Ausbao (286 Sussex St) Pty Ltd v The Owners – Strata Plan No. 100777

1. [1]

   Located on Bathurst Street, Sydney is a mixed use building (Building) comprised of two stratum lots.

2. [2]

   At all material times the plaintiff (Ausbao) was the registered proprietor of one stratum of the lots, 2/1256275, known as the Hotel Component of the Building.

3. [3]

   At all material times, the defendant owned the remaining stratum lot, known as the Residential Component of the Building (the Owners).

4. [4]

   By letter dated 19 September 2025, from the Owners’ solicitors to the strata manager of the Building, copy to Ausbao, the Owners sent a Dispute Notice pursuant to clause 5.4 of the Strata Management Statement in relation to the Building (SMS) contending, amongst other things, that a meeting convened by the strata manager on 11 September 2025 was invalid.

5. [5]

   By statement of claim filed on 28 October 2025, Ausbao commenced these proceedings seeking inter alia, declarations that the Dispute Notice is invalid and of no effect and declarations that the general meetings on 11 September 2025 and 25 September 2025 were validly convened and that the resolutions passed in those meetings are valid.

6. [6]

   By motion filed 1 December 2025, the Owners seek a permanent stay of the proceedings on the grounds that the parties have agreed to resolve the dispute the subject of the Dispute Notice by expert determination, pursuant to clause 5 of the SMS.

7. [7]

   The proceedings were heard on 11 December 2025 - Mr C N Bova SC and Mr A Mohseni appeared for the plaintiff/respondent. Mr N J Beaumont SC and Mr T L Hollo appeared for the defendant/applicant.

8. [8]

   For the reasons set out below the motion should be dismissed with costs.

The Facts

1. [9]

   The underlying facts were not relevantly in dispute. What was in dispute was the proper characterisation of the facts and the proper construction of the expert determination clauses.

2. [10]

   As set out above, the Building is a mixed use building which was subdivided by the creation of two “Stratum Lots” pursuant to the provisions of Division 3B of Part 23 of the Conveyancing Act 1919 (NSW). Subdivision of this land can include one of the stratum lots being further subdivided to create a strata scheme under the Strata Schemes Development Act 2015 (NSW) (Development Act). This is brought into effect by registration of a “strata plan” (s 9(1)). If this occurs, a strata management statement must also be registered at the same time as a strata plan. This is what occurred with the subdivision of the Building.

3. [11]

   The Building was subdivided into two stratum lots, Lots 1 and 2 of DP 1256275.

4. [12]

   On 16 March 2020, Strata Lot 1 was further subdivided by registration on that date of Strata Plan 10077 and the SMS. Both documents were executed and registered by Ausbao as the then owner and developer of the Building.

5. [13]

   This created a “strata scheme” under the Development Act in respect of strata Lot 1 with 95 strata lots together with an Owners Corporation (the Owners). The strata lots were then developed and sold as residential apartments. Ausbao remained the registered proprietor of Lot 2. There is presently a hotel operating on Lot 2 known as “Crowne Plaza Hotel”.

6. [14]

   In simple terms, the Owners are the 95 owners of residential units in the Building and Ausbao owns stratum Lot 2 where the hotel operates in the Building.

The SMS

1. [15]

   Under s 105 of the Development Act and upon registration, and pursuant to clause 1.1 of the SMS, the SMS took effect as an agreement under seal between the Members, the Occupiers of Stratum Lots and the Owners and Occupiers of Strata Lots.

2. [16]

   Clause 1.3 makes it clear that the Building has two components – the Residential Component and the Hotel Component, each being a Member.

3. [17]

   Clause 2.5 requires the Members to establish the Committee (BMC) which is responsible for managing and operating the Building. Each Member must appoint a Representative to attend and vote for them at meetings.

4. [18]

   Clause 2.3 provides:

5. [19]

   Clause 7.1 is in similar terms to clause 2.3 and provides:

6. [20]

   Clause 2.7 sets out the functions of the BMC:

7. [21]

   Clause 2.12 requires the BMC to appoint as Officers a Secretary, a Treasurer and a Chairperson.

