[The Hood]

I find it a little humorous that it is being reported that no one saw this coming and terms to that effect.
If anyone has ever read Cathy Sherry’s work then this was inevitable, if not in Cooper then in the near future perhaps by virtue of legislative reform.
Honestly: should unaffected people be able to make by-laws that do little more than disadvantage others?
Of course they shouldn’t and finally the Court of Appeal is expressing that.

The power to make by-laws has previously been viewed as far too broad; finally a sensible constraint.

The only annoying part, and it isn’t really that annoying, is that I now have to remove pages of argument from my strata review submission that related to the absolute idiocy of what amounted to mob rule in strata.

Cooper at 48.   “…a liberal democracy is not a majoritarian dictatorship; it operates under legal constraints designed to protect minorities from oppression….”

Shame on all those who subscribed to “mob rule”, you have made strata a disaster for way too long.

[The Hood]

83. We agree that a by-law which discriminates against a minority group of lot holders may be oppressive…..

The Owners – Strata Plan No 91157 v Yoolee Holdings Pty Ltd Limited; Yoolee Holdings Pty Limited v The Owners – Strata Plan No 91157 [2020] NSWCATAP 6

I guess it all depends which Appeal Panel one gets as to what is oppressive, harsh and so on and so forth.
Still a chocolate wheel.
“… this probably isn’t worth going to court over – and certainly not the CTTT chocolate wheel.”
J Thomson; Flat Chat forum 2011

[The Hood]

In Vanstone unreasonable is ‘synonymous’ with oppressive.
“Weinberg then referred to authorities, including the judgment of Lockhart J in Austral Fisheries, holding that a subordinate rule could be invalid as unreasonable if it was manifestly arbitrary, oppressive, capricious or irrational such that Parliament could not be taken to have authorised it.”
Vanstone v Clark (2005) 147 FCR 299

It would be interesting to see how these SPs with prohibitory pet by-laws explained how the by-law is not irrational; see also 143 in the above case; can a prohibition be justified by reason? It is a reverse onus of proof if looked at that way.
For all the history of cases regarding by-laws is it really the case that the Parliament’s intention was to give strata owners the power to be unreasonable and irrational or has the justice system dug itself a hole it will always struggle to get out of due to flap-trap like that found in White v Betalli (NSWCA).
A broad interpretation is one thing but a power to be unreasonable; I think not.

Typically these by-laws exist on the back of a subjective perspective held by sufficient, unaffected, people to have the numbers to create the by-law. The only real necessity when making by-laws is having the numbers. You don’t need to be rational or considered or base a decision on fact; hysteria is enough if it gets the job done.
Thank you NSW judicial system for the (dys)functional interpretation of the power to make by-laws.

Weight given to an idea disproportionate to the probability of the occurrence of the idea is a common human mental trait that has been proven as fact by psychologists to lead to poor outcomes.
That goes a long way to explaining how this whole ‘dog’s breakfast’ has eventuated.

[The Hood]

For those who like the contrasts found in legal cases consider the harsh unconscionable and oppressive in Cooper and also in Roden and contrast them with the Appeal Panels work in The Owners – Strata Plan No 91157 v Yoolee Holdings Pty Ltd Limited; where the Member argued:
(1) Does the by-law provide for unnecessary or unreasonable differential treatment between lot owners or occupiers?
(2) Does an aggrieved lot owner have a reasonable expectation (in the circumstances of the particular case) that any restriction(s) would not be required or imposed?
(3) Does the by-law provide for reasonable exceptions?
(4) Does the by-law provide a “complete embargo” as found in John Maait Properties?
(5) Is it appropriate that an owners corporation establish some control and is the level of control appropriate?
(6) Does the by-law include provision for consideration of individual needs which may not be necessary in relation to the majority of owners or occupiers?
(7) Does the by-law allow particular works or benefits but at an unreasonable cost?
(8) In considering each of the above factors (and any other factors which may suggest themselves), does the by-law include that element of extremity necessary to meet the high standard set by s. 139

I have edited this and cut it back a lot because I’m not sure that posting huge chunks of legal verdicts improves the understanding of these issues.  Most people won’t read very far into these documents.

