Lipscher and Ors v The Owners - Strata Plan No 30995 - [2017] NSWCATCD 2 - NSWCATCD 2016 case summary

DECISION

Apart from the named applicants and the respondent two other residents of the strata complex have sought leave to provide evidence and submissions in these proceedings. Those residents are John Maddalena and Wai Lee who were both represented by a solicitor when they sought to be joined as parties to the Appeal but who then abandoned their solicitor and elected to appear unrepresented. This gave rise to certain difficulties in the proceedings when Mr Ton, representing the Owners Corporation, appeared on some occasions to be providing assistance in particular to Mr Maddalena and it was note that, notwithstanding his separate appearance, Mr Maddalena was the member of the executive committee authorised to instruct or deal with Grace Lawyers on behalf of the Owners Corporation.
The evidence discloses that in about June 2014 Mr John Maddalena of unit 8 and Ms Mary Lane of unit 3 requested that a meeting be held to propose the replacement of the western balustrades of units 5, 6, 7 and 8 in order to make them compliant with current building code standards. It was also proposed at that meeting that balustrades in units 3, 4, 7 and 8 have remedial work performed.
At the EGM held on 19 June 2014 the strata managing agent who was then chairing the meeting declared the motions to be out of order given that there was no supporting evidence that the balustrades were unsafe and that in any event an approval would require a special resolution pursuant to s 65A of the Act.
Following that meeting Mr Maddalena requested a supplementary report relating to "climb-ability" from the consulting agency who had previously inspected the balconies. Conclusions in the report were not changed but it was suggested that if owners wished to upgrade the balustrades, despite no legal requirement to do so, existing balustrades could be retro-fitted to achieve compliance with the current building code. An application was then prepared for a mediation in relation to a strata dispute filed by John Maddalena of unit 8 and Wai Lee of unit 6 concerning the balustrades.
At the annual general meeting held on 3 September 2014 Mr Maddalena proposed that independent legal advice be obtained to establish the appropriate application of s 62 and/or s 65A of the Act in relation to the replacement of the balustrades. At that meeting there were seven lot owners prepared to nominate and stand for the executive committee in the following year. Mr Maddalena proposed that the executive committee be limited to three members and Mary Lane (unit 3), Ian Mason, nominee of Wai Lee (unit 6) and Mr Maddalena (unit 8) were declared elected to the executive. The voting on that motion was even on numbers but was declared as carried on unit entitlement. It is appropriate to observe that all three members of the executive committee who were declared elected had an interest in the motion which was ultimately proposed for an extraordinary general meeting on 17 March 2015 and Mr Maddalena and Mr Ian Mason both stood to benefit in terms of the works proposed to be carried out to their units if the motion was passed.
Relevant factual matters relating to the meeting have been set out above as evidence and submissions provided by the principal parties to the Appeal and it is appropriate to note that the Tribunal has had benefit of far more detailed evidence than was available to the adjudicator in terms of the affidavits provided both sides and by Mr Maddalena. The Tribunal also had an opportunity to see witnesses who have given evidence tested on various statements they had previously made.
The power to admit new evidence in an appeal to the Tribunal is contained in s 181(2) of the Strata Schemes Management Act 1996. Clearly "new evidence" is evidence that was not before the adjudicator and it is not limited ultimately to the "actual issues which were before the adjudicator". As the power to admit new evidence is not qualified or limited by the legislation it must be exercised judicially and in accordance with established legal principals.
The respondent submits that to allow new evidence on appeal, apart from being contrary to the decision of the Supreme Court in Owners Corporation SP 7596 v Risadorie [2003] NSWSC 966 and contrary to observations which I made in a matter of The Owners Strata Plan 6534 v El Khouri [2015] NSWCATCD 147 would involve procedural unfairness and a denial of natural justice on the respondent Owners Corporation. It is claimed that the procedural unfairness and denial of natural justice would be even more acute on the interested parties who were given no notice of the issue at all and were excluded from the hearing room for the majority of the Hearing.
