Reported Decision : 50 NSWLR 458 (2001) NSW ConvR 55-962 New South Wales Supreme Court CITATION : Mulwala & District Services Club Ltd v The Owners - Strata Plan 37724 [2000] NSWSC 1040 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 3921/2000 HEARING DATE(S) : 26/10/2000 JUDGMENT DATE : 26 October 2000 PARTIES : Mulwala & District Services Club Limited (P) The Owners- Strata Plan 37724 (D) JUDGMENT OF : Young J COUNSEL : E A Collins (P) M D Young (D) SOLICITORS : Hargraves (Yarrawonga)(P) Blessington Judd (D) CATCHWORDS : CONVEYANCING [128]- Torrens system- Dealing- Status of document recording alteration to by-laws of Strata Title Scheme. CONVEYANCING [184]- Caveats- Who may lodge- Strata owner entitled to interest in common property may lodge caveat. PROCEDURE [743]- Declarations- Alternative statutory tribunals available- Discretion- Whether Court should entertain dispute- Factors involved. Real Property Act 1900, ss 3(1), 74F, 74K, 74P LEGISLATION CITED : Strata Schemes (Leasehold Development) Act 1986, s 23(b) Strata Schemes Management Act 1996, ss 48, 51(1), 157, 158, 159 Barry v Heider (1914) 19 CLR 197 Borthwick v Walsh (1980) 1 BPR 9259 Dowdle v Inverell [1999] ANZ Conv R 429 Macleod v PSP 6544 [1980] 2 NSWLR 691 CASES CITED : Mercantile Credits Ltd v Shell Company of Australia Ltd (1976) 136 CLR 326 North Wind Pty Ltd v PSP 3143 [1981] 2 NSWLR 809 Perpetual Executors & Trustees Association of Aust Ltd v Hosken (Registrar of Titles) (1912) 14 CLR 286 Re R [2000] NSWSC 886 Regis Towers Real Estate Pty Ltd v Fung [2000] NSWSC 438 Ryles v Martin (1971) 1 BPR 9666 DECISION : See paras 33-37 THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION YOUNG J THURSDAY 26 OCTOBER 2000 3921/2000 - MULWALA & DISTRICT SERVICES CLUB LIMITED v THE OWNERS - STRATA PLAN 37724 JUDGMENT 1 HIS HONOUR: There are two aspects of the present matter that need to be considered this afternoon. The first is whether the proprietor of a strata lot is entitled to lodge a caveat in respect of the common property to protect itself from the registration of a by-law affecting the common property which it says is invalid. The second is whether the dispute between the parties over the validity of that by-law should be dealt with in this Court, or whether it should be dealt with by the various layers of statutory tribunals provided by the Strata Schemes Management Act 1996 (the "SSM Act"). 2 The first question arises because the plaintiff did lodge such a caveat. The caveat was served with a lapsing notice and the plaintiff commenced this suit to extend the caveat. The caveat has been extended by consent. Today, matters have come to a head in a rather bizarre way. 3 The basal difference between the two parties is that the defendant categorically insists that the dispute between the parties be dealt with by the layers of statutory tribunals. The plaintiff has taken a little time to work out what it wants, but it is now seeking that the dispute be dealt with by this Court. The plaintiff is prepared to remove the caveat if the dispute can be dealt with quickly in this Court. On the other hand, the defendant is prepared to give an undertaking not to register the by-law until the dispute is dealt with by the layers of statutory tribunals. Neither will budge. 4 The basic procedural dispute between the parties, which, one would have thought would not have arisen past the end of the nineteenth century, has generated some 132 pages of letters going back and forward between solicitors regarding the procedural point as to how the parties can resolve their dispute. When one thinks of that as something like $10 a letter plus $2 every time a letter is photocopied, thousands of dollars have been spent in this rather wasteful way of working out how the dispute can best be dealt with. 5 Thus, neither party really wishes to maintain the caveat, so long as the dispute is dealt with in the foreseeable future somewhere or other. However, that did not prevent a very technical argument being presented to me as to why the caveat was bad. 6 The caveat in question is exhibit PX03. It is in common form. In Schedule 1 of the caveat under "Nature of the estate or interest in the Land " it states "An interest in the common property as the owner of Lot 29 SP 37724...". The caveat is generally to prohibit all dealings. It is clear that whatever happens, the caveat is too wide and the only prohibition should be in respect of lodging a document which would give the impugned by-law statutory operation. However, counsel for the defendant says that there is not even the right to lodge a caveat which has a limited prohibition. 7 In this sort of case, one starts with s 74K of the Real Property Act 1900 as amended. That section allows the Court to make an order extending a caveat if satisfied that the caveator's claim has or may have substance. If the Court is of that view, it may, in its discretion, extend the caveat. If it is not so satisfied, it must dismiss the application. 