Barnett v The Owners - Strata Plan No 85385; The Owners - Strata Plan No 85385 v Barnett

[2025] NSWCATCD 81

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Barnett v The Owners – Strata Plan No 85385; The Owners – Strata Plan No 85385 v Barnett [2025] NSWCATCD 81

Hearing dates:

3 June 2025

Date of orders:

7 July 2025

Decision date:

07 July 2025

Jurisdiction:

Consumer and Commercial Division

Before:

N Kulkarni, Senior Member

Decision:

Proceedings 2024/00336052

(1)   Within six months of the date of these orders, the respondent, using appropriately qualified and licensed persons, is to carry out and complete the following work in a proper and competent manner in accordance with all applicable laws and standards:

(a)   The work identified as Option B in Section 8.1 (including the preliminary and demolition work identified in Section 8.1) of the Scope of Works & Tender Document prepared by Mr Mark Kavanagh of Integrated Building & Engineering Consultancy dated 14 June 2024; and

(b)   The work identified in Section 8.2 of the Scope of Works & Tender Document prepared by Mr Mark Kavanagh of Integrated Building & Engineering Consultancy dated 14 June 2024.

(2) Pursuant to s 150(1) of the Strata Schemes Management Act 2015 (NSW), special by-law 11 be declared invalid from the date of its registration.

(3) Within 28 days of the date of these orders, the respondent is to do all things necessary to ensure registration of order 2 under s 246 of the Strata Schemes Management Act 2015 (NSW).

(4)   The respondent is to pay the applicants’ costs of the proceedings.

Proceedings 2025/00006667

(1)   The application is dismissed.

(2)   The applicant is to pay the respondents’ costs of the proceedings.

Catchwords:

LAND LAW – Strata schemes – Common property – whether common property or lot property

LAND LAW – Strata schemes – By-laws – power to make declarations that by-law void, repealed or varied – standing of owners corporation to seek order declaring by-law invalid – validity of by-law purporting to qualify duties under s 106

LAND LAW – Strata title – Owners corporation – power of owners corporation to enter into settlement agreement – authority of strata managing agent to enter into settlement agreement – ratification by strata committee

LAND LAW – Strata schemes – Common property – Maintenance and repair of common property – compliance with duties under s 106

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Strata Schemes (Freehold Development) Act 1973 (NSW)

Strata Schemes Management Act 2015 (NSW)

Civil and Administrative Tribunal Rules 2014 (NSW)

Strata Schemes (Freehold Development) Regulation 2012 (NSW)

Cases Cited:

2 Elizabeth Bay Road Pty Limited v The Owners - Strata Plan No 73943 [2014] NSWCA 409

Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353

Campbell v The Owners Strata Plan No 88807 [2024] NSWCATCD 50

Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26

EB 9 & 10 Pty Ltd v The Owners SP 934 [2018] NSWSC 464

Feedback Deli Pty Limited and Feedback Holdings Pty Limited v The Owners-Strata Plan No 36613 [2019] NSWCATCD

Findex Group Limited v McKay [2020] FCAFC 182

Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425

Greencapital Aust Pty Ltd v Pasminco Cockle Creek Smelter Pty Ltd (Subject to Deed of Company Arrangement) [2019] NSWCA 53

Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361

Lewis v The Owners - Strata Plan No. 32924 [2025] NSWCATAP 72

Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120

Owners SP 32735 v Swan [2012] NSWSC 383

PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312

Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410

Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157

Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd [2024] NSWCA 174

The Owners - Strata Plan No 62713 v Liberant [2022] NSWCATAP 80

The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35

The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256

The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272

The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270

The Owners Strata Plan No 57164 v Yau [2016] NSWSC 1056

The Owners Strata Plan No 57164 v Yau [2017] NSWCA 341

Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284

Category:

Principal judgment

Parties:

Proceedings 2024/00336052:
Annette Barnett (First Applicant)
Laura Lillas (Second Applicant)
Tony Clarkson (Third Applicant)
Kandiah Theivendren (Fourth Applicant)
The Owners – Strata Plan No 85385 (Respondent)

Proceedings 2025/00006667:
The Owners – Strata Plan No 85385 (Applicant)
Annette Barnett (First Respondent)
Laura Lillas (Second Respondent)
Tony Clarkson (Third Respondent)
Kandiah Theivendren (Fourth Respondent)

Representation:

Counsel:
Proceedings 2024/00336052
M Forgacs (Applicants)
J Knackstredt (Respondent)

Proceedings 2025/00006667
J Knackstredt (Applicant)
M Forgacs (Respondents)

Solicitors:
Proceedings 2024/00336052
JS Mueller and Co (Applicants)
McCabes Lawyers (Respondent)

Proceedings 2025/00006667
McCabes Lawyers (Applicant)
JS Mueller and Co (Respondents)

File Number(s):

2024/00336052
2025/00006667

REASONS FOR DECISION

1. This is a dispute between four lot owners in a strata title apartment building in Mosman and the owners corporation for the strata scheme.

2. The lot owners claim that the owners corporation has breached its duties under ss 106(1) and (2) of the Strata Schemes Management Act 2015 (NSW) (SSM Act) by failing to properly maintain and keep in a state of good and serviceable repair, or renew or replace, timber decks on the balconies or terraces of their apartments. They also claim that the owners corporation has failed to comply with a by-law, by-law 26, which makes it responsible for major maintenance and replacement of the timber decks. A further claim is also made by one lot owner based on a settlement agreement arising out of a mediation session. The lot owners seek orders for replacement of their timber decks.

