Ramid Investments v Owners Corporation SP 45205

Case •

[2014] NSWCATCD 135

•

21 February 2014

NSW Civil and Administrative Tribunal


New South Wales

Medium Neutral Citation: Ramid Investments v Owners Corporation SP 45205 [2014] NSWCATCD 135
Hearing dates:3 and 4 February 2014
Decision date: 21 February 2014
Before: J Smith, Senior Member
Decision:

All three applications are dismissed.

Leave is granted for the parties to file and exchange short written submissions on the issue of costs only within 14 days of the date of these orders. In that circumstance the submissions will be considered in chambers and a decision published.

If any party seeks a hearing on the issue of costs they shall make a written request to the Registrar within 14 days of the date of these orders.

Legislation Cited: Strata Schemes Management Act 1996 (SSMA)
Category:Principal judgment
Parties: Ramid Investments (Applicant)
Owners Corporation SP 45205 (Respondent)
File Number(s):SCS 12/31156, 12/46517, 12/41696

reasons for decision

APPLICATIONS

  1. Application for adjudication SCS 12/00509 seeking five orders from an adjudicator was filed on 4 January 2012 and was dismissed by the adjudicator on 18 May 2012. On 6 June 2012 application SCS 12/ 31156 which is an appeal against that decision was filed in the Tribunal by Mr Gamayunov on behalf of Ramid Investments Pty Ltd.

  1. The application was listed for a number of directions hearings and on 23 October 2013, solicitors then acting for the applicant filed documents that clearly set out the orders sought in respect of that appeal. The orders sought were more limited than those sought on the original application for adjudication but were essentially for orders

  • to prevent the Owners Corporation from entering into any building management and/or caretaker agreement with parties carrying on a hotel letting, or any other, business within the strata scheme,
  • to prevent the Owners Corporation from entering into building management or caretaker contracts for a term exceeding 12 months,
  • to amend special by-law 3A to prevent the proprietor of lot 1 (or a related party) from providing the services of caretaker or building manager,
  • to require the Owners Corporation to enforce compliance with special by-law 3A by the proprietors of lot 1.

  1. Similarly, application for adjudication SCS 12/46517 was clarified by solicitors acting for the applicant and limited to seek orders

  • to invalidate all decisions of the Owners Corporation made after 25 July 2012, including those made by those people purporting to constitute the executive committee,
  • to convene an EGM for the purpose of considering two motions requisitioned by the applicant.

  1. Application for adjudication SCS 12/41696 sought orders for the compulsory appointment, pursuant to the SSMA s 162 or s 183B, of a strata managing agent (Conti Property Group).

  1. On 19 July 2013 all three matters were set down for hearing on the issue of whether they should be struck out pursuant to the provisions of the Consumer, Trader and Tenancy Tribunal Act s 30.

  1. The strike out application came before Senior Member Meadows on 24 September 2013. In the event, the application to strike out any or all of the matters was not successful. The Senior Member published written reasons for that decision and set all three matters down for a two day hearing. At that time, in order to clarify the orders being sought and the evidence to be relied upon, the Senior Member made directions for exchange of documentary material.

  1. It is important to note that although the applicant did not have legal representation at the time of the strike out application, it did engage solicitors who filed and served documents in response to the directions made by the Tribunal. Considerable time has been spent during the hearing arguing about the adequacy of the applicant's response to those directions and the admissibility of documentary material not provided in accordance with the directions.

  1. All three matters came before me for hearing on 3 and 4 February 2014. The parties were represented as noted above and all matters were heard concurrently. The evidence in one was considered as evidence in all three.

PRELIMINARY ISSUES

Representation

  1. The applicant's representative immediately on commencement of the hearing challenged the right of Mr Teys to represent the Owners Corporation.

  1. The essence of the objection was that the current executive committee had not been validly elected and the determination of the Owners Corporation to engage solicitors to represent it at this hearing was invalid. In fact, it was the applicant's submission that every decision taken by the Owners Corporation following the general meeting conducted on 25 July 2012 was invalid. Further, due to a variation of the costs agreement tendered to the AGM on 24 May 2013, the decision made at that meeting to engage Teys lawyers is no longer valid.

