The Owners – Strata Plan No 91016 v Upright Builders Pty Ltd

1. [1]

   The plaintiff is the Owners Corporation in respect of a multi-storey residential home unit development in Meadowbank, adjacent to the Parramatta River.

2. [2]

   The conditions of approval of the relevant development included a requirement of a walkway within the development from Nancarrow Avenue, to the north, to Rothesay Avenue, adjacent to the Parramatta River, to the south. Ultimately, that access was stipulated to be by way of a staircase.

3. [3]

   Somehow, the walkway and the staircase have been built partly on land that, upon registration of the relevant strata plan, became part of the common property, and partly on the road reserve adjacent to Nancarrow Avenue to the north. The third defendant, City of Ryde Council, is the roads authority for Nancarrow Avenue and the adjacent road reserve. That part of the walkway and staircase as is on the road reserve was referred to by the parties as “the Encroachment”.

4. [4]

   The position of the Encroachment and the Common property is illustrated on the attached diagram:

5. [5]

   The roughly triangular area to the north of the border of the common property (highlighted in blue) and Nancarrow Avenue is the Encroachment.

6. [6]

   The Owners Corporation brings these proceedings against the first and second defendants, the builder and developer of the Project, alleging various building defects and breaches of the statutory warranties in the Home Building Act 1989 (NSW). I will refer to the first and second defendants together as “the Builder”.

7. [7]

   The Owners Corporation commenced these proceedings against the Builder in the New South Wales Civil and Administrative Tribunal (“NCAT”) on 31 August 2017.

8. [8]

   Between 2017 and 2019, when the proceedings were at NCAT, the existence of the Encroachment was discovered.

9. [9]

   The proceedings were then transferred to this Court and the Council joined as third defendant.

10. [10]

    At that time, the Owners Corporation also amended its claim to include a claim against the Council, seeking relief under s 3 of the Encroachment of Buildings Act 1922 (NSW) (“the EBA”). Section 3 provides:

11. [11]

    The Council has admitted in its List Response that, for the purposes of s 3(1) of the EBA:

12. [12]

    The Council, however, denies that it is an “adjacent owner” for the purposes of s 3(1) of the EBA.

13. [13]

    The proceedings brought by the Owners Corporation against the Council will require determination of five questions:

14. [14]

    The proceedings have only now reached the stage where the Owners Corporation’s evidence is complete. No directions have yet been made for service of evidence by the Builder and the Council. There has not yet been discovery.

15. [15]

    Now, by Notice of Motion filed on 21 April 2023 and amended at the hearing on 30 May 2023, the Council seeks orders pursuant to Uniform Civil Procedure Rules 2005 (NSW), r 28.2, that the following questions be decided separately from and before other issues in the proceedings:

16. [16]

    The separate determination of all of the relief sought by the Owners Corporation against the Council would require determination of each of the matters referred to at [13] above. It emerged during argument that this would involve resolution of disputed facts arising from the Builder’s contention that:

17. [17]

    That will involve resolution of disputed factual questions rendering the separate determination of that issue inappropriate.

18. [18]

    On the other hand, it is common ground that the determination of the isolated question of whether the Council is an “adjacent owner” for the purposes of the EBA is purely a question of statutory construction.

19. [19]

    The Council’s argument is that although, as a matter of ordinary English, it appears to answer the definition of “adjacent owner” in s 2 of the EBA, being “the owner of land over which an encroachment extends”, the proper construction of various provisions in the Roads Act show that the latter is intended to be a code governing rights and liabilities of councils and adjacent owners in relation to encroachments on public roads.

20. [20]

    The Council’s position is that the present circumstances are indistinguishable from those considered by Holland J in Pesic v South Sydney Municipal Council, [1] notwithstanding the fact that Holland J was considering the EBA in the context of the then Local Government Act 1919 (NSW).

21. [21]

    This is not the occasion to express any view about the Council’s proposed argument.

22. [22]

    The point is that, if the Council is correct, the Owners Corporation’s case as currently formulated is bound to fail.

23. [23]

    On the face of it, that is a good reason to order a separate question. Indeed, as was submitted on behalf of the Council, that is the very kind of case in which a separate question may be appropriate. [2]

24. [24]

    If such a separate question were ordered, and the Council successful, then, on the face of it, the proceedings would be dismissed as against the Council, thus saving it the expense it would otherwise incur in preparing the evidence necessary to meet the Owners Corporation’s case under the EBA.

