Mortlock & Anor v Owners of Strata Plan No 55434

CATCHWORDS : Appeal from adjudicator, Strata Scheme Management Act

LEGISLATION CITED : Crimes (Local Courts Appeal and Review) Act 2001 - s 52 Strata Schemes Management Act 1996 - ss 162, 200, 201, 222

CASES CITED : Attorney General of NSW v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729 Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430

Owners Corporation Strata Plan 55434 - First Defendant PARTIES : John Sharpe - Second Defendant

Consumer, Trader and Tenancy Tribunal - Fourth Defendant

Mr J W Dodd (Plaintiffs) COUNSEL : Mr De Buse (First Defendant)

Mr P A Bell Hills Legal (Plaintiffs)

SOLICITORS : McCooe & McCooe (First Defendant)

Submitting Appearance (Fourth Defendant)

LOWER COURT JURISDICTION : Consumer Trader and Tenancy Tribunal of NSW

LOWER COURT JUDICIAL OFFICER : Tribunal Member Mr H E Moore

IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION ADMINISTRATIVE LAW LIST

JAMES HARKER MORTLOCK & ANOR v OWNERS OF STRATA PLAN NO 55434 & ORS

JUDGMENT (Appeal from adjudicator, Strata Schemes Management Act)

1 HER HONOUR: By amended summons filed 27 April 2006 the plaintiff seeks firstly, that the orders of the Consumer, Trader and Tenancy Tribunal (Strata and Community Schemes Division) (CTTT) in Application No. SCS 05/37216 of 11 January 2006 be set aside, secondly, that this court substitutes the following orders pursuant to the respective sections of the Strata Schemes Management Act 1996 (SSMA): (a) section 162: that a strata managing agent be appointed; (b) section 153: that the resolutions of the meetings held on 5 February 2004 and 15 February 2005 be invalidated; (c) section 156: that the Owners Corporation's Secretary and Treasurer being the holder of the records supply such records and documents for inspection; and thirdly, that the matter be remitted to the Strata Schemes adjudicator for redetermination.

2 Initially, by summons filed 6 February 2006, the plaintiff was James Harker Mortlock. The amended summons records Mr Harker Mortlock as the first plaintiff with the second plaintiff being Victoria Coote. The first defendant was and remains the Owners of Strata Plan No. 55434. It is now the only active defendant in these proceedings. The second defendant is John Sharpe. The third defendant is Karl Wentzel. The fourth defendant is the CTTT who has filed a submitting appearance. The fifth defendant was originally Victoria Coote who had filed a submitting appearance.

3 At the outset of the hearing before this court, Ms Coote (who was the applicant before the adjudicator) consented to being added as a plaintiff (see written consent on file). The plaintiffs relied on two affidavits of Philip Andrew Bell sworn on 3 February 2006 and 29 March 2006. Aside from the issue of costs, the Owners Corporation neither consents nor opposes the orders sought but made submissions. The appeal

4 This appeal is brought under s 200 of the SSMA. This appeal is quite different to an appeal under s 67 of the Consumer, Trader and Tenancy Tribunal Act 2001 or an appeal under s 73 of the Local Courts Act 1982 (NSW) (the Act). By way of example s 73 permits a party who is dissatisfied with a judgment as being erroneous in point of law to appeal to this court.

"200 Appeal to Supreme Court (1) An appeal lies to the Supreme Court against an order made by the Tribunal under this Chapter. (2) An appeal lies in the same cases and in the same way as it would lie under Part 5 of the Crimes (Local Courts Appeal and Review) Act 2001 if the order were a determination that a Local Court made, at the time the order took effect, in the exercise of summary jurisdiction on a court attendance notice.

(3) The persons who may appeal against an order of the Tribunal (other than an order varying or revoking an order of the Tribunal or an order made on an appeal to the Tribunal) are: (a) the applicant for the order appealed against, or

(b) a person who duly made written submissions on the application for the order, or

(c) any person required by the order to do, or refrain from doing, any act.

