Owners – Strata Plan No 58068 v/ats Cooper

[2019] NSWCATCD 62

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Owners – Strata Plan No 58068 v/ats Cooper [2019] NSWCATCD 62

Hearing dates:

26 September 2019; further written submissions to 11 October 2019

Date of orders:

21 November 2019

Decision date:

21 November 2019

Jurisdiction:

Consumer and Commercial Division

Before:

G K Burton SC, Senior Member

Decision:

In SC 19/27422:
1. Order under s 150 of the Strata Schemes Management Act 2015 (NSW) that by-law 14 is declared to be and since its date of registration has been harsh, unconscionable and oppressive.

 

2. Order the Owners Corporation SP 48887 promptly to do all acts necessary to record the removal of by-law 14 pursuant to s 246 of the Strata Schemes Management Act 2015 (NSW), such removal to be recorded as having operated on and from date of registration of the by-law being 21 January 2019.

 

In SC 19/18982:
3. Dismiss the application.

 

In both SC 19/18982 and SC 19/27422:

 

4. Note the agreement of the parties that questions of costs can be decided on written submissions without the need for further hearing on costs.

 

5. Order as follows:

 

5.1 Any party’s written submissions and any further evidence in chief on costs is to be lodged with the Tribunal and served on each other party on or before 6 December 2019.

 

5.2 Any party’s written submissions and any further evidence in reply on costs is to be lodged with the Tribunal and served on each other party on or before 20 December 2019.

 5.3 If there are no submissions and material lodged and served pursuant to 5.1 and 5.2, then the order will be that: (1) the Owners Corporation is to pay J A and L B Cooper's costs of both proceedings on the ordinary basis as agreed or assessed; and (2) the Owners Corporation is not to recoup its costs under the preceding costs order or its own costs of both proceedings from levy or fund that includes money contributed by J A and L B Cooper.

Catchwords:

Strata management – by-law excluding pets - refusal to amend or replace with new by-law - SSMA ss 134, 135, 136, 138, 139, 146, 147, 148, 149, 150, 153, 156, 157, 158, 159, 232; 1996 Regulation cll 35, 37, Sch 2, Sch 3.

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)
Civil and Administrative Tribunal Rules 2014 (NSW)
Interpretation Act 1987 (NSW)
Strata Schemes (Freehold Development) Act 1973 (NSW)
Strata Schemes Management Act 1996 (NSW)
Strata Schemes Management Regulation 1997 (NSW)
Strata Schemes Management Regulation 2005 (NSW)
Strata Schemes Management Regulation 2010 (NSW)
Strata Schemes Management Act 2015 (NSW)
Strata Schemes Management Regulation 2016 (NSW)

Cases Cited:

Ainsworth v Albrecht [2016] HCA 40; (2016) 261 CLR 167
Bonita v Shen [2016] NSWCATAP 159
Capcelea v Owners SP 48887 [2019] NSWCATCD 27
Carroll v Alldritt [2013] NSWCTTT 525
Castle Constructions PL v Sahab PL and the Registrar-General (2013) 247 CLR 149, [2013] HCA 11
Donnellan v Woodland [2012] NSWCA 433 at [190]-[192]
Gazebo Penthouse PL v Owners SP 73943 [2015] NSWCATCD 93
George v Rockett (1990) 170 CLR 104
Gett v Tabet [2009] NSWCA 76
Gurram v Owners SP 36589 [2018] NSWCATCD 39
John Maait Properties PL v Owners SP 50936 [2019] NSWCATAP 26
Johnson t/as One Tree Constructions v Lukeman [2017] NSWCATAP 45
Latoudis v Casey (1990) 170 CLR 534
McCann v Owners SP 11318 [1998] NSWSSB 44
McCormick & McGinness v Owners SP 2371 [2018] NSWCATCD 9 Oct 2018 SC 18/29877
Milijash v Owners SP 3618 [2002] NSWCTTT 297
Milman v Owners SP 1389 [2005] NSWCTTT 196
Miwa PL v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344
OC SP 7596 v Risidore [2003] NSWSC 966
Oppidan Homes PL v Yang [2017] NSWCATAP 67
Oshlack v Richmond River Council (1998) 193 CLR 72
Owners SP 20695 v Dunsford [2019] NSWCATCD 8 May 2019 SC 18/43341 and SC 18/50702
Owners SP 63341 v Malachite Holdings PL [2018] NSWCATAP 256
Owners SP 67631 v Waters and Gardner [2010] NSWCTTT 343
Owners SP 68976 v Nicholls [2018] NSWSC 270
Owners SP 69140 v Drewe [2017] NSWSC 845
Owners SP 69481 v Want [2013] NSWCTTT 440
Owners SP 87812 v Thomson [2019] NSWCATCD 38
Pacciocco v ANZ Banking Group Ltd [2015] FCAFC 50, (2015) 236 FCR 199, [2016] HCA 28, (2016) 258 CLR 525
Rielly v Owners SP 18687 [2007] NSWCTTT 58
Roden v Owners SP 55773 [2019] NSWCATCD 18 September 2019 (SC 18/37522)
Stolfa v Hempton [2010] NSWCA 218
The Proprietors SP 1627 v Schultz (1978) Strata Title Law and Practice [30-024]
Thompson v Chapman [2016] NSWCATAP 6
White v Betalli (2007) 71 NSWLR 381, [2007] NSWCA 243
Williams v Knowles and Owners SP 10147 [2018] NSWCATCD 13 June 2018 (SC17/50119, SC17/51940)
Yardy v Owners SP 5723 [2018] NSWCATCD 19

Texts Cited:

Macquarie Dictionary

Category:

Principal judgment

Parties:

The Owners – Strata Plan No 58068 (Applicant in SC19/18982, Respondent in SC 19/27422)
Johanna Anwar Cooper and Leo Bernard Cooper (Respondents in SC 19/18982, Applicants in SC 19/27422)

Representation:

Counsel: G Sirtes SC with L Johnson (OC)
V Kerr SC (Coopers)

Solicitors: D Edwards, DEA Lawyers (OC)
D Napoli, Bannermans, Lawyers (Coopers)

File Number(s):

SC 19/18982, SC19/27422

Publication restriction:

Nil

REASONS FOR DECISION

Background, facts, procedural history

1. These proceedings concern a 43-storey strata scheme of 328 residential lots in Darlinghurst, New South Wales registered 15 October 1998. One party to the two sets of proceedings is the owners corporation (OC). The other parties are the owners of a lot which is an apartment on other than the ground floor. They have owned and lived there since July 2015.

2. The proceedings centre on “Angus”, a 13-year old miniature schnauzer of approximately 9.5kgs that the owners acquired as a pet 9 years before they bought into the scheme.

3. Angus, I am told uncontradicted, is highly trained, de-sexed, vaccinated, parasite-free, hypoallergenic, non-shedding, extremely friendly, family-oriented and good with children, does not bark and is always leashed when he leaves the apartment for walks two to three times per day. There was uncontradicted expert evidence that miniature schnauzers are adaptable to all environments and bred for and ideal for apartment living. Angus himself has apparently lived in strata schemes all his life without complaint about his behaviour.

4. The female owner in her affidavit said that the owners were not aware of the "no pets" by-law for the scheme until after exchange of contracts to purchase their lot. After reviewing documents produced on summons (issued on the OC’s application), the female owner corrected her evidence and agreed that she knew before purchase of the existence of the by-law from a conversation with her solicitor that the scheme was not “pet-friendly”, but said she was not told which of option A, B or C in the then 1996 Act model by-laws (discussed below) was the form of the by-law (or what was in any customised by-law) although the solicitor said he would be able to tell her after looking at the material. She did not say that she asked the solicitor by way of follow-up. The by-laws were attached to the purchase contract signed by the owners.

5. The female owner gave evidence of discussions at Christmas drinks on 3 December 2015 with other residents who told her that pets were tolerated if they were snuck in and out of the building and were not troublesome. The formal position of the OC, expressed in the consistently-maintained by-law, was clear. I have not given weight to that hearsay evidence about what others said on the live issues in these proceedings. There was also some direct evidence of observation of pets being kept in the building in other witness statements, and of a casual comment at the 2018 AGM about pets being tolerated if hidden.

6. The female owner moved Angus into the owners' lot in January 2016, having originally left Angus with her sister. It is clear that Angus is a much-loved pet, now aging, and that extended separation from his owners would cause them great distress and, I infer, distress also to Angus.

7. The female owner said, again uncontradicted, that Angus was carried concealed in a bag when entering or leaving the building until August 2018 when slipped discs in his back made that no longer possible and he was then walked in and out on a lead. On 18 October 2018 the female owner notified the OC that Angus was living in the lot and invited the OC to discuss any reasonable concerns about that or taking Angus through common property.

