Governance, Not Grievance: When Can a Compulsory Strata Manager Be Appointed?
If you've ever sat through a tense strata committee meeting, you’ll know that disagreements are part and parcel of strata living. Disputes over budgets, by-laws, lawn arrangements, or even flowerpots are not uncommon. But when those disagreements turn into Tribunal proceedings seeking the appointment of a compulsory managing agent under section 237 of the Strata Schemes Management Act 2015 (NSW) (“SSMA”), it's worth asking: are we dealing with genuine dysfunction – or just bruised egos?
What is section 237?
Section 237 of the SSMA empowers the NSW Civil and Administrative Tribunal (“Tribunal”) to appoint a compulsory strata managing agent to take over the functions of the Owners Corporation or its office bearers, including the chairperson, secretary, treasurer, or the strata committee.
This may include:
exercising all of the functions of the Owners Corporation;
exercising some specified functions; or
all functions except specified ones.
The Tribunal can also extend this to cover all or some functions of the office bearers or strata committee.
But – and this is a big but – an order can only be made if one or more of the following circumstances under section 237(3) is satisfied:
1. The management of the strata scheme is not functioning, or not functioning satisfactorily;
2. The Owners Corporation has failed to comply with a requirement imposed by a previous Tribunal order;
3. The Owners Corporation has failed to perform one or more of its duties under the SSMA;
4. The Owners Corporation owes a judgment debt.
In other words, the Tribunal must be satisfied that something more serious than internal disagreement is at play.
A remedy of last resort
The Tribunal has repeatedly described compulsory management as a “draconian” remedy. Why? Because it effectively displaces the democratic structure of the strata scheme. Instead of owners having a say in how their building is run, a third-party manager is parachuted in to make decisions without being accountable to lot owners.
In Bischoff v Sahade [2015] NSWCATAP 135, the Appeal Panel made clear that:
“The power to appoint a strata managing agent under section 237 is a significant intervention into the democratic management of a strata scheme. It should not be exercised lightly.”
Disagreement isn’t dysfunction
Too often, section 237 applications are lodged because one faction of owners is frustrated at being outvoted by the majority. But that’s how democracy works – not everyone gets their way. Being summarised the threshold for dysfunction as follows:
“It is not enough that the owners simply do not get along… The evidence may show a properly functioning strata scheme in all practical respects despite any personal animosities.”
What does real dysfunction look like?
To justify the appointment of a compulsory managing agent, the evidence must show systemic and sustained issues, such as:
Persistent failure to maintain common property despite expert recommendations;
Persistent non-compliance with statutory requirements (e.g., no fire safety certification or insurance);
Breach of Tribunal orders;
Refusal to collect levies or keep proper financial records; and/or
Owing a judgment debt.
What it does not include are:
Like-minded committee members voting together;
Perceived slights in meeting conduct;
Allegations of bias without evidence;
A delay in implementing non-urgent works;
Accusations of “misconduct” without any substantiating material.
From grievance to governance: misusing section 237
The sad reality is that many section 237 applications are less about the scheme and more about the people. A committee member who finds themselves regularly outvoted may feel sidelined and look to the Tribunal for “intervention.” But the Tribunal is not there to act as referee for personal vendettas. Its role is to protect the functioning of the Owners Corporation as a whole – not to protect the influence of any one individual or group.
If you're not happy with who is on the committee or how decisions are made, the remedy is simple: vote at the next AGM or nominate alternative committee members. That’s democracy. Section 237 is not a shortcut to power – it’s a safeguard against true dysfunction.
Conclusion: use caution before you cry dysfunction
Appointing a compulsory strata manager is a drastic intervention into the democratic framework of strata governance – one that effectively removes decision-making power from the hands of lot owners and places it into the control of a third party. It is not a substitute for internal governance, nor a remedy for interpersonal disagreement. Its purpose is to simply address genuine, demonstrable dysfunction – nothing less. Bottom line? Personal grievances, however, passionately held, do not justify compulsory management
Tom Bacon CEO and Principal Lawyer | Strata Title Lawyers
Tom holds a Bachelor of Laws and a Bachelor of Arts (Political Science) from the University of Auckland and practices exclusively in strata and community title law. He is an accredited mediator and a leader in the field of resolution of strata and community disputes and has acted for owners corporations and unit owners in some of the most significant strata law cases in Australia in recent times.
Tom has also practised as a Barrister and Solicitor in environment law, building law and insurance law, acting for government clients in a range of appeals, administrative law reviews and declarations in New Zealand’s superior courts.
Tom can be contacted by email at tom@stratatitlelawyers.com.au or by telephone 02 9091 8088.
Disclaimer:
This article is intended for general educational purposes only and does not constitute legal or financial advice. Readers should seek independent legal and professional guidance relevant to their specific circumstances and jurisdiction
