THE OWNERS - STRATA PLAN NO. 37762 v DINH PHUONG DUNG PHAM and anor - [2006] NSWSC 1287 - NSWSC 2006 case summary

THE OWNERS - STRATA PLAN NO. 37762 v DINH PHUONG DUNG PHAM and anor - [2006] NSWSC 1287 - NSWSC 2006 case summary — Zoe

[14]

Facts 3 The dispute between the plaintiff (also in this judgment referred to as the Owners' Corporation) and DPD Pham arises from the building of a spray painting booth inside Lot 5 in the strata scheme building to which the Owners' Corporation relates. The building of the spray painting booth inside Lot 5 required work to be performed outside of the Lot and in particular included ventilation chimneys through the common property roof. 4 Lot 5 is the premises of Bang Smash Repairs, owned since 1994 by Ms DPD Pham (the defendant) and now operated by Mr Kiet Luu. It is necessary to deal with some of the history of this industrial strata scheme. 5 On 5 September 1990, Liverpool Council (the Council) issued a development consent (also called approval) for use of Lots 4 and 5 of the property at 52 Riverside Road, Chipping Norton for purposes of motor vehicle panel beating and spray painting. 6 In 1994 DPD Pham purchased Lot 5 of the scheme, which at the time was a property occupied by a smash repair business. 7 In or about December 1995 Mr and Mrs Leeming commenced operating a business in Lot 1 and on or about 19 May 1995 the Council issued a development consent to P Van Dang in relation to Lot 5, for use of those premises for panel beating and mechanical work but not for spray painting, which was expressly excluded from the development consent. 8 In approximately 1997 the aforementioned Kiet Luu began operating a smash repair business in Lots 4 and 5. 9 In 1998 Mr Sengmany and Ms Truong commenced operating a business in Lot 6. 10 For a variety of reasons including reduction of overheads, Mr Luu and Mr Dinh Ky Pham (the father of the defendant and manager of the property) agreed that the lease arrangement between the defendant and Mr Luu would be confined to Lot 5. At the time of that agreement the operation by Mr Luu, as has been stated, was in Units 4 and 5 and the main part of the business was in Lot 4, which included a spray booth. That spray booth, it is alleged, was old and needed repair and part of the continuing arrangement between the defendant and Mr Luu was that the defendant agreed to install an up-to-date spray booth in Lot 5 from which Mr Luu would then operate, leaving Unit 4 for lease by the defendant to others. 11 On 2 July 2003, the defendant applied to the Council for development consent to "set up a spray booth inside a factory unit". The Council issued development consent to the defendant for "construction of a spray booth inside a factory unit" on 13 October 2003. 12 In November 2003 structures, being the chimney stacks, were installed on the roof and Mr Luu began operating his smash repair business in a manner which confined his operations to Lot 5. 13 On 18 November 2003 the Owners' Corporation met and informed Mr Dinh Ky Pham that the installation of the spray booth and, in particular, the chimney stack and vent, required the Owners' Corporation's consent which had not been granted. The next day, 19 November 2003, the defendant wrote to the Strata Manager of the Owners' Corporation requesting the Corporation's consent. There were requirements for inspection certificates and engineers' certificates which were obtained on 24 November 2003, 27 May 2004 and 31 May 2004, and were provided to the Manager of the Owners Corporation by letter dated 2 June 2004. 14 There was no agreement between the different stakeholders and thereafter there were mediation sessions which did not resolve the matter. 