Lipscher v The Owners - Strata Plan No 30995

[2017] NSWCATCD 2

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	Lipscher and Ors v The Owners – Strata Plan No 30995 [2017] NSWCATCD 2
Hearing dates:	7 March 2016, 6 April 2016 and 18 July 2016
Decision date:	05 January 2017
Jurisdiction:	Consumer and Commercial Division
Before:	J A Ringrose, General Member
Decision:	1. The appeal is allowed 2. The decision of the Adjudicator made on 9 September 2015 is set aside 3. The passing of a resolution in relation to item 3.7 – western balustrade replacement at the extraordinary general meeting of the Owners Strata Plan 30995 held on 31 March 2015 be declared invalid. 4. The Owners Corporation is not permitted to replace the Western Balustrades of Units 5,6,7 and 8 except to the extent that this action is authorised by a special resolution being passed at a general meeting of the Owners Corporation that specifically authorises such action as required by section 65A(1) of the Strata Schemes Management Act 1996. 5. The appellants are to provide written submissions as to costs, if they are so advised within 28 days of the date of these orders. The respondent and the other parties are to provide submissions in reply 28 days thereafter. The issue of costs will then be determined on the papers.
Catchwords:	STRATA APPEAL – admission of new evidence – works to be undertaken by Owners Corporation, maintenance or new works – amendment of motions.
Legislation Cited:	Strata Schemes Management Act 1996 ss. 62, 65A, 177, 181, 188
Cases Cited:	August v Commissioner of Taxation [2014] FCAFC 85 The Owners – Strata Plan 6534 v El Khouri [2015] NSWCATCD 147 Port of Melbourne Authorities v Anshun [1981] 147 CLR 589 Stolfa v Hempton [2010] NSW CA 218 Owners Strata Plan 50276 v Thoo [2013] NSWCA 270 at para 125 Stolfa v Strata Plan 4366 Wang v Owners Corporation SP 69174 [2010] NSWCTTT 172 Strata Plan 425 v Sidwell [1987] NSW Titles Cases 30-076 The Owners – Strata Plan 21702 v Krimbogiannis [2014] NSWCA 411 Owners Corporation SP 7596 v Risadorie [2003] NSWSC 966 Nolan v Owners Corporation SP 5803 [2013] NSWCTTT 220 Owners Corporation SP 32033 v Mullens [2015] NSWCATD 23) Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187 Beale v GIO at 443 Port of Melbourne Authorities v Anssun [1981] 147 COR 589 Proprietors of Strata Plan 435 v Sidwell [1987] NSW Titles Cases (30 – 076) Ridis v Strata Plan 10308 [2008] NSWCA 248
Category:	Principal judgment
Parties:	Alena Lipscher, Scott Dumbrell and Margaret Bentivoglio (Applicants) Owners Corporation SP 30995 (Respondent) John Maddalena (8) and Wai Lee (6) (Additional Respondents)
Representation:	Mr Kent of Kent Attorneys appeared for the Applicants Mr Ton of Grace Lawyers appeared for the respondent.
File Number(s):	SCS 15/54855
Publication restriction:	Nil

reasons for decision

BACKGROUND

1. The property known as [***] Avenue, Neutral Bay (SP 30995) comprises some 8 units with a total of 12 balconies. There are 4 units at the rear of the property being units 5, 6, 7 and 8. There are 6 balconies on the western side at the rear of the building and another 6 on the front and sides of the building. The balustrades along the western side are of glass and aluminium construction and they face west and offer views. The balustrades on the other sides (being 6 in total) are of masonry/brick construction.

2. The appellants, who were also the applicants for the adjudication which includes balconies which were the subject of the resolution purportedly passed on 31 March 20215.

3. There are two interested parties who provided submissions to the adjudicator, namely John Maddalena and Wai Lee, who have now sought leave to appear on the appeal. Mr Maddalena is the owner of unit 8 whilst Wai Lee is the owner of unit 6. Their balconies are also amongst those subject of the proceedings and the resolution which was addressed on 31 March 2015. It is to be noted that Ms Bentivoglio as the owner of unit 7 is also a party who would obtain some benefits in the event that the resolutions ultimately submitted to the meeting on 31 March 2015 had in fact passed.

4. The appellants had sought various orders from the adjudicator under ss. 138, 153 and 154 of the Strata Schemes Management Act 1996 arising out of the extraordinary general meeting the Owners Corporation of Strata Plan 30995 which was held on 31 March 2015 and a resolution purported to have been passed at that meeting in relation to the western balustrades.

5. On 8 September 2015 Adjudicator Simon dismissed the appellant’s application on 9 September 2015. On 30 September 2015 an appeal was lodged to the Tribunal against the orders made by Adjudicator Simon and orders were sought pursuant to ss. 138, 153 and 154 of the Strata Schemes Management Act 1996 as well as ancillary orders pursuant to s 188 of the Act.

APPLICATION

6. In the application filed on 30 September 2015 and dated the same date the appellants sought an order that the decision of the adjudicator made on 9 September 2015 be set aside or alternatively quashed. They sought a further order pursuant to s 43(3) of the Civil and Administrative Tribunal Act that the Owners Corporation Strata Plan 30995 or any person acting on its behalf cease and be restrained from conducting any works or expending any monies in relation to the balustrades of the building of Strata Plan 30995 until the application was determined.

7. Further orders were sought that the resolution relating to item 3.7 of the minute paper of the meeting held on 31 March 2015 be declared a nullity and be declared invalid. The appellants further sought an order that the Owners Corporation was not permitted to replace the western balustrades of units 5, 6, 7 and 8 except to the extent that this action was authorised by a special resolution being first passed at a general meeting of the Owners Corporation which specifically authorised the taking of the action as required by s 65A(1) of the Strata Schemes Management Act.

8. The application set out some 10 grounds of appeal which will be addressed in more detail as required.

9. When the matter was first listed and orders were made for evidence in submissions to be provided over a period of time which was to expire on 3 March 2016. Material including submissions was received through until 12 October 2016 notwithstanding that the matter was last heard on 6 April 2016. There were various issues which arose between the parties giving rise to communications between their respective solicitors, copies of which were forwarded to the Tribunal.

10. By a letter dated 16 September 2016 Mr Ton on behalf of the Owners Corporation wrote to the Tribunal requesting the matter be listed for further directions to determine whether the respondent should be permitted another opportunity to respond to “new issues raised in the amended submissions”. It is noted that he was requested to provide the details of those new issues, merely to identify them but on 4 October 2016 he indicated that he would be seeking instructions of the Owners Corporation to provided further submissions. On 25 October 2016 both parties were advised that the Tribunal would determine the Appeal on the material already provided and would not allow further submissions but would take into account the summary of issues in respect of which was said that further submissions should be allowed.

APPLICANT’S SUBMISSIONS

11. The applicants provided affidavit evidence from Mr Scott Dumbrell, Mr Vladimir Lipscher, Ms Alena Lipscher and Ms Margaret Bentivoglio and each of these witnesses were required for cross-examination. Mr Kent, on behalf of the applicants also provided a schedule of objections to parts of the evidence provided by the respondents.

12. It was claimed that in September 2013 at the annual general meeting it was resolved that an inspection be undertaken to ensure the structure of safety on the balconies. On 9 May 2014 Core Project Consulting reported that none of the balconies appeared to be loose, significantly cracked or otherwise unsafe and that all of the balconies complied with the relevant building code both as to height and climb-ability at the time they were constructed.

13. In May or June of 2014 a request was made by Mr John Maddalena of unit 8 and Ms Mary Lane of unit 3 for an extraordinary general meeting to be held on 19 June 2014. The purpose of the meeting was to consider a proposal that the western balustrades of units 5, 6, 7 and 8 be replaced to make them safe and also compliant with current building codes of Australia standards. It was also proposed that all balustrades in units 3, 4, 7 and 8 have remedial work performed. At that meeting the strata managing agent added the following note to the Notice of Meeting:-

“some owners believe that this work is an upgrade of common property and consequently require a special resolution. If it proved beyond reasonable doubt that motion 3.2(c) and 3.3(b) is an upgrade by the time of this EGM the motion will not be valid and will be withdrawn”.

