ACT: Q&A Owners Corporation Executive Committee

We have four executive committee members in our 24-unit complex. One executive committee member resigned when they sold their unit. An owner wants to fill the vacancy. How do we elect them to the committee?

We have a very litigious owner who constantly takes the EC to ACAT. We want to ensure we do everything correctly so we don’t end up in ACAT.

Answer: Calling an executive committee meeting and noting this nomination on the agenda of that meeting.

Section 39 of the Unit Titles (Management) Act 2011 sets out the requirements for the executive committee.

As I am unaware of the actual resolution that was put forward to your AGM, I will assume that the motion approved four positions, and those four positions were filled.

S39(4)(C) states that an executive member holds office until the next AGM or unit they cease being an eligible person. As the EC member has sold, they have certainly become ineligible, and the position is now considered to be a casual vacancy.

S39(6) states that the EC of an owners corporation may appoint a qualified person to fill a casual vacancy on the committee until the next AGM.

Therefore, you can certainly appoint someone to that position. I suggest calling an executive committee meeting and noting this nomination on the agenda of that meeting. That meeting could then formally appoint the other owner to this casual vacancy.

Provided you follow the requirements of the Act, it would be very unlikely that ACAT would rule to disallow the appointment of an owner to fill a casual vacancy.

Steve Wiebe Bridge Strata E: steve@bridgestrata.com.au P: 02 6109 7700

This post appears in Strata News #680.

Question: If an owner appoints a power of attorney, can they be elected to the executive committee of an owners corporation? Can the person who holds the power of attorney attend and vote at the AGM?

Answer: An owner may appoint a person to act on their behalf on all matters.

Yes, Section 39(4a) notes that a member being elected must be considered a qualified person, as defined in S39(7).

An owner may appoint a person to act on their behalf on all matters (including attending and voting at general meetings) by way of an executed power of attorney document, refer to Powers of Attorney Act 2006.

Jack Stoker Bright & Duggan E: Jack.Stoker@bright-duggan.com.au P: 02 9902 7100

This post appears in Strata News #637.

Question: If a unit is in joint names and one of the owners is on the executive committee, can the other owner respond to executive committee issues?

I own a unit in a strata Class A complex.

If a unit is in joint names and one of the owners nominates and is elected to the executive committee, does the other owner have the right to respond to executive committee issues eg approval of expenditures?

If an executive committee member owns two units, does this give them two votes on the committee, similar to their two votes on the owners corporation?

Answer: Legally no, but…..

Legally no. But the person elected may not be good with computers and the other owner answers on their behalf. Therefore the instructions would note that Executive Committee member agrees or disagrees.

General meetings are – one vote per unit. Executive Committee meetings are – one vote per member. But if the units are in 2 names, then both could be the elected nominee from each unit. Normally, another person would nominate the second owner. But noting that the meeting can determine the final number of members between 3 & 7 unless a resolution to vary the number. If the meeting has more nominees than the number resolved, then a ballot would be required.

Jan Browne Bridge Strata E: jan@bridgestrata.com.au P: 02 6109 7700

This post appears in Strata News #631.

Question: Is an Executive Committee legally elected if the election process does not comply with the Owners Corporation rules? We have a rule that sets a deadline for when nominations must be received.

Is an Executive Committee legally elected if the election process does not comply with the Owners Corporation rules?

We have the following Owners Corporation Rule and it was not complied with –

8.3(iii) that nominations from unit owners must be received prior to 5 pm, 30 calendar days prior to the holding of the AGM.

I wrote to our Strata Manager to ask if this rule had been complied with prior to the recent AGM and he stated No, as it was too difficult to implement this rule.

Answer: The Act is silent on the matter of pre-nomination vs the ability for members to nominate from the floor.

The Act is silent on the matter of pre-nomination vs the ability for members to nominate from the floor.

S39(b) of the UTMA states that:

If there are 4 or more members of the owners corporation—the members of the corporation must, at a general meeting, decide—

by ordinary resolution to have 3 to 7 executive members; or

by special resolution to have 8 or more executive members.

S108 (3) of the UTMA states that

An alternative rule is not valid to the extent that it results in the rules—

being inconsistent with this Act or another territory law

It could reasonably be argued that the Rule requiring members to nominate prior to 5 pm, 30 calendar days prior to the holding of the AGM, is inconsistent with the Act and subsequently unenforceable.