… (5) The persons who may appeal against an order of the Tribunal made on the determination of an appeal are: (a) the appellant to the Tribunal, or

(b) the applicant for the original order made by an Adjudicator (if the applicant was not the appellant to the Tribunal), or

(c) any person who duly made written submissions to an Adjudicator in connection with the application for the original order, or

(d) a person required to do or refrain from doing any act by the order."

6 Section 201 of the SSMA provides: "201 No appeal available from Tribunal except as provided by this Division Except as provided by this Part, an appeal does not lie from an order made by the Tribunal."

7 Most appeal provisions permit only the person who is a party to the proceedings to lodge an appeal. However, under s 200(5) of the SSMA the class of appellants is wider. It allows a person who merely has made written submissions to an adjudicator to lodge an appeal. While it was initially thought that Mr Harker Mortlock had made written submissions to the adjudicator in the Tribunal and was thereby entitled to lodge an appeal, this turned out not to be the case. As I understand it, Mr Harker Mortlock took notes as to what occurred at an Owners Corporation meeting. These notes were in turn annexed to an affidavit of Ms Coote which in turn was put before the adjudicator. While Mr Harker Mortlock gave evidence before the adjudicator he did not make submissions. Mr Harker Mortlock does not own a unit in the strata complex but is a friend of Ms Coote. Hence he is not entitled to lodge an appeal under s 200. However, Ms Coote, the second plaintiff, is a unit owner and is entitled to lodge an appeal.

8 Section 200(2) SSMA states that the appeal to this court lies in the same way as an appeal would lie under Part 5 of the Crimes (Local Courts Appeal and Review) Act 2001. Part 5 of that Act provides for appeals as of right (s 52) and appeals which require leave (s 53). The second plaintiff has confined her submissions to a question of law. That being so, s 52 of the Crimes (Local Courts Appeal and Review) Act reads: "52 Appeals as of right (1) Any person who has been convicted or sentenced by a Local Court, otherwise than with respect of an environmental offence, may appeal to the Supreme Court against the conviction or sentence, but only on a ground that involves a question of law alone. (2) An appeal must be made within such period after the date of the conviction or sentence as may be prescribed by rules of court."

9 Under s 55 of the Crimes (Local Courts Appeal and Review) Act this court may set aside the conviction or set aside the conviction and remit the matter to the original Local Court for redetermination in accordance with directions of the court or dismiss the appeal. The s 200 appeal provision which refers to concepts of conviction and sentence does not seem appropriate for a civil appeal.

10 Section 222 of the SSMA provides that the provisions of the Consumer, Trader and Tenancy Tribunal Act 2001, and of the regulations made under that Act, apply in relation to proceedings before the Tribunal under the SSMA, subject to any modifications prescribed by the regulations.

11 The grounds of appeal upon which the second plaintiff seeks the orders are firstly, the Tribunal should have had regard to the matters occurring prior to 3 February 2004 because an application pursuant to section 162 of the SSMA on the basis of the management of the strata scheme not functioning or functioning satisfactorily may be determined by reference to an accumulation of incidents or events over a period of time; secondly, the Tribunal failed to give any or any adequate reasons regarding its satisfaction that the Owners Corporation had acted appropriately in attending to the rectification of building defects; thirdly, the Tribunal failed to record or classify the allegedly intemperate language of Ms Coote; the Tribunal, having found the breakdown of the relationship between the owners, should have proceeded to take that fact into account in deciding whether to appoint a managing agent; fourthly, the Tribunal failed to set out the evidence or any reasons as to what evidence it accepted or rejected; fifthly, the Tribunal failed to give any reason why it was not satisfied that there had been a denial of access to the records of the Owners Corporation. Obligation to give reasons

12 The efficacy of reasons for judgment is expressed in Beale v Government Insurance Office of New South Wales (1997) 48 NSWLR 430. The judgment of Meagher JA is particularly instructive. At 441 and 442 his Honour stated: "It is well-settled that a judge or magistrate at first instance in particular cases has an obligation to provide reasons for the judgment given: Pettitt v Dunkley [1971] 1 NSWLR 376. That obligation arises as a matter of judicial duty: Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378 at 386; but only as a normal, not universal incident of the judicial process: Public Service Board of New South Wales v Osmond (1986) 159 CLR 656. It does not arise from legislation as it does in the field of administrative law: see, eg, Administrative Decisions (Judicial Review) Act 1977 (Cth), s 13; A dministrative Appeals Tribunal Act (Cth) 1975, ss 28, 37 and 43. In the administrative field there is, at common law, no obligation on primary decision-makers to provide reasons for a decision: Public Service Board of New South Wales v Osmond.

