Validity of Strata Corporation Levies

The court examined the validity of levies imposed by a strata corporation and the enforceability of charges on a property. The court held that levies must be necessary to recover an amount owing and that the charge on the property was insufficient to prevent the need for a levy.

Supreme Court New South Wales

Medium Neutral Citation: [NAME] v [NAME], Trader and Tenancy Tribunal & Ors [2013] NSWSC 1700 Hearing dates: 1 and 4 November 2013 Decision date: 04 November 2013 Jurisdiction: Equity Division Before: White J Decision: Refer to para [32] and following of judgment of 4 November 2013 Catchwords: REAL PROPERTY - strata title - application to set aside resolutions of [NAME] and quash decision of [NAME] - notice of application pursuant to s 135 of the [NAME] Act 1996 - Wednesbury unreasonableness - procedural fairness - jurisdiction of adjudicator pursuant to s 153(1) - effect of orders of superior court of record - orders valid until set aside - a [NAME] is not the [NAME], Trader and Tenancy Tribunal (CTTT) - joinder of individual adjudicator as appropriate defendant - [NAME] a tribunal for the purposes of s 69(4) of the Supreme Court Act 1970 - setting aside resolutions of [NAME] - resolutions made contrary to court order but pursuant to decision of [NAME] - power of court to make order allowing [NAME] to levy lot [NAME] other than in proportion to unit entitlement - interpretation of court orders - meaning of "necessary" Legislation Cited: [NAME] Act 1996 Environmental Planning and Assessment Act 1979 Supreme Court Act 1970 Civil Procedure Act 2005 [NAME], Trader and Tenancy Tribunal Act 2001 Cases Cited: Phillips v Walsh (1990) 20 NSWLR 206 [NAME], Strata Plan 50411 v [NAME] [2003] NSWCA 5 [NAME] v [NAME], Strata Plan 31731 [2003] NSWCA 7 [NAME] v [NAME] (No. 45) [2013] NSWSC 1541 New South Wales v Kable [2013] HCA 26; (2013) 298 ALR 144 [NAME], Strata Plan 60919 v [NAME], Trader and Tenancy Tribunal & Ors [2009] NSWSC 1158; 16 BPR 31,673 Gillett v Walsh [2009] NSWSC 1436 [NAME] v Commissioner of Police [1977] 2 NSWLR 721 [NAME] v Attorney General of NSW [2013] NSWCA 383 Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 Category: Principal judgment Parties: [NAME] (Plaintiff) [NAME], Trader and Tenancy Tribunal (1st Defendant) [NAME] (2nd Defendant) [NAME] (3rd Defendant) [NAME] (4th Defendant) [NAME] (5th Defendant) Representation: Counsel: [redacted] By mention (1st Defendant) [NAME], sol'r (2nd Defendant) In person (3rd and 4th Defendants) [NAME] and [NAME] (5th Defendant, submitting appearance) Solicitors: [redacted] [NAME] (2nd Defendant) [NAME] (5th Defendant) File Number(s): 2013/327776

Judgment 1HIS HONOUR: These proceedings concern the interpretation and effect of orders made by [NAME] on 5 December 2012 in proceeding 2011/244426 ("the 2011 proceeding"). The plaintiff in the 2011 proceeding was [NAME] ("[NAME]"). The first defendant was [NAME] SP 79205 ("[NAME]"). These proceedings also concern the validity of orders made by a [NAME] on 3 July 2013 and the validity of resolutions of [NAME] of 27 February 2013, 20 June 2013, 18 September 2013 and 14 October 2013 purporting to levy contributions, including contributions for the payment of legal costs, on the plaintiff, [NAME], and on [NAME] and her former husband, Mr [NAME]. 2On 18 October 2013 [NAME] filed a notice of motion in the 2011 proceedings in which she sought orders that resolutions purportedly passed by [NAME] on 20 June 2013 insofar as it purported to impose a special levy upon [NAME] of lot 1 be set aside, and that resolutions purportedly passed by [NAME] on 18 September 2013, also be set aside. The notice of motion also sought an order in the nature of certiorari to quash the orders of 3 July 2013 of the [NAME] and a declaration that the resolution of [NAME] of 27 February 2013 was valid. 3These orders could not properly be sought by way of notice of motion pursuant to liberty to apply reserved in the 2011 proceedings (Phillips v Walsh (1990) 20 NSWLR 206 at 209-210). That notice of motion was referred to me by the duty judge on 30 October 2013. I directed that [NAME] file a summons seeking the orders in the nature of final relief. 4It was urged that the proceedings were urgent because a mortgagee of lot 2, [NAME], had gone into possession of lot 2 and had listed lot 2 for sale by auction the following week.

Accordingly, I listed the summons for hearing together with the balance of the notice of motion on 1 November 2013. 5On 4 November I made orders in these proceedings. At that time I summarised the conclusions to which I had come, but time did not permit the giving of full reasons. These are my reasons. The summary of my conclusions that I gave on 4 November 2013 is annexure 'A' to these reasons.

Background 6The property the subject of the strata scheme of subdivision is a duplex house in [ADDRESS]. There are only two lots. [NAME] is the owner of lot 1. [NAME] and [NAME] are the [NAME] of lot 2. The strata plan was registered on 22 August 2007. Lot 1 has a unit entitlement of 20 units. Lot 2 has a unit entitlement of 15 units. [NAME] completed the purchase of her lot in February 2008. Lot 1 is on the lower level. Lot 2 is on the upper level. 7The falling out between [NAME] and [NAME] has led to multiple proceedings of nightmarish complexity and the incurring of costs to lawyers and fees payable to compulsory strata managing agents that might well be ruinous. 8On 9 August 2010 [COMPANY] was appointed the strata managing agent by a [NAME] pursuant to s 162 of the [NAME] Act 1996. 9The present dispute apparently arose out of certain unauthorised work that was carried out by [NAME], or by [NAME] and [NAME], to an attic above their lot. Apparently they installed a spiral staircase and presumably converted the attic space into a room. It appears that the Council's consent to the work had not been given. Moreover, the attic was common property. In 2010 and 2011 there were proceedings before a [NAME] and before the [NAME], Trader and Tenancy Tribunal ("the CTTT") as a result of which [NAME] was authorised to enter the attic to remove the offending work. [NAME] sought to obtain retrospective consent to the work from the Council for which [NAME]'s consent was required.

The 2011 proceedings 10This dispute led to [NAME] filing a summons on 28 July 2011 in this Court. These were the 2011 proceedings. The summons was amended on 8 August 2011. [NAME] was not a plaintiff. Nor was he joined as a defendant. According to [NAME] he vacated the property in 2009 and he and she were divorced in 2010. Nor was [NAME] joined as a defendant to the 2011 proceedings. Instead, the amended summons joined [NAME], the Waverley Council, the CTTT and the Registrar-General as defendants. [NAME] sought orders for rectification of the strata plan to include the "loft" within lot 2, an order that [NAME] consent to a development application and a building certificate application that had been lodged with the Waverley Council, and a stay of orders made by a [NAME], the CTTT and the Waverley Council. 11The proceedings were settled by a deed dated 14 October 2011. The parties to the deed were [NAME] and [NAME]. In substance the parties agreed to take identified steps to amend the strata plan to include the attic space in lot 2; to pass a by-law in the meantime that gave lot 2 exclusive use of the attic space; to do what was required by or ancillary to the lodgement of an existing development application and any application under s 96 of the Environmental Planning and Assessment Act 1979 (NSW) required by Waverley Council to obtain approval for the [NAME]; and for the pending proceedings in the CTTT to be withdrawn. (This broad summary is not intended to be an exact description of the parties' agreement and does not incorporate all relevant terms.) 12Under the deed [NAME] agreed to pay [NAME]'s costs of the Supreme Court proceedings on a solicitor/client basis and to have those proceedings dismissed. She and [NAME] agreed to pay other costs associated with implementation of the deed as set out below. There were also mutual releases. 13For present purposes the clauses of most relevance are as follows: "10. All costs payable in respect to obtaining approval of the [NAME] including the preparation, lodgement and consideration of the DA Documents, the consent to the DA by [NAME] and the exclusive By-Law and the approval by Council are to be paid by [NAME] and [NAME] as the registered [NAME] of Lot 2 in their joint and several capacities. ...

12. The parties agree to [NAME] and [NAME] applying to Waverley Council by way of a further DA for the subdivision of the common property in Strata Plan No. 79205 as follows: ... iii. That all costs and expenses howsoever incurred in respect of the subdivision and including the retainer of the Surveyors be paid by [NAME] and [NAME] jointly and severally, provided always that such costs and expenses are reasonable (together the 'Subdivision Costs'); iv. That in default of payment of the Subdivision Costs referred to in iii above [NAME] and [NAME] hereby irrevocably agree and consent to such costs being constituted and registered as a charge upon Lot 2. ...

14. All fees and costs payable in respect of and arising out of the DA for the purposes of the subdivision are to be paid by [NAME] and [NAME], as the registered [NAME] of Lot 2 in their joint and several capacities.

