The Owners - Strata Plan No 5319 v Price;; Price v The Owners - Strata Plan... [2019] NSWCATCD 3 | Case summary

NCAT Consumer and Commercial|2018-04-18

The Application

Strata Plan No 5319 consists of 31 residential lots located over 5 levels. Ms Price purchased lot 8 in about May 2017 and settlement took place on or about 3 July 2017. Since purchasing the lot Ms Price has undertaken works to the lot.
Application SC 17/51166 was made on 1 December 2017 by the Owners Corporation. They are seeking orders against the lot owner Ms Price for reinstatement of work done to the common property on the lot.
Application SC 17/52332 was made on 8 December 2017 by the lot owner, Ms Price, who is seeking orders for the appointment of a structural engineer to inspect all historic internal wall removals within the lots in the strata plan that have been undertaken without the approval of a by-law. She seeks that the engineer report to the Owners Corporation about the structural integrity of the common property affected by all such works and for the Owners Corporation to undertake any of the works recommended by the structural engineer.

Ms Price's application

Ms Price is seeking orders pursuant to S232 (1) (a) of the Strata Schemes Management Act 2015 (SSMA) to settle a dispute. In effect the she claims that in the circumstances where she is being pursued for unauthorised works, then the Owners Corporation has a duty to pursue other lots for unauthorised works. In particular she complains that the Owners Corporation has failed in its duties including its duty under s106 to maintain and repair. Submissions are also made that the removal of common property walls is a breach of s108, 143 and/or 151(a) of the SSMA and as such the Owners Corporation has an obligation to remedy the unauthorised removals by other lot owners.
Ms Price makes submissions that documents produced by the Owners Corporation in answer to a summons show that there were works previously approved by the strata committee to be carried out by lot owners without the approval of any by-law to regulate those works. As an example she refers to an email dated 15 July 2016 from the strata manager to the owners of lot 27, advising that the internal wall removal between the kitchen and lounge room of their unit "has no structural integrity for the unit above and is therefore your property." In submissions, Ms Price also refers to other examples of works being approved for lots and submits that while it is appropriate for her proposed removal works, bathroom renovation and flooring works to be the subject of a by-law, the requirement should apply equally to all other lot owners. Ms Crittenden, made submissions that the summons documents show that common property works have been performed on lots 1, 2, 3, 10, 15, 22 and 27.
The Owners Corporations position is that the Tribunal does not have the jurisdiction to decide the matter as this is not an order to settle a dispute under section 232. In particular they refer to the case of In the case of Walsh v The Owners - Strata Plan No 10349 [2017] NSWCATAP 230.
Section 232 (1) of the SSMA relevantly provides that (1) The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following: (a) the operation, administration or management of a strata scheme under this Act, (b) an agreement authorised or required to be entered into under this Act, (c) an agreement appointing a strata managing agent or a building manager, (d) an agreement between the owners corporation and an owner, mortgagee or covenant chargee of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme, (e) an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme, (f) an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.
Having considered the documents and submissions, the Tribunal is not satisfied to exercise its discretion under s232 to make the orders that Ms Price is seeking. While some reference is made in the summonsed documents to emails about the removal of common property walls, the full circumstances surrounding the removals has not been properly explored and certainly the lot owners have not been added to respond to allegations that the walls have been improperly removed. Further, while there is no doubt that the Owners Corporation has a duty to maintain and repair common property, there is no evidence before the Tribunal that at this point the common property walls are in need of maintenance and repair. The Tribunal does not find that it should make an order about the appointment of an engineer to inspect the walls, simply on the basis that some works may have been previously approved. There is certainly no evidence before the Tribunal that works need to be undertaken to stabilise the building or maintain the areas as a result of the removal of the walls. It may be that if lot owners have removed common property walls without authorisation or required by-laws then the Owners Corporation may need to pursue those lot owners. However, the Tribunal does not propose on the evidence before it to exercise its discretion for every lot to be inspected for any historic wall removals that in its opinion would be in proportionate to the obligations of an Owners Corporation. Ms Price's application is dismissed.

