Profitability Consulting Pty Ltd v High Country Group

The nature of, and ownership of lots in the scheme

1. This was helpfully recorded by the Tribunal at first instance: 1 These proceedings relate to a strata-titled building in Jindabyne which comprises 48 lots in two sections: the section known as Alpine Gables has 43 accommodation lots and three commercial lots while the section known as The Brumby Bar covers two commercial lots, being Lots 45 and 46. Originally built as a motel, the building was converted to strata-title in 1982. The term accommodation lots rather than residential lots has been used since those lots are used for short-term occupation and not as longer-term residences. 2 The applicant is the owner of The Brumby Bar which it acquired on 1 June 2017. George Faddoul and his daughter, Roberta Faddoul, are the directors of Profitability Consulting Pty Ltd (PC) which owns 19 lots, including Lots 50 and 51. Mr Faddoul is a director of Barcoda Pty Ltd which owns one lot. Ms Faddoul is also a director of Roberta Faddoul Pty Ltd (RF) which owns four lots. As a result, Mr and Ms Faddoul are directors of companies which own 24 of the 48 lots in the scheme. 3 Ms Faddoul is the sole director and shareholder of a company, The Deal Is On Pty Ltd (TDIO), which is now named Alpine Gables Pty Ltd (AG). Since the 2017 Annual General Meeting (AGM), held on 24 November 2017, that company has been the caretaker of the subject strata scheme and the letting agent for some but not all the accommodation lots. 4 In the subject strata scheme the total number of unit entitlements (UE) is 1,000. Since PC has 371 UE, Barcoda has 21 UE, and RF has 84 UE, Mr Faddoul and Ms Faddoul are directors of companies with a total of 476 UE while the applicant has 62 UE. 5 Since the 2020 AGM, held on 30 November 2020, there have been three members of the strata committee (SC): Ms Faddoul and the co-owners of Lot 32, namely Mr and Mrs Seed. Ms Faddoul currently chairs the SC.

The issues leading to the application to the Tribunal

1. The applicant at first instance raised various concerns about the operation of the strata scheme, said to warrant a determination that the Tribunal should appoint a strata manager. It is convenient to simply record the Tribunal's summary of some of the more serious allegations which the Tribunal found to be made out:

Appointment of the caretaker. 51 The six matters which have been numbered in the previous paragraph provide support for the view that the strata scheme is not functioning satisfactorily although, considered in isolation, they would probably not be sufficient to warrant an order being made under s 237. What this allegation does show is that the appointment of the caretaker was of the company which the Faddoul family wanted, both initially and subsequently, and it is a reasonable inference that the decision to appoint TDIO [as (scil)] caretaker was based on the votes controlled by the Faddoul family.

Unsupervised conduct of the caretaker. 54 While those four matters, taken together but considered in isolation from other allegations, are not sufficient to warrant a finding that the scheme is dysfunctional, they do suggest it is desirable that Ms Faddoul not be a member of the SC which would be the case if an order for the appointment of a strata managing agent is made under s 237(2) of the SSMA. As such, those three matters are considered relevant to the exercise of the Tribunal's discretion as to whether to make an order based on s 237 of the SSMA. 55 However, there is another aspect of the conduct of Ms Faddoul, arising from the second, third and fourth findings, which relate to her conduct while carrying out the responsibilities of the caretaker, RF, which is a company controlled by her. That is the fact that there is no supervision of her conduct by the SC, of which she is a member, and that is reflected in the fact that the unchallenged affidavit evidence reveals complaints being made to Fair Trading that could and should have been made to and handled by the SC. 56 If the subject strata scheme was functioning satisfactorily, the SC would take steps to address the conduct of Ms Faddoul when carrying out the duties of the caretaker and/or letting agent. It is noted that an issue relating to communications involving Ms Faddoul was, at the 29 January 2020 AGM, referred to the SC "for review" but there is no evidence the SC, Mr Faddoul being one of its five members at that time, ever conducted such a review. 57 The unsuccessful attempt at the AGM [h]eld on 16 December 2021 to make Ms Faddoul's company, RF, the sole letting agent serves to provide objective evidence of a desire to achieve that goal which is consistent with her conduct towards lot owners who use other letting agents. …

