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BTW. Something would make it easier in the ACT is geography. Hardly anybody in the ACT is more than a half hour drive from the Tribunal so it is not hard for matters to start there. In NSW, I assume there are strata developments from which it would take travelling all day and an overnight stay in Sydney to get to the NCAT’s rooms so a required mediation step that might be undertaken locally might be much less bother for many. Can NCAT exist when required in court buildings in (say) Wagga or Dubbo?
This is an extract from a previous post on a different topic by one of our Stratagurus, Peter C. It explains how, in the ACT, mediation and adjudication can be part of the same process – getting to dispute resolution quickly and efficiently – JimmyT
It sounds like you (collectively NSW, not anyone personally!) need to make NCAT operate a bit more like ACAT, the ACT equivalent. Here anyone can make an application for a small fee.
Consideration of the matter starts with an informal Directions Hearing. This is like a mediation session except that it is with an ACAT member. If the parties reach some arrangement that is not illegal and both agree they can live with it, the ACAT will make ‘consent orders’ which are then binding.
The ACAT member does not at this stage make any findings or conclusions or impose any solution on the parties. The ACAT member will try to act just as a mediator rather than a judge.
If it is clear that a mutually agreed option is unlikely to be reached the matter will be set down for a hearing. Parties are warned that the Tribunal will then impose a solution which might not make either party happy.
If the parties agree that further discussion might reach a solution that could result in consent orders they will be scheduled to return. In some cases the consent orders could be to do something else and report back.
For example, a unit owner was unhappy with an EC decision to not remove a tree from common property near his unit. At the directions hearing the EC agreed that if the OC directed the EC to remove the tree then it was obliged to do so.
The EC agreed that it would call a general meeting at which the owner could put a motion to remove the tree. The owner put his case in a background paper distributed with the meeting notice. The EC also wrote a background paper for why it did not agree to remove the tree. A majority of owners voted to retain the tree.
When we returned to the Tribunal for a second directions hearing, the ACAT member asked the owner if the meeting had taken place, what was the outcome, and did he accept that decision by the owners. He said he did not accept the outcome.
The matter was then set down for a hearing. At the hearing the EC presented the evidence that two arborist had agreed that the tree was in good condition and a majority of owners wanted to keep it. The tribunal dismissed the application for orders that it be removed.
In another example our EC initiated an ACAT matter when an owner refused to remove a fence that enclosed an area of common property. No solution was reached in the directions hearing/mediation but we agreed to negotiate further and a date was set to return to the Tribunal.
Out of the Tribunal, the owner agreed to remove part of the fence that was entirely on common property. The EC agreed that another part could remain except that this fence was actually on a boundary between an adjacent unit and common property. The owner of that unit was happy for that leg of the fence to remain and to assume responsibility for it. We reported back to the Tribunal that we had a solution and received ‘consent orders’ for that solution. The unit owner complied with the Tribunal orders to remove the bit that had to go and all were happy.
In yet another example, it was quickly clear at the directions hearing that no consent orders were possible and mediation would get nowhere with a unit owner with an unapproved alteration. Instead the matter was set down for a hearing. We had the hearing, and the EC got the orders it sought that the unit owner must remove the unapproved alteration by a certain date.
The owner did not comply with the Tribunal order and now we need to go back, this time to the magistrates court, for enforcement orders of the Tribunal decision.
This will not involve a reexamination of the facts or merits of the matter. Instead the EC will be seeking orders from the Magistrates Court for someone else to be appointed to do what the unit owner was ordered to do but failed to do.
I think the ACAT does a good job of giving mediation or other solutions a go when it could work, coupled with the power to give the consent orders that make an agreed outcome stick. However, if mediation is clearly going nowhere, they can quickly and pragmatically move on to a hearing and an imposed solution.
A defect in the ACT’s legislation till a few years ago was ambiguity about whether the Sinking Fund Plan could be used to anticipate capital works to make improvements or was strictly for maintenance only. I became aware of this when our EC proposed to use sinking funds for a new piece of infrastructure, believed it had general meeting approval but some owners objected and sought to have the work halted. When the Act was being reviewed I put in a submission describing our situation and now the Act explicitly permits capital works to be for improvement, not just maintenance.
I guess calling it a Capital Works Fund might have avoided the argument we had. Or, does some other section of the NSW Act specify what types of Capital Works expenses may or may not be covered?
If the pub has a quiet corner booth, a convenient location and a more congenial atmosphere for the EC than anyone’s unit, then sounds OK to me.
In our EC some members have small units with nowhere else for a partner to go to avoid the meeting or young children being fed and put to bed around meeting time. So, some units are not ideal. The managing agent’s office is not especially close. With a slightly different EC composition we might well want to look to a nearby pub or cafe for a place to meet.
I can’t say for sure what you do with a completed plan in NSW. I am in the ACT. I would expect that the OC would have to resolve at a general meeting to adopt the plan. In the ACT we are required to have a plan covering at least 10 years and it must be reviewed at no more than 5 year intervals. There is no requirement to lodge the plan anywhere other than in our own records. In our OC we have occasionally made an amendment to the plan at less than 5 year intervals.
Generally, you are stuck with whoever the company gives you. However, in this instance, I would say the EC could point out the potential for the appearance of a conflict of interest and ask to have a different staff member appointed to manage your property. You could note that this would be in the interests of both the management company and the OC. It might be courteous to note that you do not suggest that the staff member has acted inappropriately or that you are dissatisfied with that person’s performance.
@JimmyT said:
DudleyYou could put together a spreadsheet yourself …
Agreed that you can probably DIY. This is not ‘rocket science’. Get together with a couple of your neighbours and the old plan and brainstorm every single thing that you think might be an expense at some point. Put everything in a table, think back to how long (for example) the penultimate paint job lasted before you needed to do it again most recently. What did it cost then? Add a bit more for inflation. I would just get started and put in your best guesstimates and have a ‘notes’ column for where the price estimate came from – a recent trade quote, an extrapolation from what it cost last time, a guess (could be quite OK to do that for the things that are obviously going to be relatively small expenses). I expect that you will have only a couple of items that are the big ticket matters. The minor things could add up to be non-trivial so it is worth counting them all.
If you have friends in other similar strata circumstances, ask to look at their plans. Be careful to avoid the retired manager types who want to over-think this sort of task and make it more complex than a submarine contract.
@JimmyT said:
…So what you have probably come up against here is a combination of infrequent committee meetings and a strata manager who charges on a per-use basis, rather than a flat fee…So, why can’t the EC just have a meeting, make a decision and minute it, all without involving the strata manager?
That said, if you plan to leave in 12 months and it is an indoor cat bothering no-one, and from the sound of how this OC is run, I suspect it will be a year before the EC gets around to doing anything about your cat. I would be inclined to lay low.
The details of what you do and terms vary between states. However the gist is generally similar. In the ACT, the default rules (aka bylaws, articles etc) require an unopposed resolution of a general meeting for a unit owner to erect a structure or alter a unit. Elsewhere it might be a special resolution. In the ACT (and perhaps elsewhere), the rules can be changed by special resolution of a general meeting. In the OC where I live the rules are relatively permissive. A unit owner must apply for permission which can be given by the EC on behalf of the OC. Most places would require at least EC permission.
You could write to the EC asking them to issue a ‘rules infringement notice’ for erecting the deck without permission and requiring its removal by some reasonable date.
You might have a general rule requiring unit owners to comply with the law. If the deck is of a size or height that it would have required local government building approval or development approval, then the rules infringement notice could refer to that also.
Or you could phone the local building approval authority and ask their advice. If the deck is more than half the height of the fence, in the ACT at least, I think I recall that that would put it above the maximum height for not needing building approval. There are then processes to report suspected breaches of the building code and the local authorities will have to get back to you with advice. It it breaches the building code it might be easier to have them do the enforcement.
Building approvals also take into account overlook from one residence to another. Some overlook of part of the neighbouring area is permitted but there are limits.
I hope that helps.
Do you want to be on the EC? IE Are you just questioning the process or do you not want to be there? If the latter, then just resign. You can’t be compelled to be on the EC!
@JimmyT said:
…And if a member feels strongly enough, they can ask if their dissent be recorded in the minutes.Agreed. We have exactly that recently. 6 of 7 agreed on what the previous meeting had decided and on the text of a letter that resulted from the decision. One member did not approve of the letter and did not agree that it reflected what we had decided. He wanted his dissent recorded in our EC minutes and it was.
So, after much discussion, which need not be recorded, our EC would send a copy of the EC meeting minutes to the managing agent to be recorded in the official records, including the resolution that approved the small deck, generally including the plan or sufficient description to not be confused with a massive terrace.
Ditto for the complaint against an owner: If it is serious enough, the EC would resolve to send the final version of a letter (after much discussion about what to say and early drafts which don’t need recording) and that resolution and letter would be what is sent to the managing agent, or the managing agent is asked to send the letter.
It doesn’t matter who said what in the process of coming to a decision. It is the final decision, recorded in the minutes, that matters. I still can’t see any need for a record of the chatter that precedes the decision.
Sounds silly and I can’t see why the strata manager would want it. Our Executive Committee (EC) has quite a lot of email traffic and it would be time-consuming and quite likely error-prone for the managing agent to sift through to find what is intended as an instruction. Far better that the EC only addresses the managing agent (MA) when there has been a decision to instruct the MA to do something or there is a specific question to be asked of the MA.
@’H’ said:
Thank you Peter C.Just a couple of asides to start with Peter:
- Our OC is very large.
Ours is quite large – just over 100 units.
- We do not count proxy votes or absentee votes when determining a standard quorum but even if we had, we would have never reached that milestone.
You should count proxy votes toward determining whether there is a standard quorum but not absentee votes. There was an ACAT decision confirming that proxy votes count for this purpose. See the OCN’s useful resource at:
https://web.ocnact.org.au/decisions-by-acat-test#TOC-Do-proxies-count-towards-a-quorum-
In Butt and UP 1725 ACAT decided that proxies do count towards the making of a quorum.
Section 3.9(1) of Schedule 3 of the UT(M)A provides that
(1) A motion may be considered at a general meeting of an owners corporation with 3 or more members only if there is present—
(a) a quorum (a standard quorum) made up by people entitled to vote (on the motion) in relation to not less than ½ the total number of units; or
(b) a quorum (a reduced quorum) made up under subsection (2).
The issue is to determine what “people entitled to vote (on the motion) in relation to not less than ½ the total number of units” means.
ACAT decided that the use of the words “in relation to” leads to the conclusion that the provision means not the people physically present but the number of entitlements to vote that are present. Therefore proxies (ie entitlements to vote) do count towards the quorum.
ACAT concluded this interpretation is reinforced because “Paragraph 3.31.(4) specifically provides in relation to absentee votes that such votes do not count “for the purposes of making up a quorum” If the same approach was intended to be taken in relation to proxies, similar legislative provision would have been made.”
I am told that too much carry over of funds from one year to the next has the potential to distort s119 certificates and that it can also cause problems with adjustments made at settlement between sellers and buyers.
I can’t think why there would be a problem or what ‘distortion’ could occur. The only thing relevant for the s.119 certificate is that an amount was levied for a period (regardless of what is in the budget or funds in the bank etc). Let’s say you pay levies quarterly and let’s say the levy for your unit for that quarter had been determined to be $300. If you have paid your levies and you sell the unit after the first month, the new owner will have to pay you $200 of the $300 at settlement. IE s.119 let’s the seller get their prepaid levies back pro-rata for the period after when the unit is sold.
How much money the OC has in the bank and when in the year budgeted expenses might occur are irrelevant. If you are looking to sell a unit in an OC that clearly has plenty of cash in reserve then you might get more for the unit (but you might not). Similarly, you would be foolish to pay a high price for a unit if the OC does not have much cash in the bank because you might reasonably worry that you could be up for a big levy hike later as a new owner in an OC without sufficient in reserve. However, none of that causes any problem for the s.119 certificate.
I am also elsewhere advised that the proposition that I posed is not permitted because contributions so determined must be paid within the same financial year. And further that contributions to the general funds must be based on an approved budget for that financial year.
I think the problem is that contributions have been determined by the last general meeting and so the EC can’t make them otherwise until decided by a new general meeting.
s.78 says just that the general funds contribution must be determined by the owners corporation. Nowhere that I can see does the UTMA say that the contribution has to be ‘based on’ the approved budget. Instead it is the other way around. The budget has to account for the fund contributions and estimates of other sources of income. Our OC quite often has total budgets that are not numerically identical with total levies and our managing agent says that is quite OK. It is explicit in our budget resolution that the contributions to be levied in a particular year for a particular fund (Admin fund, sinking fund or special purpose fund) are not necessarily the same as what is budgeted to be spent from that fund in that year.
If the OC has other sources of income (eg. interest on money in the bank) but the budget and actual spending were always exactly the same as levies then the surplus from the other income would gradually accumulate. At some point you would have to levy less to use up some of the surplus (while leaving enough for cash flow).
Many owners from other complexes and with different managing agents seem to deal with the problem ‘their own way’. And their way appears to also be a function of the accounting software being used. It seems high time for an amendment to the legislation?
Our managing agent is Independent and their software copes. I see no reason why any other accounting software would not cope with any amount of levy income that the AGM resolves to have.
Bottom line is that there is nothing I can see in the Act that prevents you from levying a slightly higher amount than the 2016/17 budget to cover a small deficit and build up reserves compared with 2015/16. It is just silly to not have a bit of cash in the bank to deal with the fact that the timing of levies coming in and expenses going out do not coincide perfectly. At the very least you need a bit of a float to cope with cash-flow even if nothing ever went even a tiny bit over budget.
Thanks again Peter C.
Your welcome. If you would like to talk more about ACT stuff feel free to send me a message (PM button at the top right of this post) and we could exchange phone numbers.
It sounds like you (collectively NSW, not anyone personally!) need to make NCAT operate a bit more like ACAT, the ACT equivalent. Here anyone can make an application for a small fee. Consideration of the matter starts with an informal Directions Hearing. This is like a mediation session except that it is with an ACAT member. If the parties reach some arrangement that is not illegal and both agree they can live with it, the ACAT will make ‘consent orders’ which are then binding. The ACAT member does not at this stage make any findings or conclusions or impose any solution on the parties. The ACAT member will try to act just as a mediator rather than a judge.
If it is clear that a mutually agreed option is unlikely to be reached the matter will be set down for a hearing. Parties are warned that the Tribunal will then impose a solution which might not make either party happy.
If the parties agree that further discussion might reach a solution that could result in consent orders they will be scheduled to return.
In some cases the consent orders could be to do something else and report back.
For example, a unit owner was unhappy with an EC decision to not remove a tree from common property near his unit. At the directions hearing the EC agreed that if the OC directed the EC to remove the tree then it was obliged to do so. The EC agreed that it would call a general meeting at which the owner could put a motion to remove the tree. The owner put his case in a background paper distributed with the meeting notice. The EC also wrote a background paper for why it did not agree to remove the tree. A majority of owners voted to retain the tree. When we returned to the Tribunal for a second directions hearing, the ACAT member asked the owner if the meeting had taken place, what was the outcome, and did he accept that decision by the owners. He said he did not accept the outcome. The matter was then set down for a hearing. At the hearing the EC presented the evidence that two arborist had agreed that the tree was in good condition and a majority of owners wanted to keep it. The tribunal dismissed the application for orders that it be removed.
In another example our EC initiated an ACAT matter when an owner refused to remove a fence that enclosed an area of common property. No solution was reached in the directions hearing/mediation but we agreed to negotiate further and a date was set to return to the Tribunal. Out of the Tribunal, the owner agreed to remove part of the fence that was entirely on common property. The EC agreed that another part could remain except that this fence was actually on a boundary between an adjacent unit and common property. The owner of that unit was happy for that leg of the fence to remain and to assume responsibility for it. We reported back to the Tribunal that we had a solution and received ‘consent orders’ for that solution. The unit owner complied with the Tribunal orders to remove the bit that had to go and all were happy.
In yet another example, it was quickly clear at the directions hearing that no consent orders were possible and mediation would get nowhere with a unit owner with an unapproved alteration. Instead the matter was set down for a hearing. We had the hearing, and the EC got the orders it sought that the unit owner must remove the unapproved alteration by a certain date. The owner did not comply with the Tribunal order and now we need to go back, this time to the magistrates court, for enforcement orders of the Tribunal decision. This will not involve a reexamination of the facts or merits of the matter. Instead the EC will be seeking orders from the Magistrates Court for someone else to be appointed to do what the unit owner was ordered to do but failed to do.
I think the ACAT does a good job of giving mediation or other solutions a go when it could work, coupled with the power to give the consent orders that make an agreed outcome stick. However, if mediation is clearly going nowhere, they can quickly and pragmatically move on to a hearing and an imposed solution.