The applicant is a lot owner in a six-lot strata scheme in Coogee, an eastern suburb in Sydney, NSW. The respondent is the owners corporation (OC).
In these proceedings filed 15 October 2024 the applicant sought, under specified provisions of the Strata Schemes Management Act 2015 (NSW) (SSMA), relief from interest, penalties and fees (particularly debt recovery fees) which had been imposed on a running balance of normal and special levies.
The applicant was a long-term owner and before she became unfinancial had been consistently on the strata committee (SC). In that role she said that she had had a major role in the operational management of the scheme and in assisting other owners, that she cared greatly about the welfare of the scheme and its owners and wished to be involved again. She said that, if interest, penalties and fees had not been imposed, a payment plan - with which she was complying - was manageable despite current challenging personal circumstances (including divorce and alleged domestic violence, with severe financial hardship effects), but as a consequence of those extra items the debt was increasing despite payments.
The applicant said that the general meetings of the scheme were generally not quorate (with the exception of the meeting described below) and that, since she had become unfinancial, only the secretary remained on the SC. There was no indication in the evidence how many members of the SC had been specified by the OC in general meeting (SSMA s 30). There was documentation in evidence of at least one inquorate general meeting.
The applicant had been provided by the strata manager with incompletely-accessible data of financial information - the gaps were because some periods between March 2021 and 22 January 2025 were encrypted and had not been provided in a form usable by her. She had put the open information into a spreadsheet which she said supported her contention that the interest, fees and penalties comprised nearly 50% of the running balance with the effect of inability to reduce it already mentioned. The items on the spreadsheet appeared to combine interest and penalties under the title "Penalty" since there were no separate designations for such items.
The OC was sent information by the Tribunal, including notices of hearing for directions hearings and the final hearing, at the nominated postal address on the application and, for one directions hearing on 2 April 2024, also to the nominated email address on the application, both of which were the strata manager's contact details.
The OC appeared at only the directions hearing on 2 April 2025, by the secretary who said that he was "now running with the matter". It was noted that the parties would try to settle and at final hearing the applicant showed me an email sent on 28 April 2025 by her which I did not read as to content but which sought to progress that avenue. The applicant said that she had received no response. The OC had filed and served no material despite being present when the directions for doing so were discussed and made at the 2 April directions hearing. The applicant was recorded at the directions hearing as seeking a refund of penalties and interest, the invalidation of a by-law concerning debt recovery as harsh and unconscionable and as seeking details of who authorised engagement of a debt recovery agent after the SC had approved a payment plan. This accorded broadly with the applicant's written material all of which had been filed by then. It was also noted that the OC representative confirmed receipt of all directions which had been emailed to him except for "the latest" (which was not further described).
On the foregoing material I was satisfied that the OC had notice of the final hearing and proceeded in the OC's absence.
The applicant's written material had said the special levy in question arose in 2022 for $12,600 as her share. The spreadsheet showed entries totalling $10,830.12 for "special levy" (with $8997.27 to the administrative fund and $1,832.85 to the capital fund) on 31 March 2021. There was email communication in October and November 2021 between owners, including the applicant and strata manager, concerning the holding in November 2021 of an EGM to rescind an ordinary resolution from an EGM on 20 October 2021 for raising a $45,000 special levy, and then to hold a further EGM in late November 2021 because a lot owner had changed her mind and wished not to approve the levy. The special levy was to repair the rear, south-facing, brick wall and windows and lintels, to supplement what the applicant said was nearly $100,000 already in the capital fund. The work began in 2022 and some painting and sealing still remained to be completed.
The applicant said that, at the general meeting where the special levy was resolved to be raised, the original proposal was that it be paid over 12 months which she favoured as manageable and which reflected the large balance existing already in the capital fund. The strata manager then suggested three months, on which the owners split 3-3 but which was passed on unit entitlements which the strata manager advised was the consequential voting method. As said above, one owner who voted in favour wished to change her vote the following day on the basis, the applicant said, that such lot owner did not understand the proposal when she voted. The levy went ahead on the three-month basis, with the spreadsheet showing charges in accord with that dating.
The spreadsheet showed that from 5 April 2023 the applicant was paying $150pfn which in later correspondence was referred to as a payment plan but for which there was no formal documentation in evidence. The applicant said that there had been no proper response to her requests for a payment plan with no interest or penalties since 2022. Because of her drastically-changed personal circumstances, she requested a revised payment plan on 17 August 2023 and repeated that request on 21 February 2024.
On 15 January 2024 the strata manager emailed the applicant that his debt management team had reported that the applicant had been making the regular payment plan payments but this covered only arrears, not new levies, the debt was then $10,458.86, "the current payment plan has been lifted" and a new plan would require a new form and SC approval. The strata manager said that he did not have authority to waive penalties or approve payment plans.
