Xie v The Owners - Strata Plan No 90092

[2025] NSWCATCD 13

Civil and Administrative Tribunal

New South Wales

Medium Neutral Citation:

Xie v The Owners – Strata Plan No 90092 [2025] NSWCATCD 13

Hearing dates:

12 and 13 August 2024

Date of orders:

20 December 2024 (Amended 24 March 2025)

Decision date:

20 December 2024

Jurisdiction:

Consumer and Commercial Division

Before:

R. Alkadamani, Senior Member

Decision:

The Notice of order issued on 20 December 2024 is amended under section 63 of the Civil and Administrative Tribunal Act 2013, and should read as follows:

1. Order pursuant to s 237(1)(a) of the Strata Schemes Management Act 2015 (NSW) appointing Direct Management Group Pty Ltd as strata managing agent to exercise all the functions of the owners corporation of strata plan no. 90092 for a period of 12 months from the date of these orders upon the terms and conditions set out in the document entitled “Strata Management Agency Agreement”, a copy of which is at tab 2 of exhibit 1, pages 11-30.

2. Order pursuant to s 237(2) of the Strata Schemes Management Act 205 (NSW) that Direct Management Group Pty Ltd is to have and may exercise all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation.

Catchwords:

LAND LAW – Strata schemes – Appointment of compulsory strata managing agent

Legislation Cited:

Civil and Administrative Tribunal Act 2013 (NSW)

Strata Schemes Management Act 2015 (NSW)

Strata Schemes Management Regulation 2016 (NSW)

Cases Cited:

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

Walker Corporation Pty Ltd v The Owners – Strata Plan No 61618 [2022] NSWSC 1246

Texts Cited:

None

Category:

Principal judgment

Parties:

Jian Guang Xie (applicant)
The Owners – Strata Plan No. 90092

Representation:

Counsel:
Mr J Green for the applicant
Mr J Bannerman (solicitor) for the respondent
Solicitors:
CJL Law for the applicant
Bannermans Lawyers for the respondent

File Number(s):

2023/00386792 (Previously SC 23/30630)

Publication restriction:

None

REASONS FOR DECISION

1. These reasons for decision deal with an application by Mr Xie (the applicant) for the appointment of a strata managing agent to the owners corporation (the OC) of strata scheme plan no. 90092 (the Strata Scheme). The application is brought pursuant to s 237 of the Strata Schemes Management Act 2015 (the SSMA). Alternative relief was also sought by the applicant in respect of the validity of a resolution passed, or purportedly passed, in July 2023.

2. The applicant is the owner of a lot in the Strata Scheme and it is common ground that he is an interested person with standing to bring this application. The OC opposes the application.

3. The matter was heard on 12 and 13 August 2024.

4. The applicant was represented by Mr Green of counsel.

5. The OC was represented by Mr Bannerman, solicitor.

6. On the first day of hearing the applicant’s legal representatives advised the Tribunal that they acted for a number of applicants, but not all applicants. However, the Tribunal’s records indicate that there is only applicant and a number of lot owners were joined as interested parties, rather than as applicants. One of the reasons for this apparent confusion on the part of the applicant’s representatives likely arose because the applicant’s solicitors at the date of hearing were not the applicant’s original solicitors.

Evidence adduced at the Hearing

7. The following paragraphs briefly set out the evidence tendered during the hearing. The evidentiary rulings in respect of the statements tendered by the parties are not set out in the following paragraphs. Those rulings are engrossed on the Tribunal’s copy of the documents and recorded in the transcript.

8. Exhibit 1 was tendered by the applicant. Exhibit 1 comprised two folders. Not all of the materials in exhibit 1 were adduced by the applicant. The applicant tendered the following materials from exhibit 1:

1. Tab 2, comprising a letter dated 19 December 2023 from Direct Management Group Pty Ltd trading as Direct Strata Management (Direct Strata) addressed to the Tribunal recording its consent to being appointed by the Tribunal pursuant to s 237 of the SSMA as strata manager and a document entitled Strata Management Agency Agreement (pp. 11-30) which set out the terms and conditions on which Direct Strata agreed to be appointed;

2. Tab 3, comprising a statement of Raphael Kooper dated Raphael Kooper and annexures;

3. Tab 4, comprising a statement of Jian Guan Xie, the applicant, dated 31 January 2024;

4. Tab 5, comprising a statement of Hao Wang dated 25 January 2024; and

5. Tab 6, comprising a statement of Ying Xin Cheng dated 1 September 2023.

9. Exhibit 2 was tendered by the OC. Exhibit 2 comprised one folder. Not all of the materials in exhibit 1 were adduced by the OC. The OC tendered the following materials from exhibit 2:

1. Tab 2, comprising a statement of Xiaojuan Cui dated 10 April 2024; and

2. Tab 3, comprising a statement of Fang Alice Li dated 29 March 2024.

3. Tab 4, comprising the statement of Xiahong Shen dated 9 April 2024;

4. Tab 8, comprising the statement of Xiahong Shen dated 31 July 2023.

10. Exhibit 3 was tendered by the applicant. Exhibit 3 comprised one folder. The applicant tendered the following materials from exhibit 3:

1. Tabs A and B, comprising the statement of Yi Dong Ge dated 18 March 2024 and the exhibit to that statement; and

2. Tabs C and D, comprising the statement of Ying Xin Cheng dated 24 April 2024 and the exhibit to that statement;

3. Tabs E and F, comprising the statement of Meng Zhang dated 24 April 2024 and the exhibit to that statement.

11. The applicant also tendered the statement of Xilin He dated 14 September 2023, which was marked exhibit 4. This statement was initially an annexure to the statement of Mr Kooper at pages 363-364. However, Mr He was available for cross examination and the applicant tendered the statement as the evidence of Mr He.

12. Exhibit 5 was a statement by Chen Ji Lee, the applicant’s solicitor, annexing a search of the Department of Fair Trading’s website in respect of the licence status of Direct Strata.

13. Exhibit 6 is the Notice of annual general meeting dated 1 October 2024. This document is attached to the Application for miscellaneous matters filed on 20 August 2024.

14. I now turn to further consider the content of exhibit 2 which was before the Tribunal.

15. There is some disputed between the parties as to the evidence that is before the Tribunal from the folder comprising exhibit 2. The OC submits that all the statements in the folder, including tabs 4 to 18 of exhibit 2, were adduced before the Tribunal. The applicant submits that only tabs 2 and 3 (the statements of Ms Cui and Ms Li) were adduced.

16. This issue arises because on the first day of hearing the OC advised that it relied on all the statements in exhibit 2, that is, tabs 2-18 inclusive. On the second day of the hearing it became apparent that the persons making the statements were not available for cross examination. The transcript records the following relevant exchange (D2, T pp. 58-60):

GREEN: The only thing that I will flag, Senior Member, there are a number of witnesses I wish to cross-examine, but my understanding is they won’t be attending the hearing.

So I’ll have to make an application that those statements are not read.

SENIOR MEMBER: Can those - can that be discussed at least so Mr Bannerman knows the - Mr Bannerman, what’s your attitude going to be? Is that going to be disputed?

BANNERMAN: Well, the rules of evidence don’t apply in the Tribunal, and the documents can be tendered subject to weight and relevance. And it maybe that they have very little weight, but I think that it should be allowed.

SENIOR MEMBER: All right. Well, you all discuss it, and we’ll deal with it. We’ll adjourn to 1.15.

LUNCHEON ADJOURNMENT

SENIOR MEMBER: All right. So we’re now dealing with some statements for witnesses who were called for cross-examination but were not available.

BANNERMAN: I’ll just maintain that same simple submission.

SENIOR MEMBER: All right. Now just in relation to that submission, I know that Mr Green agreed to not read statements for witnesses that you wanted to cross-examine. I think that’s right. Isn’t it?

