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COVID-19 Strata and Community Title Amendments Extended

According to the Strata Schemes Management Amendment (COVID-19) Regulation (No 2) 2020, the amendments made to the Strata Schemes Management Regulation 2016 in response to the public health emergency caused by the COVID-19 pandemic will now remain in place until 13 May 2021.
The amendments allow:

• altered arrangements for convening, and voting at, meetings of an owners corporation or a strata committee,

• voting at a meeting to be undertaken by electronic means (eg teleconferencing, videoconferencing or email) even if the owners corporation/strata committee has not, by resolution, adopted those means of voting;

• instruments and documents to be signed by the persons specified in section 273 of the Strata Schemes Management Act 2015, instead of being affixed with the seal of an owners corporation;

• the extension, to 6 months, of the time periods within which:

– the first annual general meeting of an owners corporation must be convened and held, and

– a levy must be determined to reimburse an amount paid or transferred from an administrative fund or a capital works fund.

In relation to community associations, similar amendments made to the Community Land Management Regulation 2018 by the Community Land Management Amendment (COVID-19) Regulation 2020 in response to the public health emergency caused by the COVID-19 pandemic will now remain in place until 13 May 2021 (see the Community Land Management Amendment (COVID-19) Regulation (No 2) 2020.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284 | NSW Court of Appeal says NCAT has power to award damages

On 11 November 2020, the NSW Court of Appeal handed down its decision in Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284.
The history of the matter involved a lot owner in a strata scheme who claimed that the owners corporation breached its obligation under section 106(1) of the SSMA to maintain the common property resulting in his lot leaking with water.  The lot owner claimed damages for lost rent as a result of the water leak.
At first instance, the NSW Civil and Administrative Tribunal (“NCAT”) held that NCAT had jurisdiction to award damages to a lot owner for breach of section 106(1) of the SSMA.  However, on appeal to the NCAT Appeal Panel, the NCAT Appeal Panel held NCAT does not have jurisdiction to award damages for breach of section 106(1) of the SSMA.
Section 106(5) of the SSMA states:
“(5)  An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.”
The NSW Court of Appeal allowed an appeal from a decision of the NCAT Appeal Panel. ‘
The issue before the NSW Court of Appeal was whether section 232 of the SSMA which provides that NCAT may “make an order to settle a complaint or dispute” included an order for the payment of damages.
Justice Basten and Justice White allowed the appeal and held that:

section 232 of the SSMA conferred power upon NCAT to hear and determine a claim for damages;
the language of section 232 of the SSMA should not be read down to preclude such an order, noting the legislative history of the provision, and the absence of any express prohibition against the making of such an order; and
the right of recovery created by section 106(5) of the SSMA was a statutory right of recovery and doesn’t reflect a general law cause of action.

The effect of the above Court of Appeal decision is that a lot owner no longer has to bring separate proceedings in the Tribunal seeking a work order to rectify the defects in the common property and in a Court seeking damages.  A lot owner may now bring a claim in NCAT for a work order and an order for damages for breach of section 106 of the SSMA.
If you have any questions in relation to the above or require assistance, please contact us.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 

NSW Court of Appeal decides NCAT has power to award damages | Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284

On 11 November 2020, the NSW Court of Appeal handed down its decision in Vickery v The Owners – Strata Plan No 80412 [2020] NSWCA 284.
The history of the matter involved a lot owner in a strata scheme who claimed that the owners corporation breached its obligation under section 106(1) of the SSMA to maintain the common property resulting in his lot leaking with water.  The lot owner claimed damages for lost rent as a result of the water leak.
At first instance, the NSW Civil and Administrative Tribunal (“NCAT”) held that NCAT had jurisdiction to award damages to a lot owner for breach of section 106(1) of the SSMA.  However, on appeal to the NCAT Appeal Panel, the NCAT Appeal Panel held NCAT does not have jurisdiction to award damages for breach of section 106(1) of the SSMA.
Section 106(5) of the SSMA states:
“(5)  An owner of a lot in a strata scheme may recover from the owners corporation, as damages for breach of statutory duty, any reasonably foreseeable loss suffered by the owner as a result of a contravention of this section by the owners corporation.”
The NSW Court of Appeal allowed an appeal from a decision of the NCAT Appeal Panel. ‘
The issue before the NSW Court of Appeal was whether section 232 of the SSMA which provides that NCAT may “make an order to settle a complaint or dispute” included an order for the payment of damages.
Justice Basten and Justice White allowed the appeal and held that:

section 232 of the SSMA conferred power upon NCAT to hear and determine a claim for damages;
the language of section 232 of the SSMA should not be read down to preclude such an order, noting the legislative history of the provision, and the absence of any express prohibition against the making of such an order; and
the right of recovery created by section 106(5) of the SSMA was a statutory right of recovery and doesn’t reflect a general law cause of action.

The effect of the above Court of Appeal decision is that a lot owner no longer has to bring separate proceedings in the Tribunal seeking a work order to rectify the defects in the common property and in a Court seeking damages.  A lot owner may now bring a claim in NCAT for a work order and an order for damages for breach of section 106 of the SSMA.
If you have any questions in relation to the above or require assistance, please contact us.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

Short Term Letting – New Mandatory Code of Conduct to Start on 18 December 2020

As part of the continued regulation of the short term letting industry, the NSW Government has released a mandatory Code of Conduct (“the Code”) which will commence on 18 December 2020. 
The Code will apply to short term rental accommodation industry participants, booking platforms, letting agents, hosts and guests.
Principal Objectives of the Code
The principal objectives of the Code are to:

set out the rights and obligations of short-term rental accommodation industry participants;
provide for resolution of disputes and complaints about the conduct of short-term rental accommodation industry participants;
outline the compliance and enforcement approach that applies to contraventions of the code by short-term rental accommodation industry participants; and
facilitate the oversight of the short-term rental accommodation industry. 

The Commissioner
The NSW Fair Trading Commissioner (“Commissioner”) will have powers to administer the Code.
Industry Participants, Booking Platforms, Letting Agents, Hosts and Guests
The Code also contains rights and obligations of industry participants and includes guidance for booking platforms, letting agents, hosts and guests.
Complaints 
The Code also includes a detailed complaints process for alleged contraventions of the Code and contraventions of other laws. 
Disciplinary Action 
Where the Commissioner finds that an industry participant has contravened the Code, the Commissioner may:   

issue a warning notice informing the participant that the participant has been found to have contravened the Code and must, in the future, comply with the Code or face disciplinary action;
issue a direction to the participant requiring the participant to act or stop acting in a manner relevant to their participation in the short-term rental accommodation industry;
record a strike against a host, or a host with reference to specific premises, or guest, or
record a host, or a host in relation to specific premises, or a guest on the exclusion register as an excluded host or guest under section 4.2 of the Code.

Any direction the Commissioner issues will be void to the extent it is inconsistent with any planning laws or by-laws.
If the Commissioner is satisfied that a host or guest has contravened the Code, the Commissioner can record a strike for the following reasons:

there has been a serious contravention of the Code, or
the Commissioner is otherwise satisfied that it is appropriate to do so, having regard to all the circumstances of the case including the number and nature of previous contraventions. 

