Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Luong v Owners Corporation SP 87671 and Telmet Ventures Pty Ltd [2015] NSWCATCD 105 Hearing dates: 9 and 10 April 2015 Decision date: 02 September 2015 Jurisdiction: Consumer and Commercial Division Before: N Vrabac, Senior Member Decision: The application to appoint pursuant to section 162(1) Strata Schemes Management Act 1996 (the "Act") Whelan Property Group Pty Ltd (license number 1373234) as the strata managing agent for the scheme is dismissed. Catchwords: Strata managing agent Legislation Cited: Strata Schemes Managing Act 1996 Strata Schemes (Freehold Development) Act 1973 Cases Cited: CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 Gershberg v The Owners SP 5768 [2011] NSWCTTT 411 Noon v The Owners-Strata Plan 22422 (2014) NSWSC 1260 Nulama Village Pty Ltd V Owners-Strata Plan 61788 (2006) NSWCTTT 55 Project Blue Sky v Australian Broadcasting Authority (1998) CLR 194 Reylan Pty Ltd v Lamag Holdings Pty Ltd (1991) NSW Title Cases 80-011 Category: Principal judgment Parties: LingLing Luong (applicant) Owners Corporation SP 87671 & Telmet Ventures Ptyl Ltd (respondents) Representation: Counsel: Mr I McKnight, Solicitor, appeared for the applicant Mr F Santisi of Counsel appeared for the Owners Corporation Mr D Hand of Counsel, appeared for Telmet Ventures Pty Ltd Solicitors: Grace Lawyers Pty Ltd for the applicant GOH Lawyers for the Owners Corporation Milad S Raad & Associates for Telmet Ventures Pty Ltd File Number(s): SCS 14/13392 Publication restriction: Unrestricted reasons for decision Background 1. Strata Plan No. 87671 was registered on 31 May 2013. 2. The strata scheme is comprised of 176 lots of dwellings. Lots 1 to 155 are residential lots. Lots 156 to176 are development lots. 3. Strata Plan 87672 was registered on 18 June 2013. 4. The strata scheme is comprised of 84 lots of dwellings. 5. Strata Plan 87673 was registered on 16 July 2013. 6. The strata scheme is comprised of 84 lots of dwellings. 7. The Strata Plans 87674 and 88987 were registered on 4 March 2014. 8. The strata scheme (88987) comprised of 94 lots of dwellings. The strata scheme (87674) was a warranted development and it involved common property such as swimming pool, gymnasium, tennis court and other common facilities. 9. The scheme is a staged development with an aggregate of 450,000 of unit entitlements. 10. The staged development consists of about 1242 lots and is being developed in about 21 separate stages. The development is to be completed over a 10 year period. 11. The first four stages comprised the "warranted development" and the remaining stages comprise "authoirsed development" within the meaning of the Strata Schemes (Freehold Development) Act 1973 (the "Development Act"). 12. The developer Telmet Ventures Pty Ltd, as the original owner of the land, was responsible for all of the duties of the owners' corporation during the "initial period" which ran between 31 May 2013 and about 26 March 2014. 13. The developer decided that it would allow residential lot owners to have some input in the decision making about the running of the strata scheme during the initial period. 14. On 24 April 2014, the first AGM of Strata Plan 87671 was held. APPLICANT'S CASE 1. On 5 March 2014 the applicant filed an Application for Adjudication in the Tribunal. 2. The applicant submitted that the Application for Adjudication be transferred to the Tribunal pursuant to section 164(1)(a) of the Strata Schemes Management Act 1996 because the matter raises complex legal issues of utmost importance. 3. The applicant alleged that the original owner, Telmet Ventures Pty Limited, misapprehended the meaning of the legislation as to how to properly administer and manage a strata scheme. One example of a misapprehension by the original owner was that each stage of development, there was to be 21 in total, would have an Owners Corporation in respect of each stage. 4. On 2 July 2014 the Adjudicator referred the matter to the Tribunal for determination. 5. The applicant seeks the following order: 'That, pursuant to section 162 (1) of the Strata Schemes Management Act 1996 (the "Act"), a strata managing agent be appointed for Strata Plan No. 87671 and that the strata managing agent exercise the functions of the Owners Corporation, the executive committee, the chairperson, secretary and treasurer.' 1. The applicant's reasons for seeking an order pursuant to section 162 of the Act to appoint a strata managing agent are in two parts. 2. The reasons in the first part are concerned with the mismanagement of the Strata Scheme during the initial period. 3. The reasons in the second part are concerned with the post-initial period. It is submitted by the applicant that the Owners Corporation, as evidenced by general and executive committee meetings, is not complying with provisions of the Act and the Development Act and that such non-compliance is on-going and systemic. 4. The applicant's complaint is that at the first Annual General Meeting (87671) held on 29 July 2013, section 75(2) of the Act was not complied with. The Owners Corporation did not provide to the meeting an estimate how much money it will need to credit to its sinking fund for actual and expected expenses. 5. Section 75A (2) was not complied with because the Owners Corporation did not prepare a plan of anticipated major expenditure to be met from the sinking over the 10-year period commencing on the firs AGM. 6. The applicant submitted that there was no instrument in writing at the First AGM to appoint the strata managing agent (section 27 of the Act). 