Keddis v The Owners - Strata Plan No 20198
[2024] NSWCATCD 51
•03 September 2024
Civil and Administrative Tribunal
New South Wales
Medium Neutral Citation: Keddis v The Owners - Strata Plan No 20198 [2024] NSWCATCD 51 Hearing dates: 23 August 2024 Date of orders: 03 September 2024 Decision date: 03 September 2024 Jurisdiction: Consumer and Commercial Division Before: G Blake AM SC, Senior Member Decision: 1 Proceedings 2023/00377627 are dismissed.
2 Proceedings 2024/00065655 are dismissed.
3 There is no order as to the costs of proceedings 2023/00377627 and proceedings 2024/00065655.
4 If the respondent makes an application to vary order (3) above in the manner and within the time specified in order 4(a) below, order (3) above ceases to have effect and the following directions apply:
(a) the respondent is to lodge and serve a costs application, including submissions limited to three pages and which are to address the question of whether a hearing may be dispensed with, and any evidence in support, by 17 September 2024;
(b) the applicant is to lodge and serve any submissions limited to three pages and which are to address the question of whether a hearing may be dispensed with, and any evidence in opposition, by 1 October 2024;
(c) the respondent is to lodge any submissions in reply limited to two pages by 8 October 2024.
Catchwords: CIVIL PROCEDURE – Time limits – Application for an extension of time to commence proceedings – Applicable principles – Application in part dismissed
LAND LAW - Strata schemes — Appointment of compulsory strata manager — Whether grounds for compulsory appointment are established - Application in part dismissed
Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW), ss 28, 29, 30, 36, 38, 41, 60
Civil and Administrative Tribunal Rules 2014 (NSW), r 23
Interpretation Act 1987 (NSW), s 36(1)
Legal Profession Uniform Law (NSW), ss 169, 174
Strata Schemes Management Act 1996 (NSW), s 80D (repealed)
Strata Schemes Management Act 2015 (NSW), ss 9, 13, 23, 24, 37, 103, 106, 108, 136, 139, 141, 150, 227, 232, 237, 240, Sch 1, cll 4, 8, 15, 17, 22
Strata Schemes Management Regulation 2016 (NSW), cll 14A, 26
Workers Compensation Act 1987 (NSW), s 151D(2)
Cases Cited: 2 Elizabeth Bay Road Pty Ltd v The Owners - Strata Plan No 73943 (2014) 88 NSWLR 488; [2014] NSWCA 409
Blondel v The Owners – SP 37248 (unreported, proceedings 2022/00399150, 25 July 2024)
Cooper v The Owners – Strata Plan No 58068 (2020) 103 NSWLR 160; [2020] NSWCA 250
Coscuez International Pty Ltd v The Owners-Strata Plan No 46433 [2022] NSWCATAP 147
Foo v Frew [2023] NSWCATAP 303
Itex Graphix Pty Limited v Elliott (2002) 54 NSWLR 104; [2002] NSWCA 104
Jackson v NSW Land and Housing Corporation [2014] NSWCATAP
Jackson v NSW Land and Housing Corporation [2015] NSWCATAP 281
Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289
The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; (2013) 17 BPR 33,789
The Owners Strata Plan No 57164 v Yau (2017) 96 NSWLR 587; [2017] NSWCA 341
The Owners - Strata Plan No 70798 v Bakkante Constructions Pty Limited [2013] NSWSC 848
The Owners Strata Plan No 73943 v 2 Elizabeth Bay Road Pty Ltd [2013] NSWSC 1769
Thoo v The Owners Strata Plan No. 50276 [2011] NSWSC 657
TriCare (Hastings) Limited v Allen [2015] NSWCA 344
Texts Cited: None cited
Category: Principal judgment Parties: Victor Keddis (Applicant)
The Owners - Strata Plan No 20198 (Respondent)Representation: Counsel:
Solicitors:
Applicant (self-represented)
Bannermans Lawyers (Respondent)
File Number(s): 2023/00377627 (formerly SC 23/40427); 2024/00065655 Publication restriction: Nil
REASONS FOR DECISION
Overview
-
In these two proceedings the applicant, Victor Keddis (Mr Keddis), seeks relief against the respondent, The Owners – Strata Plan No 20198 (OSP20198), which is responsible for the management of strata scheme 20198, under the Strata Schemes Management Act 2015 (NSW) (SSM Act) and the general law.
-
There are four main issues in these two proceedings:
whether part of one proceedings had been commenced out of time;
whether the decision of OSP20198 to engage lawyers should be ratified;
whether a compulsory strata manager of OSP20198 should be appointed;
whether the decision of OSP20198 to limit the size of the strata committee should be invalidated.
-
I have found that part of one proceedings had been commenced out of time, the decision of OSP20198 to engage lawyers should be ratified, a compulsory strata manager of OSP20198 should not be appointed, and the decision of OSP20198 to limit the size of the strata committee should not be invalidated.
-
It follows that I have decided that the two proceedings should be dismissed. I have also decided that there should be no order as to costs of the two proceedings and made orders for OSP20198 to apply to vary this costs order.
The factual background
-
Strata scheme 20198, which is a residential complex consisting of five townhouses and comprising five lots and common property at Cremorne in New South Wales, was registered on 23 May 1983.
-
Since April 1999, Mr Keddis has been the owner of lot 5 in strata scheme 20198.
-
Since the time of the events giving rise to these two proceedings the owners and occupants in strata scheme 20198 have been:
lot 1: Tom Wong (Mr Wong) and Deborah Wong (Ms Wong) have been the owners and occupants;
lot 2: John Lewis (Mr Lewis) was the owner and occupant; subsequently James Cruickshank (Mr Cruickshank) and Kate Cruickshank (Ms Cruickshank) have been the owners and occupants;
lot 3: James Hughes (Mr Hughes) and Emma Woodward (Ms Woodward) have been the owners and occupants;
lot 4: Richard Gosper (Mr Gosper) has been the owner and he with Yulia Gosper (Ms Gosper) have been the occupants.
-
Since 5 April 2022, there have been ongoing disputes between Mr Keddis and OSP20198 and its strata committee.
-
On 23 May 2022, the members of OSP20198 at the extraordinary general meeting (the 23 May 2022 EGM) relevantly passed resolutions 9 and 18 which are recorded in the minutes as being in the following terms:
“9 Agency Agreement
RESOLVED That the Owners Corporation resolve by ordinary resolution to appoint OCMS (Agent) as strata managing agent on the terms and conditions set out in the proposed strata management agency agreement
Points to be minuted: To allow complete and documented minutes for this EGM, the EGM Agenda has been included at the end of these minutes.
At the request of Victor Keddis (Lot 5) the document ‘Statement of Motion 9 by Victor Keddis has been included in these minutes. (9 Pages in total). PLEASE NOTE: This statement was submitted on the day of the EGM by Victor Keddis (Lot 5) and provided here as agreed by the owners at the meeting. Key questions on second page of that document to be answered by the Owners Corporation.
From those present at the EGM and Proxy vote held, this motion was voted as follows:
Lot 5 voted ‘against’ this motion, Unit Entitlement total: 192
Lot 1, 2, 3, 4 voted ‘for’ this motion, Unit Entitlement total 808
Based on Unit Entitlements this motion was voted ‘for’ and was RESOLVED
Agency Agreement resolved at three (3) years, to be signed by Lot 2 (John Lewis) and Lot 4 (Yulia Gosper)”
“18 Removal of Officer Holder/Strata Committee Member
SPECIALLY RESOLVED That the Owners Corporation SPECIALLY RESOLVE that Victor Keddis, the secretary of the strata committee, be removed as an officeholder and member of the strata committee.
NOTED: Victor Keddis (Lot 5) left the EGM before this motion was discussed and voted on, as a result no vote count can be taken from Lot 5
From those present at the EGM and Proxy vote held, this motion was voted as follows:
Lot 1, 2, 3, 4 voted ‘for’ this motion, Unit Entitlement total: 808
Based on Unit Entitlements this motion was voted ‘for’ and unanimously SPECIALLY RESOLVED”
-
On 23 May 2022, the members of the strata committee of OSP20198 at their meeting (the 23 May 2022 SCM) relevantly passed resolution 2 which is apparently recorded in the minutes as being in the following terms:
“Election of Strata Committee Office Bearers
RESOLVED That, pursuant to clause 17 of the Regulation, the Strata Committee elects the Chairperson, Secretary and Treasurer of the Strata Committee from the nominated candidates.
Points to be minuted: Three (3) nominations received and accepted:
Lot 2 John Sinclair Lewis (Chairperson)
Lot 3 James John Hughes (Treasurer)
Lot 4 Yulia Gosper (Secretary)”
-
Since 23 May 2022, Owners Corporate Management Services Pty Ltd (OCMS) has been the strata managing agent of strata scheme 20198 and its director Suzanne Pelders (Ms Pelders) has had day to day responsibility for its management with the assistance from time to time of Kane Kennair (Mr Kennair).
-
On 25 October 2022, the members of OSP20198 at the annual general meeting (the 25 October 2022 AGM) relevantly passed resolution 11 which is recorded in the minutes as being in the following terms:
“11 Strata Committee
RESOLVED That the Strata Committee remain of (3) as resolved during the EGM dated 23rd May 2022.
Voting was unanimous.
Chairman John Lewis Lot 2
Treasurer James Hughes Lot 3
Secretary Yulia Gosper Lot 4”
-
On 23 December 2022, a Customer Service Officer of NSW Fair Trading in their letter to Mr Keddis in relation to “his application for mediation concerning issues relating to the replacement of the fence” advised that mediation had been declined by OSP20198 and if the issues he had described in his mediation application remain unresolved, he had the option to apply for a hearing at the Tribunal, and enclosed a Tribunal application form.
-
On 17 January 2023, a Customer Service Officer of NSW Fair Trading in their letter to Mr Keddis in relation to “his application for mediation concerning issues relating to allocation of levies for unit 5, including the request for the owners corporation to rectify the levy schedule” advised that mediation had been declined by OSP20198 and if the issues he had described in his mediation application remain unresolved, he had the option to apply for a hearing at the Tribunal, and enclosed a Tribunal application form.
-
On 17 January 2023, a Customer Service Officer of NSW Fair Trading in their letter to Mr Keddis in relation to “his application for mediation concerning issues relating to meeting procedures, including the validity of resolutions made at the 25 October 2022 AGM and the request for a general meeting to be convened” advised that mediation had been declined by OSP20198 and if the issues he had described in his mediation application remain unresolved, he had the option to apply for a hearing at the Tribunal, and enclosed a Tribunal application form (the second 17 January 2023 NSWFT letter).
-
On 22 March 2023, a Customer Service Officer of NSW Fair Trading in their letter to Mr Keddis in relation to “his application for mediation concerning management of the scheme in relation to special by-law 1 and removal of John Lewis, Julia Gosper and James Hughes from the strata committee” advised that mediation had been declined by the strata committee and OSP20198 and if the issues he had described in his mediation application remain unresolved, he had the option to apply for a hearing at the Tribunal, and enclosed a Tribunal application form.
-
On 30 June 2023, a Customer Service Officer of NSW Fair Trading in their letter to Mr Keddis in relation to “his application for mediation concerning issues relating to management of the scheme including painting of common area balustrades; conduct of the committee and strata managing agent; and the request for reinstatement as strata secretary” advised that mediation had been declined by OSP20198 and if the issues he had described in his mediation application remain unresolved, he had the option to apply for a hearing at the Tribunal, and enclosed a Tribunal application form.
-
On 20 July 2023, the members of OSP20198 at the annual general meeting (the 20 July 2023 AGM) relevantly passed resolutions 10, 19, 20 and 24 which are recorded in the minutes as being in the following terms:
“10 Strata Committee
RESOLVED That the Owners Corporation reviewed the candidates for nomination and that the number of Strata Committee Members be set at three (3) elected as the Members of the Strata Committee:
Chairperson Lot 2 James Cruickshanke
Secretary Lot 4 Yulia Gosper
Treasurer Lot 3 James Hughes
RESOLVED That the Strata Committee cannot make a decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in a general meeting nor make a decision on any matter or type of matter that the owners corporation has determined in general meeting is to be decided only by the owners corporation in a general meeting.
RESOLVED That the restriction of $Nil be placed on the Strata Committee for the purposes of Section 36 of the Strata Schemes Management Act.”
