This article is about how to handle a strata executive committee not acting appropriately in NSW.
Question: Our strata committee is controlled by a Company nominee holding the majority votes from 3 company-owned units. They make all of the decisions. How do we take back control?
Our Strata Plan consists of 12 units & 2 shops. It is controlled by a Company nominee holding the majority votes from 3 company-owned units.
The lot owners who are in collusion with the Company Nominee collectively hold 525 Unit entitlements whilst rest of lot owners have 481 Unit Entitlements. There are 4 Strata Committee members. Two of these are the Company Nominee and his wife.
The Company Nominee is arrogant and dictatorial and decides how the Strata Plan Levies are spent with no-one being able to interfere on any issue as opposition just gets voted down.
The Strata Committee is dysfunctional due to the situation and no face to face meetings occur. The Company Nominee chose our Strata Manager. The strata manager simply takes orders that have been given by the Company Nominee. The rest of the Strata Committee are not ever included in the decision making process. Most of the time, they don’t even get to see the invoices or put forward an opinion about expenditure.
Where are our rights as owners? What can we do to get back some control?
Answer: Stand united at the next AGM and gather a proxy each and vote the current committee down
You could consider a new by-law that allows strata meetings to be recorded by a participant for a meeting. However, this would require a special majority vote which may not be achievable without enough support from other owners.
If this option is not possible, then it would be best practice to take notes during a strata committee meeting on what was discussed, actions that were agreed and rely on these notes to raise any comments to the minutes that are sent to the strata committee for review before they are distributed to other owners.
This post appears in Strata News #339.
Question: Our strata executive committee has been taken over by a group of lot owners who make decisions in their favour and no longer enforce bylaws. They don’t communicate with the rest of the committee. What do we do?
We’ve lived in a strata scheme for 10yrs and had been on the strata Executive Committee with another two owners for since moving in. We ran the place well and kept it neat and orderly. Three years ago, a disgruntled owner became an Executive Committee member, gathered some new owner residents and elected themselves to the chairman and secretary positions, changed the strata manager and have been ruling the roost since then.
The new strata manager openly shows favouritism to them. They have been voting the same people to office bearer positions for three consecutive years via secret ballot and they deal with all matters concerning them and their side of the block via direct phone calls to the strata manager. They should be making these decisions via email, cc’ing all committee members. Our objections to this process have been ignored.
Bylaws are no longer enforced:
- clothes are hung in balconies,
- resident cars (EC members and friends mostly) are parked in visitors parking
- funds are being misused for installation of cameras etc
Many of the other lot owners are investment property owners who aren’t interested in becoming involved. We feel like it is us two owners against four owners on the committee of seven. It’s a block of 14 units only.
We don’t see a way out. We have written to the council and environmental departments of NSW, but enforcing by-laws is the toughest part.
Answer: Stand united at the next AGM and gather a proxy each and vote the current committee down
You are an interested person under the strata legislation and are entitled to ensure the smooth operation of your Owners Corporation through NCAT: Strata Schemes Management Act 2015 – Sect 232
- 232 Orders to settle disputes or rectify complaints
- Orders relating to complaints and disputes The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following:
- the operation, administration or management of a strata scheme under this Act,
- an agreement authorised or required to be entered into under this Act,
- an agreement appointing a strata managing agent or a building manager,
- an agreement between the owners corporation and an owner, mortgagee or covenant charge of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme,
- an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme,
- an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.
You will need proper evidence to prove your case and will need to apply for mediation first.
This post appears in Strata News #320.
Question: Our Secretary was subject to a Motion of a By-Law breach and worked with the Strata Manager to re-order Motions, placing his own Motion (where he was accused of a By-Law breach) at the very end of the agenda.
A group of owners recently called an EGM due to issues in our building and provided some Motions to the Strata Manager and requested that the order of the Motions stay in the order we had provided.
We also requested that the draft motions be sent to use before the Notice of EGM was sent out.
Both of these requests were simply ignored (and the order of Motions was changed and Notice of meeting sent out before we had the chance to review).
We then found out that the Secretary (who was appointed after we requested the EGM) and who was also subject to a Motion of a By-Law breach had worked with the Strata Manager and re-ordered our Motions, placing his own Motion (where he was accused of a By-Law breach) at the very end of the agenda. We felt this was a conflict of interest.
We requested when the EGM was about to start that we re-order some Motions and the Strata Manager (and meeting Chairman) became aggressive and simply refused.
The Motions regarding By-Law breaches were then dismissed by the Chairman and these Motions were not discussed at all.
I would love your view on this scenario.
Answer: Stand united at the next AGM and gather a proxy each and vote the current committee down
I have had this issue come up myself – I can’t find the advice I was given – but I would expect the following to be the case:
- I believe it is the Secretary’s discretion as to the order of motions on the agenda
- Requests for copies of an agenda – and that motions are kept in order, of course, can be made – but there is no requirement at law to meet that request
- As to conflict of interest – without knowing what the topic is and how serious this allegation maybe – it is likely that morally you are correct – but legally there may be nothing to stop them doing what they have done.
