The proceedings involve a dispute under the Strata Schemes Management Act 2015 (NSW) ('the SSMA') between a Lot owner and the owners corporation regarding the use of a Lot and common property as a prayer hall for persons of the Muslim faith.
The proceedings involve an application by the Lot owner for the passing of a special privileges by law which the Lot owner asserts was unreasonably refused by the owners corporation; and the owners corporation giving consent to the Lot owner lodging a Development Application with the local Council.
In this decision, any reference to "the Lot owner" is a reference to the applicant; and any reference to "the owners corporation" is a reference to the respondent.
The applicant is the owner of Lot 2.
The strata scheme is comprised of six (6) Lots and is located at Merrylands in an area zoned as "IN2 Light Industrial" by the local Council. Prior to the purchase of Lot 2 by the applicant, all of the Lots in the strata scheme were used as light commercial premises, including warehouses.
The strata plan was registered on 25 August 2005. Lot 2 was purchased by the applicant in about March 2016.
Between purchase the date of purchase of Lot 2 and March 2017, the applicant conducted significant modification of the Lot and surrounding common property to transform the Lot into premises for use as a prayer hall. The modifications to the property relevantly include:
1. Replacement and extension of the ground floor bathroom below the northern mezzanine;
2. Installation of a prayer room in the level of the northern mezzanine;
3. Removal of ground floor bathrooms and conversion into a store room below the western mezzanine;
4. Enclosure of stairs from the ground floor to the western mezzanine level, and the extension of the western mezzanine level to create two offices; a kitchen; and a bathroom;
5. Installation of an air-conditioning system;
6. Installation of security alarm and closed circuit television camera system.
The modifications to common property were conducted without the knowledge or consent of the owners corporation, or any Development Application being approved by the local Council.
From 31 March 2017, the applicant has conducted prayer meetings at the Lot.
Other than Lot 2, the other 5 Lots that comprise the registered strata plan continue to be used for light industrial purposes.
In May 2017, in Matter No SC 17/21877, the owners corporation sought orders from the Tribunal for the applicant to remove unauthorised alterations to common property and restore the common property.
On 23 November 2017, the Tribunal relevantly ordered that the applicant:
1. Remove all unauthorised alterations and additions to common property and restore common property at its own cost by 31 March 2018;
2. Notify the strata scheme's managing agent within 7 days of the completion of the restoration works and allow a representative of the owners corporation to inspect the works.
The Lot owner lodged an appeal to the Appeal Panel of the Tribunal from the decision of the Tribunal dated 23 November 2017. However, the appeal was based upon the Tribunal's failure to grant the Lot owner an adjournment. Subsequent to the hearing of this matter, the Appeal Panel of the Tribunal in Matter AP 17/54206 dismissed the Lot owner's appeal. The decision of the Appeal Panel is dated 10 September 2018, and the Medium Neutral Citation is [2018] NSWCATAP 207.
Neither party in these proceedings made any application for these proceedings to be adjourned until the Appeal Panel proceedings were determined; and both parties submitted that this application should be determined.
As the Appeal Panel proceedings involved different issues to the issues being determined by the Tribunal in these proceedings, the Tribunal has given no weight to the reasons of the Appeal Panel, which in any event occurred after the close of the timetable for written submissions in these proceedings. However, the Appeal Panel proceedings were raised by the owners corporation regarding the issue of jurisdiction under s 232 of the SSMA, and the Tribunal will discuss that issue later in this decision.
In July 2017, the owners corporation engaged a building consultant Mr Mark Kavanagh of Integrated Consultancy Group to inspect Lot 2 and surrounding common property and prepare a report. The report of Mr Kavanagh is dated 19 July 2017.
Between July 2017 and early December 2017 there was correspondence between the parties and their legal representatives regarding a Development Application being lodged by the Lot owner with the local Council to approve a change in zoning and the modifications to the Lot and common property; and a special privileges by-law being passed to approve the alterations of the common property.
