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NSW: Q&A How do we Deal with Strata Manager Complaints and Bullying?

The LookUpStrata Team
Money Loss

These lot owners have questions about where and how to lodge strata complaints and strata manager complaints in NSW. They have concerns about the behaviour of their strata manager. Is there a strata ombudsman in NSW?

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Question: To terminate our strata agent, we convene an EGM without notifying the current strata manager. The strata agent insists the EGM was illegal. How do we force the agent to accept the decision to terminate?

To terminate our strata agent, the committee authorised an EGM to be convened without notifying the current strata manager. We held the EGM on time, achieved a quorum and passed the resolution. However, the strata agent said the EGM was illegal. How do we force the agent to accept the EGM?

Answer: Ask the agent to confirm on what legal basis they allege the meeting is invalid.

As appointed secretary, you may convene a general meeting (not an AGM) at any time, as you have done. Your strata manager may have picked up on a technical deficiency (e.g., a notice period of 7 clear days + 7 business days postage may have been missed). If there are no statutory flaws in the notice or minutes, your meeting cannot be challenged by the strata managing agent.

You should ask the agent to confirm on what legal basis they allege the meeting is invalid and insist they hand over the books and records to the newly appointed agent. The new agent should facilitate the handover if their appointment has commenced.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #717.

Question: What are the recommended standards and best practices for a strata manager’s role, duties, and accountability?

Best practice aligns with legislation and current compliance as a standard. Best practice for an individual strata manager would rely on the needs for that site. The needs of a four lot scheme are very different from those of a 250 lot scheme or a multi tiered property with a BMC, a community association, etc. So, best practice is difficult as it differs from scheme to scheme.

As long as your strata manager is staying up to date and continuing their professional development, which they are all required to do as a part of the licensing process. You should expect to be advised on requirements to maintain the building, have your annual general meeting once a year and communication should be flowing to the strata committee and hopefully to the owners corporation (OC), depending on the OC’s instructions.

Megan Parkins Tender Advisory E: info@tenderadvisory.com.au

This post appears in Strata News #715.

Question: Can the strata manager be liable for damages if the owners corporation or strata committee refused to perform repairs and maintenance?

Answer: Possibly, yes. There are two primary considerations.

Possibly, yes. There are really two primary considerations. First, what functions of the owners corporation have been delegated to the strata manager? In particular, has the strata manager been delegated the function of organising maintenance and repairs to the common property? If the answer is no, the strata manager can’t be held liable because that’s not their responsibility. If the answer is yes, possibly. The strata manager might be liable if the strata manager was negligent.

The second consideration is, what limitations on the liability of the strata manager are contained in their agency agreement? Most standard form agency agreements, particularly the ones published by Strata Community Association, contain very broad limitations on the strata manager’s liability that would make it very difficult for an owners corporation, for example, to say, “Well, you’re our strata manager. You should be looking after repairs and maintenance. This is all your fault, and we want you to indemnify us for any money we are ordered to pay this poor apartment owner whose apartment was wrecked by water ingress.”

Those limitations of liability obviously aren’t binding on apartment owners because they don’t have a contract with the strata manager, but they will have an effect on what duty of care, if any, the strata manager owes the individual apartment owner who suffered the loss.

Adrian Mueller JS Mueller & Co Lawyers E: adrianmueller@muellers.com.au P: 02 9562 1266

This post appears in the October 2024 edition of The NSW Strata Magazine.




Question: Is the strata manager required to supply the OC with detailed invoices for large payments?

We have requested our strata manager provide the contractor’s formal quotes and invoices, including itemised costs, on a letterhead. They continue to send bulk costs from companies via typed text in emails. The owners corporation only wants to pay once they receive the requested invoices. Is the strata manager required to supply the OC with correct invoices for large payments?

Answer: Certain jobs cannot be itemised, and this may be why your strata manager cannot provide itemised quotations.

If the owners corporation has been delegated the authority to obtain quotations for jobs over the amount you term “large payments”, reviewing the management agency agreement under the terms and conditions they undertake this service would be prudent.

If the strata manager doesn’t run the books of the contractors and does not have the building qualifications or expertise to arrange professional tender documents, other services are available. A building consultant, project manager, etc., could complete this task.

However, the strata manager should instruct contractors on how to submit their quotations. If the contractor fails to provide this, their quotation is automatically dismissed. I believe best practice requires detailed, itemised quotes on a letterhead. Itemised pricing is generally provided if jobs can be done in stages. However, certain jobs cannot be itemised, and contractors have advised me that if they cannot itemise a quotation, it is because the job must be completed as a “whole”. This may be why your strata manager cannot provide itemised quotations.

Further, in regards to your question, you mention large payments, which lends me to pose the following questions to the committee:

It may be difficult for the strata manager to push back and tell owners they should spend money on a professional consultant to manage large maintenance and repair jobs. Strata managers, as a rule, don’t have a building or estimating background and know varying amounts of construction from life experience or through discussions with contractors. The success of any job that either needs to be scoped, requires a building contract, requires multiple inspections, or multiple trades should have a building consultant or project manager engaged.

The strata manager’s role is diverse and has many moving parts, but most relate to administration and compliance. While repairs and maintenance additional services are provided, this is for jobs of a minor nature. Your GP doesn’t perform open heart surgery, and your strata manager is not equipped with the time or the knowledge to project manage large jobs.

Nathan Clarke Hunter Strata Management E: nathanclarke@hunterstrata.net.au P: 02 4934 2022

This post appears in the September 2024 edition of The NSW Strata Magazine.




Question: Owners recently raised a $30,000 special levy for specific repairs. After the handover to our new strata management agency, we discovered the previous manager used the funds for general expenses without owner approval. Is there any recourse for these actions?

Answer: Has the owners corporation suffered any detriment?

The answer depends on several factors. For example, has there been any detriment suffered by the owners corporation? Further, there does not appear to have been a misappropriation of funds but rather an application of funds for a different purpose. The re-direction of funds may have been caused by poor budgeting or the need to address urgent/emergency repairs, including items that could not be forecast. For example, it may have been caused by an unforeseen increase in insurance premiums.

