The Owners - Strata Plan No. 10717 v Mantell; Mantell v The Owners - Strata Plan No. 10717

Background

1. The strata scheme which is the subject of these proceedings comprises six buildings and a total of 38 townhouses. These applications relate to common property adjacent to Lot 11, located at the eastern end of what is essentially a north-facing building. Lot 11 is a lot which has a Beach Street frontage.

Jurisdiction

1. This application relates to a strata-titled building in Curl Curl. The subject strata scheme was registered on 11 June 1976. Accordingly, the Tribunal has jurisdiction to hear and determine these proceedings under the Strata Schemes Management Act 2015 (NSW), abbreviated in these reasons to SSMA.

Hearing

1. Documents admitted as evidence or marked for identification were as follows: Exhibit A The application of the lot owners and accompanying documents Exhibit B Documents received from the lot owners on 21 April 2023 Exhibit C Documents received from the lot owners on 5 May 2023 Exhibit D Documents received from the lot owners on 1 August 2023 Exhibit E Documents received from the owners corporation on 8 August 2023 MFI 1 Written submissions for the lot owners dated 9 August 2023
2. There was cross-examination of Ms Mantell that was followed by oral submissions, in the sequence owners corporation, lot owner and owners corporation in reply so that each party had an opportunity to speak in support of their own case and in response to the case of the other party.

Relevant law

1. In the SSMA, s 149 provides as follows: (1) The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds - (a) on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or (b) on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or (c) on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust. (2) In considering whether to make an order, the Tribunal must have regard to - (a) the interests of all owners in the use and enjoyment of their lots and common property, and (b) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law. (3) The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent. (4) The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law. (5) An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court). (6) An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.
2. A refusal will be unreasonable when there is no rational basis for it in that it was not guided by sound judgment or good sense: The Owners - Strata Plan No 69140 v Drewe [2017] NSWSC 845 (Drewe), at [43].
3. As was indicated in Capcelea v The Owners Strata Plan No 48887 [2019] NSWCATCD 27 (Capcelea), at [52], the question is not whether the proposed change is reasonable but, rather, whether the refusal was unreasonable.
4. After referring to the decisions in Beckett v The Owners - Strata Plan No 74637 [2020] NSWCATCD (Beckett), Capcelea, Endre v The Owners - Strata Plan No 17771 [2019] NSWCATAP 93 (Endre), Macey's Group Pty Ltd v The Owners - Strata Plan No 33591 [2021] NSWCATAP 7 (Maceys), The Owners - Strata Plan No 12289 v Donaldson [2019] NSWCATAP 213 (Donaldson), and Drewe, the Appeal Panel, in Bruce v Knight [2021] NSWCATAP 225 (Bruce), at [53], the Appeal Panel summarised the applicable principles as follows: 1. reasonableness must be assessed by reference to circumstances known at or prior to the passing of the relevant resolution: Maceys; Beckett; Drewe; 2. the determination of whether a refusal is unreasonable depends on the conduct of the owners corporation and all the relevant circumstances: Endre; 3. "circumstances" are different to "material". Subsequent evidence or "material" which goes to the circumstances existing at the time of the meeting is admissible: Donaldson; 4. the Tribunal is not confined to examination of the material before the meeting: Donaldson; Beckett; 5. individual owners can provide evidence of their reasons: Capcelea.
5. It is well-established that whether the proposed by-law was unreasonably refused requires a two-step approach of first considering whether the proposed by-law was unreasonably refused and, if so, making an assessment of the matters set out in s 149(2) in order to decide whether to make an order: see, for example, Donaldson and Gelder v The Owners - Strata Plan No. 38308 [2020] NSWCATAP 227. Kaye v The Owners - Strata Plan No. 4350 [2022] NSWCA 1386 warns against using s 149(2) matters in the first of those steps.

