An owners corporation can decide to engage a strata manager to assist with the running of a strata scheme; however, if an owners corporation is not functioning satisfactorily, a strata managing agent can be compulsorily appointed.
How is a Strata Manager Compulsorily Appointed?
Section 237 of the Strata Schemes Management Act 2015 (NSW) (SSMA) gives the NSW Civil and Administrative Tribunal (the Tribunal) the power to make such an appointment on its own or in response to the application of an ‘interested person’, such as an owner of a lot in the scheme or an officer of the owners corporation. The Tribunal’s power to make such an order is discretionary. A strata lawyer Sydney can assist a lot owner to prepare and present a case to the Tribunal.
What does the Tribunal take into Consideration?
Section 237(3) of the SSMA states that the Tribunal can only make an order appointing a compulsory manager if they are satisfied:
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- The management of a strata scheme is not functioning or not functioning satisfactorily; or
- An owners corporation has failed to comply with a requirement imposed on them; or
- An owners corporation has failed to perform a duty; or
- An owners corporation owes a judgement debt.
What Orders can be made?
Under section 237(1) of the SSMA, a compulsory manager can be appointed to carry out all or some of the functions the owners corporation would usually carry out. Section 232(2) allows the Tribunal to extend to the compulsory manager the power to carry out the functions of other members of the strata committee such as the chairperson or treasurer.
What is the Impact of the Appointment of a Compulsory Manager?
Depending on the orders made by the Tribunal, the appointment of a compulsory manager may result in the owners corporation having no control over the strata scheme – instead vesting those powers in one person (ie. the compulsory manager), removing the democratic process required of the owners corporation in decision making. Orders for the appointment of a compulsory manager have been recognised as “draconian” (Mortlock v Owners of Strata Plan No 55434 [2006] NSWSC 363 at [18]).
The view of the Tribunal
The case of McGrath v The Owners – Strata Plan No 13631 [2022] NSACATCD 60 (McGrath) demonstrates that substantial proof is required for the Tribunal to exercise its discretion to order that a compulsory manager be appointed. An applicant is required to have evidence of more than one example or type of mismanagement. In the McGrath case the applicants cited many examples that demonstrated mismanagement and established the jurisdiction of the Tribunal under section 237 applied. However, the Tribunal decided they would not make an order since the examples the applicant cited, such as disharmony among the lot owners, did not warrant the appointment. The Tribunal did not consider the conduct of the owners corporation ‘sufficiently serious’ and stated that there was no indication the owners corporation were incapable of discharging their responsibilities.
How we can help
If you want advice about the appointment of a compulsory manager contact strata lawyers Sydney at Carneys Lawyers today.
