The Bunker Pty Ltd v The Owners - Strata Plan No. 63731

[2021] NSWCATCD 66

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

The Bunker Pty Ltd v The Owners – Strata Plan No. 63731 [2021] NSWCATCD 66

Hearing dates:

9, 10 and 11 December 2020

Date of orders:

24 February 2021

Decision date:

24 February 2021

Jurisdiction:

Consumer and Commercial Division

Before:

Graham Ellis SC, Senior Member

Decision:

1. An order under section 237(2)(b) of the Strata Schemes Management Act 2015 appointing Wellman Strata Management Pty Ltd as strata managing agent, for a period of 2 years from the date of this order, to exercise all the functions of the chairperson, secretary, treasurer and strata committee of the Owners Corporation in relation to any matter relating to:

(a)   lot 148 and/or 167,

(b)    the registered proprietor of either of those lots, or

(c)    any tenant, lessee or licensee or either of those lots

not being a matter that affects all lot owners.

2. An order under section 229 of the Strata Schemes Management Act 2015 that the Second Respondent is provide a copy of these orders to:

(a) any current member of the strata committee, and

(b) any person who becomes a member of the strata committee during the period covered by order 1.

3.   On or before 10 March 2021 any application for costs is to be made by providing written submissions to the Tribunal and the other parties.

4.   On or before 24 March 2021 any response to any such application is to be made by providing written submissions to the Tribunal and the other parties.

5.   Any submissions on costs are to address the question of whether costs can be determined on the papers (ie without the need for a further hearing).

Catchwords:

LAND LAW – Strata title – Appointment of compulsory strata managing agent – Limited to strata committee functions – Matters relating to specific lot owners only

Legislation Cited:

Strata Schemes Management Act 1996 (NSW)

Strata Schemes Management Act 2015 (NSW)

Cases Cited:

Anderson v The Owners – Strata Plan No. 61034 [2019] NSWCATAP 61

Bischoff v Sahade [2015] NSWCATAP 135

Hoare v The Owners – Strata Plan No 73905 [2018] NSWCATCD 45

Mortlock v Owners of Strata Plan No 55434 [2006] NSWSC 363

Siewa Pty Ltd v The Owners Strata Plan 35042 [2006] NSWSC 1157

Texts Cited:

Nil

Category:

Principal judgment

Parties:

The Bunker Pty Ltd (Applicant)
The Owners - Strata Plan No. 63731(First Respondent)
McCormack’s NSW Pty Ltd trading as McCormack’s Strata Management (Second Respondent)

Representation:

Counsel:
R Lovas and Mr F Anwar (Applicant)
T Thomas (First Respondent)
Solicitors:
Wilshire Webb Staunton Beattie (Applicant)
Colin Biggers and Paisley (First Respondent)

File Number(s):

SC 20/06562

Publication restriction:

Nil

REASONS FOR DECISION

1. This application was commenced on 10 February 2020 by The Bunker 2017 Pty Ltd (the Bunker). The respondents are The Owners – Strata Plan 63731 (the OC) and McCormack’s NSW Pty Ltd Strata Management (McCormack’s). Originally, orders were sought under sections 72, 148 and 237 of the Strata Schemes Management Act2015 (NSW) (the SSMA) but the Bunker now only seeks an order under section 237 for the appointment by the Tribunal of a strata managing agent and an order for costs.

2. The strata plan, which contains 370 lots, relates to a building at XXX in Milsons Point, known as XXX, which consists of an entry foyer with a concierge and three commercial lots on the street level of the building, which is level 10. Above that are more than 170 residential apartments. The Bunker owns Lot 148 which has a floor area of 758 square metres (sqm) and is on level 1, along with a swimming pool, gym and change rooms. The Bunker also owns Lot 167, which is a car parking and storage space located on level 2. Levels 2 to 9 contain car parking and storage spaces with vehicular entry to the car parking spaces on level 8.

3. As to the lift facilities, Lot 148 is accessed via the high-rise lifts at the eastern end of the building while residents use the low-rise lifts at the western end of the building to access the pool and gym facilities on Level 1. The pool may also be accessed from Lot 148 via a pool gate.

Jurisdiction

4. It is clear that the Tribunal has jurisdiction to hear and determine the proceedings as the premises are the subject of a registered strata scheme that was registered on 02 November 2000 with the result that the SSMA applies.

The relevant law

5. Section 237 of the SSMA provides as follows:

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-

to exercise all functions of an owners corporation, or

to exercise specified functions of an owners corporation, or

to exercise all functions other than specified functions of an owners corporation.

1. 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-

all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or

specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions, or

all the functions of chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions.

1. Circumstances in which order may be made

The Tribunal may make an order only if satisfied that-

the management of the 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

an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or

an owners corporation has failed to perform one or more of its duties, or

an owners corporation owes a judgment debt.

1. Qualifications of person appointed

A person appointed as a strata managing agent as a consequence of an order made by the Tribunal must-

hold a strata managing agent’s licence issued under the Property, Stock and Business Agents Act 2002, and

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.

1. 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 the appointment) specified in the order making or directing the appointment.

1. Return of documents and other records

A strata managing agent appointed as a consequence of an order under this section must cause a general meeting of the owners corporation not later than 14 days before the end of the agent’s appointment and must on or before that meeting make arrangements to return to the owners corporation all documents and other records of the owners corporation held by the agent.

1. Revocation of certain appointments

An order may be revoked or varied on application and, unless sooner revoked, ceases to have effect at the expiration of the period after its making (not exceeding 2 years) that is specified in the order.

1. Persons who may make the application

The following persons may make an application under this section-

(a)   a person who has obtained an order under this Act that imposed a duty on the owners corporation or on the strata committee or an officer of the owners corporation and that has not been complied with,

(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 the lease of a lot in the scheme,

(c)   the authority having the benefit of a positive covenant that imposes a duty on the owners corporation,

(d)   a judgment creditor to whom the owners corporation owes a judgment debt.

6. The words appearing in that section have been previously considered on a number of occasions and the decisions in those cases aid the application of section 237 to the circumstances of this case although such decisions obviously do not override the words of that section.

7. In Mortlock v Owners of Strata Plan No 55434 [2006] NSWSC 363 (Mortlock) at [18] there is quoted the words of the decision-maker being challenged in that appeal which describes the earlier equivalent of section 237 of the SSMA as draconian on the basis that it removes the democratic process established by statute but goes on to suggest that there must be objective evidence that the management of the owners corporation is dysfunctional before an order is made for the appointment of a compulsory strata managing agent. Those words serve as a reminder that section 237 contains a significant power that requires an evidentiary basis before an order is made under that section.

8. The decision in Hoare v The Owners – Strata Plan No 73905 [2018] NSWCATCD 45 (Hoare) at [202] suggests the fact that some lot owners do not agree does not make an OC dysfunctional.

9. Despite dealing with a similar provision in the former legislation, Bischoff v Sahade [2015] NSWCATAP 135 (Bischoff) remains relevant since the grounds for an order to appoint a managing agent set out in section 162(3A) of the Strata Schemes Management Act 1996 (the 1996 Act) contain exactly the same words as the grounds set out in subsection 237(2) of the SSMA. Bischoff at [32] is quoted below:

Circumstances in which the management structure may not be functioning or functioning satisfactorily include where the relevant level of management:

1. does not perform a required function, for example to properly maintain the common property;

2. exercises a power or makes a decision for an improper purpose, for example conferring a benefit upon a particular Lot owner or group of Lot owners in a manner not authorised by the SSMA;

3. fails to exercise a power or make a decision to prevent a contravention by Lot owners and occupiers of their obligations under the SSMA, including the Lot owners and occupiers obligation to comply with the by-laws; and

4. raises levies and takes or defends legal action on behalf of the owners corporation in circumstances where such action is unnecessary or not in the interests of the owners Corporation or the Lot owners as a whole.

The hearing

10. Leave for legal representation having been granted, Mr Lovas with Mr Anwar, instructed by Mr Webber of Wilshire Webb Staunton Beattie, represented the Bunker and Mr Thomas, instructed by Mr Creighton of Colin Biggers and Paisley, represented the OC.

11. The documents upon which the parties relied were identified and either became Exhibits or were Marked for Identification as follows:

Exhibits 1-5      Joint Tender Bundle

Exhibit 6      Three emails:

6.1   03 December 2020, from Mr Ehrlich

6.2   04 December 2020, to Mr Ehrlich

6.3   07 December 2020, from Ms Farmer

Exhibit 7      Copy of lease to GDC Network Pty Ltd

Exhibit 8      Submission for the Bunker dated 24 November 2020

Exhibit 9      Reasons, OC v B & G Trading Pty Ltd, 30 September 2020

MFI 1         Bunker’s List of Objections

MFI 2         OC’s Objections to Evidence

MFI 3         Bunker’s Aide Memoire

12. After opening addresses on the first day and cross-examination of witnesses on the second day, on the afternoon of the third day the legal representatives supplemented their outline submissions with oral submissions.