8. [22]

   The representative of the Owners as Member of the BMC is Mr Wayne Spicer (Mr Spicer) who was appointed as Secretary of the BMC.

9. [23]

   Clause 2.17 sets out the powers of the Secretary:

10. [24]

    Clause 3 deals with meeting procedures and voting rights. A quorum for a meeting is a representative of all Members although if no quorum is present a meeting must be adjourned. The quorum at any adjourned meeting is the representative of only one Member if all Members are not present within 15 minutes after the meeting is due to commence (clause 3.1 to 3.5). The effect of clause 2.8 is that if all Members are present, all must vote for a resolution to be passed, otherwise a deadlock results.

11. [25]

    Clause 3.13 permits the BMC at any time and from time to time to delegate any of its powers, authorities, duties or functions to the Strata Manager or the Facilities Manager.

12. [26]

    Clause 5 deals with Dispute Resolution:

The appointment of a Strata Manager

1. [27]

   By agreement commencing 23 October 2023, the Members (being the plaintiff and defendant) appointed Bright & Duggan Pty Ltd (Bright & Duggan) as strata manager (the Agreement).

2. [28]

   Clause 2.1 and 2.2 of the Agreement provides:

3. [29]

   Schedule A1 – entitled “Dates and Functions” includes “Meeting Process” – “arranging and undertaking administrative duties in relation to meetings (including convening, chairing, etc.)”. The option “Full authority subject to limitations as disclosed in Schedule A2” is crossed. Schedule A2 does not contain any limitations which appear to be related to meetings.

4. [30]

   Clause 5 of the Agreement deals with termination and provides:

Purported calling of AGM

1. [31]

   On 12 August 2025, Ms Jenny Goodwin of Bright & Duggan (Ms Goodwin) wrote to the representatives of each of the Members seeking to obtain a suitable date for the annual meeting of the BMC, “to resolve governance motions and determine NFY budget”.

2. [32]

   On 29 August 2025, Mr Spicer responded that “11th September works for lot 1 to discuss financials for BMC”. Ms Goodwin responded that the meeting was not confined to financials “but also various governance motions prescribed under the SMS”. Ausbao had already responded that 10 and 11 September were suitable for it. On 4 September 2025, Ms Goodwin circulated an Annual BMC Meeting Agenda for 11 September 2025. Item 8 on the Agenda was for renewal of the Agreement with Bright & Duggan.

3. [33]

   On 5 September 2025, the solicitors for the Owners wrote to Bright & Duggan as follows:

4. [34]

   Ms Goodwin responded later that day, copying Ausbao’s representative, to the effect that notice of the meeting had already been served, thus the motions could not be reissued and the meeting will proceed.

5. [35]

   On 10 September 2025, the Owners’ solicitor sent another letter to Bright & Duggan, copy to Ausbao’s representatives. The letter stated:

6. [36]

   As referred to in this letter, and as attached to it, there had been correspondence as early as February 2025 between Mr Spicer and Bright & Duggan about how it was said the principles of agency operate in the circumstances.

7. [37]

   The Owners’ representatives did not attend the meeting on 11 September 2025. Accordingly a quorum was not present and the meeting was adjourned to 25 September 2025.

8. [38]

   A further email was sent by the Owners’ solicitor to Bright & Duggan on 15 September 2025:

9. [39]

   On 19 September 2025, the Dispute Notice was served. I set out below in full the cover letter to Bright & Duggan and the attached Dispute Notice (which had separately been served on Ausbao):

10. [40]

    On 2 October 2025, the solicitors for Ausbao wrote to the Owners’ solicitors asking “what are the precise questions that your client proposes to ask the expert to answer?”. The letter also indicated that without prejudice to Ausbao’s position that it did not accept the validity of the Dispute Notice, it nominated the Hon. James Stevenson SC to be appointed as the expert.

11. [41]

    A further letter was sent by Ausbao’s solicitors on 2 October 2025. The response from the Owners’ solicitor dated 9 October 2025 was as follows:

The Issues

1. [42]

   The Owners contended that the dispute was covered by clause 5.3 and following of the SMS and as such the proceedings should be stayed. The Owners contended that the dispute was “about” the SMS under clause 5.3 and in this regard “about” had the same meaning as “about matters arising from” the SMS in clause 5.2.

