The Owners Units Plan No 14 v Wright (Unit Titles) - [2020] ACAT 60

ACT CIVIL & ADMINISTRATIVE TRIBUNAL

THE OWNERS UNITS PLAN NO 14 v WRIGHT (Unit Titles) [2020] ACAT 60

UT 27/2019
Catchwords: UNIT TITLES – enforcement of rules under section 109 Unit Titles Management Act 2011 – jurisdiction of the Tribunal where pre-condition to operation of section 109 not satisfied – interpretation of meaning of reasonable belief for purposes of section 109(1) – appropriate and available orders under section 129 in relation to failure to comply with a rule infringement notice issue pursuant to section 109(3)(f)(ii)

Legislation cited: ACT Civil and Administrative Tribunal Act 2008 ss 6, 9,11 ,48
Emergencies Services Act 2004
Unit Titles(Management) Act 2011 ss 6, 16, 19, 20, 22, 35, 45, 100, 108, 109, 110 Sch 1, 4

Cases cited:Coco v R [1994] HCA 15
Corby v The Owners Corporation Unit Plan1035 [2019] ACAT 45
Growthbuilt Pty Ltd v SafeWork NSW [2018] NSWIR Comm 1002
In the Matter of Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56
Martin v Owners Units Plan No 220 & Ors [2017] ACAT 22
Marshall v Director General, Department of Transport [2001] HCA 37
Milurrpum v Nabalco (1971) 17 FLR 141
Uren & Anor v The Owners – Units Plan No 396 [2017] ACAT 51
The Owners of Units Plan No 928 v Cochaud [2017] ACAT 66

List of

Texts/Papers cited: Christopher R. Kerin, Guide to ACT Strata Law (Kerin Benson Lawyers, 2017)

Tribunal: Senior Member E Ferguson

Date of Orders:  11 August 2020
Date of Reasons for Decision:        11 August 2020
AUSTRALIAN CAPITAL TERRITORY
CIVIL & ADMINISTRATIVE TRIBUNAL           UT 27/2019

BETWEEN:
THE OWNERS UNITS PLAN NO 14
Applicant

AND:
MATHEW WHEELER HANFORD WRIGHT
Respondent

TRIBUNAL: Senior Member E Ferguson

DATE:11 August 2020

ORDER

The Tribunal orders that:

Pursuant to section 129(1)(a) of the Unit Titles (Management) Act 2011, the respondent must not park or store goods, (including motor vehicles) on the common property in breach of the Storage Rules.
Pursuant to section 129(1)(a) of the Unit Titles (Management) Act 2011, the respondent must not park or store goods, (including motor vehicles) on the common property in breach of Default Rule 5, including but not limited to obstructing access to the owners, occupiers and users of other units.
The respondent shall within seven days remove any goods (including motor vehicles) from the common property which he has stored or parked, or permitted to be stored or parked, in breach of either the Storage Rules or Default Rule 5.
………………………………..
Senior Member E Ferguson

REASONS FOR DECISION

Background

This dispute involves a small commercial unit plan at Fyshwick comprised of six units. Each unit consists of a building with an adjoining fenced yard bordering a common car park. Mr Wright runs his business, Mister Cheap, from Unit 2. According to his business card the business provides “courtesy cars and mechanical services”.
Since 2009 the owners corporation have been trying to stop Mr Wright using the common car park to store cars and car parts in ways which annoyed and inconvenienced other owners. The owners were also at times concerned, but to a lesser extent, about the untidy and congested state of Mr Wright’s yard.
In late 2017 the owners’ focus of concern shifted from Mr Wright’s use of the car park to the use of his own unit, when his refusal to give the corporation’s insurer (WFI) access to his unit resulted in it refusing to renew cover beyond February 2018.
The owners corporation was able to secure ongoing insurance from another insurer, SCI, but only at a significantly higher premium.
In March 2018 SCI’s assessor conducted a risk assessment survey of the unit plan including Mr Wright’s yard and warehouse and did not identify any risks associated with his unit. The assessor’s report noted that Mr Wright was expected to move out of his unit by May 2018.
For some reason Mr Wright did not move out as expected. On 19 June 2018 the executive committee directed the strata manager to issue an unspecified number and type of Rule Infringement Notices (RINs) to Mr Wright pursuant to section 109 of the Unit Titles (Management) Act 2011 (the UTMA).
The executive’s resolution authorising the notices contained a list of grievances regarding Mr Wright’s use of the common car park and his own unit but did not specify which rules his conduct offended.
Two weeks later the strata manager, Janet Browne, issued Mr Wright with five notices for contraventions of specific rules of the corporation, two related to his use of the common property (the common property RINS) and three related to the use of his own unit (the unit 2 RINs). Each notice contained particulars of the rule allegedly contravened and details of the contravention.
The owners alleged that Mr Wright did not remedy the infringements as required by the notices or as subsequently demanded by the applicant’s lawyers.
Section 109(3)(f) provides that:
if the person does not comply with the notice—
(i) the person commits an offence[1]; and
(ii) the owners corporation may, without further notice, apply to the ACAT for an order in relation to the failure to comply with the notice.
[1] Unit Titles (Management) Act2011 section 110 specifically deals with this offence
On 9 October 2019 the owners corporation applied to the ACAT:
(a)for orders pursuant to section 109(3)(f) in relation to Mr Wright’s failure to comply with the RINs; and
(b)for orders to recover, as statutory debts pursuant to section 31 of the UTMA, both the additional premiums incurred by the owners corporation as a result of Mr Wright’s action; and the legal costs it incurred in these proceedings.
Mr Wright denied that he was in breach of the corporation’s rules. He insisted that in any event he had substantially complied with the RINs issued against him; and that outstanding issues regarding the common property would be resolved within a matter of days.
After filing the application, the corporation’s insurance position worsened as a result of Mr Wright’s conduct and by the time of the hearing on 8 April 2020, it risked losing cover altogether by August 2020 unless Mr Wright cleaned up his unit. This is an extremely serious matter for the owners corporation given its obligation under the UTMA[2] to maintain building insurance for the common property.

At the hearing

[2] Unit Titles (Management) Act 2011 section 100

Mr Wright represented himself at the hearing. The corporation was represented by its solicitor, Ms Hendry. The strata manager Janet Browne attended and gave evidence for the corporation. The hearing was conducted by telephone.
At the hearing I decided that I did not have jurisdiction to determine the statutory debt as part of the application, for the reasons given on the day.
After hearing the parties’ evidence and submissions I reserved my decision on the balance of the application, being the application for orders pursuant to section 109(3)(f) of the UTMA in relation to Mr Wright’s alleged failure to comply with the RINs issues against him.

The decision – summary

The Tribunal has jurisdiction to determine any application that an applicant is entitled by legislation to make.[3] Such a right may be conferred by either the ACTCivil and Administrative Tribunal Act 2008 (ACAT Act) itself, or by other legislation, known as an authorising law. A right under an authorising law to make an application to the tribunal is subject to any condition stated in the authorising law.[4]
[3] ACT Civil and Administrative Tribunal Act 2008 section 9
[4] ACT Civil and Administrative Tribunal Act 2008 section 11
In this case the applicant relied upon the authority of a corporation to apply to the tribunal for orders pursuant to section 109(3)(f).
Under section 109 my jurisdiction to determine the application in relation to each rule infringement notice depended upon the applicant establishing the following:
(a)Section 109 applied in the circumstances.
(b)The RIN met the procedural requirements of the section.
(c)Mr Wright failed to comply with the RIN.
I was satisfied that all the criteria were established for the two common property RINs and so I had jurisdiction to hear the application for orders in relation to Mr Wright’s failure to comply with those notices.
I exercised my discretion under section 129 of the UTMA to make the orders set out at the beginning of this decision. Where I did not make orders in the terms sought by the applicant it was because they were either beyond my power to make, were inconsistent with the rule being enforced, or were otherwise inappropriate.
I found that section 109 did not apply to the three unit 2 RINs because, on the balance of evidence, the condition precedent to the application of section 109 stipulated in subsection (1) was not satisfied. That is, the executive committee did not hold a genuine and reasonable belief when it directed that unspecified RINs be issued that Mr Wright had infringed the rule stated in the RINs subsequently issued.
Accordingly, I concluded the applicant was not authorised by section 109 to issue the unit 2 RINs, and hence I had no power to hear an application for orders in relation to the three RINs related to Mr Wright’s use of his own unit.
The reasons for my decision are set out in full below.