15. Upon the signing of this Deed of Agreement [NAME] agrees to take all necessary steps to dismiss the Supreme Court Proceedings as against [NAME] on the following terms: (i) The Supreme Court Proceedings are dismissed; (ii) [NAME] is to pay the costs of [NAME] of the Supreme Court Proceedings on a solicitor/client basis as agreed or assessed. In default of payment of the costs referred to in (ii) of this clause [NAME] and [NAME] hereby irrevocably agree and consent to such costs being constituted and registered as a charge on Lot 2. ... 20. [NAME] and [NAME] hereby jointly and severally agree that all liability for rectification of Existing Defects as defined in relation to Lot 2 and as notified to [NAME] shall be borne solely by [NAME] and [NAME] respectively and [NAME] and [NAME] indemnify [NAME] in respect of any liability for the rectification of the Existing Defects. ...

25. The parties to this Deed hereby agree, that in consideration of and pursuant to the terms of this Deed and upon the execution of this Deed, each party will release and forever discharge each other party to [t]his Deed in respect of all claims of any kind whatsoever and howsoever arising in respect of the matters recited in this Deed and the proceedings referred to in this Deed, whether in the Supreme Court, the CTTT or any other court or tribunal in New South Wales." 14On 19 October 2011 orders were made by the Registrar by consent as follows: "1. Order that the Summons filed 28 July 2011 and Amended Summons filed 8 August 2011 be dismissed as against the first defendant.

2. The plaintiff to pay the first defendant's costs of the proceedings as agreed or assessed.

3. The proceedings as against the second, third and fourth defendants be stood over to I5 February 2012 for further mention." 15Order 2, being the order for costs, was not for the payment of costs on a solicitor/client basis or on the indemnity basis. Nonetheless, there is nothing to indicate that there was any variation to the parties' agreement that [NAME]'s costs of the proceedings would be paid by [NAME] on the solicitor/client basis. It is unfortunate that the consent order did not reflect this. It is not apparent why the order for costs was made on the ordinary basis, but it was (Uniform Civil Procedure Rules 2005, r 42.2). 16On 13 October 2011 a [NAME] appointed [COMPANY] ("[NAME]") as the compulsory strata managing agent for [NAME] from 5 November 2011 to 4 November 2013 with power to exercise all of the functions of [NAME]. It replaced [COMPANY]. 17On 20 August 2012 [NAME] filed a notice of motion in the 2011 proceeding in which she sought the following orders: "1. Set aside consent orders.

2. Urgent stay of proceedings and stay execution of deed.

3. Leave of court to add [NAME] as defendant." 18At this time [NAME] was acting for herself. 19On 10 September 2012 [NAME] gave notice of an annual general meeting of [NAME] to be held on 25 September 2012 to consider a proposed resolution that [NAME] determine that levies be imposed, including a levy of $112,854 per annum for the administration fund to be payable in four quarterly instalments. The proposed budget included an amount of $126,000 for legal fees. 20The meeting was adjourned to 8 October 2012. On that day [NAME] exercised its power to exercise all of the functions of [NAME] and caused [NAME] to pass a resolution of that day that: "6. BUDGET The motion was AMENDED and then IT WAS RESOLVED that [NAME] determine the following levies be due and payable commencing 1 September 2012 in four equal quarterly instalments as follows: a) The administration fund pursuant to Section 76(1), of the [NAME] Act, 1996 in the sum of $142,854 per annum including GST. b) The sinking fund pursuant to Section 76(1) of the [NAME] Act, 1996 in the sum of $5000 per annum including GST. c) These amounts are due and payable as follows: i) Administration fund $121,000 on the first day of September with the balance of the budget due in 3 equal instalments on December 2012 and March and June 2013 ii) The sinking fund in 4 equal instalments on the first days of September, December 2012, March and June 2013." 21As a result of this resolution, on or about 11 October 2012 [NAME] received an invoice for $69,857 said to be payable immediately. She paid $26,182 in levies, fees and interest, but contended that the balance of the levy related to legal costs incurred by [NAME] that were payable by [NAME] pursuant to the deed of 14 October 2011 and the costs order of 19 October 2011. 22On 16 November 2012 [NAME] filed a notice of motion in the 2011 proceedings seeking orders that: "1. The notice of motion filed 20 August 2012 be dismissed.

2. The plaintiff to pay the costs of the first defendant and the respondent to the motion on an indemnity basis.

3. None of the costs of these proceedings are to be levied by the first defendant against the respondent to the motion." 23The "respondent to the motion" was [NAME] and the motion referred to was [NAME]' notice of motion filed on 20 August 2012. 24The notices of motion of [NAME] of 20 August 2012 and of [NAME] of 16 November 2012 came before [NAME] on 22 November 2012. On that day [NAME] filed in court an amended notice of motion that deleted the claim in the previous paragraph 3 and substituted the following claims: "3. None of the First Defendant's costs of these proceedings, and none of the costs referred to in clauses 10, 12(iii), 14, 15(ii) and 20 of the Deed of Agreement which is Annexure A to the Consent Orders of 19 October 2011, are to be levied by the First Defendant against the Respondent to the Plaintiff's motion filed 20 August 2012 but are only to be levied (insofar as it may be necessary having regard to Order 2 above) against Lot 2.

4. Such further or other orders as the Court deems fit." 25Dr [NAME]' notice of motion of 20 August 2012 was dismissed by [NAME] on 22 November 2012. Her Honour observed that [NAME]' application was based on a supporting affidavit that made most serious allegations of deceit, misrepresentation and fraud. Her Honour was satisfied the [NAME]' notice of motion was hopeless from the outset and was accompanied by a scandalous affidavit. Her Honour made the order in paragraph 2 of [NAME]'s amended notice of motion filed in Court on that day, namely that [NAME] pay the costs of [NAME] and [NAME] on the indemnity basis. That costs order related to the costs of [NAME]' notice of motion filed on 20 August 2012. 26Bergin CJ in Eq stood over the balance of [NAME]'s notice of motion to 5 December 2012. 27The [NAME] was not represented before [NAME] on 5 December 2012. [NAME] was represented. [NAME]'s notice of motion was heard during the course of a busy duty list. [NAME], counsel for [NAME], handed up proposed [NAME] minutes of order which, in addition to the orders sought in paragraph 3 of the amended notice of motion filed on 22 November 2012, sought orders that [NAME] be directed to register a caveat over Lot 2 to secure the costs and expenses referred to in the first order sought, and also an order to set aside the resolution of [NAME] in paragraph 6 of the minutes of the annual general meeting of 8 October 2012. That resolution is set out at para [20] above. 28Bergin CJ in Eq made all those orders. In the course of submissions [NAME] advised her Honour that although [NAME] did not appear on that day it opposed order 1. The order seeking to set aside the resolution of 8 October 2012 was neither consented to nor opposed by [NAME] nor [NAME]. An affidavit was before [NAME], which her Honour had clearly read and that included a lengthy letter from the solicitor for [NAME] that made a submission that the Court did not have the power to make the orders sought. It is clear that [NAME] did not accept that submission. 29Her Honour made the following orders: "1. I order that the plaintiff is to pay the costs of the first defendant and the respondent in respect of the application for indemnity costs as contained in the Amended Notice of Motion.

2. It is noted that the plaintiff neither consents nor opposes the following order: I make the order in paragraph 1 of the [NAME] of Order initialled by me and dated today.

1. None of the First Defendant's costs of these proceedings and none of the costs referred to in clauses 10, 12(iii), 14, 15(ii) and 20 of the Deed of Agreement which is Annexure A to the Consent Orders of 19 October 2011, are to be levied by the First Defendant against the Respondent to the Plaintiff's Motion filed 20 August 2012 but are only to be levied (insofar as it may be necessary) against Lot 2.

3. It is noted that the plaintiff and the first defendant neither oppose nor consent to the following order: I make the order in paragraph 2 of the [NAME] of Order initialled by me and dated today.

4. It is noted that the plaintiff and the first defendant neither oppose nor consent to the following order: I make the order in paragraph 3 of the [NAME] of Order initialled by me and dated today.

5. It is noted that the plaintiff does not oppose the following order: The plaintiff is to pay the respondent's costs in respect of the balance of the relief claimed in the Amended Notice of Motion.

