The Owners - Strata Plan No. 64807 v Sunaust Properties Pty Ltd

[2022] NSWCATCD 20

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

The Owners – Strata Plan No. 64807 v Sunaust Properties Pty Ltd [2022] NSWCATCD 20

Hearing dates:

15-17, 19 November 2021
(last submissions 14 January 2022)

Date of orders:

17 January 2022

Decision date:

17 January 2022

Jurisdiction:

Consumer and Commercial Division

Before:

Graham Ellis SC, Senior Member

Decision:

1. Pursuant to s 72(1)(a) of the Strata Schemes Management Act 2015, the caretaker agreement between the applicant and the respondent is terminated.

2. Pursuant to s 72(1)(d) of the Strata Schemes Management Act 2015, the respondent is to sell Lots 107 and 109 in accordance with Schedule 1.

3.   If either party seeks to vary order 2 and/or Schedule 1:

(a)   any submissions seeking a variation are to be filed and served by 31 January 2022,

(b)   any submissions in reply are to be filed and served by 14 February 2022, and

(c) any such submissions are to indicate whether it is agreed that the Tribunal should dispense with a hearing for that issue, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013.

4. Pursuant to s 72(1)(d) of the Strata Schemes Management Act 2015, on or before 5pm on Friday 21 January 2022 the respondent is to provide the secretary of the applicant with the password for the digital video recording system.

5.   Should either party seek an order for costs:

(a)   any submissions seeking an order for costs are to be filed and served by 28 January 2022,

(b)   any submissions in reply are to be filed and served by 14 February 2022, and

(c) any such submissions are to indicate whether it is agreed that the Tribunal should dispense with a hearing for that issue, pursuant to s 50(2) of the Civil and Administrative Tribunal act 2013.

Catchwords:

LAND LAW – Strata title – Building manager – Whether caretaker agreement should be terminated -Whether saving provision applies – Whether ancillary orders should be made

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Civil and Administrative Tribunal Regulation 2013 (NSW)

Evidence Act 1995 (NSW)

Interpretation Act 1987 (NSW)

Local Government Act 1993 (NSW)

Strata Schemes Amendment Act 2002 (NSW)

Strata Schemes Development Act 2015 (NSW)

Strata Schemes Management Act 1996 (NSW)

Strata Schemes Management Act 2015 (NSW)

Cases Cited:

Attorney-General for the State of Queensland v Australian Industrial Relations Commission

[2002] HCA 42

Australia City Properties Management Pty Ltd v The Owners – Strata Plan No 65111 [2021] NSWCA 162

Body Corporate 396711 v Sentinel Management Ltd [2012] NZHC 1957

Briginshaw v Briginshaw [1938] HCA 34

Community Association DP No 270180 v Arrow Asset Management Pty Ltd [2007] NSWSC 527

Cooper v The Owners – Strata Plan No 58068

[2020] NSWCA 250

Corporate Property Maintenance NSW Pty Limited v The Owners - Strata Plan No 81647 [2014] NSWDC 22

Jones v Dunkel [1959] HCA 8

Mahon v Air Zealand [1984] 1 AC 808

Mitchell v Cullingral Pty Ltd [2012] NSWCA 389

OC SP 81647 v Corporate Property Management NSW Pty Ltd [2013] NSWCTTT 351

Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Ltd [2015] NSWSC 289

SZTAL v Minister for Immigration and Border Protection [2017] HCA 34

The Owners Corporation – Strata Plan 64807 v BCS

Strata Management Pty Ltd [2020] NSWSC 1040

Texts Cited:

Nil

Category:

Principal judgment

Parties:

The Owners – Strata Plan No 64807 (Applicant)
Sunaust Properties Pty Ltd (Respondent)

Representation:

Counsel:
R Gration (Applicant)
E Young (Respondent)

Solicitors:
DEA Lawyers (Applicant)
MC Lawyers & Advisers (Respondent)

File Number(s):

SC 21/02639

Publication restriction:

Nil

Abbreviations used

AGM	Annual General Meeting
Applicant	The Owners – Strata Plan No 64807
CA	Caretaker Agreement
CATA	Civil and Administrative Tribunal Act 2013
CSR	Central Sydney Realty
DVR	Digital Video Recorder
EGM	Extraordinary General Meeting
George Xue	Xiang Long Xue
Ken Xue	Yuan Kai Xue
Meriton	Meriton Apartments Pty Ltd
Ms Liang	Zhuohui Liang aka Cherry Liang
Ms Sun	Yan Xin Sun aka Susan Sun
Respondent	Sunaust Properties Pty Ltd
SC	Strata Committee or Executive Committee
SSDA	Strata Schemes Development Act 2015
SSMA	Strata Schemes Management Act 2015
the 1996 Act	Strata Schemes Management Act 1996

Contents

Topic	Paragraph
Outline		1
Background		4
Hearing		9
Applicant’s witnesses		12
Mr Eltis		13
Mr Laurans		26
Mr Wang		34
Mr Watson		42
Respondent’s witnesses		50
Mr Aguino		51
Mr Cakic		52
Mr Lai		54
Ms Liang		57
Ms Ma		60
Dr Mao		61
Ms Rahmat		72
Ms Sun		74
Ms Xu		113
Mr George Xue		117
Mr Ken Xue		120
Submissions		145
Jurisdiction		146
Relevant law		148
Consideration		150
Chronology		155
Does clause 5(7) of Schedule 4 of the CATA apply?		156
The 5% annual increase		164
The additional fee		179
Additional charges for gardening and lawnmowing		190
Ms Sun’s membership of the SC		199
Ken Xue’s membership of the SC		210
Conduct relating to the 8 August 2020 AGM		222
Failure to act on instructions		228
The 25-year term		240
Circumstances before 2001		243
Two versions of the CA?		251
Termination under s 72 of the SSMA?		256
Does s 72 of the SSMA apply?		272
Costs		305
Orders		306

Reasons for decision

Outline

1. In these proceedings, the applicant sought an order under s 72(1)(a) of the SSMA that its CA with the respondent be terminated.

2. The parties submitted more than 5,000 pages of documents which included 20 affidavits from 15 witnesses. Cross-examination occupied three hearing days and a fourth hearing day was needed to cater for oral closing submissions which supplemented more than 60 pages of what were said to be Outline Submissions.

3. After considering the evidence and having had regard to the submissions made by counsel for the parties, the Tribunal determined that the applicant is entitled to a termination order and to a consequential order for the sale of the respondent’s caretaker lots. The applicant was also considered to be entitled to an order requiring the respondent to provide, to the secretary of the applicant, the password for the DVR system which has been withheld.

Background

4. The strata scheme the subject of these proceedings, numbered 64807, was registered on 18 January 2001. It covers two buildings in Ultimo, developed by Meriton, which contain both commercial and residential lots. There are 334 lots: 109 in what was called Stage 1 and 225 in Stage 2. When the construction of Stage 1 was completed in 2000, what became Stage 2 was only one lot (Lot 110) but held 6,804 of the total number of unit entitlements which is 10,000. When the development of Stage 2 was completed in 2009, a strata plan for the subdivision of Lot 110 was registered on 28 May 2009. That strata plan, numbered 80571, comprises lots 111 to 335.

5. The respondent, incorporated on 20 October 2000, has only one shareholder and director, Ms Sun. Her husband, George Xue has been employed by the respondent as a caretaker since 2009. Ken Xue, their son, is also employed by the respondent, as a manager.

6. Cherry Liang, who is the wife of Ken Xue, was the sole owner of Lot 71 until 30 April 2019 when she transferred a 1% interest in that lot to him. Ms Sun and George Xue are the owners of Lot 107 which is a commercial lot, used by the respondent to run a real estate agency. The respondent owns Lot 109 which is the on-site building manager’s office, located in the ground floor foyer of Stage 1.

7. On 27 October 2000, Meriton and the respondent executed a Deed of Sale of Caretaker Management Rights for which the respondent paid Meriton $310,000. On 20 January 2001 the common seal of the applicant was affixed to a CA, witnessed by the then strata managing agent, and on 16 March 2001 Meriton and the respondent executed that CA which was for a term of ten years but with three options to renew, each for a further five years. As a result, the CA had a potential duration of 25 years. On the basis that each of those options have been exercised, the CA is now in its final five years and will come to an end in just over four years, on 15 March 2026.

8. The Tribunal notes that there are existing proceedings in the Supreme Court between the same parties which raise issues that include what amount is payable by whom to whom. As a result, the applicant does not seek the determination of any quantum issue by the Tribunal. On the other hand, the respondent suggests the existence of those proceedings is a reason why the Tribunal does not have jurisdiction to hear this application.

Hearing

9. During the four-day hearing, which was conducted using audio-visual link facilities and telephone lines due to the COVID-19 pandemic, the following documents were admitted as evidence:

Exhibit A   A tender bundle, containing five folders of documents

Exhibit B   Documents behind tabs 4 to 21 of those provided under cover of a 15 November 2021 letter from the respondent’s solicitor

Exhibit C   Two pages headed “Budget …”, being numbered 425 and 494

Exhibit D   Pages 1 to 273 in the applicant’s cross examination bundle

Exhibit E   Documents produced in response to a call to Dr Mao

10. During the hearing, the following documents were marked for identification:

MFI 1   Folder containing the applicant’s Statement of Facts, Chronology, Issues in Contention, and Outline Submissions

MFI 2   Documents behind tabs 1 to 3 of those provided under cover of a 15 November 2021 letter from the respondent’s solicitor

MFI 3      The applicant’s cross examination bundle

MFI 4      Two pages which became Exhibit C

MFI 6   A copy of the Strata Schemes Management Bill 2015, containing an Explanatory Note

MFI 7      Applicant’s submissions dated 14 January 2022

MFI 8      Respondent’s submissions dated 14 January 2022

11. Since the cross-examination of nine witnesses required the entire three days allocated for the hearing, a fourth day was added, after a day’s break, to enable closing addresses to be made on the last day of the week of the hearing.

Applicant’s witnesses

12. The applicant had four witnesses, namely Mr Laurans, Mr Eltis, Mr Watson, and Mr Wang. Each of them was cross-examined. Their evidence is summarised below.

Mr Eltis

13. The current secretary for the applicant, Mr Eltis (A33) set out in his affidavit the background to the relationship between the applicant and the respondent. He went on to give evidence of the involvement of Ken Xue on the SC and what occurred at various meetings, namely the 3 September 2028 SC meeting, the 25 October 2018 SC meeting, the 12 December 2018 EGM, the 13 March 2019 SC meeting, the 15 June 2019 AGM, and the 6 August 2019 SC meeting.

14. Among the documents which were annexed and exhibited to this affidavit were emails dated 13, 16 and 19 November 2019 which contained requests, by Mr Eltis, for Ms Sun to provide evidence which entitled the respondent to increase its annual fee by 5%. The evidence of Mr Eltis was that there was no response to those emails. He went on to say that, during 2019 and 2020 he sent an estimated 50 emails to Ms Sun in his capacity as an SC member and that the result was either (1) no response, (2) a cursory response, or (3) in some cases, a threatening response.

