When recovering strata levies or defending an application by a lot owner in respect of the validity of a meeting, it is essential that you have good processes in place and can demonstrate that you have followed due process when sending meeting notices and levy notices.
In an older but still relevant case of The Owners – Strata Plan No 62022 v Sahade [2013] NSWSC 2002, the Supreme Court was critical of an Owners Corporation who had commenced levy recovery proceedings against a debtor lot owner. The lot owner was successful on several points.
What happened?
The Owners Corporation sent notices for a general meeting out to lot owners by post on Tuesday 17 January. The general meeting was held on 30 January and at this meeting a special levy was raised. The lot owner fell into arrears. When the Owners Corporation took action to recover the strata levies the lot owner challenged the validity of the 30 January meeting on the basis that inadequate notice of the meeting had been provided.
The Court determined that the Owners Corporation, to prove a meeting notice was sent, must be able to satisfy the Court that:
- the meeting notice was correct;
- the notice was placed into an envelope;
- the envelope was properly addressed;
- the correct postage was paid for the envelope; and
- the envelope was physically deposited in a mailbox or post office.
The Court found that the then Clause 32 of Schedule 3 of the Strata Schemes Management Act 1996 (NSW) required that at least seven clear days’ notice of a general meeting must be provided. This provision, for meetings other than annual general meetings, is in the same form as clause 7(3)9b) of Schedule 1 of the current Act, the Strata Schemes Management Act 2015.
This seven clear days time frame excludes the postal service rule under the Interpretation Act 1987 (NSW) which deems service to be effected on the fourth working day after the notice was posted.
What this means is that the meeting notice was deemed served on Monday 23 January (the fourth working day after the notice was posted). With seven days’ notice required the meeting could not validly have been held until 31 January. Therefore, the special levy was invalid.
What do I need to do to ensure the meeting is validly held?
- Be aware of the postal rule. The date of deemed service is the fourth working day after the notice is posted unless there is evidence otherwise (s160 Evidence Act 1995)
- Be aware that electronic communications (e.g. emails) are deemed to be received on the day they are sent provided that your email system can show it was sent on that date unless there is evidence otherwise (s161 Evidence Act 1995)
- Make sure that the notice period for the meeting is strictly adhered to. These notice periods for strata schemes are:
- For an annual general meeting (AGM) 14 clear days; notice (schedule 1, clause 7(a)) Strata Schemes Management Act 2015;
- For a meeting other than an AGM 7 clear days’ notice (schedule 1, clause 7(a) Strata Schemes Management Act 2015);
- For a general meeting where a strata renewal plan is to be considered, 14 days’ notice (s172(2) Strata Schemes Development Act 2015)
- Keep a record of the date the notices were sent, who sent them and that your office processes were adhered to.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Allison Benson