“19 By-Law Registration
RESOLVED That the Owners Corporation resolves by way of special resolution pursuant to section 141 of the Strata Schemes Management Act 2015 to record a new ‘Special By-Law - Recovery of Costs for Excessive or Nuisance Communication’ (identified below) in relation to the recovery of funds by the Owners Corporation in responding to or receiving any Excessive or Nuisance Communication (as defined below) from a lot owner and further.
Special By-Law 5 - Recovery of Costs for Excessive and Nuisance Communication
A) Intention
The purpose of this By-law is to confirm that a Lot owner shall be responsible for any administrative fees incurred by the Owners Corporation, including its Strata Managing Agent, in responding to or receiving any Excessive or Nuisance Communication which is sent to the Strata Managing Agent from the Lot owner or its Representative. If the Special By-law is passed by the Owners Corporation, the intention of the By-law is for the Lot owner to assume liability for such expense.
B) Definitions
(i)The following terms are defined to mean:
‘Act’ means the Strata Schemes Management Act 2015 (NSW), as amended from time to time;
‘Excessive or Nuisance Communication’ means communication which is reasonably considered excessive by the Strata Managing Agent and which is not reasonably deemed Reasonable Communications to the Strata Managing Agent (including the Strata Managing Agent’s agency), whereby such communication is (among other things):
i. excessive in length;
ii. large in volume;
iii. badgering or harassing of the Strata Managing Agent or any of the Owners Corporation members;
iv. offensive in nature or content;
v. repeatedly seeking an outcome which the Strata Managing Agent or the Owners Corporation cannot reasonably provide action (and which has been confirmed to the lot owner to that affect);
vi. seeking an outcome contrary to the decisions of either the Strata Committee, or Owners Corporation; and/or
vii. contravenes any provisions of the Act;
‘Lot means any lot in the Strata Plan;
‘Owners Corporation’ means the Owners Corporation created by the registration of the Strata Plan;
‘Representative’ means any person appointed by the Lot owner in the Strata Plan to represent that Lot via proxy, company nominee, power of attorney or a leasing agent agreement;
‘Reasonable Communication” means genuine and reasonable communication from a Lot owner or their representative to the Owners Corporation or the Strata Managing Agent via phone, written or oral requests or otherwise or reasonable requests and directions made of, or to, the Strata Managing Agent or the Owners Corporation, whereby:
1. written communication is capable of being reasonably responded to or actioned by the Strata Managing Agent or the Owners Corporation (as the case may be), is in clear and concise written communication by the Lot owner (generally not exceeding one (1) paragraph and limited in attachments) and can reasonably be read and responded to (if required) by the Strata Managing Agent within approximately 15 minutes; and
2. phone calls do not exceed approximately 15 minutes in duration to the Strata Managing Agent.
‘Strata Managing Agent’ has the same meaning as under the Act; and
‘Strata Plan’ has the same meaning as under the Act.
(ii) Where any terms used in this By-law are defined in the Act, they Will have the same meaning as the terms attributed under that Act.
C) Payment of costs for excessive or nuisance communication costs
Owners Corporation must approve proposed costs levied upon a Lot owner at the end of each month. A Lot owner shall be liable to pay any costs associated with Excessive or Nuisance Communication as defined above.
D)Owners Right of Appeal
In the event a Lot owner believes an amount levied upon them pursuant to this By-law to be unjust or unreasonable, the Lot owner may request that the Owners Corporation waive the charge by proposing a motion to be considered by all Lot owners at a general meeting of the Owners Corporation.”
“20 Excessive Emails
RESOLVED Owners Corporation resolves to author/se the Strata Managing Agent to execute and lodge all forms necessary for the registration of the new ‘Special By-law Recovery of Costs for Excessive and Nuisance Communication’(set out in Motion 19 above) with NSW Land Registry Services.”
“24 Courtyard plants & Garden
RESOLVED That the Owners Corporation discuss that the garden has not been done properly since the rendering was complete. This is a motion to invest a once off 5K AUD on potted plants, trees and shrubs for the courtyard and common use garden area, to make the space more visually appealing. The use of funds will be at the discretion of the strata committee and the strata agent. This is to be conducted in the coming months. The funds are to be allocated from strata’s capital works fund.”
-
Subsequent to 20 July 2023, Special By-Law 5 has not been registered.
-
On 25 August 2023, a Customer Service Officer of NSW Fair Trading in their letter to Mr Keddis in relation to “his application for mediation concerning issues relating to the conduct and validity of the 20 July 2023 Annual General meeting; and the validity of motions 19 and 24, the election of the strata committee and the levy schedule” advised that mediation had been declined by OSP20198 and if the issues he had described in his mediation application remain unresolved, he had the option to apply for a hearing at the Tribunal, and enclosed a Tribunal application form (the 25 August 2023 NSWFT letter).
-
On 18 September 2023, Bannermans Lawyers provided to OCMS on behalf of OSP20198 a fee estimate of $13,970.00 inclusive of GST to defend the first Keddis proceedings (the 18 September 2023 Bannermans estimate).
-
On 20 September 2023, Mr Kennair sent an email to the owners of strata scheme 20198 attaching a notice of meeting of the strata committee on 25 September 2023 (the 25 September 2023 SCM) to relevantly consider motion 2 to engage Bannermans Lawyers in accordance with the attached 18 September 2023 Bannermans estimate on the basis that it was to be “a paper vote” with votes to be submitted prior to 9.00am on 25 September 2023.
-
On 22 September 2023, Mr Keddis sent an email to the staff of OCMS in which he voted against motion 2 the 25 September 2023 SCM.
-
On 23 September 2023, Ms Wong sent an email to Mr Kennair in which she relevantly attached the voting paper for lot 1 for the motions at the 25 September 2023 SCM.
-
On 24 September 2023, Ms Gosper sent an email to Mr Keddis (the 24 September 2023 Ms Gosper email) in which she relevantly stated:
“Appointment of lawyers
Could you please confirm whether you’re for or against the appointment of the lawyers? We need the majority of the owners to decide one way or the other.
Understand it’s a ‘No’ from Tom & Deborah and Victor. It’s a ‘Yes’ from Richard & I. @James Hughes, @Emma Woodward and @James Cruickshank and @[email protected] - could you please respond with your vote - whether you approve the appointment of the Bannermans’.
Please note that, in order to make the communication with the lawyers most efficient, it is proposed that myself and James Hughes (not OCMS as was stipulated in the Agenda circulated by Kane) would be contact persons for the lawyers engagement - should it be approved.
Further, should the lawyers’ appointment be approved, we will instruct the lawyers to assist us with the preliminary matters in preparation for the NCAT directions hearing and a General Meeting of the owners to obtain all necessary approvals.
Upcoming General Meeting
I understand that we need to call a general meeting. Matters for a formal vote at the meeting will include:
1) formal appointment of the lawyers (to ratify the informal vote that based on this email chain voting);
2) selecting a new Strata committee;
And other motions put up for voting by other members.
For this, a new Agenda will be circulated – to replace the one previously circulated by Kane. To reiterate, should the lawyers be appointed, we we will ask them to revise the Agenda and advise us on the proper process for conducting the General Meeting, to ensure its all done properly. I advised OCMS to not reissue any new agenda until we decide on the lawyers’ engagement
…
I was able to confirm with strata lawyers that this general meeting will need to be conducted in person/via a video conference - as a requirement for selecting a strata committee. …”
-
On 23 November 2023, Bannermans Lawyers advised that they had approximate unbilled work in progress of $14,155.53 inclusive of GST and provided a fee estimate of $25,155.53 inclusive of GST to defend the first Keddis proceedings (the 23 November 2023 Bannermans estimate).
-
On 18 December 2023, the members of OSP20198 at the extraordinary general meeting (the 18 December 2023 EGM), which was attended by Ms Wong, Mr Hughes, Ms Woodward, Mr Keddis, and Ms Gosper, and at which Ms Woodward held a proxy for Mr Cruickshank and Ms Cruickshank and Ms Gosper held a proxy for Mr Gosper, relevantly passed resolutions 4, 6, 7 and 8 which are recorded in the minutes as being in the following terms:
“(4) ELECTION OF COMMITTEE
The following written nominations for the strata committee were received prior to the issue of this notice:
o James Cruickshanke; (subsequently withdrawn by written notification dated 29/11/2023)
o Yulia Gosper; and
o James Hughes.
Nominations were then called from those present being as follows:
Deborah Wong - Lot 1
Victor Keddis - Lot 5
Kate Cruichshanke - lot 2 (in writing)
Five (5) nominations were received for election to the Strata committee.
After considerable discussion it was RESOLVED to reset the number of Committee members at three (3) for the ensuing year.
The Chairperson asked if any nominee was prepared to withdraw their nomination, and none did so.
As a ballot was required to be conducted, due to the limitations of the Video conferencing link, it was not possible to progress to this stage. Accordingly, the election process was left in abeyance for determination at a future General meeting.
In the interim, decisions ordinarily requiring a strata committee to exercise its function under the terms of the Strata Schemes Management Act 2015 will need to be made at a General Meeting.”
“(6) RATIFICATION OF COMMITTEE ELECTION HELD 25 OCTOBER 2022
The Owners - Strata Plan No. 20198 RESOLVED by ordinary resolution to RATIFY the election of the strata committee members and confirm that motion 11 on the minutes of the meeting of the owners corporation on 25 October 2022 are correct.”
“(7) ENGAGEMENT OF BANNERMANS LAWYERS
The Owners - Strata Plan No. 20198 RESOLVED by ordinary resolution to RATIFY the following:
(a) the engagement of Bannermans Lawyers in accordance with its fee proposal dated 18 September 2023 to undertake the activities referred to defend NCAT proceedings against Victor Keddis.
(b) accept the fee update letter issued by Bannermans Lawyers dated 23 November 2023 in relation to the defence of NCAT proceedings against Victor Keddis.
(c) appoint Yulia Gosper and James Hughes as the strata committee point of contact to provide the owners corporation’s instructions to Bannermans Lawyers.
and confirm that motion 2 on the minutes of the strata committee meeting on 25 September 2023 are correct.”
“(8) GARDEN EXPENDITURE
The Owners - Strata Plan No. 20198 RESOLVED by ordinary resolution to RATIFY the investment of the sum of $5,000.00 on potted plants, trees and shrubs for the courtyard and common use garden area and confirm that the motion 24 on the minutes of the meeting of the owners corporation on 20 July 2023 are correct.”
-
On 28 February 2024, the annual general meeting of OSP20198 (the 28 February 2024 AGM) was held.
The history of the two proceedings
-
On 4 September 2023, Mr Keddis commenced proceedings SC 23/40427 (which were subsequently renumbered 2023/00377627) against OSP20198 by filing a strata and community schemes application in which he sought orders for the invalidation of resolution 18 at the 23 May 2022 EGM and of resolution 11 at the 25 October 2022 AGM, an order in respect of resolution 11 at the 23 May 2022 EGM and resolutions 10, 19, 20 and 24 at the 20 July 2023 AGM, and an order for the appointment of a compulsory strata managing agent of OSP20198 (the first Keddis proceedings).
-
On 1 November 2023, the Tribunal made an order granting leave to the parties to be legally represented.
-
On 7 November 2023, Mr Keddis filed his points of claim in proceedings 2023/00377627 in which he sought the following relief (the first Keddis points of claim):
order 1: an order for the invalidation of resolution 9 at the 23 May 2022 EGM under ss 232(1)(a), (b) and (c) and 240 of the SSM Act;
order 2: an order for the invalidation of resolution 18 at the 23 May 2022 EGM under ss 24, 232 and 240 of the SSM Act;
order 3: an order for the invalidation of resolution 2 at the 23 May 2022 SCM under ss 232 and 240 of the SSM Act;
order 4: an order for the invalidation of resolution 11 at the 25 October 2022 AGM under ss 24, 232 and 240 of the SSM Act;
order 5: an order for the invalidation of resolution 10 at the 20 July 2023 AGM under ss 24, 232 and 240 of the SSM Act;
order 6: an order for the invalidation of resolutions 19 and 20 at the 20 July 2023 AGM under ss 24, 139, 150, 232 and 240 of the SSM Act;
order 7: an order for the invalidation of resolution 24 at the 20 July 2023 AGM under ss 24 and 232 of the SSM Act;
order 8: an order for the replacement of the boundary fence under s 232 of the SSM Act;
order 9: orders for the invalidation of any agreement binding OSP20198 to engage Bannermans Lawyers, for the disclosure of any such agreements and for the payment of the costs associated with such agreements by the parties signing them under s 232 of the SSM Act;
order 10: an order for the appointment of a compulsory strata managing agent of OSP20198 under s 237(1)(c), (2)(a) and (5) of the SSM Act.