8. On one occasion in October 2018, captured on the lobby security video and replayed in full (as to the event and its aftermath) for about 17 minutes during the hearing, Angus urinated on the tiled lift lobby floor. The female owner said this had never occurred before and there is no evidence of any other occasion. The female owner took Angus upstairs, a very short time later returned without Angus and wiped up the urine. A fairly short time after that the caretaker staff emerged with a warning sign then, again after a fairly short time, re-emerged with cleaning equipment and washed and wiped the floor.

9. The evidence of the OC was that the female owner had wiped up the puddle but not a trail of drips to the lift; the female owner disputed this and said she was not told anything to the contrary by the concierge. In the short intervals between each event just described, several people had entered or exited the lift lobby, avoiding the urine pool but possibly not the drips, although none seemed to react as if they had trodden in anything untoward. It was otherwise not possible to tell if any of the drips had been walked in by those entering or exiting the lobby before the final cleaning. The female owner said the concierge had volunteered to clean up her accidentally-spilled coffee in the foyer on another occasion.

10. The female owner on behalf of the owners unsuccessfully sought repeal of the existing "no pets" by-law and its replacement. This occurred at EGMs on 15 September 2015 and 20 February 2018, and at the AGM on 4 December 2018. The events at the AGM, and the form of the replacement by-law then proposed, are described further below.

11. On 18 April 2019 the OC lodged proceedings against the owners being SC19/18982. Under s 156 of the Strata Schemes Management Act 2015 (NSW) (SSMA) the OC sought Angus’ permanent removal from the environs of the scheme. Under SSMA s 147 the OC sought a monetary penalty for alleged persistent non-compliance with by-law 14 following notices to comply said to be issued under SSMA s 146 by the OC to the owners on 21 November 2018 and 1 February 2019. The OC also sought its costs. By leave sought by letter, with the proposed amendment, dated 3 July 2019 and granted at hearing, the application was amended to change the dates on which notices were given to 22 November 2018 and 6 February 2019 and a third notice given 18 March 2019 was added.

12. The particular contravention given in the notice dated 22 November 2018 was that “On Tuesday 13 November 2018 you carried a dog across the common property entrance lobby of the [apartment building] and entered a common property lift with the dog”.

13. The particular contravention given in the notice dated 6 February 2019 was that “On 26 November 2018, 27 November 2018, 29 November 2018, 1 December 2018, 2 December 2018 and 3 December 2018 you permitted a dog (which you have advised is named Angus and is owned by you) to walk with you across the common property main entry lobby of the [apartment building]”.

14. The particular contravention given in the notice given 18 March 2019 was that "On Tuesday 5 February 2019 and Wednesday 6 February 2019 you permitted a dog to walk with you across the common property entrance lobby of the [apartment building]".

15. The sanction sought in each notice was permanent removal of Angus from the scheme environs.

16. Under leave granted at the first directions hearing on 5 June 2019, the owners lodged on 13 June 2019 proceedings against the OC being SC 19/27422. In those proceedings the owners initially sought in substantive relief:

1. an order under SSMA ss 150 and/or 232 that by-law 14 was invalid;

2. in the alternative, an order under s 232 to make a by-law on terms rejected at the AGM on 4 December 2018 (which is set out below);

3. subject to the making of either or both of the preceding orders, an order to keep Angus in their lot pursuant to SSMA s 157.

17. Without objection from the OC, at hearing the owners’ application was amended as follows in terms of substantive relief:

1. an order under SSMA s 150 declaring by-law 14 as registered on 21 January 2019 to be invalid on and from 21 January 2019;

2. an order under SSMA s 150 declaring by-law 14 as registered on 15 October 1998 to be invalid on and from 30 November 2016;

3. an order pursuant to SSMA s 232 that the owners might keep Angus in their lot.

18. The supporting grounds for the relief remained unchanged. The owners recited by-law 14, SSMA s 139, the owners’ requisition in November 2018 for two motions to be considered at the AGM on 4 December 2018 seeking repeal of by-law 14 and its replacement by a by-law that allowed the keeping of pets with the OC’s consent and the defeat of those motions at the AGM.

19. The effect of the owners' altered claim for relief, if successful, is to leave the scheme without a by-law on pets. However, this could have been the case if the original claim had succeeded in having the current by-law invalidated but the owners did not succeed on overturning the decision to refuse to make a replacement by-law under SSMA s 232.

20. The above facts are but the trigger for and the context of what both parties seemed to see as a “test case”. This was reinforced by the presence of full legal representation including senior counsel on both sides, with a high quality and comprehensiveness of presentation at hearing and in subsequent written submissions for which I am grateful. Leave was granted for legal representation at the first directions hearing on 5 June 2019.

21. The evidence, and the OC’s contention based on it, was (in summary) that the scheme had always been “no pets” whatever and that the majority of owners obviously liked it that way as an absolute rule because a substantial majority of those who bothered to vote at meetings had stoutly resisted previous attempts to introduce any regime for dispensation, including such as that indicated in the 2016 legislative amendments discussed below and those sought to be introduced by the failed by-law at the 2018 AGM. The OC said that the majority of the owners were entitled despite the legislative amendments to keep it that way if that's the way they wanted it. The OC's further arguments and supporting grounds are further described later in these reasons.

22. The owners originally appeared to maintain that the 2016 legislative amendments meant that a regime for considering dispensation must be introduced and that an absolute bar on pets was no longer possible. As the owners' primary final written submission, it was said (in summary) that, if an absolute bar in formal terms was still possible, it was now subject to provisions that would invalidate it in this scheme in relation to types of pets such as Angus who did not affect the amenity of other owners, because it was against conscience, harsh and oppressive for some owners arbitrarily to impose their views about pets as a whole on other owners when there was no effect on enjoyment of property rights from certain types of pet, including Angus.

By-law 14 in this scheme and 2018 AGM

23. By-law 14 prior to 21 January 2019 (being the registration of the by-law passed at the December 2018 AGM) said “Subject to s 49(4) of the Act, an owner or occupier of a Lot must not keep or permit any animal to be on a Lot or on the Common Property”. The evidence was that the by-law had always been in that form. The by-law referred to the provision of the preceding Strata Schemes Management Act 1996 (NSW) (the 1996 Act) which was replaced by SSMA s 139(5) and is described below.

24. By-law 14 was not amended immediately after the SSMA came into operations, with the changes it introduced that are discussed below. At the AGM on 4 December 2018, a replacement by-law was passed as a special resolution which was registered on 21 January 2019. It simply updated the previous by-law to the current SSMA provision for the assistance dog exemption and read: “14.1 Subject to s 139(5) of the Act, an owner or occupier of a Lot must not keep or permit any animal to be on a Lot or on the Common Property.”

25. The exemption was in conformity with Commonwealth disability anti-discrimination legislation to permit the keeping of what is now called an assistance dog. It is common ground that Angus is not an assistance dog.

26. As indicated earlier, at the 2018 AGM the owners proposed a replacement by-law 14 as a special resolution which was defeated prior to the passage of the updating special resolution just described. The proposed replacement by-law 14 defeated at the 2018 AGM read as follows:

“14.1 Subject to section 139(5) of the Act, an owner or occupier of a lot must not, without prior written approval of the owners corporation, keep any animal (except a cat, a small dog or a small caged bird, or fish kept in a secure acquarium on the lot) on the lot or the common property.

The owners corporation must not unreasonably withhold its approval of the keeping of an animal on a lot or the common property.

If an owner or occupier of a lot keeps an animal on the lot, the owner or occupier must: a. notify the owners corporation that the animal is being kept on the lot, and b. keep the animal within the lot, and c. supervise the animal when it is on the common property, and d. take such action as may be necessary to clean all areas of the lot or the common property that are soiled by the animal.”

27. It will be seen, from description below, that the resolution proposed and defeated at the 2018 AGM reflected the narrower Option A in the model by-laws that pre-dated the 2016 legislative amendments.

28. A subsequent motion on the 2018 AGM agenda by the owners to repeal by-law 14 entirely was also defeated.

29. The voting (by unit entitlement) was 3,554 against, 320 for, 83 abstained on the two by-law motions. Accordingly, 89.82% of the owners by unit entitlement who voted were against any substantive change from the "no pets" policy and the by-law embodying that policy. This represented about one-third of the owners in the scheme and was a larger majority than the majorities for preserving the status quo in the meetings in 2015 and early 2018.

Legislative provisions relating to by-laws

30. SSMA s 135 states as follows:

(1)  The by-laws for a strata scheme bind the owners corporation and the owners of lots in the strata scheme and any mortgagee or covenant chargee in possession, or tenant or occupier, of a lot to the same extent as if the by-laws—

(a)  had been signed and sealed by the owners corporation and each owner and each such mortgagee, covenant chargee, tenant and occupier, and

(b)  contained mutual covenants to observe and perform all the provisions of the by-laws.