Mishandling of pecuniary interests. 67 Further, it was noted that, on 24 November 2017, Mr Faddoul was elected to the SC at the AGM and as secretary at the SC meeting held thereafter, in each case without disclosing any pecuniary interest. In addition, Mr Faddoul maintained accounts, including for cable television, gas, electricity and internet, in the name of PC that should have been in the name of the respondent and even defeated a proposal to correct that situation that was proposed at the 2017 AGM. Ms Seed suggested those accounts have been in the name of the respondent "for some time now" but did not indicate any date. A 5 November 2020 email from Ms Edwards suggests nothing was done until after that date. 68 The "Disclosure Book" does not reveal any disclosure having been made by Ms Faddoul despite being a director and shareholder of the company that is the caretaker for all units and the letting agent for some of those units. 69 A failure to comply with the statutory requirements for disclosure of direct and indirect pecuniary interests is a matter which suggest the management of a strata scheme is not functioning satisfactorily. Such disclosure serves to alert all SC members to a conflict of interest without which decisions may be made in the interests of an SC member rather than the interests of lots owners as a whole. …

Permitting unfinancial lot owners to vote at 2020 AGM. 70 …Contrary to cl 23 of Schedule 1 to the SSMA. Ms Edwards decided to waive all outstanding interest which thereby permitted Mr Faddoul and Ms Faddoul to vote in relation to 17 lots owned by PC that were unfinancial at the time of the 2020 AGM. That gave the Faddoul family 349 votes they should not have had. But for that, the composition of the SC would have been different, the proposal to amend the caretaker agreement would have failed, as would the motion to retrospectively appoint TDIO as letting agent. Further, the motions seeking to recover legal fees from Mr Higgs and Dr Parker would not have passed. 71 There can be no doubt that conduct involved breaches of the SSMA because Fair Trading issued a warning to her and fined her employer $1,100 for breaches of s 32(2) and s 85(3) of the SSMA: the former specifying people who are not eligible for appointment to the SC; the latter relating to interest charges on late levy contributions. It must be observed that this conduct was in contrast with the strictness that was applied to Mr and Mrs Gorman. 72 The respondent contended that the non-compliance of Ms Edwards was addressed at the next AGM when her decision was ratified. However, that does not alter the fact that there was conduct in breach of the SSMA that would not occur if the management of a strata scheme was functioning satisfactorily. …

A levy was invalidly raised from only two lot owners. 80 The respondent's opening submissions conceded that it did not have the power to resolve that a special levy be raised for the applicant and Dr Parker only. As s 83(2) of the SSMA clearly requires that levies must apply to each lot and be in proportion to the UE for each lot this is an instance of this strata scheme not functioning satisfactorily.

Failing to raise sufficient levies to maintain a credit balance in the administrative account. 81 …On 18 November 2020 Ms Edwards emailed a proposed budget which showed, for the administrative fund, an opening balance of -$24,980.34 and a closing balance of the same amount. In the SSMA, s 81(1) requires a determination by the respondent of "the amounts estimated as needing to be credited to those funds", and s 81(4) required the respondent, if faced with expenses it cannot meet, to levy each lot owner in order to meet those expenses. 82 The respondent sought to blame Mr Higgs on the basis that he was the treasurer at the time of the 2020 AGM and suggested that "Ms Edwards had only recently been appointed strata manager at the 23 July 2020 EGM". However, a period of almost four months was ample time for Ms Edwards to prepare the presented budget and it would take very little time, when preparing that budget, to address the negative balance. Nor is the fact that the SC decided to convene an EGM on 30 June 2022 to address this issue a valid explanation. It matters not who is to blame for this matter because, in a strata scheme that is functioning satisfactorily, while there may be a negative balance at the end of the latest financial year, there should not be a negative balance at the end of a financial year in a proposed budget. …

