The Owners - Strata Plan No 73943 v Gazebo Penthouse Pty Limited - [2014] NSWSC 1536 - NSWSC 2014 case summary

Supreme Court of NSW|2014-10-02|Before: Hamill J

Judgment 1This is an appeal, or more correctly, an application for leave to appeal, pursuant to s 83 of the Civil and Administrative Tribunal Act 2013 (NSW) ("CAT Act"). The plaintiff is the owner's corporation of Strata Plan Number 73943, a strata scheme encompassing two buildings in Elizabeth Bay Road, Elizabeth Bay. The strata plan comprises an 18-story tower block and an adjoining building (known as the court building). The court building is subject to a separate strata plan, but that strata plan is also one of the 64 units comprising strata plan 73943. The dispute concerns the entitlements of the parties to use the elevators servicing the tower block. The defendant is Gazebo Penthouses Pty Ltd, the owner of lot 61, which comprises a penthouse on level 18 of the tower block. 2The parties have fallen into dispute over whether the defendant is entitled (either alone or along with the occupiers of the lots comprising levels 16 and 17) to the exclusive use of one of the three lifts (lift 3) servicing the tower block. 3That dispute was originally subject to a decision made by an adjudicator under s 138 of the Strata Schemes Management Act 1996 (NSW) ("the Management Act"). The Adjudicator made a decision favourable to the plaintiff. There was an appeal by the defendant under s 177 of the Management Act to the New South Wales Civil and Administrative Tribunal ("the tribunal"). That appeal was successful and on 24 April 2014 a senior member of the tribunal made orders favourable to the defendant: Gazebo Penthouses Pty Ltd v The Owners - Strata Plan No. 73943 [2014] NSWCATCD 55. 4The questions arising are, first, whether leave should be granted to entertain the appeal. Secondly, there is a dispute as to whether the appeal gives rise to a question of law. Assuming that leave is granted and that a question of law arises, the question at the heart of the litigation is whether the tribunal erred in its approach to the interpretation of by-law 43. The by-law relevantly provides: 43.1 The owner of each lot has the right to the exclusive use and enjoyment of any service that exclusively services its individual lot that is located in and forms part of the common property ("exclusive services"). 43.2 The owner is responsible for the ongoing repair and maintenance of the Exclusive Service. 5By-law 43.3 makes provision for circumstances in which the owner fails to fulfil its obligation of repair and maintenance under 43.2. 6To put the cases of the parties in a nutshell, which may be to oversimplify the matter: The plaintiff contends that lift 3, which is the only lift capable of servicing Level 18, should be available for use by the occupants of Levels 1 through 17 because it is not a service that exclusively services lot 61. The plaintiff submits that that phrase should be interpreted to mean that the lift is mechanically capable of servicing each of the levels. The defendant contends that lift 3 is a "service that exclusively services its individual lot" because the defendant (along with the occupants of the lots on levels 16 and 17) has had the exclusive use of that lift since the inception of the strata plan in August 2005. 7It should be observed at the outset that by-law 43 makes no reference to lift 3. 8There is no dispute that since the registration of the strata plan and the opening of the tower block as a residential building, lift 3 has been programmed so that it would only answer calls from levels 16, 17 and 18 of the tower block (other than for the movement of large items and in emergencies to transport a stretcher). Further, there is no dispute that on about 6 July 2011 the plaintiff arranged to change the programming of lift 3 to enable it to service all levels of the tower building, that is levels 1 through 15 as well levels 16, 17 and 18. Finally, there is no dispute that the defendant has never paid for the maintenance of lift 3 and that it has never been asked to do so. 9The proceedings in this Court were commenced by summons filed 22 May 2014. The summons sets out (in paragraph 14) the following errors of law that the plaintiff says were made by the Tribunal: "(a) By having regard to the subsequent conduct of the parties and lot owners for the purpose of construing by-law 43. (b) By going beyond the language of by-law 43 and its statutory context and having regard to extrinsic materials for the purpose of construing by-law 43. (c) By failing to make a finding on the central question for determination namely whether lift number three exclusively services the defendant's lot 61 within the meaning of by-law 43." I will refer to those alleged errors of law as grounds 1, 2 and 3. 10The defendant contends that the tribunal made no error of law. Indeed, the defendant contends that no question of law arises. It submits that the tribunal did not take into account extrinsic materials or the subsequent conduct of the parties in construing the by-law. It says that there was no dispute as to the construction of the by-law and that the tribunal simply made a finding of fact, based on the history of use of the lift and the extrinsic material before it, that lift 3 was a service that was caught by the terms of by-law 43.1. 11The defendant also brings a notice of contention which gives rise to a consideration of s 65A of the Management Act. That section provides that there should be no alteration of common property in the absence of a special resolution. It is common ground that no special resolution was passed before the plaintiff took steps to reprogram lift 3. 12The defendant says that leave to appeal should be refused and argues that there is no evidence that the plaintiff or anybody else will suffer any, or any substantial, injustice as a consequence of the order of the tribunal. It further submits that leave should be refused because the case does not give rise to a question of law.

