Trentelman v The Owners - Strata Plan 76700; The Owners - Strata Plan 76700 v Trentelman

[2021] NSWSC 155

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

Trentelman v The Owners - Strata Plan 76700; The Owners - Strata Plan 76700 v Trentelman [2021] NSWSC 155

Hearing dates:

9 March; 4, 6 and 7 May; 11 June; further written evidence and submissions ending 17 December 2020

Date of orders:

26 February 2021

Decision date:

26 February 2021

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

See [332]-[336]

Catchwords:

CONTRACT – formation and validity – proposal by owner of development lots to convert lots into non-strata blocks and build townhouses of specified height – cooperation of strata corporation required – development lot owner promised proposal would result in continuing access for strata owners to swimming pool on her land – resolution passed at general meeting – no contractual effect

ESTOPPEL – proprietary estoppel – encouragement – detrimental reliance – whether lot owner’s promise made to strata corporation – whether reliance by corporation – corporation entitled to easement over pool land

EQUITY – rectification – mistake – strata plan of subdivision included notation that pool structures formed part of common property – notation failed to include three-dimensional space around pool structures – inclusion of notation deliberate and mistake established but intended form of plan could not be determined – rectification refused

Legislation Cited:

Conveyancing Act 1919 (NSW), s 54A

Real Property Act 1900 (NSW), s 12

Strata Schemes (Freehold Development) Act 1973 (NSW), ss 5, 8A, 9

Strata Schemes (Freehold Development) Regulation 2012 (NSW), cl 7

Strata Schemes Development Act 2015 (NSW), s 8

Strata Schemes Management Act 1996 (NSW), s 11

Cases Cited:

Cobbe v Yeoman’s Row Management Ltd [2008] UKHL 55

Crabb v Arun District Council [1976] Ch 179

DHJPM Pty Ltd v Blackthorn Resources Ltd (2011) 83 NSWLR 728

Doueihi v Construction Technologies Australia Pty Ltd (2016) 92 NSWLR 247

Jones v Dunkel (1959) 101 CLR 298

Manly Council v Byrne [2004] NSWCA 123

Ramsden v Dyson (1866) LR 1 HL 129

Riches v Hogben [1985] 2 Qd R 292

Sidhu v Van Dyke (2014) 251 CLR 505

Slee v Warke (1949) 86 CLR 271

The Nominal Defendant v Gabriel (2007) 71 NSWLR 150

Thorner v Major [2009] UKHL 18

Watson v Foxman (1995) 49 NSWLR 315

Texts Cited:

Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5th ed, 2015, LexisNexis Butterworths)

Category:

Principal judgment

Parties:

2018/312426
Natalia Trentelman (Plaintiff)
The Owners - Strata Plan 76700 (First Defendant)
Registrar-General, New South Wales (Second Defendant)

2018/328341
The Owners - Strata Plan 76700 (Plaintiff)
Natalia Trentelman (Defendant)

Representation:

Counsel:
2018/312426
M Ashhurst SC/G Farland (Plaintiff)
E Peden SC/ J Mee (First Defendant)

2018/328341
E Peden SC/ J Mee (Plaintiff)
M Ashhurst SC/G Farland (Defendant)

Solicitors:
2018/312426
Bannermans Lawyers (Plaintiff)
Sarvaas Ciappara Lawyers (First Defendant)

Submitting appearance
Registrar-General, New South Wales (Second Defendant)

2018/328341
Sarvaas Ciappara Lawyers (Plaintiff)
Bannermans Lawyers (Defendant)

File Number(s):

2018/312426; 2018/328341

Publication restriction:

Nil

Judgment

1. Before the Court are two lawsuits concerning a parcel of property which forms part of an apartment development at Bogangar on the far north coast of New South Wales. Bogangar is just inland from Cabarita Beach, mid-way between Byron Bay and Tweed Heads.

2. The development is known as Cabarita Lake Apartments. It lies just to the south of Cudgen Lake, which forms part of the Cudgen Nature Reserve. The development includes a four storey apartment building and surrounding land.

3. Set out below is an aerial photograph showing the main features of the development as it was prior to 2017:

4. The parcel of land which is the subject of the proceedings is the site of a swimming pool and a pavilion-style building which contains facilities for using the pool. The pool and the pool building can be seen in the photograph, to the north-west of the apartment building.

5. The development is under strata title. The strata scheme was established by the registration of Strata Plan 76700 in 2006. I will refer to the strata owners’ corporation in the scheme as the “Strata Corporation”.

6. The landscaped areas and car park falling within the curtilage of the apartment building form part of the common property under the strata scheme. The pool does not. It is on a privately owned lot, now known as lot 53.

7. The boundaries between the lots and the common property are shown in the survey plan below:

8. The part of lot 53 which contains the pool and the pool building is not a separate lot and its boundaries were not formally defined by the survey plan. I will refer to it for convenience as the “pool land”.

9. Lot 53 belongs to Natalia (also known as Natasha) Trentelman. She and her husband, Johannes Theodorus (known as John) Trentelman at one point owned all the lots in the scheme.

10. When Mr and Mrs Trentelman owned all of the lots in the scheme, some of the lots were owned by them individually and some jointly. The evidence showed that in their dealings with the lots, Mr and Mrs Trentelman worked as a couple. Irrespective of the legal ownership of the lots, they consulted each other and made decisions jointly. Mr Trentelman, in particular, would give instructions to professional advisors about lots owned by Mrs Trentelman, with her express or tacit agreement. In the rest of this judgment, except where it is necessary to distinguish between Mr and Mrs Trentelman, I will refer to them collectively as “the Trentelmans”.

11. Previously there was a registered easement over the land in lot 53 in favour of the apartment building lots (or nearly all of them) which allowed the owners of those lots and their guests to use the pool. The term of that easement expired in October 2017. Since then the Trentelmans have prevented the lot owners (or most of them) from having access to the pool.

12. The proceedings have a complicated pre-hearing history which it is unnecessary to recount. They were first fixed for hearing before me on 9, 10 and 11 March. In the course of the opening on 9 March, it became apparent that counsel for the Strata Corporation wished to argue the Corporation’s case on a basis which had not previously been articulated. This resulted in an adjournment of the hearing to 4, 6 and 7 May.

13. The evidence was presented (on the issues that then arose) at the May hearing, but there was insufficient time for the parties to present their submissions. That happened on 11 June, with the benefit of written submissions which had been lodged in the meantime.

14. The course of the debate on 11 June led counsel for the Strata Corporation to foreshadow an application to seek a further alternative form of relief. The application was to file a cross-summons in the proceedings brought by Mrs Trentelman. The parties agreed to a timetable for lodgement of the proposed cross-summons and submissions.

15. This led to a long delay. For the Strata Corporation, a proposed cross-summons was lodged, accompanied by supporting evidence and further written submissions. This resulted in objections on behalf of Mrs Trentelman, and an affidavit of her own, as well as written submissions. The Strata Corporation replied with extensive objections of its own to Mrs Trentelman’s further affidavits, as well as yet further written submissions.

16. Eventually the parties agreed that I should deal with the application and the further evidence on the papers, with the benefit of yet more written submissions. The final submissions were lodged on 17 December.

Claims for determination

17. In order to understand the issues which arise, it is necessary to go a little further into the conveyancing history. The land in lot 53 forms part of a number of lots previously owned by Mrs Trentelman which were “development lots” under the Strata Schemes (Freehold Development) Act 1973 (NSW) (“SSFDA”) (that Act has since been repealed and replaced by the Strata Schemes Development Act 2015 (NSW) (“SSDA”)). The Trentelmans wished to convert those lots into ordinary (non-strata) blocks of land under the Real Property Act 1900 (NSW) (“RPA”). This required co-operation from the Strata Corporation (including the passage of a special resolution by the members).

