The Owners – Strata Plan No 12299 v Mackay

1. In its Strata and Community Schemes application to the CCD lodged on 6 October 2023, the OC sought emergency access orders under s 124 of the Strata Schemes Management Act 2015 (NSW) (the SSMA) to enable a firm of builders to undertake any works required to address the issues identified in their report.
2. Interim orders were made on 27 October 2023 to the effect that Mr Mackay was to give access for the purpose of the OC or its contractor conducting an inspection.
3. The other order which the OC sought was

Enforcement of SP12299 Special By-law #5 to decommission lot 6 inground pool and associated reticulation leaking into common property and pooling in the fire egress stairwell until the builder (MCM Main On Construction and Maintenance) sign off on the identified risks to the common property sufficient to facilitate close out with the Strata Insurance Providers.

1. The Tribunal at first instance (the Tribunal) heard the proceedings over two half-days on 19 April and 28 May 2024. There was no lay or expert evidence given from the witness box during the hearing and the OC's representative (Mr Keyes, Chair of the Strata Committee) and Mr Mackay made oral submissions in respect of the issues in dispute.

1. The Tribunal delivered its decision (the decision) on 27 November 2024.
2. The presiding member said in his Reasons for the decision that by the time the OC's application for orders under the SSMA came on for hearing, the parties had agreed that some of the matters in dispute had been resolved between them and that the remaining live issues had evolved. The Tribunal decided that there were four (4) matters upon which adjudication and determination by the Tribunal was sought:

(1) Issues concerning the OC's duty to maintain and repair the common property under s106 SSMA, particularly in respect of concrete spalling in common property areas including the concrete slab above the garage area of the respondent's lot property.

(2) Whether a hole and downpipe apparently drilled through the concrete slab by Mr Mackay might affect the integrity of the common property.

(3) The legality of the sunroom and patio areas in Mr Mackay's lot property.

(4) The impact of these issues on the OC's attempts to obtain insurance, and the cost of that insurance. Although the OC expressed a concern in this respect, no specific relief was sought in the application.

1. The relevant background in respect of the first matter (i.e., issues with concrete spalling) is that on Friday 21 April 2023 an Extraordinary General Meeting (EGM) of the OC had taken place, and one of the motions proposed at the EGM was a draft by-law for works which, the Tribunal found, was specifically directed to Mr Mackay's property. The motion was carried by special resolution and became Special By-law #5. Mr Mackay abstained from voting.
2. Set out in the decision (at [21]), there is a version of Special By-law #5 which required Mr Mackay to warrant that "the works" on his lot property were carried out with all necessary approvals; to maintain the works at the Owner's own cost; to maintain the common property occupied by the works; and to make good any damage to the common property caused as a result of the works, regardless of when such damage may become evident.
3. Part of the purpose of Special By-law #5 is said to be to permit the OC to recover from Mr Mackay costs it had incurred in rectifying the issues attributable to the pool and spa on Mr Mackay's lot property.
4. Noting that the pool and spa and sunroom area had been installed by the previous owner of Lot 6,the Tribunal observed (the decision, at [26]) that:

by the passing of special by-law 5 in 2023 the OC was seeking to make the lot owner liable for physical variations to unit 6 that appeared to have been undertaken prior to his purchase of unit 6 by prior registered proprietors and possibly with the approval of either the OC or North Sydney Council or both.

27 There is simply insufficient evidence to support or refute any aspect of this. ...

1. From [27] - [40] the Tribunal discussed the parties' submissions and the expert reports and at [41] found:

41. Notwithstanding the two reports of MCM, the Tribunal determines on the weight of evidence proffered by Mr Mackay that the pool no longer leaks (if it ever did) and that any leaks into the common property garage below or into the stairway are not therefore the liability of unit 6 and therefore that no order should be made in respect of this item.

42. On the contrary, it seems to the Tribunal that these matters are and continue to be matters for which the OC remains responsible under s106 of the SSMA and the Tribunal assumes that this is the reason consent work orders were made for the Tribunal to attend to similar matters in the common property in the initial preceding case No. 2023/00412623.

43. In other words this finding is consistent with the agreement of the parties at the time and there has been no intervention since that time to impact or alter that liability.

44. The Tribunal quizzed Mr Keyes as to the purpose of pursuing Mr Mackay in these circumstances and based upon the weight of the evidence. Mr Keyes advised the Tribunal that he was pursuing Mr Mackay as owner of Unit 6 to recover some of the considerable costs incurred by the OC in attempting to resolve this issue. The Tribunal doubts the validity of such a purpose, and the passing of By- law #5 in an attempt to retrospectively facilitate such a purpose. Indeed there appear to be grounds for Mr Mackay to assert that By-law #5 is harsh, unconscionable or oppressive within s150 of the SSMA.