Once the reason for the re-direction of funds is determined, you may, depending on the circumstances, have recourse to report the matter to NSW Fair Trading and/or Strata Community Australia if you can prove any misconduct or mismanagement of the Strata Manager.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #707.

Question: We changed our strata management company and received the books and funds in December 2023. Since then, we received some charges. Can they invoice extra charges after the transfer of books has taken place?

We changed our strata management company in December 2023. This was the date the books and the owners corporation funds were transferred. After receiving the last statement two months later, we noticed unusually high charges collected by the previous strata manager before the transfer of the books.

We sent an e-mail to the previous strata manager disputing the charges. Weeks later, they responded, saying the charges were discounted and they were preparing a tax invoice for other uncharged services.

As their Agency Agreement ended in December 2023, can they invoice extra charges after transferring the books? Does this mean that the financial statements in the AGM agenda for the February 2023 meeting would not be a true reflection of the owners corporation’s financial position?

Answer: The management agreement should state what agreed service and additional service charges the agent is entitled to charge and the period they are entitled to charge them.

Read the management agreement between the owners corporation and the previous managing agent thoroughly. This should state what agreed service and additional service charges the agent is entitled to charge and the period they are entitled to charge them.

It’s important to note that the managing agent is only permitted to carry out the functions of the owners corporation and charge fees whilst a valid agreement is in place. You should check that you haven’t been charged for any work performed after the agreement’s expiry date.

You’ve mentioned the charges before the handover were unusually high. A significant amount of work is required to “offboard” an owners corporation (closing bank accounts, updating StrataHub, finalising accounting, collating electronic records, preparing physical documents, etc.). I expect some additional charges relating to that. The amount would depend on whether a specific charge is specified in your management agreement or how much time was required for the offboarding.

Assuming the charges you are referring to were for work carried out when the agency agreement was in place, I don’t see any issue with an outgoing managing agent issuing an invoice after the agreement has expired. As with any invoice, your owners corporation can dispute it if you feel it is unjustified.

Regarding the financial statements, most owners corporations use a hybrid of cash accounting and accrual accounting. It’s quite normal that the financial statements received at the AGM did not include some future expenses that are likely payable but which have not been entered into the accounting system as a liability because an invoice has not been received.

Please note, this is only general advice. Depending on the particulars of this matter, your strata committee might want to seek advice from a lawyer experienced with strata matters.

Edward Baker Responsive Strata E: edward.baker@responsivestrata.com.au P: 0493 970 875

This post appears in the June 2024 edition of The NSW Strata Magazine.

Question: Can our strata manager legally operate our trust account without a signed contract? We are considering changing strata managers, so the committee has not signed the contract.

Answer: The strata manager should not be operating your trust account without a signed strata management agency agreement.

Legally, the strata manager should not operate your trust account without a signed strata management agency agreement. The extent of the agent’s authority and any limitations on the agent’s authority to undertake their duties is set out in the written instrument, as required by the Strata Schemes Management Act, 2015 (NSW) and the Property and Stock Agents Regulation, 2022 (NSW).

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #679.

Question: To resolve matters in our dysfunctional scheme, fifty per cent of the committee requested and held a meeting. We recorded meeting minutes and sent them to the strata manager to distribute. Months later, they haven’t been sent. What can we do?

I am the chair of a dysfunctional strata committee of four members. In an attempt to resolve matters, fifty per cent of the committee requested and held a meeting. Thirty per cent of owners attended. We recorded a complete set of minutes.

Within four days of the meeting, we provided a copy of the minutes to the strata managing agent for distribution. Months later, despite numerous telephone calls and emails, the strata manager still has not distributed the minutes. We have not received an explanation for why the minutes have not been distributed. What suggestions do you have for dealing with the strata manager?

Is the strata manager required to distribute the minutes? How can we get them to act?

Answer: Contact the licensee of the strata management firm to make a complaint.

Well, this question has a few moving parts.

The functionality of the strata committee could be an issue, and the owners corporation may consider their options there.

To simplify and focus on the strata manager and their obligations in the first instance, I suggest that you make contact with the licensee of the strata management firm to make a complaint. If this particular firm are members of Strata Community Australia (NSW), they are part of the Professional Standards Scheme. At the forefront of this scheme is a further commitment to consumers to ensure high professional standards across the strata industry in NSW.

The strata management firm should also have a complaints management process, which the licensee should provide advice on. If you are unhappy with the outcomes of the complaint, you may be able to lodge a complaint with the Strata Community Association (NSW) or Fair Trading.

I would encourage all strata schemes to only work with firms who are members of the Strata Community Association (NSW), as there are systems and processes in place for better regulation of the sector.

Mark Louis Vital Strata Management E: mark@vitalstrata.com.au P: 02 9008 1112

This post appears in the October 2023 edition of The NSW Strata Magazine.

Question: Our Strata Manager has been paying contractors for unauthorised work. The committee has not been provided with any invoices. Can we request a reimbursement of the funds?

There are unauthorised payment transactions in Owners Committee financial reports. Our Strata Manager has been paying contractors for work carried out on a rented unit in our block. This work has not been requested by the Owners Committee.

The Committee has received no paperwork regarding the job or contractor invoices. Is the Owners Corporation entitled to request a refund from the Strata Agency for these non-authorised transactions?

Answer: Strata Managing Agents are delegated the functions of an Owners Corporation by way of their agency agreement.

Strata Managing Agents are delegated the functions of an Owners Corporation under Part 4, Division 2 of the Strata Schemes Management Act 2015, and by way of their agency agreement with the Owners Corporation.

It is not uncommon for a Strata Managing Agent to be delegated functions to arrange repairs and maintenance (so that the Owners Corporation can meet its legal obligations to repair and maintain common property) and to arrange payments to the Owners Corporation’s suppliers (tradespeople) for the services they provide. This is done in order to outsource these functions, instead of having to manage them personally.