3. The owners corporation denies that the timber decks are common property to which s 106 of the SSM Act applies. It further claims that by-law 26 (i) is void for uncertainty; (ii) has been repealed or varied by a subsequent by-law, special by-law 11, which is expressed to absolve the owners corporation from various maintenance responsibilities; or (iii) is harsh, unconscionable or oppressive. As for the settlement agreement, it claims that the agreement is not binding on it.

4. Orders are also sought by both parties in relation to special by-law 11. The lot owners claim that the owners corporation lacked power to make it or it is harsh, unconscionable or oppressive. The owners corporation claims that the registration in its current form was unauthorised.

Issues

5. The key issue is whether the timber decks are common property or lot property.

6. It is agreed by the parties that the issues related to by-law 26 do not arise for consideration on a finding that the timber decks are common property. In this regard, the owners corporation accepts that its claims concerning by-law 26 are premised on a finding that the timber decks are lot property.

7. It is also agreed that the issue of whether the settlement agreement should be given effect only arises in the event the previous issues are resolved in favour of the owners corporation.

8. In relation to special by-law 11, the main issue is whether it should be declared invalid. If not, the issue as to its current form arises.

Evidence

9. The documents relied on by the parties were admitted into evidence as follows:

Applicant:

Exhibit A – Material lodged 13 November 2024

Exhibit B – Material lodged 10 March 2025

Exhibit C – Material lodged 2 May 2025

Exhibit D – Amended Application lodged 13 February 2025

Exhibit E – Submissions lodged 2 June 2025

Exhibit F – Bundle of authorities

Respondent:

Exhibit 1 – Material lodged 28 May 2025

Exhibit 2 – Submissions (including attachments) lodged 28 May 2025

Exhibit 3 – List of objections to evidence

Exhibit 4 – Three images of the building from Glover St

Exhibit 5 – Bundle of authorities

Are the timber decks common property or lot property?

10. The strata plan for the scheme was registered on 2 August 2013.

11. The now repealed Strata Schemes (Freehold Development) Act 1973 (NSW) (1973 Act) was in force at that time. Its provisions are applicable to determining whether the timber decks are common property or lot property.

12. Section 5(1) of the 1973 Act relevantly contained the following definitions:

common property means so much of a parcel as from time to time is not comprised in any lot.

lot means one or more cubic spaces forming part of the parcel to which a strata scheme relates, the base of each such cubic space being designated as one lot or part of one lot on the floor plan forming part of the strata plan, a strata plan of subdivision or a strata plan of consolidation to which that strata scheme relates, being in each case cubic space the base of whose vertical boundaries is as delineated on a sheet of that floor plan and which has horizontal boundaries as ascertained under subsection (2), but does not include any structural cubic space unless that structural cubic space has boundaries described as prescribed and is described in that floor plan as part of a lot.

floor plan means a plan, consisting of one or more sheets, which:

(a) defines by lines… the base of each vertical boundary of every cubic space forming the whole of a proposed lot, or the whole of any part of a proposed lot, to which the plan relates…

13. Section 5(2) of the 1973 Act provided:

(2) The boundaries of any cubic space referred to in paragraph (a) of the definition of floor plan in subsection (1):

(a) except as provided in paragraph (b):

(i) are, in the case of a vertical boundary, where the base of any wall corresponds substantially with any line referred to in paragraph (a) of that definition—the inner surface of that wall, and

(ii) are, in the case of a horizontal boundary, where any floor or ceiling joins a vertical boundary of that cubic space—the upper surface of that floor and the under surface of that ceiling, or

(b) are such boundaries as are described on a sheet of the floor plan relating to that cubic space (those boundaries being described in the prescribed manner by reference to a wall, floor or ceiling in a building to which that plan relates or to structural cubic space within that building).

14. At the time of registration of the strata plan, reg 7(1) of the Strata Schemes (Freehold Development) Regulation 2012 (NSW) relevantly provided:

(1) A floor plan must be in the approved form known as “Strata Plan Form 2”, on a separate sheet from the location plan, and show the following:

…

(c) if the boundary of a lot is defined by reference to the surface of a floor or ceiling, such vertical connections and notations as are necessary to define that boundary,

(d) notations sufficient to ensure that each cubic space forming the whole of a lot or a whole separate part of a lot is fully defined (provided that if it is intended that a lot boundary is to be defined in accordance with the formula set out in section 5 (2) (a) of the Act, no notation need be made for the purpose of defining that boundary).

15. The effect of these provisions is that if the boundaries of a lot are described on a sheet of the floor plan in the manner prescribed by reg 7(1), those are the boundaries pursuant to s 5(2)(b). However, if the boundaries are not so described, the boundaries are defined pursuant to s 5(2)(a).

16. There is no dispute that, as of 2 August 2013, the timber decks had been installed and were affixed to the concrete slabs of the balconies and terraces of all of the apartments in the building.

17. The owners corporation conceded at the hearing that if s 5(2)(a) is applicable, such that the “upper surface of the floor” fixes the lower horizontal boundary of each of the lots of the lot owners, the boundary is the upper surface of the timber decks, meaning the timber decks are common property. This concession was properly made in light of the decision of the NSW Court of Appeal in The Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272.

