Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Tolhurst v Owners Corporation SP 72114 [2018] NSWCATCD 23 Hearing dates: 21 May 2018 Date of orders: 20 June 2018 Decision date: 20 June 2018 Jurisdiction: Consumer and Commercial Division Before: J A Ringrose, General Member Decision: 1. The application is dismissed 2. Each party is to bear its own costs Catchwords: Validity of Owners Corporation resolution – removal of tanks installed on common property – application for resolution of a dispute between the Owners Corporation and a lot owner. Legislation Cited: Strata Schemes Management Act 2015 ss. 24, 108 and 232 Cases Cited: The Owners Strata Plan Number 30621 v Shum [2018] NSWCATAP 15 Walsh v Owners Strata Plan 10349 [2017] NSWCATAP 230 Category: Principal judgment Parties: Jennifer Tolhurst – Applicant Owners Corporation SP72114 – Respondent Representation: Mr Fleming, Solicitor appeared for the applicant Pigott Stinson Lawyers for the applicant Mr Leiker appeared for the respondent File Number(s): SC 17/46870 Publication restriction: Nil REASONS FOR DECISION Application 1. By an application filed on 31 October 2017 the applicant as the owner of lot 1 in strata plan 72114 sought an order that the resolution passed by the Owners Corporation on 15 August 2017 be declared invalid and a further order pursuant to s. 232 of the Strata Schemes Management Act 2015 that the Owners Corporation remove the water tanks installed on the common property outside lot 1. 2. She claimed that she was not consulted about the proposed installation of water tanks on the common property outside her lot and that there was no evidence provided to her to establish that the location chosen was the only available site. 3. She claimed further that water pumps connected to the tank would generate noise and have an adverse impact on the property value of lot 1 and its rental return. 4. The applicant further asserted that the notice of the Extraordinary General Meeting held on 1 August 2017 did not comply with cl 8(d) of sch 1 of the Strata Schemes Management Act and that the Owners Corporation had unreasonably refused to hold off the installation pending mediation. 5. On 6 December 2017 directions were made for both parties to file evidence and submissions and in accordance with those directions the relevant material was filed. Applicant's Submissions 1. Submissions were filed on behalf of the applicant on 16 March 2018, 13 April 2018 and 27 April 2018. The applicant sought to rely upon affidavits of Jennifer Tolhurst dated 16 March 2018, an affidavit of Nicola McCluskey dated 26 April 2018 and an affidavit of Nathan Briggs dated 16 March 2018 which incorporated a property appraisal and a rent appraisal. 2. Annexures to the applicant's affidavit included communications between the parties, photographs and notices and minutes of the relevant meetings. All of these annexures have been taken into consideration, along with submissions made on behalf of the applicant. 3. In submissions filed and dated 12 April 2018, Mr Fleming, solicitor, pointed out that on 16 May 2017 the applicant discovered that the respondent had laid a concrete slab on the common property garden area directly outside her property. He observed that the slab had been laid in preparation for the installation of two large rainwater tanks and claimed that the applicant had not received any prior notice from the respondent of the proposed installation in that location. 4. It was claimed that the applicant had made repeated requests to the respondent for information justifying the current location and that those requests were substantially ignored. 5. On or about 1 August 2017 the respondent issued a notice of an Extraordinary General Meeting to consider a resolution to approve the installation of the tanks in the current location. That meeting was held on 15 August 2017 and the motion was passed by a special resolution. 6. It was submitted on behalf of the applicant that the notice and resolution was defective and that the respondent had erred in the manner in which it exercised its power to make alterations and additions to the common property. The defects in the notice were pressed but ultimately in the course of submissions Mr Fleming conceded that there had been a special resolution passed and that the requirements of s. 108 had otherwise been met. 7. It was claimed that as a result of the respondent's conduct the applicant has suffered substantial injustice in that she had been afforded less notice and opportunity to object than other lot owners in the strata complex. It was further claimed that the value of her property had been diminished. 8. Mr Fleming sought relief on behalf of his client pursuant to s. 232(1) of the Strata Schemes Management Act 2015 and he submitted that the section provided a broad power for the Tribunal to make an order to settle a complaint or dispute (see Walsh v Owners Strata Plan 10349 [2017] NSWCATAP 230). 9. Mr Fleming submitted that the evidence established that there was a dispute between the applicant and the respondent about an exercise of or failure to exercise a function conferred or imposed by or under the Act which then enlivened the operation of s. 232. 10. The applicant disputed that the present location of the tanks enhanced the common property and she addressed further concerns that the pump attached to the tanks had a potential to create noise or nuisance although there was no specific evidence to that effect. It was claimed that the tanks were fully installed by 17 November 2017 but there was no evidence that they were being used for gardening purposes. 