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[The Hood]

The disenfranchisement of non-financial owners under the Strata Schemes Management Act 2015 (NSW) operates as a blanket prohibition, removing voting rights entirely regardless of the nature of the matter before the meeting. It is submitted that this approach is both disproportionate and internally inconsistent with the Act’s own stated principles.
Section 9 of the Act vests in the owners corporation the principal responsibility for the management of the strata scheme. That responsibility is not merely administrative — it is the cornerstone of the owners corporation’s character as a governance body. Critically, membership of the owners corporation is not voluntary. It attaches automatically and without condition to the ownership of a lot. Every owner is, by operation of law, a constituent member of the body charged with that principal responsibility, and no owner may resign from or avoid that membership while they retain their lot.
The mechanism of disenfranchisement is found in Schedule 1, clause 23(8) of the Act, which provides that a vote at a general meeting by an owner of a lot does not count if the owner was an unfinancial owner at the date notice of the meeting was given and did not pay the amounts owing before the meeting. The provision carves out only votes on motions requiring a unanimous resolution. In all other respects, the disqualification is absolute and undifferentiated: it applies equally to votes of a financial character and to votes entirely unrelated to financial matters, without regard to the quantum of the arrears, the duration of the default, or the circumstances in which the default arose.
It follows that a tension of considerable significance arises when an owner is simultaneously held to the full incidents of that compelled membership — liability for levies, obligations under by-laws, and the legal consequences of collective decisions — yet is denied any participation in the governance of the body to which they are irrevocably bound. That is not accountability. It is, in substance, representation without participation, imposed upon a person who has no capacity to leave the arrangement to which they are subject.
Section 139 of the Act expressly prohibits by-laws that are harsh, unconscionable or oppressive. That prohibition reflects a legislative recognition that the exercise of collective power within a strata scheme must be tempered by basic standards of fairness toward individual owners. It is difficult to reconcile that recognition with the operation of Schedule 1, clause 23(8), which visits upon an owner in arrears the consequence of complete civic disenfranchisement, irrespective of the subject matter of the vote, the degree of the arrears, the duration of the default, or the circumstances giving rise to it. That the Act forbids such conduct in subordinate instruments while giving statutory effect to an analogous consequence in its principal provisions is an inconsistency that invites scrutiny.
Where an owner is in arrears, a logical case exists for restricting their participation in financial decisions specifically. Voting on budget approvals, special levies, or the expenditure of collective funds engages a direct conflict of interest for an owner who has not met their own financial obligations to the scheme. That conflict justifies a targeted restriction. It does not justify the operation of Sch 1 clause 23(8) as a wholesale removal of an owner’s voice on matters bearing no financial character whatsoever.
A restriction proportionate to its purpose would confine the operation of Sch 1 clause 23(8) — or any reformulation of it — to votes of a financial nature, preserving the owner’s participation in governance matters where no conflict of interest arises. Such an approach would achieve the scheme’s legitimate objectives while remaining consonant with the Act’s own architecture, honoring both the principal responsibility vested in the owners corporation as a whole, and the basic standard of fairness the Act elsewhere demands.

The Minister, Chanthivong, thinks otherwise.
He is more attuned to the pseudo-plutocracy nature of disenfranchising; Rule by the Richest.

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[pukoh]

or one can just pay what is required, and then it wouldn’t be an issues.

Or don’t live in a strata plan.

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[Quirky]

This is not settled law. The strata lawyer Amanda Farmer has a view that if an unfinancial owner enters into a “payment plan”, which is specified in the Act that has been recently amended to make it more reasonable for owners to take up, then they are able to vote in general meetings. That would probably require the payment plan to have been approved, and the owner actually to be following it, so you can’t turn up at a general meeting being unfinancial and having applied for a plan the day before, and hope to vote. This interpretation is controversial, but has a reasonable chance of being accepted, since the government is trying to get unfinancial owners to make payment plans, and the advantage of being able to vote and participate in strata, by making and following payment plans would be in agreement with the government’s aims, from these reforms.

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