GREEN: That’s the case, Senior Member.

SENIOR MEMBER: So in terms of the fairness between the sides, I think there’s only two courses. One of which is everyone’s statements for witnesses who were not cross-examined is allowed in, and Mr Green can apply to do that. Or in light of this particular case, where people have been cross-examined, and in which the parties, I think, are quite adversarial, the principle would be, or the application of my expression would be that, neither side whose witnesses were required for cross-examination, and whose witnesses did not come, can rely on the statements. So I just want to hear submissions from both parties on that.

BANNERMAN: I’m content with that.

SENIOR MEMBER: Either one? Is there a preference by either party?

BANNERMAN: If the witnesses weren’t available, then you can’t rely on the statements.

SENIOR MEMBER: For both?

GREEN: Yeah, that’s the applicant’s preference.

SENIOR MEMBER: Mr Bannerman, is that your preference?

BANNERMAN: Yes, that’s fine.

SENIOR MEMBER: All right. In that case, what statements do I need to disregard from exhibit 2? Actually, can I just ask the parties to list what statements I need to disregard from both exhibits 2 and exhibit 1? I think I’ve got them, in relation to exhibit 1 anyway, but I just want to make sure of that. So who would like to tell me in the exhibit 2 what I should disregard? Would the parties prefer to send a communication which is an email consolidated by both sides, which records the agreed position after court, after the hearing?

BANNERMAN: Sure.

SENIOR MEMBER: Is that what you would prefer, or would you like to do it now?

GREEN: That’s agreeable, Senior Member. Whatever is the easiest.

BANNERMAN: And the salutations for the witnesses.

SENIOR MEMBER: Oh, thank you very much. Yes. Can I also say this; it would be really helpful if it’s one email?

GREEN: Yes.

BANNERMAN: Yes.

SENIOR MEMBER: Which is agreed by both sides, obviously.

BANNERMAN: Yes, sure.

GREEN: Thank you, Senior Member. Should that just be sent to the Tribunal registry ?

Senior Member: Yes, it has to be sent to the registry, brought to my attention with the proceeding number.

17. Having regard to the above is relatively clear that the position to which the parties agreed was that where a party had sought to cross examine a witness and the witness was not available for cross examination then that witness’ statement was withdrawn.

18. The OC points to the fact that the parties never sent the email or communication which the Tribunal requested. That was unfortunate. However, in light of the exchange above, I do not accept that the failure to send the email or communication should be considered a change of position by the applicant.

19. The next question is the identity of the witnesses that were sought for cross examination. The applicant’s submissions in reply record that the applicant had notified that requested that all of the OC’s witnesses to be available for cross examination. There is no direct evidence of this matter, but it does not appear to be disputed. The reply submissions were signed by counsel for the applicant and related not to substantive evidence in the proceedings, but communications between legal representatives related to the conduct of the hearing. The OC’s legal representatives did not dispute that, although I accept that the fact it was in reply would have required an additional communication. Consequently, I accept that the applicant had notified that requested that all of the OC’s witnesses to be available for cross examination.

20. During the hearing, the applicant’s counsel cross examined Ms Cui and Ms Shen.

21. Ms Li, another witness called by the OC, was available for cross examination, but the applicant elected to not cross examine her.

22. Having regard to the above, I have concluded that only the witness statements of Ms Cui and Ms Li from exhibit 2 were properly tendered before the Tribunal.

23. The OC elected to not cross examine any of the witnesses whose statements were tendered by the applicant.

Procedural matters after hearing

24. After the conclusion of the hearing on 14 August 2024 the Tribunal made orders for further written submissions.

25. The Tribunal directed that the applicant or any interested party to file and serve written submissions by 17 September 2024. The OC or any interested party was directed to file and serve written submissions by 8 October 2024. The applicant was directed to file and serve any submissions in reply by 22 October 2024. This timetable took account of the parties’ intention to obtain a transcript of the hearing.

26. During the hearing the OC also foreshadowed that it would seek to re-open its case after the conclusion of the hearing.

27. In relation to the substantive proceedings, a number of steps occurred in relation to closing submissions. The applicant’s closing submissions were provided on about 8 October 2024. The respondent’s closing submissions were filed on 22 October 2024. The applicant filed submissions in reply on 30 October 2024. Each party also relied on written submissions filed in August 2024 prior to the hearing.

28. On 20 August 2024 the OC applied to re-open. The reasons for the request to re-open were recorded as follows:

The Tribunal was advised during the hearing on 13 August 2024 that the Respondent would be seeking leave to reopen the case to rely on the notice of agenda for the upcoming annual general meeting.

The witness statement of Leon Chow, the strata managing agent of the scheme, contains the notice of agenda The notice of agenda addresses concerns raised by the presiding member, Senior Member Alkadamani, during the course of the hearing. The Respondent’s representative advised the presiding member that this notice would be circulated to all lot owners within 7 days and a copy would be provided to the Tribunal by way of this application.

Additionally, the Applicant was put on notice of the Respondent’s intention to prepare and file this application during the hearing on 13 August 2024.

The Respondent can provide additional submissions in support of this application if directed by the Tribunal.

29. On 25 September 2024 I made orders and provided reasons as follows:

This matter was heard on 13 August 2024. The evidence was completed on that day.

Towards the end of the hearing the respondent advised that it wished to adduce further evidence and indicated that the further evidence was in the nature of the documents concerning the owners corporation’s 2024 annual general meeting, notice of which was to be sent out shortly.

On 20 August 2024 the respondent filed an application for miscellaneous matters (“the Application”) by which it seeks orders to re-open its case and to rely on a statement of Mr Chow dated 20 August 2024. Mr Chow is an employee of the strata manager.

On 5 September 2024 the applicant lodged submissions indicating that he opposed the Application. One of the grounds on which the applicant opposes the application to re-open is that the deponent of the statement, would have been cross examined on the contents of the statement and other matters.

The respondent recorded in the Application, under the heading “Grounds For Application”, that “the Respondent can provide additional submissions in support of this application if directed by the Tribunal”. That position misconceives the role of a party making an application and the role of the Tribunal. The Tribunal deals with applications as received, subject to providing the other party with an opportunity to be heard. It is the responsibility of the party making the application to set out the grounds on which it relies.

However, since the respondent’s representatives may have proceeded on a misapprehension as to when submissions should have been provided in an application of this type, the Tribunal will provide an opportunity for the respondent to provide its submissions rather than determine the application on the basis of the limited grounds set out in the Application.

ORDERS

1. On or before 30 September 2024 [the OC] is to lodge with the Tribunal and serve on the applicant and all interested parties its submissions in support of [its] application dated 20 August 2024.

2. On or before 7 October 2024 the applicant and any interested party that wishes to do so to lodge with the Tribunal and serve on the respondent their submissions in opposition to the orders sought in the respondent’s application dated 20 August 2024.

30. The OC filed submissions in support of its application to re-open on 30 September 2024. The applicant’s position had been made clear in an email communication to the Tribunal dated on 4 September 2024 and copied to the OC’s solicitors.

31. On 26 November 2024 the OC applied to for the matter to be re-listed. The reason for that request was said to be that a new strata agent had been appointed to the OC.

32. On 2 December 2024 I made orders in respect of both the OCs request to re-open and to re-list the matter and provided reasons as follows:

1. Grant leave for the respondent to re-open its case to the extent necessary to rely on the Notice of Agenda for upcoming general meeting dated 1 October 2024.

2. Dismiss the application to re-list the matter as recorded in an email from the respondent to the Tribunal dated 26 November 2024.

Reasons

These proceedings were heard on 12 and 13 August 2024. The applicant in the proceedings seek the appointment of a strata manager pursuant to s 237 of the Strata Schemes Management Act (SSMA).