The Commissioner may take any other disciplinary action the Commissioner considers appropriate in all the circumstances.
The Commissioner may only take disciplinary action against an industry participant after affording the industry participant procedural fairness in relation to a complaint.
If the Commissioner decides to take disciplinary action against an industry participant, the Commissioner must provide a brief statement of reasons to the participant and inform the participant that they may apply to the secretary for a review of the decision.
Where an industry participant has been subject to other regulatory action for a breach of criminal laws, by-laws, or planning laws that is also a contravention of the Code, the Commissioner may only take disciplinary action against that participant for that contravention if it is necessary to protect the public or the Code’s integrity.
Exclusion Register
The Commissioner must keep and administer an exclusion register.
The Commissioner is to make publicly available on the internet a means to search the exclusion register and is to ensure the register is updated in real time to the extent possible. The Commissioner may record on the exclusion register either a host, or a host in relation to particular premises, or a guest.
The Commissioner must record on the exclusion register for five years:
(a) the guest as an excluded guest where the guest has had two strikes recorded against them in a two-year period
(b) the host in relation to specific premises where the host has had two strikes recorded against them in a two-year period and the Commissioner considers it appropriate that the host only be excluded in relation to those premises
(c) the host as an excluded host where a host has had two strikes recorded against them in a two-year period and the Commissioner considers it appropriate that the host be excluded from acting as a host in relation to any premises.
The Commissioner must also record a host or a guest on the exclusion register if the Commissioner is satisfied that:
(a) the person has been charged with a criminal offence and it is in the public interest to record the person on the exclusion register as an excluded host or guest until the criminal proceedings are determined, or
(b) the person has been convicted of an offence and it is in the public interest to record the person on the exclusion register for a specified period or indefinitely.
The exclusion register must record:
(a) for an excluded host or guest—their name and any other of their details that the Commissioner considers necessary to identify them
(b) for a host excluded in relation to specific premises—the address of the premises and the name of the host who incurred the strikes with respect to the premises
(c) any other details about an excluded host, guest or premises the Commissioner considers appropriate.
Before the Commissioner records a host or guest on the exclusion register, the Commissioner must take reasonable steps to notify the relevant host or guest of (a) the Commissioner’s intention to record the host, guest or premises on the exclusion register and (b) the period for which the record will remain on the exclusion register.
The Commissioner must promptly remove any false, erroneous or misleading information about a host, a guest or premises, from the exclusion register.
A premises owner may apply to the Commissioner for the removal of a premises from the exclusion register. The Commissioner is to remove the premises from the exclusion register if the Commissioner is satisfied that the owner is not the host against whom the strikes with respect to the premises were incurred and the host against whom the strikes with respect to the premises were incurred no longer has any direct or indirect interest in the premises.
Despite any other clause of the Code, a booking platform, letting agent or host is not required to cancel any short-term rental accommodation arrangement involving a host or premises recorded on the exclusion register where: (a) the arrangement was made before the date (the record date) on which the host or guest was recorded on the exclusion register, and (b) the occupancy period starts within one month of the record date.
Appeals
Appeals against the Commissioner’s decision to record a guest, host or host’s premises on the exclusion register are covered in the Regulations.
An industry participant who has received a warning notice, direction, or strike against their name or in relation to premises may apply to the Secretary for a review of the Commissioner’s decision.
An industry participant may apply for a review within 21 days of receiving notice of the disciplinary action from the Commissioner.
The Secretary may determine the form in which a review application must be made.
A review application may include submissions to the Secretary about why the Commissioner’s decision should be changed or overturned.
The Secretary must decide a review application within 28 days.
The Secretary is to notify the applicant of the Secretary’s decision and the reasons for the decision.
The Secretary may decide to impose alternative or additional disciplinary action on the applicant as a result of the review.
If you would like to find out more, please contact us. 
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

NSW Court of Appeal Determines Blanket No Pets By-law as Oppressive

In Cooper v The Owners – Strata Plan No 58068 [2020] NSWCA 250, a decision of the New South Wales Court of Appeal delivered on 12 October 2020, the Court of Appeal determined that a by-law imposing a blanket prohibition on the keeping of pets (save in respect of assistance animals) was “oppressive” contrary to section 139(1) of the Strata Schemes Management Act 2015 (“SSMA”) because:
 

It prohibits an aspect of the use of lots in the strata scheme that is an ordinary incident of the ownership of real property, namely, keeping a pet animal.

 

It prohibits the keeping of animals across the board, without qualification or exception for animals that would create no hazard, nuisance or material annoyance to others.

 

It provides no material benefit to other occupiers.

 
The Court of Appeal also held that:
 

A by-law which restricts the lawful use of each lot but on a basis which lacks a rational connection with the enjoyment of other lots and the common property, is beyond the power to make by-laws conferred by section 136 of the SSMA.

 

A by-law is to be for the “benefit of the lot owners” within the terms of s 9(2) of the SSMA.

 

A by-law which limits the property rights of lot owners is only lawful (valid) if it protects from adverse affection the use and enjoyment by other occupants of their own lots, or the common property. The no pets by-law did not meet this description.

 

The possible administrative convenience for the owners corporation or strata committee that might result from a blanket ban could not justify interference with the ordinary rights of lot owners by means of the subject by-law.

 
The Court of Appeal also noted that the making of evaluative judgments in response to applications by lot owners, or concerning their behaviour, is a common incident of the management of strata schemes.
 
The Court of Appeal decision sets a precedent and makes it clear that a by-law which provides a blanket prohibition on the keeping of pets is likely to be found invalid.
 
In view of the above decision, every strata scheme in New South Wales which has an existing by-law which provides a blanket prohibition on the keeping of pets should seek legal advice as to the impact of the decision and the options available to manage the keeping of pets moving forward.
 
If you have any questions concerning the keeping of pets in your strata scheme or pet by-laws, we can help.
 
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 

Design and Building Practitioners Act 2020 – Building Defect Claims

Introduction
The NSW Parliament recently passed the Design and Building Practitioners Act 2020 (“DBPA”).
 
New Statutory Duty of Care
 
Part 4 of the DBPA, which commenced on 11 June 2020, establishes a new statutory duty of care. Generally speaking, any person who carries out construction work will have a duty to exercise reasonable care to avoid economic loss caused by defects in or related to a building for which the construction work is done or arising out of that work (section 37 of the DBPA).
 
“Construction work” is defined under section 36 of the DBPA to mean any of the following:
 
(a) building work (which includes residential building work within the meaning of the Home Building Act 1989);
(b) the preparation of regulated designs and other designs for building work;
(c) the manufacture or supply of a building product used for building;
(d) supervising, coordinating, project managing or otherwise having substantive control over the carrying out of any work referred to in paragraph (a), (b) or (c) above.
 
The duty of care extends to construction work carried out before the commencement of Part 4 of the DBPA if the economic loss caused by a breach of the duty of care first became apparent within the 10 years immediately before the commencement of the DPBA. Therefore, the duty of care under Part 4 of the DBPA is retrospective.
 
The duty of care is owed to each owner of the land in relation to which the construction work is carried out and to each subsequent owner of the land on which the construction work is or was carried out and whether it was carried out under a contract or other arrangement with the owner or a previous owner. These owners are defined to include the owners of a lot in a strata scheme, development lot or neighbourhood lot within a community scheme, the owners corporation, community association, precinct scheme and neighbourhood scheme.
 
A person to whom the duty of care is owed is entitled to claim damages for the breach of the duty such as the costs of rectifying the defects, consequential loss caused by the defects and the reasonable costs of providing alternative accommodation where necessary.
 
Accordingly, owners corporations can now directly pursue other parties involved in the construction work in addition to the builder and developer such as engineers, architects, designers, project managers, subcontractors, suppliers or manufacturers.
 
It is also important to note the following:
 

The duty of care under Part 4 cannot be delegated or contracted out of;

 

The statutory warranties or other obligations imposed under the Home Building Act 1989, other Acts or the common law are not limited by the new duty of care so that a claim for breach of duty of care under section 37 of the DBPA can be added in existing proceedings commenced under the Home Building Act 1989;

 

The duty of care under Part 4 does not limit damages or other compensation that may be available to a person under another Act or at common law because of a breach of a duty by a person who carries out construction work;

 

The duty of care is subject to the limitation period that applies to negligence claims under the Limitation Act 1969 meaning there will be strict time limits to bring a negligence claim;

 

Claims under Part 4 are subject to the Civil Liability Act 2002e. proportionality claims will apply to the new duty of care; and

 

Claims under Part 4 are subject to the 10 year long stop period from the date of completion of the building under s 6.20 of the Environmental Planning and Assessment Act 1979.

