The Owners-Strata Plan No 58091 v Sonia, Rossana and Fernando Romani

[2014] NSWCATCD 236

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:	The Owners-Strata Plan No 58091 v Sonia, Rossana and Fernando Romani [2014] NSWCATCD 236
Hearing dates:	22 September 2014
Decision date:	08 December 2014
Jurisdiction:	Consumer and Commercial Division
Before:	G Meadows, Senior Member
Decision:	The respondents are to pay a pecuniary penalty of $5,500.00 to: Department of Finance & Services, c/- Specialist Services, NSW Fair Trading, P O Box 4004, Penrith Plaza NSW 2750 no later than 28 days after the date of these orders.
Catchwords:	STRATA SCHEMES—penalty application; relevant issues on a strata penalty application
Legislation Cited:	Civil & Administrative Tribunal Act 2013 Strata and Community Schemes Act 1996
Category:	Principal judgment
Parties:	The Owners - Strata Plan No 58091(applicant) Sonia, Rossana and Fernando Romani (respondents)
Representation:	Mr Mueller for the applicant Mr Fernando Romani for the respondent
File Number(s):	SCS 14/31489
Publication restriction:	Nil

reasons for decision

1. The applicant wants an order that the respondents pay a pecuniary penalty of $5,500.00 because they did not comply with an order made by Adjudicator Rosser on 25 July 2013.

2. The applicant seeks this order pursuant to the Strata Schemes Management Act 1996 (“the SSMA”):

202   Civil penalties for contravention of orders under this Chapter

1. The Tribunal may, by order, require a person to pay a pecuniary penalty of an amount of up to 50 penalty units for contravention of an order under this Chapter (the original order).

2. An application for an order under subsection (1) may be made:

1. in any case, by the applicant for the original order, or.....

3. On 25 July 2013 Adjudicator Rosser ordered:

1. The respondents shall comply with Special by-law 16 and shall not keep any animal (except fish in a secure aquarium or birds kept in a cage on the lot) on the lot or the common property.

2. The respondents shall remove their pet dog from lot and common property by 31 July 2013.

4. That order is an order, an “original order”, made under “this Chapter” (as it says in s 202 of the Act). “This Chapter” is Chapter 5 of the Act and it includes provisions in relation to seeking an Adjudicator’s order and provisions in relation to enforcing those orders or rather, what to do if the order is not complied with. It is agreed that the respondents have not complied with the order in this case. That means that the Owners Corporation is entitled to bring this application for a penalty. The application was filed on 13 June 2014 following a resolution of the executive committee at an executive meeting held in June 2014. The Owners Corporation seeks the maximum penalty pursuant to s 202: 50 penalty points or the sum of $5,500.00.

Conduct of the Hearing

5. Before setting out the nature of the evidence and the hearing, I note that the early part of this hearing was characterised by an unusual level of intercourse between myself and Mr Romani. The reason for this was, in my opinion, that Mr Romani was resolutely attempting to suggest the applicant made decisions without authority or was trying to change its evidence afterwards, and also that he was raising irrelevant issues. This resulted in many well-founded objections from the applicant’s legal representative and required prompt and frequent intervention by me. At the same time, I endeavoured to advise Mr Romani of the reasons for this intervention and to explain the necessity for him to focus on the relevant issues in the case, to avoid arguing with the witness, to avoid unnecessary repetition and especially to avoid making submissions or assertions without establishing any evidentiary basis therefor. I was careful to explain my reasons for this intervention, to assist Mr Romani to get to the point he was making on a number of occasions and to focus on the purpose of the current proceedings. I was especially careful to allow Mr Romani sufficient time to explain his case.

6. Although I attempted as clearly and carefully as possible to encourage Mr Romani to focus on the issues relevant to this type of application, it must be stated that those attempts met with little success. I permitted Mr Romani to make his submissions as to the relevant evidence and the order or orders I should make following the hearing with no or minimal interruption. The summary below demonstrates that he persisted in arguing matters which could not be considered relevant to my decision and indeed which were not, in many cases, in accordance with the facts as demonstrated in contemporaneous documentary evidence.

