Tips for Own­ers Cor­po­ra­tions, Stra­ta Com­mit­tees and Stra­ta Man­agers — COVID-19

In these unprece­dent­ed times, there is a lot of uncer­tain­ty for busi­ness­es and indi­vid­u­als. This uncer­tain­ty extends to the ongo­ing and sat­is­fac­to­ry func­tion­ing of an own­ers corporation. 

Stra­ta Man­agers and Stra­ta Com­mit­tees should be aware of their ongo­ing oblig­a­tions to ensure that an own­ers cor­po­ra­tion con­tin­ues to func­tion sat­is­fac­to­ri­ly dur­ing the Covid ‑19 disruptions. 

Levies

In the case of finan­cial hard­ship of its own­ers, a Stra­ta Com­mit­tee may wish to ini­ti­ate a review of the cur­rent via­bil­i­ty of the admin­is­tra­tion fund and cap­i­tal works fund of the own­ers cor­po­ra­tion, con­sid­er upcom­ing essen­tial pay­ments, and, if pos­si­ble, resolve to allow owners:

• an exten­sion of time to pay their sched­uled levies;
• to sub­mit a pay­ment plan for approval; and
• waive inter­est for late pay­ments if an approved pay­ment plan is put in place.

In con­sid­er­ing any adjust­ment to the levies pay­ments, a Stra­ta Com­mit­tee should care­ful­ly con­sid­er the own­ers cor­po­ra­tions bud­get com­mit­ments before propos­ing any motions for res­o­lu­tion at a gen­er­al meeting. 

Gen­er­al meetings

In today’s mod­ern world, and with the imple­men­ta­tion of Clause 14 in the Stra­ta Scheme Man­age­ment Reg­u­la­tion 2016 (Reg­u­la­tions), an own­ers cor­po­ra­tion or a stra­ta com­mit­tee, may by res­o­lu­tion adopt:

‘(a) vot­ing by means of tele­con­fer­ence, video-con­fer­enc­ing, email or oth­er elec­tron­ic means while par­tic­i­pat­ing in a meet­ing from a remote location, 

(b) vot­ing by means of email or oth­er elec­tron­ic means before the meet­ing at which the mat­ter (not being an elec­tion) is to be deter­mined by the cor­po­ra­tion or com­mit­tee (pre-meet­ing elec­tron­ic voting)’.

All ongo­ing mat­ters requir­ing dis­cus­sion and res­o­lu­tion at a gen­er­al meet­ing or a stra­ta com­mit­tee meet­ing, do not need to stop and can be addressed remote­ly or elec­tron­i­cal­ly if con­duct­ed in accor­dance with the Regulations.

Annu­al Gen­er­al Meet­ings should still be held, remote­ly or elec­tron­i­cal­ly, in accor­dance with the Stra­ta Schemes Man­age­ment Act 2015 (the Act) although there is a call for Gov­ern­ment inter­ven­tion to avoid penal­ties being imposed on own­ers cor­po­ra­tions for not hold­ing their AGM in accor­dance with leg­isla­tive requirements.

By-laws and reg­is­tra­tion of by-laws

Pro­posed by-laws may still be con­sid­ered and spe­cial­ly resolved at Gen­er­al Meet­ings which can be held in the mat­ter as not­ed above. 

The own­ers cor­po­ra­tion is still required to reg­is­ter any change of by-laws spe­cial­ly resolved at a Gen­er­al Meet­ing with­in 6 months of the spe­cial res­o­lu­tion being passed.

Build­ing defect claims 

If the own­ers cor­po­ra­tion has build­ing defects and is with­in its two and/​or six year war­ran­ty peri­ods under the Home Build­ing Act 1989, statu­to­ry time lim­its still apply and action should be tak­en to pro­tect the inter­ests of the own­ers cor­po­ra­tion as usu­al. No exten­sions of time will be allowed for bring­ing a claim against, or noti­fy­ing a builder, devel­op­er or home own­ers war­ran­ty insur­er, unless fur­ther leg­is­la­tion is passed autho­ris­ing such exten­sion and there is no indi­ca­tion at all that this will happen. 

The Courts and Tri­bunal and legal offices remain open at this time (albeit oper­at­ing remote­ly in part) and legal advice should be sought and claims brought with­in the statu­to­ry time lim­its applic­a­ble to your scheme. If you are unaware of what these time lim­its are please seek legal advice. 

Exist­ing contracts 

If the own­ers cor­po­ra­tion has entered into a con­tract with a third par­ty for the pro­vi­sion of ser­vices, reme­di­al build­ing works or some oth­er arrange­ment, if the shut­downs impact the third par­ty, the con­tract terms should be reviewed and con­sid­er­a­tion giv­en as to the impact of what Covid-19 means for the contract. 

Essen­tial ser­vices should con­tin­ue unin­ter­rupt­ed although there will be sup­ply short­ages in some instances. Reme­di­al build­ing works should also con­tin­ue in the inter­im unless fur­ther clo­sures are announced by the NSW Government.

Should you require legal advice about any issue impact­ing your stra­ta scheme please con­tact Helen Kow­al Part­ner, Swaab to dis­cuss on 9777 8321.