 
Going Forward
 
Owners corporations (and their strata managers) should obtain advice in relation to the owners corporation’s options and rights to claim under the new duty of care.  Please feel free to contact us at [email protected] if you have any questions about the new legislation and how we may be able to assist you. 

Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 
 

New COVID-19 strata amendments

The Strata Schemes Management Amendment (COVID-19) Regulation 2020 commenced on 5 June 2020 and amended the Strata Schemes Management Regulation 2016 in response to the COVID-19 pandemic.
The amendments permit:

Notice of, or any other document in relation to, a relevant strata meeting may be given to a person by email to an email address specified by the person for the service of documents.Voting at owners corporation general meetings and strata committee meetings by means of teleconference, video-conferencing, email or other electronic means while participating in a meeting from a remote location and voting by means of email or other electronic means before the meeting at which the matter is to be determined by the corporation or committee (not being an election), even if the owners corporation or strata committee has not, by resolution, adopted those means of voting. Instruments and documents, instead of being affixed with the seal of an owners corporation in the presence of certain persons under section 273 of the Strata Schemes Management Act 2015 , to be signed (and the signatures to be witnessed) by those persons. The extension, to 6 months, of the time periods within which— (i) the first annual general meeting of an owners corporation must be convened and held, and (ii) a levy must be determined to reimburse an amount paid or transferred from an administrative fund or a capital works fund.

Can an Owners Corporation Repeal a Common Property Rights By-law Without Obtaining the Lot Owner’s Written Consent?

Introduction Does the owners corporation have the right to repeal a common property rights by-law granting exclusive use or special privileges over common property to a lot owner without obtaining the written consent of that owner? Common Property Rights Bylaws – What Are They? Before we examine the owners corporation’s power to repeal a common […]

Podcast 1 – Applying for Compulsory Strata Management in NCAT

In this Podcast, Michael Pobi, Strata Specialist Lawyer at Pobi Lawyers, provides useful information on:
how to apply for an order under Section 237 of the Strata Schemes Management Act 2015 to appoint a compulsory strata manager at NCAT;who can bring such an application; the usual grounds and types of evidence a lot owner can rely upon for seeking such an order;the common traps to avoid in bringing such application.
Disclaimer: Please note that the content of this Podcast is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this Podcast.

Can an Owners Corporation Repeal a Common Property Rights By-law Without Obtaining the Lot Owner’s Written Consent? The Answer May Shock You!

Introduction
The purpose of this article is to raise public awareness about a significant loophole in the strata legislation namely, the right of an owners corporation to repeal a common property rights by-law granting exclusive use or special privileges over common property to a lot owner without obtaining the written consent of that owner.
Common Property Rights Bylaws – What Are They?
Before we examine the owners corporation’s power to repeal a common property rights by-law without the owner’s written consent, we first need to know what is a common property rights by-law.  Some examples of common property rights bylaws include, but are not limited to, exclusive use car parking on common property, exclusive use or special privilege to keep grease trap on common property, exclusive use of a common property garden area, exclusive use of common property attics spaces, etc.
Section 142 of the Strata Schemes Management Act 2015 (“SSMA”) states:
“142 Common property rights by-laws
For the purposes of this Act, a common property rights by-law is a by-law that confers on the owner or owners of a specified lot or lots in the strata scheme—
(a)  a right of exclusive use and enjoyment of the whole or any specified part of the common property, or
(b)  special privileges in respect of the whole or any specified part of the common property (including, for example, a licence to use the whole or any specified part of the common property in a particular manner or for particular purposes),
or that changes such a by-law.”
At this point, I want you to keep the words “or that changes such a by-law” in the back of your mind as we will revisit some of these words further down under the section “The Procedure to Change By-laws”.
The Power to Make Common Property Rights By-laws – Lot Owner’s Written Consent is Required 
Section 143 of the SSMA gives the owners corporation the power to make a common property rights by-law.
Section 143(1) of the SSMA states:
“143 Requirements and effect of common property rights by-laws
(1)  An owners corporation may make a common property rights by-law only with the written consent of each owner on whom the by-law confers rights or special privileges.
Note. Any addition to the by-laws will require a special resolution (see section 141).”
The section makes it clear that such a by-law requires the written consent of each owner on whom the by-law confers the rights or special privileges. For example, if lot 1 is going to receive exclusive use of a car parking space on common property under the common property rights by-law, it is the owner of lot 1 that must provide their written consent to the making of the by-law.
Procedure to Change By-laws
Now that we know what a common property rights by-law is and how they are made i.e. the need to pass a special resolution passed at a general meeting + they require the written consent of the lot owner conferred with its benefit, it’s time to dive into section 141 of the SSMA which provides the owners corporation the power to change by-laws (which, as will be explained below, includes the power to repeal a common property rights by-law).
Section 141(1) of the SSMA states:
“(1)  An owners corporation may, in accordance with a special resolution of the owners corporation, change the by-laws of the strata scheme.”
It is interesting to note the words “change the by-laws” in section 141(1).  If you recall, section 142(1) also used the words “or that changes such a by-law”.  What does the word”change” mean?  Well, the definition is mysteriously hidden in section 133 Definitions of the SSMA.
Section 133 Definitions states:
“In this Part— change the by-laws for a strata scheme means amend or repeal the by-laws or add to the by-laws.
What Does this All Mean?
In the author’s opinion, the effect of sections 133, 141(1), 142 and 143 of the SSMA leads to the unintended consequence that an owners corporation has the power to repeal a common property rights by-law by special resolution in general meeting without the written consent of the lot owner who is benefitted by the by-law for the following reasons:

Section 141(1) of the SSMA does not provide that consent of a lot owner must be sought to change a bylaw;
The definition of “change” in section 133 includes repeal;
Section 143 clearly refers to “make” a by-law and not “change”; and
“Make does not include “repeal”.

Until such time as this loophole in the strata legislation is fixed, it seems that owners corporations can repeal the valuable rights of a lot owner under a common property rights by-law without obtaining that lot owner’s written consent.  If you have any queries in relation to this article, please contact our specialist strata lawyer, Michael Pobi.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

NCAT says goodbye to damages claims, at least for now.

