Melani v The Owners Strata Plan No 22214

[2017] NSWCATCD 73

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

Melani v The Owners Strata Plan No 22214 [2017] NSWCATCD 73

Hearing dates:

28 March 2017, Written submissions expiring 11 April 2017

Decision date:

19 September 2017

Jurisdiction:

Consumer and Commercial Division

Before:

G.J. Sarginson, Senior Member

Decision:

1. The appeal is dismissed.

 2. The orders of the Strata Adjudicator dated 17 October 2016 are varied as follows:

(1) The owner of Lot 13 must, on or before 23 October 2017, seek from the Owners Corporation SP 22214 consent to the removal and replacement of the common property ceiling in Lot 13. Full details sufficient to enable a proper consideration of the matter (including evidence of Council consent and compliance with any conditions imposed by Council, including any conditions in respect of fire safety) must be provided.
(2) The Owners Corporation SP 22214 must, on or before 20 November 2017, convene a special meeting of the Owners Corporation to enable consideration of the ceiling application referred to in order 3 above.

Catchwords:

Strata Schemes---Appeal from Adjudicator---Definition of ‘Lot’---Definition of ‘common property’---Whether dropped ceiling formed part of the Lot or part of the common property

Legislation Cited:

Strata Schemes Management Act 1996 ss 65A, 65B, 177, 181
Strata Schemes Management Act 2015 Cl 7 Sch 3
Strata Schemes (Freehold Development) Act 1973 ss 5, 8
Strata Schemes Development Act 2015 Cl 9 Sch 8
Environmental Planning and Assessment Act 1979 s 80
Civil and Administrative Tribunal Act 2013 s 79
Strata Titles Act 1985 (WA)

Cases Cited:

Wrigley v Owners Corporation SP 53413 [2017] NSWCATAP 100
Owners SP 56911 v Stricke [2012] NSWCTTT 392
Balafoutis and Ors v Owners SP 76563 [2016] NSWCATCD 83
Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272
Topic and The Owners Corporation of Raffels Waterfront Strata Plan 48545 [2016] WASAT 27
Ainsworth v Criminal Justice Commission [1992] HCA 10; (1992) 175 CLR 564

Category:

Principal judgment

Parties:

Annamaria Melani (applicant)
The Owners Strata Plan No 22214 (respondent)

File Number(s):

SCS 16/47866

Publication restriction:

Nil

reasons for decision

1. This is an appeal from a decision of an Adjudicator under the Strata Schemes Management Act 1996 (‘the SSMA 1996’) dated 17 October 2016. The dispute involves the removal of a dropped ceiling in the Lot of the appellant (‘the Lot owner’). The appeal was filed on 31 October 2016. The appeal has been filed within the limitation period in Section 177(2) of the SSMA 1996.

2. An appeal from a decision of an Adjudicator under the SSMA 1996 is dealt with as an external appeal under Section 79 of the Civil and Administrative Tribunal Act 2013, and determined under the relevant provisions of the SSMA 1996 (Wrigley v Owners Corporation SP 53413 [2017] NSWCATAP 100).

3. Under Section 181 of the SSMA 1996, the Tribunal may determine an appeal from a decision of an Adjudicator by order affirming, amending, or revoking the order appealed against, or substituting its own order. An appeal is conducted as a hearing de novo. The appellant does not have to demonstrate error by the Adjudicator to succeed on the appeal, and fresh evidence may be adduced (Owners SP 56911 v Stricke [2012] NSWCTTT 392 at [28]-[46]; Balafoutis and Ors v Owners SP 76563 [2016] NSWCATCD 83 at [9]).

4. The key issue in dispute is whether a ceiling (referred to in submissions and evidence as either a “dropped ceiling” or a “false ceiling”) within a strata scheme building, which was removed by a tenant of the Lot in mid-2015, was part of the common property or part of the Lot.

Background to the Dispute

5. The Lot owner is the owner of Lot 13 in the Strata Plan, which is a retail shop situated on The Corso, Manly NSW. On 25 February 2015, the Lot owner entered into a retail lease for a period of 5 years with Pocket Pizza Pty Ltd (‘Pocket Pizza’). The building in which the strata scheme is located was originally constructed in 1914.

