The Owners Units Plan No 14 v Wright (Appeal)
[2021] ACAT 55
•25 June 2021
ACT CIVIL & ADMINISTRATIVE TRIBUNAL
THE OWNERS - UNITS PLAN NO 14 v WRIGHT (Appeal) [2021] ACAT 55
AA 26/2020 (UT 27/2019)
Catchwords: APPEAL – unit titles – rule infringement notices – whether general claim can be made and considered for resolution of a dispute between an owner and the owners corporation even though rule infringement notices were issued – whether orders should be made as to use of a unit which does not comply with fire rules – whether ancillary orders should be made allowing the Owners Corporation to bring the unit into compliance with the fire rules if the owner does not do so – whether orders should be made for inspection of unit to ensure compliance – whether order should be made that the respondent pay an amount that represents the increase of the owners corporation building insurance premiums due to the condition of the unit
Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 6, 7, 18, 20
Emergencies Act 2004 s 96
Human Rights Act 2004 s 12
Legislation Act 2001 ss 126, 140, 255
Planning and Development Act 2007 ss 133, 134, 137, 199
Unit Titles (Management) Act 2011 ss 16, 31, 35, 100, 106, 107, 109, 125, 129, sch 4
Subordinate
Legislation Cited: ACT Civil and Administrative Tribunal Procedure Rules 2020 rr 10, 35, 36, 38, 91, 94
Unit Titles (Management) Regulations 2011 sch 1
Cases cited:Corby v The Owners Corporation – Units Plan No. 1035 [2019] ACAT 45
Council of the Law Society of the ACT v LP201920 [2021] ACAT 16
In the matter of Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56Riley v The Owners Corporation Units Plan 706 [2018] ACAT 99
Walls v Coutts [2019] ACAT 104
List of
Texts/Papers cited: Christopher Kerin, Guide to ACT Strata Law (2017)Tribunal: Acting Presidential Member R Orr QC
Date of Orders: 25 June2021
Date of Reasons for Decision:
25 June 2021
AUSTRALIAN CAPITAL TERRITORY )
CIVIL & ADMINISTRATIVE TRIBUNAL ) AA 26/2020
BETWEEN:
THE OWNERS - UNITS PLAN NO 14
Appellant
AND:
MATTHEW WHEELER HANFORD WRIGHT
Respondent
APPEAL TRIBUNAL: Acting Presidential Member R Orr QC
DATE:25 June 2021
ORDERS
The Tribunal orders that:
1.The appeal is allowed in part.
2.Order 1 made by the Original tribunal on 8 April 2020 is set aside.
3.The orders made by the Original tribunal on 11 August 2020 are not affected.
4.The orders made by the Appeal tribunal on 5 November 2020 and set out below are confirmed.
5.Insofar as it is necessary, the claim by the Owners Corporation under section 31 of the Unit Titles (Management) Act 2011 is treated as a civil dispute claim, and the time to appeal the decision of the Original tribunal in relation to that claim is extended to 11 August 2020.
6.The respondent is ordered to pay the appellant the sum of $7,765.
………………………………..
Acting Presidential Member R Orr QC
PREVIOUS ORDERS MADE BY THE APPEAL TRIBUNAL ON 5 NOVEMBER 2020
The Tribunal orders that:
1.The respondent must grant access within business hours to Unit 2 to a representative of the insurer after 14 days of the making of this order to enable inspection of Unit 2 for insurance purposes. The respondent will take any steps recommended by the insurer necessary to secure insurance with a reasonable excess within 14 days of the recommendation.
2.Within 28 days of making this order:
(a)the respondent must take the steps outlined in Table 4 of the report of Tim Shiu dated 13 October 2020 (the Report) and set out here:
(i)remove the dwelling from within the premises as identified in the Report;
(ii)remove goods and rubbish from the premises so as to allow a clear 1 metre unobstructed path:
a.in accordance with the plan on page 10 of the Report, and clear access to the path;
b.to the fire hose reel located on the wall of the Unit; and
c.to the fire extinguishers located on the wall of the Unit;
(iii)enclose the electrical distribution board with non-combustible construction and suitably seal the enclosure against smoke spread as required by clause D2.7 of the National Construction Code (NCC);
(iv)install additional fire extinguishers within the Unit such that the travel distance from any point within the Unit to a fire extinguisher is no more than 15 metres and so otherwise to comply with clause E1.6 of the NCC;
(v)have the existing fire extinguisher and fire hose reel serviced in accordance with AS 1852;
(vi)ensure egress paths and access to firefighting equipment is maintained; and
(vii)contact ACT Fire and Rescue to undertake a fire inspection of Unit 2 and implement any recommendations made by them; and
(b)use Unit 2 only for the purposes of one or more of the uses set out in clause 3(d) of the Schedule of provisions, Form 4, of the registered Units Plan No. 14, and not as a motor vehicles wreckers yard.
3.The respondent must provide the appellant and a representative of the insurer with access to Unit 2 within business hours and upon 7 days written notice for the purpose of the appellant and the insurer inspecting the unit and determining compliance with orders 1 and 2.
4.If the respondent does not comply with Orders 1 and 2 the appellant may appoint someone else, with prior written notice to the respondent, at the respondent's cost, to:
(a)take each of the steps outlined in orders 1 and 2;
(b)deal with the goods removed from the premises as agreed between the parties and in the absence of agreement in accordance with the Uncollected Goods Act 1996 (ACT).
5.The respondent must at all times after 28 days of this order:
(a)ensure clear unobstructed access to the premises;
(b)ensure a clear 1 metre unobstructed path:
(i)in accordance with the plan on page 10 of the Report and clear access to the path;
(ii)to the fire hose reel located on the wall of the unit;
(iii)to the fire extinguishers located on the wall of the unit; and
(iv)from the toilets to an exit;
(c)ensure 2 fire extinguishers are available within Unit 2 such that the travel distance from any point within the Unit to a fire extinguisher is no more than 15 metres and that otherwise comply with clause E1.6 of the NCC;
(d)have the fire extinguishers and fire hose reel serviced in accordance with AS1852 every 6 months;
(e)ensure implementation of any recommendations of ACT Fire and Rescue under clause 2(a)(vii); and
(f)use Unit 2 only for the purposes of one or more of the uses set out in clause 3(d) of the Schedule of provisions, Form 4, of the registered Units Plan No. 14, and not as a motor vehicles wreckers yard.
6.The parties must do all things necessary and convenient to give effect to the Tribunal's orders.
7.The parties have liberty to apply on 24 hours' notice in relation to these orders.
8.The decision on the appeal is otherwise reserved.
REASONS FOR DECISION
1.This matter concerns commercial premises at Fyshwick, where Matthew Wheeler Hanford Wright (Mr Wright or respondent) is the owner of unit 2 in Units Plan No. 14 (UP 14) from which he runs his business. Since about 2009 there has been tension between The Owners – Units Plan No. 14 (Owners Corporation, applicant or appellant) and Mr Wright about his use of his premises and some of the common property.
2.In an Application dated 9 October 2019 (Application) the Owners Corporation brought proceedings against Mr Wright seeking interim and summary orders. An Amended Application was made dated 19 March 2020 (Amended application). This asked for orders:
(a)for payment of money or pecuniary penalties for breach of rule infringement notices (rule infringement claim) (paragraph [1]);
(b)for removal of goods from, and related actions in relation to, unit 2 (condition of the unit claim) (paragraph [2]);
(c)that the respondent provide the applicant and its insurer with access to unit 2 for the purpose of assessing compliance with any orders made in relation to the condition of the unit claim (access claim) (paragraph [3]);
(d)that the respondent pay an amount that represents the increase of the Owners Corporation building insurance premiums under section 31 of the Unit Titles (Management) Act 2011 (Unit Titles Management Act) (recovery of increase in premium claim) (paragraph [4]);
(e)that the respondent not park or store goods on the common property, and allowing the Owners Corporation to remove goods from the common property (common property claim) (paragraphs [5]-[7]); and
(f)that the respondent pay the applicant’s costs (costs claim) (paragraph [9]).
