Endre v The Owners - Strata Plan No. 17771 - [2019] NSWCATAP 93 - NSWCATAP 2019 case summary

NCAT Appeal Panel|2019-03-26

Introduction

On 14 November 2018 the Tribunal made orders in applications SC 17/39487 and SC 18/33509 for the removal of skylights which had been constructed as part of the common property roof of Strata Plan No. 17771 (strata scheme), being a property located at Manly. The Tribunal provided reasons for its decision (reasons).
The strata scheme consists of three lots. Lot 1 is owned by Ms Barnes and Mr Terry. Lot 3 is owned by Ms Browning and Mr Lee.
The appellant, who is the owner of Lot 2 in the strata scheme, had access and use to the attic space above her lot, which was also common property, having been granted an exclusive use by-law to use and occupy that space. That by-law is number 31 in the registered by-laws for the strata scheme. It was passed by the Owners Corporation (respondent) on 6 February 2006.
By-law 31 was, in the following terms: The proprietor of Lot 2 shall be entitled to the exclusive use and enjoyment of that part of the property (being roof space of an area of approximately 53.3 square metres) which is defined by cross hatching on the plan marked A. The proprietor of Lot 3 shall be entitled to the exclusive use and enjoyment of that part of the property (being roof space of an area of approximately 30 square metres) which is defined by cross hatching on the plan marked B. (a) The proprietors of Lots 2 and 3 shall be responsible for the maintenance and repair for those areas of exclusive use and enjoyment granted to them.
In about June 2014, the appellant carried out various work to the roof including the removal and repair of rotting rafters and the installation of 6 skylights. In addition, at various times, the appellant or her son had apparently carried out other work in the roof space.
By application SC 17/39487, the respondent applied for orders against the appellant to permit access to Lot 2 for the purpose of accessing the roof space, inspecting unauthorised works and to carry out all necessary repair and maintenance work to restore the attic area to a good state of repair. Subsequently, by application SC 18/33509, the appellant commenced proceedings against the respondent in relation to the same subject matter. In her application, the appellant sought orders under s 126 of the Strata Schemes Management Act 2015 (NSW) (Management Act) to approve the works in relation to the installation of the six skylights as well as the approval of other alterations which had been made to the roof structure and the attic space.

Notice of Appeal and history of appeal proceedings

The notice of appeal was filed on 12 December 2018. The appeal was filed in time. The grounds of appeal were as follows: 1. The Tribunal erred in its construction of s 132(1) of the Management Act in ordering the removal of the skylights and requiring the appellant to pay the costs of removal in circumstances where there was no finding by the Tribunal that the installation of the skylights had caused damage to common property or another lot of the building. 2. The Tribunal erred in ordering removal of the skylights and requiring the appellant to pay the costs of removal where there was no evidence that the installation of the skylights had caused damage to common property or another lot of the building. 3. The Tribunal erred in ordering removal of the skylights and requiring the appellant to pay the costs of removal in circumstances where the evidence before the Tribunal was that the roof windows complied with the relevant parts of the National Construction Code. 4. The Tribunal failed to give adequate reasons in respect of its decision to order the removal of the skylights and/or to order the appellant to pay the costs of removal. 5. The Tribunal erred in its construction and/or application of s 126(2) of the Management Act by failing to take into account the conduct of the respondent in deciding whether or not to make a work approval order, in particular the facts that: 1. the skylights were installed in June 2014 and no complaints were raised by the respondent at the time those works were carried out; 2. in about November 2016, work was carried out to the roof in the form of re-tiling and the installation of sarking, and no complaints were raised by the respondent at that time; and 3. the first occasion that complaint was made by the respondent about the installation of the skylights was in about April 2017, approximately 3 years after the work had been carried out. 1. In declining to make a work approval order under s 126(2) of the Management Act the Tribunal failed to consider the conduct of the Owners Corporation, which was a mandatory relevant consideration to take account of by reason of s 126(4) of the Management Act. 2. The Tribunal failed to give any or any adequate reasons in respect of its decision to decline to make a work approval order under s 126(2) of the Management Act.
The appellant sought orders in the appeal that orders 2.3 and 2.4 of the orders made by the Tribunal on 14 November 2018 be set aside. In lieu thereof, the appellant sought a work approval order for the skylights pursuant to s 126(2) of the Management Act.
Orders 2.3 and 2.4 were in the following terms: 2.3 Orders that [the appellant] is to carry out such works ("reinstatement works") as may be necessary to enable the common property of the strata scheme to be restored to its condition prior to [the appellant] undertaking in or about June 2014 Roof Window Alterations which involve the installation of six (6) roof windows, five (5) of which were installed in the western face of the roof above Lot 2 and one (one) of which was installed on the eastern face of the roof above Lot 2, or as may be otherwise agreed by the [respondent]. 2.4 Orders that the reinstatement works are to be undertaken and completed by [the appellant] within four [4] months of the date of these orders, with due care and skill and in a proper and workmanlike manner using suitably qualified tradespeople and at [the appellant's] own expense.
Pursuant to the directions made by the Appeal Panel in preparation for hearing, the appellant filed an agreed bundle of documents (AB) and submissions in support of her appeal. The respondent filed a Reply to Appeal which had attached to it the respondent's submissions about why the appeal should be dismissed. The respondent did not file any other written submissions.
At the hearing of the appeal, the appellant was represented by Mr Robertson of Counsel. The respondent was represented by Ms Crittenden, solicitor.
The appellant handed up a complete copy of Exhibit "GE-1" being an exhibit to the original statement of the appellant filed in the proceedings at first instance. This was necessary because the agreed bundle did not contain a complete or accurate copy. The exhibit became Exhibit A in the appeal.