Identifying the issues

The key to section 109 is subsection (1) which provides that:
(1) This section applies if the executive committee of an owners corporation reasonably believes that—
(a)the owner or occupier (the person) of a unit has contravened a provision of the corporation’s rules; and
(b)the circumstances of the contravention make it likely that the contravention will continue or be repeated.
The inconsistency between the vagueness of the resolution and the specificity of the RINs subsequently issued caused me to question whether the executive had the belief required by section 109(1) to engage the operation of the section.
Was the apparent inconsistency relevant? And, if so, did it go to the merits of the authorising resolution; or did it go to my jurisdiction to determine the application?

Question of merits or jurisdiction?

In determining disputes within a unit plan it is often useful to start with the framework for self-governance established by the UTMA described by Senior Member Robinson in Martin v Owners of Units Plan No 222 at paragraph 6 as follows:
Owners corporations are intended to be self-governing, with decisions made by a vote of the members, or by elected members of the executive committee. The approach may be described as a form of constitutional residential democracy, with the UTM Act establishing a framework in which democratic decisions can be made about the management of the complex by the owners of the units within it.[5]
[5] Martin v Owners Units Plan No 220 & Ors [2017] ACAT 22
The UTMA provides mechanisms for a democratic decision of the owners corporation, or the executive acting on its behalf, to be reviewed on its merits by the ACAT.
Mr Wright could have applied to the Tribunal for an order repealing or amending the resolution of the executive committee based on a merits review of the resolution pursuant to section 129(1)(f) rather than waiting for the corporation to initiate proceedings under section 109(3).[6]
[6] See for example Corby v The Owners Corporation Unit Plan1035 [2019] ACAT 45
If he had done so, the rule enforcement process would have been interrogated on a different basis, although not necessarily one more favourable to Mr Wright. However, given the complexity of the UTMA, it would be understandable if this course of action had not occurred to Mr Wright.
Although a merits review may have been a more practical alternative to these proceedings, I dealt with the application before me, that is an application for enforcement of a rule infringement notice pursuant to section 109. In doing so, the central issue which emerged was one of jurisdiction rather than merits. To address that issue I first considered the effect of section 109(1).
The scheme of section 109 could have functioned perfectly well without the pre-condition in subsection (1) in which case the executive’s resolution made under subsection (2) would have been subject in the usual way to a merits review by the Tribunal pursuant to section 129(f).
In my view the pre-condition to the operation of section 109 was clearly intended to operate as a jurisdictional threshold for any application brought in reliance upon that section.

The issues

The questions I needed to answer to determine this application were:
(a)Did I have jurisdiction pursuant to section 109 to determine the application?
(b) If so what remedy, if any, was available and appropriate?
I looked at each infringement separately and, for obvious reasons, I only needed to consider the second question if the answer to the first question was “yes”.
I am aware that these were not the issues of concern to the applicant. Instead it focused on whether Mr Wright’s conduct contravened the rules relied upon by the corporation, and particularly whether he was contravening those rules at the time the matter came to hearing.
If this dispute came before me as a merits review of the executive’s resolution, I would have been required to consider and determine issues as at the date of the hearing and have been able to consider evidence not available to, or not considered by, the owners corporation at the time of their decision.[7] However for reasons I explain later the critical time for the purposes of section 109(1) is the moment the executive decides to issue an RIN.
[7] Uren & Anor v The Owners – Units Plan No 396 [2017] ACAT 51 a case involving a merits review of an unsuccessful resolution under section 129(g) at paragraph 17(c)
The applicant’s perspective was natural and had an intuitive appeal because it addressed in a practical way both the harm Mr Wright was allegedly causing the other owners and whether the Tribunal could intervene to stop it continuing and thereby save the applicant’s insurance cover.

Reasons for findings on jurisdiction

Reasonable belief

What does reasonable belief mean in the context of section 109(1)?
The test of reasonable belief is both subjective, that is, did the executive committee genuinely hold the requisite belief; and objective, that is, was such a belief reasonable according to the standards of a reasonable person in the same or similar circumstances?[8] The onus of proof is on the applicant to establish both criteria.
[8] Legal Definition of a ‘reasonable person’ from the Merriam Webster online legal dictionary: a fictional person with an ordinary degree of reason, prudence, care, foresight, or intelligence whose conduct, conclusion, or expectation in relation to a particular circumstance or fact is used as an objective standard by which to measure or determine something (as the existence of negligence)
The relevant hypothetical reasonable person in this case is a reasonable executive member performing their functions in accordance with the UTMA, including the mandatory Code of Conduct set out in Schedule 1 Part 1.1 of the UTMA. This reasonable person is neither a lawyer nor an expert in the law of unit titles in the ACT.
The test of reasonable belief is not whether the belief was substantively correct but rather whether there were reasonable grounds for it to be formed.

Interpretation

Part 14.2 of the Legislation Act 2001 (Legislation Act) sets out a number of key principles to help work out the meaning of legislation in accordance with its purpose.
Section 139 of the Legislation Act states:
(1) In working out the meaning of an Act, the interpretation that would best achieve the purpose of the Act is to be preferred to any other interpretation.
(2) This section applies whether or not the Act’s purpose is expressly stated in the Act.
Section 140 states that:
In working out the meaning of an Act, the provisions of the Act must be read in the context of the Act as a whole.
The principles set out in the Legislation Act provide guidance and operate in conjunction with settled common law principles of statutory interpretation.

What did the executive committee have to reasonably believe, and when did they have to believe it?

The words of section 109(1)

In accordance with established principles of statutory interpretation the first place to start is with the natural meaning of the words of provision being interpreted. As observed McHugh J in Marshall v Director General, Department of Transport:
The duty of the courts when construing legislation is to give effect to the purpose of the legislation. The primary guide to understanding that purposes is the natural meaning of the words of the legislation.[9]
[9] Marshall v Director General, Department of Transport [2001] HCA 37 at [62]
In my view the natural and ordinary meaning of these words is that the executive must reasonably believe both that:
(a)the relevant person has contravened a particular rule in a particular way, rather than just some rule in some way; and
(b)the circumstances of the particular contravention referred to in subsection (a) made it likely that that contravention, or a contravention of that type, will continue or be repeated.
The reasons for my view are as follows:
(a)The use of the singular form of ‘provision’ in the phrase “a provision of the rules” in subsection (1)(a) indicates that the executive must have in mind a particular provision of the rules, which has been contravened.
(b)The use of the definite article twice in the phrase “the circumstances of the contravention” denotes a reference to a specific thing rather than a type of thing. In this context the thing referred to is a specific contravention of the specific rule referred to in the preceding subsection.
(c)Logic dictates that a belief on reasonable grounds that a particular rule has been contravened requires a view as to how that rule was contravened.

The scheme of section 109

The language of the other provisions of section 109 confirms the substance of reasonable belief required by section 109(1) and shows us when that belief must be formed.
If section 109(1) is satisfied then the section as a whole is engaged. The other provisions of section 109 progress sequentially culminating in section 109(3)(f) which deals with the consequences of a failure to comply with a RIN.
Section 109(2) provides the mechanism for authorising the issuance of a RIN and states:
The owners corporation may, if authorised by an ordinary resolution of the executive committee, give the person a notice (a rule infringement notice) requiring the person to remedy the contravention.
It is self-evident that the ‘person’ referred to in section 109(2) is the same ‘person’ referred to in subsection (1). Likewise, ‘the contravention’ referred to in subsection (2) is the specific contravention the executive reasonably believed has occurred pursuant to subsection (1). Accordingly, the RIN issued must require the recipient to remedy the contravention of the particular rule that the executive reasonably believed they had contravened in a particular way.
The existence of a reasonable belief under (1) is a pre-condition to the executive’s power under subsection (2) to authorise a corresponding RIN. It follows that the belief under subsection (1) must be formed before the power to authorise a RIN under subsection (2) can be exercised.
Section 109(3)(a) to (e) requires that a rule infringement notice state certain information including:
(a)the provision of the rules the owners corporation believes is, or was, contravened: section 109(3)(b); and
(b)details sufficient to identify the contravention: section 109(3)(c).
It is significant that the only mechanism for forming and expressing a belief for the purposes of section 109(3)(b) is that described in section 109(1).
In short, according to the natural sequence of section 109, the belief that must be stated in the RIN[10] is the belief held by the executive committee,[11] on behalf of the owners corporation, which prompted it to authorise the RIN.[12]
[10] Pursuant to section 109(3)(b)
[11] Pursuant to section 109(1)
[12] Pursuant to section 109(2)

Section 109(3)(f) contains the authority upon which this application relies and provides that:
if the person does not comply with the notice—
(i) the person commits an offence; [13] and
(ii) the owners corporation may, without further notice, apply to the ACAT for an order in relation to the failure to comply with the notice.