(2)  There is an implied covenant by the tenant of a lot or common property to comply with the by-laws for the strata scheme.

Note.

The effect of having been taken to have signed and sealed a by-law is that the person is always taken to have known about it.

31. SSMA s 136 provides:

(1) By-laws may be made in relation to the management, administration, control, use or enjoyment of the lots or the common property and lots of a strata scheme.

(2) A by-law has no force or effect to the extent that it is inconsistent with this or any other Act or law.

32. SSMA s 139 relevantly provides as follows:

"139(1) A by-law must not be harsh, unconscionable or oppressive.

Note. Any such by-law may be invalidated by the Tribunal (see section 150).

…

(3) If an order made by the Tribunal under this Act has effect as if its terms were a by-law, that by-law is not capable of being amended or repealed except by a by-law made in accordance with a unanimous resolution of the owners corporation …

(5) A by-law has no force or effect to the extent to which it purports to prohibit or restrict the keeping on a lot of an assistance animal (as referred to in section 9 of the Disability Discrimination Act 1992 of the Commonwealth) used by an owner or occupier of the lot as an assistance animal or the use of an assistance animal for that purpose by a person on a lot or common property.

(6) A by-law may require a person who keeps an assistance animal on a lot to produce evidence to the owners corporation that the animal is an assistance animal as referred to in section 9 of the Disability Discrimination Act 1992 of the Commonwealth".

33. SSMA s 148 relevantly provides as follows:

"148(1) The Tribunal may, on application by a person entitled to vote on the amendment or repeal of a by-law or addition of a new by-law … , make one of the following orders:

(a) an order that the amendment be revoked,

(b) an order that the repealed by-law be revived,

(c) an order that the additional by-law be repealed.

(2) The Tribunal may make an order only if the Tribunal considers that, having regard to the interest of all owners of lots in a strata scheme in the use and enjoyment of their lots or the common property, the change to the by-laws should not have been made by the owners corporation.

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

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

34. SSMA s 150 relevantly provides as follows:

"150(1) The Tribunal may, on the application of a person entitled to vote on the motion to make a by-law … , make an order declaring a by-law to be invalid if the Tribunal considers that an owners corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive.

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

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

35. Section 246 provides for registration of the order on the title documents to the scheme.

36. Section 156 provides as follows:

"156(1) The Tribunal may, on application by an interested person, order a person to cause an animal to be removed from a parcel within a specified time, and to be kept away from the parcel, if the Tribunal considers that the person is keeping an animal on the parcel in contravention of the by-laws.

(2) An order under this section ceases to have effect if the keeping of the animal is subsequently authorised in accordance with the by-laws."

37. Section 157 provides as follows:

"157(1) The Tribunal may, on application by the owner or occupier (with the consent of the owner) of a lot in a strata scheme, make an order declaring that the applicant may keep an animal on the lot or the common property.

(2) The Tribunal must not make the order unless it is satisfied that:

(a) the by-laws permit the keeping of an animal with the approval of the owners corporation and provide that the owners corporation cannot unreasonably withhold consent to the keeping of an animal; and

(b) the owners corporation has unreasonably withheld its approval to the keeping of the animal on the lot or common property."

38. Section 158 provides as follows:

"158(1) The Tribunal may, on application by an interested person, make an order against a person who is keeping an animal on a lot or common property in accordance with the by-laws for a strata scheme, if the Tribunal considers that the animal causes a nuisance or hazard to the owner or occupier of another lot or unreasonably interferes with the use or enjoyment of another lot or of the common property.

(2) The Tribunal may order that the person:

(a) cause the animal to be removed from the parcel within a specified time, and be kept away from the parcel, or

(b) within a time specified in the order, take such action as, in the opinion of the Tribunal, will terminate the nuisance or hazard or unreasonable interference."

39. SSMA ss 156-159 form part of the same Div 3 of Pt 8 of the Act. Section 159 provides that an order under Div 3 binds (despite any by-law of the strata scheme) each owner and occupier, the owners corporation, those bound by the strata management statement and (in the case of a leasehold strata scheme) the lessor of the scheme. (The scheme under consideration is not a leasehold strata scheme so the substantively parallel application of the provisions above to a leasehold strata scheme have not been extracted.).

40. It should be noted that SSMA s 158 is part of a separate division of the Act specifically dealing with pets, as opposed to s 153 which is in Pt 8 Div 1 and which more generally obliges owners, tenants, occupiers and others not to use a lot in a manner or for a purpose that causes a nuisance or hazard to the occupier of any other lot, or that interferes unreasonably with the use or enjoyment of the common property or any other lot by the occupier of any other lot. The substance of the obligation in each case appears to be equivalent. There is however no specific provision that makes Div 3 a code for pets.

41. Section 43 of the former, repealed Strata Schemes Management Act 1996 (NSW) (the 1996 Act) provided a broad and non-exclusive list of topics on which by-laws may be made including in relation to "(1) … "the keeping of pets". Section 43(4) provided that a by-law had no effect to the extent that it was inconsistent with the 1996 Act or any other Act or law. Section 44 provided for the effect of a statutory contract in relevantly similar terms to the current provision. Section 49 did not have the equivalent of s 150(1) but did (in s 49(5)) have, for guide dogs and hearing dogs, the exemption equivalent to current s 139(5) for assistance dogs.

42. The model by-laws in Sch 1 to the Strata Schemes Management Regulation 1997 (NSW) (the 1997 former Regulation) were empowered to be adopted as the by-laws for a strata scheme under cl 23 of the Regulation and s 43 of the 1996 Act. For residential schemes, model by-law 16 provided for a scheme to select Option A, Option B or Option C, with Option A applying if there was no selection. All were subject to the guide/hearing dog exemption. Option A prohibited an owner or occupier keeping any animal (except fish in a secure acquarium on a lot) without the prior written approval of the OC, which approval must not be unreasonably withheld. Option B extended the fish exemption to a cat, a small dog or a small caged bird. For the extended exemption animals, the owner or occupier must notify the OC, keep the animal within the lot, carry the animal when it was on common property, and take such action "as may be necessary" to clean all areas of the lot or common property that were soiled by the animal. Option C was a total prohibition of any animal on any lot or common property.

43. The model by-laws in Sch 1 to the replacement Strata Schemes Management Regulation 2005 (NSW) (the 2005 former Regulation) were empowered to be adopted as the by-laws for a strata scheme under cl 27 of the Regulation and s 43 of the 1996 Act. They were in the same form for residential schemes as the 1997 former Regulation.

44. The model by-laws in Sch 2 to the replacement Strata Schemes Management Regulation 2010 (NSW) (the 2010 former Regulation) were empowered to be adopted as the by-laws for a strata scheme under cl 27 of the Regulation and s 43 of the 1996 Act. They were in the same form for residential schemes as the 1997 and 2005 former Regulations.

45. The model by-laws in Sch 3 to the Strata Schemes Management Regulation 2016 (NSW) (the 2016 Regulation) were empowered to be adopted as by-laws for a strata scheme under cl 37 of the 2016 Regulation and SSMA s 138.

46. Model by-law 5 removed Option C in the former 1997, 2005 and 2010 Regulations. Option A, which was the default selection if no option was selected, was new in that it permitted the keeping of an animal (without restriction of type) with notice to the OC within 14 days after the animal began to be kept on the lot. The requirements concerning the animal were also more liberal, in that the animal did not have to be carried on common property but did have to be supervised, and otherwise were the same as the previous Option B. The new Option B was a slightly more liberal version of the earlier Option A: written reasons were required for OC refusal of permission which would aid evidence in any challenge that permission was unreasonably withheld; the same conditions as in the new Option A were expressly spelled out.

47. It can be seen that the effect of the changes in 2016 altered regulation of pets to a lesser focus on status and a greater focus on regulation of conduct (noise, amenity, lot appearance, waste disposal, behaviour on, obstruction of or damage to common property, and so on) under the specific statutory provision (s 158) dealing with pets and, if adopted or defaulted to, under the generalised model by-laws dealing with conduct. As said earlier, there is no express exclusion in s 158 of the generalised model by-laws dealing with conduct or other indication that s 158 is an exclusive code for pets.

48. The second reading speech for the Bill for the SSMA stated in part:

"New model by-laws will be introduced when the Regulations are made to deal with a number of issues that are important to strata residents. These include amending the by-laws relating to pets to make it easier for schemes to become more pet friendly. While a scheme can make its own by-laws, it cannot unreasonably refuse the keeping of the animal, nor can it prevent a resident from keeping an assistance animal. The Tribunal still retains the power to make an order for the removal of an animal from a strata scheme if the animal is a nuisance or a hazard."

49. There was, and is, no requirement under either s 43 of the 1996 Act nor s 138 of the SSMA to adopt the model by-laws. A scheme may adopt customised by-laws.