7. In coming to write this decision and reasons, I listened to the recording of the entire hearing again to satisfy myself in relation to the issues discussed in the previous two paragraphs.

Evidence is missing

8. At a directions hearing on 24 July 2014 the parties were ordered to file and serve evidence by respective dates. It appears that each party complied with that order but unfortunately the evidence of neither party is included with my file. The respondents’ evidence (which apparently totals in excess of 2,000 pages contained in at least 16 folders) and the applicant’s evidence, it appears most likely, have been attached to an appeal file following the filing of an appeal by the respondents in August this year.

9. Mr Romani, appearing for the respondents, handed to me certain documents from time to time during the hearing and referred to those documents as required. The applicant’s solicitor, Mr Mueller, did not object to that procedure. The applicant, in turn, handed me a bundle of evidence (which had been partly marked up by highlighting) and referred to that evidence as necessary. I ensured the parties were able to hand up documentary evidence or to provide oral evidence as they needed. I should note that both parties had their evidence with them. While not ideal, this proved to be a workable method for each party to present its case and avoided the necessity for an adjournment. Neither party requested an adjournment but in any case I was vigilant in ensuring that the parties were able to present their cases. Had that not been the case I would have ordered an adjournment on my own initiative.

The Evidence

10. The applicant’s evidence consisted of copies of documents including the original adjudication decision and correspondence between the applicant and the respondents referring to the Adjudicator’s order and requesting the dog be removed from the premises. In addition, the Chairperson of the applicant, Mr Dean, provided a statutory declaration setting out the course of proceedings leading to the making of this application, to which were annexed relevant documents including notices and minutes of meetings.

11. With leave of the Tribunal, Mr Dean was asked a question in relation to an error in his statutory declaration, in which he had referred to an executive committee meeting on 13 February 2014, but which had actually occurred in June 2014. The error was explained by absent-mindedly failing to change the date from February to June when using the February minutes as a template for preparation of the June minutes. Otherwise, Mr Dean swore to the fact that his statutory declaration was accurate.

12. The respondents’ evidence, as noted above, was voluminous but apparently included all the available evidence, not just evidence relevant to these proceedings. As also noted above, Mr Romani was able to hand up relevant evidence as required.

The Hearing

13. A considerable portion of the hearing was consumed in a discussion between Mr Romani and the Tribunal as to whether this penalty application should be allowed to proceed. I will not summarise that discussion which I am satisfied was largely irrelevant and misconceived on Mr Romani’s part.

14. The next phase of the hearing was that referred to above which was characterised by a great deal of interchange between myself and Mr Romani.

15. Mr Romani’s submission was that first, Special by-law 16 did not exist. That was answered by my relying on the certificate of registration of that special by-law although it is necessary to state that Mr Romani for some time or at all did not accept that such reliance was reasonable on my part. Mr Romani wished to argue that the registration occurred “in peculiar circumstances”. That issue was argued several times. Secondly, Mr Romani referred to proceedings in 2000 which he submitted had the effect of granting permission to the respondents to keep a dog on the premises. I am satisfied after reading the decision in question that it did not in terms grant such permission. Thirdly, Mr Romani wished to call evidence and cross-examine Mr Dean in relation to other owners who with or without permission (although Mr Romani suggested that some owners were permitted) kept dogs on the premises. I disallowed that evidence as irrelevant because it all pre-dated the Adjudicator’s decision and properly should have been included in submissions to the Adjudicator. To the extent the Adjudicator was in error in relation to such evidence, that error should be the subject of an appeal, not raised in penalty proceedings such as the present. (I did note and state, however, that evidence such as other owners being permitted to keep dogs or other animals would be relevant to the question of the imposition of a penalty or the amount of any penalty and Mr Romani was so advised.)

16. This phase of the hearing concluded with my informing Mr Romani and the applicant that I accepted the validity and current registration of the by-law as a matter of law on the basis of the certificate of registration, that I accepted the validity and currency of the Adjudicator’s order, and that I had no authority to and did not propose to consider either question any further. This hearing concerned two questions only: should a penalty be imposed and if so, in what amount.

