The Owners - Strata Plan No 82306 v Anderson

[2017] NSWCATCD 85

Civil and Administrative Tribunal

New South Wales

• Amendment notes

Medium Neutral Citation:

The Owners – Strata Plan No 82306 v Anderson [2017] NSWCATCD 85

Hearing dates:

28 August 2017

Date of orders:

31 October 2017

Decision date:

31 October 2017

Jurisdiction:

Consumer and Commercial Division

Before:

Wright J, President
M Harrowell, Principal Member
R Seiden SC, Principal Member

Decision:

1. Subject to the condition set out in order 2, the respondent, Prudence Anderson, is to pay a pecuniary penalty of $2,500.00 to the Director General of the Department of Fair Trading on or before 15 January 2018.

 

2. Order 1 ceases to have effect if the respondent, Prudence Anderson, on or before 12 January 2018:
(a) has installed in Lot 2 in Strata Plan No 82306 in place of the carpet and underlay removed by her a floor finish that is either a soft floor or a hard floor, complying with By-law 14.2; and
(b) gives to the Tribunal and to the applicant, the Owners Corporation of Strata Plan No 82306, an affidavit confirming that the work referred to in the preceding par (a) has been done and annexing an acoustic report carried out in accordance with By-law 14.3(b) by an acoustic engineer or other appropriately qualified person in respect of the replacement floor finish referred to in par (a) demonstrating that By-law 14.2 has been complied with.

 3. If the Owners Corporation wishes to apply for costs of this application:
(a) the Owners Corporation is to give to the Tribunal and to Ms Anderson written notice of its application for costs together with any evidence and submissions (including submissions on whether the costs application should be determined without an oral hearing) on which it relies on or before 10 November 2017;
(b) if Ms Anderson opposes the making of a costs order against her, she is to give to the Tribunal and the Owners Corporation any evidence and submissions (including submissions on whether the costs application should be determined without an oral hearing) on which she relies on or before 17 November 2017;
(c) the Owners Corporation is to give to the Tribunal and to Ms Anderson any evidence or submissions in reply on or before 24 November 2017.

Catchwords:

STATUTORY CONSTRUCTION – enforcement proceedings concerning an order of a Strata Schemes Adjudicator made before repeal of the Strata Schemes Management Act 1996 (NSW) – effect of repeal of the 1996 Act – effect of transitional provisions of Strata Schemes Management Act 2015 (NSW) and Interpretation Act 1987 (NSW) – right to bring enforcement proceedings, as if the Strata Schemes Management Act 1996 (NSW) had not been repealed, preserved by s 30 of the Interpretation Act – Sch 3 cl 9 of Strata Schemes Management Act 2015 is merely facultative and does not establish an exclusive regime

CIVIL PENALTIES – application for civil pecuniary penalty under s 202 of the Strata Schemes Management Act 1996 – where unfettered discretion to impose pecuniary penalty – purposes of imposing a penalty – general factors that may be considered when determining whether a pecuniary penalty is to be imposed and amount of the penalty

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW) ss 72, 75, 77
Interpretation Act 1987 (NSW) ss 5, 30
Strata Schemes Management Act 1996 (NSW) ss 172, 202, 204, 210, 232
Strata Schemes Management Act 2015 (NSW) ss 275; Sch 3 cll 2, 3, 7, 8, 9

Cases Cited:

Aitken v South Hams District Council [1995] 1 AC 262
ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18
Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 64; [2013] HCA 54
Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482; [2015] HCA 46
Director of Public Prosecutions v Khoury [2014] NSWCA 15; 306 ALR 86
Minister for Immigration and Citizenship v Li (2013) 249 CLR 332; [2013] HCA 18
Moallem v Consumer Trader and Tenancy Tribunal [2013] NSWSC 1700
Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537; [1967] HCA 30
Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543; [2007] FCAFC 65
Shahbazian v Owners Corporation SP 56466 [2017] NSWCATCD 83
Tael One Partners Limited v Morgan Stanley & Co International PLC [2015] UKSC 12
Wrigley v Owners Corporation SP 53413 [2017] NSWCATAP 100

Category:

Principal judgment

Parties:

Owners Corporation SP 82306 (Applicant)
Prudence Anderson (Respondent)

Representation:

R Lovas, Counsel (Applicant)

  Solicitors:
Lawyers Chambers on Riley (Applicant)

File Number(s):

SC 17/22766

Reasons for decision

Introduction

1. The applicant is the Owners Corporation in respect of Strata Plan No 82306. The respondent, Ms Anderson, is, and has at all material times been, the owner of lot 2 in the strata scheme to which that Strata Plan relates.

2. The Owners Corporation has lodged an application seeking a pecuniary penalty against Ms Anderson based on her alleged failure to comply with an earlier order made on 30 June 2016 by a Strata Scheme Adjudicator under the Strata Schemes Management Act 1996 (NSW) (the 1996 Act).

3. An initial question arose as to the authority of the Tribunal to hear and determine an application, made after the repeal of the 1996 Act by the Strata Schemes Management Act 2015 (NSW) (the 2015 Act), for a civil penalty for non-compliance with an adjudicator’s orders made before the repeal of the 1996 Act.

4. For the reasons which follow, we have decided:

1. that the Tribunal has authority to hear and determine an application for a civil penalty for contravention of an adjudicator’s order operative before the repeal of the 1996 Act, by virtue of s 30(1) of the Interpretation Act 1987 (NSW) (the Interpretation Act); and

2. in the present case, the respondent should be ordered to pay a civil penalty subject to the condition referred to in the orders we have made.

The Application for a Pecuniary Penalty

5. On 18 May 2017, the Owners Corporation made an application for an order that Ms Anderson pay a pecuniary penalty for breaching and continuing to breach an order of Adjudicator made under the 1996 Act.

6. Originally, the pecuniary penalty sought was based only on a contravention of s 72(3) of the Civil and Administrative Tribunal Act 2013 (the NCAT Act). (The Tribunal is able to order the payment of a monetary penalty under s 77(2) of the NCAT Act for contravention of a civil penalty provision, such as s 72(3)).

7. On 15 June 2017, the Tribunal sent a notice of directions hearing to be held on 27 June 2017 to both parties.

8. On 27 June 2017, the Tribunal gave directions for the preparation of this matter for hearing including the filing and serving of evidence and submissions and listed the matter for hearing on 28 August 2017.

9. On 28 June 2017 the Tribunal sent by post to the Owners Corporation and to Ms Anderson, at the address of her unit in the Strata Plan, a notice of hearing for the hearing on 28 August 2017 and a letter setting out the directions made on 27 June 2017.

10. The Owners Corporation subsequently requested an extension of time in which to comply with the directions. The Tribunal extended the timetable for the filing and service of evidence and submissions and sent a letter dated 20 July 2017 to Ms Anderson and to the Owners Corporation setting out the extended timetable and confirming the date for the hearing of the application as 28 August 2017.

11. On 21 July 2017, the Owners Corporation filed its outline of submissions and the affidavit of Christopher Whelan, affirmed on 20 July 2017. Copies of these documents were also sent to Ms Anderson under cover of a letter dated 24 July 2017.

