This is an appeal seeking to set aside an order made by the Tribunal which dismissed an application for the compulsory appointment of a strata managing agent pursuant to s 237 of the Strata Schemes Management Act 2015 (SSMA).
We have decided that leave to appeal is refused and the appeal should be dismissed for the reasons set out below.
[2]
Parties to the appeal and representation
The appellant is a lot owner in a strata scheme concerning a block of 30 flats in Lakemba in Sydney, NSW. He has been a lot owner for a considerable period of time and served as secretary on the strata committee for a very lengthy period. He has become very agitated about the manner in which the strata scheme is run. As will be seen, the orders made by the Tribunal which are not the subject of this appeal upheld the correctness of many of his complaints.
The respondent is the owners corporation in respect of this strata scheme. It was made the respondent to the appeal by an order made on 25 May 2022 under which it replaced Southern Cross Strata Management Pty Ltd as the respondent to the appeal. This company was the strata managing agent of the property at the time of the Tribunal's decision at first instance. Incorrectly, it was named as the respondent to the appeal in the appellant's Notice of Appeal filed on 9 May 2022.
At the hearing of the appeal, the appellant appeared for himself by telephone. There was no appearance by the respondent.
On 25 May 2022, leave was given for the respondent to be represented on the appeal by Ms S Rachwan. At that time, she appears to have been the employee at Southern Cross Strata Management Pty Ltd who was responsible for the strata scheme. At the hearing of the appeal, it emerged that Ms Rachwan was no longer involved with this property. It also emerged that a new company, Neighbourly Strata Management Pty Ltd, was now looking after the property. The circumstances, including timing, in which this had occurred were unclear.
Near the commencement of the hearing of the appeal, we made unsuccessful attempts to speak to the individual at Neighbourly Strata Management Pty Ltd responsible for the property (our calls did not get beyond a recorded message). Next, we succeeded in speaking to Mr Richard Lim, a member of the strata committee, using a mobile phone number given to us by the appellant. He informed us that he was neither the Chairman, Treasurer nor Secretary of the strata committee. He indicated that the functions of these positions were exercised by the strata managing agent. For the purpose of this appeal, it is unnecessary for us to examine the validity of these aspects of the management of the strata scheme.
It became clear that Mr Lim was familiar with the appellant's complaints, his appeal, his written submissions on appeal and, probably, also that the appeal was listed for hearing that day (he was somewhat vague about this). He told us that he had expected someone from Neighbourly Strata Management Pty Ltd to appear for the respondent at the hearing of the appeal.
When asked whether he had anything to say about us proceeding with the hearing of the appeal that day he said he would prefer the hearing to be adjourned and indicated that he had not himself prepared to represent the owners corporation at the hearing. The appellant opposed an adjournment.
We decided to refuse this adjournment request. Mr Lim did not request leave to appear at the hearing of the appeal and we did not grant him such leave.
However, we invited Mr Lim to attend the hearing by telephone. Mr Lim accepted this invitation and we came to allow him to address us and answer questions from us about the appeal, after we had heard from the appellant. From this latter process, it was apparent that Mr Lim was familiar with the matters the subject of the appeal.
[3]
The Tribunal's decision
The appellant commenced his proceedings for the appointment of a compulsory strata managing agent by an application dated 25 January 2022. In that application he alleged, amongst other things, that the owners corporation was dysfunctional, the strata committee office bearers had resigned and there was no "return communication (dialogue) between the owners corporation and Southern Cross Strata Management".
This application preceded a meeting of the owners corporation held on 31 January 2022 in respect of which the Tribunal made findings, as referred to below, which were not challenged on the appeal.
Subsequent to his application, substantial written material was served by the appellant in support of his case. The respondent relied upon a lengthy written document, apparently prepared by Ms Rachwan. On the appeal, we were provided with the written material presented to the Tribunal by the appellant but not with the written material relied upon by the respondent. The appellant contended that the first three pages of Ms Rachwan's document chronicled events that were not related to the substance of the appellant's submissions and that the following 120 pages were agendas and minutes of general meetings which had no relevance to the appellant's submission.
Following a hearing on 13 April 2022, the Tribunal issued written reasons and made orders on 14 April 2022.
The Tribunal accepted the appellant's case that the strata scheme was not functioning satisfactorily and that, therefore, the discretion under s 237 to appoint a compulsory strata managing agent was enlivened. However, the Tribunal refrained from doing so for reasons set out in a number of paragraphs of its decision.