The terms of the agency agreement will usually impose certain limitations on the kind of works that can be arranged, or how payments are authorised. It is important to clearly understand these and to negotiate them as needed.

Each Owners Corporation operates differently, as does each Agent. Some Owners Corporation want more control (but this means more work for them) – others may wish to outsource. Too much control can become micro-management. Too little control can give too many liberties. Trust also becomes important.

Tim Sara Strata Choice E: tsara@stratachoice.com.au P: 1300 322 213

This post appears in the November 2022 edition of The NSW Strata Magazine.

Question: Can Strata Managers charge for producing a by-law breach letter? If so, what constitutes a reasonable charge?

Are Strata Managers allowed to charge for the cost of producing a letter advising of a by-law breach? If so, what constitutes a reasonable charge?

Does the notice need to be in the approved Notice to Comply form to be valid?

Answer: To determine whether the strata managing agent may charge for the letter and how much, you will need to review their Strata Management Agency Agreement.

A letter regarding a breach of by-laws is different from a Notice to Comply and usually precedes the issuance of the Notice to Comply. The Notice to Comply must be in the approved form while there is no prescribed format for the letter.

To determine whether the strata managing agent may charge for the letter and how much, you will need to review their Strata Management Agency Agreement which may be a line item (as an additional charge) or be included in the “agreed services fee”.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #605.

Question: At our AGM, our Strata Manager declared there will not be a committee and stated he has full delegated authority. Doesn’t the Act clearly outline the process of the election of a strata committee?

We recently had our AGM. At the motion “Call for Nominations to Strata Committee and Election” the strata manager first took a vote if the owners wanted to have a committee and used the votes for the motion as written, and declared there will not be a committee. When questioned the strata manager also stated that it does not matter if there is a committee, or not, as he has full delegated authority. Is this legal in the “‘Strata Schemes Management Regulation 2016 [NSW]”? It clearly outlines the process of the election of a strata committee.

Answer: Your strata managing should not be giving the Owners Corporation the option to NOT appoint a strata committe.

The relevant section is Section 29 of the Strata Schemes Management Act, 2015 (NSW) reproduced below:

29 Owners corporation to appoint strata committee

  1. An owners corporation must appoint a strata committee of the owners corporation in accordance with this Act.

  2. The owners corporation may appoint the strata committee before the first annual general meeting of the owners corporation.

  3. The members of the strata committee must be elected at the first annual general meeting of the owners corporation whether or not members were appointed before that meeting.

  4. If there is no strata committee of an owners corporation, the strata scheme must be administered by the owners corporation, but nothing in this subsection prevents a strata managing agent appointed under this Act from exercising any functions conferred on the agent.

Note sub-section (4) which permits the strata managing agent to exercising functions conferred in the absence of a strata committee.

Your strata managing should not be giving the Owners Corporation the option to NOT appoint a strata committee as it is mandatory provided eligible persons consent to Act. With Strata Hub almost upon us, your managing agent may want to reconsider his position as the Strata hub requires details of the Strata Committee.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #602.

Question: If the Strata Manager is not assisting, how and when can we request to replace this person?

Answer: Speak to their direct report, licensee in charge, team leader, and explain some of your concerns.

I’ll assume you’re on the strata committee, because if you’re an owner and the strata committee is working with the strata manager there may be misalignment between what you think they’re doing versus what the strata committee is doing. The strata committee may not want to be doing some of the things that you’re requesting.

If you’ve got a problem with your Strata Manager, first speak to their direct report, licensee in charge, team leader, and explain some of your concerns. In my experience, concerns are usually about responsiveness or actioning items. They may be behind which may be a resourcing thing or COVID, I’m not really sure. Their direct report may be able to do a manager swap.

If their response is, “No. Joanne’s the best strata manager in here, and we’re not changing”, then I would say, “Okay, that’s fine. But just putting you on notice that things need to improve. If it doesn’t, we’ll be looking at other options once the contract is expiring. We would prefer to work with you. However, if Joanne doesn’t lift her game, then we’re moving on”. That’ll, hopefully, get things moving in the right direction.

Also, I would provide the manager with a list of outstanding items. It’s one thing to say “We don’t like Joanne, she doesn’t know what she’s doing”. But if you say ‘”We need these items actioned”, normally, the manager would be able to help you follow those things through to bring everything back up to date. You can then move forward and hopefully live happily ever after.

You’re better off to try and work with the people you’ve got rather than constantly chopping and changing, unless there’s a genuine reason for change.

Rod Smith The Strata Collective E: rsmith@thestratacollective.com.au P: 02 9879 3547

This post appears in the September 2022 edition of The NSW Strata Magazine.

Question: Should our strata manager be keeping our committee regularly updated regarding actions and outcomes? Our committee is always chasing this information.

I am on the committee of our strata body as both secretary and chairperson.

When the committee sends an email instructing our strata manager to act on our behalf eg. have an owner remove a tree that is encroaching on another lot and damaging retaining walls etc with its roots, should we be able to view the communication sent from the strata management to the lot owner?

I find that I’m spending lots of unnecessary time chasing outcomes or lack of progress with outstanding matters. How do we know if a matter has been actioned?

Answer: Managing communications for and on behalf of the Owners Corporation is one of the central duties and functions of a strata manager.

Most strata managers will routinely copy/blind copy their strata committees in respect of correspondence issued on behalf of them/Owners Corporation for transparency and reporting purposes.

Managing communications for and on behalf of the Owners Corporation is one of the central duties and functions of a strata manager and is usually one of the “agreed” services under their management agency agreement, so you should not be charged extra to be kept informed of such communications.

The strata manager needs to maintain a record of the exercise of its functions, so information on actions performed should be easy to obtain.

The strata committee, as Principal, should ask or resolve that the strata manager copy you in on all correspondence received and issued by him/her, functions/duties performed as Agent, as failure to do so negatively impacts on the strata committee’s functions and may be a breach of the Agent’s duties under their agreement.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in the July 2022 edition of The NSW Strata Magazine.

