In a decision of interest to strata law practitioners, the NSW Court of Appeal (Ward, P, McHugh JA and Griffiths JA) has recently handed down judgment in Owners Corporation SP6534 v Elkhouri; Owners Corporation SP6534 v Perpetual Corporate Trust Ltd [2024] NSWCA 279.

The Court considered two important matters of principle: first, whether the Supreme Court had jurisdiction to make a declaration that certain conditions of a strata by-law were unjust within the meaning of s 149(1)(c) of the Strata Schemes Management Act 2015 (NSW) and, second, the meaning of “unjust” within s 149(1)(c).

In respect of the first issue, the Owners Corporation submitted that the fact the power to prescribe a change to a by-law in s 149(1) can only be exercised “if the Tribunal finds …” a factual precondition is satisfied, means that only the Tribunal (not the Court) has jurisdiction to determine the precondition question, in this case that the by-law was unjust: [73]-[77]. The Court of Appeal rejected this submission and found that the correct approach is not to ask whether a given statute confers a power to apply a statutory test on some other tribunal, but is rather to ask whether the statute clearly withdraws the determination of that question from the Supreme Court: [80] (McHugh JA, with Ward P and Griffiths JA agreeing).

In respect of the second issue, Perpetual submitted that “unjust” in s 149(1)(c) had a largely equivalent meaning to “unjust” and “harsh, unconscionable or oppressive” in s 139(1) and required the application of contemporary community standards. The Court accepted that in some cases there may be no difference between s 149(1)(c) and s 139(1): [137], and that s 149(1)(c) similarly invokes the application of values and a “general and inherently variable standard that requires an evaluative assessment”: [138]-[140]. However, the Court found that, unlike s 139(1), the circumstances of “unjustness” to be considered with respect to s 149(1)(c) are not limited to those inherent in the by-law: [147]-[148]. Applying this test, and having specific regard to the scope of the grant of rights under the by-law in question, the Court held that the primary judge had erred and the by-law was not unjust: [193], [200] (McHugh JA, with Ward P and Griffiths AJA agreeing).

Hannah Robinson appeared for Perpetual Corporate Trust, led by Darrell Barnett SC and instructed by Travis Toemoe and Laurice Elten of King & Wood Mallesons.

Read the full judgment here.