The Owners - Strata Plan No. 568 v Levitin; Levitin v The Owners - Strata Plan No. 568 - [2021] NSWCATCD 65 - NSWCATCD 2020 case summary

NCAT Consumer and Commercial|2020-10-14

REASONS FOR DECISION

This is a strata scheme dispute involving a strata building in North Bondi, NSW. The strata scheme was registered in about 1964.
In this decision the Strata Schemes Management Act 2015 (NSW) is referred to as 'the SSMA 2015'.
The key issue in dispute is whether the owners corporation unreasonably refused to make a common property rights by-law that retrospectively gave approval to internal renovations affecting common property performed by Mr and Ms Levitin ('the Lot owners'). The Lot owners seek order from the Tribunal that the common property rights by-law be passed. The owners corporation opposes such an order and seek an order that the Lot owners restore common property.
There is a further issue as to whether the Tribunal should appoint a compulsory strata manager.
The proposed common property by-law was not passed at the Annual General Meeting of the owners corporation on 29 October 2019.
The strata scheme comprises of 8 Lots. The strata building has two floors (ground floor and first floor). There are 4 Lots on each floor.
Mr and Ms Levitin ('the Lot owners') are the owners of Lot 2. They purchased the Lot in about late 2010. When the Lot owners purchased the Lot, the building was configured into two and 1 bedroom Lots. Lot 2 was the only 1 bedroom Lot. The remainder of the Lots have two bedrooms.
The Lot owners do not reside in Lot 2 and for a considerable period of time the Lot has been rented to tenants or licensed to occupants. Until about 2014, the Lot was used for short term rentals; and from 2015 long term rentals.
In 2011, the Lot owners proposed to the owners corporation renovations that would convert Lot 2 into a two bedroom Lot. Such proposed renovations affected common property and required the passing of a common property rights by-law. The Lot owners prepared such a by-law and put a resolution before a general meeting of the owners corporation for consideration.

Documentary Evidence of the Parties

The documentary evidence of the parties admitted into evidence at the hearing (subject to weight and relevance) was contained in a Court Book that had been prepared by the Lot owners Solicitor and filed on 12 October 2020.
Such documentary evidence (as distinct from submissions and copies of the applications filed by the parties) relevantly included:

Lot Owners 1. Affidavit of Mr Stan Levitin dated 26 July 2020. 2. Affidavit of Ms Dorin Levitin dated 26 July 2020. 3. Affidavit of Mr Leonard Mahemoff dated 17 July 2020. 4. Affidavit of Ms Julia McRae dated 24 June 2020.

Owners Corporation 1. Affidavit of Mr Danny Gubbay dated 4 September 2020. 2. Statutory Declaration of Ms Christine Judd dated 17 August 2020. 3. Statutory Declaration of Ms Karen Gadeley dated 1 September 2020.

The owners corporation's documents also contained a 'submission' dated 8 September 2020 that attached various correspondence between the parties. The submission was co-signed by Mr Gubbay and the strata manager Mr O'Neill. The contents of the 'submission' contained a mixture of evidence regarding factual matters; responses to the asserted facts in Mr Levitin's affidavit; and legal arguments.
As discussed previously, the Lot owner also relied on written submissions that had been prepared prior to the hearing and both parties made written submissions at the conclusion of the hearing.

Whether the Proposed Common Property Rights By-Law Retrospectively Approving The 2015 Works Was Unreasonably Refused?