7. The applicant submitted that for a strata managing agent to be appointed, there is no requirement to have an instrument in writing at a general meeting of the Owners Corporation. However, she points out that if the instrument is not attached to the notice, the owners attending the meeting by proxy are denied any meaningful participation and input at the meeting. 8. Section 80B was not complied with at the First AGM because the Owners Corporation did not obtain at least 2 quotations in relation to proposed expenditure in respect of any one item or matter if the proposed expenditure prescribed by the regulations for the purposes of the section, was exceeded. 9. The First AGM on 29 July was followed some 30 minutes later by an EGM. 10. The applicant submitted that there was no instrument in writing (a caretaker agreement) executed before or after the strata scheme meeting commenced and attached to the notice calling the EGM. The instrument should have been attached because the caretaking and related expenses are by a significant margin the largest expense to be met by the Owners Corporation. 11. Section 76(4) of the act was not properly enlivened because a Special Levy was struck at the meeting in the sum of $31,000.The applicant submitted that imposition of one-off large amounts is contrary to the requirement to have levies imposed for actual and expected liabilities in an orderly and common sense way by levying regular contributions for both the administrative and sinking funds. The applicant cited in support of this argument, among other, the decision in Reylan Pty Ltd v Lamag Holdings Pty Ltd (1991) NSW Title Cases 80-111. 12. The applicant provided a chronology of alleged non-compliances in similar terms to the above mentioned First AGM and EGM in respect of AGM and EGM of Strata Plan 87672 held on 6 August 2013; Strata Plan 87673 meetings held on 3 September 2013. 13. The applicant submitted that there was no motion at the EGM on 26 February 2014 to confirm the minutes of the previous meeting in contravention of clause 35(1) (a) of Schedule 2 of the Act. 14. At the EGM the respondent did not properly notify in accordance with section 28J(3) of the Development Act, the Amendment of the Strata Development Contract. 15. At the EGM held on 3 April 2014, Strata Plans 87671, 87672 and 87673, the Application to NCAT for breach of by-laws was not considered in compliance with section 45 of the Act. The respondent listed 9 other motions considered at the meeting which were passed in contravention of sections 40, 47, 65A, 68(1), 75(1) and section 235(2) of the Act. 16. The applicant submitted that inadequate notice was given for holding of the first, post-initial period AGM, held on 24 April 2014. Hence, all of the resolutions passed at the meeting were invalid. 17. The EGM held on 24 April 2014 passed motions which were not in compliance with section 80B and section 40B of the Act. That is, there were no quotations attached in respect of the caretaker agreement and there was no caretaker agreement attached to the notice of the meeting. 18. The applicant's complaint about the EGM of 24 April includes the following; 1. The OC imposed a restriction on the use of sporting amenities contrary to the principle enunciated in Noon v The Owners-Strata Plan 22422 (2014) NSWSC 2160 wherein it was held that that lot owners have an interest in relation to common property akin to equitable tenants in common. 2. On-site security was obtained without quotations, contrary to stipulation of section 80B of the Act. 3. Credit for levies was obtained without the Owners Corporation determination as to the amounts to be levied as a contribution to the administrative fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds. Requirements of sections 71 (1) and (4) of the Act were not observed. 4. Matters were resolved at the Executive Committee Meeting in "General Business" without a notice of motion. 5. Purchases were authorised without the Owners Corporation estimate how much money it will need to credit to its administrative and sinking fund for actual and expected expenditure, as required in section 74(1) and (2) of the Act. 6. On 6 September 2014 an Executive Committee Meeting was held without proper notice of the meeting and resolutions were passed without notice of motions. Clause 35 (3) of Schedule 2 to the Act requires that a motion must not be submitted at a general meeting unless notice of the motion has been given. 1. On 16 February 2015 EGM was held of Strata Plan 87671. The applicant submitted that a motion was passed for the amendment of schedule of unit entitlements. The applicant contended that a special resolution was required under section 28QAA(3)(e) to amend the schedule. 2. Ordinary resolution was passed at the meeting to achieve the amendment. Under the Development Act a special resolution is required to make the amendment. The failure to pass the motion by special resolution invalidates the motion. The Owners Corporation will have to convene and hold a further meeting to deal with the motion in accordance with section 28QAA of the Development Act. 3. At the EGM an attempt was made to deal with a major issue of unauthorised parking at the strata scheme. A motion was passed at the meeting to install bollards on common property. The motion was not passed by way of special resolution as required, because the votes recorded for and against relate to lots rather than unit entitlements. 4. A motion was passed at the same EGM to add a by-law prohibiting parking of shopping trolleys and carts on the common property. This motion was not passed in accordance with clause 18 of Schedule 2 of the Act. The vote for the motion records the number of lots rather than unit entitlements. 