In the Owners - Strata Plan 6534 v El Khouri (supra), I said:- "s. 181(2) incorporates a discretion related to the admission of further evidence and until the competing views of the Tribunal have been clarified by an appellant review I find it would be inappropriate to allow additional evidence to determine whether an adjudicator had erred but if an error was demonstrated, evidence could be received, particularly if there had been a change of circumstances between the time when the adjudication was determined and the time of the Appeal."
Mr Kent described that observation as obiter because there had been no application made to adduce additional evidence in that case. He went further to observe that there was nothing in the dicta of El Khouri which limited the general principals under the "narrow" and "wide" tests referred to in other decisions. He submitted that fresh evidence could always be adduced if it was not available at the time of the decision appealed from.
It is appropriate to note that s 186 of the Strata Schemes Management Act 1996 the Tribunal, before making any order, in the case of an appeal, must investigate the grounds of appeal and subs (2) provides:- "In any such investigation or any proceedings before it for an order the Tribunal, (a) is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks fit and, (b) must act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms."
There are a number of recent authorities of the Tribunal which make it clear that a strata appeal should be regarded as a hearing de novo and accordingly parties should not be strictly confined to the evidence before the adjudicator (see Nolan v Owners Corporation SP 5803 [2013] NSWCTTT 220 and Owners Corporation SP 32033 v Mullens [2015] NSWCATD 23), and taking these matters into account I am not satisfied that what I have said in El Khouri precludes the admission of evidence in circumstances where the Tribunal is satisfied that the adjudicator has made an error and I note that this would constitute the strictest interpretation of what was said in El Khouri. Both the main parties and the additional parties who seek to be represented have provided evidence by way of statutory declarations or affidavits in the Appeal proceedings. The documentary evidence filed on behalf of the appellants consists of affidavits of Alena Lipscher, an affidavit of Vladimir Lipscher, and affidavit of Scott Dumbrell and an affidavit of Margaret Bentivoglio. The material served on the appellants to the Appeal consisted of an affidavit of John Maddalena and an affidavit of Karen Russell together with a report of Anthony Doherty. The parties have availed themselves of oral testimony and cross-examination has been permitted on each side and the parties have availed themselves of an opportunity to supplement and re-work the evidence they put before the adjudicator and have clearly treated the Appeal as a hearing de novo.
Mr Kent has submitted that the first demonstrable error on the part of the adjudicator was her finding as to the validity of a resolution at the meeting of 31 March 2015 where she gave no proper reasons for a finding that a valid resolution was passed. It is argued that the finding was a conclusion which did not refer to the evidence leading up to that finding or set out any reasoning process for reaching it.
The requirement for proper reasons has been set out by the Court of Appeal in Keith v Gal [2013] NSWCA 339 where His Honour Justice Gleeson held:- "116 thirdly bald conclusionary statements should be eschewed as stated by Ipp J A in Goodrich Aerospace Pty Ltd v Arsic [2006] NSWCA 187. It is not appropriate for a trial judge merely to set out the evidence adduced by one side than the evidence adduced by another and then assert that having seen and heard the witnesses he or she prefers or believes the evidence of one and not the other … 117 thus it is essential to expose the reasoning on a crucial point to be contested between the parties. This proposition reflects one of the three fundamental elements to a statement of reasons identified by Meagher J A in Beale v GIO at 443."
Mr Kent submitted further that the second error on the part of the adjudicator was that there was no evidence upon which the adjudicator could find a valid resolution was passed. There was evidence of the notice of the EGM in which the proposed resolution had been set out and there was also evidence of a copy of the minutes of that EGM where the resolution was stated in substantially different terms and passed. There was no evidence before her as to what happened at the meeting and in particular there was no evidence as to how the proposed amended resolution, of which no notice had been given, came to be passed. In this respect Mr Kent has referred to the provisions of cl 35 of Sch (2) of the Strata Schemes Management Act 1996.