-
On or shortly after 29 November 2023, OSP20198 served its points of defence in proceedings 2023/00377627 (the OSP20198 points of defence).
-
On 25 January 2024, Mr Keddis commenced proceedings 2024/00065655 against OSP20198 by filing a strata and community schemes application in which he sought orders for the invalidation of resolutions 4, 6, 7 and 8 at the 18 December 2023 EGM (the second Keddis proceedings).
-
On 7 February 2024, the Tribunal made procedural orders in proceedings 2023/00377627 including provision for the application of any lot owner who opposed order 10 in the first Keddis points of claim for joinder as a respondent (the 7 February 2024 orders).
-
On 25 March 2024, Mr Keddis filed his points of claim in proceedings 2023/00377627 in which:
he sought the following relief (the second Keddis points of claim):
order 1: an order for the invalidation of resolution 4 at the 18 December 2023 EGM under s 232(1)(a) of the SSM Act and the general law;
order 2: an order for the invalidation of resolution 6 at the 18 December 2023 EGM under s 232(1)(a) of the SSM Act and the general law;
order 3: an order for the invalidation of resolution 7 at the 18 December 2023 EGM and “rescission of cost agreements of Bannermans Lawyers of 18 September 2023 and 23 November 2023” under s 232(1)(a) and/or (b) of the SSM Act and the general law;
order 4: an order for the invalidation of resolution 8 at the 18 December 2023 EGM under s 232(1)(a) and/or (b) of the SSM Act and the general law;
he contended that the Tribunal had power to make these orders under the following general law doctrines (the first being applicable to order 1, the second to sixth being applicable to order 2, and the second to fifth being applicable to orders 3 and 4):
the general law doctrines of fraud on a minority or fraud on a power against abuse of power and oppression of minorities;
the general law doctrines that shareholders cannot ratify breaches of statutory duties of directors;
the general law doctrines that it is an abuse of power for self-interested directors to ratify their own malfeasance or criminal actions;
the general law doctrines that shareholder ratification is not available where it would constitute a fraud on the minority or oppression of the minority;
the general law doctrines that shareholder ratification is not available where the majority in general meeting are acting for the same improper purpose as the directors;
the general law doctrines that for ratification to be effective, and bona fide, ratification must occur within a reasonable time of the unauthorised act.
The hearing
-
On 23 August 2024, the hearing took place. Mr Keddis represented himself. OSP20198 was represented by Mr J Bannerman, a solicitor.
-
At the commencement of the hearing, I raised my concern that the first Keddis proceedings so far as orders 1 to 4 in the first Keddis points of claim had been commenced outside the time specified in r 23(3)(b) of the Civil and Administrative Tribunal Rules 2014 (NSW) (NCAT Rules) which I mistakenly referred to as being three months after the applicable resolution was passed. Subsequently in the hearing, I corrected this mistake and pointed out that the time specified in r 23(3)(b) of the NCAT Rules was 28 days after the applicable resolution was passed and that it followed that the first Keddis proceedings so far as orders 5 to 7 in the first Keddis points of claim had also been commenced out of time.
-
Mr Keddis made an oral application to extend the time for the commencement of the first Keddis proceedings to 4 September 2023. OSP20198 opposed this application.
-
Mr Keddis did not make any application to extend the time for the commencement of the second Keddis proceedings to 25 January 2024.
-
Mr Keddis relied on the following documents which were admitted into evidence without objection in the case of documents (4) and (6) and otherwise subject to relevance and to any specific objection made on the ground of legal professional privilege or settlement privilege:
the statement of himself dated 14 March 2024 (the 14 March 2024 Keddis statement) which was marked as exhibit A1;
the statement of himself dated 22 April 2024 (the 22 April 2024 Keddis statement) which was marked as exhibit A2;
the statement of himself dated 29 May 2024 (the 29 May 2024 Keddis statement) which was marked as exhibit A3;
the statutory declaration of himself made on 3 July 2024 (the 3 July 2024 Keddis declaration) which was marked as exhibit A4;
the statutory declaration of himself made on 13 December 2023 comprising 14 pages (the 14 pages 13 December 2023 Keddis declaration) which was marked as exhibit A5;
the statutory declaration of himself made on 13 December 2023 comprising 44 pages (the 44 pages 13 December 2023 Keddis declaration) which was marked as exhibit A6;
the bundle of documents described as volume 2 lodged on 3 July 2024 other than pages 25 to 62 which was marked as exhibit A7;
the bundle of documents described as volume 3 lodged on 3 July 2024 other than pages 1294 to 1425 which was marked as exhibit A8;
the email of Ms Wong to the other owners and occupiers in strata scheme 20198 sent on 31 January 2024 (the 31 January 2024 Ms Wong email) which was marked as exhibit A9;
the email of Ms Pelders to Mr Keddis sent on 20 August 2024 (the 20 August 2024 Pelders email) which was marked as exhibit A10;
the cash management statement of OSP20198 for the quarter ending 29 February 2024 (the 29 February 2024 management statement) which was marked as exhibit A11.
-
Many of the documents made by Mr Keddis contain markings in the form of underlining and/or borders which I have treated as submissions which identify and/or emphasise part of the applicable document.
-
OSP20198 relied on the statement of Mr Hughes dated 6 March 2024 (the 6 March 2024 Hughes statement) which was admitted into evidence without objection and marked as exhibit R1.
-
Mr Keddis and Mr Hughes gave oral evidence.
-
Mr Keddis relied on his written submissions dated 17 May 2024 (the 17 May 2024 Keddis submissions) and 23 August 2024 (the 23 August 2024 Keddis submissions) and made oral submissions. In his oral submissions Mr Keddis advised that he was no longer seeking order 8 in the first Keddis points of claim.
-
OSP20198 relied on its written submissions dated 24 May 2024 (the 24 May 2024 OSP20198 submissions) and Mr Bannerman made oral submissions.
-
At the conclusion of the hearing, I reserved my decision and made a direction for OSP20198 to lodge and serve any written submissions limited to two pages on the issue of whether the Tribunal has power to rescind the contract between it and Bannermans Lawyers by 27 August 2024.
-
On 27 August 2024, OSP20198 lodged its written submissions dated 27 August 2024 (the 27 August 2024 OSP20198 submissions).
-
On 28 August 2024, Mr Keddis sent an email to the Registry attaching his written submissions dated 28 August 2024 in reply to the 27 August 2024 OSP20198 submissions (the 28 August 2024 Keddis submissions) and seeking leave to lodge and serve them.
The issues for determination
-
The following issues arise for determination in these two proceedings:
issue 1: whether the Tribunal has jurisdiction to hear and determine the two proceedings;
issue 2: whether the time for the commencement the first Keddis proceedings should be extended to 4 September 2023;
issue 3: whether the time for the commencement the second Keddis proceedings should be extended to 25 January 2024;
issue 4: whether resolutions 6 and 8 at the 18 December 2023 EGM should be invalidated;
issue 5: whether resolution 4 at the 18 December 2023 EGM should be invalidated;
issue 6: whether Mr Keddis should have leave to rely on the 28 August 2024 Keddis submissions;
issue 7: whether orders should be made for the invalidation of any agreement binding OSP20198 to engage Bannermans Lawyers, for the disclosure of any such agreements and for the payment of the costs associated with such agreements by the parties signing them;
issue 8: whether resolution 7 at the 18 December 2023 EGM should be invalidated;
issue 9: whether an order should be made for the appointment of a compulsory strata managing agent of OSP20198;
issue 10: the costs of the two proceedings.
-
It will be convenient to deal with issues 7 and 8 together.
Issue 1: whether the Tribunal has jurisdiction to hear and determine the two proceedings
Introduction
-
Mr Keddis in the 17 May 2024 Keddis submissions submitted that the Tribunal has jurisdiction to hear and determine some of his claims in the two proceedings, but otherwise did not address the jurisdiction of the Tribunal.
-
OSP20198 did not make any submissions as to the jurisdiction of the Tribunal to hear and determine the two proceedings.
Conclusion - the first Keddis proceedings
-
I am satisfied that the Tribunal has jurisdiction to hear and determine the first Keddis proceedings. The source of the jurisdiction of the Tribunal to determine this claim is ss 28(1) and (2)(a) and 29(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act). Pursuant to cl 3(1) and (2)(b) of Sch 4 of the NCAT Act this jurisdiction is allocated to Consumer and Commercial Division.
Conclusion - the second Keddis proceedings
-
I am satisfied that the Tribunal has jurisdiction to hear and determine the second Keddis proceedings so far as Mr Keddis claims relief under the SSM Act for the same reasons as for the first Keddis proceedings.
-
As to the claims of Mr Keddis made under the general law, I accept that the equitable doctrine of fraud on a power may apply to strata schemes: Thoo v The Owners Strata Plan No. 50276 [2011] NSWSC 657 at [177]-[183] (Slattery J); The Owners Strata Plan 50276 v Thoo [2013] NSWCA 270; (2013) 17 BPR 33,789 at [196] (Tobias AJA, with Barrett JA at [1] and Preston CJ of LEC at [227] agreeing).
-
However, whatever the extent of the application of equitable doctrines to strata schemes, the Tribunal does not have any power to grant equitable remedies: Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Limited [2015] NSWSC 289 at [62]-[78] (White J). However, I accept that allegations of breaches of fiduciary duty, unconscionable conduct and fraud on the minority by the owners corporation may form the factual matrix for a claim for relief under particular provisions of the SSM Act.
-
It follows that I am not satisfied that the Tribunal has jurisdiction to hear and determine the second Keddis proceedings so far as the claims of Mr Keddis made under the general law in reliance on the equitable doctrines. It follows that it is unnecessary to consider these claims.
Issue 2: whether the time for the commencement the first Keddis proceedings should be extended to 4 September 2023
Introduction
-
Neither s 24(1) nor s 232(1) of the SSM Act contains any time limit for making an application for relief under the section. It follows that the time for the commencement the first Keddis proceedings is governed by r 23(3)(b) of the NCAT Rules.
-
Rule 23 of the NCAT Rules deals with deals with the commencement of proceedings by a general application, and relevantly provides:
23 General applications
…
(3) Unless the Tribunal grants an extension under section 41 of the Act, an application must be made—
…
(b) in any other case—within 28 days from the day on which the applicant became entitled under the enabling legislation to make the application.
…
-
Section 41 of the NCAT Act deals with extensions of time, and provides:
41 Extensions of time
(1) The Tribunal may, of its own motion or on application by any person, extend the period of time for the doing of anything under any legislation in respect of which the Tribunal has jurisdiction despite anything to the contrary under that legislation.
(2) Such an application may be made even though the relevant period of time has expired.
-
I am satisfied that that the first Keddis proceedings so far as orders 1 to 7 in the first Keddis points of claim have been commenced outside the time specified in r 23(3)(b) of the NCAT Rules and should be dismissed to this extent unless an extension of time for their commencement is granted under s 41 of the NCAT Act.
-
In exercising the power to extend time under s 41 the Tribunal is required by s 36(2)(a) to give effect to the guiding principle to be applied to practice and procedure specified in s 36(1) of the NCAT Act.
-
Mr Keddis provided no explanation in his evidence for his delay in the commencement of the first Keddis proceedings. In his submissions in support of an extension of time to commence the first Keddis proceedings Mr Keddis submitted that orders 1 to 4 raised important issues for the administration of strata schemes and his delay in their commencement was explained by his attempts to mediate the disputes with OSP20198.
Consideration
The applicable legal principles
-
In Coscuez International Pty Ltd v The Owners-Strata Plan No 46433 [2022] NSWCATAP 147 (Coscuez International) at [108]-[109], the Appeal Panel made the following observations as to the calculation of time under r 23(3)(b) of the NCAT Rules:
“[108] As this issue has not been raised or argued, it is inappropriate for us to make findings on this issue. …
[109] Our preliminary view is that for applications where there is no limitation period identified in the SSM Act (which relevantly is the “enabling legislation”) and the application involves a type of matter where the application cannot be accepted by the Registrar of the Tribunal without evidence that mediation with NSW Fair Trading occurred or was attempted under s 227(1)(a) or (b) of the SSM Act; or the Registrar considered that mediation was unnecessary or inappropriate in the circumstances under s 227(1)(c) of the SSM Act (and noting that matters under s 227(1) of the SSM Act do not include the types of disputes under s 227(4) of the SSM Act), then the 28 day period would run from the date that either of the matters in s 227(1)(a); (b); or (c) of the SSM Act occurred.”
