Question: Can an owner apply to VCAT to revoke a house rule if it conflicts with model rules?
At our recent AGM, I objected to a resolution for new house rules that passed the previous year. I believe the house rules contain mistakes and some conflict with the model rules. I tabled a document explaining my concerns.
One issue involves a colour scheme change to the building facade. The committee chose the new colour scheme without consulting owners. My understanding is that a facade colour scheme change requires a special resolution, but it was treated as a house rule and passed as an ordinary resolution.
I asked the strata manager to include my objection on the AGM agenda, but they initially refused. At the meeting, they also refused to allow discussion. As we seem to be unable to resolve this at committee level, can I apply to VCAT to revoke the house rule resolution?
Answer: ‘House Rules’ are not rules, at all.
‘House rules’ are an interesting one. They’re interesting because legally, they have no effect. There are the Model Rules, which every OC has in place, or where one of the Model Rules will apply if there is no Registered Rule to cover it. And then, of course, there are the just-mentioned Registered Rules. Adding, amending or removing a Registered Rule requires a Special Resolution – either the 75% threshold of all owners voting in favour, or the 50% threshold with no more than 25% against, without 25% challenging it for 28 days after it is passed, and no longer being interim as of day 29.
You noted that there was not a Special Resolution passed – which to be clear re: the thresholds above, requires a majority of ALL owners, not a majority of ATTENDING-owners. Registered Rules are usually either added at inception by the developer (which is a 100% vote right there), or by a ballot rather than a meeting (a ballot being easier to achieve a voting majority of owners).
Ideally, an owners corporation will seek and engage a qualified and experienced strata lawyer to draft any Registered Rules it wishes to add. This recommendation is due to the fragility of Registered Rules at VCAT. If the tribunal finds that a rule under challenge doesn’t have the correct wording, clarity, or strays into a space where the OC has no authority – e.g. in Victoria, an OC can make conditions insofar as affecting the common property, but cannot ban pets within private lots – then it will declare the Registered Rule to be void and invalid. Hence the recommendation to have a professional strata lawyer assist.
In the context at hand and based on your description, the set of ‘House Rules’ that was passed is not in fact a rule at all. At best, I’d venture it was a resolution. If it’s conflict with existing Registered Rules, or the Model Rules, then the resolution is likely not valid.
Similarly, a change in the colour of the facade would require a Special Resolution under section 52 of the Owners Corporation Act 2006:
52. Significant alteration to common property requires special resolution
An owners corporation must not make a significant alteration to the use or appearance of the common property unless—
- the alteration is—
S. 52(a)(i) amended by No. 2/2008 s. 12(2).
- first approved by a special resolution of the owners corporation; or
- permitted by the maintenance plan; or
- agreed to under section 53; or
There is a workaround of sorts if the changes are incorporated by ordinary resolution into an approved Maintenance Plan, but again, that doesn’t appear to be the case here.
Summarising your options – yes, I would think your case at VCAT is a reasonably good one based on no Special Resolution being obtained for the significant change to appearance, and potentially on how the ‘House Rules’ are attempting to be used by the owners corporations and manager.
This post appears in Strata News #784.
Alex McCormick
SOCM
alex@socm.com.au
P: 03 9495 0005
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