It is quite clear that a transcript or recording of the meeting was not made available to the appellants until well after the adjudication had taken place and accordingly a recording of what was said at that meeting is, evidence which would, having regard to the provisions of s 186 of the Act be clearly admissible for the Appeal.
The evidence discloses that the minutes of the EGM of 31 March 2015 were prepared by the chairman, Ian Mason, who is the nominee of Wai Lee from unit 6. During his evidence Mr Maddalena admitted that there was no motion for any amendment at the meeting and that the minutes of the meeting did not contain any reference to an amendment motion ever being proposed or classed. It was submitted that there was in the circumstances a clear breach of cl 35(3) and it was argued that the adjudicator had erred and the motion should be declared invalid on that basis.
The respondent submits that the amendment to the motion were discussed in detail and voted upon and agreed to by all unit owners. It is clear that this submission was not supported by the evidence given by Mr Maddalena under cross-examination and it is also not reflected in the authorised transcript of the recording of the meeting which the respondent was required ultimately to produce to the Tribunal. A reading of that transcript discloses that:- 1. no resolution was proposed. 2. there was no proposer or seconder. 3. there was no reading of the wording of any changes that were made. 4. there was no declaration of any vote. 5. there was no declaration of a result of the vote.
Although these matters in some instances could be regarded as technicalities when the effect of the vote should be taken into account I am not disposed to take that approach in the present circumstances particularly having regard to the factual matters set out in the earlier part of my decision starting from April 2014.
The evidence of Alena Lipscher in her affidavit of 6 July 2015 and in her evidence record that the chairman (Ian Mason) stated to the meeting:- "I have received advice from a well-known strata lawyer who said that we do not require a special resolution, only an ordinary resolution."
When she requested that the advice be tabled for the meeting to see he replied:- "I told you what the advice said but I am not prepared to show you unless you pay for the advice."
Mr Mason was not called by the Owners Corporation although he acted as the chairman for that meeting and Mr Maddalena did not address that issue. It is appropriate to note that no copy of such an advice has been provided to the Tribunal either by the Owners Corporation, Mr Maddalena or by Wai Lee who has nominated Ian Mason as her representative in the executive committee. At the very least it could be said that the advice was designed to influence those persons voting at the meeting when a dispute between the need for a special resolution or the requirement of an ordinary resolution was discussed and raised. The appointed strata manager had not been invited to attend and chair the meeting and, according to Mr Maddalena, this had never occurred before.
On the issue of the admission of new evidence I am satisfied firstly that an error in the decision of the adjudicator has been demonstrated on the basis of the material which was provided to her. I am further satisfied that the evidence falls within a category which should be admitted in any event as the material, and in particular the recording which demonstrated the minutes provided to the adjudicator to be incorrect, was not available until after the adjudication had concluded. This material is both relevant and significant in a proper determination of the Appeal having regard to the provisions of s 186 of the Strata Schemes Management Act 1996.
The respondents contend that a new issue has arisen which was not before the adjudicator and it is claimed that the issue raised was that there was "no vote". The grounds of appeal/reasons for appeal filed with the application on 30 September 2015 included that the adjudicator erred in making the following findings:- 1. that a valid resolution was passed at the extraordinary general meeting held on 31 March 2015.
The validity of the resolution was clearly an issue as the appellants left the meeting before the vote occurred and were reliant only on the minutes produced by the chairperson, Mr Mason. One could not have expected a specific allegation at that time that the resolution was not properly voted upon. In circumstances where the Tribunal is satisfied that the adjudicator has erred then even on the narrowest approach, evidence which was not available to the appellant party when the matters came before the Adjudicator can be relied on if it could materially affect the orders made.
To the extent that the evidence is "new evidence" I am satisfied that there are no discretionary matters weighing against the admission of the evidence because the true position was or ought to have been well known to the respondent and its executive committee as well as the other respondents. The evidence relating to the audio recording of the EGM was provided from the respondent and it is inconceivable, as submitted by Mr Kent, that the respondent could be prejudice by the appellants relying upon relevant material which was in its own possession. Mr Maddalena clearly acknowledged in cross-examination that there was no time at which the resolution purported being voted on was ever read out to the unit owners, there was no proposer or seconder and there was no declaration of the vote.
