Pollack v The Owners - Strata Plan No. 2834; The Owners - Strata Plan No. 2834 v Pollack - [2019] NSWCATAP 227 - NSWCATAP 2019 case summary

Pollack v The Owners - Strata Plan No. 2834; The Owners - Strata Plan No. 2834 v Pollack - [2019] NSWCATAP 227 - NSWCATAP 2019 case summary — Zoe

Introduction

These appeals arise out of a decision published on 12 April 2019 following proceedings in the Consumer and Commercial Division of the Tribunal. We will refer to the decision under appeal as the "Decision". We will refer to Dr Pollack and Ms Solden as the "lot 44 owners" and to the Owners Corporation as the "Owners Corporation". The lot 44 owners are the appellants in one appeal and the Owners Corporation is the appellant in the second appeal.
For convenience, we will set out a summary of the facts which have given rise to the dispute as follows: 1. The strata scheme concerning this dispute is a residential building in Potts Point, Sydney consisting of eight levels. The lot 44 owners own the penthouse lot on the 8th level, being lot 44; 2. The common property includes a rooftop area above the 8th level. It consists of a rear roof area and a front roof area. The two parts of the roof area are separated by a gate. The front roof area contains a structure (referred to in the Decision as the "roof area room") which the representatives of the parties referred to at the appeal hearing as the "block room"; 3. In 1968 the council of the body corporate (as the Owners Corporation's Strata Committee was then known) granted to the then owners of lot 44 the right to exclusive use of parts of the common property rooftop area for 50 years ending on 30 June 2018; 4. On 28 August 1974 the Owners Corporation made a by-law for the strata scheme (by-law 28) to this effect: 1. The proprietors of lot 44... are granted the right to the exclusive use and enjoyment of those parts of the common property on the top floor of roof area hatched black on the annexed plan until 30 June 2018; 2. This right of exclusive use was initially granted by and pursuant to the terms of a resolution on 16 July 1968 by the then Council of the proprietors of Strata Plan 2834; and 3. This by-law may be amended, added to or repealed at the request of the proprietors for the time being of lot 44 in Strata Plan 2834 and with the consent of the body corporate or subject to the consent in writing of the said proprietors in all other cases.
On 11 April 2018, the solicitor's acting for the lot 44 owners wrote to the Owners Corporation seeking an amendment of by-law 28. The lot 44 owners requested that the by-law be amended so that the date "30 June 2018" was replaced with "30 June 2068". The Owners Corporation did not provide consent. On 28 June 2018 the owner of lot 41 in the strata scheme, JPSF Pty Ltd (JPSF) requested the Owners Corporation to amend by-law 28 in the same way (i.e. by extending the relevant period to 30 June 2068) and also requested that the by-law be amended so that the lot 44 owners become responsible for repair and maintenance and to give access to enable the Owners Corporation to repair and maintain the structure of the building and other parts of common property. The notice from JPSF recorded that the lot 44 owners consented to the proposed amendment to by-law 28.
The central issue for determination by the Tribunal concerned the proper meaning of by-law 28. If the benefit of the by-law was no longer available to the lot 44 owners, then what consequences flow, including what orders should be made.
For reasons which we will summarise later, the Decision records that the Tribunal made orders to the following effect: 1. The lot 44 owners are to pay the Owners Corporation an amount of money commensurate with $3,970.00 per month from July 2018 until compliance with orders (3)(i), (ii), (iii), (iv) and (v); 2. The lot 44 owners are not to restrict access to and use of those parts of the common property the subject of the dispute (referred to as the front roof area) by the Owners Corporation and the owners and occupiers of other lots in the strata scheme ((3)(i)); 3. The lot 44 owners are to remove from the front roof area all of their chattels and goods and make good any damage caused by removal ((3)(ii)); 4. The lot 44 owners are to deliver to the Owners Corporation all keys and other devices in their possession, custody or control that are used to access the front roof area ((3)(iii)); 5. The lot 44 owners are to seal the hole in the floor of the roof area room which provides a means of access to lot 44 via a staircase using appropriately licensed and qualified contractors ((3)(iv)); and 6. Order 3(v) required the parties to cooperate to give effect to the above orders within 2 months.
Since the Decision, the lot 44 owners lodged a Notice of Appeal on 8 May 2019 and the Owners Corporation lodged a Notice of Appeal on 12 June 2019. Both appeals were heard together.

[5]

