Robinson v The Owners-Strata Plan 61717 - [2018] NSWCATCD 49 - NSWCATCD 2018 case summary — Zoe

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Robinson v The Owners-Strata Plan 61717

[2018] NSWCATCD 49

NCAT Consumer and Commercial|2018-05-31

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At a glance

Source facts

Court

NCAT Consumer and Commercial

Decision date

2018-05-31

Source

Original judgment source is linked above.

Judgment (14 paragraphs)

[1]

Application

This is an application filed with the Tribunal on 5 December 2017 by a lot owner in a strata scheme for an "Order under Section 24 of the Strata Schemes Management Act 2015 ("SSMA") to invalidate the resolution of Motion 2.1 of the SP 61717 EGM, 19 September 2017 'That the Owners Corporation accept the tender received from PD Redial dated 28 August 2017 for the amount of $530,587 plus GST as per the recommendation received from Core Project Consulting for the required remedial works-façade, waterproofing, blinds'.
The applicant is the registered proprietor of Lot 128 in Strata Plan 61717.
The respondent is The Owners, Strata Plan 61717.

[2]

Legislation and jurisdiction Section 232 provides that the Tribunal may make an order 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.

The Tribunal is satisfied that the applicant as a lot owner in the strata scheme is a person able to bring proceedings in the Tribunal under s 232 of the SSMA.
Section 227 of the SSMA provides that the Registrar of the Tribunal cannot accept an application unless mediation has been attempted, a party has refused mediation or the registrar considers mediation is unnecessary or inappropriate in the circumstance, as follows: (1) A registrar must not accept an application made to the Tribunal under this Act unless: (a) mediation by the Secretary under Division 2 or otherwise has been attempted but was not successful, or (b) a party refused to participate in the mediation, or (c) the registrar considers that mediation is unnecessary or inappropriate in the circumstances. (2) The registrar must inform an applicant that the applicant should arrange for mediation if the registrar rejects an application under this section. (3) The applicant may arrange for mediation under Division 2 or otherwise. (4) This section does not apply to applications for the following orders: (a) an order to appoint, or requiring the appointment of, a strata managing agent, (b) an order varying or revoking an order that varies or revokes another order by the Tribunal, (c) an order with respect to waiving, varying or extinguishing a restriction relating to the initial period, (d) an order allocating unit entitlements, (e) an order with respect to access to a lot by the owners corporation to inspect or repair common property, (f) an order seeking provision of records to an owners corporation by a former strata managing agent for the strata scheme, (g) an order with respect to the inspection of records of an owners corporation, (h) an order imposing a monetary penalty and any associated order as to the payment of costs.
There is attached to the application a copy of a letter dated 29 November 2017 from NSW Fair Trading to the applicant confirming that mediation of the dispute had been not been fully successful. The Tribunal is satisfied that the requirements of s237(1) of the SSMA have been complied with and the Tribunal has the jurisdiction to hear and determine the application.
S 24 of the SSMA provides: (1) The Tribunal may, on application by an owner or first mortgagee of a lot in a strata scheme, make an order invalidating any resolution of, or election held by, the persons present at a meeting of the owners corporation if the Tribunal considers that the provisions of this Act or the regulations have not been complied with in relation to the meeting. (2) The Tribunal may, on application by an owner or first mortgagee of a lot in a strata scheme, make an order invalidating any resolution of, or election held by, the persons present at a meeting of the owners corporation if the Tribunal considers that the provisions of Part 10 (other than Division 6 or 7) of theStrata Schemes Development Act 2015 have not been complied with in relation to the meeting. (3) The Tribunal may refuse to make an order under this section only if it considers: (a) that the failure to comply with the provisions of this Act or the regulations, or of the Strata Schemes Development Act 2015 , did not adversely affect any person, and (b) that compliance with the provisions would not have resulted in a failure to pass the resolution or affected the result of the election. (4) The Tribunal may not make an order invalidating a resolution under subsection (2) if an application for an order has been made under Division 6 of Part 10 of theStrata Schemes Development Act 2015 in relation to the same or a related matter. (5) The Tribunal may not make an order under this section invalidating a decision by an owners corporation to approve, or not to approve, the appointment of a building inspector under Part 11.

