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We recently applied to NCAT for the appointment of a compulsory managing agent (under s162 of SSMA 1996).
We have just received the decision in our favour and a compulsory managing agent has now been appointed.
When we first lodged the application, our Strata Committee engaged a legal firm to defend the application. They did not seek the approval of the owners corporation at a general meeting to engage the solicitors. Further, they did not even send a copy of the application to the owners, as listed on the strata roll, and as required under the act.
After many underhanded tactics, it became clear that they racked up legal costs to the tune of approximately $88,000 in defending the application for a compulsory strata administrator. They did not seek approval from the OC on this expenditure.
We understand that under s230 of the 1996 act, a special levy now needs to be raised to cover these costs and all owners are required to pay the levy, with the exception of us, the applicants.
Could you please advise what the corresponding section of the 2015 act is.
In addition, is there a way for the owners to request this money is recouped another way, through the insurance for example, since the owners did not approve this expenditure in the first place and hadn’t even been sent a copy of the application!
Many thanks for any insight and advice.
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I think this comes under section 87 and/or 90 (both below)
87 Orders varying contributions or payment methods
(1) The Tribunal may, on application, make either or both of the following orders if the Tribunal considers that any amount levied or proposed to be levied by way of contributions is inadequate or excessive or that the manner of payment of contributions is unreasonable:
(a) an order for payment of contributions of a different amount,
(b) an order for payment of contributions in a different manner.90 Contributions for legal costs awarded in proceedings between owners and owners corporation
(1) This section applies to proceedings brought by one or more owners of lots against an owners corporation or by an owners corporation against one or more owners of lots (including one or more owners joined in third party proceedings).
(2) The court may order in the proceedings that any money (including costs) payable by an owners corporation under an order made in the proceedings must be paid from contributions levied only in relation to the lots and in the proportions that are specified in the order.
(3) The owners corporation must, for the purpose of paying the money ordered to be paid by it, levy contributions in accordance with the terms of the order and must pay the money out of the contributions paid in accordance with that levy.
(4) This Division (other than provisions relating to the amount of contributions) applies to and in respect of contributions levied under this section in the same way as it applies to other contributions levied under this Division.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 think the process would be something like this.
The new committee resolves that the Owners Corporation will get instructions from a lawyer re issuing a demand to the members of the committee that started the legal action without approval for incurring obligations and making payments from the Owners Corporation funds without proper approval of a general meeting. There should be supporting documentation for the likely cost (it is for advice only, not for actually doing anything) to substantiate that there is no requirement for a general meeting to approve.
The advice will be that those owners should be advised of the proposed legal action, and a notice prepared and distributed for a general meeting at which the proposal for recovery of the unapproved expenditure from those committee members will be put to the owners. The Treasurer at the time should be specifically identified as the responsible person, but the liability would actually be joint and several.
Meanwhile an application is made to the Tribunal for awarding of costs that excludes from the special levy all owners who were not part of the Committee at the time that the payments were made.
With those two actions in front of them the owners who spent the money without approval will come to an agreement to meet the expenses by levy contributions based on their responsibilities, and a notice of adjudicated agreement can be lodged with the tribunal. If that doesn’t happen, the owners can then consider whether or not to take things further.
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