As at the dates of hearing a notice of the general meeting for be held for 2024 had not been issued (“the Notice”). The Notice was issued on 20 August 2024. The Notice could not therefore have been adduced at the hearing on 12 and 13 August 2024. On 20 August 2024 the owners corporation, by its solicitors, lodged an application for miscellaneous orders seeking leave to re-open its case and rely on a statement of Leon Chow or alternatively on the Notice. The applicants object. They point to the hearing having been concluded. The Tribunal’s decision is currently reserved. I will grant leave for the respondent (ie the owners corporation) to re-open its case so as to tender the Notice because it was not available as at the hearing and is relevant to the resolution of the dispute as it includes audited financial accounts. I will not permit the statement of Leon Chow to be adduced. To do so could open up a further request for cross examination and other steps which will delay the resolution of the application.

On 26 November 2024 the owners corporation, by its solicitors, requested that the proceedings be re-listed. It appears that the reason for the requested re-listing is an intent to rely on more evidence, specifically, that the managing agent has been changed. That is not in itself a reason that justifies a re-listing of the matter. It is not evidence in the proceedings and the request for re-listing is not a (further) application to re-open.

Findings

33. I make the following findings of fact.

34. The Strata Scheme comprises residential premises located at ** Brown Street, Ashfield, New South Wales.

35. The Strata Scheme comprises 120 lots. Since the Strata Scheme comprises more than 100 lots it is a “large strata scheme” within the meaning of s 6 of the SSMA.

36. The applicant is the owner of lot 115.

37. The strata scheme’s financial year is from 1 April to 31 March.

38. At the OC’s annual general meeting held on 22 March 2022, the OC resolved to strike a special levy of “up to $99,000.00” payable in four instalments to address the deficit in the OC’s administrative fund (Ex 2, tab 2, p. 39, motion 9). The instalments were payable on 1 March 2022, 1 June 2022, 1 September 2022 and 1 December 2022 (ex 2, tab 2, p. 39, motion 9). I infer from this that the OC’s administrative fund was in deficit prior to March 2022.

33. As at 31 March 2022 the deficit in the OC’s administrative fund was $64,323.35 (Ex 1, p. 189).

34. At the annual general meeting held on 22 May 2022 the OC resolved to strike a special levy of $99,000.00 inclusive of GST “to rectify the deficit” in the administrative fund (Ex 2, pp. 38-39).

35. The applicant’s opening submissions contend that Professional Strata Management Group Pty Ltd (PSMG) commenced managing the OC in December 2022 (see paragraph 10) and in that respect referred to paragraph 11 of Mr Kooper’s statement. However, that paragraph only recorded Mr Kooper’s understanding that “the owners corporation is currently under the management of PSMG”. Moreover the minutes of the 22 May 2022 AGM bear PSMG’s letterhead and record the attendance of PSMG (Ex 2, pp. 38-39). Consequently, I find that as at May 2022 PSMG were the strata managers of the OC.

36. As at 31 March 2023 the deficit in the OC’s administrative fund was $74,451.16 (Ex 6, p. 4 of Annual reports, document entitled “Statement of Financial Position” under the “Previous Year” column). The annual reports in exhibit 6 are stamped with the word “Audited” and include an audit certificate.

37. Another set of annual reports was included exhibit 1 commencing at page 183. That set of annual reports records that the OC’s administrative fund deficit as at 31 March 2023 was $73,771.16 (Ex 1, p. 189). Those annual reports are also stamped with the word “Audited” and include an audit certificate (Ex 1, p. 183).

38. In May 2023 members of the strata committee identified what were said to be issues with PSMG’s management. Mr Xie’s statement explains the matter as follows:

[12] From May 2023, and after becoming aware of financial and accounting irregularities, the members of the elected strata committee started to lose confidence in PSMG’s capacity to properly manage the strata scheme. The committee prepared an agenda with motions to terminate PSMG’s management agreement which was due to expire in December 2023, and to pay out the balance of the term.

[13] On 7 June 2023, the committee wrote to PSMG and instructed PSMG to issue the notice of the meeting to owners. A copy of the email appears at page 11 of PX-1.

[14] PSMG did not issue the agenda as instructed. The committee subsequently issued electronic notices to owners with email addresses, and arranged to have physical copies of the notice delivered to the mailboxes of the owners in the strata scheme. A copy of the agenda of the meeting appears at pages 12 of PX-1.

[15] On 20 June 2023, the owners corporation convened the EGM in person at the Ashfield Club. A copy of the minutes of the meeting appears at pages 14-16 of PX-1.

[16] The owners corporation engaged Goddard and Co Solicitors to write to PSMG to advise of its termination. On 26 June 2023, Goddard and Co issued a letter to PSMG. A copy of the letter appears at page 17-18 of Exhibit PX-1.

45. The applicant’s evidence as to nature of the “financial and accounting irregularities” were not explained in his statement.

46. The “financial and accounting irregularities” to which the applicant referred may have been alleged overpayments to the building managers, the Wealth Group Australia Pty Ltd (Wealth Group Australia). Mr Cheng’s evidence addressed this issue (Ex 1, tab 6). His evidence was as follows:

On the 15th of March 2023, at 4:30 PM, discovered an inconsistency in the invoice that Professional Strata Management Group (PSMG) paid to Wealth Group Australia Pty Limited (WGAL). On the following morning, I visited the office of PSMG at 102/582 Princes Highway, Rockdale NSW 2216, and personally asked Whitney Wang about why the payment made by PSMG to Wealth Group Australian Pty Limited (sic) did not align with the fees in cost proposal approved by the owners’ corporation during the Annual General Meeting (AGM) on 1st December 2022. Whitney Wang did not provide a direct response at that time; instead, he inquired “Who discover this issue”, and then he kept avoiding answer to my question.

Subsequently, I discovered another contract between SP90092 and Wealth Group Australia Pty Limited. The effective date of this contract matched the cost proposal approved during the AGM; however, the contract amount differed. Notably, this contract was not signed (Owners’ Corporation vs Wealth Group Australian Pty Limited), and based on this enlarged contract’s amount, PSMG has paid the invoices to Wealth Group Australian Pty Limited several times.

During the AGM meeting on 1st December 2022, the owners corporation approved the following amounts in the cost proposal by Wealth Group Australia Pty Limited as: Building Management - $18,500 Plus GST per annum, or $1,541.67 plus GST per month, Cleaning & Gardening Service - $56,000 Plus GST per annum or $4,666.67 plus GST per month. The contract that was discrepant from the cost proposal, bearing the signature of the contract left blank as I discovered above, stated: Building Management - $23,125 plus GST per annum or $1,927.08 plus GST per month; Cleaning & Gardening Service - $76,000 plus GST per annum or $6,333.33 plus GST per month. The total difference between the two cost amounts exceeds $24,625 +GST.

As a member of the strata committee, I solemnly affirm that I was the first one to discover this irregular discrepancy between two contracts. I hereby declare that I have never authorized or consented to Wealth Group Australia Pty Limited privately as to increasing their working hours, nor as to the contract amounts.

47. I have corrected Mr Cheng’s description of the building manager as “Wealth Group Australian Pty Ltd”.

48. In April-June 2023 there were numerous emails between members of the strata committee and PSMG regarding Wealth Group Australia’s contractual entitlements and payment to Wealth Group Australia (Ex 3, tab D, pp. 686-701). On 1 June 2023 Ms (Cindy) Shen emailed Mr Chow as follows:

Hi Leon,

Thanks for your email regarding the overpaid money to Wealth Group Australia.

There were 2 issues in your email.

-The total overpaid amount was $15446.70 not $9453.03 which you email to Alice previously. Please refer the break down attached.

-You had arranged the payment without SC approval. For the building management and cleaning May 2023 invoices, we clearly instructed you in writing only pay the amount we agree (Building Management $1695.84 and Cleaning $5133.34), why you paid both before your email due day 29/07/2023. In the meantime your Cash Report showed, the payment had been made 26/05/2023 without notification.