15. Mr Eltis also suggested the respondent had not complying with its duties as recorded in a schedule to the CA and he alleged there had been a failure on the part of the respondent to ensure compliance with fire code requirements.

16. Another topic raised by Mr Eltis was that the respondent appears to also operate a business called Central Sydney Finance which he claims manages lots which can lead to conflicts of interest with the respondent’s obligations to the applicant. He referred to two commercial lots whose tenant installed an illegal cool room in the car park and the respondent failed to take any steps to address that issue, that cool room finally being removed in November 2020 due to action taken by the applicant’s lawyers.

17. He went on to indicate that it was not until the applicant obtained a full copy of the CA in 2020 that it did not provide for the 5% annual increases charged by the respondent. It was noted that a 9 December 2019 SC meeting resolved to request the respondent to provide “a copy of the contract indicating a 5% annual increase to their fees”. The 20 December 2019 response of Ms Sun was that “the agreement to the 5% increase was passed at a meeting many years ago. I am surprised the committee have not located a copy of the minutes in the strata records”.

18. In his affidavit, Mr Eltis also raised the question of whether the 2001 contract was validly extended in 2011. He also noted that, since 2011, the respondent has charged about $25,000 per annum for matters including manage cleaning and maintenance of the Stage 1 garbage room that is shared with Stage 2 but apparently without any contract, contrary to words within Schedule 2 of the CA which said the respondent was to “Perform such further duties for additional payment to the Caretaker as may be agreed in writing between the parties”.

19. Mr Eltis proceeded to give evidence of what he said occurred before, during and after the 8 August 2020 AGM. It is noted that he maintains he heard both Ms Sun and Ken Xue saying words to the effect: “The AGM has been cancelled – you can go” to people who were arriving at the venue for that AGM. Further, he said he observed Slyvia (an employee of the respondent), Ken Xue, and Mr Beachem (the then treasurer) attempting to distribute a letter containing a similar message. He maintained that the AGM proceeded on that occasion and provided a copy of what he said were the minutes of that meeting.

20. Mr Eltis also gave evidence of the issue of a first default notice to the respondent on 1 October 2020 and a second default notice on 29 October 2020. He went on to indicate various communications by the respondent since August 2020 which were said to have contained incorrect information. He also referred to a 26 November 2020 request for copies of some building keys and the key register and a same day request for CCTV footage, which requests he said have not been met.

21. The affidavit of Mr Eltis included an allegation that, at 4.40pm on 3 March 2021 he heard Ms Sun say words to the effect: “I am not taking instructions from the OC” and “I am fighting with you and I do not have to do what you say”. A failure to arrange for the removal of trolleys from a nearby shopping centre was also alleged as was allowing Stage 1 of the strata plan to fall into disrepair and four examples were provided in support of that allegation.

22. Further matters set out in this affidavit were (1) the use of unlicensed tradespeople, (2) a failure to be available at the reception area as required by the CA, (3) a failure to maintain adequate records, (4) not accepting instructions from the secretary, (5) refusing to attend SC meetings, (6) failing to answer correspondence, (7) unremedied omissions from the respondent’s monthly report, (8) failure to provide the monthly report within time, (9) financial mismanagement by continuing a DVR lease for 3,300 days at a daily rate of $18.77 plus GST (costing more than $68,000) when the applicant was able to buy and install a replacement DVR for $1,320, (10) financial mismanagement by the submission of an invoice for $660 which related to premises in Auburn, and (11) incorrectly claiming the applicant has entered into a contract with Enviro-LCS for the provision of cleaning and hygiene equipment.

23. The final paragraph in the affidavit of Mr Eltis referred to a spreadsheet which was said to set out a comparison of what the respondent had charged the applicant and what he contended the respondent was entitled to charge under the CA.

24. Cross-examination suggested the recollection of Mr Eltis of what occurred at various meetings was not clear, but each such suggestion was firmly denied. As to the illegal cool room, Mr Eltis agreed that was not part of the duties of the respondent as caretaker but maintained it was part of the respondent’s duties as building manager. Mr Eltis did not accept that that the pandemic was the reason why it was suggested the 8 August 2020 AGM could not proceed.

25. In re-examination, in relation to an email distributed by the owner of lot 147 to various lot owners, said to have included false or at least misleading allegations, Mr Eltis referred to metadata which he suggested implicated Central Sydney Finance, being a business conducted by the respondent. The issue raised by that email appears to be the potential misuse of the strata roll.

Mr Laurans

26. The affidavit of Mr Laurans (A24, ie page 24 in Exhibit A) revealed that he has been a lot owner since September 2013 and a member of the SC from 14 May 2015 to 22 May 2018 and since 8 August 2020. He said that at AGMs held prior to 22 May 2018 there was low attendance and lot owners would commonly nominate themselves and be appointed. However, at that AGM, Ms Sun had 15 proxies and her son, Ken Xue, had 11 proxies. He said that all but three of the existing SC members were not re-elected and noted that the minutes recorded the election of Zhuohui Liang but not Ken Xue.

27. Mr Laurans recalled a conversation after that meeting which expressed concern that Mr Sun and her son had taken over the SC for their financial benefit, which had occurred after the SC had sought legal advice in relation to terminating the CA.

28. It was the evidence of Mr Laurans that, despite the respondent having had the caretaker role for more than 20 years, there were significant, unresolved maintenance issues. He referred to (1) damp, damaged carpet, (2) mould in the air conditioning and on the walls of the gym/pool area, (3) grass growing through the skylight above the pool, and (4) the intercom system not working, which required attendance to let guests enter the building until those intercoms were replaced by the current SC early in 2021.

29. He went on to suggest that the respondent had taken steps to limit or reduce the maintenance work to be carried out. The example he provided was of Ms Sun and her son achieving, by using proxies, the repeal of by-law 1 which required regular painting and replacement of the common area carpet in the Stage 1 building, neither of which had occurred, to his knowledge, since 2001. Mr Laurans also referred to the failure to repair what appeared to be water damage in the gym/pool area. He further suggested that the SC raised concerns with the performance of the respondent, which included failure to repair reaching the point where render was falling from external walls, and of requests for reimbursement which he understood Dr Mao instructed the strata managing agent to pay.

30. As to 8 August 2020 AGM, Mr Laurans noted proceedings in the Supreme Court and the Tribunal which attempted to stop that meeting. He said that, when he arrived at the venue for that meeting, there were about ten private security guards attempting to prevent lot owners from gaining access and that those security guards were acting under instructions from a person named Slyvia, an employee of the respondent. His evidence was that Ken Xue, an employee of the respondent and the son of Ms Sun, was (1) also giving instructions to those security guards, (2) was himself attempting to prevent lot owners from accessing the venue for the meeting, and (3) was saying words to the effect that “The AGM has been cancelled”.

31. The last paragraphs of the affidavit of Mr Laurans suggested that, since September 2013, he has not seen either Ms Sun or any employee of the respondent wear any uniform, nor had he ever seen the shutters open for the office in the lobby.

32. In cross-examination it was suggested that Mr Laurans had breached a by-law in relation to his installation of a television antenna which he removed after the strata managing agent sent a follow-up letter. Suggestions that George Xue was present most hours and for several hours on the weekend were firmly denied.

26. As with each of the applicant’s witnesses, unsuccessful attempts were made to suggest Mr Laurans did not have a clear recollection of the matters to which he referred in his affidavit and the joint statement (B/4, ie tab 4 in Exhibit B).

Mr Wang

34. In his affidavit (A670), Mr Wang indicated that in mid-November 2018 he received a letter in Chinese and English regarding an SC meeting. That letter, dated 15 November 2018 (A678), noted that the SC had decided on 25 October 2018 that CSR was to be the only candidate considered for a building management contract with a term of at least ten years at an EGM to be held on 12 December 2018. It is sufficient to observe that the letter urged voting against that proposal and set out the reasons for upon which that view was based.

35. Later that month he joined a social media chat group which led him to understand that CSR was the respondent’s trading name, Ms Sun was the owner of CSR, and her son, Ken Xue, was the secretary of the applicant. He went on to say that Ms Sun rang him on 6 December 2018, asked why he was not happy with CSR, and during that conversation threatened to report him to the Law Society for posting a copy of a company search on social media. Mr Wang said he made a contemporaneous note of that conversation which formed the basis of what appeared in his affidavit.

36. He also said that, when he went to attend the applicant’s AGM on 8 August 2020, he heard Ms Sun, Ken Xue and a lady named Sylvia speak with lot owners who attended that meeting, using words to the effect that “NCAT does not support this meeting going ahead”.

37. Cross-examination revealed that Mr Wang became a lot owner in June 2016, ceased to be a resident in June 2018, and became a member of the SC in June 2019. He denied that Ms Sun’s version of their conversation on 6 December 2018 (A3598) was accurate.

38. As to his affidavit expressing agreement with what was said in the affidavit of Mr Eltis, Mr Wang said he read that affidavit before finalising his affidavit but did not discuss his evidence with Mr Eltis beforehand. He was also taken to a joint statement dated 23 December 2020 (B/4) which he indicated was prepared by a lawyer and submitted to him before he signed it.

39. Mr Wang disagreed with the proposition that he had no accurate recollection of the 15 June 19 AGM, the 6 August 2019 SC meeting, and the 12 December 2019 EGM. In relation to the 8 August 2020 AGM, Mr Wang said his clear recollection was due to there being extraordinary events and that he was able to hear because the speakers were talking very loudly and were moving around, talking to more than one lot owner.

40. After being referred to the minutes of SC meetings in relation to the extent of the disclosure made by Ken Xue, Mr Wang suggested that disclosure of being an employee of a business did not cover the fact that he was the son of the owner of that business.

41. In relation to the elevators in Stage 1 breaking down on several occasions, including for one month over Christmas in 2018, Mr Wang accepted that elevators break down from time to time but disagreed with the proposition that was not a major issue. He denied that the elevators were promptly repaired and suggested the problem was becoming more frequent and more serious.

Mr Watson

42. In his affidavit (A626), Mr Watson indicated that he is a current SC member. He set out his recollections in relation to the 3 September 2018 SC meeting, the 25 October 2018 SC meeting, the 12 December 2018 EGM and the 13 March 2019 SC meeting, the 15 June 2019 AGM, the 6 August 2019 SC meeting, and the 8 August 2020 AGM.

43. As to the 3 September 2018 SC meeting, he said that a representative of Meriton, which was at that time the building manager for Stage 2, raised a concern that Meriton was not being permitted to tender for the building management contract for Stage 1. Despite the absence of a scope of works that would enable a comparison between the proposals of the respondent and Meriton, the 25 October 2018 meeting resolved to present only the respondent’s proposal to the 12 December 2018 EGM. He suggested that, at the 13 March 2019 SC meeting, Ken Xue said he was not a lot owner, and that legal advice obtained after that meeting indicated that he was not eligible to be on the SC. Mr Watson said that, despite that advice, Ken Xue remained on the SC.

