The Owners - Strata Plan No 69140 v Drewe

[2017] NSWSC 845

Supreme Court

New South Wales

• Summary available

Medium Neutral Citation:

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

Hearing dates:

9 March 2017

Date of orders:

27 June 2017

Decision date:

27 June 2017

Jurisdiction:

Common Law

Before:

Latham J

Decision:

1 Leave is granted under s 83 of the Civil and Administrative Tribunal Act 2013 to appeal on a question of law.
2 The appeal is allowed.
3 The decision of the Tribunal dated 8 August 2016 is set aside.

Catchwords:

ADMINISTRATIVE LAW – application for judicial review – where alternative available remedy to judicial review - errors of law – injustice to the plaintiff that is more than arguable – where Strata Schemes Management Act 1996 considered – where appeal allowed

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW) s 83
Strata Schemes Management Act 1996 (NSW) ss 140; 177; 65A; 52; 61; 181; ch 3; 21
Supreme Court Act 1970 (NSW) s 69

Cases Cited:

Ainsworth v Albrecht [2016] HCA 40; (2016) 338 ALR 1
Alchin v Daley [2009] NSWCA 418
BKE v Office of Children’s Guardian & Anor. [2015] NSWSC 523
Compensation (Dust Diseases) Board of NSW v Smith [2010] NSWCA 19
Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 197 ALR 389
Owners Corporation SP7596 v Risidore [2003] NSWSC 966; 1 STR (NSW) 395
Stolfa v Hempton [2010] NSWCA 218; 15 BPR 28,253
Zouk v The Owners Corporation of Strata Plan 4521 & Anor [2005] NSWSC 845

Category:

Principal judgment

Parties:

The Owners ­– Strata Plan No 69140 (Plaintiff)
Stephanie Jane Drewe (First Defendant)
Civil and Administrative Tribunal of New South Wales (Second Defendant)

Representation:

Counsel:

 

D.D. Knoll AM (Plaintiff)

 

C Conde (First Defendant)

 

Solicitors:

 

Grace Lawyers (Plaintiff)

  Staunton & Thompson Lawyers (First Defendant)

File Number(s):

2016/266870

Judgment

1. By Amended Summons filed on 16 November 2016, the plaintiff applies for judicial review of a decision by a Senior Member of the NSW Civil and Administrative Tribunal (NCAT or the Tribunal) of 8 August 2016 on the grounds of both error of law on the face of the record and jurisdictional error.

2. An alternative basis for relief requiring leave to appeal on a question of law pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act) is pressed on the basis that the alleged errors of law involve the proper construction of provisions of the Strata Schemes Management Act1996 (NSW) (the SSM Act), that there is a public interest in ensuring that the Tribunal acts according to law and that the decision represents an injustice which is more than merely arguable. In the event that leave is granted, the first defendant does not oppose the application for leave and the appeal being heard and determined concurrently.

3. The first defendant is the owner and occupier of a lot within the plaintiff’s Strata Plan and was the successful party in an appeal from a decision of an Adjudicator that came before the Senior Member. The second defendant filed a submitting appearance.

The First Defendant’s Unauthorised Alteration of the Common Property

4. The first defendant became the owner of Lot 27 in a strata scheme comprising 120 lots at North Manly on 16 June 2010.

5. On 15 April 2013 the first defendant informed the plaintiff’s Strata Manager of her intention to install a timber window in her bedroom. The first defendant was informed that consent was very unlikely, given that all windows and doors in the property were powder coated aluminium. The first defendant was invited to submit detailed drawings indicating the location of the window and details about the design, colour and material to be used. The first defendant supplied a drawing of the timber window. Her application was declined on 3 May 2013 by the Executive Committee of the Owners Corporation. The first defendant’s proposal in relation to the window went no further.

6. On 18 December 2013, the first defendant installed bi-fold timber doors at her veranda entry, replacing the powder coated aluminium doors which constituted common property. This was done without any prior notice to the plaintiff and without the plaintiff’s approval.

7. On 13 October 2014 the plaintiff’s building manager informed the first defendant in writing that the doors were in breach of the by-laws and requested that the first defendant reinstate the original doors. The first defendant failed to do so.

8. On 18 November 2014, the first defendant wrote to the Executive Committee, stating that she would like to put forward a special resolution for the creation of a by–law granting authorisation of the works already carried out, “which would include that I am solely responsible for maintenance of these changes.”

9. Following an exchange of correspondence, the first defendant sent an email to the Strata Manager on 22 January 2015, attaching a Building Works Application, and requesting that a motion be placed on the Agenda of the Annual General Meeting (AGM) seeking retrospective approval of the unauthorised works.