Failing to comply with the obligation to maintain and repair, imposed by s 106 of the SSMA, including (a) failing to do what was planned, (b) failing to budget, (c) failing to follow a plan, (d) failing to replace a leaking roof, (e) failing to replace leaking gutters and downpipes, (f) failing to repair stormwater drains and remove trip hazards, and (g) failing to carry out other repairs of common property. 104 Despite (1) roof leaks over many years, (2) multiple recommendations that replacement of the roof was required, (3) a levy of $818,818.19 being struck for the capital works fund in January 2019, (4) a budgeted amount of $135,454.55 for maintenance of the roof in 2019, (5) a quotation for $$123,416.48 in February 2020, and (6) the failure of repairs arranged by Mr Faddoul, the roof has yet to be replaced and the respondent is seeking to defer replacement, as Mr Faddoul unsuccessfully tried to do last year. 105 The Tribunal is comfortably satisfied that the history relating to the roof warrants a finding that the respondent has breached the duty to repair and maintain common property imposed on it by s 106(1) of the SSMA. …

Excluding the applicant's lots when upgrading the fire system. 110 Excluding the applicant's lots when upgrading the fire system. In February 2021 two quotations were obtained to replace and upgrade the fire detection and alarm system with the objective of reducing false alarms caused by cooking in guest rooms. The work that was carried out did not include the applicant's lots. 111 The explanations provided by Ms Seed in her affidavit were (1) "the Applicant does not own any units in the Property", and (2) different, more stringent fire safety requirements apply. 112 In the applicant's submissions, it was noted that the evidence of Mr Higgs was that the fire system, which services the entire property, was upgraded. That system included smoke detectors and exit lights which are also present in the applicant's lots (Lots 45 and 46). 113 The respondent's submissions included yet another reference to an annexed letter with the result that any submissions based on that letter are of no utility. 114 Fire safety is an important matter because of the risk of death or injury. As there is sufficient basis for an order under s 237, this allegation does not alter the outcome of these proceedings. From an abundance of caution, the Tribunal considers the fire safety of the applicant's lots can and should be included in an order to assist the incoming strata managing agent. There can only be two alternatives: either (1) work has been done to ensure an equivalent standard of fire safety, in which case no further work will be required, or (2) if not, steps can be taken to achieve that goal and thereby reduce the risk of death or injury.

1. At [122], the Tribunal made the following summary of its findings: It is sometimes said that the appointment of a strata managing agent by the Tribunal is a draconian step because it removes the democracy of a strata scheme but, in this instance, the Tribunal considers the strata scheme has been operating closer to a dictatorship in that Mr Faddoul appears to have achieved the outcomes he sought, and Ms Faddoul's membership of the SC appears to have resulted in her conduct going unchallenged.

Roberta Faddoul Pty Ltd and Bardoca Pty Ltd

1. The appellants concede, properly, that Roberta Faddoul Pty Ltd and Bardoca Pty Ltd, being lot owners never joined as parties to the proceedings at first instance, cannot be said to have standing to bring the appeal. Rather, it was suggested in the appellants' submissions that they be joined to the appeal.
2. No formal application was made in that regard. In the absence of any formal application, I will not deal with that issue. As I will come to, informal applications as to joinder have caused enough uncertainty in these proceedings already. Further, whilst there has been an application made by the first respondent to the appeal that there be a costs order personally against Roberta Faddoul Pty Ltd and Bardoca Pty Ltd at first instance, and they would have standing to appeal if such an order were made, such an application was not contemplated by the decision at first instance which is the subject of this appeal.