6. None of the defendant's costs in respect of the Amended Notice of Motion are to be levied by the first defendant against the respondent." 30The argument of [NAME] that was before her Honour, that in substance was repeated before me, was that by reason of s 78(4) of the [NAME] Act, contributions could only be levied on lot [NAME] proportionate to their unit entitlement. 31Sections 76, 78 and 229 of the [NAME] Act provide: "76 [NAME] to set levy for contributions to [NAME] and sinking funds (1) [NAME] must determine the amounts to be levied as a contribution to the [NAME] fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds. (2) That determination must be made at the same meeting at which those estimated amounts are determined. (3) [NAME] must levy on each person liable for it such a contribution. (4) If [NAME] is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner a contribution to the [NAME] fund, determined at a general meeting of [NAME], in order to meet the expenses. (5) A contribution is, if an [NAME] so determines, payable by such regular periodic instalments as are specified in the determination setting the amount of the contribution. ... 78 Manner of levying contributions (1) An [NAME] levies a contribution required to be paid to the [NAME] fund or sinking fund by an owner of a lot by serving on the owner a written notice of the contribution payable. (2) Contributions levied by an [NAME] must be levied in respect of each lot and are payable (subject to this section and section 77) by the [NAME] in shares proportional to the unit entitlements of their respective lots. (3) If, at the time a person becomes owner of a lot, another person is liable in respect of the lot to pay a contribution, the owner is jointly and severally liable with the other person for the payment of the contribution and interest on the contribution. (4) A mortgagee or covenant chargee in possession of a lot (whether in person or not) is jointly and severally liable with the owner of the lot: (a) for any regular periodic contributions to the [NAME] fund or sinking fund together with any interest on those contributions, and (b) for any other contribution together with interest on that contribution if the mortgagee or covenant chargee has been given written notice of the levy of the contribution. (5) Subsection (4) does not affect the liability of an owner of a lot for any contribution levied under this section. (6) Regular periodic contributions to the [NAME] fund and sinking fund of an [NAME] are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not served on the owner. ... 229 Costs in proceedings by [NAME] against [NAME] (1) This section applies to proceedings brought by one or more [NAME] of lots against an [NAME] or by an [NAME] against one or more [NAME] of lots (including one or more [NAME] joined in third party proceedings). (2) The court may order in proceedings that any money (including costs) payable by an [NAME] under an order made in the proceedings must be paid from contributions levied only in relation to such lots and in such proportions as are specified in the order. (3) If a court makes such an order [NAME] must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of the contributions paid in accordance with that levy. (4) Division 2 of Part 3 of Chapter 3 (section 78 (2) excepted) applies to and in respect of contributions levied under this section in the same way as it applies to contributions levied under that Division." 32Where a court orders an [NAME] to pay costs of a successful party, s 229(2) of the [NAME] Act provides that the court may order that costs payable by an [NAME] must be paid from contributions levied only in relation to such lots and in such proportions as are specified in the order. If the court makes such an order [NAME] must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of contributions paid in accordance with that levy. In other words the court may make an order requiring that the costs payable by an [NAME] are to be paid only out of levies contributed by other lot [NAME] in accordance with the terms of the order. 33The Court of Appeal has also held by necessary implication that s 76 of the Supreme Court Act 1970, that is in materially the same terms as s 98 of the Civil Procedure Act 2005, confers power on the court to make similar orders in respect of [NAME]'s own costs that it incurred in such proceedings so that the successful party does not bear the burden of a levy from [NAME] in respect of its proceeding against [NAME] ([NAME], Strata Plan 50411 v [NAME] [2003] NSWCA 5 at [170]-[172]; [NAME] v [NAME], Strata Plan 31731 [2003] NSWCA 7 at [82]-[84]). 34No point was taken before [NAME] that as the proceedings between [NAME] and [NAME] had been dismissed on 19 October 2011 the Court was functus officio and no further order could be made pursuant to s 98 of the Civil Procedure Act as to who should bear the burden of [NAME]'s costs of the proceedings. Clearly no such issue would have arisen in respect of the costs of [NAME]' notice of motion to set aside the orders of 19 October 2011 and to "stay execution of the deed". The latter application should have been brought by a separate proceeding, but, in any event, it was dismissed. No submission was made to [NAME] that she did not have jurisdiction to make the orders sought in [NAME]'s notice of motion because the proceedings between [NAME] and [NAME] had been concluded. In any event, it seems to me consistently with my reasons in [NAME] v [NAME] (No. 45) [2013] NSWSC 1541, that the application made by [NAME] was an application "as to costs" that could be made after the conclusion of those proceedings pursuant to s 98(3) of the Civil Procedure Act. 35No question arises as to the correctness of the orders of [NAME] of 5 December 2012. There was no application for leave to appeal from her Honour's orders. 36On 29 August 2013 [NAME] filed a notice of motion seeking to set aside the orders of 5 December 2012 pursuant to the slip rule (Uniform Civil Procedure Rules, r 36.17). That application was heard and dismissed by [NAME] on 25 October 2013.

The decision of the [NAME] of 3 July 2013 37Following the orders of [NAME] of 5 December 2012 [NAME] convened an extraordinary general meeting that was held on 27 February 2013. The minutes record that after noting the orders of 5 December 2012 resolution 6 of 8 October 2012 was revoked. [NAME], exercising the functions of [NAME], then caused it to resolve as follows: "7. LEVY ON LOT 2 [NAME] the motion and then RESOLVED to levy the amount of $47,012.53 on Lot 2, representing some of the costs incurred by [NAME] referred to and in accordance with order 1 of the orders of the Supreme Court on 5 December 2012 in matter 2011/244426, such amount due and payable on 27 February 2013. The amount levied only includes: (a) legal costs charged by [COMPANY] ($36,130.90) and [NAME] of Counsel ($7,623.00) and incurred by [NAME] in the Supreme Court proceedings (matter 2011/244426) from about 13 February 2012 to 15 February 2013; and, (b) legal costs charged by [COMPANY] and incurred by [NAME] in relation to the exclusive use by-law referred to in clause 10 of the Deed dated 14 October 2011. [NAME] intends to raise further contributions levied on the [NAME] of Lot 2 in accordance with order 1 of the orders of the Supreme Court on 5 December 2012 in matter 2011/244426." 38On or about 11 March 2013 [NAME] applied to a [NAME] for an order altering the amount of the contributions payable pursuant to the resolutions of 27 February 2013. The ground of the application is not entirely clear but seems to have been that there had been no proper reconciliation of what contributions had been paid to [NAME] and were outstanding, and that the levy of $47,012.53 on lot 2 was exorbitant and had not been assessed or agreed to. 39In the reasons of the [NAME] of 3 July 2013 the ground of the application was stated to be that the [NAME] of Lot 2 were not served with the notice of meeting and did not attend the meeting. That ground does not appear from the materials before me. 40On 3 July 2013 the [NAME], ordered that: "1. Pursuant to the provisions of the SSMA s 153 an order is made invalidating resolution 7 made at the EGM on 27 February 2013.

2. Pursuant to the provisions of the SSMA s 149(1)(a) an order is made that the strata levy imposed on the [NAME] of lot 2 is varied by providing for payment of a different sum being a sum $47,012.53 less than is shown on the statement for the period ended 23 May 2013.

3. It is noted that the above order may require the strata managing agent to review and correct interest charges made in respect of late payment of the sum mentioned in order 2." 41His reasons relevantly were as follows: "15. In regard to the levy raised in the sum of $47,012.53 by way of resolution at the EGM conducted on 27 February 2013 it was submitted that the levy was raised in accordance with orders of the Supreme Court made on 5 December 2012 (a copy of which was provided). Further, the strata managing agent was acting in accordance with powers delegated in the instrument of appointment made by an Adjudicator on 13 October 2011.

DECISION 16. Because the substance of this application deals with the issue of whether or not the applicant is in arrears of contributions it is inappropriate to dismiss it pursuant to s 163(4)(d) and I have therefore considered the application on its merits.

17. The Adjudicator, by orders made on 13 October 2011 appointed the current strata managing agent for a period of two years to 4 November 2013. The orders specified that the strata managing agent was to exercise all of the functions of [NAME] and of the chairperson, secretary, treasurer and executive committee.

18. That order effectively took all the rights of the lot [NAME] to vote in general meeting away from them for the period of the appointment. It has been said that a prudent strata managing agent in those circumstances will nevertheless hold properly constituted meetings and give lot [NAME] an opportunity to have their say, even though it is not a requirement at law and they are not entitled to vote on any motion.

19. Hence, in the circumstances of this case, it was not a requirement that the applicant be given notice of, and an opportunity to vote at, the general meeting on 27 February 2013. Hence, the resolution cannot be invalidated on that basis.

20. The SSMA s 153 provides: 153 Order invalidating resolution of [NAME] (1) An Adjudicator may make an order invalidating any resolution of, or election held by, the persons present at a meeting of an [NAME] if the Adjudicator considers that the provisions of this Act have not been complied with in relation to the meeting. (2) An Adjudicator may refuse to make an order under this section but only if the Adjudicator considers: (a) that the failure to comply with the provisions of this Act did not adversely affect any person, and (b) that compliance with the provisions of this Act would not have resulted in a failure to pass the resolution or have affected the result of the election. (3) An application for an order under this section may be made only by an owner or first mortgagee of a lot.

21. In this case I am not satisfied that the order of the Supreme Court was a reasonable and proper basis for [NAME] to impose a levy of $47,012.53 on the [NAME] of lot 2 for a number of reasons.

22. Firstly, it should be noted that the order was made against [NAME] alone and not the [NAME] of lot 2.

23. Secondly, and more importantly for the purpose of this application, [NAME] (or in this case the strata managing agent exercising the functions of [NAME]) was required by the SSMA s 78(2) to levy contributions on the lot [NAME] in accordance with their respective unit entitlements.

24. In failing to do so, the strata managing agent has acted contrary to the provisions of the SSMA which gives rise to a power for an Adjudicator to invalidate the resolution pursuant to s 153(1) above. 25. [NAME] was never at any time entitled to include the costs ordered by the Supreme Court in the levy imposed on the [NAME] of lot 2, nor to charge interest on such sum pursuant to the SSMA.

26. The order made by the Supreme Court is enforceable against [NAME] alone, and interest can be charged on it. The respondent should seek its own legal advice in that regard.

