Mackinnon v Greenway; Greenway v The Owners - Strata Plan No 49770 - [2020] NSWCATCD 28 - NSWCATCD 2020 case summary

NCAT Consumer and Commercial|2020-10-28

History of the proceedings

On 12 March 2020, The Owners - Strata Plan No 49770 (the Owners Corporation) commenced proceedings (SC 20/12439) against Mr Greenway, the owner of Lot 4 in that strata scheme (the respondent), seeking orders to achieve compliance with Special by-laws 34, headed "Floor Coverings in Your Lot", and 35, headed "Flooring and Noise Guidelines". On 22 May 2020 two applicants were added, being Mr Mackinnon and Mr McKee, who are two other lot owners (the applicants). On 01 October 2020 the Owners Corporation lodged a request to withdraw as an applicant.
On 16 June 2020, the respondent commenced proceedings against the Owners Corporation (SC 20/26307), seeking orders that Special by-laws 34 and 35 be declared invalid on the basis that they are harsh, unconscionable or oppressive. Thus, the respondent seeks to invalidate the by-laws while the applicants seek to enforce them.

The issues

From the Agreed Statement of Issues in Contention, the first issue in these proceedings is the respondent's request for orders that Special by-laws 34 and 35 to be declared invalid because they are harsh, unconscionable or oppressive. The second issue is whether the respondent's flooring achieves marginal compliance. The third issue is whether the applicants' request for orders to achieve compliance with those Special by-laws should be granted.

The hearing

The hearing was conducted over the telephone due to COVID 19 movement restrictions. In attendance were the applicants, Ms Fernando (the respondent's solicitor) and the respondent plus Mr Vezmar with Ms Dulay for the Owners Corporation.
Despite the inclusion in the evidence of affidavits from Mr Vezmar and Mr Knackstedt, two affidavits from the respondent and two joint expert reports from Mr Colla and Mr Haydon, there was no cross-examination.
After Ms Fernando identified the relevant documents in the two volume of the Joint Tender Bundle (JTB), she made oral submissions. Mr Vezmar did not wish to add to the written submissions already provided for the Owners Corporation. The applicants spoke briefly in response to Ms Fernando.

Jurisdiction

It is clear that the subject premises at Rushcutters Bay which are the subject of these proceedings are a lot in a strata scheme registered on 10 May 1995. As a result, the Strata Schemes Management Act 2015 (the SSMA) provides the Tribunal has jurisdiction to hear and determine the proceedings.

Respondent's evidence

Within the two folders containing almost 700 pages of documents were not only documents upon which the parties relied but also affidavits and experts' reports prepared for the hearing as part of the respondent's case. Such evidence is summarised below.
A report dated 29 July 2020 was prepared by Mr Colla and Mr Haydon of Acoustic Dynamics for the purpose of these proceedings. The following testing chronology was noted:
Jul 18 Testing of 5 timber floor systems revealed none satisfied the by-laws
Sep 18 Testing of 15 timber floor systems revealed none satisfied the by-laws
Nov 18 Testing of 12 tiled floor systems yielded recommendations
Aug 19 Testing revealed the installed system did not satisfy the by-laws
Oct 19 Remediation work achieved a difference of 1 to 2 dB
Nov 19 Testing for the Owners Corporation gave results 2 to 3 dB worse
Messrs Colla and Haydon indicated that the Building Code of Australia contained an upper limit of 62 dB while the City of Sydney's Development Control Plan contained an upper limit of 55 dB. They suggest the discrepancy in the measurements in October and November 2019 could be due to the location and orientation of the tapping machine and/or the time of day when the measurements were taken.
They indicated that, after a total of 32 tests, no timber or vinyl floor meets the 45 dB requirement of the by-laws, only four tiled systems were able to achieve compliance and the installed system was the only one which consisted of a single layer of underlay. Otherwise, to achieve the 45 dB target it would be necessary to install two levels of underlay at as much as double the cost.
These experts concluded that the by-laws were overly stringent and that they operate to prohibit the installation of hard floors "using reasonable and feasible methods of mitigation". They recommended changing the requirement from 45 dB to 50 dB.
In a supplementary report dated 27 August 2020, Messrs Colla and Haydon respond to a submission of the Owners Corporation they consider to be erroneous and provide documentary support for their contention that the Association of Australian Acoustical Consultants (AAAC) has voted for the adoption of a 55 dB minimum standard. They also explain that the term "marginal compliance" is used when there is a difference of 1 or 2 dB on the basis that such a difference is not discernible to the human ear.
Mr Vezmar's 30 July 2020 affidavit recalled a comment made by one of the applicants, Mr Mackinnon, during a meeting held on 16 January 2020 during which he responded to someone saying: "What if someone needs hard flooring?" in a raised voice with the words: "I don't want hard flooring in this building." This letter also annexes copies of letters dated 14 February 2020 and 13 March 2020 which suggest that the subject by-laws are retrospective.
This witness also noted that the owner of Unit 3 has health complications which make hard flooring a matter of her well-being. He goes on to indicate that there are a number of apartments with hard flooring but there have not, to his knowledge, been any complaints until recently. Further, he suggests that the other applicant, Mr McKee, does not live in the building. Finally, he indicated that attempts to have the Owners Corporation withdraw the proceedings against the respondent were opposed by Mr McKee.
The respondent's first affidavit, dated 31 July 2020, sets out the history of events relevant to these proceedings and sets out the hardship he has experienced, the health situation of his wife who is allergic to dust mites and notes that the level of the floor in his unit has been raised by about 1 cm due to the insulation material, a figure amended by a subsequent affidavit to 1.5 cm. He provides documents in support of his indication that he has spent more than $60,000 in order to install a ceramic tile floor.
This affidavit also indicates that an attempt to raise the 45 dB requirement to 50 dB was defeated because it did not achieve a 75% majority vote. He recalls that, at the Extraordinary General Meeting (EGM) heled to consider that proposal, Dr Mackinnon said words to the effect: "The reason for by-laws 34 and 35 is because I do not want any of the units to have hard flooring". Further, he recalled that, at a meeting held on 21 February 2020, Dr Mackinnon said: "I want carpet in all apartments…". This affidavit also noted the respondent had received no complaints in relation to his flooring and that he had specifically checked with the people living in the unit below his unit.
An affidavit from Mr Knackstedt dated 03 August 2020 was included in the respondent's evidence. He indicated that he is the owner of unit 10. His evidence, supported by documents annexed to his affidavit, was that he raised concerns before the subject by-laws were introduced in relation to those who needed to install a hard floor for medical reasons and whether the proposed standard could be realistically achieved. He noted that Mr McKee had twice ruled a motion to withdraw the proceedings against the respondent out of order and said that, if that had not occurred, he would have voted in favour of that motion.