The applicant submitted a payment plan application form dated 21 February 2024 for instalments of $350pfn for 12 months. The form's fine print stated that interest would continue to accrue on overdue levies until paid or a general meeting at the lot owner's cost waived interest. The form also contained an acknowledgement by the applicant that if for any reason the plan was not adhered to then the OC could recover the full debt by legal action and that the applicant would pay new levies as they fell due during the plan. The applicant's accompanying letter to the SC proposed, in addition to the $350pfn terms for 12 months, "No interest on the outstanding amounts, considering the financial constraints" and lump sum payments of $2,500 in July and November 2024.
By email from the strata manager on 25 March 2024, the plan was notified as approved by the SC subject to further information on when payments would start. The applicant's documents contained an email of 13 June 2024 confirming approval by the SC of a payment plan for overdue balances of $10,458.86 by instalments of $350pfn for 15 fortnights starting on 5 May 2024 with final payment on 5 May 2025, with future levies to be paid in full to avoid the plan falling into default. The email said that interest would continue to accumulate unless the OC approved by resolution in general meeting the removal of interest, but other fees would stop.
The applicant emailed on 13 June 2024 that fortnightly payments had started on 9 May 2024; from the spreadsheet these appeared to occur fortnightly at least until commencement of these proceedings. On 13 June 2024 the strata manager emailed that: interest was suppressed from when the payment plan was set up but that the plan form was required in order for the plan to be set up; interest removal required a decision at an EGM or AGM of the OC with the next AGM in 2025 and a cost to a lot owner of $350-$400 to call an EGM. From the spreadsheet the "Penalty" item continued to appear after May 2024.
The applicant relied on SSMA s 85(3), (5) and (8). Under those provisions, respectively: (3) an owners corporation may by resolution determine (either generally or in a particular case) that a contribution is to bear no interest; (5) an owners corporation may, by resolution at a general meeting, agree to enter into payment plans, either generally or in particular cases, for the payment of overdue contributions, with a payment plan to be limited to 12 months but with a further plan able to be agreed to by resolution, and (8) the Tribunal or a court may, on application by an owner, order that no interest is chargeable on a specified contribution if the Tribunal or the court is satisfied that the owners corporation should reasonably have made a determination not to charge interest for the late contribution.
Under s 85(7) "The existence of a payment plan does not limit any right of the owners corporation to take action to recover the amount of unpaid contributions"; see also reg 18(1)(i) which requires this to be stated in the notice of payment plan. There was no express statement to that effect in the application for a payment plan, only (as already said) for recovery if the plan was not adhered to; the letters of 25 March and 13 June 2024 from the strata manager did not meet this requirement.
Under SSMA s 87, also relied upon by the applicant (and to which s 88 is consequential), the Tribunal may, on application by (among others) a lot owner, order payment of levied contributions of a different amount or in a different manner if the Tribunal considers that any amount levied or proposed to be levied by way of contributions is inadequate or excessive or that the manner of payment of contributions is unreasonable. Under s 88, if a contribution has been wholly or partly paid, then an order to pay more has effect as if the owners corporation had decided to levy a contribution equal to the difference, and an order to pay less imposes a duty on the owners corporation to refund the difference.
The applicant also challenged, under SSMA ss 24 and 150, a by-law "and associated motions" that authorised the SC to make decisions on payment plans and empowered the SC or strata manager in debt recovery for $500 or more. This challenge appeared to be on the basis that the SSMA specified the OC as the body to resolve on payment plans without power of delegation to the SC.
The applicant further complained about being contacted by a debt recovery agency, demanding full payment of $10,843.18 plus costs of $894.56 totalling $11,737.74 within seven days to avoid legal proceedings, on 26 March 2024 after approval in principle of the payment plan by the SC on 4 March 2024. The applicant relied on SSMA ss 85(3) and (4) and 103. The amount of $894.56 was debited to the account on 18 May 2024 despite the payment plan beginning with payments on 9 May 2024.
SSMA s 260, which avoids personal liability for SC members and office-holders acting in good faith exercise of functions, was also called in aid of the applicant's hardship arguments.
The evidence contained unsigned minutes of an AGM on 1 May 2023, with no other formal indication of approval (as the extracts from the 2024 AGM minutes in evidence were in a similar state). The meeting was inquorate as only the secretary's proxy was present, with the strata manager in attendance and acting as chair. The meeting continued under SSMA Sch 1 para 17(4)(b). There were included the following resolutions: to authorise the strata manager and/or the SC to engage in debt collection processes, including changing the process and limits of authority, and for the purpose of collection to authorise the SC to approve payment plans generally or for specific lot owners. Both were said to be pursuant to s 103. Among other dispensations, approval of the OC is not required under s 103(3)(b) "to take legal action to recover unpaid contributions, interest on unpaid contributions or related expenses".