Agreed facts and chronology

13. From the documents headed “Agreed Chronology” and “Statement of Agreed Facts”, the following overall chronology has been prepared, adding relevant material from the submissions of the parties.

02 Nov 00   Strata scheme registered, including By-law 32 which granted Lot 148 a special privilege to carry out alternations to common property (CP) without first obtaining consent from the OC

01 Feb 16   OC engaged McCormack’s as the strata manager (SM) for the scheme

07 Apr 17   The Bunker acquired an option to purchase Lots 148 and 167, the owner at that time being B & G Trading Pty Ltd (B&G)

06 Dec 17   Seven days’ notice provided of intention to commence work on Lot 148

Dec 17   That work commenced, including setting out stud walls and pipe work

Feb 18   That work concluded

21 Feb 18   Those works were discussed at a meeting, attended by the Bunker

20 Mar 18   OC commenced proceedings against the Bunker

02 May 18   Interim application finalised

29 May 18   Special by-law 6, dealings with security keys, was passed

01 Jun 18   Consent order made re sprinkler modification works

Jul 18      Special by-law 6 was registered and thereby took effect

13 Jul 18   Private certifier wrote to OC, seeking access

30 Jul 18   Private certifier gave notice of intention to serve fire safety order on OC

07 Aug 18   Sprinkler modification works were carried out

21 Sep 18   The Bunker became the owner of Lots 148 and 167

Apr 19      Annual Fire Safety Statement issued for the entire building

05 Jun 19   Date of Plan of Management (PoM) which limits hours of use to 7am to 8pm on weekdays, 8.30am to 8pm on Saturdays and number of people

06 Aug 19   Development Consent from Land and Environment Court to use Lot 148 as office space for 45 people during specified hours, Lot 167 for 2 car and 7 bicycle spaces, subject to, inter alia, complying with PoM

21 Aug 19   Final Occupation Certificate obtained by the Bunker for Lot 148

26 Aug 19   The Bunker advised Mr Greenwood that it had entered into a lease with Classtime Pty Ltd, t/a Tutor Time

30 Aug 19   Building Information Certificate obtained by the Bunker

04 Sep 19   Emails to Mr Greenwood sought 10-15 further keys, a copy of the by-laws was provided, the Bunker was told to contact the strata manager

05 Sep 19   Email sent to the strata manager (SM), seeking additional security keys

14 Sep 19   The Bunker requested details of the process for obtaining a letter box to the strata manager and building manager (BM)

20 Sep 19   Despite exchanges of correspondence, no additional keys were issued

21 Sep 19   Tutor Time relinquished its lease

20 Jan 20   By this date, 4 of 8 keys in Mr Rowe’s name had been deactivated and, upon advising the BM, his key was reactivated

20 Jan 20   The BM was advised of a strong, unpleasant smell in Lot 148 and the were subsequent communications between Mr Rowe, the BM and SM

02 Mar 20   The letter box for Lot 148 was installed

13 Jul 20   The Tribunal made orders for the repair of the sewerage system

21 Jul 20   SM sent email to the Bunker, suggesting repairs would begin by 03 Aug and a timeline for those repairs would be provided by 27 Jul 20

13 Aug 20   2020 Annual General Meeting (AGM) for the strata scheme held

17 Aug 20   The Bunker received a report containing details for the sewage works

28 Aug 20   The SM provided the Bunker with timeline for the sewage repair works

Aug 20   The Bunker engaged a hydraulic engineer re the Sewer Pump Station

21 Sep 20   The SM was provided with a copy of that hydraulic engineer’s findings

Oct 20      All outstanding sewage tank issues resolved

The Bunker’s witnesses

14. The Bunker relied on affidavits from two of its directors, Mr Ehrlich and Mr Rowe, and its real estate agent, Mr Moloney. Each of those three witnesses was cross-examined.

15. Mr Moloney, said in his affidavit that, after being engaged to sell and/or lease Lot 148, on 13 July 2018 he attended the building, with a videographer, and some video footage was taken. At around 4pm on 18 July 2018, when he returned to the building for the purpose of preparing a marketing video, he approached the concierge after which a lady who said she was the Treasurer of the OC, who referred to then current litigation, suggested access would be trespassing and said filming would be illegal.

16. On 26 July 2018, at about 4pm, Mr Moloney went to the building to meet with a prospective purchaser/tenant but was told that he could not come into the property. Despite producing a letter from solicitors, he was still denied access by a man who became irate and threatened to call the police. Not surprisingly, the prospective purchaser/tenant expressed no further interest in the property and cross-examination revealed that Mr Moloney has not been back to the property since.

17. Mr Ehrlich provided a brief affidavit in which he indicated that on 01 August 2018, at about 12.10pm, when he attended the building with a prospective tenant, a building manager who identified herself as Mini tried to prevent him from going to Lot 148. In cross-examination, it was revealed that on 03 December 2020, when five access keys were requested, the building manager was not present, and it was said he would not be available until 14 December 20202. It was suggested it would take two weeks for those keys to be provided. He was also questioned about the lease to GDC Network Pty Ltd which had been accepted but not signed and would commence when keys were provided. That lease was said to have rent of $70,000 per annum (pa) for the first two years then about $150,000 pa with a 2.5% pa increase thereafter.

18. Mr Rowe, in the primary affidavit for the Bunker, set out the history of the Bunker’s relationship with the OC under headings of interference with fit-out works in February 2018, interference with a marketing campaign in July 2018, refusal of access to carry out fire safety works, obtaining Development Consent to use Lot 148 as office premises, a failure to provide keys for a new tenant, his being asked to leave the 2019 AGM, delay is fixing a fault sewer pump, delay in providing a letter box, failing to carry out a fire inspection, delayed access to strata records and details of enquiries with potential strata managing agents. A large number of documents, exhibited to this affidavit, were placed in the folders which are Exhibits 3 and 4.

19. At the commencement of Mr Rowe’s cross-examination, it was indicated by counsel for the OC that five access keys would be provided by 4.30pm that day. As to the work of the SM, McCormack’s, he said they had been slow, but he did not consider they had acted in bad faith.

20. Mr Rowe said he was asked to leave the AGM held on 23 October 2019, while motions relating to litigation involving Lot 148 were discussed, and, when his departure from that meeting was not recorded in the minutes, his attempt to have them correct was unsuccessful. In re-examination, Mr Rowe indicated that, even if a vote was won on a show of hands, proxies were then used by Mr Greenwood, Ms Khor and Mr Harrison to achieve their preferred outcome.

21. In relation to the lease to Swoopy, it was said that they moved in during June or July of 2020 and ran a digital marketing business. Mr Rowe agreed that once the required documents were signed and provided, keys were issued. That was different to Tutortime who were not willing to provide residential addresses for each keyholder.

22. The Bunker’s position in relation to the litigation was summarised as getting a by-law passed to retrospectively approve work that had been done (Plan A), appeal the decision of the Appeal Panel (Plan B) and doing to restorative work (Plan C). It was noted that the Appeal Panel decision required restorative work to commence by 01 February 2021.

The OC’s witnesses

23. Affidavits upon which the OC relied were those of Mr Greenwood, Mr De Bono, Mr McCormack, Ms Van Metter and Choo Lee Khor. Save for Ms Van Metter, each of those witnesses was cross-examined.

24. Mr Greenwood, whose affidavit was the major affidavit for the OC, indicated that he is a lot owner and chairman of the Strata Committee (SC). This affidavit responded to the affidavit of Mr Rowe.

25. The first topic in cross-examination was the issue of the construction work in February 2018 when he indicated to Mr Rowe that access keys for people doing building work would be reactivated when the provided identification and showed they had insurance coverage. He said that he made that decision on behalf of the OC without any resolution and that deactivation of access keys had occurred because he considered there was unlawful work being undertaken. Much of the subsequent cross-examination was directed to the issues relating to the provision of access keys.

23. After the lunch break on the second day of the hearing, Mr Greenwood was taken to an email dated 19 August 2020 which suggested that the OC’s legal fees over the previous two and a half years totalled $600,000 and he said they were higher than that now.

24. When asked if the OC was spending money in litigation to make it uneconomic for the Bunker to pursue occupation of their lot, Mr Greenwood denied that proposition. Mr Greenwood’s attention was directed to the last bullet point in an email he sent to the other SC members on 02 March 2018 in which he said: “If we are prepared to spend a lot it may become sub-economic for them to pursue, as this is undoubtedly a commercial decision for them, while it is a lifestyle and amenities issue for us.” Mr Greenwood denied that those words in that email unambiguously advocated a course of action that would make it uneconomic for the Bunker to pursue its aim in relation to Lot 148.

