The Owners - Strata Plan No. 100526 v Hamdan - [2024] NSWCATAP 222 - NSWCATAP 2024 case summary

NCAT Appeal Panel|2024-10-17

Solicitors: Bannerman Lawyers (Appellant) Construction Legal (First Respondent) Construction Legal (Second Respondent) File Number(s): 2024/00196929 Publication restriction: Nil Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: [2024] NSWCATCD Date of Decision: 29 April 2024 Before: D Moujalli, Senior Member File Number(s): 2022/00416316 (formerly SC 22/38958)

Outline

The appellant commenced proceedings against the respondents, seeking an order under s 132(1)(a) of the Strata Schemes Management Act 2015 (NSW) (the SSMA) for the removal of unauthorised works and the reinstatement of common property.
At first instance, the presiding member was of the view that the Tribunal's discretion should not be exercised in favour of ordering the removal of those works and, for that reason, dismissed the application. That order, dismissing those proceedings, became the subject of this appeal.

Scope and nature of internal appeals

Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
What constitutes a question of law was considered in detail in a decision published the day before the hearing of this appeal: Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 (Unique). That decision, which added to the non-exhaustive list of questions of law set out in John Prendergast & Vanessa Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, made it clear that the question of law should be articulated with precision.
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Sch 4 to the NCAT Act.
In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that: (a) the decision of the Tribunal under appeal was not fair and equitable; or (b) the decision of the Tribunal under appeal was against the weight of evidence; or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17 (Collins), the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where: … there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Sch 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b). In Collins, at [84], the Appeal Panel stated that ordinarily it is appropriate to grant leave to appeal only in matters that involve: (a) issues of principle; (b) questions of public importance or matters of administration or policy which might have general application; or (c) an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; (d) a factual error that was unreasonably arrived at and clearly mistaken; or (e) the Tribunal having gone about the fact finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
In the NCAT Ac t, s 81 sets out the orders which an Appeal Panel may make: (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.

Hearing

After introductory matters, and having identified the relevant documents, oral submissions were made, following in the usual sequence of appellant then respondent, followed by the appellant in reply, so that each party was able to speak in support of their case and to respond to the case of the other party.

Documents

In addition to the Notice of Appeal, the appellant lodged documents in support of this appeal on no less than five occasions: two on 28 August 2024 and one on each of 19 July 2024, 18 September 2024 and 3 October 2024. The respondent filed a Reply to Appeal on 17 June 2024 and documents on 2 September 2024.
Of all those documents, it was only necessary to refer to those received from the appellant on 3 October 2024. This document was the Parties' Joint Court Book, which included all previously lodged documents.

Timing

As the orders were made on 29 April 2024, r 25 of the Civil and Administrative Tribunal Rules 2014 (NSW) (the Rules) required that the Notice of Appeal be lodged within the following 28 days, which is by 27 May 2024. As the Notice of Appeal was received on that day, the appeal has been commenced within time.

Appellant's submissions

While the appellant raised six grounds of appeal in a five-page attachment to the Notice of Appeal, it is not necessary to refer to them in any detail for the reasons indicated below. That Notice of Appeal also asserted that the first instance decision was not fair and equitable.
Oral submissions included claims (1) that the first instance decision set a precedent and (2) that the challenged decision failed to refer to the appellant's reliance of s 240 and a 241 of the SSMA. Reference was also made to Smith v The Owners - Strata Plan No. 43094 [2024] NSWCATAP 186.

Respondent's submissions

The respondent submitted that damage to common property was what triggered the application of s 132, that s 241 was not raised by the appellant until its outline submissions, and that s 153 was not raised until the appellant's closing submissions. The contended consequence was that the appellant was confined to a case based on s 132 of the SSMA.
While the first instance outcome was said to be explicable on the basis that the case was based on s 132 and that the damage could be addressed by separating the structure from the common property, the respondent accepted that the decision was made by considering the damage to common property, excluding other issues such as the effect of the unauthorised works on other lots. However, the respondent did submit that the Tribunal had taken into account the fact that the works were unauthorised in the exercise of its discretion. Further, while accepting that the works were unauthorised, it was said that separation of the structure from the common property removed that issue.