Evidence of owners corporation

1. Exhibit E contained affidavits from Tony Polito dated 20 January 2023 (E1), 31 May 2023 (E34), and 28 April 2023 (E119), plus a statement in reply dated 8 August 2023 (E206).
2. The first of those affidavits, dated 20 January 2023, purported to give hearsay evidence of the views of the strata managing agent and the local council, in paragraphs 5 and 6. No weight is attached to that evidence. Although s 38(2) in the Civil and Administrative Tribunal Act 2013 (NSW) provides that the Tribunal is not bound by the rules of evidence, it does say that relaxation is subject to the rules of natural justice. It is convenient to here indicate that the Tribunal does not consider that, in these proceedings, it should rely on evidence that is provided in a form that cannot be challenged.
3. Paragraph 8 of this affidavit said: The committee didn't act earlier as we were going to restructure the garden area adjacent to the [lot owners'] town house and reposition the fence in its correct position at the same time. Then continue with the restructure of the garden along the new fence line, once in the correct position.
4. It is noted that there is no documentary support for that claim, such as minutes of a strata committee meeting, no corroborating evidence from any member of the strata committee, no indication as to timing, no indication that was ever communicated to any meeting of the owners corporation, and no indication that was ever communicated to the lots owners. To the extent that it purports to speak on behalf of the strata committee, paragraph 8 again seeks to put evidence before the Tribunal that is not corroborated. To the extent that paragraph 8 contains Mr Polito's view, that evidence is not considered reliable, as to which see below.
5. While a copy of a letter dated 3 September 2021 from the strata managing agent was provided (E23), that letter goes no higher than expressing a desire to "re-position the fence back onto the boundary". The use of the words "re-position" and "back" suggests there was an earlier fence on the boundary of lot 11 but there is no evidence of that.
6. In paragraph 22, Mr Polito suggested: "When this complex was initially built around 1976 there were no fences erected until late 1978." However, this affidavit contains nothing to indicate Mr Polito has any personal basis for that evidence.
7. It is noted that a proposed mediation did not proceed on 25 August 2021 because Mr Polito contracted COVID. It is also noted that Notice to Comply dated 26 October 2022 was issued to the lot owners which only referred to the bench and not the fence (E30). In Mr Polito's first affidavit (E6-7 at [44]-[50]) are paragraphs headed "CONCLUSION" which are in the form of submissions rather than evidence.
8. In that second affidavit, dated 31 May 2023, Mr Polito suggests he is the strata committee member who communicates with the strata managing agent and that he attends to "much of the on-site management of the strata scheme, such as communicating with tradesmen and owners".
9. Paragraph 4 in this affidavit resembles paragraph 8 in the earlier affidavit in that it seeks to give evidence of what "the strata committee has been planning". He refers to having met with Mr Clyne but there is no evidence from Mr Clyne.
10. In paragraph 12 Mr Polito purports to summarise conversations he asserts he had with "owners of most of the lots" prior to the 9 November 2022 meeting but there is no indication of who he spoke to or when. He does not suggest any reason was given at that meeting.
11. Paragraph 14 refers to a valuation dated 26 May 2023 that was obtained more than six months after the meeting and a copy of that valuation was provided (E107). That valuation suggests an amount of $41,250 for the subject area which was said to be 6 square metres.
12. In paragraph 15 Mr Polito responds to matters raised by Ms Mantell. Again, he resorts to hearsay, saying he had been "advised by owners", but not providing any names, and sought to give evidence on behalf of the gardener on a matter which does not appear to be relevant to these applications. He also purports to summarise what he alleges occurred at a meeting in the office of the strata managing agent on 26 April 2023 in the presence of Ms Mantell, but there is no evidence from that strata managing agent and this matter was never put to Ms Mantell during her cross-examination.
13. The third affidavit of Mr Polito, dated 28 April 2023, included paragraph [4] which suggested what was said during a mediation session which is plainly inadmissible. As a result, that evidence and evidence based on that evidence has not been taken into consideration.
14. Again, Mr Polito sought to give evidence of other person, including a gardener and "previous committee members". Much of this affidavit is argumentative material that provides little or no assistance in relation to the issues to be determined. This affidavit also concludes with paragraphs, from [15], under a heading "CONCLUSION" which, again, are in the form of a submission. Their contents are such as to suggest what appears in those paragraphs may be the result of what the lawyer preparing this affidavit wanted Mr Poilito to say.
15. At [22] there is reference to a "valuation/appraisal", said to suggest a land value of $15,000. However, that evidence (E155) is from a real estate agent, with no indication of the author's qualifications or experience and no reference to the Tribunal's Code of Conduct for expert witnesses.
16. Not satisfied with three overlapping affidavits, which included the multiple provision of the same documents, Mr Polito provided a statement dated the day before the hearing, based on the proposition that it was a statement in reply.
17. Again, Mr Polito sought to give evidence of the views of Mr McMartin but did not indicate when he obtained those views. At [8], Mr Polito suggest for the first time, not having mentioned this evidence of any of his three earlier affidavits, that he saw Mr Mantell removing two garbage bins full of soil at the time when the bench was installed.
18. Mr Polito's evidence that he is "a retired decorated Police officer of 30 years' service", at [13], carries little, if any, weight. Neither the current nor former occupation of a witness determines the reliability of the evidence of that witness.
19. When repetitive content and submissions are removed, this statement adds little if anything to the evidence relevant to the issues in these proceedings.