The Lot owner submitted 2 Development Applications to the local Council in 2017, but withdrew the applications and intended to file a further Development Application after obtaining advice from a planning consultant (MB Town Planning) and other consultants.
On 5 December 2017, the owners corporation held its annual general meeting ('AGM'). Relevantly, there were 2 Motions considered by the AGM.
Motion 15 was that a special privilege by law be passed pursuant to s 141 of the SSMA authorising the "Past Works" conducted by the Lot owner ("Past Works" being defined as the work identified at paragraph 7.3 of the report of Mr Kavanagh dated 19 July 2017), with the Lot owner to provide within 28 days certification that the Past Works complied with "the Building Code of Australia; pertinent Australian Standards; and manufacturers specifications" and a building certificate under Section 149A to 149E of the Environmental Planning and Assessment Act 1979 (NSW).
Further, Motion 15 stated that, if a building certificate under the relevant provisions of the Environmental Planning and Assessment Act 1979 (NSW) was not provided within the stipulated time; the owners corporation must consent to the Lot owner making such an application within 7 days and the Lot owner must then lodge then application with the local Council within 7 days.
Motion 16 was that the owners corporation consented to the Lot owner lodging a Development Application with the local Council regarding the modifications to the Lot and common property, and would provide written consent to such an application including the affixing of the common seal of the owners corporation on the application. It was noted in Motion 16 that the consent of the owners corporation to the Lot owner lodging a Development Application did not indicate the owners corporation was giving consent to any subsequent application by the Lot owner for the passing of a special privileges by-law regarding the works.
No representative of the Lot owner attended the AGM, nor was there any proxy vote by the Lot owner. According to the affidavit of Mr Moustapha Darwiche, President of the Lot owner, this was because "the date was missed in my diary".
Both Motion 15 and Motion 16 failed to pass. According to the minutes of the AGM and the statutory declaration of the strata manager of the owners corporation Mr Stephen Webb dated 21 June 2018, Lot owners other than the owner of Lot 2 had appointed persons from the owners corporation's Solicitors, Kerin Benson Lawyers, to act as proxies. The AGM was held at the offices of the owners corporation's Solicitors. Voting was comprised by the lodging of proxy forms by the Lot owners of owners of Lots 1, 3, 4, 5, and 6. The owners of Lots 1, 3, 5 and 6 voted against Motions 15 and 16.
[2]
THE CLAIM
The Lot owner seeks the following orders:
1. An order pursuant to s 149 of the SSMA that a special by-law be made in the same terms as Motion 15 of the AGM dated 5 December 2017;
2. An order pursuant to s 232 of the SSMA that the owners corporation consent to the lodging of a Development Application by the Lot owner, in the same terms as Motion 16 of the AGM dated 5 December 2017.
[3]
EVIDENCE OF THE PARTIES
Neither party sought to cross examine the witnesses of the other party.
The documentary evidence of the parties was as follows:
[4]
Applicant
Affidavit of Mr Moustapha Darwiche dated 30 May 2018, and attached documents. Such documents relevantly included a report of Mr Blaszczakiewicz, structural engineer, dated 6 February 2018; a copy of a Development Application to the local Council including a report by Mr Tobin of BCA Vision; and correspondence between the parties.
[5]
Respondent
Statutory Declaration of Mr Stephen Webb, strata manager, dated 21 June 2018;
Statutory Declaration of Mr Peter Wahbe, director of the owner of Lots 4 and 5, dated 21 June 2018;
Statutory Declaration of Mr David Wehbe, director of the owner of Lots 1, 3 and 6, dated 21 June 2018;
Statutory Declaration of Ms Gemma Lumley, employed Solicitor for the Solicitors for the owners corporation, dated 21 April 2017.
