The Owners - Strata Plan 5709 v Andrews - [2009] NSWCA 189 - NSWCA 2009 case summary

The Owners - Strata Plan 5709 v Andrews - [2009] NSWCA 189 - NSWCA 2009 case summary — Zoe

[20]

(1) An owners corporation must, not later than 14 days after the constitution of the owners corporation and at each annual general meeting after that, estimate how much money it will need to credit to its administrative fund for actual and expected expenditure: (a) to maintain in good condition on a day-to-day basis the common property and any personal property vested in the owners corporation, and (b) to provide for insurance premiums, and (c) to meet other recurrent expenses. Note . Recurrent expenses would include such regular expenses as insurance, water charges, electricity charges, carpet cleaning, lawnmowing services and the like and minor expenses relating to maintenance of the common property. (2) An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its sinking fund for actual and expected expenditure: (a) for painting or repainting any part of the common property which is a building or other structure, and (b) to acquire personal property, and (c) to renew or replace personal property, and (d) to renew or replace fixtures and fittings that are part of the common property, and (e) to replace or repair the common property, and (f) to meet other expenses of a capital nature. Note . Expenses of a capital nature would include expenses in relation to major repairs or improvements to the common property or personal property of the owners corporation, such as painting of a building or replacement of roofing, guttering or fences and the like. (3) When estimating amounts needed to be credited to the administrative fund or the sinking fund the owners corporation must have before it, and take into account, a statement of the existing financial situation of the strata scheme and an estimate of receipts and payments. (4) In estimating amounts to be credited to the sinking fund, an owners corporation that is required to prepare a plan under section 75A is to take into account anticipated major expenditure identified in the plan for the 10-year period to which the plan relates. (5) An owners corporation of a large strata scheme must include in the estimates prepared under this section at an annual general meeting specific amounts in relation to each item or matter on which the owners corporation intends to expend money, or on which the owners corporation is aware money will be likely to be expended, in the period until the next annual general meeting.

[32]

(1) Order appointing strata managing agent to exercise functions of owners corporation An Adjudicator may by order 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 An Adjudicator may also order, when appointing a strata managing agent under this section, that the strata managing agent is to have and may exercise: (a) all the functions of the chairperson, secretary, treasurer or executive committee of the owners corporation, or (b) specified functions of the chairperson, secretary, treasurer or executive committee of the owners corporation, or (c) all the functions of the chairperson, secretary, treasurer or executive committee of the owners corporation other than specified functions. (3) Order may be made without application in certain circumstances An Adjudicator may make an order under this section, without an application having been made for the order, but only if satisfied that the management structure of a strata scheme the subject of an application under this Chapter is not functioning or is not functioning satisfactorily. (3A) Order may be made on application in certain circumstances An Adjudicator may make an order under this section, on application, but only if satisfied that: (a) the management structure of a strata scheme the subject of an application under this Chapter 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. (4) Qualifications of person appointed A person appointed as a strata managing agent under this section must: (a) hold a strata managing agent's licence issued under the Property, Stock and Business Agents Act 2002, and (b) have given consent in writing to the appointment, which consent, in the case of a strata managing agent that is a corporation, may be given by the chief executive officer of the corporation. (c) (Repealed) (5) Terms and conditions of appointment A strata managing agent may be appointed under this section on such terms and conditions (including terms and conditions relating to remuneration by the owners corporation and the duration of appointment) as may be specified in the order making the appointment. (6) Revocation of certain appointments An order made in the circumstances referred to in subsection (3) may be revoked or varied by an Adjudicator on the application of a person entitled to make an application for an order under this section and, unless sooner revoked, ceases to have effect at the expiration of such period after its making (not exceeding 12 months) as is specified in the order. (7) Who may make an application? An application for an order under this section may be made only by: (a) a person who obtained an order under this Act that imposed a duty on the owners corporation or on its executive committee, chairperson, secretary or treasurer and that has not been complied with, or (b) a person having an estate or interest in a lot in the strata scheme concerned or, in the case of a leasehold strata scheme, in a lease of a lot in the scheme, or (c) the authority having the benefit of a positive covenant that imposes a duty on the owners corporation, or (d) a judgment creditor to whom the owners corporation owes a judgment debt. 15 Schedule 2 of the Act deals with meetings and procedures of the owners corporation. Clause 32 requires that notice of a general meeting of an owners corporation must, at least seven days before the meeting be served on each owner.

