Virpi Kristina Tuite v The Owners—Strata Plan No. 2217 [2018] NSWCATCD 57

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: Virpi Kristina Tuite v The Owners—Strata Plan No. 2217 [2018] NSWCATCD 57 Hearing dates: 26 April 2018 Date of orders: 17 October 2018 Decision date: 17 October 2018 Jurisdiction: Consumer and Commercial Division Before: Senior Member Meadows Decision: (1) The application is dismissed. Catchwords: Strata Schemes Claim—s 148 Strata Schemes Management Act 2015—application to repeal Special By-Law 9—s 150 of Act – By-Law harsh, unconscionable or oppressive—s 24 of Act—declare resolution at EGM be invalidated—s 232 of Act—l Special By-Law be set aside—s 229 of Act—Registrar-general be requested to make certain recordings in registered dealing—conduct of EGM—exercise of Tribunal's discretion Legislation Cited: Civil and Administrative Tribunal Act 2013 Strata Schemes Management Act 2015 Category: Principal judgment Parties: Virpi Kristina Tuite—applicant; The Owners—Strata Plan No. 2217—respondent Representation: Applicant: Mr Le Page; Respondent: Mr Song File Number(s): SC 17/40899 Publication restriction: Nil

REASONS FOR DECISION

Background 1. Parking spaces are at a premium in Strata Plan 2217. 2. Apparently, six of the owners in the scheme at all relevant times enjoyed the exclusive use of "lock up" garages. There is no evidence as to when or how that situation came about, or indeed whether those garages are part of lot property or common property. There is no issue in regard to those garages. 3. The strata scheme shows an area of common property at ground level. The respondent owners corporation states that there were no car spaces identified as such on the strata plan in that area of common property. That appears to be correct. 4. However, it appears that a number of spaces (6) were marked on the concrete of that common property and those marked spaces were used as "common property car spaces". As I understand the evidence, any owner could choose to park their car in any one of those spaces if there was such a space vacant. It appears this was on a "first come, first served" basis. Indeed, the owners corporation asserts in its submissions that owners who had the exclusive use of a lock-up garage could rent that space and then park their own car in one of the common property car spaces. 5. As there are 16 Lots in the scheme the potential for competition for car parking spaces is obvious. 6. At the Annual General Meeting for 2016 held on 23 August 2016, it was proposed to implement a plan to raise funds for the purpose of maintaining common property and avoid having to set a special levy. The plan was to "sell" exclusive use rights to four of the six common property car spaces. Despite some objections being raised in relation to details of the proposal, the motion was passed (unanimously, according to the statement of Mr Arneaud dated 27 November 2017, filed in the proceedings for the respondent). 7. The method chosen was by way of an auction system described as a "helmsman auction". Such a system is used, for example, in stud breeding or championship stock auctions, such as rams, bulls or polo horses. The auction is distinguished by all lots being offered at once, and bidders can bid on one or more of the lots at once, the bidding being open for some pre-determined period, such as 10 minutes or 30 minutes or whatever may suit the circumstances. The bidding is open and all bids are recorded. It is usually claimed that the system is "buyer-friendly" and reduces the stress of an auction, as bidders can take the time (within the pre-determined period) to consider and reconsider their bids in comparison with bids for other lots as well as the lot or lots for which they have lodged a bid. Obviously, each bidder is also aware of all the other bids in relation to all the lots in the current round of bidding. 8. The owners corporation decided to implement a modified helmsman auction by first obtaining a professional valuation of the lots (apparently to aid in setting a reserve price) and then conducting the actual bidding at, or immediately before or after, an Extraordinary General Meeting. 9. The bidding process involved the placing of four "bid registration sheets" (as I will term them) identified "A" to "D", each with a column for writing an amount, a column for the bidder's name and a column for the bidder's lot number. A bidder could bid on each of the four spaces and also keep bidding on each of the four spaces. 10. The resulting bids in this case can be clearly be seen in a photographic attachment to the statement of Mr Arneaud referred to above. 11. The applicant disputes the legality of the process, submitting there were various breaches of the Strata Schemes Management Act 2015 (SSM Act). I mention here one aspect of the auction which is one the major controversies in this application by way of general information. 12. In the usual helmsman auction (or at least, "usual" in my limited knowledge and experience), there is a procedure by which, whatever the bidding period selected, if there is a bid placed in the last part of that period, often the last two minutes of the period, then the period is automatically extended by, often again, two minutes. Those extensions continue until the last two minute period (if that is the period selected in the particular auction) is "bid free". Thus, that procedure provides an automatic method of determining whether bidding has ceased. 13. It appears on the evidence before me that the method just described was not adopted in this helmsman auction. Instead, it is agreed, the original bidding period was extended for one final period. How that decision was made is a subject of controversy in these proceedings. 14. The bidding period was extended, it appears clear on the evidence, because as the end of the initial period approached it was obvious that bidders wished to continue bidding and there was a certain amount of pushing and jostling by bidders attempting to reach the bid registration sheets to record a further bid or bids. 15. The evidence also suggests (and I do not understand this is disputed) that the decision to extend the bidding time, although perhaps not put in strictly formal form under the SSM Act, was made on a "unanimous" basis, only in the sense that there were no votes against the decision to extend from any person present at the general meeting. 16. The extension having concluded, the winning bids were decided and the proposed procedures for lodging deposits and so on followed. There is no evidence or submission by either party that the extended period concluded with or without the same issues as were present when the initial period ended and as described above. 17. I note also that it is clear on the evidence that the owners corporation made concerted efforts to prepare for the sale of the four exclusive use lots and the making of the special by-law to formalise the effect of the sales. They obtained advice from Messrs Bannermans, who also represented the owners corporation in these proceedings, in relation to the drafting of the by-law and general advice in relation to the sale proposal. 18. However, in the event, the sale did lead to disputes and objections, including from the applicant and one Dr Scott. Consequently, the applicant commenced these proceedings, seeking essentially to invalidate the auction sale and to have the special by-law found to be harsh, unconscionable and oppressive and set aside. It would be a necessary consequence also that the register be amended to reflect the setting aside of the special by-law, the monies paid by the successful bidders returned, the four car spaces reverting to common property general use and perhaps consequential alterations to any plans and procedures for using the monies raised in relation to the owners corporation's statutory functions, including, perhaps, contractual disputes. 19. In that regard, as submitted particularly by the respondent, the auction was well over one year ago, the successful bidders have been using their exclusive rights since then and the owners corporation has used the funds gained to consider and perhaps commence maintenance or rectification works on common property. 20. It can therefore be readily understood that the issues are serious for the individual owners (or some of them) as individuals, and also for the owners corporation as a whole.