18. The owners corporation submitted, however, that the lower horizontal boundaries of the lots are relevantly “described” on sheets of the floor plan such that s 5(2)(b) is applicable instead.

19. Two of the lots in question are on level 1. The other two lots are on level 4.

20. The level 1 lots are shown on sheet 4 of the floor plan. Both comprise terraces. The terraces are marked on the sheet with the letter “T”. The legend for the sheet contains the following notation:

T   DENOTES TERRACE HAVING A CONCRETE SURFACE AND IS LIMITED IN HEIGHT TO 3 METRES, EXCEPT WHERE COVERED BY A LEVEL 2 BALCONY

21. The level 4 lots are shown on sheet 7 of the floor plan. Both comprise balconies. The balconies are marked on the sheet with the letter “B”. The legend for the sheet contains the following notation:

B   DENOTES BALCONY HAVING A CONCRETE SURFACE AND LIMITED IN HEIGHT TO 3 METRES, EXCEPT WHERE COVERED

22. In respect of each of the lots, inherent in the owners corporation’s submission is that the words “having a concrete surface” relevantly describe the lower horizontal boundary. I do not agree.

23. In my view, the notations do not purport to define the lower horizontal boundaries of the lots. The language in them does not indicate that the concrete surface is to represent the boundary. In Seiwa, Tobias JA (with whom Giles and Basten JJA agreed) observed at [29] in relation to a description under s 5(2)(b):

Provided the description adopted makes it plain that it is in fact purporting to fully define that particular boundary, it will be effective according to its terms.

24. The description “having a concrete surface” does not make plain that it is purporting to define the lower horizontal boundary.

25. I read the words as simply describing the nature of the element of the building. This reading is consistent with other notations in the floor plan that adopt words that can only be considered descriptions of building elements and not boundaries. Thus, for example, the notation for the concrete roof describes it as “non-trafficable”. Similarly, the notations for the balconies and planter on levels 2 and 3 simply state “having a concrete surface and is covered”. These notations cannot be read as defining the lot boundaries.

26. Further, the descriptions are not in the prescribed manner. The words “having a concrete surface” do not amount to notations necessary to define the boundary: see reg 7(1)(c). Nor do they have the effect of ensuring the boundary is “fully defined”: see reg 7(1)(d).

27. The fact that no notations are necessary where it is intended that lot boundaries are defined under s 5(2)(a) does not mean it is to be inferred from the existence of the notations that it was intended to define the boundaries under s 5(2)(b). If that was the intention, the notations could easily have stated, for example, “the lower boundary of the terrace/balcony is the concrete surface”.

28. I also do not consider an inference is to be drawn as to what was intended from the separate notation that “all water proofing forms part of the common property”. The argument in this regard is that this notation only would be necessary on the premise that the timber decks, which sit above the waterproofing membrane, are not common property. I do not agree with that argument. First, the notation refers to all the waterproofing in the building and is not specific to the waterproofing membrane of the terraces and balconies. Secondly, it can be read as simply confirming the position.

29. In any event, the search for intention distracts attention from the proper focus of the relevant statutory provisions of whether sheets of the floor plan relevantly describe the particular boundaries. I consider they do not.

30. I find that the boundaries of the lots are defined pursuant to s 5(2)(a) such that the timber decks are common property.

31. For completeness, I observe that this conclusion hardly could be said to give rise to “unintended consequences in terms of the division of responsibility for repairs and maintenance between the owners corporation and the proprietors of individual lots” (see Seiwa at [41]). The by-laws adopted by the strata plan when it was registered included by-law 26. It is in the following terms:

26   Timber Decking on Balconies

26.1   The Owner of a Lot shall maintain the timber decking on the balconies to keep the timber decking in good order.

26.2   The Owners Corporation shall have the timber decking on balconies re-oiled annually to keep the timber decking aesthetically pleasing and shall be responsible for major maintenance and replacement.

32. Its terms are entirely consistent with the timber decks being common property.

By-law 26

33. It follows from my finding that the timber decks are common property that the issues related to by-law 26 do not arise for consideration.

34. I have considered whether I should proceed to determine those issues on the basis that, contrary to my finding, the timber decks are lot property. In this regard, I am alive to the principle that a primary decision-maker generally should determine the issues raised by the parties, including those that do not require determination in light of other findings: see PPK Willoughby Pty Ltd v Baird [2021] NSWCA 312 at [15]; Shinetec (Australia) Pty Ltd v The Gosford Pty Ltd [2024] NSWCA 174 at [131].

35. I have decided that a full consideration of each of the issues is not justified for the following reasons.

36. First, none of the three issues concerning by-law 26 depends upon findings of fact. The claim that it is void for uncertainty is resolved by its terms. The claim of its repeal or variation by special by-law 11 is a question of construction. So far as concerns the claim that it is harsh, unconscionable or oppressive, Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250 establishes that it does not turn upon factual findings as to the particular circumstances. The applicable test is whether the by-law “is readily capable of operating in a [harsh, unconscionable or oppressive] manner” (Macfarlan JA at [81]) and involves evaluation of its “character” (Basten JA at [45]; see also [68]) or “inherent qualities… as a rule of general application to all lot owners” (Fagan J at [101]).

37. Secondly, related to the first, any appellate decision-maker is in as good a position to determine the issues if they are to become live. That being so, there is no risk of a further trial in connection with determination of those issues.