6. The evidence of the Owners Corporation (which will be referred to in greater detail below) was that in 1979 the owner of the building sought to sub-divide and renovate the building. A strata plan and development application was prepared and lodged with Manly Council. In 1984 the development application was approved, and as part of the approval a dropped ceiling was installed in a position below the original structural ceiling of the building. The Strata Plan was registered on 19 December 1986.

7. In December 2003, the former owner of Lot 13 sought approval from the Owners Corporation to remove the existing dropped ceiling. The Owners Corporation sought legal advice in 2004 as to whether or not the existing false ceiling was common property. The dropped ceiling was not removed at that stage.

8. In March 2015, Pocket Pizza sought to renovate the Lot, including changes to the façade and removal of the dropped ceiling. Although changes to the façade were part of the initial dispute dealt with by the Adjudicator, the parties made clear at the hearing that the sole issue currently in dispute involves the dropped ceiling.

9. The Lot owner asserts that in March 2015, it provided the strata manager architectural plans and a development application for work, including the removal of the false ceiling. On 16 March 2015 the strata manager emailed the Lot owner stating “you have approval”.

10. In the period between March 2015 and October 2015, the dropped ceiling was removed.

11. On 22 October 2015, the strata manager wrote to the Lot owner stating that the Executive Committee of the Owners Corporation “does not have the capacity to give permission for exclusive use of the common space as shown in the Development Application submitted to Manly Council by your tenant”. The letter stated that the original ceiling (i.e. the ceiling after removal of the dropped ceiling) had “significant fire damage” which may have been caused by the previous tenant of Lot 13. The letter states that the Lot owner had “raised this issue” (i.e. presumably, removal of the dropped ceiling) “on a number of occasions over the past 13 years and on each occasion the request has been denied”. The letter states that removal of the “common property ceiling” (i.e. the dropped ceiling) was “illegal” and “restoration is required”. However, the letter states that the Executive Committee “has allowed for you to make a proper application to purchase the common property or to apply for a Special By-Law for exclusive use of the common property” and that an Executive Committee meeting was scheduled for 2 November 2015 “to consider your response”.

12. On 11 November 2015, Manly Council issued a “deferred commencement approval” under Section 80(3) of the Environmental Planning and Assessment Act 1979 that consent is given, but “not operate until the following documentation/information is submitted:

A1    The applicant shall demonstrate compliance with one (1) of the following sections:

Replace the removed ceiling at 3.4 meters with a BCA fire compliant ceiling and restore the space above and around the previous condition.

Agree to an Exclusive By-Law for the common property in question with fire and acoustic insulation installed.

Agree to purchase the common property in question.

A2   Owner’s Consent from the Owners Corporation of SP 22214 shall be obtained.”

13. On 9 December 2015, Solicitors for the Owners Corporation wrote to the Solicitor for the Lot owner stating that removal of the false ceiling (and modification of the façade by way of the construction of a new entry) was an alteration of common property in breach of Section 65A of the SSMA 1996, and was work performed without development consent by the Council.

14. On 9 December 2015, the Solicitors for the Lot owner wrote to the Solicitors for the Owners Corporation stating that the Lot Owner “does not admit that the relevant area above the previous false ceiling is common property. This area is clearly part of the strata title held by our client”. The letter stated that the Council had erred in its development consent conditions.

15. On 29 July 2015 the Owners Corporation filed an application for Adjudication in the Tribunal, after mediation between the parties had been unsuccessful. The application for Adjudication sought the following orders:

1. The Lot owner immediately re-instate the fire rated false ceiling, and re-instate all common property affected by its removal.

2. The Lot owner immediately re-instate the common property façade, and re-instate all common property affected by the alteration of the façade.

3. The Lot owner and its tenant allow the Owners Corporation access for the Owners Corporation to reinstate the common property.

Decision of the Adjudicator

16. The Adjudicator found that the dropped ceiling was common property, rather than part of the Lot. The Adjudicator found that the “definition of Lot boundaries in the Strata Schemes (Freehold Title) Development Act 1973 is clear” and rejected the opinion of the Lot owner’s expert, Mr Worthington.