5. On 30 March 2015 AGM was held. A motion was passed to accept or amend the proposed budget in accordance with sections 76(1) and 78(2) of the Act. The applicant submitted that there was no plan given of anticipated major expenditure as required by section 75(2) of the Act. 6. The owners were levied contributions for the sinking fund in the sum of $55.00. The requirement under the Act is to levy contributions in accordance with unit entitlements. 7. An amendment was proposed at the meeting to By-law 2 to enable the Owners Corporation to immobilise any vehicle parked upon common property contrary to any signage. This amendment would have been contrary to sections 651B and 651C of the Local Government Act 1993. 8. The applicant argued that the provisions of the Act relating to contributions are mandatory. That is, procedure set out in section 75 of the Act to give estimates of expenses for the administrative and sinking fund has to be followed. The Owners Corporation must determine, in compliance with section 76 of the Act, the amounts to be levied as a contribution to the administrative fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds. 9. The applicant concluded that the determinations made at the first three general meetings in 2013 relating to contributions are invalid and any attempt to recover outstanding levies would be met with such defence. 10. The applicant submitted that having regard to the multifarious and continuing breaches of the various provisions enumerated in this matter it is open to the Tribunal to appoint a strata managing agent pursuant to section 162 of the Act. 11. The applicant submitted that the application should not be dismissed because she has exchanged contract for the sale of the property at the time of making her submissions in the proceedings, 8 May 2015. That is, the applicant did not settle on the sale of the property at the time of her submissions. 12. The applicant rejected the respondents' submission, made at the hearing, that she lost legal standing because her property has been sold. The applicant noted that section 162(7)(b) of the Act provides that an application for an order may be made by 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. The applicant's argument is that section 162(7)(b) of the Act does not provide for dismissal of the application in the event that the applicant disposes of her interest in the lot after the application is made. 13. The applicant noted that section 185(3) gives the Tribunal power to dismiss an application on any other ground that the Tribunal considers appropriate. The applicant submitted that this discretion not be exercised in the present case as it raises serious questions as to the governance of the scheme by complying with various provisions of the Development Act and the Act. Some of the provisions are mandatory in nature and if not complied with may have significant consequence in the ongoing management of the strata scheme. RESPONDENTS' CASE 1. The First Respondent's ("the OC") written submissions were prepared on 17 December 2014. The OC submissions post-date the Adjudicator's decision made in July 2014 to have the matter referred to the Tribunal for hearing. They predate the hearings held in April 2015. 2. The OC's submissions discuss and take up issue in part with the Adjudicator's reasons and decision to have the matter transferred to the Tribunal. However, the submissions are otherwise directed to the central issue of these proceedings, whether order should be made appointing strata managing agent to exercise functions of Owners Corporation. 3. The OC argued that the appointment of a compulsory strata manager under section 162(1) of the Act is a draconian step and a measure of the last resort. An appointment of the manager would entirely remove the decision-making capacity of the owners. Before making such an order, the Tribunal must be satisfied that: 1. (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 2. (b) an Owners Corporation has failed to comply with a requirement imposed on the Owners Corporation by an order made under this Act, or 3. (c) an Owners Corporation has failed to perform one or more of its duties, or 4. (d) an Owners Corporation owes a judgment debt. 1. The OC submitted that in the initial period between 31 May 2013 and about 26 March 2014, the developer Telmet Ventures Pty Ltd, as the original owner of the land, was responsible for all duties of The Owners. The developer allowed through its attorney, Lansari Pty Ltd, the owners for lots already transferred to have some input to its decision making about the running of the strata scheme during the initial period. 2. The developer held a series of meetings as each stage of the development was completed. At these meetings, lot owners in each stage were given a "say" in the setting of levies and the operation of the scheme in the initial period. At the end of the initial period, the owners voted unanimously to consolidate the balances of funds held to the credit of each of the separate stages in to a consolidated fund of the owners. 3. During the initial period, the residential lot owners were required to meet the common property expenses in amounts calculated solely by reference to their residential lots. The monies collected were the subject matter of an interim arrangement put in place by the developer in respect of each of the first three stages of the development. 