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I appreciate that the reduced quorum decisions take 4 weeks to come into effect. Are you aware that proxy votes count towards determining the quorum? Thus, if you have enough proxy votes, even if not many show for the actually meeting, you might have a quorum and can act on the decisions straight away after the meeting.
While 35(1) says that the EC exercises the functions of the OC, the later parts of that section limit the EC’s power where there are OC resolutions directing the EC or where the Act requires a general meeting to make the decision. Only when the matter does not require a general meeting resolution from a provision of the Act, or it is not subject to a direction to the EC from a general meeting resolution, can the EC exercise a function of the OC as it sees fit.
In this case, I presume that a resolution at the last AGM determined a levy for the financial year. For the EC to now levy an additional amount before another general meeting would be inconsistent with the AGM resolution. So, I think, no, the EC can’t exercise the function of the OC to determine a general funds contribution because the OC at the last AGM already did this.
Strictly speaking the EC should not have overspent the budget. On the other hand, sometimes you would be negligent to not spend the money. If you are under budget on some other line of the budget this is usually not a problem. Just explain openly what happened at the next AGM and people will mostly understand that the spending was wise.
As treasurer, I alway budget to retain about a quarter to a third of our annual budget in the bank. [With a budget of about $150K, I plan to start and end the year with about $50K in the bank.] This gives considerable leeway for some things to go a bit over or for an unexpected expense to come up or whatever. However, the main benefit is for cash-flow. We don’t find ourselves caught short just before a new influx of levies. I also include a margin in some of the more variable budget lines to allow the possibility of spending a bit more than I really expect. That way the approved budget can tolerate some unexpected expenses. It doesn’t need to be a lot more than the realistic expectation, just slightly more to leave the EC some breathing space. Nobody will get upset if you are usually a little bit under budget. If that means you accumulate more funds than you need for comfortable cash fluidity at all times, then you can levy a bit less than the budget next year, but always plan to keep some money in the bank, just in case.
If you make the budget precisely what you expect to spend and not a penny more you are just asking to run into trouble when a few things turn out to cost even a tiny trivial bit more than expected. You don’t need the hassle. Far better to have an approved budget with some leeway and some cash in the bank that would allow small overruns from your realistic expectation or a minor deficit in any particular year without running into problems.
With the AGM only a few weeks away, presumably the multiple but small budget overruns are being disclosed and explained in AGM papers that might be mailed out already. Presumably the 2016/17 levies have been proposed in the AGM papers too with a proposed due date some time after the AGM. Perhaps you could write to owners, explain the problem, and ask people to volunteer to pay their levies early, even before the AGM, to help out. Not everyone will do it but enough owners might be prepared to pay the proposed levy a little early. That would fix the cash flow problem and allow some bills to be paid. The early payment would just put those unit owners in credit for a while until the levy became due.
I also suggest, if you have not already proposed this for the AGM, to levy a bit more than the budget so that the bank balance does not end up at zero again this time next year. Explain that you plan to do that for each of the next few years so that the extra expense is spread out and smaller in any particular year.
Alternatively, if the timing for adequate notice would allow it, put an extra motion for an additional one-off special levy to prevent cashflow problems in future.
If the OC is small enough for this to be feasible, go around and door knock and explain face to face.
I hope that helps!
Reviewing all the rules/Bylaws in one meeting could be hard, especially in a larger or more complex OC. Just one bylaw might be subject to a great deal of debate.
In the ACT, our OC has been through a process taking about 4 years so far to review our rules (ACT-speak for bylaws). We had a set from the mid 1970s from the first general meeting of the OC which replaced the default set. That had kept some default rules, had substantially amended others and had some custom rules.
Many years later, it was clear that many of the rules were irrelevant or useless. Some were just old-fashioned in their language. We had a period of education for owners about what rules were for, how they worked with the Act, how they could be enforced etc. EC members sketched out some of the changes we thought were obvious or desirable. We had small group meetings in different parts of the site to discuss all this.
Then we put a series of motions to a general meeting, just to make changes that we hoped would be so innocuous that everyone would get used to the process and we would not scare the horses. The first motion was to change the word ‘lot’ to ‘unit’ in each rule where it appeared (to align with the language of the current Act), substitute gender-neutral language and so on. Then we had a series of motions to replace various carried over default rules from the 1970 Act with their equivalents from the current Act where the meaning and effect was nearly identical.
Then we rescinded a bunch of rules that were redundant or irrelevant. Some rules were no longer of any effect because their subject matter had been incorporated into the current Act, generally without much difference but making the rule redundant. Some rules referred to matters that had only been relevant while construction was still under way, so those could go. We still had one person who voted against the motions, presumably on some misplaced point of principle.
The next year we sent drafts to everyone with a cover letter and proposed a range of changes that we thought would be relatively uncontroversial but useful. For example, we had from the start a rule prohibiting growing noxious plants. However, it had never been successfully used. That was amended by tacking on the end “or any plant recognised as invasive or a pest plant by relevant authorities in the ACT”. It was explained that the ACT has a Pest Plant and Animals Act which has a schedule of plants declared to be pest plants. Consequently we had an objective standard to refer to which would be kept up to date without requiring work from the OC. This has made it far easier to say: ‘It’s on the list, we need to deal with that ivy or this periwinkle and grow something different there.’