15 On 2 November 2004, the Council gave notice of proposed orders under s121B of the Environmental Protection and Assessment Act 1979 (NSW) (EP & A Act) requiring cessation of the use of the spray booth and removal of the spray booth and chimneys. Those orders were made on 13 January 2005. 16 Presumably as a consequence the defendant filed an application in the Tribunal (matter no. SCS 05/10475) seeking this order: "The owners corporation to consent to vents through the common property roof for a spray booth within Lot 5 strata plan 37763 including consent to development application." 17 The application is made by completing a request for an order by an adjudicator, one of the questions and answers to which was: "10. If known specify the section of the act under which the application is made." 18 The answer, in handwriting, was: "Section 140 Strata Schemes Management Act 1996". 19 On 21 March 2005, the Council, through its Acting Corporate Manager, City Planning, wrote to the defendant (or her father or both) notifying them that pursuant to s121ZG it had revoked the s121B order issued on 13 January 2005. 20 On 14 April 2005 the Owners Corporation commenced proceedings in the Tribunal primarily under s138 of the Strata Schemes and Management Act 1996 being proceedings SCS05/19616 and 05/19610. 21 On 15 April 2005, proceedings were commenced in the Land and Environment Court by four of the unit holders (A Leeming, M Leeming, B Segmany and M H Truong) seeking declarations and orders, inter alia, that the development consent purportedly granted on 13 October 2003 by the Council is void and orders that the defendant in these proceedings cease using the premises for spray painting. On 18 May 2005, the Owners Corporation was substituted as the applicant for the four unit holders in the Land and Environment Court proceedings. On 13 September 2005, his Honour Cowdroy J granted the orders sought by the Owners Corporation. That judgment declared invalid the development approval granted on 13 October 2003 and restrained the defendant (Ms DPD Pham) and Mr Luu from using the spray booth within Lot 5 without consent being lawfully obtained from Liverpool City Council. It also ordered that Ms Pham reinstate those parts of the common property which were altered pursuant to the development consent and stayed the operation of the restraining order and the reinstatement order until 9 December 2005 and 9 January 2006 respectively. The judgment is Owners Lot and Strata Plan 37762 v Pham and Others [2005] NSWLEC 500. 22 The hearing before the Tribunal commenced on 18 October 2005 and that day, as already stated, orders were made by the Tribunal which are now the subject of appeal and/or leave to appeal. 23 As is clear from the above, the dispute between the plaintiff and defendant has persisted for some years. It essentially concerns the construction of a spray booth and the operation of a spray painting business for which the spray booth is required, which was originally operated from Lots 4 and 5 and ultimately confined within Lot 5. Lot 5 did not have a spray painting booth. Consent was sought and obtained from the Council but such consent was granted without the consent of the Owners' Corporation on the development application and without Ms Pham holding a proprietary interest in the common property roof, either in the form of a specific use by-law or a licence. As is not uncommon in disputes of this kind, there is a degree of unhelpful hostility between the parties which, for the purposes of this Court, is irrelevant. Some of the factual issues sought to be adduced before the Court, and certainly adduced before the Tribunal, are matters that would go to that hostility rather than the legal issues between the parties.