10. The Agenda for the AGM was duly circulated to all owners. It included a motion “that the Owners Corporation approves by Special Resolution the works/renovations undertaken by the Owner of Apartment 216 Lot 27 without prior approval of the Owners Corporation.”

11. On 17 February 2015 at the AGM, the motion was comprehensively defeated. The only vote in favour of the motion was the first defendant’s vote. The first defendant did not present a draft by-law for the purposes of the vote.

12. On 10 March 2015, the first defendant was again instructed to reinstate the original doors. Four days later, the first defendant informed the Strata Manager that she would not comply.

13. On 28 April 2015 the first defendant was served with a Notice to Comply with By-Law 4.2(a) (requiring consent from the Owners Corporation to keep anything in a lot that is visible from outside of the lot and is not in keeping with the appearance of the building) and a Notice to Comply with Special By Law No. 4 (stipulating that owners must not carry out unauthorised works).

14. On 20 May 2015 the first defendant applied for an Adjudicator’s order, pursuant to s 140(2) of the SSM Act. That provision allows for an order approving alterations already made, if the Adjudicator considers that the Owners Corporation unreasonably refused its consent.

15. The application to the Adjudicator sought the creation of a new by-law granting authorisation of the works carried out and allocating sole responsibility to the first defendant for the maintenance of them.

16. On 2 September 2015 the first defendant’s application was dismissed by the Adjudicator, on the basis that the first defendant failed to establish that the plaintiff’s concerns, with respect to the alteration of the common property by the installation of timber doors, were not guided by sound judgment or good sense. In summary, the Adjudicator was not of the view that the Owners Corporation had unreasonably refused consent.

17. On 30 September 2015, the first defendant appealed against the Adjudicator’s decision pursuant to s 177 of the SSM Act. The appeal was heard by the Senior Member on 28 June 2016. It is a matter of some relevance to the resolution of these proceedings that the decision under appeal concerned the unauthorised installation of timber doors.

The Decision of the Senior Member

18. After setting out the background to the appeal, the Senior Member summarised the first defendant’s evidence and made findings of fact based upon it. One of those factual findings was that “the timber doors the subject of the application and which open on to a covered patio area are not visible from outside of the boundaries of the [first defendant’s] lot.”

19. The plaintiff’s evidence was also summarised. There was no reference to the evidence of the plaintiff’s representative, given in response to being shown a series of photographs, that the timber doors were visible from other properties on the high side of the street, albeit not visible from the common property of the unit complex itself. The Senior Member in fact stated that the plaintiff “did not advance any evidence which undermines such a finding [that the timber doors cannot be seen from other than within the first defendant’s lot] or renders it liable to any substantial doubt.” The Senior Member noted that the first defendant’s contention on the appeal was essentially a re-agitation of the matters put before the Adjudicator, that is, that the refusal of retrospective consent for the installation of the timber doors by the Owners Corporation was unreasonable.

20. The plaintiff resisted any suggestion that there was error on the part of the Adjudicator and referred the Senior Member to s 65A of the SSM Act. That provision mandated the approach of the Owners Corporation to the authorisation of changes to the common property. It provided that such authorisation could occur provided that a special resolution was passed at a general meeting of the Owners Corporation to that effect. Moreover, in the absence of the special resolution specifying that the relevant lot owner was responsible for the ongoing maintenance of the altered common property, responsibility for maintenance fell to the Owners Corporation (s 65A(3)). Section 65A(4) provided that a special resolution has no effect unless the Owners Corporation make an appropriate by-law. The plaintiff contended before the Senior Member that the absence of a by-law was therefore fatal to a special resolution and that the Adjudicator had correctly determined that “it is not unreasonable to expect [the first defendant] to provide the Owners Corporation for consideration a detailed by-law in accordance with sections 51 and 52 of the Act” (Adjudicator’s decision of 2 September 2017 at [27]).

21. The Senior Member approached the determination of the appeal in the following sequence:-

1. The failure of the plaintiff to apply to the Tribunal for a pecuniary penalty against the first defendant on the basis of a breach of by-law 4.2(a) and special by-law 4, together with the failure to serve a notice to comply with by-law 21, evinced an understanding on the part of the Executive Committee that “such applications would likely fail.”

2. The absence of a draft by-law at the AGM of February 2015 “was directly as a result of the strata managing agent requiring submission of the standard form of application which did not require such an instrument to be advanced at that time.”

3. The evidence established that, had the requirement for a draft by-law been made known to the first defendant by the plaintiff, the first defendant would have advanced such a by-law “without delay”.

4. The “true position” was that the plaintiff did not require a draft by-law to be advanced, in view of the evidence of the plaintiff’s representative (an Executive Committee member) that he had drafted such a by-law, albeit it was never served upon the first defendant.

5. The Adjudicator erred “in finding that no draft by-law was advanced as a consequence of [the first defendant’s] failure to observe the requirements of [the plaintiff]”.

6. Error having been established, it was open to the Tribunal to re-exercise the discretion.

7. On the basis of the material before the Adjudicator, the Tribunal was “comfortably satisfied and finds that the decision made first by the Executive Committee and then at the AGM refusing the application was unreasonable” on the following bases:-

1. The strata managing agent’s response to the first defendant on 3 May 2013 was “a pre-determination of the issue”, which demonstrated a closed mind by the Executive Committee and was therefore unreasonable.

2. There was “no reasonable basis in any of the evidence for the adoption of the position by the Executive Committee” that unauthorised works would undermine the building’s image as a landmark, or that wooden bi-fold doors required more maintenance than powder coated aluminium doors. The absence of any objective evidence supporting these contentions supported the finding that the Executive Committee held “preferences and opinions” rather than “weighing all relevant factors ... in considering such an application and determining it on the merits.”

3. It was “clearly wrong” to assert that there was no draft by-law provided “to the Executive Committee or the AGM and that there was an absence of the [first defendant] taking responsibility for repairs and maintenance thus making the [plaintiff] ... responsible for them”.

4. At all material times “in this dispute the Executive Committee had little understanding of the duties imposed upon it by the Act, if it had any understanding of them at all.” This finding was based upon the strata manager’s letter of 26 April 2013 to the Executive Committee with respect to the first defendant’s request to alter the window.

5. The Executive Committee disregarded the duties imposed upon it by s 140 of the SSM Act in dealing with the first defendant’s application for retrospective approval.

6. The approach by the plaintiff to the first defendant’s application amounted to unreasonable conduct at all times on and after 26 April 2013, in that reliance was placed upon grounds which were not objectively reasonable.

The Available Effective Remedy

22. The submissions of the first defendant opposing the grant of relief by way of judicial review pursuant to s 69 of the Supreme Court Act1970 (NSW) are persuasive. It is clear that an available effective remedy is available under s 83 of the NCAT Act and that the issues arising under both avenues for relief substantially overlap. In those circumstances, the statutory scheme for relief is to be preferred to the discretionary jurisdiction under s 69 of the Supreme Court Act 1970 (NSW).

23. The first defendant opposes the grant of leave, claiming that no question of principle arises and no substantial injustice has been occasioned. The first defendant also invokes the principles of finality and proportionality. The value of the unauthorised works does not exceed $12,000.00 and the proceedings have had a long and unsatisfactory history.

24. For the reasons set out below, I have concluded that leave ought to be granted and that the appeal should be heard and determined. It will be apparent from what follows that the Tribunal erred in law in a number of significant respects. Whilst the value of the unauthorised works might be considered small, the errors in the Tribunal’s application of the relevant statutory provisions significantly undermine the effective control, management and administration of the common property by the plaintiff, which has that statutory duty pursuant to s 61(1) of the SSM Act. The Owners Corporation must discharge that duty for the benefit of the owners as a whole. The reasonableness or otherwise of the withholding of consent to the alteration of the common property by one of many lot owners must be assessed in that statutory context.

Errors of Law

25. The plaintiff alleges a number of errors of law in the Tribunal’s decision. The first concerns the construction of s 140 of the SSM Act and the Senior Member’s assessment of the Adjudicator’s decision. The second concerns the construction of s 65A of the SSM Act and the Senior Member’s findings in relation to the proposed by-law. The third claims that the Senior Member took into account irrelevant considerations, the fourth that he failed to have regard to relevant considerations and the fifth that he denied the plaintiff procedural fairness.

26. The relevant parts of s 140 of the SSM Act provide:-

(1) An Adjudicator may order an owners corporation to consent to work proposed to be carried out by an owner if the Adjudicator considers that the owners corporation has unreasonably refused its consent and the work relates to any of the following:

(a) alterations to common property directly affecting the owner’s lot,

(b) carrying out repairs to common property or any other property of the owners corporation directly affecting the owner’s lot.

(2) An Adjudicator may make an order approving of alterations or repairs already made by an owner to common property or any other property of an owners corporation directly affecting the owner’s lot if the Adjudicator considers that the owners corporation unreasonably refused its consent to the alteration or repairs.

(3) An order under subsection (2) is taken to be the consent of the owners corporation to the alterations or repairs concerned and may be expressed as having effect from a day specified in the order that occurred before the order was made.

(4) An Adjudicator may specify in an order under this section whether the owners corporation or the owner of the lot concerned has the ongoing responsibility for the repair and maintenance of any additional property arising out of an alteration or repair to common property approved under the order.

27. Subsection 2 required the Adjudicator to approach the first defendant’s application by determining whether the plaintiff unreasonably refused consent to the installation of the wooden bi-fold doors that the first defendant had already installed? without prior approval. Further, that question fell to be determined having regard to the circumstances at the time of the refusal of consent, namely at the AGM on 17 February 2015.

28. The Senior Member of the Tribunal was obliged to confine himself to the decision of the Adjudicator, and the evidence which underpinned that decision, for the purposes of determining whether the Adjudicator had erred: Owners Corporation SP7596 v Risidore [2003] NSWSC 966; 1 STR (NSW) 395 at [17] – [18].

29. To the extent that the first defendant relies upon s 181(2) of the SSM Act (which provides the Tribunal with a discretion to admit new evidence) in support of the submission that the Tribunal has a wide discretion to consider whether an Owners Corporation has unreasonably refused consent, it must be remembered that the discretion under s 181(2) “is to be exercised having regard to its statutory context. It is a weapon provided to facilitate the hearing of an appeal. It was not intended to have the function of converting an appeal into a fresh hearing”: Zouk v The Owners Corporation of Strata Plan 4521 & Anor [2005] NSWSC 845 at [12].

30. The Adjudicator’s decision focussed on the circumstances that existed on 17 February 2015 with respect to the first defendant’s application to the Owners Corporation for retrospective consent to the installation of the doors. The Adjudicator found that the first defendant had done no more than put forward a motion, without a proposed by-law (for which the first defendant was held to be responsible), regarding responsibility for the ongoing maintenance of the doors, without detailed engineering/architectural drawings demonstrating that the work was sound, and without evidence of a development application or Compliance Certificate from Council. None of those findings were, or are now, disputed as matters of fact.

31. No issue was taken before the Tribunal or before this Court with the Adjudicator’s approach to the construction of what is “unreasonable” for the purposes of s 140(2) of the SSM Act.

32. The Senior Member’s reasoning towards the establishment of error on the part of the Adjudicator, summarised at [21] (a) to (e) above, failed to engage at all with the accepted test under s 140. The reasoning includes a number of findings which were not established by the evidence or were against the weight of the evidence ((b), (c), (d) and (e)). The assumption represented by (a) was entirely irrelevant.

33. The Adjudicator’s finding that the first defendant was responsible for drafting the by-law was not directly challenged and nowhere in the decision of the Senior Member was an analysis undertaken of the relevant statutory provisions which were relevant to that question.

34. With respect to the proposed by-law, the evidence was that the first defendant was aware of the requirement for a by-law regarding responsibility for maintenance as at 18 November 2014 when she requested that the AGM include the special resolution. There was no evidence from the first defendant that she acted under a misapprehension that the Owners Corporation was responsible for drafting the by-law, nor was there evidence that she would have provided a draft by-law without delay had she been requested to do so. The first defendant professed a willingness to provide a draft by-law in a letter which accompanied her application to appeal the Adjudicator’s decision, but the contents of that letter were not mirrored in her affidavit before the Senior Member.

27. In relation to (d), the evidence was that one member of the Executive Committee drafted a by-law; there was no evidence of that having been done on behalf of the Executive Committee or that the draft by-law was circulated to anyone. In fact, during the hearing the Senior Member commented “But I don’t even have evidence of a by-law. I have an assertion” (Transcript of proceedings 28 June 2016, p 38). Given the tenor of this remark, the plaintiff was entitled to think that nothing turned on the limited evidence in relation to this matter. The plaintiff was denied procedural fairness in this respect, which itself constitutes an error of law: BKE v Office of Children’s Guardian & Anor. [2015] NSWSC 523.

28. It was an undisputed fact that no draft by-law was put forward at the AGM. The Adjudicator did not err in that respect. The reasonableness of the refusal of consent fell to be decided primarily by reference to the statutory obligations imposed upon the Owners Corporation by s 65A of the SSM Act. In the absence of a by-law (for whatever reason), the first defendant’s proposed special resolution was of no effect. The requirement on the Owners Corporation under s 65A(4)(b) was to make a by-law, not to draft and propose one.

29. In any event, none of the alleged conduct or omissions of the plaintiff with respect to the by-law that were identified by the Senior Member in his reasons were capable of overcoming the requirements of s 65A by way of estoppel: Stolfa v Hempton [2010] NSWCA 218; 15 BPR 28,253.

30. The Senior Member’s re-exercise of the discretion under s140 of the SSM Act was also fatally flawed. It is apparent from the reasons set out and summarised at [21](g) above that the Senior Member approached the matter on the basis that the correspondence between the first defendant and the Executive Committee regarding the proposed alteration of the window in the first defendant’s lot was relevant to the refusal of consent by the Owners Corporation. There was no application before the AGM with respect to the window. The first defendant never progressed with that application.

31. With respect to the statement summarised at [21](g)(iii) above, it was common ground that no draft by-law was submitted to the AGM and that, whatever undertaking had been expressed by the first defendant in that regard, the legal consequence of the absence of an appropriate by-law was that the Owners Corporation was responsible for maintenance and repairs.

32. The Senior Member’s finding at [21](g)(v) above is another expression of a seeming fundamental confusion with respect to the statutory scheme of the SSM Act. Section 140 imposed no duties on an Executive Committee. That provision is concerned with the circumstances warranting an order by an Adjudicator, directed to an owners corporation, relating to alterations or repairs to common property. It represents the only exception to the discretions and obligations otherwise imposed upon an owners corporation by Part 2 of Chapter 3 of the SSM Act (Maintenance and Repairs; Key Management Areas). More importantly, s 21(2) of the SSM Act prohibits an executive committee from deciding anything that the Act requires the owners corporation to decide by special resolution.

33. In short, a reading of the whole of the Senior Member’s reasons demonstrates an erroneous approach to the determination of the appeal. The question to be asked and answered was whether the Owners Corporation‘s refusal of consent at the AGM, based on the material then available, was unreasonable, not whether the grounds were objectively reasonable: see Ainsworth v Albrecht [2016] HCA 40; (2016) 338 ALR 1 at [97].

34. The evidence before the Senior Member established that the Owners Corporation refused consent for reasons which included:-

1. The importance of the uniformity of appearance of the building;

2. The wooden bi-fold doors were not in keeping with the overall appearance of the building;

3. The grant of retrospective approval required a special by-law and none was submitted;

4. Wooden bi-fold doors require more maintenance than powder coated aluminium doors and in the absence of a special by-law, responsibility for maintenance fell to the owners corporation;

5. The grant of retrospective consent did not allow the Owners Corporation to control the engagement of contractors and their access to the building, thus exposing the Owners Corporation to potential work, health and safety liability;

6. The works undertaken by the first defendant were contrary to the SSM Act and to the by-laws of the building.

43. The onus lay upon the first defendant to establish that these grounds had no rational basis in that they were not guided by sound judgment or good sense. Apart from some questions put to a representative of the Owners Corporation that challenged whether the doors could be seen from outside the common property, which went to the basis of reason (ii), no suggestion was put that was capable of discharging that onus. As I have already noted, there was objective evidence that the doors could be seen from outside the common property but it was ignored by the Senior Member.

44. The combination of the errors identified above are capable, in my view, of demonstrating a constructive failure to exercise jurisdiction on the basis that the Senior Member failed to consider the substance of the plaintiff’s appeal principally because he misconstrued the relevant provisions of the SSM Act: Dranichnikov v Minister for Immigration and Multicultural Affairs [2003] HCA 26; (2003) 197 ALR 389.

45. I am also of the view that the Senior Member’s reasons are inadequate in several material respects, to the extent that it constitutes error of law. There is little or no reference to the manner in which he resolved questions of fact or law. Rather, the reasons appear to consist of a series of conclusions: Workers Compensation (Dust Diseases) Board of NSW v Smith [2010] NSWCA 19; Alchin v Daley [2009] NSWCA 418. In reaching this conclusion, I have taken into account the nature of the Tribunal’s jurisdiction, in particular that the Tribunal is required to be accessible and responsive to the needs of all of its users, and that it resolves the real issues in proceedings justly, quickly, cheaply and with as little formality as possible. Those laudable aims must not however displace the requirements of consistency and transparency.

46. Accordingly I make the following orders:-

1. Leave is granted under s 83 of the Civil and Administrative Tribunal Act2013 (NSW) to appeal on a question of law.

2. The appeal is allowed.

3. The decision of the Tribunal dated 8 August 2016 is set aside.

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Decision last updated: 27 June 2017