27. Hence, I am satisfied I am entitled to order that resolution 7 made on 27 February 2013 is invalid and that it is appropriate that I do so." 42Ms [NAME] did not receive [NAME]' application. 43Sections 135 and 136 of the [NAME] Act relevantly provide: "135 Notice of application to be given (1) The Registrar must give a copy of an application for an order under this Chapter to [NAME] for the strata scheme to which the application relates and to any other person, not being the applicant, who, in the Registrar's opinion, would be affected if the order sought were made. ... 136 [NAME] to display and give certain notices (1) An [NAME] given a copy of an application for an order under this Chapter accompanied by the relevant notice must: (a) immediately cause the application and notice or a copy of the application and notice to be prominently displayed on any notice board required to be maintained by or under the by-laws on some part of the common property, and (b) keep the application and notice so displayed until the expiration of the time specified in the notice for the making of submissions, and (c) immediately serve a copy of the application and notice on each person whose name appears on its strata roll. ..." 44Ms [NAME] deposed that to the best of her knowledge and belief [NAME] did not place and maintain a copy of the application on the common property as required by s 136(1)(a) and (b). She deposed that: "The first time I became aware of the details of [NAME]' application was when I received from [NAME] a copy of the CTTT's orders and Reasons for Decision by mail addressed to my post office box on or about 10 July 2013. (I had heard about May 2013 that [NAME] had instituted some applications to the [NAME] adjudicator of the CTTT, but I was not aware of the details of the application at that time. I was under the impression that, in the light of s 163(4)(d) of the Act any application by [NAME] would simply be dismissed because of the fact that she was so substantially in arrears in relation to the payment of her levies." 45The material that accompanied [NAME]' application to the [NAME] showed that the strata plan was a dual occupancy with two lots. The material accompanying the application clearly showed that the owner of lot 1 would be affected by the orders sought by the owner of lot 2. If the Registrar of the CTTT (who is the Registrar referred to in s 135(1)) considered the materials that accompanied the application he or she must have considered that the owner of lot 1 would be affected if the orders sought by [NAME] were made. The Registrar did not give a copy of the application to [NAME]. I conclude that either the Registrar failed to form an opinion as to whether any other person would be affected if the orders sought were made, or, if the Registrar did consider that question, an opinion that no other person would be affected if the orders sought were made was so manifestly unreasonable that no reasonable decision-maker in the Registrar's position would have formed that opinion. 46I gave leave to [NAME] to re-open its case to call evidence from [NAME], who is a director of [NAME] and the strata manager appointed by [NAME] to manage the day-to-day affairs of [NAME]. [NAME] deposed that on 2 April 2013 she received four separate applications to the CTTT, three of them having been lodged by [NAME] and the fourth by [NAME]. She deposed that in accordance with her ordinary practice she arranged for the documents to be served on the lot [NAME] by photocopying the applications and handing them to her [NAME] assistant with the request that the documents be sent to all lot [NAME]. She deposed: "8. My office uses the 'StrataMax' software system to monitor action taken with respect to the various strata plans that I manage. When printing mailing labels using that system, there is an option to select 'send to all lot [NAME]'. If this option is selected, mailing labels are automatically populated with the lot [NAME]' details in accordance with the details for those lot [NAME] included in the strata roll. Annexed hereto and marked 'A' is a copy of a printout from the StrataMax records for the Scheme that includes 2 April 2013. The highlighted entry on that annexure shows that my [NAME] assistant for the day placed an entry on the Stratamax records for the Scheme on 2 April 2013 for 8 units at a rate of 0.80cents per unit. I believe that eight stamps were used and charged to the Scheme on this day. This accords with an [NAME] assistant having posted two envelopes on that day with four stamps on each envelope.

9. Annexed hereto and marked 'B' is a copy of a printout of my office's further records with respect to the Scheme. I note that the second substantive entry on the table contained within those records discloses that my [NAME] assistant printed labels on 2 April 2013. This accords with my [NAME] assistant having printed mailing labels for the envelopes by which my office posted the CTTT applications.

10. The ordinary practice of my office is that, at the end of each day, my [NAME] assistant takes all mail and delivers the same to the Australia Post Office near my offices for postage." 47Annexure B includes an entry for "labels" on 2 April 2013 at a unit price of 23 cents. It also included an entry for postage of $6.40 with a note "lot 1 lot 2". [NAME]'s [NAME] assistant did not give evidence. I understood [NAME] to say that her instruction to her [NAME] assistant was to post the four applications to both lot [NAME]. The application of [NAME] relevant to this case was 35 pages. There was no evidence as to the bulk of the other three applications. There was no evidence that the postage was the correct postage for the sending of all four applications to both lot [NAME]. [NAME] said that she did not receive the application to the CTTT lodged by [NAME]. 48I am satisfied on the balance of probabilities that not all applications were posted, and in particular, that [NAME] did not serve a copy of [NAME]' application to the CTTT on [NAME] as required by s 136(1)(c). A copy of the application was also not displayed on a notice board, but there was no noticeboard on which it could be displayed. 49I do not conclude that any failure to comply with a requirement of subs 135(1) or s 136(1) of the Act would necessarily vitiate the adjudicator's decision. However, that will be the position if the result of the sections not having been complied with is that [NAME] was denied procedural fairness. In this case procedural fairness was denied. 50Dr [NAME] submitted that was not so because [NAME] was aware that an application had been made to the CTTT. It was her fault if she did not make the necessary inquiries to find out what the application was. 51This is not an answer to the claim of denial of procedural fairness arising from [NAME]'s not having been served with the application. She did not know the substance of the application and she was entitled to be served with the documents so that she would have that knowledge. 52This is the first ground on which the adjudicator's decision of 3 July 2013 should be quashed. 53The second ground on which that decision should be quashed is that the section under which the adjudicator purportedly acted to invalidate the resolution of 27 February 2013 did not authorise the making of that order on the ground on which the adjudicator acted. Section 153 is set out at para 20 of the adjudicator's reasons quoted at [41] above. 54The adjudicator's power under subs 153(1) is only enlivened if the adjudicator considers that the provisions of the Act have not been complied with "in relation to the meeting". 55It is clear that the adjudicator considered that the provisions of the Act had been complied with in relation to the meeting of 27 February 2013. This is clear from paragraphs 17, 18 and 19 of his reasons quoted at para [41] above. Section 153(1) did not authorise the adjudicator to set aside the resolution of 27 February 2013 on the ground that he considered that the resolution was contrary to the requirements of s 78(2) of the [NAME] Act. He did not have jurisdiction to make the order he made. 56The third basis for setting aside the adjudicator's orders is that he misconceived the effect of the orders of [NAME] of 5 December 2012. Those orders conferred power on [NAME] to make a levy in respect of lot 2 alone in respect of the identified categories of costs where it was necessary to do so. Unless those orders were set aside on appeal, they provided the requisite authority for [NAME] to act in accordance with the terms of the order. It was irrelevant to the adjudicator's decision-making whether the order was made in accordance with the requirements of the [NAME] Act or not. As an order of a superior court of record the order is valid until set aside, even if made in excess of jurisdiction (New South Wales v Kable [2013] HCA 26; (2013) 298 ALR 144 at [28]-[40]). The adjudicator was required to treat the order as valid and therefore as authorising [NAME] to make a levy only in respect of lot 2 in respect of the identified classes of costs referred to in the order, whether or not in the adjudicator's opinion that was consistent with the [NAME] Act. The fact that one of the [NAME] of lot 2, [NAME], was not a party to the proceedings before [NAME] does not affect the matter. The orders not only bound [NAME], but conferred power on [NAME] in respect of the raising of a levy on lot 2. That order was and remains valid in accordance with its terms, unless and until it is set aside. 57It is unnecessary to decide whether the adjudicator's error in this regard was a jurisdictional error or an error made in the exercise of jurisdiction. [NAME] referred to s 65 of the [NAME], Trader and Tenancy Tribunal Act 2001 (NSW). Section 65 of the [NAME], Trader and Tenancy Tribunal Act limits a court's jurisdiction to grant relief in respect of a matter that "has been heard and determined ... by the Tribunal". That section precludes a court from granting relief or a remedy by way of, amongst other things, an order in the nature of certiorari, in respect of any matter that has been heard and determined by the CTTT, except in relation to jurisdictional error, including the denial of procedural fairness. Section 65 has no application. A [NAME] is not the Tribunal. A [NAME] is appointed by the Minister administering the [NAME] Act pursuant to s 217 of that Act. The CTTT is constituted by s 5 of the [NAME], Trader and Tenancy Tribunal Act 2001 and its members are appointed by the Governor pursuant to s 7 of that Act. The functions that are conferred or imposed on an adjudicator by the [NAME] Act or by any other Act are conferred or imposed on them in their capacity as adjudicators. An appeal lies from a decision of a [NAME] to the Tribunal ([NAME] Act, s 177). 58The fact that all or many of the [NAME] are members of the Tribunal, that the adjudicator's orders were published under the heading "[NAME], Trader and Tenancy Tribunal, Strata and Community Services Division" and that the required form of application for an order from a [NAME] is on a form that bears a heading referring to the CTTT, does not mean that a [NAME] is exercising the powers of the Tribunal, or is the Tribunal ([NAME], Strata Plan 60919 v [NAME], Trader and Tenancy Tribunal & Ors [2009] NSWSC 1158; 16 BPR 31,673 at [13]; Gillett v Walsh [2009] NSWSC 1436 at [7]-[8]). 59In my view a [NAME] is a tribunal (although he or she is not the CTTT) for the purposes of s 69(4) of the Supreme Court Act. Hence the reasons of the adjudicator form part of the record. The third ground on which the orders of the adjudicator should be quashed is error of law on the face of the record, whether or not that error is also jurisdictional error. 60It follows that the first defendant, the CTTT, should not have been joined as a party. I made an order joining [NAME], the adjudicator, as a defendant. In making his decision as a [NAME] he was acting as an individual office holder and there was no other decision-maker that could be specified by description that could be joined ([NAME] v Commissioner of Police [1977] 2 NSWLR 721 at 724-725; [NAME] v Attorney General of NSW [2013] NSWCA 383 at [13]). I dispensed with service on [NAME]. In making those orders I noted that I was informed by the plaintiff's counsel that the plaintiff's solicitors had been advised by the Registrar of the CTTT that if a challenge is made to the decision of a [NAME], it is the Tribunal and not the adjudicator who should be joined as the party if the decision is sought to be set aside. If such advice were given, it is wrong and contrary to authority. I dispensed with service because the adjudicator has no personal interest in the challenge to his orders and would inevitably submit to any order of the court save as to costs, in the same way as has the Tribunal. 61Dr [NAME] referred to Kostas v HIA Insurance Services Pty Ltd [2010] HCA 32; (2010) 241 CLR 390 where French CJ said (at [15]): "[15] The Tribunal may, subject to the CTTT Act, determine its own procedure. It is not bound by the rules of evidence and may inquire into, and inform itself on, any matter in such manner as it thinks fit, subject to the rules of procedural fairness. That freedom is enjoyed by many [NAME] tribunals. The term 'rules of evidence' does not lay out with precision its metes and bounds. Nor does it exclude the discretionary application of such rules. But the authority of the Tribunal to 'inform itself on any matter in such manner as it thinks fit' indicates that it is able to act upon information whether or not it is embodied in evidence which would be admissible in a court of law." 62Dr [NAME] submitted that this paragraph showed that the High Court had clearly identified that an [NAME] body such as the CTTT had widespread powers to do what it required. The passage cited from [NAME] v [COMPANY] does not support that submission. French CJ in that passage was explaining the width of the Tribunal's powers to inform itself about matters with which it had jurisdiction to deal. [NAME] v [COMPANY] has nothing to say about the jurisdiction of a [NAME] under s 153 of the [NAME] Act. 63Dr [NAME] also submitted that relief should be refused because [NAME] could have, but did not, appeal to the Tribunal from the orders made by the adjudicator. If there is an avenue of appeal from the decision of a tribunal or inferior court that may well provide grounds for refusing to grant a remedy by way of prerogative order. Prerogative orders are discretionary and the availability of an appeal can provide a discretionary ground for refusing to make an order, even though the grounds for a prerogative order are otherwise established. The availability of an appeal is not necessarily a bar to the grant of prerogative relief. 64The question does not arise in the present case because [NAME] did not have the right to appeal to the Tribunal against the orders made by the adjudicator. Section 177(2) of the [NAME] Act lists the persons who may appeal against an order made by an adjudicator under Pt 4. [NAME] was not included amongst the persons who could appeal. She was not the applicant for the order. Nor had she made a written submission on the application for the order. Nor was she required to do, nor required to refrain from doing, a specified act. 65For these reasons I made the order on 4 November 2013 that the orders of the adjudicator be quashed.

