The Owners - Strata Plan No 100339 v SHLACDZ Pty Ltd t/as S Building & Facility Management

[2025] NSWCATCD 107

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

The Owners – Strata Plan No 100339 v SHLACDZ Pty Ltd t/as S Building & Facility Management [2025] NSWCATCD 107

Hearing dates:

25 February 2025

Date of orders:

5 August 2025

Decision date:

05 August 2025

Jurisdiction:

Consumer and Commercial Division

Before:

G K Burton SC, Senior Member

Decision:

Application dismissed.

Catchwords:

REAL PROPERTY – STRATA MANAGEMENT – removal of building manager – disclosure of interests – connected persons – Strata Schemes Management Act 2015 (NSW) ss 7, 71, 72, Strata Schemes Management Regulation 2016 (NSW) reg 62

Legislation Cited:

Strata Schemes Management Act 2015 (NSW)

Strata Schemes Management Regulation 2016 (NSW)

Category:

Principal judgment

Parties:

The Owners – Strata Plan No 100339 (applicant)
SHLACDZ Pty Ltd t/as S Building & Facility Management (respondent)

Representation:

Mr F Schmidt, secretary of owners corporation (applicant)
Mr C Koikas, counsel, instructed by Madison Marcus Lawyers (respondent)

File Number(s):

2024/00344511

Publication restriction:

Nil

REASONS FOR DECISION

1. For reasons below, I have decided that the application should be dismissed.

2. Only the respondent building manager (BM) was legally represented. No deferral of costs questions was sought. I make no costs orders.

Background, issues, procedure

3. The applicant is the owners corporation (OC) and the respondent the appointed BM of a 172-lot strata scheme in Wolli Creek, an inner southern suburb in Sydney, NSW. The BM was appointed as the initial building manager at the outset of the scheme following a resolution of the OC at the first AGM on 5 December 2019. A seven-year building management agreement titled “Maintenance Management Agreement” (BMA) was signed on the same date, expiring 10 September 2026.

4. In its application filed 17 September 2024, initially two members (secretary and chair of the OC) as applicants sought the termination of the BM under ss 71 and 72 of the Strata Schemes Management Act 2015 (NSW) (SSMA). The grounds in the application were an allegedly overdue annual fire safety statement (AFSS) which had attracted a council notice on 14 June 2024 and a warning of a penalty of up to $110,000 for non-compliance, alleged overcharging by contractors in an emergency flooding incident on 25 March 2024 and an alleged need to monitor the BM, all of which engendered, it was alleged, a loss of trust and confidence.

5. In the amended points of claim filed 29 November 2024, amendment or termination of the BMA was sought on the grounds in SSMA s 72(3)(a) (refusal or failure to perform the agreement or unsatisfactory performance) and s 72(3)(b) (unfair charges). The “gross misconduct” alleged was: not providing a full-time building manager (20 hours pw service for 40 hours of payment); repeated and intentional provision of misleading information to the OC; the handling of a flooding incident on 25 March 2024, and as detailed in seven breach notices. Termination was the primary remedy sought, with variation to 20 hours and pro-rated payment not exceeding $40,000pa as the alternative (this was raised to $50,000 in evidence). A refund of half of the fees paid (said to approximate $350,000) since 2019 was sought.

6. All allegations were contested by the BM. The BM said that the flooding incident was investigated and in May 2024 it determined that one of the flooded lots contained the cause of the incident, with the relevant lot owner being responsible, which was for the benefit of the OC who would otherwise have been liable and who did not follow that advice in claiming on the strata building insurance. It denied that the emergency plumber overcharged. It said that it provided a full service through an onsite employee even though it was also managing nearby two other multi-lot schemes.

7. At a directions hearing on 18 October 2024 to issue directions to prepare the matter for final hearing, leave was granted to both parties for legal representation and the OC was substituted for the two members of the strata committee (SC) who were named as the original applicants on behalf of the OC, a change confirmed on 24 October 2024. Interim relief applied for by the OC because of the AFSS allegations was refused because effectively the relief was the same as final relief. The OC was represented by its secretary and chair; the BM was represented by its solicitors It was noted that the OC in general meeting had voted to take steps to remove the BM, of which the BM said that it was not aware.