49. Mr Chow responded that he had conveyed to Wealth Group Australia that it should refund $15,446.70 and that he “did email [PSMG’s] accounts team specifically to pay $5,133.34 and $1,695.84” (Ex 3, tab D, p. 698).

50. The result of these communications was a consensus that Wealth Group Australia had been overpaid and

51. One of the items of business on the agenda for the meeting to be held on 20 June 2023 was the termination of PSMG as strata manager.

52. On 20 June 2023 an in-person extraordinary general meeting was held to address the issues with PSMG’s management (the June 2023 EGM). A resolution was passed at this meeting to terminate PSMG as the strata manager.

53. On 25 June 2023 Goddard & Co solicitors wrote to PSMG advising that they the OC had resolved to terminate PSMG as strata managers of the OC (Ex 1, p. 507).

54. During the hearing the OC’s solicitor submitted that the OC did not have the right to unilaterally terminate PSMG. There is likely some force to this submission in terms of the OC’s contractual entitlement. The strata committee at least appeared to be cognisant of the contractual issues because the minutes of the committee’s meeting held on 20 June 2023 resolved that the OC “Payoff the management fee of the remaining period of the PSMG strata management agreement, agreement ends 23/12/23” (Ex 1, p. 505). In any event, the parties did not otherwise address this question by reference to the terms of the contract between the OC and PSMG.

55. On 28 June 2023 Mr Witney Wang, the strata manager from PSMG, responded to Mr Goddard’s letter dated 25 June 2023 as follows (Ex 2, p. 36):

Dear Mr Goddard

We refer to your email and the attachments.

The meeting of 20/06/2023, you referred in your email, is deemed invalid as it failed to comply with the meeting protocol stipulated in the Strata Schemes Management Act 2015.

We have so informed the owner of Lot 115 and other committee members.

There is no evidence of your office being appointed or engaged by the owners corporation.

Regards

Whitney Wang | B.A | J.P | LSMA.

56. The OC submitted (OC’s Opening Submissions, para [17]):

The lot owners who sought to convene the June EGM did not have an up-to-date strata roll, so it is unclear how the lot owners would have known where to post all of the notices. It is submitted by the OC that this meeting cannot reasonably be deemed to have been convened in accordance with the SSMA.

57. The OC referred to the email dated 28 June 2023 from Mr Whitney Wang to Mr Goddard as the evidentiary foundation for the submission in the preceding paragraph. However, PSMG’s email is not evidence which establishes that the “lot owners who sought to convene the June EGM did not have an up-to-date strata roll”.

58. On 8 June 2023 PSMG sent out notice of the annual general meeting to be held on 29 June 2023 (the 29 June 2023 AGM) (Ex 1, tab 4 within Mr Kooper’s statement, p. 173). The applicant received the notice by email on that date (Ex 1, tab 4, p. 487, paragraph [17]). The applicant says that he did not receive a copy of the proposed caretaker agreement or the terms of the proposed strata management agency agreement with PSMG which were to be considered at the 29 June 2023 AGM. The applicant was not cross examined and I accept his evidence about not receiving copies of those documents.

59. The 29 June 2023 AGM was held in-person on that date at Club Ashfield (the 29 June 2023 AGM).

60. Mr Wang gives the following evidence in relation to the dispute about chairing the 29 June 2023 AGM (Ex 1, tab 5, pp. 598-599):

Adjourned Meeting with PSMG

[6] On 29 June 2023, I attended the annual general meeting of the owners corporation at the Club Ashfield, at 1-11 Charlotte Street, Ashfield NSW.

[7] I was one of the first people to arrive at the meeting at around 5:50pm.

[8] I recall that approximately 20-30 people attended the meeting in person.

[9] I recall that Whitney Wang and a group of people from PSMG arrived at the meeting at around 6: 10pm.

[10] As I occupied the role of chairperson of the owners corporation at the time, I believed that I was entitled to exercise the functions to chair the person and to ratify the attendees.

[11] I recall there was confusion at the meeting because there was no procedure implemented to verify the identity of owners and attendees. Several people at the meeting claimed to hold proxies for Yong Yu, the owner of Lot 9, even though the owner was present at the meeting and he indicated that he did not recognise these other people.

[12] I recall that I spoke to a solicitor at the meeting. This solicitor was a friend of another lot owner and attended to help that owner understand the procedures of the meeting. I recall we had a conversation to the following effect:

Me: I’m the chairperson of the owners corporation. Can I exercise this function even though PSMG are here?

Solicitor: You can do it.

[13] I recall that Jian Guang (Phillip) Xie, the owner of Lot 115 and elected secretary, and myself approached Whitney to request the elected officers to chair the meeting instead of PSMG. I recall we had the following discussion in mandarin:

Me: I would like to be chairperson of the meeting.

Whitney: No, I am chairing this meeting whether you like it or not.

[14] At this point, Whitney started raising his voice and started arguing with Philip in mandarin. A security guard from the venue intervened and said:

Guard: You can’t argue like this. You either need to hold the meeting or leave.

I recall after a time, Whitney abruptly said words to the follow effect:

Whitney: This meeting will not happen.

[15] I clearly recall that no motion was proposed at the meeting or any proposal put to the attendees for the meeting to adjourned.

[16] It was clear to me during this exchange that PSMG would not permit the members of the strata committee to chair the meeting, or to allow the meeting to occur without PSMG’s involvement

61. Mr Wang was not cross examined and I accept the evidence set out in the preceding paragraph.

62. There were a number controversial items on the agenda for the 29 June 2023 AGM that were significant in these proceedings. The first controversial item was a motion to adopt the financial reports for the period 31 March 2023 (Motion 2). The second controversial item was a motion to appoint Comprehensive Strata and Property Services as building managers (Motion 17). The third controversial item was a motion to terminate PSMG and pay out the balance of the strata management contract, which was due to expire on 23 December 2023 (Motion 19). Motion 19 was proposed by the applicant. Finally, and related to Motion 19, was the proposal that the OC appoint PSMG “with full delegation as the strata managing agents…and that authority be given for the common seal of the Owners Corporation to be affixed to the Agency Agreement to be tabled at the meeting by any two members of the strata committee or any two owners to finalise the appointment” (Motion 18). I note that Motion 18 indicates that the proposed strata managing agreement was to be “tabled at the meeting”.

63. During the 29 June 2023 AGM there were heated and aggressive exchanges leading to the management of Club Ashfield directing participants to leave the venue and the meeting ending abruptly (D2, T p. 41.25; pp. 50-52). The differences between participants included the presence of PSMG and whether PSMG should be chairing the meeting. Ms Shen’s evidence includes the following (Ex 2, tab 4):

I arrived at the venue at around 5:45pm. I went upstairs and entered the conference room a few minutes prior to six o’clock. While waiting at the rostrum, to receive my vote paper and check in, I observed that 4-5 individuals rushed to the rostrum and confronted Mr. Wang from PSMG, the strata management company, who was sitting behind the rostrum. They angrily demanded that Mr. Wang and the PSMG employees leave the conference room immediately.

Mr. Wang remained seated and explained in Chinese and English that the AGM required the presence of the strata manager, as it was within their rights to attend. One man stood directly in front of Mr. Wang, pointing aggressively and using abusive and inappropriate language (F**k Off!), insisting for Mr. Wang and his assistant to leave, immediately. It was later revealed that this aggressive man was Frank Ngo, a lawyer. The building had previously filed a complaint with the OLSe against Mr. Ngo due to overcharging and double charging the owners corporation. When Mr. Wang explained to Mr. Ngo that this was an AGM and that their presence was necessary, Mr. Ngo responded with further abusive and aggressive language (F**k You! F**k Off!). His demeanour was confrontational and arrogant, berating Mr. Wang for an extended period. Despite this, Mr. Wang remained composed, reiterating his responsibility and requesting that his work not be disrupted.

