Smith v The Owners SP 32563; O'Shea and Hamilton v The Owners SP 32563; Smith v The Owners SP 32563

[2018] NSWCATCD 38

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Smith v The Owners SP 32563; O’Shea & Hamilton v The Owners SP 32563; Smith v The Owners SP 32563 [2018] NSWCATCD 38

Hearing dates:

3 August 2018

Date of orders:

07 August 2018

Decision date:

07 August 2018

Jurisdiction:

Consumer and Commercial Division

Before:

S Westgarth, Deputy President

Decision:

1 An order is made pursuant to the provisions of the Strata Schemes Management Act 2015 s 237 appointing Spencer Ware Group Pty Ltd of P.O. Box XXX, Kogarah 2217 as strata managing agent for The Owners-Strata Plan No 32563. The appointment shall be on the terms and conditions as set out in the Strata Management Agency Agreement dated 8 June 2018 provided by Spencer Ware Group Pty Ltd and filed in these proceedings and as modified by their email of 12 June 2018;

2 Spencer Ware Group Pty Ltd shall exercise all of the functions of the Owners Corporation including the functions of the chairperson, treasurer, secretary and the strata committee;

3 The appointment shall be for a period of twelve months from the date of these orders;

4 The Registrar is directed to notify Spencer Ware Group Pty Ltd of these orders forthwith both in writing and by email to [email protected]; and

5 Interim application SC 18/32099 is dismissed.

Catchwords:

Compulsory manager

Legislation Cited:

Strata Schemes Management Act 2015

Category:

Principal judgment

Parties:

SC 18/32099
Jeff Smith (Applicant)
The Owners SP 32563 (Respondent)

 

SC 18/29667
Suzanne O’Shea (First Applicant)
Margaret Hamilton (Second Applicant)
The Owners SP 32563 (Respondent)

  SC 18/32094
Jeff Smith (Applicant)
The Owners SP 32563 (Respondent)

Representation:

Not applicable

File Number(s):

SC 18/32099SC 18/29667SC 18/32094

Publication restriction:

Unrestricted

REASONS FOR DECISION

Background

1. These three applications concern a dispute as to which of two candidates should be appointed a compulsory manager of the strata scheme.

2. Mr Smith (the owner of lots 1 and 3) has filed an application (SC 18/32094) for the appointment of a compulsory manager and an application (SC 18/32099) for the appointment of the same manager on an interim basis.

3. Ms O’Shea (the owner of lot 2) and Ms Hamilton (the owner of lot 4) have filed a separate application (SC 18/29667) for the appointment of a different compulsory manager. There are four lots in the strata scheme, two owned by Mr Smith (with 50% of the unit entitlements) and Ms O’Shea and Ms Hamilton each have unit entitlements representing one quarter of the total.

4. At the hearing on 3 August 2018, all three applicants were present and they requested the Tribunal to make a final decision (with appropriate orders) for the appointment of a compulsory manager rather than the Tribunal making an interim order to be followed later by an substantive non-interim order. All three applicants were ready to proceed having no further evidence to provide. Accordingly, the Tribunal has decided to determine the two substantive applications together based upon the evidence provided with the applications and the oral evidence given at the hearing. It follows that the interim application will be dismissed.

Evidence and Submissions

5. Mr Smith requests the Tribunal to appoint Proactive Strata Services Pty Ltd (Proactive) of West Ryde as the compulsory manager for one year. They have provided written consent to their appointment and the director of that company (Yvonne Howard) was present and gave evidence at the hearing. Miss O’Shea and Miss Hamilton propose Spencer Ware Group Pty Ltd (Spencer Ware). Mr Smith’s contentions can be summarised as follows:

1. He favours the appointment of Proactive on the basis that that company has more experience than Spencer Ware. Mr Smith says that the strata scheme has waterproofing issues and it will require complex and extensive work to be undertaken. There is inadequate funding and levies will have to be imposed. Proactive has been in business for 10 years. Ms Howard gave evidence that her company has had experience as compulsory managers at least a dozen times;

2. Mr Smith gave evidence that he was introduced to Proactive because they manage a strata block in North Parramatta where his mother formerly resided and through that association is familiar with their abilities;

3. Although Proactive is at West Ryde that, in his view, would not detract from their ability to act as managers; and

4. In Mr Smith’s opinion, Proactive would not be dearer than Spencer Ware.

6. Ms O’Shea and Ms Hamilton prefer the appointment of Spencer Ware (whose consent to appointment was in evidence) as the compulsory manager. Ms O’Shea made the following submissions:

1. Spencer Ware was considered by the Owners Corporation at an EGM and a motion was put for their appointment but it was not passed. Ms O’Shea and Ms Hamilton voted in favour of it and Mr Smith voted against it;

2. Ms O’Shea believes that the Spencer Ware fee proposal creates greater certainty in that the “add ons” are less likely to be incurred than is the case with Proactive’s proposal. She tendered an email from Spencer Ware dated 12 June 2018 in which Spencer Ware clarify that they would only charge postage for AGM and Minutes if the owners elected to receive these by post;

3. Ms O’Shea said that she has had no prior association with Spencer Ware. The firm was recommended to her by a colleague at the place where she works; and

4. She submitted that Spencer Ware are local (i.e. not far from where the owners corporation exists) and they have been interviewed by her and Ms Hamilton.

Decision

7. Mr Smith’s application was accompanied with evidence of disagreements between the parties as to the management of the strata scheme, including a disagreement as to the appointment of a replacement manager to the one which had hitherto acted as managers of the scheme. Based on the admissions of the parties and the evidence, I am satisfied that the management of the strata scheme is not functioning for the purposes of the Strata Schemes Management Act 2015 NSW (the SSM Act): see s 237(3)(a). Accordingly, I am satisfied that the Tribunal has jurisdiction to compulsorily appoint a strata managing agent in accordance with s 237.

8. Having considered all of the evidence and submissions I propose to order that Spencer Ware be appointed the compulsory managers for a period of twelve months, for the following reasons:

1. I do not think that the relative difference in years of experience is significant. Proactive appears to have had a longer period of experience. Ms Howard gave evidence that she had been involved in strata management since 1998 and Proactive had commenced business in 2009. The only evidence concerning Spencer Ware was that Mr Smith thought that that company had been in business for eight years. I acknowledge that Proactive appears to have had more experience but other factors (discussed below) have greater weight;

2. The fees which both Proactive and Spencer Ware propose to charge are similar. Both propose to charge an annual fee in the order of $1,500.00 and then there is a scale of fees in each case for additional work. The scale of fees involves different rates per hour, but are very similar. It is difficult to predict which of the two companies would ultimately charge the most. That will depend upon what takes place during the period of management. In my view, neither company is to be preferred over the other on the basis of what they would charge;

3. In my view, the business location of the two proposed managers is a relevant consideration. It appears to be the case that Proactive, which is at West Ryde is at a disadvantage to Spencer Ware (which is at Kogarah) in servicing the management of this strata scheme (which is at South Hurstville). All parties agree that there are water issues which need attention and that remedial work needs to be undertaken. Although such work would be presumably handed over to engineering and/or building experts, it is reasonable to conclude that there is still an advantage to the manager in being in close proximity in order to be able to keep an eye on progress and be satisfied as to the nature of the work being undertaken. This consideration favours Spencer Ware;

4. A further consideration in my view is the fact that two lot owners out of three favour Spencer Ware. Although Mr Smith has 50% of the unit entitlement, it is relevant that Spencer Ware have been interviewed by Ms O’Shea and Ms Hamilton who, having not only reviewed their proposed management agreement have also been satisfied following that interview that Spencer Ware would be suitable; and

5. Spencer Ware has had no prior association with this strata scheme or its lot owners. Proactive has a prior association with Mr Smith (as mentioned above) but I do not think that this association is such as to put Proactive at a disadvantage. In other words, Proactive’s prior association with Mr Smith is not a disqualifying factor in my opinion.

9. In short, I have formed the preference for Spencer Ware on the basis of its location and the fact that it has been interviewed by and is supported by two of the three lot owners.

Orders

10. Accordingly, the Tribunal makes the following orders:

1. An order is made pursuant to the provisions of the Strata Schemes Management Act 2015 s 237 appointing Spencer Ware Group Pty Ltd of P.O. Box XXX, Kogarah 2217 as strata managing agent for The Owners-Strata Plan No 32563. The appointment shall be on the terms and conditions as set out in the Strata Management Agency Agreement dated 8 June 2018 provided by Spencer Ware Group Pty Ltd and filed in these proceedings and as modified by their email of 12 June 2018;

2. Spencer Ware Group Pty Ltd shall exercise all of the functions of the Owners Corporation including the functions of the chairperson, treasurer, secretary and the strata committee;

3. The appointment shall be for a period of twelve months from the date of these orders; 

4. The Registrar is directed to notify Spencer Ware Group Pty Ltd of these orders forthwith both in writing and by email to [email protected]; and

5. Interim application SC 18/32099 is dismissed.

S Westgarth

Deputy President

Civil and Administrative Tribunal of New South Wales

7 August 2018

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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: 22 October 2018