Coastalstyle Pty Ltd v Proprietors 'Surf Regency' Building Units Plan No 4246 [1991] QSC 372 [1995] 1 Qd R 132

IN THE SUPREME COURT OF QUEENSLAND Before the Honourable Mr. Justice Thomas BETWEEN: COASTALSTYLE PTY. LTD. Plaintiff AND: No. 1336 of 1991 THE PROPRIETORS, SURF REGENCY BUILDING UNITS PLAN 4246 Defendant JUDGMENT - THOMAS J. Delivered the 20th day of December, 1991. CATCHWORDS Home and commercial units - Letting agency agreement with sole right to advertise on the common property - Whether agreement can be made without special by-law - Surfers Aquarius case (1991) 1 Qd.R. 487 doubted but followed - Ratification or adoption after power obtained - Assignment of rights under agreement - Assignees not the owner of specified unit - Body Corporate advising assignee of consent to ownership of specified unit by another party - Estoppel Whether Body Corporate is a "trading corporation" under Trade Practices Act - Trade Practices - Whether Body Corporate a "trading corporation" for purposes of s. 52. Building Units and Group Titles Act 1980-1988 ss. 27(3); 30(2); 30 ( 7). Trade Practices Acts. 52(10). Counsel: C.J.L. Brabazon Q.C. with C. Carrigan for plaintiff R.R. Douglas Q.C. with S. Radcliff for defendant Solicitors: Short Punch & Greatorix for plaintiff Robinson & Robinson for defendant Hearing dates: 12-14 November, 1991. -- 1 of 27 -- ' I IN THE SUPREME COURT OF QUEENSLAND BETWEEN: AND: No. 1336 of 1991 COASTALSTYLE PTY. LTD. Plaintiff THE PROPRIETORS, SURF REGENCY BUILDING UNITS PLAN 4246 Defendant JUDGMENT - THOMAS J. Delivered the 20th day of December, 1991. This is a dispute between a managing and letting agent ("Coastal") and the proprietors Surf Regency Building Units Plan No. 4246 ( "the Body Corporate"). The relevant building is known as "Surf Regency" and is situated at Surfers Paradise. At about the time of the registration of the Building Units Plan the Body Corporate made two agreements with a company (Taren Investments Pty. Ltd.). These will be referred to as "the letting agreement" and "the management agreement". The letting agreement gave Taren the right to act as letting agent with respect to the various units in the building for a period of 10 years from the date of the first annual general meeting, with the option of renewal for a further period of 10 years. The management agreement granted Taren certain management rights and duties in relation to the building for a similar period and with a similar right of renewal, upon agreed remuneration. -- 2 of 27 -- 2 Each deed contemplated that the manager and the letting agent would have a presence in Unit No. 1. For example the letting agreement provided that "the letting agent shall maintain and staff a reception desk located in Unit 1 in the building for such times as are found to be necessary for the due provision of the proposed letting service" and that "the letting agent or its appointee shall reside in the said unit". The management agreement was expressed to be "subject to and conditional upon completing the sale to the manager of Lot 1 in the said Building Units Plan pursuant to the terms of the contract of sale and to the manager ensuring that it promptly becomes registered as proprietor of the said lot". The manager further covenanted "to ensure that the manager or its appointee resides at all reasonable times in Unit 1 " The letting agreement secured for the benefit of the proprietors the provision of a letting service run from a designated reception desk area in Unit 1. It also contemplated that the letting agent would be able to place certain advertising signs in the common area, and that no other letting agent would be allowed to do so within the common area. Al though the let ting agent was given the sole right to conduct the business in the building the unit owners were not obliged to use his services with respect ,to their units. In this respect the letting agreement expressly acknowledged "that the unit holders and occupiers are free agents and that while the Body Corporate will take all reasonable steps to ensure that there is no interference with the letting agent in the provision of such said service to occupiers of 'Surf Regency' during the currency of this agreement -- 3 of 27 -- 3 it is not within the scope of the Body Corporate to interfere with the ordinary exercise of choice of such services available to individual occupiers from suppliers of such services operating from outside 'Surf Regency'". The interests of the manager and letting agent under these agreements were expressly assignable with the consent of the Body Corporate, such consent not to be arbitrarily or capriciously withheld. In the events which happened, Taren acquired Lot 1 and became the letting agent and manager pursuant to those agreements in 1981. There is no suggestion of any breach by Taren of any of the conditions under the agreements. In early 1983 the Body Corporate consented to the assignment of both agreements in favour of Terrimal Pty. Ltd. Again, on 23rd October, 1987 Terrimal assigned its rights under both agreements to Brancove Pty. Ltd. Again the Body Corporate consented, and it executed a deed affirming the validity of both agreements. The deed asserted that Terrimal was at that time the letting agent and managing agent respectively under those agreements. The evidence shows that in August 1983 and October 1985 other managing agents had been appointed, but there is no evidence