4. The OC submitted that the applicant's complaints about the functioning of the management structure of the owners relate to several minor non compliances with the requirements of the Act at the meetings of lot owners held on 29 July 2013, 6 August 2013 and 23 August 2013. 5. The meetings were held in the initial period when the developer exercised the functions of the Owners Corporation. The initial period is defined in the Dictionary of the Act; initial period, in relation to an Owners Corporation, means the period commencing on the day on which that Owners Corporation is constituted and ending on the day on which there are owners of lots the subject of the strata scheme concerned (other than the original owner) the sum of whose unit entitlements is at least one-third of the aggregate unit entitlement. 1. The applicant's argument is that resolutions taken during the meetings held in the initial period took effect as a series of recommendations to the developer. On 24 April 2014 a management scheme was put into effect to govern and control the position post-initial period, which could not take effect by reason of the applicant's application, filed in the Tribunal on 5 March 2014. 2. At the inaugural AGM the agenda for that meeting complied with each of the requirements of clause 3 of Schedule 2 of the Act other than the requirement that the meeting decide whether a caretaker should be appointed, what functions the caretaker should exercise. 3. The AGM concluded at 9:55pm. The EGM was held at 10:00pm. At the EGM it was resolved unanimously that a caretaker be appointed and its contract approved. The OC notes that all the people present, included the applicant and those she held proxies for, approved the caretaker's (Crinti Pty Ltd) appointment. 4. The failure to comply with section 40B of the Act-that is, the failure to include a caretaker resolution on the agenda of the first AGM-did not adversely affect any person, in circumstances where the appointment was considered at the EGM that immediately followed. There is no evidence by the applicant to suggest that the same people did not attend the AGM and EGM to vote unanimously to pass the resolution to appoint the caretaker. 5. The OC stated that Mr Kerz, the nominated representative for the developer, gives evidence that at the time of the consideration of the motion for the appointment of the caretaker, he tabled two caretaker's quotes and he told the meeting who they were from and the total amounts of the quotes for the services. 6. The OC submitted that the alleged deficiencies in the notice of meeting did not cause any substantial injustice especially in circumstance where the applicant was present and voted in favour of the motion. She does not state otherwise. Hence, her application should be dismissed. 7. The OC contended the Tribunal has no jurisdiction to address the meeting of 29 July 2013 as it was held in the initial period. The functions and duties of the Owners Corporation at the time were exercised by the developer and the matters complained off in that meeting have long been overtaken by intervening events. 8. Likewise the meetings held on 6 August 2013 and 8 August 2013 were not Owners Corporation meetings. They were held in the initial period and the matters complained of have been overtaken by intervening events by the date of the application and hearing which again have been adopted or otherwise replaced by new contracts and transactions. 9. The contraventions of the provisions of the Act listed by the applicant at the meeting on 24 April 2014 are not conceded. There is no evidence to suggest that they led to failure to pass resolution and there is no evidence that any omissions made affected the outcome or that any person was adversely affected by any of the outcomes of the AGMs or EGMs. 10. The Second Respondent ("the Developer") submitted that the applicant failed to demonstrate why the Tribunal should take the draconian step of appointing a compulsory strata manager. The applicant's submission that there is "systemic" non-compliance with the Act is not borne out by the evidence and should be rejected. 11. The Developer stated that the applicant is unhappy with the performance of the existing strata manager and she wants him removed from office. That is not a proper basis under which the Tribunal may make an order under section 162 of the Act. 12. The Developer argued that the applicant's application should be dismissed because she no longer holds an estate or interest in the strata scheme. The developer furnished in support of his argument a Statutory Declaration sworn on 16 June 2015 confirming the sale of the applicant's property. 13. Section 162(7) relevantly provides: (7) Who may make an application? An application for an order under this section may be made only by: (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… 1. The Developer submitted that the making of the application for the purposes of section 162(7) includes not merely the lodging of the application, but also the prosecution of that application by making submissions and engaging with the processes of the Tribunal. Section 162(7) is not merely concerned with the standing of a person to bring a claim; it is also concerned with the standing of that person to obtain a benefit of an order applied for. 2. The Developer submitted that the applicant's submission that section 162(7) does not expressly provide for the dismissal of the application for want of capacity should be rejected. The applicant's submission fails to grapple with the Act's requirement that an applicant must fit, at all relevant times, up to the date of the making of the order, within one of the defined categories provided by section 162(7). 