14. At the EGM held on 19 June 2014 the strata managing agent chaired the meeting and declared those motions to be out of order noting that there was no supporting evidence that the balustrades were not safe and thus any approval would require a special resolution as it would be considered an alteration to the common property under s 65(A)(1).

15. A revised report from Core Project Consulting was then issued on 19 June at the request of Mr John Maddalena and an extra chapter was included relating to “climb-ability”. The conclusions of the report were not changed but it was suggested that in the event that the owners wished to upgrade the balustrades, despite no legal requirement to do so, the existing balustrades could be retro fitted or modified to achieve compliance.

16. On 14 August 2014 an application for mediation was prepared and lodged with the Department of Fair Trading by John Maddalena (unit 8) and Wai Lee (unit 6) in relation to the balustrades.

17. On 3 September 2014 a motion was proposed at the annual general meeting to be held on 22 September 2014 relating to replacement and modification of balconies and the fact that motions at the extraordinary general meeting had been ruled out of order. Mr Maddalena proposed that independent legal advice be obtained in order to establish the appropriate application of s 62 and/or s 65A in relation to the replacement of balustrades.

18. The minutes of the annual general meeting held on 22 September record that there was a resolution that the executive committee consist of only three members instead of five despite that there were 7 owners willing to be on the committee. Mary Lane (unit 3), Ian Mason (nominee of Wai Lee) (unit 6) and John Maddalena (unit 8) were declared to be elected to the executive committee. The voting was even on numbers but was declared as carried on unit entitlement.

19. On 17 March 2015 a notice of EGM was issued. The meeting was to be held on 31 March and a motion in the notice paper submitted by unit 8 (Mr Maddalena) was included:-

“that the western balustrades of units 5, 6, 7 and 8 be replaced to make them safe and also compliant with current BCA standards.”

20. At the commencement of the meeting the present applicants, being the owners of units 1, 2 and 7 handed a letter to the secretary, Ian Mason, confirming that they were opposed to the motion and that it should have been a motion by way of special resolution. That letter was handed to the chairman and tabled at the meeting.

21. After the applicants had removed themselves from the meeting the minutes record that it was resolved:-

“that a maximum cap of $10,000.00 be imposed upon the executive committee for the replacement of the western balustrades to meet safety issues and to meet the latest BCA standards and that this work be completed before external painting starts.”

It is noted that the resolution differs from the resolution set forth in the notice of meeting dated 17 March 2015.”

22. Upon receipt of the notification that the motion as amended had been passed, the applicants lodged an application for adjudicator’s orders on 28 April 2015.

23. On 11 June 2015 a notice of EGM of the strata plan to be held on 25 June 2015 was issued and proposed a motion that the Owners Corporation review the quotes from Rail Safe, Southern Cross Balustrades, Donnell Co and Classic Quarters and resolve which contractor should be appointed to perform the balustrade work agreed to at the EGM on 31 March 2015. It was indicated that a number of the quotes received not only included replacement of glass/aluminium balustrades but also covered cutting of concrete on the balconies as part of the work to be done.

24. On 25 June 2015 the EGM resolved that a quote of Classic Quarters in a sum of $17,000.00 should be accepted and that they should be appointed to carry out the balustrade work subject to the result of the adjudication which had been commenced. Mr Kent on behalf of the applicants, points out that the quote of Classic Quarters substantially exceeds the $10,000.00 cap set by the resolution on 31 March.

25. At that same meeting the owners of units 1, 2 and 7 sought to have the draft minutes of meeting held on 31 March 2015 amended to reflect their claim that the vote for the motion was not unanimous as units 1, 2 and 7 had made it clear to the chairman of the meeting, when asked, that they were voting against the resolution and the minutes should record their opposing votes. The proposed amendment failed as the motion was defeated.

26. The witnesses, on behalf of the appellants, were cross-examined and during the course of the proceedings an issue arose in relation to a recording of proceedings at the EGM held on 31 March 2015. Issues arose in the course of the Hearing as to the details of the discussions which had been recorded and following the conclusion of the Hearing on 6 April 2016 I made orders concerning submissions and a further direction that the respondent was to provide a professionally prepared transcript of all conversations from the recording made from Mr Maddalena covering the whole period of time after the appellants left the meeting on 31 March 2015. It was directed that such transcript be made available to the Tribunal and to the appellants when the respondent’s submissions are provided.

27. The first issue addressed by Mr Kent on behalf of the applicants, he argued that s 181(2) of the Strata Schemes Management Act 1996 enabled the Tribunal to admit new evidence and that the Act did not qualify or limit the power of the Tribunal to admit such evidence although the power must be exercised judicially. He submitted that the Act made it clear that the Appeal was an appeal by way hearing de novo. He detailed the principles in relation to admission for further evidence as outlined in August v Commissioner of Taxation [2014] FCAFC 85. He addressed the history of decisions in this regard from the decision of Master Malpass in Owners Corporation Strata Plan 7596 v Risidore (2003) NSWSC 966

28. Mr Kent then went on to address a number of authorities relating to the admission of new evidence including a decision which I handed down in The Owners – Strata Plan 6534 v El Khouri [2015] NSWCATCD 147 and then went on the address the earlier authorities referred to in that decision.

29. In El Khouri (supra) I observed:-

“s. 181(2) incorporates a discretion related to the admission of further evidence and until the conflicting views of the Tribunal had    been clarified by an appellate review I find that it would be inappropriate to allow additional evidence to determine whether an adjudicator had erred but if an error was demonstrated it could be received, particularly if there had been a change in circumstances between the time when the adjudication was determined and the time of the Appeal.”

He submitted that there was nothing in the dicta of El Khouri which limited the general principals, both under the “narrow” and “wide” tests by which fresh evidence could be adduced if it was not available at the time of the decision appealed from.

30. Mr Kent described the new evidence to be relied on as:-

1. the affidavit of Alena Lipscher sworn 14 December 2015

2. the affidavit of Alena Lipscher sworn 20 February 2016

3. the affidavit of Vladimir Lipscher sworn 20 February 2016

4. the affidavit of Scott Dumbrell sworn 22 February 2016

5. the affidavit of Margaret Bentivoglio sworn 22 February 2016.

He observed further that sworn documentary evidence filed and served by the respondents to the Appeal were included in an affidavit of John Maddalena sworn 22 January 2016 affirmed to be 2 January 2016, the report of Anthony Doherty dated 13 January 2016 and affidavit of Karen Russell (transcriber) sworn 21 June 2016 to which was attached a transcript of the last 10 minutes of the audio recording of the meeting. He argued that as both parties had availed themselves of the opportunity to re-work and supplement the evidence that they had put before the Adjudicator and clearly treated the Appeal as a hearing de novo, neither party should be permitted to resile from that position.

31. Mr Kent then went on to address what he described as admission of new evidence on the “narrow” test as well as admission of new evidence on the “wide” test and admission of new evidence on the “strict” test. In relation to the “strict” test, he submitted that new evidence should be permitted because of a demonstrable error on the part of the adjudicator relating to the validity of the resolution at the meeting referred to in para 13 in the adjudication. He described the finding of the adjudicator in the following terms:-

“having considered the evidence of the parties I am not satisfied that any of the orders sought should be granted. I find from the evidence that a valid resolution was passed at the extraordinary general meeting and that the minutes reveal that the applicants chose to leave the meeting before the meeting was finished and accordingly chose not to vote on the resolution.”

Mr Kent pointed out that the first error was that there were no proper reasons given for the finding that a valid resolution was passed. The second error was that there was no evidence upon which the adjudicator could find that a valid resolution was passed given the material which had been provided. The third error relates to the adjudicators failure to consider the non-compliance with cl 35(3) of Sch 2 of the Strata Schemes Management Act in relation to that resolution.

