The Owners-Strata Plan No 53865 v JPG Investments Pty Ltd

NCAT Appeal Panel|2023-07-20

BACKGROUND

The strata building the subject of the dispute is located in Bondi Junction. It is a 4 story building with a basement level containing commercial Lots from which a variety of businesses operate. As at the date of the Tribunal hearing, businesses operating from the building included a dry-cleaner; a florist; a Thai restaurant; a gymnasium; and a nightclub.
There are 10 Lots in the strata scheme.
The respondents are the current owners of Lot 10, having purchased interests in the Lot at various times between 2016 and 2020. Lot 10 is located on the upper two floors of the building.
Lot 10 also comprises, as part of the Lot, the cubic airspace on the rooftop to a height of 20 meters.
In March 2003, the owners corporation registered a common property rights by-law giving the owner of Lot 10 the right to perform certain "roof development works"; and exclusive use of common property. That special by-law granted the owner of Lot 10 exclusive use of a further 30 metres of airspace above the 20 meters depicted in the registered strata plan; and exclusive use of an elevator shaft.
In July 2020, the predecessor owner of Lot 10 entered into a lease agreement with Optus Mobile Pty Ltd for certain rooftop space to be used for telecommunications infrastructure (a mobile telephone tower). That lease expires in July 2025.

Summary of Reasons for the Decision under Appeal

We summarise the reasons of the Tribunal as follows:
The onus was on the Lot owners to persuade the Tribunal on the balance of probabilities 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: The Owners-Strata Plan No 18229 v Jakabah Pty Ltd [2022] NSWCATAP 229 (Jakabah) at [50]) (Tribunal decision at [74]).
Sections 232(1) and (6) of the SSM Act do not direct the manner or method of the exercise of the Tribunal's discretion, other than requiring consideration of the use and enjoyment of all Lot owners in their Lots and the common property (Jakabah at [45]). There was no requirement to make a finding that the failure to consent was unreasonable (Jakabah at [61]) (Tribunal decision at [75]-[76]).
When considering "interests" for the purpose of s 232(6) of the SSM Act, it is permissible to look to the future and assess how the proposed development might impact on the other Lot owners if the Development Application was approved and the construction it contemplated took place (Tribunal decision at [77]).
Mr Kosnetter; Mr Emery and Mr Moody were suitably qualified and experienced to provide expert opinions relevant to the issues in dispute (Tribunal decision paras [8]-[11] and [13]).
However, the Tribunal did not accept Mr Moody's opinion that the Lot owners had not provided "adequate and accurate plans and reports" to the owners corporation sufficient for the owners corporation to make a "full and proper assessment" of the proposed Development Application. The Tribunal found that Mr Moody had not provided adequate reasoning to explain how he reached that opinion. Further, the Tribunal found that it could not "assume" that all documents that need to be submitted to the local Council to address every technical planning issue that might arise must be provided to all Lot owners prior to the general meeting, and that Mr Moody's opinion is not sufficient to make that assumption (Tribunal decision paras [14]-[16]).
Mr Walford was suitably qualified and experienced to express an expert opinions on structural issues. However, his opinion that it was "not unreasonable" for the owners corporation to request review of structural load calculations to be assessed by an "independent engineer" prior to giving consent to the lodgement of the Development Application was not accepted because Mr Walford had no expertise on what an owners corporation should, or should not, request or require prior to giving consent. Further, the weight to be given to Mr Walford's opinions of the effect of the proposed works on the structural integrity of the strata building was "somewhat weakened" because Mr Walford had not inspected the building (Tribunal decision paras [17]-[23]).
The Tribunal set out the evidence of the parties (Tribunal decision paras [25]-[58]). The lay evidence included evidence regarding how the proposed development would affect the various Lot owners if it was approved, or not approved.
At paras [46]-[47] the Tribunal referred to the evidence of Mr Kosnetter and Mr Moody. Mr Kosnetter "gave evidence that the development application (sic) proposed by the applicants met all the requirements of Waverley Council for lodgement and was in a form that was capable of being approved by said council (sic). He expressly acknowledged that the council (sic) may seek further or amended documentation as part of the process to assess the applicants development application." Mr Moody gave evidence that the "documents, plans and reports provided by the applicants to the respondent in support of the future development application are inadequate and not of sufficient accuracy compared to the requirements of the Environmental Planning Regulation and various documents of Council relating to the documents, plans and reports required for a future DA."
At paras [59]-[67] the Tribunal set out in detail the submissions of the parties as to why the Tribunal should, or should not, order that the owners corporation provide its consent to the lodgement of the Development Application. One of the submissions made by the owners corporation was that the proposed Development Application was "not in a form capable of being lodged through Waverly Council's development application portal."
At paras [79]-[132] the Tribunal gave a detailed explanation of how it weighed the evidence; the matters it took into account; and how those matters persuaded the Tribunal it should exercise its discretion in favour of making the orders sought by the Lot owners.
Firstly, the Tribunal dealt with the Lot owners' interests. The Tribunal found that the proposed development would enhance the use and enjoyment of the Lot owners in their Lot property and common property, and would likely provide a proprietary benefit to the Lot owners by enhancing the value of Lot 10.
Secondly, the Tribunal referred to the effect of the proposed development on the structural integrity of the strata building. One of the documents included in the proposed Development Application by the Lot owners was a report from a structural engineer Mr Sedhom dated 18 January 2021 that the Lot owners proposal for the development of the airspace was structurally sound and that the load from the proposed development would be borne principally through existing brick walls and down through the basement retaining walls and the rock below.
Mr Walford asserted that Mr Sedhom's opinion was insufficiently detailed, and it was likely that further "structural intervention" would be required in the levels below the proposed new floors to provide adequate structural support. Mr Emery asserted that Mr Sedhom's proposed method required further site investigation and that Mr Sedhom's opinion that no load would be added to the existing building supporting concrete structure "seemed inconsistent" with the architectural proposal attached to the Development Application. Mr Emery canvassed alternative methods so that load was not transferred onto the existing concrete columns. Mr Emery stated that "it may be structurally viable for two new additional floors, in accordance with the architectural scheme…to be supported off the existing building" but was unable to discount the possibility that "some strengthening" of the existing building would be required.
The Tribunal accepted that Mr Sedhom's proposal and methodology "is not entirely persuasive and some questions are raised about how the conclusions in it were reached." However, the Tribunal pointed out that it was considering whether to make an order under s 232(6) of the SSM Act. The relevance of criticisms of Mr Sedhom's report went to the exercise of discretion as to whether the Tribunal should order the owners corporation consent to the lodging of the Development Application, and not beyond that issue.
The Tribunal referred to the evidence of Mr Walford and Mr Emery that calculations and methodology in a structural engineer's report contained within a Development Application need to be sufficiently detailed, and there is a further process engaged upon after the Development Application is lodged before the local Council is satisfied of their adequacy.
The Tribunal found (at paras [91]-[93]) that the criticisms of Mr Sedhom's report were not a sufficient reason not to order the owners corporation to consent to the lodging of the Development Application. There was no expert evidence that the form or substance of Mr Sedhom's report was insufficient to lodge a Development Application. Although the Lot owner would, when the Development Application was being assessed by the local Council, have to address any issues raised by the local Council and satisfy the local Council that the proposed development was structurally sound, the evidence did not establish that the Lot owner should have provided a report in a different form or of a different substance to Mr Sedhom's report to the general meeting of the owners corporation.
The Tribunal stated at [93]: This is not a case were the Tribunal has persuasive evidence before it that a development application proposed by a lot owner and relating to common property, is so flawed that it would not be approved by the relevant planning authority or was bound either not to be accepted for consideration, or accepted but then inevitably rejected, by the relevant planning authority, because of a risk that cannot be overcome, such that an order under s 232 of the Act would have no utility and ought not to be made by the Tribunal.
Thirdly, the Tribunal (at [94-[98]) dealt with the issue of whether the proposed Development Application was in a form that could be lodged and considered by the local Council.
The Tribunal accepted the evidence of Mr Kosnetter that "the development application proposed by the applicants met all the requirements of Waverly Council for lodgement and was in a form that was capable of being approved by the said council."
The Tribunal stated that Mr Moody was addressing a different issue, which was whether the Lot owners proposal was sufficiently detailed and complete to be reviewed and approved by the local Council. If there was any conflict between the opinions of Mr Kosnetter and Mr Moody, the Tribunal preferred the evidence of Mr Kosnetter. The Tribunal referred to Mr Kosnetter having "extensive experience" in working for and consulting for Waverly Council, and that he had provided a detailed explanation for his opinions (particularly in his report in reply). Further, Mr Kosnetter had "impressed" during cross examination with his answers. Mr Kosnetter had agreed with Mr Moody that there were some "inadequacies" in the proposal, but they were matters that could, and would, be addressed during the local Council assessment process before the local Council made its decision whether or not to approve the Development Application.
The Tribunal noted (at para [97]) that Mr Moody had made clear a number of times in his report that "he had not undertaken a merits assessment of the applicants' proposed development as to whether he considered that the proposed development was worthy of ultimate approval by the relevant planning authority".
The Tribunal was satisfied that the Development Application was in a form that could be lodged with the local Council (it not being in dispute that lodgement took place electronically through a website portal); and the substance of the proposed Development Application was not "so flawed that it would not be approved by the relevant planning authority or was bound either not to be accepted for consideration, or accepted but then inevitably rejected, such that an order under s 232 of the Act would have no utility and ought not to be made by the Tribunal" (paras [95] and [98]).
Fourthly, the Tribunal (at paras [100]-[126]) considered the interests of the other Lot owners.
The Tribunal rejected the submission of the owners corporation that to make an order under s 232(6) would "usurp" the rights of other Lot owners to oppose a Development Application that affected their property rights and legitimate interests. The Tribunal pointed out that s 232(6) of the SSM Act specifically gives the Tribunal power to make an order that an owners corporation provide consent to the lodging of a Development Application in circumstances where the owners corporation has refused to consent at a general meeting. The Tribunal also pointed out that individual Lot owners retain their right to make objection to the local Council as to the substance of the Development Application after it is lodged.
The Tribunal rejected the owners corporation's submission that the Lot owners had "no legitimate interests in meeting the owners concerns or cannot do so." The Tribunal noted there was an "impasse" in the period before the Tribunal proceedings were filed regarding a demand by the owners corporation that the Lot owners pay monies to it so it could engage experts to assess the substance of the Development Application, but there was no obligation that the Lot owners provide the funds demanded. There was also insufficient evidence to make a finding sought by the owners corporation that the Lot owners had made unlawful "threats."
The Tribunal did not accept that the lodgement of the Development Application would infringe any proprietary right of any other Lot owner in their individual Lots. One lay witness referred to a column encroaching on Lot property, but the Tribunal was not satisfied the evidence established such an encroachment if the works contained the Development Application proposal were performed.
The Tribunal accepted that the other Lot owners had legitimate concerns about the effect of significant construction works on the building. The Tribunal found that the use and enjoyment of the other Lot owners in respect of their Lot property and common property would be "detrimentally affected" during the construction period, due to issues such as noise, debris, hoardings, scaffolding, and loss or restriction of access to the lift in circumstances where commercial businesses operated from the building and relied on members of the public for patronage.
The Tribunal also accepted that it could not "confidently assess" the construction period. One of the directors of the Lot owners had stated work would take less than two years, but there was no "definitive evidence" about duration.
The Tribunal accepted that the impact of the construction works on the Lot owners was a factor that "weighed against" making an order that the owners corporation provide its consent to the lodging of the Development Application.
However, the Tribunal noted there was no clear evidence as to how the construction works would affect the value of the Lots; or that there was any evidence that a Lot owner was likely to sell his or her Lot during the construction period.
The Tribunal referred to the concerns of the other Lot owners regarding the effect of the proposed development on the "structural integrity" of the strata building; that "combustible cladding" might be used; and that there may be other "risks" such as fire safety risks. The Tribunal found that any concerns would be ameliorated by the fact that the Development Application would have to go through a process with the local Council before Development Consent was given, and that the local Council could impose conditions on any Development Consent. The Tribunal stated at para [120]: …The Tribunal was not given evidence that suggested there was a real and substantial risk that Waverly Council would approve a development that carried with it a threat to the structural integrity of the building within the Scheme, or that the proposed development, if and when it is ever built, would be built in a way that did not comply with proper engineering and construction standards and did not use appropriate cladding and other construction materials.
A further concern raised by the other Lot owners was that the works, if performed, may cause increased costs regarding insurance, strata levies, and other expenses. It was also raised that unit entitlements may have to be "re-evaluated." The Tribunal found that these concerns did not rise above mere speculation.
The Tribunal accepted that the proposed works, if performed, would cause a significant alteration of the common property, and that although it was a difficult matter to quantify, the proposed works would detrimentally affect the Lot owners use and enjoyment of common property (para [124]-[125]). This was a factor that weighed against making the orders sought.
However, that factor was minimised by reason of the following: …the applicants proposed development will almost certainly need a common property by-law to confer on the applicants rights or special privileges in regards to common property, and that as a condition of such a by-law the applicants can be required to make a payment of money to the owners or owners concerned: s 143 of the Act. If there is a dispute about the making of a common property by-law, there are means to resolve it: e.g. s 149 of the Act.
At paragraphs [127]-[132] the Tribunal explained how, taking into account the considerations and evidence referred to in the decision, it was satisfied that the Tribunal should exercise its discretion in favour of making an order that the owners corporation consent to the lodging of the Development Application.