Make your point, by all means quote a line or two, and then please provide a link to the document you’re quoting.  But I think great long screeds of detailed copied and pasted material turns the vast majority of people off and halts discussion in its tracks (as you can see right here). – JimmyT

 

[The Hood]

There is actually a limit on what you can see in terms of “sealed” legal docs but that is unrelated to your situation.

In your case if the agent or OC do not want to play nice then you simply make application to inspect the records under s 182. If you follow the process and the OC decline to ‘come to the party’ then it is relatively easy to make application to NCAT (no need for mediation in this case) and get an order that requires the OC to give you what you want; and you are a good chance to get the costs of the application back if you ask for it.
NCAT frown on OCs who hold out when they are required to produce.

One reported case is :
Legge v Network Strata Services Pty Ltd (Strata and Community Schemes) [2013] NSWCTTT 45 (8 January 2013)

A couple of unreported cases which i can supply a copy of are:
Jones v OC SP36965 and
Ross v OC SP 8557

If the Agent of OC do not want to play nice then it will not end well for the OC.

JT said: “… and any failure to comply will leave you no choice but to commence proceedings at Fair Trading and NCAT against both the Strata Manager and Strata Committee for failure to abide by their legal responsibilites under the Act.”

Just to clarify what JT probably means.

You will have no luck with proceedings against the agent because of s 53 of the SSM Act and you will have no luck with proceedings against the SC because the SC has no legal character.

Jimmy means to say is proceedings against the Owners Corporation  SP*****.

The OC SP **** is the respondent if you go to NCAT.

 

 

The legal stuff:
182   Requests for inspection of records of owners corporation

(1) Persons who may inspect

An owner, mortgagee or covenant chargee of a lot in a strata scheme, or a person authorised by the owner, mortgagee or covenant chargee, may request the owners corporation to allow an inspection to be carried out under this section.

(2) Form of request

The request must be made by written notice given to the owners corporation and be accompanied by the fee prescribed by the regulations. ($31+gst)

(3) Items to be made available for inspection The owners corporation must make the following items available for inspection by the person who makes the request or the person’s agent—

(a)  the strata roll,

(b)  any other records or documents required to be kept under this Part,

(c)  the plans, specifications, certificates, diagrams and other documents required to be delivered to the owners corporation before its first annual general meeting by the original owner or the lessor of a leasehold strata scheme,

(d)  if in its custody or under its control, the certificate of title comprising the common property or, in the case of a leasehold strata scheme, the certificate of title for the lease of the common property,

(e)  any applicable 10-year capital works fund plan,

(f)  the last financial statements prepared,

(g)  every current policy of insurance taken out by the owners corporation and the receipt for the premium last paid for each such policy,

(h)  if a strata managing agent has been appointed, a copy of the instrument of appointment,

(i)  if a strata renewal plan has been given to owners for their consideration under Part 10 of the Strata Schemes Development Act 2015, a copy of the plan,

(j)  any other record or document in the custody or under the control of the owners corporation,

(k)  if the duties of the owners corporation under this subsection have been delegated to a strata managing agent, any other records (including records of the strata managing agent) relating to the strata scheme that are prescribed by the regulations,

(l)  if a building manager agreement is in force or has been entered into but has not yet commenced, a copy of the building manager agreement,

(m)  particulars of any service agreement entered into by the owners corporation,

(n)  particulars of any agreement entered into with a local council for a strata parking area,

(o)  if the request is made within 5 years after the end of the initial period, particulars of any orders made under section 27 and copies of any related contracts or other documents.

Maximum penalty—5 penalty units.

(4) Meeting inspections

For the purpose of complying with requirements for the giving of notice of a meeting of the owners corporation, the original owner (whether or not having ceased to be an owner) or an agent authorised in writing by the original owner is entitled to inspect the strata roll without payment on making a written application.

 

183   Inspection of owners corporation documents

(1)  An inspection under this Division is to take place at the time and place, or by the means, agreed on and, failing agreement, at the parcel at a time and on a date, or by the means, fixed by the owners corporation under this section.

(2)  If an applicant and the owners corporation fail to reach an agreement within 3 days after the owners corporation receives the application, the owners corporation must immediately give the applicant a written notice fixing a specified time (between 9 am and 8 pm) on a specified date (not later than 10 days after the owners corporation receives the application), or a specified means, for the inspection to take place.

