The Owners – Strata Plan 2010 v Kahn [2021] NSWCATAP 243

Civil and Administrative Tribunal New South Wales Medium Neutral Citation: The Owners – Strata Plan 2010 v Kahn [2021] NSWCATAP 243 Hearing dates: 27 July 2021 Date of orders: 2 August 2021 Decision date: 16 August 2021 Jurisdiction: Appeal Panel Before: A Suthers, Principal Member Decision: Pursuant to s 43(3) of the Civil and Administrative Tribunal Act 2013 (NSW), the appointment of a compulsory manager by order of 9 June 2021 in SC 20/16091 is now subject to the following condition: (i) Pending further order of the Appeal Panel or determination of the appeal (whichever is the earlier in time), the strata manager may not grant any right of exclusive use or enjoyment of the whole or any part of the common property, pursuant to s 237(5) of the Strata Schemes Management Act 2015 (NSW). Catchwords: PRACTICE AND PROCEDURE – stay application – compulsory appointment of strata manager Legislation Cited: Strata Schemes Management Act 2015 (NSW) Cases Cited: Beck v Colonial Staff Super Pty Ltd & Ors (No. 2) [2015] NSWSC 1360 Bentran v Sabbarton [2014] NSWCATAP 37 New South Wales Bar Association v Stevens [2003] NSWCA 95 Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 The Owners - Strata Plan No 1813 v Keevers [2021] NSWCATAP 130 Category: Procedural rulings Parties: The Owners – Strata Plan 2010 (Appellant) Irene Stasos (Appellant) Michael Stasos (Appellant) Mediterranean Estate Pty Ltd (Appellant) N & J Stavrou Pty Ltd (Appellant) Joel Willie Kahn (Respondent) Representation: Counsel: K Ginges, instructed by Legal Made Easy (Appellants)

Other: S Frumar (Respondent) File Number(s): 2021/196881 Decision under appeal Court or tribunal: Civil and Administrative Tribunal Jurisdiction: Consumer and Commercial Division Citation: Not applicable Date of Decision: 09 June 2021 Before: S Thode, Senior Member File Number(s): SC 20/16091

REASONs FOR DECISION

Background 1. On 7 July 2021, a Notice of Appeal was lodged, purportedly on behalf of the first-named appellant, The Owners – Strata Plan 2010, commencing an internal appeal against orders made by the Consumer and Commercial Division. The orders appealed from were made on 9 June 2021 and, relevantly, appointed a manager ("compulsory manager") for the scheme pursuant to s 237 of the Strata Schemes Management Act 2015 (NSW) and other machinery orders for the remuneration of the manager and the like (the Decision). The costs of the application were reserved, with directions made for written submissions. The Tribunal imposed no relevant condition or fetter on the powers of the compulsory manager. 2. The orders were made on the application of the respondent to this appeal, a lot owner in the scheme. The Tribunal recorded that it gave its reasons orally. However, it is not in dispute that by the time the Tribunal was required to rule on the application; the parties were in agreement that a manager should be appointed to the scheme. The issues which remained in contest, according to the appellants, were the identity of the manager to be appointed and whether the appointment should be made on condition, as proposed by the first-named appellant, that the appointment of the manager should only be made on condition that: …no right of exclusive use and enjoyment of the whole or any part of the common property is to be granted by the strata managing agent during the compulsory appointment, pursuant to s 237(5) of the Strata Schemes Management Act 2015 (NSW). 1. Relevantly, no other lot owners sought to be joined in their own right in the proceedings below. 2. An Application for a Stay of Original Decision Pending Appeal (Stay Application) was also lodged with the Notice of Appeal, seeking that all orders made in the Decision be stayed. 3. The matter was listed before me to make directions in the appeal and determine the Stay Application on 27 July 2021. Accordingly, I made directions which, relevantly, listed the appeal for hearing on 21 September 2021 and provided for the parties to prepare for that hearing. 4. Without objection by the respondent, after considering his position, I also made orders joining the other named parties as appellants in the appeal, whilst reserving the respondent's rights to argue that those parties had no standing to bring the appeal or that the appeal had not, in fact, been instituted by the first-named appellant, whose rights in that regard are currently controlled by the compulsory manager. The complexity of those issues was recently dealt with in a decision of the Appeal Panel in The Owners - Strata Plan No 1813 v Keevers [2021] NSWCATAP 130 at [74] to [93] without that Panel being obliged to express a definitive view about the issues likely to be agitated in this appeal, for reasons it gave. With respect, it was appropriate that the respondent proceed as he did and to reserve the consideration of those issues to the hearing of the appeal. 5. The parties lodged a significant volume of material in respect of the Stay Application, including the hearing transcript. 6. The respondent has opposed the granting of a stay. 7. In hearing from the parties, it became apparent that several annexures to the material the appellants relied upon were missing from the bundle filed in the application. I heard from the parties about those documents and indicated that I would not make a decision until I had reviewed the documents which the appellants provided, on my direction, after the hearing. This I did, and on 2 August, I issued my order. The parties indicated at the hearing that they wished to have the benefit of my reasons, which are now provided. 8. Whilst the history of this matter from the parties' perspective is, no doubt, lengthy and complex, it is sufficient in my view that I record in these reasons that the salient aspects of the disputes seem to be: 1. That a strata manager, voluntarily agreed upon, had been appointed to manage the scheme for approximately 12 months before the Decision; and that the individual appellants primarily sought the appointment of that manager under the proposed order for compulsory management of the scheme; 2. The respondent took the view that the management arranged under that process was insufficient, particularly in respect of two issues, being: 1. The need to ensure appropriate levies are raised and works progressed in respect of various operational aspects of the scheme, including tree management, stormwater and sewage management, and repairs to the common property; and 2. Resolution of the respondent's request for a by-law to be passed which grants the respondent exclusive use of an area adjacent to his lot, consisting of about 46 square meters, which is said to have been used by the respondent and his predecessor in title over many years with the acquiescence of the Owners Corporation.

