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Engaging Lawyers: A Primer For Owners Corporations

Engaging Lawyers: A Primer For Owners Corporations

Published on November 28, 2016 by Ben Robertson

Everyone knows that lawyers are engaging – with sparkling repartee.  However, a more pertinent issue for an owners corporation after the commencement of the Strata Schemes Management Act 2015 on 30 November 2016 is:

“How does an owners corporation engage a lawyer?”

Changes introduced in the Strata Schemes Management Act 2015  make it easier to engage lawyers for urgent advice without requiring a resolution being passed at a general meeting.  Urgent advice may be required where a statutory warranty period or a home owners warranty insurance period is due to expire, or where advice on urgent rectification works is required.

General Principle

The general principle for engaging lawyers under the Strata Schemes Management Act 2015  is that an owners corporation or a strata committee must obtain a resolution passed at a general meeting approving the legal services.

Exceptions To The General Principle

An owners corporation or a strata committee is exempt from obtaining a resolution passed at a general meeting approving legal services in the following circumstances:

  1. Urgent Action –
    1. Where the owners corporation or strata committee considers that urgent action is necessary to protect the interests of the owners corporation; and
    2. Where the cost of the legal services does not exceed $15,000.
  2. Non Urgent Action –
    1. Where the cost of the legal services for non urgent action does not exceed $3,000.
  3. Obtaining legal advice before commencing legal action.
  4. Taking legal action to recover unpaid contributions, interest on unpaid contributions or related expenses.

Proceedings Where No Resolution Was Obtained Will Not Be Invalid

It should be noted that the Strata Schemes Management Act 2015 expressly provides that proceedings or other legal action commenced by an owners corporation will not be invalid due to any failure on the part of the owners corporation or the strata committee to obtain a resolution passed at a general meeting approving the legal services.

This is a welcome development from the position prior to the Strata Schemes Management Act 2015 where a failure on the part of an owners corporation to obtain a resolution ratifying the commencement of proceedings could provide the basis for an application striking out those proceedings.

So How Does An Owners Corporation Engage A Lawyer?

Accordingly, for those matters where an exception to the general principle for engaging lawyers applies a strata committee may engage a lawyer after resolving to approve the law firm’s fee proposal and scope of works, unless an owners corporation has passed a by-law restricting the strata committee from engaging lawyers.

Otherwise, an owners corporation or strata committee must obtain a resolution passed at a general meeting of the owners corporation approving the law firm’s fee proposal and scope of works.

Where a fee proposal is provided to an owners corporation, the owners corporation must give a copy to each owner and strata committee member within 14 days of receipt.

We can assist your scheme to chart a path through the Strata Schemes Management Act 2015.

Disclaimer: This article contains general advice only and does not constitute legal advice.  Readers’ own particular facts and circumstances may change the general advice in this article and it is recommended that readers obtain legal advice in relation to their own individual facts and circumstances.

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