Coscuez International Pty Ltd v The Owners Strata Plan No 46433; The Owners Strata Plan No 46433 v Coscuez International Pty Ltd

[2022] NSWCATCD 201

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Coscuez International Pty Ltd v The Owners – Strata Plan No 46433; The Owners – Strata Plan No 46433 v Coscuez International Pty Ltd [2022] NSWCATCD 201

Hearing dates:

19 October 2022

Date of orders:

16 November 2022

Decision date:

16 November 2022

Jurisdiction:

Consumer and Commercial Division

Before:

G Ellis SC, Senior Member

Decision:

In SC 22/20291:

1. Under s 149(1) of the Strata Schemes Management Act 2015, the Tribunal makes the common property rights by-law tabled by the applicant (Lot owner) at the meeting of the respondent (owners corporation) held on 25 July 2018.

2. Under s 246 of the Strata Schemes Management Act 2015, within 28 days (ie on or before 13 December 2022) the respondent is to do all things necessary to register that by-law.

3. Under s 150(1) of the Strata Schemes Management Act 2015:

(a) Special By-Law 8 is declared invalid on and from 12 August 2014, being the date on which it was purportedly made,

(b)   Special By-Law 9 is declared invalid on and from 7 October 2015, being the date on which it was purportedly made, and

(c)   Special By-Law 10 is declared invalid on and from 25 July 2018, being the date on which it was purportedly made.

4. Under s 246 of the Strata Schemes Management Act 2015, within 28 days (ie on or before 13 December 2022) the respondent is to:

(a)   obtain a certified copy of order (3) from the Tribunal’s Registrar,

(b)   lodge that certified copy with the Registrar General, NSW Land Registry Services, and

(c)   do all other things necessary to ensure that order 3 is recorded on the common property title of Strata Plan 464633.

5. Under s 229(a) of the Strata Schemes Management Act 2015, within 28 days (ie on or before 13 December 2022) the respondent is to:

(a)   amend the levy register for Lot 4 in the strata scheme to give effect to the Tribunal’s decision in this application, including but not limited to Order 3; and

(b)   provide the applicant with a copy of that register for Lot 4.

6.   Any submissions in support of an application for costs (not exceeding five pages), together with any supporting evidence, are to be filed and served by 29 November 2022.

7.   Any submissions in response to any such application (not exceeding five pages), together with any supporting evidence, are to be filed and served by 13 December 2022.

8.   Any submissions in reply (not exceeding two pages) are to be filed and served by 20 December 2022.

9.   Any such submissions should indicate whether the party accepts that costs should be determined on the papers, ie without the need for a further hearing.

In SC 22/20296:

1.   The application is dismissed.

2.   Any question of costs in relation to these proceedings is to be included in the submissions made in relation to costs in the related proceedings (SC 22/20291).

Catchwords:

LAND LAW - Strata title – whether proposed by-law unreasonably refused – whether by-laws are harsh, unconscionable, or oppressive

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW), s 60

Civil Procedure Act 2005 (NSW), s 98

Legal Profession Uniform Law 2014 (NSW)

Strata Schemes Management Act 1996 (NSW)
Strata Schemes Management Act 2015 (NSW), ss 9, 80, 81, 82, 83, 99, 135, 136, 137, 139, 149, 150, 229, 232

Strata Schemes Management Regulation 2016 (NSW), cls 36, 60

Cases Cited:

Beckett v The Owners – Strata Plan No 74637 [2020] NSWCATCD

Bruce v Knight [2021] NSWCATAP 225

Capcelea v The Owners Strata Plan No 48887 [2019] NSWCATCD 27

Casuarina Rec Club Pty Limited v The Owners – Strata Plan No 77971 [2011] NSWCA 159

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

Coscuez International Pty Ltd v The Owners – Strata Plan No 46433 [2022] NSWCATAP 147

Endre v The Owners – Strata Plan No 17771 [2019] NSWCATAP 93

Gelder v The Owners – Strata Plan No. 38308 [2020] NSWCATAP 227

Gokani-Robins Pty Ltd v The Owners – Strata Plan No 77109 [2022] NSWCATCD, 8 August 2022

Macey’s Group Pty Ltd v The Owners – Strata Plan No 33591 [2021] NSWCATAP 7

Precision Plastics Pty Ltd v Demir [1975] HCA 27

The Owners – SP No 91684 v Liu; The Owners – SP No 90189 v Liu [2022] NSWCATAP 1

The Owners – Strata Plan No 12289 v Donaldson [2019] NSWCATAP 213

The Owners – Strata Plan No 69140 v Drewe [2017] NSWSC 845

Walsh v The Owners – Strata Plan No 10349 [2017] NSWCATAP 230

Texts Cited:

Nil

Category:

Principal judgment

Parties:

In SC 22/20291:
Applicant - Coscuez International Pty Ltd
Respondent - The Owners – Strata Plan No 46433

In SC 22/20296:
Applicant – The Owners – Strata Plan No 46433
Respondent – Coscuez International Pty Ltd

Representation:

The Owners – Strata Plan No 46433 – Kerin Benson Lawyers Pty Ltd

Coscuez International Pty Ltd – P Tang (director)

File Number(s):

SC 22/20291, SC 22/20296

Publication restriction:

Nil

Reasons for decision

Outline

1. These proceedings raise matters relating to the Strata Schemes Management Act 2015 (the Act). Seven issues were remitted by an Appeal Panel for rehearing:

1. Whether a common property rights by-laws, proposed by the Lot owner, pertaining to the ‘swinging door’ was unreasonably refused under s 149 of the Act.

