A lot owner from NSW is wondering ways to overrule Strata Committee decisions. Leanne Habib, Premium Strata provides the following responses.
Table of Contents:
- QUESTION: My Community Association recently approved expenditure in excess of $60,000 at a committee meeting with no notice of motion on the agenda. Is this legal or does it breach strata law in NSW?
- QUESTION: Can an EGM be called to reverse the decision of a majority at an AGM? The owners corporation by a majority vote accepted the proposed strata levies at our AGM. A group of dissatisfied owners have asked for an EGM with a motion to reverse the decision.
- QUESTION: When considering committee decisions, if a motion is defeated at an AGM (or EGM), how soon can the same or similar motion be proposed again?
- 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?
- QUESTION: Whose decision is it to appoint strata maintenance contractors?
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Question: My Community Association recently approved expenditure in excess of $60,000 at a committee meeting with no notice of motion on the agenda. Is this legal or does it breach strata law in NSW?
My Community Association recently approved expenditure in excess of $60,000 at a committee meeting.
There was no notice of motion on the agenda, no quotes were tabled, and not even the scope of the work to be carried out was tabled.
The discussion on the matter lasted less than 3 minutes. The minutes of the meeting include a motion that a contract has been awarded to carry out the works. Is this legal or does it breach strata law in NSW?
Answer: The minutes should record decisions made and the notice of the meeting should include all decisions to be considered.
The minutes should record decisions made and the notice of the meeting should include all decisions to be considered. In other words, you cannot make decisions which do not appear on the agenda for the meeting.
Depending on how much evidence you have and the nature of the expenditure (e.g. it may have been urgent remedial works), you may have grounds to make an application to NCAT to have the resolution to award the contract invalidated (unless works have commenced).
The Community Association could though, theoretically, ratify this anomaly at their next meeting.
This post appears in the November 2020 edition of The NSW Strata Magazine.
Question: Can an EGM be called to reverse the decision of a majority at an AGM? The owners corporation by a majority vote accepted the proposed strata levies at our AGM. A group of dissatisfied owners have asked for an EGM with a motion to reverse the decision.
Can an EGM be called to reverse the decision of a majority at an AGM?
The owners corporation by a majority vote accepted the proposed strata levies at our AGM. Levies supported by appropriate budgets, explanations and Capital Works Funding Plan.
A group of dissatisfied owners (just enough to make the 25% required for an EGM) within a month have asked for an EGM with a motion to reverse the newly agreed levies to those of the previous year. They provide no further explanation or documentation.
It seems this is permissible but unsatisfactory. Can a series of AGM and EGMs be called each to reverse the decisions of a prior AGM, EGM?
Answer: Decisions may be reversed and any type of general meeting may revoke a decision of another type of general meeting.
Yes, decisions may be reversed and any type of general meeting may revoke a decision of another type of general meeting.
Under the strata legislation, a unanimous resolution or special resolution of an owners corporation about a matter cannot be amended or revoked other than by a subsequent resolution of the same kind.
The position may change if a decision has been implemented and is incapable of being reversed.
This post appears in Strata News #359.
Question: When considering committee decisions, if a motion is defeated at an AGM (or EGM), how soon can the same or similar motion be proposed again?
Are old Owners Corporation committee decisions “set in Concrete?”
At the conclusion of our recent AGM there was a discussion on the merits of undertaking a couple of capital works projects, and whether the Strata Committee should investigate their affordability and practicality of seeking a DA.
Long-time residents stated that someone had proposed the same idea some years before, and the committee decision, based on a vote, was to not pursue the initiative. Over the ensuing years, the newer unit owners would likely now have the numbers to approve this idea.
Therefore, our question is: If a motion is defeated at an AGM (or EGM), how soon can the same motion (or one ostensibly similar) be proposed for the second time?
Answer: Owners Corporations may change their minds over time, in the same way that their previous committee decisions may be rescinded.
We are not aware of any impediment to the Owners Corporation placing an old motion for reconsideration by it.
