Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Rita Sahade v Owners Corporation Strata Plan 62022 & Carina Gilster & Eckart Bischoff [2015] NSWCATCD 46 Hearing dates: 25 March 2015 Decision date: 02 April 2015 Jurisdiction: Consumer and Commercial Division Before: Senior Member Meadows Decision: Order 3 made by Adjudicator Smith on 16 April 2014 is amended as follows: "3.In addition, pursuant to the Management Act s 149 the contribution levied in respect of Lot 3 is reduced in the sum of $78,516.11." Catchwords: STRATA SCHEME - appeal against adjudicator's orders - excessive levies - legal costs of owners corporation Legislation Cited: Civil and Administrative Tribunal Act 2013 Strata Schemes Management Act 1996 Category: Principal judgment Parties: Rita Sahade (applicant) Owners Corporation Strata Plan 62022, Carina Gilster, Eckart Bischoff and Celia Bischoff (respondents) Representation: Counsel: Mr M Sahade (applicants) Mr Cunio (respondent) Solicitors: Trinity Legal (applicants/cross respondents) David Le Page (respondents) File Number(s): SCS 14/25121 Publication restriction: Nil reasons for decision Background 1. On 25 November 2013 the appellant filed an application for an order by an Adjudicator in the Consumer Trader and Tenancy Tribunal, seeking the following orders: Annexure "A" 11. What order/s do you want? With respect to each of the following levies passed by Resolution of the Owners Corporation: 30 January 2012 $ 40,000 17 May 2012 $ 50,000 30 August 2012 $ 60,000 5 November 2012 $100,000 5 April 2013 $ 40,000 17 May 2013 $100,000 21 October 2013 $200,000 Total: $590,000 And: 1. Any further resolution imposing levies in respect of legal proceedings passed since the filing of this application to the date of determination by the Adjudicator and or Tribunal; (Hereinafter referred to as "the said levies"): 1. An order pursuant to section 149, 138 Strata Schemes Management Act (NSW) ("SSM Act") or otherwise for payment of each and all of the said levies without any contribution from Lot 3, or in the alternative, a lesser contribution from Lot 3 than the proportion of the Lot 3 unit entitlements; 2. In the alternative, an order pursuant to section 138, 149 of the SSM Act or otherwise revoking each and all of the said levies or in the alternative, reducing the amounts to be levied; 3. Further and in the alternative, an order pursuant to section 148, 138 SSM Act or otherwise that no interest be chargeable on a contribution payable by Lot 3 for late payment of the contribution as varied or otherwise; 4. To the extent that any of the above orders requires an extension of time, then leave be granted nunc pro tunc for the extension of such time to make this application; 5. Such other order as to the Adjudicator and or Tribunal seems just. 1. That application was determined by Adjudicator Jeffery Smith on 16 April 2014. Adjudicator Smith made the following orders: 1. Pursuant to the Management Act s 163 the application in respect of the owners of lots 1 and 2 is dismissed. 2. Pursuant to the Management Act s 149 the total contributions levied by the respondent is reduced in the sum of $230,822.63. 3. In addition, pursuant to the Management Act s 149 the contribution levied in respect of lot 3 is reduced in the sum of $50,787.68. 4. The respondent, through its newly appointed strata managing agent, Melandiro Pty. Ltd. t/as "Irvine Strata Management" shall re-calculate the interest payable by the applicant in accordance with the Management Act s 79 1. The Adjudicator's decision was accompanied by lengthy and detailed reasons comprising 74 paragraphs. 1. On 7 May 2014 the appellant filed this appeal. Because of the issues raised by the parties in their submissions it is appropriate, or indeed necessary, to set out the orders sought in the appeal. They are as follows: ANNEXURE "A" 1. On 16 April 2014, Adjudicator Jeffery Smith made orders in SCS 13/62024. 2. This is an appeal in respect of party [sic: part] only of that decision. 3. The appellant claims that order 2 of the Adjudicator reducing levies in the sum of $230,822.63 should be increased by: 1. A further sum of $171,298.41 in respect of proceedings SCS 11/52841 upon which the applicant was successful on appeal; and 2. A further sum of $69,321.08 in respect of levies passed in breach of the orders made in the Supreme Court. 1. In the alternative to order 3(ii) above, the appellant claims an order that order 3 of the Adjudicator be increased by 40% of $69,321.08. 2. In respect of paragraph 3(i) above, the Adjudicator erred in law in paragraphs 62 and 63 of the decision where he found that the applicant was unsuccessful in the Tribunal but successful on appeal. In particular the Adjudicator failed to apply section 230(3) of the SSM Act, which deems the appeal proceedings to be Chapter 5 proceedings. 