Owners Corporation Strata Plan 300 v John Noel Reen & anor

LOWER COURT Consumer Trader and Tenancy Tribunal of NSW JURISDICTION : LOWER COURT SCS 02/42966 FILE NUMBER(S) : LOWER COURT Mr H E Moore JUDICIAL OFFICER :

• 9 - IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION

11097/03 Owners Corporation Strata Plan 300 v John Noel Reen & Anor

JUDGMENT 1 HISLOP J: This is an appeal by the plaintiff from an order of the Consumer Trader and Tenancy Tribunal ("the Tribunal") dated 2 April 2003 reversing the order of an adjudicator that a by-law of the plaintiff was invalid. 2 The background facts are: a) Strata Plan 300 was registered on 11 July 1963 pursuant to the Conveyancing (Strata Titles) Act 1961 in respect of an existing building at 14 Fairfax Road, Bellevue Hill. The building was divided into eight residential home units. There were five garages.

b) On 14 October 1963, the plaintiff granted to the original proprietors the sole right and privilege to the exclusive use and enjoyment of the five garages for a term of 50 years (expiring on 9 October 2013) on certain terms and conditions. Separate licences in identical terms were issued for each garage.

c) Subsequently the original owners sold each of the units to third parties. They assigned to the purchasers of some units the licence to use a particular garage. Relevantly, the licence in respect of garage 3 was assigned to Lot 2.

d) Minutes of a meeting on 17 March 1975 of the proprietors of the body corporate recorded inter alia the following: Resolved pursuant to clause 15 sub-clause 2 of Schedule 4 of the Strata Title Act 1973 that the By-Laws under Schedule 1 to the said Act be added to by adding the following new By-Law: - That the exclusive rights of occupancy existing at 30th September, 1974 in pursuance of Licence Agreements in operation at that date be granted and confirmed in respect of Garage No. 3 being used by the Proprietor of Lot 2.

e) On 21 March 1975 a notification of change of by-laws documenting a new by-law was signed by the then proprietors of Lot 2 (Messrs G & L Port) and executed under the common seal of the body corporate by the strata managing agent. The by-law stated: 28 That the proprietor for the time being of Lot 2 be granted a right of exclusive use and enjoyment of that part of the common property described as garage No. 3 subject to the terms and conditions contained herein.

Thereafter followed various terms and conditions. Those terms and conditions differed from those in the 1963 licences. The by-law contained no temporal limitation.

f) On 30 April 1975 a Deed between Messrs G and L Port and the intended purchasers of Lot 2, Mr and Mrs Oatley, was executed whereby the Ports assigned, "all their right, title and interest" in the licence dated 14 October 1963, to the Oatleys.

g) On 27 July 1981, the Land Titles Office registered the notification of change of by-laws on the common property title.

h) On 23 April 1993 the defendants exchanged contracts for the purchase of Lot 2 from Mrs Oatley. The sale was settled on 11 June 1993.

i) On 28 May 2001 an extraordinary general meeting of the Owners Corporation was held, during the course of which a resolution was purportedly passed (despite objection from the defendants) repealing by-law 28.

j) On 23 April 2002 the defendants lodged an application with the Tribunal seeking inter alia an order that by-law 28 was valid.

k) On 19 September 2002 the Strata Schemes adjudicator dismissed the application.

l) On 16 October 2002 the defendants appealed from the decision of the adjudicator to the Tribunal pursuant to the Strata Schemes Management Act 1996 s 177.