[16]

25 It is necessary that development applications include the signature or seal of the owners of the land to which the development application relates. If the applicant is not the owner, then as well as the application (as a matter of fact, on the same form) the consent in writing of the owner must be obtained. This is labelled an "endorsement" or "owner's consent". 26 It is uncontested that the defendant (the applicant for development application) did not own the common property, being the roof, but the Owners' Corporation did. Two development applications were made by the defendant in these proceedings (and a third application, the form of which was required to be agreed by the parties, was ordered by the Tribunal), neither of which has the consent in writing of the owner of the property, namely, the Owners' Corporation. 27 As earlier made clear the chimneys were installed purportedly pursuant to a development consent granted by the Council without the consent of the owner of the roof in question. 28 There needs to be some refinement and or explanation of some of the facts set out above. The application made by the defendant for an order by an Adjudicator, which was made on 22 February 2005, was referred by the Adjudicator to the Tribunal in July 2005. It was that referral with which the Tribunal was dealing and it was that referral which formed part of the basis for the jurisdiction of the Tribunal. 29 Further, on 15 October 2005, the defendant, Ms DPD Pham, sent the Owners' Corporation a second application for development seeking its consent to the application being lodged with the Council. On 18 October 2005, the Tribunal hearing was held (as stated above) and the Tribunal ordered that consent be given to the second development application. The ex tempore decision of the Member of the Tribunal is found at pages 52-53 of the transcript of the proceedings below. After announcing proposed orders there was some discussion between the Tribunal and representatives of the parties and the Tribunal went on to make clear that he understood what, in effect was being sought was: "to legitimise the unauthorised use of the premises. To the extent that that involves seeking approval for the use of the particular spray booth and the two vents on the roof, then I see no reason to allow the Owners' Corporation to consider this matter afresh because the matters which are relevant to their consideration of that matter have already been before them and they have not exercised the function required of them". 30 Further discussion occurred between the Tribunal Member and the parties and the Tribunal Member made this comment: "I do not make any order under s140. I am not requiring the Owners' Corporation to consent to the work. I am requiring the Owners' Corporation to permit the applicant to make a development application to Liverpool City Council to seek its approval to the installation of a spray booth and associated structures. If that approval is granted, and all of the Lot owners will have ample opportunity to object, if that is granted after the Council considers those objections and all the planning issues, if it is approved, then the issue of approval under s140 and 158 arise again, but there has to be some reasonable grounds for refusing the work. If there are reasonable grounds, then you are entitled to say, despite the consent, we have independent and reasonable grounds for refusing to allow the work or grant an exclusive use by-law. … This does not, as I have already said, preclude the owners corporation - indeed, it has an obligation - … to … give consideration to the matters in those two sections." [The two sections to which the Member of the Tribunal was referring were s140 and s158]. 31 The Tribunal found that the plaintiff had failed to exercise the function of applying its common seal to the development application and made an order, purportedly under s138(1)(a) of the Act. On its face, the Tribunal did not seem to differentiate between the first development application or the second development application (for that matter even the proposed third application) and found that in failing to apply its seal the Owners' Corporation had failed to exercise a function conferred by or imposed under the Act. The alleged basis of the Tribunal's order was the failure to endorse any and all of the forms that represented the defendant's continuing attempts to apply for development. 32 In November 2005 the proceedings were commenced in this Court and the plaintiff moved successfully for the stay of the Tribunal's orders, which stay remains in force.

[21]

39 In a strata property, the Owners' Corporation is the owner of common property including roofs, the front of the outside door to the unit etc. Because of this distinction the Owners' Corporation's seal on the defendant's development application to the Council would not be consent to perform the work in question but would only be consent by the owner, to the making of the application for development: a consent which is limited to the ascertainment of compliance with planning provisions and/or the obtaining of approval from the development authority. 40 The Tribunal and the parties accept that the application to the Council is not an application to the Owners' Corporation for a transfer to the defendant of proprietary interests in the common property affected by the application. Such a "transfer", or its practical equivalent, would be effected by an exclusive use by-law or the grant of a licence. 41 The plaintiff submits that requiring the Owners' Corporation to endorse a development application creates an estoppel and the Owners' Corporation would be bound, if the development approval was subsequently granted, to allow the works and/or to effect the transfer or grant property rights accordingly. Although, as already stated, the basis for the orders of the Tribunal was to the opposite effect. 42 It should be stated that, because ownership is integral to the works being effected, works inside Lot 5 and outside Lot 5 are legally differentiated. The defendant owns all of the premises within Lot 5 and can effect building works there without the endorsement of the Owners' Corporation, provided that the work does not impinge upon property which is common to all of the unit holders: see Owners Strata Plan No. 50411 & Ors v Cameron North Sydney Investments [2003] NSWCA 5 per Heydon and Santow JJA. 43 The works that any such Lot owner sought to undertake within the confines of the Lot would still need to be compliant with any relevant planning law and would therefore still need to get a development approval from the Council. Owners of other Lots (and owners of adjacent or nearby property to the entire premises) could object to the approval being granted by Council by lodging an objection to Council on interests that are protected by the E P & A Act. However, such an objection is not related to consent by the Owners' Corporation, which has no power to approve or reject the internal works. In other words, in relation to those works confined to the property owned by any Lot owner the only right of either the Owners' Corporation or any other Lot Owner is the right to make objection to Council against the grant of approval. 44 Works on the common property are not works on the property of the defendant. In relation to works on common property, there would continue to be a right of objection reposed in other property owners affected by any proposed works, but there is also a need both for the consent of the Owners' Corporation (being the owner of the common property) to the development application being lodged and also, over and above development consent granted by the Council, a need for an exclusive use by-law or a licence from the Owners' Corporation which would allow common property to be used exclusively by one unit holder. 45 It is for this reason that the ventilation chimneys through the common roof is contentious and it is for this reason that differentiation must be made between works that are confined to the property of the defendant and works on common property. Also there must be a differentiation between the consent required of the Owners' Corporation, as the owner of the property, for there to be a valid application for development approval and, over and above approval granted by the Council, the consent of the Owners' Corporation to the approved works being carried out. That latter consent would need to be reflected in a formal manner either by the grant of an exclusive use by-law or a licence.