Question: If the strata manager gives incorrect advice causing a monetary loss to the owners corporation, what remedy is available to the OC?

Answer: The type and quantum of liability of the managing agent is limited.

Generally, the strata management agency agreement between the Strata Management Agency and Owners Corporation will set out the liability of the agent in performing services under such agreement.

Under the Strata Community Australia (NSW) standard form of strata management agency agreement, the type and quantum of liability of the managing agent is limited to:

As it is likely the Owners Corporation will need to commence legal proceedings for the “negligence” or “breach of contract”, we strongly recommend you seek legal advice on this matter, as the Owners Corporation will require evidence to establish its case and will carry the burden of proof.

Please note also under the terms of the standard agreement (among other things), that the Owners Corporation may be required to indemnify the strata managing agent for the agent’s legal costs in defending the Owners Corporation’s proceedings against it.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #573.

Question: An EGM was called to dismiss the strata manager. When sending out the agenda for the meeting, the strata manager added information to our explanatory notes. Is this legal?

The majority of the committee are deeply dissatisfied with our strata manager. We requested an EGM be called and we put forward a motion to dismiss the strata manager.

We provided explanatory notes as reasons why the strata manager should be dismissed. On the agenda, the strata manager responded with her version of events under each of our points on the explanation notes and sent this onto everyone. Is it legal for the strata manager to add her own information to the agenda?

Answer: There is no breach of duty if they have not amended your notes but simply added notes in the capacity as the delegated Secretary.

If your strata manager is the delegated Secretary of the Owners Corporation, they have the specific function of giving notices, answering communications and attending to administrative/secretary duties. The delegated Secretary should not be altering or amending your explanatory notes but we can see no breach of duty if they are adding their own notes. Therefore, there is no breach of duty, in our opinion, if they have not amended your notes but simply added notes in the capacity as the delegated Secretary.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #566.

Question: Our strata manager refuses to discuss items about maintenance. If we want him to assist with maintenance issues, he charges extra fees under strata consultancy. Some maintenance issues have been outstanding for more than six months.

Answer: Ask the strata manager for an update. If they bill you for this, you get billed but you need to know that information and you need to know what’s been action and what hasn’t.

It depends on the complexity of the issues. Section 106 of the Act is the requirement that an Owners Corporation must maintain common property. You must maintain common property within your strata scheme.

If your building is dealing with quite an involved waterproofing issue, and I’ve got a few buildings which have these at the moment, it sometimes take three or four months to get the specification, get tenders, have a general meeting, and so forth. That being said, the time it takes doesn’t remove any liability from the owners Corporation, so you need to always be mindful of that you need to work as quickly as you can.

In terms of your strata manager, if it’s lots of little things and they just haven’t actioned them, that’s really disappointing. If you’re on the committee, you’re charged with the day to day administration of the strata scheme. Ask the strata manager for an update. If they bill you for this, you get billed but you need to know that information and you need to know what’s been action and what hasn’t.

If you get billed when you ask for this list and they get back to you with items that haven’t been actioned, I think the next step would be potentially considering options regarding your strata manager.

Rod Smith The Strata Collective E: rsmith@thestratacollective.com.au P: 02 9879 3547

This post appears in the May 2022 edition of The NSW Strata Magazine.

Question: Until recently, the strata manager has never notified us about our strata insurance options. Is this now mandatory in the new act?

Until recently, the strata manager has never notified our strata committee about strata insurance options. Is this now mandatory in the new act?

I see in the current act at section 166, that it is mandatory to be notified.

What are the ramifications of not being notified by the strata manager when there could be different financial outcomes if the strata committee had been informed of its options?

Answer: If the strata manager decides on an insurance policy on behalf of the owners corporation, they run the risk that they could be held professionally liable if the option chosen is not appropriate.

You refer to Section 166, which states that A strata managing agent must provide the owners corporation with not less than 3 quotations from different providers for each type of insurance proposed by the agent to the owners corporation or provide written reasons to the owners corporation if less than 3 quotations are provided.

Best practice is for the committee to decide on the insurance option in the best interest of the owners corporation based on the quotes provided.

If the strata manager decides on an insurance policy on behalf of the owners corporation, they run the risk that they could be held professionally liable if the option chosen is not appropriate for the owners, particularly in circumstances where there is a claim that is not covered by the strata managers chosen option and if given the choice, the committee would have chosen a different option that did provide cover.

Additionally, as most strata managers receive commissions for arranging insurance, this conflict of interest should be appropriately managed. This includes placing the buying decision for insurance in the hands of the committee.

If you believe the arrangement of insurance is something the committee should be more actively involved in, this should be discussed with the strata manager. This may include a review of your strata management contract and any terms and conditions which provides that the strata manager has authority to make a buying decision on behalf of the owners corporation.

Tyrone Shandiman Strata Insurance Solutions E: tshandiman@iaa.net.au P: 07 3899 5129

This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.

This post appears in the February 2022 edition of The NSW Strata Magazine.

Question: Can an auditor provide any proactive mitigation against risk of strata manager fraud? One of our schemes had all strata funds stolen by a strata management company in QLD some years ago despite having the accounts audited annually.

Answer: In my experience, fraud at a strata management level is more common where there is a single trust account with pooled funds.

Referring back to the presentation, I think the best suggestion in terms of strengthening the Owners Corporation’s internal controls is making sure that the strata committee are the ones that are approving the expenditure before the payments are made. That’s not going to mitigate against the risk of fraud. In my experience, fraud at a strata management level is more common where there is a single trust account with pooled funds. There’s been quite a few of those in in New South Wales in recent years.

I would also add, I suppose that the internal controls and the technology that banks use these days would hopefully prevent that from happening if a Strata Manager decided ‘I’m going to transfer $40,000 out of Owners Corporation’s account across to my own account’, that would probably ring bells at the bank and hopefully that transaction would be frozen and questions asked the following morning.