25. Mr Greenwood’s denial, in his oral evidence, both before and after he was confronted with the last bullet point in his 02 March 2018 email (3/40), is a significant matter. For present purposes, it is sufficient to record that such a denial operates to render him an unreliable witness whose evidence should be viewed with caution.

26. It is also noted that, in this 02 March 2018 email he sent to the other SC members, Mr Greenwood said: “[A council officer] made a site inspection, but does not see any problem with the work they are doing at this point in time so did not issue a Stop Work Order today, which is most disappointing from our perspective”.

27. Cross-examination also made it clear that the Bunker was successful at first instance in Tribunal proceedings that were then successfully appealed. However, despite making an order for restorative work, the Appeal Panel, in a decision published on 30 September 2020 gave four months, ie until 01 February 2021, for the commencement of that work in order to provide an opportunity for the Bunker to seek a by-law which provided retrospective approval so as to remove the need for restorative work.

28. Ms Khor is a lot owner who provided an affidavit in which she said she is the Treasurer of the SC, a role she has held since 2012. She responded to the evidence of Mr Moloney, denying that she “physically restricted access to the lobby area”. It is clear that Ms Khor did not want there to be any video taken on the common property without prior permission being obtained from the OC or the SC.

29. Mr McCormack is a director of the company which currently serves as the strata managing agent, having been appointed by the OC. His affidavit indicated that, in relation to the sewage tank rectification, the matter was handled by the building manager, Mr De Bono. He also responded to the paragraphs of Mr Rowe’s affidavit which dealt with the issue of access to the strata records.

30. In cross-examination, Mr McCormack indicated that he was not involved in Tutortime’s application for keys, that being a matter left for decision by the OC. He indicated that he acted under delegated authority at all times. When asked about the form of order sought by the Bunker in these proceedings, Mr McCormack said that it was unusual, but he has worked in that situation previously.

31. Mr De Bono is the building manager. His affidavit addressed the deactivation of keys. He said that on or around 09 December 2019 he received an email from Mr Greenwood which advised that Mr Rowe no longer need extra fobs, ie keys. After an exchange of emails with him on 13 December 2019, he deactivated four fobs and said that if he had known Mr Rowe was not able to access Lot 148, he would have rectified that matter. He also recounted what happened on 20 January 2020 when Mr Rowe’s key was reactivated.

32. This affidavit also set out what Mr De Bono did in relation to the sewage tank issue from when Mr Rowe reported it to him on 20 January 2020 until 15 May 2020 when he said the strata manager took over that issue. The next topic covered was the provision of a letterbox, saying that he arranged for the engraving of a name plate on 16 September 2019 and that he installed the letter box for Lot 148 on 02 March 2020. Finally, this affidavit referred to emails in relation to the six-monthly building audit and the fire inspection.

33. Cross-examination revealed that Mr De Bono deactivated five keys and left four keys active, but the selection was obviously random as they were all in the name of Mr Rowe. It was also revealed that he started work as building manager on 01 June 2019 with the result that he had been in that role for more than seven months when the sewage issue arose. Mr De Bono indicated that he has no staff, attends to maintenance himself and was not aware of the sewer in question. As to activating or deactivating keys, he said that on another site where he worked that was done within 24 hours. He said that when he received the recent request, he assumed it was not urgent. For the provision of keys, Mr De Bono said he only needs what is in the form.

34. Ms Van Metter is a lot owner who is a member of the SC. In her affidavit, she acknowledged that by 10 March 2018 she was aware of the need to review by-laws as a result of the legislative changes introduced by the SSMA replacing the 1996 Act. Her evidence was that she sent an email on 10 May 2018 to the strata manager and other SC members expressing concerns in relation to the commercial lots using the concierge for deliveries, based on the concierge being an employee of the residents who “had a full-time job meeting the needs of the residents within the building”. Ms Van Metter was not cross-examined.

The documents

38. The evidence included large number of documents which have been considered by the Tribunal. As it is not feasible to summarise them, they are only referred to so far as is required by the submissions of the parties.

The Bunker’s submissions

39. The Bunker’s written submissions (1/2, ie Exhibit 1, tab 2) were lodged prior to the hearing and oral submissions were also made: lengthy opening submissions on first day of the hearing and closing submissions on the last day of the hearing.

40. From its written submissions, it is the Bunker’s case that the OC has been and is continuing to use its powers to frustrate the Bunker’s ability to let its lots which has caused pecuniary losses. Each of the topics upon which that claim is based is considered below. The relief sought is to place the powers of the SC in relation to Lot 148 (and Lot 167) in the hands of an independent strata manager.

41. Most of the opening submissions involved taking the Tribunal through a considerable number of documents which are considered below.

42. In oral closing submissions it was indicated that the Bunker sought the appointment of Wellman Strata Management Pty Ltd in place of the chairman, secretary, treasurer and SC for a period of two years, confined to matters relating to section 148. It is convenient to here note that a letter of consent, draft agreement and copies of licences were included in the Bunker’s evidence (4/939-958), thereby satisfying the requirements of subsections (4) and (5) of section 237 of the SSMA. It was noted that Mr McCormack had indicated he can manage a ‘split function’ arrangement and that he has had experience of that in the past.

43. By reference to the decision in Anderson v The Owners – Strata Plan No. 61034 [2019] NSWCATAP 61 at [10] it was noted that it is not just a matter of considering the current position because

“what happened in the past will affect the present and future for all owners”.

44. In Bischoff, at [121], it was noted that the SSMA provided for three levels of management: the OC, the SC (or executive committee) and the strata manager and/or caretakers. It was noted that the Bunker only seek to interfere with the middle level of management, namely the SC and only insofar as it relates to the Bunker.

45. The remaining oral submissions addressed the various topics, considered below. It was contended that the SC has manifested antipathy towards the Bunker, as the owner of Lot 148, demonstrated by a course of conduct that may be expected to continue unless the orders sought are made.

The OC’s submissions

46. The OC also lodged written submissions (1/3) and made oral submissions both prior to and after the oral evidence at the hearing.

47. In the written submissions, it was contended that the matters raised are minor, that section 237, as interpreted in Hoare and Bischoff, requires “in essence, proof of improper purpose or egregious mismanagement” and that the Tribunal should assume the OC is otherwise properly executing its functions.

48. The opening submission was that the relationship between the Bunker and the OC may have been troubled but was not dysfunctional and that “things are now calm and sensible”. It was said that any suggestion of a dispute is illusory and that, while there is a background issue in relation to the retrospective approval or ‘make good’ work, that is not a matter for consideration in this case.

49. In the closing submissions for the OC, it was suggested that there is a lease in place and there are no other outstanding issues. It was suggested that the issues relating to access have been a concern as far back as February 2013, not just in relation to the Bunker. The tenor of the submissions was that everything is now satisfactory and that an Extraordinary General Meeting (EGM) has been convened for 14 January 2021.

Consideration

50. It is convenient to deal with each of the topics raised by the Bunker by summarising the submissions of both parties before making findings in relation to each of those topics and then considering whether to make an order under section 237.

Denial of access in February 2018

51. The Bunker’s case was that on 15 February 2018, which was a Wednesday, the cards required to access Lot 148 were deactivated without prior notice with the result that workmen were unable to carry out their intended work. That lockout continued until 21 February 2018, ie the following Tuesday, when they were reactivated following a meeting, in the presence of those attending that meeting.

52. According to the OC, there was difficulty with the access control, believed to be related to a new building system. Although there is an email that suggests such a problem, that email, which was not sent until 20 February 2018, went on to set out “building rules”. That email also requested a meeting at 1pm the following day. No evidence was provided from any witness of a control access problem in relation to a new building system and the were no evidence as to the source of those building rules.

53. As to what was said at the 21 February 2018 meeting, there was a contest between the affidavit evidence of Mr Rowe for the Bunker and Mr Greenwood for the OC. The evidence of Mr Rowe is preferred for the reason indicated earlier. While paragraph 21 of Mr Rowe’s affidavit is of low weight given the multiple levels of hearsay (ie Mr Rowe saying what Simon said Ron said Kat said), Mr Greenwood admitted in cross-examination that the denial of access was deliberate.

54. Having regard to that evidence and the contemporaneous documents, the Tribunal makes the following findings:

1. On 15 February 2018 cards enabling access to Lot 148 were deactivated.

2. That deactivation was deliberate.

3. At 3.19pm that day, the strata manager inquired about the building work.

4. On 20 February 2018, the building manager sent an email that sought to impose “building rules” on access to Lot 148 by its builders.

