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Kotwal, Giridhar --- "The Use of Administrative Law Principles to Limit the Decision Making Powers of Owners Corporations" [2014] UNSWLawJlStuS 9; (2014) UNSWLJ Student Series No 14-09


THE USE OF ADMINISTRATIVE LAW PRINCIPLES TO LIMIT THE DECISION MAKING POWERS OF OWNERS CORPORATIONS

GIRIDHAR KOWTAL

I INTRODUCTION

Administrative law is concerned with controlling the exercise of power by government, and regulating the procedures of administration.[1] However, the increasing deregulation and privatisation of many functions of government has created substantial difficulty in its application. With this increasing complexity, the rule-making function (the legislative function) of government has had to intermingle increasingly with the rule-enforcing or administrative function (the executive function) in the interests of efficiency and convenience.[2] This has had profound effects on the way that rules are created and enforced.

The Strata Schemes Management Act (‘SSMA’) provides for the creation of an owners corporation on registration of a strata plan for a strata scheme.[3] It also sets out the rights, powers, duties, liabilities and privileges of the owners corporation. In holding the common property of the strata scheme as agent for the lot owners,[4] the owners corporation is given significant discretionary power in administering the scheme. It is given the power to administer funds to meet the recurrent and capital expenditure of the strata scheme.[5] It is given the power to enter individual lots for various purposes, including fire safety inspections[6] and work related to the maintenance, repair, and alteration of the strata scheme.[7] It is given the power to appoint a strata managing agent and delegate various decision-making functions to the agent.[8] It is given the power to institute legal action.[9] It is given the power to create, repeal, and amend by-laws for the administration of the scheme.[10]

Overhanging all of this is a complex dispute resolution scheme involving courts, tribunals and other adjudicatory bodies. Disputes frequently arise in strata schemes. Strata and community title schemes are becoming larger and more complex, encompassing vast swathes of land, and increasing numbers of people.[11] Land is unique as a form of property in that it endures far beyond the people who may for some time claim ownership over it.[12] People’s homes are enshrined in the principles of liberal democracy as a place of refuge from the outside world, where people should be free to live, with legal limits, according to their own conscience. Strata title, by its inherent character, involves the surrender of these rights to a statutorily created body that is to act, notionally, in the collective interests of all the members of the scheme.

The SSMA itself contains many ‘checks and balances’ on the powers exercised by the owners corporation. Often, these take the form of requirements for simple (50%) or special majorities for the passage of resolutions to exercise the powers. In other cases, fetters are imposed by the legislation itself, such as a certain statutorily defined procedure to be followed,[13] or the preparation of certain documents,[14] or the need for an order from an adjudicator.[15] In addition, courts and tribunals have also developed many limits, mostly through the accepted principles of statutory interpretation. Superior courts have on occasion used equitable principles like estoppel[16] and fraud on the minority[17] to assist aggrieved lot owners who have been left without effective redress for their legitimate complaints within the strata legislation.

Nonetheless, as the case law analysed in Part III demonstrates, problems persist. These problems are rooted in the way that strata and community title offend ancient notions of private property law. Sherry notes how accepted property law doctrines like the numerus clausus principle limit the number of obligations that can run with land, giving fee simple holders a marketable commodity to pass on.[18] By allowing strata scheme owners corporations to draft, amend and repeal by-laws and make other important decisions, strata title has the potential to ‘burden’ land with a myriad of positive obligations. Traditional doctrines of property are not suited to deal with strata title; a broader model, based on public ideals such as accountability, transparency, and legality, is needed.

This paper will focus on the use of administrative law principles by courts and tribunals to limit the decision-making powers of owners corporations in New South Wales. It will do so in two parts, first through an evaluation of the use of these principles thus far, then through a prospective examination of whether such principles can and should play a more significant role in the management of strata schemes.

Why is this useful? First, in relation to decision-making powers generally, administrative law is in essence concerned with checking the use of power by government. It will be argued that the powers owners corporations wield – particularly in larger strata developments – are akin to those of a ‘private government’, and therefore invite a consideration of ‘public’ law principles to understand and limit them. Secondly, in relation to the by-law making power in particular, the use of administrative law principles is theoretically sound – if by-laws are characterised as delegated legislation, and delegated legislation is construed through statutory interpretation, then the principles of administrative law seem well suited to effectively limit the by-law making power of owners corporations.

It is necessary to consider these alternative principles because the current adjudicative method has frequently produced unsatisfactory results. A legislative framework that effectively governs 10-lot strata schemes may not be so well suited to governing a 100-lot scheme. Thus, administrative law is suited to grapple with such expansions. It should be noted at the outset that this paper will not consider the use of administrative law principles in relation to jurisdictional issues arising from the dispute resolution process in Chapter 5 of the SSMA. Although this is a very interesting topic in itself, it will be left to another day.

This paper will be structured as follows. Part II will create a brief theoretical framework by which to view owners corporations and their powers through the eyes of an administrative lawyer. Part III reviews the case law so far. For the sake of brevity, this analysis will be limited in the Australian context to New South Wales. Part IV will then evaluate various principles that could assist courts and tribunals. In particular, recourse will be had to the jurisprudence of the United Kingdom in construing the by-law and other decision-making powers of railway and canal companies and municipal corporations in the 19th century. It is hoped that the UK experience will give us a better model through which to evaluate these principles. Part V concludes.

II A THEORETICAL BASIS

The principles of legitimacy and accountability underpin our liberal democratic system of government.[19] Every government structure needs three separate branches – a legislative branch to create rules, an executive branch to enforce them, and a judicial branch to independently arbitrate disputes as to the application of those rules. Whenever power becomes concentrated, the governing body of any society stops being accountable. When accountability is lost, legitimacy goes with it.

Considerations of administrative efficiency have engendered a ‘New Regulatory State’ whereby the rule-making (legislative) function of government intermingles increasingly with the rule-enforcing (executive) function, resulting in the delegation of the legislative function to the executive (or administrative) through the enactment of legislation that empowers the executive government to make decisions that have the effect of law.[20] These decisions can be as varied as the power to administer an asylum seeker detention centre;[21] the power to determine which substances should be on the Poisons Standard;[22] or the power to market and sell eggs interstate.[23] Often, these powers are conferred through the power to make regulations, called delegated legislation.

Because the power to make delegated legislation is limited only by the law-making authority of the relevant Parliament itself, one has to look to the ‘enabling’ legislation that conferred power to the relevant decision-making body to determine the validity of the impugned delegated legislation. Fundamentally, delegated legislation must not contradict, be repugnant to or inconsistent with its enabling legislation.[24] If so, the delegated legislation will be found to be ultra vires and void. The classic formulation for a finding of ultra vires was set out by Lord Diplock in McEldowney v Forde, where his Honour said:

Where the validity of subordinate legislation made pursuant to powers delegated by Act of Parliament to a subordinate authority is challenged, the court has a three-fold task:

(1) To determine the meaning of the words used in the Act of Parliament itself to describe the subordinate legislation which that authority is authorised to make

(2) To determine the meaning of the subordinate legislation itself

(3) To decide whether the subordinate legislation complies with that description.