In the recent NCAT Appeal Panel decisions of The Owners – Strata Plan No 74835 v Pullicin; The Owners – Strata Plan No 80412 v Vickery [2020] NSWCATAP 5, the Appeal Panel held that the Tribunal or commonly known as “NCAT” does not have the power to order damages or compensation to a lot owner for an owners corporation’s failure to comply with the owners corporation’s duty under section 106(1) of the Strata Schemes Management Act 2015 (“SSMA”). 
We have extracted and directly quoted for you below the facts and summary of the decisions:
“1. Mr and Mrs Pullicin own an apartment in Sydney. Water began penetrating into the apartment from common property outside the apartment. Their tenants complained of serious mould infestation and terminated the tenancy. Mr and Mrs Pullicin applied to the Tribunal for orders including damages for loss of rent. The Tribunal ordered the owners corporation to pay $73,744.76 in damages for breach of its statutory duty “to properly maintain and keep in a state of good and serviceable repair the common property. . .”: Strata Schemes Management Act 2015 (the 2015 Management Act), s 106(1).
2. Mr Vickery had a similar experience. He owns an apartment in Newcastle. Water penetrated the apartment from common property and he applied to the Tribunal for damages for compensation for loss of rent. The Tribunal found that the owners corporation had breached its statutory duty and ordered it to pay Mr Vickery $97,000.
3. Each owners corporation has appealed to the Appeal Panel from the Tribunal’s decision. Because there are common issues, we heard the appeals concurrently and have given all our reasons in this decision.
4. The common issue in the grounds of appeal is whether the Tribunal has power to award damages to a lot owner in a strata scheme for a breach of s 106(1) of the 2015 Management Act by the owners corporation. Section 106(5) gives the lot owner the right to recover damages for foreseeable loss as a result of a breach of the statutory duty in s 106(1). Section 232(1)(e) gives the Tribunal jurisdiction to “make an order to settle a complaint or dispute about” failure to comply with the duty in s 106(1). The lot owners contended that the dispute also came within the more general provision in s 232(1)(a). That provision gives the Tribunal jurisdiction to “make an order to settle a complaint or dispute about the operation, administration or management of a strata scheme under the Act”.
5 The lot owners in both cases acknowledged that s 106(5) gives them a private right of action to sue for damages in the Supreme Court or any other court of competent jurisdiction. They submitted that, as long as they do not have other proceedings on foot which are the subject of the application in the Tribunal, s 232(1)(a) or (e) of the 2015 Management Act gives the Tribunal power to award damages for breach of the statutory duty in s 106(1). (See 2015 Management Act, s 232(3)(b).)
6. In support of their submissions, the lot owners rely, in part, on the 2018 decision of the Appeal Panel in ­The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15. In 2019, a differently constituted Appeal Panel decided that the Tribunal did not have power to award damages for breach of the statutory duty in s 106(1): Shih v The Owners – Strata Plan No 87879 [2019] NSWCATAP 263. We will refer to these cases as “Shum” and “Shih”. In Shih, the Appeal Panel also expressed the tentative view that, even though the Tribunal cannot order damages, the Tribunal may have power to order compensation for the same kinds of losses. The Tribunal in Vickery characterised the payment of $97,000 as being compensation for losses sustained.
7. The owners corporation for each of the strata plans contended that only a court of competent jurisdiction has power to award damages for breach of s 106(1). The Tribunal does not have that power. In addition, they submitted that the Tribunal does not have power to order the payment of compensation for losses sustained as a result of a breach of the statutory duty in s 106(1). Those questions are questions of law that this Appeal Panel has jurisdiction to consider: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80(2).
8. We have decided that the Tribunal does not have power to order damages or compensation for failure to comply with the duty in s 106(1). In summary, that conclusion is based on the following propositions:
(1) The Tribunal has the jurisdiction and order making powers imposed or conferred on the Tribunal by the NCAT Act or other legislation.
(2) The inclusion of s 106(5) in the 2015 Management Act has put beyond doubt the existence of a private cause of action in damages for breach of the statutory duty in s 106(1) in a court of competent jurisdiction.
(3) Sub-section 106(5) of the 2015 Management Act does not confer or impose any jurisdiction or order making powers on the Tribunal, nor does it confer or impose jurisdiction on the Tribunal to exercise any other functions in connection with the conduct or resolution of proceedings.
(4) Section 232(1)(e) of the 2015 Management Act confers jurisdiction on the Tribunal to entertain complaints or disputes between a lot owner and an owners corporation about the operation of a strata scheme or the failure to comply with the duty in s 106(1) to maintain and repair common property.
(5) The word “about” in s 232(1) relates to the complaint or dispute, not the orders the Tribunal has power to make.
(6) Sub-sections 106(3) – (7) govern applications to courts of competent jurisdiction for breach of the statutory duty in s 106(1). Section 232 and relevant provisions of the NCAT Act, govern applications to the Tribunal for failure to perform the duty in s 106(1).
(7) The order making power in s 232 is expressed as being “to make an order to settle a complaint or dispute about” failure to comply with the duty in s 106(1) to maintain and repair property.
(8) The words “to settle” do not mean that the Tribunal is restricted to making consent orders under s 232.
(9) Having decided that s 232 is not confined to consent orders, the literal or grammatical meaning of the words “to settle” is “to resolve”. These are general words that do not, either expressly or impliedly, confer or impose power on the Tribunal to make an order for damages under s 106(5).
(10) The context, the consequences and the purpose of the legislation do not affect our conclusion.
(11) The 2015 Management Act does not, expressly or impliedly, impose or confer power on the Tribunal to make orders by way of compensation for failure to comply with the duty in s 106(1).”
What Does this All Mean?
The effect of the above decisions leads to the unintended result that: 

the Tribunal has no power to order that an owners corporation pay a lot owner damages for breach of the owners corporation’s duty to maintain and repair common property under section 106 of the SSMA; the lot owner will need to commence proceedings in the Courts; and
a lot owner who requires repairs to common property affecting their lot and also has suffered loss or damage due to the owners corporation’s breach of section 106 of the SSMA will be required to commence 2 separate proceedings namely, in the Tribunal for an order to rectify the defects to the common property and Court proceedings claiming damages.

Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 
 
 

Can an occupant be restricted from smoking in their own lot? Gisks v The Owners – Strata Plan No 6743

Background
Between 2015 and 2017 the applicant lot owner constantly complained to the owners corporation about receiving second-hand tobacco smoke drift from a neighbouring lot 7. The smoke came into his living room and kitchen through windows and doors and in all of the rooms within his lot.
The owner of lot 7 admitted that she smoked in her lot although she tried to prevent smoke drift by closing her windows and doors.
The evidence indicated that the owners corporation did not consider lot 7’s smoke penetration complaints to be a matter which concerned them as it only affected one lot owner. There also did not appear to be a  by-law that dealt with smoking in the building.
The owner of lot 7 claimed that the smoke drift was a nuisance or a hazard and breached section 153 of the Strata Schemes Management Act 2015 (“SSMA”) which states that: “An owner .. of a lot in a strata scheme must not … permit the lot to be used or enjoyed, in a manner or for a purpose that causes a nuisance or hazard to the occupier of any other lot…”.
Decision 
The NSW Civil and Administrative Tribunal held that:
1. The smoke drift that emanated from lot 7 and entered into lot 5 was a hazard for the same reasons as found by Senior Member Buckley in Bill Sheath and Rhonda Sheath v Rick Whitley and Sandra Whitley.
2. The smoke drift that emanated from lot 7 and entered into lot 5 was also a nuisance because it was an interference with the lot owner’s use and enjoyment of his lot which was substantial and unreasonable. 
3. The fact that the other lot owner complained of the issue of smoke drift from 2015 to 2017 indicated that his complaints were not trivial or lacking in a serious element. The evidence also indicated that his concerns had not been properly addressed by the owners corporation. 
4. An order pursuant to section 241 of the SSMA should be made to restrict where the owner of lot 7 can smoke in her lot. She must not smoke on the balcony or in the bedrooms and must close all exterior doors and the windows to bedroom 1 and 2 and the bathroom window when smoking in her lot.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