Submissions for the respondent

The reasons given in an annexure to the respondent's application included the limit being 45 dB, the absolute discretion of the strata committee and Owners Corporation, the requirement of inspection by a strata committee member who is unlikely to have relevant experience and the required verification process. In addition, reference was made to the retrospective application of the by-laws. The other matters raised were the efforts made by the respondent, the lack of complaints, the blocking of an attempt to withdraw the proceedings against him, other lot owners not being held to the same high standard and earlier Tribunal proceedings in which an outcome of 62 dB was allowed to stand.
Written submissions, included in the JTB, set out the history of the respondent's actions in relation to the flooring which is the subject of these proceedings. Additional matters raised in these submissions were a reference to the decisions in Gurram v Owners Corporation SP 36589 [2018] NSWCATCD 39 (Gurram), the requirement to pay for legal costs going beyond section 60 of the Civil and Administrative Tribunal Act 2013 (the NCAT Act) and to the decision in John Maait Properties Pty Ltd v The Owners - Strata Plan No 50396 [2019] NSWCATAP 26 (Maait). In addition to a bare consideration of the by-laws, it was submitted they were also harsh, unconscionable and oppressive by reference to their application to the respondent.
Submissions in reply were also included in the JTB. Those submissions listed reasons why it was contended that no enforcement order should be made if the by-laws were not determined to be invalid by the Tribunal.

Submissions for the applicants

The submissions of the applicants, which rise no higher than contentions since they did not lodge any evidence apart from the documents placed before the Tribunal, suggested that the "By-law does not consider an assessment of compliance by acoustic consultants chosen by the owner". Reference was made to the upper limits said to apply in other buildings.

Submissions for the Owners Corporation

A statement at pages 11-14 of the JTB went through the sequence of events in relation to the respondent's flooring with reference to the requirements of the by-laws. The case for the Owners Corporation was similarly set out in submissions at pages 16-20 of the JTB although it should be observed that those submissions appear to have been prepared prior to the pursuit of the application initiated by the Owners Corporation being taken over by Messrs Mackinnon and McKee.
The primary submissions for the Owners Corporation, which include reference to the respondent's evidence, are at pages 327-336 of the JTB. After setting out the nature and history of the by-laws, these submissions go on to respond to points made by the respondent. It was indicated that five other lot owners have been issued with notices to show current compliance, but they have no done so. Reference was made to section 110(7)(f) of the SSMA and to the fact that legal advice confirmed that the by-laws are retrospective.
It was suggested that: "We have not asked Lot 3 to remove their hard flooring and replace with carpet. The strata committee have only asked that she investigate installing a hard floor that complies with the by-law." This submission responds to matters of detail in relation to the respondent's evidence.
At JTB page 472 is a two-page submission prepared after 03 September 2020, ie after Messrs Mackinnon and McKee ceased to be members of the strata committee. This submission indicates that the Owners Corporation did not seek advice from a qualified expert before drafting by-laws 34 and 35. This submission indicates that the strata manager and the Owners Corporation was not aware, and was not made aware, of Mr Mackinnon's intention to make the by-laws retrospective and suggests that a majority of lot owners do not believe the by-laws are retrospective.

Consideration of the first issue: Are the by-laws valid?

