The Owners Strata Plan no 63731 v The Bunker Pty Ltd

The Decision under Appeal

1. In order to better understand the application for summary dismissal of the appeal, it is necessary to set out in some detail a summary of the reasons for the decision under appeal (the Decision) as follows: 1. The strata scheme contains 370 lots, the great bulk of which are residential apartments. The Respondent to the appeal (the Applicant below) owns Lots 148 and 167. Lot 148 includes a swimming pool, gym and change rooms. Lot 167 is car parking and storage space. 2. Bylaw 32 purported to give to the Respondent the power to carry out work by giving notice to the Appellant rather than requiring a decision of the Appellant (see [111] of the Decision). Prior proceedings before the Tribunal concerned whether bylaw 32 gave the Respondent the power to carry out work without the need required by s 108 of the Strata Act for the Respondent to obtain a special resolution for work involving changes to common property or whether there was no such need. Those proceedings went on appeal and the Appeal Panel held that compliance with s 108 was required notwithstanding bylaw 32 [113]. 3. The Tribunal in the proceedings under appeal made a number of findings of fact concerning the conduct of the strata committee and the individuals who comprised the committee at the relevant time. At [146], the Tribunal found that the management of the strata scheme was not functioning satisfactorily and made factual findings supporting that conclusion. 4. At [147], the Tribunal found that it was satisfied that the Owners Corporation, by its agent the strata committee, failed to perform its duty under s 106 of the Strata Act in relation to matters involving health and safety. 5. At [148], the Tribunal stated that while the "evidence was sufficient to satisfy the Tribunal that an order might be made in relation to all functions and not just those relating to Lot 148 and Lot 167, the [Respondent] did not seek such a broad order and the Owners Corporation did thus not make any submissions on that aspect. In these circumstances, it is not appropriate for the Tribunal to, metaphorically speaking, blaze a trail down a path that has not been trodden by counsel." The Tribunal then made what is described as a "restricted order" which it stated was "intended to isolate from the [strata committee] matters relating to Lot 148 or Lot 167", and "there will be matters affecting all lots and it does not make sense to have decisions in relation to such matters made twice." [150]. The order, the Tribunal stated, should not extend to cover matters relating to all lots.

Notice of Appeal

1. On 24 March 2021, the Appellant lodged a Notice of Appeal against all of the orders made by the Tribunal at first instance. For the purposes of this decision it is not necessary to set out the grounds of appeal.

