York & Edwards v The Owners - Strata Plan No 675 - [2024] NSWCATAP 121 - NSWCATAP 2023 case summary

NCAT Appeal Panel|2023-05-02

REASONS FOR DECISION

Bernadette York and Kevin Edwards, the appellants in this appeal, own a residential lot and a commercial lot in Strata Plan No 675 located in Wagga Wagga. The strata plan primarily consists of shops and offices and is known as the Australian Arcade. Over the years since the strata plan was first registered in April 1964 there have been various subdivisions of lot and common property. The last of these subdivisions was registered on 17 June 2014 and resulted in 36 lots in the scheme with 1,922 unit entitlements.
Ms York and Mr Edwards own lot 31 which is a residential lot with a unit entitlement of 60. They also own lot 32, a commercial lot located on the first floor of the building which is an unoccupied loft in a dilapidated condition. Its current unit entitlement is 24.
Darren Keen of Keen Property Pty Ltd was instructed by The Owners - Strata Plan 675 (the Owners and respondent in this appeal) to provide an opinion as to the market value of the lots in Strata Plan 675 as at the date of registration of the last subdivision on 17 June 2014. It seems that it was not controversial that as at 17 June 2014 and up to the present time there was a disparity (either higher or lower) between unit entitlement and value of many of the lots in the strata plan. In an expert report dated 11 January 2021 (the Keen Report) Mr Keen set out a revised market value and unit entitlement for each lot as at 17 June 2014.
The Owners then brought an application to the Tribunal under s 236 of the Strata Schemes Management Act 2015 (SSMA) for a reallocation of unit entitlements in the scheme in accordance with the proposed reallocation set out in the Keen Report on the basis that the allocation of unit entitlements was unreasonable when the last subdivision was registered. In a decision dated 18 October 2021, the Tribunal found that the allocation of unit entitlements as at 17 June 2014 was unreasonable but declined, for a variety of reasons, to exercise its discretion to make an order reallocating unit entitlements. The Owners appealed to the Appeal Panel from that decision.