38. Thirdly, although I have not embarked on a full and complete consideration, in deference to the parties’ submissions, I proceed below to express my view on the issues, together with brief reasons. I consider what I say informs the parties of the findings I would have made and the core reasons for those findings.

Void for uncertainty

39. I do not consider that s 232(1) authorises the Tribunal to declare that a by-law is void for uncertainty. I consider current authority establishes that the Tribunal lacks power to make declarations (unless specifically authorised; for example, under s 150): see EB 9 & 10 Pty Ltd v The Owners SP 934 [2018] NSWSC 464. It would be necessary to approach the NSW Supreme Court for such relief. I acknowledge that, recently, the Appeal Panel in Lewis v The Owners - Strata Plan No. 32924 [2025] NSWCATAP 72 made such an order pursuant to s 232(1). However, I consider EB 9 & 10 Pty Ltd v The Owners SP 934 to be binding on this point. I also consider that the NSW Court of Appeal decision in Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284, which held, by majority, that s 232(1) embraces a claim for damages pursuant to s 106(5), does not have the effect of authorising the Tribunal to make the declaration of the kind sought.

40. That said, in a case where a by-law is sought to be enforced for failure to comply with a duty purportedly created by it, I consider it open to the Tribunal to make a finding that there has been no failure to comply on the ground that the by-law is not effective to create the duty.

39. Even if the owners corporation’s argument were considered on that basis, I would have rejected it.

40. The law imposes a high bar for construing a contractual term as being so uncertain that it is unenforceable. It must be so obscure or imprecise as to be incapable of being attributed any particular contractual intention: Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd [2016] HCA 26 at [53].

41. By-law 26 can be given some meaning. It is not unintelligible. Any difficulty in drawing the line between what does or does not constitute “major” replacement does not mean it is devoid of meaning. The by-law operates so that if the obligation on the owners corporation under by-law 26.2 is not triggered, the obligation on a lot owner under by-law 26.1 applies.

Repeal or variation by special by-law 11

44. Special by-law 11 is set out below. The circumstances surrounding its registration also are set out below. I have found that it should be declared invalid. Accordingly, this issue also does not arise on that finding (in addition to the finding that the timber decks are common property).

45. In any event, for the reasons outlined above, I do not consider that the declaration sought as to the repeal or variation of by-law 26 by special by-law 11 is authorised.

46. Even if the argument were analysed on the basis that it would justify a finding that by-law 26 is not effective to impose a duty, I would have rejected it.

47. The owners corporation’s written submissions relied on Part 1, clause (d) of special by-law 11. I infer this was an error. At the hearing, reference was made to Part 1, clause (b), which relevantly states the intent of the by-law is to absolve the owners corporation of maintenance responsibilities of “any fixture or fitting contained within the lot, whether specified in this by law or not”. Part 3 of the by-law proceeds to refer to seven categories of items associated with such fixtures and fittings and identify items included in each category.

48. Special by-law 11 is a rule of general application. In contrast, by-law 26 deals specifically with timber decking on balconies. An instrument is to be construed as a whole such that its provisions fit together: Greencapital Aust Pty Ltd v Pasminco Cockle Creek Smelter Pty Ltd (Subject to Deed of Company Arrangement) [2019] NSWCA 53 at [51]-[52]. This means specific provisions will be given effect in preference to general provisions: Findex Group Limited v McKay [2020] FCAFC 182 at [156]. The two by-laws can be read together and each given operation by construing special by-law 11 as not applying to the timber decking on balconies.

Harsh, unconscionable or oppressive

49. Section 150(1) of the SSM Act provides:

(1) The Tribunal may, on the application of a person entitled to vote on the motion to make a by-law or the lessor of a leasehold strata scheme, make an order declaring a by-law to be invalid if the Tribunal considers that an owners corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive.

50. An owners corporation is not a person entitled to vote on the motion to make a by-law or the lessor of a leasehold strata scheme. It lacks standing to make an application pursuant to s 150(1).

51. The owners corporation submits that it can seek the same declaration under s 232(1). They rely on passages in Vickery v The Owners – Strata Plan No 80412 indicating the breadth of s 232: see [26]-[58], [160]-[167]. I do not accept those passages stand for the proposition that s 232 is to be construed so as to render otiose the express, specific power in s 150(1) setting out how and when that power may be exercised. I agree with the reasons of the Tribunal in Feedback Deli Pty Limited and Feedback Holdings Pty Limited v The Owners-Strata Plan No 36613 [2019] NSWCATCD at [146]-[175].

52. There is a good reason why an owners corporation lacks standing to seek an order under s 150(1). An owners corporation, unlike a lot owner, can, by special resolution, change the by-law under s 141 of the SSM Act. That would include repealing it. Indeed, in this case, a motion to resolve to “change by-laws to rescind by-law 26” was considered at a general meeting held on 6 August 2024 but was not passed.

53. In those circumstances, I propose not to state my view on whether, on the assumption the timber decks are lot property, by-law 26 is harsh, unconscionable or oppressive.

54. For completeness, I observe the availability of s 141 raises an issue as to whether it is appropriate for an owners corporation to assail by-laws of the strata scheme in the manner sought to be done in these proceedings, at least where there is nothing to suggest any practical obstacle to the effective exercise of s 141. In any event, it is unnecessary for me to pursue this further.

