Hakemi v Gray

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.

1. The appellant (Neda Hakemi) and the first respondent (Peter Gray) are the owners of lots 1 and 2 respectively in Strata Plan 98770. There are only two lots in the strata plan. The unit entitlement of Lot 1 is 55, the unit entitlement of Lot 2 is 45.
2. A previous appointment by the Tribunal of a strata managing agent pursuant to s 237 of the SSMA was terminated on 7 March 2024 by order of the Tribunal, made with the consent of the parties.
3. On 9 March 2024 the first respondent filed an application in the Tribunal seeking both an interim order and a substantive order for the appointment of a strata managing agent pursuant to s 237 of the SSMA. The application named only the appellant as respondent to the application.
4. On 20 March 2024 My StrataCare was appointed strata managing agent by the lot owners.
5. An extraordinary general meeting of the owners corporation was held on 28 May 2024.
6. On 31 May 2024 the first respondent's application for interim orders was listed before the Tribunal. The application for an interim order was dismissed and directions were made for the first respondent (Mr Gray) to file any further documents on which he relied by 14 June 2024 and for the appellant (Ms Hakemi) to file any documents on which she relied by 28 June 2024. Documents in reply were to be filed by 5 July 2024. The owners corporation of Strata Plan No 98770 was joined as second respondent to the application.
7. The Annual General Meeting of Strata Plan No 98770 was held on 17 September 2024.
8. The hearing of the first respondent's substantive application was fixed for 23 September 2024. On 20 September 2024 the first respondent sent a document to the appellant. The parties were in agreement at the hearing of the appeal that that document, which the first respondent described as his "presentation notes", was not before the Tribunal at the hearing.
9. At the hearing, the Tribunal administered an oath or affirmation to each of the first respondent and the appellant and permitted the first respondent to outline his case. The first respondent provided considerable background including in relation to the previous appointments of strata managers by the Tribunal. As outlined by the first respondent, his case for a further appointment by the Tribunal was founded upon three bases: costs, administration, and "dysfunctionality in poll voting."
10. The Tribunal did not identify the evidence before it in the conventional way, and it is not clear from the transcript of the hearing, which the parties provided to the Appeal Panel, whether any, and if so what, written evidence from the parties was taken into account by the Tribunal.
11. At the conclusion of the hearing the Tribunal indicated it proposed to make an order for the appointment of a strata managing agent pursuant to s 237. On the same day, the Tribunal made orders appointing Sky Strata Living Pty Ltd as strata manager of Strata Plan No 98770 for a period of two years commencing from 1 October 2024, to exercise all the functions of the owners corporation and all the functions of the chairperson, secretary, treasurer and executive committee of the Strata Plan.
12. The Tribunal provided written reasons for its decision. In those reasons, the Tribunal outlined the factual background to the application as follows:

"8). The strata plan consists of two lots. There is a long history between the parties. There were previously compulsorily appointed managers. The most recent appointment ended on 7 March 2024. My Stratacare was engaged in the usual manner on 20 March 2024 in an attempt to self-manage. Two meetings were held - an EGM and an AGM - where disagreements between the owners remain. Legal representation was involved, and the EGM at least called to an early end due to the conduct. Such items of which there was, and still are, disagreement relate to the core running of the strata scheme including the committee appointments, an auditor, financial management - the proposed refund to the lot owners of most of the administrative and sinking fund monies from the Owners Corporation's funds, the engagement of legal representation, the location of the common property electrical box and issues relating to a boundary retaining wall and dividing fences.

9). The applicant simply wants the strata plan run properly and according to law. The applicant submits that after Foreshew Strata Agency compulsory management finished, under the current self-management, that is not occurring. The applicant bares [sic] the onus of proof in the matter."

1. The Tribunal set out the terms of s 237(3) and continued:

"10). A compulsory appointment of a strata manager is a draconian step as it removes the democratic process to allow owners to have their say in the management of the strata scheme. It is not an order that should be made lightly or merely because the lot owners have different views and there are disagreements within the strata plan. However, in this two lot scheme where one lot owner has the majority unit entitlements, if that lot owner uses their power to take control and make decisions which are not in the best interests of the Owners Corporation, such as appointing her own legal representative to also be the Owners Corporation's legal representative, and the financial management of returning money to the lot owners of most of the administrative and sinking fund monies from the Owners Corporation's funds, then that is not operating satisfactorily.

11). The applicant seeks the compulsory appointment to manage the strata plan so that proper and independent decisions can be made to achieve outcomes and it would take out all the personal self-issues and conflicts which is causing a lot of stress to them.

12). It is clear in the legislation that the Owners Corporation is to properly budget, manage their finances and raise appropriate levies in respect of both the administrative and sinking funds. That money must be retained and managed properly for the ongoing financial management of the scheme. It is clear to the Tribunal that the respondent is more focused on her own personal finances rather than what is required for the proper management of the strata plan's finances in using her majority to vote that most of the money currently held be refunded back to the owners. There is also no evidence of proper financial budgeting and the required 10-year capital works fund plan. For the Tribunal, this demonstrates a clear lack of understanding of how the strata scheme needs to operate in respect of their budgets and finances.

13). After considering the evidence presented, it is very clear on the applicant's evidence that the Owners Corporation since coming out of compulsory management in March this year is failing to comply with its duties under the Strata Schemes Management Act 2015 in respect of the following:

a). They have not been properly and fully conducting meetings.

b). They have made decisions especially in respect of financial matters which are not in the best interests of the owner corporation.

c). There has been a failure to prepare budgets and then the related failure to raise and maintain sufficient finances.

d). Issues in respect of the common property, a boundary retaining wall and dividing fences remain unresolved."