32. He observed that quite clearly, the resolution which was purportedly passed is different from the former resolution described in the agenda and in the circumstances no notice had been given in accordance with cl 35. He noted that during the evidence Mr Maddalena admitted that there was no motion for any amendment of the resolution and further that the minutes of the meeting did not contain reference to an amendment motion ever being proposed or passed. It was submitted that accordingly the purported resolution should be declared invalid and it should be noted that the adjudicator erred in not so finding.

33. Mr Kent submitted that the fourth error by the adjudicator was failing to consider and make any findings on the issue of the failure by the meeting to amend the motion.

34. Mr Kent submitted that the sixth error on the part of the adjudicator was determining that the subject resolution could be passed as an ordinary resolution and that a special resolution was required under s 65A of the Strata Schemes Management Act.

35. Mr Kent next addressed the issue raised by the respondent’s solicitor concerning admission of new evidence, in particular an audio recording of the EGM allegedly made by Mr Maddalena. He argued that the recording was always in the possession of the respondent through Mr Maddalena and only a partial transcript was submitted by the respondent as evidence. As the appellants were not in attendance at that part of the meeting they were the only ones at a disadvantage as they assumed that the minutes accurately recorded what had occurred at the meeting. It was only when the audio recording was made available (and was listened to) that they became aware that the minutes did not accurately record what had actually occurred at the end of the meeting. Mr Maddalena acknowledged in cross-examination that there had been consensus and agreement on two amendments to the notified motion but there was a vote on the amended form of motion but no amendment had been voted on and there was no vote as recorded in the minutes.

32. Mr Kent commented on a further claim by the respondents that a new issue had been raised in that the applicants had challenged the assertion that the resolution which was the subject of the adjudication was actually passed at the EGM. He argued that the applicants were not seeking to introduce a new issue but rather to adduce new evidence in relation to the question of the validity of the subject resolution which was one of the central issues in the case and was within the ambit of par 4(a) of the Grounds of Appeal. It is appropriate to note that the Ground of Appeal referred to was in the following terms:-

“that the adjudicator erred in making the following findings:-

(a) that a valid resolution was passed at the extraordinary general meeting held on 31 March 2015.”

Mr Kent observed that the respondent had submitted that the “new issue” should not be considered in the context of the Appeal but rather should be the subject of another adjudication application In relation to this submission he observed that the Tribunal is presently seized with the “new issue” and is in a position to determine it and that a new adjudication application would almost certainly be estopped by reason of the principals in Port of Melbourne Authorities v Anshun [1981] 147 CLR 589 because the validity of the subject resolution had been determined in the course of the Appeal from the adjudication.

37. In relation to the respondents contention that Mr Maddalena and Ms Lee had been denied procedural fairness in relation to the “new issue” he pointed out that neither Mr Maddalena nor Ms Lee had made any claim relating to denial of procedural fairness.

38. Mr Kent then addressed the evidence given by the witnesses on behalf of the appellants and the evidence given by the respondents including cross-examination. Aspects of this evidence will be addressed where necessary in the course of this decision but it is noted that the evidence and submissions have all been fully considered for the purposes of determining this matter.

39. When Mr Doherty was cross-examined concerning his expert report prepared in 2016, he conceded that he had not prepared any report for the meeting held on 31 March 2015 or for the adjudicator. His report dated 13 January 2016 was prepared under instructions from the lawyers for the respondent. Those instructions were not provided until 17 December 2015. Mr Doherty conceded that he did not inspect all balconies but that his attention was simply directed to the balconies in units 6 and 8. He claimed that he did not consider other balconies, notwithstanding an instruction to do so because he had been informed by Mr Mason from unit 6 that the other lot owners were not available and they were at work. It was pointed out that, in cross examination, Mr Doherty had acknowledged any opinion he gave related to safety dependant was solely on the height of the balustrades referred to in the current building code.

40. Mr Kent referred in depth to the answers given by Mr Maddalena in cross-examination and these matters will be addressed at a later stage in this decision.

41. Mr Kent pointed out that the minutes of the extraordinary general meeting held on 31 March had been prepared by Mr Mason and not by the secretary. The minutes were conceded by Mr Maddalena in cross-examination to be incorrect in a number of respects in that:-

1. they did not record the statement allegedly made by Mr Mason that the meeting would be recorded.

2. the minutes did not record the fact that the three appellants handed the chairman a letter and asked it to be tabled and read at the meeting.

3. the minutes record that a proposer and seconder for the subject resolution however Mr Maddalena acknowledged that there was no proposer and seconder and the transcript of the recording of the meeting establishes that to be correct. It was pointed out further that the minutes did not record any amendment motion changing the form of the motion on which notice had been given on the agenda to that which was allegedly passed. It was pointed out that this was clearly so because no amendment motion was ever presented for voting on at the meeting. To the contrary Mr Maddalena had described the process as “just a discussion between a number of people at the meeting”.

42. Although Mr Maddalena and Mr Mason had been given an opportunity to correct the minutes they chose not to do so even though Mr Maddalena, who was the secretary of the Owners Corporation, had acknowledged that they were inaccurate in a number of ways. Accordingly it was submitted by the appellants that the purported resolution 3.7 allegedly passed at the meeting should not be allowed to withstand but should be declared invalid and nullity.

43. Mr Kent, on behalf of the appellants referred to the Core Project Consulting report which had been prepared at the request of the strata managers of Bright and Duggan. That report noted that there were a total of 12 balustrades in the building and that the construction was a mix of masonry and re-enforced concrete and glazed aluminium. It was noted that none of the balustrades appeared to be loose, significantly cracked or otherwise unstable and that they were compliant with the Australian Building Codes at the time when the building was constructed (circa 1987). The report went on to note that the balustrades are of a height complying at the relevant time and that there was no legal requirement to modify the balustrades to meet the modern building code.

44. In considering the departure of the three appellants from the meeting Mr Kent pointed out that the appellants had become concerned about their personal safety and they noted that the chairman intended to disregard their concerns about why the subject resolution had not been notified as a special resolution despite the fact that a motion to an identical effect had been ruled out of order back in 2014 by the strata managing agent. It was conceded that the appellants did not vote on a resolution form in the meeting and had simply made clear their intention to oppose the motion before they left.

45. Issues were raised concerning the authority given to Mr Maddalena to instruct or deal with Grace Lawyers. That authority was apparently provided at a meeting held on 25 June 2015 where it was resolved that John Maddalena be appointed as the Owners Corporation’s point of contact to provide the executive instruction to the legal firm which had been appointed under an earlier motion. Mr Maddalena noted in cross-examination, that he felt that all times he had been authorised to give instructions to Grace Lawyers and that no executive committee meetings had been held and that Scott Dumbrell (an appellant of the proceedings) had never been consulted despite being the chairman of the executive committee.

46. It was submitted that the adjudicator erred in finding that the balustrades were being replaced to make them safe. It was submitted that in coming to this conclusion the adjudicator gave undue weight to the statements of interested parties, namely the letters of John Maddalena and Michelle Davis and also the letter of Wai Lee. It was submitted that those statements could only be classified as the opinions or evidence of non-experts and the adjudicator did not address the fact that there was no retrospective obligation for buildings to meet the modern Building Code requirements.

47. The respondent’s solicitor was criticised for having put submissions on behalf of the interested parties as those parties had ceased to instruct the solicitor initially acting for them and had attended the Appeal without representation.

48. It was submitted that there was no safety issue with the subject balustrades which had been properly raised before the adjudicator and the only evidence relating to that issue from an expert was the Core Project report which had been obtained for 2014. In reasons provided by the adjudicator she noted:-

“17 having considered the evidence I am satisfied that the balustrades are being replaced to make them safe. I accept that they do not comply with Australian Building Standards as indicated in the expert report and the letter from the local council. ”

It was argued that the adjudicator was incorrect in making a determination that the balustrades were not safe and therefore was incorrect in finding that a special resolution was not required. The amended orders sought by the appellants were as follows:

1. appeal allowed.