2. [43]

   By contrast, Ausbao contended that clause 5.2 dealt with a wider range of disputes than clause 5.3 – the difference in language used was deliberate. The present dispute was not “about” the SMS or even “about matters arising from” the SMS.

3. [44]

   Two broad issues thus arose for determination:

   1. (1)

      The proper construction of clauses 5.2 and 5.3.

   2. (2)

      The nature of the present dispute between the parties.

The proper construction of clauses 5.2 and 5.3

1. [45]

   Each party referred to a number of authorities in support of its construction.

2. [46]

   It was not in dispute that the dispute resolution clauses such as clause 5 are construed according to the orthodox process of construction. Hammerschlag J (as the Chief Judge in Equity then was) summarised the principles in Illawarra Community Housing Trust Ltd v MP Park Lane Pty Ltd [2020] NSWSC 751 at [41] to [46]:

3. [47]

   Applying these principles the meaning of clauses 5.2 and 5.3 is clear.

4. [48]

   First, clause 5.2 imposes a contractual obligation on the parties to endeavour in good faith to resolve disputes “about matters arising from” the SMS. It is obvious that this is intended to apply to a broad range of disputes – about matters arising from the SMS. Words such as “arising from”, like “arising out of”, are words of “great amplitude”: see Lepcanfin Pty Ltd v Lepfin Pty Ltd [2020] NSWCA 155; (2020) 102 NSWLR 627 at [112] per Bell P (as the Chief Justice then was).

5. [49]

   Clause 5.3 and the provisions that follow it, apply to a narrower range of disputes – namely disputes “about” the SMS. The language of clause 5.2 (arising from) and clause 5.3 (about) is different. I do not accept the submission advanced by the Owners that this was, in effect, a drafting slip and no difference was intended between clause 5.2 and 5.3 – they were intended to apply to the same range of disputes.

6. [50]

   In The Owners – Strata Plan No 2661 v Selkirk [2024] NSWSC 760 at [14], Leeming JA, sitting at first instance, recently remarked that “ordinarily a shift in the language … implies a shift in legal meaning”, although context is of course important.

7. [51]

   The present context does not suggest that it was intended that the different terms would have the same meaning.

8. [52]

   I do not accept that the concluding words of clause 5.2 “before taking action under this clause” bring about the construction contended by the Owners. Those words still have work to do where the subsequent clauses apply only to a narrower set of disputes.

9. [53]

   The ordinary meaning of clause 5.2 is simply to impose an obligation on the parties to endeavour to resolve a broad range of disputes in good faith.

10. [54]

    Clause 5.3 is substantively different. The first sentence imposes a mandatory obligation on the parties to follow the dispute resolution procedure in the remaining provisions where the dispute is “about” the SMS. In relation to such disputes there is a more prescribed negotiation process in clause 5.5 and 5.6.

11. [55]

    In Four Colour Graphics Australia Pty Ltd v Gravitas Communications Pty Ltd [2017] FCA 224 (Four Colour), Gleeson J stated, in the context of an alternative dispute resolution clause that applied to any dispute “about” the interpretation or application of the contract, at [27] that the word “about”:

12. [56]

    Gleeson J rejected a submission that “about” should be construed similarly to, but wider than phrases like “arising out of”.

13. [57]

    Gleeson J also rejected a construction that a dispute was about a contract where the contract provided the source foundation or justification for a second contract which is what the dispute was about.

14. [58]

    The fact that dispute resolution provisions are to be read liberally does not permit a court to depart from the meaning of the words chosen: see Illawarra Community at [45]. The words should be given their ordinary meaning.

15. [59]

    I also do not accept that construing clause 5.3 as dealing with a narrower range of disputes than clause 5.2 is an uncommercial construction and, as such, the two clauses should be construed as dealing with the same range of disputes, notwithstanding their different language. The problems alluded to by Hammerschlag J in Illawarra Community at [45] do not arise in the present context. Caution should also be exercised in attributing a particular commercial intent or understanding of commercial common sense to parties to a commercial agreement: see The J & P Marlow (No 2) Pty Ltd v Hayes and McCabe (2023) 112 NSWLR 29 at [76] per Bell P.