3. Respect of paragraphs 3(ii) and 4 above, the Adjudicator misunderstood the application concerning levies in respect of Supreme Court proceedings where Kunc J ordered the respondent to pay its own costs by levies on all lot owners other than the applicant. The applicant complained that levies were passed contrary to Kunc J's orders as levies were passed requiring the applicant to contribute to same. The adjudicator erred in believing the application to be to amend or correct Kunc J orders - when in fact, it was to enforce it. 1. The appeal was listed for directions on 30 July 2014. It appears from the Tribunal file that the appellant (in fact, all parties) were late on that occasion and the appeal was initially dismissed for non-appearance of the appellant. That order was then set aside on the same date and the presiding Member made a number of orders. 2. The first procedural order was that the lot owners were to file and serve an application to be joined as parties pursuant to section 44 of the Civil and Administrative Tribunal Act 2013 (CAT Act) and that application, by consent, was to be determined on the papers. There were then orders for the filing and service of evidence by the appellant and the lot owners. 3. The "hearing" on the papers was ordered to be listed not before 08 September 2014 and in fact was listed on 11 November 2014. On that date Senior Member Rosser ordered that Carina Gilster, Eckart Bischoff and Celia Bischoff were joined as parties to the appeal, and also ordered the matter was to be listed for directions on the next available date. Senior Member Rosser wrote detailed reasons for her decision in relation to the joinder of the other lot owners and I will not repeat them here. Before me, there was no dispute in relation to the lot owners being parties to the appeal. 4. The appeal was then listed for directions, again before Senior Member Rosser, on 17 December 2014. Senior Member Rosser made orders for the service by all parties of all documents on which the parties intended to rely at the hearing. Those directions included orders that the appellant file her documents by 30 January 2015, the respondents by 20 February 2015 and the appellant's documents in reply by 27 February 2015. 5. On 26 February 2015 the appellant sought a short extension of time to file her documents in reply, noting that the respondents' material "was voluminous and complex in nature". The respondents objected to an extension of time being granted, noting that the "voluminous" material filed by the respondents comprised 17 pages of written submissions and 35 pages of attachments, whereas the documents filed by the appellant comprised over 750 pages of material. In any event, the appellant was granted an extension of time until 06 March 2015 to file her material in reply. No issue was raised in regard to the provision of evidence and submissions by any party (although there is a substantive dispute in relation to the respondents being able to rely on certain submissions). 6. The appeal was set down for 3 hours on 25 March 2015. Before proceeding to summarise the issues and the submissions of the parties, I consider it is appropriate to repeat certain comments I made at the hearing. I have been greatly impressed by the preparation of the parties not only in relation to the presentation of their documentary evidence and submissions, but by the oral submissions made by Mr Sahade for the appellant and Mr Cunio for the lot owners. There is a complex litigation history (if I may so phrase it) between these parties in this Tribunal and elsewhere and a lengthy and complex factual history in relation to this particular proceeding and the background to it. The parties' advocates displayed the highest standard of cogently summarising the issues and taking issue with each other in a calm and professional manner, with excellent clarity, including carefully relating the various submissions to the evidence. No doubt each advocate was ably assisted by their instructing solicitors (in Mr Sahade's case) or their colleagues (in Mr Cunio's case). The Nature of the Appeal 1. No issue was taken by any party as to the legislative nature of this appeal. In her decision of 11 November 2014, Senior Member Rosser adverted to the legislative provisions for an appeal against an Adjudicator's orders. There is no issue in relation to the abolition of the Consumer Trader and Tenancy Tribunal or the formation of this Tribunal. Suffice it to say that this appeal is, pursuant to the CAT Act, an "external appeal" and is to be heard by this Division of the Tribunal and not by an Appeal Panel as in the case of an "internal appeal". 2. There is an issue in relation to whether this appeal hearing is to be regarded as a hearing de novo, pursuant to my earlier decision in Stricke in which all issues included in the original adjudication and the Adjudicator's orders may be canvassed, or whether the issues are properly limited to the specific matters raised in the application for Tribunal Orders as filed by the appellant and set out in paragraph 3 above. I propose to deal with that issue first. 