The renovation works performed by the Lot owners occurred prior to the commencement of the SSMA 2015 on 30 November 2016 and during the period in which the Strata Schemes Management Act 1996 (NSW) ('the SSMA 1996') was in force. However, that makes no material difference to the legal issues for determination.
Under s 108 (1), s 108 (2) and s 111 of the SSMA 2015 a Lot owner can only add to common property; alter common property; or erect a new structure on common property for the purpose of improving or enhancing the common property if a special resolution has first been passed authorising the taking of the particular action proposed.
The SSMA 2015 created circumstances where changes or alteration to common property did not require consent of the owners corporation (Cosmetic Work under s 109 of the SSMA 2015); or only required the passing of a resolution rather than a special resolution (Minor Renovations under s 110 of the SSMA 2015) but, as discussed previously, the work performed by the Lot owner occurred prior to the SSMA 2015 coming into effect.
Division 3 of the SSMA 2015 (ss 142-145) set out what a common property rights by-law is; and the requirements and effect of a common property rights by-law.
Section 149 of the SSMA 2015 states as follows: 149 Order with respect to common property rights by-laws (1) The Tribunal may make an order prescribing a change to a by-law if the Tribunal finds - (a) on application made by an owner of a lot in a strata scheme, that the owners corporation has unreasonably refused to make a common property rights by-law, or (b) on application made by an owner or owners corporation, that an owner of a lot, or the lessor of a leasehold strata scheme, has unreasonably refused to consent to the terms of a proposed common property rights by-law, or to the proposed amendment or repeal of a common property rights by-law, or (c) on application made by any interested person, that the conditions of a common property rights by-law relating to the maintenance or upkeep of any common property are unjust. (2) In considering whether to make an order, the Tribunal must have regard to - (a) the interests of all owners in the use and enjoyment of their lots and common property, and (b) the rights and reasonable expectations of any owner deriving or anticipating a benefit under a common property rights by-law. (3) The Tribunal must not determine an application by an owner on the ground that the owners corporation has unreasonably refused to make a common property rights by-law by an order prescribing the making of a by-law in terms to which the applicant or, in the case of a leasehold strata scheme, the lessor of the scheme is not prepared to consent. (4) The Tribunal may determine that an owner has unreasonably refused consent even though the owner already has the exclusive use or privileges that are the subject of the proposed by-law. (5) An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court). (6) An order under this section operates on and from the date on which it is so recorded or from an earlier date specified in the order.
Although the provisions of s 108 of the SSMA (and its predecessor provision under the SSMA 1996) require consent and the passing of a common property rights by-law prior to the performance of works, an owners corporation has the power to, in effect, retrospectively consent to the work involving common property and deal with the works by way of the passing of a common property rights by-law after the work has been performed (see the discussion of the relevant authorities in Capcelea v The Owners Strata Plan No 4887 [2019] NSWCATCD 27 ('Capcelea') at [26]).
The following legal principles are applicable: 1. The onus is upon the party asserting that the common property rights by-law was unreasonably refused to persuade the Tribunal that the refusal was unreasonable, not upon the other party to prove the refusal was reasonable (Roseby v The Owners-Strata Plan No 2400 [2018] NSWCATCD 72 at [21]-[24] and the authorities cited therein). 2. In determining whether the refusal to pass the common property rights by-law was unreasonable, the Tribunal must have regard to the interests of all Lot owners and the reasonable expectations of the owner deriving a benefit under the proposed common property rights by-law. This involves a balancing of competing interests in determining whether the relevant refusal is unreasonable (Macey's Group Pty Ltd v The Owners-Strata Plan No 33591 [2020] NSWCATAP 7 at [54] ('Macey's Group')). 3. Whether the refusal was unreasonable is an objective test. "Reasonableness is to be given its ordinary meaning (Capcelea at [31]). 4. "Reasonableness" is assessed by reference to the circumstances known prior to the consideration of the relevant resolution (Macey's Group at [55]; Capcelea at [35]-[36]).
As discussed previously, a key issue was understanding the basis upon which the persons who voted against the common property rights by-law at the annual general meeting on 29 October 2019.
The documentary evidence provided by Mr Gubbay and Ms Gadeley contained broad assertions as to why the Lot owner had acted unreasonably. However, the issue for consideration is not whether the Lot owner had acted reasonably in the manner in which the renovations occurred, or afterwards, but whether the refusal to pass the proposed common property rights by-law was, assessed objectively, unreasonable.
At the hearing, the Tribunal directly asked both Mr Gubbay and Ms Gadeley the reasons upon which they voted against the proposed common property rights by-law.
The Tribunal, from the documentary evidence of the respondent and the oral evidence of Mr Gubbay and Ms Gadeley understands the fundamental reasons they voted against the proposed common property rights by-law to be: 1. There was a potential safety risk as there was no evidence the Lot owner had installed fire collars on pipes where the Lot owner had connected pipes to the existing pipes in the laundry walls. 2. It was possible further pipes had been installed in common property walls. 3. The Lot owners had not provided any scope of works in respect of the works that had been performed, which had been part of the mediation agreement before NSW Fair Trading. 4. The Lot owners had not provided any evidence that the works performed complied with Local Council requirements, which had been part of the mediation agreement before NSW Fair Trading. 5. The Lot owners had not been truthful regarding the renovations performed in 2015 which, in substance, had created a second bedroom despite the Lot owners not having Council approval to do so. In essence, the Lot owners had gained the advantage of a second bedroom without Council approval and knowing that they would not be able to obtain Council approval. 6. The conditions of the proposed common property rights by-law regarding the property not being advertised for sale other than as a 1-bedroom unit and occupancy being limited to 2 adults would be "difficult to enforce". 7. From time to time, cooking smells emanated from Lot 2 and this was attributable to the works that had been done.
However, it was clear to the Tribunal at the hearing that the main grievances of Mr Gubbay and Ms Gadeley were that they believed the Lot owners had surreptitiously created a second bedroom without obtaining prior approval (of the Local Council and the owners corporation); had been disingenuous in doing so; and had obtained a financial advantage.