3.These claims were heard by Senior Member E Ferguson of the Tribunal on 8 April 2020 (Original tribunal and Original hearing). In a decision entitled The Owners Units Plan No 14 v Wright [2020] ACAT 60 (Original decision), the Original tribunal only made orders in relation to the common property claim based on rule infringement notices made under section 109 of the Unit Titles Management Act, namely that Mr Wright not park or store goods on the common property and remove goods from the common property. The Original tribunal held that the rule infringement notices in relation to the unit itself were not properly made and therefore did not support an order. No other orders were made in relation to the other claims. Earlier on 8 April 2020, the Original tribunal ordered that it did not have jurisdiction to determine the recovery of increase in premium claim.
4.The Owners Corporation now appeals this decision by an Application for appeal dated 7 September 2020 (Application for appeal). Shortly after the conclusion of the hearing on 5 November 2020 (Appeal hearing), the Appeal tribunal made some orders on the basis that some of the grounds of appeal were upheld, in particular in relation to the condition of the unit claim (orders of 5 November 2020, set out above). This statement sets out the reasons for those orders, and the other final orders now made in the appeal (Appeal decision).
Summary of this Appeal tribunal decision
5.The Owners Corporation’s main argument was that the Original tribunal should have considered its condition of the unit claim under the general powers in relation to disputes in sections 125 and 129 of the Unit Titles Management Act, as well as under section 109 concerning rule infringement notices. I agree that this should have been considered. On consideration of this claim in this appeal I found that many of the orders sought by the Owners Corporation, in an amended form, should be made, and these are orders 1-6 of the orders of 5 November 2020. The Owners Corporation is required to keep insured all buildings on the land against specified risks, including fire risks (section 100), and the failure by Mr Wright to comply with relevant fire rules was preventing this, and putting the owners at risk of personal injury and damage, of being uninsured or underinsured, and suffering a loss in value of their units and other adverse financial consequences. Mr Wright’s actions were also in breach of the Default Rules.
6.This situation supports the orders sought by the Owners Corporation to require Mr Wright to comply with the recommendations of Mr Shiu, a fire expert, in relation to the fire rules provided to the Appeal tribunal (orders 2 and 5 of 5 November 2020). Further, if Mr Wright does not undertake these actions, I think that the Owners Corporation should be enabled to do so (order 4 of 5 November 2020). I also think it appropriate to make orders to enable inspection of unit 2 to assess the risks and to ensure that the relevant actions have been undertaken (orders 1 and 3 of 5 November 2020).
7.The Owners Corporation also challenged the failure of the Original tribunal to make orders based on the rule infringement notices concerning the condition of the unit, but it was not necessary to consider this in light of the orders made on 5 November 2020.
8.The decision of the Original tribunal not to order the payment of $1,000 under section 129(1)(d) of the Unit Titles Management Act as part of the rule infringement claim, and not to order the payment of pecuniary penalties, is upheld. The costs claim was not pursued by the Owners Corporation in the Original tribunal or in the Appeal tribunal.
9.The Owners Corporation did pursue in the appeal the recovery of increase in premium claim. In my view the Original tribunal had jurisdiction to hear this claim, and this Appeal tribunal can also do so, and I find that the Owners Corporation incurred an expense in the form of increased insurance premiums which were necessary because of the acts and omissions of Mr Wright in failing to comply with the Default Rules for which he is liable to the Owners Corporation.
Original tribunal hearing
10.In the Original tribunal hearing the Owners Corporation relied on the Amended application, and statements by Janet Browne (the managing agent) dated 19 March 2020; Grant Taylor of Strata Community Insurance Agencies Pty Ltd dated 19 March 2020; Sarah Hendry of McInnes Wilson Lawyers dated 19 March 2020; and Shelley Mulherin of McInnes Wilson Lawyers dated 19 March 2020. There was also a timeline filed on 11 February 2020. An invoice from McInnes Wilson Lawyers was tendered at the hearing. Written submissions on what was called the Couchard issue were also provided by the Owners Corporation dated 21 May 2020.
11.Mr Wright provided a number of documents containing statements and submissions, one dated 28 January 2020, one filed on 11 February 2020, one filed on 1 April 2020 (which was entitled ‘This is the timeline and defence of case number UT 27/2019’, and contained a number of attachments), and one filed on 20 May 2020. Some of these documents also considered other proceedings in the tribunal in relation to Mr Wright and the Owners Corporation.
12.The Original tribunal conducted a hearing on 8 April 2020, made some orders on that day, and made further orders and provided reasons on 11 August 2020. The summary of the material before the Original tribunal at paragraph [10]-[11] above was confirmed at the Appeal hearing.[1]
Original tribunal decision
[1] Transcript of Appeal proceedings on 5 November 2020 at pages 2-7
13.The Original tribunal focussed on the Tribunal’s jurisdiction under section 109(3)(f) of the Unit Titles Management Act. Section 109 provides for rule infringement notices to be issued by an owners corporation to the owner of a unit if the executive committee reasonably believes that an owner has contravened a provision of the corporations rules.[2] If the person does not comply with the notice, the owners corporation may apply to the ACAT for an order in relation to the failure.
[2] Section 109(1)
14.In this case, five rule infringement notices were issued to Mr Wright in July 2018, two related to his use of common property (as part of the common property claim) and three related to the use of his own unit (as part of the condition of the unit claim). The Original tribunal found that the two common property notices were properly issued, and made orders on this basis (Original decision at [20]).
15.In relation to the three notices regarding Mr Wright’s use of his own property, the Original tribunal found that the executive committee did not hold the relevant genuine and reasonable belief as required under section 109. Accordingly, the Original tribunal held that the Owners Corporation was not authorised to issue the notices, and the Original tribunal had no power to hear that aspect of the Amended application, nor make the orders sought (Original decision at [22]). As discussed below, the condition of the unit claim was also based on sections 125 and 129 of the Unit Titles Management Act. The Original tribunal did not consider this claim in detail, and did not uphold it.
16.The Original tribunal also decided that it did not have jurisdiction to determine the increase in premium claim or the costs claim (Original decision at [15]).[3] There was an issue about whether the total claim by the Owners Corporation took it outside the jurisdictional limit set out in section 18 of the ACT Civil and Administrative Tribunal Act 2008 (ACAT Act). The lawyer for the Owners Corporation did ask that if it was possible for the Original tribunal to hear the claim for just the insurance premium which was under the section 18 limit, but the Original tribunal was unwilling to take this course.[4] The Original tribunal did not deal with the access claim. The Original tribunal did not grant the rule infringement claim for a pecuniary penalty or an amount of $1,000 (Original decision at [94]-[98] and [99]-[106]).
Appeal tribunal hearing
[3] Transcript of Original proceedings on 8 April 2020 at page 58
[4] Transcript of Original proceedings on 8 April 2020 at page 20
17.The appellant’s Application for appeal set out in Annexure A eight grounds of appeal which are discussed below. The hearing was held on 5 November 2020.
