STRATA TITLES NEWSLETTER – SEPTEMBER 2022
Is a Strata Manager liable if its agent, employee or contractor misappropriates funds?
244 Flinders St Mt Yokine Strata and Perera  WASAT 64
In this case, SAT found that the Strata Manager did not have a good working knowledge of the Strata Titles Act (1985) (“Act”) as required by section 146(1)(c) and that its agent, employee, or contractor had misappropriated funds of the strata company. SAT ordered the Strata Manager to repay the misappropriated funds of $21,599 to the strata company. Further, SAT ordered the Strata Manager to pay the strata company’s costs because it had delayed the proceeding, was reticent to produce documentation and held off paying a conceded amount to the strata company.
The take-away from this case is:
- Strata Managers must ensure that they have a good working knowledge of the Act.
- Parties that delay cases and are uncooperative are risking a cost order against them.
What scheme functions do you need to perform before you are considered a Strata Manager?
Broome Beach Resort Strata and Waydanette Pty Ltd  WASAT 56
SAT had to decide whether an entity that entered into a Resort Management Agreement (“RMA”) with the strata company was performing scheme functions and acting as a strata manager. If it did, the RMA did not comply with s. 144, 145 and ceased to have effect pursuant to Schedule 5, clause 13(3) of the ST Act.
- A strata manager is someone who the strata company authorises to perform a “specified scheme function”.
- A specified scheme function is a function identified in Division 1 Part 8 of the Act, such as control and management or maintenance of the common property.
- A person is not performing a specified scheme function if it is doing a task falling within a specified scheme function or an aspect of a scheme function is delegated to it. For example, a pool attendant is performing one part or function of the strata company’s control and management of the common property and is not a strata manager. The attendant simply assists the strata company in performing its scheme functions.
Based on the above analysis, SAT found the entity performing the RMA was not a strata manager.
Can a strata company authorise an owner to act as its agent?
Singh v UnitingCare West  WASAT 18
A resolution was made by ordinary resolution at an Annual General Meeting that UnitingCare West, an owner in the strata complex, act as an agent for the strata company in purchasing and installing bike rails and bollards on common property, at the expense of UnitingCare West.
An argument was raised that the resolution was invalid.
The Tribunal found that the strata company had the power to appoint a third person (including an owner) to undertake work to the common property, at the expense of the third person, and may do so by ordinary resolution.
This case is useful authority to consider if an owner wishes to undertake work to common property, at that owner’s expense.
In practice, appointing an owner to act as an agent may avoid the requirement for an exclusive use by-law (which requires resolution without dissent), in circumstances where an owner wishes to make, and pay for, alterations to the common property. In saying that, there may be other benefits to an exclusive use-by law, and you should seek legal advice about how this may apply to your particular circumstances.
Defamation within the strata scheme sphere
In Accommodation West Pty Ltd v Aikman  WASC 157, the Supreme Court had to decide whether a strata lot owner had defamed the strata manager in email communication and statements made at the AGM.
The owner said that the strata manager, its owner and employee were going broke, poorly managed the strata scheme, alleged that they were qualified when it was not the case, and she circulated a forensic audit report about the strata manager that could not be distributed without written consent.
The court held that the owner did not defame the strata manager, its owner and employee because she did not act with malice, and was speaking and writing to communicate her genuinely held and not unreasonable views about the level of management to a small number of other dissatisfied owners.
What is the status of an amount in an approved budget?
If the Strata Company has approved $50,000 for painting in the 2022 budget, the strata council can approve repair work within the budget limit by ordinary resolution. If the budget turns out to be inadequate, the strata company can, by ordinary resolution, vary the budget and increase the amount, for example, to $60,000. The strata company cannot approve expenditure above the budget, except if it has previously, by a special resolution, approved a specific amount by which the budget may be exceeded. If no amount has been approved by special resolution, the regulations prescribe an amount by which the budget may be exceeded (currently $500 per lot).
How can the powers of the chair of the strata council be limited?
The strata council performs the duties of the strata company. The strata company can impose restrictions or give directions concerning the council or the chair’s duties by an ordinary resolution. In addition, the scheme by-laws may also prescribe limits to the council and the chair’s powers. Pursuant to the Act, the council members and the chair cannot act in a way that will cause detriment to the strata company.
No new legislation affecting Strata Titles came into effect in August 2022.
Interesting strata facts
- Strata living is the fastest growing form of property ownership in Australia.
- Half the dwellings to be built in metropolitan areas in the next 10 years will be strata titled.
- The most common strata title dispute is parking.
- The largest apartment building in the world is the Edificio Copan in Sao Paolo, Brazil designed by the famous architect Oscar Niemeyer. It has 1,160 apartments, 70 commercial establishments and its own postal code.
Please contact us for assistance with:
- Strata title disputes
- Strata title advice
- By-law consolidation and drafting of new by-laws