5. Later that day, the Bunker’s solicitor sent a letter questioning the basis and validity of the suggested “building rules”.

6. Those “building rules” were based on what had been imposed in respect of prior building work at another location in the building.

7. On 21 February 2018 there was a meeting, attended by Mr Rowe for the Bunker, Mr Greenwood for the OC and others.

8. During that meeting, Mr Greenwood required compliance with the “building rules”.

9. Immediately following that meeting, the access cards were reactivated, in the presence of those who attended that meeting.

55. It is also noted that there is no evidence from the OC that the “building rules” have been approved by the SC, there is no suggestion of a breach of any by-law or special by-law and that the denial of access extended to the lot owner. Further, that the suggestion of a technical issue by the then BM in the 20 February 2018 email (3/35) was, to be polite, not accurate.

56. While this incident might be regarded as a minor matter, it does appear to reflect an unfavourable attitude towards the Bunker by the OC’s representative, Mr Greenwood. From the evidence it appears that a significant factor in relation to this issue is by-law 32 which granted the Bunker a special privilege to carry out alternations to common property (CP) without first obtaining consent from the OC, being a by-law that was challenged in earlier proceedings in this Tribunal, summarised below.

Other denials of access

57. There was evidence from Mr Rowe that three times in two weeks during 2018, on 18 July, 26 July and 01 August, access to the Bunker’s lot was refused.

58. As to 18 July 2018, the Bunker’s evidence was contained in the affidavits of Mr Rowe, at [40-42], and Mr Moloney. It was Mr Moloney’s evidence that he went to the building on that day, with others, to prepare a marketing video. After informing the concierge he was going to take some video footage outside the front of the building, a woman who identified herself as the Treasurer denied him and those with him to the building. While the affidavit of Ms Khor, who indicated she is the Treasurer, disputed the conversation Mr Moloney alleges. Mr Rowe’s first affidavit contains evidence of what Mr Moloney said to him after that confrontation which accords with Mr Moloney’s evidence.

59. By reason of (1) that corroboration of Mr Moloney’s evidence, (2) the alleged conversation having been set out in a document shorting afterwards (considered below), and (3) the fact that Mr Moloney’s evidence on this issue was not damaged by cross-examination, the Tribunal prefers the evidence of Mr Moloney and Mr Rowe to that of Ms Khor.

60. Mr Moloney’s evidence was that on 26 July 2018 he went to the building to meet a potential purchaser/tenant but, when he indicated to the concierge that he was going to inspect Lot 148, the result was that an “Asian gentleman”, being the same man who was present with Ms Khor on the earlier occasion, denied entry. There was no evidence from the OC in relation to this incident, other than Ms Khor’s suggestion she does not know who the identity of the “Asian gentleman” referred to by Mr Moloney. Again, Mr Rowe sets out a conversation he says he had with Mr Moloney at the time of this incident although he suggests the date was 27 July 2018.

61. As to 01 August 2018, Mr Ehrlich’s evidence was that, when he went to the building just after noon that day with a prospective tenant, the building manager tried, unsuccessfully, to prevent him from accessing Lot 148. This incident, which does not appear to have been challenged either in cross-examination or on the OC’s written submissions, was the subject of a letter dated 03 August 2020 (3/223-226) which matches Mr Ehrlich’s evidence, thus suggesting that what alleged in his affidavit was what he said to the Bunker’s solicitors shortly after the incident.

62. It is also necessary to consider the contemporaneous written communications in relation to these incidents. A 20 July 2018 letter sent by the Bunker’s solicitors (3/201-203) indicated a desire to prepare a marketing video and protested the denial of access. The same day response (3/200-201) sought extensive details, some plainly not relevant to the desire to prepare a marketing video and the remaining details having already been provided. The 23 July 2018 email sent in reply (3/207) noted that the letter read as suggesting there was an entitlement to control access to Lot 148. It is sufficient to record that a 26 July 2018 email from the OC’s solicitors (3/208-209) continued the contest as did a 31 Jul 2018 email from the Bunker’s solicitors (3/210)

63. The 03 August 2018 letter from the Bunker’s solicitors (3/223-226) set out what was said to have occurred on 01 August 2018, set out the then current situation in relation to the building works and threatened legal action if there was any further interference with the right to access Lot 148. There was no evidence of any subsequent interference.

64. The OC’s response, in its written submissions, was to suggest that there was no denial of access to Lot 148 on 18 July 2018, that filing in the foyer was not permitted without prior approval, that Raine & Horne’s Mr Moloney was not the lot owner and had no right to conduct “commercial works” on the common property.

65. While a desire to prevent filming within the building might be understandable, the evidence of the conduct of the concierge and building manager, coupled with the evidence of witnesses and documents, satisfies the Tribunal that, as at late July and early August in 2018, an instruction had been issued and was in place to deny access to Lot 148. There is no evidence that denial occurred after the 03 August 2018 letter from the Bunker’s solicitors threatening legal action if there was any further denial of access to Lot 148.

Refusal of consent to fire sprinkler works

66. The Bunker’s evidence in relation to this issue is found in Mr Rowe’s affidavit and the documents annexed to it. It is noted that paragraphs 60 to 94 of that affidavit were not the subject of any reply in the affidavit of Mr Greenwood.

67. After obtaining a fire safety report and having an emergency lighting test conducted, both in November 2017, the following sequence of events was said to have occurred:

Mar 18   Meeting between Mr Rowe and the BM during which the BM said she would have Oxford Fire look into the matters raised by Mr Rowe

20 Mar 18   OC commenced Tribunal proceedings which included a request for an interim order prohibiting fire safety works from being done

22 Mar 18   Mr Rowe emailed the BM with details of work to be done (3/160)

28 Mar 18   An email was sent to Mr Greenwood by a fire engineer (3/155)

29 Mar 18   At the hearing of the interim application, Mr Greenwood suggested advice had been received advice from a fire engineer that some electrical work was illegal and unsafe

29 Mar 18   A copy of the 28 Mar 18 email was sent by Mr Greenwood to Mr Rowe, but indirectly in that Mr Greenwood sent it to the OC’s solicitors who sent it to the Bunker’s solicitors who sent it to Mr Rowe (3/151-155)

29 Mar 18   The Bunker’s solicitors wrote to the OC’s solicitors noting that work raised by the fire engineer was the same as to work raised by Mr Rowe and sought consent to carry out the necessary work (4/1213-1214)

07 Apr 18   Mr Rowe sent a follow-up email to the BM (3/166-167)

09 Apr 18   Mr Rowe sent a follow-up email to the SM (3/165)

10 Apr 18   SM advised issues to be discussed at SC meeting that night (3/165)

01 May 18   The OC’s solicitors advised of no consent to carry out work that included the fire safety work (3/168-169) and the Bunker’s solicitors replied to confirm that (3/170)

02 May 18   The interim application was dismissed, noting that the Bunker would not carry out work (including the fire safety work) without giving notice and that no less than 10 days’ notice would be provided (3/171)

18 May 18   The Bunker invited the OC to carry out the fire safety work and gave notice of that the Bunker would do work if the OC didn’t (3/172-173)

21 May 18   The OC’s solicitors responded, with unnecessary pedantry (3/174-175)

24 May 18   The Bunker’s solicitors replied (3/176-178)

29 May 18   The Bunker commenced carrying out the fire safety work

31 May 18   Some, but not all, of the fire safety work was completed

01 Jun 18   Consent orders made by Tribunal requiring OC to indicate by 15 Jun 18 if it would permit the Bunker to complete that work (3/181-182)

06 Jul 18   Further correspondence failed to resolve the issue

13 Jul 18   A private certifier gave notice to OC of a proposed order (3/197-199)

30 Jul 18   A further notice was issued to the OC by that certifier (3/219-221)

07 Aug 18   Around this date, the fire safety work was completed

68. The Bunker’s case is that work which should have taken about three working days took about five months to complete and that the failure to address the fire safety issues was a breach by the OC of its duty to repair and maintain under section 106 of the SSMA.

69. The OC’s written submissions suggested that this issue was dealt with by the OC’s solicitors, BM and fire safety consultant, that the OC’s solicitors were not notified of the fire sprinkler issues until 01 June 2018, that there was subsequent correspondence, and the work was “carried out on or about 7 August 2018”.

70. The Tribunal notes that the OC’s solicitors were made aware of these fire safety issues, in writing, as early as 29 March 2018 (4/1213-1214) and that these issues were raised in the Tribunal that day as that email referred to what had been said in the Tribunal earlier that day. It should also be noted that the OC’s solicitors, BM and fire safety consultant and each retained or employed by the OC from whom instructions are received.