  1. The respondent's representative relied on the minutes of the AGM conducted on 24 May 2013 and motion 14 resolved at that meeting. Further, it was argued that Mr Teys had attended on behalf of the Owners Corporation at earlier directions hearings and in the "show cause" application and had on each occasion been granted leave by the Tribunal to represent the Owners Corporation.

  1. The minutes of the extraordinary general meeting conducted on 12 December 2013 was tendered by consent of the parties. Those minutes confirmed the accuracy of the minutes of the AGM conducted on 24 May 2013.

Decision on representation

  1. I am satisfied the minutes of the meeting of 24 May 2013 accurately records the decision of the Owners Corporation to engage Teys lawyers to defend the Owners Corporation in these proceedings. Further, the applicant and his joint applicant Mr Morony claim that Mr Morony is the proper representative of the Owners Corporation, having been appointed to that position by the then compulsorily appointed strata managing agent. Without someone acting in the capacity of representative of the Owners Corporation putting the contrary argument to the Tribunal, the proceedings would be a nonsense.

  1. In addition these proceedings have been on foot for some two years and all parties agreed that there is a need for early resolution.

  1. It was therefore determined to grant leave to Mr Teys to represent the Owners Corporation.

  1. Mr Gamayunov advised that he was no longer legally represented and did not seek an adjournment to obtain legal representation.

Admissibility of documents

  1. The respondent took objection to the fact that the applicant's response to the directions of the Tribunal made on 24 September 2013 for the filing and serving of documents was inadequate because of its reference to (unspecified) documents filed earlier upon which the applicant relied.

  1. During a short adjournment the applicant was able to prepare a bundle of documents for the respondent and the Tribunal that addressed that concern.

  1. Accordingly it was determined that although there was not strict compliance by the applicant with the Tribunal directions in regard to preparation of documents any prejudice to the respondent would be minimal if the bundle of documents was admitted on the basis that, to the extent that the additional documents referred to other documents not repeated therein, those other documents were not in evidence.

ADJOURNMENT APPLICATION

  1. No application was made to adjourn the proceedings and all parties indicated their readiness to proceed.

JURISDICTION

  1. The jurisdiction of the Tribunal to determine the three applications was not in dispute. It was explained to the parties that the matters were heard by NCAT as though it was sitting as the CTTT, pursuant to the transitional provisions of the NCAT Act.

ISSUES

  1. Whether the decision of the Adjudicator made on application

SCS 12/ 00509 was in error and whether, in light of evidence presented, the Tribunal should substitute for the order dismissing the application, orders for one or more of the following

  • An order preventing the Owners Corporation from entering into any building management and/or caretaker agreements with any parties that carry on a hotel business or letting business or any other business within the strata plan,
  • An order preventing the Owners Corporation from entering into any building management or caretaker agreements for a period exceeding 12 months,
  • An order amending special by-law 3A to include a provision "the proprietor of lot 1 and any related party to the proprietor of lot 1 cannot provide services of a building manager and/or caretaker to the Owners Corporation",
  • An order that the Owners Corporation take all reasonable action to enforce compliance by lot 1 with special by-law 3A including

(a)   removal of the illegal structures identified on the survey attached at exhibit F to the application for adjudication,

(b)   issuing a notice to comply to any person that parks (or facilitates parking) a vehicle in the parking spaces designated for contractors' parking.

  1. On application SCS 12/46517 whether the applicant is entitled to an order pursuant to the SSMA s 138 to invalidate all decisions of the Owners Corporation made after 25 July 2012 including any decisions made by the executive committee and whether the applicant is entitled to an order that the Owners Corporation convene an extraordinary general meeting for the purpose of consideration of the motions requisitioned by the applicant and referred to above at para (22).

  1. On application SCS 12/41696, whether the management structure of the Owners Corporation is not functioning or is not functioning satisfactorily such that the Tribunal should appoint, pursuant to the SSMA s 162, a strata managing agent.

APPLICANT'S SUBMISSIONS

  1. This application is characterised by poor preparation, failure to provide and to refer the Tribunal to relevant documents and the use by the applicant's representative of emotive and pejorative language calculated to cause objection and disharmony.

  1. At no time during the applicant's submission was there any clear explanation of the substance of the appeal or of the two applications. The applicant repeatedly alleged "stealing" from the Owners Corporation, "criminal" activity by the respondent's solicitors, "fraud" and falsification of documents. No proper evidence was provided in support of any of these allegations.