[4]

Evidence

The applicant relies on: 1. The bundle of documents filed on 20 February 2018 and admitted without objection as Exhibit A1 which includes: 1. The applicants Statement & Chronology; 2. Minutes of a meeting of the Strata Committee Strata Plan 61717 held on 11 April 2017; 3. Minutes of a meeting of the Strata Committee Strata Plan 61717 held on 4 September 2017; 4. Letter from BCS to lot owners dated 13 September 2017; 5. Copies of two Specification Details prepared by Core Project Consulting ("CPC") dated 11 July 2017; 6. Minutes of an extraordinary general meeting ("EGM") of the Owners Strata Plan 61717 held on 19 September 2017; 7. Copy of an email dated 1 December 2017 from BCS to the applicant with quotes from Vental Australia Pty Ltd and Turner Bros attached; 8. Copy of Settlement Agreement dated 28 November 2017 prepared by NSW Fair Trading Mediator and signed by Strata Manager and applicant; 9. Copy of Building Management Agreement between The Owners Strata Plan 61717 and K & S Building Management Services Pty Ltd; 10. Minutes of a meeting of the Strata Committee Strata Plan 61717 held on 7 February 2017; 11. Minutes of a meeting of the Strata Committee Strata Plan 61717 held on 16 May 2017; 12. Copy of CPC Fee Proposal; 13. Copy of CPC Tender Recommendation for Remedial Works; 14. Minutes of a meeting of the Annual General Meeting of Strata Plan 61717 held on 23 June 2004; 15. Minutes of a EGM of the Owners, Strata Plan 61717 held on 19 September 2017; 16. Chain of emails ending with email dated 14 September 2017 from the applicant to the Strata Manager; 17. Chain of emails ending with email dated 15 September 2017 from Beth Hocking of BCS to the applicant; 18. Copy of an Application for Mediation dated 5 October 2017; 19. Copy of letter from Chambers Russell Solicitors to the applicant dated 14 February 2018; 20. Copy of letter from the applicant to Chambers Russell Solicitors dated 18 February 2018; 1. The applicant's Points of Claim and admitted without objection as Exhibit A2; 2. The applicant's Reply to the Points of Defence and admitted without objection as Exhibit A3. 3. The applicant's letter dated 23 May 2018 and admitted without objection as Exhibit A4. 4. The sworn oral evidence of Noel Robinson.
The applicant has also made written submissions on 13 June 2018 that have been read and taken into account by the Tribunal.
The respondent relies on: 1. A bundle of documents filed and served on the applicant and admitted without objection as Exhibit R1 including: 1. Points of Defence; 2. Respondent's submissions; 3. Statement of Beth Hocking with annexures.
The respondent has also made submissions on 4 April 2018, 7 June 2018 and 18 June 2018 that have been read and taken into account by the Tribunal.

[5]

Facts and findings

The strata scheme comprises 146 lots and common property at 15-19 Boundary Street Darlinghurst ("Property").
The Owners have appointed Body Corporate Services ("BCS") as the Strata Manager for Strata Plan 61717 ("Strata Manager"). Beth Cocking is an employee of the Strata Manager and conducts the day to day management of SP61717 on behalf of her employer.
The Owners entered into a Building Management Agreement for SP61717 dated 8 August 2014 with K & S Building Management Services Pty Ltd for a term of 3 years ending on 8 August 2017 for the purpose of maintenance and repair of the Common Property ("BMA").There is no evidence adduced by the parties of the BMA being terminated.
The Property requires remedial work.
Cl 5.7(c) of the BMA provides that "the Owners Corporation reserves the right to obtain a second opinion on any engineering matters. Such second opinion will be at the cost of the Owners Corporation. Once having obtained the second opinion, the Owners Corporation may elect in its absolute discretion which engineering opinion will be utilised"
On 7 February 2017 the Annual General Meeting ("AGM") of the Owners resolved to engage engineers Core Project Consulting ("CPC") to undertake a site inspection, prepare technical specification/scope of works, undertake tender phase, contract preparation for remedial works ("preliminary works"). At that meeting the AGM resolved not to accept a proposal for carry out the preliminary works from RHM Consultants.
On 16 May 2017 at meeting of the committee, it was resolved that the replacement of the blinds, façade repairs and water penetration for the side of the Property known as the Block Side were priorities.
CPC prepared an initial Remedial Building Works Report dated 23 March 2017 and a Remedial Works Tender Specification on 11 July 2017.
On 4 September 2017 the executive committee reviewed the tenders and recommendation of CPC and determined that a general meeting would be convened on 19 September 2017 to consider a tender received from PD Remedial to carry out the work specified.
At an EGM of the Owners on 19 September 2017 a discussion took place about 2 quotes obtained by the Building Managers for the carrying out of the work by Aardvark Blinds and Turner Bros.
The Owners resolved on 19 September 2017 at an EGM to accept a tender from PD Remedial upon the recommendation by CPC by 6455 unit entitlements for the motion and 503 unit entitlements against.
On 5 October 2017 the applicant applied for mediation with the NSW Fair Trading. The mediation took place on 28 November 2017. The mediation resulted in the Strata Manager providing what material was in existence.
The applicant is not satisfied that the provisions of the SSMA have been complied with in respect of the remedial works and the inclusion of awnings as being the responsibility of the Owners and he has brought this claim for orders.

[6]

Awnings

In part of his application the applicant raises the issue of awnings installed by the owners of lot 92.
At an AGM held on 23 June 2004 it was resolved to make a by-law with respect to two awnings on the application by the then owners of lot 92. The by-law included a term that the maintenance and repair obligations would be transferred to the owner of lot 92. The by-law was not registered.
The lot owner who installed the awnings is no longer the owner of lot 92.
The Tribunal is satisfied that at the time the motion approving the by-law was passed, the provisions of the Strata Schemes Management Act 1996 SSMA1996 was in force. The SSMA1996 contained no provision which governed the process of improving and enhancing the common property.
At the time standard by-law 5 provided that an owner or occupier must not mark, paint, drive nails or screws or the like into, or otherwise damage or deface, any structure that forms part of the common property without the approval in writing of the owners corporation.
Without registration of the by-law the repair and maintenance obligation of works affecting the common property remained with the owners corporation.
The applicant contends that the awnings were abandoned by the original lot owner who installed them when he sold lot 92 to its current owner. The applicant argues that for the Owners to assume responsibility for the repair and maintenance of the two awnings, the Owners are proposing to add to or alter the common property. To do so, the Owners are required to pass a special resolution in compliance with ss 108 and 36(3)(a) of the SSMA.
The Tribunal is satisfied that if a chattel is attached to the land it will become part of the land by operation of law: Reid v Smith (1905) 3 CLR 656. The test of whether a chattel to some extent fixed to the land is a fixture is whether it was intended that it should remain in position permanently or for an indefinite or substantial period: Australian Provincial Assurance Co Ltd v Coroneo (1838) 38 SR (NSW) 701. As the awnings were intended to be attached permanently to the common property, they are fixtures and without a by-law imposing the obligation to repair and maintain on the lot owner they become chattels attached to part of the common property and become the responsibility of the Owners.
The awnings were attached to the common property before s65A of the SSMA1996 was assented to on 6 July 2004 and commenced on 7 February 2005. The law that applied is that when they were attached.
S65A had not come into effect and there was no provision requiring the passing of a by-law. The then owner of the lot sought and was granted by the owner's corporation consent to install the awnings. S65A of the SSMA1996 and the provisions of s108 of the SSMA have no retrospective application. If the awning was attached to common property at the time of the amendment to the SSMA1996 and the commencement of the SSMA then there is no need for the Owners to do more to accept the awnings as chattels attached to the common property (and accepting the obligation for their maintenance and repair).

[7]

Other Orders

In his Points of Claim, the applicant seeks orders: 1. Under S240 of the SSMA, the intention of which is not clear from the applicant's evidence. In the Points of Claim he says "An Order or Order under a different provision of the SSM Act 2015 if the Tribunal considers it appropriate to do so". 2. Under S232 of the SSMA to settle a dispute or rectify a complaint: 1. To declare null the resolution of Motion 2.1 of the Extraordinary General Meeting ("EGM") of the Owners Corporation held on 19 September 2017; 2. The applicant alleges that the Remedial Works Tender form PD Remedial of 28 August 2017 responded to the "Remedial Works Tender Specification", Rev. 1, 11 July 2017 which he alleges incorrectly included: 1. Nominated Subcontracts' for $168,409 plus GST for External Blinds and Sensors, the procurement of which had not met the statutory requirements of s102(1) of the SSMA. That provisions requires: (1) An owners corporation for a large strata scheme must obtain at least 2 quotations in relation to proposed expenditure in respect of any one item or matter if the proposed expenditure will exceed the amount prescribed by the regulations for the purposes of this section. 1. And, the statutory requirements of s37 of SSMA which requires: It is the duty of each member of a strata committee of an owners corporation to carry out his or her functions for the benefit, so far as practicable, of the owners corporation and with due care and diligence. 1. Remedial work on 2 Glazed Awnings installed originally by a lot owner, which is a change to the common property that had not been agreed to by the Owners under s108 of the SSMA. 1. A further Order under s232 of the SSMA that the Owners refrain from proceedings with any remediation work in relation to Blinds and Sensors and Glazed Awnings until further Orders made under this application are carried out and all statutory pre-requisites are met; 2. A further Order under s232 of the SSMA that the Owners: 1. obtain a minimum of 2 quotes for the design, supply and installation of blinds and sensors ("Works") as required by s102(1) of the SSMA and Reg 25 of the Strata Scheme Management Regulations 2016 ("SSMR") for expenditure greater than $30,000. 2. In obtaining quotes for the Works the Owners must act carefully and diligently for the benefit of the Owners which is a function required by s37 of the SSMA, by directing the Building Manager or an independent expert consultant experienced in design, specification and procurement of façade systems to: 3. Prepare Scope of Works and manage the Tender for the Works in the manner specified in Schedule , Cll 6.1, 6.2 and 10.6 of the BMA; and 4. In a written report, in the manner specified in Schedule 3 Cl 6.2 of the BMA, objectively assess tenders fairly and impartially to ensure tendered systems are fit for the specified purpose and that the Owners receive best value. 1. Orders under s238 of the SSMA relating to strata committee members and officers: 1. That the Strata Committee is prohibited from determining the preferred contractor for the Works and that because of the value and visual prominence of the blinds that the matter be determined by resolution of the Owners at a general meeting; 2. That the Strata Committee is prohibited under s38(3)(a) of the SSMA from determining that 2 dilapidated Glazed Awnings previously installed by a lot owner be added to the common property and that the matter be determined by special resolution of the Owners after receiving a professionally written dilapidation report that provides cost estimates for the repair, ongoing maintenance, or removal of the two awnings.
The onus is on the applicant to satisfy the Tribunal that it should make the orders sought by the applicant. For the applicant to succeed he must satisfy the Tribunal to the civil standard of proof.
Although not included in his Points of Claim the applicant seeks in his application an order under s24 of the SSMA.

[8]

Order under s24

For the Tribunal to make an order under s24 it must consider s24(3) if the Tribunal is to refuse to make such an order: 1. That the failure to comply with the provisions of this Act or the regulations, or of the Strata Schemes Development Act 2015, did not adversely affect any person, and 2. That compliance with the provisions would not have resulted in a failure to pass the resolution or affected the result of the election
The applicant contends in his Points of Claim that the respondent is alleged to have failed to comply with ss 102(1), 37 and 108 of the SSMA.
CPC and the Building Manager on behalf of the respondent obtained 2 quotes for the proposed works from Vental Australia Ltd and from Turner Bros Furnishings Pty Ltd.
The Tribunal is satisfied that the respondent has complied with s102(1).
The respondent and the strata committee carried out their functions with the due care and skill required of them under the SSMA. Their duty under s106 of the SSMA is to maintain and repair the common property. They performed that duty prudently and diligently after a comparative process by engaging the services of a specialist suitably qualified engineering project manager, CPC, to identify the proposed remedial works, advise on rectification and oversee the works. The applicant has not provided evidence to satisfy the Tribunal that the respondent has breached its duty. In any case, if the respondent had failed to comply, the Tribunal is not satisfied on the evidence that any person has been adversely affected by non-compliance nor is there evidence to sufficiently suggest that compliance with the provisions would have resulted in a failure to pass the resolution or affect the result.
The Tribunal is satisfied that the respondent has not breached its obligation under s37 of the SSMA.
For the reasons given in considering whether the awnings are chattels attached to the common property, the Tribunal is satisfied that there is no breach of s108. At the time that the works were approved in 2004 there was no positive obligation on the respondent to register a by-law under legislation.
For these reasons the Tribunal is satisfied that the provisions of the SSMA and SSMR have been complied with and there is no basis for invalidating the resolution.

Robinson v The Owners-Strata Plan 61717

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Judgment (14 paragraphs)

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