The dispute involves the construction of awnings fixed to common property on the balcony of a Lot in a strata scheme in Cronulla, NSW in April 2016.
Ms Bate is the owner of Lot 3, who constructed the balcony. Mr and Ms Birdsall are the owners of Lot 7, which is the Lot directly above Lot 3.
It is not in dispute that no exclusive use by-law has been passed at a general meeting of the strata scheme under s 108 of the Strata Schemes Management Act 2015 ('the SSMA 2015'). Ms Bate asserts that she was given permission from the strata manager Mr Myers and a representative of the strata committee Mr Zimmerman (the owner of Lot 14) to construct the awning.
At the annual general meeting of the strata scheme on 22 August 2017, a resolution was passed as follows:
"That permission for the awning, previously approved for Lot 3, attached to the underside of Lot 7 balcony is now WITHDRAWN and the owner of Lot 3 is directed to have the awning removed".
In Matter SC 17/42189 Ms Bate seeks orders as follows:
1. That the owners corporation be directed to consent to existing or proposed alterations under s 126 of the SSMA 2015.
2. That the resolution of the owners corporation passed on 22 August 2017 be invalidated under s 24 of the SSMA 2015.
3. The appointment of a compulsory strata managing agent under s 237 of the SSMA 2015.
At the hearing of the matter, Ms Bate also raised s 149 of the SSMA 2015. Under s 149(1) (a) and (b) of the SSMA 2015, the Tribunal may direct that a common property rights by-law be recorded if the Tribunal is satisfied that an owners corporation has unreasonably refused to make, or consent to, a common property rights by-law.
Ms Bate had not previously sought, or been granted, leave to amend the application to seek an order under s 149 of the SSMA 2015. However, even if it was procedurally fair to allow the late amendment of the proceedings to seek an order under s 149 of the SSMA it is futile to do so, because a proposed exclusive use by-law under s 108 of the SSMA 2015 has never been considered and voted upon by a general meeting of the strata scheme.
In circumstances where no such proposed exclusive use by-law had been considered and voted upon, the Tribunal cannot determine that the owners corporation unreasonably refused to pass such a by-law under s 149 of the SSMA 2015, nor is it appropriate to circumvent the procedure under ss 108 and 141 of the SSMA 2015 that an common property exclusive use by-law be considered at a general meeting of the owners corporation.
In Matter SC 18/00627, Mr and Ms Birdsall seek an order under s 232 of the SSMA 2015 that Ms Bate remove the awnings, and restore common property.
At the hearing of the matter, relevantly, Ms Bate appeared and gave evidence. Mr and Ms Birdsall appeared and gave evidence. Mr Myers, the strata manager, appeared and gave evidence. Mr La Mela, who is a real estate manager and strata manager and who attended the general meeting on 22 August 2017 to "observe" on behalf of Ms Bate, also appeared. A number of other Lot owners also appeared, but were not called to give evidence.
In strata disputes involving unrepresented parties and where the parties have strong emotions about the issues in dispute, it is not unusual for parties to file and serve copious amounts of documentary evidence, many documents having little or no evidentiary value to the determination of the real issues in dispute between the parties. In this matter, both Ms Bate and Mr and Ms Birdsall filed and served a large amount of documents.
The Tribunal has considered all of the documents filed and served by the parties. However, only the relevant documents of the parties will be referred to in this decision.
[2]
Evidence of Ms Bate
Ms Bate filed and served a number of written statements and affidavits in the proceedings that attached numerous documents.
Ms Bate purchased Lot 3 in December 2015 and resides in the Lot. Ms Bate had never lived in a strata scheme previously.
In the period between December 2015 and February 2016 there were a number of storms that resulted in a large amount of water entering the external balcony area of the Lot, and Ms Bates' belongings become wet on a number of occasions. There were also incidents where Ms Bates' belongings became wet when the owner of Lot 14 watered plants. Further, there were incidents where tree and leaf debris entered the balcony area.
According to Ms Bate, she could not store her belongings in the garage area of the Lot because it "leaked" and she believed that her use of the balcony area was restricted because of her belongings that she stored on the balcony becoming wet and having to clean tree and leaf debris.
