Young v Owners - Strata Plan No 3529

[2001] NSWSC 1135

Reported Decision: 54 NSWLR 60

New South Wales

Supreme Court

CITATION:	Young & 1 Ors v The Owners S/P 3529 & 2 Ors [2001] NSWSC 1135
CURRENT JURISDICTION:	Equity
FILE NUMBER(S):	SC 2454/99
HEARING DATE(S):	26/07/01, 27/07/01
JUDGMENT DATE:	11 December 2001
PARTIES :	Bruce Donald Young (First Plaintiff) Nateli Solenko (Second Plaintiff) The Owners - Strata Plan No. 3529 (First Defendant) Leonard Wallace Boyd (Second Defendant) Helen Frances Boyd (Third Defendant)
JUDGMENT OF:	Santow J

COUNSEL :	Dr C Birch, SC/ J-J Loofs (Plaintiffs) M D Young (First Defendant)
SOLICITORS:	John McEncroe & Company (Plaintiffs) David Le Page (First Defendant) Boyd House & Partners (Second and Third Defendants)
CATCHWORDS:	PROPERTY -- Strata titles -- Exclusive use by-law foreshadowed which would deprive non-residential lot owners of previous right to use common property including swimming pool and leave it exclusively with residential lot owners -- Nature of that right as proprietary -- Validity of by-law under s52(1)(a) of Strata Schemes Management Act 1996 (NSW) -- Principles of statutory construction -- Same expression in adjacent provisions having different denotation but same connotation -- Relevance of principles concerning expropriation in construction of statute -- Challengeable as fraud on minority and as expropriation under Gambotto principles -- meaning of "expropriation" for that purpose -- Slander of title - Fair Trading Act 1987 (NSW) and meaning of conduct in trade or commerce -- Availability of relief -- prematurity no defence in circumstances.
LEGISLATION CITED:	Fair Trading Act 1987 (NSW) s42 Strata Schemes (Freehold Development) Act 1973, s20 Strata Schemes Management Act 1996 (NSW) s52(1)(a) Strata Titles Act 1973
CASES CITED:	Re Boulton; ex parte Bean (1987) 162 CLR 514 Clissold v Perry (1904) 1 CLR 363 Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 Data Flow v Goodman (1999) 168 ALR 169 Duke of Brunswick v Harmer (1849) 14 QB 185 Gambotto v WCP Limited & Anor (1995) 182 CLR 432 Heydon v NRMA (2001) 36 ACSR 462 Hougton & Anor v Immer (155) Pty Ltd (1997) 44 NSWLR 46 Loudon v Ryder (No. 2) [1953] 1 Ch 423 Metal Manufacturers Limited v Lewis, on appeal at (1988) 13 NSWLR 315 Monier v Szabo (1992) 28 NSWLR 53 Mulwala & District Services Club Ltd v Owners Strata Plan 37724 (2000) 50 NSWLR 458 North Wind Pty Limited v The Proprietors Strata Plan No. 3143 (1981) 2 NSWLR 809 Penney v Penney [1965] NSWR 495 Southern Cross Interiors Pty Ltd (in liq) v DCT (2001) 39 ACSR 305
DECISION:	Foreshadowed by-law invalid without consent.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SANTOW J

No. 2454/99
Bruce Donald Young
First Plaintiff
Nateli Solenko
Second Plaintiff

The Owners - Strata Plan No. 3529
First Defendant
Leonard Wallace Boyd
Second Defendant
Helen Frances Boyd
Third Defendant

JUDGMENT
11 December 2001

INTRODUCTION

1 Can a strata titles “exclusive use” by-law validly take away a right to share in the use of common property, without the consent of those so deprived? This is a question posing important issues both under strata titles legislation and by reference to Corporations Law principles of fraud on the minority and under the Gambotto doctrine. It arises in the following circumstances.

2 From April 1993, the Plaintiffs were registered proprietors of 37 Wolsely Road Point Piper and also of Lot 27 of Strata Plan 3529. The latter confers the right to two car parking spaces in 45 Wolsely Road Point Piper, an adjoining property but not to any residential rights. However, by virtue of their ownership of Lot 27, the Plaintiffs also have an interest in the common property of Strata Plan 3529 which presently confers use of a swimming pool upon the Plaintiffs. The present proceedings follow the Plaintiffs’ strata titling of Lot 37 into three lots. They are directed at precluding an “exclusive use” by-law foreshadowed by the Owners’ Corporation (the First Defendant). If passed, that by-law would deny to the Plaintiffs, and the other purchasers of the new strata titled lots, any entitlement to the common property and thus to use the swimming pool.

3 The First Defendant first foreshadowed passing that exclusive use by-law by letter dated 28 April 1999. This was just two hours before the advertised time for auction of one of the new lots (Lot 2), and according to the Plaintiffs led to the cancellation of the auction. The effect of the foreshadowed by-law would be to limit the use of that swimming pool and common property exclusively to those who owned residential lots in the Strata Title development on 45 Wolsely Road. That excludes the Plaintiffs who merely have the parking lot entitlement and no residential entitlement.

4 The questions for resolution are set out below. The parties have agreed that these questions should be answered first. Then, depending on those answers, the question of damages, if any, should be separately determined by a Master.

QUESTIONS FOR RESOLUTION

5 I start with the central question to be determined, followed by the remaining questions. The answers to the latter are in varying degrees affected by resolution of that central question.

“Is a by-law invalid or otherwise challengeable which purports to deprive the Plaintiffs, as non-residential lot-owners, of the right to use common property particularly as regards the swimming pool, by conferring exclusive use on only the residential lot-owners, when this is done without the Plaintiffs’ consent? This is on one or other of the following contended bases:

(a) that such a by-law contravenes s52(1)(a) of the Strata Schemes Management Act 1996 (NSW) (“the Act”), for lack of “written consent” from the Plaintiffs as “owner or owners of the lot or lots concerned”, that is to say if and insofar as they come within that statutory description in the Act;

(b) that under principles of Corporations Law, it is a fraud on the minority, constituted by the proposed purported exercise by an Owners’ Corporation and its members of its by-law making power for a purpose said to be foreign to the power, namely expropriating the Plaintiffs’ share in, or right to enjoyment of, the common property, or

(c) that it is an expropriation of what is said to be the Plaintiffs’ right to a share of the common property or the right to its enjoyment, being (it is said) a proprietary and not merely contractual right, which expropriation is said to offend the principles regulating the entitlement of a majority to use its power under the Articles of Association to expropriate minorities, as enunciated by the High Court in Gambotto v WCP Limited & Anor (1995) 182 CLR 432 at 444-5.

Having regard to the answer to Question 1 above, did the letter of 28 April 1999 on behalf of the First Defendant convey representations, either expressly or by implication, which constituted a slander of the Plaintiffs’ title, giving rise to damage by reason of the Plaintiffs’ auction of Lot 37 having to be aborted with consequent loss of the commercial opportunity to effect a sale on that evening?

