Question: To compensate for money I’ve spent on repairing common property, I’m withholding levies payments. Is this the right course of action?
After repeated requests from the Strata Manager, some of the long standing activities of strata are not completed so we’ve withheld the quarterly levies.
Over the last few years, special levies were collected for rectification works and these have not been completed. In addition, there have been issues with the internal exhaust fans that were not completed by the strata manager and I replaced them on my own account.
Since some of the amounts are the Owners corporation’s responsibility and there has been no satisfactory outcome, I have held back Levies due for the past year and I intend to continue holding back any quarterly levies until the amount owed equals the costs that I have incurred in fixing some of the defects/remedial activities that I deem to be necessary in my unit complex.
Can the Owners Corporation adjust my levy against the costs that I have incurred whether there is an approval or not?
Answer: If you do not pay your levies, then you will be an unfinancial owner with the consequences that you cannot vote at general meetings and you cannot be a member of the strata committee.
Under the Strata Schemes Management Act 2015 (SSMA) there is no legal basis for a lot owner to refuse to pay a levy or for an owners corporation to reduce the levy one lot owner pays. This is the case even if the owners corporation is refusing to comply with its legal duties or is being mismanaged. In those cases, the appropriate thing for the lot owner to do is apply for mediation at Fair Trading and then for orders at NCAT to rectify the situation.
If you do not pay your levies, then you will be an unfinancial owner with the consequences that you cannot vote at general meetings and you cannot be a member of the strata committee.
You are not entitled to be re-imbursed (for example by a reduction in your levies) for the money you have spent repairing common property. The NSW Supreme Court in the case of The Owners – Strata Plan 32735 v Heather Lesley-Swan [2012] NSWSC 383 has made it clear that where a lot owner spends their own money to fix common property because the owners corporation has failed to do so, the lot owner is not entitled to be re-imbursed the cost by the owners corporation unless there is a prior agreement between the two to permit the re-imbursement. The reasons the Supreme Court gave that one person is, generally speaking, not permitted to do work on another person’s property without the latter’s permission, and an owners corporation must be able to engage and control the contractors that work on common property so that the owners corporation can enforce warranties against contractors for defective works. An owners corporation cannot enforce warranties in a contract between a lot owner and a contractor.
If the owners corporation has budgeted for quarterly levies and raises those quarterly levies and any special levy, but it is not spending the money raised at all or the money is not required (which may be the case if a lot owner has paid to repair common property because the owners corporation has not) then there may be some scope for a lot owner to apply to NCAT for an order reducing the size of the levies under section 87 of the SSMA. Under section 87, NCAT may change the amount of a levy or its manner of payment if NCAT considers that the amount of a levy is inadequate or excessive or that the manner of its payment is unreasonable. An applicant for such an order must first apply for mediation at Fair Trading.
This post appears in the August 2021 edition of The NSW Strata Magazine.
Carlo Fini Lawyer (NSW)