In addition to the lawyer’s disruptive behaviour, Jian Guang (Philip) Xie, owner of unit 115 and secretary of the previous strata committee, stood next to Mr. Wang in an intimidating manner, leaning over, waving his arms at Mr. Wang, threatening him and demanding his departure from the meeting room, immediately. Despite the escalating tension, Mr. Wang remained composed and focused on his duties.

I was shocked by the lawyer’s aggressive behaviour and cannot comprehend why he disrupted the meeting when he was not even an owner. Furthermore, the behaviour of the owner of unit 115 was disrespectful, hostile, and caused disorder, making us onlookers concerned about Mr. Wang’s safety.

Consequently, PSMG’s employee had to request intervention from the club’s security guards.

When the security guards arrived in the meeting room, the lawyer and the owner of unit 115 asked them to remove Mr. Wang and the PSMG team. The security guards refused, stating that although they were unfamiliar with any of the individuals or their roles, they understood that the meeting was arranged by PSMG, the strata company. The owner of unit 115 and the lawyer kept arguing loudly. As a result, their disorderly conduct prompted the club’s security guards to cancel the meeting.

64. I find that the conduct of the applicant was broadly as described by Ms Shen. I find that the applicant did use the expletives attributed to him and I accept that his conduct was aggressive.

65. Because the 29 June 2023 AGM ended abruptly, with the management of Club Ashfield directing participants to leave, the meeting was not properly closed or adjourned.

66. The next relevant meeting was held on 20 July 2023.

67. There is dispute as to the validity of the business conducted at this meeting for a number of reasons.

68. First, the applicant contends that the 29 June 2023 AGM was not properly closed and adjourned.

69. Second, there is dispute as to whether proper notice of the meeting was given. One aspect of that dispute is that for 10 lot owners no email address is recorded on the strata roll so their address for service is the postal address of their lot. Those lots are as follows:

1. Lot 8 (Ex 1, p. 54);

2. Lot 32 (Ex 1, 78);

3. Lot 46 (Ex 1, p. 92);

4. Lot 47 (Ex 1, p. 93);

5. Lot 54 (Ex 1, p. 100);

6. Lot 58 (Ex 1, p. 104);

7. Lot 85 (Ex 1, p. 131);

8. Lot 95 (Ex 1, p. 141);

9. Lot 104 (Ex 1, p. 150);

10. Lot 119 (Ex 1, p. 165).

70. The applicant submitted that lots 13, 21 and 45 also did not nominate an email address for service of documents. That is correct in respect of service of documents, but I note that those lots did nominate an email address (Ex 1, pp. 59, 67, 91). Consequently, whilst the notice of the 20 July 2023 meeting may not have been sent to their address for service, notice of the meeting may have come to their attention prior to the meeting.

71. The only evidence of the notice for the 20 July 2023 meeting is an email dated 18 July 2023 (Ex 1, tab 6 within Mr Kooper’s statement, p. 253). Consequently, and even if that notice of meeting had been posted on 18 July 2023 to the 10 lots for which there is no email address on the strata roll records, there would not be sufficient time for presumed service by post to be effective. In this respect s 76 of the Interpretation Act 1987 (NSW) provides as follows:

Service by post

(1)  If an Act or instrument authorises or requires any document to be served by post (whether the word “serve”, “give” or “send” or any other word is used), service of the document:

(a)  may be effected by properly addressing, prepaying and posting a letter containing the document, and

(b)  in Australia or in an external Territory—is, unless evidence sufficient to raise doubt is adduced to the contrary, taken to have been effected on the seventh working day after the letter was posted, and

(c)  in another place—is, unless evidence sufficient to raise doubt is adduced to the contrary, taken to have been effected at the time when the letter would have been delivered in the ordinary course of post.

(2)  In this section:

working day means a day that is not:

(a)  a Saturday or Sunday, or

(b)  a public holiday or a bank holiday in the place to which the letter was addressed.

72. The provisions relating to reckoning of time are also important. Section 36 of the Interpretation Act is as follows:

Reckoning of time

(1)  If in any Act or instrument a period of time, dating from a given day, act or event, is prescribed or allowed for any purpose, the time shall be reckoned exclusive of that day or of the day of that act or event.

(2)  If the last day of a period of time prescribed or allowed by an Act or instrument for the doing of any thing falls:

(a)  on a Saturday or Sunday, or

(b)  on a day that is a public holiday or bank holiday in the place in which the thing is to be or may be done,

the thing may be done on the first day following that is not a Saturday or Sunday, or a public holiday or bank holiday in that place, as the case may be.

(3)  If in any Act or instrument a period of time is prescribed or allowed for the doing of any thing and a power is conferred on any person or body to extend the period of time:

(a)  that power may be exercised, and

(b)  if the exercise of that power depends on the making of an application for an extension of the period of time—such an application may be made, after the period of time has expired.

73. Having regard to the above matters, I find on the balance of probabilities that the ten lot owners who did not have an email address recorded on the strata roll records did not receive notice of the 20 July 2023 meeting.

74. The 20 July 2023 meeting was conducted by means of audio-visual link only. Although the Tribunal was not taken to any resolution made pursuant to clause 14 of the Strata Schemes Management Regulation 2016 (NSW) (the SSMR), the applicant did not contend that the 20 July 2023 meeting was ineffective for that reason.

75. The minutes of the meeting (Ex 1, tab 7 within Mr Kooper’s statement, p. 255) disclose that numerous proxies were voted at the meeting and numerous proxies were ruled invalid.

76. One of the proxies which was accepted by the chair of the 20 July 2023 meeting, Mr L Chow, was a purported proxy from lot 76 (see Ex 1, tab 7 within Mr Kooper’s statement, p. 255). The owner of lot 76 is Xilin He. Mr He did not attend the 1 December 2022 annual general meeting or the 20 July 2023 meeting (Ex 4). Mr He says that he did not give a proxy to any other person “to attend those meetings of vote for any matter”. Mr He was not required for cross examination and I accept his evidence. Further, Mr He also annexed the proxy form which purports to appoint the owner of lot 42 as the proxy for lot 76. The details of the name of the appointer(s) is recorded, relevantly, as “XiaLin He” and the first name of the signature is “Xia”. Mr He’s first name is Xilin, not “Xia” or “Xialin”. The evidence of Mr He establishes that the proxy form for lot 76 purportedly signed by Mr He and accepted as valid for the purposes of voting at the 20 July 2023 meeting was not in fact signed by Mr He and was not valid. The Tribunal is not in a position to determine the person or persons responsible for completing the proxy form.

77. The 20 July 2023 meeting resolved, or purported to resolve the following (Ex 1, tab 7 withing Mr Kooper’s statement, pp. 255-259):

1. Confirmation of minutes of the general meeting held 1 December 2022 (Motion 2);

2. Appointment of Comprehensive Strata and Property Services as building managers (Motion 17);

3. Appointment of PSMG “with full delegation as the strata managing agents…and that authority be given for the common seal of the Owners Corporation to be affixed to the Agency Agreement to be tabled at the meeting by any two members of the strata committee or any two owners to finalise the appointment” (Motion 18);

78. Motion 19, seeking to terminate PSMG and pay out the balance of the strata management contract, which was due to expire on 23 December 2023, was recorded as having become obsolete.

79. A motion to remove the limitation on expenditure exceeding 10% of the budgeted line item was defeated (Ex 1, tab 7 within Mr Kooper’s statement, p. 258, motion 13).

80. The 20 July 2023 meeting also elected or purported to elect a strata committee.

81. On 1 August 2023 a qualified request for an extraordinary general meeting was sent to PSMG together with requisition forms signed by lot owners whose total unit entitlements exceeded one-quarter of aggregate unit entitlements (Ex 1, tab 4, p. 562).

