- This topic has 15 replies, 4 voices, and was last updated 1 year, 12 months ago by .
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We have an interesting situation, be interested in any comments thoughts anyone has.
Community Scheme with 350 odd lots comprising four member buildings.
The member with the highest UE (but no majority UE) has different ideas to the other 3 members and seems to be incapable of respecting majority decisions constantly trying to have decisions overturned.
This members representative is also secretary of the community association. For various reasons, the committee decided it wanted to elect someone else to be secretary so a motion was placed on the agenda of a committee meeting to vacate the secretary role and appoint someone else.
On the day of the meeting the representative (also the proxy holder for that member) wrote to the managing agent and invoked the decisions to have no effected if apposed part of the act saying they opposed the decision being made to remove them as secretary. They have more than 30% UE. The member gave no reason for their objection.
This clause (schedule 2, part 3, clause 7, point 4) was originally in the SSMA and seems to have made its way over to the CLMA update in 2021. I have read of examples where this clause has been used to stop committees making a decision where owners believed the committee was acting improperly or making a decision beyond it’s authority.
However in this case, the committee was not acting improperly or beyond it’s authority in attempting to resolve by majority decision to change an officeholder position. That CLMA is very clear that the committee has authority to appoint someone else to an officeholder role.
There appears to be no legitimate basis for this member to oppose the making of the decision, other than they didn’t see the outcome of the decision being in their favour / interests.
It doesn’t appear this part of the act has been used in the spirit / manner in which it was intended and thus the situation raises a serious ethical concern.
A committees most important responsibility is to preserve the integrity of the democratic process and a number of use see the use of this clause in this manner as completely undermining the democratic process.
In theory now this member has learnt this new trick, they could stop the committee from making any decision they think may not be in their interests by simply objecting to it.
I see the need for these protection mechanism in the act, but there also needs to be something to stop them from being misused where they are not actually appropriate.
- This topic was modified 2 years, 2 months ago by .
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Warning: My opinions immediately below turned out to be wrong (as you will discover from reading on). I have left them in because I think it’s a good example of how one can misinterpret strata law, especially if you go by what you think the law’s intent was, rather than a “black letter” reading. It’s worth reading through all the posts to see how a reasonable interpretation can be totally wrong. – JimmyT
Unless the person raising the objection owns 33.4 percent of the unit entitlements, or has signed letters from enough owners, I think the strata manager has erred here. This is what that section of the Act says:
Decisions to have no effect if opposed by more than specified owners
A decision of an association committee has no force or effect if, before the decision is made, notice is given to the secretary of the association by 1 or more owners of relevant lots, the sum of whose unit entitlements exceeds one-third of the total unit entitlements, that the making of the decision is opposed by those owners.The key word in all this is “owners”. The way I read this is, just because someone is the secretary of a block with more than one-third of the owners in it, they don’t necessarily have the votes of owners required to block a vote in committee unless they can show that all those owners have made an individual decision to support them.
Your strata manager needs to have a serious rethink on this (and not allow themselves to be so easily bullied). If they refuse, hit them with a request for mediation leading to a run at a section 193.
193 Orders to settle disputes or rectify complaints
(1) Orders relating to complaints and disputes
The Tribunal may, on application by an interested person, make an order to settle a complaint or dispute about any of the following—
(a) the operation, administration or management of a scheme under this ActThe 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.
- This reply was modified 1 year, 12 months ago by .
I still don’t think that someone who is a nominee for a building can claim to carry the votes of everyone in that building. Even if they are the “proxy” there is a limit to the number of proxies any one person can hold.
Sounds like you have a mess there and the strata manager is not helping. If the strata manager wasn’t allowed to see the minutes, they should never have allowed the veto.
A trip to NCAT may be in order, to get it sorted out. One owner can’t be given a veto on all motions proposed at a community association. Maybe you need a new strata manager too.
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.
I’d also like to clarify if the secretary is sending a proxy to the meetings and how can this work?
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.
We can only assume either the strata managing agent for building A (which is a different company to the one managing the community association) or a strata lawyer who they may have consulted has provided them with the advice on how to use this part of the act to seek their desired outcome.
I don’t know why you would accept that assumption to be true. And even if it is, I would accept that advice to be valid.
The secretary claims they are acting on behalf of their strata committee (building A) by making the objection to a decision being made by the CA to remove them as secretary.
They are using a clause cloned from the Strata Schemes Management Act which refers to a percentage of owners. I would think they would have to show that sufficient numbers of owners supported their veto for it to stand
I have asked numerous strata managers whom I know for their opinion on this clause, and it certainly appears to be open to the interpretation in which it has been used in this situation.
Yes, it’s open to that interpretation but it’s also open to the interpretation that this is beyond the scope of the relevant section of the Act, is anti democratic and not in keeping with the intention or spirit of the Act.
I will dig further … in the meantime, your strata manager should ask the vetoing member to provide proof or authoritative legal advice that they have a valid power to do this. Failing that, the secretary should stand down, at least until this is resolved.