2. If not, whether an order should be made that the Lot owner restores common property, and the terms of such order.

3. Whether Special By-laws 8, 9 and 10 of the strata scheme were made without power or are harsh, unconscionable or oppressive under s 150 of the Act.

4. Whether the Tribunal should make an order that the Lot owner is liable to pay water consumption charges and other “one off” charges imposed by the owners corporation that are unpaid in the period from 30 November 2016 to the date of commencement of the Tribunal proceedings under s 232 of the Act.

5. Whether the Tribunal should make a money order in favour of the Lot owner for water consumption and other “one off charges” that were paid in the period from 30 November 2016 to the date of commencement of the Tribunal proceedings under s 232 of the Act.

6. Whether the Tribunal should direct the owners corporation to amend the levy register, kept under s 99 of the Act, in respect of Lot 4.

7. Any applicable limitation issues that pertain to the jurisdiction of the Tribunal.

2. The Tribunal’s decision in relation to each of those issues is as follows:

1. The Lot owner’s by-law was unreasonably refused.

2. As a result, this issue did not require consideration.

3. The owners corporation’s three by-laws are each harsh, unconscionable, or oppressive.

4. No order should be made as no money is payable by the Lot owner.

5. No order should be made as no money is payable to the Lot owner.

6. The levy register should be amended in a manner that gives effect to the orders made in these proceedings.

7. There were no limitation issues that required determination.

Background

3. The strata scheme which is the subject of these proceedings comprises 4 commercial lots and 75 residential lots. These applications related to Lot 4 which has been divided into two retail premises which will be referred to as Shop 4A and Shop 4B. Shop 4A has been operated as an iced tea store while Shop 4B has been a gift store, a convenience store and then a newsagency.

Hearing

4. Leave having been granted for additional evidence to be lodged, the Tribunal was confronted with three folders of documents for the Lot owner (Exhibit A) and two folders of documents for the owners corporation (Exhibit B). The parties were requested to identify the documents upon which they relied in relation to each of the above issues as it is not the role of the Tribunal to read five folders of documents to discern which documents are relevant to the various issues.

5. Documents marked for identification were as follows:

MFI 1      Lot owner’s Points of Claim (SC 22/20291)

MFI 2      Owners corporation’s Points of Defence

MFI 3      Owner’s corporation’s Points of Claim

MFI 4      Lot owners’ Points of Defence (SC 22/20296)

6. There was no cross-examination of Ms Tang for the Lot owner, and only brief cross-examination of Mr Koh for the owners corporation. That was followed by oral submissions, in the sequence Lot owner then owners corporation then Lot owner in reply so that each party had an opportunity to speak in support of their own case and in response to the case of the other party.

Jurisdiction

7. This application relates to a strata-titled building in Kingsford. The subject strata scheme was registered on 30 March 1994. Accordingly, the Tribunal has jurisdiction to hear and determine these proceedings under the Act.

Consideration

8. It is convenient to deal with each of the issues in turn, having regard to the relevant law, the evidence, and the submissions for each party before indicating the Tribunal’s decision and the reasons for that decision.

Issue 1

9. In the Act, s 149 provides as follows:

(1)   The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds—

(a)   on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or

(b)   on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or

(c)   on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust.

(2)   In considering whether to make an order, the Tribunal must have regard to—

(a)   the interests of all owners in the use and enjoyment of their lots and common property, and

(b)   the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law.

(3)   The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent.

(4)   The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law.

(5) An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).

(6)   An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.

10. A refusal will be unreasonable when there is no rational basis for it in that it was not guided by sound judgment or good sense: The Owners – Strata Plan No 69140 v Drewe [2017] NSWSC 845 (Drewe), at [43]. As was indicated in Capcelea v The Owners Strata Plan No 48887 [2019] NSWCATCD 27 (Capcelea), at [52], the question is not whether the proposed change is reasonable but, rather, whether the refusal was unreasonable.

11. After referring to the decisions in Beckett v The Owners – Strata Plan No 74637 [2020] NSWCATCD (Beckett), Capcelea, Endre v The Owners – Strata Plan No 17771 [2019] NSWCATAP 93 (Endre), Macey’s Group Pty Ltd v The Owners – Strata Plan No 33591 [2021] NSWCATAP 7 (Maceys), The Owners – Strata Plan No 12289 v Donaldson [2019] NSWCATAP 213 (Donaldson), and Drewe, the Appeal Panel, in Bruce v Knight [2021] NSWCATAP 225 (Bruce), at [53], summarised the applicable principles as follows:

1.   reasonableness must be assessed by reference to circumstances known at or prior to the passing of the relevant resolution: Maceys; Beckett; Drewe;

2.   the determination of whether a refusal is unreasonable depends on the conduct of the owners corporation and all the relevant circumstances: Endre;

3.   “circumstances” are different to “material”. Subsequent evidence or “material” which goes to the circumstances existing at the time of the meeting is admissible: Donaldson;

4.   the Tribunal is not confined to examination of the material before the meeting: Donaldson; Beckett;

5.   individual owners can provide evidence of their reasons: Capcelea.