-
In Jackson v NSW Land and Housing Corporation [2015] NSWCATAP 281 (Jackson 2015 AP) at [23]-[24], the Appeal Panel found that the following three factors identified in Jackson v NSW Land and Housing Corporation [2014] NSWCATAP 22 at [22] were applicable to the consideration of an extension of time under s 41 of the NCAT Act for the commencement of proceedings in the Tribunal by bringing a general application:
“[22] …
(1) The discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the appellant - Gallo v Dawson [1990] HCA 30, 93 ALR 479 at [2], Nanschild v Pratt [2011] NSWCA 85 at [38];
…
(3) Generally, in an application for an extension of time to appeal the Appeal Panel will be required to consider:
(a) The length of the delay;
(b) The reason for the delay;
(c) The appellant’s prospects of success, that is usually whether the applicant has a fairly arguable case; and
(d) The extent of any prejudice suffered by the respondent (to the appeal),
- Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [55] (per Basten JA) but note also [14], Nanschild v Pratt [2011] NSWCA 85 at [39] to [42]; and
(4) It may be appropriate to go further into the merits of an appeal if the explanation for the delay is less than satisfactory or if the opponent has a substantial case of prejudice and, in such a case, it may be relevant whether the appellant seeking an extension of time can show that his or her case has more substantial merit than merely being fairly arguable - Tomko v Palasty (No 2) (2007) 71 NSWLR 61 at [14] (per Hodgson JA, Ipp JA agreeing at [17]) and Molyneux v Chief Commissioner of State Revenue [2012] NSWADTAP 53 at [58] - [59].”
-
The principles in Jackson 2015 AP at [23]-[24] reflect the principles applicable to the determination of an extension of time to commence proceedings in other statutory contexts.
-
In Itex Graphix Pty Limited v Elliott (2002) 54 NSWLR 104; [2002] NSWCA 104 (Itex Graphix) the New South Wales Court of Appeal (Spigelman CJ, Sheller JA and Ipp AJA) allowed an appeal from substantive judgments concerning an award of damages for personal injuries and the reimbursement of workers compensation benefits, as well as from an interlocutory order granting leave to commence proceedings out of time pursuant to s 151D(2) of the Workers Compensation Act 1987 (NSW). Sheller JA at [3]-[4] made the following observations:
“[3] The cases have shown that particular circumstances may compel a refusal by the Court to extend time. An example is actual significant prejudice to the defendant brought about by the plaintiff’s delay. But it is not correct to conclude that the absence of such prejudice compels an exercise of discretion in favour of the plaintiff. Ordinarily the potential plaintiff is required to demonstrate that circumstances warrant the Court’s exercising its discretion to extend the time for commencing proceedings. The applicant bears that positive burden. In Salido v Nominal Defendant (1993) 32 NSWLR 524 at 530 Gleeson CJ said that the proper question for a judge to ask in dealing with an application for leave to proceed is whether it would be fair and just to grant leave. …
[4] Ipp AJA has concluded that the appellant suffered no prejudice in consequence of the resultant delay but that the decision initially taken not to proceed at common law and allow the three year period under s151D(2) of the Workers Compensation Act to expire were taken quite deliberately on a fully informed basis. The respondent further delayed for a significant period before changing her mind. I entirely agree that this in itself is a potent circumstance which must be taken into account and will ordinarily weigh heavily against an applicant. If the discretion was to be exercised favourably to the respondent, she was bound to give some explanation both satisfactory and pertinent to a conclusion that justice would be best served by granting her application. I agree with Ipp AJA that this she failed to do. …”
Ipp AJA [88]-[91] made the following observations (with Spigelman CJ at [1] agreeing):
“[88] I have pointed out that the justice of the case is to be determined by its own individual circumstances. Often, a failure satisfactorily to explain the delay will not be decisive. Ordinarily, the issue of prejudice will be of paramount importance. Nevertheless, the justice of the case may be such that the failure to explain the delay and to prosecute the case with the requisite diligence will result in an extension of time being refused.
[89] The rule that an applicant, who applies for leave to bring proceedings after a limitation period has expired, must provide a reasonable explanation for the delay (and show that there has not been an absence of diligence on his or her part) forms part of limitation legislation throughout the country and, independently, has long been recognised by the courts. It is hardly necessary to provide authority for this proposition, …
[90] The reason for this requirement is not hard to understand. A limitation provision is an expression of intent by Parliament that persons who wish to sue must do so within the stipulated time unless circumstances exist entitling them to obtain leave. A limitation provision is the general rule and an extension is the exception. In obtaining leave, a party is in effect obtaining an indulgence. To allow parties leave, when they have been careless of their rights and careless of the need to proceed with their disputes within the limitation period, would, ordinarily, be contrary to the justice of the case and would subvert the intent of Parliament. Just as the rules of court must prima facie be obeyed , so must the laws of Parliament.
[91] A deliberate decision to allow a statutory limitation period to expire would be a powerful factor against the grant of leave. Where a deliberate decision to allow the period to expire has been made, ordinarily it will be difficult to provide an explanation for that decision sufficiently cogent to warrant the grant of leave. …” (citations omitted)
-
The preliminary observations in Coscuez International at [108]-[109] have recently been not followed in Blondel v The Owners – SP 37248 (unreported, proceedings 2022/00399150, 25 July 2024) (Blondel). The Tribunal at [55(2)] noted that the issue of mediation or otherwise does not enliven any jurisdictional fact as:
the SSM Act distinguishes between the making of an application to the Tribunal, and the acceptance or non-acceptance of the application by Registrar;
in any event, the Registrar has a discretion whether or not to accept the application, regardless of whether there has been mediation: SSM Act, s 227(1)(c);
the interpretation of r 23 of the NCAT Rules contended for by the applicants effectively places an applicant in the position where they can defer potentially applications for relief for a long period.
-
I disagree with the preliminary observations in Coscuez International at [108]-[109] for the same reasons as set out in Blondel at [55(2)].
Resolutions 9 and 18 at the 23 May 2022 EGM and resolution 2 at the 23 May 2022 SCM
-
The time for the commencement of the first Keddis proceedings for the invalidation of resolutions 9 and 18 at the 23 May 2022 EGM and resolution 2 at the 23 May 2022 SCM, having regard to s 36(1) of the Interpretation Act 1987 (NSW), was 28 days after 24 May 2022, namely 21 June 2022.
-
The first Keddis proceedings for the invalidation of resolutions 9 and 18 at the 23 May 2022 EGM are out of time by 440 days. As the claim for the invalidation of resolution 2 at the 23 May 2022 SCM was first made in the first Keddis points of claim the first Keddis proceedings for the invalidation of this resolution are out of time by 504 days. I am satisfied that each of these periods is very substantial having regard to the time of 28 days specified in r 23(3)(b) of the NCAT Rules.
-
I do not accept the submission of Mr Keddis that his delay in the commencement of the first Keddis proceedings so far as these three resolutions was explained by his attempts to mediate the disputes with OSP20198. There was no evidence that Mr Keddis made any application for mediation in respect of resolutions 9 and 18 at the 23 May 2022 EGM and resolution 2 at the 23 May 2022 SCM.
-
In circumstances where the explanation for the delay is less than satisfactory, I am not satisfied that Mr Keddis’ claims have more substantial merit than merely being fairly arguable for the following reasons:
as to resolution 9 at the 23 May 2022 EGM, the decision to appoint OCMS as the strata managing agent of OSP20198, which was made in circumstances where strata scheme 20198 had not had a strata managing agent, does not prima facie demonstrate an absence of benefit for OSP20198, dysfunctional decision making, fraud on a power (patent improper purpose), fraud of any claim of proper purpose, or fraud on a power (latent “ill motives”) as alleged in the first Keddis points of claim. Further, the conduct of OCMS since the 23 May 2022 EGM and the “Precedent for Constructive Behaviours” alleged in the first Keddis points of claim are irrelevant factors in considering the validity of this resolution;
as to resolution 18 at the 23 May 2022 EGM, the decision to remove Mr Keddis as an officeholder and member of the strata committee does not prima facie demonstrate fraud on a power (patent improper purpose) or fraud of any claim of proper purpose, or fraud on a power (latent “ill motives”) as alleged in the first Keddis points of claim. I do not accept that on the proper construction of cl 4(2)(c) of Sch 1 of the SSM Act the written notice of this motion submitted by Mr Gosper was required to include statements about the service of Mr Keddis as alleged in the first Keddis points of claim, the success of self-management, and the absence of mediation. Further, the “Precedent for Constructive Behaviours” alleged in the first Keddis points of claim is an irrelevant factor in considering the validity of this resolution. Moreover, there would be no utility in exercising the discretion under ss 24, 232 and 240 of the SSM Act as the office of Mr Keddis as a member of the strata committee would have been vacated at the end of the 25 October 2022 AGM at which a new strata committee was elected pursuant to s 23(1)(d) of the SSM Act;
as to resolution 2 at the 23 May 2022 SCM, the decision to appoint Mr Lewis, Mr Hughes and Ms Gosper as the members of the strata committee was made in breach of cl 8(1)(b) of Sch 1 of the SSM Act as to the notice convening the 23 May 2022 EGM did not include notice of an election for members of the strata committee. I do not accept the confirmation of latent ill motives as alleged in the first Keddis points of claim. Moreover, there would be no utility in exercising the discretion under ss 232 and 240 of the SSM Act as the office of each Mr Lewis, Mr Hughes and Ms Gosper as a member of the strata committee would have been vacated pursuant to s 23(1)(d) of the SSM Act at the end of the 25 October 2022 AGM at which a new strata committee was elected.
-
I am not satisfied that OSP20198 will suffer any particular prejudice by reason of an extension of time.
-
Having regard to the principles in Jackson 2015 AP at [23]-[24] and Itex Graphix at [3]-[4] and [88]-[91] and all these considerations, I have decided that it would be unjust to exercise the discretion under s 41 of the NCAT Act to extend the time for the commencement of the first Keddis proceedings so far as the claims for orders 1 to 3 in the first Keddis points of claim.
Resolution 11 at the 25 October 2022 AGM
-
The time for the commencement of the first Keddis proceedings, having regard to s 36(1) and (2)(a) of the Interpretation Act 1987 (NSW), for the invalidation of resolution 11 at the 25 October 2022 AGM was the first business day 28 days after 26 October 2022, namely 25 November 2022.
-
The first Keddis proceedings for the invalidation of resolution 11 at the 25 October 2022 AGM are out of time by 279 days. I am satisfied that this period is substantial having regard to the time of 28 days specified in r 23(3)(b) of the NCAT Rules.
-
I do not accept the submission of Mr Keddis that his delay in the commencement of the first Keddis proceedings so far as this resolution was explained by his attempts to mediate the disputes with OSP20198. While it can be inferred from the second 17 January 2023 NSWFT letter that Mr Keddis made an application for mediation in respect of this resolution, the mediation had failed by 17 January 2023.
-
In circumstances where the explanation for the delay is less than satisfactory, I am not satisfied that Mr Keddis’ claim has more substantial merit than merely being fairly arguable for the following reasons:
I accept that the evidence of Mr Keddis that the 25 October 2022 AGM was not held in person or by any form of live audio-visual technology. I also accept that OSP20198 breached cl 28(1)(b) and (3) of Sch 1 of the SSM Act when read with cl 14A(a) of the Strata Schemes Management Regulation 2016 (NSW) (SSM Regulation) which prohibited pre-meeting electronic voting. The inaccuracy of the minutes of the 25 October 2022 AGM as alleged in the first Keddis points of claim is irrelevant to the validity of resolution 11;
there would be no utility in exercising the discretion under ss 24, 232 and 240 of the SSM Act as the office of each Mr Lewis, Mr Hughes and Ms Gosper as a member of the strata committee would have been vacated pursuant to s 23(1)(d) of the SSM Act at the end of the 20 July 2023 AGM at which a new strata committee was elected.
-
I am not satisfied that OSP20198 will suffer any particular prejudice by reason of an extension of time.