If the subordinate legislation does not fall within that description, then it will be held ultra vires and void.[25]

The doctrine has had a decidedly less expansive reception into Australia, with the guiding principle being that of legality, which protects commonly accepted rights and freedoms through:

a presumption that Parliament does not intend to interfere with common law rights and freedoms except by clear and unequivocal language for which Parliament may be accountable to the electorate.[26]

In South Australia v Tanner, Brennan J found that ‘a delegation of power should be narrowly construed unless Parliament has ... revealed a contrary intention’.[27] His Honour developed a three-step checklist to test the validity of delegated legislation, by which the court has to:

1. Construe the terms in which the Parliament has conferred the power to make the regulation;

2. Ascertain the scope and legal effect of the impugned regulation; and

3. Determine whether the regulation having that scope and legal effect is within the ambit of the power.[28]

In Owners of Strata Plan No 3397 v Tate (‘Tate’), McColl JA (with Mason P concurring on this point)[29] identified two possible ways to characterise by-laws in a strata scheme – as delegated legislation, and a statutory contract. Characterisation as delegated legislation is useful because it opens up a whole new prism of rights and remedies through which to analyse strata scheme by-laws. The SSMA can be characterised as a piece of enabling legislation that delegates its rule-making function to the administrators of strata schemes. The by-law making power can thus be seen as an administrative power to draft delegated legislation. This approach was confirmed by the High Court in relation to legislation preceding the SSMA,[30] and more recently in the New South Wales Strata Schemes Board (SSB).[31]

III A SURVEY OF THE CASE LAW

This section will seek to identify and flag certain recurring illustrative principles, and their effectiveness in providing a clearer method to limit the powers of the owners corporation, which will be analysed in more detail in Part IV.

A Ultra Vires

Schedule 1 of the SSMA and the Strata Schemes Management Regulation 2010 (NSW) contain model by-laws that can then be adapted to particular schemes. Following the initial period, the owners corporation has an extremely wide power to amend, repeal, or add to the original by-laws (provided they are registered within 2 years).[32] Section 49 of the SSMA prohibits by-laws that (1) prohibit or restrict alienation; (2) are the subject of an order; (3) prohibit or restrict children; or (4) prohibit or restrict the keeping of a guide dog.

On first glance, the ultra vires doctrine appears perfectly suited to limit the by-law making powers of owners corporations through a delegated legislation characterisation. However, courts have consistently afforded these powers a broad interpretation, deferring to the collective will of the owners corporation, producing unsatisfactory results.

White v Betalli concerned a by-law for a two-lot strata scheme that granted one lot owner access and ownership rights of a part of another owner’s lot. The issue was whether such a by-law – which granted exclusive access to one lot-owner over part of another lot (as opposed to common property) – was valid. The applicant argued, inter alia, that the by-law was ultra vires.[33] Santow and Campbell JJA in majority dismissed this argument on appeal, on the basis respectively that there was no inconsistency with any Act or law,[34] and applied to a particular community within the general framework of statute, common law and equity.[35] McColl JA’s dissent was wide-ranging, but based on a finding of inconsistency between the impugned by-law and the SSMA.[36] Her Honour found that the by-law ‘[did] not operate for the benefit of the strata scheme as a whole’, but ‘only for the benefit of the respondents’.[37]

The central question in Casuarina Rec Club Pty Ltd v The Owners — Strata Plan No 77971 (‘Casuarina’) was whether the impugned by-law was within the powers of the owners corporation.[38] Whilst not using the phrase ‘ultra vires’ per se, it is apparent that Young JA was referring to the same doctrine. Young JA (for the Court of Appeal) applied Campbell JA’s statement in White v Betalli that:

There is nothing in the notion of a by-law that, of itself, imposes any kind of limitation on the kind of regulation that might be adopted, beyond that it is for the regulation of the particular community to which it applies. Any limitation on the type of restriction or regulation that can be a by-law must arise from the statute that enables the by-laws to be created, or from the general framework of statute law, common law and equity within which that local community is created and administered.[39]

It is thus apparent that the doctrine of ultra vires is not a useful principle to limit the by-law making powers of owners corporations. This is unfortunate, but not surprising, given that the enabling legislation, the SSMA, imposes virtually no value-based – that is, those based on notions of reasonableness, oppression, or unconscionability – fetters on those powers.[40] The only clear fetter is that the by-law must relate to the lot or common property.[41]

B Reasonableness

The case law is peppered with requirements of ‘reasonableness’ in administering strata schemes. A distinction needs to be drawn at the outset with ‘reasonableness’ in a general legal sense, and ‘reasonableness’ in the administrative law Wednesbury sense. By way of example, the reasonable person in torts is the ‘man on the Clapham omnibus’, but for a decision of an administrative body to be unreasonable, it needs to be ‘so unreasonable that no reasonable decision-maker would have come to such a decision’.[42] The latter is manifestly more difficult to prove than the former; although it should be noted that the High Court has recently signaled its willingness to make findings on qualitative grounds such as arbitrariness, capriciousness, or ‘abandoning common sense’.[43] Nonetheless, keeping this caveat in mind, this section will outline the use of varying notions of reasonableness by courts and tribunals to limit the decision-making powers of owners corporations.

Although the SSMA does not of itself impose a reasonableness requirement on the by-law making power in ss 43 and 47, courts and tribunals have imported a reasonableness requirement in construing by-laws. Interestingly, however, a reasonableness requirement pops up in ss 158(1)(a) and (b) in giving an Adjudicator jurisdiction to make an order with respect to exclusive use by-laws made under s 52.

In Casuarina, Young JA (writing the leading judgment) accepted the appellant’s submission that ‘an unreasonable by-law will be held to be invalid’.[44] However, this statement must be taken to have been made in obiter, as his Honour did not apply this doctrine for the reasons described above. MacFarlan JA devised a reasonable proportionality test, finding that for a by-law to be valid, there ‘must clearly be a nexus between the subject matter of the by-law and the use or occupation of the subject property’.[45]

After drawing an analogy between by-laws and delegated legislation, the SSB in Lynch found that as a consequence of this characterisation, a by-law may be invalid on the grounds that it is unreasonable. The SSB then gave two examples of unreasonableness: first, that it lacks reasonable proportionality (like MacFarlan JA in Casuarina); and secondly, it is oppressive or discriminatory in effect.