25. [25]

    In those circumstances, I propose to order the separate determination of the narrower question.

26. [26]

    The costs of the Council’s application for a separate question will be the Council’s costs in the separate question.

Proposed amendment

1. [27]

   Against the possibility that the Council is successful on the separate question, the Owners Corporation seeks to amend its List Summons to add prayers for the following declarations:

2. [28]

   It also seeks to make the following further allegations in its List Statement:

3. [29]

   The proposed declaratory relief is premised on the allegations proposed to be made in [34A] and [34B] of the List Statement. That is made clear by the use of the word “accordingly” at the outset of proposed [34A].

4. [30]

   Thus, the proposed declaration only arises from the matter the subject of proposed [34B]; the foreshadowing by the Council on 20 October 2022 of the making of an order against the Owners Corporation under s 124 of the Local Government Act 1993 (NSW) requiring the Owners Corporation to “submit a proposed methodology to repair the damage” said to have been caused by the Encroachment.

5. [31]

   However, the Council’s position is that it no longer considers it necessary to make such an order and has no present intention of doing so. Thus, as the Council submits, the making of the proposed declarations would not quell any dispute and would be hypothetical.

6. [32]

   The Owners Corporation submits that, leaving aside the matter in proposed [34B], the making of the declarations would clarify the Owners Corporation’s standing in relation to the Encroachment and that this may be relevant to issues in the proceedings, including the Builder’s contention of the existence of an implied licence over the Encroachment.

7. [33]

   The first difficulty with that proposition is that the proposed [34A] to [34C] are not directed to the Builder’s contention as to the existence of an implied licence, nor to any other aspect of the Owners Corporation’s claim against the Builder. Rather, they are directed to a contemplated intention of the Council, that the Council has, in terms, eschewed.

8. [34]

   In any event, the Builder’s case, as articulated in its List Response, is that, in the events that have happened, the Council has granted the Owners Corporation an implied licence over the Encroachment. Assuming that such an implied licence would confer on the Owners Corporation a “property interest” in the Encroachment, the effect of the Owners Corporation’s proposed allegation – that it has no such property interest in the Encroachment – would seem to be that it disputes having any such implied licence over the Encroachment. But, as explained to me during argument, that is not, or will not necessarily be the Owners Corporation’s position.

9. [35]

   For those reasons alone, I am not prepared to grant the Owners Corporation the leave it seeks.

10. [36]

    In any event, proposed declaration [34B] is that the Owners Corporation has no “liabilities or obligations” of any kind to any party, presumably including the Council, in relation to any “property interest” that it may have in the Encroachment.

11. [37]

    I cannot see how any court would make such a broad ranging and unqualified declaration.

12. [38]

    Further, such a declaration is sought in the context of proposed [34B] of the List Statement. Leaving aside the hypothetical nature of the declaration made in that context, were the Council to issue an order against the Owners Corporation of the kind contemplated by [34B], that would be an obligation imposed by “planning or environmental law”. Accordingly, the declarations sought would amount to a declaration of a right in relation to any obligation imposed on the Owners Corporation by planning or environmental law. Only the Land and Environment Court has jurisdiction to make such a declaration. [3]

13. [39]

    I decline to give the Owners Corporation leave to make the proposed amendment.

14. [40]

    The Owners Corporation’s Notice of Motion of 29 May 2023 is to be dismissed with costs.

Whether the Council should remain a party in any event

1. [41]

   The Owners Corporation is concerned that if the Council is successful on the separate question, it will seek to have the proceedings dismissed as against it, thereby for all practical purposes foreclosing, by reason of the effluxion of time and the passage of relevant limitation periods, the possibility of Owners Corporation making any further claim against the Council.

2. [42]

   The Council’s position is that it is open to remaining in the proceedings if there is a proper basis or some utility in doing so.

3. [43]

   That is a matter that can be further considered once the outcome of the separate question is known.

Conclusion

1. [44]

   The parties should now bring in short minutes of the orders necessary to give effect to these reasons, and to make ready the proposed separate question for determination.