[57]

MOTION 1: Resolved to adopt the minutes of the extraordinary general meeting held 6 June 2005. Minutes Resolved that Consolidated Quality Projects Pty Ltd be appointed to carry out stage 1 works in accordance with the tender document at a price of $110,473 including GST. MOTION 2: The managing agent provided samples of tiles to the Owners to choose. The works are scheduled to commence immediately pending Council's approval for works on Council's property, expected to be granted within 14 days. Mr and Mrs Metford preferred a light off-grey colour. Owners were asked to provide the strata manager with their preferred tiles specifications within 14 days of the meeting. Waterproofing works Mr Andrews did not give an opinion as to the tiles, as he stated that his property is not leaking. It was noted that the Consumer, Trader & Tenancy Tribunal released Mr Andrew's previous tenants from the lease due to water penetration, and that the real estate agent, Ms Ghilardi, had advised the strata manager by email on 18 January 2006 that lot 2 had water penetration. Ms Ghilardi requested adjournment of the meeting citing the need for a second opinion regarding the works. As the building condition report provided by Komplete Properties Pty Ltd and dated 7 December 2005 was emailed to both owners on 12 December 2005 seeking comment it was determined not to adjourn the meeting and delay further at this stage. It was noted that Mr and Mrs Metford had communicated with the strata manager regarding common property repairs, while Ms Ghilardi advised by facsimile dated 31 January 2006 that Mr Andrews is "happy to take necessary repairs". MOTION 3: The managing agent stressed that if the owners worked together to improve the property it could bring great financial benefits, especially if cosmetic works are carried out in accordance with stage 2 of the Komplete Properties report. It was noted that the handrails need upgrading as these do not meet the current Building Code of Australia standards. Though Mr and Mrs Metford supported further improvements Mr Andrews did not. Other works MOTION 4: Motion withdrawn. Discounts MOTION 5: The strata manager asked Mr Andrews to pay his outstanding special levy raised in respect of the waterproofing works, so that it would not be necessary to raise further funds. Mr Andrews declined. The strata manager informed the owners that a solicitor will be instructed to issue a statement of claim as soon as possible to recover the outstanding special levy. Special Levy Resolved as amended that a special contribution of $120,000 be raised to pay for the waterproofing works, due and payable in one instalment on 1 May 2006.

[62]

Attendance: Bart Jaworski (Bright & Duggan) MOTION 1: Resolved that the minutes of the extraordinary general meeting held 2 June 2006 be approved. Minutes MOTION 2: Resolved that the audited statement of financial position and statement of financial performance for the year ended 30 June 2006 be adopted. Financials MOTION 3: Resolved that the accounts and financial statements be audited to Australian Auditor Standards for the financial year ending 30 June 2007, for presentation to the next annual general meeting. Auditor a) Resolved that the contributions to the administrative and sinking funds be determined per annum including GST on a continuing basis at: MOTION 4: Administrative fund $34,540 Budget and contributions Sinking fund $10,000 b) And that both contributions be paid in equal quarterly instalments, effective from 1 October 2006. MOTION 5: Resolved that, as the strata managing agent has been appointed by the Consumer, Trader and Tenancy Tribunal to exercise all the functions of the owners corporation, the chairperson, the secretary, treasurer and executive committee, an executive committee not be elected at this time. Executive committee MOTION 6: Resolved to confirm the insurances. Insurance MOTION 7: Resolved that the strata manager seek an alternative quotation and accept the least expensive insurance policy. Insurance renewal MOTION 8: Resolved that a revaluation be carried out for insurance purposes, and that the strata manager alter the sum insured on the building and common property in accordance with any building valuation that the owners corporation may from time to time receive. Revaluation MOTION 9: Resolved that the strata manager be authorised and instructed to arrange change the owners corporation's address for service of notices to Bright & Duggan Pty Ltd's address. Change of address for service of notices

[76]

