Bischoff & Ors v Rita Sahade & Anr

Issues raised on appeal

1. There are three issues raised in the appeal: 1. Whether Ms Gilster should be joined as an appellant (or party) to this appeal; 2. Whether the Appeal Panel has jurisdiction to hear and determine an appeal from the order of the Tribunal made under section 184 of the SSMA following the referral of an application to the Tribunal by an adjudicator pursuant to 164 of the SSMA; and 3. Whether the Tribunal was in error in making an order appointing a strata managing agent under section 162 of the SSMA and whether the orders and first decision and second decision should be set aside.

Joinder of Ms Gilster

1. The appellants, in written submissions dated 25 July 2014, contend that Ms Gilster was a party to the original proceedings, that she consented to her joinder as an appellant and there is no reason why she should not be joined as an appellant.
2. The appellants' submissions on this issue are found in paragraphs 11 and following of the document entitled "Jurisdiction of the Appeal Panel" dated 25 July 2014. In essence the appellants submit that: 1. Ms Gilster was an interested party, her rights being affected by the orders made by the Tribunal on 10 April 2014; 2. Through counsel, she participated in the original proceedings and made submissions; 3. She was, in any event, a person to whom the Registrar was required to give notice pursuant to section 135 of the SSMA. Also, it was submitted, the Registrar was obliged to send notice to Ms Gilster of the time, place and date on which the Tribunal would determine the application referred by the adjudicator: see section 137(5) SSMA; 4. Ms Gilster would be affected by the orders that had been made.
3. When the hearing commenced on 25 September 2014 Counsel for the appellants, Mr Gray SC, made submissions concerning the parties. It was agreed that the Bischoffs were entitled to bring the appeal, subject to the jurisdictional challenge by the first respondent dealt with below.
4. There were no substantive submissions made by the first respondent, to suggest that Mr Gilster had not in fact participated in the original proceedings through Counsel nor did the first respondent suggest that she was not an interested person.

Consideration

1. Rule 29 of the Civil and Administrative Tribunal Rules, 2014 provides that the parties provides as follows: 29 Parties to internal appeal The parties to an internal appeal are: (a) the appellant, and (b) any person or body (other than the appellant) who was a party to the proceedings before the Tribunal at first instance, and … (d) any other person who is made a party to the proceedings by the Tribunal under section 44 of the Act, and (e) any other person required to be joined or treated as a party to the proceedings by a Division Schedule for a Division of the Tribunal, enabling legislation or the procedural rules. Note.The member or members constituting the Tribunal at first instance cannot be made parties to an internal appeal - see section 44 (3) of the Act.
2. There is some doubt whether or not Ms Gilster was in fact a party to the original proceedings and therefore Rule 29(b) may not apply. However, it seems clear from order 3 made 9 April 2014 that, as a lot owner, she was affected by the orders made appointing the strata managing agent under section 162 of the SSMA. This is because, as submitted by the appellants, the order appointing the strata managing agent conferred upon the agent the power "to exercise all of the functions of the Owners Corporation" and "all of the functions of the chairperson, secretary, treasurer and executive committee of the Owners Corporation". Ms Gilster was a lot owner. As such, her rights as a lot owner were affected by the orders made.
3. Section 44(1) of the NCAT Act provides: "44 Parties and intervention (1) The Tribunal may order that a person be joined as a party to proceedings if the Tribunal considers that the person should be joined as a party."
4. This section confers as wide power on the Tribunal, including the Appeal Panel to join necessary parties.
5. It is clear from the authorities applicable to the joinder of parties in courts that those parties who will be directly affected by an order of a court should be joined as a party: see John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd [2010] HCA19 at [131] - [132] and the authorities referred to in Ritchie's Uniform Civil Procedure NSW at [6.24.5] and following. Similar considerations apply to proceedings in the Tribunal. In this regard Rule 29 makes clear that parties to an appeal include: 1. parties to the proceedings before the Tribunal at first instance (see Rule 29(b)); and 2. "any other person who is made a party to the proceedings by the Tribunal under Section 44 (see Rule 29(e)).
6. Further, notwithstanding that the application is made for joinder at the time of the hearing of the appeal, it seems to the Appeal Panel that not only is such a joinder appropriate but that an order joining Ms Gilster would not in any way be prejudicial to any of the parties whose interest will be affected by the outcome of the appeal.
7. In these circumstances, the Appeal Panel is satisfied that an order should be made joining Ms Gilster as a party to the appeal.
8. Further, as she is a party who is advocating the same position as the appellants, is represented by the same lawyers, and consents to be joined as an appellant, it is appropriate that an order be made to this effect.
9. Accordingly, the Appeal Panel orders that Ms Carina Gilster be joined as an appellant in application AP 14/46347 previously known as AP 14/0070.

Jurisdiction of the Appeal Panel to hear an appeal from an order of the Tribunal made pursuant to section 184 of the SSMA

1. The next issue is whether or not the Appeal Panel has jurisdiction to hear an appeal from the orders made by the Tribunal pursuant to section 184 of the SSMA. The first respondent to the appeal contends that the Appeal Panel does not have jurisdiction to determine an appeal from an order of the Tribunal made upon referral of an application by an adjudicator in the circumstances outlined above.
2. There is no dispute that, following the abolition of the CTTT, NCAT had power to determine proceedings referred by an adjudicator to the CTTT pursuant to section 164 of the SSMA, that power arising from the provisions of Schedule 1 of the NCAT Act.
3. The issue that arises is whether or not, in making orders under section 184 of the SMMA, those orders and the decisions made are an internally appealable decision for which the Tribunal has internal appeal jurisdiction pursuant to section 32 of the NCAT Act.
4. The appellants' submissions can be summarised as follows.
5. A decision by an adjudicator is an external decision within the meaning of the NCAT Act for which NCAT has an external appeal jurisdiction pursuant to section 31 of the NCAT Act. The appellants submit this is in accordance with the provisions of section 177(1) of the SSMA, which applies to appeals against an order of an adjudicator.
6. However, the appellants submit that where an application has been referred under section 164 of the SSMA, the power to make orders is given to the Tribunal pursuant to the SSMA under Section 184 and that a decision of the Tribunal in exercising its powers under section 184(1) of the SSMA is a decision of the Tribunal in the exercise of its general jurisdiction under section 29 of the NCAT Act.
7. Consequently, the appellants contend there is a right of appeal pursuant to section 80 of the NCAT Act which gives a right of appeal to the Appeal Panel on any question of law or with leave of the Appeal Panel on any other ground.
8. In reply, the first respondent agrees that a decision of an adjudicator can be appealed to the Tribunal by way of external appeal.
9. However, the first respondent contends that when a matter is referred by an adjudicator to the Tribunal and is determined by the Tribunal, the decision of the Tribunal pursuant to section 184 of the SSMA is not internally appealable.
10. The first respondent categorised an appeal from an adjudicator determination as contemplated by the NCAT Act as a two stage process involving; 1. a determination by the adjudicator (first stage); and 2. a decision of the Tribunal (being the second) by way of appeal from an adjudicator's determination (second stage).
11. The first respondent contends that the decision of the Tribunal was made in its external appeal jurisdiction and that the provisions of section 80 of the NCAT Act do not apply to a decision of the Tribunal in its external appeal jurisdiction. The first respondent further contends that where a matter had been referred to the Tribunal under section 164 for determination that this was a "second stage" and it was erroneous in law to suggest that there was, from this "second stage" a "third stage" by way of an internal appeal to the Tribunal itself.
12. The first respondent submitted in written submissions: "8. ….. It does not make sense, effectively, to demote the Tribunal proceedings and make them susceptible to a third-stage Appeal Panel, merely because the adjudicator has referred the matter directly to the Tribunal. The public would not expect such a bizarre process. It also does not make sense for an external Adjudicator to be determining the jurisdiction of the Tribunal which stands above the Adjudicator. … further, there is nothing in the legislation at all to support "third-stage contention".
13. The first respondent then submitted that the nature of an external appeal to NCAT does not change merely because the external adjudicator refers the decision to the Tribunal. In this regard the respondent referred the Appeal Panel to section 5 of the NCAT Act, which provides a definition of decision as follows: "(a)…. refusing the make an order or determination"; and "(g) doing or refusing to do any other act or thing."
14. The first respondent submitted that where the adjudicator refers a matter to the Tribunal the adjudicator "is refusing to make an order or determination, or any other act or thing upon which the original application has called upon him to do".
15. The first respondent also contends that the grounds upon which an order for referral can be made under section 164 of the SSMA supports the view that there is a second and end stage process in the Tribunal making a determination in respect of the matter referred. In this regard the first respondent relies on section 164(1)(b) of the SSMA, which provides that a ground for referral is "the possible frequencies of like applications".
16. The first respondent submitted that: "Section 184 is clear and unambiguous in its terms. Its effect clearly is to preserve the two-stage process of adjudicator - stage one, and Tribunal - stage two - and to have the process end there. It effectively disallows the appellant's contention to have a third stage - an internal appeal to the Tribunal - thus making these appeals incompetent."
17. The first respondent contends: 1. Subsection 184(1) of the SSMA vests the Tribunal with appropriate jurisdiction to determine the original question that was before the adjudicator, which the adjudicator is declining to make orders on; 2. Section 184(2) of the SSMA makes any appeal from the Tribunal's orders incompetent. It addresses a right of appeal to the Tribunal because the order of the Tribunal made under subsection (1) takes effect as if it was an order of an adjudicator and these provisions deal with "all other cases".
18. The first respondent also relies on section 184(3) and draws a distinction between the "right of appeal to the Tribunal" and "an appeal from … the Tribunal."
19. In this regard the respondent submits at paragraph 24 of its written submissions; "24. The only avenue open to the appellants is under subsection (3). Subsection (3) refers to appeals from the Tribunal and means to a higher Court. That avenue is still available to a party after a decision made by the Tribunal. That is the only avenue available to the appellants herein - as opposed to an internal or further appeal to the Tribunal itself."
20. Oral submissions were made by the first respondent to a similar effect, the first respondent contending that the decision of the Tribunal was in fact a decision of an external decision maker for which there was no right of appeal to the Appeal Panel.
21. In reply, the appellants contend that in so far as a decision had been made by an adjudicator to refer the proceedings to a Tribunal, that decision was not the subject of any appeal. Rather, it was the decision of the Tribunal in consequence of the referral in respect of which present rights of appeal were being exercised in accordance with the Tribunal's internal appeal jurisdiction.

Consideration

1. The Tribunal can only determine matters for which it has jurisdiction. Section 28(2) provides that the Tribunal has the following jurisdiction; 1. the general jurisdiction; 2. the administrative review jurisdiction; 3. the appeal jurisdiction (comprising its external and internal appeal jurisdiction); and 4. the enforcement jurisdiction
2. There is no suggestion that in making the first and second decision the Tribunal was exercising its administrative review jurisdiction or its enforcement jurisdiction.
3. The question for determination is whether or not a decision made by the Tribunal under section 184 of the SSMA is, on the proper construction of the SSMA and NCAT Act, a decision made by the Tribunal in the exercise of its general jurisdiction pursuant to section 29 of the NCAT Act or an exercise of its external appeal jurisdiction under section 31 of the NCAT Act.
4. Neither party contended that there was no right of appeal to the Tribunal exercising its internal appeal jurisdiction as provided in section 32 of the NCAT Act if the decision of the Tribunal was made in its general jurisdiction. Thus it is necessary to consider the nature and the role the Tribunal decision maker is performing and the jurisdiction being exercised by the Tribunal.
5. The first respondent submitted that a decision of the Tribunal under section 184 of the SSMA is a decision of an external decision maker. This submission is plainly incorrect for a number of reasons. Firstly, section 4 of the definition in the NCAT Act provides: "external decision-maker means a decision-maker who is external to the Tribunal."
6. The jurisdiction of the Tribunal to deal with applications referred by an adjudicator is provided by section 184 of the SSMA. It is appropriate to set out the whole of this which is in the following terms: "184 Tribunal's jurisdiction to deal with applications referred by Adjudicator (1) If an Adjudicator refers to the Tribunal an application for an order that, but for the referral, could have been made by the Adjudicator, the Tribunal has the same powers as the Adjudicator to make an order (other than an interim order) or to dismiss the application. (2) Except in relation to a right of appeal to the Tribunal, this Act has effect in relation to an order made under subsection (1) as if the order were an order of an Adjudicator. (3) Subsection (2) does not exclude an appeal from an order of the Tribunal made under subsection (1)."
7. Section 184 confers jurisdiction to the Tribunal to determine a matter referred to it by an adjudicator under section 164 of the SSMA. Section 184 grants to the Tribunal "the same powers as the adjudicator to make an order (other than an interim order) or to dismiss the application." While the powers of the Tribunal "are the same powers as the adjudicator", the Tribunal's power is granted by in section 184 of the SSMA.
8. On the other hand the general power of an adjudicator to make orders in respect of an adjudication application is granted by section 138 of the SSMA and specific powers are given to an adjudicator in sections 139 - 176 of the SSMA, inclusive.
9. Each of these grants of jurisdiction, to determine applications and make orders given to an adjudicator and the Tribunal respectively, is separate and distinct.
10. Next, the respondent, in effect, submitted that the Tribunal's decision under section 184 is an "appealable external decision" for which there is no right of appeal to the Appeal Panel. This was said to be "stage 2".
11. Section 31 of the NCAT Act defines an appealable external decision as "a decision of an external decision-maker over which the Tribunal has external appeal jurisdiction." In respect of appeals against orders of an adjudicator, sections 177 and 181 of the SSMA make provision for the Tribunal to determine such appeals.
12. An appeal against the decision of an external decision maker extends to a person to whom a function to make the decision is delegated, a decision maker appointed by reference to the holding of a particular office or a decision made by "any other person authorised to exercise the function of making the decision": see section 31(5) of the NCAT Act. However, those definitions do not include a member of the Tribunal because the decision, when made by the Tribunal; 1. is not made by an external decision maker as defined by section 5 of the NCAT Act; and 2. is made by the Tribunal under a power granted to the Tribunal under section 184 of the SSMA, not under section 138 or the other sections of the SSMA which confer power to make orders on an adjudicator.
13. The third proposition of the first respondent is that, upon the proper construction of Sections 164 and 184 of the SSMA, the SSMA excludes any right of appeal to the Appeal Panel. In our view this submission is also incorrect for the following reasons.
14. Section 164(1) of the SSMA provides as follows: "(1) An Adjudicator may refer to the Tribunal an application for an order if the Adjudicator is of the opinion: (a) that the application raises complex legal issues, or (b) that it should be referred because of its importance or the possible frequency of like applications, or (c) that there are other good reasons to refer the application."
15. This section grants to an adjudicator a statutory power to refer an application for an order to the Tribunal. As stated in subsection 164(2), it does not confer on any person a right to have referred to the Tribunal an application for an order that may be made by an adjudicator. The language of the section is that the "application" is referred to the Tribunal. The grounds for transfer do not involve the adjudicator who refers the application making any determination about whether or not an order should be made in the application. It is a power of referral given to the adjudicator. It is not a power given to the Tribunal to determine the matter referred.
16. While subsection 184(2) provides that any order made by the Tribunal "has effect… as if the order were an order of an adjudicator", this subsection does not provide that the decision of the Tribunal thereby becomes a decision of an adjudicator by some deeming provision or otherwise.
17. Rather, the insertion of the words "except in relation to a right of appeal" confirms the position that the order made by the Tribunal is not to be taken as the decision of the adjudicator and it is not an "appealable external decision", that is a decision to which the provisions of section 31 of the NCAT Act would apply.
18. Consequently, in making a primary decision in respect of an application referred by an adjudicator, the Tribunal is not exercising external appeal jurisdiction as conferred by section 31 of the SSMA.
19. The next question is whether a decision and orders made pursuant to Section 184 of the SSMA are otherwise appealable and, if so, to where.
20. Section 184(3) of the SSMA expressly provides that subsection 184(2) of the SSMA does not exclude an appeal from an order of the Tribunal made under subsection (1).
21. Prior to the NCAT Act, the right of appeal from an order of the Tribunal was found in sections 200 and 201 of the SSMA. The right of appeal that previously existed was to the District Court of New South Wales. These sections have been repealed.
22. Section 29 of the NCAT Act provides that the Tribunal has general jurisdiction over a matter if: 1. Legislation (other than the NCAT Act or the procedural Rules) enables the Tribunal to make decisions or exercise other functions, whether on application or of its own motion, of a kind specified by the legislation in respect of that matter; and 2. The matter does not otherwise fall within the administrative review jurisdiction, appeal jurisdiction or enforcement jurisdiction of the Tribunal.
23. When an application is referred to the Tribunal by an adjudicator under section 164 of the SSMA, the Tribunal is making a decision or exercising a function under section 184 of the SSMA on application that is, pursuant to "legislation (other than the NCAT Act or the procedural Rules)." The matter does not fall within the appeal jurisdiction of the Tribunal because the Tribunal is the primary decision maker not the determiner of an appeal from an external decision maker to the Tribunal and is not, at this stage, the determiner of an internal appeal. Consequently, in exercising the power granted under section 184 of the SSMA, the Tribunal is doing so in its general jurisdiction and any decision of the Tribunal in respect of a matter of which it has general jurisdiction is a "general decision" as defined by section 29(3) of the NCAT Act.
24. Because the decision made by the Tribunal pursuant to section 184 of the SSMA is a general decision, the Appeal Panel has jurisdiction to determine any such appeal under its internal appeal jurisdiction granted pursuant to section 32 of the NCAT Act: see NSW Land and Housing Corporation v Diab [2014] NSWCATAP 8 at [35] and following.
25. This interpretation is consistent with section 184(3) of the SSMA, which makes clear that any right to appeal "from an order of the Tribunal," is not excluded by section 184 of the SSMA. While this section contemplates that there is a right of appeal, the SSMA does not specify to whom the appeal is made.
26. Further, the right of appeal identified is a right of appeal "from an order of the Tribunal" not "from the Tribunal". As such the language of Section 184(3) does not exclude an internal appeal from an order made by the Tribunal in its Division function to the Appeal Panel of the Tribunal in its internal appeal jurisdiction.
27. Finally, this interpretation is consistent with the objects set out in Section 3 of the NCAT Act which include: "(b) to enable the Tribunal: (i) to make decisions as the primary decision-maker in relation to certain matters, and (ii) to determine appeals against decisions made by certain persons and bodies; (iii) to exercise such functions as are conferred or imposed on it."
28. The appeal jurisdiction includes NCAT's "internal appeals jurisdiction over… any decision made by the Tribunal in proceedings for a general decision": see section 32 of the NCAT Act.
29. Accordingly, the first respondent's challenge to the jurisdiction of the Appeal Panel to hear and determine the present appeal should be dismissed.

Challenge to order appointing Strata Managing Agent under section 162 of the SSMA

1. The appellants challenge the order appointing a strata managing agent under section 162 of the SSMA on the following grounds: 1. There was no evidence of some matters upon which the Tribunal relied in finding the management structure was not functioning satisfactorily; 2. Those allegations of which there was some evidence are insufficient to justify the appointment of a strata managing agent and the delegation of all functions of the Owners Corporation to that person; 3. The Tribunal erred in construing the requirements of section 162(3A)(a) and in particular was in error in: 1. Relying on the acrimonious relationship between the owners, and (in the absence of any contribution from the Respondents) the agreement of the majority owners in matters of management; 2. Failing to identify actions or behaviour of the management structure that the Tribunal considered relevant to the application and to give reasons as to how they affected the Tribunals consideration and determination of the application; 3. Considering how the management structure of the Owners Corporation might function in the future.
2. The appellants relied on the decision of Member Moore in Consumer Trader and Tenancy Tribunal proceedings Coote v Sharpe, Wentzel & Owners Corporation Strata Plan 55434 SCS 05\37316. In that case Member Moore concluded that the power of appointment under section 162 was "draconian because (it) simply removes the democratic process which has been established under the Strata Schemes Management Act" and that the "Tribunal (must) make its determination based on objective considerations and there must be objective evidence that the management of the Owners Corporation is seriously dysfunctional before the Tribunal would be disposed to make an order under section 162".
3. The appellants contend that the Supreme Court confirmed this interpretation in Mortlock and Anor v The Owners-Strata Plan No 55434 and Ors [2006] NSWSC 363 at [19] where the Supreme Court concluded the reasons were "more than adequate".
4. The appellants then submitted that the reasons provided were not adequate to satisfy the requirements of nature justice. In this regard the appellant relied on a decision of Cole J in Xuereb v Viola [1989] 18 NSWLR 453.
5. The appellants made the following submissions in relation to the above grounds.
6. It was incorrect for the Senior Member to conclude that Ms Bischoff, as sole member of the executive committee, constitutes the "management structure" of the Strata Scheme and that the management structure included the strata manager and the Owners Corporation in general meeting. In this regard the first respondent had a right to requisition a general meeting and to challenge any decisions of the executive committee by seeking to pass at a general meeting a resolution to a different effect. Further, the appellants submitted that by reason of the first respondent holding unit entitlements which exceed one third of the aggregate unit entitlements for the strata plan, she was able to render any decision of the executive committee of no force and effect by providing notice in writing to the secretary of the executive committee under clause 11(2) of schedule 3 of the SSMA.
7. Consequently this process, which was available to her, provided a means by which the first respondent could participate "constructively in the ordinary matters of management, if she wished to do so": see appellants' written submissions [33].
8. In relation to the physical altercation between Mr Bischoff and Mr Sahade, the appellants submitted that there was no evidence to demonstrate that this altercation, or indeed any personal relationship between the parties, had in fact resulted in management decisions being made inappropriately. Further, the appellants submitted that there was no evidence to support the conclusion that the Owners Corporation decision to appeal to the Supreme Court from the Local Court decision about levies was motivated in whole or in part by personal animosity of the Bischoffs towards the Sahades. In this regard the appellants submit that the Member was incorrect in concluding that the levy of $590,000.00 had been raised "solely to fund the internecine litigation proceedings through various Courts or Tribunals of the State". This is because the appellants say that the minutes raising the levies make clear that the levies are for a number of purposes including to meet obligations for "unpaid creditors". The appellants also contend that the evidence of Ms Bischoff in re-examination confirms the levies were not limited to the purpose of paying legal expenses: see transcript T315.43-T316.10.
9. As to the levies referable to the payment of legal costs, the appellants contend the Tribunal was in error in criticising the Owners Corporation and failed to have regard to the fact that the majority of the proceedings had been instituted by the Sahades. In this regard the appellants relied on the evidence of the Sahades found at transcript T313.1-T315.41.
10. The appellants also rely on the reasons for judgement in various court proceedings as demonstrating that the Tribunal was in error in criticising the Owners Corporation in taking or defending proceedings against the Sahades.
11. In relation to the Tribunal describing the third appellant, Ms Gilster as "a non-involved but familiarly obliged second owner", the appellants submitted that this finding was both crucial and without any evidence. In this regard the appellants relied on the evidence of Ms Bischoff at T165.30-T166.15 and the fact that no impropriety was suggested to Ms Gilster: T14.26-T14.36. The appellants then submitted that the mere fact that Ms Bischoff discussed the subject matter of motions and agreed how to vote with her sister did not mean she was "non-involved" or "obliged" by anything.
12. Finally, the appellants submitted that while the Tribunal had concluded that "the genesis of much of the present hostility" concerned the dispute resolved by Kunc J in connection with the so called "northern handle of land" which resulted in the Supreme Court making orders to vary the strata plan, in so far as the Tribunal was critical of the conduct of the Owners Corporation, this conclusion was unsustainable having regard to the reasons of Kunc J set out in paragraph 41 of the appellants' submissions.
13. The appellants raised two other matters in connection with the orders made under section 162 of the SSMA.
14. Firstly, that the Tribunal was in error in determining that the proposed appointee, Melandiro Pty Ltd t/as Irvine Strata Management, had provided a valid consent. In this regard, section 164(4)(a) of the SSMA requires that a person appointed as a strata managing agent under section 162 "must have given consent in writing".
15. The appellants refer to the consent and said that what was provided by Melandiro Pty Ltd t/as Irvine Strata Management was not in fact a valid consent because it was in the form of an agency agreement which provided that any functions as the agent could not be performed "unless authorised, approved, requested or instructed by the Owners Corporation". The appellants point to submissions made at the hearing at T391.3- T391.43 and T407.4- T409.26.
16. Secondly, the appellants contended that there has been a denial of natural justice because the Tribunal made an appointment for a period of 2 years without notifying the parties of this possibility and giving them an opportunity to make submissions in circumstances where the first respondent had only sought an appointment for one year.
17. In reply, the first respondent relied on written submissions set out in her Notice of Reply and in written submissions dated 17 August 2014. In addition, the first respondent made oral submissions.
18. Those submissions can be summarised as follows:
19. Contrary to grounds of appeal in paragraph 1 (a) - (g) inclusive of the Notice of Appeal, there was evidence before the Tribunal on which the identified findings of fact could be based. In this regard the first respondent submitted it was open to the Tribunal to conclude that: 1. The third appellant, Ms Gilster was "familiarly obliged" to the second respondent, Ms Bischoff because there was evidence from Ms Gilster to the effect that at all times she provided her sister with a proxy so as to carry all resolutions passed at all meetings; 2. acrimony and violence was engendered by an environment created by the decisions of Ms Bischoff because Ms Bischoff had been cross-examined in connection with the District Court proceedings claiming assault and malicious prosecution and on the evidence that she and her husband had provided to the police against the occupant of Lot 3. and that the other matters of fact, as found by the Tribunal "were all open and available inferences and were matters which had been put to Ms Bischoff in cross examination.
20. In oral submissions, in relation to the question of the special levy being made for legal costs, the first respondent contended that there was some cross-examination on this issue and that the inference drawn by the Tribunal was available. Reference was made to the resolutions of the Owners Corporation raising these special levies, which are found in the agreed bundle of documents, Tab 31, page 501 and following.
21. Therefore, it was asserted, there was no error in the reasoning provided by the Tribunal on the conclusion that the management of the strata scheme was not functioning satisfactorily was correct.
22. In relation to the appellants' contention that there were no findings of unsatisfactory management sufficient to justify the order made, the first respondent contends that paragraphs 8-15 of the Tribunal's reasons are sufficient. The first respondent specifically refers to paragraph 13 of the reasons and submits that by reason of Ms Bischoff having her sister's proxy she thereby had "a majority of voting entitlements".
23. In relation to the appellants' ground of appeal that the Tribunal gave no reasons as to why the pursuit of the "Supreme Court option" demonstrated that the Owners Corporation was not functioning satisfactorily, the first respondent contends that paragraph 10 of the reasons for decision are sufficient.
24. Finally, the first respondent contends that insofar as the appellants seek leave to appeal, the decision of the Tribunal was not against the weight of evidence, does not raise a question of law and, in any event, the appellants have not shown they have suffered any miscarriage of justice. Rather, the first respondent submits "the appellants are only personally aggrieved because Ms Bischoff herself constituted the Executive Committee and controlled the majority of voting entitlements of the Owners Corporation - but that control of the Owners Corporation is now vested in an independent third-party."
25. In relation to the issue of the Strata managing agent providing proper consent, the first respondent relies on the Tribunal's decision in paragraph 18 and contends that the appellant's assertion that the agent has "not consented in writing" is factually incorrect. Further, the first respondent submits that the words of the agency agreement do not invalidate the consent given. This it argued, is because the powers of the Owners Corporation would be vested in the agent.
26. In reply, the appellants noted that the document found at tab 31 and the evidence of Ms Bischoff was to the effect that the special levies were not only to pay legal costs but also to pay creditors. Therefore, it is submitted, the conclusion of the Tribunal that all levies were for legal costs is incorrect.
27. Further it is submitted by the appellants that, insofar as the Tribunal made criticism in respect of legal proceedings between the parties, this criticism only related to the Supreme Court proceedings determined by Kunc J about the strata plan and the so-called "handle" which became part of Lot 3. The appellants referred to the reasons of Kunc J and the fact that His Honour had concluded that the problem arose from an error for which no one was responsible. In part, the appellants relied on the reasons of the Court in making no order for costs. The appellants also relied on the evidence of Ms Bischoff that the Owners Corporation had acted on advice in respect of the Supreme Court proceedings.
28. Therefore, the appellants submitted, the Tribunal's conclusions in respect to the raising of levies "solely to fund the internecine litigation" were incorrect.
29. Further, as to the reference to the (then) unresolved litigation between the parties concerning the reallocation of unit entitlements and what might happen in the future, the appellants submitted this was speculative and did not form a proper basis for any appointment of a strata managing agent under section 162 of the SSMA.

Consideration.

1. The primary question for resolution in this appeal is whether or not the Tribunal was in error in making an order to appoint a strata managing agent under section 162 of the SSMA.
2. The appointment of a strata managing agent under section 162 is discretionary and any appointment may confer upon the strata managing agent a power to exercise all or some of the functions of: 1. the owners corporation: see section 162 (1); or 2. the chairperson, secretary, treasurer or executive committee of the owners corporation: see section 162 (2).
3. An order to appoint a strata managing agent under section 162 can only be made in circumstances where an adjudicator (or the Tribunal when determining an application referred under section 164) is satisfied that one of the circumstances set out in subsection 162 (3A) of the SSMA exist. Those circumstances are: "(a) the management structure of a strata scheme the subject of an application under this Chapter is not functioning or is not functioning satisfactorily; or (b) the owners corporation has filed to comply with a requirement imposed on the owners corporation by an order under this Act; or (c) the owners corporation has failed to perform one or more of its duties, or (d) the owners corporation owes a judgement debt."
4. The relevant circumstance which the Tribunal identified in concluding that a strata managing agent should be appointed was that the management structure of the strata scheme was not functioning or was not functioning satisfactorily.
5. This is a jurisdictional fact which must be established as a precondition before an adjudicator (or Tribunal) can make an order appointing a strata managing agent: see eg Allen & Ors v TriCare (Hastings) Pty Ltd & Anor [2015] NSWSC 416 at [49].
6. Neither party contended that there existed any other circumstance prescribed in section 162 (3A) which would have justified an appointment.
7. The SSMA does not specify particular matters that are to be considered by an adjudicator or the Tribunal in deciding whether the management structure of the strata scheme is not functioning or is not functioning satisfactorily. Therefore, a determination of this appeal requires the Appeal Panel to determine what matters are properly to be considered.
8. The language of Section 162 (3A) does not suggest that: 1. the manner in which Lot owners, occupiers or other people who have dealings with each other; or 2. the way such people conduct themselves when on common or Lot property within the strata scheme, is generally relevant to a determination of this question.
9. Rather, the conduct relied upon must have an effect on the functioning or satisfactory functioning of the management structure.
10. Management of the strata scheme is regulated by Chapter 2 of the SSMA. An owners corporation has principal responsibility for the management of the strata scheme: see section 8 of the SSMA. In doing so: 1. it may employ persons to assist in the exercise of its functions: see section 13 of the SSMA; 2. it must appoint an executive committee: section 16 of the SSMA; 3. it may appoint a strata managing agent or a caretaker: see section 26 and section 40B of the SSMA.
11. The functions of the owners corporation are specified in section 12 of the SSMA which are the "function conferred or imposed on it by or under this or any other Act."
12. Relevant functions include the Owners Corporation: 1. Employing persons to assist in exercising its functions: see section 13 of the SSMA; 2. Serving notice upon an owner or occupier of a Lot to comply with relevant by-laws and taking action in respect of breaches of by-laws: see e.g. sections 45 and 202 of the SSMA; 3. Raising levies for the administration of the strata scheme and for the repair of maintenance of common property: see e.g. section 75 of the SSMA; and 4. taking legal action on behalf of the Owners Corporation, subject to any resolution passed at a general meeting as required by section 80D of the SSMA.
13. Meetings of the Owners Corporation must be conducted in accordance with the requirements of Schedule 2 of the SSMA which, inter alia, provide for the giving of notices of general meeting (including extraordinary general meeting) the conduct of those meetings, the counting of votes and other administrative matters.
14. In relation to any executive committee appointed under section 16 of the SSMA, its role and the obligations of particular officeholders are specified in Part 3 of Chapter 2 of the SSMA. As provided in section 9 of the SSMA, the executive committee is to assist the Owners Corporation in carrying out its management functions. The constitution and procedures for the executive committee to meet and make decisions is regulated by Schedule 3 of the SSMA.
15. In this regard, it should be noted that any decision of the executive committee has no force and effect if notice in writing is given by one or more owners who oppose that decision if those owners in aggregate hold unit entitlements exceeding one third of the aggregate unit entitlements: see Schedule 3 clause 11 (2).
16. The effect of these provisions is that the management structure provided for in the SSMA consists of three levels of management, namely; 1. the owners corporation, which makes decisions and manages the affairs of the strata scheme in general meetings of Lot owners or through persons employed; 2. the executive committee, which makes decisions and manages the affairs of the strata scheme in respect of matters delegated to it; and 3. appointed strata managing agents and/or caretakers, who make decisions and manage the affairs of the strata scheme in respect of matters delegated to them;
17. Circumstances in which the management structure may not be functioning or functioning satisfactorily include where the relevant level of management: 1. does not perform a required function, for example to properly maintain the common property; 2. exercises a power or makes a decision for an improper purpose, for example conferring a benefit upon a particular Lot owner or group of Lot owners in a manner not authorised by the SSMA; 3. fails to exercise a power or make a decision to prevent a contravention by Lot owners and occupiers of their obligations under the SSMA, including the Lot owners and occupiers obligation to comply with the by-laws; and 4. raises levies and takes or defends legal action on behalf of the owners corporation in circumstances where such action is unnecessary or not in the interests of the owners Corporation or the Lot owners as a whole.
18. The appellants contend that there was no evidence to justify the appointment. This is a question of law.
19. Alternatively, the appellants contended that the decision made by the Tribunal was not fair and equitable or against the weight of evidence and that the Appeal Panel should therefore grant leave to the appellants to appeal the Tribunal's decision and set aside the order made. The appellants also contend that a number of the facts as found by the Tribunal, even if they existed, are irrelevant to the consideration of an appointment of a strata managing agent under section 162.
20. The Tribunal made the following findings: 1. there was a physical altercation between one of the appellants Mr Bischoff and Mr Sahade; 2. "the particular structure of the strata scheme, where the decision of one owner supported by a non-involved but familiarly obliged second owner, has created an environment that has persisted for almost 9 years which has engendered acrimony and eventual violence"; 3. there has been a dispute, recently determined in the Supreme Court by Kunc J, which resulted in the orders being made to alter the common property and Lot property in the strata scheme. This litigation had been resolved in favour of Ms Sahade, having been opposed by the Owners Corporation and the appellants "at significant cost to all involved"; 4. Other proceedings had been brought by the Owners Corporation to recover unpaid levies, "such levies… raised by the (Owners Corporation) to legally fund court or tribunal proceedings involving Ms Sahade. 5. In determining the Supreme Court proceedings, the Court had made "an adverse costs order" which was reflected in the reasons for decision in The Owners-Strata Plan No. 62022 v Sahade [2013] NSWSC 2002; 6. the decision of the Owners Corporation to pursue the Supreme Court option was, at least, "partly motivated by personal animosity towards (Ms Sahade) and her husband"; 7. there was ongoing litigation in the District Court seeking orders for the reallocation of unit entitlements and "a readjustment in favour of (Ms Sahade) might well give rise to retribution and ongoing litigation"; 8. the management structure for the purpose of considering section 162 (3A)(a) was Ms Bischoff who constituted the executive committee; 9. Ms Bischoff, as the executive committee, "took decisions to incur legal costs and disbursements without obtaining the support of a resolution passed at a general meeting as required by section 80 D of the SSMA"; 10. the Owners Corporation had passed special levy resolutions "justifying legal costs being incurred totalling $590,000-solely to fund the internecine litigation proceedings through various courts and Tribunals of the State".
21. It was against this background that the Tribunal determined that the management of the strata scheme was not functioning satisfactorily and had probably not done so for at least six or seven years.
22. It is convenient to deal with the questions of law before dealing with the questions for which leave to appeal is required.
23. The first question of law is that there was no evidence to support any of these conclusions. In our view this submission must fail.
24. On the appellants' own submissions, there was evidence that levies had been raised for the purpose of funding legal action: see Exhibit 31. There was also evidence in the form of the Supreme Court decisions which indicated that costs had been incurred by the Owners Corporation in taking or defending proceedings which should not be borne by all Lot owners, including the first respondent, but only by the appellants: See The Owners- Strata Plan 62022 v Sahade [2013] NSWSC 2002 at [38] and Sahade v Owners Corporation SP 62022 [2013] NSWSC 1791 at [75] - [81].
25. In the second proceedings, which related to the modification of the strata plan, while it is correct the Court concluded that the proceedings were necessary to correct an error for which none of the parties were responsible (see Sahade at [79]) it was always open to the Owners Corporation to file a submitting appearance rather than incur costs and take an active role in those proceedings.
26. Clearly decisions in connection with the taking or defending proceedings by the Owners Corporation and raising levies for those purposes is one of the functions to be performed by the Owners Corporation. It was not challenged in the appeal that the decision to do so was made by the Owners Corporation either in general meeting or by the executive committee.
27. It is also clear that the litigation in which the Owners Corporation was involved that: 1. The first respondent was the opponent in each case; 2. The first respondent was successful in each case; and 3. The first respondent was not obliged to pay the costs of the Owners Corporation through levies which needed to be imposed due to orders made by the various Courts.
28. Further, having considered the reasons of Rothman J in The Owners- Strata Plan 62022 v Sahade [2013] NSWSC 2002, it is clear that His Honour dismissed the Owners Corporation's claim and found that the decision of the Local Court (the Recovery Action) was correct because the resolution upon which the Owners Corporation relied in seeking to recover levies against the first respondent was invalid.
29. In these circumstances, there was some evidence upon which the Tribunal could rely to conclude that the litigation being undertaken and the levies being raised were not for the benefit of the Owners Corporation or Lot owners as a whole, but rather to advance the position of particular Lot owners. Further, there was some evidence to conclude that the decision to appeal the decision in respect of the Recovery Action was inappropriate.
30. In these circumstances, the no evidence ground is not made out.
31. The second question of law is that the Tribunal was in error in concluding Ms Bischoff, who was the executive committee, constituted the management structure of the strata scheme and that because the first respondent had rights to requisition a general meeting or otherwise challenge any decision of the executive committee under clause 11 (2) of Schedule 3 of the SSMA the Tribunal was also in error in concluding that the management structure of the strata scheme was not functioning satisfactorily.
32. We do not accept on a fair reading of the Tribunal's reasons that the Tribunal concluded that the executive committee constituted the whole of the management structure of the strata scheme. Rather, the Tribunal was identifying that part of the management structure, namely the executive committee, which was not functioning satisfactorily.
33. In our view, the executive committee is part of the management structure but not the whole of the management structure. Insofar as the Tribunal concluded Ms Bischoff, as the sole office holder in the executive committee, was part of the management structure it was therefore correct.
34. Further, the failure of an aggrieved party to exercise a right to requisition a general meeting or any other right available to them to rectify any circumstance constituting the unsatisfactory functioning of the management structure may be a relevant factor to consider in deciding whether to exercise any discretion to appoint a strata managing agent. However, such failure does not mean that the Tribunal is bound to conclude that the management structure, or part of the management structure, is functioning or is functioning satisfactorily.
35. Accordingly, this ground of appeal fails.
36. In relation to the issue of the validity of the consent provided by Melandiro Pty Ltd t/as Irvine Strata Management, it seems clear on the evidence that the agent was advised it was to be appointed under section 162 of the SSMA. While it provided a standard agency agreement as part of indicating its consent to the Tribunal, the terms of that agreement did not vitiate or rendered ineffective the consent.
37. As the first respondent submits, insofar as the agent required consent of the Owners Corporation in performing any functions of the Owners Corporation pursuant to the order of the Tribunal, the agent was empowered by the order to provide such consent.
38. This ground of appeal fails.
39. The next question of law is that the appellants were denied procedural fairness in that the term of the appointment was for a period of two years whereas the first respondent, the applicant seeking appointment of a strata managing agent, had only sought an appointment of 1 year.
40. It would appear that the period of appointment was fixed by the second decision and the orders made on 9 April 2014. This was after the hearing concluded, after the first decision, and after the parties had complied with directions in relation to the nomination and submissions in relation to the who the strata managing agent should be.
41. Neither party submitted they had been afforded a chance to make submissions in relation to a period of appointment greater than one year. No material has been provided to the Appeal Panel suggesting that the Tribunal had foreshadowed such an outcome.
42. As pointed out in the decision of Member Moore in the CTTT application SCS05/27316 an appointment of a strata managing agent is "draconian". This is because the SSMA provides for the Lot owners to decide how the functions of the Owners corporation are to be exercised through: 1. Passing resolutions at a general meeting; 2. Electing members to an executive committee; and 3. Having the executive committee make decisions in respect of delegated or authorised functions though the committee's applicable processes whereas upon appointment under section 162, those powers are vested in a third party strata managing agent who is not subject to direction and control: see for example Jennifer Elizabeth James v The Owners Strata Plan No. SP 11478 (No 4) [2012] NSWSC 590.
43. While there is no limit on the period of appointment under section 162 in the present case, the statutory scheme contemplates that an Owners corporation should be managed by its members, the Lot owners, through the structures provided in the SSMA and that such management structure should only be displaced in circumstances set out in section 162 (3A). It follows that the period of appointment should only be for a period necessary to correct the circumstance justifying an appointment.
44. In this respect a Lot owner who is affected by the order must be afforded an opportunity to make submissions. As this did not occur, the Tribunal was in error.
45. Further, because the Tribunal failed to provide reasons as to why an appointment for a period of 2 years was thought reasonable, as opposed to the period of 1 year, there has been a further failure of the Tribunal to afford procedural fairness.
46. The duty to accord procedural fairness arises because the power involved is one which may "destroy, defeat or prejudice a person's rights, interests or legitimate expectations": Annetts v McCann [1990] HCA 57; (1990) 170 CLR 596 at 598; 97 ALR 177; (1990) 65 ALJR 167; 21 ALD 651. The content of the duty in a particular case depends upon the circumstances of the case and the nature of the power being exercised: Kioa and Ors v West [1985] HCA 81; (1985) 159 CLR 550 at 585 and at 612-615; (1985) 62 ALR 321; (1986) 60 ALJR 113; 9 ALN N28.
47. As was said by Mason J in Kioa (at 587) "if in fact the decision-maker intends to reject the application by reference to some consideration personal to the applicant on the basis of information obtained from another source which has not been dealt with by the applicant in his application there may be a case for saying that procedural fairness requires that he be given an opportunity of responding to the matter". Similarly Brennan J observed in Kioa (at 628) that "[a] person whose interests are likely to be affected by an exercise of power must be given an opportunity to deal with relevant matters to his interests which the repository of the power proposes to take into account in deciding upon its exercise."
48. The same considerations apply to proceedings in the Tribunal. In Collins v. Urban [2014] NSWCATAP 17, the Appeal Panel held in respect of hearings before the Tribunal, that s 38(5)(c) of the NCAT Act requires that the Tribunal "take such measures as are reasonably practicable ... to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings": Collins at [40].
49. As the application was made on the basis that a one year appointment was sought by the first respondent and as neither party contended for a period greater than 1 year, in our view the parties should have been given an opportunity to make submissions if the Tribunal was considering making an appointment for a longer period.
50. Accordingly, the appellants have established this ground of appeal.
51. In consequence of this decision, it is unnecessary to determine the issue of whether leave to appeal should be granted.

Disposition of Appeal

1. The only matter left to determine is what orders should now be made.
2. As indicated above, the appointment of Melandiro Pty Ltd t/as Irvine Strata Management was made on 9 April 2014, more than one year ago. This is greater than the period sought in the application.
3. During the hearing of the appeal, the Appeal Panel noted that if the appeal was successful it may be inappropriate to set aside the original order of the Tribunal because the appointed agent had in fact managed the Owners Corporation for more than a year. The Appeal Panel was concerned that to set aside the original orders may invalidate some of the actions of the agent and/or lead to a situation where those third parties dealing with the Owners Corporation in good faith may be adversely affected.
4. Consequently, the parties were asked to consider what form of orders the Appeal Panel should make.
5. In determining an appeal, the Appeal Panel has powers as provided in section 81 of the NCAT Act. This section provides: "81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following: (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when varying, or making a decision in substitution for, the decision under appeal."
6. The appellants provided proposed orders and submissions dated 3 May 2015. In short, the appellants propose that the orders of the Tribunal made 9 April 2014 should be set aside and in lieu thereof a more limited form of authority granted. They contended that the form of orders proposed were necessary because of concerns the appellants had that the agent "may have exercised, or may yet exercise, functions of the Owners Corporation in excess of what was required for the day-to-day operation of the scheme, in particular actions that may affect the proprietary rights". Such possible actions the appellants identified as being the granting of licenses, the borrowing of money or the transferring or leasing of common property.
7. On the other hand, the first respondent says that the only order that should be made would be to terminate the appointment prospectively, that is vary the period of appointment in the original orders made by the Tribunal on 9 April 2014 to provide for the appointment to cease to have effect on the date the reasons of the Appeal Panel published.
8. While the appellants have expressed some concerns about what the strata managing agent may have done, there is no evidence before the Appeal Panel to suggest those concerns have any substance. Further, when the matter was dealt with by the Appeal Panel on 25 February 2015, the parties were able to confirm that no by-laws had been passed and that the strata managing agent had not otherwise taken action of the type for which concern was expressed. Also, at the conclusion of the hearing on 25 February 2015 provision was made for the strata managing agent to give not less than four days' notice to the Lot owners of any proposed decision of the Owners Corporation that may affect the proprietary rights of the Lot owners.
9. No party has since informed the Appeal Panel that any actions adverse to their particular proprietary rights have been taken. In those circumstances, and having regard to the time which the strata managing agent has acted under the appointment, in our opinion the appropriate order is to allow the appeal and vary the orders made by the Tribunal on 9 April 2014 so as to provide that the appointment of Melandiro Pty Ltd t/as Irvine Strata Management Avenue strata managing agent under section 162 of the Strata Schemes Management Act be terminated on the date specified.
10. Further, as the appointment has been in place for more than a year the first respondent did not otherwise submit the appointment should continue for a longer period, it will be sufficient for the Appeal Panel to make orders to bring the appointment to an end and not remit the matter for further hearing.
11. This will allow the strata scheme to resume operating through the management structure in the usual way.
12. Of course, these orders will not prevent a further application under section 162 of the SSMA being made in the future if circumstances warrant such action.

Orders

1. Accordingly, the Appeal Panel makes the following orders: 1. Carina Gilster is joined as the third appellant 2. The appeal is allowed; 3. Order 2 made by the Tribunal on 9 April 2014 is varied to provide for the appointment of Melandiro Pty Ltd t/as Irvine Strata Management as strata managing agent of Strata Plan 62022 for the period 28 April 2014 to 6 July 2015. 4. Any applications for costs are to be filed and served within 14 days of the date of these reasons, such applications to include any submissions. 5. Any submissions in reply are to be filed and served within 28 days of the date of these reasons. 6. Any submissions are to also address the question of whether or not the application for costs can be dealt with on the papers. 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: 08 July 2015