16. [60]

    The Owners also placed some reliance on clause 5.8 of the SMS as indicating that the parties intended a broad range of disputes to be covered by the expert determination procedure in clause 5.4 and following. This was said to follow from the fact that the expert may be a surveyor, or valuer, or real estate agent, quantity surveyor, barrister, engineer or project manager. In my view this is only limited relevance on the construction point.

The nature of the current dispute?

1. [61]

   The issue that then arises is whether the current dispute can be said to be “about” the SMS – being its interpretation or application, or as senior counsel for the Owners put it, the true meaning and effect of the SMS. In my view it is not.

2. [62]

   The essence of the dispute is whether Bright & Duggan was empowered to call the AGM. The Owners contend that Bright & Duggan was not because Bright & Duggan was required to follow the instructions of Mr Spicer as Secretary of the BMC.

3. [63]

   Such a dispute is not “about” the SMS. There is no issue that Mr Spicer is the Secretary of the BMC. The fact that he was so appointed and has powers under clause 2.17 of SMS does not make the dispute “about” the SMS. Bright & Duggan is not a party to the SMS. It is a party to the Agreement.

4. [64]

   The dispute is really one between principal (the BMC through the Secretary) and the Agent (Bright & Duggan) as to the scope of the agency conferred on Bright & Duggan.

5. [65]

   The fact that there is presently a dispute between Ausbao and the Owners about whether the meetings were validly convened – and that Ausbao and the Owners are each Members under the SMS – does not make the dispute “about” the SMS. The dispute remains the same – it is “about” the scope of the authority of the agent (Bright & Duggan) under its Agreement. Bright & Duggan is likely a proper party to the determination of the dispute.

6. [66]

   Insofar as the dispute is said to be or at least include, whether to renew Bright & Duggan’s Agreement, such dispute is not “about” the SMS. Such a “dispute” is really nothing more than a deadlock that is the result of the application of the provisions of the SMS. The nature of the arrangements as set out above, is that each of Ausbao and the Owners must agree to a resolution otherwise there is a deadlock. A deadlock is not a dispute “about” the SMS.

7. [67]

   The nature of the dispute may be tested by asking what relief the expert would be able to give in relation to the “dispute”? There is nothing for the expert to resolve. The position in this regard is similar to that dealt with by Sackar J in The Owners Corporation – Strata Plan 70672 v Trustees of the Roman Catholic Church for the Archdiocese of Sydney [2011] NSWSC 973; (2011) 1 STR (NSW) 457 at [121]-[122].

8. [68]

   It follows that I do not accept that the Dispute Notice is “about” the SMS and accordingly the expert determination procedures in clause 5.3 and following of the SMS do not apply.

Discretionary matters

1. [69]

   Ausbao also raised, if I was satisfied that the present dispute fell within the agreed expert determination provisions in clause 5.4 and following, there were a number of discretionary reasons as to why I would not stay these proceedingds.

2. [70]

   In light of my conclusions above, these points do not arise for consideration.

3. [71]

   I make the following observations nonetheless.

4. [72]

   I am not overly persuaded by the contention that the Court is best placed to determine the issues of construction. The experts nominated by the respective parties were distinguished senior legal practitioners.

5. [73]

   The contention that Ausbao has a strong prima facie case is not able to be assessed. The point was not really explored in argument.

6. [74]

   Of more significance is the fact that Bright & Duggan – a proper party in my view – is not a party to this SMS and thus the expert determination provisions. It could not be compelled to participate in any expert determination and would not be bound by any such determination.

Conclusion

1. [75]

   The motion should be dismissed. There is no reason why costs should not follow the event.

2. [76]

   The Court orders:

   1. (1)

      Defendant’s motion dated 1 December 2025 is dismissed.

   2. (2)

      Defendant pay the plaintiff’s costs of the motion.

   3. (3)

      The proceedings be listed in the Real Property List on 13 February 2026 for further directions.