NSW: Q&A What is an unfinancial lot owner and can they vote?

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This Q&A is about voting, unfinancial lot owners and what this means in NSW owners corporations.

Question: Is an unfinancial lot owner entitled to a valid vote if they pay outstanding levies immediately prior to the AGM? Monies do not arrive in the relevant account for three working days after the AGM.

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We recently held our AGM. One of the lot owners paid their outstanding levies half an hour before the start of the meeting. We were unaware of this at the start of the meeting and the meeting was conducted, votes counted etc. with the understanding that the unfinancial lot owner’s votes were invalid.

The meeting was closed. After this, the unfinancial lot owner states to the strata manager that he had paid and provided evidence of payment. The strata manager then decides to accept this lot owner’s vote and alter the outcome of the closed meeting. Please note that despite payment being made to the strata management company, the monies didn’t arrive into the relevant strata scheme’s account for at least three working days.

Is this lot owner entitled to a valid vote and can the strata manager alter the outcome of a meeting once the meeting is declared closed?

Answer: The lot owner should have confirmed when signing in that they were financial so this could be dealt with transparently at the start of the meeting.

As you would know an unfinancial owner, mortgagee or covenant chargee cannot vote at a meeting on a motion (other than a motion requiring a unanimous resolution) unless payment has been made before the meeting of all contributions levied on the owner, and any other amounts recoverable from the owner, in relation to the lot. This is taken to be payment received as schedule 1, clause 23(8) of the Act requires the payment must be made before the meeting for the lot owner to be financial.

The lot owner should have confirmed when signing in that they were financial so this could be dealt with transparently at the start of the meeting. The lot owner could have provided evidence such as a screenshot of the payment from their mobile emailed or texted to the strata manager, that the funds had been transferred and the strata manager could have checked whether the funds had been received. In this case, as the funds had not been received unit 3 days after the meeting the lot owner was not financial.

To prevent this from happening again I recommend that you requestion under cl13 of Scheduled 1 of the Act that the chairperson declare the names of those persons entitled to vote at the start of each meeting.

An unfinancial lot owner could file an application with NCAT under s25 of the Strata Schemes Management Act 2015 on the basis that they were denied a right to vote and that a particular resolution or all resolutions at the meeting were a nullity and of no effect. However, section 25(2) states:

2. The Tribunal must not make the order unless the Tribunal is satisfied that the resolution would not have been passed but for the fact that the applicant for the order–
   
   1. was improperly denied a vote on the motion for the resolution, or
   2. was not given due notice of the item of business in relation to which the resolution was passed.

Therefore if the lot owner’s vote was not going to change the outcome of the vote then the Tribunal cannot make an order to declare the resolution a nullity. This type of application must be made within 28 days of the meeting.

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Allison Benson
Kerin Benson Lawyers
E: [email protected]
P: 02 4032 7990

This post appears in Strata News #466.

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