17. The Adjudicator found: “Whilst the Owners Corporation gave consent to the lodgement of the DA they were not asked to consent to the removal of the ceiling. Such consent should be sought and should not be unreasonably be withheld by the Owners Corporation. This may require the second respondent (Pocket Pizza Pty Ltd) to provide evidence to the Owners Corporation of Council consent, and compliance with fire safety issues about which there appears to be some dispute. It will need the respondents to seek consent for both the removal of the existing ceiling and its replacement, if that is necessary. The respondent should consider whether a special use by-law is necessary and if so seek consent from the Owners Corporation for that by-law”.

18. In respect of the façade, the Adjudicator found that consent was sought from the strata manager, and apparently given by the Owners Corporation, but may not have been put to a General Meeting.

19. The Adjudicator made the following orders:

The respondents must, on or before 30 November 2016, seek from the Owners Corporation consent to the removal and replacement of the common property ceiling in Lot 13. Full details sufficient to enable a proper consideration of the matter (including evidence of Council consent and compliance with any conditions imposed by the Council, including any conditions in respect of fire safety) must be provided.

The Owners Corporation must, on or before 15 February 2017, convene a special meeting of the Owners Corporation to enable consideration of the ceiling application referred to in Order 1 and to consider the respondents application for retrospective approval of alterations made to the façade.

Grounds of Appeal

20. The Lot owner identified the grounds of appeal as follows:

• The ceiling of Lot 13 without the dropped ceiling is the ceiling that “joints a vertical boundary of that cubic space-the upper surface of that floor and the under surface of that ceiling” in order to determine the true horizontal boundary of cubic space. The Adjudicator did not consider the report of Mr Phil Mudge (registered surveyor) dated 2 March 2004; and was incorrect in rejecting the opinion of Mr John Worthington.

• The interpretation of Section 5(2) (a) (ii) of the Strata Schemes (Freehold Title) Development Act 1973 did not take into account that the false ceiling removed by Pocket Pizza Pty Ltd, by its timber framing is not capable of supporting any load, but “only enabled visual support for mechanical ventilation”.

• The Adjudicator did not consider the evidence that the false ceiling was erected independently of the original development consent requirements, as the arched lintels over the door and window were above the line of the false ceiling before it was removed.

Documentary Evidence of the Parties

21. Neither party called any witnesses to give oral evidence at the hearing. The evidence of each party was exclusively documentary evidence. Further, each party filed and served various written submissions.

Documents of the Lot Owner

22. The documents relied upon by the Lot Owner were relevantly as follows:

1. Documents that had been filed in respect of the Adjudication proceedings. Relevantly, such documents included:

2. A copy of the registered Strata Plan;

3. The registered lease with Pocket Pizza Pty Ltd; a report of Phil Mudge (registered surveyor) dated 2 March 2004;

4. A Certificate of Compliance issued by Better Fire Protection Pty Ltd dated 17 July 2015;

5. The Development Consent of Manly Council dated 11 November 2015;

6. A report by Zoltan Kovacs Architect dated June 2015;

7. A report by John Worthington (building consultant) dated 11 February 2005; and extensive correspondence between the Lot owner; the Owners Corporation; and the strata manager.

8. Written submissions.

23. The documents relied upon by the Lot Owner that were not before the Adjudication were as follows:

• A report of John Worthington (building consultant) dated 23 January 2017. That report contained a number of attachments, including a report of James Thorpe (Registered Surveyor of Dunlop Thorne and Co) dated 29 July 2005.

• A report of GN Consulting Pty Ltd dated 8 September 2016 regarding the requirements of the Building Code of Australia to any re-installed dropped ceiling.

• Written submissions dated 20 March 2017, and a supplementary written submission in reply dated 10 April 2017.

Documents of the Owners Corporation

24. The documents relied upon by the Owners Corporation were relevantly as follows:

25. Documents that had been filed in respect of the Adjudication proceedings. Those documents relevantly included:

1. A written submission dated 21 September 2016;

2. A copy of the Strata Plan for the scheme registered on 11 December 1984; a letter from the strata manager to the Owners Corporation dated 11 December 2003 regarding a request by the owner of Lot 13 to remove the false ceiling and adding a mezzanine floor;

3. An advice from David Le Page Solicitor to the Owners Corporation dated 28 April 2004; a signed statement of Mr Leslie Wright dated 21 September 2016;

