Zheng v The Owners – Strata Plan No 83678

Decision: Notice of motion dismissed with no order as to costs

Catchwords: LAND LAW — Strata title — Strata managing agent — Authority of strata managing agent to represent the Owners Corporation in tribunal or court proceedings subject to instructions
CIVIL PROCEDURE — Representation — By unqualified persons — Court powers — Leave for strata managing agent to represent Owners Corporation
LAND LAW — Strata title — Owners corporation — Meetings of owners corporation — Where motion to accept an NCAT Appeal Panel decision passed by 7 to 6 majority — Whether motion required an ordinary or special resolution
LAND LAW — Strata title — Owners corporation — Meetings of owners corporation – Whether fraud on a power for member of owners corporation to vote in personal interest

Legislation Cited: Civil and Administrative Tribunal Act 2013 (NSW) s 83(1)
Strata Schemes Management Act 2015 (NSW) ss 5(1)(b), 9(1), 9(2), 21(1), 23, 83(1), 108(2), 149(5), 246, sch 1, sch 1 cl 14, sch 2 cl 18

Cases Cited: Lin v The Owners Strata Plan No 50276 [2004] NSWSC 88
The Owners - Strata Plan No 83678 v Khatib [2026] NSWCATAP 153
Zheng v The Owners - Strata Plan No 83678 [2025] NSWSC 1038

Texts Cited: P Taylor (ed), Ritchie’s Uniform Civil Procedure New South Wales (LexisNexis, looseleaf)

Category: Procedural rulings

Parties: Paul Zheng (Plaintiff/Applicant)
The Owners – Strata Plan No 83678 (First Defendant)
Michael Khatib (Second Defendant)
Nicholas Johnson (Respondent)

Representation: Paul Zheng (Plaintiff/Applicant)
Nicholas Johnson (First Defendant and Respondent)

File Number(s): 2026/00234627

Publication restriction: Nil

EX TEMPORE JUDGMENT (REVISED)

1. Before the Court is the plaintiff’s notice of motion filed on 11 September 2026. In support of the motion, he relies on his affidavits dated 11 September 2026 and 12 October 2026. The first defendant, which is the Owners Corporation for Strata Plan No 83678 (Owners Corporation), relies on the affidavit of Nicholas Johnson dated 18 August 2026. Mr Johnson is the strata managing agent of the first defendant through his company, which I will refer to below. The second defendant, Mr Khatib, did not appear on the motion.

2. The background to this proceeding is that on 19 June 2025, the New South Wales Civil and Administrative Tribunal (NCAT) approved alterations to the common property of the strata scheme by prescribing a change to the by-laws in the form of a common property rights by-law. The by-law retrospectively authorised the construction of an awning which a lot owner, the second defendant, had carried out without first obtaining the special resolution of the Owners Corporation authorising it.

3. The plaintiff sought and obtained from this Court leave to bring an appeal from that decision to the Appeal Panel of NCAT on behalf of the Owners Corporation: see Zheng v The Owners - Strata Plan No 83678 [2025] NSWSC 1038. The plaintiff brought the appeal, and on 18 May 2026, the appeal was dismissed: see The Owners - Strata Plan No 83678 v Khatib [2026] NSWCATAP 153 (Appeal Panel decision).

4. At an extraordinary general meeting of the Owners Corporation on 2 June 2026, a resolution was passed, by a majority of seven to six, to accept the Appeal Panel decision (Resolution). The minutes of the meeting record that the Resolution was in respect of motion 3 put to the meeting (described as ‘Acknowledgement and Acceptance of NCAT Appeal Decision’) and was in the following terms:

That the Owners Corporation for Strata Plan 83678 acknowledge receipt of the Appeal Panel decision in The Owners – Strata Plan No 83678 v Khatib [2026] NSWCATAP 153 dated 18 May 2026.

That the Owners Corporation note the Appeal Panel dismissed the appeal and upheld the orders made by the Tribunal in relation to the awning installed adjoining Lots 13 and 14, including the approval of the common property rights by-law and work approval orders pursuant to sections 126 and 149 of the Strata Schemes Management Act 2015 (NSW).

That the Owners Corporation accept the outcome and decision of the Appeal Panel proceedings and further note that the relevant by-law remains registered as part of the registered by-laws for the scheme.

That the Owners Corporation authorise the Strata Managing Agent to undertake any further administrative actions required in relation to the implementation and recording of the Tribunal’s orders.

The Appeal Panel decision confirmed that the Owners Corporation had unreasonably refused to approve the proposed common property rights by-law relating to the awning works and dismissed the Owners Corporation’s appeal.

The by-law associated with the Tribunal proceedings remains registered on title for the scheme. This motion is intended to formally record the Owners Corporation’s acknowledgement and acceptance of the outcome of the Appeal Panel proceedings and the current status of the by-law for the scheme records.

5. On 21 August 2026, the plaintiff filed a summons seeking an order permitting him to commence, conduct, and prosecute on behalf of the Owners Corporation an appeal from the Appeal Panel decision. Any such appeal would be limited to questions of law: s 83(1) of the Civil and Administrative Tribunal Act 2013 (NSW).

6. The plaintiff’s notice of motion filed on 11 September 2026 raises essentially two issues. First, whether the appearances by Mr Johnson on behalf of the first defendant at prior directions hearings in this matter and the materials filed by him on its behalf should be ‘struck out’ because he does not have authority to represent the Owners Corporation and is not a solicitor. These are prayers 1, 2, 3, 4, 5, and 7 of the motion. Second, whether the Resolution is invalid because it was passed by a bare majority of seven votes to six, when it was required to be passed as a special resolution with a majority of 75%, or was a fraud on a power. That is prayer 6.

7. At the commencement of the hearing today, I gave leave to Mr Johnson to appear on behalf of the Owners Corporation, in addition to his appearance as a named respondent on the notice of motion. The Court has a discretion to allow a person to appear on behalf of a litigant who is not a legal practitioner: see P Taylor (ed), Ritchie***’***s Uniform Civil Procedure New South Wales (LexisNexis, looseleaf) at [7.1.7]. In the circumstances, it was, in my view, appropriate to do so for the following reasons.

8. First, Mr Johnson has been authorised by the Owners Corporation to represent it in these proceedings. The strata management agency agreement between the Owners Corporation and Direct Management Group Pty Ltd (A****gent), dated 16 July 2025, authorises the Agent to exercise the function of representing the Owners Corporation in tribunal or court proceedings ‘subject to instructions’: see cl 2.1 and schedules A1 and A2. Mr Johnson is the designated manager of the Agent under the agency agreement.

9. By its terms, the Resolution authorises the Agent to undertake any further ‘administrative actions’ required in relation to the implementation of NCAT’s orders. As to the expression ‘administrative action’, I note that ‘administrative’ means ‘of, relating to, or concerned with administration (in various senses); (in later use esp.) relating to or required for the running of a business, organization, etc’ and ‘action’ means ‘something done or performed, a deed, an act’: see Oxford English Dictionary, online ed. The Resolution, in my view, amounts to an instruction to the Agent, and through it to Mr Johnson, to take the necessary steps to give effect to the Appeal Panel decision.

10. Second, Mr Johnson holds a Bachelor of Laws degree and is admitted as a solicitor in New South Wales. He says, and I accept, that he is representing the Owners Corporation not as its solicitor but rather solely because the Owners Corporation has been named as a defendant and is required to respond to the proceedings commenced by the plaintiff in circumstances where the Owners Corporation has resolved to accept the Appeal Panel decision and not to pursue any further appeal.

11. Third, I have considered the factors referred to in Ritchie*’*s Uniform Civil Procedure at [7.1.7] as relevant to the exercise of the Court’s discretion. In my view, it is in the interests of justice that Mr Johnson represent the Owners Corporation at this hearing, bearing in mind that the Owners Corporation is a defendant and not the plaintiff, the litigation is not complex, the Court will be assisted by Mr Johnson representing the first defendant, particularly as he has legal training, and his representation of the first defendant will lead to the more efficient conduct of the hearing.

12. For the same reasons that I have given leave to Mr Johnson to represent the Owners Corporation at this hearing, I do not accept that the grounds for the relief sought in prayers 1 to 5 and 7 of the motion are made out.

13. Coming now to prayer 6, this seeks a declaration that motion 3 at the meeting held on 2 June 2026:

(a) required a special resolution and that its purported ordinary resolution as ‘carried’, based on seven votes in favour and six votes against, is invalid pursuant to ss 5(1)(b), 21(1), 108(2), and 149(5) of the Strata Schemes Management Act 2015 (NSW) (the Act); and (b) is invalid due to fraud on a power and because it was passed for an improper purpose, not for the benefit of the Owners Corporation as a whole.

14. In relation to (a), I do not accept the submission that the resolution to accept the Appeal Panel decision required a special resolution. First, the Owners Corporation has the principal responsibility for the management of the strata scheme and has the administration of the scheme: see ss 9(1) and 9(2) of the Act. In carrying out these functions, it may be assisted by the strata managing agent, being here the Agent: s 11(1) of the Act.

15. Second, under cl 14 of sch 1 of the Act, read with s 23, a motion put to a meeting of the Owners Corporation is to be decided by a simple majority absent a provision of the Act prescribing a different majority. There is no provision of sch 1 or of the Act which would require a decision of the Owners Corporation to accept the Appeal Panel decision, or conversely to appeal against it, to be more than a simple majority.

16. Third, the plaintiff submitted that the resolution was, in substance, a decision to make or add a new by-law, and that, he says, requires a special resolution. He relies on ss 21(1), 108(2), and 149(5) of the Act for that submission. These provisions provide as follows:

17. Section 21(1):

A unanimous resolution or special resolution of an owners corporation about a matter that is required by or under this Act or the by-laws of a strata scheme to be determined by a resolution of that kind cannot be amended or revoked other than by a subsequent resolution of the same kind.

The expression ‘special resolution’ is a resolution passed at a properly convened general meeting where not more than 25% of the value of votes cast are against the resolution (s 5(1)).

2. Section 108(2):

Any such action [ie to add to, alter, or erect a new structure on common property] may be taken by an owners corporation or owner only if a special resolution has first been passed by the owners corporation that specifically authorises the taking of the particular action proposed.

3. Section 149(5):

An order under this section, when recorded under section 246, has effect as if its terms were a by-law (but subject to any relevant order made by a superior court).

17. In my view, that submission is misconceived. It is NCAT’s order made on 19 June 2025, and affirmed by the Appeal Panel decision, which (on being recorded in the register under s 246 of the Act) created the new by-law: see s 149(5) of the Act. While, as the plaintiff points out, s 149(5) states that it is subject to an order made by this Court (relevantly, following an appeal under s 83(1)), that does not mean that the decision of the Owners Corporation to accept the Appeal Panel decision gives to the Resolution the substantive effect of making the by-law. That decision was merely is a step in a process which will determine if the order made by NCAT and entered on the register is final.

18. No other provision of the Act or the by-laws of the strata scheme been identified which would enliven s 21(1) of the Act. In my view, s 108(2) is not relevant to the present issue.

19. The second basis on which the plaintiff challenges the Resolution is that it was a fraud on a power. I accept the plaintiff’s submission that the principle of fraud on a power is potentially applicable to the exercise by the Owners Corporation of its power of management of the strata scheme. What must be shown is that the power was exercised for a purpose or with an intention beyond the scope of the power: Lin v The Owners Strata Plan No 50276 [2004] NSWSC 88 at [86].

20. The difficulty for the plaintiff is that in the present case, he has not established that the decision to accept the Appeal Panel decision was made for a purpose or an intention outside the scope of the power, being the proper management of the strata scheme. It is open on the evidence, and I so find, that the majority present at the general meeting of the Owners Corporation who voted in favour of the motion considered that it was not appropriate to appeal the Appeal Panel, given the time and expense of doing so and the likely prospects of success.

21. While the second defendant voted as one of the majority, he was quite entitled to do so. He is under no fiduciary obligation not to exercise his right to vote in his personal interest, and I note that sch 1 of the Act does not include an equivalent to cl 18 of sch 2 of the Act – sch 2 being the schedule of the Act applicable to voting at meetings of the strata committee. That reflects the different capacity to which members of the strata scheme act at general meetings compared to members of the strata committee.

22. For these reasons, the notice of motion should be dismissed. In my view there should be no order as to costs, and none was sought.

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