Conclusion on meaning of section 109(1)

[13] UTMA section 110 specifically deals with this offence

I concluded that the natural meaning of the words of section 109(1) is that an executive committee can only resolve to authorise the owners corporation to issue an infringement notice if it reasonably believes the particular rule referred to in the notice has been contravened in the manner described in the notice.
Further I concluded that the words of section 109(1) read in the context of the section as a whole 109 required that the executive form the relevant belief before it authorises the issuance of a corresponding notice.
I found the intention of section 109 was to empower the executive to authorise action impacting on an owner’s use of their property only if it honestly and reasonably believed it had grounds to do so. In forming that view I had regard to both the natural meaning of the section and the following considerations:
(a)The established common law presumption of legislature’s purpose in favour of the sanctity of private property in the absence of clear words indicating a contrary intention; supported by the express provisions of section 19(2) UTMA which provides that: “The owners corporation must give all members of the corporation opportunity for the reasonable use and enjoyment of the common property.”
(b)the nature of the powers and responsibilities conferred on the executive by the UTMA:
(i) the scheme of the UTMA confers a high level of responsibility on the executive in exercising its functions on behalf of the owners corporation; and
(ii) the express terms of the Code of Conduct require an executive member to, amongst other things, commit “to acquiring an understanding of the Act, as relevant to the member’s role on the executive committee;”[14] “act honestly and fairly,”[15] and “use reasonable care and diligence.”[16]
(c)the exclusive power conferred on the executive by section 109(1) to authorise the corporation to take action impacting on the property rights of individual owners;
[14] Schedule I Part 1.1 UTMA Executive Committee’s Code of Conduct paragraph 1
[15] Schedule I Part 1.1 UTMA Executive Committee’s Code of Conduct paragraph 2
[16] Schedule I Part 1.1 UTMA Executive Committee’s Code of Conduct paragraph 3
I concluded that a reasonable executive member exercising their obligations under the UTMA would not have authorised a RIN to be issued against an owner without first having formed a reasonable view as to what rule that person had contravened and how.
None of the executive members gave evidence as to their state of mind at the relevant time. The only evidence from which I could infer the collective belief of the executive is the resolution it passed pursuant to subsection (2) authorising the issuance of rule infringements notices to Mr Wright, and the circumstances leading up to that resolution.

Evidence of belief

The resolution

On 19 June 2018 the executive committee met and passed the following resolution:
1.MOTION: RESOLVED that pursuant to section 109 of the Unit Titles Management Act the Owners Corporation instruct the Managing Agent to issue Rule Infringement Notices against unit 2 for the following breaches-
1)      Rubbish accumulating in yard of property.
2)      Unkempt state of the unit with overflow of parked cars within the unit.
3)      Illegal parking.
4)      Causing additional costs for the owners corporation having to pay increase in insurance premiums.
General Discussion preceded the above motions with executive members expressing concerns at the continual issues associated with the behaviour practices of the owner of unit 2.
Significantly, the resolution does not identify which rules Mr Wright had contravened or how he had done so.
On 2 July 2018, Ms Browne, issued Mr Wright with five infringement notices for contraventions of the following Default Rules of the corporation[17] as amended. Those notices are identified in two categories:
(a)In relation to the Common Property- use of common car park:
(i)      The Storage Rules[18]
(ii)     Default Rule 5
(b)In relation to Mr Wright’s use of his own unit:
(i)      Default Rule 3
(ii)     Default Rule 6
(iii)   Default Rule 7
[17] As set out in Schedule 4 of the UTMA
[18] Which the Default Rules were amended to include by a special resolution of the AGM in October 2011 pursuant to section 108(1) of the UTMA, and which took effect sometime before the next AGM upon being registered by the Registrar of Land Titles: section 108(2) UTMA.
Each notice identified the rule contravened and described the contravention.
At the hearing the applicant’s solicitor submitted that:
Section 109(2) does not say anything about the ordinary resolution having to identify the specific rule. The substance of the minutes as opposed to the form I would say is what is important here. And the substance of the minutes in the context of the factual history of the matter, in my submission, clearly gives the Owners Corporation the power to issue the rule infringement notices.
Whilst I agree that section 109(2) does not expressly require that the executive committee identify the rule allegedly breached, I do not accept that the resolution’s vagueness is simply a matter of form over substance.
The committee’s failure to be specific made it difficult to determine both whether it held the requisite beliefs at the relevant time, and if so whether such beliefs were reasonable in the circumstances.
Although the words of the resolution give little indication as to whether the executive committee had a clear idea of how or even if the conduct they complained of contravened the rules, I accepted Ms Hendry’s submission that the resolution should be read in the historical context.
The circumstances of the common property breaches significantly differ from those of the unit 2 breaches, so I considered the two categories of breaches separately from this point on.
For the purpose of determining whether the executive held the requisite belief when they passed the resolution for obvious reasons, I only had regard to the history leading up to that time.

History of illegal parking prior to resolution

Ms Browne at paragraph 18-19 of her witness statement stated that:
18. Since at least August 2009, Mr Wright has been storing vehicles, or permitting vehicles to be stored, in the common property car park in a manner that unreasonably interferes with the use and enjoyment of the common property by other owners or occupiers.
19. For example, at times Mr Wright has caused up to 20 vehicles to be parked or stored on the common property car park, which has resulted in other owners and occupiers being unable to use and enjoy the car park.
Mr Wright did not seriously dispute that he had used the car park in this way although he did not admit it interfered with other owners. Mr Wright not only left a number of cars and car bodies in the car park for extended periods, but also regularly brought in overnight a large number of cars from other car parks around Fyshwick and parked them in the common car park before dispersing them the following morning.
Over several years successive strata managers had asked Mr Wright to desist from using the car park in this way. When doing so they had relied on either Rule 5 or the new Storage Rules after they were enacted.
Indeed in 2013 the owners corporation took action to recover costs they claimed to have incurred as a result of Mr Wright’s use of the car park in breach of the Storage Rules. The minutes of the general meetings of the corporation over many years chronicled ongoing issues with Mr Wright illegally parking in the common car park.
At the Annual General Meeting (AGM) held on 19 December 2017, the last before the RINs were issued, the owners resolved to engage “legal representation and advice” in relation to illegal parking by Mr Wright and “varying the levies of unit 2 to cover the 30% increase in insurance premiums due to the state of unit 2”.
I was satisfied on the evidence that the corporation through successive strata managers had repeatedly raised over many years the issue of Mr Wright’s “illegal parking” in the common car park with, at best, temporary and limited success before the resolution to issue RINs was passed on 19 June 2018.