In January 2016 Ms Bate obtained quotations from 2 plumbers regarding "drainage issues" at the strata scheme, and sent an email to Mr Erich Zimmerman on 23 January 2016 regarding repairs to common property drainage issues. Mr Zimmerman is the owner of Lot 14 and Ms Bate was informed by the strata manager that Mr Zimmerman was the person to contact in respect of strata committee approvals at the strata scheme.
On 4 March 2016, Ms Bate sent an email to Mr Zimmerman as follows:
"I am seeking Executive Committee (sic) approval for awnings to be installed over my U3 (sic) terrace as per the attached specifications. The awnings have become an absolute necessity given the belongings undercover are not protected during periods of rain, and given that upper storey lots have water discharge from their balconies onto my lot/belongings/people/washing at any time of day or night.
Each awning is visually appealing (refer attachment) and will be in the same colour used on the building's balustrades and garden railings (Dulux Paperbark). More details are as follows:
Awning 1 located outside loungeroom area-Designed to (i) catch rainwater that showers down the side of the building onto my lot and into my outdoor storage unit, causing water damage to my undercover belongings; (ii) catch water discharge from upper storey lots when they wash their balconies or water their plants et al; (iii) transfer water to raised garden bed nearby; and (iv) alleviate flooding issues experienced on the terrace by diverting some rainwater to the garden bed.
Awning 2 located outside bedroom area-Designed to mainly catch rainwater that sprays back into my unit through the screen door and wets the bedroom carpet. Again, it will alleviate some flooding issues on the terrace by diverting rainwater to the nearby downpipe. It will not resolve water escaping from the scupper pipes on the U 14 (sic) balcony.
The awnings will be paid for and cleaned and maintained by myself as the owner.
I request Executive Committee (sic) approval within the next 2 weeks please to avoid the quote being null and void. I look forward to any further questions and/or the decision by return mail".
Attached to the email was a quotation of Patioland Parramatta Pty Ltd ('Patioland') in the sum of $4,100; a handwritten plan; and a brochure.
According to Ms Bate, Mr Zimmerman informed her that she would have to contact the strata manager, Mr Myers, regarding the proposed awnings.
On 7 March 2016, Ms Bate sent an email to Mr Myers attaching the email she had sent Mr Zimmerman, and referring to the "water issues" on her balcony being "alleviated" by installation of the awnings. Ms Bate requested a response from Mr Myers within 2 weeks. An email exchange occurred between Ms Bate and Mr Myers on 7 March 2016.
Mr Myers responded to the email as follows:
"I have no objection in principal (sic) Cheryl-but would need more details-construction materials-colours-size etc-maybe a brochure on the product".
Ms Bate responded to with an email as follows:
"Did the PDF attachment not come through? It has the brochure materials as well as the size/specifications. The colour is Dulux Paperbark, which is the same colour as the building's balcony balustrades and garden railing. I'll attach the PDF again and if you need further details than this please let me know".
Mr Myers responded by email as follows:
"Thanks Cheryl-got it now-Only the committee can approve your request-or the Owners at General Meeting-I cannot-but I do not have any objection to your proposal".
Ms Bate responded by email as follows:
"Thanks Greg. What is the best way to go about having the Committee approve my request? I would appreciate your advice."
Mr Myers responded by email as follows:
"The committee needs to have a meeting Cheryl to decide this issue-I will speak to Erick (sic) about it".
On 10 March 2016 there was a further email exchange between Ms Bates and Mr Myers regarding approval for the awnings to be installed.
Mr Myers emailed Ms Bate as follows:
"Hi Cheryl-I received a message from Eric Zimmerman-he says that he is happy for you to go ahead-it is noted that you and any subsequent Owners would always be responsible for its maintenance and must always be kept in good condition".
Ms Bate responded by email as follows:
"Thanks so much Greg that's good news. Rest assured my standards are high so keeping the awnings in good repair and condition is not an issue".
On 27 April 2016 the awnings were installed pursuant to the quote by Patioland.
On 19 July 2016 the annual general meeting of the owners corporation occurred. According to Ms Bate, Mr Zimmerman "resigned" from the strata committee and she was elected in his place to be the "go to person" along with other persons including Mr Birdsall and Mr Tranter on the strata committee. Discussed at the meeting was Ms Bate's dog, but there was no motion or discussion in respect of the awnings.