Special by-laws 34 and 35, which were passed by a special resolution on 02 December 2015 and registered on 18 January 2016, are set out in Appendix 1 and Appendix 2 respectively. By way of summary, those by-laws require a lot owner to accomplish the following steps in order to install flooring other than carpet: 1. Testing of the lot by a member of the AAAC. 2. A submission to the Strata Manager, on behalf of the Executive Committee and Owners Corporation who have an absolute discretion to approve, conditionally approve or withhold approval. 3. Paragraph 7.3 of Special by-law 35 requires that submission to include "a sworn statement confirming that the sound proofing impact isolation system will achieve a LnT,w not greater than 45 dB or an AAAC 5 Star Rating". 4. Inspection by a member of the Executive Committee, including after the insulation is installed but prior to it being covered by the flooring material. 5. Post-installation verification by the Owner or Occupier of the Lot that installation has been in accordance with the manufacturer's guidelines, requiring a certificate acceptable to the strata manager. 6. Verification of that by the Owners Corporation, at the expense of the Owner or Occupier of the Lot. 7. Further testing by the an AAAC member, again at the expense of the Owner or Occupier of the Lot, to ensure the achievement of either an LnT,w not exceeding 45 dB or an AAAC 5 Star Rating. 8. (8) The Owner or Occupier of the Lot "must indemnify" the Owners Corporation "and will pay those amounts including legal costs to the Owners Corporation on request".
The challenge to the validity of those by-laws is based on sections 139(1) and section 150 of the SSMA. Section 139(1) provides that: "A by-law must not be harsh, unconscionable or oppressive" while section 150, headed "Order invalidating by-law", reads: 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. 2. The order, when recorded under section 246, has effect as if its terms were a by-law repealing the by-law declared invalid by the order (but subject to any relevant order made by a superior court). 3. An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.
On 12 October 2020 the Court of Appeal of the Supreme Court of New South Wales, in Cooper v The Owners - Strata Plan No 58068 [2020] NSWCA 250, considered section 139 of the SSMA. Although the by-law under consideration in that case related to keeping an animal on a lot or on the common property, that decision provides guidance for the circumstances of this case in the following respects: 1. The words "harsh, unconscionable or oppressive" are to be seen as a trinity: three words conveying a single criterion. 2. However, by reason of the inclusion of the word "or", it is sufficient for a by-law to be caught by any one of those three words. 3. The meaning of those words is not aided by reference to a dictionary which does no more than provide synonyms. 4. The test created by those words requires a consideration of contemporary community standards. 5. The focus should be on the character of the by-law. 6. The test should be considered objectively, not by reference to the actual or constructive knowledge of any lot owner. 7. The consequences of a by-law for the use and enjoyment of a lot owner is relevant as is any adverse impact on the use and enjoyment of other lot owners and/or the common property. 8. It is not the role of the Tribunal to reformulate a by-law so it would not be considered "harsh, unconscionable or oppressive". 9. By-laws are not just a matter of 'majority rules' but are subject to the constraints of section 150, either because they are beyond power or because they are "harsh, unconscionable or oppressive".
From the evidence, the following chronology of relevant events may be prepared, aided by reference to the Joint Statement dated 19 October 2019: 29 Oct 14 An EGM defeated Lot 3's attempt to change to a wood floor Later Lot 3's flooring was changed from carpet to vinyl 09 Mar 15 A 'breach notice' was issued to Lot 3 29 May 15 Renzo Tonin & Associates test of Lot 3 gave result of 67 dB 07 Jun 15 Acoustic Directions testing gave results for Lot 3 of 60-72 dB 17 Jul 15 Mediation in relation to Lot 3 unsuccessful 02 Dec 15 Special By-Laws 34 and 35 passed by special resolution 18 Jan 16 Those Special By-Laws were registered 29 Mar 16 Tribunal dismissed proceedings re Lot 3 (SCS 16/04275) 10 Apr 18 Respondent applied for approval form Owners Corporation 10 May 18 That application, which suggested a 46 dB result, was approved 22 May 18 Owners Corporation granted approval to install wooden flooring Jun 18 Respondent has conversation with Mr Mackinnon, an applicant, who suggested he use Mr Leembruggen of Acoustic Directions Jun 18 Respondent engaged Acoustic Directions to undertake testing 29 Jun 18 Acoustic Directions carried out testing at the respondent's lot 19 Jul 18 Their report suggested none of the test flooring would comply due to their being no ceiling in the lot underneath the respondent's lot 11 Sep 18 Respondent engaged Acoustic Dynamics who were also unable to find a wooden flooring system that would comply with the by-laws Nov 18 Acoustic Dynamics attended the respondent's lot and then identified two ceramic tile floor systems that would comply with the by-laws 23 May 19 The respondent faxed a sworn statement in relation to the proposed tiled floor to the strata manager that was not received 04 Sep 19 After testing the floor, Acoustic Dynamics provided a report indicating non-compliance and recommending decoupling the floor from the wall. That report measured: 52 dB living room, 53 dB master bedroom 09 Sep 19 That report was provided by the respondent to the strata manager 18 Sep 19 The respondent provided a sworn statement to the strata manager, attaching a copy of the statement faxed on 23 May 19 04 Oct 19 Strata Committee resolves to issue notice to the respondent for contravening by-laws 34 and 35 04 Nov 19 Acoustic Dynamics again test the floor. The resulting report suggests marginal compliance: 47dB living room, 46 dB master bedroom 10 Nov 19 Notice to Comply with By-Law issued to the respondent 05 Dec 19 Acoustic Directions suggests 50 dB living room, 48 dB master bedroom 16 Jan 20 Motion to change criterion to 4 Star Rating and 50 dB defeated 12 Mar 20 Owners Corporation commenced proceedings against the respondent 05 May 20 Mr McKee ruled a motion to withdraw the proceedings out of order 16 Jun 20 The respondent lodged a cross-application, challenging the by-laws 22 Jul 20 Mr McKee ruled another withdrawal motion out of order 21 Sep 20 Strata Committee resolved to remove the applicants as representatives of the Strata Committee in relation to these proceedings 29 Sep 20 The Owners Corporation resolved to withdraw their application
It is instructive to set out the table for the AAAC Star Rating that was included in the report of Acoustic Directions dated 19 July 2018:
Following that table there appear the words: "We note that floors achieving a 2 Star of better comply with the minimum standard set by the NCC 2016 BCA."
It is also convenient to summarise each of the reports that were obtained from a member of the AAAC: 1. On 19 July 2018 Acoustic Directions provided a report which revealed that, of five timber flooring systems tested, only one achieved 45 dB and that involved a method of installation not recommended by its manufacturer. 2. On 04 September 2018 Acoustic Dynamics provided a report that revealed recorded measurements for an installed tiled floor of 52 dB in the living room and 53 dB in the master bedroom. 3. On 26 November 2018 Acoustic Dynamics recommended two ceramic tile flooring systems which it expected to achieve 44 dB measurements. 4. On 04 November 2019 Acoustic Dynamics provided a report that revealed recorded measurements for an installed tiled floor of 47 dB in the living room and 46 dB in the master bedroom, being a 4 Star Rating outcome. 5. On 05 December 2019 Acoustic Directions provided a report that revealed recorded measurements for the same installed tiled floor of 50 dB in the living room and 48 dB in the master bedroom, being a 4 Star Rating outcome.
