Under s 80(1) of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), only a party to the proceedings at first instance may institute an internal appeal from that decision to the Tribunal's Appeal Panel.
That issue becomes acute where one or more lot owners in a Strata Scheme succeed in obtaining an order from the Consumer and Commercial Division for the appointment of an external manager to the scheme, with that manager being authorised to exercise, to the exclusion of the owners, the powers of the Owners Corporation and Strata Committee: Strata Schemes Management Act 2015 (NSW) (SSMA), ss 237(1)(a) and 237(2)(a). If no owners who opposed the making of such an order were parties to the application, who may appeal from that decision and how should they do so?
The issue is not a new one. There is not, as yet, a definitive decision of the Supreme Court that resolves it, save that the Supreme Court has exercised its equitable power to give such owners authority to bring derivative proceedings in the name of an Owners Corporation in the past: Carre v Owners Corporation - SP 53020 [2003] NSWSC 397. The Court has also been asked to consider exercising that power where an order appointing a manager to the scheme has been made: Tan v The Owners Strata Plan 22014 (No 2) [2015] NSWSC 1920.
A differently constituted Appeal Panel in The Owners - Strata Plan 2010 v Kahn [2022] NSWCATAP 9 ('Kahn') summarised its findings in this way:
"1 One function assigned to the Tribunal under the Strata Schemes Management Act 2015 (NSW) (SSMA) is to consider the appointment of a strata managing agent to exercise the functions of an Owners Corporation: SSMA, s 237. The Tribunal may make an order giving the managing agent all the powers of the owners corporation (SSMA, s 237(1)(a)), stipulate the functions, or carve out some of the functions the owners corporation could otherwise exercise: SSMA, ss 237(1)(b)&(c). The Tribunal may also stipulate the terms and conditions (including terms and conditions relating to remuneration by the owners corporation and the duration of appointment) of appointment of the managing agent in the order: SSMA, s 237(5).
2 If a plenary appointment is made, neither the owners corporation through its members nor individual lot holders in the strata scheme controls the decisions made by the appointed managing agent. They cannot purport to represent the owners corporation or make decisions for it.
3 For the reasons that follow, that prohibition extends to lot owners purporting to lodge an appeal against the decision to appoint a managing agent for the owners corporation on a plenary basis, leaving lot owners who disagree with the proposed appointment of a manager with four apparent courses of action. They may:
1. seek to be joined as a party to the proceedings in which the appointment is being considered, to preserve a right of appeal;
2. seek to have the owners corporation ask the Tribunal, if it is to make an order for the appointment of a managing agent, to carve out the functions of instituting and conducting an appeal from the order and, if it deems it appropriate, that of calling and conducting a general meeting of the owners corporation to approve legal services to advise or represent the owners corporation in the appeal, as required by s 103 of the SSMA; or thereafter;
3. apply to the Tribunal's Consumer and Commercial Division to vary the order for a plenary appointment of a manager to carve out the functions set out in (2) (SSMA, s 237(7)) and then, if successful, decide in a meeting of the owners corporation to institute an internal appeal to this Appeal Panel and instruct legal representation; or
4. seek leave from the Supreme Court to institute an appeal in the name of the owners corporation, relying on what is commonly described as the fifth exception to the rule in Foss v Harbottle (1843) 2 Hare 461; 67 ER 189: see for example Carre v Owners Corporation - SP 53020 [2003] NSWSC 397; Tan v The Owners Strata Plan 22014 (No 2) [2015] NSWSC 1920."
For simplicity, we will refer to an order appointing a strata manager with plenary powers as the appointment of a "compulsory strata manager" in this decision.
Subsequent to the decision in Kahn, but without considering it, the Supreme Court dismissed an appeal involving a decision of an Appeal Panel to join lot owners who sought to challenge the appointment of a compulsory strata manager, where the appeal had been lodged in the name of the relevant owners corporation but the appointed manager did not wish to pursue it: Keevers v Sarraf Property Group Pty Ltd [2022] NSWSC 1017 ('Keevers').
