Rita Sahade v The Owners – Strata Plan No 62022 and Ors [2015] NSWCATCD 5

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Rita Sahade v The Owners – Strata Plan No 62022 and Ors [2015] NSWCATCD 5 Hearing dates: 3 December 2014 Decision date: 13 January 2015 Jurisdiction: Consumer and Commercial Division Before: S Thode, Senior Member Decision: The application is dismissed. Catchwords: Unit reallocation - management and control – power to reallocate unit entitlements if original allocation considered unreasonable – respective value of lots Legislation Cited: Strata Schemes Management Act 1996 Cases Cited: Sahade v The Owners – Strata Plan 62022 [2014] NSWCA 208 Texts Cited: None Category: Principal judgment Parties: Rita Sahade (Applicant) The Owners – Strata Plan No 62022 (First Respondent) Carina Gilster, Celia Bischoff and Eckhart Bischoff (Second Respondents) Representation: Counsel: Mr B Walker SC/Mr Sahade (Applicant) Mr Williams SC/ Mr Knoll (First and Second Respondents) Solicitors: Trinity Legal (Applicant) Le Page Lawyers (First and Second Respondents) File Number(s): SCS 11/52841 Publication restriction: Unrestricted

Judgment

Application 1. Rita Sahade, as owner of lot 3 of Strata plan 62022, filed an application with the Tribunal seeking orders for re-allocation of unit entitlement (the applicant). The contested matter was heard, determined and a decision was published in 2012, dismissing the application. 2. The decision of the Tribunal was appealed to the District Court. The District Court found that the Tribunal had made an error of law in failing to provide reasons for its refusal to reallocate unit entitlements in accordance with the market value of the respective units at the time of registration of the plan. The District Court also found that the Tribunal should take into account the effect of any proposed reallocation on the power of the unit holders to control the management of the strata scheme (the control issue). 3. The District Court decision was appealed to the Court of Appeal. 4. The principal judgment of that Court was published on 3 June 2014. 5. The Court of Appeal remitted the matter back to the Tribunal for determination so much of the application as concerned: 1. Whether the original allocation of unit entitlements was unreasonable; 2. if so whether the unit entitlements should be reallocated and; 3. if so, the appropriate allocation of unit entitlements on the basis of the values of the respective lots assessed by the Tribunal on 4 September 2012. 1. The Court of Appeal declared that in determining the questions as set out in (b) and (c) above the Tribunal is entitled to take into account: (a) if a variation in the allocations will affect the level of control of the owners' corporation currently enjoyed by each lot holder, that fact, and (b) if a particular reallocation could lead to the potential for deadlock in voting at meetings of the owners corporation, that fact. 2. The remitter was listed for hearing before the Tribunal differently constituted on 18 December 2014. The decision was reserved on 22 December 2014 after receipt of submissions and evidence tendered by agreement of all parties. 3. It is necessary to set out the different findings reached by the Court of Appeal as they are adopted by this Tribunal. The Court held (Basten JA McColl JA and Sackville AJA), dismissing the summons (per Basten JA and McColl JA agreeing): 1. It would be inconsistent with the nature of the power and the test of unreasonable allocation under section 183 of the Management Act if an order was solely determined by the respective values of the lots at the time of registration [24]. … 2. Section 183(1) of the Management Act confers a discretion on the Tribunal to reallocate unit entitlements when their original allocation is found to be unreasonable. The issue of control was not held to be relevant because it establishes unreasonableness; it is relevant because it is a matter the Tribunal, having found the original allocation unreasonable, should have taken into account when determining whether an order to reallocate unit entitlements should be made in these circumstances.