Author: baron + associates

In Ku-ring-gai Council v Chan [2017] NSWCA, Ku-ring-gai Council undertook inspections of a property to ascertain whether there were any building defects, and then provided a certificate that the property was fit for occupation. After the property was purchased by Chan, serious structural defects manifested in the property. The Supreme Court held the Council liable for a breach of duty of care to the subsequent purchaser, on the basis that the Council was the Principal Certifying Authority and could reasonable expect that the purchasers would rely on the issued occupation certificate.

On appeal, the NSW Court of Appeal overturned this decision, finding that the Council did not owe the subsequent purchasers a duty of care. The Court found that the purchasers would have had only a general expectation that the Council had properly issued the certificate, and that there was no actual reliance on this expectation when making the purchase. In coming to its decision the Court also took into consideration the ability of the purchasers to rely on the statutory warranty scheme under the Home Building Act (1989) NSW.

The case of Brannigan v Smith [2017] NSWSC 1201 concerned an agreement to lease a one bedroom unit, with an option to purchase at the end of a set period. This dispute arose as to whether or not Brannigan validly exercised the option by giving notice. Notice was allegedly effected by a letter with enclosures sent to the duly authorised agent of the grantor. The defendant argued that the provided facsimile was insufficient to meet the requirements in s170 of the Conveyancing Act 1919 (NSW), and the notice was therefore ineffective.

Justice Darke in the Supreme Court found that the notice was duly served. First, he found that on these facts service to the duly authorised agent of the grantor was acceptable, as the address and contact details of the grantor were not known to the plaintiff. He then drew attention to the nature of s170 of the Conveyancing Act: it does not provide an exclusive code, rather, it applies alongside the general law unless the instrument otherwise specified. In this case the option agreement does not require that the notice of exercise of option be served in conformity with s170. Service on the agent by facsimile is in accordance with general law principles and is sufficient, and consequently the plaintiff had validly exercised the option.

Auburn Shopping Village v Nelmeer Hoteliers [2017] NSWSC concerned an agreement by Nelmeer Hoteliers to provide Auburn Shopping Village with poker machines. Upon searching the Personal Property Security Register, Auburn Shopping Village found there was a registered security interest by a party called Druin against Nelmeer, potentially attaching to the poker machines. Auburn Shopping Village alleged there was a contractual term that Nelmeer Holdings would transfer the Poker Machine permits free of all encumbrances or security interests, and that this had been breached.

Nelmeer submitted that the Druin encumbrance did not affect the poker machines. On the evidence, the Court found that there was an error in the registration of the encumbrance, and as such the security interest was not perfected. Based on this finding, the Court accepted Nelmeer’s argument that the mere presence of the unperfected interest will not make it an encumbrance.  The PPSR is a notice based system, the purpose of which is to provide enough information to permit Auburn Village to make enquiries. Even if there was an obligation to transfer the permits without an encumbrance, this could not be breached solely by an entry on the register which wrongly claimed that a security interest existed.

In McElwaine v The Owners – Strata Plan 75975 [2017] NSWCA 239, McElwaine was the registered proprietor of a unit in an apartment building managed by an owner’s corporation. He sued the owner’s corporation for their alleged failure to repair waterproofing defects in the common property. The water damaged his unit and McElwaine claimed damages for common law nuisance. At the Supreme Court the owner’s corporation were successful in arguing that the effect of the Strata Schemes Management Act (SSM Act) was to bar McElwaine from bringing a common law action.

On appeal, the Court of Appeal unanimously overturned the Supreme Court’s decision, finding that the SSM Act does not exclude the common law. Individual lot owners are still owed general law duties of care, not merely duties which can be enforced through the statutory scheme. Therefore, McElwaine had a common law right to sue the owners for nuisance, which is a breach of their responsibility to control and manage the common property with due care and skill.

The NSW government has released an Options Paper to address the rapid growth of the short term holiday letting industry. The short term holiday letting industry includes the rental of a room or entire residence, with or without the host present, and includes AirBnb properties. The Options Paper presents regulatory options, any of which would be standardised through NSW to manage the impacts of the industry growth. These options include: self-regulation, changing strata laws, regulation under the Environmental Planning and Assessment Act 1979, or a registration system. Submissions on the paper can be made until 31 October 2017.