The Owner's Corporation Application

It is generally not in dispute that on about June 2017, Ms Price notified the Owners Corporation that she wished to undertake works to her lot including removal of common property walls. Ms Price claims that on 3 July 2017, Mr Sharp, the chairperson of the Strata committee met with her to discuss the renovations and on 3 July 2017 she was sent an email confirming approval of the works except the removal of the works.
In about August 2017, Ms Price provided to the Strata Committee a copy of the application for approval of the works, including insurances and engineers drawing/certificates and this was discussed at a Strata Committee meeting on 14 August 2017. Ms Price then engaged a solicitor, Ms Crittenden to act on her behalf and provide motions and special by-laws requesting an Extraordinary General Meeting be held. Between 14 August 2017 and 23 October 2017 the strata committee held three strata committee meetings to discuss the application to carry out works. Correspondence and plans passed between the parties. The minutes of the Strata Committee meetings and various correspondences are attached to the affidavit of the Strata Manager Rachel Welch dated 1 December 2017. Both parties had engaged engineers to provide opinions on the removal of the walls.
In her affidavit dated 7 December 2017, Ms Price concedes that around mid-November 2017 she had formed the view that the Strata Committee was purposely obstructing the Owners Corporation from considering her motions and was frustrated, upset and had spent considerable sums of money engaging a structural engineer to prepare a design and amend it. From about 28 November 2017 she had her builder commence propping works and removing walls. She claims that no works have taken place since 30 November 2017.
On 4 December 2017 an interim order was made by the Tribunal for the Ms Price to stop works.
On 15 January 2018 the Owners Corporation held an Extraordinary Meeting for approval for kitchen and minor electrical works and removal of the walls. The minutes of the meeting disclose that in relation to the bathroom, ensuite and laundry works, the Owners Corporation specially resolved those works pursuant to s142 of the SSMA. However in relation to the wall removal works the following is noted in the minutes of the meeting: MOTION DEFEATED It was noted that the Strata Committee organised a letter that was sent to Unit 8 solicitor outlining the Strata Committee's position and summarised a series of proposed conditions that were previously sent and are to be incorporated into the by-law before the Strata Committee would support the wall removal. It was noted that the special by-law in the motions requested by Unit 8 included the incorrect engineering design drawing and did not incorporate the proposed conditions. The by-law in its current form was defeated until the conditions are met to and an amended by-law is provided for consideration.
No amended by-law was ever provided or the correct engineering designs.
Ms Crittenden made submissions that the in line with the Tribunal's decision in Owners Corporation SP 22607 v Yang [2018] NSWCATCD 3, the Tribunal should allow all owners who have performed works on the lots, including Ms Price, the opportunity to submit a by-law for their works for consideration by the Owners Corporation, and that Ms Price only be required to remove the works and make good common property if a by-law is not reasonably approved. She makes submissions that Ms Price should not simply be made to return the property to where it was.
Section 108 of the SSMA relates to changes to common property and relevantly states: (1) Procedure for authorising changes to common property an owners corporation or an owner of a lot in a strata scheme may add to the common property, alter the common property or erect a new structure on common property for the purpose of improving or enhancing the common property. (2) Any such action may be taken by the owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed. (3) Ongoing maintenance A special resolution under this section that authorises action to be taken in relation to the common property by an owner of a lot may specify whether the ongoing maintenance of the common property once the action has been taken is the responsibility of the owners corporation or the owner. (4) If a special resolution under this section does not specify who has the ongoing maintenance of the common property concerned, the owners corporation has the responsibility for the ongoing maintenance. (5) A special resolution under this section that allows an owner of a lot to take action in relation to certain common property and provides that the ongoing maintenance of that common property after the action is taken is the responsibility of the owner has no effect unless: (a) the owners corporation obtains the written consent of the owner to the making of a by-law to provide for the maintenance of the common property by the owner, and (b) the owners corporation makes the by-law. (6) The by-law: (a) may require, for the maintenance of the common property, the payment of money by the owner at specified times or as determined by the owners corporation, and (b) must not be amended or repealed unless the owners corporation has obtained the written consent of the owner concerned. (7) Sections 143 (2), 144 (2) and (3) and 145 apply to a by-law made for the purposes of this section in the same way as they apply to a common property rights by-law. Note: A new by-law or other changes to the by-laws for a strata scheme must be approved by a special resolution of the owners corporation (see section 141).