18. The necessary resolution was passed at the Annual General Meeting (“AGM”) of the Strata Corporation in July 2014. On behalf of the Strata Corporation in these proceedings, it is alleged that in order to secure passage of the resolution, the Trentelmans promised to “give the pool” to the apartment building lot owners.

19. In December 2014 a strata plan re-subdivision was drawn up and executed which adjusted the boundaries between two of Mrs Trentelman’s lots (it was this plan which created lot 53). The application to register the plan was executed on behalf of the Strata Corporation, as was required by SSFDA. It was eventually registered in 2015. At the time, the Trentelmans accounted for two of the three members of the Strata Corporation’s executive committee, and they effectively controlled the committee.

20. The plan as registered included a notation that the pool building and the pool itself formed part of the common property under the strata scheme. I will refer to this as the “Pool Notation”.

21. While the easement lasted, the Pool Notation was of little practical significance. But when the easement expired, the Strata Corporation, acting on behalf of the apartment building lot owners, relied upon it to claim an entitlement to continued access. The validity of the notation was thereupon denied by the Trentelmans, who claimed that it ought to be removed from the register.

22. This dispute is the subject of the first of the lawsuits before the Court (proceedings 2018/312426). Mrs Trentelman is the plaintiff. The Strata Corporation is the first defendant. The Registrar-General is the second defendant, but has entered a submitting appearance.

23. If Mrs Trentelman’s case fails, the notation will remain on the register. But the Strata Corporation now accepts that, even if valid, the notation is of limited use. It purports only to make the pool structures themselves part of the common property. It does not apply to land below, or air above, those structures. Nor does it carry with it any right of access to the structures, which are entirely enclosed within lot 53.

24. The Strata Corporation attempts to overcome this problem in the second lawsuit (proceedings 2018/328341). In that lawsuit the Strata Corporation is the plaintiff and Mrs Trentelman is the defendant. The Strata Corporation claims that it is entitled to have the pool land transferred to it, or alternatively to have a further or extended easement granted to it over the pool land. The pool land, or the easement over it, would be held by the Strata Corporation as common property for the benefit of all lot owners.

25. The Strata Corporation relies upon the alleged promise at the 2014 AGM, contending that it gave rise to an enforceable contractual entitlement, or alternatively an equitable entitlement by way of proprietary or promissory estoppel, to have the promise fulfilled. Mrs Trentelman resists these claims.

26. By its proposed cross-claim in Mrs Trentelman’s lawsuit, the Strata Corporation now attempts to overcome the problem with the Pool Notation in a different way. The proposed cross-claim seeks an order which would vary the registered plan by substituting a new plan prepared by the Strata Corporation’s surveyor. That plan would make the pool land (including, of course, the air space above and the earth underneath) common property. The proposed claim is based on rectification.

27. While the Trentelmans controlled the executive committee, they were also responsible for registering a right of way over part of the Strata Corporation’s land in favour of Mrs Trentelman. That registration was challenged in the Strata Corporation’s lawsuit on grounds which included lack of authority. At the hearing on 9 March counsel for Mrs Trentelman abandoned her defence to that part of the Corporation’s claim, and an order was made by consent for the right of way to be removed from the title.

Summary and analysis of evidence

28. In this part of the judgment I first summarise and analyse the evidence presented at the May hearing (including supplementary evidence tendered on 11 June). In particular I consider, and express my conclusions on, the critical factual issues about the July 2014 AGM and the registration of the plan of subdivision containing the Pool Notation. For these purposes I do not need to consider the supplementary affidavits filed by the parties, or the objections to those affidavits. I deal with those matters in a separate section at the end of this part of the judgment.

Chronology of key facts

29. Strata Plan 76700 (“SP 76700”) was registered by the previous owner of the land, Mother Earth Developments Pty Ltd (“MED”), in March 2006. The strata scheme consisted of lots 1-8. Lot 1 included a pre-existing four-storey building which had been built as a motel. Lot 7 included the pool and ancillary structures but was otherwise vacant apart from a disused building in the north-western corner. Lots 2-6 and 8 were completely vacant.

30. SP 76700 is depicted in the plan below (the survey lines have been removed):

31. Accompanying the SP 76700 registration was a development contract. Under SSFDA such a contract was required for the staged development of a strata scheme. The development contract had to identify the “development lots” which were defined to include lots reserved for future development works. The development contract also had to identify a “development proposal”.

32. The development contract identified the development lots as lots 2 to 8. The development proposal was for a scheme consisting of nine stages. It involved a staggered development which would include the erection of several multi-level buildings on most lots, as well as sporting and recreational facilities. The development was to be completed by September 2010.

33. In August 2007, Strata Plan 79344 (“SP 79344”) was registered by MED. Lot 1, which included the four-story structure, was subdivided to create common property and lots 9-51. Lot 9 included the rooftop terrace and ground floor car park. The remaining lots were the individual motel (apartment) rooms.

34. MED then registered an easement over the pool lot in October 2007. The servient tenement was lot 7 of SP 76700 and the dominant tenements were lots 9-48 of SP 79344 (which were also lots 9-48 in SP 76700). The easement was described as “[f]or use of swimming pool”. The attached condition provided:

The lots in the dominant tenement [sic; the transfer creating the easement directly identified lots 9-48 as the dominant tenement] shalI bear the cost of operation, repairs and maintenance of the pool and surrounding facilities in the proportions of their unit entitlement in SP79344. Such easement shall continue until the earlier of 10 years from the date of registration or until a further easement to the use of a swimming pool benefiting the same parcels is created in any of the other lots in SP76700.

35. It seems that the reason for the easement being only for a limited term was that the pool on lot 7 would be replaced by a new swimming complex as part of the staged development. Although strata lots 49-51 were in existence at the time the easement was created, they were not given the benefit of it. There was no evidence to explain the omission, and it seems that no-one paid any attention to it until the second half of 2016.

36. Around 2008, MED fell into financial difficulties and the mortgagee, Commonwealth Bank of Australia, took possession of the property. Between them, the Trentelmans acquired all the lots in the strata scheme in July 2009. They continued to operate the building as a motel.

37. The Trentelmans acquired the lots in different capacities. Mr and Mrs Trentelman purchased some of the units in their personal capacities and the remaining units were purchased by them as the trustees of their superannuation fund, Frogmore Super Fund. The units acquired by Mrs Trentelman alone included all the development lots (lots 2-8).

38. In September 2010, the development scheme deadline expired. The Trentelmans began selling individual lots in the apartment building the following month. Prospective purchasers were offered the opportunity to have their units managed for them. This was done by way of an agreement with Mr Trentelman (who acted as caretaker) or some other entity controlled by the Trentelmans.

39. Once the Trentelmans started selling off the apartment lots in the strata scheme, it became necessary for the Strata Corporation to operate more formally. The necessary general meetings of the body corporate were held, and likewise the necessary appointments were made to the executive committee. But both of the Trentelmans were appointed to the committee, and it appears that for practical purposes their control of the Corporation continued as before.

40. Another aspect of having the Strata Corporation functioning more formally was that the other lot owners had to start paying for the common expenses. In the usual way, the lot owners in the apartment building were required to contribute to the Corporation’s administration and sinking funds in accordance with the unit entitlements.