45 In Nikitopoulos v The Owners - Strata Plan No. 52311 [2023] NSWCATCD 83 the Tribunal found that a by-law requiring applicant lot owners to the Tribunal to cover the owners corporation's costs unless a costs order was otherwise made by the Tribunal, was invalid.

46. Finally it is unclear what power the Tribunal has pursuant to s232 of the SSMA to make such an order. No source of that power has been specified by the OC in its application or at the hearing.

47. For these reasons, the Tribunal does not propose to make any orders in respect of this item.

1. As to the second matter (i.e., the downpipe), Mr Mackay admitted that, in or about June 2020, he had put a downpipe through the concrete slab to improve drainage or runoff. Both parties reportedly accepted that work needed to be done to repair this. The Tribunal said:

50 The Tribunal was told in papers filed by the OC on 27 May 2024 immediately prior to the second day of hearing that they should be able to verbally update the Tribunal in respect of this issue, which was progressing, but no further update was received. It's unclear exactly where this issue has come to rest between the parties.

51 However the parties seemed to be in agreement in respect of this issue and the resolution of it and the Tribunal does not propose to make an order in respect of this issue unless the matter is re-listed by consent after publication of these reasons for decision.

1. With respect to the third issue (Sunroom/patio of Unit 6), at [54] of the decision, the Tribunal found that, although the swimming pool, spa and patio/sunroom may well have been constructed or installed after 1977, the year of registration of the strata scheme, it was unclear when and by whom and what approvals (if any) had been obtained from either the OC or North Sydney Council and what conditions (if any) were attached to those approvals.

55 In discussions at the Tribunal hearing, Mr Keyes indicated that the OC sought an order that the patio/sunroom be demolished because of the difficulties it was creating in respect of the arrangement of strata insurance for the OC - either at all or in a materially increased sum. It is unclear what power the Tribunal has to order such drastic relief and the source of that power.

56 Mr Keyes submitted that as chair he wanted the strata plan to be compliant and that that may involve the demolition of these 'additions'.

57 the Tribunal respectfully declines to make such an order.

1. As to the fourth matter (i.e., insurance) the Tribunal also declined to make any demolition order in favour of the OC for the purpose of reducing the OC's insurance premiums, which the OC said were a liability arising because of the additions to Mr Mackay's lot. The Tribunal said such an order was inappropriate and not commensurate.
2. In its final determination of the issues it had identified for its adjudication and determination, the Tribunal dismissed the OC's application "other than in respect of the issue raised in paragraphs 48 - 51 of this decision." Those paragraphs were concerned with the question as to whether the parties had agreed on the downpipe issue. If not the Tribunal granted the parties the liberty to relist the matter by consent after publication of the decision.

1. The parties were self-represented and gave oral submissions in the Appeal Panel hearing.
2. The OC provided written submissions along with the following documents:

(1) The Notice of Appeal and Annexures A, B and C setting out (respectively) grounds of appeal, orders sought and grounds for leave to appeal;

(2) A copy of the decision;

(3) A development consent for lot 6 date stamped 25 January 1980 for the construction of an inground swimming pool, with the consent of the proprietors of the Strata Plan;

(4) A copy of Strata Plan 12299;

(5) A copy of the Tribunal's interim orders regarding the access order made on 27 October 2023;

(6) A copy of the minutes of a Strata Committee Meeting on 17 December 2024 authorising the lodgement of this appeal;

(7) Email exchanges regarding insurance for the Strata Plan and the Insurance Renewal Submission;

(8) A letter from NSW Fair Trading dated 12 April 2024 (prior to the first Tribunal hearing) regarding mediation between the OC and Mr Mackay which had taken place on that day. Although a final settlement was not achieved, that letter set out that the parties had reached the following points of understanding on the issues in dispute:

(i) The OC agreed to provide Mr Mackay with a list of items they think should be examined, as a minimum by a structural engineer or other expert to be engaged by Mr Mackay within 14 days after the mediation and

(ii) Mr Mackay agreed to provide the OC with the details of any structural engineer or other professional expert he intended to engage for their approval prior to the engagement of their services.

(9) Further email correspondence between Mr Mackay and the Strata Manager in relation to the issues discussed at mediation.

