Lenux v The Owners - Strata Plan No 88786 [2023] NSWCATCD 186 | Case summary

NCAT Consumer and Commercial|2023-11-22|Before: Blake AM

Introduction

Before considering this issue, I have set out the applicable legal principles. To the extent that it is not recorded as part of the factual background, I have then set out the evidence of the parties. I have finally set out the written submissions of the parties. I have not summarised the oral submissions of the parties as they substantially were repetitive and in reinforcement of their written submissions.

Section s 150 of the SSM Act

On 12 October 2020, the New South Wales Court of Appeal (Basten JA, Macfarlan JA and Fagan J) in separate judgments in Cooper v The Owners - Strata Plan No 58068 (2020) 103 NSWLR 160; [2020] NSWCA 250 (Cooper) upheld an appeal and found that a by-law was invalid under s 150(1) of the SSM Act.
In Coscuez International Pty Ltd v The Owners-Strata Plan No 46433 [2022] NSWCATAP 147 (Coscuez International) at [147]-[152], the Appeal Panel summarised the principles applicable to s 150(1) of the SSM Act as explained in Cooper: "[147] The leading decision on s 150 of the SSM Act is Cooper v The Owners-Strata Plan No 58068 [2020] NSWCA 250; (2020); 103 NSWLR 160 ('Cooper'). Cooper involved a by-law that prohibited the keeping of certain pets. Basten JA wrote the leading judgment. Macfarlan JA agreed with the orders of Basten JA, but added his own reasons which were "consistent" with the reasons of Basten JA and Fagan JA (para [75]). Fagan JA agreed with the orders of Basten JA, but gave his own reasons "briefly" (para [83]), which diverted from Basten JA on one issue. [148] Relevantly, the NSW Court of Appeal held: (1) A By-law that limits the property rights of Lot owners is only valid if it protects from adverse affection the use and enjoyment by other occupants of their own Lots, or the common property (paras [46], [81]). (2) Administrative convenience does not determine the validity of a By-law (paras [46]; [51]; [82]; [96]). (3) The regulation of activities and behaviour of persons living in close proximity under a strata scheme will involve evaluative judgements (paras [46]; [51]; [82]; [96]). [149] Basten JA held (at para [26]) that the phrase "harsh, unconscionable or oppressive": …is better understood as a triune, three words conveying a single criterion. It is towards the other end of a scale from the hendiadys "just and equitable". It invokes the application of values, the content of which derives no elucidation from reference to synonyms, nor from a supposed differentiation from other similar words such as "unjust". [150] Basten JA further held that: (1) The ""single criterion" of harsh, unconscionable or oppressive" is to be given its context within the provisions of the SSM Act; and requires consideration of contemporary community standards (at paras [25], [28]-[29]); (2) Section 139 of the SSM Act focusses upon the character of the particular by-law rather than the actual or constructive knowledge of any particular Lot owner (para [45]); (3) The power to make By-laws is not unconstrained. The power may only be exercised for proper purposes. The function and purpose of by-laws must be derived from the language of s 136 of the SSM Act and the structure of the SSM Act. A By-law that restricts the lawful use of a Lot on a basis that lacks a rational connection with the enjoyment of other Lots and common property is beyond the power to make by-laws under s 136. A by-law is to be "for the benefit of lot owners" within the terms of s 9 (2) of the SSM Act (paras [56]-[57]; [59]; [61]; [63]). [151] Fagan JA disagreed with Basten JA that "harsh, unconscionable or oppressive" was a "single criterion". Rather, Fagan JA was of the view that each of the words are to be considered separately and none disregarded (at para [90]). [152] Fagan JA did not regard the relevant by-law as "harsh" or "unconscionable". His Honour did not believe it was necessary to explore in detail the meaning of "harsh" or "unconscionable" under ss 139 or 150 of the SSM Act generally. However, Fagan JA found the by-law was "oppressive" because the "inherent qualities of the by-law and the way it impacts on owners" forbid "a common incident of property ownership without providing benefit to others". The number of Lot owners who voted for the adoption of the by-law is immaterial (at paras [90]-[94])."
In The Owners - Strata Plan No. 77109 v Gokani-Robins Pty Ltd [2023] NSWCATAP 82 (Gokani-Robins) at [23], [54]-[60], [71], the Appeal Panel summarised the principles applicable to s 150(1) of the SSM Act as explained in Cooper: "[23] The interplay of s 136, 139(1) (by-law must not be harsh unconscionable or oppressive) and s 150 was considered by the Court of Appeal in Cooper v The Owners - Strata Plan No 58068 [2020] NSWCA 250 (Cooper). Of s 150, Basten JA said at [19]: Finally with respect to the statutory scheme, it may be noted that s 150(1) has two limbs. The first arises where the Tribunal finds that a by-law is beyond power; the second, where a by-law is not in accordance with the requirement of s 139(1). Finally, given the limited nature of the appeal to the Appeal Panel, it may be noted that the precondition to a declaration of invalidity is the Tribunal's state of satisfaction as to the lack of power or breach of s 139(1)." "[54] As indicated above, and as made clear by the decision of the Court of Appeal in Cooper, the question of whether a by-law is harsh. unconscionable or oppressive is a separate question to invalidity arising in consequence of a by-law being beyond power by reason of s 136 of the SSMA. [55] The expression "harsh, unconscionable or oppressive" was considered by the Court of Appeal in Cooper. [56] Basten JA described these words as a triune. At [26] of Cooper His Honour said (citations omitted): Thirdly, the phrase is better understood as a triune, three words conveying a single criterion. It is towards the other end of a scale from the hendiadys "just and equitable". It invokes the application of values, the content of which derives no elucidation from reference to synonyms, nor from a supposed differentiation from other similar words such as "unjust". [57] His Honour then said at [45] that s 139 "focuses on the character of the particular by-law …". [58] At [78] of Cooper, Macfarlan JA said that a by-law may be harsh, unconscionable or oppressive where it imposes a restriction that "could not on any rational view enhance or be needed to preserve the other lot owners' enjoyment of their lots and the scheme common property". In doing so, His Honour, at [75] endorsed the reasons of Basten JA and Fagan J. [59] Fagan J separately considered the operation of each of the terms harsh, unconscionable or oppressive, His Honour noting the terms are "grouped disjunctively" in the context of a "composite expression". His Honour concluded that the requirement that a by-law not be "oppressive" was the provision contravened by the by-law regulating the keeping of animals in Cooper: at [90] and following. In this regard, His Honour pointed to the by-law being oppressive "because it prohibited an aspect of the use of lots in the strata scheme that is an ordinary incident of ownership of real property, namely, keeping a pet animal, and the prohibition provides no material benefit to other occupiers of the building in the use or enjoyment of their lots or of the common property": at [94]. [60] His Honour found it unnecessary to consider "what characteristics or operation of any by-law might engage [the] statutory description" of harsh: at [91] and was unclear as to the expression "unconscionable" and its operation in connection with a by-law: at [92]." "[71] In this regard, in deciding whether a by-law is harsh, unconscionable or oppressive, the Tribunal is required to look at its terms. The Tribunal's role is not to rewrite the by-law and the fact that "it may in some circumstances operate fairly cannot save it from invalidity": Cooper per Macfarlan JA at [81]."

