Court of Appeal
Supreme Court
New South Wales

Summary available

Medium Neutral Citation:

Sahade v The Owners - Strata Plan 62022 [2014] NSWCA 208

Hearing dates:

3 June 2014

Decision date:

01 July 2014

Before:

McColl JA at [1];
Basten JA at [2];
Sackville AJA at [55]

Decision:

(1) Set aside the order of the District Court remitting the matter to the Consumer, Trader and Tenancy Tribunal.

(2) In place of that order, order that:

(i) the decision of the Consumer, Trader and Tenancy Tribunal (Strata and Community Schemes Division) made on 4 September 2012, dismissing an application for variation of unit entitlements, be set aside;

(ii) order that the New South Wales Civil and Administrative Tribunal redetermine so much of the application as concerned -

(a) whether the original allocation of unit entitlements was unreasonable;

(b) if so, whether the unit entitlements should be reallocated, and

on the basis of the values of the respective lots assessed by the Tribunal on 4 September 2012.

(3) Declare that in deciding the questions set out at 2(ii)(b) and (c), 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.

(4) Order the applicant to pay the costs of the active respondents in this Court, being the owners' corporation up to 2 June 2014 and the second, third and fourth respondents thereafter.

(5) Grant the parties leave to -

(a) make submissions as to the source of the appeal to the District Court and the appropriateness of orders (2) and (3) set out above, and

(b) seek a variation of orders (2) and (3) above on the basis of any submissions made pursuant to (a),

within 14 days of the date of this judgment.

[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]

Catchwords:

ADMINISTRATIVE LAW - judicial review - error of law - tribunal declined to reallocate unit entitlements in strata scheme - appeal to District Court - remittal to tribunal ordered on the basis that there was a failure to give reasons - whether an error of law disclosed in requiring the issue of control of strata scheme management to be considered on remittal

REAL PROPERTY - strata titles - management and control - allocation of unit entitlements - power to reallocate units entitlements if original allocation considered unreasonable - relevant considerations - whether the only relevant consideration is "the respective values of lots" - whether control of strata scheme management by a lot is a relevant consideration - Strata Schemes Management Act 1996 (NSW), s 183

Legislation Cited:

Civil and Administrative Legislation (Repeal and Amendment) Act 2013 (NSW), s 3; Sch 4.41 [18]
Civil and Administrative Tribunal Act 2013 (NSW), Sch 1, Pt 2, Div 3, Sub-div 2, cll 7, 8
Consumer Trader and Tenancy Tribunal Act 2001 (NSW), s 67
Crimes (Appeal and Review) Act 2001 (NSW), ss 52, 53, 56, 59; Pt 5, Div 2
Freehold Development Act and the Strata Schemes (Freehold Development) Regulation 1997 (NSW), cl 7
Strata Schemes (Freehold Development) Act 1973 (NSW), ss 5, 8, 28, 28QAA, 43, 46, 46F, 47, 51A, 92; Pt 2, Div 2A
Strata Schemes Legislation Amendment Act 2001 (NSW), Sch 1 [27], Sch 3
Strata Schemes Management Act 1996 (NSW), ss 54, 78, 183, 200, 201, 209, 241; Sch 2, cll 12, 17, 18, 33, 37; Pt 5, Div 3, Ch 5
Supreme Court Act 1970 (NSW), s 69
Valuation of Land Act 1916 (NSW), ss 7A, 7B

Cases Cited:

Anderson Stuart v Treleaven [2000] NSWSC 283; 49 NSWLR 88
Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421
Kirk v Industrial Court of New South Wales [2010] HCA 1; 239 CLR 531
Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24
National Provincial Bank Ltd v Ainsworth [1965] AC 1175
Sahade v OC SP 62022, Bischoff (Strata and Community Schemes) [2012] NSWCTTT 350
Sahade v Owners Corporation SP62022 (District Court (NSW), 10 October 2013, unrep)
SAS Trustee Corporation v Woollard [2014] NSWCA 75
Spencer v The Commonwealth [1907] HCA 82; 5 CLR 418
Wang v Farkas (No 3) [2014] NSWCA 111

Texts Cited:

K & S Gray, Elements of Land Law (OUP, 5th ed, 2009) 1.5.13

Category:

Principal judgment

Parties:

Rita Sahade (Applicant)
The Owners - Strata Plan 62022 (First Respondent)
Carina Gilster (Second Respondent)
Eckart Bischoff (Third Respondent)
Celia Beth Bischoff (Fourth Respondent)
District Court of NSW (Fifth Respondent)

Representation:

Counsel:
Mr B Walker SC/Mr M Sahade (Applicant)
Mr C Birch SC (Second, Third and Fourth Respondents)
Submitting appearances (First and Fifth Respondents)
Solicitors:
Trinity Legal (Applicant)
Grace Lawyers Pty Ltd (First Respondent)
Le Page Lawyers (Second to Fourth Respondents)
Crown Solicitor (Fifth Respondent)