1. Mr Mackay also provided written submissions.
2. On behalf of the OC, Mr Keyes argued that several items, including fit for purpose membrane protection, the breach of the fire code in relation to the sun room, the outstanding spalling risk from the open core hole/down pipe and a leak to the fire stairs required certification to ensure ongoing insurance coverage.
3. Mr Mackay responded that the pool did not leak because there was no evident loss of water, except on hot days. As for the downpipe, this issue was not resolved, but that it would be unnecessary to return this matter to the Tribunal when it could be settled quickly. The sun room was no longer subject to an order under the fire code. All residential insurance premiums had increased and this was not caused by the sun room.
4. Regarding Special By-law #5, Mr Mackay did not recollect any discussion of s 150 SSMA at the Tribunal hearing.

1. Internal appeals may be made as of right on a question of law, and otherwise with leave of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
2. As the Appeal Panel observed in Unique Commercial Group Pty Ltd v Cusamano [2024] NSWCATAP 204 (16 October 2024), referring to relevant authorities at [25] - [40], a question of law means a pure question of law. It is not a mixed question of fact and law, and it does not depend on facts not found.
3. Accordingly, appeal grounds based on a question of law, must be articulated with precision. The categories of questions of law are not closed but will include the application of the wrong principle of law, or a failure to accord natural justice (i.e., procedural unfairness) by not responding to substantial, clearly articulated arguments based on established facts, which alternatively, may also constitute a constructive failure to exercise jurisdiction.
4. The issue of what constitutes a question of law has been discussed elsewhere (see particularly Kirby P in Azzopardi v Tasman UEB Industries Ltd (1985) 4 NSWLR 139 (Azzopardi)). In Donohoe v Albulario [2025] NSWSC 9 (Donohoe) at [30] - [33], Basten AJ gave guidance in relation to establishing whether a question of law has been raised. We particularly note His Honour's view that:

30 In construing the phrase "question of law", statements of principles are less likely to be of assistance than close attention to the nature of the issue identified by the appellant and the statutory context in which the appeal arises. Reformulating the statutory criterion as referring to a "question of law alone", or as excluding "a mixed question of fact and law", may prove a distraction...

1. In its Notice of Appeal, the OC raised various grounds of appeal.
2. In our view, the OC have brought two (2) valid challenges to the Tribunal's orders, both on these procedural fairness grounds:

(1) That the Tribunal denied the OC procedural fairness by deciding Special By-law #5 was not valid or that it was harsh, unconscionable or oppressive (within the meaning of the SSMA, s 150) but did not give the OC an opportunity to make submissions on those matters; and

(2) That the Tribunal erred by holding the parties were in agreement in respect of their dispute, and the resolution of it, as regards the damage caused to the reinforced steel and concrete slab and associated membrane by the core hole made in that slab by Mr Mackay. As a result the OC submitted that the Tribunal denied it procedural fairness and constructively failed to exercise the Tribunal's jurisdiction.

1. In response to these challenges, Mr Mackay submitted that the Tribunal's orders were fair and equitable and that they took into account all submissions presented to the Tribunal by both parties. He argued that the Tribunal's final determination was based upon factual evidence and that the appeal was therefore misguided and an abuse of process. He supported the Tribunal's findings as regards the invalidity of Special By-law #5 as being consistent with Nikitopoulos v The Owners - Strata Plan No. 52311 [2023] NSWCATCD 83 (Nikitopoulos) which the respondent said served as a reminder that Owners Corporations must act fairly and reasonably when creating by-laws. Mr Mackay said the matter of the downpipe had been resolved in principle, in his understanding, but he was still waiting for confirmation in writing from the OC. He further submitted that the matter could be settled between the parties and that asking the Tribunal to get involved, was unnecessary.
2. Consideration of Grounds of Appeal

Denial of procedural fairness as a question of law

1. In YHY v YHZ [2024] NSWCATAP 117 (YHY) at [54] the Appeal Panel found that, on the basis of authority, a procedural unfairness challenge should be heard and determined prior to any other challenges. In light of our findings that the procedural fairness grounds of appeal have been successful, it has been unnecessary to consider the remaining grounds or whether leave to appeal should be granted.
2. Whether the decision-maker has failed to accord procedural fairness has been found in many cases to constitute a question of law. In Donohoe at [39] Basten JA overturned as untenable an Appeal Panel's conclusion that a denial of procedural fairness did not raise a question of law:

... The conferral of jurisdiction upon the Tribunal is conditioned by an obligation to accord each party procedural fairness. To deny that a ground asserting that the Tribunal has exceeded its legal powers raises a question of law is untenable, both as a matter of principle and authority.

