At OCX, protecting our clients’ interests doesn’t stop at day-to-day management. When disputes escalate to the Victorian Civil and Administrative Tribunal (VCAT), we’re prepared to go the distance, even when that means stepping into the hearing room ourselves.
The Challenge: A Lot Owner Disputes Levy Funds and Interest Charges
OCX took over an owners corporation from another manager following the completion of a cladding removal project. One of the lot owners brought a claim to VCAT, raising two significant arguments against the Owners Corporation:
- Leftover levy funds — She alleged that money remaining after the completion of cladding rectification works had been unlawfully withheld by the OC. Her position was that because the funds were raised via a special levy specifically for the cladding works, any surplus should be returned to lot owners.
- Loan facility entitlement — The OC passed a special resolution for executing a Drawdown Loan Facility; however, the OC did not enter into the agreement since there were only 2 lot owners interested and notified the lot owners accordingly. She argued that a loan facility passed by the OC as part of a special resolution must have been made available to her as a facility, and that as a result, the late penalty interest charged to her account was unjust.
The stakes were real. A finding in her favour could have set a precedent affecting how the OC manages surplus funds from special levies, and potentially exposed the OC to further financial liability.
OCX’s Approach: Prepared, Evidence-Led, and Self-Represented
Rather than engaging external legal counsel, the case was prepared and run entirely in-house. Every argument was carefully researched, every financial record was reviewed, and the OC’s position was built on solid evidence before a single hearing day.
This approach required a thorough understanding of the Owners Corporations Act 2006, the OC’s own resolutions and financial records, and the specific facts surrounding both the cladding rectification project and the loan facility resolution.
What Happened at VCAT
On the surplus levy funds claim, the OC demonstrated that the total expenditure on cladding rectification works actually exceeded the amount raised through the special levy, meaning there was no surplus to return in the first place, and also demonstrated that even if there was any surplus, the OC did not have to return the remaining funds to the owners. VCAT accepted the OC’s position and ruled that the lot owner was not entitled to any portion of the levy funds.
On the loan facility claim, the lot owner relied on a letter from the previous manager as evidence that a special resolution had been passed by the OC offering a loan arrangement to lot owners. However, that same letter revealed that only two lot owners had expressed interest in the strata loan, and the special resolution actually failed. VCAT found that this fell short of demonstrating that a binding special resolution had been passed for the loan facility. The member ruled accordingly: the lot owner had not established her entitlement to the loan, and therefore could not rely on it to excuse the penalty interest charges and that the OC. Further, even if the Special Resolution passed, she has given no legal authority for the proposition that an owners corporation is in breach of its obligations if it subsequently resolves not to implement such an arrangement.
The only matter decided in the lot owner’s favour was a relatively minor one: VCAT found that the interest charges applied to her account had been incorrectly calculated by the previous management company, resulting in a slight overcharge. The OC was ordered to refund approximately $280 to the lot owner on that basis.
The Outcome at a Glance
| Claim | Outcome |
| Surplus cladding levy funds withheld unlawfully | Ruled in favour of OC — OC spent more than was raised |
| Entitlement to OC loan facility/waiver of penalty interest | Ruled in favour of OC — special resolution not established |
| Interest was incorrectly calculated and overcharged | Partial win for lot owner — OC ordered to refund ~$280 |
Conclusion
This matter is a clear example of what diligent, evidence-based management looks like in practice. By understanding the legislation, maintaining accurate financial records, and preparing a sound case, OCX was able to successfully help the OC defend its position against claims that, if upheld, could have had far broader financial consequences.
At OCX, we don’t just manage properties; we stand behind our clients when it counts.
Are you facing a dispute or an escalating arrears matter? Get in touch with OCX today to find out how our experienced team can protect your Owners Corporation’s interests.