Lewis v The Owners - Strata Plan No. 32924

1. Under s 80 of the NCAT Act, a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law. In respect of any other grounds, in the case of an appeal from the Consumer and Commercial Division of the Tribunal, as this is, the appellant must satisfy the Appeal Panel that leave to appeal should be granted.

1. The appellant is the owner of lot 4 in a strata plan consisting of 4 townhouse lots in Parramatta. Part of the common property is a room adjacent to lots 2 and 3 (the Common Property Room). The position, shape and size of this room was depicted in a diagram which was Appendix C to these special by-laws.
2. At the annual general meeting of the respondent held on 9 November 2023 the special resolutions approving the making of the 3 special by-laws were made over the objection of the appellant.
3. As appears below, there are problems with the drafting of some aspects of SBL 2 and SBL 3.
4. SBL 1 concerns the carrying out of works, including works in the Common Property. SBL 1 consists of 16 clauses. Clause 1 states:

"1. Pursuant to the terms contained in this by-law, the Owners have the privilege to undertake, perform and keep the Works on their Lots and for Common Property Room jointly undertake and perform the works for mutual benefit of the Strata."

1. "Works" was defined in clause 3 (m) as follows:

"(m) 'Works' means the renovations of Lots and Common Property Room including kitchen, bathroom, laundry and courtyard renovation works to the Lot and the Common Property to be carried out or in accordance with:

(i) the scope of works described in the list of works and annexed to and forming part of this by-law at Annexure A1; and if necessary, any repair, and replacement of the works and in addition, the restoration of the Lot and Common Property damaged by the works and all of which to be conducted strictly with the provisions under this by-law."

1. Annexure A1 set out a list of described works.
2. Clause 5 of SBL 1 set out a number of matters that the "Owner" (the registered proprietor of the lot in issue) must undertake before commencing "the Works". Clause 5 (d) was headed "Approvals" and provided:

"The Owner must obtain before commencing the Works:

(i) written approval for the Works from the Owners Corporation; and

(ii) all required approvals from any Authority for the performance of the Works and provide a copy to the Owners Corporation."

1. "Authority" was defined in clause 3.
2. SBL 2 concerns the common garden area. It consists of 16 clauses. Clause 1 provides:

"1. Pursuant to the terms contained in this by-law, the Owners have the special privilege to use, maintain and renew the Common Garden Areas directly in front of their Lot boundary and have the right of exclusive use and enjoyment of those parts in respect to the Common Property affected by those garden areas."

1. Clause 6 of SBL 2 is concerned with compliance with the by-law and required lot owners to, amongst other things:

(a) as is reasonably practicable maintain the garden area in front of their Lot a minimum of six occasions a year with not less than 2 months between each maintenance during spring and summer months. The Owner must remove all debris resulting from the maintenance from garden beds, walkways and building areas as soon as practicable and must ensure all other areas outside are kept clean and tidy;

(b) maintain the garden area personally or the maintenance must be carried out by licensed garden contractors at the expense of the Lot owner;

(e) be carried out substantially in accordance with the definition and marking of Common Garden Areas described in Annexure B of this by-law."

1. "Common Garden Areas" was defined in clause 3 (m) of SBL 2 to be:

"means the Garden Areas directly in front of an Owner's Lot front boundary in accordance with:

(i) the scope of the maintenance of the Common Garden Areas described in the list and annexed to and forming part of this by-law at Annexure B..."

1. There is no Annexure B so described to these by-laws.
2. SBL 3 is concerned with the use of the Common Property Room for accommodation. It consists of 16 clauses. Clause 1 provides:

"1. Pursuant to the terms contained in this by-law, the Owners Corporation have the special privilege to use the Common Property Room on the Common Property, and has the right of exclusive use for the attainment of income through using the Common Property known as the Common Property Room as an accommodation boarding room."

1. Clause 5 of SBL 3 is concerned with steps to be undertaken by the respondent before commencing use of the Common Property Room as an accommodation room. The clause includes:

Pursuant to section 152 of the Act, the Owners Corporation must provide written notice to the Owners Corporation of at least 14 days before commencing Use of the Common Property Room for accommodation. The written notice must describe the proposed conditions and details of the accommodation usage.

The Owners Corporation must review and check prior to accepting any agreement with a Host company person a certificate of currency of the Insurance policy or policies satisfactory to the Owners Corporation."

1. "Act" is defined in clause 3 of SBL 3 as the Strata Schemes Management Act 2015 (NSW) (SSMA).
2. Clause 6 of SBL 3 provides:

"6. For Use of Common Property Room for Accommodation to be compliant under this by-law, it must:

(a) be used in accordance with the Use of Common Property Room for Accommodation described in Annexure C of this by-law".

