A lot owner from NSW is wondering ways to overrule Strata Committee decisions. Leanne Habib, Premium Strata provides the following response.
Question: What is deemed as a justifiable reason for an owners corporation to call a vote to overrule its strata committee decisions? What proportion of the vote is required to overrule strata committee decisions?
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Our Strata has a couple of less than congenial lot owners who, after resigning from the Strata Committee, now repeatedly quote a single sentence from NSW Fair Trading’s website in all their correspondence, and speak it verbatim when in conversation with committee members.
They quote: “Any decision made by the strata committee is treated as a decision of the owner’s corporation. However, the owner’s corporation can vote to overrule its strata committee’s decisions or put limits on what they can make decisions about”. From the NSW Fair Trading FactSheet: Meetings of the strata committee.
This whilst both tedious and ungracious it is in fact quite true; in the event of a disagreement between the owners corporation and the executive committee, the decision of the owners corporation prevails.
Therefore my 5 questions are:
- What are deemed as justifiable reasons for an owners corporation to call a vote to overrule its strata committee decisions?
- What would be the process of calling for such a vote to take place?
- Would an extraordinary general meeting of the owners corporation be needed to put the overrule motion to the vote?
- What proportion of the vote is required to overrule strata committee decisions?
- Would strata committee members retain their vote in the owners corporation meeting?
- Finally, is there a definitive statement that could be used to effectively counter the NSW Fair Trading quote (and put these nay-sayers in their place)?
Answer: Eg. if the decision of the strata committee was not in the best interests of the Owners Corporation.
- Examples:
- if the strata committee made a decision which was ultra vires or one that may only be made by the Owners Corporation
- if the decision of the strata committee was not in the best interests of the Owners Corporation
- a significant purchase is proposed to be made against the wishes of the individual lot owners
All of the above apply if the decision has NOT yet been implemented ie major purchase has already been made in which case the Owners Corporation would not be able to reverse the decision and would need to seek NCAT assistance. - A general meeting would need to be called and by ordinary resolution the Owners Corporation would vary, rescind or override the decision made.
- Yes or a motion on the AGM agenda.
Please note following the strata reforms which took effect in November 2016 there are now only types of general meetings, an Annual General meeting and a General Meeting (formally referred to as an Extraordinary General Meeting) - An ordinary resolution would be required as per point 2 above ie a majority
- Yes
- Not really, because NSW Fair Trading position re-states the letter of the law (which is correct).
This post appears in Strata News #183.
Read next:
- NSW: Decision Making in an Owners Corporation. Are decisions made in accordance with legislation?
- Nothing happens without a decision
Leanne Habib
Premium Strata
P: 02 9281 6440
E: info@premiumstrata.com.au
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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Hi Leanne
I thought an owners corporation could block or override a committee’s decision using a petition with at least 25 % of owners signatures. The petition is simply presented to the secretary and tabled with an appropriate motion for the next committee meeting, avoiding the need for a general meeting
Hi Brett
We have received the following reply back from Leanne Habib, Premium Strata:
See Section 36 of the Strata Schemes Management Act, (NSW) 2015 entitled “Functions of strata committee” (emphasis added)
(1) A strata committee has the functions conferred on it by or under this or any other Act.
(2) A decision of a strata committee is taken to be the decision of the owners corporation. However, in the event of a disagreement between the owners corporation and the strata committee, the decision of the owners corporation prevails.
So, a motion at a general meeting would need to be passed to override the decision of the strata committee because the Owners Corporation can only make decisions at a duly convened meeting (or valid strata committee resolution).
What is the difference between Owners Corporation and strata Committee?
I am hoping to get onto the Stata Committee at our meeting next month, but how do you get to be on the Owners Corporation?
Jo W
“Any decision made by the strata committee is treated as a decision of the owner’s corporation. However, the owner’s corporation can vote to overrule its strata committee’s decisions or put limits on what they can make decisions about”. From the NSW Fair Trading FactSheet: Meetings of the strata committee.
The above assume several things, it is nothing more than a very general statement that reflects the intent of s 36(2). It is far from literal and far from gospel.
The statement should say “any valid decision, within their authority, made by the strata committee” (SC) just to be clear the SC can’t just do as it pleases; there are limits.
The Act sets out various decisions which are solely for the owners corporation (OC) to determine at a general meeting so such decisions are not within the scope of the SC. The Act, as a whole, also sets limits on what the OC and SC can make decisions about and when the OC / SC steps outside those boundaries it acts ultra vires (beyond its authority).
As far as the procedural aspects of a committee meeting goes the Court’s seem to not really care about most of the musts that are in the Act.
Must does not mean must in the Strata Act in most instances of its use, i.e. there is often no consequence for not doing what the Act says ‘must’ be done.
Q1 has no objective answer. The Act sets out what is required to call a general meeting and you should read s 19 to understand the provisions at your disposal.
The problem with utilizing s 19 is the time factor. The SC can easily in most cases action their resolution long before a general meeting is called and in those circumstances the GM then becomes mute.
If the owners do not like what the SC has done then in urgent matters the owners should seek an interim order to restrain the SC from relying on their decision until after a general meeting to fully determine the matter. There is more to that suggestion than is possible to outline here but it is an option.
Q2 is in part answered by s 19. You need to get the Secretary to call the general meeting or force the issue via s 19(2) if you can get the support.
Q3. There is no longer a meeting called an EGM, there is the FAGM, the AGM and a general meeting is now what was formerly known as an EGM. As per s 19 you will need a general meeting.
Q4. If you can get a a general meeting to resolve the matter then you need just an ordinary resolution (majority vote) but for future reference I would refer readers to Sch 2 cl 9(3) which enables the owners to effectively “veto” a decision of the SC but that veto must be exercised before the SC make the decision, i.e. if you see something on the SC meeting agenda that you do not want the SC making a decision about there is a way to ‘nullify’ any decision the SC make on that matter using the provisions found in cl 9(3).
Clause 9(3) is not easy to meet the conditions of but it is something owners should be aware of.
Q5. Provided they are entitled to vote at the general meeting; simplistically put, as long as they are financial at the time of the general meeting then they are entitled to vote.
Q6.
The best response is probably: The Fair Trading statement is a very general statement; it is not literal nor is it gospel. The decision/s needs to be a valid decision/s within the scope of the authority of the SC, the SC can’t just do as it pleases.
If you think your SC aren’t following the Act then s 238 sets out a way to seek to have NCAT make an order removing one or more SC members from being SC members. Also if you can force a general meeting then perhaps the odd motion to declare a SC members position vacant, see s 35(1e), would add to the entertainment of the day.