At this consultation stage we had our drafts checked out by a strata specialist lawyer who did some useful tweaking. We added in some new rules which made responsibilities for various things explicit that had generally been assumed, with good reason, but occasionally caused headaches for ECs or had potential to be a problem. These were things like individual responsibility to maintain various individually installed paths and utility connections and equipment such as air-conditioners that might be on or under or crossing common property but only service the one unit.
These also passed with an overwhelming majority but a small minority opposed, presumably out of some misplaced distrust of the EC or wilful misreading of the obvious intention of the rule.
With those rules out of the way, we had several rounds of drafts and consultation on a revised ‘Keeping of Animals’ rule. This had been left to late in the process because we knew there would be differing and possibly heated opinions on this and we did not want to derail the whole process. So, at this year’s AGM we passed the animals rule. The main point of difference is that we had on one hand some wanting utter laissez faire, particularly with cats free to roam the common property. On the other hand we had a strong view that we should ban cats from our site that has remnant bush, birds, lizards, etc. Some though dogs should never be off-lead, yet others have well-behaved, well-trained dogs and have innocuous fun throwing a ball for their dog in parts of our extensive grounds. In the end our rule passed by special resolution which in the ACT requires ‘fewer than a third opposed’ but would not have passed in NSW which requires less than a quarter. It is species neutral. It allows animals on the common property only when under the control and supervision of a responsible person but has enough flexibility to allow a well-behaved dog off-lead, even while others would never be off-lead. Some owners already took their cats out with a lead or had indoor cats which stuck close by to them when they went outdoors or had extensive enclosed cat-runs in their courtyards.
Crucial to getting the rule passed was having a ‘grandfathering’ clause. A small number of animals that were accustomed to roaming unaccompanied at the time the rule was adopted are on a ‘Grandfathered Animals List’. As they eventually die off their replacements will have to comply with the rule.
Foreshadowed as still to come is amending our unit alterations rule. We have an existing rule and an established practice which we believed was consistent with the Act but we thought it might need to be made explicit in case of future debate. However, in the past year we used the existing rule in a Tribunal matter when a unit owner made an unapproved alteration. The published Decision and Reasons document very helpfully sets out that our existing rule is valid and confirms that it was used correctly by the EC in accordance with various other OC resolutions. So, we might not need to amend that rule after all since the Tribunal’s ruling clearly and unequivocally sets out its proper operation in a way that is consistent with what we have always done and thought was correct.
So, a rules review can be a long and involved process, particularly if you are trying to engage a large OC. I doubt it could always be done all in one go. We have had several years of constant reference to the ‘on-going rules review’ in newsletters and AGM papers and consultation letters to owners.
Agree with Jimmy. ‘Knowledge is power’. If you know the correct process by which someone can be removed from the EC and the EC discusses doing so in a calm and dispassionate manner, the guy might mend his ways or resign when he sees he has been called out.
If, as you say, everyone knows who it is and one or two other residents are the target out of 24, then I suggest the first thing is to make an effort to reassure those targeted that they have the understanding and sympathy of all the other residents. There might not be much you can do directly, but you can make it less bad for those targeted.
Perhaps the EC or a general meeting could pointedly pass resolutions of sympathy for the victims and condemnation of the perpetrator ‘whoever that might be’ (being careful to not be at risk of being sued for defamation). A show of solidarity could make the situation feel better and the bully might even decide to quietly and discretely back off from the bad behaviour.
I would add that even if the SM is wonderful and the EC and OC are both entirely happy to delegate everything to the SM, the EC still ultimately is the boss of the SM on behalf of the OC and carries the can ultimately. The EC could decide that on some particular issue it disagrees with the SM and then it directs the SM to do what it wants to have done. The SM is your employee, not the other way around.
That seems odd advice. Once a budget is set by the AGM, the EC makes financial decisions consistent with the budget. Let’s say there is a general maintenance line. The EC might decide to use some of that on something that needs fixing during the year, or it might decide it is not that serious and doesn’t fix it. If it turns out that was a poor decision and something bad happens as a result, they would want to have some insurance, I would have thought.
My impression was that typical strata insurance packages include office bearer’s insurance as part of the deal.
If it is unequivocally shown that tree that did damage then the EC should remove it or find an alternative solution if the tree is especially valued – eg. reroute the pipe. On the other hand, in many locations, pipe damage could be due to any of a dozen trees and you would not want to lose them all. Further, tree roots only get into pipes if the pipe already leaks. Otherwise there is no source of water for the roots to follow. If the pipe is decades old then this could be characterised as expected wear and tear.
As a general principle, if something should be done on the common property then the OC should pay for it. If there is any urgency about safety or a serious loss of amenity, the EC should approve and get on with it and worry about how to fund it later.
Whether an individual owner is prepared to pay for something should not be relevant to a decision about whether some item of common property maintenance should or should not be done.