Rod Laws TINWORTH & CO E: RodLaws@tinworth.com P: 02 9922 3660

This post appears in Strata News #530.

Question: A new committee has discovered the strata manager authorised repairs over the past few years that should have been lot owner responsibility. Can we get reimbursed?

Our new committee has reviewed repair and maintenance invoices paid by the Owners Corporation over the past couple of years.

We have found a number of these invoices were for repairs to lot property and not common property eg burst pipe in an internal wall.

This was because the Strata Manager did not understand the internal layout of our units, and in particular, the location of plumbing and other services in internal lot walls.

Can the Owners Corporation recover the costs of such repairs from the lot owner?

Answer: Your owners corporation should consider making a claim against the strata manager for reimbursement of the cost.

It will be difficult for the owners corporation to recover the cost of repair of lot property from the owner of the lot. However, it may be easier for the owners corporation to recover the cost from the strata manager.

The key to answering the question is working out the legal basis for a person having to pay the owners corporation.

It is assumed that the internal wall pipe is lot property. This is because pipes in an internal lot property wall that service more than one lot are common infrastructure and therefore common property because of the definitions of “common infrastructure” and “common property” in section 4(1) of the Strata Schemes Development Act 2015.

The strata manager has a common law duty of care to the owners corporation. That duty would include a duty to take care that the strata manager only spends the owners corporation’s money on work that the owners corporation is authorized to carry out. Repair of lot property is not something an owners corporation is generally not authorized to do (there are some exceptions in the Strata Schemes Management Act 2015 to this eg section 122(6) but on the information provided it does not appear an exception applies. In addition, it is likely that the strata managing agency agreement only authorizes the strata manager to organize repair of common property and not lot property.

Therefore, in the present case, it appears that the strata manager has been negligent and is in breach of contract. This would entitle the owners corporation to seek and recover from the strata manager damages representing the cost of this repair. Therefore, your owners corporation should consider making a claim against the strata manager for reimbursement of the cost. Should your owners corporation wish to consider legal action against the strata manager then it should seek legal advice.

It is difficult to say the owner of the lot has a legal liability to reimburse the owners corporation. The starting point is the case of The Owners – Strata Plan 32735 v Heather Lesley-Swan [2012] NSWSC 383 where the NSW Supreme Court made it clear that where a person spends their own money to fix another person’s property, the first person is not entitled to be reimbursed the cost by the property owner unless there is a prior agreement between the two to permit the reimbursement.

There may be an argument that the owner of the lot is liable to reimburse the owners corporation based on the legal doctrines of mistake and unjust enrichment however these can be difficult to establish and further information would be required. Your owners corporation should seek legal advice on whether it can claim from the owner of the lot based on mistake and unjust enrichment.

Carlo Fini Lawyer (NSW)

This post appears in Strata News #500.

Question: I have an investment unit in a NSW strata complex. Our Strata Manager says they won’t deal with property managers, just lot owners. Surely they can’t enforce this?

The strata manager at the complex I used to live at and now rent out says they won’t deal with property managers, just owners, and it’s up to the owners to pass on any information to the property managers who then pass it onto the tenants.

I have questioned this as most people who have property managers do so for good reason. We don’t all want to be involved or don’t have time. Surely they can’t enforce this?

Answer: The owners corporation should be clear with the strata manager about its expectations about how he conducts himself on its behalf.

There is no legal basis under the NSW Strata Schemes Management Act 2015 (SSMA 2015) for a strata manager to discriminate in this way between owners on the one hand, and property managers and tenants on the other. It is difficult to see how the strata manager can properly carry out his job when he discriminates in this way, and it may be that he is exposing himself and the owners corporation he manages to both complaint and legal action against them.

It seems that the strata manager has adopted a practice that would tend to increase costs and slow down the taking of action such as common property repairs. The owners corporation should be clear with the strata manager about its expectations about how he conducts himself on its behalf.

The SSMA 2015 recognises various circumstances in which an owner may appoint an agent and have that agent transact strata business on their behalf:

  1. An owner must nominate an address for service of notices section 22 and that address can be an agent. There is nothing in the SSMA 2015 that says it must be the owner’s address.

  2. A company that owns a lot may appoint a nominee section 154 and that nominee becomes the contact person for receipt of notices and may attend meetings.

  3. An owner with an intellectual impairment or physical impairment, or who is illiterate or unable to read or write English sufficiently, or who is absent from their lot (eg a landlord) may appoint an agent to receive notices and the owners corporation must serve notices on the agent section 155.

  4. An owner’s address for service must be an Australian postal address or an email address section 261 but once again there is nothing in the SSMA 2015 that requires it to be the owner’s postal address or email address, so it can be the agent’s postal address or email address.

  5. Notices under the SSMA 2015 required to be given to an owner must be sent to the owner’s address for service section 263 and that address can be the owner’s agent.

Tenants are bound by a strata scheme’s by-laws and have a statutory obligation not to create a nuisance sections 135 and 153 of the SSMA 2015. Timely compliance by tenants with these obligations suggests that the strata manager would communicate directly with tenants or property managers. It seems that a strata manager who refused to do so could be adding to the problem.

The strata manager is usually delegated the secretary’s functions. Under section 43 of the SSMA 2015, those functions include answering communications addressed to the owners corporation and attending to matters of an administrative or secretarial nature in connection with the exercise of functions by the owners corporation or the strata committee. These functions do not discriminate between owners, property managers and tenants.

Indeed, if a property manager or tenant were to notify to the strata manager about a defect in common property and request that it be repaired, and the strata manager ignored that notice and request, then after two months, the owners corporation is deemed to have breached its duty under section 106 of the SSMA 2015 to repair and maintain common property see section 232(2)(b) of the SSMA 2015 and thus the owners corporation is exposed to having an NCAT work order made against it.

In those circumstances, the strata manager may also be in breach of their own common law, contractual, and statutory duties to the owners corporation, and their professional and ethical duties. This could result in a complaint to NSW Fair Trading and Strata Communities Association NSW if the strata manager is a member of that organisation.