12. In par 2 of its outline of submissions, the Owners Corporation gave notice of its intention to seek to amend its application so that the orders sought were:

“1. THAT, pursuant to section 248 of the Strata Schemes Management Act 2015 NSW and section 72(3) of the Civil and Administrative Tribunal Act 2013 NSW:-

The Respondent pays a penalty in the sum of $11,000 to the Applicant for breach of the Adjudicator’s order of 30 June 2016.

2. In the alternative, THAT pursuant to section 202 of the Strata Schemes Management Act 1996:-

The Respondent pays a penalty of an amount of $5,500 for contravention of the Adjudicator’s order of 30 June 2016.”

13. Since Ms Anderson had been informed of the proposed amendment of the orders sought by the outline of submissions, which had been sent to her by the Owners Corporation, the Tribunal considered that it was appropriate to allow the amendment especially as it went only to the source of the power to make a pecuniary penalty order and not to any factual matters upon which such an order might be based. Accordingly, on 28 August 2017, the Tribunal gave the Owners Corporation leave to amend its application of 18 May 2017 to seek, in the alternative, an order:

“THAT pursuant to section 202 of the Strata Schemes Management Act 1996:-

The Respondent pays a penalty of an amount of $5,500 for contravention of the Adjudicator’s order of 30 June 2016.”

The Hearing

14. When the matter was called on for hearing at about 10.15 am on 28 August 2017, there was no appearance by Ms Anderson. No application for an adjournment had been made by or on behalf of Ms Anderson before the time of the hearing. At about 10.20 am, the Tribunal attempted to contact Ms Anderson on the mobile telephone number given by the Owners Corporation as her contact number on the application. There was no answer and the Tribunal left a message asking the recipient to contact the Tribunal in relation to the hearing of the matter between the Owners Corporation and Ms Anderson. The Owners Corporation also relied upon the notice of hearing, which was tendered and which had been sent to Ms Anderson. For the oral reasons given at the time, the Tribunal held that it was satisfied that Ms Anderson had been served with a notice of the hearing and other relevant documents, that she had had a reasonable opportunity to put her case had she wished to do so, and that the Tribunal should proceed to hear and determine the application on that day even though Ms Anderson was absent.

15. The Owners Corporation read the affidavit of Mr Whelan and tendered its solicitors’ letter to Ms Anderson of 24 July 2017, together with the enclosed submissions.

The Relevant Facts and Circumstances

16. On the evidence before the Tribunal, we find that what relevantly occurred is as set out in the following paragraphs.

17. Since before 2011 Ms Anderson was the owner of lot 2 in the Strata Scheme that is the subject of this application. By an application lodged on 12 April 2016, the Owners Corporation sought an order under s 138 of the 1996 Act that Ms Anderson comply with by-law 14 of the Strata Scheme which relates to floor coverings. Since January 2011, by-law 14 has provided:

“14.1   An owner of a lot must ensure that all floor space within the lot is covered or otherwise treated to a sufficient extent in order to prevent the transmission of noise from the floor which is likely to disturb the peaceful enjoyment of the owner or occupier of another lot.

14.2   If an owner is replacing a floor finish within his lot with material that is not carpet, the minimum sound transmission standard to be achieved for the floor finish must meet the following standards set by the Australian Association of Acoustical Consultants:

Hard floor finishes    3 star rating

Soft floor finishes    6 star rating

14.3   An owner who wishes to change any flooring within a lot must

(a)   first apply to the Owners Corporation for approval to change the flooring, which will not be unreasonably withheld, provided the application contains sufficient information to enable the Owners Corporation to satisfy Itself that the requirements of this by-law regarding noise transmission will be satisfied; and

(b)   following installation of the flooring, provide the Owners corporation with an acoustic report signed by an acoustic engineer or other appropriately qualified person to demonstrate that this by-law has been complied with.

14.4   Any owner who replaces any flooring installed by the Original Owner takes sole responsibility for the cost of installation, repair, maintenance and replacement of the new floor covering and is solely responsible to the Owners corporation if this by-law is not complied with.

14.5   Occupiers may not apply to the Owners corporation for permission to change floor coverings. Because of the provisions of by-law 53.4, all applications must come from lot owners.”

18. In his decision of 30 June 2016, the Adjudicator found that:

1. on 24 November 2015, Ms Anderson removed the carpet and underlay in her lot and polished the concrete slab;

2. this was done without the consent of the Owners Corporation;

3. Ms Anderson did not reinstate the carpet and underlay;

4. Ms Anderson did not provide evidence that the polished concrete complied with the standards set by the Australian Association of Acoustical Consultants for hard and soft floor finishes, referred to in by-law 14.2;

5. Ms Anderson did not provide an acoustic report signed by an acoustic engineer or another suitably qualified person to demonstrate compliance with by-law 14.3(b).

19. On 30 June 2016, the Adjudicator made the following order:

“1. Pursuant to s 138 of the [1996] Act I order that on or before 31 July 2016 the respondent [Ms Anderson] is to replace the floor finish in Lot 2 with either a soft floor or a hard floor that complies with By-law 14.2 after removal of the carpet and further that an acoustic report is carried out [sic] in accordance with By-law 14.3(b) by an acoustic engineer or other appropriately qualified person.”

20. Under ss 172 and 210 of the 1996 Act, the Adjudicator’s order had force and effect for a period of 2 years from the making of that order and the order took effect when a copy of the order was served on the person required to do the specified act. Sections 172 and 210 provided:

“172 Duration of order by Adjudicator

Except to the extent that the order otherwise provides, an order made by an Adjudicator under this Part (other than an interim order) ceases to have any force or effect on the expiration of the period of 2 years that commences on the making of the order.

…

210 Time at which order takes effect

(1) An order takes effect when a copy of the order is served:

(a) if the order requires a person to do or refrain from doing a specified act, on that person, or

(b) in any other case, on the owners corporation for the strata scheme to which the order relates.

(2) This section does not apply if express provision is otherwise made by this Act or in the order itself.”

21. On 4 July 2016, a notice of order was sent to both Ms Anderson and the Owners Corporation. A copy of the Adjudicator’s reasons for decision was sent with that notice. On the same day, the managing agent of the strata scheme also sent a letter to Ms Anderson enclosing a copy of the Tribunal’s notice of 4 July 2016 and stating:

“RE: Strata Plan 82306 – [XXX], Pyrmont – Lot 2 (Apartment 1B) – Breach of By Law 14

We write to you as the managing agent for the above property in relation to the enclosed notice of order issued by the NSW Civil and Administrative Tribunal on 30 June 2016.

We note that the order requires you to install a compliant floor covering by no later than 31 July 2016.

In the first instance you are required to furnish the Owners Corporation with a detailed specification of the flooring proposed with reference to the performance standards set out in the terms of by law 14. Once the specification has been approved by the Owners Corporation and installed by you an acoustic engineers report (from a qualified and accredited acoustic engineer) will be required to confirm the new floorings compliance with the terms of by law 14 as stated in the notice of order.