[6]
APPLICABLE LEGAL PRINCIPLES-UNREASONABLE REFUSAL TO PASS SPECIAL PRIVILEGES BY-LAW
The Lot owner is an "interested person" within the meaning of s 226 of the SSMA and has standing to bring the application. On 5 March 2018, NSW Fair Trading Strata Mediation Unit issued a letter stating that mediation had been declined by the owners corporation. Accordingly, the Tribunal accepted the filing of the application under s 227 (1) (b) of the SSMA.
Under s 111 of the SSMA, a Lot owner must not perform work affecting common property (relevantly, other than the provisions dealing with cosmetic work by a Lot owner or minor renovations by a Lot owner under ss 109 and 110 of the SSMA which are clearly inapplicable to this dispute) without the passing of a common property rights by-law, or approval of the owners corporation by special resolution or any other manner authorised by the by-laws.
A "common property rights by-law" is defined in s 142 of the SSMA as:
142 Common property rights by-law
For the purposes of this Act, a common property rights by-law is a by-law that confers on the owner or owners of a specified lot or lots in the strata scheme:
(a) a right of exclusive use and enjoyment of the whole or any specified part of the common property, or
(b) special privileges in respect of the whole or any specified part of the common property (including, for example, a licence to use the whole or any specified part of the common property in a particular manner or for particular purposes),
or that changes such a by-law.
By reason of s 141 (1) of the SSMA, a common property rights by-law must be passed by a special resolution of the owners corporation.
Any such common property rights by-law may be passed authorising alterations to common property that previously occurred.
Section 149 of the SSMA states:
149 Order with respect to common property rights by-laws
(1) The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds:
(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
(b) on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or
(c) on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust.
(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.
In Roseby v The Owners-Strata Plan No 2400 [2018] NSWCATCD 72 at [21]-[24], the Tribunal set out the relevant principles applicable to whether the owners corporations refusal was "unreasonable" as follows:
"In respect of predecessor provisions under the Strata Schemes Management 1996 (NSW) the principles for whether or not a decision of the owners corporation was, or was not, reasonable were set out by Member Ringrose in Carroll OC SP 865 v Aldritt [2013] NSWCTTT 525 at [54]-[55] as follows:
"The provisions of section 140 and of section 158 of the Act each require a determination of whether a decision or the actions of an Owners Corporation were unreasonable. "Unreasonable" is not defined in the Act. It is therefore to be understood as it would be in the common everyday meaning of that word (see Sole Australia Pty Limited v Public Interest Advocacy Centre) and anor (1992) 36 FCR 111 at 122 and Curragh Coal Sales Company Pty Limited v Wilcox (1984) FCR 46 per Davies J). The Macquarie dictionary provides the following definition:
"unreasonable"- not reasonable, not endowed with reason, not guided by reason or good sense, not based on or in accordance with reasonable sound judgement.
The test of what is reasonable is an objective test which requires the existence of facts which are sufficient to induce that state of mind in a reasonable person (see George v Rocket [1990] HCA 26; (1990) 170 CLR 104 at 112). A decision by the Owners Corporation to withhold consent could be seen as reasonable if there was, on the material before it, a sound basis for making that decision. Conversely if there was no such sound basis it would be unreasonable."
Application of the dictionary meaning of "unreasonable" was also the approach adopted by Senior Member Thode in OC SP 69481 v Want [2013] NSWCTTT 440 at [47].
In Bartlett v Owners Corporation SP 1429 ('Bartlett') [2011] NSWCTTT 219, Member Ross stated:
"It is immaterial that there was also material which may not provide a sound basis for the decision. The onus is on the appellant to demonstrate that the Owners Corporation decision was unreasonable. The Owners Corporation does not have to prove that it acted reasonably in refusing its consent to the proposed by-law".
The principle that the onus is upon the Lot owner to demonstrate that the decision of the owners corporation was unreasonable, rather than the owners corporation having to prove it acted reasonably, was applied by Member Ringrose in Olive Grove Investment Holdings Pty Ltd v The Owners-Strata Plan No 5942 [2015] NSWCATCD 120 at [69]."