44. In relation to the 8 August 2020 AGM, this witness suggested that, when he arrived (1) private security guards were attempting to prevent access to the venue for that AGM, (2) they were primarily acting on instructions from Sylvia, an employee of the respondent, (3) Ken Xue was also present and was providing instructions to those security guards, and (4) Ken Xue was also attempting to prevent lot owners from accessing the venue for that AGM.

45. Mr Watson also suggested that the respondent had been charging about $25,000 per annum to manage the Stage 1 garbage room and other facilities that are shared with Stage 2 and that he had never seen either Mr Sun or any employee of the respondent wearing any uniform.

46. He annexed a chain of emails which were said to suggest the respondent had attempted to make the applicant responsible for contractors engaged to carry out gardening work, despite that being part of the respondents’ contractual obligation, along with two emails from an SC member who complained about the respondent and then resigned from the SC.

47. When cross-examined, Mr Watson accepted that Ms Sun and Ken Xue had left SC meetings when requested to do so. He was asked the same series of questions as the applicant’s other witnesses, which served to indicate that his recollections of the meetings to which he referred were clear. As with Mr Laurans, Mr Watson admitted he had breached a by-law on one occasion.

48. A suggestion that Ms Sun was not elected to the SC at the AGM held on 16 May 17 was denied. He noted that Ken Xue became secretary at the SC meeting held after that AGM and agreed that did not marry with the AGM minutes which did not record him being elected as a member of the SC.

49. When taken to a photo which suggested a tree was growing through the roof (B/21), Mr Watson asserted his belief that this was a matter which fell within the responsibility of the respondent. He also strongly disagreed with the proposition that falling render was not a concern. Further that such a matter was, according to his understanding, a matter for the respondent to report, not repair.

Respondent’s witnesses

50. The respondent had eleven witnesses. Mr Cakic, Mr Lai, Ms Ma, Ms Rahmat, Mr George Xue and Mr Aguino were not cross-examined. The remaining five witnesses, namely Ms Sun, Ms Xu, Mr Ken Xue, Dr Mao, and Ms Liang, were cross-examined.

Mr Aguino

51. Although included in the tender bundle, the affidavit of Mr Aguino (A4764) was affirmed in support of the respondent’s unsuccessful request for an adjournment of the hearing. This affidavit noted that, on 12 February 2021, the applicant was directed to file and serve Points of Claim by 26 February 2021. Reference was also made to the respondent’s application, made with the object of obtaining strata records from the applicant. As indicated above, this witness was not cross-examined.

Mr Cakic

52. The affidavit of Mr Cakic (A680), a solicitor for the respondent, did no more than annex copies of documents which have been lodged in the Supreme Court proceedings. Those documents reveal that the respondent filed a summons on 30 October 2020 and that the applicant lodged a cross-summons on 11 December 2020.

53. Although filed in relation to the interim application, this affidavit serves to inform the Tribunal that the issues in the Supreme Court proceedings are: (1) whether the respondent is entitled to increase the fee payable by the applicant by 5% per annum or by reference to the Consumer Price Index (CPI), (2) whether the respondent is entitled to charge additional amounts following the completion of Stage 2, (3) whether the respondent has been performing the duties required by the CA, and (4) whether the respondent has been charging the applicant twice for the same duties.

Mr Lai

54. In his affidavit (A727), Mr Lai said he was employed by the respondent “from or around November 2020, until mid-2001 to manage its real estate business”. He said he was a director of the respondent from 22 January 2001 to 12 June 2002.

55. Mr Lai claimed to have become aware, in mid-2001 that Meriton had CAs with other entities which provided for a fee increase of 5% per annum but he was unable to recall how he came to access those documents. He suggested he had a conversation with Meriton’s Mr Paskell who said the subject CA was in error and that he would fix it so the increase would be 5% per annum but he was unable to recall when that conversation occurred. Mr Lai said he was unable to recall whether there was any subsequent documentation to give effect to such a change to the CA.

56. Annexed to Mr Lai’s affidavit was a statement dated 11 April 2020 in which he suggested he negotiated the CA with Meriton on behalf of the respondent. He suggested: “The negotiation which was agreed by Meriton was an oral agreement to remove term 3.1 referring to CPI from the caretaker agreement and replace that with a 5% annual increase of caretaking fees”.

Ms Liang

57. The 30 June 2021 affidavit of Ms Liang (A4733) indicated that she and her husband, Ken Xue, purchased Lot 71 in December 2015. She said that, although she always considered that lot to have been owned ‘half each’ with her husband, she was initially the sole owner, a decision said to have been based on accountant’s advice.

58. Ms Liang said that in late 2016 or early 2017 she suggested her husband should be on the SC and that early in 2019 she decided to register him as “a title holder of Lot 71”. That was said to have followed him telling her that his eligibility to be a member of the SC had been questioned. As a result, in mid-2019 he became the owner of a 1% interest in Lot 71.

59. Under cross-examination, Ms Liang accepted that her husband was employed by the respondent at the time he was a member of the SC. When her attention was directed to her proxy form at A4737, Ms Liang accepted that on 25 March 2017 she nominated her husband to be a member of the SC and that he signed that nomination to indication his consent to that nomination. She said she never attended any AGM or SC meeting herself.

Ms Ma

60. An accredited interpreter, Ms Ma’s affidavits (A1963 and A3742) do no more than indicate she translated the 10 February 2021 and 17 My 2021 affidavits of Ms Sun and George Xue from written English to spoken Mandarin before they signed them.

Dr Mao

61. The 28 May 2021 affidavit of Dr Mao (A3800) was that of a lot owner and former resident who was a member of the SC between 2017 and 2020. Contrary to what appears in the minutes of the 27 May 2018 AGM, Dr Mao suggested that Ken Xue was elected as a member of the SC at that meeting. He disagreed with what may be termed the maintenance allegations in the affidavit of Mr Laurans.

62. Dr Mao also disagreed with much of Mr Watson’s affidavit and suggested the respondent performed it caretaking duties “efficiently, responsibly and conscientiously”. He also replied to the affidavit of Mr Eltis and set out what he maintains occurred at the EGM held on 12 December 2018, which meeting was adjourned.

63. Dr Mao suggested his concern in relation to the 8 August 2020 AGM “was predominantly due to the Covid-19 pandemic”. He said he was not involved in instructing Mr Beazley of Beazley Lawyers other than consenting for that firm to be retained.

64. When cross-examined, it was ascertained that Dr Mao held a PhD in neuroscience, not covering either epidemiology or infectious diseases, and that he was not a medical practitioner. Dr Mao suggested the reference to Ms Liang in the minutes of the 3 September 2018 SC meeting should be a reference to her husband, Ken Xue. He accepted that Ken Xue disclosed that he was an employee of the respondent but could not recall him disclosing that he was the son of Ms Sun. Dr Mao accepted that the minutes of that meeting did not suggest Ken Xue left the meeting or abstained when a motion relating to the building management contract was considered but did not accept that Ken Xue had a conflict of interest in relation to that topic.

65. In relation to the 25 October 2018 SC meeting, Dr Mao’s answers were the same except that he suggested Ken Xue did not vote due to an objection from Mr Watson. He accepted that the contract for Stage 2 was a major contract but, when a figure of $200,000 per annum was put, he said he could not recall the figure.

66. Dr Mao’s attention was directed to the proposal to award a building management agreement to the respondent being on the agenda for the 12 December 2018 EGM, being a meeting which he chaired. He accepted that what occurred at that meeting could be described as “absolute chaos” and that the meeting was abandoned and had to be adjourned.

67. It was noted that Mr Mao had suggested in his affidavit that Mr Jordan, an employee of a former strata managing agent, had suggested to him that an additional quarterly fee payable to the respondent had been agreed at an SC meeting which should be in the minutes but Dr Mao accepted that such minutes were sought but never provided.

68. In relation to the suggestion of Dr Mao that his concerns in relation to the 8 August 2020 AGM were COVID-related, he accepted that the notice stated
    “The venue has confirmed that they can accommodate your meeting with the required social distancing and cleaning COVID measures” but said he did not agree it was a Covid-safe venue. It was also noted that a 21 July 2020 email from Ms Hu to the strata managing agent, asking whether it would be safe for lot owners to attend the 8 August 2020 (A520) was the subject of a same day reply (A519) which indicated that advice had been obtained from NSW Health.

69. Dr Mao accepted that he, Ken Xue and Ms Hu retained Beazley Lawyers and attempted to stop the 8 August 2020 AGM, those Supreme Court proceedings being brought in the name of the applicant. When it was put to Dr Mao that there was no SC meeting for funds to be spent on those proceedings, he suggested there was an informal meeting, the decision being made by emails.

70. When asked for a copy of those emails he said he did not know where they were, and he also said he did not know who gave instructions to Beazley Lawyers. The voting page of Dr Mao became part of the evidence (E7) and it reveals that the eight motions put to SC members did not include either the commencement of the Supreme Court proceedings or engaging Beazley Lawyers. When it was put to Dr Mao that only Ken Xue gave an affidavit in support of those proceedings, he again said he did not know and added the suggestion that he was not allowed to talk to any witness.

71. When it was put to Dr Mao that the real reason for trying to stop the meeting was not the COVID pandemic but the extent of lot owner anger against the respondent, that he knew that the majority of lot owners were against a contract being awarded to the respondent, and that Ken Xue told him the respondent would be outvoted, Dr Mao denied each of those propositions.

Ms Rahmat

72. This deponent indicated that she purchased a lot off the plan and lived in it until shortly prior to 10 February 2021 which was the date of her affidavit (A1967). She said that, whenever she has seen Ms Sun and George Xue at the complex, they have been dressed in business attire. She claimed that the lawns are no longer well-kept and said she has not seen any maintenance of that kind since October or November in 2020.

73. Mr Rahmat went on to suggest that the barbeque area, fire safety, drain maintenance, carpark and clearing gutters receive proper attention. She recalled a mid-2019 incident when she said a neighbour’s bathroom leak was addressed.

Ms Sun

74. The first affidavit of Ms Sun (A736) indicated that the respondent trades as CSR which is now a real estate agency whose activities include caretaking and building management for apartments, selling properties, managing tenancies and strata management. On 27 October 2000, the respondent purchased the caretaker management rights from Meriton for $310,000 and executed the CA on 16 March 2001 (A457 or A847).

75. Ms Sun provided a copy of a letter, dated 26 October 2000, from the respondent’s then solicitor which began with the words “We confirm your instructions that you do not wish to purchase the Caretaker Management Rights for Stage 2 for the sum of $500,000 increased by 5% per annum.” It should be observed that the 5% increase was referring to the sale price of the rights, not the annual charge for the work of the caretaker. She said she raised with Mr Lai that the Stage 1 contract should also increase by 5% every year and claimed he later told her that Meriton had said they would give her a 5% increase which she took to mean a 5% increase in the caretaker fees.

76. By reference to what she described as “my handwritten ledger of invoices issued” for 29 March 2001 to 12 March 2003, Ms Sun noted the application of a 5% annual increase.