Legislative Foundation and Principles Relating to Granting a Stay 1. The lodgement of an internal appeal does not affect the operation of the decision appealed. Nonetheless, under s 43(3) of the Civil and Administrative Tribunal Act 2013 (NSW) the Tribunal has the discretion to stay the operation of a decision or make other orders affecting the operation of that decision pending the determination of the appeal. That discretion must be exercised judicially, and the general principles that apply in relation to the exercise of that discretion are derived from the terms of s 43(3) itself. The Appeal Panel can obtain guidance from the considerations applied by the courts in deciding whether or not to grant a stay pending an appeal, which an Appeal Panel constituted by the former President of the Tribunal, Justice Wright, summarised in Bentran v Sabbarton [2014] NSWCATAP 37. 2. To set out those principles here, it is sufficient to cite the summary of Slattery J in Beck v Colonial Staff Super Pty Ltd & Ors (No. 2) [2015] NSWSC 1360 at [35], with citations omitted, that: [35] The principles governing a stay of a judgment pending appeal are well established. The applicant must demonstrate that there is a reason for the grant of a stay or that a matter is an appropriate case in the exercise of the Court's discretion. It is not necessary for the applicant for the stay to establish special or exceptional circumstances. The stay is likely to be granted if the appeal would otherwise be rendered nugatory. The Court considering the grant of a stay is not required to determine the merits of the appeal but usually considers whether the applicant has at least an arguable case; and the Court may impose conditions on the grant of a stay including that the applicant pay a sum of money into Court or otherwise secure the payment of the disputed sum. The central determinant as to whether a stay would be granted, and if so upon what terms, if any, is the Court's assessment as to what is a fair balance of the rights of the parties, given that an appeal does not of itself operate as a stay and the party who has succeeded at trial is entitled to the fruits of its victory. 1. The overriding principle in any application for a stay is to ask what the interests of justice require: New South Wales Bar Association v Stevens [2003] NSWCA 95 at [83]; Penrith Whitewater Stadium Ltd v Lesvos Pty Ltd [2007] NSWCA 103 at [18].