File Number(s):

CA 2013/339623

Decision under appeal

Jurisdiction:

9101

Citation:

Rita Sahade v Owners Corporation SP62022 [2013] NSWDC 95

Date of Decision:

2013-06-14 00:00:00

Before:

Murrell DCJ

File Number(s):

DC 12/297753

HEADNOTE

[This headnote is not to be read as part of the judgment]

The Consumer, Trader and Tenancy Tribunal (now part of the Civil and Administrative Tribunal) has power to reallocate the unit entitlements attaching to lots in a strata plan. Under the Strata Schemes Management Act 1996 (NSW) ("the Management Act"), unit entitlements may be reallocated if the allocation at the time the plan was registered is considered "unreasonable". The Act requires that the Tribunal have regard to the "respective values" of the lots when considering making an order: s 183(3).

A dispute arose as to the allocation of unit entitlements with respect to a three lot strata scheme in Point Piper. The applicant asserted that the value of her unit was greater than the combined values of both other units, a fact that was not reflected in the allocation of unit entitlements. The Tribunal held that the value of her unit at the time of registration of the strata plan was equal to the combined value of the other two units. It nevertheless declined to reallocate the unit entitlements.

The applicant appealed to the District Court. Murrell DCJ held that the Tribunal had made an error of law in failing to provide reasons for its refusal to reallocate the unit entitlements. However, the Court also held that the Tribunal was not required to reallocate unit entitlements in accordance with the market values of the respective units at the time of registration of the plan, but should take into account, in addition, the effect of any proposed reallocation on the power of unit holders to control the management of the strata scheme.

The issue for determination on review was whether the District Court erred in requiring control of the strata scheme's management to be considered when making an order under s 183 rather than solely relying on the market value of the lots at the time of registration.

The Court held (Basten JA, McColl JA and Sackville AJA), dismissing the summons:

(per Basten JA, McColl JA agreeing)

1. It would be inconsistent with the nature of the power and the test of "unreasonable" allocation under s 183 of the Management Act if an order was solely determined by the respective values of the lots at the time of registration: [24].

Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 applied

2. The issue of control of the strata scheme's management was a relevant consideration in the sense that it was something the Tribunal could not ignore. By failing to give reasons, the Tribunal had deprived the District Court of knowing whether the issue of control had been rejected as irrelevant. The matter should be left to the discretionary judgment of the Tribunal: [39]-[47], [50].

(per Sackville AJA, McColl JA agreeing)

3. 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: [83]-[91].

Judgment

1McCOLL JA: I have had the benefit of reading Basten JA and Sackville AJA's reasons in draft. I agree with their Honours' reasons. I agree with the orders Basten JA proposes.

2BASTEN JA: These proceedings concern the allocation of unit entitlements among the lots of a strata scheme involving property in Wolsley Road, Point Piper in the eastern suburbs of Sydney.

3When a strata plan with respect to particular land is registered the plan must include a schedule of unit entitlements: Strata Schemes (Freehold Development) Act 1973 (NSW) ("Freehold Development Act"), s 8(1)(c). The schedule must show the unit entitlement of each lot and the aggregate unit entitlement of all lots. Special provisions apply to a strata plan that includes a "development lot", (being a lot in a strata plan that is the subject of staged development pursuant to Pt 2, Div 2A of the Freehold Development Act). With respect to such schemes the schedule must apportion unit entitlements on the basis of land value (as provided by the Valuation of Land Act 1916 (NSW)) and on the basis of market value: s 8(4A). The only requirement with respect to other schemes was in s 8(4):

8 Registration of strata plans

...

(4) The schedule of unit entitlement for a strata scheme that does not include a development lot must show as whole numbers the aggregate unit entitlement of all lots and the proposed unit entitlement of each lot

4The property the subject of the present proceedings involved three lots; it did not include a "development lot". Section 8(4A) did not apply. The strata plan was registered on 5 April 2000. The unit entitlements allocated in the plan were: Lot 1 - 30; Lot 2 - 30 and Lot 3 - 40.

5The applicant is the owner of Lot 3. In 2012 she commenced proceedings in the Consumer, Trader and Tenancy Tribunal (since incorporated into the New South Wales Civil and Administrative Tribunal) seeking an order varying the allocation of unit entitlements. The application is not before the Court, but appears to have sought a variation so that the unit entitlements would reflect, with a degree of precision, the market values of the respective lots, as at the date of registration of the plan. The applicant contended that the value of her lot was significantly greater than the combined values of the other two lots and that, accordingly, her unit entitlements should exceed 50% of the total.

6The Tribunal had power to make such an order pursuant to s 183 of the Strata Schemes Management Act 1996 (NSW) ("Management Act"). In making a determination with respect to such an application, the Tribunal was required to have regard to "the respective values of the lots": s 183(3).