Common property – illegal parking – the RINs

Set out below are the two rules the corporation claimed Mr Wright had contravened and relevant parts of the two corresponding RINs.
The Storage Rules were approved by the AGM in 2011 and registered sometime before the next AGM held on 3 December 2012:[19]
Ø   The storage of goods, including registered or unregistered vehicles, is not permitted on common property without the written permission of the Owners Corporation.
Ø   Permission for storage of goods will incur a charge as determined by the Owners Corporation.
Ø   Parking of registered vehicles is permitted on the common property up to 12 hours without the need for Owners Corporation written permission.
Ø   Goods, including vehicles, stored for longer than 12 hours without approval will be deemed to be “unauthorised storage”.
Ø   Goods, including vehicles, that are more than 14 days in arrears will be deemed to be “unauthorised storage”.
Ø   Goods, including vehicles, that are “unauthorised storage” will be removed and disposed of by the Owner Corporation.
[19] Minutes of AGM held 3 December 2012.
The RIN issued in relation to Mr Wright’s contravention of the Storage Rules provided the following particulars:
The Owners Corporation believes you have contravened this article due to the state of the internal of your unit (sic) with numerous car bodies and associated goods and continual illegal parking of vehicles on common property. Also causing additional costs to the Owners Corporation having to pay additional in insurance premiums. The owners corporation believes that the contravention is likely to continue as you have been notified of this issue over several years.
Removal of vehicles from within the unit and the common property within 14 days of this notice.[20]
[20] Witness statement of Janet Browne of 19 March 2020 at page 94
Rule 5 ‘Use of the Common Property’ provides that:
A unit owner must not use the common property, or permit it to be used, to interfere with the use and enjoyment of the common property by an owner, occupier or user of another unit.
The RIN issued in relation to contravention of Rule 5 provided the following particulars:
The owners corporation believes you have contravened Rule 5 due to the illegal parking of vehicles on common property and causing access difficulties to other residents units and limited visitor parks. Also causing additional costs for the Owners Corporation having to pay additional in insurance premiums.
The Owners Corporation believes that the contravention is likely to continue as you have been notified of this issue over several years.
Removal of vehicles parking illegally on common property within 14 days of this notice.[21]
[21] Witness statement of Janet Browne of 19 March 2020 at page 88
Both common property RINs repeated the concern expressed in the executive’s resolution about increased insurance premiums. However, the increase was caused by Mr Wright’s refusal to allow access to his unit and had nothing to do with his use of the common property. As both rules only apply to use of the common property, the increased cost of insurance premiums was irrelevant.

Jurisdiction – common property – conclusion

I was satisfied that at the time the RINs were authorised a reasonable executive member, having familiarised themselves with the relevant provisions of the rules, could have believed that Mr Wright’s had contravened Rule 5 and the Storage Rules. I was further satisfied that Mr. Wright’s pattern of behaviour over several years gave the executive reasonable grounds to believe that he was likely to continue or repeat the contravention.
For the reasons set out above I concluded that the executive had the belief required to activate the operation of section 109.

Were the other requirement of the section satisfied?

In spite of the inclusion of irrelevant material about insurance, I was satisfied that both the common property RINs contained relevant information sufficient to satisfy the requirements of section 109 (3)(a) to (e).
For the reasons above I found in relation to the common property RINs:
(a)section 109 applied; and
(b)the owners corporation was entitled to apply to the ACAT pursuant to section 109(3)(f)(ii) for an order in relation to Mr Wright’s failure to comply with both RINs.

Remedy - common property

Part 8 of the UTMA sets out a process by which owners, the corporation and other specified parties can seek dispute resolution through the Tribunal. This process applies to disputes including:
(a)the owner of a unit and the owners corporation;[22] and
(b)a dispute between two or more unit owners.[23]
[22] UTMA section 125(1)(a)
[23] Section 128(1)
The orders that are available to the Tribunal to resolve disputes are set out in section 129 of the UTMA.

Orders sought – for breaching five RINs

The corporation sought the following orders for breaching the five RINs issued by the applicant:
(a)Pursuant to section 129(1)(d) of the UTMA: the respondent pays the applicant the sum of $1,000; or
(b)In the alternative, pursuant to section 129(1)(a) of the UTMA, the respondent pays a pecuniary penalty of 25 penalty units.

Pecuniary penalty

It is open to me under Section 129(1)(a) to make an order “requiring a party to do, or refrain from doing, a stated thing”. The Act provides no guidance on the sort of thing contemplated.
There are specific provisions in the Act applying to liability for pecuniary penalty arising from failure to comply with a RIN.
The relevant provisions are section 109(3)(f)(i), which simply states that a failure to comply with a RIN is an offence, and the operative section 110 which provides:
(1) A person commits an offence if the person—
(a)is given a rule infringement notice under section 109; and
(b)does not comply with the notice.
Maximum penalty: 5 penalty units.
(2) However, the person does not commit an offence under this section if, when the rule infringement notice is given to the person, the person is not contravening, or has not contravened, the provision mentioned in the notice in the way detailed for section 109 (3) (c).
The applicant asked me to impose a pecuniary penalty of 25 penalty units being the maximum penalty of five penalty units for each of the five rule infringement notices.
At the hearing, the solicitor for the applicant was unable to point me to any power I have to impose a fine pursuant to section 110 and I am not aware of any. The prosecution of an offence under section 110, which may result in the imposition of a fine, is a matter for the relevant regulator to pursue and not the Tribunal.

Recovery of expenses via section 129(1)(d)

The applicant sought, as an alternative to the imposition of a pecuniary penalty, an order that Mr Wright pay it the sum of $1,000 pursuant to section 129(d) which provides that the Tribunal may make an order:
requiring a person to pay to the Territory or someone else an amount of not more than $1,000;
The applicant’s solicitor submitted at the hearing that such an order was justified:
…in order to compensate the applicant who is out of pocket by no fault of its own and ought not to be in this situation where they have done everything they can to try and resolve the issues.[24]
[24] Transcript of Proceedings 8 April 2020, page 54
In particular, she argued that Ms Browne had “spent hours and hours and hours over the years but particularly in relation to this set of proceedings”, which the applicant had not sought to recover, including by way of the section 31 application. “Not only attending conferences but liaising with me, preparing the evidence, appearing today. Her costs well exceed $1,000.”
I am not sure what additional expense the owners corporation incurred as a result of Ms Browne attending to its dispute with Mr Wright. But whatever its nature and extent, I do not have power pursuant to section 129 to make an order compensating the applicant for it.
Section 48(1) of the ACAT Act provides that:
The parties to an application must bear their own costs unless this Act or another territory law otherwise provides or the tribunal otherwise orders.
Section 129(1)(d) of the UTMA is not “another territory law” within the meaning of section 48(1) as it does not confer a costs power on the Tribunal.
The no costs rule established in section 48(1) is subject to the exceptions set out in subsection (2). The applicant did not argue that any of those exceptions applied in this case.
The only other way in which an owners corporation can recover expenses of litigation, including administrative costs or disbursements incurred in bringing the Tribunal proceedings (e.g. charges by owners corporation managing agent, collections agency) from an owner is as a statutory debt pursuant to section 31 of the UTMA [25], as the corporation did in relation to its legal costs.

Orders sought – for breach of the two rules in relation to the common car park

[25]In the Matter of Ruling Tribunal Section 31 of the Unit Titles (Management) Act 2011 [2017] ACAT 56

The applicant also sought the following orders “for alleged breach of the two rules in relation to the common car park”:
5.       That pursuant to section 129(1)(a) of the Act, the respondent must not park or store goods, (including motor vehicles) on the common property in breach of the Default Rules or Storage Rules.
6.       That pursuant to section 129(2) of the Act, the applicant is authorised to:
(a)Remove all goods parked or stored on the common property in breach of the Default Rules or Storage Rules; and
(b)Recover the costs associating (sic) with removing and disposing of the goods from the relevant owner, bailee or consignee of the goods.
7.       That pursuant to section 129(1)(a) or section 129(2) of the Act, the applicant is authorised to:
(a)Remove and dispose of all goods (including motor vehicles) that are parked or stored in the common property car park outside the delineated lines, immediately and without notice; and
(b)Recover the costs associating (sic) with removing and disposing of the goods from the relevant owner, bailee or consignee of the goods.
8.       The applicant has liberty to apply to the Tribunal on three days notice in the event of a failure by the respondent to comply with any of these orders.[26]

Contravention of the Storage Rules

[26] Applicant’s submission of 19 March 2020 page 6

An object of the ACAT Act is to ensure that the decisions of the Tribunal are fair.[27] To this end before making any order against Mr Wright for failing to comply with a RIN I must be satisfied on the balance of probabilities that he actually contravened the relevant rule. It is not enough that the executive had reasonable grounds for believing he did when it authorised the RINs. I must determine, as at the date of the hearing, the issue by applying the law to the facts, as far as they can be established, on the evidence before me.
[27] ACAT Act section 6(d)
The Storage Rules purport to provide the following built in consequences for breach:
(a)The corporation may remove and dispose of vehicles parked, or other goods stored, in contravention of the Rules.
(b)The owners corporation may impose a charge, as it determines, for permitting goods to be stored.
It is noteworthy that, despite Mr Wright flagrantly breaching the rules for years, the corporation has never taken direct action under the rules to remove vehicles. This is despite Mr Wright’s mother, who previously owned the unit he runs his business from, encouraging the strata manager on at least two occasions in 2009 and 2010 to use the powers it apparently had under the Storage Rules to dispose of cars and car bodies Mr Wright had left in the car park. [28]
[28] See two letters from Lady Stevenson to ACT Strata Management Services; undated in response to letter of 19 August 2009; and dated 15 November 2010 annexed at pages 33 and 34 respectively of Witness Statement of Janet Browne.