Respondent's Application

1. By an application lodged on 12 April 2021, the Respondent lodged an application for orders to the following effect: 1. (a) the Notice of Appeal and/or; (b) Application for stay of original decision pending appeal be summarily dismissed. 1. Costs.
2. The Respondent's grounds for making the application for summary dismissal were contained in a separate document, namely the Respondent's outline of submissions in response to the Appellant's stay application. Those grounds were developed orally at the hearing. The grounds relevant to dismissal of the appeal as opposed to the stay application which has been adjourned, may be summarised as follows: 1. The appeal is a nullity. 2. The lawyers purporting to represent the Appellant do not have a valid retainer to do so. 3. Those purporting to represent the Owners Corporation rely on the passing of resolution 2.2 by the general meeting of 23 March 2021 as the authority for prosecuting the appeal. 4. Motion 2.2 was purportedly requisitioned by the strata committee but that committee does not have any power to requisition a motion. The Strata Act only empowers lot owners and persons entitled to vote at a general meeting to requisition a motion for consideration by a general meeting: see Strata Act, Schedule 1, clause 4(1). The strata committee has no power to requisition a motion for a general meeting. The form of that requisition is prescribed: see Schedule 1, clause 4(2). The requisition must identify the person making it: clause 4(2)(b). The Strata Act does not permit anonymous motions to be put to a general meeting. Nor does it allow pseudo-anonymity by using the collective words "strata committee". That term does not disclose who among the strata committee were the moving parties. If the strata committee did requisition motion 2.2, it was acting ultra vires. 5. The record discloses of the strata committee did not requisition the motion. A strata committee can only requisition a motion in one of three ways: by resolution, by delegating its power to requisition a motion to an agent or by ratifying a resolution or act of a person who acted without authority. None of these events has occurred. 6. To the extent that the strata committee members purported to requisition motion 2.2, it was an illegal act. They were acting in contravention of the orders made at first instance, and accordingly contrary to s 56(a) of the Strata Act and s 72(3) or s 73(2) of the Civil & Administrative Tribunal Act (NSW) 2013 (the NCAT Act). 7. By letter dated 23 March 2021, Wellman purported to ratify the general meeting insofar as it relates to motions 1.1 and 2.2. The purported ratification is ineffective for two reasons. First, Wellman stands in the shoes of the strata committee and its office bearers. Wellman is not a lot owner or a person entitled to vote at a general meeting. Wellman has no power to requisition a motion at a general meeting and accordingly has no power to ratify such an act. The ratification was as to the Notice of Meeting, not the requisition of the motion. It was the requisition of the motion, an event which must occur before the Notice of Meeting was prepared, which is ultra vires the strata committee. 8. Schedule 1, clause 8, provides that motions cannot be submitted to a general meeting unless the terms of schedule 1, clause 4(2) are complied with. As there was no valid motion in the form of motion 2.2, that motion should not have been submitted to the general meeting. The general meeting had no power to make that resolution. 9. The evidence suggests that the appeal is being funded by an insurer under an insurance policy which the Appellant has no power to purchase. 10. Motion 2.3 was not put to the general meeting. That was a proposed motion to appoint, fund and give authority to Grace Lawyers to act on the appeal. Accordingly, the Appellant in general meeting has not appointed anyone to represent it in the appeal. The strata committee has not purported to retain Grace Lawyers to represent the Owners Corporation. Wellman has not retained Grace Lawyers. If Grace Lawyers are obtaining their instructions from an insurer, that insurer cannot have a lawful delegation or right of subrogation to step in the shoes of the Owners Corporation. As Grace Lawyers do not have a valid retainer to commence or prosecute the appeal, the appeal should be summarily dismissed: Harry S Bagg's Liquidation Warehouse Pty Ltd v Whittaker (1982) 44 NSWLR 421 at 430D.
3. As stated above, Mr Lovas of counsel developed the arguments in favour of summary dismissal of the appeal at the hearing and what follows is a summary of the evidence relied upon by Mr Lovas and his submissions: 1. Mr Lovas further relied upon the Notice of Extraordinary General Meeting (appearing at page 143 of the exhibits attached to the affidavit of Ms Anderson) in which it is stated that the strata committee proposed for consideration at the meeting a motion which is then set out. The Respondent's submission was that the strata committee has no power to propose a motion. Reliance was also placed upon an email dated 23 March 2021 (marked as exhibit CA-2 to the second affidavit of Caitlin Jane Anderson sworn 13 April 2021). By that email, a representative of Chubb Insurance Australia Ltd stated that Chubb had agreed to indemnify the Appellant for appeal expenses and had agreed to engage Grace Lawyers to run the appeal. In addition, by letter dated 23 March 2021, Wellman wrote to the Appellant advising of the receipt of the communication from Chubb and stating that Wellman ratified the notice insofar as that related to motions 1.1 and 2.2 of the proposed extraordinary general meeting. 2. The Respondent then referred to the minutes of the extraordinary general meeting held 23 March 2021 ( page 177 of the exhibit to the first affidavit of Ms Anderson) in which it is stated that the Appellant resolves to appeal the decision and orders of the Tribunal at first instance. 3. Mr Lovas submitted that the Strata Act contains provisions concerning the types of insurance policies which may be entered into by an Owners Corporation. These provisions are contained in Part 9 of the Strata Act. His submission was that there was no power to affect the kind of policy which had been entered into with Chubb. As a consequence the appeal has not been properly authorised and has been brought without power.

Submissions of the Appellant with respect to the Application for Summary Dismissal

1. In the following paragraphs, the submissions of the Appellant with respect of the Respondent's application for summary dismissal of the appeal are summarised as follows: 1. The Owners Corporation has resolved to bring this appeal. 2. Section 103(1) of the Strata Act which provides that an Owners Corporation must not obtain legal services for which any payment may be required unless there is a resolution approving the obtaining of those services passed at a general meeting of the Owners Corporation is not relevant. This is because Chubb exercised has agreed to conduct the appeal and to indemnify the Appellant. In any event, s 103(4) provides that a failure by an Owners Corporation or strata committee to obtain an approval under s 103 does not affect the validity of any proceedings or any other legal action taken by the Owners Corporation. 3. Clause 4 of Schedule 1 to the Strata Act provides that any owner or any person entitled to vote at a general meeting of an Owners Corporation may require a motion to be included in the agenda. That is not an exclusive provision. Section 19 of the Strata Act provides that the secretary or a strata committee may convene a general meeting. Clause 4 is to be read as a permissive provision. 4. On 23 March 2021, the Owners Corporation resolved to appeal the decision. Even if s 103 is relevant, it has been complied with. 5. It is clear from s 19 and Schedule 1 of the Strata Act that a secretary or a strata committee may convene a meeting and propose motions to be considered at it. A strata committee may also convene a meeting and include proposed motions in the notice of meeting. It was held in Owners - Strata Plan 47027 v McGinn [2018] NSWSC 1230 at 67 that the power to convene an extraordinary general meeting is conferred by s 19(1) of the Strata Act on both the secretary and the strata committee. 6. Any submission that the commencement of the appeal was in contravention of the orders at first instance should be rejected. Such submission involves the contention that the commencement of the appeal was a matter that does not affect all lot owners. That is clearly incorrect. 7. The Appellant was entitled to rely on the motion passed at the extraordinary general meeting and, in addition, upon the terms of the policy which gave to the insurer the right of subrogation.

Consideration

1. The Tribunal has power under s 55 of the NCAT Act to dismiss "any at stage any proceedings before it in the following circumstances". The only relevant circumstances to this application are those described in s 55(1)(b) which applies "if the Tribunal considers the proceedings are frivolous or vexatious or otherwise misconceived or lacking in substance".
2. The Respondent's submissions in favour of dismissal were to the effect that the appeal had been brought without appropriate authority and was therefore a nullity. It was submitted that proceedings brought without authority can be described as frivolous or otherwise misconceived or lacking in substance.
3. The Tribunal is obliged by s 38(2) of the NCAT Act to observe the "rules of natural justice". Section 38(4) requires the Tribunal 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".
4. It is consistent with the requirement to observe the rules of natural justice that an application for summary dismissal be exercised with care as the consequence of dismissing the appeal is to preclude the Appellant from being fully heard on the appeal points which it wishes to prosecute. As Garling J said in Newtek Constructions Pty Ltd v Slotwinski [2021] NSWSC 274 at [22] "There must be a high degree of certainty about the ultimate outcome of the proceedings if it were allowed to go to trial or a hearing in the ordinary way". Although that case concerned consideration of the Uniform Civil Procedure Rules, the statement expressed by his Honour is relevant in the Tribunal's consideration of whether the appeal is capable of being considered as frivolous or otherwise misconceived or lacking in substance.
5. The order made by the Tribunal at first instance did not remove from the strata committee all of its powers. Rather it removed its powers only in relation to any matter relating to the Respondent's lots, or the Respondent or any tenant, lessee or licensee of those lots provided that any such matter did not affect all lot owners. In my view, the strata committee still had authority to take appropriate steps to enable the Owners Corporation to consider and determine whether the orders made at first instance should be the subject of an appeal. That is because the order made at first instance indirectly affected all lot owners because the order affected the management of the Strata Scheme.
6. The source of the authority given to the Owners Corporation to bring the appeal lies in motion 2.2 passed at the meeting held on 23 March 2021. Section 19 of the Strata Act provides that the secretary or a strata committee may convene a general meeting of the Owners Corporation at any time. Clause 4 of schedule 1 of the Strata Act states that a person may require a motion to be included in the agenda of the next general meeting. It is not apparent that if the strata committee required a motion to be included in the agenda that that motion would be void because the persons comprising the strata committee were not specifically named in the notice requiring the motion to be included. It is true, as the Respondent submitted, that clause 4(2) provides that the requirement (to include a motion in the agenda) must be by written notice that states the name of the person making the requirement. I am of the view that it is arguable that a motion required by the strata committee but which fails to state the names of the persons comprising the strata committee does not necessarily result in the Owners Corporation having before it a motion which is incapable of being approved. When no person entitled to vote at the Owners Corporation meeting raises the question and the motion is passed, it seems arguable that the motion may be effectively passed notwithstanding the failure to comply with clause 4(2). It is also arguable, as the Appellant submits, that s 19 operates in tandem with clause 4 and permits the strata committee to convene a general meeting.
7. The next point raised by the Respondent is that motion 2.3 was not put to the general meeting and that therefore the lawyers now representing the Appellant were not authorised to do so. I am of the opinion that the submissions put by the Appellant are arguably correct as s103(4) makes it clear that a failure by an Owners Corporation or strata committee to obtain approval under s 103 to retain lawyers does not affect the validity of any proceedings or other legal action taken.
8. I am also of the opinion that it is not clear that the Owners Corporation were not entitled to take out the insurance policy which has given rise to the insurer, exercising a right of subrogation, to retain lawyers and prosecute this appeal. Although the Strata Act contains provisions for the types of policies which an Owners Corporation should obtain that does not necessarily mean that they are the only policies which an Owners Corporation is able to, obtain.
9. For the above reasons I am not satisfied that the appeal can be described as frivolous or vexatious or otherwise misconceived or lacking in substance.That conclusion does not mean that I have expressed any final view on the respective arguments of the parties. Rather I am of the view that the appeal cannot be described in the language of s55(1((b).
10. It follows that it is necessary to make the following order: 1. Application for summary dismissal of appeal dismissed.

I hereby certify that this is a true and accurate record of the reasons for Decision of the New South Wales Civil and Administrative Tribunal. Registrar 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: 05 May 2021