Evidence of lot owners

1. Exhibit A included an email which suggested the fence was put in its current position by the developer, that the lot owners purchased their lot in 1991 and that the fence was replaced by the owners corporation in 1994. It was also said that by-laws 3, 29 and 30 are existing use by-laws.
2. Exhibit B comprised copies of: (1) the strata plan, (2) three letters sent by the strata managing agent in 2020, on 22 September, 3 and 30 November, (3) photographs, (4) emails, (5) a 10 September 2021 letter from the lot owners' solicitors, (6) minutes of a strata committee meeting held on 22 February 2021, (7) three notices for the 2021 annual general meeting (AGM) and a letter indicating that would be an "electronic meeting", and (8) a notice for the 2022 AGM. The final page, marked 36, is a photograph taken inside the lot which shows the fence and the bench which are the subject of these proceedings.
3. Exhibit C appears to only contain two additional documents relevant to these proceedings, namely (1) a response to an affidavit from Mr Polito, and (2) four photographs taken outside the lot which show the area now in issue.
4. Exhibit D contained the 31 July 2023 statement of Ms Mantell which indicated that the bench in question was added by Mr Mantell in August 2020. It was suggested that Mr Polito installed a similar bench in his courtyard. There was also reference to an incident between the lot owners and Mr Polito which they reported to the Police, and to allegations of smoking. An AGM on 3 August 2021, a general meeting on 25 May 2022, and an AGM on 9 November 2022 were referred to, each of which was said to have involved electronic voting and no discussion of the by-law sought by the lot owners. Ms Mantrell also said, in response to Mr Polito's affidavit, that she was unaware of any plans of the owners corporation to restructure the area in issue in these proceedings.
5. The photos at D13-14 (ie pages 13 and 14 in Exhibit D) shows the extent to which the fence and bench are outside the building line of lot 11.
6. A copy of the proposed common property rights by-law, as proposed to the 9 November 2022 AGM, is at D124-126 and the page of the minutes which records the defeat of that motion is at D151.
7. When cross-examined, Ms Mantell indicated that the purpose of the bench was for it to be used for plants and small children. She said the bench rests on concrete but there are no footings. It was her evidence that only the grass in that area was removed, and that Mr Polito saw the work being done when the bench was installed. Ms Mantell indicated there had been three meetings at which her motion was defeated, that there was no discussion at that meeting, the decision was on each occasion by way of an electronic vote, and that no reasons were provided. She said she thought the fence, which she said had been in the same position for years, was on the boundary of the lot and that the bench was inside that boundary. There was no re-examination.