We ask that you please confirm your intentions in relation to the orders made with our office within seven (7) days”

22. We are satisfied that Ms Anderson received the Tribunal’s notice of 4 July 2016. A copy of that notice, with handwritten annotations, was received by the Tribunal’s registry on 8 July 2016. The handwritten annotation was as follows:

“                  7.7.16

To whom it may concern

I’m not sure what to do about this Im not in a financial position to attend a new floor. I have major regrets about what I’ve done by removing the carpet but at no time did I think having polished concrete floors was a not a floor BUT as it is & as it has become a burden then I feel I don’t have any rights to live my life in my property it’s a shame. But unless they can pay for floors for me I have to keep working pay my bills and save for new floors.”

23. Thus, by 7 July 2016, at the latest, the Adjudicator’s order took effect and continued in force for 2 years from the making of the order.

24. On 12 July 2016, a team leader from the Tribunal’s registry sent a letter to Owners Corporation and Ms Anderson concerning the correspondence received from Ms Anderson. The letter was as follows:

“Correspondence has been received from the Respondent [Ms  Anderson] on 08-JUL-2016 concerning compliance with the adjudication decision made on 04-Jul-2016 [sic, this was the date of the letter giving notice of the decision made on 30 June 2016]. Parties are required to comply with adjudication orders made by the Tribunal [sic].

…

To lodge an appeal against the Adjudicator’s order you must complete an application form (enclosed with this letter to the Respondent) and pay the filing fee of $98.00.

Should you require any further advice you may contact the NSW Fair Trading on …. Law Access NSW can also provide general legal information on ….

The correspondence has been placed on the file and a copy sent to the other parties.”

25. It should be noted that, despite what is said in that letter, an order of an adjudicator under the 1996 Act was not an order of the Tribunal. The status of adjudicator’s orders is explained in Wrigley v Owners Corporation SP 53413 [2017] NSWCATAP 100 at [9] and Moallem v Consumer Trader and Tenancy Tribunal [2013] NSWSC 1700 at [57] to [60].

26. On 27 July 2016, the managing agent of the Owners Corporation wrote again to Ms Anderson in the following terms:

“RE: Strata Plan 82306 – [XXX] Pyrmont – Lot 2 (Apartment 1B) – Breach of By Law 14

We write to you as the managing agent for the above property in relation to the enclosed notice of order issued by the NSW Civil and Administrative Tribunal on 30 June 2016.

We note that the order requires you to install a compliant floor covering by no later than 31 July 2016.

As noted in our previous correspondence of 7 July 2016 in the first instance you are required to furnish the Owners Corporation with a detailed specification of the flooring proposed with reference to the performance standards set out in the terms of by law 14. Once the specification has been approved by the Owners Corporation and installed by you an acoustic engineers report (from a qualified and accredited acoustic engineer) will be required to confirm the new floorings compliance with the terms of by law 14 as stated in the notice of order.

We note at this time we have received no further response from you.

Please be advised that in event [sic] that you do not comply with the orders issued by the NSW Civil & Administrative Tribunal [sic] the Owners Corporation intend to seek Enforcement Orders inclusive of a request that pecuniary penalties be issued for same and a cost order sought for all legal costs incurred arising from the application.

We encourage you to undertake the necessary works to comply with this order to avoid further and unnecessary expenses to be incurred by you as outlined above.“

27. Ms Anderson received this letter. On 9 August 2016, she sent a two page facsimile to the managing agent. The first page was a copy of the managing agent’s letter of 27 July 2016 marked in handwriting “9/8/16 To Whom It may Concern”. The second page was a copy of the Tribunal’s notice of decision dated 4 July 2016 which was annotated in handwriting as follows:

“               9.8.16

I have had lots of paperwork from the tribunal in regards to this matter and I have stated as I have stated to you that I cannot do anything in regards to laying of new floors – I simply don’t have the money. If someone can look on it as a “charity” case I would like tiles to be layed if you can pay for it. It’s the cheapest option and I would prefer it as carpet is not conducive to good health particularly mine. Then their would be the “noise test” which is added costs I just don’t have. I am at a loss financially therefore may have to vacate my apartment for leasing to assist my position.

Thanks Prue Anderson”

28. Thus, it can be seen that before the time for compliance had expired, the managing agents had put Ms Anderson on notice, by their letter of 27 July 2016, of the Owners Corporation’s intention to seek a pecuniary penalty and costs in the event that she did not comply with the order.

29. On 12 September 2016, the solicitors for the Owners Corporation sent a letter to Ms Anderson in the following terms:

“RE: THE OWNERS- STRATA PLAN NO 82306- APPLICATION TO THE TRIBUNAL CONCERNING [XXX] PYRMONT

FILE NUMBER: SCS 16/17603

We act on behalf of The Owners- Strata Plan No. 83206 (“Owners Corporation”).

We are instructed that you are the respondent to an application for adjudicator’s orders made by the Owners Corporation on 11 April 2016.

On 30 June 2016 Adjudicator Charles made the following order in respect of that application:

1. Pursuant to s 138 of the Strata Schemes Management Act 1996 I order that on or before 31 July 2016 the respondent is to replace the floor finish in Lot 2 with either a soft floor or a hard floor that complies with By-law 14.2 after removal of the carpet and further than an acoustic report is carried out in accordance with By-law 14.3(b) by an acoustic engineer or other appropriately qualified person.

We are instructed that, as at the date of this letter, you have not replaced the concrete flooring in your lot in accordance with the above order.

Not only do you remain in breach of by-law 14, you are now in breach of the Adjudicator’s order. The Owners Corporation offers you one further opportunity to bring yourself into compliance before taking steps to enforce the Adjudicator’s order.

You are required to do the following by 5:00pm on Friday, 23 September 2016:

1.   commence work to replace the concrete flooring in your lot in accordance with the Adjudicator’s order; and

2.   forward the following information to our office:

(a)   details of the contractor engaged to carry out the above work;

(b)   evidence that the contractor is properly licensed and has effected all necessary policies of insurance;

(c)   confirmation from you or your contractor that the concrete flooring in your lot will be replaced in accordance with the Adjudicator’s order by Friday, 30 September 2016 at the latest; and

(d)   details of the acoustic engineer or other appropriately qualified person who will be carrying out the acoustic report in accordance with by-law 14.

In the event that you do not comply with the above, we hold instructions to take all further steps necessary to enforce the Owners Corporation’s rights, including seeking a penalty order of up to $5,500 from the NSW Civil and Administrative Tribunal, plus the payment of any costs incurred by the Owners Corporation as part of this process.

We await your urgent response.”

30. The present case involves a claim for the imposition of a civil penalty. In such proceedings the standard of proof is on the balance of probabilities, Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482 at [53]; [2015] HCA 46 and s 140(1) of the Evidence Act 1995 (NSW). In reaching our conclusions of fact we have taken into account the nature of the basis of the claim for the imposition of a pecuniary penalty, the nature of the subject matter of the proceedings and the gravity of the matter alleged.