Submissions in reply

Reference was made to what was said in the reasons delivered at first instance at [37], which is set out in full below. The appellant submitted there were issues that should have been considered, such as privacy, light, and council approval. The appellant drew attention to a number of cases referred to in the reasons at first instance at [25] which it contended demonstrated that the discretionary exercise under section 132 SSMA could take into account issues going beyond damage to the common property. The submission that the respondents should have obtained a by-law was repeated.

The first instance decision

The reasons published on 29 April 2024 did refer to (1) the requirement to obtain authorisation for the subject works, (2) the refusal of such authorisation at a meeting held on 1 April 2022, (3) the continuation of those works after that refusal, (4) a proposed scope of works for detachment of the works from the common property instead of demolition and remove of the works. (5) the agreement of the experts that detachment could be achieved by that scope of works.
After referring to reported decisions, including Owners Corporation SP 22607 v Yang [2018] NSWCATCD 3 and The Owners - Strata Plan No 5319 v Price [2019] NSWCATCD 3, the exercise of the discretion conferred by s 132 and the order that should be made were considered at [37] and [38]: In the above circumstances, I am not persuaded that I should exercise the Tribunal's discretion to order the removal of the Works. Such an order is not necessary to protect the common property from damage or defects in the sense referred to in the Yang and Price decisions. The damage to the common property is of the limited nature in the sense which I have described above. The works have been well-constructed. They do not raise any concerns about the safety or amenity of the common property. There is also a feasible rectification methodology for detaching the Works from the common property which does not involve the demolition and removal of the Works. In my opinion, these are compelling considerations militating against the making of the order sought by the applicant. I am hard pressed to identify any counter-veiling discretionary considerations in favour of the order sought in the Application. The only substantive order sought in the Application is for the removal of the Works. Notwithstanding the agreement of the experts on the rectification method for detaching the Works from the common property, I do not consider it appropriate, in the interest of procedural fairness, to make a more limited order in relation to the Works in the absence of such an order having [been] sought in the Application. It will be a matter for the applicant to consider whether it wishes to make a fresh application for a more limited order in relation to the Works in the absence of the parties being able to reach agreement in relation to this.

Relevant law

In the SSMA, s 111 deals with work carried out by lot owners on common property: An owner of a lot in a strata scheme must not carry out work on the common property unless the owner is authorised to do so - (a) under this Part, or (b) under a by-law made under this Part or a common property rights by-law, or (c) by an approval of the owners corporation given by special resolution or in any other manner authorised by the by-laws.
As to the rectification of work done by lot owners, s 132 provides as follows: (1) The Tribunal may, on application by an owners corporation for a strata scheme, make either of the following orders if the Tribunal is satisfied that work carried out by or for an owner or occupier on any part of the parcel of the scheme has caused damage to common property or another lot - (a) an order that the owner or occupier performs the work or takes other steps as specified in the order to repair the damage, (b) an order that the owner or occupier pay to the owners corporation or the owner of the lot a specified amount for the cost of repairs of the damage and any associated costs, including insurance and legal costs. (2) An amount payable by an owner or occupier to an owners corporation under this section is payable, and may be recovered, under this Act as if it were an amount of unpaid contributions.
It is also necessary to note s 240 and s 241 which are in the following terms: 240 Tribunal may make order of another kind The Tribunal may deal with an application for an order under a specified provision of this Act by making an order under a different provision of this Act if it considers it appropriate to do so. 241 Tribunal may prohibit or direct taking of specific actions The Tribunal may order any person the subject of an application for an order to do or refrain from doing a specified act in relation to a strata scheme.