Resolution of 20 June 2013 66On 20 June 2013 [NAME] caused [NAME] to hold what was called an extraordinary general meeting, although notice of the meeting was not given to at least [NAME]. Resolutions were passed by [NAME] exercising its authority under s 162. The resolutions included a resolution determining that a special contribution in accordance with ss 76 and 78 of the [NAME] Act be levied on the [NAME] of both lots in a sum of $135,035. The contribution was to be payable on 1 July 2013 for the purpose of meeting a list of creditors and providing moneys payable, or which were expected to become payable, to two firms of lawyers. The listed creditors were solicitors, counsel and a legal costs consultant. 67Section 76 of the [NAME] Act requires an [NAME] to determine amounts to be levied as a contribution to the administration fund and the sinking fund to raise amounts estimated as needing to be credited to those funds. Subsection 76(3) provides that [NAME] must levy on each person liable for it such a contribution. Subsection 76(4) provides that if [NAME] is subsequently faced with other expenses it cannot at once meet from either fund, it must levy on each owner a contribution to the [NAME] fund, determined at a general meeting of [NAME], in order to meet the expenses. Section 78(2) provides that contributions levied by an [NAME] must be levied in respect of each lot and are payable (subject to that section and s 77) by the [NAME] in shares proportional to the unit entitlements of their respective lots. 68The levy purportedly raised by the resolution of 20 June 2013 was made against the [NAME] of both lots 1 and 2 in proportion according to their lot entitlement. Insofar as the costs the subject of the levy were costs that fell within the orders of 5 December 2012, the resolution was contrary to those orders. 69It is hard to say how much of the contributions sought to be levied related to costs that were the subject of the orders of 5 December 2012. But it is not disputed that some of the levy related to those costs. After the solicitors for [NAME] complained that the levy was contrary to the orders of 5 December 2012, [NAME], lawyers, who acted for [NAME] or [NAME], wrote to [NAME]'s solicitors as follows: "The orders of Justice Bergin of 5 December 2012 related to six categories of costs which are not [to] be levied on lot 1 and they are:

1. The costs of lot 1's application for indemnity costs in lot 1's amended notice of motion.

2. Clause 10 costs - ie costs related to Council approval of the Attic Work.

3. Clause 12(iii) costs - ie costs related to subdivision and the surveyor's fees.

4. Clause 14 costs ie costs related to subdivision.

5. Clause 15(ii) costs ie costs of the Supreme Court proceedings 2011/00244426 brought by [NAME].

6. Clause 20 costs ie costs of rectifying the Existing Defects. Her Honour did not order that any costs of the Scheme attributed to [NAME] in any situation at any time were not to be levied on lot 1. [NAME] has been retained to act for the Scheme in CTT matters and in levy recovery proceedings, all of which are separate and new proceedings. [NAME] has been retained to act for the Scheme in the costs assessment against [NAME] (which is a separate and new proceeding), in any enforcement action concerning the settlement deed (which would be a new and separate proceeding) and generally. [NAME] nor [NAME] has been retained in any matter that falls within one of the six above categories of costs. My client has reviewed the tax invoices of its previous solicitors and counsel and concedes that $40,457.52 of the costs in those invoices, which became part of the special levy, fall within one of the six above categories, and the remainder of those invoices does not. Therefore, my client proposes to resolve to:

1. Cancel the special levy of 20 June 2013 which was for $135,035; and 2. Raise a new special levy against both lots for $94,577.48." 70However, [NAME] and [NAME] did not cancel the special levy of 20 June 2013. Instead, on 30 August 2013 [NAME] of [NAME] advised [NAME] that: "I have signed paperwork which will have been lodged in the Supreme Court by now to challenge the decision by Judge Bergin [sic], in light of the correct decision under the Act under s 229 as raised by [NAME] [[NAME]]. This should soon be heard and resolved, in which case it is expected that the levy I have struck will be found to be correct. [NAME] [[NAME]] - your lawyers - will soon receive further details of this from both [NAME] and [NAME]. Hence the levy stands and your comments below are in fact incorrect." 71This was a reference to the notice of motion filed by [NAME] on 29 August 2013 that sought an order pursuant to UCPR, r 36.17 (the slip rule) that the orders of 5 December 2012 be "rescinded" to the extent that they provided in order 1 that none of [NAME]'s costs of the proceedings and none of the costs referred to in the relevant clauses of the deed are to be levied by [NAME] against [NAME] but are only to be levied (insofar as may be necessary) against lot 2, and provided in order 6 that none of [NAME]'s costs in respect of [NAME]'s amended notice of motion were to be levied by [NAME] against her. That notice of motion filed by [NAME] was dismissed by [NAME] on 25 October 2013. His Honour ordered that it be dismissed with costs and ordered pursuant to s 229 of the [NAME] Act that those costs be levied against the owner of lot 2 alone and also ordered that any costs of the "strata corporation" in the proceedings be not levied against lot 1 in the strata plan. 72Notwithstanding that [NAME], or [NAME], through its solicitor admitted that the special levy of 20 June 2013 was for an amount that included costs of $40,457.52 that were the subject of the orders of [NAME] of 5 December 2012, it did not rescind the resolution. 73There is a dispute as to the correctness of the statement of [NAME] that the quantum of legal costs said to have been incurred or estimated to have been incurred that fall within the terms of the costs orders of 5 December 2012 is only $40,457.52. Part of the costs the subject of the contribution that is said to fall outside the costs orders of 5 December 2012 were costs of solicitors retained to act in levy recovery proceedings. Insofar as they were proceedings against [NAME], she contends that there were no outstanding levies payable by her, except levies purportedly raised by [NAME] in breach of the orders of [NAME]. She also complains that [NAME] has twice commenced proceedings against her in the [ADDRESS] for the recovery of levies which it was alleged she had not paid where the proceedings were commenced notwithstanding that undertakings had been given by [NAME] not to do so. The extent to which, if at all, the purported levies the subject of the resolution of 20 June 2013 related to these matters, is not clear. 74Bannermans Lawyers also said that levies that fell outside the terms of the costs orders of 5 December 2012 included costs of new proceedings in which [NAME] had been retained to act for [NAME] to obtain a costs assessment against [NAME]. They contended that this was a separate and new proceeding that was not the subject of the orders of 5 December 2012. However, the order that none of [NAME]'s costs of the proceedings be levied against [NAME] would include [NAME]'s costs of obtaining an assessment of the costs payable by [NAME]. Those are costs of the proceedings. 75It is not possible to say how much, if any, the levy purportedly raised on 20 June 2013 could have been raised without infringing the orders of 5 December 2012. 76A question may also arise as to whether costs in relation to matters that are not within the scope of the orders of 5 December 2012 may nonetheless be the subject of the releases in clause 25 of the deed of 14 October 2011. By that clause [NAME] released the other parties to the deed "in respect of all claims of any kind whatsoever and howsoever arising in respect of the matters recited in this deed and the proceedings referred to in this deed, whether in the Supreme Court, the CTTT or any other Court or Tribunal in New South Wales." I have heard no argument on that question. If the effect of that clause is to preclude [NAME] from raising a levy against either lot 1 or lot 2 in respect of the subject matter of the release, the question would arise as to how [NAME] would pay debts that were incurred in relation to matters that were the subject of the release. A question may arise as to the enforceability of clause 25 if its effect is prejudicial to the creditors of [NAME]. No submissions were made in relation to the effect or enforceability of clause 25 of the deed in relation to [NAME]'s ability to make levies for costs that fall outside the scope of the orders of 5 December 2012. 77Because the resolution of 20 June 2013 purported to levy contributions that to a substantial extent were contrary to the orders of 5 December 2012, the resolution should be set aside.