71. Further, it is noted that Mr Greenwood received an email on 28 March 2018, being an email that included details of work that was included in what Mr Rowe had previously indicated, caused the Tribunal on 29 March 2018 to be advised of the matters raised in that email in a manner which told against the Bunker and then, only afterwards, provided that 28 March 2018 to Mr Rowe but only via sending it to the OC’s solicitors who sent it to the Bunker’s solicitors who sent it to Mr Rowe.

72. Further, letters such as the 24 May 2018 reply from the OC’s solicitors (3/176-178) suggest a pedantic and pugnacious approach which it is difficult to accept could have been taken without instructions.

73. The evidence on this topic reveals that what could and should have been resolved promptly took too long, resulted in both parties incurring avoidable legal costs and involved proceedings in the Tribunal which should not have been necessary.

74. The duty to repair and maintain common property, which is imposed by section 106 of the SSMA, and which was described in Siewa Pty Ltd v The Owners Strata Plan 35042 [2006] NSWSC 1157 as a strict duty and not just a matter of reasonable care or best endeavours, was continuing throughout the period from March to August in 2018 as was the fire safety risk raised by the matters under consideration.

Additional security keys

75. Again, it is desirable to compact a significant volume of evidence into the following chronology of relevant events, based on the affidavit of Mr Rowe and the accompanying documents. On this topic, Mr Greenwood’s affidavit annexed copies of documents (annexures C to P inclusive) which have also been included.

19 Aug 19   After meeting Mr Greenwood, Mr Rowe sent details of 3 prospective tenants and Mr Greenwood sought further details of one (3/227, 3/234)

20 Aug 19   Mr Rowe sent Mr Greenwood details for Tutortime (3/234)

23 Aug 19   The Bunker leased Lot 148 to that company (3/858)

02 Sep 19   Mr Rowe met Mr Greenwood, made a request for additional keys

05 Sep 19   The Bunker requested 10 extra keys, later reduced to 9 (3/240, 3/250),  An 11.29pm email relied on the 2-key limit of Special By-law 6 (3/247) and told The Bunker to submit an application to the SC

09 Sep 19   Additional conditions imposed on issue of further keys (3/249, 3/256)

10 Sep 19 SM emailed Mr Rowe, settled out requirements of the Plan of Management (D, ie Annexure D)

10 Sep 19   Mr Rowe replied, querying request for DOB and home address (E)

11 Sep 19 SM replied that compliance with Plan of Management required (F)

11 Sep 19    Mr Rowe said information reasonably required had been provided (G)

12 Sep 19   SM sent email to SC members, then sought legal advice (H)

15 Sep 19   The OC refused further keys, required application by occupier (3/266, I)

15 Sep 19    Mr Rowe sought details of the basis for requests for information (J)

16 Sep 19   Mr Greenwood replied, quoting from Plan of Management (K)

16 Sep 19   Mr Rowe responded, alleging failure to act reasonably (L)

17 Sep 19   Mr Greenwood said any application to be made by tenant (M)

18 Sep 19   Tutortime lodged an application, as required by the OC (3/277)

18 Sep 19   That application was forwarded to SC members (N)

18 Sep 19   Mr Greenwood asked Tutortime to amend, resubmit its application (O)

19 Sep 19   Mr Greenwood sent a further email to Tutortime (3/281, P)

20 Sep 19   Tutortime wouldn’t agree to provide personal details of its staff (3/1215)

21 Sep 19   Tutortime withdrew from the lease (3/1216)

76. After sending his 19 September 2019 email to Mr Rowe and the principal of Tutortime (P), eight minutes later Mr Greenwood said to his fellow SC members:

I have sent this email this evening at the suggestion of our lawyer Peter Ton and the threat of legal action by the Buner if we do not comply, which Peter Ton thinks would go against us if we do not give them the keys. I am of course mortified to have to give this much, but if that is the law then we have to do it I guess. I also take John’s suggestion that I do not organise the electrician right now to cut off the common property electricity supply, but I can’t see how the OC should be expected to supply electricity to the Bunker’s tenant.

77. The Bunker’s case was that, as Special By-Law 6 was made by the OC in a general meeting, the SC cannot vary those conditions or impose additional conditions. Such variations were said to be: (1) requiring an application by an occupier, rather than an owner, contrary to clause 4; (2) requiring the provision of further particulars other than name, contrary to clause 5; and (3) changing the policing of use of the keys from the lot owner to the SC contrary to clause 9.

78. It was suggested that it took 13 days, from 02 to 15 September in 2019 for the OC to decide that the Bunker did not require additional keys. As a result, it was said to be unsatisfactory that the OC acted in a way that was not authorised by either Special By-Law 6 (3/241-242) or the Plan of Management (3/845-857) and was unreasonable.

79. The OC’s case was that Special By-Law 6 provided for a standard allotment of 2 keys per lot and that additional keys required an application which would not be unreasonably refused. Further, that the Plan of Management required occupants to maintain a register of the fobs (ie keys) allocated to each staff member, which register had to be available to the OC, and include: (1) full name, (2) residential address, (30 contact phone number, (4) email address, (5) gender, (6) date of birth, (7) date of staff induction, and (8) the date on which a copy of the Plan of Management was provided.

80. It was said that the OC requested particulars and, as those particulars were not provided, the application was not granted. Having obtained legal advice, the OC’s case was that it acted both in keeping with the legal advice it received and reasonably.

81. A consideration of the wording of Special By-Law 6 does indicate that what the SC was seeking differed from that by-law in the three respects indicated by the Bunker.

82. The Plan of Management is a document that formed part of the development consent (DA294/18) which could “only me amended or updated by a modification of the development consent”. Section 10 required the occupants to maintain a register of the fobs allocated to each staff member which must be “available to the Owners Corporation” and includes the following words: “Seven (7) key fobs will be assigned to those with access to the car/bicycle parking and the remain remaining (sic) keys fobs allowed to office staff parking”. In section 11.2, the details of staff members to be kept in that staff register are set out and those details include residential address and date of birth.

83. In the 19 September 2019 email (3/281), what was sought, so far as is presently relevant, was:

The address and contact details of each of the persons who wish to have a security key will be supplied, together with confirmation that they will abide by the strata by-laws and POM. The address and contact details are required as they are entered into our security system so that the owners corporation can ensure security keys are used only by the authorised person and in case a replacement is required if a security key is lost, etc. Further, the owners corporation advises that a key will be issued to each of their employees for their collection from our building manager on receipt of written acknowledgment requested above and supply of valid ID to verify their identity.

84. The request for “valid ID to verify identity” is reasonable and that requirement could be met by showing a passport, which contains name and photo, or by a driver’s licence and although a driver’s licence contains a residential address that does not need to be recorded. A reasonable approach to the question of valid ID to verify their identity would be to sight government-issued photo id and record the number of that document, as commonly occurs elsewhere. Details such as residential address and date of birth are not reasonably required to be recorded for that purpose.

85. The request for “address and contact details” differs from the Plan of Management which requires details to be kept by the occupants in a Staff Register and the details required to be kept in the Staff Register do not go beyond the matters which an employer would be expected to obtain and retain for each of its employees.

86. What was requested in the 19 September 2019 email does differ from the Plan of Management in that it required address and contact details to be provided to the OC (or even to the BM on behalf of the OC) instead of those details being included in a Staff Register maintained by the occupant. However, the fact that the Plan of Management requires that Staff Register to be available to the Owners Corporation means that there is no practical difference since either way the address and contact details would be available to the OC. Accordingly, any overreach in the 19 September 2019 email is of a technical rather than substantive nature.

87. The Tribunal considers that what was sought from the Bunker and Tutortime prior to the 19 September 2019 email does appear to be overreach by the SC on behalf of the OC when compared to what appears in Special By-Law 6 and the Plan of Management. Further, the forms annexed to Mr De Bono’s affidavit (Annexure A) suggest that access keys/cards/fobs were issued at the request of Mr Rowe by the provision of no more personal details than name and phone number.

88. It may have been that any concerns Tutortime had might have been met if the OC or SC had sought confirmation that a staff register was prepared and would be maintained by the tenant and that the OC could access that staff register whenever any need to do so arose. However, the pugnacious approach of both the Bunker and the OC on this issue appears to have created a situation where neither of them was prepared to make a concession and Mr Greenwood expressed regret at having to make any concession, saying he was “mortified to have to give this much”.

89. There are two aspects of Mr Greenwood’s 19 September 2019 email to his fellow SC members that are noteworthy. First, the grudging acceptance of the advice to accept the advice of the OC’s lawyer which involved an acceptance of less than what had previously been sought. Secondly, the clear suggestion that Mr Greenwood harboured an intention to turn off the electricity supply to the Bunker’s tenant.