More recently in The Owners SP 57237 v Fowley, Burgess (Strata and Community Schemes),[46] the CTTT had the opportunity to consider the validity of a by-law requiring development consent for the provision of accommodation by lot owners in a strata scheme. Senior Member Bordon considered but dismissed the respondent’s submission that such a by-law was unreasonable due to the expansive power it gave the owners corporation. It was not unreasonable because ‘in any application to enforce a by-law by way of penalty the Owners Corporation would be required to establish that in fact the activity was one which required development consent to be obtained.’[47] In other words, the fact that the owners corporation had the onus to prove its case was enough to render the by-law reasonable.

In OC SP 50246 v Kumar,[48] a lot owner with access to common property by an exclusive use by-law had an application to develop the area refused by the owners corporation of his strata scheme. Given the by-law in question was an exclusive use by-law, Member Ringrose had no trouble applying a reasonableness requirement, although it did not matter in the end because the by-law was found not to be sufficiently specific to comply with the statutory requirements.

In Tate, McColl JA applied the reasonableness doctrine as the correct way to construe an exclusive use by-law, like that which was in question in the case.[49] However, upon a closer reading of her Honour’s judgment, it becomes apparent that her Honour was talking more about the ‘reasonable person’ in the Clapham sense – that exclusive use by-laws were to be construed by an objective standard, rather than that of a hypothetical lot owner.[50]

1 Model By-Law 16

Model by-law 16 in Schedule 1 to the SSMA contains a requirement for the owners corporation, in exercising its discretion to grant approval for a lot owner to keep an animal on the lot or common property, not to ‘unreasonably withhold its approval’. There has been a considerable amount of litigation concerning pets in strata schemes, mostly in the SSB[51] and CTTT.[52] In The Owners of Strata Plan 56117 v Drexler,[53] the NSW District Court considered a pet-related dispute, but the issue was whether the impugned terrier was a ‘hearing dog’ for the purposes of s 49(4) of the SSMA.

The SSB and CTTT cases demonstrate that in order to give ‘reasonable’ consideration to a lot owner’s request under Model By-Law 16, the owners corporation needs in essence to give the application a fair hearing, and legitimately put the application to other lot owners in the scheme. So, in Richardson v OC SP 56695 (Strata and Community Schemes),[54] approval was found to have been unreasonably withheld where the owners corporation only considered the lot owner’s application for four minutes at general meeting, and apparently made false representations about the votes later.

But this requirement is not uniform – in Antonov & Levina v The Owners Strata Plan 30082 (Strata and Community Schemes),[55] Senior Member Balding in the CTTT found that ‘the owners corporation is not required to give reasons for its decision’. This is inexplicable; it is submitted that a notion of reasonableness requires, at its core, the exercise of some deliberation in legitimately considering a lot owner’s request.

The owners corporation also needs to be consistent in its decisions. In Engelman v Owners Corporation (Strata and Community Schemes),[56] the CTTT found that an application had been unreasonably withheld where the owners corporation had allowed other lot owners to keep pets in their lots. The owners corporation can, of course, delete the model by-law and draft its own, but can it draft out the ‘reasonableness’ requirement? Member Cochrane’s voice of reason in Paris, Arthur v The Owners Strata Plan 16973[57] indicates that although the owners corporation can theoretically remove such a requirement, certain requirements will inhere. Member Cochrane indicated that an owners corporation that wishes to restrict pet ownership on strata schemes should ‘ensure that their by-laws reflect that line.’ He continues: ‘[i]f a special by-law is not in force then any policy should be publici[s]ed.’ In other words, he recommends that owners corporations develop a clear policy and make it publicly available.

But a mere uniform exercise of policy is not enough. Each case is to be considered on its merits, in light of what the SSMA requires, permits, or forbids the owners corporation to take into account.[58] As Bugden and Allen note:

when dealing with applications for approval it should seek as much information as possible from the applicant, thoroughly consider that information and support its decisions with documented reasons that appear to be entirely reasonable.

This was echoed in Gershberg, Mr L and Mrs M, owners of lot 22. v,[59] where the SSB found that a refusal to consider the particular circumstances of the application amounted to unreasonable withholding of consent by the owners corporation. Precedent was found not to lead to a valid exercise of discretion.[60]

It is easy to become unduly enamoured by such legalistic formulations; but a fundamental point must be made – many strata schemes are run by volunteers, using skills developed elsewhere or ‘on-the-job’ on an ad-hoc basis. Lawyers and accountants will be more easily able to keep adequate records, but people without such professional skills will find it difficult. In permitting lay people to exercise these functions, the strata schemes legislation perhaps expects a little too much of them – particularly in large strata schemes, where dealings frequently involve large sums of money, and affect the lives of a large number of people.

2 Other Decision Making Powers

The SSMA contains other reasonableness requirements for decision-making powers. In Ridis v Strata Plan 10308,[61] the Court of Appeal imported a reasonableness requirement into ss 62(1), (2) & (3) of the SSMA. In relation to ss 62(1)–(2), Hodgson JA found that an owners corporation should ‘act reasonably’ in having a system in place for

monitoring the maintenance and state of repair of the common property.[62] In relation to s 62(3), McColl JA found that the obligation with regards to safety ‘imports an obligation of reasonableness not absolute safety’.[63]

Reasonableness requirements do not appear to have been used in relation to the owner’s corporation’s power to raise funds for administering the strata scheme under Ch 3, Pt 3 of the SSMA. Neither do such requirements appear to be in place in relation to the delegation of powers to strata managing agents, or commencing legal action and seeking the imposition of fines. It thus seems that there is more scope for the importation of a reasonableness requirement in relation to decision-making powers. This will be taken up further in Part IV.

C Improper Purpose

An exercise of power with an ulterior or different purpose to that which is lawfully exercisable under statute will be invalid.[64] As the owners corporation is, for all intents and purposes, a statutory corporation, courts and tribunals have occasionally used the improper purpose doctrine to better characterise and limit exercises of power by the owners corporation. In The Owners Strata Plan No. 60919 v Consumer Trader and Tenancy Tribunal,[65] Patten AJ quoted the Adjudicator whose decision was being appealed to the effect that a by-law created for a commercial purpose, rather than one made for the management, administration or use of the strata scheme, and not in the interests of the lot owners, would be invalid.[66] There was no further reference to such a requirement.

Despite expressly including proper purpose as a remedy against the ‘injustice’ of by-laws that interfere substantially with a lot-owner’s use of their lot[67] (and quoting Sydney Diagnostic Services Pty Ltd v Hamlena Pty Ltd to that effect),[68] White J in White v Betalli (at first instance) found that the impugned by-law had been validly enacted.[69] His Honour identified the following limits on the by-law making power:

a) the need for the consent of mortgagees and other holders of security

under s 8(4C) and s 16 of the Strata Schemes (Freehold Development) Act;

b) the express restrictions and prohibitions in s 49 of the Strata

Schemes Management Act;

c) the need to avoid inconsistency with any Act or law; and

d) that the provision is made for a proper purpose and fairly falls within the concept of a by-law, that is, the regulation of the rights and responsibilities of lot owners, occupiers, or the owners corporation, in respect of the lots, or the lots and common property, for the strata scheme.[70]

On appeal, Santow JA[71] and McColl JA[72] both cited these limits in the course of their judgments. Santow JA curiously glossed over the clearly enumerated limits as a general requirement that the by-law not be inconsistent with any Act or law.[73] It is unfortunate that his Honour did not feel it necessary to engage with point (d) in White J’s list. McColl JA also did not give any more attention to White J’s list, particularly the requirement for a proper purpose.