To the extent that the issue raised is regarded as a "new issue" I am satisfied that leave should be granted to raise it, although I am not satisfied on the findings I have made that leave is necessary.
Section 36 of the Civil and Administrative Tribunal Act 2013 requires the Tribunal to achieve just quick and cheap resolution of issues before it and to act in a manner which enables the substantial merits of the case to be dealt without technicalities or legal form (s. 38(4)). I am satisfied that the ground was not initially available to the appellants by reason of the fact that the minutes which constituted the public record of what occurred did not address these issues in an appropriate manner. No prejudice will be suffered by the respondent as the matter was raised in the hearing and both parties have had an opportunity to address the admission or rejection of these matters.
To the extent that the respondent claims that the "new issue" should be dealt with as a subject of a new adjudication application I am satisfied that if a new adjudication application was filed it would be likely to be estopped by reason of the principal in Port of Melbourne Authorities v Anssun [1981] 147 COR 589 because the validity of the subject resolution has already been raised for determination in the present appeal.
The respondent claims that in determining whether or not an Owners Corporation has passed a resolution, a common sense approach should be applied. Reference is made to a decision of the Court of Appeal in Stolfa v Hempton [2010] NSWCA 218 where Allsopp where Basten and Young JJA agreed observe:- "s. 65A calls for a special resolution that "specifically authorises the taking of the action proposed". It will be a question of fact or mixed fact and law in each case with any given special resolution or special resolutions is or are adequate in its or their specificity of authorisation and its or their particularity as to the action proposed. There is obviously a clear policy requiring direct and specific attention to the proposed action, at the same time an overly pedantic attention to detail might frustrate otherwise clear authorisation. Common sense and reasonableness have their part to play in the operation of a provision intended to regulate how people go about dealing with the common property in their units in everyday life."
Whilst these principals are clearly applicable it is difficult to understand how common sense and reasonableness should be applied to overcome a lack of "specificity" and a relaxation of the requirements under Sch (2) of the Act in circumstances which I have outlined above including the way in which the whole meeting was constructed without the Strata Manager, and the actions of the Chairman when objections were taken to the type of resolution requited as well as lack of formality in the moving and adopting of amendments, the moving and passing of the motion and the terms by which the ultimate motion was apparently passed.
Reference has also been made to a decision of Justice Wood of the Supreme Court in the Proprietors of Strata Plan 435 v Sidwell [1987] NSW Titles Cases (30 - 076). I am remain satisfied that the circumstances of the present case are not amendable to being cured by the principals enunciated by His Honour in Sidwell. Mr Kent has described the meeting chairperson, Mr Mason and Maddalena as being set on a course of action whereby they intended to avoid the decision of the strata manager back in 2014 and to have a resolution passed as an ordinary resolution thereby compelling the appellants to either accept the resolution or file an application with the Tribunal. The available evidence could lead to an inference that this was the case. Mr Mason did not put on any evidence and he was not cross-examined. In cross-examination Mr Maddalena admitted that he had contacted the North Sydney Local Council in order to agitate issues relating to the replacement of balconies and that he had been involved in changing both the size and makeup of the executive committee. He agreed that a number of other people wanted to be on the committee however the number was able to be reduced from five to only three so that he was then able to exercise a greater control over the committee. He agreed further in cross-examination that he wanted to put the appellants to the bother of commencing an application in NCAT and therefore bear the onus of any application. He also conceded that he was not going to have the resolution passed as a special resolution and he took steps to put an ordinary resolution to the meeting where he knew that Ian Mason would be the chairman in the absence of the strata managing agent. He acknowledged that the strata managing agent had chaired all meetings other than the EGM held on 31 March 2015 although he claimed that that meeting had been called by Ms Lipscher.