18.There was some discussion by the appellant as to the nature of an appeal in the ACAT, and some conflicting approaches to such appeals, and as to whether this should be a review or rehearing. In my view, it is not necessary to consider these in any detail. The appeal was dealt with as a review under section 82(b) of the ACAT Act. On that basis, the Owners Corporation needed to establish an error of fact or law in the Original decision in order to succeed.[5] The exercise of some of the powers of the Original tribunal under the Unit Titles Management Act were discretionary (see especially section 129). In an appeal in relation to the exercise of such discretionary powers, it is necessary for this Appeal tribunal to be of the view that the exercise was clearly wrong because of material errors.[6]
[5] ACAT Act, section 79(3)
[6] Council of the Law Society of the ACT v LP201920 [2021] ACAT 16 at [62]-[66]
19.The Appeal tribunal has all the powers and duties of the Original tribunal that made the order appealed from and may receive further evidence.[7] The appellant sought to rely on additional evidence, and there was significant discussion about this at the hearing.
[7] ACT Civil and Administrative Tribunal Procedures Rules 2020, rule 91
20.As to this additional evidence, at a directions hearing in relation to the appeal on 28 September 2020, an order was made that the appellant’s fire expert will inspect the property, be accompanied by David Swane and Melinda Swane, and that “any photographs taken are to be used for the purposes of the report and the inspection only, noting that the report will be provided to insurers.” A report of the inspection of unit 2 was provided by Tim Shiu of Warringtonfire dated 13 October 2020 which considered whether the unit complied with relevant fire rules. It was said by the Owners Corporation that generally, the additional evidence sought to be tendered went to the current state of the unit, its current use, and the current situation in relation to insurance, and that the report of Mr Shiu would in particular help with tailoring any order which was made, particularly in relation to the fire risk.[8] In an appeal of this nature, it is possible to look to the current situation, and I was of the view that this was appropriate in this case. There was disagreement with some aspects of the report of Mr Shiu, but no objection to its admission as evidence, from the respondent, and it was admitted as evidence in the appeal (Exhibit AA1).[9]
[8] Transcript of Appeal proceedings on 5 November 2020 at pages 23 and 29
[9] Transcript of Appeal proceedings on 5 November 2020 at page 33
21.The appellant also sought to tender a statement by Melinda Swane dated 13 October 2020. Part of that statement went to the inspection of unit 2 which gave rise to Mr Shiu’s report, including what Ms Swane observed during the inspection and photographs she took during the inspection. This aspect of the statement was objected to by the respondent, because it was said to be based on actions outside the terms of the order made by the Tribunal on 28 September 2020 (see paragraph [20] above). There was considerable discussion about this issue at the hearing. I had some concern that while the order provided for inspection and photographs of unit 2, it seemed that these were to be by the fire expert, Mr Shiu as it turned out, and not by Ms Swane. In my view, if there is any ambiguity in the order, it should be read in the way which protects Mr Wright’s privacy in relation to his unit.[10] The Owners Corporation argued that Ms Swane’s actions were covered by the order, and at any rate there were other bases on which Ms Swane could have entered the premises, such as under the Default Rules. But this inspection expressly took place under the Tribunal’s order, an order made at a hearing at which both parties were present and at which Mr Wright expressed concerns for his privacy. In these circumstances, I thought there would be significant unfairness to Mr Wright in allowing evidence to be tendered in the appeal on the basis that the inspection in fact took place under the Default Rules, a basis of which he had no notice, no opportunity to be heard, and in the circumstances where he would have held a reasonable belief that this was not relied upon. Therefore, this aspect of Ms Swane’s statement was initially not admitted into evidence.[11] However later in the appeal hearing there was further consideration of the current state of the premises, and the efforts made by Mr Wright to address this state, and in the end he gave a response to the issues raised by Ms Swane in her statement. In this context, her description of the property was admitted as evidence (Exhibit AA3), but not the photos.[12]
[10] Human Rights Act 2004, section 12
[11] Transcript of Appeal proceedings on 5 November 2020 at pages 49-50
[12] Transcript of Appeal proceedings on 5 November 2020 at page 90
22.The statement by Ms Swane also set out the current insurance situation. This part of the statement was also admitted as evidence (Exhibit AA3).[13]
[13] Transcript of Appeal proceedings on 5 November 2020 at page 52
23.There was also a statement by Sarah Hendry dated 13 October 2020 which attached the registered units plan. This was not objected to and was admitted as evidence (Exhibit AA2).[14] A statement by Paul Campbell dated 13 October 2020 in relation to the non-compliance by Mr Wright with the orders of the Original tribunal was also admitted as evidence (Exhibit AA4). A number of emails were also tendered (Exhibit AA5). The appellant also provided an Outline of submissions dated 13 October 2020 (Appellant’s submissions).
[14] Transcript of Appeal proceedings on 5 November 2020 at page 38
24.Mr Wright provided a number of photos and an invoice (Exhibit RA1), and a response dated 27 October 2020. He also provided some submissions with the assistance of his sister filed on 27 October 2020 (Respondent’s appeal submissions).
25.The grounds of appeal are set out in the Application for appeal, Annexure A, in subparagraphs within paragraph 4. I use those eight subparagraph numbers to identify the grounds of appeal.
Nature of the claim (grounds of appeal (1)-(4) and (6))
26.A key ground of appeal was that the Original tribunal erred by identifying the claim as to the condition of unit 2 as one principally under section 109 of the Unit Titles Management Act, rather than one under Part 8 and in particular sections 125 and 129 of the Act.[15] As noted, section 109 deals with rule infringement notices, and the Original tribunal enforced the notices in relation to the common property, but declined to enforce the notices in relation to the condition of unit 2 itself, because of what was said to be a failure to comply with the requirements in section 109. The appellant argued that the Original tribunal erred in failing also to consider the claim under section 129 and whether to grant relief under that section.
[15] Application for appeal, Annexure A, at [4(1)]–[4(4)] and [4(6)]
27.Section 125 of the Unit Titles Management Act provides that it applies to a dispute relating to an owners corporation for a units plan between the corporation and an owner or occupier of a unit in the units plan. A party to the dispute may apply to the ACAT for an order in relation to the other party if the application relates to the dispute. Section 129 of the Unit Titles Management Act relevantly provides as follows:
129 Kinds of ACAT orders
(1) The ACAT may make the following orders:
(a)an order requiring a party to do, or refrain from doing, a stated thing;
…
(d)an order requiring a person to pay to the Territory or someone else an amount of not more than $1 000;
…
(2) The ACAT may make any other order it considers reasonably necessary or convenient to resolve a dispute under this part.
(3) This section does not limit the orders the ACAT may make in relation to a dispute under this part.
Did the Owners Corporation make a claim under sections 125 and 129?
28.The Application and then the Amended application set out the orders which the Owners Corporation sought in Attachment A. In the Application and the Amended application the orders sought were mostly said to be under section 129, except for the amount that represents the increase in the insurance premiums which was said to be sought under section 31. There was no mention of section 109 in the Amended application, Attachment A. There is a mention of the rule infringement orders, but this is in the context of seeking a sum of $1,000 or a pecuniary penalty only.
29.Attachment B to the Application and Amended application set out the reasons for this claim. They set out relevant events from at least October 2011. These reasons do refer to the rule infringement notices in paragraphs [7] and [8], but there is no indication that the claim is based only on those notices and section 109.
30.At the Original hearing, the lawyer for the Owners Corporation stated in response to the Tribunal’s suggestion to begin by working through the rule infringement notices:
The most pressing issue in the dispute is the internals of the respondent’s property. He’s maintaining it in a way that there’s an excessive accumulation of material and it’s significantly affecting the applicant’s ability to maintain insurance … I was hoping that we might be able to deal with that issue first, being the lot property … And the applicant’s wish for him to take certain steps as a result of his breaches of the default rules, as opposed to necessarily the rule infringement notices.[16]
[16] Transcript of Original proceedings on 8 April 2020 at pages 24-25
This however did not occur.