  1. Nevertheless, doing the best I can with the applicant's submissions, supplemented by the submissions of Mr Morony and Mr Ferguson the applicant's case appears to be as follows. Mr Gamayunov is the director and representative of one or more companies holding unit entitlements of about 20% of the total 10,000 unit entitlement for the strata scheme.

  1. Vesture Management Pty Ltd (STM) had been compulsorily appointed as the strata managing agent for a period expiring on 19 April 2012. Prior to that date STM had called an extraordinary general meeting of the Owners Corporation to be conducted on 19 April 2012. At that time an interim executive committee was nominated by STM and the Owners Corporation at the EGM "illegally" appointed STM as the strata managing agent for the period following compulsory appointment. No explanation was given as to why such appointment was illegal.

  1. The interim committee determined to hold an AGM, which was conducted on 25 July 2012.

  1. At that meeting, which was chaired by Mr Morony, two motions that had been requisitioned by the applicant were not put to the meeting, as being "out of order". Those motions were not in the form originally notified to the executive committee and the caretaker (owner of lot 1), exercising its proxies in contravention of the SSMA Schedule 2 clause 11(7A), prevented an amendment to correct the motions to their original form.

  1. Further, at that meeting 11 nominations were received for seven positions as the executive committee but a ballot for those positions did not determine the constitution of the executive committee.

  1. Mr Morony, as chairman of the executive committee, "reconvened" the AGM on 23 October 2012 and at that time declared, due to the inability to resolve inconsistencies and irregularities in the voting, that the previous interim committee remained as the executive committee.

  1. It was as a result of that sequence of events that the applicant (and Mr Morony) claimed that Mr Morony was and remained the proper representative of the Owners Corporation. The current people, claiming to act as the executive committee, were acting "fraudulently".

  1. It was the two motions that were not passed at that meeting for which the applicant had sought the orders of the adjudicator on SCS 12/ 00509.

  1. The next general meeting was conducted on 3 December 2012. At that meeting Mr Gamayunov's wife, who is a fellow director and company nominee of each of the companies represented by Mr Gamayunov, was refused the opportunity to vote because of an alleged lack of proxy, which was in fact unnecessary. As a result, a special by-law was passed at that meeting which would not otherwise have been passed.

  1. Generally, it was the applicant's submission that far from being a dispute between two commercial entities, as seen by the adjudicator on SCS 12/00509, the applications were related to the inability or lack of interest by the Owners Corporation in preventing overcharging and charging for work not done by the caretaker and the misappropriation of Owners Corporation funds by the caretaker.

  1. The next general meeting conducted was the AGM on 24 May 2013. At that meeting nominations were called for election of the executive committee and a ballot conducted at which the current executive committee was elected. The applicant claimed that the caretaker was precluded (pursuant to SSMA Schedule 2, clause 11) from voting on the issue of appointment of Teys lawyers, but did so, and in that way the motion was carried.

  1. In regard to the Adjudicator's decision on SCS 12/00509 the Adjudicator was wrong in determining that the Owners Corporation was unaware of the misuse of car parking as it had photographs. Those photographs were not provided in evidence.

  1. In addressing the issue of compulsory appointment of a strata managing agent it was the applicant's submission that the group regarding itself as the executive committee had been less than thorough in preparing the brief for instructing the external assessors of the criteria for successful tender for future caretaker and management. Further, the executive committee members had not considered the individual tenders but had adopted the consultant's recommendation despite the fact that the recommendation did not take into account earlier serious (and admitted) overcharging by the caretaker.

  1. The respondent is aware of "illegal structures" on the common property but has taken no steps to require their removal.

  1. The applicant's representative submitted that the Owners Corporation needed the help of the Tribunal and to that end a compulsory strata manager should be appointed to return the operation of the Owners Corporation to a "lawful" footing.

  1. Both Mr Morony and Mr Ferguson provided written statements which they adopted on affirmation. Mr Morony was cross examined on his statement.

  1. Mr Ferguson's submission was generally that he wanted proper management of the Owners Corporation and a reduction of the "excessive" strata levies. He also observed that the strata managing agent worked "too closely" with the caretaker.

  1. Under cross examination Mr Morony acknowledged that there was no resolution of the executive committee of which he claimed to be chairman or of the Owners Corporation in general meeting, authorising him to represent the Owners Corporation at this hearing.