11. Mr Fleming indicated that the applicant was concerned about the manner in which the respondent purported to exercise a power conferred under s. 108 of the Act and he then submitted that there was sufficient connection between the complaint and the subject matter of the motions passed to enliven the Tribunal's jurisdiction under s. 232(1)(e) of the Act. 12. The affidavit of Nathan Briggs sworn 16 March 2018 indicated that he was a licensed real estate agent with approximately five years working in the inner west and three years working in property sales. Mr Briggs referred to a market appraisal he had undertaken in respect to the applicant's property at X/X-X XXX Avenue, Petersham and he concluded that the unit in its present condition could achieve between $950,000.00 and $975,000.00 and the rental market would be between $600.00 and $630.00 per week. He also concluded that if the tanks had not been placed in the location the current price would be between $1,000,000.00 and $1,025,000.00 or increase of $50,000.00 above the estimated price for the property with the tanks in place. The report does not however provide reasons for that opinion nor does it provide reasons as to why the rental of the property would be affected. It is noted that the report also claims a disclaimer pointing out that it is a computer generated process and not a professional appraisal of the subject property and should not be relied on in lieu of appropriate professional advice. An affidavit of Nicola McCluskey dated 25 April 2018 was filed. Ms McCluskey conducted a search of the premises of the strata managers for records relating to strata plan 72114. All records found were annexed to the affidavit and it is appropriate to note that there was little which would assist the Tribunal in dealing with the application. 13. Supplementary submissions from the applicant dated 27 April 2018 point out that the respondent declined to attend the mediation process and also suggested that there were other more appropriate locations for the placement of the tanks other than those which were chosen and marked to be the most final. Respondent's Submissions 1. Mr Leiker of Clisdells Strata Titles Managers, provided submissions on behalf of the Owners Corporation which included some background, a timeline of events and a number of annexures. 2. In response to the applicant's claim that the Owners Corporation declined to mediate it was claimed that the strata committee tried to mediate informally with the applicant in providing the applicant with as much information as they had available and directing the applicant to the strata manager for additional information. That option was taken up and no discussions were held in relation to alternate locations as it is claimed that the applicant went straight to Fair Trading. 3. On 28 May 2015 at the Annual General Meeting renewable energy was voted on and approved and was budgeted for in the 2015/16 budget. By July 2015 the committee had commenced to investigate renewable energy options most suited to the Eversleigh Estate by contacting experts from the UTS School of Built Environment. A walk around was arranged with Dr Grace Ding and other lecturers and students from the UTS School who were accompanied by a member of the strata committee. 4. On 25 November 2015 a presentation with the findings and recommendations of experts from the UTS was held on the renewable energy options for Eversleigh Estate. The committee decided, based on the report from Dr Ding that water tanks would be the first of the renewable energy projects to assist in the maintenance of extensive gardens in the strata plan. Quotes were obtained at that time but it was at a cost in excess of $11,000.00 for a large, round water tank. The committee determined that the cost and location of the tank would not be optimal for garden use. 5. In November 2016 a committee member attended a rainwater harvesting technical workshop at the local council. Later that month the site was inspected by a plumbing firm where several possible locations around the estate were identified and discussed and the current water site was recommended as it best suited the needs of the estate. 6. Later in November a senior environmental officer of the Inner West Council conducted a site inspection and was happy with the site chosen for the water tank. It is claimed that between November and December 2016 strata committee members attended and knocked on the door of lot 1 several times to advise of the upcoming/proposed water tank installation, however there was no answer. 7. Approval for the location of the rainwater tank was received from the Inner West Planning Department in December and at that time an electrician installed a power point for the pump before Christmas. A garden bed was cleared and efforts were made to have the tank installed. 8. In January 2017 the original round tank was delivered and was deemed unsuitable due to its size and appearance. The tank was returned to the supplier and a smaller slimline tank was obtained. Purchase of this tank was approved in January 2017. 9. On 16 May 2017 the strata committee received an email from the applicant, noting that she had just become aware of the tank installation and demanding that all works cease until mutual agreeable solutions could be found. The committee elected to move forward with the project as the site was unsightly and covered with building rubble. The project was progressed to allow the beautification of the area. 10. The applicant attended the Annual General Meeting held on 24 May 2017 and stated that she had just become aware of the water tank installation and she requested a meeting with the members of the strata committee to resolve the water tank issue which she claimed was devaluing her property. 11. Members of the committee met with the applicant in early July 2017 to endeavour to resolve the concerns. The discussions were around the location of the water tanks and the noise that would be produced by the pump. It was pointed out in the course of discussions that the current noise levels arising from the proximity of Addison Road roundabout and bus stops were to material to a lack of peace and quiet in that area in any event. 