77. After Stage 2 was completed, it was suggested there was increased pedestrian traffic and usage of facilities in Stage 1 which was said to give rise to an additional workload for the respondent. Ms Sun claimed that the raised the question of an additional fee at a meeting of the SC and that, at the next SC meeting, when she suggested $22 an hour for 20 hours a week, the SC chairman approved that proposal but told her to send an invoice quarterly. She went on to suggest that the chairman told the strata managing agent to ensure that was recorded in the minutes.

78. Ms Sun said she based the $22 figure on the award rate and later revised that rate and adjusted the hours. It was her evidence that the resulting invoices were paid without query or complaint until October 2019. She went on to suggest that in May 2016, Mr Jordan, an employee of the strata managing agent, approved her request to charge a fixed fee every quarter at a time when the award rate was said to be $24.26. That rate, for 20 hours per week, with GST added, was said to be the basis for the quarterly amount of $6,938.36.

79. Although Ms Sun’s affidavit suggested the option to renew the CA was exercised in 2010 and 2015, the only letter she annexed was dated 28 October 2015 which related to the five-year period from 19 March 2016 (A915). That affidavit then proceeded to detail the caretaking services said to have been provided by the respondent and annexed copies of various building reports.

80. On 17 December 2019 Ms Sun received an email from the strata managing agent which indicated that a resolution had been passed at a 9 December 2019 SC meeting to request her to provide a document recording the agreement for CSR to increase its fee by 5% each year and indicating that no further payments would be made until that issue was resolved. However, the minutes of the SC meeting held on 12 February 2020 suggest a resolution to pay a caretaker fee based on CPI increases.

81. A copy of the minutes of the 8 August 2020 AGM was provided to Ms Sun under cover of a letter dated 20 August 2020 from the strata managing agent. Also annexed to Ms Sun’s affidavit were copies of the 1 October 2020 default notice issued by the applicant to the respondent, the 12 October 2020 letter whereby the respondent exercised its option to renew the CA for the final five years, from March 2021, and a second default notice dated 29 October 2020.

82. The last document annexed to Ms Sun’s first affidavit was a copy of a 28 January 2021 letter to the Tribunal which included a submission that this application be dismissed or alternatively stayed by reason of the pre-existing Supreme Court proceedings between the applicant and the respondent.

83. In her second affidavit (A3576), Ms Sun responded to the affidavits of each of the applicant’s four witnesses. As to what occurred on 8 August 2020, Ms Sun suggested that Sylvia, said to be the assistant of her son, Ken Xue, said the security guards were invited by the SC at the suggestion of the solicitor, Mr Beazley. Ms Sun also denied the suggestion of Mr Eltis that she told people that they could go as the AGM had been cancelled.

74. In relation to the issue regarding the provision of CCTV recordings, Ms Sun claims she told Mr Eltis: “I listen to the OC. But for the CCTV issues I can’t just listen to you.”

75. Despite suggesting in her first affidavit (A741 at [17]) that she was not aware of the concept of CPI when signing the CA, in cross-examination Ms Sun agreed that she came to Australia in 1991, having been an accountant in Shanghai for 18 years, started a finance business in 1998 and that she became aware of the CPI. She agreed that Meriton owned all the Stage 1 lots when the subject strata plan was registered with the result that the CA bound future owners.

76. Ms Sun was taken through various provisions in the CA, including clause 10.1, which requires the respondent to sell the caretaker lots (specified in Item 3 in Schedule 1 of the CA to be Lot 107 and Lot 109) in the event the CA is terminated, and clause 18.2, which requires that “any shareholder or director of the [respondent] shall not offer himself for election as an office bearer of the Executive Committee of the Owners Corporation”.

77. In relation to the duties set out in Schedule 2 of the CA, Ms Sun agreed that paragraph 1(i) required the respondent to carry out all reasonable directions given by the applicant in relation to the care and maintenance of the complex. Ms Sun also agreed that the words in bold type at the end of Schedule 2 applied, namely:

All the foregoing activities shall be undertaken and carried out by the [respondent] at the reasonable direction of the Owners Corporation and shall not be a delegation of any duty or obligation of the Owners Corporation.

88. Ms Sun accepted that, as the sole director of the respondent, she was responsible for compliance with the CA. She also indicated that she had engaged an interpreter to translate the entire CA to her.

89. When questioned about the 5% increase, Ms Sun suggested she did not understand that such an increase would give the respondent more than if a CPI increase was used. Her answers to subsequent questions on that topic were evasive, not responsive and on one occasion she asked if she could choose to not answer a question.

90. When it was put to her that the letter to which she referred related to the purchase price of the Stage 2 rights, not the fees charged, Ms Sun suggested that was not her understanding. Ms Sun agreed that she had not been able to provide anything in writing to support her claim that clause 3.1 of the CA had been varied from the CPI increase stated in that provision.

91. As to her suggestion of an oral variation of that provision, when it was suggested to her that she had not provided any evidence of the applicant agreeing to a 5% increase, Ms Sun gave a lengthy answer which suggested that she grew up in China where not everything was in writing and that “oral is OK” and she then simply did not answer the next question, when it was put to her alleged conversation with Mr Dunn of the then strata managing agent was not true.

92. When her attention was directed to a schedule of caretaker payments provided to the respondent’s lawyers by the applicant’s lawyers under cover of a letter dated 19 October 2021, Ms Sun claimed to have never seen that document then claimed she had seen it but not read it. However, she then accepted that the difference between an annual increase 5% instead of the CPI created an additional charge by the respondent to the applicant of $442,963.38.

93. When taken to a paragraph in her first affidavit (A744 at [33]) in which she suggested she proposed a variation in the respondent’s remuneration due to the increased workload created by the completion of Stage 2 (the extra fee), Ms Sun suggested she did not ask anyone about that and that she only thought that herself.

94. Despite the minutes of the 5 June 2008 EGM suggesting Ms Sun was elected to the SC, she claimed she was not elected, no-one voted and that the strata managing agent said she should be on the SC. After it was brought to her attention that the minutes of that meeting had been signed as a correct record, and after being reminded that she was under an obligation to answer questions truthfully, Ms Sun was asked if she ever sought to have those minutes corrected. She said she did but when the question was repeated her answer was to the effect: “I did not request for the minutes to be corrected, I did not agree to participate as an SC member”.

95. When her attention was drawn to the minutes of the 5 June 2008 SC meeting which followed that EGM, Ms Sun initially suggested she attended all meetings as caretaker but in answer to the next question, accepted she attended as an SC member and that she participated in that meeting as an SC member. When it was suggested that she did not declare her interest as the owner of the caretaker company at SC meetings, Mr Sun said that was incorrect then added that most lot owners knew of her role.

96. Ms Sun was asked twice by the Tribunal whether she left SC meetings when there was discussion of matters relating to the respondent. After suggesting she could not recall in answer to the first such question, she responded to the repeated question by suggesting she did leave the room. When her cross-examiner noted that she must have been present because she purported to recall what was said on the topic of an extra fee (A745 at [35]), Ms Sun replied by saying that the meeting did not reach a decision. In answer to the next question, she suggested she was there when that topic was raised but when it was discussed she was not there.

97. When taken to the next paragraph (A745 at [36]), Ms Sun accepted that she had not included in her evidence the minutes of any decision to pay the extra fee which the respondent has charged every quarter since 2009. In response to the suggestion there was no SC decision to approve the extra fee, Ms Sun suggested that the respondent was entitled to issue those invoices if “they” told her she could and, when asked who she meant by “they”, she said Ms Xu. When it was put to her that she was not aware of any SC resolution approving the extra fee, Ms Sun agreed that she had not seen any such decision but suggested “they did say OK”. It is noted that Mr Sun agreed that the respondent had sought and obtained online access to all the applicant’s minutes since 2008.

98. After being asked questions about those increased fees, Ms Sun also agreed that the charges for that extra fee totalled $255,794.64. It was noted that the respondent was requested to make that admission prior to the hearing but did not do so.

99. When asked to concede that she was an elected member of the SC between 2009 and 2012, Ms Sun suggested she did not feel she was elected. After a series of questions, she accepted that she did not disclose her connection with the caretaker company, which is the respondent in these proceedings.

100. In response to questions from the Tribunal, Ms Sun agreed she expected the applicant to abide by the CA as that was part of the law of Australia and accepted that the applicant expected the respondent to abide by that contract.

101. Ms Sun’s attention was also directed to the respondent’s proposal for the building management services for Stage 2 which proposed an annual increase in accordance with the CPI (D152). She denied the suggestion that was because it was unreasonable to seek a 5% annual increase.

102. In relation to the invoices for lawnmowing, Ms Sun agreed that was part of the respondent’s duties but claimed there was a change in about October 2014 which she claimed was the result of a telephone conversation with the strata managing agent. She accepted there was no resolution for that change but suggested that was because the strata managing agent represents the applicant. It was noted that she had claimed, in a letter dated 23 February 2021 (A665), that Meriton’s Mr Walmsley, at a time when he was said to be the sole SC member, has resolved for gardening expenses to be paid by the applicant instead of the respondent. Ms Sun would not admit that a total of $25,112 had been paid to Gardenmakers since 10 January 2018 or that $4,260 had been paid to Jim’s Mowing.

103. As to the 8 August 2020 AGM, Ms Sun initially denied seeing security guards in attendance despite her own affidavit evidence to the contrary (A3588 at [42]). She suggested that the notice being handed out by Ken Xue and Sylvia, both employees of the respondent, was a “reply from NCAT”. Ms Sun denied telling people that AGM had been cancelled.

104. When asked if she believed, at that time, the meeting had been cancelled, she gave a non-responsive answer and then said she merely provided paper to the others. When the question was repeated, she said she did not believe the AGM had been cancelled. However, in her affidavit in reply (A3589 at [48]) Ms Sun said: “I was not present at the 2020 AGM because I thought it was cancelled”. When that was drawn to her attention, Ms Sun suggested that later on it was announced that the meeting was cancelled.

105. Ms Sun’s attention was directed to the 11 August 2020 email she received from the strata managing agent (A594) which indicated that a new SC had been elected. On 8 September 2020 the strata managing agent sent another email to Ms Sun (A593) seeking her confirmation that she would address all matters pertaining to the applicant to the elected SC members. The reply from Ms Sun, sent 40 minutes later (A593), included an assertion that the 8 August 2020 AGM was invalid. Despite the clarity of those emails, in her affidavit in reply (A3589 at [49]) Ms Sun suggested: “I do not recall if I had received or read the minutes of the AGM of 2020 from [the strata managing agent] by 15 September 2020. I do not recall any other form of clarification as to the line of authority given the dispute between the strata executive committee.”

106. The quoted words are further contradicted by the inclusion in the annexures to Ms Sun’s first affidavit of the 20 August 2020 covering letter whereby the strata managing agent provided the respondent with a copy of the minutes of the AGM held on 8 August 2020.