There appears to have been no consideration of the improper purpose doctrine in relation to other decision-making powers. In Jennifer Elizabeth James v The Owners Strata Plan No. SP 11478 (No 4), Ball J considered proper purpose, but in the context of the fraud on the minority doctrine.[74] In Santai v The Owners – Strata Plan No. 77971,[75] McDougall J paid lip service to White J’s requirement for proper purpose,[76] but did not proceed further as it was not argued by the parties in the instant case.[77] In Owners Corporation SP 65120 v Dewar (Strata & Community Schemes Division),[78] Member Moore cited White J and accepted that the special by-law in question was for a proper purpose, without further discussion.

This unsatisfactory situation is the result of the extremely wide discretion given to owners corporations in drafting, amending and repealing by-laws. It is difficult to find improper purpose where the by-law making power is so broad. Part IV will consider (im)proper purpose in the context of the UK case law, evaluating how the UK courts used the doctrine to limit the decision-making powers of railway and canal companies in the 19th century.

IV SCOPE FOR FURTHER USE

This section will evaluate whether administrative law principles can and should play a more significant role in the management of strata schemes. In so doing, it will borrow heavily from the better-developed jurisprudence of the United Kingdom. In Casuarina, Young JA made passing reference to these cases. His Honour said:

[56] The early railway and canal cases show that the company’s powers were to be construed as not only encompassing their principal activity, but also all incidental and ancillary activities. Thus, a company which had power to operate a railway station could also run a souvenir stall on that station, for example Queen Victoria Niagara Park Commissioners v International Railway Co. A railway company with authority to own ferries in connection with its railway, could use those ferries as pleasure boats when the boats were otherwise unemployed: Forrest v The Manchester, Sheffield and Lincolnshire Railway Co.

[57] It must be noted, however, that in Attorney-General (Vic) v The Commonwealth, Rich J, when commenting on Forrest’s case, said that it was a matter of degree as to how far this association could be pushed. Where the line is to be drawn is sometimes difficult. It is clear that the incidental power cannot be used to expand the company’s activities. Thus, whilst a company can contract with another to carry goods from the end of its line to a further destination (Wilby v West Cornwall Railway Co) it may not be able to extend its business by operating its own buses from its terminus, Attorney-General v Mersey Railway Co.[79]

This Part will take up his Honour’s baton and run – or, more accurately, wade – through English cases that considered by(e)-law and other decision-making powers of railway and canal companies in Great Britain in the 19th century.

A The Starting Point: Power Imbalances

Railway and canal companies were similar to owners corporations in two vital ways: first, they were statutory corporations, created by Acts of Parliament for express purposes. Secondly, they wielded wide statutorily conferred decision-making powers. In addition to their power to construct railways – public infrastructure of mind-boggling capital investment – they were empowered to raise funds, compulsorily acquire land, and create by(e)-laws that regulated everything from passengers’ obligations to taxi ranks at railway stations.

England was in the grip of the Industrial Revolution. In Colman, on behalf v The Eastern Counties Railway Company,[80] Lord Langdale MR painted a vivid picture of the ‘frenzy’ which England was in at the time:

There has been no project, however wild, which has not been encouraged by some or one of these companies: there has been no project, however wild, in which the shareholders have not acquiesced, either from cupidity, hoping to gain extraordinary profits, beyond their first anticipations, or from the terror of entering into a contest with a combination of persons so powerful as a railway company.[81]

Lord Langdale MR acknowledged that the legislature and courts were struggling to limit the powers of railway companies:

I think it right to observe, that companies of this kind, possessing most extensive powers, have so recently been introduced into this country, that neither the Legislature nor Courts of Justice have been yet able to understand all the different lights in which their transactions ought properly to be viewed.

Thus began, over the decades following, a systematic process of consolidation whereby the courts developed boundaries within which to limit the discretion exercised by railway companies. It is important to note that this limiting process began with a judicial acknowledgement of the enormous power that railway companies wielded. In Colman, Lord Langdale MR noted that railway companies have funds ‘extremely large’, and ‘exercise powers so extensive and so materially affecting the rights and interest of other persons and the rights which the public for the subjects of Her Majesty has been accustomed to enjoy under the protection of the laws established in this kingdom’.[82]

This acknowledgement of the power imbalances inherent in railway companies’ powers then permitted the courts to remain more vigilant about their potential for misuse. For example, this vigilance manifested in a very strict construction of the field of permissible incidental financial activities of railway companies. In Hare v London and North-Western Railway Company,[83] Vice Chancellor Page Wood found that:

this Court will not permit parties, having the enormous powers which railway companies obtain, to apply one farthing of their funds in a way which differs in the slightest degree from that in which the legislature has provided that they should he applied.[84]

It is interesting to note that there has not yet been a similar judicial acknowledgement in relation to the decision-making powers of owners corporations in New South Wales – particularly of large strata schemes.[85] In her Second Reading Speech introducing the Strata Schemes Management Amendment Bill 2003 (NSW), Ms Meagher acknowledged that ‘running a large high-rise building is different to running an average size scheme.’[86] Among other changes, the Bill introduced ss 80A and 80B of the SSMA. However, there was no mention of the powers which owners corporations wield. Section 80A was referred to in Eastmark Holdings Pty Ltd v Kabraji[87] without comment. It is submitted that effective characterisation begins with a clear understanding of the nature of the rights, duties, powers, and liabilities which are affected.[88]

Characterisation of by-laws involves considerations of traditional doctrines of administrative law. However, for other decision-making powers, English courts devised a method, through company law doctrine, by which they could be limited. Although not strictly concerned with administrative law, these considerations are concerned with the exercise of power by private bodies exercising public power. They also use similar principles like proper purpose and reasonableness, which are relevant.[89]

B Proper Purpose

The English courts were careful to strictly limit the decision-making powers of railway companies to those contained in their enactment. Because they were creatures of statute, created for specific purposes, it was easy for the courts to limit their powers through the ‘proper purpose’ doctrine. This doctrine manifested in many ways.

