The Owners - Strata Plan 2010 v Kahn

Background

1. The respondent is a lot owner in SP 2010, a multi-unit development in Vaucluse.
2. He fell into dispute with each of the other lot owners about the management of the scheme and the Owners Corporation's refusal to allow him the benefit of an exclusive use by-law he proposed over part of the common property of the scheme, which he had used as his own since purchasing his lot.
3. The respondent brought an application to the Tribunal for the appointment of a strata managing agent with the authority to exercise all of the powers of the Owners Corporation. Initially, the respondent proposed the appointment by order of the managing agent who was then managing the scheme by agreement. However, late in the proceedings he changed his position and sought the appointment of a managing agent not previously contemplated by the Owners Corporation.
4. The Owners Corporation agreed that a managing agent should be appointed but disagreed with the appointment of the managing agent eventually proposed by the respondent. It also raised the prospect that there should be a condition placed on the appointment of the managing agent in that they may not grant a right of exclusive use or enjoyment of the whole or any part of the common property. The Owners Corporation identified the power for the Tribunal to make such an order in s 237(5) of the SSMA.
5. The Tribunal made the orders sought by the respondent in the proceedings at first instance. It appointed the managing agent he proposed, for a period of twelve months, with the following functions as set out in order 2: 2. The appointed strata manager is to exercise all the functions of the Owners Corporation and is to have and may exercise all the functions of the chairperson, secretary, treasurer and executive committee of The Owners - Strata Plan No. 2010.

The Appeal

1. The other owners of lots in the scheme, with the assistance of the lawyers who represented the Owners Corporation in the proceeding at first instance, lodged a Notice of Appeal in respect of the decision, purportedly in the name of the Owners Corporation and in their own names as appellants. The Notice of Appeal was signed by Mr Attoh, the solicitor representing the Owners Corporation in the proceedings at first instance. The other lot owners claimed that the Tribunal denied them procedural fairness in deciding to appoint the managing agent proposed by the respondent and that it failed to engage with their case that the appointment of a managing agent should exclude the right to make a by-law granting exclusive possession.
2. The respondent, in reply, raised the question of whether the appeal had been instituted by the Owners Corporation, given that it had been lodged without the authority or ratification of the managing agent appointed by the Tribunal.
3. At the directions hearing to prepare the appeal for determination it was noted that the other lot owners had no apparent standing to lodge the appeal and were not, by virtue of r 29 of the Civil and Administrative Tribunal Rules 2014 (NCAT Rules) otherwise parties to the appeal. They sought to be joined as parties. That was not opposed by the respondent, subject to the qualification that he maintained that they had no right to bring an appeal as they were not parties to the proceedings at first instance.
4. The other lot owners were each joined, nominally as appellants, with an express reservation of the respondent's right to argue that those parties had no standing to appeal or that the Owners Corporation had not properly instituted the appeal.
5. In making that decision, the Appeal Panel referred to an earlier decision of another Appeal Panel in The Owners - Strata Plan No 1813 v Keevers [2021] NSWCATAP 130 at [74] to [93], where the issues of standing or whether an appeal had been properly brought in similar circumstances was raised. That Appeal Panel did not express a definitive view about those issues because an unqualified order joining the disaffected lot owners had been made in preparation for the appeal.

How are Lot Owners informed of Proceedings in the Tribunal at first instance?

1. In the proceedings at first instance, the parties were the respondent as applicant and the Owners Corporation as respondent.
2. Section 228(2) of the SSMA requires an Owners Corporation given notice of an application to the Tribunal for an order to immediately cause a copy of the application to be prominently displayed on any notice board required to be maintained by or under the by-laws on some part of the common property. It must also immediately serve a copy of the application on each owner of a lot in the strata scheme, except an owner who is a named party to the application. In that way, the lot owners who are not named parties become aware that they may wish to seek to be joined in the proceedings.
3. Under s 44 of the Civil and Administrative Tribunal Act 2013 (NSW) (the NCAT Act), one or more of the other lot owners could have applied to be joined as parties in the proceedings at first instance. The Tribunal had the power to do so if it was satisfied that they "should be joined": NCAT Act, s 44(1).