(3)  The means for inspecting documents may be in person or through electronic access to the documents or any other means agreed on or fixed under this section.

(4)  A person entitled to inspect a document may take extracts from, or make a copy of, the document but must not, without the consent of the owners corporation, remove the document from the custody of the owners corporation.

 

[The Hood]

During the strata reform period back in 2014 the NSW Parliament released various draft papers on the reforms.
In the draft model by-laws there were originally 3 options for pets.
Option 2 of your AGM motion was option 3 in the original draft model by-laws for new strata schemes.
When the legislation was passed option 3 from the draft had been removed.
The Parliament no longer considered a prohibition on pets to be appropriate.

Your SP might pass option 2 on your agenda but if it does then it is a NCAT matter waiting to happen and your owners corporation would not fair well if the by-law is challenged.

In recent times there has been a number of cases Yardy, McCormick, Roden  and more recently Cooper which all point to a by-law such as option 2 being contrary to the Act, i.e. section 139
139   Restrictions on by-laws

(1) By-law cannot be unjust A by-law must not be harsh, unconscionable or oppressive.

And a by-law such as option 2 has already been viewed as invalid in a number of cases.

First thing I would recommend is ask the motion be amended to remove option 2 as it is contrary to the Act (s 139). Cite the above cases as evidence that such an option has already been viewed on a number of occasions, by NCAT, as invalid.

If that fails then request the Chair exercise his/her discretion under cl 19 of Sch 1 of the SSM Act and rule the motion out of order:

19   Chairperson may rule certain motions out of order

The chairperson at a meeting may rule a motion out of order if—

(a)  the chairperson considers that the motion, if carried, would conflict with this Act or the by-laws of the strata scheme or would otherwise be unlawful or unenforceable, or

If that fails and option 2 passes then make immediate application for mediation (free) on the basis the resolution is contrary to the Act and the Chair failed to properly exercise his/her discretion.

If that does not resolve the matter then it gets messy as you may need to go to NCAT to get the resolution invalidated.
You should not need to vote down a motion that is about acting contrary to the Act.

 

[The Hood]

Q1. There is s 135 of the NSW “Strata Act” which in effect says the by-laws apply to the owners. So in a context the owners are legally obliged to observe them.

Probably better to say there are potential consequence for not observing the by-laws.

So, the by-laws are applicable to the committee members (assuming they are owners) and there can be consequences for breaking them. It might be via a notice to comply with a subsequent application to NCAT for a penalty if compliance is not the result. The fine money going to the OC.
There is the option to just go straight to NCAT and seek an order for the owner to be restrained from the non compliance. That application can be made by the owners corporation OR just an owner against another owner and then there is when the committee members are breaking the by-laws which is grounds to have them removed from the committee under s 238.

s 238 (2) of the SSM Act  says “(2)  Without limiting the grounds on which the Tribunal may order the removal from office of a person, the Tribunal may remove a person if it is satisfied that the person has—
(a)  failed to comply with this Act or the regulations or the by-laws of the strata scheme,

I feel if the SC member is a problem then ‘go for the throat’ and make application for mediation through Fair Trading, owner v owner, which is free, with a view to seeking a s 238 removal order.
That will put the wind up then.

Q2. Simply no. There is no legal requirement for the SC to enforce the by-laws although NCAT Senior Member Vrabac does say the following in the Luong case

106 .The circumstances in which the management structure may not be functioning or functioning satisfactorily include where the relevant level of management;

• Fails to exercise power or make a decision to prevent a contravention by lot owners and occupiers of their obligations under the Act, including breaches of by-laws

By-laws are difficult to enforce because people are under the ‘the rule of law’ which has no real interest in the mundane petty day to day issues of the plebs. There is a process, a few options, which are slow vexing, adversarial and often unknown to the average owner.

“The offending Committee member is hardly going to agree to make up the majority and thereby impose a penalty on himself.”
It is one thing to send a notice to comply it is another to seek a penalty. The two are related in a process but are separate things.

