(a) on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or
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(2) In considering whether to make an order, the Tribunal must have regard to -
(a) the interests of all owners in the use and enjoyment of their lots and common property, and
(b) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law.
(3) The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent.
(4) The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law.
(5) An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).
(6) An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.
- The manner in which the Tribunal is to approach an application under s 149 of the SSMA was recently considered by Basten AJ in Kaye v The Owners - Strata Plan No 4350 [2022] NSWSC 1386. At [46] to [48], his Honour said:
[46] … Relying on a potential loss of privacy for those entitled to enjoy the Lot 8 roof area, the stairwell of Lot 8, and possibly the living of area of the lot, did not reveal legal error. The owners of other lots were not obliged to ignore privacy concerns and the Appeal Panel was not obliged to reject such concerns as invalid reasons for rejecting the proposal; nor was it required to find that the factual basis of the concerns was "speculative" or not supported by the evidence.
[47] Underlying this challenge (and that to (4)) was an assumption that the owners corporation would act unreasonably by having regard to "speculation" as to any possible disadvantage that might accrue to other lot owners from the proposed common property rights by-law. That was a false assumption. Those voting at the extraordinary general meetings were not required to disregard all considerations which were not established by some objective material placed before the meeting. Nor were they required to give particular weight to particular matters. Lot owners were entitled to have regard to their own interests and, so long as they did not act unreasonably, have regard to their own experience and beliefs as to how a particular change might affect them.
[48] Further, the interests of the proponents and the interests of other lot owners were likely to be in conflict. It was not for the Appeal Panel to seek to "balance" those interests by apportioning weight between them, so as to conclude that a refusal would be unreasonable if the balance favoured the proponents. The function of the Appeal Panel was to determine whether the refusal was "unreasonable". In making that assessment, it was entitled to treat as a valid reason for voting against the proposal a belief or opinion, whether or not it was supported by "evidence". The Management Act does not require that the owners corporation accept any proposal which was objectively reasonable. Nor should the Tribunal, in applying s 149(1)(a) of the Act, decide that a refusal was unreasonable merely because it considered the proposal to be reasonable. The plaintiffs' contentions came close to such an assertion. [emphasis added]
- At [42], his Honour gave examples of legitimate reasons for an owners corporation refusing to approve a proposed common property rights by-law. His Honour said:
There are more nuanced reasons which might justify a conservative approach to the approval of a common property rights by-law. For example, an owners corporation might legitimately be reluctant to grant such a consent if not satisfied that sufficient information had been presented, or because one approval might open a floodgate to other applications which could not then reasonably be rejected, or because the same lot owner might in the future seek to expand the rights in a piecemeal fashion.
- I respectfully adopt Basten AJ's interpretation of s 149 of the SSMA as set out in Kaye. His Honour's reasoning makes clear that the relevant question under s 149 of the SSMA is whether the owners corporation has acted unreasonably in refusing to approve a common property rights by-law. It also follows from his Honour's reasoning that the following circumstances would not, of themselves, indicate that an owners corporation has acted unreasonably, namely, where:
1. lot owners had regard to their own interests in voting on a proposed by-law;
2. lot owners had regard to their concerns, beliefs, opinions or experience as to how a proposed by-law might affect them;
3. the concerns, beliefs, opinions or experience of lot owners were not established by some objective material or evidence;
4. lot owners had not given particular weight to particular matters; and
5. the proposed by-law was objectively reasonable.
- Considerable guidance can also be derived from the decision of the High Court in Ainsworth v Albrecht (2016) 261 CLR 167. In Ainsworth, the High Court was concerned with the proper construction of Queensland legislation, namely, s 276 of the Body Corporate and Community Management Act 1997 (Qld). However, the question which the High Court had to consider was similar to the question which arises for consideration under s 149 of the SSMA.
- In Ainsworth, a lot owner in a community title scheme wished to amalgamate two balconies on his lot to form one deck. As the airspace between the two balconies was common property, he required exclusive use of the airspace to implement his proposal. The other lot owners refused to approve an "exclusive use by-law" for this purpose.