2. the decision of Adjudicator Simon made on 9 September 2015 be quashed.

3. the passing of a resolution in relation to item 3.7 – western balustrade replacement at the extraordinary general meeting of the Owners Strata Plan 30995 held on 31 March 2015 be declared invalid.

4. that the respondent not be permitted to replace the western balustrades of units 5, 6, 7 and 8 except to the extent that the action is authorised by a special resolution of a general meeting of the Owners Corporation.

Mr Kent sought an order that the question of costs be reserved for argument after the decision for the Tribunal was published.

RESPONDENT’S SUBMISSIONS

49. In an outline of respondents submissions provided dated 1 March 2016 Mr Ton noted:-

“in broad terms in the adjudication decision and the Appeal the appellant (other than the owner of unit 7) seek to rely upon a plethora of technical objections to prevent the western balustrades on other lots being replaced in the same manner as the balustrades of units 1 and 2. This is notwithstanding the respondent clearly is motivated by worthy intention namely to protect the safety of its occupants and visitors.”

This observation does little to assist the Tribunal in determination of the Appeal. Mr Ton then went on to identify the following issues in dispute:-

1. whether the respondent was required to pass the special resolution under s. 65A of the Strata Schemes Management Act in order to replace the western balustrades.

2. whether the respondent is able to replace the balustrades under s. 62 and/or any other provision of the Strata Schemes Management Act.

3. whether, as a matter of fact, the appellants chose to leave the extraordinary general meeting on 31 March 2015 before the meeting had been completed

4. whether the reason for replacing the western balustrade was to make them safe and whether safety fell within the operation of s. 62 of the Strata Schemes Management Act 1996.

5. whether resolution 3.7 passed at the extraordinary general meeting on 31 March 2015 could validly be amended before being passed.

6. whether the effect of the resolution 3.7 passed at the extraordinary general meeting on 31 March 2015 properly construed, was to replace the western balustrades.

7. whether the appellants were “denied a vote” in relation to resolution 3.7 passed at the extraordinary general meeting on 31 March 2015.

50. It was noted that there was a general issue concerning whether the appellants had demonstrated any relevant error by the adjudicator to the extent that such is relevant to an appeal under s 177 of the Strata Schemes Management Act 1996. Finally the respondent noted that there had been an objection foreshadowed to the admissibility of sound recordings made at the general meeting on 31 March 2015 and partial transcripts of those recordings.

51. In addressing the special resolution issue Mr Ton referred to the decision of the Court of Appeal in Stolfa v Hempton [2010] NSW CA 218 and the further decision of the Court of Appeal in the Owners Strata Plan 50276 v Thoo [2013] NSWCA 270 at para 125. On the basis of those references it was submitted that the question about whether s. 65A operates only arises if it is found that the replacement of the western balustrade is not within the respondent’s power under s 61 and 62.

52. In addressing the argument as to whether the matter can be dealt with under s 62 the respondents again referred to a decision of Stolfa v Strata Plan 4366 [2009] NSWSC 589 where his Honour Mr Justice Brereton held that the obligation to repair was an absolute duty which imposed an obligation to take preventative measures to ensure that no problems arise and to add articles or structures to the common property to rectify defects in the original construction per Brereton J at para 63.

53. Reference was made to a decision of Senior Member Meadows in Wang v Owners Corporation SP 69174 [2010] NSWCTTT 172 where Senior Member Meadows found that the addition of a fire door to common property in an area where a door never existed did not require a special resolution under s 65A. In that case the addition of the fire door was required to comply with the Fire Safety Requirements.

54. Mr Ton pointed out that the present case western balustrade clearly functioned as a safety barrier and he suggested that there were at least two reports from Core Engineering and a A D Consultants as well as an opinion expressed by North Sydney Council that the balustrades were not safe and that in the circumstances a power to replace the balustrades could be exercised in accordance with ss. 61 and 62 of the Act.

55. In addressing the issue as to whether the appellants left the extraordinary general meeting it was pointed out that the appellants had clearly admitted that they left that meeting.

56. In dealing with the ground relating to safety it was submitted that there was more than sufficient evidence to demonstrate the following:-

1. the respondent had been put on notice and knew that the balustrades were potentially unsafe and,

2. that the lot owners other than the appellants were motivated    to act by their concerns in respect of safety.

57. Mr Ton then went on to observe:-

“other than to oppose for the sake of opposing, it is submitted that the appellants have proffered no sensible reason for the extensive costs they have caused in pursuing the dispute.”

This comment which has been made without any factual base does little to assist the Tribunal in the issues to be decided in this appeal.

58. In relation to ground five relating to an amendment of the resolution it was simply submitted that the ground of appeal was without merit and if accepted would lead to a nonsensical result. It was claimed further that the appellants had not established the jurisdictional fact under s 154(1) of the Strata Schemes Management Act which would enliven the power of the adjudicator to declare the resolution a nullity.

59. In purporting to deal with the sixth ground of the Appeal relating to the meaning of the resolution, Mr Ton suggests that when resolution 3.7 is read as a whole and in the context of the meeting agenda it is difficult to see what basis the appellants assert that the relevant resolution does not have the effect of authorising the replacement of the western balustrades (being its natural meaning).

60. Addressing the final ground of Appeal as to whether the appellants were denied a vote the respondent submitted that in accordance with the provisions of s 154(1) of the Strata Schemes Management Act 1996 an adjudicator must be satisfied that the resolution would not have been passed but for the alleged denial of a vote. It was claimed that even if their votes had been counted there was still a denial of majority support for the replacement of the western balustrade and the jurisdiction to enliven s 154 had not been made out.

61. The respondent’s final submissions were provided on 15 June 2016 after the timetable for submissions had been extended. Mr Ton referred to submissions of interested parties, namely Mr Maddalena and Ms Wai Lee dated 15 January 2016 which had also been provided. Before dealing with his submissions in reply Mr Ton sought to address a claim that the solicitor for the applicants had communicated with the respondent Owners Corporation without consent of his office and that serious allegations of professional misconduct had been made for the purposes of interfering with the respondent Owners Corporation preparing its submissions in reply. It is noted that communications between the solicitors had been provided to the Tribunal and it was noted that the majority of owners had voted to continue the defence of the Appeal with the engagement of Grace Lawyers. None of these issues have any bearing on the Appeal to be decided and it was not necessary for the Tribunal to be privy to an exchange of correspondence between the respective legal practitioners. Having raised the issue Mr Ton then went on to submit that the Tribunal should disregard the numerous distractions that had been manufactured by the appellants and instead determine the Appeal based on the considerations of merits of the issues before the adjudicator and whether the appellants had disregarded the onus on them to demonstrate the adjudicator was in error on issues she was actually asked by the appellants to decide. It should be pointed out that the Tribunal has no part to play in the determination or resolution of disputes between the legal practitioners and it is difficult to understand why these issues have been raised by the solicitor for the respondent in his closing submissions on the appeal.

62. In an introduction the solicitor for the respondent referred to my decision in The Owners Strata Plan 6534 v El Khouri (supra) and he suggested that I had found that parties could not treat the adjudication process as a “trial run”. That proposition was not contained in my decision and the interpretation of the decision put forward cannot be regarded as an accurate representation of what I had said in that case. I do however propose to deal with my earlier decision, firstly considering whether an error on the part of the adjudicator has been demonstrated. It was argued that it is not open to the appellant to raise a “new issue” on the appeal which was not before the adjudicator. Mr Ton submitted that to do so would result in the appeal being no longer about the adjudicators decision but rather an invitation for the Tribunal on appeal to decide a different case.