GROUNDS OF APPEAL

The owners corporation filed its appeal on 26 May 2023. There was also an application for a stay of the orders of the Tribunal.
The appeal has been filed with the appliable time limit under reg 25 of the Civil and Administrative Tribunal Rules 2014 (NSW).
The grounds of appeal are identified as follows:

Ground 1-Failure to apply the correct legal test under s 232(6) of the SSM Act.

The grounds of appeal identify that the Tribunal was "required to consider whether in the circumstances of subsections 9(1) and (2) and section 37 of the SSM Act, the strata committee of the owners corporation was justified in failing to exercise its function to consent to the making of the development application".

Ground 2-Denial of procedural fairness

The grounds of appeal assert the Tribunal denied procedural fairness because it: 1. Did not "consider or address" the "concessions" of Mr Kosnetter in cross examination that the Development Application "could not be accepted and approved by Waverly Council because of the absence of a Water Management Site Plan/Stormwater Plan; or 2. The Development Application "could not be submitted" in its present form, and "should not be approved" because the Sedhom structural report was "misleading in a material respect."
The owners corporation raised an "alternative" ground that the Tribunal's exercise of discretion miscarried under the principles in House v The King because the Tribunal "acted on the wrong principle, was guided by extraneous or irrelevant facts, mistook the facts, failed to take into account material considerations and arrived at an unreasonable or plainly unjust result."

Ground 3-Factual Errors

The grounds of appeal assert that the Tribunal made errors in "findings of fact" at paras [94]-[95]; [98] and [128] of the decision because: 1. The Development Application "could not be accepted and approved by Waverly Council because of the absence of a Water Management Site Plan/Stormwater Plan; and 2. The Development Application "could not be submitted…in its present form, and should not be approved by the appellant, because the Sedhom structural report was misleading in a material respect."