The evidence 13The evidentiary material before me consisted of a document described as the plaintiff's bundle ("PB") comprising some 346 pages. This included relevant parts of the evidence before the tribunal, the decision of the tribunal, the submissions of the parties before the Tribunal and other documents. 14The defendant read, without objection, an affidavit of Sinem Mutlu. Exhibited to the affidavit were a series of exhibits comprising in excess of 1000 pages of material. Much of that material was repetitive of the evidence contained in the plaintiffs bundle. A larger amount of the material was irrelevant to the decision that I have to make. 15The most cogent explanation for placing such an amount of material before me was that the defendant sought to protect its position in the event that the matter goes on appeal. While I am sympathetic to that position, I pressed the defendant for some explanation as to which part of the material it in fact sought to rely upon. It is not reasonable to place material upon which no submission is made before a first instance judge called upon to determine a question of law in order to protect a party's position on appeal. The material from the exhibit that was actually referred to in argument consisted of no more than two or three pages of the transcript of proceedings before the Tribunal, a tender form dated 18 December 2001 and a letter dated 20 December 2004. I have taken that material into account. 16None of the material so identified added very much, if anything, to the arguments that have been made either in written or oral submissions. In any event, there seemed to be no dispute between the parties as to the facts relevant to the appeal. A perusal of the record of the proceedings below suggests that there was a more substantial factual dispute in the proceedings before the Tribunal. 17Because no objection was taken to the material and to allow the parties to protect their positions, I received the affidavit and annexures. However, I record my dissatisfaction at being placed in the position where more than 1,000 pages of material was placed before me in circumstances where neither party took me in any detail, or at all, to that material. I should add, in fairness, that senior counsel for the defendant was somewhat diffident in the tender and sympathetic to my stated concerns. He agreed that it would have been preferable simply to tender the individual documents that were subject to submissions or relied upon. I will say no more about that matter.

Leave to appeal 18An appeal to this Court under s 83(1) CAT Act can only be brought with the leave of the Court. Whether or not leave should be granted is the first matter that I should consider. In doing so, I will apply the comments of Basten JA in Be Financial Pty Ltd as Trustee for Be Financial Operations Trust v Das [2012] NSWCA 164: "32 The principles governing cases such as these have recently been restated in Zelden v Sewell; Henamast Pty Ltd v Sewell [2011] NSWCA 56. As Campbell JA noted (with the agreement of Young JA) at [22]: 'It is of some importance to reiterate the principles that were stated in Carolan v AMF Bowling Pty Limited [1995] NSWCA 69, where Sheller JA said that an applicant for leave must demonstrate something more than that the trial judge was arguably wrong in the conclusion arrived at. Cole JA relied on a principle that where small claims are involved, it is important that there be early finality in determination of litigation, otherwise the costs that will be involved are likely to swamp the money sum involved in the dispute.' 33 In Jaycar Pty Ltd v Lombardo [2011] NSWCA 284 Campbell JA, with the agreement of Young and Meagher JJA, expanded on his summary of Carolan, noting that Kirby P had recognised 'that ordinarily it was appropriate to grant leave to appeal only concerning matters that involve issues of principle, questions of general public importance or an injustice which is reasonably clear, in the sense of going beyond [what is] merely arguable': at [46]. 34 Kirby P in Carolan set out a number of reasons for the constraint on rights of appeal in such cases. Not all of them have been repeated in later cases. Not all are universally relevant. Thus, the delay in obtaining a hearing in this Court appears to have been greater at that time than is the case presently, although an overly liberal approach to leave applications might well result in an increase in the period between filing and hearing. 35 In Coulter v The Queen [1988] HCA 3; 164 CLR 350, dealing with a challenge to a refusal of the South Australian Full Court to grant leave to appeal in a criminal matter, the majority noted that a leave requirement was a preliminary procedure 'recognised by the legislature as a means of enabling the court to control in some measure the volume of appellate work requiring its attention': at 356 (Mason CJ, Wilson and Brennan JJ). That statement is clearly applicable to civil, as well as criminal, appellate jurisdiction. 36 As the High Court has noted, an application for leave is not a proceeding in the ordinary course of litigation but a preliminary procedure: Collins v The Queen [1975] HCA 60; 133 CLR 120 at 122; Coulter at 356. On the other hand, there is no reason to doubt that s 58 of the Civil Procedure Act 2005 (NSW), requiring a court to act in accordance with 'the dictates of justice' when making an order or direction 'for the management of proceedings', applies in respect of a leave application. One of the factors to be taken into account pursuant to s 58 is 'the degree of injustice that would be suffered by the respective parties as a consequence of any order or direction': s 58(2)(b)(vi). That provision, like s 56, identifying the overriding purpose of the Civil Procedure Act as being to facilitate the just, quick and cheap resolution of the real issues in the dispute, recognises that questions of injustice are relative. Similarly, the requirement that this Court not order a new trial unless it appears that 'some substantial wrong or miscarriage' has been occasioned, also reflects a principle of parsimony in requiring that the parties be put to the expense of a second trial: UCPR, r 51.53. 37 The idea that injustice may be measured on a scale reflects a number of underlying considerations. First, the ability to assess the existence of an injustice in a preliminary proceeding, such as a leave application, is limited. In assessing the merit of a proposed appeal, the Court may well apply a vague criterion, such as whether the judgment below is attended by 'sufficient doubt'. Secondly, injustice involves a balancing exercise. The delay and cost of further litigation will constitute a form of injustice to the successful party below, whatever the outcome of the appellate process. Thirdly, the entitlement of the parties to justice is not unconditional, but is dependent upon the resources of the court made available by the government and the appropriate allocation of resources by the parties, which may depend upon their individual assessments of the importance of the issues in dispute. The parties may well make disparate assessments in a particular case." 19I have concluded that leave should be granted to the plaintiff for the following reasons: (1)The undisputed evidence is that lift 3 is the only lift capable of fitting a stretcher in a medical emergency. While it is said that no such medical emergency has occurred since the opening of the building, that does not dispose of the possibility that such a medical emergency might arise in the future. While it is said that the current occupant of lot 61 would not obstruct the use of the lift should such a situation arise, that does not resolve the situation should the owner of lot 61 change. (2)Lift 3 is also the only lift capable of being used to transport large items of furniture. Until the inception of the current dispute, it seems that there has never been a problem with the occupants of levels 1 through 15 making arrangements to use lift 3 for that purpose. That appears to be as a result of the goodwill of the owner of lot 61 (and the owners of the lots on levels 16-17). However, there appears to be nothing to stop that corporation or any successor in title to lot 61 from denying the other occupants the use of the lift for that purpose. (3)The defendant provided evidence to the tribunal that the impact of the change in programming of the lift to him has been that the value of lot 61 has decreased by close to $2 million. On its face that is not a fact which would ordinarily assist the plaintiff (in relation to which there is no evidence of any financial loss arising by virtue of the non-availability of lift 3). However, it is relevant that the amount of advantage (or disadvantage) for the defendant is in excess of the jurisdictional limit of this Court. 20For those reasons, leave will be granted to the plaintiff.