Mr Wright continued to fail to comply with repeated requests to remove vehicles from the car park and in 2013 the corporation took action in the ACAT to recover unpaid contributions it had levied against Mr Wright for “storage charges” under the Storage Rules. Mr Wright disputed liability.[29]
[29] The Owners Unit Plan No. 14 v Matthew Wheeler Hanford Wright XD 784/2013 resolved through an Order by Consent
The validity of the corporation’s claim was never tested as the proceedings were settled by consent and without admission. The Corporation at the AGM later that year indefinitely suspended recovery of the storage charges, which were also variously described as the “debt” or “parking fines”, upon certain conditions.
Why has the corporation been unable through self-help to make Mr Wright comply with the storage rules? Can the Tribunal succeed where the corporation has failed?
The answer to these questions requires a closer examination of the measures taken by the corporation to control parking in the common car park, how effective they are, and who is bound by them.
Minutes of the AGM held on 3 December 2012 recorded that the Storage Rules passed at the previous AGM had been registered and also stated:
a. Mr Wright undertook to remove the vehicles/car bodies stored in common car park by Christmas 2012.
b. The meeting discussed the need for line marking to determine car spaces and noted that this could not be done effectively until the vehicles and car bodies where (sic) removed from the property. Resolved that once the car bodies where (sic) removed the Corporation arranges:
ØTo have the car spaces marked.
ØAn onsite meeting to designate parking specifically for each Unit with any leftovers to be general visitor parking spaces.
Ø Consideration given to ‘No Parking’ and ‘timed’ parking. (errors in original)
The next AGM on 15 November 2013 passed the following motions concerning Mr Wright’s use of the car park:
Motion 6 – (Unit 2-Parking)- Resolved that the Owners Corporation accepts that the owners of Unit 2 has made the requested rectifications regarding parking of vehicles at the complex (and minimization of fire risk to the Units Plan).[30]
Motion 7- (Unit 2- Fines)- Resolved that by special resolution: the Owners Corporation determines if the Owner of Unit 2 be liable for outstanding Parking Fines and the interest incurred on these fines in the amount of $5,533.17.
Moved that the amounts of money owing to the Owners Corporation, by Unit 2 due to the incurred fines be removed in the interim, conditional that if the cars reappear the fines incurred will stand as per the abovementioned Special Resolution and be re-levied against unit 2, ( further conditional that a path through the yard be the minimum width of a roller door wide from the front of the yard to the building to allow emergency access).[31] MOTION CARRIED.
[30] parenthesis added
[31] parenthesis added
Significantly, the meeting on 15 November 2013 also agreed to implement the parking plan foreshadowed at the previous AGM to allocate specific spaces in the common car park to individual owners by Motion 4 (Car Park Plan):
RESOLVED that by Special Resolution the Owners Corporation determines the division of the Common Property car parking spaces on a Unit Entitlement basis as per the amended plan as attached.
NB: there is to be no vehicles parked in this area undergoing repairs. Vehicles are not to be parked for more than 24 hours.
A resolution was passed (Motion 5) that, the owners corporation register with the Office of Regulatory Services the Resolution from Motion 4. I am not sure whether it was registered or not.
In argument, the applicant relied on the assertion that Mr Wright allowed cars or car bodies to be parked or stored for more than 24 hours in the common car park outside the three spaces allocated to unit 2 in the Car Park Plan approved at the AGM on 15 November 2013.
At the time of the hearing, five cars were parked or stored in the common car park in front of Mr Wright’s fence. Mr Wright told the Tribunal that he owned two of the cars and a friend of his owned the other three. Mr Wright conceded that he had permitted his friend to leave the cars there but assured the Tribunal they would be gone within a matter of days.
It seemed that both parties accepted that Mr Wright was only entitled to use the three car spaces allocated to him in the Car Park Plan. Although Mr Wright argued that only applied to cars he had parked, as opposed to those owned by others, which he permitted to be parked there.
What was the relevance of the Car Park Plan to Mr Wright’s alleged contravention of the Storage Rules? The applicant’s argument was predicated on the cars parked outside the allocated car spaces being subject to the Storage Rules and those within Mr Wright’s allocated spaces not being.
I would observe by way of obiter that since the Car Park Plan was approved by a special resolution, the accuracy of this assumption depended on whether the nature of the parking rights purportedly created by the Car Park Plan were by way of a special privilege attached to the leasehold,[32] which requires a unanimous resolution of a general meeting to establish; [33] or a personal contractual license, which does not.
[32] UTMA section 20(2) prohibits the transfer, sublet or mortgage of the owners corporations interests in the common property
[33] UTMA section 22(1) - see also The Owners –Unit Plan No.116 v Nicholson & Ors [2012] ACAT 63.
The validity of the resolution implementing the Car Park Plan was not in dispute and in any case was not necessary to determine, it being sufficient note that the applicant in these proceedings only sought to enforce the Storage Rules as they applied to that part of the common car park not ‘allocated’ to Mr Wright.

Who is bound by the Storage Rules?

Section 107 of the UTMA deals with the effect of the corporation’s rules and states:
(1)     There are taken to be agreements under seal between an owners corporation and each of its members, and between each member and each other member, under which the corporation and its members agree to be bound by the rules of the corporation.
(2)     An occupier of a unit (who is not the owner of the unit) is bound by each rule of the corporation as if the occupier were the owner of the unit, unless the rules provide otherwise.
(3)     If the unit owner does not occupy the unit, the owner is liable separately and together with an occupier of the unit for any breach of the rules of the owners corporation by the occupier, unless the owner proves that the owner took reasonable precautions and exercised appropriate care to prevent the breach.
(4)     An occupier of a unit who occupies the unit under a residential tenancy agreement within the meaning of the Residential Tenancies Act 1997 is not bound by any rule of the owners corporation to the extent that the rule is inconsistent with the prescribed terms (or terms to the effect of the prescribed terms) to which the agreement is subject under that Act, section 8.
Mr Wright has run his business from unit 2 since at least 2009. Originally his mother owned the unit, but he acquired ownership of it after she passed away sometime after 15 November 2010.[34]
[34] Being the date of the last letter in evidence from her to the strata manager at the time
The corporation’s rules have applied to him at all relevant times, first as an occupier, and later as an owner.
Clearly the Storage Rules apply to Mr Wright to the extent that he stores things described in them on the common property, whether he owns those things or not.
Just as clearly, the Storage Rules do not bind third parties, including customers and visitors because they are not parties to the agreement referred to in section 107 of the UTMA. Consequently, the corporation cannot rely on the Storage Rules to either:
(a)move or dispose of vehicles or car bodies on the common property, which are not owned by a unit owner or occupier; or
(b)impose storage charges on third parties.
In circumstances where goods are left on the common property and it cannot be established that they belong to either an owner or occupier, the corporation may be able to deal with them as uncollected goods under the Uncollected Goods Act1996, subject to the conditions set out in that Act. Such a course of action has perils of its own.
Other practical courses of action, which do not rely on application of the corporation’s rules, may be available to an owners corporation to control parking by persons who are neither occupiers or owners[35] but the corporation does not appear to have resorted to these measures.

Had Mr Wright contravened the Storage Rules?