Leave to Appeal

The notice of appeal also identifies that the owners corporation is seeking leave to appeal under cl. 12 of sch. 4 of the NCAT Act. The assertions are as follows: 1. The decision was not fair and equitable because (a) it has the effect of "forcing" an owners corporation to "approve a development application" for the benefit of a single Lot owner and over the objection of a majority of Lots;" and (b) the Tribunal accepted the use and enjoyment of other Lot owners would be "detrimentally affected if the development went ahead" and there were "significant concerns" about the development "including safety and structural adequacy." 2. The decision was against the weight of evidence, because (a) Mr Kosnetter had "accepted" in cross examination that the Development Application could not be "accepted and approved by the local Council without a Water Management Site Plan; and (b) the Development Application "could not be submitted…in its present form" and "should not be approved" by the owners corporation because the Sedhom report was "misleading in a material respect."
Notably, the Notice of Appeal states that the owners corporation is not seeking leave to appeal on the basis that there is significant new evidence that was not reasonably available at the date of the Tribunal hearing.

Fresh Evidence

Despite the Notice of Appeal stating that the owners corporation was not seeking leave to appeal on the basis of new evidence, the written submissions of the owners corporation dated 28 June 2023 state that the owners corporation is seeking leave to rely on a fresh affidavit of Mr Clee dated 28 June 2023 that a tenant had moved out and the owner of Lot 1 had been having difficulty obtaining a replacement tenant due to uncertainty regarding the proposed development.
The Lot owners also sought leave to rely on new evidence. That evidence was a fresh affidavit of Mr Solomon, director of Conrad Corporation Pty Ltd dated 5 June 2023, pertaining to whether the owners corporation had held a general meeting to resolve to lodge the appeal.

SCOPE AND NATURE OF APPEALS

Internal appeals may be made as of right on a question of law, and otherwise with leave (that is, the permission) of the Appeal Panel: s 80(2) of the NCAT Act.
Internal appeals involve consideration of whether there has been any error of law; or any error other than an error of law sufficient to grant leave to appeal under cl. 12 of sch. 4 of the NCAT Act.
An appeal is not simply an opportunity for a dissatisfied or aggrieved party to re-argue the case they put at first instance: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
In Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 ('Prendergast') 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 sch. 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 requiring leave to appeal has satisfied the requirements of cl. 12(1) of sch. 4 of the NCAT Act, the Appeal Panel must additionally consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b) of the NCAT Act.
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: 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; 3. 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; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. 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.
Even if the appellant establishes that it may have suffered a substantial miscarriage of justice in the sense explained above, the Appeal Panel retains discretion whether to grant leave under s 80(2) of the NCAT Act. The appellant must demonstrate something more than the Tribunal was arguably wrong (Pholi v Wearne [2014] NSWCATAP 78 at [32]).