You should look at the consequences of the strata manager not communicating with your property manager and if that failure amounts to a failure by the owners corporation to carry out its legal duties under the SSMA 2015, then you should consider lodging an application for mediation against your owners corporation at NSW Fair Trading with a view to bringing a case against the owners corporation at NCAT.

Carlo Fini Lawyer (NSW)

This post appears in the June 2021 edition of The NSW Strata Magazine.

Question: We have complaints about our Strata Manager. What is the best way to remind our Strata Manager she is working for us? She borders on bullying.

We have complaints about our Strata Manager. What is the best way to remind our Strata Manager she is working for us and that sometimes a little bit of “license” on lesser matters goes a long way? She borders on bullying. Is there a strata ombudsman in NSW we can make a complaint with?

Answer: Speak to the principal of the strata management agency and asking for their intervention.

Personality conflicts are inevitable in strata and other contexts – have you thought about speaking to the principal of the strata management agency and asking for their intervention or possibly asking for a substitute strata manager with whom you have better rapport?

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #237.

Question: What can a lot owner when they have no support from other lot owners? Is “corruption” only an issue at our strata? Do lot owners at other strata complexes have the same feelings but don’t know what to do? Where do we make strata complaints?

My question is what can a lot owner do about committee and strata manager complaints when they live in a small strata complex and find that lot owners are either not interested in strata matters or too not equipped to understand the seriousness of the issues at hand?

I am living in NSW. Our Owners corporation is totally dysfunctional as many owners cannot attend meetings as their levies are not paid. Others investor owners don’t care about meetings and their outcome and many are in the pocket of the Strata manager who is using their back to push his agenda and the agenda of the lot owners who are his best mates.

The issues which are bothering me are as follows:

I am feeling very frustrated as it seems that few owners and the Strata Manager are wasting money for their own gratification. I am very sure that money is being embezzled as well. There is plenty of expenses which are very questionable. When raised at meetings, the Strata Manager moves onto the next motion without answering my questions or just give a very lame answer which cannot be swallowed by any reasonable person.

Is strata legislation silent on corrupt behaviour of Strata Managers and/or Owners corporations? I am aware of going to the Tribunal for strata manager complaints. What are the chances at Tribunal about corrupt behaviour when there is nothing legislated about it? How can I stop the Strata Manager and his mates from embezzling the Owners corporations monies?

Is “corruption” only an issue at our strata? Do lot owners at other strata complexes have the same feelings, but don’t know what to do? What do other owners corporations do about strata complaints?

Answer: Under the strata legislation, you have rights to make an application for the compulsory appointment of a strata manager.

Under the strata legislation, you have rights to make an application for the compulsory appointment of a strata manager. If you are successful, that means that no owners will have a vote and the new strata manager will make decisions himself/herself to ensure compliance with the legislation etc. You would need to demonstrate that the scheme is not functioning or is not functioning satisfactorily (ie it must be dysfunctional as you state). See Section 237 Orders for appointment of strata managing agent.

In terms of corruption, strata managers are generally bound by ethical codes of conduct. Further, if you can demonstrate such corruption, you could report them to Strata Community Australia (institute of strata ) and NSW Fair Trading – see below for links and contact information.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #209.

Question: We got several pieces of advice and recommendation from our Strata Manager – some of those pieces are very unprofessional, not applicable or totally ignoring previous recommendations given. Where can I make strata manager complaints?

I am living in a 2 Strata Plan building with over 100 lots each. At present we have some problems with the performance of the Strata Manager and the Building Manager. They get along together very well. It seems they rather play politics than manage our building and finance.

We got several pieces of advice and recommendation from the Strata Manager – some of those pieces are very unprofessional, not applicable or totally ignoring previous recommendations given.

It seems this is all done to split the committee and owners into different groups.

As a previous long term committee member, where and how can I do something about this?

Can I apply to the tribunal for an order demanding the Strata Manager to either withdraw his advise or to justify it?

Where can I make strata manager complaints? Is there a place where I can officially complain about his unprofessional recommendation? Is there a strata ombudsman or do I contact NSW Fair Trading?

Answer: The best course of action would be to try to be elected to the committee then rally support from the other committee members.

Obviously, the best course of action would be to try to be elected to the committee then rally support from the other committee members. You might be able to sway them to your position due to your long term experience as a committee member. Also, you could raise your concerns in writing to the strata manager. Alternatively, you could give a “qualified request” to convene a general meeting of the Owners Corporation to discuss specific areas of concern. You might also wish to pursue the matter through NCAT though you would need to go to mediation first.

Can I apply to the tribunal for an order demanding the Strata Manager to either withdraw his advise or to justify it?

Not specifically on the grounds you state, however, your concerns may fall within the Tribunal’s general powers:

232 Orders to settle disputes or rectify complaints

  1. Orders relating to complaints and disputes The Tribunal may, on application by an interested person, the original owner or building manager, make an order to settle a complaint or dispute about any of the following:
    1. the operation, administration or management of a strata scheme under this Act,

    2. an agreement authorised or required to be entered into under this Act,

    3. an agreement appointing a strata managing agent or a building manager,

    4. an agreement between the owners corporation and an owner, mortgagee or covenant chargee of a lot in a strata scheme that relates to the scheme or a matter arising under the scheme,

    5. an exercise of, or failure to exercise, a function conferred or imposed by or under this Act or the by-laws of a strata scheme,

    6. an exercise of, or failure to exercise, a function conferred or imposed on an owners corporation under any other Act.

Where can you make strata manager complaints?

Yes, you may lodge a strata complaint with the NSW Office of Fair Trading and you may also lodge a complaint with Strata Community Association (NSW).

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #190.

Questions: Is there a dollar amount limit to the payment of an invoice that can be made by our Strata Manager on behalf of the owners corporation?

We understand that one of the duties of a Strata Manager is to process and pay invoices for work carried out on behalf of the Owners Corporation. However, is there any $ limit to the payment of an invoice that can be made by our Strata Manager on behalf of the owners corporation?

I recently noticed a paid invoice for $11,000 that was made by our Strata Management Company. As a member of the Strata/Exec Committee, I would like to have seen the invoice before it is paid.

I noticed on our portal that there is a tab for Invoice Approval, but I have never seen anything under that tab.

Answer: The duties of a strata manager come from their authority in their agency agreement with the owners corporation.

Andrew Terrell Bright & Duggan E: Andrew.Terrell@bright-duggan.com.au P: 02 9902 7100

This post appears in the December 2020 edition of The NSW Strata Magazine.

Questions: What can the owners corporation committee do to gain access to our Strata scheme’s data that is being withheld by our retired Strata Manager?

Our Strata committee Secretary has resigned and now refuses to pass our Strata records to their newly appointed replacement. The current committee must have access to all official correspondence and obligatory Strata documentation.

What can the owners corporation committee do to gain rightful access to our Strata’s physical and virtual data under these circumstances? Is there somewhere we can make a complaint about this strata manager’s behaviour.

Answer: You are correct in that the books and records of the Owners Corporation are the rightful property of the Owners Corporation.

You are correct in that the books and records of the Owners Corporation are the rightful property of the Owners Corporation.

Pursuant to the section below, you may make a demand for the records and non-compliance attracts fines – please ensure the wording complies strictly with the below when making such demand:

181 Owners corporation may require certain persons to produce records, accounts and property of the owners corporation

  1. If the strata committee of an owners corporation gives a notice to a person who has possession or control of property (including records) of the owners corporation requiring the person to deliver the property to the strata committee, the person must, not later than 14 days after the notice is given, deliver that property to a member of the strata committee specified in the notice. Maximum penalty: 20 penalty units.

  2. If the strata committee of an owners corporation gives a notice to a person who has possession or control of property (including records) of the owners corporation advising of the decision of the owners corporation to terminate the person’s appointment as strata managing agent, the person must, not later than 14 days after the notice is given, deliver that property to a member of the strata committee specified in the notice. Maximum penalty: 20 penalty units.

  3. This section does not take away or affect any just claim or lien which a strata managing agent may have against or on any records or other property of an owners corporation.

  4. This section does not affect the operation of the Property, Stock and Business Agents Act 2002. The Property, Stock and Business Agents Act 2002 contains requirements relating to the keeping of records under that Act.

If this process is unsuccessful, you may have recourse under the strata legislation for Orders that such records be supplied.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #415.

Question: Our Strata Manager refuses to show lot owners the trust fund. Are they obligated to show us? We suspect the Strata Manager of mishandling the finances.

Our strata manager has been with us less than 1 year and we found out that the management agreement contract is signed for 3 years by 2 committee members who were not voted as committee members in the new strata scheme. Is this a valid management agreement? There is no date. The rest of the lot owners knew nothing about this.

The Strata Manager also refuses to show lot owners the trust fund. Are they obligated to show us?

We suspect the Strata Manager of mishandling the finances. They are charging us special levies without specifying what it’s for and falsely accusing lot owners of being in arrears.

They refuse contact with everyone but the 2 ‘committee’ members.

Answer: The owners corporation must, at the request of an owner, give to the owner, a copy of the last financial statements prepared for the administrative fund, the capital works fund and any other fund of the owners corporation by the owners corporation at least 2 days before the meeting at which the statements are to be presented.

The appointment of a strata managing agent must first be authorised by a resolution at a general meeting of the Owners Corporation and based on the information provided, it appears that this did not take place.

In terms of the execution of the instrument itself, the common seal of the Owners Corporation must not be affixed to any document except in the presence of 2 persons, being owners of lots or members of the strata committee, that the owners corporation determines for that purpose or, in the absence of a determination, the secretary of the owners corporation and any other member of the strata committee. Therefore, in our view, you have valid grounds to challenge the validity of the agreement.

The owners corporation must, at the request of an owner, give to the owner, a copy of the last financial statements prepared for the administrative fund, the capital works fund and any other fund of the owners corporation by the owners corporation at least 2 days before the meeting at which the statements are to be presented.

Further, pursuant to Sections 61 & 62:

61 Procedure for requiring information from strata managing agent

  1. An owners corporation is to require information from a strata managing agent under this Division by written notice given to the strata managing agent.

  2. The notice must specify a member of the strata committee to whom the information is to be delivered.

62 Offences

  1. A strata managing agent must comply with a notice to provide information under this Division by giving a written statement, containing the information required, within 14 days after the notice is given. Maximum penalty: 20 penalty units.

  2. A person is not guilty of failing to comply with the notice if reasonable cause for the failure is shown.

  3. A strata managing agent must not knowingly provide information that is false or misleading in a material particular in a statement given in response to a notice to provide information under this Division. Maximum penalty: 20 penalty units.

Finally, if the above does not assist, you are at liberty to request an inspection of the books and records of the owners corporation according to the statutory procedure together with payment of the applicable fees, pursuant to section 183 of the Strata Schemes Management Act 2015.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #331.

Question: We’re concerned our Strata Management Company is experiencing operating problems. Are there safeguards in place to ensure the Strata Manager is not using our fees to prop up a failing business?

We’re concerned our Strata Management Company is experiencing operating problems. In the last 12 months we have had 6 different Strata Managers who all disappear and we are told they are either on sick leave or personal leave and then they mysteriously vanish and then a new person makes contact each time. Some are only there for 2 months.

Now the Principal is answering our emails after telling us that the most recent Manager was on 2 weeks sick leave. Today they are now confirming he has left also. If a Strata Management Company becomes insolvent are the Owners Corporation’s funds safe? Are there safeguards in place to ensure the Strata Manager is not misappropriating funds and our fees are not used to prop up a failing business?

We are out of trust when it comes to our Strata Management Company.

Answer: The strata manager has a fiduciary duty NOT to misappropriate the funds which belong to the owners corporation ie it is a relationship of trust.

The strata manager has a fiduciary duty NOT to misappropriate the funds which belong to the owners corporation ie it is a relationship of trust.

The owners corporation’s funds should be in a trust account and those funds should only be accessed for bona fide owners corporation’s purposes. If there has been a misappropriation of funds or if the manager becomes insolvent, this would be grounds for termination of your strata management agency agreement and should be reported to the Office of Fair Trading.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #276.

Question: Our Strata Manager has been putting off our AGM since December. How can they be made to hold an AGM asap? We have issues that need to be addressed.

Answer: An AGM must be held once in each financial year of the owners corporation

As set out in the extracts of the legislation below, an AGM must be held once in each financial year of the owners corporation, so you should make enquiries about your particular scheme’s financial year end.

Should the strata manager continue to delay holding the AGM, you may apply to NCAT to have the AGM held within the time specified by the Tribunal.

18 AGM must be held

An owners corporation must hold an annual general meeting once in each financial year of the corporation.

20 Tribunal may appoint person to hold first AGM and other meetings

  1. The Tribunal may, on application by an owners corporation or an owner or mortgagee of a lot in a strata scheme, order a person to convene and hold a meeting of the owners corporation within the time specified in the order if a meeting has not been convened and held in accordance with this Act.

  2. The person who is to convene and hold the meeting is to be a person nominated by the applicant or appointed by the Tribunal, who has consented to the nomination or appointment.

Alternatively, if the matters requiring attention can be decided at a general meeting (as opposed to an AGM), you could avail yourself of the procedure set out below, which could see a general meeting convened within 14 days:

19 Other general meetings

  1. The secretary or a strata committee of an owners corporation may convene a general meeting (that is not an annual general meeting) of the owners corporation at any time.

  2. The secretary of the owners corporation, or another officer if the secretary is absent, must convene a general meeting (that is not an annual general meeting) of the owners corporation as soon as practicable, and not later than 14 days after, receiving a qualified request.

  3. A meeting may be convened on a qualified request even if the first annual general meeting has not been held.

  4. A request is a “qualified request” for the purposes of this section if it is made by one or more owners of a lot or lots in the strata scheme having a total unit entitlement of at least one-quarter of the aggregate unit entitlements.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #473.

Question: Our strata manager refuses to hold our AGM after office hours. Should this be an expected service or is he being inflexible?

Our strata manager refuses to hold our AGM at 6.30 pm. He says his office closes at 6 pm and will not accommodate an owner who cannot attend until 6.30 pm because of work commitments. Is this reasonable or is he being inflexible?

Our argument is that he is providing the service for which we are paying $150,000 pa for 38 apartments and he should be flexible and chair meetings to accommodate the owners corporation and not at his convenience. We do not consider 6.30 pm to be unreasonable. Can he dictate the time or should he be more flexible?

Answer: We would agree that your strata manager is being inflexible.

We would agree that your strata manager is being inflexible – it is unreasonable to expect individual owners in owners corporations to take time off work on each occasion to participate in decisions of the owners corporation. It is commonplace in the industry that strata managers are required to convene meetings after hours to service the needs of its client.

Further, he should be reminded that you are the principal (as the Owners Corporation) and he is engaged and paid by him to be the agent for the scheme. He takes instructions from the strata committee/owners corporation and not vice versa.

Leanne Habib Premium Strata E: info@premiumstrata.com.au P: 02 9281 6440

This post appears in Strata News #401.

Question: Can Strata management companies charge owners who request Strata ByLaws to give to a tenant?

Answer: No I don’t believe so, but it would depend on the terms of the agency agreement that the owners corporation has with the strata manager and the by-laws registered with the scheme.

Andrew Terrell Bright & Duggan E: Andrew.Terrell@bright-duggan.com.au

This post appears in Strata News #401.

Question: Can the Strata Committee insist that the Strata Manager seeks approval before actioning any type of work on their behalf?

Can the Strata Committee insist that the Strata Manager seeks approval before actioning any type of work on their behalf?

SITUATION: Unit Owner had engaged a plumber to fix an internal water leakage in a rental unit. The leak returned & Strata didn’t liaise with the owner & sent another plumber to access the problem resulting in a charge to the Owners. The Strata Committee asked the lot owner to pay this bill.

Understandably the Owner is unhappy that they were not consulted as they could have sent the original plumber to fix the problem. This is a new Strata Manager & the Strata Committee instructed them at the first AGM to contact the Committee before arranging any repairs or inspections for their approval.

We an arrangement in place with the previous Strata Management Company because we had been overcharged for unnecessary work that had been carried out without our knowledge.

Answer: If the arrangement is not approved by the Owners Corporation, the Strata Manager may not contact the building as they are not legally required to.

Regarding the appointment of a strata manager, some buildings do ask that the Strata Manager contacts the Strata Committee or a member of the Strata Committee for approval for works before proceeding. This arrangement should be documented in the Strata Managers agency agreement which must be approved at a General Meeting. If the arrangement is not approved by the Owners Corporation, the Strata Manager may not contact the building as they are not legally required to.

Regarding the charging of an invoice to an owner, this is not generally something that is allowed unless there is a specific by-law for the scheme that allows for cost recovery. I’m not sure why the Strata Manager would pass on the cost of a work order to the owner in this instance. It seems to me that the Strata Manager must have actioned a lot owner repair which they shouldn’t have organised anyway.

The owner has 2 options:

  1. Pay the invoice to keep the peace. I would then pass the invoice onto the old plumber to pay as it was their original repair that caused the problem. If they original plumber doesn’t pay, you could follow this up with the Master Plumbers Association for decision (assuming that they are member of the Master Plumbers).
  2. Dispute the invoice with strata and state that it is unlawful to pass on an invoice to the lot owner without the lot owners approval. If this isn’t resolved after this dispute, you could lodge a complaint to NSW fair trading to have this resolved.

Rod Smith The Strata Collective E: rsmith@thestratacollective.com.au T: 02 9879 3547

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