41. The development lots likewise had been allocated unit entitlements in the strata scheme and under the applicable legislation the lot owner (Mrs Trentleman) was obliged to contribute to the common expenses in accordance with the specified lot entitlements. The obligation was considerable, because each development lot carried a unit entitlement of ten to fifteen times the entitlement of a typical apartment lot. But this obligation was overlooked. The development lots neither contributed to the Strata Corporation’s funds, nor were their unit entitlements counted for voting purposes at general meetings of the Corporation.

42. Although the easement identified the individual lots (excluding lots 49-51) as the “dominant tenement”, the costs of maintaining the pool were treated as body corporate expenses and levies were calculated for all lot owners in the apartment building (including lots 49-51) accordingly. This arrangement continued right through until the second half of 2016.

43. The Trentelmans caused the Strata Corporation to register Strata Plan 85596 (“SP 85596”) in October 2011. The registration subdivided lot 9 (see [33] above) to create a new lot 52 (manager/caretaker’s residence); the rooftop terrace and ground floor car park were also converted to common property. The Trentelmans retained a surveyor, Mr Phillip Wyper, to do the surveying work (he had completed the two previous strata plan surveyor certificates for MED).

44. Following the registration of SP 85596, the Strata Corporation’s by-laws were amended to confer a special status of lot 52. The owner of the lot (then Mr Trentelman) was given the exclusive right to operate a sale and letting business for the lots in the building, and was also allowed to offer other associated services. Clearly this was designed to formalise the Trentelmans’ management business. There was also a formal caretaker agreement between Mr Trentelman and the Corporation. Among other things, the agreement defined the caretaker’s maintenance responsibilities. These included the pool area.

45. In 2013 the Trentelmans decided not to pursue the development proposal as described in the strata development contract and in late 2013 they entered into negotiations to sell lot 7 to a third party. The prospective purchaser was John James Luddington. He is the husband of Shimonti Chatterjee, who is the owner of lot 43 (or was her husband: according to Ms Chatterjee, they were actually separated when she bought the lot).

46. By 2014 the Trentelmans wanted to free the development lots (owned by Mrs Trentelman) from the restrictions of the strata scheme so that the land could be sold off or developed as ordinary RPA lots. The Trentelmans had also developed specific plans for the development of lot 7 by building a group of three townhouses on it.

35. It was not possible under the terms of SSFDA to convert the lots directly from strata development lots to ordinary RPA lots. They had to be converted to common property in the strata scheme, and then transferred back by the Strata Corporation as RPA lots. Conversion of the lots into common property required a strata re-subdivision.

36. In order to obtain a strata re-subdivision a special resolution of the Strata Corporation was required. The Trentelmans also wanted resolutions that the Corporation would, once their lots had been converted to common property, transfer the land back as RPA lots; and that the Corporation would consent to their application for development approval of the townhouses.

37. The promise which is the subject of the Strata Corporation’s claim was allegedly made at the Strata Corporation’s 2014 AGM, which took place in July 2014. The resolutions sought by the Trentelmans were passed. I analyse the evidence on this issue in detail in a later section of this part of the judgment.

38. At some point in the second half of 2014, it was discovered that the development lots carried obligations to contribute towards the Strata Corporation’s expenses (and corresponding voting entitlements). The minutes of the 2014 AGM (which were prepared and approved in December) record that there was a resolution that the development lots (which, on conversion to ordinary RPA lots would be removed from the strata scheme) did not have to contribute in the meantime. Whether such a resolution was actually passed at the AGM appears to be disputed; I touch further on this when analysing the evidence below.

39. In the months following the AGM, the Trentelmans continued their negotiations to sell lot 7 to Mr Luddington. Both parties retained solicitors and a contract was drawn up.

40. The December 2014 plan of strata re-subdivision containing the Pool Notation was drawn up by Mr Wyper on the Trentelmans’ instructions (as the plan which created SP 85596 had been). Lots 7 and 6 became lots 53 and 54 (the plan has already been reproduced at [7] above). The plan was eventually registered in the following year as Strata Plan 91510 (“SP 91510”).

41. The Trentelmans allege that the inclusion of the Pool Notation was a mistake. I will consider the evidence on this issue in a later section of this part of the judgment.

42. In early 2015, the Trentelmans sold their management and caretaking rights to an external purchaser, Mr Geoff Walton. He became the owner of lot 52, and accepted the burden of the caretaker agreement.

43. At around the same time, Mr Luddington withdrew from his negotiations with the Trentelmans to buy lot 7 (now lot 53). The Trentelmans, however, continued to pursue their plan to convert the development lots to ordinary RPA lots and to obtain development approval for the construction of three townhouses on lot 53. The development application (“DA”) for the townhouses was lodged in September 2015.

44. In November 2015, Mrs Trentelman entered into a deed with the Strata Corporation to complete the arrangement contemplated by the 2014 AGM resolutions, by converting her development lots into common property and then transferring those lots back to her as ordinary RPA lots. The conversion and transfer back of lots 2, 3, 4, 5, 8 and 54 (roughly corresponding with the former lot 6) was completed in February 2016. The process was not followed for lot 53. It remained (and remains) part of the strata plan.

45. The result was the registration of an RPA deposited plan (DP 1208402). In this plan the strata scheme (including lot 53) was lot 11 and the remaining land transferred back to Mrs Trentelman was lot 12.

46. DP 1208402 is reproduced below. The right of way over lot 11, which was created by registration of the plan, but was abandoned by counsel for Mrs Trentelman at the hearing on 9 March 2020, can be seen on the eastern side of the lot:

59. In 2014 and 2015, while all of the relevant conveyancing steps were taken, the executive committee of the Strata Corporation consisted of Mr Trentelman as chairman, Mrs Trentelman as treasurer, and Ms Sharyn McConnell as secretary. Between them, they were responsible for the execution by the Corporation of the December 2014 strata re-subdivision plan and the November 2015 deed.

60. By late 2015, disputes had arisen between the Trentelmans and some of the other lot owners about the management of the Strata Corporation which remained effectively under the Trentelmans’ control. The new caretaker, Mr Walton, was one of the parties dissatisfied with Mr Trentelman’s conduct.

61. According to the lot owners, Mr Trentelman gave an undertaking that he and Mrs Trentelman would resign from the executive committee when the development lots had been converted to ordinary RPA lots. This happened in February 2016 but they did not do so. By this stage the Trentelmans had decided that, rather than selling lot 53 with its DA, they would carry out the townhouse development themselves.

62. In May 2016 the disgruntled lot owners requisitioned an extraordinary general meeting. At that meeting a resolution was passed for the appointment of an independent strata management company. Resolutions had also been tabled to remove the Trentelmans and Ms McConnell from office. Ms McConnell resigned, but the Trentelmans did not. The resolutions failed to achieve the necessary special majority, so the Trentelmans remained in office.

63. The AGM took place in September 2016. Mr Trentelman declined to relinquish the chair to the representative of the strata management company. The Trentelmans nominated themselves for re-election but were unsuccessful. A new committee of five members was elected. The new chair was Charito Lofthouse, who was a resident lot owner. Another member of the new committee was Mr Luddington.

64. About three weeks later, the Trentelmans appear to have discovered that the easement was expressed to be in favour of the owners of lots 9 to 51, rather than the Strata Corporation. On 8 November, the Trentelmans (to use their description) “took back” the pool. Mr Trentelman took over the maintenance and cleaning, and excluded Mr Walton and the pool cleaning contractor retained by the Corporation. Mr Trentelman also wrote a sign excluding everyone other than owners and tenants of lots 9 to 51.

65. As part of the process of “taking back” the pool, the Trentelmans’ solicitors wrote to the Corporation asking for the pool expenditure to be removed from the Corporation’s expenses. Instead the Trentelmans sent bills to the individual lot owners, going so far as to bring debt recovery claims against owners who did not pay.