Decision of primary judge 32 As regards the meetings held in August 2003, the primary judge held that Mr Patman did not act as the owners corporation of Strata Plan 5709 at those meetings; that if Mr Patman had all the powers of the owners corporation under the Adjudicator's orders, he delegated those powers to Mr and Mrs Metford and Mr and Mrs Andrews in contravention of s 32 of the Act; and that otherwise Mr and Mrs Andrews' votes against the motions would have defeated them. In addition, she was not satisfied that OSP had notified Mr and Mrs Andrews of their contribution. 33 As regards later events, the primary judge concluded that Bright and Duggan's consent to their appointment was on terms set out in the draft agreement annexed to the orders of the Adjudicator, and thus did not extend to delegation by the owners corporation of its power to make decisions on matters required by the Act to be decided by the owners corporation or relating to the levying or payment of contributions. On that basis, the primary judge held that the instructions to lawyers to commence the proceedings contravened s 80D of the Act. 34 As regards the meeting of 29 March 2006, the primary judge held that, if Bright and Duggan had all the powers of the owners corporation, Mr Jaworski delegated those powers to Mr and Mrs Metford and to Mr Andrews in contravention of s 32 of the Act; and that otherwise the Andrews' voting against the motion for a special contribution would have defeated that motion. Also, she was not satisfied that OSP had notified Mr and Mrs Andrews of their contribution. 35 As regards the meeting on 2 June 2006, the primary judge was not satisfied that Mr Jaworski made the resolution set out in the minutes; or that Mr Jaworski complied with s 75 of the Act in determining at that meeting whatever special contribution Mr and Mrs Andrews may have been liable to pay; or that OSP duly notified Mr and Mrs Andrews of whatever contribution was payable. 36 As regards the meeting on 21 August 2006, the primary judge was not satisfied that Mr Jaworski complied with s 75 of the Act by determining at that meeting whatever special contribution Mr and Mrs Andrews may have been liable to pay; or that OSP duly notified Mr and Mrs Andrews of whatever contribution was payable. 37 As regards the meeting on 24 August 2006, the primary judge held that the resolution that a special contribution of $115,000 be raised was ineffective because it significantly exceeded the relevant quotations and thus exceeded the maximum amount permitted by ss 75 and 76 of the Act; and she was not satisfied that OSP had duly notified Mr and Mrs Andrews of whatever contribution was payable. 38 As regards the meeting on 27 July 2007, the primary judge held that the resolution that a special contribution of $200,000 be raised was ineffective, because the amount significantly exceeded what was required and thus exceeded the maximum amount permitted by ss 75 and 76 of the Act; and she was not satisfied that OSP duly notified Mr and Mrs Andrews of whatever contribution was payable.

[77]

