The Community Association - DP No 270193 v Dib - [2022] NSWCATCD 194 - NSWCATCD 2022 case summary

NCAT Consumer and Commercial|2022-10-06|Before: Community Association DP

APPLICATION

In an application for orders filed on 30 November 2021, the applicant relevantly seeks an order under s 71 of the Community Land Management Act 1989 (the Act) that the respondent remove the unauthorised pergola to comply with the following bylaw set out in the community management statement for DP 270,193: 1. by-law 2.8; 2. by-law 3.1; 3. by-law 4.1; and 4. by-law 4.4 (b)

The applicant's submissions

I have had regard to the joint tender bundle filed by the parties on 18 September 2022 and the applicant's written submissions contained in that bundle.
The Community Management statement of the Community Association (the management statement) provides for a process for development and building works to be reviewed by the executive committee of the Association. Pursuant to section 13 of the Act a management statement is binding on the Association, each subsidiary body and each person who is proprietor of a lot. In particular Section 13(4) states as follows: (4) Subsections (1) - (3) have effect as if, in each case - (a) the management statement included mutual covenants to observe its provisions entered into by the person is bound by it, and (b) the person so bound to executed the management statement under seal.
Within the Association's management statement there are specific regulations regarding the appearance of a lot including external features on the management statement. Such regulations require that any works to the external appearance of the lot are required to be reviewed and subsequently approved by the executive committee or the Association.
In the management statement there is an architectural code referred to as by-law 2 which relevantly prescribes for the respondent's lot that there is to be no pergola.
Relevantly the by-laws provide as follows: i. by-law 2.8: an owner or occupier must not carry out any Works on any lot, Community Property or Subsidiary Property unless: a. Subject to by-laws 2.6 and 2. 7 those works comply with the Architectural Standards and Landscape Standards prescribed in this Management Statement; and b. the Owner or Occupier complies with By-Laws 3 and 4 and if the works affect Subsidiary Body Property, By-law 15; and c. The Owner or Occupier complies with any design and installation conditions imposed by the Community Association or Executive Committee under By-law 17. ii. bylaw 3. 1: A person must not carry out any works on any Lot, Community Property Subsidiary Body Property unless the person first obtains the written consent of the Executive Committee. iii. bylaw 4. 1: An Owner or Occupier or a Subsidiary Property may only construct, install or maintain on or in a Lot Community Property or Subsidiary Body Property anything which can be seen from the outside of that Lot, Community Property or Subsidiary Body Property if that Owner or Occupier first obtains approval of the Executive Committee. iv. bylaw 4. 4 (b): Without limiting this Bylaw, a person must obtain the written consent of the Executive Committee before that person places on a Lot, Community Property or Subsidiary Body Property: b. Any external improvement other than fly screens produced by the manufacture of the window to which the fly screen is to be installed. v. Works are defined as: a) A change to any building; b) A change to any landscaping; or c) The construction of the new building(s).
As a consequence of the by-laws the Applicant cannot install a pergola without the approval of the executive committee or the Association. In May 2020 the respondent sent a written application to the executive committee for the installation of a pergola. The application sought approval for the structure which extended beyond the balcony on the second floor of the property and accordingly beyond the envelope of the building.
On 20 October 2020 the Community Association held its annual general meeting during which time a motion to amend the management statement to include pergolas was defeated by 93.5% of unit entitlement. As a consequence of the defeat of the resolution the executive committee meeting on 16 November 2020 formally passed a resolution refusing the respondent's application to install the proposed pergola.
After the application was refused on 16 November 2020 there was no further communication from the lot owner or a representative until 13 October 2021. On 13 October 2021 the respondent's solicitor advised that works would commence on 14 October 2021.

Unauthorised works

It is the applicant's submission that the pergola constitute illegal works as the pergola is constructed outside the building envelope and is installed without the approval of the executive committee. The respondent subsequently enclosed the pergola so that it is now a partially an enclosed room.
In Owners Corporation SP 68751 v Community Association DP 270281 [2015] NSWCAT CD 99 the Tribunal determined that the Community Management Statement and by-laws thereunder were binding on a Community Association and under each subsidiary body within the community scheme as well as each person who was a proprietor, lessee or occupier of a lot or strata lot within the community scheme. This was affirmed in Community Association DP 270158 v O'Neill [2018] NSWCATCD 26, wherein the Tribunal ordered that the respondent remove works which were in breach of the management statement due to a failure to obtain approval from the Community Association and/or its executive committee.
The Association therefore submits that a lot owner cannot carry out works to the external appearance of the lot property without the written approval of the executive committee.
The applicant submits that the unauthorised work should be removed as the unauthorised works are clearly not permitted by the management statement.