Application in the Present Case 1. In the present case, the respondent should be taken to be entitled to the benefit of the decision at first instance unless the appellants can demonstrate that it is appropriate to grant a stay, or another order affecting the operation of the orders made. 2. The first matter that I should consider is whether the appeal raises serious issues to be determined by the Panel or, in other words, whether the appellant has a reasonably arguable case on appeal. However, it is neither appropriate nor necessary for me to attempt to determine whether the appeal will succeed. The appellants raise six grounds of appeal, some of which are broken into sub-grounds. Broadly, they can be grouped into the following categories: 1. That the first-named appellant was denied procedural fairness, in that it was denied the opportunity to properly respond to the proposed appointment of the compulsory manager suggested by the respondent because: 1. that manager was only proposed some three working days prior to the hearing, in circumstances where the respondent had, prior to that, sought the appointment of the manager proposed by the first-named appellant; 2. the Tribunal denied the first-named appellant a proper opportunity to be heard on the issue; and 3. the Tribunal took no submissions from the first-named appellant on issues it subsequently decided were important in the determination of the issues. 1. The Tribunal failed to engage with the first-named appellant's case that the appointment of any manager should only be made on the condition that they may not grant a right of exclusive use or enjoyment of the whole or any part of the common property, pursuant to s 237(5) of the SSMA; and 2. Various grounds alleging that the Decision was based, in part, on no evidence or irrelevant considerations; or was against the weight of the evidence.

Is the appeal reasonably arguable? 1. As to whether the appeal is reasonably arguable, or raises real issues to be considered, it is sufficient to refer to the second issue, regarding whether the Tribunal engaged with the first-named appellant's case, or failed to do so and thereby constructively failed to exercise its jurisdiction or failed to provide the first-named appellant with procedural fairness. 2. In respect of that issue, both parties took me to the transcript. In various passages, the first-named appellant's representative engaged with questions from the member and, eventually, submitted that an appointed compulsory manager would have the discretion to grant the proposed by-law: Transcript P 20 Ln 920 to 922. Later, it was submitted that this could occur without regard to what had occurred in the past: Transcript P 21 Ln 945 to 948. In conclusion, on this topic, the first-named appellant's representative noted that a compulsory manager would only have to consult with the respondent before doing so, having regard to the effect of s 143 of the SSMA: Transcript P 21 Ln 968 to 972. 3. These submissions were eventually accepted by the Tribunal, and, as I understand it, the conclusion reached is not challenged in the appeal. 4. Where the parties differ, however, is that the respondent argues that the passages are indicative of the first-named appellant having abandoned its request that a condition be applied to the appointment of a manager. The appellant says that it simply represents the first-named appellant's representative, appropriately, making submissions as to the law and the effect of the orders sought by the respondent. 5. Later, the transcript reveals that the Tribunal was satisfied that the legal position was as submitted, and that "…once a compulsory manager is appointed all other orders that [the Tribunal] is asked to make (scil) would be otiose…": Transcript P 39 Ln 1873 to 1874. 6. On the material I was referred to, the position of both parties on this issue is reasonably arguable, and needs to be determined at the hearing of the appeal. On that basis, the appeal is not devoid of merit.

Should the Decision be stayed in its entirety? 1. As to the balance of convenience and the competing rights of the parties, the appellants contend that previously appointed manager would better run the scheme pending the determination of the appeal, that there have been delays caused by the transition to having the compulsory manager take over works in progress, and that the compulsory manager has put the necessary works "on hold". 2. As to the last contention, I was shown no evidence that would allow me to be reasonably satisfied this is the case. The appellants' evidence, at its highest, consisted of relatively recent correspondence from the compulsory manager indicating that whilst there have been delays occasioned by the transition to new management, the works are being progressed. 3. Nor do I accept that the delays occasioned by the transition to new management (caused by the need for the compulsory manager to obtain, review and consider the relevant history of the required works) would be best addressed by staying the order in toto, as submitted by the appellants. Instead, it seems to me that, in the absence of evidence to the contrary, the compulsory manager, having now been appointed for six weeks, is likely best placed to ensure the works can progress smoothly. Returning to the prior arrangement for voluntary management, which the appellants implicitly conceded was insufficient given their consent or acquiescence to the appointment of a compulsory manager, would be likely to lead to more delay and inaction. There would be yet another transition, with the attendant need for the appellants' proposed manager to review what the compulsory manager has done, and consider how to proceed. 4. Further, whilst there are veiled and, on the evidence before me, unsubstantiated criticisms of the compulsory manger (which I will return to) there is no evidence that the respondent has a disproportionate interest in seeing the necessary works completed, or that he will benefit disproportionately from the nature of any levies which may be raised to have that work completed. That this may be completed by the manager the respondent preferred, then works no apparent injustice pending the determination of the appeal.