[The Hood]

We had a similar problem recently with a well known agent from Liverpool.
The AGM was attended by a manager and a Director of the agency of whom neither said boo when one of their stooge owners (stooge 1) nominated themselves and also another stooge (stooge 2) for the SC.
Stooge 1 then sold her unit meaning she was no longer a SC member by virtue of s 35. Stooge 2 was never properly nominated in the first but was told repeatedly by the agent she was still a SC member, even though her nomination from stooge 1 was no longer from a person eligible to nominate her.

If a position is not vacated by virtue of one of the ‘conditions’ in s 35 then s 38 can in some cases be applicable.
“any defect in the appointment” is broad enough a statement to be interpretable as a defect in the nomination process.

The point of s 38 is not to validate a bogus election but to validate a good faith act or proceeding. So even if these bogusly appointed people voted at a SC meeting the decisions of the SC would still be good.

Somewhere in the AGM minutes it will note these people were elected and that is ‘evidence’ of the validity of their position until challenged even if others know the election was bogus.

Tell them they are not a SC member (and to take it up with NCAT if they have a problem). I like that call. That is what we did.

38   Acts and proceedings of strata committee valid despite vacancies or defects

(1)  This section applies if, when any act or proceeding of a strata committee was done, taken or commenced there was—

(a)  a vacancy in the office of an officer of the owners corporation or any other member of the strata committee, or

(b)  any defect in the appointment, or any disqualification, of any such officer or member.

(2)  Any act or proceeding of a strata committee done in good faith is as valid as if the vacancy, defect or disqualification did not exist and the strata committee were fully and properly constituted.

[The Hood]

I would suggest if you have any real issue with any decision seek an interim order to restrain the OC from relying on any decision from the SC meeting of ….

A lack of notice.
Notice is required by cl 5 of Sch 2 (NSW) so the question becomes what is the consequence for failure.

5   Notice of meetings for other strata schemes

(1)  The secretary of the owners corporation of a strata scheme that is not a large strata scheme must give notice of a meeting to each other member of the strata committee at least 3 days before the meeting and to each owner.

(2)  Notice is to be given by displaying the notice on the notice board maintained by the owners corporation or in accordance with section 263.

 

The key to 5(1) is what does ‘must’ mean and what happens when the OC doesn’t ‘must’.
Welcome to the absolute nightmare world of the NSW court system and their making it up as they go view of what ‘must’ means.
Must appears over 250 times in the SSM Act and you can never know what any particular must means until some Court, typically the NSWCA, says what any particular must means.
We have the must of s 106 which is a mandatory strict obligatory must.

This type of must:
‘Must’ means ‘must’. It is an imperative – expressing necessity, obligation and compulsion. There is no halfway house; no reason for attempting to ameliorate the outcome because of the particular consequences … J Pembroke (Bakkante)

But then we have cases like Sher Global where just about every ‘must’ in what is now Sch 1 relating to general meetings was considered procedural and there was no consequence for failing those musts.

Then we get cracks like that in The Owners – Strata Plan No 62022 v Sahade [2014] NSWSC 3 that talk about how, for a general meeting, no notice “adversely affected that person” and strict compliance is required with the provision is required.

28. Moreover, it is difficult, if not impossible, to imagine a circumstance where a person was provided no or inadequate notice of the meeting, yet it could be said that the failure “did not adversely affect” that person, except in circumstances where the person attended the meeting notwithstanding and waived the notice provision. I note, at this juncture, that paragraphs (a) and (b) of s 153(2) of the Act must each be satisfied in order for an adjudicator to refuse to make an order invalidating the resolution or the election. Thus, the legislative presumption, with a limited exception, is that non-compliance with any provisions of the Act dealing with the conduct of a meeting will result in an order invalidating any resolution or election held.

It’s a dog’s breakfast the consequence of not giving notice.

My favorite argument for no notice of a SC meeting flows from  Sch 2 cl 9(3) – the veto clause.
(3) Decisions to have no effect if opposed by more than specified owners

A decision of a strata committee has no force or effect if, before the decision is made, notice is given to the secretary of the owners corporation by one or more owners, the sum of whose unit entitlements exceeds one-third of the aggregate unit entitlement, that the making of the decision is opposed by those owners.

 I like to say a SC only has authority in the absence of veto because that is the effect of Cl 2 9(3).

There can be no greater disenfranchising of the owners than to give them no opportunity to veto.
Clause 9(3) might as well not exist if it is OK to give no notice.