In Santai, McDougall J cited the legislative framework of the SSMA as a whole as a potential limit on the powers of the owners corporation. His Honour noted: ‘for a by-law to be valid, it must be fairly referable to the role of an owners corporation as “owner” of the common property or to its role as “manager” of the strata scheme’.[90] Thus, his Honour found in obiter[91] that the provisions detailing the duties and functions of the owners corporation could operate as a limit on the general by-law making power in s 47. On appeal, Young J also considered a similar question as to the width of the power to make by-laws.[92] His Honour then proceeded to set out the following steps:

1. Consider the role of the Owners Corporation (OC)[93]

a) Section 12 SSMA: OC has functions imposed on it under SSMA, other Act

b) Dictionary: ‘Function’: including ‘power, authority, duty’[94]

2. Look at section 61: Key management areas for a strata scheme[95]

3. Look at section 49: Express limits[96]

a) ‘[T]he fact that this section prohibits the making of certain by-laws suggests that, without the section, such a by-law could have been made.

4. Look at Part 6 of the SSMA[97]

a) Section 111 SSMA: ‘shows that the provision of amenities not only to the lot but also to the owner or occupier of the lot is within the function of the body corporate. This points to it being within power to make a by-law covering the topic’.

5. Consider that ss 44–45 pull in the ‘opposite direction’ in that they proceed on the basis that a by-law is an actual law which must be obeyed

Only after these initial five steps did his Honour then consider s 47 itself.[98]

Like in Casuarina, many cases concerned the powers of railway companies to engage in activities incidental[99] to those within their purposes. In Lyde, on behalf, & v Eastern Bengal Railway Company,[100] the Court of Chancery held that a railway company could not become a steam-boat company or a brewery.[101] This was found to be a business ‘foreign to its original object’.[102] Interestingly, the Court also found that it ‘will take the interests of the public into consideration when asked to interfere with a railway’.[103] The Court left open the question whether a railway company could go outside its stated objects by unanimous majority, but nonetheless found that a railway company could not, against the will of any dissentient minority (however small), undertake business outside its purpose.[104]

In Vance v The East Lancashire Railway Company,[105] the defendant railway company took to raising funds for the construction of its railway line while its application for an authorising Act was pending in Parliament. This was found to be invalid as an incidental exercise of its power, as the power had not yet been granted by the Parliament. In Cooper Preston v The Company of Proprietors of the Liverpool, Manchester, and Newcastle-Upon-Tyne Junction Railway,[106] a railway company tried to pay off a landowner whose land it was to compulsorily acquire to withdraw his opposition to their application for an empowering Act. This was found to be ultra vires of a corporation established for the purpose of making a railway.

In Forrest v Manchester, Sheffield and Lincolnshire Railway Co,[107] the defendant railway company was given permission to use steam boats and ferries to transport passengers across the Humber River. Significantly, it had authority ‘to do all other things necessary for establishing, maintaining, regulating and managing the said communication, and making the same as useful and advantageous to the public as might be’.[108]

The defendant company took to operating its ferry fleet for commercial joyrides down the river when the boats were idle. The plaintiff argued that this was outside the company’s statutory purpose. The Court of Chancery found that the defendant company was entitled to carry passengers for excursions when the boats were not being used for transport. In so doing they were not contravening the object or provisions of the legislature.

Occasionally distinctions were made between general and specific purposes. In Bagshaw v The Eastern Union Railway Company,[109] the defendant company was authorised by Acts of Parliament to raise money for construction of railways. There were two distinct authorisations: One authorisation was a general one, applying to construction of several railway lines; another was a specific one, authorising the company to purchase and complete the Hadleigh Junction Railway, and for that purpose, to raise a sum not exceeding 100,000 pounds. Vice-Chancellor Wigram distinguished between the general assets of the defendant company, which it could apply to whatever purpose that is within its power, to specific assets raised by virtue of the power given by an Act of Parliament. This was to be applied only in pursuance of the stated purpose.

Finally in Salomon v Laing,[110] a railway company used its surplus funds to buy shares in another railway company. Lord Langdale MR found that the company ought to apply all its funds for the purposes directed by the empowering Act of Parliament, and not for any other purpose.[111] The Master of the Rolls went further:

if, as in this case, the directors are proceeding upon an illegal principle,

and for purposes not authorised by the Act, to involve the company or the shareholders of the company, or any of them, in liabilities, to which the shareholders or any shareholder never consented, relief may and ought to be given in this Court.[112]

These cases offer many instructive lessons. First, the courts had a much clearer starting point. Railway companies were statutory corporations, created by individual Acts of Parliament, each with express purposes tailored to the situation at hand. It is not suggested that each new strata scheme in New South Wales require its own enabling legislation; such a position would be untenable. Rather, it is suggested that courts would benefit from greater legislative involvement in providing a clearer legislative purpose for owners corporations, grounded in considerations of public policy. The SSMA at present outlines the owners corporation’s purposes only as those functions ‘conferred or imposed on it under this or any other Act.’[113] A more extensive ‘purpose’ statement could permit a clearer judicial characterisation of those powers.

Secondly, the English courts were very cautious in permitting railway companies to pursue commercial endeavours. In Forrest, although the railway company was allowed to continue running a commercial steam boat operation, it was allowed on the express proviso that the boats would only be utilised when they were not being used for public transport. We learn from Salomon v Laing that surplus funds were to be distributed straight back to investors, and used for other commercial investments only with the permission of all the investors. We learn from Colman that mere acquiescence was not enough. English courts were alive to the fact that railway companies were powerful entities in a position to misuse their statutorily conferred powers, as happened in Salomon v Laing, dealing with large sums of money. So, while an owners corporation would be precluded from having a separate commercial operation, courts in New South Wales could be careful in equating acquiescence with approval.

C Reasonableness

The doctrine of reasonableness was used by courts to temper their strict approach to construing the powers of railway companies and similar statutory bodies. This gave courts a certain level of discretion in tailoring their orders to the circumstances of each case. In particular, it was used to limit the scope of permissible activities by railway companies. So, in Attorney General v Great Eastern Railway Co,[114] the House of Lords held that the doctrine of ultra vires was to be applied reasonably, such that whatever was fairly incidental to things authorised by statute ought not to be held to be ultra vires.

It appears that there is conflicting authority as to whether reasonableness could operate to proscribe the activities of public bodies. On the one hand, in Ballymena Township Commissioners v M'kay[115] the Court of Chancery found that if any doubt as to the construction of by-laws exist, they must be construed so as not to render them unjust or unreasonable. On the other hand, in Kruse v Johnson,[116] the Queen’s Bench found that in determining the validity of a by-law made by public representative bodies, courts would be slow to hold that it was void for unreasonableness. So, the reasonableness principle as expressed in the English courts is of limited utility in better understanding its use in limiting the powers of owners corporations in New South Wales.

