Sydney Gold Bullion Exchange Pty Ltd v The Owners- Strata Plan 34794

1. The factual background, although somewhat complicated, is not in dispute and was not in dispute before the Tribunal. The following paragraphs [4] to [31] of these reasons are an abridged version of paragraphs [4] to [37] of the Tribunal's decision.
2. On 25 May 1989, Strata Plan 34794 was registered. Strata Plan 34794 consisted of two lots. Lot 2 comprised areas on the ground floor and level 1 at the eastern end of the building. Lot 1 contained the balance of the building, apart from common property areas on each level (which included stairs, lifts, toilets, service areas and ducts). The unit entitlements of Lots 1 and 2 respectively were 70 and 30, making an aggregate of 100.
3. On 29 November 1989, Strata Plan 35894 was registered. Strata Plan 35894 identifies that it is a "Plan of subdivision of lots 1 and 2 and part of the common property in SP 34794".
4. Strata Plan 35894 divided the building into 28 lots. What was previously Lot 2 became Lot 6. The basement and part of the ground floor became Lot 3. The balance of that part of the ground floor which was formerly part of Lot 1 became Lot 5 and part of Lot 4 and common property. The first floor, to the extent it was previously part of Lot 1, became the balance of Lot 4 and common property.
5. Levels 2, 3, 4 and 7 were each divided into multiple lots. In each case, part of what had formerly been lot property became a common property access corridor.
6. Levels 5, 6, 8, 9, 10, 11 and 12 each became a separate lot. In each case, the stairs, lifts and ducts remained common property, but the toilets (previously common property) became lot property. Level 8 became Lot 26.
7. The schedule of unit entitlements included in Strata Plan 35894 allocated, in aggregate,1,000 unit entitlements between the 28 lots. Lots 20, 21, 26, 27 and 28, being levels 5, 6, 8, 9 and 10 respectively, that is the lots which comprised whole floors, were each allocated a unit entitlement of 60. The aggregate unit entitlement of the multiple lots on floors 2, 3, 4 and 7 amounted to 47 or 48.
8. On 18 September 1990, Strata Plan 37489 was registered as a "Plan of subdivision of Lot 26 in SP 35894".
9. Strata Plan 37489 divided Lot 26, that is the eighth floor of the building, into four lots, Lots 31-34. The toilets on level 8 and an access corridor in front of the lifts became common property.
10. Lots 33 and 34, were similar, but not identical, in location and dimensions to Lots 18 and 19 on level 4 and Lots 24 and 25 on level 7.
11. The schedule of unit entitlements in Strata Plan 37489 included the 27 remaining lots within Strata Plan 35894 (identified as such on the schedule) as well as the four new lots created by Strata Plan 37489.
12. The aggregate unit entitlement was 1,000. The unit entitlements allocated to Lots 31-34 total 60. The unit entitlement of each of the 27 pre-existing lots remained unaltered from Strata Plan 35894.
13. SGBE acquired Lot 34 on 11 December 1990 and Lot 33 on 23 April 2021.
14. The issue underlying SBPE's claims in the Tribunal was that, notwithstanding that level 8 was now comparable in arrangement to levels 4 and 7, the four lots on level 8 were allocated 60 unit entitlements whereas the four lots on each of levels 4 and 7 were allocated only 48 unit entitlements.
15. Consequently, despite the similarity between lots 18, 24 and 33, lots 18 and 24 were allocated 10 unit entitlements, while Lot 33 had 13, and, despite the similarity between lots 19, 25 and 34, lots 19 and 25 were allocated 13 unit entitlements while Lot 34 had 16.
16. On 27 November 2012, at the Annual General Meeting of "Strata Plan 35894" a resolution was passed authorising the strata manager to engage the services of a surveyor to prepare a strata plan of subdivision of Lots 31-34 "to adjust the unit entitlement of such lots to reflect equivalent size blocks on other floors in the building."
17. On 27 May 2013, Alastair Dunn, of Dunn's Strata Consulting, forwarded to "all owners Strata Plan 35894" a letter enclosing notice of an Extraordinary General Meeting scheduled to be held on 13 June 2013.The letter stated that the meeting had been convened " to rectify an error in the units of entitlement currently allocated to Lots 31,32,33 and 34".The letter attached a schedule C, proposing an alteration in the entitlements of Lots 31,32,33 and 34 from 16,15,13 and 16 units respectively to 12,11,10 and 13 respectively. The letter noted that the individual units of entitlement of other lots would not change but that if the resolution was passed, the aggregate unit entitlement would change to 986 from 1000.
18. An Extraordinary General Meeting of "Strata Plan 35894" was held on 13 June 2013. At that meeting the following resolution was passed by special resolution:

"The Owners Strata Plan 35894, being a Strata Plan of Sub Division of Lots 1 & 2 in Strata Plan 34794, and the Owners of Strata Plan 37489 being a Strata Plan of Sub Division of Lot 26 in Strata Plan 35894 hereby RESOLVE SPECIALLY to agree to each proposed Unit of Entitlement and the proposed Aggregate Unit Entitlement shown on the Schedule attached to the Notice of this Meeting, and Marked Attachment B, and that a copy of the Schedule be affixed to the pages of the Minute Book immediately following the Minutes of this Meeting."

1. The schedule attached to the notice of meeting, attachment B, could not be found within the records of the Owners Corporation. SGBE submitted that it may be inferred that it incorporated the same proposed changes to unit entitlements as Attachment C to Mr Dunn's letter of 27 May 2013
2. On 20 April 2015, an Extraordinary General Meeting of "Strata Plan 35894" passed resolutions:

(1) That the owners corporation agreed to "proposed shopfront works covering Lots 4 & 6" subject to the owners of Lots 4 and 6 consenting to a special bylaw covering the works;

(2) That the Owners of Lots 4 & 6 agree to a strata plan of Sub Division of Lots 4 & 6 whereby the two common property toilets on Level 2 become part of Lots 4 & 6 and that the Units of Entitlement for Lots 4 & 6 increase from 160 to 170 for Lot 4 and from 86 to 90 for Lot 6.

(3) That the Units of Entitlement for Lots 31, 32, 33 & 34 decrease as follows:

Lot 31 - 16 to 12, Lot 32 - 15 to 11, Lot 33 - 13 to 10, Lot 34 - 16 to 13

1. The covering letter from Mr Dunn enclosing the notice of that meeting had indicated that the Owners Corporation had reached agreement with the owner of Lots 4 and 6 that the Owners Corporation would consent to a proposed shop front, the construction of a door in the common property wall between Lots 4 and 6 on level 1 and the incorporation of the toilets on level 1 into Lots 4 and 6 "by way of a Strata Plan of Sub Division". The owner of Lots 4 and 6 had in turn agreed to increasing the units of entitlement for Lots 4 and 6 by 14 units "which will enable the Units of Entitlement for the lots situated on Level 8 to be reduced by a net 14 units of entitlement."
2. At the Annual General Meeting of "Strata Plan 35894" on 27 November 2019, resolutions were passed:

That the Strata Manager, pursuant to resolutions passed at the Extraordinary General Meeting held 20/04/15, invoice the Owners of Lots 4 & 6 for an adjustment in levies for Lots 4 & 6 In favour of the Owners of Lots 31,32,33 & 34 effective from 1 December 2013 and to continue with such adjustment until registration of the strata plan of subdivision has been approved and lodged with the LPI. And

That the adjustment amounts payable to the Owners of Lots 31,32,33 & 34 be made prior to 31st March 2020.

1. A different strata manager was appointed with effect from about February 2021.
2. On 10 March 2021, a solicitor, Ms Crittenden, addressed a strata committee meeting regarding "the units of entitlement for level 8 subdivision SP 37489 (Lots 31, 32, 33 & 34)". The minutes record Ms Crittenden providing the following "background information":

"SP 34794 was registered on 25 May 1989 and comprised two lots;

SP 35894 was registered on 29 November 1989 and is a strata plan of sub-division and created lots 3-30;

SP 37489 was registered on 19 June 1990 and sub-divided lot 26 being level eight creating lots 31-34;

The correct strata plan number is SP 34794 that entity owns the common property;

The aggregate units of entitlement [UE's] is 1000;

The only way to change UE's is by an order of the NSW Civil and Administrative Tribunal (NCAT);