Despite absence of malice as an element of actionable slander of title, are the Plaintiffs nonetheless entitled to a declaration that their rights are not liable to extinction in the fashion asserted by the First Defendant in that letter of 28 April 1999?

Having regard to the answer to Question 1, were there representations in the letter of 28 April 1999 in breach of s42 of the Fair Trading Act 1987 (NSW) which were:

(i) conduct in trade or commerce;

(ii) false in the respects asserted by the Plaintiffs, and hence

(iii) misleading and deceptive?

Having regard to the answers to the foregoing questions, can and should relief nonetheless be refused on discretionary grounds advanced by the Defendants, namely:

(i) prematurity of the dispute;

(ii) availability of relief through the Strata Schemes Adjudicator,

(iii) grant of relief sought would preclude the Owners’ Corporation from testing the reasonableness of any refusal by the Plaintiffs to provide consent to the proposed exclusive use by-law, were such consent required, contrary to the First Defendant’s submission; and

(iv) so far as injunctive relief is concerned the Plaintiffs by letter dated 17 November 2000 wrote asking that an extraordinary general meeting be held to deal with the passing of the proposed by-law which was refused, such that the Plaintiffs are said to have sought both to “approbate and reprobate”, taking into account a further letter of 12 April 2001 concerning possible mediation.

11 I turn now to Question 1

Question 1: Validity of exclusive use by-law passed without consent.

12 Before turning to the legislative scheme now contained in the 1996 legislation (The Strata Schemes Management Act 1996 (NSW) (“the Act”), there is an anterior question. It concerns the proper classification of the Plaintiffs’ current entitlement in relation to the common property; is it a proprietary or merely contractual right? The First Defendant contends that the protection or enforceability of such entitlement is denied by reason of the statutory provisions and their application to what it contends is a mere contractual right.

13 The Strata Schemes (Freehold Development) Act 1973, s20 provides as follows:

“ 20 Body corporate to hold common property as agent for proprietors
The estate or interest of a body corporate in common property vested in it or acquired by it shall be held by the body corporate as agent:
(a) where the same person or persons is or are the proprietor or proprietors of all of the lots the subject of the strata scheme concerned – for that proprietor or those proprietors, or
(b) where different persons are proprietors of each of two or more of the lots the subject of a strata scheme concerned – for those proprietors as tenants in common in shares proportional to the unit entitlements of their respective lots.”

14 It follows from the statutory provision that the relevant rights of the Plaintiffs in the common property are proprietary; they are rights owned by them beneficially as tenants in common in the common property.

15 It is true that the rights which flow from the estate or interest in the common property so held are delineated by the by-laws. These define the nature of its use and enjoyment, any constraints upon it and any conditions applicable such as payment for maintenance and the like. That flows from the statutory scheme under the companion legislation namely the Strata Schemes Management Act 1996 to which I now turn. The relevant rights nonetheless remain proprietary in nature, though their detailed articulation stems from the by-laws.

16 This analysis bears on whether the doctrine of fraud on the power applies to the exercise by an owners corporation and its members of their by-law making power. That this doctrine is capable of so applying in the context of a strata scheme was resolved by the Court of Appeal in Hougton & Anor v Immer (155) Pty Ltd (1997) 44 NSWLR 46 at 53. That case also resolved that the principles governing the expropriation of minority shareholders in Gambotto v WCP Limited & Anor (supra) were capable of application to the operation of a strata title body. The majority in Gambotto described its principles as applying to “an actual or effective expropriation of shares or a valuable proprietary right attaching to shares” (at 444). The present right to exclusive possession can properly be described as a valuable proprietary right in relation to a share in the common property. It is, at the least, proprietary in character, though its delineation be the subject of by-laws pursuant to statute.

17 The First Defendant sought to argue that rights the subject of such exclusive use or special privilege by-laws operated merely in contract, citing North Wind Pty Limited v The Proprietors Strata Plan No. 3143 (1981) 2 NSWLR 809 at 813 to 814 and s44 of the Strata Schemes Management Act 1996 whereby owners corporation and owners are bound to comply with by-laws.

18 As I have explained I do not accept that the proper characterisation of the legal nature of the Plaintiffs’ right in the common property is to equate it merely to the contractual right of a lot-holder entitled to exclusive use of common property. That is the position discussed in North Wind and addressed by s44 of the Act. It is true that s44 renders the by-laws binding upon the owners corporation and the owners (as well as upon any mortgagee or covenant chargee in possession or lessee or occupier). But that does not, of itself, override the proprietary character of the estate or interest held in common property through the body corporate as agent for the relevant proprietors.

19 I turn next to the statutory scheme itself. This is for what light it throws upon the proper construction of those provisions of the current Act (ss51 and 54 in particular quoted in 26 below) which bear upon whether an exclusive use by-law is capable of depriving a lot owner of a pre-existing interest in common property without his or her consent. The interpretation favoured by the Defendants is that the statutory scheme does go so far as to permit a by-law to be passed which, without the lot owner’s consent, took away entirely any exclusive right to use the common property or any shared right of that character; even where, unlike the position here, the owner so deprived is still required to contribute to the proper maintenance of the relevant facility within the common property. I deliberately state the matter at its extreme for that oppressive result is the consequence of the Defendants’ interpretation. I do so having regard to the ordinary legislative presumption that a statute could not be intended to take away or alienate vested proprietary interests without adequate compensation. That proposition has been confirmed in a long line of cases commencing with Clissold v Perry (1904) 1 CLR 363. There a person, whose only title to land was ten years adverse possession, was held entitled to compensation on acquisition. Griffith CJ at 373 said: “In considering this matter it is necessary to bear in mind that it is a general rule to be followed in the construction of statutes such as that with which we are now dealing, that they are not to be construed as interfering with vested interests unless that intention is manifest.” See generally the authorities cited in Pearce and Geddes, “Statutory Interpretation in Australia” 4th edition at 5.1 to 5.13.

20 However, that principle is not unqualified and the Defendants seek to distinguish its application from the present circumstances. In particular the presumption against interference with vested proprietary interests may not, as the authors point out, be applicable to rights which are the creature of statute. Since the rights of an owner of common property is a creature of statute, it may be said that that which the Legislature has given, it may take away. The intention of the legislation in dealing with rights so created by statute must therefore be derived from the legislation itself, without recourse to such a presumption against that deprivation; compare Penney v Penney [1965] NSWR 495 at 498.