31. Having regard to all of the material and in particular the correspondence from Ms Anderson, we are more than comfortably satisfied, and find on the balance of probabilities, that Ms Anderson was aware, before 31 July 2016, of the Adjudicator’s order made on 30 June 2016 but did not before 31 July 2016 or by September 2016:

1. replace the carpet and underlay which she had removed with a soft or hard floor that complied with by-law 14.2; or

2. provide an acoustic report in accordance with by-law 14.3(b) carried out by an acoustic engineer or other appropriately qualified person.

32. No evidence has been led, however, which would indicate that Ms Anderson has taken the steps required by the Adjudicator’s order since September 2016.

Enforcement of the Adjudicator’s Order and Relevant Legislative Provisions

33. Under ss 202 and 204 of the 1996 Act, a pecuniary penalty and costs could be ordered by the Tribunal for a contravention of an adjudicator’s order made under Ch 5 of the 1996 Act. The Adjudicator’s order of 30 June 2016 was made under Ch 5. Sections 202 and 204 relevantly provided:

“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:

(a)  in any case, by the applicant for the original order, or

…

…

204   Order as to costs

(1)  The Tribunal may also make an order for the payment of costs when making an order requiring the payment of a pecuniary penalty under this Part.

(2) Any costs awarded against a person on an application for an order under section 202 include the amount of the fee paid when the application for the original order was made.”

34. On 30 November 2016, the 1996 Act was repealed by s 275 of the 2015 Act. The 2015 Act in effect abolished the position and functions of a Strata Scheme Adjudicator.

35. The 2015 Act does not contain any substantive provision that would allow the Tribunal to order the payment of pecuniary penalties for non-compliance with orders concerning the operation and management of a strata scheme. There are, however, savings and transitional provisions dealing with orders made under the 1996 Act in Sch 3 to the 2015 Act. The relevant clauses of that schedule include cll 2, 3, 7, 8 and 9 which are in the following terms:

“2 Definitions

In this Part:

…

“former Act” means the Strata Schemes Management Act 1996.

3 General savings

(1) Any act, matter or thing done or omitted to be done under a provision of the former Act and having any force or effect immediately before the commencement of a provision of this Act that replaces that provision is, on that commencement, taken to have been done or omitted to be done under the provision of this Act.

(2) This clause does not apply:

(a) to the extent that its application is inconsistent with any other provision of this Schedule or a provision of a regulation made under this Schedule, or

(b) to the extent that its application would be inappropriate in a particular case.

…

7 Existing proceedings

Any proceedings commenced but not determined or finalised under a provision of the former Act are to be dealt with and determined as if the former Act had not been repealed.

8 Adjudicators

(1) A person who held office as an Adjudicator under the former Act immediately before the commencement of this clause ceases to hold the office on a day appointed by the Secretary, being a day not earlier than the determination or finalisation of all proceedings referred to in clause 7.

(2) (Repealed)

(3) An Adjudicator who ceases to be an Adjudicator under this clause is not entitled to any compensation for loss of office.

9 Existing orders under former Act

An order made by an Adjudicator or a Tribunal under the former Act, and in force immediately before the commencement of this clause, is taken to have been made by the Tribunal under the corresponding provision of this Act.”

36. Clause 9 of Sch 3 applies to the Adjudicator’s order of 30 June 2016 because that order was an order made by an adjudicator under the 1996 Act and was in force immediately before 30 November 2016 when cl 9 of Sch 3 to the 2015 commenced. Thus, the Adjudicator’s order of 30 June 2016 is taken to have been made by the Tribunal under s 232 of the 2015 Act, which appears to be the provision corresponding to s 138 of the 1996 Act.

37. The Interpretation Act also contains, in s 30, general provisions relating to the enforcement of rights, obligations or liabilities accrued or incurred under repealed Acts. Section 30 relevantly provides:

“30 Effect of amendment or repeal of Acts and statutory rules

(1) The amendment or repeal of an Act or statutory rule does not:

…

(b) affect the previous operation of the Act or statutory rule or anything duly suffered, done or commenced under the Act or statutory rule, or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under the Act or statutory rule, or

…

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability or penalty,

and any such penalty may be imposed and enforced, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, as if the Act or statutory rule had not been amended or repealed.

…

(3) This section applies to the amendment or repeal of an Act or statutory rule in addition to, and without limiting the effect of, any provision of the Act or statutory rule by which the amendment or repeal is effected.

...”

38. The operation of s 30 is, however, limited by s 5(2) of the Interpretation Act which relevantly states:

“(2) This Act applies to an Act … except in so far as the contrary intention appears in this Act or in the Act … concerned.”

39. Even in the absence of a pecuniary penalty provision, equivalent to s 202 of the 1996 Act, in the 2015 Act, orders of the Tribunal made under the 2015 Act can be enforced by, among other things, the imposition of a civil pecuniary penalty for a breach of s 72(3) of the NCAT Act. Section 72 provides:

“72   Contravention of orders of Tribunal

(1)  A person must not, without lawful excuse, contravene a designated order of the Tribunal.

Maximum penalty:

(a)  in the case of a corporation—100 penalty units, or

(b)  in any other case—50 penalty units or imprisonment for 12 months, or both.

(2)  A designated order of the Tribunal means any of the following:

(a)  an order of the Tribunal made under section 64 (Tribunal may restrict disclosures concerning proceedings),

(b) an order of the Tribunal made under section 108 (2) (b), (c), (d) or (e) of the Anti-Discrimination Act 1977 or an interim order of the Tribunal made under that Act,

(c) an order of the Tribunal made under section 42 of the Guardianship Act 1987,

(d)  any other order of the Tribunal that a provision of this Act or enabling legislation has declared to be a designated order for the purposes of this section.

(3)  A person must not, without reasonable excuse, contravene any other order of the Tribunal made under this Act or any other legislation.

Civil penalty provision.”

40. Proceedings to recover a civil penalty for breach of s 72(3) are brought under ss 75 and 77 of the NCAT Act. Those sections provide:

“75   Commencement of proceedings

Proceedings for an offence against a provision of this Act or on an application under section 77 may be commenced only by any of the following persons (an authorised official):

(a)  the Minister,

(b)  a person with the written consent of either the Minister or another person or body authorised by the Minister for that purpose.

…

77   Proceedings for contravention of civil penalty provision of this Act

(1)  This section applies to a provision of this Act (a civil penalty provision of this Act) if the words “Civil penalty provision” are specified at the end of the provision.

Note.

A contravention of a provision of this Act for which a maximum penalty is provided is an offence rather than a contravention of a civil penalty provision of this Act.

(2)  The Tribunal may, on the application of an authorised official, order a person to pay a monetary penalty if the Tribunal is satisfied that the person has contravened a civil penalty provision of this Act.

(3)  The monetary penalty must not exceed:

(a)  in the case of a contravention by a corporation—$22,000, or

(b)  in any other case—$11,000.

(4)  In determining whether to impose a monetary penalty or the appropriate amount for the penalty, the Tribunal is to have regard to the following matters:

(a)  the deterrent effect of the imposition of a penalty on the contravener,

(b)  the nature and extent of the contravention,

(c)  any loss or damage sustained, or gain or benefit obtained, as a result of the contravention,

(d)  whether the contravention indicates a pattern of behaviour by the contravener of failing to comply with the orders or processes of the Tribunal,

(e)  the length of time during which the contravention occurred,

(f)  such other matters as the Tribunal considers relevant.