Owners Corporations may change their minds over time, in the same way that their previous committee decisions may be rescinded.
This post appears in Strata News #232.
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?
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: This could occurif the decision 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.
Question: Whose decision is it to appoint strata maintenance contractors?
My issue is that our committee wants to appoint an expensive gardening company when we have cheaper quotes. A few other members and I are opposed to it, saying it is a waste of money. If gardening can be done for a reasonable amount, why spend big dollars?
Currently, these members and I are seen as troublemakers. The remainder of the owners have a majority and also have the Strata Manager on their side.
We believe the decision to accept the higher quote is not in the best interest of the body corporate. The gardening contractor has been recommended by the Strata Manager and frankly, we question the Strata Manager’s honesty and professionalism.
Are we able to disapprove any company recommended by the Strata Manager, as it is in conflict?
Can we ask the Strata Manager to butt out of Committee issues such as recommending strata maintenance contractors?
The Strata Manager is calling an executive meeting in which we have to decide (vote) to appoint a Gardener and he is saying majority vote will win? Can he do that?
There is no Secretary, Treasurer or any other official in our Committee. I have asked for this previously, but the Strata Manager told us we don’t need any Officials. I noticed that the Strata Manager is always getting his way regarding the appointment of strata maintenance contractors.
Answer: The appointment of a new gardener may be a matter that you and other owners feel is best taken to a general meeting
The Owners Corporation under the Act must appoint office bearers consisting of a Chairperson, Secretary and Treasurer. This is normally done at a committee meeting and traditionally, immediately at the first Committee meeting following the Annual General Meeting each year.
A decision regarding the appointment of a new gardener can be done at a committee meeting if owners have not previously restricted the decision making of the committee in relation to this subject. A majority vote at a committee meeting is the vote required to appoint a new gardener.
There is no conflict of interest if the Strata Manager proposes different strata maintenance contractors to assist with servicing the Owners Corporation, as this will fall normally within their delegated duties on behalf of the Owners Corporation, although the Strata Manager is required under the Act to disclose any direct connection or relationship with any nominated contractors, if relevant.
Further Pursuant to Clause 31 (3), Schedule 2 of the Strata Schemes Management Act 1996 (NSW), persons entitled to vote in respect of lots the total unit entitlement of which is at least one –quarter of the aggregate unit entitlement, can requisition the convening of a general meeting with the proposed motions that are submitted pursuant to Clause 36, Schedule 2 of the Act:
36 Requisition for motion to be included on agenda for general meeting
- Any person entitled to vote at a general meeting of an owners corporation on a motion that does not require a unanimous resolution may, by notice in writing served on the secretary of the executive committee, require inclusion in the agenda of the next general meeting of the owners corporation of a motion set out in the notice and the secretary must comply with the notice.
- The secretary must give effect to the requirement of the notice.
- Subclause (1) does not require the inclusion of a motion on the agenda of a general meeting for which notices have already been given in accordance with this Schedule but in that case the motion must be included in the agenda of the next general meeting after that.
- For the purposes of subclause (1), an owner of a lot who, but for the fact that the lot is subject to a mortgage or covenant charge, would be entitled to vote at a general meeting of the owners corporation is entitled to vote at that meeting.
Therefore, the appointment of a new gardener may be a matter that you and other owners feel is best taken to a general meeting so that all owners can consider the appointment of the new gardener, instead of leaving the decision for the committee, if the committee has different views on the subject.
If so, owners who have at least one-quarter of the aggregate unit entitlement can requisition a general meeting to consider the appointment of a new gardener.
Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
Have a question or something to add to the article? Leave a comment below.
Read next:
- NSW: Q&A Duties of Strata Treasurer. Is there a job description?
- NSW: Q&A Can our Strata Committee pay themselves an undisclosed amount?
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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I have applied to the strata committee to install a solar system on what I now find is a roof which is common property and they ruled against me. Do I have any avenue of appeal?
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.