66. In about mid-2017, the Trentelmans completed construction of the three townhouses on lot 53. When the easement expired in October 2017 they completely excluded the lot owners (except for certain owners with whom they were friendly, such as Ms McConnell) from the pool area.

67. Since October 2016, Mr Ian McKnight has acted as solicitor for the Strata Corporation. Following the restriction of access in October 2017, he sent a letter to solicitors acting for the Trentelmans concerning the use of the pool. Mr McKnight quoted the Pool Notation, asserting that the pool lot was common property.

68. The Trentelmans reacted by instructing Mr Wyper to apply to the Registrar-General to remove the Notation. Their instruction was that the Notation had been a mistake and the 2014 AGM resolutions had never intended to make the pool common property. The litigation with which I am concerned then followed.

Witnesses

69. It was agreed that the Strata Corporation would present its case first at hearing. The Corporation called evidence from five witnesses who attended the 2014 AGM about the events at that meeting. Each of the five was either a lot owner or the spouse of a lot owner. Affidavits had been filed from five other witnesses but these were not read.

70. The five witnesses who gave evidence for the Strata Corporation about events at the meeting were Mr Luddington; Ms Chatterjee; Mrs Lofthouse and her husband, Mr Donald Harley Lofthouse; and Mr Gregory Robert Flynn. The Strata Corporation also called evidence from another lot owner, Mr Randall Kelly. Mr Kelly gave evidence of a meeting with Mr Trentelman shortly before the AGM at which he alleged that a similar promise was made.

71. Each of these witnesses was cross-examined. I discuss their testimony when analysing the evidence on this issue in more detail below.

72. The Strata Corporation’s solicitor, Mr McKnight, was also called as a witness by the Corporation. His testimony concerned the events surrounding the Trentelmans’ denial of access to the pool in October 2017. He was cross-examined but in the end nothing turned on the events in question, and it is not necessary to say anything more about his evidence.

73. The witnesses in Mrs Trentelman’s case were Mr Trentelman, Mrs Trentleman and Ms McConnell. Each of them was cross-examined. I will set out my findings on their credibility when dealing in detail with the factual issues below.

74. Mr Wyper was not called to give evidence about the preparation and registration of the strata plan containing the Pool Notation. His absence was not explained.

Documentary evidence

75. 2014 Annual General Meeting: A notice of meeting for the 2014 AGM was distributed to members of the Strata Corporation. The notice included motions 10 and 11, explanatory notes to the motions and a two page plan of the townhouses with handwritten annotations.

76. Motion 10 was lengthy. It proposed five separate resolutions, to which I will refer as resolutions 10.1 to 10.5.

77. Resolution 10.1 was:

that the Owners Corporation specially resolve to consent to the removal of the development lots (lots 2, 3, 4, 5, 6, 7, and 8) in strata plan 76700 (Development Lots) (as hatched and outlined on the pages of the strata plan attached and marked "DL-1" to "DL-3") from the strata scheme in accordance with the Strata Schemes Freehold Development Act 1973 (SSFDA).

78. Resolution 10.2 was:

that the Owners Corporation agree to the carrying out of the following matters (or such similar procedures as may be authorised by the Executive Committee to give effect to the intention of this resolution) by the owners of the Development Lots (at the cost of the owners of the Development Lots) to give effect to the proposal:

(a) conversion of the Development Lots to common property in accordance with the SSFDA;

(b)   preparation and registration of such deposited plans as may be required to give effect to the proposal;

(c)   preparation and registration of such transfers of land for the newly created lots as may be required to transfer the relevant parcels of land as necessary to give effect the proposal;

(d)   future development on Lot 7 in strata plan 76700 (Lot 7) of no more than 3 townhouses of no more than two storeys in height, (Proposal).

79. Resolution 10.3 was:

that the respective amount that each remaining lot's unit entitlement bears to the overall unit entitlement will be proportionally increased as a result of the removal of the Development Lots from the scheme and the reduction in the aggregate unit entitlement for all the lots remaining in the scheme following the Proposal.

80. Resolution 10.4 was (emphasis added):

that the Owners Corporation sign such documents under seal in accordance with section 238 of the Strata Schemes Management Act 1996 as may be required to give effect to the Proposal, including (but not limited to):

(i)   application for development approval to Tweed Shire Council (Council);

(ii) notice of conversion in the form approved under the Real Property Act 1900 and such other documents and certificates which may be required to accompany same;

(iii) administration sheets (approved form 23) in accordance with the SSFDA;

(iv) certificates and approved forms in accordance with the SSFDA (including approved forms 9, 10, 11 and 12);

(v)   transfers of land for the newly created lots (including approved form 9); and

(vi) preparation and registration of such documents for the surrender or creation of such easements or covenants as may be necessary or desirable, including any section 88B instruments, to ensure:

•   Owners and occupiers of lots within the scheme have a continuing right to use the swimming pool on Lot 7;

•   Owners and occupiers of Lot 7 have a continuing right to traverse the scheme by road and foot for the purposes of accessing Lot 7 (including the carrying out of future development work); and

•   the carrying out of future development work on Lot 7 is restricted in accordance with the conditions included in this motion

81. Resolution 10.5 was:

that the Executive Committee and/or Strata Managing Agent liaise with such representatives of the owners of the Development Lots (e.g. surveyor and solicitor) or such other persons on behalf of the Owners Corporation to assist with the preparation and registration of all documentation as may be required to give effect to the Proposal.

82. Motion 11 proposed that, subject to passing of Motion 10, the Strata Corporation (emphasis added):

unanimously resolve to consent to the making of an application for development approval to Tweed Shire Council (Council) by the owner of former development lot 7 in strata plan 76700 (being any new lot into which Lot 7 is subdivided consequent upon the removal of the Development Lots from the scheme in accordance with motion 10) (Lot 7) for the creation of a community association over Lot 7 and the scheme in accordance with the provisions of the Community Land Development Act 1989 (CLDA) and the creation of the following community lots:

•   Lot 1 - association property, comprising the swimming pool (currently on Lot 7 (to become Lot 3) and/or any common roadways and footpaths (provided that, if the swimming pool does not form association property, owners and occupiers of lots within the scheme have a continuing right to use the swimming pool by way of easement or similar and, if any roadways or footpaths providing access to Lot 3 do not form association property, owners and occupiers of Lot 3 have a continuing right to use any relevant roadways and footpaths within the scheme for the purposes of accessing Lot 3 by way of easement or similar);

•   Lot 2 - comprising the area forming the scheme (less any association property); and

•   Lot 3 - comprising the area forming Lot 7 (less any association property),

(Community Association)

83. Motion 11 went on to contain further resolutions dealing with lot entitlements within the Community Association and the planning and conveyancing steps required to give effect to the proposal. These did not say anything specific about the swimming pool.

84. Motions 10 and 11 were accompanied by an explanatory note. The explanatory note for Motion 10 stated (emphasis added):

The strata scheme includes a series of development lots (being lots 2 - 8), which were originally intended to be developed and subdivided further plans of subdivision to create additional lots in the scheme. The proposed development was 'authorised development' and not 'mandatory development' and development was never completed in accordance with the strata development contract.

Accordingly, motion 10 proposes to remove the development lots from the scheme. Following the removal of the development lots from the scheme, the existing built lots (9 - 51) will continue to be strata lots forming part of the strata scheme, which will continue in existence and be identical in all material respects to the existing strata scheme (without the balance development lots reserved for future development). This will benefit owners of lots in the scheme; who will not have to contribute to the upkeep and maintenance of additional common property that would have otherwise been created in the subsequent stages of development.