3. The respondent submitted in the alternative that the application should also be dismissed because at the time of the hearing of this matter, 10 April 2015, she was in arrears of her levies in the sum of $8,267.71. Pursuant to section 163(4)(d) of the Act the Tribunal should dismiss her application. 4. Section 163(4)(d) provides that an application of an owner of a lot in the strata scheme concerned, who has not paid all contributions levied and payable in relation to the lot under the Act, should be dismissed. The applicant was invited at the hearing, and she conceded, that she is not up to date with her levy payments. 5. The Developer submitted that the applicant abandoned on 9 April 2015, the first hearing day, all claims related to the "initial period". The matter was adjourned on 9 April 2015 for the applicant to prepare a list of matters, for the second day of hearing, 10 April 2015, to illustrate that the management of the strata scheme is not functioning. 6. Hence, the Developer's submissions address only the complaints raised post-initial period. 7. The Developer submitted that the appointment of a compulsory strata manager under section 162(1) of the Act is a draconian step and a measure of the last resort. He restates the criteria in section 162 of the Act, set out In paragraph 53 above, which have to be met to enable the Adjudicator to make an appointment of a compulsory manager. 8. The Developer stated that the applicant's case is that the combined effect of a series of minor mistakes with certain requirements of the Act is not a" concatenation of non-compliance", as submitted by the applicant, and it does not show sufficient support for the order sought by the applicant. 9. The Developer cites in support of his argument Gershberg v The Owners SP 5768 [2011] NSWCTTT 411, wherein Member Moore observed: 'The appointment of a compulsory managing agent under s162 requires it to be objectively established, inter alia, that the management of the strata scheme is not functioning satisfactorily. The power under section 162 is a draconian one and the Tribunal has consistently said that it should be exercised only in the clearest of cases. It is not possible to provide exhaustive definition but it does usually involve a clear and substantive dereliction of duty to manage the strata scheme in accordance with the Act and the interests of its members. 1. The Developer stated that, in this matter, there is no such evidence of any clear and substantial dereliction on the part of the managers of the scheme in the exercise of their duty. 2. I will not recite all of the Developer's submissions because they are not dissimilar to the submissions of the OC in particular concerning and answering the complaints of non-compliance with the Act in the initial period. 3. The Developer stated that pursuant to section 28E of the Development Act, the lot owners were at all times liable for all expenses relating to the "use or maintenance of the common property of the Strata Scheme", with such expenses to be apportioned among the lots on a unit entitlement basis, but disregarding the unit entitlements of the development lots. 4. The Developer held a series of "interim" meetings as each stage of the development was completed. Lot owners were given a "say" in the setting of the levies and the operation of the scheme in the initial period. The residential lot owners were required to meet the common property expenses in amounts calculated by reference to the unit entitlements for their residential lots. 5. On 24 April 2014, the first AGM of Strata plan 87671 was convened. An EGM was held immediately afterwards. The owners elected an executive committee of 9 owners, a budget was passed, levies were set, the finance of the scheme were to be audited each year, developer insurance cover was varied, strata manager was appointed and a caretaker was appointed for the scheme. 6. The owners voted unanimously to balance the funds held to the credit of each of the three stages. The executive committee was to source quotes for the preparation of the sinking fund and they were to obtain quotations for the valuation of the common property. 7. The applicant showed that ordinary rather than special resolutions were passed to make changes to common property such as installing bollards to regulate parking to install a satellite dish or to pass a by-law prohibiting the use of shopping trolleys on the property. The Developer submitted that that section 153 of the Act provides the means to address those shortcomings. Similarly, section 153 may be used to address the problem with the caretaker agreement and the pool maintenance. 8. The applicant showed that at the meeting held on 24 April 2014, there were no estimates provided with the notice of the meeting for the sinking fund and there were no comparative quotes given for the caretaker. The Developer submitted Mr Kerz, his nominated representative at the meeting, gave sworn evidence that financial reports were made available by him to attendees at the meeting. It is recorded in the minutes of the meeting that some 90 people voted in favour of adopting the records, and 59 voted against. 9. Mr Kerz also gave evidence that at the time of the consideration of the motion for appointment of the caretaker, he tabled two caretakers' quotes, who were they from, and the total amounts of the quotes for the services. He also gave evidence to the Tribunal that the appointment of each, the caretaker and the strata manager were in writing. The alleged deficiencies in the notice did not cause any substantial injustice. The complaint about them should be dismissed. 