of the arrangements between the Body Corporate and Terrimal in relation to those appointments. In particular there is no evidence controverting the subsistence of Terrimal' s rights under the managing and letting agreements at material times. The Body Corporate no doubt had an interest in the continuity of an acceptable letting agent and manager for the building. In any event, whatever its motivation it was prepared to warrant the -- 4 of 27 -- 4 validity of the interests that Terrimal was assigning to Brancove for valuable consideration. A similar procedure occurred when Brancove assigned its interest under those agreements to the plaintiff (Coastal) for a substantial consideration by deed of assignment of 16th February, 1989. The Body Corporate was a party to that deed and in addition to consenting to the assignments it covenanted and agreed with Coastal:- " (a) That the said Agre em en ts are in full force and effect unforfeited and unsurrendered and the Body Corporate shall not rely upon any previous breach of the Assignor on a basis in any respect forforfeiture of the said Agreements; (b) That the Body Corporate shall be bound by the provisions of the said Agreements as if the Assignee was the original Manager and Letting Agent therein named." Apart from the initial period when Taren was the manager and letting agent and also the owner of unit 1, the Body Corporate was content to allow the natural persons who were in control of the respective companies to be the owner of Unit 1. Thus, during Terrimal's period of service Mr. and Mrs. Hearn were the owners of Unit 1 , and during Brancove' s period of service Mr. and Mrs. Tait were the owners of that unit. The relevant directors of the plaintiff (Coastal) were and are Mr. Lord and his daughter Miss Lord. At the meeting of the committee of the Body Corporate in December 1988 which considered and approved the proposed assignment from Brancove to Coastal, Mr. and Miss Lord expressly raised the question of ownership of Lot 1, indicating their desire that Miss Lord be the owner of the unit. The committee responded affirmatively to.this request. I am aware that the Chairman of the committee, Mr. Cleworth considers that the -- 5 of 27 -- 5 request was that Mr. Lord and Miss Lord be the owners of the unit, but consider that this is based upon an assumption that the ownership of the unit would be on a similar basis to that which had been previously accepted, as for example with the Tai ts. The important point is that those representing the Body Corporate had no objection to ownership by a director of the managing-letting company as distinct from the company itself. In any event I accept the evidence of Mr. Lord and Miss Lord on this question and hold that the Committee assented to the proposal that Miss Lord be the owner of the unit. I am also satisfied that had the Body Corporate refused to assent to such arrangement, Coastal would itself have been prepared to acquire the unit. Indeed it is still willing to become the owner of it and it would seem that Miss Lord would be willing to transfer the unit to Coastal if anything turns upon this. Having received the assurance and covenant of the Body Corporate with respect to the validity of the agreements, Coastal completed the assignments and paid the price of $895,000.00 to Brancove. Miss Lord paid $240,000.00 to acquire Unit 1, acquiring it from Mr. and Mrs. Tait. These transactions were settled on 16th February, ·1989. Thereafter Coastal, primarily through Mr. Lord and Miss Lord, performed the duties of letting agent and manager of the building. At some stage animosity seems to have developed on the part of at least some of the unit-owners towards Mr. and Miss Lord. Whether this was contributed to by low receipts associated with the airline pilots' strike it is not necessary to speculate. It is enough to note that some hostility developed -- 6 of 27 -- 6 on the part of some owners. From about September 1990 the Body Corporate commenced to assert that the agreements were invalid and that Coastal had no rights thereunder. Thereafter it has acted so as to repudiate any managing or letting rights on the part of Coastal under those agreements. It may be noted that an interim agreement for the management of the building by a third party pending trial has been made without prejudice to the rights of the parties. A factual issue exists as to the time when the original management and letting agreements were made. I find that they were probably made (in the sense of being accepted and executed by all parties) at or after the first meeting of the Body Corporate on 20th July, 1981. The Body Corporate did not come into legal existence until the registration of the building units plan on 17th July 1981. It is true that a date "the seventh day of July, 1981" is written in each, but that was not in the circumstances the probable date of acceptance or making of the agreement. I accept Mr. Shakespeare's evidence on this issue. A simple explanation consistent with his evidence is that the manager and letting agent signed the proposed agreements on the earlier date and, that date was then written in, and the documents were in due course signed on behalf of the Body Corporate when· it approved them at its inaugural meeting. Indeed the minutes of the inaugural meeting of 20th July, 1981 contain the resolution "that the Body Corporate enter into a management agreement and letting