The history of the dispute 21It is now necessary to set out in a little more detail the history of the case. I will do so in as short a form as is possible. 22The tower building was constructed in 1969 and the adjacent court building was constructed in 1982. 23The tower operated as a hotel (The Gazebo) from 1969 until 2001 - 2002 when a major refurbishment of the building was undertaken. The refurbishment resulted in the opening of the two apartment buildings subject of strata plan 73943 (the tower building) and strata plan 75363 (the court building). 24Until the refurbishment there was no usable space on level 18. As I understand it, until that point, it was simply a rooftop. 25As a consequence, there was no lift access to level 18 prior to the refurbishment. 26A Mr Fisher was the sole director and shareholder of the corporation that owned the hotel and undertook the refurbishment of the building. He is also the sole director of the defendant. As part of the refurbishment, arrangements were made to enclose level 18, and to establish a penthouse apartment on that level. The penthouse became lot 61 of strata plan 73943 when the strata plan was registered. 27It was therefore necessary to undertake extensive work on the lifts in order that there be lift access to the newly established penthouse on level 18. In November 2001, EMF Griffiths Pty Ltd (Consulting Engineers) provided specifications for the lift refurbishment. Those specifications provided that lift 3 was to be used exclusively by levels B1, G, 16, 17 and 18. 28The refurbishment of the lifts was completed on 20 December 2004. 29The completion of those works resulted in there being one lift (lift 3) capable of going to level 18. Lifts 1 and 2 remained incapable of servicing level 18. In accordance with the specifications, lift 3 was programmed in such a way that it would only answer calls from levels, 16, 17 and 18. The occupants of the lots on those levels had access to a special key enabling them to call and use lift 3 from the basement (B1) or ground level. Because of the way in which lift 3 was programmed, it would not answer calls from people on levels 1 through 15. 30In addition to the occupants of levels 16, 17 and 18, the building manager also had access to a special key enabling him or her to access lift 3. 31Lift 3 is larger than the other two lifts and is the only lift capable of being used for the movement of large items of furniture. As a result, lift 3 was designated as the "goods lift" and was used for movements of such items by the residents of the entire tower building. As a matter of practice, this required the residents to fill in a form which was processed by the building manager who, as a courtesy, informed the owners of apartments on levels 16, 17 and 18 that such use was to be made of lift 3 and the time and date of such use. 32The registration of strata plan 73943 included the registration of the by-laws. The by-laws made no specific reference to the question of whether the occupants of levels 16, 17 and 18 were to enjoy the exclusive use of lift 3. However, it did make provision in section 43.1 that the owner of each lot had "the right to the exclusive use and enjoyment of any service that exclusively services its individual lot that is located in and forms part of the common property". 33In late 2010 and early 2011, a member of the plaintiff's executive committee noted that the defendant had not been paying for the servicing of lift 3. By-law 43.2 provided that the owner who had right to an exclusive service provided for by by-law 43.1 "is responsible for the ongoing repair and maintenance of such an exclusive service". 34As a result, the executive committee resolved to have the building manager investigate whether lift 3 could be used by all residents. 35At a meeting on 20 January 2011 the executive committee noted that "all lifts for the tower are common property and there is no restriction in place to prevent all residents from using them." In a sense, the correctness of that note lay at the heart of the litigation before the tribunal. 36On 6 July 2011 the plaintiff arranged for the programming of lift 3 to be modified to enable it to be used by the occupants of the entire tower block. The parties quickly fell into dispute. 37On 3 November 2011 the defendant made an application to an adjudicator. On 4 November 2011 the Adjudicator made an interim order preventing the plaintiff from interfering with Gazebo's use of lift 3. 38On 8 February 2012 the tribunal (under a previous style and name) revoked the interim order made by the Adjudicator. 39On 22 March 2012 a different adjudicator dismissed the defendant's application for final orders, the effect of which would have been that the exclusive use of lift 3 was restored to the defendant (and, presumably, the occupants of levels 16 and 17). 40The tribunal overturned the Adjudicator's decision and it is from that decision that the plaintiff now appeals. 41In the meantime, the defendant's solicitors wrote to the plaintiffs asking the plaintiff to consider passing a special by-law in relation to lift 3 at its next general meeting. On 7 March 2013 the plaintiff refused to make such a by-law. On 16 April 2013 the defendant made an application to an adjudicator for the making of a by-law in respect of lift 3. The Adjudicator referred that application to the tribunal. The background to that application, and the attempts by both sides to pass relevant by-laws, are set out in the decision below at [58]-[70].

