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The EC chairman has sought legal advice on behalf of the committee, without discussing it first or getting agreement. The amount is not exorbitant, and falls within delegated approval system for complex maintenance (ie under 1000). However, the feeling is legal advice falls outside this. Your thoughts? What options do a) EC members have and b) non members.
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I would say it depends on whether the Chairman has this approval limit or the committee. If the chairman has the authority I would say it’s legal, if the EC has the authority it’s illegal as he dosn’t have permission of the EC who would be required to vote the issue before proceeding.
The EC chairman has sought legal advice on behalf of the committee, without discussing it first or getting agreement. The amount is not exorbitant, and falls within delegated approval system for complex maintenance (ie under 1000). However, the feeling is legal advice falls outside this. Your thoughts? What options do a) EC members have and b) non members.
I would think EC members could ‘have a quiet word’ with the chair to indicate they are not happy with spending that was not discussed by the EC. There will always be some matters minor enough that EC members could just get on with it (EG. buying some replacement globes for path lights is not something we bother to pass resolutions about (there is an amount for lighting in the budget). Several EC members keep a small stock, replace globes, and send in a receipt for reimbursement). At some point EC members, including the chair, should exercise judgement about when matters are significant enough that they should be formalised by an EC resolution or, more formal still, a resolution of a general meeting. In between might be some things where an email would suffice (EG. “Dear EC, does anyone have a problem with me spending about $XXX from the maintenance budget on some paint and a bit of timber to fix up the YYY?”).
In the ACT at least, up to a point specified in the Act, the EC can spend money on legal advice or even legal action so I expect you would have something similar.
Sometimes an EC might need to spend money on something because it would be irresponsible not to do so, even if not clearly identified in a budget.
It sounds like perhaps this was a borderline matter and the chair could be pulled up on it informally by the EC.
We have an EC where 2 members want to comply with CTTT orders to maintain common property and install windows agreed at a 2010 AGM and the other 3 from a part of the building where they are not affected want to spend money on lawyers to fight this. Madness – we will be spending owners money on lawyers only to find out that ultimately we will have to replace the windows as ordered by the CTTT. Over one third of the owners have written in to complain but still they continue!!!
I don’t think EC members should spend any money on legal advice without calling a general meeting but I think it can be done if they do it legally such as a vote at an EC meeting. Newlsie
At least in Victoria a Committee can decide on getting legal ADVICE (by majority vote). But a Committee cannot decide on taking legal ACTION – that needs a Special Resolution of the OC. Individual members on the Committee cannot decide anything.
Wow, does anyone know if that is the case in NSW. Can an EC take legal action without asking the owners?
@newlsie said:
Wow, does anyone know if that is the case in NSW. Can an EC take legal action without asking the owners?Generally speaking, no, except as allowed by the Regulations which state that you don’t need general meeting approval for legal costs that are less than $1000 multiplied by the number of units, or $12,500, whichever is the lesser.
This allows ECs, for instance, to take legal action against levies defaulters. But some cases are so complicated that lawyers have complained that they can’t even prepare a comprehensive quote for consideration at a general meeting because the costs are so restrictive.
These restrictions were brought in at the behest of developers who were annoyed at ECs (over which they had no control) launching legal action over defects.
This is what the Act says.
80D Legal action to be approved by general meeting
(1) An owners corporation or executive committee of an owners corporation must not seek legal advice or the provision of any other legal services, or initiate legal action, for which any payment may be required unless a resolution is passed at a general meeting of the owners corporation approving the seeking of the advice or services or the taking of that action.
(2) The regulations may make provision for or with respect to exempting any type of legal service or legal action from the operation of this section.
The current regulations referred to in paragraph 2 allow for small scale legal actions, as described above.
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@newlsie said:
We have an EC where 2 members want to comply with CTTT orders to maintain common property and install windows agreed at a 2010 AGM and the other 3 from a part of the building where they are not affected want to spend money on lawyers to fight this…Over one third of the owners have written in to complain but still they continue!!!In the ACT, a petition by 25% of owners can force a general meeting to be called. Assuming it is similar in NSW, it seems you have the numbers to call a general meeting at which a resolution could be put that the OC recognises its obligation to comply with tribunal orders and directs the EC to get on with it. The EC will be obliged to act on the resolution. That also might protect the OC as a whole for any legal consequences of not following the tribunal orders since it would be clear that the OC was trying to comply.