The respondent's submission

The respondent submissions were provided under the hand of Mills Oakley lawyers dated 23 December 2021. As appropriate I have repeated part of the submissions verbatim. I have had regard to all written submissions contained in the tender bundle.
The respondent submits that the application is legally flawed as the erection of a pergola did not require the approval of the Association because New South Wales planning legislation expressly overrides any purported restrictions on the carrying out of a development pursuant to 3.16 of the Environmental Planning and Assessment Act 1979 (the EPA Act) in combination with clause 1. 20 of the State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (Codes SEPP).
It is the respondent's submission that the "extensive body of jurisprudence emanating from both the Land and Environment Court of NSW and the Supreme Court of NSW, both being superior courts, has established over several decades the broad application and effect of section 3.16 of the EPA Act and its ability to nullify and to suspend the operation of private restrictions, agreements, covenants and the like in order to enable development to be carried out in accordance with certain State Government and local council planning instruments".
It is submitted that 'in the event that the Tribunal has any concern or difficulty in accepting the Respondent's legal submissions… We respectfully invite the Tribunal to transfer this matter to the Land and Environment Court to be dealt with under that Court's Class 4 jurisdiction … Of course the Tribunal may consider the matter to be sufficiently clear that any such transfer of proceedings is unnecessary".
It is submitted that the pergola was erected by the respondent wholly within the respondent's own property (lot 27) therefore the works were carried out on lot property, not community property or community land.
The respondent submits that the works are exempted from any requirement to obtain any development consent under the EP&A Act "whether from the City of Canada Bay or any other authority". It is noted that the pergola constitutes an "exempt development" under the EPA Act because it is of minimal environmental impact.
It is submitted that the by-laws purport to impose a restriction on the carrying out of a development by prohibiting the carrying out of a development without first obtaining the written consent of the executive committee and that the executive committee "effectively becomes the consent authority with the power to determine what works it will allow and what works it will prohibit, at its own discretion … irrespective of whether such works are or might be acceptable to the relevant planning authorities such as the local councils".
The respondent relies on clause 1.20 of the Codes SEPP Stating "that for the purpose of enabling development on land in any zone to be carried out in accordance with this Policy with a consent granted under the Act any agreement, covenant or other similar instrument that restricts the carrying out of that development does not apply to the extent necessary to serve that purpose."
It is submitted that such provisions and environmental planning instruments are to enable consent authorities such as local councils and the State Government to determine what development is appropriate rather than leaving such decisions to private parties to purport to set their own rules for development on land within NSW.
The respondent cites the following authorities: Donald Crone & Associated Pty Ltd v Council of the City of Bathurst & Ors, 19 October 1988, unreported (a copy was not provided); Challister Limited v Blacktown City Council (1992) 76 LGRA 10; Cumerlong Holdings Pty Ltd v Dalcross Properties Pty Ltd & Ors [2010]; NSWCA 214; Marjen Pty Ltd v Coles Supermarkets Australia Pty Ltd (1996) 90 LGERA 363, Edward and Harrington v Greenwood Grove Estate Pty Ltd [2011] (Edward). The last decision concerned a residential estate and a land owner who did not wish to comply with the architectural standards contained in a management plan that formed part of the contract of sale to all persons who purchased lots within that estate. (I note that this decision does not concern a community association within the meaning of the Act nor does it concern a management statement within the meaning of the Act).