8. An extension of time was granted for document filing on 25 November 2024.

9. At final hearing the OC was represented by its secretary who consulted with the chair and another SC member and received advice privately from a solicitor (practising in criminal law) who was a lot owner. The BM was represented by counsel and its solicitors.

10. The OC filed and served multiple sets of documents and submissions with many pages containing a significant degree of repetition and development of a topic over several iterations. The particulars of alleged conduct said to support the claim grew over those iterations into new areas not all of which were developed.

11. The BM by its solicitors filed its documents extremely late and in significant non-compliance with directions, on the Friday before the hearing the following Tuesday. The documentary bundle comprised 463 pages with a detailed 10-page witness statement. A further brief updating affidavit from the instructing solicitor was sworn on the morning of the hearing and given to the OC representatives present (some were participating by AVL) about 15 minutes before the scheduled start time of the hearing. The index to the documents was written out in the hearing at my request.

12. The OC said that it had worked over the weekend to answer what was in the BM’s witness statement and documents. The BM’s counsel said that he had received the witness statement and bundle only the day before the hearing and had little sleep as a consequence of necessary preparation. He candidly said that there was no reasonable excuse for the lateness (none was sought to be provided) and that the lateness was by no means the fault of the BM itself as client. Those instructing him had asked the OC if it wished for an adjournment. The principal of the BM, who made the witness statement, was not present as he had not been required for cross-examination.

13. I pointed out that this was not professionally acceptable conduct or good enough by solicitors who represented to practise in strata litigation and who must know the duties imposed on representatives among others under s 36 of the Civil and Administrative Tribunal Act 2014 (NSW) (NCAT Act); further, the offer of an adjournment was not costly because the OC was self-represented so effectively an adjournment was a free ride which must have been obvious.

14. The BM’s counsel submitted, in terms of prejudice, that all the documents in the bundle had been previously given to or were known about by the OC but accepted that the important point was what was forensically relied upon as identified by service of the evidence. He also submitted, relevantly, that the OC’s hard work over the weekend meant that it had effectively answered what it wanted to answer in the late evidence of the BM so was not relevantly prejudiced. If the extremely late solicitor’s affidavit was permitted to be part of the evidence he would not need to cross-examine the OC’s witnesses.

15. The OC discussed what to do privately in a ten-minute adjournment. On return the OC accepted that it had answered what it wished to answer by its weekend work.

16. On that basis I admitted the witness statement and bundle but said that I would be making comments to the foregoing effect in my reasons, which would not be directed at the BM’s counsel or the BM itself based on what had been said by the BM’s counsel as recorded above. It is appropriate to leave questions of costs as a matter to be resolved between the BM and its solicitors.

17. The OC was willing to agree to the inclusion in evidence of the very late affidavit of the BM’s instructing solicitor if it was given an opportunity to present material in response orally to the operative paragraph (para 7) through the secretary and chair of the OC and that it may cross-examine.

18. After a further ten-minute adjournment to enable the OC to finalise preparation, there was then discussion with the OC to clarify the relief sought. In addition to terminating the BM contract under SSMA s 72(1)(a), the OC sought an order for compensation under s 72(1)(b) in the amount of a refund of 50% of the BM fees since December 2021 which was said to reflect the reality that the BM employee onsite was half-time not full-time (20 hours pw not 40). The BM’s annual fee was $150,275.84 exclusive of GST indexed annually and the term of the agreement was to December 2026. The BM pointed out that the monthly fee instalments had not been paid from and including December 2024 and a credit would need to be given against any refund, which in any event was opposed. As an alternative to termination, an order under s 72(1)(c) varying the agreement to 20 hours pw with corresponding fee reduction was sought, it was said to reflect the reality. The grounds for relief were said to be found in s 72(3)(a) and (b). It was also sought to raise s 72(3)(f) on the ground that the BM was appointed by the developer without proposing alternatives, but this was not pressed when it was pointed out that it was not in the points of claim and may prompt an adjournment application and potentially further evidence.

19. The OC had issued detailed breach notices the BMA with one termination notice. There was a lack of clarity whether a resolution at the AGM on 8 July 2024 (mentioned above) authorised the OC to terminate the BM contract or whether the operative resolution was to authorise the SC to commence the present proceedings by the OC. The BM accepted that the grounds for statutory relief including termination may include contract breaches and that the statutory relief test may be less onerous than the test for contractual termination.