3. Before doing so, however, I note that the issue does not concern one of the matters discussed in Stricke, as to whether an appellant is required to establish error on the part of the Adjudicator. In any case, in this appeal, the appellant does allege error. 4. In Owners Strata Plan 56911 v Stricke [2-12] NSWCTTT 392, the appellants had appealed against orders made by Adjudicator J Smith. The respondent to the appeal had submitted at the outset that "… the first question that needs to be determined on this appeal is whether or not there is an error by the adjudicator, and it's only at that point that the Tribunal's discretion to admit further evidence comes into play." The parties made detailed submissions in relation to the nature of an appeal from an Adjudicator's orders and in my decision on the appeal I treated that issue as a preliminary matter, giving detailed reasons. Without repeating those reasons, I decided that an appeal from an adjudicator's decision was by way of a hearing de novo. I stated: "[t]he provisions of sections 181 and 186 of the Act are, in my opinion, such as to demonstrate that an appeal from an Adjudicator's decision is by way of a hearing de novo. On that basis, the Tribunal is not required to first demonstrate error on the part of the adjudicator, is required to exercise its own jurisdiction in relation to the appeal and therefore may consider fresh evidence …" 5. Stricke was not specifically concerned with the question as to what issues may be included in the appeal. However, as at the date of that decision, s 186 of the Strata Schemes Management Act 1996) (SSM Act) was in the form: 186 Investigations and proceedings before the Tribunal (1) Before making an order (except an order for a stay of proceedings), the Tribunal must investigate the application for the order or, in the case of an appeal, the grounds for the appeal. (2) In any such investigation or in any proceedings before it for an order, the Tribunal: (a) is not bound by the rules of evidence and may inform itself on any matter in such manner as it thinks fit, and (b) must act according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. (3) The Tribunal need not hold a hearing in order to decide an application or appeal unless there is an appearance by a person entitled or required to appear before it. (4) A hearing need not be formal.[Emphasis added] 1. In my opinion, the effect of the former s 186(1) was to ensure that an appeal against an Adjudicator's orders was limited to the subject matter of the original application for an Adjudicator's orders and further to limit the appeal to those issues specified in the grounds of appeal. 2. Section 186 of the SMM Act was repealed by the Civil and Administrative Legislation (Repeal and Amendment) Act 2013. The effect of that repeal (and the repeal of other sections of the SSM Act in relation to appeals against an adjudicator's orders) is that such an appeal is entirely governed by the CAT Act and subordinate legislation. I can find no provisions in that legislation similar to the former s 186(1). Nor can I find any recent decisions of the Tribunal or superior Courts in relation to the effect of that repeal. 3. However, I find that, as always subject to sections 36 and 38 of the CAT Act and s181 of the SSM Act, an appeal against an Adjudicator's orders is commenced by completing the "Strata and Community Schemes Application for Tribunal Orders", question 9 of which requires an appellant (as in this case) to state "[w]hat are your reasons for requesting the above orders". Assuming leave is not granted later to amend those reasons, the appeal is necessarily restricted to the issues raised in answer to question 9 because there is otherwise no application before the Tribunal. Should a respondent also wish to appeal the Adjudicator's orders it would be necessary for that party to complete its own application. 4. In addition, as pointed out in the respondents' own submissions at 11.2 and 11.3: "11.2. Clause 25(2)(a) of the NCAT Rules 2014 requires that the notice of an appeal (whether internal or external) "be to the effect of the approved form." The approved form requires that the Appellant identify the orders that he or she wants, and the reasons for requesting those orders. The Notice of Appeal in this case discloses (in relation to the costs of the unit entitlement proceedings) only the question of the application of s.230 SSMA following Mrs Sahade's "success on appeal". It does not disclose an appeal based on Mrs Sahade's contention that the Respondents acted improperly by failing to procure the Owners Corporation to file submitting appearances, or by (allegedly) procuring the Owners Corporation to involve itself in the proceedings. 