50. SSMA s 134(2) provides that the by-laws in force for a strata scheme that (like the present scheme) came into existence after the commencement (on 1 July 1997) of the 1996 Act and before the commencement (on 30 November 2016) of s 134(2) are the by-laws adopted by or lodged with the registered strata plan for the scheme including any changes to by-laws made in accordance with the 1996 Act or the SSMA.

51. For schemes initially regulated under the Strata Schemes (Freehold Development) Act 1973 (NSW), SSMA s 134(3) provides that the by-laws in force for a strata scheme that was in existence before the commencement (on 1 July 1997) of the 1996 Act are the by-laws set out in the regulations for the purposes of s 134, including any changes to by-laws made in accordance with a previous law or the SSMA. Clause 35 of the 2016 Regulation provides that, for the purposes of SSMA s 134(3), the by-laws for a strata scheme that was in existence before the commencement of the 1996 Act are the by-laws set out in Sch 2. (A Note to that clause says that, by virtue of s 134(3) of the Act, the by-laws also include any amendments to the by-laws set out in Sch 2, and any additional by-laws made for the scheme, as in force before the commencement of SSMA s 134 and that the by-laws may also be amended in accordance with the SSMA. The note appears not to be part of the Act itself under Interpretation Act 1987 (NSW) s 35(4), but describes the effect of s 134.)

52. Schedule 2 to the 2016 Regulation provides a by-law 16 headed "Keeping of animals" that says, subject to SSMA s 157, an owner or occupier of a lot must not, without the approval in writing of the owners corporation, keep any animal on the lot or the common property and that the owners corporation must not unreasonably withhold its approval of the keeping of an animal on a lot or the common property. It can be seen that this is the same as Option A in the 1997, 2005 and 2010 model by-laws except there was no exemption for fish securely held in an aquarium on a lot. (A Note to by-law 16 says that this by-law was (relevantly) previously by-law 27 in Sch 1 to the Strata Schemes (Freehold Development) Act 1973 (NSW). Again, the note is simply a cross-reference.)

Recent primary decisions on "no pets" by-laws

53. There have been three recent primary decisions of the Tribunal by single members that have dealt with “no pets” by-laws. I am not bound by these decisions and two effectively derive from the lead decision. Not to follow the lead decision would be justified if I, with respect, considered it plainly wrong (as I do) in outcome, or in reasoning to support the outcome, as a matter of correct legal analysis rather than preference for a different approach or outcome: cp the approach of an appellate court to its own decisions and the decisions of courts of co-ordinate status in Donnellan v Woodland [2012] NSWCA 433 at [190]-[192]; Gett v Tabet [2009] NSWCA 76 at [261] et seq, esp [294]-[295].

54. The lead decision is Yardy v Owners SP 5723 [2018] NSWCATCD 19, where the Tribunal found that a by-law in essentially the same terms as the present by-law 14 was invalid by exercise of the power under SSMA s 139(1) together with s 150, and also that the previous by-law was reinstated (called revived in the order) under s 148(1) together with s 229.

55. The reasoning was followed in Roden v Owners SP 55773 [2019] NSWCATCD 18 September 2019 (SC 18/37522). It was referred to, without elaboration and obiter, in McCormick & McGinness v Owners SP 2371 [2018] NSWCATCD 9 Oct 2018 SC 18/29877. As yet, there is to my knowledge, with assistance from the legal representatives, no decision of the Appeal Panel or the courts directly on point.

Yardy - summary and critique of reasoning

56. In Yardy, the owners purchased into the subject strata scheme in February 2017 having owned (while living in a more pet-friendly scheme) a rescue dog since 2015. Unlike the present case, the owners were under the mistaken impression, prior to purchase in early 2017, that the scheme permitted pet ownership because an earlier version of the pets by-law substantially in the form of Option A under the 1996 Act and the 1997, 2005 and 2010 former Regulations still appeared on the strata scheme noticeboard despite the change to a "no new pets" by-law in December 2009. The owners were confirmed in their impression by their solicitors' obtaining a strata report that stated the model standard by-law applied. (This was ambiguous in itself because of the three options in the model standard, but the one on the noticeboard was the default standard if no other was chosen.) The primary member in Yardy at [77] said that this circumstance was "possibly irrelevant" although it involved "a degree of unconscionability".

57. There is a further potentially-distinguishing feature in the present facts from Yardy, in that the challenge in Yardy was to an alteration (in 2009) of an existing by-law to make it pet-prohibitive, which brought SSMA s 148 into play. That alteration was confirmed by a vote at an EGM on 27 June 2017 where an amendment to the by-law to enable the owners to keep the rescue dog on their lot obtained a simple but not a special majority required to change the by-law to reinstate the 2009 by-law. SSMA s 148 is not available in the circumstances of the present proceedings, which involves a rejection of a proposed new liberalising by-law.

58. The Tribunal in Yardy had before it extensive evidence from the owners, largely uncontradicted it appears, which bore similarities to the evidence in the present case, again uncontradicted, on small dogs living in strata. This consisted of lay evidence describing the rescue dog's habits and control by his owners. It also included expert evidence on the general suitability of small dogs such as the rescue dog (and Angus in the present case) for strata living and an assessment of the particular rescue dog (and Angus in the present case) as within those criteria of suitability. The primary member constituting the Tribunal in Yardy found at [87] that evidence to be "compelling and unchallenged" and at [88] said that he had "no doubt" that the dog in question would be able to be kept by the owners "without disruption or inconvenience to other occupants" of the building.

59. On the basis of that evidence the primary member at [27] said that, although the particular circumstances were largely irrelevant to the validity of the by-law, he nevertheless accepted that the owners' evidence was "compelling" and considered that, "if the question of whether the withholding of an application to keep [the rescue dog] within [the lot] were assessed under the former regime, with a test of reasonableness … , the application would clearly succeed".

60. The primary member in Yardy recited the expert evidence in some detail. He then referred at [29] to a Queensland adjudication which he said supported the proposition "that a blanket prohibition against the keeping of animals within strata premises is unnecessary, and at least unreasonable, and that a balanced and considered approach can be adopted which has due regard to the interests [of] all owners and occupiers of lots within the scheme".

61. At [30] he said "To the extent that the legislative intention might be relevant to the issues of interpretation it is clear to the Tribunal that the introduction of s 139(1) was directed to by-laws such as [the "no pets" by-law]. In addition to citing at [31] the first part of the extract from the second reading speech set out above, he also quoted the Department of Fair Trading's position paper 4.7 "which formed part of the reform process":

"(there) was a strong view in the submissions that pet ownership was unreasonably restricted in many schemes. This is a particular problem for pet owners looking to buy or rent a unit. It is thought that by changing the model by-laws, more and more schemes will allow pets to be kept over time."

62. At [32] he referred to the removal of Option C (no pets) in the 2016 Regulation model by-law, set out above.

63. On the basis of the expert evidence, the summarised adjudicator decision, and the legislative intent said to be derived from the second reading speech, the position paper and the removal of a no-pets option from the model by-laws, the primary member in Yardy said:

"[33] The Tribunal concludes that the evidence establishes that the right to keep an animal as a pet within strata units, under suitable conditions, subject to regulation and control by the owners corporation, which has due regard to the rights of all unit owners is part of contemporary community standards applicable to the assessment of an application by a lot owner to keep an animal as a pet in their lot. It may also be, as the Applicant submits, a part of a lot owner's basic right of habitation.

[34] These standards ought also be applied to the assessment of the validity of by-laws regulating the keeping of animals as pets in strata units."

64. There appeared to be no reference in the primary reasons to any evidence supporting the owners' apparent submission about a basic right of habitation, or any other reference to the existence, nature and content of such an asserted right.

65. There also appeared to be no reference in the primary reasons to any evidence supporting the conclusion that a right to keep an animal as a pet within strata units, under suitable conditions properly regulated by the owners corporation in the interests of all lot owners, was part of contemporary community standards.

66. That conclusion appeared to be drawn from the sources quoted in preceding paragraphs, invited by the owners' submissions in the case.

67. To the extent it was based on the expert evidence, the expert evidence as set out in the primary members' reasons did not, in my respectful view, justify such a conclusion. The expert evidence spoke about the ability to regulate animals (with dogs as the almost exclusive focus) in strata living and the benefits and incidence of pet ownership, not a translation of that into any accepted criteria for or rights in respect of animals generally, or even dogs alone, in strata living.

64. To the extent it was based on the position paper and the second reading speech, those documents spoke, on the basis of submissions received, of at best an educative effect of changes to the model by-laws over time and a facultative effect on assisting a change to more pet-friendly strata schemes. I am doubtful that the position paper qualifies within s 34 of the Interpretation Act 1987 (NSW) or that either piece of extrinsic material assists interpretation of the legislation, under the test in s 34(1) and s 34(3).