7On 4 September 2012 the Tribunal handed down its decision, in which it determined the values of the respective lots at the date of registration of the strata plan. The market values of Lots 1 and 2 were assessed at $3.8 million and "approximately" $3.2 million respectively: Sahade v OC SP 62022, Bischoff (Strata and Community Schemes) [2012] NSWCTTT 350 at [30]. The Tribunal further valued Lot 3 at approximately $7 million, being the combined approximate value of the other two lots. Recognising that the existing unit entitlements did not reflect the proportionate market values at the time of registration, the Tribunal nevertheless declined to vary the unit entitlements as allocated in the plan.

Appeal to District Court

8From that decision, the applicant appealed to the District Court. The Court identified the appeal as being limited to the erroneous determination by the Tribunal of a question with respect to a matter of law, in part by reference to the Consumer Trader and Tenancy Tribunal Act 2001 (NSW) ("the CTTT Act"), s 67(1): Rita Sahade v Owners Corporation SP62022 [2013] NSWDC 95 at [7]-[10] (Murrell SC DCJ) ("Sahade"). In fact that provision did not apply. A right of appeal to the District Court was provided by s 200 of the Management Act, which appeared in Pt 5, Div 3 of Ch 5. Section 201 stated that "[e]xcept as provided by this Part, an appeal does not lie from an order made by the Tribunal." Accordingly, s 67 of the CTTT Act was not the source of the District Court's jurisdiction.

9Sections 200 and 201 have since been repealed, by the Civil and Administrative Legislation (Repeal and Amendment) Act 2013 (Sch 4.41 [18]) but only with effect from 1 January 2014: accordingly, they were in effect at the time of the appeal brought from the decision of the Tribunal in August 2012, heard by the District Court in April 2013 and decided in June 2013. (The actual notice of appeal was not, as it should have been, in the record placed before this Court.) Section 200 of the Management Act relevantly provided:

200 Appeal to District Court

(1) An appeal lies to the District Court against an order made by the Tribunal under this Chapter.

(2) An appeal lies in the same cases and in the same way as it would lie under Part 5 of the Crimes (Local Courts Appeal and Review) Act 2001 if the order were a determination that the Local Court made, at the time the order took effect, in the exercise of summary jurisdiction on a court attendance notice.

10Section 200(1) was engaged because s 183, under which the order of the Tribunal was sought, was also in Ch 5 of the Management Act. The Act referred to in s 200(2) is now known as the Crimes (Appeal and Review) Act 2001 (NSW) ("Appeal and Review Act"). The incorporation of provisions from other legislation in this way is a recipe for confusion. Part 5 of the Appeal and Review Act provides for appeals from a Local Court to the Supreme Court. It provides separately for appeals by defendants and prosecutors. Where an appeal is brought by an applicant before the Tribunal, it should, presumably, be inferred that Pt 5, Div 2, dealing with appeals by prosecutors, is the relevant source of jurisdiction. An appeal by a prosecutor may be brought from "an order by the Local Court dismissing a matter the subject of any summary proceedings ... but only on a ground that involves a question of law alone": s 56(1)(c). (There is a similar constraint with respect to appeals as of right by a defendant, but a defendant, unlike a prosecutor, may, by leave, appeal on a ground that involves a question of fact or a question of mixed law and fact: s 53(1).) Although the judge referred to both ss 52 and 56 of the Appeal and Review Act, it appears to have been accepted that the appeal was limited to a ground involving a question of law alone.

11The powers of the District Court were, on this approach, those set out in s 59(2) of the Appeal and Review Act:

59 Determination of appeals

...

(2) The Supreme Court may determine an appeal against an order referred to in section 56(1) ... (c) ...:

(a) by setting aside the order and making such other order as it thinks just, or

(b) by dismissing the appeal.

12In her first judgment, Sahade, Murrell DCJ noted that the powers of the Court identified in s 67(3) of the CTTT Act were expressed differently from those identified in s 59(2) of the Appeal and Review Act. In the judgment of 10 October 2013, presumably because s 67(3) was the subject of submissions, no reference was made to s 59(2). Nor was it suggested in this Court that the powers conferred by s 67(3) were different in extent from those conferred by s 59(2). For reasons which will be explained below, there was no error of law involved in remitting the matter to the Tribunal for determination. Accordingly, any misapprehension as to the statutory source of jurisdiction was immaterial.

13There were a number of grounds of appeal, only one of which was successful, namely a failure on the part of the Tribunal to give reasons for its refusal to reallocate the unit entitlements in the light of its findings as to market value: Sahade at [70]-[71].