11.3. In these circumstances, the Respondents submit that it is not incumbent upon them to respond to the contention not raised in the Notice of Appeal. …" 1. Therefore, even though the requirement for the Tribunal to consider the grounds of appeal has been repealed, the procedure still requires the Tribunal to consider only those issues raised in the appeal application (again assuming no later amendment). I agree with the respondents' submissions in that regard, despite their later going on to suggest that the whole matter before the Adjudicator can be argued on appeal. 2. As a result, the respondents' submission that they may raise additional issues, relying on Stricke, is rejected. The Parties' Evidence and Submissions Appellant "Proceedings 4" 1. The appellant submits that the owners corporation improperly levied the applicant in relation to 40% (the appellant's unit entitlement) of the legal costs of the owners corporation incurred in defending the claim of the appellant in the Supreme Court seeking orders to correct an anomaly on the Strata Plan. Those costs were $69,321.08. 2. Adjudicator Smith misunderstood the nature of the application in that respect, in finding that "there is no power for an Adjudicator to amend that determination" (that is, the order in relation to costs made by Kunc SCJ in those proceedings). 3. In fact, the appellant was seeking to enforce that determination and so the levies owed by the appellant should be reduced by 40% of $69,321.08 "Proceedings 1" 1. I will summarise these submissions very briefly. Proceedings 1 related to an application by the appellant seeking a re-allocation of unit entitlements. The application was "vigorously opposed" by the owners of Lots 1 and 2 (the current respondents). The Tribunal decision was appealed to the District Court and from there to the Court of Appeal from which it was remitted back to the Tribunal for determination. The appellant asserts that she was "successful" in the Court of Appeal and also, it appears, the same assertion is made in relation to the District Court appeal. 2. The respondents incurred costs in the sum of $171,298.41 and the owners of Lots 1 and 2 directed the owners corporation to pay that sum, levying all lot owners in that regard. Therefore, the appellant was forced to contribute 40% of those costs. 3. This levy, as it affected the appellant, was "excessive" within the meaning of s 149 of the SSM Act as the owners corporation was not "personally interested" in the outcome: the claim affected only the Lot owners. This was possible because the owners of Lots 1 and 2 controlled the owners corporation and was for their own personal interests. Respondents "Proceedings 4" 1. The respondents submit that the finding of the Adjudicator that "the levies imposed on Lot 3 contrary to Kunc J's order is, by definition, excessive …" is not available under s 149. This is because that provision relates only to the totality of the amount or amounts levied and no finding is possible that a levy imposed on the owner of one lot is excessive. 2. If the owners corporation had levied contributions contrary to the orders of Kunc J, that would be a contravention of s 229 of the SSM Act and the appellant's recourse is to seek declaratory relief on the basis of illegality and unenforceability to oppose any proceedings for recovery, also on that basis. 3. Further, Kunc J had not made his determination as at the date the original adjudication application was filed and so the appellant had not sought any orders in that regard in her adjudication application. Section 124 of the SSM Act requires that the application specify the orders sought. 4. In addition, this additional order was raised in the submissions filed by the appellant on the last date on which submissions could be filed, being 28 January 2014. The respondents were thus unaware that this particular levy was the subject of the adjudication application and made no submission in that regard. The respondents point out the criticism of this "tactic" referred to by Adjudicator Smith in his reasons. 5. For those reasons, Adjudicator Smith could not "properly" have made a decision about Proceedings 4 "and did not do so", and it follows that this issue "is therefore not properly within the external appeal jurisdiction of the Tribunal, as defined in s 31(1) of NCATA, there being no pertinent decision made by the Adjudicator". "Proceedings 1" 1. The respondents again refer several times to the "secret submissions" of the appellant. For reasons to be discussed below, I do not consider it is necessary to summarise that submission further. 2. The respondents then provide detailed submissions in relation to the issue of the "success of the appellant in the various hearings in relation to her application to vary unit entitlements. 3. The respondents concede that the Adjudicator was in error in finding that the appeal proceedings following the Tribunal proceedings were not, for the purposes of s 230 of the SSM Act, "Chapter 5 proceedings". 