Submissions of owners corporation

1. The first written submissions for the owners corporation were included in Exhibit E, at E137. A copy of the strata plan and by-laws were annexed to these submissions. It was submitted that the proposed by-law, if made, will not ratify unauthorised construction of a timber bench, and reference was made to Stolfa v The Owners Strata Plan 436 & Ors [2009] NSWSC 589 (Stolfa) at [84] in support of that proposition. The remaining propositions may be summarised as follows: 1. The owners corporation has been planning on removing the subject fence and "re-landscaping" the area in dispute. 2. The lot owners constructed a timber bench on common property, without authorisation, in 2020, in breach of by-law 3, and the use of that bench breaches by-law 4. 3. That bench is either an addition to common property or a new structure erected on common property and thus involves a breach of s 108(2) which requires a special resolution. 4. The owners corporation seeks an order that the lot owners remedy those alleged breaches, at their own expense, which will permit the proposed re-landscaping. 5. It was submitted that the owners corporation's complaint renders applicable paragraphs (a) and (e) of s 232(1) in the SSMA.
2. Further written submissions for the owners corporation were included in Exhibit E, at E211. Those submissions, which addressed the application of the lot owners, are summarised below: 1. A failure to provide reasons may be relevant if it can be inferred that the owners corporation had no reasons for refusing the by-law but that such an inference could not be drawn in this case. 2. The lot owners application and evidence do not "concern themselves with the question of unreasonableness". 3. Reference was made to Ashbee v The Owners Strata Plan No. 11761 [2018] NSWCATCD 80 and Capcelea at [36]-[38]. 4. The lot owners "do not explain why it would be unreasonable to relocate the fence line to its proper position". It is convenient to here note that this submission goes to whether the by-law is unreasonable and not to whether its refusal was unreasonable. 5. The lot owners may have a reasonable expectation, for the purposes of s 149(2)(b) to maintain the status quo, but not when their use of the area which is the subject of their proposed by-law was negatived by rejections prior to the 9 November 2022 meeting and when their continued belief is implausible. 6. An exclusive use by-law will not ratify unauthorised construction: Stolfa. 7. Lots owners may take matters into account which are not substantiated by objective material placed before a meeting and may have regard to their own experience and beliefs as to the effect of the proposed by-law. 8. Unreasonableness is considered at the time of refusal: Gelder, at [41]. 9. After setting out what was said to be a summary of the reasons provided by the lot owners, it was said: "A number of these propositions are likely to have been recognised by owners as problematic". First, the fence was replaced in about 1994 on the assumption it reflected the boundary. Secondly, the area is about 6 square metres. Thirdly, reference was made to the work carried out by the gardener. Fourthly, the issue of the location of the boundary was raised in a September 2020 letter from the strata managing agent (E12). 10. The lot owners would benefit from their proposed by-law but "do not point to any circumstances that would have rendered the owners' reasons for refusing to make the by-law unreasonable". 11. The lot owners have not demonstrated the refusal of their by-law was unreasonable but, even if that was the case, the "the matter that would count most heavily against [making the proposed by-law] is that the area of common property is capable of being landscaped and beautified to benefit all owners in the use and enjoyment of their lots and common property".
3. Omitting matters already set out above, oral submissions made during the hearing noted there appeared to be an issue as to whether the bench was on common property and submissions were made in support of the claim that it was. As to the location of the fence it was suggested that the lot owners' evidence pre-dated the registration of the strata plan and that the owners corporation relied on conversations alleged by Mr Polito.
4. There was also reference to the degree of affixation of the bench to the ground and to the application of s 108 of the SSMA in this instance, the case of the owners corporation being that there has been a breach of by-law 3, by law 4, and s 108 of the SSMA.
5. In the absence of reasons having been provided either during the meeting on 9 November 2022 or in the minutes of that meeting, reliance was placed on the evidence of Mr Polito who suggested a desire on the part of the strata committee to beautify the subject area. It was also said that the proposed by-law would grant the owners valuable rights without having to provide any compensation.