(5)  Proceedings for a penalty under this section may be brought within the period of 2 years of the date on which the contravention is alleged to have occurred.

(6)  The standard of proof that applies in connection with an application under this section is proof on the balance of probabilities.

Note.

The Tribunal must observe the rules of evidence in proceedings under this section. See section 38 (3).

(7)  A penalty imposed under this section may be recovered from the person on whom it is imposed in any court of competent jurisdiction as a debt due to the Crown.”

Can the Tribunal Determine the Application for a Pecuniary Penalty?

41. As has been noted above, the Owners Corporation has in effect sought the imposition of a pecuniary penalty on two alternate bases:

1. for contravention, without reasonable excuse, of an order of the Tribunal, under ss 72(3), 75 and 77 of the NCAT Act;

2. for contravention of an order under Ch 5 of the 1996 Act, under s 202 of the 1996 Act.

Pecuniary Penalty under s 77(2) of the NCAT Act

42. The Tribunal can impose a pecuniary penalty under s 77(2) of the NCAT Act for breach of s 72(3) if a person has, without reasonable excuse, contravened an order of the Tribunal other than a “designated order”. As we have explained above, by operation of cl 9 of Sch 3 to the 2015 Act, after 30 November 2016 the Adjudicator’s order of 30 June 2016 is taken to be an order of the Tribunal under the 2015 Act. Such an order is not a “designated order” within the definition in s 72(2). There is, however, a problem with the Owners Corporation’s application under s 77.

43. Only an “authorised official” (as defined in s 75 of the NCAT Act) can commence proceedings for the imposition of a civil penalty under s 77 of the NCAT Act. The Owners Corporation did not dispute that its application of 18 May 2017 was not commenced by the Attorney General, as the Minister referred to in s 75, or by a person with the written consent of either the Attorney General or another person or body authorised by him for that purpose. As a result, the Owners Corporation’s application was not commenced by an “authorised official”. Thus, to the extent that the Owners Corporation was seeking the imposition of a civil penalty under s 77 of the NCAT Act, based on a breach of s 72(3), the proceedings were not properly commenced under s 75 of the NCAT Act.

44. For these reasons, we must dismiss the Owners Corporation’s application for the imposition of a civil penalty to the extent that it is brought under s 77 of the NCAT Act based on a contravention of s 72(3).

Pecuniary Penalty under s 202 of the 1996 Act

45. Section 202, along with all other provisions of the 1996 Act, was repealed on 30 November 2016. Among other things, Mr Lovas, of counsel, who appeared for the Owners Corporation, in his careful and helpful written submissions, submitted that the Tribunal could determine the application for the imposition of a pecuniary penalty under s 202 of the 1996 Act, as if that Act had not been repealed. This was said to follow from the operation of s 30(1) of the Interpretation Act and the absence of any relevant contrary intention, within the meaning of s 5(2) of the Interpretation Act, in that Act or the 2015 Act. Alternatively, Mr Lovas argued that the same result would follow from the application of the savings and transitional provisions in cl 7 of Sch 3 to the 2015 Act.

46. We considered similar, but not identical, issues in Shahbazian v Owners Corporation SP 56466 [2017] NSWCATCD 83. That case concerned the enforcement of an adjudicator’s order made, by operation of cl 7 of the savings and transitional provisions in the 2015 Act, after the repeal of the 1996 Act. Unlike Shahbazian, this case concerns the enforcement of an adjudicator’s order made before the repeal of the 1996 Act and in force immediately before the 1996 Act was repealed. Nonetheless, elements of the reasoning in Shahbazian are applicable in this case.

47. In our view, Mr Lovas’s submissions concerning the operation of s 30(1) of the Interpretation Act should be accepted.

48. As explained above, the Adjudicator’s order of 30 June 2016 took effect, at the latest, on 7 July 2016 and, by operation of s 172 of the 1996 Act, was to remain in force until 29 June 2018.

49. Under s 30(1)(b) of the Interpretation Act, the repeal of the 1996 Act did not affect the previous operation of “anything duly … done under the [1996] Act”. There has been no appeal against, or other challenge to, the Adjudicator’s order of 30 June 2016 and there is no reason to hold that the making of the order was not a thing “duly done under the [1996] Act”. As a consequence of s 30(1)(b), the Adjudicator’s 30 June 2016 order continues to operate after 30 November 2016 as it did before the repeal of the 1996 Act.

50. Section 30(1)(c) of the Interpretation Act has the effect of preserving any “obligation … accrued or incurred under” a repealed Act. In Shahbazian at [64] we held that “obligation” includes a reference to a duty or binding requirement on a person to take or refrain from taking certain action. (See also Ogden Industries Pty Ltd v Lucas (1967) 116 CLR 537 at 585; [1967] HCA 30 at 585 and Aitken v South Hams District Council [1995] 1 AC 262 at 271.)

51. The Adjudicator’s order of 30 June 2016 duly established a duty or binding requirement on Ms Anderson to carry out the actions set out in the order and thus gave rise to an “obligation” within the meaning of s 30(1)(c).

52. The next question that arises under s 30(1)(c) is whether that obligation on Ms Anderson was “accrued” under the 1996 Act. For an obligation to be “accrued” in the relevant sense, the obligation must have come into being and been real and continuing at the relevant time - Shahbazian v Owners Corporation SP 56466 [2017] NSWCATCD 83 at [69] and see also Aitken v South Hams District Council [1995] 1 AC 262 at 272 and Tael One Partners Limited v Morgan Stanley & Co International PLC [2015] UKSC 12 at [42]. In our view, the obligation imposed on Ms Anderson by the order of 30 June 2016 had come into being when it was duly made under the 1996 Act. It was real and continuing in that it came into effect when notice of the order was served on Ms Anderson between 4 and 7 July 2016 and it continues in effect until 29 June 2018, by operation of s 172 of the 1996 Act as preserved by s 30(1)(b) of the Interpretation Act. Thus, the obligation arising out of the order was accrued under the 1996 Act at the time that that Act was repealed and when the proceedings under s 202 were commenced.

53. Accordingly, there was an “obligation … accrued … under the [repealed 1996] Act”, within the meaning of s 30(1)(c) of the Interpretation Act. In these circumstances, s 30(1)(c) operates so that the repeal of the 1996 Act did not affect the obligation on Ms Anderson to perform the actions in accordance with the order.

54. Section 30(1)(e) then provides that the repeal of the 1996 Act also did not affect “… any … legal proceeding or remedy in respect of any such … obligation”. The Owners Corporation’s application based on s 202 of the 1996 Act, was such a “legal proceeding” seeking a “remedy” in respect of the obligation imposed on Ms Anderson by the Adjudicator’s order of 30 June 2016.

45. Finally, the chaussette to s 30(1) provides that “any such … legal proceeding or remedy… may be instituted ... or enforced, as if the [1996] Act … had not been … repealed”. Thus, subject to the operation of s 5(2) of the Interpretation Act, the Owners Corporation was entitled to institute its legal proceedings under s 202 and the remedy provided by that section could be enforced, as if the 1996 Act had not been repealed.

