The Owners - Strata Plan No. 77109 v Gokani-Robins Pty Ltd

Background

1. It is necessary to briefly set out how these proceedings came before the Tribunal.
2. The appellant (as plaintiff) had commenced proceedings 2020/00252859 in the Local Court by statement of claim filed 31 August 2020 (Local Court proceedings) seeking recovery of $19,740.08 from the respondent (as defendant). That document is found in the appeal bundle (AB) 117. There, the appellant sought recovery of monies under: 1. Special By-law 16 clause 3 which relates to call out costs and other loss and damage incurred by the owners corporation in the respect of the fire safety system of the strata scheme arising from "the act, negligence or omission" of an owner or occupier of a Lot; and 2. Under SBL 17 which relates to costs of enforcement of the by-law, costs of rectification of an owner's or occupier's failure to comply with the now repealed Strata Schemes Management Act 1996 (NSW) (1996 Management Act), the now repealed Strata Schemes (Freehold Development) Act 1973 (NSW) (1973 Development Act) or the by-laws and interest thereon.
3. We were not provided with any defence filed by the respondent lot owner in the Local Court proceedings. However, we were told that an assessor of the court had stood over the Local Court proceedings to permit the respondent to bring the present proceedings in the Tribunal to have SBL 17 declared invalid.
4. Having drawn the parties' attention to Sch 4 cl 5 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), we understood from the parties' submissions that the issue of invalidity of SBL 17 had not been raised in the Local Court proceedings and was not the subject of a dispute in those proceedings at the time the present proceedings were commenced. Consequently, the Tribunal was not deprived of jurisdiction to determine the issue of invalidity of the SBL 17: cf NCAT Act Sch 4 cl 5(7).

Notice of Appeal and history of appeal proceedings

1. The Notice of Appeal was filed on 5 September 2022. The appeal was lodged in time.
2. Accompanying the appeal was an application for a stay. This application was determined by the Appeal Panel 23 September 2022. The orders made by the Tribunal included the following: 10 In respect of the decision made on 08 August 2022 in matter number SC 22/00096, and until further order of the Tribunal or finalisation of the appeal, whichever is the earlier in time: (a) Order 2 is stayed; and (b) The effect of order 1 is varied in that Special By-Law 17 (as described in the decision) is declared to be invalid: (i) in respect of amounts levied by the appellant against a lot owner pursuant to Special By-Law 17 which are already paid by the respective lot owner, on and from 8 August 2022; and (ii) in respect of amounts levied by the appellant against a lot owner pursuant to Special By-Law 17 which remains unpaid, on and from 14 July 2020. 11 The appellant is directed to provide to any lot owner in the scheme whose Current Owner Account balance is affected by order 10 herein, an updated Current Owner Account giving effect to that order, within 14 days.
3. In its Notice of Appeal the appellant sought the following orders: 1. To the extent required, leave to appeal is granted; 2. The appeal is allowed; 3. Paragraphs (1) and (2) of the orders made by the Tribunal on 8 August 2022 in NCAT file No. SCC 22/00096 is set aside; 4. The decision under appeal is varied pursuant to subsection 81(1)(b) of the Civil and Administrative Tribunal Act 2013 by making an order instead of orders (1) and (2) as follows: "The Applications in file nos. SC 22/00096 is dismissed."