Submissions of lot owners

1. The submissions for the lot owners were also threefold: (1) written submissions, added as the last pages of Exhibit D, (2) written submissions which became MFI 1, and (3) oral submissions made a during the hearing.
2. In the initial written submissions, the case of the lots owners was that fence around the courtyard of their lot was there when they purchased the lot in 1991 and that fence was replaced by the owners corporation in 1994 and that after they added a bench inside that fence in August 2020 the owners corporation sought its removal. Further, that three meetings, the last of which was held on 9 November 2022, had rejected their proposed by-law, being electronic meetings with no discussion of that proposal, and that no reasons had been given as to why that by-law was refused at that meeting. The area in question was said to be 1 metre width and 3.5 metres in length. It was contended that, if that area is not part of their lot, the position should be resolved by the Tribunal making a common property rights by-law.
3. The contents of the 17-page submission handed up during the hearing (MFI 1) are summarised below. These submissions began by noting the numerous instances of hearsay evidence from Mr Polito, which the Tribunal has noted.
4. In relation to the application of the owners corporation, it was submitted that the Tribunal has no power to make the order sought on the basis that (1) s 108 does not apply as the bench is not affixed to the common property, (2) the only relevant power is s 132 of the SSMA, which not been proved by the owners corporation as there is no evidence of damage, (3) reliance on s 232 alone is not sufficient, and (4) no scope of works has been provided. Reference was made to Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425 and other reported decisions in relation to the last of those points. Detailed submissions were then made in support of the proposition that the lot owners have repaired and maintained the area which is now in dispute for a period of more than 30 years, and it was suggested the owners corporation has failed to comply with its obligation to repair and maintain, imposed by s 106.
5. Turning to the application of the lot owners, it was submitted that the owners corporation had not provided any adequate reason why the by-law proposed by the lots owners was refused. It was contended that, if the hearsay evidence of Mr Poilito was excluded, lack of compensation was the primary ground advanced for the refusal. Further, that the decision in Edward Lee and Jennifer Ann Lee v Andrew Geary [2015] NSWCATCD, 14 April 2015, SM Meadows, at [28], suggested that reasons for refusal are a requirement and, at [31]-[32], that in the absence of reasons for refusal, there is no defence available.
6. As to compensation, it was noted that Coscuez International Pty Ltd v The Owners - Strata Plan No 46433 [2022] NSWCATAP 147 at [105] suggested that each case depends on its own facts and that "there is no absolute rule that a failure to offer compensation … is always a reasonable basis for voting against a common property rights by-law".
7. The case for the lot owners was put on the basis that they have arguably had exclusive use for the last 30 years, the area has been for their sole benefit, enclosed by a fence, and they have carried out repair and maintenance obligations. It was contended that there was no loss of a valuable right to the owners corporation by reason of those matters.
8. Next, reasons were advanced in support of the rights and reasonable expectations of the lot owners. It was also contended that the lot owners believed that the boundary of their lot corresponded with the location of the fence and that the Tribunal should determine the application of the lot owners using the same questions set out in Linkhorn v The Owners - Strata Plan No, 18756 [2022] NSWCATCD, 2 February 2022, SM Ellis SC, at [19].
9. Written submissions in reply to those of the owners corporation noted that Ashbee was did not involve s 149 case but a question of question of whether an owners corporation had acted unreasonably and found there had been a failure to properly articulate reasons. It was also noted that, in Ashbee at [37], it was said: It is reasonable and, indeed would be procedurally fair, for the reasons for refusal by the other lot owners to be recorded so that the applicant had knowledge of the reasons for refusal.
10. Further, in response to the reference to Capcelea, it was observed that the lot owner obtained an order under s 149 on that case and that, at [39], there was no evidence linking the matters raised to the reasons for rejecting the resolutions. In distinction to Capcelea, the Tribunal was reminded that the relevant meeting in this case was electronic, with pre-meeting voting.
11. As to the report of the valuer, three matters were raised: (1) whether he inspected the property, (2) no survey was carried out, and (3) his report was attached to a witness statement rather than being filed as a separate report such as would enable cross-examination. It was contended that this report should be disregarded.
12. Again, omitting matters covered in the written submissions, oral submissions raised the following points: 1. The main evidence for refusal is discussions Mr Polito claims he had with other persons. 2. By 9 November 2022, there was no need to hold an electronic meeting and that meeting could have been held by Zoom. 3. The only evidence of a desire to re-landscape the garden is that of Mr Polito and no supporting document has been provided. 4. The unchallenged evidence is that the fence was in its current position prior to the lot owners purchasing their lot. 5. There was a prior penalty application that was withdrawn by the owners corporation. 6. No issue had been raised against the wording of the proposed by-law. 7. An order should be made under s 149 to regularise what has been the position for many years.

Submissions in reply

1. Matters raised in reply were as follows: 1. It was clear where the boundary was, and no surveyor was needed. 2. These proceedings were not about exclusive use but were about regularising the breaches for which the owners corporation contended. 3. The lot owners had presented their application as if the owners corporation had to disprove unreasonableness, but the lot owners did not provide any evidence of taking steps to ascertain what were the reasons. 4. This was a case where there had been use of common property by lot owners for a long time due to a mistake. 5. The owners corporation did not seek compensation but relied on the valuation as evidence that the exclusive use rights were worth a significant amount but nothing was offered by the lot owners. 6. An order under s 132 does not need a work order and Glenquarry was dealing with the adequacy of a work order made under s 106.