A summary of the reasoning contained in the Decision

The following is a summary of the findings made by the Tribunal as recorded in the Decision and of the reasons supporting those findings: 1. The Tribunal found that the decision of the body corporate's council made on 16 July 1986 to grant the then owner of lot 44 of the strata scheme the right to the exclusive use and enjoyment of the front roof area for a period of 50 years was made pursuant to by-law 3(f) in the first schedule to the 1961 Act. That Act was the Conveyancing (Strata Titles) Act 1961 NSW (the 1961 Act). By-law 3(f) essentially provided that the body corporate may grant to a proprietor the right to exclusive use and enjoyment of common property provided that any such grant shall be determinable on reasonable notice unless the body corporate by unanimous resolution otherwise resolves; 2. On 1 July 1974 the 1961 Act was repealed and replaced by the Strata Titles Act 1973 NSW (the 1973 Act). Schedule 4 to the 1971 3 Act contained transitional and savings provisions and cl 15 in Sch 4 provided the following: 15 Maintenance of exclusive use etc of, and special privileges in respect of, common property (1) Where immediately before the appointed day a proprietor of a former lot was entitled, whether pursuant to a resolution of the body corporate under the former Act or pursuant to a former by-law, to a right of exclusive use and enjoyment of, or special privileges in respect of, any of the former common property, the proprietor for the time being of the derived lot that corresponds to that former lot may at any time after that day serve notice on that body corporate, as continued by the operation of clause 4, requiring it to make a by-law, in terms specified in the notice, confirming that right or those special privileges and indicating the method by which the by-law may be amended, added to or repealed. (2) Notwithstanding section 58, the body corporate may make a by-law referred to in subclause (1) otherwise than pursuant to a special resolution or a unanimous resolution. (3) Where the body corporate on which a requisition has been served under subclause (1): (a) fails to make a by-law (being a by-law adding to the by-laws set forth in Schedule 1) in accordance with the requisition: (i) if the requisition was served on the body corporate within two months after the appointed day - before the expiration of three months after the appointed day, or (ii) if the requisition was served on the body corporate after the expiration of two months after the appointed day - within one month after the service of the requisition, or (b) having made such a by-law and having been tendered the prescribed fee, does not cause the by-law to be recorded in accordance with section 58 (3) within a reasonable time, the proprietor who made the requisition may make an application to the Commissioner for an order to be made by the Residential Tribunal under subclause (5). (4) The provisions of Part 5 apply to an application made under subclause (3) in the same way as they apply to an application for an order made under that Part and required to be referred by the Commissioner to the Residential Tribunal. (5) Where, pursuant to an application by a proprietor under subclause (3), the Residential Tribunal is of the opinion that the applicant or a predecessor in title to the lot of which the applicant is proprietor was, immediately before the appointed day, entitled to a right or to special privileges of the nature referred to in subclause (1), the Residential Tribunal may, having regard to the interests of other persons having an estate or interest in lots the subject of the strata scheme concerned, the extent to which the right or special privileges referred to in the application has or have been exercised or apparent since the appointed day and the justice and merits of the case, order that the applicant is entitled to such rights or special privileges of that nature as may be specified in the order and in that order shall specify the method by which the by-law, giving effect, by virtue of subclause (7), to the terms of the order, may be amended, added to or repealed. (6) The provisions of: (a) section 130 (subsection (2) (b) and (c) excepted) apply to and in respect of an order under subclause (5) in the same way as they apply to an order under Division 4 of Part 5 (section 117 excepted), and (b) section 141 (subsections (3) and (4) excepted) apply to the recording of an order under subclause (5) in the same way as they apply to the recording of an order referred to in that section. (7) An order under subclause (5), when recorded under section 141, has effect, subject to any order with respect thereto made by a superior court, as if its terms were a by-law. (8) Notwithstanding section 58, a by-law: (a) made pursuant to a requisition under subclause (1), or (b) giving effect, by virtue of subclause (7), to the terms of an order under subclause (5), may be amended, added to or repealed in such manner as may be specified in that by-law. (9) A by-law: (a) made under subclause (1), or (b) giving effect, by virtue of subclause (7), to the terms of an order under subclause (5), being a by-law expressed to be for the benefit of a specified derived lot, shall while it remains in force enure as appurtenant to, and for the benefit of, that lot. (10) Subject to subclause (8), a by-law: (a) made under subclause (1), or (b) giving effect, by virtue of subclause (7), to the terms of an order under subclause (5), shall be deemed, for the purposes of this Act, to be a by-law referred to in section 58 (7). 1. The Tribunal found that on 28 August 1974 by-law 28 of the strata scheme was made in accordance with the procedure contemplated by cl 15; 2. Clause 15(8) provided that a by-law of the kind referred to in that subclause may be amended, added to or repealed in such manner as may be specified in that by-law. The Tribunal found that by-law 28(3) specified the manner in which the by-law may be amended, added to or repealed; 3. The lot 44 owners acquired lot 44 in 2013 and the Tribunal found that they knew about the terms of by-law 28 before they purchased lot 44. Settlement of their purchase occurred in February 2014; 4. The Tribunal found that an objective interpretation of the by-law was that it confirmed the grant made in 1968 for the owners for the time being of lot 44 to have the exclusive use of the front roof area of the strata building until 30 June 2018, and the object of the by-law was not to grant the owners of lot 44 the exclusive use of part of the roof area for a longer period; 5. Nextly, the Tribunal found that the language of by-law 28 did not permit an amendment to extend its duration. The by-law stated that "this by-law" may be "amended, added to or repealed" but that did not mean that the grant of exclusive use could be amended, added to or repealed. When the grant was originally made in 1968 the council of the proprietors had no power to give the owners of lot 44 the unilateral right to grant an extension of the grant of exclusive use of part of the rooftop area. The transitional provisions make it clear that the amendments made by the 1973 Act did not vary initial grants of exclusive use made under the 1961 Act; 6. Thirdly, a construction of by-law 28 that would enable it to be amended or added to without the consent of the grantor in a manner that would extend the duration of the grant for another 50 years would give the by-law an absurd, capricious and irrational operation which would not have been intended and ought to be avoided; 7. Fourthly, the Tribunal found that on a proper construction of by-law 28, any amendment of the by-law required the consent of the Owners Corporation; 8. In respect of the request made by JPSF, the Tribunal found that that company was owned and controlled by Dr Pollack and therefore the request was, in substance, a request by the lot 44 owners and such request could only be effective if the Owners Corporation consented in writing (which it did not do); 9. In respect of the second limb of by-law 28(3) the Tribunal found (consistent with the submissions of the Owners Corporation) that the operation of the second limb was confined to the circumstance where it is the Owners Corporation which makes the request for the by-law to be amended, and it does not apply where any third party makes a request; 10. Having regard to the Tribunal's construction of by-law 28, the lot 44 owners were not entitled to continue to use the front roof area to the exclusion of other lot owners and occupiers after 30 June 2018; 11. The Tribunal found that the lot 44 owners are no longer entitled to directly access the front roof area, including the block room because the structures which permit them to do so were constructed unlawfully. That meant that the lot 44 owners must access the roof area through other areas of common property in the same way that the front roof area would be accessed by all of the owners, tenants and occupiers of other lots. The Tribunal found that the internal staircase and void (in the concrete structure between lot 44 and the roof area) were constructed unlawfully and were not shown on the council approved plans for the strata building. The Tribunal held that the low 44 owners should not be allowed to continue to use the unlawful structures which provide access from lot 44 to the roof room area. There was no evidence to establish that the staircase and void existed at the time the strata plan was registered and the Tribunal inferred from the absence of the staircase and void from the council approved plans that the staircase and void were built unlawfully after the plan was registered; 12. It is appropriate for the Tribunal to order the lot 44 owners to take steps to seal or otherwise cover up the hole in the floor. Although the lot 44 owners were not the cause of the illegalities referred to (they have only been owners since 2014), the Tribunal stated that it was not a problem of the Owners Corporation's making; and 13. The lot owners have continued to enjoy the exclusive use of the roof area since 30 June 2018 in contravention of the statutory duty under s 153 of the Strata Schemes Management Act 2015 (SSM Act) or their covenants in by-laws 3 and 28. Interim orders had been made by the Tribunal to restrain to Owners Corporation from accessing the roof area and those orders recorded that the lot 44 owners gave an undertaking as to damages. The Tribunal found that this undertaking was the quid pro quo for the orders restraining the Owners Corporation from having access to the roof area. The Tribunal found that the lot owners cannot have the benefit of the continued use of the front roof area beyond 30 June 2018 without the burden of compensating the Owners Corporation for that benefit. The Tribunal found that there was evidence that the roof area had a monthly rental value of $3,970.00 and the Tribunal ordered the lot 44 owners to pay to the Owners Corporation an amount of money commensurate with $3,970.00 per month from 1 July 2018 until compliance with the orders made by the Tribunal.