Proceedings before the tribunal 42The tribunal had before it three distinct, albeit factually related, questions. The first concerned the correctness of the Adjudicator's decision refusing to resolve the dispute as to the applicability of the by-law to lift 3 in favour of the defendant. The second concerned an argument that the alteration of the programming of the lift was a matter that required a special resolution under s 65A of the Management Act. The third required consideration of whether the application for the by-law made by the defendant and relating to lift 3 should be granted (and the proposed by-law made). 43In relation to the first question, the defendant relied on the following grounds of appeal against the Adjudicator's decision: 1. The Adjudicator erred in finding that by-law 43 could not confer exclusive rights in respect of the lift without a specific nomination of the lift in the by-law. 2. The Adjudicator erred in construing by-law 43 according to the subsequent conduct of the parties. 3. The Adjudicator erred in construing by-law 43 by placing weight upon the contention that the Owners Corporation has not requested payment of the maintenance and cleaning of the lift. 4. The Adjudicator erred in finding (or inferring) that the applicant not objecting to "the continued use over the years of the lift to bring furniture, etc into and out of the building" was inconsistent with the right of exclusive use and enjoyment of the lift. 5. The Adjudicator erred in finding that the respondent has not interfered with the applicant's exclusive use of Lift No 3, and that any interference was limited to the events of 11 October 2011. 6. The Adjudicator erred in failing to find that Lift No 3 has been designed to be used exclusively by the Penthouse levels (except for transporting persons by stretcher). 7. The Adjudicator erred in finding that the alterations and additions to the lift were "no more than utilizing the mechanical and/or electronic capabilities of common property to achieve the management obligations imposed on the Owners Corporation pursuant to s 61(1) of the Act." 8. The Adjudicator erred in failing to find that alterations and additions to the lift had not been authorised by the Owners Corporation. 9. The Adjudicator erred in his findings of fact and in weight given to his findings. 44The tribunal resolved the first question favourably to the defendant. It held that grounds 1-6 of the 9 specified grounds were established (see [2014] NSWCATCD 55 [113]). It determined at [114] that it did not need to consider grounds 7-9. The tribunal allowed the appeal against the Adjudicator's decision and revoked the order made by the Adjudicator. It also ordered: "The Owners Corporation [ie the plaintiff] is to restore forthwith exclusive use of lift number three in the tower building to the owner of lot 61, and thereafter not interfere with the exclusive use of the lift by the applicant [ie the defendant], subject to the lawful repeal or variation of by-law 43". 45The result of that decision was that it was strictly unnecessary for the tribunal to consider the question under s 65A as to whether the alteration to the programming of the lift required a special resolution (see [2014] NSWCATCD 55 at [54]-[57], [159]-[161]). In relation to that question, the tribunal made the following observations: "159 I disagree with the Adjudicator that re-programming of a lift does not amount to alteration of the common property. However, I am not required to entertain this issue because the appeal has been allowed in the applicant's favour in relation to by-law 43. 160 I note, as found by the Adjudicator, that the applicant had sole access to Lift No 3 in the period 2005 to 2011. It cannot be said that in these circumstances the change of use of Lift No 3 does not amount to more than utilising the mechanical and/or electronic capabilities of common property. 161 To change the use of common property, wherein the applicant had sole access to Lift No 3, for around six years, required the formalities set out in s 65A of the Act to be observed." 46In relation to the defendant's application for a new or amended by-law the tribunal dismissed that application giving only short reasons: "162 I will make only a short observation about this application to illustrate that the appeal and the adjudication in SCS 13/21405 were both concerned with the grant of exclusive use of Lift No 3 to the applicant. 163 The application was made to an adjudicator pursuant to s158 of the Act. 164 An order was sought to prescribe the making of a by-law if it was found that the Owners Corporation has unreasonably refused to make a by-law of a grant of exclusive use and enjoyment of Lift No 3. 165 The application was transferred to the Tribunal for hearing, prior to the Adjudicator making a decision on the papers. 166 The applicant submitted that the Owners Corporation considered the application for a by-law conferring exclusive rights over Lift No 3 on two occasions, in October 2012 and March 2013. The proposed by-law was defeated at both meetings despite lengthy negotiations and offers of compromise in particular regarding the responsibility for the maintenance of Lift No 3. 167 The applicant contended that the Owners Corporation conduct was unreasonable in refusing the proposed by-law. In addition to the unreasonable conduct, the Owners Corporation did not give reasons why they voted against the motion. 168 The respondent's contention is that the applicant appears to object to having to share the use of Lift No 3 with the owners and the occupiers of the Tower Building. 169 The respondent submitted that all owners have an interest as beneficial tenants in common in the common property, including the lifts. The applicant's proposal to pay the cost of maintenance of Lift No 3 was rejected because it does not address loss of an asset and it did not address the significant loss of amenity involved in reducing lift capacity by 33% for 92 lot owners. 170 There is no need to have matter no SCS 13/21405 determined on its merits because the applicant has been successful in the appeal against the Adjudicator's decision in SCS 12/20802. 171 Matter No SCS 13/21405 is therefore dismissed."