10. The Developer conceded that the agenda for the April 2014 meeting did not have a caretaker resolution on it, in contravention of section 40A of the Act. However the Developer stated that the EGM held immediately after the AGM resolved unanimously that a caretaker be appointed and its contract approved. Hence, no person was adversely affected. The balance of the resolutions about which the applicant now complains should be redressed through section 153 of the Act. DECISION 1. In this matter the application to an Adjudicator was referred to the Tribunal pursuant to section 164 of the Act. The Tribunal has the same power as the Adjudicator to make the order or to dismiss the application, section 184 of the Act. Consequently, section 184 limits the order making power of the Tribunal to those available to the Adjudicator. 2. I will briefly deal with the respondents' applications to dismiss these proceedings because they were: 1. Frivolous and vexatious, section 163(4)(a) of the Act 2. The applicant has not paid her levies in full, section 163(4)(d) 3. The applicant has no standing in the proceedings, section162(7)(b) 1. I am not satisfied that the proceedings should be dismissed because they were frivolous or vexatious or otherwise misconceived or lacking in substance. In CPD Holdings Pty Ltd t/as The Bathroom Exchange v Baguley [2015] NSWCATAP 21 the Appeal Panel observed that proceedings are vexatious if they are instituted with the intention of embarrassing or annoying the person against whom they are brought. The proceedings can also be dismissed if they are obviously untenable or manifestly groundless as to be utterly hopeless. 2. There is no evidence before me to show that the applicant brought these proceedings and they fell within anyone of the categories stated in The Bathroom Exchange case. 3. There was evidence at the hearing of this matter that the applicant has not paid her levies. 4. The Developer submitted at the that the application has to be dismissed because section 163(4)(d) of the Act provides that application be dismissed if it is made by an owner of a lot in the strata scheme concerned, wherein the lot owner has not paid all contributions levied and payable in relation to the lot under this Act. 5. There were very little written submissions made in respect of the issue of unpaid levies by the parties in the proceedings. My view is that the applicant's application should be dismissed on the oral submissions made by the Developer at the hearing. The application should not have been brought by the applicant until the levies were paid in full by her. 6. If I am wrong on the issue determined in paragraphs 95-97, I would dismiss the application because the applicant no longer has standing in the proceedings. 7. The Developer applied to have the proceedings dismissed because section 162(7)(b) of the Act states that an application for an order under this section may be made only by a person having an estate or interest in a lot in the strata scheme concerned. The Developer filed and served evidence, sworn on 16 June 2015, which states that the applicant is no longer recorded in the strata roll for the scheme as the owner of an interest in any other lot in the scheme. The contract for the sale of the land was completed on 18 May 2015. 8. The applicant submitted that section 162(7)(b) does not provide for dismissal of the application in the event that she disposes of her interest in the lot after the application is made. 9. The applicant contended that section 185(3) of the Act provides that the Tribunal may dismiss an application on any other ground that the Tribunal considers appropriate. The applicant submitted that the Tribunal should not dismiss this application under the discretionary power given in section 185(3) as it raises serious questions as to the governance of a strata scheme which has not complied with various provisions of the Development Act and the Act, some of which are mandatory in nature and which also have significant consequences on the ongoing management of the strata scheme. 10. Neither party provided any authority in support of their contention on this issue. I rely on section 162(7)(b) of the Act and adopt the Developer's submissions. The application is dismissed pursuant to the discretionary power given to the Tribunal in the Act. 11. In what follows I will briefly consider the application on its merits. I note that I have carefully read the parties' submissions, however I will not recite the whole of the chronology of the complaints made and the response to them. I will only refer to the matters significant to the making of this decision. 12. The appointment of the Strata managing agent under section 162 of the Act is discretionary. The Tribunal has to be satisfied that one of the circumstances set out in subsection 162(3A) of the Act exist. 13. The Act does not specify particular matters that are to be considered by the Tribunal in deciding whether the management structure of the strata scheme is not functioning or is not functioning satisfactorily. I am not satisfied, on the evidence given in the post-initial period that the strata scheme is not functioning satisfactorily. 