The appeal

Under s 80 of the Civil and Administrative Tribunal Act 2013 (NCAT Act), a party may appeal as of right to the Appeal Panel in an internal appeal on any question of law. In respect of any other grounds, in the case of an appeal from the Consumer and Commercial Division of the Tribunal, an appellant must satisfy the Appeal Panel that leave to appeal should be granted under cl 12 sch 4 of the NCAT Act on the basis that the appellant may have suffered a substantial miscarriage of justice because: 1. the decision of the Tribunal under appeal was not fair and equitable, or 2. the decision of the Tribunal under appeal was against the weight of evidence, or 3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
Even if these conditions for the grant of leave are satisfied, the Tribunal has a discretion concerning the grant of leave which it will ordinarily only exercise in the circumstances described in Collins v Urban [2014] NSWCATAP 17 at [84 (2)], namely. 1. issues of principle; 2. questions of public importance or matters of administration or policy which might have general application; 3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand; 4. a factual error that was unreasonably arrived at and clearly mistaken; or 5. the Tribunal having gone about the fact-finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
An appeal to an Appeal Panel does not simply provide a losing party in the Tribunal below with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
In the Notice of Appeal, Ms York and Mr Edwards identify some 14 grounds of appeal which they submit involve errors on a question of law. They also allege other errors in respect of which leave to appeal is sought. The alleged errors on a question of a law can be summarised as: 1. the Tribunal erred in law by making a determination under s 236 of the SSMA without the elements necessary having been made out, including that the Tribunal did not have regard to current and relevant respective values of the lots as required by the SSMA; 2. the Tribunal erred in law by distinguishing Sahade v The Owners - Strata Plan 62022 [2014] NSWCA 208 (Sahade) in circumstances where the present matter and Sahade are similar and by not accepting that the consequences of the increase in strata fees for the residential lot owned by Ms York and Mr Edwards would be a significant and unreasonable prejudice; 3. the Tribunal also erred by incorrectly distinguishing Sahade and by not accepting as real and significant the prejudices Ms York and Mr Edwards would suffer by causing the strata fees for their relatively useless commercial lot to be approximately doubled; 4. the Tribunal erred by failing to take into account uncontested evidence provided by Ms York and Mr Edwards which established that the expenditures of the owners corporation are substantially and disproportionately for the benefit of the commercial lots and not residential lots such as Lot 31; 5. the Tribunal erred by failing to take into account relevant matters as required by the SSMA when it held at [40] that it did not consider that the impact of increased levies on the value of a lot is an independent factor which needs to be considered, independently from the raw fact of the likely increase in levies. It is stated that this is directly contradictory to the views expressed in Sahade by Sackville AJA; 6. the Tribunal erred by incorrectly dismissing significant, relevant and evidenced prejudices to the interests of Ms York and Mr Edwards on bases, including, that the devaluation caused by approximately doubling strata fees on their lots had not been quantified; 7. the Tribunal erred in deciding that prejudices to Ms York and Mr Edwards would need monetary quantification in order to be considered, yet made an order as if there were no relevant prejudices, without having received or sought any quantification from either Ms York and Mr Edwards or the Owners - the party with the resources and onus to justify its application; 8. the Tribunal erred by failing to afford procedural fairness to Ms York and Mr Edwards, who did not have legal representation, including by not informing them at the hearing nor at any stage before making its decision that the Tribunal would need specific quantifications of depreciation in order to assess the issues. Further, the Tribunal made a decision having sought nothing from the Owners, as the party on whom the onus rested to produce a reasonable allocation, as to any quantification of the significant appreciation and depreciation that would be caused to the affected lots; 9. the Tribunal erred by acting with Wednesbury unreasonableness in approving the application after the evidence demonstrated that imposing strata fees of over $9,000 per annum on Lot 31 was unreasonable and out of all proportion to strata fees imposed on such an apartment anywhere in Australia; would render the property significantly less saleable; would impose an unfair cost on the owners of the apartment; would devalue the property; and was inequitable as there was no evidence that the commercial lots were paying above market rates or that the building was so unique and expensive to maintain that all lots were paying above market strata fees; 10. the Tribunal erred by acting with Wednesbury unreasonableness in approving the application after the evidence demonstrated that imposing strata fees on Lot 32 at the same rate as commercial lots was unreasonable; was inequitable as the lot is not serviced by amenities; would render Lot 32 significantly less saleable; would impose an unfair ongoing cost burden on the owners of Lot 32; and would devalue Lot 32; 11. the Tribunal erred in replacing a unit entitlement allocation that was judged to be unreasonable with an unreasonable unit entitlement allocation, instead of a reasonable one as intended by s 236 of the SSMA; 12. the Tribunal erred by not placing the onus on the Owners to demonstrate that the unit entitlement allocation it proposed met the requirements of s 236 of the SSMA in that the proposed allocation was reasonable; 13. the Tribunal erred in law and acted unreasonably including by (a) effectively acting as if it was obliged to make the ordered unit entitlement allocation in the interests of "workability" when it was not, and (b) effectively turning a blind eye to the prejudices that made the allocation unreasonable, on bases including that there was a lack of quantification of those prejudices but ordering the allocation despite never having sought quantification from Ms York and Mr Edwards or the Owner; and. 14. the Tribunal, as set out in the above grounds, erred in law in its decision which amounts to a constructive failure to exercise its jurisdiction.
Ms York and Mr Edwards also seek leave to appeal on the ground that the Tribunal's decision was erroneous because it was obliged to place reliance on the Keen Report which contained methodological errors.

Consideration

There is a good deal of overlap and repetition in the grounds of appeal and we will deal with them as best we can by grouping some grounds together. At the outset we note our view that in the remitted matter the subject of this appeal the Tribunal correctly identified its task. The starting point for the Tribunal's consideration of the exercise of the discretion under s 236(1) of the SSMA to reallocate unit entitlements is, relevantly, that the allocation of the unit entitlements among the lots in the strata scheme was unreasonable at the time a strata plan of subdivision was registered. This question had previously been answered in the affirmative and, in the previous appeal, the Appeal Panel stated that this position was not challenged by Ms York and Mr Edwards: at [69]. Similarly, in the previous appeal they did not seek to challenge the earlier Tribunal's acceptance of the market values of each of the lots as set out in the Keen Report: at [69]. Hence, the Tribunal was bound by the Appeal Panel's orders that these two matters did not, in effect, need to be redetermined.
Therefore, the only issue before the Tribunal was whether it was appropriate to make an order specifying a different until entitlement allocation to that currently in place. In order to make that decision, it was required under s 236(2) of the SSMA "to have regard to the respective values of the lots and to such other matters as the Tribunal considers relevant."
We now turn to the grounds of appeal.

Ground 1

This ground states that the Tribunal erred by not having regard to current and relevant respective values of the lots as required by the SSMA. The Owners short reply to this ground is that, by virtue of the decision in the previous appeal, the Tribunal was required to accept the property values set out in the Certificate of Value on page 53 of the Keen Report.
In their reply to the submissions made by the Owners, Ms York and Mr Edwards expanded upon this ground of appeal. They submitted that, in considering "the respective values of the lots" as required by s 236(2) of the SSMA, the valuations relied upon in the Keen Report to determine that the allocation of unit entitlements was unreasonable in 2014 do not necessarily reflect the current value of the lots in the scheme. They argue that the Tribunal was required, in making any new allocation, to have regard to valuations that are current and pertain to when the reallocation is proposed to be made. They further submit that it was up to the Owners to provide this evidence but it did not.
In our view Ms York and Mr Edwards misunderstand the premise of s 236 of the SSMA. The unit entitlements allocated among the lots in a strata scheme are established at the time the strata plan is registered: s 10, Strata Schemes Development Act 2015. Clause 2 of Schedule 2 of that Act provides that the proposed unit entitlement of each lot is apportioned on a market value basis at the valuation day and totalling the aggregate unit entitlement of all lots. That allocation can be varied in limited circumstances as set out in s 236 of the SSMA. The valuation day for the purposes of the various circumstances set out in s 236(1)(a)-(c) depends upon the event that has occurred - the date of registration, the date when a revised schedule of unit entitlement was lodged at the conclusion of a development scheme or the date of a change in permitted land use.
The relevant date for the assessment of the market value of the lots and determination of the unit entitlement in this case is the date when the last strata plan of subdivision was registered, that is, 17 June 2014. The date of valuation and therefore what the unit entitlement allocation is at any one time does not shift according to the vagaries of the market or other intervening events. That would simply be unworkable. In our view the date of valuation for the purpose of determining whether the unit entitlement allocation was unreasonable under s 236(1) and in determining under s 236(2) whether in fact the unit entitlement should be reallocated is the same. In this case, that is 17 June 2014 and, as the Owners submitted, the relevant values were as set out in the Keen Report.
In their submissions on this ground, Ms York and Mr Edwards also raise other matters concerning levies which are addressed in their other grounds and are considered below.

Grounds 2 and 3

Grounds 2 and 3 state that the Tribunal erred in law by distinguishing Sahade in circumstances where the present matter and Sahade are similar and by not accepting that the consequences of the increase in strata fees in relation to Lots 31 and 32 would be a significant and unreasonable prejudice to the lot owners.
The Tribunal accepted that under the proposed reallocation, the levies on Lots 31 and 32 would increase substantially and that this was a matter it could take into account in considering whether to make the order sought by the Owners. The Tribunal also accepted that the extent to which, as a result of the proposed reallocation, a disproportionate liability for the costs of the strata scheme would fall on lots that do not benefit from that expenditure was also a relevant matter for the Tribunal to consider in exercising its discretion to make the order. In relation to both matters the Tribunal stated that the extent to which the reallocation would impose an unfair burden upon any lot was a factor to be taken into account.
Contrary to the arguments put forward by Ms York and Mr Edwards, the Tribunal did not fail to take the increase in levies into account in exercising its discretion insofar as that increase would impose an unfair burden of strata scheme expenses upon a lot. That it did not exercise the discretion in their favour is a matter we will come to later in these reasons.

Grounds 4

Ground 4 is that the Tribunal erred by failing to take into account evidence provided by Ms York and Mr Edwards which established that the expenditures of the owners corporation are substantially and disproportionately for the benefit of the commercial lots and not residential lots such as Lot 31.
As we understand it, before the Tribunal Ms York and Mr Edwards argued that items such as cleaning costs and insurance are incurred primarily in relation to the commercial lots (other than Lot 32 which they say is distinguishable) and that it is unfair to impose those costs upon the residential lots. They take exception to the statement by the Tribunal in its reasons that: The only evidence before the Tribunal which might suggest that the expenditures of the owners corporation are substantially and disproportionately for the benefit of the commercial lots was evidence tendered by the respondents of the strata levies disclosed in six advertisements for the sale of residential strata units in other strata schemes in Wagga Wagga.
Ms York and Mr Edwards state they provided other uncontested evidence which the Tribunal failed to take into consideration. That evidence was attached to Ms York's supplementary affidavit dated 28 September 2021. This evidence was of residential apartments for sale on realestate.com which had strata levies approximating what would be paid by Lot 31 under the proposed reallocation. These properties were located in Sydney and Perth and, according to Ms York and Mr Edwards, demonstrate that levies of the magnitude that would be paid by Lot 31 are typically levied on luxurious capital city apartments in expensive locations. They also stated there was no evidence of an apartment similar to Lot 31 being required to pay strata fees as proposed and there was no evidence that their particular building is more expensive to maintain than other buildings. By implication, it was stated, the strata levies to be paid by them for Lot 31 were therefore substantially and disproportionately for the benefit of the commercial lots and not Lot 31.
In relation to this ground of appeal, the evidence about other properties in other locations with similar strata levies is not evidence that the strata levies for residential lots in the particular strata scheme in Wagga Wagga are substantially and disproportionately for the benefit of the commercial lots. There was no evidence of apportionment of such costs between lots before the Tribunal. We agree with the Tribunal that the only cogent evidence in this regard that was before the Tribunal was that referred to in its decision as quoted above.
In this and a number of other grounds Ms York and Mr Edwards assert that the Owners bore the onus to provide evidence of certain matters (here, to provide evidence of lots similar to that owned by them with strata fees of the magnitude they would be paying under the proposed reallocation).
The legal burden of proving that the allocation of unit entitlements was unreasonable clearly rests with the Owners. Here, they have satisfied that burden. There is, however, no onus on the Owners to raise other relevant matters as part of its application unless it so chooses, particularly when those matters are not within its knowledge.
It is a matter for the Tribunal to take into account relevant matters in determining whether an order for reallocation should in fact be made. If it does not take relevant considerations into account it will fall into error: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; (1986) 162 CLR 24; Sahade. Those considerations may be raised by any party to the Tribunal proceedings or by the Tribunal itself. A matter having been raised, however, the Tribunal must determine whether the matter is indeed relevant and the weight to be accorded to that matter if it is found to be relevant.
In the normal course the onus of adducing evidence to support an alleged fact lies on the party asserting that fact. In this case insofar as Ms York and Mr Edwards have asserted that there are several relevant matters which should inform the exercise of the Tribunal's discretion, it was up to them to provide evidence to support their assertions. These are the conclusions that were also made by the Tribunal when this issue was raised by Ms York and Mr Edwards and we agree with the Tribunal's statement that the procedure provided by s 236 would be unworkable if the approach suggested by them was correct.

Grounds 5 and 6

These two grounds concern the Tribunal's findings with respect to the impact of increased levies on the value of the lots. Ms York and Mr Edwards had submitted to the Tribunal that the increase in their strata levies would reduce the value of their lots. They relied upon the statement of Sackville AJA in Sahade at [91]: If the effect of a variation on voting rights is likely to prejudice other lot owners, for example, by decreasing the value of their lots, it is difficult to see why it would not be open to the Tribunal to take that prejudice into account. If the parties opposing the proposed variation base their resistance on the prejudice they would suffer, a failure to take that prejudice into account may well constitute an error of law.
The Tribunal accepted that a substantial increase in the liability for strata levies allocated to a lot was likely to reduce the value of that lot, as it would reduce the net revenue which might be generated from the lot. The Tribunal stated that it was also the case that the increase in voting power in relation to a strata scheme flowing from an increase in unit entitlements may have a positive effect on the value of the lot. The Tribunal noted that the dispute in Sahade concerned the impact of a reallocation of unit entitlements on the respective voting power of the lot owners (in a three lot scheme). It went on to state that, given the size of the scheme involved in this matter, the voting powers of any one lot owner would not be substantially altered as a result of the proposed reallocation that it might be a relevant factor to be considered.
The Tribunal concluded at [40] that it did not consider that "the impact of increased levies on the value of a lot is an independent factor which needs to be considered, independently from the raw fact of the likely increase in levies." The Tribunal was of the view that this was particularly so in this case as Ms York and Mr Edwards did not put before the Tribunal any evidence to enable it to assess the extent to which the value of their lots might diminish if the proposed reallocation were adopted.
Ms York and Mr Edwards take issue with the statement at [40] and submit that it is directly contrary to the views expressed by Sackville AJA in Sahade. However, as was noted by the Tribunal, Sahade was concerned with a proposed reallocation of unit entitlements in a three lot scheme that would give majority control to one owner. As Sackville AJA commented at [90], in a small scheme the other lot owners would suffer prejudice because a single lot owner would effectively gain control over important issues that fall to be decided by the Owners Corporation.
In this matter the issue is not voting rights. Ms York and Mr Edwards base their claim that the value of their lots will be diminished because of the increase in their levies. In this circumstance we do not see any error in the Tribunal's conclusion that the impact of increased levies on the value of a lot was a factor that needed to be considered separately to the general question of the impact of an increase in the levies payable in respect of Lot 31 and 32.
In ground 6 Ms York and Mr Edwards state, contrary to the Tribunal's conclusion that they had not provided evidence which would enable it to assess the extent of any diminished value if the proposed reallocation were adopted, that the evidence they provided of apartments with similar levies demonstrated that their lots would lose value. This evidence is referred to above and concerns residential apartments for sale on realestate.com which had strata levies approximating those that would be paid by Lot 31 under the reallocation. The difficulty with this material is that it does not directly relate to determining to what extent the proposed reallocation would have an effect on the value of the lots in a mixed use scheme in Wagga Wagga. We agree with the Tribunal's conclusion that evidence of such diminution was lacking.
Ms York and Mr Edwards also submit in relation to ground 6 that the Tribunal erred in failing to take "judicial notice" of obvious facts. These facts include: 1. imposing large, unavoidable, ongoing costs on purchasers of a modest property is a large disincentive to purchase that property, and would greatly reduce the number of people who would consider buying the property; 2. the purchasers willing to pay large, $9,265 strata fees every year can expect to be buying large, luxury apartments, where the fees would actually go to providing identifiable amenities; and 3. creating large disincentives to purchase a property, and greatly reducing the number of people who would buy such a property would greatly devalue such a property.
It is difficult to see how the Tribunal could or should take "judicial notice" of such matters which are highly speculative and contain value judgments about people's supposed behaviours and expectations. We can find no error in the Tribunal's approach.
In these grounds Ms York and Mr Edwards repeat their submission that it was up to the Owners to provide the relevant evidence of diminution of value. For the reasons set out above, we do not accept that submission.

Grounds 7 and 8

In ground 8, Ms York and Mr Edwards submit that, as self-represented litigants, they were denied procedural fairness because the Tribunal did not at any stage advise them that they needed to provide evidence of any depreciation in the value of their lots arising out of the proposed unit entitlement allocation. Ground 7 is in similar in terms in that it is alleged that the Tribunal erred by not seeking quantification of certain prejudices which Ms York and Mr Edwards alleged they would suffer if the proposed reallocation were approved.
Sackar J summarised the principles in relation to self-represented litigants in Antonio Di Liristi v NSW Public Trustee [2021] NSWSC 1347 at [87]-[89]: [87] Bound up with the obligation to act in a procedurally fair manner is the suite of obligations attending the manner in which courts deal with self-represented litigants (MZAIB v Minister for Immigration and Border Protection [2015] FCA 1392). Matters involving litigants-in-person may encounter a number of issues, as identified recently by the Full Court of the Federal Court (Markovic, Derrington and Anastassiou JJ) in Flightdeck Geelong Pty Ltd v All Options Pty Ltd [2020] FCAFC 138 ("Flightdeck") (at [52]): As acknowledged by the High Court in Neil v Nott (1994) 121 ALR 148 at 150; 68 ALJR 509, "[a] frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy". In addition, litigants-in-person commonly fail to lodge documents in the correct form, observe court formalities and procedures, understand the significance of court processes, put the relevant evidence or law before the Court; and understand the role of the Court in adjudicating the matter. [88] In Hamod v State of New South Wales [2011] NSWCA 375 ("Hamod"), the New South Wales Court of Appeal set out the courts' duty to unrepresented litigants at [309] - [316]. In essence, the overarching duty is to ensure that the trial is fair. The trial judge has an obligation to an unrepresented party to ensure that the unrepresented litigant has sufficient information about the practice and procedure of the court so far as is reasonably applicable for the purpose of ensuring a fair trial. The application of that principle will depend on the circumstances of the case. Also see Ekermawi v Administrative Decisions Tribunal of New South Wales [2009] NSWSC 143 at [53] and Pullin, Newnes and Murphy JJ in Moleirinho v Talbot & Olivier Lawyers Pty Ltd [2014] WASC 65 at [51]. In Stone v Braun [2015] WASCA 103, the Western Australia Court of Appeal found that an applicant had been denied procedural fairness in proceedings pursuant to the Family Provision Act 1972 (WA) where the master failed to alert the applicant to the distinction between evidence and submissions. [89] The judge must put the unrepresented litigant in the position of being able to make an effective choice, however, their duty does not extend to advising on how the litigants' rights should be exercised, giving judicial advice nor conducting the case on behalf of the unrepresented litigant (R v Gidley (1984) 3 NSWLR 168; MacPherson v The Queen (1981) 147 CLR 512; [1981] HCA 46 per Mason J at 534; Clark v State of New South Wales (No 2) [2006] NSWSC 914, cited in Hamod at [312]).
The effect of the submission made by Ms York and Mr Edwards is that the Tribunal was obliged to give them advice about what evidence they were required to submit to support their contentions. We do not accept this submission and it is clearly not supported by the statements of Sackar J in Di Liristi.
The obligations of the Tribunal in this respect are particularly set out in s 38 of the NCAT Act. Section 38(5) provides: (5) The Tribunal is to take such measures as are reasonably practicable: (a) to ensure that the parties to the proceedings before it understand the nature of the proceedings, and (b) if requested to do so - to explain to the parties any aspect of the procedure of the Tribunal, or any decision or ruling made by the Tribunal, that relates to the proceedings, and (c) to ensure the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings.
While the Tribunal may be obliged to explain its procedure and to afford parties an opportunity to provide evidence and submissions so that they can participate in the proceedings and have a reasonable opportunity to be heard, this obligation does not usually extend to providing advice about the precise nature of the evidence a party should provide to support its case.
In this matter there is a lengthy history where the issues have been canvassed on several occasions prior to the most recent determination by the Tribunal. Ms York and Mr Edwards were provided with an opportunity to provide additional evidence to the Tribunal hearing the remitted matter and were able to obtain independent legal advice if they wished to do so.
The Tribunal was under no obligation to advise Ms York and Mr Edwards about the evidence they needed to submit and there was no denial of procedural fairness. Similarly, in relation to ground 7, as we have stated above, it was up to Ms York and Mr Edwards to provide evidence to support their contentions.
In their submissions Ms York and Mr Edwards state that the Tribunal should have adopted an inquisitorial approach and itself sought evidence to enable it to make the correct decision. They refer to several decisions of the High Court and Federal Court relating to administrative review proceedings in migration and other matters. Proceedings in the Consumer and Commercial Division of the Tribunal are not administrative review proceedings, nor are they strictly inquisitorial. While under s 38(2) of the NCAT Act the Tribunal is not bound by the rules of evidence and may inquire into and inform itself on any matter in such manner as it thinks fit and, under s 38(6)(a), is to ensure, as far as practicable, that all relevant material is disclosed to the Tribunal so as to enable it to determine all of the relevant facts in issue in any proceedings, these obligations also do not extend to making a party's case for it.

Grounds 9, 10 and 11

In grounds 9, 10 and 11 Ms York and Mr Edwards, in effect, submit that the Tribunal erred in the exercise of its discretion by acting unreasonably in approving the application for reallocation of unit entitlement in circumstances where they had demonstrated significant detriment and that the reallocation was inequitable.
In submissions at the hearing Ms York and Mr Edward's legal representative referred to Lo v Chief Commissioner of State Revenue [2013] NSWCA 180 at [10] where Basten JA referred to the requirement to give "proper, genuine and realistic consideration" to a relevant consideration. We understand the submission to be that the Tribunal acted unreasonably in failing to give adequate consideration and weight to the matters put forward by Ms York and Mr Edwards.
The Tribunal has a discretion under s 236(2) to order a reallocation of unit entitlements where, as here, the allocation as at the date of registration of the last strata subdivision was unreasonable. In its reasons the Tribunal identified, in accordance with s 236(2) of the SSMA, that the primary consideration in determining whether to make an order for the reallocation of unit entitlements was the value of the lots as at 17 June 2024. It then identified the other factors relevant to its consideration of whether the reallocation should be ordered. It considered the matters put forward by Ms York and Mr Edwards but concluded that there were only two other matters which were relevant to the exercise of the discretion in this matter. These were 1) the extent to which the reallocation would impose an unfair burden of strata scheme expenses upon any lot and 2) the extent to which lot owners generally may be assumed to have relied upon the existing unit entitlements in making decisions in relation to their lots, including buying and selling.
In relation to 1) the Tribunal was unable to conclude, based on the evidence before it, that the proposed reallocation would impose an unfair or unwarranted burden of the strata schemes expenses on any lot, or on the lots owned by Ms York and Mr Edwards in particular. The Tribunal accepted that lot owners had acted in reliance upon the existing unit entitlements in respect of factor 2). It did not, however, accord significant weight to that factor in circumstances where the evidence showed that the allocation of unit entitlements was substantially disproportionate to the relative values of the respective lots at the relevant time, that is on 17 June 2014.
The Tribunal stated that, as noted in Sahade at [41] and following, the degree of unreasonableness and the extent to which adjustment is required are factors which may be taken into account when considering whether to make an order reallocating unit entitlements. The Tribunal considered that the degree of disproportion identified in the Keen Report outweighed any concern that the lot owners may have relied upon the existing unit entitlements in making decisions concerning their ownership of their lots. The Tribunal was not satisfied, on the evidence before it, that Ms York and Mr Edwards had identified any matter which rendered it inappropriate to adopt an allocation for the scheme which relied wholly upon the relative values of the lots at the relevant date as set out in the Keen Report. Accordingly, it made the order sought by the owners.
As the High Court (per Dixon, Evatt and McTiernan JJ) stated in House v The King [1936] HCA 40; (1936) 55 CLR 499 at 504-505: [i]t is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed … It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance.
The factors which the Tribunal identified as the reasons for why it decided that in the circumstances of this case it was preferable to make an order reallocating unit entitlements are set out in the decision. The Tribunal considered the matters raised by Ms York and Mr Edwards and the factors which it took into account were matters that were relevant to the exercise of its discretion. In our view, no error in the House v King sense arises from the Tribunal's decision. The result was not so unreasonable or plainly unjust as to warrant an inference the discretion had not been properly exercised.

Ground 12

This ground repeats matter raised previously and addressed above under ground 4 in relation to the submission that the Tribunal erred in not placing the onus on the Owners to prove certain facts.

Ground 13

Ms York and Mr Edwards submit that the Tribunal erred in law and acted unreasonably including by (a) effectively acting as if it was obliged to make the ordered unit entitlement allocation in the interests of "workability" when it was not, and (b) effectively turning a blind eye to the prejudices that made the allocation unreasonable, on bases including that there was a lack of quantification of those prejudices but ordering the allocation despite never having sought quantification from Ms York and Mr Edwards or the Owners.
This ground primarily seeks to run arguments previously made and which we have found do not disclose any error. The reference to "workability" is a reference to [27] of the Tribunal's reasons in which it was stated: The procedure provided for by s 236 would be unworkable if the approach suggested by the respondents were correct.
This statement was made in the context of dealing with the arguments put forward by Ms York and Mr Edwards that there was an onus placed upon the Owners to identify and provide evidence about factors which may be argued to require a different unit entitlement allocation to that set out in the valuation. For the reasons we have given in relation to ground 4, we do not agree with the proposition put forward by Ms York and Mr Edwards and consider that the Tribunal's approach was correct.

Ground 14

This ground appears to be a catchall and states that the Tribunal, as set out in the above grounds, erred in law in its decision which amounts to a constructive failure to exercise its jurisdiction. As we have not found that the Tribunal erred on any of the grounds numbered 1 to 13, this ground fails.

Leave to appeal

Ms York and Mr Edwards state they seek leave to appeal on the ground that the Tribunal's decision was erroneous as it was obliged to rely upon the Keen Report which contained methodological errors. They have not identified on which basis leave is sought in accordance with cl 12 sch 4 of the NCAT Act. In any event, this ground cannot be sustained. The Tribunal was required, by the orders of the Appeal Panel, to proceed on the basis that the values of the lots at the relevant time were the values set out in the Certificate of Value on p 53 of the Keen Report. There can be no error in these circumstances. As the respondent points out, Ms York and Mr Edwards are merely seeking to reagitate matters that have already been determined by the Appeal Panel.

Conclusion

None of the grounds of appeal have been established. Leave to appeal is therefore refused and the appeal is dismissed.

Orders 1. Leave to appeal refused. 2. Appeal dismissed. 3. The stay order made on 8 February 2023 is lifted.

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: 26 June 2024

York & Edwards v The Owners - Strata Plan No 675

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