  1. Mr Morony was unable to refer to any authority for the proposition that he was entitled, as chairman of the executive committee, to "reconvene" the AGM on 23 October 2012.

  1. It was Mr Morony's submission that several decisions of the Owners Corporation reached in general meeting on 25 July 2012 had subsequently been changed at later meetings and that the strata levies were excessive and had doubled over the last three years.

  1. In relation to the proposed by-laws that were denied due to being inconsistent with the SSMA, Mr Morony claimed there was no such inconsistency and that he had received legal advice to that effect. He claimed that whilst the SSMA precluded management contracts in excess of ten years, there was no impediment to a by-law requiring a shorter period than that.

  1. The perception held by the adjudicator that the strata scheme is predominantly a hotel is incorrect. Some 70 lots are hotel accommodation whilst a further 116 are either normal residential lots or commercial lots. That is, the strata scheme is of diverse composition with many different interests.

  1. As well as the poor briefing documentation by the Owners Corporation for the tendering process already mentioned by the applicant's representative, there are serious problems related to financial mismanagement of the strata scheme.

  1. These issue relate to the terms of the building management contract which provides for outsourcing of some work (such as cleaning) which effectively doubles the cost of building management, an unexplained budget allowance of $150,000.00 for telephone calls, excessive cost of compliance with fire orders. In short, it was said that there has been no focus on managing the costs of the scheme but rather the priority has been to ensure the financial gain of the building manager.

  1. Further, the minutes and other documents prepared and circulated by the strata managing agent are "riddled with inaccuracies".

  1. It is noted that Mr Morony was not making any suggestion that the decision of the Owners Corporation on 12 December 2013 to reappoint the current caretaker should be invalidated. It was acknowledged that to do so may expose the Owners Corporation to a considerable commercial damages claim.

RESPONDENT'S SUBMISSIONS

  1. The respondent's submissions were to the following relevant effect.

The appeal (SCS 12/31156)

  1. In regard to the application for orders preventing the Owners Corporation from entering into building management/caretaker agreements with a party carrying on a business within the strata plan, to prevent the Owners Corporation from entering into such contracts for periods in excess of 12 months and an order amending special by-law 3A to prevent the proprietor of lot 1 from providing management/caretaker services to the Owners Corporation, the respondent's submission was that the orders sought are inconsistent with the power of an Owners Corporation to enter into contracts generally and specifically inconsistent with the provisions of s 40A(3).

  1. The SSMA s 138(3)(c) provides that an Adjudicator may not make such an order and accordingly the decision of the Adjudicator on SCS 12/00509 should be upheld.

  1. Further such orders are inconsistent with special by-laws 30, 31 and 32 and are therefore not available to an Adjudicator.

  1. Further, the orders sought are inconsistent with the rights of an Owners Corporation to determine appropriate arrangements for management of the building consistent with the resolution of the general meeting on 24 May 2013. In this regard, since the application was filed the Owners Corporation has entered into a new building management contract which is consistent with special by-law 30 and s 40A. Over-turning that contract would potentially expose the Owners Corporation to a damages claim in the vicinity of $3.4M. The applicant has not made any application for interim orders or to otherwise challenge the decision of the Owners Corporation reached in general meeting on 12 December 2013 to enter into that contract.

  1. The application for orders that the Owners Corporation take action to enforce compliance by the proprietors of lot 1 with special by-law 3A should be dismissed because the SSMA provides a mechanism for enforcement of by-laws and the applicant has taken no steps to approve the issue of a notice to comply pursuant to s 45(2).

Adjudication SCS 12/46517, invalidation of decisions of Owners Corporation

  1. This application was made pursuant to s 138, the general order making power of an Adjudicator. If the application is to invalidate a resolution or the election due to non-compliance with the SSMA, the application ought to have been brought pursuant to s 153.

  1. If the application relates to denial of voting rights it ought to have been brought pursuant to s 154.

  1. The High Court in Anthony Hordern & Sons Ltd v Amalgamated Clothing and Allied Trades Union of Australia [1932]47 CLR 1 (Anthony Hordern & Sons) determined that where the legislature explicitly gives a power by a particular provision it excludes the operation of general expressions of power in the same instrument which might otherwise be relied on.

