Supreme Court New South Wales Medium Neutral Citation: Tan v The Owners - Strata Plan 22014 [2014] NSWSC 1660 Hearing dates: 19 November 2014 Decision date: 19 November 2014 Jurisdiction: Equity Division - Duty List Before: Stevenson J Decision: Interlocutory injunction granted up to 24 November 2014 Catchwords: REAL PROPERTY - strata schemes - whether orders of NSW Civil and Administrative Tribunal appointing strata managing agents displaced power of executive committee to appoint solicitor to act for Owners Corporation; PRACTICE AND PROCEDURE - setting aside of orders - whether serious question to be tried that orders obtained against good faith or in absence of party Legislation Cited: Strata Schemes Management Act 1996 Uniform Civil Procedure Rules 2005 Category: Interlocutory applications Parties: Patrick Tian Keng Tan (First Plaintiff) Ian Peterson Walters (Second Plaintiff) Rose Sok Kio Tan (Third Plaintiff) Owners Corporation - Strata Plan No 22014 (First Defendant) Whelan Property Pty Ltd (Second Defendant) Janette Daisy Porter (Third Defendant) Mary Magney (Fourth Defendant) Representation: Counsel: N Cotman SC (Plaintiff and First Defendant) G A Sirtes SC with A L Avery-Williams (Fourth Defendant) Solicitors: Terrett Lawyers (Plaintiff and First Defendant) Chambers Russell Lawyers (Second Defendant) Mills Oakely Lawyers (Third Defendant) Hall's Strata Law Pty Ltd (Fourth Defendant) File Number(s): SC 2014/176516 EX TEMPORE Judgment (revised) 1These proceedings concern a dispute that has arisen amongst owners of lots in Strata Plan 22014, being the building known as "The Quay" in Sydney. 2The plaintiffs, Drs Tan and Walters, are owners of lots in that strata plan. 3The third defendant, Ms Porter, is also an owner of a lot. 4The first defendant is the Owners Corporation itself. 5The applicant before me, Mrs Magney, is also an owner of a lot. 6The second defendant, Whelan Property Group Pty Ltd is a strata title manager. 7Mrs Magney seeks to set aside orders made on 26 August 2014 by Robb J in these proceedings on the basis they were either obtained "against good faith" for the purposes of r 36.15(1) of the Uniform Civil Procedure Rules 2005 or were entered "in the absence of a party" for the purposes of UCPR r 36.16(2)(b). 8The orders that Robb J made were: (1)The Owners Corporation Strata Plan No 22014 indemnify the Plaintiffs in respect of costs and liability incurred in respect of this proceeding. (2)The Owners Corporation Strata Plan No 22014 pay the costs of the Third Defendant of the proceeding on a party/party basis as agreed or, failing agreement, as assessed. (3)Otherwise the Plaintiffs be granted leave to discontinue the proceeding with no further Order as to costs. (4)Orders the Owners Corporation Strata Plan No 22014 pay the costs of the Second Defendant of the proceedings on a party/party basis as agreed or failing agreement as assessed. 9The first three of those orders was made with the consent of Drs Tan and Walters, the Owners Corporation and Mrs Porter. 10The substance of Mrs Magney's contentions is that a resolution of the Executive Committee of the Owners Corporation of 11 August 2014 purporting to authorise the retainer of the solicitor, Mr Terrett (who entered an appearance for the Owners Corporation on 26 August 2014, and who, as solicitor for the Owners Corporation, signed the consent orders that day) was void and of no effect. Mrs Magney thus contends that Mr Terrett had no authority to agree to the orders, and that the orders were made "against good faith" or "in the absence of" the Owners Corporation. 11To understand the basis of that contention it is necessary to set out some of the history of the matter. 12On 19 December 2012, Mrs Porter made an application to the Consumer, Trader and Tenancy Tribunal (CTTT) for an order under the Strata Schemes Management Act 1996 ("the Act") that a strata scheme manager be appointed to Strata Plan 22014 for a period of two years pursuant to s 162 of the Act. Mrs Porter nominated Whelan as the proposed strata manager. 13After what I understand to have been been a lengthy procedural history, on 20 May 2014, Senior Member Meadows of the NSW Civil and Administrative Tribunal (successor to the CTTT), exercising the power of an adjudicator under the Act, made the following order pursuant to s 162(1)(a) of the Act: "1. Pursuant to s 162(1)(a) of the Strata Schemes Management Act 1996 ("the Act"), I order that Whelan Property Group is appointed as strata manager of Strata Plan 22014 3. These orders are effective for a period of twenty-four months from the date of these orders. 4. During the period of appointment, Whelan Property Group is to exercise all the functions of the Chairperson, Secretary, Treasurer and Executive Committee. 5. This order may be renewed by an Adjudicator if a request for its renewal is made prior to the expiry of three months from the date of this order. 6. The Owners Corporation must display a copy of this order on the scheme notice board no later than 72 hours after receiving this order and the order must remain on the scheme notice board for not less than 14 days. 7. If there is no scheme notice board, the Owners Corporation must give a copy of this order to each person shown on the Strata Roll." 14Sections 162(1) and (2) of the Act are in the following terms: "(1) 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) 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." 