Determination

1. As the questions of whether the appeal has been properly instituted or can be regularised are jurisdictional issues; we must deal with them first.
2. At the hearing, only those issues could be canvassed due to time constraints. We indicated that we would decide on them first, and hear from the parties further as necessary. As we are satisfied that the appeal must be dismissed there will be no need for a further hearing.

Standing to bring an Internal Appeal

1. An internal appeal from the Tribunal's decision may only be made "by a party to the proceedings in which the decision is made": NCAT Act, s 80(1).
2. It is not submitted for the other lot owners that the appeal was lodged with the authority, or subsequent ratification, of the managing agent appointed by the Tribunal.
3. The other lot owners, nominally joined as appellants, acknowledge that they were not parties to the proceedings in which the decision was made. They say, though, that the appeal can proceed on the bases below, which were argued cumulatively and in the alternative. The other lot owners acknowledge that their arguments require a degree of "mental gymnastics" to follow. Their contentions are: 1. That Mr Attoh, for the Owners Corporation in the proceedings at first instance, was authorised by the terms of his retainer to lodge the appeal for the Owners Corporation, meaning the appeal was validly instituted; 2. That the Appeal Panel may, and should, make an order joining them as parties to the proceedings at first instance as an interlocutory order and either allow them to continue to prosecute the appeal lodged by Mr Attoh, (which the currently appointed manager does not wish to do) or grant any necessary extension of time for them to lodge an appeal; or 3. That the Appeal Panel should make an order under s 43(3) of the NCAT Act in the terms set out above at [3(2)], limiting the power of the appointed manager by excluding functions relating to the appeal, and then adjourn so that they may hold a meeting and decide to appeal in the name of the Owners Corporation. They could then make an application for us to approve ex-post-facto the prosecution of the appeal on the current Notice of Appeal or to allow an extension of time for a new appeal to be lodged; or 4. That the Appeal Panel has power to allow them to prosecute the appeal even absent such orders, relying on the combined effect of ss 38 and 36 of the NCAT Act.
4. For completeness, we note that in their written submission the other lot owners also sought to argue that the Appeal Panel could exercise discretion under what is described as the fifth exception to the rule in Foss v Harbottle to allow them to commence the appeal in the name of the Owners Corporation. However, that was abandoned, properly in our view, noting that unlike the Supreme Court the Tribunal lacks the equitable jurisdiction to do so: Owners Corporation SP 47027 v Peter Clisdell Pty Ltd [2017] NSWCATAP 188.
5. In their written submissions, the other lot owners also referred to s 45(4) of the NCAT Act as providing a power for allowing the appeal to proceed. Section 45(4) provides for the appointment of representatives for a party, including orders for the appointment of a guardian ad litem. That argument was not developed in either the written submissions or in oral argument. We assume on that basis that it was abandoned, and it has no apparent merit in any event.
6. The other lot owners also mentioned the possibility of making an instanter application at the appeal hearing to vary the order made at first instance under s 237(7) SSMA, to carve out decisions relating to the appeal. They did not do so, however, and in our view such an application would have been doomed to fail, for reasons we will come to.

Mr Attoh's authority to lodge an appeal for the Owners Corporation.

