The Court held that a lot owner seeking to bring a derivative action on behalf of an owners corporation must satisfy a recognised exception to the rule in Foss v Harbottle, which applies to owners corporations under the Strata Schemes Management Act 1996. Payment of legal fees from a sinking fund under s 71(2) is not rendered ultra vires merely because the owners corporation is late in making the recoupment determination required by s 71(3), provided the determination can still be made. The interests of justice exception was not established where the plaintiff had not attempted to use the statutory dispute resolution mechanisms under Chapter 5 of the Management Act (including adjudication under s 138), had not petitioned for a general meeting, and could not demonstrate serious injustice. On the appropriation of payments issue, where a debtor settling composite debts (administrative and sinking fund levies) does not clearly communicate which debt the payment is to be applied to, the creditor is free to appropriate the payment as it sees fit.
The full text is available to signed-in members, including the 9 later cases that cite this judgment.
1 of the 9 citing cases carry a classified treatment. How each court treated it is available to signed-in members.