Shonroo Pty Ltd v Community Association DP 270482; Casuscelli v Community Association DP 270482 and Shonroo Pty Ltd

The resolutions of the respondent under attack by the appellants

1. Before setting out the detail of the resolutions we refer first to some background information contained in an affidavit of Stephen Pettit sworn on an unspecified day in June 2018 for the purpose of the hearing of the applications. Mr Pettit was the Strata Manager of the respondent. He said that there had been an issue under discussion for some time amongst members of the respondent and amongst its Executive Committee concerning the "existence on some of the lots in the Association of temporary structures such as shipping containers, without the approval of the Committee." One such shipping container was situated on the lot owned by Mr Casuscelli. In general terms the motions passed by the respondent prohibited the erection of mobile or fixed temporary or permanent structures on a lot (including specifically among other items containers and sheds) without the prior approval of the Executive Committee. This did not relate to a Council approved dwelling. If a structure was erected without approval, the Executive Committee was to be empowered to require its removal within 14 days, and if not removed, it was empowered to enter the lot after giving notice, to remove the structure and to claim the expense for doing so against the lot owner.
2. Mr Casuscelli objected vehemently to motions to this effect being passed. He thought that the question of approval or otherwise for the erection of structures on a lot owner's property should be left with the local Council.
3. Before discussing each of the resolutions in detail, it is necessary to consider the statutory and other bases for the attack made by the appellants on the validity of the resolutions.

