There are quite a lot of apartment complexes where the body corporate secretary has proven ridiculously difficult to get rid of. In some cases, the developer has put in its own management company and entrenched itself in the rules. In others, a company has paid the developer money to become the secretary and has provided its own set of written rules that can likewise make it difficult to remove.
For example, they might write into the rules that they have a five or ten or twenty year renewable management term. They might write in that they control votes from management units and separate principal units used by the body corporate of a hotel for common purposes such as laundry, restaurant, office, reception desk, loading areas, storage and the like. There is the principle that owners in default on BC fees cannot vote…so if owners refuse to pay levies to a secretary they are in dispute with, they can inadvertently prevent themselves from achieving a valid removal. Sometimes you will find BC Rules written so that any owner that doesn’t attend a meeting – such as an overseas owner – automatically gives a proxy in favour of the secretary to be voted as they choose.
What can an owner do? Well, these days more and more…but you need to be careful and will usually need professional advice.
Owners in the 278-unit Imperial Gardens’ building in central Auckland had to go all the way to the High Court to stop Strata Title Administration voting proxy shares sufficient to keep itself in place as secretary no matter how much the rest of the owners wanted to get rid of it due to unhappiness with the company’s performance and fees.
The vote, at a reconvened annual general meeting (AGM), went ahead after a breakaway owners’ committee sought a high court injunction to uphold an extraordinary vote to remove the company.
The owners’ committee alleged Strata wrote its body corporate rules “solely to protect Strata’s interest” and that it withheld from unit owners interest earned on Imperial Gardens’ bank accounts.
The body corporate also failed to manage the building properly, the owners said, pointing to a recurring roof leak, apartment overcrowding and a faulty fire alarm system.
However the first vote to get rid of Strata was defeated by Strata voting in its own interests. In the High Court:
Judge Graham Lang ruled another vote to decide the fate of Strata Title should go ahead with all previous proxy votes – the majority held by Strata Title – voided and an independent chair to oversee the meeting.
The new vote unsurprisingly removed Strata forthwith, with orders that all records and funds were to be handed over to the owners association lawyers.
This is not the first time that Strata Title Administration have been involved in High Court action against apartment owners to remove it, and the article references some of them, including:
In 2003 Strata was ordered to pay $50,000 to a body corporate which a judge found had been illegally held by Strata after it refused to step down as body corporate.
Another city apartment building, Dynasty Gardens, removed Strata as its body corporate earlier this year.
Not a great track record…..but in defence of BC secretaries it can be a thankless task where you are incapable of pleasing everyone….and if you displease litigious people then you can find yourself in court despite having done what you thought was your best.
Strata do seem, however, to have involved themselves in a number of High Court actions. If you’re interested, here are links to pdf’s of a few:
Strata also seem to have spawned a blog entirely devoted to their activities from someone who appears not to be a fan. We have no position on the views expressed there.
Whatever the facts may be, in this present matter, as with Lighter Quay down on the Auckland Waterfront (although that particular battle continued long after the leases were avoided – see the latest Herald update on the matter, worth an article in itself), the courts have shown themselves willing to intervene to rescue owners. If you are trapped in a body corporate relationship that seems rather one sided, there is now enough precedent in case law to give managers or secretaries obtaining one-sided benefit considerable pause and put them on the back foot in negotiations.