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The EC of my strata have convened an EGM and one agenda item is to borrow from the sinking fund to pay for legal expenses against me. Can they do this seeing as the sinking fund has my contributions in it, and I will be paying for my own legal expenses as their opponent? The resolution is to repay the sinking fund within 3 months by raising a special levy,which I will also be expected to pay. Its as if I have to pay legal fees twice from both sides of the case!
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In the ACT once money goes into the sinking fund it can’t be taken out except by spending it on things consistent with the sinking fund plan and only certain sorts of things can be paid for from a sinking fund. Perhaps it is similar where you are.
The OC could instead resolve to fund the legal expenses by borrowing the money from a bank and repaying the money via a levy.
Pam – if you’re in NSW then your Owners Corporation (O/C) doesn’t have to meet in order to resolve to “borrow” money from its Sinking Fund, but the General Meeting would be necessary if no funds are allocated for that specific purpose (legal expenses) in its Administrative Fund, or if those proposed expenses are anticipated to exceed the equivalent of $1K/Lot or $12,500 – whichever is the lesser amount.
So I gather the circumstance at your Plan is the first of the above, where your O/C is meeting to seek approval from a majority of Owners to make a payment for Legal Expenses from its Sinking Fund that should otherwise be paid from its Administrative Fund, and if you don’t want that to pass, then you need to lobby or to otherwise gain sufficient support from like-minded Owners to vote-down that proposal (i.e. by their personal attendance or by granting you their proxy).
So far as the means of reimbursement for that amount to the Sinking Fund is concerned, your O/C doesn’t have to make that payment within 3 months but rather has that timeframe in which to determine how that payment will be made, and over what period.
Sect 71(3) of the NSW Strata Schemes Management Act (the Act) applies.
As unfair as it seems, if a majority of those Owners in attendance at the Extraordinary General Meeting (EGM) resolve in favour of using Sinking Funds to meet legal expenses against you, and to reimburse that amount to the Administrative Fund by way or a Special Levy or as Peter suggested by way of borrowing, then YES you’ll need to contribute to that by way of your own Levy Contributions UNLESS you can be successful in having that component of your personal Contributions ruled “excessive” or “unreasonable” under Sect 149 of the Act, or if your matter is before the NSW Civil & Administrative Tribunal you can be successful in having an Order for costs in your favour; that is against your O/C.
Whale is on the ball, as usual. If you win the case at NCAT, there are provisions in the Act to ensure you don’t have to pay your share of their costs. Howveer, if you lose, then you will suffer the double-whammy of your costs and your share of their costs. Time for a mediated settlement, methinks.
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.
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