107. Despite accepting she was told on 11 August 2020 what had happened in relation to the SC and that she had been given directions by the strata managing agent, Ms Sun denied the respondent was in breach of the requirement imposed by clause 18 of the CA to obey directions from the applicant’s strata managing agent.

108. The next topic explored in cross-examination was the CCTV footage. Ms Sun agreed that on 13 October 2020 Mr Eltis made a request for CCTV footage which had not been provided by 1 December 2020 (A611). A further request made on 2 March 2021 (A88) was also blocked by Ms Sun who questioned the authority of Mr Eltis who was, at that time, the applicant’s secretary. A 3 March 2021 email from Mr Eltis (A90) to Ms Sun attached a letter from the applicant’s lawyer (A4301). The response was a letter from the respondent’s solicitor (A4304) which did not contest what was said in that letter but instead threatened to report the applicant’s lawyer to the Legal Services Commissioner.

109. While Ms Sun accepted that Mr Eltis came to her office on 3 March 2021, she denied saying: “I am not taking instructions from the OC”. She even denied saying “I can’t just listen to you“ despite those words being in her affidavit (A3591 at [55]). However, she accepted that the CCTV footage belonged to the applicant and that she had received direct instructions to provide that footage. It is noted that, from the minutes of the SC meeting held on 1 March 2020 (A129), it was resolved to authorise the secretary (Mr Eltis) to obtain that footage and it cannot be suggested Ms Sun and Ken Xue were not aware of that decision as they both attended that meeting by telephone.

110. On 15 March 2021 a request was made for the password to “the old stage 1 DVR” (A78). Ms Sun agreed that password was sought, and that the respondent has that password. That password has not yet been provided.

111. On 26 November 2020 (A613) a request was made for keys to enable access to the building’s cable risers and that on or shortly after 01 March 2021 (A132) a request was made for the respondent’s rosters or timesheets, neither of which requests have been met.

112. When taken to a voting paper for the SC dated 27 March 2009 (D23), Ms Sun accepted that she signed that document as an SC member. Likewise, for a 6 July 2010 voting paper (D33).

Ms Xu

113. In her affidavit (A1957), Ms Xu indicated that she was a lot owner who served on the SC from about 2007 to about 2013. She claimed that during the period prior to the completion of Stage 2 there was a motion moved for additional payments to be made to the respondent due to the use of the Stage 1 common property by owners/occupiers of lots in Stage 2. However, she was unable to recall the date of that motion or whether it was carried.

114. When cross-examined, Ms Xu agreed that she and Ms Sun were elected to the SC at an EGM held on 18 August 2019, as recorded in the minutes of that meeting. She also agreed that Ms Sun was appointed by the SC on 5 June 2008and 18 August 2009 to liaise with the strata managing agent.

115. During cross-examination it became clear that the recollection of Ms Xu was not sufficient to answer questions without reference to the relevant minutes. There was a sequence of questions directed towards Ms Sun’s participation in SC meetings. First, Ms Xu suggested she could only recall who attended SC meetings and not who was on the SC. Next, when asked if she was a friend of Ms Sun, she sought to avoid answering but conceded they had known each other since 2020. Then, asked if there was any reason for not admitting that Ms Sun was an SC member, the response of Ms Xu was that she did not wish to answer that question.

116. Ms Xu agreed that if the SC decided to pay the respondent an additional $25,000 per annum it was important for that to be recorded.

Mr George Xue

117. There were two affidavits from this witness (A1974 and A3746). In the first, George Xue indicated that he has been employed by the respondent as a caretaker, on a full-time basis since 2009. He suggests he has read Schedule 2 to the CA and that he is onsite from 8am to 6pm Monday to Friday, on Saturday from 9am to 1pm, and on Sundays and public holidays for around two hours. Further, that he mans the reception area unless he is conducting his duties elsewhere at the complex. He said he looks after the master keys, that a key register is kept at the office of CSR and that his wife, Ms Sun, maintains the card system for the complex.

118. The evidence of George Xue is that he reports to Ms Sun and his son, Ken Xue, and that he keeps a diary. He went through the matters to which he attends, and said he supervises the cleaner, whose name is Kamal Hossain, and grants access to the gardener and pool cleaner.

119. The second affidavit of George Xue was an affidavit in reply, primarily responding to the affidavit of Mr Eltis on the topics of proxies, compliance with fire code obligations, and other matters. George Xue also responded to maintenance issues raised in the affidavit of Mr Laurans.

Mr Ken Xue

120. In his first affidavit, dated 11 February 2021 (A2592), Ken Xue indicated that he is employed by the respondent, assists his mother (Susan Sun) who delegates tasks to him, and works with his father (George Xue) who is the onsite caretaker employed by the respondent. He said he has been working in that role since 2015 on a full-time basis.

121. After describing his duties, he outlined a conversation he suggests occurred at an SC meeting on 13 March 2019. This affidavit also annexed copies of various building reports, correspondence, and tax invoices of the respondent.

122. The second affidavit of Ken Xue, dated 12 February 2021 (A3530), responded to the joint statement of Messrs Eltis, Laurans, Wang and Watson which was tendered by the respondent (B/4). This affidavit primarily responded to matters relating to the various meetings covered in that joint statement. As to what occurred at the AGM on 8 August 2020, Ken Xue suggested in this affidavit (A3542 at [54]) that Mr Beacham, who was the applicant’s treasurer at that time, said: “There is an NCAT matter on. This AGM may be a waste of time as NCAT may declare it invalid. This meeting is adjourned.” but did not provide any indication of how it was that he was chairing that AGM.

123. This affidavit (A3542 at [60]) also suggested that Ken Xue never saw a copy of a resolution authorising Mr Eltis to take control of the master keys for the property. However, the request was not for master keys but for keys to enable access to the building’s cable risers (A613).

124. In his third affidavit (A3911), Ken Xue responded to the affidavits of the applicant’s four witnesses. As to the 8 August 2020 AGM, Ken Xue maintained he had separate telephone conversations on 07 August 2020 with four members of the SC in which he said that Mr Beazley had suggested security guards be engaged to ensure the health and safety of lot owners by cancelling the AGM that was scheduled to be held the following day. His recollection of what occurred on the day of that AGM included a senior police officer telling the security guards to leave and then telling the lot owners they could all attend the meeting. Ken Xue repeated the suggestion made in his earlier affidavit that Mr Beacham adjourned the AGM.

125. This third affidavit includes passages which are more in the nature of written submissions prepared by a lawyer in that they set out provisions in the SSDA and the SSMA which are matters of law. The final paragraphs of this affidavit, and the documents referred to, indicate that the interim application related to these proceedings was dismissed on the basis that there were no urgent considerations.

126. In cross-examination, Ken Xue said he had not taken time to read the SSMA. He suggested he became a member of the SC at the 2016 AGM when his wife gave a proxy form to him and that the minutes of the 21 February 2017 SC meeting should record his name and not that of his wife. He accepted that he did declare his interest as the building manager but not as the son of the owner of the respondent company. The position as to his SC membership was said to be the same in relation to the 2017 AGM. He accepted he was not a lot owner at that time, when he was elected to the position of secretary.

127. In relation to the 3 September 2018 SC meeting, Ken Xue accepted that he did not leave the meeting when the building management contract was discussed. He agreed that meeting decided to limit the tender to the respondent and Meriton. He also agreed that he and his mother attended the next SC meeting, held on 25 October 2018, and remained in the meeting when it was decided to only put the respondent’s proposal to the next meeting.

128. Ken Xue also accepted that he was the applicant’s secretary when the notice of for the 12 December 2018 EGM was issued but he said they were issued by the strata managing agent. He said he did not see any conflict of interest in him being secretary at a time when his mother’s company was seeking to obtain a building management agreement for Stage 2. He accepted that there was “absolute chaos” at that meeting, which was adjourned.

129. He agreed that the 15 June 2019 AGM decided to name five candidates with two of them to be short-listed after which the respondent was appointed. When questioned about the first SC meeting held on 6 August 2019, well after that AGM, Ken Xue suggested that was because the venue for the AGM was only booked for three hours. When it was first suggested the length of the AGM was due to discussion of the respondent, Ken Xue suggested most of the time was spent on by-laws but, when the question was repeated, he accepted that the length of the AGM was due to discussion of the respondent.

130. It was noted that the voting at the meeting resulted in Ken Xue and Ms Sun being permitted to remain in the meeting but not participate while Tribunal applications were discussed. Further, Ken Xue agreed that, at the 21 September 2019 EGM, the earlier resolution in favour of the respondent was rescinded and the contract was awarded to Meriton which thereby became the building manager for Stage 2.

120. In relation to the 9 December 2019 SC meeting, which resolved to request the respondent to provide documents to justify its 5% annual fee increase, Ken Xue said he didn’t refrain from voting as he was a lot owner and that he did not see any conflict of interest arising from the fact that he was an employee of the respondent.

121. Ken Xue did not attend the 3 May 2021 SC meeting, but he accepted that he received a copy of the minutes of that meeting which included a resolution instructing the respondent “to provide the password to the Strata Managing Agent and the Secretary for the redundant DVR that serviced Stage 1 within 24 hours of the minutes being issued”. He accepted that a second, similar resolution was passed on 29 June 2021. A third such resolution was passed by the SC on 30 August 2021. He appeared to accept that the applicant was told to contact the security firm who then referred the matter back to the respondent.

122. Ken Xue denied that the suggestion in his second affidavit that he and his wife bought Lot 71 on 10 December 2015 (A2594 at [13]) was misleading but he did concede that it was not until 30 April 2019 that he became the owner of a 1% interest in that lot for $1. He was also forced to admit that he was not a lot owner when he was first elected to the SC.

123. He also admitted that the 13 March 2019 SC meeting resolved to seek advice as to his eligibility to be a member of the SC and that the advice obtained was that he was not eligible. When it was suggested the 30 April 2019 transfer of a 1% interest in the lot owned by his wife to him was an attempt to render him eligible to be on the SC, Ken Xue suggested that was a “tax decision”, and claimed he had also obtained advice which suggested he was eligible to be a member of the SC.

124. Ken Xue denied that he considered it important for him to be on the SC to protect the interests of the respondent and he denied that, in 2019, he wanted to respondent to obtain the contract for Stage 2.

125. After the notice for the 08 August 2020 AGM (A4128) was issued on 21 July 2020, Ken Xue accepted that he sent out an email at 5.11pm the next day (A514) which was critical of the secretary, although he conceded it was a statutory function of the secretary to send out such notices. He initially suggested Sylvia sent out the email with his name on it but later suggested she drafted it and he sent it. That email contained the closing words: “I don’t agree with the meeting to be held on 8^th August and since we now have the majority … we demand you to cancel AGM notice asap...”

126. The result was a 5.30pm email in which the secretary, who had only agreed to take up the position when voting for that position was evenly divided, resigned. The 5.46pm response did not thank that person for serving as secretary but instead alleged, in bold type, “You have failed your duty of care to all owners …”. Ken Xue initially suggested that reply was drafted by Sylvia but subsequently accepted it was sent by him.