This would be a matter for which the interpretation from ACAT would be very interesting.

Nina Cannell Signature Strata E: nina@signaturestrata.com.au P: 02 6185 0347

This post appears in Strata News #626.

Question: As a unit owner in an apartment building in Canberra, am I permitted to attend or “sit in” on an EC meeting to observe? I don’t have confidence in the minutes that are released.

As a unit owner in an apartment building in Canberra, I have concerns about the conduct of both the EC and our Strata Company. Am I permitted to attend or “sit in” on an EC meeting to observe? I am not wanting to speak or have any input, just merely observe what is said. I don’t have confidence that the minutes are an accurate reflection of what is happening, and have serious concerns about the conduct and decisions being made.

Answer: A recommendation for the owner would be to ask if they can attend the meeting, stating their reason as to why.

The Act is silent on this specific matter and does not state that non-executive committee members cannot attend the meetings. However, it is not common in the ACT for owners to be invited.

A recommendation for the owner would be to ask if they can attend the meeting, stating their reason as to why. Alternatively, they can request a General Meeting to discuss their concerns with all owners, as per Schedule 3, Part 3.1, Section 3.5 of the Unit Titles (Management) Act 2011.

Nicole Robb Signature Strata E: Nicole@signaturestrata.com.au P: 02 6185 0347

This post appears in Strata News #614.

Question: Can an Executive Committee appoint the functions of the Chairperson to the Strata Manager?

Can an Executive Committee appoint the functions of the Chairperson to the Strata Manager?

The EC has minimal nominees and no current EC members are willing to take the role. If possible and if the EC does appoint the functions of the Chairperson to the Strata Manager, would this mean the Strata Manager would not have any voting rights (casting vote etc) as they are not an owner, and effectively they would simply Chair the meetings etc and be required to see EC approval for any non-delegated decision making outside of the Strata Management contract.

Answer: The strata manager cannot be elected to the Committee, however the Committee may delegate any of its functions to the manager, pursuant to Section 58 of the Unit Titles (Management) Act 2011

The strata manager cannot be elected to the Committee, however the Committee may delegate any of its functions to the manager, pursuant to Section 58 of the Unit Titles (Management) Act 2011.

This permits the Committee to delegate the function of chairperson to the manager, enabling the manager to chair meetings and perform any other function the chairperson would ordinarily be responsible for.

It should be noted however, that this delegation does not extend to voting. The manager has no voting rights under any circumstance.

Michael Smythe NSW Branch Manager Civium Communities E: michael.smythe@civium.com.au

This post appears in Strata News #582.

Question: Does the chair have a “leadership role” over the rest of the Executive Committee?

My reading of the Act suggests that the chair is just that – a person to chair meetings and liaise between the other office holders and Strata Manager.

It appears that many people view the chair as a leadership position to be the first point of contact and to make final decisions on all matters, which appear to end up being unilateral decisions by the chair in our EC. This person is also making unilateral decisions about what public records are kept and what are not, at the moment overriding my role as a record keeper (Sec) in the EC.

I’m seeking guidance on the question – does the chair have a “leadership role” over the rest of the EC?

Notwithstanding I understand they do get to cast an additional vote in the event that the EC is divided.

Answer: Yes, the observations you make are broadly correct.

Christopher Kerin Kerin Benson Lawyers E: enquiries@kerinbensonlawyers.com.au P: 02 8706 7060

This post appears in Strata News #582.

Question: Should owners corporation members get notice of Executive Committee meetings?

Section 42 of the Unit Titles (Management) Act 2011 provides:

42 Executive committee—secretary’s functions

The functions of the secretary are—

on behalf of the executive committee—
1. to give notice of meetings of the executive committee and general meetings;

The schedules amplify requirements for AGM and special general meetings but I cannot find similar direction for EC meetings (apart from EC determining its procedures and min 7 days’ notice if a member wants a special EC meeting).

There is a requirement that owners corporation members get copies of EC minutes.

Should owners corporation members get notice of EC meetings?

Answer: There is no requirement for the Executive Committee to distribute its agenda for an upcoming Executive Committee Meeting or notify owners.