Did the Works Alter Common Property?

Common property of a strata scheme is any part of a parcel (i.e. the land; structures; infrastructure and buildings) of the strata scheme that is not comprised in a Lot (s 4 of the Strata Schemes Development Act 2015 (NSW)).
Lot property is the property identified in the strata plan as Lot property and includes the cubic space from the surface of the inner walls (being the vertical boundary of the Lot); the upper surface of the floor and the under surface of the ceiling (being the horizontal boundary of the Lot) (ss 4 and 6 of the Strata Schemes Development Act 2015 (NSW)).
The Tribunal is satisfied that the renovation works performed by the Lot owners altered common property, because they involved the capping of pipes within the wall of the original kitchen; the resurfacing of the wall; and the connection of pipes from the relocated kitchen to the connections located in the adjacent laundry. The works further involved rendering of walls.
The Tribunal is not satisfied on the evidence that the works involved the installation of additional pipes within common property. Mr Levitin denies that this occurred. The Lot owners did not provide a scope of works or any documentation from the tradespersons who performed the works to set out exactly what work occurred, but the owners corporation also did not obtain any expert evidence, such as from a building consultant, to indicate that the renovation works involved any significant structural changes to the building, or involved more extensive alterations to the common property than as set out in the evidence of Mr Levitin and set out in the definition of "Works" in the proposed common property rights by-law.
The Tribunal concludes that the work did not involve an extensive alteration of common property and there is no evidence to indicate that the works affected the structural integrity of the building. There is no clear evidence that in the period between the works being performed in 2015 and 29 October 2019 the works caused any damage or weakness to common property; or affected water ingress; or that there was a real possibility that the works would cause any damage or weakness to common property in the future.
Mr Gubbay in his evidence asserts that because Mr Levitin in his affidavit of 26 July 2020 stated that he verbally instructed tradesperson performing the pipe connections to ensure that fire collars were installed that an inference should be drawn that additional pipes were installed which involved wall penetrations. The evidence is insufficient to draw this inference and make such a factual finding.

Fire Safety Risk

One of the reasons relied upon by Mr Gubbay and Ms Gadeley in opposition to the passing of the common property rights by-law was that there may be a fire safety risk by reason of there not being evidence that fire safety collars had been installed on pipes.
As discussed previously, neither party had provided any expert evidence to indicate that (a) fire safety collars needed to be installed to comply with any relevant building standards; (ii) whether or not they had been installed; and (iii) whether or not there was a fire risk.
There is simply insufficient evidence to conclude that the issue raised by the owners corporation regarding the works constituting a fire safety risk has any substance, or rises above mere speculation.

