This article is about how a minority owner can gain control of an owners corporation and take legal action on its behalf.
The Strata legislation sets up a democratic system under which the majority rules. This means that owners in the minority generally have to accept decisions made by the majority of owners, even if they disagree with those decisions.
But that does not always have to be the case. A recent decision of the Supreme Court provides a good example of how an owner in the minority can gain control of an owners corporation.
The Case
Mr Khatib owns a residential lot in a strata building in Bankstown, Sydney. Mr Khatib installed an awning on the common property of the building without the consent of the owners corporation. Mr Khatib applied to NCAT for an order to create a by-law to retrospectively approve the awning. He was successful.
On 2 July 2025, the owners corporation appealed against NCAT’s decision to the Appeal Panel of NCAT.
Mr Khatib did not want the appeal to proceed. Four owners including Mr Khatib requisitioned an Extraordinary General Meeting of the owners corporation and put forward a motion for the owners corporation to withdraw the appeal. On 17 July 2025, the motion to withdraw the appeal was passed by 8 votes to 7. Mr. Khatib voted in favour of the motion. But that is not where the appeal ended.
Supreme Court Decision
Mr Zheng is another lot owner in the building and the secretary and chairperson of the owners corporation. He was aggrieved by the decision made at the Extraordinary General Meeting for the owners corporation to withdraw the appeal. On 12 August 2025, Mr Zheng applied to the Supreme Court for permission to conduct the appeal on behalf of the owners corporation. Mr Zheng was successful and was granted permission on behalf of the owners corporation to conduct the appeal to its conclusion or settlement.
The Obstacle
The reason Mr Zheng needed to obtain permission from the Supreme Court to pursue the appeal on behalf of the owners corporation is because of a well settled rule that a company (or, here, an owners corporation) is the proper plaintiff to take legal action in respect of a wrong done to it as a result of which an individual member of the company (or, here, a lot owner) has no standing to take legal action in respect of that wrong.
However, there is an exception to that rule which relevantly, allows a lot owner to bring legal action on behalf of an owners corporation where justice requires that to occur.
The Supreme Court concluded that justice dictated that the exception to the operation of the rule should apply because without Mr Khatib’s vote the motion to withdraw the NCAT Appeal would have been defeated and to give the motion effect would result in Mr Khatib’s own vote would bring the litigation regarding his contentious awning to an end where a significant proportion of the owners voted to continue the appeal.
The Court reserved (and did not decide) the question of whether the owners corporation should indemnify Mr Zheng for the costs he would incur to conduct the appeal on behalf of the owners corporation until after the appeal was determined.
Conclusion
The case demonstrates that, in some circumstances, owners who are in the minority have to accept decisions that are made by the majority and can take control of the affairs of the owners corporation in an appropriate case.
Another example of where it would normally be appropriate to permit an owner to pursue appeal proceedings in NCAT on behalf of an owners corporation is where NCAT appoints a compulsory strata manager to manage the affairs of the owners corporation and that compulsory manager refuses to authorise an appeal against his or her own appointment.
Case: Zheng v The Owners – Strata Plan No. 83678 [2025] NSWSC 1038.
Adrian Mueller
JS Mueller & Co Lawyers
E: [email protected]
P: 02 9562 1266
This post appears in Strata News #764.
Have a question or something to add to the article? Leave a comment below.
Read next:
- NSW: Q&A Quorum Requirements for the AGM
- NSW: Q&A Strata Dispute Resolution and NCAT Orders
- NSW: Contract Tips and Traps for Owners Corporations
This article has been republished with permission from the author and first appeared on the JS Mueller & Co Lawyers website.
Visit our Strata Committee Concerns OR NSW Strata Legislation.
Are you not sure about some of the strata terms used in this article? Take a look at our NSW Strata Glossary to help with your understanding.
After a free PDF of this article? Log into your existing LookUpStrata Account to download the printable file. Not a member? Simple – join for free on our Registration page.
Leave a Reply