[22]

Retrospective Owners' Corporation Consent 46 As earlier stated, the development application originally lodged was the subject of approval by the Council, or purported approval by the Council, and the works for which approval was granted have been completed. The plaintiff takes issue with being ordered by the Tribunal to endorse a development application retrospectively. It submits that an Owners' Corporation does not have the power to consent retrospectively to a development application: retrospectively, in that sense, being at a point in time after the Council has approved an application. They referred to Harris Farm Markets Pty Ltd v Ashfield Fresh Pty Ltd and Anor [2002] NSWLEC 106. 47 Before dealing with the issues of law involved in that submission, it is necessary to set out a number of other fundamental issues, and the legislative provisions which are relevant to the issues to be discussed. 48 First, it is necessary to look at the status of the Council approval purportedly granted in these proceedings. The Land and Environment Court has issued judgment. It has determined and declared, in a manner which is binding on the parties before this Court, that the development consent granted on 13 October 2003 is invalid. 49 Moreover, the reasons for judgment make clear that the development consent never was valid and is void ab initio. Neither party is able to go behind that order in these proceedings and no party does. In those circumstances the works that were completed by the defendant were relevantly unauthorised and were completed at a time that they were relevantly unauthorised by the Council. 50 This involves the necessary consequence that the development application process begins anew and, in relation to any such application, it cannot be said that Council has yet reached the position that approval has been granted. In other words, in relation to any subsequent application for development approval, nothing which is requested of the Owners' Corporation and no order imposed upon the Owners' Corporation is a request or order for the Owners' Corporation to approve retrospectively, ie in the sense used earlier, namely, at a point in time after the Council has approved the application. 51 However, a further complication arises, namely, whether a development application can ever be granted to approve work which has already been completed (or perhaps even commenced) and is unauthorised. These two legal complications inform the issues that are agitated before the Court. It is submitted that the Council has no power or jurisdiction to grant approval for the completed works and that, therefore, the Owners' Corporation cannot be required to consent to a development application in circumstances where the development application cannot lead to a valid consent.

[25]

67 Appeal against decision of Tribunal with respect to matter of law (1) If, in respect of any proceedings, the Tribunal decides a question with respect to a matter of law, a party in the proceedings who is dissatisfied with the decision may, subject to this section, appeal to the Supreme Court against the decision. (2) An appeal is to be made in accordance with the rules of the Supreme Court. The rules of the Supreme Court may provide that an appeal (or such classes of appeal as may be specified in the rules) may be made only with the leave of the Court. (3) After deciding the question the subject of such an appeal, the Supreme Court may, unless it affirms the decision of the Tribunal on the question: (a) make such order in relation to the proceedings in which the question arose as, in its opinion, should have been made by the Tribunal, or (b) remit its decision on the question to the Tribunal and order a rehearing of the proceedings by the Tribunal. (4) If such a rehearing is held, the Tribunal is not to proceed in a manner, or make an order or a decision, that is inconsistent with the decision of the Supreme Court remitted to the Tribunal. (5) If a party has appealed to the Supreme Court against a decision of the Tribunal on a question with respect to a matter of law, either the Tribunal or the Supreme Court may suspend, until the appeal is determined, the operation of any order or decision made in respect of the proceedings. (6) If the Tribunal suspends the operation of an order or a decision, the Tribunal or the Supreme Court may terminate the suspension or, where the Supreme Court has suspended the operation of an order or a decision, the Supreme Court may terminate the suspension. (7) If a rehearing is held, fresh evidence, or evidence in addition to or in substitution for the evidence on which the original decision was made, may be given on the rehearing. (8) A reference in this section to a matter of law includes a reference to a matter relating to the jurisdiction of the Tribunal. (9) The regulations may exclude the making of an appeal under this section in such classes or description of cases as may be prescribed.