20. After a short adjournment the OC’s secretary and chair gave supplementary evidence in chief as envisaged and the chair was cross-examined. The principal of the BM, who made the witness statement, was not cross-examined; the BM’s instructing solicitor was briefly cross-examined. Each party made oral closing submissions and I reserved my decision.

21. Neither party referred to applicable authority in the application of relevant statutory provisions.

Relevant statutory provisions

22. SSMA ss 71 and 72 provide as follows:

71   Interests must be disclosed by potential strata managing agents or building managers

(1)  A person appointed as the strata managing agent or building manager for a strata scheme who has an interest that must be disclosed under this section must disclose the interest to the owners corporation before the appointment of the person.

Maximum penalty—

(a)  for a corporation—500 penalty units, or

(b)  otherwise—100 penalty units.

(2)  The following are interests that must be disclosed to the owners corporation by a person—

(a)  that the person is connected with the original owner,

(b)  any direct or indirect pecuniary interest in the strata scheme (other than an interest arising only from the prospective appointment),

(c)  that the person is connected with another person (the supplier) who routinely supplies goods or services for other strata schemes for which the person is the strata managing agent,

(d)  that the person gave advice, whether under a formal contract or not, to the original owner during the previous 2 years about the strata plan or another strata plan or a community plan,

(e)  another interest prescribed by the regulations.

(3)  The disclosure must—

(a)  be made in writing, and

(b)  for subsection (2)(c), include—

(i)  details about the nature of the relationship between the person and the supplier, and

(ii)  details about the goods and services provided by the supplier.

72   Strata managing agent and building manager agreements may be terminated or varied by Tribunal

(1)  The Tribunal may, on application by an owners corporation for a strata scheme, make any of the following orders in respect of an agreement for the appointment of a strata managing agent or building manager for the scheme—

(a)  an order terminating the agreement,

(b)  an order requiring the payment of compensation to a party to the agreement,

(c)  an order varying the term, or varying or declaring void any of the conditions, of the agreement,

(d)  an order that a party to the agreement take any action or not take any action under the agreement,

(e)  an order dismissing the application.

(2)  If the Tribunal makes an order terminating the agreement, the Tribunal may also order the strata managing agent or building manager to return to the owners corporation, within the period specified in the order, any documents or other records relating to the strata scheme that are in the possession of the agent or manager.

(3)  The Tribunal may make an order under this section on any of the following grounds—

(a)  that the strata managing agent or building manager has refused or failed to perform the agreement or has performed it unsatisfactorily,

(b)  that charges payable by the owners corporation under the agreement are unfair,

(c)  that the strata managing agent has contravened section 57(2),

(d)  that the strata managing agent has failed to disclose commissions or training services (including estimated commissions or value of training services or variations and explanations for variations) in accordance with section 60 or has failed to make the disclosures in good faith,

(e) that the strata managing agent or building manager has failed to disclose an interest under section 71,

(f)  that the agreement is, in the circumstances of the case, otherwise harsh, oppressive, unconscionable or unreasonable.

23. SSMA s 7(1) provides as follows:

7   Connected persons

(1)  For the purposes of this Act, a person (the principal person) is connected with another person if the other person—

(a) is a relative (within the meaning of the Local Government Act 1993) of the principal person or, if the principal person is a corporation, is a relative of the holder of an executive position in the corporation, or

(b)  is employed or engaged by the principal person or is a business partner of the principal person, or

(c)  if the principal person is a corporation, holds an executive position in the corporation, or

(d)  is the employer of the principal person, or

(e)  is employed or engaged by, or holds an executive position in, a corporation that also employs or engages the principal person or in which the principal person holds an executive position, or

(f)  has any other connection or association with the principal person of a kind prescribed by the regulations.

(2)  However, the principal person is not connected with a member of an owners corporation, or the strata committee of an owners corporation, merely because of any dealing, contact or arrangement the member has with the principal person in the capacity of a member of the owners corporation or strata committee.

(3)  In this section, executive position in a corporation means the position of director, manager or secretary of the corporation, or any other executive position of the corporation, however those positions are designated.