1. The Tribunal held, at [14], that, on the basis of those findings, the management of the strata scheme was "not properly performing its duties and ... not functioning satisfactorily" so that the Tribunal's discretion to compulsorily appoint a strata manager pursuant to s 237 was enlivened. In respect of the exercise of that discretion, the Tribunal stated:

"16). It is clear to the Tribunal from the respondent's conduct of the matter and their engagement with the Tribunal today that there is a lack of knowledge or insight in respect of how to properly run and operate a strata scheme according to the legislative requirements. The first compulsory appointment occurred in May 2021, and they have had since then to appraise themselves of information and knowledge to get to a level where they could self-manage properly. This has clearly not happened, and the Tribunal considers that the strata scheme is in a situation where there can be no confidence that anything meaningful will change any time soon given the history, especially as all parties are clearly not able to get on in any meaningful manner. The issues identified in paragraph 13 above are real issues of concern and the Tribunal is simply not satisfied that all these issues can appropriately be resolved and concluded between the two lots under self-management of the strata scheme.

17). The focus in any such application is to consider what order is required to ensure that the Owners Corporation resolves the outstanding issues quickly and again commences to perform its duties and function satisfactorily. The applicant submitted that the compulsory appointment of a strata manager was the only way forward to resolve the issues. In this matter given the current state of the management, the history of the matters and the lack of any real understanding of the legislative requirements, and the somewhat evident reluctance of the lot owners today to understand how to operate the strata scheme in a satisfactory manner, the Tribunal has no confidence that in leaving the matter in the hands of the Owners Corporation there would be resolutions any time soon."

1. An appeal to the Appeal Panel from a decision of the Tribunal is an internal appeal. Section 80 of the Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act) provides that an internal appeal may be brought against a decision of the Tribunal, as of right on a question of law and with the leave of the Appeal Panel on other grounds.
2. An internal appeal to the Appeal Panel does not provide a losing party in the Tribunal at first instance with the opportunity to run their case again: Ryan v BKB Motor Vehicle Repairs Pty Ltd [2017] NSWCATAP 39 at [10].
3. In Unique Commercial Group Pty Ltd v Cusumano [2024] NSWCATAP 204 (Cusumano) at [25] the Appeal Panel set out a number of "propositions aris[ing] from the authorities":

"(1) Absent leave to appeal, the question of law is the subject matter of the appeal

(2) The question of law should be articulated with precision....

(3) A question of law means a pure question of law....

(4) A 'pure question of law' and 'a question of law alone', and other variants, are synonyms....

(5) A 'pure question of law' does not depend on facts not found...

(6) A party contending a 'question of law alone' was wrongly decided, must identify the question in abstract terms. ...

(7) The question of law must, self‑evidently, be a question of law and not depend on the answer. ....

(8) A mixed question of fact and law is not a question of law...

(9) There is a distinction between an error of law and a question of law. A question may disclose an error of law, but not raise a question of law...

(10) An appeal is 'on' any question of law: s 80(2) of the NCAT Act. The question of law must not be hypothetical or arid. ....

(11) An appeal is against orders and not reasons...." [Citations omitted]

1. In relation to the identification of questions of law, the Appeal Panel in Cusumano referred to the list of questions of law identified in Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69, at [13], that is:

(1) Whether there has been a failure to provide proper reasons.

(2) Whether the Tribunal identified the wrong issue or asked the wrong question.

(3) Whether a wrong principle of law had been applied.

(4) Whether there was a failure to afford procedural fairness.

(5) Whether the Tribunal failed to take into account relevant considerations.

(6) Whether the Tribunal took into account an irrelevant consideration.

(7) Whether there was no evidence to support a finding of fact.

(8) Whether the decision is so unreasonable that no reasonable decision-maker would make it.

"31 The formulations above are overly reductive. As the authorities above identify, it is necessary to state the question of law with precision."

and, at [32], identified further categories of questions of law, noting that some were "nuanced aspects of the categories in Prendergast":

"(1) Whether the Tribunal drew inferences that were not available from the facts as found (an extension of item 7). ...

(2) Whether the construction of a statute or contract arrived at by the Tribunal at first instance was wrong in some identified way....

(3) Whether the Tribunal's decision was vitiated by bias, or a reasonable apprehension of bias, relates to and intersects with the fair hearing rule, and may encompass or be related to the procedural fairness question....

(4) Whether the Tribunal failed to respond to substantial, clearly articulated arguments based on established facts which may constitute a failure to accord natural justice, that is, procedural unfairness. Alternatively, it may also constitute a constructive failure to exercise jurisdiction....

(5) Whether the facts as found necessarily satisfied the statute or necessarily did not...." [Citations omitted.]

37 What constitutes a question of law is vexed and context dependent in the sense that the distinction between matters of fact and of law may turn on the circumstances in which the question arises....

38 For instance, a ground of appeal that raises the question whether there were adequate reasons may constitute an attack on the merits which would not raise a pure question of law. On the other hand, it may be a contention that the decision is unreasonable in the requisite sense or that the Tribunal failed to exercise the jurisdiction, which would likely raise a question of law.... Care must in any event be taken. As has been clarified by amendment to the NCAT Act since Prendergast was decided, the Tribunal is not required to give reasons for all decisions it makes: NCAT Act, s 62(2A) ...." [Citations omitted]

1. The appellant limited her appeal to a question of law. She did not seek leave to appeal. The appellant annexed to her Notice of Appeal an attachment which identified six grounds of appeal. In summary, the grounds were:

(1) The Tribunal erred on a question of law by failing to provide reasons, or adequate reasons, in seven specified respects;

(2) The Tribunal erred on a question of law by taking into account irrelevant considerations, of which five are listed;

(3) "The Tribunal erred on a question of law by placing the onus of proof on [the appellant] to demonstrate that the owners corporation had complied with its legal obligations under the [SSMA]."