The operation of a development consent in rem

In Wingecarribee Shire Council v Concrite Quarries Pty Ltd [2001] NSWLEC 97; (2001) 114 LGERA 82 (Concrite Quarries) at [21]-[23], Lloyd J set out the principles with respect to the operation of a development consent: [21] It is settled law that the development consent of 1993 upon which the respondent relies operates in rem. The nature of a determination which operates in rem is explained in Spencer Bower and Turner: Res Judicata, 2nd ed (1969) at 213: [A decision in rem] is one which declares, defines, or otherwise determines the status of a person, or of a thing, that is to say, the jural relation of the person, or thing, to the world generally, and therefore is conclusive for, or against, everybody, as distinct from those decisions which purport to determine the jural relation of the parties only to one another, and their personal rights and equities inter se, and which, therefore, are commonly termed decisions in personam. [22] In House of Peace v Bankstown City Council (2000) 48 NSWLR 498, Mason P (with whom Stein and Giles JJA agreed) said (at 504): [22] This dispute arises in a context, planning law. Several matters follow. Planning law "is concerned with the use of land - not with the identity of the user": per Cripps J in Moslem Alawy Society Ltd v Canterbury Municipal Council (1983) 51 LGRA 79 at 82. ... [23] Emphasis upon the use as distinct from the person using the land reminds that a consent operates in rem. In an oft-cited dictum, Else-Mitchell J described a development consent as "not personal to the applicant but enur [ing] for the benefit of subsequent owners and occupiers, and in some respects... equivalent to a document of title": Ryde Municipal Council v Royal Ryde Homes (1970) 19 LGRA 321 at 324. In Eaton & Sons Pty Ltd v Warringah Shire Council (1972) 129 CLR 270 at 293, Stephen J described a consent as "essentially impersonal in the sense that it does not concern itself with and is not limited to the applicant but is a consent to the world at large in relation to the land which is its subject. Once granted it makes lawful, in a town planning context, what would otherwise be unlawful but does so by reference to the acts done and not to the identity of the actor". [23] In Sydney Serviced Apartments Pty Ltd v North Sydney Municipal Council [No 2] (1993) 78 LGERA 404, Handley JA (with whom Cripps and Clarke JJA agreed) said (at 407): "As a general rule development consents, being public documents operating in rem for the benefit of successors in title, should be construed without reference to extrinsic evidence other than to identify a thing or place referred to in it: see Leichhardt Municipal Council v Terminals Pty Ltd (1970) 21 LGRA 44 at 50; see also Wyre Forest District Council v Secretary of State for Environment [[1990] 2 AC 357] (at 370-371). However reference may properly be made to documents incorporated expressly or by implication into the consent."

Issue estoppel

In Bauer v Farm Cove Investments Pty Ltd [2022] NSWCATAP 14 (Bauer) at [58]-[59], the Appeal Panel expounded the common law principle of estoppel that operates to preclude the raising of an issue of fact or law (or the assertion of a right or obligation) that applies to decisions of the Tribunal: "[58] The Appeal Panel has recognised that the common law principle of estoppel that operates to preclude the raising of an issue of fact or law (or the assertion of a right or obligation) applies, at least, to decisions of the Tribunal of the nature involved in these proceedings; see, for example, Ravenscroft v Skinner [2016] NSWCATAP 107; Mae v Ho and Ors [2021] NSWCATAP 5 at [72]. [59] In the Ravenscroft decision the Appeal Panel set out the various forms of such principle, as expounded by the plurality of the High Court in Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28; 256 CLR 507, as follows: 8. The High Court has recently outlined the nature of issue estoppel and how it works in practice: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [21] and [22]. The following discussion summarises the principles the High Court explained in that decision. 9. Issue estoppel in relation to judicial determinations is a common law doctrine informed by considerations of finality and fairness. It operates "as a rule of law, to preclude the assertion of a right or obligation or the raising of an issue of fact or law": Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [21] citing Jackson v Goldsmith (1950) 81 CLR 446 at 446. The High Court has identified three forms of estoppel: cause of action estoppel, issue estoppel and Anshun estoppel. 10. Cause of action estoppel prevents a party from asserting in a subsequent proceeding a claim to a right or obligation which was asserted in earlier proceedings between the same parties and in relation to which a final judgment or decision was made. That doctrine applies to the facts of this case because the second proceedings were based on the same claim or cause of action that Mr Ravenscroft made in the first proceedings. That claim was that when supplying the boat, Skinner Marine engaged in deceptive or misleading conduct in breach of s 18 of the ACL (NSW) or that Skinner Marine had breached the consumer guarantee in s 54 of the ACL (NSW). The Tribunal determined those claims in the first proceedings and awarded Mr Ravenscroft damages. 11. The Tribunal relied on the second form of estoppel, issue estoppel, to dismiss the second proceedings. That doctrine operates "to preclude the raising in a subsequent proceeding of an ultimate issue of fact or law which was necessarily resolved as a step in reaching the determination" made in the first proceedings: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [22]. It operates regardless of whether the cause of action is the same in each proceeding. In our view, the second proceedings did not just raise certain issues of fact and law that had been resolved in the first proceedings; the cause of action was the same. 12. Alternatively, the Tribunal relied on the third form of estoppel, Anshun estoppel, to dismiss the second proceedings. The High Court has described that form of estoppel as an extension of the first and second forms: Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [22]. It operates to preclude the assertion of a claim or the raising of an issue of fact or law "if that claim or issue was so connected with the subject matter of the first proceeding as to have made it unreasonable in the context of that first proceeding for the claim not to have been made or the issue not to have been raised in that proceeding:" Tomlinson v Ramsey Food Processing Pty Ltd [2015] HCA 28 at [22]. The second proceedings were not just connected with the subject matter of the first proceeding; the cause of action was the same."