4. A letter from Dunlop Thorpe & Co (Mr James Thorpe), registered surveyor dated 29 July 2005;

5. Minutes of a meeting of the Strata Committee dated 22 September 2015 in which it was resolved that the Executive Committee write to Manly Council to advise that the “common property ceiling” in Lot 13 had been removed, causing “common property space above the ceiling” to be used without permission and “likely to have degraded” the fire rating between Lots and “the Executive Committee on behalf of the Owners Corporation therefore withdraw their support of the development application; a copy of the development application filed by the Lot owner with Manly Council;

6. A letter from the strata manager to Manly Council dated 20 October 2015;

7. A letter from the strata manager to the Lot owner dated 22 October 2015; minutes of an Executive Committee meeting of the Owners Corporation dated 2 November 2015;

8. A letter of the Solicitors for the Owners Corporation to the Solicitors for the Lot owner dated 9 December 2015;

9. The Deferred Commencement Development Approval of Manly Council dated 11 November 2015;

10. An email from Mr Eisenhut of Pocket Pizza Pty Ltd to the strata manager dated 11 August 2016 seeking “approval to install a fire rated ceiling at the desired height…to comply with our deferred development consent”;

11. A letter from the Solicitors of the Owners Corporation to Pocket Pizza Pty Ltd dated 14 September 2016 stating that the Executive Committee of would recommend approval for the installation of a fire rated ceiling subject to documents being provided, but an exclusive use By-law would have to be prepared and passed by special resolution at a General Meeting of the Owners Corporation; written submissions in reply dated 4 October 2016.

26. The documents relied upon by the Owners Corporation that were not before the Adjudicator were as follows:

• A written submission dated 13 March 2017 that attached the documents the Owners Corporation relied upon before the Adjudicator. At the conclusion of the hearing, a further written submission was filed in accordance with Tribunal directions regarding the orders that the Owners Corporation sought in respect of disposition of the appeal.

• A copy of relevant provisions of the Strata Schemes (Freehold Development) Act 1973 and the decision of the NSW Court of Appeal in Owners SP 35042 v Seiwa Australia Pty Ltd [2007] NSWCA 272, which were provided at the hearing.

Relevant Statutory Provisions-Definition of “Lot”

27. As proceedings were commenced prior to the commencement of the Strata Schemes Development Act 2015 (‘the SSDA 2015’), by reason of Clause 9 Schedule 8 of the SSDA 2015, the provisions of the Strata Schemes (Freehold Title) Development Act 1973 (‘the SSFDA 1973) apply to this matter in respect of the statutory definition of “Lot” and “common property”.

28. The relevant definitions are set out in Section 5 of the SSFDA 1973 as follows:

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

floor area, in relation to a cubic space, means the area occupied on a horizontal plane by the base of that cubic space.

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

(a)  defines by lines (in paragraph (c) of this definition referred to as base lines) the base of each vertical boundary of every cubic space forming the whole of a proposed lot, or the whole of any part of a proposed lot, to which the plan relates,

(b)  shows:

(i)  the floor area of any such cubic space, and

(ii)  where any such cubic space forms part only of a proposed lot, the aggregate of the floor areas of every cubic space that forms part of the proposed lot, and

(c)  where proposed lots or parts thereof to which the plan relates are superimposed on other proposed lots or parts thereof to which the plan relates:

(i)  shows the base lines in respect of the proposed lots or parts thereof that are so superimposed separately from those in respect of the other proposed lots or parts thereof upon which they are superimposed, and

(ii)  specifies, by reference to floors or levels, the order in which that superimposition occurs

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

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

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

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

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

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

(7)  A reference in this Act to a subdivision of a lot or common property is a reference to the alteration of the boundaries of:

(a)  one or more lots so as to create only two or more different lots,

(b)  one or more lots so as to create one or more different lots and common property,

(c)  one or more lots and common property that are not part of a community scheme so as to create one or more different lots or one or more different lots and common property, or

(d)  common property that is not part of a community scheme so as to create one or more lots,

but does not include a reference to the consolidation of two or more lots into one lot or the conversion of one or more lots into common property.”

29. Section 8 of the SSFDA 1973 refers to the registration of strata plans. It relevantly states:

8   Registration of strata plans

(1)  A plan intended to be registered as a strata plan must include, as sheets of the plan:

(a)  a location plan, and

(b)  a floor plan, and

(c)  a schedule of unit entitlement.