(4) The Tribunal erred by failing to afford procedural fairness to the appellant, in two respects;

(5) The Tribunal erred on a question of law by making five specified findings of fact where there was no evidence to support those findings;

(6) "The Tribunal erred on a question of law by making a decision that is so unreasonable that no reasonable decision-maker would make it."

1. The appellant seeks that the orders of the Tribunal be set aside and that the application filed by Mr Gray on 9 March 2024 be dismissed, or alternatively, that the application be remitted to the Tribunal, differently constituted, for determination.
2. We will consider, when addressing the individual grounds of appeal whether each ground does raise a question of law upon which the appellant has a right of appeal.
3. It is convenient to deal with the grounds of appeal in turn, and to deal with Grounds 4 and 5 first.

Grounds 4 and 5 - Procedural Fairness and Findings made without evidence

1. The attachment to the Notice of Appeal identified two respects in which the appellant alleged that the Tribunal had failed to accord the appellant procedural fairness:

"a. To the extent it did so, receiving as evidence in chief any oral submissions or speaking notes made by the Applicant at the hearing without leave and without prior notice to the Respondent in circumstances where directions had previously been made for the parties to file and serve documents in writing and by specified dates without giving the Respondent the opportunity to respond;

b. Making a finding at [16] that 'it is clear to the Tribunal from the respondent's conduct of the matter and their engagement with the Tribunal today that there is a lack of knowledge or insight in respect of how to properly run and operate a strata scheme according to the legislative requirements' without giving the Respondent the opportunity to respond."

1. Whether there has been a denial of procedural fairness raises a question of law: Donohoe v Albulario [2025] NSWSC 9 at [39].
2. The appellant, in her written submissions, addressed Ground 4 together with Ground 5 (findings made without evidence). The relevant findings were identified as follows:

"At [8] the Tribunal made a number of observations about the EGM that are not referrable to any of the evidence that was filed with the Tribunal. Specifically, there was nothing in the evidence filed with the Tribunal to indicate that:

(a) legal representation was involved;

(b) the EGM was called to an early end due to the conduct,

(c) there were disagreements relating to the core running of the strata scheme."

"At [9] [sic [10]], the Tribunal appear to make a finding that [the appellant] had '[taken] control and [made] decisions which are not in the best interests of the Owners Corporation, such as appointing her own legal representative to also be the Owners Corporation's legal representative, and the financial management of returning money to the lot owners of most of the administrative and sinking fund monies from the Owners Corporation's funds'."

"At [10] [sic [12]], Tribunal made the following finding: 'It is clear to the Tribunal that the respondent is more focused on her own personal finances rather than what is required for the proper management of the strata plan's finances in using her majority to vote that most of the money currently held be refunded back to the owners'."

The finding at [12] that there was "no evidence of proper financial budgeting and the required 10-year capital works fund plan", which the appellant submitted did not substantiate the conclusion that "this demonstrates a clear lack of understanding of how the strata scheme needs to operate in respect of their budgets and finances."

(1) Each of the findings at [13(a) - (c)], in that:

"There was no evidence whatsoever to suggest that meetings had not been conducted properly and fully"

and that the basis of the findings at (b) and (c) is unclear, but they were not supported by evidence any more than the findings at [10] and [12], from which they may be thought to derive; and

(2) The findings at [16] that "there is a lack of knowledge or insight [on the part of the appellant] in respect of how to properly run and operate a strata scheme according to legislative requirements" and that the appellant had "clearly not" taken the opportunity since 2021 "to appraise themselves of information and knowledge to get to a level where they could self-manage properly."

1. The appellant submitted in respect of each of these findings that the first respondent had filed no evidence in advance of the hearing of any of those matters and that, to the extent that the Tribunal relied in making any of those findings upon the first respondent's assertions at the hearing, the appellant had been denied procedural fairness because she had not been given an opportunity to file evidence in response and was not given a fair opportunity to respond at the hearing.
2. The first respondent submitted that the Tribunal's findings were supported by the "sworn oral evidence from the respondent" which was "generally consistent" with his presentation notes.
3. The first respondent further submitted that the presentation notes "had been provided to the appellant prior to the hearing of 23 September 2024, [and] she was given ample opportunity to respond to the first respondent's evidence at the hearing."

1. We consider that the Tribunal did deny the appellant procedural fairness in receiving evidence at the hearing, which the first respondent had not filed in accordance with the Tribunal's directions or given the appellant adequate notice of, without providing the appellant an opportunity to object to the reception of that evidence or seek an adjournment to prepare a response to it. We do not consider that service of the presentation notes the business day before the hearing constituted adequate notice. Such service did not allow the appellant the opportunity to obtain advice in relation to it or to gather evidence to respond to it.
2. We note that the appellant did not have legal representation at the hearing before the Tribunal.
3. In Flightdeck Geelong Pty Ltd v All Options Pty Ltd (2020) 280 FCR 479; [2020] FCAFC 138, at [52]-[57], the Full Federal Court considered the scope of the Court's obligation to assist an unrepresented litigant:

"[52] As acknowledged by the High Court in Neil v Nott [1994] HCA 23; (1994) 68 ALJR 509 at 510; [1994] HCA 23; 121 ALR 148 at 150, '[a] frequent consequence of self-representation is that the court must assume the burden of endeavouring to ascertain the rights of parties which are obfuscated by their own advocacy'. ....

[53] However, whilst disadvantages exist and the Court is obliged to act to ameliorate them by giving assistance to the unrepresented litigant, its role is constrained by its concurrent duty to remain an impartial adjudicator: ... Indeed, the Court must strike a fine balance between providing assistance to a litigant-in-person, and ensuring a fair trial for all parties: ...

[54] The assistance provided to a litigant-in-person must therefore be limited to that which is necessary to diminish the disadvantage which he or she will ordinarily suffer, and the Court should be wary to avoid placing a litigant-in-person in a position of advantage or privilege over a represented opponent. ...

