This article about seeking an order to appoint an administrator of a strata company in WA has been supplied by Anthony Quahe, Civic Legal. The Q&A has been responded to by Shane White, Strata Title Consult.
Table of Contents:
- QUESTION: I was hoping to have an auditor appointed to determine whether financial impropriety has occurred. Does an Administrator have to be a strata professional?
- ARTICLE: Appointment of an Administrator
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Question: I was hoping to have an auditor appointed to determine whether financial impropriety has occurred. Does an Administrator have to be a strata professional?
Answer: The new changes to the Act have now made it possible to include a strata manager into the mix with the offending group within the strata scheme.
The circumstances surrounding the need for an Administrator to be appointed are many.
It basically boils down to proving some form of “dysfunctionality” within the strata scheme – as examples only:
- it is unable to work through the meeting process provided under the Act or;
- there is a group of marginalised owners who are experiencing poor management of the strata scheme in general or;
- the strata council have gone rogue and creating dysfunctionality through poor decisions or;
- there is a need to carry out urgent repairs and the strata company are unable to raise a budget or borrow funds as the motions get defeated.
The new changes to the Act have now made it possible to include a strata manager into the mix with the offending group within the strata scheme.
It is important to note that such an application to the Tribunal (SAT) would require various items of evidence that support the claims the subject of the application and how the situation is detrimental to the strata scheme in general.
The application to have an Administrator appointed by the SAT now comes under section 205 of the STA.
205. Administrator of strata company
- An order of the Tribunal appointing an administrator of a strata company may specify conditions of appointment of the administrator.
- If the Tribunal makes an order appointing an administrator of a strata company —
- no person other than the administrator may, while the order remains in force, perform a function that the administrator is authorised to perform under the order; and
- any act or thing done or suffered by the administrator in the performance of a function under the order has the same effect as it would have had if the order had not been made and it had been done or suffered by the person or body who, but for the order, would have been entitled or required to perform the function; and
- the Tribunal may, by further order, vary or revoke the appointment.
- An administrator of a strata company appointed by the Tribunal must, after performing a function under the order —
- make a written record specifying the function and the manner of its performance; and
- serve the record on the strata company.
The information provided is not legal advice.
You may need to engage a lawyer for this purpose although you may as an individual prepare your own application to the SAT.
See also:
- [2014]WASAT 15 – Kinsella Street Joondanna Strata Plan 14493
- [2013]WASAT 64 – Mount Bakewell Resort Strata Plan 18228
Shane White Strata Title Consult E: shane.white@stratatitleconsult.com.au
This post appears in Strata News #425.
Appointment of Administrator
Key Points
- Only the SAT can appoint an administrator to a strata company
- An administrator can be appointed to resolve a strata dispute
- It is a last resort
- It may be appropriate where the strata company has become dysfunctional.
Under the Strata Titles Act 1985 (WA) (as amended) (the Act), it is possible for an administrator to be appointed to a strata company by order of the State Administrative Tribunal (SAT).1
The SAT may order the appointment of an administrator, if it considers it appropriate, to resolve a dispute. The order to appoint an administrator may specify the conditions of appointment for the administrator.
Strata Disputes
Disputes between the strata company and other strata participants may arise over a range of issues.
For the purposes of this article, strata participants include:
- occupiers;
- lot owners; and
- lot owners who are members of the strata council.
Any of these parties can apply for an administrator to be appointed.
The most contentious types of strata dispute are those that result in a sense of unfairness or injustice. They can revolve around issues such as:
- interpretations as to what is exclusive to a lot owner and what is common property;
- a perceived abuse of power on the part of one or more members of a council of owners;
- the strata company’s financial management of the strata scheme. E.g. the council continually approves a budget that invariably results in improvements to the northern end of the complex, which is where the dominant council members’ lots are situated.
When is it Appropriate to Seek an Order to Appoint an Administrator?
In the most extreme circumstances, a dispute may be so substantial and contentious that a party, typically one or more lot owners, might consider that the strata company has become dysfunctional.
One example of a dysfunctional situation might be where a series of financial decisions by the council of owners favours a particular member of the council. Further, those decisions might appear to have been made in accordance with the formal processes of an AGM yet still appear to be unfair. This could be because that particular council member controls a majority of the votes.
The situation might even be aggravated by a perception that a particular council member did not act for the benefit of the entire group of lot owners but only for himself or herself. The result could be that one or more lot owners feel disadvantaged and fall into dispute with the person who dominates the council but is unable to change the way that its decisions continually benefit a particular council member or group of lot owners or disadvantage another group of lot owners.
The SAT has the power to make a number of different orders to resolve disputes. The appointment of an administrator is one such order. However, it is seen as an extreme remedy that should only be used as a last resort. After all, it could be said that the concept of strata schemes is that the governing body of the strata scheme makes decisions for itself.
Appointing an administrator may be appropriate where the strata company has become dysfunctional. The symptoms of dysfunction would include its inability to provide the services required by the lot owners as a whole, an inability or unwillingness to make fair or reasonable decisions (that benefit lot owners as a whole) or otherwise make decisions that do not fairly comply with the Act.
The SAT can only appoint an individual as administrator if that person has consented to the appointment in writing. If an administrator is appointed, he or she would have the power to make decisions and take actions as a council of owners would have done. This can include commencing proceedings in the SAT or defending the strata company against proceedings.
As an administrator would charge fees for their services, appointing an administrator would incur additional expense for the strata company. This cost will ultimately be borne by the lot owners. However, the additional cost should be considered as a necessary evil if it rectifies or replaces the improper decisions processes occurring under the previous dominant majority on the council of owners.
Summary
The SAT may order the appointment of an administrator to a strata company where it is appropriate to resolve a strata dispute.
Such an order will only be appropriate in exceptional circumstances. Those exceptional circumstances typically involve a dysfunctional council of owners.
Appointment of an administrator is a last resort as it takes control of the strata company away from its owners. However, it may be that handing control to a professional administrator is preferable to leaving control in the hands of a dysfunctional council.
For more information please contact: Anthony Quahe Managing Principal Civic Legal T: 08 9200 4900 E: aquahe@civiclegal.com.au
Disclaimer: This article contains references to and general summaries of the relevant law and does not constitute legal advice. The law may change and circumstances may differ from reader to reader. Therefore, you should seek legal advice for your specific circumstances. The law referred to in this publication is understood by Civic Legal as of publication date.
This post appears in Strata News #315.
Please note: this response was provided prior to the proclamation of the new strata title amendments.
Footnotes
- 1 Strata Titles Act 1985, s 102.
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A PDF Version of the article can be accessed here.
Embed Read next:- WA: Strata Manager’s Duties under the Strata Titles Act Amendments
- WA Strata Titles Amendment Act 2018: duties of a council member and how to protect yourself from liability
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