21 Whether or not that presumption can be called in aid, for the reasons which I develop below I consider that the Statute does not have the effect that the Defendants contend for. In particular I have concluded, for reasons developed below, that the statute does require the consent of the Plaintiffs before a new by-law can deprive them of their right to share in the exclusive use of the common property relevantly as regards the swimming pool. I so conclude, notwithstanding that the Statute does provide a mechanism for subsequent appeal to the strata schemes adjudicator (s157) with the adjudicator able thereafter to make an order declaring a by-law to be invalid and for appeal against that order to the Supreme Court (see ss158 and 159 of the Act). I do not consider the legislature, by conferring such an appeal mechanism, thereby evinced a legislative intention to render such proprietary rights liable to extinction, though it may render a regime said to do so marginally less oppressive.

Legislative history

22 It is convenient that I start with the legislative history of the Strata Schemes ManagementAct 1996. Its current version is first recognisable in the amendments to the 1973 Strata Titles Act effective in 1987 but now appearing in the 1996 legislation in rearranged form from the 1987 version.

23 The Strata Titles Act in 1973, the predecessor legislation to the 1996 legislation provided in s58(7) as follows:

“ 58(7) [Exclusive use by-laws] Without limiting the generality of any other provision of this section, a body corporate may, with the consent in writing of the proprietor of a lot pursuant to a unanimous resolution make a by-law in respect of that lot conferring on that proprietor the exclusive use and enjoyment of, or special privileges in respect of, the common property or any part thereof upon such terms and conditions (including the proper maintaining and keeping in a state of good and serviceable repair of the common property or that part of the common property, as the case may be, and the payment of money by that proprietor to the body corporate) as may be specified in the by-law and may, pursuant to a unanimous resolution, make a by-law amending, adding to or repealing any by-law made under this subsection if the proprietor of the lot at the time the by-law is made to effect the amendment, addition or repeal has given written consent to its being made.”

24 In 1987, that legislation was amended in two significant respects. The 1973 version of s58(7) required unanimity of all lot-holders in the passing of the resolution, and in addition the written consent only of the lot-holder expressly stipulated to have benefited from the proposed by-law. However, the 1987 amendment removed that unanimity requirement and substituted the passing of a special resolution. It then however removed the express reference limiting written consent to the lot-holder benefited by such by-law. That latter requirement was replaced in favour of what I consider to be a more comprehensive requirement, that of written consent from “the proprietor or proprietors of the lot or lots concerned”. The question then becomes, are those deprived of a (shared) exclusive use included in that expression as proprietor or proprietors of “lots concerned”, or is that expression still limited only to those benefited, despite the changed and wider wording? It would, prima facie, be surprising indeed if those injured by the deprivation were omitted from the need for consent, whilst those benefiting – and only those -- were covered by that safeguard of consent.

25 The Plaintiffs correctly point out that had the legislature intended that there be thereafter no protection at all for disenfranchised lot holders (disenfranchised in the sense that unanimity was no longer required), it would have been open to have kept the express terminology employed in the 1973 version (s58(7)). The 1973 legislation limited the need for written consent only to lot holders benefited, or benefited with a reciprocal obligation to contribute to proper maintenance. Instead, the legislature discarded that terminology in favour of a more comprehensive category of “the proprietor or proprietors of the lot or lots concerned”. That reference to lot(s) concerned includes reference to their proprietors. That suggests that the phrase “lot or lots concerned” was intended to cover comprehensively all those affected by the new by-law, whether beneficially or otherwise.

26 The later 1996 legislation, apart from some rearrangement of the relevant provisions from the 1987 version, produced the following corresponding provisions, namely ss51 and 52. I shall also quote the immediately contextual s53 and s54(1), the latter of which is strongly relied upon by the Defendants.

“ Division 4 Special provisions for by-laws conferring certain rights or privileges
51 Application of Division
(1) This Division applies to a by-law conferring on the owner of a lot specified in the by-law, or the owners of several lots so specified:
(a) a right of exclusive use and enjoyment of the whole or any specified part of the common property, or
(b) special privileges in respect of the whole or any specified part of the common property,
and to a by-law that amends or repeals such a by-law.
(2) This Division does not prevent an owners corporation making a by-law in accordance with section 54 of the Community Land Management Act 1989
52 How does an owners corporation make, amend or repeal by-laws conferring certain rights or privileges?
(1) An owners corporation may make, amend or repeal a by-law to which this Division applies, but only:
(a) with the written consent of the owner or owners of the lot or lots concerned and, in the case of a strata leasehold scheme, the lessor of the scheme, and
(b) in accordance with a special resolution.
(2) A by-law to which this Division applies may be made even though the person on whom the right of exclusive use and enjoyment or the special privileges are to be conferred had that exclusive use or enjoyment or enjoyed those special privileges before the making of the by-law.
(3) After 2 years from the making, or purported making, of a by-law to which this Division applies, it is conclusively presumed that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed
53 Can a by-law contain conditions?
A by-law to which this Division applies may confer rights or special privileges subject to such conditions as may be specified in the by-law (for example, a condition requiring the payment of money by the owner or owners of the lot or lots concerned, at specific times or as determined by the owners corporation.
54 By-law must provide for maintenance of property
(1) A by-law to which this Division applies must:
(a) provide that the owners corporation is to continue to be responsible for the proper maintenance of, and keeping in a state of good and serviceable repair, the common property or the relevant part of it, or
(b) impose on the owner or owners concerned the responsibility for that maintenance and upkeep. …”

27 The Defendants contend that no consent is required from the lot owner whose prior rights are to be extinguished but only from those lot owners who are to acquire exclusive use. Such a construction, ex facie, would deny the right to consent to those most adversely affected and confer it on those who are thereby benefited. A conclusion so absurd and unreasonable in effect invites a very careful reading of the legislation to see if it is compelled by its plain words. The onerousness of such a result, if it indeed is the legislative consequence of the plain words used, would not be sufficiently mitigated by the fact that the deprived lot owner was relieved thereafter from any associated maintenance obligation, as may or may not occur. Here it is true the Plaintiffs will henceforth be released from the costs of maintenance of the relevant common property, though correctly described by the Defendants in their submissions as microscopic. As I have said, the construction contended for by the Defendants must as a matter of logic apply equally to the situation where there were no extinguishment of the obligation to contribute to maintenance, an even more oppressive result. On the Defendant’s contention, that would leave the deprived lot owner with only such rights of a limited kind to object (and appeal) after the event as are allowed by the statute. Those rights are to seek revocation of the amendment of the orders by recourse to ss157 to 159 of the Act to which I have earlier made reference. It is well-settled that a construction of legislation that leads to a manifestly absurd result is not to be adopted unless compelled by sufficiently clear language which leaves no room for an interpretation that avoids such consequence.

28 The Defendants urge that the process of interpretation should be informed also by recourse to the Minister’s second reading speech introducing the 1987 amendments to the 1973 Strata Titles Act. The Defendants contend that recourse thereto throws light on the legislative scheme that was then repeated in the 1996 Act (subject to some minor re-arrangement of the relevant sections). The particular passage relied upon by the Defendants is underlined and I have quoted it along with its immediate context as that context bears upon the remedial purpose as well.