14. The circumstances in which the management structure may not be functioning or functioning satisfactorily include where the relevant level of management; * Does not perform the required function, for example maintain the common property or it makes decisions inconsistent with its powers or it does not act in accordance with the decisions passed at AGM or EGM * It exercises a power or makes a decision for an improper purpose, for example conferring a benefit upon a particular lot owner or group of lot owners not authorised by the Act * Fails to exercise power or make a decision to prevent a contravention by lot owners and occupiers of their obligations under the Act, including breaches of by-laws * Takes legal action on behalf of the owners in circumstances where such action is unnecessary or not in the interest of the Owners Corporation or the lot owner as whole. * Raises levies in amounts not determined without a proper budget for the actual and expected liabilities, levied to and paid into the administrative and the sinking fund. 1. Section 12 of the Act provides that an Owners Corporation has functions conferred or imposed on it by the Act. Relevant functions include: * Employing persons * Serving notices and taking action in respect of breaches of by-laws * Appointing strata managing agent by instrument in writing, authorised by a resolution in general meeting * Delegate duties to the managing agent by an instrument in writing, under the authority of a resolution passed at a general meeting * Appoint a caretaker to assist the Owners Corporation in managing and controlling the use of common property * Raise levies for the administration of the strata scheme * Provide a plan at an AGM in relation to each item or matter on which the Owners Corporation intends to expand money * Provide a plan of anticipated major expenditure to be met from the sinking fund over the 10 year period commencing on the first AGM * Take legal action on behalf of the Owners Corporation ,subject to a resolution passed at a general meeting 1. Meetings of the Owners Corporation must be conducted in accordance with the requirements of Schedule 2 of the Act which, among other things, provides for the giving of notices of general meeting (including extraordinary general meeting) the conduct of those meetings, the counting of votes and other administrative matters. 2. In relation to any executive committee appointed under section 16 of the Act, its role is to assist the Owners Corporation in carrying out its management functions. The decisions made by the executive committee have no force and effect if notice in writing is given by one or more owners who oppose that decision if those owners in aggregate hold unit entitlements exceeding one third of the aggregate unit entitlement. 3. The effect of these provisions is that the management structure provided for in the Act consists of three levels. They are; a) the Owners Corporation, b) the executive committee, in respect of matters delegated to it, and appointed strata managing agent and/or caretaker. 4. The complaints made by the applicant about the management of the strata scheme in the initial period were, among other things, concerned with the lack of estimates or anticipated plan of expenditure being given with the notices of meetings held in 2013. 5. There was no instrument in writing attached to the notice of the meeting for the owners to consider the appointment of a caretaker. The process, it was pointed out by the applicant, did not afford an opportunity to the lot owners to participate, there was a lack of transparency. 6. The applicant listed all of the motions at the meeting in the initial period which were passed without a special resolution such as installation of bollards, extra swipe cards, installation of a bicycle rack, by-law not validly open and application to NCAT made without proper consideration of section 45 of the Act. 7. In the initial period, during the first three stages of the development, the Developer gave to individual lot owners a "say" about the setting of the levies and the operation of the strata scheme. The residential lot owners were required, as part of the interim arrangements, to meet the common property expenses in amounts calculated by reference to their unit entitlements. In the initial period the Developer exercised all of the functions of the Owners Corporation. 8. At the end of the initial period, the lot owners voted unanimously to consolidate the balances of funds held to the credit of each of the separate stages into the consolidated fund of the owners. 9. The Developer submitted, and I agree with him, that on the first day of hearing, 9 April 2014, the applicant abandoned all complaints relating to the running of the scheme in the initial period. The applicant was allowed to prepare a list of the matters about which she complains, post-initial period, which she says illustrate that the management of the strata scheme is not functioning. 10. The applicant complained that AGM and EGM held on 24 April 2014 contained several errors; there were no quotations attached to the notice of the meeting regarding the caretaker agreement, there was no instrument in writing given regarding the caretaker. 11. Motion 5 purports to place restrictions on use of sporting amenities contrary to the principle in Noon v The Owners-Strata Plan. Motion 7 does not have at least 2 quotations in relation to proposed expenditure in respect the on-site security. 12. Motions 10 and 11 do not have proper determinations as required by section 76(1) and 76(4) of the amounts to be levied to the administrative and the sinking fund. 13. There were Executive Committee Meetings in which matters were resolved in General Business without a notice of motion. Purchases were made without an estimate in the budget of how much money should be credited to administrative fund for actual and expected expenditure. 