-
Having regard to the principles in Jackson 2015 AP at [23]-[24] and Itex Graphix at [3]-[4] and [88]-[91] and all these considerations, I have decided that it would be unjust to exercise the discretion under s 41 of the NCAT Act to extend the time for the commencement of the first Keddis proceedings so far as the claim for order 4 in the first Keddis points of claim.
Resolutions 10, 19, 20 and 24 at the 20 July 2023 AGM
-
The time for the commencement of the first Keddis proceedings for the invalidation of resolutions 10, 19, 20 and 24 at the 20 July 2023 AGM, having regard to s 36(1) of the Interpretation Act 1987 (NSW), was 28 days after July 2023, namely 18 August 2023.
-
The first Keddis proceedings for the invalidation of resolutions 10, 19, 20 and 24 at the 20 July 2023 AGM are out of time by 17 days. I am satisfied that this period is small having regard to the time of 28 days specified in r 23(3)(b) of the NCAT Rules.
-
I do not accept the submission of Mr Keddis that his delay in the commencement of the first Keddis proceedings so far as these resolutions was explained by his attempts to mediate the disputes with OSP20198. While it can be inferred from the 25 August 2023 NSWFT letter that Mr Keddis made an application for mediation in respect of the validity of the 20 July 2023 AGM and resolutions 19 and 24, the mediation had failed by 25 August 2023.
-
In circumstances where the explanation for the delay is less than satisfactory, I am not satisfied that Mr Keddis’ claims have more substantial merit than merely being fairly arguable for the following reasons:
as to resolution 10 at the 20 July 2023 AGM, I accept that the evidence of Mr Keddis that the 20 July 2023 AGM was not held in person or by any form of live audio-visual technology. I also accept that OSP20198 breached cl 28(1)(b) and (3) of Sch 1 of the SSM Act when read with cl 14A(a) of the SSM Regulation which prohibited pre-meeting electronic voting. The inaccuracy of the minutes of the 25 October 2022 AGM as alleged in the first Keddis points of claim is irrelevant to the validity of this resolution. However, there would be no utility in exercising the discretion under ss 24, 232 and 240 of the SSM Act as the office of each Mr Cruickshank, Mr Hughes and Ms Gosper as a member of the strata committee would have been vacated pursuant to s 23(1)(d) of the SSM Act at the end of the 28 February 2024 AGM at which a new strata committee was elected;
as to resolutions 19 and 20 at the 20 July 2023 AGM, I do not accept that special by-law 19 on its proper construction levies fines or is contemptuous of legislation and the rule of law or is counter-productive and not for the benefit of lot owners as alleged in the first Keddis points of claim. However, even if it is assumed that this special by-law is harsh, unconscionable or oppressive within s 150(1) of the SSM Act, there would be no utility in exercising the discretion to invalidate it as it has never been in force by reason of not having been registered within six months of its passing as required by s 141(4) of the SSM Act;
as to resolution 24 at the 20 July 2023 AGM, the decision to expend $5,000.00 on potted plants, trees and shrubs for the courtyard and common use garden area, to make the space more visually appealing at the discretion of the strata committee is, on the evidence, not a decision that must be made under s 108(1) of the SSM Act by a special resolution as required by s 108(2) of the SSM Act, rather than pursuant to the obligation to renew or replace fixtures and fittings comprised in the common property and any personal property vested in OSP20198 pursuant to s 106(2) of the SSM Act. The contention of Mr Keddis in the first Keddis points of claim that these items are clearly additional to the common property, and were either not present during rendering or not damaged by the rendering which was completed in June 2020, does not establish that the decision was required to be made under s 108(1) of the SSM Act. There is no evidence as to the state of the courtyard and common use garden area before the rendering works. I do not accept that this resolution demonstrates fraud on a power (ill motives) as alleged in the first Keddis points of claim.
Conclusion
-
For these reasons I have dismissed the application of Mr Keddis to extend the time for the commencement of the first Keddis proceedings to 4 September 2023. It follows that the first Keddis proceedings so far as orders 1 to 4 sought in the first Keddis points of claim sought be dismissed.
Issue 3: whether the time for the commencement the second Keddis proceedings should be extended to 25 January 2024
Introduction
-
I am satisfied that that the second Keddis proceedings have been commenced outside the time specified in r 23(3)(b) of the NCAT Rules and should be dismissed to this extent unless an extension of time for their commencement is granted under s 41 of the NCAT Act.
Consideration
-
The issue of an extension should logically be determined before any consideration of the claims made by Mr Keddis in the second Keddis proceedings. As I did not specifically raise this issue with Mr Keddis during the hearing, I have not determined this issue in advance of my consideration of the claims made by Mr Keddis. The issue of an extension of time is unnecessary to determine because, as set out below, I have decided to dismiss the second Keddis proceedings.
Issue 4: whether resolutions 6 and 8 at the 18 December 2023 EGM should be invalidated
Introduction
-
As I have decided that the Tribunal does not have jurisdiction to hear and determine the second Keddis proceedings so far as the claims of Mr Keddis made under the general law in reliance on the equitable doctrines, the only issue for determination is whether resolution 6 at the 18 December 2023 EGM should be invalidated under s 232(1)(a) of the SSM Act and resolution 8 at the 18 December 2023 EGM should be invalidated under s 232(1)(a) and/or (b) of the SSM Act.
-
I have decided to dismiss the first Keddis proceedings so far as the orders sought to invalidate resolution 11 at the 25 October 2022 AGM and resolution 24 at the 20 July 2023 AGM.
Consideration
-
As resolution 11 at the 25 October 2022 AGM and resolution 24 at the 20 July 2023 AGM have not been invalidated, resolutions 6 and 8 at the 18 December 2023 EGM were otiose and had no legal effect.
-
In these circumstances, there is no utility in deciding the second Keddis proceedings so far as Mr Keddis’ claims for orders 2 and 4 in the second Keddis points of claim. It follows that the second Keddis proceedings so far as orders 2 and 4 sought in the second Keddis points of claim sought be dismissed.
Issue 5: whether resolution 4 at the 18 December 2023 EGM should be invalidated
Introduction
-
As I have decided that the Tribunal does not have jurisdiction to hear and determine the second Keddis proceedings so far as the claims of Mr Keddis made under the general law in reliance on the equitable doctrines, the only issue for determination is whether resolution 4 at the 18 December 2023 EGM should be invalidated under s 232(1)(a) of the SSM Act.
-
Mr Keddis in the second Keddis points of claim contends that this resolution is in breach of s 9(2) of the SSM Act because as there is no bona fide benefit to each and every owner. Prior to 23 May 2022, all owners were members of the strata committee. Since 23 May 2022, there has been a deterioration in the financial position of OSP20198 with a surplus of $15,419 as at 30 June 2022 and a deficit of $547.00 as at 28 February 2024.
-
Mr Keddis in the 17 May 2024 Keddis submissions repeated his contentions in in the second Keddis points of claim except for submitting that OSP20198 had a deficit of $1,511.31 as at 31 May 2024.
-
Mr Keddis in the 23 August 2024 Keddis submissions submitted that this resolution should be invalidated because it constitutes a fraud on the minority.
-
OSP20198 in the 24 May 2024 OSP20198 submissions submitted that this resolution was validly passed.
Consideration
-
Section 9 of the SSM Act deals with the management of a strata scheme, and relevantly provides:
9 Owners corporation responsible for management of strata scheme
(1) The owners corporation for a strata scheme has the principal responsibility for the management of the scheme.
(2) The owners corporation has, for the benefit of the owners of lots in the strata scheme—
(a) the management and control of the use of the common property of the strata scheme, and
(b) the administration of the strata scheme.
…
-
Section 30 of the SSM Act deals with the members of a strata committee, and relevantly provides:
30 Members of strata committee
(1) The strata committee of an owners corporation is to consist of the number of persons determined by the owners corporation (not being more than 9).
…
-
In Cooper v The Owners – Strata Plan No 58068 (2020) 103 NSWLR 160; [2020] NSWCA 250 (Cooper) at [61], Basten JA, having referred to s 9(2) of the SSM Act, held that there is no sound basis to construe the by-law making power in s 136 as permitting a by-law which is not for the benefit of the owners of lots in the strata scheme. His Honour at [57] referred to the applicable principles governing the exercise of a statutory power:
“The courts have long held that a conferral of power, whether under an instrument executed by individuals, or by statute, can only be exercised for the purpose for which it was created. The exercise of a power in particular circumstances may, without more, demonstrate that the real purpose and object of the power has been exceeded; in other cases the subjective intention of the donee of the power may reveal its exercise for an improper purpose. Both cases fall within the concept of “fraud on a power”, as understood in both public and private law, although in relation to public law it is usually referred to as an improper purpose. This Court has held that the making of by-laws is subject to invalidation if they constitute a fraud on a power.” (citations omitted)
-
I do not accept that s 9(2) of the SSM Act creates a duty which can be breached. However, I do accept that, conformably with the principles in Cooper at [61], s 9(2) may limit the exercise of a power under the SSM Act, including the power in s 30(1).
-
I am not satisfied that the exercise of the power under s 30(1) the SSM Act to determine the number of the members of the strata committee as being three persons by resolution 4 at the 18 December 2023 EGM, without more, demonstrated that the real purpose and object of the power had been exceeded.
-
Neither Mr Keddis in his extensive written evidence nor Mr Hughes in the 6 March 2024 Hughes statement or in his oral evidence have given any evidence as to the conduct of the 18 December 2023 EGM or any communications between the owners in relation to the agenda for the 18 December 2023 EGM. In circumstances where there was no evidence adduced as to the subjective intention of the persons who voted for resolution 4 at the 18 December 2023 EGM, I am not satisfied that the exercise of the power under s 30(1) the SSM Act to determine the number of the members of the strata committee as being three persons was for an improper purpose.
Conclusion
-
It follows that the second Keddis proceedings so far as order 1 sought in the second Keddis points of claim should be dismissed.
Issue 6: whether Mr Keddis should have leave to rely on the 28 August 2024 Keddis submissions
-
I have decided that Mr Keddis should have leave to rely on the 28 August 2024 Keddis submissions as they substance deal with legal principles and are repetitive of the 17 May 2024 Keddis submissions and the 23 August 2024 Keddis submissions.
issue 7: whether orders should be made for the invalidation of any agreement binding OSP20198 to engage Bannermans Lawyers, for the disclosure of any such agreements and for the payment of the costs associated with such agreements by the parties signing them
Issue 8: whether resolution 7 at the 18 December 2023 EGM should be invalidated
Introduction
-
Mr Keddis in the first Keddis points of claim contends that the strata committee has had no lawful right to represent or bind OSP20198 since its inception on 23 May 2023. There was no bona fide urgency in the appointment of Bannermans Lawyers. Ms Gosper in her capacity as secretary in the 24 September 2023 Ms Gosper email admitted fraud in her capacity as secretary be saying that a new strata committee needs selection.
-
As I have decided that the Tribunal does not have jurisdiction to hear and determine the second Keddis proceedings so far as the claims of Mr Keddis made under the general law in reliance on the equitable doctrines, the only issue for determination is whether resolution 7 at the 18 December 2023 EGM should be invalidated under s 232(1)(a) and/or (b) of the SSM Act.
-
Mr Keddis in the second Keddis points of claim contends that this resolution is in breach of s 9(2) by condoning the previous breaches of ss 37 and 103(2) of the SSM Act by the unlawful strata committee of Mr Hughes and Ms Gosper and cl 22(1) of Sch 1 of the SSM Act. He asserts that the 25 September 2023 SCM did not take place and so the motion to engage Bannermans Lawyers was never approved. He further asserts that there was no urgency within s 103(2) of the SSM Act. By passing resolution 7 at the 18 December 2023 EGM Mr Hughes, Mr Cruickshank and Mr Gosper are engaging in “conscious impropriety” and “dishonesty”. The 18 September 2023 Bannermans estimate does not comply with ss 169 and 174(1) of the Legal Profession Uniform Law (NSW). The unlawful strata committee of Mr Hughes and Ms Gosper, and their compliant strata agent Ms Pelders, are in conspiracy with Bannermans Lawyers to circumvent s 103(1) of the SSM Act. Based on this, in equity, good conscience and the substantial merits of the case, the cost agreements of Bannermans Lawyers of 18 September 2023 and 23 November 2023 must be rescinded.
-
Mr Keddis in the 17 May 2024 Keddis submissions repeated his contentions in in the second Keddis points of claim except for submitting that as at 30 April 2024 Bannermans Lawyers have been paid $37,790.97 exclusive of GST.