65. There was no reference in the consideration or the conclusion to the non-compulsory nature of the model by-laws and the absence of express legislative proscription of a "no pets" by-law. This was in contrast to express legislative proscription of other matters in SSMA s 139(2)-(5). It also remains possible to move away from an absolute ban on pets to something less than the regime under the revised model by-law. Contrast the express regime introduced for minor renovations which expressly included hard floors, that led to the decision against a blanket ban on hard floors in Gurram v Owners SP 36589 [2018] NSWCATCD 39 at [20]-[21].

66. Further, and compelling, is the wording of SSMA s 157 which is premised on there being a by-law that permits the keeping of an animal with the approval of the owners corporation, as the basis for a challenge to the owners corporation's refusal of consent. This strongly infers a recognition that there will be schemes that do not meet the precondition for the operation of s 157, namely, schemes that have a blanket prohibition on pets or schemes which limit approval to the owners corporation's absolute discretion without a requirement of reasonableness in the exercise of discretion.

67. The primary member in Yardy returned to the same line of reasoning at [63], but only with further reference to the changes in the provisions of the SSMA from what went before. In my respectful view, this did not grapple with the matters I have pointed to in the preceding paragraphs.

68. In my respectful view the reasoning just critiqued cannot in itself support a conclusion about the continuing validity or otherwise of a "no pets" by-law.

69. The primary member in Yardy went on, correctly in my respectful view, at [39] et seq to distinguish Queensland decisions on differently-worded legislation in order to find that the impugned "no pets" by-law was within power under SSMA s 136. (That appeared to be common ground in the present proceedings.)

70. The primary member in Yardy then used at [57] et seq the same Queensland decisions in support of his conclusion that the impugned "no pets" by-law was harsh, unconscionable or oppressive under s 139(1) and liable to be struck down under s 150(1).

71. In so finding, at [37] he accepted, uncontroversially, the applicant's submission based on authority that "harsh, unconscionable or oppressive" are given their ordinary meaning, which he cited from the Macquarie Dictionary.

Meaning of "harsh", "unconscionable", "oppressive", "unreasonable"; importance of context and circumstances

76. Using the Macquarie Dictionary source (where denotation may differ slightly between editions), the ordinary meaning of these terms is, respectively, unpleasant or ungentle in action or effect ("harsh"), unjust or unreasonably excessive or not in accordance with what is just and reasonable ("unconscionable"), and unjustly harsh or burdensome in exercise of power ("oppressive").

77. "Unreasonable", a term within the dictionary denotation of "unconscionable", means, in its ordinary sense, not endowed with reason, not guided by reasonable good sense, not agreeable to, based on or in accordance with reason or sound judgment, exceeding the bounds of reason, immoderate, capricious or exorbitant: see, e.g., the discussion in McCann v Owners SP 11318 [1998] NSWSSB 44; and Owners SP 67631 v Waters and Gardner [2010] NSWCTTT 343 ("if there was on the material before the Owners Corporation a sound basis for making that decision; conversely if there was no such basis it would be unreasonable"); Carroll v Alldritt [2013] NSWCTTT 525; Owners SP 69481 v Want [2013] NSWCTTT 440; Owners SP 69140 v Drewe [2017] NSWSC 845 at [43]; Ainsworth v Albrecht [2016] HCA 40; (2016) 261 CLR 167 at [41] ("the opposition … was not unreasonable because it had a logical and rational basis"). Some of these are in the context of review of property rights decisions but the meaning of the terms does not change. However, the connotation when used within "unconscionable" is of a significant or excessive quality of the unreasonableness.

78. The authorities go on to say that the ordinary meaning is applied in relation to a by-law in the context and circumstances of a particular scheme: George v Rockett (1990) 170 CLR 104 at 112; Kirra Wave [2012] QBCCMCmr 460 at [32]; Body Corporate for River City Apartments CTS 31622 v McGarvey [2012] QCATA 47 at [58]-[65]; OC SP69481 v Want [2013] NSWCTTT 440 at [40]; Croyden & Anderson v Owners SP1583 [2015] NSWCATCD 104 at [26]. That follows from the inherent character of the terms, which require a judgment of a character that may vary according to context.

79. It also follows from the inherent character of the words that the context and the circumstances being dealt with must be assessed objectively, as set out in the decisions cited on the ordinary meaning of the terms, above.

Yardy - critique of conclusions

80. More controversially, the primary member in Yardy adverted at [61] to the use of "unjust" in the marginal heading to s 139(1): "By-law cannot be unjust". This does not seem to accord with s 35 of the Interpretation Act but is not of ultimate significance given the use of "unjust" as one meaning of unconscionable. The primary member referred to the owners' invocation of the term in defining community standards (at [62]). Of itself this did not cure the absence of substantive definition of the existence, nature and content of community standards in relation to animals in strata schemes.

81. At [64], the primary member in Yardy found that the notion of justness was not reflected in complete absence of a discretion "to consider the particular needs and desires of individual lot owners". This gains some support from the introduction of s 139(1) with the notion of justness as a component of the meaning of unconscionability at the same time as the removal from the model by-laws of the "no pets" alternative. However, it again runs up against the difficulty, as a per se solution applicable to all instances, that "no pets" by-laws were not at the same time proscribed. If that had been done, there would have been no need to call in aid ss 139(1) and 150. It also does not, in my respectful view, take into account the need, on long-established authority, to apply the words and their ordinary meaning in the particular context and circumstances.

82. The primary member in Yardy then at [65] called in aid the different wording of the Queensland legislation and its claimed similarity to SSMA s 149(1) in use of the phrase "having regard to the interests of all owners and occupiers of lots included in the scheme". The wording in NSW is actually in SSMA s 149(2)(a) and is "must have regard to: (a) the interests of all owners in the use and enjoyment of their lots and common property". In NSW this is a different context, being a right in the Tribunal to prescribe a change to a common property rights by-law for various forms of unreasonable or unjust conduct, and the phrase is combined with the requirement, in s 149(2)(b), that the Tribunal must have regard to "the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law", which is not present in the Queensland legislation. In my view, for reasons I gave in detail in Capcelea v Owners SP 48887 [2019] NSWCATCD 27 at [52]-[84], SSMA s 149 has a distinctive context and application which distinguishes, in the operation of the NSW legislation, the decision in Ainsworth v Albrecht [2016] HCA 40 on the Queensland legislation, all the more so the attempted application of a distinctive test for property rights by-laws to s 139(1).

83. I equally reject the OC's submission that the remarks of Nettle J (not a member of the plurality) in Ainsworth at [106]-[107] assist in the s 139(1) context. His Honour, with respect, was dealing with the perceived advantage of a blanket prohibition where the only requirement, in the property rights legislation in question, was to provide a rational basis for the owners corporation's decision even if there were competing rational positions. That does not assist even with the equivalent NSW property rights provision (s 149) where there is a requirement to balance reasonable interests between the owners corporation and the minority owners. All the more so, it does not assist an inquiry under SSMA s 139(1) which inherently requires an objective examination of all interests in the context and circumstances of the particular scheme.

84. In any event, calling in aid a requirement to have regard to the interests of all owners and occupiers of lots in the scheme does not, in itself, assist in supporting a per se exclusion of "no pets" by-laws. All the owners may be unanimous at a particular point in time in wanting no pets and also not want the expense in time and effort of dealing with any change of attitude by one owner at a later point in time or with a new owner. Having regard to all their interests begs the question of which interests at which time, assuming the new owner or the owner with the change of mind knows of the rule.

85. At [66] et seq the primary member in Yardy drew together the above strands to give a specific content to community standards, and hence the meaning of harsh, unconscionable or oppressive, and unjust, based on the change in legislation, which was said to be stricter to satisfy than in Queensland because "harsh" and "unconscionable" were substituted for "unreasonable", with "oppressive being the common element". This suffers from the same weaknesses in analysis already identified.

86. If one strips away the supporting reasoning along the lines of the above critique, one is left with the following basis for a per se exclusion of "no pets" by-laws in Yardy: (1) one looks to the operation of the by-law on any circumstance, not the individual circumstance and context before the Tribunal (at [27], [77]); (2) a "no pets" by-law is "harsh" because it is a "blunt instrument" of complete prohibition that "provides no means by which the special circumstances of particular lot owners might be considered" and "is based on the interests of only one side of the issues associated with the keeping of animals as pets", so is "clearly ungentle and unpleasant in its effect for owners who wish to have a pet" (at [76]); (3) it is unconscionable because "it provides no opportunity for consideration to be given to the rights and needs of individual lot owners" and is "unreasonably excessive in that it is unbalanced and operates only in the interests of those who are opposed to the keeping of animals as pets" (at [77]); (4) it is oppressive because "it does not involve a balanced consideration of the interests and needs of all [emphasis in original] lot owners or occupiers and operates only in the interests of lot owners who are opposed to pet ownership" and "provides no process by which a lot owner could be able to keep an animal as a pet" (at [78]).