Should any other order affecting the operation of the Decision be made? 1. As a secondary position, the appellants sought that I make an order affecting the Decision pending determination of the appeal by making the appointment of the compulsory manager subject to the condition that they may not grant any right of exclusive use or enjoyment of the whole or any part of the common property, pursuant to s 237(5) of the SSMA. They say that the value of the proposed area of exclusive use is significant and that a grant of the by-law would work an injustice on them. 2. The respondent opposes any such order and says that the appellants are simply attempting to undo the Decision. He says that if the exclusive use by-law is not granted during compulsory management, it will never be. The respondent's representative did not attempt to demonstrate that this was a proper conclusion in law, and I took it as an emotive expression of the respondent's frustration in the ongoing dealings between the parties. 3. The appellant also asserts that there may have been an inappropriate level or type of collusion between the respondent and the compulsory manager, such that, I infer, it is said that I might be concerned that the compulsory manager has a predisposition or interest in granting the by-law sought by the respondent. They say that they were prevented from demonstrating this in the proceedings below because of the late notification of the respondent's preferred candidate, and they intimated that they may seek to issue a summons to the compulsory manager to obtain evidence in that regard. I reject these submissions entirely. They are unsupported by any evidence, and no explanation was proffered as to why, if the submission was to be made, a summons could not have been sought in the nearly three weeks since the Notice of Appeal was lodged. This submission will factor in no way in my decision. 4. Also weighing against the condition sought by the appellants, is their acknowledgement (which I, therefore, do not need to determine) that they may still challenge any decision made by the compulsory manager to grant an exclusive use by-law during the period of the order. This would seem to significantly reduce the prejudice to the appellants if the condition is not applied. 5. However, there are other factors I need to consider, in determining what the interests of justice require on the Stay Application, and trying to resolve the disputes between the parties in a way that is not only just, but also quick and cheap. 6. Firstly, on my assessment, any grant of an exclusive use by-law pending determination of the appeal will almost certainly lead to further litigation between the parties, given the historical acrimony over this issue. That this may occur whilst the appeal proceedings are on foot would only be likely to add expense and delay. 7. Secondly, I have been able to list the appeal for hearing on 21 September 2021, meaning that it will likely be determined during the period of the order for compulsory management. 8. Thirdly, and, weighed with those issues, determinatively, the order sought by the appellants would not prevent the compulsory manager from considering the request for an exclusive use by-law before the appeal is determined. Similarly, it would not prevent the compulsory manager from expressing a preliminary view to the parties, which may assist them in resolving their differences without the assistance of the Tribunal or Appeal Panel. 9. The parties did not press for a stay of the orders made to determine the costs of the proceedings below in submissions, and I think it best that this proceed to avoid any unnecessary duplication of appeal proceedings. There is no realistic likelihood that the costs issue will be determined, any costs ordered assessed, and payment enforced before the hearing of this appeal. 10. In light of those considerations, and asking the overriding question of what the interests of justice require, I am satisfied that I should order that: 1. Pursuant to s 43(3) of the Civil and Administrative Tribunal Act 2013 (NSW), the appointment of a compulsory manager by order of 9 June 2021 in SC 20/16091 is now subject to the following condition: 1. Pending further order of the Appeal Panel or determination of the appeal (whichever is the earlier in time), the strata manager may not grant any right of exclusive use or enjoyment of the whole or any part of the common property, pursuant to s 237(5) of the Strata Schemes Management Act 2015 (NSW). 1. If any party seeks its costs of the Stay Application as a separate issue to the costs of the appeal, noting that the general position that each pay their own costs unless there are special circumstances warranting an order for costs appears to apply, I direct that: 1. Any application for costs, together with submissions and evidence in support of the application, is to be lodged with the Appeal Registry and given to the other parties within 14 days of the publication of these reasons. 2. Any submissions and evidence in response to any such costs application are to be lodged with the Appeal Registry and given to the other parties within 14 days thereafter. 3. Any submissions in reply are to be given to the Appeal Panel and the other parties within 7 days thereafter. 4. Submissions on the application for costs are not to exceed five pages in length. 5. The Appeal Panel may dispense with a hearing and determine any application for costs based on the written submissions and evidence provided. If the parties oppose this course, they should make submissions on this issue when complying with the directions as to their submissions on the substantive costs application.

********** 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: 16 August 2021