Consideration

1. In these proceedings, it is necessary to refer to two principles in relation to the assessment of evidence.
2. The first relates to the onus or proof and the burden of proof. In these proceedings, as is usually the case, the party lodging the application bears the onus of proof and that party needs to establish on the balance of probabilities, that the order sought should be made. That onus creates a burden of proof. Using the analogy of a set of weighing scales, if the applicant produces some evidence, then that tips the scale in favour of the applicant. If the respondent fails to provide either any evidence or adequate evidence to the contrary then it may be that the scales are not tipped away from the applicant, in favour of the respondent. It should not be thought that any reference to the lack of evidence from the respondent is reversing the onus of proof because all that is happening is an assessment of the evidence. This principle is sometimes summarised by saying that the legal burden of proof remains with the applicant, while the evidential burden of proof shifts, depending on what evidence is led.
3. Secondly, following on from that, is the principle that a court or tribunal can have regard to both evidence that is provided and evidence that is not provided. This principle was well expressed almost 250 years ago, in the English decision of Blatch v Archer [1774] ER 2; 1 Cowper 63 at 65, being a case in which Lord Mansfield said: "It is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other side to have contradicted."

Assessment of witnesses

1. There were only two witnesses in these proceedings: Mr Polito for the owners corporation and Ms Mantell for the lot owners.
2. The evidence of Mr Polito is not considered reliable for the following reasons.
3. First, he sought to give hearsay evidence in many instances. He sought to give evidence of the views of (1) the strata managing agent, (2) the local council, (3) other, unnamed current members of the strata committee, (4) Mr Clyne, (5) "owners of most of the lots", (6) the gardener, (7) "previous committee members", and (8) Mr McMartin.
4. Secondly, he was not content to rely on his own evidence but sought credibility based on his former occupation as a police officer.
5. Thirdly, it is clear there is bad feeling between Mr Polito and the lot owners. That is evident from (1) an incident on 27 February 2021 which resulted in the Police being called and an event number recorded, and (2) from his hearsay evidence (E37 at [15]), not relevant to the issues in these proceedings, which sought to denigrate the lot owners.
6. Fourthly, it is clear from Mr Polito's evidence that he has a proprietorial approach to the subject strata scheme: (1) he purports to conduct the defence of the s 149 application without any indication of the basis for his authority to do so, such as minutes recording him being given that role, (2) while there is evidence that he is a strata committee member, there is no evidence that he is either the chairperson, secretary or treasurer, (3) he suggests he is the person who communicates with the strata managing agent, (4) he attends to "much of the on-site management of the strata scheme, such as communicating with tradesmen and owners", and (5) on 27 February 2021 he took it upon himself to enter the lot owners' carport, moved tools and blasted the area with water, using a water pressure cleaner.
7. In view of those matters, it is not surprising that Mr Polito was not required for cross-examination. The Tribunal is not satisfied it should accept his uncorroborated evidence.
8. The evidence of Ms Mantell, whose single witness statement was succinct and who was cross-examined, is accepted but with caution, since (1) it is clear the fence and bench are on common property, and (2) that aspect was drawn to her attention by a letter from the strata managing agent dated 22 September 2020.

Findings of fact

1. Based on the evidence, and having regard to the submissions of the parties, the Tribunal makes the following findings of fact: 1. Strata Plan No. 10717 was registered on 11 June 1996. 2. The lot owners purchased Lot 11 in 1991. 3. At that time there was a fence near the eastern end of their patio. 4. That fence was replaced by the owners corporation in 1994. 5. That fence is on common property and not on the boundary of Lot 11. 6. In August 2020 the lot owners placed a bench inside that fence. 7. That bench is on common property and not with the boundary of Lot 11. 8. That bench is not affixed to the common property. 9. On 22 September 2020, 3 November 2020, and 30 November 2020 the strata managing agent wrote to the lot owners, seeking the removal of that bench. Those letters made no reference to any plan to renovate the area on which the fence and bench are located. 10. On 22 February 2021 the strata committee met but the minutes of that meeting make no reference to any plan to renovate the area on which the fence and bench are located. 11. On 3 August 2021 an Annual General Meeting rejected a common property rights by-law proposed by the lot owners. That was an electronic meeting. 12. On 25 May 2022 a General Meeting rejected a common property rights by-law proposed by the lot owners. That was an electronic meeting. 13. On 9 November 2022 an Annual General Meeting rejected a common property rights by-law proposed by the lot owners. That was an electronic meeting. 14. No reasons for the rejection of that by-law were provided to the lot owners at any of those three meetings, or in the minutes of any of those meetings, and there was no subsequent correspondence providing any such reasons. 15. On 26 October 1992 the owners corporation issued a Notice to Comply to the lot owners in relation to the bench (E30) but that notice was never the subject of any application to the Tribunal. (The application filed on 13 July 2022 (SC 22/31529), withdrawn on 5 August 2022, was based on a 3 September 2021 Notice to Comply which related to smoking.)
2. The basis for findings (5) and (7) is that the strata plan clearly shows (D7) that the eastern boundary of the lot owners' balcony and garden area is aligned with the eastern boundary of the building and the photographic evidence (C4, C7 and D13-14) clearly shows that the fence and bench are located outside that boundary. It is not necessary to have evidence from a surveyor to make those findings. Indeed, the plan which formed part of the by-law proposed by the lot owners (D126) shows the relevant area, shaded, outside the north-eastern boundary of Lot 11.