In Luxcon Developments No 6 Pty Limited v Woollahra Municipal Council [2017] NSWLEC 1426, a development application was classed by the developer as ‘shop-top’ housing. The Council rejected this classification, meaning the development was not permissible within the zone. A ‘shop-top’ requires a ground floor retail premises with residential housing directly above. In this case, the development proposal had a ‘lower ground floor’ for retail use.

In coming to their decision, the judges considered Arco Iris Trading Pty Ltd v North Sydney Council [2015] NSWLEC 1113. That case established that a building can have two ground floor levels, but each ground floor must be at street level and have street frontage. The judges found that neither condition was met in this instance. As such, this was not ‘shop-top’ housing, and the development was prohibited by zoning restrictions.

The Environmental Planning and Assessment and Electoral Legislation Amendment (Planning Panels and Enforcement) Act 2017 was assented to 14 August, and most changes will take effect 1 September 2017. The bill affects the Greater Sydney region and the City of Wollongong. The key changes are to:

• Remove the powers of councillors to determine development applications
• Require local councils within the affected areas to create local planning panels
• Give consent authority functions to those local planning panels, or a delegate of the council (an officer or employee), or a regional panel
• Allow local council to consult local planning panels on other development matters

The purpose of the amendment is to increase the transparency and independence of the development application process.

Nikolaidis v Northern Beaches Council [2017] NSWLEC 1439 concerned a waterfront residential property, which had a pool without the child-proof fencing required under s7 of the Swimming Pool Act 1992.  The applicant argued that they fell within the exception in s10 which provides that for waterfront properties the means of access to the pool must be at all times restricted (although not necessarily by a fence). The applicant had renovated the house 8 years previously, and had intended to install locks on the rear doors and windows such that the means of access to the pool would be restricted. Due to unforeseen circumstances, the installation of those locks was delayed. The Commissioner found that the applicant was not entitled to the exemption in s10 because of the extensive 8 year delay, and ordered compliance with s7.

In MPG Investments Pty Ltd v Willoughby City Council [2017] NSWLEC 1442, a land owner made a development application to the local council. The current building on the land was a commercial building, which was permissible within the zoning at the time of construction, but became impermissible.  Consent for this existing use was maintained under the Environmental Planning Act 1979. The land owner applied for development consent to demolish the existing building and construct a mixed-use development permissible within the area’s zoning. The Council rejected the application because it exceeded height and floor plan limitations, and would have amenity impacts on surrounding properties.

The owner argued that the compliance with the development standard was unreasonable in this instance. The basis for this argument was that allowing the development to go ahead would incentivise him to discontinue the existing impermissible use of the land. The judge did not accept this argument, stating that this was a policy consideration not outlined in the legislation, and refused development consent.

In Woolworths Limited v Randwick City Council [2017] NSWCA 179, Woolworths lodged a development application to convert Randwick Rugby Club’s former premises into a grocery store. The Council rejected the application. Woolworths challenged the decision. At issue on appeal was whether the building was ‘designed or constructed’ as a ‘retail premises’ within the meaning of the Local Environmental Plan (LEP).

The Court of Appeal held that the courts must look to the function of the premises at the time of design or construction; not the use to which that premises is later put. Moreover, the fact that the building was designed and constructed to be a registered club did not preclude it from also being a ‘retail premises’ selling food and drink. The building included cafes, restaurants, seating areas, a commercial kitchen, a loading dock, and storage areas. The presence of these facilities in the design and construction of the building meant that the building did fall within the meaning of a ‘retail premises’, and hence Woolworths was able to proceed with their development application.

The judges also clarified the meaning of ‘retail premises’ under the LEP. The noted that whether the premises was only accessible by members of the club was legally irrelevant. Whilst a ‘business premises’ must provide services ‘directly to the public’ under the LEP, a ‘retail premises’ has no such limitation in its definition.