Compulsory appointments, the colloquial name for an appointment of a strata manager to manage a scheme under section 237 of the Strata Schemes Management Act 2015 (SSMA), are becoming increasingly common.

1. A compulsory appointment is made when the management of a scheme is not functioning satisfactorily, or where an owners corporation (OC) has failed to comply with orders or other obligations, or owes a judgment debt.
2. An owner applies to the NSW Civil and Administrative Tribunal (NCAT) for an order under s237, and a strata manager is appointed, usually with full power to pass all resolutions at general meetings and committee meetings, with no restriction.Sometimes a strata manager is appointed only to carry out specified functions.
3. For that reason, it is a is a very serious order, that is not made lightly.
4. Alternatively, a judgment creditor, for example a building manager or a lawyer who is owed fees, may apply for a compulsory appointment order, so a strata manager is appointed and strikes levies to pay their outstanding fees.

Below are circumstances within strata schemes where NCAT has found the owners corporation’s conduct sufficiently serious to warrant making a compulsory appointment order.

1. Years of neglect of an item of common property repairs, such as an awning. Whilst NCAT has the power to make a compulsory appointment order as soon as a common property item falls into disrepair, or as soon as an owners corporation breaches the SSMA or another Act, it is unlikely to make the order if the owners corporation can show it is taking steps to address the breach.
2. A self-managed scheme that is not running itself properly, for example it splits insurance premiums equally between owners even though the unit entitlements are not equal, or it fails to hold meetings, appoint a committee, raise any levies, or even have a bank account.
3. Failing to permit proper access for works and decoding fobs.
4. The majority owners are making decisions for their own benefit (improper purpose) and to the detriment of minority owners.
5. The OC takes or defends legal action unnecessarily, or fails to require owners to comply with by-laws.
6. The OC fails to comply with an NCAT order, for example to carry out specific repairs to common property.

Any owner seeking a compulsory appointment order has to establish 2 things: (1) NCAT has the power to make the order, i.e. there is a breach of an order or another obligation and (2) NCAT should make the order, that is, it should exercise its discretion to make the order.

That second question is where the legal action is usually won or lost, and where legal skill and experience are required. There are many matters to take into account, and Tribunal Members approach this differently.

We are highly experienced in this area, personally running many of these matters with considerable success. For enquiries about running or defending any compulsory appointment applications, click here.