14In terms to which it will be necessary to return, Murrell DCJ also found that the question of control over the affairs of the owners' corporation "will often be a relevant consideration": at [75]. Given (a) that there were only three lots, (b) the nature and configuration of the lots and (c) the interests of the respective owners, she concluded that "the control issue was a relevant consideration": at [76]. On 10 October 2013, The Court ordered that the matter be remitted to the Tribunal for rehearing "consistent with my findings." (Curiously, no order was made setting aside the decision of the Tribunal, but that appears to have been an oversight: neither party raised it as an issue in this Court.) The judge declined to make an order as to the costs of the appeal.

Application for judicial review

15Dissatisfied with the result, the applicant sought to review the judgment of the District Court in the supervisory jurisdiction of this Court, pursuant to s 69 of the Supreme Court Act 1970 (NSW). To that end, she sought to identify an error of law in the reasoning of the District Court. To understand her submissions it is helpful first to outline the statutory scheme, referring as required to the reliance placed on particular features.

The statutory scheme

16The operative provision conferring power on the Tribunal to reallocate unit entitlements, s 183, reads:

183 Order for reallocation of unit entitlements

(1) Tribunal may make order allocating unit entitlements

The Tribunal may make an order allocating unit entitlements among the lots that are subject to a strata scheme in the manner specified in the order.

(2) Circumstances in which order may be made

An order may be made only if the Tribunal considers that the allocation of unit entitlements among the lots:

(a) was unreasonable when the strata plan was registered or when a strata plan of subdivision was registered, or

(a1) was unreasonable when a revised schedule of unit entitlements was lodged at the conclusion of a development scheme, or

(b) became unreasonable because of a change in the permitted land use, being a change (for example, because of a rezoning) in the ways in which the whole or any part of the parcel could lawfully be used, whether with or without development consent.

(3) Matters to be taken into consideration

In making a determination under this section, the Tribunal is to have regard to the respective values of the lots and (if a strata development contract is in force in relation to the strata scheme) to such other matters as the Tribunal considers relevant.

(4) Application to be accompanied by valuation

An application for an order must be accompanied by a certificate specifying the valuation, at the relevant time of registration or immediately after the change in the permitted land use, of each of the lots to which the application relates.

(5) Qualifications of person making valuation

The certificate must have been given by a registered valuer under the Valuers Act 2003 authorised under that Act to make such a valuation (a qualified valuer).

(6) Ancillary orders that may be made if original valuation unsatisfactory

The Tribunal may, if it makes an order allocating unit entitlements that were not allocated in accordance with a valuation of a qualified valuer and, in the opinion of the Tribunal, were allocated unreasonably by a developer, also order:

(a) the payment by the developer to the applicant for the order of the costs incurred by the applicant, including fees and expenses reasonably incurred in obtaining the valuation and the giving of evidence by a qualified valuer, and

(b) the payment by the developer to any or all of the following people of such amounts as may be assessed by the Tribunal to represent any overpayments (due to the unreasonable allocation) for which liability arose not earlier than 6 years before the date of the order:

the lessor of a leasehold strata scheme

the owners corporation

the owners of lots.

...

(8) Who may make application?

An application for an order under this section may be made only by:

(a) an owner of a lot (whether or not a development lot) within the parcel, or

(b) the owners corporation, or

(c) the lessor of a leasehold strata scheme, or

(d) the local council, or by any other public authority or statutory body representing the Crown, being an authority or body that is empowered to impose a rate, tax or other charge by reference to a valuation of land.

17Section 183(1) confers a power on the Tribunal: there is no explicit indication that there are any particular circumstances in which the power is coupled with a duty to make a particular kind of determination. Section 183(2) imposes a statutory precondition to the exercise of the power, namely "only if" the Tribunal is satisfied as to at least one of the three evaluative criteria specified. In substance, each criterion is identified by reference to a test of "unreasonableness", at one of a number of specified times. The first three temporal elements (identified in paragraphs (a) and (a1)) identify a point at which the scheme was first settled. Paragraph (b) permits consideration of whether the allocation "became unreasonable" (that is at a later point in time) because of a change in permitted land use. Subsection (2) does not identify the factors which may demonstrate unreasonableness.

18Subsection (3) may be described as identifying mandatory considerations, namely matters the Tribunal "is to have regard to". Only one specific matter is identified, namely "the respective values of the lots". Where there is a "strata development contract in force" the range of possible matters is left open-ended by use of the words "such other matters as the Tribunal considers relevant." (The operation of that limb apparently ceases when the staged development is complete.) It was not in dispute that, in the present case, there was no strata development contract in force in relation to the strata scheme. As a result, the second limb of subs (3) had no application, except as context to the relevant element.

19Thus the only matter identified as a mandatory consideration was the respective values of the lots. That left open the issue in dispute in the present case, namely whether "by implication from the subject-matter, scope and purpose of the Act" some factor can be identified as either mandatory (or prohibited), so that a failure to take it into account (or taking it into account) will reveal legal error: Minister for Aboriginal Affairs v Peko-Wallsend Ltd [1986] HCA 40; 162 CLR 24 at 39-40 (Mason J). Such a factor may be identified in objective terms (as with the first limb in subs (3)) or in terms which refer to the opinion of the Tribunal (being the approach adopted in the second limb in subs (3)).