12. The decision of the Appeal Panel in Bruce suggests a need to determine the subsequent evidence and material which go to the circumstances existing at the time of the meeting which requires findings in relation to the evidence given.

13. Only then can the Tribunal determine whether the proposed by-law was unreasonably refused as the first step in a two-step approach, consistent with what was said in Donaldson and Gelderv The Owners – Strata Plan No. 38308 [2020] NSWCATAP 227, which requires a consideration of whether the proposed by-law was unreasonably refused, and then an assessment of the matters set out in s 149(2).

14. From the documents which were said to be relevant to this application, the following sequence of events emerges.

15. On 22 June 2010 the strata committee “Resolved to approve the application from Shop 4 to install bi-fold doors at the front of the property as per plan tabled at the meeting” to which the strata managing agent had added a heading “Shop 4 Development Application”. The addition of the heading by the strata managing agent did not qualify or amend what was resolved at that meeting. Plans submitted with that proposal showed the proposed bi-fold doors in Shop 4A (labelled “Chatime”) and a swinging door in Shop 4B, presumably the existing door. Simply stated, this proposal was to create two shops instead of one with the second shop having bi-fold doors. On 12 January 2011 the development application for Shop 4A was approved. On 18 March 2011 Ms Tang’s mother sent a letter to the strata committee which raised various issues. On 19 April 2011 the development consent was modified, and on 27 April 2011 a complying development certificate for Shop 4A was issued.

16. There is also a plan which shows the swinging door for Shop 4B in a changed location, being a Construction Certificate drawing approved by a certifier on 27 April 2011. On 16 May 2011 an Occupation Certificate for Shop 4B was issued.

17. An 11 April 2011 letter from the strata managing agent suggested a need to change the colour of the door framed from black, back to maroon. At the annual general meeting held on 1 June 2011, a proposal for a special by-law to approve work done on shop 4A and shop 4B was defeated. While there is no evidence as to why that proposal was rejected, the minutes contain the following words:

Note: the strata manager supported this By-law for the protection in afforded the owners corporation now and in the future, concerning the alterations to the common property.

18. The 7 October 2015 annual general meeting resolved to issue breach notices but not in relation to the swinging door. In 2016 proceedings were commenced in the Tribunal by the owners corporation against the Lot owner. Those proceedings, which were decided on 25 May 2017, did not involve the swinging door.

19. Minutes of an extraordinary general meetings held on 29 March 2017 and 22 August 2017, and the annual general meeting held on 25 July 2018, each record that a proposal to introduce a special by-law for the renovations to Lot 4 was defeated.

20. In August 2017, Mr Koh sent a letter to Lot owners in which he maintained that approval for the bi-fold doors was not the same as approval for the swinging door. His 17 February 2021 and 3 May 2021 affidavits set out what he contended was the relevant history of various matters but did not include what he suggested were the reasons why those proposals were defeated or why he voted against them.

21. As this issue turns of whether the proposal to introduce a by-law that was considered at the meeting held on 25 July 2018 was unreasonably refused, what was said and done after that date is not relevant, unless it goes to show the circumstances at that time that decision was made.

22. For example, it is not relevant to consider the mediation in relation to a toilet and the swinging door was held on 26 September 2019. Although that mediation was not successful in relation to the swinging door, it was recorded that the owners corporation was prepared to consent to the swinging door, subject to an agreement as to compensation, and there was an offer by the Lot owner to pay $17,000 in compensation. As Mr Koh said during his oral evidence, compensation was not discussed at the 25 July 2018 meeting.

23. The wording of the special by-law that was proposed at the annual general meeting held on 25 July 2018 was as follows:

SPECIAL BY-LAW NO. < >   PAST WORKS IN LOT 4

PREAMBLE

1.1 This by-law is made under the provisions of Part 6 and 7 of the Strata Schemes Management Act 2015.

1.2   The Occupier of Lot 4 has previously carried out the Past Works and the Owner wishes to retain those Past Works.

1.3   The intended effect and purpose of this by-law is to:

(a)   permit the Owner of Lot 4 to retain the Past Works; and

(b)   to confer a right of exclusive use and enjoyment, and special privilege, in respect of the common property concerned or affected by the Past Works.

DEFINITIONS & INTERPRETATION

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

(a) Act means the Strata Schemes Management Act 2015;

(b)   Authority means any government, statutory, judicial, quasijudicial, public or other authority having any jurisdiction over the lLt or the Building including but not limited to the local council, a court or a tribunal;

(c)   Building means the building and situated at ***-*** Anzac Parade, Kingsford. NSW 2032;

(d)   Lot means lot 4 in Strata Plan No 46433;

(e)   Owner means the owner for the time being of the Lot;

(f)   Owners Corporation means the owners corporation constituted by the registration of Strata Plan No 46433;

(g)   Past Works means the works to Lot and common property previously carried out and in connection with the Lot being the installation of a door and ancillary framing along the eastern façade of the Lot installed by a previous occupier marked as “door 1” as shown in the plans annexed hereto and marked “Annexure A” (2 pages prepared by NK Architect dated 7 December 2017).

