The Owners - Strata Plan No. 18229 v Jakabah Pty Ltd [2022] NSWCATAP 229 | Case summary

The Owners - Strata Plan No. 18229 v Jakabah Pty Ltd [2022] NSWCATAP 229 | Case summary | Zoe

[3]

Scope and Nature of Internal Appeals

Internal appeals may be made as of right on a question of law, and otherwise (that is, on any other grounds) with leave of the Appeal Panel: NCAT Act, s 80(2).
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 the Appeal Panel set out at [13] a non-exclusive list of questions of law: 1. Whether there has been a failure to provide proper reasons, 2. Whether the Tribunal identified the wrong issue or asked the wrong question, 3. Whether a wrong principle of law had been applied, 4. Whether there was a failure to afford procedural fairness, 5. Whether the Tribunal failed to take into account relevant (i.e., mandatory) considerations, 6. Whether the Tribunal took into account an irrelevant consideration, 7. Whether there was no evidence to support a finding of fact, and 8. Whether the decision is so unreasonable that no reasonable decision-maker would make it.
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 of 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: 1. the decision of the Tribunal under appeal was not fair and equitable; or 2. the decision of the Tribunal under appeal was against the weight of evidence; or 3. 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 v Urban), 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 v Urban, the Appeal Panel stated at [84] 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.

[6]

Grounds of Appeal

The amended grounds of appeal set out in the amended Notice of Appeal are: 1. Stated as paragraph 1a of the amended grounds of appeal, that the Tribunal posed the wrong test in [80] of the Reasons where the presiding Senior Member said: "on the balance of probability that the balance of interests favours the granting of consent to the applicant to lodge a Development Application with the City of Sydney Council in the form tabled at the extraordinary general meeting held on 19 May 2021" (Ground 1 - Evaluation Error). 2. Stated as sub-paragraphs (i), (ii) and (iii) of paragraph 1b of the amended grounds of appeal, that the Tribunal reversed the onus of proof in reaching its ultimate decision (Ground 2 - Onus Error), specifically: 1. In [90] of the Reasons by finding that "there was no evidence given by the respondent" to support a contention that it was not "illusory" that there would be trespassers "tailgating" into the lifts. 2. In [91] of the Reasons on the matter of visitor parking, and 3. In [97] of the Reasons in connection with the suggested invasion of privacy in the swimming pool area. 1. Stated as paragraphs 1c and 1d of the amended grounds of appeal, that the Tribunal failed to resolve and make findings as regards the competing contentions of the parties about the likely impact of the DA upon the requirements of the fire authorities and/or the local council, which the Tribunal had referred to in [100] - [102] of the Reasons - and, accordingly, did not "take into account" relevant considerations that it ought to have considered and resolved (Ground 3 - Omission Error). 2. Stated as paragraph 1e of the amended grounds of appeal, that the Tribunal failed to make the necessary finding that the Owners Corporation had acted outside the range of what was reasonable by refusing to consent to the lodgement of the DA with the local council where the proposed DA affected common property of the strata scheme (Ground 4 - Unreasonableness Error).
In the amended Notice of Appeal, the Owners Corporation stated the grounds of appeal as "errors of law" on the part of the Tribunal. However, the language of "error of law" (without linking to a question of law) is imprecise and does not accord with the NCAT Act in s 80(2)(b). As stated by Bathurst CJ and Bell P in Orr v Cobar Management Pty Limited [2020] NSWCCA 220 at [52]: When one is concerned with questions of the application of the law to the facts, it is important and, for present purposes, perhaps critical to distinguish between the question of law/question of fact dichotomy and the error of law/error of fact dichotomy. A question may, in its form, sufficiently identify a possible error of law, but nevertheless not qualify as a "question of law" or be readily answered as a question of law.
The essence of the Owners Corporation's submission for Ground 1 - Evaluation Error is that the Tribunal applied the wrong test in exercising its discretion to make the Orders under the SSMA. We find that this is a ground of appeal which clearly bears upon a question of law. The Owners Corporation may appeal as of right on this Ground, i.e., leave to appeal is not required. However, we consider that Ground 2 - Onus Error is, in substance, a ground of appeal which alleges that the Tribunal erred in its fact-finding process, that it is a ground of appeal which does not bear upon a question of law, and that it is a ground of appeal for which leave is required. Further, in our view having considered the Owners Corporation's written and oral submissions, whether Ground 3 - Omission Error and Ground 4 - Unreasonableness Error, respectively, bear upon a question of law is, at best, arguable only. Accordingly, we have considered Grounds 2, 3 and 4 on the basis that leave to appeal is, or may be, required, and therefore in the light of the circumstances set out in cl 12(1) of Sch 4 of the NCAT Act.

