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  • #8545
    AmazedOwner
    Flatchatter

      Hi Jimmy I enjoy your forum & advice from the posters.

      At our AGM early this year the OC voted by a poll NOT to appoint a certain Building Management company (let’s call them #1). #1 was recommended to the OC by the EC after a tender process and is the incumbent manager.

      The EC then conducted another tender with several applicants including #1 and at a recent EC meeting declared #1 successful and authorised the Strata Manager to affix the OC seal to the contract. We are a large Strata (250+ units) and there is disquiet about this however the EC have been proxy farming for a number of years and hold about 40% of the unit entitlements.

      Is this legal as I thought the OC decision can’t be overridden? If the tender was sightly changed would that make a difference (i.e.: the EC may be tweaking the detail so as to sidestep the OC’s decision)? What can we do about this, is there a way to complain rather than mediation or do we need to do that?

      All thoughts welcome.

      AmazedOwner

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    • #17144
      alley cat
      Flatchatter

        Firstly – no the EC can not overrule a decision taken at an AGM. Simple.

        But if the common seal has now been applied to a contract then this significantly complicates the situation. This needs to be addressed by others in this forum who know way more than me.

        But in an aside – I think you have good reason to lobby for support to replace the current strata manager, and put in someone who is more ethical and responsible.

        Not sure how big your complex is, but you could find that with a decent strata manager, you may not even need a building manager. I would suggest that a  building manager should not be allowed to write work orders, that all work orders are approved by EC delegates (or sub committee) and then written by the strata manager. I hope that a legal eye went over the building managers contract for sticky issues as there is no standard industry contract, as building managers are completly unregulated. But you probably already know this. 

        Good luck

        Alley cat

        #17148
        Whale
        Flatchatter

          AmazedOwner – firstly, I’m amazed too!

          alley cat’s advice is correct, in that the Executive Committee (E/C) cannot overrule a decision of the Owners Corporation (O/C) who, no matter what the circumstances, remains the “principal manager”.

          It would appear from the information you’ve provided that the E/C has been half-smart, by convening a Meeting to consider and then approve a slightly changed tender.

          I use the term “half-smart” as whilst any Motion placed on the Agenda for a General Meeting can be amended by those present at the Meeting prior to a vote being taken provided the prime intent and/or the objective of the original Motion is not changed, your E/C acted illegally when it alone considered and approved a Motion on a slightly altered tender having the same intent and/or objective as the original Motion that the O/C had itself already resolved not to approve.

          So in summary, NO the E/C definitely cannot overrule a decision of the O/C and in my opinion it cannot circumvent that decision by determining a Motion differently at its level, that has the same intent and/or objective as the original Motion.

          Mine’s a lay person’s opinion, so I’d strongly suggest that you quickly obtain some professional advice from a Specialist Strata Law Firm such as the one who advertises on this Forum’s Homepage, particularly about what can be done to rescind the Building Management Contract. 

          Whatever that advice recommends, I’d also suggest that at the next General Meeting of the O/C it resolves to invoke the Provision of the Legislation that limits the power of the E/C, in this instance to appoint a Building Manager; in NSW that’s Sh2 Cl 34(g) of the Strata Schemes Management Act (1996).

          #17150
          AmazedOwner
          Flatchatter
          Chat-starter

            Thanks for the feedback guys, everything said makes sense.

             

            Our problem is that this EC has previously proved very difficult to deal with, have lots of proxies from their constant proxy farming exercises and the several of us who are concerned feel like we are in a difficult spot because we now need professional advice & that costs money for us individuals whilst our own EC will be using the OC money to defend their position.

             

            Would the CTTT help out here, and if so how – is that just mediation? This is a very tricky situation if the EC and/or the Strata Manager has knowingly broken the law/breached the Act.

            thanks

            AmazedOwner

            #17151
            Jimmy-T
            Keymaster

              Mediation is just the initial obligatory step before adjudication and perhaps a hearing.

              At adjudication, each side presents their argument in writing.  Whoever loses usually then asks for a tribunal hearing where you can present your case in person.

              What you would be seeking is a CTTT order for your EC to obey the instruction of the Owners Corporation.  In an extreme situation – such as the EC being seriously dysfunctional or just not running the strata scheme for the benefit of the majority of owners – you would ask for the compulsory appointment of a strata manager (although you have to find one in advance who is prepared to take on the role).

              Proxy farming is a blight on strata in this state which is why it will soon be outlawed.  But there’s nothing to stop you approaching owners directly and getting their proxies to hold a general meeting – proxies are extinguished automatically by a subsequent proxy –  reverse the EC’s decision and, if you have the support, boot them out.

              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.
              #17154
              scotlandx
              Strataguru

                Naughty naughty EC.  The gall of some people is gobsmacking.

                A couple of things you might want to consider:

                – if you overturn the EC’s decision (which I believe would be the right thing to do) then the management company may have the right under the contract to be paid out a sum of money, this will vary depending on the contract, but that is how those contracts usually work.  The amount can be quite substantial.

                – however, if the management company was aware that the OC had determined not to appoint it, and it may well have been, then its case is weaker.  That is, if it entered into the contract knowing that the OC didn’t want to appoint it, then at one level it was party to the misfeasance of the EC and would find it difficult to argue it was entitled to anything. 

                – similarly, if the OC did have to pay the management company out in the event of termination/rescission of the contract, it is possible that the OC could hold the EC members liable for that payment, because they overrode the wishes of the OC determined at the GM.  In such a case I am not so sure they would be covered by insurance, because from the facts they acted in bad faith.  That would certainly give the EC members something to mull over.  Query also whether you could seek recompense from the strata manager if he was a party to it.

                None of the above is legal advice.

                I agree with Whale, tweaking the tender is not going to cut it if the substance of the decision is the same, i.e. appointing the building manager.

                I would go further and limit the EC’s decisions over a range of matters, including the amount of money they can spend, if you can’t trust them.

                #17157
                Dudley
                Flatchatter

                  Good Morning,

                  I have been following this thread and I am not quite sure what “Proxy Farming” is. I think that I am experiencing the effects.

                  Regards,

                  Dudley

                  #17158
                  Jimmy-T
                  Keymaster

                    Proxy farming or harvesting is where one owner, usually the chair, approaches a number of individuals and convinces them that their proxy vote is needed for the smooth running of the building. What they possibly don’t realise is that dozens of other owners are getting the same message and at the end of the day the Proxy Farmer has a stack of votes that they can use to block motions, promote their own preferences, elect their own choice of committee members, reduce the size of the committee to exclude opponents (aka ‘troublemakers’) and free themselves from financial restraints for the next year.
                    Another popular way of amassing votes is to use their position in the EC to launch a scare campaign claiming that without proxies, the AGM could be non-quorate which would be an economic disaster on a par with the Global Financial Crisis.
                    It’s a racing certainty that proxy farming will be banned in the current review of strata law in NSW, as it has in Queensland and S.A. where there are limits on the number of proxies individuals can hold plus, in the latter case, postal voting on specific issues.
                    It’s the strata equivalent of branch stacking and you can bet anyone who does it is probably up to no good.

                    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.
                    #17175
                    AmazedOwner
                    Flatchatter
                    Chat-starter

                      Thanks for all the replies and advice.

                      I’ll start the process with Mediation to see if we can hold this EC accountable to the owners and update here as it progresses.

                      AmazedOwner

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