Mr Lenux

On 31 October 2020, Mr Martins sent an email to Mr Culbi and two other members of staff of Jamesons, and copied to the members of the strata committee of OSP88786 (the 31 October 2020 Martins email) which relevantly provided: "… I am sending this e-mail to both of you, copying the committee because we have a serious matter to be addressed immediately. UNIT 702 has enclosed their mezzanine (see photos attached) and we can't authorised it under any circumstances due to the below: 1- By enclosing the mezzanine the building effective height will reach +25m which automatically obligate us to comply with several BCA clauses such as D1.2, E1.5 & Specification E1.5, E1.8, E2.2a and E3.4. 2- BCA clause E1.5 states that sprinklers are required throughout the whole building (installed in every single level) 3- In addition of not being compliance (Fire Safety) and the high cost to install sprinklers (new system) in every single level, we have now a huge Fire-Safety liability which may cost us millions of dollars in case of fire! insurance. …"
On 20 February 2023, Mr Culbi sent his email to Mr Lenux which relevantly provided: "… I confirm that on 17 February 2023, Mr Colin Cunio, Chantel Contarino, yourself and I appeared before Member Smith in the Tribunal for the hearing of Mr Lenux's application for the Tribunal to make the by-law rejected by the owners corporation concerning the enclosure of his mezzanine and the creation of a new room. Prior to the commencement of the hearing Mr Cunio confirmed with you that the owners corporation would be seeking leave to appear for the owners corporation and noting you would appear in the event leave was not granted. Mr Cunio also confirmed that the owners corporation would be relying on the written submissions I previously prepared and filed and served. 10 minutes before the commencement of the hearing in the meeting room we discussed the matter and dispute to which you indicated that you wanted to give the owners corporation a proposal to remove the glazing from the mezzanine enclosure and leave the enclosure below the glazing on the bottom half of the enclosure to which you believe that this would not affect the height of the building and would not render the budling non-compliant. We indicated to you that this belief would have to be supported by a BOA expert before the owners corporation would consider another by-law allowing him to make and then keep the changes. This would also apply to the creation of a new room on the lower level of his lot. It was suggested that: 1. That your application before the Tribunal be dismissed with no order as to costs; and, 2. The order made by the Tribunal on 1 November 2022 to remove the unauthorised be extended by four months. 3. In the intervening period, you will obtain the relevant expert report(s) and present a new by-law for the owners corporation to consider granting him a special privilege to keep the works, subject to conditions. 4. The owners corporation convenes a general meeting to consider the by-law. 5. If the owners corporation passes the by-law, the dispute will be at an end. 6. If the owners corporation does not pass the by-law, you are then free to make any other or further application to the Tribunal to determine the dispute. This was a sensible suggestion and one agreed to by all parties. The Tribunal accordingly made orders dismissing Mr Lenux's application with no order as to costs and extended the removal order by four months to 1 July 2023. Following on we look forward in receiving such information for the owners corporations consideration. …"
On 21 March 2023, Mr Lenux sent his email to Mr Culbi (the 21 March 2023 Lenux email) which relevantly attached: 1. the report of Credwell Consulting Pty Ltd dated 17 March 2023 to Mr Lenux (the 17 March 2023 Credwell report) which states that it was prepared by Mudi (Eddie) Liu (Mr Liu), Building Inspector, and reviewed by Christopher Ward (Mr Ward), Associate Building Surveyor - Unrestricted, which relevantly 1. provided: "Reference is made to our engagement to provide specific Building Code of Australia (BCA) advice in relation to the internal alteration work at Level 7 & Level 8 (upper storey) within Unit 702/5 [address omitted] Mascot NSW 2020 and provide advice in relation to the potential effect if the rise in storeys and effective height has been altered. The building works include the following components: • Erection of internal partition wall to create a study room on Level 7 within Unit 702/5 [address omitted] Mascot NSW 2020; and • Erection of balustrade consisting of light weight construction at 1,100mm height only along the existing metal balustrade to protect occupants from falling on the upper storey within Unit 702/5 [address omitted] Mascot NSW 2020. It is noted that the client has provided confirmation via email correspondence dated 13 March 2023 that the upper storey is no longer enclosed by glazing. … The upper storey within Unit 702 contains an existing enclosed sanitary compartment, arid therefore is a storey in lieu of a mezzanine by definition of the BCA. As a result, the upper storey within Unit 702 contributes to the rise in storey of the base building. It is determined that the internal works noted above do not amend the existing effective height and rise in storeys of the base building. This state merit includes assessment of the internal works noted above against BCA Clause C1.2 arid the effective height as defined under Schedule 3 Definitions of NCC 2019 Amendment 1 only and does not constitute a building approval or certificate of compliance for the internal works noted above. …" 1. contained a plan of the modified renovation works which depicted a room without any dimensions identified as "Study" enclosed by two walls and a doorway within the kitchen and living areas, and a solid balustrade on the mezzanine level; 1. the modified renovation works by-law which relevantly provided: "By-Law - Exclusive Use & Work to Lot 28 SP 88786 PART 1 INTRODUCTION … The Owner for the time being of Lot 28 in Strata Plan 88786 also known as Unit 702 / 5 [address omitted] Mascot NSW 2020 is permitted and entitled to keep the Works carried out to the Lot and common property as defined herein subject to the Conditions hereof. PART 2 DEFINITION AND INTERPRETATION 1. In this By-Law, unless otherwise indicated by the context: … h. Works means the works specified in Annexure A to this By-Law. … 9. The Works were he carried out at the cost of the Owner and shall remain the property of the Owner. … Annexure A Works Level 8 Bedroom a. Installation of a plasterboard type partition wall (1100mm high) along the existing handrail on the level 8 bedroom ; and b. Painting the plasterboard type partition wall with two coats of semi-gloss to finish. Study a. Installation of a plasterboard type partition wall on the main floor of the lot; and b. Painting of the plasterboard type partition wall."
On 27 March 2023, Mr Cunio sent his email to Mr Lenux which relevantly provided: "… We are instructed to respond to your email below on behalf of the owners corporation. Our client has considered the report you have provided from Credwell, and cannot accept its findings due to its inaccuracies, nor does it address our client's concerns. For example, the claim that the upper storey of your lot is no longer enclosed by glazing is inaccurate. Further, we note that the building was approved with a balustrade at 1,000mm in height for all lots on level 7 of the building, and not 1,100mm as noted in the report. Finally, the report notes the creation of a "study room" on the lower level of your lot, when in fact, it is another bedroom, and in any event, our client's issue with this is not related to the building height issue, and further, the author of the report noted that the report did not constitute any certificate of compliance for these internal works. These examples are not exhaustive. In light of the above, our client will require you to comply with the orders of the Tribunal made in SC 22/21291 by 1 July 2023, as ordered by the Tribunal. Our client will be placing your motion to make the by-law on the agenda of its next general meeting. …"
On 28 March 2023, Mr Lenux sent his email to Mr Cunio which relevantly provided: "… 4. Credwell was nominated by Jameson Strata for this exercise. I believe Credwell is a licensed expert with accuracy and expertise. … 5. Importantly, OC please pay attention to Credwell's assessment below: "The upper storey within Unit 702 contains an existing enclosed sanitary compartment and therefore is a storey in lieu of a mezzanine by definition of the BOA. As a result, the upper storey within Unit 702 contributes to the rise in storey of the base building." OC needs to read, digest and understand what those words meant. Neither my renovation work impacts the effective height, nor it impacts the number of storey. It means the Existing mezzanine level is already counted as a storey regardless of my renovation. Again, OC needs to seek current Expert Advice in relevant to my Unit and My renovation to challenge Credwell's assessment. Any new outcome, please keep me updated. …"
On 17 July 2023, Mr Lenux sent his email to Jamesons and Mr Culbi which relevantly provided: "… My lot owner's interests and rights would be significantly infringed and deprived of, oppose your proposed special resolution. I provide a revised renovation proposal and amended by law to Owners Corporation on 21 March and was advised by Cohn Cunio on 29 March that "Our client will be placing your motion to make the by-law on the agenda of its next general meeting." Your proposed resolution prior to the Next General meeting is your plotted attempt to manipulate by law in order to deny my renovation proposal and to grasp at straws in the pending proceeding against Owner Corporation NCAT case no SC 23/25727 lodged months ago. Your Resolution's reasoning is unsustained, unfair, and against laws and purely imagined by Douglas Martin, in the name of "Owners Corporation". My objection is based on the following findings: Mezzanine level in Jots 27, 28, 29 and 30 not to be enclosed "Owners Corporation will be in breach of the condition of development consent for the construction of the building and the Owners Corporation will need to install a sprinkler system in the building." Development Consent by Council for Construction of the building is issued to Developer CE Concept, not to Owners Corporation. Installing Sprinkler system was required by Council in its DA consent. CE Concept violated that by not installing the system. Installing Sprinkler system is beneficial to all lot owners, increasing fire safety and value of the building that should have been provided by Developer. It is unacceptable that Douglas Martin attempts to protect Developer's interest by prohibiting Level 7 units lawful right. Douglas Martin appears to involve his complicity with Developer in settling the building defect claim in 2019 by sacrificing all lot owners' lawful rights and interests. My previous revised renovation proposaI was not impacting the existing effective building height and it was supported by Credwell Report in March. Approval must be obtained before enclosing any part of a lot This part of the resolution significantly increases the burden of lot owner to overcome excessive barriers and difficulties that can be by Owners Corporation. It seriously impacts lot owner's right in terms of minor work and major work and common property by law right granted by Strata Scheme Management Act 2015. The formality of written vote only for such a significant matter is nothing but manipulation of the voting system and abuse by Strata committee's majority control that may lead to an under-table dealing. …"

