De Beck v The Owners - Strata Plan No 30468 - [2024] NSWCATCD 11 - NSWCATCD 2023 case summary

NCAT Consumer and Commercial|2023-10-05

REASONS FOR DECISION

These reasons for decision deal with an application by Ms de Beck (the applicant) for the appointment of a strata managing agent to the owners corporation (the OC) of strata scheme plan no. 30468 (the Strata Scheme). The application is brought pursuant to s 237 of the Strata Schemes Management Act 2015 (the SSMA). The applicant is the owner of lot 9 in the Strata Scheme. The OC opposes the application.
The matter was heard on 5 October 2023.
The applicant appeared and represented herself.
The OC was represented by Mr Barbariol, chairperson of the strata committee and Ms Pantazis, a member of the strata committee. Mr Barbariol is the owner of lot 10. Ms Pantazis is the owner of lots 4 and 16.
During the hearing the applicant relied on a bundle of documents filed 11 September 2023, which was tendered without objection and marked exhibit 1. Exhibit 1 was 345 pages which included a strata report compiled by Eyeon Strata dated 31 March 2023, numerous emails, photographs, minutes of meetings of the OC and invoices or reports relating to maintenance or repairs undertaken.
The OC relied on a bundle of documents filed 29 September 2023, which was tendered without objection and marked exhibit A.
At the conclusion of the hearing on 5 October 2023 the Tribunal made directions which provided an opportunity to the OC to apply to tender further documents and an opportunity for the applicant to object to further materials. The OC sought to tender further documents and the applicant objected. I will receive one further document because it is a business record. That document is a document dated 14 September 2023 entitled "Quote Request" which will be exhibit B. I reject the other documents sought to be tendered because admitting them would require an opportunity to be given to the applicant to address them including by evidence.

Findings

I make the following findings of fact.
The Strata Scheme comprises commercial premises located at *** - *** Great North Road, Five Dock, New South Wales. The Strata Scheme was registered in February 1986 (Ex 1, pp. 24 and 245).
The Strata Scheme includes two separate buildings. One of the building comprises 18 lots, namely lots 1 to 18 inclusive. Lot 18 is an internal roof space in the main building. Lot 19 is a separate building.
The lots in the Strata Scheme are utilised in a wide variety of ways. The applicant conducts a tutoring business from her lot. Other businesses conducted from the Strata Scheme include a butcher and a dentist's surgery.
There is car parking available on the common property but the car parking spaces are not allocated or otherwise reserved for a specified lot owner or invitee. There is often very heavy demand for the car parking space and it is common ground that the demand for car parking spaces sometimes exceeds the availability.
The applicant makes a number of complaints about the manner in which the OC is functioning. I deal with these complaints in the following paragraphs.

Maintenance and repair of toilets in common property

One of the applicant's complaints is that the OC has not maintained and/or repaired common property toilets. These complaints relate to two sets of toilets.
One set of toilets are located in the area of lot 19. The applicant contends these toilets are common property and due to the OC's failure to maintain and repair them they cannot be used.
There is no dispute that these toilets have not been in working order for some time. The OC outlined that these toilets had been frequently vandalised and damaged because they could be accessed easily by trespassers. For that reason a decision was taken by the OC to cease repairing these toilets. In addition, lot 19 is currently the subject of a development application and the OC submitted that work in relation to that development application would impact those toilets. In those circumstances, the OC has decided to not repair the toilets at least until the lot 19 development is completed. In essence, the OC's submission that repairing the toilets at this point in time may ultimately be a waste of the OC's funds.
A preliminary issue in relation to these toilets is whether they are lot property or common property.
During the hearing, the OC's representatives identified that the location of the toilets was immediately to the east of a north-south wall depicted in the strata plan drawings for lot 19 and bearing the measurement 11.5m (see Ex 1, p. 26). The toilets themselves are not depicted on the registered strata plan diagram and the Tribunal was informed of their location by reference to the 11.5m line on p. 26 of Ex 1. The strata plan in evidence before the Tribunal did not clearly depict whether the location of the toilets was within lot 19 or immediately outside lot 19. The north-south wall measuring 11.5m is depicted as a line which would mean that it was a common property wall. Approximately 7.4 m to the east of the 11.5m wall another north-south feature is depicted on the strata plan in broken lines. Consequently, the area east of the 11.5m north-south wall appears to be outside lot 19 and therefore common property.
The degree of confusion as to this issue is evidenced by the OC's past consideration of the matter. The minutes of the annual general meeting of the OC held on 6 February 2018 (2018 AGM) record (Ex 1, p. 152): Toilets at rear: the strata manager is to check the strata plans and records to ascertain if the toilets are common property or have been built by the previous owner of lot 19.
However, the question as to whether the toilets are on common property or part of lot 19 does not appear to have been finally resolved by the OC.
Weighing up all the evidence adduced before me, I find that the toilets are located on the common property and not part of lot 19. The main component of the evidence is that the OC's representatives identified that the location of the toilets was east of the north-south wall measuring 11.5m which is depicted on the registered strata plan drawings at page 26 of exhibit 1.
However, that does not establish that the toilets were built by the OC or required to be maintained as part of the common property. There was no evidence before the Tribunal as to the terms of any development approval or similar planning approval in respect of the Strata Scheme prescribing the number of common property toilets required for the Strata Scheme. In light of the uncertainty concerning the construction of the toilets, as recorded in the 2018 AGM minutes, I am not satisfied that the toilets were built by the OC and so I am not satisfied that the toilets comprised common property that the OC was required to maintain and repair.
The other set of toilets are located in the main building in which the other 18 lots are located. There is no dispute that these toilets are common property. The female toilets are located in the first floor of the building. The applicant gave evidence that these toilets are unsafe due to roof leaks creating slippery floor surface. The evidence is corroborated by photographs on p. 284 of Ex 1 which depict the presence of water on the tiles and depict the ceiling from where the water ingresses from the roof into the interior of the toilets. I heard the applicant's evidence concerning the female toilets and I accept her evidence.
I also accept the applicant's evidence that the male toilets are in a state of some disrepair. The photographs depict this presence of 'witches hats' indicating the inaccessibility of the wash basin. The evidence did not establish that the urinals in the male toilets cannot be used or are in disrepair.
The OC submitted that there was a standing work order for remedying roof leaks. It relies on exhibit B in this respect, being a document dated 14 September 2023 entitled "Quote Request". That document seeks quotes for tiles for the male bathroom. As at the date of hearing those tiles had not been installed (if they had been purchased).
The OC also submitted there were other toilets available for use by invitees, lot owners and lessees. However, the other toilets are in fact within one of the lots and access to those toilets requires accessing the lot and permission from the owner or lessee of that lot.

Roof leaks

The applicant complains that there are numerous roof leaks in the main building. The photographs in exhibit 1, as well as the applicant's evidence of her observations, satisfies me that there are indeed a number of locations from which water penetrates from the roof into the interior of the building.
The presence of water on interior surfaces on the mezzanine floor and the ground floor is depicted in five locations in the photographs in exhibit 1 (Ex 1, p. 281). The evidence also includes photographs of cracks in the glass atrium ceiling area of the main building (Ex 1, p. 281 and 285). The applicant gave evidence that water on the inside floor surfaces regularly occurs after significant rain. Having regard to the photographs at pp. 281 and 285 and the photographs relating to water ingress in the female toilets (in the main building) I accept that water on the inside floor surfaces regularly occurs after rain events.
Further, during the hearing the applicant gave oral evidence of damage within the applicant's lot (lot 9) arising from water penetration from the roof. Photographs corroborate this evidence (Ex 1, p. 289) and I accept it.
The water penetration issues have been the subject of correspondence between the applicant and the strata manager (Ex 1, pp. 299-302). I accept that the OC has caused work to be undertaken on the roof to address water penetration (Ex 1, pp. 256-260, 271, 273). However, the applicant's evidence, which I accept, is that no work on the roof has been undertaken since February 2023 and there has been water penetration since that time.

Air conditioning unit and grease trap and common property

The applicant also complained about the removal by the owner of lot 18 of lot 15's air conditioning unit compressor and exhaust.
The OC sought legal advice on more than one occasion. That advice makes clear that the issue is unclear. Under the strata plan as registered the owner of lot 18 rights relating to the airspace over the lot (see Ex 1, pp. 245 - 255 and 286). The issue requires consideration of the existence of any air conditioning unit(s) at the time of registration of the strata plan.
I am not persuaded that the OC's conduct or position in relation to this issue has been unsatisfactory.

Unauthorised Bollard in Car Park

Sometime prior to February 2017 the owner of lot 13 installed a lockable bollard in the car parking area of the Strata Scheme. It is common ground the lot owner did not have any authorisation from the owners corporation to install the bollard. When the bollard is locked in place other lot owners or invitees cannot park in the car space. The bollard is unlocked and removed when the owner of lot 13 wishes to park in the area.
By installing the lockable bollard the lot owner has effectively reserved for his use a car parking space because other lot owners, lessees and invitees cannot park in the area where the bollard is installed.
The installation of the bollard was discussed at the annual general meeting held on 23 February 2017 (2017 AGM). The minutes of the 2017 AGM record the following (Ex 1, p. 155): That the Owners Corporation discusses the unauthorised use of strata property for parking. Noting that the back parking area converted to private parking by use of a bollard. "This needs to be prohibited or bollards installed for all spaces and all owners issued keys to all bollards. It's annoying at times when I arrive during the day to find the only car space locked by a bollard with no one parking there." The meeting commenced discussion about the parking spaces and use of them. The discussion became personal and very heated between 2 owners which resulted in the closure of the meeting due to the volume and disruption to the meeting.
On 18 March 2019 the owners corporation held an annual general meeting (the 2019 AGM). Item 18 of the minutes of 2019 AGM record that a motion that the "owners corporation SPECIALLY RESOLVE to remove the bollard in the common parking area at the back of the complex" was defeated (Ex 1, p. 146). It is unclear why the OC considered that an appropriate course of action required a motion to specially resolve to remove the bollard when its installation on the common property had never been approved.
On 8 February 2023 the applicant complained about the bollard with the strata manager (Ex 1, p. 299) and asked for documentation evidencing that it was authorised. The complaints did not result in the removal of the bollard.
During the hearing on 5 October 2023 the OC's representatives was asserted that the bollard was in the process of being removed and that steps had been taken so that this had been done or was imminently to be undertaken. However, the evidence does not bear this out and I do not accept that the bollard has been removed or that, as at the date of the hearing, steps had been taken so that the bollard was imminently to be removed.
The Tribunal also finds that the bollard has led to significant tensions between lot owners (see Ex 1, pp. 146, 155 and 298 - 301).

Capital Works Plan

Pursuant to s 80 of the SSMA, a strata scheme must prepare a 10 year capital works plan. It was concede by the OC during the hearing that the OC had not prepared a 10 year capital works plan.

Grease trap

The applicant contended that a grease trap had been installed on the common property without the consent of the OC. The evidence established the presence of the grease trap on an outside area comprising common property (Ex 1, p. 287). There was no clear evidence that the grease trap had been authorised by the OC. The applicant referred to the strata scheme plan (Ex 1, pp. 24-27) but these do not establish that the installation of the grease trap on common property was not authorised by the OC.

Annual General Meeting

The applicant also complains that she was unable to attend an annual general because it appears she had been given incorrect time and date details.
The notice for the annual general meeting indicated that the meeting would be held on 23 February 2023 (Ex 1, p. 305). After the applicant emailed the strata manager about the apparent mistake in dates the strata manager advised that the correct date was 23 March 2023 and that the Zoom date had been fixed (Ex 1, p. 304).
It is unclear when the 2023 annual general meeting was actually held but when the applicant sought to log in on 23 March 2023 using the Zoom details she was unable to do so. I am not satisfied that the applicant was deliberately prevented from attending the 2023 annual general meeting.

Other complaints

The applicant also complained of the following matters: 1. That the back security door lock for the main building was not working creating a security issue. I accept this evidence. The OC's response was that it should be working and that this could be attended to; 2. That one of the lot owners, or their lessees, had installed security cameras on the common property. There was a photograph in exhibit 1 depicting the camera. The OC did not dispute this evidence and its response was that this could be addressed, presumably by removal; 3. That one of the lot owners, or their lessee, kept a large council garbage bin inside the main building in the main corridor. The There was a photograph in exhibit 1 depicting the bin. The OC did not dispute this evidence and its response was that this could be addressed by informing the lessee of that lot.

Jurisdiction

The applicant seeks orders from the Tribunal under s 237 of the SSMA relying on the issues identified above.
It is clear that the building the subject of these proceedings is a registered strata scheme and the SSMA applies. The applicant is a lot owner in the Strata Scheme and has standing to bring the application.
It follows that Tribunal has jurisdiction to hear and determine the application.

Consideration

Section 237 of the SSMA provides: 237 Orders for appointment of strata managing agent (1) Order appointing or requiring the appointment of strata managing agent to exercise functions of owners corporation The Tribunal may, on its own motion or on application, make an order appointing a person as a strata managing agent or requiring an owners corporation to appoint a person as a strata managing agent: (a) to exercise all the functions of an owners corporation, or (b) to exercise specified functions of an owners corporation, or (c) to exercise all the functions other than specified functions of an owners corporation. (2) Order may confer other functions on strata managing agent The Tribunal may also, when making an order under this section, order that the strata managing agent is to have and may exercise: (a) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or (b) specified functions of the chairperson, secretary, treasurer or strata committee of the owners corporation, or (c) all the functions of the chairperson, secretary, treasurer or strata committee of the owners corporation other than specified functions. (3) Circumstances in which order may be made The Tribunal may make an order only if satisfied that: (a) the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or (b) an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or (c) an owners corporation has failed to perform one or more of its duties, or (d) an owners corporation owes a judgment debt.
Section 237 requires a two-step process. The first step requires that the Tribunal be satisfied that one or more of the grounds specified in sub-section 237(3)(a) - (d) has been established. If so, the Tribunal's discretion under sub-section 237(1) falls to be exercised.
I am satisfied that the management of the Strata Scheme is not functioning satisfactorily within the meaning of subsection 237(3)(a). My reasons are as follows: 1. The water penetration issues are relatively significant. I am satisfied that the maintenance and repairing of the roof has not been diligent. The OC seeks to rely on an 'open work order' that any time there is a leak it is addressed. But the evidence demonstrates that the approach to date has been insufficient. No work has been undertaken since February 2023. Leaks persist creating a number of issues, including slippery floors in the interior of the main building, damage to at least one lot (lot 9) and damage to the toilets. 2. As at the date of the hearing the repair and maintenance of the male and female toilets had been ongoing for months. 3. The unauthorised bollard installed by the owner of lot 13 have been outstanding since 2018. The inability to deal with a relatively clear issue of an unauthorised installation on common property for a number of years points, even though it has led to disharmony between lot owners, is clearly unsatisfactory. 4. The failure to prepare a 10 year capital works plan pursuant to s 80 of the SSMA. This also constitutes a failure "to comply with a requirement imposed on the owners corporation by an order made under" the SSMA within the meaning of subsection 237(3)(b).
The four matters in the preceding paragraph are the main bases on which I have found that the management of the strata scheme has not been satisfactory. They are the matters to which I have given the most weight.
I am satisfied that the applicant established the following matters: 1. that as at the date of hearing a security lock was not working; 2. that a security camera was installed on common property without authorisation; and 3. that a large council garbage bin was placed in the interior of the building on the common property by a lessee.
However, I have placed very little weight on the matters in the preceding paragraph because I was persuaded that the OC was willing to expeditiously address these issues.
It is well settled that the appointment of a compulsory strata manager is a serious step. The remedy has been described as "draconian": see Mortlock v Owners of Strata Plan No 55434 [2006] NSWSC 363 at [18]. Appointment of a compulsory strata managing agent removes lot owner democracy that is built into the SSMA: see Walker Corporation Pty Ltd v The Owners - Strata Plan No 61618 [2022] NSWSC 1246 at [150] and [173].
Based on the matters which I have found demonstrate that the management of the owners corporation is not functioning satisfactorily referred to in paragraph [53] above it is appropriate to appoint a strata manager pursuant to s 237 to exercise all the functions of an owners corporation.
A significant concern for the Tribunal has been the delays and inadequacy of the repairs to the roof and the toilets inside the main building of the Strata Scheme. The water penetration leads to slippery floor surfaces creating a foreseeable risk to lot owners, lessees and invitees. I am satisfied that these risks have not been addressed diligently.
The delay in completion of the toilet repairs (in the main building) is both inconvenient and, in relation to the water penetration in the female toilet, also a risk of harm. The inconvenience is also material because some they are the toilets provided for lot owners, lessees and invitees. Some lot owners and lessees will spend a large portion of their working day relying on access to those toilets.
The bollard installed by the owner of lot 13 without authorisation clearly should have been dealt with by the OC many years ago. The failure to do so, notwithstanding the tension it has created and the obvious inappropriateness of the unauthorised installation, is clearly unsatisfactory.
The failure to prepare a 10 year capital works plan as required by s 80 of the SSMA is a material matter. Compliance with provisions of the SSMA such as s 80 is an important protection for all stakeholders, and particularly lot owners.
I consider that the appropriate period for the appointment of the strata manager to the OC should be 12 months. That period of time will give the strata manager the time needed to attend to the issues raised in these proceedings.

Identity of Strata Manager

The applicant's evidence included a consent to act from Brilliant Property Group Pty Ltd as well as their standard terms and conditions and their licence issued under the Property and Stock Agents Act 2002. I am satisfied it would be appropriate to appoint Brilliant Property Group Pty Ltd as the strata managing agent under s 237 of the SSMA.

Orders

For the reasons indicated above, the order that will be made to finalise the application is as follows: 1. Order pursuant to s 237(1)(a) of the Strata Schemes Management Act 2015 (NSW) appointing Brilliant Property Group Pty Ltd as strata managing agent to exercise all the functions of the owners corporation of Strata Plan No. 30468 for a period of 12 months from the date of these orders upon the terms and conditions set out in the Strata Management Agency Agreement, a copy of which is at exhibit 1, pp. 326 - 345.

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: 13 August 2024

De Beck v The Owners - Strata Plan No 30468

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Judgment (15 paragraphs)

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