Delayed provision of a letter box

90. On 14 September 2019 Mr Rowe sent an email to the SM and BM, asking about “the process of getting a letter box” (3/360). It was not until a follow-up email was sent on 07 October 2019 (3/360) that a next day reply from the BM (3/359), which was copied to Mr Greenwood, indicated a period of three to four weeks. More than three months later, on 20 January 2020, when Mr Rowe met with the BM (Mr De Bono), a further email was sent to the BM, copied to Mr Greenwood (3/358-359). Further follow-up emails were sent on 05 and 21 February 2020 (3/357-358), to both the BM and Mr Greenwood, and a 21 February 2020 reply (3/357) suggested the BM was waiting on the engraver. The letter box, requested in mid-September 2019, was not installed until March 2020 when a key was provided to Mr Rowe.

91. The evidence for the OC on this issue came from Mr De Bono who said that around 16 September 2020 he arranged for a name plate to be engraved but “there were issues determining the correct size which caused some delay”, and on about 02 March 2020 he installed the letter box. Despite being provided with copies of emails in relation to this issue, Mr Greenwood did not refer to it in his affidavit.

92. For the Bunker, it was contended that this was evidence of dysfunction in the management of the strata scheme in relation to the OC’s dealings with the Bunker.

93. The OC’s case was that this was a matter for the BM and that, as there was no mail during the period of the delay, the Bunker suffered no loss. The fact that there may have been no mail misses the point that the Bunker was endeavouring to lease Lot 148 and the lack of a mailbox was relevant to the facilities available to a tenant.

94. The contemporaneous emails do not raise the issue with the engraver until 21 February 2020. The BM himself suggested, on 07 October 2019, a period of three to four weeks. In his affidavit, the BM does not refer to any delay other than the engraver and it is difficult to see how that issue, said to have related to the correct size, could have caused any significant delay since that was a matter within the control of the BM.

95. The SM was only contacted initially in an email which sought details of the process and no further contact appears to have been made with the SM in relation to this matter. However, the OC’s submission that this was purely a matter for the BM must be rejected as the BM was providing Mr Greenwood, who chaired the SC, with copies of emails.

96. It is difficult to see why the person who chairs a strata scheme which comprises 370 lots would be provided with copies of emails relating to a letterbox for one of those lots unless the person who sent him those emails, namely the BM, had been instructed to do so. Even if there was no such instruction, the fact remains that Mr Greenwood was made aware of the delays in relation to the letterbox and the evidence does not contain any suggestion that he ever said or did anything about that delay.

Deactivated security keys

97. The evidence or Mr Rowe, Mr Greenwood and Mr De Bono on this issue may be summarised as follows:

09 Dec 19   At an EGM, Mr Rowe advised he only required 3 or 4 key fobs and the BM was informed

09 Dec 19   The BM was told Mr Rowe needed 4 not 9 fobs (De Bono, Annexure B)

13 Dec 19   The BM advised Mr Rowe he no longer needed 9 keys and his email requested “please email me back the 4 numbers you would like to keep active and I will cancel the rest” (3/293)

13 Dec 19   Mr Rowe replied but did not provide that information, saying he presumed the BM had name, address and contact details for every key holder, suggested each such person be contacted by the BM (3/296)

17 Dec 19   As all 9 fobs were in Mr Rowe’s name, 4 were deactivated, at random

Later   Mr Rowe was unable to obtain access due to deactivation of his card

20 Jan 20   Mr Rowe met with the BM and his key was reactivated

20 Jan 20   Mr Rowe emailed the BM to say: “I note that 5 fobs were deactivated by you in early December because you didn’t know who had which keys, which included by fob. You reactivated by fob today.” (3/309)

98. Mr De Bono’s evidence was that, had he known earlier, he would have reactivated Mr Rowe’s fob and that the concierge was able to provide lift access to Lot 148 for Mr Rowe if he did not have an activated fob.

99. This topic does not tell against the OC, Mr De Bono or Mr Greenwood. What happened would not have occurred if Mr Rowe had complied with the BM’s 13 December 2019 email or had not presumed, in his response, that the BM would be able to ascertain which fobs to deactivate.

Sewage tank

100. As Lot 148 is below ground level, all waste from the lot collects in a tank underneath and is later pumped up to ground level for disposal into the sewerage system. Since that tank is in common property, the Bunker is unable to fix the problem.

101. The sequence of events that is suggested by the Bunker’s evidence on this topic, and the OC’s evidence, is as follows:

20 Jan 20   Strong, unpleasant smell first noticed, and an alarm was sounding

20 Jan 20   Mr Rowe met with BM, the faulty sewer pump was discussed

20 Jan 20   An email was sent by Mr Rowe to confirm that (3/309)

21 Jan 20   BM submitted report in relation to the sewage tank (De Bono, C)

21 Jan 20   BM advised Mr Rowe the tank had collapsed and requested that the plumbing on level 1 not be used (3/312)

28 Jan 20   BM advised that a plumber would be inspecting at 1pm (3/314)

05 Feb 20   Mr Rowe sent a follow-up email (3/313-314)

06 Feb 20   BM said two quotes sought, one obtained, SC meeting 11 Feb (3/315)

21 Feb 20   Mr Rowe sent a follow-up email (3/316)

21 Feb 20   BM replied that “several contingencies need to be clarified” (3/317)

21 Feb 20   Mr Rowe requested a timetable for the steps required (3/317)

21 Feb 20   BM asked Mr Rowe for details of anyone willing to do the job (3/318)

25 Feb 20   Mr Rowe noted he was unable to show Lot 148 to prospective tenants, reminded BM of section 106, suggested the SM be contacted (3/319)

12 Mar 20   After further email exchanges, Mr Rowe the BM for a date by which he believed the issue would be fixed (3/322)

18 Mar 20   Mr Rowe sent a follow-up email to the BM (3/322)

18 Mar 20   BM sought access so work could start on 24-25 Mar 20 (3/321)

19 Mar 20   Mr Rowe repeated his request for a timetable for the work (3/321)

19 Mar 20    BM suggested plumber needed to drain the fluid before providing a quote and a timeline (3/320)

27 Mar 20   Mr Rowe sent a follow-up email (3/339-340)

27 Mar 20   BM said tank had been pumped out, couldn’t be repaired, and plumber was providing a scope of work and quote on 30 Mar 20 (3/338)

27 Mar 20   Mr Rowe sent an email to the BM, copied to Mr Greenwood and the SM, requesting their assistance (3/337)

30 Mar 20   Mr Rowe asked the BM if he had obtained the quote (3/335-336)

30 Mar 20    BM replied, suggesting he would have the quote “tomorrow” (3/335)

01 Apr 20   Mr Rowe asked BM if he had a quote (3/334)

06 Apr 20   Mr Rowe sent a follow-up email to BM, Mr Greenwood and SM (3/334)

06 Apr 20   SM replied, saying SC met the previous week and it was hoped “to make a decision shortly” (3/333)

07 Apr 20   Mr Rowe emailed the SM, seeking a timeframe (3/332-333)

08 Apr 20   BM said quote obtained and sent to SC (3/331)

08 Apr 20    Mr Rowe asked for a copy of the quote and a timeline (3/330-331)

09 Apr 20   Mr Rowe emailed the SM, and SC members, seeking details (3/330)

09 Apr 20   Mr Greenwood suggested Mr Rowe should be able to get his own plumber to say what work needs to be done (3/329)

09 Apr 20   Mr Rowe replied that it was common property work and not the Bunker’s responsibility (3/329)

15 Apr 20   Mr Rowe sent follow-up email to Mr Greenwood and others (3/328)

17 Apr 20   Mr Rowe sent follow-up email to Mr Greenwood and others (3/327)

20 Apr 20   Mr Rowe sent follow-up email to Mr Greenwood and others (3/327-328)

22 Apr 20   BM advised plumber waiting on a supplier, waiting on insurance which can take up to 4 weeks, work would take up to 20 days (3/325-326)

27 Apr 20   BM obtained advice from plumber, provided to Mr Rowe (De Bono, D)

27 Apr 20   Mr Rowe again requested a timeline, asked when the Bunker would be able to use its lot and queried why the OC’s lawyer was being sent copies of the emails (3/325)

04 May 20   The sewer pump was not fixed when Mr Rowe signed his affidavit

15 May 20   SM took over management of the issue from the BM (De Bono [9(ix)])

Later   Further emails were exchanged in relation to this issue

20 May 20   Plumber provided SM with budget, contract and insurance documents (McCormack [5(e)]

05 Jun 20   A decision was made to consult an engineer (2/27)

13 Jul 20   Tribunal ordered OC to advise the Bunker on or before 27 Jul 20 of the projected programme for the repair of the sewerage system

21 Jul 20   SM provided copy of engineer’s report to Mr Rowe (Greenwood, V)

27 Jul 20   The OC did not comply with that order of the Tribunal

05 Aug 20   SC meeting update on “sewer tank repairs” (Greenwood, W)

Sep 20   The OC provided the Bunker with a programme of the works

Oct 20   Work on the sewer tank was completed

102. It is important to note the concession of the BM, Mr De Bono, who said, during cross-examination, that until 20 January 2020 he did not know this sewer tank existed.