JURISDICTION

I am satisfied that I have been appointed as a Community Schemes Adjudicator and have jurisdiction to determine the application. I am satisfied that the application has been brought pursuant to the Community Land Management Act 1989 (hereinafter 'the Act'). I note that the Act was repealed and new legislation - the Community Land Management Act 2021 (the 2021 Act) - came into force on 1 December 2021. Pursuant to the transitional provisions contained in Schedule 3(6) of the 2021 Act existing proceedings - any proceedings commenced but not determined or finalised under a provision of the former Act are to be dealt with and determined as if the former Act had not been repealed. This application for adjudicator's orders, having been commenced on [date] is covered by the transitional provisions.
I am satisfied that the application was accepted without the parties being required to undertake mediation.
I make the determination on the basis of all the material and documents as filed in the application form and the joint tender bundle and all written submissions contained therein.

Consideration

The management statement enables the executive committee of the Association to review development and building works under guidelines which ensure that any proposed development or building is not contrary to the management statement and the by-laws. The management statement provides for a process of development and building works to be reviewed by the executive committee or by the Association in general meeting particularly in relation to concerns about the conservation of the overall appearance of the Association property.
By majority the Association resolved against the amendment of the relevant by-law and the pergola was rejected. It is therefore uncontroversial to state that the erection of the pergola constitutes unauthorised works. The respondent was requested to cease the illegal works and at the time when the initial application for adjudication was filed, the respondent had completed the unauthorised works.
The solicitors for the respondent submit that compliance with the by-laws is unnecessary where an approval from a regulatory authority is not required by reliance on the EPA Act and the Codes SEPP. That submission overlooks the provisions of s. 13 of the governing Act which provides:- Binding effect of management statement (1) A community management statement is binding on: (a) the community association, and (b) each subsidiary body within the community scheme, and (c) each person who is the proprietor, lessee or occupier, or the mortgagee or covenant chargee in possession, of a development lot, neighbourhood lot or strata lot within the community scheme. (2) A precinct management statement is binding on: (a) the precinct association, and (b) each subsidiary body within the precinct scheme, and (c) each person who is the proprietor, lessee or occupier, or the mortgagee or covenant chargee in possession, of a precinct development lot, neighbourhood lot or strata lot within the precinct scheme. (3) A neighbourhood management statement is binding on: (a) the neighbourhood association, and (b) each person who is the proprietor, lessee or occupier, or the mortgagee or covenant chargee in possession of, a neighbourhood lot within the neighbourhood scheme. (4) Subsections (1)-(3) have effect as if, in each case: (a) the management statement included mutual covenants to observe its provisions entered into by the persons bound by it, and (b) the persons so bound had executed the management statement under seal.
In Owners Corporation SP 68751 v Community Association DP 270281 [2015] NSWCATCD 99 the Tribunal determined that the management statement and by-laws thereunder were binding on the association and on each subsidiary body within the community scheme as well as each person who was a proprietor, lessee or occupier of a lot or strata lot within the community scheme. Further, upon purchase of her lot in 2015 the by-laws and the community management statement became binding on the respondent by reason and operation of clause A of the management statement: "A. The terms of this Management Statement are binding on: (a) the Community Association; (b) each subsidiary body; and (c) each person who is in Owner, lessee, Occupier or mortgagee in possession of a Lot".
Whether or not the relevant consent authority such as the City of Canada Bay grants development consent pursuant to the EPA Act is an irrelevant consideration for the purpose of this adjudication. Whether or not a development consent is granted or even required may be relevant for an application by the respondent in relation to whether the refusal of the Association for the rejection of the pergola was unreasonable or whether the management statement should be amended pursuant to section 80 of the Act.
An environmental planning instrument referred to in section 3.28 of the EPA Act is defined under section 1.4 of the same Act as an environmental planning instrument made or taken to have been made under Part 3 of the EPA Act. Part 3 of the EPA Act relates to planning instruments created by the New South Wales government and/or council or other designated planning authority and does not nullify a management statement. Planning approval for the purpose of the EPA Act or the relevant authority does not constitute work approval for the purposes of the Association by-laws and regulations that apply to strata lots or community lots.
I refer to the most recent Appeal Panel decision O'Neill v Community Association DP 270158 [2018] NSWCATAP 272 which in my view is binding on me. There is nothing in the relevant planning legislation drawn to the adjudicator's attention that provides the EPA Act or any other legislation made under planning approval laws overrides the private contractual obligations between the parties. The management statement provisions have, by legislative force and case law authority have contractual effect between members of the community association (see Community Land Management Act 1989 (NSW) s 13; OC SP 68751 v CA DP 270281 [2015] NSWCATCD 99; see also State Environmental Planning Policy (Exempt and Complying Development Codes) 2008 (the 2008 Code).
I refer to and adopt the applicant's submissions at page 372 of the bundle that the applicant, being faced with the respondent's assertion that they did not need to comply with the management statement, obtained advice from a town planner 'GAT & Associates Pty Ltd' who confirmed that a pergola is an exempt development under Part 2 of the Codes SEPP. The town planner confirmed that "While the exempt provisions to allow for a pergola to be erected within the Cape Cabarita Estate without the approval of Council or an accredited certifier if the standards are met, the approval of the Executive Committee is still required as per Note 2 under the Part 2 Exempt Development Codes of the Codes SEPP". I find that there is nothing in the authorities or submissions provided by the respondent to support the contention that the fact that the pergola is an exempt development "nullifies" the by-laws or the management statement of the Association.
The authorities cited by the respondent in my view do not assist the respondent's case as they are not concerned with community associations and management statements within the meaning of the Act. In particular, the authority of Edwards concerns a contract for the sale of land and has no bearing on the facts of this case. The case in point which supports the applicant's contention that approval from an [owners corporation] or community association to lodge a development application is distinct from approval to carry out the work is supplied by the decision in The Owners of Strata Plan No 37762 v Ding Phuong Dung Pham and Anor [2006] NSWSC 1287 at [38] - [39].