After consideration of the power of the Tribunal to join parties under s 44(1) of the NCAT Act, and with reference to Commissioner of Police, New South Wales Police Force v Fine [2014] NSWCA 327 and Rice Marketing Board for the State of New South Wales v Forbidden Foods Pty Limited; Forbidden Foods Pty Limited v Rice Marketing Board for the State of New South Wales [2020] NSWCATAP 182, the Court found that the power of joinder under that section was sufficiently broad that there was no error in the Appeal Panel exercising its discretion to join lot owners as appellants in order that they may prosecute the appeal.
However, before reaching the point of considering whether the power of joinder should be exercised, it is necessary to consider whether there is a validly instituted appeal to which parties may be joined.
For the reasons that follow, there is no validly instituted appeal here and the appeal must be dismissed as incompetent.
[2]
Background
On 12 January 2024, after a hearing conducted on three dates in 2023, the Tribunal's Consumer and Commercial Division appointed Jameson and Associates Unit Services Pty Ltd as compulsory strata manager of the scheme described as "The Owners - Strata Plan No 61419." That is the proper way for the legal entity that comprises the scheme to be described: SSMA, s 8. The order of the Tribunal in fact referred to the legal entity as "the Owners Corporation - SP 61419." No error in that regard is alleged and it appears to be a simple slip capable of correction under s 63 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) if it becomes controversial between the parties.
On 19 January 2024, a Notice of Appeal was lodged in the Appeals Registry. The appellant was described as "The Owners - SP 61419 on behalf of The Owners Corporation SP 61419". The Notice of Appeal set out to challenge the orders for the appointment of the compulsory strata manager. The Notice of Appeal was signed by Mr Ned Abraham, the Chairman of the Owners Corporation. Mr Abraham had represented the Owners Corporation in the proceedings at first instance.
In addition to the Notice of Appeal, Mr Abraham also lodged an application for a stay.
The matter came before the Appeal Panel for directions on 31 January 2024. The Compulsory Strata Manager appeared, and confirmed that it neither commenced nor ratified the lodgment of the appeal on behalf of the Owners Corporation.
Two other proper respondents to the appeal, Mr and Mrs Bilski, who had been applicants at first instance had also not been named in the appeal. Directions were made to note their role in the appeal and the matter was listed for consideration of the issue of standing and, if the appeal was found to have been validly commenced, determination of the application for a stay on 9 February 2024. The parties were directed to lodge and serve evidence and submissions in respect of those issues in advance of the hearing. Their attention was directed to Keevers and Kahn.
In addition to lodging evidence and submissions in respect of standing and the application for a stay, Mr Abraham has lodged informal applications for the joinder of several other lot owners who oppose the appointment of the compulsory strata manager.
[3]
Has an appeal been validly commenced?
There is no suggestion that, prior to the appointment of the compulsory strata manager, the Owners Corporation resolved to commence an appeal if such an appointment was made.
Similarly, this is not a case where, arguably, lawyers appointed to represent the Owners Corporation had been provided with such instructions: see the discussion in Kahn at [25]-[28].
Mr Abraham acknowledges that he had no authority to lodge the appeal on behalf of the body corporate described as the Owners - Strata Plan 61419. He is correct in this acknowledgement: see the discussion in Owners Corporation SP 47027 v Peter Clisdell Pty Ltd [2017] NSWCATAP 188 at [30]-[38], with which we agree. He acknowledges, as indicated by his instituting of the appeal in the name of "The Owners - SP 61419 on behalf of The Owners Corporation SP 61419" that he, and perhaps other lot owners, wish to institute the appeal in their own names.
Finally, the appointed compulsory strata manager has not elected to ratify lodgment of the appeal.
In those circumstances, there is no appeal validly on foot to which parties can be joined as appellants, despite the fact that such power exists where an appeal has been validly commenced. The appeal must be dismissed as incompetent due to an absence of standing: see the analogous discussion in Quader v Nguyen [2023] NSWSC 815 at [24], [27].
On that basis, the questions of joinder or a stay do not arise for consideration.
[4]
The argument raised by Mr Abraham
So that it is not thought that we have overlooked Mr Abraham's submissions on the issue of standing we will record his brief written submissions, which he spoke to at the hearing:
"This is the legal dilemma. The legal catch 22 that we referred to on Wednesday 31 January.
If no one had standing to appeal The Orders, this would render The Orders unappealable which would be incorrect in Law and unjust.