A Lot owner bringing an application that the refusal of a proposed special privileges by-law must demonstrate the unreasonableness of the refusal, not the reasonableness of the proposed change (Ainsworth v Albrecht [2016] HCA 40 at [55]; [63]-[64]; [74]; [84]-[90]). Regarding this issue, and the relevant considerations under s 149 of the SSMA, the Tribunal stated in Capcelea v The Owners-Strata Plan No 48887 [2019] NSWCATCD 27 at [56]-[59]:
"The fundamental assessment, on which the challenging owners bear the onus of proof as further discussed below, is whether or not, taking into account those interests, rights and expectations, the decision to refuse the proposed by-law was unreasonable.
But the exercise required by s 149(2), unlike the exercise in Ainsworth, requires not only the consideration of an objective rational basis for refusal taking into account the interests of all owners in their lots and the common property but, also, an assessment of that basis by taking into account the rights and expectations of the owners propounding the by-law and anticipating a benefit from them.
It is not a simple balancing exercise to test for reasonableness of the proposal being rejected, as the adjudicator engaged in and the Queensland Court of Appeal endorsed, in Ainsworth.
But it is an exercise in which the unreasonableness of a refusal is assessed by, not only the interests of the refusing owners in their perception and expression of the status quo property rights, but also by the rights and reasonable expectations of the proponent owners that the refusing owners ought (to avoid acting unreasonably) have taken into account in coming to a decision. The Tribunal intrudes into the decision because it is required by the wording of s 149(2) to have regard to the matters in s 149(2) as they presented at the time of the refusal, and on an objective basis, in assessing the quality of the decision made by the refusing owners."
[7]
UNREASONABLE REFUSAL TO PASS SPECIAL PRIVILEGES BY LAW-SUBMISSIONS OF THE PARTIES
[8]
The Lot Owner
The Lot owner's submissions and submissions in reply regarding the reasonableness of the decision of the owners corporation at the AGM dated 5 December 2017 to refuse to pass the proposed special privileges by-law can be summarised as follows:
1. The minutes of the AGM contain no information regarding the reasons why the majority of Lot owners voted against Motions 15 and 16 at the AGM;
2. There is nothing to indicate the Lot owners who voted at the AGM considered the report of Mr Kavanagh, nor his comments in the report regarding the compliance with plans; quality of construction; or compliance with the Building Code of Australia or National Construction Code;
3. There is nothing to indicate the owners corporation or Lot owners considered the "compliance assessment report of Mr Tobin of BCA Vision dated 28 March 2017;
4. The only matters raised in evidence by Lot owners involve the use of Lot 2 as a prayer hall involving an increased number of visitors to the strata scheme at certain times; parking concerns; and safety concerns. There was no evidence that such matters were considered at the AGM, and "the specific instances" referred to in the evidence of Mr Wahbe and Mr Wehbe "were yet to occur as at December 2017.
5. Further, the matters raised in evidence by the Lot owners did not address the issue of whether the by-law ought to be made; and whether the owner of Lot 2 be permitted to make an application for a building certificate from the Council, which were the subject matter of the Motions. The proposed special privileges by-law only related to the modifications and alterations to common property, not the use of the Lot. The proposed by-laws did not seek any approval or consent for the Lot to be used for a certain purpose (being use as a prayer hall). Accordingly, it was unreasonable for the other Lot owners to consider the purpose of the modifications and alterations to common property, or the effect such modifications and alterations would have rather than the modifications and alterations themselves.
6. Any issues regarding the structural integrity; quality; or compliance with relevant codes and Australian Standards regarding the works are adequately dealt with in Clauses 4 and 5 of the proposed special privileges by-law, because the onus is placed upon the Lot owner to provide appropriate evidence and certification regarding the structural adequacy of the works.
7. The alterations to common property do not affect the use and enjoyment of other Lot owners to the common property or their Lots.
8. The Lot owner has "an expectation to develop the Lot and so much of the common property to maximize its use of the Lot".