- The High Court characterised the relevant question as being whether the lot owners' opposition to the proposed exclusive use by-law was unreasonable. In the joint judgment of French CJ, Bell, Keane and Gordon JJ, their Honours said at [55]:
It is no light thing to conclude that opposition by a lot owner to a resolution is unreasonable where adoption of the resolution will have the effect of: appropriating part of the common property to the exclusive use of the owner of another lot, for no return to the body corporate or the other lot owners; altering the features of the common property which it exhibited at the time an objecting lot owner acquired his or her lot; and potentially creating a risk of interference with the tranquillity or privacy of an objecting lot owner.
- At [57] and [58], their Honours continued:
[57] ... Nothing in the BCCM Act suggests that an opponent to a proposal acts unreasonably in failing to act sympathetically or altruistically towards a proponent who seeks to diminish the property rights of the opponent. The BCCM Act does not contemplate that the rights of a lot owner genuinely opposed to the reduction of his or her rights to common property attached to his or her lot may be overridden where that might be thought by an adjudicator to be a reasonable course to adopt, having regard to some standard of sympathy or altruism applicable between lot owners.
[58] Such a standard is not prescribed or suggested by the BCCM Act; rather, the Act allows opposition to a resolution to be overridden only where opposition by lot owners other than the proponent is unreasonable. The unreasonableness of the opposition to the first respondent's proposal is to be determined in a context in which lot owners voting in respect of the proposed resolution are exercising their right to vote as an aspect of their proprietary rights as owners of lots included in the Scheme. In this context, the unreasonableness with which Item 10 of Sch 5 is concerned is unreasonableness on the part of the opposing lot owners having regard to those lot owners' interests under the Scheme.
- At [63], their Honours said:
… opposition to a proposal that could not, on any rational view, adversely affect the material enjoyment of an opponent's property rights may be seen to be unreasonable. Opposition prompted by spite, or ill-will, or a desire for attention, may be seen to be unreasonable in the circumstances of a particular case. [emphasis added]
- The applicant bears the onus of demonstrating that the owners corporation acted unreasonably in refusing to approve the Proposed Amended By-Law. In The Owners - Strata Plan No 69140 v Drewe [2017] NSWSC 845, the relevant question was whether an owners corporation had unreasonably refused consent to proposed work. That question arose by reference to s 140 of the Strata Schemes Management Act 1996 (NSW). At [16], Latham J suggested that there would have been unreasonable refusal if the decision was "not guided by sound judgment or good sense". At [43], her Honour considered that the onus lay upon the party seeking the consent of the owners corporation to establish that the owners corporation had acted unreasonably. I consider that the question which arises under s 149 of the SSMA is sufficiently analogous to that which arose under s 140 of the Strata Schemes Management Act 1996 (NSW) so as to engage her Honour's observations in relation to onus.
- I also consider Latham J's decision to be applicable to the present circumstances to the extent that her Honour considered that the question of whether there had been unreasonable refusal by the owners corporation was to be determined "having regard to the circumstances at the time of the refusal of consent": see [27]-[28] of Drewe; see also Owners Corporation SP7596 v Risidore [2003] NSWSC 966 at [13].
- I do not accept the respondents' submissions (see [38] of RS) that the decisions of the Appeal Panel in The Owners - Strata Plan No 12289 v Donaldson [2019] NSWCATAP 213 at [102] and Bruce v Knight [2021] NSWCATAP 224 at [50]-[53] are "plainly wrong" and "at odds" with the decision in Drewe to the extent that they held that evidence not existing at the time of the owners corporation's decision is admissible on an application pursuant to s 149 of the SSMA.
- As the Appeal Panel explained in Donaldson and Bruce, evidence which did not exist at the time of the owners corporation's decision may be admissible to the extent that it exposes circumstances existing at the time of the decision. For example, it would appear to me that this would cover an affidavit or witness statement by a lot owner explaining why they voted in a particular way. The affidavit or statement is subsequent evidence not existing at the time of the decision but it evidences a circumstance existing at the time of the decision, that is, the lot owner's reasons for voting the way they did.