Profitability Consulting Pty Ltd

1. Prima facie, Profitability Consulting Pty Ltd ("Profitability Consulting") also has no standing to bring the appeal, as it was not referred to as a party in the first instance proceedings: Civil and Administrative Tribunal Act 2013 (NSW) (NCAT Act), s 80.
2. However, in evidence before me were two relevant documents which call that situation into question.
3. The first was an email to the Tribunal from the then lawyers for Profitability Consulting and a company described as "Roberta Faddoul Nominees Pty Ltd", Bannermans Lawyers, dated 9 July 2021. In that email, the author Mr Joseph Bannerman indicates, relevantly, that: "my clients wish to be joined to the proceedings as foreshadowed in the orders dated 8 July 2021…".
4. The relevant directions of 8 July 2021 had provided, at direction 5, that: By 21 July 2021, the respondent (and the majority lot owner if the majority lot owner seeks to be jointed [(sic)] as a party to the proceedings) is to provide to the applicant and the Tribunal any evidence and submissions in response to the application for interim orders.
5. I was not provided with evidence that any such evidence and submissions was lodged and served on the other parties at first instance by Profitability Consulting. Indeed, the email to the Tribunal was not even copied to the other parties.
6. Notwithstanding that, however, the Tribunal made directions on 23 July 2021 which included: 2. Leave is granted to the Applicant, the Respondent and the Other Party, Profitability Consulting Pty Ltd, to be represented by Australian legal practitioners. 3. The legal representatives shall advise the Divisional Registrar and each other in writing by no later than 5:00 PM 30 July 2021 of the representative's name, office, address for service, telephone and other contact details. 4. The Tribunal notes that Profitability Consulting Pty Ltd opposes the applicant's application to appoint Vital Strata Management as the strata agent for the scheme under s 237 of the Strata Schemes Management Act 2015 NSW. 5. The Tribunal determines that Profitability Consulting Pty Ltd may remain on the Tribunal's record as the "Other Party" and that it may continue to participate in the proceedings by its solicitor, Mr Yang, in that capacity. However, it is not formally joined as a respondent to the application because no order is sought against it by the Applicant.
7. Unfortunately, but unsurprisingly given the necessary urgency the parties experienced in preparing for the application for a stay, I was not provided with a sound recording or transcript of what occurred at the directions hearing on 23 July 2021.
8. It is not disputed that the parties then represented by Bannermans Lawyers did not seek to appear and be heard at the final hearing of the proceedings at first instance.

Can I resolve the issue of standing?

1. It was decided in Kurt Keller Pty Ltd & Ors v BMW Australia Ltd & Ors (1984) NSWLR 353 at 369 that in proceedings seeking interlocutory relief in the nature of an injunction, where the matters for trial are for the most part (if not entirely) pure questions of law or at least questions of law arising from facts which are not challenged, the court should determine the matter in issue rather than determining whether there is a prima facie case.
2. However, I am not satisfied that the issue of whether Profitability Consulting has standing is a pure question of law in these circumstances or that the relevant facts are unchallenged. The directions made 23 July 2021 indicate, at a prima facie level, that the Tribunal intended that Profitability Consulting be joined as a party to the proceedings under section 44(1) of the NCAT Act. Whilst I accept that no such formal order was apparently made, the directions taken as a whole tend to indicate that the Tribunal was working on that premise and that is bolstered by the fact that, in proceedings such as those before the Tribunal at first instance, there was no other apparent basis on which Profitability Consulting could be legally represented: see NCAT Act, s 45 and the thorough discussion of the rights of non-parties to be heard in Rice Marketing Board for the State of New South Wales v Forbidden Foods Pty Limited; Forbidden Foods Pty Limited v Rice Marketing Board for the State of New South Wales [2020] NSWCATAP 182 (Rice Marketing).
3. In my view, the grant of leave to Profitability Consulting contemplated by direction 2 is a reflection of the Tribunal's view that it had determined Profitability Consulting's status as a party.
4. The fact that Profitability Consulting is not shown on the coversheet of the Tribunal's decision as a party is not determinative of its status: Rice Marketing at [70]. Further, I note that seeking to be joined as a party purely to preserve appeal rights in respect of applications under s 237 of the SSMA is a course the Appeal Panel has indicated is available to lot owners: The Owners - Strata Plan No 2010 v Kahn [2022] NSWCATAP 9 at [3(1)].
5. I think that there is a prima facie case made out that Profitability Consulting has standing to bring the appeal. However, I do not consider myself compelled, or intend, to make any final or binding determination of that issue in these interlocutory proceedings, particularly without the parties having the opportunity to obtain and review the transcript of the directions hearing conducted on 23 July 2021.
6. I will, therefore, proceed to determine the application for a stay on the presumption that the appeal has been regularly commenced by Profitability Consulting.

