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Topic
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Our Owners Corporation was successful at the Tribunal in proceedings against lot owners who had made alterations to their lots without approval.
Our strata manager had advised that a special levy will have to raised to cover his costs of representing the owners corporation at the Tribunal.
The admin fund presently has adequate funds to cover the amount and all other known commitments.
Can you advise if the Strata Manager is correct?
Your prompt responds would be appreciated as a notice of AGM is under preparation
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Section 90 specifies that when costs are awarded by the Tribunal in a case where the individual lot owners had won, they should be raised by a special levy which excludes the winning owners.
So, did the Tribunal award costs and were they awarded against the owners corp? It doesn’t sound like that, according to your post. I would ask the strata manager on what basis you are being asked to raise a special levy.
Did they, perhaps, forget to ask for costs to be awarded against the miscreant owners and are now covering their backsides? All in all it seems strange and I wouldn’t be raising a special levy until they explain.
I have heard of cases where the winning parties in a dispute forgot to ask for costs and all costs were awarded against them and not the losing party.
If this is the case here, where a special levy is being raised to exclude payments by the losing parties, your strata manager has a bit of explaining to do and I would want to know why they expect to be paid for their work if they stuffed up.
90 Contributions for legal costs awarded in proceedings between owners and owners corporation(1) This section applies to proceedings brought by one or more owners of lots against an owners corporation or by an owners corporation against one or more owners of lots (including one or more owners joined in third party proceedings).
(2) The court may order in the proceedings that any money (including costs) payable by an owners corporation under an order made in the proceedings must be paid from contributions levied only in relation to the lots and in the proportions that are specified in the order.
(3) The owners corporation must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of the contributions paid in accordance with that levy.
(4) This Division (other than provisions relating to the amount of contributions) applies to and in respect of contributions levied under this section in the same way as it applies to other contributions levied under this Division.
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Unless there is something I am unaware of in NSW legislation specifying a separate resolution for funding legal action, I can’t see why the up-coming AGM could not include a proposed Admin Fund budget for the coming year (as it always would) that includes a line for legal expenses with a sufficient amount to pay the managing agent for their services representing the OC at the Tribunal. If anyone objects, you can explain that the OC is obliged to pay since it has already received those services (and won). The lot owners who lost might vote against the motion but I assume they are a small minority so it would not matter.
Not sure if they would be defined as legal expenses.
Costs can include legitimate charges for professional advice – but not for your time spent away from work, for instance. It doesn’t have to be legal advice. The strata manager is entitled to charge for their time but if they were planning to do so they should have advised you to apply for costs at the tribunal
You need the strata manager to tell you, preferably in writing or via an email, why a special levy is required when the there are sufficient funds in the kitty. Sounds to me like somebody screwed up and there’s some backside covering afoot.
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Our strata management agreement with one of the larger companies has a table of fees they charge for various extra services, which includes representation at the Tribunal. The manager should have reminded the committee that this would be an additional service and the committee should have asked for an estimate of the cost. Either or both might have occurred. I don’t know why that can’t now be paid for out of the admin fund. With an AGM imminent, the cost can be explicit in the budget approved by the meeting. A special levy seems unnecessary since a levy will be raised anyway for all the usual expenses of the coming year.
Here’s another thought – Section 90 of the strata Act establishes the potential for the tribunal to order that the owners corporation in a dispute with lot owners should pay their costs, and that the other side – individual lot owners – be excluded from the payment, for whatever reason.
In that case the strata scheme is ordered to raise a special levy to cover the costs, as paying from strata funds would effectively mean the individual lot owners in the case were contributing to the costs.
So perhaps the Tribunal decided that although the Owners Corp won the argument in terms of the law, the way they conducted the case wasn’t quite right.
Thus one party could win the legal fight but still have the costs are awarded against them and only them. Generally speaking, NCAT likes both sides in a dispute to pay their own costs. But it will award costs in “exceptional” circumstances, such as those listed here (from its own factsheet).
6. Section 60(3) of the Act explains the types of special circumstances in which the Tribunal can
decide that someone else should pay another party’s costs. They are:a) A party has conducted their case in a way that unnecessarily disadvantages another party
b) A party has been responsible for unreasonably making the case take longer
c) The relative strength of a party’s case or whether the case was hopeless
d) The nature and complexity of the case
e) A party’s case was frivolous, vexatious or misconceived
f) A party has not cooperated with the Tribunal in providing a just, quick and cheap resolution of the real issues in dispute
g) A party has not followed Tribunal orders or directions
h) Any other matter the Tribunal thinks is relevant.7. Rule 38 allows the Tribunal to make an order for costs where:
a) The claim is more than $10,000 but no more than $30,000 and an order is made under clause 10 of Schedule 4 of the Act because a party has conducted the proceedings in a way that unreasonably disadvantaged another party in the proceedings;
b) The claim is more than $30,000.More than half of the conditions listed above could result in the “winning” side having costs awarded in a way that excluded the “losing” owners.
Either way – or for a different reason entirely – you’re entitled to a “please explain” to your strata manager.
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I’d love to hear from the OP what the outcome from all this was. Was there a simple explanation that we missed?
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