Holding paper 12

An owners corporation has the functions given it by the Unit Titles (Management) Act and certain other legislation.  In addition, they have such other functions and powers as are necessary or convenient to their exercising those functions.  But under no circumstances can corporations or executive committees give themselves powers or functions that are not solidly based in the law.  When owners corporations have a problem, they can save a lot of time and effort by checking what the law is.  

First there is the applicable Acts, the Unit Titles Act 2001, the Unit Titles (Management) Act 2011, the Privacy Act, the Agents Act, and the Legislation Act, any one of which may be relevant to the case in point.

Second, there are ACAT (ACT Civil and Administrative Tribunal) decisions, which as we go along will provide an increasingly useful case study of how those laws apply.


Note that most ACAT judgements are verbal and about such things as levies or trees or cars parked in the wrong place.  Only a few warrant a written judgement.  An applicant or defendant can ask for a written judgement that may not be posted on the site because ACAT does not think it important enough.


We will endeavour to keep this part of this website up to date.  If we fall behind please let us know asap.


If the information under the headings below does not help you, 

check the ACAT (ACT Civil and Administrative Tribunal) website at  http://www.acat.act.gov.au/judgment 

ring the ACAT Registry on (02) 62071740 

email ACAT at tribunal@act.gov.au

email the OCN at secretary@ocnact.org.au 


ACAT DECISIONS


Can an owners corporation delegate its powers to the executive committee?

Probably not.

In 1976 the owners corporation of Units Plan 116 had purported to empower the executive committee to grant special privileges over areas of the common land to unit owners.  However, the Unit Titles Ordinance 1970, s. 46 and subsequent Acts all required that any grant of a significant special privilege be agreed by the owners corporation by initially a unanimous resolution and later an unopposed resolution.

In The Owners Units Plan No 116 & Nicholson and Ors, ACAT made clear that that owners corporation did not have the power to make this delegation of its powers because the relevant ordinance at the time and later Acts all specifically required the owners corporation itself to make the decision to grant a special privilege and that the owners corporation could not override the specific requirements of the Act.   

ACAT decided that all grants of special privilege by the executive committee subsequent to this decision of the owners corporation were ultra vires, that is outside the powers of the executive committee, and consequently void.

ACAT then made orders to bring about the lawful remaking of all these decisions.

So if the executive committee is empowered to put the owners corporation’s decision into effect, the owners corporation cannot delegate its decision making power to the executive committee and has to make decisions itself.


Can an executive committee make any decision it thinks is appropriate?

No.

In Karina Lanfranchi and the Owners of Units Plan 806, ACAT overturned the executive committee’s decision and substituted its own.

The question was “Did the executive committee on behalf of the owners corporation fail to consider relevant matters and take into account irrelevant matters and make an unreasonable decision?”  

ACAT concluded :

“that the executive committee has failed to properly inform itself prior to making the decision…. It has failed to consider relevant matters and has taken into account irrelevant matters. The decision was not based on a reasonable consideration of the issues, but was based on erroneous assumptions, not supported by evidence or information. It was thus a decision that was not based on sound judgement and was unreasonable.”

ACAT then voided the decision for irregularity.

ACAT then reviewed the decision on the merits of the contesting arguments.

ACAT then substituted its own decision.


This decision is fair warning to all executive committees that they must abide by the Executive Committee Code of Conduct (Schedule 1 to the Unit Titles (Management) Act and operate strictly within their powers with honesty, fairness, care and diligence.  If they don’t ACAT can overturn their decisions.


Can the owners corporation decide not to insure certain buildings or parts of the common property?

No.

In Kajula Pty Limited & Units Plan No 682, ACAT decided that the owners corporation has no right to exempt itself from the sections of the Act (Ss99-102 of the Unit Titles (Management) Act) requiring insurance for all buildings on the parcel and public risk liability.  

Owners corporations should note that S101 allows owners corporations by unanimous resolution to exempt themselves from taking out insurance if the common property is less than the amount prescribed by Regulation (currently $10,000), or, again by unanimous resolution, for one year at a time if the development comprises class B units.


In a mixed commercial and residential owners corporation, are owners of the commercial units members of the owners corporation?

Yes.

In Kajula Pty Limited & Units Plan No 682, ACAT affirmed at para 18 that the commercial unit holders are members of the owners corporation and are entitled to attend meetings and vote at those meetings.


Can an owner deny that they are liable to pay levies?  Or say they did not know they had to pay levies?

No.