[26]

138 General power of Adjudicator to make orders to settle disputes or rectify complaints (1) An Adjudicator may make an order to settle a dispute or complaint about: (a) an exercise of, or a failure to exercise, a function conferred or imposed by or under this Act or the by-laws in relation to a strata scheme, or (b) the operation, administration or management of a strata scheme under this Act. (2) For the purposes of subsection (1), an owners corporation or building management committee is taken to have failed to exercise a function if: (a) it decides not to exercise the function, or (b) application is made to it to exercise the function and it fails for 2 months after the making of the application to exercise the function in accordance with the application or to inform the applicant that it has decided not to exercise the function in accordance with the application. (3) An Adjudicator may not make an order under subsection (1) for the settlement of a dispute or complaint: (a) dealt with in another section of this Chapter, or (b) referred to the Tribunal or only within the jurisdiction of the Tribunal, or (c) relating to the exercise, or the failure to exercise, a function conferred on an owners corporation by this Act or the by-laws if that function may be exercised only in accordance with a unanimous resolution or a special resolution (other than a special resolution under section 62 (3), 65A or 65B), or (d) that includes the payment by a person to another person of damages. (4) If a dispute or complaint arises from or relates to the operation or application of a provision of a lease of a lot, or of the common property, in a leasehold strata scheme, the lessor of the strata scheme must not: (a) commence other proceedings in connection with the settlement of the dispute or complaint after having made an application under this section for the settlement of the dispute or complaint, or (b) make an application under this section for the settlement of the dispute or complaint after having commenced other proceedings in connection with the settlement of the dispute or complaint. (5) An application for an order under this section may be made only by an interested person.

[27]

140 Order relating to alterations and repairs to common property and other property (1) An Adjudicator may order an owners corporation to consent to work proposed to be carried out by an owner if the Adjudicator considers that the owners corporation has unreasonably refused its consent and the work relates to any of the following: (a) alterations to common property directly affecting the owner's lot, (b) carrying out repairs to common property or any other property of the owners corporation directly affecting the owner's lot. (2) An Adjudicator may make an order approving of alterations or repairs already made by an owner to common property or any other property of an owners corporation directly affecting the owner's lot if the Adjudicator considers that the owners corporation unreasonably refused its consent to the alteration or repairs. (3) An order under subsection (2) is taken to be the consent of the owners corporation to the alterations or repairs concerned and may be expressed as having effect from a day specified in the order that occurred before the order was made. (4) An Adjudicator may specify in an order under this section whether the owners corporation or the owner of the lot concerned has the ongoing responsibility for the repair and maintenance of any additional property arising out of an alteration or repair to common property approved under the order. (5) If an order makes provision for the owner of a lot to have the ongoing responsibility for the repair and maintenance of any such additional property, the order also has effect in relation to any subsequent owner of the lot. (6) In deciding whether to grant an order under subsection (2) or to provide for the order to have effect from a day that occurred before the date of the order, an Adjudicator may take into account the conduct of the parties in the proceedings, for example, if an owner did not first seek the consent of the owners corporation before carrying out the alterations or repairs. (7) An application for an order under this section may be made only by a lessor of a leasehold strata scheme or an owner.