Two arguments about exclusivity that are no longer pressed 47The plaintiff submitted before the tribunal that the fact that the occupants of levels 16 and 17 also had use of the relevant lift meant that the defendant's argument that it enjoyed exclusive use must fail. 48The tribunal determined that exclusivity did not require that level 18 alone had access to the lift. In other words, it was possible that level 18 enjoyed the exclusive use and enjoyment of lift 3 along with the occupants of levels 16 and 17. 49That decision and finding has not been subject to any argument on this appeal and I will leave it to one side. 50Similarly, the plaintiff did not press a submission that the fact that other tenants from time to time used the lift to transport furniture and the like would mean that level 18 did not have exclusive use and enjoyment of the lift.

Question of law or question of fact 51Appeals under s 83 CAT Act are limited to appeals "on a question of law". The distinction between a question of law and a question of fact is a vexed one and has occupied the minds of many judges in many cases both at first instance and on appeal. 52In Norrie v NSW Registrar of Births Deaths and Marriages [2013] NSWCA 145; 84 NSWLR 697, Beazley ACJ discussed the question in the following passage: "52 As I have earlier stated, the jurisdiction of the Court on this appeal is limited to questions of law: Administrative Decisions Tribunal Act, s 119(1). As the Federal Court stated in Collector of Customs v Pozzolanic Enterprises Pty Ltd [1993] FCA 322; 43 FCR 280 at 287: 'Distinctions between a question of fact and a question of law can be elusive. The proper interpretation, construction and application of a statute to a given case raises issues which may be or involve questions of fact or law or mixed fact and law.' 53 The Court in Pozzolanic nonetheless suggested, at 287, that there are five general propositions as to whether a question of law or fact is at issue: '1. The question whether a word or phrase in a statute is to be given its ordinary meaning or some technical or other meaning is a question of law. 2. The ordinary meaning of a word or its non-legal technical meaning is a question of fact. 3. The meaning of a technical legal term is a question of law. 4. The effect or construction of a term whose meaning or interpretation is established is a question of law. 5. The question whether facts fully found fall within the provision of a statutory enactment properly construed is generally a question of law.' (citations omitted) 54 The second and third propositions are supported by the statement of Jordan CJ in Australian Gas Light Co v Valuer-General at 137: 'The question what is the meaning of an ordinary English word or phrase as used in the Statute is one of fact not of law. This question is to be resolved by the relevant tribunal itself, by considering the word in its context with the assistance of dictionaries and other books, and not by expert evidence; although evidence is receivable as to the meaning of technical terms; and the meaning of a technical legal term is a question of law.' 55 In Collector of Customs v Agfa-Gevaert Limited [1996] HCA 36; 186 CLR 389, the High Court observed, at 396, in relation to the Pozzolanic propositions: 'Such general expositions of the law are helpful in many circumstances. But they lose a degree of their utility when, as in the present case, the phrase or term in issue is complex or the inquiry that the primary decision-maker embarked upon is not clear.' 56 In particular, the High Court questioned the distinction drawn in Pozzolanic between the second and fourth propositions: 'With respect this distinction seems artificial, if not illusory. The meaning attributed to individual words in a phrase ultimately dictates the effect or construction that one gives to the phrase when taken as a whole and the approach that one adopts in determining the meaning of the individual words of that phrase is bound up in the syntactical construction of the phrase in question. In R v Brown [1996] 1 AC 543 at 561 [1996] 1 AC 543 at 561, a recent House of Lords decision, Lord Hoffmann said: "The fallacy in the Crown's argument is, I think, one common among lawyers, namely to treat the words of an English sentence as building blocks whose meaning cannot be affected by the rest of the sentence ... This is not the way language works. The unit of communication by means of language is the sentence and not the parts of which it is composed. The significance of individual words is affected by other words and the syntax of the whole." If the notions of meaning and construction are interdependent, as we think they are, then it is difficult to see how meaning is a question of fact while construction is a question of law without insisting on some qualification concerning construction that is currently absent from the law.' 57 It was unnecessary for the High Court in Agfa-Gevaert to resolve that issue. It was sufficient, for the purposes of that case, in order for a reviewable question of law to arise for determination, 'for a phrase to be identified as being used in a sense different from that which it has in ordinary speech': see at 397. 58 In Industry Research and Development Board v Bridgestone Australia Ltd [2001] FCA 954; 109 FCR 564. Lindgren J (Branson and Mansfield JJ agreeing) stated, at [54]: 'In the present case, the facts have been found and what is left is a choice as to which of two suggested meanings of the words of the statute is to be applied to those facts. That choice is not a matter of discretion; the statute truly bears only one of the two suggested meanings; the choice made will be correct or incorrect in law ... These considerations show that a question of law is involved.' His Honour then referred to the obiter remarks of the High Court in Agfa-Gevaert set out above at [56]. 59 In Aktiebolaget Hassle v Alphapharm Pty Ltd [2002] HCA 59; 212 CLR 411, Gleeson CJ, Gaudron, Gummow and Hayne JJ, citing Agfa-Gevaert, stated, at [36], that '[t]he notions of meaning and construction are interdependent' and that the meaning of a particular word in the legislation 'must be affected by the other words and syntax of the whole of [the provision].' See also Kirby J at [138]. 60 In OV v Members of The Board of Wesley Mission Council [2010] NSWCA 155; 79 NSWLR 606, the New South Wales Court of Appeal applied Agfa-Gevaert: see [2]-[8] and [27]-[31]. Allsop P (as his Honour then was) commented that the High Court's decision in Agfa-Gevaert: '... should not be taken as denying the conceptual distinction between the ascertainment of semantic meaning (interpretation) and determining legal effect or legal content (construction) of a legal text. The processes can be seen to be distinct in terms of legal theory and function. What the High Court stated was that their inter-relationship in the process of ascription of meaning to a legal text meant that for the purpose, at least, of distinguishing between questions of law and fact, the distinction was illusory.' 61 In Screen Australia v EME Productions No 1 [2012] FCAFC 19; 200 FCR 282 the Full Federal Court also applied the High Court's statement in Agfa-Gevaert as to the interdependency of meaning and construction, observing at [41], that the "clearly considered dicta" of the High Court had been followed in OV v Members of The Board of Wesley Mission Council and cited with approval in Aktiebolaget Hassle v Alphapharm: see [39]-[42]. The Court concluded, at [42]: 'Where there is uncertainty as to the meaning of a statutory word or expression, as here, the process of construction raises a question of law.' 62 The High Court's obiter remarks in Agfa-Gevaert and their approval in Aktiebolaget Hassle v Alphapharm indicates that it cannot be said that the ordinary meaning of a word or its non-technical meaning is a question of fact, at least as a stand alone proposition. Rather, when the Court is engaged in a task of statutory construction, it is required to have regard to the language used by Parliament and the context in which it is used. That task involves a question of law. 63 Further, as was explained, correctly in my opinion, by Mark Aronson, Bruce Dyer and Mathew Groves, Judicial Review of Administrative Action (2009) Lawbook Co at 213: 'Misunderstanding the governing law has always been an error of law in its own right, and that should include misunderstanding the legal meaning of a statutory term, ordinary or special. Misunderstanding is the error, and that can occur in relation to ordinary as well as technical terms. In other words, the proper meaning of any legal term should itself be a question of law ... If it is error of law to stray beyond the boundaries of an ordinary meaning, then fixing the ordinary meaning must surely itself be a question of law.'" 53The plaintiff contends that the tribunal fell into legal error by taking into account extrinsic material in determining the construction of the relevant by-law. It also contends that the tribunal erred in taking into account the conduct of the parties (subsequent to the making of the by-law) as to the way that lift 3 was used from the time of the registration of the strata plan up until the time that the plaintiff decided to reprogram the lift to enable occupants of all levels of the tower block to access it. In making that submission, the plaintiff relies on the propositions enunciated by McColl J (with whom Mason P relevantly agreed) after an extensive analysis of the relevant law in The Owners of Strata Plan No 3397 v Tate [2007] NSWCA 207; 70 NSWLR 344: "71. The following propositions emerge from the foregoing discussion: 1.By-laws are the 'series of enactments' by which the proprietors in a body corporate administer their affairs; they do not deal with commercial rights, but the governance of the strata scheme: Bailey; 2. By-laws have a public purpose which goes beyond their function of facilitating the internal administration of a body corporate; cp, Parkin, Lion Nathan; 3. Exclusive use by-laws may be inspected by third persons interested in acquiring an interest in a strata scheme, whether, for example, by acquiring units, or by lending money to a lot proprietor; such persons would ordinarily have no access to the circumstances surrounding their making; their meaning should be understood from their statutory context and language: NRMA; Lion Nathan. 4. By-laws may be characterised as either delegated legislation or statutory contacts: Dainford; Re Taylor; Bailey; North Wind; Sons of Gwalia; 5. Whichever be the appropriate characterisation, exclusive use by-laws should be interpreted objectively by what they would convey to a reasonable person: Lion Nathan; 6. In interpreting exclusive use by-laws the Court should take into account their constitutional function in the strata scheme in regulating the rights and liabilities of lot proprietors inter se: Parkin; Lion Nathan. 7. Unlike the articles of a company, there does not appear to be a strong argument for saying exclusive use by-laws should be interpreted as a business document, with the intention that they be given business efficacy: cf NRMA (at [75]). That does not mean that an exclusive use by-law may not have a commercial purpose, and be interpreted in accordance with the principles expounded in cases such as Antaios Cia. Naviera S.A., but due regard must be paid to the statutory context in so doing; 8. An exclusive use by-law should be construed so that it is consistent with its statutory context; a court may depart from such a construction if departure from the statutory scheme is authorised by the governing statute and if the intention to do so appears plainly from the terms of the by-law: Re Taylor; 9. Caution should be exercised in going beyond the language of the by-law and its statutory context to ascertain its meaning; a tight rein should be kept on having recourse to surrounding circumstances: Lion Nathan " 54The plaintiff also says that the tribunal erred in law by failing to make a finding as to the true question arising under by-law 43.1, that is, whether lift 3 exclusively services the defendant's lot. 55Putting aside the merit of those assertions, each of those matters involves "an appeal on a question of law". 56Accordingly, the jurisdiction of the Court under s 83 of the CAT Act is properly invoked.