In accordance with Schedule 2, Part 2.1 (2) of the Unit Titles (Management) Act 2011, the Executive Committee must distribute the minutes within 14 days of the meeting being held. However, there is currently no requirement for the Executive Committee to distribute its agenda for an upcoming Executive Committee Meeting or notify owners.

If there is something you wish to discuss with the EC, the EC might invite you to attend an EC meeting or instead will likely discuss the matter at their next meeting.

Mark Zezulka ACT Division Manager Civium Communities E: mark.zezulka@civium.com.au

This post appears in Strata News #559.

Question: Can the committee make the decision to invest owners corporation funds or does this require approval by a resolution?

Our Executive Committee has placed funds in term deposits. Is this defined as an investment under UTMA section 69(1) and can the Committee decide to invest, or does this require approval by a resolution of the Owners Corporation? Should we have a special resolution to ‘direct’ where any investments are to be made?

Answer: Provided there were no such directions in place at the time the executive committee invested the funds in a fixed deposit, the decision to make such an investment would be valid and effective.

Gary Bugden, Budgen Allen Graham Lawyers:

A general meeting may:

by a resolution, direct the executive committee about the way it exercises its functions; and

by a special resolution, direct the way in which the owners corporation invests its money.

Provided there were no such directions in place at the time the executive committee invested the funds in a fixed deposit, the decision to make such an investment would be valid and effective (subject, of course, to any fatal procedural defect in the passing of the resolution).

If owners want more control over the investment of funds, then the proper course would be to pass a special resolution directing the type of investment that the owners corporation can make. The executive committee would then be bound by those directions. Section 69(1) itself does not define the type of investments that can be made. That is left to the special resolution passed pursuant to that section. Finally, no matter how it is authorised, the owners corporation cannot invest in a mortgage of land. That is an absolute prohibition.

Tim Fuller, Strata Guardian:

The selection and allocation of Owners Corporation capital can be aided by the projections in the maintenance plan (mandatory from 1 Nov 2020 see s24 (1A and 1B), s25, s168, s3.4(c) Sch3, Reg4A and 4B). Care must be taken to ensure liquidity (ie. accessibility) is available for shorter-term expenditure to avoid needing to ‘break’ a term deposit before the maturity date, which entails the usual 31 days notice period and potential early withdrawal (prepayment) costs and fees.

In a similar vein, some thought should be given to the maturity period and whether the maturity date coincides with an appropriate time for your committee to make a decision to either top-up, renew or withdraw the term deposit, and over what period the next term may be.

In regards to the following term, often the solution lies in once again aligning the immediate cash needs over the longer-term ones for the owner’s corporation (over at least 2 years) to ensure sufficient capacity to pay costs. Once again an accurate maintenance plan, with recent costings is crucial here to provide confidence in the cash flow projections.

Term deposits are popular as they offer a near-zero risk (and commensurate return!) solution for short term savings, for longer periods of investment it may pay to look elsewhere with the aim of offsetting the impacts of inflation.

Gary Bugden Bugden Allen Graham Lawyers E: gary@bugdenallenlawyers.com.au P: 02 9199 1055

Tim Fuller Strata Guardian E: contact@strataguardian.com P: 1300 482 736

This post appears in Strata News #554.

Question: We have just had an AGM and elected an EC. Subsequently, a member of the OC has requested to join the EC. What process are we required to undertake to legally have them on the committee?

Answer: Usually, willing incumbent EC members would need to wait until the next AGM to join the EC.

Basically, if an AGM has been held recently, and a new committee elected, another person cannot join the EC unless:

a residing EC member resigns; and,

the remaining members of the EC all agree to co-opt a new member.

Unless this happens, any willing incumbent EC members would need to wait until the next AGM and volunteer at that point to join the EC.

Gareth Halverson Civium Communities E: gareth.halverson@civium.com.au

This post appears in Strata News #533.

Question: Are we able to provide remuneration to EC members who make substantial time commitments to their roles, either through agreed payment for work or alternative incentives such as reduction of strata levies.

I’m on the EC of a large building in Canberra and a number of EC members undertake substantial work in order to discharge their duties.

We also struggle to recruit new members to the EC, possibly because it’s effectively a volunteer role with a sometimes onerous time commitment.

We have discussed very broadly the possibility of providing remuneration to EC members who make substantial time commitments to their roles, either through agreed payment for work or alternative incentives such as reduction of strata levies.

I was wondering whether there are any precedents for this or information about best practice information on how to ensure people are treated fairly and transparently in relation to the work they provide on Executive Committees?

Answer: In the ACT, there is nothing in the executive committee code of conduct or the UTMA which explicitly prohibits or approves this.

I am not aware of any owners corporations in the ACT that have paid executive committee members for their work on executive committees.

However, this does occur in NSW although not frequently. However, I understand that there are some rules in relation to remunerating NSW strata committee members. For example, strata committee members in NSW can be paid for work they’ve done on behalf of the scheme, but only retrospectively.

In the ACT, there is nothing in the executive committee code of conduct or the UTMA which explicitly prohibits or approves this but there are some provisions of the code of conduct that would need to be considered when deciding whether or not to remunerate executive committee members.

Christopher Kerin Kerin Benson Lawyers E: enquiries@kerinbensonlawyers.com.au P: 02 8706 7060

This post appears in Strata News #532.

Question: Can the president refuse to give an interested committee member an update on motions?

I am a committee member. Our committee meets once every 3 months. It has been two months since our last meeting. I sent an email to the president asking for an update on items that were outstanding at the last meeting and how they were progressing. I was told to wait until the meeting (which is 6 weeks away) to receive an update.

Can the president refuse to give an interested committee member an update? What can I do about the failure to update me when I have requested an update?

Answer: The Executive Committee members should be sharing the work load and usually, email discussions would keep all members up to date.

The Executive Committee at their first meeting should have elected a Chairperson, Secretary and Treasurer. Once the roles are determined then a bit easier for actions arising to be checked.

We would not expect that the Chair would be responsible for undertaking all actions. The Executive Committee members should be sharing the work load and usually, email discussions would keep all members up to date. Do other members have some further information or input?

At the next Executive Committee meeting it may be prudent to request a motion that the Executive Committee develop protocols in the management of works and maintenance and minutes have action items plus who is responsible.

Normally protocols would identify processes in place and open communications within the committee. The ACT legislation also allows for a communication officer.

Is the Executive Committee on a group email chat. Maybe ask other Executive Committee members if they are aware of an update of actions. Not sure if the manager has a portal that may also contain information etc. on quotes received.

Maybe ask for a one on one with the chair to talk it out.

We also note the requirement of the legislation as passed last November to distribute minutes within 14 days to all owners.

Jan Browne Bridge Strata E: jan@bridgestrata.com.au P: 02 6109 7700

This post appears in Strata News #459.

Question: The committee has a number of major issues that need to be resolved but the secretary is trying to filter all information. Is this a breach of the UTMA Code of Conduct?

I was elected onto the Executive Committee last year. The new EC comprises of two former EC members and three new members. I am a new member.

Me and another new member have been elected Co-Chairs. We are not having much luck with the former Secretary who actually ran the former EC and compartmentalised most information.

We have a number of major issues that need to be resolved which he will only drip-feed information about. He is contacting our contractors and suppliers and still meeting with them about these issues.

We are talking about major defect rectification and legal issues and he is trying to filter all information. He is effectively running a shadow EC.

Is this a breach of the UTMA Code of Conduct?

Answer: It’s imperative for the Owners Corporation that the Executive Committee is on the same page as a collective.

Have you considered raising your concerns with the former Secretary directly? From our experience, delicate issues that are raised in a mutual environment can be beneficial. Alternatively, if you have one, your Strata Manager may be able to facilitate mediation. It’s imperative for the Owners Corporation that the Executive Committee is on the same page as a collective so that they may present a united front at any General Meetings ensuring that matters are communicated effectively.

The former Secretary does need to be mindful that there is an Executive Committee – Code of Conduct which must be abided to in accordance with Schedule 1 of the Unit Titles Management Act 2011.

If the situation becomes untenable within the EC, you have the ability to remove certain members of the EC under Section 39 (5) of the UTMA via ordinary resolution at a general meeting on the provision that the Owners Corporation elect another member to fill the vacant position at that meeting.

Caroline Mitchell ACT Branch Manager Civium Communities E: caroline.mitchell@civium.com.au

This post appears in Strata News #454.

This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.

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