OSP88786

In the 4 June 2018 Dix report, Mr Dix relevantly expressed the following opinions as to the effective height of the building: "The following information has been located in relation to determining the "Effective Height" of the subject premises at the time the DA and Construction Certificate were issued. The "Effective Height" is determined to be 23.5m when calculated as follows: Level7- R.L -31.60 Basement Level la - R.L. - 8.10 Effective Height = 23.50 m The uppermost level is determined not to be a "storey" when taking into consideration the requirements of Effective Height, Mezzanine, Storey, and Calculation of rise in storeys. Subsequently that level (mezzanine level) was not required to be included as a storey or in the rise in storeys that determines the Effective Height, and it was resolved that the "Effective Height" was 23.50 m. Furthermore the overall area of the upper level (mezzanine) is less than 200 m2 and not more than 1/3 of the floor area of the room, whichever is the lesser which satisfies C1.2 (d) (i) and (ii). …"
In the 7 March 2019 Quaglia report, Mr Quaglia, who was provided with the 4 June 2018 Dix report, relevantly expressed the following opinions: "Level 7 units have not had the voids filled in. Therefore the uppermost bedrooms of the level 7 units can still be considered to be mezzanines and Level 7 can be considered the upmost storey. Architectural drawings indicate that the floor heights of level 7 and Basement 1a are 31.6m and 8.05m respectively. This results in an effective height of 23.55 m which is in line with the conclusions of the Effective Height report issued by Building Code Assistance."