Having considered the evidence, the submissions and the recent decision in Cooper, the Tribunal is satisfied that Special By-Law 34 and Special By-Law 35 are harsh, unconscionable and oppressive for the following reasons: 1. The decision in Gurram, at [20-21], makes it clear that a prohibition of any flooring other than carpet is harsh, unconscionable and oppressive. The expert evidence of Messrs Colla and Haydon indicates that the effect of these by-laws is to prohibit hard floors and suggests that the by-laws would prevent "engineered timber, hardwood, laminate flooring, bamboo flooring and vinyl flooring" (JTB 492 at [41] and [39] respectively). If a prohibition is harsh, unconscionable and oppressive then a by-law that has the same effect must also be consider harsh, unconscionable and oppressive: to decide otherwise would be to allow a by-law to do indirectly what it is not permitted to do indirectly. 2. Allied to the first reason, the by-laws set a standard that is harsh by reason of the requirement to achieve 45 dB. Reference to the upper limit imposed in other buildings is akin to a speeding motorist complaining that other drivers were also speeding: the comparison the Tribunal is required to make is not between these by-laws and the by-laws of other buildings but between these by-laws and the statute. The fact that the City of Sydney's DCP may set an upper limit of 55 dB and the BCA may set an upper limit of 62 are indicative but not determinative. The expert evidence upon which the respondent relies suggests a reasonable upper limit would be 50 dB and the Tribunal accepts that evidence. A finding that an upper limit of 45 dB is harsh, unconscionable and oppressive is also warranted by the effect that limit has on the flooring products that can be used, considered in the previous paragraph. 3. Section 110(3)(c) of the SSMA provides that minor renovations include "installing or replacing wood or other hard floors" with the result that, by reason of section 110(1), such work may be carried out with the approval of an owners corporation. Section 110(4) requires that, before obtaining such approval, a lot owner must provide details of the work, the duration and time of that work, who will carry out that work and arrangement for managing debris. While section 110(7) says that section 110 does not apply where the work is authorised by a by-law, that is not the case here since the by-law does not authorise work but sets out a regime with which a lot owner must comply. Section 136(2) of the SSMA provides that: "A by-law has no force or effect to the extent that it is inconsistent with this or any other Act or law". In Gurram it was held that a prohibition on wooden floors was caught by section 136(2) because that was inconsistent with section 110. While it could be said that a by-law which has the same effect as a prohibition is also caught by section 136(2), it is sufficient to record a finding that, by comparison with the statutory framework of section 110, the by-laws under consideration in these proceedings are harsh and oppressive. 4. The by-laws are harsh and oppressive in that they confer an absolute power and are not confined to reasonable. Paragraph 3.1 of Special By-law 34 gives the executive committee "absolute discretion", words denoting an unfettered power. The subject by-laws do not contain the word reasonable or even suggest that approval will not be unreasonably refused. This alone is an additional reason to find that those by-laws are harsh, unconscionable and oppressive. 5. Allied to the previous reason, the by-laws are not expressed in a form that requires the consideration of the individual circumstances. Illustrations of this are the fact that the unit underneath the respondent's unit does not have a ceiling and the health issues which impact on the respondent and the owner of Lot 3. An allergy to carpet is but one example of the special circumstances which the decision-maker is not obliged to consider. 6. The requirement, in paragraph 7.3 of Special By-Law 35, to provide "a sworn statement confirming that the sound proofing impact isolation system will achieve a LnT,w not greater than 45 dB or an AAAC 5 Star Rating", is harsh and oppressive since it requires a lot owner to make a statement in relation to a future matter, on oath or on affirmation, and that requirement relates to a matter of expertise which a lot owner is most unlikely to have. 7. The requirement of inspection by a member of the strata committee. Overlooking the imposition this requirement places on members of the strata committee, this step requires inspection by someone who is most unlikely to have any relevant experience. As the respondent's evidence, unchallenged on this point, reveals, he had difficulty securing the attendance of a strata committee member and that member conceded: "I don't know anything about flooring." However, the views of such a person could bind a lot owner and a failure to obtain that inspection may be fatal to obtaining approval. It appears this requirement is designed to ensure that insulation or underlay is, in fact, installed. The same goal could be achieved by a statement from the lot owner or the installer in relation to that aspect. This requirement is harsh. 8. The by-law requires a duplication of verification in that post-installation verification by the owner or occupier is followed by verification of that by the Owners Corporation, at the expense of the Owner or Occupier of the Lot. That duplication is considered by the Tribunal to be harsh and oppressive. 9. The requirement to use the member of the AAAC nominated by the strata committee is harsh as it should be sufficient to use any member of that body if membership of that body is considered necessary to ensure reliability of the acoustical testing. 10. Special By-Law 35, in paragraph 10, requires the lot owner to indemnity the Owners Corporation against any loss or damage which is considered by the Tribunal to be harsh and oppressive since an owners corporation has no legal right to claim damages against a lot owner: Maait at [87]. 11. The requirement to pay legal expenses, which is also contained in paragraph 10 of Special By-Law 35, goes beyond the legislative regime of the NCAT Act which, in section 60, only provides for an order for the payment of costs where special circumstances are shown. Paragraph 10 is this harsh, unconscionable and oppressive in that it requires the payments of legal expenses in all circumstances. In practice, that provision would enable unmeritorious proceedings to be commenced and maintained with an obligation on a lot owner to pay the cost of those proceedings even in situations where the Tribunal would not make an order for costs. Even if legal proceedings are not commenced, this paragraph would oblige a lot owner to pay the cost resulting from the owners corporation obtaining legal advice and that could involve a significant amount for a service over which the lot owner has no control. 12. The retrospective operation of the by-laws is another aspect that the Tribunal considers to be harsh, unconscionable and oppressive. There was evidence that lots 7 and 8, which have had hard wood floors since 1999, well prior to the 2015 introduction of Special By-laws 34 and 35, have been issued with notice for having flooring which does not comply with these by-laws (JTB506 at [7-8]). Since those by-laws impose an indirect prohibition on hard flooring, their retrospective application has the effect of transforming those by-laws from by-laws which set out a procedure to be followed by those who wish to change from carpet to hard flooring to a procedure to compel those with hard flooring to change to carpet. The 22 April 2016 email (JTB 482) suggests it was Mr Mackinnon who was urging retrospective application of these by-laws and there was unchallenged evidence from both Mr Vezmar (JTB507 at [12]) and the respondent (JTB 522 at [42]) that suggests it is Mr Mackinnon's desire to have carpet on the floor of all units in the strata scheme.
The twelve matters referred to above warrant a finding that the test of "harsh, unconscionable or oppressive" is satisfied not only by those matters individually but also by them when considered collectively.
For the sake of completeness, as between the submission of the applicants that the building originally had carpets and the evidence of Mr Vezmar to the contrary, the Tribunal prefers the unchallenged evidence of Mr Vezmar. Further, the Tribunal notes the contemporaneous documents which suggest the prescient comments of Mr Knackstedt were not considered, either adequately or at all. dated 03 August 2020 was included in the respondent's evidence.
The Tribunal also notes that, as was indicated in Cooper, it is not for a court of tribunal to reformulate a by-law it determines to be invalid.