No further issues were raised regarding the awnings until late November 2016, when Mr Myers notified Ms Bate that Mr and Ms Birdsall had complained about the awnings. On 29 November 2016, Mr Myers attended Lot 3 and had a discussion with Ms Bate and her father regarding the complaint. According to Ms Bate, Mr Myers "intimidated" her and said that he had spoken to Mr and Ms Birdsall and Mr Zimmerman, and that the only way to "appease all parties" was for there to be an exclusive use by-law with a "sunset clause" that Ms Bate would remove the awnings when she sold her Lot.
On 14 December 2016 Ms Bate emailed Mr Myers stating that she would "accept" an exclusive use by-law, but not a "sunset clause". Ms Bate stated that she "assumed" the strata manager would draft the exclusive use by-law.
On 3 February 2017 a meeting of the strata committee of the owners corporation elected at the 2016 annual general meeting occurred. According to Ms Bate, she arranged the meeting and Mr and Ms Birsdall attended, as Mr Birdsall had been elected to the strata committee. The meeting descended into an argument about whether or not the structures were "awnings" and whether or not Ms Bate had permission to install the structures.
In June 2017, being "disillusioned" about the management of the strata scheme, Ms Bate put her Lot on the market for sale. However, the Lot was subsequently removed from sale. According to Ms Bate, part of her "disillusionment" was that the strata manager had entered into a lift maintenance contract for an inflated price and without obtaining quotes.
On 4 August 2017, Ms Bate received the agenda for the 2017 annual general meeting of the strata scheme. The agenda contained a Motion that she be directed to remove the awnings.
Ms Bate then sought advice from a "strata lawyer" and Mr La Mela. Ms Bate had an exclusive use by-law drafted. However, no motion was put forward by Ms Bate to be included on the agenda of the annual general meeting that the alterations to common property be approved, and an exclusive use by-law be passed.
On 10 and 11 August 2017 there was an email exchange between Ms Bate and the strata manager regarding the annual general meeting. Ms Bate asserted that the meeting was invalid and should be adjourned. Ms Bate then wrote to other Lot owners regarding the adjournment of the annual general meeting. The meeting was not adjourned. On 11 August 2017 the strata manager (Ms Myers, on behalf of McDonald Strata Pty Ltd) wrote to Lot owners stating that the annual general meeting was not being adjourned, and the only way it could be adjourned is if a motion was passed at the annual general meeting adjourning the meeting.
As discussed previously, the annual general meeting occurred on 22 August 2017. According to Ms Bate, Mr Myers presided over the meeting. Ms Bate attended. Ms Bate had Mr La Mela attend on her behalf, as well as Ms Bate's partner. Mr and Ms Birdsall attended the annual general meeting along with a number of other Lot owners.
Ms Bate asserts that the meeting was heated, with the various parties accusing each other of incompetence and not being honest. According to Ms Bate, she raised at the annual general meeting that the owners corporation could be exposed to significant expenses due to the issues regarding water ingress from common property, if the awnings did not remain in place. Ms Bate complains that the minutes of the annual general meeting did not reflect the extent of discussions regarding the awnings, and the owners corporation having a history of not operating with a proper strata committee.
On 31 October 2017 there was a meeting between Mr Birdsall; Ms Bate and Mr Munro of Combined Building Services to discuss the awnings and issues of water ingress. Mr Munro then prepared a report dated 21 November 2017 regarding issues of water ingress. Ms Bate also obtained a quotation from a plumber, Mr Ward, regarding the cost of removing the awnings an installing further guttering on common property.
On 10 November 2017, Ms Bate wrote to other Lot owners regarding the cost of performing work to common property to reduce water ingress issues if the awnings were removed.
[3]
Evidence of Mr and Ms Birdsall
Mr Birdsall swore an affidavit dated 28 February 2018, that sets out his evidence in a written form, and attached relevant documents.
Mr and Ms Birdsall purchased Lot 7 on 5 April 2014. The do not occupy the Lot, but rent it to tenants. Mr Birdsall is a builder by occupation.