63. The new issue to which Mr Ton was referring appears to be the question of whether there was a valid vote at the meeting on 31 March 2015. In this context it is noted that the first ground of Appeal was dated as:-

“the adjudicator erred in making the following findings:

(a) that a valid resolution was passed at the extraordinary general meeting held on 31 March 2015.”

64. It is claimed that this issue was only raised with the respondent Owners Corporation two business days prior to the final hearing. It is claimed that as a matter of law the appellants would be precluded from raising or arguing a new issue and that the appropriate process would have been to file for a new adjudication.

65. It is claimed that the appellants were in possession of Mr Maddalena’s sound recording from 11 November 2015 but the outline of submissions were not served until 2 March 2016 although they were due on 29 February 2016.

66. It was submitted that the appellants had commenced and pursued the Appeal on the basis that they were seeking to set aside the effect of the vote taken and the resolution that had been passed. It was claimed that the appellants had not made any application seeking leave to amend the Appeal to include a new issue not before the adjudicator. It is noted that the Tribunal directed that a transcript of the sound recording from a point in time when the appellants left, should be produced by the Owners Corporation transcribed by an independent transcription service and served at the time when the respondent’s submissions were provided.

67. It was then submitted that the issue on an appeal should not be decided upon “inadmissible hearsay” and “opinion evidence” arising from a cross-examination of Mr Maddalena in circumstances where he was:

1. self-represented

2. had not been served with the appellant’s evidence in submissions in order to give him prior notice of the intention that was that the appellants would raise a new issue or would cross-examine him about it.

3. had not been given an opportunity to obtain legal advice or representation.

4. had been excluded from the hearing room until his cross-examination.

68. This submission appears to be a submission made on behalf of Mr Madddalena who did not himself take that point. It further fails to take into account that Mr Maddalena was never called as a witness by the respondent and that he was, in November 2015, given leave to make his own submissions in the proceedings represented by a solicitor. After that leave had been granted he apparently ceased to instruct his solicitor but remained as the contact point to give instructions on behalf of the Owners Corporation to Grace Lawyers. Mr Maddalena acknowledged in cross-examination that he did not think it was necessary to consult with other members of the executive committee before giving those instructions to the solicitors for the respondent. Mr Ton, (again, apparently on behalf of Mr Maddalena), claimed that he was informed he was being treated as a separate respondent for the first time at the commencement of his cross-examination in circumstances where an application had been made and Senior Member Smith had expressly ruled that Mr Maddalena and Ms Lee were not to be joined as parties. It is to be noted that on 18 November 2015 Senior Member Smith made an order that Wai Lee and John Maddalena would be noted as interested parties who wished to be heard at the Hearing. He directed that evidence was to be provided to those interested parties. At the time those orders were made both Mr Maddalena and Ms Lee were represented by Mueller & Co Lawyers and it was not until 4 February 2016 that Mr Adrian Mueller advised the Tribunal that he was no longer acting for the interested parties Wai Lee and John Maddalena. The solicitors for the applicant, and for the respondent were informed at that time that Mueller & Co were ceasing to act. The submission made by Mr Ton in relation to the beliefs and expectations that Ms Lee and Mr Maddalena may have had as at 18 November 2015 and thereafter appear to be misconstrued.

69. The respondent then made submissions as to the content of the sound recording from the meeting of 31 March 2015. The independently prepared transcript speaks for itself in that regard.

70. In addressing the appellants submission in chief that there was no vote the respondent submitted that the Tribunal should not adopt an artificially strict approach that requires the terms of the resolution as amended to be put and voted on. It was argued that nowhere in the Strata Schemes Management Act is it prescribed that meetings are to occur in the manner put by the appellants and that although there were requirements as to the conduct of a meeting under Sch 2 to the Act none of the requirements had been breached in this instance. It was suggested that the common sense approach should be taken to determine whether or not an Owners Corporation had passed a resolution as was proposed by the Court of Appeal in Stolfa v Hempton (supra).

71. Mr Ton referred to a portion of the judgment in Stolfa (at P30) where Alsop P observed:-

“s. 65A calls for a special resolution that “specifically authorises the taking of the action proposed. It will be a question of fact or mixed fact and law in each case with any given special resolution or special resolutions is or are adequate in its or their specificity of authorisation and its or their particularity as to the action proposed. There is obviously a clear policy in requiring direct and specific attention to the proposed action, at the same time, an overly pedantic attention to detail might frustrate otherwise clear authorisation. Common sense and reasonableness have their parts to play in the operation of a provision intended to regulate how people should go about their dealing with the common property in their units in everyday life”.

72. The application of common sense was also addressed by His Honour Justice Wood in the proprietors of Strata Plan 425 v Sidwell [1987] NSW Titles Cases 30-076.

73. Mr Ton submitted that there was incontrovertible evidence (transcript and sound recording) that the relevant motion was called to a vote, a lot owner proposed two amendments and each of the amendments were discussed and agreed to by all lot owners in attendance. In such circumstances, he submitted, it would be contrary to the Sidwell and Stolfa decisions for the Tribunal to prefer form over substance and not adopt a common sense approach.

74. Mr Ton then went on to address each of the Appeal grounds. In relation to the operation of s 62 he referred to a decision of the Court of Appeal in The Owners – Strata Plan 21702 v Krimbogiannis [2014] NSWCA 411 where the court held that s 62 would also include circumstances where an Owners Corporation seeks to restore the common property that has been altered even though the alteration was not defective.

75. It was argued that the evidence before the adjudicator and the Tribunal establishes that the Owners Corporation has express knowledge that the western balustrades posed a safety risk. It was claimed that the appellants had put on no evidence to the contrary that the balustrades posed no safety risk. It was claimed that the respondent Owners Corporation had considered the safety risk posed by the western balustrades and resolved by the majority to take action (noting the cost of such action was envisaged to be over the minor amount capped at $10,000.00).

76. Mr Ton then addressed appeal ground five relating to the amendment of the resolution the respondent submitted that the appellant’s reference to cl 35.(3) Schedule 2 the Strata Schemes Management Act 1996 and the claim that the motion was invalid because it was not in exactly the same format as contained in the notice. He observed that the clause expressly provided that a motion can be amended at a meeting and that notice of the amendment is not required.

77. It was noted that the determination of this issue was tied in with the appeal on grounds one and two in respect of ss.62 and 65A. It was agreed that if the Tribunal found the adjudicator was correct that the Owners Corporation was considering a safety risk under s 62 then the issue would fall away but if it found that the balustrade works could only be done by way of a special resolution then there would be no need to determine the issue as the Owners Corporation did not purport to pass the motion as a special resolution (even though it was unanimous).

78. Mr Ton criticised the evidence of the witnesses called on behalf of the appellant, particularly in their replies to cross-examination. It was submitted ultimately that none of the appellants were credible or reliable and that their evidence in relation to what occurred at the meeting should be rejected.

79. Two of the owners who sought to provide separate submissions filed submissions and evidence in support of the Owners Corporation. Wai Lee as the owner of unit 6 filed submissions on 18 January 2016 and 16 June 2016.

80. Mr John Maddalena as the owner of unit 8 provided submissions and those submissions have been considered and taken into account for the purposes of the present appeal. When the matter was listed to address further matters on 18 July 2016 Mr Maddalena sought to rely on a large volume of documents in which he stated were evidence and submissions. The tender of these documents was refused. Evidence in the matter had been concluded in April 2016 and no extension of time for filing of evidence or submissions had been obtained. The evidentiary material was excluded on the basis that it was out of time and the submissions contained within the bundle were excluded on the basis that no extension of time had been obtained. Reference was made to a decision of the Appeal Panel of the Tribunal in Abdel-Messih v Lomo [2016] NSWCATAP 143. The Appeal Panel rejected the tender of a bundle of further material and it noted:-

“the material was submitted without leave having been given by the Court. The impression, unfortunately abroad, that parties may file    supplementary written material after the conclusion of oral argument, without leave having been given beforehand, is quote misconceived. We have to say once again, firmly and clearly, that the hearing is the time to present argument, whether it be wholly oral or oral arguments supplemented by written submissions.”