Legislative Foundation and Principles Relating to Granting a Stay

1. The lodgement of an internal appeal does not affect the operation of the decision appealed against. Nonetheless, under s 43(3) of the NCAT Act the Tribunal has discretion to stay or make another order affecting the operation of a decision pending the determination of the appeal. That discretion must be exercised judicially and the general principles that apply in relation to the exercise of that discretion are derived from the terms of s 43(3) itself. As I noted in Silberstein v Strata Choice Pty Ltd [2022] NSWCATAP 249 at [15], unlike a superior court of record which has inherent power to stay proceedings, the Tribunal is entirely a creature of statute. On that basis, the Tribunal has no inherent power to grant a stay. The terms of s 43(3) dictate that the discretion to make an order under that section is constrained, principally, by the need to ensure the orders affect "the operation of a decision to which the […] appeal relates" and are "appropriate to secure the effectiveness of the determination of the […] appeal."
2. Additional guidance in the application of the relevant principles can be obtained from the considerations applied by the Courts in deciding whether or not to grant a stay pending an appeal, summarised in a decision of the Appeal Panel constituted by the former President of the Tribunal, Justice Wright, in Bentran v Sabbarton [2014] NSWCATAP 37 at [9].
3. To summarise those principles here, it is sufficient to cite what was said by Slattery J in Beck v Colonial Staff Super Pty Ltd & Ors (No. 2) [2015] NSWSC 1360 at [35], with the citations omitted, that: [35] The principles governing a stay of a judgment pending appeal are well established. The applicant must demonstrate that there is a reason for the grant of a stay or that a matter is an appropriate case in the exercise of the Court's discretion. It is not necessary for the applicant for the stay to establish special or exceptional circumstances. The stay is likely to be granted if the appeal would otherwise be rendered nugatory. The Court considering the grant of a stay is not required to determine the merits of the appeal but usually considers whether the applicant has at least an arguable case; and the Court may impose conditions on the grant of a stay including that the applicant pay a sum of money […] or otherwise secure the payment of the disputed sum. The central determinant as to whether a stay would be granted, and if so upon what terms, if any, is the Court's assessment as to what is a fair balance of the rights of the parties, given that an appeal does not of itself operate as a stay and the party who has succeeded at trial is entitled to the fruits of its victory.
4. The overriding principle in an application for a stay is to ask what the interests of justice require: New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83]; Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 at [18].