Cross-Examination of Mr Dean

17. The next phase of the hearing was brief. Mr Romani attempted to cross-examine Mr Dean along the lines of “[W]hy do you hate the occupants of Lot 5?” and “[W]hy do you dislike Simba (the dog)?”. It was pointed out that these issues were irrelevant to the issue before the Tribunal today: Mr Dean’s views on such issues simply have nothing to do with my decision.

18. The following phase was both lengthy and wasteful in terms of time. Mr Romani sought to cross-examine Mr Dean on the legality of the decision to make the present application and to retain legal services to do so. Mr Romani started from the position that a general meeting of the owners corporation had to pass a formal resolution to utilise legal services and to commence legal action (in apparent reliance on s 80D of the Act which does indeed provide for that).

19. When Mr Dean’s response was that the executive committee made the decision as it was entitled to do, or more specifically Mr Romani was unable to assert with evidentiary support that it did not have such authority, the questioning moved on to whether the strata manager filed the application before such a resolution had actually been passed by the executive committee.

20. In that regard, Mr Romani pointed out that the executive committee meeting was on 13 June 2014, that the minutes of that meeting stated it commenced at 5:00PM and concluded at 6:00PM. The application was filed on 13 June 2014 and must have been filed before 4:30PM or at 5:00PM at the latest. That line of questioning was suggested to Mr Romani, as became clear in discussions, because of his belief that the June meeting was on Friday 13 June 2014. Mr Romani apparently came to that fixed belief because, as noted above, Mr Dean corrected the error of the June executive committee meeting minutes stating it was held on 13 February 2014. Changing that date to “June” apparently to Mr Romani meant the correction simply changes “February” to “June” in the document, so it would now read “13 June 2014”. However, under cross-examination Mr Dean stated he could not actually remember what date in June the executive committee meeting occurred. There was otherwise no evidence as to the date. I understood the correction by Mr Dean meant that the executive committee meeting occurred on a date in June, not necessarily 13 June. I expressed this possibility to Mr Romani who was unable to accept it but could not provide evidence in support of his dating.

21. In any event, the management agreement being in evidence, I pointed out to Mr Romani that that agreement provided for the strata manager to have the relevant authority to commence proceedings such as the present. In that case, the submission in relation to the date of the meeting had no force, although it should be repeated that in any event the respondents had not proved on what date that meeting took place.

22. It is exemplary of Mr Romani’s approach to this hearing, in my opinion, that he sought to claim that the management agreement in the evidence was no longer current, because it was dated 2011 and this hearing is occurring in 2014, therefore, he submitted, the agreement was an “old agreement”. Mr Romani had to concede that he did not have any evidence or indeed any reason whatsoever to make that submission, to the effect that the 2011 agreement had been superseded or changed in any way.

23. Mr Romani, throughout this phase of the hearing, sought to demonstrate that the owners in general meeting had no notice of this legal action nor had they had the opportunity to vote in that regard and therefore this application was illegal. Section 80D of the Act was referred to above. I note that the section makes provision that the regulations may provide for exemptions. Regulation 15 states:

15   Exemptions from need for approval for certain legal action

1. The seeking of legal advice, the provision of legal services or the taking of legal action is exempt from the operation of section 80D of the Act if the reasonably estimated cost of seeking the legal advice, having the legal services provided or taking the legal action would not exceed:

1. an amount equal to the sum of $1,000 for each lot in the strata scheme concerned (excluding utility lots), or

2. $12,500,

whichever is the lesser.

2. In a case where the cost, or estimated cost, of seeking legal advice, having legal services provided or taking legal action has been:

1. disclosed by the Australian legal practitioner concerned in accordance with the Legal Profession Act 2004, or

2. set out in a proposed costs agreement under that Act,

the reasonably estimated cost of seeking the legal advice, having the legal services provided or taking the legal action is taken, for the purpose of this clause, to be the cost or estimated cost so disclosed or set out.