Ground 1 57I agree with the defendant's submission in relation to ground one. The plaintiff submitted (and thus conceded) that certain factual material had to be taken into account to give any content to the dispute between the parties. Thus, the plaintiff submitted in effect that in construing the by-law it was necessary to take into account the fact that lift 3 was mechanically capable of servicing all of the lots from the ground level through to level 18. However, the plaintiff submitted that the fact that the parties had conducted themselves in the way that they did from 2005 to 2011 was not material that could properly inform the construction of the by-law. 58While I agree with the legal premise behind the plaintiff's submission and note that its submission accords with the decision of the Court of Appeal in SP 3397 v Tate (supra), in my opinion the tribunal did not use the conduct of the parties in construing the by-law. 59Rather, as the defendant contends, the meaning of the by-law was (or should have been) plain on its face and the tribunal (and the Adjudicator before it) simply made findings as to whether the occupants of levels 16, 17 and (importantly) 18 did in fact have "the right to the exclusive use and enjoyment" of that lift. 60The conduct of the parties between the 2005 and 2011 was relevant factual material to be taken into account in the determination of whether, as at the date of the dispute over the applicability of the by-law 43, lift 3 was a service "that exclusively services" lot 61. I appreciate that there is some tension between the matters to which I have referred in paragraph [75] below and my conclusion in relation to ground 1. Those matters (in [75]) may seem to undermine that conclusion to some degree. However, the reasons of the tribunal do not suggest that it interpreted or construed the by-law by reference to what the parties had done in the years between 2005 and 2011. Rather, as I have said, it took that history into account in determining whether the by-law was engaged. 61The defendant is correct when it submits that, even if I was of the view that the tribunal's conclusion was erroneous on the evidence, the limited nature of the appeal does not allow me to reverse the decision of the tribunal on a question of fact. 62The error of law contended for in ground 1 is not established.