agreement with Taren Investments Pty. Ltd. as set out in the annexure hereto". The tense is present or future and there is no suggestion of attempted ratification of -- 7 of 27 -- 7 an existing purported agreement. Accordingly I find that these agreements were made on or after 20th July, 1981. The new by-laws of the Body Corporate although approved by the Body Corporate on 20th July 1981, were not registered until 29th July, 1981. Thus at the time of the first meeting of the Body Corporate and for nine days thereafter its by-laws were the 21 standard by-laws then contained in the Third Schedule of the Building Units and Group Titles Act 1980. (Sees. 30(3)). Those by-laws do not make any particular reference to the making of letting agreements or management agreements. Whether it is necessary that there be an express power in that behalf in the by-laws before the Body Corporate may validly make such arrangements is a live issue and will be discussed later. For the moment I confine attention to the time when the by-laws containing particular powers of that kind were adopted. On 29th July, 1981 the new by-laws were registered. They include the following by-law:- "60. The proprietor or occupier of Lot 1 (Unit No. 1 Ground Floor) in the Building may use such Lot both for residential purposes and for the purposes of letting and Management of the building and for the sale and letting of Units in the building on behalf of the proprietors, and the rendering of such services to occupants of units in the building, and may without the consent of the Council of the Body Corporate display signs or notices for the purposes of offering for sale or for lease or for letting any unit in the building.· For the purposes aforesaid the Body Corporate shall have power to grant to the proprietor of Lot 1 (Unit No. 1 Ground Floor) in the building the right to carry on in the building the business of lettings of Units in the building and for that purpose to enter into an appropriate agreement on such terms and conditions as the Body Corporate may deem fit." Assuming that the initial agreements were made shortly before the amendment to the by-laws, there followed an abundance -- 8 of 27 -- 8 of acts by and on behalf of the Body Corporate which had the effect of confirming or ratifying the grant to Taren and its successors of the relevant rights under the letting agreement. I do not understand it to be submitted that the Body Corporate needed a by-law for the purposes of granting a management agreement. It seems perfectly clear that the Building Units and Group Titles Act 1980-1988 at all material times gave direct powers to the Body Corporate t:o make arrangements for the management of the building for the benefit of the proprietors (see e.g. ss. 27(3), 37(1)(a), 37(2)(a)). Plainly the management agreement was validly made, and the Body Corporate is now repudiating its validity in the hands of the present assignee. It is sufficient then to focus upon the letting agreement. So far as the letting agreement is concerned it has been assigned three times. On each occasion the Body Corporate has been a party to a deed of assignment and has consented thereto. It has expressly avowed the validity of the original letting agreement as well as of the assignments thereof. Exhibit 13 (a deed dated 26th October, 1987) is particularly strong evidence of confirmation or adoption after the Body Corporate had the power conferred by by-law 60. The plaintiff .claims declarations of the validity of the management and· letting agreements and of their enforceability by Coastal against the Body Corporate; an order for the specific performance of the management and letting agreements; an injunction to prevent interference with Coastal's carrying out of the agreements; damages for breach of warranty or of contract; damages and orders pursuant toss. 52, 82 and 87 of the Trade -- 9 of 27 -- 9 Practices Act; and if necessary, equitable relief founded on estoppels arising from the dealings between the parties in consequence for which an order should be made to prevent the plaintiff from suffering detriment in reliance upon certain assumptions induced in it by the defendant's conduct. 1. The claim under the Trade Practices Act In order to sustain this claim it must be shown that the defendant was a trading corporation which engaged in certain conduct "in trade or commerce" ( s. 52 ( 10)) . The nature of a "trading corporation" has received a deal of judicial attention notably in Ewes v. Western Australian Cricket Association Inc. (1986). Appr. 40-736; R. v. Trade Practices Tribunal and Others Ex parte st. George County Council (1973-1974) 130 C.L.R. 533; R. v. The Judges of the Federal Court of Australia Ex parte Western Australian National Football League Incorporated (1978-1979) 143 C.L.R. 190; Fencott v. Muller (1982-1983) 152 C.L.R. 570; Conference and Exhibition Organisers Pty. Ltd. v. The Australian Beauty Trade Suppliers Ltd. (1990) A.T.P.R. 51,628, 51,633; on appeal 99 A.L.R. 474; E. v. Australian Red Cross Society (1991) A.T.P.R. 41-085. In my view the corporation which is required to be formed for the purposes of the proprietors of a home units building is essentially one to regulate the conduct and activities of the proprietors inter se in matters touching and concerning their occupancy of the building; there are also functions relating to external parties, but these are of a strictly limited