Settlement agreement

55. It follows from my finding that the timber decks are common property, as well as my indicative alternative findings on by-law 26, that the issue of whether the settlement agreement should be given effect does not arise. I propose to deal with it on the same basis as the issues on by-law 26, noting that there is no factual dispute and the question is only one of authority.

56. The settlement agreement was made on 20 May 2024 between one lot owner, Annette Barnett, and the owners corporation. The owners corporation was represented by Rupert Cater, an employee of the strata managing agent, Network Strata Services Pty Limited (trading as Netstrata). It provided:

THE PARTIES AGREE THAT:

1. The commencement/start date is dependent on resolutions at a general meeting.

2. The owners corporation progress a tender option, (prepared by IBC), and ensure works commence on or about the 3 August 2024.

3. The “works” include work to the deck servicing Unit 401.

57. Subsequently, on 6 June 2024, the strata committee unanimously resolved to endorse the settlement agreement.

58. Although, at one point, the owners corporation appeared to submit that the agreement was conditional on the passing of resolutions at a general meeting, this was not further pursued or clearly articulated. I would have rejected that submission. The start date of the work depended on resolutions but the owners corporation needed to ensure it commenced by 3 August 2024.

59. The focus of the owners corporation’s submission was an absence of authority. Although various points were made at the hearing, I understand the contentions to be (i) Mr Cater had no authority; and (ii) the owners corporation itself would not have been permitted to enter into the settlement agreement as it fell outside its statutory functions under Part 2, Division 2 of the SSM Act. I would have rejected both contentions.

60. As to the latter, an owners corporation may be sued. It possesses the power to do all things necessary for or incidental to its functions. That power would include a power to compromise a claim brought against it: see The Owners Strata Plan No 57164 v Yau [2016] NSWSC 1056 at [99].

61. As to the former, I consider clauses 6.3, 8.1 and 8.32 authorised Netstrata to enter into the settlement agreement on behalf of the owners corporation. Further, the settlement agreement was ratified by the strata committee, which would have had authority to enter into it: see 2 Elizabeth Bay Road Pty Limited v The Owners - Strata Plan No 73943 [2014] NSWCA 409 at [29]; The Owners Strata Plan No 57164 v Yau [2017] NSWCA 341.

Special by-law 11

62. Special by-law 11, in its currently registered form, is in the following terms:

11 Absolution of Maintenance of Lot Fixtures & Fittings

Registration Date: 12/12/2024

Part 1 - Introduction and Intent

(a) This By-law has been drafted from the NSW Land and Property Information memorandum AG600000 dated November 2011 which attempts to provide a guide to owners in determining the maintenance responsibilities for their scheme.

(b) The intent of the By-law is to provide definition of the maintenance responsibilities of the fixtures and fittings within a lot and any appliances that only service a single lot within the strata scheme.

The intent being that any fixture or fitting contained within the lot, whether specified in this By-law or not, or any appliance that only services one lot, whether specified in this By-law or not shall be deemed to be the maintenance responsibility of the lot owner by virtue of the Owners Corporation absolving its maintenance responsibilities for same pursuant to section 62(3) of the Act.

(c) Any item specified in this By-law that is afforded cover for damage due to an insurable event by the Owners Corporations insurance policy shall still be protected by that insurance.

(d) At all times the Owners Corporation shall retain the maintenance responsibility for the structural elements, integrity and general safety of the building.

Waterproofing shall also remain the Owners Corporations responsibility, except where a lot owner has undertaken renovation within their lot that affects a waterproofed area.

(e) This By-law does not confer any rights upon a lot owner to install any item listed in this By-law as a fixture or fitting of a lot.

PART 2 - Definitions

2.1 In this by-law, unless the context otherwise requires or permits:

(a) Act means the Strata Schemes Management Act 2015 (NSW) or any amendment

(b) Lot means any lot in the strata plan

(c) Owner means the owner of the Lot

(d) Owners Corporation means the owners corporation created by the registration of the strata plan 85385

(e) Internal Area means any area within the envelope of a lot as defined by the Strata Plan

(f) Internal Pipe Work and Wiring means any pipe work or wiring that only services one lot, whether located on a common property or internal wall.

2.2 In this by-law, unless the context otherwise requires:

(a) the singular includes plural and vice versa;

(b) any gender includes the other genders;

(c) any terms in the by-law will have the same meaning as those defined in the Act; and

PART 3 - Terms and Conditions

In accordance with section 62(3) of the Act, the Owners Corporation has deemed it inappropriate to repair, maintain, replace or renew any of the following items that are associated with the fixtures and fittings within an owners lot within the Strata Scheme;

3.1 Internal Areas

All decorative finishes within a lot, including but not limited to;

(a) All Cornices

(b) All Skirting Boards

(c) All Architraves and Internal Door Jams

(d) references to legislation includes references to amending and replacing legislation

(e) Wall tiles wherever located, including kitchen, bathroom and laundries

(f) Floor Tiles wherever located, including kitchen, bathroom and laundries

(g) False Ceilings

(h) Mezzanines, Stairs and Handrails

(i) All paintwork and wall paper

(j) The cleaning of mould throughout the lot where the causative factors are purely environmental

3.2 Bathroom, Ensuites and Laundry Areas

All Bathroom, Ensuite & Laundry fixtures and fittings, including but not limited to;

