Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Helmut Haslinger v Owners Corporation SP 56568, Nancy Joffee [2014] NSWCATCD 126 Hearing dates: 17 December 2013 Decision date: 28 January 2014 Before: G Meadows, Senior Member Decision: The Owners Corporation of Strata Plan 56568 and Nancy Joffee permanently refrain from proposing, moving, calling for votes on or in any way seek to resolve motions in the form of Motions 2 to 5, and Motions 6 and 7 so far as they relate to such motions, as contained in the Notice of an Extraordinary General Meeting to be held on Wednesday 19 June 2013 included with this application as Annexure "A1" Catchwords: Debt, fraud on a minority, recovery action by Owners Corporation Legislation Cited: Strata Schemes Management Act 1996 Category: Principal judgment Parties: Helmut Haslinger (Applicant) File Number(s): SCS 13/32049 reasons for decision APPLICATION 1This application was filed on 14 June 2013, together with an application for interim orders number SCS 13/32039. Both applications related to allegations by the applicant that the respondents, or more particularly, Ms Nancy Joffee, intended to implement a devious scheme by which she would, at an Extraordinary General Meeting, have passed a number of motions intended to ensure that Mr. Haslinger (and possible another or other owners) would be rendered unfinancial, after which Ms Joffee would be enabled to then seek a special by-law permitting her to undertake substantial construction in relation to her lot, including having the use of certain parts of the common property of the scheme. The impugned motions were as follows, as included in the agenda for an Extraordinary General Meeting held on 19 June 2013: " Motion 2 - THAT the owner of Lot 4 is to reimburse the Owners Corporation for all costs Incurred by the Owners Corporation in relation to the by-law proposed by Lot 4, which Is the subject of current proceedings In the Consumer, Trader and Tenancy Tribunal. These costs Include but are not limited to legal costs, survey costs, valuer costs and managing agents costs. The owner of Lot 4 is to reimburse the Owners Corporation these costs within seven days of demand by the Owners Corporation; falling which the Owners Corporation may recover such amounts as a debt from the owner of Lot 4. Motion 3 - THAT the owner of Lot 4 reimburse the Owners Corporation the amount of $32,402.60 within seven days of the date of the meeting at which this resolution is passed, such amount representing legal and survey costs in relation to the by-law proposed by Lot 4, which is the subject of current proceedings in the Consumer, Trader and Tenancy Tribunal. A copy of the tax invoices making up this amount Is an annexure to the notice of the meeting at which this resolution will be considered, If this amount is not paid within seven days the Owners Corporation May recover the amount as a debt from the owner of Lot 4. See attached Invoice. Motion 4 - THAT the owner of Lot 4 reimburse the Owners Corporation the amount of $72.60 representing the cost of issuing a Notice to Comply, such amount payable within seven days of the date of the meeting at which this resolution Is passed, failing which the Owners Corporation may recover the amount as a debt from the owner of Lot 4. See attached Invoice. Motion 5 - THAT the owner of Lot 3 reimburse the Owners Corporation the amount of $49.50 representing the cost of issuing a Notice. to Comply, such amount payable within seven days of the data of the meeting at which this resolution is passed, failing which the Owners Corporation may recover the amount as a debt from the owner of Lot 3. See attached Invoice. Motion 6 - THAT the managing agent is authorised and instructed to issue letters of demand on the owners of Lots 3 and 4 , as the case may be, demanding any amounts referred to in motions 3, 4 and 5, such a letter to be sent out within seven days of the date of the meeting at which these motions are passed. Motion 7 - THAT the managing agent is authorised and instructed to Issue letters of demand on the owners of Lot 4 demanding any amount referred to in motion 2, such a letter to be sent within seven days of the payment by the Owners Corporation of a tax invoice of costs referred to in motion 2. " 2On 18 June 2013, Adjudicator Vrabac made interim orders that the respondents were not to propose, move or call for votes on those motions at the EGM to be held on 19 June 2013 nor, in effect, to propose move or pass such motions or motions to a similar effect, at any other meeting, nor to hold the EGM on 19 June 2013, until the substantive application (being the current application) is determined or until further order. 3On 21 June 2013, the solicitors for Ms Joffee applied to have the interim orders revoked, on the grounds that they were ultra vires and other grounds. On 04 July 2013 I dismissed the application to revoke the interim orders, but I ordered they be varied to comply in form with the requirements of the Act. 4On 5 September 2013 the then solicitor for the applicant sought an extension of the interim orders for a further 3 months. This application was opposed by the solicitors for Ms Joffee and extensive submissions were exchanged. On 9 October 2013, another Adjudicator, Adjudicator Westgarth, ordered the interim orders were to remain in force for a further period of six months unless revoked, varied or otherwise set aside. Adjudicator Westgarth was also considering this substantive application for an Adjudicator's order, but on 22 October 2013, he ordered this application be transferred to the then Consumer, Trader and Tenancy Tribunal pursuant to s 164 of the Act, on the bases contained within his written reasons published on that date, for determination. 5This decision is that determination. SUBMISSIONS 6These applications, and others before the Tribunal (whether decided or not) have called forth extremely lengthy submissions with attachments, drawn, in my opinion, in often rather extreme language (at least for submissions drafted by experienced legal practitioners as in this case). The skeleton summary provided above in paragraph 1 may provide some explanation of these submissions, based they are more on suspicion (if not paranoia) than hard evidence. I do not mean to belittle the concerns of any of the parties in saying so, but there is no doubt there is a paucity of persuasive evidence compared to what appears to be a long history of argument and distrust between the parties. 