Morrison v Neighbourhood Association DP No 285032

Exemption from the statutory repair obligation - s 109 (3) of the CLMA

1. Section 109 of the CLMA provides: 109 Duty of association to maintain and repair property (1) An association must properly maintain and keep in a state of good and serviceable repair the association property and personal property vested in the association, including any open access ways or private access ways. (2) An association must renew or replace fixtures or fittings comprised in the association property and personal property vested in the association. (3) This section does not apply to a particular item of property if the association determines by special resolution that - (a) it is inappropriate to maintain, renew, replace or repair the property, and (b) its decision will not affect the safety of a building, structure or common property in the scheme or detract from the appearance of property in the scheme. (4) If an association has taken action against a member or other person in respect of damage to the association property, it may defer compliance with this section until the completion of the action if the failure to comply will not affect the safety of a building, structure or property in the association scheme. (5) A member of an association may recover from the association, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the member as a result of a contravention of this section by the association. (6) A member of an association may not bring an action under this section for breach of a statutory duty more than 2 years after the member first becomes aware of the loss. (7) This section is subject to the provisions of any by-law made under this Act. (8) This section does not affect a duty or right of the association under another law.
2. It is well established by NSW Court of Appeal authority concerning like provisions to s109 (1), (2) and (3) in NSW strata legislation that s 109 (3) operates to exempt the relevant body from the absolute obligations in s 109 (1) and (2) in circumstances where a special resolution has been passed which addresses the two matters referred to in s109 (3) (a) and (b): see The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270 per Barrett JA at [9]-[11] and per Tobias AJA at [151], [160]-[162]; The Owners-Strata Plan No 74232 v Tezel [2023] NSWCA 35 at [35].
3. In Thoo, Tobias AJA indicated that the basis of a challenge to a special resolution made under a like provision to s 109 (3) could include that the relevant body (in that case the owners corporation) had not addressed the issues in s 109 (3) (a) and (b), the determination was affected by administrative law grounds such as unreasonableness, failing to take into account a relevant consideration or taking into account irrelevant considerations or on the basis of improper purpose (fraud on the minority): see at [160]-[162], [183] and [186] -[197].
4. This authority is contrary to any proposition that s109 (3) (b) is to be construed as an objective, factual requirement to be satisfied in each case, regardless of any determination about the issue by the association, before it can exempt itself from the obligations in s109 (1) and (2).

The Tribunal's decision

1. On 12 June 2023 the Tribunal dismissed the appellants' application. It gave detailed reasons for its decision.
2. The Tribunal did note that the appellants did not contend that the resolutions passed were void, invalid or otherwise unable to be made and that no application had been made to set them aside. Correctly, the Tribunal also noted that there was no requirement for the lot owners to give reasons for voting in favour of the resolutions
3. Despite this, the Tribunal referred to evidence from the respondent about the reasons for the determination and other aspects of the Tribunal's reasoning, including reasoning that gives rise to the grounds of appeal, appear to address issues on the basis that s 109 (3) (b) could or should be construed in the objective factual way we have just outlined, contrary to the above authority, rather than adopting the short and clear answer to the appellants' case, namely, that the appellants' case must fail given that no challenge had been brought to the validity of the special resolution made on 9 August 2023 and no application had been made to have it set aside.
4. For example, the Tribunal expressed a conclusion that the respondent's "decision does not impact the safety of the land or detract from its appearance and will avoid significant costs to the Neighbourhood Association and harm to the environment".
5. We should note here that it does appear to us that these aspects of the Tribunal's reasons do seem to be a response to various written submissions made by the respondent which included, but went beyond, the simple proposition that the appellants' case must fail because of the lack of challenge to the 9 August 2023 resolution.

The appeal

1. By the appeal, the appellants sought to overturn the dismissal of their case and obtain an order that the respondent comply with s 109 (1) of the CLMA (see 5C of the Notice of Appeal): "… to properly repair and maintain its association and in particular the training track structure and that special resolutions made on 31st May 2023 and 9th August 2023 to cease maintaining the training track are invalidated."
2. Under s 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law.
3. 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 under cl 12 sch 4 of the NCAT Act on the basis that: …..the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
4. In their Notice of Appeal and in their written and oral submissions the appellants referred to a range of matters in their criticism of the Tribunal's decision, including that the Tribunal had made a number of errors and that the decision was harsh and unfair.

Consideration

1. In view of the lack of any challenge to the 9 August 2023 special resolution before the Tribunal at first instance and our consideration of the authorities concerning the meaning and effect of s 109 (3) of the CLMA referred to above, it is unnecessary for us to address the appellants grounds of appeal in any detail.
2. This is because whatever errors of law or fact may have been made by the Tribunal the situation remains that the respondent has exempted itself from its s 109 obligations in respect of the training track by the special resolution of 9 August 2023, which resolution was unchallenged at first instance.
3. It is not open to the appellants to seek to challenge that resolution for the first time on appeal, as they seek to do in the Notice of Appeal, having regard to the legal impediment to raising new points on appeal that give rise to issues of fact: see Suttor v Gundowda Pty Ltd [1950] HCA 35; 81 CLR 418 at 438
4. Nor did the appellants seek to challenge this special resolution on appeal in any of their submissions and supporting material by reference to any of the recognised grounds for such a challenge, despite the terms of the order which they sought on appeal (referred to above).
5. Accordingly, to the extent that there was any error of law or fact made by the Tribunal it is immaterial. So far as the question of leave to appeal is concerned, for the same reasons, it follows that the appellants cannot be said to have suffered any substantial miscarriage of justice.
6. There are two remaining matters we should address. First, the case presented by the appellants to the Tribunal did not involve any contention based upon s 109 (7) that any by-law of the respondent precluded the making or effectiveness of the special resolution made on 9 August 2023.
7. Secondly, in his oral submissions on appeal Mr Morrison contended that his complaint about maintenance and repair extended beyond the training track and the use of that track and that there were other aspects of Lot 1 that the association had failed to maintain and repair. However, we are satisfied that this is a new case involving new factual issues that it is not open to the appellants to pursue on appeal. The appellants' application to the Tribunal sought an order for remedial work to be carried out on the "training track and surrounds" on the basis of allegations that there had been a long history of "neglecting the track area" and that failure to maintain the "track structure" has led to ongoing safety risks. The expert evidence presented by the appellants to the Tribunal, namely reports from Ms Bathgate and Mr Crittenden, were directed at problems connected with the trotting track. The Notice of Appeal itself confirms that this was the scope of the dispute between the parties in stating that the order sought on appeal was for repair and maintenance of the "training track structure" (see above).

Orders

1. For the above reasons, we order that the appeal be dismissed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 07 February 2024