DECISION

81. Apart from the named applicants and the respondent two other residents of the strata complex have sought leave to provide evidence and submissions in these proceedings. Those residents are John Maddalena and Wai Lee who were both represented by a solicitor when they sought to be joined as parties to the Appeal but who then abandoned their solicitor and elected to appear unrepresented. This gave rise to certain difficulties in the proceedings when Mr Ton, representing the Owners Corporation, appeared on some occasions to be providing assistance in particular to Mr Maddalena and it was note that, notwithstanding his separate appearance, Mr Maddalena was the member of the executive committee authorised to instruct or deal with Grace Lawyers on behalf of the Owners Corporation.

82. The evidence discloses that in about June 2014 Mr John Maddalena of unit 8 and Ms Mary Lane of unit 3 requested that a meeting be held to propose the replacement of the western balustrades of units 5, 6, 7 and 8 in order to make them compliant with current building code standards. It was also proposed at that meeting that balustrades in units 3, 4, 7 and 8 have remedial work performed.

83. At the EGM held on 19 June 2014 the strata managing agent who was then chairing the meeting declared the motions to be out of order given that there was no supporting evidence that the balustrades were unsafe and that in any event an approval would require a special resolution pursuant to s 65A of the Act.

84. Following that meeting Mr Maddalena requested a supplementary report relating to “climb-ability” from the consulting agency who had previously inspected the balconies. Conclusions in the report were not changed but it was suggested that if owners wished to upgrade the balustrades, despite no legal requirement to do so, existing balustrades could be retro-fitted to achieve compliance with the current building code. An application was then prepared for a mediation in relation to a strata dispute filed by John Maddalena of unit 8 and Wai Lee of unit 6 concerning the balustrades.

85. At the annual general meeting held on 3 September 2014 Mr Maddalena proposed that independent legal advice be obtained to establish the appropriate application of s 62 and/or s 65A of the Act in relation to the replacement of the balustrades. At that meeting there were seven lot owners prepared to nominate and stand for the executive committee in the following year. Mr Maddalena proposed that the executive committee be limited to three members and Mary Lane (unit 3), Ian Mason, nominee of Wai Lee (unit 6) and Mr Maddalena (unit 8) were declared elected to the executive. The voting on that motion was even on numbers but was declared as carried on unit entitlement. It is appropriate to observe that all three members of the executive committee who were declared elected had an interest in the motion which was ultimately proposed for an extraordinary general meeting on 17 March 2015 and Mr Maddalena and Mr Ian Mason both stood to benefit in terms of the works proposed to be carried out to their units if the motion was passed.

86. Relevant factual matters relating to the meeting have been set out above as evidence and submissions provided by the principal parties to the Appeal and it is appropriate to note that the Tribunal has had benefit of far more detailed evidence than was available to the adjudicator in terms of the affidavits provided both sides and by Mr Maddalena. The Tribunal also had an opportunity to see witnesses who have given evidence tested on various statements they had previously made.

87. The power to admit new evidence in an appeal to the Tribunal is contained in s 181(2) of the Strata Schemes Management Act 1996. Clearly “new evidence” is evidence that was not before the adjudicator and it is not limited ultimately to the “actual issues which were before the adjudicator”. As the power to admit new evidence is not qualified or limited by the legislation it must be exercised judicially and in accordance with established legal principals.

88. The respondent submits that to allow new evidence on appeal, apart from being contrary to the decision of the Supreme Court in Owners Corporation SP 7596 v Risadorie [2003] NSWSC 966 and contrary to observations which I made in a matter of The Owners Strata Plan 6534 v El Khouri [2015] NSWCATCD 147 would involve procedural unfairness and a denial of natural justice on the respondent Owners Corporation. It is claimed that the procedural unfairness and denial of natural justice would be even more acute on the interested parties who were given no notice of the issue at all and were excluded from the hearing room for the majority of the Hearing.

89. In the Owners – Strata Plan 6534 v El Khouri (supra), I said:-

“s. 181(2) incorporates a discretion related to the admission of further evidence and until the competing views of the Tribunal have been clarified by an appellant review I find it would be inappropriate to allow additional evidence to determine whether an adjudicator had erred but if an error was demonstrated, evidence could be received, particularly if there had been a change of circumstances between the time when the adjudication was determined and the time of the Appeal.”

90. Mr Kent described that observation as obiter because there had been no application made to adduce additional evidence in that case. He went further to observe that there was nothing in the dicta of El Khouri which limited the general principals under the “narrow” and “wide” tests referred to in other decisions. He submitted that fresh evidence could always be adduced if it was not available at the time of the decision appealed from.

91. It is appropriate to note that s 186 of the Strata Schemes Management Act 1996 the Tribunal, before making any order, in the case of an appeal, must investigate the grounds of appeal and subs (2) provides:-

“In any such investigation or any proceedings before it for an order the Tribunal,

(a)   is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks fit and,

(b)   must act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms.”

92. There are a number of recent authorities of the Tribunal which make it clear that a strata appeal should be regarded as a hearing de novo and accordingly parties should not be strictly confined to the evidence before the adjudicator (see Nolan v Owners Corporation SP 5803 [2013] NSWCTTT 220 and Owners Corporation SP 32033 v Mullens [2015] NSWCATD 23), and taking these matters into account I am not satisfied that what I have said in El Khouri precludes the admission of evidence in circumstances where the Tribunal is satisfied that the adjudicator has made an error and I note that this would constitute the strictest interpretation of what was said in El Khouri. Both the main parties and the additional parties who seek to be represented have provided evidence by way of statutory declarations or affidavits in the Appeal proceedings. The documentary evidence filed on behalf of the appellants consists of affidavits of Alena Lipscher, an affidavit of Vladimir Lipscher, and affidavit of Scott Dumbrell and an affidavit of Margaret Bentivoglio. The material served on the appellants to the Appeal consisted of an affidavit of John Maddalena and an affidavit of Karen Russell together with a report of Anthony Doherty. The parties have availed themselves of oral testimony and cross-examination has been permitted on each side and the parties have availed themselves of an opportunity to supplement and re-work the evidence they put before the adjudicator and have clearly treated the Appeal as a hearing de novo.

93. Mr Kent has submitted that the first demonstrable error on the part of the adjudicator was her finding as to the validity of a resolution at the meeting of 31 March 2015 where she gave no proper reasons for a finding that a valid resolution was passed. It is argued that the finding was a conclusion which did not refer to the evidence leading up to that finding or set out any reasoning process for reaching it.

94. The requirement for proper reasons has been set out by the Court of Appeal in Keith v Gal [2013] NSWCA 339 where His Honour Justice Gleeson held:-

“116 thirdly bald conclusionary statements should be eschewed as stated by Ipp J A in Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187.

It is not appropriate for a trial judge merely to set out the evidence    adduced by one side than the evidence adduced by another and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of one and not the other …

117 thus it is essential to expose the reasoning on a crucial point to be contested between the parties. This proposition reflects one of the three fundamental elements to a statement of reasons identified by Meagher J A in Beale v GIO at 443.”

95. Mr Kent submitted further that the second error on the part of the adjudicator was that there was no evidence upon which the adjudicator could find a valid resolution was passed. There was evidence of the notice of the EGM in which the proposed resolution had been set out and there was also evidence of a copy of the minutes of that EGM where the resolution was stated in substantially different terms and passed. There was no evidence before her as to what happened at the meeting and in particular there was no evidence as to how the proposed amended resolution, of which no notice had been given, came to be passed. In this respect Mr Kent has referred to the provisions of cl 35 of Sch (2) of the Strata Schemes Management Act 1996.