[9]
The Owners Corporation
The submissions of the Owners Corporation can be summarised as follows:
1. No structural plans have been provided to the owners corporation regarding the alterations to common property.
2. The report of Mr Kavanagh expressly states that he does not comment upon the structural adequacy of the works.
3. The report of Mr Blaszczakiewicz of Demlakian Consulting Engineers is irrelevant because it came into existence after the AGM on 5 December 2017.
4. In any event, Mr Blaszczakiewicz does not certify the structural integrity of the works.
5. Lot owners have a reasonable expectation that other Lot owners will only use Lots in accordance with the permitted use prescribed by the planning laws. The area is zoned light commercial; Lot 2 was used previously for light commercial purposes; and other Lot owners use their Lots for light commercial purposes.
6. The practical effect of the modifications and alterations to common property is that Lot 2 and common property attached to Lot 2 is being used as a prayer hall. Large number of persons regularly gathers at the strata scheme, which is located in an industrial estate area. This creates parking and access difficulties for the other Lot owners, whose use of their Lots involves trucks, forklifts and couriers accessing their Lots and common property.
7. The proposed special privileges by-law is inadequate because it does not identify who performed the works or that they were suitably licenced, and the warranties contained in the proposed by-law are ineffectual because cl 7 of the proposed by-law refers to work that has not yet been performed, rather than works that have previously been performed.
[10]
CONSIDERATION-WAS THE REJECTION OF THE PROPOSED SPECIAL PRIVILEGES BY-LAW UNREASONABLE?
The evidence of Mr Wahbe and Mr Wehbe refer to the amount of persons attending the strata scheme for prayer meetings. Mr Wahbe refers to having personally reviewed CCTV footage from May to June 2018. The specific events in May and June 2018 are irrelevant, because they occurred after the AGM on 5 December 2017.
However, Mr Wahbe also states that the first prayer meeting was conducted on 31 March 2017 and he has been advised by tenants of Lots that "on a Friday hundreds of people attend the midday prayer service and parking and navigating through Peel and Walpole streets is difficult due to the large number of people". Mr Wahbe also states that the large number of people that attend prayer services, particularly on a Friday, cause access and parking problems, and raise potential safety issues in circumstances where other than Lot 2 the Lots are used as warehouses, and large numbers of persons are parking and attending the area proximate to the strata scheme.
Mr Wehbe also states that having a large number of persons using common property to access Lot to that are not employees, couriers, customers or tradespersons is a safety concern, and:
"Parking is limited in the scheme and on the surrounding streets with access being tight for large trucks if cars are parked on either side of the street. Using Lot 2 as a place of worship attracts hundreds of people and affects the parking for the employees and visitors for the businesses operating out of the other Lots in the strata plan.
Cars belonging to people attending Lot 2 of Friday for midday prayers often park in the car spaces designated for Lot 1.
When the Friday prayers are over hundreds of people leave dangerously cross the road in front of cars and trucks".
Mr Darwiche in his affidavit of 30 May 2018 does not dispute that large numbers of persons attend Lot 2 on Fridays for prayer services, but states that no other Lot owners made him aware prior to the AGM on 5 December 2017 that they had any "comments or concerns" regarding the alternations and modifications to Lot 2 and common property, or its impact upon the interests of other Lot owners.
The Tribunal accepts that large numbers of persons attend the strata scheme to participate in prayers at Lot 2 on Fridays, and many of those persons travel by car, which then involves cars being parked on common property or the adjacent street area.
The strata scheme is located in an area zoned for light industrial purposes, and other than the modification of Lot 2 and surrounding common property into a prayer room, the strata scheme has been, and continues to be used for light industrial purposes.
The interests of the owners of Lots 1, 3, 4, 5 and 6 regarding the use of their Lots and common property include the use and operation of their Lots and common property to facilitate the use of their Lots for light industrial purposes. Such use involves Lots being used as warehouses, and the Lots being accessed through common property by vehicles delivering and transporting materials on a regular basis, and parking on common property for that purpose.