Application of the lot owners

1. The first question is whether the refusal of the by-law proposed by the lot owners was unreasonable. Commonly, in applications of this kind, a lot owner provides evidence of what reason(s) for refusal were given at the relevant meeting and assert unreasonable refusal by reference to such reason(s).
2. As indicated above, refusal will be unreasonable when there is no rational basis for it in that it was not guided by sound judgment or good sense and, as was submitted for the owners corporation, the question of unreasonableness has to be determined as at the time of refusal.
3. In this case, the lot owners provided unchallenged evidence that no reasons were given at the time of refusal and cases such as Precision Plastics Pty Ltd v Demir [1975] HCA 27; 132 CLR 372 at 370-371, applied in Ashby v Slipper [2014] FCAFC 15 at [77], establish that evidence, which is not inherently incredible and which is unchallenged, ought to be accepted.
4. Thus, in the absence of any evidence from the owners corporation, there is no evidence of any rational basis for the refusal of the proposed by-law. That does not involve any reversal of the onus of proof, as was suggested in submissions for the owners corporation. Rather, that the lot owners provided evidence which, in the absence of credible evidence from the respondent, would entitle them to the order sought.
5. There is no evidence to suggest that the value of the land in question was ascertained prior to the 9 November 2022 meeting. The fact that such evidence was later obtained and presented to the Tribunal does not establish that a failure to offer compensation was a reason for refusal of the by-law. Indeed, oral submissions in reply for the owners corporation indicated that the owners corporation did not seek compensation but relied on the valuation as evidence that the exclusive use rights were worth a significant amount but nothing was offered by the lot owners. Contrary to the submissions for the lot owners, a failure to offer compensation was not the primary ground advanced for refusal.
6. What was the primary ground advanced for refusal was that there was a plan to redevelop the area the subject of the proposed by-law. However, there is no credible evidence that warrants finding that was THE reason or even A reason for refusal: (1) there is nothing recorded in the minutes of the owners corporation of that plan, (2) no minutes of any strata committee has been provided in support of that plan, (3) the evidence of what others are said to have thought prior to the meeting is not sufficient, (4) evidence of what it was said the strata committee intended to do is not sufficient, (5) the strata committee only covers a small number of the lot owners, (6) the evidence of Mr Polito is not considered reliable, (7) there is no direct evidence from any other lot owner, and (8) there is no evidence which clearly indicates what was the reason why any lot owner voted against the proposed by-law on 9 November 2022.
7. It is not uncommonly the situation, in proceedings such as this, that evidence is provided to the Tribunal in support of whatever reasons could have been advanced at the time of the hearing rather than reasons upon which there was refusal at the relevant meeting. Any attempt to achieve subsequent justification will not provide a defence to a claim based on s 149. Further, as was noted earlier, the question is not whether the lot owners proposed by-law is reasonable, or whether the suggested plan to redevelop the area the subject of that by-law is reasonable: the question is whether the refusal of that by-law was unreasonable.
8. In this instance, the Tribunal is comfortably satisfied that the lot owners have established that the refusal of their proposed by-law was unreasonable because there is no credible evidence of any rational basis for that refusal. The owners corporation failed to provide any reliable evidence from any lot owner of the form: 'I voted against that by-law on that day for this reason'. Further, as in Capcelea, there was no evidence linking matters raised by Mr Polito to reasons for rejection of the proposed by-law.
9. It is therefore necessary to consider the matters set out in s 149(2) and to exercise the discretion conferred on the Tribunal by the inclusion of the word "may" in s 149(4).
10. That requires a consideration of (1) the interests of all owners in the use and enjoyment of their lots and common property, (2) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law, and (3) whether the Tribunal's discretion should be exercised in favour of making the by-law proposed by the lot owners.
11. Simply stated, the competing arguments are the suggested plan to redevelop the area where the fence and bench are currently located and the desire of the lot owners to maintain the status quo.
12. As to the interests of all lot owners, there is limited evidence as to what is said to be proposed: only an uncorroborated suggestion from a witness whose evidence is not considered reliable. No documents have been submitted to provide any evidence of what Mr Polito claims is proposed. As to the interests of owners of Lot 11, there is no dispute that the current situation has been in place for more than 30 years.
13. While it cannot be doubted that granting the lot owners exclusive use of the subject area is a valuable right, that is doing no more than maintaining a situation that has existed for more than three decades.
14. Weighing up the competing alternatives, the Tribunal considers the preferable course is to maintain the current situation. It is noted that the owners corporation did not raise any objection to the wording of the proposed by-law. In the circumstances of this case, the Tribunal is satisfied the order sought by the lot owners should be made, under s 149.

