If I was the owner I would email the SM and state that it is not the owner’s responsibility to pay for the tenant’s bills whether they be a fine or an admin cost.
The SC and SM cannot impose a fine unilaterally for a by-law breach in NSW. Only NCAT can issue fines.
This extract is from the Office of Fair Trading web site:
“The owners corporation can apply to the NSW Civil and Administrative Tribunal if a notice to comply has been issued and the conduct continues. If the Tribunal believes that there has been a breach of a by-law and the notice was given validly, they can issue a penalty of up to $1,100. If the Tribunal has already fined the owner or occupier within the last 12 months for a breach of the same by-law, the penalty imposed by the Tribunal can double to a maximum of $2,200. In this case, the owners corporation does not have to issue another notice to comply before applying to the Tribunal to impose the fine.”
So ….Wait for the SM to take this to NCAT if they dare. I personally don’t think that the SM will stand a chance of winning this by the methods that they are currently using. They possibly issued the initial $550 fines to the tenant without proper authority.