Consideration

Annexure A to the Notice of Appeal set out six grounds of appeal, under the following headings: 1. the Tribunal erred in law by failing to take into account relevant considerations, 2. the Tribunal failed to provide proper reasons for its decision. 3. "no reasonable decision maker", 4. the Tribunal identified the wrong issues, 5. the Tribunal took into account irrelevant considerations, and 6. the decision was against the weight of the evidence.
Leave to appeal was only sought in relation to the last of those six grounds.
It is necessary to first consider whether the appellant has identified a question of law.
A decision in relation to section 132 SSMA involves two steps. The first step is to determine whether the facts give rise to the exercise of the discretion available under section 132 to make orders. These may be described as the jurisdictional facts. If the jurisdictional facts are found, the second step is to determine, as a matter of discretion, whether to make any orders. Insofar as the first instance outcome was the result of an exercise of discretion, set out below is the well-established test as to whether the exercise of a discretion involved an error, being what was said in the joint judgment of Dixon, Evatt, and McTiernan JJ in House v The King [1936] HCA 40; 55 CLR 499 at 504-505: The appeal is a full one on law and fact…But the judgment complained of, namely, sentence to a term of imprisonment, depends upon the exercise of a judicial discretion by the court imposing it. The manner in which an appeal against the exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed ... It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.
The circumstances identified in House v The King in which the exercise of a discretion can be set aside may be summarised as (1) acting on a wrong principle, (2) being guided by extraneous or irrelevant matters, (3) mistaking the facts, (4) failing to consider a relevant matter, or (5) a result that is so unreasonable or plainly unjust as to warrant an inference.
The reasoning in House v The King applies to judicial decisions involving an exercise of discretion: GLJ v Trustees of the Roman Catholic Church for the Diocese of Lismore [2023] HCA 32;(2023) 414 ALR 635 at [16].Not all of the circumstances warranting setting aside the exercise of a discretion identified in House v The King necessarily involve questions of law giving rise to an internal appeal to the Appeal Panel as of right as required by section 80 (2) of the NCAT Act. As the High Court noted in House v The King, it was dealing with a "full" appeal, that is, an appeal by rehearing on both fact and law rather than an appeal confined to a question or error of law.
Grounds 1 to 5 of the appellant's notice of appeal, although expressed by reference to different formulae, were in effect substantially the same complaint that, in exercising its discretion, the Tribunal had only considered factors relating to the impact on the common property created by the work and had not taken into account wider considerations in relation to the work such as the impact on neighbouring lots including loss of privacy, the fact that the work was unauthorised and what was said to be a failure to obtain Council approval for the work.
We would observe as to ground 2, that a reading of the reasons at first instance does not suggest there was a failure to provide proper reasons, as required by s 62(3) of the NCAT Act and as suggested by Bell P (as he then was) in New South Wales Housing Corporation v Orr [2019] NSWCA 231 at [71].
Ground 6, which contended that the decision was against the weight of the evidence, plainly requires leave to appeal, as was sought in the Notice of Appeal.
In view of what was said in Unique, at [25]-[40], the preparation of a Notice of Appeal should not involve completing that form by referring to an annexure in which every possible complaint is set out but instead requires a precise identification of a pure question of law (except insofar as leave to appeal is sought).
The question of law raised by this appeal appears to be whether circumstances relating to the work beyond the impact on common property, including the impact of the work on other lot owners, are matters relevant to the discretion conferred by s 132 of the SSMA. If so, then the failure to consider those circumstances would involve misconceiving the scope of the discretion and thereby acting on a wrong principle thus involving an error on a question of law in relation to the exercise of the discretion. We are therefore satisfied that this appeal raises a question of law.
The jurisdictional facts which must be established for the purposes of section 132 are that the work carried out by or for an owner or occupier has caused damage to common property or another lot; see also McDonnell v The Owners-Strata Plan No64191 [2022] NSWSC1631 at [135].
In the first instance decision the Tribunal did acknowledge at [21] that the work had caused damage to the common property and that the discretion under section was therefore enlivened. However, on one reading, at [25] the Tribunal appeared to indicate that the fact that the work was unauthorised was also a jurisdictional fact which must be established before the discretion could be exercised: It appears from my consideration of the authorities referred to in the applicant's submissions that in addition to the Tribunal being satisfied that unauthorised works had caused damage to common property ( i.e. the jurisdictional threshold for the exercise of discretion being satisfied), there were discretionary factors which favoured an order under s132(1)(a) for the removal of the works.[emphasis added]
Despite what is said at [25], we are not prepared to conclude that the Tribunal erroneously proceeded on the basis that the fact that the work was unauthorised was a necessary jurisdictional fact. However it is striking that the first instance decision makes no reference to the fact that the work was unauthorised being taken into account as a relevant discretionary consideration. Indeed, at [37] of the first instance decision, the Tribunal stated that it was "hard pressed" to identify any discretionary considerations favouring removal of the work.