4. The appellant raised 12 grounds of appeal as follows: 1 The Tribunal erred in failing to give adequate reasons in respect of its decision to invalidate each part of the by-law. 2 The Tribunal, having found that clause 17.1 of the by-law was inconsistent with certain legislation and therefore inoperative by reason of s 136(2) of the Strata Schemes Management Act, erred in finding that clause 17.1 of the by-law was 'harsh unconscionable or oppressive' because it operated in a manner unconstrained by that legislation. 3 The Tribunal erred in finding that clause 17.1 of the by-law would enable the Appellant to recover costs without any limitation of 'reasonableness', without any opportunity for independent review and in circumstances where the determination of costs was entirely within the control of the Appellant, despite the applicability of relevant costs legislation, including the following: (a) Civil Procedure Act, s 98; (b) Local Court Act, s 37; (c) Local Court Rules, r 2.9(3)(b); (d) Legal Profession Uniform Law Application Act 2014, ss 75-76; (e) Legal Profession Uniform Law, ss 172-173, 198 and 200. 4 The Tribunal erred in failing to take into account the following submissions made to it by the Appellant in respect of clause 17.1 of the by-law: (a) When recovering costs under a contract they must be reasonably incurred and reasonable in amount; (b) There is an opportunity for the Respondent to seek review as it is a third party payer entitled to seek assessment under the Legal Profession Uniform Law; (c) The ultimate determination, as to the amount recoverable, is in the control of the Courts. The Owners Corporation may only recover by commencing legal proceedings and having a Court determine the claim. 5 The Tribunal erred in finding that: (a) The provisions of clause 17.1 of the by-law did not require the commencement of Court proceedings in order to effectuate recovery of expenses under it; or, in the alternative, (b) The Appellant was able to recover expenses under clause 17.1 without having to commence Court proceedings. 6 The Tribunal erred in its construction of clause 17.2 of the by-law, and in particular its conclusion that: (a) The word 'should' ought not be construed as a mandatory requirement; (b) The word 'anything' ought to be construed as meaning something more than 'work'. 7 The Tribunal erred in failing to find that clause 17.2 of the by-law reflected the terms of s 120 of the Strata Schemes Management Act. 8 Further, or in the alternative, the Tribunal erred in finding that clause 17.2 of the by-law was 'harsh, unconscionable or oppressive' on the basis that: (a) it imposed requirements that were additional to those in s 120 of the Strata Schemes Management Act; (b) it was not limited by any notion of 'reasonableness'; and (c) it did not provide for the Respondent to be engaged in the Appellant's decision-making process or any review of it. 9 The Tribunal erred in failing to take into account the following relevant considerations in its determination of whether clause 17.2 of the by-law was 'harsh, unconscionable or oppressive': (a) The thing being regulated is lot property connected to the common property; (b) The Respondent is responsible for that lot property; and (c) It would be unfair for the Appellant to bear the expenses arising from any breach of clause 17.2 of the by-law in circumstances where those expenses ought to have been borne by the Respondent in view of (a) and (b) above. 10 The Tribunal erred in finding that clause 17.3 of the by-law was 'harsh, unconscionable or oppressive' on the basis of its erroneous findings in relation to clauses 17.1 and 17.2. 11 The Tribunal erred in denying the Appellant procedural fairness by determining that the by-law ought to be invalidated as at 14 July 2020 without giving the parties an opportunity to be heard on that particular date. 12 The Tribunal erred in failing to find that the by-law was not 'harsh, unconscionable or oppressive'.
5. Despite an order being sought for leave to appeal, it was made clear to us at the hearing of the appeal that leave to appeal was not sought. In this regard, the appellant said all grounds of appeal raise questions of law. As necessary we will return to the proper categorisation of the grounds of appeal below.