At the annual general meeting of the owners corporation on 19 July 2016, an executive committee was elected that included Ms Bate, Mr Tranter and Mr Birdsall. Mr Birdsall agreed with Ms Bate's evidence that no subsequent meeting of the strata committee was held to elect strata committee members to specific roles (i.e. appointment of a Secretary or Treasurer).
On 22 July 2016, Mr Birdsall and Mr Tranter (the owner of Lot 13) attended Ms Bate's Lot to discuss with her the issue of Ms Bate's dog. According to Mr Birdsall, this was the first occasion he became aware that Ms Bate had installed awnings. He did not say anything about the awning, because he was "there on another issue" and wanted to get access from his tenant in Lot 7 so he could inspect the awnings from above.
In August 2017, Mr Birdsall had gained access to his Lot and taken photographs of the awnings. Mr and Ms Birdsall were upset that the awnings were installed without their knowledge and the awnings may "affect the security, outlook & appearance, valuation of the property, and any rental income".
On 29 September 2016, Mr and Ms Birdsall met with Mr Myers and voiced their displeasure at the construction of the awnings. A further meeting with Mr Myers occurred on 29 November 2016.
In the period between December 2016 and August 2017 there was a significant amount of correspondence between Ms Bate; Mr and Ms Birdsall; and Mr Myers in respect of the awnings. It was the position of Mr and Ms Birdsall that the awnings should be removed.
Mr and Ms Birdsall proposed a Motion to be placed on the agenda for the annual general meeting of the owners corporation on 22 August 2017 that the awnings be removed. The meeting occurred and the Motion was passed.
Mr and Ms Birdsall disagree with Ms Bate's assertion that the awnings are of benefit to the common property in respect of restricting water ingress.
[4]
Evidence of Mr Myers
According to Mr Myers, McDonald Strata Pty Ltd had been the strata manager of the strata scheme for approximately 15 years prior to 2016.
Mr Myers stated that, in the many years he had been the strata manager, for a considerable period of time there was no "official" executive committee (under the Strata Schemes Management Act 1996) or strata committee (under the SSMH 2015). Mr Zimmerman was the only Lot owner who took any active interest in the management or operations of the owners corporation, and he was the person who Mr Myers contacted regarding any issues.
Mr Myers agreed that he had been contacted by Ms Bate in March 2016 regarding the installation of the two awnings at the centre of the dispute in these proceedings. Mr Myers stated that he only briefly looked at the documents he had been sent by Ms Bate, and passed them on to Mr Zimmerman. Mr Myers stated that he thought the installation of the awnings were the type of issue in respect of which Mr Zimmerman, as the de facto strata committee, could give approval in respect of.
In respect of the meeting that occurred between Mr Myers; Ms Bate and her father when an exclusive use by-law with a sunset clause was raised, Mr Myers denied that he had attempted to pressure Ms Bate, stating that he was only attempting to find a compromise solution that would be acceptable to Ms Bate and Mr and Ms Birdsall.
Mr Myers denied that he had not performed adequately as strata manager, or that there had been any irregularities in the annual general meeting that occurred on 22 August 2017. According to Mr Myers, the meeting became heated and he had used the red "No" button in a humorous way to keep order.
Mr Myers submitted that any criticisms of his management of the strata scheme or the conduct of the annual general meeting on 22 August 2017 by Mr La Mela should not be accepted, for reasons including that Mr La Mela had a conflict of interest because Ms Bate had proposed in her application two alternative strata managers be appointed if the Tribunal made an order under s 237 of the SSMA 2015, one of which was Mr La Mela, and he had a conflict of interest.
[5]
Application of Legal Principles
From the registered strata plan; photographs of the awnings; quotation of Patioland; and the brochure of Patioland, it is clear that the two awnings installed by Ms Bate in July 2016 involve the alteration of common property and the erection of a structure on common property within s 108 (1) of the SSMA 2015. The construction of the awnings involves work that is not merely "cosmetic work" under s 109 of the SSMA 2015, or "minor renovations" under s 110 of the SSMA 2015 (and even if the work was "minor work" within the meaning of s 110 of the SSMA 2015, it required approval by the owners corporation at a general meeting passed by normal resolution).