D The Lynchpin: The Public Interest

Owners corporations are representative to the extent that the lot owners eligible to participate actually exercise their democratic right and participate in decision-making. However, even if lot owners exercise their democratic participatory rights, the by-law making (and, presumably by extension, other decision-making) powers of the owners corporation have the innate tendency to subvert minority interests in a strata scheme.[117] Given the significant power exercised through the by-law making power of the owners corporation, this can potentially eschew the democratic process. The principles of equity – such as fraud on the minority – seem like a useful cure. However, it is worth noting that a claim on this ground has only been successful in one instance, in Houghton v Immer (No 155) Pty Ltd.[118]

The principles of administrative law, as enunciated in the English courts, account for the interests of the ‘public’ more broadly defined; not just minority interests. This was captured most aptly in Attorney General v Great Northern Railway,[119] where the Court of Chancery found that an Act constituting a railway company is a ‘contract’ between the company and the public, the performance of which the public has an interest in enforcing. Although it was found that the Attorney General could not sustain an ‘information’ (a cause of action) simply on behalf of the ‘public’, the public was found to have an interest in enforcing its strict performance. In Attorney General v Great Eastern Railway Company,[120] Baggallay LJ found, in an oft-quoted passage:

It is the interest of the public that the law should in all respects be respected and observed, and if the law is transgressed or threatened to be transgressed, as in my opinion it has been by the Great Eastern [Railway] Company, it is the duty of the Attorney-General to take the necessary steps to enforce it ...

Although Baggallay LJ was in dissent in that case, his view was subsequently endorsed by the Court of Appeal.[121]

In Attorney General v London & North Western Railway,[122] the defendant railway company was found to have infringed a provision introduced into its Act in the public interest where it exceeded its prescribed speed limit at level crossings. The company argued that the Attorney General could not seek an injunction against them, as the Attorney General had not proven that injury to the public had in fact resulted. The Court of Appeal, in affirming the decision at first instance, found that as the information was filed by the Attorney-General to enforce the express terms of an enactment made by the Legislature in the interests of the public, the Court could not entertain the question of whether injury to the public was in fact occasioned by the contravention of the Act, but were bound to grant the injunction.

Again, there are many lessons here. First is the effective balance that the English courts were able to strike between protecting business and public interests. While a remedy could not be sought merely on behalf of an ill defined ‘public’, the public was found to have a relevant interest, particularly where this was statutorily conferred. By analogy, if the ‘public’ is statutorily defined as people who will have to live in strata schemes and thus be governed by the law constraining (or not constraining) them, the legislature can provide clearer guidance to owners corporations in administering strata schemes in the interests of anyone relevantly affected by its decisions.

Second, the Attorney General was given authority to bring an action against errant bodies in the public interest. In London & North Western Railway, it was decided that the Attorney General was the sole arbiter as to whether the public was in fact harmed by the actions of a statutory corporation. This is remarkable. In effect, the Queen’s Bench was acknowledging that it was not well placed to initially determine what was and was not in the public interest, although it would ultimately arbitrate on the matter.[123]

Under section 28QB of the SSFDA, the Director-General of the Department of Fair Trading is given the power to give assistance to owners corporations who are in dispute with a developer in relation to a staged development. The government recognised that when people buy homes in developments that might take years to complete, they are vulnerable in relation to what a developer may do, or not do, in the years after they purchase. The government gave itself an obligation to assist these people, but it has never been used.

Although the railway companies’ activities would notionally affect only passengers, investors, workers, and those unlucky souls possessed of land in its path, the railway as a system of public transport was such a pervasive element of British society that it would have been inadequate to view their activities from a strict contractarian approach. By analogy, although strata schemes notionally affect only residents, workers, investors, builders, and managers, they are reaching a similar stage of saturation in society whereby they are increasingly affecting members of the public. Although there is no space to discuss this at length, this is especially the case with community title schemes, modeled on the Home Owners Associations of the United States. In essence, it involves the provision of public goods by private entities, not always operating by a democratic mandate.

VI CONCLUSION

The strata title system in New South Wales is in the process of its biggest overhaul in over 50 years. NSW Fair Trading rightly raised concerns over the legitimacy and accountability of the owners corporation acting as agents for lot owners. These changes, however, unfortunately do not appear to have any special provisions for large strata schemes;[124] the amendments introduced by the Strata Schemes Management Amendment Act 2004 (NSW) have not been followed with more ambitious reform of this important area. Fundamentally, there is no acknowledgment about the public powers owners corporations exercise.[125]

As strata schemes become larger and more complex, they have the potential to affect larger amounts of people and interests. Disputes will always arise in densely populated areas, but the principles of administrative law can be used to provide a more effective framework to deal with them. Administrative law already deals with checking the powers of government. It is submitted that property law, as it relates to strata title, can borrow from this established learning.

Attempts have been made to import concepts of ultra vires, proper purpose, and reasonableness by courts and tribunals in New South Wales, but they have been ad-hoc. This is because, firstly, courts and tribunals are operating in a sparsely legislated landscape. The proposed changes in this area – for example, to the by-law making power in s 47 to prohibit by-laws that are unreasonable, oppressive or unconscionable – are welcome.[126] But more is needed. The doctrines of ultra vires and proper purpose have not been useful in limiting the decision-making powers of owners corporations because the powers themselves are conferred broadly by the enabling legislation.

It is thus proposed that a public interest element be introduced into the functions of owners corporations of large strata schemes. The UK cases analysed in Part IV reveal that this was a powerful deterrent against railway companies exceeding their powers. The Attorney General was able to exercise a fiat to bring actions in the public interest; the courts actively encouraged this process by abstaining from considering the jurisdiction of the Attorney General a justiciable issue. The Attorney General operated in a similar fashion to a modern Ombudsman to useful effect; it might be worth considering a private sector Ombudsman for strata and community title schemes.[127]

Courts and tribunals in New South Wales would also do well to take ‘judicial notice’ of the extraordinary power that owners corporations in large strata schemes (and community title schemes) exercise. It is seen from the English cases that this important acknowledgement by Lord Langdale MR in Colman paved the way for a period of surprising judicial activism in limiting the by-law and other decision-making powers of railway companies. Although the rhetoric suggests that courts were deferring to the legislature’s will expressed in statute, a closer read reveals that courts were sympathetic to the plight of individual investors and other affected members of the public.

And that really is the crux of this paper: why are we considering such a fundamental doctrinal shift? The reason is this: a just society is one in which democratic ideals are enshrined in every sphere of life, whether they exist in the silo of ‘public’ or ‘private’ law. The ‘public’ principles of legitimacy and accountability have a lot to offer to hitherto ‘private’ areas of law such as property, especially where private bodies exercise statutorily conferred power that affects the lives of many people.


[1] See Roger Douglas, Douglas & Jones’s Administrative Law (Federation Press, 6th ed, 2009) 343.

[2] Mark Aronson and Matthew Groves, Judicial Review of Administrative Action (Lawbook, 5th ed, 2013) 3 [1.20].

[3] SSMA s 8(1).

[4] Strata Schemes (Freehold Development) Act 1973 (NSW) s 20 (‘SSFDA’).

[5] SSMA ch 3 pt 3.

[6] SSMA s 65C.

[7] SSMA ss 62–65A.

[8] SSMA ch 2 pt 4.

[9] SSMA s 80D.