The requirement to provide reasons can operate prophylactically on the judicial mind, guarding against the birth of an unconsidered or impulsive decision. It enhances judicial accountability.

The provision of reasons has an educative effect: it exposes the trial judge or magistrate to review and criticism and it facilitates and encourages consistency in decisions. The educative effect does not stop with judges but extends to other lawyers, to government and to the public. Decisions of courts usually influence the way in which society acts and it is trite to point out that it is better to understand why one should act in a particular way."

13 Meagher JA (at 443) outlined and explained three fundamental elements integral to a statement of reasons. They are: (1) A judge should refer to relevant evidence. (2) A judge should set out any material findings of fact and any conclusions or ultimate findings of fact reached. (3) A judge should provide reasons for making the relevant findings of fact (and conclusions) and reasons in applying the law to the facts found.

14 It must be borne in mind that this court is dealing with a decision made by an adjudicator and not a judicial officer. It is difficult to characterise whether the adjudicator is exercising purely administrative power. An adjudicator's functions under the SSMA differ from that of a judicial officer in that an adjudicator has power to investigate an application and in so doing may enter common property - see s 167 SSMA.

15 In Attorney General of NSW v Kennedy Miller Television Pty Ltd (1998) 43 NSWLR 729 the Court of Appeal agreed with the earlier decision of Sperling J in that matter. Sperling J decided that, upon the assumption that a costs assessor's function is administrative, there is an obligation on costs assessors to give their reasons for their determination because otherwise the appeal right given to parties under s 208 of the Legal Professional Act would be useless. Similarly it is my tentative view that an adjudicator has an obligation to give reasons for his or her decision otherwise the right of appeal given under s 200 SSMA would likewise be useless. It has been said that lengthy or elaborate reasons are not required; in most cases, a word or two may suffice. It is necessary that the essential ground upon which the decision rests should be articulated. Or to put if another way, the adjudicator should make it clear what he or she has decided and why (see Meagher JA in Beale at p443). The adjudicator's reasons

16 On 11 January 2006, the CTTT in SCS 05/37216 ordered firstly that the appeal from the determination of Strata Schemes Adjudicator in SCS 05/18934 is allowed, limited to the Owners Corporation being ordered to refrain from paying that part of the handyman's lawn and garden accounts which relate to charges for tending to the maintenance of areas within individual lots and secondly, the appeal from the determination of the Strata Schemes Adjudicator in SCS 05/18934 is otherwise dismissed.

17 Voluminous material was placed before the adjudicator. The issues before the adjudicator were firstly, whether there should be a compulsory appointment of a strata managing agent under s 162 SSMA; secondly, whether the Owners Corporation had acted appropriately in attending to the rectification of certain building defects (s 138); thirdly, to prevent the Owners Corporation from charging interest (s 148); fourthly, to alter the amount of contributions or manner of payment in relation to payments to gardener and fence painting (s 149); fifthly, to invalidate resolutions of the Owners Corporation in relation to Tribunal costs and payments to an "unspecified person" (s 153); and sixthly, orders that required the Owners Corporation's Secretary and Treasurer being the holder of the records to supply records and documents for inspection. The second plaintiff does not appeal against the decision so far as it concerns s 138.