82. On 22 August 2023 Mr Chow of PSMG sent an email to the applicant asking “Who is making the request for the EGM” and advising that he needed the information “to note it … to the committee” (Ex 1, tab 4, p. 561). The applicant responded as follows Ex 1, tab 4, p. 560:

Dear Leon,

Hope you well.

According to Strata Scheme Management Act, strata manager should respond to and act on request of organising EGM by 25% lot owners that we have sent on 2nd August 2023. However 20 days gone passed, and you failed to respond completely in violation of the Act, we demand you to reply within 24 hours without failure.

Failure of performing your duty in this regards will result in further dissatisfaction and action being taken by laws.

83. Minutes on PSMG letterhead record that on 23 August 2023 an extraordinary general meeting was held or purportedly held (Ex 1, tab 4, p. 489, paragraphs [26]-[27] and pp. 558-559). About 40 lot owners are recorded as being present at the meeting. The applicant says that lot owners were not given notice of the extraordinary general meeting held on 23 August 2023. The applicant was not cross examined and there is no evidence of any notice for this meeting.

84. In any event, no motions were passed at the 23 August 2023 meeting (Ex 1, tab 4, pp. 558-559). A motion to terminate the strata management agreement between the OC and PSMG was ‘defeated’.

85. On 7 or 8 September 2023 notice of an extraordinary general meeting to be held on 29 September 2023 was issued (Ex 1, tab 14 within Mr Kooper’s statement, pp. 376-380).

86. On 29 September 2023 another extraordinary general meeting was held. No motions were passed at the 29 September 2023 meeting. A motion to terminate the strata management agreement between the OC and PSMG was ‘defeated’.

87. On 15 February 2024 an email from [email protected] was sent to some, but not all, lot owners (Ex 3, tab B, pp. 621). The email records that it was sent by the strata committee. The substance of the email discusses the lack of merit of these proceedings, the state of the strata scheme and the OC’s finances and related issues. Mr Ge, who with his wife owns lot 25, was not a recipient of the email (Ex 3, tab A, p. 612, paragraph [14]).

88. On 25 February 2024 Mr Ge with some other lot owners knocked on the doors of two lots seeking to engage lot owners (Ex 3, tab A, p. 612, paragraph [15]-[17]). I infer that the discussions related to the management of the OC.

89. On 7 March 2024 PSMG sent the following email to at least some lot owners, including Mr Ge (Ex 3, tab B, pp. 627-629):

Dear Owner, Agents, and Tenants,

Please be advised that we have received multiple complaints regarding individuals knocking on people’s doors.

This occurred at 9:10PM Sunday night 25/04/2024 and continued for another 30 minutes.

Occupants be advised to ring the police if this problem/harassment continues to disturb your peace.

The owner’s corporation will like the offenders to cease this kind behaviour which is in breach of by law 2. As stipulated by the by-law, you are creating noise on common property which interferes with the peaceful enjoyment of owner or occupier of another lot.

Thank you.

Kind Regards

Leon Chow | Licenced Strata Manager

90. The email included photographs from CCTV footage, some of which depicted Mr Ge. The email does not record all the recipients, but it is self evidently addressed to a range of recipients that appear to have some connection with the strata scheme.

91. The evidence of Mr Ge and in particular the 29 February 2024 email sent by PSMG evidence some polarisation among lot owners. Moreover, the conduct of Mr Ge at least did not, it seems to me, justify PSMG’s tone in the 29 February 2024 email.

92. As at 31 March 2024 the deficit in the OC’s administrative fund was $6,238.96 (Ex 6, Ex 6, p. 4 of Annual reports, document entitled “Statement of Financial Position”).

93. As at 10 April 2024 the deficit in the OC’s administrative fund was $104,014.76 (Ex 2, p. 225). In cross examination Ms Cui gave evidence along the lines that in April there were significant expenses. I accept that provides some explanation as to the administrative fund balance as at 10 April 2024. However, the OC did not adduce detailed evidence during the hearing in this respect and Ms Cui’s evidence was of limited usefulness in the absence of a more detailed explanation of the timing of expenses and receipts from levies over the following months.

94. The Tribunal was informed that in November 2024 a new strata managing agent was appointed to the OC.

95. In relation to the evidence of the witnesses that were cross examined, I accept that Ms Cui and Ms Shen were honest witnesses. However, I also find that from Ms Cui and Ms Shen’s evidence as to the conduct of the applicant, and some lot owners who agree with the applicant, was somewhat affected by polarisation amongst lot owners and the ‘side’ to which the lot owner is seen to fall. One of the issues in relation to these ‘sides’ were broadly lot owners who wished to retain PSMG and lot owners who did not.

Jurisdiction

96. The applicant seeks orders from the Tribunal under s 237 of the SSMA relying on the issues identified above.

97. It is clear that the building the subject of these proceedings is a registered strata scheme and the SSMA applies. The applicant is a lot owner in the Strata Scheme and has standing to bring the application.

98. It follows that Tribunal has jurisdiction to hear and determine the application.

Consideration

99. Section 237 of the SSMA provides:

237   Orders for appointment of strata managing agent

(1) Order appointing or requiring the appointment of strata managing agent to exercise functions of owners corporation

The Tribunal may, on its own motion or on application, make an order appointing a person as a strata managing agent or requiring an owners corporation to appoint a person as a strata managing agent:

(a)  to exercise all the functions of an owners corporation, or

(b)  to exercise specified functions of an owners corporation, or

(c)  to exercise all the functions other than specified functions of an owners corporation.

(2) Order may confer other functions on strata managing agent

The Tribunal may also, when making an order under this section, order that the strata managing agent is to have and may exercise:

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

(b)  specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or

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

(3) Circumstances in which order may be made

The Tribunal may make an order only if satisfied that:

(a)  the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or

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

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

(d) an owners corporation owes a judgment debt.

100. Section 237 requires a two-step process. The first step requires that the Tribunal be satisfied that one or more of the grounds specified in sub-section 237(3)(a) – (d) has been established. If so, the Tribunal’s discretion under sub-section 237(1) falls to be exercised.

101. It is well settled that the appointment of a compulsory strata manager is a serious step. The remedy has been described as “draconian”: see Mortlock v Owners of Strata Plan No 55434 [2006] NSWSC 363 at [18]. Appointment of a compulsory strata managing agent removes lot owner democracy that is built into the SSMA: see Walker Corporation Pty Ltd v The Owners – Strata Plan No 61618 [2022] NSWSC 1246 at [150] and [173].

102. I will now consider the grounds on which the applicant relies for the appointment of a strata manager under s 237 of the SSMA.

Compliance with section 102

103. Section 102 of the SSMA provides as follows:

102 Limits on spending by large strata schemes

(1) An owners corporation for a large strata scheme must obtain at least 2 quotations in relation to proposed expenditure in respect of any one item or matter if the proposed expenditure will exceed the amount prescribed by the regulations for the purposes of this section.

(2) An owners corporation for a large strata scheme must not spend on an item or matter an amount greater than the amount specified for the item or matter (plus 10%) in estimates provided for that item or matter at an annual general meeting.

(3) The owners corporation may by a resolution passed at a general meeting remove the limitation imposed by subsection (2) generally or in relation to any particular item or matter.

(4) This section does not apply to expenditure for emergency purposes, including (but not limited to) the following—

(a) burst or blocked water or sewerage pipes,

(b) serious damage caused by fire or storm or any other natural disaster,

(c) unexpected electrical or security system failure,

(d) glass breakages that affect the security of any building in the strata scheme or could result in damage to the inside of any such building.

104. Clause 25 of the SSMR provides that the prescribed amount for the purposes of s 102 of the SSMA is $30,000.00.

105. Under the agreement between the OC and Wealth Group Australia entered pursuant to the resolution at the 29 July 2023 meeting the OC agreed to pay on an annual basis $23,125.00 plus GST for a building management services $76,000.00 plus GST for cleaning services (Ex 1, p. 215).