The evidence also contained an unsigned extract from what appeared to be minutes of an AGM on 11 June 2024, with no other formal indication of approval. This varied the form of the 2023 authority to the SC just described, relevantly to reduce the recovery threshold for authorised action, to approve payment plans not exceeding 12 months and to waive interest and recovery costs including penalties, legal and other costs, arising out of the collection/recovery of unpaid lot owner contributions.
An OC cannot delegate its functions except as empowered by the SSMA. Section 13 and SSMR reg 4 do not contain empowerment to delegate enforcement of levies or approval of payment plans to the SC. Sections 85 and 86 expressly empower the OC in these matters without a right to delegate. Sections 85(3) and (5) expressly require a resolution of the OC or a resolution in general meeting in respect of waiver of interest and approval of payment plans.
SSMA s 11 empowers the SC to assist the OC to carry out its management functions but is not in itself a delegation. Section 103(3)(b), on which the OC appeared to rely for empowering the SC in relation to levy enforcement and payment plans, may not be sufficiently broad to cover all instances of enforcement and use of payment plans. It is also not a delegation; rather, it dispenses with the need, in the specified circumstances, to obtain approval in general meeting, thereby enabling the SC to act in the OC's name without such approval. However, such empowerment is for the SC to take action in the name of the owners corporation within the scope of the empowerment.
It is therefore problematic whether the SC's actions in respect of approving a payment plan on the terms it did (which were not the same as the applicant's accompanying document proposed), rather than putting the approval to a general meeting, was within power.
I do not need to determine that aspect on a final basis, nor some of the applicant's other arguments.
That is because, in the circumstances described at the start of these reasons, I consider that orders should be made under SSMA s 87(1), which will have consequences specified under s 88; there may also be occasion for an application for further orders, under s 85(8). There was no evidence as to why the entirety of the levy was required to be paid within three months when there was a very significant balance in the capital fund and no indication of an immediate need in the short term for the entirety of the funds. Those indicators supportive of a longer payment period as reasonable were clearly raised by the applicant and other lot owners who comprised in number half the ownership (and more than half when the lot owner with second thoughts was included).
The OC could have chosen to participate in the proceedings when on notice of such matters and lead evidence if the three month period was required for a significant sum rather than over the succeeding 12 months or some intermediate period. The timing of the building programme and payment schedule compared with available funds to meet obligations was evidence specifically within the knowledge of the OC, who did not lead it, with the forensic consequence stated historically in Blatch v Archer[1774] EngR 2; (1774) 1 Cowp 63, (1774) 98 ER 969 per Lord Mansfield LCJ: "[i]t is certainly a maxim that all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted". The state of the evidence supports a finding that the three-month payment period was unreasonable.
In those circumstances the 12-month payment period by equal instalments appears a reasonable approach. If that had been adopted then interest, fees (including the large collection fee debited on 9 May 2024) and penalties would have accrued on lower amounts at later delayed dates and, if the lower payments had been met and future levies had been paid on time, would not have accrued at all. That reconstruction of lot owners' levies accounts is to be undertaken by the OC, with any consequential orders once it is completed, including under s 85(8) if the applicant seeks that any outstanding interest under the outcome from performance of orders 1 and 2 is not chargeable or is chargeable in a lesser amount.
[2]
1. Order, under s 87 of the Strata Schemes Management Act 2015 (NSW) (SSMA), that the special levy for $45,000 in resolution 5 approved at the EGM on 20 October 2021 is varied so as to be required to be paid in 12 equal monthly instalments with the first instalment due for payment on 20 November 2021, but otherwise in the same amount and with the same allocation between administrative fund and capital fund.
[3]
2. Order that the respondent owners corporation (OC) re-calculate the lot owners' levies accounts in accordance with order 1, including any resulting credits and/or debits for interest, penalties and fees charged.
[4]
3. Note the obligations under SSMA s 88 in respect of the outcome from performance of orders 1 and 2.
[5]
4. Grant leave to the applicant to apply for further orders, including under SSMA s 85(8), if the applicant seeks that any outstanding interest under the outcome from performance of orders 1 and 2 is not chargeable or is chargeable in a lesser amount.
[6]
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.
Parties
Applicant/Plaintiff:
Sydney
Respondent/Defendant:
The Owners �e" Strata Plan No 15000 [2025] NSWCATCD 29