[55] In practical terms, the Court may find it appropriate to provide the following kinds of assistance to a litigant-in-person:

(a) Ensuring the litigant has sufficient information about the practice and procedure of the Court to make effective choices in the conduct of the matter: ...

(b) Ensuring the litigant is informed of procedures which, if invoked, may prove to be advantageous: ...

(c) Ensuring the litigant has not, because of a lack of legal skill, failed to claim rights or put forward arguments: ...

[56] The duty of the Court does not extend to providing judicial advice, counselling a litigant on how to exercise their rights, or conducting the case on their behalf: ... Nor does the duty of the Court require it to view a litigant-in-person's case with a favourable eye. ...

[57] It seems to be well accepted that the extent of the Court's obligation to assist an unrepresented litigant is factually idiosyncratic and, significantly, depends upon "the litigant, the nature of the case, and the litigant's intelligence and understanding of the case': ..."

1. The Appeal Panel in Donohoe v Albulario [2024] NSWCATAP 166, at [51]-[53], addressed the obligations of the Tribunal where potential procedural fairness might warrant the adjournment of proceedings.

"51 In Italiano v Carbone & Ors [2005] NSWCA 177 (Italiano) at [105]-[107], Basten JA explained in relation to the Consumer, Trader and Tenancy Tribunal (which was a predecessor of the Tribunal) that a failure to adjourn proceedings or to advise a litigant of his right to apply for an adjournment may constitute a failure to afford procedural fairness to the litigant:

'[105] The remaining question is thus whether, on the evidence, the Tribunal was under an independent obligation to take particular steps which it did not do. If so, the consequent question is whether its failure invalidated the resulting orders. There is statutory support in the CTTT Act for such obligations. Thus, s.35 ... provides that the Tribunal "must ensure" that each party is given "a reasonable opportunity" to present its case. Where necessary this will entail offering an appropriate adjournment, whether sought or not. In addition, s.28(4) ... requires the Tribunal to "take such measures as are reasonably practicable" to ensure that the parties understand not only the nature of the assertions made in the proceedings, but also "the legal implications of those assertions".

....

[107] A provision in similar terms to those contained in s.35 of the CTTT Act led Deane J in Sullivan v Department of Transport [1978] FCA 48; (1978) 20 ALR 323 at 342 (25) to state:

"Where a Tribunal is under a duty to act judicially, the principle that a party must be given a reasonable opportunity to present his case is at the heart of the requirements of natural justice which it is obliged to observe... . If, in all the circumstances, the failure of the Tribunal to adjourn the matter to enable Dr Evans to be called as a witness or to alert the appellant of his right to apply for such an adjournment constituted a denial to the appellant of a reasonable opportunity of presenting his case, both the common law principles applicable to a tribunal under a duty to act judicially and the specific provisions [of the Act] entitle the appellant to the intervention of this Court."

His Honour then referred to provisions in the Administrative Appeals Tribunal Act (s.33(1)(b)) equivalent to s.28(3) of the CTTT Act. His Honour concluded, at p.343 (10):

"A refusal to grant an adjournment can constitute a failure to give a party to proceedings the opportunity of adequately presenting his case. If the Tribunal had, in the present matter, refused an application by the appellant for an adjournment ... that refusal may well have constituted such a failure. No such application for an adjournment was, however, made. If it had been made, it is highly probable that the Tribunal would have acceded to it: indeed, counsel who appeared for the appellant stated that he did not dispute that, if the appellant had applied for an adjournment, the Tribunal would have granted it. The absence of any application for an adjournment does not, however, necessarily conclude the issue adversely to the appellant. The failure of a Tribunal which is under a duty to act judicially to adjourn a matter may, conceivably, constitute a failure to allow a party the opportunity of properly presenting his case even though the party in question has not expressly sought an adjournment (see Priddle v Fisher & Sons [1968] 1 WLR 1478; [1968] 3 All ER 506. In this regard, however, it is important to remember that the relevant duty of the Tribunal is to ensure that a party is given a reasonable opportunity to present his case. Neither the Act nor the common law imposes upon the Tribunal the impossible task of ensuring that a party takes the best advantage of the opportunity to which he is entitled."

52 The principles in Italiano at [105]-[107] have been applied by the Appeal Panel to proceedings in the Tribunal: see, for example, Roach v Swain [2021] NSWCATAP 258 at [29]- [30].

53 In Gallo v Duflou [2014] NSWCATAP 115 (Gallo) at [33], the Appeal Panel made the following observations about the duty of the Tribunal to an unrepresented party:

'Where a party is unrepresented, a court or tribunal has a common law duty to ensure that that party understands that they may cross examine the other party and that party's witnesses. This is particularly so where the absence of an understanding of a procedural matter adversely affects a party's opportunity to be heard.' (citations omitted)"

1. Although the decision of the Appeal Panel in that matter was overturned by the Supreme Court, no doubt was cast upon the correctness of the above analysis.
2. Far from asking the appellant whether she was prejudiced by the first respondent's raising of issues and evidence not the subject of material filed by the first respondent in advance of the hearing, or considering whether the first respondent should be permitted to rely upon that evidence, the Tribunal engaged in exchanges with the appellant which were combative to say the least.
3. After the appellant had mentioned communications she had had with the previous compulsory manager, both in relation to safety concerns she held about the first respondent's tenants' children playing in the parking area and in relation to communications with a neighbour concerning what the appellant described as a "wall that is dangerously leaning" on the boundary, the Tribunal made comments such as:

"Why were you even contacting the compulsory strata manager?"

"Well, you shouldn't be contacting them, they've got no reason to engage with you. They're a compulsory appointed strata manager. If you ring them, they should just hang up on you. They don't need to answer your emails. They don't need to engage with you at all. It's not your responsibility anymore."

"But why are you talking to [the compulsory manager] about this? It's none of your business....