2.2   Interpretation

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

(a)   the singular includes the plural and vice versa;

(b)   any gender includes other genders;

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

(d)   a reference to the Owners Corporation includes the building manager, strata managing agent, any member of the strata committee or any person authorised by the Owners Corporation from time to time;

(e)   references to legislation include references to amending and replacing legislation;

(f)   a reference to the Owner includes the Owners invitees, executors, administrators, successors and permitted assigns or transferees;

(g)   to the extent of any inconsistency between the by-laws applicable to Strata Plan No 46433 and this by-law, the provisions of this by-law shall prevail; and

(h)   if any provision of part of a provision in this by-law whether held or found to be void, invalid, or otherwise unenforceable, it shall be deemed to be severed from this by-law (or that provision) to the extent that it is void or invalid or unenforceable but the remainder of this by-law and the relevant provision shall remain in full force and effect.

GRANT OF RIGHT

3.1   Subject to Part 4 of this by-law, the Owner shall have:

(a)   the right of exclusive use and enjoyment of those parts of the common property occupied by the Past Works; and

(b)   special privilege to keep and maintain the Past Works.

CONDITIONS

4.1   Owner Warranty

To the best of their knowledge, the Owner warrants to the Owners Corporation that the Past Works:

(a)   were carried out with dur care and skill;

(b)   were carried out in compliance with the Home Building Act 1989 or any other applicable law;

(c)   comprise of materials that are good and suitable for the purposes for which those materials were used;

(d)   were carried out by persons who were properly qualified to cary out such works.

4.2   Enduring rights and obligations

The Owner must:

(a)   not carry out any alterations or additions ot do any works (other than the Past Works);

(b)   properly maintain and upkeep the Past Works in a good state of serviceable repair;

(c)   properly maintain and upkeep those parts of the common property in contact with the Past Works;

(d)   comply with all directions, orders and requirements of any Authority relating to the Past Works;

(e)   remain liable for any damage to lot or common property arising out of or in connection with the Past Works and will make good that damage immediately after it has occurred; and

(f)   indemnify and keep indemnified the owners corporation against any costs or losses arising out of or in connection with the Past Works including their installation, repair, maintenance, replacement, removal and/or use.

4.3   Failure to comply with this by-law

If the Owner fails to comply with any obligation under this by-law the owners corporation may:

(a)   request, in writing, that the Owner complies with the terms of it;

(b)   by its agents, employees or contractors, enter upon the Lot and carry out all work necessary to perform that obligation;

(c)   recover the costs of such work from the Owner as a debt due; and

(d)   if such costs are not paid at the end of one (1) month after they become due and payable shall bear, until paid, interest at the annua rate of ten (10) per cent.

The owners corporation may recover as a debt any costs not paid at the end of one (1) month after they become due and payable, together with any interest payable and the expenses of the owners corporation incurred in recovering those amounts.

4.4   Cost of By-Law, Approvals and Certification

The Owner shall be responsible for all costs associated with the Past Works and the reasonable cost of any work required to be undertaken by the owners corporation pursuant to this by-law, including but not limited to:

(a)   the drafting and consideration of this by-law;

(b)   approving any plans, drawings or other documentation for the Past Works; and

(c)   obtaining and considering any certification in relation to the Past Works

4.5   Ownership of the Works   

The Past Works will always remain the property of the Owner.

4.6   Applicability

In the event that the Owner desires to remove the Past Works approved and/or installed under this by-law (or otherwise), the provisions of Part 4 shall also apply in relation to that removal.

24. The focus of the case of the owners corporation was that the swinging door, in its current position, has not been approved but that alone is not a sufficient reason to refuse the proposed by-law because that will be the case in every application based on s 149 of the Act. There was a lack of evidence as to what occurred at the 5 July 2018 meeting: the minutes do not set out either reasons why the motion was defeated or who voted for and against the resolution. There is no credible reason that has been advanced for refusing to pass the by-law.

25. There is no evidence that the swinging door is unsafe, structurally unsound, or non-complaint with any building standard or local council requirements. Indeed, the is an approved plan for a construction certificate that shows the door in its current position. The Lot owner referred to photos which showed the street frontage of the commercial lots and there is nothing in those photos to suggest the swinging door is visually offensive. By reference to the available plans, removal of the door would create a shop with no access and the Tribunal is unable to see why the owners corporation would persist in a desire to have the door relocated to its former position.

26. As there is no rational basis for the refusal to pass the proposed by-law, it remains to consider the matters set out in s 149(2) of the Act.

27. As to s 149(2)(a), the Tribunal is unable to see how either moving or removing the existing swinging door would have any impact on the use and enjoyment of other Lot owners of either their lots or the common property.

28. Turning to s 149(2)(b), it is a reasonable expectation of the Lot owner to be able to continue to use a swinging door that has been in position for more than ten years, which was not raised when the colour of the work done was raised in a letter dated 11 April 2011, was supported by the strata managing agent at the annual general meeting held on 1 June 2011, and was not raised when the owner corporation took proceedings in relation to the work on the street frontage of the lot in 2016. Further, it is difficult to see how moving or removing a door can reasonably be said to entitle the owners corporation to compensation.