96. It is quite clear that a transcript or recording of the meeting was not made available to the appellants until well after the adjudication had taken place and accordingly a recording of what was said at that meeting is, evidence which would, having regard to the provisions of s 186 of the Act be clearly admissible for the Appeal.

97. The evidence discloses that the minutes of the EGM of 31 March 2015 were prepared by the chairman, Ian Mason, who is the nominee of Wai Lee from unit 6. During his evidence Mr Maddalena admitted that there was no motion for any amendment at the meeting and that the minutes of the meeting did not contain any reference to an amendment motion ever being proposed or classed. It was submitted that there was in the circumstances a clear breach of cl 35(3) and it was argued that the adjudicator had erred and the motion should be declared invalid on that basis.

98. The respondent submits that the amendment to the motion were discussed in detail and voted upon and agreed to by all unit owners. It is clear that this submission was not supported by the evidence given by Mr Maddalena under cross-examination and it is also not reflected in the authorised transcript of the recording of the meeting which the respondent was required ultimately to produce to the Tribunal. A reading of that transcript discloses that:-

1. no resolution was proposed.

2. there was no proposer or seconder.

3. there was no reading of the wording of any changes that were made.

4. there was no declaration of any vote.

5. there was no declaration of a result of the vote.

99. Although these matters in some instances could be regarded as technicalities when the effect of the vote should be taken into account I am not disposed to take that approach in the present circumstances particularly having regard to the factual matters set out in the earlier part of my decision starting from April 2014.

100. The evidence of Alena Lipscher in her affidavit of 6 July 2015 and in her evidence record that the chairman (Ian Mason) stated to the meeting:-

“I have received advice from a well-known strata lawyer who said that we do not require a special resolution, only an ordinary resolution.”

101. When she requested that the advice be tabled for the meeting to see he replied:-

“I told you what the advice said but I am not prepared to show you unless you pay for the advice.”

102. Mr Mason was not called by the Owners Corporation although he acted as the chairman for that meeting and Mr Maddalena did not address that issue. It is appropriate to note that no copy of such an advice has been provided to the Tribunal either by the Owners Corporation, Mr Maddalena or by Wai Lee who has nominated Ian Mason as her representative in the executive committee. At the very least it could be said that the advice was designed to influence those persons voting at the meeting when a dispute between the need for a special resolution or the requirement of an ordinary resolution was discussed and raised. The appointed strata manager had not been invited to attend and chair the meeting and, according to Mr Maddalena, this had never occurred before.

103. On the issue of the admission of new evidence I am satisfied firstly that an error in the decision of the adjudicator has been demonstrated on the basis of the material which was provided to her. I am further satisfied that the evidence falls within a category which should be admitted in any event as the material, and in particular the recording which demonstrated the minutes provided to the adjudicator to be incorrect, was not available until after the adjudication had concluded. This material is both relevant and significant in a proper determination of the Appeal having regard to the provisions of s 186 of the Strata Schemes Management Act 1996.

104. The respondents contend that a new issue has arisen which was not before the adjudicator and it is claimed that the issue raised was that there was “no vote”. The grounds of appeal/reasons for appeal filed with the application on 30 September 2015 included that the adjudicator erred in making the following findings:-

1. that a valid resolution was passed at the extraordinary general meeting held on 31 March 2015.

105. The validity of the resolution was clearly an issue as the appellants left the meeting before the vote occurred and were reliant only on the minutes produced by the chairperson, Mr Mason. One could not have expected a specific allegation at that time that the resolution was not properly voted upon. In circumstances where the Tribunal is satisfied that the adjudicator has erred then even on the narrowest approach, evidence which was not available to the appellant party when the matters came before the Adjudicator can be relied on if it could materially affect the orders made.

106. To the extent that the evidence is “new evidence” I am satisfied that there are no discretionary matters weighing against the admission of the evidence because the true position was or ought to have been well known to the respondent and its executive committee as well as the other respondents. The evidence relating to the audio recording of the EGM was provided from the respondent and it is inconceivable, as submitted by Mr Kent, that the respondent could be prejudice by the appellants relying upon relevant material which was in its own possession. Mr Maddalena clearly acknowledged in cross-examination that there was no time at which the resolution purported being voted on was ever read out to the unit owners, there was no proposer or seconder and there was no declaration of the vote.

107. To the extent that the issue raised is regarded as a “new issue” I am satisfied that leave should be granted to raise it, although I am not satisfied on the findings I have made that leave is necessary.

108. Section 36 of the Civil and Administrative Tribunal Act 2013 requires the Tribunal to achieve just quick and cheap resolution of issues before it and to act in a manner which enables the substantial merits of the case to be dealt without technicalities or legal form (s. 38(4)). I am satisfied that the ground was not initially available to the appellants by reason of the fact that the minutes which constituted the public record of what occurred did not address these issues in an appropriate manner. No prejudice will be suffered by the respondent as the matter was raised in the hearing and both parties have had an opportunity to address the admission or rejection of these matters.

109. To the extent that the respondent claims that the “new issue” should be dealt with as a subject of a new adjudication application I am satisfied that if a new adjudication application was filed it would be likely to be estopped by reason of the principal in Port of Melbourne Authorities v Anssun [1981] 147 COR 589 because the validity of the subject resolution has already been raised for determination in the present appeal.

110. The respondent claims that in determining whether or not an Owners Corporation has passed a resolution, a common sense approach should be applied. Reference is made to a decision of the Court of Appeal in Stolfa v Hempton [2010] NSWCA 218 where Allsopp where Basten and Young JJA agreed observe:-

“s. 65A calls for a special resolution that “specifically authorises the taking of the action proposed”. It will be a question of fact or mixed fact and law in each case with any given special resolution or special resolutions is or are adequate in its or their specificity of authorisation and its or their particularity as to the action proposed. There is obviously a clear policy requiring direct and specific attention to the proposed action, at the same time an overly pedantic attention to detail might frustrate otherwise clear authorisation. Common sense and reasonableness have their part to play in the operation of a provision intended to regulate how    people go about dealing with the common property in their units in everyday life.”

111. Whilst these principals are clearly applicable it is difficult to understand how common sense and reasonableness should be applied to overcome a lack of “specificity” and a relaxation of the requirements under Sch (2) of the Act in circumstances which I have outlined above including the way in which the whole meeting was constructed without the Strata Manager, and the actions of the Chairman when objections were taken to the type of resolution requited as well as lack of formality in the moving and adopting of amendments, the moving and passing of the motion and the terms by which the ultimate motion was apparently passed.

112. Reference has also been made to a decision of Justice Wood of the Supreme Court in the Proprietors of Strata Plan 435 v Sidwell [1987] NSW Titles Cases (30 – 076). I am remain satisfied that the circumstances of the present case are not amendable to being cured by the principals enunciated by His Honour in Sidwell. Mr Kent has described the meeting chairperson, Mr Mason and Maddalena as being set on a course of action whereby they intended to avoid the decision of the strata manager back in 2014 and to have a resolution passed as an ordinary resolution thereby compelling the appellants to either accept the resolution or file an application with the Tribunal. The available evidence could lead to an inference that this was the case. Mr Mason did not put on any evidence and he was not cross-examined. In cross-examination Mr Maddalena admitted that he had contacted the North Sydney Local Council in order to agitate issues relating to the replacement of balconies and that he had been involved in changing both the size and makeup of the executive committee. He agreed that a number of other people wanted to be on the committee however the number was able to be reduced from five to only three so that he was then able to exercise a greater control over the committee. He agreed further in cross-examination that he wanted to put the appellants to the bother of commencing an application in NCAT and therefore bear the onus of any application. He also conceded that he was not going to have the resolution passed as a special resolution and he took steps to put an ordinary resolution to the meeting where he knew that Ian Mason would be the chairman in the absence of the strata managing agent. He acknowledged that the strata managing agent had chaired all meetings other than the EGM held on 31 March 2015 although he claimed that that meeting had been called by Ms Lipscher.