127. In relation to the Supreme Court proceedings, Ken Xue’s cross-examination revealed a number of matters: (1) there was no SC meeting in relation to the commencement of those proceedings, (2) he “thinks” the treasurer approved that expenditure, (3) no costs agreement was distributed because it was an emergency, (4) Beazley Lawyers were chosen because they were recommended by Sylvia, (5) he gave instructions to those lawyers, and (6) the only affidavits provided in support of the application were his. He denied that his affidavit was an attempt to stop the AGM. That answer is contrary to his earlier answer that he sought to stop that AGM.

128. Ken Xue accepted that the summons was dismissed by the Supreme Court. He accepted that a further attempt in the Tribunal later the same day also failed to stop the AGM, but only when that proposition was put a second time because of a non-responsive answer the first time it was put.

129. When it was put to Ken Xue that he and Sylvia were at the venue for that meeting the next morning, again the question had to be asked twice so a non-responsive answer could be replaced by an admission. He suggested they were handing out a paper which indicated that “NCAT did not make orders for the meeting to go ahead”. It does not appear that any copy of what was being handed out was included in the evidence. Nor was a copy of any Tribunal order to that effect placed before the Tribunal. He claimed that the hiring of security guards was approved by the treasurer and accepted that his mother, Ms Sun, was present as was Sylvia, an employee of the respondent.

130. After answering questions by seeking to maintain his answer that he and Sylvia were saying that the Tribunal did not say the meeting could go ahead, Ken Xue admitted that he was telling people the meeting could not go ahead.

131. When it was put to Ken Xie that the elected chairperson declined to chair that AGM, Ken Xue said: “We declared that the meeting be adjourned and left”. He agreed that it was the treasurer, Mr Beecham, and not the person chairing the meeting, who said that there were Tribunal proceedings on foot and that the meeting may be declared invalid, so it was adjourned.

132. Ken Xue agreed that he considered the SC members were not validly elected and that, as a result, the respondent was not obliged to do what they decided. When taken to his third affidavit (A3934 at [60]), Ken Xue accepted that the request for keys had not been for the master keys as he had suggested. When it was then suggested that he was seeking to make an excuse for non-compliance, Ken Xue suggested that he would have to go and make copies. However, there is no record of that reason having been given previously and no explanation of why copies have not been obtained.

133. In relation to the admitted failure to provide the password for the DVR, Ken Xue suggested the request received “may be illegal” and that if there was a specific resolution of the lot owners then it would be provided.

Submissions

145. Submissions for the applicant comprise 35 pages of written submissions (MFI 1, tab 4), oral submissions made on the morning of the fourth day of the hearing, and submissions in reply made that afternoon. The respondent’s submissions cover 26 pages of written submissions (MFI 1, tab 5) plus oral submissions delivered on the afternoon of the fourth day of the hearing. Those submissions have been considered by the Tribunal when determining each of the issues.

Jurisdiction

146. As these proceedings relate to premises in Ultimo which are the subject of a strata scheme, the SSMA applies and that would normally be sufficient to find that the Tribunal has jurisdiction to hear and determine the proceedings.

147. However, the respondent raised two reasons in support of its contention that the Tribunal does not have jurisdiction. The first, is that s 72 does not apply to the CA. Secondly, that the pre-existing Supreme Court proceedings between the parties deprive the Tribunal of jurisdiction by reason of clause 5(7) of Schedule 4 to the CATA. Both those issues are considered below.

Relevant law

148. The applicant sought a termination order under s 72 of the SSMA which is set out in full later in these reasons. For present purposes, it is sufficient to note that s 72(1)(a) provides the Tribunal with the power to terminate an agreement for the appointment of a building manager. Since s 72(1) commences with the words “The Tribunal may …” that power to terminate is discretionary. There are six grounds for making an order under s 72 and the applicant relies on three of them, being paragraphs (a), (b) and (f) of s 72(3) which are set out below since they provide the yardstick against which the evidence must be assessed.

(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,

…

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

149. There does not appear to be any reported decision where the power conferred in the Tribunal by s 72 of the SSMA has been exercised in favour of an applicant. That, of course, is not a defence otherwise that power would never be exercised. The question is not whether the power has been exercised in a previous case but whether it should be exercised in this case.

Consideration

150. The difficulties of dealing with the issues which are, metaphorically speaking, needles in a haystack of evidence as well as submissions, both written and oral, do not require elaboration. Attempting to be both complete and concise involves competing goals. In reaching a decision in relation to this application, the Tribunal has considered each of the documents that were referred to during the hearing, the oral evidence, and the submissions, both written and oral, albeit without the benefit of a transcript.

151. These reasons focus on the material central to the issues but, to the extent that any evidence or a submission is not referred to, it should not be assumed that evidence or submissions has been ignored. That approach is consistent with what was said by Allsop P in Mitchell v Cullingral Pty Ltd [2012] NSWCA 389 at [2]:

[A] judge may, in dealing with large bodies of evidence, be forced to economise in expressions and approach in order to be coherent in resolving the overall controversy. The need for coherent and tolerably workable reasons sometimes requires a truncation of reference and expression. Judgement writing should not become a process that is oppressive and produces unnecessary prolixity. Not every piece of evidence must be referred to. That said, central controversies put up for resolution by the parties must be dealt with. The competing evidence directed or relevant to such controversies must be analysed or resolved …

152. The matters suggested by the parties to be the issues in these proceedings are considered below. Each issue has been considered with the objective that, in the event of a successful appeal, it will not be necessary to conduct a re-hearing.

153. In considering the issues raised in these proceedings, the applicant bears the onus of proof since it commenced the proceedings. The standard of proof is the civil standard, usually expressed as proof on the balance of probabilities. However, it is well-established that, when considering whether the evidence meets that standard and thus satisfies the onus of proof, regard should be had to the nature of the issue under consideration: Briginshaw v Briginshaw [1938] HCA 34. Although the rules of evidence do not apply to these proceedings, it is noted that principle has been incorporated in s 140 of the Evidence Act 1995 which requires a consideration of the nature of the cause of action or defence, the nature of the subject matter of the proceedings, and the gravity of the matter alleged.

154. The respondent’s submissions included the suggestion that matters which were not raised in the applicant’s Points of Claim ought not to be dealt with by the Tribunal. It is clear the Points of Claim were phrased by reference to s 72 rather than the evidence. However, there are two reasons why this submission is rejected. First, the Tribunal is not a court of pleading whereby a matter that is not pleaded cannot be raised. Secondly, both parties lodged their evidence, had an opportunity to cross-examine each witness and to make both written and oral submissions with the result that it cannot be said to be procedurally unfair to now consider issues which have been strenuously contested over a four-day hearing.

Chronology

155. A statement of facts and chronology was provided by each party. Combining those four documents yields the following summary of what appears in more than 5,000 pages of evidence.

20 Oct 00   The respondent was incorporated

27 Oct 00    Caretaker rights sold by Meriton to respondent for $310,000

18 Jan 01   The subject strata plan was registered, with 110 lots

20 Jan 01   Applicant’s common seal was affixed to the CA

16 Mar 01   Meriton and the respondent executed the CA

15 Mar 02   Respondent began increasing its fee by 5% each year

10 Feb 03   The 2002 amendment of 1996 Act commenced

2009      George Xue was employed as caretaker by the respondent

05 Jun 08   Ms Sun elected to SC and appointed as substitute contact

28 May 09   The subdivision of Lot 110 into 224 lots was registered

18 Aug 09    Ms Sun elected to SC and appointed primary contact point

18 Aug 09   Applicant resolved have a 10-year CA with Meriton for Stage 2

Sep 09   Respondent began charging additional quarterly fee of $5,148 plus GST, backdated to 01 Apr 09

11 Oct 10   Ms Sun elected to SC and appointed primary contact point

20 Oct 10   Respondent excised option to extend CA by five years

04 Jul 11   Ms Sun elected to SC and appointed primary contact point

31 Jul 12   Ms Sun elected to SC and appointed primary contact point

2013-2014   No AGM held

Nov 14   Respondent engaged Jim’s Mowing and invoiced applicant

28 Oct 15   Respondent excised option to extend CA by five years

29 Oct 15   Applicant and respondent initialled a CA

10 Dec 15    Lot 71 purchased in the name of Ms Liang (Ken Xue’s wife)

May 16   Respondent began charging additional quarterly fee of $6,938.36 plus GST

19 Sep 16   Minutes suggest Ken Xue’s wife elected to SC

30 Nov 16   SSMA commenced

28 Mar 17   Ken Xue elected as secretary, appointed primary contact point

10 Jan 18   Gardenmakers replaced Jim’s Mowing and invoiced applicant

22 May 18   Ken Xue elected as secretary

13 Mar 19   SC resolved to seek advice re eligibility of Ken Xue

22 Mar 19   SC received legal advice Ken Xue not eligible to be SC member

30 Apr 19   Ms Liang transferred a 1% interest in Lot 71 to Ken Xue

15 Jun 19   Ken Xue and Mr Eltis elected to the SC

15 Jun 19   Applicant resolved to enter CA for Stage 2 with the respondent

06 Aug 19   Ken Xue nominated for position is secretary but not successful

21 Sep 19   15 Jun 19 resolution rescinded, resolved to re-appoint Meriton

Nov 19   Applicant ceased pay fees to respondent for caretaker services

09 Dec 19    Applicant resolved to request respondent to provide documents in support of the 5% annual increase in its fees

12 Feb 20   SC resolved to only pay respondent based on CPI increase and not to pay the additional quarterly fee

11 May 20   Respondent served Dispute Notice on applicant

04 Aug 20   Supreme Court summons filed by Beazley Lawyers

07 Aug 20   Supreme Court refused to grant injunction to stop AGM and the Tribunal decline to cancel the AGM to be held the following day

08 Aug 20   AGM held - no director or employee of respondent elected to SC

01 Oct 20   Applicant served Dispute Notice on the respondent

09 Oct 20   Mediation held between applicant and respondent

12 Oct 20   Respondent excised option to extend CA by five years

13 Oct 20   Respondent directed to provide access to CCTV footage

29 Oct 20   Respondent replied to applicant’s Dispute Notice

29 Oct 20   Applicant served second Dispute Notice on the respondent

30 Oct 20   Respondent commenced Supreme Court proceedings

26 Nov 20   Respondent replied to applicant’s second Dispute Notice

26 Nov 20   Respondent refused to provide copy of CCTV footage, says it will only permit inspection at its office

01 Dec 20   Respondent refused to provide keys

11 Dec 20   Applicant filed cross-application in Supreme Court proceedings

24 Dec 20   Applicant filed interim and substantive applications with Tribunal

20 Jan 21   Those applications were re-filed

28 Jan 21   Respondent write to Tribunal, alleging abuse of process

12 Feb 21    Interim application dismissed but directions were made in substantive application as abuse of process argument rejected

01 Mar 21   SC resolved to authorise secretary to access CCTV footage

02 Mar 21   Secretary sought to arrange that access with respondent

03 Mar 21   Respondent denied access, saying it required approval by a general meeting of the applicant

30 Apr 21   Respondent directed by secretary to provide access keys

Does clause 5(7) of Schedule 4 of the CATA apply?