Issues 39 The notice of appeal sets out the following grounds: 1. The primary judge erred in dismissing the proceedings (paragraph [217] of the judgment delivered on 17 June 2008 ("the judgment"). 2. The primary judge should have found that: a. The strata managers Bright & Duggan Pty Ltd and John Patman Strata Management ("the strata managers") had been duly appointed pursuant to section 162 of the Strata Schemes Management Act, 1996 ("the SSMA") with the full powers of the Owners Corporation (paragraphs [174], [175], [177-180] of the judgment); b. The strata managers, having been duly appointed pursuant to section 162 of the Strata Schemes Management Act, had not (and could not) delegate their full authority or full powers of the Owners Corporation to the lot owners of the strata scheme (paragraphs [174], [175] and [191] of the judgment); c. No meetings or notices of meetings were required as a precondition to the making of determinations by the strata managers (paragraphs [188], [189], [190], [194], [198], [201], [209] and [213] of the judgment); d. Each of the determinations made by the strata managers was a valid exercise of authority by the respective strata managers; e. The managing agent's authority to instruct the plaintiff's solicitors was not circumscribed by section 80D of the SSMA or the regulations thereunder (paragraph [183] of the judgment); f. If a meeting/s of lot owners were necessary for any purpose then in consequence of the operation of clause 10(8) of schedule 2 of the SSMA, the respondents were disentitled from casting any effective vote at any such meeting. 3. The primary judge erred in coming to her decision on the basis of matters not pleaded by the respondents in their defences: a. That Mr Patman delegated his authority (paragraphs 174 and 175 of judgment); b. That Mr Jaworski delegated his authority in relation to the meeting of 29 March 2006 (paragraph [191] of the judgment); c. That section 80D of the SSMA and the regulations thereunder circumscribed authority to instruct the plaintiff's solicitors (paragraph [183] of the judgment); d. That the alleged failure of the strata managers to comply with sections 75 and/or 76 of the SSMA invalidated determinations (paragraphs [172], [173], [197], [199], [203], [207] and [215] of the judgment). 4. Further or in the alternative to paragraphs 3(c) and 3(d) above, the primary judge should have found that the strata managers complied with Section 80D of the SSMA and sections 75 and/or 76 of the SSMA. 5. The primary judge erred in failing to find that upon the proper construction of Section 80 of the SSMA, the Owners Corporation was entitled to recover the whole of its costs and/or expenses pursuant to Section 80 of the SSMA in the amount of $61,624.61. 6. Inasmuch as the primary judge found that any decisions purportedly made by or on behalf of the Owners Corporation were for any reason invalid or ineffective, the primary judge should have found that any and each such decision was duly and validly ratified by the Owners Corporation by subsequent determinations or by fresh determination (paragraphs [176], [183], [193], [195], [197], [198], [199], [210], [203], [206], [207], [209], [210], [211], [213], [214] and [215] of the judgment). 7. The primary judge erred in failing to find that the respondents' liability for ordinary levies fell due upon the passing of each such resolution for ordinary levies. 8. The primary judge erred in failing to find that the respondents had been notified of their contributions to pay ordinary and special levies, in the absence of any issue in consequence of the respondent's evidence that notification of such ordinary and special levies had been received (Transcript of 21 February 2008 at page 28/29) and (paragraphs [176], [192], [197], [200], [204], [208], [212] and [216] of the judgment). 9. The primary judge erred: a. In failing to hold that the determination of the issues of the terms of the appointment of the respective strata managers, the validity of their appointments generally, the requirement for notices of meetings, the requirement for notices of contributions and the validity of the determinations of the compulsorily appointed strata managers prior to 23 February 2007 ("the Chapter 5 issues") were all matters within Chapter 5 of the SSMA and were therefore within the exclusive jurisdiction of the Consumer Trader & Tenancy Tribunal ("the CTTT"); b. In failing to hold that as a result of findings made by the CTTT previously in relation to the Chapter 5 issues, the respondents were estopped from re-litigating the Chapter 5 issues or were otherwise embarking upon an abuse of process in seeking to do so (paragraphs [166-170] of the judgment); c. In so far as her Honour had any discretion to deal with any matters within Chapter 5 of the SSMA, any discretion purportedly exercised in that regard was erroneous; d. In failing to come to the same conclusion as the CTTT in relation to the Chapter 5 issues. 10. The primary judge omitted to give any or any sufficient reasons for any of her factual findings or legal conclusions (paragraphs [166] to [218] of the judgment) 40 There is a notice of contention setting out the following grounds: 1. Her Honour should have held that the plaintiff failed to issue proper and effective notices of meeting of the Owner's Corporation to the defendant in respect of meetings purportedly held on 24 August 2006 and 27 July 2007, and that such meetings were invalid and the decisions that were purportedly made at them were nullities. 2. Her Honour should have held that the plaintiff failed to issue proper and effective contribution notices to the defendant with respect to the levies arising in 2003, 2006 and 2007. 3. Her Honour should have held in the case of the levies purportedly resolved upon at the 24 August 2006 meeting and the 27 July 2007 meeting of the plaintiff, the levies were excessive and struck without lawful justification. 4. Her Honour should have held that Bright & Duggan Pty Ltd was invalidly appointed as Strata Manager. 5. Her Honour should have held that, with respect to the 2003 meetings, no valid resolutions were passed due to unlawful delegation. 6. Her Honour should have held that no valid resolution to instigate and prosecute the subject legal proceedings has been passed. 41 At the hearing of the appeal, the respondents did not seek to uphold the decision of the primary judge that OSP had not notified Mr and Mrs Andrews of their contribution, as required by s 78(1) of the Act. 42 In my opinion this concession was correct. Mr and Mrs Andrews were given minutes of the meetings of 25 August 2003 and 27 August 2003, and were sent the letter of 5 November 2003; and subsequently they received the notices set out at pp 469-482 of the Blue Book. 43 Also, the respondents did not seek to uphold the decision of the primary judge, concerning the meetings of 24 August 2006 and 27 July 2007, to the extent that it turned on the view that the resolutions were ineffective because the levies substantially exceeded the amounts needed. 44 In my view, this concession is also correct. It is true that s 75 of the Act requires the owners corporation to estimate "how much money it will need to credit to" both its administrative fund and its sinking fund "for actual and expected expenditure"; but s 76 requires determination of a different amount, namely the amount to be levied "to raise the amount estimated as needing to be credited" to the funds (s 76(1)) or "in order to meet the expenses" (s 76(4)). If an owners corporation determines that the levy will not in fact be paid by some of the unit holders (for example, because of bankruptcy), the amount of the levy necessary to raise the required amounts and/or to meet the expenses will be that much greater. By reason of s 78(2) of the Act, the contributions have to be payable in shares proportionate to unit entitlements. 45 The issues actually contested on the appeal were: (1) Whether Mr Patman exercised the function of the owners corporation in making relevant determinations at the August 2003 meetings. (2) Whether the appointment of Bright and Duggan was subject to limitations of the kind referred to in the draft agreement. (3) Whether certain functions of OSP had to be exercised at a properly convened general meeting, notwithstanding the appointment of a strata managing agent under s 162 of the Act, notably the functions under s 76(4) and s 80D of the Act.

[78]

Did Mr Patman exercise the function of OSP? 46 In the Further Amended Grounds of Defence, Mr and Mrs Andrews admitted that Mr Patman "convened the relevant meetings and prepared to pass special resolutions to raise special levies" (par [2]). It is likely that the word "prepared" was a typographical error for "purported" (cf par [3]). There was no suggestion in defence that Mr Patman had not purported to pass special resolutions to raise the levies. 47 OSP did not call Mr Patman to give any evidence. Mr Andrews gave affidavit evidence concerning the meeting of 25 August 2003 as follows: 4.1 At the Annual General Meeting the Second Defendant and I attended the meeting and said to the words to the following effect in respect of proposed motion 5:- I said:- " I cannot support this motion at this time. John you say that $20,000.00 needs to be raised as a special levy for urgent maintenance works but you have not specified what works are required. Do you have any quotes? " Mr Patman said:- " I don't have any quotes at the moment. But this is to cover expected costs " I said:- " How can you know what costs are likely to be incurred if you don't have quotes and don't know the extent of the works to be undertaken. What works do you have in mind? " He said:- " In general there is work needed on the carport and the driveway ." I said:- " How can you talk in such general terms. Besides weren't you appointed to provide a report rather than to take affirmative action to raise funds? ' He said:- " I consider the work is necessary and I am now going to put it to the vote ." 4.2 A vote was taken and the Second Defendant and I voted against and Mrs and Mrs Metford voted in favour. Mr Patman then said words to the effect:- " I declare the vote carried on the basis that the Metfords have a 60% entitlement to the Andrews' 40% ." 48 The only oral evidence relevant to the question was given by Mr Andrews in cross-examination. At Black 103-4 he was asked the following questions, initially referring to the meeting of 25 August 2003: Q. And it's your recollection, isn't it, that it was Mr Patman who made - in fact made resolutions at that meeting? A. As far as I recollect, yes. ……

[84]

Q. And he indicated he was going to proceed, didn't he? A. Yes, we weren't satisfied with that-- 49 Written submissions prepared by counsel for Mr and Mrs Andrews (dated 21 February 2008, the same day as the cross-examination of Mr Andrews) contained the following: 33. Section 32 of the Act provides that a strata managing agent appointed by an adjudicator pursuant to s.162 cannot delegate functions conferred by the adjudicator. 34. Accordingly, it was not open to Mr Patman to delegate the responsibility for determining levies to the owners or to any other person. 35. Due to a typographical error in the orders made by the CTTT and set out in BJ3, Mr Patman has taken the view that his appointment was confined to an appointment to exercise the powers of the executive committee. 36. The error arises due to a missing comma between "owners corporation" and "executive committee" in the third line of order one. Mr Patman has taken the view that those words are to be read conjunctively, as opposed to disjunctively and he did not consider that the words meant "the Owners Corporation and the Executive Committee". That this was not intended by the CTTT as can be seen at page 012 in BJ3. 37. The misapprehension is made clear when one considers the minutes of the meetings that took place in 2003. 38. The minutes of the meeting held on 25 August 2003 form annexure J to the affidavit of Mr Jaworski sworn on 17 May 2007 (page 29). 39. Mr Patman has recorded votes being exercised by both lot owners (Mr & Mrs Metford and Mr & Mrs Andrews) in respect of each resolution considered that day. The explanation that votes have been recorded for the lot owners is found in the announcement of the Chairman (Mr Patman) that his appointment was as "Chairman, Secretary and Treasurer and also to have the role of Executive Committee of Strata Plan 5709". 40. The consequence of Mr Patman's misapprehension is that he failed to exercise the functions of the Owners Corporation, rather, considering himself as having the function of the executive committee and office holders, delegated such powers to the owners to exercise. Such delegation was invalid being contrary to s.32 of the Act. The consequence is that the decisions made on 25 August 2003 were invalid because they were made by an invalidly appointed delegate (i.e. the owners). 41. The same problem arises with respect to the extraordinary general meeting which was held on 27 August 2003. In this case, the announcement of Mr Andrews at the beginning of the meeting that Mr Patman had been appointed as "strata manager... with all the powers of the owners Corporation executive committee, chairperson, secretary and treasurer of the owners Corporation" was not disputed. 42. Again, in the case of the meeting on 27 August 2003 votes are recorded as having been entered by the owners of the lots. The consequence is that another invalid delegation has been exercised by reason of the typographical error in the orders of the CTTT. 50 In her judgment, the primary judge said this concerning the evidence of Mr Andrews: 45. The Andrews called Anthony Andrews. Mr Andrews' demeanour in the witness' box conveyed the impression that he is unsophisticated. He grappled uncomfortably with complex propositions and agreed reluctantly to courteous, insistent cross-examination. Mr Andrews' delivery of his oral evidence contrasted with the specialised terminology and formal syntax in the orderly affidavit which Diamond Conway had drawn for him. Mr Andrews frankly admitted that he could not remember his exchanges with Mr Patman and with Mr Jaworski verbatim but the preponderance of evidence tends to support the version of their conversations, reconstructed in Mr Andrews' affidavit. 51 The primary judge said that the evidence supported the hypothesis in pars 35, 36, 39, 40 and 41 of counsel's submissions; but she said she did not need to adopt his thesis. 52 Mr Coles QC for OSP submitted that the minutes of the meetings and the oral evidence of Mr Andrews showed that Mr Patman had exercised the function of OSP; and he submitted that unduly legalistic standards should not be applied in this area, referring to Smith v The Body Corporate of Strata Plan No 22669 (1997) NSW Titles Cases 80-046. 53 Mr Beech-Jones SC for Mr and Mrs Andrews submitted that the primary judge was not shown to be in error. He submitted that the minutes of 25 August 2003 indicated that Mr Patman regarded himself as having been appointed Chairman, Secretary and Treasurer and have the role of the Executive Committee, not as having all the functions of OSP. The reference to motions, and the recording of votes, suggested that these were not determinations by him. He submitted that the same applied to the meeting of 27 August 2003; and although there was reference in those minutes to "all the powers of the owners corporation", Mr Patman was recorded as saying "it was necessary to call the meeting to arrange for funds to be available for urgent repairs to be carried out". 54 In my opinion, although the point at issue here was not pleaded, it was sufficiently raised at the hearing. However, having regard to the way it was raised, in my opinion OSP's failure to call Mr Patman could not be considered as weighing significantly against its case. The question to be determined is one of inference from contemporaneous documents and the evidence of Mr Andrews. Apart from the views expressed about Mr Andrews in par [45] of the judgment of the primary judge, and her underlining of the passage quoted at the end of the previous paragraph, the primary judge gave no reasons for her conclusion that Mr Patman did not act as the owners corporation of Strata Plan 5709 at those meetings. In my opinion, reasons directed to this question were required; and the lack of reasons here is both an error of law, and sufficient justification for this Court to reach its own view on the question. 55 The matters referred to by Mr Beech-Jones are factors suggesting that Mr Patman did not exercise the functions of OSP in determining the levies at the August 2003 meetings. However, in my opinion, it is fanciful to suggest that the absence of the comma after "owners corporation" in order 1 made on 22 May 2003 meant that Mr Patman was under a misconception and did not understand that he had been appointed under s 162 of the Act to exercise all the functions of the owners corporation. The statement in the minutes of 25 August 2003 that "it was therefore not necessary for a quorum of owners to be present" clearly confirms that Mr Patman did understand that he had been so appointed, and that a validly constituted meeting was not necessary for what was proposed to be done. 56 Furthermore, at the 25 August meeting, Motion 5 was purportedly passed as a special resolution. Although s.76(4) did not require such a resolution, Mr Patman apparently did and such a resolution could only be passed at a meeting of the owners corporation, not its executive committee. Further, such a resolution would be known to Mr Patman as requiring a 75% majority of unit entitlements. Mr and Mr Metford only had 60%. It follows that their vote for and that of Mr and Mrs Andrews against, would not have been sufficient to pass the resolution as a special resolution if Mr Patman had delegated the voting to them is alleged. He must, therefore, have exercised the vote himself which, of course, constituted 100% of the votes. 57 As to the meeting of 27 August, the resolution on Motion 2 was expressed in terms of Mr Patman exercising the delegated functions of the owners corporation. This also confirms that he understood that he was acting as the owners corporation and that he was under no misconception that he was doing anything other than acting in that capacity when that resolution was passed. 58 The affidavit evidence of Mr Andrews could be taken as suggesting that Mr Patman regarded the vote of unit holders as deciding the question; but in the light of the primary judge's acceptance of Mr Andrews' admission that he could not remember the exchanges verbatim, there is in my opinion more force in Mr Andrews' general impression as to what happened as conveyed in his oral evidence. 59 In my opinion there is merit in the view expressed in Smith that in this area overly legalistic standards should not be imposed; and in my opinion it is also appropriate to have regard to the presumption of regularity, although I would not suggest that in these circumstances it operates very strongly. However, that presumption would tend against a finding that Mr Patman intended to delegate his function, contrary to s 32 of the Act, as found by the primary judge. 60 Having regard to all these considerations, in my opinion Mr Patman understood that the functions of OSP to be exercised at the meetings had been vested in him, and what happened at the meetings was an exercise by him of those functions, on the basis of consultation with the unit holders and their indication by their votes of the views that they held.

[86]

Were general meetings necessary? 65 Mr Beech-Jones submitted that for raising special levies under s 76(4) and for initiating legal action under s 80D, the Act specifically required a general meeting. It was not to the point that unit owners could not effectively vote, because all the functions of OSP were being exercised by the Strata Managing Agent. Mr Beech-Jones referred to cl 32 of Schedule 2 of the Act, and submitted that seven days notice was required even if the owners had no entitlement to vote; and he submitted that accordingly all meetings held by Mr Jaworski were invalid, because this notice had not been given. 66 Mr Beech-Jones referred to Re Compaction Systems Pty Limited [1976] 2 NSWLR 477, in which Bowen CJ in Eq held (at 484-5) that the right of shareholders in a company to receive notices of meetings applied to shareholders not entitled to vote. Bowen CJ in Eq noted that the right to advance arguments and to influence the course of discussion could be significant. Mr Beech-Jones referred also to a decision to similar effect in Royal Mutual Benefit Building Society v Sharman [1963] 1 WLR 581. He submitted that the case of Smith, referred to earlier, was distinguishable because the legislation then applying did not require the holding of meetings, as do ss 76(4) and 80D. 67 Mr Beech-Jones accepted that, in the case of an appointment under s 162(1)(a), the determination referred to in s 76(4) would have to be the determination of the strata managing agent, and the resolution referred to in s 80D would be that of the strata managing agent. However, he submitted, that did not detract from the necessity of having a properly constituted general meeting of which proper notice was given. 68 In my opinion, these submissions should be rejected. It is to be remembered that this was a case in which orders had been made under s 162 appointing a strata managing agent to exercise all the functions of an owners corporation, which was not subject to any limitations of the kind referred to in s 28(3) of the Act. 69 Section 76(4) sets out one function of an owners corporation; and if that function is to be exercised by a strata managing agent pursuant to s 162(1)(a), it is not exercised by the owners corporation itself. What s 76(4) requires to be determined at a general meeting is the contribution "it", that is the owners corporation, must levy; and if the levying function is exercised by the strata managing agent, so it is not the owners corporation itself that is levying the contribution, in my opinion the requirement of a general meeting has no application. 70 Section 80D deals with other functions of an owners corporation, including initiating legal action; and again, if that function is exercised by a strata managing agent appointed pursuant to s 162(1)(a), it is not exercised by the owners corporation itself; and again, in my opinion, s 80D has no application. This view is confirmed by the language of s 80D. The language "resolution is passed" is inapt to refer to a determination unilaterally made by a strata managing agent exercising the functions of the owners corporation.

The Owners - Strata Plan 5709 v Andrews

At a glance

Court

Decision date

Before

Source

Judgment (88 paragraphs)

Parties

Cited By (10)