Consideration

1. There is a right of appeal on a question of law: s 80(2)(b) of the NCAT Act. As noted above, the appellant contended all its grounds raise questions of law.
2. In its written submissions in chief, the appellant dealt with its grounds of appeal under the following headings: 1. Ground 1: failure to give adequate reasons; 2. Grounds 2-5, 12: failure to give proper effect to s 136(2) of the SSMA; error in finding that clause 17.1 of the By-Law was 'harsh, unconscionable or oppressive'; 3. Grounds 6 and 7: erroneous construction of clause 17.2 of the By-Law; 4. Grounds 8-9, 12: error in finding that clause 17.2 of the By-Law was 'harsh, unconscionable or oppressive'; 5. Grounds 10, 12: error in finding that clauses 17.3 and 17.4 of the By-Law was 'harsh, unconscionable or oppressive'; 6. Grounds 11: Denial of procedural fairness.
3. We will deal with these matters under the following hearings: 1. Were the reasons inadequate? 2. Was SBL 17 harsh, unconscionable or oppressive? 3. Was the appellant denied procedural fairness in connection with the date the Tribunal's order declaring the SBL 17 was invalid was to take effect?

Were the reasons inadequate?

1. It is uncontroversial that failure to give adequate reasons is an error of law: see eg Pollard v RRR Corp Pty Ltd [2009] NSWCA 110. The decision of the Court of Appeal in New South Wales Land and Housing Corporation v Orr [2019] NSWCA 231, particularly the reasons of Bell P at [65] and following, sets out the principles applicable in determining adequacy or reasons.
2. The appellant says the reasons were inadequate because, having found SBL 17.1 was inconsistent with another Act or law and therefore had no force or effect by reason of s 136(2) of the SSMA, the Tribunal did not explain how the by-law (or part of a by-law) which had no effect could be "harsh, unconscionable or oppressive" and thereby susceptible to the Tribunal's order making powers under s 150 of the SSMA.
3. Reliance was place on the decision of White J (as he then was) in White v Betalli (2006) 66 NSWLR 690; [2006] NSWSC 537 (White) at [3] and The Owners of Strata Plan 63731 v B&G Trading Pty Ltd [2020] NSWCATAP 202 (B&G Trading) at [68]-[75] and the proposition that the existence of inconsistency between a by-law and an Act or law did not render the by-law invalid. Rather, the operation of s 43(4) (being the equivalent provision under the now repealed Strata Schemes Management Act, 1996 (NSW) to s 136(2) of the SSMA) merely rendered the by-law inoperable to the extent of any inconsistency.
4. This ground misunderstands the Tribunal's reasons and the effect of the decisions to which the appellant refers.
5. The Tribunal was concerned with an application in which the respondent (applicant at first instance) sought an order that SBL 17 was invalid. An order was sought under s 150(1) of the SSMA. That section provides: 150 Order invalidating by-law (1) The Tribunal may, on the application of a person entitled to vote on the motion to make a by-law or the lessor of a leasehold strata scheme, make an order declaring a by-law to be invalid if the Tribunal considers that an owners corporation did not have the power to make the by-law or that the by-law is harsh, unconscionable or oppressive. (2) The order, when recorded under section 246, has effect as if its terms were a by-law repealing the by-law declared invalid by the order (but subject to any relevant order made by a superior court). (3) 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.
6. The interplay of s 136, 139(1) (by-law must not be harsh unconscionable or oppressive) and s 150 was considered by the Court of Appeal in Cooper v The Owners - Strata Plan No 58068 [2020] NSWCA 250 (Cooper). Of s 150, Basten JA said at [19]: Finally with respect to the statutory scheme, it may be noted that s 150(1) has two limbs. The first arises where the Tribunal finds that a by-law is beyond power; the second, where a by-law is not in accordance with the requirement of s 139(1). Finally, given the limited nature of the appeal to the Appeal Panel, it may be noted that the precondition to a declaration of invalidity is the Tribunal's state of satisfaction as to the lack of power or breach of s 139(1).
7. It is clear from his Honour's reasons that section 150 has two bases upon which an order declaring a by-law invalid might be made.
8. The Tribunal determined: 1. SBL 17 was inconsistent with the Civil Procedure Act 2005 (NSW) (CP Act) or the Local Court Act 2007 (NSW) (Local Court Act). 2. The fact of inconsistency does not mean the by-law is invalid- reference being made to the decisions in White and B&G Trading. Rather, those parts of the by-law that were not inconsistent remained operable. 3. As the by-law provided "a mechanism for recovery" it was a by-law "for the management and administration of lots of the strata scheme" as permitted by s 136(1) of the SSMA. 4. Consequently, there was power to make the by-law and that part of s 150(1) which permitted the Tribunal to make an order if it "considers that an owners corporation did not have power to make a by-law" did not permit invalidation on this basis: Reasons at [27]-[40].
9. The Tribunal then considered the next, distinct question, namely whether the by-law could be declared invalid because it was harsh, unconscionable or oppressive.
10. As to this challenge, the Tribunal considered each of clauses 17.1, 17.2, 17.3 and 17.4 of SBL 17. The Tribunal made the following findings.