29. Accordingly, the Tribunal is satisfied that the by-law quoted above was unreasonably refused at the 25 July 2018 meeting. A submission was made for the owners corporation that the by-law relating to the swinging door contains provisions as to costs similar to those in Special By-Laws 8, 9, and 10 but the significant difference in this case is that it is the Lot owner who is casting upon itself an obligation to pay costs.

Issue 2

30. This issue raised the question of what work the Tribunal should order to Lot owner to carry out if it was considered the by-law was not unreasonably refused. By reason of the Tribunal’s decision on Issue 1, this issue does not require consideration.

Issue 3

31. In the Act, s 136(2) says that “A by-law has not force or effect to the extent that it is inconsistent with this or any other Act or law”. Further, s 139(1) provides that “A by-law must not be harsh, unconscionable or oppressive” and s 150 (set out below) empowers the Tribunal to declare such a by-law to be invalid.

32. While s 137 of the Act permits a by-law to set occupancy limits, cl 36 of the Strata Schemes Management Regulation 2016 (the Regulations) provides exceptions, such as where the adults residing in the lot are related to each other.

33. The wording of s 150 is set out below:

(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.

(2) The order, when recorded under section 246, has effect as if its terms were a by-law repealing the by-law declared invalid by the order (but subject to any relevant order made by a superior court).

(3)   An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.

34. In the interests of consistency, and since it represents a succinct summary of the law in relation to s 150 and the decision in Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250 (Cooper), what was said by the Appeal Panel when considering these applications (Coscuez International Pty Ltd v The Owners – Strata Plan No 46433 [2022] NSWCATAP 147 at [147]-[152]) is quoted below:

147. The leading decision on s 150 of the SSM Act is Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250; 103 NSWLR 160 (‘Cooper’). Cooper involved a by-law that prohibited the keeping of certain pets. Basten JA wrote the leading judgment. Macfarlan JA agreed with the orders of Basten JA, but added his own reasons which were “consistent” with the reasons of Basten JA and Fagan JA (para [75]). Fagan JA agreed with the orders of Basten JA, but gave his own reasons “briefly” (para [83]), which diverted from Basten JA on one issue.

148.   Relevantly, the NSW Court of Appeal held:

(1)   A By-law that limits the property rights of Lot owners is only valid if it protects from adverse affection the use and enjoyment by other occupants of their own Lots, or the common property (paras [46], [81]).

(2)   Administrative convenience does not determine the validity of a By-law (paras [46]; [51]; [82]; [96]).

(3)   The regulation of activities and behaviour of persons living in close proximity under a strata scheme will involve evaluative judgements (paras [46]; [51]; [82]; [96]).

149.   Basten JA held (at para [26]) that the phrase “harsh, unconscionable or oppressive”:

…is better understood as a triune, three words conveying a single criterion. It is towards the other end of a scale from the hendiadys “just and equitable”. It invokes the application of values, the content of which derives no elucidation from reference to synonyms, nor from a supposed differentiation from other similar words such as “unjust”.

150.   Basten JA further held that:

(1)   The “single criterion” of harsh, unconscionable or oppressive” is to be given its context within the provisions of the SSM Act; and requires consideration of contemporary community standards (at paras [25], [28]-[29);

(2) Section 139 of the SSM Act focusses upon the character of the particular by-law rather than the actual or constructive knowledge of any particular Lot owner (para [45]);

(3) The power to make By-laws is not unconstrained. The power may only be exercised for proper purposes. The function and purpose of by-laws must be derived from the language of s 136 of the SSM Act and the structure of the SSM Act. A By-law that restricts the lawful use of a Lot on a basis that lacks a rational connection with the enjoyment of other Lots and common property is beyond the power to make by-laws under s 136. A by-law is to be “for the benefit of Lot owners” within the terms of s 9 (2) of the SSM Act (paras [56]-[57]; [59]; [61]; [63]).

151.   Fagan [J] disagreed with Basten JA that “harsh, unconscionable or oppressive” was a “single criterion”. Rather, Fagan JA was of the view that each of the words are to be considered separately and none disregarded (at para [90]).

152. Fagan [J] did not regard the relevant by-law as “harsh” or “unconscionable”. His Honour did not believe it was necessary to explore in detail the meaning of “harsh” or “unconscionable” under ss 139 or 150 of the SSM Act generally. However, Fagan JA found the by-law was “oppressive” because the “inherent qualities of the by-law and the way it impacts on owners” forbid “a common incident of property ownership without providing benefit to others”. The number of Lot owners who voted for the adoption of the by-law is immaterial (at paras [90]-[94]).

35. Special By-Law 8, which was passed at the annual general meeting held on 12 August 2014, so far as is relevant to these proceedings, provides:

(1)   The owner, occupier or lessee of a lot:

…

(e)   must not, in the case of an owner, allow more than 2 occupiers (not including occupiers below 16 years of age) per bedroom in their lot (being a bedroom in existence in accordance with law).