4. Without summarising in detail the respondents' submissions on this issue, the respondents submit that the appellant could not be said to have enjoyed any success in the appeal proceedings nor in the final dismissal of her application when the matter was returned to this Tribunal. The respondents submit that indeed the true nature of the appellant's submissions in regard to this issue is that the owners of Lots 1 and 2 procured the owners corporation to oppose the unit entitlement proceedings for their own benefit and for no ostensible benefit of the owners corporation. 5. At this point the respondents submit as described in paragraph 18 above. Appellant's Submissions in Reply 1. The appellant's submissions in reply raise three issues not covered in her original submissions, and otherwise repeat those submissions. 2. The first new submission is to refute any criticism by Adjudicator Smith or by the respondents that the filing of substantial submissions (or a purported application to amend the application) was some kind of "tactic". The appellant points out that she complied fully and strictly with the directions imposed on her. She states the observation of the Adjudicator was unfair and unjust. Far from being a "tactic", the appellant was "scrambling to be able to comply without extending the timeframe …" 3. Further, the Adjudicator, if he perceived any prejudice [to the respondents], "ought to have extended the Respondents any further time to consider such matters. The Respondents did not make any such request". 4. The second new submission is to state that referring to "secret submissions" is improper and ought to be withdrawn, for the reasons given by the appellant. 5. The third new submission is a very brief response to the respondents' submissions to the balance of the respondents' submissions as dealt with previously in these reasons in regard to the nature of this appeal. The appellant points out no "cross appeal" has been filed and submissions in that regard have been improperly made. Consideration and Decision 1. I have already set out my decision in relation to the respondents' submissions on the nature of the appeal, above. 2. I do not agree with the Adjudicator's remarks on the "tactic" of late, or rather last minute, filing of submissions. With great respect to Adjudicator Smith, I am aware of the mischief to which he was alluding, that such last minute filing appears in many adjudications to be deliberate, seeking to put the opposing party at a disadvantage. In the current proceedings I am not satisfied that is what occurred. 3. I note that Kunc J's decision was published on 3 December 2013. There then followed shortly afterwards the notorious "Christmas/New Year Period" so often used in the industry as an excuse for delays in progressing matters. In this case, there would have been some delay anyway, given the complexity of the history of the various proceedings engaged in by the current parties, including the proceedings before Kunc J. I also note the voluminous documentary materials which required examination and selection by the appellant. The filing of those submissions on 28 January 2014 can, it seems to me, be quite adequately explained by those factors. Of course, it could be that filing on that date was a "tactic" but it cannot be decided that it was so, on no other basis than the date of filing. 4. Furthermore, it was open to the respondents to check what submissions may have been filed on that date (such an occurrence, as all involved appear to concede, being by no means unusual) and then to seek a further extension of time. 5. I also point out that the adjudication procedure is designed to be robust, as well as quick, cheap and just, and in the event of any procedural unfairness there is a ready remedy. 6. For those reasons, although it is not strictly relevant to my decision, I agree with the respondents that continually characterising the appellant's submissions as "secret" is unreasonable and, if called upon to do so, I would agree it is improper. Apart from that opinion, however, the issue has not affected my consideration or decision of this appeal, any prejudice being completely removed by the appeal procedure itself. 7. I consider first the "Proceedings 1" issue: I am in agreement with the respondents' submissions in that regard. Although both parties now agree the Adjudicator was in error in his reasons for rejecting that part of the application, I am not satisfied the appellant has demonstrated the necessary "success" so as to require consideration of the statutory basis for making any amendment to that particular levy. 8. In relation to "Proceedings 4", I accept the submissions of the appellant to the effect that the Adjudicator was in error in suggesting that he had not power to amend an order of the Supreme Court. The application was in fact not seeking an amendment, but an enforcement of the order. It therefore becomes necessary to consider the statutory issues raised by the parties in this appeal in regard to those proceedings. 