Scope of Works Not Provided

The Tribunal accepts that the Lot owners did not provide a scope of works by the tradesperson who performed the renovations in 2015 prior to the annual general meeting, and the mediation agreement between the parties indicated they would do so. The failure to provide a scope of works and expert evidence that the works altering common property are structurally sound and compliant with the National Construction Code is a relevant factor as to whether there is a reasonable basis for the refusal of the proposed common property rights by-law (Capcelea at [75]-[76]).
There was no clear explanation in the Lot owners evidence as to why no scope of works was provided (the agreement indicating that the scope of works was to include "details regarding plumbing"
The Lot owners did provide some plans in regards to the kitchen joinery and provided internal plans of the Lot and photographs as attached to Annexure B of the proposed common property rights by-law.
However, the failure to provide a scope of works is mitigated by the provisions of the common property rights by law regarding the Lot owner being responsible for the repair and maintenance of the works and indemnifying the owners corporation for any loss and damage caused by the works.
Further, as discussed previously, the alteration of common property (distinct from alteration of Lot property) in this matter is not substantial, unlike alterations of common property that affect the waterproofing membrane of the building structure, or affect load bearing walls.
If there concerns of other Lot owners that the alteration of common property deleteriously affected the structural integrity or safety of the building; considering the lengthy duration of the dispute the owners corporation could have obtained some expert evidence prior to the rejection of the common property rights by-law that the works set out in the proposed common property rights by-law raised potential repair and maintenance issues for the owners corporation that needed to be addressed.
Although the Tribunal accepts that the onus is on the Lot owners to satisfy the Tribunal that it was unreasonable for the owners corporation not to pass the proposed common property rights by-law rather than the owners corporation to establish that its refusal was reasonable, that does not prevent the owners corporation from obtaining expert evidence (even a brief report from a builder; plumber; or building consultant, for example) that identified a genuine concern that the alteration of common property deleteriously affected the structural integrity of the common property; or created a risk of future damage to common property; or is a safety risk).