-
Mr Keddis in the 23 August 2024 Keddis submissions referred to the 17 May 2024 Keddis submissions and made the following submissions:
a decision made in contravention of s 103(1) of the SSM Act must be invalidated as explained in The Owners - Strata Plan No 70798 v Bakkante Constructions Pty Limited [2013] NSWSC 848 (Bakkante Constructions) at [86] (Pembroke J);
the wilful and egregious fraud of the actions of Mr Hughes and Ms Gosper cannot be ratified at any subsequent general meeting as explained in 2 Elizabeth Bay Road Pty Ltd v The Owners - Strata Plan No 73943 (2014) 88 NSWLR 488; [2014] NSWCA 409 (2EBR CA) at [86] (Leeming JA).
-
OSP20198 in the 24 May 2024 OSP20198 submissions submitted that this resolution was validly passed and the Tribunal has no jurisdiction to set aside the costs agreements between it and Bannermans Lawyers.
-
OSP20198 in the 27 August 2024 OSP20198 submissions made the following submissions:
Bannermans Lawyers is not a party to these proceedings and it would not be appropriate to make orders against them until such time that they were joined to the two proceedings as a party;
the Tribunal has no jurisdiction to set aside the costs agreements between it and Bannermans Lawyers;
ratification has retrospective effect as explained in 2EBR CA at [109];
Bakkante Constructions is distinguishable.
-
Mr Keddis in the 28 August 2024 Keddis submissions has disputed the 27 August 2024 OSP20198 submissions and relevantly made the following submissions:
the fact that Bannermans Lawyers have not been formally joined as a respondent is “technicalities or legal forms” and the Tribunal has jurisdiction pursuant to s 38 of the NCAT Act;
the orders he is seeking do not prejudice Bannermans Lawyers as their fees are paid by the individual owners who purportedly approved their engagement at the purported 25 September 2023 SCM and then ratified that purported engagement at the 18 December 2023 EGM, and not by OSP20198.
Consideration
-
Section 103 of the SSM Act deals with the approval of legal services, and relevantly provides:
103 Legal services to be approved by general meeting
(1) An owners corporation or strata committee of an owners corporation must not obtain legal services for which any payment may be required unless a resolution approving the obtaining of those services is passed at a general meeting of the owners corporation.
(2) An owners corporation or strata committee may obtain legal services without obtaining approval under this section if—
(a) it is of the opinion that urgent action is necessary to protect the interests of the owners corporation, and
(b) the cost of the legal services does not exceed $10,000 or another amount prescribed by the regulations for the purposes of this subsection.
…
(4) A failure by an owners corporation or the strata committee of an owners corporation to obtain an approval under this section does not affect the validity of any proceedings or other legal action taken by the owners corporation.
(5) In this Division—
legal services includes obtaining legal advice and taking legal action.
-
The prescribed amount for s 103(2)(b) of the SSM Act is $15,000: SSM Regulation, cl 26(1).
-
I accept that, conformably with the principles in Cooper at [61], s 9(2) may limit the exercise of the powers under s 103(1) and (2) of the SSM Act.
-
I do not accept that Bakkante Constructions has any relevance to these proceedings. In Bakkante Constructions at [86], Pembroke J held that the decision of the owners corporation to commence proceedings in the predecessor of the Tribunal in contravention of s 80D(1) of the Strata Schemes Management Act 1996 (NSW) (the repealed SSM Act) was invalidated with the consequence that the proceedings were dismissed. Section 80D(1) of the repealed SSM Act was the statutory predecessor of s 103(1) of the SSM Act. The repealed SSM Act had no equivalent provision to s 103(4) of the SSM Act.
-
In The Owners Strata Plan No 73943 v 2 Elizabeth Bay Road Pty Ltd [2013] NSWSC 1769 (2EBR SC) Hammerschlag J held that the statutory inhibition imposed by s 80D(1) of the repealed SSM Act can be lifted by ex post facto resolution of the owners corporation at general meeting. In 2EBR CA the New South Wales Court of Appeal dismissed an appeal from 2EBR SC. Barrett JA, after setting out at [54]-[58] the principles for ratification, at [65] held that the resolution of the owners corporation at general meeting was effective to ratify the original decision of the executive committee to initiate the proceeding. Leeming JA (with Basten JA at [1] agreeing) at [106]-[108] determined the issue in the context of the application of procedural rules, and at [109] held that it was not necessary to say anything about the question of whether doctrines of ratification of proceedings commenced by an unauthorised agent apply where the owners corporation, by statute, holds the common property “as agent” for the lot owners but commences proceedings contrary to s 80D of the repealed SSM Act in its own name.
-
The application of the principles articulated by Barrett JA in 2EBR CA as to ratification by the owners corporation of an unauthorised action have been approved by the New South Wales Court of Appeal: The Owners Strata Plan No 57164 v Yau (2017) 96 NSWLR 587; [2017] NSWCA 341 (Yau) at [178]-[183] (Beazley P) (with Leeming JA at [195] and Emmett AJA at [226] not expressing a view).
-
The foundation of the challenge of Mr Keddis to the engagement of Bannermans Lawyers was the lack of authority of Mr Hughes and Ms Gosper because they were not validly elected as members of the strata committee at the 20 July 2023 AGM. As the first Keddis proceedings so far as order 5 seeking the invalidation of resolution 10 at the 20 July 2023 AGM has been dismissed, the foundation does not exist.
-
I am not satisfied that there was a valid decision made by the strata committee at the 25 September 2023 SCM. There are no minutes of the 25 September 2023 SCM in evidence. It is not possible to determine from the 24 September 2023 Ms Gosper email whether a majority of the strata committee voted in favour of motion 2. In any event, there is no evidence as to whether the members of the strata committee were of the opinion that “urgent action is necessary to protect the interests of the owners corporation” as required by s 103(2)(a) of the SSM Act.
-
However, this is immaterial as I am satisfied that, having regard to the principles in 2EBR CA at [54]-[58] and Yau at [178]-[183], OSP20198 by resolution 7 at the 18 December 2023 EGM both validly ratified the engagement of Bannermans Lawyers on the terms of the 18 September 2023 Bannermans estimate and approved the obtaining of their further legal services on the terms of the 23 November 2023 Bannermans estimate. The invocation by Mr Keddis of 2EBR CA at [107] is inapposite because OSP20198 had not commenced any proceedings without authority and necessarily there was no application to stay any such proceedings in accordance with the applicable procedural rules.
-
I reject the submissions of Mr Keddis that resolution 7 at the 18 December 2023 EGM should be invalidated on the basis that it constituted the ratification and condoning of malfeasance of OSP20198, and the ratification and condoning of conspiracy and malfeasance of the strata committee of OSP20198 and OCMS. The terms of this resolution were to approve the engagement of Bannermans Lawyers for the defence by OSP20198 of the first Keddis proceedings. I am not satisfied that the exercise of the powers under s 103(1) and (2) of the SSM Act to ratify the engagement of Bannermans Lawyers on the terms of the 18 September 2023 Bannermans estimate and to engage them on the terms of the 23 November 2023 Bannermans estimate for the defence by OSP20198 of the first Keddis proceedings by resolution 7 at the 18 December 2023 EGM, without more, demonstrated that the real purpose and object of the power had been exceeded. Further, in circumstances where there was no evidence adduced as to the subjective intention of the persons who voted for resolution 7 at the 18 December 2023 EGM, I am not satisfied that the exercise of these powers was for an improper purpose.
-
I do not accept that the evidence of Mr Keddis establishes any malfeasance by OSP20198 or any conspiracy or malfeasance by the strata committee of OSP20198 and OCMS.
Conclusion
-
It follows that the first Keddis proceedings so far as order 9 sought in the first Keddis points of claim and the second Keddis proceedings so far as order 3 sought in the second Keddis points of claim should be dismissed. This means that it is unnecessary to consider the claim of Mr Keddis that the cost agreements of Bannermans Lawyers of 18 September 2023 and 23 November 2023 should be rescinded. However, if it had been necessary to determine this issue, I would have rejected this claim on the basis that each of the first Keddis proceedings and the second Keddis proceedings were not properly constituted without the joinder of Bannermans Lawyers as a respondent. I do not accept that s 38 of the NCAT Act confers authority on the Tribunal to make an order binding a person who is not a party to the applicable proceedings.
Issue 9: whether an order should be made for the appointment of a compulsory strata managing agent of OSP20198
Introduction
-
Mr Keddis in the first Keddis points of claim contends that the following circumstances warrant the appointment of a compulsory strata managing agent of OSP20198:
dysfunctional management since 5 April 2022 in connection with the following:
improper meetings minutes and levy notices;
loss of financial control and disregard for owners’ funds;
property neglect and mismanagement in relation to the boundary fence and cleaning of the common areas;
decisions relating to the painting of common area balustrades since 5 April 2022, the spraying of common area in September 2022, the placement of bins in May 2023, and access to the electrical power and internet room in June 2023;
fear and self-destructive acquiescence impacting management;
the impact of Mr Gosper on the affairs of OSP20198;
the wilful and unconscionable ostracization and disenfranchisement of the minority (Mr Wong, Ms Wong and himself);
the failure to perform statutory duties under the SSM Act by reason of the matters underlying the claims for orders 4, 5, 8 and 9 in the first Keddis points of claim, and the matters specified in subparagraphs (1)(a), (c) and (e) of this paragraph;
fraud on a power and improper purpose;
acrimony and decision paralysis with the OSP20198 “split into two volatile camps”;
the breakdown in management responsibility because he:
works to maintain the common property by sourcing quotes and placing detailed motions on meeting agendas;
organises trades people to power wash the complex including seeking approval from all owners;
prepares budgets and levy schedules that are reasonable and based on the previous works and accumulated funds of OSP20198;
reviews the minutes published by OCMS;
checks the accounts of OSP20198 for errors and incorrect charges;
engages with all owners to highlight issues with motions placed on the agenda by other owners and the strata committee;
“fiscal vandalism” by reason of the increase in levies.
-
It is clear from the allegations in the first Keddis points of claim that Mr Keddis’ claim for the appointment of a strata managing agent with plenary powers under s 237(1)(c) and (2)(a) of the SSM Act, which I have referred to as the appointment of a “compulsory strata manager”, in based on the circumstances in the second limb of s 237(3)(a) of the SSM Act and the circumstances in s 237(3)(c) of the SSM Act.
-
OSP20198 in the OSP20198 points of defence contends that it is performing its duties and denies the allegations in the first Keddis points of claim.
-
Before considering this issue, it is appropriate to make some general comments, and summarise the evidence of the parties and their submissions.
Some general comments
-
No other owner pursuant to the 7 February 2024 orders applied for joinder as a respondent in relation to this claim.
-
I am concerned that OSP20198 has actively defended these proceedings in relation to this claim of Mr Keddis. There has been no resolution of a general meeting that OSP20198 should defend the proceedings as opposed to engaging Bannermans Lawyers to defend the proceedings. Further, while it has been unnecessary to determine the first Keddis proceedings so far as order 8 sought in the first Keddis points of claim, my prima facie view is that OSP20198 was in breach of s 106(1) of the SSM Act with respect to the boundary fence prior to its remediation and repair in early January 2024. It would have been preferable for one or more the owners who opposed order 10 to have applied to become a respondent. Further, it would have been preferable for the role of OSP20198 in relation to this order to have been confined to the adduction of evidence on the following matters:
the steps taken by OCMS in the management of strata scheme 20198 and the reasons for those steps;
the financial position of strata scheme 20198 including income and expenditure;
the steps considered necessary to be taken in the future management of strata scheme 20198 including the time frames for achieving those steps, the amount of funds required and likely source of those funds, and the reasons why those steps are considered to be necessary.
-
I have regarded the evidence adduced by OSP20198 in the 6 March 2024 Hughes statement as deficient for the following reasons:
there was inadequate evidence as to the financial position of OSP20198;
there was an incomplete explanation of the steps taken by OCMS in the management of strata scheme 20198 since 23 May 2022 and the reasons for those steps;
there was no explanation of the steps considered necessary to be taken in the future management of strata scheme 20198 and the reasons why those steps are considered to be necessary.