Instead of making the appointment requested by the appellant the Tribunal made orders requiring the respondent to take various steps. It was open to the Tribunal to take this course in view of s 240 of the SSMA which provides that the Tribunal may deal with an application for an order under a specified provision of the SSMA by making an order under a different provision of the Act, if it considers it appropriate to do so.
The orders that it made were as follows:
2. The Owners-Strata Plan No 6006 shall:
a) Properly maintain and keep in a state of good and serviceable repair the common property. The Owners-Strata Plan No 6006 shall comply with their Strata Community Insurance requirements and rectify all "Trip and Fall Hazards" nominated in the letter sent to them dated 7 March 2022. All required work is to be completed on or before 31 May 2022.
b) Properly maintain and keep in a state of good and serviceable repair the common property. The Owners-Strata Plan No 6006 shall undertake and complete all necessary repair is required to the common property pool and ensure that it is fully operational and accessible for use on or before 30 June 2022.
c) Immediately complete the proper execution of the Strata Managing Agency agreement which commenced on 31 January 2022.
d) Amend and re-issue to all lot owners the minutes of meeting for the Annual General Meeting held on 31 January 2022 to correctly reflect all attendees at the meeting and any other inaccuracies. This is to be completed on a before 27 April 2022.
e) Properly issue and notify lot owners of notices, agendas and minutes of all future meetings as required.
f) Engage with the contractor and the Local Council to complete and submit the currently required Final Annual Fire Statement and ensure compliance with all such requirements imposed by Canterbury-Bankstown Council.
The Tribunal concluded that the respondent was not complying with its obligations and duties under the SSMA in the respects referred to in these orders: at [10] of the reasons. It concluded that it did not accept that the evidence was sufficient to establish that the respondent was not complying with its obligations and duties in respect of all other issues raised by the appellant and explained why this was so: at [11] of the reasons.
The Tribunal also concluded (at [11]) that the strata committee was properly elected at the recent meeting (plainly, a reference to the meeting on 31 January 2022), the strata manager was properly appointed and the respondent had appropriately engaged with contractors to have necessary work carried out and was appropriately managing financial expenditure, levies and debt recovery. None of these conclusions was challenged on the appeal, at least, not directly.
The Tribunal then went on to say:
12. However, following the above findings in paragraph 10, the Tribunal finds that the failure of the Owners Corporation to comply with those obligations and duties jointly is sufficient to establish that the management of a strata scheme is not functioning satisfactorily and the discretion to compulsorily appoint a strata manager is enlivened pursuant to Section 237 of the Act.
The Tribunal then gave reasons that it was not prepared to make an order for the appointment of a compulsory strata manager. It explained:
13. The applicant's position is that he has lost confidence in the Owners Corporation because they are making wrong & unsound decisions, not properly engaging with him and taking too long to get anything done. The applicant sought someone impartial be appointed to manage the strata plan so that proper and independent decisions can be made to achieve outcomes. The applicant submitted that it would be for the betterment of all lot owners if a compulsory strata manager was appointed.
14. The Owners Corporation has identified on point that there is a recently employed strata manager who is engaging with the executive committee, appropriate meetings are now being called and held to discuss and resolve all the issues raised by the applicant, which are not resolved this point. In opposing the application, it was submitted that the Owners Corporation will comply moving forward and complete any necessary task identified, and complete such tasks by any date required by the Tribunal.
15. The Tribunal is satisfied with the involvement of the strata manager that the Owners Corporation does understand their obligations and duties under the [SSMA]. Whilst there is evidence that in the past they have not complied with all their requirements and duties, thereby failing to function satisfactorily, the Tribunal accepts and has confidence with the recent engagement of Ms Ruchwan (sic) as strata manager that now all the issues are being addressed and shall be resolved with due process. The Tribunal anticipates that this will then result in resolving the issues and resulting in the Owners Corporation's compliance with their obligations and duties assumed to the Act
16. Overall, in respect of the issues raised by the applicant concerning the operation of the Strata plan, the Tribunal accepts the Owners Corporation's submission that they are now dealing with those matters in an appropriate manner and they are functioning satisfactorily. The Tribunal is prepared to allow the Owners Corporation some extra time to follow through with the proper process that they are currently undertaking.
17. Accordingly, the Tribunal found that the current situation is in no way sufficient to make the orders sought and thereby remove the democratic process which allows owners to have their say in the management of the strata scheme. The Tribunal is not persuaded to make the order sought. Following the issues raised in the application, the Tribunal anticipates that the Owners Corporation will be more diligent in ensuring their compliance with the legislation. The Tribunal makes orders to resolve the outstanding issues and in respect of each issue allows the Owners Corporation a sufficient time to comply.