By reason of s 108 (2) of the SSMA 2015, the work should not have been done prior to the passing of a special resolution at a general meeting of the owners corporation; including an exclusive use by-law (a "common property by-law") under s 142 of the SSMA 2015. However, an owners corporation has the power, by special resolution passed at a general meeting, to retrospectively approve alterations of common property and the passing of an exclusive use by-law in respect of such alterations.
It is clear that Ms Bate sought permission from Mr Zimmerman and Mr Myers prior to installing the awnings. It is also clear that Mr Zimmerman did not have authority under the SSMA 2015 to "approve" the installation of the awnings.
It is very unfortunate that Mr Myers, as an experienced strata manager, did not understand that Mr Zimmerman did not have the power to authorise the approval of erection of the awnings by Ms Bate and did not make it clear to Ms Bate that she would be required to have a Motion passed by special resolution at a meeting of the owners corporation to construct the awnings, and for an exclusive use by-law to also be passed. Had such information been provided, the dispute may not have occurred, or escalated into proceedings in the Tribunal.
Contrary to oral submissions made by Mr Myers at the hearing, the position was not relevantly different under s 65A of the Strata Schemes Management Act 1996, the predecessor Act to the SSMA 2015.
The Tribunal does not criticise the actions of either Ms Bate or Mr and Ms Birdsall. On the one hand, Ms Bate notified the strata manager and Mr Zimmerman (who appears to have taken on the role of acting as the strata committee of the owners corporation) and was given a written approval to install the awnings. On the other hand, Mr and Ms Birdsall (and other Lot owners) had not been given an opportunity to object to the awnings being installed by way of voting at a general meeting prior to the installation of the awnings. Both Ms Bate and Mr and Ms Birdsall have raised valid issues regarding whether the awnings should be installed, or should be removed.
Under s 232 of the SSMA 2015, the Tribunal has the power to make orders to resolve disputes and rectify complaints regarding the operation, administration and management of a strata scheme (s 232 (1) (a) of the SSMA 2015) and the exercise of powers conferred by the provisions of the Act or the by-laws of the strata scheme (s 232 (1) (e) and (f) of the SSMA 2015.
Importantly, in this matter, no Motion has ever been considered at a general meeting of the owners corporation to approve the installation of the awnings, and the passing of an exclusive use by-law. Such a Motion would allow Ms Bate to provide all relevant information regarding the awnings, and a proposed exclusive use by-law. All Lot owners would then have the opportunity to properly consider and vote on the issue. Under such circumstances, by reason of s 149 of the SSMA 2015, if the proposed exclusive use by-law was unreasonably refused at the general meeting, Ms Bate could bring an application in the Tribunal. However, if such an application was made, it will be for Ms Bate to demonstrate that any refusal was unreasonable in respect of any future application under s 149 of the SSMA 2015, and why the Tribunal should exercise its discretion in regard to orders under s 149 of the SSMA 2015.
Although a Motion was passed at the annual general meeting on 22 August 2017 for the awnings to be removed, the Tribunal is not satisfied that the issue was thoroughly considered, because there was no Motion by Ms Bate proposing that the alternations to common property be approved, and an exclusive use by-law passed. Although in retrospect Ms Bate should have put such a Motion on the agenda of the 2017 annual general meeting, rather than attempting to have the annual general meeting adjourned, the Tribunal is not satisfied in the circumstances of the matter that her conduct should result in an outcome where she is deprived of the opportunity to put forward such a Motion, and for it to be properly debated and considered by the owners corporation.
In respect of orders sought by Ms Bate under s 126 of the SSMA, the installation of the awnings is not "minor renovations" within the meaning of s 110 of the SSMA 2015, nor is the work "repairs" to common property, and s 126 is not applicable to the circumstances of the dispute.
Ms Bate seeks an order under s 24 of the SSMA 2015 that the Tribunal make an order invalidating the resolution passed at the annual general meeting on 22 August 2017 that she remove the awnings.
However, under s 24 (1) of the SSMA 2015, such an order can only be made if the Tribunal "considers that the provisions of this Act, or the regulations, have not been complied with in relation to the meeting".