  1. In this case, any application pursuant to s 154 cannot be brought after 28 days of the meeting on 25 July 2012 (s 154(2)).

  1. Further it was argued that the application for orders on SCS 12/ 31156 is inconsistent with the orders sought on SCS 12/ 46517.

  1. Since the general meeting on 25 July 2012, there have been general meetings conducted on 3 December 2012 and on 24 May 2013. Even if the election of the committee on 25 July 2012 was invalid, any invalidity was cured by the election of a new committee on 24 May 2013. There has been no application to invalidate that meeting.

The application for compulsory appointment (SCS 12/ 41696)

  1. There is confusion in the applicant's submission between dysfunction in the management of the strata scheme and disagreement with decisions of the Owners Corporation.

  1. The conflict in the strata scheme which it is claimed justifies the compulsory appointment of a strata manager essentially arises from the competing business interests of the applicant and related companies and the current building manager/caretaker.

  1. The functionality of the management structure of the strata scheme is demonstrated, since the completion of the period of compulsory appointment on 19 April 2012, by

  • general meetings conducted on 25 July 2012, 3 December 2102, 24 May 2013 and 12 December 2013,
  • at least 17 meetings of the executive committee have been held in that time and copies of the minutes of those meetings were provided,
  • a sub-committee for the purpose of choosing a new building manager has met regularly, kept records and made recommendations which resulted in the appointment in general meeting on 12 December 2013 of a new building manager,
  • levies have been struck and collected and steps taken to collect arrears,
  • the strata scheme has paid its debts as they fall due,
  • sinking and administrative funds are maintained and books and records kept in accordance with the SSMA,
  • insurance has been effected in accordance with the SSMA, there are no outstanding health, safety or other statutory compliance issues except a fire order which is being attended to,
  • resolutions of the Owners Corporation have been acted upon, including the call for tenders for a new building manager.

  1. The respondent sought orders that each of the applications are dismissed and reserved its right to make an application for costs.

APPLICATION OF RELEVANT LAW and CONCLUSIONS

Re: Adjudication SCS 12/ 46517 seeking orders to invalidate all of the decisions of the Owners Corporation and the executive committee made since 25 July 2012 and to convene an EGM

  1. It was the submission of all of the parties that the previous compulsorily appointed strata managing agent (STM) had the authority prior to the end of its term in April 2012 to nominate the members of an interim executive committee, of which Mr Morony was nominated chairman.

  1. If that is in fact correct, it follows that it was appropriate that Mr Morony chair the first meeting of the Owners Corporation coming out of the period of compulsory appointment conducted on 25 July 2012. It think the preferred procedure would have been to convene an EGM at which the compulsorily appointed strata manager acted as chairperson and to include on the agenda for that meeting the election of an executive committee from the day following the expiry of the period of compulsory appointment.

  1. It was acknowledged by Mr Morony under cross examination that he "lost control" of that meeting and accordingly that the conduct of that meeting left something to be desired. No blame is attached to Mr Morony in that regard, but his lack of knowledge and experience in conducting meetings pursuant to the provisions of the SSMA may in part be the genesis of the current dispute.

  1. It was not disputed that the result of the election of an executive committee was not declared on 25 July 2012. It was also not disputed that there was no lawful basis for the attempt by Mr Morony to regularise matters by "reconvening" the meeting on 23 October 2012.

  1. I am satisfied therefore that the "declaration" of the constitution of the executive committee subsequently made by Mr Morony was unlawful and not made in accordance with the SSMA.

  1. The constitution of the executive committee between 25 July 2012 and 24 May 2013 therefore remains in some doubt. Nevertheless the strata scheme did function during that period without a properly appointed executive committee. However, I am satisfied that the election of an executive committee in general meeting on 24 May 2013 rectified the situation by validly electing the current committee. The minutes of that meeting confirming that fact were adopted at the general meeting on 12 December 2013 and have not been challenged.

  1. Accordingly, I am satisfied that the current executive committee was properly elected in accordance with the SSMA on 24 May 2013.

  1. I am satisfied for the above reasons that the decisions of the Owners Corporation made on and after 24 May 2013 should not be invalidated on the basis of an invalidly appointed executive committee. No other basis for invalidation of the decisions has been suggested.

