Small victory for litigious Victoria strata warrior

An increasingly attractive suggested method for dealing with… let’s call them “persistently critical” owners in a strata scheme has been to try to pass on the cost of strata managers responding to their complaints.

Is that fair?  Possibly in extreme situations.  Is it legal, that depends, according to a recent ruling in the Victorian Civil Administrative Tribunal (VCAT).

This all came to light in a case involving an elderly owner in a Melbourne scheme who, to say the least, was not happy with the way his block was run.  And, as in many similar cases, it became very personal, very quickly.

It’s not clear what original beef this owner – let’s call him Mr Roger (not his name) – had with his strata committee. He has numerous cases running through VCAT but one dispute related to six tax invoices from the block’s owners corporation (strata) manager.

The invoices were related to alleged breaches and charges for dealing with correspondence, starting on Christmas Eve, 2020 and continued until June, 2021. They included:

• Alleged by-law breach – Loud and offensive behaviour towards the Building Management team without reasonable cause – $118.46
• Response to 93 emails: $1677.14
• Alleged by-law breach – Abusive and Threatening behaviour to Building Manager:    $118.46
• Invoice for attending various correspondence: $197.31
• Invoice for attending various correspondence: $345.29
• Response to 16 emails from 14/4/21 to 2/6/21: $443.95

The total of all six invoices was $2900.61. It’s worth noting that the charges relating to the breaches of the by-laws were not fines so much as fees charged to the owners corp for issuing the breach notices.

Interest added

Mr Roger refused to pay those disputed fees as he says they were not properly levied, however he paid all other invoices issued, such as annual fees. However, the manager kept issuing tax invoices and adding the unpaid amounts plus interest to the alleged ‘arrears’.

In the meantime Mr Roger approached four separate legal firms in an effort to challenge the disputed fees, as well as consulting them about other issues he had with the owners corporation and the manager. He eventually sacked all the law firms as he was not happy with their services.

The issue then took an even more serious turn when the strata manager engaged debt collectors to collect the disputed fees.

According to a summary of the VCAT case, by the time the next annual general meeting rolled around in September 2021, the ‘arrears’ amounted to $4342.00, including interest.

Election blocked

Mr Roger was allowed to attend the annual general meeting, but he was not permitted to vote at the meeting as he was not ‘financial’ because of the unpaid arrears. For the same reason he was also not permitted to stand for election to the committee.

The strata committee chair told the Tribunal that the intention was to recover from Mr Rogers what the owners corporation had been charged by the manager as a result of numerous emails and requests for information.

“We believed we were entitled to pass them on because it had cost the owners corporation to deal with all his emails,” he said.

Mr Rogers then applied to VCAT for orders to erase the disputed fees and halt the debt collection action.  In his 125-page submission he said he also wanted the AGM minutes to be corrected, appointment to the committee (because he was wrongly prevented from standing), the refund of legal fees, legal costs incurred by the committee and refund of VCAT fees.

He requested an explanation of how the committee had reached the decision to charge him the fees and why this had not appeared on any committee minutes. And he asked that the chair, secretary and strata manager be fined for their actions

Shortly after he filed his action, the owners corporation rescinded the arrears claims and halted the debt collection process. However, Mr Rogers persisted, demanding that the minutes be corrected, his fees in taking the action be covered and an explanation be forthcoming.

Unanswered emails

Mr Rogers also sought orders against the chairman, committee and manager that, ‘all past unanswered emails by each be answered and all future emails be answered promptly’.

This was declined by the Tribunal, as was a request that the chair and secretary be fined for pursuing the disputed charges.  The Member observed that the Tribunal did not have the power to order that.

But here’s the interesting part; the Member said the owners corp could have charged Mr Rogers for all the extra expenses he incurred, they just did it the wrong way.

“I have found that the tax invoices comprising the disputed fees were not validly levied,” the Member observed. “However, had the proper process been followed, the Owners Corporation might well have been justified in charging back to Mr [Rogers] the fees that all the lot owners had incurred as a result of Mr [Rogers’] extensive correspondence and requests for information.’

And what is the valid way?  Earlier observations that the costs were charged without a special resolution of the owners corp or even a simple resolution by the committee offer a clue.

More VCAT actions

The scheme’s lawyers pointed out that there were three other VCAT actions underway by Mr Rogers and that there were more on the way, so you have to feel for the strata chair and committee members.

In the end, the Tribunal ruled that the decision-making behind their action should be explained by the committee, the suggestion in minutes of the AGM that Mr Rogers was ‘unfinancial’ should be corrected, and that legal costs and application fees of $460 and $64.30 respectively be refunded by the strata scheme.

But here’s the main lesson from this whole fandango: if you are planning to deter owners from issuing complaints by making them wear the resulting extra charges incurred by the strata manager, make sure you have the appropriate by-laws and decisions in place before a single invoice is issued – that’s if this is even permissible in your state.

This ruling was made in Victoria and, as we know, different strata laws are interpreted differently in different places.

So, wherever you are, consult a strata lawyer and make sure your legal ducks are lined up before you hit owners with charges for excessive work, regardless of how persistent and annoying their complaints may seem.