Mr Maddalena agreed that the discussion at the meeting had become heated particularly in relation to issues concerning special and ordinary resolutions and that the chairman had disregarded the complaints that the resolutions should have been a special resolution and simply said "I am going on". This caused the tension in the room to increase and in due course he conceded that as a result of the tension the three appellants left the meeting. He agreed that a letter had been handed to the chairperson by the appellant at the start of the meeting and he refused to read it out and he further agreed that the tabling of the letter was not recorded in the minutes and that the lack of recording was not corrected when an opportunity was given to do so. Mr Maddalena acknowledged that as the secretary he was responsible for the accurate preparation and recording of minutes but that he had not taken minutes at this meeting and they had in fact been taken by Mr Mason.
I am satisfied that the decision of adjudicator T Simon made on 9 September 2015 should be set aside. I am satisfied that the passing of the resolution in relation to item 3.7 - western balustrade replacement at the extraordinary general meeting of the Owners - Strata Plan 30995 held on 31 March 2015 is invalid.
The remaining matter to be addressed is as to whether the resolution to replace the western balustrades of units 5, 6, 7 and 8 should be authorised by a special resolution or whether an ordinary resolution is sufficient.
The respondent submits that the evidence before the adjudicator and before the Tribunal is to the effect that the Owners Corporation had express knowledge that the western balustrades pose a safety risk. Mr Ton has submitted that the transcript at the extraordinary general meeting on 31 March 2015 makes it clear that the majority of lot owners were and are motivated by concerns about safety and the potential future liability of the Owners Corporation if it does not act. It is difficult to understand the objective evidence which was before the meeting at the time when that decision was made consisted of a report from Core Project Consulting dated 4 May 2014 which reported that none of the balconies appeared to be loose, significantly cracked or otherwise unsafe and the balconies complied with the relevant building code both as to height and climb-ability. A further report commissioned by Mr Maddalena was asked to address "climb-ability" and the conclusions of the report were unchanged but it was suggested that if owners wished to upgrade balustrades, despite no legal requirement to do so they could be retro fitted. It is difficult to reconcile that evidence with the assertion that the Owners Corporation had express knowledge that the balustrades posed a safety risk. Comments made by persons at a meeting does not, in my view, serve as evidence of knowledge. There was no further expert evidence before the adjudicator when her decision was made. She appears to have relied on the statements of concern expressed by Mr Maddalena and the other witnesses for the Owners Corporation.
The respondent had a report prepared by Mr Doherty on 13 January 2016. He was engaged to review all of the balustrades in the building but his report was directed only to units 6 and 8. When asked in cross-examination why he did not inspect other balustrades he indicated that he had been advised other owners were not at home and their balconies and balustrades could not be inspected. He acknowledged he was only taken to those two units by the owner of unit 8.
110 In cross-examination it was put to Mr Doherty that before preparing his report he had been provided with a report of Core Project Consulting and he acknowledge that the report stated there were no legal requirements under the Owners Corporation to bring the existing balustrades up to the current Building Code of Australia standard. He stated that he did not insert a similar statement into his report and it would appear that his report seems to concentrate solely on compliance with the current Building Code of Australia.
It is relevant to note that the Core Project Consulting report which was obtained by the Owners Corporation stated that none of the balustrades appeared to be loose, significantly cracked or unstable and a recommendation was included in the following terms:- "2.2.3 as far as Core Project Consulting is aware there are no retrospective legal requirements for buildings to modify their balustrades to meet the modern Building Code of Australia. Whilst the law may change in the future no action is currently required. In the event that the balustrades need to be upgraded in the future, then they will need to comply with requirements of the Building Code of Australia of the day."
The evidence before the Tribunal on this issue makes it clear that the relevant expert information concerning safety is contained in the Core Project Consulting report and it is conceded by Mr Doherty there was no retrospective legal requirement to modify balustrades to meet the current building code.
Mr Maddalena attempted to give some evidence of discussions he had with Southern Cross Constructions and also with North Sydney Council. Evidence of these conversations was rejected on the basis that they were hearsay and that no steps had been taken by the respondent to call evidence from the parties who allegedly gave this important information to Maddalena.