- A Chairman can declare a motion out of order if it breaches some aspect of the legislation – so you should at the time request the basis (actual section) that this is the case for – otherwise the proposer can withdraw the motion – or the meeting agree (not the discretion of the chairman) to not put the motion. What should happen is that the party who requested the motion on the agenda should have forced the issue by asking the Chair to put the motion to the vote.
- One final point – the Chairman should be impartial – or have the scheme’s interest at heart as a worst-case scenario. If the Chair is the strata manager – he should be ensuring everyone gets to have a say and a vote and that owners make an informed decision.
The chairperson at a meeting may rule a motion out of order if the chairperson considers that the motion if carried, would conflict with this Act or the by-laws of the strata scheme or would otherwise be unlawful or unenforceable.
I cannot see that the Chair or Secretary have breached S18 of Schedule 2 regarding declaring a pecuniary interest.
I am aware many managers do not follow this practice of being impartial and involve themselves in the politics of keeping the committee happy to ensure their contract is maintained. Over time this sort of behaviour only ensures that various people become unhappy (it’s not hard for all to see what is being done and why) and the vote would eventually go against the managers re-appointment – but how long that takes is up to the group who have been disenfranchised to enlist the backing of the others (ie it may happen to you next often works) and so push for a change. Either of the Chair of the committee if that who is at issue (or the Secretary) or the Strata Manager.
I would suggest that those who requisitioned the meeting stand united at the next AGM and gather a proxy each and vote the current committee down for starters but you will need to have others who are willing to stand and do the work. This will send a clear message to the manager and those elected off as to future behaviour. To be successful at this though you need to act by stealth as otherwise the committee and manager will collude to get votes to maintain the status quo.
This post appears in Strata News #271.
Question: We have a toxic person on the strata executive committee who is suing the owners corporation and planning a leadership spill to take over as chairman. How do we handle this?
We have a toxic person on the strata committee who is suing the owners corporation and mediation has just ended with no result.
Is he allowed to attend the meetings while the legal issue is unresolved?
He wants a motion to fire the strata manager and a leadership spill to take over the role of the elected chairman. Unfortunately, he had convinced some members to back him.
What can the rest of the committee do to stop this bully lawyer and to counteract his devious plan to control every decision?
Answer: An owners corporation may, by special resolution, oust the Chairman.
Is this committee member allowed to attend the meetings while the legal issue is unresolved?
He should be asked to leave the meeting while you discuss legal advice, legal strategy etc in relation to the dispute to enable you to properly prepare your case. However, this does not disentitle him from attending meetings per se – you can only ask him to leave while discussing the dispute.
He should also be invited back into the meeting before any resolution is passed as he is entitled as a member to also vote on any proposed motions.
Care should be taken when terminating a strata manager, as it must be done strictly in accordance with the strata management agency agreement and the strata legislation.
It is a legislative requirement that the functions of a member of the strata committee exercise their functions for the benefit of the owners corporation and with due care and diligence.
An owners corporation may, by special resolution, oust the Chairman (in case he gets elected).
Alternatively, an application may be made to NCAT that such officer/member has failed to comply with the legislation or by-laws or failed to exercise due care and diligence, or engaged in serious misconduct while holding the office.
This post appears in Strata News #241.
Question: What can we do about one of our strata executive committee members who disregard the law and people’s safety, and has now driven almost all owners away?
How can a strata owner protect themselves against one of our Strata Executive Committee members, a keenly intentionally negligent secretary who has ruled a scheme for 25+ years with total disregard to strata legislation and other law issues such as public health and risk issues? They have driven almost all owners from the site so that only tenants remain to see, suffer and be at risk?
Answer: I understand the style of building / management structure and this can be problematic.
I have heard reports of strata like this for many years. I’m not sure of the detail on the negligence suggestion, however, I understand the style of building / management structure and this can be problematic.
The Strata Schemes Management Act 2015 doesn’t recognise a one person secretary as the only person to run a strata building except in the case where there is only one person on the Strata Committee who is Chairperson / Secretary and Treasurer. The reason behind this is that the Act recognises a strata committee as a whole, rather than a delegation of a Strata Committee (such as one or two members).
I would suggest that you do three things:
- Nominate for the Strata Committee and also speaks to other owners to gain more interest from these owners to join the strata committee (to broaden the membership) and have them nominate at the next AGM. I would not suggest you be negative about the current structure. Focus the conversation towards increasing owner participation, which improves strata communities.
- Making sure that everyone is clear on what role the Strata Manager performs under their agreement and what role the Strata Committee has in the management of the strata. Normally the routine day to day functions are run by the Strata Manager. Changes to contracts in place, trades used on site, insurance policies & operational procedures are usually voted upon by the Strata Committee as a whole. All owners via the AGM make decisions on each of the statutory motions including approving financials, levies and the strata committee election. A high level, 1-2 page document should be prepared and signed off by both the Strata Manager and the Strata Committee (at a Strata Committee meeting) outlining who does what.