The statutory and bylaw matrix

1. The power to amend the management statement is provided by section 14 of the Act which is in the following terms; 14 Amendment of management statement (1) Except as provided by subsection (2), an association may amend its management statement in relation to the control, management, administration, use and enjoyment of the lots, or of the association property. (2) A management statement may not be amended: (a) in a manner inconsistent with any restriction imposed by this Act on the making of the amendment, or (b) in a manner that would make the management statement inconsistent with this Act or the Community Land Development Act 1989. (3) An amendment requires: (a) a unanimous resolution if the amendment would affect by-laws made under section 17 to control or preserve the essence or theme of the scheme to which they relate, or (b) a unanimous resolution if the amendment would affect a by-law the terms of which have effect because they are the terms of an order by the Tribunal, or (c) in any other case - a special resolution. (4) An amendment has no effect until it is registered. (5) Lodgment of an amendment cannot be accepted later than 2 months after the passing of the resolution making the amendment.
2. Section 58 makes provision for an Association to perform work which a proprietor of a lot has failed to carry out after having been given notice of requirement to do so. It is in the following terms; 58 Community association or precinct association may do certain work (1) If the proprietor of a development lot does not do work on or in relation to the lot in accordance with a notice given to the proprietor by a public authority, the relevant association may do the work after giving the proprietor notice that it proposes to do so. (2) If the proprietor, mortgagee or covenant chargee in possession, lessee or occupier of a development lot: (a) is required to do work under a by-law relating to restricted property of a relevant association and fails to do the work, or (b) is in breach of the duty imposed by section 110 and does not do work required to remedy the breach, or (c) is in breach of the duty not to interfere with the passage or provision of services and does not do work required to remedy the breach, the relevant association may do the work. (3) If an order by an Adjudicator or the Tribunal to carry out work in relation to a development lot is not complied with, the relevant association may do the work. (4) If, without any breach of duty referred to in subsection (2), there is a defect in the services within a development lot, the defect may be remedied by the relevant association at its own expense. (5) Except where work is done under subsection (4), the relevant association may recover the cost of the work, as a debt, from the person who failed to do the work or from a subsequent proprietor of the lot. (6) Subsection (5) does not apply to a subsequent proprietor who is absolved from payment because the debt was not disclosed in a certificate given under clause 2 of Schedule 4. (7) In this section: relevant association means: (a) in relation to a community development lot - the community association, or (b) in relation to a precinct development lot - the precinct association. subsequent proprietor, in relation to a development lot, includes a precinct association, neighbourhood association or strata corporation constituted under a scheme to which the development lot has become subject.
3. A power of entry is given to an Association by section 60 which is in the following terms; 60 Powers of entry of association (1) An association may, by its servants, agents or contractors, enter any part of the community, precinct or neighbourhood parcel: (a) to exercise its powers under section 58 or 59, or (b) to do any work ordered by an Adjudicator or the Tribunal, or (c) to renew or replace its personal property or any fixtures that are part of its association property. (2) An association may, by its servants, agents or contractors, enter on any part of the parcel for the purpose of determining whether any work is required to be carried out by the association in accordance with this Act. (2A) In an emergency, the association may enter any part of the parcel for those purposes at any time. (2B) In a case that is not an emergency, the association, may enter any part of the parcel for those purposes with the consent of any occupier of that part of the parcel or, if the occupier does not consent, in accordance with an order of an Adjudicator. (3) A person who obstructs or hinders an association in the exercise of its powers under this section is guilty of an offence. Maximum penalty: 2 penalty units. (4) An association is liable for any damage to a development lot, neighbourhood lot or strata lot, or its contents, caused by, or arising from: (a) the carrying out of work under section 58 or 59, or (b) the exercise of the powers conferred by this section. (5) Subsection (4) does not apply in relation to damage that would not have occurred but for the commission of an offence under subsection (3), whether or not there has been a conviction for the offence.
4. The respondent sought to justify the action taken by it in passing the motions by reference to the provisions of section 110 of the Act, which are in the following terms; 110 Mutual duties owed by proprietor and others A proprietor, mortgagee or covenant chargee in possession, lessee or occupier of a development lot, neighbourhood lot, or strata lot, must not: (a) do anything, or allow anything to be done, on or in relation to the lot that interferes with any support or shelter provided by the lot for another lot, for association property or for common property, or (b) do anything, or allow anything to be done, on or in relation to the lot that interferes with, or with the use of, the statutory easement created by section 36 of the Community Land Development Act 1989 or any service lines within the parcel, or (c) use or enjoy the lot, or allow it to be used or enjoyed, in a manner, or for a purpose, that causes a nuisance (by noise or otherwise) or hazard to any other person who is exercising a right to use and enjoy another lot, or (d) do anything, or allow anything to be done, on an open access way or a private access way that interferes with the use of the access way.
5. Specifically, the respondent relied on the provisions of section 110(c) to justify the entitlement to amend the by-laws in the manner indicated asserting that the presence of the container on the lot owned by Mr Casuscelli constituted a nuisance to other lot owners.

The decision under appeal

1. In essence, the Member held that the motions did not attract the provisions of section 14(3)(a) of the Act. That is, they did not go to the control or preservation of the essence or theme of the scheme. That essence or theme concerns the creation of "a rural living experience which reflects the vibrant Vineyard character which is such an important element of the Hunter Valley area in general and the Pokolbin district in particular" as contained in Part 7 of the Management Statement referred to above. On this basis a unanimous decision was not required, and this was the primary reason for the dismissal of the applications. There were other matters dealt with. However, as the appellants had abandoned all arguments considered by the Tribunal in the original proceedings by the time that these appeals came on for hearing before us except for the matters raised for the first time in the course of the hearing of these appeals, it is only necessary that we consider these new matters.
2. When the matter came on for hearing before us all parties indicated that they had reached agreement that there was no necessity for us to resolve any matter which has been considered by the Member in her decision and it was only necessary that we deal with the new arguments raised by the appellants. The parties were ready to proceed on this basis.
3. On one view, it would have been open to us to dismiss the appeals and to require the appellants to file fresh applications for them to be considered anew by the Tribunal. However, we decided to accommodate the consent position presented by the parties in order to ensure that the controversy between them was dealt with as efficiently, effectively and cheaply as possible, so as to ensure that the real issues between the parties were determined. This accords with our statutory obligation contained within the provisions of section 36(1) and (2) of the Civil and Administrative Tribunal Act which is in the following terms; 36 Guiding principle to be applied to practice and procedure (1) The guiding principle for this Act and the procedural rules, in their application to proceedings in the Tribunal, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. (2) The Tribunal must seek to give effect to the guiding principle when it: (a) exercises any power given to it by this Act or the procedural rules, or (b) interprets any provision of this Act or the procedural rules. This also accords with a procedure contemplated by section 81 (2) of that Act; 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following: (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.

The motion under attack

1. We now set out those provisions of the Motion which were the subject of attack by the appellants in these proceedings. The provisions were presented to the meeting in the form of a revised Community Management Statement which contained the proposed amendments. It is convenient to reproduce those which are relevant in this manner.
2. A starting point is the proposed insertion of a new By-Law number 46, the substance of which is the genesis for the positions taken by the appellants. It is in the following terms; Unauthorised Structures (1) Mobile or fixed temporary or permanent structures on a lot (including but not limited to awnings, carports, large children's playground, containers, shed, mobile homes, general structures et cetera) other than council approved dwelling must be approved by the Executive Committee prior to being erected stop (2) If in the reasonable opinion of the Executive Committee an unauthorised structure has been erected as per clause (1), the Executive Committee may deliver a notice to the owner or occupier of a Lot requiring him to remove the structure within 14 days. (3) If the recipient of a notice fails to comply with the notice the provisions of By-Law 25 shall apply.
3. It is next convenient to set out the provisions of By-Law 25 as proposed to be amended. The amendments are indicated by underlining: Community Association's right of rectification 25.1 Community Association may remedy, remove or restore anything on a Lot or relating to the obligations of a owner or occupier of a Lot pursuant to any By-law that should have been carried out by a owner or occupier of the Lot but has not been carried out within the time specified in any notice or otherwise within a reasonable time 25.2 If the Community Association exercises its right under By-law 25.1 then the Community Association and persons authorised by it may enter the Lot to remedy, remove or restore anything on that lot that breaches this management statement and remain there for as long as is necessary. 25.3 The Community Association may enter and remain on a Lot under By-law 25.2 only after the date specified in a notice given to the owner or occupier of the Lot by the Community Association stating its intention to so enter. 25.4 If the Community Association exercises its rights under this by-law 25, then it may recover from the relevant owner as a debt its costs of exercising those rights.
4. By-Law 25 and the new By-Law 46 are both within Part 4 of the Management Statement.
5. The affidavit sworn by Stephen Pettit previously referred to which we was in evidence in the proceedings before the Member said in part that following the passing of the various motions at the AGM he caused the changes to the Community Management Scheme to be registered. Included within those changes is Part 5 of the Management Statement which is in the following terms; By-laws required by Public Authorities By-laws 11, 41 and Part 7 clauses 1, 2, 3 and 6 and Part 5 of this Management Statement must not be varied, modified or revoked without the approval of Cessnock City Council and/or Singleton Council (as the case may be).
6. Material provided to the Tribunal in the original proceedings and to us on appeal is to the effect that Part 5 was also amended, because in the version previously registered it reads as follows; By-laws required by Public Authorities By-laws 11, Part 6 clauses 1, 2, 3 and 6 and Part 4 of this Management Statement must not be varied, modified or revoked without the approval of Cessnock City Council and/or Singleton Council (as the case may be).
7. There is nothing contained within the agenda items circulated to lot proprietors before the AGM to indicate that any amendment to Part 5 was intended. In addition, the minutes of that meeting made available with Mr Pettit's affidavit make no mention of any amendment to Part 5. However, the proposed changes to the Community Management Scheme circulated to members before the meeting do show a proposed amendment to Part 5, but there is no accompanying explanation to make clear what was the impact of this amendment. The fact of this amendment is confirmed in the form of an Amended Management Statement lodged with the Registrar General by H M Ailen & Co on behalf of the respondent and which was registered on 6 February 2018. That document indicates that By-Laws 12, 15, 25, 27 and 30 and Part 5 were repealed and that By-Laws 12, 15, 25, 27, 30, 44, 46 and 47 and a Part 5 were added.

Non-compliance with Part 5 of the Community Management Scheme

1. Such evidentiary material as is before us is to the effect that Part 5 was, at the time of the Annual General Meeting, expressed in terms set out in [23] above. By-Law 25 and the new By-Law 47 are both contained within Part 4. As such, it would have been necessary to obtain the approval of the relevant Council before any part of Part 4 could be varied, modified or revoked. As we have previously stated, no such approval has been obtained either before or after the Annual General Meeting. Prima facie, such approval should have been obtained prior to attempting any changes to Part 4.
2. It is clear that, no Council approval having been obtained, the purported changes to By-Law 25 and the insertion of By-Law 47 (and any other By-Laws within Part 4) should not have been made. On this basis it is appropriate to grant consequential relief as sought by the appellants. In addition, and as a consequence, the amendment purportedly made to Part 5 (of which there is no evidence of any resolution having been proposed to or passed at the Annual General Meeting) which affects anything contained within Part 4 is also invalid.

Were the amendments otherwise within power?

1. A consideration of the powers of the respondent Association commences with a reference to section 5(5) of the Act which states that the community Association has the functions conferred or imposed on it by Schedule 1 and "by other provisions of this Act and by any other Act."
2. The relevant parts of Schedule 1 are Parts 1 and 2 which are in the following terms; Part 1 Preliminary 1 Definition In this Schedule: property means, in relation to an association, its association property and personal property. Part 2 Property 2 Management and maintenance of property (1) An association must control and manage its open access ways and private access ways, and all other parts of its association property, and must do so for the benefit of its members. (2) Subclause (1) does not authorise any action that would be inconsistent with: (a) an Act in so far as, under section 116, it applies to an access way, or (b) a function in so far as, under that section, it may be exercised on, or in relation to, an access way. (3) An association must properly maintain, and keep in a good and serviceable state of repair, any part of its association property that is an access way. (4) An association must inform the consent authority if any part of the association property is to be, or is, used for commercial purposes. (5) In this clause: access way means an open access way or a private access way. 3 Mail (1) An association must provide proper means for the receipt of its mail. (2) The means provided: (a) must be clearly identified as a receptacle for the receipt of mail addressed to the association, and (b) may be provided in more than one position. 4 Maintenance and replacement of property (1) An association must maintain its property in good condition. (2) An association must, when necessary, replace fixtures or fittings that are part of its property. (3) An association must, when necessary, replace its personal property. 5 Insurance An association must effect and maintain such insurance as is necessary to avoid committing an offence under section 39 or 40.
3. It will be observed that in so far as the Act allocates functions to the respondent by reason of part 2 of Schedule 1, it is confined to the management and maintenance of association property, which by virtue of the definition in section 3 refers to the community property in the scheme, and is not a reference to property owned by a lot holder
4. Section 58 of the Act does allow the respondent to carry out work on a lot owned by a proprietor. We have set out the provisions of this section above. Section 58 is complemented by section 60 (1) which allows an association to enter any part of the community inter-alia to exercise its powers under section 58 or for the purpose of determining whether any work is required to be carried out by the association in accordance with the Act. Again, the circumstances contemplated by section 60 are confined.
5. It should be noted that section 58 is confined to circumstances where firstly, a notice has been given to the proprietor by a public authority, the proprietor is required to do work under a by-law relating to restricted property, is in breach of a duty imposed by section 110 or is in breach of a duty not to interfere with the passage or provision of services.
6. Leaving aside the provisions of section 110 of the Act, we observe that none of these provisions is relevant. The respondent did not seek to argue otherwise.
7. We now turn to the provisions of section 110 which we have earlier set out. The only possible relevant part of section 110 is subsection (c). However, this would only apply if a proprietor "has caused a nuisance (by noise or otherwise) or hazard to any other person who is exercising a right to use and enjoy another lot" whether by act or omission.
8. The only scintilla of evidentiary material which is available to the respondent in support of the application of section 110 as justifying a creation of a right to enter a lot of a proprietor is a photograph of a container situated on the lot of Mr Casuscelli, which is not of great clarity. There is no suggestion of anything by way of any substance of any kind escaping from the container or contained within it which would adversely impact upon any other proprietor of a lot within the scheme or on any community or other property. There is no evidence from any other proprietor of any lot or anyone on his, her or its behalf that is indicative of any noise or hazard of any kind created whether directly or indirectly by the presence of a container on the lot. The only possible suggestion found in correspondence between the parties is that in general terms a container is unsightly. However, in the absence of any specific evidence that any container, or indeed any other item contemplated by the new By-Law 47 is comprehended within the provisions of section 110 (c), we cannot see how this provision can be used to justify the impugned amendments which are the subject of these proceedings.
9. We add for completeness that counsel for the appellant Shonroo submitted that a reference to "nuisance" in section 110 (c) must be a reference to the common law concept of nuisance. Such a proposition is attractive, but in the circumstances, it is not necessary for us to come to a decision about this. This is because there is simply no evidence of any kind which would point to anything which might constitute a nuisance, even as understood in ordinary language, because no-one person has provided any evidence of any kind of being inconvenienced, upset or otherwise adversely affected by the presence of a container on the lot owned by Mr Casuscelli (being the only evidence of any container on any lot in the community scheme).
10. We approach the consideration of this matter on the basis that there are specific provisions in the Act which allow an association to enter upon the lot of a proprietor for certain purposes. In the absence of any indication that it is intended that an association have any overall or general power to enter upon a proprietor's lot in circumstances outside those specifically referred to in the Act, we would apply the provisions of the Act as describing in a comprehensive manner those circumstances where such entry is permitted and excluding by implication any other circumstances. The functions of an association are circumscribed by the provisions of the Act and it is not otherwise at large to pursue any other functions unless they are necessarily ancillary to or associated with a function specifically allocated.
11. In circumstances where the respondent has not been able to point to any particular power which would sustain an entitlement in the association to have created new By-Law 47 and to have made the consequential amendments to By-Law 25, those purported variations are beyond its power. It follows that the by-laws have been amended in a manner inconsistent with a restriction imposed by the Act and, by reason of section 14 (2) (a) of the Act the amendment could not be made. We conclude that the amendments are accordingly invalid.

The removal of By-Laws 47 and 48

1. During the course of the hearing the appellants sought to argue that the respondent had purported in 2013 to remove then existing By-Laws 47 dealing with "Vineyard Areas" and 48 dealing with "Landscaped Areas and Stormwater Detention Basins" respectively, in circumstances where there had been no approval by any relevant Council and that their removal was therefore invalid. It seems that those By-Laws were contained in the original Community Management Statement when registered in 2006.
2. We have not been provided with any background material dealing with the circumstances in which those amendments were made, nor have we been provided with any precise evidence that any relevant Council has not approved those specific amendments.
3. In the Decision under appeal the Member referred briefly to these amendments and to evidence led by the respondent that a number of the repealed by-laws had been inadvertently deleted but had now been reinstated under different numbers. The Member was unable to determine whether any relevant invalidity accompanied those amendments.
4. Given the circumstances in which these appeal proceedings have come before this Appeal Panel we are disinclined to deal with this particular aspect of the proceedings. They will need to be fully particularised in a manner which shows clearly the provisions of the By-Laws which are relevant to these two disputed By-Laws, and clear evidence will need to be adduced negativing any Council approval.
5. In any event, now that one of the appellants and the respondent are legally represented, the determination of this issue on an agreed basis should not pose any difficulty requiring any further litigation involving this Community Association.

Consequential orders

1. It is now necessary to determine what consequential orders should be made following the findings which we have made concerning the invalidity of part of the amendments purported to be made to the By-Laws at the Annual General Meeting.
2. The relevant provision of the Act is section 81 which is in the following terms; 81 Order by Tribunal revoking invalid part of management statement (1) The Tribunal may, by order, revoke so much of a management statement as the Tribunal considers to be invalid. (2) Application for an order under this section may be made by any person (including a mortgagor as well as a first mortgagee or covenant chargee) entitled to vote at a meeting of the association to which the management statement relates.
3. We observe firstly that section 81 falls within Division 4 of Part 4 of the Act dealing with Disputes. Section 75A(1) prima facie contains mandatory provisions compelling the dismissal of an application before the Tribunal if mediation was appropriate and was not attempted. Section 75A is in the following terms; 75A Dismissal of application on certain grounds (1) The Tribunal must, by order, dismiss an application for an order under this Division if satisfied that mediation was appropriate and was not attempted. (2) If the ground for an application is: (a) the absence of a quorum at a meeting, or (b) a defect, irregularity or deficiency of notice or time, the Tribunal may, by order, dismiss the application if the Tribunal believes that no substantial injustice has resulted. (3) The Tribunal may, by order, dismiss an application for an order under this Division on any other ground that the Tribunal considers appropriate. (4) Without limiting the generality of subsection (3), the Tribunal may, by order, dismiss an application for an order under this Division if: (a) the application is frivolous, vexatious, misconceived or lacking in substance, or (b) a decision in favour of the applicant is not within the jurisdiction of the Tribunal, or (c) the applicant has unreasonably delayed the provision of information required by an Adjudicator, or (d) the application is made by a proprietor of a development lot or neighbourhood lot or by an association and the applicant has not paid all contributions levied and payable in relation to the lot under this Act. (5) The Tribunal may, by order, dismiss an appeal.
4. The evidence is that Mr J Abdurahman on behalf of the appellant Shonroo attempted mediation which was declined by the respondent. Accordingly, the provisions of section 75 A (1) do not apply.
5. Having found the amendments made to the management statement which we have described above to have been invalidly made, it follows that they must be revoked. Notwithstanding that the complaints made by the appellants which were the subject of the appeal proceedings were confined to By-Laws 25 and 47, the failure to obtain the prior consent of the relevant Council, as conceded by the respondent, will invalidate all of the amendments made at the Annual General Meeting which fell within Part 4 of the Management Statement and consequential amendments to Part 5. To fail to make such an order would constitute a condonation of the failure of the respondent to conduct itself in a lawful manner. It would leave the respondent vulnerable to further applications in the future made by any disgruntled proprietor or other relevant person such as a mortgagee or covenant chargee. We shall make orders accordingly.

The disposition of the appeal

1. The effect of the orders which we propose to make is that the appeal must succeed, and the decision of the Member under appeal be set aside. Of course, in so ordering we repeat that none of the matters upon which the appellants succeeded was canvassed before the Member, and it follows that the Member had no opportunity to deal with any of them.
2. We shall require the parties to bring in short minutes of order reflecting the contents of the By-Laws consequent upon the removal of the By-Laws which have been revoked by reason of this Decision, so that there will be available to all interested parties a copy of the current By-Laws. No doubt the respondent will cause the then current By-Laws to be registered.

Costs

1. The parties asked that we reserve costs and we shall do so, granting liberty to apply.

Orders

1. We order that; 1. appeal allowed 2. the decision of the Member in SCS 18/09453 is set aside. 3. so much of the amendments made at the Annual General Meeting of Community Association DP 270482 held on 7 October, 2017 which purport to amend any provision of Part 4 of the By-Laws of the Association and which purport to amend Part 5 of the Management Statement are revoked, with effect from 7 October, 2017. 4. the parties are directed within 28 days to bring in short orders of minutes, reflecting order (3) above 5. costs reserved with liberty to apply to be exercised within 28 days

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal. Registrar 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

Amendments 08 July 2019 - typo corrected on coversheet 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: 08 July 2019