Notwithstanding [The Owners - Strata Plan 2010 v Kahn [2022] NSWCATAP 9], the Appellants rely on [The Owners - SP 1813 v Keevers [20211 NSWCATAP 130 (12 May 2021)].
Regardless of the suggested controversy and/or contradiction in Keevers, the Tribunal Appeal Panel clearly ruled that the owners of a strata plan can appeal an order and make submissions even in the presence of a compulsory strata manager.
As the Orders were made against The Owners-SP 61419, The Owners-SP 61419 have the legal right to appeal them.
The argument that the Owners-SP 61419 "should have" sought to join as parties to the proceedings before The Orders were made cannot be supported as the application was against the Owners Corporation and joining procedures as an individual(s) would leave the individual(s) open to cost implications if they were unsuccessful.
The Owners Strata Plan 61419 could not have logically been able to join as parties to the proceedings before The Orders were made.
We humbly submit that there is a distinct likelihood that the Tribunal made The Orders against The Owners Strata Plan 61419 to make The Orders appealable to ensure fairness to all parties."
Certainly, there is a difficult situation that arises in these circumstances, however Mr Abraham is incorrect to submit that an appeal cannot be instituted. The Appeal Panel in Kahn set out several available avenues at [3], cited above. Which of those courses are available depends on the current state of the proceedings. To those may be added the possibility, before the appointment of a compulsory stata manager is ordered, of asking the Tribunal to delay the effect of the order under s 61 of the NCAT Act long enough for an appeal to be instituted to which other lot owners may seek to be joined in the manner set out in Keevers.
Whilst we also accept that an owner who seeks to be joined at first instance may expose themselves to an order for costs, that would appear to be an insignificant risk if their conduct went no further than that, and they otherwise sought to refrain from participation in the hearing in the manner that might in the courts be described as a submitting appearance. Further, there is no apparent reason why the lot owners moving for the appointment of a compulsory strata manager should risk greater exposure to a potential costs order than those who oppose it, and who are able to utilise the financial resources of the Owners Corporation to do so. In that regard we agree with what was recorded in Keevers at [82]-[83], albeit that it was a reflection of a submission of the appellant in those proceedings that:
"82 This is consistent with the more general principle that an appeal cannot be brought by an entity which was not a party to the proceedings in which the impugned decision was made. This in turn is supported by the following principles: it is parties, and parties alone, which have standing to conduct and appear in proceedings: see Australian Railways Union v Victorian Railways (1971) 125 CLR 319 at 331 per Dixon J. Any person who had an interest in and could make themselves a party to proceedings, but knowing what was passing, was content to stand by and see the battle fought by somebody else in the same interest, should be bound by the result, and not be allowed to re-open the case (or, it follows, appeal from the result): Administration of Papua New Guinea v Daera Guba (1972) 130 CLR 353 at 456 per Gibbs J; Osborne v Smith (1960) 105 CLR 153 at 155 per Kitto J; Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 95 at 102; House of Spring Gardens Ltd v Waite [1991] 1 QB 241 at 252-253.
83 There are sensible practical reasons for this. They are that if it were otherwise, it would be possible for an entity which may have a practical interest in the outcome of proceedings (such as a lot owner in a strata scheme) to decline an opportunity to participate as a party to proceedings (and thereby avoid any potential exposure to an adverse costs order) but still be able to appeal from a decision in those proceedings (to which it was not a party)."
Finally, whilst the process of applying to the Supreme Court for leave to bring derivative proceedings may be cumbersome, and potentially expensive, it does allow the Court to consider what conditions ought properly be applied to such a grant. In Carre v Owners Corporation - SP 53020 [2003] NSWSC 397, leave was only granted "subject to [the] plaintiff's indemnifying owners corporation for costs." By an order of that nature, owners dissatisfied by the appointment of a compulsory strata manager are not able to use funds contributed by other lot owners who may be unconcerned by the decision, to institute or conduct the appeal. Nor could monies contributed to the scheme by lot owners with no interest in pursuing the appeal be used to partially defray the costs of those who seek to promote it, if costs are awarded against the Owners Corporation as appellant.
[5]
Orders
Our Orders are as follows:
1. The name of the appellant is corrected to Ned Abraham.
2. The appeal is dismissed as incompetent.
[6]
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
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Decision last updated: 16 February 2024