31.In my view it is clear that claims were made under sections 125 and 129, and independent of the rule infringement orders and section 109. The claims having been made, the Tribunal was obliged to deal with these, and insofar as the Original tribunal decided the application only on the basis of section 109, and not sections 125 and 129 alone, this Appeal tribunal can do so.
Was there a dispute for the purposes of section 125?
32.However, in order for the Owners Corporation to succeed under sections 125 and 129 alone, it is necessary to consider whether there was a relevant dispute for the purposes of section 125, that is a dispute “relating to the owners corporation” between the corporation and Mr Wright. There was, in my view, significant evidence of an ongoing dispute in relation to the use of unit 2 between Mr Wright and the Owners Corporation.
33.The history of this dispute is set out in the evidence put forward by the Owners Corporation, in particular the statement of Janet Browne dated 3 April 2020. It is not necessary to set this out in detail, but I do summarise some key events.
34.The issue of Mr Wright storing goods on common property arose in about 2009. At some point, the issue of the fire risk from Mr Wright’s own unit was added to this dispute, and orders made by the Tribunal in proceedings in July 2013 included that: “To minimise the risk of insurance being cancelled undertake fire hazard reduction.”[17] Ms Browne gave evidence that at around 2017, it was evident Mr Wright was using his unit to cause a hazard and nuisance, and had caused an accumulation of wrecked motor vehicles and other miscellaneous items to accumulate in his yard. This issue was brought to Mr Wright’s attention again by letter dated 14 July 2017, which stated that this issue would be taken to ACAT “unless you comply with previous requests to reduce the number of motor vehicles.”[18]
[17] Statement of Janet Browne at paragraphs [36] and [44]
[18] Statement of Janet Browne at [44]–[46]
35.The Owners Corporation was in 2017 insured with Wesfarmers Federation Insurance Ltd (WFI), and for November 2016 to November 2017 at a cost of $14,566. In November 2017, WFI declined to provide further insurance. Emails from WFI indicated that this was due to “the storage of materials outside of the units and … that one of the occupants does some fibreglass works”. Mr Wright pointed to this as evidence that factors other than his unit were involved. However, shortly after, an officer of WFI said that unit 2 “was unwilling to let me take photos on the inside”.[19] The officer further stated that:
WFI have no issues with all the tenants apart from the ‘vehicle storage’ whilst the client may not be a wrecker the activities of dismantling vehicles and storage of wrecks and parts are obvious in the photos. Unless we can confirm via detailed internal photos of the unit that his practices are acceptable then we will have to uphold our decline at this point.[20]
[19] Statement of Janet Browne at [49]-[50] and attachment at page 71
[20] Statement of Janet Browne at [49]-[50] and attachment at page 71
36.In her statement, Ms Browne said that between about December 2017 to February 2018, the applicant’s insurance broker attempted to obtain building insurance from alternative providers and eventually secured insurance with Strata Community Insurance Agencies Pty Ltd (SCI) for $21,290 for the period 2018-19. However the invoice from the insurance brokers is for an amount of $21,460 and this is used in the Applications. I will use the lesser amount of $21,290 in this decision. For the period 2019 to 2020 this rose further to $26, 819.[21]
[21] Application, attachment B at [18] and annexure F; Amended application, attachment B at [17] and annexure F; statement of Janet Browne at [51]-[53]; statement of Grant Taylor at [19]
37.Issues concerning insurance were discussed at the annual general meeting in December 2017. The minutes note that the insurance assessors were not allowed access to unit 2, but that Mr Wright agreed to meet additional cost for the insurance assessor to view unit 2 and to provide access as well as provide a certificate of compliance in relation to fire safety. It was also resolved to seek advice on varying the levies of unit 2 to cover the 30% increase in insurance premium due to the state of unit 2. Mr Ciminelli stated he would be working with Mr Wright to undertake a cleanup and removal of excess vehicles.[22]
[22] Statement of Janet Brown at [48] and attachment at page 69
38.It was in July 2018 that the rule infringement notices were issued. The three notices which related to unit 2 were based on Default Rules, rule 3 (owner must ensure the unit is in good repair), rule 6 (owner must not use the unit to cause a hazard), and rule 7 (owner must not use the unit to cause a nuisance or substantial annoyance). Each of these notices referred to the fact that the conduct was causing additional costs for the Owners Corporation by additional insurance premiums, as did the two notices about use of the common property.[23]
[23] Statement of Janet Browne at [54]-[56] and attachments at pages 86-94
39.A petition from the other owners signed from 15 to 18 November 2019 set out a range of complaints in relation to Mr Wright, including concerning cars parked on common areas, failure to comply with directives, and that:
he has not complied with requests from owners corp or insurance companies to tidy up & become fire compliant, therefore our risk profile and costs have been raised – there is now a special excess of $250,000 applied…[24]
[24] Statement of Janet Browne at [4] and attachment at page 11
40.There is other material raising this issue. On this basis, it seems clear that there was at the time of the Applications, the Original hearing, and the Appeal hearing a significant dispute between Mr Wright and the Owners Corporation as to the condition of Mr Wright’s unit 2.
41.It is true, as the Original tribunal discussed, that three rule infringement notices were issued generally in relation to this dispute. The Original tribunal considered these. But as the appellant argues, the Original tribunal seems to have taken the view that the issuing of these notices somehow prevented the dispute from being considered by the Tribunal also under sections 125 and 129.[25] Could the dispute have been considered under sections 125 and 129?
[25] Application for appeal, annexure A, at [4(4)], referring to the Original decision at [23] and [49]
42.The question is: where there is a rule infringement notice, and the Owners Corporation seeks to enforce that notice under section 109, can the Owners Corporation also seek to have the underlying dispute resolved under sections 125 and 129 of the Unit Titles Management Act? In my view the answer is yes. There is nothing in sections 109, 125 and 129 which expressly prevents that. There does not seem to be a basis for implying such a limitation from the terms of the provisions, or their purpose. Rather, sections 125 and 129 are very general and of broad application. There is no other provision which says there is or suggests such a limitation. The purpose of that Act includes “to assist in the resolution of disputes in relation to the management of unit plans” (section 6(c)), and this suggests that the range of mechanisms to do so are generally available, in the absence of specific limitations. Therefore, I think that the Original tribunal should have gone on to consider this dispute under section 125 and 129 alone (indeed as discussed above at paragraphs [28]-[30], this seems to have been the primary basis relied on by the Owners Corporation).
43.Further, I also note that the Original tribunal found that the three rule infringement notices in relation to the unit were not properly issued. Given this finding, it is difficult to see how the notices, or section 109, could have prevented the Owners Corporation from having its claim under sections 125 and 129 determined.
Should the Owners Corporation succeed in its claim under sections 125 and 129?
44.Having decided that the Owners Corporation made a claim under sections 125 and 129 alone, and were entitled to do so, the question is then whether they should succeed in that claim, that is whether the dispute should be resolved by making the orders sought under section 129. This is something which this Appeal tribunal can now consider.
45.Three preliminary points need to be made here. First, this dispute concerns the use by Mr Wright of his unit, which is his private property. For the most part any restriction on his use of his private property needs to have a legal basis. In my view, a general complaint based on only ethical, social, political, or aesthetic concerns about what he does on his property will not provide a basis for an order. For the most part the role and powers of an owners corporation and an executive committee are focussed on the common property and services, not the private property of individual owners (see sections 16 and 35). For an owners corporation or this Tribunal to interfere with the use of private property requires a specific power on the basis of relevant laws. As discussed below, there are in this case relevant laws which limit Mr Wright’s personal property rights. These are, in particular, the requirements that the Owners Corporation take out insurance, fire rules, the purpose of the leases for the Units Plan, and the Default Rules for the Units Plan.
46.Second, Mr Wright said in the appeal hearing that he was taking steps to address many of the issues raised by the Owners Corporation in the dispute. This included steps similar to many of the orders proposed by the Owners Corporation, and therefore there was limited dispute about these.[26] The concern of the Owners Corporation was that he has said similar things in the past, and the issues had not been addressed.
[26] Transcript of Appeal proceedings on 5 November 2020 at pages 78, 81-84
47.Third, Mr Wright raised a number of general points in relation to the claims against him which I set out here. He started his business, Mr Cheap Courtesy Cars, in 1998; he buys older cars; the good ones are used as courtesy cars for an affordable cost; the not so good ones are used as spare parts for the good ones; he has conducted the business for the past 20 years during which his premises have been in much the same condition; his business has suffered significantly because of the pandemic; he has been wrongly blamed for insurance hikes and other matters; everyone is not treated equally within the Owners Corporation; rather there has been persistent persecution of Mr Wright which has gone beyond a professional approach, and Mr Wright has not been treated fairly.[27] I have taken into account these concerns, but in my view they do not rebut the particular issues raised against Mr Wright.
Insurance and compliance with fire rules
[27] Respondent’s bundle of documents of 1 April 2020; Respondent’s appeal submissions; transcript of Appeal proceedings on 5 November 2020 at pages 49, 59, 62-63, 126-127
48.Some of the history in relation to insurance is set out in paragraphs [33]-[40] above. Following on from these events, by letter dated 11 December 2019, SCI in turn refused to renew its insurance policy on the basis that the risk “falls outside of our underwriting guidelines due to the occupants [sic] of Lot 2,” and even a request to extend the policy for 30 days was refused. Axis Underwriting refused to provide a quotation due to the issues with unit 2. CHU Underwriting Agencies Pty Ltd (CHU) initially refused to provide a quotation, however it did provide insurance for a limited period of six months. This was on the basis that for any renewal there would need to be clean up of unit 2 in line with ACAT orders. This policy provided for an excess of $250,000 for the fire insurance.[28]
[28] Statement of Janet Browne at [66], and [75]-[79]
49.In further evidence before the Appeal tribunal, Ms Swane provided a letter from the current insurer which stated that “in order for CHU to invite renewal due 22nd February 2021, confirmation of completed clean up to Lot 2 inline with ACAT order is to be provided”, and if this is not done “it will be CHU’s decision to decline renewal”.[29] She also gave evidence of a conversation with Ben Hanson of MGA Insurance, confirmed in an email, that because of the unit 2 fire risk the current insurer has applied a $250,000 deductible (excess) and will not offer renewal, if unit 2 is not cleaned up to specifications of the fire inspector and to the underwriters satisfaction, the property may become uninsurable, the insurer may look at unit 2 as a “wreckers,” and if this is not disclosed the insurers could deny any claim, and if it is disclosed it may not be possible to secure insurance or the terms may be very restricted. He concluded:
Ideally once the Fire Inspector has provided their recommendation(s) and the owners at Unit 2 undertake a clean-up program and guarantee to keep property clean and tidy … we should be able to secure terms from the broader market AND have the fire excess reduced to a more reasonable level ...[30]
[29] Statement of Melinda Swane (Exhibit AA3) at [16] and page 59
[30] Statement of Melinda Swane (Exhibit AA3) at [17]-[18] and page 69
50.Ms Swane also noted advice from a commercial real estate agent that the property would be seriously devalued if the scheme was unable to obtain insurance, and is already devalued because of the excess. She also noted that this may place her in breach of her finance covenants with her bank in relation to her unit, which may give rise to the bank demanding immediate repayment.[31]
[31] Statement of Melinda Swane (Exhibit AA3) at [19]-[20]
51.The Appeal tribunal also had the report of Mr Shiu, who is accredited as a registered professional engineer of Queensland – fire safety, a registered building practitioner Victoria – fire safety engineer, and by Engineers Australia as a fire safety engineer. He assessed unit 2 against the fire related provisions of the National Construction Code (NCC) (fire rules). He set out in some detail nine issues which needed to be addressed in relation to unit 2, and how he proposed they be addressed. In summary, this included building classification and the need for removal of the dwelling in the unit (item 1), separation of fire walls and the need for an assessment of the fire rating for the walls of the unit (item 2), exit travel distances and the need for removal of storage to provide exit paths (item 3), dimensions of exits and paths of travel requiring maintenance of a path to allow occupants to reach the exit (item 4), installations in exit requiring enclosure of the electrical distribution board (item 5), swinging doors requiring that the front exit door be rehung (item 6), fire hose reels with investigation of whether these are required (item 7), additional fire extinguishers (item 8), and inspection by ACT Fire & Rescue to assess special problems (item 9).
52.Mr Wright indicated that he was getting his own report, but this was not available to the Appeal tribunal. Mr Wright stated that he was already doing many of the things recommended by Mr Shiu, but had some issues with some of the recommendations, in particular, that concerning the door (item 6).[32] He accepted that the unit should comply with these fire rules. He also had concerns that he was being targeted by the Owners Corporation, but the evidence was that other units were also inspected for fire issues.[33] At any rate the various discussions with the insurers indicate that unit 2 was a particular concern to them, which the Owners Corporation was therefore dealing with.
[32] Transcript of Appeal proceedings on 5 November 2020 at pages 31, 71, 66-83
[33] Transcript of Appeal proceedings on 5 November 2020 at page 58
53.The Owners Corporation is required to keep insured all buildings on the land against specified risks, including fire risks (section 100(1)), and must take out a policy that covers to the greatest practicable extent the specified risks (section 100(2)). This is a pivotal obligation in the Unit Titles Management Act, and failure to comply with it puts the unit owners at significant risk. In particular, the failure by Mr Wright to comply with relevant fire rules puts him, and the other unit owners, at risk of personal injury and damage to their units and the property in them. It puts them at risk of being uninsured, or underinsured, for these risks with potential significant loss if the risks come about. And as a result of the current insurance situation, it puts them at risk of suffering a loss in value of their units and other significant adverse financial consequences.
54.In my view, the orders sought by the Owners Corporation to require Mr Wright to comply with the recommendations of Mr Shiu in relation to the fire rules are clearly warranted in order to enable the Owners Corporation to carry out its legal obligations under section 100, and reduce the risks described. Orders 2 and 5 of the orders made on 5 November 2020 are made on this basis. Further, if Mr Wright does not undertake these actions, I think that the Owners Corporation should be enabled to do so (order 4 made on 5 November 2020). The Owners Corporation argued that there had been a significant history of Mr Wright being asked to do things, and of him even agreeing to do things, or being ordered to do things, and him not doing them.
55.I also think it appropriate to make orders to enable inspection of unit 2 to assess the risks and to ensure that the relevant actions have been undertaken (orders 1 and 3 made on 5 November 2020).
Purposes under Unit Plan
56.In these appeal proceedings, the Owners Corporation sought other orders in relation to use of unit 2. This was originally an order for the removal of all unregistered vehicles from within unit 2 and from the common area. The request stems from the concern of the insurers that Mr Wright may be conducting a car wreckers yard, though what the order originally asked for was broader than this. In my view the request was too broad, and would have impinged on some legitimate activities by Mr Wright. The appellant could not point to a prohibition on Mr Wright simply having an unregistered car on his property. There was significant discussion at the hearing of this issue in an attempt to find a more suitable and limited form of order.
57.The registered Units Plan for UP14 sets out in Form 4, Schedule of provisions, covenants, and conditions subject to which leases are held, clause 3(d) that the provisions subject to which the leases of the land are held include:
to use the said land for the purpose of one or more of the following uses which include any manufacturing process (other than offensive, hazardous or noxious industries), the repairing or servicing of vehicles etc. and parts and accessories thereof, the storage or sale of motor vehicles etc., auction rooms, second-hand stores etc., businesses concerned with the installation of equipment and services.
58.The appellant argued that these uses did not include a motor vehicle wreckers yard. It was also said that use for such a purpose may be in contravention of the Planning and Development Act 2007.
59.In the end, I thought it appropriate to make an order that that Mr Wright only use the unit for the purposes of one or more of the uses set out in clause 3(d) of the Schedule of provisions, Form 4, of the registered Units Plan No. 14, and not as a motor vehicles wreckers yard (orders 2(b) and 5(f) of the orders of 5 November 2020). It may be that such an order is unnecessary, but it makes clear to Mr Wright that he is subject to these restrictions.
Default Rules
60.The appellant also relied on the Default Rules under section 106, and formerly Schedule 4, of the Unit Titles Management Act, and now Schedule 1 of the Unit Titles (Management) Regulations 2011, to support its case for the orders. Section 107(1) provides that there is taken to be an agreement under seal between an owners corporation and each of its members under which the corporation and its members agree to be bound by the rules of the corporation. As such, they provide for legal obligations which can form the basis of resolution of disputes by orders under section 129.
61.The Default Rules operate in relation to UP 14 and provide that a unit owner must carry out any work in relation to the unit, and do anything else in relation to the unit, that is required by a territory law (formerly rule 3(2), now rule 1.3(2)). The Owners Corporation referred to a range of possible territory laws in this regard. One was section 96 of the Emergencies Act 2004 which provides that a person not obstruct a passageway, stairway or exit that may be used for escape from premises if there is a fire. On the basis of Mr Shiu’s report, it is probable that the unit does not comply with this territory law. The Owners Corporation raised a number of other laws which may have been breached, especially if unit 2 was being used as a “motor vehicle wreckers yard”.[34]
[34] Planning and Development Act 2007, sections 133, 134, 137 and 199 and the Territory Plan, IZ2 – Industrial mixed use zone development table
62.Further, a unit owner must not use the unit, or permit it to be used, so as to cause a hazard to an owner, occupier or user of another unit (formerly rule 6, now rule 1.8). The term hazard is not defined, so its ordinary meaning applies. This includes: “1. A risk; exposure to danger or harm. 2 the cause of such a risk; a potential source of harm, injury, difficulty, etc …6. … to expose to risk”.[35] For the reasons set out above, I think that Mr Wright used his unit to give rise to a range of physical and financial risks to other owners.
[35] Macquarie Dictionary, online
63.Further, a unit owner must not use the unit in a way that causes a nuisance or substantial annoyance to an owner, occupier or user of another unit (formerly rule 7(1); now rule 1.9(1)); and a unit owner must not use the unit, or permit it to be used, to contravene a law in force in the ACT (formerly rule 9, now rule 1.11). It is not necessary to consider these in detail, but it is possible that as argued by the Owners Corporation that these rules were also breached.
64.
In my view rules 1.3(2) and 1.8 of the Default Rules have been breached by
Mr Wright in the use of his unit, and this provides an alternative basis for orders orders (1)-(5) made on 5 November 2020.
Summary of nature of the claim (grounds of appeal (1)-(4) and (6))
65.To summarise the findings in relation to this ground of appeal, the Original tribunal considered the condition of the unit claim only on the basis of the rule infringement notices. In my view the Owners Corporation also made the condition of the unit claim under sections 125 and 129, there was a dispute for the purposes of this claim, and that dispute should have been considered.
66.In my view that dispute should be resolved on the basis that the actions of Mr Wright prevented the Owners Corporation from meeting its insurance obligations under section 100, and put Mr Wright in breach of the fire rules as specified by Mr Shiu in his report. This situation supported the orders sought by the Owners Corporation. The fact that the use of the unit was in breach of the Default Rules also supported those orders.
Validity of rule infringement notices concerning unit 2 (ground of appeal (5))
67.The Application for appeal does challenge the finding of the Original tribunal that the three rule infringement notices in relation to the unit under section 109 were invalid.[36] But at the hearing this ground was not emphasised, rather primacy was given to the claim under sections 125 and 129. In this appeal I have upheld the appeal in relation to, and made orders under, section 129 concerning unit 2. It is therefore not necessary to determine the issues raised in relation to the notices, and the appellant conceded this course was appropriate.[37]
Pecuniary penalty (ground of appeal (7))
[36] Application for appeal, Annexure A, at [4(5)]
[37] Transcript of Appeal proceedings on 5 November 2020 at page 98
68.The Amended application also sought payment of the sum of $1,000 under section 129(1)(d) of the Unit Titles Management Act or a pecuniary penalty of 25 penalty units for breach of the rule infringement notices under section 129(1)(a) with section 110(1) (Attachment A, paragraph (1)).
69.In relation to the claim for $1,000, the Original tribunal stated that the Owners Corporation argued that this was justified in order to compensate it for being out of pocket by no fault of its own, including the hours Ms Browne had spent particularly in relation to this set of proceedings. The Original tribunal referred to the no costs rule in the tribunal (section 48 of the ACAT Act), and the possibility of a claim under section 31 of the Unit Titles Management Act. (There was in fact such a claim under section 48 but it was abandoned by the applicant.) This claim was therefore refused.[38] In this appeal it was further pursued.[39] But I do not think there was any error in this regard.
[38] Original decision at [99]-[106]
[39] Application for appeal, Annexure A at [4(7)]
70.The claim for a pecuniary penalty to be imposed was rejected by the Original tribunal, principally on the basis that the tribunal cannot impose such a penalty.[40] This was not challenged in this appeal.
Increase in premium claim (ground of appeal (8))
[40] Original decision at [94]-[98]
71.The Amended application sought an order that the respondent pay an amount that represents some of the increases of the Owners Corporation building insurance premiums under section 31 (Attachment A, paragraph (4)), which I have called the increase in premium claim and the Original tribunal called the statutory debt claim.
72.The amount sought was $11,525. It is not completely clear how this figure is arrived at. It appears that the amount should be calculated as set out in the statement of Mr Taylor.[41] That is, the WFI premium of $14,566 for 2017-18 (see paragraph [35] above) would have been about $15,294 for 2018-2019 (under the normal increase of 5% referred to by Mr Taylor). The SCI premium was $21,290 (see paragraph [36] above). The difference between the likely WFI premium and the SCI premium for 2018-19 was therefore about $6,000 (rounded) (that is $21,290 minus $15,294). Further, this SCI premium was increased in 2019 from $21,290 to $26,819 for 2019-20, an increase of $5,529. On the evidence of Mr Taylor 5% of the increase from the likely WFI premium would have been normal, and this 5% increase in my view should be deducted from the claim against Mr Wright; on this basis the extra increase is $4,765. Adding $6,000 and $4,765 gives $10,765. This amount is the basic claim by the Owners Corporation.
[41] Transcript of Appeal proceedings on 5 November 2020 at page 118
73.As to the circumstances of the increase from WFI, these are discussed at paragraphs [35]-[36] above. As to the increase in 2019 by SCI, Mr Taylor of SCI stated that the 2019 increase was “a direct result of the high level of risk associated with Unit 2”.[42]
[42] Statement of Grant Taylor at [18]-[20]
74.Section 31 of the Act provides in part that:
Recovery of expenditure resulting from member or unit occupier’s fault
(1) This section applies if an owners corporation for a units plan has in carrying out its functions incurred an expense, or carried out work, that is necessary because of—
(a)a wilful or negligent act or omission of a member of the corporation, or an occupier of the member’s unit; or
(b)a breach of its rules by a member of the corporation, or an occupier of the member’s unit.
(2) The amount spent or the cost of the work is recoverable by the owners corporation from the member as a debt.
…
(4) In this section:
expense, includes a reasonable legal expense reasonably incurred, including a legal expense relating to a proceeding in the ACAT.
work, carried out by an owners corporation, means maintenance or anything else the corporation is authorised under this Act to do.
75.In the Guide to ACT Strata Law by Christopher Kerin, it is said that this section has a wide range of potential applications, however typically it is used to recover the excess which an owners corporation is required to pay on a claim on its insurance policy in circumstances where the claim arose through a wilful or negligent act, such as leaving a tap on which then floods a unit. Another example is if a unit owner uses their unit for a purpose which increases the premium on an insurance policy and is in breach of the rules.[43] This last example is close to the position in this case.
[43] (2017) at [5.22]
76.The Original Tribunal stated in her reasons that at the hearing she decided that she did not have jurisdiction to determine the statutory debt as part of the application, for the reasons given on the day of the hearing (at [15]). Early in the Original hearing, the Original tribunal had raised the fact that the increase in premium claim and the legal costs claim combined were outside the tribunal’s jurisdictional limit under section 18 of the ACAT Act.[44] In response to this, Ms Hendry for the Owners Corporation asked whether it would be possible for the tribunal to hear the civil claim for the insurance premium, which sat at $11,000 odd. She indicated that they would “reserve their right” to transfer to the other claim for legal fees to another court. She stated that the respondent’s use of his property was a fire hazard, orders were sought to clean it up, and also for the increase in the insurance premiums that had been occasioned directly as a result of the failure to clean up the property. The Tribunal suggested that the claim should be in the civil disputes jurisdiction of the Original tribunal, that she would have to transfer the claim to the civil disputes jurisdiction, that she could then hear the two matters together, but she did not think this was procedurally convenient, though she noted the connection between the two issues. The Original tribunal said that if she dealt with the default rule claim, “that might inform the Owners Corporation as to what they do with regard to the application to the Magistrates Court.” Therefore she decided to “go on with the hearing of the alleged infringements of the rules.” [45]
[44] Transcript of Original proceedings on 8 April 2020 at page 8
[45] Transcript of Original proceedings on 8 April 2020 at pages 20-21
77.At the end of the Original hearing on 8 April 2020, the Original tribunal ordered that “the Tribunal does not have jurisdiction to determine the statutory debt as part of the Unit Titles Application”, and reserved her decision on the balance of the Amended application.
Was the increase in insurance premium claim outside the tribunal’s jurisdiction?
78.In this appeal, the Owners Corporation seeks to overturn that approach and to obtain an order under section 31 for the increase in insurance claim.[46] To do this a number of issues need to be considered. First, section 18 of the ACAT Act provides that a civil dispute application cannot be made to the tribunal for more than $25,000 unless the excess is abandoned (under section 20) or by agreement (section 21). There was no agreement here.
[46] Application for appeal, Annexure A, at [4(8)]
79.But the Owners Corporation argued there was abandonment of part of the claim so that the balance came within the jurisdictional limit. That is, the appellant argued, the decision not to hear the increase in premium claim, once the legal costs claim “was no longer pressed”, was an error of law. As is often the case, there was some confusion as to what was happening in this regard in the Original hearing, but it does seem that the Owners Corporation abandoned its costs claim in the tribunal so that the increase in premium claim could be considered (see paragraph [76] above). On this basis the claim was within the jurisdiction of the tribunal under section 18.
Was the claim a civil claim, and does that prevent consideration of it?
80.Second, claims under section 31 of the Unit Titles Management Act are civil dispute claims. Section 31(2) of the Unit Titles Management Act provides that the amount spent is recoverable by the owners corporation from the member as a debt. Part 4 of the ACAT Act, headed ‘Civil Disputes’, relevantly provides that a ‘debt application’ is an application for the recovery of a debt (section 15; a ‘civil dispute application’ includes a debt application (section 16)); in relation to civil dispute applications, the tribunal has the same jurisdiction and powers as the Magistrates Court under the Magistrates Court Act 1930, Part 4.2 (Civil Jurisdiction) subject to rules providing otherwise (section 22). Accordingly, on the basis that the amount claimed was less than $25,000, the Owners Corporation could make a debt application under Part 4 of the ACAT Act.[47]
[47] In the matter of Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56 at [21]–[22]
81.In this case, the Owners Corporation brought the claim in the tribunal, the tribunal had jurisdiction to determine it, but the claim was made using the form entitled ‘Application – Unit Titles (Management) Act 2011’, and not using the form entitled ‘Civil Dispute Application’. Does this matter?
82.The Amended application clearly set out the person making the claim, the person against whom the claim was made, what the dispute was about and the orders sought, including the amount claimed. The Amended application stated clearly that the claim was made under section 31 of the Unit Titles Management Act, that the sum sought was $11,525, and that the basis of the claim was that this represents the increase in the Owners Corporation building insurance premiums caused by the respondent’s breach of the rules or, in the alternative, the wilful acts and omissions of the respondent. Significant evidence was provided in support of this claim (see paragraph [10] above). This provided procedural fairness to the respondent in relation to the claim. It also complied with sections 10 and 11 of the ACAT Act. The tribunal has approved a form for a civil dispute application and section 117(2) of the ACAT Act provides that if the tribunal has approved a form, the approved form must be used. But section 255 of the Legislation Act 2001 provides that substantial compliance with the form is sufficient. In my view there was substantial compliance since all the information required in the prescribed form was included in the Amended application, and section 255 (5) was also complied with.[48]
[48] See also rules 10 and 35 of the ACT Civil and Administrative Tribunal Procedures Rules 2020
83.Therefore the claim was able to be considered by the Original tribunal and now this Appeal tribunal. At most there was a formal defect in the Amended application, but no lack of jurisdiction, which could be remedied either by directing the applicant to file a civil dispute application,[49] by ordering that the section 31 aspect of the claim be treated as a civil dispute claim, or by the tribunal simply proceeding to hear the claim. Rule 36 of the ACT Civil and Administrative Tribunal Procedures Rules 2020 now specifically provides for such an order. I have made a relevant order.
[49] Riley v The Owners Corporation Units Plan 706 [2018] ACAT 99 at [71]
84.There may be some circumstances where this is not an appropriate course. But in my view this step should be taken here. There is significant overlap between the factual matrix in relation to the increase in premium claim and the condition of the unit claim; there is also significant overlap in the legal matrix. The Owners Corporation brought both claims together and thought they should be decided together. Mr Wright did not object to that course in the Original tribunal and does not object to it here. It was and is simpler, less expensive, quicker, fairer, and more efficient to hear and determine these matters together, rather than separately.[50] In my view it is appropriate for a tribunal to hear a claim which is clearly and fairly presented, even if there is a formal but not substantive defect in a document, indeed generally the tribunal has a duty to take this course.
Was the appeal in relation to the claim out of time?
[50] ACAT Act sections 6(b), (c) and(d) and 7(a) and (b)
85.Third, the Original tribunal made a relevant order in relation to the statutory debt claim on 8 April 2020. The Owners Corporation appeal was much later on 7 September 2020. This is out of time if the 28 days appeal period ran from 8 April.[51] The appellant argued that the time for appeal did not run from 8 April but from the final orders made in the application on 11 August 2020. These final orders did not expressly deal with the increase in premium claim, but by implication she affirmed her order of 8 April. The appeal was lodged within 28 days of the final orders.
[51] ACT Civil and Administrative Tribunal Procedures Rules 2020, rule 94
86.Further, the appellant argued that it could not have appealed against the order made on 8 April 2020, but only that on 11 August 2020. The tribunal has held that section 79 of the ACAT Act permits an appeal to be brought from only a final decision on an originating process.[52] However, the appellant argued that if this was an issue, the Appeal tribunal can and should extend the time for an appeal if this is necessary.[53]
[52] Walls v Coutts [2019] ACAT 104
[53] Under rules 38 and 94 of the ACT Civil and Administrative Tribunal Procedures Rules 2020.
87.In my view, there are reasonable arguments that the appeal made is in time to consider the increase in premium claim, but there is some doubt about this. In light of this doubt, given the circumstances where an appeal was made to the substantive final decision of the Original tribunal within time, I am prepared to make an order that if necessary, the time for the appeal in relation to the decision of the Original tribunal in relation to the increase in premium claim is extended to 11 August 2020.
Requirements of section 31
88.It is necessary to consider whether the requirements of section 31(1) are met. The key elements are that:
1. the owners corporation in carrying out its functions;
2. incurred an expense;
3. there is a wilful or negligent act or omission, or a breach of its rules, by a member; and
4. that makes the expense necessary.
89.Therefore, section 31 first requires that the Owners Corporation was carrying out its functions. As discussed above, this includes obtaining insurance, which is what the Owners Corporation was doing here.
90.Second, it requires an expense. In this case, this is the additional expense of the insurance.
91.Third, it requires a wilful or negligent act or omission of a member or a breach of the rules by a member which, fourth, makes the expense necessary. For convenience, I deal with these together. The Owners Corporation did not expressly argue that Mr Wright’s actions or inactions were negligent within the terms of section 31(1)(a). They did argue that they were wilful. It is unclear what wilful means in section 31. The actions or inactions of Mr Wright were purposeful acts; they were not accidental. But there is an issue about whether this is sufficient in this context. The heading to the section refers to “expenditure resulting from member or unit occupier’s fault”. This heading is part of the Act,[54] and in working out the meaning of the provision, this must be read in the context of the Act including this heading.[55] It seems likely therefore that the wilful act must in some way involve fault on the part of the member, such as failure to comply with a lawful obligation.[56] A legal action without fault will not give rise to such a liability. For example voting on a motion at a meeting, or refusing entry to a unit to a person who has no right of entry will be wilful acts, but in my view they will not without more give rise to liability under section 31. The discussion by Christopher Kerin noted above at paragraph [75] seems to assume this. At any rate the principal argument of the Owners Corporation were that Mr Wright’s acts or omissions were in breach of the Default Rules.
[54] Legislation Act 2001, section 126(2)
[55] Legislation Act 2001, section 140
[56] Corby v The Owners Corporation – Units Plan No. 1035 [2019] ACAT 45 at [47]
92.As discussed above, in my view Mr Wright’s unit was not at the time of the appeal hearing compliant with relevant legal obligations, including the Default Rules (see paragraphs [48]-[63] above). But it is necessary to assess whether the breaches existed at the time of the insurance premium increases and whether they made necessary those increases.
93.The first part of the expense arose from the refusal of WFI to provide insurance and the agreement of SCI to do so at a higher rate. The evidence in relation to this is mixed and does not wholly support Mr Wright’s liability under section 31. First, emails from WFI indicated that their refusal was due to “the storage of materials outside of the units and … that one of the occupants does some fibreglass works”. Mr Wright pointed to this as evidence that factors other than his unit were involved.
94.Second, shortly after, an officer of WFI indicated that the refusal was principally because unit 2 “was unwilling to let me take photos on the inside.”[57] It is not clear that there was an obligation on Mr Wright to allow such an inspection. Default Rules, rule 10, was in operation at this time, but this only allowed inspection by an executive committee representative. But, third, it is clear that the reason that WFI wanted to inspect was their concern about the state of the property. It is likely on the basis of the evidence, in relation to the unit over a long period of time, that the state of the property was in breach of at least what was then Default Rules, rule 6, concerning hazardous use, and perhaps other rules and laws.
[57] Statement of Janet Browne at paragraphs [49]–[50] and attached documents
95.Fourth, the evidence was that the Owners Corporation made significant efforts to find another insurer. The insurer they found charged a higher premium. There was no evidence that other providers were available, and if so at what cost. But fifth, it is unclear whether the whole reason for the higher premium was the state of unit 2 caused by Mr Wright’s acts or omissions, that is, that the whole of the extra expense was made necessary by the breach by Mr Wright of rule 6. Mr Taylor stated that SCI were aware that WFI had declined to issue insurance due to the owner of unit 2 refusing to provide access, but as noted it is unclear whether Mr Wright was obliged to provide access.[58] He does not say that the whole of the increase of the SCI was a result of the state of unit 2.
[58] Statement of Grant Taylor at paragraphs [9]–[12]
96.Given the obligation of the Owners Corporation to take out insurance, and the fact that the state of unit 2 was in part a cause of the need to find a new insurer, to at least some extent Mr Wright made the expense necessary. In light of the evidence, it is likely that a factor in the increase was the use of the unit in breach of rule 6. But because it is not clear that Mr Wright’s breach of rule 6 (and perhaps other rules and laws) was wholly responsible for the whole of the increased premium, Mr Wright’s liability on this ground should be reduced to some extent, in my view by 50%, to about $3,000 (rounded) from the claimed amount.
97.The second part of the expense arose through the significant increase in premiums for SCI. As to the increase, Mr Taylor of SCI stated clearly that the 2019 increase was “a direct result of the high level of risk associated with Unit 2”, which risk was directly related to the likely breach of rule 6.[59] This is a much clearer case of Mr Wright making the expense necessary. Mr Wright’s liability should therefore be the full $4,765.
[59] Statement of Grant Taylor at [18]
98.The cost must be reasonably incurred and a reasonable amount.[60] The calculation of the amount is set out above at paragraph [72], and the circumstances of incurring the liability at [35]-[36]. The Owners Corporation was required to take out insurance (sections 100 and 101). It seems that the Owners Corporation made significant efforts to obtain appropriate insurance, and that what they obtained from SCI was the result. WFI was not willing to continue insuring the property; there was no evidence that anyone else was willing to do so. On this basis, the cost was reasonably incurred and a reasonable amount.
[60] In the matter of Ruling Tribunal section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56 at [55]–[61]
99.There is also an issue about whether Mr Wright was put on notice that his actions were causing an insurance problem, and that he may be liable for the premium increases. There is significant evidence of this in the history outlined above, and in particular the orders of the tribunal in July 2013, discussion at the annual general meeting, and the rule infringement notices, brought this to his attention.
100.On this basis the requirements for an order are in my view made out. There are some issues about the quantum discussed above at paragraphs [72], [96] and [97]. In my view Mr Wright should be required to pay $3,000 (see paragraphs [72] and [96]) plus $4,765 (see paragraph [72] and [97]), that is $7,765.
………………………………..
Acting Presidential Member R Orr QC
Date(s) of hearing 5 November 2020 Counsel for the Appellant: Mr N Oram Solicitors for the Appellant: Ms S Hendry, McInnes Wilson Lawyers Respondent: In person
0
6
6