Mr Lenux

In his submissions for the 2023/00392816 proceedings dated 20 August 2023, Mr Lenux sought an order for costs in addition to the relief sought in strata and community schemes application and relevantly made the following submissions: "The common properties the the renovation work involves / affects are a) Timber flooring at the edge of level 8 (mezzanine floor) towards Void b) Wall linings and ceiling lining of Level 8 c) Wall lining and ceiling lining of Level 7 d) Timber Flooring of Level 7. Those common properties are exclusively used and enjoyed by Applicant only and not used or enjoyed by any other lot owners in this strata scheme. Proposed renovation work has the following features • Within Applicant's own lot • Do not change external appearance of the building • Do not change floor space • Do not change floor height or level • Do not fill change or impact the Void between Level 7 and Level 8 • Do not enclose the Level 8 (mezzanine floor) • Do not involve water proofing • Do not interfere with other lot owners' peaceful enjoyment of common property or their own lots • Do not involve structural changes … 5. Owners Corporiaition's Unreasonable refusal to common property rights by law … I. Applicant removed the renovation work by 1 July. m. Owners Corporation continues to refuse the common property right by law without giving reasons as this document was written."
In his submissions for the 2023/00383969 proceedings dated 5 September 2023, Mr Lenux relevantly made the following submissions: "10. Lawful Rights and Interests: The resolution of by law change would greatly hinder the affected lot owners lawful rights and interests. By prohibiting legitimate renovations within their own private airspaces, Owners Corporation is infringing upon lot owners' private property rights. Strata Scheme Management Act 2015 provides lot owners with rights to conduct minor and major works common property by law rights subject to certain conditions. Owners Corporation cannot unreasonably withhold their consent. 11. Purpose of the by-law change was misconceived. a. In its "Purpose of this by-law", it is written that "If the effective height of the building exceeds 25 meters, the Owners Corporation will be in breach of the conditions of development consent for the construction of the building and the Owners Corporation will need to install a sprinkler system in the building." b. Development Consent was issued by Bayside Council to the building developer in 2013. The building was completed and handed over to Owners Corporation in 2016. Owners corporation bears no obligation to the developer to keep the building to its original design. c. Development consent issued by Bayside Council determined the building effective height is higher than 25 metres, therefore the consent required that building to be installed with a fire sprinkler system however the developer did not install. d. If Owners Corporation is to obey the development consent, then Owners Corporation should install the fire sprinkler system regardless. Owners Corporation's responsibility to obey the development consent would not be relieved by prohibiting or restricting renovation works in those affected lots. 12. Reasoning of the by-law change was merely a personal assertion by committee chairperson Douglas Martins who extracts $10,000 for his "service fee" a year out of owners' budget for the last 5 years. a. The reasoning is not supported by an independent trustworthy industry professional. The reports that Owners Corporation has referred to in the past or would refer to were prepared by the contractor paid by the developer in 2018 for the purpose of defending the developer against Owners Corporation's defect claim. Those report writers' positions were biased towards the developer. b. Even Though, the reports had zero wording to confirm or suggest such prohibition or restrictions proposed by this by law change and or such reasoning of the by law change. 13. Unfairness: This change unfairly targets only the four units on Level 7, while disregarding the interests and rights of our lot owners. It is discriminatory and does not apply universally to all lot units. 14. Lot owners Difficulty to sell and gain bank valuation. Prospective buyers and banks will view this by law change negatively, resulting in difficulty to sell and gain bank's fair valuations in future. The original by-law was exhibited and attached to the original purchase contract of the affected lots. By imposing covenants created by this bylaw change reduces the lot value of what the lot owners have paid for. 15. Manipulation. OC has manipulated the Meeting by setting it up as a written vote without allowing for full discussions or disclosing the substantiation of their reasoning. 16. Unlawful By-Law change: The change contradicts Sections 148 and 150 of the Strata Scheme Management Act 2015, as it is unreasonable, harsh, unconscionable, and oppressive. a. Douglas Martin appeared to be the mastermind of the by-law change. Instead of speaking or acting for the interests of lot owners, he appeared to have formed an undisclosable relationship with building's developer Central Element (or CE Concept) for him to in fact serve the developer to keep the building to its original design by prohibiting or restricting the affected lot owners law empowered rights of renovation. b. His behaviors have formed a pattern of unreasonableness, harshness, unconscionableness and oppressiveness. He has showcased his misuse of majority power to deprive the right of minority pirates. c. Douglas Martin has demonstrated his abuse of his power by disabling lift access to Kevin's lot in January 2021 in his attempt to prevent my lot being rented, without notice given in advance, without explanation during, without any apology after. d. Manipulating this recent special resolution of the by-law change is another episode of his misuse of power and unleashing his personal dissent, driven by his spite only because he was not satisfied that Kevin's renovation work was not dismantled as soon as he wanted."