Resolution of 18 September 2013 78On 18 September 2013 [NAME] held a further meeting of [NAME]. It is not clear who attended. Notice of the meeting was not given to [NAME]. The resolutions were passed by [NAME] using its power under s 162. It resolved that: "... [NAME] determine a special contribution in accordance with sections 76 and 78 of the Act to be levied on the [NAME] to accrue $26,900 due and payable in one lump sum being 1 October 2013 for the purpose of meeting cost agreements from [NAME] as noted in this agenda, as above. Lot 1 arrears $9,025 New s162 appointment $7,875 Supreme Court Action $10,000" 79The minutes of the meeting record that [NAME] had been engaged to act on behalf of [NAME] in respect of three matters. One was to seek the amendment or rescission of the orders made by [NAME] on 5 December 2012. The second was to act in respect of a debt recovery from lot 1 in relation to all moneys owed to the scheme. The third was to act on behalf of [NAME] in respect to seeking an order appointing a compulsory managing agent to the management of the scheme, or, alternatively, seeking an extension of the order made on 13 October 2011 appointing [NAME] the compulsory managing agent for the scheme. 80On or about 1 October 2013 [NAME] received a levy notice from [NAME] in an amount of $98,825.74 that was stated to be payable on that same day. It included charges for "overdue interest", contrary to previous undertakings given. [NAME] deposed that at the date of receiving the notice she had paid all quarterly and special levies, other than the disputed levy struck on 20 June 2013 and the levy struck on 18 September 2013. She was not cross-examined on that evidence and I accept it. 81The proposed action to recover strata levies from [NAME] for which a contribution of $9,025 was purportedly levied on the lot [NAME] was misconceived because [NAME] was not entitled to levy the contributions which would be the subject of the proposed debt recovery action. The application to set aside the orders of 5 December 2012 was misconceived. The application was dismissed by [NAME] on 25 October 2013. His Honour ordered that [NAME]'s costs of that application were not to be levied against lot 1. 82The [NAME] did not submit that the levy of $7,875 could stand, even if the balance of the resolution should be set aside. [NAME] nor [NAME] had standing to make an application under s 162 of the Act for the appointment of a compulsory strata manager. Therefore a levy to be raised by [NAME] for that purpose should also be set aside.

Resolution of 14 October 2013 83On 14 October 2013 [NAME] held what was described as an annual general meeting of [NAME]. No lot owner attended but [NAME] passed resolutions exercising its power under s 162 of the Act to exercise the functions of [NAME]. It made the following resolution: "7. SPECIAL LEVY - MEET THE ADMINISTRATION FUND DEFICIT IT WAS RESOLVED that [NAME] determines a special contribution in accordance with section 76, 77 and 78 of the Act to be levied on the [NAME] to accrue $24,750 due and payable in one lump sum being due on 1 November 2013 for the purpose of meeting the administration fund deficit as at 30 June 2013. This is based on $159779.70 - DR per annual accounts as at 30 June 2013 $135034.90 - struck - due and payable 1 July 2013 $24744.80 - remaining deficit." 84This levy was in addition to the levy of $135,035 determined on 20 June 2013. It is unclear how much of the levy of $24,750 was to meet legal costs in relation to matters that were the subject of the orders of 5 December 2012, or otherwise incurred by [NAME] in relation to the issues arising in the Supreme Court proceedings, or otherwise arising under the deed. 85The solicitor appearing for [NAME] admitted that each of the June, September and October levies included levies for costs that were the subject of the orders of 5 December 2012. Although it is unclear how much of the contributions that were the subject of the special levy of 14 October 2013 related to legal costs that were the subject of the orders of 5 December 2012, it was accepted that some part of the levy related to such costs.

Accordingly, the resolution was contrary to the orders of 5 December 2012 and should be set aside. 86Similar issues could arise in respect of a levy of so much of the legal costs as were not the subject of the orders of 5 December 2012 concerning the effect of the release in clause 25 of the deed of 14 October 2011 as could arise in relation to the levy of 20 June 2013. No submissions were made on this subject. As the levy struck was contrary to the orders of 5 December 2012 the resolution should also be set aside.