87. The foregoing boils down in substance to one basis of: the self-imposed absence of discretion, which can be preserved so long as there is enough support to block a special majority required for a change.

88. Yet, for reasons already given, the existing law continues to allow such absence of discretion, even if it is seen (in the change in the model by-laws) to seek to encourage a move away from such total absence of discretion.

89. In Yardy there was available an alternative ground for the decision under SSMA s 148 because the 2009 amendment had repealed the existing by-law. The primary member ordered that the replacement by-law be revoked and the repealed by-law be revived. (This appears to be an order directly available under s 148 itself although the primary member invoked the power to make ancillary orders in s 229.)

90. The primary member made this order on the basis of s 148(2), which requires the Tribunal to be satisfied that, having regard to the interests of all owners of lots in a strata scheme in the use and enjoyment of their lots or the common property, the change to the by-laws should not have been made by the owners corporation.

91. The primary member did not expand separately on the reasons for this decision, or whether or not it was an easier test to satisfy than the challenge under s 139(1) with s 150 of the SSMA. Having been satisfied that the latter was satisfied, it can be inferred that the primary member considered that s 148 did not impose a more onerous test, which appears with respect to be correct.

92. The primary member in Yardy, having found that the dog in question could not reasonably be refused occupancy, made final orders under SSMA s 157 and an interim order under s 231 to similar effect until re-registration of the 2009 by-law. The precondition for the use of s 157 was the reinstatement of the previous by-law, and was dropped by the owners in the present application.

93. For completeness, I should mention the following. To the extent that there is an implication or conclusion in Yardy that a blanket prohibition is discriminatory, and therefore harsh, unconscionable or oppressive, because in effect (if not in form) it operates unfavourably against some owners (those wanting pets) and not others, such discrimination or interference has been upheld as an incident of by-laws, in the context of property rights by-laws: White v Betalli (2007) 71 NSWLR 381, [2007] NSWCA 243 at [48]-[50]. The safeguard there recognised was the operation of review provisions the current (and expanded) version of which are found in SSMA ss 139(1), 148 and 150 and, in the context of property rights by-laws, also ss 126 and 149.

94. Also for completeness, I should mention that no argument was sought to be developed in the present case distinct from reliance on or criticism of the "right of habitation" expressed in Yardy that keeping of pets was a property right in itself or an incident of property rights that directly attracted the principles in provisions such as SSMA ss 126 and 149, the authority on which I analysed in Capcelea v Owners SP 48887 [2019] NSWCATCD 27, Owners SP 20695 v Dunsford [2019] NSWCATCD 8 May 2019 SC 18/43341, SC 18/50702 and Williams v Knowles & Owners SP 10147 [2018] NSWCATCD 13 June 2018 SC 17/50119, SC 17/51940 at [52]-[67]. While ownership of pets may (controversially for some) be a property right in respect of the pet itself, that right is not in itself a direct property right attached to a lot in a strata scheme. The property and other rights attaching to lots, as said in preceding paragraphs, are governed by the relevant legislative provisions and the by-laws of the scheme. Here, the focus was on the enjoyment of property rights in the sense of amenity from the ownership of a lot and an interest in common property that are the incidents of a strata scheme.

95. It was common ground that principles such as fraud on the minority and expropriation of the Gambotto variety had no application in the present context, to the extent that they still have a separate life after the legislative changes in the SSMA: see the discussion in Williams v Knowles at [53]-[61].

Roden

96. In Roden there was a vote in mid-2013 on poll of 81.85% in favour, of a by-law which preserved the existing total ban on pets that had been in the by-laws since the establishment of the scheme in 1977, but which granted a dispensation for pets already living in the scheme in breach of the existing by-law to stay upon registration and compliance with specified requirements. An attempt in 2017 to liberalise the by-law towards Option B under the 2016 Regulation was defeated with 64% voting to keep the status quo. A motion at the AGM on 28 November 2018 voted 55.6% to 44.5% to defend the owner's application to the Tribunal that challenged the status quo. A further attempt in April 2019 shortly prior to determination of the proceedings was also defeated. The owners corporation said that a survey confirmed no majority support for change. SSMA s 148 would not have assisted those seeking change.

97. The primary Tribunal member followed Yardy in respect of relief under SSMA ss 139(1) and 150 without further substantive development of reasons beyond those in Yardy.

98. However, the decision noted at [48] the authorities which showed the range of denotations for "unconscionable", including "showing no regard for conscience; irreconcilable with what is right or reasonable", all importing a pejorative moral judgment. At [51] authority was cited that said conduct could be oppressive only if it was not exercised for the approved statutory purpose. This was not directly engaged with when the primary member followed Yardy at [62]-[64] of his reasons in Roden.

99. Further, at [55]-[57] the primary member in Roden referred to the "central argument" put forward by the owners corporation. This focused on SSMA s 157. As discussed above, it said that the wording of that provision contemplated the continuance of "no pets" by-laws. That was said to be recognised by the quotation in full of the extract from the second reading speech as set out earlier (in Yardy the first two sentences of that extract had been quoted).

100. However, the primary member in Roden did not directly engage with that argument on s 157 when, at [82], he followed Yardy for reasons of comity and factual similarity. Rather, at [83], the continued existence of schemes with a blanket ban on pets was acknowledged but in following Yardy the primary member at [87]-[88] and [91] accepted that blanket bans on pets would be struck down as unconscionable per se under ss 139(1) and 150. This was said to be because they were contrary to owners' "basic habitation rights", based on the statutory material referred to in Yardy. At [92] the primary member in Roden referred to the absence of balance argument expounded in Yardy, as already discussed.

Way forward

101. Having rejected the approach in Yardy and Roden that "no pets" by-laws per se no longer can stand, what is the way forward?

102. Clearly the legislature intended some encouragement of movement towards a regime where the keeping of pets was a decision on the merits and in the context of a particular strata scheme, with the backup of amenity by-laws, but without outlawing per se the solution of "no pets".

103. In some circumstances, given the nature of the strata scheme, that could still mean no pets at all. But that would need to be a conscious choice for new schemes.

104. Arguably, it also means that a conscious choice needs to be made by a scheme considering whether or not it should keep an existing, historic "no pets" by-law by a conscious re-consideration of the matter, even if that leads to (as here) a strong re-endorsement of the existing "no pets" by-law. I do not need to determine if all schemes need to reconsider in this way, or be at risk of the blanket absence or refusal of reconsideration being seen as at least unreasonable and potentially burdensome or unjust, let alone unpleasant. This scheme, as already acknowledged, voted strongly at the 2018 AGM to re-affirm the existing scheme.

105. Further, if a scheme adopted (by default or choice if new, by choice if existing) the model by-laws then "no pets" is no longer an option.

106. It seems to me that the best expression of the legislative intention on pets in the SSMA is that it gives context for assessing the content of the terms in ss 139(1), 148 (where applicable) and 150.

107. As said earlier, the test for words such as "unconscionable" has always been objective and contextually-related, being an assessment of all connected circumstances by reference to the values and norms recognised by the text, structure and context of the legislation: Pacciocco v ANZ Banking Group Ltd [2015] FCAFC 50, (2015) 236 FCR 199 at [304]-[306], effectively approved in the High Court appeal [2016] HCA 28, (2016) 258 CLR 525 at [213]-[215], [217]-[220], [286]-[291].

101. Here, the expressed legislative preference in the model by-laws is for acceptance, with amenity protections, of any notified pet (2016 Option A), with the alternative of the owners corporation having to justify refusal on objective grounds (2016 Option B).

102. There is also no express prohibition in the SSMA of a choice of "no pets" and the continuing possibility of customising a by-law to, for example, allow certain types of pets with minimum requirements (for approval or otherwise) and grade the requirements for other types of pets. In other words, there is no requirement for individual applications for each pet, unless the owners corporation chooses to adopt a by-law with that requirement.

103. The foregoing summary of legislative intent means, in my opinion, that a scheme which wishes to have a blanket "no pets" by-law needs objectively to justify that choice in the context and circumstances of the scheme where, and once, that choice is challenged by a particular owner or owners in respect of particular types of pet and where evidence is led that gives a proper basis for that challenge: cp, in a property rights context, Rielly v Owners SP 18687 [2007] NSWCTTT 58; Owners SP 69140 v Drewe [2017] NSWSC 845 at [30]; Gurram v Owners SP 36589 [2018] NSWCATCD 39 at [32]; John Maait Properties PL v Owners SP 50936 [2019] NSWCATAP 26 at [69]-[70].

104. There may be schemes that, in their context and circumstances, objectively justify a "no pets" by law.

105. A very small strata scheme, for example, or a scheme with a high number of absentee landlord owners and a high tenant turnover or which permits short-term occupancy, may demonstrate that the attendant costs and disruption from any form of pet permission (or beyond an absolute discretion in the strata committee on pet permission) on balance means that any challenge to the scheme's blanket ban on pets fails to establish the requirements in s 139(1) or s 148 (if applicable).