Council Approval; and Use of the Lot and Common Property

This was a significant bane of contention between the parties.
As discussed previously, the evidence of Mr Levitin was that he was given advice a number of years ago that the local Council was "unlikely" to approve the addition of a second bedroom, and that the renovations in 2015 were not intended to create a second bedroom.
The position of the Lot owners was that it was unnecessary to provide any evidence regarding Council approval as the works did not require Council approval. Accordingly, the Lot owners asserted that they had complied with the mediation agreement because there was no "relevant government/statutory/local Council requirements in relation to the works" that were applicable.
Much of the evidence of the parties, and submissions, were based upon the belief of Mr Gubbay and Ms Gadeley that the Lot owners had been renting out the Lot as a two bedroom unit for a number of years.
As discussed previously, the Tribunal must assess the issue of whether the common property rights by-law had been unreasonably refused on the basis of the evidence and circumstances as of 29 October 2019 when the proposed common property rights by-law was rejected.
There is insufficient evidence for the Tribunal to conclude that as of 29 October 2019 the Lot was being occupied as a two bedroom unit, or that the Lot owners had been advertising or renting the property out on this basis at that time.
However, the Tribunal accepts that the proposed common property rights by-law does not, in strict terms, prevent the Lot owners from renting the property as a 2-bedroom unit, nor any tenants or occupants deciding of their own volition to convert the 'study/nursery' to a bedroom. The conditions contained in the proposed common property rights by-law are only that when the Lot is sold it will not be advertised as anything other than a 1 bedroom unit; and that it cannot be rented out to more than 2 adult occupants.
Further, the plan contained in Annexure B to the proposed common property rights by-law uses the words "single bed" in addition to the words "study/nursery".
Accordingly, the Tribunal is satisfied that, irrespective of whether or not the room had been used previously as a second bedroom, the area was capable of being used as a second bedroom (albeit a relatively small bedroom) within the terms of the proposed common property rights by-law.
However, other than the evidence of Mr Levitin that he had been told a number of years ago that it was "unlikely" the local Council would approve renovations to the Lot to create a second bedroom, there was no evidence that the works performed (creating the potential use of the area as a second bedroom) were in contravention of local Council requirements.
Despite the works being performed in 2015 and Mr Gubbay and Ms Gadeley suspecting that the area of the former kitchen was being used as a second bedroom, there was no evidence to suggest that they had made any complaints to the local Council, nor that the local Council had made any inspections or directions regarding the works. There was also no evidence, such as the owners corporation writing to the local Council and obtaining a response as to whether or not the creation of a second bedroom; or potential second bedroom; would be in contravention of local Council statutory requirements.
Further, if the proposed common property rights by-law had been passed, any Lot owners in the scheme could make a complaint to the local Council in any event. If the local Council believed that there was a contravention that required action (such as a direction to the Lot owner not to use the space as a second bedroom) such action could be taken in the future by the local Council.
There was also no evidence to clearly indicate that if the Lot owners or their tenants used the space as a second bedroom (as compared to using it as a study or nursery) that such use would deleteriously affect the manner in which other Lot owners could use their Lots, nor use the common property.
The Lot owners, by developing their Lot in a manner which allowed the former kitchen to be potentially used as a second bedroom (or be used as a study or nursery) would likely obtain a financial benefit in comparison to the layout of the Lot prior to the 2015 renovations. However, denying another Lot owner a financial benefit by reason of renovating or improving their Lot is not, of itself, a reasonable basis for refusing to pass a common property rights by-law.
There was no evidence to clearly indicate, for example, that if the Lot was used as a two bedroom unit there would be an excessive number of occupants of the building and this would affect the use by other Lot owners of their Lots or the common property. In any event, the condition that the Lot not be leased to more than 2 adult persons ameliorates any such concern. There was also no evidence that if the common property rights by-law was passed it would reduce the value of other Lots in the strata scheme.
One of the concerns raised in the evidence was that, from time to time, other Lot owners had experienced cooking smells coming from the relocated kitchen. However, there was no evidence that the owners corporation had taken any action against any occupants in this regard (such as issuing a compliance of by-law notice under s 146 of the SSMA 2015) or requested that the Lot owners take action against their tenants. Further, if there was a concern in regard to this issue, the owners corporation could take action in the Tribunal to seek orders restraining any nuisance, such as under s 153 of the SSMA.
The Tribunal notes that the strata manager; Mr Gubbay; and Ms Gadeley all expressed concern because they believe the Lot owners had not been transparent regarding the renovations and the use of the Lot since 2015. However, the Tribunal must assess the reasonableness of the rejection of the common property rights by-law on an objective basis. Animosity or lack of trust is not, of itself, a reasonable basis for voting against a common property rights by-law.

Difficulty of Enforcing the Conditions on the Proposed Special Privileges By-Law

Mr Gubbay and Ms Gadeley stated in evidence that they did not believe the obligations in the by-law could be sufficiently enforced.
If a by-law is not complied with, an owners corporation or an individual Lot owner can bring proceedings in the Tribunal seeking orders under either s 232 or 241 of the SSMA 2015 for compliance with the by-law; or orders restraining a person from breaching the by-law.
Further, if by-laws are breached, the owners corporation can, after the passing of a resolution by the strata committee or the owners corporation, issue a notice for compliance under s 146 of the SSMA 2015; and if the by-law is not complied with, after the passing of a resolution, take proceedings for the imposition of a monetary penalty under s 147 of the SSMA 2015.
Accordingly, there are measures that can be taken by the owners corporation (or an individual Lot owner) to enforce compliance with the conditions and obligations contained in the proposed common property by-law. Whether or not any such action would be necessary, or successful, are matters of mere speculation.
The reasoning of Mr Gubbay and Ms Gadeley that the proposed common property rights by-law obligations would be "difficult to enforce" is not a reasonable basis for voting against the proposed by-law.

Conclusion-Was The Proposed Common Property Rights By-Law Unreasonably Refused?

Having considered the evidence objectively, and weighed up the interests of all of the Lot owners of the strata scheme, the Tribunal is satisfied that the owners corporation unreasonably refused to pass the proposed common property rights by-law at the general meeting of the owners corporation on 29 October 2019.

