REAL ESTATE SERVICES COUNCIL v ALLIANCE STRATA MANAGEMENT LTD and ORS [1994] NSWCA 258

REAL ESTATE SERVICES COUNCIL v ALLIANCE STRATA MANAGEMENT LTD and ORS

SUPREME COURT OF NEW SOUTH WALES

MEAGHER, SHELLER and POWELL JJA 21-22 March 1994, 8 June 1994 [1994] NSWCA 258

DECLARATION OF RIGHT — STRATA MANAGEMENT — FIDUCIARY DUTIES — IMPERMISSIBLE DELEGATION OF FUNCTIONS- INSURANCE COMMISSIONS — IMPROPER RETENTION — FULL AND PROPER DISCLOSURE — CONTRACTS TO EXCLUDE FIDUCIARY DUTIES — EXCEPTIONS — STATUTORY DUTY — s42AA PROPERTY, STOCK AND BUSINESS AGENTS ACT, 1941 — APPLICABILITY.

FACTS: The Real Estate Institute initiated proceedings against Alliance Strata Management and its principle, Mr Scott, alleging that they were not fit and proper persons to hold their respective licences. The main grounds were that the terms of Alliance's strata management agreements entailed an impermissible delegation of functions and the improper retention of insurance commissions. During an adjournment granted by the Magistrate for further matters to be put as to orders, the defendants sought a declaration of right in the Supreme Court on a) the effect of its fiduciary duties between the parties in the circumstances, and b) on the statutory duties created by s42AA of the Property, Stock and Business Agents Act, 1941. The Appellant appealed on the grounds that the declarations made were inappropriate.

HELD: (1) Although declaration (a) cleared up a misunderstanding of law in the initial proceedings by indicating that fiduciary duties can be contractually excluded prior to embarking upon the fiduciary occupation, the language used was too general, and unrelated to any particular facts. (2) Declaration (b), dealing with the applicability of s42AA, was appropriately made. (3) (per Powell JA) Declarations of right are only appropriate where the declaration will effectively determine a particular question in issue; discretion to make such declarations to be used sparingly.