In The Owners Units Plan No 259 and Hugh Russell Ford, ACAT affirmed that all unit owners are liable to pay levies.


Can you give your proxy to someone who is not a member of your owners corporation?

Yes you can.  

In the case of Anne K Brown and The Owners of Units Plan 2737, ACAT concluded that because Sub-section 115(3) (now Schedule 3 3.26 of the Unit Titles (Management) Act ) excludes only two types of person (the strata manager or a service contractor) from being appointed a proxy, it therefore allows anyone else to hold a proxy.


Can an owners corporation exclude certain people from accepting proxies?

No.

ACAT concluded in Anne K Brown and The Owners of Units Plan 2737 that an owners corporation’s power to approve the proxy form (Schedule 3 3.26 of the Unit Titles (Management) Act does not include a power to change the Act.  So as the Act only prohibits the strata manager or a service contractor from being appointed a proxy, an owners corporation can go no further than that. 


Can an owners corporation stop proxies from voting on certain motions at AGMs?

No.

ACAT concluded in Anne K Brown and The Owners of Units Plan 2737 that an owner may in writing place restrictions on what motions and how their proxy holder may vote but that, as the Act does not limit what motions a proxy may vote on, an owners corporation cannot change the Act or the scope of the proxy given by the owner.


Is an owners corporation liable to pay for work done by a former strata manager during the handover to a new strata manager? 

Yes.

In Owners Corporation Units Plan 220 and Link Corporate Services Pty Ltd ACAT found that the former strata manager was entitled to be paid up to the termination date and if any work continued beyond that date, like preparing accounts for an audit, to be paid for work performed beyond that date.


Is an owners corporation member entitled to vote at an AGM or special general meeting if they owe any money to the owners corporation?

No.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others, (decision not yet published), ACAT affirmed that if an owners corporation member owes any money to the owners corporation they are not entitled to vote on any resolution  at an AGM or special general meeting.


If members of an owners corporation seek a special general meeting under section 3.5 of Schedule 3 of the Unit Titles (Management) Act, do all the signatories have to be fully financial at the time they sign the request for the meeting?

Yes.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others, (decision not yet published), ACAT concluded that Subsection 2 of Section 3.5 means that if a signatory is not fully financial at the time they sign a petition seeking a special general meeting, their signature does not count towards achieving at least 1/4 of the total unit entitlement in the units plan.  “It is not sufficient that they may become entitled to vote by paying outstanding amounts some time before the general meeting that is held as a result of their request.” 


Can an owners corporation or an executive committee still perform a power if it has delegated that power to a strata manager? 

Yes.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others, (decision not yet published), ACAT decided that 

“It is not the case that the executive committee, having engaged a manager, lost the power to exercise its own functions or to give direction to the manager.”


It should be noted that the Legislation Act 2001 provides at S. 240 that “A function that has been delegated may, despite the delegation, be exercised by the appointer.”

So it would be reasonable to conclude that this issue had already been settled in ACT law before ACAT’s decision in this case.


Does an executive committee automatically delegate its powers and functions to a strata manager simply by contracting to engage a strata manager?

No.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others, (decision not yet published), ACAT did not accept that delegations existed.  It seems that ACAT requires more evidence of a delegation than the assertion by the strata manager that a delegation exists.

It should be noted that the Legislation Act 2001 provides at that S. 232 “A delegation must be made, or evidenced, by writing signed by the appointer.”

So it would be reasonable to conclude that this issue had already been settled in ACT law before ACAT’s decision in this case.


Is an executive committee entitled to receive a copy of the corporate register any time it requests it?

Yes.

In Executive Committee Units Plan 930 and Capital Strata Management and Miliano and Others, ACAT said the Executive Committee was entitled to the information, the strata manager should have provided it as soon as the Executive Committee requested it and there was no need for ACAT to order the strata manager to make the information available to the Executive Committee.


Do unit owners in mixed commercial/residential owners corporations have a right to object to commercial operations they think will cause noise, waste, security or other problems? 

Yes other owners have the right to object to any proposal that requires a unanimous or an unopposed resolution to be approved.  However, ACAT indicated in Artico Holdings Pty Limited and The Owners Units Plan No. 3461, that if the lease purpose contemplates the commercial activity being included in the residential facility and contemplates the commercial activity in question, the owners cannot make a case based on assertions and need to purchase expert evidence to back their objections.


This suggests that unit owners in mixed developments need to be willing for the development to be mixed or to decide what sorts of activities they do not want and to defend their interests strenuously and potentially expensively.

 

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