It's none of your business. You're not engaged anymore. This is a compulsory appointment....

Because you keep interfering when you shouldn't be interfering."

1. We note immediately that this implicit criticism of the appellant was entirely unwarranted. Regardless that a strata managing agent appointed pursuant to s 237 is not answerable to the lot owners and need not seek their approval for decisions in relation to the management of the strata scheme, the strata managing agent is responsible for the management of the strata scheme in the interests of the lot owners. Part of that management will involve the enforcement of by-laws and consideration of safety issues which might arise. The strata manager will not be present on site most of the time. If lot owners who observe what they believe to be safety issues and/or breaches of the by-laws are not entitled to communicate those issues to the strata manager, it is unlikely that those matters would come to the attention of the strata manager so as to be able to be attended to.
2. Later, after discussion of a resolution passed at the annual general meeting for the return to lot owners of moneys held in the owners corporation's bank accounts, the Tribunal stated:

"[Y]ou've had the chance to self-manage. You had an EGM in June, which Mr Gray tells me that there were only five matters, and you couldn't even agree on all five. You only agreed on three.

So, he then tells me that you had your EGM, again, a lot of straightforward items. Again, no agreement, still outstanding issues from the AGM, which has not been resolved. So, again, that just shows me that between the two of you, you can't do the basics and the fundamentals. And part of that meeting, you voted on returning the money, that was the strata scheme's money, almost all of it back to you and Mr Gray, and that's completely irresponsible.

And you used your veto, your power vote to say, well I want my money back. So, again, it just shows me that you can't operate this thing yourself. So, at the two meetings you had a chance to show the Tribunal that you can make this thing work between the two of you. Both of them have been a failure."

1. At a later point the Tribunal stated, when the appellant suggested that the meetings held during 2024 had "resolved so many issues":

"Yes, but there was others that weren't. And the biggest one that I can see, which I think is negative to your approach to the matter, is how you possibly could have thought that refunding that money was in the interests of the owners corporation, and the building. Just is beyond belief, because that shows to me that you have no comprehension of how to manage a strata scheme properly."

"[Y]our veto vote to get the money paid back to you is just completely irresponsible. It's not in the interests of the owners corporation. That's only done in your interest to try and get some of your money back. And that to me, is the most demonstrable example of the fact that you really don't know, you clearly don't know what you're doing. So, the system is not going to work. It's not functioning satisfactorily. So, I am going to appoint a compulsory appointment."

1. Again, it is important to note that the criticism of the appellant expressed and implied in the foregoing statements was not obviously justified. Section 77(1) of the SSMA explicitly provides that:

(1) An owners corporation for a strata scheme may, in accordance with a unanimous resolution, distribute between the owners any money in its administrative fund or capital works fund that is not, in the opinion of the owners corporation, required for the purposes of either fund.

1. Although not addressed in submissions before the Appeal Panel, the implication of that provision would appear to be that, unless there were unusual circumstances not disclosed in the evidence before the Tribunal, the resolution for repayment of moneys from the owners corporation's accounts was not valid as it was not passed unanimously. It would appear that that proposition escaped both the parties as well as the strata manager, and, seemingly, the Tribunal.
2. Nevertheless, the propositions:

(1) That repayment of the moneys was irresponsible and not in the interests of the owners corporation;

(2) That the resolution was only in the interests of the appellant; and

(3) That the passage of the resolution was evidence that the appellant had "no comprehension of how to manage a strata scheme properly"

could not be maintained in the absence of full evidence of the financial affairs of the owners corporation. The very existence of s 77(1) is an acknowledgment that it may be responsible and in the interests of the owners corporation and all lot owners to distribute surplus funds to the lot owners in proportion to their unit entitlements.

1. It is apparent from a reading of the transcript that the appellant was at a substantial disadvantage by reason of the Tribunal hearing submissions or evidence of which she had been given inadequate, if any, notice.
2. We note that the appellant did make some concessions in the course of her submissions. For example, at one point the appellant stated, in response to the question from the Tribunal, "How much is the ten-year sinking fund?":

"Well we're not doing a ten-year sinking fund, because Mr Gray ... wants to sell his property ...".

1. But that does not amount to evidence of "a failure to prepare budgets" or a "failure to raise and maintain sufficient finances".
2. Nevertheless, we do not conclude that the findings of the Tribunal, which the appellant submits were made without evidence, were not supported by evidence. Evidence was given, albeit informally in the course of submissions by the first respondent, which supported, at least to some degree, each of the findings: see Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 at 355-6; [1990] HCA 33.
3. We consider that it is clear from the transcript, and the circumstances in which evidence came to be given by the first respondent, that the appellant was not given a fair opportunity to deal with that material.
4. As the appellant submitted, had she been given proper notice of the matters which the first respondent raised at the hearing, she could at least have obtained evidence from the strata manager appointed in March 2024, who had been involved with the strata plan since that time. The appellant would also have been in a position to obtain advice from solicitors and produce relevant financial records to meet the first respondent's allegations.
5. We are satisfied that the denial of procedural fairness to the appellant was material to the outcome of the proceedings, in the sense that there is a realistic possibility that, if the appellant had been given a fair opportunity to respond to the matters which the first respondent raised at the hearing, the Tribunal may not have appointed a strata managing agent.
6. The strata scheme had only emerged from compulsory management two days before the first respondent filed his application. A strata manager had been appointed shortly after the compulsory management had ended and, in the subsequent six months leading up to the hearing, meetings had been held, insurance had been renewed, and there was no evidence of bills not being paid.
7. The fact that the owners of a two lot strata scheme do not get on is not a sufficient basis for the appointment of a strata managing agent pursuant to s 237 of the SSMA: Foo v Frew [2023] NSWCATAP 303 at [23]. Nor is the fact that issues regarding the retaining wall and dividing fence had not been resolved within the six months that the scheme had not been the subject of compulsory management.
8. Each of the remaining three matters relied upon by the Tribunal at [13] were the subject of allegations raised by the first respondent at the hearing. None were the subject of the documentary evidence which might have been expected. Each might have been explained or refuted if the appellant had been given the opportunity.
9. For the foregoing reasons, the appeal must be upheld. Although s 80(3) of the NCAT Act permits the Appeal Panel to deal with the appeal by way of a new hearing, in the absence of the evidence which the appellant might, if given adequate notice, have led in response to the matters raised by the first respondent, it would not be appropriate for the Appeal Panel to determine the application.
10. The proceedings must be remitted to the Consumer and Commercial Division for re-hearing. In light of the extent to which the Member was critical of the appellant in the course of the hearing and in the decision, it is appropriate that the remitted proceedings be determined by a different member. The parties should have the opportunity to file such evidence relevant to the issue for determination as they may be advised.
11. In light of our conclusion regarding ground 4, we can deal more shortly with the appellant's other grounds of appeal.