20Before addressing this question, it is convenient to note a possible ambiguity in the language of subs (3), referring to "making a determination under this section". The language of subs (1) appears to confer a discretionary power to make an order; the language of subs (2) requires the Tribunal to consider whether the existing allocation of unit entitlements was "unreasonable". It would seem that the respective values of the lots (the identified mandatory consideration) must be considered both in determining unreasonableness and in exercising the power to make an order, unless, as the applicant appeared at times to submit, once unreasonableness was established by reference to the respective values of the lots, there was effectively an obligation to make an order allocating entitlements so as to conform to those values. Whether other potentially mandatory considerations, or even permissible considerations, operate at the stage of identifying unreasonableness or in determining whether or not to make an order is not a question which can be resolved in the abstract.

21The applicant contended that subsequent provisions in s 183 reinforced the construction rendering the respective values of the lots the primary and, in most circumstances, the only relevant consideration. Thus, an application was required to be accompanied by a certificate specifying the valuations at the relevant time: subs (4). The certificate must have been given by a "registered" valuer: subs (5). Where lots were not originally allocated in accordance with a valuation of a "qualified" valuer, and the allocation was unreasonable, the developer could be required to pay the costs incurred by the applicant: subs (6).

22Given that a comparison of the respective values of the lots constitutes a mandatory and primary consideration, the subsequent provisions do not take the issue much further. Subsections (4) and (5) are machinery provisions. Subsection (6) goes somewhat further, but it is dependent not merely on a failure to allocate in accordance with the opinion of a qualified valuer, but also on a finding by the Tribunal that the allocation was unreasonable. As the applicant pointed out, the Tribunal might find that the allocation was not in accordance with the first requirement, perhaps because no valuation by a qualified valuer had been obtained, but that the allocation was not unreasonable because it accorded with a proper valuation. While that may indeed be a possible outcome, there is nothing in the language of subs (6) to imply that the test of unreasonableness is restricted to such a consideration.

23Finally, the applicant noted that a rating or taxing authority was given standing to make an application under s 183 by subs (8)(d). That, too, it was submitted, served to emphasise the importance of the respective values of the lots in determining such an application. (It is not necessary for present purposes to consider why a rating or taxing authority should be entitled to bring such an application.)

Other relevant features of scheme

24As noted in respect of various provisions relied on by the applicant, the importance of the respective values of the lots was not in doubt; the fact that such significance was consistently reflected in the various subsections did not, however, demonstrate that it was either the sole consideration or even the sole mandatory consideration to which the Tribunal should have regard. A powerful factor weighing against the applicant's construction (and conceded to be such) was the fact that s 183 could readily have been drafted to require the Tribunal to reallocate unit entitlements according to the respective values of the lots, had that been intended. If minor departures were to be ignored, that too could readily have been allowed. The conferral of a power with no express obligation and the setting of a test of "unreasonable" allocation, should be sufficient to reject the proposition that 'respective values' was to be the only criterion.

25However, to determine whether other factors may (or must) be taken into account by the Tribunal, it is appropriate to consider further the statutory context within which power is conferred on the Tribunal; it is also appropriate to consider procedural factors in relation to an application for an order.

26In considering the concept of unreasonableness, the applicant emphasised that one is dealing with one aspect of the bundle of rights constituting a form of realty: see, generally, K & S Gray, Elements of Land Law (OUP, 5th ed, 2009) 1.5.13. Property should be "definable, identifiable by third parties, capable in its nature of assumption by third parties, and [having] some degree of permanence or stability": National Provincial Bank Ltd v Ainsworth [1965] AC 1175 at 1247-1248 (Lord Wilberforce). Although unit entitlements are indeed variable (under s 183) they are, nevertheless, an essential element of the form of property created by the strata titles legislation and in that sense are permanent. They are inherently assignable and pass with (and can only pass with) the interest in land to which they attach. While alienable as part of the land, their purpose is to apportion, within a particular strata scheme, decision-making power, which will usually be exercised by the owners corporation. That being so, the applicant submitted, the proper basis for apportionment is by reference to the respective values of the alienable lots, as reflected in market value.

27There is an element of circularity in this reasoning. Although the market value of a unit will no doubt be fixed primarily by reference to the physical features of a development at the time of registration, it may also be affected by the allocation of unit entitlements, the degree of control thus given to the unit holder with respect to the strata scheme and the proportionate responsibility for fees and charges. Further, to the extent that the unit entitlements constitute a right attaching to property, that fact might provide a significant reason not to interfere with such rights, at least when units have been sold and purchased on the basis of a known allocation. Finally, although the submissions assumed that references to 'value' were to market value, there is a reason, noted below, for considering that the appropriate value might be land value.

