Common property excluded from general use

Please clarify – is this one owner taking over the common garden area or the Owners Corp tidying up the garden with fencing?

I have just realised (on having written the material below) that your property is in WA.  I have answered based on NSW strata law which may be totally different (but will certainly have a lot of similarities).

Failing that, your best remedy is to claim a “fraud on the minority” which is where a majority of owners have used due process to award themselves common property for a nominal fee, thereby benefitting at the expense of other owners. I think that may be your strongest claim for which there is a legal precedent  that went all the way to the High Court. Have a look here for the original judgement in the Supreme Court of NSW. 

It sound very much like the three owners with ground floor apartments have decided to enhance their properties (and their property values) without compensating the other owners.  They are not allowed to do this. Sadly strata law in WA is still in its infancy but this issue goes beyond that – talk to a specialist strata lawyer now.

Meanwhile, for NSW readers, if you are in a similar position, this is what you need to know:

There are three issues here:

1) Was approval given for the effective exclusive use of the fenced area by one lot owner.  Or was this simply allowing one owner to change common property? Either way, that requires a special resolution.

2) was that special resolution properly notified and voted on?

3) has the owner, with the approval of some other owners, benefitted in terms of the increased value of their property to the detriment of all other owners?

Taking the first matter, for that owner to enjoy exclusive use of the area, which seems to be their intention, they have to have a special resolution by-law approved by 75 percent of the owners voting on the issue. The terms of that by-law would include their agreement to maintain the common property as if it was part of their lot.

However, the OC can authorise an owner to use common property in a specific way but this also requires a special resolution.

Finally, if this is presented simply as a motion to alter common property, then this applies:

For the purpose of improving or enhancing the common property, an owners corporation or an owner of a lot may take any of the following action, but only if a special resolution has first been passed at a general meeting of the owners corporation that specifically authorises the taking of the particular action proposed: (a)  add to the common property, (b)  alter the common property,(c)  erect a new structure on the common property.

So all three possibilities require a special resolution and that has to be handled in a specific way. Any general meeting has to give written notice of the agenda seven days before the meeting.  Also that agenda has to specify that there is a special resolution by-law on the agenda.  This is what the Act says:

The notice must clearly indicate which motions require a special resolution for their passage and which motions require a unanimous resolution for their passage.

Also …

A motion must not be submitted at a general meeting unless notice of the motion has been given in accordance with this clause …

So, at the very least what you have here is a failure to follow the prescribed procedure under the Act. It sounds like there was no written notice of the motion and there was not indication that a special resolution was required, there fore the decision is invalid and you need to let all the owners know this as soon as possible.

Now a special resolution requires more than 75 percent vote in favour by all those voting at a general meeting and had proper procedure been followed, the vote, three out of three voting, would have passed.  However, just one vote against out of four would have meant the motion would have been rejected – and, under the terms of the act relating to owners being denied a vote that would have made a difference to the outcome, the motion could be overturned then too. This is what the Act says:

An Adjudicator may order that a resolution passed at a general meeting of an owners corporation be treated as a nullity on and from the date of the order if satisfied that the resolution would not have been passed but for the fact that the applicant for the order: (a)  was improperly denied a vote on the motion for the resolution, or(b)  was not given due notice of the item of business in relation to which the resolution was passed.

(2)  An application for an order under this section may not be made after 28 days after the date of the meeting at which the resolution was passed.

If that's the case, you had better get on to Fair Trading now (Tel 13 32 20) to begin proceedings.

Finally, even if the whole process was carried out according to the law, if this a land grab by one owner, which enhances the value of their property at the expense of the other owners (loss of common property) then this is considered a “fraud against the minority” and the owner has to pay compensation to the OC based on the increased value of their property. Why would the other two owners have supported this?  Perhaps they have their own plans and this is a quid pro quo. See the link to the court case at the top of this posting.

You need to write to all owners and tell them that the decision to erect the fence was probably not legal and you need a General Meeting as soon as possible to either ratify or reject the motion.  You also need, collectively, to get legal advice from an expert strata lawyer on exactly where you stand on this issue for future reference.

It's very important not to let this slide – before you know it, you'll have all your common property hived off to various owners and no commitment from them to pay for it or maintain and repair it (which should have been part of the special resolution by-law, as described above).