15It is common ground that the effect of Senior Member Meadows' orders of 20 May 2014 was to vest in Whelan all of the powers of, inter alia, the Executive Committee and, correspondingly, to deprive the current Executive Committee of any power over the affairs of the Owners Corporation. 16Drs Tan and Walters, as lot owners, wished to challenge the appointment of Whelan as Strata Manager and for that reason, on 13 June 2014, commenced these proceedings seeking orders including: "1. ...that the Plaintiffs be authorised to use the name of the Owners Corporation Strata Plan No 22014 in filing and prosecuting an application for leave to Appeal and Appeal with and in this Honourable Court against the Decision of the New South Wales Civil and Administrative Tribunal of 20 May 2014 in the matter of Janette Daisy Porter v The Owners - Strata Plan No 22014 (the Appeal)." (emphasis in original) 17On 24 July 2014, Senior Member Meadows either amended his 20 May 2014 order, or made a further order in lieu of that order which was in the same terms as the 20 May 2014 order save that the reference in paragraph 1 to s 162(2)(a) of the Act was changed to s 162(1)(b). 18As I have set out above, s 162(1)(b) provides that an adjudicator can order a person to be appointed as a strata management agent to exercise "specified functions of an owners corporation". Senior Member Meadows' order of 24 July 2014 did not "specify" any functions. 19Whelan took the view that the effect of this omission was that Senior Member Meadows' orders no longer had any effect. Thus, Whelan's solicitors, on 8 August 2014, wrote to all lot owners in the following terms: "Whelan's view is that the most arguable view of those corrected orders is that the first order (to appoint Whelan under section 161(1)(b) of the SSMA 1996) is of no effect because it fails to specify the functions of the [Owners Coroproation] that are intended to be delegated to Whelan under that order (which is required by the section) and the subsequent order appointing Whelan to have the functions of the executive committee and office bearers is ineffective because a valid order under that power (section 162(2) of the SSMA 1996) can only be made in circumstances where a valid order under section 162(1) of the SSMA 1996 has been made." 20Drs Tan and Walters took the same view in a document later circulated to lot owners which said: "As a result of the 24 July 2014 NCAT Orders, the [Owners Corporation], [the Executive Committee] is now able to act. The representation order proceedings sought by the Plaintiffs Tan & Walters for purposes of Appeal at the Court have now been superceded [sic] by subsequent events." 21Accordingly, on 11 August 2014, the Executive Committee (which included Drs Tan and Walters) purported to resolve to appoint Mr Terrett "to represent the Owners Corporation in the Supreme Court proceeding in trying [sic] to settle the matter if possible". 22The proceedings were "resolved" by the orders now under challenge. 23I should add that on 5 September 2014 Senior Member Meadows made a further order which did "specify functions" and which was evidently intended to cure such problems as may existed with the 24 July 2012 order. 24Mr Sirtes SC, who appeared with Ms Avery-Williams for Mrs Magney, submitted that there is a serious question to be tried as to whether the purported 11 August 2014 resolution of the Executive Committee was valid. Mr Sirtes submitted two bases for that contention. First, he submitted that notwithstanding that Senior Member Meadows' order of 24 July 2014 failed to "specify functions" for the purposes of s 162(1)(b) of the Act, it is nonetheless valid. Second, and alternatively, Mr Sirtes submitted if the 24 July 2014 order was invalid, the earlier order of 20 May 2014 remained valid. Either way, Mr Sirtes submitted, Whelan remained the sole repository of power to conduct the Owners Corporation's affairs and that the Executive Committee had no power to pass the resolution on 11 August 2014. Accordingly, Mr Sirtes submitted, there is a serious question to be tried as to whether the Owners Corporation ever retained Mr Terrett and as to whether the Owners Corporation ever consented to the orders made by Robb J on 26 August 2014. 25On that basis, Mr Sirtes sought, as an interim order, pending final resolution of the validity of the 26 August 2014 orders, an order that the Owners Corporation "be restrained until further order" from making payments to Drs Tan and Walters or to Mrs Porter pursuant to the 26 August 2014 orders. 26I am satisfied that there is a serious question to be tried and I think it clear that the balance of convenience justifies making the order sought on behalf of Mrs Magney, albeit for a very short period. 27I make the following orders: (1)That Mary Jane Magney be joined as fourth defendant in these proceedings. (2)Upon the fourth defendant by her counsel giving the Court the usual undertaking, that the first defendant be restrained until 5pm on 24 November 2014 from making any payments to the plaintiffs or to the third defendant pursuant to the orders made on 26 August 2014. (3)Stand the fourth defendant's notice of motion of 18 November 2014 over to Robb J sitting as Duty Judge at 10am on 24 November 2014. (4)That the fourth defendant provide by email to my Associate and to Robb J's Associate and serve the submissions upon which she relies to support the order sought in paragraph 5 of the notice of motion of 18 November 2014. (5)That these orders be taken out forthwith. ********** 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: 21 November 2014