…”

Relevant Authorities Dealing With the Definition of “Lot”

30. In Owners Corporation SP 35042 v Seiwa Australia Pty Ltd (‘Seiwa’) [2007] NSWCA 272, the Court of Appeal considered the issue of the definition of what is the “Lot” of a strata scheme in the context of a dispute between the Lot owner and the Owners Corporation over who was responsible for repairs to tiles and waterproof membrane on an uncovered balcony of the Lot. Water ingress had occurred due to failure of the tiles and waterproof membrane, rendering the Lot uninhabitable for a period of time, and causing the Lot owner to relocate until repairs were performed.

31. The primary judge accepted the argument of the Lot owner that, as the lower horizontal boundary of the Lot had not been expressly defined in the floor plan of the strata scheme, the definition of the Lot was as set out in Section 5(2) (a) (ii) of the SSFDA 1973. As tiles had been laid on the balcony floor prior to the registration of the floor plan, the tiles and waterproof membrane formed part of the concrete slab, and the lower horizontal boundary commenced at the upper surface of the concrete slab. Accordingly, the tiles and waterproof membrane were not part of the Lot, and were part of the common property, for which the Owners Corporation was liable to keep in a reasonable state of repair. The primary judge awarded the Lot owner damages for the cost of having to relocate due to the Owners Corporations breach of its statutory duty to keep common property in a reasonable state of repair.

32. The primary judge rejected the argument of the Owners Corporation that, due to a notation on the floor plan which defined the upper horizontal boundary of the Lot as “2.5 above the upper surface of the concrete floor” an inference should be drawn that the floor plan also described the lower horizontal boundary, and that Section 5(2) (b) of the SSFDA 1973 applied.

33. The Court of Appeal (Tobias JA, with whom Giles JA and Basten JA agreed) rejected the appeal of the Owners Corporation that the primary judge erred in finding that Section 5(2)(b) of the SSFDA 1973 did not apply, as the notation on the floor plan “should be construed as describing only the upper horizontal boundary of the relevant cubic space (being the terrace) and not its lower horizontal boundary, which in my view was intended to be defined in accordance with the formula set out in s 5(2)(a)(ii)” (Seiwa at para [32]). In respect of the operation of Section 5(2) (a) (ii) of the SSFDA 1973, the Court of Appeal held:

“38 For completeness, I should make it clear that where s 5(2) (a) (ii) applies to define the lower horizontal boundary of a cubic space as the upper surface of the floor of that space, that surface fixes the boundary as at the date of registration of the strata plan. If at that date the floor comprises only the bare concrete floor slab, then its upper surface will constitute the lower horizontal boundary.

39 However, if at the date of registration a tile or timber floor has been laid over and affixed to the concrete slab, then the boundary will be the upper surface of the tiles or timber flooring. If that upper layer of flooring is later removed and replaced by tiles or timber flooring the upper surface of which is higher than the surface as at the date of registration of the strata plan, it is the level of the original surface which remains the lower horizontal boundary, not the level of the new surface. The boundary remains fixed: it is not ambulatory. The same principle applies to the determination of the upper horizontal boundary being the ceiling to the relevant cubic space as well as to a vertical boundary of that space being a wall.

40 I am not unmindful of the practical effect of what I have written above. Careful consideration will need to be given by, for instance, a developer who is constructing a building which is proposed to be the subject of a strata scheme to what is intended to constitute the vertical and horizontal boundaries of the cubic space or spaces comprising a lot. Are they to be the surfaces of the concrete floor and ceiling slabs or brick walls or the surface of any tiles, timber or other material affixed to those slabs or walls?

41 The present case points up the importance of determining these matters prior to the registration of the strata plan. If they are not given attention, then the relevant boundaries will be determined under s 5(2) (a) by reference to the state of the floor, ceilings and walls at the date of registration, in all probability thus giving rise to unintended consequences in terms of the division of responsibility for repairs and maintenance between the owners corporation and the proprietors of the individual lots. It would seem ridiculous, for instance, if the Owners Corporation was required to take such responsibility for the state of the internal paintwork of a lot. Disputes over such matters can be simply avoided by utilising s 5(2) (b) to fully and clearly describe the relevant boundaries of the cubic space or spaces forming each lot of the strata plan.