Compulsory Appointment of a Strata Manager

The Lot owners additionally seek an order for appointment of a compulsory strata manager.
Section 237 of the SSMA 2015 states as follows: 237 Orders for appointment of strata managing agent (1) Order appointing or requiring the appointment of strata managing agent to exercise functions of owners corporation The Tribunal may, on its own motion or on application, make an order appointing a person as a strata managing agent or requiring an owners corporation to appoint a person as a strata managing agent - (a) to exercise all the functions of an owners corporation, or (b) to exercise specified functions of an owners corporation, or (c) to exercise all the functions other than specified functions of an owners corporation. (2) Order may confer other functions on strata managing agent The Tribunal may also, when making an order under this section, order that the strata managing agent is to have and may exercise - (a) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or (b) specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or (c) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions. (3) Circumstances in which order may be made The Tribunal may make an order only if satisfied that - (a) the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or (b) an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or (c) an owners corporation has failed to perform one or more of its duties, or (d) an owners corporation owes a judgment debt. (4) Qualifications of person appointed A person appointed as a strata managing agent as a consequence of an order made by the Tribunal must - (a) hold a strata managing agent's licence issued under the Property and Stock Agents Act 2002, and (b) have consented in writing to the appointment, which consent, in the case of a strata managing agent that is a corporation, may be given by the Secretary or other officer of the corporation or another person authorised by the corporation to do so. (5) Terms and conditions of appointment A strata managing agent may be appointed as a consequence of an order under this section on the terms and conditions (including terms and conditions relating to remuneration by the owners corporation and the duration of appointment) specified in the order making or directing the appointment. (6) Return of documents and other records A strata managing agent appointed as a consequence of an order under this section must cause a general meeting of the owners corporation to be held not later than 14 days before the end of the agent's appointment and must on or before that meeting make arrangements to return to the owners corporation all documents and other records of the owners corporation held by the agent. (7) Revocation of certain appointments An order may be revoked or varied on application and, unless sooner revoked, ceases to have effect at the expiration of the period after its making (not exceeding 2 years) that is specified in the order. (8) Persons who may make an application The following persons may make an application under this section - (a) a person who obtained an order under this Act that imposed a duty on the owners corporation or on the strata committee or an officer of the owners corporation and that has not been complied with, (b) a person having an estate or interest in a lot in the strata scheme concerned or, in the case of a leasehold strata scheme, in a lease of a lot in the scheme, (c) the authority having the benefit of a positive covenant that imposes a duty on the owners corporation, (d) a judgment creditor to whom the owners corporation owes a judgment debt.
In its documentary evidence, the Lot owners provided details of a proposed compulsory strata manager in accordance with s 237 (4) of the SSMA 2015.
In respect of the applicable principles for appointment of a compulsory strata manager, the Tribunal stated in Hoare v The Owners-Strata Plan No 73905 [2018] NSWCATCD 45 at [199]-[200]: Appointment of a compulsory strata manager is a serious measure not to be taken lightly, because it removes the democratic process that has been established under the SSMA 2015 for the owners corporation to govern itself. In essence, it places the owners corporation into the hands of an administrator for a period of time. In respect of s 237 (3) (a) of the SSMA 2015, the Appeal Panel of the Tribunal stated in Bischoff v Sahade [2015] NSWCATAP 135 ('Bischoff') at [22]: "Circumstances in which the management structure may not be functioning or functioning satisfactorily include where the relevant level of management: (1) Does not perform a required function, for example to properly maintain the common property; (2) Exercises a power or makes a decision for an improper purpose, for example conferring a benefit upon a particular Lot owner or group of Lot owners in a manner not authorised by the SSMA; (3) Fails to exercise a power or make a decision to prevent a contravention by Lot owners and occupiers of their obligations under the SSMA, including the Lot owners and occupiers obligation to comply with the by-laws; and (4) Raises levies and takes or defends legal action on behalf of the owners corporation in circumstances where such action is unnecessary or not in the interests of the owners Corporation or the Lot owners as a whole"
The basis upon which the Lot owners sought appointment of a compulsory strata manager can be relevantly summarised as follows: 1. The strata manager "favoured" Mr Gubbay and Ms Gadeley in the performance of its duties; 2. Members of the strata committee had "bullied" Lot owners including a now deceased Lot owner Ms Morris. 3. Mr Gubbay and Ms Gadeley had in the past performed renovations to the bathrooms of their Lots involving alteration of common property without a common property rights by-law having been passed, and the owners corporation had "turned a blind eye" to other alterations of common property by Lot owners. 4. There was a high degree of animosity between Mr Gubbay and Ms Gadeley on the one hand, and other Lot owners of a degree sufficient to constitute dysfunctionality of the owners corporation.
Mr Gubbay and Ms Gadeley denied the allegations of the Lot owners, and asserted that such allegations were, in essence, a 'smokescreen' to divert attention from the improper conversion of Mr and Ms Levitin's Lot from 1 bedroom to 2 bedrooms.
Further, the owners corporation submitted that it had complied with its duties under the SSMA 2015 in respect of the fundamental responsibilities of an owners corporation (e.g. holding meetings; keeping a proper budget; administering levies; holding current insurance; keeping common property in a good state of maintenance and repair) and that personality conflicts between Mr Gubbay and Ms Gadeley on the one hand, and the Lot owners on the other hand, were not a sufficient basis to appoint a compulsory strata manager.
Having considered the evidence, the Tribunal is not satisfied that there is sufficient non-compliance by the owners corporation with its obligations; or sufficient dysfunction in the operation of the owners corporation, to justify the appointment of a compulsory strata manager.
Rather, the Tribunal is satisfied that the owners corporation is functioning adequately. The submissions of the Lot owner's Solicitor in regard to the basis for the appointment of a compulsory strata manager were heavy on rhetoric, but light on substance.
The fact that there have been disagreements between members of the strata committee on the one hand, and the Lot owners on the other hand, over the issue of renovations to Lot 2 is unfortunate, but disputes and disagreements are not uncommon in strata schemes. The Tribunal is not satisfied that such disputes and disagreements in this strata scheme are sufficient for the strata scheme to be considered dysfunctional.