12. On 15 August 2017 the Owners Corporation passed a special resolution to install the rainwater tanks in the common area next to lot 1. The minutes of the meeting which was by electronic vote showed that voting papers were received from 31 lots with 2 lots being declared unfinancial. A quorum was declared and a special resolution to install the rainwater tank on the common area garden next to lot 1 was carried by 85% (2204 UE) in favour with 15% (380 UE) against. It is noted that the applicant was one of probably 4 lot holders who voted against the proposal. 13. By 18 October 2017 the building manager advised that the tank installation was complete and there was no discernible increase in noise factors as the pump was near a busy road. That document is of little assistance as the building manager does not purport to have either legal expertise or other qualifications to determine whether a noise level constitutes a nuisance. 14. The respondent reports that the estate is under an aircraft flight path which would constitute a significant noise factor but it was noted that there had been no complaints from the applicant or any other residents related to an increase in noise or disturbance as a result of the running of a pump which was generally used during the day to water common area gardens. 15. A real estate appraisal from Nathan Briggs noted that lot XX/X-X XXX Avenue, sold in February 2018 for $958,000.00 and a property was rented within the area in March 2016 for $650.00 per week. It was noted from the same report that a 3 bedroom 2 bathroom complex was sold for $1,045,000.00 whilst a 2 bedroom 2 bathroom unit in the same complex was sold at about the same time for $865,000.00. This material suggests that the market assessment of Mr Briggs on behalf of the applicant may have been based on the price of a 3 bedroom 2 bathroom unit as opposed to a 2 bedroom, 2 bathroom unit. Decision 1. The applicant is a registered proprietor of a property located at unit X/X-X XXX Avenue, Petersham. The complex consists of some 109 units which is known as Eversleigh Estate. She purchased the property in April 2004 and it has been retained as an investment property. Her address for service of notices is in Tempe and it would appear that some notices had been served on the unit rather than at her address recorded on the strata roll. 2. Ms Tolhurst received a communication from her tenant in May of 2017 indicating that the water tanks were outside her unit on the common property. Following this communication she entered into discussions with the Owners Corporation through the strata manager and through the executive committee. 3. Mr Fleming, on behalf of the applicant, relies on s. 232 of the Strata Schemes Management Act 2015 to seek orders requiring removal of the tanks as the basis upon which the dispute between the parties should be resolved. S. 232 provides:- 232 orders to settle disputes or rectify complaints 1. Orders relating to complaints and disputes. The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following; 1. The operation, administration and management of the strata scheme under this act, 2. An agreement authorised or required to be entered into under this act, 3. An agreement of appointing a strata managing agent or a building manager, 4. An agreement between the Owners Corporation and an owner, mortgagee or covenant chargee of a lot in a strata scheme related to the scheme or a matter arising under the scheme, 5. An exercise of or failure to exercise a function conferred or imposed by or under this act or the by-laws of the strata scheme, 6. Exercise or failure to exercise, a function conferred or imposed on an Owners Corporation under any act. 1. The applicant claims that the Owners Corporation has failed to exercise function conferred or imposed under this act or with the by-laws and has accordingly failed to comply with s. 108 of the Strata Schemes Management Act 2015 in relation to the authorisation of changes to the common property. The further complaint relates to the manner in which the power under s. 108 has been exercised. 2. It was further submitted that the special resolution made on 15 August 2017 was made pursuant to a defective notice because it failed to indicate that the motion required would be dealt with by a special resolution. It is further alleged the notice contained no indication that the voting would be by way of special resolution and also that it contained misleading information in that it suggested that any concerns of the applicant as the owner of lot 1 would not be an issue. 3. The applicant therefore submits the special resolution was defective because Clause 8(d) of Schedule 1 of the Act describes that a notice of the General Meeting must specify whether a motion requires a special resolution to be passed and the notice contained no such statement. Whilst it was conceded that the ballot result was dealt with as a special resolution, she claims that the defective notice could result in the resolution being invalidated in accordance with the provisions of s. 24 of the Act. 4. S. 24 of the Strata Schemes Management Act 2015 provides; 24 Order invalidating resolutions of owners corporation 1. The Tribunal may on application by an owner or first mortgagee of a lot in a strata scheme, make an order invalidating any resolution of, or election held by, the persons present at a meeting of the Owners Corporation if the Tribunal considers that the provisions of this act or regulations have not been complied with in relation to the meeting. 2. The Tribunal may, on application by an owner or first mortgagee of a lot in the strata scheme make an order invalidating any resolution of, or election held by, the persons present at a meeting of the Owners Corporation if the Tribunal considers that the provisions of Pt 10 (other than Div 6 or 7 of the Strata Schemes Development Act) had not been complied with in relation to the meeting. 3. The Tribunal may refuse to make an order under this section only if it considers; 1. That the failure to comply with the provisions of this act or the regulations, or of the Strata Schemes Development Act 2015, did not adversely affect any person. 