Shih v The Owners – Strata Plan No 87879 [2019] NSWCATAP 263

NCAT does not have jurisdiction to award damages under s 106(5) of the Strata Schemes Management Act 2015
Background
The owners of a lot in a strata scheme filed an application in the NSW Civil and Administrative Tribunal (“NCAT”) alleging that water had entered and damaged their property. The lot owners sought orders against the owners corporation under section 232 of the Strata Schemes Management Act 2015 (“SSMA”) for the carrying out of rectification works and consequential orders and for the payment of damages under section 106(5) of the SSMA for compensation for loss of rent and the cost of replacement of the carpet in the lot.
NCAT ordered the owners corporation to pay $542.86 in compensation for loss of rental income to the lot owners but dismissed the application.
The lot owners appealed to the NCAT Appeal Panel against the amount awarded for loss of rent and also the adverse costs order made against them.
On appeal, the owners corporation argued that NCAT had neither jurisdiction nor power to deal with a claim for damages based on statutory breach created by section 106(5) of the SSMA.
Section 106 of the SSMA provides that the owners corporation must maintain and repair the common property. A failure to comply with this statutory duty will enable a lot owner to recover damages from the owners corporation for any “reasonably foreseeable loss” the lot owner has suffered. It is worth noting that section 106 of the SSMA is silent as to the jurisdiction in which the lot owner should pursue the damages claim.
NCAT Appeal Decision
The NCAT Appeal Panel held that:
–   NCAT did not have jurisdiction to award damages under s 106(5) of the SSMA.
–   The drafters of the legislation have been very careful in conferring jurisdiction upon NCAT to make certain orders or decisions. Section 106 of the SSMA, while it provides for the making of an award of damages, does not specify which body can make that order.
–  The lack of specificity contained within s 106 of the SSMA is to be contrasted with a number of other provisions of the SSMA which do create specific powers in NCAT to make monetary orders. 
–  It would be unusual to empower NCAT with the right to determine whether and to what extent damages for statutory breach should be ordered, in the absence of any specific provision in the SSMA creating such empowerment.
–  Legislation conferring jurisdiction on a Tribunal, which exercises defined and confined powers and uses different rules of procedure and evidence to courts, should not, in the absence of the clearest language, be construed so as to confer power to determine claims at common law. 
–  The language used in s 106(6) of the SSMA which refers to the bringing of an “action” for damages is more pertinent to and consistent with an intention on the part of the legislature that a claim for damages under s 106(5) of the SSMA should be brought before a court. This is language normally associated with the jurisdiction and powers of courts to deal with such matters. It is not language normally used when describing the powers of NCAT where the legislature makes particular provision for the remedies available to be ordered by NCAT. 
–  In The Owners Strata Plan No 30621 v Shum [2018] NSWCATAP 15, the NCAT Appeal Panel held that the jurisdiction of NCAT to make an order for damages under section 106(5) arising from a breach by an owners corporation of the duty imposed by section 106 is granted by the general order making power in section 232 of the SSMA. However, given the structure of the SSMA and the order making powers contained within it, it is impermissible to import into the general power in section 232 a specific power such as that exercisable under s 106(5) of the SSMA. An action under s 106(5) of the SSMA for damages for breach of statutory duty must be maintained in a court of competent jurisdiction.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 

The Road to Unreasonableness – What happens when an Owners Corporation Unreasonably refuses a By-law?

In the recent case of Capcelea v The Owners – Strata Plan No 48887 [2019] NSWCATCD 27, the Tribunal found that it was unreasonable for an owners corporation not to approve a lot owners by-law for work to a terrace area.
The decision provides valuable insight into how lot owners and owners corporation should deal with disputes in relation to common property rights by-laws.
If you are a lot owner, or on the strata committee of an owners corporation, it is important to understand that your actions, or omissions, in addressing the dispute may ultimately become evidence in legal proceedings and have ramifications down the track.
Capcelea is the owner of a lot in Strata Plan No. 48887. The strata plan is located in Bondi Junction. It comprises a 13 storey building with 76 individual lots.
Capcelea’s lot includes a terrace which forms part of the street boundary. There are bushes along the edge of terrace to provide screening and privacy from the street.
Capcelea wanted to undertake some internal renovations to the bathroom, replace the sails over the terrace and install some additional features on the terrace. The additional features included the waterproofing of the terrace.
By-laws were prepared in relation to the proposed works. An Extraordinary General Meeting was convened on 18 September 2018. The by-laws were refused at the Extraordinary General Meeting.
Capcelea commenced proceedings in NSW Civil and Administrative Tribunal claiming:
1. That the owners corporation unreasonably refused to make a common property rights by-law.
2. That the Tribunal order the owners corporation to consent to the work proposed in the by-laws.
How does the Tribunal determine what is unreasonable?
The Tribunal reasoned that:
– The test of unreasonableness is an objective test based upon its ordinary meaning as found in the Macquarie Dictionary – “agreeable to, based on, or in accordance with sound judgment”. Emphasis was placed on the words “sound judgment”.
– The test concerns the unreasonable refusal to make the by-law however the Tribunal may also consider whether the content of the by-law itself is reasonable and the Tribunal may make changes to the by-law accordingly.
– The test is applied to the state of affairs which existed at the time of the refusal, in this case, the Extraordinary General Meeting held on 18 September 2018.
– The test involves the Tribunal weighing up not only the interests of the owners who refused the by-law but also the rights of the owner wanting the by-law and their expectation that the refusing owners take their rights into account when making a decision.
– Minutes of the Extraordinary General Meeting may be relied upon as evidence however a lack of detail or incomplete minutes may compromise the weight of that evidence.
– Individual owners, who voted for or against the by-law, may also give evidence as to their reasons for doing so.
– The chairperson of the Extraordinary General Meeting may give evidence which may be accepted as the owners corporation’s reasons for refusal in the absence of any views to the contrary.
– Personal dislike between the person wanting the by-law and members of the strata executive may also be relevant.
Did the owners corporation act unreasonably in refusing the by-laws?
The Tribunal found that:
– The owners corporation did not have evidence that there is any existing restriction, by way of a by-law or otherwise, restricting the use of the terrace. There was no basis to the owners corporation arguing that the terrace should be maintained as it was when they purchased the lot.
– The owners corporation did not have evidence that changing the terrace would impact upon the original design intent of the building or its amenity. The point being the terrace was not visible from the street.
– There was no evidence from the owners corporation that the changes to the terrace would increase disturbance due to additional noise or privacy intrusions as compared to its current use.
– There was no issue raised by the owners corporation that passing the by-law created a precedent as there was no other lot which had a similar terrace.
– Apart from members of the strata committee, there was no objection from any other lot owner to the original and amended development applications submitted to the council.
– As the by-law provided for a new waterproofing membrane, which is common property and therefore the responsibility of the owners corporation to maintain, the installation of new waterproofing provided compensation to the owners corporation as it saved the owners corporation the cost of maintaining the waterproofing membrane.
– The by-law included a professionally prepared design with detailed plans and expert reports which were not assessed by an expert on behalf of the owners corporation and was not criticised. It was unreasonable to oppose the by-law without supporting it with technical assertions.
The Tribunal Member said in his decision that:
“A lot owner has a right to enjoy and add amenity to an external part of his or her lot and a reasonable expectation to use and equip it as he or she reasonably wishes to do. It will improve privacy from overlook.”
“There was direct evidence from the applicants of their complaints about the descent of bottles, glasses, an umbrella, food, vomit and other items from the levels above onto the terrace, some of it landing very close to the applicants or their guests. This was a clear safety hazard and a detriment to amenity.”
“There was also direct evidence, not contradicted, from the applicants about the inability to stand on the terrace’s current unshaded surface in hot weather because of the heat in the surface material.”
“The applicants’ proposed by-laws placed the burden of remediation and maintenance of the terrace waterproofing and drainage on the applicants, with appropriate indemnities.”
The Tribunal found that the owners corporation had acted unreasonably withholding consent where there was no material before the owners corporation at the Extraordinary General Meeting which provided a sound basis for that decision.
The Tribunal ordered that the operative date for the by-laws was the date of the Extraordinary General Meeting at which they were refused, 18 September 2018.
Further insight obtained
The Tribunal also elaborated on the rights available to lot owners in relation to the unreasonable refusal of works and reasoned that the works could also be claimed pursuant to sections 126 or 232 of the Strata Schemes Management Act 2015 in the case where the works was not the subject of a common property by-law.
The take home point
Both lot owners and owners corporations need to conduct themselves reasonably from the outset when dealing with disputes in relation to the approval of by-laws.
The lot owner should ensure that it provides the owners corporation with all of the information required to properly assess the by-law in advance of the Extraordinary General Meeting which may include a professional design with detailed drawings and engineering reports.
Owners corporations should ensure that they undertake their due diligence and consider all of the information presented by the lot owner and provide reasons for refusal which may later be relied upon should legal proceedings eventuate.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