OSP88786

In its submissions for the 2023/00392816 proceedings, OSP88786 relevantly made the following submissions: "… 9. On 26 June 2023, the applicant removed these works, pursuant to the orders made by the Tribunal in SC 22/21291 on 1 November 2022. Accordingly, there are no changes to the common property presently in existence that could be the subject of the proposed common property rights by-law. Therefore, the application should be dismissed on this ground alone, as the Tribunal does not have the power to make the order sought by the applicant. 10. If the submission in the previous paragraph is not accepted by the Tribunal, the owners corporation submits that it reasonably refused to make the by-law for the following reasons: (a) The works are not described with a sufficient level of specificity. For example, the level 8 bedroom works do not describe the structure to which the partition is attached. (b) clause 4 of the by-law does not require the owner to provide the documents to the owners corporation - the clause should have provided for the owner to be required to submit the documents to the owners corporation by a certain date. (c) The by-law does not require the provision of any requisite certificate under the Environmental Planning and Assessment Act 1979 for the works. That may have been required given the enclosure of the level 8 bedroom and making a new room on level 7. (d) The by-law does not require the provision of any certificates of insurance or contractor details for the works performed. There is no doubt the works were regulated by the Home Building Act 1989, though insurance may not have been required. (e) The indemnity only relates to a breach of the by-law and not, for example, any costs incurred by the owners corporation as a result of the works (e.g., complying with a development control order to remove the works issued by the local council). (f) The findings in the Credwell report obtained by the applicant should not be accepted by the Tribunal due to inaccuracies in the report, and a failure to address the concerns of the owners corporation. For example, the building was approved with a balustrade at 1,000mm in height for all lots on level 7 of the building, and not 1,100mm as noted in the report. Further, the report notes the creation of a "study room" on the lower level of the applicant's lot, when in fact, it was another bedroom, and in any event, the owners corporation's issue was not related to the building height issue, and further, the author of the report noted that the report did not constitute any certificate of compliance for these internal works. (g) The by-law could not have cured the adverse findings made by the Tribunal at [105] of the judgment in SC 22/21291, reproduced below … … Disposal 11. The application should be dismissed with no order as to costs."
In its submissions for the 2023/00383969 proceedings, OSP88786 relevantly made the following submissions: "… 9. The applicant has detailed his objections to the making of the by-law in an email to the owners corporation on 17 July 2023, and paragraphs 10 to 16 of his submissions dated 5 September 2023. 10. Each objection of the application is reproduced in the table below, together with the response of the owners corporation. The by-law is a "plotted attempt to manipulate by law in order to deny my renovation proposal and to grasp at straws in the pending proceedings against the Owner Corporation NCAT case no SC 23/25727 lodged months ago." 11. The reference to the renovation proposal is a reference to the common property rights by-law proposed by the applicant and not made by the owners corporation in a general meeting held on 17 October 2022. 12. The applicant filed SC 23/25727 seeking an order pursuant to Section 149 of the Strata Schemes Management Act 2015 for the Tribunal to prescribe the making of the common property right by-law the applicant proposed and was not made by the owners corporation in a general meeting held on 17 October 2022. Those proceedings are listed for hearing together with this application on 22 November 2023. 13. The by-law that was made by the owners corporation on 1 August 2023 was not an attempt to deny the applicant's proposed by-law the subject of SC 23/25727, which was refused by the owners corporation almost 12 months prior to the owners corporation making its by-law on 1 August 2023. The purpose of the by-law, being that if "the effective height of the building exceeds 25 meters, the Owners Corporation will be in breach of the conditions of development consent for the construction of the building and the Owners Corporation will need to install a sprinkler system in the building" is incorrect. 14. The development consent in relation to the construction of the building was issued to the developer. It continues to apply to the owners corporation, being the successor in title to the developer. Accordingly, the applicant's submission at [11(b)] that the "Owners corporation bears no obligation to the developer to keep the building to its original design" is misconceived and contradicts his submissions at [11(c) and (d)]. 15. The applicant has provided an extract of an undated modification of development consent for the construction of the building, issued by City of Botany Bay Council, and appears on pages 12 to 14 of his submissions. The document is incomplete (note the 36 pages the document was to comprise, though only 3 pages have been provided). The applicant submits at [11(b)] that the consent issued by Council "determined the building effective height is higher than 25 metres, therefore the consent required that building to be installed with a fire sprinkler system however the developer did not install." That submission is misconceived. The "Advisory Conditions of Consent" on pages 14 of the applicant's submissions required the developer to install a sprinkler system "should the building design remain unchanged" (our emphasis). 16. Peter Dix provided a report to the developer of the scheme on 4June 2018, concerning the effective height of the building, being less than 25 metres, which was accepted by the certifying authority when issuing a construction certificate. This is also supported by the expert engaged by the developer (Stephen Grubits, dated 7 March 2019) in response to an allegation made by the owners corporation concerning building height. 17. The applicant's submission that the effective height of the building is more than 25 metres or that sprinklers need to be installed is misconceived. However, should any of the mezzanines of the lots on the top floor of the building be enclosed, it will raise the effective height of the building to more than 25 metres and sprinklers will need to be installed. Reasoning of the by-law change was merely a personal assertion by committee chairperson Douglas Martins who extracts $10,000 for his "service fee" a year out of owners' budget for the last 5 years 18. This submission is outrageous and irrelevant to the determination of the application. The fact that the chairperson receives a payment from the owners corporation each year is of no moment. In any event payments have been made in accordance with Section 46 of the Act. An example of a motion authorising such a payment is motion 10 made by the owners corporation in its annual general meeting held on 17 October 2022. 