(a) All taps and internal pipe work

(b) Shower screens

(c) Bathtub, including internal floor waste and drainage pipes

(d) Sinks and hand basins including internal drainage pipes

(e) Cabinets and mirrors

(f) Toilet pan, including cistern and internal waste pipes

(g) All lights, light fittings and exhaust fans that only service the lot, wherever located

3.3 Kitchen Areas

All Kitchen fixtures and fittings, including but not limited to;

(a) All taps and internal pipe work

(b) All internal waste and drainage pipes, including connection to the common stack

(c) Bench tops

(d) Sinks and insinkerators

(e) Ovens, Stoves and Cook Tops

(f) All lights, light fittings, exhaust fans and rangehood’s that only service the lot, wherever located, including ducting and external ventilation points

3.4 Floor Coverings

(a) All carpet within the lot

(b) All floor tiles, wherever located, including kitchen, bathroom, laundry and balcony tiles

(c) All Floor boards, whether floating or fixed

(d) All parquetry, linoleum, vinyl and cork tiles wherever located

3.5 Balcony/Courtyard Areas

(a) All tiles and pavers

(b) All stairs and handrails within the balcony or courtyard area

(c) All awnings, pergolas, privacy screens or louvers, whether originally or installed by the lot owner subsequent to the registration of the Strata Plan

(d) All plants and grassed areas within the balcony or courtyard

(e) the pruning, trimming or removal of a tree or trees, including damage caused by roots

(f) Fences that divide two lots

(g) All lights, switches, light fittings and wiring within the balcony or courtyard of the lot

3.6 Electrical Fittings & Appliances

(a) All lights and light fittings, including switches that service only one lot, including down lights and transformers that may be recessed in the ceiling

(b) All electrical sockets and wall plates

(c) Electrical main and sub-main that services only one lot including fuses wherever located

(d) Smoke Detectors that only service one lot

(e) Alarm Systems that only service one lot

(f) Individual Garage Door Motors

(g) Telephone, Television, cable television and internet wall plates and cabling that only services one lot, wherever located

(h) Split system and ducted Air-conditioning systems, including condenser units and all associated equipment wherever located that only service one lot;

(i) Ceiling Fans

(j) Electrical or Gas Hot Water Heaters and all associated equipment that only service one lot, wherever located.

(k) Any general appliance, such as a dishwasher, microwave oven, clothes dryer or other that is designed to only service a single lot.

3.7 Front Door, Balcony Doors, Windows and Garage Area

(a) All flyscreens and security screens/doors fitted to the windows, doors and balcony doors of the lot, whether installed originally or subsequently by the lot owner;

(b) Automatic door closers

(c) Any locking device or door furniture installed on the front and back doors, balcony doors or windows of the lot, whether installed originally or subsequently by the lot owner;

(d) Supplying or replacing swipe tags, fobs, security passes, restricted keys or remote control units that operate common entry doors and garage doors at the scheme

63. At the annual general meeting on 28 November 2023, the owners corporation passed a special resolution to add special by-law 11 “as outlined in the meeting notice but with the reference to decks in clause 3.5(a) deleted”. It is common ground that the current form of special by-law 11 set out above reflects the special resolution passed as there is no reference to decks in clause 3.5(a).

64. On 29 April 2024, Moirs Law lodged the notice of a change to the by-laws, which included the addition of special by-law 11. The notice attached a consolidated version of the by-laws. The form of special by-law 11 contained in that version included clause 3.5(a) in the following terms:

(a) All tiles, pavers and decking (emphasis added)

65. It is common ground that this form of special by-law 11 was not in accordance with the special resolution passed on 28 November 2023.

66. On 1 May 2024, the consolidated by-laws attached to the notice were registered by entry in the common property folio.

67. On 8 January 2025, Moirs Law lodged another notice of change to the by-laws. It referred to amendment to special by-law 11. It attached consolidated by-laws that contained special by-law 11 in its current form set out above.

68. On 9 January 2025, the consolidated by-laws attached to the notice were registered.

69. The notices lodged by Moirs Law state that they were executed on behalf of the owners corporation. There is no evidence as to who instructed Moirs Law. Both parties proceeded on the assumption that it was Netstrata in each case.

70. The lot owners contend that special by-law 11 should be declared invalid under s 150(1) of the SSM Act on the grounds that the owners corporation did not have the power to make it or that it is harsh, unconscionable or oppressive. The lot owners did not seek an order or make any contention that special by-law 11 should be repealed under s 148 of the SSM Act.

71. There is a basic difficulty with special by-law 11. Its stated intent is defining the maintenance responsibilities of “the fixtures and fittings within a lot”, which items would be lot property by definition, and “any appliances that only service a single lot”, which generally would be expected to be lot property. However, its operation is directed to carving out those items from its duties with respect to common property under ss 106(1) and (2) of the SSM Act pursuant to s 106(3) of the SSM Act (by reference to its predecessor provision).

72. Plainly, to the extent the items identified in Part 3 are lot property, the by-law has no operation. Those items are the responsibility of lot owners. This is not affected by special by-law 11.

73. The difficulty in the by-law might be overcome by reading “within” a lot in some broader physical sense reflecting common parlance, as well as implying a proviso along the lines “to the extent that the items are common property”.