156. Both the previously dismissed interim application and the substantive application sought the following orders:

1  An order that the Applicant not be required to provide the Respondent with a new Caretaker Agreement pending resolution of the substantive proceedings; and

2 An order pursuant to Section 72(1)(A) of the Strata Schemes Management Act 2015 terminating the Caretaker Agreement between the Applicant and the Respondent; and

3  An order varying the term of that Agreement to the effect that the Agreement terminates not later than 15 March 2021; and

4  An order requiring the Respondent to pay the Applicant compensation for over-payments made by the Applicant to the Respondent; and

5  An order that the Respondent take such steps as are necessary to transfer to a replacement building manager the Caretaker Lots in accordance with the further orders annexed to this Applicant (sic); and

6  An order that the Respondent pay the Applicant’s costs.

157. In a letter dated 28 January 2021 and in written submissions dated 10 February 2021, the respondent raised clause 5(7) of Schedule 4 of the CATA which is set out below:

Effect of pending court proceedings on Tribunal. If, at the time when an application is made to the Tribunal for the exercise of a Division function, an issue arising under the application was the subject of dispute in proceedings pending before a court, the Tribunal, on becoming aware of those proceedings, ceases to have jurisdiction to hear or determine the issue.

158. When this application was considered by the Tribunal on 12 February 2021, an order was made dismissing the claim for order 4 above and the published reasons clearly indicate that decision was based on clause 5(7).

159. The first order sought relates solely to the interim application and the third order sought has been overtaken by time. As a result, it is only the requests contained in the second, fifth and sixth paragraphs that require consideration. It is clear the issue the applicant wishes to have determined is whether the CA should be terminated, as sought in the second paragraph, and that the fifth and sixth paragraphs raise matters that would be consequential upon any termination order being made.

160. While the written submissions of the respondent (MFI 1, tab 5, at [26] to [43]) detailed the overlapping factual aspects between this application and the pre-existing Supreme Court proceedings, s 72 of the SSMA (quoted below) confers the power to terminate on the Tribunal and it would appear the issue of whether the CA should be terminated is a matter which cannot be considered in the Supreme Court proceedings.

161. In support of its submissions on this issue, the respondent referred to and quoted portions of the judgement in The Owners Corporation – Strata Plan 64807 v BCS Strata Management Pty Ltd [2020] NSWSC 1040, being the unsuccessful application to prevent the 8 August 2020 AGM from being held. In that case, the court noted that proceedings had already been commenced in the Tribunal on 3 August 2020, dismissed some aspects of the summons for want of jurisdiction due to those proceedings, and transferred the remaining aspects to the Tribunal. The respondent’s submissions quoted from that judgment ([36, [37] and [45]) in support of the proposition that common factual issues underlying the relief sought was sufficient.

162. However, those paragraphs refer to the judgement of White J (as he then was) in Steak Plains Olive Farm Pty Ltd v Australian Executor Trustees Ltd [2015] NSWSC 289 which, at [105], said (emphasis added):

Parliament has provided, in effect, that if an issue arising under the application can be dealt with either by a court or the Tribunal, the issue should be determined by the court of tribunal in which the proceedings are first commenced.

163. There are two reasons why the Tribunal rejects the respondent’s contentions on this issue. First, since it was previously raised, considered, and determined by the Tribunal on 12 February 2021. Secondly, since the issue of whether the CA should be terminated is an issue that can only be determined by the Tribunal by reason of the wording of s 72 of the SSMA.

(b)   section 40B(2) does not apply to such an agreement,

(c)   an application for an order under section 183A may not be made with respect to such an agreement on the ground that the period for which the agreement is in force is harsh, oppressive, unconscionable or unreasonable.

278. The effect of clause 12 was to render existing caretaker agreements subject to the amendments but not in relation to its term, by excluding the term of the agreement from the operation of both s 40B(2) and s 183A. That position is confirmed by the Second Reading speech, delivered on 30 October 2002 in relation to the 2002 amendments to the 1996 Act, which included the following paragraph:

The main concern that has arisen over the appointment of caretaker managers by developers is that an owners corporation may be tied to a 25-year contract with little opportunity to challenge its terms. The developer has in effect decided, before there are individual lot owners in the scheme, what is in the best interests of the owners for the next 25 years. However, it is the developer who has received the financial benefit, as the sale of caretaker management rights can be quite a lucrative transaction. The bill provides that no future caretaker management contract will be able to exceed a total period of 10 years. Contracts already in existence, which may have periods in excess of 10 years to go, will be allowed to run their course but from the day this bill becomes law 10 years will be the maximum contract period for new arrangements. If after the 10-year period the parties wish to renew for a further 10 years, that is in order. The important thing is that it will be the owners corporation, with input from individual owners, both investors and owners-in-residence, making a decision on what is desirable rather than a developer with little ongoing interest in the operation of the scheme.

279. When the SSMA took effect on 30 November 2016 the 1996 Act was repealed. Within Schedule 3, which is entitled “Savings, transitional and other provisions” is clause 15, titled “Caretakers and building managers”, which provides:

(1)   An agreement in force immediately before the commencement of this clause is taken to be a building manager agreement for the purposes of this Act, despite any of the provisions of the agreement, if—

(a)   the agreement provides for the appointment of a person to carry out any of the functions specified in section 66(1) in relation to the owners corporation for a strata scheme, and

(b)   the primary purpose of the agreement is to provide for that appointment and related matters, and

(c)   the person is not entitled to exclusive possession of a lot or common property in the strata scheme.

(2)   Any such building manager agreement expires 10 years after the commencement of this clause unless the terms of the agreement provides that it expires on an earlier day or the agreement is terminated on an earlier day.

(3)   A reference in any instrument to a caretaker in relation to a strata scheme is taken to be a reference to a building manager in relation to that scheme.

280. Headed “Strata managing agent and building manager agreements may be terminated or varied by Tribunal”, section 72 of the SSMA provides as follows:

(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 58 (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.

281. While the Second Reading speech in relation to the SSMA does not shed light on the issue relevant to these proceedings, the Explanatory Note (MFI 6) does in Part 4 where paragraph (g) says:

caretakers for strata schemes are now to be referred to as building managers and a building manager is not required to be a person entitled to exclusive possession of a lot or common property

282. It is noted that the terms caretaker agreement (the term used in the 1996 Act) and building management agreement (the term used in the SSMA) are synonyms by reason of s 40A(4) of the 1996 Act and clause 15 in the SSMA.

283. Importantly, the 2002 amendments to the 1996 Act only impacted on agreements when the caretaker had exclusive possession of a lot. In the SSMA, s 66(4) expanded the position because it said: “A building manager may be a person who is entitled to exclusive possession (whether or not jointly with any other person) of a lot or common property in a strata scheme.” That is consistent with what was said in the relevant paragraph in the Explanatory Note (set out above).

284. The respondent contended that clause 15 operated to exclude agreements which did include exclusive possession of one or more lots that were in existence on 30 November 2016, when the SSMA commenced, because clause 15 in the transitional provisions only operated to subject such an agreement to the SSMA if the caretaker was not entitled to excusive possession of a lot. When clause 15 is read in isolation that appears to be the case.

285. However, when clause 15 is viewed in the context of the expansion of the rights in relation to agreements to include agreements where the caretaker is not entitled to exclusive possession of a lot, the position is that clause 15 was expanding the operation of rights to give rights not only in relation to caretakers who did have exclusive possession of a lot but also in relation to caretakers who did not have exclusive possession of a lot. In other words, clause 15 was including agreements where the caretaker was not entitled to exclusive possession of a lot and was not excluding agreements where the caretaker was entitled to exclusive possession of a lot.

286. To illustrate the legislative history, it is convenient to label and describe four potential situations:

Category 1   An agreement that took effect prior to 10 February 2003, which is governed by clause 12 within Schedule 4, which limits the application of s 40B and s 183A of the 1996 Act (being amendments introduced by a 2002 amending Act).

Category 2   An agreement that took effect on or after 10 February 2003, which is governed by s40B and s 183A of the 1996 Act.

Category 3   An agreement which took effect prior to 30 November 2016, which is governed by the SSMA, subject to clause 15 within Schedule 3 of the SSMA.

Category 4   An agreement which took effect on or after 30 November 2016, which is governed by s 66 to s 72 of the SSMA.   

287. At the risk of stating the obvious, when the 1996 Act was repealed on 30 November 2016, Category 1 and Category 2 agreements became Category 3 agreements. It is convenient to here note that the 2001 CA was a category 1 agreement while the 2015 CA was a category 2 agreement but they both became Category 3 agreements on 30 November 2016. As a result, the question of whether the 2015 CA replaced the 2001 CA is of no consequence.

288. If the respondent’s contention is correct, then clause 15 would operate to deprive a Category 1 or Category 2 agreement of the rights acquired under the 2002 amendments to the 1996 Act when that agreement became a Category 3 agreement on 30 November 2016. That contention is rejected because it would mean that an owners corporation would lose rather than maintain its rights and that cannot be seen as the statutory intention in view of what was said in the Explanatory Notes.

289. The SSMA expanded the rights of an owners corporation in two respects. First, it expanded the number of grounds for termination from three to six, as revealed by a comparison of s 183A of the 1996 Act and s 72 of the SSMA. Secondly, the provisions in the 1996 Act, after it was amended in 2002, were confined to caretaker agreements where the caretaker did have exclusive possession of a lot while the SSMA was not so confined as it applied whether or not the caretaker had exclusive possession, as revealed by a comparison of s 40A(1) in the amended 1996 Act and s 66(4) in the SSMA.

290. The Tribunal considers the correct interpretation to be that the provisions introduced to the 1996 Act in 2002 only apply to Category 1 and Category 2 agreements only if the caretaker has exclusive possession of a lot while the provisions of the SSMA apply to Category 3 and Category 4 agreements regardless of whether the caretaker has exclusive possession of a lot.

291. Put another way, clause 15 does not operate to exclude a Category 3 agreement which does have exclusive possession rights from the operation of s 72 of the SSMA but operates to bring a Category 3 agreement which does not have exclusive possession rights within the operation of s 72 of the SSMA.

292. In other words, caretaker agreements commencing on or after 30 November 2016 are subject to the prospect of a termination order under s 72 regardless of whether the caretaker has exclusive possession of a lot. As caretaker agreements commencing before that date only had the prospect of termination (under s 183A of the 1996 Act) if the caretaker had exclusive possession of a lot, clause 15(1)(c) ensures that caretaker agreements commencing before 30 November 2016 are subject to the prospect of a termination order if the caretaker does not have exclusive possession of a lot.