…

(4)   Any owner or occupier of a lot in breach of this by-law must indemnify and keep indemnified the Owners Corporation against all legal and other costs which may be incurred by the Owners Corporation arising out of any proceedings by or against that owner or occupier due to a reach of this by-law, in the NSW Civil & Administrative Tribunal or in any other jurisdiction. The Owners Corporation may recover such amount as a liquidated debt immediately due and payable.

(5)   If any part of this by-law is found to be void or unenforceable then that part is to be severed from this by-law and will not affect the enforceability of any other part of this by-law.

36. The Lot owner’s submissions suggested that clause 1(e) was inconsistent with cl 36(1) of the Regulations, and that clause (4) pre-empted any decision as to costs by a court or tribunal. It was noted that cl 60 of the Regulations provides that “The parties to a mediation are to pay their own costs associated with the mediation”. Reference was also made to s 60 of the Civil and Administrative Tribunal Act 2013 and s 98 of the Civil Procedure Act 2005. Reference was made to the decision in The Owners – SP No 91684 v Liu; The Owners – SP No 90189 v Liu [2022] NSWCATAP 1 (Liu).

37. On behalf of the owners corporation, it was contended that this by-law fell within the purpose of s 136 of the Act and had sufficient nexus to the strata plan, as required by Casuarina Rec Club Pty Limited v The Owners – Strata Plan No 77971 [2011] NSWCA 159. The requirement to comply with relevant laws and indemnify the owners corporation for any legal and other costs was in keeping with the requirement under s 9 of the Act for the owners corporation to have principal responsibility for the management and control of the strata scheme. Further, that the wording of clause (4) was that the owners corporation “may recover” and not that they must recover, and that clause (5) specially provided for severance of ay part of the by-law that may be found to be unenforceable.

38. In oral submissions, the example was given of the owners corporation passing on a fine for a Lot owner propping open a fire door. It was suggested that Cooper was a case where the by-law under consideration was not rationally necessary whereas these by-laws did not more than restate existing restrictions and provided that if a Lot owner breaches a by-law then they pay for the costs of breaching that by-law with the objective of deterring Lot owners from breaching a by-law. It was suggested that it was relevant to bear in mind that the by-laws did not prevent a Lot owner from going to the Tribunal to challenge a decision based on those by-laws.

39. Special By-Law 8, in clause (4), renders any recoverable amount as a “liquidated debt”. It does not render any recoverable amount a “levy debt” as was the case in Liu. Since a liquidated debt is a debt of a known amount, the effect of the use of those words in Special By-Law 8 is to remove any challenge as to the amount of the debt.

40. The Tribunal considers Special By-Law 8 to be invalid for the following reasons. First, clause 1(e) is caught by s 136(2) because it contradicts the combined effect of s 137 of the Act and cl 36 of the Regulations.

41. Secondly, it is harsh, unconscionable, and oppressive because it renders a Lot owner liable to pay costs in circumstances where a statutory discretion as to costs is conferred on a court (under s 98 of the CPA) or tribunal (under s 60 of the CATA). In other words, it purports to override the question of liability for costs by pre-determining that the Lot owner should pay costs. Further, it operates even where there is a specific provision that each party bear their own costs, such as cl 60 of the Regulations.

42. Special By-Law 8 is also harsh, unconscionable, and oppressive because it removes the ability of a Lot owner to challenge the amount payable for costs, such as via the assessment process under the Legal Profession Uniform Law 2014, by making those costs a liquidated debt. In other words, it purports to override the question of quantum by pre-determining that the Lot owner should pay the amount of those costs, regardless of whether they were reasonably incurred: regardless of whether the rate charged was reasonable and regardless of whether the time charged was reasonable.

43. Further, the fact that a Lot owner may be able to take legal proceedings in a court or tribunal to challenge a decision based on Special By-Law 8, does not assist the owners corporation: if a decision is not harsh, unconscionable, or oppressive, the ability to commence proceedings is no more than a statement of the rights of a Lot owner; otherwise, the ability to commence legal proceedings only adds to the conclusion that the by-law is harsh, unconscionable, or oppressive.

44. It is noted that perceived administrative convenience does not determine the validity of a by-law: Cooper, at [46], [54], and [82].

45. The Tribunal considers itself to be bound by what was said in Cooper at [47] and [81] to the effect that a court or tribunal cannot amend or reformulate a by-law to save it from invalidity. It is noted that conclusion is consistent with what was said in Liu at [71]-[80]. The wording of clause (5) does not override what was said in those decisions.

46. Inclusion of the word “may” in clause (4) is not considered to be a sufficient answer because the fact that the owners corporation may take action under a by-law considered to be harsh, unconscionable, or oppressive does not answer the fact that the by-law permits it to enforce such a by-law if it so desires.

47. Next, Special By-Law 9 was passed at the annual general meeting of the owners corporation held on 7 October 2015. In essence, this by-law provides that the owner or occupier of a lot:

1. not damage common property or personal property of the owners corporation and restricted the bringing of heavy items onto the common property that may cause structural damage;

2. indemnify the owners corporation for any loss caused by damage to the common property;

3. is responsible for paying fines or penalties imposed by a government agency due to the failure to comply with the by-law and any costs of the owners corporation which were payable upon demand;

4. is responsible for paying the legal costs of the owners corporation of bringing or defending a mediation, adjudication, Tribunal proceedings or other legal proceedings; and

5. allows recovery of costs imposed under the provisions of the by-law by way of a levy on the Lot owner under s 80(1) of the Act.