The evidence of Mr Keddis
The 14 March 2024 Keddis statement (exhibit A1)
-
In the 14 March 2024 Keddis statement, Mr Keddis gave the following evidence:
details of his professional background ([1]-[3]);
an explanation of the scope and structure of his evidence ([4]-[8]);
details of photographs ([9]-[10]);
details of his accomplishments and record of conduct ([11]-[34]) including:
strata scheme 20198 was self-managed from 2008 to 23 May 2022 with all five owners on the strata committee and he was the chair from 2010 to 2012 and the secretary from 2012. He was the informal leader as the secretary;
he saved OSP20198 in excess of $278,000 in maintenance and refurbishment costs, strata agent fees, and insurance premiums. As at 30 June 2022, net owners corporation funds were $15,419;
he was removed from the strata committee and as strata secretary by “a tyrannical majority”;
details of his approach to strata leadership and management ([35]-[40]);
details of his management of refurbishment of common area balustrades ([41]-[49]) including:
the application of two coats of custom tint paint;
considerable discussion and disagreement as to the final colour of the balustrades on 5 April 2022;
his denial that he was acting unilaterally in his own interests and in disregard of the wishes of the remaining owners;
his assertion that what followed was management dysfunction and a concerted and continuing campaign by Mr Hughes, Mr Gosper, Ms Gosper, and Ms Pelders to unfairly, unlawfully, and unconscionably ostracise, disenfranchise, smear, and intimidate him;
details of the length of ownership of and the number of general meetings attended by, the owners as at 23 May 2022 and the expression of appreciation by the other owners of his work and efforts ([50]-[60]);
details of the alleged breaches of the SSM Act and of the SSM Regulation in relation to the 23 May 2022 EGM and the 23 May 2022 SCM ([61]-[70]);
details of the alleged breaches of the SSM Act and of the SSM Regulation in relation to the 25 October 2022 AGM ([71]-[79]);
details of the alleged breaches of the SSM Act and of the SSM Regulation in relation to the 20 July 2023 AGM ([80]-[97]);
details of the alleged malfeasance of the strata committee and OCMS in the conduct of meetings and elections ([98]-[127]);
details of the alleged loss of financial control and bankruptcy ([128]-[142]) including information in relation to net owners’ funds, strata agency fees, strata levies, and strata insurance;
details of the alleged wilful mismanagement of the boundary fence by the strata committee and OCMS, and contempt of his rights ([143]-[156]);
details of the alleged fraud in the appointment of Bannermans Lawyers ([157]-[166]);
details of the alleged dysfunctional management and decision making in relation to balustrade colour management, the engagement of Bannermans Lawyers in May 2022, the calling of the Police and Fire Services in September 2022, bin placement in May 2023, and the locking of the room with the electrical board and internet cables ([167]);
the reasons why special by-law 19 which was the subject of resolutions 19 and 20 at the 20 July 2023 AGM was unconscionable and unlawful ([168]-[174]);
details of the alleged fraud of adding to the common property by means of resolution 24 at the 20 July 2023 AGM ([175]-[179]);
details of the alleged tyranny and destructive control of Mr Gosper and compliance and complicity of the strata committee and OCMS ([180]-[185]);
details of the alleged wilful and unconscionable ostracization and disenfranchisement, bias and discrimination against Mr Wong, Ms Wong and himself ([186]-[187]);
details of the alleged belligerence and self-interest by strata committee and its refusal to engage in mediation ([188]-[200]);
a chronology of “Major Events” (Appendix 1);
a chronology of “Engagement of Bannermans Lawyers Sept/Oct 2023” (Appendix 2).
The 22 April 2024 Keddis statement (exhibit A2)
-
In the 22 April 2024 Keddis statement, Mr Keddis gave the following evidence:
a summary of the destruction of strata scheme 20198 ([1]-[10]);
details of the alleged oppression and disenfranchisement of minority owners, the privileged treatment of Mr Gosper by OCMS and the illegitimate strata committee, and the tyranny of Mr Gosper ([11]-[18]);
details of the alleged destruction and misappropriation of funds and insurability of OSP20198 ([19]-[30]);
details of the alleged performance of himself compared to the gross incompetence and destruction of funds by OCMS and the strata committee in relation to insurance ([31]-[37]);
details of the alleged fraud, negligence, and gross incompetence of OCMS and the strata committee ([38]-[49]);
details of the alleged incompetence, negligence, and fraud of Ms Gosper as strata secretary ([50]-[53]);
details of the alleged destruction of owners’ funds in relation to the boundary fence ([54]-[56]);
details of the alleged fraud in the elections at, and outcomes of, the 25 October 2022 AGM ([57]-[60]);
details of the alleged fraud in the appointment of Bannermans Lawyers at the 25 September 2023 SCM ([61]-[76]);
details of the alleged fraud in the elections at, and outcomes of, the 20 July 2023 AGM ([77]-[81]);
details of the alleged fraud, negligence, and incompetence of OCMS and the strata committee in relation to the 18 December 2023 EGM ([82]-[84]);
details of the alleged suppression of equitable rights of minority owners and the unlawful conduct of the elections at the 28 February 2024 AGM ([85]-[91]);
details of the alleged improper resignation of OCMS and unlawful conduct of the strata committee ([92]-[94]);
details of the alleged machinations to appoint, and updated due diligence on, Sydney Strata Specialists as the strata managing agent ([95]-[99]);
the locking of the room with the electrical board and internet cables ([100]-[105]);
details of the alleged dishonesty and conscious impropriety by Ms Pelders ([107]-[113]);
details of the alleged smear, intimidation, disenfranchisement, and oppression of himself and the impact on strata scheme 20198 ([114]-[119]);
details of the alleged abuse of power and improper purpose in relation of financial audit ([120]-[140]).
The 29 May 2024 Keddis statement (exhibit A3)
-
In the 29 May 2024 Keddis statement, Mr Keddis gave the following evidence:
a charge of $1,155.00 was made to OSP20198 on 16 January 2024 for an affidavit provided by Ms Pelders in relation to proceedings 2023/00377627 (the impugned charge) ([1]-[2]);
no response was provided by Ms Pelders and Ms Anna Sianof Bannermans Lawyers to requests by Ms Wong and himself on 21 February 2024 and himself on 12 April 2024 for information about the impugned charge ([3]-[6]);
he noticed on 3 May 2024 that the impugned charge had been reversed ([7]);
these events demonstrate that Mr Hughes, Mr Gosper, and Ms Gosper, aided and abetted by Ms Pelders, have engaged in fraud, abuse of power, and corruption as well as gross negligence and malfeasance ([8]-[12]).
The 3 July 2024 Keddis declaration (exhibit A4)
-
In the 3 July 2024 Keddis declaration, Mr Keddis stated that the evidence he has given in the two proceedings is true and accurate.
The 14 pages 13 December 2023 Keddis declaration (exhibit A5)
-
In the 14 pages 13 December 2023 Keddis declaration, Mr Keddis gave the following evidence:
the rationale for strata self-management;
the reasons why strata self-management of strata scheme 20198 was “A Success Story”;
the alleged destruction of self-management of strata scheme 20198 and its toxic repercussions;
the endorsements he has received for his efforts and contributions to self-management of strata scheme 20198.
The 44 pages 13 December 2023 Keddis declaration (exhibit A6)
-
In the 44 pages 13 December 2023 Keddis declaration, Mr Keddis gave the following evidence:
he has attached documents recording the financial position of OSP20198 between 1 June 2014 and 30 November 2014, and as at 30 September 2019, 30 June 2022, and 13 December 2023;
he has attached an article as to the median property prices in Cremorne at an unknown date on the “Domain” website;
he has attached copies of a valuation by CoreLogic of the lots in strata scheme 20198 as at December 2023;
he has attached an article about strata levies by John Collett dated 19 July 2023 and an analysis of strata levies;
he has attached a comparison of render quotes;
he has attached a comparison of an invoice provided by OCMS and a quote he has obtained for power wash and cleaning of the common area;
he has attached a table setting the total amount for maintenance and renovations funded through special levies in different periods;
he has attached a table setting the total savings to OSP20198 which can be attributed to his efforts;
he has attached a comparison of strata insurance.
The bundle of documents described as volume 2 filed on 3 July 2024 other than pages 25 to 62 (exhibit A7)
-
The bundle of documents comprises pages 1 to 907 and includes documents grouped under headings that largely correspond to topics dealt with in the 14 March 2024 Keddis statement and the 22 April 2024 Keddis statement. Except as set out elsewhere in this decision, I have not summarised the contents of these documents.
The bundle of documents described as volume 3 filed on 3 July 2024 other than pages 1294 to 1425 (exhibit A8)
-
The bundle of documents comprises pages 908 to 1425 and includes documents grouped under headings that largely correspond to topics dealt with in the 14 March 2024 Keddis statement and the 22 April 2024 Keddis statement. Except as set out elsewhere in this decision, I have not summarised the contents of these documents.
The 31 January 2024 Ms Wong email (exhibit A9)
-
In the 31 January 2024 Ms Wong email, Ms Wong requests that all the lot owners work together without excluding information and input from certain owners.
The 20 August 2024 Pelders email (exhibit A10)
-
In the 20 August 2024 Pelders email, Ms Pelders attaches a document recording the financial position of OSP20198 as at 22 August 2024 which is a deficit in owners’ funds of $6,327.43.
The 29 February 2024 management statement (exhibit A11)
-
The 29 February 2024 management statement records the financial position of OSP20198 in terms of income and payments as at 29 February 2024.
The oral evidence of Mr Keddis
-
In cross-examination, Mr Keddis relevantly gave evidence that there was a recent special levy of $30,000.00 to pay Bannermans Lawyers.
The evidence of OSP20198
The 6 March 2024 Hughes statement (exhibit R1)
-
In the 6 March 2024 Hughes statement, Mr Hughes gave the following evidence:
details of his co-ownership of lot 3 and authority to make the statement on behalf of OSP20198 as its treasurer ([1]-[2]);
details of the dates of general meetings of OSP20198 held during 2022 and 2023 at which OSP20198 carried out the following actions ([3]-[7]):
the preparation and acceptance of estimates of expenditure for both the administrative fund and capital works fund for 2021, 2022 and 2023;
the determination of levy contributions to the administrative fund and capital works fund for 2021, 2022 and 2023;
the decision to review and adjust the plan of anticipated major expenditure to be met from the capital works fund;
on 20 July 2023, OSP20198 resolved to obtain an insurance valuation for the purposes of ensuring that the strata scheme 20198 maintains sufficient strata building insurance and it has done so ([8]-[9]);
on 18 December 2023, OSP20198 resolved to engage a fencing contractor to carry out remediation and repair works to the common property boundary fence located on lot 5, which have since then been completed ([10]-[11]);
at the 28 February 2024 AGM, the strata committee comprising Ms Gosper, Ms Cruickshank and himself was elected ([12]);
at the 23 May 2022 AGM, OSP20198 resolved to appoint OCMS as the strata managing agent for strata scheme 20198 for a period of three years ([13]). Since then it has been responsible for the day-to-day management of the scheme in accordance with the terms of the agency agreement ([13]-[15]) including but not limited to ([14]):
“A. The receiving of, acknowledging of, banking of or accounting for money paid to the owners corporation;
B. Having custody of any money paid to the owners corporation or making payments from any such money;
C. The taking out of insurance required under the [SSM Act];
D. The conduct of meetings of the owners corporation and handling of correspondence; and
E. The maintenance of the books and records of the owners corporation.”
OSP20198 has incurred substantial additional costs from OCMS to respond to correspondence from Mr Keddis ([15]);
at the 18 December 2023 EGM, OSP20198 ratified the engagement of Bannermans Lawyers pursuant to the 18 September 2023 Bannermans estimate ([16]);
at the 23 May 2022 EGM, OSP20198 resolved to remove Mr Keddis from the strata committee and his office as secretary and the reasons why he voted for this resolution ([17]-[18]);
the difficulties he together with OCMS and OSP20198’s contractors have experienced in interactions with Mr Keddis ([19]-[23]);
the acceptance of coverage of the legal defence claim by OSP20198’s insurer which Mr Keddis has sought to reverse ([24]);
the refusal of Mr Keddis to provide records of OSP20198 ([25]-[26]);
the taking of action by Mr Keddis including the lodgment of a complaint against OCMS and in the commencement of proceedings to invalidate resolutions passed at the 18 December 2023 EGM ([27]).