  1. It is noted the application does not specify any particular decisions of the Owners Corporation for which orders of invalidation are sought but simply seeks orders to invalidate all decisions made after 25 July 2012.

  1. In regard to the argument put by the respondent that the Tribunal cannot consider the application for invalidation of resolutions under s 138 because there is a primary power under s 153 that was not exercised, I am not satisfied that the decision of the High Court in Anthony Hordern & Sons in the circumstances of the SSMA s 165, precludes such consideration.

  1. The SSMA s 165 provides that if an application is made for an order under a specific provision and the Adjudicator considers that an order under that provision is inappropriate, the Adjudicator may determine the matter under another provision. It is specifically intended to avoid an injustice due to a lay person being unaware of the relevant legislative provision under which they should apply.

  1. It is true that consideration under s 138 is inappropriate; however, there is no time limit to an application being made under s 153 (as there is under s 154). Hence, pursuant to the provisions of s 165, I am satisfied the application to invalidate all resolutions may be considered under s 153. Section 153 is in the following terms.

153 Order invalidating resolution of owners corporation
(1) An Adjudicator may make an order invalidating any resolution of, or election held by, the persons present at a meeting of an owners corporation if the Adjudicator considers that the provisions of this Act have not been complied with in relation to the meeting.
(2) An Adjudicator may refuse to make an order under this section but only if the Adjudicator considers:
that the failure to comply with the provisions of this Act did not adversely affect any person, and
that compliance with the provisions of this Act would not have resulted in a failure to pass the resolution or have affected the result of the election.
(3) An application for an order under this section may be made only by an owner or first mortgagee of a lot.

  1. However, to invalidate all decisions of the Owners Corporation made during the interval 25 July 2012 to 24 May 2013 is a nonsense which should not be entertained. There were innumerable decisions made during that time (for example payment of the just debts of the Owners Corporation, raising of levies, taking of insurance, etc.) that are not in dispute and for which invalidation would now create chaos.

  1. As mentioned there is no specific resolution made by the Owners Corporation in the period in question that has been shown to have adversely affected any person.

  1. Further, as the result of the election was not declared, it has not been demonstrated that compliance with the SSMA would not have affected the result of the election.

  1. Hence, I am satisfied that despite any decision of the Owners Corporation made in the period 25 July 2012 to 24 May 2013 being open to invalidation under s 153, such an order should not be made pursuant to the provisions of s 153(2).

  1. The applicant has also requested orders that the Owners Corporation convene an EGM for the purpose of considering motions referred to at paragraphs 2.1 and 2.2 of its filed documents. Those paragraphs refer to the motion to prevent the Owners Corporation from entering into a building management contract with any party that carries on a business within the strata plan and to restrict any such contract to a period not exceeding 12 months.

  1. I have considered those aspects of the application under the appeal (SCS 12/31156, below) and for the reasons expressed there I am satisfied there is no merit in convening a general meeting.

Re: Adjudication SCS 12/ 41696 seeking orders for the compulsory appointment of Conti Property Group as strata managing agent pursuant to s 162

  1. This application was filed in August 2012 following the general meeting conducted on 25 July 2012 referred to above. In the context of the management structure of the strata scheme at that time the application is understandable and had some merit.

