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We live in a small 70’s inner west strata apartment block with 9 apartments. The block has not been well maintained and now considerable work has to be done to bring the building up to scratch. Over the past 2 years the SC has been following with OC support the development of a body of works to achieve agreed objectives. The capital works component of the current strata fees would not allow completion of that work in under 7 years.
The disruption to strata life would of course be considerable over this time period while the work is being undertaken. Because of this it was proposed to raise a special levy so that the bulk of the work could be completed in a reasonably short time. The rest could then be finished as money becomes available from the usual strata fees.
At our recent AGM which had to be conducted by teleconference due to the current climate, 6 of the 9 apartments participated. 4 were present plus 2 proxies. The special levy was proposed and voted on. 5 residents agreed to the special levy and one of the proxies abstained because they are in the process of completing the sale of their apartment. So 5 of 9 strata owners agreed to a special levy.
Following the meeting a report was emailed to all owners. The 3 strata owners who didn’t participate in the AGM have strongly indicated their objection to a special levy being raised.
AGM papers were sent to all owners in advance as required. The papers included a comprehensive strata committee report explaining the history of the works development and financing options with reasons for and against.
Question: What is the likelihood, given the above, of NCAT overturning the outcomes of the AGM should the matter reach this point?
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My understanding is that special levies do not require a special resolution, meaning that a simple majority can pass them. Unless there is a serious imbalance in the Unit Entitlements, 5-3 is a majority in this case.
Given that the correct procedures have been followed, and assuming the levies aren’t for some frivolous reason, I wouldn’t think your minority group had much chance at NCAT.
Even if there had been some technical issue (like not sending out agendas) the Tribunal probably wouldn’t change the ruling because the missing three votes would not have made a difference to the outcome.
But then NCAT is a strange beast that sometimes makes odd rulings, so who knows?
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If the shoe was in the other foot and there was a majority vote against the special levy could NCAT overturn this to allow the owners Corp to function properly and fulfill their obligations?
If the shoe was in the other foot and there was a majority vote against the special levy could NCAT overturn this to allow the owners Corp to function properly and fulfill their obligations?
There are provisions under section 232(2) of the Act for owners to seek orders requiring the strata scheme (in effect, the other owners) to fulfil its statutory duties and these could include repairing and maintaining common property.
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Based on my experience at the ACT Tribunal, I would not be surprised if the Tribunal had a preliminary conference at which it attempted to help the parties reach an agreement, which could then be given as ‘consent orders’. Otherwise, if the dissenters insisted on a hearing, I think the Tribunal might allow that but would be reluctant to overturn a decision that was validly made, was reasonable and supported by a majority.
Essentially the Tribunal would overturn a decision and substitute its own decision only if it were convinced that it was unreasonable for the resolution to have passed. On the face of it, it sounds like a well-reasoned decision was made (i.e. not unreasonable) to prioritise works, raise a special levy for the most urgent and to have a plan for funding and completion of the less urgent over several years. Even if some would have preferred a different schedule for the works, it does not sound like the resolution was ‘unreasonable’ so the Tribunal would not overturn it.
Taking into account that you can never be sure that NCAT will be sensible, I think it is highly unlikely that a Tribunal would set aside the special levy.
– the owners who object would have to have grounds for the objection – what are they? For example, is there a legal issue, were the owners’ rights overriden etc.
– the special levy is to enable the OC to fulfil its obligations under the Act to repair and maintain common property
– the Committee has undertaken a comprehensive process which formed the basis of the decision at the general meeting
– a majority of the owners has approved the special levy.
There would have to be a compelling reason to overturn a decision like this. Note that an individual owner’s circumstances such as their financial position is not a compelling reason.