[10] SSMA s 47.

[11] See generally NSW Government, Strata Title Law Reform: Strata & Community Title Law Reform Position Paper (November 2013) <http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Strata_title_law_reform_position_paper.pdf> 2; NSW Fair Trading, Reform of Strata and Community Title Laws <http://www.fairtrading.nsw.gov.au/ftw/About_us/Have_your_say/Review_of_strata_and_community_scheme_laws.page?> .

[12] See generally Joseph William Singer, ‘Democratic Estates: Property Law in a Free and Democratic Society Essay’ (2008) 94 Cornell Law Review 1009; Joseph William Singer, Entitlement: The Paradoxes of Property (Yale University Press, 2000); Edward W Soja, Seeking Spatial Justice (University of Minnesota Press, 2010); Kevin Gray and Susan Francis Gray, Elements of Land Law (Oxford University Press, 5th ed, 2009).

[13] See, eg, SSMA s 80D, Ch 7 Pts 1A, 2 (commencing legal action).

[14] See, eg, SSMA Ch 3 Pt 3 Divs 1–2 (for payments out of administrative and sinking funds).

[15] See, eg, SSMA s 44 (imposing fines).

[16] See, eg, Moussa v Owners Corporation of Strata Plan 65404 [2007] NSWLEC 807, [178]; Owners Strata Plan No 50411 & v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5, [183]; Owners Strata Plan 22724 v Owners Strata Plan 30403 [2012] NSWSC 1192, [114], [140] (though it was not applied in either case).

[17] Oft-considered, but only once-applied: Houghton v Immer (No 155) Pty Ltd (1997) 44 NSWLR 46.

[18] Cathy Sherry, ‘Lessons in Personal Freedom and Functional Land Markets: What Strata and Community Title Can Learn from Traditional Doctrines of Property’[2013] UNSWLawJl 13; , 36 University of New South Wales Law Journal 280, 308–9.

[19] Mark Aronson and Matthew Groves, Judicial Review of Administrative Action (Lawbook, 5th ed, 2013) 1.

[20] The scholarship on this topic is voluminous. For a recent exposition and useful summary, see Lee Godden et al, ‘Law, Governance and Risk: Deconstructing the Public-Private Divide in Climate Change Adaption’ [2013] UNSWLawJl 11; (2013) 36 University of New South Wales Law Journal 224, 231 ff.

[21] Plaintiff M61/2010E v Commonwealth [2010] HCA 41; (2010) 243 CLR 319.

[22] Roche Products Pty Ltd v National Drugs and Poisons Schedule Committee [2007] FCA 1352; (2007) 163 FCR 451.

[23] Butler v Egg & Egg Pulp Marketing Board [1966] HCA 38; (1966) 114 CLR 185.

[24] Re Taylor [1995] 2 Qd R 564; see further SSMA s 43(4).

[25] [1969] 2 All ER 1039, 1068 [emphasis added].

[26] Momcilovic v The Queen (2011) 245 CLR 1, 46–7 (French CJ); compare Owners Strata Plan No 48544 v [1999] NSWSSB 62, where it was found that where there is ambiguity in the by-law relied upon for a notice to comply with a by-law under s 45, that ambiguity should generally be resolved in favour of the one whose liberty is being restrained.

[27] [1989] HCA 3; (1989) 166 CLR 161, 174.

[28] Ibid 173.

[29] [2007] NSWCA 207; (2007) 70 NSWLR 344, 347.

[30] Dainford Ltd v Smith (1985) 155 CLR 342, 349 (Gibbs CJ), Mason J (351), 355–8 (Wilson J).

[31] Lynch Glenn and Jenny Owners of Lot 75a v The Owners Strata Plan No 36458 [1999] NSWSSB 55 (‘Lynch’).

[32] SSMA s 48. Section 43 contains suggested topics for by-laws, but these are not exhaustive. Further, owners corporations can draft their own by-laws, circumventing the model scheme altogether: SSFDA ss 8(4B)–(4D).

[33] [2006] NSWSC 537; (2006) 66 NSWLR 690, 694 [20].

[34] [2007] NSWCA 243; (2007) 71 NSWLR 381, 390 [42].

[35] Ibid 419 [205].

[36] Ibid 413 [170].

[37] Ibid 413 [169].

[38] [2011] NSWCA 159; (2011) 80 NSWLR 711, 722 [86].

[39] Ibid 716 [30], quoting [2007] NSWCA 243; (2007) 71 NSWLR 381, 419 [205] (Campbell JA).

[40] Although this may soon change: see NSW Government, Strata Title Law Reform: Strata & Community Title Law Reform Position Paper (November 2013) <http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Strata_title_law_reform_position_paper.pdf> 33.

[41] White v Betalli [2007] NSWCA 243; (2007) 71 NSWLR 381, 419 [205].

[42] Associated Provincial Picture Houses Ltd v Wednesbury [1947] EWCA Civ 1; [1948] 1 KB 223.

[43] Minister for Immigration and Citizenship v Xiujuan Li [2013] HCA 18; (2013) 87 ALJR 618, [27]–[28].

[44] [2011] NSWCA 159; (2011) 80 NSWLR 711, 722 [89].

[45] Ibid 713 [2].

[46] [2012] NSWCTTT 425.

[47] Ibid [44].

[48] [2013] NSWCTTT 585.

[49] [2007] NSWCA 207; (2007) 70 NSWLR 344, 362 [71].

[50] Ibid 360 [65].

[51] Renshaw, Ms – Owner of Lot 3 Strata Plan SP12963 v Owners Corporation of Strata Plan No SP12963 [1999] NSWSSB 40; Corporation of Owners Strata Plan No 31471 v Neave, Mrs M [1999] NSWSSB 43; Paris, Arthur v The Owners Strata Plan 16973 [1998] NSWSSB 12.

[52] Crulz v Dultz (Strata and Community Schemes) [2009] NSWCTTT 182; Antonov & Levina v The Owners Strata Plan 30082 (Strata and Community Schemes) [2008] NSWCTTT 1069; Richardson v OC SP 56695 (Strata and Community Schemes) [2008] NSWCTTT 928; Engelman v Owners Corporation (Strata & Community Schemes) [2003] NSWCTTT 778; Montagna v Owners Corporation (Strata & Community Schemes) [2003] NSWCTTT 783; Drexler v The Owners Corp SP 56117 (Strata and Community Schemes) [2012] NSWCTTT 338.

[53] [2013] NSWDC 67.

[54] [2008] NSWCTTT 928.

[55] [2008] NSWCTTT 1069.

[56] [2003] NSWCTTT 778.

[57] [1998] NSWSSB 12.

[58] Compare NEAT Domestic Trading Pty Ltd v AWB Ltd [2003] HCA 35; (2003) 216 CLR 277, 288 [20] (Gleeson CJ).

[59] [1999] NSWSSB 64 (actual case name – not a typographical error).