“These amending bills arise from the most recent recommendations of this committee and reflect the Government’s desire to simplify the management provisions of the Strata Titles Act by removing unnecessary regulation. They also reflect the Government’s determination to keep the Strata Titles Act in step with industry practices, thus providing bodies corporate with the means to equitably manage more complex schemes such as mixed commercial-residential strata schemes. In this latter area the major proposals, which are contained in schedule 1 of the bill, seek to remedy an increasing problem whereby special services are being provided to only some proprietors – for example, an airconditioning system servicing a ground floor shopping arcade – are being paid for by all proprietors. This is because of the management provisions of the Act which require that all of the proprietors have to contribute to the cost of operating and maintaining a service if it is located on common property.
This is clearly inequitable and it is proposed to introduce the concept of limited common property to enable the body corporate to charge those who use the service its cost in proportion to the benefit they derive from it. This will be achieved by allowing a developer or body corporate to make a limited common property by-law granting exclusive use of part of the common property to certain proprietors. The by-law would contain all necessary details to ensure the effective upkeep and maintenance of the common property. The developers or original proprietors would be able to make such by-laws at the time of registration of the strata scheme, thus allowing them to provide in advance for the equitable operation of special services. Also, consumers buying into a strata scheme would be able to clearly establish their responsibility for the operating and maintenance costs of any service provided from common property. Bodies corporate will be able to make such by-laws in the same manner s they can for any general by-law.
The proposals also include a number of measures to protect the interests of both individual proprietors and bodies corporate. The first is that for such a by-law to be valid, the body corporate must first obtain the written consent of the proprietors who will be given the exclusive use of the common property. This provides a proprietor with a safeguard against unknowingly being given responsibility for the maintenance of part of the common property. For example, a proprietor absent on vacation might otherwise return to find that he had been granted exclusive use of the roof of the building with attached responsibilities for its upkeep and maintenance. The other measures centre around the ability of the body corporate or a proprietor to apply to the Strata Titles Board for a determination if either the body corporate has unreasonably refused to make a limited common property by-law, a proprietor has unreasonably withheld his or her consent to the by-law, or a dispute arises over the method of determining contributions towards the upkeep of the common property.” [emphasis added]

29 The Defendants rely upon the emphasised passages as supporting strongly a reading that would treat as the exclusive remedial purpose elimination of the requirement of unanimous consent. Its purpose (it is said) is then to substitute a regime where written consent is only required of the owner or owners of the lot or lots “concerned”; that is to say, concerned in the limited sense of receiving the benefit of exclusive use but not in the sense of deprived of a pre-existing exclusive shared use. The justification for what must prima facie be an entirely paradoxical result is said to be that the Minister in that second reading speech is dealing only with the circumstances where exclusive use is conferred over common property accompanied by an obligation for effective upkeep and maintenance of that common property, thus reciprocally burdening those who are thereby to be benefited. It is said that it would be quite unreasonable for such persons to be so burdened without their having first to give written consent.

30 One may readily accede to that last proposition as an example of where consent should be required. This is without acceding to the supposed consequence that this is the exclusive ambit of the regime which replaced the requirement for unanimous consent. It appears moreover that the Defendants would also treat the new regime as covering, as a matter of logic, the situation where the lot owner was given exclusive use of the common property with no obligation to contribute to its upkeep, further emphasising the absurdity and anomaly of such a regime.

31 Moreover there is a difficulty in the way of that regime being compatible with what the Minister says elsewhere in her second reading speech. She refers to what is said to be “an increasing problem whereby special services are being provided to only some proprietors - for example an airconditioning servicing a ground floor shopping arcade”, which are being paid for by all proprietors. It is said that this legislation will remedy that inequity by allowing a developer or body corporate to make a limited common property by-law grounding exclusive use of part of the common property to certain proprietors, such a by-law containing all necessary details to ensure effective upkeep and maintenance of the common property, presumably only by those proprietors that are granted the exclusive use.

32 Significantly, it is then said by the Minister that this would enable the developers or original proprietors “to make such by-laws at the time of registration of the strata scheme”. However, this would be a circumstance where no-one would be yet the owner of a lot and thus there would be no-one who would be deprived of a pre-existing user right. That emphasises that the Minister would have been conscious that thereafter depriving any existing lot owner of a pre-existing user right, exclusive or not, could work an inequity if it was without consent. That would hardly be expected in remedial legislation having the purpose described by the Minister of effectuating “the Government’s desire to simplify the management provisions of the Strata Titles Act”.

33 In any event, that the Minister chose to highlight one circumstances in which written consent would be required is hardly to justify the conclusion that this is the only circumstances contemplated by the legislation as requiring such consent, when construing the words “the owner or owners of the lot or lots concerned” who by s52(1)(a) are required to give written consent.

34 In any event, there has been repeated judicial cautioning against drawing general conclusions from the limited exposition possible in a second reading speech; see, for example, Mahoney JA in Metal Manufacturers Limited v Lewis, on appeal at (1988) 13 NSWLR 315 at 326 and Palmer J in Southern Cross Interiors Pty Ltd (in liq) v DCT (2001) 39 ACSR 305 a 329. Thus in Monier v Szabo (1992) 28 NSWLR 53 at 61-2 per Kirby JA (as he then was), noted that there was often a disharmony between the words of a statute and that of a second reading speech, and that the court’s ultimate loyalty was to “the purpose of Parliament as expressed in the legislative language”, citing Mason CJ, Wilson and Dawson JJ in Re Boulton; ex parte Bean (1987) 162 CLR 514 at 518.

35 Turning now to the other arguments put by the Defendants related to the specific text of the 1996 legislation and its predecessor amendments of 1987, I find that none of these compel that interpretation contended for, with its manifestly oppressive result.

36 Perhaps the strongest argument which the Defendants mount is that s54(1)(b), in using similar language to the reference in s52(1)(a) to “the owner or owners of the lot or lots concerned (compare “the owner or owners concerned”) could not have intended a different sense to that phrase. Furthermore, if s54(1)(b) were capable of applying not only to the owner or owners granted exclusive use but also to the owner or owners who are thereby deprived of pre-existing use rights, this would enable a by-law to impose on the deprived owner who has suffered the injury of deprivation, the further injury of being made responsible for maintenance and upkeep, though having no further use rights of that which had to be maintained.

