature” of a running account as being that it:

… predicates a continuing relationship of debtor and creditor with an expectation that further debits and credits will be recorded. Ordinarily, a payment, although often matching an earlier debit, is credited against the balance owing in the account. Thus, a running account is contrasted with an account where the expectation is that the next entry will be a credit entry that will close the account by recording the payment of the debt or by transferring the debt to the Bad or Doubtful Debt Alc.

If the record of the dealings of the parties fits the description of a "running account", that record will usually provide a solid ground for concluding that they conducted their dealings on the basis that they had a continuing business relationship and that goods or services would be provided and paid for on the credit terms ordinarily applicable in the creditor's business. When that is so, a court will usually be able to conclude that the parties mutually assumed that from a business point of view each particular payment was connected with the subsequent provision of goods or services in that account. … Thus, it is not the label ‘running account’ but the conclusion that the payments in the account were connected with the future supply of goods or services that is relevant because it is that connection which indicates a continuing relationship of debtor and creditor.

  1. In Meriton Apartments Pty Ltd v Owners Strata Plan No 72381 [2015] NSWSC 202 it was argued that fees paid by an owners corporation under a caretaker agreement were in the nature of a running account, giving rise to a single balance. This was said to affect the treatment of claims about past payments because the single balance arose within the limitations period. Slattery J, at [205], referred to a number of judgments in which practical definitions of the term “running account” have been given:

… A “running account” has been described as “a current account where the debtor/creditor relationship of the parties is recorded in one entire account into which all liabilities and payments are carried in order of date as a course of dealing extending over a considerable period”: Re Footman Bower & Co Ltd [1961] Ch 443 at 450, per Buckley J (as his Lordship then was). The Court of Appeal in New South Wales has described a “running account” as “where there is truly a running account, there is a single balance which is the product of mutual dealings in the past”: Santos Coffee Co Pty Ltd v Director Freight Express Pty Ltd [2010] NSWCA 14 at [41]. Wiley v Eastern Elevators Pty Ltd (2003) 175 FLR 344; [2003] NSWSC 377, at [29] described a running account as arising in circumstances where “the transactions between the parties…resulted in a fluctuating balance with the payments made from time to time against services provided and to be provided, that is, to the general balance of the account”, a situation which is to be contrasted with an account in which “each party was specifically related with a specific invoice representing a particular ‘progress payment’ for past work”.

  1. The evidence adduced in Meriton Apartments included the relevant account ledgers, which Slattery J found did show a single balance which was “the product of past dealings and which balance arises within the limitation period”.

  2. In Santos Coffee Company Pty Ltd v Direct Freight Express Pty Ltd [2010] NSWCA 14 an issue arose as to the operation of certain contractual limitation clauses in a contract for the delivery and return of pallets used in the distribution of coffee and comestibles. Under the contract Direct Freight was obliged to replace the pallets that had been taken within a week by return of an equivalent number to Santos. Over the course of 2004 to 2007 Direct Freight did not replace pallets taken from Santos with an equivalent number of pallets and by 2007 there was an accumulated deficit of 1067 pallets. In resisting a claim for damages for breach of contract in this regard the question arose as to the treatment of certain returns of batches of pallets that had occurred in 2007 and how those returns were to be allocated or attributed given the outstanding deficiencies in returns.

  3. In seeking to resist the operation of the contractual limitation clause Santos sought to characterise the arrangement as being in the nature of a running account. That analogy was rejected by the Court:

[41]   Santos relied on the rule in Clayton’s Case (Devaynes v Noble (1816) 1 Mer 572 at 608-609; ER 35 781 at 792-793) as the operative rule of law. It sought to draw an analogy between a running account between banker and customer and the cumulative total of pallets owing from weekly breaches. The analogy with a running account is imperfect. The accumulated deficiency was the product of multiple weekly breaches of contract by Direct. Where there is truly a running account, there is a single balance which is the product of mutual dealings in the past.

[42]   As to appropriation and statute barred debts, the rule is that where there is no true running account, if neither party makes an election it will be assumed that claims that have not become statute barred are paid before those that have become barred: Nash v Hodgson (1855) 6 De GM & G 474 at 482-487; 43 ER 1318 at 1321-1323; D Oughton et al Limitation of Actions (1998 LLP) at 158; A McGee Limitation Periods (5th ed 2006 Sweet & Maxwell) at 390; and P R Handford Limitation of Actions; the Laws of Australia (2nd ed 2007 Thomson Lawbook Co) at 279-281 [5.10.2220]. If, on the other hand there is a true running account (absent intention) it is incorrect to apportion the payment among the various items making up the balance: Re Footman Bower & Co [1961] 1 Ch 443.

[43]   The appropriate rule here is that drawn by analogy from statute barred debts where there is no running account, but separate debts. No running account was ever kept. The contractual arrangements did not provide for one. Rather, the contractual arrangements provided for weekly satisfaction of a contractual obligation. The barring of the claim by cl 4 is the equivalent of a statute bar. …

  1. In the present case the Owners Corporation cannot point to any evidence of anything in the nature of a running account that operated between Council and the Owners Corporation, let alone an arrangement of this kind that encompassed payments from Council to the Owners Corporation in respect of electricity consumption. As far as electricity consumption is concerned, the position appears to be that no payments ever passed between the parties in this respect. Before 21 March 2013, Council made no payments in this respect, whether by way of purported discharge of past obligations, an expectation of future provision of services or otherwise. After 21 March 2013, when a separate meter was installed, Council made payments to the electricity service provider without any involvement of the Owners Corporation.

  2. As to the payments that were made, the evidence that was before the Court about the accounting practices and ledgers maintained by Council did not reveal anything in the nature of a running account generating a running balance. For example, for invoices charged by Council the accounts recorded the invoices that were issued, and payments were recorded against those invoices when received.

  3. The Owners Corporation sought to argue that there was nevertheless something in the nature of a running account that existed, not by reference to a practice that was in fact adopted but rather by pointing to the circumstance that Council and the Owners Corporation had various obligations under the By-Laws, the 1996 Deed and the 1999 Deed. In substance that is little more than an observation that the parties owed each other different obligations, sourced in different instruments, that could from time to time give rise to payments flowing one way or the other. That is a long way removed from demonstrating that all such payments were in fact the subject of a running account of the kind described in the authorities considered above.

  4. His Honour was therefore correct to find that any claim in contract was statute barred. Given these conclusions, it is unnecessary to determine whether or not By-Law 17, on its proper construction, obliged Council to pay for electricity costs associated with the operation of the Public Carpark, or the subsidiary question of whether the Owners Corporation had properly isolated and quantified such usage during the relevant period.

Conclusion and orders

  1. For these reasons, I would dismiss the appeal with costs.

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Decision last updated: 28 August 2025

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Airservices Australia v Ferrier [1996] HCA 54
Airservices Australia v Ferrier [1996] HCA 54
Airservices Australia v Ferrier [1996] HCA 54