Ground 2 63The question of whether the tribunal used extrinsic material (and in particular the 2001 EMC Griffiths specifications) in construing the by-law is more difficult. The relevant part of the tribunal's decision is as follows: "149.The respondent argued that a specification in a document dated November 2001 has no relevance to the proper construction of by-law 43. 150. The respondent cited the decision by McColl JA in Tate's case in support of his argument. That is, an exclusive use by-law may be inspected by third persons interested in acquiring an interest in the strata scheme. The third person would ordinarily have no access to the circumstances surrounding the making of the by-law. 151. McColl JA said that 'caution should be exercised in going beyond the language of the by-law and its statutory context: a tight rein should be kept having recourse to surrounding circumstances'. The respondent submitted that the applicant makes no serious attempt to explain how, as a matter of language, the specification is called up by by-law 43. 152. The applicant submitted that by-law 43 is to be construed by reference to its own language and its statutory context. The applicant noted that the respondent is misconceived to as to the applicant's position is that the proper meaning of by-law 43 is being derived by reference to the words of EMC Griffiths specification. The applicant also submitted in relation to this argument, that the observations of McColl JA in Tate do not assist the respondent. 153. I agree with the applicant, that by virtue of by-law 43, a right of exclusive use and enjoyment emanates from the fact of exclusive use. If a third person was to enquire, as suggested by the respondent, what were the by-laws in Strata Plan 73943, by-law 43 would be found. 154. Lift No 3 is not nominated in the by-law for exclusive use to the applicant. The respondent submitted that the third person ought not to be asked to derive the proper meaning of a by-law other than from the language of the by-law. The third person should not be asked to consult some other documents, not publicly available, to understand the meaning of the by-law. 155. I disagree with the respondent's submission. If a third person was to enquire, as suggested by the respondent, what were the by-laws in SP 73943, by-law 43 would be found. This ought to convey to a reasonable third person to enquire from the Body Corporate what does by-law 43 refers to. The answer would be the exclusive use by the applicant of Lift No 3. 156. If the third person was to delve further in to the applicant's exclusive use, then the recourse would be had to surrounding circumstances of by-law 43, namely EMC Griffiths specifications. My view is that these two enquiries, to ascertain the meaning of by-law 43, do not make public search in to by-law 43 nugatory as contended by the respondent. 157.The third person enquiry to identify any particular exclusive use granted under by-law 43 would not in my view go beyond what is said by McColl JA namely, keeping a tight rein on having recourse to surrounding circumstances in ascertaining the meaning of the by-law. 158. I am of the view that the applicant has made out Ground 6 of the appeal." 64It will be recalled that ground 6 asserted "the Adjudicator erred in failing to find that lift 3 has been designed to be used exclusively by the Penthouse levels (except for transporting persons by stretcher)". 65Without great confidence, I have reached the conclusion that the tribunal did not use the 2001 EMC Griffiths specifications in order to construe the by-law. Rather, it seems that it was using the specifications of the lift in order to come to a factual conclusion as to whether by-law 43.1 was engaged. 66I say that my conclusion is reached without great confidence because it seems to me that the approach taken by the tribunal gives rise to one of the vices which concerned her Honour McColl JA in SP 3397 v Tate (supra). That is, a prospective purchaser reading by-law 43.1, would have no immediate understanding that it applied to lift 3. Lift 3 is not nominated in the by-law and the prospective purchaser would not immediately recognise that there was a specification from 2001 that was relevant to the by-law's content and operation. This issue was highlighted in argument (T 47) when I asked counsel for the defendant a somewhat prosaic question as to the whereabouts of the specifications and how a prospective purchaser would find them. Senior counsel responded: "No doubt the body corporate would have to dig them up. I take your Honour's point. I do not mean to suggest they are there on the title or something, they are no doubt not. But my submission does not require that because that wasn't the issue. The issue was as a matter of fact is there exclusive use in a contested hearing before a judicial officer, namely the member, and he investigates the fact. The facts include the specification and the facts establish that yes, there is exclusivity." 67I accept the submission but, as I say, I do so with some hesitation and without great confidence. In dealing with the grounds as presented, my conclusion is that the tribunal did not use the extrinsic material in construing the by-law. 68Ground 2 is not established.