18. As stated above, it is a serious and final step to compulsorily appoint a strata managing agent. The Tribunal is not persuaded on the evidence presented that the Owners Corporation is not functioning satisfactorily to a level where it is appropriate to make the order. The application to compulsorily appoint a strata managing agent is dismissed.
Earlier in the reasons the Tribunal had stated that there was currently a recently appointed strata manager (Southern Cross Strata Management Pty Ltd) on 31 January 2022 to manage the strata scheme and that Ms Rachwan, representing the strata manager, stated that they understood their obligations and were working with the respondent's executive committee in undertaking a process to work through any unresolved issues: at [7] of the reasons.
The Tribunal had also, correctly, stated that the applicant bore the onus of proof (at [8] of the reasons) and that the compulsory appointment of a strata managing agent was a draconian step as it removed the democratic process to allow owners to have their say in the management of the strata scheme: at [9] of the reasons.
[4]
Provisions of the SSMA
Section 237 of the SSMA, relevantly, 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.
An owners corporation must appoint a strata committee (s 29 (1) of the SSMA). The elected members of a strata committee must be elected at each annual general meeting of the owners corporation (s 30 (4) of the SSMA). The members of the strata committee must, at the first meeting of the strata committee after they assume office as members, appoint a chairperson, secretary and treasurer of the strata committee (s 41 (1)). An owners corporation may appoint a person who is the holder of a strata managing agent's licence under the Property and Stock Agents Act 2002 to be the strata managing agent of the scheme (s49 (1) of the SSMA). The appointment is to be made by instrument in writing authorised by a resolution at a general meeting of the owners corporation (s 49 (2)). An owners corporation may, by the instrument appointing a strata managing agent or some other instrument, delegate to the strata managing agent all or some only of its functions (s 52 (1)). The instrument of appointment of a strata managing agent may provide that the strata managing agent has and may exercise all the functions of the chairperson, secretary, treasurer or strata committee of an owners corporation (s 54 (1) of the SSMA). However, the chairperson, secretary, treasurer and strata committee may continue to exercise all or any of the functions that the strata managing agent is authorised to exercise (s 54 (2)).
[5]
Nature of the appeal
Internal appeals may be made as of right on a question of law, and otherwise with permission (that is, the "leave") of the Appeal Panel: s 80(2) Civil and Administrative Tribunal Act 2013 (the NCAT Act).
The circumstances in which the Appeal Panel may grant leave to appeal from decisions made in the Consumer and Commercial Division are limited to those set out in cl 12(1) of Schedule 4 to the NCAT Act. In such cases, the Appeal Panel must be satisfied that the appellant may have suffered a substantial miscarriage of justice on the basis that:
1. the decision of the Tribunal under appeal was not fair and equitable; or
2. the decision of the Tribunal under appeal was against the weight of evidence; or
3. significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17, the Appeal Panel stated at [76] that a substantial miscarriage of justice for the purposes of cl 12(1) of Schedule 4 may have been suffered where:
… there was a "significant possibility" or a "chance which was fairly open" that a different and more favourable result would have been achieved for the appellant had the relevant circumstance in para (a) or (b) not occurred or if the fresh evidence under para (c) had been before the Tribunal at first instance.
Even if an appellant from a decision of the Consumer and Commercial Division has satisfied the requirements of cl 12(1) of Schedule 4, the Appeal Panel must still consider whether it should exercise its discretion to grant leave to appeal under s 80(2)(b).
In Collins v Urban, the Appeal Panel stated at [84] that ordinarily it is appropriate to grant leave to appeal only in matters that involve:
1. issues of principle;
2. questions of public importance or matters of administration or policy which might have general application; or
3. an injustice which is reasonably clear, in the sense of going beyond merely what is arguable, or an error that is plain and readily apparent which is central to the Tribunal's decision and not merely peripheral, so that it would be unjust to allow the finding to stand;
4. a factual error that was unreasonably arrived at and clearly mistaken; or
5. the Tribunal having gone about the fact-finding process in such an unorthodox manner or in such a way that it was likely to produce an unfair result so that it would be in the interests of justice for it to be reviewed.
Furthermore, as is clear from the Tribunal's reasons for decision and the terms of s 237 of the SSMA, this is an appeal against the Tribunal's exercise of a discretion whether or not to appoint a compulsory strata manager. Accordingly, the principles in House v King (1936) 55 CLR 499 (at 505) also apply and, therefore, it must appear that the Tribunal acted upon a wrong principle, allowed extraneous or irrelevant matters to affect the decision, mistook the facts, did not take into account some material consideration or came to an unreasonable or plainly unjust decision, in order for the decision to be reviewed on appeal.