1. The appellant identified the matters said to have been not supported by adequate reasons in the attachment to her Notice of Appeal:

"a. how it was 'very clear' that the Owners Corporation had 'failed to comply with its duties under the Strata Scheme Management Act 2015' (SSM Act);

b. which duties the Owners Corporation had failed to comply with;

c. how it was 'very clear' that the Owners Corporation:

i. had not been properly and full conducting meetings;

ii. had not made decisions in the best interests of the Owners Corporation;

iii. had bailed [sic, failed] to prepare budgets and a related failure to raise and maintain sufficient finances;

d. how it had 'clearly not happened' that the lot owners were at a level where they could self-manage properly;

e. why the Respondent's conduct and assumed lack of knowledge contributed to the operation of running a strata scheme;

f. how it was said that the appointment of a compulsory managing agent would resolve breaches of obligations that had purportedly occurred when the Owners Corporation had been under compulsory management;

g. how the Tribünal was satisfied that it was appropriate to appoint a compulsory strata managing agent under s 237 to exercise all the management functions of the Owners Corporation."

1. In her written submissions, the appellant cited the Appeal Panel decision in Hockley-Brown v Metford Road Pty Ltd t/as Morpeth Gardens Village [2023] NSWCATAP 151 at [43]- [45]:

"43 It is essential, where reasons are required or otherwise provided, to expose the reasons for resolving a point critical to the contest between the parties but the manner in which that obligation is discharged varies according to the nature of the jurisdiction being exercised, the court or tribunal exercising it and the subject matter being determined: Soulemezis v Dudley (Holdings) PL (1987) 10 NSWLR 247 (CA) at 259, 270-272, 280-281; Minister for Immigration and Multicultural and Indigenous Affairs; ex parte Palme [2003] HCA 56; (2003) 216 CLR 212 at [40]; Wainohu v NSW (2011) 243 CLR 181 at [58]; NSW Land and Housing Corp v Orr (2019) 100 NSWLR 578, [2019] NSWCA 231 at [65]- [77]; see also s 62(3) of the NCAT Act which sets out the content when reasons are requested.

44 A failure to deal with evidence may also in the appropriate circumstances be characterised as a failure to engage with the case put by a party. It is generally not mandatory to consider particular evidence: Rodger v De Gelder (2015) 71 MVR 514, [2015] NSWCA 211 at [86]; Allianz Australia Insurance Ltd v Cervantes (2012) 61 MVR 443, [2012] NSWCA 244 at [15] per Basten JA (McColl and Macfarlan JJA agreeing). Further, at common law, where a decision-maker ignores evidence which is critical to an issue in a case and contrary to an assertion of fact made by one party and accepted by the decision-maker, this is an error of law because the reasons are thereby rendered inadequate: Mifsud v Campbell (1991) 21 NSWLR 725 at 728; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 at [62]- [63]; Eadie v Harvey [2017] NSWCATAP 201 at [61]- [62].

45 In NSW Land and Housing Corp v Orr (2019) 100 NSWLR 578, [2019] NSWCA 231 at [65]- [77], the Court of Appeal made it clear that, while the degree of complexity required for reasons (including reference to the evidence) differs according to the nature of the proceeding and the decision-maker, there is a "minimum acceptable standard" with "certain minimum characteristics" that requires the decision-maker to expose why it reached the decision it did, so that a losing party, in particular, has the basis to understand why it lost, if there is an avenue for challenge and to enable an appellate body to understand and assess whether the decision was correct:

'Reasons need be given only so far as is necessary to indicate to the parties why the decision was made and to allow them to exercise such rights as may be available to them in respect of it.': per Mahoney JA in Housing Commission of NSW v Tatmar Pastoral Co PL [1983] 3 NSWLR 378 (CA) at 386, cited in Orr at [74]."

"15 The primary difficulty with the reasons provided in the Decision is that while the Tribunal did generally identify the legal test that was required by s 237 of the SSM Act, and then did identify a number of material findings of fact that led to its conclusion, the Tribunal repeatedly failed to refer to the evidence or other material on which those findings were based. As a consequence of that failure, its reasoning process is entirely unclear.

16 The material findings of fact appear to be made at [10]-[13] and [16] of the Decision. With the exclusion of the reference in [16] to 'the respondent's conduct of the matter and their engagement with the Tribunal today', it is entirely unclear on what basis the findings were made, and what evidence the Tribunal specifically had regard to in making those findings.

17 In the absence of identifying the evidence relied upon and how those findings were derived, the residual difficulty created is that it cannot be ascertained how the Tribunal came to the conclusions identified in Ground 1(f) and (g) of the Notice of Appeal.