The alterations and modifications of Lot 2 and associated common property by the applicant have caused a large number of persons to attend the strata scheme and adjacent area for the purpose of attending the prayer hall. This is a fundamentally different use of the common property than for light industrial purposes. The Tribunal accepts that the owners of Lots 1, 3, 4, 5 and 6 had, at the date of the AGM on 5 December 2017, valid concerns regarding the large number of persons who were attending the strata scheme on Fridays to attend prayer meetings, and the affect that was having upon parking and accessing the Lots by employees; customers; and delivery persons attending Lots 1, 3, 4, 5 and 6.
The submission of the Lot owner is that s 149 of the SSMA should be construed in a manner that focusses upon the physical alterations and modifications of the Lot and their structural integrity, rather than how such modifications and alterations changed the use of the Lot.
However, s 149 (2) (a) of the SSMA refers to the "interests of all owners in the use and enjoyment of their lots and common property" being considered. The alterations and modifications to Lot 2 and associated common property have caused a large number of persons to attend the strata scheme on Fridays for the purpose of prayer. This affects the interests of the other Lot owners by having the practical effect of restricting access to their Lots and the ability to park on common property. Section 149 (2) (a) is not to be interpreted in a manner that does not consider the change in use of the Lot and how it has affected the use and enjoyment of other Lot owners to their Lots and the common property of the strata scheme, particularly where the change in use is inconsistent with the zoning of the area by the local Council as light industrial.
The Lot owner submits that it has the right to use and enjoy its Lot and common property, and that the alterations and modifications are consistent with that right. The Tribunal must consider the rights of the Lot owner in the context of s 149 (2) (a) of the SSMA, and has done so. What the owner of Lot 2 has done is to convert a Lot used previously for light industrial purposes into a prayer hall.
However, the rights of the Lot owner are not unfettered. The Lot owner purchased a Lot in a strata scheme in an area zoned by the local Council as light industrial. The other Lots in the scheme were used for light industrial purposes. Without any notice to the owners corporation, and without having planning permission by the local Council, the Lot owner performed very significant alterations and modifications to common property which caused a substantial change in the previous use of the Lot and caused a large number of persons to attend the strata scheme on an ongoing basis for reasons that had nothing to do with accessing light industrial premises.
Further, as of 5 December 2017, the only expert evidence regarding the works provided to the owners corporation by the Lot owner was the report of Mr Kieran Tobin, of BCA Vision dated 26 June 2017 that was prepared as part of the Lot owner's Development Application, and was further submitted to the owners corporation prior to the AGM on 5 December 2017.
Although Mr Tobin asserts that the "proposed works are consistent with the relevant Building Code of Australia clauses", he identifies further work that needs to be performed to ensure appropriate fire rating is achieved regarding under stair storage enclosures beneath each of the stairs to the mezzanine level. Further, Mr Tobin recommended that all exit door handles be replaced; an additional fire hose reel be installed at the rear of the premises; portable fire extinguishers be installed; and exit lights be made operational and tested.
The Lot owner provided no information to the owners corporation regarding who it intended to engage in such work; when such work would be done; and that the persons engaging in such work would be suitable licensed and insured.
The owners corporation had obtained a report from Mr Kavanagh (Integrated Consultancy Group), building consultant, dated 19 July 2017.
Mr Kavanagh stated that, other than the necessity for a step ramp to be installed adjacent to a disabled toilet under the northern mezzanine area, the works he inspected were compliant with the National Construction Code and were generally of a "high standard". However, Mr Kavanagh also stated that he was "unable to comment on the structural adequacy of the works other than what could be felt e.g. would the structure physically shake".