[35]

The Powers under Section 138(1)(a) of the Strata Schemes Management Act 1996 62 It is clear from the ex tempore reasons of the Tribunal and, in particular, the references therein to the exercise of "the function required of them" (see [29], infra) that the Tribunal was purporting to exercise jurisdiction under s138(1)(a) of the Act. The Tribunal is not given a general supervisory function to oversee the Owners' Corporation. Nor is the Tribunal given ancillary jurisdiction in relation to matters that come before it. 63 By s21 of the Consumer Trader and Tenancy Tribunal Act 2001 the Tribunal only has such jurisdiction to decide matters and such powers to make orders as is conferred on it by that Act or any other Act. Section 138(1)(a) of the Strata Schemes Management Act 1996 does not allow an Adjudicator, or, in this case the Tribunal, to make any order to settle any dispute or complaint. The words in paragraph (a) and (b) confine the subject matter of the dispute and complaint and are words of limitation. 64 In construing the terms of s138(1)(a) it is relevant to note that the exercise of or failure to exercise a function is confined to a function conferred or imposed by or under that Act, or under the by-laws in relation to a strata scheme. By comparison, the provisions of s12 of the Act grant to the Owners' Corporation the functions "conferred or imposed on it by or under this or any other Act." To the extent that a function is conferred or imposed under another Act such a function may be performed by the Owners' Corporation but may not be the subject of orders under s138(1)(a) of that Act. 65 Therefore, for the jurisdiction under s138(1)(a) of the Act to be enlivened one must point to a function conferred by the Act or under the by-laws for a strata scheme. The function or requirement for there to be consent by an owner, in this case the Owners' Corporation, to a development application is not a function conferred or imposed by the Strata Schemes Management Act or the by-laws of the strata scheme. It is a requirement of the EP & A Act and the function is performed by any owner of property, of which the Owners' Corporation is but one example. This issue has been the subject of analysis in Owners Strata Plan No. 50411 & Ors v Cameron North Sydney Investments [2003] NSWCA 5: "[42] By s78A(1) of the EPA Act and cl49(1) of the EPA Regulation the owner of the land to which a development application relates is given control over the making of the development application. The owner must either make the application or give written consent to the making of the application. A third party proposing a development application for the owner's land generally can not insist that the owner make or consent to the making of the application (see Mulyan Pty Ltd v Cowra Shire Council ). If the third party has rights in relation to the owner's land, as in Kirkijian v Towers , or no doubt if the third party has an appropriate enforceable contractual right against the owner, the third party can insist that the owner give consent, possibly that the owner make the development application. But a basis for an obligation to make or consent to the making of the development application must be established.

[39]

[46] If an obligation to make or consent to the making of a development application is to be found, it must be in the strata scheme legislation. An owners corporation holds the common property of the strata scheme and can not be regarded as disinterested in development of the lots of the lot-holders. By s12 of the Strata Schemes Management Act 1996 an owners corporation has the functions conferred or imposed on it by or under that or any other act. The powers conferred under the Act include making (s47) and enforcing (s45) by-laws and controlling, managing and administering the common property of the strata scheme for the benefit of the owners (s61(1)), specifically maintaining and repairing the common property of the strata scheme, managing the finances of the strata scheme, taking out insurance for the strata scheme and keeping accounts and records for the strata scheme (s61(2)). Miscellaneous functions are specified (ss110-115). Nothing in these provisions suggests an obligation to consent to the making of a development application in relation to a lot in the strata scheme unless it is unlawful, the obligation held to exist by Young CJ in Eq. On the contrary, any decision by the owners corporation as to making or consenting to the making of a development application would properly be informed by regard to the effect of the development on the proprietors of the other lots and the building as a whole." (Per Giles JA at [42]-[46]) 66 In Cameron, above, Giles JA was the only member of the Court to deal with the issue in question. In so doing, his Honour dissented on the reasons on which the majority judgment turned (the capacity on appeal to decide the correctness of Halpin v SCC (2000) 110 LGERA 464). However, the force of these observations of his Honour and the persuasiveness of the analysis is not affected by his Honour's dissent in the result in that case. 67 The function of consenting to a development application is not a function conferred by the Act nor by the EP & A Act. As such it is not amenable to orders under s138(1)(a) of the Act.