37 There is however a short answer to that argument. The language used in s52(1)(a) flows from that in s54(1)(b) in a way which could justify a narrower reading of the ambit of s54(1)(b) in terms of what it denotes. Thus s52(1)(a) connects the word “concerned” to the expression “the lot or lots” whereas in s54 “concern” qualifies “the owner or owners”. It would be perfectly logical for s52(1)(a) to refer in a broad sense to the “lot or lots concerned” with “concerned” having the dictionary sense of “involved”. “Involved” is a word of wide denotation, capable of embracing both those benefited and those injured by the relevant law. “Lots” as inanimate objects are hardly to be thought of as having the alternative dictionary meaning of “interested”, or “troubled or anxious”. It is true that the ultimate connection is back to the owners. They alone have the capacity to use and enjoy the specified part of the common property or suffer its deprivation, or to enjoy special privileges or suffer their deprivation. But the language of “concerned” in s52(1)(a) is still apt to pick up both categories, namely those upon whom is conferred the right of exclusive use and enjoyment of the special privilege, and those who are deprived of that use, exclusive or otherwise, of the relevant special privilege. Such an interpretation avoids the absurdity and anomaly to which I have earlier made reference.

38 Thus I consider that when it comes to s54(1)(b), the focus is more narrowly upon the owner or owners concerned in the subject matter of maintenance and upkeep to which s54(1)(b) is alone directed. It precludes the by-law leaving no one responsible for maintenance and upkeep. The owner would cease to be “concerned” in maintenance and upkeep if by the by-law that owner were henceforth released from that responsibility, with the owners corporation taking it over. Whereas that owner would remain “concerned” if the by-law continued to impose that obligation on the owner(s) concerned. That suggests, in its context, that the instances denoted by the word in s54(1)(b) are narrower in scope than those covered by s52(1)(a). That said “concerned” in each of s54(1)(b) and s52(1)(a) still has the same essential connotation of defining features.

39 To sum up. While one would not ordinarily expect to find a different meaning given to the same phrase in adjacent legislative provisions, first the language and context here is sufficiently different to justify what is a difference only in denotation, not connotation or essential meaning. Second, that difference in denotation is the more readily justified where not to make it would produce its own manifest absurdity in that context.

40 The Plaintiffs’ construction of s58(7) of the 1987 Act and s52(1) of the 1996 Act still permits a relaxation of the management provisions of the Act and the removal of unnecessary regulation as identified in the Minister’s second reading speech. A principal vice of the 1973 version of s58(7) was no doubt that owners who had no interest at all in relation to the making of an exclusive use by-law, such as owners who never had an exclusive or other use and would not acquire that use by virtue of the by-law, were still able to frustrate the making of such by-laws by denying the consent required for a unanimous resolution. The possibility for such capricious behaviour was removed by the twofold amendment effected by the 1987 Act. That required only the passing of a special resolution and, sensibly, the written consent of the owners “concerned”. This is either in the sense of those who are to receive the benefit of exclusive use, with the possibility of an accompanying burden, and those who are deprived of pre-existing use rights. Each are “concerned”, not just the former.

41 The fact that the 1987 amendments permit the owners corporation to determine who “owner or owners of the lot or lots concerned” might be, in place of the unanimous consent requirement, is an important de-regulation. It liberates owner corporations of the veto power of the vexatious lot holder. In the vast majority of cases, it is not difficult to determine whether a lot-holder might be an “owner of a lot concerned”. It will be readily apparent whether existing rights are threatened or an economic burden created, or for that matter even where a privilege is conferred with no economic burden, since some owners may not wish that for themselves for whatever reason, unusual as that may be. In each case, the relevant lot is “concerned”. For the small percentage of cases where some complexity may attach, that does not diminish the value of the intended reform or lead to the conclusion that the language does not have the meaning which its words are capable of bearing and which avoids the anomalies earlier identified.

Summing up

42 Section 52(1)(a) of the Act requires the written consent of the owner or owners of Lot 27 for a by-law to be capable of depriving such owner or owners of a pre-existing use right in relation to the common property, whether or not that deprivation were accompanied by release from any further obligations in relation to maintenance and upkeep. In particular, the Plaintiffs who would be in that position as owners “concerned” are not reduced to persuading an adjudicator or court that such a by-law should be subsequently revoked, following the procedure first of adjudication and then of appeal to the Supreme Court pursuant to the provisions of ss157 to 159 of the Act. The proposed by-law foreshadowed in the faxed letter of 28 August 1999 could not therefore be passed so as to be rendered valid and effective in the absence of written consent from the Plaintiffs. Nor would such a by-law escape the requirement of written consent, merely because the by-law specified only the lots which were to be granted the right of exclusive use and enjoyment and made no express mention of the lots to be thereby deprived of such use and enjoyment. I view s51(1) as enabling such a by-law to be passed and being part of a code which states exhaustively the statutory basis which alone permits such a by-law. Put simply, if a valid by-law were sought to be passed depriving the Plaintiffs of a pre-existing right of exclusive use and enjoyment of that part of the common property as consisted of the swimming pool, first that by-law would need to specify both lots to be conferred with the right of exclusive use and enjoyment of the relevant part of the common property and second, the lots to be deprived of use and enjoyment of the relevant part of the common property. Then consent of the owner deprived (as well as owners benefited) becomes an essential requirement for such by-law to take effect.

Fraud on the minority and expropriation

43 It is convenient that I deal with both these bases of challenge together, though my earlier conclusion means that it is not strictly necessary to consider these alternative bases of attack.

44 I have already identified the nature of the proprietary interest conferred by the relevant legislation, albeit by-laws may bring about its delineation. The Plaintiffs’ right as a tenant in common of the common properties is sufficient to permit them to lodge a caveat had they so chosen to prevent the registration of any by-law affecting common property alleged to be invalid; see Mulwala & District Services Club Ltd v Owners Strata Plan 37724 (2000) 50 NSWLR 458, implying that such a right must be an interest in land and accordingly a property right.

45 But in any event, the doctrine of fraud on the minority is capable of application in the present circumstances, save insofar as statute precludes that. In circumstances where no written consent has been sought or foreshadowed in the relevant correspondence, the doctrine of fraud on the minority is capable of application in relation to the contemplated expropriation of the Plaintiffs’ minority rights to a shared use of the relevant part of the common property. Such a use of a by-law prima facie would be a fraud on the power being for an improper purpose, on the assumption that such power existed. As I have earlier concluded, such statutory power does not exist, absent written consent. If I were wrong, the exercise of that power could be restrained as I explain.

46 The Defendant attempts to avoid this consequence by contending that the rights held by the Plaintiffs are undeserved, or somehow unnatural, or are inadequately paid for in terms of a contribution to maintenance charges. Those contentions are quite beside the point. Even if it were in some sense true that the rights were morally undeserved and unduly generous having regard to the miniscule contribution made by the Plaintiffs, the fact remains that they have those use rights legitimately (presumably reflected in what they paid to buy Lot 37 limited Lot 27 by Deed). The proposed by-law would extinguish them. Indeed the disparity between their cost and their worth emphasises the extent of the foreshadowed deprivation.