Glenquarry Park Investments Pty Ltd v Hegyesi [2019] NSWSC 425

Background
The proceedings concerned a strata title property at Point Piper NSW where lot owners were in dispute concerning the extent of works that should be carried out on the common property. 
For more than a decade, the majority lot owners wished to have the property refurbished at a cost of several million dollars. This was opposed by the minority lot owners who considered that the works proposed by the majority lot owners were too extensive (although they acknowledged that some repair works were required).
In 2016 a series of resolutions were passed as ordinary resolutions. The resolutions purported to authorise the owners corporation to undertake extensive building works.
The building works included:
• Replacing the existing lift.  • Replacing the existing timber stairway. The majority lot owners wanted to replace the existing stairway with a concrete staircase. Replacement of the lift shift necessitated the replacement of the existing stairway. • Upgrading the foyer and lobbies to allow the new glass lift to bring light into the lobbies.
A lot owner challenged the resolutions on the grounds that they were improperly passed. The lot owner argued that as the building works were “improvements to the common property”, they should have been passed by a special resolution under 65A of the Strata Schemes Management Act 1996 (the now equivalent provision being section 108 of the Strata Schemes Management Act 2015). However, the Adjudicator held that the lift and the staircase were unsafe and therefore required immediate rectification. The Adjudicator categorised the building work as repair and maintenance and therefore governed by section 62 of the 1996 Act (equivalent of section 106 of the Strata Schemes Management Act 2015). Section 62 of the 1996 Act provided that repairs to, and replacement and renewal of, the common property does not require a special resolution.
The decision went on appeal with the Tribunal finding that the replacement of the lift shaft and the staircase required a special resolution as per section 65A of the 1996 Act as they should have been properly categorised as “improving or enhancing the common property”.
The Tribunal also ordered the owners corporation to carry out certain repairs to the common property on the basis that the owners corporation had failed to perform its duty in this respect. However, the Tribunal did not impose a method of rectification instead leaving it up to the strata manager to “explore the competing options and undertake the work within the scope of the Owners Corporations obligations”.
The majority lot owners then appealed against this decision to the Supreme Court of NSW.
The Decision
A relevant fixture or fitting needs to have deteriorated, to have been damaged or to be operating inadequately in order for the owners corporation to be required to renew or replace it under s 62(2): Ridis v Strata Plan 10308 [2005] NSWCA 246 and The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270.
“77. …it would be impossible to continue to maintain the existing lift and that it can be expected to operate for many years into the future. There is nothing in the evidence which establishes that a new lift car is required, much less a new lift shaft.
78. On the facts, the lift is operating in accordance with its design requirements and can be kept operating into the future. It has not reached the point where it “can no longer be kept in a state of good and serviceable repair” to use the language of Tobias AJA in Thoo. In the language of Barrett JA, the existing functionality of the lift can be maintained without renewing or replacing it. Installing a new glass lift would be an improvement, not the maintenance or reinstatement of the functionality of the existing lift.”
The replacement of the lift shaft and the staircase should have been properly categorised as “improving or enhancing the common property”. 
“104. As Senior Member Ross acknowledged, the orders did not specify the works in question. Orders in this form gives rise to two particular problems. The first is that the orders leave it unclear what it is that the Strata Corporation is being ordered to do. The second is that the order are not necessarily confined to complying with the Strata Corporation’s obligations under SSMA s 62.
105. Both of these problems are illustrated by the replacement of the lift. The relevant order requires the Strata Corporation “to replace the lift in the existing shaft and associated works”. No doubt the reference to replacement in the existing shaft was included in Ms Hegyesi’s application because, whatever else she wanted the Strata Corporation to do, she did not want it to adopt the approach which had been put forward by the majority owners of replacing the whole lift shaft as well as the lift car. But there is no concrete proposal for the replacement of the lift in the shaft, in the sense of a defined scope of works. All sorts of technical difficulties might arise. The order gives no guidance as to how such difficulties would be overcome. It simply commands the Strata Corporation to achieve a specified result by a specified date. And the “associated works” are completely unspecified. The Strata Corporation is left to guess what it is required to do.”
Accordingly, the order for the owners corporation to carry out certain repairs to the common property did not specify the works in question, leaving it unclear as to what it was that the owners corporation was being ordered to do. The order simply commanded the owners corporation to achieve a specified result by a specified date.
The Court also added:
“106. Furthermore, despite the “finding” by the Tribunal that the lift should be replaced, the Pitfield report shows that there is in fact no actual need to do so. The lift can be kept functioning without any replacement of the lift car, whether in the existing shaft or otherwise. The order thus goes beyond what I consider to be the Strata Corporation’s obligations under s 62.”

108. An adjudicator has a general power to make orders to settle disputes or rectify complaints (s 138). This extends to disputes or complaints arising under s 62. The adjudicator’s decision may then, under s 207, be included in an order which takes effect as a resolution of the owners’ corporation which is binding and enforceable by the courts: see Thoo at [211].
109. The power under s 138 may be exercised where there is a dispute or complaint about, among other things, “a failure to exercise” a function conferred or imposed by or under the Act, or the operation, administration or management of a strata scheme under the Act. But sub-section (2) provides that for the purposes of sub-section (1) the owners’ corporation is taken to have failed to exercise a function if it decides not to exercise the function where application is made to it to exercise the function and it fails for two months after the making of the application to exercise the function. This suggests that the proposal must be put before the owners’ corporation in some sort of formal and concrete way.
110. Although in a general sense the minority owners had been pressing for repairs to be done, the orders made do not reflect any specific proposals. It is thus doubtful whether there was a “failure” sufficient to enliven the power under sub-section (1). But this is not the only problem.”
111. … But on any view the Tribunal is not entitled to order an owners’ corporation to do things just because the Tribunal considers it desirable to do so. If, as seems to have been assumed, the justification for the order was that the Strata Corporation had not complied with its obligations under s 62, then the Tribunal’s order could go no further than the minimum necessary to comply with that obligation.
112. In the present case, the Tribunal did not ask itself what needed to be done so as to order to achieve a minimal compliance with s 62(1) and then frame orders accordingly. In my view this means that there was no proper statutory foundation for the orders.
113. Furthermore, the orders are in the nature of mandatory injunctions. Such orders can be enforced (indirectly, under NCAT: Civil and Administrative Tribunal Act, s 73) by way of contempt. It is unacceptable that the recipient of the order should be in any doubt as to what is required. In my view, for the Tribunal to make an order giving rise to such a doubt is itself an error of law.
114. An adjudicator, and on appeal, the Tribunal, may have power to make an order that an owners’ corporation carry out a defined repair in order to comply with its obligation under SSMA s 62. But the orders made in this case have been made in a form which takes them outside the limits of any such power. In truth, the orders are nothing more than a vague “wish list” from Ms Hegyesi. They should not have been made and must be set aside.”
Accordingly, the Tribunal is not entitled to order an owners corporation to do things just because the Tribunal considers it desirable to do so. If, as seems to have been assumed, the justification for the order was that the owners corporation had not complied with its obligations under section 62, then the Tribunal’s order could go no further than the minimum necessary to comply with that obligation.
The Supreme Court concluded that:

the majority owners’ challenge to the Tribunal’s decision that the disputed works required a special resolution because of SSMA, s 65A, fails;
the majority owners’ challenge to the order directing the Strata Corporation to repair certain parts of the common property succeeds.

