NSW: Q&A Owners Corporation Committee Decisions

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A lot owner from NSW is wondering ways to overrule Strata Committee decisions.

Table of Contents:

• QUESTION: Can the owners corporation make verbal approvals of the major work by-law?
• QUESTION: In NSW strata, how many committee members are needed to agree for the approval of building repairs or works?
• QUESTION: Our Executive Committee held Christmas drinks without approval for the spending. A resident had too much alcohol and vomited on the common property. What can be done about the unapproved spending and any liability in these circumstances?
• QUESTION: How many committee members need to sign off on the approval for repairs or building maintenance work for NSW strata properties?
• 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: At no cost to the owners corporation, we’d like to paint an unpainted common area exterior wall. How can we get this action sanctioned and take advantage of this improvement?
• 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?

Question: Can the owners corporation make verbal approvals of the major work by-law?

An owner has installed an awning over her front door without Owners Corporation approval. 

I notified the Strata Manager of this issue and they replied “We understand prior to our management (appointed in 2020), this was approved by owners verbally.”

Can the owners corporation make verbal approvals of the major work by-law? As I know, all of the unauthorised works should be applied in writing to the Owners Corporation, and then the outcome should also be written. Am I correct?

Answer: Any approval should be recorded in writing because it needs to be made by a general meeting or at a strata committee meeting (if authorised to approve minor renovations) and both types of meetings must have written minutes.

You are likely to be correct.

Any approval should be recorded in writing because it needs to be made by a general meeting or at a strata committee meeting (if authorised to approve minor renovations) and both types of meetings must have written minutes.

It is likely that the awning must be approved by special resolution of a general meeting. This is because it is a new structure affixed to common property (assuming the wall is common property which is most likely the case in most strata plans in NSW) and new structures must be approved by special resolution of a general meeting under section 108 of the NSW Strata Schemes Management Act 2015 (SSMA 2015) before they are installed. If it is intended that the lot owner be responsible for the repair and maintenance of the new structure, then under section 108 a by-law needs to be passed and registered making the lot owner responsible and if there is no such by-law, then the owners corporation remains responsible for repair and maintenance.

It is unlikely the awning could be approved as a minor renovation under section 110 of the SSMA 2015 because it would change the external appearance of the lot, may involve structural changes or may have needed planning approval. More detail would need to be provided to determine if the awning could be a minor renovation. However, under section 110, minor renovations can only be approved before they are installed.

If there has not been a proper approval for the awning, then the owners corporation has three options to choose from. The first is to remove the awning as part of its duty to repair and maintain common property because the awning is an illegal addition to common property. The second is to apply for an NCAT order under section 132 of the SSMA 2015 to compel the lot owner to remove the awning. The third is to pass a by-law ratifying the installation of the awning and making the lot owner responsible for its repair and maintenance. The owners corporation needs to consider all the facts of the case and what it wishes to achieve before deciding which option it wants to choose.

Carlo Fini
Lewis & Charles Lawyers
E: [email protected]
P: 02 8095 6263

This post appears in Strata News #465.

Question: In NSW strata, how many committee members are needed to agree for the approval of building repairs or works?

What is the NSW strata law regarding how many committee members can approve building repairs or works?

In our building of eight lots, we have always stood by four committee member approvals as a minimum. Our new strata manager is authorising quotes from only two committee member approvals plus a non-member approval, while two other committee members are not being advised.

Answer: Strata Committees may only make decisions in duly convened meetings with a majority voting in favour of any motion for it to pass.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #461.

Question: Our Executive Committee held Christmas drinks without approval for the spending. A resident had too much alcohol and vomited on the common property. What can be done about the unapproved spending and any liability in these circumstances?

The Executive Committee in our NSW Strata Plan hosted Christmas drinks for all residents on the common property. This was funded by the Owners Corporation, however no permission to spend our funds was ever asked or given. 

At the event, a resident had too much alcohol and vomited on the common property. What are the Responsible Service of Alcohol rules for Owners Corporations in NSW? What if this resident had fallen and needed, say, $20,000 worth of dental work? Would ALL owners be responsible for the costs and legal implications associated with this? Surely insurance wouldn’t cover this type of accident. Would we be best to have a bylaw that covers something like this?

Answer: If a majority of owners disagree about having a Christmas party they can call a general meeting and reverse the strata committee’s decision and they can impose restrictions on what decisions the strata committee can make and how it spends the owners corporation’s money.

This problem touches on various areas of the law: liquor licensing, strata law, public liability (also known as the law of negligence) and insurance.

The Liquor Act 2007 generally only requires premises to be licensed if liquor is for sale and does not require to be licensed premises where a private party is conducted and liquor is supplied to guests free of charge. So, a private Christmas party hosted by an owners corporation should not require a liquor license. However, the Liquor Act 2007 does create offences such as supplying liquor to minors regardless of whether this occurs on premises that must be licensed or not.

The Strata Schemes Management Act 2015 regulates what an owners corporation can and cannot do. It does not confer an express statutory power or function on an owners corporation to hold social functions such as Christmas parties. However, an owners corporation has the principal responsibility for the management of its strata scheme and this includes the management and control of the use of its common property and the administration of its strata scheme.

