NSW: Can a strata committee recover overspending through a no debate email vote?

This article discusses if a strata committee can raise a special levy by email vote in NSW.

Question: Can a committee raise a special levy by email vote without explaining why it is needed and how it will prevent future overspending?

I live in a six unit over 55s strata scheme in NSW. Our strata committee overspent the administrative fund budget, and the treasurer stated the owners corporation was insolvent.

The strata manager then issued a notice to hold a general meeting by “other means”, which in this case was an email vote. The notice only allowed owners to tick a box to approve or disapprove the motion. It did not provide an opportunity to discuss how the amount was calculated, what it would fund, or how to avoid a repeat of the overspending.

I raised concerns about their process. The committee did not address my concerns, and the process went ahead. Owners were levied the amounts. Is this a proper process for raising funds in these circumstances?

Answer: A process can be lawful but unsatisfactory.

In short, an owners corporation can lawfully raise additional funds in this way, but the legality turns on how the meeting was conducted and whether statutory safeguards were met.

Overspending and “insolvency”

First, an owners corporation does not become insolvent in the corporate sense simply because the administrative fund has been overspent. What usually occurs is a cash-flow shortfall, which the legislation expressly allows to be addressed by raising additional contributions.

Authority to raise funds

An owners corporation may determine additional contributions to the administrative fund by ordinary resolution at a general meeting. There is no legal requirement that owners must first agree on how the overspend occurred or how to prevent it in future. However, good governance would usually involve that explanation.

Meetings conducted wholly by pre-meeting voting

The Strata Schemes Management Act 2015 allows for meetings to be conducted using pre-meeting electronic voting.

• Schedule 1, clause 28(3)(e) recognises that votes may be cast by pre-meeting electronic voting.
• The detailed rules sit in the Strata Schemes Management Regulation 2016, particularly clauses 14, 14A and 14B.

Under this framework:

• A general meeting may be conducted wholly by pre-meeting electronic voting
• Owners vote before the meeting, often by email or an electronic form
• Motions cannot be amended
• There is no mechanism for live debate or discussion at the meeting itself

This means that a meeting limited to “approve/disapprove” voting is not, by itself, unlawful.

The “reasonable steps” requirement

However, the Regulation introduces an important safeguard.

Clause 14B of the Regulation requires the secretary to take reasonable steps to ensure that owners can participate in the meeting.

What is “reasonable” depends on the circumstances, but in practical terms, this usually includes:

• Providing sufficient information in the notice of meeting to explain the motion
• Allowing owners to ask questions before voting closes
• Ensuring voting instructions are clear and accessible

The legislation does not require discussion or consensus, but it does require a fair opportunity for informed participation.

Failure to respond to questions is poor practice. Still, it does not automatically invalidate a levy unless it can be shown that the notice or process was misleading, procedurally defective, or denied voting rights.

So was the levy valid?

The levy is likely to be valid if:

• The general meeting was properly convened
• Notice requirements were met
• The motion was within the owners corporation’s power
• The resolution passed by the required majority
• Voting entitlements were correctly applied

Concerns about transparency, budgeting, or committee performance are legitimate governance issues, but they do not, on their own, invalidate a levy that was lawfully resolved.

Final word

This is a common strata tension point: a process can be lawful but unsatisfactory.

The legislation permits efficiency through pre-meeting voting. Still, it expects committees and strata managers to exercise that power responsibly, particularly when owners are asked to contribute additional funds.

Tim Sara
Strata Choice
E: tsara@stratachoice.com.au
P: 1300 322 213

This post appears in Strata News #781.

Have a question or something to add to the article? Leave a comment below.

Read next:

• NSW: Q&A Capital Works Expenses. What to do about the Overspends?
• NSW: Levy Collection Practice is Changing – Are You Ready?
• NSW: Q&A Special Levies, Levy Payments and Overdue Levies

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