47 It is true that in Gambotto the majority considered that the exercise by members of their power to alter the constitution of the company to expropriate the shares of a minority would still be capable of being exercised for a proper purpose and indeed only be so capable of being exercised, if it were to remove a detriment to the company.

“(i) It is exercisable for a proper purpose; and (ii) its exercise will not operate oppressively in relation to minority shareholders. In other words, an expropriation may be justified where it is reasonably apprehended that the continued shareholding of the minority is detrimental to the company, its undertaking of the conduct of its affairs -- resulting in detriment to the interest of the existing shareholders generally -- and expropriation is a reasonable means of eliminating or mitigating that detriment.
Accordingly, if it appears that the substantial purpose of the alteration is to secure the company from significant detriment or harm, the alteration would be valid if it is not oppressive to the minority shareholders.” At 445
The majority emphasised that an expropriation merely to advance the interests of the company as a legal and commercial entity or those of the majority, albeit the great majority, would be insufficient justification; at 446.

48 It is impossible to conclude from the facts in the present case that the Plaintiffs’ use rights, which in practice merely adds a further family to the two families in the duplex previously constituted by Lot 27 as users of the pool, constitutes a material detriment in the sense used in Gambotto. Nor could it be said that the relatively miniscule contribution for that use is itself detrimental to the owners corporation, its undertaking or the conduct of its affairs as used by the majority in Gambotto. This is because it is clear that “detriment” is not demonstrated merely by showing that the proposed expropriation would advance the interests of the company as a legal and commercial entity or those of the majority. Moreover given the willingness of the Plaintiffs to submit to an order calling for a more proportional contribution, even such detriment as its absence bespeaks will be removed.

49 It is nothing to the point for the Defendants contend that the only natural use of common property by the car parking spaces is to walk or drive to and from Wolsely Road on the western boundary of the land to the car parking spaces and there to park. Nor that the use made of the rear pool and garden area is an entirely unnatural one (whatever that may mean) since this too misses the point. Speculation as to why the miniscule contribution to maintenance was arrived at add nothing either.

50 As to detriment, though the Plaintiffs do not concede that they are obliged to do so, they have indicated that if imposed, they would not object to a condition of relief being the requirement to make a reasonable contribution to maintenance. Moreover, in the events that have happened, subject to consideration of the matters pertaining to relief to be discussed latter, my earlier conclusion concerning the need for, and lack of, consent under the Statute means that the Plaintiffs are not required to resort to common law or equitable remedy in any event.

51 Finally, it is simply nonsense to say that in considering reasonableness, the loss of any right to use the physically remote pool and garden is counter-balanced by the foreshadowed provision which places the financial burden of maintenance and upkeep on the residential lots. The fact of the matter is that the Plaintiffs’ contribution is miniscule in relation to that cost. Whether that be reasonable or not, that is the valuable right which the First Defendant intends to extinguish by the foreshadowed by-law.

52 It remains to consider in relation to the Gambotto principles whether “expropriation” comprehends extinction of rights as distinct from the compulsory taking of another’s property to oneself by way of transfer. The Court of Appeal in Heydon v NRMA (2001) 36 ACSR 462 provided differing interpretations as to the meaning of “expropriation”. Clearly enough were the statutory scheme to have been followed by obtaining written consent, the issue of expropriation would not arise. But it not having been followed, there is the question whether the view expressed by Malcolm AJA, defining “expropriation” as limited to the transferring of another’s property to oneself (at 516-8) should be accepted. While the view expressed by Malcolm CJ is to be treated with respect, I prefer the reasoning of Ormiston AJA who rejected the submission that Gambotto does not apply to the mere removal of rights by way of their compulsory destruction in the following passage (para 577):

“Thus I would conclude that, although the word “expropriation” is ordinarily wide enough to comprehend not merely compulsory acquisition but also compulsory destruction of rights, the High Court in Gambotto was concerned primarily with amendments to articles which have the effect of destroying the minority’s shareholding or other membership rights or of placing those rights in the hands of the majority shareholders, even if the amendments are not necessarily intended principally to give the majority the financial advantages attaching to those shares but are more directed to excluding the minority from continuing to exercise membership or other related rights in the corporation.”

53 The limited view of expropriation suffers from its preference for form (legitimate compulsory extinction artificially distinguished from illegitimate compulsory transfer) over substance. To work a compulsory extinction is just as much a deprivation or expropriation as a compulsory transfer. Extinction leaves the remainder to “inherit the earth” just as they would if beneficiaries of a compulsory transfer.

54 There is nothing in the judgment of McPherson AJA to the contrary of that view.

Conclusion

55 Unless I were wrong in my earlier conclusion that written consent is required to effect an extinction of the rights of the Plaintiffs in the manner contemplated by the proposed by-law, pursuant to s52 of that Act, the absence of such consent would make the extinction not only invalid under the Act but also successfully challengeable as either a fraud on the minority or a contravention of the Gambotto principles, as constituting an expropriation of the Plaintiffs’ rights, being rights which are more than merely contractual but have a proprietary basis or character.

Question 2: Slander of Title and
Question 3: Declaration

56 It is convenient to deal with these questions together. The Plaintiffs’ contentions start with the proposition that the letter of 28 April 1999 from Mr Le Page, solicitor for the Defendants, to the auctioneer on the day of the proposed auction of 37A Wolsely Road, Point Piper, upon its proper construction, conveyed to the auctioneer the following representations,

“(a) The Defendant was entitled to make a by-law extinguishing the plaintiffs’ right to use of the swimming pool and other common property of SP 3529.
(b) That the defendant intended and would in due course make such a by-law
(c) That owners of Lot 27, including purchasers of any interest in Lot 27 would consequently not be entitled to enjoy use of the swimming pool and other common property of SP 3529.”

57 I agree with that first proposition. There is no suggestion that the letter contemplated any written consent. Rather it contemplates, as a matter of sufficiently formed intention as would require warning to potential buyers, that the by-law would be passed extinguishing the Plaintiffs’ right to use the swimming pool. This is with the clear implication that this would be done without seeking the Plaintiffs’ consent. It is disingenuous for the Defendants to suggest that the Owners’ Corporation could in any event appeal any lack of written consent from the Plaintiffs (s158(1)(b) of the Act), when there is no suggestion that the Owners’ Corporation intended to seek the written consent in the first place.

58 The elements in the action for slander of title are set out in Halsbury’s Laws of England, 4th edition (Vol. 28) at para 276. The Plaintiffs must prove:

(i) falsity;

(ii) publication and disparagement of the Plaintiffs’ title;

(iii) malice; and where necessary,

(iv) special damage to the Plaintiffs.