24. SSMR reg 62 provides as follows:

62   Connected persons

(1) For the purposes of section 7(1)(f) of the Act, a person that is a corporation (the principal person) is connected with another person if the other person—

(a)  is a related body corporate or an associated entity (within the meaning of the Corporations Act 2001 of the Commonwealth) of the principal person, or

(b) holds an executive position (within the meaning of section 7 of the Act) in a related body corporate or an associated entity of the principal person, or

(c)  holds or will hold any relevant financial interest in the principal person, or is or will be entitled to exercise any relevant power (whether in the person’s own right or on behalf of any other person) in the business of the principal person, and by virtue of that interest or power is or will be able to exercise a significant influence over or with respect to the management or operation of the principal person.

(1A) For the Act, section 7(1)(f), a person (the principal person) is connected with another person if the other person is—

(a)  the trustee of a trust of which the principal person is a beneficiary, or

(b)  one or more of the following in relation to a trust of which the principal person is, or has at any time been, a trustee—

(i)  a beneficiary,

(ii)  a child, spouse or de facto partner of a beneficiary.

(2)  In this clause—

relevant financial interest, in relation to a principal person, means—

(a)  any shares in the capital of the principal person, or

(b)  any entitlement to receive any income derived from a business carried on by the principal person, or to receive any other financial benefit or financial advantage from the carrying on of the business, whether the entitlement arises at law or in equity or otherwise.

relevant power means any power, whether exercisable by voting or otherwise and whether exercisable alone or in association with others—

(a)  to participate in any directorial, managerial or executive position in the principal person, or

(b)  to elect or appoint any person to any such position.

Consideration and conclusion

25. The OC developed its case through description of alleged incidents and matters within the general framework already outlined. The seven notices were issued between 1 June and 16 September 2024. They were as follows: 10 June for termination in respect of alleged non-communication and alleged unauthorised expenditure in respect of the flooding incident in three lots on 25 March 2025; 23 July (two breach notices) for lack of work experience and behaviour of the onsite employee manager already mentioned; 1 August (breach notice) for performance of the onsite employee manager; 1 August (breach notice) for four maintenance items ranging from $300 to $1,500 and totalling $2,680 when SC approval was required for any expenditure; 9 August (breach notice) for unapproved work of $825; 16 September (breach notice) for alleged gross negligence by failing to inform the OC that the AFSS certifier was unable to operate the fire indicator panel (FIP) and was neither qualified nor certified to work on the particular brand of FIP. It was alleged that the AFSS remained incomplete because of the certifier’s inability to check, configure and program the FIP.

26. In evidence, reference was made to BMA cl 9(b) with cl 10.1(a): the former constituted, as a default, “gross misconduct or gross negligence by the building manager in the observance or performance of the building manager’s duties”; the latter empowered the OC to terminate the BMA “immediately upon service of a notice of termination upon the building manager” for such a default. This appeared to constitute a higher or more rigorous test to meet for termination than the statutory test. I did not understand the OC to rely on it except as context for the statutory test. In any event, breach but not termination notices had been issued except in respect of the first notice. Termination clearly did not occur despite that notice because the BM continued to provide services and the OC continued to pay monthly until the end of 2024. Other contractual default and termination provisions in cll 9 and 10 were not relied upon.

27. I accordingly focus on whether the OC discharged its onus of proof to establish the requirements under the test in SSMA s 72 and, in one respect, s 71.

28. There OC said that there were multiple changes of onsite employee managers by the BM including one employee in July 2024 who was terminated in his employment and replaced within a fortnight for inappropriate behaviour. There were multiple invoices totalling $15,492 which were not submitted for OC approval to the SC.

25. The OC said that the onsite manager’s own email on 25 March 2024 made it aware that the manager was assigned to two other strata schemes with provision for 20 onsite hours each, which totalled 80 hours for that employee’s assignment. The division of attention meant that there was a lack of co-ordination and knowledge, including about the AFSS, organising cleaning and waste management services, and defects, with problems left unresolved “for years”. There were two statements from lot owners in another strata scheme criticising the BM and one of its employees in respect of alleged conduct in those schemes which was of tenuous relevance. Although signed, they were not put forward separately as witness statements subject to cross-examination. The text of the statements was in substance identical. I have given them no weight.

