The practice of on-passing certain Strata Manager fees to lot owners has been done in VIC stratas for decades.
Eg the fee charged to the OC by an SM for issuing a breach notice has been on-passed to the lot that received the breach notice. It gets placed against the lot’s account. So it becomes type of pseudo fine against the lot. But it’s never been allowed to be done that way, so it’s always been done as a gambit: the lot owner has to either pay the fee or challenge it. Most pay.
The practice can even get approved by the OC at each AGM. I know some of my OCs do that. To some extent that gives the SM the green light to do it. But, as several VCAT cases have established, OC approval of the practice does not make it legal.
To make it legal before charging a lot owner, an OC had to first apply to VCAT for approval. VCAT more recently has more authority to grant that approval if it sees fit to do so.
Applying to VCAT is a process within itself, so many (most I’d say) OCs try the gambit method first. If a lot owner challenges the fees at VCAT, they might win or they might lose. The lot owners has to decide if it’s worth the challenge.
In the case in this thread, the OC withdrew the fees before the case was heard at VCAT. So we’ll never know if VCAT might have allowed some or part of them. But the OC involved for sure did not follow the correct process it needed to follow when it issued the fees.