8 A fairly low threshold test is used under that section. As Bryson J said in Dowdle v Inverell [1999] ANZ Conv R 429, it is not "a very demanding test". Usually, if there appears to be an arguable case for relief and the caveator has not been unreasonable in and about proposals of alternative security whilst the final hearing takes place, the caveat is extended. Sometimes a condition is imposed that there be an undertaking as to damages because of the relatively toothless provisions of s 74P of the Real Property Act. 9 The present caveat is a caveat restricting any dealing with the common property. 10 Under the Strata Schemes (Leasehold Development) Act 1986 (the "Leasehold Act"), the common property in a strata title scheme, where the basic title is leasehold (as it is in the present case), is held by the body corporate as agent for the sublessees as tenants in common in shares proportional to their unit entitlements (s 23(b)). 11 It has been the case for some time that a person may lodge a caveat against their own title. Even before section 74F of the Real Property Act took its present form this was a common practice, particularly where the certificate of title had been lost or where there was some fraudulent dealing which the registered proprietor thought might be registered. Ever since Barry v Heider (1914) 19 CLR 197, this practice has been common. Section 74F(2) now makes it clear that the registered proprietor of an estate or interest may lodge a caveat on his or her own title. Although it does not expressly say that the registered proprietor of a strata lot in a strata plan may lodge a caveat over the common property, by parity of reasoning with the practice that grew up after Barry v Heider, which practice is reflected in section 74F(2), the Real Property Act would seem to permit it. I do not consider that the legislature, when recasting the caveat provisions and putting them all into the one part of the Real Property Act, intended to limit the previous practice. 12 However, a caveat can only be lodged under section 74F to prohibit the recording of a dealing affecting the estate or interest to which the person claims to be entitled unless it comes within 74F(2) or its implied extension, where the caveat can exist to protect an already existing interest from the registration of a dealing. 13 Mr M D Young, who appears for the defendant, says that the lodgment of a change of by-law under a strata scheme is not a "dealing". This is because a "dealing" is defined as being an instrument which does certain things. An "instrument" is defined in section 3(1) of the Real Property Act as meaning: "Any grant, certificate of title, conveyance, assurance, deed, map, plan, will, probate, or exemplification of will, or any other document in writing relating to the disposition, devolution or acquisition of land or evidencing title thereto." 14 Mr Young puts that the by-laws do not relate to the disposition, devolution or acquisition of land, nor do they evidence title to land. 15 It must be noted that "land" is defined in the Real Property Act as meaning: "Land, messuages, tenements, and hereditaments corporeal and incorporeal of every kind and description or any estate therein, together with all paths, passages, ways, watercourses, liberties, privileges, easements, plantations, gardens, mines, minerals, quarries, and all trees and timber thereon or thereunder lying or being unless any such are specially excepted." 16 It is important to realise that the word "instrument" in the definition does not mean "document". As was recognised early in the history of the Torrens system in Perpetual Executors and Trustees Association of Australia Ltd v Hosken (Registrar of Titles) (1912) 14 CLR 286 at 294, a document can contain several instruments and the instrument in the statutory sense is the transfer, mortgage, conveyance, et cetera, and a document may contain one or more instruments and also a non-instrument. As Isaacs J so poetically put it in Hosken's case at p 294: "… that extrinsic agreement is not presented for registration, any more than if there were appended to the instrument of mortgage a verse of 'Omar Khayam', or a copy of an Egyptian hieroglyphic. It is the mortgage, and that alone, that is sought to be registered." 17 Accordingly, a "dealing" is something which will at least contain an instrument, but need not be restricted to an instrument. However, when a dealing is registered, the only part of the dealing which will obtain protection under the Real Property Act is the instrument. The estate or interest affected by the instrument and all rights that touch and concern the land that must be regarded as part of the estate or interest which the person getting the benefit of the instrument takes under the instrument alone obtain indefeasibility: see Mercantile Credits Limited v Shell Company of Australia Limited (1976) 136 CLR 326 at 346. 