74. Even if that were done, it nonetheless directs attention to s 106(3) of the SSM Act, which provides:

(3) This section does not apply to a particular item of property if the owners corporation determines by special resolution that—

(a) it is inappropriate to maintain, renew, replace or repair the property, and

(b) its decision will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

75. The subsection refers to “a particular item of property”. It is necessary for the owners corporation to determine by special resolution the matters in subparagraphs (a) and (b): see also The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270 at [152]-[167]; The Owners – Strata Plan No 74232 v Tezel [2023] NSWCA 35 at [35] .

76. There is no evidence of a special resolution separate to the one by which special by-law 11 was passed on 28 November 2023.

77. I would accept that, in a case where a by-law is passed so as to qualify the duties under ss 106(1) and (2) of the SSM Act with respect of particular items of property, the terms of the by-law may satisfy the requirements in s 106(3). However, I find that special by-law 11 does not satisfy those requirements.

78. First, it does not apply only to “particular” items of property, but rather to various inclusively defined categories of property, as well as fixtures, fittings and appliances “whether specified in this By-law or not”. The significance of the need for “particular” items is that determination of the matters in subparagraphs (a) and (b) are made in respect of the “particular” items.

79. Secondly, it does not address the matter in subparagraph (b). The statement in Part 1, clause (d) that “At all times the Owners Corporation shall retain the maintenance responsibility for the structural elements, integrity and general safety of the building” is not a determination that the decision that it is inappropriate to repair, maintain, replace or renew the items will not affect the safety of any building, structure or common property in the strata scheme or detract from the appearance of any property in the strata scheme.

80. I add that it seems open to argument that the decision that it is inappropriate to repair, maintain, replace or renew the items, evidenced by the chapeau to Part 3, itself is liable to challenge on administrative law grounds: see The Owners Strata Plan 50276 v Thoo at [162]; Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353 at 360. The lot owners did not express their submission in this way, so I do not consider it.

81. It follows from my finding that special by-law 11 is inconsistent with the SSM Act and has no force and effect: s 136(2). Accordingly, the owners corporation did not have power to make it and it should be declared invalid.

82. It is unnecessary to consider whether special by-law 11 is also harsh, unconscionable or oppressive. Consideration of this issue in the alternative is not justified in circumstances where it was barely addressed in the submissions of the parties.

75. It is also unnecessary to consider the issue as to the form of special by-law 11. However, I would have rejected the claim by the owners corporation to reinstate the form that became registered on 1 May 2024.

76. First, it involves a declaration that the form registered on 9 January 2025 was invalid. For the reasons outlined above, I do not consider that such a declaration is authorised by s 232(1) upon which the owners corporation relied. Further, the nature of the declaration is one that might be made by an order under s 150(1) on the ground of absence of power. For the reasons outlined above, the owners corporation lacks standing to seek such an order.

77. Secondly, whatever the position as to the authority Moirs Law had to lodge the notice on 8 January 2025, or the authority Netstrata had to give instructions in that regard, it would be inappropriate to reinstate the form registered on 1 May 2024 for the simple reason that the by-law in that form was not passed by special resolution and thus would not be compliant with s 141.

Compliance with duties under s 106

86. It is common ground that, based on the report of Mr Mark Kavanagh of Integrated Building & Engineering Consultancy dated 3 May 2024 (IBEC Report), certain timber decks of the apartments of the four applicant lot owners have fallen into disrepair and require replacement. As the timber decks are common property, this amounts to a breach of ss 106(1) and (2) of the SSM Act: Seiwa Pty Ltd v Owners Strata Plan 35042 [2006] NSWSC 1157 at [5]; Riley v The Owners - Strata Plan 73817 [2012] NSWCA 410 at [76].

87. I accept, based on the IBEC Report, that the extent of damage to the relevant timber decks is such that repair is not viable and replacement is reasonably necessary to achieve “a minimal compliance” with the duties under s 106: see Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 at [112].

88. The IBEC Report also stated:

The western balcony repair for unit 105 will also require the adjoining planter box to be stripped and re-waterproofed, as it is from this planter box that water is leaking and flowing into the void under the decking system, resulting in timber decay.

89. A Scope of Works & Tender Document prepared by Mr Kavanagh dated 14 June 2024 (Scope of Works) set out three options for replacement of the timber decks in section 8.1 as follows:

8.1   TIMBER BALCONY DECK REMOVAL AND REPLACEMENT FOR UNITS 104 (EAST), 105 (EAST & WEST), 401, & 404, INCLUDING THREE OPTIONS FOR THE DECK FINISH BEING:

A   As per the original design with timber joists and hardwood decking boards

B   Aluminium joists and composite timber boards

C   Pavers of 400mm x 400mm in size and laid using a pedestal system

90. Section 8.1 set out preliminary and demolition work required for all three options. It then set out the scope of works for each of the three options. Section 8.2 set out the work required for re-waterproofing the planter box adjoining the balcony in unit 105.

91. The lot owners seek a work order for replacement of the timber decks based on the work identified as Option B in Section 8.1 of the Scope of Works, or in the alternative, the work identified as Option A. They also seek a work order based on the work identified in Section 8.2 of the Scope of Works. Although a work order is also sought for “external wall investigations for unit 105”, I do not consider such a work order is appropriate, or consistent with Glenquarry Park Investments Pty Ltd v Hegyesi.