103. The Bunker submitted the OC failed to carryout rectification work, failed to provide updates to the Bunker and failed to tell the Bunker when the work would be carried out. Further, that the OC had not explained either the delay or why the delay was not its fault. As a result, it was submitted there was (1) a breach of section 106 of the SSMA, (2) a failure to deal with the Bunker in good faith, and (3) a breach of an order of the Tribunal.

104. The OC’s response to this topic was to suggest that this issue was immediately referred to the BM and the SM who at all times handled the matter which was complex and involved a delay beyond the control of the OC. The suggestion that the issue was immediately referred to the SM is rejected since the BM’s evidence was that the SM took over the issue from 15 May 2020, being an issue that arose on 20 January 2020.

105. In describing the pace of this repair work, the Tribunal considers even the word mañana too prompt. The number of follow-up emails that were sent by Mr Rowe only serve to confirm both the time taken and the lack of adequate explanation.

106. The first written submission of the OC on this topic (“as soon as it became privy to the sewage tank issue it immediately referred the matter to its building manager and strata manager”) is rejected as providing any explanation for two reasons: first, the matter was initially referred by the Bunker to the BM, so it was not a matter of the SC referring the matter to the BM and SM; secondly, the statutory obligation rests imposed by section 106 of the SSMA rests with the OC, not the SM or the BM.

107. The second written submission of the OC on this topic (“the matter of the sewage tank has at all relevant times been handled by the building manager and/or strata manager”) overlooks the contemporaneous documentary evidence which clearly shows this topic being referred to Mr Greenwood and other SC members for their consideration, decision and action.

108. The third written submission of the OC on this topic (“the matter of sewage tank works are (sic) complex causing delay outside the control of the First Respondent”), even if correct, would not explain the lack of updating information provided to the Bunker.

109. The Tribunal is comfortably satisfied that, even allowing for COVID-19 (which was not referred to in the emails at the time), there was undue delay, insufficient communication to the affected lot owner having regard not only to the statutory duty imposed by section 106 but also to the nature of the issue under consideration which prevented use of the Bunker’s lot for months. Simply stated, even accepting that the issue was not straightforward, it should not have taken as long as it did to resolve.

Other matters

110. A number of other matters were raised by the parties in their submissions. The Bunker raised the litigation between the parties, including an allegation of delaying a general meeting, what was said to be Mr Greenwood’s campaign, Ms Van Metter’s email, a recent issue in relation to keys and the conduct of Mr Harrison. The OC made submissions as to confidence in the SC. Dealing briefly with those matters in turn.

Litigation between the parties

111. By-law 32 gave the Bunker the power to carry out work by giving notice to the OC rather than requiring a decision of the OC. As a result, after a Complying Development Certificate (CDC) was issued on 16 November 2017, notice was given to the OC on 06 December 2017 of the intention to undertake fit-out work which then commenced and concluded in February 2018. A second CDC was issued on 06 February 2018.

112. On 20 March 2018 the OC commenced proceedings in the Tribunal which sought the removal of that fit out work and reinstatement of the common property. An interim application was dismissed on 02 May 2018 and the application for substantive relief was dismissed on 07 January 2020. On 04 February 2020 the Tribunal’s 07 January 2020 decision was appealed and that appeal was allowed on 30 September 2020.

113. That effect of that decision of the Appeal Panel, simply stated, is that By-law 32 does not remove the need, created by section 108 of the SSMA, for the Bunker to obtain a special resolution for work which involves changes to common property. A challenge to that decision has been made in the Supreme Court by the Bunker.

114. The decision of the Appeal Panel included a ‘make good’ order but only required commencement on 01 February 2021, thereby providing the Bunker with a period of four months in which to obtained retrospective approval for the fit-out work so as to avoid the need to comply with the ‘make good’ order.

115. When the Bunker encountered difficulties in having a meeting convened to consider a request for retrospective approval, on 24 November 2020 the Bunker commenced separate proceedings in the Tribunal, both interim (SC 20/49167) and substantive (SC 20/49168). Those proceedings were listed on the first day of the hearing of these proceedings and, on the following day, orders were made by consent for such a meeting to be held.

116. It is also necessary to outline other litigation. On 17 July 2018 the OC commenced proceedings in the Land and Environment Court, challenging the CDCs upon which the fit-out work was based. On 31 August 2018 the Bunker sought that court’s approval in the event the CDCs were overturned. Those proceedings were finalised in favour of the Bunker on 06 August 2019. The conditions of consent included the Plan of Management. A final occupation certificate was issued on 21 August 2019 and a Building Information Certificate on 30 August 2019.

Mr Greenwood’s campaign

117. There are three matters which warrant reference. First, on 02 March 2018 Mr Greenwood, who chairs the SC, sent an email to the other SC members (3/38-41). Headed “Private and Confidential” and “Owners Corporation Only”, that email began by indicating that he, with others, had met with an officer from North Sydney Council earlier that day. He described as “most alarming” that council zoning permits office use for Lot 148. The last section of the email set out a proposed plan of action, the last sentence of which read as follows:

If we are prepared to spend a lot it may become sub-economic for them to pursue, as this is undoubtedly a commercial decision for them, while it is a lifestyle and amenities issue for us.

118. The litigation which had been conducted since that email was sent, early in March of 2018, is consistent with the strategy advocated in those words.

119. Secondly, in the 19 September 2019 Mr Greenwood sent to his fellow SC members, he said: “I also take John’s suggestion that I do not organise the electrician right now to cut off the common property electricity supply …” which clearly suggests he harboured an intention to take that step against Lot 148.

120. Thirdly, on 19 August 2020, Mr Greenwood sent an email to all lot owners which began with the sentence: “If the Bunker had indicated the collapse of the sewer sump under the bunker earlier, the OC would have commenced work much earlier.”

121. It is sufficient to record that the first sentence of those quoted words is inaccurate since the clear, unchallenged evidence in the Bunker’s case is that the problem with the sewer sump was reported as soon as the smell it created became apparent. Further, there was an alarm sounding on 20 January 2020 when the matter was reported and there is no evidence of the alarm sounding prior to that date nor is there any basis to suggest the matter could or should have been reported prior to that alarm sounding. The Tribunal notes that this email provided inaccurate information to all lot owners in relation to the Bunker.

Ms Van Metter

122. On 10 March 2018, Ms Van Metter, who has been a member of the SC since 2016, sent an email to her fellow SC members which suggested “In the light of the current situation with Lot 148, we need to implement additional by-laws”. The additional by-laws for which Ms Van Metter contended included “By-law regarding the issue of swipes to commercial/retail lots – limit to 4.”

123. This email included a further suggestion that “For the upcoming EGM we need to have revised By-laws that will relate to the operation of the Call Centre”. Eight bullet points, under a heading “Concerns we need to cover” included “Restricting the use of the concierge …” and:

No building products or commercial products should be carried by the lifts that service the residents of the building. If they need access they can drive down to level 2 and carry what they want from there.

124. In her affidavit, Ms Van Metter suggested her proposals were the result of a need to update the by-laws by reason of the passage of the SSMA in 2015 and concerns in relation to the proposed use of Lot 148 by the Bunker.

Provision of keys

125. The 03 December 2020 email, which became Exhibit 6.1, reveals that the Bunker’s Mr Ehrlich sought five additional keys for an incoming tenant and the next day reply from the BM (Exhibit 6.2) indicated that he is off site until 14 December and will have the keys/fobs available on 15 December at a cost of $55 each.

126. When this topic was raised with Mr De Bono in cross-examination, on 10 December 2020, he said arrangements were in place for them. He agreed that, at another site where he had worked, keys would have been provided within 24 hours and said he assumed the request was not urgent.

127. Shortly after this matter was raised, it was indicated that the requested keys would be available by 4.30pm that day.

Mr Harrison

128. An email from the Bunker’s solicitor to the SM, copied to Mr Greenwood and other SC members, became Exhibit 6.3. Dated Monday 07 December 2020, that email suggested that Mr Harrison, an SC member, entered Lot 148 without notice and without consent on 07 and 30 November 2020. It was suggested this was not the first time such a trespass by members.