18 Further, the failure to provide adequate reasons is precisely why the appeal grounds have had to encapsulate the distinct possibility that the Tribunal did or did not treat as evidence matters that had been raised in submissions by Mr Gray. It raises the precise issue identified in NSW Land and Housing Corp v Orr [2019] NSWCA 231; (2019) 100 NSWLR 578 that the Appellant has been denied the opportunity to properly understand why she lost, and in turn, enable the Appeal Panel to properly understand and assess the rationale for the Decision.

19 In that context it should be observed that while the Tribunal did make positive findings to the effective that the Owners Corporation had failed to perform its duties, it is not readily apparent what specific duties had not been performed, and why this warranted an order under s 237 of the SSM Act."

1. The first respondent's submissions in respect of this ground of appeal merely referred in general terms to the evidence said to support the decision and asserted:

"The Tribunal's findings of fact were clearly based on evidence identified by it and reasoning process was provided in its Reasons paras 5,8,9,10,11,12,13,14,15,16 and 17."

1. Paragraphs [8]-[13] and [16]-[17] of the decision are set out above, at [14]-[16]. Paragraph [5] was as follows:

"5). The Tribunal explained the formal process to the parties and the matter proceeded. The parties and Lot Owners were given an opportunity to state their case, were asked questions and were given the opportunity to ask each other questions. The Tribunal has reached this decision following due and careful consideration of the evidence presented and the submissions made by the parties at the formal hearing. The Tribunal has read and considered the material referred to. In the following reasons for the decision, they may focus on the evidence/material that the Tribunal considers is central to the issues in dispute but to the extent that it may not refer in the reasons to a specific piece of evidence or singularly deal with a submission, it should not be assumed that the Tribunal has ignored that evidence or submission."

1. In [14] and [15] the Tribunal found on the basis of findings set out in [13] that the management of the strata scheme was not functioning satisfactorily and that it was thus necessary to consider whether to appoint a strata managing agent pursuant to s 237 of the SSMA. The Tribunal noted that it was a very serious step.
2. We accept the appellant's submission that the Tribunal's decision did not sufficiently identify the evidence upon which it was based or the process by which the Tribunal reached the critical findings set out at [13]. As we have previously noted, the circumstances that the owners corporation, on the appellant's deciding vote, had resolved to refund money to lot owners or that the owners corporation (according to the appellant with the agreement of the first respondent) had not sought to maintain a "ten-year sinking fund" do not, without more, demonstrate that the management of the strata scheme was not functioning satisfactorily or that the owners corporation had failed to perform one of its duties.
3. We have previously addressed, at [45]-[47], the resolution for the return of funds.
4. An owners corporation is required pursuant to s 80 of the SSMA to "prepare a plan of anticipated major expenditure to be met from the capital works fund for a 10-year period commencing on the first annual general meeting of the owners corporation" and to prepare a plan for each subsequent 10 year period. The appellant's concession that the owners corporation was not maintaining a "ten-year sinking fund" was not a concession that the owners corporation was in breach of s 80. The Tribunal's reasons do not explain whether it proceeded on the basis that they were the same thing, or if not, how it concluded that the owners corporation was in breach of its duties.
5. In this context we note that the absence of evidence of a 10 year capital works fund plan or proper financial budgeting was not evidence that there was no such plan or budget. In this regard we agree with the appellant, as maintained by the third ground of appeal, that the Tribunal reversed the onus of proof and required the appellant to prove the existence of those items rather than recognising that it was for the first respondent to prove their absence.
6. There is equally in the Tribunal's reasons no elucidation of how the owners corporation had "not been properly and fully conducting meetings".
7. The fact that the owners did not agree on everything discussed at meetings of the owners corporation did not suggest that the meetings were not being properly conducted. The Tribunal stated, at [8], that the areas of disagreement:

"[R]elate to the core running of the strata scheme including the committee appointments, an auditor, financial management - the proposed refund to the lot owners of most of the administrative and sinking fund monies from the Owners Corporation's funds, the engagement of legal representation, the location of the common property electrical box and issues relating to a boundary retaining wall and dividing fences."

1. The Tribunal did not identify the evidence on which that conclusion is based or why the fact that there was disagreement about those issues had the result that the management of the strata scheme was not functioning satisfactorily.
2. By virtue of her 55% share of unit entitlements, the appellant was able to determine the outcome of any vote which did not require a special majority. However, that fact, in itself, would not establish that the management of the owners corporation was not functioning satisfactorily. More would be required, such as evidence that the appellant was using her majority vote to advantage herself at the expense of the first respondent or otherwise engaging in what might in other contexts be termed a fraud on the minority. The Tribunal did not identify any such issue which might have justified the proposition that, because the lot owners disagreed, the management of the strata scheme is not functioning satisfactorily.
3. The fact that the appellant was represented by her solicitor at a meeting did not indicate the meeting was not properly conducted. The proposition that "the EGM at least [was] called to an early end due to the conduct" fails to elucidate what conduct is referred to or why a decision to terminate a meeting early is necessarily an indicator of dysfunction.
4. It is not necessary to consider further the respects in which the appellant submitted that the reasons of the Tribunal were not sufficient. We are satisfied that the reasons do not sufficiently identify either the factual basis for the orders made nor the reasoning by which the Tribunal reached the findings by reference to which it justified those orders. In that regard, the Tribunal made an error on a question of law.
5. We also uphold the appeal on this ground.

1. The appellant's written submissions identified the irrelevant considerations which the appellant maintained the Tribunal had taken into account as follows:

"(a) The personal or subjective views of Mr Gray;

(b) the personal relationship between Mr Gray and Ms Hakemi;

(c) the mere fact that there had been some disagreement between Mr Gray and Ms Hakemi as to what decisions should be made by the Owners Corporation, as each individual lot owner is inherently entitled to their own opinion about the best decisions to be made by the Owners Corporation;

(d) issues concerning the boundary retaining wall, in circumstances where that was not an issue that was within the Owners Corporation's control;

(e) the issues identified at [13(d)] in circumstances where they implicitly must have been issues that existed for the duration of the compulsory management period, and could therefore not be indicative of the strata management scheme not functioning satisfactorily;

(f) any matters that existed prior to March 2024, as they were the responsibility of the prior compulsory managers."