106. The OC “acknowledges that two quotations should have been provided” (Closing Written Submissions, [27]).

107. I find that the OC did not comply with s 103 in respect the expenditure for cleaning services under the contract between the OC and Wealth Group Australia.

108. The OC submitted (OC’s Closing Written Submissions, [27]):

The OC relied on the management agreement being a continuation of the prior terms and conditions (being a re-appointment)

109. That submission is unclear in the sense that the evidence which established that “the OC” so relied was not identified. It was also unclear whether the submission related to the OC as a whole or PSMG or some members of the strata committee. In any event, whether the contract was a re-appointment or not does not affect the applicability of s 102(1).

Spending in excess of 10% of the amount specified for an item

110. Section 102(2) of the SSMA provides that an “owners corporation for a large strata scheme must not spend on an item or matter an amount greater than the amount specified for the item or matter (plus 10%) in estimates provided for that item or matter at an annual general meeting”. The strata scheme in these proceedings is a large strata scheme within the meaning of s 6 of the SSMA.

111. At the annual general meeting held on 22 March 2023 the OC resolved, pursuant to s 102(3), to remove that limitation (Ex 2, tab 2, p. 38).

112. At the 29 June 2023 AGM one of the items of business was a motion to remove the limitation on expenditure exceeding 10% of the budgeted line item was defeated (Ex 1, tab 7 within Mr Kooper’s statement, p. 258, motion 13). This motion was defeated at the 20 July 2023 meeting.

113. The applicant identified numerous items of expenditure which exceeded the 10% of the budgeted line item. However, all the items to which the applicant referred related to the financial year to 31 March 2023. In respect of that financial year, the OC had resolved to remove the limitation that would have applied pursuant to s 102(2).

114. In relation to the financial year ending 31 March 2024, the relevant financial reports are exhibit 6. I have given consideration to those financial statements. There are a few items with expenditure that exceeds the budgeted line items by more than 10%. One item relates to fire protection lighting ($4,430.91 instead of $0). However, that item may fall within s 102(4). Another item is cleaning equipment ($7,200.00 instead of $0) and legal fees ($3,651.82 instead of $0). The sums involved need to be put in the context of an administrative fund budget of slightly more than $450,000.00 for that financial year.

115. I also take into account that exhibit 6 was adduced pursuant to leave to the granting of leave to re-open.

116. Having regard to the relatively small sums involved and the timing of the admission of exhibit 6, I do not accept the complaints of the applicant founded on a contravention of s 102(2).

Administrative fund

117. One of the applicant’s complaints relates to the OC’s over-spending of the administrative fund, causing it to be in deficit.

118. The following is a summary of the state of the administrative fund on the available evidence is as follows:

1. Prior to March 2022 the administrative fund was in deficit leading to the OC striking a special levy of up to $99,000.00 to rectify it (Ex 2, tab 2, p. 39);

2. As at 31 March 2022 the deficit in the OC’s administrative fund was $64,323.35 (Ex 1, p. 189);

3. As at 22 December 2022 an unaudited report records that the deficit in the OC’s administrative fund was $36,852.37 (Ex 1, p. 168);

4. As at 31 March 2023 the deficit in the OC’s administrative fund was $74,451.16 or $73,771.16 (see Ex 6, p. 4 of Annual reports, document entitled “Statement of Financial Position” under the “Previous Year” column and Ex 1, p. 189);

5. As at 31 March 2024 the deficit in the OC’s administrative fund was $6,238.96 (Ex 6, Ex 6, p. 4 of Annual reports, document entitled “Statement of Financial Position”);

6. As at 10 April 2024 the deficit in the OC’s administrative fund was $104,014.76 (Ex 2, p. 225).

119. Having regard to the above I am satisfied that the OC has over an extended period of time incurred administrative expenses in excess of the funds available in the administrative fund. I accept that the extent of the deficits varies, but I also note that even after the striking of the special levy a deficit has persisted and at time times it is significant.

120. Section 76 of the SSMA provides as follows:

76 Use of administrative fund or capital works fund for purposes of other fund

(1) This section applies if the owners corporation for a strata scheme having more than 2 lots—

(a) transfers money from the administrative fund to the capital works fund or uses the administrative fund to meet expenditure that should have been met from the capital works fund, or

(b) transfers money from the capital works fund to the administrative fund or uses the capital works fund to reimburse expenditure that should have been met from the administrative fund.

(2) The owners corporation must, not later than 3 months after the transfer or use, determine the amount to be levied as a contribution to the fund from which the transfer or use was made to reimburse the amounts paid from the fund. Section 81 (3) and (5) apply to a contribution determined under this subsection.

121. Although the deficit in the administrative fund as at 31 March 2024 demonstrated a significant improvement from the deficit as at 31 March 2023, all of the financial reports before the Tribunal record that as at the date of the financial report the administrative fund was in deficit.

122. The evidence before the Tribunal was that the OC operates one bank account into which funds for both the capital fund and the administrative fund are deposited. There was no evidence that the OC operated an overdraft. Ms Cui, the current treasurer, did not know there to be an overdraft. Consequently, I find that the deficits in the administrative fund are met by drawing on funds attributable to the capital fund.

123. The administrative fund was at any point not in deficit. The only evidence of a special levy to address the deficit in the administrative fund is the special levy struck in March 2022.

124. Having regard to the above evidence I am satisfied on the balance of probabilities that the administrative fund has been in deficit and when it has been in deficit the funds attributable to the capital fund have been utilised. I am also satisfied that this has persisted in respect of at least one period of greater than 3 months, namely, namely, the period 22 December 2022 to 31 March 2023 and that the OC did not, within 3 months after the transfer or use, determine the amount to be levied as a contribution to the capital fund to reimburse the amounts paid from the capital fund. It follows that I am satisfied that at least in that period there was a contravention of s 76(3) of the SSMA.

Notices of Meetings and Requisitioning of EGM

125. The applicant has a number of well founded complaints concerning notice of meetings.

126. In relation to the 20 July 2023 meeting, I am satisfied that ten lot owners, being those with no email address recorded on the strata roll records, were not given notice. In a strata scheme comprising 120 lots, ten lot owners not receiving notice of an adjourned annual general meeting, is not acceptable.

127. Pursuant to s 19(2) of the SSMA provides that the OC “must convene a general meeting (that is not an annual general meeting) of the owners corporation as soon as practicable, and not later than 14 days after, receiving a qualified request”.

128. The applicant submits that the qualified request was received by the OC on 1 August 2023 with the consequence that the extraordinary general meeting should have been held by 15 August 2023.

129. The OC submits that the proposed motions conveyed in the qualified request did not comply with schedule 1, clause 4(2)(b) of the SSMA, which provides that a motion included as an item in the agenda of general meeting must include details of the person requiring the motion. I accept the OCs submission in this respect.

130. However, I also note that PSMG did not raise any query until about 20 days after receiving the documentation relating to the qualified request. That delay was not explained.

131. I also note that PSMG’s email of 21 August 2023 did not identify the correct reason for requiring the identity of the person requiring the motions that were to be included in the agenda for the meeting. The correct reason, as Mr Bannerman submitted on behalf of the OC, was the requirement of clause 4(2)(b) of schedule 1 of the SSMA. PSMG recorded that it was needed “to note it ... to the committee”. I do not intend to place any weight on this circumstance, but I have recorded it in light of the submissions made by both parties.

132. The applicant’s response to PSMG’s email made a number of complaints, but did not actually provide the information requested by PSMG.