Either an Owners Corporation or an individual Owner can make application for a change of UE's to NCAT;

There has been no application made by an Owner or by SP 34794 to date;

For a change of UE's it requires a Valuer's report and that needs to support the proposed change;

The relevant date of the valuation is not today but either one of the dates of the strata plan of subdivision (the relevant date);

A Valuer needs to inspect each and every lot and refer back to the relevant date - an expensive exercise;

The application can be opposed (if made by the Owners Corporation by individual Owners, or if made by an individual Owner by other Owners and/or the Owners Corporation);

If opposed they would need their own independent Valuer's report;

The Valuer needs to understand the condition of the lots at the relevant date;

The act says UE's are determined by value (not just size);

One cannot make changes to UE's by a resolution at a meeting;

The question of whether the tribunal can backdate the UE's if they make an order is not expressly stated in the Strata Schemes Management Act SSMA;

If an application is made in the first six years in the life of a strata scheme then the original owner pays for the reallocation;

Any application to NCAT would also require the services of a lawyer;

A re-evaluation would affect each and every lot not just level eight;

The total of UE's for level eight when adding up the four lots is 60 which is the same as it was before the strata plan of subdivision;

An exercise was conducted comparing the UE's on level seven (lots 22-25) being 48 with those on level eight being 60;

The discussion turned to level ground and one and the exclusive use of parts of level one for lots four and six and if any agreement is in existence;

If a new plan strata plan of subdivision was created then in addition a surveyor would be required and stamp duty would be applicable;

By-Laws are never permanent Jane Crittenden advised and they can be amended or revoked;

Again, Jane Crittenden reminded those present that any Owner can make an application for a change in the UE's;

The discussion turned to the previous agent and to earlier strata committees;

Jane's recommendation is for Owners to come to an agreement on what outcome is desired and what the Owners Corporation (and individual Owners) want to achieve;

Once that is relayed along with any documents showing previous agreements) to the Strata Managing Agent then he can seek for the Owners Corporation advice from the lawyer."

1. There was, until 2021, some uncertainty or confusion within the building and its owners about the correct identification of the Owners Corporation. As the strata committee was advised by Ms Crittenden on 10 March 2021, the Owners Corporation was constituted by the registration of Strata Plan 34794 on 25 May 1989. Strata Plans 35894 and 37489 were strata plans of subdivision of Strata Plan 34794, or of lots within Strata Plan 34794.
2. A meeting of the strata committee of Strata Plan 34794 was held on 30 March 2021. The minutes of that meeting record that the committee resolved to receive a cost disclosure from Ms Crittenden and a quote from "Egan National Valuers" and to "convene a general meeting to appoint Jane Crittenden Lawyer and Egan Valuers." The minutes include a note that the strata manager was asked to arrange a meeting with the valuer "so they can better understand the methodology involved in carrying out a valuation of UE's". The minutes include a further note:

"It was further noted that after the valuation report is received and reviewed by the Owners Corporation it might be that the Owners Corporation decides not to proceed with a submission to NCAT. But that can't be ascertained without the report."

"Consideration of obtaining advice about paying compensation to Level 8 Lot Owners was deferred to a later date."

1. At a strata committee meeting of The Owners - Strata Plan No 34794 held on 15 July 2021 a resolution was passed to rescind the motion passed at the meeting of 30 March 2021 to convene a meeting to appoint Ms Crittenden and Egan Valuers.
2. At an Extraordinary General Meeting held on 15 July 2021, The Owners - Strata Plan No 34794 resolved by special resolution:

(1) To make a special by-law to authorise works affecting the common property by the owner of Lot 4, involving the construction of a doorway through the common property wall between Lots 4 and 6 and confer upon the owner of Lot 4 exclusive use of the common property where the wall has been removed; and

(2) To make a special by-law conferring upon the owners of Lots 4 and 6 exclusive use of the common property areas occupied by the toilets on level 1 and authorising works to those areas (which the by-law noted had already been completed between 2015 and 2017). The by-law required the owner of Lots 4 and 6 to pay the owners corporation $90,000 as "compensation for the grant of the exclusive use right".