Consideration

There is a right of appeal on a question of law. Otherwise, leave to appeal is required: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act).
The issue of inadequate reasons raises a question of law. Save in relation to submissions to the effect there was no evidence to support a finding of fact by the Tribunal, the appellant otherwise requires leave to challenge findings of fact. Sch 4 cl 12(1) of the NCAT Act regulates the grant of leave, Collins v Urban [2014] NSWCATAP 17 sets out the principles applicable in determining whether leave should be granted.
Determining whether the reasons are adequate requires an identification of the legal and factual issues to be resolved.
The substantive issue raised in the appeal is whether the Tribunal was correct in declining the appellant's application for an order under s 126(2) of the Management Act. This section permits the Tribunal to make a work approval order where an owners corporation has unreasonably refused its consent to work which has already been carried out. The section provides: (2) Order consenting to owner's work on owners corporation property The Tribunal may, on application by a lessor of a leasehold strata scheme or an owner of a lot in a strata scheme, make an order (a work approval order) approving of minor renovations or alterations or repairs already made by an owner to common property or any other property of the owners corporation directly affecting the owner's lot if the Tribunal considers that the owners corporation unreasonably refused its consent to the minor renovations or alterations or repairs.
If a work approval order is made, it is taken to be with the consent of an owners corporation, that consent taking effect on the date specified in the order, which may be a date before the order was in fact made: s 126(3) of the Management Act.
Section 126(4) of the Management Act provides: In deciding whether to grant a work approval order or to provide for the order to have effect from a day that occurred before the date of the order, the Tribunal may take into account the conduct of the parties in the proceedings, for example, if an owner did not first seek the consent of the owners Corporation before carrying out the renovations, alterations or repairs.
A resolution of this appeal requires an examination of the power conferred on the Tribunal to make a work approval order, the circumstances in which it is enlivened and the matters that are to be taken into account in considering the question of whether the refusal was unreasonable.
There is a jurisdictional limitation on the exercise of power imposed by the terms of s 126.
In Colbert v MacDonald & Ors [2016] NSWSC 1291, Adams J considered s 140 of the Strata Schemes Management Act 1996 (NSW) (1996 Act), the predecessor of s 126 of the Management Act, which was in similar terms. At [79], her Honour concluded that the power to make an order is only enlivened if the Tribunal is satisfied: 1. an owners corporation has unreasonably refused consent to the relevant works; and 2. those works are to common property or any other property of the owners corporation directly affecting the lot owner's lot.
It follows that an order under s 126(2) can only be made if these two preconditions are satisfied.
In oral submissions, the respondent submitted that there is another constraint. That is that the section only operates in respect of "minor repairs".
We do not accept this submission. Sections 108-110 draw a distinction between cosmetic work (which is defined in s 109(2)), minor renovations (which is defined in s 100(3)) and other repairs, alterations and additions which do not fit within the definitions of cosmetic work or minor renovations.
The use of the disjunctive "or" in s 126(2) in the expressions "minor renovations or alterations or repairs" makes clear the Legislature was not intending to limit the operation of this section to minor repairs only, an expression not used or defined in the Management Act. The words of the section do not otherwise limit its operation to work that might be described as major or minor.
While cosmetic work is not referred to in s 126(2), this is because consent to do this work from an owners corporation is not required. Consequently, there could be no resolution of the owners corporation to which s 109 might apply. On the other hand, a dispute concerning what work fits within the definitions of "cosmetic work" and "minor renovations" may be resolved by the Tribunal in an application brought under s 127 of the Management Act.
The question of unreasonableness is to be determined having regard to the facts that existed at the time the decision was made.
In Owners Corporation Strata Plan 7596 v Risidore & Ors [2003] NSWSC 966, again when considering s 140 of the 1996 Act, the Court said at [12]-[13]: 12 In my view, this provision makes it clear that the question for determination by the adjudicator in the present case was whether or not he considered that the Owners Corporation had unreasonably refused its consent. 13 It seems to me that is a question which falls to be determined having regard to the state of affairs in existence at the time of the refusal of consent. In considering that question, regard should not be had to material that subsequently came into existence. The taking into account of subsequent material would involve the adjudicator in embarking on a fresh consideration in light of material that was not before the decision-maker. The adjudicator would not then be addressing the relevant question.
At this point, we should note in passing that the decision to refuse, for which a work approval order is sought under s 126(2), was made in respect of a motion for the passing of a special by-law to permit alterations to the common property. The work, the subject of that by-law, included but was more extensive than the six skylights.
However, in this appeal, the appellant only sought to challenge the reasonableness of the decision in connection with the skylights. The appellant did not challenge the orders otherwise made for the carrying out of works to the roof structure. Further, neither party challenged the orders of the Tribunal requiring the parties to meet to formulate a special by-law to permit other works done within the attic space to remain in situ.
The Tribunal approached the question of refusal by looking at the issue of the skylights separately to the other works for which approval was also sought. Neither party challenged this approach in the appeal. Accordingly, we will proceed on this limited basis.
Section 126(4) provides that the Tribunal may take into account the conduct of the parties in the proceedings in determining whether to make a work approval order. That conduct includes, but is not limited to, the conduct of the owner and the fact the owner did not first seek consent.
That is, the section makes clear that the conduct of an owners corporation may be taken into account. The question is for what purpose? Is the conduct of the respondent: 1. relevant to both whether the refusal is unreasonable and what order should be made and the terms thereof; or 2. relevant only to the question of whether or not an order should be made where the conduct of the owners corporation is otherwise shown to be unreasonable;
In our view, the conduct of the owners corporation is relevant to both the question of whether the refusal was unreasonable and the question of whether a work approval order should be made and if so on what terms. Our reasons are as follows.
The interpretation of s 126 requires a consideration of the text of the section and its context. The interpretation must be "consistent with the language and purpose of all provisions of the statute": Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) HCA 28; 194 CLR 35 at [69].
The purpose of s 126 is to permit the Tribunal to make a work approval order in respect of common property in circumstances where an owners corporation has unreasonably refused to approve such work. This, in turn, depends on the power of the owners corporation to approve or refuse such work as the case may be.
Common property is held by an owners corporation as agent for all lot owners as tenants in common in shares proportional to the unit entitlements: s 28(1) of the Strata Schemes Development Act 2015 (NSW) (Development Act). However, an owners corporation is permitted to deal with the common property as provided in the Development Act and the Management Act: s 23 of the Development Act.
Alterations to common property can, generally, only be made with the approval of an owners corporation. Part 6 Division 1 of the Management Act, particularly ss 108-110, regulates the type of works for which approval is required and whether such approval must be by way of special resolution and/or requires consent. Sections 109 (Cosmetic work by owners - which permits work without consent) and 110 (Minor renovations by owners - which permits a work with consent given by ordinary resolution) in the Management Act are new and additional provisions to those found in the 1996 Act. They ameliorate the strict requirement for a special resolution found in s 108.
The definitions of permitted work in ss 109 and 110 are inclusive, there being the possibility of interpretive differences concerning what work is permitted without seeking approval, what work requires an ordinary resolution and what work requires a special resolution.
The powers of an owners corporation to approve work to common property must also be read in the context of the power of an owners corporation to make a common property rights by-law (including the power to grant special or exclusive use rights to particular Lot owners) under Part 7 Division 3 of the Management Act and the power of the Tribunal to review any unreasonable refusal as provided in s 149 of the Management Act.
Taken together, these provisions enable the approval of work and/or the granting to a Lot owner of exclusive use rights to common property, including on terms requiring the benefited lot owner to repair and maintain the common property to which the right relates. In respect of the granting of exclusive use by-laws, under s 149(2) (if the by-law has been unreasonably refused by an owners corporation) the Tribunal may approve the by-law. However the Tribunal is required to have regard to: 1. the interests of all owners in the use and enjoyment of their lots and common property; and 2. the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law.
It seems clear from the above that the purpose of the powers given to an owners corporation (and the Tribunal in a permitted review of any refusal) is to enable the grant of rights over common property to individual Lot owners and to permit such Lot owners to carry out minor renovation or alterations or repairs. The power to do so is despite other Lot owners having an interest in the common property as tenants in common. That is, individual rights to object might be overridden, even if there is a loss of amenity suffered by an objector.
It follows that the determination of whether a refusal is unreasonable must depend upon the conduct of the owners corporation and all the relevant circumstances.
The Tribunal said in its reasons, relying on the decision in Yardy v Owners Corporation Strata Plan 57237 [2018] NSWCATCD 19, that "the word 'unreasonable' means not based on or in accordance with reason or sound judgement": reasons at [39]. In saying so, the Tribunal, correctly in our opinion, noted that the test was an objective test.
However, insofar as the Tribunal sought to suggest that one examines the objective reasonableness of the decision of the owners corporation by reference to the particular views reasonably held by objecting lot owners, we would not agree.
The plurality of the High Court in Ainsworth v Albrecht [2016] HCA 40 (Ainsworth) said at [63] that opposition by a lot owner might be unreasonable if "prompted by spite, or ill-will, or a desire for attention", that is if their opposition was motivated by matters which "on any rational view, [could not] adversely affect the material enjoyment of an opponent's property rights".
However, the High Court was concerned with a power to make an order "because of opposition [to a motion] that in the circumstances is unreasonable": Ainsworth at [17] and [48]. The High Court in Ainsworth was not concerned with whether the decision of the owners corporation in a general meeting was, in the circumstances in which that decision was made, unreasonable.
However, in the latter case, the High Court said in Ainsworth the question of unreasonableness in connection with a decision to pass or not pass a motion at a general meeting of the body corporate requires a determination of whether the decision made was "a reasonable balance of the competing interests affected by the proposal": Ainsworth at [49].
Similar views have been expressed by the Supreme Court of New South Wales in connection with s 158 of the 1996 Act (unreasonable refusal to make a by-law), now s 149(2) of the Management Act. In Reen v Owners Corporation SP 300 [2008] NSWSC 1105, the Court said at [58]: 57. The starting point here is that the by-laws are made to facilitate the administration and harmony of the strata scheme. 58. Senior Tribunal Member Balding was asked to consider whether SP 300's refusal to approve a new by-law granting the Reens exclusive use of garage number 3 was unreasonable, as Adjudicator Taylor had concluded. That determination required a consideration of the interests of all owners in the use and enjoyment of the lots and common property. It also required consideration of the rights and reasonable expectations of the Reens, who would derive a benefit under the by-law.
It follows that what the Tribunal is required to do is determine whether, in all the circumstances, the refusal of the respondent to approve the work was unreasonable.
That is not to suggest that individual lot owner's views are not relevant to determining whether the refusal by an owners corporation was unreasonable. Rather, it is one of the factors to be taken into account when determining whether the refusal to approve works was unreasonable in all the circumstances.
It is in this context that the decision of the Tribunal needs to be reviewed, both as to adequacy of reasons and, whether the Tribunal was correct to order removal of the skylights and reinstatement.
In declining to make a work approval order in connection with the skylights, the Tribunal provided the following reasons (at [45]-[49]): The Roof Window Alterations Issue 45 By-Law 31 of the strata scheme's By-Laws, as approved by the Owners Corporation in general meeting on 10 September 2005, did not express Ms Endre's understanding that she had permission (albeit verbal) to carry out renovations and alterations to the attic space above Lot 2. Nonetheless, the Tribunal accepted that Ms Endre had acted in good faith and believed she had verbal consent to carry out the roof window alterations in 2014; notwithstanding this, the Tribunal found that the Owners Corporation had not authorised the installation of the roof windows. 46 Mr Terry on behalf of the Owners Corporation gave written and oral evidence, subject to cross examination, that the roof windows (or skylights) were not necessary. In Mr Terry's opinion, this was because the attic space above Lot 2 is for storage purposes only; that is, it not suitable or approved for habitable purposes and does not need natural light. Moreover, in respect of issues of mould, as referred to by Ms Endre in her written evidence, Mr Terry gave evidence that the space had adequate ventilation from the window at the front of the property into the attic. Mr Terry also said that the roof windows created an increased risk of water ingress if left open during periods of rain and raised the likelihood of water damage to the common property. 47 Further, Mr Terry noted that the Owners Corporation had been asked to give its retrospective approval to the installation of the roof windows. He said that in addition to the other matters, the Owners Corporation was not prepared to give retrospective approval because a majority of the lot owners of the scheme believed that the windows were unappealing (i.e. arranged in a disorderly manner on the roof) and detracted from the strata building's external appearance. This consideration prompted submissions from Ms Endre's counsel about a lack of procedural fairness (see, for example, her written submissions dated 9 October 2018 at [67]) as there was reference to By-Law 17 of the strata scheme's By-Laws. 48 Ms Endre's submissions about lack of procedural fairness did not assist the Tribunal. In fact, the Tribunal was not required to make any findings as to whether or not Ms Endre had breached By-Law 17. No proceedings were brought against Ms Endre for breach of the By-Laws of the strata scheme. The issue before the Tribunal on Ms Endre's application was whether it could be said, objectively, that the Owners Corporation's decision to refuse consent to the roof window alterations was unreasonable. In this regard, the Tribunal accepted Mr Terry's evidence. It was not persuaded that the Owners Corporation's decision to decline its consent was not based on or in accordance with reason or sound judgment. 49 Therefore, the Tribunal declined to make a work approval order under s 126(2) in respect of the roof window alterations. It found that the Owners Corporation's decision to refuse consent to the roof window alterations in the attic space above Lot 2 was not unreasonable. 50 In the event the Tribunal declined to make a work approval order, Ms Endre's counsel submitted that the removal of the roof windows should not be at Ms Endre's cost as Ms Endre had, at all material times, acted in good faith, and also because the Owners Corporation had "unreasonably" delayed raising with Ms Endre that the roof windows were unauthorised works to the common property of the strata scheme. The Tribunal did not accept that submission. However well-intentioned Ms Endre may have been, the Tribunal was satisfied that the roof windows were not "minor renovations" (s 110, SSMA 2015); they were works which had the effect of adding to or altering the common property of the strata scheme (s 108); and that they were installed by Ms Endre without authority (s 111). Since at least 27 February 2017, the Owners Corporation had informed Ms Endre that she did not have the approval to do any work in the roof space above Lot 2 which affects the common property of the strata scheme: see page 63 of Exhibit GE-1 to Ms Endre's witness statement dated 10 May 2018. Ms Endre took no steps to have her unauthorised works approved until 20 April 2018, when a motion for a common property rights by-law was submitted to the Owners Corporation. The Tribunal found that there was insufficient evidence to support a contention that the installation of the six roof windows or the cutting and alteration of parts of the roof structure was done: "to repair damage that was caused by a leak in the roof", as asserted by Ms Endre's solicitors at page 105 of Exhibit GE -1 to Ms Endre's witness statement.
The appellant's primary submission was that the reasons provided by the Tribunal were inadequate. To support this contention, the appellant's Counsel handed up at the hearing of the appeal a chronology of events. While the respondent, through its solicitor, initially sought to cast doubt on the date the skylights were installed, the final position of both parties was acceptance of the matters recorded in that chronology. The chronology recorded the following facts: 1. There had been discussions between the appellant and the former owner of Lot 3, Mr Thompson, in late 2004/early 2005 in which Mr Thompson carried out works to install skylights above his lot. The appellant's evidence was that Mr Thompson said the appellant could do likewise. 2. By-law 31 was passed by the respondent on 10 September 2005. Each of Lots 2 and 3 were given exclusive use of roof space above their lots. 3. Between 2009 and 2013, the appellant had made requests of the respondent to carry out maintenance and repairs to the roof area above Lot 2, however these repairs were not approved. 4. In June 2014, the appellant installed the skylights and removed and repaired rotting roof rafters. No complaints were made by the then owners of Lots 1 and 2. The skylights were installed in accordance with relevant building requirements and did not compromise the structural integrity of the roof. 5. The current owners of Lot 1 (who include Mr Terry) purchased the property in December 2015. No complaint was made by them about the skylights at this time. 6. On 26 October 2016, the respondent resolved to replace the roof above Lot 2. This work was carried out in about November-December 2016. The work incorporated the existing skylights in the new roof. No complaint was made about the installation of the skylights at this time. 7. The respondent, by a letter from its solicitor dated 5 April 2017, notified the appellant that the "skylights requires strengthening if they are to remain in the roof" but that the respondent intended to take immediate steps to obtain quotations for removal of the unauthorised works, in part described as the "installation of 5 skylights". We note there was in fact six skylights installed- five on one side of the pitched roof and one on the other side: see photographs at p 48 of the strata application. 8. The respondent's proceedings seeking orders against the appellant were commenced on 11 September 2017. 9. By proposed motion submitted 20 April 2018, the appellant sought retrospective approval of the unauthorised works. The motion was defeated in consequence of an email circular resolution, Lot 1 and 3 voting against the motion. We were informed that there was not in fact an extraordinary general meeting.
Against this factual background, the appellant made the following submissions concerning her application for a work approval order under s 126(2).
The appellant said that the Tribunal must make findings as to the reasons why the respondent refused to give its consent.
Insofar as this submission suggests that an owners corporation needs to prove it acted reasonably, we do not accept this submission. It is the party seeking relief that must prove its claim, in this case the appellant. In this regard the question is whether, on the material available at the time of the relevant meeting, the refusal was unreasonable: The Owners - Strata Plan No. 69140 v Drewe [2017] NSWSC 845 at [41], Ainsworth per Nettle J at [97].
Next, having noted that s 126(4) of the Management Act permits the Tribunal to have regard to the conduct of the parties, the appellant says that the Tribunal, in its reasons, focused solely on the evidence of Mr Terry and did not evaluate or explain how it dealt with the other evidence concerning the history of the roof, including when the skylights were installed and that repairs were effected in 2016 without removing the skylights. This focus on the evidence of Mr Terry included accepting his personal opinion that the skylights were unnecessary, increased the risk of water ingress into the roof space and were unappealing and detracted from the building's external appearance.
In response, the respondent says the reasons were adequate, the Tribunal having set out the contentions of the appellant at paragraphs 20 to 24 of the reasons, a statement of the law at paragraphs 25 to 39 of the reasons and its decision at paragraphs 45 to 51 of the reasons. In short, the respondent says the work was not authorised, the evidence of Mr Terry was accepted by the Tribunal and the Tribunal was not persuaded that the decision of the respondent was not based on reason or sound judgement.
The Appeal Panel has provided many statements as to the requirements for adequate reasons. The reasons must identify the relevant evidence, explain how it has been evaluated and what findings have been made, identify the relevant law and apply the law to the facts as found so as to enable an affected party to understand the decision which has been reached and to provide a sufficient explanation to enable a party to exercise any right of appeal: Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 per Meagher JA at 441 and following.
In our view, the reasons of the Tribunal in the present case do not adequately explain how the Tribunal evaluated the evidence concerning the conduct of each of the parties or the circumstances in which approval was sought.
The Tribunal had before it the following evidence: 1. The skylights had been in place for nearly three years before any decision was made to demolish them. 2. The owners corporation, constituted by the same lot owners, had resolved to replace the tiles to the roof and leave the skylights in situ and completed this work less than 4 months before it resolved to demolish the skylights. 3. There was no evidence to which we have been referred of any complaint being made by Mr Terry or any lot owner of the building about the aesthetics of the building at the time of the general meeting or of any risk of water ingress; 4. The appellant had proposed a motion to pass special by-law 33 to permit the installation of the skylights in the attic and to convert the attic into a "clean room". This was on terms that the appellant carry out work as reflected in various reports including that of Partridge Structural Pty Ltd dated 31 March 2017, 31 October 2017 and 31 January 2018: see Exhibit A p 109. 5. The respondent did not actually meet in general meeting to discuss any of these matters. Rather, the resolution was dealt with by email ballot.
The reasons do not explain how this evidence was evaluated or taken into account in the decision-making process. In this regard, simply recording some relevant facts is insufficient to discharge the Tribunal's obligation to provide reasons.
Rather, the passages to which we have referred, indicate the Tribunal focused on the evidence of one witness only, was not satisfied that the "decision to decline its consent was not based on or in accordance with the reason or sound judgement" and therefore concluded that the refusal was not unreasonable.
Consequently, the reasons of the Tribunal are inadequate in that they do not address the evidence and legal principles requiring consideration for the purpose of resolving the dispute.
In light of this error, the Appeal Panel is able to re-exercise the functions of the Tribunal for the purpose of resolving this appeal: s 81(2) of the NCAT Act.
In order to do so, it is necessary for us to determine: 1. whether the initial decision of the respondent was unreasonable; 2. whether the work in question directly affects the appellant's Lot; and 3. if so, what if any orders should be made.

Was the initial decision of the respondent unreasonable?

The respondent's submissions are to the effect that the refusal was not unreasonable because: 1. the appellant failed to obtain prior approval for the installation of the skylights, 2. the attic space was for storage purposes only; 3. the attic is not suitable for habitable purposes and so does not need natural light; 4. the attic already receives ventilation from a window at the front of the attic; 5. the roof windows create an increased risk of water ingress; 6. the roof windows have an unappealing appearance, particularly due to the disordered manner in which they are arranged in the roof; and 7. the roof windows detract from the building's external appearance.
In our view, in the circumstances of the present case, those matters do not provide a reasonable basis for refusing retrospective approval of the work.
By-law 31 allowed the appellant to occupy the space above her premises. That by-law was passed in 2005. It has not been revoked. It is not subject to any condition of use, although the appellant may be prevented from using that space other than as permitted by any right of occupancy granted under relevant development legislation.
Aside from assertions from Mr Terry, there is no expert evidence to which we have been referred concerning adequacy of ventilation or adequacy of light. It is difficult to see why the installation of a natural light facility in order to make use of a ceiling area would generally be regarded as unnecessary or undesirable. Similarly, it is difficult to see why additional ventilation could be seen as harmful to the common property or inappropriate in any way.
While there is evidence from Mr Terry concerning the conduct of the appellant's son and his particular circumstances, including placing his head out the open skylights, and of the skylights being left open causing the possibility of rain ingress, the proposed motion seeking approval provides for locking devices to be fitted to the windows to prevent them from opening too far (Motion definition of "Works" item (iii)(d) - AB 109 - Motion) and for the appellant to be responsible for the repair and maintenance of the windows and the common property in the attic space (Conditions of by-law - Motion - AB 110). These obligations on the appellant would appear adequate to protect against any of the risks which have been identified.
In relation to the "unappealing appearance" and the detraction from the building's external appearance, the evidence given on these matters was from Mr Terry, who acquired his Lot after the skylights had been installed. As such, it seems probable he would have observed the skylights at or about the time he acquired his Lot. In any event, he would have been aware of their existence at the time the roof repair works were done in late 2016. There is no evidence to suggest he objected to the skylights at this earlier point in time nor is there evidence that the owner of Lot 3 had similar concerns. In the absence of any independent evidence, we are not satisfied that there is a proper basis to conclude the appearance of the building was unappealing or that the skylights detracted from the external appearance of the building.
The Tribunal accepted that the skylights were not installed by the appellant in circumstances where she knew approval was first required and chose not to seek such approval. To the contrary, the Tribunal accepted that she genuinely believed she was entitled to construct the skylights having regard to the terms of by-law 33: reasons at [45]. The appellant's Counsel properly conceded she did not in fact have authority to install the skylights. However, in light of the findings of the Tribunal, her conduct is not a factor which we would regard as justifying the respondent in refusing the approval request.
Otherwise, no submission was made concerning the conduct of the appellant's son in apparently carrying out other works within the attic space as a justification for refusing retrospective consent to install skylights.
It is clear that the attic space is not accessible by other Lot owners. There is no evidence that its use and development by the installation of the skylights would otherwise adversely affected the other Lot owners.
It is also clear from the submissions that we receive that the owners of Lot 3 (Ms Browning and Mr Lee) have subsequently developed the common property attic space to which by-law 31 operated in their favour, and have now constructed a balcony and other works in this area after acquiring the property formerly owned by Mr Thompson: see By-law 32 Exhibit A p 34 item (iii)(j). That is, there is no common intention of the respondent that the building should be retained in its original state and the respondent has otherwise been content to approve exclusive use and occupation of common property in roof spaces above existing lots and alterations thereto.
Lastly, what is also relevant is that the appellant has accepted to undertake all structural work required, that work appearing to be limited to what is described as a "strutting beam", which is the subject of a scope of works apparently still to be finalised.
It follows that in circumstances where: 1. the skylights had been in existence for nearly 3 years at the time the resolution was proposed, 2. the roof structure was repaired around the skylights without dissent from any of the current Lot owners; and 3. the appellant has otherwise agreed to be responsible for the repair and maintenance of the skylights (in addition to her obligations under by-law 31), 4. and notwithstanding the objections raised by Mr Terry, we are satisfied the refusal of the owners corporation was unreasonable.

Does the work in question directly affect the appellant's Lot?

The respondent submitted that the work sought to be approved does not directly affect the appellant's Lot.
We do not agree.
The roof area is immediately above the attic space, for which the appellant has an exclusive use by-law. Quite clearly, the adequacy of this work will directly affect water ingress to the attic space and therefore have a direct impact upon the appellant's Lot.
It also directly affects Lot 2 insofar as the appellant is able to use the Lot and common property area in accordance with the rights she has been given under by-law 31.
It seems to us that the expression "directly affecting" is not limited to work that has an immediate physical connection with the Lot in question. Lot and common property are separate parts of the building or its services, delineated in the manner prescribed by the legislation. Common property can have a direct effect on a particular Lot even if not physically adjacent to that Lot. For example, air-conditioning units and other common property which fall into a state of disrepair can directly affect a Lot even if not adjacent to that Lot.
Consequently, we are satisfied the Tribunal has power to make a work approval order under s 126(2).

What if any orders should be made?

In light of the findings we have made, we are satisfied that a work approval order should be made in favour of the appellant. On the evidence before us, it was unreasonable for the owners corporation to refuse approval of the installation of the skylights.
In her notice of appeal, the appellant sought an order that the works installing the skylights be approved. The form of orders contended for in the appellant's submissions were as follows: 1. The Tribunal makes a work approval order in respect of the 6 skylights installed in the roof of the building above Lot 2 in SP 17771; 2. The work approval order is to have effect on and from 30 June 2014; 3. The owner of Lot 2 in SP 17771, and any subsequent owner, is to have ongoing responsibility for the repair and maintenance of the 6 skylights in the roof of the building.
No submissions were made by the respondent as to the form of orders.
The orders 1.1-1.4 made by the Tribunal on 14 November 2018, which are not subject to challenge in this appeal, involve the inspection of the roof area by a structural engineer, the identification and carrying out of necessary structural work to support the roof and surrounds and for the appellant to reimburse the respondent the costs of doing so. In this regard there appears to be an unresolved issue concerning the need for a strutting beam and the adequacy of the existing structure to support the roof including the skylights.
A report suggesting the structure was adequate had been provided by Mr Charles Blunt of Rooney & Bye (Aust) Pty Ltd, consulting engineer as part of the evidence of the appellant to the Tribunal at first instance: see Exhibit A p43. On the other hand, a report of Mr Rob O'Reilly of Partridge Structural Pty Ltd, engineer, the expert for the respondent, suggested a strutting beam may be required. The Tribunal said that the need for a strutting beam could only be determined by inspection (which Mr O'Reilly said was necessary) in order to ascertain if a steel beam or a load-bearing wall is present beneath the position of the current strut which is the subject of concern. The Tribunal did not resolve the issue of what work should be carried out. Rather, the Tribunal directed an inspection take place by the parties' experts with a view to trying to reach agreement. However, because the Tribunal took the view that the respondent could engage whichever expert it wished, the Tribunal made an order "that the opinion of Mr O'Reilly prevails" in the event of disagreement: reasons at [44].
Again, the orders made by the Tribunal on this aspect were not the subject of any appeal or challenge by either party.
In these circumstances, it is appropriate to make orders which facilitate the inspection, and to provide any adjustments to the structural work required by order 1 of the 14 November 2018 orders in light of the work approval order we will make in respect of the skylights.
In addition, an order should be made to fit safety devices to the skylight windows. Section 118 of the Management Act requires the installation of window safety devices. Reg 30 of the Strata Schemes Management Regulation 2016 (NSW) (Management Regulation) prescribes the requirements. This work can be carried out by the respondent as part of the works contemplated by order 1.
In relation to carrying out the works, the parties noted that the original orders of the Tribunal were made on 14 November 2018. We understand the work required by order 1 has not been carried out. The orders we will make will include timeframes for completion of work.
Lastly, it seems to us the approval which we propose to give should be conditional upon the appellant paying to the respondent the cost of carrying out the work contemplated by order 1, as amended by the orders we will make. Consequently, in order to ensure the appellant does not have the benefit of the order without first paying for the works (or a substantial portion), we will make provision for payment by the appellant to the respondent of an amount equal to the quotation for any works, the balance to be paid upon delivery of tax invoices as contemplated by order 1.4.
This will be a condition of the work approval order.