The take home point
Whether proposed works are to be properly categorised as repairs to or replacement/renewal of common property in which case no special resolution is required as per section 106 of the Strata Schemes Management Act 2015 (“SSMA”) or whether the proposed works amount to enhancement/improvements in which case a special resolution is required as per section 108 of the SSMA is not always easy to determine. 
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

NSW Community schemes law reform

The NSW Government is seeking public feedback on the drafting of the Community Land Management Bill 2019 and the Community Land Development Bill 2019. The draft bills propose a complete rewrite of the community title schemes laws. The draft bills are aligned with the major 2015 strata scheme reforms, make community land development legislation more flexible and incorporate feedback from the implementation of the strata laws.
Feedback is sought on the drafting of both bills and whether they give effect to the proposed reforms announced in the 2014 Community Schemes Law Reform Position Paper without any unintended consequences.
Key measures in the draft bills include:
• improving transparency and accountability in the way schemes are managed • providing greater flexibility to deal with association property • simplifying dispute resolution within schemes • reducing red tape by targeting the documents needed to be lodged with a plan, and • encouraging greater participation of scheme members, owners and tenants, including through the use of technology.
The consultation will close on 28 February 2020. Details on how to make a submission are available on the NSW Fair Trading’s website.
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

Owners Corporation Strata Plan No 14172 v Cai [2019] NSWCATCD 56

The general order making power under section 232 of the Strata Schemes Management Act 2015 does not empower the NSW Civil and Administrative Tribunal to make an order for an owners corporation to recover a debt. 
Background
A tenant operated a coffee shop/sandwich bar from a lot in a mixed, residential and commercial scheme. Directly below the coffee shop was an orthodontic surgery.
Since 2015, the occupiers of the orthodontic surgery had complained to the owners corporation that water was dripping into the surgery from the coffee shop.
The owner of the lot made numerous demands for the tenant to fix the problem but the owner refused to rectify the problem himself.
The owners corporation obtained access to the tenant’s coffee shop in late 2017 and had repairs carried out which remedied the problem at a cost of $76,108.25.
The owners corporation sought to recover the $76,108.25 from the owner and tenant, arguing that the failure to address the water penetration issue amounted to a breach of the owner/tenant’s duty not to create a nuisance or hazard under section 153 of the Strata Schemes Management Act 2015 (“SSMA”). The owners corporation was entitled to carry out the work itself and sought to “recover the cost of the work” from the tenant/owner as a “debt” under sections 120(3) and (5) of the SSMA.
The owners corporation sought an order from the Tribunal that the tenant/owner reimburse the owners corporation for the cost of the rectification work. The owners corporation believed that the Tribunal had jurisdiction to make such an order under its general order-making power found at section 232(1)(a) and (e) of the SSMA. 
Decision
The Tribunal held that the general order making power under section 232 of the SSMA does not empower the Tribunal to make an order for an owners corporation to recover a debt. The proceedings were transferred to the Local Court of NSW. 
The Tribunal also held:
“41. When s 232(1) is read in its entirety, it appears to be directed towards orders that require some outcome that will ensure that those within the strata scheme act, or refrain from acting, in some way that will achieve the workable operation, management and administration of that scheme.

42. What is conspicuously absent from s232 is the use of any words that even vaguely allude to an order for debt recovery. This is because such remedies fall outside and are at odds with the objectives s 232 SSMA seeks to implement. This conclusion is reinforced by the fact that other sections of the Act (eg s 132) make specific reference to the Tribunal’s power to order payment of money to an owners corporation. 
43. Thus, I am inclined to the view that the general order making provisions in s232 SSMA do not empower the Tribunal to make a monetary order for “debt recovery” “for the cost of carrying out the work” to remedy a breach of Part 8 of the SSMA, as provided for under s 120 SSMA.

47. What we see in s132 therefore, is a specific provision that addresses a specific scenario, namely, where an owner or occupier has carried out work that damaged common property or another lot. In such a situation the legislature has enacted a provision, that specifically refers to and empowers the Tribunal to award an owners corporation the cost of repair flowing from that damage. This is to be contrasted with s 120 of the SSMA, which makes no reference to the Tribunal.

50. If, as the OC argues, the situation addressed under s 120 SSMA triggers the operation of the Tribunal’s general order-making power under s 232 so as to allow the Tribunal to make an order, it must follow that s 132 SSMA should also trigger the operation of s 232 and empower the Tribunal to make a money order without the need for s132(1) to specifically empower the Tribunal to do so. In which case, the words in s 132(1) referring to the Tribunal’s power, would be superfluous and of no utility.”
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 

Owners Corporation Unable to Convince Supreme Court of NSW for Building Manager to Hand Over Contact Details of Owners Recorded on Strata Roll

Owners Corporation Unable to Convince Supreme Court of NSW for Building Manager to Hand Over Contact Details of Owners Recorded on Strata Roll
Background
The case of The Owners – Strata Plan No. 54026 v Phillipa Ternes [2019] NSWSC 1579 involved a mixed use building in Broadway, Sydney comprising some 586 units, primarily residential, some shops and 27 commercial units.
The majority of the units are managed on behalf of the investor owners by UniLodge. The holding company is UniLodge Australia Pty Ltd. The units in the strata scheme are managed for the investor owners pursuant to lease arrangements between the owners and Sydney Campus Apartments Pty Ltd, a wholly owned subsidiary of UniLodge Australia.
Under the lease arrangements the owners grant residential leases of their properties to Sydney Campus.  UniLodge then arranges to licence the units for occupation by students.  Under the terms of the leases, the owners appoint Sydney Campus as their representative for the purpose of exercising their rights of ownership vis the owners corporation. The voting rights in the scheme are exercised by Sydney Campus, not the individual investor owners.  UniLodge Australia owns a unit in the strata scheme. Sydney Campus is the building manager.
In March 2015, Philippa Ternes, the general manager for UniLodge in Sydney, sent an e-mail to the then strata managing agent asking for the managing agent to enter a post office box of UniLodge as the mailing address for all of the units under UniLodge’s management. It appears that the then strata managing agent, Prudential Investment Company of Australia Pty Ltd (“PICA”) acted on the instruction. Since that time, all of the units managed by UniLodge have had the UniLodge post office box entered as their contact address in the strata roll. This position continued for over four and a half years.
In June 2019, PICA ceased to act as strata manager, and it appears to be common ground that its appointment was terminated. A new strata managing agent, Whelan Property Group Pty Ltd was subsequently appointed.
On 30 October 2019, the Owners Corporation commenced proceedings in the Supreme Court of NSW against Ms Ternes, UniLodge Australia and Sydney Campus seeking orders that Ms Ternes, UniLodge Australia and Sydney Campus produce a verified list of names and addresses, together with other contact details, for the persons recorded as owners of the units. On 5 November the defendants filed a notice of motion that the proceedings should have been commenced in the Tribunal.
As a side note, Unilodge Australia and Sydney Campus had also commenced proceedings in NCAT in June 2019 against the owners corporation seeking an order under section 237 of the Strata Schemes Management Act 2015 (“SSMA”) to appoint a compulsory strata manager and other relevant orders.
The Basis for the Claim
The Owners Corporation’s claim rested on service of a letter dated December 2018 under section 181 of SSMA which permits the strata committee of an owners corporation to give a notice to a person who has possession or control of property (including records) of the owners corporation requiring the person to deliver the property to the Strata Committee not later than 14 days after the notice is given.
Jurisdiction of the Tribunal
Section 187 of the SSMA gives the Tribunal power, on application by an owners corporation, owner or other person having or acquiring an estate or interest in a lot in the scheme, to order an owners corporation to enter information contained in a strata interest notice in the strata roll if a person fails to provide the required written confirmation of the notice. The Court then went on to say that section 187 of the SSMA was not applicable because the owners corporation was seeking information rather than refusing to record information which has been supplied. The Court said that no application was made to have information recorded in any strata interest notice recorded in the roll.
The Court noted that section 188 of the SSMA does allow the Tribunal to make an order for information to be supplied either by or to an owners corporation, but where the information is to be supplied to an owners corporation the section is limited to a strata managing agent, officer or former strata managing agent of the owners corporation. The Court held section 188(1) does not deal with requiring information from building managers.
The Court found that neither of the above provisions in Division 3 of the SSMA were applicable.
However, the defendants relied upon section 232 of the SSMA which entitles NCAT to make an order to settle a dispute or complaint about, relevantly, the operation, administration or management of a strata scheme. The defendants submitted that entitlement to the information involved a “complaint or dispute” about the “operation, administration or management” of the strata scheme.
The Decision
The Court considered that the Tribunal has jurisdiction to make an order under section 181 of the SSMA if the conditions set out in that section were satisfied.
The Court also considered that the orders sought by the owners corporation concern the maintenance of the strata roll, which is clearly part of the “administration” of the strata scheme under section 232(1)(a) of the SSMA.
In the circumstances, the Court also held that although the Tribunal has jurisdiction, it was not an exclusive jurisdiction as contended by the defendants.
Although the defendants sought the proceedings to be summarily dismissed or stayed, the Court relied upon its power to make an order transferring the proceedings to NCAT.
The Court also remarked that:
“50.     In general, the appropriate forum for disputes under the SSMA should in my view be the Tribunal. Applications under that Act form an important part of the Tribunal’s jurisdiction, and the Tribunal has ample powers and resources to deal with this particular dispute. There is no doubt that this Court would have the ability to deal with the Strata Corporation’s claim if the circumstances were sufficiently urgent, but I do not consider that they are.

