Compulsory appointments – cure sometimes worse than the disease.

I am a minority owner in a two unit strata scheme that is in its fifth consecutive term of compulsory appointment. Unit entitlement 60/40.

Before the compulsory managers were appointed the scheme was self managed and I applied for the appointment because no repairs or maintenance was getting done.

I successfully applied for the first four appointments. The fourth one was reappointed for a fifth time on application by the other owner.

The fourth appointment went bad when the manager agreed in mediation to waive interest on the majority owners $50,000.00 levy arrears. This agreement was made in July 2010. The manager did not make any minute of the exercise of the function described in s79(3) of the SSMA until April 2011. The manager did this at the AGM in April 2011 by passing a special resolution to stop interest for a period of time. The manager had the option to minute the exercise the function in accordance with s31 but has opted not to do so.

In addition to the interest waiver the manager also agreed not to take levy recovery action which gave the majority owner time to pay their debt at a time when the owners corporation was in the midst of a major maintenance and repair contract with a builder. A scaleback of the works was necessary to accommodate the financial concessions given to the majority owner.

On 22/12/10 an adjudicator dismissed an application by the majority owner to have the interest waiver mediation agreement made enforceable. The adjudicator would not entertain the application because the function under s79(3) had not been exercised by the owners corporation.

On 31/12/10 the manager finalised the accounts for the year 2010 which were passed on to the auditors and then presented to the owners at the April AGM. The accounts have embedded errors in them due to the manual interest stop that the manager placed on the majority owners account in July 2010. The manager had no right to do this without the owners corporation first exercising the function under s79(3).

Without exercising the proper function on or before the 31/12/10 the manager is obliged to calculate the the interest and include it in the accounts. The manager is resisting this correction to the accounts.

The managers illegal stop on the interest there has had other effects on the validity of the accounts. The manager has applied the early payment discount, for levies due on 1/1/11 to the majority owner account on the 31/12/10. The majority owner is not entitled to this discount on the discount date, 31/12/10, because they were not entitled to the benefits of the interest stop on the 31/12/10.

The net effect of this is that the majority owner still has arrears of thousands of dollars. The AGM was held late so the next quarterly levies are due on 25/5/11. I fear that the manager will further embed the errors in the accounts by giving the early discount to the majority owners without being entitled to it.

As I said earlier there was a scaleback of building works necessary to accomodate the financial concessions. The scaleback has resulted outstanding s62 breaches.

I may need to make an application to have the current manager replaced. I would do this by making yet another application for a compulsory appointment. I am in two minds about this as sometimes the cure can be worse than the disease.

The majority owners are happy with the current managers performance. They were so happy that when they made the application for the compulsory appointment the managers pay packet was doubled. Which was rubber stamped by the CTTT.

To make another application I need to find a manager willing to consent to a compulsory appointment and I fear that I may have exhausted that resource. Can anyone help me find a manager.