TERMITE DAMAGE

James – I’m inclined to agree with you about your decision to purchase being naive, as was your decision to undertake and pay for any works that should have been paid for from funds held in your Owners Corporation’s (O/C) accounts.

The easiest answers first…….

1. Regarding the sinking fund (or the probable absence thereof), a two (2) lot scheme is exempted from having a sinking fund if the buildings comprising each of the lots are physically detached, and each building is contained wholly within the boundaries of its lot, and the O/C (i.e. the two owners) has unanimously resolved at a General Meeting not to have that fund, and;
2. That same criteria applies to the requirement for an O/C to hold building insurance, so it could be that under-insurance is not an issue in your situation if the above has been unanimously resolved, and;
3. There’s no requirement for a two (2) lot scheme to have its accounts audited.

Now I’m a little confused about who it is that you expect to pay half of your costs particularly in circumstances where the O/C, who you indicate may have some funds in its accounts, is in fact you and your neighbouring owner.

So I have some questions to assist in further responses by me and others:

1. What half of your expense has been paid – for the back boundary fence, for the gyprock, or both, and does your reference to “my strata plan neighbours” mean those in the adjoining villa or in a different property on the other side of the back boundary fence?
2. Who if anyone took over the management of your scheme after the cessation of self-management in 1995?
3. Is there currently a strata managing agent for your scheme; it sounds like one was compulsorily appointed, and if that’s the case what were the terms of any appointment and is it ongoing?
4. What exactly are you hoping to resolve post mediation?

James – the best outcome for you would in my opinion be for mediation to result in your adjoining lot owner agreeing to reimburse the approx. $3K that represents 50% of the costs that you incurred to attend to works that would otherwise be the responsibility of the Owners Corporation (O/C).

Otherwise, I don’t believe that you could take the matter to the NSW Civil & Administrative Tribunal (NCAT) due to its statutory appointment of a Strata Managing Agent, who in both legal and practicle terms is now the O/C of your Plan.

So unless the NCAT’s terms of appointment for the Strata Managing Agent specifically sets out what’s required of them, and that would be unusual, then they have carte blanche to, without prior referral to you and your neighbouring lot owner, do whatever they consider is necessary in order to bring your O/C into compliance with the Act with or without a formal General Meeting.

Despite your objectives, that I can appreciate, the Strata Managing Agent’s objectives likely won’t be limited to setting contributions at a level that they consider is sufficient to raise the required funds to properly maintain the common property, as after all an O/C’s responsibilities go far beyond that.

I hope that gives you some insight to the situation that you’ve stumbled into, albeit with the best of intentions and encouragement from worthless permissions and verbal approvals.

So how best to proceed?

As I said successful mediation is the best outcome, but if that doesn’t eventuate or if your neighbour renigs, then I’d approach the Strata Managing Agent with a formal /written request for entire cost of O/C works for which you alone have paid to be recorded as a credit towards your future contributions (levies).

That’s somewhat complicated I agree, but less so than the Strata Managing Agent, who remember IS the O/C, automously determining to raise those same funds and more from the proprietors of the Plan in circumstances where one of those (i.e. you) has already paid some of those.

In conclusion, I’ve probably painted a worst case scenario with regard to how a statutorily appointed Strata Managing Agent can elect to perform their duties, when how yours may act could depend upon a number factors including how much work’s on their table, how much of a mess your Plan’s in, how many of your O/C’s functions are out of control, and how urgently all of those need to be reigned-in.

James – I can’t help wondering how it is that a Strata Managing Agent who was statutorily appointed following your Application to the Tribunal attended mediation presumably in support of the other Owner (?).

Anyway, Sect.62 of the NSW Strata Schemes Management Act (SCMA) requires that Owners Corporations (O/C) properly maintain and repair common property, that in the circumstances that you’ve describe yours didn’t do, because you arranged for some repairs yourself, it would seem without prior written consent from anyone who was empowered to provide it.

So have a look at Chapter 5 of the SCMA and particularly Part 4, and see if you can find any provision under which the Tribunal can Order an O/C to reimburse an Owner in the circumstances described (above), and particularly so where any consent of the former would likely have required a special resolution that the Tribunal may require an O/C to vote upon in that way after the fact, but cannot itself rule upon or make an Order that would bring into effect the same outcome as such a vote would if properly resolved. 

Then… perhaps consider who will be funding the O/C’s costs to attend the Tribunal, and the fact that it rarely (if ever) awards costs to either party.

Then… think about a second legal opinion!