1. As noted by the Full Court of the Federal Court in Haritos v Commissioner of Taxation [2015] FCAFC 92; (2015) 233 FCR 315 (Haritos) (at p 385 [202]):

... An appeal on the question whether the Tribunal made a jurisdictional error in a specified respect, such as denying a party procedural fairness (see Re Refugee Review Tribunal; Ex parte Aala [2000] HCA 57; 204 CLR 82) would be, in our opinion, an appeal on a question of law.

1. In YHY at [28] the Appeal Panel also found the question of whether the Tribunal had failed to accord procedural fairness to be a question of law:

28 In determining proceedings before it, NCAT is under a duty to afford procedural fairness to the parties. Procedural fairness, or the duty to act fairly, applies to courts and tribunals which are empowered to determine matters affecting the rights and interests of a person. Procedural fairness requires that NCAT give the parties a fair hearing, and that it be free from actual or apprehended bias. The term "procedural fairness" is synonymous with natural justice (the latter term is used in s 38(2) of the NCAT Act). Procedural fairness will usually raise a question of law and "conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case": Kioa v West [1985] HCA 81; (1985) 159 CLR 550 at 585; [1985] HCA 81.

1. The requirement for parties to be heard is not the only type of procedural fairness which will raise a question of law. Denial of procedural fairness by way of failure to consider a submission which goes to the heart of the proceedings will equally raise a question of law.
2. A constructive failure to exercise jurisdiction arises where the decision-maker purports to have exercised the jurisdiction but in substance has not undertaken or completed the task of doing so because of failure to address some essential matter: see, for example, Dart v The Owners - Strata Plan No. 71849 [2024] NSWCATAP 145. It might, for instance, be a statutory precondition to the exercise of the power which it was necessary for the decision-maker to be satisfied of before the power is enlivened. Or it might be a critical argument raised by a party.
3. This further variant of constructive failure to exercise jurisdiction was discussed by members of the High Court in Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 73 ALD 321 (Dranichnikov). In that case Gummow and Callinan JJ (with whom Hayne J agreed) held that for an administrative decision-maker "[t]o fail to respond to a substantial, clearly articulated argument relying upon established facts" was both a constructive failure to exercise jurisdiction and a failure to accord natural justice: at [23]-[25]. Kirby J similarly found a constructive failure in that case where the decision-maker's mistake "amounts to a basic misunderstanding of the case brought by an applicant": at [88].
4. It is not necessary for judicial decision-makers to address every argument or every piece of evidence in delivering reasons; Corcoran v Far [2019] NSWSC 1284 at [64]. In a situation where the facts have changed, a decision-maker will not need to deal with submissions relating to the prior position; Allianz Australia Insurance Limited trading as Allianz v Susak [2025] NSWCA 91 (per Adamson JA, Payne and Stern JJA agreeing) at [73] - [76]. The failure to address an issue must be of sufficient significance as to warrant a conclusion that the decision-maker has failed to complete the exercise of its power by reason of having failed to engage with an issue of importance to the matter being resolved: Plaintiff M1/2021 v Minister for Home Affairs (2022) 275 CLR 582 (p 599 - 600 [25] - [27] per Kiefel CJ, Keane, Gordon and Steward JJ).
5. Both types of procedural fairness issues are present in this appeal. The OC has established a question of law which gives rise to a right of appeal under s80(2)(b) NCAT Act and it is not necessary to grant leave to appeal.

Did the Tribunal fail to accord one or both of the parties procedural fairness?

1. For two reasons, we consider that this question is answered in the affirmative. Firstly, the OC's case for orders of the Tribunal under the SSMA was affected by the Tribunal's finding that there were grounds for Mr Mackay to assert that Special By-law #5 was harsh, unconscionable or oppressive within s150 of the SSMA. As indicated, the version of Special By-law #5 as set out in the Tribunal's decision (at [21]) provided that Mr Mackay warrants that "the works" were carried out with all necessary approvals; that Mr Mackay warrants to maintain the works at his own cost; that Mr Mackay warrants to maintain the common property occupied by the works; and that Mr Mackay warrants to make good any damage to the common property caused as a result of the works, regardless of when such damage may become evident.
2. Part of the purpose of this by-law was stated to be to permit the OC to recover the costs it had incurred in rectifying the issues which were attributed to the pool and spa in unit 6 from Mr Mackay.
3. The Tribunal considered the expert reports produced by the parties. The OC's expert noted there was water leakage onto the concrete slab but did not attribute this to any cause. Mr Mackay's expert raised the possibility of groundwater resulting in the leaking in the stairway of the common property. The Tribunal preferred Mr Mackay's expert's evidence and determined that the pool no longer leaked (if it ever did) and that the leaks continued to be matters for which the OC was responsible under s106 SSMA.
4. The Tribunal then expressed doubt that the purpose of the OC's pursuit of Mr Mackay was valid and that there appeared to be grounds for Mr Mackay "to assert that By-law #5 is harsh, unconscionable or oppressive within s150 of the SSMA." (at [44]).
5. Although neither of the parties provided a transcript of the hearing, it was common ground between appellant and respondent for this appeal that s 150 of the SSMA was not raised during the hearing at first instance. Section 150 provides, relevantly:

150 Order invalidating by-law

(1) The Tribunal may, on the application of a person entitled to vote on the motion to make a by-law or the lessor of a leasehold strata scheme, make an order declaring a by-law to be invalid if the Tribunal considers that an owners corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive.

...

1. Under s 150 a lot owner has standing to seek an order declaring a by-law to be invalid. This is to be distinguished from the present case where the application for enforcement of the by-law was brought by the OC. In those circumstances, s150 had no role to play in the proceedings.
2. However without the matter having been raised by either party in evidence, or by the Tribunal when it received the parties' submissions, neither party had the opportunity to be heard on this point before the Tribunal.
3. The reasoning of tribunals and administrative decision-makers should not be 'construed minutely and finely with an eye keenly attuned to the perception of error"; Collector of Customs v Pressure Tankers Pty Ltd and Pozzolanic Enterprises Pty Ltd [1993] FCA 356; (1993) 43 FCR 280 (at [20] - [22]). These sentiments were approved by the majority in the High Court in Minister for Immigration & Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259 at [30].
4. Here it is clear that the Tribunal's remarks regarding s 150 were more than mere observations. It is apparent that the Tribunal formed a view that Mr Mackay had grounds to assert Special By-law #5 was harsh, unconscionable or oppressive within the meaning of s 150 of the SSMA. It is further apparent that the Tribunal took account of this matter when considering the OC's request for relief under the SSMA in the nature of the enforcement of Special By-law #5, and that the Tribunal did so, without giving the parties the opportunity to be heard on the point and so did not accord the parties procedural fairness in that regard.
5. This was sufficiently integral to the issues under determination to potentially affect the outcome and the orders which were made. As a result, we consider that the Tribunal erred on a question of law on this point.
6. The other reason why we consider there was procedural unfairness during the hearing before the Tribunal is that the Tribunal declined to make an order on the downpipe issue; instead granting the parties liberty to relist the proceeding insofar as it related to the downpipe issue, should the parties find they cannot agree upon or otherwise resolve the issue between themselves. There is no doubt that in the NCAT Act (see, especially, s 36 and s 38) there are clear provisions which guide and inform the Tribunal's conduct of a proceeding brought to it for orders under the relevant enabling legislation (in this instance, the SSMA). The guiding principle is to facilitate the just, quick and cheap resolution of the real issues in the proceedings: s36(1), NCAT Act. The Tribunal must seek to give effect to the guiding principle when it exercises any power given to it by the NCAT Act or the procedural rules or interprets any provision of the NCAT Act or the procedural rules: s 36(2), NCAT Act.
7. The Tribunal may, where it considers it appropriate, use, or require parties to proceedings to use, any one or more of dispute resolution processes (s 37, NCAT Act). However, if those resolution processes are unsuccessful, it must conduct the proceedings and determine the issues in dispute; that is, to resolve the issues.
8. As noted by Basten JA in Donohoe at [36] - [37], the NCAT Act specifically requires the Tribunal to conduct its enquiries and inform itself subject to the rules of natural justice: s38(2). The Tribunal is further required to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: s38(5)(c).
9. In this case, the Tribunal identified that the downpipe/core hole was an issue in the proceedings. The parties made submissions on the issue and the decision (at [50]) plainly reflects that the issue was still live at the time of the hearing, and required determination by the Tribunal.
10. In fact, the Tribunal did not resolve the issue. As a result, the Tribunal failed to take those submissions into account and so denied the parties procedural fairness.
11. If the Tribunal had resolved the issue, it is obvious that the orders would have been affected. We are satisfied that the error on a question of law was sufficiently significant to remit the matter to the CCD to be reheard.

(1) The appeal is upheld.

(2) The proceedings are remitted to the Consumer and Commercial Division of the Tribunal for determination in accordance with the law, with leave given to the parties to adduce such further evidence as the Tribunal thinks fit.

(3) No order as to the costs of the appeal (with the intent that the parties are to pay their own costs of the appeal proceedings).

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.