Consideration of the second issue: Is there marginal compliance?

Even though the Tribunal's decision in relation to the first issue could be said to remove the need to consider any further issues, the Tribunal proceeds to consider the second issue.
It is sufficient to indicate that the Tribunal considers there has been marginal compliance for the following reasons: 1. The original application, which was approved on 10 May 2018, indicated that the respondent expected to achieve an outcome of 46 dB, as revealed at JTB page 55. 2. While there are competing dB measurements for the living room (47 vs 50) and for the master bedroom (46 vs 48), the respondent is entitled to rely on the unchallenged evidence of his expert which suggests the lower figures. 3. Results of 46 and 47 are only slightly above the 45 dB upper limit of the by-law and involve only a 1 dB difference on one of those rooms when compared with the approved application. 4. The unchallenged expert evidence, which the Tribunal accepts, is that a difference of 1 or 2 dB is not discernible by the human ear.
This finding of marginal compliance does not relate to any test in either the by-law or the SSMA but was an issue ventilated by the parties which is relevant to the question next considered.

Consideration of the third issue: What orders should be made?

The application in the earlier proceedings (SC 20/12439) sought an order under section 232 of the SSMA. Like other provisions in the SSMA which confer on the Tribunal the power to make an order, that section commences with the words: "The Tribunal may …". By reason of the inclusion of the word "may", the Tribunal has a discretion whether to make an order of the kind sought.
In addition to the finding of marginal compliance, for the reasons set out below, the Tribunal is not satisfied it should make the order sought: 1. The respondent has had 32 products tested by experts in an attempt to achieve compliance. 2. The respondent took steps to reduce the initial outcome from 52 dB to 47 for the living room and from 53 dB to 46 dB for the master bedroom. 3. The respondent has spent more than $60,000 trying to achieve compliance. 4. There is no evidence of any complaints from other owners or occupiers. Indeed, to the contrary, there is unchallenged evidence that there have been no complaints and that the respondent has specifically checked with the people living in the unit below his unit who may be reasonably be expected to be the people most affected by the flooring in the respondent's unit. 5. It is unreasonable to expect a lot owner to remove and replace flooring in order to achieve a difference which the unchallenged expert evidence suggests is not discernible to the human ear. 6. To impose such a requirement would be to place a burden on the respondent which would not confer any resulting benefit on any other owner or occupier. 7. The Tribunal has previously made no order in relation to a 62 dB outcome for the same strata plan. 8. The majority of the lot owners approved withdrawing the application now being maintained by the applicants. 9. A majority of lot owners (ie 50%), albeit not a special majority (75%) favours increasing the upper limit from 45 dB to 50 dB.