General Principles

The jurisdictional basis for the Tribunal to make an order under s 232(6) of the SSM Act is set out in Quo Warranto Pty Ltd v Goodman [2022] NSWCATAP 315 at [72]-[76], where the Appeal Panel stated: We note the submission made by the Goodmans and the Lockes in relation to the Appeal Panel's decision in Dehsabzi v The Owners Corporation - Strata Plan No 83556 [2020] NSWCATAP 142 (Dehsabzi), in which the Appeal Panel held at [53] that the Tribunal at first instance was correct in holding that the Tribunal has jurisdiction to make an order that an owners corporation consent to the submission of a development application involving common property. The Goodmans and the Lockes rely on Dehsabzi in support of their position that the power to make orders under s 232(1) is not dependant on the existence of substantive law requirements. They state in relation to the issue in Dehsabzi: That is clearly the intention of s 232(6) of the Act. Such power exists despite the fact that, in withholding consent to the submission of a development application, an owners corporation would not be in breach of any duties owed by it under the SSMA or any other legislation. The power to make the order is confirmed by section 232(1) not s 232(6): s 232(6) merely regulates the exercise of the power under s 232(1) with respect to disputes concerning the failure of an owners corporation to consent to the making of a development application. We agree that s 232(6) regulates the exercise of the power under s 232(1) to make an order concerning a dispute about the failure of an owners corporation to consent to the making of a development application. We also accept that withholding consent to making such an application would not place (or at least, would not necessarily place) an owners corporation in breach of its duties under the SSM Act or other legislation. However, we do not accept that this demonstrates that the power under s 232(1) exists independently of substantive legal rights and obligations. In relation to the power to make an order requiring an owners corporation to consent to a development application, s 4.2 of the Environmental Planning and Assessment Act 1979 relevantly provides: (1) General If an environmental planning instrument provides that specified development may not be carried out except with development consent, a person must not carry the development out on land to which the provision applies unless - (a) such a consent has been obtained and is in force, and (b) the development is carried out in accordance with the consent and the instrument. Maximum penalty - Tier 1 monetary penalty. (2) For the purposes of subsection (1), development consent may be obtained - (a) by the making of a determination by a consent authority to grant development consent, or (b) in the case of complying development, by the issue of a complying development certificate. Clause 23 of the Environmental and Planning Assessment Regulation 2021 relevantly provides: 23 Persons who may make development applications (1) A development application may be made by - (a) the owner of the land to which the development application relates, or (b) another person, with the consent of the owner of the land. It is not controversial that in strata schemes, the common property is owned by the owners corporation. Where a lot owner wishes to undertake works, is obliged to make a development application in respect of those works and the works involve works to the common property, the lot owner requires the consent of the owners corporation because the owners corporation owns the common property. The issue in relation to the Tribunal's power under s 232(1) to order an owners corporation to give its consent to a development application is not whether the owners corporation is obliged to give its consent or whether it is in breach of the law if it fails to do so. The substantive obligation giving rise to the Tribunal's jurisdiction to make such an order under s 232(1) is, in our view, the lot owner's obligation under planning law to obtain the owners corporation's consent to the making of a development application which involves the common property.
If a Development Application only involves works wholly within the boundaries of a Lot and the proposed works do not affect common property, there is no requirement that an owners corporation give consent to the lodging of a Development Application: The Owners-Strata Plan 50411 v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5 at [163]; The Bunker 2017 Pty Ltd v North Sydney Council [2019] NSWLEC 1365 at [53]. It is unnecessary to explore that distinction in the circumstances of this appeal.
The Appeal Panel discussed the matters to be considered and the principles applicable to the exercise of discretion under s 232(6) of the SSM Act in Dehsabzi v The Owners Corporation-Strata Plan No 83556 [2020] NSWCATAP 142 (Dehsabzi) and The Owners-Strata Plan No 18229 v Jakabah Pty Ltd [2022] NSWCATAP 229 (Jakabah).
In Jakabah, the Appeal Panel stated at [44]-[45]: 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.
Mandatory considerations are considerations which are bound to be taken into account by the decision maker, with such obligation arising from the express terms of the statute, or implied from the subject matter, scope and purpose of the statute. As Basten JA (with whom Beazley P agreed) stated in Lo v Chief Commissioner of State Revenue [2013] NSWCA 180 at [9]: …The term "relevant considerations" is widely misunderstood: as used in leading authorities, such as Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 39 (Mason J) it refers to a matter which the decision-maker is bound to take into account. The obligation may derive from the express terms of the power-conferring statute or may be implied from its subject matter, scope and purpose. A preferable term would be "mandatory consideration". Further, a matter traditionally described as an "irrelevant consideration" is one which is prohibited because, having regard to the subject matter, scope and purpose of the power being exercised, it can be seen to reflect an extraneous or improper purpose or to render the decision arbitrary or capricious. Between these two categories is usually a wide range of permissible considerations which the decision-maker may weigh or disregard without committing an error of law.
It is clear that the only mandatory consideration under s 232(6) of the SSM Act is the interests of all of the owners of Lots in a strata scheme in the use and enjoyment of their Lots and the common property. Any other considerations will depend upon whether or not the Tribunal regards them as relevant in the particular circumstances of the dispute to the exercise of its discretion as to whether to order an owners corporation to consent to the lodging of the Development Application.
In respect of the onus of proof and the weight to be given to mandatory and other relevant considerations, the Appeal Panel stated in Jakabah at [50]-[51]: 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.
Section 232(6) of the SSM Act involves determination of a complaint or dispute in respect of an owners corporation refusing consent to the "making of a development application under the Environmental Planning and Assessment Act 1979 relating to the common property of the scheme".
"Making" a Development Application, and the provision of a Development Consent by the local Council authorising the works are two different things.
Part 4 of the Environmental Planning and Assessment Act 1979 (NSW) (EPA Act) applies to the assessment of a proposed development and its consent. Different procedures apply to "complying developments" where a complying development certificate is issued authorising the works (Part 4.5 of the EPA Act); and developments that involve more complex works and require formal consent (Part 4.3 of the EPA Act).
There are also different procedures applicable to State significant developments (Part 4.7 of the EPA Act) and Integrated developments (Part 4.8 of the EPA). By reason of s 4.5 of the EPA Act, the local Council will usually (but not always) be the "consent authority" making assessment and determination of a Development Application. In this decision, for the sake of simplicity, we refer to the "consent authority" as "the local Council."
The main steps in the process of assessment under Part 4.3 of the EPA Act are set out in ss 4.12-4.18. Those provisions set out the obligations of the local Council to consult with those persons who may be affected by the prosed development (to the extent that an environmental planning instrument requires consultation) and to evaluate the proposed development. If the proposed development is approved, the local Council has the power to impose conditions. The assessment of a Development Application will involve consideration by the local Council of applicable State Environmental Planning Policy (SEPP) and Local Environmental Plans (LEC).
If a local Council fails to approve a Development Application, there are rights of review and appeal by the unsuccessful party who lodged the Development Application (Part 8 of the EPA Act). In some circumstances, an objector may have rights to appeal or to seek judicial review of a decision granting Development Consent (see, for example, Whitehouse Developments Pty Limited v The Council of the City of Sydney [2017] NSWLEC 1512; Wallin v Lake Macquarie City Council & Ors [1999] NSWCA 318).
The consent of the owners corporation to the lodgement of a Development Application is not a representation that all Lot owners agree with the substance of the Development Application. Individual lot owners can still raise objection with the local Council to the extent this is permissible under the EPA Act.
No legal authority was referred to by the owners corporation in this appeal that the consent to the lodging of a Development Application by an owners corporation prevents a Lot owner from making an objection the local Council regarding the merits of the proposal; or that the local Council gives any particular weight in its assessment under the EPA Act to the fact that the owners corporation consented to the lodging of the Development Application.
Whether or not a proposed Development Application complies with any applicable SEPP and LEP or any other applicable policy or statutory requirement for approval of a Development Application may be a relevant consideration under s 232(6) of the SSM Act. However, environmental planning legislation is complex, and the Tribunal must be cautious to avoid an application under s 232(6) of the SSM Act being treated as a pre-emptive merits assessment of the Development Application under the provisions of the EPA Act.
The legislature has identified that in making a decision under s 232(6) of the SSM Act the Tribunal must consider the use and enjoyment of Lot property and common property by the Lot owners. That involves consideration of the effect of the proposed development on the use of enjoyment of Lot property and common property by all Lot owners if the proposed works were approved by the local Council.
Accordingly, complex, lengthy and technical evidence and arguments about whether or not the proposed Development Application complies with the provisions of environmental planning legislation and policies may be of limited relevance (if any) to the primary focus of s 232(6) of the SSM Act, which is the effect of the proposed development on the use and enjoyment of Lot property and common property by all Lot owners if the proposed works were approved by the local Council and Development Consent granted. Such evidence and arguments, if unrestrained, may cause the Tribunal to lose sight of the mandatory consideration under s 232(6) and may not be consistent with the just, quick, cheap and efficient resolution of the real issues in dispute.
As noted above, when making an assessment under s 232(6) of the SSM Act further relevant considerations may be taken into account. These may include the legislative provisions of the SSM Act dealing with alteration of common property.
By reason of the operation of ss 108 and 111 of the SSM Act, any alteration of common property (beyond cosmetic work under s 109 and minor renovations under s 110 of the SSM Act) by a Lot owner for the purpose of improving common property requires a common property rights by-law under ss 142 and 143 of the SSM Act. A common property rights by-law can only be passed by a special resolution at a meeting of the owners corporation. Applicable principles are discussed in Coscuez International Pty Ltd v The Owners-Strata Plan No 46433 [2021] NSWCATAP 147 (Coscuez) at [46]-[53]. An existing by-law cannot provide exemption from the requirements of s 108 of the SSM Act to avoid the requirement for a common property rights by-law (The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd [2020] NSWCATAP 202 at [117]-[128] and [140]-[144]).
A special resolution can only be passed if a minimum of 75% of unit entitlements vote in favour of it (s 5 of the SSM Act). In the circumstances of this appeal, the Lot owners have unit entitlements of 0.6% of the strata scheme (which the parties acknowledged at the hearing appears to be extremely low in comparison to the value of Lot 10; but no application had been made to the Tribunal to reallocate unit entitlements under s 236 of the SSM Act).
Consequently, in the circumstances of this matter (as the Tribunal correctly recognised in the decision), even if Development Approval was granted by the local Council, the Lot owners would still require a common property rights by-law to perform the works. Other Lot owners would have the opportunity to vote against the proposed works. If the common property rights by-law was refused, the Lot owners would then have to bring an application to the Tribunal under s 149 of the SSM Act, and persuade the Tribunal that the refusal was unreasonable (Coscuez at [94]-[95]).

Grounds of Appeal - Errors on a Question of Law and Errors Requiring Leave to Appeal