The Lot owner did not obtain any expert evidence or certification by a suitably qualified expert, such as a structural engineer, that the works were structurally sound prior to the AGM on 5 December 2017. The Lot owner submits that it was unnecessary to do so, in circumstances where the proposed special privileges by law states at clause 4:
"The Owner must, within 28 days of the making of this by-law, provide the following to the owners corporation in relation to the Past Works:
(a) certification that the Past Works were carried out in accordance with the Building Code of Australia, pertinent Australian Standards, and manufacturer's specifications;
(b) subject to clause 5 and only if required at law, a copy of a building certificate under Section 149A to 149E of the Environmental Planning and Assessment Act 1979 in relation to the Past Works."
However, although clause 4 of the proposed special privileges by-law places an obligation on the Lot owner to provide "certification" within 28 days of the making of the by-law, the fact that there was not any expert evidence that clearly stated that the structural modifications and alterations to common property were adequate, in circumstances where there had been significant structural changes, was a relevant matter to be considered by the owners corporation regarding whether or not to consent to the proposed special privileges by-law at the AGM on 5 December 2017.
The fact that the Lot owner has obtained an expert report after AGM on 5 December 2017 and its contents is irrelevant to whether the decision made at the AGM not to pass the proposed special privileges by-law was unreasonable. The information contained in that report (and any further expert reports obtained by the parties) become relevant if there is a further Motion by the Lot owner regarding a special privileges by-law.
The Lot owner raises in its submissions that the owners corporation did not give reasons in the minutes of the AGM on 5 December 2017 why the Motions failed to pass, or otherwise give an explanation for the decision. However, the task of the Tribunal in this application is to consider whether, assessed objectively and taking into account the considerations under s 149 (2) of the SSMA, whether the Lot owner has established that the decision of the owners corporation not to pass the special privileges by-law was unreasonable. It is the decision itself, not the adequacy of the explanation of the decision, which is the focus of s 149 of the SSMA.
The Tribunal is not satisfied that the Lot owner has established on the balance of probabilities that the decision of the owners corporation not to pass the proposed special privileges by-law on 5 December 2017 was unreasonable within the meaning of s 149 of the SSMA.
[11]
THE ORDER SOUGHT THAT THE OWNERS CORPORATION CONSENT TO THE LODGING OF A DEVELOPMENT APPLICATION
The second order sought by the applicant is that the owners corporation provide consent to the Lot owner lodging a Development Application with the local Council. Any Development Application will likely deal with seeking a change to the zoning of the Lot as being in a light industrial area, and will further involve consideration being given to access and parking issues.
Section 232 of the SSMA relevantly states as follows:
"232 Orders to settle disputes or rectify complaints
(1) Orders relating to complaints and disputes
The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following:
(a) the operation, administration or management of a strata scheme under this Act,
(b) an agreement authorised or required to be entered into under this Act
,
(c) an agreement appointing a strata managing agent or a building manager,
(d) an agreement between the owners corporation and an owner, mortgagee or covenant chargee of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme,
(e) an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme,
(f) an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.
(2) Failure to exercise a function
For the purposes of this section, an owners corporation, strata committee or building management committee is taken not to have exercised a function if:
(a) it decides not to exercise the function, or
(b) application is made to it to exercise the function and it fails for 2 months after the making of the application to exercise the function in accordance with the application or to inform the applicant that it has decided not to exercise the function in accordance with the application.
(3) Other proceedings and remedies
A person is not entitled:
(a) to commence other proceedings in connection with the settlement of a dispute or complaint the subject of a current application by the person for an order under this section, or
(b) to make an application for an order under this section if the person has commenced, and not discontinued, proceedings in connection with the settlement of a dispute or complaint the subject of the application.
(6) Disputes relating to consent to development applications
The Tribunal must consider the interests of all the owners of lots in a strata scheme in the use and enjoyment of their lots and the common property in determining whether to make an order relating to a dispute concerning the failure of an owners corporation for a strata scheme to consent to the making of a development application under the Environmental Planning and Assessment Act 1979 relating to common property of the scheme.