129. There was an attempt by Mr Greenwood to explain away this matter in cross-examination. However, after suggesting Mr Harrison told him he had only gone to Lot 148 with Mr Rowe and the BM, Mr Greenwood subsequently indicated an instance on 17 October 2020 when Mr Harrison had gone to Lot 148, not on the invitation of the lot owner, which was said to involve a question of “illegal parking”.

Confidence in the SC

130. The written submissions for the OC indicated that the most recent Annual General Meeting (AGM) of the OC was held on 23 August 2020. It was noted that, in advance of that meeting, Mr Rowe had sent an email to all lot owners, suggesting that $750,000 had been spent on legal costs and estimate that there would be a further cost of $250,000.

131. It was submitted that the fact that each member of the SC was re-elected reflected that the OC was properly exercising its powers and functions and that the Bunker is simply dissatisfied with the members of the SC. However, that submission overlooks the fact that whether statutory powers and functions are being properly exercised is not a popularity contest and that the issue in these proceedings is not whether the SC has been re-elected but whether the provisions of section 237 of the SSMA have been established.

Decision

132. In relation to the denial of access in February 2018, the Tribunal finds that action to have been deliberate and to have involved a desire on the part of Mr Greenwood to impose rules on building work, being building work which the Bunker was entitled to undertake by reason of By-law 32 and having obtained the requisite council approval. This denial of access applied not only to builders but also to the lot owner. The approach of the OC was combative and confrontational.

133. As to the denials of access in July and August of 2018, the Tribunal is satisfied that an instruction was given to deny access to Lot 148, without valid reason, which only ceased when a threat of legal action was made by the Bunker’s solicitors.

134. The dispute in relation to the fire sprinkler works took too long to resolve, resulted in avoidable legal costs and Tribunal proceedings that should not have been necessary. Further, the extent of the delay was such as to involve a breach of the duty imposed by section 106 of the SSMA to repair and maintain common property.

135. When additional security keys were sought, the conduct of the OC went beyond Special By-Law 6 and suggested a desire to make it as difficult as possible for the Bunker’s tenant to obtain security keys. The Tribunal is satisfied that such conduct caused the loss of that tenancy. Further, the fact that Mr Greenwood said he was “mortified” to have to make the concessions recommended by the OC’s lawyer, favours the view that his opposition was a significant factor in relation to this matter. The clear evidence from Mr Greenwood’s own email that he was intending to cut off the electricity supply to Lot 148 reveals he harboured animosity to the Bunker.

136. The time it took for a letterbox to be provided for lot 148 was too long. Considered in isolation, this matter could not be considered substantial but, in conjunction with other matters it suggests either sub-standard management or antipathy to the owner of Lot 148, neither of which can be considered acceptable.

137. Deactivation of Mr Rowe’s security keys is not a matter that reflects adversely on either the OC or the SC.

138. Rectification of the sewage tank issue also involved an unacceptably long period. After the problem first became apparent on 20 January 2020, it was not until 27 March 2020 that the tank was emptied. Mr De Bono, who did not even know of the existence of the tank before 20 January 2020, suggested there was an SC meeting held on 11 February 2020. On 25 February 2020 Mr Rowe suggested the SM be contacted but it was not until 15 May 2020 that the SM took over.

139. Mr Greenwood, who chaired the SC, was made aware of the problem as early as an email sent on 20 January 2020 and that a number of subsequent emails were copied to him. It was not until 05 June 2020 that an engineer was retained. It was not until October 2020 that the matter was finally addressed. It is noted that the issue progressed promptly after Tribunal proceedings were commenced and an order was made on 13 July 2020.

140. The Tribunal is satisfied that the OC’s conduct in relation to this matter involved a breach of the duty to repair and maintain common property imposed by section 106 of the SSMA. While the OC may delegate matters to the BM and/or the SM, responsibility remains with the OC. There was also a failure to provide a proper level of information to the lot owner as can be seen from the number of follow-up emails he sent.

141. The history of litigation between the OC and the Bunker, commencing on 20 March 2018, favours the view that Mr Greenwood’s expressed desire, set out in his 02 March 2018 email, found sufficient support with at least other SC members and likely other lot owners and the result was that the conduct of the OC was infected by his desire to make it “sub-economic” for the Bunker to pursue leasing or even using Lot 148.

142. Viewed on its own, Ms Van Metter’s 10 March 2018 email would not warrant consideration. However, when considered in conjunction with the other matters between the OC and the Bunker, it confirms a clear antipathy on the part of the SC towards the Bunker.

143. From an evidentiary standpoint, the movements of Mr Harrison rose no higher than the Tribunal being provided with a copy of a letter of complaint from the Bunker’s solicitors. However, when the cross-examination of Mr Greenwood is added, it does appear that Mr Harrison was, at the very least, “keeping an eye” on Lot 148 to an extent that would not be expected of an SC that is functioning properly.

144. The delayed provision of keys warrants two comments: that was yet another example of an unacceptable level of delay in the service provide by the OC to the Bunker; as with the fire sprinkler work and the desire to have an EGM convened, the problem was resolved once the prospect of Tribunal orders arose.

145. In these circumstances, having regard to what was said in Bischoff at [32], the Tribunal is satisfied that the SC has used its powers for an improper purpose in the following respects:

1. The SC has manifested the desire, expressed by its chair, to litigate against the Bunker with the aim of rendering their use of their lot(s) uneconomic.

2. That included litigation in the Tribunal and the Land and Environment Court.

3. The SC has manifested a desire to obstruct and/or delay the Bunker.

4. That has included fire safety works, sewage pump works, the provision of access keys, the provision of a letter box and convening an EGM.

5. Such conduct has resulted in decisions not being made on the merits.

146. Further, the Tribunal is satisfied, having regard section 237(3)(a) of the SSMA, that the management of this strata scheme is not functioning satisfactorily based on the following matters:

1. The denial of access in February 2018.

2. An instruction to deny access in July-August 2018.

3. The time taken to address fire safety issues.

4. The time taken to address a sewage tank issue.

5. The time taken to provide access keys.

6. The time taken to provide a letter box.

7. The clear antipathy of SC members, including but not limited to Mr Greenwood, to the Bunker’s use of Lot 148 and Lot 167.

8. The fact that matters such as the fire safety works, the sewage tank work, the recent request for keys and the Bunker’s desire to have an EGM convened were only resolve promptly after Tribunal proceedings were commenced.

147. Thirdly, having regard to section 237(3)(c) of the SSMA, the Tribunal is satisfied that the OC, by its agent the SC, failed to perform its duty under section 106 of the SSMA in relation to matters involving health and safety:

1. Sewage tank works, which took from January to October in 2020 to resolve.

2. Fire safety works, which took from March to August in 2018 to resolve.

148. While the evidence was sufficient to satisfy the Tribunal that an order might be made in relation to all functions and not just those relating to Lot 148 and Lot 167, the Bunker did not seek such a broad order and the OC did thus not make any submissions on that aspect. In those circumstances, it is not appropriate for the Tribunal to, metaphorically speaking, blaze a trail down a path that has not been trodden by counsel.

149. Although, the Tribunal would normally be hesitant to make a restricted order of the kind sought by the Bunker, any such concern is addressed by the evidence of Mr McCormack that he has prior experience of working in such a situation. As the problems have prevailed between the SC and the Bunker for more than two years, the Tribunal is satisfied that a term of two years is appropriate for the order.

150. Although that order is intended to isolate from the SC matters relating to Lot 148 or Lot 167, there will be matters affecting all lots and it does not make sense to have decisions in relation to such matters made twice. As a result, the order should not extend to cover matters relating to all lots.

Orders

151. For the reasons indicated above, the orders that will be made are as follows, including orders that will cater for any application for costs:

1. An order under section 237(2)(b) of the Strata Schemes Management Act 2015 appointing Wellman Strata Management Pty Ltd as strata managing agent, for a period of 2 years from the date of this order, to exercise all the functions of the chairperson, secretary, treasurer and strata committee of the Owners Corporation in relation to any matter relating to:

1. lot 148 and/or 167,

2. the registered proprietor of either of those lots, or

3. any tenant, lessee or licensee or either of those lots not being a matter that affects all lot owners.

2. An order under section 229 of the Strata Schemes Management Act 2015 that the Second Respondent is provide a copy of these orders to:

1. any current member of the strata committee, and

2. any person who becomes a member of the strata committee during the period covered by order 1.

3. On or before 10 March 2021 any application for costs is to be made by providing written submissions to the Tribunal and the other parties.

4. On or before 24 March 2021 any response to any such application is to be made by providing written submissions to the Tribunal and the other parties.

5. Any submissions on costs are to address the question of whether costs can be determined on the papers (ie without the need for a further hearing).

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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: 03 September 2021