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.
- This reply was modified 2 years, 2 months ago by .
My inner “bush lawyer” finds this fascinating. My new project – get a definitive answer or get the law changed.
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.
This all depends on who are the members of the community association. If they are the 4 strata schemes, then they will each vote via their authorised representative according to their UE in the community scheme. If you read the management statement, it will describe how this works. Just because one is a lot owner in a strata scheme doesn’t mean one is a member of the community association.
Why would you change the law because it does not comfortably fit a particular situation? One of the features of strata law is that it is designed to apply to a range of schemes of different sizes, in different locations, filled with different people, with different requirements. The fact that some people exercise power and engage in politics is a reality that can arise whenever groups of people get together and try to balance their competing interests and aims.
The ‘owner’ referred to in clause 7(4) of Schedule 2 of the Community Land Management Act 2021 is not the individual owners in the strata scheme, but the strata scheme itself, i.e. the owners corporation is the owner of the strata scheme.
Therefore, it appears as if the strata scheme can provide notice of opposing the decision of the committee and the owner corporation cannot consider the motion.
However, the community association can either:
- Resolve at a general meeting to appoint another person as secretary – see section 49(c) of the Community Land Management Act 2021; or
- Convene a general meeting and elect a new committee.
Matthew Jenkins
General Manager / Partner
Bannermans Lawyers
Level 2, Suite 1, 65 Berry Street, North Sydney NSW 2060
PO Box 514 North Sydney NSW 2059
P 9929 0226 F 8920 2427
W www.bannermans.com.au- This reply was modified 1 year, 12 months ago by .
Why would you change the law because it does not comfortably fit a particular situation?
Why? When it leads to a minority of owners holding an excessive amount of power over the decisions of the majority. That’s why they changed the proxy farming rules – to stop people misusing the powers that were granted to them in the mistaken belief that it would aid the democratic process, not undermine it.
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.
invoking schedule 2, part 3, clause 7, point 4 of the CLMA objecting to the decision being made.
For anyone bewildered by theses references, the CLMA is the Community Land Management Act and the reference is to a clause which says this:
(4) Decisions to have no effect if opposed by more than specified owners
A decision of an association committee has no force or effect if, before the decision is made, notice is given to the secretary of the association by 1 or more owners of relevant lots, the sum of whose unit entitlements exceeds one-third of the total unit entitlements, that the making of the decision is opposed by those owners.
The secretary also seems to be depending on clause 39 which says a committee member can only be remove by a special resolution at a general meeting (which can be blocked by a 25 per cent vote against).
Section 39 allows for an “officer” to be removed from that office simply by electing someone else to it, but that has to be done by the committee, and if the committee member has the votes to block that motion, then they can do so (which is how we got here).
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.
- This reply was modified 1 year, 12 months ago by .
This could all be resolved at the next AGM, when the blocking vote would not apply as the new committee and office-bearers have to be elected, regardless of any other motions.
However, if it’s a matter of urgency, you could put a motion to the general meeting, calling for the secretary’s resignation.
You could also propose a motion that the committee seeks a ruling from NCAT under Section 197 c (below), and that all
membersowners be made aware of the potential costs of pursuing and defending this motion given that all owners will be contributing to taking the action but only the owners in the losing side in the argument have to pay a special levy to cover the costs of defending the action.Yes, it’s a scare campaign but it could all be resolved if he just steps down from his role as secretary. If the owners in his building become aware that the disruption and heavy legal costs are solely due to the failure of their secretary to accede to requests of the majority of committee members for him to vacate his office-bearer role on the community association, the might put pressure on him to step down.
You might even be able to persuade the committee of the other building to remove the person as secretary of their committee which would trigger his removal from your committee.
In my experience, the fear of costly legal battles will motivate strata owners more than moral or political arguments. And just commencing action, and letting owners know about it, is often enough to put those involved back in their box.
But a word of caution – I wouldn’t get too specific about why you want him removed. Just say that the majority of members of the committee want him to cease acting as secretary but he is using arcane legal arguments to prevent a civilised transfer of duties, forcing members to consider action at NCAT to assert the will of the majority of committee members.
197 Orders relating to association committee and officers(1) The Tribunal may, on its own motion or on application by an interested person, make any of the following orders—
(a) an order removing a person from an association committee,
(b) an order prohibiting an association committee from determining a specified matter and requiring the matter to be determined by resolution of the association,
(c) an order removing 1 or more of the officers of an association from office and from the association committee.
(2) Without limiting the grounds on which the Tribunal may order the removal from office of a person, the Tribunal may remove a person if it is satisfied that the person has—
(a) failed to comply with this Act or the regulations, or the by-laws or management statement of the association scheme, or
(b) failed to exercise due care and diligence, or engaged in serious misconduct, while holding the office.
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.
- This reply was modified 1 year, 12 months ago by .
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