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20/06/2016 at 1:37 am #10508
I have a costs order in my favour against the OC of my apartment block.
The OC have engaged a strata lawyer to have the decision set aside even though the deadline to appeal has passed. Do I have to be included in paying for the special levy for the OC’s legal team to fight me?
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20/06/2016 at 8:29 am #25049
I can’t say for sure but I expect the answer is yes. In the ACT and, I expect, elsewhere, there is a high bar to be reached for the OC to resolve to charge levies other than strictly in proportion to unit entitlements. In the ACT it takes an unopposed resolution.
Since you are a member of the OC and the OC presumably believes it is acting in the interests of the OC as a whole in taking this action, then you have to pay like everyone else that is part of the OC, even though, wearing a different hat, you are also the other party.
Depending on the magnitude of the expected legal costs, taking legal action might be a decision the EC can take or it might be a decision that has to be taken at a general meeting. I could point to the section of the Act in the ACT which sets out the threshold at which a legal cost must be approved by the OC at a general meeting rather than by the EC. I expect that whichever state you are in has a similar provision. You might be able to challenge the cost if the cost is higher than the threshold and the decision to take legal action was taken improperly by the EC rather than properly by the OC.
20/06/2016 at 10:22 am #25050The simple answer, in NSW, is no.
If that action was brought under Chapter 5 of the Act which relates to disputes and orders by the tribunal, the Owners Corp can’t pay costs out of the sinking or admin funds and must collect a special levy which excludes the successful party
This is what section 230 says. There may be other conditions in the order, or is may have been raised under a different part of the Act (unlikely) but this is the basic rule.
230 Restrictions on owners corporation levying contributions for expenses
(1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it under Chapter 5, levy a contribution on another party who is successful in the proceedings.
(2) An owners corporation that is unsuccessful in proceedings brought by or against it under Chapter 5 cannot pay any part of its costs and expenses in the proceedings from its administrative fund or sinking fund, but may make a levy for the purpose.
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.
20/06/2016 at 7:12 pm #25051Ah. The ACT doesn’t have anything like that bit of the NSW act.
20/06/2016 at 10:08 pm #25052I thought not – I was surprised we do!
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.
20/06/2016 at 11:26 pm #25053Thanks Guys, I really appreciate you taking the time to advise me, and pointing me in the direction of where to find the relevant information in the Act. P
28/06/2016 at 10:22 am #25079As stated in my post above I have been awarded a costs order at NCAT.
Last Friday I received a notice of an EGM to be convened shortly (despite there being an AGM due any day now). The only matter on the agenda at the EGM is for the OC to vote either to pay my costs, or to engage a Strata Lawyer in order to appeal the decision and related costs order that was granted in my favour.
Seeing as I, being the successful party am not to be included in contributing financially to any special levy raised in relation to this matter I am questioning why I was sent the meeting notice? The meeting notice did not state that I am not a contributing party to the levy.
I know as part of the OC I’m entitled to attend an EGM, but would have thought that because this EGM is solely to discuss this one matter of which I am the opposing party, having me attend is counter intuitive, is the meeting not legally privileged?
Of course I don’t mind attending the EGM to see what is discussed, but it would be obvious as to how I would vote. I don’t want to take the time to turn up at the meeting just to be told I can’t take part. Can someone please give me their opinion on this?
30/06/2016 at 12:19 pm #25081Your OC is treading very carefully here. They are legally obliged to send you a notice of the EGM and would risk any decision being invalidated if they didn’t do so. It’s a simple case of dotting the i’s and crossing the t’s.
Personally, I would take the opportunity to attend and ask the other owners to think carefully about who they elect at the upcoming AGM as the incumbents are costing them money that they don’t need to spend by pursuing legal actions that they can’t win.
But that’s just me …
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.
30/06/2016 at 1:34 pm #25083Thanks Jimmy,
I will attend (probably with my solicitor) because the OC will have theirs there.
The AGM is due any day. I’ve asked what the anniversary date is so that the AGM takes place within 11 or 13 months from the first AGM, and I’ve also asked why this is an EGM (which costs the OC for the attendance of the SM) and not an AGM – as usual no response, except to be told a response will come from their solicitor “following” the EGM…… seems like the democratic “vote” to engage the solicitor in this matter is a foregone conclusion!
Two of the units have sold recently, but the 42 day standard settlement period has not elapsed as yet, and won’t have done by the time the meeting is convened.
I’m expecting the new owners to attend the EGM, because, as you no doubt know, a NSW Law Society standard form sales contract for a unit states that prospective owners need to be aware of an EGM in order to attend and be able to vote (in place of the outgoing owner) on paying a special levy that will be payable after the sale has been finalised.
Hopefully the new owners will bring a “changing of the guard” to the EC and all the ridiculous amounts of Owners Corporation money spent on legal fees by the current EC/OC to contest orders that I have been successful in, can stop (it is the Secretary of the EC who has sold one unit).
My solicitor has said “you only fight the battles you know you can win”, I wish my current OC/EC used the same mantra!
30/06/2016 at 4:50 pm #25085I would definitely attend, after all you have been invited and you might as well take the opportunity.
In the case of legal privilege – once they have disclosed information to you any privilege is lost (not that I am giving you legal advice). So if they choose to disclose something on which they should claim privilege, more fool them.
13/07/2016 at 4:20 pm #25109Thanks Guys for your useful responses, there have been some developments since the EGM which have muddied the waters even more.
There was a motion on the agenda for the EGM to engage a strata law firm to lodge the appeal against my costs order, (the OC’s lawyer was in attendance) this motion was passed. Another alternative motion on the agenda was to vote to pay my costs as per the NCAT order, this motion was defeated. One final motion was to vote to raise a special levy to pay for the legal costs (the motion did not specify whether the costs were for my legal fees or the Strata Lawyers) for all units to contribute (including me) which was passed.
I have received a letter saying that the OC are now willing to pay me my costs, and I will not have to contribute even though this motion was defeated at the EGM.
The Strata Manager has informed me it was discussed to pay me after all with those owners present at the EGM after I left the meeting and after the meeting was formally closed.
Is it allowed for this decision to be made without all persons present at the initial meeting being present to make this altered decision? It may seem like I should just take the offer and run, but I think it could be more complicated because two of the units in my block of 6 have sold recently, so it is the new owners who would be liable to pay the special levy, not the ones who have sold, one of whom happens to be one of the EC members who started the whole mess in the first place.
It will be very hard to persuade two new owners that I should be paid my costs for a matter they had nothing to do with, and could quite probably cause a rift with my new neighbours before they even have time to move in properly.
14/07/2016 at 6:21 pm #25110Regarding the new owners, the phrase caveat emptor comes to mind. If they bought without knowing there was a dispute going on that could cost them money, then that’s the price they pay for not doing a propoer strata search.
Regarding the post-meeting decision, I have frequently seen meetings where the loudest voices on the EC have prevailed and insisted things be done their way, only for sharper and calmer minds to tell them that the decision they pushed through was illegal or unworkable.
The last AGM I attended in my building passed a raft of by-laws that I treid to tell them were invalid but I was steamrolled. Lo and behold, the by-laws remain unchanged.
So yes, take the money and run provided it comes with written assurances that you will not have to pay now or in the future. The law says that they have to raise a special levy that excludes you to pay legal costs in a case they lost. maybe someone has finally read the law … or this website!
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.
15/07/2016 at 9:02 am #25111Thanks for responding Jimmy. Can the decision be made by some owners outside of the EGM forum to pay my costs rather than paying the OC’s lawyers costs? especially considering the motion to pay me was defeated at the EGM.
15/07/2016 at 9:45 am #25112If the owners corp has been ordered to pay your costs then any decision not to include legal fees in a special levy is a decision to break the law. Section 230 of the strata Act (see item 3) is crystal clear on this.
The EGM decision has no more validity than a decision to go out a rob old ladies on the street. It is a decision to break the law and therefore should be rescinded. In fact, the motion should never have been raised in that form. The decision to appeal is valid but the decision not to pay you isn’t.
Refer them to the section of the Act and tell them that any further attempts to make you pay a share of the legal costs, by whatever means, will result in further action at NCAT and an application for the statutory appointment of and independent strata manager to take over the running of the building.
In fact, you could get a strata lawyer to write the letter and then send the bill for that to the EC too. Contact our sponsors SGB – they’ll advise you.
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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› Flat Chat Strata Forum › Levies and Unit Entitlements › Current Page