2. That the compliance with the provisions would not have resulted in a failure to pass the resolution or affected the result of the election. 1. The applicant, through her solicitor, is in effect seeking an order that the motion be set aside and that thereafter the tanks be relocated. It would not be possible for the applicant to seek relief under s. 232 of the Act if the motion had been validly passed or if the motion had not been or could not be set aside because the actions of the Owners Corporation could not be construed as the exercise of, or failure to exercise a function conferred or imposed by or under the Act or the by-laws of the scheme within the meaning of s. 232(1)(e). 2. The solicitor for the applicant has already conceded that the motion authorising the location of the water tanks was in fact passed as a special resolution and the minutes show that a substantial majority of those owners voting had voted in favour of the location of the tanks outside lot 1. 3. There is little doubt that if the provisions of s. 232(1)(e) are activated through the failure on the part of the Owners Corporation to pass a valid motion then the applicant would be entitled to seek relief under s. 232 of the Act (see The Owners Strata Plan Number 30621 v Shum [2018] NSWCATAP 15). 4. Clause 8 Schedule 1 of the Act prescribes those matters which must be included in a notice of a general meeting. Clause 8 Schedule 8(1) (d) requires that it should be indicated whether the motion requires a special resolution or a unanimous resolution to be passed. Clause 7 requires that a notice of a meeting must be given to each owner in writing at least 7 days before the meeting. 5. The present evidence does not disclose whether the applicant received notice in writing and within the prescribed period although she was certainly aware of the meeting. There is no doubt that the notice given did not specify that the particular motion should be passed by a special resolution and although the respondent submits that a special resolution was not required it would seem that the nature of the proposed addition to the common property would require a special resolution in accordance with s. 108 of the Act. 6. The Tribunal is satisfied that there has been a failure to comply with the regulations in relation to the notice of meeting within the meaning of s. 24 of the Act. In that event the motion would be declared invalid unless the Tribunal can be satisfied that it ought to refuse to make an order the section on the basis that:- 1. the failure to comply with the provisions of the Act or regulations … did not adversely affect any person and, 2. that the compliance with the provisions would not have resulted in a failure to pass the resolution or affected the result of the election. 1. Mr Fleming has submitted that a claim of detriment suffered by the applicant is sufficient to require the Tribunal to make an order on the basis of Subsection 3(a). 2. Subsection(3) appears to relate to the passing of the resolution or the effect on a person who may have been adversely affected in their ability to vote or to obtain sufficient information to enable them to property vote. 3. In the present case the applicant had notice of the meeting and had sufficient time to place a valid vote and there is no evidence that she was otherwise adversely affected in relation to her ability to exercise her rights in addressing the motion. Although the motion was described as a vote on the papers in accordance with the resolution passed at a meeting held on 31 May 2017 the voting was ultimately dealt with as a special resolution and the motion was passed on unit entitlement by 85% to 15%. It follows from that evidence that no person was adversely affected by the failure to comply with the provisions of the Act. From the result of the ballot it would appear the compliance with the provisions would not have resulted in a failure to pass the resolution. In the circumstances the Tribunal is entitled to refuse to make an order declaring the motion passed on 15 August 2017 to be invalid. 4. Turning to the question of whether relief ought to be afforded to the applicant in accordance with s. 232 of the Act it should be noted in the first instance that the Tribunal has discretion as to whether relief should be granted. In considering the exercise of that discretion, although there was a failure to address the ballot relating to the water tanks in accordance with the Act, the Tribunal is satisfied that the failure in this case would not and should not result in the motion being set aside for the reasons set out earlier above, as it would appear that the majority of lot owners in a proportion greater than 75% approved of the proposed location of the water tanks. It would not be appropriate to grant the applicant the relief she seeks in the present case. It is clear that the Owners Corporation had, for some time, considered renewable energy options and that it was directing its efforts towards the provision of water tanks in the first instance. The applicant was or ought to have been aware of these discussions from 2015 and she was aware of the proposal to locate the tanks on common property outside her unit from May of 2017. The Tribunal is not satisfied that the valuation report prepared by Mr Briggs constitutes a reliable report of any suggested loss in value or rent in income as there is no evidence that Mr Briggs took into account the relevant factors referred to and the evidence produced by the respondent. There is insufficient evidence to persuade the Tribunal that the discretion to grant the relief under s. 232 in the present case should be exercised in favour of the applicant. The application must accordingly be dismissed. J A Ringrose General Member Civil and Administrative Tribunal of New South Wales 20 June 2018 ********** 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: 25 September 2018