9. As the respondents state in their submissions, they have been unable to find any precedent in relation to a variation of contributions pursuant to s 149 of the SSM Act in respect of an individual lot owner. The section states: 149 Order for variation of contributions levied or manner of payment of contributions (1) An Adjudicator may make either or both of the following orders if the Adjudicator considers that any amount levied or proposed to be levied by way of contributions is inadequate or excessive or that the manner of payment of contributions is unreasonable: (a) an order for payment of contributions of a different amount, (b) an order for payment of contributions in a different manner. (2) If an Adjudicator considers that the consent of an owner referred to in section 77 has been unreasonably refused, the Adjudicator may make an order for payment of a different amount of one or more contributions levied or proposed to be levied by the owners corporation. (3) If a contribution which is the subject of an order under this section has been wholly or partly paid: (a) an order to pay more has effect as if the owners corporation had decided to levy a contribution equal to the difference, and (b) an order to pay less imposes a duty on the owners corporation to refund the difference. (4) An application for an order under this section may be made only by the lessor of a leasehold strata scheme, an owners corporation, an owner or by a mortgagee in possession (whether in person or not). 1. There is nothing in the words used in that section which assists in deciding either way: can it refer to an individual's contribution or only to contributions in general? In my opinion the section operates so as to include individual contributions in certain circumstances. It depends on the type of levy under consideration. For example, pursuant to s 230 of the SSM Act, an owners corporation cannot levy a contribution towards any part of its costs in proceedings on another party who is successful in those proceedings and if such a contribution has been levied, it appears to me an Adjudicator could make an order in relation to an individual contribution. 2. I am not convinced by the respondents' submission that the Adjudicator's finding in this case that levies imposed on Lot 3 contrary to the order of Kunc J is "by definition" excessive. It appears to me that the Adjudicator, with respect, was saying no more than that if a particular lot owner, pursuant to an order of a court, was not liable to contribute to a levy for the owners corporation's costs, then any amount levied must be excessive, because the amount levied can be no more than $0.00. The fact that attempting to levy such a contribution may be in breach of s 229(3) does not mean that s 149 does not apply, as the respondents appear to be submitting. 3. In some circumstances, a levy may only involve one lot owner anyway. For example, if an owners corporation purported to levy a contribution from one lot owner to pay the entire costs of the owners corporation in relation to particular legal proceedings, in breach of an order described in s 229, then any amendment of that levy will be in relation to that lot owner individually, even if the levy must then be made against one or more other lot owners. 4. In relation to the respondents' submission that the orders of the Adjudicator in relation to the determination of Kunc SCJ was not raised in the appellant's original adjudication application and therefore could not be the subject of an order by the Adjudicator, I consider the answer to that submission is that the order sought was that the appellant not contribute at to the levy or contribute in a lesser proportion. That did not change and no amendment was sought in that regard. The reasons for seeking the order changed when it became clear prior to the Adjudicator making his decision, but that does not change the order being sought. As the appellant stated at paragraph 19 of her submissions in reply: "The Applicant was at all times seeking non-payment of the levies in respect of 'Proceeding 4' before the Adjudicator. The order of Kunc J perfectly aligned with the reasons why Lot three should not have to contribute towards those fees and expenses." 1. By the same reasoning, in my opinion Adjudicator Smith could and did make a decision about the determination of Kunc SCJ (in relation to the order sought in the application concerning a reduction of the levy she should be required to pay in relation to 'Proceeding 4') and that issue is properly part of this appeal. 2. I find that Adjudicator Smith was in error in relation to "Proceedings 4" and that as a result his orders require amendment. 3. Order 2 made by Adjudicator Smith on 16 April 2014 is amended as follows: "3. In addition, pursuant to the Management Act s149 the contribution levied I respect of Lot 3 is reduced in the sum of $120,108.76." 1. The orders of 16 April 2014 are otherwise affirmed and the appeal is otherwise dismissed. Geoffrey Meadows Senior Member Civil and Administrative Tribunal of New South Wales 2 April 2015 ********** I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 June 2015