[8]

Ground 1 - Evaluation Error

The Owners Corporation contended that the Tribunal at first instance posed the wrong test in [80] of the Reasons where the Senior Member stated: "on the balance of probability that the balance of interests favours the granting of consent to the applicant to lodge a Development Application with City of Sydney Council in the form tabled at the extraordinary general meeting held on 19 May 2021". Referring to s 232 of the SSMA, in which the word "balance" is not expressed, the Owners Corporation submitted that the exercise of the Tribunal's discretion cannot be a simple balancing of commercial interests because the "dispute" that the Tribunal is asked to "settle" is a dispute affecting the property rights of other lot owners; and the Tribunal's analysis must be to settle a dispute about the compulsory taking or reduction of property rights.
We do not agree that the Tribunal adopted an incorrect principle or that it otherwise posed the wrong test. Whether the Tribunal's reasoning in the exercise of its discretion under s 232 of the SSMA is considered by reference only to [80] of the Tribunal's Reasons, or as we think is the proper context, that [80] of the Tribunal's Reasons is part only of the Tribunal's reasoning process for the orders it made under s 232, we find that there is no evaluation error.
In exercising its function under s 232(6) of the SSMA, the Tribunal may approach the task as a balancing exercise - see Dehsabzi v The Owners Corporation - Strata Plan No 83556 [2020] NSWCATAP 142 - an approach with which we agree, and with which we are satisfied that the presiding Senior Member applied on the available evidence before the Tribunal at first instance. The Tribunal may make an order under s 232(1) of the SSMA directing an owners corporation to consent to the lodgement of a development application where it is satisfied that it should exercise its discretion to do so having considered "the interests of all the owners of lots in a strata scheme in the use and enjoyment of their lots and the common property" (as required by s 232(6)).
To the extent the Owners Corporation submitted that the "starting point" for, or the consideration to which "appropriate weight" must be given in, the Tribunal's analysis, is how the property rights of Lot owners of the scheme (other than Jakabah) are affected, we disagree. Subsection 236(6) of the SSMA does not direct the manner or method of the exercise of the Tribunal's discretion, other than mandating consideration of the interests of all the owners of lots in a strata scheme in the use and enjoyment of their lots and the common property.
We find that the Tribunal's statement at [80] of the Reasons is one of several statements in the Tribunal's Decision expressing the considerations, conclusions and process of reasoning which led the Tribunal to be persuaded on the available evidence that "the exercise of my discretion under s 232(6) of the (SSMA) is in favour of ordering the Owners Corporation to consent to the lodging of the (DA)": see Reasons at [108]. We do not think that the statement in [80] about which the Owners Corporation now complains can be read as if that paragraph is a comprehensive statement of the basis upon which the Tribunal made orders in the exercise of its discretion. The Tribunal further articulated its approach to the exercise of its discretion in, inter alia, [79], [81] - [82] and [108] of the Reasons, and it did so consistently with the consideration of the interests of all lot owners in the exercise of its discretion as required by s 232(6). We are satisfied that there was sufficient foundation for the Tribunal's final summation of its reasoning (at [108]) and for the Tribunal's statement of its ultimate finding (also at [108]) as to the exercise of its discretion.
For those reasons, Ground 1 fails.

