You and your neighbour can apply directly to the CTTT for an emergency order to impose a Strata Manager to run the building until this is sorted out. The running of the building is clearly dysfunctional and possibly corrupt so you need to clear the decks and the statutory imposition of a strata manager – who takes over all the duties of the OC and EC – may be the simplest way to do that.
First you will need to find a strata manager who is prepared to take on the role, then make an application for an adjudication imposing a statutory manager using THIS FORM. Then at the same time you need to make an application for an interim order using THIS FORM.
The idea of the Interim Order is to prevent any further misuse of the Owners Corporations seal or any other powers while the sacked Strata Manager still has all your papers.
You'll find a case study about the appointment of a strata manager HERE. It's a very different situation from yours but it will give you an idea of how it works.
If you have a new strata manager lined up, they may well help you with all this. If you don't have one arranged already, have a look here for some I recommend (although there are plenty of other excellent operators). Just make sure whoever you choose is a member of Strata Community Australia (formerly ISTM) or you could be entering a whole other world of pain.
(7A) Other limits on exercise of proxy
A vote by a proxy who is a caretaker, an on-site residential property manager or a strata managing agent is invalid if it would obtain or assist in obtaining a pecuniary interest for, or confer or assist in conferring any other material benefit on, the proxy.
(7B) For the purposes of subclause (7A), material benefitsinclude, but are not limited to, the following:
(a) an extension of the term or an additional term of appointment of the proxy as caretaker, on-site residential property manager or strata managing agent,
(b) an increase in the remuneration of the proxy,
(c) a decision of the owners corporation not to proceed with, to withdraw, to delay, to compromise or to settle litigation or other legal proceedings relating to the proxy,
(d) any other decision of the owners corporation that affects litigation or other legal proceedings relating to the proxy.
As far as needing an EGM goes, yes you do need one before you can get legal advice (for which you are paying) but that can be called by getting signatures from 25 percent of owners. However, many OCs pass a motion at their AGM allowing them to seek legal advice as and when may be necessary, so that might already be on the books.