Although Ms Bate is critical of the manner in which the annual general meeting was conducted on 22 August 2017, the Tribunal is not satisfied that she has established that the provisions of the SSMA 2015, or the Regulations have not been complied with "in relation to the meeting". The Tribunal is not satisfied on the basis of the oral and documentary evidence of Ms Bate that the annual general meeting was not validly called and conducted in accordance with the provisions of the SSMA 2015, and the Regulations.
However, the fact that Ms Bate has failed to establish that the Motion passed at the annual general meeting on 22 August 2017 that she "remove" the awnings does not conclude the issue. Mr and Mrs Birdsall have sought in their application that Ms Bate remove the awnings and restore the common property. It remains at the discretion of the Tribunal whether or not to make such an order.
As discussed previously, the Tribunal is of the view that the appropriate course of action is that an order be made that the owners corporation convene a general meeting to consider a Motion that the erection of the awnings be approved and that an exclusive use by-law be passed. Had Ms Bate not sough any permission or given any notice before installing the awnings, the Tribunal would have no hesitation in making an order under s 232 of the SSMA 2015 that she remove the awnings and restore the common property. However, that is not the situation that occurred in this matter.
The Tribunal is not satisfied in Mr and Ms Birdsall's proceedings that an order should be made at this stage that the awnings be removed. Rather, the Tribunal is satisfied that the following course of action is appropriate to resolve the dispute regarding the awnings:
1. The owners corporation be directed to convene a general meeting within 6 weeks of the date of this decision to consider Motions that (i) the owners corporation consent to the installation of the awnings on Lot 3; and (ii) an exclusive use by-law be passed in respect of the awnings.
2. Ms Bate is to provide to the owners corporation, in accordance with the relevant provisions of the SSMA 2015 and the Strata Schemes Management Regulation 2016 a copy of a proposed exclusive use by-law prior to the general meeting.
3. If the Motions are not passed: (i) Ms Bate may file fresh proceedings in the Tribunal seeking orders under s 149 of the SSMA 2015; and (ii) the owners corporation, or any "interested person" within the meaning of the SSMA 2015 may file fresh proceedings in the Tribunal seeking an order that the owner of Lot 3 remove the awnings and restore common property.
The final aspect of Ms Bate's proceedings is her applicant for an order that a compulsory strata manager be appointed under s 237 of the SSMA 2015. In the application filed with the Tribunal, Ms Bates provided a proposal from Mr Adamson of Strata Management Services-NSW consenting to being appointed as a strata manager and providing licence details and management fee details in accordance with s 237 (4) and (5) of the SSMA 2015. Ms Bates in subsequent documents provided details of Mr La Mela in this regard.
Under s 237 (3) of the SSMA 2015 an order appointing a compulsory strata manager to exercise the functions of the owners corporation can only be made if:
"(a) the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or
(b) an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or
(c) an owners corporation has failed to perform one or more of its duties, or
(d) an owners corporation owes a judgment debt."
The appointment of a compulsory strata manager is a very significant step which must not be taken lightly, because it removes from the owners corporation its ability to manage its own affairs and reposes all of the functions of the owners corporation into a single person (Bischoff & Ors v Sahade & Ors [2015] NSWCATAP 135).
The Tribunal has considered all of the issues raised by Ms Bate regarding the operation of the scheme, including the alleged failure of the strata manager to obtain quotations and enter into contracts without proper consideration of the owners corporation, and the operation of the owners corporation generally. Of the issues raised by Ms Bate, the issue that is of considerable concern to the Tribunal is the historical failure of the owners corporation to have a strata committee operating in accordance with the provisions of the SSMA 2015, with the roles of Secretary and Treasurer being duly appointed, and regular meetings of the strata committee.
However, the Tribunal is not satisfied on the evidence that the past deficiencies of the owners corporation in regards to a strata committee is of sufficient magnitude in the circumstances of this matter to justify the appointment of a compulsory strata manager.
However, if such deficiencies continue to occur in the future, any "interested person" within the meaning of the SSMA 2015 may apply to the Tribunal seeking an order for the appointment of a compulsory strata manager under s 237 of the SSMA 2015.
G.J. Sarginson
Senior Member
Civil and Administrative Tribunal of New South Wales
3 August 2018
[6]
I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales.
Registrar
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Decision last updated: 22 October 2018