EGM

Alinka – yours is a perfect example of the tail wagging the dog!

The Strata Manager works for the Owners Corporation (i.e. you and the other Owners) and they’re obligated to act in accordance with your instructions provided they’re legal in terms of the NSW Strata Schemes Management Act (SCMA) and any other Acts of relevance.

Even though the Agency Agreement that prescribes the terms of your Strata Manager’s appointment and their duties may delegate the role of Executive Committee Secretary to them, which gives that Strata Manager the ability to convene General Meetings, even then the elected Secretary of the Committee can, and in your circumstances should have, overruled the Strata Manager.

The correct procedure was followed when 25% of Owners (by unit entitlement) requisitioned the delegated Secretary to convene an Extraordinary General Meeting (EGM) but the SCMA then requires the Secretary to convene a Meeting to consider the Owners’ Motion/s “as soon as practicable” thereafter.

Clearly, in the circumstances you describe that should have been concurrently with the upcoming Annual General Meeting, and any Strata Manager worth what their client’s paying them (i.e. your Owners Corporation again) should have been in no doubt about the requirement for special resolutions, with ≥75% of votes in favour by unit entitlement for the Motion/s to pass; the SCMA is very clear on that provision!

It’s usual for an EGM to be paid for by the Owners who’ve requisitioned it, but because the Motions were incorrectly put and the 2 hour debate resolved nothing in terms of committing expenditure, resulting in a proper mess (a technical term) I’d be inclined to let it slide and pay-up from communal funds. After all, those 2 Owners are contributing at least 25% of those costs anyway!

So far as the Strata Manager is concerned, your Executive Committee needs to quickly pull them into line. Let them know who they’re working for, and if necessary amend their Agency Agreement to ensure that happens – perhaps by reviewing those delegations.

alinka – NO they should not, unless of course one of them is the Executive Committee Secretary who is the person responsible for convening General Meetings, but in a Plan as small as yours it shouldn’t have been too difficult for someone to consult with all eight (8) Owners about a suitable time, venue etc. and even if there’s no consensus, that’s what proxies are for!

Just as the Secretary convenes Meetings, without stating the obvious the Chairperson chairs them, but I say again that it’s customary for those functions to be delegated to a Strata Manager, who should discuss the details of venue etc with whoever it is that’s shown as the Owners Corporation’s nominee on their Agency Agreement; usually the Secretary.

The Motions to be included on the Meeting Agenda can be whatever is provided to the Secretary by the Owners concerned, so YES those Owners could submit a Motion about the Owners Corporation paying for the costs of the EGM, and that could have been resolved by those present on the basis of a simple majority vote one way or the other; so unlike the “non-special resolutions” there was no basis for the Strata Manager to dismiss it.

With regard to those resolutions, the Strata Manager should have known what type was required for each of the submitted Motions, and it’s their role to provide the Owners Corporation as their client with that advice and to re-word the Motions accordingly; that’s what you’re paying them for and it should have taken about 2 minutes “research” as the relevant provision of the SCMA is very clear at Sect 65A (with my emphasis in bold):

(1) 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.

As I said before, in the process of pulling its Strata Manager into line, your Owners Corporation also needs to review the current appropriateness of that Agency Agreement and, particularly so in the circumstances, its delegations and its nominee/s in terms of liaison with that Strata Manager.

Finally, it’s clear to me that you and the other like-minded Owners want those who requisitioned that do-nothing EGM to meet the entire costs of doing so, and whilst I can understand your sentiment it’s just not a practical option in my opinion. It will just end up as a they said : the rest of you said scenario, and with the Strata Manager just sitting back and relying the Schedule 1 charges (the disbursements schedule) that are outlined in the Agency Agreement that your Owners Corporation has already signed-off on; not worth the fight in my opinion.

Alinka – in response to your questions and in the context of the circumstances that you’ve outlined in your posts, the answers to each of those questions is YES, and it’s also worth noting that “Extraordinary General Meeting” is just the descriptor used to define any Meeting of an Owners Corporation that’s not an Annual General Meeting!

However, I’m afraid that it’s not always as straight forward as that; as I often say with the practical application of Strata Law, it depends.

For example, if an Owner proposed to undertake renovations to their townhouse, and they’d obtained quotations, selected a preferred contractor, checked their licensing and insurance details, agreed upon a preferred start date with them, and then after approaching Council they were informed that it required letter from their Owners Corporation (O/C) stating its prior consent to the works in accordance with the SCMA.

Assume that Owner then directly approached their Executive Committee Secretary to convene and EGM (which the Secretary can themselves do) in order to consider a Motion to consent to their proposed renovations, or even if they even went as far as providing a requisition for a EGM supported by 25% of all Owners, then in such circumstances, whilst after discussions with other Members the Secretary would be correct in imposing a requirement to have that Owner meet the costs of the Meeting and for the drafting and Registration of a Special By-Law if necessary, they’d be hard-pushed to claim that it was impracticable to convene an EGM – even if the date of the next AGM was only a few months off.

Impracticable from whose perspective? As I said, it depends on the circumstances, but as you requested, some relevant provisions of the SCMA are:

– Re the role of the Strata Manager with respect to convening and chairing Meetings, and of the Secretary’s to still assume their role; and,

– Re the ability of Owners to requisition a General Meeting and the subsequent role of the Secretary at Clause 31 (3) of Schedule 2; and more generally,

– I’d urge you and your like-minded Owners to read THIS excellent publication of the NSW Department of Fair Trading.

Here is the full requirement

Schedule 2 section 31

(3) The secretary of an executive committee or, in the secretary’s absence,
any member of the executive committee must convene an extraordinary
general meeting as soon as practicable after receiving a requisition for
such a meeting signed by one or more persons entitled to vote in respect
of one or more lots, the unit entitlement or the sum of the unit
entitlements of which is at least one-quarter of the aggregate unit
entitlements.

This to me seems to be a license for an unscrupulous Sec to ignore the requests of 25% of the strata that have requested an EGM to resolve an issue because it leaves it up to the Sec to decide when to hold the meeting because the term “as soon as practicable” could be interpreted as the next AGM if he is so inclined.