The Issue of Costs

The Lot owners are legally represented. The Lot owners succeeded in part of their proceedings, but failed in another part. The starting point for any costs consideration is that under s 60 (1) of the Civil and Administrative Tribunal Act 2013 (NSW) ('the NCAT Act'), parties bear their own costs or proceedings; unless "special circumstances" are shown under s 60 (2) and (3) of the NCAT Act; or the amount claimed or in dispute exceeds $30,000 under Rule 38 of the Civil and Administrative Tribunal Rules 2014 (NSW) ('the NCAT Rules'). This is not a dispute to which Rule 38 of the NCAT Rules applies (The Owners Corporation Strata Plan No 63341 v Malachite Holdings Pty Ltd [2018] NSWCATAP 256 at [99]-[105].
The parties have not been given the opportunity to be heard on the issue of costs, but the preliminary view of the Tribunal is that there are no sufficient "special circumstances" under s 60 (2) of the NCAT Act to depart from the applicable principle in these proceedings that each party bear its own costs under s 60 (1) of the NCAT Act. If a costs application is made to the Tribunal and the other party within 14 days of the date of this decision, the Tribunal will issue directions regarding the filing and serving of costs submissions. In the absence of such an application, there is no order as to costs.

ORDERS 1. The Tribunal prescribes the making of a by-law in the terms set out in Motion 17 and 'Special By-law 4" in the notice of the annual general meeting of The Owners-Strata Plan No 568 which occurred on 29 October 2019. 2. The Owners-Strata Plan No 568 are to forthwith do all acts and things necessary to register the By-law with the Registrar-General and bear the cost of registration. 3. The application by the owners corporation for the restoration of common property by the owners of Lot 2 of the strata scheme is dismissed. 4. The application by the owners of Lot 2 for compulsory appointment of a strata manager is dismissed. 5. Any costs application is to be made within 14 days of the date of this decision.

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: 03 September 2021

Strata Schemes Management Act 1996(NSW)

The Owners - Strata Plan No. 568 v Levitin; Levitin v The Owners - Strata Plan No. 568

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Judgment (15 paragraphs)

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