28Reference to the possible unreasonableness of the allocation invites attention to the provisions with respect to the creation and registration of strata plans, to be found in the Freehold Development Act and the Strata Schemes (Freehold Development) Regulation 1997 (NSW), which was in force at the date of registration. The only relevant provision in the Freehold Development Act in 2000 was s 8(4), referred to at [3] above, which did not assist the applicant and upon which she did not seek to rely. The Regulation (cl 7) did no more than provide the mechanism for identifying unit entitlements in a schedule.

29For completeness it may be noted that s 28QAA of the Freehold Development Act is in the following terms:

28QAA Revised schedule of unit entitlements

(1) If, at the conclusion of a development scheme, a body corporate considers that the schedule of unit entitlement in force for the strata scheme concerned does not apportion the unit entitlements so as to reflect the market value of the lots in the strata scheme, the body corporate may lodge a revised schedule of unit entitlement for the strata scheme with the Registrar-General.

(2) The revised schedule of unit entitlement must be lodged within the period of 2 years after the conclusion of the development scheme.

30On one view this provision supports the argument that primacy, if not exclusivity, should be accorded to an apportionment reflecting market value. However, there are two reasons to doubt that the section has such significance in the present case. First, the section was inserted after the strata plan was registered and was not invoked by the body corporate. It is at least doubtful whether such a provision could affect the construction of the statutory scheme as in force prior to the amendment, which commenced on 1 June 2001. No submissions were addressed to that question. Secondly, s 28QAA was inserted at the same time as s 183(2)(a1): Strata Schemes Legislation Amendment Act 2001 (NSW), Sch 1 [27] and Sch 3. Thus, the use of the standard of unreasonableness in the latter provision, despite the explicit terms of s 28QAA, highlights, without indicating the resolution of, the question already identified.

31It should be noted in reference to the concept of value that s 8(4A) of the Freehold Development Act, although not applicable to the present case, envisages a schedule of unit entitlements apportioned both by reference to land value and market value. The parties appear to have assumed that, in s 183, the references to "value" refer to market value. The basis for that assumption may have been the approach adopted by Santow J in Anderson Stuart v Treleaven [2000] NSWSC 283; 49 NSWLR 88. Although the distinction between that which used to be referred to as "unimproved capital value" and market value was not expressly addressed, Santow J held that, in accordance with Spencer v The Commonwealth [1907] HCA 82; 5 CLR 418 "value" is to be assessed by reference to the price which would be paid by a willing but not anxious purchaser to a willing but not anxious vendor: Anderson Stuart at [73], [99] and [109].

32The principles in Spencer deal with the appropriate compensation payable by a public authority for a compulsory acquisition of privately held land; they do not dictate how land is to be valued in all statutory contexts. Where an Act, such as the Valuation of Land Act provides separately for an assessment of the "improved value of strata" (s 7A) and the "land value of strata" (s 7B), a valuation must be undertaken in accordance with the requirements of those provisions. Nor is it self-evident on which basis the land value was to be calculated for the purposes of s 183(3).

33The next step in considering possible factors which might be taken into account on an application under s 183 is to examine the scheme of the legislation within which unit entitlements are allocated. First, the schedule of unit entitlements is registered on the title to the common property identified in a registered strata plan: Freehold Development Act s 46(1)(c). The Registrar-General has power to make amendments to the form of the schedule in certain circumstances (although not so as to reapportion entitlements: ss 43, 46 and 47). A transfer of title to a lot effects a transfer of the benefits of the unit entitlements attaching to that lot upon registration of the transfer.

34There are various consequences flowing from a unit entitlement. One, though not directly relevant in the present case, is that the allocation of unit entitlements will determine when the "initial period" ends, with consequences for the control exercised by the "original owner": Freehold Development Act, s 5(1), initial period and, eg, s 28(4).

35The proportionate allocation of unit entitlements forms the basis for liability to rates (Freehold Development Act, s 92(2)(c)); payments with respect to the maintenance and upkeep of common property (Management Act, s 54(2)); levies for administration and sinking funds (Management Act, s 78(2)); liability for statutory charges (Management Act, s 241(2)) and sharing in the assets and liabilities of the body corporate on termination of a strata scheme (Freehold Development Act, s 51A(8)).

36In addition to financial consequences, unit entitlements control the power of management through an owners' corporation. Thus they are counted for determining a quorum (Management Act, Sch 2, cl 12); with respect to elections and motions generally, where a poll is required (Sch 2, cll 17 and 18), and provide the basis for determining whether a requisition for a general meeting is effective (Sch 2, cll 33 and 37).

37Where the Tribunal orders a reallocation of unit entitlements, the Registrar-General is required to amend the schedule of unit entitlements recorded in the folio of the Register comprising the common property: Freehold Development Act, s 46Fs 51(1)(c); Management Act, s 209(3).