Section 111 of the SSMA states: An owner of a lot in a strata scheme must not carry out work on the common property unless the owner is authorised to do so: (a) under this Part, or (b) under a by-law made under this Part or a common property rights by-law, or (c) by an approval of the owners corporation given by special resolution or in any other manner authorised by the by-laws.
The Tribunal finds that Ms Price has undertaken unapproved renovation works. In particular the Tribunal finds that Ms Price has undertaken the following: 1. removed the internal brick wall separating the laundry from the pantry of the lot 2. demolished a non-loadbearing segment of the wall separating the kitchen from the living/dining room.
As I stated in the decision Owners Corporation SP 22607 v Yang [2018] NSWCATCD 3 The SSMA has clearly implemented a regime so that such works require approval as they do affect common property and the applicant is entitled to know what the works are. The SSMA offers the applicant protection in relation to the works that affect common property. While there is no immediate evidence before the Tribunal that the works are defective or have had any negative impact on common property, the onus is not on the applicant to produce such evidence. Just because no evidence of that nature has been produced, does not mean that the Owners Corporation can be assured that the common property has not been adversely affected by the unauthorised works. The regime and regulation imposed by the statute of authorisation and by-laws clearly protects an applicant from any prospective defects or damage that that might arise on common property. In this case the non-compliance with the regulatory scheme by the respondent has denied the applicant the opportunity to ensure the works are done in a way that will not adversely affect other common property or that if it does, the respondent bears the responsibility. Further the SSMA clearly provide a mechanism for lot owners to bring an action in situations where an Owners Corporation unreasonably refuses to approve the works.
Ms Price has undertaken unauthorised works to common property. On that basis the Tribunal orders that she must restore the common property. It has come to the Tribunal's attention that related proceedings are now again on foot in relation to the refusal of the by law retrospectively approving the works. An extensive time is being allowed for the restoration to allow the completion of those related proceedings. The Owners Corporation is also seeking costs and directions have been made for submissions on costs. Tribunal makes the following orders. 1. The lot owner at her own cost must: 1. reinstate the wall between the laundry and pantry of Lot 8 in Strata Plan No 5319 and the affected areas of the lot and common property to a structurally sound condition comparable to the adjacent areas of the common property not affected by the works. 2. Remove all unauthorised works to the floor space of Lot 8 in Strata Plan No 5319 in all areas other than floor space comprising a kitchen. laundry, lavatory or bathroom and reinstate the former floor covering in those areas: and 3. remove and reinstate common property and lot property works (except as properly approved by the applicant under Sections 108, 110, 111 and/or Section 143 of the Strata Schemes Management Act 2015 (NSW) (SSMA)) as follows: 1. wall works: and 2. hard flooring works. 1. For the purpose of order 1 above, the unlawful common property works are to be completed by a qualified and licenced contractor(s) with due skill and care by 1 April 2019.
The Owners Corporation was seeking the following further orders be made by the Tribunal: 1. Pursuant to Section 132(1) (a) and/or 229(a) of the SSMA, on completion of the works in order 3 above, the respondent is to obtain and provide to the applicant certification(s) from the qualified and licenced contractor(s) that the work has been completed in a proper and workmanlike manner and in accordance with applicable industry standards. 2. Pursuant to Sections 124(1) (a) and/or 229(a) of the SSMA, the lot owner is to provide inspection access to Lot 8 on receipt of 48 hours written notice from the Owners Corporation. 3. Pursuant to Section 132(1)(b) of the SSMA an Order that the respondent pay the applicant compensation for any cost of repairing the damage to common property and lot property in and around Lot 8 in Strata Plan No &8945319 and any associated costs including insurance and legal costs, such amounts to be particularised.
Having considered the matter the Tribunal does not find that those further orders are necessary. All that is necessary in these circumstances are orders which facilitate the returning of the common property that has been removed.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 28 March 2019

The Owners - Strata Plan No 5319 v Price;; Price v The Owners - Strata Plan No 5319

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