3. The seeking of legal advice, the provision of legal services or the taking of legal action is exempt from the operation of section 80D of the Act if its purpose is to recover unpaid contributions and interest under section 80 of the Act.

There is no evidence before the Tribunal as to the likely legal costs of these proceedings nor as to any costs disclosure and agreement entered into by the applicant and its legal representative (although both the applicant’s legal representative and Mr Romani made submissions to the effect that legal costs of these proceedings did not exceed the statutory amount). However, in my opinion, the relevant findings are: first, it is not necessarily the case that the owners in general meeting have to make the decision to commence the current proceedings and in any event it is agreed no such decision was made; secondly, the management agreement provides authority for the strata manager to commence such proceedings (and the application was completed and signed by the strata manager); and third that the executive committee meeting in June 2014 in fact did pass a resolution to make this application (or a resolution which had that effect) and I am satisfied on the balance of probabilities that such resolution was passed before the application was filed. I note the application was dated 4 June 2014 and in my view that suggests the strata manager, having filled out the application, delayed filing it until the resolution was passed, even though strictly speaking the resolution was not necessary.

24. A further issue in this regard related to whether the owners or the executive committee properly accepted the legal costs disclosed by the applicant’s solicitors and whether the owners or the executive committee properly appointed those solicitors. In my opinion this was another example of the respondents attempting to suggest something sinister on the part of the applicant which evaporated on a proper scrutiny of the evidence. In this particular instance, the minutes of an executive committee meeting on 22 July 2014 make it clear that the executive committee unanimously agreed to accept the costs agreement put forward by J. S. Mueller and Co. Further, as already noted, the amount of legal costs appears to be less than the statutory amount provided in Regulation 15.

25. I find these proceedings were properly commenced according to the relevant provisions of the Act and the Regulation.

Appeals

26. Another issue which arose during the hearing but which finally, as I find below, has no relevance to this decision, related to a number of appeals against the Adjudicator’s order.

27. The respondents filed an appeal against that order on 30 August 2013. That appeal was dismissed on 22 November 2013 by Member Gray as there was no appearance by the appellant on that date.

28. The current application, in answer to Question 9 on the application form (“What are your reasons for requesting the above order/s?”) states inter alia: “[A]gain on 8-JAN-2014 tribunal member K. Rosser declined a stay and noted that the order remain in full force and effect.” There is no other evidence in that regard.

29. During the hearing it became clear that the respondents had in fact filed two further appeals which were dismissed. There was no information before me as to the nature of such appeals but it appears to have been conceded by the respondents that that information was correct and also that an order had been made that the respondents pay the applicant’s costs or some of them in relation to those appeals. That order, it appears, was made on or about 07 march 2014. It also appears that such appeals were treated as external appeals as defined in the Civil and Administrative Tribunal Act 2013 (“the CAT Act”).

30. Finally, as noted above, the respondents filed yet another appeal, this time an internal appeal pursuant to the CAT Act and that appeal is proceeding through the usual appeal processes. There was no evidence provided by the respondents that in relation to any of those appeals or by any other means, an order has been made staying the orders made by Adjudicator Rosser. I am satisfied there is no statutory reason why I may not proceed to determine this penalty application.

The Respondents’ Submissions

31. I note in summarising the submissions as to penalty made by Mr Romani for the respondents, those submissions repeat many of the issues and assertions referred to above which, as I attempted to indicate to Mr Romani, were not relevant to the proceedings today. Out of respect to Mr Romani and to ensure he had every opportunity to present his case as he wished, I made no or virtually no attempt to guide or restrict his submissions. As Mr Romani wished to take me to a number of documents which he referred to as “evidence”, I should note that in fact these related to submissions in writing which Mr Romani proceeded to present orally and which I now summarise.

1. First, the respondent asserted again that Special By-law 16 does not exist. The owners never gave permission to introduce Special By-law 16 and never gave permission for legal action to be taken and there was never a meeting held to approve legal action nor legal costs, in contravention of the Act.