38The question which then arises is whether, either in determining the unreasonableness of the original allocation, or in deciding whether to make an order varying that allocation, or in both circumstances, the Tribunal may take account of (respectively) the significance of the consequences of the original allocation and the effect of a reallocation.

Issues in Tribunal and District Court

39Although the summons identified the grounds on which relief was sought in seven paragraphs, the substantive issue turned upon the ruling of the District Court that the question of "control" was a relevant consideration in determining whether to reallocate the unit entitlements. The question turned in part on what was meant by "relevant consideration" and upon the language of s 183 of the Strata Schemes Management Act, read in context.

40In accordance with the language used by Mason J in Peko-Wallsend at 39, in administrative law a "relevant consideration" is a matter which the decision-maker is bound to take into account, in the sense that a failure to have proper regard to the consideration will constitute a contravention of the legal preconditions to the exercise of the power and hence an error of law. However, sometimes the phrase "relevant consideration" is used not as a term of art but as a loose description of that which is permissible. Precisely how the phrase should have been used in the present circumstances will be resolved by reference to the terms of the statute.

41The issue of what constituted a relevant consideration arose because of the following statement in the reasons of the Tribunal at [31]:

"The respondent submits that the Tribunal may also consider further matters and raises the fact that varying the unit entitlements in accordance with the application would result in handing control of the strata scheme to the applicant. This seems a rather anomalous submission taking into account that currently the strata scheme is occupied by two families and control must be with one family or the other and this submission is not one which the Tribunal considers relevant to the application."

42A challenge to that conclusion was raised by the respondents in the District Court by way of notice of contention. Precisely how such a notice could operate in response to an appeal on a ground involving a question of law was not addressed in the District Court. However, read in context, the statement by the judge that the question of control was a "relevant consideration" must have been intended to mean that it was not a consideration which the Tribunal could lawfully ignore, as it had apparently done. In considering the respondent's contention, the judge said in Sahade at [71]:

"The Tribunal rightly dismissed any suggestion that, when considering 'unreasonableness' under s 183(2)(a) of the Act, it could take into account the identity and relationship between the current owners: see para [31] of the Tribunal's decision. Section 183(2)(a) is concerned with unreasonableness at the time when the strata plan was registered, rather than with current circumstances such as current ownership. Conceivably, current circumstances may be relevant to the exercise of any discretion under s 183(1), but the Court does not need to decide that question."

43Subject to identifying any implication lurking in the last sentence, that passage is unexceptionable. The reasoning in the subsequent paragraphs of the judgment appears to involve the following elements:

(a) the apportionment of unit entitlements within a three unit strata plan may confer voting control on one or more than one lot holder;

(b) the allocation of unit entitlements sufficient to confer control of the scheme is an integral part of the property enjoyed by the unit holder;

(c) the legislative scheme demonstrates that the initial allocation of unit entitlements is not to change by reference to circumstances arising after registration except in narrowly defined circumstances (which do not arise here);

(d) the question for the Tribunal is not whether the initial allocation was reasonable, nor whether some alternative allocation might have been more reasonable, but whether the original allocation was demonstrated by the applicant to be "unreasonable", and

(e) the effect of changing the allocation of entitlements on the control of the owners' corporation cannot properly be ignored.

44It is necessary to consider the status of this reasoning in the District Court. First, the finding that the question of control was a consideration that had to be taken into account did not form part of the order of the Court. Secondly, having noted that the matter rejected by the Tribunal as irrelevant was properly so rejected, the issue of control may have been seen to be obiter, even in respect of the notice of contention. Thirdly, however, and despite the structure of the judgment, it appears that this finding may have had significance both with respect to the finding of error on the part of the Tribunal and with respect to the order of remittal.

45The failure to give reasons, which the District Court held constituted the error of law by the Tribunal, was identified by reference to the fact that, having made findings as to the values of the respective lots when the strata plan was registered, the Tribunal needed to consider whether there were other relevant matters to be taken into account. If there were no matters which might reasonably be considered relevant, the failure to address them might not have been fatal to the decision. Thus it was relevant to consider whether there were matters which needed to be addressed, of which the "control" issue was identified as one. Further, in deciding whether the Court could determine the matter, or whether it should be remitted to the Tribunal, the judge noted that one of the factors relevant and indeed "something quite central, or potentially central, to the outcome of the proceedings" was the "control" issue: Judgment, 10 October 2013, p 3. In these circumstances, the Court concluded (correctly) that it was appropriate (indeed necessary) to remit the matter to the Tribunal: see Kirk v Industrial Court of New South Wales [2010] HCA 1; 239 CLR 531 at [110]-[111]; cf Edwards v Santos Ltd [2011] HCA 8; 242 CLR 421 at [4]-[5]; Wang v Farkas (No 3) [2014] NSWCA 111 at [6]-[8]; SAS Trustee Corporation v Woollard [2014] NSWCA 75 at [107].