293. By way of summary, the position appears able to be reduced to three propositions. First, that an owners corporation which has a caretaker agreement which commenced on or after 30 November 2016 has a right of termination under s 72 of the SSMA regardless of whether the caretaker is entitled to exclusive occupation of one or more lots. Secondly, for an owners corporation which has a caretaker agreement under which the caretaker does have exclusive possession of one or more lots, which commenced prior to 30 November 2016, then that owners corporation had termination rights under s 183A of the amended 1996 Act and has the same rights (with six grounds instead of three) under s 72 of the SSMA. Thirdly, that an owners corporation which has a caretaker agreement under which the caretaker does not have exclusive possession of one or more lots, which commenced prior to 30 November 2016, then that owners corporation had no termination rights under s 183A of the amended 1996 Act but does have termination rights under s 72 of the SSMA by reason of cl 15.

294. Noting that cl 15 appears within a section of the SSMA which is headed “Savings, transitional and other provisions”, it appears that cl 15 does not operate to save a caretaker agreement with exclusive possession of a lot from the operation of s 72 of the SSMA, but instead operates to create a transition for existing caretaker agreements which did not contain provision for the exclusive possession of a lot by making them the subject of a potential application for a termination order under s 72 of the SSMA, which was not possible under the amended 1996 Act.

295. In ACPM at [330-342] the position in relation to a similarly worded caretaker agreement was considered. However, that was in the context of a claim for damages, not termination. It was noted, at [330] that statutory provisions “are to be considered having regard to their text, context and purpose”, as indicated by the High Court in SZTAL v Minister for Immigration and Border Protection [2017] HCA 34 at [14]. The Tribunal’s analysis in this case, set out above, has been in accordance with that principle of statutory interpretation.

296. At [331] it was noted that the purpose of the 2002 amendments to the 1996 Act was “plainly to limit the extent that lot owners in a strata scheme could be bound by a long-term contract entered into between the developer and Caretaker providing lucrative returns to the Caretaker, the sale of which conferred a significant financial benefit on the developer”.

297. In the next paragraph, ie [332], it was noted that: “The purpose of the exception in the transitional provisions was to protect caretakers who had already entered into such agreements, and not retrospectively deprive them of rights they had acquired sometimes for substantial payment.”

298. After determining that what was referred to as a 2010 Deed was a new agreement and not a variation of an existing agreement, the position in relation to what was called the 2015 Deed was considered. It was decided that the 2015 Deed did not fall within clause 15 of the transitional provisions of the SSMA because the plaintiff in ACPM was entitled to exclusive possession of the Caretaker Lots (at [338]).

299. However, after expressing the view that clause 3 of the transitional provisions of the SSMA does not operate in a manner inconsistent with clause 15 of those transitional provisions (at [340]), it was held (at [341]) that, by reason of the operation of s 30 of the Interpretation Act 1987, “to the extent the 1996 Act as amended operated to limit the effect of the 2010 and 2015 Deeds, the limitation remained in force” and it was said that such an approach was not inconsistent with the savings and transitional provisions of the SSMA and the decision of the High Court in Attorney-General for the State of Queensland v Australian Industrial Relations Commission [2002] HCA 42 at [6]-[8].

300. The outcome of that analysis in ACPM was stated as follows at [342]: “Thus, the question of the effect of the 2015 Deed is to be determined having regard to the 1996 legislation.” Damages were then assessed on the basis that a 10-year term limitation applied to a caretaker agreement which provided the caretaker with exclusive possession of caretaker lots and pre-dated the SSMA (ie a Category 3), despite the view taken of clause 15 in the transitional provisions.

301. If the decision in ACPM can be distinguished on the basis that it was a decision which involved a consideration of the term of a caretaker agreement and not the termination of such an agreement, then the Tribunal’s analysis of the statutory provisions, set out above, suggests the applicant is entitled to a termination order. Alternatively, if the decision in ACPM cannot be distinguished then, if either the Tribunal’s analysis of the statutory provisions is wrong or if the view taken of clause 15 of the transitional provisions in ACPM is binding, then the applicant is still entitled to a termination order on the same basis as the decision in ACPM, namely that rights acquired under the 1996 Act, as amended, survived by reason of s 30 of the Interpretation Act 1987.

302. In other words, if the statutory right relating to the term of a caretaker agreement survived the introduction of the SSMA in ACPM, in like manner the statutory right relating to the termination of a caretaker agreement provided the applicant with a right which survived the introduction of the SSMA. It is noted that each of paragraphs (a), (b) and (c) of s 183A(2) in the 1996 Act, as amended, was carried over into paragraphs (a), (b), and (f) of s 72(3) in the SSMA.

303. The Tribunal notes that, on 27 October 2000 the respondent and Meriton executed a Deed of Sale of Caretaker Management Rights (A824) whereby, in return for paying $310,000 (clause 3.1), it acquired a right to have a CA (clause 5.1) and to purchase what were termed interdependent lots (clause 6.1). Further, that the 2001 CA specified that Lots 107 and 109 were caretaker’s lots (Item 3). As a result, these proceedings involve a CA which does include exclusive possession of one or more lots in the strata scheme which is the subject of the CA.

304. For the reasons indicated above, the Tribunal considers the applicant is entitled to a termination order under that s 72(3) of the SSMA, either by reason of the Tribunal’s interpretation of the relevant statutory provisions or by an application of the same reasoning as in ACPM.

Costs

305. As the question of costs was not argued during the hearing, provision will be made in the orders for the provision of written submissions on that topic.

Orders

306. An order terminating the CA needs to be accompanied by an order in relation to the sale of the respondent’s lots, being lots 107 and 109. Clause 10 of the CA, which sets out a detailed mechanism for the sale of such lots in the event of termination by either the applicant or Meriton under clause 9.3, is set out in full below:

1.   The Caretaker must sell or cause the owner(s) of the Caretaker’s Lots to sell, together with the Caretaker’s interest in this Agreement (‘the Caretaker-Management Rights’) the Caretaker’s Lots to a person nominated by the Owners Corporation;

2.   The Owners Corporation may nominate in writing on or before the date being ninety (90) days after the termination of the Agreement, (“the Nomination Period”) any person or persons, corporation or corporations (“the Nominee”) who shall be deemed to have the right of the first refusal to purchase (“the Right of Pre-emption”) from the owners of the Caretaker’s Lots in the Complex together with the Caretaker-Management Rights at such price and on such terms as are agreed upon between the Caretaker and the Nominee or, failing such agreement, at such price as is fixed as being the fair market value of the Caretaker’s Lots and the Caretaker Management Rights by a valuer appointed for the purpose by the Law Society President and on such terms and conditions as are fixed as being the usual ones applicable in such a transaction by a Solicitor appointed for the purpose by the Law Society President. The exercise of the Right of Pre-emption shall be made in writing and served upon the Caretaker within fourteen (14) days after the date of nomination by the Owners Corporation of the Nominee. If no nomination is made by the Owners Corporation within the Nomination Period or if the right of Pre-emption so created is not exercised then the Caretaker shall be at liberty to affirm this Agreement and to retain the Caretaker’s Lots and the Caretaker-Management Rights or to sell the Caretaker’s Lots and to assign the Caretaker-Management Rights in accordance with Clause 21

3.   The parties must continue to perform and fulfill their obligations pursuant to this Agreement during the Nomination Period.

4.   The Caretaker must admit the Owners Corporation by its agents, servants and contractors to the Caretakers Lots for the purpose of restoring the lots and its fittings and fixtures to a state of good, serviceable and clean repair.

5.   The Caretaker irrevocably appoints the Owners Corporation its attorney for the purpose of doing any act or executing any document necessary for or conducive to the discharge of the Caretaker’s responsibilities under this Clause 10.

6.   The Caretaker irrevocably consents to the Owners Corporation lodging a caveat over the Caretaker Lots to protect the Owners Corporations interests pursuant to this Clause 10.

307. The Tribunal has used that wording to draft an order for the sale of those lots, noting that s 72(1)(d) empowers the Tribunal to make “an order that a party to the agreement take any action … under the agreement”. Although it appears that the registered proprietors of Lot 107 are Ms Sun and her husband, George Xue, that lot is rendered subject to sale in the event of the termination of the CA. As the parties have not made submissions in relation to the sale of the lot consequent upon a termination order being made, the practical course is to make an order but include a mechanism for its revision. Accordingly, if either party contends for a different form of order for the sale of those lots, written submissions are to be filed and served by 31 January 2022 and any written submissions in reply are to be filed and served by 14 February 2022.

308. Any such submissions should be accompanied by an indication of whether it is agreed that the Tribunal should make an order pursuant to s 50(2) of the CATA, dispensing with a hearing for that issue. Of course, if the parties agree on the form of an alternative order for the sale of those lots, then that should be submitted so that the Tribunal can make such an amendment pursuant to regulation 9(1)(a) of the Civil and Administrative Tribunal Regulation 2013.

309. While an order under s 72(1)(a) of the SSMA terminating the CA will resolve the any remaining questions of access to CCTV footage and keys, it will not result in the provision of the password to a DVR system. However, as noted above, s 72(1)(d) empowers the Tribunal to make “an order that a party to the agreement take any action … under the agreement”. The Tribunal considers it both necessary and appropriate to make an order for the provision of that password to the applicant’s secretary, and notes that s 247A of the SSMA provides for the imposition of a civil penalty of up to 50 penalty units ($5,500) for a contravention of an order of the Tribunal.

310. For the reasons indicated above, the orders that will be made are as follows:

1. Pursuant to s 72(1)(a) of the Strata Schemes Management Act 2015, the caretaker agreement between the applicant and the respondent is terminated.

2. Pursuant to s 72(1)(d) of the Strata Schemes Management Act 2015, the respondent is to sell Lots 107 and 109 in accordance with Schedule 1.

3. If either party seeks to vary order 2 and/or Schedule 1:

1. any submissions seeking a variation are to be filed and served by 31 January 2022,

2. any submissions in reply are to be filed and served by 14 February 2022, and

3. any such submissions are to indicate whether it is agreed that the Tribunal should dispense with a hearing for that issue, pursuant to s 50(2) of the CATA.

4. Pursuant to s 72(1)(d) of the Strata Schemes Management Act 2015, on or before 5pm on Friday 21 January 2022 the respondent is to provide the secretary of the applicant with the password for the digital video recording system.

5. Should either party seek an order for costs:

1. any submissions seeking an order for costs are to be filed and served by 31 January 2022,

2. any submissions in reply are to be filed and served by 14 February 2022, and

3. any such submissions are to indicate whether it is agreed that the Tribunal should dispense with a hearing for that issue, pursuant to s 50(2) of the Civil and Administrative Tribunal Act 2013.

Schedule 1

1. The respondent must sell or cause to sell Lot 107 and Lot 109 to a person or corporation nominated by the applicant within 90 days of the date of these orders.

2. If there is no agreement as to the price to be paid for either of those lots, the price is to be determined by a valuer appointed for that purpose by the President of the NSW Law Society and the decision of that valuer shall bind the parties.

3. If there is no agreement as to the terms upon which either of those lots is to be sold, the terms are to be determined a solicitor nominated by the President of the NSW Law Society and the decision of that solicitor shall bind the parties.

4. Pending completion of the sale of both those lots, the applicant may lodge a caveat to protect its interests in those lots.

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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: 16 March 2022