The oral evidence of Mr Hughes
-
In cross-examination, Mr Hughes relevantly gave the following evidence:
he said that he did not know or could not remember in answer to many questions in relation to documents in exhibits A7 and A8;
he explained that the locking of the room with the electrical board and internet cables occurred for safety reasons and that two keys were supplied with lock;
there were two owners, being Mr Wong and Ms Wong, and Mr Keddis, who are refusing to pay levies;
he agreed that OCMS had made some mistakes in its management of strata scheme 20198.
The submissions of Mr Keddis
-
In the 17 May 2024 Keddis submissions and the 23 August 2024 Keddis submissions and in his oral submissions, Mr Keddis has set out at length submissions in support of the making of an order for the appointment of a compulsory strata managing agent of OSP20198. It is unnecessary to summarise these submissions.
The submissions of OSP20198
-
In the 24 May 2024 OSP20198 submissions, OSP20198 made submissions in opposition to the making of an order for the appointment of a compulsory strata managing agent of itself. Mr Bannerman repeated and reinforced these submissions in his oral submissions. It is unnecessary to summarise these submissions.
Consideration
The applicable provisions of the SSM Act
-
Section 9 of the SSM Act also relevantly provides:
9 Owners corporation responsible for management of strata scheme
…
(3) The owners corporation has responsibility for the following—
(a) managing the finances of the strata scheme (see Part 5),
(b) keeping accounts and records for the strata scheme (see Parts 5 and 10),
(c) maintaining and repairing the common property of the strata scheme (see Part 6),
(d) taking out insurance for the strata scheme (see Part 9).
-
Section 13 of the SSM Act deals with the delegation of the functions of an owners corporation, and relevantly provides:
13 Functions that may only be delegated to member of strata committee or strata managing agent
(1) The following functions of an owners corporation, strata committee or officer of an owners corporation may be delegated to or conferred only on a member of the strata committee or a strata managing agent—
(a) the preparation of estimates for the purposes of section 79,
(b) the levying of contributions,
(c) the receiving of, acknowledging of, banking of or accounting for money paid to the owners corporation,
(d) having custody of any money paid to the owners corporation or making payments from any such money,
(e) the taking out of insurance required or permitted by this Act,
(f) the conduct of meetings of the owners corporation and handling of correspondence,
(g) the maintenance of records required to be kept under this Act,
(h) such other functions as may be prescribed by the regulations.
…
-
Section 237 of the SSM Act deals with orders for the appointment of a strata managing agent, and relevantly provides:
237 Orders for appointment of strata managing agent
(1) Order appointing or requiring the appointment of strata managing agent to exercise functions of owners corporation The Tribunal may, on its own motion or on application, make an order appointing a person as a strata managing agent or requiring an owners corporation to appoint a person as a strata managing agent—
(a) to exercise all the functions of an owners corporation, or
(b) to exercise specified functions of an owners corporation, or
(c) to exercise all the functions other than specified functions of an owners corporation.
(2) Order may confer other functions on strata managing agent The Tribunal may also, when making an order under this section, order that the strata managing agent is to have and may exercise—
(a) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or
(b) specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or
(c) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions.
(3) Circumstances in which order may be made The Tribunal may make an order only if satisfied that—
(a) the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or
(b) an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or
(c) an owners corporation has failed to perform one or more of its duties, or
(d) an owners corporation owes a judgment debt.
(4) Qualifications of person appointed A person appointed as a strata managing agent as a consequence of an order made by the Tribunal must—
(a) hold a strata managing agent’s licence issued under the Property and Stock Agents Act 2002, and
(b) have consented in writing to the appointment, which consent, in the case of a strata managing agent that is a corporation, may be given by the Secretary or other officer of the corporation or another person authorised by the corporation to do so.
(5) Terms and conditions of appointment A strata managing agent may be appointed as a consequence of an order under this section on the terms and conditions (including terms and conditions relating to remuneration by the owners corporation and the duration of appointment) specified in the order making or directing the appointment.
…
(8) Persons who may make an application The following persons may make an application under this section—
…
(b) a person having an estate or interest in a lot in the strata scheme concerned or, in the case of a leasehold strata scheme, in a lease of a lot in the scheme,
…
The applicable legal principles
-
In Foo v Frew [2023] NSWCATAP 303 (Foo) at [21]-[27], the Appeal Panel set out the principles that are applied under s 237 of the SSM Act:
“[21] SSMA s 237 gives, by the word “may”, a discretion to the Tribunal which needs to be exercised on principled grounds.
[22] The appointment of a compulsory strata manager under SSMA s 237, like the removal of a strata scheme officer under s 238, is not lightly made and requires some dereliction of duty or dysfunction in operation of the scheme, usually not arising from an isolated incidence unless it showed serious misconduct or dereliction of duty (including disobedience to Tribunal or Court orders): see, eg, Kahn v Owners Corporation SP 2010 [2017] NSWCATCD 39 (‘Kahn’) at [30]; The Owners-Strata Plan No 14593 v Soares [2019] NSWCATAP 35 (‘Soares’) at [44], [46]; Anderson v Owners SP 61034 [2019] NSWCATAP 61 at [41]-[42].
[23] The aim of SSMA s 237 and its predecessors in the 1996 Act is, where possible, to maintain a democratic system which the legislative scheme has established, rather than substitute a compulsory appointment: Kahn at [30]. It is not enough that the owners simply do not get along: Bischoff v Rita Sahade [2015] NSWCATAP 135. The evidence may show a properly functioning strata scheme in all practical respects despite any personal animosities or disagreements on the decisions made: Robinson v Owners SP 61717 [2018] NSWCATCD 49 at [53]-[58]; Anderson v Owners SP 61034 [2019] NSWCATAP 61 at [41]-[42].
[24] However, if dispute becomes chronic, complex and/or litigious the trigger point may well have been reached: Moallem v CTTT [2013] NSWSC 1700 at [7]; Bate v Owners SP 60549 [2018] NSWCATCD 36 at [77]-[78]. This may also be the case where there is a clear and substantial dereliction in the duty to manage the scheme in accordance with statutory requirements and in the interests of all lot owners under SSMA s 9(2) and its statutory predecessors, without discrimination: Gershberg v Owners SP 5768 [2011] NSWCTTT 411; Soares at [44], [46].
[25] Failure to engage or reasonably to act in accord with relevant expertise and advice, including the strata manager for voluntary members of a strata committee, may be a sufficient indicium: Co Funds Management PL v Owners SP 78945 [2011] NSWCTTT 488 at [27]-[28].
[26] There may be a need for intervention to provide a “clean slate”, to re-establish proper functioning, and to facilitate non-repetition of dysfunctional conduct or non-compliance with statutory requirements, which may require the maximum appointment period of two years: Kotevski v Seadon and Owners SP 82413 [2013] NSWCTTT 597 at [74]. This may require continuation on a serial basis if the complexity of the mix of uses in the scheme, the size of the scheme or other ongoing management issues are present: Foong v Scutella [2021] NSWCATAP 225.
[27] If a compulsory strata manager is appointed, it should be someone who, in addition to giving the statutory consents, will provide the necessary impartial management at least cost: Farland v Simmons [2018] NSWCATCD 28 at [45].”
Whether the management of strata scheme 20198 is not functioning satisfactorily
-
I am not satisfied that Mr Keddis has established that strata scheme 20198 is not functioning satisfactorily within the second limb of s 237(3)(a) of the SSM Act for the following reasons:
the evidence Mr Hughes in the 6 March 2024 Hughes statement as to actions carried out at the general meetings of OSP20198 held during 2022 and 2023 and the maintenance of sufficient strata building insurance together with the actions carried out by OCMS and the remediation and repair works to the common property boundary fence located on lot 5, which I accept, demonstrates that OSP20198 is carrying out the responsibilities in ss 9(3) and 13(1) of the SSM Act and shows a properly functioning strata scheme in all practical respects despite personal animosities or disagreements on the decisions made;
there has been a breakdown in the personal relationship and there is mutual personal animosity between Mr Keddis and the other owners except for Mr Wong and Ms Wong since the 23 May 2022 EGM. Mr Keddis is clearly affronted by the decision at the 23 May 2022 EGM to remove him from the strata committee and his office as secretary, and it is clear from his evidence and submissions that he is seeking personal vindication from the Tribunal. However, this breakdown in the personal relationship and mutual personal animosity does not establish that strata scheme 20198 is not functioning satisfactorily;
the transition from self-management of strata scheme 20198 under the informal leadership of Mr Keddis to management by OCMS does demonstrate that OSP20198 is not functioning satisfactorily. In view of differences of opinion between Mr Keddis and the other lot owners that emerged prior to the 23 May 2022 EGM, it is understandable and reasonable that the majority of the lot owners choose to appoint OCMS as the strata management agent to avoid, or at least reduce, the tensions that had arisen from personal interaction in respect of issues where there were differences of opinion. The fact that this strata management agency has increased the costs of the management of OSP20198 is a necessary consequence;
the limited financial evidence does not demonstrate OSP20198 has anything more than a temporary shortage of funds. I accept the evidence of Mr Hughes in his oral evidence that Mr Wong and Ms Wong, and Mr Keddis are not paying levies and infer that this is part of the reason for the temporary shortage of funds.
Whether OSP20198 has failed to perform one or more of its duties
-
I am not satisfied that OSP20198 has failed to perform one or more of its duties except in the respects referred to in this decision. The breaches of the SSM Act related to the breach of cl 28(1)(b) and (3) of Sch 1 of the SSM Act when read with cl 14A(a) of the SSM Regulation in relation to resolution 11 at the 25 October 2022 AGM and resolution 10 at the 20 July 2023 AGM.
Whether the discretion should be exercised to appoint a compulsory strata managing agent of OSP20198
-
Having regard to the principles at Foo at [21]-[27], I am not satisfied that I should exercise the discretion to appoint a compulsory strata managing agent of OSP20198 under s 237(1)(a) of the SSM Act as I do not regard the identified breaches of the SSM Act as being sufficiently serious to warrant the appointment of a compulsory strata manager.
Conclusion
-
It follows that the first Keddis proceedings so far as order 10 sought in the first Keddis points of claim should be dismissed.
Issue 10: the costs of the two proceedings
Introduction
-
In the 24 May 2024 OSP20198 submissions, OSP20198 has applied for an order for Mr Keddis to pay the costs of the two proceedings and submits that there are special circumstances within s 60(c), (d), (e) and (g) of the NCAT Act. OSP20198 also seeks an opportunity to supplement its submissions after my decision.
-
Mr Keddis in his submissions did not address the costs of the two proceedings.
Consideration
-
I consider that s 60 of the NCAT Act is applicable to the two proceedings.
-
In TriCare (Hastings) Limited v Allen [2015] NSWCA 344 (TriCare) at [15]-[16] the New South Wales Court of Appeal (Ward JA, Simpson JA and Tobias AJA) held that, in circumstances where the appeal was dismissed as incompetent and the issue of the competency of the appeal was first raised by the Court at the commencement of the hearing, each party should pay their own costs of the appeal.
-
In circumstances where I raised the issue of whether part of the first Keddis proceedings were out of time, I consider that the principles in TriCare at [15]-[16] should be applied by way of analogy to the costs of the out of time part of these proceedings and have decided there should be no order as to the costs of this part of these proceedings.
-
I have also decided to no order as to the costs of the balance of the first Keddis proceedings, and the second Keddis proceedings, as I do not consider that there are special circumstances within s 60(3)(c), (d), (e) and (g) of the NCAT Act.
-
It follows that there should be no order as to the costs of the two proceedings pursuant to s 60(1) of the NCAT Act. However, as I have not heard supplementary submissions of OSP20198 on this issue, I have made procedural orders providing for OSP20198 to make an application to vary this order.
Orders
-
I make the following orders:
proceedings 2023/00377627 are dismissed;
proceedings 2024/00065655 are dismissed;
there is no order as to the costs of proceedings 2023/00377627 and proceedings 2024/00065655;
if the respondent makes an application to vary order (3) above in the manner and within the time specified in order 4(a) below, order (3) above ceases to have effect and the following directions apply:
the respondent is to lodge and serve a costs application, including submissions limited to three pages and which are to address the question of whether a hearing may be dispensed with, and any evidence in support, by 17 September 2024;
the applicant is to lodge and serve any submissions limited to three pages and which are to address the question of whether a hearing may be dispensed with, and any evidence in opposition, by 1 October 2024;
the respondent is to lodge any submissions in reply limited to two pages by 8 October 2024.
**********
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
Decision last updated: 03 April 2025
0
21
8