46. As has been noted above, s 5(2) of the Interpretation Act creates a potential inhibition on the application of s 30 “in so far as the contrary intention appears in [the Interpretation] Act or in the [2015] Act”.

47. In respect of the contrary intention referred to in s 5(2), the High Court held in ADCO Constructions Pty Ltd v Goudappel (2014) 254 CLR 1; [2014] HCA 18; at [52]:

“A contrary intention sufficient to displace s 30 of the Interpretation Act must ordinarily appear with the same reasonable certainty as is needed to displace the general common law rule. A contrary intention need not be express and its implication, although sometimes referred to as "necessary implication", has not been confined to those extreme circumstances in which alteration of an existing right or liability "cannot be avoided without doing violence to the language of the enactment". The cases, rather, demonstrate that a contrary intention will appear with the requisite degree of certainty if it appears "clearly" or "plainly" from the text and context of the provision in question that the provision is designed to operate in a manner which is inconsistent with the maintenance of an existing right or liability.” (footnotes omitted)

58. There is nothing in the Interpretation Act which discloses an intention that s 30(1) should not apply in respect of the repeal of the 1996 Act and its replacement with the 2015 Act.

59. The only potentially relevant provisions in the 2015 Act are those found in Sch 3, the savings and transitional provisions. The relevant clauses, cll 3, 7, 8 and 9 are set out above. Nothing in those clauses amounts to an express intention that a pecuniary penalty for contravention of an order made under Ch 5 of the 1996 Act should not be able to be sought after the repeal of the 1996 Act, contrary to the operation of s 30(1) of the Interpretation Act.

60. Furthermore, nothing in cl 3 is inconsistent with s 30(1) operating as set out above. To the contrary, that clause displays a general intention to preserve acts, matters and things done under the 1996 Act and deems them to have been done under the corresponding provision of the 2015 Act. In the circumstances of this case, cl 3 has no direct application because the 30 June 2016 order was not “done under a provision of the [1996] Act and having any force or effect immediately before the commencement of a provision of [the 2015] Act that replaces that provision”. There was no provision of the 2015 Act that replaced the provision empowering adjudicator’s to make orders. Order making by an adjudicator was simply abolished when the 1996 Act was repealed. In addition, subcl 3(2)(b) provides that the clause does not apply to the extent that its application would be inappropriate in a particular case.

61. Clause 7 continues the operation of the 1996 Act to proceedings commenced under that Act but not determined or finalised prior to its repeal. It does not apply to the Owners Corporation’s application for the imposition of a civil pecuniary penalty as those proceeding were commenced after the repeal of the 1996 Act. Nonetheless, the clause is entirely consistent with the operation of s 30(1) of the Interpretation Act as set out above. No contrary intention is implicit in that clause.

62. It can also be noted here that the Owners Corporation submitted that cl 7 would permit proceedings to be commenced after the repeal of the 1996 Act seeking the imposition of a pecuniary penalty under s 202 of that Act for contravention of the Adjudicator’s order. This was said to be because, like appeals as of right, enforcement rights were inherent in the original proceedings. We considered this question in Shahbazian. We held, at [44] to [49], that cl 7 of Sch 3 to the 2015 Act did not operate by itself so as to permit proceedings under s 202 of the 1996 Act to be commenced after its repeal and that enforcement rights did not inhere in proceedings in the same way that appeal rights were inherent. Following that decision, we reject the Owners Corporation’s submission concerning the operation of cl 7 in this regard.

63. As to cl 8, that clause continues the position and power of adjudicators after the repeal of the 1996 Act so that existing undetermined proceedings can be finalised in accordance with cl 7. Once again, it does not demonstrate any intention that is contrary to the operation of s 30(1) of the Interpretation Act as set out above.

64. Clause 9 is applicable in the present circumstances because the order of 30 June 2016 was an order of an adjudicator in force immediately prior to the commencement of the 2015 Act. Thus, the order is taken to have been made by the Tribunal under the corresponding provision of the 2015 Act. Accordingly, proceedings could have been commenced under s 75 of the NCAT Act by an “authorised official” for the imposition of a pecuniary penalty under s 77 of that Act based on a contravention of s 72(3). In our view, however, cl 9 is in this regard facultative. It does not provide that adjudicator’s orders that fall within its terms cease to be adjudicator’s orders or that such orders cannot be enforced by other means, if they are available. In Shahbazian we held at [81] that although cl 9 did not apply to the order in that case, even if it did, the clause did not establish, expressly or impliedly, an exclusive regime for how adjudicators’ orders were to be treated after the repeal of the 1996 Act. We said that cl 9 provides a mechanism for dealing with a limited class of adjudicators’ orders but it does not exclude those orders or other classes of adjudicators’ orders being dealt with in other ways, to the extent that those ways might be available. Applying this reasoning in the present case, we are of the view that cl 9 does not disclose an implicit intention contrary to the operation of s 30(1) of the Interpretation Act, which we have set out above.

65. In summary, it does not appear "clearly" or "plainly" from the text and context of these clauses in Sch 3 to the 2015 Act that they are designed to operate in a manner that is inconsistent with the maintenance and enforcement of obligations accrued under the 1996 Act, as provided by s 30(1) of the Interpretation Act.

66. Thus, s 5(2) of the Interpretation Act does not apply in the present case so as to prevent the application of s 30(1) in the manner we have adopted.

67. For all of these reasons, we are of the view that the Tribunal can hear and determine the application for the imposition of a pecuniary penalty under s 202 of the 1996 Act, as if that Act had not been repealed.

Consideration of the Application for a Pecuniary Penalty under s 202

68. The Owners Corporation was the applicant in the proceedings in which the Adjudicator’s order of 30 June 2016 was made. Under s 202(2)(a) of the 1996 Act, the Owners Corporation was thus entitled to apply for a pecuniary penalty under s 202(1).

69. The power under s 202(1) to order the payment of a pecuniary penalty of an amount of up to 50 penalty units ($5,500) arose when a person contravened an order made under Ch 5 of the Act.

70. Chapter 5 included s 138 which relevantly provided:

“(1)  An Adjudicator may make an order to settle a dispute or complaint about:

…

(b)  the operation, administration or management of a strata scheme under this Act.”

71. The Adjudicator’s order of 30 June 2016 was expressly made under s 138. Although its terms were a little awkward, the order clearly required Ms Anderson to:

1. replace the floor finish in Lot 2, being the carpet and underlay that Ms Anderson had removed, with either a soft floor or a hard floor that complies with By-law 14.2; and

2. provide, in relation to the replacement floor finish, an acoustic report in accordance with by-law 14.3(b) carried out by an acoustic engineer or other appropriately qualified person,

on or before 31 July 2016.

72. As we indicated above, we are more than comfortably satisfied that Ms Anderson:

1. was aware of the Adjudicator’s order made on 30 June 2016 by 7 July 2016 at the latest;

2. did not before 31 July 2016 or by September 2016:

1. replace the carpet and underlay which she had removed with a soft or hard floor that complied with by-law 14.2; or

2. provide an acoustic report in accordance with by-law 14.3(b) carried out by an acoustic engineer or other appropriately qualified person.

73. Accordingly, we find that Ms Anderson contravened the Adjudicator’s order of 30 June 2016 which had been made under Ch 5 of the 1996 Act.

74. In these circumstances, we may under s 202(1), by order, require Ms Anderson to pay a pecuniary penalty not exceeding $5,500.

Nature of the power under s 202 of the 1996 Act

75. The use of the word “may”, as in s 202(1), usually indicates that the power so conferred is discretionary, see s 9(1) of the Interpretation Act. Nonetheless, a contrary intention may be indicated in a specific statutory context, see s 5(2) of the Interpretation Act. In considering whether the power is discretionary regard must be had to the language of the provision and the scope and object of the whole statute in question - Director of Public Prosecutions v Khoury [2014] NSWCA 15; 306 ALR 86 at [2] and see also [38]. The language of s 202 and its nature as a conferral of power to order the payment of a pecuniary penalty in any number of circumstances which may vary markedly support the conclusion that the power is discretionary. Similarly, the scope and object of the 1996 Act as a whole are consistent with the Tribunal having a discretion under s 202(1) both as to whether to order the payment of a penalty and the amount of the penalty, up to the specified limit. Accordingly, we accept that the Tribunal has a discretion as to both of those matters in this case.

Relevant Factors

76. Neither s 202 nor any other provisions of the 1996 Act, however, provide any express guidance as to how the discretion is to be exercised. No factors which must or may be considered are expressly identified. Notwithstanding the unfettered nature of the discretion conferred by s 202(1), it, like every statutory discretion, is confined by the subject matter, scope and purpose of the legislation under which it is conferred and the Tribunal must form its view of what the justice of the particular case requires according to reason - Minister for Immigration and Citizenship v Li (2013) 249 CLR 332 at [23] – [24], [[67] and [90]; [2013] HCA 18.

77. The power to impose civil penalties occurs in a number of contexts in addition to strata schemes management including in competition and consumer protection, corporations and industrial relations legislation. Some guidance can be gained from decisions concerning civil penalties in these other contexts but it is important to bear in mind the different purposes of the penalty provision in each context and any specific legislative differences that apply.

78. It has been held in the Full Court of the Federal Court that there are at least three purposes of imposing a penalty: punishment; deterrence; and rehabilitation, Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93]; [2007] FCAFC 65. It should also be noted, however, that the High Court in Commonwealth v Director, Fair Work Building Inspectorate (2015) 258 CLR 482; [2015] HCA 46 observed at [55] that the purpose of civil penalties is primarily protective in promoting the public interest in compliance and punishment and rehabilitation may be of little or no significance.

79. In Ponzio at [93] and [94], Lander J also observed:

“93 …The punishment must be proportionate to the offence and in accordance with the prevailing standards of punishment…. Therefore the circumstances of the offence or contravention are especially important. The penalty must recognise the need for deterrence, both personal and general. In regard to personal deterrence, an assessment must be made of the risk of re-offending. In regard to general deterrence, it is assumed that an appropriate penalty will act as a deterrent to others who might be likely to offend …. The penalty therefore should be of a kind that it would be likely to act as a deterrent in preventing similar contraventions by like minded persons …. If the penalty does not demonstrate an appropriate assessment of the seriousness of the offending, the penalty will not operate to deter others from contravening the section. However, the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat. ….

94 The individual or personal circumstances of the contravenor must be taken into account as also any relevant matter in mitigation. … Where one act may involve a number of contraventions, as in this case, it would be generally inappropriate to impose separate penalties because almost inevitably that would offend against the totality principle as known to the criminal law.”

80. Turning now to the specifics of the 1996 Act, we note that the purpose of the Act was to provide for the management of strata schemes and for the resolution of disputes in connection with strata schemes, as disclosed in the long title of the Act and in the objects of the Act found in s 3. In relation to s 138 in particular, the power to make orders given to adjudicators under that section was expressly stated to be for the purpose, among others, of settling a dispute or complaint about the operation, administration or management of a strata scheme.

81. Ensuring that orders duly made under a provision such as s 138 were complied with was an important element of managing, and resolving disputes in connection with, strata schemes under the 1996 Act. Section 202 was one means of seeking to ensure compliance with such orders.

82. That the purpose of s 202 was to provide an incentive to comply with adjudicators’ orders is expressly identified in the Minister’s Second Reading Speech for the Strata Schemes Management Bill 1996 which stated: [1]

“Giving the board[2] the power to impose fines for breaches of its own orders or the orders of the adjudicators is an important improvement. At present penalties for non-compliance with an order are applied by the Local Court. By giving this task to the Strata Schemes Board in the form of a civil fine-making power, the process is made more direct and relevant. The maximum fine has been increased from the present $500 to $5,000. The $500 maximum has remained unchanged since the Act began in 1974 and clearly offers no incentive to people to comply with orders. …”

1. Ms Faye Lo Po’, Minister for Fair Trading, Second Reading Speech, Parliamentary Debates, Legislative Assembly, 13 November 1996, 5916.

2. The “board” was a reference to the Strata Schemes Board which existed under the 1996 Act until 1 September 2001. From that date, the power under s 202 was exercised by the Residential Tribunal (see item 1.27 of Sch 1 of the Statute Law (Miscellaneous Provisions Act) (No 2) 2000 (NSW)). On 1 February 2002, the Residential Tribunal was replaced by the Consumer, Trader and Tenancy Tribunal and on 1 January 2014, the CTTT was replaced by NCAT (see item 4.41 of Sch 4 of the Civil and Administrative Legislation (Repeal and Amendment) Act 2013 (NSW)).

83. These observations concerning the 1996 Act confirm that a very significant factor in the exercise of the discretion conferred by s 202(1) should be whether the imposition of the penalty would provide an incentive to comply with orders made under Ch 5 of the 1996 Act, including those made by adjudicators under s 138. In this case, it involves deterring persons from failing to comply with adjudicators’ orders. It is well established that deterrence in relation to penalties involves both general and specific deterrence – see for example Australian Competition and Consumer Commission v TPG Internet Pty Ltd (2013) 250 CLR 640 at [65]; [2013] HCA 54.

84. In cases under strata schemes management legislation, specific deterrence requires that the penalty be sufficient to provide a real incentive for the person the subject of the order to comply with the order. General deterrence requires that any pecuniary penalty should also be sufficient to serve as a warning to other persons who are or might become subject to an order concerning the operation, administration or management of a strata scheme that failure to comply with such an order is likely to be met with significant consequences.

85. The penalty should not be so low as to encourage persons subject to orders under the strata schemes management legislation to ignore orders and pay any penalties because it involves less trouble or expense than complying with the orders. Nonetheless, as observed in the Full Federal Court in Ponzio v B & P Caelli Constructions Pty Ltd (2007) 158 FCR 543 at [93]; [2007] FCAFC 65, “the penalty should not be such as to crush the person upon whom the penalty is imposed or used to make that person a scapegoat.”