Orders

Accordingly, we will make the following orders: 1. The appeal is allowed and orders 2.3 and 2.4 made in application SC 18/33509 on 14 November 2018 are set aside. 2. Subject to order 5: 1. The Tribunal makes a work approval order in respect of the 6 skylights previously installed in the roof of the building above Lot 2 in SP 17771 in the locations depicted in the photographs at p 48 of strata application SC 18/33509 dated 10 May 2018; 2. The work approval order is to have effect on and from 30 June 2014; 3. The owner of Lot 2 in SP 17771, and any subsequent owner, is to have ongoing responsibility for the repair and maintenance of the 6 skylights in the roof of the building. 1. Order 1 made in application SC 17/39487 on 14 November 2018 (November Orders) is varied as follows: 1. The roof is to be inspected by the experts as provided in order 1.1 for the purpose of assessing whether, in light of the work approval order authorising the skylights, additional work is required to strengthen the roof structure to that which would have been required if the skylights were removed. 2. To the extent additional work is required, orders 1.1, 1.2, 1.3 and 1.4 operate in respect of that work. 3. The work to be carried out by the respondent (owners corporation) is to include the installation of window safety devices for each skylight as required by s 118 of the Strata Schemes Management Act 2015 and in accordance with Reg 30 of the Strata Schemes Management Regulation 2016 (NSW). 4. Prior to carrying out any rectification work to the roof as required under order 1 of the November Orders (including the installation of window safety devices required by order 3(c) above), the respondent is to give to the appellant a quotation for the rectification works and an invoice for the cost of any structural engineering services already provided. 5. Within 7 days of receipt of the quotation and the invoice required by order 4(b), the appellant is to pay to the owners corporation the amount of the quotation and the invoice, such funds to be applied in satisfaction of order 1.4. 6. The balance of the cost of any works (for example in the event of variations or for further engineering services) is to be paid in accordance with order 1.4. 7. The following times apply for carrying into effect the specified orders as varied above: 1. Order 1.1 - Access and inspection - within 30 days of the date of these orders; 2. Completion of the work required by order 1.2 or 1.3, as the case may be - within 3 months of the date of this order. 1. Order 2 is conditional upon the appellant paying the amount in order 3(e) by the due date, or any extension thereof as might be allowed by the Tribunal. 2. In the event the condition in order 4 is not met: 1. order 2 is of no effect; 2. the owners corporation may demolish the skylights and reinstate the roof: 3. all costs associated with such work, including any costs incurred in any work required by the above orders which proves abortive, are to be paid by the appellant to the respondent in accordance with order 1.4 of the November Orders. 1. The parties have liberty to apply to the Tribunal at first instance for other orders, including ancillary orders or orders to extend time, for the purpose of giving effect to the above.

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: 17 April 2019

Strata Schemes Management Act 1996(NSW)

The parties have liberty to apply to the Tribunal at first instance for other orders, including ancillary orders or orders to extend time, for the purpose of giving effect to the above. Catchwords: STRATA SCHEMES - s 126 Strata Schemes Management Act 2015 - Work approval order - limitations on making order - meaning of unreasonably refuse - relevant considerations - individual objectors personal views not determinative. Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) Civil and Administrative Tribunal Rules, 2014 (NSW) Strata Schemes Development Act 2015 (NSW) Strata Schemes Management Act 1996 (NSW) Strata Schemes Management Act 2015 (NSW) Strata Schemes Management Regulation 2016 (NSW) Cases Cited: Ainsworth v Albrecht [2016] HCA 40 Beale v Government Insurance Office of NSW (1997) 48 NSWLR 430 Colbert v MacDonald & Ors [2016] NSWSC 1291 Collins v Urban [2014] NSWCATAP 17 Project Blue Sky Inc & Ors v Australian Broadcasting Authority (1998) HCA 28; 194 CLR 355 Reen v Owners Corporation SP 300 [2008] NSWSC 1105 Owners Corporation Strata Plan 7596 v Risidore & Ors [2003] NSWSC 966 The Owners - Strata Plan No. 69140 v Drewe [2017] NSWSC 845 Yardy v Owners Corporation Strata Plan 57237 [2018] NSWCATCD 19 Texts Cited: Nil Category: Principal judgment Parties: Appellant: Gyongver Entre Respondent: The Owners - Strata Plan No. 17771 Representation: Appellant: D Robertson (Counsel) Respondent: J Crittenden (Solicitor)

Endre v The Owners - Strata Plan No. 17771

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Judgment (8 paragraphs)

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