[6]
Grounds of appeal
In an attachment to the Notice of Appeal, the appellant stated that there were four grounds of appeal, namely denial of procedural fairness, procedural unfairness amounting to practical injustice, misconceived use of GIPA Act provisions and errors in law/procedures. He then went on to make contentions and submissions about these matters and at the conclusion of the attachment summarised his contentions as follows:
Member Hennings dismissed the failure to comply with orders as being too old, and perhaps irrelevant however he failed to note that on Page 9 of this submission Order SC 22307 issued on the 24th February 2022 was not complied with (to issue to owners on a before 20/02/2022…
The Respondent's 123 Page submission did not address any of the issues raised in the Applicants 73 page submission.
Member Hennings led the Respondent through each of the issues documented by the Appellant without requiring substantiation of any Respondent's response ie; The lot owners have agreed to pay $2380 Instead of I have an email from the owners of Lot 16 and they have agreed to pay $2380
The Applicant was not permitted to cross-examine the Respondent.
Member Hennings' threat to dismiss the application if the crippled applicant opened his front door (Page 5 of this submission, to admit the applicants carer) is a breach of NCAT Members Code of Conduct 9/07/2020 The Hon Justice Lea Armstrong.
Despite the Appellant's precise detailing and presentation of issues in the Supplementary Submission and Applicant's Submission and the Respondent's failure to document a response to any issue Member Hennings, nevertheless, overwhelmingly weighted the Respondent's response to the detriment of the Applicant.
Member Hennings correctly found that the owners corporation is not functioning satisfactorily which is all that is required to satisfy Section 237 orders however then found that he was not satisfied enough to make the orders requested.
The Appellant suggests that Member Hennings may be in conflict with the provisions of the GIPA Act.
[7]
Consideration-procedural fairness issues-alleged errors of law
We can deal, shortly, with the procedural fairness issues raised by the appellant. These raise alleged errors of law. As the appellant explained in his detailed written submissions, dated 5 July 2022, we were not provided with a sound recording or transcript of the hearing before the primary member because it was of such poor quality that it was unusable. No other evidence setting out what, relevantly, transpired at the hearing, including all relevant context, was presented to us.
In these circumstances it is impossible for us to arrive at any decision on appeal concerning procedural fairness founded upon what occurred at the hearing. We extend this conclusion to the contention of bias by the Tribunal based upon the events occurring at the hearing summarised above, which appeared to be implicit in the appellant's written submissions, and which the appellant confirmed at the hearing of the appeal.
We should also mention that a failure to give a party an opportunity to cross-examine another party's witness in proceedings in the Tribunal is not necessarily a breach of procedural fairness: see, for example, Jannis v Ant-Hassa Pty Ltd [2020] NSWCATAP 99 at [32].
[8]
Consideration- alleged failure to, correctly, apply s 237 of the SSMA - alleged error of law/principle
The appellant contended that, having concluded that the conditions for the appointment in s 237 were satisfied, namely, those in s 237 (3) (a) and (c), the Tribunal erred by not proceeding to appoint a compulsory strata manager.
To the extent that this amounted to a contention that the Tribunal was obliged, in the circumstances, to make the appointment, this contention is, plainly, incorrect in view of the discretion vested in the Tribunal made clear by the expression "The Tribunal may make an order" in the opening line of s237 (3) [our emphasis].
[9]
Consideration - contention that the Tribunal should not have exercised the discretion against the appointment of a compulsory strata managing agent -alleged errors of law and fact
The appellant made contentions in his written and oral submissions in support of his position that the Tribunal should not have exercised its discretion against appointing a compulsory strata managing agent.
We treat the appellant as having submitted, in accordance with House v King, that the Tribunal's decision was unreasonable or plainly unjust because the documentary evidence was all one way in favour of making the appointment and the Tribunal should not have acted upon the bare statements of Ms Rachwan about what had been, and what would be, done to rectify the situation.
At the hearing of the appeal the appellant indicated that a submission along these lines was the nub of his main contention on appeal.
In further support of this submission the appellant contended that the subsequent failure by the owners corporation to comply with any of the orders the Tribunal made on 14 April 2022 showed, clearly, that the Tribunal had misjudged the situation and was, plainly, in error in declining to make the appointment.