19. The applicant also submits that the reasoning of the owners corporation making the by-law, is "not supported by an independent trustworthy industry professional". Such a submission is misconceived. The opinions of the experts referred to above are independent and professional, even though they may have been prepared at the request the developer. The applicant has not provided any evidence to support his position, event though he bears the onus of proving his case. Unfairness: This change unfairly targets only the four units on Level 7, while disregarding the interests and rights of our lot owners. It is discriminatory and does not apply universally to all lot units 20. There is no requirement in the Act for a by-law of the type the subject of this dispute to "apply universally to all lot units". 21. The by-law partly relates to all lots on level 7 of the building, because only these lots have mezzanine levels, and if the mezzanines are enclosed, it will raise the effective height of the building to a level requiring the installation of a sprinkler system by the owners corporation. It is entirely relevant for that part of the by-law relating to the enclosure of mezzanine levels, to apply to the level 7 lots. 22. The by-law applies to all lots in the scheme in relation to the enclosure of any part of the lot. 23. The applicant's submission is misconceived. Lot owners Difficulty to sell and gain bank valuation. Prospective buyers and banks will view this by law change negatively, resulting in difficulty to sell and gain bank's fair valuations in future. The original bylaw was exhibited and attached to the original purchase contract of the affected lots. By imposing covenants created by this bylaw change reduces the lot value of what the lot owners have paid for. 24. There is simply no evidence to support this submission. It is fanciful and lacking in substance. Manipulation. OC has manipulated the Meeting by setting it up as a written vote without allowing for full discussions or disclosing the substantiation of their reasoning. 25. The applicant alleges that the general meeting held by the owners corporation on 1 August 2023 was manipulated by the owners corporation in setting up the meeting by written vote. 26. The submission is misconceived as the notice of the meeting (on pages 5 to 7 of the applicant's submissions) clearly provides for the meeting to be held by written vote and provides a physical address and time for the meeting. 27. The applicant did not attend the meeting in person or by proxy or at all and did not provide any written vote in relation to any of the motions, as noted in the minutes of the meeting held on 1 August 2023. Unlawful By-Law change: The change contradicts Sections 148 and 150 of the Strata Scheme Management Act 2015, as it is unreasonable, harsh, unconscionable, and oppressive. … 29. The power of the Tribunal under Section 148 is a discretionary one to nullify changes made to the by-law, which may only be exercised if, having regard to the interests of the owners, the change should not have been made. 30. There is no dispute that the applicant, being an owner of a lot, was entitled to vote on the addition of special by-law 1 at the general meeting held on 1 August 2023. 31. In relation to the interest of all owners of lots in the strata scheme in the use and enjoyment of their lots or the common property, the owners corporation submits: (a) The applicant has adduced no evidence as to any adverse effect of the by-law on his use and enjoyment of his lot or the common property, let alone all owners of lots in the strata scheme. (b) Special by-law 1: (i) Prohibits the owners of the level 7 lots form enclosing the mezzanine level of their lots, to ensure that the building does not breach the effective height threshold that will require the owners corporation to install a sprinkler system. By imposing such a prohibition, the interests of all owners of lots in the use and enjoyment of their lots or the common property will not be adversely affected, and the present position preserved. (ii) Prohibits the enclosure of any part of a lot, unless the owner makes an application to the owners corporation for approval and the owners corporation approves the application. This qualified prohibition and the process for seeking approval is both lawful, and reasonable. (c) Of the top floor lots in the building, the owner of lot 27 voted in favour of special by-law 1, while the applicant (the owner of lot 28) and the owners of lots 29 and 30 did not attend the meeting or exercise any vote in relation to the motion to make special by-law 1. 32. In the event the Tribunal does not agree with the submissions of the owners corporation, and finds that the applicant has made out the necessary elements in Section 148, as a matter of discretion, the fact that the applicant did not attend the general meeting where special by-law 1 was made, or exercise any vote in relation to the motion to make the by-law, should be sufficient to dismiss this aspect of the application. … 35. There is no dispute that the applicant, being an owner of a lot, was entitled to vote on the addition of special by-law 1 at the general meeting held on 1 August 2023 36. The applicant does not make any submissions of substance in relation to the elements required to be proven, or which limb under section 150 of the Act he is prosecuting. 37. In relation to the first limb, Special by law 1 is entirely consistent with the power under Section 136 (1) of the Act for the owners corporation to make a by-law in relation to the management, administration, control, use or enjoyment of the lots or the common property and lots of a strata scheme. operation of a strata scheme. The power to make by-laws pursuant to Section 136 of the Act is wide. 38. In relation to the second limb, the making of special by-law 1, which limits the property rights of the level 7 lot owners by the imposition of a prohibition, arguably protects other owners and occupants in the use and enjoyment of their owner lots and the common property, as it will avoid the inconvenience and expense of the installation of a sprinkler system in the event any one of the four level 7 lots enclose their mezzanine level. Accordingly, the by-law cannot be held to be harsh, unconscionable, or oppressive. Additional submissions 39. The submissions made in relation to the chairperson of the owners corporation are outrageous, not supported by any evidence, unequivocally refuted, and importantly, irrelevant to the determination of this application. 40. The second order sought in these proceedings, being an "Order to disregard or invalidate the by law change as Respondent (OC's defence in the pending hearing of Case no SC 23/25727)" is misconceived. Disposal 41. The application should be dismissed with no order as to costs."

