› Flat Chat Strata Forum › Finance, budgeting and loans › Who decides on donations? › Current Page
I get the impression the following case law is a big no to donations.
The donation motions I refer to are on the agenda for AGMs, have been for over 10 years, always passed close to unanimously by the 33% of owners who attend such meetings and the interesting part is because the donation is to be paid from a trust fund the money is often never expended because the organizations involved will (rightly) not invoice the OC for a donation.
Anyway the Courts and Tribunal have said the following:
In Humphries v Proprietors Surfers Palms North Group Titles Plan 1955 (1994) 179 CLR 597 at 613 (McHugh J):
“Section 32 authorizes the body corporate to levy contributions from the proprietors. They are to be paid into an administrative fund and a sinking fund (s. 38). Moneys are not to be disbursed from those funds except to meet the liabilities incurred by the body corporate in performing its duties and functions or exercising its powers and authorities under the Act (ss. 38, 38A).”
A Qld matter but the sections are equivalent to those found in NSW’s SSM Act.
In Lawson & Clarke v Owners Corporation SP 61788 (Strata & Community Schemes) [2011] NSWCTTT 270 (27 June 2011):
“77. The payment of money by the Owners Corporation to a third party in circumstances where the Owners Corporation has not received any benefit in return cannot be regarded as being in the interests of all of the lot owners.
80. I am not satisfied that the Owners Corporation in general meeting had any power to agree to pay a very large sum of money to a third party in respect of a matter that was not of the making nor for the benefit of the Owners Corporation. Resolution 3 passed at general meeting on 12 March 2010 is therefore ultra vires the powers of the Owners Corporation.”
In APX Projects Pty Limited v The Owners – Strata Plan No. 64025 [2015] NSWSC 1250, (Slattery J):
16. “Part 3 of the Management Act requires that owners corporations generally must establish two types of funds: an administrative fund: s 66; and a sinking fund: s 69. The purpose of the administrative fund is for the owners corporation to make certain payments that are administrative and recurrent in nature. Examples of such payments are those made for recurrent expenditure as insurance, water charges and electricity charges; payments to members of the corporation’s executive committee in accordance with the Management Act; and payments in connection with carrying out the owners corporation’s functions under this Act or the by-laws: ss 66, 75(1). In contrast the purpose of the sinking fund is for the owners corporation to make payment of expenses that are capital in nature. For example, for painting or repairing the common property, to acquire personal property, or to renew or replace fixtures that are part of the common property: s 75(2).”
Does the management of the OC extend to levying money for donations? An NCAT application has been lodged so we will see what they say.
Personally I think who people donate money to and how much has nothing to do with the management of a strata scheme. It is not a function or duty of the OC to control and when there is no direct, or even indirect benefit, then the concept really struggles to have validity.
I will post the outcome once the matter is decided.