Probably no notice of a SC meeting is best explained in:
Owners Corporation SP 67631 v Waters & Gardner [2010] NSWCTTT 343 at [19]:
“[19] … There was consequently no opportunity for each of the lot owners to make an objection at the executive committee meeting to the proposed course of action.”

In other words, all lot owners (including the applicant) were denied entitlements which they “possessed according to the Act and that must be an adverse effect” (Pamela Williamson v Owners Corporation Strata Plan 7348 [2015] NSWCATCD 65 at [39]).

I would suggest using that in any NCAT application.

Totally disenfranchising the owners, if that doesn’t warrant invalidation then we all in trouble.

[The Hood]

Just a quick correction on the LP comment
(6) Proxies can be used at Committee meetings. To prevent your majority being lost by a member not being able to be present at a meeting, a Committee member may act as a proxy for another committee member who is unable to attend the meeting. The proxy giver would need to notify the Secretary in writing prior to the meeting that they have given their proxy to another member. The proxy recipient would, of course, need to agree.

Just to tidy that up a little.

“There is no provision in the legislation for proxies at executive committee level.”
Daniel Russell of Chambers Russell Lawyers

There is authority that voting at an executive committee can proceed by properly appointed “alternates” (Quest Rose Hill Pty Ltd v White [2010] NSWSC 939 (Unreported, Ward J, 24 August 2010) at paragraph 145).

Also the SC must vote to accept the “alternate” (see s 34(1))

So an owner can nominate an eligible alternate (substitute – it is not semantics) who can with the approval of the SC act as a member of the SC in the place of the missing person. (see also s 34 (2))

[The Hood]

Not buying, I wasn’t selling.

JT said: “If I take the wheels off a car and leave it on bricks on common property, have I altered it? I don’t think so.  How about if I build a shed that sits on common property but isn’t fixed to it?  Same story, I reckon.”

The car is dumping and I doubt the shed would not be fixed, there are requirements for fixing sheds or they blow away.

Unauthorisded additions are the responsibility of the OC to maintain and repair. Plenty of case law on that. Unauthorised additions can interfere with the use and enjoyment of common property by the owners who have the beneficial use of common property.

If the SC member is looking for the OC to create a barrier then it is hard to image how the barrier (planter boxes) is not a chattel (property) of the OC, hard to image it isn’t an addition.

If the owner is looking to do the barrier then the owner would need some form of exclusive use of the area – a special resolution motions.

I will be brief because I can’t make choices for the OC is question, I can only give information. I often feel Flatchat tries to make choices for owners.

I know of a case where an owner had to move two poly tanks from the common property because they were an unauthorised addition. They were not fixed or required remedial work to remove.

Things do not need to be fixtures to be additions to the common property.

Sections in the Act on cosmetic and minor work came about because such small scale work under the old law required a process that was overkill.

As much as it seems complete overkill, s 108 is about additions and if an OC is looking to create a planter box barrier then, on the information I have, said OC would struggle to argue the barrier is not an addition to the common property.

Perhaps we all need to lobby the Minister for further reforms.

[The Hood]

This planter box thread has a s 108 tone to it.
JT talks of not changing changing common property but add to, alter and erect are the terms used in s 108 and section 108is headed “Changes to the common property” (see below)

The minor improvements and cosmetic improvements sections only extent to owners not the OC itself.

“… then any additions to the common property for the purpose of improving or enhancing it must comply with the requirements of s 65A (now s 108). Glenquarry NSWSC

It sounds like complete overkill but it seems the Act requires a general meeting to pass a special resolution to add some planter boxes to the common property.

108   Changes to common property

(1) Procedure for authorising changes to common property
An owners corporation or an owner of a lot in a strata scheme may add to the common property, alter the common property or erect a new structure on common property for the purpose of improving or enhancing the common property.

(2)  Any such action may be taken by the owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed.

[The Hood]

Extract from response in relation to enforcement of orders

I also note your comments about enforcing NCAT orders in strata matters. By way of background, Section 202 of the Strata Schemes Management Act 1996 (repealed) allowed the applicant for the original order to ask the Tribunal to require a person to pay a civil pecuniary penalty if the person contravened an order of an Adjudicator under Chapter 5 of the 1996 Act. The 1996 Act was repealed on 30 November 2016 and replaced by the 2015 Act. No such provision exists in the 2015 Act, although an Owners Corporation may seek a civil penalty for contravention of a by-law under section 147 of the 2015 Act.