[9]

Ground 2 - Onus Error

The Owners Corporation submitted that the Tribunal reversed the onus of proof in respect of several adverse impacts which the Owners Corporation argued would arise from Jakabah's proposed development. The adverse impacts of the proposed development, according to the Owners Corporation's submission, would likely include tailgating trespassers (considered at [90] of the Reasons), misuse of visitor parking (considered at [91] of the Reasons), and diminished privacy in the swimming pool area (considered at [97] of the Reasons). In the Tribunal's consideration, the alleged adverse impacts were disregarded or dismissed on the basis that the Owners Corporation had not adduced any, or any persuasive, evidence to establish those impacts would arise in the circumstances.
We do not think it can be said that the Tribunal's approach in this regard was not fair or equitable or that it was against the weight of evidence. Nor do we think that the Tribunal went about the relevant fact-finding process in an unorthodox manner or in such a way that it was likely to produce an unfair result.
As the applicant for orders under s 232 of the SSMA, Jakabah's onus, on the balance of probabilities, was to persuade the Tribunal, having regard to the interests of all lot owners in the use and enjoyment of their lots and the common property, that the Tribunal should make the orders sought. This onus, in our view, did not require Jakabah to negative mere assertions of the Owners Corporation in circumstances where the assertions of adverse impacts were not substantiated by any, or any persuasive, evidence led by the Owners Corporation. Nor was there an onus upon Jakabah to establish that all the evidence and every matter advanced in the Owners Corporation's case was without substance.
In our opinion, there was no reversing of onus. It was incumbent upon the Owners Corporation to advance evidence to establish the matters upon which it relied in opposition to Jakabah's case for orders under s 232, including evidence as to any adverse impacts of the proposed development. Having failed in the Tribunal's assessment to do so, we find that the Tribunal was entitled to dismiss or attribute little weight to those matters in the exercise of its discretion as to whether (or not) to order the Owners Corporation to consent to the lodgement of the DA with the local council.
As stated earlier, we are not persuaded that Ground 2 of the appeal gives rise to an error on a question of law. Therefore, we have considered Ground 2 on the basis that leave to appeal is required under cl 12 Sch 4 of the NCAT Act. We are not satisfied that the Owners Corporation has suffered a substantial miscarriage of justice. In our opinion, the findings of the Tribunal were fair and equitable, and they were not against the weight of the evidence. We are also satisfied that in respect of its consideration of adverse impacts which the Owners Corporation argued would arise from Jakabah's proposed development, the Owners Corporation has not been deprived of a significant possibility or of a chance which was "fairly open": see Collins v Urban at [76] - [79].
Further, even if any of the considerations in cl 12 of Sch 4 of the NCAT Act had been made out, we would not have been inclined to grant leave because in our view, there is no issue of principle involved, no question of public importance, no reasonably clear injustice, and there is no clear mistake or error in the Tribunal's fact-finding process: see Collins v Urban at [84].

[10]