11. Clause 17.1 permitted the owners corporation "unilaterally … to determine the costs of enforcing a by-law (including the cost of legal proceedings) and to recover that money as a debt": reasons at [52]. The Tribunal then explained at [53] of the Reasons: Clause 17(1) is unjust, harsh, unconscionable and oppressive, and operates in an inevitably arbitrary manner because: (1) There is no requirement that the costs of enforcement be reasonably incurred (including whether there is double recovery), or be a reasonable amount or proportionate to the breach; (2) There is no opportunity for review or independent assessment of the costs; (3) The determination of costs is entirely in the control of the owners corporation.
12. Clause 17.2 was considered by the Tribunal in the context of s 120 of the SSMA. At [56]-[59] the Tribunal found: 56 Section 120 SSMA states relevantly: (2) Work required to be carried out under term or condition of by-law If a person who is the owner, mortgagee or covenant chargee in possession, tenant or occupier of a lot in the strata scheme fails to carry out work that is required to be carried out by the person under a term or condition of a by-law of the scheme, the owners corporation may carry out the work and recover the cost of carrying out the work from that person, the owner of the lot (if the person is not the owner) or any person who, after the work is carried out, becomes the owner of that lot. (5) Recovery of costs as a debt The costs incurred by an owners corporation in carrying out any work referred to in this section may be recovered by the owners corporation as a debt. 57 Despite obvious similarities between section 120 and clause 17(2), there are significant differences. 58 For the following reasons the Tribunal finds that clause 17(2) is unjust, harsh, unconscionable and oppressive because the broad discretion it confers on the owners corporation means clause 17(2) would 'inevitably operate arbitrarily in some cases': (1) Whereas section 120(2) refers to work required to be carried out on an owner's lot under a by-law (Tribunal's emphasis), clause 17(2) refers to 'anything' that 'should' have been done under a by-law. (2) The word 'should' in its ordinary meaning denotes that a particular action is recommended or advisable but not mandatory or required. (3) While section 120(2) limits the owners corporation's discretion to work that is required or mandatory under a by-law, clause 17(2) significantly broadens that discretion to include 'anything' that is not just required but is merely recommended or advisable. (4) What 'should' have been done under a by-law is, by inference, determined by what the owners corporation in its discretion considers advisable and is not limited to what is actually required by the SSMA or the by-laws. (5) The authorisation for the owners corporation to do 'anything' on an owner's lot that the owner should have done under the SSMA or by-laws is extremely permissive and not limited by any requirement of reasonableness (apart from when an owner has not done 'anything' properly); (6) The broad discretion conferred on the owners corporation is not balanced by an opportunity for the lot owner to engage in the process or seek review.
13. As to cl 17.3, the Tribunal said this by-law "falls away" because it is a mechanism for recovering costs payable under cls 17.1-17.2 which are harsh, unconscionable or oppressive: Reasons at [61]-[65]. Similarly, cl 17.4 "falls away": Reasons at [66]-[67].
14. The appellant contends the Tribunal, in determining certain provisions were inconsistent with the CP Act and Local Court Act and therefore inoperative, failed to explain why, in light of the findings of inconsistency, SBL 17 could nonetheless be harsh, unconscionable and oppressive.
15. In our view such an explanation was not necessary.
16. The Tribunal did not find that the operation of the by-law was harsh, unconscionable or oppressive because it purported to operate in a manner contrary to the CP Act or the Local Court Act. Rather, the Tribunal found that each of clauses 17.1 and 17.2 operated in a manner which gave the owners corporation an ability to undertake work and impose charges for costs and expenses incurred (which included but was not limited to costs of legal proceedings) without any requirement for those works or costs to be in fact reasonable or independently reviewable or assessable at the request of the person obliged to pay.
17. This was the reason why the by-law contravened s. 139(1) of the SSMA. It was a conclusion based on findings concerning the operation of SBL 17 separate to issues arising from inconsistency with the CP Act and Local Court Act.
18. Once it is understood there are two distinct limbs to the operation of s 150, a separate consideration was both permissible and appropriate in the context of providing reasons for decision. In our view, for the reasons explained above, the conclusion concerning whether the by-law was invalid because of the operation of s 136 was not a necessary part of the reasoning process which required explanation in the context of the second limb and the reasons provided, when taken as a whole, permit the reader to understand why a decision on each limb was made.
19. Whether there is legal error in the decision is a different matter. However, in our view, the challenge based on inadequate reasons fails.