Validity of the resolution of 27 February 2013 87Ms [NAME] sought a declaration that the resolution of [NAME] made at the extraordinary general meeting on 27 February 2013 is valid. As noted above at [37], on that day [NAME] resolved to levy an amount of $47,012.53 on lot 2. Costs of $43,753.90 that were the subject of that levy related to costs of the Supreme Court proceedings payable by [NAME]. The balance of the contribution the subject of that special levy, namely $3,258.63, was described as costs charged by [COMPANY] and incurred by [NAME] in relation to the exclusive use by-law referred to in clause 10 of the deed of 14 October 2011. 88In [NAME], Strata Plan 50411 v [NAME] the successful respondent was a lot owner of a strata plan and entitled to an order for costs. Section 229 of the [NAME] Act has been set out at para [31] above. 89The Court of Appeal ordered pursuant to s 229 that the costs payable by [NAME] be paid from contributions levied from lot [NAME] other than the successful respondent. 90Section 229 deals with how the burden of costs payable by [NAME] under a costs order may be borne between lot [NAME]. It does not deal with the burden of the costs incurred by [NAME] in the proceedings. Section 230 of the [NAME] Act provides in substance that in proceedings brought by an [NAME] or against an [NAME] under Chapter 5 of that Act, [NAME] cannot levy a contribution on another party who is successful in the proceedings, and an [NAME] that is unsuccessful in the proceedings cannot pay any part of its costs and expenses from its [NAME] fund or sinking fund, but may make a levy for that purpose. The section does not deal with costs incurred by an [NAME] in proceedings that were not proceedings brought by or against it under Chapter 5 of the [NAME] Act. 91In [NAME], Strata Plan 50411 v [NAME] (with whom [NAME] agreed) said (at [170]): "... the court has, under s76(1)(b) of the Supreme Court Act 1970, 'full power to determine by whom and to what extent costs are to be paid'. It would be quite unjust if the successful plaintiff had to assist in the payment of the costs of the first claimant through levies based on unit entitlement, or had to suffer indirectly as a result of existing assets of the first claimant being diminished for that purpose. The same is true of [COMPANY], the remaining lot holder. Accordingly it is appropriate to order that, in respect of the costs incurred by the first claimant in this Court, the first claimant is not to levy a contribution on the opponent or on [COMPANY], nor to use any [NAME] fund, sinking fund or other existing assets for the purpose of meeting those costs." 92Heydon JA observed that the question of costs had not been the subject of submissions. The costs orders were stayed for 28 days to allow the parties the opportunity to file written submissions if different orders as to costs were sought. It does not appear that any different order was made. 93In [NAME] v [NAME], Strata Plan 31731 [NAME], (with whom [NAME] J agreed) reiterated the view he had expressed in [NAME] and said (at [83]): "... So far as it is unclear that the proceedings in the Equity Division are not proceedings under Chapter 5 of the [NAME] Act 1996, a source of power to make the second proposed order is s76(1)(b) of the Supreme Court Act 1970, which gives the court 'full power to determine by whom and to what extent costs are to be paid'. It would be unjust if [NAME] had to assist in the payment of the costs of the [NAME] through levies based on unit entitlement, or had to suffer indirectly as a result of the existing assets of the [NAME] being diminished for that purpose." 94The orders made included an order that costs of the respondent incurred in the proceedings were not payable in any part by the successful appellant. 95It was implicit in the orders made in [NAME] and [NAME] that [NAME] could impose levies on the lot [NAME] other than the named party to meet its costs. That is because in the case of the order in [NAME] was expressly prohibited from using an [NAME] fund or sinking fund or other existing assets for the purpose of meeting its costs. It was necessarily implicit in the finding that s 76 of the Supreme Court Act conferred power on the court to restrain a body corporation from imposing a levy on a successful party so as to recover its own costs, or a proportion thereof, from the successful party and could not have recourse to the [NAME] fund or sinking fund or other assets, that s 76 also empowered a [NAME] to impose a levy on other lot [NAME] to meet its costs, notwithstanding that such a levy would not be proportionate to the lot [NAME]' unit entitlement. If that were not so [NAME] would have no means of paying debts properly incurred to its lawyers for its legal costs and the lawyers would have no means of recovering their debts. 96It appears from the transcript of 5 December 2012 and the orders made on that day that this was the view of [NAME]. I am also of the view that this conclusion follows from the decisions of the Court of Appeal referred to above. 97Section 98 of the Civil Procedure Act is in materially the same terms as s 76 of the Supreme Court Act. 98The [NAME] argued that this construction of s 76 or s 98 failed to have regard to the fact that the power conferred on the court to determine by whom, and to what extent, costs are to be paid, was a power that was subject to any other Act. As s 78(4) of the [NAME] Act required levies raised under s 76 to be raised proportionately to the lot [NAME]' unit entitlement, s 98 of the Civil Procedure Act, so it was argued, could not authorise an order that purportedly empowered [NAME] to raise a contribution for its costs otherwise than from lot [NAME] proportionately to their unit entitlement. Section 229 made express provision for the levying of contributions otherwise than from lot [NAME] in accordance with their unit entitlements where an order was made for the payment of costs by [NAME] with a further order that the costs payable by an [NAME] be paid from contributions levied only in relation to certain lots. [NAME] argued that the absence of a provision modifying the application of s 78(2) in relation to costs incurred by an [NAME] shows that the power under s 98 does not authorise the making of orders that would allow an [NAME] to impose a levy otherwise than on the lot [NAME] proportionately in accordance with their unit entitlement. Therefore, the resolution of 27 February 2013, although made in accordance with the orders of [NAME] of 5 December 2012, was not authorised by any legislation. 99There is no occasion to consider the merits of this submission except to observe that it is not consistent with the decisions of the Court of Appeal. Nor need I explore the possible sources of power for the second part of order 2 made on 5 December 2012, that is, the order in relation to the making of levies concerning the costs referred to in clauses 10, 12(iii), 14, 15(ii) and 20 of the deed of 14 October 2011. That is because the orders of 5 December 2012 are binding on the parties and effective in accordance with their terms as an order of a superior court of record. 100The costs of $43,753.90 the subject of the separate levy of 27 February 2013 are in an amount well below the amount that a costs assessor has determined is payable by [NAME] in respect of the costs orders made against her. That certificate of assessment was not provided until 24 October 2013. The time for seeking a review of the costs assessor's determination has not expired, but there is no reason to doubt that [NAME] is liable to [NAME] for at least the amount of $43,753.90. No issue was raised before me, nor it seems before the [NAME], that the moneys sought to be levied on 27 February 2013 for legal costs incurred in relation to the exclusive use by-law were not owing. 101However, unlike the orders of the Court of Appeal in [COMPANY] and [NAME] which impliedly conferred an unqualified power on [NAME] to raise levies on other lot [NAME] to meet costs that could not be raised from the successful party or, in the case of Cameron, from the [NAME] fund, sinking fund or other existing assets, the orders of 5 December 2012 do contain such a qualification. The order that [NAME] costs of the proceedings and the costs referred to in clauses 10, 12(iii), 14, 15(ii) and 20 of the deed are only to be levied "insofar as it may be necessary" against lot 2, defines the extent of the power of [NAME] to raise levies against lot 2 in respect of such costs. That is, contribution for such costs may only be levied against lot 2 insofar as that may be necessary. Given that a levy will bind not only [NAME], but also [NAME] and any person who becomes the owner of lot 2 at a time when [NAME] and [NAME] are liable in respect of the lot to pay a contribution, the limitation "insofar as it may be necessary" is important. 102"Necessary" here means indispensable, essential or requisite for the recovery of the amount owed: not something desirable or convenient for the recovery of the amount owed. 103The obligations of [NAME] and [NAME] under the deed, including [NAME]' obligations to pay the costs of the proceedings on the solicitor/client basis, were secured by a charge. There was no evidence before me as to what steps if any [NAME] took to seek to recover moneys payable by [NAME] or [NAME] that were subject to the levy of 27 February 2013 before the levy was raised. It has not been shown that at that time the levying of the contribution was necessary for [NAME] to recover the amount owing. As [NAME] sought a declaration that the resolution was valid, she needed to establish that the levying of the contribution as at 27 February 2013 was necessary in order for [NAME] to recover an amount owing. As that has not been established the declaration sought in para 5 of the summons should be refused. 104In its submissions [NAME] said that it wanted clarity as to its ability to raise levies having regard to the conflicting orders of [NAME] of 5 December 2012 and the adjudicator's orders of 3 July 2013. [NAME] did not file a cross-summons seeking any declaratory or other relief. 105It does not follow that because it has not been shown that the levy on lot 2 was necessary as at 27 February 2013 to recover the contribution, that a levy could not now be raised against lot 2 for an amount owing by [NAME] or [NAME], or for an expense that [NAME] is required to meet for which they, or either of them, is liable pursuant to the costs orders or the deed. [NAME] has gone into possession of lot 2 as mortgagee. It had listed the lot for sale by auction. I assume [NAME] has a registered mortgage and therefore could sell the property free of the charge given by [NAME] and [NAME] pursuant to the deed of 14 October 2011. No payments have been made by either [NAME] or [NAME] in respect of amounts they owe under the deed or the amounts [NAME] owes under the costs orders. 106There is no evidence as to the value of lot 2, or the amount of the debt owed to [NAME], or as to the likely amount of any net proceeds of sale that may be available after discharge of [NAME]'s mortgage and any other prior security pursuant to [NAME]'s charge. I think a reasonable interpretation of the orders of 5 December 2012 as to when a levy is necessary is that [NAME] should not be exposed to the vagaries of a mortgagee sale. If [NAME] or [NAME] contended that the security by way of charge was so sufficient that a levy could not be considered as necessary to protect [NAME]'s position to ensure recovery, the evidentiary onus would be on them to adduce evidence of those matters. No such case has been put. 107It is true that [NAME] did not put its case on this basis, but during the course of submissions I clearly raised the question as to the effect of the words "insofar as may be necessary" in the order of 5 December 2012. It was open to [NAME] or [NAME] to seek to adduce evidence to establish that it is not necessary for [NAME] to be able to impose a levy on lot 2 because it has sufficient security by way of its charge. No such contention was raised. 108In my view a levy could justifiably be made now in accordance with the orders of [NAME] of 5 December 2012 as such a levy could now be regarded as necessary for the recovery of amounts owed pursuant to the deed and the costs orders. I make no declaration about that as none was sought. 109It was for these reasons that I made orders in accordance with paragraphs 1, 2, 3, and 4 of the summons and refused the relief in order 5. 110I also made an order in substance as sought in paragraph 7 of the summons. I ordered that [NAME] and [NAME] pay [NAME]'s costs of the proceedings (including costs in connection with the claim for relief in paragraphs 7, 9, 10 and 11 of [NAME]'s notice of motion of 18 October 2013 in the 2011 proceedings). I ordered that none of the costs payable by [NAME] to [NAME] and none of the costs incurred by it in relation to the proceedings, was to be levied against [NAME]. Nor was [NAME] to use the [NAME] fund, sinking fund or other existing assets for the purpose of paying or meeting those costs. 111It was not just that [NAME] be required to bear any of the costs payable or incurred by [NAME] in respect of her proceeding. Her proceeding was only necessary because [NAME] had acted contrary to the orders of [NAME] of 5 December 2012. 112I have not made an order that such costs can be levied against lot 2. The question of whether the burden of the costs payable by [NAME] and the costs incurred by [NAME] should be borne by [NAME] and [NAME] and any subsequent owner of lot 2, or whether the burden of those costs should be borne wholly or in part by [NAME] is a question yet to be decided. 113It is for these reasons that I made the orders of 4 November 2013. ANNEXURE A 4 November 2013 1 HIS HONOUR: Time does not permit my giving full reasons for the orders I will make. Instead I will provide a summary of my conclusions which provide the basis for those orders. 2 I will deal first with the orders of the [NAME], of 3 July 2013. I have concluded that those orders should be quashed. This is because, first, the material in the application lodged by [NAME] showed that the strata plan related to a building with dual occupancy with two lots and showed that the owner of lot one would be affected by the orders sought. I conclude that either the Registrar failed to form an opinion as to whether any other person would be affected if the orders sought in the application were made, or if he or she did consider that question, I conclude that an opinion that no other person would be affected was so manifestly unreasonable that no reasonable decision maker in the Registrar's position would have formed it.