m) On 2 April 2003 the Tribunal upheld the appeal. 3 The orders made by the Tribunal in upholding the appeal were as follows: 2. By-law 28 of the by-laws of Strata Plan SP 300 is a valid and subsisting by-law of Strata Plan 300. 3. The resolution made by the Owner's Corporation in General Meeting on 28 May 2001 repealing the by-law is of no effect. 4. The resolution seeking to modify the conditions of by-law 28 is of no effect. 4 The grounds of appeal which were pursued in this Court were: The Tribunal erred in law when it decided that:

a) By-law No. 28…was a valid and subsisting by-law of the plaintiff;

b) The minutes of the meeting of proprietors dated 17 March 1975 cannot necessarily be given greater evidentiary weight as to the terms of the resolution passed at that meeting than the subsequent formal document embodying the terms of the by-law executed under seal by the strata managing agent present at the meeting. There was no appeal or cross-appeal against Tribunal orders 3 and 4. 5 The appeal is brought to this Court pursuant to the Strata Schemes Management Act 1996 s 200. Section 200(2) of that Act, as it was when the order of the Tribunal was made and the appeal to this Court was brought, was in the following terms: An appeal lies in the same cases and in the same way as it would lie under Part 5 of the Justices Act 1902 if the order were a determination that a Justice or Justices made, at the time the order took effect, in the exercise of summary jurisdiction on an information or complaint.

The Justices Act has application notwithstanding its subsequent repeal by the Crimes (Local Courts Appeal and Review) Act 2001 (see Schedule 1, clause 4 of that Act). 6 The plaintiff, in its written submissions, relied upon s 104(1)(a) of the Justices Act 1902, thus limiting the appeal to a question of law. The appeal was conducted on the basis it was necessary for the plaintiff to show an error of law on the part of the Tribunal if it was to succeed. 7 At the relevant time, in order to create a valid by-law granting exclusive use of the common property, a body corporate was required to: a) resolve unanimously to make the by-law ( Strata Titles Act 1973 s 58(7)), and

b) lodge in the office of the Registrar General a notification in the prescribed form of the new by-law. Until such notification was registered on the title the by-law was of no force or effect - Strata Titles Act 1973 s 58(3). 8 The issues for determination by the Tribunal were what was resolved at the meeting on 17 March 1975 and whether by-law 28 accurately reflected the terms of that resolution.

9 The minutes of 17 March 1975 stated, in terms, that the exclusive rights of occupancy existing at 30 September 1974 be granted and confirmed in respect of garage No. 3 being used by the proprietor of Lot 2. The minutes did not expressly state that the rights of occupancy were granted on the same terms and conditions as the previous licence agreement.

10 The notification of the change of by-laws was based on the premise that the right of occupancy granted by the resolution of 17 March 1975 was subject to terms and conditions, which were different than those contained in the licence agreement, and was not subject to a temporal limitation.

11 There was no oral evidence before the Tribunal as to the circumstances surrounding the completion of each document, and no explanation for the delay in the registration of the by-law.

12 The Strata Schemes Adjudicator held that in passing the resolution, the body corporate intended to make a by-law that conferred on the proprietor of Lot 2 all the rights conferred by the deed of licence and nothing more and nothing less. As by-law 28 did not accurately reflect the terms of the resolution as thus understood, it was invalid. 13 The Tribunal reached a different conclusion. It held:

It is possible that the resolution as recorded in the minutes intended the by-law to be limited to the terms of the 1963 Deed. The by-law gave the proprietor of Lot 2 a right which did not extend to other lot owners and which right added a not insignificant value to the Lot.

With deference to the Adjudicator, it appears to me that the approach should be to determine if there is cogent evidence to establish that the exclusive use by-law, registered on the common property title deed for some 20 years, is invalid. It seems to me that the minutes of the meeting of 17 March 1975 cannot necessarily be given greater evidentiary weight as to the terms of the resolution passed at the meeting than the subsequent formal document embodying the terms of the by-law, executed under seal by the strata managing agent present at the meeting. This is particularly so where the minutes of the resolution are not specific as to the terms of the by-law.

I believe such an approach to be justified on the grounds that conveyancers may be able to rely upon the common property register as to any change of by-laws except where clear evidence exists that the by-law is not in accordance with the resolution by which it is made.