Application of the owners corporation

1. The application of the owners corporation was confined to the bench, which is not surprising since the evidence suggests respondent erected the fence, prior to 1991, and replaced it in 1994. So far as is presently relevant, s 108 of the SSMA provides: (1) Procedure for authorising changes to common property An owners corporation or an owner of a lot in a strata scheme may add to the common property, alter the common property or erect a new structure on common property for the purpose of improving or enhancing the common property. (2) Any such action may be taken by the owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed.
2. Just as holding a driver's licence does not enable a person to drive without having a car, s 232 does not empower the Tribunal to make an order without there being a basis for such an order by reference to another provision in the SSMA. However, as with s 149, s 232 commences with the words "The Tribunal may …" which indicates there is a discretion as to whether to make an order.
3. As the Tribunal has found that the bench is not affixed to the common property, it is questionable whether s 108(1) applies to the bench. Assuming (without deciding) that it does, then an order could be made under s 232 for the bench to be removed by the lot owners. However, once the common property rights by-law sought by the lot owners is registered, they could move the bench back into the same position. That being the case, to make an order for the removal of the bench would be pettifoggery.
4. The practical approach is to decide that, even assuming the bench involves a breach of s 108 of the SSMA, the Tribunal, in the exercise of its discretion, declines to make an order under s 232. Accordingly, the Tribunal determines that the application of the owners corporation for an order requiring the lot Owners to remove that bench should be dismissed.

Costs

1. Leave for legal representation was granted provided no order for costs is sought. While the lot owners are entitled to be shielded from having to contribute to the costs of the owners corporation in relation to these applications by s 104 of the SSMA, decisions such as The Owners Strata Plan No 80412 v Vickery (No 2) [2019] NSWCATAP 97, at [25], suggest that s 104 operates without the need for any order by the Tribunal. From an abundance of caution, the Tribunal should record that the lot owners are successful parties.

Orders

1. For the reasons set out above, the following orders are made: In SC 23/10406: 1. The application is dismissed. 2. No order as to costs. 3. The Tribunal notes that the respondents are a successful party and are thereby entitled to the benefit of s 104 of the Strata Schemes Management Act 2015 (NSW). In SC 23/15614: 1. Under s 149(1) of the Strata Schemes Management Act 2015 (NSW), the Tribunal makes the common property rights by-law tabled by the applicant (lot owner) at the meeting of the respondent (owners corporation) held on 9 November 2022. 2. Under s 246 of the Strata Schemes Management Act 2015, within 28 days (ie on or before 12 September 2023) the respondent is to do all things necessary to register that by-law. 3. No order as to costs. 4. The Tribunal notes that the applicants are a successful party and are thereby entitled to the benefit of s 104 of the Strata Schemes Management Act 2015 (NSW).

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: 22 September 2023