Accordingly, s 135(1) of the [NAME] Act was not complied with. 3 [NAME]'s evidence that she did not receive the application to the [NAME] was not challenged. I am not persuaded by the evidence of [NAME] that [NAME] did serve a copy of the application on [NAME]. 4 I do not conclude that if there is any failure to comply with the requirements of subsection 135(1) or 136(1) that this would necessarily vitiate the Strata Scheme Adjudicator's decision. However, in this case I conclude that [NAME] was denied procedural fairness. That conclusion is arrived at notwithstanding her evidence that she had heard in about May 2013 that [NAME] had instituted some applications to the [NAME]. I have regard to her evidence, that was not challenged, that she was not aware of the details of the applications at that time and was under the impression that in the light of s 163(4)(d) any application by [NAME] would be dismissed because she was in arrears in relation to payment of levies. 5 This is the first ground for setting aside the orders of 3 July 2013. The second ground is that the adjudicator did not consider that the provisions of the [NAME] Act had not been complied with in relation to the document 27 February 2013, as distinct from his considering that the resolution passed by [NAME] through its strata managing agent did not comply with the provisions of the Act. 6 Section 153(1) only gave the adjudicator jurisdiction invalidating the resolution if he had considered that the provisions of the Act had not been complied with in relation to the meeting. There was, therefore, no jurisdiction to make the orders that he made. 7 The third ground for quashing the orders of 3 July 2013 is that the adjudicator erred in his reasons concerning the binding nature of the orders of [NAME] on 5 December 2012. 8 In relation to the resolution of 20 June 2013 determining that the special contribution of $135,035 be levied on the [NAME] of both lots, I have concluded that that resolution should be set aside. That is so, first, because as to a sum of at least $40,457.52 the resolution is contrary to the orders of this Court of 5 December 2012. 9 There is a dispute as to the correctness of what is asserted to be the quantum of legal costs that the solicitors and [NAME] contend have been incurred, or which are estimated to be incurred, that they say fall outside the terms of the cost orders and the relevant clauses of the deed of 14 October 2011. 10 [NAME] contended that the costs of obtaining an assessment of costs payable by [NAME] were not covered by the orders of 5 December 2012. That is incorrect. It is not possible to say how much, if any, of the levy purportedly raised could have been raised without infringing those orders. 11 A question may also arise as to whether costs in relation to matters that are not within the scope of the orders of 5 December 2012 may nonetheless be the subject of the releases in clause 25 of the deed of 14 October 2011. However, I have heard no argument on that question, nor as to the enforceability of clause 25 if its effect is prejudicial to the creditors of [NAME]. 12 The resolution of 20 June 2013 should be set aside as being contrary to the orders of 5 December 2012. 13 I turn next to the resolution of 18 September 2013. That resolution should be set aside at least as to the levies of $9,025 for legal work in relation to the recovery of strata levies against [NAME] and $10,000 in relation to the taking of proceedings to seek the amendment or rescission of the orders of 5 December 2012. 14 The proposed action to recover strata levies from [NAME] was misconceived because [NAME] was not entitled to levy the contributions sought to be recovered. The application to set aside the orders of 5 December 2012 was also misconceived. In any event, pursuant to the orders of [NAME] on 25 October 2013 [NAME]'s costs of that application can only be levied against [NAME]. 15 No separate submissions were made in respect of the levy of $7,875, the subject of the resolution of 18 September 2013. That is to say, it was not submitted that that levy could stand even if the balance of the resolution should be set aside. 16 That levy was said to be in relation to an application to be made to the [NAME] and Tenancy Tribunal seeking the appointment of a compulsory strata manager or in the alternative an extension of time of a previous order appointing a compulsory strata manager and matters incidental thereto. 17 Prima facie neither [NAME] nor the existing compulsory strata manager would have the standing to make an application under s 162. In the absence of any argument separately addressed to that levy, I consider that it also should be set aside. 18 I turn next to the resolutions of 14 October 2013. The levy of a special contribution of $24,750 should be set aside. It is unclear how much of the contribution sought was to meet legal costs in relation to matters that were the subject of the orders of 5 December 2012. Similar issues could arise in relation to a levy for so much of the legal costs as were not the subject of the orders of 5 December 2012, but otherwise were the subject of the releases in clause 25 of the deed as could arise in relation to the earlier levy. No submissions were made as to the effect of the release in clause 25 of the deed. The levy actually struck was contrary to the orders of 5 December 2012.

Accordingly, that levy will be set aside. 19 In relation to the declaration sought in para 5 of the summons that the resolution of 27 February 2013 is valid my conclusions are as follows. 20 First, there is binding authority of the Court of Appeal that s 76 of the Supreme Court Act 1970 conferred power on the Court to restrain the [NAME] from imposing a levy on the successful party in order to recover its own costs or a proportion thereof from the successful party. There is also binding authority of the Court of Appeal that s 76 of the Supreme Court Act empowers the making of orders to empower a [NAME] to impose a levy on other lot [NAME] to meet the [NAME]'s costs, notwithstanding that such a levy would not be proportionate to the lot owner's unit entitlement. There is no material difference between the wording of s 76 of the Supreme Court Act and s 98 of the Civil Procedure Act. 21 The costs of $43,753.90 that were the subject of the separate levy of 27 February 2013 related to the costs of the Supreme Court proceeding. That sum is well below the amount of costs a costs assessor has determined is payable by [NAME] in respect of the costs orders made. Whilst the time for seeking a review of the costs assessor's determination has not expired, there is no reason to doubt that she is liable to [NAME] for at least that sum in respect of the costs orders made. 22 The balance of the contribution the subject of the special levy of 27 February 2013 was the sum of $3,258.63. This was described as the legal costs charged by [COMPANY] and incurred by [NAME] in relation to the exclusive use bylaw referred to in clause 10 of the deed of 14 October 2011. No issue was raised before me, and nor I think before the [NAME], that the money sought to be levied was not owing under the deed. That part of the levy was the subject of the orders of [NAME] of 5 December 2012. It is unnecessary and it would be inappropriate for me to explore the possible sources of power for the second part of order 2 made on 5 December 2012, that is, the order in relation to the making of levies concerning the costs referred to in clauses 10, 12(iii), 14, 15(ii) and 20 of the deed of 14 October 2011. 23 The order is binding on the parties and is effective according to its terms as an order of a superior court of record. However, unlike the orders of the Court of Appeal in [NAME] of Strata Plan No.50411 v Cameron North Sydney Investments Pty Ltd [2003] NSWCA 5 and [NAME] v [NAME] of Strata Plan No. 31731 [2003] NSWCA 7 the orders of 5 December 2012 did not confer an unqualified power on [NAME] to raise levies on the lot owner who was the unsuccessful party. The order that [NAME]'s cost of the proceedings and that the costs referred to in the relevant clauses of the deed are only to be levied (insofar as it may be necessary) against lot 2, defines the extent of the power of [NAME] to raise levies against lot 2 in respect of such costs. That is to say, contribution for such costs may only be levied against lot 2 insofar as that may be necessary. 24 This is an important qualification given that the levy will bind not only [NAME], but also [NAME], and any person who becomes the owner of lot 2, at a time [NAME] and [NAME] are liable in respect of the lot to pay a contribution. "Necessary" here means indispensable, essential or requisite for the recovery of the amount owed and not something desirable or convenient for the recovery of the amount owed. 25 The obligations of [NAME] and [NAME] under the deed, including [NAME]' obligation to pay the costs of the proceedings on the solicitor/client basis, were secured by a charge. There is no evidence before me as to what steps, if any, [NAME] took to seek to recover the moneys payable by [NAME] and [NAME] that were subject to the levy of 27 February 2013 before the levy was raised. 26 It has not been shown that as of 27 February 2013 levying the contribution was necessary for [NAME] to recover the amount owing. Therefore, I will refuse the declaration sought in paragraph 5 of the summons. 27 In its submissions, [NAME] said that it wanted clarity as to its ability to raise levies, having regard to the conflicting orders of the Chief Judge in Equity of 5 December 2012 and, the [NAME] of 3 July 2013. [NAME] did not file a cross-summons seeking any declaratory or other relief. 28 It does not follow that because it has not been shown that the levy on Lot 2 was necessary on 27 February 2013 to recover the contribution, that a levy could not now be raised against Lot 2 for an amount owing by [NAME] or [NAME], or for an expense that [NAME] is required to meet, which they, or either of them, is liable pursuant to the costs orders or the deed. This is because [NAME] has gone into possession of Lot 2 and has listed the lot for sale by auction. I assume it has registered a mortgage and could sell the property free of the charge given by [NAME] and [NAME] by deed of 14 October 2011. 29 No payments have been made by them in respect of the amounts they owe under the deed, or the amounts [NAME] owes under the costs orders. There is no evidence as to the value of Lot 2 or the amount of the debt owed to [NAME], or the likely amount of any net proceeds of sale that after the discharge of [NAME]'s mortgage and any other security that might have priority to the charge, that may be available to discharge their obligations to [NAME]. 30 I think a reasonable interpretation of the orders of [NAME] of 5 December 2012 as to when a levy on Lot 2 may be necessary is that [NAME] should not be exposed to the vagaries of a mortgagee sale. I think the evidentiary onus is on [NAME] and [NAME] to adduce evidence as to these matters if they contended that the security by way of charge was sufficient, so that a levy could not be considered necessary to protect [NAME]'s position to ensure recovery. No such case has been put. 31 It is true that [NAME] also did not seek to put a case on this basis, but I clearly raised the question, during the course of the submissions, as to the effect of the words "insofar as may be necessary" in the order of 5 December 2012. No contention was raised by either [NAME] or [NAME] or [NAME] about that. However, as no declaratory or other relief was sought as to the current ability of [NAME] to levy the contribution against Lot 2, pursuant to the orders of 5 December 2012, it is not appropriate that I make a declaration about that. 32 The orders that I make are as follows. 33 First, I make orders in accordance with paragraphs 1, 2, 3 and 4 of the summons filed in proceedings 2013/00327776. 34 I refuse the application in paragraph 5 of the summons. 35 Prima facie [NAME] and [NAME] should pay the plaintiff's costs. If such an order is made, I will also make the order sought in paragraph 7 of the summons. 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: 20 November 2013