[40]

Section 138(1)(b) of the Strata Schemes Management Act 1996 68 The reasons of the Tribunal, below, make clear that the Tribunal did not purport to exercise jurisdiction under s138(1)(b). Jurisdiction under that paragraph is conferred in order to "settle a dispute or compliant about … the operation, administration or management of a strata scheme under this Act." Interesting, but for present purposes irrelevant, questions arise as to whether the use of the terms "settle a dispute or compliant" are limiting words which require consensus and mediation rather than determination. My preliminary, but uninformed view, is that it does not and one needs only to refer to those cases dealing with the prevention and settlement of industrial disputes which make clear that the settlement of an industrial dispute may involve the determination contrary to the interests or desires of any one or more parties: R v Kirby; ex parte Boilermakers' (1956) 94 CLR 254 at 342 - 343. 69 It is necessary however to determine, in the exercise of the discretion to make orders in this appeal, whether another provision of the Act grants power to the Tribunal to make the orders it has. If that were the case, the Court would be required to determine whether the discretion ought be exercised to quash the order even where, as here, there has been shown to be an error of law. Certainly that is the case in relation to the orders in the Summons seeking prohibition: see R v Moore; ex parte Graham (1977) 138 CLR 164. 70 As already stated, the words used in paragraph (b) of s138(1) are words of limitation on the power of the Tribunal, confining the subject matter of the dispute or compliant about which the Tribunal may make orders. 71 An Owners' Corporation is not covered by the terms of the Corporations Act, nor the Australian Securities and Investments Commission Act 2001: see s11(2) of the Act. The Act deals with management of strata schemes and prescribes the constitution of the Owners' Corporation, its functions and both staff and committees that are involved in the strata scheme management. None of the provisions relating to the operation and management of the Owners' Corporation, nor the provisions relating to the administration of the strata scheme and Owners' Corporation, involve endorsing a development application or functions akin thereto. 72 There are two possible exceptions to that general statement: s65A and s65B of the Act. Each of those sections deals with the power of the Owners' Corporation to make authorised changes to the common property or to grant a licence to a lot owner to use common property. Each of those sections requires a special resolution and if there were a dispute or complaint about such a matter it would, pursuant to the terms of s138(3)(c), not be amenable to any orders under s138(1)(b) of the Act. 73 I take the view that the words "operation, administration or management" must be construed ejusdem generis. They have overlapping meanings such that all of them may apply to one or more situations. 74 The purpose of the provisions in s138(1)(b) is to ensure that those matters with which the Act deals and with which the Act requires the Corporation to deal, either directly or indirectly, may be the subject of resolution by the Tribunal. But the operation, administration or management must be "of a strata scheme". Here the Owners' Corporation is not involved in a dispute about the operation, administration or management of the strata scheme. Those matters which may be the subject of settlement pursuant to the powers granted to the Tribunal under s138(1)(b) are those tasks undertaken by the Owners' Corporation qua its status as an Owners' Corporation. Thus, if a lot owner also coincidentally owned property adjacent to the land upon which a strata scheme was built, a dispute between the Lot owner and the strata scheme about the adjoining fence would not be a dispute about the operation, administration or management of the strata scheme. It would be a dispute between the owners of adjacent land and the duties and/or rights of the Owners' Corporation under general law. 75 In such general circumstances, no matter, with which s138 of the Act is concerned, arises. But, if the Owners' Corporation were to arrive at any such decision or to exercise powers or duties under the general law, and did so irregularly, such irregularity would be a dispute about the operation, management and administration of the Owners' Corporation and possibly, if not probably, the strata scheme. No submissions or evidence here suggests any such kind of irregularity. 76 In this way, the purpose of the Act is achieved. Disputes involving internal management of the Owners' Corporation, for example, could be subject of settlement. Thus, issues that might be subject to regulation under the Corporations Act 2001, were it not for the exemption in s11(2) of the Act, such as oppression etc, may be the subject of resolution by the Tribunal under s138(1)(b). However, s138(1)(b) does not allow the Tribunal to settle a dispute between a Lot owner and the Owners' Corporation which dispute arises under the general law unrelated to issues inter se. In this case, if the Lot owner, Ms Pham, could or did allege oppression in the internal management of the Owners' Corporation which gave rise to the refusal to consent to the development application, then such a matter would seem to fit within the provisions of s138(1)(b) of the Act. However, the exercise of the functions of the Owners' Corporation as an owner of the property, those functions neither being conferred by the Act nor involving the operation of the strata scheme, as such, may not be the subject of orders under s138 of the Act.