1. SGBE lodged an application to the Tribunal on 17 June 2024 and an amended application on 22 July 2024. A principal order sought by SGBE was an order under section 236 of the Management Act that the allocation of unit entitlements among lots 31, 32, 33 and 34 in strata plan 37489 be amended in accordance with the schedule of unit entitlements in a valuation certificate prepared as at 18 September 1990 by Mr S. Azar (Mr Azar's certificate). Another principal order sought was for compensation against the Owners Corporation under section 232 of the Management Act on the basis that the reallocation of units for which SGBE contended ought to have been sought by the Owners Corporation after the special resolution which was passed on 13 June 2013 and affirmed several times thereafter. SGBE sought orders for compensation even if the Tribunal declined to make an order under section 236 of the Management Act allocating unit entitlements.
2. The parties had indicated at a directions hearing on 17 July 2024 that they agreed that the proceedings were suitable to be determined "on the papers" and that neither party sought an oral hearing. On 28 July 2025 the Tribunal made an order pursuant to section 50(2) of the Civil and Administrative Tribunal Act 2013 dispensing with a hearing, having noted that there had been no requirement for any witness to be cross-examined.
3. Mr Azar's certificate certified the value of Lots 31-34 as at 18 September 1990 as follows:

1. Mr Azar's certificate did not however certify the value of the remaining lots in the strata plan as at that date, or at any date.
2. The Tribunal concluded that Mr Azar's certificate was insufficient to meet the requirements of section 236 of the Management Act because it did not certify the value of the remaining lots in the strata plan at the relevant time. The Tribunal held that in order to exercise its power, it was required by s236(2) and (4) to determine that the original allocation was unreasonable. This required the Tribunal to have regard to the respective values of all of the lots to which the application related. As the application would have changed the aggregate unit entitlements in the strata plan, the application necessarily related to all the lots in the strata plan because it affected the proportion of units held by each lot: see [96]-[123].
3. The claim for compensation by SGBE was put on the basis of breach of statutory duty or alternatively on the basis of negligence at common law. As to breach of statutory duty, the Tribunal held, based on the decision of the Appeal Panel in Trentelman v The Owners- Strata Plan No. 76700 [2021] NSWCATAP 222 at [32] and [61],that there was no obligation on the Owners Corporation to seek an order for the reallocation of unit entitlements. The Tribunal did not accept that the passing of resolutions by the Owners Corporation, which erroneously purported to accomplish a result, imposed an obligation on the Owners Corporation to identify and pursue an alternative means of achieving that result: see [147]-[156].
4. Nor did the Tribunal accept that the Owners Corporation owed a duty of care to bring about the outcomes sought to be achieved by the resolutions of 13 June 2013 and 20 April 2015.SGBE was capable of undertaking those tasks itself: see [157]-[161].
5. Because of these conclusions it was unnecessary for the Tribunal to determine whether the claim for compensation was commenced within the relevant limitation period: see [162]-[173]. However the Tribunal did decide that, in the absence of evidence of the value of all lots at the relevant time, there was no evidence that the acts or omissions of the Owners Corporation had caused SGBE any loss: see [174]-[177].
6. In these circumstances, the Tribunal dismissed SGBE's application.

1. The Amended Notice of Appeal raised 37 grounds of appeal. It would be unhelpful to set them out. Many of the grounds are repetitive or raise peripheral matters. Some of them raise issues which had not been raised before the Tribunal.
2. We are grateful to the counsel for SGBE, who frankly and, in our view, correctly, abandoned those grounds of appeal which raised new issues (rectification, equitable compensation, constructive trust, fraud on a power) and submitted that for the appeal to succeed SGBE must either establish an entitlement to an alteration of units under section 236 SSMA or a breach of statutory or common law duty.
3. We are satisfied that the issues as reframed by counsel for SGBE in oral submissions are the real issues to be determined on this appeal. We are satisfied that these issues raise questions of law.

1. Before outlining the parties' submissions it is necessary to set out the relevant legislation. Sub- sections (1), (2), (3) and (4) of section 236 of the Management Act are central :

(1) Tribunal may make order allocating unit entitlements The Tribunal may, on application, make an order allocating unit entitlements among the lots that are subject to a strata scheme in the manner specified in the order if the Tribunal considers that the allocation of unit entitlements among the lots--

(a) was unreasonable when the strata plan was registered or when a strata plan of subdivision was registered, or

(b) was unreasonable when a revised schedule of unit entitlement was lodged at the conclusion of a development scheme, or

(c) became unreasonable because of a change in the permitted land use, being a change (for example, because of a rezoning) in the ways in which the whole or any part of the parcel could lawfully be used, whether with or without planning approval.

(2) Matters to be taken into consideration In making a determination under this section, the Tribunal is to have regard to the respective values of the lots and to such other matters as the Tribunal considers relevant.

(3) Persons who may apply for order An application for an order under this section may be made by any of the following--

(a) an owner of a lot (whether or not a development lot) within the parcel for the strata scheme,

(b) the owners corporation,

(c) the lessor, in the case of a leasehold strata scheme,

(d) the local council, or by any other public authority or statutory body representing the Crown, being an authority or body that is empowered to impose a rate, tax or other charge by reference to a valuation of land.

(4) Application to be accompanied by valuation An application for an order must be accompanied by a certificate specifying the valuation, at the relevant time of registration or immediately after the change in the permitted land use, of each of the lots to which the application relates.

1. Sub-sections (1) and (2) of section 232 of the Management Act provide:

(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.

1. The core submission of SGBE was that an application under section 236(1) for the allocation of unit entitlements which seeks to modify the entitlements of some, but not all lots, but which has the incidental effect of modifying the scheme's aggregate unit entitlement only requires a valuation certificate for those lots in respect of which unit entitlements are sought to be changed. SGBE submitted that this meant in this case that valuation evidence referable only to lots 31 to 34 in strata plan 37489 fell within the permitted scope of section 236.
2. SGBE submitted that section 236 envisaged a four step process before the Tribunal exercises the power to reallocate entitlements in a strata scheme:

(a) first, relevantly, the Tribunal must determine whether an allocation of unit entitlements was unreasonable when a strata plan or a strata plan of subdivision was registered - ss 1(a) (ss 1(b) and (c) not being presently relevant);

(b) secondly, the Tribunal must have before it evidence by a registered valuer of the "respective" values of lots to which the application relates as at the date of registration - ss 2 and 4;

(c) thirdly, apart from respective values, the Tribunal can have regard to such other matters as it considers relevant - ss2; and

(d) fourthly, even if the Tribunal decides that the allocation of unit entitlements was unreasonable, it nevertheless has a discretion as to whether to reallocate - ss 1

1. In relation to the first step, SGBE submitted that there was an obvious unreasonableness in the allocation of 60 unit entitlements to Lots 31-34 in 1990. It submitted that this appeal focusses on the second step. SGBE submitted that the Tribunal erred in its construction of section 236 by concluding that the section required evidence of the value of all lots where unit entitlement as a proportion of aggregate unit entitlement would be affected. It submitted that "aggregate unit entitlement" was not a concept which found expression in s 236, and that an analysis of the proportion which the unit entitlement bears to the aggregate unit entitlement was not contemplated.
2. It followed, in SGBE's submission, that all that section 236 requires is to consider the relevant schedule of unit entitlements and identify those lots where the integer of unit entitlements specified for those lots was proposed to be varied. Valuation evidence is only required for those lots, which are "the lots to which the application relates" to employ the language of section 236 (4). As, in this case, the only integers of unit entitlements proposed to be varied were for Lots 31-34, section 236 only required valuation evidence for those lots.
3. SGBE sought to distinguish the decision in Chehab Investments Pty Ltd v The Owners-Strata Plan No 89670 [2025] NSWCATCD 28, on which the Tribunal had relied. SGBE submitted that Chehab and cases like it dealt with applications to modify the unit entitlements of all lots in the relevant strata schemes and not only some of the lots as was the case here.
4. SGBE submitted that the Tribunal's approach was harsh because the cost of obtaining evidence to support a retrospective valuation of all lots, should it even be obtainable, would be prohibitive and likely outweigh any benefit from the reallocation of units for Lots 31 -34. Furthermore, SGBE submitted, it had no way to compel other owners to make their lots available for inspection.
5. In relation to its claim for compensation, SGBE recognised that its claim under section 232 of the Management Act required it to identify a cause of action to support relief being granted under that section. The causes of action relied upon by SGBE in the Tribunal were breach of statutory duty and negligence. The 2013 and 2015 resolutions by the Owners Corporation provided the factual foundation for these alleged breaches. In particular, SGBE submitted that they gave rise to a responsibility on the Owners Corporation to take steps to implement the ineffective resolutions by bringing an application to the Tribunal.
6. As to breach of statutory duty, SGBE sought to distinguish Trentelman v The Owners - Strata Plan No 76700 [2021] NSWCATAP 222, on which the Tribunal had relied in concluding that no statutory duty existed. SGBE submitted that Trentelman was distinguishable as the owners corporation in that case had not passed resolutions for the modification of unit entitlements.
7. In relation to breach of duty of care, SGBE maintained the submissions it had made to the Tribunal and emphasised that by virtue of the 2013 and 2015 resolutions the Owners Corporation had assumed a duty of care to it to avoid the foreseeable risk of significant financial loss to it by taking steps to implement the resolutions.
8. SGBE acknowledged in oral submissions that it was unable to point to any authority which provided a precedent for the imposition of a statutory duty or a duty of care on the Owners Corporation.
9. On the question of causation, SGBE submitted that it was sufficient if the wrongful conduct of the Owners Corporation was one of a number of conditions sufficient to produce the damage. It was put to counsel for SGBE that if SGBE had not put forward the evidence necessary to vary unit entitlements under section 236 then it had also not put forward the evidence necessary to establish that any act or omission by the Owners Corporation had caused it any loss. In response to this counsel for SGBE suggested that SGBE may be entitled to damages on the basis of the loss of a chance to establish the factual basis to support an order under section 236. However counsel for SGBE later acknowledged that no claim for damages on the basis of the loss of a chance had been put to the Tribunal.

1. The Owners Corporation submitted that the Tribunal correctly found that SGBE had failed to provide evidence which could satisfy it that the allocation of units was unreasonable in 1990 when the strata plan of subdivision was registered. In particular, Mr Azar's certificate did not value each of the lots to which the application related.
2. The Owners Corporation submitted that the application related to all the units in the strata plan. It submitted that the proposed reduction in the aggregate entitlements of Lots 31 to 34 from 60 to 46 meant that the aggregate unit entitlement of all lots in the strata plan would be reduced from 1000 to 986. This necessarily involved a change in the unit entitlement of every lot in the strata plan.
3. The Owners Corporation submitted that the definition of "unit entitlement" in section 4 of the Management Act was relevant. It is defined to mean "the unit entitlement of the lot shown on the schedule unit entitlement for the strata scheme". The schedule of unit entitlement in this case (Agreed Bundle pages 18 and 41) shows both the entitlement for each lot and the aggregate of all entitlements. The Owners Corporation submitted that this demonstrated that the unit entitlement for each lot was a relative value which necessarily depended upon the aggregate entitlement. This was emphasised by the expression "respective values of the lots" in section 236(2), which necessarily considering the relative value of one lot to another.
4. The Owners Corporation submitted that the present case was a good analogue of Chehab because it similarly required consideration of the respective values of all lots.
5. The Owners Corporation submitted that the Tribunal was correct to conclude that the Owners Corporation owed neither a statutory duty nor a duty of care to SGBE to apply to reallocated unit entitlements following the 2013 and 2015 resolutions. It pointed out that SGBE was able to make an application. It also submitted that the asserted duty to make an application so as to provide SGBE with a financial benefit failed to recognise that in doing so it would cause financial detriment to other lot owners.

1. In its submissions in reply SGBE submitted that there was a clear distinction in the Management Act between a unit entitlement and the aggregate unit entitlement, with the latter having its own discrete definition in section 4 SSMA. SGBE submitted that there was no basis in the Management Act to justify treating a unit entitlement as a quotient of which the unit entitlement of a lot is the numerator and the aggregate unit entitlement of all lots is the denominator.
2. SGBE submitted that "respective values" in section 236(2) does not mean "relative value of one to another" but rather means the particular value of each unit": Anderson Stuart v Treleaven [2000] NSWSC 283; (2000) 49 NSWLR 88 at [51]- [56].
3. SGBE submitted that satisfaction of section 236 (4) of the Management Act is not a mandatory requirement for a reallocation of unit entitlements. SGBE pointed to the fact that "the respective values of the lots" was only one consideration in section 236(2) and that section 236(2) did not specify that the Tribunal was to have regard to certificates of valuation provided pursuant to section 236 (4).
4. As to its claim for compensation, SGBE submitted that it was not contending that the Owners Corporation had a duty to provide it with a financial benefit; rather that the 2013 and 2015 resolutions created administrative duties and functions to realise the intent of the resolutions.

1. Both parties also made submissions in relation to the limitation period for bringing SGBE's claim for compensation. However, for reasons we will explain, it is unnecessary to record these submissions.

1. In construing section 236 it is necessary to have regard to the function and purpose of unit entitlements. Basten JA in Sahade v The Owners- Strata Plan 62022 [2014] NSWCA 208 at [35]- [36] explained that the proportionate allocation of unit entitlements forms the basis for liability to rates; payments with respect to the maintenance and upkeep of common property; levies for administration and sinking funds; liability for statutory charges; and sharing in the assets and liabilities of the body corporate on termination of a strata scheme. In addition to financial consequences, unit entitlements control the power of management through the owners corporation.
2. The purpose of unit entitlements is to identify the relevant fraction, proportion or percentage of total or aggregate unit entitlements applicable to each lot in order to ascertain the relevant respective rights and liabilities of each lot owner. A unit entitlement only has significance as a concept insofar as it is a proportion of a whole.
3. So, for example, section 83(2) of the Management Act provides:

(2) Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 82) by the owners in shares proportional to the unit entitlements of their respective lots.

This provision conceives of unit entitlements as a proportional concept, that is, as a proportion of aggregate unit entitlements.

1. This is consistent with the definition of "unit entitlement" and the schedule of unit entitlement in this case. Section 4 of the Management Act defines the unit entitlement of a lot in a strata scheme to mean "the unit entitlement of the lot shown on the schedule of unit entitlement for the strata scheme". Section 4 also provides that "schedule of unit entitlement" has the same meaning as it has in the Strata Schemes Development Act (2015) (NSW) (Development Act).
2. Section 4 of the Development Act defines "schedule of unit entitlement" in relation to a strata scheme to mean the schedule recorded as the schedule of unit entitlement in the folio for the common property in the scheme.
3. In this case the schedule of unit entitlement for strata plan 37489 (Agreed Bundle page 41) shows both the individual units for each lot and the aggregate unit entitlement (1000 units).
4. In our view the legislation identifies the unit entitlement of a lot in terms of how it appears in a schedule which also identifies the aggregate unit entitlement because the unit entitlement of a lot is only a meaningful concept insofar as it identifies a proportion of the aggregate. Both the text and the scheme of the legislation identify a unit entitlement as a proportion of a whole, or, in mathematical terms, as a numerator with the aggregate unit entitlement as the denominator. The fact that the Management Act also employs a separate definition of "aggregate unit entitlement" (i.e. the denominator) does not in our opinion derogate from the force of this conclusion.
5. In our view section 236 (2) and (4) of the Management Act impose a mandatory requirement on the Tribunal, in considering an application for the reallocation of unit entitlements, to have evidence of the respective values of all lots which would be affected by the application. Those lots which will be affected would include those lots whose unit entitlement would vary, that entitlement being a proportion which could vary either as a result of a change in the numerator or the denominator. These are lots "to which the application relates". In our opinion there is no relevant factual distinction between this case and Chehab Investments.
6. It follows in our opinion that we see no error in the approach taken by the Tribunal in this case in dismissing the application under section 236 because evidence was not tendered of the value of all of the lots to which the application related.
7. This conclusion can be tested by considering the valuation evidence in fact tendered in this case. The premise of SGBE's application was that the unit entitlements of Lots 31-34 were unreasonable in comparison to the other lots in the strata scheme. Yet the valuation evidence tendered by SGBE consisted only of evidence of the value of Lots 31-34 at the relevant time in 1990. That evidence could be of no assistance at all in determining whether the unit entitlements of Lots 31 -34 were unreasonable in comparison to the other lots. That would primarily be assessed by comparing the values and unit entitlements of Lots 31 -34 with the values and unit entitlements of other lots. Whilst section 236(2) contemplates that other evidence may be relevant in assessing unreasonableness, the primary and mandatory mechanism put in place by section 236 is the assessment of respective values.
8. We reject the submission by SGBE that section 236(4) is not a mandatory requirement. To use the language of Basten JA in Sahade at [22], section 236 (4) is the machinery provision which implements the mandatory and primary requirement in section 236(2) to compare the respective values of the lots. To use the language of Santow J in Anderson Stuart v Treleaven at [51], section 236(4) supports the requirement imposed by section 236(2).
9. Whether or not it would have been onerous for SGBE to furnish satisfactory evidence of the value of all lots in the strata plan at the relevant time is ultimately a matter of speculation. We were not taken to any evidence tendered to the Tribunal on this issue. More fundamentally, however burdensome the process of furnishing relevant evidence of the value of all affected lots may have been, that is the evidence which in our view the legislation required in this case.
10. We observe that if we are wrong in identifying unit entitlements as a proportionate concept, it could nevertheless be said that the other lots in the strata scheme would be affected if the application succeeded. The proportionate rights and liabilities attaching to the other lots would change. It could therefore be said that the application related to those other lots within the meaning of section 236(4) and therefore that relevant valuation evidence of those lots would nevertheless be required by section 236. However as this point was not raised with the parties during the hearing of the appeal, we have not had regard to it in deciding the appeal.

1. SGBE accepted that there was no authority for the imposition of a statutory or common law duty on an owners corporation in the circumstances of this case. In terms of a statutory duty, the Tribunal held that Trentelman was clear authority that no duty exists. At [61], the Appeal Panel in Trentelman held that the owners corporation was under no duty to apply for the reallocation of unit entitlements.
2. SGBE sought, both in the Tribunal and on appeal, to distinguish Trentelman on the basis that in this case there had been two resolutions to change entitlements. We agree with the Tribunal's view set out at [148]-[150] that this does not provide a relevant point of distinction. In particular we agree with the Tribunal's conclusion at [150] that the passing of resolutions which erroneously purported to accomplish a result which could not be achieved by resolution did not impose an obligation on the Owners Corporation to identify and pursue an alternative means of achieving that result.
3. In our view this conclusion is emphasised by section 236 (3) which provides that an owner of a lot may apply for an order under section 236, as well as the owners corporation (and others).
4. In relation to whether the Owners Corporation owed a duty of care to SGBE to apply to the Tribunal to reallocate unit entitlements, the Owners Corporation referred us to the decision of Darke J in James v The Owners -Strata Plan No.11478 [2016] NSWSC 1558. In that case at [95]-[96], Darke J noted that it had been said that it was not open to judges at first instance to find a novel duty of care, although views differed in that regard.
5. If Supreme Court judges at first instance should fear to tread, at the very least, in imposing a novel duty of care, then plainly the Civil and Administrative Tribunal should not rush in to do so. For our part, we see no error in the approach taken by the Tribunal in rejecting the existence of a duty of care for the reasons which it gave.
6. Even if we are wrong in concluding that the Owners Corporation did not owe a statutory or common law duty to SGBE to apply to reallocate unit entitlements, in our view SGBE has not established that SGBE's acts or omissions caused it any loss. This would require SGBE to establish, as an initial step, that an application by the Owners Corporation to reallocate unit entitlements in the manner sought by SGBE would have succeeded. In the absence of evidence of the relevant value of all lots this cannot be demonstrated. We agree with the Tribunal's analysis of this issue at [174].
7. The belated attempt, during the hearing of the appeal, by SGBE to put its loss for the first time on the basis of a lost chance cannot be permitted. A case of this kind was not raised before the Tribunal and may have resulted in different evidence being led.
8. In view of the conclusions we have reached, it is unnecessary to consider any limitation period issues raised by SGBE's claim for compensation.

1. It is common ground that Rule 38A of the Civil and Administrative Tribunal Rules 2014 applies in relation to the costs of this appeal. At the hearing of the appeal, both parties agreed that the costs of the appeal should follow the event.
2. We make the following orders:

(1) Appeal dismissed.

(2) Order the appellant to pay the respondent's costs of the appeal.

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.