In this application, the minutes of the resolution are not precise as to the terms of the by-law and there is no evidence sufficient to satisfy the Tribunal that the by-law as registered was not in accordance with that approved by the proprietors in general meeting. Accordingly, I find the by-law to be valid and subsisting. 14 The plaintiff accepted the Tribunal's approach. In its written submissions it said:

The Tribunal in fact acknowledged the correct principle: that a by-law should not be set aside unless there is clear evidence that it is wrong. However, it failed to recognise that the minutes provided clear evidence that the by-law is wrong. 15 The plaintiff submitted the minutes provided clear evidence that by-law 28 was wrong because: a) The minutes came into existence for the purpose of recording resolutions of the corporation, as required by s 68(1)(g) of the Strata Titles Act 1973 . The purpose of the notification to the Registrar General was merely to "provide notification in the prescribed form" to the Registrar General of the resolution.

b) The minutes were signed by the chairman of the meeting and provided prima facie evidence at common law.

c) The minutes provided the best evidence of the resolution as they were created for the purpose of recording the terms of the resolution. 16 The plaintiff further submitted that the only evidence the Tribunal was permitted to look at in determining the terms of the resolution was the minutes, as the notification was lodged to serve a different statutory purpose. However, as the minutes provided no more than prima facie evidence, I do not accept this submission. 17 The defendants submitted that: a) however one dresses up the issue, it is a straight question of fact of two competing evidentiary documents, apparently inconsistent, one of which the Tribunal accepted over the other;

b) no issue of law arises from the decision of the Tribunal. 18 Whilst there is force in the plaintiff's submissions, there was evidence entitling the Tribunal to reach the conclusion that it did. That evidence included the following: a) No later minutes were tendered to prove the minutes had been subsequently confirmed as correct and complete.

b) The minute book was not in evidence. There thus remained the possibility of a later meeting on the 17 March 1975.

c) The notification was prepared within 4 days of 17 March 1975 and the Ports signed and, "consented to the change of by-laws" on 21 March 1975.

d) The notification was a formal document. It contained a certificate in the following terms: In pursuance of the Strata Titles Act, 1973, The Proprietors - Strata Plan No. 300 hereby certifies that, with the consent in writing of the proprietors named hereunder, and by unanimous resolution, duly passed on the 17th day of March 1975, it changed its by-laws as follows. (Then followed the terms of By-Law 28 including the terms and conditions thereof) e) The common seal of the body corporate was affixed to the notification and attested by the managing agent who had been present at the meeting on 17 March 1975.

f) The common seal of the body corporate was affixed to the Registrar General's Form 14 on 5 May 1981. This form accompanied the notification.

g) The fact that a by-law was made in respect of this garage alone was suggestive that something more was intended to be achieved than the mere assignment of the existing licence.

h) The plaintiff had permitted the by-law to remain on the register for some 20 years. 19 The appeal is confined to error of law. That is a very limited right of appeal. In Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 at 155-156, the Court of Appeal held: To say of a finding that it is perverse, that it is contrary to the overwhelming weight of the evidence, that it is against the evidence and the weight of the evidence, that it ignores the probative force of the evidence which is all one way or that no reasonable person could have made it, is to say the same thing in different ways. Upon proof that the finding of a jury is vitiated in this way, it will be set aside because it is wrong in fact. Since the Act does not allow this Court to correct errors of fact, any argument that the finding of a Workers' Compensation Commission judge is vitiated in the same way discloses no error of law and will not constitute a valid ground of appeal. It is also pointless to submit that the reasoning by which the court arrived at a finding of fact was demonstrably unsound as this would not amount to an error of law. 20 In my opinion, the issues before the Tribunal were issues of fact. No error of law has been demonstrated by the plaintiff. Accordingly, the appeal must be dismissed.

Orders 21 The order of the court is that the appeal is dismissed. I make no order as to costs at this stage pending submissions in writing being lodged by the parties with my Associate within 10 days of this date. **********

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