Decision

By way of summary, the Tribunal determines that there are a number of reasons why the by-laws should be found to be harsh, unconscionable or oppressive and a number of reasons why no enforcement order should be made.
It may seem inconsistent for the Tribunal to determine that Special By-Laws 34 and 35 are invalid, that there has been marginal compliance and that no order should be made to enforce those by-laws. Accordingly, by way of explanation: 1. The Tribunal considers that an order should be made invalidating those special by-laws on the ground that they are harsh, unconscionable and oppressive. 2. If, however, those special by-laws were not considered to be harsh, unconscionable or oppressive then the Tribunal is satisfied that there has been marginal compliance with those by-laws in that the outcome is close to the standard set by them. That finding of marginal compliance operates in favour of not making the orders which the applicants seek. 3. Even if it the achieved outcome is not considered to constitute marginal compliance, the Tribunal is still not satisfied that its discretion should be exercised in favour of the applicants.
Put another way, if the respondent had not commenced the subsequent proceedings, so that the only question was whether to grants the application for orders against the respondent, and if the respondent had not contended there was marginal compliance then the Tribunal considers, in the exercise of its discretion, that no orders should be made against the respondent. As a result, Tribunal considers the application to enforce the by-laws against the respondent should be dismissed.

Orders

For the reasons indicated above, in the proceedings commenced by the respondent (SC 20/26307) an order should be made under section 150 of the SSMA in favour of the respondent. In order to give effect to that outcome, a further order will be made so that an entry is made in the Register to give effect to that order. As a result, the proceedings that were commenced by the Owners Corporation but have been maintained by the applicants (SC 20/12439) should be dismissed. Orders also need to be made to cater for any application for costs that may be made.
Thus, the orders that will be made are as follows: In SC 20/12439 1 The application is dismissed. In SC 20/26307 2 Order under section 150 of the Strata Schemes Management Act 2015 that special by-laws 34 and 35 are declared to be (and since the date of registration have been) harsh, unconscionable and oppressive. 3 Order the Owners Corporation SP 49770 to promptly take all necessary steps to record the removal of special by-laws 34 and 35 pursuant to section 246 of the Strata Schemes Management Act 2015, such removal to be recorded as having operated on and 18 January 2015, being the date of registration. In both SC 20/12439 and SC 20/26307 4 Any application for costs is to be made by written submissions which are to the Tribunal and each other party on or before 19 November 2020. 5 Any written submissions in reply are to be provided to the Tribunal and each other party on or before 03 December 2020. 6 Any such submissions are to address the question of whether the party agrees that the question of costs can be decided "on the papers", ie without a hearing, pursuant to section 50 of the Civil and Administrative Tribunal Act 2013. Appendix 1 Special By-Law 34 Purpose of this By-Law
The Owners Corporation may from time to time issue guidelines under this by-law in relation to the installation of a floor surface ("the works") and Approved Underlay and Approved Insulation in a Lot with Strata Plan 49770 ("Guidelines"). The Guidelines form part of this by-law and include the following: the type or types of floor surfaces, Approved Underlay and Approved Insulation that may be installed in a Lot; the standard of floor surfaces, Approved Underlay and Approved Insulation that may be installed in a Lot; the method of installation of the floor surface, Approved Underlay and Approved Insulation in a Lot, including treating surrounding areas to reduce noise transmission that might unreasonably disturb another owner or occupier; that a member of the Association of Australian Acoustical Consultants is to carry out acoustic services in relation to the installation of a floor surface and Approved Insulation other than carpet and Approved Underlay in a Lot; that the Owners Corporation requires Lot owners to carry out a test or tests in relation to the installation of a floor surface and Approved Insulation other than carpet and Approved Underlay in a Lot; the minimum sound proof rating that the floor surface and surrounding area must attain; the ability of the Owners Corporation to independently verify your compliance with the by-law; and such matters as the Owners Corporation reasonably determines from time to time in relation to the floor surfaces within the Lots of the building and any installation of floor surfaces within the Lots of the building. Conditions of By-Law 34
All Lot owners within Strata Plan 49770 must: 2.1 comply with the Guidelines within Special By-law 35; 2.2 ensure that all floor space and surrounding areas within their Lots are covered or otherwise treated in accordance with the Guidelines to reduce noise transmission through the flooring that might unreasonably disturb another owner or occupier within the building. 2.3 Obtain written consent from the Owners Corporation to remove or interfere with floor coverings or treatments to their Lot or to install a floor surface and Approved Underlay other than carpet with Approved Underlay; and 2.4 Obtain a Checklist from the Strata Manager before any work is commenced within their Lot that may affect the floor surfaces. Further conditions 3.1 On any request to change floor surface within a lot, the executive committee may withhold approval or give consent conditionally or unconditionally in their absolute discretion. 3.2 If the executive committee grants a conditional approval, all conditions must be met by the lot owner before commencing the Works on their lot. 3.3 If the any condition sets the requirement for an Exclusive Use By-Law or Special Privilege By-Law to be passed by the lot owner, then the lot owner can only commence Works on their lot after such by-law is passed. 3.4 Lot owners may install carpet provided that the underlay used is equal to Approved Underlay without requiring specific consent. All other types of underlay and carpets without underlay will require specific consent from the Owners Corporation. Consent of Owners Corporation
