VIC: Q&A Altering the common area such as letterboxes may require a special resolution

This article discusses when altering common property in Victoria, such as replacing letterboxes, requires a special resolution and how the process should be managed by the owners corporation.

Question: What is the process for altering a common area, such as replacing letterboxes? What resolutions are required?

Our committee of four wishes to alter the letterboxes, which are a common area. Does this require a special resolution? Should the committee call a special general meeting to allow more owners to participate? Would the owners corporation manager arrange this on our behalf, and can the matter instead be addressed at the next AGM? If a special general meeting is required, will the owners corporation incur costs to hold it?

Answer: Is the proposed alteration simply a repair or maybe a necessary replacement that is ‘close enough’ to like-for-like?

Section 4 of the Owners Corporations Act 2006 (the Act) gives a clear authority on one of the core functions and powers of an owners corporation:

4 Functions of owners corporation

An owners corporation has the following functions—

1. to manage and administer the common property;
2. to repair and maintain—
1. the common property;
2. the chattels, fixtures, fittings and services related to the common property or its enjoyment;
3. equipment and services for which an easement or right exists for the benefit of the land affected by the owners corporation or which are otherwise for the benefit of all or some of the land affected by the owners corporation;

To answer the question about authority and the correct procedures, we first need to consider – is this a repair? Letterboxes are like anything else and need to be replaced from time to time. The exact design or model may no longer be available, the flaps no longer exist, or the ‘shell’ (think of a brick letterbox) has crumbled away, and the same colour brick isn’t available anymore.

If this is indeed a case of ‘well, it’s got to be done’, then it is likely that the committee is acting within its authority. That authority is delegated to it (the committee) by section 11 of the Act, specifically sub-section 5;

11 Management of owners corporation and power to delegate

1. An owners corporation is to be managed by or under the direction of the lot owners.
2. Subject to subsection (3), an owners corporation may, by instrument or by resolution at a general meeting, delegate any power or function of the owners corporation to—
   1. the committee of the owners corporation;
   2. the manager of the owners corporation;
   3. a lot owner;
   4. the chairperson of the owners corporation;
   5. the secretary of the owners corporation;
   6. an employee of the owners corporation.

3. An owners corporation must not delegate any of the following powers or functions under subsection (2)—
   1. a power or function that requires a unanimous resolution, a special resolution or a resolution at a general meeting;
   2. the power of delegation under that subsection.

5. If no delegation is in force under subsection (2)(a), the committee of the owners corporation is delegated all powers and functions that may be exercised by the owners corporation, except for—
   1. those powers and functions set out in subsection (3); and
   2. those matters which must be determined at a general meeting under section 82.

For simplicity’s sake, we can summarise the above as the default position being that the committee is delegated full authority of the owners corporation when it doesn’t require a unanimous or special resolution, and when the general meeting doesn’t limit its delegation.

So, when would the decision to “alter” the letterbox NOT fall within a committee’s scope?

Section 52 covers this;

52 Significant alteration to common property requires special resolution

An owners corporation must not make a significant alteration to the use or appearance of the common property unless—

1. the alteration is—
   1. first approved by a special resolution of the owners corporation; or
   2. permitted by the maintenance plan; or
   3. agreed to under section 53; or

2. there are reasonable grounds to believe that an immediate alteration is necessary to ensure safety or to prevent significant loss or damage.

Basically, this prevents a committee from doing any random thing/whatever it likes, simply because they happen to be the committee of the moment. The problem here is that the word “significant” lacks any form of definition. If the letterboxes are changed from wooden to metallic in composition and appearance, but still occupy the same dimensional space, does that count as significant? What if it is just the paint or finish colour—same material, same location, same letterboxes, but they’ve gone from white to nitro-orange or hot-pink?

For argument’s sake, let’s say that the proposed change IS significant – it passes the pub test, maybe there’s some legal opinion supporting it, whatever the case may be. In that instance, the committee are required to conduct a special resolution vote of the owners corporation. This vote can be conducted at a General Meeting – either Annual or Special – or via a postal ballot (traditional or email).

However, there is also one exception to the special resolution requirement for any significant alterations. That exception is s52(a)(ii) – seen above – which allows for significant alterations to use or appearance of the common property to be made if they are permitted (read as ‘included’) by the maintenance plan. That is, if the replacement of the letterboxes is within an approved maintenance plan, there’s no requirement for a special resolution. The maintenance plan itself doesn’t require a special resolution to be approved – it can be approved via committee authority or an ordinary resolution of the owners corporation.

So let’s summarise

• Is the proposed alteration simply a repair or maybe a necessary replacement that is ‘close enough’ to like-for-like? If ‘yes’, then no special resolution is required.
• If no, what is the extent of the difference? Is it sufficient to pass the reasonable meaning of ‘significant’? If yes, a special resolution is likely required, which can be put to all owners at a General Meeting or by postal ballot. What counts as significant? Consider colour, size, composition, relocation, and functionality.
• Is the change part of the maintenance plan? If so, then no special resolution is required.

If your circumstance ticks the special resolution requirement, then you should contact your manager requesting their advice, and requesting they notify the committee of your view of the need for a vote. If the matter is imminent and will greatly impact you, individual legal advice and representation may be required. I always recommend starting by contacting your manager and seeking their advice and view as a starting point.

Alex McCormick
SOCM
alex@socm.com.au
P: 03 9495 0005

This post appears in Strata News #767.

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