Application in the Present Case

1. In the present case, the respondents should be taken to be entitled to the benefit of the decision at first instance unless the appellant can demonstrate that it is appropriate to stay, or otherwise affect the operation of any of the orders made.
2. The first matter I should consider is whether the appeal raises serious issues to be determined by the Appeal Panel or, in other words, whether the appellant has a reasonably arguable case on appeal.
3. Other than pressing that the appeal was irregularly commenced and ought to be dismissed on that basis, the respondents do not submit that the appeal is not reasonably arguable. I will proceed on the basis it is arguable although, in my view, the appellant's prolix grounds of appeal do not, as presently framed, necessarily identify questions of law save in respect of an allegation of a denial of procedural fairness in the Tribunal refusing to accept material filed late by the second respondent at first instance and a broad allegation that the Tribunal's reasons are inadequate.
4. It cannot properly be said that the appeal will be rendered nugatory if the decision is not stayed, given the Appeal Panel's ability to hear the matter promptly. I accept, though, that an object of the appeal from the appellant's perspective will be stifled in that there will be a period of external management until the appeal is determined during which the CSM would have the power to exercise all functions of the Owners Corporation and strata committee, including in respect of raising levies and expending monies.
5. The appellant, conceding that the CSM had commenced management of the scheme acknowledged the difficulty posed by staying the substantive appointment, submitting that "… as regards the balance of convenience, for a stay to be ordered, [the CSM] would have to be taken out of the running of the management of the strata scheme and relinquish control of the books and records. To mitigate this issue, the appellants propose that one solution for the Appeal Panel would be to order a stay to the effect that [the CSM] do not have power to exercise control of all of the owners corporation but rather [the CSM] maintains control of the functions of the strata committee (including the chairperson, secretary and treasurer). This proposed approach would obviate the inconvenience of removing [the CSM] from a management role it is already in, but avoid rendering the appeal useless by giving [the CSM] total control of the owners corporation for two years."
6. The respondents rely on an affidavit of Jack Stoker, Senior Strata Manager with the CSM, dated 8 December 2022. Mr Stoker confirms that, relevantly: 1. his organisation has obtained the books and records of the strata scheme and commenced the process of management, including by opening a trust account in the name of the scheme; 2. his organisation is willing and able to comply with any requests to inspect the books or records of the scheme made in accordance with ss 182 and 183 of the SSMA.
7. Mr Stoker also expresses the view that if his organisation's power as a CSM were to be limited to that of the members of the strata committee, leaving the Owners Corporation to make its own decisions at general meeting, the CSM would be hampered from progressing the necessary ongoing functions of the Owners Corporation including raising levies to engage contractors, given that requires approval at a general meeting to raise funds to meet their fees. This would include complying with the Tribunal's direction as to the fire safety works and the roof works. Mr Stoker also notes the power of the Owners Corporation to determine in general meeting that certain decisions may not be made by the strata committee: s 36(3)(b) SSMA.
8. In respect of the works to the roof, Mr Stoker confirms that proposals have been sought for the works but that, in his estimate, compliance with the roof replacement works would commence within 6 to 9 months.

The first respondent's position

1. The first respondent submits that if the Appeal Panel hears the standing issue (or by implication determines the appeal) in the next few months, it is difficult to see what action the CSM could take within that period which would irreversibly affect the interests of the appellants. The CSM is bound by the terms of the SSMA.
2. In respect of the issues the Tribunal directed the CSM to prioritise, the first respondent submits that: Replacing the roof - Mr Urginovski, a structural engineer retained by the owners corporation gave evidence in the Initial Proceedings that his recommendation was to replace the whole roof over the second-floor units. 6 There was no evidence tendered in the first instance proceedings which opined that the roof does not require replacement. On the contrary, Mr Urginovski admitted in cross-examination that mere maintenance of the roof would still result in condensation entering through the roof. Mr Mawhinney, a licensed roofer, also advised that a lack of anti-condensation insulation was causing the leaks and that the only way to fix that issue was a full re-roof. In any event, the evidence of Mr Stoker indicates that it will be six to nine months before the roof replacement work can be carried out. Confirming that the fire safety systems in the applicant's lots (Lots 45 and 46) has been adequately upgraded by comparison with the remaining lots - the appeal will not be irreversibly affected by the CSM confirming that the fire safety systems in first respondent's lots have been adequately upgraded. The first Respondent submits that it is not necessary to make an order that [the CSM] grant access to the appellants to the books and records of the owners corporation. Pursuant to section 182 of the SSMA, a lot owner may request an inspection of the records of the owners corporation and Mr Stoker has confirmed that he will comply with any requests made under this section. The first respondent notes that the timetable for submissions to be made as to costs is now complete and submissions have been served and filed in accordance with the orders and cannot be stayed.
3. It also submits that a stay of the appointment of the CSM is against the balance of convenience because: 1. The Owners Corporation will be left without a strata managing agent; 2. It will deprive the first respondent of the benefit of a roof replacement in a timely manner in circumstances where the lots it owns are currently experiencing leaks and all expert evidence states that the roof replacement is required; 3. The appellants have further sought that the Appeal Panel order a stay to the effect that the CSM not be given the power to exercise control of all of the Owners Corporation but only the functions of the strata committee. This would mean that the Owners Corporation would be able to continue to make decisions at general meetings. This is problematic and against the balance of convenience because the CSM will be hampered from carrying out its obligations pursuant to section 9 of the SSMA (including meeting ongoing expenses as well as engaging contractors) if levies cannot be raised at general meetings as required; 4. In making such an order, the Appeal Panel would be requiring the CSM to potentially enter into two separate agreements with the Owners Corporation; one for compulsory appointment and one for other functions to be carried out. This is an unnecessarily costly exercise for the Owners Corporation, and it is not clear whether it is administratively possible; and 5. One of the Tribunal's main reasons for appointment of a compulsory strata managing agent was due to the control exercised by Mr and Ms Faddoul (as directors of the appellant and related companies) in general meetings.