Ground 3 - Omission Error

The Owners Corporation's submission for this ground of appeal was that the Tribunal had failed to resolve and make findings upon the parties' competing contentions about the likely impact of the DA on the requirements of the relevant fire authorities and/or the Council, being requirements which it is said the Senior Member "only touched upon" in [100] - [102] but without resolution. The Owners Corporation argued that the imposition of fire safety requirements on the strata building was likely if the proposed development proceeded, that this would bring significant expenditure to the scheme for compliance costs, and that these matters were all of "genuine and proportionate" concern to the lot owners of the scheme who were opposing the DA and therefore were a "weighty consideration", not to be "brushed off" by the Tribunal.
We do not accept the Owners Corporation's contentions. This is not a case where it could be said that the Tribunal failed to "take into account" relevant consideration(s). The issue for the Tribunal was consent to lodgement of the DA, not the undertaking of any works pursuant to a DA at a later stage. In that context, we are satisfied that the Tribunal had regard to the matter of fire safety infrastructure and compliance in the Reasons (see, particularly, at [100] - [102]), and that the Tribunal's consideration and assessment of the matter was entirely adequate.
Moreover, we do not agree with the Owners Corporation's submission that the other lot owners' concerns, which we accept were legitimate, were brushed off by the Tribunal. At [65] of the Reasons for Decision, the Senior Member observed that Jakabah's fire safety expert, Mr Lee Clark of AED Fire had not excluded the possibility that the local council may require the installation of a building-wide sprinkler system as a condition of consent to the DA; however, for various reasons as stated by Mr Clark in his report, he did not think that it was likely the local council would make such requirement.
On the other hand, the Owners Corporation adduced no significant evidence to support propositions that the lodgement of Jakabah's DA would inevitably lead the Council to take steps which would have the effect of mandating an upgrade of the fire safety infrastructure of the strata building, increasing the disclosable fire risk of the strata building, and bringing higher building insurance premiums.
While there were assertions (consistent with the propositions in the Owners Corporation's case) from some lot owners who gave evidence before the Tribunal at first instance, notably Mr Molesworth, we think, to the extent leave to appeal is necessary to make out Ground 3, that it was entirely open to the Senior Member to place more weight upon the independent fire safety expert evidence of Mr Clark (in this respect, the expert evidence was preferred to the lay evidence of Mr Molesworth) and that there was no substantial miscarriage of justice.
Accordingly, we find that in respect of Ground 3 of the appeal, there was no error on a question of law, and further to the extent leave to appeal is necessary, the Owners Corporation was not deprived of a significant possibility or of a chance which was "fairly open": see Collins v Urban at [76] - [79].

[11]

Ground 4 - Unreasonableness Error

The Owners Corporation contended that the Tribunal's discretion to order an owners corporation to consent to the lodgement of a lot owner's development application is enlivened only where its refusal to do so is "unreasonable" in the sense considered in Ainsworth v Albrecht [2016] HCA 40; (2016) 261 CLR 167 (Ainsworth). In essence, the submission is that an applicant for an order in the exercise of the Tribunal's discretion under s 232(6) of the SSMA (that is, an order directing an owners corporation to consent to the lodgement of a development application), bears the onus of establishing that an owners corporation's failure or refusal to do so was, or is, unreasonable.
In contrast to other sections of the SSMA (see, for example, s 87, s 149 and s 236), the language of s 232(1) and s 232(6) does not refer to reasonableness, or to unreasonableness. In our view, in circumstances where the SSMA imposes a requirement of reasonableness, or of unreasonableness, on a party seeking orders of the Tribunal, the SSMA does so expressly and not by implication. As a matter of the proper interpretation of s 232(1) and s 232(6) of the SSMA, we find that there is no basis at all for the implication of a requirement of reasonableness, or of unreasonableness, in those subsections of the SSMA.
Nor, in our opinion, is Ainsworth authority for the Owners Corporation's contention in respect of Ground 4. Ainsworth concerned the interpretation of a statutory provision which conditioned the power to make an order for a by-law granting rights in respect of common property to a Lot owner, upon the refusal to do so being "in the circumstances unreasonable". The language of the provision in issue in Ainsworth expressly conditioned the power to make an order upon the unreasonableness of an owners corporation's failure or refusal. We do not think Ainsworth is authority for the implication of a requirement that a refusal to consent to a development application must be unreasonable to enliven or warrant an exercise of the discretion of the Tribunal to compel consent to the lodgement of the DA.
Furthermore, we do not accept the Owners Corporation's characterisation of the Tribunal's discretion in respect of Jakabah's DA as in any way analogous to the power in issue in Ainsworth, that is, as put by the Owners Corporation, as a power to compulsorily take or reduce the property rights of other Lot owners. An order compelling consent to the lodgement of Jakabah's DA has no adverse effect upon the property rights of the Owners Corporation or the other Lot owners. There is no legal basis at all for the Owners Corporation's contention that once an owners corporation provides its written consent to lodgement by imposition of a Tribunal order under s 232(6) of the SSMA, the mere existence of the (imposed) consent to lodgement gives "considerable impetus to the likelihood of Council approval being granted". Indeed, the contrary is the position, such that there cannot be an appropriation or diminishment of property rights in respect of a dispute about consent to lodgement of a development application. The proposed DA involves an undertaking of CP Works. Therefore, to progress any development consent, Jakabah would need a common property rights by-law, and in that context, there are other provisions of the SSMA which regulate the property rights of lot owners inter se. For instance, s 149(1) (a) limits the ability of the Owners Corporation to refuse to make a common property rights by-law. Materially, that subsection does prescribe, and operates by reference to, a standard of reasonableness.
For those reasons, there is no error on a question of law in respect of Ground 4 of the appeal and to the extent leave to appeal is necessary on that Ground, there is no substantial miscarriage of justice within cl 12 Sch 4 of the NCAT Act.