1. There is no Annexure C so described to these by-laws.
2. Clause 15 of SBL 3, relevantly, provides:

"Pursuant to section 120 of the Act, if the Owners Corporation fails to comply with any of the obligations under this by-law, then the Owners Corporation may:

(a) undertake all necessary work to perform that obligation/s;

1. We are not concerned with that part of the decision the subject of Orders 1, 2 and 3. Those orders were made in relation to a claim by the appellant for repair of common property consisting of the courtyard and pathway adjacent to her unit.
2. Order 4 is the subject of this appeal. It was in terms: "The application is otherwise dismissed". This order covered, amongst other matters, the appellant's claims that SBL 1, SBL 2 and SBL 3 were invalid.
3. The Tribunal remarked (at [38]) that the special by-laws had been drafted from templates and reviewed by a legally qualified person but they were not the best drafted set of by-laws the Tribunal had reviewed.
4. The Tribunal then considered the appellant's claim that the special by-laws were invalid (at [44]). It did so on the basis that the application was pursuant to s 150(1) of the SSMA and that the by-laws were harsh, unconscionable or oppressive.
5. Section 150(1) provides:

(1) The Tribunal may, on the application of a person entitled to vote on the motion to make a by-law or the lessor of a leasehold strata scheme, make an order declaring a by-law to be invalid if the Tribunal considers that an owners corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive.

1. One of the contentions made by the appellant in the primary proceedings in support of the contention that the by-laws were harsh, unconscionable or oppressive was that "(c) their terms are so uncertain as to render the by-laws void." Various points were then listed in respect of this contention.
2. The Tribunal rejected the contention that the by-laws were harsh, unconscionable or oppressive. In doing so, it expressed the view that it did not consider the "imperfections in drafting" to be of such a nature as to warrant such a conclusion: at [69].
3. As will be seen below, it is unnecessary for us to consider any contention that the by-laws were harsh, unconscionable or oppressive.
4. The Tribunal then turned to consider the question whether SBL 2 was beyond the power of the respondent to make because the appellant had not consented to it. It considered this question by reference to s 143 and s 150(1) of the SSMA. Implicitly, it appears the Tribunal accepted that SBL 2 was a "common property rights by-law" (see ss 142 and 143 below).
5. It decided that given the absence of the appellant's consent to the by-law it was unenforceable against her, rather than beyond power, and that if the appellant chose not to maintain the common property garden area adjacent to her lot the by-law could not be enforced against her: at [71]-[72]. Accordingly, it also considered that the by-law was not harsh, unconscionable or oppressive.
6. The Tribunal also said that it would exercise the discretion it had under s 150 not to make an order invalidating the special by-laws.
7. Another contention was that SBL 3 was beyond power because it was a "common property rights by-law" and s 143 of the SSMA provided that the respondent had no power to make the by-law without the written consent of the appellant.
8. Section 143, relevantly, provides:

143 Requirements and effect of common property rights by-laws

(1) An owners corporation may make a common property rights by-law only with the written consent of each owner on whom the by-law confers rights or special privileges.

(2) A common property rights by-law may confer rights or special privileges subject to conditions specified in the by-law (such as a condition requiring the payment of money by the owner or owners concerned, at specified times or as determined by the owners corporation).

(3) A common property rights by-law may be made even though the person on whom the right of exclusive use and enjoyment or the special privileges are to be conferred had that exclusive use or enjoyment or enjoyed those special privileges before the making of the by-law.

(4) After 2 years from the making, or purported making, of a common property rights by-law, it is conclusively presumed that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed.

1. A "common property rights by-law" is defined in s 142 of the SSMA as follows:

For the purposes of this Act, a common property rights by-law is a by-law that confers on the owner or owners of a specified lot or lots in the strata scheme -

(a) a right of exclusive use and enjoyment of the whole or any specified part of the common property, or

(b) special privileges in respect of the whole or any specified part of the common property (including, for example, a licence to use the whole or any specified part of the common property in a particular manner or for particular purposes),

1. The Tribunal concluded that SBL 3 (and SBL 1) did not require any consent from a lot owner, presumably, because it considered it was not a "common property rights by-law" as defined in s 142. There was no challenge to that conclusion on appeal.

1. As to SBL 1, on appeal the appellant raised a new point of law, namely that SBL 1 did not comply with s 108 of the SSMA because the special resolution approving the by-law was not one "that specifically authorises the taking of the particular action proposed" as required by s 108(2). Various arguments were then set out in the appellant's written submissions, but they all depended upon the correctness of the contention that SBL 1 did not comply with this requirement in s 108(2).
2. Section 108 of the SSMA provides:

(1) Procedure for authorising changes to common property An owners corporation or an owner of a lot in a strata scheme may add to the common property, alter the common property or erect a new structure on common property for the purpose of improving or enhancing the common property.

(2) Any such action may be taken by the owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed.