Requirements for Consent: 4.1 In requesting consent under this by-law, you must provide to the Strata Manager the following documentation: 4.2 the documentation set out in the Guidelines; and 4.3 Such other material or documentation that the Strata Manager acting on behalf of the executive committee reasonably requires.
Within 14 days of the installation of a floor covering and Approved Underlay other than carpet and Approved Underlay in a Lot, Lot owners must provide the Strata Manager such confirmation, certificate or report or as the executive committee may require which will include a written report from a member of the Association of Australian Acoustical Consultants addressed to the Lot owner and the Owners Corporation that guarantees: 5.1 the completed installation has been inspected by that member of the Association of Australian Acoustical Consultants; and 5.2 All matters in relation to the installation of the floor surface and Approved Insulation satisfy this by-law, including the Guidelines. Floor Rating
Measurement of Floor Rating: 6.1 Strata Plan 49770 uses the LnT,w measurement or the AAAC Star Rating system in accordance with the guidelines for the Transmission Measurement and Ratings. 6.2 All Lots within Strata Plan 49770 must meet the LnT,w ratings or the AAAC Star Rating within the guidelines. 6.3 The CI measurement is not to be used within Strata Plan 49770. Obligations on Lot Owners
Under this by-law, all lot owners have the ongoing obligation of reducing noise transmission through the floors of the building that might reasonably disturb another Owner or Occupier.
Anything you are obliged to do under this by-law must be done at your own costs.
Under this by-law, all Lot owners accept liability for any damage caused by any part of their Lot, the Common Property or any other Lot as a result of the removal or installation of floor surfaces, Approved Insulation, carpeting and Approved Underlay to their Lor and will be responsible to make good that damage immediately after it occurs. Lot owners must commence repairing any damage created by the Works to the Common Property or any other Lot within 7 days of the occurrence.
You must indemnify the Owners Corporation against any loss or damage the Owners Corporation suffers as a result of the performance maintenance of replacement of your floor surface Approved Insultation carpeting and Approved Underlay and will pay those amounts including legal costs to the Owners Corporation on request.
You must maintain, repair and replace any floor installed in your Lot or for the benefit of you Lot pursuant to the Guidelines. THIS BY-LAW TO PREVAIL
If there is any inconsistency between any by-laws applicable to the strata scheme, and this by-law, then the provisions of this by-law shall prevail to the extent of that inconsistency. Appendix 2 Special By-Law 35 2 HOLDSWORTH AVENUE RUSHCUTTERS BAY NSW GUIDELINES ISSUED BY THE OWNERS CORPORATION SP 49770 FLOOR COVERINGS ARE DEALT WITH IN BY-LAW 34 Preamble
These Guidelines: 1.1 are issued by the Owners Corporation pursuant to By-Law Number 34; 1.2 are provided principally with the aim to reduce noise transmission that might unreasonably disturb another Owner of Occupier. 1.3 may assist an Owner of Occupier of a Lot in considering treating the floor surface in a lot with material other than carpet with specified underlay (Dunlop Springtred UltimateRubber Underlay) or equivalent, refer to By-law 34.
It should be noted that arguably the ONLY floor which can normally be relied upon to meet acoustic standards is carpeting with the specified underlay. Any installation of a hard floor involves considerable risk for the owner. Lot Owner and Occupier Responsibilities
Notwithstanding adhering to the minimum ratings provided by these guidelines: 3.1 The onus to control and reduce appropriately and suitably the transmission of noise that might unreasonably disturb another owner or occupier remains with the owner and any occupier of a Lot, and 3.2 the responsibility of complying with the by-law remains with the owner and any occupier of a Lot.
As an Owner or Occupier you are obliged to give appropriate consideration to your neighbours and the following actions should only be exercised with appropriate circumspection particularly with respect to the time of day or night: 4.1 dragging of chairs without felted tips across uncarpeted floors; 4.2 walking about in stiletto heels; 4.3 sound levels from sound systems, TVS and particularly bass sound in music; and 4.4 any other activities that may cause excessive noise transmitted through the floor that may disturb any other Owners or Occupiers. Guideline to Sound Transmission and Ratings
Sound Transmission and Ratings 5.1 Hard and firm floors allow impact noise to be transmitted to other apartments. There are a number of various measuring systems that describe the degree of impact noise isolation between apartments. Some are established and measured under laboratory conditions such as IIC (Impact Isolation Class) and others are measured on site such as FIIC (Field Impact Isolation Class). 5.2 With the IIC the higher the number the greater the sound isolation effect of the floor. A good IIC standard is 65 while 70 represents an excellent rating. These standards are generally not achievable with timber, parquetry, ceramic tiles, marble or stone flooring unless an impact isolation system is used, A FIIC test result takes into account other factors that affect the transmission of impact noise such as ceiling, structures, slab thickness, floor span, underlying ceiling structure, and wall structure which can all make a significant difference. For example an IIC80 rated floor may rate FIIC55 "in situ". 5.3 Australia and New Zealand have adopted the measurement called the weighted standardised impact sound pressure level, LnT,w. A reduction in this parameter corresponds to an improvement in impact isolation and a lower likelihood of residents being adversely affected by impact noise. LnT,w replaces Impact Isolation Class (IIC), which is in common use in Australia. There is an approximate relationship between LnT,w and IIC. Either value can be subtracted from 110 to indicate approximately the other. 