Living in a property governed by a strata scheme involves living in close proximity to others and sharing common property. In this context failing to follow the lawful procedures in relation to obtaining the necessary authority to carry out work on the common property is significant. The fact that damage to common property (or another lot) was caused by work which was unauthorised is a relevant contextual discretionary consideration which may be taken into account in deciding whether to make an order under section 132.
Apart from failing to explicitly weigh the impact of the work being unauthorised in the discretionary calculus, from the first instance reasons at [37] (referred to above), it is clear the discretionary decision at first instance was confined to a consideration of the damage or impact of the respondents' work on the common property. The inclusion of the words "I am hard pressed to identify any counter-veiling discretionary considerations" provides support for that conclusion. Evidence from adjoining lot owners about the negative impact of the work on their privacy and amenity received no mention at all in the first instance decision.
The jurisdictional facts which may be relevant in a particular case under section 132 include damage to other lots as well as damage to common property. Once the necessary jurisdictional facts are established, we are of the view that the scope of the relevant discretionary considerations under section 132 SSMA is not necessarily limited to the damage or impact to the common property. Just as, in principle, the fact that work on common property is unauthorised may be a relevant discretionary consideration, so too can the damage to or impact on other lot owners. This was a case where the evidence of the impact on adjoining lot owners required consideration.
The appellant owners corporation also contended that the first instance decision failed to take into account evidence that Council approval for the work was required and had not been obtained. This point was put in various ways to conform with the various formulations of the grounds of appeal. The Tribunal found at [36] that Council approval was not required. In fact, the appellant's contentions on this point amounted to a submission that the finding that Council approval was not required was against the weight of evidence, in respect of which leave to appeal was required. In the circumstances it is unnecessary to say any more about this issue.
Consequently, we are of the view that the decision at first instance misconceived the scope of the discretion conferred by s 132, which amounted to an error on a question of law. As a result, we consider the appeal should be allowed.
Allowing the appeal raises the question of whether we should redetermine the application or remit the application for redetermination. Reluctant though we are to impose additional time and costs on the parties, we do not consider we can undertake redetermination with the result that the application should be remitted for redetermination by a differently constituted Tribunal.
Since we have come to the view that there should be a redetermination of the application, we have neither attempted to weigh the competing discretionary considerations nor analysed the evidence relating to those considerations, as we do not intend to express a view on those matters.
There are two additional matters which warrant reference. First, we do not conder that the decision at first instance set a precedent. Any decision that only involves the exercise of discretion is determined by the facts in that case and cannot have more general application except to the extent that there is some statement of principle or interpretation of the law. Further, a first instance decision does not bind other applications being considered at first instance, unlike a decision of an Appeal Panel.
Secondly, the appellant also contended that the Tribunal had erred in failing to address claims for relief under sections 240 and 241 of the SSMA. A suggestion that relief should be granted under section 241 was first raised in outline submissions at first instance. The application to the Tribunal dated 20 July 2022 made no reference to section 241. Particularly in proceedings where both parties are legally represented, we do not consider raising a claim in outline submissions to provide a sufficient basis for an order to be made. While proceedings in the Tribunal are not governed by pleadings, as in court proceedings, the Tribunal is still required, by s 38(2) of the NCAT Act, to observe the rules of natural justice. The primary rules of natural justice are that a party should (1) know the nature of the case that is being alleged, and (2) have an opportunity to provide a response to that case.
Outline submissions are often provided very close to a hearing with the result that treating the inclusion of a reference to an alleged basis for a final order in such submissions may involve an element of ambush. Procedural fairness requires an applicant to seek and obtain leave to amend the application prior to the hearing so that (1) it is clear to the Tribunal what order(s) are being sought, and (2) the respondent has an opportunity to respond by way of evidence and/or submissions.
At worst, an application to amend should be made at the outset of the hearing so that the Tribunal (1) is aware of the case being mounted by the applicant, and (2) can consider whether any prejudice to the respondent would be caused by permitting the amendment.
In the present circumstances, we should add that, having regard to the view we have taken as to the scope of the discretion under section 132 SSMA it is not apparent that the discretionary considerations under section 241 SSMA which might arise in this case are any broader than or different to those which may arise under section 132.The appellant's solicitor appeared to ultimately accept in argument that this was the case.

