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Samowill Pty Ltd v Queanbeyan – Palerang Regional Council; Samowill Pty Ltd v Heritage Council of New South Wales [2017] NSWLEC 1550

Braidwood is heritage listed town famous for its well preserved colonial architecture. The Samowill company sought approval from the Council to subdivide a rural lot into five residential blocks. The Council refused the application because it would have a detrimental impact on the heritage listed town. The Court upheld the Council’s decision, taking into consideration factors unique to the site. The Commissioner highlighted that the modern site would be visible during arrival to the town, and that the uninterrupted transition from heritage building to unused land was important for the colonial style landscape. Taking these factors into consideration, the development would have an adverse impact on heritage significance.

In the matter of Plutus Payroll Pty Limited & others [2017] NSWSC 1360, the Plaintiff Deputy Commissioner alleged that twelve companies participated in a syndicate for the purpose of avoiding large tax obligations to the Commonwealth. The companies were unable to pay their tax liabilities, and the Commissioner applied for the companies to be wound up for insolvency under s459P of the Corporations Act.

A corporation is not solvent unless it is able to pay all its debts when they become due and payable. A company’s failure to pay a particular debt may by itself be sufficient evidence of insolvency, unless that debt is disputed. None of the defendants have disputed the debt they owe to the Commonwealth, and the debts are substantial, ranging from $1.6 million $54.7 million. Additionally, eight of the twelve defendants have outstanding unpaid obligations to employees for wages and superannuation. Brereton J concluded that each of the defendants were insolvent, and ought to be wound up.

The NSW Supreme Court addressed this question in Yeshiva Synagogue Incorporated 9893834 v Karimbla Properties (No 10) Pty Ltd [2017] NSWSC 1368. Land owned by Karimbla was leased to the “Yeshiva Centre”, which consisted of the Yeshiva Synagogue, two colleges, and a charitable kitchen. To raise money, Karimbla sold the land to a purchaser subject to existing tenancies, and when the leases expired the new purchaser refused to renew them. Yeshiva Synagogue argued that a clause in the Deed of Agreement for the continued use and occupation of the land gave rise to an ongoing right of possession even after the termination of the lease.

Justice Darke determined that the object of the sale of land by Karimbla was to raise money to facilitate the continued operation of the Yeshiva Centre. Nonetheless, the language in the agreements did not indicate that the plaintiffs were to be given a right of possession following the termination of the leases. A reasonable business person would have read the terms as meaning that upon termination of the leases, the owner would have a right to sell the premises with vacant possession.

In Morris Finance Ltd v Free [2017] NSWSC 1417, Morris Finance applied for an order for judicial sale of a property over which another party held the first mortgage. Morris Finance argued it had the benefit of an equitable charge over the land which secured unpaid moneys in a commercial lease agreement granted by the registered proprietor. In considering whether there was an equitable charge, Ward J agreed with recent cases from Victoria, in which it was stated by the Victorian Supreme Court that in Australia there is neither a required form for an equitable charge, nor a requirement to include a precise definition of the property over which the charge attaches. Despite the broad wording in the lease agreement, the Court found that Morris Finance did have an equitable charge over the land. The default under the lease was not contested, meaning the equitable charge was enforceable to recoup the money owing to Morris Finance. The first mortgagee did not object to the making of a court order for sale of the property, and the order was duly made.

The Court of Appeal outlined when the consent of the owner’s corporation is required for a lot owner’s development application in Owners Strata Plan No. 50411 & Ors v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5. Consent from owner’s corporation is not required for a development application when work is wholly within boundaries of lot. However, consent from owner’s corporation is required for a development application when works impact on common property. There is judicial debate as to what will entail ‘impact’. If the owner’s corporation decides not to provide consent, the lot owner can apply to the NSW Civil and Administrative Tribunal to settle the dispute.

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.