18 On 22 December 2005 the adjudicator at the conclusion of the hearing provided extempore reasons. These were later supplemented with written reasons dated 11 January 2006. In the extempore reasons the adjudicator stated (t 33-34 - 22/12./05): "All that has to be considered in the context of the, I suppose, most important part of this appeal, which is the application for the appointment of a compulsory strata managing agent. …but it seems to me that's the most important because that's the most Draconian because that simply removes the democratic process which had been established under the Strata Schemes Management Act to allow people to have some say in the management of their particular strata scheme. So serious is that that the tribunal's power is limited really to a maximum of 12 months. Ms Coote believes the management is not functioning satisfactorily. It's clear she holds that view very strongly, but the tribunal must makes its determination based on objective considerations and there must be objective evidence that the management of the owners corporation is seriously dysfunctional before the tribunal would be disposed to make such an order under section 162. In my view there is absolutely no evidence to support the appointment of a compulsory managing agent. I see no, what shall I say, serious criticism that can be made of the functioning of the owners corporation or the executive committee. It's a small scheme, self-managed and often in those sort of situations people run into some difficulty in complying with their obligations under the act. I must say I see no such real indications of any significance in how the present management of the owners corporation is conducting the affairs of the strata scheme. So that application is dismissed."

19 These are detailed reasons on the s 162 issue which are more than adequate.

20 The appellant further submitted that the adjudicator should have had regard to events which occurred prior to 3 February 2004. In this regard the adjudicator stated in his written reasons (at B): "The orders sought in the present proceedings have been the subject of earlier application to the Tribunal. Accordingly, the Tribunal in the present appeal has no regard to matters that occurred prior to 3 February 2004, being the date of hearing of SCS 03/43015."

21 At paragraph J of his written reasons the adjudicator added that he did not consider the meeting held on 13 February 2002 given the passage of time and the history of earlier applications between the parties at which this matter could have been raised.

22 Section 168 is written in temporal language. The approach taken by the adjudicator was one which was open to him. It cannot be intended that if a person lodges a number of applications over a period of time seeking the same relief that matters dealt with on prior occasions can be rehashed once again. It was up to the adjudicator to determine the starting point.

23 The second plaintiff submitted, inter alia, that it failed to classify the intemperate language of Ms Coote and did not indicate the evidence it accepted and rejected. The adjudicator stated in his extempore judgment that in relation to the conduct of the meeting Mr Harker Mortlock was an objective witness and he took his evidence into account. The adjudicator did find it necessary to comment about the behaviour of Ms Coote during the proceedings before him. He said (at t 34 - 22/12/05): "I think her behaviour has displayed an intemperate nature, one which has shown a willingness to really be quite, I suppose, sarcastic, vituperative, I suppose is the words, and I would have thought it would not be unusual for that to really engender a fairly strong response from people who are subjected to that sort of behaviour."

24 The obligation to provide reasons did not go further to require the details of "intemperate" behaviour at the meeting. In relation to building defects the adjudicator stated that the Owners Corporation had used its best endeavours to remedy the defects which the proprietors inherited from the failure of the form of builder to comply with the Home Building Act 1989 warranty (t 25 - 22/12/05).

25 Insofar as interest is concerned the adjudicator stated in his written reasons at paragraph K that while the applicant may have had a dispute with the Owners Corporation it did not make it unreasonable for the Owners Corporation to require payment of interest.

26 In relation to s 156 the adjudicator said that the Tribunal was not satisfied on the evidence that the applicant had been denied access to the records of the Owners Corporation in accordance with s 108 SSMA. That section required the request to be in writing and payment of the prescribed fee (paragraph I in the adjudicator's written reasons). In relation to s 153 the adjudicator was not satisfied that these were grounds for invalidating any of the resolutions of the meetings held on 5 February 2004 and 15 February 2005 (paragraph I of his written reasons). Accordingly, the application for an order under s 153 failed. These reasons are adequate.

27 The decision of Tribunal Member H E Moore dated 11 January 2006 is affirmed. The appeal is dismissed. The amended summons filed 27 April 2006 is dismissed.

28 Costs are discretionary. Costs usually follow the event. The plaintiffs are to pay the first defendant's costs as agreed or assessed. The court orders: (1) The decision of Tribunal Member H E Moore dated 11 January 2006 is affirmed. (2) The appeal is dismissed. (3) The amended summons filed 27 April 2006 is dismissed. (4) The plaintiffs are to pay the first defendant's costs as agreed or assessed.

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.