[60] See also Renshaw, Ms - Owner of lot 3 Strata Plan SP12963 v Owners corporation of Strata Plan No. SP12963 [1999] NSWSSB 40.

[61] [2005] NSWCA 246; (2005) 63 NSWLR 449.

[62] Ibid 452 [5].

[63] Ibid 483 [156].

[64] Brownells Ltd v Ironmongers' Wages Board & the Drapers' Wages Board [1950] HCA 3; (1950) 81 CLR 108.

[65] (2009) 16 BPR 31,673; [2009] NSWSC 1158.

[66] Ibid 31,677 [7].

[67] [2006] NSWSC 537; (2006) 66 NSWLR 690, 697 [37], 698–9 [45].

[68] Ibid, quoting (1991) 5 BPR 11,432.

[69] Ibid 705–6 [75].

[70] Ibid 697 [37] (emphasis added).

[71] [2007] NSWCA 243; (2007) 71 NSWLR 381, 389–90 [40].

[72] Ibid 402 [100].

[73] Ibid 390 [42].

[74] [2012] NSWSC 590, [49]; see also Young v The Owners S/P 3529 [2001] NSWSC 1135, [45]–[47]; Pro-Tek Pty Ltd, trading as Panozzo Property Unit Trust v The Owners SP54408 [1999] NSWSSB 38; R & M Mesiti Holdings and Pahos Holdings Pty Ltd v Community Assoc DP 270118 and OC SP 53121 (Strata and Community Schemes) [2013] NSWCTTT 462, [41], [43], [60].

[75] [2010] NSWSC 628.

[76] Ibid [55].

[77] Ibid [70].

[78] [2008] NSWCTTT 893.

[79] [2011] NSWCA 159; (2011) 80 NSWLR 711, 719 (citations omitted).

[80] (1846) 50 ER 481; 10 Beav 1 (‘Colman’).

[81] Ibid 486–7; 15.

[82] Ibid 486; 13–14.

[83] [1861] EngR 710; (1861) 70 ER 978; 2 J & H 80.

[84] Ibid 989; 105.

[85] Cf NSW Government, Strata Title Law Reform: Strata & Community Title Law Reform Position Paper (November 2013) <http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Strata_title_law_reform_position_paper.pdf> 30, which proposes to shift the threshold for a ‘large’ strata scheme from 100 lots to a budget of $250,000.

[86] New South Wales, Parliamentary Debates, Legislative Assembly, 4 December 2003, 6093 (Reba Meagher).

[87] [2013] NSWSC 1763, [68].

[88] Grain Pool of Western Australia v Commonwealth (2000) 202 CLR 479, 492, quoted in George Williams AO, Sean Brennan and Andrew Lynch, Blackshield and Williams Australian Constitutional Law and Theory (Federation Press, 6th ed, 2014) 782 [17.53].

[89] This accords with the constitutional model of the corporation, which there will not be enough time or space to discuss here: see, eg, Stephen Bottomley, The Constitutional Corporation: Rethinking Corporate Governance (Ashgate, 2007) Ch 2; John Pound, ‘The Rise of the Political Model of Corporate Governance and Corporate Control’ (1993) 68 New York University Law Review 1003.

[90] [2010] NSWSC 628, [63].

[91] The by-laws in question were ‘original’ by-laws introduced with the strata scheme, so the by-law making power in s 47 was not strictly in question.

[92] [2011] NSWCA 159; (2011) 80 NSWLR 711, 717 [38].

[93] Ibid 717 [39].

[94] Ibid 717 [40].

[95] Ibid 717 [41].

[96] Ibid 717 [43].

[97] Ibid 717–8 [44]–[45].

[98] Ibid Ibid 718 [47] ff.

[99] See also Attorney General v Great Eastern Railway Company (1879) LR 11 Ch D 449, 457.

[100] [1866] EngR 132; (1856) 55 ER 1059; 36 Beav 10.

[101] Ibid 1061; 14.

[102] Ibid.

[103] Ibid 1062–3; 17–18.

[104] Ibid 1061; 14.

[105] [1856] EngR 999; (1856) 69 ER 1018; 3 Kay & J 50.

[106] [1856] EngR 361; (1856) 10 ER 1037; 5 HL Cas 605.

[107] [1861] EngR 631; (1861) 54 ER 803; 30 Beav 40 (‘Forrest’).

[108] Note the interesting similarity between the above formulation and the by-law making power contained in s 47 of the SSMA, which empowers the owners corporation to add, amend, or repeal by-laws for a strata scheme ‘for the purpose of the control, management, administration, use or enjoyment of the lots or the lots and common property for the strata scheme’.

[109] [1849] EngR 430; (1849) 68 ER 46; 7 Hare 114.

[110] [1850] EngR 118; (1850) 50 ER 1091; 12 Beav 339.

[111] Ibid 1096; 352.

[112] Ibid 1096; 353.

[113] SSMA s 12.

[114] (1879) LR 11 Ch D 449.

[115] (1886) 17 LR Ir 605.

[116] [1898] 2 QB 91.

[117] Lindsey Alford and Jasmine Sommer, ‘Protection of Minority Owners in a Body Corporate’ (2005) 11 Australian Property Law Journal 141.

[118] (1997) 44 NSWLR 46.

[119] (1860) 62 ER 337; 1 Drew & Sm 154.

[120] (1879) LR 11 Ch D 449.

[121] Attorney General v Westminster Corp [1924] 2 Ch 416, 419–21 (Pollock MR).

[122] [1900] 1 QB 78 (‘London & North Western Railway’).

[123] See further Attorney General v Wimbledon House Estate Co [1904] 2 Ch 34.

[124] Except for a change of definition: see NSW Government, Strata Title Law Reform: Strata & Community Title Law Reform Position Paper (November 2013) <http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Strata_title_law_reform_position_paper.pdf> 30.

[125] Cf NSW Fair Trading, Examination of Proposed Expenditure for the Portfolio Area (General Purpose Standing Committee No 5) 15 <http://www.parliament.nsw.gov.au/prod/parlment/committee.nsf/0/9430aff6b387e95aca257bc900266d24/$FILE/44985752.PDF/Highlighted%20transcript%20-%20Uncorrected%20proof%20-%20Fair%20Trading.PDF> , where the Minister for Fair Trading, Anthony Roberts MP, acknowledged that owners corporations in strata schemes were essentially a ‘fourth level of government’. Whether this rhetoric translates to meaningful policy change remains to be seen.

[126] NSW Government, Strata Title Law Reform: Strata & Community Title Law Reform Position Paper (November 2013) <http://www.fairtrading.nsw.gov.au/biz_res/ftweb/pdfs/About_us/Have_your_say/Strata_title_law_reform_position_paper.pdf> 33.

[127] Like other private-sector Ombudsmen such as the Financial Ombudsman Service, or the Telecommunications Industry Ombudsman.


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