[35]Christopher R. Kerin, Guide to ACT Strata Law Kerin Benson Lawyers (2017), at 111-112

The Storage Rules were registered at the Land Titles Office sometime before the AGM in December 2012, at which point they became enforceable.
Mr Wright promised the owners at the meeting in December 2012 that he would remove the vehicles by Christmas. It seems he was slow to do so:
(a)On 15 January 2013 ten vehicles were observed to be stored on the common property.[36]
(b)On 15 April 2013 six vehicles remained.[37]
(c)On 16 July 2013 Mr Wright agreed to remove the remaining vehicles stored on the common property.[38]
[36] letter from ACT Strata Management Services to Mr Wright dated 16 January 2013
[37] letter from ACT Strata Management Services to Mr Wright dated 19 April 2013
[38] See ACAT orders made by consent on this date
On 23 October 2015 at the AGM it was recorded that:
multiple vehicles are still being parked on the Common Property. Unit 2 advised that by the end of November they will no longer have cars parked on the common driveway and that by the end of February the yard will be completely cleared up.
By the AGM on 15 November 2013 he had fully complied.[39]
[39] Minutes exhibited Witness statement of Janet Browne at page 53 to 55
A the AGM on 12 October 2016 the owners again discussed Mr Wright storing multiple vehicles on the common property. On 14 December 2016 the strata manager asked Mr Wright to remove vehicles.
Mr Wright did not comply with the RIN issued and continued to contravene the Storage Rules. However, by the time of the hearing only five cars were parked in the common area, and the corporation only objected the two parked outside the car spaces allocated to Mr Wright.
Although it seems that three of the cars in front of the fence may not have been parked there by Mr Wright, I am satisfied that he at least caused them to be there because he purported to grant permission to his friend to leave them there. In my view the verb ‘storage’ encompasses not just the physical act of placing something in storage but also causing someone else to store a thing.

Orders in relation to failure to comply with Storage Rule RIN

Based on his past behaviour I am satisfied that Mr Wright has contravened the Storage Rules by storing vehicles in the common car park and is likely to repeat that contravention in the future. Accordingly, I order that:
1.Pursuant to section 129(1)(a) of the UTMA, the respondent must not park or store goods, (including motor vehicles) on the common property in breach of the Storage Rules.
It is not appropriate to make the other orders sought by the applicant for the following reasons:
(a)They potentially affect the rights of persons who are not parties to these proceedings.
(b)They have the potential effect of extending the operation of the corporations rules to third parties who are not bound by them.
(c)They have the effect of authorising the recovery of expenses associated with the corporation’s enforcement of its rules outside the mechanism provided by the UTMA Act in section 31, and are therefore beyond the power of the Tribunal to make.

Contravention of Default Rule 5

Mr Wright admitted at the hearing that in the course of his business he regularly brought in cars from other car parks in Fyshwick in the afternoon and parked them in the common car park before dispersing them the following morning.
Ms Browne conceded at the hearing that it was difficult to establish that on any particular occasion whether one or more of these cars remained for more than 12 hours in contravention of the Storage Rules.
However, Ms Browne told the Tribunal that although this activity mainly occurred outside business hours it unreasonably interfered with the neighbours’ business because it impeded access to their units and delivery of goods.
I accepted Ms Browne’s assertion, the substance of which was supported by a petition in evidence signed by all the other owners which stated in part:
· U2 is constantly affecting the running of our businesses, illegally parked / stored cars on the common area are blocking delivery trucks and turn-ins for driveways.
· Any directions to move or relocate these are met with abuses, we have had to get new body corp managers about 6 years ago because of this abusive behaviour from U2.[40]
[40] Exhibit Witness statement of Janet Browne at page 11
I was satisfied on the balance of evidence that Mr Wright had contravened Rule 5 by causing access difficulties to the owners and occupiers users of other units. I was also satisfied that he was likely to continue to do so given his past behaviour and despite indicating to the Tribunal that his business may soon cease operating due to the commercial pressures caused by the COVID 19 pandemic.

Orders in relation to failure to comply with Rule 5 RIN

I made the following order in relation to Mr Wright’s continuing failure to comply with the RIN in relation to Rule 5:
2.Pursuant to section 129(1)(a) of the UTMA, the respondent must not park or store goods, (including motor vehicles) on the common property in breach of Rule 5, including but not limited to obstructing access to the owners, occupiers and users of other units.

Use of Unit 2 RINs

Use of Unit 2 – History

I agree with the written submission made by the applicant after the hearing with the leave of the Tribunal that a lot owner’s right to use and enjoy their own units is subject to the Default Rules to the extent intended by the legislature.
The proceedings in 2013 were settled by consent at a preliminary conference on 16 July 2013. The orders agreed to by the parties addressed parking in common property but also included the following order apparently unrelated to the grounds of the application:
Order 3: To minimise risk of insurance being cancelled undertake fire hazard reduction.
The owners’ concerns regarding fire risk were resolved before the 15 November 2013 AGM. On that date at a general meeting[41] the owners passed Motion 6 which stated:
the owners accepted that Mr Wright had made the requested rectifications regarding parking of vehicles at the complex and minimisation of fire risk to the Units Plan.
[41] Minutes of General Meeting held 15 November 2013 exhibited Janet Browne’s Witness Statement at pages 53-55
The meeting went on to confirm that Mr Wright was liable to pay “the fine” (in relation to illegal use of the car park); but suspended payment conditional on, amongst other things, “a path through the yard be the minimum of the roller door wide from the front of the yard to the building to allow emergency access.” (Motion 7).
Presumably this was a new request as the minutes indicated that Mr Wright had already rectified the previously agreed risks.
The minutes of the AGM on 23 October 2015,[42] which Mr Wright attended, contain the following notation:
Vehicles- multiple vehicles are still being parked on the Common Property. Unit 2 advised that by the end of November they will no longer have cars parked on the common driveway and that by the end of February the yard will be completely cleaned up.[43] (emphasis added)
[42] Minutes of General Meeting held 15 November 2013 exhibited Janet Browne’s Witness Statement at pages 56 to 58
[43] Minutes of General Meeting held 15 November 2013 exhibited Janet Browne’s Witness Statement at page 57
The owners corporation did not raise with Mr Wright’s his use of his own unit again until 14 July 2017 when Ms Browne wrote to Mr Wright about illegally parked cars and also mentioned “build up on your lot”.
As the Unit Plan Managers of the above Unit Plan we have been requested to once again bring your attention to the issues of the illegally parked cars and build up on your lot.
The Units Plan has previously taken this issue to ACAT and will take this action again unless you comply with previous requests to reduce the number of motor vehicles……[44]
[44] Minutes of General Meeting held 15 November 2013 exhibited Janet Browne’s Witness Statement at page 63
Ms Browne did not say why the other owners objected to the condition of Mr Wright’s lot, nor did she say that it contravened any rule of the corporation.
Before any further action was taken a more pressing issue emerged in relation to Mr Wright’s use of his unit.
The corporation’s insurance policy was due to expire on 17 November 2017. On 20 November 2017 Mr Wright refused to allow the corporation’s insurer, WFI, access to his unit to conduct an insurance risk assessment. WFI declined to extend the policy beyond February 2018 for the following reasons:
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 (of the exterior). 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.[45]
[45] Witness statement by Janet Browne of 19 March 2020 at page 71
Between December 2017 and February 2018, the corporation’s insurance broker struggled to find alternative insurance. Eventually it managed to secure cover from SCI but only at a significantly increased premium.
SCI insured the unit plan without first accessing Mr Wright’s unit. On 22 March 2018 Nicholas King inspected the unit plan and produced a report for SCI in which he made the following observation regarding unit 2:
The wrecking yard has been the subject of many complaints from other tenants for several years. The owner of the business has agreed to move out within the next two months. The adjacent owner in Unit 3 has signed a lease to take effect in May re this site. The site is congested and untidy. Work has already begun clearing wrecks from the site. It is to be used for welding/fabrication of steel as per unit 3.[46]
[46]King’s Risk assessment report annexed to witness statement of Grant Taylor page 21
Mr King apparently gained access for the purpose of his survey to both Mr Wright’s yard and the interior of his warehouse because one photo of each is attached to his report. Nevertheless, he concluded:
There are no recommendation items re any specific tenancies. It is suggested however, that AAL be notified of the uptake of the lease of unit 2.
There is no evidence to suggest that, prior to the RINs being issued, the owners corporation had ever alleged that Mr Wright’s use of his own unit infringed any of its rules. This contrasts with the corporation’s approach towards Mr Wright’s use of the common property. Nor had a survey of Mr Wright’s unit been undertaken which identified any risk.
Against that background I considered whether the executive had the required belief in relation to each of the RINs relating to Mr Wright’s use of his own unit.

