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[Paradise]

We have a situation whereby an owner has accumulated the majority of apartments in the building.  He has leveraged his position to be the sole committee member and basically runs the building how he wants. This has lead to little maintenance over the years and lots of complaints to Fair Trading.

He didn’t like this and has now declared that if that’s what we want then the whole building is going to be renovated inside and out by year end. The quotes are goldplated and required levies to pay massive. There is no way anyone can pay. He declared he will bankrupt those owners but “generously offered” to purchase those apartments less the value of those levies. Whatever way we look at it we’re being forced out and financially wiped out.

Can he do this?

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[Jimmy-T]

He’s not the first to try but there are safeguards in place.  My first step would be to apply to NCAT for the compulsory appointment of a strata manager (and make sure you have one ready to step in if the appointment is awarded).

If successful, the strata manager will make all the decisions for the building for at least a year, probably two, during which time you can get all your essential repairs done in a timely manner.

If you are considering this, I suggest you and your other minority owners talk to an experienced strata lawyer first.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

[optusJo]

Wasn’t there a NSW case similar to this where the legal term used was “fraud on the minority”?  Although I suppose in this case it is fraud on the majority?

[Jimmy-T]

Firstly, this is a majority owner acting against the interests of the minority, so if it were a fraud (which it issn’t) in would be a fraud on the moinority.

The case to which you refer was where a majority owner used their superior voting power to award themselves the roof space in the building.

In the case cited here, the majority owner isn’t defrauding or stealing from the minority but they are playing fast and loose with the laws. I would reckon this would be a prime case for the appointment of a compulsory strata manager under section 237:

Circumstances in which order may be made

The Tribunal may make an order only if satisfied that—

(a)  the management of a strata scheme the subject of an application for an order under this Act or an appeal to the Tribunal is not functioning or is not functioning satisfactorily, or

(b)  an owners corporation has failed to comply with a requirement imposed on the owners corporation by an order made under this Act, or

(c)  an owners corporation has failed to perform one or more of its duties, or

(d)  an owners corporation owes a judgment debt.

But first the minority owners would have to ge an order, maybe under Section 232:

232   Orders to settle disputes or rectify complaints

(1) Orders relating to complaints and disputes

The Tribunal may, on application by an interested person, original owner or building manager, make an order to settle a complaint or dispute about any of the following—

(a)  the operation, administration or management of a strata scheme under this Act,

(b)  an agreement authorised or required to be entered into under this Act,

(c)  an agreement appointing a strata managing agent or a building manager,

(d)  an agreement between the owners corporation and an owner, mortgagee or covenant chargee of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme,

(e)  an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme,

(f)  an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.

(2) Failure to exercise a function For the purposes of this section, an owners corporation, strata committee or building management committee is taken not to have exercised a function if—

(a)  it decides not to exercise the function, or

(b)  application is made to it to exercise the function and it fails for 2 months after the making of the application to exercise the function in accordance with the application or to inform the applicant that it has decided not to exercise the function in accordance with the application.

(3) Other proceedings and remedies A person is not entitled—

(a)  to commence other proceedings in connection with the settlement of a dispute or complaint the subject of a current application by the person for an order under this section, or

(b)  to make an application for an order under this section if the person has commenced, and not discontinued, proceedings in connection with the settlement of a dispute or complaint the subject of the application.

Clearly, the first thing they should do is contact an experienced strata lawyer.

The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.

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