[41]

Absurdity of the Result 77 If the overall result meant that the affected Lot owner had no recourse in relation to matters of the kind here agitated, then the Court would endeavour to construe the Act in a way which gave the Lot owner a remedy. However, on the construction of the Act that I have accepted, the Lot owner is not deprived of all remedy. 78 The provisions of Chapter 3, Part 1 of the Act provide certain key management areas with which the Owners' Corporation must deal. Generally, the basis for exercising any of the functions there conferred on the Owners' Corporation is a purpose which must be "for the benefit of the owners". It includes the maintaining and repairing of common property, managing the finances of the strata scheme, taking out insurance of the strata scheme and keeping accounts and records for the strata scheme: see s61 of the Act. 79 Relevantly, with the exception of s65A and s65B of the Act, the duty imposed by Chapter 3 Part 1 is the maintenance and repair of common property. The duties imposed by s62 of the Act and other sections to maintain properly the common property for the benefit of all owners would generally be inconsistent, without an express power to the contrary, with the alteration of the common property for the benefit of one particular Lot owner. The power to benefit one particular Lot owner is a power conferred either by s65A, s65B or by alteration of the by-laws pursuant to the terms of s51. 80 A Lot owner in the position of the defendant in these proceedings is entitled to approach the Owners' Corporation and seek either a special resolution under s65A or a licence under s65B of the Act, or an exclusive use by-law under s51 of the Act. If such a request were refused, the Lot owner would be entitled to make application to the Tribunal for orders under s158 of the Act alleging, if it be the case, that the refusal of the Owners' Corporation was unreasonable. 81 In those circumstances the Tribunal could assess the adjudication by the Owners' Corporation of the balance between the rights of the Lot owner and the rights and/or duties of the other Lot owners in determining the request before it. If the Tribunal found that the refusal, for example, of an exclusive use by-law was unreasonable, it could make orders remedying that situation. Thereafter the Lot owner would be, for the purposes of the development application, the owner from whom consent would be required. Alternatively and/or additionally, the Lot owner could require, under the general law, the consent of the Owners' Corporation because of its rights to exclusive use of the common property in question. 82 The availability of this remedy ensures that no absurdity or lack of remedy arises in relation to a situation faced by a Lot owner of the kind the defendant here faces. Further, dealing with the exclusive use by-law first (i.e. before the development application) requires that the Tribunal assess, initially, the reasonableness of the conduct of the Owners' Corporation before requiring it to consent to a development application (and indeed never requiring it to consent to a development application). 83 Were it otherwise, or were it in accordance with the construction preferred by the Tribunal below, the Tribunal could require the Owners' Corporation to consent to the development application, which application may be approved and after which approval the Owners' Corporation could refuse to consent to the works being carried out and/or to an exclusive use by-law. In the situation of either of the latter two decisions, that would be only remediable by the Tribunal if the decision or refusal was unreasonable: see s140 and s158 of the Act.

THE OWNERS - STRATA PLAN NO. 37762 v DINH PHUONG DUNG PHAM and anor

At a glance

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Judgment (45 paragraphs)

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Legislation Cited (2)

Cases Cited (7)

Cited By (23)