7It appears from the documents provided (which I do not intend to review and summarise in detail although I have perused them carefully) that first, Mr Haslinger undertook certain improvements (to use a neutral term ) to his property. He has since sought a special by-law in that regard and it appears that has been opposed by Ms Joffee. More recently, it is alleged by Mr. Haslinger (as noted above) that now Ms Joffee wants to undertake certain improvements to her property and will also seek the benefit of an appropriate by-law to enable that to occur. The applicant's submissions and evidence are, apart from historical events, basically dependent on my accepting that allegation of what I described above as a devious scheme (an accurate term, in my view, if the allegation is true). 8For her part, Ms Joffee vigorously disputes this view of the situation and energetically argues that there is simply no evidence in support. She also states that the Owners Corporation should not be prevented from putting these or similar motions at an appropriate meeting, as it needs to raise funds required to enable it to meet its statutory duties. 9The underlying basis, so it is said by the applicant, for these disputes is, as is so often the case in small strata schemes, the voting powers of the several parties. 10The applicant has provided further submissions, dated 09 December 2013, through his new solicitors, Messrs Doyle Edwards Anderson. These submissions are cogently expressed and relatively brief. The applicant notes that the first order sought has been rendered otiose as the EGM was in fact held and Ms Joffee withdrew the impugned motions. The remaining orders are pressed. 11The applicant asserts (as he has previously done) that the Owners Corporation has no power to make the resolutions sought. First, the Tribunal cannot make any order which has the effect of imposing a costs order (s 176 of the Act). Second, the proceedings the subject of Motions 2 and 3 have not yet been decided by the Tribunal or an Adjudicator and it is therefore inappropriate, or rather, there is no power given to the Owners Corporation, to make any resolution in relation to such costs, s s 230 of the Act may be breached. 12Detailed submissions in relation to fraud on the minority are provided, with which I generally agree and which in my opinion are not controversial in relation to the legal issues, provided, of course, there is evidence to support the allegation. 13Finally, the applicant seeks to refute the submission by the respondent Ms Joffee that the motions are required to be put and if passed, implemented, on the grounds that the Owners Corporation cannot comply with its statutory duties (for example, the mandatory duty imposed by s 62 of the Act) without being able to raise funds. The applicant suggests that there is nothing preventing the Owners Corporation from raising funds in the usual manner pursuant to s 76 of the Act. The applicant also seeks to refute the submission that the applicant is acting prematurely, in the sense argued by the respondents that the concerns raised by the applicant are not and cannot be enlivened until the impugned resolutions come into being. The applicant submits that the orders sought are analogous to a prohibitory injunction, made to prevent acting ultra vires or implementing an unlawful decision. It is submitted that the provisions under which this application is brought, being ss 138, 165 and 169 of the Act, should be given a broad interpretation. CONSIDERATION AND DECISION 14There is no doubt, in my view, that if the allegation put forward by the applicant is correct, to propose and pass motions with the purpose alleged by the applicant would be almost a classical instance of a fraud on the minority. However, before coming to such a conclusion I would require some substantial evidence. It is certainly possible that the allegation is accurate, and given the particular history between these parties it is perhaps not surprising that the applicant has developed that view, but before the Tribunal can come to the same view, there must be some evidence beyond a mere possibility. 15In relation to Motions 2 and 3, I accept the submission of the applicant that no such motion can be put until the substantive matters referred to therein have concluded. There cannot be any possible right to seek reimbursement until it is known which is the successful party or parties. In my opinion, these motions lend weight to the applicant's fears that the respondents, or at least Ms Joffee, is attempting to use strata management procedures not for their apparent purpose but for some ulterior purpose, perhaps that suggested by the applicant. In any event, the motions may not be put, even if used within the letter and spirit of the Act, until the matters are resolved. The whole question of payment of costs or expenses may be the subject of argument and the eventual decision in those matters. 16Also in relation to Motions 2 and 3, I am not aware of any power under the Act providing for the recovery of such an alleged debt. I cannot see that the provisions for raising contributions apply, and there is no other provision relating to debts covering those referred to in these motions. An Owners Corporation being a creature of statute, unless such a power can be shown, such motions cannot be put. The respondents have not provided any submissions to the contrary. 17It necessarily follows, in my opinion, that motions 6 and 7, so far as they refer to motions 2 and 3, may also not be proposed or voted on, for the same reasons. 18Motions 4 and 5 are at face value, relatively insignificant, involving trivial amounts (as just stated, relatively speaking). In my opinion, the same reasoning applies as that contained in paragraph 16 above. There is no power under the Act for an Owners Corporation to recover such costs or alleged costs. ORDERS 19The Owners Corporation of Strata Plan 56568 and Nancy Joffee permanently refrain from proposing, moving, calling for votes on or in any way seek to resolve motions in the form of Motions 2 to 5, and Motions 6 and 7 so far as they relate to such motions, as contained in the Notice of an Extraordinary General Meeting to be held on Wednesday 19 June 2013 included with this application as Annexure "A1". 20For these reasons, I make the orders above. 21For these reasons, this application is dismissed. Geoffrey Meadows Senior Member Civil and Administrative Tribunal of New South Wales 28 January 2014 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: 11 September 2014