42 I also appreciate that what I have said above will not necessarily assist the avoidance of disputes as exemplified by the present case with respect to many existing strata plans where advantage has not been taken of s 5(2)(b). In many cases it will be the luck of the draw dependent on the condition of the relevant floors, ceilings and walls at the date of registration of the particular strata plan. This is unfortunate and unavoidable as to the past but avoidable for the future.”

Does Section 5(2) (a) (ii) or Section 5(2) (b) of the SSFDA 1973 Apply in this Matter?

34. In respect of determination of the issues in dispute in this matter, the salient principle set out in Seiwa is the importance of identifying the physical structure of the Lot at the date of registration of the floor plan. Such an approach was taken also by the State Administrative Tribunal of Western Australia (WACAT) in Topic and The Owners Corporation of Raffels Waterfront Strata Plan 48545 [2016] WASAT 27, in the context of the identification of the delineation between common property and Lot property involving almost identical legislative definitions under the Strata Titles Act 1985 (WA).

35. The floor plan of the strata scheme, at the date of registration of the plan (19 December 1986) simply describes the dimensions of Lot 13 as “39 sq. meters”. There is no definition in the plan of the dimensions of the walls; floor; or ceiling. The boundaries of the Lot are not described. Accordingly, Section 5(2) (a) (ii) of the SSFDA 1973 applies.

What is the Effect of the Operation of Section 5(2) (a) (ii) of the SSFDA 1973 to the Facts of this Matter?

36. The Lot owner relies upon the report of Mr Worthington, building consultant, dated 23 January 2017, which refers to and updates Mr Worthington’s earlier report in the proceedings before the Strata Adjudicator. Mr Worthington originally inspected the property on 13 January 2005. Mr Worthington’s report complies with NCAT Expert Code of Conduct.

37. Mr Worthington states that the “dropped ceiling” or “false ceiling” was a plasterboard ceiling that was likely installed sometime after 1947 and is a “later addition” to the building. Mr Worthington does not state when he believes the ceiling was installed. Mr Worthington states that he does not believe the dropped ceiling was structurally strong enough to be load bearing, but clearly was attached to the walls of the Lot.

38. Mr Worthington states that, based upon evidence including photographs of the ceiling taken at his inspection in 2005, the ceiling was “never fire rated” and was likely to have been non-compliant with the Building Code of Australia. According to Mr Worthington, he could see “no reason” why, if the space between the top of the dropped ceiling and the roof of the premises was to be common property at the date of registration of the floor plan, it was not set out in the floor plan. Mr Worthington states the cubic space between the dropped ceiling and the roof was of no use to the Owners Corporation, and should not be regarded as common property.

39. Mr Worthington states that, if the Lot owner were ordered to restore the ceiling, it would be impracticable to do so because the ceiling was not fire rated. Mr Worthington concludes:

“Dropped ceilings are a staple of modern construction and architecture used in both residential and commercial applications often for aesthetic reasons to hide pipes, wiring and ductwork.

I am firmly of the view that the current actual structural physical ceiling of Lot 13 in Strata Plan 22214 as delineated in the registered plan is the horizontal boundary where the structural ceiling joins the vertical boundary. The dropped secondary ceiling which once hung below the main structural ceiling provided no fire rating protection, nor did it have the structural ability to form a space that could be considered as a practical common area for the benefit of each lot holder (sic) of the Owners Corporation for all the reasons set out in this report”.

40. The Owners Corporation relied on the statement of Mr Leslie Wright dated 21 September 2016. Mr Wright’s statement is not in the form of an affidavit or statutory declaration, and he was not called to give evidence. The written statement sets out that he is a director of Commenarra Investments Pty Ltd, which was the owner of the property as of the date of registration of the floor plan.

41. Mr Wright states that in about 1979 he engaged surveyors to draw the strata plan in respect of a proposed sub-division of the property. According to the statement, in 1984 Manly Council issued a direction to install a fire rated ceiling. The “dropped ceiling” was installed, and approved by a building inspector from Manly Council. Mr Wright states that he no longer has any documents regarding the development approval or installation of the dropped ceiling.

