Roseby v The Owners - Strata Plan No 2400

The Claim

1. The applicant sought orders under the following provisions of the Strata Schemes Management Act 2015 ('the SSMA') arising from the EGM on 17 April 2018: 1. A order under s 126(1) of the SSMA that the owners corporation had unreasonably refused its consent to the approval of "minor renovations, alterations or repairs" under s 110 of the SSMA, in respect of the removal of carpet and installation of flooring in the Lot, and an order by the Tribunal directing the owners corporation to consent to the proposed work. 2. An order under s 149(1) (b) of the SSMA that the owners corporation had unreasonably refused to consent to the proposed special privileges by-law in respect of the removal of the internal wall; installation of the ceiling beam; and installation of down lights. Further, the owners corporation be directed to consent to the proposed special privileges by-law and register it.
2. The applicant made clear in his documentary evidence that any proposed works involving the removal of the internal wall and installation of the ceiling beam are subject to lodgement and approval by the local Council of a development approval, which will occur after consent is obtained from the owners corporation and a special privileges by law passed by way of an order from the Tribunal in these proceedings.
3. As the applicant is a Lot owner, he is an "interested person" within s 226 of the SSMA and has standing to make the application for the orders sought.
4. At the hearing, neither party sought to cross examine witnesses.

Documentary Evidence of the Applicant

1. The documentary evidence of the applicant which was admitted into evidence comprised of the following: 1. Affidavit of the applicant dated 4 May 2018. The affidavit contains annexures that include: 2. Emails and correspondence between the parties regarding the proposed works, including a letter from the Solicitors of the owners corporation dated 18 October 2017. 3. Report of Mr S. Eati, acoustic engineer, of PKA Acoustic Consulting dated 14 December 2017. 4. Letter of the applicant dated 5 April 2018 to the strata committee of the owners corporation setting out the proposed work to the Lot and common property. 5. Letter of Campisi Electrical Services dated 20 February 2018 regarding proposed installation of down lights in dining, lounge room, and hallway. 6. Report of Mr Turhanlar of Mobius Fire Safety Pty Ltd dated 26 March 2018. 7. A letter to the strata committee of the owners corporation dated 3 November 2017 providing details of the proposed works, including a brochure in respect of 'Trafalgar Down light Covers'. 8. Report of Acroyali Engineering dated 28 March 2017. 9. Copy of strata by-laws for the scheme.

Documentary Evidence of the Respondent

1. The documentary evidence of the respondent which was admitted into evidence comprised of the following: 1. Affidavit of Rebekah Byrne, strata committed member, dated 5 July 2018. 2. Affidavit of Mr Peter Kennedy, Solicitor for the owners corporation in the proceedings, dated 5 July 2018, annexing correspondence between the Solicitors for the applicant and the owners corporation. 3. Registered Strata Plan. 4. By-laws of the strata scheme. 5. Letter of Mr Longa, structural engineer, of MJ Civil Consulting Engineers, dated 21 December 2016 (addressed to the applicant). 6. Brochure for Embleton Noise and Vibration Isolation 'Impactamat'. 7. Notices and minutes of general meetings of the owners corporation. 8. A report of Ms Rusbridge, of Holmes Fire dated 16 April 2018. 9. An email of Ms Rusbridge of Holmes Fire dated 17 April 2018 to the Solicitor of the owners corporation. 10. Correspondence between the parties regarding the proposed works.

Relevant Legal Principles

1. Section 108 of the SSMA 2015 states: 108 Changes to common property (1) Procedure for authorising changes to common property An owners corporation or an owner of a lot in a strata scheme may add to the common property, alter the common property or erect a new structure on common property for the purpose of improving or enhancing the common property. (2) Any such action may be taken by the owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed. (3) Ongoing maintenance A special resolution under this section that authorises action to be taken in relation to the common property by an owner of a lot may specify whether the ongoing maintenance of the common property once the action has been taken is the responsibility of the owners corporation or the owner. (4) If a special resolution under this section does not specify who has the ongoing maintenance of the common property concerned, the owners corporation has the responsibility for the ongoing maintenance. (5) A special resolution under this section that allows an owner of a lot to take action in relation to certain common property and provides that the ongoing maintenance of that common property after the action is taken is the responsibility of the owner has no effect unless: (a) the owners corporation obtains the written consent of the owner to the making of a by-law to provide for the maintenance of the common property by the owner, and (b) the owners corporation makes the by-law. (6) The by-law: (a) may require, for the maintenance of the common property, the payment of money by the owner at specified times or as determined by the owners corporation, and (b) must not be amended or repealed unless the owners corporation has obtained the written consent of the owner concerned. (7) Sections 143 (2), 144 (2) and (3) and 145 apply to a by-law made for the purposes of this section in the same way as they apply to a common property rights by-law. Note. A new by-law or other changes to the by-laws for a strata scheme must be approved by a special resolution of the owners corporation (see section 141).
2. Section 110 of the SSMA 2015 states: 110 Minor renovations by owners (1) The owner of a lot in a strata scheme may carry out work for the purposes of minor renovations to common property in connection with the owner's lot with the approval of the owners corporation given by resolution at a general meeting. A special resolution authorising the work is not required. (2) The approval may be subject to reasonable conditions imposed by the owners corporation and cannot be unreasonably withheld by the owners corporation. (3) Minor renovations include but are not limited to work for the purposes of the following: (a) renovating a kitchen, (b) changing recessed light fittings, (c) installing or replacing wood or other hard floors, (d) installing or replacing wiring or cabling or power or access points, (e) work involving reconfiguring walls, (f) any other work prescribed by the regulations for the purposes of this subsection. (4) Before obtaining the approval of the owners corporation, an owner of a lot must give written notice of proposed minor renovations to the owners corporation, including the following: (a) details of the work, including copies of any plans, (b) duration and times of the work, (c) details of the persons carrying out the work, including qualifications to carry out the work, (d) arrangements to manage any resulting rubbish or debris. (5) An owner of a lot must ensure that: (a) any damage caused to any part of the common property by the carrying out of minor renovations by or on behalf of the owner is repaired, and (b) the minor renovations and any repairs are carried out in a competent and proper manner. (6) The by-laws of a strata scheme may provide for the following: (a) additional work that is to be a minor renovation for the purposes of this section, (b) permitting the owners corporation to delegate its functions under this section to the strata committee. (7) This section does not apply to the following work: (a) work that consists of cosmetic work for the purposes of section 109, (b) work involving structural changes, (c) work that changes the external appearance of a lot, including the installation of an external access ramp, (d) work involving waterproofing, (e) work for which consent or another approval is required under any other Act, (f) work that is authorised by a by-law made under this Part or a common property rights by-law, (g) any other work prescribed by the regulations for the purposes of this subsection. (8) Section 108 does not apply to minor renovations carried out in accordance with this section. Note. Section 132 enables rectification orders to be made against owners of lots for damage caused by work done by owners.
3. Section 149 of the SSMA 2015 states: 149 Order with respect to common property rights by-laws (1) The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds: (a) on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or (b) on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or (c) on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust. (2) In considering whether to make an order, the Tribunal must have regard to: (a) the interests of all owners in the use and enjoyment of their lots and common property, and (b) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law. (3) The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent. (4) The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law. (5) An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court). (6) An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.
4. Section 126 of the SSMA 2015 states: 126 Orders relating to alterations and repairs to common property and other property (1) Order requiring owners corporation to carry out work on common property The Tribunal may, on application by a lessor of a leasehold strata scheme or an owner of a lot in a strata scheme, order the owners corporation to consent to work proposed to be carried out by an owner of a lot if the Tribunal considers that the owners corporation has unreasonably refused its consent and the work relates to any of the following: (a) minor renovations or other alterations to common property directly affecting the owner's lot, (b) carrying out repairs to common property or any other property of the owners corporation directly affecting the owner's lot. (2) Order consenting to owner's work on owners corporation property The Tribunal may, on application by a lessor of a leasehold strata scheme or an owner of a lot in a strata scheme, make an order (a work approval order) approving of minor renovations or alterations or repairs already made by an owner to common property or any other property of the owners corporation directly affecting the owner's lot if the Tribunal considers that the owners corporation unreasonably refused its consent to the minor renovations or alterations or repairs. (3) A work approval order is taken to be the consent of the owners corporation to the renovations, alterations or repairs and may provide that it has effect from a day specified in the order that occurred before the order was made. (4) In deciding whether to grant a work approval order or to provide for the order to have effect from a day that occurred before the date of the order, the Tribunal may take into account the conduct of the parties in the proceedings, for example, if an owner did not first seek the consent of the owners corporation before carrying out the renovations, alterations or repairs. (5) Responsibility for ongoing repair and maintenance of affected property The Tribunal may specify in an order under this section whether the owners corporation or the owner of the lot has the ongoing responsibility for the repair and maintenance of any additional property arising out of a minor renovation or alteration or repair to common property approved under the order. (6) If an order provides for the owner of a lot to have the ongoing responsibility for the repair and maintenance of any such additional property, the order also has effect in relation to any subsequent owner of the lot.
5. In respect of predecessor provisions under the Strata Schemes Management 1996 (NSW) the principles for whether or not a decision of the owners corporation was, or was not, reasonable were set out by Member Ringrose in Carroll OC SP 865 v Aldritt [2013] NSWCTTT 525 at [54]-[55] as follows: "The provisions of section 140 and of section 158 of the Act each require a determination of whether a decision or the actions of an Owners Corporation were unreasonable. "Unreasonable" is not defined in the Act. It is therefore to be understood as it would be in the common everyday meaning of that word (see Sole Australia Pty Limited v Public Interest Advocacy Centre) and anor (1992) 36 FCR 111 at 122 and Curragh Coal Sales Company Pty Limited v Wilcox (1984) FCR 46 per Davies J). The Macquarie dictionary provides the following definition: "unreasonable"- not reasonable, not endowed with reason, not guided by reason or good sense, not based on or in accordance with reasonable sound judgement. The test of what is reasonable is an objective test which requires the existence of facts which are sufficient to induce that state of mind in a reasonable person (see George v Rocket [1990] HCA 26; (1990) 170 CLR 104 at 112). A decision by the Owners Corporation to withhold consent could be seen as reasonable if there was, on the material before it, a sound basis for making that decision. Conversely if there was no such sound basis it would be unreasonable."
6. Application of the dictionary meaning of "unreasonable" was also the approach adopted by Senior Member Thode in OC SP 69481 v Want [2013] NSWCTTT 440 at [47].
7. In Bartlett v Owners Corporation SP 1429 ('Bartlett') [2011] NSWCTTT 219, Member Ross stated: "It is immaterial that there was also material which may not provide a sound basis for the decision. The onus is on the appellant to demonstrate that the Owners Corporation decision was unreasonable. The Owners Corporation does not have to prove that it acted reasonably in refusing its consent to the proposed by-law".
8. The principle that the onus is upon the Lot owner to demonstrate that the decision of the owners corporation was unreasonable, rather than the owners corporation having to prove it acted reasonably, was applied by Member Ringrose in Olive Grove Investment Holdings Pty Ltd v The Owners-Strata Plan No 5942 [2015] NSWCATCD 120 at [69].

Submissions of the Applicant

1. The applicant made oral submissions at the hearing, which can be summarised as follows: 1. In respect of the proposed removal of the internal wall; installation of the ceiling beam and installation of down lights; the applicant had provided sufficient evidence that the works were structurally sound and safe, including a fire rating report. 2. The report of the respondent's engineer did not question the structural integrity of the proposed beam installation. 3. There was no valid reason why the owners corporation should reject the proposed works regarding the removal of the internal wall; installation of the ceiling beam; and installation of down lights other than aesthetic reasons which was unreasonable in the context where the work could not be viewed from outside the Lot. 4. The applicant had supplied all information regarding the proposed works that the owners corporation had requested. 5. In respect of the removal of carpet and installation of floorboards, the owners corporation had been provided with an acoustic engineer's report from the applicant well before the EGM on 17 April 2018. 6. The Lot owners voting at the EGM on 17 April 2018 knew the substance of the type of flooring the applicant wanted to install, and should have considered substance of the Motion irrespective that it contained a misdiscription of the type of flooring. 7. Regarding the issue of fire rating, ultimately that will be an issue for the local Council to consider in respect of the approval of any development consent for the works, and should not be a valid reason for the owners corporation refusing consent, or refusing to pass the special privileges by-law.

Submissions of the Respondent

1. The respondent made oral submissions supplemented by written submissions at the hearing, which are summarised as follows: 1. The fire rating report regarding the proposed installation of the beam in the ceiling by Mobius Fire Safety was based on a "desktop review" rather than a physical inspection, and the report of Holmes Fire dated 16 April 2018 recommended a visual inspection occur. 2. There is "no evidence before the Tribunal as to why the beams need to be in the common property roof cavity rather than on the underside of the applicant's ceiling". 3. The proposed installation of the ceiling beam is for the "aesthetic wants of the applicant" and there is "no evidence that the common property currently requires repairs of work of the kind sought by the applicant". 4. In respect of the acoustic reports, the report relied upon by the applicant (Blackett Acoustics dated 19 March 2018) tested a proposed floor installation that would give a 3 star acoustic rating, but a fully installed system may result in performance of between 2-3 dB less than the sample test, which would result in the floor system being less than the 3 star minimum standard. The acoustic report obtained by the respondent (PKA Acoustic Consulting dated 14 December 2017) recommended a 4 star rating as being appropriate. 5. The error in Motion 6 considered at the EGM on 17 April 2018 was more than a typographical error, and the applicant could not validly amend the Motion one day prior to the EGM. The applicant should have withdrawn the Motion and requisitioned a fresh EGM, with the correct specifications of the proposed flooring.

Motion 7 of the EGM dated 17 April 2018-The Removal of Carpet and Installation of Floorboards

1. The type of floorboards that the applicant sought permission to install are: "14 mm floorboard laid on top of a 1 layer of 18 mm plywood with Regupol 6010 8/4 mm acoustic underlay loose laid onto the existing concrete slab" as set out in the report of Blackett Acoustics dated 19 March 2018.
2. The Motion that was considered at the EGM on 17 April 2018 was to install: "8/4 mm Regupol 6010, 18 mm plywood and 14 mm Oak Timber boards in the place of such carpet and underlay".
3. The email of the applicant the day before the EGM (which was conducted electronically) was not a valid amendment of the Motion. The Motion which was being voted upon was not for the type and dimensions of flooring that the applicant wanted to install. As the EGM was held electronically, there was no ability for the applicant to seek to amend the Motion at the meeting, and by reason of Schedule 1 Clauses 7 and 8 of the SSMA 2015 notice of any Motion to be considered at the EGM needed to be given to Lot owners at least 7 days prior to the meeting.
4. Under such circumstances, it cannot have been unreasonable for the owners corporation to refuse to give the consent sought in Motion 7, because the Motion sought something fundamentally different to what the applicant sought to install. The applicant accepts that Motion 7 did not identify "the correct profile of the floor". The Tribunal does not accept the applicant's submission that this was a mere typographical error that could be overlooked, particularly where the EGM was conducted electronically and there was no oral discussion at the EGM to consider amending the Motion, or debate about the substance of the Motion.
5. Further, the Tribunal notes that on 11 April 2018 an email from Mr Eati of PKA Acoustic Consulting was sent to the Solicitor for the owners corporation. Mr Eati's email reviewed the Blackett Acoustic report, and opined that there was disagreement with the Blackett Acoustic report because to provide an appropriate level of sound insulation in a strata building, the proposed flooring should achieve a result "no greater than LnT, w50", equating to a "minimum 4 star rating" and the testing of Blackett Acoustics "barely makes a 3 star rating".
6. As it was clearly not unreasonable for the owners corporation not to have consented to Motion 7 in the form proposed, it is unnecessary to consider whether the email from PKA Acoustic Consulting dated 11 April 2018 was sufficient to constitute a "sound basis" for refusing consent. If the applicant seeks to call a further EGM with a Motion that clearly sets out the type, quality and dimensions of the floorboards the applicant proposes to install, the owners corporation can re-consider the issue. The sound suppression qualities of the proposed flooring will clearly be relevant.
7. Considering the long history of the dispute regarding the proposed renovations, the parties should strongly consider the benefits of having a face to face EGM, rather than an electronic EGM.

Motion 2-Consent to the Proposed Special Privilege By-Law In Respect of Removal of Internal Wall; Construction of Beam in Ceiling; and Installation of Down lights

1. As discussed previously, there was a long history of discussion and dispute between the applicant and the owners corporation regarding the proposed works. However, by the EGM of 17 April 2018, the key issue regarding whether or not consent would be given and the special privileges by law passed was whether the works would provide a sufficient fire rating for the ceiling.
2. The applicant obtained a report of Mr Turhanlar of Mobius Fire Safety Pty Ltd dated 28 March 2018. The report was "based on a desktop review" and no site inspection had occurred. Mr Turhanlar relevantly stated: "We understand that the ceiling void is open, and the internal walls to not extend to the underside of the roof covering. Therefore Option 2 is the required method of protection for the Unit 7 ceiling. Additionally, any penetrations in any new ceiling (including down lights) shall be protected in accordance with BCA C3.15 and Specification C3.15. Finally, the proposed structural beam is not required to be provided with fire resistance under the current requirements of the BCA a the roof is not required to have an FRL due to the concession under BCA Spec C1.1 (3.5)."
3. The respondent obtained a report from Ms Rusbridge of Holmes Fire dated 16 April 2018 that relevantly stated: "The Mobius report notes that the ceiling was advised as consisting of one layer of 13 mm Fyrchek based on a visual inspection through an aerial opening. It is considered that this is not a large enough opening to determine whether the plasterboard is in fact fire rated. It is recommended that a larger opening be created, potentially an access hatch located in the common area at the top of the stair. This way, a more detailed visual inspection of the ceiling can be undertaken from the roof side, as well as the removed portions. If the ceiling can be demonstrated as achieving the required fire rating, is considered that the proposed works will meet the Deemed to Satisfy Provisions of the BCA. If the ceiling does not achieve the required fire rating, it is considered that there is an existing deficiency within the building and a risk of fire spread between SOUs. Council may issue a Fire Order at any time, and should a fire occur within the building, there would be an increased risk of fire spread and he potential for occupant harm".
4. In determining whether the owners corporation unreasonably refused to pass the special privileges by-law Motion on 17 April 2018, the Tribunal can only consider the evidence and materials available as of 17 April 2018.
5. In circumstances where the Holmes Fire report dated 16 April 2018 raised a valid issue as to whether or not the proposed alterations affecting the ceiling would be appropriately fire rated, the Tribunal is not satisfied that there was "no sound basis" for refusing to pass the special privileges by-law at the EGM on 17 April 2018.
6. The other asserted grounds of refusing to pass the special privileges by-law, including whether the internal beam could have been located at a lower level and the internal aesthetic appearance of the Lot appear to be less than compelling reasons to refuse passing the proposed special privileges by-law. However, in circumstances where there was, as of 17 April 2018, one ground for refusing to pass the special privileges by-law that was soundly based, the Tribunal is not satisfied the applicant has proved that it was unreasonable for other Lot owners not to pass, by way of special resolution, the special privileges by-law. It is unnecessary to further consider whether any other grounds were reasonable.
7. Importantly, after the EGM on 17 April 2018, the Solicitor for the owners corporation received an email from Ms Rusbridge dated 17 April 2018. The affidavit of Mr Kennedy, Solicitor for the owners corporation, states that an inspection by Holmes Fire had occurred on 17 April 2018 "after voting closed for the EGM on 17 April 2018". Accordingly, the email was not considered by Lot owners who had already voted on Motion 2.
8. The email of Ms Rusbridge dated 17 April 2018 states: "It looks like the ceiling is fire rated. Mat was able to see one side of the board that was stamped with a fire rating, so it is likely the ceiling would comply. Will send photo when I get it".
9. It appears from the email of Ms Rusbridge that the concern that the ceiling is not appropriately fire rated is no longer an issue.
10. As the Tribunal is not satisfied that at the EGM on 17 April 2018 the owners corporation (a) unreasonably refused to make the common privileges by law contained in Motion 2; and (b) unreasonably refused to consent to the replacement of flooring in Motion 7, the proceedings are dismissed.
11. However, the dismissal of these proceedings does not prevent the applicant from requisitioning a further general meeting of the owners corporation, and having the Motions (in a proper form) again considered by the owners corporation. If this occurs, for reasons discussed previously, consideration should be given to the general meeting not being conducted electronically, but that is a matter for the parties.
12. The respondent has written to the Tribunal to raise the issue of a costs application. It is not appropriate for the Tribunal to consider the issue of costs until both parties have had an opportunity to make submissions. In respect of any costs application, "special circumstances" under s 60 (2) of the Civil and Administrative Tribunal Act 2013 will have to be demonstrated: The Owners Corporation Strata Plan No. 63341v Malachite Holdings Pty Ltd [2018] NSWCATAP 256.
13. On the issue of costs, the Tribunal makes the following directions: 1. Any application for costs is to be made by written application containing written submissions (no more than 4 pages) to be filed with the Tribunal and served on the other party on or before 14 days from the date of this decision. 2. Any response to the application for costs is to be made by written submissions (no more than 4 pages) to be filed with the Tribunal and served on the other party on or before 14 days thereafter. 3. Costs submissions are to include reference as to whether the parties consent to the issue being determined on the papers. Subject to the submissions of the parties, the issue of costs will be determined on the papers pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

Orders

1. The application is dismissed.
2. Any application for costs is to be made by written application containing written submissions (no more than 4 pages) to be filed with the Tribunal and served on the other party on or before 14 days from the date of this decision.
3. Any response to the application for costs is to be made by written submissions (no more than 4 pages) to be filed with the Tribunal and served on the other party on or before 14 days thereafter.
4. Costs submissions are to include reference as to whether the parties consent to the issue being determined on the papers. Subject to the submissions of the parties, the issue of costs will be determined on the papers pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 01 February 2019