NSW’s first strata renewal decision unpacked: procedural tips for your scheme

pot of gold

On 8 August 2019, the Land & Environment Court, handing down the first decision in respect of giving effect to a collective sale under the strata renewal provisions of Part 10 of the Strata Schemes Development Act 2015 (the Act) in Application by the Owners – Strata Plan No 61299 [2019] NSWLEC 111.

This is a case that I had been eagerly anticipating and, I have to admit, I am a little disappointed. Why? Unfortunately for strata lawyers (but fortunately for the lot owners in the scheme) the application was not contested. This means that the full extent of Part 10 was not challenged by objecting lot owners.

What the case does provide however is a good look at what the Court will be looking at in terms of the processes under the Act and the detail the Court will go into in investigating compliance. In short, the detail is excruciating. My top procedural tips are:

  • Make sure meeting requirements for quorum, notice, voting rights and distribution of minutes are followed – this is a situation where it pays to take particular care to keep excellent records including persons present at meetings, by what means they are in attendance, the votes for and against motions and ensuring eligibility to vote.
  • Make sure you have evidence regarding the appointment of the strata committee and their eligibility for the strata committee. Many schemes do not record who nominated who for the strata committee. While not raised in the decision best practice would be to do so as it may affect voting rights in strata committee meetings.
  • Diarise any time frames that impose triggers under Part 10 of the Act and ensure they are complied with. This includes the time frame for distributing meeting minutes, for serving notices, for meeting notice and also, the timing of the two required valuation reports.
  • It is preferable when drafting motions for meetings to ensure that if a matter is to be considered under the Act, such as whether the strata committee considered the strata renewal proposal worthy of consideration or whether the owners corporation considered the strata renewal plan to meet the requirements of s170 of the Act, that this form part of the motion to be put to lot owners to evidence that the strata committee or owners corporation turned its mind to the issue.
  • When the owners corporation gets to the stage of sending the plan out to lot owners to return (or not return as the case may be) support notices it should ensure they are an independent entity with the required resources to receipt support notices, determine their validity and attest to the voting process and consider engaging an independent lawyer to do this.
  • As the owners corporation need only serve notice of its intention to apply to the LEC for approval on tenants that it is notified of under s258 of the Strata Schemes Management Act 2015 if you are a tenant, and wish to receive notification of an application for approval of the strata renewal plan, you must comply with section 258.

My second and third blogs will concern some of the legal issues raised in this decision and will be posted shortly.

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