Was SBL 17 harsh. unconscionable or oppressive?

1. Save for the procedural fairness ground, the other grounds of appeal challenge the Tribunal's conclusion that SBL 17 was harsh unconscionable or oppressive. There are several ways in which this argument is put.

Submissions

1. First, the appellant submits that because the Tribunal found inconsistency and therefore inoperability of certain provisions by reason of the CP Act and the Local Court Act and the operation of s 136 of the SSMA, the Tribunal made inconsistent determinations in deciding that SBL 17.1 was harsh, unconscionable or oppressive and therefore liable to be declared invalid pursuant to s 150 of the SSMA.
2. This submission was further developed as follows: 1. To the extent SBL 17.1 is inconsistent with the CP Act or Local Court Act it simply has no operation to the extent of inconsistency. 2. In order to enforce recovery of an amount of costs "as a debt" it would be necessary for the owners corporation to commence Court proceedings. The wording of cl 17.1 "requires such a conclusion". Of necessity, relevant Court rules relating to costs would apply. Further, "it is entirely unclear how such a debt could be recovered absent such proceedings". Consequently, the by-law would be subject to the provision of those other Acts. 3. Further, the by-law operates as a mutually binding covenant as provided in s 135 of the SSMA. SBL 17.1 is properly to be regarded as a "contractual indemnity in respect of costs", which can be enforced pursuant to a court's general cost discretion and any statutory constraints, such as the limit on cost in particular Local Court proceedings. 4. As to costs outside the context of court proceedings, legal costs are only recoverable to the extent they are fair and reasonable and not unnecessarily incurred. Reference is made to the Legal Profession Uniform Law (NSW), particularly ss 172-173 and 200. As a "third party payer" a lot owner could apply for assessment of any costs as permitted by ss 171 and 198. 5. Because the by-law did not operate in the manner assumed by the Tribunal, it could not be harsh, unconscionable or oppressive. In this regard the appellant contends the Tribunal misdirected itself concerning the statement of Basten JA in Cooper at [19].
3. Second, the appellant says the Tribunal misconstrued SBL 17.2 and its operation, in particular the word "should" and the word "anything".
4. The appellant said that the power of the owners corporation was constrained by the words "under the SSMA, SSFD or the By-laws". The word "should", in its context, did involve a mandatory connotation and the word "anything" is confined to "work", the owners corporation being permitted to enter lots to do "the work" and the lot owners being obliged to pay for "the work".
5. Consequently, the terms of by-law 17.2 "were broadly equivalent to those in s 120 of the SSMA and the Tribunal was in error in deciding to the contrary.
6. Thirdly, in respect of SBL 17.2, the appellant says that if work is required under the legislation or the by-laws "then there is no proper scope for considerations of 'reasonableness' to intrude and the lack of possibility of review is irrelevant".
7. Alternatively, to the extent there is any divergence between s 120 and SBL 17.2, the Tribunal had erroneously assumed this, of itself, gave rise to a finding that clause was harsh, unconscionable or oppressive. The appellant says the mere fact by-law goes beyond the terms of the SSMA is not a reason for such a finding, any inconsistency been resolved by the operation of s 136(2) of the SSMA.
8. The appellant submits that the by-law could not operate arbitrarily "where all that it permitted the owners corporation to do was to carry out work on the Lots which the Lot Owner ought to have carried out itself under the SSMA, SSFD or the By-laws". A review of any decision of the owners corporation was permissible and provided for in s 232 of the SSMA, a matter which the Tribunal failed to have regard in reaching its conclusion.
9. Finally, the work regulated by cl 17.2 "was work to the lot property connected to the common property, in circumstances where lot owners are responsible for their own Lot property, and it would be unfair to the owners corporation and the other lot owners to require them to bear the expenses for work which the lot owner in question ought to have carried out". The Tribunal erred in failing to take account of these matters.
10. As to the Tribunal's conclusion concerning by-laws 17.3 and 17.4, these were dependent upon the Tribunal's reasoning concerning by-laws 17.1 and 17.2.
11. In reply, the respondent said that the issue raised was not a question of law. Further, reliance was placed on the terms of the by-law and the contention that, according to its terms, amounts claimed could be added to a lot owner's ledger in the accounts of the owners corporation and, in this case were added to the respondent's ledger. This, in turn, has the consequence of the loss of voting rights of an affected lot owner.
12. The respondent says the Tribunal dealt with these matters in its reasons in reaching the conclusion by-law was harsh, unconscionable or oppressive.
13. In reply, the appellant said the construction of the by-law involves a question of law, reference being made to Chief Commissioner of State Revenue v Benidorm Pty Ltd [2020] NSWCA 285; (2020) 184 NSWLR 232 at [7].
14. The submissions raised in connection with s 136 and the conclusions reached by the Tribunal, were said to "all impact the assessment of the effect of the By-law for the purposes of s 136 (2) of the SSMA and, relatedly, whether or not it was 'harsh, unconscionable or oppressive' within the meaning of s 150 (1) of the SSMA. Consequently, the appellant submits "[t]hey were, accordingly, matters which the Tribunal ought to have taken into account in light of the 'subject matter, scope and purpose' of the legislation".