2. The evidence of Mr Dean should be taken with “a pinch of salt”, because he seeks to make too many corrections to his evidence and there is no evidence that the dog is a nuisance. Also, there are other dogs in the scheme, there is evidence from other owners to that effect and there is photographic evidence that one dog is still in the scheme.

1. This is the second time the respondents have been taken to the Tribunal when they already had permission to keep a dog from “the board” back in 2000. In addition, there was a vote at a general meeting on 14 April 2013 in which the owners corporation’s resolution for a special by-law was defeated as more than 25% of owners voted against the proposal. There was a mediation agreement prior to that meeting that there would be a vote that owners either wanted or did not want pets and if that vote was successful then “we are going to change the law” to allow it.

2. In “collusion” with the executive, “management” (that is, the strata manager) made life very difficult for the respondents, there was no simple yes/no vote, rather there were proposed special by-laws full of conditions and that was not agreed at mediation. Owners could not understand these confusing proposals.

3. The original special by-law was made on 05 November 1998 before any owners had moved into the scheme, therefore there were no owners present at that meeting and therefore the meeting or the special by-law were illegal. This was all irregular and therefore unlawful. Mr Dean gave evidence he moved into the scheme on 03 December 1998 and the respondents moved in in February 1999.

4. Mr Romani repeated his submission that these proceedings and the previous application by the owners were “in retribution” because they lost the previous action back in 2000. The executive and management acted secretly in collusion, no notices of meetings or agendas were ever given to owners or maybe one or two towards the end and therefore the executive [committee] should pay all these legal costs.

5. This application for a penalty should not be decided until the current appeal is determined.

6. The penalty application should be denied for moral reasons, because the respondents kept their dog without problems for so long, because other people kept dogs, because there have already been two votes on the issue and because the Government has plans to “introduce pets without consent” and because pets are part of normal Australian life.

7. This is especially true because there were lots of arguments and evidence available before the Adjudicator’s order was made (that is, the order founding the current penalty application). [It should be noted that there appeared to be some confusion as to which order was meant to be referred to: the Adjudicator’s order or an order made on 07 March 2014.] The order was made under duress and under pressure from the legal representative for the applicant.

8. There is no valid contact between the scheme and management, the contract is an old contract from 2011.

Cross-Examination of Mr Romani

32. Although the above representations appeared to be submissions and were treated as such by me, following these submissions the applicant requested and was given leave to cross-examine Mr Romani.

33. In cross-examination, Mr Romani agreed the respondents no intention, until circumstances may change, removing the dog Simba. This is because they see no reason why they should do so as the executive has not given reasons for refusing permission to keep a dog. Mr Romani also agreed that the respondents do not intend to comply with the orders of Adjudicator Rosser. This is because. so the respondents assert, her orders were made without evidence being examined and therefore it would not be fair for the respondents to remove the dog particularly when the dog has caused no problems at all. The respondents intend to appeal the matter further.

The Applicant’s Submissions

34. In its submissions, the applicant pointed out that the Act had been properly complied with in relation to the procedures for commencing these (and the previous) proceedings, first by virtue of specific provisions in the management contract between the strata and the strata manager, and secondly because the executive committee had properly resolved, within power, to commence the proceedings. More specifically, the executive committee had resolved to accept the costs agreement proposed by their solicitors and to commence these proceedings. This is clear from the documentary evidence. There is no evidence before the Tribunal that the relevant executive committee meeting in June 2014 had been held on 16 June 2014 that was an assumption by the respondents.

35. In relation to penalty, the applicant submitted that this was the one and only attempt the applicant was permitted in seeking a penalty and that the respondents had deliberately and for a long time failed to comply with the Adjudicator’s order.

Consideration and Decision

36. Provided an applicant owners corporation for a penalty pursuant to s 202 of the Act has complied with the statutory procedures in relation to, for example, properly resolving to file such an application, to retain solicitors and so forth, a penalty application is almost always a fairly brief and straightforward hearing. The bulk of the hearing time and the consideration, for that matter, usually relates to whether any penalty should be imposed and if so, in what amount.