42. The Lot owner submits that Mr Wright’s statement should be no evidentiary weight because it is not an affidavit or statutory declaration, and Mr Wright did not give evidence before the Tribunal.

43. Much of the other documentary evidence relied upon by the Lot owner does not shed light on whether the dropped ceiling was in place at the date of registration of the floor plan on 19 December 1986.

44. The report of Mr Phil Mudge, registered surveyor, dated 2 March 2004 is a brief report, which does not adopt the NCAT Expert Witness Code of Conduct. Mr Mudge did not attend the Tribunal to give evidence. Mr Mudge states that the property was inspected on 1 March 2004, and concludes as follows:

“Unless specified by statement relating to height restrictions on the Strata Plan 22214, of which there is none present, then the limits of strata ownership are commonly taken to be from the upper surface of the floor to the underside of the floor above. With this information in mind, and after examining the suspended false ceiling in presently in Lot 13, we are of the opinion that the void area above the false ceiling and below the concrete floor slab is in fact part of the strata ownership of Lot 13”.

45. The heritage impact assessment report of Mr Kovacs, architect, dated June 2015 (which appears to have been prepared as part of the development application process to Manly Council) discusses the history of the building and its heritage impact, but does not contain information that assists in determining whether or not the dropped ceiling was in place at the date of registration of the floor plan.

46. However, the Lot owner’s documents contain a report and drawings from Mr James Thorpe, architect, of Dunlop Thorpe & Co dated 29 July 2005. The Owners Corporation also relies upon the report of Mr Thorpe. The report is addressed to “M Cameron AA Cameron Strata Real Estate”, but it is unclear the precise context in which the report came into existence. Mr Thorpe states that there was an “investigation of the location of the limits of the strata boundaries in Lot 13”, and relevantly states:

“The strata plan was prepared in 1979. The upper limit of Lot 13 will be the underside of the ceiling that was in place at this time. It would appear from the construction, the painted ducting that is in place within the common property and the comparison of the other walls within the common property that have been constructed since the preparation of the strata plan that the current ceiling of Lot 13 is in the same place as when the strata plan was prepared”.

47. The other documents relied upon by both parties primarily involve the circumstances in which the parties have been in dispute since the dropped ceiling was removed in mid-2015, and the deferred development consent, issued subject to the compliance with conditions, issued by Manly Council in 2015.

48. I am satisfied that, as of 19 December 1986 when the floor plan was registered, the dropped ceiling was in place. The statement of Mr Wright and the report of Mr Thorpe support this conclusion. The Tribunal accepts that reduced weight should be given to the statement of Mr Wright, on the basis that it is not in a sworn form, and Mr Wright did not attend the Tribunal to give evidence. However, the statement of Mr Wright and the report of Mr Thorpe corroborate each other to the extent that they support a finding that the dropped ceiling was in place as of the date of registration of the floor plan.

49. Further, there is no clear evidence that the dropped ceiling was installed after registration of the floor plan on 19 December 1986. Neither party provided documents from Manly Council regarding the approval of the development consent of the building in the mid 1980’s prior to the registration of the floor plan. Either party could have attempted to obtain such documents by the issue of a Summons for Production. The documents may no longer exist, but neither party has issued a Summons for Production. The reports of Mr Worthington do not contain evidence, nor does Mr Worthington clearly state, the dropped ceiling was installed after registration of the floor plan on 19 December 1986. The report of Mr Mudge also does not clearly state that the dropped ceiling was installed after registration of the floor plan on 19 December 1986.

50. The issues raised by Mr Worthington regarding the materials used in the construction of the dropped ceiling and whether or not the ceiling would be considered fire rated under the Building Code of Australia are applicable whether the dropped ceiling was constructed before, or after, registration of the floor plan, and do not directly contradict the information contained in the statement of Mr Wright and the report of Mr Thorpe.

51. Mr Worthington’s reports do not contain any measurements of the Lot, to determine whether the Lot is “39 square metres” with the dropped ceiling having been removed. The opinion of Mr Worthington and Mr Mudge that the empty floor space between the dropped ceiling and the structural ceiling being not of any use to the Owners Corporation is not relevant to the key issue for determination, which is whether the dropped ceiling was in place as of registration of the floor plan on 19 December 1986. The definition of “common property” in Section 5 of the SSDFA 1973 is a “parcel…not comprised in any lot”, not whether the space has any utility.