A difficulty with the grounds of appeal and the submissions of the owners corporation (both written and oral) is that they do not clearly distinguish between errors on a question of law and errors requiring leave to appeal, and move between the two concepts without clear delineation (despite the use of headings and sub-headings in the written submissions).
It is well established that denial of procedural fairness raises an error on a question of law, as does a Court or Tribunal constructively failing to exercise jurisdiction; or misdirecting itself as to the correct legal principles.
Procedural fairness is not an abstract concept. As Gleeson CJ in Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1; [2003] HCA 6 said at [37] in respect of procedural fairness: ...Fairness is not an abstract concept. It is essentially practical. Whether one talks in terms of procedural fairness or natural justice, the concern of the law is to avoid practical injustice.
Basten JA addressed the same issue in Italiano v Carbone & Ors [2005] NSWCA 177 at [88]: An opportunity foregone, but reasonably available, does not demonstrate breach of procedural fairness. To demonstrate procedural fairness it is usually necessary to show that a claimant "lost an opportunity to put any information or argument to the decision-maker, or otherwise suffered any detriment," as explained by Gleeson CJ in Re Minister for Immigration, Multicultural and Indigenous Affairs; Ex parte Lam (2003) 214 CLR 1 at [36]. As the Chief Justice continued at [37]: "A common form of detriment suffered where a decision-maker has failed to take a procedural step is loss of an opportunity to make representations." at [37].
A failure to make a finding on a "substantial, clearly articulated argument relying on established facts" can amount to a failure to accord natural justice or a constructive failure to exercise jurisdiction such as to constitute an error on a question of law (Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 197 ALR 389; [2003] HCA 26 at [24]-[25] and [95]).
In TNT Building Trades Pty Ltd v Baker [2023] NSWCATAP 178 the Appeal Panel summarised the principles distinguishing between purported errors on a question of law, and purported errors that do not involve a question of law and require leave to appeal as follows at [39] and [42]-[43]: If there has been a constructive failure to exercise jurisdiction there will have been error of law which can be addressed on an appeal limited to a question of law: Alexandria Landfill Pty Ltd v Transport for NSW (2020) 103 NSWLR 479; [2020] NSWCA 165 (Alexandria Landfill) at [22] (Basten JA). … Errors in the exercise of a discretion are capable of being agitated on appeal restricted to a question of law alone. If it was apparent that the court had acted on a "wrong principle", then the question of law would be whether that principle was wrong or correct and, if wrong, whether the trial judge acted on that principle and whether that materially affected the outcome: Bimson, Roads & Maritime Services v Damorange Pty Ltd [2014] NSWSC 734 (Bimson) at [48]-[53] (Beech-Jones J). This passage was recently applied by the Appeal Panel in relation to the exercise of the discretion under s 48O of the HB Act: Noori Homes Pty v Patel [2023] NSWCATAP 149 (Noori Homes) at [45]-[47]. Recently the Appeal Panel has decided that a conclusion of mixed fact and law cannot be challenged on an appeal on a question of law under s 80(2)(b) of the NCAT Act except in the circumstances where it can be determined that the conclusion proceeded from a misdirection of law: Jain v Dr N Kalokerinos Pty Ltd [2023] NSWCATAP 141 at [91]. This is to be distinguished from the wrong application of the correct principles to the facts that would be an error of mixed fact and law and an appeal would not lie on a question of law: Bimson at [42]-[45] (Beech-Jones J).
A finding of fact made without any evidence to support the finding is an error on a question of law (Kostas v HIA Insurance Services Pty Ltd (2010) 241 CLR 390; [2010] HCA 32). However, if there is some probative evidence to support a factual finding, even "perverse findings of fact do not give rise to a "question of law" under a statutory formulation limiting an appeal to such questions (Azzopardi v Tasman UEB Industries Limited (1985) 4 NSWLR 139 at 155-156).
In our view, the manner in which the Lot owners characterised the owners corporation's grounds of appeal in its written submissions is an appropriate summary of the grounds, and we adopt similar headings. The grounds of appeal are: 1. The Tribunal applied the wrong legal test (which raises an error on a question of law). 2. The Tribunal denied procedural fairness (error on a question of law). 3. The Tribunal committed an error in the exercise of its discretion under the principles of House v The King (error on a question of law). 4. Leave to appeal should be granted under sch. 4 of cl. 12 of the NCAT Act.