RIN – Default Rule 6 – hazard

Rule 6 deals with hazardous use of a unit and provides:
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.
The RIN in relation to Rule 6 stated that:
The Owners Corporation believes you have contravened Rule 6 due to the state of the internal of your unit (sic) with numerous car bodies and associated goods. Also causing additional costs for the Owners Corporation having to pay additional in insurance premiums.
The Owners Corporation believes that the contravention is likely to continue as you have been notified of this issue over several years.
Removal of vehicles from within the unit to be removed by 70% within 14 days of this notice.

The reference in the RIN to the internal use of Mr Wright’s unit reflects ‘breaches’ described in the resolution:
a. Rubbish accumulating in yard of property
b. Unkempt state of the unit with overflow of parked cars within the unit
It was not clear whether the second grievance related to Mr Wright’s yard or his warehouse or both.

Genuine and reasonable belief – genuine belief

Neither the executive’s resolution nor the RIN explained how the condition of Mr Wright’s unit created a hazard for other owners, users or occupiers. The only reason the executive gave in its resolution for objecting to the state of Mr Wright’s unit was that it caused “additional costs for the owners corporation having to pay increase in insurance premiums.”
When I asked the applicant’s solicitor why the state of Mr Wright’s unit bothered the applicant she said:
It’s unsightly. And it’s also a hazard because there’s no clear path from the internal lot property to the external common property carpark.[47]
[47] Transcript of proceedings 8 April 2020 page 27
At the time the executive committee authorised one or more RINs to be issued against Mr Wright there was no evidence that anyone, apart from Mr King on behalf of the corporation’s insurer, had conducted a risk survey of Mr Wright’s unit including his warehouse.
While Mr King noted that Mr Wright’s site was congested and untidy, he did not identify any risk associated with it. It was not until February 2019, upon SCI becoming aware that Mr Wright had not moved out as expected, that it revised its risks assessment in relation to unit 2. SCI offered to extend insurance but only on the basis of increased premiums and higher excesses “due to the high level of risk associated with Unit 2”.[48] After inspecting the unit on 11 December 2019 SCI refused to renew its insurance policy “due to the occupants of Lot 2.”[49]
[48] Witness statement of Mr Taylor, SCI State Manager for the ACT and NSW dated 19 March 2020 at paragraphs 18-20
[49] Letter from SCI to the Owners of UP No.14 dated 11 December 2019 exhibited to Janet Browne’s witness statement at page 131
I noted based on the evidence before me:
(a)The first record of the owners raising the issue of emergency access through Mr Wright’s yard was at the AGM on 15 November 2013.[50]
(b)By mid-2017 other owners were again expressing concern about the crowded state of Mr Wright’s lot.[51]
(c)The photos taken by the SCI’s agent, Mr King, on 22 March 2018 show the yard in a congested state; it is hard to draw any conclusion from the photograph of the interior of the warehouse. [52]
(d)Mr King made no comment on any risks associated with unit 2 and simply noted that:
(i)      the owner of Unit 2 was observed to be operating a wrecking yard; (an assertion denied by Mr Wright)
(ii)     The site was “congested and untidy”; and
(iii)   the owner of Unit 2 was reported to be moving out “within the next two months”.[53]
(e)Mr Wright conceded at the hearing, “Well, the way I kept the property hasn’t changed in 20 years, and I haven’t had a fire.”[54]
[50] Minutes of meeting
[51] Letter from Ms Browne to Mr Wright dated 14 July 2017 Exhibited to Janet Browne’s witness Statement at page 63
[52] Exhibited to Mr Taylor’s witness statement at page 22 Image 3 “U2- Wrecking Yard” ; and Image 4 “U2- Interior”
[53] Mr King’s findings as summarised by Grant Taylor at paragraph 17 of his witness statement
[54] Transcript of proceedings 8 April 2020 page 28
In light of this history it seems likely that when the executive passed the resolution it was concerned, at least to some extent, that the lack of clear access through Mr Wright’s yard could hamper efforts to contain an emergency, including a fire, starting within Mr Wright’s unit and spreading to other units or the common property.
There is an obvious logical connection between the potential scenario just referred to and the harm Rule 6 is designed to address. I concluded that the executive made that connection because it is obvious, and that they genuinely believed that the condition of Mr Wright’s yard contravened Rule 6.
My degree of confidence in this inference based on logical connection is only just sufficient to tip the balance of probability in favour of the applicant noting that:
(a)there is no evidence to suggest that anyone acting on behalf of the corporation had ever made such a connection before;
(b)no such connection is apparent from either the words of the resolution or the subsequent RIN; and
(c)the risk assessment done three months before the resolution identified no risk associated with Mr Wright’s unit.

Genuine and reasonable belief – reasonable belief

Although satisfied that the executive held the genuine belief required, I was not satisfied that a reasonable executive member would have formed such a belief in the circumstances because:
(a)there is no evidence that, when the executive authorised the RINs, either the insurer, or any other qualified person, had identified any current risks associated with the state of Mr Wright’s unit;
(b)The executive made no attempt to test their assumption that the state of Mr Wright’s yard created a hazard.

Evidence of hazard

In my view, the argument put on behalf of the corporation conflated causing a “hazard to an owner, occupier or user of another unit” with causing increased insurance costs for all owners.
An insurer is not directly interested in the risk of fire, or any other hazard to the common property or the unit owners. When it undertakes a risk assessment it is assessing and pricing its own risk of having to pay a claim under the policy. However, the insurer’s risk is the corollary the risk of personal or property damage of the type covered by the policy occurring. In this case one of the risks the corporation must insure against is fire.[55]
[55] UTMA section 100(1)(a)
WFI declined to reinsure not because there was an unacceptable risk but because it could not satisfy itself that there was not. Whilst Mr Wright’s use of his yard was not the deciding factor, it seems from the email that it at least raised a question of risk, which they did not have an opportunity to answer by a thorough inspection of Mr Wright’s unit.

Failure to test assumptions

The standard required of an executive member in exercising their functions to authorise a notice under section 109 reflects their responsibilities under the Code of Conduct. Those obligations relevantly include: a commitment to understanding the parts of the Act relevant to their functions, in this case the rules of the corporation; to act honestly and fairly,[56] to use reasonable care and diligence.[57]
[56] Code of Conduct paragraph 2
[57] Code of Conduct paragraph 3
The NSW Industrial Relations Commission, in considering whether a safety inspector had formed the reasonable belief necessary to issue a notice stopping work on a construction site, found that the inspector must have an objectively reasonable and balanced approach in issuing the notice, and that he cannot make assumptions and act on them without, at least, attempting to test in a timely and practical manner, the validity of those assumptions.[58]
[58] Growthbuilt Pty Ltd v SafeWork NSW [2018] NSWIR Comm 1002 at paragraph 96
Chief Commissioner Kite SC also said:
An inspector is however required to balance the objective information available to him, and is obliged to make reasonable inquiries.[59]
[59] Growthbuilt Pty Ltd v SafeWork NSW [2018] NSWIR Comm 1002 at paragraph 95
The executive’s conclusion that the state of Mr Wright’s unit created a hazard was not supported by the recent risk assessment conducted by Mr King. Furthermore, the executive failed to use its investigative powers to test its assumption.
Default Rule 10 enables an executive committee representative to inspect a unit and states:
(1)     An executive committee representative may do any of the following in relation to a unit at all reasonable times-
(a)if the committee has reasonable grounds for suspecting that there is a breach of the Act or these rules in relation to a unit- inspect the unit to investigate the breach;
(b)carry out any maintenance required under the Act or these rules;
(c)do anything else the owners corporation is required to do under the Act or these rules.
(2)     An executive committee representative may enter a unit and remain in the unit for as long as is necessary to do something mentioned in subrule (1).
(3)     An executive committee representative is not authorised to do anything in relation to a unit mentioned in subrule (1) unless-
(a)the executive committee or representative has given the owner, occupier or user of the unit reasonable notice of his or her intention to do the thing; or
(b)in an emergency, it is essential that it be done without notice.
(4)     The executive committee may give a written authority to a person to represent the corporation under this rule.
Subject to section 45(2), an executive committee of an owners corporation may engage or employ people on the terms it considers appropriate to help in the exercise of the corporation’s functions.[60] It was open to the executive to engage a suitably qualified expert to access all parts of Mr Wright’s unit to conduct a risk assessment.
[60] UTMA section 45(1)
Although Mr Wright appears to have let Mr King inspect the interior of his warehouse for SCI, he previously refused WFI’s agent access, prompting the strata manager to at least consider using the corporation’s powers under Rule 10 to gain access.
On 23 November 2017 in response to an email from WFI notifying its decision not to extend insurance due to Mr Wright’s refusal to allow their agent to inspect his unit, Janet Browne responded:
Thanks Jane
Appreciate the update. I will discuss with the other owners as to what action they want to take. Did unit 2 actually communicate verbally. He was in our office at 1.00 pm abusing us.
Might have to issue him with an access order.
Or can we ask the owner to provided (sic) detailed internal photos.
Section 109 is only engaged if the executive holds a genuine and reasonable belief pursuant to section 109(1). In the case of the Rule 6 RIN, although the executive held the relevant belief it was not reasonable for it to do so and so the corporation could not rely on the authority of section 109 to apply to the ACAT for orders in relation to Mr Wright’s failure to comply with the RIN.