18 It is also important to realise that the definition of "instrument" refers to "evidencing title" to land. The definition of "land" is a very peculiar one because it includes not only words which ordinarily would be considered to be ancillary to land, general words like "corporeal and incorporeal hereditaments", but also words which do not normally denote "land", such as, for instance, "liberties and privileges", some of which might be incorporeal hereditaments and some which would not be. The better view appears to be that the draftsperson in using this definition endeavoured to take up what is really better covered by s 67 of the Conveyancing Act 1919, removing the necessity for general words in conveyances. Outside that area the definition is to be limited to the part of the verbiage that ends with the word "therein". 19 However, tending against that is the fact that on many occasions, including in section 74F(1) itself, not only is the word "estate" used in respect of land as it is in the definition, but so is the word "interest". It would seem then that one cannot limit what is "land" to the initial part of the definition. The balance of the definition indicates that all rights connected with land, whether they are traditionally incorporeal hereditaments or not, are incorporated within the word "land". The word "title" is again a general word. As Butt says in Land Law 3rd ed (LBC, Sydney, 1996) at para 1904, title usually just means ownership, but in a looser sense, it denotes the various acts and events which go towards proving ownership. Ownership, in respect of the expanded definition of "land", includes not only the fee simple but also incorporeal hereditaments and rights beyond incorporeal hereditaments including liberties and privileges or rights relating to trees or gardens or plantations. 20 In the cases there is a fine line between defects in title and defects in quality. The same dividing line needs to be drawn here. Where there is a severe interference with the use to which property could be put by planning schemes or defects in buildings or otherwise, there may well be a defect in title. However a lesser affectation is usually only a defect in quality: see, for instance, Borthwick v Walsh (1980) 1 BPR 9259. 21 When one turns to the disputed by-law in the instant case, it purports to govern the use that the proprietor of Lot 29 can make of the common property. The right to use the common property, the entitlement or title to use the common property is being affected by the restrictions in the by-law. It may well be that parts of the by-law do not go to title at all, but it is certainly arguable that at least some parts do go to title. Accordingly, in my view, the document which will register the by-law under the power given to the Registrar General under s 48 of the SSM Act is within the concept of "dealing" and can be protected by a caveat. 22 Mr Young says that that is a momentous decision to make because the whole of the procedure of sensibly administering strata schemes could be affected. Although the Court does bear in mind matters of particular inconvenience to the parties, matters of general inconvenience are normally not matters of concern in individual cases, as Parliament is able to fix any general problem if it wishes to. 23 The caveat, as I have said, is in too wide a form. However, the plaintiff is entitled to lodge a caveat and maintain it. It may be more convenient for an injunction to be given if the proffered undertaking by the defendant is insufficient, a matter to which I will return after dealing with the second part of the case. 24 The second part of the case comes about because the plaintiff seeks to amend the summons by seeking in this Court a declaration as to its rights in respect of the by-law. 25 After debate with counsel, it appears that there are two questions which, no matter how they are answered, would solve the whole of the dispute between the parties. Those two questions are: (a) do by-laws 32 or 38 of the relevant strata plan create special privileges in the plaintiff within the meaning of s 51(1)(b) of the SSM Act? and (b) does new by-law 28 alter the rights of the plaintiff? 26 Miss Collins, who appears for the plaintiff, says that these questions are eminently suitable to be dealt with by this Court and that the Court should be able to deal with them in half a day as there is minimal factual material that need be considered. 