106. That may not be the case for a scheme with more stable occupancy patterns where, for instance, generalised approval of particular types of pet is justified because of a greater propensity to observe and ability to enforce observance of amenity by-laws.

107. A blanket "no pets" policy may be objectively justified, as another example, if owners when buying in have clear notice, confirmed by express written acknowledgement, of the no pets by-law, more controversially coupled with a written undertaking not to challenge such a by-law other than by proposing successfully the required resolution in a general meeting.

Conclusion on the present challenge to the "no pets" by-law

115. On the facts objectively assessed in the present case, the owners have demonstrated a proper basis for a case that the nature of Angus, in terms of the personality and behaviour of the type of pet that he is, makes it unpleasant or ungentle in action or effect ("harsh"), unjust or unreasonably excessive or not in accordance with what is just and reasonable ("unconscionable"), and unjustly harsh or burdensome in exercise of power ("oppressive"), simply to ban and seek to expel his type of pet (and types of pet with demonstrated similar characteristics) under a blanket prohibition, rather than rely upon the amenity and conduct by-laws to regulate custody and management under the stewardship of owners of types of pets such as him.

116. The evidential onus then falls on the owners corporation to put forward evidence able to be objectively assessed in the context and circumstances of the particular strata scheme and that, when taken with the owners' evidence, means that the owners have not satisfied the burden of proving that the blanket prohibition by-law is harsh, unconscionable or oppressive under s 139(1).

117. There also needs to be taken into account that, if SSMA s 148 applies, there is a potentially easier test to satisfy, although the relationship between the test under s 148 and the test under ss 139(1) and 150 is for close examination when it directly arises.

118. In the present challenge the OC has not led sufficient evidence that, when taken with the owners' evidence, removes the proper basis for the owner's challenge to the "no pets" by-law in the context and circumstances of this scheme. The owners accordingly have satisfied their burden of proving that the blanket prohibition by-law is harsh, unconscionable or oppressive under s 139(1).

119. The OC has first relied on the consistent pattern of voting on the topic over the years which indicates that the owners like the scheme the way it is. But simply liking something the way it is does not answer the allegation that it is harsh, unconscionable or oppressive in the context and circumstances of a particular strata scheme and given the moderated change in the norms expressed in the changed legislative intent since the SSMA commenced operation in 2016.

120. The OC has also submitted a version of the "floodgates" argument. It says that the blanket "no pets" by-law reduces the costs (in the strata committee's time, and money), in a large scheme, of having to adjudicate via what was colloquially in submissions termed a "Pets Court" on individual applications.

121. The difficulty with this submission is the absence of objective support by way of evidence. As previously said, the OC relied upon the comments about "floodgates" of Nettle J in Ainsworth v Albrecht at [106]-[107]. The inappositeness in principle of those remarks to the present context has already been examined. Factually, the situation is also very different. In a large scheme with such a large majority against pet ownership (it appears consistently), there seems to be no objective support for the view that there will be a flood of self-interested applications that need time and money to adjudicate.

122. Further, there is no evidence to suggest that a customised solution - such as permitting certain types of pets that on objective grounds are unlikely to cause compliance costs in relation to enforcing amenity provisions - may not work to remove the feared time and cost. There is no evidence to suggest that setting up a customised alternative such as that just mentioned, or even a scheme of assessing individual applications, may be difficult or costly, any more so than the types of advice and the protocols that owners corporations need to obtain and put in place in order to assess works-based and amenity applications. The uncontradicted expert evidence led by the owners suggests that assessment of suitable pet types is readily available. There was no indication that time and cost were a reason for the owners' consistent rejection in general meeting of anything but a blanket ban.

123. Accordingly, on the facts as presented in this case, I find under SSMA s 139(1) that the owners have established that both the "no pets" by-law that pre-dated the 2018 AGM and the replacement by-law passed at that AGM which effectively re-affirmed the preceding by-law in substance (with the necessary change for an updated legislative reference) were harsh, unconscionable and oppressive under SSMA s 139(1).

124. The only by-law that can be in question, in terms of grant of relief by way of an order under SSMA s 150, is the one currently registered. Registration supersedes whatever was previously on the register that is replaced by the new by-law: White v Betalli (2007) 71 NSWLR 381, [2007] NSWCA 243 at [56]-[74]; Castle Constructions PL v Sahab PL and the Registrar-General (2013) 247 CLR 149, [2013] HCA 11 esp at [20]-[21], [28], [34]-[36], [53]-[56]; Williams v Knowles and Owners SP 10147 [2018] NSWCATCD 13 June 2018 (SC17/50119, SC17/51940) at [65]. SSMA s 150(1) empowers the Tribunal to declare a by-law to be "invalid" if the condition (which I have found) is satisfied. SSMA s 150(2) and (3) expressly contemplate that such an order will be registered and have a certain effect (including retroactive effect if specified in the order) when registered. It follows from the foregoing that a declaration of invalidity can be made in an order under s 150(1) only when the order is capable of having the effect provided by s 150(2) and (3), which is not possible with a by-law already removed from the register.

125. In the further written submissions after hearing that provision was made for, on specified matters, the OC, on the basis of concessions it made about the penalty application (explored below) and what it anticipated the response from the owners would be, said that it would not be necessary for the Tribunal to decide the effect of SSMA s 150 on the removed by-law 14 that was in force before 21 January 2019. The OC indicated potential consequences for those who made decisions based on the by-law as it was prior to that date, which would be better explored when the issue "squarely arose". The owners agreed as the OC anticipated.

126. Of course, the potential consequences pointed to by the OC could arise for decisions made during the substantial period while the present by-law registered 21 January 2019 has been in force, that is, between registration and the date of implementing this decision (perhaps after determination of sequential appeals). Although the correct position seems to me clear, on the wording of the authority cited above and SSMA s 150, that is not now required to be finally determined.

127. Accordingly, an invalidation order under s 150(1) should be applied to the "no pets" by-law passed at the 2018 AGM. The OC should therefore register its removal from the registered by-laws of the scheme under SSMA s 246. Under s 150(3) the by-law should be declared invalid and ordered to be removed with operative effect on and from the date of its registration on 21 January 2019.

128. Since that will leave no by-law about pets in place, there is presently no need to consider the basis for a further order under SSMA s 232 or otherwise about Angus's entitlement to stay within the owners' lot in the scheme.

Penalty notices

129. In the further written submissions after hearing that provision was made for, on specified matters, the OC indicated that it pressed the claim for a penalty only in respect of the third notice dated 13 March 2019, but continued to rely on the fact of the first two notices having issued "as evidencing the [OC's] consistent approach to enforcing its by-law prohibiting the keeping of animals, and in defence of any submission to the effect that it tolerated breaches of, or waived compliance with, the by-law".

130. This qualified concession appeared to operate in several potential ways. First, it reinforced the determination of the OC on a "no pets" policy which has been considered, and its significance determined, in relation to the attack on the "no pets" by-laws (previous and current). Secondly, it appeared to answer any inference from the hearsay conversations put forward by the female owner, which I have indicated I have not relied upon. Thirdly, it appears to reinforce a submission about penalty by saying that the alleged breaches for which a penalty was sought were consistent with earlier conduct by the owners.

131. In the third area of potential significance, I still need to examine the first two notices.

132. The first notice required compliance with by-law 14 as it was in force when the notice was issued. The by-law as it was then in force I have also found to be harsh, unconscionable or oppressive under SSMA s 139 although, for reasons I have given, there is no need or basis for an order under s 150 for its removal since it is no longer registered.

133. The second notice required compliance with by-law 14 in its form which had been replaced by the time the notice was issued. It could not validly require compliance with a then non-existing by-law, and is invalid.

134. The third notice required compliance with the replacement form of by-law 14 that I have found to be invalid and ordered to be removed retroactively from its time of registration, having found it to be harsh, unconscionable and oppressive. That notice is already invalid on the strength of my finding under s 150(1), even prior to registration. Alternatively, it will cease to exist, retroactively, once the order is registered.

135. In relation to the remaining first notice, it can no longer be complied with because the by-law has now been removed. That seems to me to be a sufficient ground for finding that there is no basis to impose a penalty.

136. If further is required, and in respect of the alternative analysis in relation to the third notice, I have a discretion under SSMA s 147 ("may") in ordering a monetary penalty. I decline to exercise that discretion in favour of ordering a monetary penalty which has the substantive effect of enforcing a removed by-law that has been found to be harsh, unconscionable and oppressive and which would have been ordered to have been removed if it was not already removed from registration, or which is about to be removed retrocactively: Owners SP 87812 v Thomson [2019] NSWCATCD 38 at [41].

