The Owners – Strata Plan No 80877 v Lannock Capital 2 Pty Ltd [2023] NSWSC 1401

The Owners – Strata Plan No 80877 v Lannock Capital 2 Pty Ltd [2023] NSWSC 1401

It is not appropriate to order termination of the scheme under s 136 SSDA where there is neither unanimity among lot owners nor evidence that repair is commercially unviable; the Part 10 collective sale process better protects the interests of all stakeholders. If a termination order had been made, registered mortgagees would have priority over the unsecured creditor Lannock, with each lot owner’s share of sale proceeds subject to mortgagee claims, and unpaid owners corporation debts recoverable from lot owners proportionally.

Jurisdiction
Australia
Judgment Date
24 November 2023
Procedural Posture
Application for Termination of Strata Scheme (equity Real Property List) / Judgment at First Instance, Post Hearing, Further Submissions Received
Outcome
Application dismissed; no termination order made.
Legal Topics
['termination of Strata Scheme' 'priorities Between Creditors and Mortgagees' 'discharge of Owners Corporation Liabilities' 'collective Sale Vs. Court Termination' 'unanimity and Majority Decisions' 'winding Up of Strata Schemes']
['land Law' 'strata Title' 'equity' 'banking and Finance'] ['termination of Strata Scheme' 'priorities Between Creditors and Mortgagees' 'discharge of Owners Corporation Liabilities' 'collective Sale Vs. Court Termination' 'unanimity and Majority Decisions' 'winding Up of Strata Schemes']

Case Brief

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Procedural Posture

Application for Termination of Strata Scheme (equity Real Property List) / Judgment at First Instance, Post Hearing, Further Submissions Received

Legal Issues

  1. 1 ['Whether the strata scheme ought to be terminated under s 136 Strata Schemes Development Act 2015 (NSW)' 'If a termination order is made, how proceeds are to be distributed and in what order of priority between secured mortgagees and unsecured creditors' 'Whether the court should instead direct that a collective sale process under Part 10 of the SSDA is more appropriate in the circumstances' 'What directions would be appropriate for winding up and administration if a termination order were made']

Ratio Decidendi

It is not appropriate to order termination of the scheme under s 136 SSDA where there is neither unanimity among lot owners nor evidence that repair is commercially unviable; the Part 10 collective sale process better protects the interests of all stakeholders. If a termination order had been made, registered mortgagees would have priority over the unsecured creditor Lannock, with each lot owner’s share of sale proceeds subject to mortgagee claims, and unpaid owners corporation debts recoverable from lot owners proportionally.

Court Disposition

Application dismissed; no termination order made.

Orders

  • ['Further Amended Summons is dismissed.' 'Parties are to confer and attempt to agree on appropriate costs orders. Failing agreement within 7 days, parties to jointly approach the Associate to Peden J for a timetable for a costs hearing.']