133. A further issue related to the August and September general meetings and the qualified request is the holding of a meeting on 23 August 2023. In respect of this meeting, the applicant’s evidence is that notices were not issued. I accept that at the very least the applicant did not receive notice. Mr Kooper’s evidence, upon a review of the OC’s records, did not identify notice for the 23 August 2023 meeting having been issued. The evidence does disclose that a general meeting was held that day, with about 40 attendees. (Ex 1, tab 4, p. 489, paragraphs [26]-[27] and pp. 558-559).

134. The organisation of the 23 August 2023 was unsatisfactory. If the qualified request did not comply with clause 4(2)(b) of schedule 1 of the SSMA then no meeting should have been held. If the 23 August 2023 meeting was a general meeting then proper notice was not given.

Proxies

135. The applicant has not established wide ranging irregularities with the use or misuse of proxies.

136. However, the clear and unchallenged evidence is that Mr He did not give a proxy to any person to attend the 29 June 2023 or the 20 July 2023 meeting. As explained above, the proxy form for lot 76 purportedly signed by Mr He and accepted as valid for the purposes of voting at the 20 July 2023 meeting was not in fact signed by Mr He and was not valid.

137. The concerning aspect of Mr He’s purported proxy is that it demonstrates conduct that cannot be explained by mistake or carelessness. The fact that Mr He’s first name was misspelt in both the printed field and the signature field is indicative of intentional conduct.

138. Although the conduct is concerning, the evidence does not demonstrate that the conduct in relation to Mr He’s proxy is attributable to the OC or to any other party. I consider the conduct relevant to considering whether the OC is functioning satisfactorily, but I intend to place very little weight on this matter.

Disharmony

139. There is obviously a degree of disharmony amongst lot owners. During the hearing Ms Cui and Ms Shen attributed the disharmony to the conduct of the applicant. I have formed the view that there is some substance to this view. The applicant’s conduct at the 29 June 2023 AGM was aggressive and unacceptable.

140. However, it is also clear that the applicant was justified in some of his concerns. The deficit in the administrative fund has been persistent. The entry into the contract with Wealth Group Australia did not comply with the requirements of the SSMA. Notices for the 20 July 2023 and 23 August 2023 meetings, were not in accordance with the SSMA. In relation to the 20 July 2023 meeting, ten lot owners without email addresses recorded on the strata roll, did not receive notice of meeting. There were other matters such as the over-payments to Wealth Group Australia, which the strata committee discovered. These matters do not excuse the applicant’s conduct at the 29 June 2023 AGM, but they do demonstrate that the applicant had bona fide concerns about the functioning of the OC.

141. Further, the aggression and disharmony is not only attributed to the conduct of the applicant. It is attributed to a number of lot owners. Ms Shen said five or six lot owners were the “most aggressive ones”.

142. Moreover, I find that there is a degree of polarisation amongst at least some lot owners. Of course, that does not mean that the OC is not functioning satisfactorily. But I make the observation as to polarisation to indicate that in such circumstances attributing the disharmony to the conduct of ‘one side’ is both difficult and often of limited utility. It is generally difficult in these types of matters to attribute disharmony to one lot owner or one ‘side’.

143. However, the Tribunal cannot overlook that in these proceedings the disharmony and arguments at the 29 June 2023 AGM reached a level of severity that the venue’s management asked participants to leave. The level of disharmony, leading to abrupt ending of an annual general meeting, is affecting the proper functioning of the OC.

Other matters

144. The applicant relied on numerous other matters.

145. The applicant’s evidence included the overpayments to Wealth Group Australia identified in the period April – June 2023. I have given no weight to that matter because, although it appeared to involve an unnecessary degree of effort to explain to PSMG and on one view PSMG should have been more diligent, the issue appears to have been resolved.

146. The applicant contended that the 29 June 2023 AGM did not pass a motion to adjourn that meeting. That is strictly correct, but in light of the venue’s management requesting that all participants leave, the circumstances were understandable. Consequently, in relation to the application under s 237 of the SSMA, I place no weight on the failure to pass a motion to adjourn the 29 June 2023 AGM.

147. I have considered the applicant’s complaints in relation to the election of the strata committee at the 20 July 2023 meeting. I do not consider those complaints to have substance in respect of the satisfactory functioning of the OC.

Summary

148. Having regard to the above matters, I am satisfied that the management of the OC is not functioning satisfactorily within the meaning of subsection 237(3)(a). In summary, for the reasons discussed above, the following matters are a summary of the matters discussed above which persuade me that the OC is not functioning satisfactorily:

1. The contravention of section 102(1) of the SSMA in respect of the Wealth Group Australia;

2. The regular deficits in the administrative fund and my finding that s 76 has also been contravened;

3. The failure to comply with the provisions requiring notice of general meetings and the organisation of the 23 August 2023 meeting;

4. The conduct in respect of the proxy of Mr He;

5. The disharmony, as described above.

149. I am also satisfied that the OC has failed to perform a one or more of its duties in that it has not complied with the SSMA, in particular, section 102(1)(a) and the notice requirements for general meetings on 20 July 2023 and the meeting held on 23 August 2023.

150. I find that the OC is not functioning satisfactorily within the meaning of s 237(3)(a) and that it has failed to perform one or more of its duties within the meaning of s 237(3)(c) in that it has not complied with section 102(1)(a) and its obligations in respect of notice for general meetings held on 20 July 2023 and the notice and/or organisation of the 23 August 2023 meeting.

Discretion

151. The next issue is whether the Tribunal should exercise its discretion to appoint a compulsory strata manager.

152. I am persuaded that the Tribunal should do so.

153. The appointment of Wealth Group Australia was a significant breach of s 102(1) in terms of the sums involved.

154. The administrative fund has had a significant history of deficits and the evidence in relation to it from 10 April 2024 has not satisfied me that the issues do not persist, particularly in light of the history of deficit balances.

155. The failure to provide proper notice of meetings, as found above, is an important matter.

156. I also formed the view that there is a level of disharmony which is significant. compulsory strata agent, as a neutral appointee by the Tribunal, will improve the functioning of the OC.

157. I also consider that it is appropriate that an order be made under s 237(2) that the strata managing agent is to have and may exercise all the functions of the chairperson, secretary, treasurer or strata committee of the OC.

158. I have given some consideration to the appropriate length of the appointment. I have concluded that 12 months is the appropriate length for the appointment. The Strata Scheme is a large scheme. It has for a number of years operated a deficit in the administrative fund. I consider that 6 months will not be sufficient for a compulsory strata manager to address the financial and administrative issues identified in these reasons.

Identity of Strata Manager

159. The applicant’s evidence included a consent to act from Direct Strata addressed to the Tribunal recording its consent to being appointed by the Tribunal pursuant to s 237 of the SSMA as strata manager and a document entitled Strata Management Agency Agreement (Ex 1, pp. 11-30) recording the terms and conditions that would apply to its appointment. Exhibit 5 demonstrates that Direct Strata’s licence was current as at the date of hearing. I am satisfied it would be appropriate to appoint Direct Strata as the strata managing agent under s 237 of the SSMA.

Alternative Relief

160. The applicant also sought relief in the alternative in respect of resolutions passed at the 20 July 2023 meeting. That relief was sought only in the alternative and in light of my conclusions it is unnecessary to determine those matters.

Orders

161. For the reasons indicated above, the order that will be made to finalise the application is as follows:

1. Order pursuant to s 237(1)(a) of the Strata Schemes Management Act 2015 (NSW) appointing Direct Management Group Pty Ltd as strata managing agent to exercise all the functions of the owners corporation of strata plan no. 90092 for a period of 12 months from the date of these orders upon the terms and conditions set out in the document entitled “Strata Management Agency Agreement”, a copy of which is at tab 2 of exhibit 1, pages 11-30.

2. Order pursuant to s 237(2) of the Strata Schemes Management Act 205 (NSW) that Direct Management Group Pty Ltd is to have and may exercise all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation.

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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: 26 May 2025