  1. The application is brought pursuant to the provisions of the SSMA s 162(3A). Section 162 provides

162 Order appointing strata managing agent to exercise certain functions
(1) Order appointing strata managing agent to exercise functions of owners corporation An Adjudicator may by order 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 An Adjudicator may also order, when appointing a strata managing agent under this section, that the strata managing agent is to have and may exercise:
(a) all the functions of the chairperson, secretary, treasurer or executive committee of the owners corporation, or
(b) specified functions of the chairperson, secretary, treasurer or executive committee of the owners corporation, or
(c) all the functions of the chairperson, secretary, treasurer or executive committee of the owners corporation other than specified functions.
(3) Order may be made without application in certain circumstances An Adjudicator may make an order under this section, without an application having been made for the order, but only if satisfied that the management structure of a strata scheme the subject of an application under this Chapter is not functioning or is not functioning satisfactorily.
(3A) Order may be made on application in certain circumstances An Adjudicator may make an order under this section, on application, but only if satisfied that:
(a) the management structure of a strata scheme the subject of an application under this Chapter 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 under this section must:
(a) hold a strata managing agent's licence issued under the Property, Stock and Business Agents Act 2002, and
(b) have given consent in writing to the appointment, which consent, in the case of a strata managing agent that is a corporation, may be given by the chief executive officer of the corporation.
(c) (Repealed)
(5) Terms and conditions of appointment A strata managing agent may be appointed under this section on such terms and conditions (including terms and conditions relating to remuneration by the owners corporation and the duration of appointment) as may be specified in the order making the appointment.
(6) Revocation of certain appointments An order made in the circumstances referred to in subsection (3) may be revoked or varied by an Adjudicator on the application of a person entitled to make an application for an order under this section and, unless sooner revoked, ceases to have effect at the expiration of such period after its making (not exceeding 12 months) as is specified in the order.
(7) Who may make an application? An application for an order under this section may be made only by:
(a) a person who obtained an order under this Act that imposed a duty on the owners corporation or on its executive committee, chairperson, secretary or treasurer and that has not been complied with, or
(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, or
(c) the authority having the benefit of a positive covenant that imposes a duty on the owners corporation, or
(d) a judgment creditor to whom the owners corporation owes a judgment debt.

  1. It is the applicant's position that the management structure of the strata scheme is not functioning satisfactorily and that an appointment should therefore be made pursuant to s 162(3A)(a).

  1. However, events appear to have overtaken this application. The Owners Corporation has conducted three general meetings since this application was filed and the (now validly elected) executive committee has met regularly and kept records of its meetings and decisions.

  1. It is true that one of the major decisions of the Owners Corporation, made at the general meeting on 12 December 2013, with which the applicant's representative disagrees, was the decision to appoint Oaks Hotels and Resorts (NSW) No 2 Pty Ltd as building manager for a period of five years. Nevertheless that decision was open to the Owners Corporation to make and it was made by a substantial majority of unit entitlement.

  1. Far from being a basis for the compulsory appointment of a strata managing agent, I am satisfied that the process adopted by the Owners Corporation in that regard is demonstrative of the fact that the management structure of the strata scheme is functioning satisfactorily.

  1. Currently, despite the mismanagement during the transition from compulsory appointed strata manager to self-management in 2012, I am satisfied that the management structure of the strata scheme is satisfactory and that compulsory appointment to replace the strata managing agent chosen by the owners in general meeting is not appropriate or necessary.

Re: Application SCS 12/31156, appeal from decision of the adjudicator on SCS 12/00509

  1. The appeal from the decision of the Adjudicator on SCS 12/ 00509 initially relied on grounds that the Adjudicator had failed to consider material filed in other applications that were not currently before the adjudicator for determination. Although the applicant's representative did not subsequently rely on that ground for appeal it is demonstrative of the approach taken with this and other applications. There have been some 42 applications involving this strata scheme before adjudicators and the Tribunal in recent years. It is outrageous to suggest the Adjudicator (or the Tribunal) should embark on a process of sifting through earlier applications (some involving different parties) in the expectation of locating evidence that may be relevant to the matter under consideration.

  1. The appeal also raised the allegation that the Adjudicator had failed to address in her reasons any reason for dismissal of the application for amendment of special by-law 3A and for its enforcement. I shall deal with that allegation below.

  1. In his opening statement to the Tribunal the applicant's representative alleged the Adjudicator had made errors but failed to elucidate on that allegation.

  1. During the course of submissions the applicant's representative alleged that the suggestion that the Owners Corporation was unaware of parking infringements was "a lie" because they had photographs. The photographs were not tendered in evidence. The applicant's representative also referred to "illegal structures" on the common property of which the Owners Corporation was aware. There was no attempt to explain what those structures are, why they are "illegal" or how that is related to the adjudicator's decision.

  1. The only other submission in regard to the appeal was that the applicant's representative had seen, during an inspection of documents, a letter from Teys lawyers. The content or relevance of the letter was unexplained.

  1. It is noted, and I accept, both the applicant's and Mr Morony's submissions that the Adjudicator was misled by the evidence into believing the strata scheme was largely or exclusively operated as a hotel. It is clear from the evidence before me and it is not disputed by the respondent that there are a number of hotel lots, private residential lots and commercial lots that make up a range of diverse holdings within the strata scheme.