The motion ensures that easements exist so that owners and occupiers of lots within the scheme have a continuing right to use the swimming pool on Lot 7 and that owners and occupiers of Lot 7 have a continuing right to traverse the scheme by road and foot for the purposes of accessing Lot 7.

The motion also provides that future development on Lot 7 is restricted to no more than 3 townhouses of no more than two storeys in height. Such development is far less intense than the original development permitted under the development contract, which allows for a 3-storey, 10 lot apartment building on the land. Accordingly, owners and occupiers in the strata scheme will benefit from retaining greater amenity of their units in relation to Lake Cabarita.

85. The explanatory note for Motion 11 stated (emphasis added):

Should motion 10 be passed, motion 11 provides for an application to be made to Council for development approval to create a Community Association over the strata scheme and development Lot 7 (adjoining the scheme, which houses the swimming pool).

Motion 11 may not necessarily be carried out as it is an alternative way of carrying out the development proposed in motion 2 (namely, the townhouses) and involves the creation of a Community Association (of which the scheme would be a part) and requires a unanimous resolution for its passage. The passing of the motion will provide flexibility for the owner of Lot 7 and Council

in deciding the most suitable way of carrying out future development on Lot 7.

The arrangement will allow the creation of community association property (being the swimming pool and/or common roadways) which will be shared between the scheme and Lot 7 (to become Lot 3 (Development Lot)). The unit entitlements of each lot will be the same (until such time as the development contemplated on the Development Lot is carried out), so that both the strata scheme and the Development Lot contribute equally to maintaining the common facilities.

Provision will be made for the Development Lot to be developed in the future to accommodate no more than 3 townhouses of no more than 2 storeys in height and the unit entitlements for the scheme and the Development Lot will be adjusted based on the respective number and value of lots in the scheme and the Development Lot respectively (taking into account that the scheme will have a greater intensity of use of the common facilities).

The proposed development on the Development Lot is far less intense than the original development permitted under the development contract, which allows for a 3-storey, 10 lot apartment building on the land. Accordingly, owners and occupiers in the strata scheme will benefit from retaining greater amenity of their units in relation to Lake Cabarita.

86. The minutes of the 2014 AGM were in evidence. The minutes were approved at the next general meeting of the Strata Corporation, which took place (an extraordinary general meeting) in December. They were prepared by Mr Trentelman shortly before that meeting took place, although Mr Trentelman claimed that he prepared them from notes taken by Ms McConnell at the AGM.

87. At the time of the 2014 AGM, the Trentelmans had sold 34 lots and had retained 8 lots for themselves. The minutes recorded that twelve lot owners were present at the meeting, including the Trentelmans (four non-owners were also in attendance). Mr Luddington was also present, although the minutes do not record his attendance.

88. The voting entitlements at the meeting, as recorded in the minutes, are set out in the following table:

Ownership votes	Proxy votes	Total
Mr & Mrs Trentelman	17 (13.8%)	46 (37.4%)	63 (55.8%)
Ms McConnell	3 (2.4%)	8 (6.5%)	11 (9.7%)
Others	32 (26.0%)	7 (5.7%)	39 (34.5%)
113

89. The minutes do not record any discussion about motions 10 and 11. They simply record that the motions were passed unanimously (the text of the resolutions in the minutes was copied from the notice of meeting). At the end of motion 11, the minutes record:

Additional amendment

Further, the owners of Lot 7 whilst the land has not been developed with a residence or residences has no obligation to pay owner corporation levies.

90. Preparation of plan including Pool Notation: The process which led to the registration of the Pool Notation appears to have begun with a plan to adjust the boundary between lots 6 and 7. The boundary on the eastern side of lot 7 was to be made more square, resulting in the transfer of a triangular area to lot 7 from lot 6. The triangular area is shown on the survey plan which appears at [30] above.

91. The written evidence does not reveal when Mr Wyper was retained by the Trentelmans, or the instructions he was given. The earliest reference in the documentary evidence to Mr Wyper’s involvement is a reference to a letter from him to Tweed Council dated 27 October 2014, but the letter itself is not in evidence.

92. On 3 December 2014 Mr Trentelman emailed Mr Wyper asking how the re-subdivision would proceed. Mr Trentelman explained that there had earlier been discussion about community title (as reflected in motion 11 at the 2014 AGM) and that the Trentelmans were trying to clarify the lot arrangements for the purpose of the proposed sale to Mr Luddington. Mr Wyper replied:

We are planning to have a survey team on site tomorrow to peg the new bdy between lots 6 & 7 and the new motel bdy line for your approval.

A Strata Plan of subdivision will then be prepared for new lots 6 & 7. They will become lots 53 and 54 and will be "open space lots". Lot 53 can then be transferred to the new owner. This plan can be registered ASAP.

Then (after townhouse approval and construction) lot 53 will be s/div'd into lots 55, 56 and 57 (3 townhouses) and it will be part of the existing strata scheme. Body Corp approval will be required for this s/div as additional common property is being brought into the scheme.

Lots 2-5, 8 and new lot 54 will be converted to CP. Then this CP will be s/div'd out of the existing strata scheme. The new s/div'd lot will need to be transferred into your and Natalia's name as previously discussed and agreed. Note stamp duty issues may arise.

93. The evidence does not identify what the “new motel” boundary was. Nor does it identify the “additional common property” being brought into the strata scheme.

94. Mr Wyper then prepared the survey plan reproduced at [7] above, which shows the pool land marked off from the rest of lot 7 (proposed lot 53) with a dashed line. That survey plan was described as annexure A to a report of Mr Wyper dated 14 December 2014, but the plan itself bore the date 18 December, as did the survey report which is in evidence. The discrepancy was not explained.

95. On 15 December 2014, Mr Wyper emailed his plan of strata re-subdivision to the Trentelmans. The plan was made up of two sheets. The first sheet was a location plan. It is reproduced below:

96. The area marked off by dashed lines within lot 7 (proposed lot 53) corresponded with the pool land shown on the survey plan. Notation (P) referred to the registered easement.

97. The second sheet contained the actual definition of the lot boundaries, and associated survey lines. It is reproduced below:

98. The sheet included two notations. The first noted that the stratum for each of lots 53 and 54 consisted of the space from 20 metres below ground level to 100 metres above ground level. The second notation was that areas were approximate only.

99. Mr Wyper’s email also included a draft administration sheet to accompany the re-subdivision plan. The administration sheet included the unit entitlements for the existing lots. Mr Wyper noted that the current unit entitlements for lots 6 and 7 were 50 each and that these would need to be amended for the new lots 53 and 54 “to better represent share of common property and expenses etc”. He also noted that the entitlements should be proportional to “the value of each respective unit”.

100. On 18 December, Mr Wyper wrote to them enclosing a set of documents for signature. It seems that in the meantime he had been provided with further instructions by way of response to his 15 December email, but there is no documentary evidence about this.

101. The enclosures included what Mr Wyper described as a “preliminary copy” of the “final” strata re-subdivision plan. The plan was in the same form as the plan provided on 15 December, except for the addition of the Pool Notation to the notations on the second sheet of the plan. The text of the Pool Notation was:

The inground pool and auxiliary structures (shed, concrete, fencing etc) located within Lot 53 cubic space are common property. All other structures located within Lot 53 cubic space form part of Lot 53.

102. Accompanying the strata re-subdivision plan was the administration sheet. Mr Wyper’s covering letter noted that this showed the unit entitlements for proposed new lots 53 and 54 as 15 each “as directed”. The administration sheet also contained a panel for “signatures, seals and statements of intention to create easements, restrictions on use of the land or positive covenants”. Mr Wyper asked that these be “signed” by Mrs Trentelman and the Strata Corporation although this was “not critical just yet”.

103. The documents also included Mr Wyper’s survey report, and the Council application forms which had been completed for signature. Mr Wyper stated that the Trentelmans were to submit the documents directly to the Council. They did so on 22 December, the following Monday.

104. The documents were signed as required by Mrs Trentelman. Her signature on the strata administration sheet is undated, but on the Council applications her signatures are dated 18 December.

105. The strata administration sheet was also executed on behalf of the Strata Corporation. It was signed by Ms McConnell and stamped with the Corporation’s common seal. The relevant text was as follows (as prepared by Mr Wyper, with handwritten insertions in bold):

The Owners – Strata Plan 76700 certifies that on 9/6/14 it passed a special resolution agreeing to each proposed unit entitlement and proposed aggregate unit entitlement shown in the schedule attached to this certificate.

The common seal of the Owners – Strata Plan No.76700 was hereunto affixed on 22/12/14 in the presence of Sharyn McConnell being the person(s) authorised by section 238 Strata Schemes Management Act 1996 to attest the affixing of the seal.

106. The first handwritten insertion (the meeting date of 9 June 2014) was in Mr Trentelman’s handwriting. The other handwritten insertions were in Ms McConnell’s handwriting.

107. As completed by Mr Trentleman, the statement about approval was incorrect. There was a general meeting of the Strata Corporation on 9 June but it was an extraordinary general meeting which dealt with other issues. No doubt Mr Trentelman intended to refer to the AGM on 28 July 2014. But even so the statement was incorrect.

108. By the time the re-subdivision plan was prepared, the proposal had changed so far as lot 7 was concerned. Lot 7 was no longer to be converted into an ordinary RPA lot, but was to remain a lot (and eventually would become three lots) in the strata scheme. There was nothing in motions 10 and 11 about this, or about how it was to be reflected in revised unit entitlements, or about the boundary adjustment with lot 6.

109. January 2015 solicitors’ correspondence: As already noted, at the time the plan of re-subdivision was executed, the Trentelmans were in negotiations to sell lot 7 (as it then was) to Mr Luddington, and a contract had been prepared. Mr John Saddington was the solicitor for Mrs Trentelman. Ms Sharon Flood was the solicitor for Mr Luddington. In the course of the negotiations there was some reference to the status of the pool.

110. On 8 January 2015, Ms Flood sent a letter to Mr Saddington setting out a list of comments and queries about the draft contract. The list included comments on proposed special condition 36 (which apparently concerned the swimming pool) and a new special condition proposed by Ms Flood allowing for further enquiries by way of “due diligence”. These were:

Clause 36 Swimming Pool Please confirm if your client is aware of any issues with the pool and if so what they are. This element is important as we understand that the pool will remain on the proposed lot and our client is to provide certain rights of use to the body corporate.

…

Due Diligence

As previously requested we require a due diligence clause to be included (30 days from date of contract). Please see our proposed

wording on the following page.

This diligence period will allow our client to investigate not only the proposed development but also the proposed strata arrangements and allowance for future development by the owners corporation.

In this regard can you please advise if the contents of the resolutions of motion 10 and 11 of the general meeting held 28 July 2014 are still the proposed way moving forward (as we understood the current proposal was that the 3 lots our client proposes to develop will form part of the current strata rather than a community association.

111. Mr Saddington responded on 13 January. He stated:

Clause 36 – Swimming Pool

Our client advises they are [sic] not aware of any issue in relation to the swimming pool and that the pool will remain on the proposed Lot 53 and that it is proposed that when your client develops the property into 3 Lots [sic]. We refer you to Transfer Granting Easement AD463207P annexed to the Contract.

…

Due Diligence

Proposed Special Condition is agreed.

In regard to the Resolution of Motions 10 and 11 at General Meeting on 28 July 2014, it was resolved that the Pool becomes part of the Common Property on the subdivision by your client of the proposed Lot 53 into 3 Lots and will remain part of the current strata.

112. Registration of plan including Pool Notation: Meanwhile, the Tweed Shire Council had been considering the plan of re-subdivision. In March 2015 the Council issued the necessary approval. In May, Mr Wyper lodged the plan for registration with Land & Property Information (“LPI”).

113. LPI responded with some requisitions. It was not clear whether all of the correspondence is in evidence. Two of the requisitions are relevant for present purposes.

114. One of the requisitions concerned the identification of the servient tenement for the pool easement, which was shown in the plan as part of the new lot 53 (see [7] above). LPI pointed out that the transfer creating the easement specified lot 7 (that is, the whole of lot 7) as the servient tenement. In response, Mr Wyper noted that at the time the easement was granted he had prepared a sketch (not itself in evidence) identifying the part of the lot which was to be the subject of the easement. For some reason it had not been registered. In response, LPI insisted that the identification of the servient tenement had to comply with what had in fact been registered.

115. The other relevant requisition concerned the unit entitlements for lots 53 and 54. LPI noted that the entitlements under the original strata plan (SP 76700) had been 30. Mr Wyper pointed out that they had been increased to 50 as a result of the lodgement of SP 79344 and queried why they could not be changed by the lodgement of a fresh re-subdivision. LPI appears not to have accepted Mr Wyper’s submission in this regard either.

116. The plan itself was registered in July 2015. The site plan on the first sheet was modified so as to remove the dashed lines delineating the pool lot. The location plan as registered is set out below:

117. The second sheet (reproduced at [97] above) was registered unchanged, including the Pool Notation. The strata administration sheet was registered with the unit entitlements of Lots 53 and 54 shown as 30 rather than 15.

118. 2015 Annual General Meeting: The Strata Corporation’s next AGM was held in August 2015. At that stage, the strata plan containing the Pool Notation had been registered (see below), adjusting lot 7’s boundary and converting it into lot 53, but motions 10 and 11 had not otherwise been carried into effect. The Trentelmans’ application for a DA over lot 7 had not yet been completed (or consented to by the Strata Corporation). Nor had the developments been converted into ordinary RPA lots.

119. The meeting went for several hours. It was recorded by Mr Lofthouse. Later Mr Lofthouse gave the recording to Mr Luddington. An agreed partial transcript was in evidence which included a discussion of the Trentelmans’ development proposal.

120. The discussion began when the agenda items had been addressed and the meeting had turned to general business. Mr Trentelman was asked to explain what the development would look like and what impact it would have. He apparently had a whiteboard or something similar on which he drew a plan of the development. He was asked to draw the pool.

121. When Mr Trentelman had done so, the transcript records an intervention from David Adam, one of the lot owners about the pool:

Mr Adam:      Technically, he’s not passing it on.

Mr Trentelman:    No, no, it belongs to lot 53. Now when we bought the (inaudible) complex and we bought the complex and what was the, this was already existing, the boomerang [motel building] there, ok that was already existing. Now there were development approvals for all these lots. Now the development approval here was for a block of 10 apartments. Block of 10 apartments. Now that block of 10 apartments would have taken the whole of that and may have taken the pool as well.

122. Mr Luddington then intervened. By this stage he had decided not to buy lot 53 and had (to use his language) “changed his camp” (he later said he had “no sides of the fence”). Mr Luddington protested that Mr Trentelman “assured many of us that we would never lose our view”.

123. Mr Trentelman denied this, and brought the discussion back to the original development proposal, stating that it would have involved 80 to 100 further units. The transcript continues (emphasis added):

Mr Trentelman:    Ok so, we went to to, to you guys and said look we don't want that, we, you guys have bought in here, and we don't want that for you, alright.

Ms McConnell:    That was the meeting last time.

Mr Trentelman:    We've said, we would try and make it as attractive as we possibly can. Okay, so we've said we will not build this, we will not build any of these. Ok. We will keep the development down and what we are going to do here is build 3 townhouses, 3 townhouses and the maximum height is 2 levels, ok being ground and next level and that's the maximum height. We also said because that we are building those, we will give you the swimming pool.

124. The transcript then continues:

Mr Luddington:   Well that's all tied into the original [development] contract, the right of use for the pool as (inaudible) ... community pool, (inaudible) no issues (inaudible).

Mr Trentelman:    If you look at the swimming pool ... the swimming pool, if you, actually Charito [Lofthouse] actually found it, the swimming pool has a an easement for 10 years only. In 2 years time, that easement that easement is diminished, is gone.

Mr Luddington:    So we lose our right of access?

Mr Trentelman:    You lose your right of access to that pool.

125. Mr Luddington replied that this was “something you have assured us would never happen”. After some disjointed exchanges, the transcript continues (emphasis added):

Mr Trentelman:    John, what we have said... we look we don't agree with that, we don’t agree with taking the pool away from you.

Mr Luddington:    Yeah that's fine, I understand that.

Mr Trentelman:    We have said, we will give you the swimming pool.

Mr Luddington:    Yep.

Mr Trentelman:    Ok We will get. We will not have a block of 10 apartments there. We will keep our development to a minimum. That’s what we’ve done here (inaudible). We will section this off. We will not have all the blocks of townhouses there. Look I reckon it's a fair cop what we're (inaudible) giving you.

126. Mr Luddington then addressed the meeting further, complaining that the boundary adjustment effected by the December 2014 strata plan of re-subdivision had not been approved by the owners. Mr and Mrs Trentelman responded that Mr Luddington had himself asked for the adjustment (as erstwhile purchaser). The transcript ends with these comments from Mr Adam and another participant identified as “Malcolm”:

Mr Adam:   Legally John can do whatever he likes, he doesn’t have to give us that pool right (inaudible arguing).

Malcolm:   Give you nothing, the way you have treated him he has paid all this money out of his own pocket he has given you the shed, he has given the pool and you treat him like shit.

Mr Trentelman:   And you still want it.

Malcolm:   And you are still after blood. I’ve never seen people like you, you are not very business minded people

127. 2017 correspondence: About two years later, there was correspondence between the parties which touched on the status of the pool. The context for the correspondence was that the Trentelmans were constructing the townhouse development and issues arose about the sewerage and stormwater on lot 53.

128. The correspondence began with a letter from Ms Carolyn Byrne, a solicitor acting for Ms Trentelman, to Ms Lofthouse, who was then the president of the Corporation, on 27 April 2017. By this stage Mrs Trentelman’s plumber had investigated the drainage systems and had dug up part of the carpark, apparently for the purpose of laying or connecting pipes for the development.

129. Ms Byrne’s letter identified three particular issues. The third was that the pool sewer line was not connected to the Strata Corporation’s sewerage network, but instead drained to a neighbouring property.

130. Ms Byrne’s letter continued:

It is requested that SP76700 rectify these faults as a matter of urgency, now that they are aware of these issues and prior to any claims of public nuisance may arise.

We request the SP76700 investigate these matters as identified and notify our office of their willingness to rectify these issues at their own costs. We have requested our plumber to suspend work on rectifying the bitumen of the car park for a period of seven days, in the hope that these issues can been addressed within that timeframe and manage the expenses of resurfacing the car park on two separate occasions for the works to be completed.

We have also requested our plumber to provide a report and quote on the rectification works to assist you in this matter. We will forward this to you as soon as it becomes available.

131. On 11 May, Mr McKnight responded on behalf of the Strata Corporation. He stated (emphasis added):

The matters raised by you are of serious concern. In particular, the third matter of complaint, the sewer line that services the swimming pool, must be addressed as a matter of urgency. As you would be aware, an Owners Corporation is ordinarily responsible for proper maintenance and repair of common property. Pipes, wires, cables or ducts are usually part of common property unless they are for the exclusive benefit of one lot. In this regard you are referred to the definition of “lot” and “common infrastructure” in section 4 of the Strata Schemes Development Act 2015. As you are aware, the swimming pool is located within lot 53 in Strata Plan 91510. The sewer pipe servicing the same is clearly a pipe for the exclusive benefit of lot 53.That being so, and subject to confirmation by way of reference to conditions of development consent and plans, its repair would be the responsibility of the owners of that lot. As we understand it, your clients own that lot and are currently developing the same.

132. Ms Byrne replied later the same day (emphasis added):

We confirm and accept your statement in the penultimate paragraph of your correspondence, that the Swimming Pool is for the exclusive use and benefit of one lot, that lot being Lot 53 in Strata Plan 915610.

Our client has a separate storm water system benefiting [sic] exclusively to their [sic] lot 53 SP91510.

Similarly, owners of lots 10-52 of SP79344, are responsible for the repair of storm water pipes benefiting exclusively their lots and currently the subject of this correspondence for which our client request [sic] urgent remediation.

306. Following the hearing on 11 June, I received an email from junior counsel referring to the submission by counsel for the Strata Corporation about detriment to which I have referred at [303] above. The Corporation had consented to the email being sent on the basis that it would be entitled to reply. The email stated that Mrs Trentelman’s case had been prepared on the basis that the Corporation’s alleged detriment was limited to passing the motions. It stated that Mrs Trentelman strongly objected to detriment being put on a wider basis.

307. There was no further response to this email in the subsequent submissions by the Strata Corporation. I was left uncertain about the email’s significance. Senior counsel had dealt with the point without apparent difficulty at the hearing on 11 June, and had in fact invited me to find that the passage of the motions was the cause of the subsequent conversion of the development lots. It was not clear to me what prejudice could possibly be suffered by Mrs Trentelman in acknowledging that fact.

308. As at present advised, I do not see the protest in the email as having any significance for my resolution of the case. But in view of the uncertainty I will give Mrs Trentelman’s legal representatives a further opportunity, once I have delivered my reasons, to make further submissions on this question should they wish to do so.

309. Subject to any such submissions, the Strata Corporation has made out its case for relief by way of proprietary estoppel. The remaining question is the nature of the relief which the Court should grant.

310. The choice is between the grant of an easement and an order for transfer of the pool land. There is little practical difference between the two options, and in my view either method could be used to satisfy the equity. But on balance I consider that the grant of an easement is more appropriate.

311. I am not satisfied that any mention was made at the 2014 AGM of converting the pool land into common property. There was no such implication from motion 11, which referred to community property and was in any event expressly stated to be only one possible future option. In my view the natural interpretation in the context for “continuing access”, was access in accordance with the then existing basis, namely, by way of easement.

312. Furthermore I think it is permissible for this purpose to take into account the statements made at the 2015 AGM, where there was explicit reference to the easement and its impending expiry. In that context a reference to continued access or “giving you the pool” would even more clearly suggest an indefinite extension of the existing easement.

313. This does not of course mean that the benefit of the relief to be granted should be confined to the lots benefited by the previous easement. For reasons I have already given the representation was made in favour of, and the reliance was by, the Strata Corporation. In my view the proper form of relief is an easement in favour of the Corporation in the same terms, or substantially the same terms, as the previous easement. I will leave the precise terms of the new easement and its commencement date to consultation between, and, if necessary, further submissions from, the parties.

Pool Notation

315. In her lawsuit, Mrs Trentelman seeks an order removing the Pool Notation from the December 2014 plan of strata subdivision as registered (SP 91510). She claims that:

1. the Pool Notation was legally ineffective to create any common property interest in favour of the Strata Corporation; and

2. even if effective, its registration was a mistake on her part.

316. Mrs Trentelman relies on RPA s 12(1)(d):

(1)    The Registrar-General may exercise the following powers, that is to say:

…

(d)   The Registrar-General may, subject to this section and upon such evidence as appears to the Registrar-General sufficient, correct errors and omissions in the Register.

317. The power under s 12(1)(d) is conferred on the Registrar-General, not the Court. But the case was conducted on behalf of Mrs Trentelman on the basis that, if satisfied that a correction should be made, the Court would direct the Registrar-General to make it. In the end there seemed to be no dispute from the Strata Corporation (or the Registrar-General) that the Court had power to proceed in this way. On my conclusions, it is not necessary to consider this any further.

Legal effectiveness

318. The parties agreed that the legal effect of the December 2014 subdivision was to be decided by reference to SSFDA and the Strata Schemes (Freehold Development) Regulation 2012 (NSW) (“SSFDR”) made under that Act. SSFDA relevantly permitted a subdivision altering the boundaries of a strata lot so as to create a different lot and an area of common property: s 5(7)(b).

319. The subdivision of development lots was dealt with in SSFDA s 8A, with s 9 dealing with lots other than development lots. The parties agreed that s 9 was the applicable provision, because of the previous expiry of the development contract. In any event no material difference was identified between ss 8A and s 9.

320. The effect of s 9 was that lots other than development lots might be subdivided by registering a plan of subdivision (sub-s (1)) which was to consist of a floor plan, and, if required by the Registrar-General, a location plan. The definition of the term “floor plan” relevantly provided (s 5(1)):

floor plan means a plan, consisting of one or more sheets, which:

(a)    defines by lines (in paragraph (c) of this definition referred to as base lines) the base of each vertical boundary of every cubic space forming the whole of a proposed lot, or the whole of any part of a proposed lot, to which the plan relates,

(b)    shows:

(i)    the floor area of any such cubic space, and

(ii)    where any such cubic space forms part only of a proposed lot, the aggregate of the floor areas of every cubic space that forms part of the proposed lot, …

321. Counsel for Mrs Trentelman submitted that the December 2014 plan of subdivision (including the Pool Notation) was inadequate to effect the transfer of the pool land to common property of the Strata Corporation. This was for two reasons.

322. The first reason was that the plan did not define the vertical boundary of the pool land. The version of the December 2014 plan as originally lodged did not purport to show the pool land by means of surveyed lines (as required by sub-paragraph (a) of the definition in SSFDA, s 5(1); see also SSFDR, cl 7(1)(a)) and the registered version completely omitted any indication of the pool land. The second reason was that the plan did not show the floor area of the pool land. This is a requirement of SSFDA, s 5(1)(b).

323. I did not understand the submission to be disputed by counsel for the Strata Corporation. Instead counsel contended that the effect of the Pool Notation was to convert the pool structure, considered as a “structural cubic space” (see the definition in SSFDA, s 5(1)), into common property. Counsel submitted that this did not require the use of lines and a floor area as is required for an ordinary strata lot.

324. This contention led to a complex argument concerning the interpretation of the SSFDA and SSFDR provisions. I do not propose to resolve this argument. Counsel for the Strata Corporation accepted, as I understood them, that even if the argument succeeded it would only confirm the structure of the pool, without the surrounding air space, as common property. As already noted, this would provide no practical benefit to the Corporation.

Mrs Trentelman’s rectification claim

325. My findings on the mistake claim are set out at [210]-[221]. I have concluded that the operative state of mind was Mr Wyper’s. The inclusion of the Pool Notation appears to have been deliberate on his part, even if it was ineffective to achieve any useful purpose. And even if Mrs Trentelman’s was the relevant state of mind, I am not satisfied that there was any mistake on her part. On these findings, her rectification claim fails.

Strata Corporation’s rectification claim

326. I have described the proposed cross-claim at [26] above. In essence the Strata Corporation’s contention is that the Pool Notation involved a mistake, but not the mistake alleged by Mrs Trentelman. Rather, according to the Corporation, the mistake was the failure to draw the plan in such a way so as to convert both the pool structures and the surrounding air space to common property.

327. Counsel for Mrs Trentelman resisted granting the Corporation the necessary leave to file the cross-claim. But I am satisfied that leave should be granted. The Corporation’s contention arises directly out of the rectification claim by Mrs Trentelman; it picks up her allegation that there was a mistake but asserts that the actual mistake was different. The Corporation did not seek to lead any further evidence. There is no prejudice in allowing it to put its own interpretation on the facts established by the existing evidence.

328. As I have already stated, including the Pool Notation was clearly conscious and deliberate. It is impossible to accept that Mr Wyper intended an outcome under which, at best, the notation created an ownership of the pool structure only, which was of no practical benefit to the Corporation. In that sense, the plan must have involved a mistake on his part.

329. The more difficult question is what mistake Mr Wyper made. It seems unlikely that he intended the plan to convert the pool land into common property in the conventional way. Had he done so he would presumably have complied with the SSFDA requirements concerning lines and areas, as he did for the boundary adjustment between lot 6 and lot 7. Yet that is the rectification sought by the Corporation, in the form of Mr Green’s substitute plan.

330. The jurisdiction to rectify documents is not confined to contracts; it extends to a wide array of other instruments: see Heydon, J D, M J Leeming and P G Turner, Meagher, Gummow and Lehane’s Equity Doctrines and Remedies (5^th ed, 2015, LexisNexis Butterworths) at [27-005]. But rectification of a survey plan creates special challenges. In the present case rectification of the plan would not just require drawing lines around the pool land as Mr Green has done. In order to draw those lines Mr Green has presumably had to undertake his own survey. I cannot be satisfied on the evidence that Mr Wyper ever surveyed the boundaries to the pool land; if he did, there is no evidence of it. The debate about the boundaries of the pool land (see [166] and [240]-[245] above) also indicate how Mr Green has had to confront issues which Mr Wyper did not.

331. In my view this is a case where mistake is established but the Court cannot be satisfied what was intended instead: see Slee v Warke (1949) 86 CLR 271 at 281. The Corporation’s rectification case fails.

Conclusions and orders

332. I have concluded that:

1. the Strata Corporation is entitled by way of proprietary estoppel to an easement in its favour over lot 53 in substantially the same terms as the pool easement which expired in 2017;

2. Mrs Trentelman’s claim for rectification so as to delete the Pool Notation from the December 2014 plan of subdivision fails;

3. the Strata Corporation should have the leave required to file its cross-claim for rectification of the plan of subdivision, but that claim also fails.

333. The effect of this decision is to leave the Pool Notation on the register without deciding its validity, and in circumstances where, even if valid, it is of no use to the Corporation. It would seem to be in the interests of both parties to agree to remove the Notation from the register.

334. It will be necessary to draw up orders to give effect to my conclusions. I will stand the proceedings over to allow that to happen. Any debate about costs should take place at the same time.

335. Conclusion (1) is subject to the possibility of further submissions from Mrs Trentelman (see [309] above). More generally, the hearing and submissions have been disjointed and have taken place over a long period of time (I do not intend this as a criticism of the parties). If any party considers that there is something I have overlooked in this judgment, that should be raised with me before any orders are made.

336. The orders of the Court are:

1. Adjourn the proceedings to 9.30am on 16 March 2021 or such other time as may be arranged with my Associate.

2. Direct that the parties confer on the form of orders to be made to give effect to this judgment and to deal with costs, and, no later than 24 hours before the adjourned hearing, submit proposed orders for this purpose.

Amendments

14 April 2021 - amend cross-referencing at [94]

Decision last updated: 14 April 2021