The property the subject of the strata scheme was developed by Ms Purcell's family in the mid-1990's. It was converted to strata title in 2010.
There is a long history of dispute between Ms Purcell and other lot holders. Between May 2014 and July 2017, Bright and Duggan acted as strata managing agent, appointed under s 162 of the Strata Scheme Management Act 1996 (NSW), the predecessor of s 237 of the SSM Act.
In September 2017 at Ms Purcell's recommendation, the Owners Corporation appointed O'Neill as its strata managing agent. O'Neill acted under that appointment until June 2020, when appointed by the Tribunal.
[2]
Decision under appeal
The Tribunal appointed O'Neill for a period two years to exercise all functions of the Owners Corporation, except:
"(a) The making of an exclusive use or special privilege by-law; and/or
(b) The making of a licence; and/or
(c) The approval of a subdivision,
With such issues referred to in (a) - (c) above to be determined by The Owners - Strata Plan No. 84716 at a general meeting pursuant to the usual requirements under the Strata Schemes Management Act 2015."
The appellants do not challenge the Tribunal's decision to make an appointment under s 237 of the SSM Act, the term of that appointment or the scope of functions conferred under that appointment. The appellants' challenge to the order relates solely to the appointment of O'Neill.
In written reasons for its decision, the Tribunal recorded that the parties agreed that the management of the subject scheme "is not functioning or is not functioning satisfactorily" and therefore the power to appoint a manager under s 237(1) of the SSM Act could be exercised. In addition, the Tribunal noted that O'Neill and Foreshew each satisfied the requirements for appointment listed in s 327(4) of the SSM Act, namely to hold a strata managing agent's licence issued under the Property and Stock Agents Act and to consent in writing to their proposed appointment.
The Tribunal went on (at 4) to consider whether to appoint O'Neill as proposed by the appellants or Foreshew as proposed by the appellants. The Tribunal identified the following factors which weighed in favour of the appointment of each nominee:
In favour of Foreshew is that it has a cheaper base management fee, but onto that will be charged many schedule fees which are unknown. Another plus is that it is a new firm with no history with the personalities involved in this scheme.
In favour of O'Neill is that it has managed the strata scheme, in difficult circumstances, for three years. It knows the characters involved and yet it is still willing to manage the scheme, albeit on a compulsory basis rather than voluntary as it has been. It knows the issues and the scheme and knows it will cost $6,600 plus GST and disbursements to manage the scheme, and his quotation is based on past experience. Despite many submissions about O'Neill's incompetence and dishonesty and bias against Ms Purcell, the Tribunal does not accept they are conducting themselves in an incompetent, dishonest or biased manner. Mr O'Neill frankly attests that "Delmont Purcell is one of my most challenging lot owners I have ever encountered" in his 24 years as a strata manager ... From all the evidence of the parties, the Tribunal accepts that Ms Purcell would be a challenging lot owner to deal with in this strata scheme ... Clearly, because of the AVOs which have been granted and all the other matters set out in the uncontested witness statement of fellow resident Julia Cantarella, Ms Purcell would be a difficult lot owner for any strata manager to manage. Yet O'Neill is still willing to manage this scheme for a further two years.
The Tribunal went on (at 4) to consider the factors which weighed against the appointment of O'Neill and Foreshew:
Against Foreshew is that there is no evidence that it is aware of the significant personal issues within this scheme, and is nonetheless willing to take it on. It is less desirable for the scheme to have yet another strata manager, as this will be the third in several years, the second compulsorily appointed manager and the third including O'Neill who has been voluntary. The fact that Foreshew has no bad relations with the applicant Ms Purcell is less relevant as it appears Ms Purcell has a history of becoming discontented with the strata managers, even if she initially suggests their appointment. The Tribunal considers it a very possible outcome that, over time, Ms Purcell will also come to loathe Foreshew if Foreshew were appointed as she is requesting.
Against O'Neill is their higher base management fees, but this is known by the owners corporation who instructed their lawyer to seek their appointment despite the higher fees. It is less important because when spread over 17 units the difference is not prohibitive. It is also relevant that O'Neill knows the hours and work involved and the fees are based on the reality of the situation. Against O'Neill is that there clearly has been some friction with Ms Purcell, but that is not to say O'Neill is biased against Ms Purcell, just that their relations may be strained. However, this cannot be a factor against O'Neill in circumstances where the Tribunal finds it likely Ms Purcell will take issue with any strata manager even if she recommends or votes for their initial appointment as was the case with O'Neills.
The Tribunal decided that the balance of considerations favoured the appointment of O'Neill reasoning (at 4):
In all the circumstances the Tribunal finds O'Neill to be appropriate to continue as the strata manager but for the next two years as the compulsorily appointed strata managers. Their experience in managing this particular scheme and their willingness to continue to do so count strongly in their favour.
[3]
Was the decision against the weight of evidence?
In its reasons for decisions (at 3) the Tribunal rejected the appellants' claim that O'Neill had been managing the scheme in an incompetent and dishonest manner and, in addition, had been biased against Ms Purcell. In support of the contention that that finding was against the weight of evidence the appellants assert that O'Neill:
1. "doctored" the minutes of the minutes of the strata committee meetings;
2. assisted a consortium of owners to have Ms Purcell "criminally charged";
3. had charged excessive fees for its services in managing the strata;
4. refused to give Ms Purcell access to the pool and electricity cupboard.
In support of those claims the appellants pointed to the following material that was apparently before the Tribunal at first instance:
1. Reports prepared by building manager, Clean Green Strata, of periodical inspections of the common property for the months November and December 2019;
2. A Computer Operational Policing System (COPS) report dated 3 February 2020, which recorded that Ms Purcell reported to NSW Police that a contract pool cleaner had removed a "No Smoking" sign she had erected. A verbal argument ensued. Ms Purcell is reported to have said,, "Go back to South Africa; nobody wants you here", to which the cleaner is reported to have replied, "John wants to get a contract against you";
3. Several invoices issued to Jaridel Pty Ltd for expenses relating to the maintenance of the pool, totalling about $1,000;
4. Photographs apparently taken on the common property of broken flowerpots (2) and cigarette butts (1);
5. Numerous letters from Ms Purcell to O'Neill outlining her concerns about various issues, including: the provision of keys to electricity cupboards and garden gates for "owners involved in the running of the premises"; lots owners allegedly entering into short-term rental agreements; the use of CCTV cameras to monitor the common property; the removal of compost bins from the common property; O'Neill's alleged failures to enforce the purported by-law banning visitors from using the pool, to notify Ms Purcell and her husband of strata meetings, and to take action in relation to a resident who discarded cigarette butts throughout the common property.
The appellants assert that the oral evidence given by Ms Purcell at the hearing at first instance, together with the documentary material they filed in those proceedings, supports their claim that in managing the strata plan O'Neill had been incompetent, dishonest and biased against Ms Purcell, and the allegations listed at [28] above. Neither party filed a transcript or sound recording of the proceedings at first instance. In orders made on 20 July 2020, the Appeal Panel directed the parties to provide a transcript or sound recording of the hearing if they proposed to rely on any oral evidence given in proceedings at first instance.
[4]
Consideration
To establish that the decision to appoint O'Neill was made "against the weight of evidence", the appellants must establish that "the evidence in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal Member could reach": Collins at [77].
Once satisfied that the proposed strata manager met the qualifications for appointment listed in s 237(4) of the SSM Act, the Tribunal was required to decide whether to appoint O'Neill, Forshew or some other strata managing agent. The Act does not prescribe any matters the Tribunal was required to take into account in evaluating the respective merits of the nominees. Nonetheless, we accept that the issue of whether O'Neill had failed to properly discharge the obligations of its role was relevant to the Tribunal's determination.
The Tribunal had before it the history of the long-running dispute between Ms Purcell, other lot owners and O'Neill. The Owners Corporation filed in the proceedings at first instance a detailed statement made 5 June 2020 by O'Neill's principal, Mr John O'Neill. In that statement, Mr O'Neill addressed the multiple allegations made by Ms Purcell about O'Neill's management of the scheme. Attached to that statement were contemporaneous documents and business records said by Mr O'Neill to support the claims made in that statement. In addition, the Owners Corporation filed a detailed statement prepared by lot owner, Ms Julia Cantarella, disputing many of the claims made by Ms Purcell.
A difficulty posed in this appeal is that the appellants provided to the Appeal Panel only some of the documentary material, and none of the oral evidence, that was before Tribunal at first instance. Self-evidently, this makes it difficult, if not impossible, to evaluate whether, as contended by the appellants, the finding made by the Tribunal - that O'Neill was suitable to act as strata managing agent - was against the weight of evidence. We are being asked to evaluate whether the evidence "in its totality preponderates so strongly against the conclusion found by the tribunal at first instance that it can be said that the conclusion was not one that a reasonable tribunal Member could reach", in circumstances where we have not been provided with all of the material that was before the Tribunal.
The material filed by the appellants in this appeal falls a long way short of establishing the allegations made by the appellants against O'Neill. While Ms Purcell may hold the genuine belief that since its appointment O'Neill has failed to properly discharge its role and was biased against her, objectively assessed, the material filed in this appeal does not support that belief.
The contention that the finding made by the Tribunal that O'Neill was suitable to act as strata managing agent was made against the weight of evidence must be rejected.
[5]
Was the decision to appoint O'Neill not fair and equitable?
In deciding whom to appoint as strata managing agent, the Tribunal considered the respective merits of O'Neill and Foreshew.
The Tribunal identified the following factors favouring Foreshew's appointment: its "cheaper base management fee" and the absence of any history with the "personalities involved in the scheme". The Tribunal identified the following considerations as weighing against Foreshew's appointment: its "unknown scheduled fees"; its lack of knowledge of the "significant personal issues" within the scheme; the number of strata managers appointed over a relatively short period. While acknowledging that its lack of any history of "bad relations" with Ms Purcell was a powerful factor favouring Foreshew, the Tribunal considered this to be of limited significance, given Ms Purcell's history of becoming "discontented" with strata managers. The Tribunal considered it "a very possible outcome" that, if appointed, over time, Ms Purcell would "come to loathe Foreshew".
The Tribunal identified the following factors as favouring O'Neill's appointment: its history of managing the scheme for three years in "difficult circumstances"; the likelihood that, given its familiarity with the scheme, its estimate of its costs would be realistic; its willingness to undertake the role despite Mr O'Neill's candid assessment that "in his 24 years as a strata manager Delmont Purcell is one of my most challenging lot owners I have ever encountered".
Having addressed the threshold issue of whether O'Neill had acted dishonestly and incompetently in the discharge of its obligations as strata manager, the Tribunal went on to consider the respective merits of the nominees. It determined that of the two, O'Neill was the better choice and gave cogent reasons for that decision. That decision was open to the Tribunal on the available material. We are not persuaded that that decision was not fair and equitable.
[6]
Leave to appeal
The appellants have failed to establish that the decision to appoint O'Neill was made against the weight of evidence and/or was not fair and equitable. It follows that the power to grant leave to appeal cannot be exercised. Leave to appeal must be refused.
[7]
Costs
The Owners Corporation seeks its costs in the appeal. It contends that the appeal was hopeless and lacked any tenable basis in law or fact. Further, it contends that the proceedings commenced by the appellants in NCAT, and the appeal itself, was based on nothing more than a "multitude of wild claims" unsupported by evidence. In addition, the Owners Corporation contend that it is relevant to the assessment of their application for costs that the appellants have brought four sets of concurrent proceedings in NCAT.
The appellants oppose the application for costs.
Section 60 of the NCAT Act creates the general rule that each party to proceedings is to pay their own costs: s 60(1). An Appeal Panel may only order costs "if satisfied that there are special circumstances warranting an award of costs (emphasis added)": s 60(2). Section 60(3) sets out a non-exhaustive list of factors that may be taken into account in deciding whether there are special circumstances warranting an award of costs:
(a) whether a party has conducted the proceedings in a way that unnecessarily disadvantaged another party to the proceedings,
(b) whether a party has been responsible for prolonging unreasonably the time taken to complete the proceedings,
(c) the relative strengths of the claims made by each of the parties, including whether a party has made a claim that has no tenable basis in fact or law,
(d) the nature and complexity of the proceedings,
(e) whether the proceedings were frivolous or vexatious or otherwise misconceived or lacking in substance,
(f) whether a party has refused or failed to comply with the duty imposed by section 36 (3),
(g) any other matter that the Tribunal considers relevant.
The term "special circumstances" is not defined by the NCAT Act. It has been interpreted to mean circumstances that are out of the ordinary but not necessarily extraordinary or exceptional. The discretion to award costs must be exercised judicially having regard to the underlying principle that parties to proceedings in the Tribunal are ordinarily to bear their own costs. (See eMove Pty Ltd v Naomi Dickinson [2015] NSWCATAP 94 at [48]; CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 at [23]-[31]; Nguyen & Anor v Perpetual Trustee Company Ltd; Perpetual Trustee Company Ltd v Nguyen & Anor (no 2) [2016] NSWCATAP 168 at [16].)
[8]
Consideration
We agree with the Owners Corporation's contention that, in light of the grounds advanced and the material filed in support of the appeal, there was no reasonable prospect that the appeal would succeed. Arguably, it lacked any tenable basis in law.
With respect to the second ground in support of the costs application, the commencement of concurrent proceedings by the appellants, the available material is insufficient to determine whether, as suggested by the Owners Corporation, those proceedings are unmeritorious or demonstrate that the appeal proceedings were vexatious.
We have considerable sympathy for those lot owners who are frustrated by what they see as Ms Purcell's attempts to dictate how the strata scheme is managed and to act unreasonably in her dealings with O'Neill, other lots holders and residents. Nonetheless, we are not persuaded that it is appropriate to exercise the discretion to award costs, notwithstanding our view that the appellants' case probably lacked any tenable basis in law. Had there been evidence of other factors supportive of a finding of special circumstances, such as the appellants conducting the proceedings in a way that unnecessarily disadvantaged the Owners Corporation, or, for some collateral purpose, we may have been more inclined to exercise the discretion to award costs.
While the considerations are finely balanced, we are not satisfied that special circumstances warrant an order for costs in this appeal.
[9]
Orders
We make the following orders:
1. Leave to appeal refused.
2. Appeal dismissed.
3. Application for costs is refused.
[10]
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 January 2021
The appellants have a right to appeal against the decision at first instance as of right on any question of law or with the leave of the Appeal Panel: s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act).
Where a decision the subject of the appeal is a decision of the Consumer and Commercial Division of NCAT, cl 12 of Sch 4 to the NCAT Act limits the circumstances in which an Appeal Panel may exercise the power to grant leave to appeal:
12 Limitations on internal appeals against Division decisions
(1) An Appeal Panel may grant leave under section 80(2)(b) of this Act for an internal appeal against a Division decision only if the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because:
(a) the decision of the Tribunal under appeal was not fair and equitable, or
(b) the decision of the Tribunal under appeal was against the weight of evidence, or
(c) 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 (Collins), an Appeal Panel of NCAT stated at [84] that there must be a "sound basis" for granting leave under s 80(2)(b) of the NCAT Act. The Appeal Panel stated that an appellant must demonstrate something more than that the primary decision maker was arguably wrong in the conclusion arrived at, or that there was a bona fide challenge to an issue of fact. Ordinarily, it will only be appropriate to grant leave to appeal in matters that involve:
(a) issues of principle;
(b) questions of public importance or matters of administration or policy which might have general application; or
(c) 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;
(d) a factual error that was unreasonably arrived at and clearly mistaken; or
(e) 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.
(Citations omitted)