86. Having regard to these matters and without attempting to be exhaustive, in our view the relevant factors to consider when determining whether and in what amount to impose a pecuniary penalty under s 202 of the 1996 Act include, where relevant:

1. The nature and extent of the contravention;

2. The circumstances in which the contravention took place;

3. The effect of the contravention on the operation, administration or management of the strata scheme in question;

4. The maximum penalty that may be imposed;

5. The need for deterrence, both specific and general;

6. The individual or personal circumstances of the contravenor;

7. Any other relevant mitigating circumstances;

8. Where there are a number of contraventions:

1. whether it is appropriate to impose separate penalties; and

2. whether the penalty or penalties are appropriate having regard to the totality principle.

The nature and extent of the contravention

87. In the present case, the contravention was Ms Anderson’s failure to comply with the Adjudicator’s order of 30 June 2016 within the time for compliance specified in the order. She had been aware of the order since 7 July 2016 at the latest.

88. There is nothing to suggest that she sought a stay of the order or appealed against it. Nor is there any material before us that indicates that she took any steps in an attempt to comply with the order or to ascertain what complying with the order might cost.

89. From her correspondence, it appears that the contravention was not unintentional or the result of an oversight. In our view, while not at the most serious end of the range, the contravention was significant and should attract a penalty of substance.

The circumstances in which the contravention took place

90. Ms Anderson was and is the owner of lot 2 in the Strata Scheme. The Strata Scheme by-law relating to floor coverings had been in place for some time prior to Ms Anderson removing the carpet and underlay and having the concrete slab polished. She had already had the opportunity to comply with the by-law before the original application was made for an adjudicator’s order under s 138 of the 1996 Act.

91. This consideration also supports a substantial penalty being imposed.

The effect of the contravention on the operation, administration or management of the strata scheme in question

92. There was no evidence of the effect of the Ms Anderson’s failure to replace the polished concrete floor finish with either a soft or hard floor finish that satisfied the requirements of the by-law in question on other residents in the Strata Scheme. As a result, this consideration tells neither one way nor the other in considering the extent of any penalty.

The maximum penalty that may be imposed

93. The maximum penalty that could be imposed under s 202(1) of the 1996 Act is $5,500.

The need for deterrence, both specific and general

94. In the present case, it is appropriate for us to set a penalty in order to achieve both specific and general deterrence. It will have to be sufficiently high to ensure that Ms Anderson has a real incentive to comply with the Adjudicator’s order rather than treating payment of the penalty as a lower cost option than complying with the order by replacing or renewing the floor covering.

95. In this context, we note that the Tribunal has the power to make conditional orders under s 58 of the NCAT Act. In order to enhance the incentive to comply with the order, it could be appropriate to make the payment of a penalty conditional on the contravenor not having complied with the order by a future date. In this way, the contravenor would be given the option of expending the funds necessary to do the work to comply with the order or paying a penalty and having to expend the funds necessary for the work in any event.

96. In addition, general deterrence requires the penalty to be of substance so that it is apparent that adjudicators’ orders cannot be ignored with impunity.

The individual or personal circumstances of the contravenor

97. Ms Anderson did not appear at the hearing of the application for the imposition of a penalty. She did not provide any detailed evidence as to her financial circumstances or any up to date explanation of why she did not comply.

98. The only indication of Ms Anderson’s position was found in her handwritten annotations on her facsimiles to the Tribunal and the managing agent. Her reason for not complying with the adjudicator’s order was there said to be lack of funds. Nonetheless, she herself recognised in that correspondence that she had at least two options to obtain the necessary funds:

1. “keep working [to] pay my bills and save for new floors”; or

2. “vacate my apartment for leasing to assist my position”.

99. We have no sufficient basis for concluding that Ms Anderson was so impecunious that she was not, and has not been, able to afford to comply with the Adjudicator’s order of 30 June 2016.

100. Ms Anderson did not raise any other circumstances as relevant in this case.

Any other relevant mitigating circumstances

101. No other relevant mitigating circumstances were raised.

Conclusion on the penalty

102. Having regard to our findings of fact and all the matters and circumstances referred to above, in our view, it is appropriate to impose a penalty in the sum of $2,500.

103. Further, in order to:

1. provide a significant incentive to comply with the adjudicator’s order, there being no evidence of compliance since the order was made;

2. take into account that Ms Anderson may have required some time (albeit unidentified) to raise the funds required to carry out the work necessary to comply with the order; and

3. avoid, if possible, the necessity for the Owners Corporation to bring further proceedings to obtain compliance with By-law 14 by Ms Anderson,

we propose to make the payment of the penalty conditional so that if Ms Anderson has complied or complies with the Adjudicator’s order of 30 June 2016 by 31 December 2017, no penalty will be payable.

Costs

104. In correspondence before the commencement of these proceedings, it was indicated that the Owners Corporation would seek costs of any application for the imposition of a civil penalty. In its application, however, no costs order was sought. Nor was costs mentioned in its written submission sent to Ms Anderson. In oral submission, the Owners Corporation sought its costs of the application.

105. Since Ms Anderson was not present at the hearing and could have been proceeding on the basis that no costs order would be sought because it was not mentioned in the application or the written submissions (despite the possibility of seeking costs orders being mentioned in correspondence to her), we do not think it is appropriate to make any costs order at this stage.

106. If the Owners Corporation wishes to make any application in relation to costs of this application, it should do so by notice to the Tribunal and Ms Anderson in accordance with the directions set out in the orders to be made in this matter.

Orders

107. For the reasons set out above, the Tribunal orders that:

1. Subject to the condition set out in order 2, the respondent, Prudence Anderson, is to pay a pecuniary penalty of $2,500.00 to the Director General of the Department of Fair Trading on or before 15 January 2018.

2. Order 1 ceases to have effect if the respondent, Prudence Anderson, on or before 12 January 2018:

1. has installed in Lot 2 in Strata Plan No 82306 in place of the carpet and underlay removed by her a floor finish that is either a soft floor or a hard floor, complying with By-law 14.2; and

2. gives to the Tribunal and to the applicant, the Owners Corporation of Strata Plan No 82306, an affidavit confirming that the work referred to in the preceding par (a) has been done and annexing an acoustic report carried out in accordance with By-law 14.3(b) by an acoustic engineer or other appropriately qualified person in respect of the replacement floor finish referred to in par (a) demonstrating that By-law 14.2 has been complied with.

3. If the Owners Corporation wishes to apply for costs of this application:

1. the Owners Corporation is to give to the Tribunal and to Ms Anderson written notice of its application for costs together with any evidence and submissions (including submissions on whether the costs application should be determined without an oral hearing) on which it relies on or before 10 November 2017;

2. if Ms Anderson opposes the making of a costs order against her, she is to give to the Tribunal and the Owners Corporation any evidence and submissions (including submissions on whether the costs application should be determined without an oral hearing) on which she relies on or before 17 November 2017;

3. the Owners Corporation is to give to the Tribunal and to Ms Anderson any evidence or submissions in reply on or before 24 November 2017.

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Endnotes

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.

Registrar

Amendments

31 October 2017 - Paragraph 87 - typo corrected

Paragraph 98 - typo corrected

Decision last updated: 31 October 2017