Owners Corporation case law update – Ford v Owners Corporation SP24717 (Owners Corporations) [2024] VCAT 547
What is the case about?
The applicants sought the appointment of an administrator to an Owners Corporation which affects a residential development of 6 apartments on Toorak Road, Toorak. The applicants, the owners of lots 2 and 6 claimed that the owners of lots 3, 4 and 5 and the manager are causing the Owners Corporation to be dysfunctional creating the need for an administrator.
What do you need to get an administrator appointed?
The Victorian Supreme Court says:
“To justify the appointment of an administrator the body corporate concerned must be affected by some incapacity or must be acting so dysfunctionally as to render the provision of appropriate services to unit holders and/or care of the common property either non-existent, or so beset by difficulties to render the body corporate unable to function at what the court considers to be a satisfactory level. There may or may not be financial difficulties or even financial impropriety affecting the body corporate’s capacity to function but there must be some deficiency in its operational capacity sufficient to justify the Court’s intervention in the interest of some or all of the unit holders.”
What did the Applicants argue?
The applicants broadly contend that:
(a) by failing to elect the applicants to the committee the Owners Corporation has been rendered dysfunctional,
(b) the Owners Corporation does not manage and protect the common property,
(c) the Owners Corporation is profoundly dysfunctional, wilfully ignores the Owners Corporations Act 2006 and does not consult with members,
(d) the Owners Corporation has a manager which fails to execute its duties and contributes to the dysfunction.
What did the Tribunal find?
A single instance or even many instances of a failure to strictly comply with the Act in an immaterial way does not prove the applicants’ case. The evidence was that the Owners Corporation is:
a. repairing, maintaining and administering common property,
b. holding meetings and reporting to lot owners as required by the Act,
c. approving annual budgets, raising levies and taking out insurance,
d. maintaining a register and the documents required to be kept by the Owners Corporation and makes those documents available to lot owners via an online portal.
The tribunal was satisfied that the Owners Corporation was carrying out its functions and duties under the Owners Corporations Act and therefore there is no basis for the appointment of an administrator.
How easy is it to get an administrator appointed?
It is incredibly difficult. For some reason there are plenty of applications made by lot owners with a mistaken belief that the appointment of an administrator will be an easy application that will result in that lot owner getting their way in circumstances where others in the Owners Corporation do not agree with them.
However, the reality is VCAT will not readily appoint an administrator. The starting presumption is that Owners Corporations should be run by their lot owners not the tribunal or third parties.
Administrators impose a significant cost burden on lot owners and transfer power from lot owners for usually around a 12 month period.
Administrators do not replace an Owners Corporation manager, they replace the decision making of lot owners and committees. Just because a lot owner is not getting their way does not mean an Owners Corporation should is dysfunctional.
Phillip Leaman and Tisher Liner FC Law have extensive experience in administrator applications and have successfully had administrators appointed and successfully defended applications seeking to appoint administrators.
Need advice or assistance in a VCAT case?
Contact Phillip Leaman who heads the Owners Corporations team at Tisher Liner FC Law. We have extensive experience in assisting Owners Corporations in general governance matters and prosecuting and defending VCAT applications.