92. The owners corporation submit that the orders should not be made because it “should be permitted to decide [the particular form of repair] for itself, in the usual democratic way, once the broader issues are resolved”. I do not agree.

93. First, such an approach is inconsistent with the principles applicable to compliance with the duties under s 106, which were summarised in Campbell v The Owners Strata Plan No 88807 [2024] NSWCATCD 50 at [13]-[26].

94. Secondly, the evidence indicates the owners corporation received a report in November 2023 which set out the significant damage to timber decks in three of the four apartments and recommended replacement. It accepted the findings of the IBEC Report. It did not raise any issue with the Scope of Works. Nonetheless, the timber decks remain in a state of disrepair. The owners corporation should be required to perform work to ensure compliance with the “strict” duties under s 106.

95. The owners corporation did not raise any other argument against the orders or as to which orders should be made. I am satisfied that the work identified as Option B in Section 8.1 of the Scope of Works and the work identified in Section 8.2 of the Scope of Works is reasonably necessary to ensure compliance with the duties under s 106. I will make orders accordingly.

Costs

96. The lot owners seek their costs of the proceedings pursuant to r 38(2) of the Civil and Administrative Tribunal Rules 2014 (NSW) or s 60(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

97. Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) provides:

38 Costs in Consumer and Commercial Division of the Tribunal

(1)  This rule applies to proceedings for the exercise of functions of the Tribunal that are allocated to the Consumer and Commercial Division of the Tribunal.

(2) Despite section 60 of the Act, the Tribunal may award costs in proceedings to which this rule applies even in the absence of special circumstances warranting such an award if—

(a) the amount claimed or in dispute in the proceedings is more than $10,000 but not more than $30,000 and the Tribunal has made an order under clause 10(2) of Schedule 4 to the Act in relation to the proceedings, or

(b) the amount claimed or in dispute in the proceedings is more than $30,000.

98. The operation of r 38(2)(b) was summarised by the Appeal Panel in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 at [3]-[5]. Its operation in the context of two applications, one of which is in the nature of a cross-application, was considered in Hanave Pty Ltd v Wine Nomad Pty Ltd; Wine Nomad Pty Ltd v Hanave Pty Ltd (No 2) [2022] NSWCATAP 361 at [33]-[63].

99. In this case, neither party sought a money order. Nor could a money order be made: see Owners SP 32735 v Swan [2012] NSWSC 383. No order was sought, or could be made, for relief from payment of an amount. I find that rule 38(2)(b) does not apply.

100. It is thus necessary for there to be special circumstances to warrant an award of costs: s 60(2). The expression “special circumstances” means circumstances that are out of the ordinary but not necessarily extraordinary or exceptional: Megerditchian v Kurmond Homes Pty Ltd [2014] NSWCATAP 120 at [11].

101. Section 60(3) of the Civil and Administrative Tribunal Act provides:

(3) In determining whether there are special circumstances warranting an award of costs, the Tribunal may have regard to the following—

(a)  whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,

(b)  whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,

(c)  the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,

(d)  the nature and complexity of the proceedings,

(e)  whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,

(f)  whether a party has refused or failed to comply with the duty imposed by section 36(3),

(g)  any other matter that the Tribunal considers relevant.

102. I find that there are special circumstances to warrant an award of costs in favour of the lot owners in this case. The claims by the owners corporation in respect of by-law 26 were misconceived. I have found the orders sought were not authorised or could not be sought by the owners corporation. Also, although I did not pursue the issue further, it seems to me there is a real question as to the appropriateness of the owners corporation to have made such claims in the face of s 141. The argument in respect of the settlement agreement was contrary to established authority. The claim to reinstate special by-law 11 in the form that it accepted did not reflect its own special resolution was ill-considered. I presume the motivation was to have an additional argument against the claim of the lot owners.

103. The lot owners have been successful. I will order the owners corporation to pay their costs of both applications.

104. The lot owners have not sought a quarantining order under s 232(1) of the SSM Act of the type set out in s 90(2) of the SSM Act against making contributions to pay for the costs order against the owners corporation: see The Owners - Strata Plan No 62713 v Liberant [2022] NSWCATAP 80 at [132]. I therefore will not make such an order.

Orders

105. I make the following orders in proceedings 2024/00336052:

1. Within six months of the date of these orders, the respondent, using appropriately qualified and licensed persons, is to carry out and complete the following work in a proper and competent manner in accordance with all applicable laws and standards:

1. The work identified as Option B in Section 8.1 (including the preliminary and demolition work identified in Section 8.1) of the Scope of Works & Tender Document prepared by Mr Mark Kavanagh of Integrated Building & Engineering Consultancy dated 14 June 2024; and

2. The work identified in Section 8.2 of the Scope of Works & Tender Document prepared by Mr Mark Kavanagh of Integrated Building & Engineering Consultancy dated 14 June 2024.

2. Pursuant to s 150(1) of the Strata Schemes Management Act 2015 (NSW), special by-law 11 be declared invalid from the date of its registration.

3. Within 28 days of the date of these orders, the respondent is to do all things necessary to ensure registration of order 2 under s 246 of the Strata Schemes Management Act 2015 (NSW).

4. The respondent is to pay the applicants’ costs of the proceedings.

106. I make the following orders in proceedings 2025/00006667:

1. The application is dismissed.

2. The applicant is to pay the respondents’ costs of the proceedings.

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I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar