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My strata committee decided to stop naming candidates for vacancies after I stood in opposition to the chairman’s preferred choice – just because I wanted to force a vote.
The vote was tied and eventually the other chap gave up, I withdrew and a more acceptable candidate was elected.
The committee then proposed and passed (with proxies) a motion at the next AGM saying nominees for vacancies would not be listed “to save the embarrassment of those who failed to be elected”.
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The following was sent to JimmyT by Peter Byrne, Executive General Manager Business Development and Marketing for the PICA Group.
It is reproduced here unedited and without comment.
Question 1: How was the compliance fee charge calculated?
- The fee was based on expenses incurred – over and above business-as-usual activities, to recover in part the significant and legitimate costs for the implementation of the new legislation requirements, across all relevant schemes, to ensure owners corporation compliance.
- The reason for the charge was a conscious decision to be transparent in isolating the fee for legislation compliance only, rather than build it into future management fee (or other) increases which would’ve meant our customers bearing an ongoing cost.
- As there is a certain amount of work to be done for each owners corporation to be compliant, the total cost (excluding GST) was based on a conservative number of resource hours, and allocated divided into 3 tiers by lot size:
o 2-15 lots: $260 for approx. 1.5 hours
o 16-50 lots: $510 for approx. 2.5 hours
o 51+ lots: $690 for approx. 3.5 hours
Question 2: On what basis was the compliance fee charged?
- The compliance fee is a legal and justifiable charge.
- At times extra services need to be provided in special circumstances. The legislation services provided was over and above what we had to do to satisfy our own requirements to be compliant.
- We believe that the amount we charged was much less than the charges we would have been entitled to charge on an hourly basis, and does not compensate the full amount of time and resources spent to ensure owners corporation compliance.
- Under schedule B and D, we have the right to charge for “additional services” as per the normal course of doing business.
Question 3: Shouldn’t ensuring our customers compliance be part of business as usual activity?
- As strata managing agent it is our responsibility to ensure the owners corporation is compliant.
- We took the proactive stance of preparing for the legislation change two years in advance of it being introduced.
- Only the work that was incurred to ensure our customers are compliant was charged for.
- As mentioned above, under schedule B and D we have the right to charge for “additional services”, as per the normal course of doing business.
- If we calculated the compliance fee in isolation or per scheme, the charge would have been significantly higher i.e. calculated by hour, per scheme. Instead we were able to leverage the size of our business, by gaining efficiencies across resources to benefit both us and our customers.
Question 4: What value do our customers tangibly gain from paying the compliance fee?
- Access to new master documents such as the “Statement of key financial information”.
- Access to updated master documents:
o Terminology changes
o Section number alignment with the Acts
o Inclusion of new items required for certain documents
o The addition of new motions (e.g. declaration of training received and likely to be received, annual fire safety statement, by-law review), etc.
o Agendas, minutes, proxies, company nominees (over 1,000 new and upgraded templates)
o Section reports
o Financial reports
o Agency agreements (section reference, terminology changes and new compliance matters)
o More than 100 other documents that refer to a section of the Act or executive committee (e.g. welcome letters, by-laws, warning letters, etc.), that is new templates which the owners corporation can use, rather than addressing matters as they arise and charging per instance.
- Risk prevention of potential consequences for the owners corporation not complying with the new legislation range from monetary penalties, failure of actions at NCAT, motions being challenged at meetings or being declared invalid or the owners and/or the committee members being found liable.
Question 5: What else did we do (time not charged for) to ensure that the PICA Group is acting responsibly?
- We reviewed the new Act and Regulations in detail which consisted of over 300 pages and took almost 10 months to complete the review.
- We proactively engaged with key industry bodies such as the NSW Department of Fair Trading and Strata Community Australia (SCA) to lobby for beneficial and sensible changes on behalf of our customers.
- A team of in-house strata specialists were appointed to assess the impact of the new legislation. The outcome was a detailed reference document which our strata managers can access should they face a situation that requires reference to the new laws.
- 23 easy to reference fact sheets were created.
- External senior legal advisors were appointed to ensure the appropriate meeting and operational documentation was in place for full compliance.
- Approximately 13,000 hours was spent on developing new processes and software solutions to meet the new requirements of this legislation.
- Extensive training was provided to staff, owners and agents to ensure we offer the necessary guidance on how to navigate through these changes.
- A project manager was allocated to ensure the smooth roll-out of changes impacting all stakeholders.
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@Fey Knows said:
An Office of Fair Trading summary of what the NSW Act says is “The position can be filled by having a member of the owners corporation fill the vacancy in an ‘acting capacity’. This is generally the easiest solution as it can be done by passing a motion by the executive committee.”This is the least acceptable way of doing this. The committee would have to agree to the acting member joining the committee at every meeting and to do that would have to achieve a quorum, based on at least half of the number of members agreed at the AGM. Only they would be trying to achieve a quorum while one member down
It’s better for the committee to canvas for new members and then elect a replacement to serve as a permanent member until the next AGM
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@Stratademocrats said:
The Strata Manager … responded: “I don’t understand what the issue is here? There were 4 members present in person and 2 members gave proxies. That’s 6/9 present. As long as the proxies were provided before the meeting the timing is irrelevant, and if the meeting was invalid we wouldn’t have allowed it to occur.”Can you tell us where in the SMA or regulations it states that proxies are not valid?
This is quite complicated and there’s a bit of chicken and egg about it all but I have posted relevant extracts below which I will try to unpack now.
It’s not that proxy votes are specifically banned for strata committee meetings, it’s that there is no provision in the Act or Regs for proxy votes at committee meetings. There can be alternative voting arrangements, and “Acting Members”. But not proxies, per se.
The critical issue is that the committee has to agree to accept Acting Members (who can include existing members voting on absent members’ behalf) but they have to first be agreed by the committee which has to be quorate to do so. The proposed Acting Members are not counted towards the quorum.
To be quorate there must be at least half the members present. Absent members can be considered “present” if they have stated in writing that they intend to vote by means that have already been agreed at a general meeting as being permissible. This would include by Skype, phone or electronically. NB: These alternative means of voting would have to have already been accepted at a general meeting.
My understanding is that written votes can’t be considered towards the quorum unless a vote in writing has been accepted at a general meeting as a form of attendance under Section 4 (1).
So I would put that right back at the strata manager and ask them to show you the section of the Act or regulations that allows proxy votes to be considered as counting towards the quorum.
Schedule 2: 12 Quorum
(1) Quorum required for motion
A motion submitted at a meeting of a strata committee must not be considered unless there is a quorum present to consider and vote on the motion.
(2) When quorum exists
A quorum is present at a meeting only in the following circumstances:
(a) in the case of a strata committee which has only one member, if the member is present,
(b) in any other case, if not less than one-half of the persons entitled to vote on the motion are present.
(3) A person who has voted, or intends to vote, on a motion or at an election at a meeting by a permitted means other than a vote in person is taken to be present for the purposes of determining whether there is a quorum.
Section 4 (1)
person present at a meeting includes a person who is not personally present but is able to vote at the meeting by another means specified under clause 28 of Schedule 1 or clause 10 of Schedule 2.
Schedule 2: 10 Manner of voting
(1) A vote at a meeting by a person entitled to vote must be cast in person unless the strata committee, by resolution, determines that a vote may be cast by some other specified means.
Note. A person may be present at a meeting even if not actually at the meeting (see section 4 (1), definition of person present).
Schedule 1: 28 Manner of voting
(1) A vote at a meeting by a person entitled to vote or by a proxy must be cast in person unless the owners corporation, by resolution passed at a general meeting, determines that a vote may be cast by some other specified means.
34 Acting members of strata committee
(1) A member of a strata committee may, with the consent of the strata committee, appoint an owner or company nominee of a corporation that is an owner who is eligible to be a member to act in his or her place as a member at any meeting of the strata committee.
(2) The owner or company nominee appointed is, while so acting as a member, taken to be a member.
(3) An owner or company nominee of a corporation may be appointed whether or not he or she is already a member of the strata committee.
(4) If a person so appointed is a member of the strata committee, the person may, at any meeting of the strata committee, separately vote in the person’s capacity as such a member and on behalf of the member in whose place the person has been appointed to act.If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. 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. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.
The meeting should never have gone ahead.
Proxy votes may not be used at strata committee meetings. Other non-members can represent absent members, but only after the committee has agreed to this and to be able to agree, they have to have a quorum in the first place.
This is what the Act says:
A motion submitted at a meeting of a strata committee must not be considered unless there is a quorum present to consider and vote on the motion.
So all the decisions made at that meeting should be rescinded immediately or mediation requested prior to orders being sought at NCAT.
If the chair and secretary refuse to rescind the decisions and hold another meeting, they should be informed in writing that if they continue to seek legal advice without proper authority, they will be personally liable for the legal bills that are accrued.
Normally the secretary or chair would communicate with lawyers but it can be anyone the strata committee or owners corp appoints in general meeting, provided that person agrees.
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BONNIE L said
So does anyone know if a phone call, a note in the mailbox or an approach outside the building are in breach of privacy? Or a doorknock? Or friendly note under door, any of that ok?
I don’t know how many times I have written this but there is no statutory absolute right to privacy under Australian law. Anybody who tells you that sending an email or making a phone call or even photographing someone in their own home is a breach of privacy doesn’t know what they are talking about (and probably has something they are trying to hide).
Now, that’s not to say that no one is entitled to privacy but the above scenarios are covered by other laws such as trespass or misuse of a “carriage service” – that’s if any offence has even been committed in the first place.
There are different rules for companies and corporations, but if, for instance, calling someone on their phone number was an invasion of privacy with legal ramifications, cold calls from call centres would stop overnight.
On the other hand, members of a corporation have the right to communicate with other members, provided they do so in a way that is not itself illegal. We can even criticise each other – provided it’s done in good faith and there is no malicious intent.
So forget privacy. It’s not an issue.
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The “informal” approach is entirely understandable given the previous situation but there are legal obligations for you to have an AGM.
At the very least, the new strata laws require you to review your by-laws before November 30.
Also, Section 18 of the Act also requires you to hold an AGM withing the financial year. Since the building hasn’t had one in the past 12 months, then you should have one before June 30.
Obviously, there’s no need to get too formal or bureaucratic about all this – but it’s important for the resale value of your (and their) property that things are seen to be done properly and there is a record of meetings and decisions like insurances, for instance.
One thing to be wary of in self-managed schemes is the “let’s just divide the bills equally” scenario. Your liabilities, such as levies, are based on your unit entitlements and you should not waver from that.
Download a copy of the Act here and look at Schedule 1, Part 2 for all the things that need to be on the agenda of your AGM. But don’t get all “bush-lawyer” about this. It’s better to be on good terms with the majority owner than be pedantically correct on every detail.
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I don’t know the exact wording but the thrust of the letter is that it’s because of their need to adjust to the new laws.
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From asking around it seems that mostly, if not only strata managers who are part of the PICA group are doing this. Strata Choice, for instance, say adjusting to new laws is just part of their job and they are not charging schemes for that.
The charges seem to vary and I suspect they are related to the number of units in the scheme. If anyone has any figures – number of units v charges imposed, let’s have ’em. Post them here or email them to mail@flatchat.com.au – either is good.
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@dance2303 said:
Thank you Jimmy, really appreciate the response.We have our AGM coming up shortly and we are being told that only one owner (from each lot that has two co-owners) can be on the committee at the one time.
Sorry, my mistake. I was so hung up on the nominations that I missed the obvious.
Two co-owners of the same property can’t be on the committee unless they also own another lot in the scheme.
So the advice you were given is correct. This is what the Act says:
Only one co-owner (including a company nominee of a co-owner) of the same lot may be a member of a strata committee at the same time …
My apologies for giving you false hope.
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It’s all about who nominated whom. Both members of the couple would have to have been nominated by a third party.
A co-owner can’t nominate themselves – they have to be nominated by the other co-owner or another owner, provided neither they nor the third-party nominee is standing for election.
So who nominated the first co-owner? If the nomination was invalid (and they are supposed to be done in writing) the wrongly nominated person should step down.
I have to add, however, that they could then be co-opted back on to the committee, by a majority vote of the remaining committee members, to fill the vacancy created by their resignation.
The question then becomes, how much trouble do you want to cause, bearing in mind that any decisions made by the committee are still valid until the discrepancy is reported?
This is who the Act says can be elected:
… an individual who is a co-owner of a lot … if the person is
nominated for election by an owner who is not a co-owner of the lot or by a co-owner of the lot who is not a candidate for election as a member.If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. 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. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.
It’s hard to offer different advice from what you’ve been given. And it’s hard to know what you expect anyone else to do.
The statutorily appointed strata manager would almost certainly immediately order the work to be done to fix this and, even if you just go for penalties, that might galvanise the committee into doing something.
Personally, I would do both and I would also tell the members of the committee who decided to do nothing and to ignore an NCAT order that I was seeking damages from them personally because in so doing, they were no longer acting in good faith and therefore their immunity from legal action for personal liability, as provided by Section 260, has been voided.
260 Personal liability
(1) A matter or thing done or omitted to be done by any of the following persons, or a person acting under the direction of any of those persons, does not, if the matter or thing was done or omitted to be done in good faith for the purpose of executing functions as such a person under this or any other Act, subject any of the following persons or person so acting personally to any action, liability, claim or demand:
(a) an officer of an owners corporation,
(b) a member of a strata committee.
(2) Any such liability of an officer of an owners corporation or a member of a strata committee attaches instead to the owners corporation.If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. 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. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.
Until the first AGM, the developer is the Owners Corporation. The owners Corporation can only charge for services relative to Unit Entitlements. There is no capacity that I know of for “sharing” of expenses by any other means. If the developer want to alter the conditions under which owners are charged for services, then he has to get a ruling from NCAT. If he doesn’t want to carry the burden of the rest of the costs he needs to sell the other units.
It occurs to me that they must be very close to having sold units adding up to one-third of the unit entitlements. As soon as that point is passed they have two months in which to hold the first AGM. The developer will have his vote reduced to one-third and everybody else can get on with running the building properly.
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@SnOwl said:
I have heard that with the installation of these new locks an OC is required to have a certificate retained on file (issued by the locksmith installing the locks) that the lock is compliant to the 125mm opening and has been pressure tested.Does anyone know if this is a requirement (especially in relation to the pressure testing) in order to comply with the legislation and perhaps for insurance purposes or is it a nice to have?
There is no requirement under the law fro you to have the locks “pressure tested” just that they are “capable of resisting an outward horizontal action of 250 newtons”.
What’s the difference? If you have standard windows that comply already and you add locks that the manufacturer says are compliant, then you would be fine.
But if someone, say, fitted a lock to a flyscreen, that would cut no mustard.
The Act requires you to have window locks that comply with the regulations. The regulations do not require you to have certification but they do require locks to be compliant.
However, how are you supposed to know if they comply?
The easiest answer is you get a competent and qualified tradie to do it and provide you with certification to show that it has been done. It may well be that your insurers will have their own criteria since they are the ones who will have to pay out if something goes horribly wrong because of a failure by the Owners Corp to do this properly.
118 Window safety devices—child safety
(1) An owners corporation for a strata scheme to which this section applies must ensure that there are complying window safety devices for all windows of each building in the strata scheme that are windows to which this section applies.
Maximum penalty: 5 penalty units.
(2) An owners corporation is to carry out work related to its functions under this section at its own expense and may, for the purposes of this section, carry out work on any part of the parcel.
(3) An owner of a lot in a strata scheme to which this section applies may install a complying window safety device on a window to which this section applies (other than a window on another owner’s lot).
(4) An owner of a lot who installs a window safety device under this section must:
(a) repair any damage caused to any part of the common property by the
installation of the device, and
(b) ensure that the device is installed in a competent and proper manner and has an appearance, after it has been installed, in keeping with the appearance of the building.
(5) An owners corporation or an owner of a lot may carry out work authorised by this section despite any other provision of this Act, the regulations or any by-law of the scheme.
(6) The regulations may make provision for or with respect to the following:
(a) the strata schemes and windows to which this section applies,
(b) the devices or other things that are complying window safety devices for the purposes of this section,
(c) notification to the owners corporation by owners who install window safety devices.
(7) A regulation may apply this section to a window located on any part of a parcel.If you want to be alerted when anyone replies to your posts or responds to this topic, please register and login, then you will be able to subscribe to the topic. 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. NB: Longer threads may spill over to additional pages - look for the numbers on the bottom right, under the last post.