1. The appellant also submitted that the Tribunal's assessment of the appellant, as set out in [16], that is "lack of knowledge or insight in respect of how to properly run and operate a strata scheme according to the legislative requirements", was based on irrelevant factors including the issues, such as children in the parking area, contacting the previous compulsory strata managing agent and voting to return funds to the lot owners, in respect of which, as we have noted above, the appellant had been subject to unwarranted criticism by the Tribunal.
2. The first respondent's submissions asserted, without elaboration, that the matters identified by the appellant were relevant.
3. In circumstances where we have concluded that the Tribunal's reasons do not adequately disclose the evidence on which the Tribunal based its decision or the reasoning by which it reached its factual findings, it is difficult to conclude that the Tribunal did rely upon any of the matters identified in the appellant's written submissions.
4. The only matter clearly relied upon by the Tribunal was the fact that the issues in respect of the boundary retaining wall had not been resolved. We have already indicated that, generally, the other matters identified by the appellant were not relevant to consideration of whether the management of the strata scheme was functioning satisfactorily.
5. In some circumstances, the failure of an owners corporation to take appropriate steps over a long period of time to resolve an ongoing issue which potentially raised safety issues might constitute a relevant matter to be taken into account in considering whether the management of that strata scheme was functioning satisfactorily. The reasons of the Tribunal do not provide sufficient explanation, of how the failure to resolve the issues regarding the retaining wall in the six months since the strata plan had been out of compulsory management was indicative of a failure of management, to enable us to say that it was improperly taken into account.
6. The appeal has succeeded, among other reasons, because the reasons are not adequate. The corollary of that finding in the circumstances of this case is that the ground founded upon the taking into account of irrelevant considerations must fail.

1. We have already indicated above, at [70], that we consider that the Tribunal did reverse the onus of proof in requiring the appellant to have led evidence of the 10 year capital works plan, budgets and other financial documentation in order to establish that the management of the strata plan was functioning satisfactorily in those respects.
2. The first respondent's written submissions did not grapple with the real issue raised by the appellant, merely referring to evidence which did not establish the absence of a capital works plan, budgets or sufficient finances.
3. The correct allocation of the onus of proof is a question of law. In applying an incorrect onus, the Tribunal applied a wrong principle of law.
4. We are satisfied that the placing of the onus of establishing those financial records of the owners corporation upon the appellant was material to the final decision to appoint a strata managing agent. The failure to prepare budgets and failure to raise and maintain sufficient finances were one of the four bases upon which the Tribunal concluded that the management of the strata scheme was not performing its duties and was not functioning satisfactorily. Even if the Tribunal would have reached the same conclusion in respect of performance of duties and the functioning of management by reference to the other three bases alone, it is not possible to conclude that the Tribunal would have reached the same result in the exercise of its discretion whether to appoint a strata managing agent in the absence of the finding regarding budgets and raising sufficient finances.
5. Accordingly, the appeal is upheld on this ground also.
6. We have addressed grounds 4 and 5 above.

1. As the appellant acknowledged in her written submissions, establishing the proposition that the decision was so unreasonable that no reasonable decision-maker would make it, has a high threshold.
2. We are not satisfied that the appellant has done so in this case. The appeal will be upheld on other grounds and it is neither necessary nor appropriate to examine this ground of appeal further. It is sufficient to note that, if the Tribunal had, on the basis of specific evidence, notified to the appellant in sufficient time, reached the conclusion, by an identifiable process of reasoning, that the owners corporation was not performing its duties and that its management was not functioning satisfactorily, it could not have been said that a decision to appoint a strata managing agent pursuant to s 237 of the SSMA was unreasonable in the relevant sense.

1. As we have noted in relation to Ground 4, the decision must be set aside and the proceedings remitted to the Consumer and Commercial Division, differently constituted, for determination on the basis of such evidence as the parties may seek to rely upon. We will not make directions for the preparation for re-hearing of the remitted proceedings, but we note that it is likely to be conducive to the fair and efficient conduct of the proceedings that the first respondent (applicant at first instance) should be directed to file a form of points of claim specifying all matters upon which he relies as establishing one or more of the requirements of s 237(3). By that means the appellant (respondent at first instance) will have a clear understanding of the factual allegations made against her and be in a position to respond.
2. The consequence of the order appointing a managing agent being set aside will be that the manager appointed by the orders of 23 September 2024 will cease to hold office, the management of the strata scheme will revert to the lot owners, and, unless they resign, My StrataCare, the strata manager appointed by the owners corporation in March 2024, will resume that office.

1. The appellant did not in her submissions or at the hearing make or foreshadow any application for costs in the event the appeal was upheld. The first respondent's submissions state only that the first respondent would seek an opportunity to respond to any submissions on costs filed by the appellant.
2. The appeal does not involve any monetary claim or dispute and, accordingly, special circumstances would be necessary before the Appeal Panel could make an order in relation to the costs of the appeal.
3. A notation to directions made by the Appeal Panel at the call-over of the appeal on 30 October 2024 required any party seeking costs of the appeal to file submissions concerning costs at the same time as filing submissions in relation to the appeal.
4. As no such submissions have been filed, we proceed on the basis that neither party seeks an order for costs and that we need not make provision for the filing of further submissions concerning costs.

(1) Appeal allowed.

(2) The orders of the Consumer and Commercial Division of the Tribunal made on 23 September 2024 in proceedings 2024/00107957 are set aside.

(3) The proceedings are remitted to the Consumer and Commercial Division of the Tribunal, differently constituted, for determination on the basis of such evidence as the parties may seek to rely upon.

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.