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[phill74]

Hi, I am hopeful someone can help with a current issue I am having with my strata manager.

By way of background we have a small strata complex (6 units, being 2 commercial and 4 residential). The building did not have a strata manager prior to the current owners purchasing the units in late 2008 / 2009, and unfortunately the owners appointed the cheapest local agent. They were useless, never doing the work they were meant to, paying some owners they were “in” with to do cleaning (which never happened or done very poorly) and do electrical work (not licenced electricians). After a long running battle we finally terminated them in June 2013.

However they refused to hand over the strata records, and no new strata manager was willing to take it on. We applied to NCAT for a compulsory strata manager to be appointed, and after an initial rejection, I finally convinced NCAT to make the appointment, and a New SM was appointed around June 2016.

I should point out that the last AGM was held (late) in 2012, which approved strata levies for the 2012/13 financial year. No AGM’s have been held since, even subsequent to the New SM’s appointment.

So there are two issues currently, in respect of strata fees being claimed by the New SM:

1. Strata fees prior to 30 June 2013.

I have prepared a schedule of strata fees approved at AGM’s, less the strata fees I paid to the previous manager, and come up with a figure. the New SM have claimed strata fees which total approx. $2,000 more, and seem to be relying on a statement from the previous SM, which is incorrect. I have pointed this out and asked for detailed calculations as to how they arrive at the fees, which they have refused to provide.

I know I can demand to review the strata records, but I don’t live in Australia at present, and don’t know if this will produce any result, as I don’t believe the New SM know how the fees were calculated. The only other thing I can think of is to apply for mediation, or make an application for determination with NCAT, but reading other posts here not sure these would produce a result, and its really hard to organise from the other side of the planet.

2. Strata fees after 30 June 2013.

The strata manager has claimed that fees are outstanding for periods after 30 June 2013, even though no AGM was held to set such levies (a requirement under the law), and they haven’t held an AGM in 3-4 months since their appointment by NCAT.

The Strata Schemes Management Act states:
Division 2 Levy of contributions
75 Estimates to be prepared of contributions to administrative and sinking funds
(1) An owners corporation must, not later than 14 days after the constitution of the owners corporation and at each annual general meeting after that, estimate how much money it will need to credit to its administrative fund for actual and expected expenditure:
(a) to maintain in good condition on a day-to-day basis the common property and any personal property vested in the owners corporation, and
(b) to provide for insurance premiums, and
(c) to meet other recurrent expenses.
(2) An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its sinking fund for actual and expected expenditure:
(a) for painting or repainting any part of the common property which is a building or other structure, and
(b) to acquire personal property, and
(c) to renew or replace personal property, and
(d) to renew or replace fixtures and fittings that are part of the common property, and
(e) to replace or repair the common property, and
(f) to meet other expenses of a capital nature.

76 Owners corporation to set levy for contributions to administrative and sinking funds
(1) The owners corporation must determine the amounts to be levied as a contribution to the administrative fund and the sinking fund to raise the amounts estimated as needing to be credited to those funds.
(2) That determination must be made at the same meeting at which those estimated amounts are determined.

To me the above two sections mean that the strata levies have to be charged to individual owners in accordance with the amounts decided at the AGM. The AGM held in 2012 specified amounts until 30 June 2013 only, and no AGM has been held subsequently. That means that no levies can be raised against owners for subsequent periods, until a further AGM is held. Yet the new SM have issued levies (in arrears) for all quarters since 30 June 2013, in violation of the Act. When this was pointed out to them, they appointed a lawyer, who said raising such levies was fine, but couldn’t advise why it was allegedly ok (which it isn’t), or reconcile their advice to these sections of the Act.

I spoke to the OFT back in January, who verbally confirmed that my position was correct, but when I asked for written advice they merely suggested in respect of the first point above that I could inspect the records, and didn’t respond at all on the second point, other than to say I could commence mediation.

It appears to me that the strata manager is going to continue to ignore my requests for information and calculations in respect of the levies paid pre June 2013, and ignore the correct treatment under the Act for those after June 2013, and is just going to claim interest and do nothing until such time as they commence legal proceedings. Not living in Australia I am very concerned that my side of the story, and the correct treatment in respect of the fees, will not be correctly heard.

Accordingly, if anyone has any advice on how to deal with difficult strata managers, or get the OFT to advise the correct position, so this can be sorted outside of lawyers and litigation, that would be great. Unfortunately with the strata manager being unreasonably difficult this is likely where it will end up.

Sorry of the long post and appreciate any advice that anyone can offer.

*The names of the companies concerned have been removed in accordance with our policies. There are legal avenues for “naming and shaming” -this forum thrives and survives unencumbered by threats of legal action.  

Topic

[Jimmy-T]

@phill74 said:
We applied to NCAT for a compulsory strata manager to be appointed, and after an initial rejection, I finally convinced NCAT to make the appointment, and a New SM was appointed around June 2016.

Depending on the terms of the compulsory appointment, you no longer have any say in the running of the building.  Many of your problems will stem from that fact. this is what Fair Trading says about statutory appointments:

An Adjudicator may appoint a nominated person as a managing agent to carry out:

• all the functions of an owners corporation
• all the functions of the executive committee and/or the Chairperson, Secretary or Treasurer
• only some of those functions

… if an Adjudicator is satisfied the owners corporation is not doing its work satisfactorily, or has failed to comply with an order, failed to perform one or more of its duties or owes a judgement debt, the Adjudicator may appoint a managing agent.

The only other thing I can think of is to apply for mediation, or make an application for determination with NCAT, but reading other posts here not sure these would produce a result, and its really hard to organise from the other side of the planet.

It’s still your only option.  There is no other mechanism for correcting this discrepancy.

To me [quoted strata law means] that the strata levies have to be charged to individual owners in accordance with the amounts decided at the AGM. The AGM held in 2012 specified amounts until 30 June 2013 only, and no AGM has been held subsequently. That means that no levies can be raised against owners for subsequent periods, until a further AGM is held.

Are you sure about this? It seems strange to me that the law would allow a strata scheme to run out of money because of a failure to follow correct meetings procedure. I would say the levies can’t be changed without agreement at an AGM – not that levies cease to be collected.

Nowehere in the law does it say that you shouldn’t pay levies that have not been approved at an AGM. In fact, I would also be guided by section 78 which if nothing else, allows for anomalies including that owners are expected to pay levies even when they haven’t received a notice.

78   Manner of levying contributions

(1)  An owners corporation levies a contribution required to be paid to the administrative fund or sinking fund by an owner of a lot by serving on the owner a written notice of the contribution payable.

(2)  Contributions levied by an owners corporation must be levied in respect of each lot and are payable (subject to this section and section 77) by the owners in shares proportional to the unit entitlements of their respective lots.

(6)  Regular periodic contributions to the administrative fund and sinking fund of an owners corporation are taken to have been duly levied on an owner of a lot even though notice levying the contributions was not served on the owner.

Compulsory appointment

More significantly, when you have a statutorily appointed strata manager, they are effectively the owners corp so any decisions you made as owners would be irrelevant. They can set the levies without reference to the owners.

Compulsory appointment is a double-edged sword. OK, you get rid of one dysfunctional system but the price can be giving up all control over your building. To reverse the statutory appointment, you would have to go back to NCAT and either prove gross mismanagement by the New SM or that you as owners have got yourselves sorted out and are capable of running the show yourselves.

Claiming the new guys are just as bad as the old guys may make an NCAT adjudicator ask “what is the common factor in this?” (that would be you, the owners) and make them less, not more likely to rescind the statutory appointment.

One other thing, the fees for a six-unit block are so low it’s hard for firms to justify spending a lot of time on their management. Charges often go up as a result.

Also, complaints to Fair Trading about strata managers will have little or no effect.

I hate to say this but, given your situation, I would recommend selling your unit and buying somewhere in a bigger block that’s better run so you can forget about it.

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