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Topic
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Our sinking fund balance is twice that proposed by fund analyst, Sinking Fund Plans Australia Pty Ltd. Members of the owners Corp. have asked to hold an EGM prior to the next AGM to consider reducing the levy. We have been informed in writing by the OFT that we can lower the levy at an EGM, however our strata manager states that we are not permitted to do so and must wait until the next AGM, referring to Strata Schemes management Act clause 75. The OFT telephoned our manager to add a verbal explanation and because she was so adamant, they held a “very high profile” advisory meeting and confirmed their ruling again. The authority for this opposition is her “office”, with no author named or text provided. Who is correct and what is our next step?
Papageno
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THE SM WORKS FOR YOU THE OC
and so if you want to hold an EGM to reduce the SF levy do so and so long as you pass a valid motion to that effect you tell your SM to levy the new rate.
The SM doesn’t have any choice unless they take you to conciliation and adjudication to get the decision overturned (even if they are correct which I doubt) and for this they would have to spend their own money (NOT strata funds with no possibility of a refund from strata).
Think of the SM as the Strata Administrator doing the bidding of the OC or EC who make all the decisions.
Papageno – I’m afraid that have a different interpretation; sorry to confuse.
When the budgets upon which levies are set are determined, they’re based on the actual expenditure for the preceding year and any anticipated additional expenditures in the coming year, and that’s why the Annual General Meeting (AGM) is the best venue for Owners Corporations (O/C) to make that determination.
I recognise that the above methodology is less accurate for the Sinking Fund, but that’s why the Sinking Fund Plan comes into play.
So as Clause 76 of the Strata Schemes Management Act (SCMA) prescribes that the amount of the Plan’s levies must be determined at the same meeting at which the budgets are set, and Clause 75 prescribes that those budgets must be set at each Annual General Meeting, I agree with your Strata Manager.
I appreciate why you and the other Owners would want their levies to be as low as possible, but I’d be more inclined to base those on past actuals and anticipated future expenditures, so it may be as well for you to use the time between now and the next AGM to take a closer look at that Sinking Fund Plan. There may be future expenditures required and shown in that Plan that will gobble-up what appears to be a current surplus.
All that said, KWP’s right in saying that your Strata Manager is contracted by the O/C, and in that regard it could instruct her to convene the EGM and, subject to a favourable resolution by those present, to adjust the sinking fund component of the levies…. but then Strata Managers are required to act in accordance with relevant laws, and as I said, in that regard I believe yours is right.
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