26. In addition to dealing with the matters of contest with documents discussed below, the BM in its updating affidavit said that the plumbing invoice for a blocked toilet the subject of the 9 August breach notice had been withdrawn by the plumber at the BM’s request so was not a matter of charge for or payment by the OC. The lighting installed that was the subject of the 1 August breach notice was offered to be removed but the SC declined the offer. All monthly reports had been issued along with regular updates apart from an accidentally-missed report in January 2025 that at time of hearing was being caught up within the February report. The AFSS final reports for 2024 were signed off by the certifier and sent to council in the preceding week (mid-February 2025) and council’s approval was awaited.

27. The very late BM evidence contained, primarily, the work logs for the scheme. As a record they were thorough, recording (almost verbatim) requests and other communications with relevant images and the BM responses including communications seeking approval from the SC and dealing with SC responses. In March 2024 there was detailed communication and investigation to support a recommendation by the BM to change the fire safety contractor to one who was also certified to service mechanical and lift systems. It was recorded on 29 April 2024 that the SC had decided to stay with the existing fire safety contractor.

28. The monthly building and facility management reports contained similarly detailed narration of issues raised and their disposition, including on the AFSS. The May 2024 report showed detailed communication with the SC and relevant lot owners concerning the flooding incident involving three lots. In some periods there were weekly reports. At other points there was detail of the investigation of increased water usage conducted by the BM (being an issue raised by the OC in its last round of filed documents).

29. The AFSS communication in and from May 2024 showed resolution of outstanding issues and regular attention to the issues until they were resolved. This included: prompt repair and upgrade of all aspects except for the multiple faults in the FIP; labour shortages for repairers of the brand of FIP originally installed; communications with the original builder and contractors; regular communications with the AFSS certifier; obtaining extensions of time from the council and providing progress reports in support of those extensions. The council extension to 15 February 2025 was not a cut-off point – the council letter said that no further extension would be granted without providing council with documentation concerning progress on the rectification works. It appears, as said earlier, that the mid-February 2025 extended date was met in substance. The AFSS certifier stated in communications that it had the relevant expertise in respect of inspecting and certifying systems but it was standard industry practice that fault finding required a specialist in the brand.

30. The OC complained that there was an apparent lack of earlier available fire statements, which the BM would have arranged, from which it could be possible to identify who created a programming issue in the FIP. The SC secretary and chair had asked that question and not received an answer from the BM. There was no evidence as to why such records were not available. Of itself, this could be a matter for criticism.

31. However, in my view it is insufficient to indicate the required refusal or failure to perform or unsatisfactory performance of the BMA. The agreement covers a scope of works which requires serious or repeated systemic failures to constitute a basis for exercise of power under SSMA s 72(3)(a). The documents in evidence show a systemic organisation with regular communication and which included thorough communications with and reports to the SC and performance of required responsibilities.

32. The OC acknowledged that the onsite employee manager who was the subject of a breach notice for inappropriate communication and lack of experience had been terminated, which occurred promptly (although an email from the by-then-former onsite manager putting forcefully his views of facilities provided by the SC, and the SC’s attitude, said that he had resigned). The other onsite employee manager who was the subject of complaint was subject to performance management procedures under fair work legislation. There was no similar criticism of the current onsite employee manager.

33. For the purpose of these proceedings the breaches in the notices of 1 and 9 August 2024 for unapproved expenditure were not expressly relied upon except implicitly as contributing to an expressed loss of confidence of the SC in the BM. At least one of the items was reported by the BM to have an attendant security risk if not remediated quickly. It was not clear that, for most of the items (which were under $500), there had been agreement by the BM to alter the contractual threshold of $500in item 9 in Table A to the BMA or a notification of the change to that threshold (to nil) made in 2021 by the OC under cl 4.3.