RIN – Default Rule 3 – good state of repair

Rule 3 states:
(1) A unit owner must ensure that the unit is in a good state of repair.
(2) 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.
The RIN in relation to Rule 3 stated:
The Owners Corporation believes you have contravened Rule 3 due to the unkempt state of the unit with overflow of parked cars within the unit and causing additional costs for the Owners Corporation having to pay additional in insurance premiums.
The contravention described in the RIN reflects the concerns in the resolution about “the unkempt state of the unit with overflow of parked cars within the unit”; and possibly also the concern about rubbish accumulating in Mr Wright’s yard.
The owners corporation had not previously characterised Mr Wright’s longstanding failure to keep his yard tidy as failure to ensure his unit was in a good state of repair.
Repair in the context of the condition of something is defined in the Macquarie International English Dictionary as “the condition of something in terms of whether it needs mending or fixing” – an example is given of an air conditioner no longer in good repair.
Mr Wright’s unit did not need to be mended or fixed. It needed to be tidied: that is to be “made neat and orderly.”[61]
[61] Macquarie International English Dictionary Second Edition Bloomsbury Publishing 1999, 2004
There is a clear distinction between a state of repair and a state of tidiness. It seems unlikely that the executive genuinely confused the two, and if they did it was not reasonable to do so. Accordingly, I concluded that the executive did not have the requisite belief for the purposes of section 109(1).

RIN- Rule 7- Nuisance or annoyance

Rule 7 states:
(1)     A unit owner must not use the unit, or permit it to be used, in a way that causes a nuisance or substantial annoyance to an owner, occupier or user of another unit.
(2)     This rule does not apply to a use of a unit if the executive committee has given an owner, occupier or user of the unit written permission for that use.
(3)     Permission may be given subject to stated conditions.
The RIN in relation to Rule 7 stated:
The Owners Corporation believes you have contravened Rule 7 due to the state of the internal of your unit with numerous car bodies and associated goods and continual illegal parking of vehicles on common property. Also causing additional costs for the Owners Corporation having to pay additional in insurance premiums.
The Owners Corporation believes that the contravention is likely to continue as you have been notified of this issue over several years.
Removal of vehicles from within the unit and the common property within 14 days of this notice.
The executive committee had genuine and reasonable belief that Mr Wright’s use of the common car park interfered with his neighbours in ways which contravened Rule 5. But what was it about Mr Wright’s use of his own unit that annoyed his neighbours?
The applicant’s solicitor submitted that the accumulation of motor vehicles and parts within Mr Wright’s unit was a nuisance and substantial annoyance to the other owners because:
(a)there was no clear path through his yard from his warehouse to the common property car park thereby creating a hazard; and
(b)the untidy and congested yards was unsightly.
It was also apparent that a substantial source of annoyance was the perception that the state of Mr Wright’s yard and his refusal to allow the corporation’s insurer inside his warehouse had resulted in increased premiums for all owners.
I have also already found that at the relevant time the executive committee did not have reasonable grounds for believing that the condition of Mr Wright’s unit created a hazard for other owners.
Mr Wright responded to the suggestion that his yard was unsightly by observing that it was located on an “industrial estate”. No evidence was presented as to the permitted uses for the unit plan, but I note that Mr King’s report described the site as:
a group of factory units…, other businesses operation on site included a motorcycle smash repairer, an welding and steel fabricating workshop and a kitchen manufacturer. [62]
[62] Report of Nicholas King exhibited to Grant Taylor’s witness statement at page 20
Whilst I accepted that some of Mr Wright neighbours might be annoyed by the messy appearance of his yard I was not satisfied that a reasonable executive member would believe it constituted a substantial annoyance given the character and use of the unit plan as a whole.
When the executive decided to initiate action against Mr Wright for contravening the corporation’s rules, they were primarily concerned by the additional cost Mr Wright had caused the owners by his refusal to allow WFI access to his unit to conduct a risk survey.
At the hearing I expressed concern that the Default Rules of the corporation cannot be interpreted in a way which unreasonably interfered with a unit owners right to use their own property.[63] I referred to the decision of Senior Member Robinson in The Owners of Units Plan No 928 v Cochaud[64] (Cochaud) which I thought might be of relevance on this point.
[63] Transcript of proceedings 8 April 2020 pages 36-37
[64] [2017] ACAT 66
In a written submission made after the hearing with the leave of the Tribunal the applicant submitted at paragraph 16 that:
Consequently, the Applicant submits that Cochaud supports the propositions are in effect subject to some extent to the Applicant’s authority over individual units, as intended by the legislature and as per the Default Rules.
While I agree with that proposition it does not address how the Default Rules should be interpreted.
In my view a reasonable executive member would not have formed the view that Mr Wright’s denial of access in the circumstances constituted the type of use which Rule 7 is intended to prohibit. I reached this conclusion for the following reasons:
(a)As Mr Wright was not obliged to allow the insurer’s agent access to his property, it would be unreasonable to interpret Rule 7 as prohibiting him from lawfully exercising his right to quiet possession of his own property absent any clear words to that effect.
(b)The owners corporation did not avail itself of the legitimate process to compel access upon giving reasonable notice established by Default Rule 10.
(c)Mr Wright’s refusal of access did not constitute a nuisance because it was not ongoing, and any harm it caused was a not a reasonably foreseeable consequence of the refusal.
Although there is no rule against an owner or occupier through their act or omission causing an owners corporation to incur additional insurance costs, that does not preclude an application to recover that expense as a statutory debt pursuant to section 31 of the UTMA.

Conclusion RINs in relation to use of unit 2 – where to from here?

I decided not to make orders in relation to Mr Wright’s use of his own unit because the relevant RINs were not authorised in accordance with the requirements of section 109(1) and hence the owners corporation had no authority to apply for orders in relation to Mr Wright’s failure to comply with them pursuant to section 109(3)(f)(ii).
This was not a decision reached lightly because since the RINs were issued the situation has significantly deteriorated due to Mr Wright’s failure to tidy up his unit. The corporation now faces the real and imminent prospect of losing its insurance cover unless the insurer receives satisfactory evidence that Mr Wright had tidied up his unit. This would have potentially disastrous consequences for all owners including Mr Wright.
The corporation has a number of options available to it, including utilising Default Rule 10 to organise an independent risk assessment and issuing RINs based on current circumstances. If any person believes that the condition of a premises poses a risk to public safety or to the safety of people who are likely to be at the premises then it is open to them to report the concern to the chief officer (fire and rescue service).[65] None of these methods are guaranteed to succeed.
[65] See Emergencies Services Act 2004 Part 5.4
All involve delay, stress and expense to all owners, which could be avoided if Mr Wright simply tidied up his unit and provided evidence of doing so to the satisfaction of the insurer.

………………………………..
Senior Member E Ferguson
HEARING DETAILS

FILE NUMBER:	UT 27/2019
PARTIES, APPLICANT:	The Owner Units Plan No 14
PARTIES, RESPONDENT:	Matthew Hanford Wright
COUNSEL APPEARING, APPLICANT	N/A
COUNSEL APPEARING, RESPONDENT	N/A
SOLICITORS FOR APPLICANT	McInnes Wilson Lawyers
SOLICITORS FOR RESPONDENT	N/A
TRIBUNAL MEMBERS:	Senior Member E Ferguson
DATES OF HEARING:	8 April 2020