1. At the hearing of the appeal, Ms Daniels of Counsel, who appeared for the appellant, did not take issue with the terms of Annexure A1 to SBL 1 in conjunction with the definition of "Works" and, for example, press any argument that those terms satisfied the requirement that the "particular action proposed" be authorised by the special resolution.
2. Instead, Ms Daniels confined her real point to the contention that because the by-law contained the provision in clause 5 (d) requiring various approvals "before commencing the Works" (set out above) the requirement in s 108(2) was not satisfied.
3. However, we fail to see how the requirement for such approvals results in a special resolution that did not "specifically [authorise] the taking of the particular action proposed." The fact that particular steps must be taken before commencing the Works does not, in our view, negate the fact that otherwise there was such an authority provided by the by-law to take the particular action proposed.
4. Accordingly, we reject the appeal in so far as it challenges the validity of SBL 1.

1. The appellant contends that the owners corporation had no power to make this by-law because it was a "common property rights by-law", as apparently accepted by the Tribunal, and because written consent had not been provided by, at least, the appellant.
2. In this regard, the appellant contended that the Tribunal was wrong to conclude that the requirement for such written consent only meant that the by-law was not enforceable against the appellant and did not affect the validity of the making of the by-law.
3. However, as submitted by Ms Daniels, the requirement for such written consent is a precondition of the power to make the by-law and not a matter that merely affects enforceability against an owner who failed to supply such consent. Such interpretation has been well established by case authority relied upon by Ms Daniels and endorsed, recently, by the Appeal Panel in Van der Rijt v Collins [2024] NSWCATAP 247: see, in particular, at [47].
4. Accordingly, the respondent had no power to make SBL 2 and, pursuant to s 150 of the SSMA, we should declare that by-law invalid.

1. On appeal, it was contended that the Tribunal had erred in failing to conclude that SBL 3 was void for uncertainty. It seems to us that this was also a new argument on appeal because it would appear that, in the primary proceedings, the appellant's criticism of the uncertainty of the by-law was presented as a reason why it should be regarded as harsh, unconscionable and oppressive within the meaning of s 150 of the SSMA.
2. We accept that the principles concerning uncertainty of contracts apply to by-laws on the basis that by-laws are statutory contracts: see, for example, Community Association DP 270427 v Kazagrandi; Kazagrandi v The Community Association DP 270427 [2024] NSWCATCD 8 applying the analysis in The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207; 70 NSWLR 344.
3. At the hearing of the appeal, Ms Daniels informed us that the basis for this contention was the uncertainty contained in clauses 6 (a) and 5 (e). She accepted that the remedy sought, namely a declaration the by-law was void as a remedy available under s 232(1) of the SSMA.
4. We agree with these contentions.
5. We apply the test of uncertainty put forward by the appellant, namely that to be uncertain the contractual language in question must be "so obscure or imprecise as to be incapable of supporting attribution ... of any particular contractual intention" per French CJ, Kiefel and Bell JJ in Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26 at [53].
6. Clause 6 is an important part of SBL 3. It was intended to prescribe the use of the Common Property Room for accommodation that would be compliant with the by-law. However, in the absence of Annexure C the intended prescribed use cannot be discerned. This deficiency alone renders the whole of the by-law uncertain.
7. Given our conclusion about clause 6, it is unnecessary for us to consider clause 5 (e). It is sufficient for us to say that there is a real problem with clause 5 (e). Clause 5 is intended to prescribe specific tasks that the respondent must undertake before use of the Common Property Room for accommodation can occur. It is clear from clause 5 (e) that one of these tasks is concerned with insurance but there is a real difficulty in comprehending what the content of this task is.
8. The respondent provided written submissions lodged on 27 November 2024 and 18 December 2024. In these submissions the respondent referred to the lack of funds to enable legal representation and that the other unit owners were not legally trained and were not in good health. In the submissions reference was made to the history of the dispute, that it was believed that the appellant was acting vexatiously and that irrespective of the legal or technical writing of the special by-laws the respondent had sought to implement them with the assistance of legal support and for the benefit of all owners. The respondent was also critical of the appellant now making new arguments about the by-laws.
9. However, none of these submissions directly addressed the particular legal problems raised by the appellant with the special by-laws.

(1) The appeal is allowed in part.

(2) Order 4 made by the Tribunal on 9 August 2024 is set aside but only insofar as it concerned the appellant's application in relation to the validity of SBL 2 and SBL 3 (as defined in the reasons for decision).

(3) Pursuant to s 150 of the Strata Schemes Management Act 2015 (NSW) SBL 2 (as defined in the reasons for decision) is declared invalid.

(4) Pursuant to s 232(1) of the Strata Schemes Management Act 2015 (NSW) SBL 3 (as defined in the reasons for decision) is declared void for uncertainty.

(5) Otherwise, the appeal is 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.