@supersleuth said:
Also in relation to this… The EC has a budget of $7,000 which allows them to use without having to go to the OC for repairs etc. Is this the same?You do want the EC to have a budget for repairs so things can be repaired promptly without having to wait for a general meeting. Indeed, if the repair is serious enough, I would say they are obliged to fix it promptly even if it means going over budget. If the money has been spent but the EC does not seem to have repaired anything, then you worry.
Actually, don’t worry immediately. Just talk to the treasurer and ask nicely. Most likely all can be explained if you give him/her a chance to look back over the accounts and get back to you with a good answer.
Our OC does have a ‘Miscellaneous Expenses’ line in the budget but it is less than 1% of the total budget and I always write a “Treasurer’s Report” in which I explain what expenses were put against that line. Usually we do have a few minor random items that are genuinely miscellaneous and don’t fit any other budget line. Eg. recently we bought an updated, current edition of a book on meeting procedures that our first AGM in the 1970s had decided would be the rules for our meetings, there was a minor website cost to renew the domain name, and some minor printing costs for a couple of newsletters.
Worry if a substantial fraction of expenses is under ‘miscellaneous’ although it probably just means that the category should be broken up into several specific explicit purposes.
I would not be automatically suspicious of reimbursement of EC members’ expenses. You probably have a line in the budget for gardening and an EC member might find it quicker and easier on some occasions to buy certain supplies for the common property gardening from their own pocket. If they keep the receipt and arrange for reimbursement through the treasurer and/or managing agent, I would think that is appropriate if the expense was an appropriate gardening expense. I would expect that cost to then be assigned to the gardening line of the budget.
Ditto for costs associated with a website for the OC. Perhaps easier to pay personally and get reimbursed. As long as the expenses are assigned to the right lines of the budget and reasonable and appropriate etc then it is probably just pragmatic rather than dodgy. Only worry if the treasurer can’t give a reasonable account of things (after giving reasonable notice so they can give a good answer. Don’t ambush the probably honest volunteer treasurer at the AGM).
I am in the ACT rather than NSW but I think some similar principles would apply even if the details vary. Giving over part of the common property to the exclusive use of particular lot(s) generally has a high threshold. In the ACT it is an unopposed resolution of a general meeting (except for ‘minor uses’). In NSW, I think a special resolution is required, which means that fewer than one quarter of the vote can be opposed if the resolution is to pass. So, with two in favour and 4 opposed you don’t get a majority in favour, let alone less than a quarter opposed.
The two owners could put their proposal to a general meeting. If it fails they could appeal that at the Tribunal making an argument that it was unreasonable for the motion to have failed. I don’t think the NSW Tribunal, if it acts like the ACT tribunal, would want to decide one way or the other until the proposal has be put to a general meeting for the owners to decide. If the motion passes, then the Tribunal was unnecessary. If the motion fails the Tribunal would at least know what level of support there had been among the owners.
I would expect that 4 of 6 opposed would not be a good start for their case. They would be better off if a majority had supported it and it had come very close to passing. Also, they would have a better case if they could show that nobody but the two units derived much benefit from the particular bits of common property – IE that the effect on the use and enjoyment of the common property by other residents would be negligible.
However, from the sound of it, you have good reasons to want to keep the area as common property for the general enjoyment of all residents. It is a fundamental principle in strata properties that all should have equal opportunity to use and enjoy the common property. So, I doubt the two have much of a case.
I think it is irrelevant whether the OC has necessary maintenance expenses. The OC can raise funds by other means.
@JimmyT said:
I agree with Peter’s general point about thwarting the intention of the proxy providers but the date of signing is significant because of the provision thet the most recently dated proxy superseded any previous proxies given by the same person.Agreed. Far better if dated properly. I only meant that if only one form shows up and it is clear and correct in all respects except the date, then I would be inclined to accept it.
As a chair, I would be tempted to disallow proxies that turned up unsigned on the day.
I would not just be tempted. I would certainly not allow proxies that were unsigned.
Which state you are in is important. In the ACT, for example, the Act says that a unit owner must not keep an animal without permission but permission cannot be unreasonably refused. It would be difficult to find a way to reasonably refuse two small dogs.
If it is clear what the intent of the proxy allocation is, I would have thought the decent and reasonable thing for the chair to do is just act as if the form had been ‘made’ and then arrived on the day of the meeting. From the sounds of it, the form would be valid and unambiguous if that occurred.
I think owners would be justifiably annoyed if their clearly stated intentions were thwarted by an overzealous application of pedantry.
The only circumstance I can imagine when it would be of any consequence when the proxy allocation is made is if a person filled out two forms differently. Then the later dated one would be the one for the chair to follow.
I would be very cautious about having anything to do with commercial news. They are interested in the quickest laziest way route to a titillating story. They are not interested in old-fashioned notions such as responsibility, truth or accuracy. Here is an example of Today Tonight twisting the interviews with two advocates of renewable electricity generation to seem to say the opposite of what they meant:
https://reneweconomy.com.au/2016/today-tonights-misleading-report-renewables-south-australia-85014