Analysis

1. SBL 17 was made prior to the introduction of the SSMA. As noted in the relevant definitions in the by-law, it originally operated in the context of the 1996 Management Act and the 1973 Development Act.
2. Consequent upon the enactment of the SSMA, the Tribunal found the by-law contravened s 139(1) of the SSMA and made an order declaring the by-law invalid pursuant to s 150.
3. As indicated above, and as made clear by the decision of the Court of Appeal in Cooper, the question of whether a by-law is harsh. unconscionable or oppressive is a separate question to invalidity arising in consequence of a by-law being beyond power by reason of s 136 of the SSMA.
4. The expression "harsh, unconscionable or oppressive" was considered by the Court of Appeal in Cooper.
5. Basten JA described these words as a triune. At [26] of Cooper His Honour said (citations omitted): Thirdly, the phrase is better understood as a triune, three words conveying a single criterion. It is towards the other end of a scale from the hendiadys "just and equitable". It invokes the application of values, the content of which derives no elucidation from reference to synonyms, nor from a supposed differentiation from other similar words such as "unjust".
6. His Honour then said at [45] that s 139 "focuses on the character of the particular by-law …".
7. At [78] of Cooper, Macfarlan JA said that a by-law may be harsh, unconscionable or oppressive where it imposes a restriction that "could not on any rational view enhance or be needed to preserve the other lot owners' enjoyment of their lots and the scheme common property". In doing so, His Honour, at [75] endorsed the reasons of Basten JA and Fagan J.
8. Fagan J separately considered the operation of each of the terms harsh, unconscionable or oppressive, His Honour noting the terms are "grouped disjunctively" in the context of a "composite expression". His Honour concluded that the requirement that a by-law not be "oppressive" was the provision contravened by the by-law regulating the keeping of animals in Cooper: at [90] and following. In this regard, His Honour pointed to the by-law being oppressive "because it prohibited an aspect of the use of lots in the strata scheme that is an ordinary incident of ownership of real property, namely, keeping a pet animal, and the prohibition provides no material benefit to other occupiers of the building in the use or enjoyment of their lots or of the common property: at [94].
9. His Honour found it unnecessary to consider "what characteristics or operation of any by-law might engage [the] statutory description" of harsh: at [91] and was unclear as to the expression "unconscionable" and its operation in connection with a by-law: at [92].
10. As the Tribunal found, whether SBL 17 was harsh, unconscionable or oppressive requires a consideration of its terms in the manner in which it operated.
11. The text of SBL 17 is set out above. It's operation can be summarised as follows: 1. It permits the owners corporation to recover the "costs of enforcement of the by-law and rectification of the owner's or occupier's failure to comply with any obligation under the SSMA, SSFD or the by-laws: cl 17.1. It includes costs of compliance with SBL 17. 2. Costs include but are not limited to the costs of any repair, rectification or remediation works, the costs of any strata manager, building manager, other expert or legal costs and the costs of conducting legal proceedings: cl 17.1. The costs to which it applies are not just legal costs, whether incurred in proceedings or otherwise. 3. These costs are a debt due which a lot owner "must pay" and a lot owner is obliged to "indemnify" the owners corporation: cl 17.1. By this term, there is no need for the taking of proceedings to establish any entitlement. Irrespective of the position concerning legal costs, there is no requirement for cost of works and others engaged to assist in respect of those works to be reasonable in amount or reasonably incurred. 4. The operation of SBL 17 extends to recovery from the relevant Lot owner of costs of the owners corporation doing anything on an owner's lot or common property that a lot owner should have done under the SSMA, SSFD or the by-laws. In this regard, the owners corporation is entitled to decide what has not been done, as long as it holds a reasonable opinion, whether or not the work is in fact necessary and whether or not the manner in which the work is to be carried out is in fact reasonable: cl 17.2. The by-law does not, by its terms, give any independent right of review to the affected lot owner either before or after the work is done. This is despite the fact the work in question may not only affect common property but also the owner's lot property. 5. Having formed an opinion, the owners corporation may give a notice to enter the lot owner's property and the lot owner "must" give that access at the lot owner's cost: cl 17.2. There is no constraint on who may enter and, on its face, this by-law purports to give a right beyond that granted by s 122 of the SSMA, even over objection of the affected lot-owner. In this regard, subs 122(2)-(4) of the SSMA provide: (2) An owners corporation for a strata scheme may, by its agents, employees or contractors, enter on any part of the parcel for the purpose of determining whether any work is required to be carried out by the owners corporation in accordance with this Act. (3) In an emergency, the owners corporation may enter any part of the parcel for those purposes at any time. (4) In a case that is not an emergency, the owners corporation may enter any part of the parcel for those purposes with the consent of any occupier of that part of the parcel or, if the occupier does not consent, in accordance with an order of the Tribunal under this Division. 1. As to the monies for which a lot owner is liable, it is "due and payable on written demand or at the direction of the owners corporation": SBL 17.3.1. While proceedings can be commenced to recover an amount due, because the amount is immediately due and payable, "voting rights of the owner are diminished" in accordance with "Schedule 2 clause 10 (8) of the [1996 Management Act]" which provided: (8) Voting rights may not be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count unless payment has been made before the meeting of all contributions levied on the owner, and any other amounts recoverable from the owner, in relation to the lot that are owing at the date of the notice for the meeting. The equivalent provision is now found in Sch 1 cl 23(8) which provides: (8) Voting rights cannot be exercised if contributions not paid A vote at a general meeting (other than a vote on a motion requiring a unanimous resolution) by an owner of a lot or a person with a priority vote in respect of the lot does not count if the owner of the lot was an unfinancial owner at the date notice of the meeting was given and did not pay the amounts owing before the meeting. "Unfinancial owner" is defined in s 3 of the SSMA to mean "an owner of a lot in a strata scheme who has not paid all contributions levied on the owner that are due and payable, and any other amounts recoverable from the owner, in relation to the lot". Consequently, the by-law operates immediately on the affected lot owner, without the need for any proceedings or any adjudication about whether the costs are reasonable in amount or necessarily incurred.