48. The Lot owner submitted that both Special By-Law 9 and Special By-Law 10 permit the owners corporation to recover costs from a Lot owner on an indemnity basis even if the conduct in question was that of an occupier or invitee. It was noted that the Act does not impose a duty on Lot owners who are landlords to ensure their tenants comply with by-laws: Walsh v The Owners – Strata Plan No 10349 [2017] NSWCATAP 230 at [28]. Further, that s 135 of the Act imposes a duty on the tenant to comply with the by-laws.

49. Again, the owners corporation pointed to the inclusion of the word “may” in clauses 2(c), 3(c), and 4(c) of Special By-Law 9. It was submitted that this by-law was protective of other Lot owners when there is a breach. It was also observed that clauses 4(a) and 4(b) included the words “To the extent permitted by law” with the contended result that there was “an inbuilt safety net”.

50. In addition to the reasons set out above in relation to Special By-Law 8, the Tribunal notes that Special By-Law 9 does permit a Lot owner to be made liable for the conduct of a tenant or invitee and that clause 4(c) provides:

The Owners Corporation may recover the amounts payable in clauses 4(a) and 4(b) of this by-law from the relevant owner as a contribution recoverable under section 80(1) of the Act together with the expenses of the Owners Corporation incurred in recovering those costs including legal costs on an indemnity basis and any interest payable.

51. Since s 80(1) of the Act relates to planning the expenditure of the capital works fund, it appears that should be a reference to s 81(1) or s 82(1) or s 83(1) of the Act. However, s 81(1) relates to setting contributions for the administrative find and capital works fund, s 82(1) relates to increased insurance costs, and s 83(1) relates to the imposition of levies which must be in accordance with unit entitlements. It would appear the reference to s 80(1) in clause 4(c) was intended to be a reference to s 81(1) in which case it operates to create what may be termed a levy debt which, on the authority of Liu (at [70]) is not permissible.

52. Accordingly, the Tribunal determines that both Special By-Law 8 and Special By-Law 9 do not comply with s 139(1) of the Act. As a result, it is not necessary to consider whether there was a power to make those by-laws.

53. Thirdly, Special By-Law 10 was passed at the 25 July 2018 annual general meeting. It may be summarised as a by-law that required the owner and occupier of a lot to comply with the by-laws of the strata scheme and, if there was a breach of a by-law of the strata scheme, the owners corporation may recover as a debt due various costs and expenses for the taking of action due to that breach, including legal costs and administrative costs.

51. While Special By-Law 10 does not appear to create a levy debt but does have the same features as Special By-Law 8, by rendering a Lot owner liable without an opportunity to challenge either the liability for costs or the amount of those costs, and Special By-Law 9, by rendering a Lot owner liable in the event of a breach by an occupier or invitee. As a result, this by-law is also considered to be caught by the words harsh, unconscionable, or oppressive in s 139(1) of the Act.

52. As was determined on 8 August 2022 in Gokani-Robins Pty Ltd v The Owners – Strata Plan No 77109 [2022] NSWCATCD, at [53], the Tribunal considers that these three Special By-Laws are harsh, unconscionable, or oppressive in that (1) there is not requirement that the costs be reasonably incurred, (2) there is no opportunity for independent assessment, and (3) the determination of costs is entirely in the control of the owners corporation.

53. Although s 150(1) commences with the words “The Tribunal may …”, which indicates there is a discretion to be exercised, no submissions were made as to why an order should not be made in the event the Tribunal found these by-laws to be harsh, unconscionable, or oppressive, and the Tribunal is unable to discern any reason why the lot lower is not entitled to the order sought under s 150(1) of the Act.

Issue 4

57. Although $11,948 was claimed for water usage, the Appeal Panel noted that $9,511.14 arose prior to July 2016. It would therefore appear that little if anything more than $2,436.86 relates to the period after 30 November 2016.

58. The owners corporation referred to a 22 October 2010 letter from Ms Tang’s mother but those pages do not contain anything to indicate that any agreement arising from that letter would bind a subsequent Lot owner. Further, that letter appears to contain an offer which raises the question of where is the evidence of its acceptance? Reference was also made to 6 June 2011 email which referred to that letter as a draft letter. Mr Koh dealt with this issue in his 3 May 2021 affidavit at [14-19].

59. For the Tribunal to make an order that the Lot owner is liable to pay these charges, there would need to be a legal basis for such an order. Ideally, there would have been a common property rights by-law that imposed an obligation to pay water charges according to an installed meter but there is no such by-law in this case.

60. Even if the evidence is considered sufficient establish an agreement between Ms Tang’s mother and the owners corporation, there is no sufficient basis for finding that such an agreement was binding on the Lot owner, being the company which acquired the lot from Ms Tang’s mother. Resort cannot be had to Special By-Laws 8, 9 or 10 which have been found to be invalid.