Obviously, it is desirable that the Tribunal should, if possible, deal with the dispute at the same time as the application scheduled for hearing, but that is a matter for the Tribunal. In my view, even if there were no proceedings pending in the Tribunal, this application should be transferred to it, as there is nothing about these proceedings which requires that there should be a departure from the ordinary run of cases under the SSMA. For these reasons, I will order that the proceedings be transferred to the Tribunal.”

Conclusion
The outcome of the Ternes case was that the Court transferred the proceedings to NCAT and continue before NCAT as if the proceedings had been instituted before NCAT to permit the Owners Corporation to pursue its claim against the defendants in that jurisdiction.
The Ternes case highlights the importance of making sure legal proceedings are commenced in the appropriate jurisdiction. If not, the applicant/plaintiff can risk their proceedings being dismissed, stayed or transferred to the appropriate jurisdiction with a costs order made against them.
Michael Pobi
Principal
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.
 

Owners Corporation Unable to Convince Supreme Court of NSW for Building Manager to Hand Over Contact Details of Owners Recorded on Strata Roll

OWNERS CORPORATION UNABLE TO CONVINCE SUPREME COURT OF NSW FOR BUILDING MANAGER TO HAND OVER CONTACT DETAILS OF OWNERS RECORDED ON STRATA ROLL
Background
The case of The Owners – Strata Plan No. 54026 v Phillipa Ternes [2019] NSWSC 1579 involved a mixed use building in Broadway, Sydney comprising some 586 units, primarily residential, some shops and 27 commercial units.
The majority of the units are managed on behalf of the investor owners by UniLodge. The holding company is UniLodge Australia Pty Ltd. The units in the strata scheme are managed for the investor owners pursuant to lease arrangements between the owners and Sydney Campus Apartments Pty Ltd, a wholly owned subsidiary of UniLodge Australia.
Under the lease arrangements the owners grant residential leases of their properties to Sydney Campus.  UniLodge then arranges to licence the units for occupation by students.  Under the terms of the leases, the owners appoint Sydney Campus as their representative for the purpose of exercising their rights of ownership vis the owners corporation. The voting rights in the scheme are exercised by Sydney Campus, not the individual investor owners.  UniLodge Australia owns a unit in the strata scheme. Sydney Campus is the building manager.
In March 2015, Philippa Ternes, the general manager for UniLodge in Sydney, sent an e-mail to the then strata managing agent asking for the managing agent to enter a post office box of UniLodge as the mailing address for all of the units under UniLodge’s management. It appears that the then strata managing agent, Prudential Investment Company of Australia Pty Ltd (“PICA”) acted on the instruction. Since that time, all of the units managed by UniLodge have had the UniLodge post office box entered as their contact address in the strata roll. This position continued for over four and a half years.
In June 2019, PICA ceased to act as strata manager, and it appears to be common ground that its appointment was terminated. A new strata managing agent, Whelan Property Group Pty Ltd was subsequently appointed.
On 30 October 2019, the Owners Corporation commenced proceedings in the Supreme Court of NSW against Ms Ternes, UniLodge Australia and Sydney Campus seeking orders that Ms Ternes, UniLodge Australia and Sydney Campus produce a verified list of names and addresses, together with other contact details, for the persons recorded as owners of the units. On 5 November the defendants filed a notice of motion that the proceedings should have been commenced in the Tribunal.
As a side note, Unilodge Australia and Sydney Campus had also commenced proceedings in NCAT in June 2019 against the owners corporation seeking an order under section 237 of the Strata Schemes Management Act 2015 (“SSMA”) to appoint a compulsory strata manager and other relevant orders.
The Basis for the Claim
The Owners Corporation’s claim rested on service of a letter dated December 2018 under section 181 of SSMA which permits the strata committee of an owners corporation to give a notice to a person who has possession or control of property (including records) of the owners corporation requiring the person to deliver the property to the Strata Committee not later than 14 days after the notice is given.
Jurisdiction of the Tribunal
Section 187 of the SSMA gives the Tribunal power, on application by an owners corporation, owner or other person having or acquiring an estate or interest in a lot in the scheme, to order an owners corporation to enter information contained in a strata interest notice in the strata roll if a person fails to provide the required written confirmation of the notice. The Court then went on to say that section 187 of the SSMA was not applicable because the owners corporation was seeking information rather than refusing to record information which has been supplied. The Court said that no application was made to have information recorded in any strata interest notice recorded in the roll.
The Court noted that section 188 of the SSMA does allow the Tribunal to make an order for information to be supplied either by or to an owners corporation, but where the information is to be supplied to an owners corporation the section is limited to a strata managing agent, officer or former strata managing agent of the owners corporation. The Court held section 188(1) does not deal with requiring information from building managers.
The Court found that neither of the above provisions in Division 3 of the SSMA were applicable.
However, the defendants relied upon section 232 of the SSMA which entitles NCAT to make an order to settle a dispute or complaint about, relevantly, the operation, administration or management of a strata scheme. The defendants submitted that entitlement to the information involved a “complaint or dispute” about the “operation, administration or management” of the strata scheme.
The Decision
The Court considered that the Tribunal has jurisdiction to make an order under section 181 of the SSMA if the conditions set out in that section were satisfied.
The Court also considered that the orders sought by the owners corporation concern the maintenance of the strata roll, which is clearly part of the “administration” of the strata scheme under section 232(1)(a) of the SSMA.
In the circumstances, the Court also held that although the Tribunal has jurisdiction, it was not an exclusive jurisdiction as contended by the defendants.
Although the defendants sought the proceedings to be summarily dismissed or stayed, the Court relied upon its power to make an order transferring the proceedings to NCAT.
The Court also remarked that:
“50.     In general, the appropriate forum for disputes under the SSMA should in my view be the Tribunal. Applications under that Act form an important part of the Tribunal’s jurisdiction, and the Tribunal has ample powers and resources to deal with this particular dispute. There is no doubt that this Court would have the ability to deal with the Strata Corporation’s claim if the circumstances were sufficiently urgent, but I do not consider that they are.
51. Obviously, it is desirable that the Tribunal should, if possible, deal with the dispute at the same time as the application scheduled for hearing, but that is a matter for the Tribunal. In my view, even if there were no proceedings pending in the Tribunal, this application should be transferred to it, as there is nothing about these proceedings which requires that there should be a departure from the ordinary run of cases under the SSMA. For these reasons, I will order that the proceedings be transferred to the Tribunal.”
Conclusion
The outcome of the Ternes case was that the Court transferred the proceedings to NCAT and continue before NCAT as if the proceedings had been instituted before NCAT to permit the Owners Corporation to pursue its claim against the defendants in that jurisdiction.
The Ternes case highlights the importance of making sure legal proceedings are commenced in the appropriate jurisdiction. If not, the applicant/plaintiff can risk their proceedings being dismissed, stayed or transferred to the appropriate jurisdiction with a costs order made against them.
Michael Pobi
Principal
Disclaimer: Please note that the information contained in this article is not legal advice and should not be relied upon. You should obtain legal advice specific to your circumstances before you take any action or otherwise rely upon the contents of this article.

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