  1. However, it has not been demonstrated that the Adjudicator's misunderstanding in that regard led her into any error.

  1. In regard to the application for orders requiring the respondent to take all reasonable steps to enforce special by-law 3A relating to the exclusive use of the car parking by the owner of lot 1 there is no evidence before the Tribunal that there has been illegal use of the car parking or that any "illegal" structure has been erected.

  1. In any event, the proper procedure for the applicant to follow if it considers there to have been a breach of special by-law 3A or that such a breach continues, is to have the issue placed on the agenda of the executive committee or a general meeting of the Owners Corporation for consideration. If it is considered by such a meeting that a breach has occurred, the meeting may resolve pursuant to s 45(2) to issue the appropriate notice to comply. Further breach may then result in an application to the Tribunal for a civil penalty pursuant to s 203.

  1. The application for orders for the Adjudicator to amend special by-law 3A to provide that the owner of lot 1 (or any related party) may not provide services of a building manager to the Owners Corporation was misconceived. The application was brought pursuant to s 138 and/or s 158 (the applicant does not make it clear). However, s 158 empowers the adjudicator to make, amend or repeal a by-law of the type referred to in s 51. Section 51 provides for exclusive use or special privilege by-laws. The amendment sought here is not of that nature and therefore there is no power for an Adjudicator to consider such an application under s 158. Similarly there is no power under s 138 for an Adjudicator to make the order requested for amendment of the by-law.

  1. The above was clearly explained by the adjudicator at paragraph 4 of her decision where it was also stated that there was no power under any other provision of the SSMA for an Adjudicator to make the orders requested. I see no reason to depart from that reasoning.

  1. The application for orders to prevent the Owners Corporation from entering into a building management contract with any person carrying on a hotel (or any other) business in the strata scheme and to prevent any building management agreement from exceeding 12 months in duration are inconsistent with the SSMA s 40A(3) and with special by-law 30.

  1. Special by-law 30 provides that the Owners Corporation may enter into a contract for provision of management services for a period not exceeding 5 years. The proposed order is that the period must not exceed one year, which is clearly inconsistent with the special by-law.

  1. The SSMA s 40A(3) specifically provides that a person may be a caretaker as well as an on-site residential property manager. The owner of lot 1 is an on-site residential property manager. The proposal to prevent the Owners Corporation from contracting with that company for provision of management/caretaker services is clearly in conflict with s 40 A(3).

  1. Consequently it was not within the power of the Adjudicator to make the orders sought.

  1. The Adjudicator observed (at p 5 of her reasons) that the application was largely misconceived. I concur with that observation and I am satisfied for the above reasons that the appeal was both misconceived and lacking in any substance.

Costs

  1. The respondent requested that the issue of costs be reserved for further submissions.

  1. It is noted that applications SCS 12/41696 and SCS 12/46517 were referred to the Tribunal pursuant to s 164. It is further noted that s 184 deals with the power of the Tribunal in respect of applications that are referred to it and limits the order making power of the Tribunal to those that were available to an Adjudicator.

  1. As there is no power for an Adjudicator to make a costs order it is my preliminary view that there is no power, in relation to SCS 12/41696 and SCS 12/46517 to consider an application for costs.

  1. In relation to application SCS 12/ 31156 (the appeal) the power of the Tribunal to consider a costs application is set out at s 192. The parties' attention is drawn to the decision of the Supreme Court in Zouk v Owners Corporation SP 4521 & anor. [2005] NSWSC 845.

  1. I have made directions for dealing with the issue by way of written submissions or a hearing, should the parties be unable to agree.

ORDERS

  1. All three applications are dismissed.

  1. Leave is granted for the parties to file and exchange short written submissions on the issue of costs only within 14 days of the date of these orders. In that circumstance the submissions will be considered in chambers and a decision published.

  1. If any party seeks a hearing on the issue of costs they shall make a written request to the Registrar within 14 days of the date of these orders.

J Smith

Senior Member

NSW Civil and Administrative Tribunal

21 February 2014

I hereby certify that this is a true and accurate record of the reasons for decision of the New South Wales Civil and Administrative Tribunal.

Registrar

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: 11 September 2014

Actions
Download as PDF Download as Word Document
Cases Citing This Decision

0

Cases Cited

1

Statutory Material Cited

1

Zouk v The Owners Corporation of Strata Plan 4521 [2005] NSWSC 845