character. (See in particular ss. 20, 22, 23, 25, 27, 30, 35, 37, 38, 46, 47 and 48 of the Act). Conversely, no activities are -- 10 of 27 -- 10 contemplated of the kind that bring it into existence as a trading corporation or that place its conduct in performing its functions into the stream of trade and commerce. As I read the authorities, one should look at the powers of the corporation under its charter or documents of incorporation, but should look still more significantly at the activities of the corporation. The defendant corporation has no commercial activities. It makes no investment other than investment of levied funds in the bank. It purchases commodities for the purpose of doing improvements or maintenance to the building but solely for objects of that kind. It does not acquire commodities for commercial purposes. It operates no business as such. The funds that are obtained by levying the unit-holders are mutual funds. The common property is owned by the proprietors as tenants in common and the Body Corporate is the agent for the proprietors with the responsibility of controlling, managing and maintaining the common property. Mr. Stewart., a person well versed in the conduct of Bodies Corporate in this State, was not aware of any Bodies Corporate which engage in any type of commerce outside the immediate requirements or the mutual needs of the proprietors. Under s. 37 of the Act the Body Corporate provides control management and administration of the common property. It is an inward rather than an outward looking corporation. In those buildings where the Body Corporate has arranged for the provision of a restaurant or the like, this is achieved by making available (presumably through lease or licence) a part of the common property for that purpose, and the business is conducted by the lessee or licensee. -- 11 of 27 -- 1 1 I suppose it is theoretically possible that in a given situation a Body Corporate might go further and become involved to some extent in what might be called outside commerce. But even here one would need to look at matters of degree, as Mason J. suggested in the Western .Australian National Football League case (above at p. 234). When one does so here it is apparent that the Body Corporate engages in no such activity. It fails to meet any test of substantial corporate activity. In my view Bodies Corporate which perform the functions and act in the manner contemplated by the Building Units and Group Titles Act are not trading corporations for the purposes of s. 52 of the Trade Practices Act. I do not rule out the possibility that by unusual and radical action a Body Corporate might be capable of being held to be a trading corporation. However the nature and activities of the present Body Corporate are merely potential and insubstantial and do not qualify it as a trading corporation in trade or commerce. Accordingly the plaintiff cannot maintain any case against the defendant for breach of s. 52. The validity of the original letting agreement (a) Is a special by-law necessary? Bodies Corporate have perpetual succession, a common seal and are capable of suing and being sued. Section 27(3) provides:- " (3) Subject to this .Act the Body Coroorate shall have the powers, authorities, duties and functions conferred or imposed on it by or under this Act or the by-laws and shall do all things reasonably necessary for the enforcement of the by-laws and the control, management and administration of the common property." -- 12 of 27 -- 12 It is a general power conferred by the Act. The underlining illustrates that the Body Corporate's functions and duties are not limited to those mentioned in the by-laws, and it is charged with the doing of ali things reasonably necessary for "the control management and administration of the common property". Section 37(1) sets out certain duties and functions which the Body Corporate "shall" perform. These include the general requirement that it shall "control manage and administer the common property for the benefit of the proprietors". Sub-section 2 then provides a number of more specific matters which a Body Corporate "may" do, but this does not purport to be an exhaustive statement. It includes the right to "enter into hiring agreements and leasing agreements". I have no doubt that it has the power, for purposes of the good management of the building and the common property, to grant licenses and make contracts with respect to the common property, subject of course to express or implied provisions in the Act that preserve the common property for the benefit of the proprietors. The Building Units and Group Titles Act 1980 replaced the Building Units Titles Act of _1965 it may be assumed that the framers of the present Act were familiar with the major practices that operated under its predecessor in relation to what was then generally referred to as "strata title". The evidence before me shows that during the decade up to 1980 it was common for management and letting agreements to be granted. Usually this was done in the one document. By-laws were not framed to grant any particular power of this kind, and such arrangements were simply made as a matter of contract between the Body Corporate -- 13 of 27 -- 13 and the manager-letting agent engaged. The presence of managing and letting agents upon such premises has always been a familiar circumstance in strata title and home unit buildings, and it is difficult to regard such services as other than a normal service to be expected in the ordinary running of such buildings. Counsel for the Body Corporate conceded that the power to enter into management agreement exists without the need for express by-laws, and that it falls within the general powers vested in the Body Corporate as to management of the building and common property. In the absence of a clear implication in the Act it is difficult to see why the provision of the further service of a letting agent within the building should be regarded as being on a different footing. A letting facility on the premises may be regarded as a service for the benefit of the unit holders. They may of course make separate arrangements for the letting of their own units if they wish. The facility does not cease to be an ordinary managerial service from the mere fact that the right to act as agent within the building is given to one agent only, and that he is given the sole right to advertise such service upon the common property. (Adelaide City Council v. Altinorm (1987) 63 L.G.R.A. 336.) This may be thought to be an aspect of orderly management. The exclusion of other potential competitors within the common property hardly changes the nature of the exercise. I find it difficult to regard this service as other than an aspect of the management of the building for the benefit of the unit holders, a duty with which the Body Corporate is charged to perform. -- 14 of 27 -- 14 The similarities between the management agreement and the letting agreement include the requirement that the manager or agent have a presence in the building. In support of the submission that the grant of a letting agreement is merely an aspect of the general powers of management of the Body Corporate, Mr. Brabazon Q.C. referred to Attorney-General v. Crayford U.D.C. (1962) Ch. 575, 585, 586; Ski Enterprises v. Tongariro National Park Board (1964) N.Z.L.R. 884; and Adelaide City Council v. Altmann (1987) 63 L.G.R.A. 336, 352. The constraints of Ashbury Railway Carriage and Iron Co. v. Riche (1875) L.R. 7 H.L. 653 whereunder matters not included in the memorandum of association are beyond the powers of the corporation, have always been read so that "whatever may fairly be regarded as incidental to, or consequential upon those things which the legislature has authorised, ought not (unless expressly prohibited) to be held by judicial construction to be ultra vires" (Attorney-General v. Great Eastern Railway Co. (1880) 5 App.Cas. 473, 478 per Lord Selborne L. C.). The issue in the Crayford v. U. D. C. Case (above) was whether the management of Council housing estates comprehended the arranging by the Council of collective insurance of tenants' household goods, fixtures and fittings. It is not entirely without significance that Evershed M.R. in that case (at p. 589-590) considered it legitimate to take into account the managerial practices of local councils prior to the introduction of the Housing Act 1957. Such activity was held to fall within the managerial power conferred. In the Tongariro National Park case above, it was held to be within the powers of a National Park Board to grant an exclusive licence to construct and operate -- 15 of 27 -- 15 chair lifts within the park. This was based upon the general power of the Board to administer manage and control the park. In Adelaide City Council v. Altmann the South Australian Full Court ( King C. J. , Bollen and Von Doussa JJ. ) held under the "reasonably incidental" principle that a local authority could enter into a contract to grant for ten years the sole right to operate launches for leisure cruises on a river within the area of the city. The power was held to derive from the general power of "the care control and management" of the relevant waters. Prima facie I consider the above submissions to be correct, and note that Mr. Douglas Q. C. was not able to advance any argument of substance to a contrary effect, or to suggest anything special about the nature of granting a letting agency such as to require a special by-law before exercising such a power. Mr. Douglas simply relied upon the decision of Victorian Professional Group Management Pty. Ltd. v. The Proprietors "Surfers Aquarius" Building Units Plan No. 3881 (1991) 1 Qd.R. 487. In that case Ambrose J. and I concurred in the judgment of Connolly J. There is no discussion in that case of the need for a by-law to empower the Body Corporate to make a sole letting agreement, but the judgment assumes that a by-law was necessary. This seems to be based primarily upon the terms of s. 30(7). Thus at p. 492 1. 4-5, s. 30(7) is construed as containing a "requirement that the rights be conferred by the making of a by-law". The judgment then proceeds by analysing the by-laws, failing to find a conferral of such power by the by-laws, and concluding with the remark "it follows in my judgment that long before 18th March 1981, ... the letting agreement ... could not -- 16 of 27 -- 16 have been validly entered into without a by-law made under s. 30(7) of the current Act" (p. 492). Section 30 is the "by-law" section of the Act. It appears in the context of Part IV Division 1 - "Management". The Third Schedule By-Laws are applicable unless the Body Corporate, by special resolution, alters them (s. 30(1)). It may do so "for the purpose of the control management, administration, use or enjoyment of the lots and common property" ( s. 30 ( 2)). That power is however premised with the words "save where otherwise provided in subsections 7 and 11". Section 30(7) provides:- ( 7) Without limiting the generality of any other provision of this section, a Body Corporate may, with the consent in writing of the proprietor of a lot, pursuant to a resolution without dissent make a by-law in respect of that lot conferring on that proprietor the exclusive use and enjoyment of, or special privileges in respect of, the common property or any part thereof upon such terms and conditions (including the proper maintaining and keeping in a state of good and serviceable repair of the common property or that part of the common property, as the case may be, and the payment of money by that proprietor to the Body Corporate) as may be specified in the by-law and may, in like manner, make a by-law amending, adding to or repealing any by-law made under this subsection." It will be noted that this particular power is conferred by means 0f the words "may ... make a by-law II . . . . The real question is whether that is the only means by which a Body Corporate may confer on a proprietor special privileges in respect of the common property. In particular, is a by-law necessary before a Body Corporate may grant a letting agent the right of advertising within the common property, at the same time preventing competitors from so doing? -- 17 of 27 -- 17 A search of the court file on appeal, including counsel's summary of argument, and my notes of the appeal, suggests that neither counsel in that case attempted to support the existence of power under the Act unless conferred by a by-law. There does not appear to have been an express concession, but the point was not argued. It seems to have been generally assumed that unless a by-law could be found, no power existed to make the letting agreement. This is similarly assumed in the reasons for judgment. I prefer the view that a letting agreement such as that in the present case is within the general management powers of a Body Corporate for the benefit of unit holders and that the assumption in the Surfers Aquarius case (in which I concurred) is incorrect. The point of greater difficulty is whether I am free to refuse to follow a conclusion of the Full Court which was a necessary part of the decision. If not bound by the Surfers Aquarius decision, I would simply hold that both agreements where validly made from day one ( 20th July, 1981) that they were validly assigned to the plaintiff and that they remain of full force and effect for the benefit of the plaintiff. That is the primary relief sought by the plaintiff and it would determine the whole action. However I am not in a position to say that the Surfers Aquarius decision is plainly wrong. It is at least arguable that there is a negative implication within s. 30(7) prohibiting the grant of exclusive use of special privileges in respect of common property in favour of a proprietor unless by means of a by-law made by a resolution without dissent. Mr. Brabazon Q.C. for the -- 18 of 27 -- 18 plaintiff submitted that s. 30(7) says nothing about agreements with persons who are not proprietors. That submission would seem to be correct. However it may be arguable that any implied prohibition against proprietors is a fortiori prohibited against non-proprietors. It might also be asked what is the point of enacting s. 30(7) if a Body Corporate may do the same thing by simple resolution? On the other hand one must not always expect to find logic maintained, or tautology avoided, throughout a statute of this kind. My preferred view is that the correct construction of s. 30(7) confines it to special arrangements in favour of proprietors, generally of the kind referred to in the words in brackets in that subsection. However it is not a matter upon which I feel free to depart from a Full Court decision, notwithstanding my preference to the contrary. It is therefore necessary for me to determine the rights of the parties on the footing that in the absence of a by-law conferring power to enter into the letting agreement the Body Corporate had no power to enter into the agreement. On this footing, when the Body Corporate made the letting agreement on 20th July, 1981 it did not have the power to do so. Nine days later it had new by-laws including by-law 60. That by-law plainly gave the Body Corporate the power to enter into the letting agreement with Taren, which was at all material times the owner of lot 1. I have no doubt that the ensuing activities and actions of the Body Corporate (mentioned earlier in these reasons) amounted either to ratification or adoption of the ear 1 i er agreement whi eh it had purported to make with Taren. Mr. Douglas Q.C., in reliance on Ashbury Railway Co. v. Riche -- 19 of 27 -- 19 (above) submitted that the original agreement was "ultra vires" and that an ultra vires agreement cannot be ratified. However the decisions in that line speak of attempted ratification by a body which still lacks the necessary power when the ratification is attempted. The position is otherwise for ratifications or adoptions after the necessary power has been acquired. Perhaps an analogy may be drawn with the ratification of contracts after attainment of majority. In any event the subsequent conduct of the Body Corporate has been to adopt and even to verify to others the validity of the agreement when in full possession of the power to do so. It is perhaps unnecessary to labour the point further. However I think it worth noting that the adoption of by-law 60 and the approval of the leading contract were both given on the same occasion, namely the inaugural meeting of 20th July, 1981. Plainly the intention of the Body Corporate was to give itself the power to enter into the appropriate contract and to enter into that contract. The intention must be taken to have been to act lawfully and that the contracts take effect from the time of operation of the by-law. So construed no question of ultra vires arises. There is no doubt that the Body Corporate had the capacity to make a contract conditional upon the registration of a by-law. I am prepared to hold that upon the registration of the by-law, or at the latest, when the body-corporate affirmed its obligations under that contract after perfection of the necessary power, the letting agreement was of full force and effect. -- 20 of 27 -- 20 The plaintiff is therefore entitled to the declarations of the validity of both the management agreement and the letting agreement. But what of their enforceability by Coastal against the Body Corporate? Is Coastal, as assignee of the rights under those agreements, entitled to decrees of specific performance? The only hurdle that remains in the way of such relief is the circumstance that, with the assent of the committee of the Body Corporate, Miss Lord became the owner of Unit 1, whereas the agreements contemplate that the manager and the letting agent be the owner of that unit. In the first place this cannot be an objection to the framing of at least a preliminary order of specific performance. On the worst view for the plaintiff the matter is still capable of being cured. The problem would not have arisen but for the representations of the defendant upon which the plaintiff relied. It was submitted however that there is more in the point than would arise in dealings between natural persons, by reason of the restrictive approach taken in the Surfers Aquarius decision. If the Body Corporate' s power to make a letting agreement of this kind is confined to that given by by-law 60, the rights may be granted only to the proprietor of lot 1. I think it follows that the "appropriate agreement" mentioned in the by-law is ,to be made with such a proprietor. The agreement itself seems to have been framed on this understanding. There is no difficulty in relation to the original agreement, because Taren was the owner of lot 1 . The only question is whether Taren, or its successors in title, could validly assign the -- 21 of 27 -- 21 benefits of the agreement to a non-proprietor. Clause 8 of the agreement provides:- "Assignment 8. The letting agent shall not except with the consent of the Body Corporate: (a) Sell, assign or attempt to sell or assign its interest in this deed, except in accordance with cl. 5 hereof; or (b) Sell or transfer or attempt to sell or transfer unit 1 in the building without at the same time selling or assigning to the same person in accordance with cl. 5 hereof· its interest in this deed." (My underlining) Clause 5 permits assignment but only with the written consent of the council of the Body Corporate, such consent not to be arbitrarily or capriciously withheld. It should be noted that cl. 8 expressly recognises a power in the Body Corporate to consent to an assignment without compliance with either (a) or (b). That is to say, according to the letting agreement, the Body Corporate has the right to approve an assignment even without an accompanying sale or transfer of unit 1 to the assignee of the letting agreement. This is exactly what it purported to do in relation to approving the assignment to Coastal in the knowledge that Miss Lord would take an assignment of lot 1. The existence of such a provision in the letting· agreement is not in my view inconsistent with the power granted by by-law 60. In the event that Miss Lord ceased co-operating with Coastal, thereby rendering it unable to provide the services it is bound to provide under the letting agreement, the Body Corporate would have the right to terminate the agreement for breach (see for example ell. 1(c) and 1(h)). -- 22 of 27 -- 22 I therefore conclude that each of the series of assignments was valid as between each succeeding assignor and assignee, and that in each instance the necessary approval was given by the Body Corporate. It had the power to give such approvals and the assignments have been made in accordance with the requirements of the letting deed. I do not think that any question of power or capacity arises in relation to the assignments once the validity of the original letting agreement is established. If I am wrong in this last respect, it does not mean that the plaintiff is disenti tled from specific performance. All that would be necessary would be that the acquisition by Coastal of lot 1 be made a condition of the declarations concerning the letting agreement and of the specific performance order. The Body Corporate certainly has the power to approve assignments to an assignee subject to that person becoming a proprietor of lot 1. Up till now the defendant has by its conduct suspended the need for satisfaction by the plaintiff of such a condition. It is estopped at this stage from relying upon its non-satisfaction. The plaintiff should be afforded a reasonable opportunity of satisfying the requirement of assignability which the defendant initially and erroneously told the plaintiff it need not fulfil. However in my view conditional orders are not required; the agreement and the assignments are themselves valid and within the power contained in by-law 60; the non-ownership by the plaintiff of lot 1 is probably not even a breach of the letting agreement (see for example ell. 1(c) and 1(h)); and if it does amount to -- 23 of 27 -- 23 a breach the defendant has by its conduct waived any right to rely upon such a breach. The situation has been brought about entirely by the defendant. All necessary orders and injunctions should be granted as will permit the plaintiff to have the benefit of the assigned rights under the agreement. I have not found it necessary to determine the case upon the further interesting arguments presented by Mr. Brabazon Q.C. to the effect that the plaintiff is in the circumstances entitled to the benefit of a positive equity arising from estoppel. Reference was made to Legione v. Hateley (1983) 152 C.L.R. 406; Waltons Stores (Interstate) Ltd. v. Maher (1987-1988) 164 C.L.R. 387; Commonwealth v. Verwayen (1990) 170 C.L.R. 394; and to articles including "Contract by Estoppel" by Sutton Vol. 1 Australian Journal of Contract Law p. 205, "Equitable Estoppel: Developments after Waltons Stores (Interstate) Ltd. v. Maher" by Parkinson Vol. 3 Australian Journal of Contract Law, p. 50 and "Commonwealth v. Verwayen: Quo Vadis Estoppel, Waiver?" by Butler Q.L.S. Journal, August 1991, p. 287. The argument proceeded upon the creation of an expectation of valid rights, and ultimately upon the assertion that the court would force the defendant to make good that expectation. It was submitted that the circumstances warranted a positive order and that it was necessary to do so in order to avoid detriment. It was alternatively submitted that if the obstacle was incapacity the Body Corporate should at least be ordered to attempt to remedy it. The present case is a strong one for intervention in favour of the plaintiff. It includes written warranties of a state of -- 24 of 27 -- 24 affairs and of legal conclusions; the leading of the plaintiff to a very heavy financial commitment; a repudiation of obligation when expedient to do so; and a resort to technical defects allegedly committed a long time ago by the defendant itself. However I do not find it necessary to pursue this particular path. Orders 1. There will be declarations:- (a) That the management agreement dated 7th July, 1981 is valid and enforceable against the defendant; (b) That the letting agreement dated 7th July, 1981 is valid and enforceable against the defendant; (c) That the rights pursuant to the management agreement and the letting agreement have been assigned to the plaintiff and are enforceable by it against the defendant; (d) That the options to renew rights under the management agreement and the letting agreement have been validly exercised by the plaintiff. 2. There will be an order for the specific performance of the management agreement and the letting agreement; it will be directed that the defendant provide all necessary co-operation to permit the plaintiff to exercise its rights under the agreement and that it execute such further documents as may be required to give effect to the options contained in the said agreements; it will be further ordered that the defendant take all such steps as are necessary to permit the plaintiff to resume the enjoyment -- 25 of 27 -- . , 25 of its rights pursuant to the said agreements forthwith; and that all necessary accounts and enquiries be taken in relation to any period when the plaintiff had been deprived of the opportunity to exercise such rights. 3. Subject to further submissions by the parties on the form of the order, there will be injunctions in accordance with those sought in para. 28(d) and 28(e) of the statement of claim. 4. There will also be orders for the assessment and payment of equitable damages in addition to the decree for specific performance. As I understand it the claim for damages for breach of contract or damages for breach of warranty is an alternative to the claim for speci'fic performance with equitable damages. In the event that I have erred in upholding the validity of the agreements, assignments and entitlement to specific performance, the plaintiff is clearly entitled to an assessment of common law damages for breach of warranty and to findings, which I make, of repudiation by the defendant of its obligations under the agreements, and breach of its warranty of the validity of the agreements. An entitlement to damages to be assessed exists even if the defendant lacked and still lacks the necessary power to grant such .-agreements. It warranted their validity notwithstanding, it did so under seal, and it is responsible for the damages suffered by the plaintiff by reason of the warranty not being true. In that event the parties, during the course of the trial, agreed that this issue should be reserved for separate assessment by a Master in the event that an assessment becomes -- 26 of 27 -- 26 necessary. On the assumption that the primary orders above are valid, it will not be necessary to make any direction in relation to this alternative relief. There will be judgment for the plaintiff in the above terms, with costs including reserved costs if any to be taxed. Liberty to apply. -- 27 of 27 --