Zheng v The Owners - Strata Plan No 83678

The case of Zheng v The Owners - Strata Plan No 83678 involved the Zhengs, who sought to challenge a decision made by the Appeal Panel of the New South Wales Civil and Administrative Tribunal (NCAT). The dispute centred around a by-law approved by the Owners Corporation that regularised the construction of an awning that had been erected without proper approval. The Owners Corporation had originally authorised the by-law, but subsequently appealed the decision. The Zhengs, along with three other lot owners, including the one who had constructed the awning, requisitioned an extraordinary general meeting of the Owners Corporation to pass a resolution discontinuing the appeal. This resolution was passed by a narrow majority, including the vote of the awning's constructor.

The primary legal issue before the court was whether the plaintiff, Zheng, was entitled to proceed with the NCAT appeal on behalf of the Owners Corporation. This hinged on the application of the rule in Foss v Harbottle and its exceptions. The rule generally prevents shareholders from bringing proceedings on behalf of a corporation to enforce its rights, but there are exceptions, such as where the act complained of is itself illegal or fraudulent. The Zhengs argued that the resolution to discontinue the appeal was invalid as it was passed by a bare majority, which did not reflect the true will of the corporation, and thus an exception to the rule in Foss v Harbottle applied.

The court found in favour of the Zhengs, granting them leave to proceed with the NCAT appeal. It was determined that the resolution to discontinue the appeal was not reflective of the true will of the Owners Corporation because it was passed by a bare majority. The court held that the rule in Foss v Harbottle did not apply in this situation, and an exception was warranted as the resolution was not properly authorised. Consequently, the plaintiff was permitted to represent the Owners Corporation in the NCAT appeal.

In light of the above, the court ordered that the plaintiff, Zheng, be granted leave to proceed with the NCAT appeal on behalf of the Owners Corporation. This decision effectively overturned the resolution to discontinue the appeal and allowed the Zhengs to challenge the by-law approving the unauthorised awning construction.