Incorrect Legal Test

The first issue raised in the grounds of appeal (although not referred to in any detail in the owners corporation's written submissions in chief and written submissions in reply) was that the correct legal test under s 232(6) of the SSM Act requires the consideration of the provisions of ss 9 and 37 of the SSM Act.
Section 9 of the SSM Act states: 9 Owners corporation responsible for management of strata scheme (1) The owners corporation for a strata scheme has the principal responsibility for the management of the scheme. (2) The owners corporation has, for the benefit of the owners of lots in the strata scheme - (a) the management and control of the use of the common property of the strata scheme, and (b) the administration of the strata scheme. (3) The owners corporation has responsibility for the following - (a) managing the finances of the strata scheme (see Part 5), (b) keeping accounts and records for the strata scheme (see Parts 5 and 10), (c) maintaining and repairing the common property of the strata scheme (see Part 6), (d) taking out insurance for the strata scheme (see Part 9).
Section 37 of the SSM Act states: 37 Duty of members of strata committee It is the duty of each member of a strata committee of an owners corporation to carry out his or her functions for the benefit, so far as practicable, of the owners corporation and with due care and diligence. Note - Section 260 provides protection from personal liability for members of strata committees who act in good faith.
The decision of the owners corporation to refuse to consent to the lodging of the Development Application was a decision made at a general meeting of the owners corporation. Lot owners voted (or had the opportunity to vote) on whether or not the owners corporation gave its consent to lodgement of the Development Application. Lot owners voted on the basis of their own perceived interests.
The responsibilities of the owners corporation under s 9 of the SSM Act is not a mandatory consideration under s 232(6) of the SSM Act and the Tribunal was therefore not bound to take them into account: Minister for Aboriginal Affairs v Peko-Wallsend Ltd (1986) 162 CLR 24. In addition, there was no clear articulation in oral submissions in the appeal as to how the duties of the owners corporation under s 9 of the SSM Act was a relevant consideration that was not considered by the Tribunal, separate and distinct from the matters that Lot owners had given evidence about at the hearing as to why they had voted for, or against, the Motion and the expert evidence that was adduced at the hearing.
We also note that the responsibility of the owners corporation to manage and control common property does not override the provision in s 232(6) of the SSM Act. If that were the case, s 232(6) would have no role to play, because any decision of the owners corporation (by way of consideration at a general meeting of the owners corporation) could not be the subject of consideration and determination by the Tribunal under s 232(6) of the SSM Act on the basis that the refusal was for "the benefit of owners of lots in the strata scheme".
The reference to the duties of the strata committee under s 37 of the SSM Act does not disclose any error on a question of law. The decision was a decision made by the owners corporation at a general meeting of the owners corporation. It was not a decision of the strata committee; nor was it a decision that the strata committee would likely have the delegated power to make on behalf of the owners corporation in any event. Whether or not Lot owners who voted against the Motion were strata committee members is not a mandatory consideration under s 232(6) of the SSM Act, nor, in our view, is it a relevant consideration.
The second issue raised by the owners corporation as an error on a question of law is that Mr Kosnetter made a "concession" during cross examination that the proposed Development Application could not be lodged, or approved, without a "waste management site plan/stormwater plan."
The substance of the owners corporation's submission is that a "waste management site plan/stormwater plan" was a "mandatory" document required to be lodged by the local Council pursuant to its policies (the "DA Checklist") and the Development Application would automatically be rejected without such a plan being lodged with the Development Application.
This issue refers to the factual findings made by the Tribunal in paras [94]-[98] of the decision.
This issue was dealt with in the reports of Mr Kosnetter and Mr Moody, and the cross examination of Mr Kosnetter.
In his report of 14 July 2022, Mr Kosnetter stated (at p 3) that the Development Application was "in a form that meets all requirements for lodgement…other than consent of the owners corporation…" and that the lodgement of a "water management plan" was "not fatal to the lodgement process". He further stated that approval of the Development Application was "…subject to conditions and/or refinements following an assessment of design excellence."
At p 8, Mr Kosnetter states that, documents that are required under the "Waverly Council Development Application Checklist" to be lodged include a "water management site plan prepared by a hydraulic engineer. He states that this: …would require the services of an additional consultant to inform stormwater provision on the site. This is a discretionary requirement of Council and the application may be accepted without this Plan, as it can be dealt with via conditions of consent. In most cases, Council will request this plan as part of the DA process.
Mr Kosnetter also states at p 8: Subject to owners' consent being provided and the completion of the relevant Council forms, as well as potentially requiring the services of a hydraulic engineer, it is my view that the application meets the requirements for lodgement in the Council's DA checklist.
Mr Moody stated in his report dated 12 August 2022 at p 19: i. There is reference to a "water management site plant required for all Development Applications except for internal works and to be in accordance with the Waverly Water Management Technical Guidelines" on the Council's DA Checklist (emphasis in bold). Thus, Council's DA Checklist specifically requires details of stormwater disposal as part of the DA. ii. At page 8 LK states that a Water Management Site Plan "would require the services of an additional Consultant to inform stormwater provision on the site. This is a discretionary requirement of Council and the applicant may be excepted without this Plan as it can be dealt within the conditions of consent. In most cases Council will request this plan as part of the DA lodgement" (emphasis added). Due to the scale of the proposed development and the located on the 2 levels above the existing building, I consider that Council would require a Water Management Site Plan as part of the DA. Furthermore, I consider that the Owners Corporation would be entitled to be informed about the proposed Stormwater System. Accordingly, the lack of a Water Management Site Plan is a further deficiency in the DA documents, plans and reports provided by the Applicants to the Owners Corporation.
In his report in reply dated 16 September 2022, Mr Kosnetter stated (at p 4): I maintain that there is sufficient documentation for the application to be lodged and considered by Council. However, this is not exclusive to, and also agree with some of the matters raised in the TM Report that the application would require a review by the consent authority that may involve seeking clarification as part of the assessment process. The lodgement process is one whereby the Council receives an application, checks it for relative completeness and accepts the application can be made. Following this, a detailed assessment of the technical information contained in the documents forming the application would take place. To my mind, the question of missing and/or inaccurate information referred to in the TM Report goes more to the latter. The only practical, rather than hypothetical, way to determine if the application is able to be lodged is to attempt lodgement on the NSW Planning Portal. If there was missing information as part of that lodgement attempt, the Council would inform the applicant and provide a list of outstanding documentation. The only matter stopping this from occurring is the need to confirm that the owners' consent has been granted…
In respect of Mr Moody's opinion regarding the provision of a Water Management Site Plan, Mr Kosnetter stated (at p 6): Mr Moody's position in relation to the stormwater (sic) plans and waste management are consistent with my position, that these items may be required as part of the DA lodgement.
Mr Kosnetter concluded (at p 7): Having reviewed the opinion of Mr Moody I maintain the position that all requirements have been met for the lodgement of a Development Application (other than consent of the owners corporation) and that the proposed development is a reasonable project. I acknowledge that the Council may seek further or amended documentation as part of the assessment process, however, I do not believe this would cause the lodgement of the application to the (sic) rejected.
A copy of the Waverly Council "Development Application Checklist" was in evidence before the Tribunal (Appeal Book pp 126-1728).
In cross examination, Mr Kosnetter was questioned about the Waverly Council Development Application Checklist and the provision of a stormwater management plan. During the course of that questioning, the following evidence was given (Appeal Book 99: L18-21): Q. You agree with me that on the basis of this checklist a stormwater management plan is required because this development involves both internal and external works? A. On the basis of this checklist, yes.
Mr Kosnetter was then cross examined on the Waverly Development Application Guide, which was an additional document of the local Council. During the course of that questioning, the following evidence was given (Appeal Book 101: L1-13): Q. Do you see that one of the documents required is a water management site plan and that's required for all development applications except for internal works? Do you see that? A. Yes. Q. So that's consistent with the development checklist? A. Yes. Q. I understand you to accept-I just wanted you to listen to my question carefully. I understand you to accept that a stormwater or a water management site plan has not been included in the development application given to the general meeting on 25 August 202. A. I accept that. I haven't seen one so I accept that it wasn't provided.
Mr Kosnetter was then further cross examined about the absence of a "water management site plan." During the course of that questioning, the following evidence was given (Appeal Book 103:L 18-30): Q. Do you accept that sitting in the witness box today, because you were not provided with a water management site plan you cannot say one way or the other whether the development will have an impact on the disposal of water from the building generally? A. Yes. Q. By yes, you mean you cannot say one way or the other? A. I can't make assumptions on water or hydraulic issues because that's not my area of expertise. I'd be making assumptions. Q. That is a matter that would be clarified in your expertise in the water management site plan, is that right? A. Yes.
When Mr Kosnetter was cross examined on the issues involving the water management site plan and/or stormwater plan, it was not clearly and unambiguously put to the expert witness that the absence of the documents meant that either (or both) (a) the Development Application could not be lodged; and/or (b) if lodged, it would automatically be dismissed on its merits without any opportunity given to provide further documentation. It was also not put to the expert witness that the absence of such documents meant that the opinions he expressed in his report and report in reply were without foundation or otherwise flawed.
We do not accept that, assessed objectively, and taking into account the totality of his evidence, that there was any unambiguous concession by Mr Kosnetter that the absence of a water management site plan and/or stormwater plan meant the Development Application was fatally flawed.
In any event (over objection by Counsel for the owners corporation) Mr Kosnetter was, quite properly, given the opportunity to clarify any ambiguity in re-examination (and Counsel for the owners corporation was given the opportunity to briefly re-open cross examination).
During the course of re-examination, Mr Kosnetter stated the following (Appeal Book 108: L 46-50 and 109: L1-24). Q. If you filed this application on the documents that you've reviewed without the water management plan, would it be accepted on the portal? A. I think the one piece of missing information that would stop it on the portal is the owner's consent being affixed to the development application form. Other than that form, the application documentation meets the requirements of the NSW Planning Portal to be lodged. After that point, its assessed by a duty planner to be checked for completeness. Certainly, it would get through the requirement of the portal. Q. Once the application's been lodged on the portal would a DA number be issued? A. On lodgement through the NSW Planning Portal a planning application, a PAN number, is allocated to that file. Following that, the application is then checked by Waverly Council and when its declared to be sufficient a development application is also attached to it. If the council finds that its sufficient a development application is also attached to it, so there are two reference numbers that get attached to it. If the council finds that its sufficient, its immediately offered a DA number. If it's found to be partially insufficient, the council will write to you and say "This application is missing X document" at which time your PAN number is still your relevant number, you haven't yet received a DA number. That gives you the opportunity to provide that document and then the DA number would be allocated in addition to the PAN that you've got. Q. Provided that you satisfy the requirements of council, the DA would then be accepted, you would assume? The DA would be granted? A. Granted approval? Q. Yes, could be determined? A. It commences assessment, yes.
The presiding Senior Member then asked Mr Kosnetter to clarify what was a PAN. In the course of answering that inquiry, Mr Kosnetter stated as follows (Appeal Book 109: L 38-42): A. Correct. And in my experience 90% of the applications that I lodge the council determines something's missing and offers seven days to provide the document that wasn't saved properly or named incorrectly or left off, and after that period you would have both the PAN number and the DA refence number.
When the evidence of Mr Kosnetter is set out in detail, it is clear in his opinion the absence of a water management site plan and/or stormwater plan was not fatal to the proposed Development Application. The Development Application was in a form that could be lodged. To the extent that the local Council determined that further documentation was required, the Lot owners would be given the opportunity to submit such documentation, before the assessment of the merits of the Development Application commenced under the applicable provisions of the EPA Act and planning policies.
Accordingly, there was evidence for the Tribunal to make the factual findings it made regarding the ability of the Lot owners to lodge the Development Application without a water management site plan and/or stormwater plan and for the Development Application to proceed and be determined on its merits by the local Council under the appliable provisions of the EPA Act and planning policies.
No error on a question of law exists on the basis of the Tribunal making a factual finding in the absence of any evidence. If an error on a question of law exists on this issue, it is under the principles in House v The King. Otherwise, leave to appeal is required.
The third issue raised by the owners corporation in in respect of the structural engineering report of Mr Sedhom. It is asserted the report was "known to be incorrect" and was "misleading in a material respect" because Mr Sedhom had stated in his report that "No load will be added to the existing concrete structure" and "The external walls alone are more than capable of supporting any current and additional load imposed by the proposed addition within all relevant codes."
As discussed previously, the Tribunal dealt with the structural engineering evidence of the parties (Mr Walford for the owners corporation and Mr Emery for the Lot owners) at paras [83]-[93] of the decision. The Tribunal accepted that both Mr Walford and Mr Emery made criticisms of Mr Sedhom's opinion, but did not accept that the Lot owners were bound to provide a structural engineering report in a different form or of different substance to Mr Sedhom's report, and that any criticisms or inadequacies of Mr Sedhom's assessment were matters to be determined on the merits by the local Council.
Neither Mr Walford nor Mr Emery were required for cross examination.
In its appeal submissions, the owners corporation asserts (p 8 submissions filed on 28 June 2023) that: …Mr Kosnetter accepted the obvious proposition that if there was a structural engineering report attached to the development application and the structural engineering report was known to be incorrect, in particular because the report stated that no load would be added to existing supporting concrete structure, when that was not the case, then the declaration required by the Developer on the application stating that the application was true and correct could not be made on the application and the application was not capable of lodgement or acceptance.
That submission does not accurately reflect the evidence that was given by Mr Kosnetter on this issue (Appeal Book pp 94-96).
It was put to Mr Kosnetter that on the local Council portal for submitting a Development Application that there was a declaration "all the information is true and correct." Mr Kosnetter agreed that there was such a declaration.
There were then a series of "assumptions" that were put to Mr Kosnetter on the basis of the proposition that he was to assume they were correct. One was that there was a structural engineering report attached to the Development Application which stated that "no load will be added to the existing concrete structure." Mr Kosnetter was asked to assume that this was "known to be incorrect." He was then asked to assume that the person who signed the declaration knew that "the statement" (i.e. that no load will be added to the existing concrete structure") was incorrect.
There was then an objection from the Solicitor for the Lot owners. After the objection was overruled, the following was said (Appeal Book p 96: L 15-26): Q. Do you understand the question or do you need to have it repeated to you? A. I believe its effectively-if the engineer said I've said this but that's a lie, I would then know that the report was incorrect. On that assumption, I wouldn't be able to make that declaration because it was brought to my attention that something was incorrect. Q. And if that was the case and this declaration could not be made and was not made when the application was lodged, do you accept it wasn't capable of assessment? A. Yes.
Mr Kosnetter was not giving evidence that a Development Application that contained any information that may possibly be inaccurate or an expert report that other experts disagreed with was not capable of assessment. The proposition that he agreed to was that if an expert who had provided a report as part of the Development Application told the party who was lodging the Development Application that there was a "lie" in the expert's report prior to the Development Application being lodged, then the declaration that the information contained in the Development Application was true and correct could not be agreed to and, on that basis, the Development Application was not capable of assessment.
There was no evidence that Mr Sedhom's opinion was deliberately false, or that the Lot owners who signed the declaration were told by Mr Sedhom that he had provided deliberately false information. There was also no evidence that Mr Sedhom had changed his opinion or informed the Lot owners he had changed his opinion prior to (or subsequent to) the preparation of the Development Application that was put before the general meeting of the owners corporation on 25 August 2021.
Neither Mr Walford or Mr Emery asserted that Mr Sedhom's opinion was deliberately false or misleading or that it was not an opinion genuinely held by Mr Sedhom based on Mr Sedhom's knowledge, qualifications, and experience as a structural engineer.
What the Tribunal was dealing with in the evidence before it was that Mr Sedhom had provided a structural engineering report regarding the load bearing effect of the proposed works on the existing structure. Mr Walford disagreed with Mr Sedhom's opinion. Mr Emery thought Mr Sedhom's opinion may require further site investigation, but that it still "may be structurally viable for two new floors…to be supported off the existing building" notwithstanding that it was possible that "some strengthening of the existing building" may be required.
Quite simply, Mr Walford did not agree with the opinion of Mr Sedhom and Mr Emery thought it was possible that further investigation and a different method may be appropriate (although Mr Emery did not state Mr Sedhom's opinion was clearly wrong). The fact that experts disagree with each other does not mean one expert's opinion is false or misleading. The Tribunal clearly took the evidence of Mr Walford and Mr Emery into account when referring to a relevant consideration in the exercise of its discretion. We do not accept that Mr Sedhom's opinion was false or misleading; nor that Mr Kosnetter had expressed an opinion that the Development Application could not be lodged or considered on its merits based on Mr Sedhom's report.
There was clearly evidence to support the factual findings made by the Tribunal at [83-[94]. No error on a question of law exists on the basis of the Tribunal making a factual finding in the absence of any evidence. If an error on a question of law exists on this issue, it is under the principles in House v The King. Otherwise, leave to appeal is required.