61. As the Appeal Panel noted (at [137]), the Act commenced on 30 November 2016 and there was no power to claim damages under the predecessor statute, the Strata Schemes Management Act 1996.

62. Accordingly, the Tribunal is unable to determine that the Lot owner is liable to pay the owners corporation in respect of unpaid water charges for the period from 30 November 2016. As a result, no order is made for the payment of money by the Lot owner.

Issue 5

63. The “one off charges” that were paid in the period since 30 November 2016 appear to total $6,631.98, comprising $3,323.20 for water, $184.78 for interest, and $3,124 for fire safety measures.

64. It was the Lot owner’s case was that there was no valid basis for those charges but the pages to which reference was made were not included in the three folders of the Lot owner’s documents. It was said those amounts were paid to to prevent the Lot owner from being considered unfinancial.

65. The owners corporation sought to defend these charges by reference to the special by-laws which have been determined to be invalid. Although the orders made in these proceedings render those by-laws invalid from the dates when they were made, the charges were charged to the Lot owner and were paid by the Lot owner at a time when it was considered those by-laws were valid.

66. The Lot owner sought an order under s 232 of the Act which grants the Tribunal a discretionary power because of the use of the words “The Tribunal may …”. As with issue 4, where the owners corporation did not provide a legal basis for the order sought, with issue 5 the Tribunal is not satisfied that the Lot owner has provide a factual basis for the order sought. In the exercise of its discretion, the Tribunal makes no order in relation to this issue. As a result, no order is made for the payment of money to the Lot owner.

Issue 6

67. This issue raised the question of whether the Tribunal should direct the owners corporation to amend the levy register, kept under s 99 of the Act, in respect of Lot 4. Both parties made submissions in relation to the levy register for Lot 4 but it is not clear what are the entries on that register and what entries the Lot owner seeks to removed.

68. Clearly, the levy register for Lot 4 should be amended to give effect to the Tribunal’s findings in these proceedings, notably that Special By-Laws 8, 9, and 10 are invalid. In such circumstances, the Tribunal considers the preferable course is to do no more than make an order for the levy register for Lot 4 to be amended by the owners corporation within 28 days, under s 229(a) of the Act which grants the Tribunal the power to make ancillary orders, and for the Lot owner to be provided with a copy of that levy register for Lot 4.

Issue 7

69. At the outset of the hearing, neither party wished to refer to any documents in relation to this issue and no written or oral submissions have been made. The Tribunal does not consider any limitation issues as no such issues have been raised by either party.

Costs

70. The question of costs having been raised, but not argued at the hearing, the Tribunal will make orders to enable submissions to be made as to costs.

Orders

71. The application of the owners corporation (SC 22/20296) only sought an order for the removal of the swinging door, and costs. As the Tribunal has determined that no order should be made for the removal of the swinging door, this application should be dismissed. Any submissions as to the costs of this application should be included in the submissions in relation to the other application (Sc 22/20291).

72. For the reasons set out above, the following orders are made:

In SC 22/20291:

1. Under s 149(1) of the Strata Schemes Management Act 2015, the Tribunal makes the common property rights by-law tabled by the applicant (Lot owner) at the meeting of the respondent (owners corporation) held on 25 July 2018.

2. Under s 246 of the Strata Schemes Management Act 2015, within 28 days (ie on or before 13 December 2022) the respondent is to do all things necessary to register that by-law.

3. Under s 150(1) of the Strata Schemes Management Act 2015:

1. Special By-Law 8 is declared invalid on and from 12 August 2014, being the date on which it was purportedly made,

2. Special By-Law 9 is declared invalid on and from 7 October 2015, being the date on which it was purportedly made, and

3. Special By-Law 10 is declared invalid on and from 25 July 2018, being the date on which it was purportedly made,

4. Under s 246 of the Strata Schemes Management Act 2015, within 28 days (ie on or before 13 December 2022) the respondent is to:

1. obtain a certified copy of order (3) from the Tribunal’s Registrar,

2. lodge that certified copy with the Registrar General, NSW Land Registry Services, and

3. do all other things necessary to ensure that order 3 is recorded on the common property title of Strata Plan 464633.

5. Under s 229(a) of the Strata Schemes Management Act 2015, within 28 days (ie on or before 13 December 2022) the respondent is to:

1. amend the levy register for Lot 4 in the strata scheme to give effect to the Tribunal’s decision in this application, including but not limited to Order 3; and

2. provide the applicant with a copy of that register for Lot 4.

6. Any submissions in support of an application for costs (not exceeding five pages), together with any supporting evidence, are to be filed and served by 29 November 2022.

7. Any submissions in response to any such application (not exceeding five pages), together with any supporting evidence, are to be filed and served by 13 December 2022.

8. Any submissions in reply (not exceeding two pages) are to be filed and served by 20 December 2022.

9. Any such submissions should indicate whether the party accepts that costs should be determined on the papers, ie without the need for a further hearing.

In SC 22/20296:

10. The application is dismissed.

11. Any question of costs in relation to these proceedings is to be included in the submissions made in relation to costs in the related proceedings (SC 22/20291).

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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

Amendments

04 September 2023 - Formatting amendments.

Decision last updated: 04 September 2023