Costs

In the NCAT Act, the effect of s 60 is that each party is to bear their own costs unless there are special circumstances warranting an order for costs. However, s 35 of the Act operates to make s 60 subject to r 38 of the Rules which applies when the amount claimed or in dispute exceeds $30,000 in proceedings allocated to the Consumer and Commercial Division of the Tribunal. When r 38 applies it is not necessary to establish special circumstances, and the usual order is that costs follow the event (i.e. follow the outcome of the case) unless there is disentitling behaviour by the successful party.
The question of whether rule 38(2)(b) applies was considered in The Owners Corporation Strata Plan No. 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 which established that it is necessary for either: (1) the amount claimed to exceed $30,000; or (2) the amount in dispute to exceed $30,000; or (3) there to be credible evidence which, if accepted, would establish an entitlement to an order for more than $30,000. On the other hand, rule 38(2)(b) does not apply where either: (1) the proceedings involve a request for payment, or relief from payment, of $30,000 or less; or (2) the relief sought does not depend on a finding that an amount of money is owed.
As to the cost of appeals, the effect of r 38A(2) is that we are required to apply the first instance costs provisions when deciding whether to award costs in relation to the internal appeal.
It appears to us that the costs of this appeal are governed by s 60 and that there are no special circumstances warranting an order for costs of the appeal. However, as the parties' written submissions raised the question of costs, an opportunity should be provided for submissions to be made as to costs. Any such submissions should include an indication of whether it is accepted that the issue of costs should be determined on the papers, without a further hearing.
During the hearing, it was said that no decision has yet been made on the question of costs of the proceedings at first instance. We will include a reference to that aspect in the orders so that issue is not overlooked.

Orders

For the reasons set out above, the following orders are made: 1. The appeal is allowed. 2. The orders made by the Tribunal on 29 April 2024 in proceedings 2022/00416316 are set aside. 3. The proceedings are remitted for reconsideration by a differently constituted Tribunal. 4. The Tribunal in the remitted proceedings may allow the parties to rely on such further evidence as the Tribunal considers appropriate. 5. In relation to the costs of the appeal, if either party wishes to seek an order for costs, it is to file and serve submissions (of not more than five pages) and any relevant evidence within 14 days of the date of these orders. 6. Any submissions (of not more than five pages) and evidence in response are to be filed and served within the following 14 days. 7. Any submissions (of not more than two pages) and evidence in reply are to be filed and served within the following 7 days. 8. It is noted that the question of what costs order should be made in relation to the first instance proceedings does not yet appear to have been finalised.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 06 November 2024

The Owners - Strata Plan No. 100526 v Hamdan

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