12. The operation of the by-law in the above manner is unaffected by section 136 of the SSMA and the extent to which by-law may be rendered inoperative because it is inconsistent with the SSMA or any other Act or law. Whether or not there might be a right to assessment of legal costs, or a constraint of legal costs applicable because of the rules of court in connection with the particular proceedings, the other amounts recoverable are not reviewable or affected by the CP Act or Local Court Act.
13. As to the necessity for the commencement of legal proceedings to "enforce recovery", this submission ignores the consequences of the operation of the by-law which makes amounts due and payable on demand. This in turn operates to prevent the exercise of voting rights.
14. As to the submissions concerning the word "should" in its context in cl 17.2, and that its operation is confined to "work" for which a lot owner might be obliged to pay, the extent of the work is fixed by the "reasonable opinion of the owners corporation" not whether the work and costs thereof is in fact reasonable. That was the conclusion of the Tribunal [58]. Also, it can include legal costs associated with such work whether arising from legal proceedings or not. Lastly, as the by-law permits entry to a Lot without an order of the Tribunal, its effect is to allow the owners corporation access to do work which the owners corporation thinks necessary without an order of the Tribunal, even if the affected lot owner does not agree and even if there is no emergency.
15. These differences to ss 120 and 122 of the SSMA are a significant expansion of the rights of the owners corporation and have the effect of overriding a lot owners right to regulate who enters their property and what work is done on their lot and associated common property. In light of the provisions in the SSMA that requires disputes concerning access to do work to be first brought to the Tribunal (except on the case of an emergency), SBL 17 consequently operates in a manner that is harsh, unconscionable or oppressive.
16. The argument concerning the operation of s 136(2) does not affect this position.
17. As said in Cooper, whether a by-law is harsh. unconscionable or oppressive is a separate question from whether it has no effect to the extent of inconsistency.
18. If s 136(2) operated in the manner contended by the appellant then a by-law that was harsh unconscionable and oppressive would be inconsistent with s 139(1) of the SSMA and would be inoperative. Consequently, s 150 would never have any work to do.
19. In our view, this was not the intent of the Legislature, s 150 permitting a by-law infringing the requirements in s 139(1) of the SSMA to be declared invalid by order of the Tribunal and thereby removed from the by-laws of a strata scheme.
20. In this regard, in deciding whether a by-law is harsh, unconscionable or oppressive, the Tribunal is required to look at its terms. The Tribunal's role is not to rewrite the by-law and the fact that "it may in some circumstances operate fairly cannot save it from invalidity": Cooper per Macfarlan JA at [81].
21. There is no doubt the parties can agree any necessary work and cost. It is in the absence of any agreement SBL 17 will inevitably operate in a manner that is harsh unconscionable or oppressive. This arises because of the manner in which it operates to fix the scope of work, permit access, specify the costs recoverable and deprive the lot owner of voting rights immediately "on written demand or at the direction of the owners corporation".
22. As to the appellant's submission concerning the arbitrary operation of SBL 17 and the possibility of a lot owner applying for review of any claims under s 232 of the SSMA, this submission does not address the matters concerning the operation of the by-law set out in the previous paragraph. The by-law has a direct impact on a lot owners rights of ownership based on a view formed by the owners corporation and actions permitted to be taken under the by-law.
23. This is the sense in which the Tribunal described the by-law as operating in "an inevitably arbitrary manner". The by-law does not require the owners corporation to first establish its right to do work nor does it require consent of the affected lot owner to the work or to permit entry to their lot property where there is a dispute.
24. As to who bears the cost of necessary work, this is regulated by the SSMA and the right of an owners corporation to obtain orders from the Tribunal to permit it to access lot property, carry out work found to be necessary and recover the costs of doing so. In these circumstances, there is nothing unfair in the sense used by the appellant, there being remedies existing under the SSMA to permit an owners corporation to do work and recover costs from a lot owner who fails to comply with their obligations under the SSMA.
25. Whether one approaches the analysis of SBL 17 on the basis the words "harsh, unconscionable or oppressive" are a "triune" or are to be separately considered, to use the words of Macfarlan JA, SBL 17 "could not on any rational view enhance or be needed to preserve the other lot owners' enjoyment of their lots and the scheme property". Rather, it is to permit the owners corporation to carry out what work it thinks is appropriate and require a lot owner to indemnify the owners corporation for all costs incurred. It places a burden on a lot owner to take positive action to prevent the owners corporation entering their lot to do work to the lot which the lot owners does not approve rather than the position that would otherwise operate under the SSMA which requires the owners corporation to establish a need where there is a dispute.
26. It follows that we do not accept the Tribunal was in error in making an order declaring the by-law invalid.