27 Mr Young, on the other hand, says that it would be highly inappropriate for these matters to be dealt with by this Court. The Government has set up specialist tribunals to deal with this sort of problem and, prima facie, those tribunals should be utilised. He referred me to the cases of Macleod v PSP 6544 [1980] 2 NSWLR 691 and North Wind Pty Ltd v PSP 3143 [1981] 2 NSWLR 809. Miss Collins referred me to the recent decision of Bryson J in Regis Towers Real Estate Pty Ltd v Fung [2000] NSWSC 438 in the same area. All of these cases point out that where there are statutory tribunals which are accustomed to dealing with matters of a particular type, then ordinarily the Court will, as a matter of discretion, allow such matters to be dealt with before those tribunals. For reasons that I gave in Re R [2000] NSWSC 886, it is inappropriate to call the levels of tribunals under the SSM Act "specialist tribunals", but it is certainly the case that they have been set up to deal with this sort of dispute. 28 However, the Court does not just decide cases according to some general rule of thumb. Each matter must be looked at on its own particular circumstances. 29 It seems to me that there is some doubt as to whether question (a) that I have isolated falls precisely within the jurisdiction of the statutory tribunals. The powers of the tribunals relating to by-laws are given by ss 157, 158 and 159 of the SSM Act. They seem to be almost discrete powers. The appropriate power to declare that a by-law is invalid is in s 159(1), but that section seems only to go to power. There are always problems where statutory tribunals are asked to decide not only whether the whole of a by-law is good or bad but whether it is partly good or partly bad. These problems are dealt with in Wade On Administrative Law 5th Edition (Oxford, Oxford University Press, 1982) pp 302 and following as well as in the other standard works on Administrative Law. Questions of construction are often involved as to whether the bad part vitiates the whole document. 30 In any event, I have some doubt as to whether s 159 of the SSM Act allows the tribunals to deal with questions of law which are collateral to the questions of validity. It is clear that if one has power to make a final administrative decision, one has power to make decisions on the steps along the way. What I am concerned about is that there may be some collateral consideration which would be outside the purview of the tribunals. 31 In other words, I am saying that there is some doubt as to the ability of the tribunals to deal with the whole of the dispute between the parties. 32 Secondly, particularly since the amendment to the Supreme Court Rules, all courts are required to consider what is the just, cheap and efficient way of dealing with a dispute. Strangely enough, in the correspondence there are copious references to that being the parties' desire but, as I say, they must have already wasted $5,000-$10,000 in that correspondence. It is clear that in this Court, the matter should take half a day. Before the tribunals, there may be mediation and that may take a day. There may be a decision on the papers by the adjudicator without appearance. There may be an internal appeal with the right of legal representation. I cannot see how that process is necessarily going to be cheaper. Again, cases like Ryles v Martin (1971) 1 BPR 9666 show that this Court will often take the view that where there is a short question of law which can be dealt with by way of declaration, despite the tendency I have referred to earlier to have the ordinary tribunals deal with the matter, this Court will, in the interests of cost and efficiency, take the matter under its own wing. 33 Having considered all these matters, it seems to me that it is more appropriate that the matter be dealt with in this Court. Accordingly, I give leave to the plaintiff to further amend the summons in accordance with the document which I have initialled and dated and placed with the papers. 34 Reverting now to the caveat or injunction, it seems to me that the best thing to do is to simply extend the caveat for a short period and stand the matter over for directions. At that time, short minutes should be brought in by the plaintiff substituting a form of injunction for the caveat and proffering the appropriate undertaking as to damages to support it. 35 It would be possible for the Court to deal with this matter fairly soon if my Associate were contacted, but it may be that the parties will need to consider how long it will take them to put all the evidence before the Court. Accordingly, unless anyone says something to the contrary, I propose that the matter stand over to the Registrar's list on 9 November 2000, 14 days hence, for that purpose. 36 As the defendant has wholly failed today, it must pay the costs of today. 37 Accordingly, I extend the caveat until further order. Stand the matter over to the Registrar's list at 9.30 am on 9 November 2000 and order that the defendant pay the plaintiff's costs of today. ***************** Last Modified: 11/09/2000 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.