It is arguable that an owners corporation organising social activities such as a Christmas party is conducive to the owners corporation carrying out those functions and, in practice, many owners corporations engage in promoting social activities that enhance their communities. Should there be doubt about the ability to do so, it is also possible to pass an empowering by-law to authorise the owners corporation to organise those social activities. A decision to have a Christmas party, however, should be the subject of a properly worded resolution of either a strata committee meeting or general meeting. If there is no such resolution, then there is no authority to spend an owners corporation’s funds on a Christmas party.

If a majority of owners disagree about having a Christmas party then under the Strata Schemes Management Act 2015 they can call a general meeting and reverse the strata committee’s decision to hold a Christmas party and they can impose restrictions on what decisions the strata committee can make and how it spends the owners corporation’s money.

As the occupier of premises being the common property where the Christmas party is held, the owners corporation is under a common law duty to take reasonable case to ensure that guests are not injured and this probably extends to taking care that guests don’t injure themselves because they are drunk. To discharge the duty, the owners corporation should have something like a responsible service of alcohol policy and choose an area that it suitable for the party. If the owners corporation breaches that duty and a guest is injured because say they are drunk then the owners corporation may be liable to pay damages for the guest’s injuries.

The strata insurer would indemnify the owners corporation for any liability it has to pay such damages if the strata policy covers public liability for having a Christmas party. If the policy does not cover it or there is an exclusion in the policy that the insurer can rely on, then the owners corporation would have to pay damages itself and likely have to raise a levy on owners to do so. Even if the strata insurer picks up the bill, then the owners corporation can expect its premiums to increase significantly in following years.

Carlo Fini
Lewis & Charles Lawyers
E: [email protected]
P: 02 8095 6263

This post appears in the March 2021 edition of The NSW Strata Magazine.

Question: How many committee members need to sign off on the approval for repairs or building maintenance work for NSW strata properties?

How many committee members need to sign off any repairs or building maintenance work for NSW strata properties?

Our new Strata Manager is approving work quotes when only one or two committee members have OK’d it verbally, without including the other committee members in any correspondence.

Answer: Email direction is generally for matters that does not require a resolution of the strata committee.

Decisions by the strata committee are made in strata committee meetings by simple majority vote, though in practice, sometimes members give their verbal or email direction to the strata manager. The strata manager then obtains quotes or issues a work order and such approval is ratified at the next strata committee meeting.

Email direction is generally for matters that does not require a resolution of the strata committee. Matters that do require resolution should be dealt with at a properly convened meeting of the strata committee.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in >Strata News #449.

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 that 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.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in the November 2020 edition of The NSW Strata Magazine.

Question: At no cost to the owners corporation, we’d like to paint an unpainted common area exterior wall. How can we get this action sanctioned and take advantage of this improvement?

It has been suggested that we have some unsightly unpainted interior walls in our complex spruced up with a coat of paint. Currently, they are untreated block walls and unpainted concrete. They are within our building’s interior common property, adjacent to our basement carpark. As these services have never been painted, it is considered that improving their appearance is not maintenance, as the current finish could be considered maintenance free.

We have adequate paint left over from a recent exterior repaint to cover these unfinished surfaces, and sufficient volunteer labour to tackle the work. Therefore this improvement would come at no cost to our owners corporation.

The fact that these surfaces are isolated and interior would likely mean that a single paint would probably last us in excess of 15 years. How can we get this action sanctioned and take advantage of this zero cost improvement?

Answer: Such improvements require a special resolution of the Owners Corporation.

In our view, the painting is an “improvement” to the common property because the surfaces are currently unpainted. Such improvements require a special resolution of the Owners Corporation. Before embarking on the working bee, ensure you have the proper authorisations in place, and, in particular, check with the building’s insurer whether such a working bee would be an insurable event (in case of slip-and-fall etc).

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

This post appears in Strata News #402.

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.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

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.

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

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:

1. What are deemed as justifiable reasons for an owners corporation to call a vote to overrule its strata committee decisions?
2. What would be the process of calling for such a vote to take place?
3. Would an extraordinary general meeting of the owners corporation be needed to put the overrule motion to the vote?
4. What proportion of the vote is required to overrule strata committee decisions?
5. Would strata committee members retain their vote in the owners corporation meeting?
6. 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 occur if the decision was not in the best interests of the Owners Corporation.

1.  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.

2. A general meeting would need to be called and by ordinary resolution, the Owners Corporation would vary, rescind or override the decision made.
3. 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)
4. An ordinary resolution would be required as per point 2 above ie a majority
5. Yes
6. Not really, because NSW Fair Trading position re-states the letter of the law (which is correct).

Leanne Habib
Premium Strata
E: [email protected]
P: 02 9281 6440

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 Strata Manager recommended the gardening contractor 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 the 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

1. 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.
2. The secretary must give effect to the requirement of the notice.
3. 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.
4. 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
E: [email protected]
P: 02 9281 6440

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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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