Conclusion - Failure to Apply the Correct Legal Test

The Tribunal applied the correct legal test in respect of s 232(6) of the SSM Act. The legal test it applied is the test that was set out by the Appeal Panel in Dehsabzi and Jakabah which we have referred to previously.
Further, we do not accept the submission made by the owners corporation in submissions in reply (submissions in reply dated 17 July 2023 at [46]) that the Tribunal "did not consider any factors beyond section 232(6)".
The Tribunal clearly considered relevant considerations beyond the mandatory consideration of the effect on the proposed development on the use and enjoyment of Lot property and common property by all Lot owners. In our view, the Tribunal gave careful and detailed consideration of other relevant matters in addition to the mandatory consideration under s 232(6) of the SSM Act. The Tribunal also clearly expressed the weight it was giving to the different considerations when exercising its discretion as to whether to make the orders sought by the Lot owners.
No error of law is established in respect of failure to apply the correct legal test.

Denial of Procedural Fairness

The alleged denial of procedural fairness identified in the owners corporation's submissions (in particular, the submissions in reply) is that the Tribunal denied procedural fairness by "not considering a substantial and clearly articulated argument." In essence, the owners corporation is raising a constructive failure to exercise jurisdiction.
The finding challenged is that: "The development application met all the requirements of Waverly Council for the lodgement and was in a form that was capable of being approved by the said Council."
The purported "failure" is based on the finding "being made without reference or consideration of a substantial and clearly articulated argument which indicated the opposite."
The purported "substantial and clearly articulated argument" is that the Tribunal did not consider purported concessions made by Mr Kosnetter, that have been set out previously.
We have explained previously why we do not accept the interpretation of Mr Kosnetter's evidence put forward by the owners corporation. No constructive failure to exercise jurisdiction is established. We are satisfied the Tribunal gave consideration to all of the substantial and clearly articulated arguments of the owners corporation, both in respect of the mandatory consideration under s 232(6) of the SSM Act and additional considerations that the Tribunal determined were relevant to the exercise of its jurisdiction.
To the extent that it was submitted that there was false or misleading information contained in the report of Mr Sedhom and that caused there to be a constructive failure to exercise jurisdiction, we reject that argument. As set out previously, we do not accept that there was false, misleading or clearly wrong information contained in Mr Sedhom's report. The Tribunal did not commit a constructive failure to exercise jurisdiction by concluding that, despite the criticisms of Mr Sedhom's report, it was in form or substance, a report that could be accepted by the local Council in the context of lodgement of a Development Application and a merits assessment of a Development Application (para [93] Tribunal decision).

House v The King Error

The principles in House v The King (1936) 55 CLR 499 at 504-505; [1936] HCA 40 in respect of when the exercise of discretion constitutes an error on a question of law are as follows: [i]t is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed … It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.
We do not accept that any error in the sense identified in House v The King is established.
In our view, when exercising its discretion to make the orders it made, the Tribunal identified correct legal principles; it did not allow extraneous or irrelevant matters to guide it; it did not clearly mistake the facts; and did not fail to take into account a material consideration. On the factual findings that were open to the Tribunal to make according to the evidence before it, the decision was not unreasonable or plainly unjust.