The second respondent's position

1. The second respondent submits that, as the record stands, there are findings of fact to the effect that the management of the subject strata scheme was dysfunctional and that the underlying management structure of the strata scheme (absent the exercise of functions by the CSM) could only be said to have deteriorated as a consequence of the orders, as the previous managing agent's functions were terminated by the making of those orders.
2. It submits that a stay pending the outcome of the appeal could engender a risk that the purposes of the appointment are frustrated, if the appeal were ultimately refused, as the remaining duration of the appointment (following a decision on the appeal) may be insufficient to achieve the outcomes the decision intended to ensure.
3. It further submits that: 1. even if another manager was to be appointed, the transitional period would be of a meaningful duration, thereby exacerbating the dysfunction in the scheme during that transitional period; 2. if a limited appointment were created, due to a limited stay granted by the Appeal Panel, the compulsory manager would need to reconsider the terms of its approval to act. Given that the compulsory manager's consent to act is a jurisdictional precondition to the making of an order for compulsory management, and that the terms of the agent's agreement are conditions of the Tribunal's original order, the granting of a limited stay may have the effect of substantially altering jurisdictional facts that were relied upon by the Tribunal at first instance. This outcome would tend to undermine the integrity of the justice system, and may result in an injustice to the compulsory manager; and 3. the order now sought by the appellant would have the effect of limiting the compulsory managing agent's functions to those of the strata committee, which was an order that could have been made by the Tribunal at first instance, but was not. The Appeal Panel should defer to the decision of the Tribunal as to whether such an arrangement was appropriate, given the Tribunal had the benefit of hearing evidence and submissions on the matter.