37. That is not what occurred in this matter. I explained at length to the parties (although of course Mr Mueller required no such explanation) that the issues before me were:

1. was there an order under Chapter 5 of the Act;

2. had the order been complied with;

3. if (a) and (b) are satisfied, on the evidence presented by the parties, was it an appropriate case in which to impose a penalty; and

4. if so, on the evidence presented by the parties, what is an appropriate penalty in these particular circumstances.

38. The case presented by the applicant was, as it should have been, brief. The applicant demonstrated (a) and (b) above and submitted in relation to (c) and (d), as summarised previously. There is no doubt as to the fact that there was an order under Chapter 5 of the Act. There is no doubt nor dispute that the respondents have not complied with the order.

39. The case presented by the respondents was in stark contrast to the applicant’s case. Although it was agreed that (a) and (b) above were proved, the respondents sought to impugn the order itself and to explain why it was unfair or unreasonable to comply with it. The respondents also argued what was in effect a preliminary issue: that the owners corporation or rather the strata manager had no authority to bring the penalty application.

40. In relation to the preliminary issue, I find the strata manager was properly authorised to bring the application for the reasons described above. I am also satisfied on the balance of probabilities that the executive committee validly passed a resolution in compliance with the Act and with the conditions prevailing in this strata scheme both that the proceedings be commenced, that the costs agreement provided by the applicant’s solicitors be accepted and that those solicitors are properly and legally retained, on the basis also of the evidence and submissions above.

41. In relation to the validity or effectiveness of the order (although I note those specific terms were not used by Mr Romani it appears to me that was the effect of his submissions), I am satisfied the order was properly made and remains in effect. There was no challenge in fact to the legality of the order, as I understand the respondents’ case: their argument appears to me to be that because all the evidence was not provided to the Adjudicator or considered by the Adjudicator, or because there were other issues which should have been raised before the Adjudicator, the order should not have been made because it is not fair or reasonable. I do not agree with that argument even if the submissions are correct. The appropriate course, as was known to and adopted by the respondents, was to appeal to the Tribunal against the Adjudicator’s order. Such appeals were not successful, in one case at least because the appellant respondents did not appear for the appeal hearing.

42. The respondents have not convinced me that there is any reason to doubt the effectiveness and validity of the Adjudicator’s order or the current application. It is also obvious and not disputed that the respondents have deliberately decided not to comply with the order and that they deliberately do not intend to change that decision. It is therefore appropriate, in my opinion, that I go on to consider points (c) and (d) set out above.

43. For the reasons expressed by the applicant and summarised above, I find that this is a case in which it is appropriate to impose a civil penalty pursuant to s 202 of the Act and for the same reasons it is appropriate to impose a significant penalty. The respondents, with full knowledge of the Act and in deliberately deciding not to comply with a relevant order, have flouted the Adjudicator’s order.

44. However, before making a final decision, it is appropriate that I consider, in the particular circumstances of this application, whether there is utility in making such an order because of the current appeal.

45. The respondents submit that there is a current appeal against the Adjudicator’s order which has been accepted by the Tribunal and is currently proceeding through that appeal process. If that appeal is successful it would be unfair that a penalty be imposed for failing to comply with an Adjudicator’s order if that order is to be set aside on appeal.

46. I reject those submissions. There is no evidence before me as to the chances of success (although the applicant submits the appeal must be doomed). In any case, in my opinion it is not appropriate to refuse to impose a penalty in the quite extreme circumstances of this case for no other reason than an appeal (in fact, apparently, the fourth appeal) has been filed against the Adjudicator’s order. The “extreme circumstances” are the undoubted existence of the order and the undoubted deliberate decision not to comply with the order. In my opinion this is a serious issue whatever the outcome of the appeal: the respondents do not have the right to decide when and in what circumstances they will comply with a Tribunal order.

47. For these reasons, I impose a pecuniary penalty of $5,500.00 on the respondents.

G Meadows

Senior Member

Civil and Administrative Tribunal of New South Wales

11 December 2014

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: 12 February 2015