Leave to Rely on Fresh Evidence

The fresh evidence the owners corporation seeks to rely upon is an affidavit of Mr Clee (strata committee member) dated 28 June 2023. Mr Clee had provided an affidavit on behalf of the owners corporation in the Tribunal proceedings.
Mr Clee asserts that Lot 1 (which was previously leased to a commercial tenant operating a nightclub, bar and restaurant) has been "vacant since April 2023" and that Mr Clee has been unable to obtain a tenant. He sets out the measures taken to obtain a "long term tenant" and asserts that potential tenants who have been approached or made enquires have expressed concerns about the uncertainties created by reason of the potential Development Application, including construction works; length of time to perform construction works; and inability to access the lift in the premises.
An appellant does not have an unfettered right to adduce fresh evidence about events that have occurred subsequent to the hearing. As the Appeal Panel stated in Chapman v McLaughlin [2016] NSWCATAP 212 at [37]: ... The point of limiting fresh evidence to that which was not reasonably available at the first hearing is to ensure finality of proceedings. This means that it is in the interests of justice for parties to put forward all of their evidence as best they can at the hearing, as otherwise, if they were free to add fresh evidence after a case was decided, the proceedings would run the risk of not being finalised until after many hearings. This principle is of particular importance in the Tribunal because of the provisions of s 36 of the Act. That section requires the Tribunal to proceed to decide cases justly, quickly and cheaply.'
The ability to adduce fresh evidence arises in the context of the Tribunal's powers to grant leave to appeal under cl. 12 of sch 4 of the NCAT Act. In that statutory context, the Tribunal must be satisfied that the appellant suffered a "substantial miscarriage of justice" in the sense there was a "significant possibility" or "a chance that was fairly open" that a different and more favourable result would have occurred if the fresh evidence of Mr Clee had been before the Tribunal at first instance (Collins v Urban at [76]-[79]).
Further, the "concept of substantial miscarriage of justice refers to the failure in the way a matter was conducted or decided that which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred" (Collins v Urban at [71]). The concept focuses upon the manner in which the hearing was conducted or decided, not fresh events that have occurred since the date of the Tribunal hearing.
The purported new evidence must not only be "significant," but it must also be evidence that was unavailable at the date of the hearing in the sense that "no person could reasonably have obtained the evidence" (Al-Daouk v Mr Pine Pty Ltd t/as Furnco Bankstown [2015] NSWCATAP 111 at [23]).
We are not satisfied that leave should be granted for the owners corporation to rely on the affidavit of Mr Clee dated 28 June 2023 for the following reasons: 1. To the extent that the affidavit refers to events since April 2023, that evidence could not have been before the Tribunal at the hearing on 8 November 2022 because the events had not occurred. Accordingly, it cannot be said that had that evidence been before the Tribunal at the hearing on 8 November 2022 there was a "significant possibility" or "chance that was fairly open" that had such evidence been before the Tribunal at the hearing that a different and more favourable result would have occurred had the evidence been before the Tribunal at the hearing. 2. The hearing occurred on 8 November 2022. The decision was reserved. The decision was published on 12 May 2022. If the owners corporation sought to adduce the fresh evidence of Mr Clee about events occurring subsequent to the hearing, it could have made an application to be granted leave to re-open its case. It failed to do so. 3. Mr Clee had given evidence in the proceedings before the Tribunal as to his concerns about the effects of the proposed works, and why he opposed the proposed works, in his affidavit of 26 August 2022. Those concerns included the impact of the works on the then tenant of Lot 1. The repetition of such concerns in the context of purported difficulties in obtaining a new tenant since April 2023 is not, in our view "significant" new evidence. 4. There is no evidence in Mr Clee's affidavit dated 28 June 2023 about why the tenancy ended in respect of the former tenant or that it had anything to do with the proposed works. 5. There is very limited evidence as to what measures the owner of Lot 1 has taken to obtain a new tenant, or detail about the "concern" Mr Clee asserts that prospective new tenants have expressed about the proposed works. Much of the affidavit involves a repetition of Mr Clee's own opinion of the effects the proposed works are likely to have, which are matters that he gave evidence about in his first affidavit, and had a reasonable opportunity to give evidence about prior to the Tribunal hearing on 8 November 2022.
We are not satisfied that the proposed new evidence of Mr Clee is a basis to grant leave to appeal under cl. 12 of sch. 4 of the NCAT Act.
The purported "fresh" evidence of the Lot owners regarding whether or not a resolution was passed at a general meeting for the owners corporation to lodge the appeal is irrelevant in circumstances where no application was made by the Lot owners at the appeal hearing regarding that purported failure to pass a Resolution. Leave to rely on that evidence is refused.
The other basis to admit fresh evidence is by reason of the operation of ss 80(3) and 81 of the NCAT Act in circumstances where the Appeal Panel may determine it appropriate to admit fresh evidence if it determines an appeal is successful, and the Appeal Panel is then reconsidering the decision itself rather than remitting the decision back to the Tribunal.
Another situation would be a variation of a date of vacant possession in an appeal from a decision to terminate a residential tenancy where the appeal has failed but the date of vacant possession pursuant to the original orders of the Tribunal have long expired.
However, none of those circumstances apply to this appeal.

Leave To Appeal

We have previously set out in detail the legal principles pertaining to leave to appeal under cl. 12 of sch 4 of the NCAT Act. Those principles do not require repetition.
We are not satisfied that the issues raised in the appeal satisfy the legal test for leave to appeal to be granted.
We are not satisfied the owners corporation may have suffered a substantial miscarriage of justice because the decision was not fair and equitable, or was against the weight of evidence, or significant new evidence has arisen that was not reasonably available at the date of the hearing. The reasoning process we have set out previously dealing with the issues raised by the owners corporation in the appeal provide the foundation for our finding that leave to appeal should not be granted.

Conclusion

No error on a question of law is established, nor are grounds to grant leave to appeal under cl. 12 of sch 4 of the NCAT Act established.

The Issue of Costs

As both parties are legally represented, the potential exists for a costs application. Our orders contain procedural directions to deal with any costs application if one is made. If there is no costs application, there is no order as to costs.

ORDERS 1. Leave to appeal is refused. 2. Appeal dismissed. 3. Stay of orders 1 and 2 of the Tribunal dated 12 May 2023 is lifted immediately. 4. Costs applicant to file and serve costs submissions and documents by 28 days from the date of this decision. 5. Costs respondent is to file and serve costs submissions and documents by 42 days from the date of this decision. 6. Costs applicant is to file and serve costs submissions in reply by 49 days from the date of this decision. 7. Costs submissions of the parties are to include reference as to whether they consent to the issue of costs being determined without a further oral hearing in accordance with s 50 (2) of the Civil and Administrative Tribunal Act 2013 (NSW) and if not, why not. 8. The parties may apply to vary the timetable for costs submissions by way of a written application to the Tribunal and the other party. Any such application is to be filed and served by no later than the date of the applicable timetable obligation. 9. The costs submissions and documents of the parties must be filed with the Appeal Panel in hard copy.

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: 30 January 2024

estments Pty Ltd [2003] NSWCA 5 The Owners-Strata Plan No 18229 v Jakabah Pty Ltd [2022] NSWCATAP 229 The Owners-Strata Plan No 63731 v B & G Trading Pty Ltd [2020] NSWCATAP 202 TNT Building Trades Pty Ltd v Baker [2023] NSWCATAP 178 Wallin v Lake Macquarie City Council & Ors [1999] NSWCA 318 Whitehouse Developments Pty Limited v The Council of the City of Sydney [2017] NSWLEC 1512 Texts Cited: None cited Category: Principal judgment Parties: The Owners-Strata Plan No 53865 (Appellant) JPG Investments Pty Ltd (First Respondent) Conrad Corporation Pty Ltd (Second Respondent) Representation: Counsel: M Sheldon (Appellant) V Kerr SC (First and Second Respondents)

(2020) 103 NSWLR 479

At a glance

Court

Decision date

Catchwords

Source

Catchwords

Judgment (21 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (34)

Cited By (3)