The enforcement of NCAT orders is provided for in Part 5 of the CAT Act and I draw your attention to Division 1-3. A party should seek legal advice before considering any of the options contained in the Divisions. A party may also seek to renew the proceedings if an order is not complied with. Information about renewing is on NCAT’s website at <u>http://www.ncat.nsw.qov.au.</u>

Yours sincerely

Principal Registrar and Executive Director NSW Civil & Administrative Tribunal

NCAT seem to be aware of s 73.

[The Hood]

A failure to comply with orders , i.e. disobey orders is contempt in the face of the Court.
A failure by a party to comply with a court order may constitute a contempt of court (Legal Services Board v Forster (No 2) [2012] VSC 633, [43])
Disobeying court orders including subpoena: O’Shane v Channel Seven Sydney Pty Ltd [2005] NSWSC 1358

If we take s 73 (CAT Act) on face value and the Tribunal has “the same powers as the District Court has in those circumstances in relation to a contempt of the District Court” and  the District Court may ( s 199(7) of the District Court Act) ‘punish contempt by a fine not exceeding 20 penalty units or by imprisonment for a period not exceeding 28 days’ then yes the Tribunal would appear to have the power to fine (for contempt) those who do not comply with their orders.

Why isn’t it a power used; possibly because the Tribunal would need to initiate the proceedings rather than the person (party to the orders) who had issue with an order not being complied with.

Under the old s 202 it was one of the parties to the order who would have made application for a penalty. Under s 73 of the CAT Act NCAT are the ‘party’ initiating the action against the alleged ‘offender’.

‘Loopholes’ that seem impossible to close, unused powers; none of it does much for consumer confidence.

[The Hood]

There is an avenue. It has been used in Bott v NSW Land and Housing Corporation [2017] NSWCATCD 88
But far be it from the State to be constantly policing if its orders have been complied with.
Section 202 (1996 Act) required an applicant, s 73 CAT Act doesn’t. Section 73 requires ‘the State’ to follow it up.
The absence of an equivalent of s 202 is the ‘loophole’.
The Tribunal is not toothless.

73   Contempt of Tribunal

(1)  The Tribunal has, if it is alleged, or appears to the Tribunal on its own view, that a person is guilty of contempt of the Tribunal committed in the face of the Tribunal or in the hearing of the Tribunal, the same powers as the District Court has in those circumstances in relation to a contempt of the District Court.

Note.

Section 27 (1) provides that, in the case of proceedings for contempt of the Tribunal, the Tribunal may be constituted by one or more members (being members who are the President or any other member who is a current or former NSW judicial officer).

(2)  A person is guilty of contempt of the Tribunal if the person does or omits to do any thing that, if the Tribunal were a court of law having power to commit for contempt, would be contempt of that court unless the person establishes that there was a reasonable excuse for the act or omission.

(3)  Without limiting subsection (1), the Tribunal may vacate or revoke an order with respect to contempt of the Tribunal.

(4)  For the purposes of this section:

(a)  sections 199, 200 and 202 of the District Court Act 1973 apply to the Tribunal and any members constituting the Tribunal in the same way as they apply to the District Court and a Judge of the District Court, and

(b)  a reference in section 200 of that Act to the registrar of a proclaimed place is taken to be a reference to the principal registrar, and

(c)  section 201 of that Act applies to a ruling, order, direction or decision of the Tribunal under those provisions as so applied.

Note.

Section 201 of the District Court Act 1973 (as applied by this subsection) provides for appeals to the Supreme Court against contempt decisions of the Tribunal under this section.

(5)  Without limiting the powers of the Tribunal under this section, if it is alleged, or appears to the Tribunal on its own view, that a person is guilty of contempt of the Tribunal (whether committed in the face or hearing of the Tribunal or not), the Tribunal may refer the matter to the Supreme Court for determination.

(6)  The Supreme Court is to dispose of any matter referred to it under this section in the manner it considers appropriate.

[Author]

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