Overturning a Tribunal’s Order appointing a Strata Manager

07/12/2015

We have recently been approached by Lot owners (who were on the Executive Committee) of an Owners Corporation who have had the order made by the NSW Civil and Administrative Tribunal (NCAT) appointing a Strata Manager in place of an Executive Committee and the Owners Corporation to undertake the management of the Owners Corporation.

The appointment is pursuant to Section 162 of the Strata Schemes Management Act 1996. 

Such a claim is made on the basis that the Owners Corporation and Executive Committee were dysfunctional in that it was not functioning or not functioning satisfactorily.  In the proceedings in which we were not originally instructed, the Owners Corporation sought to dispute the claim made by a lot owner made seeking to appoint a specified Strata Manager.  The Strata Manager had previously been appointed a Strata Managing agent for the strata units.  The Owner Corporation thereafter chose to appoint a new independent Strata Manager.  One Lot owner then sought to appoint the original Strata Manager in place of the Executive Committee and the Owners’ Corporation to manage the affairs of the Owners Corporation under the NCAT powers under Section 162 of the Strata Schemes Management Act 1996.

The original Strata Manager had support from some of the Lot owners but not the Executive Committee or a majority of the Lot owners.  As often happens there were various factions within the Owners Corporation.  This of itself does not mean that the Owners Corporation does not function satisfactorily.

Whether the Owners Corporation functions satisfactorily depends on how the matters of dispute are resolved and whether they are resolved in accordance with the general provisions of the Strata Schemes Management Act.  For example, are the by-laws consistently applied against those who offend? 

In the recent enquiry which we have been asked to advise, the lot owners chose to dispute the claim in whole and made submissions that no order should be made.  The Executive Committee’s main issue was with the previous Strata Manager and the conduct of a particular Lot owner.

The difficulty for the Owners Corporation and previous Executive Committee was that they did not properly prepare their case and focus on the dispute. 

A NCAT Member considering such a dispute may in some circumstances be influenced to make an order appointing a Strata Manager because of the conduct of the case rather than seeing it as part of the functioning of the Owners Corporation.  In some circumstances there are certain reasons for an issue not to be resolved and it may be better in those circumstances for the Owners Corporation and existing Executive Committee to concentrate on having a resolution on that single issue and agree to an order that is limited to resolving the single issue.  Further if the Strata Manager proposed is part of the dysfunction and that the person proposed is not a truly independent person, it would have been better to focus seeking to appoint a truly independent Strata Manager who could (or attempt) to resolve the main issue.

In circumstances where a prior Strata Manager has not been able to resolve the issues it is likely in our view the appointment of that Strata Manager under a compulsory appointment will do little to help the proper functioning of the Owners Corporation.  In those circumstances if you are met with such an application serious consideration should be given to a request that a truly separate and independent Strata Manager be appointed.

It is also important to note that the costs associated with having the Owners Corporation and Executive Committee replaced with a Strata Manager will usually result in the cost of administration being increased during the period of the compulsory appointment.

There are appeal processes, however one should not rely upon the appeal process but rather properly prepare the application or the defence to the application. 

If you find once a Strata Manager has been appointed and nothing has changed, then one can consider an application for the appointment of a new Strata Manager in place of the original Strata Manager appointed by NCAT or otherwise varying the NCAT order so as to return the administration to the Executive Committee and the Owners Corporation.

If you find yourself in that position, please telephone Richard Watson experienced in these matters to seek advice as to what would be the appropriate course to be adopted.