1. There is no dispute that the Owners Corporation retained Mr Attoh's firm in the proceedings at first instance. The minutes of a meeting authorising the retainer were before us.
2. The respondent argues, though, that Mr Attoh had no authority to lodge the appeal for the Owners Corporation, noting that he was not authorised to do so by the managing agent appointed by the Tribunal nor has his doing so been ratified by the managing agent. We agree. Whist it was argued by the other lot owners that Mr Attoh's retainer in the proceedings at first instance extended to lodging and acting in the appeal; that is not borne out by any evidence before us. Given that the other lot owners were on notice of this challenge, it was incumbent on them to produce any relevant evidence to meet it. The other lot owners pointed to minutes of a meeting of the Owners Corporation made prior to the decision at first instance, on 2 June 2021, in which the Owners Corporation resolved to: "appoint Legal Made Easy Pty Ltd to act for the owner's corporation (sic) in relation to NSW Civil and Administrative Tribunal, SC 20/50621 and SC 20/16091, in accordance with section 103 of the Strata Schemes Management Act 2015 (NSW), and Legal Made Easy costs proposal and disclosure, dated 20 May 2021."
3. This is not evidence that Mr Attoh's firm was retained to institute an appeal from the decision in those proceedings. Nor could we properly infer that Mr Attoh's firm's retainer extended to lodging the appeal without specifically obtaining instructions to do so after the decision at first instance was made. In response to our questions, Mr Ginges for the other lot owners properly conceded that a solicitor retained to represent a party in a proceeding has no automatic authority to lodge an appeal from the decision resolving that proceeding without specific instructions from their client.
4. On that basis, given the Owners Corporation (through its appointed manager) did not authorise the appeal and the other lot owners lacked authority to lodge it, the appeal was not properly instituted. If the other lot owners cannot satisfy us that this can be cured, it should be dismissed.

Joinder of the other lot owners to the proceedings at first instance

1. The other lot owners next call in aid s 44 of the NCAT Act, which states, relevantly: 44 Parties and intervention (1) The Tribunal may order that a person be joined as a party to proceedings if the Tribunal considers that the person should be joined as a party. …
2. The other lot owners argue that we can, and should, make an interlocutory order in the appeal joining them to the proceedings at first instance. They say that having been so joined, the appeal would then be regularised given the effect of r 29 of the NCAT Rules as they were named as appellants in the Notice of Appeal. The other lot owners say that s 44 should be read broadly, and in context, to promoting the guiding principle that the Tribunal should resolve the real issues in the proceedings in a way that is just, quick and cheap: NCAT Act, s 36(1). They note that s 44 refers to the joinder of parties "to proceedings" and that there is no qualification by reference to any specific proceedings. They say this supports the broad interpretation of the power granted by the section which they urge on the Appeal Panel. They also say that nothing else in the Act would prevent this interpretation and that the section ought to be interpreted in the context of the Act as a whole with a view to ensuring that persons affected by the operation of a decision of the Tribunal can appeal.
3. There is, in our view, a fundamental flaw in this argument. By doing as the other lot owners suggest, we would be making orders in respect of the proceedings at first instance. The Appeal Panel has limited authority to make such orders. Section 81 of the NCAT Act provides: 81 Determination of internal appeals (1) In determining an internal appeal, the Appeal Panel may make such orders as it considers appropriate in light of its decision on the appeal, including (but not limited to) orders that provide for any one or more of the following - (a) the appeal to be allowed or dismissed, (b) the decision under appeal to be confirmed, affirmed or varied, (c) the decision under appeal to be quashed or set aside, (d) the decision under appeal to be quashed or set aside and for another decision to be substituted for it, (e) the whole or any part of the case to be reconsidered by the Tribunal, either with or without further evidence, in accordance with the directions of the Appeal Panel. (2) The Appeal Panel may exercise all the functions that are conferred or imposed by this Act or other legislation on the Tribunal at first instance when confirming, affirming or varying, or making a decision in substitution for, the decision under appeal and may exercise such functions on grounds other than those relied upon at first instance.
4. As is plain from subsection (2), the Appeal Panel's power to exercise the functions that are conferred on the Tribunal at first instance is limited to situations where it is confirming, affirming or varying, or making a decision in substitution for, the decision under appeal. It is also to be exercised, as set out in subsection (1), "in determining an internal appeal." Here, when we are asked to make the order, there is no valid appeal on foot, and we are not confirming, affirming or varying, or making a decision in substitution for the one made at first instance.
5. In the absence of us being able to determine an internal appeal, and then conduct the appeal as a new hearing (NCAT Act, s 80(3)(a)), we are not satisfied that we have power to make an order for joinder affecting the proceeding at first instance. This appeal was irregularly commenced and is, on that basis, effectively a nullity. We should record our preliminary view, despite the issue not having been raised, that the power to conduct the appeal as a new hearing is similarly predicated on the existence of a valid appeal.
6. For the same reasons, any application that we make an order under s 237(7) SSMA, as foreshadowed but not pursued by the other lot owners, was also doomed to fail.
7. In case we are found elsewhere to be wrong in that conclusion, we should indicate that we would not have exercised any available discretion to join the other lot owners to the proceedings at first instance simply in order to regularise the appeal.
8. This is despite the other lot owners submissions that doing so would be appropriate where they say the appeal is reasonably arguable and there is potential for injustice to the other lot owners to be ingrained by preventing them from challenging the decision in a way which is just, quick and cheap.
9. There are several bases for our view: 1. Firstly, and self-evidently, the proceedings at first instance are finalised, meaning that the order could serve no purpose other than allowing the appeal to proceed; 2. Secondly, we are not satisfied that the other lot owners meet the test of being parties who "should be joined" simply to validate the appeal at this stage of the proceedings. As set out earlier, there was provision for those parties to be given notice of the proceedings at first instance and to seek to be joined whilst the proceedings were on foot, to preserve a right of appeal. That those parties were on notice of the proceedings at first instance is borne out by them all voting in favour of Mr Attoh's firm's appointment to represent the Owners Corporation in those proceedings: the minutes of the meeting of the Owners Corporation on 2 June 2021, referred to above. They also had the opportunity to seek leave from the Supreme Court to commence the appeal in the name of the Owners Corporation if they could satisfy the Court that it was in the interests of justice that they do so, a process set out in settled law. It is not irrelevant in that regard that the other lot owners were legally represented; 3. Thirdly, the obligation on the Tribunal set out in s 36(1) of the NCAT Act is directed to the resolution of "the real issues in the proceedings." It is entirely circular to argue that it is appropriate to join parties to the proceedings at first instance in order that they might properly bring an appeal to resolve the real issues in that appeal.