59 The Plaintiffs then contend that malice in the requisite sense might be inferred, in the present case in the following circumstances:

(i) the letter of 28 April 1999 was sent only several hours prior to the auction,

(ii) the letter was sent to the auctioneer without notice to the Plaintiffs;

(iii) on the evidence of the Defendants’ witness, Mr Notley, stopping the Plaintiffs or their successors in title making use of the swimming pool facility had been considered by members of the First Defendant for many months beforehand;

(iv) although the Defendants’ executive committee had obtained legal advice, it appears that the advice contained at least the proviso that any decision by a special majority under the Act might be liable to challenge before the appropriate tribunal under the legislation (see Notley affidavit, para 6);

(v) letter of 28 April 1999 made no reference to the entitlement to challenge before the appropriate tribunal;

(vi) after causing the auction to abort the First Defendant and its members failed to properly follow up and respond to the Plaintiffs’ request for explanation regarding their threat (see affidavit of Plaintiff Mr Young sworn 13 August 1999); and

(vii) after aborting the auction the First Defendant’s members promptly abandoned the proposal to immediately pass the by-law, once faced with the threat of legal action.

60 It is then contended that it may be concluded from the above facts that the most probable explanation of the letter of 28 April 1999 was the desire of the First Defendants and its members to inconvenience the Plaintiffs in their attempt to sell the property, in the hope this would give a tactical advantage, perhaps a settlement upon favourable terms.

61 It is then said (and I would accept) that the 28 April 1999 letter was the cause of the auction aborting on that date, and that the Plaintiffs lost the commercial opportunity to effect the sale that evening. It is then contended that there is no difficulty in the present instance in the Plaintiffs establishing special damage, for example the loss of an opportunity, although the prospective opportunity is to be determined as a separate issue; see Sellars v Adelaide Petroleum NL (1994) 179 CLR 332. Any action for damage, if otherwise available, still depends on whether that loss of opportunity actually gave rise to damage taking into account any subsequent increase (if such there were) in the value of the property.

62 Hence it can be said that the gravamen of the Plaintiffs’ case is that there is an implied false representation that the by-law could be passed without the requirement of first obtaining written consent, even if the absence of such consent could itself be the subject of proceedings brought pursuant to s158(1)(b) of the Act, based on such consent being unreasonably refused. Further, that this involves a published disparagement of the Plaintiffs’ title, so far as it impliedly represents that the title is defeasible in that way, that is defeasible without obtaining written consent.

63 While I accept that a representation was made broadly to the effect stated, more precisely it is a representation as to the effect of a by-law but not a representation as to title itself. In that sense, the potential extinction of the Plaintiffs’ title still presupposes that the title exists. What is false is the suggestion that it can be defeated by a by-law without obtaining the requisite consent either voluntarily or pursuant to the procedures in s158 being successfully pursued. To my mind that is not a disparagement of the title itself.

64 If I were wrong in that, I would nonetheless conclude that the relevant disparagement did not occur with the necessary malice but represented more likely a genuinely held view as to the entitlement of the Defendants to pass a by-law without requirement for written consent, even if, as I have concluded, that view was misconceived. Failure to refer to the other matters identified by the Plaintiffs (see para 30 of the Plaintiffs’ written submissions of 26 July 2001) does not sufficiently support an allegation of malice.

65 Assuming in the Plaintiffs’ favour that there was nonetheless publication, on the basis that publication to a plaintiff’s agent is publication (see Gately on Libel and Slander (Sweet & Maxwell) 9th ed, para 6.1 citing Duke of Brunswick v Harmer (1849) 14 QB 185 and the authorities and footnotes 45 to 50) nonetheless there is a further difficulty in the way of the Plaintiffs. As I have said, it has not yet been shown even in a general sense that loss of the economic opportunity to sell that evening would indeed have led to the Plaintiffs suffering special damage, as that depends upon whether or not the property increased in value thereafter. However, as damage has not been argued before me, it would be open to the Plaintiffs to remedy that omission should that aspect be pressed further.

66 As to the question of whether, absent malice on the part of the First Defendant, the Plaintiffs are nonetheless entitled to a declaration that their rights are not liable to extinguishment in the fashion that the First Defendant has asserted in his letter (see Loudon v Ryder (No. 2) [1953] 1 Ch 423), I do not need to reach any conclusion on that matter. This is because even if relief should be denied on discretionary grounds (as to which see Question 5 below) my answer to Question 1 confirming the requirement for statutory consent means that the Plaintiffs are entitled to such a declaration on that footing in any event.

Conclusion

67 The Plaintiffs’ claim based on slander of title is not made out. The occasion for making a declaration based on slander of title does not arise, as such a declaration may sufficiently be made by reason of the answer to question 1, but subject to consideration of any relevant discretionary ground under question 5.

Question 4: Fair Trading Act

68 I have earlier concluded that there was an implied (false) representation that the First Defendant was entitled to make a by-law extinguishing the Plaintiffs right to use of the swimming pool and other common property of S/P 3529, without obtaining the Plaintiffs’ written consent in circumstances where refusal of that consent might be the subject of challenge pursuant to s158 of the Act. It follows that such representation, though implied, was misleading and deceptive. I do not accept the Defendants’ contention that all the letter amounted to was a mere statement of future intention (see 76 and 77 below). Quite clearly the context in which the letter was written and the request in relation to the auction from the auctioneer was calculated in a misleading way to convey the probability of a future defeasance or extinction of the Plaintiffs’ rights with respect to the common property. In that sense it was to influence the outcome of the auction if not to cause it to be aborted. It matters not whether or not the statements expressed and implied were made with malice so far as s42 of the Fair Trading Act is concerned.

69 The remaining question is whether the conduct of the First Defendant in sending the letter was conduct “in trade or commerce” for the purposes of s42 of the Fair Trading Act.

70 The Plaintiffs’ argument is that although the letter was sent by Mr Le Page, solicitor, it was clearly sent on the instructions of the First Defendant; see the affidavit of Mr Notley sworn 12 November 1999. The First Defendant is a corporation formed for the management of S/P 3529. There are some ten proprietors who are members of the Corporation and who pay fees to the Corporation in exchange for the services associated with the management, repair and maintenance of the property. Thus it is clearly to be concluded that the First Defendant is itself engaged in trade and commerce, namely the business of managing a residential block of units.

71 However the Defendants contend that the letter merely foreshadowed an intention to pass a by-law; accordingly, that the communication of that intention fell short of the test for engagement “in trade or commerce” set forth in the joint judgment of Mason CJ, Deane, Dawson and Gaudron JJ in Concrete Constructions (NSW) Pty Limited v Nelson (1990) 169 CLR 594 at 602 to 605. Thus “conduct in trade or commerce” refers only to “conduct which is itself an aspect or element of activities or transactions which, of their nature, bear a trading or commercial character. So construed … the words in “in trade or commerce” refer to the ‘central conception of trade or commerce’ and not to the ‘immense field of activities’ in which corporations may engage in the course of carrying on some overall trading or commercial business.” (at 603) At 604 the court concluded: “what the section is concerned with is the conduct of a corporation towards persons be they consumers or not, with whom it (or those whose interests it represents or is seeking to promote) has or may have dealings in the course of those activities or transactions which, of their nature, bear a trading or commercial character.”