Was the appellant denied procedural fairness in connection with the date the Tribunal's order declaring the SBL 17 was invalid was to take effect?

1. The appellant says it was denied procedural fairness because the Tribunal decided "invalidation should have retrospective operation, commencing on 14 July 2020".
2. Section 150(3) of the SSMA, set out above, provides that an order made declaring a by-law invalid operates from the date which it is recorded under s 246 by the Registrar General or from "an earlier date specified in the order".
3. The appellants says no opportunity was given to the parties to be heard on the date upon which the by-law was to be invalidated. Had the issue being raised by the Tribunal the appellant says "evidence could have been led about other lot owners and the Owners Corporation having change their position based on the By-Law having effect". In turn, the appellant contends that there would be flow on effects, for example in relation to budgets and settlement of disputes.
4. In our view, this submission ignores the application made by the respondent lot owner for an order declaring SBL 17 invalid and an order that its voting rights be reinstated. The respondent also sought "such other orders the Tribunal deems necessary or appropriate". The basis of the application was that the lot owner had been improperly levied legal costs and denied its voting rights.
5. In its submissions dated 5 April 2022 (before the hearing at first instance on 12 April 2022) the respondent made clear it sought orders that "amounts added and/or otherwise charged by the [owners corporation] to the ledger balances of the [lot owner] in Strata Plan 77109 in reliance upon [Special By-law 17] be removed from said ledger balances": AB p185.
6. The proceedings were brought in the Tribunal to resolve the issue of whether the by-law was valid and thereby operated to permit the charges being imposed and the voting rights being denied.
7. On any view, the date on which any order operated to invalidate the by-law was critical to a resolution of the issues before the Tribunal. A declaration operating on a date after the order was registered would not have provided relief in the form sought in the application and would not address the matters raised in submissions - at least those made by the respondent lot owner.
8. It was open to the parties to make submissions and provide evidence about this matter and any other consequential orders that should be made.
9. In these circumstances, particularly where the parties were represented by lawyers and in the circumstances of how these proceedings came before the Tribunal at first instance, we do not accept the respondent was denied procedural fairness on this matter.

Orders

1. It follows from the above that the appeal should be dismissed. We will make that order. We also make orders permitting any submissions on costs.
2. The Appeal Panel makes the following orders: 1. The appeal is dismissed. 2. In respect of any application for costs, the following directions apply: 1. The applicant for costs (costs applicant) is to file and serve any application, evidence and short submissions (not more than 5 pages) within 14 days from the date of these orders. 2. The respondent to any costs application is to file and serve any evidence and submissions in reply (not more than 5 pages) within 21 days from the date of these orders. 3. The costs applicant is to file and serve any submissions in reply within 28 days from the date of these orders. 4. The submissions from the parties are to include submissions as to whether an order should be made dispensing with a hearing pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013 (NSW).

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: 24 March 2023