The Legal Challenge: Section 238 of the SSMA
In a recent ruling for owners and strata committees, the NSW Civil and Administrative Tribunal (NCAT) has shed further light on the test for removal of strata committee members. In Timpano v The Owners – Strata Plan 11247 & Ors [2024] NSWCATCD 61, NCAT dismissed an application brought by an owner alleging strata committee member wrongdoings and mismanagement. The ruling notes that dissatisfaction or opposition to decisions of a committee is never sufficient to justify removal under section 238 of the Strata Schemes Management Act 2015 (NSW) (SSMA).
The Applicant, who was self-represented, instituted proceedings under section 238 of SSMA for removal of strata committee members due to a range of claimed deficiencies. These varied between failure to carry out repairs to common property through to a failure to communicate, irregularity in holding AGMs, unauthorised capital works, failure to comply with past Tribunal orders, and an attempted approval of oppressive by-laws.
Applicant’s Claims Against the Strata Committee
These comprised a sitting chairperson, a former treasurer who sold her parcel and a former chairperson who lost in a re-election in an EGM. The Applicant also wanted to bar sitting members from running in future elections and requested orders for joining third parties to the strata manager.
The Tribunal dismissed the application on grounds that while there were several complaints registered by the Applicant, they were short of meeting the test in section 238 of the SSMA. The Tribunal reminded the parties of its discretion to remove strata committee members and this shall only be exercised in instances of serious misconduct, persistent breach of statutory obligations, or systemic dysfunction.
NCAT noted that the owners corporation continued to function, maintenance work was carried out by the strata committee, and there was no application for a compulsory strata manager appointment. NCAT viewed the Applicant’s numerous allegations to be unsubstantiated and to be insufficient to establish a continued failure in strata scheme governance.
Tribunal’s Response: A High Evidentiary Bar
Section 238 of SSMA enables NCAT to remove a strata committee member or prevent a strata committee from resolving a matter if satisfied on the facts such a member has either been in breach of the SSMA or has failed to exercise reasonable care and diligence or has engaged in serious misconduct. NCAT has always however adopted the view that s 238 must be exercised judiciously and only when necessary.
Isolated acts of negligence or procedural mistakes will not typically be enough. The Tribunal looks for evidence of chronic failure, abuse of power, or serious breaches that undermine the proper functioning of the owners corporation.
The Applicant’s application detailed a wide range of allegations against the committee, including:
• Delay in repairing a stairway handrail and other maintenance issues.
• Engagement of a preferred contractor for concreting works, allegedly without proper approval.
• Inadequate communication between the strata committee and lot owners.
• Procedural irregularities in the election of the committee at AGMs.
• Attempts to introduce a by-law restricting communication from lot owners.
• Failure to respond to complaints about potential by-law breaches.
• Alleged conflicts of interest involving the strata manager’s staff and a contractor.
Use of Section 238 Must Be Justified by Serious Misconduct
The Applicant also submitted that past AGMs used pre-meeting electronic voting in a way that improperly limited nominations for election to the committee.
NCAT found that many of the Applicant’s allegations were either not supported by evidence or did not amount to serious misconduct. Importantly, NCAT highlighted that:
• The concrete works were part of a long-standing capital works program and were carried out after obtaining competitive quotations.
• Allegations of defective concrete were not supported by independent expert evidence.
• Communications from the committee and strata manager, although sometimes defensive, were generally reasonable in tone and substance.
• Some of the Applicant’s claims relied on minor inconsistencies in committee procedures, which were not sufficient to justify removal of members.
• The applicant had not shown that the alleged contractor relationship affected the decision to award work or resulted in any improper benefit.
One of the core findings was that the owners corporation had continued to operate effectively. While NCAT acknowledged there were some delays in maintenance and communication issues, these were not indicative of chronic dysfunction or bad faith. There was also insufficient evidence to suggest that the strata committee had engaged in oppressive conduct or had acted outside its legal authority.
A significant point made by NCAT was the emphasis on the democratic election process. Strata committee members are elected by lot owners at a general meeting. Unless there is clear and convincing evidence of wrongdoing, NCAT is reluctant to interfere with this democratic process. In this case, despite the Applicant’s criticisms, the chairperson was re-elected by the majority at the next AGM.
NCAT found that some of the procedural irregularities, such as the use of pre-meeting electronic voting, were likely based on misunderstandings of legislative requirements, particularly those that applied during and after COVID-19. However, these misunderstandings were not sufficient to justify interference with the strata committee’s functioning.
This case illustrates that section 238 should not be used as a tool for personal grievances or to re-litigate disputes over strata committee decisions. The Applicant’s voluminous submissions and the inclusion of irrelevant allegations detracted from the core legal issues. NCAT noted that many of the complaints were better suited for internal resolution or mediation.
There was no application made for a compulsory strata manager under section 237, nor was there a claim for a work order under section 106(1) of the SSMA. These omissions further undermined the Applicant’s case and reinforced the view that the matter could have been managed within existing strata governance mechanisms.
Lessons from the Decision
• Mere disagreements, poor performance, or administrative delays will not suffice. The applicant must establish a clear pattern of serious misconduct or gross neglect that undermines the functioning of the strata scheme.
• NCAT will not act on speculation or personal assertions. Independent expert evidence, proof of breaches of statutory obligations, and material evidence of harm or mismanagement are essential to sustain a claim.
• Committee members derive their authority from elections conducted under the SSMA. Unless elections are proven to be invalid or tainted by illegality, NCAT will be slow to intervene.
• Disputes over maintenance, contractor engagement, or by-law enforcement should first be addressed through the strata manager, internal dispute resolution, or mediation before legal proceedings are commenced.
Conclusion: Legal Process Not a Forum for Personal Grievances
The decision confirms that NCAT will not lightly remove strata committee members. The case reinforces the importance of evidence-based claims and cautions against using legal processes as a platform for personal grievances. While strata committees must remain accountable, lot owners must also respect the democratic structure and statutory checks in place.
At Pobi Lawyers, we assist lot owners, strata committees, and owners corporations with all aspects of strata and community title law, including NCAT proceedings. If you need legal guidance about your rights, please contact us via our Contact Us form or by phone at (02) 8324 7565.
Disclaimer
This article was published by Pobi Lawyers and the material in it is intended only as general information. This does not constitute legal advice, nor create any solicitor-client relationship. We recommend that you seek your own independent legal advice in relation to your own individual circumstances, before acting or relying on the contents of this article. Pobi Lawyers shall not be responsible for any reliance placed on this information, and its contents are liable to change at any time without notice.
Recent Comments