52. Being satisfied that the dropped ceiling of the Lot was in place as of 19 December 1986, the upper horizontal boundary of the Lot was the under surface of the dropped ceiling (Section 5 (2)(a)(ii) of the SSFDA 1973). The dropped ceiling above the under surface, and the space above it, were part of the common property, as they were not part of Lot 13.

53. The grounds of appeal (and submissions) of the Lot owner that the Adjudicator failed to consider that the dropped ceiling was not capable of bearing loads; and was erected independently of development consent requirements (based on the opinion of Mr Worthington that the dropped ceiling was not a fire rated ceiling) are misconceived. The fundamental issue for determination is whether or not the dropped ceiling was part of the Lot, or part of the common property.

54. For the reasons set out previously, I am satisfied that the dropped ceiling was in place as of the date of registration of the floor plan, and was (in respect of its structure above the under surface of the dropped ceiling, and where it attached to the walls) part of common property. Concomitantly, the space above the dropped ceiling was part of common property because it did not form part of the Lot, irrespective of whether or not it was of any use.

Consequences of the Removal of the Dropped Ceiling

55. The dropped ceiling was removed in mid-2015, and there is no evidence that the removal of common property was approved by the Owners Corporation by way of special resolution. Under Section 65A of the Strata Schemes Management Act 1996 (‘the SSMA 1996’, which applies to these proceedings as they were commenced prior to 30 November 2016, by reason of the operation of Clause 7 Schedule 3 of the Strata Schemes Management Act 2015), alteration of common property by a Lot owner cannot occur without a special resolution passed at a general meeting of the Owners Corporation having been passed, and a special by-law regarding the maintenance of the common property may also have to be passed. Further, if a Lot owner seeks to use common property for a particular purpose or in a particular manner, the Owners Corporation may grant a licence if approved by a special resolution passed at a general meeting of the Owners Corporation (Section 65B of the SSMA 1996).

56. As the Adjudicator correctly stated, the consent of the Owners Corporation to the lodging of a development application does not constitute the approval of the Owners Corporation to the alteration or use of common property by the Lot owner, which must be dealt with by way of special resolution.

57. Both parties have referred in their submissions to the deferred development approval by Manly Council, and whether or not the conditions imposed by Manly Council were appropriate. However, the jurisdiction of the Tribunal in this matter is under the relevant applicable strata schemes legislation, not the Environmental Planning and Assessment Act 1979.

Disposition of the Appeal

58. I am satisfied that the correct approach to the determination of this dispute is the same as the Adjudicator (other than in respect of the façade of the building, which the parties informed the Tribunal was not an issue in the appeal). Rather than making an order that the dropped ceiling, or an equivalent properly fire rated dropped ceiling, be re-instated at this stage it is appropriate to allow the Lot owner the opportunity to retrospectively seek consent to the removal of the dropped ceiling, and for the Owners Corporation to convene a special general meeting of the Owners Corporation to consider issues including: (i) consent; (ii) any special by-law; and (iii) any licence. Accordingly, the appeal is dismissed but the order of the Adjudicator varied to allow a further reasonable period time for the Lot owner to retrospectively seek consent and for a special general meeting of the Owners Corporation to be convened.

Postscript-Declarations Sought by the Owners Corporation

59. In oral submissions at the hearing, the representative of the Owners Corporation sought that the Tribunal make a declaration. The Tribunal made a timetable for the filing and serving of written submissions in that regard.

60. The Owners Corporation seeks a declaration regarding the position of the upper horizontal boundary of Lot 13. Irrespective of whether or not the Tribunal has the power under the SSMA 1996 to make a declaration in an appeal from an Adjudicator, I decline to make the declaration sought. A declaration must be directed towards the determination of the legal issues in dispute, and not be made if there is no utility in doing so (Ainsworth v Criminal Justice Commission [1982] HCA 10; (1992) 175 CLR 564). In the determination of the appeal, findings have been made regarding what constitutes Lot 13, and it is unnecessary to make the declaration sought.

G.J. Sarginson

Senior Member

Civil and Administrative Tribunal of New South Wales

19 September 2017

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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

22 November 2017 - uploaded in place of another decision which was published in error

Decision last updated: 22 November 2017