As to this latter point, the appellant sought to rely upon new evidence about the alleged failure to comply with the Tribunal's orders that was, obviously, not before the Tribunal at the time of the hearing on 13 April 2022 because it concerned events that had occurred after that date.
At the hearing of the appeal, and after hearing from Mr Lim, it seems clear that, at least, some of these orders have not been complied with. This is a serious matter for the owners corporation to address. It also appears that there was likely to be a reasonably extensive factual dispute between the parties about the extent of non-compliance with the orders and the reasons for that non-compliance. There was also the apparent change in the identity of the current strata manager, the non-attendance of the strata manager to represent the owners corporation at the appeal hearing and the possible lack of interaction of the strata committee with the current strata manager to which we have earlier referred. Such matters may provide a basis for a fresh application for the appointment of a compulsory strata managing agent but that is not the subject of this appeal.
For present purposes, the important point is that this ground of challenge on appeal to the discretionary decision must be based upon the events, circumstances, intentions and expectations that were presented to the Tribunal. It is conceivable that subsequent events, when fully analysed, might establish that, for example, false or baseless evidence was given to the Tribunal leading it to be mistaken about material facts. However, the bare fact of non-compliance with the orders is not capable of showing that intentions or expectations to do various things were not genuinely held or were baseless. Furthermore, for reasons already explained, we do not have an account of the evidentiary material that was presented to the Tribunal, which is another obstacle in the way of seeking to establish the materiality of subsequent events.
In these circumstances, for the purpose of this appeal, we are not satisfied that the new evidence is "significant" new evidence within the meaning of the condition for the grant of leave to appeal in clause 12 (1) (c) of Schedule 4 to the NCAT Act.
Furthermore, looking at the outcome in the Tribunal, its reasons for decision and the limited material put before the Tribunal that we have seen, we do not agree that the Tribunal's decision was unreasonable or plainly unjust. Correctly, the Tribunal saw the appointment of a compulsory strata managing agent as a serious step which overrode the normal democratic process involved in the management of the strata scheme. Understandably, the Tribunal relied upon the facts that a strata managing agent had, relatively, recently been appointed and that it had heard from a representative of that strata managing agent at the hearing in relation to the engagement that was occurring with the strata committee to address and resolve all the unresolved issues raised by the appellant. In that context and, in our view, not unreasonably, the Tribunal took the view that it was prepared to allow the owners corporation some extra time to complete what Ms Rachwan said they were undertaking.
On the appeal, the appellant did not seek to establish that any of these matters of historic fact were incorrect. Furthermore, in the absence of a sound recording, transcript or affidavit proof of the material presented to the Tribunal, including what it was told by Ms Rachwan, it is impossible for us to arrive at any conclusion that the evidentiary material before the Tribunal that pointed against the appointment of a compulsory strata manager lacked any probative force.
In the course of its reasoning the Tribunal added that it had "confidence" that, with the recent engagement of Ms Rachwan, all issues were being addressed and would be resolved with due process and that it anticipated this would result in the owners corporation complying with its obligations and duties: at [15].
In our view, it was unnecessary for the Tribunal to arrive at such an emphatic opinion about future events in order to warrant the decision not to appoint a compulsory strata manager. However, to the extent that the appellant's challenge in this ground of appeal implicitly criticises this aspect of the Tribunal's reasons, we do not accept that it renders the decision unreasonable or plainly unjust because there were sufficient reasonable grounds for the exercise of discretion without taking into account the emphatic opinion. Furthermore, in the absence of proof of what transpired at the hearing, it is impossible for us to arrive at a conclusion that this expression of confidence by the Tribunal was a view that was not reasonably open to it.
[10]
Consideration - other matters
As set out above, the first matter referred to by the appellant with respect to the grounds of appeal was that the Tribunal, incorrectly, dismissed the failure to comply with orders as being too old or, perhaps, irrelevant. However, no such reason appears in the written reasons for decision and, accordingly, we reject this ground of appeal.
In addition to material about events occurring after the hearing on 13 April 2022, the appellant's written submissions contain references to a number of facts and circumstances that do not appear in the Tribunal's reasons for decision. We are unable to arrive at any conclusions about the significance of such references to the appeal in circumstances where we have not been supplied with the documentary and oral material that was presented to the Tribunal at first instance.
[11]
Leave to appeal
So far as the appeal is based on matters other than error of law, for the reasons we have already given we do not consider that the matters raised on appeal fall within any of the categories referred to above that warrant the grant of leave to appeal.
[12]
Orders
For the above reasons, we make the following orders:
1. Leave to appeal is refused.
2. The appeal is dismissed.
[13]
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
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 18 November 2022