- Put in place a Strata Committee Charter to deal with conduct of the Strata Committee level.
If these changes don’t change the strata culture, changing strata manager may be the last resort. In similar situations to that which you describe, the Strata Manager is often entrenched with the primary owner so this may need to be resolved.
I hope this is helpful.
This post appears in Strata News #162.
This article is for reference purposes only and is not intended to be a comprehensive review of the developments in the law and practice or to cover all aspect of the subject matter. It does not constitute legal or other advice and should not be relied upon this way. Readers should take legal or other advice before applying the information containing in this publication.
Question: An old cooling tower in our building only services a proportion of the apartments. What are the strata executive committee powers? The committee is proposing to replace the tower with ducted air conditioning to the affected units at the cost of the Owners Corporation.
I live in a building completed in 1981 with 24 apartments.
At the time of the sale of the apartments, the builder put a cooling tower on the roof and connected 9 units to this cooling tower via air conditioners, which were also installed by the builder, in their own lot.
Although I believe the water pipes to the roof cooling tower for each lot is in place, the other lots have not connected to the cooling tower.
The secretary of the Strata Committee owns 3 lots which are connected. They have always told lot owners who have purchased over the years that the cooling tower would only accommodate 9 lots.
For many years now, I have argued the maintenance of the cooling tower should be borne by the 9 lots. How can this be common property if it is not available to all owners?
This February at the AGM I had a motion passed to get three reports to see if in fact the cooling tower was ever installed to accommodate 24 lots.
The strata executive committee has basically ignored this resolution, but the secretary did use 1 of the work orders to quote on a new system on the roof. On reading this report, it basically reads that the cooling tower is old and hasn’t been well maintained and that it would never accommodate 24 lots. He did say he could put a new unit in to accommodate 19 lots, assuming not everyone would want to use their air conditioner at the same time.
The Strata Committee meeting in May resolved to disconnect the cooling tower. This decision didn’t go to the Owners Corporation. Is this within the strata committee powers? The Strata Committee has raised a motion for an EGM to have the Owners Corporation pay for completely new ducted air conditioner units in each of their lots. In addition, the outside unit which will sit on each of their balconies is to be paid for and maintained by the Owners Corporation.
Of the 9 lots in question:
- 6 are owned by members of the Strata Committee, of which includes 1 which was bought with reverse cycle air conditioners and not connected to the cooling tower;
- 2 were disconnected from the system up to 18 years ago, but they are included in the motion;
- 1 lot has the “cupboard system” air conditioners in their lot but has never connected as she had been advised by a lot owner who had disconnected the system that the air conditioner “chewed up electricity, the heating unit was woeful” and it wasn’t worth using.
The Strata Committee are bringing this motion to NOT replace the cooling tower or equivalent BUT to have 9 lots fitted with the latest ducted air conditioning at a cost of approximately $13,000.00 per lot = approximately $117,000.00 in total to be paid for and maintained by the Owners Corporation.
In addition, there is no costing AT ALL in the motion.
What are the strata executive committee powers?
Answer: The strata committee seems to be abusing their powers and not acting in the best interests of the Owners Corporation.
So, your scheme is not a large one (under 100 lots).
Because the installations were there at the time of registration of the strata plan, it would appear that the cooling tower (but perhaps not the connections) are common property and the responsibility of the Owners Corporation.
Unfortunately, there is no legal requirement for common property to be “available to all owners”. For example, you might have a common property grease trap in the scheme, but it is for the exclusive use of the retail shop on the ground floor which no one else may access.
As you correctly point out, the decommissioning of the cooling tower could only properly be affected by the Owners Corporation.
Strata Executive Committee Powers
Your strata committee is exceeding its powers in that they are not exercising the Owners Corporation’s repair and maintenance function but rather “enhancing” lot and common property with a completely different product.
In our view, such installations should be governed by a by-law at the cost of the individual owners benefiting and they should bear the ongoing repair and maintenance thereof.
The strata committee seems to be abusing their powers and not acting in the best interests of the Owners Corporation (but rather themselves!). In relation to the costings, however, as you are not a large scheme there is no requirement to have a minimum number of quotes. Costing, on the other hand, must be disclosed.
You should be blocking the strata committee from considering the above motions and ensure you garner more than a third of the aggregate unit entitlements to ensure any decisions made in light of the signed objections have no legal force or effect. We can point you in the direction of strata lawyers to assist in this regard.
If they still persist, it seems you might have rights to have a compulsorily appointed manager take over the scheme (so that there is no strata committee or general meetings for one year).
This post appears in Strata News #200.
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
Have a question or something to add to the article? Leave a comment below.
- NSW: How To Remove a Disruptive Lot Owner from the Committee
- NSW: Q&A Procedure for filling a strata executive committee vacancy
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