In a dissenting judgment in Ridis v Strata Plan 10308 [2008] NSWCA 248 McColl J A observed that s 62(1) and (2) does not impose an obligation on an Owners Corporation to insert a door which was operating and did not require maintenance or repair. She noted that there was nothing in the legislative history of the Strata Schemes Management Act that indicated an intention of the legislation to impose an obligation on the Owners Corporation of a standard of care higher than that imposed by the general law of negligence upon the occupiers of property. I am not satisfied that the evidence in the present case establishes that the Owners Corporation was aware of a significant safety risk and therefore I am not satisfied that there was an absolute duty imposed on the Owners Corporation on the facts available to replace the balustrades pursuant to s 62 of the Act.
The passage in Ridis relied upon by the respondents comes from the judgement of Tobias J A at para 187 which states:- "49 secondly, at first blush I consider that the duties the subject of subs (1) and (2) of s. 62, although framed in absolute terms must have only imposed the duty if the common property required repair on one hand or its fixtures or fittings needed renewal or replacement on the other in the sense that the relevant item was broken or patently defective. Upon reflection no such qualification as a matter of statutory construction is justified in view of the provisions of s. 62(3) which did not appear in any of the predecessors of the section. However this must be said to be the case that the obligation to renew or replace only arises where such action is "appropriate" as contrasted with a special resolution that renewal or replacement is "inappropriate" as determined by the Owners Corporation pursuant to s. 62(3)(a) subject to strictures of s. 62(3)(b). 50 what is "appropriate" involves in my opinion, a broader concept than what is necessary or needed. In other words it would be "appropriate" to replace a fixture or fitting even though it was neither broken nor patently defective but nevertheless presented a reasonably foreseeable risk of safety. Where that risk was, for instance, due to the antiquity of the installation of the fixture or fitting in question so that as a matter of probability it did not conform or comply with current safety standards, if adopted, would avoid the risk that in my opinion s. 62(2) required its replacement."
The observations of Mr Justice Tobias and Justice McColl must be considered in the light of the factual material which is available in the present case. There was little factual material available with the adjudicator and in relation to the material before the Tribunal it is clear that the present balustrade is 800mm high whilst the requirements of the current Building Code of Australia impose a 100mm height requirement. It is submitted on behalf of the appellants that the transition from the previous code requirements to the current code requirements does not result in a transition from unsafe to safe but a change to the balance of compromise between the safety of the balcony and its function. Mr Doherty was not qualified to give opinions on safety but rather was only concerned with compliance with the Building Code of Australia. The material from Core Projects does not address the safety issue and accordingly the remaining evidence is that provided by Mr Maddalena who, on his own evidence, has a significant interest in having the motion approved by any means available to him.
The appellants have requested an ancillary order that the work not be carried out unless a special resolution is passed pursuant to s 65A and it is reasonable that the issue should be addressed by the Tribunal to prevent a recurrence of the previous attempt to have the orders made. Addressing the evidence which is presently before the Tribunal I am satisfied that it is appropriate to make the further order sought by the appellants namely an order the respondent is not permitted to replace the western balustrades of units 5, 6, 7 and 8 except to the extent that the action is authorised by a special resolution of a general meeting of the Owners Corporation. There is no evidence presently available to suggest that safety issues compel the Owners Corporation to carry out such work pursuant to s 62 of the Act.
In addressing the question of costs it is appropriate that the orders for costs should be reserved for submissions after the decision of the Tribunal is published. The appellants are to provide written submissions as to costs if they are so advised within 28 days of the date of these orders. The respondent and other parties are to provide written submissions in reply within 28 days thereafter. The issue of costs will be then determined on the papers. J A Ringrose General Member Civil and Administrative Tribunal of New South Wales 5 January 2017 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: 15 February 2017

Lipscher and Ors v The Owners - Strata Plan No 30995

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Judgment (5 paragraphs)

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Cases Cited (12)