113. Mr Maddalena agreed that the discussion at the meeting had become heated particularly in relation to issues concerning special and ordinary resolutions and that the chairman had disregarded the complaints that the resolutions should have been a special resolution and simply said “I am going on”. This caused the tension in the room to increase and in due course he conceded that as a result of the tension the three appellants left the meeting. He agreed that a letter had been handed to the chairperson by the appellant at the start of the meeting and he refused to read it out and he further agreed that the tabling of the letter was not recorded in the minutes and that the lack of recording was not corrected when an opportunity was given to do so. Mr Maddalena acknowledged that as the secretary he was responsible for the accurate preparation and recording of minutes but that he had not taken minutes at this meeting and they had in fact been taken by Mr Mason.

114. I am satisfied that the decision of adjudicator T Simon made on 9 September 2015 should be set aside. I am satisfied that the passing of the resolution in relation to item 3.7 – western balustrade replacement at the extraordinary general meeting of the Owners – Strata Plan 30995 held on 31 March 2015 is invalid.

115. The remaining matter to be addressed is as to whether the resolution to replace the western balustrades of units 5, 6, 7 and 8 should be authorised by a special resolution or whether an ordinary resolution is sufficient.

116. The respondent submits that the evidence before the adjudicator and before the Tribunal is to the effect that the Owners Corporation had express knowledge that the western balustrades pose a safety risk. Mr Ton has submitted that the transcript at the extraordinary general meeting on 31 March 2015 makes it clear that the majority of lot owners were and are motivated by concerns about safety and the potential future liability of the Owners Corporation if it does not act. It is difficult to understand the objective evidence which was before the meeting at the time when that decision was made consisted of a report from Core Project Consulting dated 4 May 2014 which reported that none of the balconies appeared to be loose, significantly cracked or otherwise unsafe and the balconies complied with the relevant building code both as to height and climb-ability. A further report commissioned by Mr Maddalena was asked to address “climb-ability” and the conclusions of the report were unchanged but it was suggested that if owners wished to upgrade balustrades, despite no legal requirement to do so they could be retro fitted. It is difficult to reconcile that evidence with the assertion that the Owners Corporation had express knowledge that the balustrades posed a safety risk. Comments made by persons at a meeting does not, in my view, serve as evidence of knowledge. There was no further expert evidence before the adjudicator when her decision was made. She appears to have relied on the statements of concern expressed by Mr Maddalena and the other witnesses for the Owners Corporation.

117. The respondent had a report prepared by Mr Doherty on 13 January 2016. He was engaged to review all of the balustrades in the building but his report was directed only to units 6 and 8. When asked in cross-examination why he did not inspect other balustrades he indicated that he had been advised other owners were not at home and their balconies and balustrades could not be inspected. He acknowledged he was only taken to those two units by the owner of unit 8.

118. 110   In cross-examination it was put to Mr Doherty that before preparing his report he had been provided with a report of Core Project Consulting and he acknowledge that the report stated there were no legal requirements under the Owners Corporation to bring the existing balustrades up to the current Building Code of Australia standard. He stated that he did not insert a similar statement into his report and it would appear that his report seems to concentrate solely on compliance with the current Building Code of Australia.

119. It is relevant to note that the Core Project Consulting report which was obtained by the Owners Corporation stated that none of the balustrades appeared to be loose, significantly cracked or unstable and a recommendation was included in the following terms:-

“2.2.3   as far as Core Project Consulting is aware there are no retrospective legal requirements for buildings to modify their balustrades to meet the modern Building Code of Australia. Whilst the law may change in the future no action is currently required. In the event that the balustrades need to be upgraded in the future, then they will need to comply with requirements of the Building Code of Australia of the day.”

120. The evidence before the Tribunal on this issue makes it clear that the relevant expert information concerning safety is contained in the Core Project Consulting report and it is conceded by Mr Doherty there was no retrospective legal requirement to modify balustrades to meet the current building code.

121. Mr Maddalena attempted to give some evidence of discussions he had with Southern Cross Constructions and also with North Sydney Council. Evidence of these conversations was rejected on the basis that they were hearsay and that no steps had been taken by the respondent to call evidence from the parties who allegedly gave this important information to Maddalena.

122. In a dissenting judgment in Ridis v Strata Plan 10308 [2008] NSWCA 248 McColl J A observed that s 62(1) and (2) does not impose an obligation on an Owners Corporation to insert a door which was operating and did not require maintenance or repair. She noted that there was nothing in the legislative history of the Strata Schemes Management Act that indicated an intention of the legislation to impose an obligation on the Owners Corporation of a standard of care higher than that imposed by the general law of negligence upon the occupiers of property. I am not satisfied that the evidence in the present case establishes that the Owners Corporation was aware of a significant safety risk and therefore I am not satisfied that there was an absolute duty imposed on the Owners Corporation on the facts available to replace the balustrades pursuant to s 62 of the Act.

123. The passage in Ridis relied upon by the respondents comes from the judgement of Tobias J A at para 187 which states:-

“49 secondly, at first blush I consider that the duties the subject of subs (1) and (2) of s. 62, although framed in absolute terms must have only imposed the duty if the common property required repair on one hand or its fixtures or fittings needed renewal or replacement on the other in the sense that the relevant item was broken or patently defective. Upon reflection no such qualification as a matter of statutory construction is justified in view of the provisions of s. 62(3) which did not appear in any of the predecessors of the section. However this must be said to be the case that the obligation to renew or replace only arises where such action is “appropriate” as contrasted with a special resolution that renewal or replacement is “inappropriate” as determined by the Owners Corporation pursuant to s. 62(3)(a) subject to strictures of s. 62(3)(b).

50 what is “appropriate” involves in my opinion, a broader concept than what is necessary or needed. In other words it would be “appropriate” to replace a fixture or fitting even though it was neither broken nor patently defective but nevertheless presented a reasonably foreseeable risk of safety. Where that risk was, for instance, due to the antiquity of the installation of the fixture or fitting in question so that as a matter of probability it did not conform or comply with current safety standards, if adopted, would avoid the risk that in my opinion s. 62(2) required its replacement.”

124. The observations of Mr Justice Tobias and Justice McColl must be considered in the light of the factual material which is available in the present case. There was little factual material available with the adjudicator and in relation to the material before the Tribunal it is clear that the present balustrade is 800mm high whilst the requirements of the current Building Code of Australia impose a 100mm height requirement. It is submitted on behalf of the appellants that the transition from the previous code requirements to the current code requirements does not result in a transition from unsafe to safe but a change to the balance of compromise between the safety of the balcony and its function. Mr Doherty was not qualified to give opinions on safety but rather was only concerned with compliance with the Building Code of Australia. The material from Core Projects does not address the safety issue and accordingly the remaining evidence is that provided by Mr Maddalena who, on his own evidence, has a significant interest in having the motion approved by any means available to him.

125. The appellants have requested an ancillary order that the work not be carried out unless a special resolution is passed pursuant to s 65A and it is reasonable that the issue should be addressed by the Tribunal to prevent a recurrence of the previous attempt to have the orders made. Addressing the evidence which is presently before the Tribunal I am satisfied that it is appropriate to make the further order sought by the appellants namely an order the respondent is not permitted to replace the western balustrades of units 5, 6, 7 and 8 except to the extent that the action is authorised by a special resolution of a general meeting of the Owners Corporation. There is no evidence presently available to suggest that safety issues compel the Owners Corporation to carry out such work pursuant to s 62 of the Act.

126. In addressing the question of costs it is appropriate that the orders for costs should be reserved for submissions after the decision of the Tribunal is published. The appellants are to provide written submissions as to costs if they are so advised within 28 days of the date of these orders. The respondent and other parties are to provide written submissions in reply within 28 days thereafter. The issue of costs will be then determined on the papers.

J A Ringrose

General Member

Civil and Administrative Tribunal of New South Wales

5 January 2017

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

Decision last updated: 15 February 2017