The alleged actions of Mr Martins

I do not accept the submissions of Mr Lenux relating to Mr Martins as they are unsupported by any evidence. Contrary to the 28 June 2023 orders and the 9 August 2023 orders, Mr Lenux did not provide any evidence in the form of a statement, statutory declaration, or affidavit. It follows that I have made no findings against Mr Martins.

Special by-law 1

Having regard to the principles in Concrite Quarries at [21]-[23], I am satisfied that OSP88786 as the successor in title to CE in relation to the common property of scheme 88786 is bound by the development consent. While I accept the submission of Mr Lenux that OSP88786 bears no obligation to CE to keep the building to its original design, this submission does not address the critical issue of whether OSP88786 is bound by the development consent.
Having regard to the principles in Bauer at [58]-[59], I am satisfied that Mr Lenux is precluded by the finding in the 1 November 2022 decision at [105] from raising the issue that the development consent does not prohibit lot 28 from having more two bedrooms.
I am satisfied that paragraph 1(iv) of the advisory conditions of consent of the development consent on its proper construction requires a sprinkler system throughout the building if its effective height exceeds 25 metres.
I accept the opinions of Mr Dix in the 4 June 2018 Dix report and Mr Quaglia in the 7 March 2019 Quaglia report that the effective height of the building as constructed is 23.55 metres. I do not accept the contrary opinion of Messrs Liu and Ward in the 17 March 2023 Credwell report for the following reasons: 1. they are incorrect that the upper storey of lot 28 only contains a bathroom. It also has a bedroom; 2. they have not addressed the contrary opinions of Messrs Dix and Quaglia.
I am satisfied that the purpose of special by-law 1 as expressed in paragraph 1 raises legitimate matters of concern for the management, administration, control, use or enjoyment of the common property and lots of scheme 88786. I am also satisfied as to the financial implications of OSP88786 having to instal a sprinkler system throughout the building as expressed by Mr Martins in the 31 October 2020 Martins email. I am further satisfied that the effect of paragraph 3 of special by-law 1 is to prevent a breach of the development consent and avoid the necessity of the installation of a sprinkler system throughout the building.
In the light of these findings, I am not satisfied that special by-law 1 imposes a restriction that could not on any rational view enhance or be needed to preserve the other lot owners' enjoyment of their lots and the scheme common property. I do not accept the submission of Mr Lenux that special by-law 1 unfairly targets only the four lots on level 7 of the building, while disregarding the interests and rights of lot owners, and is discriminatory.
I do not accept the submissions of Mr Lenux relating to special by-law 1 reducing the value, or creating a difficulty in the sale or the procurement of a bank valuation, of any lots including lot 28, or that OSP88786 manipulated the 1 August 2023 EGM by providing for pre meeting voting. These submissions were unsupported by any evidence.
Having regard to the principles in Coscuez International at [147]-[152] and Gokani-Robins at [23], [54]-[60], [71], it follows that I am not satisfied that: 1. special by-law 1 should not have been made by OSP88786 within s 148(2) of the SSM Act; 2. OSP88786 did not have power to make special by-law within s 150(1) of the SSM Act for the following reasons: 1. it relates to the management, administration, control, use or enjoyment of the lots or the common property and lots of scheme 88786 within s 136(1) of the SSM Act; 2. it is not inconsistent with the SSM Act (because it is not contrary to any of the restrictions on by-laws in s 139 of the SSM Act) or any other Act or law within s 136(2) of the SSM Act; 1. special by-law 1 is not harsh, unconscionable or oppressive within s 150(1) of the SSM Act on the interpretation of either Basten JA or Fagan J in Cooper.
It follows that Mr Lenux is not entitled to an order under s 148(1)(c) of the SSM Act that special by-law 1 be repealed or an order under s 150(1) of the SSM Act declaring special by-law 1 to be invalid, and that the 2023/00383969 proceedings should be dismissed.

The modified renovation works by-law

It is not entirely clear whether the 2023/00392816 proceedings relate to the original renovation works by-law or the modified renovation works by-law. Part of this lack of clarity stems from the fact that paragraph 9 of the modified renovation works by-law on its ordinary construction conveys the meaning that the modified renovation works had been carried out. As at time of the 21 March 2023 Lenux email when the modified renovation works by-law was provided to OSP88786 the original renovation works had been carried out and were still in place.
As OSP88786 refused to make the modified renovation works by-law at the 1 August 2023 EGM, I have treated the 2023/00392816 proceedings as relating to this refusal.
I do not accept that the prohibition in the development consent of lot 28 having more two bedrooms can be avoided by creating an additional enclosed room on the lower level of lot 28 and calling it a study.
Having regard to the principles in Bruce at [42]-[53] and Kaye at [48], I am not satisfied that OSP88786 unreasonably refused to make the modified renovation works by-law for the following reasons: 1. the creation of study on the lower level of lot 28 was contrary to the development consent; 2. it is deficient because it does not contain any specifications for the works as described in the modified renovation works by-law and their precise location by reference to a plan of lot 28. While it otherwise generally complies with ss 142, 143 and 144 of the SSM Act, in view of this deficiency it is unnecessary to make findings about the other criticisms made by OSP88786; 3. Mr Lenux adduced no evidence that the erection of a solid balustrade on the mezzanine level of lot 28 would not have any impact on the effective height of the building; 4. it contravenes special by-law 1 which has been registered and so is binding on Mr Lenux since 29 August 2023 pursuant to s 135(1) of the SSM Act.
It follows that Mr Lenux is not entitled to an order under s 149(1)(a), when read with the definition of "change" in 133, of the SSM Act prescribing a change to the by-laws of OSP88786 by adding the modified renovation works by-law, and that the 2023/00392816 proceedings should be dismissed.

Issue 4: the costs of the proceedings

As r 38(2)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) is not applicable to each of the two proceedings because there is no amount claimed or in dispute of more than $30,000, the position of each party paying their own costs as specified in s 60(1) of the NCAT Act applies unless an award of costs is made pursuant to s 60(2) of the NCAT Act.
There is no reason why there should be an order as to the costs of any party pursuant to s 60(2) of the NCAT Act.

Orders

I make the following orders: 1. proceedings 2023/00392816 are dismissed; 2. proceedings 2023/00383969 are dismissed.

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: 13 August 2024

Strata Schemes Management Act 1996(NSW)

The appeal proceedings

On 1 December 2022, Mr Lenux appealed against the 1 November 2022 orders.
On 10 February 2023, the Appeal Panel relevantly extended the time for the filing of the notice of appeal to 1 December 2022, refused leave to appeal, and dismissed the appeal: Lenux v The Owners - Strata Plan No. 88786 [2023] NSWCATAP 38. The Tribunal at [8] provided the following outline of the Tribunal's findings in the SC 22/21291 proceedings: "Outline of the Tribunal's findings [8] The Tribunal found that: (1) When the Council approved the building, level 8 was not considered to be a ''storey'', so it was not included in the calculations for the height of the building, which was less than 25 metres. (2) The enclosure of the void had resulted in an increase in the floor space so that level 8 became an additional "storey" and the building was now higher than 25 metres. (3) A building higher than 25 metres must comply with Building Code of Australia clause E1.5 which provides that sprinklers are required throughout the whole building. These had not been installed. (4) The structure on level 8 was affixed to the common property. (5) Section 108 of the Strata Schemes Management Act 2015 (SSM Act) provides that a lot owner can only erect a new structure on common property if a special resolution has first been passed by the Owners Corporation authorising the work. No such special resolution had been passed. (6) The third bedroom constructed on level 7 required Council approval which had not been obtained. (7) The work was not permitted by ss 109 and/or 110 of the SSM Act which set out the circumstances in which cosmetic and minor work can be done by a lot owner on common property."

(2020) 103 NSWLR 160

Lenux v The Owners - Strata Plan No 88786

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (15 paragraphs)

Parties

Legislation Cited (5)

Cases Cited (26)

Cited By (1)