Determination of the application for a stay

1. I agree with the respondents' submissions that it is not possible to stay the orders for delivery of the books and records of the scheme to the CSM, as this has already occurred. Nor do I see any need for a specific order for production of the records to assist the appellant to prepare its case at this time. I have no reason to doubt Mr Stoker's indication that he can facilitate production of the records and the appellant has the comfort of ss 182 &183 of the SSMA in that regard in any event.
2. A similar position arises in respect of the directions for submissions as to costs, which had also been complied with prior to my hearing the application. As I have indicated previously, it is by no means clear that I have power to stay the Tribunal's determination of the costs application at first instance (Silberstein, supra, at [37]), and I would not exercise my discretion to do so in any event given the strong possibility that doing so may lead to bifurcated appeals on the substantive decision and any decision on costs. Furthermore, any costs ordered are unlikely to be recoverable, in a practical sense, before the appeal is determined: The Owners - Strata Plan No 95230 v Maister [2022] NSWCATAP 390 at [73].
3. The question of staying the Tribunal's directions to the CSM as to the works to be prioritised is, in my view, properly to be considered on the basis of whether the order for the appointment of the CSM should be stayed or varied as sought by the appellant. If the CSM's appointment remains active, the issues the Tribunal found to warrant prompt attention are self-evidently matters the CSM should prioritise in any event.
4. I am not persuaded that there is a material difference, in a practical sense, in my staying the order appointing the CSM or varying it to remove the functions of the Owners Corporation from the ambit of the appointment. The reasons for decision make clear that the appellant and the other lot owners seeking to be joined have historically been able to influence decisions of the Owners Corporation to coincide with their wishes. The Owners Corporation can simply decide in General meeting to limit decisions that can be made by the strata committee (SSMA, s 36(2)(b)) and a decision of a strata committee is taken to be the decision of the owners corporation only absent any disagreement between them, in which case the decision of the owners corporation prevails: SSMA 36(2).
5. In respect of the appointment of the CSM and allowing it to undertake the functions of the Owners Corporation and strata committee, the appellant has not persuaded me that the balance of convenience and the competing rights and interests of the parties warrant staying or amending this order.
6. The Tribunal's lengthy and detailed reasons indicate several discrete issues which, taken individually, may have warranted the appointment of the CSM. Certainly, the decision paints a picture of a severely dysfunctional scheme in which minority lot owner's interests have been left to languish. Further, there are unchallenged findings that the function and management of the scheme has led to intervention by Fair Trading and it appears that the scheme's budget has been insufficiently maintained to meet its financial obligations.
7. Against that, the prejudice asserted by the appellant is that the CSM may take steps to raise and expend funds in the management of the scheme, to which it will have to contribute. However, that is part of the proper role of any strata manager, whether appointed by the Tribunal or by agreement of lot owners. There was no evidence from the appellant as to any impecuniosity which would prevent it funding its share of any levies. Further, given the most substantial expenditure likely to need to be funded, being the replacement of the roof, is unlikely to occur before the appeal can be heard, it also seems unlikely that funds raised against the appellant in that regard will be expended in the short term in any event.
8. It was not argued before me that the CSM's fees were excessive, that it lacks the qualification or expertise to manage the scheme, or that it has any conflict of interest or improper pre-conceived agenda in that regard.
9. Finally, on this issue, I note that in the application for a stay the appellant relied on the evidence it was not permitted to rely on (due to it being lodged late) in the proceedings at first instance, being an affidavit of Gina Seed dated 14 August 2022. I admitted that affidavit for the purpose of the stay only. The apparent relevance of the affidavit in the application is that Ms Seed deposes to various issues of concern to the first respondent having been rectified prior to the hearing at first instance and, importantly, to provide updated information about expert opinion from Mr Urginovski as to whether the roof in fact needs to be replaced or can be repaired. That information can be provided to the CSM for its consideration in determining what is required to meet the schemes' obligations under s 106 SSMA. It does not advance in any significant way the application for a stay, particularly given the unchallenged submission by the first respondent as to Mr Urginovski's evidence in cross-examination, recorded at [40], above.
10. I will dismiss the application for a stay, and make directions as to submissions on costs.

Joinder

1. As I indicated earlier, if there is to be an application for joinder it should be brought in the form of an Application for Miscellaneous Matters, supported by relevant evidence and submissions. Without expressing any view about whether other lot owners should be joined, it is not apparent why such an application is warranted where the companies who nominated themselves as appellants all appear to have coincident interests and were content to be commonly represented, but that is a matter for them.

Summary dismissal on the issue of standing.

1. In the alternative to my summarily dismissing the appeal, the first respondent sought to have me list the determination of that issue as a preliminary matter prior to requiring the parties to prepare for the substantive appeal. I will not do so at this stage. If, having had the opportunity to review this decision the first respondent maintains that is the preferred course it should likewise bring an application in the form of an Application for Miscellaneous Matters.

Orders

1. My Orders are as follows: 1. The application for a stay is dismissed. 2. Any party or parties seeking an order for costs of the application for a stay are to lodge and serve an application for same in the form of an Application for Miscellaneous Matters, with submissions and evidence in support of the costs application, within 14 days of the publication of this decision. In the absence of any application, I will not make any order about costs, leaving the costs of the stay to be considered costs of the proceedings. 3. Any submissions and evidence in response to the costs application(s) are to be lodged with the Appeal Registry and given to the costs applicant(s) within 14 days thereafter. 4. Submissions on the application for costs are not to exceed five pages in length. 5. The Appeal Panel may dispense with a hearing and determine any application for costs on the basis of the written submissions and evidence provided. If the parties oppose this course they should make submissions on this issue when complying with the directions as to their submissions on the substantive costs application.

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: 09 January 2023