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I am an owner in a small strata scheme. I was the successful applicant for an adjudication order against the owner’s corporation in NSW. The owner’s corporation paid their legal counsel a sum of money that was incorporated as an expense in the yearly budget. What section of the Act or Regulation can I rely on to request the owner’s corporation refund my 23% unit entitlement taken out of my levies for payment of their legal fees? I read somewhere that I am not liable, but they will not refund unless I quote something. Otherwise I will have to get an order from NCAT, but even then I would have to quote something. Does anybody know? I would really appreciate it.
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Why should you get anything back? You’re not outside the Owners Corporation, you are part of it and are liable for its expenses to the extent of your unit entitlement. That would include legal fees.
The Act seems to disagree with DaveB.
Section 230 clearly says that an owners corporation can’t pay costs or expenses, incurred in a losing action against an owner, from admin or sinking funds. It has to raise a special levy. However, that levy can’t be raised against the owner who was successful in the action.
It makes sense – why should someone have to pay a share of the costs of another party that was in the wrong? FYI: Chapter five is the section of the Act dealing with disputes within owners corporations.
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.
(3) In this section, a reference to proceedings under Chapter 5 includes a reference to proceedings on appeal.
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.
Thanks Jimmy for the correction. In sealion’s case it would seem that there has been no special levy raised and that the expense has been charged to either the admin or sinking fund. I’d doubt whether the legal counsel would want to wait for that process to take place and the remaining owners to eventually pay up. So shouldn’t sealion be asking that the correct process be followed so that the special levy is struck, and reimbursed to the appropriate fund. He wouldn’t then be charged that levy for his share, and no refund would be involved to himself.
I agree. It might take some creative accounting and maybe it would just be better if they paid him back and the result would be the same … ah, but would it? I seems to me as if the law has been written to prevent owners corps depleting their funds with ill-considered actions against individuals. So, yes, a special levy to replace the “loan’ from the admin fund and repay sealion would be the go.
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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