46The applicant's submission in this Court was that the reference in s 183(3) to "the respective values of the lots" as the only specific criterion meant that the sub-section could not be read as requiring the Tribunal to consider the question of control. That may be so, but, as the respondent submitted, the Strata Schemes Management Act and Strata Schemes Management Regulation 2010 confer significant powers of control on an owners' corporation, which in turn controls management of the strata scheme. Control of such management powers will fall within the hands of a lot holder with a unit entitlement in excess of 50%. Of course, it is also true that control may fall within the hands of two lot holders whose combined unit entitlement exceeds 50%. Where control falls is not the point: the point is that, within the statutory scheme, much power lies within the hands of lot holders controlling a majority of unit entitlements.

47On one view, it cannot be irrelevant that a change in the allocation of unit entitlements will affect the balance of power as between unit holders. Accordingly, there is no reason to conclude that such a factor is outside the proper contemplation of the Tribunal in determining an application under s 183. On another view, whether that factor has weight in any particular circumstances is a matter for the Tribunal, acting reasonably and taking into account the statutory scheme revealed by the Act and the Regulation. The Tribunal properly rejected an irrelevant consideration (the identity of the current owners); its failure to give reasons for declining to make the reallocation sought by the applicant deprived the District Court of any basis for knowing whether it had rejected the proposed change in the balance of power (as an abstract notion divorced from the identity of the current owners) as irrelevant.

Relief sought in this Court

48The primary relief sought in this Court challenged the remittal of the case to the Tribunal. For the reasons noted at [45] above, that order was correct, given the nature of the error. On the basis that the matter was properly to be remitted to the Tribunal, the only relevant relief sought in the summons (otherwise than as to costs) was an order "quashing paragraphs 72-77 of the decision of Murrell DCJ dated 14 June 2013". The form of that proposed alternative order misconceived the function of the Court. Even an appeal is limited to a challenge to the orders made by the court below, as opposed to review of the reasons where the orders are not in dispute. That principle applies with equal force in relation to the supervisory jurisdiction of the Court; the powers under s 69 are limited to quashing orders, not quashing paragraphs in a set of reasons.

49However, the substance of the challenge was to that part of the order of remittal requiring that the Tribunal determine the application "consistent with" the "findings" of the District Court. In that form, the direction was uncertain: to what particular "findings" did it refer? If it were to include the "control issue", the finding should have been identified with appropriate precision. Presumably the direction was not so limited, because "findings" was in the plural. Whether it referred to the findings as to the value of the lots is unclear: those findings were made by the Tribunal, not the Court, although the Court held they were not affected by legal error

50The third challenge involved the decision of the District Court not to award costs in favour of the applicant. It appears that the alleged error in that regard was a consequence of the Court upholding the respondent's notice of contention. No separate error of law was identified in respect of that order.

51It may be that the reasoning of the primary judge went further than necessary in prescribing that the Tribunal must, as a matter of law, take into account the effect of the proposed reallocation of unit entitlements on the control of the owners' corporation. If the Court had said that a proposed change in unit entitlements which resulted in one unit holder obtaining control of the owners' corporation when, at the date of registration, no individual unit holder had been in that position, and that the Tribunal could not reasonably disregard that consequence, it is doubtful whether the statement would have been erroneous in point of law. Similarly, the Court might properly have said that as the effect of the proposed allocation would have been to give one unit holder precisely 50% of the unit entitlement, with the possibility of frustrating the management of the scheme, the Tribunal could properly take that consequence into account.

52It was sufficient for the District Court, giving judgment in October 2013, to remit the matter to the Tribunal. The legislation by which the Tribunal was established was, however, repealed, as of 1 January 2014: Civil and Administrative Legislation (Repeal and Amendment) Act 2013 (NSW), s 3. Absent appropriate transitional and savings provisions, it is not possible for the matter now to be remitted to the Tribunal. Because the findings of the Tribunal as to valuation have not been set aside and are not to be reopened, the proceedings before the Tribunal are (and were on 1 January 2014) "part heard proceedings" for the purposes of the Civil and Administrative Tribunal Act 2013 (NSW), Sch 1, Pt 2, Div 3, Sub-div 2, cl 7. The effect of cl 7 is that the proceedings are to continue before, and be determined by, the New South Wales Civil and Administrative Tribunal ("NCAT"). Pursuant to cl 8, the Court on an appeal from the Tribunal, is empowered to remit the matter to NCAT. Accordingly, the matter must now be remitted to NCAT.

53No reason was given why, in the event that the summons was dismissed, the applicant should not be ordered to pay the costs of the active respondents in this Court. That order should be made.

54It follows that the form of the orders must be varied, but the summons must otherwise be dismissed. An opportunity should be accorded to the parties to make submissions as to the source of the appeal to the District Court and the appropriateness of the orders set out below. The orders of the Court should be in the following terms: