1. The correct description of the second respondent is Owners Corporation RP 17739. The principal registrar is directed to amend the register accordingly.
2. Pursuant to s. 174 of the Owners Corporations Act 2006, Stuart John Mellington of Mellington Management Pty Ltd, 711 High Street, Kew 3102 is appointed to be the administrator of Owners Corporation RP 17739 until 30 September 2012.
3. During the period of his administration in accordance with this order the administrator may do anything which Owners Corporation RP 17739 can do.
4. Without limiting the generality of paragraph 3, the Tribunal authorises the administrator to retain solicitors and Counsel:
   • (a) to act for Owners Corporation RP 17739 in the defence of the first respondent Halina Adams' application for leave to appeal from the Tribunal's order determining proceeding no. C5896/2008 and in the defence of the appeal if leave to appeal is granted;
   • (b) to give such instructions to those solicitors and Counsel as would enable them to represent Owners Corporation RP 17739 as a contradictor in the application for leave to appeal and in the appeal if leave to appeal is granted;
   • (c) to levy such fees and charges (based upon lot liability of members of the owners corporation) as he may consider necessary to meet the cost of such legal representation.
5. The remuneration and expenses of the administrator shall be calculated in accordance with clause 2 headed "Fees and Services" in the document headed "Contract of Appointment" which is exhibit SJM-1 to the affidavit of Stuart John Mellington sworn on 1 June 2011 except that in clause 2.2 of that document the hourly rate of $300.00 is substituted for the hourly rate of $165.00 specified in the document, and shall be payable by the members of Owners Corporation RP 17739 in accordance with their respective lot liabilities.
6. The administrator shall record in writing each decision he makes in the course of his administration. If he makes any decision requiring the expenditure of more than $2,000.00 he shall not make that expenditure without first giving each lot owner at least 7 days notice in writing of his decision.
7. Each party has liberty to apply for further orders or directions, including any order extending the term of his administration, by giving notice in writing to the principal registrar.
8. All questions of the costs of this proceeding are reserved.

1. On 9 September 2011 I made an order appointing Stuart John Mellington of Mellington Management Pty Ltd as administrator of Owners Corporation RP 17739 until 30 September 2012. Mr Mellington's company had been the manager of the owners corporation until I made the order appointing him as administrator. I gave lengthy oral reasons for my decision on the day.
2. By a letter sent by facsimile transmission to the principal registrar on 21 September 2011, the first respondent Halina Adams requested written reasons for my decision, as she was entitled to do. The letter did more than request written reasons. It became a questionnaire. I do not respond to it, apart from giving these written reasons for my decision, expanding as they do upon the reasons given orally.
3. The three applicants are members of the owners corporation. They commenced this proceeding on 8 June 2011, applying for the appointment of Mr Mellington as administrator. The first respondent Ms Adams is also a member of the owners corporation.
4. There are six residential units at 35 Alfred Street Kew which consist of lots on a plan of subdivision affected by the owners corporation. Each of the applicants owns one of the six lots. Ms Adams owns the other three lots. The lot entitlements and lot liabilities are equal. So the voting power of Ms Adams, either at a meeting of members of the owners corporation or by ballot, is equal to the voting power of the three applicants combined. If she does not support a motion put at a meeting or by ballot, it cannot be passed and there can be no resolution of members. Of course the converse is true: if the three applicants in combination vote against, there can be no resolution either.
5. Section 173 of the Owners Corporations Act 2006 entitles a lot owner to apply to VCAT for the appointment of an administrator for the owners corporation. Section 174 provides:

On an application under section 173, VCAT

1. Section 175 provides:

1. Section 176 provides, amongst other things, that subject to any order of VCAT or court order the administrator may do anything that the owners corporation can do.
2. Section 177 provides that an administrator in carrying out his functions and powers must act honestly and in good faith, and must exercise due care and diligence.
3. This is not the first time that an administrator has been appointed for the owners corporation (or the body corporate as it used to be called). There is a very long history of dispute between Ms Adams and persons who have been other lot owners from time to time. On 1 March 1991 a County Court judge appointed an estate agent, Marian Binks, as administrator for a period of one year. On 16 April 2003 Bongiorno J of the Supreme Court appointed Maurice Dunlea as administrator until 31 October 2004. Mr Dunlea died and Mark Bourke was appointed instead. That administration was extended from time to time until Harper J, having received an undertaking from Ms Adams to which I shall refer below, dismissed on 30 November 2007 an application to extend the administration further.
4. In the course of his judgment given on 16 April 2003, McKinnon v Adams [2003] VSC 116, Bongiorno J stated (at paragraphs 20 and 21):

To justify the appointment of an administrator the body corporate concerned must be affected by some incapacity, or must be acting so dysfunctionally as to render the provision of appropriate services to unit holders and/or care of the common property either non-existent, or so beset by difficulties as to render the body corporate unable to function at what the Court considers to be a satisfactory level. There may or may not be financial difficulties or even financial impropriety affecting the body corporate's capacity to function but there must be some deficiency in its operational capacity sufficient to justify the Court's intervention in the interest of some or all of the unit holders.

Thus, the power to appoint an administrator pursuant to s 38(6) of the Subdivision Act 1988 may be ordered, in the Court's discretion, where the evidence discloses that the body corporate is failing to operate properly in the interests of its members, is being inefficiently or incompetently managed, or the appointment is necessary to protect the interests of the members.

Section 38(6) of the Subdivision Act 1988, as it then read, was in similar terms to section 174 of the Owners Corporations Act.

1. In arriving at my decision I applied those expressions of principle.
2. The more immediate background to this proceeding was created by two other proceedings in VCAT, commenced in 2009 and heard in 2010. In proceeding no C5809/2009 the owners corporation claimed from Ms Adams various fees and levies. In proceeding no C481/2009 Ms Adams made various claims including claims for compensation against the three other lot owners and against the former administrator Mr Bourke. The two proceedings were heard together for a total of 12 days. In its proceeding the owners corporation was substantially successful; Ms Adams was ordered to pay $38,567.05. Ms Adams' proceeding was dismissed.
3. Ms Adams made an application to the Supreme Court for leave to appeal. The evidence I heard did not make clear to me whether her application concerned both of those two proceedings. Certainly it concerned the order that she pay $38,567.05. As at the date of my decision, the application for leave to appeal had not been heard, for reasons I shall explain below.
4. The owners corporation manager, through Mr Mellington, convened a special general meeting of members of the owners corporation on 28 February 2011, with a view to the members making a resolution authorising the retainer of solicitors to oppose the application for leave to appeal. Two of the three applicants attended the meeting. The third, Mr Connors, who lives abroad, did not. Ms Adams attended the meeting. So did Mr Mellington.
5. There is a dispute about what happened at the meeting and shortly thereafter. Mr Piper, Mr Gleeson and Mr Mellington say that the members resolved to instruct the manager to engage Andrew Whitelaw of Tress Cox Lawyers, to represent the owners corporation upon Ms Adams' application for leave to appeal, "should Ms Adams not present an acceptable alternative by 10.00am the following morning". They say that Ms Adams agreed to that resolution, had not presented any alternative by 10.00am on the following morning, but later that day told them that she did not agree to Mr Whitelaw being retained. Ms Adams denies that there was any such resolution made and says that she never agreed to Mr Whitelaw being retained.
6. These three applicants then commenced proceeding no OC642/2011 naming the owners corporation as a respondent and asking for two orders. One was an order declaring that the resolution of 28 February 2011 had been made and was effective to authorise the retaining of Mr Whitelaw. The other was for appointment of an administrator.
7. On 7 April 2011 there was a directions hearing in proceeding no OC642/2011. The presiding Senior Member made an order joining Ms Adams, who attended the directions hearing, as a respondent. The Senior Member made the following interim orders:
   1. Until further Order the First Respondent (the Owners Corporation) is bound by the resolution, and the manager (Select OwnersCorp Management/Mr Stuart Mellington) is thereby instructed to engage Andrew Whitelaw of Tresscox to act on behalf of the First Respondent in the Supreme Court appeal filed by Halina Adams against the Owners Corporation.
   2. The First Respondent is entitled to levy special fees pursuant to section 24(1) of the Owners Corporations Act 2006 to cover the extraordinary item of expenditure in retaining Tresscox, and set such fees on the basis of lot liability in accordance with section 24(2) of that Act.
8. The three applicants commenced this fresh proceeding, OC1154/2011, asking again for the appointment of an administrator. From what I was told at the hearing of the proceeding, my understanding of the reason for the fresh proceeding was that TressCox Lawyers were not satisfied that the interim orders authorised them not only to accept a retainer from the owners corporation but also to participate actively in opposition to the application for leave to appeal, and that that new impasse was thought to be a new reason for seeking the order appointing an administrator and to require a fresh proceeding. At all events, because of the impasse the owners corporation has been able to obtain adjournments of Ms Adams' application for leave to appeal, pending the hearing and determination of this proceeding.
9. Meanwhile, Ms Adams had commenced another proceeding of her own, no OC942/2011. In that proceeding she asked for declarations that no resolution had been made on 28 February 2011 or, if it had, it was invalid. She made many other claims in that proceeding. I shall not itemise them. Several of them relate to matters which had occupied some of the 12 days of hearing time in earlier proceedings.
10. The hearing of this proceeding came on before me on 8 September 2011. Two days had been set aside for the hearing. Mr Piper, Mr Gleeson and Mr Mellington all gave evidence. So did Marie Shannon, who holds a power of attorney for Mr Connors. Ms Adams cross-examined each of them, at length. She herself then gave evidence. The hearing took the whole two days. At the conclusion of it I announced my decision and the reasons for it. The hearing would have taken longer had I not on the second day imposed time limits on Ms Adams' cross-examination. Had it taken longer, I would have had to adjourn the hearing to an indefinite date. In any case involving an application for appointment of an administrator, which usually has a degree of urgency, it is undesirable to adjourn a hearing unless the interests of justice require an adjournment.
11. The circumstances that caused the applicants to commence the proceeding were the dispute about whether there had been a resolution authorising the engagement of TressCox Lawyers and the belief that the interim orders made on 7 April 2011 did not advance the matter sufficiently to enable the owners corporation to defend properly Ms Adams' application for leave to appeal. My view was that those circumstances alone did not warrant the appointment of an administrator. The difficulty for the owners corporation could have been dealt with in a different way, by the making of a further interim order, or even a final order, widening the authority of the manager to give meaningful instructions to the lawyers and to fund the legal representation.
12. The critical evidence which led me to decide to grant the application and to appoint the administrator was evidence as to what happened at the annual general meeting of the owners corporation on 16 August 2011, after the proceeding had commenced and about three weeks before the hearing. At that meeting, Ms Adams voted against the adoption of the manager's financial report in relation to the previous year and voted against the adoption of a proposed budget for the prospective year. Because the three votes she had as owner of three lots equalised the three votes of the applicants, the motions for adoption were lost. So there was no approved budget on the basis of which the owners corporation could set fees to fund the performance of its obligations.
13. The evidence about the meeting was this, in summary. Mr Mellington presented the financial report and the proposed budget. The members discussed it. Mr Piper and Mr Gleeson were present. Mr Piper held a proxy for Mr Connors. Ms Adams proposed that the provision in the budget for gardening expenses be reduced by one-half. Her proposal was put to a vote. She voted in favour. The three applicants voted against. So her motion was lost. Then Ms Adams proposed that there be a reduction in the budgeted allowance for repairs and maintenance. Again, her proposal was put to a vote, and her motion was lost when she voted in favour and the three applicants voted against. Finally, the motions for adoption of the financial report and of the budget were put and lost, the three applicants having voted in favour and Ms Adams having voted against.
14. The deadlocked vote at the annual general meeting left an intolerable state of affairs. No owners corporation is able to discharge its obligations to manage and administer the common property effectively, and to take out and maintain required insurance cover, unless its members are able to put it in funds to do so. The members cannot do that if there cannot be a resolution to approve a budget on the basis of which fees can be calculated and charged. There was nothing in the evidence that persuaded me that that state of affairs was likely to change, and the history of the relations between the parties, disclosed in the evidence, led me to conclude that there is likely to be continued deadlock and rancour between the parties on financial matters. In accordance with the principles which Bongiorno J expressed and which I cited above, I concluded that the owners corporation was dysfunctional and that the appointment of an administrator was necessary in the interests of all the members.
15. The evidence which led to the conclusion that there was likely to be continued deadlock and rancour about financial matters was as follows.
16. Mr Piper and Mr Gleeson purchased their respective lots in 2006, during Mr Bourke's administration. Like Ms Adams, Mr Connors has been a lot owner for many years. For the past few years he has lived abroad, in Kazakhstan. Ms Shannon holds a power of attorney for him.
17. One matter that has been for a long time, and still is, a source of dispute between Ms Adams and other lot owners is the laundry situated on common property. Ms Adams' residential units have bathrooms which are not large enough to contain laundry facilities. Her tenants have to use the common laundry. Before Mr Bourke's administration it was in disrepair. There was disagreement about what should be done about it. Ms Adams wanted the laundry to be demolished and rebuilt. The other lot owners wanted less expensive repairs. The administrator chose the less expensive repairs and raised levies to meet the cost of the repairs. Ms Adams refused to pay the levy charged to her. In proceeding no C5809/2009 the owners corporation's claim included that levy. It succeeded in that regard. In her evidence to me Ms Adams maintained her stance that the laundry should be demolished and rebuilt. As her application for leave to appeal indicates, she continues to object to pay a levy for something other than demolition and rebuilding. The other lot owners do not agree with her proposal for rebuilding.
18. There was no evidence that there was a need for any urgent action at the moment in relation to laundry facilities. So the dispute about the laundry was not something that would justify a decision to appoint an administrator. But it reinforced that decision that I had reached for a different reason. It demonstrated that Ms Adams is likely to continue to block a proposal for expenditure upon something that she does not want and a proposal to charge fees or levies for such expenditure.
19. Another long-standing dispute has been about sewerage facilities. Sewerage pipes have been blocked by tree roots and have required repair for other reasons. Ms Adams has wanted the entire sewerage system to be replaced. The other lot owners from time to time, and the present lot owners, have taken a different view. The administrator Mr Bourke, in accordance with that view and as a result of having had expert evaluation of the sewerage system which included a camera survey, arranged for replacement for part, but not all, of the pipes. Again, Ms Adams refused to pay a levy raised to meet the cost of doing that.
20. Maintenance of the pipes has continued to be a matter of dispute. At the annual general meeting of members of the owners corporation held on 27 August 2010 the then manager Mr Mellington tabled a quotation for the cost of re-lining some of the pipes. Mr Mellington's evidence, which I accepted, was that Ms Adams would not permit such work to proceed, even though the other lot owners wanted it to. She has continued to press for the entire sewerage system to be replaced. So there is a "stalemate" (Mr Mellington's expression) on the issue. The toilets in the residential units are functional at the moment, the need for further repair is not urgent, and so the dispute about the sewerage system was not something that would justify a decision to appoint an administrator. But, for the same reason I gave in relation to the laundry, the existence of this long-running dispute reinforced that decision.
21. Mr Piper, Mr Gleeson and Ms Shannon all gave evidence to the effect that they and Ms Adams are in constant deadlock, at meetings and otherwise, about maintenance and other day to day matters. When asked to be specific, they were vague, even though Ms Shannon said that there were more than 30 different subjects about which there was disagreement. Mr Mellington in his evidence, however, gave a short catalogue of matters on which he said he had attempted to get agreement between Ms Adams and the applicants but had failed. The catalogue included removal of agapanthus from a fence, removal of trees, the erection of a trellis, gutter cleaning, roof repairs, repairs of water damaged ceilings, removal of trip hazards and the repairs to the sewerage pipes. Again, none of those matters would justify the appointment of an administrator. Nor would the combination of them. But they reinforced the conclusion of likely continuing deadlock.
22. Mr Mellington gave evidence of how, as manager, he had to deal with correspondence from Ms Adams, several times per week. He said that if he charged properly for his time spent in responding to Ms Adams' correspondence, as he would have to do if his company continued as manager, the manager's fees would become disproportionately large. If he were to be appointed as administrator, there would not be as great an obligation to respond to Ms Adams and so, Mr Mellington said, the potential expense to the owners corporation would be less. While that may turn out to be a benefit that the owners corporation and its members derive from the appointment of an administrator, I did not regard it as a reason justifying the appointment of one.
23. In their evidence one or more of Mr Piper, Mr Gleeson and Ms Shannon asserted that Ms Adams had been in breach of an undertaking which she had given to the Supreme Court and that I should appoint an administrator for that reason. As I stated in my oral reasons, I did not accept that she had breached an undertaking.
24. For the purpose of opposing an application to the Supreme Court by the then administrator Mr Bourke for an extension of the period of administration, Ms Adams swore an affidavit on 23 November 2007. I received a copy of it in evidence in this proceeding. In the affidavit Ms Adams made various complaints about Mr Bourke's administration, some of which she repeated in her evidence to me. Paragraph 36 of her affidavit, however, was as follows:

I also solemnly undertake to this honourable court, and to the other members of the body corporate, that I will use my best endeavours to work co-operatively with them to achieve the best outcome for all the members in relation to the property provided the administrator is removed.

When Harper J dismissed the application for extension of the administration his Honour's reasons for judgment placed importance upon the undertaking and expressed a hope that it was an indication of better relations between the members in future.

1. Unfortunately the expressed hope has not been fulfilled. I was not persuaded, however, that subsequent events showed that Ms Adams has breached the undertaking. In fact she has not worked co-operatively with the other members of the owners corporation. On any objective view one would have to say that her endeavours could have been, and ought to have been, better. But I do not think that she has been deliberately unco-operative. Membership of an owners corporation often requires one to make unpalatable compromises and to put the interests of the members as a whole ahead of one's personal interests. Events since the undertaking was given could be accounted for, I thought, by Ms Adams' difficulty in meeting those requirements, rather than by deliberate non-co-operation.
2. An incident that the applicants relied upon as evidence of a breach of the undertaking occurred at a meeting of members held shortly after Harper J made his order ending the administration by refusing to extend its period. Mr Piper, Mr Gleeson and Ms Shannon gave evidence, which Ms Adams did not contradict, about the incident. The lot owners had agreed to hold a meeting with a view to appointing a manager. They had agreed that each should notify the others, before the meeting, of the identity and credentials of any proposed manager. But Ms Adams, without having given any such notification, arranged for her own putative manager to attend the meeting. While this was an instance of Ms Adams paying little heed to the interests of the members as a whole and preferring her own personal interests, it was not in my view a breach of the undertaking. Even if it was a breach, the incident was years old and would not justify a decision to appoint an administrator.
3. In her evidence to me Ms Adams professed a willingness to compromise and said that she was happy to allow a motion for the approval of a budget to be passed. Almost immediately after saying that, however, she put a qualification upon it, that she wanted certain works done. I am afraid that I could not accept the professed willingness to compromise and to allow the owners corporation to pass a budget. In the history of dealings between the parties, actions have spoken louder than words.
4. So it was because of the evidence of deadlock about the motion for approval of the budget, reinforced by the other matters I have mentioned above, that I made an order appointing an administrator.
5. Mr Mellington expressed, with understandable reluctance, his consent to being appointed administrator on terms that he may be remunerated in accordance with clause 2.2 of the management contract between the manager and the owners corporation, with one exception, namely, that the hourly rate for his services should be $300.00 rather than $165.00 as expressed in clause 2.2. A copy of the management contract had been exhibit SJM-1 to an affidavit of Mr Mellington sworn on 1 June 2011 and filed in the proceeding.
6. Ms Adams submitted that if an administrator were to be appointed at all it should not be Mr Mellington because his evidence had demonstrated a partiality towards the applicants and a bias against her. I rejected that submission because I rejected the proposition on which it was based. I was satisfied that Mr Mellington had the credentials to be a competent administrator and that he would discharge the obligations of honesty and good faith that section 177 imposes upon an administrator.
7. In view of the formidable task that Mr Mellington would be assuming as administrator of this owners corporation, I considered that the proposed basis of remuneration, including the rate of $300.00 per hour, was reasonable.
8. I made the appointment for a period of a little over twelve months, expiring on 30 September 2012. That should be ample time for the determination of the application for leave to appeal and, if leave is granted, for the determination of the appeal. If it is not, the applicants can always apply for the period to be extended. Conversely, if circumstances change, Ms Adams or the applicants can apply for the period to be shortened.
9. In paragraph 4 of the order I made specific provision for the administrator to be able to instruct lawyers to defend the appeal proceedings, and to be able to levy fees and charges that might be required to meet the cost of defending the appeal proceedings. No doubt by virtue of section 176 the administrator has those powers but, in view of the events which precipitated the commencement of this proceeding, I thought it desirable to make them explicit. Although Ms Adams submitted that only the three other lot owners, not she, should be subject to such fees and charges, I thought that in the first instance I should follow the scheme of the Owners Corporations Act by making all lot owners liable to contribute in accordance with their lot liabilities. When the appeal proceedings are determined, the Supreme Court might make costs orders that have the effect of altering that state of affairs. Whether that happens remains to be seen.
10. In paragraph 6 of the order I required the administrator to record each decision in writing and to notify each lot owner of any decision that required expenditure of more than $2000.00. In 2003 Bongiorno J made an order of a comparable kind. Such an order gives each lot owner the opportunity to challenge any such decision in a VCAT proceeding if the member thinks it fit to do so.
11. That concludes my elaboration of the reasons for decision that I gave on 9 September 2011. I should, however, explain two other matters, in the hope that the explanation makes the whole more comprehensible.
12. First, the reason why, despite the deadlock on financial matters, the owners corporation was able to commence proceeding no C5809/2009 claiming unpaid fees and levies was that Ms Adams had given to Harper J another undertaking that she would not exercise any rights she might otherwise have had to prevent the owners corporation from commencing and pursuing such a proceeding.
13. Secondly, as at 9 September 2011 the owners corporation's other proceeding no OC642/2011 and Ms Adams' proceeding no OC942/2011 were both still on foot. By the time that these reasons for decision are given, the owners corporation by leave had withdrawn its proceeding no OC642/2011. Ms Adams' proceeding no OC942/2011 is still on foot.