5.4 The term LnT,w indicates that the measurement values have been adjusted or normalised to a reverberation time of 0.5 seconds in the receiving room. This normalisation is made so that the effects of acoustic absorption in the receiving room are standardised for all measurements. 5.5 A good LnT,w rating is 50, while 40 is excellent but difficult to achieve with timber, parquetry, ceramic tiles, marble or stone flooring without substantial impact isolation methods. 5.6 LnT,w is often combined with a CI adjustment to give a total acoustic effect. CI is a spectrum adaptation term that is intended to allow the measurement to better indicate the effect of footfall noise. However, the use of CI should be cautious as some floors, e.g. bare concrete, can have a high LnT,w rating but have a large negative value of CI. This effectively improves the rating of the floor without satisfactorily reflecting the experience of the affected residents. City of Sydney's Guidelines for Impact Noise
City of Sydney's guide for impact noise: 6.1 Part 10 of Section 4.2.3.11 Acoustic Privacy City of Sydney DCP2012. LnT,w less than or equal to 55 where floor separates a habitable room and another habitable room, bathroom, toilet, laundry, kitchen, plant room, stairway, public hallway and the like. 6.2 The Building Code of Australia introduced new guidelines for impact isolation as of May 2004: LnT,w+CI not to exceed 62. 6.3 AAAC (Assoc. of Aust. Acoustical Consultants) uses a Star System rating where an LnT,w of 40 equates to 6 AAAC Stars. 6.4 Park Grande, 2 Holdsworth Avenue Rushcutters Bay, Strata Plan 49770 has regard to a specific requirement that the impact sound insulation rating of an installed floor shall have a weighted standardised impact sound pressure level of LnT,w of not greater than 45 dB, or at least on AAAC 5 Star Rating measured in accordance with AS ISO 140-7 and rated have a significant acoustic effect. Two otherwise identical floors with identical insulation in two different locations could, and quite possibly will, have different results. 6.5 It is noted that the Strata Plan 49770 does not use the CI measurement within their building and rely on the LnT,w measurement and the AAAC Star Rating 6.6 Polished concrete floors are not permitted. Owners Requirements
Owners Should Document the Following: 7.1 the type of flooring and sound proofing material proposed; 7.2 the location of the flooring and sound proofing material; 7.3 a sworn statement confirming that the sound proofing impact isolation system will achieve a LnT,w not greater than 45 dB or an AAAC 5 Star Rating
General Requirements 8.1 Where an owner or Occupier of a Lot proposed to install a floor surface and sound proofing material other than carpet with Specified Underlay, the following procedures must be followed: 8.1.1 The required specification can only be made after a qualified acoustic consultant who is a member of the Association of Australian Acoustical Consultants has tested the apartment; 8.1.2 Provide your submission to the Strata Manager on behalf of the Executive Committee of the Owners Corporation for prior written approval. The Strata Manager, the Executive Committee and the Owners Corporation may withhold approval or give it conditionally in their absolute discretion. Any conditions must be complied with by the Owner or Occupier of the Lot; 8.1.3 During the installation of the flooring system the Owner or Occupier must ensure that inspections are made by a member of the Executive Committee on behalf of the Owners Corporation of the installation as it proceeds, and these will become part of the written verification. It is a very important requirement that the Owner or Occupier ensure that the designated member of the Executive Committee particularly inspects the insulation after it is laid and before the flooring covers the installation. 8.1.4 when the installation of the flooring system is complete, the Owner or Occupier of the Lot must provide written verification in a form satisfactory to the Strata Manager on behalf of the Executive Committee and the Owners Corporation that the floor system has been installed in accordance with the manufacturer's procedures, the by-laws and the guidelines.
Verification: 9.1 Verification that the installation of the floor surface will ensure compliance with the by-laws and the guidelines and must be demonstrated by a certificate acceptable to the Strata Manager on behalf of the Executive Committee and the Owners Corporation. 9.2 The Owners Corporation will, at the expense of the Owner or Occupier of the Lot independently verify that all matter in relation to the installation of the floor surface comply with the by-laws.
Rating Insulation: 10.1 Immediately following the completion of the installation of a changed floor covering other than carpet with specified underlay, the Owners Corporation will at the expense of the Owner or Occupier of the Lot employ an acoustic consultant who is a member of the Association of Australian Acoustical Consultants to test the changed floor to ensure that it complies with the requirement of 2 Holdsworth Avenue. SP 49770, to have a sound impact isolation of LnT,w not exceeding 45dB or an AAAC 5 Star Rating.
Overriding Obligation 11.1 Meeting a standard, whether acoustic or otherwise prescribed in these guidelines or in any by-law does not: 11.1.1 Mean that an owner will necessarily achieve appropriate and suitable reductions of noise transmissions that might unreasonably disturb another Owner or Occupier. 11.1.2 Exonerate or excuse an owner from an ongoing obligation to reduce appropriately and suitably the transmission of noise that might unreasonably disturb another owner or occupier. THIS BY-LAW TO PREVAIL
If there is any inconsistency between any by-laws applicable to the strata scheme, and this by-law, then the provisions of this by-law shall prevail to the extent of that inconsistency.

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: 06 November 2023

Mackinnon v Greenway; Greenway v The Owners - Strata Plan No 49770

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Judgment (14 paragraphs)

Cases Cited (3)