…"
The owners corporation submitted that the Tribunal had no jurisdiction to make such an order by reason of s 232 (3) of the SSMA, because the Lot owner had commenced Appeal Panel proceedings involving Matter SC 17/21877.
The Tribunal does not accept that the Appeal Panel proceedings involving Matter SC 17/21877 deprive the Tribunal of jurisdiction under s 232 of the SSMA in these proceedings. Those proceedings involved an application brought by the owners corporation for the Lot owner to restore common property. That is an entirely separate issue and separate cause of action to a dispute regarding an owners corporation refusing to consent to a Development Application being lodged.
In respect of Development Applications that affect common property (as distinct from Development Applications that wholly involve Lot property) the consent of the owners corporation is required, but only before the approval of the Development Application. The consent of the owners corporation is not required to make or lodge the Development Application: Owners Strata Plan No 50411 & Ors v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5.
The owners corporation submits that, if the Tribunal is against it on the jurisdiction point, then it accepts that the Lot owner should not be deprived of the opportunity to lodge a Development Application, in circumstances where the owners corporation (and individual Lot owners) can make objections to the local Council as part of the Development Application consideration process. As the owners corporation correctly concedes, consent by an owners corporation to a Lot owner lodging a Development Application is not a concession that the owners corporation agrees with the substance of the Development Application.
Under these circumstances, the Tribunal would have no hesitation making an order that the owners corporation consent to the Lot owner making a Development Application to the local Council, save for one issue that goes to the exercise of discretion. The order sought by the applicant is that the owners corporation consent to the Development Application "in the form considered in by the respondent in the general meeting on 5 December 2017". In submissions, the Lot owner stated that a further Development Application had been lodged with the local Council. However, considering the evidence of Mr Darwiche that the Lot owner had engaged further consultants and was in the process of lodging a further Development Application, it is unclear to the Tribunal whether the Development Application is the same, or different, to the Development Application that was before the AGM on 5 December 2017.
If the Development Application is different, there is no utility to making an order that the owners corporation give consent to a Development Application "in the form considered by the respondent in the general meeting on 5 December 2017".
Accordingly, the Tribunal does not make the order sought. The Lot owner can again seek that the owners corporation consent to the making of the particular Development Application that has been lodged. Considering the reasoning process of the Tribunal in these proceedings and the concession made by the owners corporation regarding the issue of consent, it is extremely difficult to envisage how the owners corporation could justify any future refusal of consent.
[12]
CONCLUSION
The application is dismissed. However, the dismissal of the application under s 149 of the SSMA does not prevent the Lot owner putting forward a fresh Motion seeking the passing of a special privileges by-law to be considered at a meeting of the owners corporation, and obtaining further evidence that addresses concerns of the other Lot owners.
[13]
COSTS
As both parties are legally represented, the potential exists for a costs application. If any such application is made, it is to be made in writing by 14 days of the date of this decision, with a copy filed with the Tribunal and served on the other party. The application is to include reference to whether the party making the application consents to the issue of costs being determined on the papers. If such an application is made, the Tribunal will make further directions regarding the filing and serving of written submissions.
If no costs application is made, each party will bear its own costs of the proceedings in accordance with s 60 (1) of the Civil and Administrative Tribunal Act 2013 (NSW).
[14]
ORDERS
The Tribunal makes the following orders:
1. The application is dismissed.
2. If there is an application for costs, it is to be made in writing by 14 days of the date of this decision, with a copy filed with the Tribunal and served on the other party. The application is to include reference to whether the party making the application consents to the issue of costs being determined on the papers. If such an application is made, the Tribunal will make further directions regarding the filing and serving of written submissions.
3. If no costs application is made, each party will bear its own costs of the proceedings in accordance with s 60 (1) of the Civil and Administrative Tribunal Act 2013 (NSW).
[15]
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
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 30 July 2019
Parties
Applicant/Plaintiff:
Charitable Islamic Association of Beirut City Incorporated