72 With some hesitation, I would conclude that the conduct of the First Defendant in writing the relevant letter was in the course of carrying on the business of managing a residential block of units in that central sense laid down by the High Court as prerequisite for s42 (or s52) jurisdiction to be enlivened. To characterise a letter dealing with a proposed by-law as somehow peripheral to that central conception of trade or commerce could not ultimately be sustained once it is recognised that the writing of such a letter would be very much a core activity of the management of the residential property being itself trade or commerce. In that regard, the trade or commerce certainly need not be engaged in by the recipient of the letter being the auctioneer, though he was in any event also engaged in trade or commerce. In that regard, the observation of Toohey J in Concrete Constructions (NSW) Pty Limited v Nelson (supra) at 613 is pertinent, as explained by Hely J in Data Flow v Goodman (1999) 168 ALR 169 at 172. Toohey J held that for s52 jurisdiction to be enlivened, conduct must be in trade or commerce, but not necessarily that of a person engaging in the relevant conduct. Examples of the application of this principle are usefully collected in Data Flow (supra) at 172 to 173.

Conclusion

73 Section 42 of the Fair Trading Act was contravened by the implied representation earlier identified, as constituting misleading and deceptive conduct in trade or commerce.

Question 5: Relief

74 The principle ground put by the Defendants for denying relief on discretionary grounds is prematurity. I agree with the Plaintiffs’ contention that the construction of the letter of 28 August 1999 contended for by the First Defendant is not sustainable. That is, in seeking to reduce the impact of that letter upon a reader to a mere indication that strict compliance with the requirements of the 1996 Act was proposed by the First Defendant in making the proposed by-law, and that a democratic vote would determine the fate of the existing use right, such that the letter could be said to have contemplated the possibility of the by-law not being made.

75 In particular I agree with the Plaintiffs’ contention that the clear words of the letter, particularly the last sentence of paragraph 3, exclude this construction. In paragraph 3 having indicated that the proposed by-law will confine the use of the swimming pool to residential owners, the last sentence provides that the by-law “will exclude the owner of Lot 27” from such entitlements and their responsibility from paying such entitlements; [emphasis added]. Moreover, the letter does not suggest that there is any doubt that the by-law will be passed and has no statement of any qualification upon the capacity so to pass it, in particular the essential qualification of obtaining written statutory consent.

76 Thus the reasonable meaning conveyed in the letter is that the First Defendant intended then and there to pass a by-law which had the effect of precluding the use of the swimming pool. That intention has never been withdrawn. On the contrary, the Defendants’ actions including the vigorous and unyielding defence of the matter on this preliminary point make it clear that the Defendants intend to pass their by-law which (if valid) would have such effect if permitted to do so. Whether or not the by-law has been properly formulated is nothing to the point given the clear evincement of that intention. Indeed paragraph 8 of Mr Notley’s affidavit of 12 November 1999 makes it perfectly clear that the intention of the Owners’ Corporation was to pass an exclusive use by-law as quickly as possible.

77 That the First Defendant has still not passed the proposed by-law is not to the point given that it has not withdrawn the threat to do so. The Plaintiffs are entitled to have that threat removed by vindication of the actions they have brought in the present proceedings. They are likewise entitled to have removed the blight upon their future sale prospects from this continuing threat. It is nothing to the point to say that until the by-law has been made, no rights under ss157 or 158 accrue, since the non-consenting Plaintiffs’ rights do not depend on ss157 or 158. That consent is a fundamental integer of the validity and efficacy of any by-law passed pursuant to s52 of the Act. In those circumstances, it could not properly be said that the dispute is not at a sufficiently advanced stage so as to render the Plaintiffs’ proceedings premature or in any way hypothetical. The Plaintiffs still wish to sell the remaining lot; see para 57 of the Plaintiffs’ affidavit of 13 August 1999, though Lot 37A has been sold.

78 The foregoing deals with the second discretionary ground relied upon by the Defendants, namely the availability of relief from the Strata Scheme’s adjudicator pursuant to ss158 and 159 of the Act. Given that consent has not been sought, the Defendants are not in a position to argue that by bringing the action in the way the Plaintiffs have done they are precluding the Owners’ Corporation from testing the reasonableness of any refusal to provide consent to the proposed by-law.

79 Finally, there is said to be conduct by the Plaintiffs which should preclude any injunctive relief. That conduct is first that the First Defendant has made an offer which is said to be unreasonably refused by the Plaintiffs. However, that offer contained in DX7 would exclude the Plaintiffs’ entitlement to any damages whatsoever or any costs whatsoever.

80 Then it is said that by letter dated 17 November 2000 the Plaintiffs’ solicitor wrote asking that an extraordinary general meeting be held to deal with the passing of a proposed by-law, which was subsequently refused. It is then said that the Plaintiffs would thereby be both approbating and reprobating were they permitted to obtain injunctive relief.

81 However the refusal by the First Defendant to call the proposed meeting made it impossible for the Plaintiffs to have even the possibility of any relief under the Act. The Plaintiffs were then left in a position where no relief was available and the threat to pass the by-law remained. I fully agree with the Plaintiffs’ contention that persisting with these proceedings became the only practical vehicle by which the dispute might be resolved in a cost effective manner.

82 Finally, a letter of 12 April 2001 is relied upon by the Defendants (DX3) as betraying a misleading and deceitful attitude to mediation that had been suggested by the Court at the pre-trial conference. However, not having been cross-examined on that letter, it is not now for the Defendants belatedly to rely upon the apparent breakdown of any mediation and the other allegations made in the Defendants’ written submissions at para 49 as their basis for denial of discretionary relief, even if such contention otherwise had any validity, as must be dubious.

OVERALL CONCLUSION AND COSTS

83 The Plaintiffs succeed in relation to each of the questions posed under Question 1 and Question 4 and are not denied relief on any of the discretionary grounds in Question 5. The Defendants succeed in relation to Question 2 but the Plaintiffs are entitled to a declaration that in the absence of written consent from the Plaintiffs the by-law cannot be validly passed. In that regard I note that the issue of the reasonableness of the Plaintiffs’ contribution may be a relevant factor should any application be made pursuant to ss157 and 158 of the Act in the event that such written consent is sought and declined.

84 As to any damage, if it be pressed, that claim will need to be separately determined.

85 The parties are directed to submit orders giving effect to this judgment as soon as possible and in any event by 14 December 2001. Costs, prima facie, should follow the event but the parties may address me on costs if they wish.

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Last Modified: 12/12/2001