[6]

The Notice of Appeal lodged by the lot 44 owners

The Notice of Appeal contains grounds which may be summarised as follows: 1. The Tribunal erred at law in the construction of by-law 28(3) and should have held that: 1. By-law 28 could be amended by a lot owner, in this case JPSF, requiring an amendment and the lot 44 owners consenting to that amendment; 2. Such an amendment could include an amendment extending the duration of by-law 28; and 3. The Owners Corporation should be ordered to register the amended by-law in the terms set out in the requisition dated 28 June 2018. 1. The Tribunal in holding that the first limb of by-law 28(3) was engaged because the requisition by JPSF was made by or on behalf of the lot 44 owners, by allowing this issue to be raised in closing submissions, caused a denial of procedural fairness to the lot 44 owners, and erred in proceeding on the basis that the question for the purposes of by-law 28(3) was whether the requisition was "in substance" made by or on behalf of the lot 44 owners, rather than asking which entity made the requisition. The Tribunal erred in fact in holding that the evidence established that the requisition was made by or on behalf of the lot 44 owners in circumstances where it was made by a different entity and included additional clauses not sought by the lot 44 owners in their request of 11 April 2018 for the benefit of other lot owners other than the lot 44 owners; and 2. The Tribunal erred at law in the exercise of its discretion in failing to hold that the lot 44 owners had an accrued property right so that there was no reason to refuse the relief sought by the lot owners on discretionary grounds. Should discretionary grounds arise, the Tribunal erred in fact in finding that the lot 44 owners did not address by-law 28 on its terms within a reasonable time prior to 30 June 2018.
The following grounds of appeal were advanced by the lot 44 owners in the alternative in the event that Appeal Panel does not uphold the lot 44 owners' appeal: 1. The Tribunal erred at law or in fact in finding that the internal staircase and void were constructed unlawfully; 2. The Tribunal erred in law or in the exercise of its discretion in holding that it is the lot 44 owners' responsibility to make good the common property on the basis of its conclusion that the staircase and void were constructed unlawfully having regard to the following: 1. It is not a matter for the Tribunal to determine whether a structure is lawful or unlawful in accordance with relevant planning laws; 2. The lot 44 owners themselves had no role in the construction of the staircase and void; 3. The Owners Corporation is responsible for maintaining the common property in accordance with the law and in a manner that does not derogate from the property rights of the lot owners in respect of their individual lots; 4. If the staircase and void were constructed unlawfully, the only party before the Tribunal that participated in this in any way was the Owners Corporation which must have known at the time it enacted by-law 28 whether or not the staircase or void were constructed lawfully or unlawfully; 5. The Tribunal erred in fact or in the exercise of its discretion in failing to hold that cultural or heritage consequences weigh against granting relief in terms of Order 4 in circumstances where the Tribunal had no adequate evidence about how the void would be sealed; 6. The Tribunal erred at law in proceeding on the basis that it could order the lot owners to carry out work which required development consent which would include consent from the lot 44 owners in circumstances where the Tribunal has no power to order a lot owner to consent to a development order, the local council or other potentially interested parties had no involvement in the question of whether the work should be carried out. Such an order has the effect of circumventing the protections of legislation pursuant to which a lot owner can be required to consent to work, such as s 88K of the Conveyancing Act 1919, and such an order is precluded by s 232(7) of the SSM Act; 7. The Tribunal erred in fact that holding that Mr Gescheit's evidence was that council approval is not required to seal the void; 8. The Tribunal erred in the exercise of its discretion in ordering the lot 44 owners to seal the void in circumstances where there was no adequate evidence from the Owners Corporation about how the void would be sealed. The Owners Corporation was not willing to meet the costs of the work sought and the consequence of sealing the void would result in a substantial loss of amenity to the lot 44 owners, being access to the roof area from lot 44, and in the absence of adequate evidence from the Owners Corporation about how the void would be sealed, the Tribunal could not assess the extent to which the work would further derogate from the lot owners' privacy, security and amenity; 9. The Tribunal erred at law, in fact or in the exercise of its discretion in ordering the lot 44 owners to pay an amount equivalent to $3,970.00 per month pursuant to their undertaking as to damages in circumstances where there was:

A denial of procedural fairness since the possibility of an order in reliance on the lot 44 owners' undertaking was not raised prior to the orders being made;
The Tribunal does not have power to order damages under the SSM Act;
The Owners Corporation did not prove that it suffered loss in an amount equivalent to the monthly rental or any other amount;
As to the quantum of $3,970.00 per month, it was a denial of procedural fairness to rely on the contested evidence of Mr Keen in circumstances where agreed facts were stated onto the transcript as a result of which the competing valuation evidence was not the subject of cross examination;
The agreed facts did not establish that the value of the contested interest in the front roof area was more than $243,000.00 which would equate to Mr Keen's analysis to monthly rental in an amount no greater than $1,096.26; and
It was not open to the Tribunal to conclude on the evidence before it that the figure of $3,970.00, or the cumulative value, was a properly calculated amount reflecting a loss suffered by the Owners Corporation.

[7]

Reply to Appeal

The Owners Corporation's Reply to Appeal may be summarised as follows: 1. The Owners Corporation supports Order 1 (requiring the payment of compensation) for the reasons given by the Tribunal and for reasons propounded by the Owners Corporation which were rejected by the Tribunal. These additional reasons are set out below; 2. The lot 44 owners excluded the Owners Corporation and other owners and occupiers of lots from the common property rooftop area after 30 June 2018 and in doing so breached by-law 28 and by-law 3 in Sch 2 to the Strata Schemes Management Regulation 2016 (the 2016 Regulation). The lot 44 owners also breached s 153 of the SSM Act; 3. The Tribunal had jurisdiction to make an order for payment of compensation under s 232 of the SSM Act: see The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15. 4. The Owners Corporation was entitled to be awarded compensation for mesne profits for the lot 44 owners' infringement of its proprietary rights and damages for breach by the lot 44 owners of their statutory duty under s 153 and the covenants in by-laws 3 and 28.
The Owners Corporation's Reply to Appeal contains the following further submissions which we summarise as follows: 1. The Tribunal did not err in its construction of by-law 28(3); 2. The Tribunal did not err in failing to hold that the lot 44 owners had an accrued property right; 3. The Tribunal did not err in fact in finding the lot 44 owners did not address by-law 28 within a reasonable time prior to 30 June 2018 given that they did not address the expiry of by-law 28 until their request to amend the by-law on 11 April 2018 (being a request on which, ultimately, the lot 44 owners did not rely in the proceedings below) and the request that was made by or on behalf of the appellants was made on 28 June 2018; 4. The Tribunal did not err at law or in fact in finding that the internal staircase and void were constructed unlawfully in circumstances where they were not shown on the Council approved plans for the building and there was no evidence to prove that they were constructed with the approval of the Council or otherwise constructed lawfully; 5. The Tribunal did not err at law in the exercise of its discretion in concluding that it was appropriate to make a consequential order under s 241 of the SSM Act to require the lot 44 owners to seal or otherwise cover up the void in the floor of the enclosed roof room and the Tribunal did not make that order solely on the basis of its conclusion that the staircase and void were constructed unlawfully; 6. The Tribunal did not err in fact or in the exercise of its discretion in concluding that there was no cultural or heritage impacts which weighed against the making of an order to require the lot 44 owners to seal the void particularly given the evidence of the expert, Mr Kovacs that sealing the void would not require the removal of the internal staircase; 7. The Tribunal did not err at law in proceeding on the basis that it could order the lot 44 owners to carry out work which required development consent. Specifically, the Tribunal did have power to order the lot 44 owners to consent to such a development (should one have been necessary) by virtue of s 229, 232 and 241 of the SSM Act had it been necessary for the Tribunal to exercise that power (which it was not). The non involvement of the Local Council in the question of whether the works should be carried out was not relevant to the power of the Tribunal to order the lot 44 owners to carry out those works. Such an order did not circumvent any legislation pursuant to which the lot 44 owners (or any other interested party) could be required to consent to work. Such an order was not precluded by operation of s 232(7) of the SSM Act; 8. The Tribunal did not err in fact in finding that Mr Gescheit's evidence was that Council approval is not required to seal the void. The Tribunal did not err in the exercise of its discretion in the House v The King sense or otherwise in ordering the Tribunal to seal the void. There was no requirement for the Owners Corporation to lead evidence about how the void would be sealed. Any unwillingness on the part of the Owners Corporation to meet the cost of sealing the void provided a cogent reason for the Tribunal to order the lot 44 owners to seal the void. There was no evidence from the lot 44 owners that sealing the void would result in a substantial loss of amenity to them and any such loss of amenity would not have been a sufficient reason for the Tribunal to refrain from ordering the lot 44 owners to seal the void. It was a matter for the lot 44 owners to demonstrate the extent to which sealing the void would impact on their amenity (if amenity be relevant to the exercise of the Tribunal's discretion to order the sealing of the void) and the lot 44 owners did not do so; 9. The Tribunal did not err in the exercise of its discretion in the making Orders 3(i) to (iv) in the House v The King sense, particularly in circumstances where the Tribunal concluded that the rights to the exclusive use of the roof top area conferred on the lot 44 owners expired on 30 June 2018. The lot 44 owners did not lead any sufficient evidence as to the impact orders 3(i) to (iii) would have on their privacy, security and amenity and the impact of the making of those orders would not have presented a sufficient reason to refrain from making those orders; and 10. The Tribunal did not err in ordering payment of money equivalent to $3,970.00 per month pursuant to the undertaking given by the lot 44 owners as to damages. It was not a denial of procedural fairness for the Tribunal to rely on the evidence of Mr Keen in circumstances where the lot 44 owners were on notice that the Owners Corporation intended to rely on his evidence and the lot 44 owners made the forensic decision not to challenge his evidence by cross examination. The agreed facts establish that the value of the contested interest in the rooftop area was worth at least $243,000.00 and Mr Keen's valuation evidence established a monthly rental for the rooftop area for the sum of $3,970.00. In the circumstances, the Tribunal was entitled to accept that evidence.
Some of the appeal grounds raise questions which do not relate to any question of law. Clause 12 of Sch 4 of the NCAT Act regulates such grounds. Leave is required and the Owners Corporation submits that leave should not be granted.

[9]

Ground 1

The lot 44 owners submitted that the task of the Tribunal was to construe by-law 28 according to its terms having regard to the principles of interpretation summarised in The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207. By-law 28 provided for two alternative circumstances in which the by-law may be amended (i.e. at the request of the proprietors for the time being of lot 44 or in all other cases). Here, the request for the amendment made by JPSF made on 28 June 2018 engaged the second of the two alternative methods of amendment. That method required the consent of the lot 44 owners but not the consent of the Owners Corporation. The consent of the lot 44 owners was provided in the same document as JPSF's request.
Contrary to the Tribunal's findings there is nothing "absurd, capricious and irrational" in this interpretation of by-law 28. The by-law was given a primary sunset date because the owner for the time being of lot 44 may not have wished to maintain responsibility that went with the exclusive access to the rooftop or may simply be inactive so that the by-law comes to an end. If the parties always expected 30 June 2018 to be the last possible date to which the exclusive use would extend, it is surprising that they made no provision for who would make good the property so that it is suitable for access by all lot owners.
The narrow construction of by-law 28(3) adopted by the Tribunal begs the question of what work is to be given by the closing words "or subject to the consent in writing of the said proprietors in all other cases". The Tribunal must give meaning to every word in the by-law and should avoid interpretations that leave clauses or sentences superfluous or insignificant: Project Blue Sky v Australian Broadcasting Authority (1998) 194 CLR 355 at [71].
The Tribunal should not adopt the construction made by Tribunal that "in all other cases" is confined to a request by the Owners Corporation (see the Decision at [83] and [84]). The clear language of "all other cases" cannot be read down to mean "in a single other case being a request by the Owners Corporation". The plain and ordinary meaning of "in all other cases" covers requests for by-law amendment by any lot owner.
Of course, "in all other cases" must be given a sensible interpretation which does not comprehend strangers to the common property. The natural interpretation is to read the provision as allowing any lot owner, being a person with an interest in the common property under the strata scheme and a right to propose amendments to by-laws to be entitled to propose an amendment for the purposes of by-law 28(3).
The legislative context to this by-law is important. Clause 15(1) of the 1973 Act provides that a proprietor entitled to a right of exclusive use of common property may serve a notice on the Body Corporate requiring it to make a by-law in terms specified in the notice confirming that right. Clause 15(2) provides that the Body Corporate may make a by-law referred to in subclause (1) otherwise than pursuant to a special or unanimous resolution. That occurred in this case. Clause 15(8) provides that notwithstanding s 58 (which provided for amendments to by-laws) such a by-law may be amended, added to or repealed in such manner as may be specified in the by-law. There is no basis to read the by-law down in the manner contended.
The effect of the construction adopted by the Tribunal at first instance is that no amendment can occur without the consent of the Owners Corporation which is entirely inconsistent with the fact that by-law 28(3) has two limbs or avenues for amendment, only one of which requires the consent of the Owners Corporation.
The object of by-law 28 was not simply to grant exclusive use for a period of 50 years, rather the object was to grant exclusive use for a period of 50 years subject to amendment. It was an error to find that the by-law cannot be amended to extend its duration.

[19]

By Ground 13

The lot 44 owners submit that Order 1 (requiring payment of compensation) exceeded jurisdiction and should be set aside. At no stage during the hearing did the Owners Corporation seek an order on reliance on the undertaking given by the lot 44 owners, nor was this raised by the Tribunal. The first that the lot 44 owners because aware of this was when the orders were made on 12 April 2019. They were not afforded an opportunity to be heard in relation to those orders. There was a denial of procedural fairness. The Tribunal does not have the independent power to award damages in the circumstances of this case. The Owners Corporation did not suffer any loss in any amount let alone an amount equivalent to the value of monthly rental to someone in the position of the lot 44 owners. The position would be different if, for example, the Owners Corporation adduced evidence that it would have rented out the space. Indeed the Owners Corporation could not grant a license to use the common property without a special resolution: s 112(1) of the SSM Act. Even then, the valuation prepared by Keen Property would not assist - this was a valuation of the exclusive right in the hands of lot 44, not the amount that the Owners Corporation could have rented the space to a third party. The Owners Corporation has not proved that it is any worse off by reason of the Tribunal's interim order.
As to the actual amount that was ordered, it was not open to the Tribunal to accept the contested aspect of the report by Keen Property. Agreed facts were stated onto the transcript as a result of which the competing valuation evidence was not the subject of cross examination. It was a denial of procedural fairness to determine the matter on the basis of disputed expert evidence in the Owners Corporation's valuation report. Finally, the amount that was ordered is not a figure borne out on the evidence. Keen Property's figure is consistent with its much greater valuation for the exclusive use rights of $880,000.00, being a figure expressly excluded. This does not address the value of the exclusive use right, nor the lost benefit to the Owners Corporation noting that the Owners Corporation could not only access the area through the back staircase.

[20]

Submissions of the Owners Corporation in the appeal of the lot 44 owners

The following paragraphs summarise the submissions of the Owners Corporation in the above appeal.
The Owners Corporation dispute the assertion of fact made by the lot 44 owners that the staircase formed part of the original building. Rather, the contention of the Owners Corporation is that the approved strata plan showed the box room on the rooftop with a concrete floor covering the whole of the box room and no staircase connected to lot 44 below.
The lot 44 owners' submission is that by-law 28(3) entitled them or a company they control (JPSF) to unilaterally grant themselves a further right of exclusive use of the roof area for another 50 years (or such longer period as they desire) for free, without the consent of the party which granted their exclusive use right, namely the Owners Corporation.
The interpretation of by-law 28(2) contended for by the lot 44 owners ignores the object of the by-law read as a whole. The object of the by-law was to confirm the initial 50 year grant of the exclusive use of the roof area in favour of the penthouse owners that had been made by the former Strata Committee in 1968, not to extend that grant, or to enable that grant to be unilaterally extended by the lot 44 owners or a company controlled by them.
By-law 3(f) in the first schedule to the 1961 Act (which permitted the Owners Corporation to grant an owner the right to exclusive use of common property) did not permit the Owners Corporation to amend that grant. Clause 15(1) in Sch 4 to the 1973 Act provided that an owner in the position of the lot 44 owners could, by notice, require the Owners Corporation to make the by-law confirming (not amending) the previous grant to them of a right of exclusive use of common property. Clause 15(1) did not permit the exclusive use of rights to itself be amended.
The Owners Corporation supports the construction of by-law 28 found by the Tribunal below. Reading down the second limb of by-law 28(3) enables the by-law to operate in a sensible manner. It explains why the consent of the Owners Corporation is not required where a request for the by-law to be amended in made "in all other cases" because the request must be made by the Owners Corporation itself and it also explains why the consent of the Owners Corporation is required when the lot 44 owners or a company they control request an amendment of the by-law. It avoids the by-law being harsh, unconscionable or oppressive.
The interpretation contended for by the lot 44 owners leads to illogical, harsh and unreasonable outcomes. They would be entitled to unilaterally grant themselves a further right of exclusive use of the roof area. The unilateral right to insist on amendments could lead to the by-law being amended to the substantial detriment of every other owner. Third parties (whose requests for amendments to the by-law would need only to be approved by the lot 44 owners) would have a greater capacity to amend the by-law than the lot 44 owners themselves (whose request for amendments to the by-law would still need to be approved by the Owners Corporation). These outcomes show the interpretation of the by-law advanced by the lot 44 owners leads to absurd, capricious and irrational results which cannot have been intended and ought to be avoided, as well as an operation that is harsh, unconscionable and unreasonable contrary to the prohibition on such by-laws in s 139(1) of the SSM Act.

[29]

Ground 13

The lot 44 owners say that the Owners Corporation did not seek an order in reliance on the undertaking given by the lot 44 owners, nor was the making of an order on that basis raised by the Tribunal as a result of which they were denied procedural fairness. The terms of the undertaking provided that they would "submit" to such order as the Tribunal considered just for payment of compensation to be assessed by the Tribunal or as it may direct to any person affected by the interim orders made on 29 July 2018. By agreeing to "submit" to such order to be made by the Tribunal, the lot 44 owners placed themselves into the same position as a party who files a submitting appearance in a Court and agrees to abide by the terms of any order the Court makes. Consequently, no procedural unfairness arose.
The lot 44 owners submit that the Tribunal did not have power to award payment of damages. The Owners Corporation submits that the Tribunal had power to grant the lot 44 owners interim relief on the condition that they gave the usual undertaking as to damages. Section 231 of the SSM Act empowers the Tribunal to make an interim order in the form of any order that could otherwise be made by the Tribunal. Section 58 of the NCAT Act permits the Tribunal to make orders subject to conditions. Section 232 of the SSM Act gives the Tribunal a broad power to make an order to settle a complaint or dispute, including a payment for damages (The Owners Strata Plan No 30621 v Shum). In Crawley v Cohchrane (unreported) New South Wales Supreme Court Cohen J 14 October 1998, BC 9805307 at 20 the Court held that although there was no reference to an undertaking as to damages in the legislative precursor to s 231 or elsewhere in that Act, there was no reason why, in an appropriate case, an adjudicator could not require an undertaking as a condition of an order under that section.
In response to the submission of the lot 44 owners that the Owners Corporation did not suffer any loss as a consequence of being excluded from the roof top area after 30 June 2018, the Owners Corporation submits that the Owners Corporation had an entitlement to an occupation fee in the form of mesne profits arising from the wrongful ouster by the lot 44 owners of the Owners Corporation and other owners from the roof area. The measure of damages was not the Owners Corporation loss but the occupation fee to which it was entitled.
The lot 44 owners submitted that it was not open for the Tribunal to accept the contested aspects of Mr Keen's valuation report. He assessed the monthly rental of the roof area to be in the sum of $3,970.00. There was no agreement reached between the parties to exclude Mr Keen's valuation opinion. The lot 44 owners made a forensic decision not to test Mr Keen's evidence through cross examination. They cannot now complain that they were denied procedural fairness because of that forensic decision. The Tribunal was entitled to accept Mr Keen's evidence of rental value.

[30]

Lot 44 owners' submissions in reply

The following summarises the lot 44 owners' submissions in reply: 1. In respect of the notice issued by JPSF dated 21 June 2019 it is important to note that that notice included terms to the advantage of other lot owners, including that the lot 44 owners would be responsible for and indemnify the Owners Corporation for repairs and maintenance of the exclusive use area; 2. In relation to the Owners Corporation's purported reliance on the evidence of Keen Property to the effect that the right to the exclusive use of the roof area for 50 years is worth between $243,000.00 to $880,000.00, the lot 44 owners submit that for reasons given in the submissions in chief it is impermissible to rely on the figures asserted in the Keen report outside what was agreed between the parties; 3. Grounds 1 - 4: the reference relied upon by the Owners Corporation to the provisions of the cross application said to put in issue the assertion that JPSF was the agent for the lot 44 owners, that reference was insufficient to put agency squarely in issue and was not the subject of cross examination. There was no basis to assert an agency relationship. In view of the decision we have reached it is not necessary to restate the balance of the submissions in reply of the lot 44 owners concerning the JPSF notice; 4. In respect of Ground 6 (the staircase) the lot 44 owners refer to the submissions of the Owners Corporation drawing attention to the fact that the evidence disclosed that there was a requirement that there be a void. The lot 44 owners submit that this begs the question as to why a void would be approved but not a staircase. The only rational inference is that the staircase was also approved and built around the same time; 5. If the Owners Corporation is to have the benefit of a finding that a structure which has stood for over 50 years is unlawful, the Tribunal would expect evidence of the clearest nature bearing in mind the Briginshaw standard and the fact that this is not a matter within the familiar jurisdiction of the Tribunal, but rather a matter for the Local Council or, if necessary, the Land and Environment Court; 6. The circumstances in which a lot owner can be ordered to repair/alter common property are set out exhaustedly in s 132 of the SSM Act. The lot 44 owners submitted that the Tribunal has no statutory authority to make orders under that section against the lot owners. The Tribunal's power to make orders under that section is limited to circumstances where the orders are sought against the owner who caused damage to the common property. Assuming that the void is regarded as "damage" to common property, it is common ground that the lot 44 owners did not cause it. They are not the relevant person against whom an order can be made under s 132. In any event, the central purpose of sealing the void would be to enable other lot owners to access the area consistent with the lot 44 owners' privacy, security and amenity. There is no reason why, as a matter going to discretion, such work for that central purpose should not be borne by the Owners Corporation; and 7. With respect to Ground 13 (concerning the money order) the lot 44 owners submit that there was nothing on the face of the undertaking given by them to indicate that, were recourse to be had to it in due course, the lot 44 owners did not seek to be heard as to what amount, if any, should be ordered. In addition, there is no express authority given to the Tribunal to order damages. There is no general power under s 232 of the SSM Act and it is necessary to identify a specific source of power arising from one of the subparagraphs in s 232(1): see Feletti v Eales [2019] NSWCATAP 100 at [21] and [28].

[32]

Submissions of the Owners Corporation in support of their appeal

The submissions in support of the above Grounds of Appeal put forward by the Owners Corporation may be summarised as follows: 1. The Tribunal erred in not deciding that the lot 44 owners continued occupation of the roof area to the exclusion to the Owners Corporation and other owners and occupiers after 30 June 2018 did not infringe the proprietary rights of the Owners Corporation in connection with that area, or result in a breach of their statutory duty under s 153 of the SSM Act or a contravention of their covenants in by-laws 3 and 28. The only reason given by the Tribunal on this issue was that the lot 44 owners had continued to have exclusive use of the roof area since 30 June 2018 arising from the interim orders; 2. The Tribunal proceeded on the basis that the lot 44 owners continued occupation of the roof area "arising from" the interim orders was something that was mutually exclusive to, and could not overlap with, any infringement of the proprietary rights of the Owners Corporation or any breach of the statutory duty of the lot 44 owners in s 153 of the SSM Act or their covenants in by-laws 3 and 28. There was no cogent reason for the Tribunal to adopt that approach. Once the Tribunal rejected the Owners Corporation's contention that an infringement of its proprietary rights and breach of the legislation and by-laws, the Tribunal concluded that considerations as to compensation payable by the lot 44 owners for breach of duty or mesne profits did not arise. The Tribunal should not have rejected that contention and neither should the Tribunal have dismissed the claim for payment of an occupation fee; 3. Section 153 of the SSM Act imposes a statutory duty on an owner not to use or enjoy the common property in a manner or for a purpose that interferes unreasonably with the use or enjoyment of the common property by the owner or occupier of any lot. By-law 3 in Sch 2 to the 2016 Regulation contains terms which have the effect that an owner or occupier must not obstruct lawful use of common property by any person. It follows that by continuing to use the rooftop to the exclusion of the Owners Corporation and the owners and occupiers of other lots, the lot 44 owners infringed the rights of the other parties under the general law, contravened s 153 and breached by-laws 3 and 28; 4. The Tribunal has a broad power to make orders to resolve disputes - see ss 232, 241 and 249 of the SSM Act. In Crawley v Cochrane the Court, dealing with the 1996 Act and considering the sections which were the predecessor to s 232, stated that wide powers were given to the Adjudicator (in that context the decision maker) so as to permit a resolution of disputes without the need to apply to a Court; 5. In the circumstances, the entitlement of the Owners Corporation was to an occupation fee in the form of mesne profits. They are calculated on the open market value of the premise and the measure of mesne profits is a reasonable sum in the nature of rent (see Biviano v Natoli (1998) 43 NSWLR 695). The Owners Corporation was entitled to an occupation fee in the form of mesne profits payable by the penthouse owners at the rate of $3,970.00 per month having regard to the evidence of Mr Keen; and 6. The Owners Corporation submits that there was no reason why the Tribunal could not make an order requiring the lot 44 owners to pay the Owners Corporation an amount of money. In The Owners Strata Plan No 30621 v Shum the Appeal Panel held that the Tribunal has jurisdiction under s 232 of the SSM Act to make an order for payment of compensation and that there is no monetary limit to the jurisdiction of the Tribunal in that respect. Shum involved a claim by a lot owner against an Owners Corporation for payment of compensation for breach of the statutory duty to repair common property. However, the key finding in Shum is that the power given to the Tribunal in s 232(1) to "settle a dispute or complaint" should be construed in a way that enables the determination of a claim for damages by the Tribunal, particularly because s 3(b) indicates that the object of the SSM Act is to "provide for resolution of disputes arising from strata schemes": see The Owners Strata Plan No 30621 v Shum at [64]. The Appeal Panel's conclusion in that case makes it clear that the Tribunal has power to make a money order for the award of damages not confined to only a claim for damages made by a lot owner against an Owners Corporation for breach of statutory duty.
In conclusion, the Owners Corporation submits that the cross appeal should be allowed. Order 3(vii) should be set aside and in lieu thereof, an order should be made for the lot 44 owners to pay the Owners Corporation an amount of money commensurate with $3,970.00 per month from 1 July 2018 until compliance with Orders 3(i) - (v).

[34]

Grounds 1 to 4

We are in agreement with the Tribunal's construction of by-law 28 that any amendment of the by-law requires the consent of the Owners Corporation. Ground 1 of the appeal is therefore dismissed. We also wish to add to the Tribunal's reasoning which we do in the following paragraphs.
By-law 28(3) refers to a request for amendment, addition or repeal made by the proprietors for the time being of lot 44 and provides that any amendment, addition or repeal of the by-law is subject to the consent of the Owners Corporation. The by-law does not state in express terms to whom the request is to be made, but our view is that the by-law is intended to be read as contemplating that the request is to be made to the Owners Corporation.
By-law 28(3) also refers to "all other cases" whereby the by-law may be amended, added to or repealed. Such cases may be cases where the Owners Corporation wishes to amend, add to or repeal the by-law or may be cases where another lot owner proposes the amendment, addition or repeal of the by-law. Such requests expressly require the consent of the lot 44 owners or the proprietors of that lot from time to time. The way a request is acted upon is by the convening of an extraordinary general meeting of the Owners Corporation or by including such item on the agenda of an annual general meeting. Such meeting (an extraordinary general meeting or annual general meeting) of the Owners Corporation constitutes the method by which the Owners Corporation considers whether it consents to the proposal through the votes of those lot owners entitled to and voting. It is our view that the by-law does not expressly state that in those "other cases" the Owners Corporation's consent is required because it is unnecessary to say so given that the Owners Corporation considers the request at one of the two types of meetings described above by passing (or failing to pass) a resolution for the amendment, adding to or repeal of the by-law. The by-law in our opinion is not capable of the meaning that where a request is made by a lot owner other than the lot 44 owners, the consent of the Owners Corporation is not required. Such an interpretation of the by-law ignores the fact that requests go to the Owners Corporation for it to consider, and approve or not approve.
For the above reasons, we agree with the Decision at [83] which states: 83 Fourthly, the Tribunal finds, on a proper construction of By-Law 28, any amendment of the By-law requires the consent of the Owners Corporation. Clause (3) of By-Law 28 permits the By-Law to be amended or added to in two circumstances: 1) At the request of the owners of Lot 44 and with the consent of the Owners Corporation; and 2) Subject to the consent in writing of the proprietors (of Lot 44) in all other cases.
Given our views as to the construction of by-law 28(3) it is not necessary to say whether we agree with the Decision insofar as the Tribunal declined to exercise its power under s 232 of the SSM Act to make orders in favour of the lot 44 owners (see [88] of the Decision). It is also not necessary to state whether we agree with the Decision insofar as it stated that the by-law did not permit the grant of exclusive use being amended, added to or repealed (see [81] of the Decision). The essential point is that the Decision was correct in concluding that the consent of the Owners Corporation is required to amend, add to or repeal by-law 28.
Our view as to how by-law 28 is to be construed disposes of Ground 1 of the appeal brought by the lot 44 owners. It is also not necessary to determine Ground 2 because in our view the benefit of by-law 28 came to an end on 30 June 2018. Grounds 3 and 4 also fall away. This brings us to Grounds 5 to 13.

[35]

Grounds 5 and 6

Ground 5 is merely introductory to Ground 6 which is to the effect that the Tribunal was in error to find that the staircase and void were constructed unlawfully.
It is necessary to state that appeals from decisions made in the Consumer and Commercial Division of the Tribunal are regulated by s 80 of the NCAT Act. Essentially, this means that there is an appeal as of right on any question of law (see s 80(2)(b)) or with leave on the grounds set out in cl 12 of Sch 4 of the NCAT Act. Clause 12 provides: Part 6 Appeals 12 Limitations on internal appeals against Division decisions (1) An Appeal Panel may grant leave under section 80 (2) (b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied 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). Note. Under section 80 of this Act, a party to proceedings in which a Division decision that is an internally appealable decision is made may appeal against the decision on a question of law as of right. The leave of the Appeal Panel is required for an internal appeal on any other grounds. (2) Despite section 80 (2) (b) of this Act, an internal appeal against a Division decision may only be made on a question of law (as of right) and not on any other grounds (even with leave) if: (a) the appellant is a corporation and the appeal relates to a dispute in respect of which the Tribunal at first instance had jurisdiction because of the operation of Schedule 3 to the Credit (Commonwealth Powers) Act 2010, or (b) the appeal is an appeal against an order of the Tribunal for the termination of a tenancy under the Residential Tenancies Act 2010 and a warrant of possession has been executed in relation to that order.
The question of new evidence has not arisen in these appeals and therefore there is no need to make further reference to cl 12(1)(c). The Tribunal has previously provided guidance as to the issues to be considered under cl 12: see Collins v Urban [2014] NSWCATAP 17 from [65].
In our view, Ground 6 does not assert any question of law but rather asserts that the findings made by the Tribunal were not available on the evidence. We understand the lot 44 owners to be relying upon cl 12(1)(b) - i.e. that the decision under appeal was against the weight of evidence.
Under cl 12 it is necessary for the Appeal Panel to be satisfied that the appellant may have suffered a substantial miscarriage of justice. The concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred (Collins v Urban at [71]. A decision under appeal can be said to be "against the weight of evidence" where the evidence in its totality preponderates so strongly against the conclusion found by the Tribunal at first instance that it can be said that the conclusion was not one that a reasonable Tribunal Member could reach (Collins v Urban at [77]).
We are of the opinion that the lot 44 owners have not demonstrated to our satisfaction that they may have suffered a substantial miscarriage of justice in the sense described in Collins v Urban, nor are we satisfied that the findings of fact were against the weight of evidence in the manner described in Collins v Urban.
Furthermore, in Collins v Urban the Appeal Panel noted that even if an Appeal Panel is satisfied that the applicant for leave to appeal may have suffered a substantial miscarriage of justice on one of the grounds identified in in cl 12, then the Appeal Panel "may" grant leave. In other words, there is still a discretion as to whether to grant leave (Collins v Urban at [80] and [81]).
In Collins v Urban the Appeal Panel stated that ordinarily it is appropriate to grant leave only in matters that involve: 1. Issues of principle; 2. Questions of public importance or matters of administration or policy which might have general application; 3. An injustice which is reasonably clear in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. A factual error that was unreasonably arrived at and clearly mistaken; and 5. The Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed (Collins v Urban at [84]).
We are of the opinion that the submissions concerning Ground 6 do not satisfy us either that there has been a substantial miscarriage of justice or that if, even if there were, that we should exercise our discretion to grant leave. None of the above matters referred to in Collins v Urban exist in this matter and in particular, there was evidence which was reasonably available to the Tribunal as to the basis for the finding that the staircase and void were constructed unlawfully.

[36]

Ground 7

This concerns the order for the sealing of the void. The lot 44 owners submit that the Tribunal erred in law in ordering the lot 44 owners to seal the void in circumstances where the Tribunal did not find that they (i.e. the lot 44 owners) had a statutory obligation to repair common property. The basis for the Tribunal order in this regard was that in the circumstances of the matter, it was not unreasonable for the Owners Corporation to ask the lot 44 owners to take steps to seal the void (see [108] of the Decision). The order was described as a consequential order.
We are of the view that the Tribunal erred in not identifying the basis for the decision that the lot 44 owners were responsible for the repair of the common property by sealing the void. Section 106 of the SSM Act provides that the Owners Corporation must properly maintain and keep in a state of good and serviceable repair the common property. Once the right of the lot 44 owners to access the area provided for in by-law 28 had come to an end, the obligation under s 106 was enlivened in our view and required the Owners Corporation to seal the void. The practical consequence of so doing was twofold. Firstly, the roof top area previously set aside for the exclusive use of the lot 44 owners became available for use by other lot owners. The void was required to be sealed to enable other lot owners to safely enjoy that amenity. The second purpose was that the consequence of the former exclusive area becoming non-exclusive was that the lot 44 owners were entitled to the void being sealed so as to preserve their privacy and amenity. In our view, Order 3(iv) should be set aside and in its place, an order should be made requiring the Owners Corporation to seal the void. An order to that effect will be made imposing the same time frame for compliance (2 months) as is contained in the existing Order 3(iv).
The fact that the void was constructed unlawfully does not lead to the conclusion that the lot 44 owners must bear the cost of sealing the void. The circumstances in which the void was constructed many years prior to the lot 44 owners becoming owners of that lot were not the subject of findings of fact made by the Tribunal. Therefore, it was, in our respectful view, an error for the Tribunal to impose the obligation to seal the void upon the lot 44 owners.

[39]

Ground 13

This ground concerns the order for the payment of money at the rate of $3,970.00 per month from July 2018 to be made by the lot 44 owners to the Owners Corporation. The basis for this order was the fact that the Owners Corporation had given an undertaking as to damages. The Decision records that this undertaking was given as a condition for the interim order restraining the Owners Corporation from accessing the front roof area pending determination of the hearing.
The lot 44 owners' appeal ground was partly based upon the assertion that they were denied procedural fairness. This ground is rejected. The terms of the undertaking put the lot 44 owners on notice that the Tribunal may make an order for the payment of compensation. The Decision records that the Owners Corporation's application lodged in July 2018 included an application for an order that the lot 44 owners pay the Owners Corporation an occupation fee or mesne profits (see [45] of the Decision). At [49] the Decision records that the Owners Corporation's expert, Mr Keen gave evidence that the front roof area had a monthly rental value of $3,970.00. Although the Tribunal did not make the order for compensation based upon an assertion of breach of statutory duty or an obligation to pay mesne profits (see [111] of the Decision) and, instead, made the order based upon the undertaking given by the lot 44 owners to pay damages, no procedural unfairness has arisen. The substance of the claim put forward by the Owners Corporation was for compensation. That was foreshadowed and the fact that the Tribunal based its decision upon the undertaking has not given rise to any unfairness suffered by the lot 44 owners. The lot 44 owners have not put to us any submission that they would have made (but did not make) had they been aware that the Tribunal would determine compensation on the basis of the undertaking.
The second aspect of Ground 13 is that the lot 44 owners submit that the Tribunal does not have power to award payment of damages by a lot owner to an Owners Corporation. The Tribunal has a general order making power to settle a complaint or dispute by reason of s 232 of the SSM Act. That section provides: 232 Orders to settle disputes or rectify complaints (1) Orders relating to complaints and disputes The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following: (a) the operation, administration or management of a strata scheme under this Act, (b) an agreement authorised or required to be entered into under this Act, (c) an agreement appointing a strata managing agent or a building manager, (d) an agreement between the owners corporation and an owner, mortgagee or covenant chargee of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme, (e) an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme, (f) an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act. (2) Failure to exercise a function For the purposes of this section, an owners corporation, strata committee or building management committee is taken not to have exercised a function if: (a) it decides not to exercise the function, or (b) application is made to it to exercise the function and it fails for 2 months after the making of the application to exercise the function in accordance with the application or to inform the applicant that it has decided not to exercise the function in accordance with the application. (3) Other proceedings and remedies A person is not entitled: (a) to commence other proceedings in connection with the settlement of a dispute or complaint the subject of a current application by the person for an order under this section, or (b) to make an application for an order under this section if the person has commenced, and not discontinued, proceedings in connection with the settlement of a dispute or complaint the subject of the application. (4) Disputes involving management of part strata parcels The Tribunal must not make an order relating to a dispute involving the management of a strata scheme for a part strata parcel or the management of the building concerned or its site if: (a) any applicable strata management statement prohibits the determination of disputes by the Tribunal under this Act, or (b) any of the parties to the dispute fail to consent to its determination by the Tribunal. (5) The Tribunal must not make an order relating to a dispute involving a matter to which a strata management statement applies that is inconsistent with the strata management statement. (6) Disputes relating to consent to development applications The Tribunal must consider the interests of all the owners of lots in a strata scheme in the use and enjoyment of their lots and the common property in determining whether to make an order relating to a dispute concerning the failure of an owners corporation for a strata scheme to consent to the making of a development application under the Environmental Planning and Assessment Act 1979 relating to common property of the scheme. (7) Excluded complaints and disputes This section does not apply to a complaint or dispute relating to an agreement that is not an agreement entered into under this Act, or the exercise of, or failure to exercise, a function conferred or imposed by or under any other Act, if another Act confers jurisdiction on another court or tribunal with respect to the subject-matter of the complaint or dispute and the Tribunal has no jurisdiction under a law (other than this Act) with respect to that subject-matter.
Here, the dispute arose out of the operation, administration or management of the strata scheme in that the interim order permitted the lot 44 owners to have continued use of the disputed area on the conditions contained in the undertaking. In our view, the order made by the Tribunal was within the order making power of the Tribunal having regard to the terms of s 232.
In the Shum case the Appeal Panel held that s 232 of the SSM Act contains a power to make an order to settle a dispute, the form of order not being confined to requiring a party to perform or restrain from performing a duty, carrying out an action or undertaking some defined tasks [91]. The Appeal Panel held there was no reason to conclude that the order making power excludes a money order for the award of damages [91]. At [95] the Appeal Panel held that there is no reason to construe the jurisdiction of the Tribunal or the order making power in s 232 in a manner that would prevent an order for the payment of damages consequent upon the determination of a claim by a lot owner for damages arising from an Owners Corporation breach of statutory duty. The approach of the Appeal Panel in that case was to identify that the subject matter in question (a claim by a lot owner against an Owners Corporation) was not excluded from the operation of s 232. The Appeal Panel did not limit the ambit of s 232 to that type of claim.
In addition, in the circumstances of this case, the lot 44 owners have undertaken (as a condition of being granted interim relief) to pay compensation. The Tribunal has a power to impose conditions: see s 58 of the NCAT Act. Having imposed the condition it follows in our view that the Tribunal is entitled to make an appropriate order contemplated by the condition: in this case an order for the payment of compensation.
The third aspect of Ground 13 raised by the lot 44 owners was that the valuation relied upon (namely that of Keen Property) was a valuation of the exclusive right in the hands of lot 44. In our view, the evidence of rental value, (which was not opposed by an alternative methodology) was an appropriate way of measuring compensation. Furthermore, the fact that the Owners Corporation was not able to demonstrate that it had suffered any loss in an amount equivalent to the value of the money rental does not defeat the claim of the Owners Corporation. The Owners Corporation, having received the undertaking to pay compensation, were entitled to seek compensation for the value of the benefit denied to them and did not have to adduce evidence of potential renters who would have used the space but for the presence of the lot 44 owners.
The final aspect of Ground 13 is that the lot 44 owners submit that agreed facts were stated on to the transcript as a result in which the competing valuation evidence was not the subject of cross examination. Having read the relevant parts of the transcript, we do not accept that the Tribunal was precluded from making findings as to the amount of damages paid. The parties agreed not to require either valuer for cross examination, and they further agreed to the specific facts mentioned by counsel for the lot 44 owners at the hearing. The transcript reveals that through counsel the parties agreed what the minimum value of the exclusive area was worth for a period of 50 years. The second fact agreed was that the lot 44 owners have had continued use of the relevant area contemplated by the interim orders. The third fact agreed was that the relevant area has superior views of the harbour. Accordingly, in our view, it remained open to the Tribunal to accept the opinion of Keen Property as to the rental value of the disputed area. The Decision describes such evidence as "not seriously contested" and we were not taken to evidence that might have suggested that that description was inaccurate.

Pollack v The Owners - Strata Plan No. 2834; The Owners - Strata Plan No. 2834 v Pollack

At a glance

Court

Decision date

Before

Source

Judgment (43 paragraphs)

Cases Cited (8)

Cited By (1)