Ground 3 69I take a different view in relation to Ground 3. I have concluded that in applying those factual circumstances (including the conduct of the parties and the terms of the 2001 specifications) to the question of whether by-law 43.1 applied, the tribunal addressed the wrong question. 70An important part of the tribunal's decision indicates that the tribunal fell into legal error. First, in paragraph 144 the tribunal said: "The applicant pointed out in its submission in reply that by virtue of by-law 43 a right of exclusive use and enjoyment emanates from [the fact of] the exclusive use." 71Then, in paragraph 153, the tribunal held and determined: "I agree with the applicant that by virtue of by-law 43, a right of exclusive use and enjoyment emanates from the fact of exclusive use." 72Apart from the circularity in that approach, it addresses the wrong question. The by-law does not create a "right to the exclusive use and enjoyment" of a relevant service by the "fact of exclusive use" of that service. Rather, the exclusive use and enjoyment arises from the fact that the particular service "exclusively services its individual lot." That is a somewhat fine distinction but it also an important one. Had the tribunal addressed that question, rather than the conduct of the parties in terms of the use of the lift, the result may have been different. 73Had the correct legal question been posited and considered, the tribunal may have given greater weight to the mechanical capacity of the lift to service levels 1 through 15, its capacity (unlike lifts 1 and 2) to carry a stretcher and the fact that it serviced other units for the purpose of moving furniture. It may have given less weight to the fact that the lift was programmed in such a way as to allow the occupants of levels 16, 17 and 18 to use lift 3 in the way that they did from 2005 to 2011. It may have given less weight to the capacity of a "reasonable third person to enquire from the body Corporate what does by-law 43 refer to" and whether "any particular exclusive use" is "granted under by-law 43" [155]-[157]. It may have given less weight to the evidence of Mr Fischer and the defendant's experts (see, for example, at [72]-[77]). Unless and until the correct legal question is addressed, it is difficult to know how much weight should be given to the competing parts of the evidence. 74Ultimately (and obviously) questions of the weight to be given to particular parts of the evidence were matters for the tribunal. I do not suggest that there is any error of law manifested by that issue alone. However, decisions as to questions of weight had to be made by reference to the correct legal question and the precise terms of the by-law. Apart from restating the submission of the plaintiff in paragraphs [33] and [83], the tribunal did not address the question of whether lift 3 "exclusively services [the defendant's] individual lot". Rather, the tribunal determined whether the lift had been exclusively used by the occupants of the individual lot. 75One way of testing this proposition is to consider how the by-law would have been understood by an interested purchaser immediately after the strata plan (along with the by-laws) was registered. At that point, there was no history of use upon which the defendant now relies. In the absence of any history of use, it could not have been said - as it was held by the Tribunal - that the "right of exclusive use and enjoyment emanates from the fact of exclusive use". The by-law did not then - and does not and cannot now - bestow upon the owner of any particular lot the "right of exclusive use and enjoyment" by reference to the fact of exclusive use. That right derives, on a proper interpretation of the by-law, from the fact that the subject service "exclusively services" the particular lot. 76As contended by the plaintiff, the tribunal "[failed] to make a finding on the central question for determination namely whether [lift 3] exclusively services the defendant's lot". The failure to determine whether lift three "exclusively services" lot 61 constitutes an error of law. Ground 3 is made out.

Disposition and orders 77Because ground 3 is established, the appeal must be allowed. Section 83(3) of the CAT Act provides me with power to affirm, vary or set aside the decision of the tribunal or to remit the case to the tribunal. 78In the circumstances of this case, the most appropriate resolution is to remit the matter to the tribunal to be dealt with according to law. 79The tribunal did not consider to finality the other questions which arose namely whether s 65K required a special resolution and whether it should have acceded to the application by the defendant for there to be a new or amended by-law. I note in passing that the amendment to the by-law would have formalised the availability of the lift to other occupants of the tower block for the movement of furniture and in medical emergency when a stretcher was required. While the tribunal expressed some tentative views on the former matter, it did not need to resolve those issues to finality because of the conclusion it had reached in relation to the principal question before it. 80Further, the nature of the appeal to this Court is on a question of law. While this Court has power to vary the orders or make orders that the tribunal should or could have made, the tribunal is in a better position to determine the factual issues that arise. 81It is also of some concern that the position of the proprietors of the lots on levels 16 and 17 (lots 166 and 60) is not known. They are affected by the outcome of the case. Prior to the present dispute, the occupiers or owners of lots 166 and 60 enjoyed the same access to lift 3 as did the defendant. While the tribunal referred in passing to their interest (for example, at [35], [39], [59] ) and noted at [31] that "lots 60 and 166 did not make submissions or take part in the proceedings", the orders made - that the exclusive use of lift 3 be restored to the owner of lot 61 - did not acknowledge their interest at all. It may be that this is their preferred position because they do not want to be liable for the costs associated with the repair and maintenance of the lift. I simply do not know. 82In any event, I am firmly of the view that the proper order to make is to remit the matter to the tribunal to be dealt with according to law. 83Accordingly, I make the following orders: (1)Application for leave to appeal granted. (2)Appeal allowed. (3)The judgment and orders of the Civil and Administrative Tribunal of New South Wales on 24 April 2014 be set aside. (4)The matter is remitted to the NSW Civil and Administrative Tribunal to be dealt with according to law. (5)The defendant is to pay the plaintiff's costs.

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: 19 November 2014

Strata Schemes Management Act 1996(NSW)

The Owners - Strata Plan No 73943 v Gazebo Penthouse Pty Limited

At a glance

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Before

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Judgment (12 paragraphs)

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Legislation Cited (3)

Cases Cited (15)

Cited By (7)