An order under s 43(3) of the NCAT Act to regularise the appeal?

1. Section 43 of the NCAT Act provides, relevantly, that: 43 Effect of pending general applications and appeals (1) This section applies to the making or lodgment of any of the following (a pending general application or appeal) - (a) a general application for the review or other re-examination of a decision made by an external decision-maker, (b) an external appeal, (c) an internal appeal. … (3) The Tribunal may make such orders (whether with or without conditions) staying or otherwise affecting the operation of a decision to which a pending general application or appeal relates as it considers appropriate to secure the effectiveness of the determination of the application or appeal
2. The other lot owners acknowledge that the power available under this provision would not extend to us making an order granting them standing in order to regularise the lodgement of the appeal.
3. They submit, though, that we can and should make an interlocutory order limiting the functions of the strata manager pending determination of the appeal on the basis that they may then follow the course set out at [21(3)] above.
4. Similar to the position we set out in respect of the joinder argument, making an order under s 43 of the NCAT Act is predicated on the validity of the appeal, which we have found invalid. Further, such an order could not be said to be appropriate to secure the effectiveness of the determination of the appeal. To suggest that it would be, simply begs the question. We are not satisfied that such an order is available or appropriate.

A power under s 38 of the NCAT Act to allow the other lot owners to prosecute the appeal?

1. The other lot owners then sought to rely on s 38 of the NCAT Act, again read with the guiding principle in s 36 of the NCAT Act giving it context. Section 38 provides, relevantly: 38 Procedure of Tribunal generally (1) The Tribunal may determine its own procedure in relation to any matter for which this Act or the procedural rules do not otherwise make provision. … (4) The Tribunal is to act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. …
2. The other lot owners say that we should exercise a discretion available to us under that section in order to allow them to appeal. They say that doing so would avoid them having to apply to the Supreme Court for leave to bring an appeal in the name of the Owners Corporation. Doing so, they submit, would promote the just, quick and cheap resolution of the real issues in the proceedings.
3. We are not satisfied that this provision assists the other lot owners. The section only operates to give the Tribunal the power to determine its own process where there is otherwise a gap in the procedure set out in the Act or its subordinate Rules. That is not the case here. Section 81 of the NCAT Act covers the field in this regard and sets out who may appeal, as set out above.
4. The appeal must be dismissed.
5. The respondent did not seek costs.

Orders

1. Our Order is as follows: 1. The appeal is dismissed.

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: 13 January 2022