14. Alterations such as erection of signage were approved without a special resolution being passed at a general meeting of the Owners Corporation that specifically authorises the taking of the particular action proposed. Motions were passed at the Executive Committee Meeting without notice of the motion being given in accordance with Schedule 2 of the Act. 15. On 16 February 2015 EGM was held. An amendment was made to the schedule of the unit entitlement without special resolution required under section 28QAA(3)(e) of the Development Act. 16. The OC held an AGM on 30 March 2015. Motions were passed without estimates for the sinking fund and without the sinking fund 10 year plan being incorporated into estimate. An ordinary resolution was passed rather than a special resolution as required in the Development Act. The applicant submitted, the consequence of this is that another meeting will have to be convened to deal with the motion in the manner prescribed to enable the issue of the requisite certificate. 17. A special resolution was passed at the AGM to install bollards on the common property to address the issue of unauthorised parking. The motion was passed on the basis of the number of lots at the meeting rather than unit entitlements. Unit entitlements are considerably higher than the figures shown in the voting. 18. The applicant submitted that provisions relating to the determination of contributions are mandatory as observed by the High Court in Project Blue Sky v Australian Broadcasting Commission (1998) CLR 355. That is, the acts done in breach of an essential preliminary to the exercise of a statutory power will result in the invalidity of an act done subsequent to the breach of the procedural condition being illegal. 19. The applicant submitted that the CTTT has contemplated that it may be satisfied that a strata scheme is not functioning satisfactorily when the provisions of the Act are not being complied with, Nulama Village Pty Ltd v Owners-Strata Plan No 61788 (2006) NSWCTTT 55. 20. I am not satisfied that the strata scheme is not functioning satisfactorily. In my opinion, the Owners Corporation did not fail in its charter under the Act to control manage and administer the common property for the benefit of the lot owners. There is no complaint that the Owners Corporation did not properly maintain and keep in a state of good repair the common property. 21. The OC did make mistakes when it attempted to grapple with the parking of cars on the common property. Similarly, it had problems in dealing with the abandoned shopping trolleys on its premises. These and other mistakes, such as improperly approving by-laws, do not amount to a dysfunction to warrant the appointment of a compulsory strata manager. 22. The inaugural AGM was held on 24 April 2014. The complaints are that the agenda was not in conformity with clause 3 of Schedule 3 of the Act. There were no financial statements attached with the notice of the firs AGM. There were no comparative quotes for the caretaker and the strata manager attached to the notice. The notice did not include a motion to decide whether a caretaker should be appointed under section 40A of the Act. 23. The Developer stated that an EGM was held immediately after the AGM. It was unanimously resolved at the EGM that a caretaker be appointed and its contract approved. I agree with the Developer that the omission how the agenda of the AGM was given, did not adversely affect any person. 24. The applicant made a similar submission in respect of the failure to include the financial documents with the notice of the first AGM. The Developer gave evidence at the hearing that its representative, Mr Kerz, made the financial records available to the attendees at the meeting. 25. My view is that the applicant's complaints about the failures surrounding the first AGM and EGM do not amount to the strata scheme not functioning satisfactorily. The contributions that were levied by the Owners Corporation, somewhat clumsily, were levied with respect to repair and maintenance of the common property for the benefit of all owners. 26. There were serious omissions made by the Owners Corporation that the relevant paperwork was not properly made available at the meetings required under the Act. These omissions were corrected by the Owners Corporation, albeit in practical sense only. If anyone was affected by any of the omissions, there were remedies available under section 153 of the Act to apply for an order invalidating any resolution passed or election held, by the persons present at the AGM or EGM. COSTS 1. In this matter two orders were made in relation to costs. They are: 1. 19 December 2014 2. Costs of the directions on 27 November 2014 and 19 December 2014 be and are reserved. 3. 9 April 2015 4. Costs thrown away on 9 April 2015 are to be the respondents' costs in the cause. 1. In this jurisdiction the rule is that each party pay its own costs. 2. My preliminary view is that a costs order may be made in favour of the party who had the benefit of the determination in respect of the abovementioned directions under one of the subsections of section 60(3) of the Civil and Administrative Tribunal Act 2013. 3. Unless the parties are able to resolve the issue of costs by way of an agreement, leave is granted to the parties to apply within 14 days of the publishing of these orders to have the matter listed for directions. N Vrabac Senior Member Civil and Administrative Tribunal of NSW 2 September 2015 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: 08 October 2015