The potential future

137. It may be that the OC, if supported by a sufficiently determined cohort of owners and with skilled advice, may propound a renewed blanket "no pets" by-law, pass it at an EGM or AGM, and bring evidence to resist, on the basis I have described, any challenge under ss 139 and 150 to that by-law.

138. An additional objective circumstance within any such challenge, that will also need to be assessed in the context of the scheme if put forward, may be comprehensive direct evidence of the historic informal tolerance of pets within the scheme that are "kept under the radar" by owners not making a fuss about or challenging the policy behind the "no pets" by-law as it has existed until this decision. Such evidence may well be important because full and strict enforcement may sometimes change voting patterns in respect of a formal position that is not uniformly or practically enforced against those who acquiesce quietly in the formal position.

139. A further objective circumstance at the time of considering the new by-law may be that an owner's successful challenge to the existing "no pets" by-law has created an effective status quo for existing types of pets exhibiting characteristics consistent with those of the type of pet in that successful challenge that (at the least) ought not be affected by any new and properly-justified "no pets" by-law.

140. A further objective circumstance may arise from the absence, after this decision, of any by-law in this scheme in respect of pets.

141. In that context, authorities on review decisions in the context of property rights have approached the review as one of what was before, or reasonably available to, the owners corporation or owners at the time of the decision under review: OC SP 7596 v Risidore [2003] NSWSC 966 at [11]-[13], and quoting from Master Malpass at [13]: "It seems to me that … is a question which falls to be determined having regard to the state of affairs in existence at the time of the refusal of consent. In considering that question, regard should not be had to material that subsequently came into existence". This appears to have been implicitly confirmed in George v Rockett (1990) 170 CLR 104 at 112, [1990] HCA 26; Gazebo Penthouse PL v Owners SP 73943 [2015] NSWCATCD 93 at [86]-[87]. It was explicitly confirmed in Owners SP 69140 v Drewe [2017] NSWSC 845 at [27].

Costs - preliminary matters

142. Both parties asked for costs to be reserved until the substantive outcome was known. Both indicated that they were prepared to have costs determined on the written submissions they provided. Accordingly, the requirements of CATA s 50 are satisfied, to the extent (if any, which is presently undetermined and potentially controversial) that they apply to a separate costs determination when there has been a hearing on the merits of the matter but questions of costs have been reserved for consideration after delivery of the substantive decision.

143. However, it may be useful to the parties if I indicate my provisional view on costs on the basis of the above findings.

144. CATA s 60, together with rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW), provide that the ordinary costs rules apply, even in the absence of special circumstances required by s 60, where "the amount claimed or in dispute in the proceedings is more than $30,000".

145. There may have previously been room to argue that, for some strata decisions, the underlying value of the relief sought was sufficient to satisfy rule 38.

146. In Owners SP 63341 v Malachite Holdings PL [2018] NSWCATAP 256 esp at [86]-[111] the Appeal Panel has decided (in a case involving re-allocation of unit entitlements) that strata applications such as the present proceedings (not involving direct claims for monetary relief) do not fall within rule 38.

147. Accordingly, the parties would need to make submissions and provide any further evidence they wish in order to establish special circumstances under SSMA s 60, for any order as to costs to be made. I set out some general principles concerning costs in those circumstances.

148. The starting point for exercise of costs discretion on the usual principles is that costs follow the event. “The event” is usually the overall outcome of the proceedings – did the successful party have to go to the Tribunal (in this case) to get what it achieved, rather than being offered at least that relief. If there are distinct issues on which the party seeking relief did not succeed, that may be taken into account in the exercise of costs discretion.

149. Some recent Appeal Panel decisions have made no order as to costs (to the intent that each party paid its or their own costs) where there has been a measure of success on both sides: Johnson t/as One Tree Constructions v Lukeman [2017] NSWCATAP 45 at [25]-[29]; applied in Oppidan Homes PL v Yang [2017] NSWCATAP 67. The exercise of discretion in Johnson was in relation to the costs on appeal only: Johnson at [4]. The clear mixed outcome on appeal grounds meant that the original decision was maintained in a central respect but the original claim was otherwise to be the subject of a re-hearing. The outcome in Oppidan reflected the outcome of the primary hearing which involved claims by both parties.

150. For an award of costs on other than the ordinary basis, a party’s conduct of the proceedings themselves, or the nature of the proceedings themselves (for instance, misconceived), or an outcome less favourable than an offer, are considered. The principles are explored in Latoudis v Casey (1990) 170 CLR 534, Oshlack v Richmond River Council (1998) 193 CLR 72 and in this Tribunal in Thompson v Chapman [2016] NSWCATAP 6 and Bonita v Shen [2016] NSWCATAP 159, citing earlier consistent authority.

151. The principles have resonance with at least some of the "special circumstances" in CATA s 60 that are required to justify a costs order when rule 38 does not apply, as is the case here. But those special circumstances are not exhaustively set out, as the terms of s 60(3) makes clear.

152. In an open letter dated 18 October 2018, the solicitors for the owners said the owners were aware of the restrictions on pets in by-law 14 and put the OC on notice that, if it brought proceedings against the owners, the owners would bring proceedings such as have been brought and which have succeeded and would be relying upon the letter on questions of costs. The letter said that, given Angus had lived in the scheme for 12 years without complaint, it was clear that he had not interfered with the peaceful enjoyment of other owners or occupiers or damaged the common property, that the owners did not wish to enter into further litigation with the OC, and that the owners were willing and seeking to directly address any reasonable concerns that the OC had regarding the keeping of Angus such as waste, noise and transporting him through common property.

153. It seems to me in this case that the facts and nature of the competing points of view that would be litigated were sufficiently known to the OC, prior to litigation, as to make it possible for the OC fairly to assess prospects if it proceeded compared with negotiating as offered: Miwa PL v Siantan Properties Pte Ltd (No 2) [2011] NSWCA 344 at [9]-[16]. It is also clear that the owners have obtained a better outcome than what they offered, because negotiations concerning keeping of Angus would most likely have left the by-law otherwise intact that is to be expunged. By seeking to negotiate an outcome less than removal of the by-law, the owners also offered a genuine compromise.

142. In those circumstances, despite the absence of a defined single alternative in the owners' open offer, it seems to me sufficient basis for constituting special circumstances justifying an award of costs that follows the event or outcome under s 60(3)(g). I am reinforced in this view by the "test case" approach that both parties appear to have brought to the proceedings once the penalty notice was sought to be enforced, including engagement of counsel and solicitors appropriate to a test case.

143. The foregoing is despite the OC having succeeded in the argument that the 2016 legislative changes did not impose a per se prohibition on "no pets" by-laws. That was but a step in the argument towards the determination of the event, not a distinct issue on which costs could be divided.

144. Of course, the orders will reflect that the parties have the opportunity to put forward submissions and any material on costs that either reinforces or opposes, or seeks to modify, my provisional views on costs. I have provided for two rounds of written submissions in chief and in reply. Those submissions will, at the OC's request, include the opportunity for submissions on the costs of the summons issued by the OC and contested until date of hearing, as a potentially separate set of costs.

145. If there are no submissions and material lodged and served seeking to establish special circumstances justifying a different award of costs, then the order will be that the OC pay the owners' costs of the proceedings on the ordinary basis as agreed or assessed, without the owners having to contribute to that liability or the OC's liability to pay its own costs of the proceedings (refer SSMA s 104).

Order

158. I make the following orders:

In SC 19/27422:

1. Order under s 150 of the Strata Schemes Management Act 2015 (NSW) that by-law 14 is declared to be and since its date of registration has been harsh, unconscionable and oppressive.

2. Order the Owners Corporation SP 48887 promptly to do all acts necessary to record the removal of by-law 14 pursuant to section 246 of the Strata Schemes Management Act 2015 (NSW), such removal to be recorded as having operated on and from date of registration of the by-law being 21 January 2019.

In SC 19/18982:

3. Dismiss the application.

In both SC 19/18982 and SC 19/27422:

4. Note the agreement of the parties that questions of costs can be decided on written submissions without the need for further hearing on costs.

5. Order as follows:

5.1 Any party’s written submissions and any further evidence in chief on costs is to be lodged with the Tribunal and served on each other party on or before 6 December 2019.

5.2 Any party’s written submissions and any further evidence in reply on costs is to be lodged with the Tribunal and served on each other party on or before 20 December 2019.

5.3 If there are no submissions and material lodged and served pursuant to 5.1 and 5.2, then the orders will be that: (1) the Owners Corporation is to pay J A and L B Cooper's costs of both proceedings on the ordinary basis as agreed or assessed; and (2) the Owners Corporation is not to recoup its costs under the preceding costs order or its own costs of both proceedings from levy or fund that includes monies contributed by J A and L B Cooper.

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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

Decision last updated: 04 December 2019