This article discusses discusses overturning a strata special levy decision in NSW and the options to challenge or uphold it.
Question: At our AGM, a special levy was approved to replace aged windows. An owner has since challenged the decision and is seeking to have it overturned. What are the chances the decision will be overturned and if so, how do we fix the damaged windows?
I’m in a strata lot of 12. I’m the current secretary of the Strata Committee. We are in a 1960s building and have original windows which are in terrible condition and need replacing.
We held an AGM and EGM last year and the raising of a special levy was approved. Only 3 owners attended the EGM but it was an unanimous vote at the EGM. My understanding is that it requires a majority vote for a general resolution so this should be sufficient.
The levies will take 2 years to collect.
After the first levy was issued, we received a complaint from 4 of the owners asking for another EGM and for the levy to be overturned. One of those owners has previously had their windows replaced without the approval of the OC and they are unwilling to pay again.
Given this is a necessary repair and the levy was approved according to legislation, what are the chances this will be overturned (either at an EGM or NCAT). And if it is, what is our recourse to fix the damaged windows?
Answer: If an owner is unhappy with the outcome of a decision made at a general meeting, they have a few options.
Overturning decisions of the owners corporation
If an owner is unhappy with the outcome of a decision made at a general meeting, they have a few options they can take.
Option 1 – Submit a motion to revoke the decision
An owner can require the Secretary to include a motion in the agenda of the next general meeting, in accordance with schedule 1, clause 4 of the Act, to revoke the previous decision. It’s quite common for the Strata Managing Agent to be delegated the powers of the office bearers (including the Secretary), so the requirement can probably be made to them as well, and they should be able to assist you in drafting a motion.
The requirement must be made in writing and set out the motion, the name of the person making the requirement, and include an explanatory note of up to 300 words.
If the original decision were made by ordinary resolution, the motion to revoke that decision would also require an ordinary resolution. If the decision was made by a special or unanimous resolution, it could only be revoked in the same way (as noted in section 21 of the Act).
The original decision is only revoked if the motion to revoke it is carried. Until then, the original decision is valid and can be acted upon, so the next option may be necessary.
Option 2 – Arrange a qualified request for a general meeting
Whilst an owner can require a motion for the next general meeting – that could be some time away. The Secretary only has to keep the motion until they decide to convene the next general meeting.
If the Secretary is not convening a general meeting soon, an owner can arrange a qualified request in accordance with section 19 of the Act.
To make a qualified request, one or more lot owners of lots that have a total unit entitlement of at least one-quarter of the aggregate unit entitlements have to make the same request. The request often comes in the form of a written requisition (such as a petition). It should state the motion(s) being demanded.
Once a qualified request is made, the Secretary has 14 days to convene the general meeting with the motion(s) that have been required.
If the Secretary fails to do so, an application can be made to the Tribunal under section 20 of the Act for the Secretary or someone else to convene the meeting.
Option 3 – Seek orders from the Tribunal invalidating a resolution
Section 24 of the Act allows an owner to apply to the Tribunal for orders to invalidate a decision made by an owners corporation. However, the Tribunal must be satisfied that the Act or Regulations have not been complied with in relation to the meeting that was held. Furthermore, the Tribunal does not have to make an order if:
- the failure to comply did not adversely affect anyone, or
- if compliance still would not have resulted in a failure to pass the resolution.
For example, if insufficient notice was given for the meeting, but the person making the application for orders invalidating the decision was able to attend the meeting and vote anyway, the Tribunal would likely decide that the outcome would not have been any different had the law been complied with.
An owners corporation’s duty to repair and maintain common property
Owners Corporations have a strict duty under section 106 of the Strata Schemes Management Act 2015 (NSW) (‘the Act’) to repair and maintain the common property.
If somehow, the owner was able to overturn the decision to raise levies and repair or replace the windows in this scenario, you could apply to the Tribunal for orders under section 232 of the Act, requiring the owners corporation to undertake the repairs.
This post appears in Strata News #573.
Tim Sara
Sara Strata
E: tim@sarastrata.com.au
P: 04 8500 7960
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