[12]

Conclusion and Orders (including costs)

In conclusion, we are of the opinion that the grounds of appeal and the other submissions made by the Owners Corporation do not identify any error on a question of law.
Nor are there any other grounds identified which would permit us to grant leave under Cl 12 of Sch 4 of the NCAT Act, or for us to exercise the Appeal Panel's discretion in the appellant's favour.
In the circumstances, the appeal must be dismissed.
The Appeal Panel previously stayed the Tribunal's Orders. The stay should be lifted in consequence of the decision we have reached on this appeal.
The parties may seek to be heard separately on costs.
Frankly, any disputes between the parties as to costs are matters which we would expect the parties, and their legal representatives, to discuss co-operatively to reach agreement, consistent with the duty in s 36(3) of the NCAT Act. By Rule 38A of the NCAT Rules, the costs rules which apply for the determination of internal appeals are the same costs rules as would apply to the proceedings at first instance. There is no amount of money claimed or in dispute in the proceeding or on the appeal, with the consequence that each party must pay their own costs of the appeal (s 60(1), NCAT Act), unless there are "special circumstances" within subsections 60(2) and (3) of the NCAT Act warranting a costs order, and further that the Appeal Panel determines in the circumstances it is appropriate to exercise its discretion as to the making of a costs' order.
Of course, if the parties are unable to reach agreement on the issue of costs in this appeal, or there are circumstances of which we are unaware, we have made further directions to deal with that issue.
The orders of the Appeal Panel are: 1. To the extent leave is required, leave to appeal is refused. 2. Appeal dismissed. 3. The stay order made on 13 April 2022 is lifted. 4. If any party desires to make an application for its costs of the appeal: 1. that party is to so inform the other party within 14 days of the date of these reasons. 2. the applicant for costs is to lodge with the Appeal Panel and serve on the respondent to the costs' application any written submissions of no more than five pages on or before 14 days from the date of these reasons. 3. the respondent to any costs' application is to lodge with the Appeal Panel and serve on the applicant for costs any written submissions of no more than five pages on or before 28 days from the date of these reasons. 4. any reply submissions limited to three pages are to be lodged with the Appeal Panel and served on the other party within 35 days of the date of these reasons. 5. the parties are to indicate in their submissions whether they consent to an order dispensing with an oral hearing of the costs' application, and if they do not consent, submissions of no more than one page as to why an oral hearing should be conducted rather than the application being determined on the papers.

The Owners - Strata Plan No. 18229 v Jakabah Pty Ltd

At a glance

Court

Decision date

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Judgment (13 paragraphs)

Parties

Cases Cited (6)

Cited By (1)