Conclusion

The mechanism provided by community schemes legislation is clear. Under the Act, if the owner considered that a by-law in the management statement should be varied or revoked, the respondent could have made an application to the Tribunal under s 80 or s 81 of the Act. Under the Community Land Management Act 2021, if an owner considers that a by law should be revoked, an application may be made to the Tribunal, time limits permitting.
No such application has been filed. The works remain unauthorised. In consideration of Section 71 of the Act I am satisfied that I should make an order as sought by the applicant for the removal of the unauthorised pergola and all related work on the lot and return the outside of the lot to its original condition and state. In the exercise of my discretion, I am not satisfied that the unauthorised works should remain in place. In giving the respondent a reasonable time to comply, I allow until 5 December 2022 for that to occur.
An order is made accordingly.

Adjudications

I note that there is considerable confusion in the respondent's submissions concerning the jurisdiction of an adjudicator. The relevant legislative framework is provided under the Act and the Civil and Administrative Tribunal Act 2013 (the NCAT Act). An Adjudicator is defined as a Community Schemes Adjudicator appointed under section 109H of the Act. An adjudicator in the exercise of his or her duty and in the disposal of an adjudication is not appointed as "NCAT" or "the Tribunal" as referred to in submissions. An appeal under section 88 of the Act is an 'external appeal' of a decision of an adjudicator to the Tribunal for the purposes of the Civil and Administrative Tribunal Act 2013 and is heard by a single Member of the Consumer and Commercial Division. An appeal from a decision of a single Member of the Tribunal is an 'internal appeal' and lies to the Appeal Panel of the New South Wales Civil and Administrative Tribunal (see ss 80 - 82 of the NCAT Act).

Transfer to a court of competent jurisdiction?

The respondent invited "the Tribunal" to transfer this matter to the Land and Environment Court. To the extent that this constitutes an application for Miscellaneous Matters under the New South Wales Civil and Administrative Tribunal Act (the NCAT Act), such application is misconceived. An adjudicator appointed under the Community Land Management Act has no jurisdiction to transfer matters under Schedule 4 Clause 6 of the NCAT Act. An adjudicator may refer matters to the Tribunal (constituted as a single member of the Consumer and Commercial Division) under section 71B of the Act if matters are legally complex. There is no provision under the Act for an adjudicator to transfer a matter to a court of competent jurisdiction. Insofar as such an application is brought, it is dismissed.

Costs

The respondent makes an application for costs. Such an application is misconceived. There is no jurisdiction to award costs in an adjudication under the Community Land Management Act. An application for adjudicator's orders is not an application to the Tribunal. Section 60 and Rule 38 of the NCAT Act therefore do not apply.

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 07 September 2023 - Formatting amendments. 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: 07 September 2023

Community Land Management Act 1989(NSW)s 13

The Community Association - DP No 270193 v Dib

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