34. As to the number of hours, the BMA provided, in item 2 in Table A, for BM fees of $16.42 plus GST per lot pw, with no reference there or elsewhere to a number of hours to be provided by the BM either onsite or remotely. Also in evidence was an executed building management agreement titled “Maintenance Management Agreement” dated 10 September 2019 for another nearby strata scheme to which the BM was appointed that contained similar provisions to those relied on by the OC in cll 9 and 10 of the BMA. Item 4 in Table A in that agreement stated that the BM’s fees were $16.97 including GST per lot pw “based on 20 hours”. A further “Defects/Building Management Agreement” for another scheme managed by the BM dated 3 August 2021 contained no reference in that equivalent item to hours.

35. An email chain in early August 2024 confirmed that the current onsite manager was assigned to the scheme for 40 hours pw and that while he was performing those hours of service (currently 7am-3pm Monday to Friday), they were for the sole use of the building. An earlier email in the same chain on 31 July 2024 confirmed that the respondent would be onsite 40 hours pw carrying out the duties but that “This may change from time to time depending on the requirements”, which inferred flexibility in number of hours. The same message had been conveyed in an email in similar words to the secretary on 25 July 2024. The subsequent emails from the SC in the August chain did not challenge the quoted statement as being not in line with contract obligations.

36. The time sheets in evidence were for parts of August and September 2024 only. They largely showed a range of attendance onsite from 3 up to 5 hours per day. It was not clear from the sheets themselves to which scheme they related.

37. In a performance review dated 13 March 2023 the OC representatives (the secretary and chair) had asked to confirm the BM working hours and onsite hours. This would be unnecessary if there was a contractual obligation.

38. In that uncertain state of the evidence I cannot find that under the BMA there was specified the number of hours for the fee charged.

39. Clause 8.4 of the BMA disclosed to the OC that the appointed strata manager at time of entry into the BMA had an interest in the BM. It is unclear whether this was required under SSMA s 71(1) (a penalty rather than a civil relief provision) with s 71(2)(b), but it was done. On the evidence the BM was not a person “connected” with the original owner/developer of the scheme within the meaning of SSMA s 7 with SSMR reg 62 because the evidence did not establish the required association or relationship between any of the BM’s shareholders or controllers and the original owner/developer. Disclosure under s 71(1) with s 71(2)(a) therefore did not arise.

40. The complaint about the flooding incident on 25 March 2024 focused on the absence of immediate reporting to the strata manager and SC, on allocation of responsibility to one lot owner without consultation and on incurrence of significant expenditure without approval and which the OC’s insurer rejected in part as excessive in charge. The OC evidence contained a letter dated 30 October 2024 from the strata manager clearly prepared for the purposes of the litigation which supported these allegations but which was not in the form of a witness statement subject to cross-examination. There were other allegations in the letter that were not the subject of further evidence on this application. There was also a statement, not put forward as a witness statement for cross-examination, by the lot owner to whom the BM attributed responsibility for the issue which led to the flooding of adjacent lots. That statement referred, without denial or qualification, to a report from a flood emergency service who attended the incident and attributed the cause to washing machine overflow which was consistent with the plumbing evidence pointing to that lot owner’s laundry as a potential source, not the piping or other common property. The lot owners of the two other flooded lots did not give witness statements and no reason for that absence was given.

41. As said earlier, the monthly reports following the incident contained detailed narrative and reproduced communications on the incident and these matters. If there was a lack of immediate reporting and some unilateral action in an emergency situation that could have been handled more in compliance with the BMA (which, counterintuitively, required SC approval for all emergency action), that appears to have been regularised. There was no objective evidence to support the insurer’s position that the emergency plumbing investigation and work could have been done more cheaply in the situation. The available evidence was consistent with the BM’s attribution of responsibility.

42. Again, in my view there is insufficient to indicate the required refusal or failure to perform or unsatisfactory performance of the BMA. The agreement covers a scope of works which requires serious or repeated systemic failures to constitute a basis for exercise of power under SSMA s 72.

43. Turning finally to the alleged overcharging, there was insufficient evidence of the scope of responsibilities which lower charges in the two other schemes in the evidence covered.

44. While there may be matters of legitimate criticism of aspects of the BM’s performance, an assessment of the matters put forward by the OC, taken individually or cumulatively, does not establish the conduct required to satisfy the requirements under SSMA s 72 to remove the BM or to vary the BMA as sought by the OC.

45. The OC’s application is to be dismissed.

Orders

50. I make the following orders:

1. Application dismissed.

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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 2025