This article is about how the reforms to WA strata legislation will affect the council of owners.
Table of Contents:
- QUESTION: I am an owner of one lot in a four lot complex. I manage the finances for the complex. Do I need to do anything in order to comply with WA’s new strata reforms?
- QUESTION: Section 118 of the Strata Titles Act as amended in 2018 appears to conflict with section 135.
- QUESTION: What does “degree of care and diligence” effectively mean. Is it basically the same as directors duties?
- ARTICLE: How Will the New Strata Titles Legislation Affect our Council of Owners?
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Question: I am an owner of one lot in a four lot complex. I manage the finances for the complex. Do I need to do anything in order to comply with WA’s new strata reforms?
I am an owner of one lot in a four lot complex. I manage the finances for the complex.
It was agreed that each owner looks after their own repairs and maintenance.
Do I need to do anything in order to comply with WA’s new strata reforms?
Answer: We would always recommend that a Professional Management company be engaged by a Strata Company to ensure ongoing compliance with the Strata Titles Act.
We would always recommend that a Professional Management company be engaged by a Strata Company to ensure ongoing compliance with the Strata Titles Act.
We also note your comment “each owner looks after their own repairs and maintenance”. Every Strata Plan is different, each owner may have the responsibility of maintaining their own areas in accordance with the boundaries of the lots, or the Strata Plan may determine that the Strata Company is responsible for some or all of these areas.
To answer your query, these are a couple of issues to further consider:
- Schedule 1, Bylaw 10 provides the Powers and Duties of the Treasurer of the Strata Company
- Section 100 outlines the establishing of the Administrative & Reserve Funds, raising levies, charging interest and debt recovery
- Section 101 outlines the keeping of the financial records for the Strata Company
- Section 102 outlines preparing the budget and limitations on how funds can be spent
- Section 148 (2) requires the Strata Company to have an ADI account and all money received on behalf of the Strata Company must be paid into that ADI account
Strata Alliance
E: info@strataalliance.com.au
P: 9330 3959
This post appears in Strata News #441.
Question: Section 118 of the Strata Titles Act as amended in 2018 appears to conflict with section 135.
Section 118 of the Strata Titles Act as amended in 2018 appears to conflict with section 135. In section 135 it states that the Strata Council must carry out the work on behalf of the Strata Company. I assume that means organise the contracts for work required. Section 118 states that execution of documents must be authorised by a general meeting of the Strata Company.
If the Strata Council can carry out the work of the Strata Company then why do they have to get authorisation to execute documents? This appears to be contradictory.
Answer: Section 118 and s 135 are not in conflict.
Section 118 and section 135 are not in conflict.
Section 118 addresses the execution of documents. Such documents can range from contracts to engage a strata manager to contracts of insurance.
Once all relevant documents are signed under section 118, the council will typically then liaise with the strata manager to deal with work functions covered by section 135, i.e. things like maintaining the gardens and fixing the automatic gates.
Anthony Quahe
Managing Principal
Civic Legal
T: 08 9200 4900
E: aquahe@civiclegal.com.au
Disclaimer: This response is of a general nature only and is not to be taken as legal advice. You should seek legal advice for your specific circumstances.
This post appears in Strata News #417.
Question: What does “degree of care and diligence” effectively mean. Is it basically the same as directors duties?
What does “degree of care and diligence” effectively mean. Is it basically the same as directors duties?
Several members of the CoO passed motions, but then reneged claiming they either hadn’t read or didn’t understand the supporting information provided nor did they raise any such issues during discussions at CoO meetings.
How do you reverse or enforce motions made when CoO members don’t correctly engage in CoO decision making?
Answer: Failing to read or understand the issues can potentially amount to a lack of care and diligence.
“Company directors do owe a duty of care and diligence to their companies. That kind of ‘care and diligence’ is similar to the kind expected of lot owners who are on a strata company council. Failing to read or understand the issues can potentially amount to a lack of care and diligence.
As a general rule, one may be able to reverse or enforce a resolution arising from a motion at council or general meeting by passing an appropriate resolution at a later council meeting or general meeting (as the case may be). Obviously, an appropriate majority would be needed to effect this. However, there may be limits on this, arising from the kind of resolutions in question, what actions have been taken as a result, legal limitations etc.
Disclaimer: This response is of a general nature only and is not to be taken as legal advice. You should seek legal advice for your specific circumstances.”
This post appears in Strata News #411.
Article: How Will the New Strata Titles Legislation Affect our Council of Owners?
How will the coming reforms in WA affect the way the Council of Owners operates? We cover the major changes you need to know about if you are a part of the Council of Owners in your scheme.
Functions and Constitution of Council
Section 135 (formerly section 44) is now where you will find the functions and the constitution of council. The functions of a strata company will subject to the Act and any restrictions imposed by an ordinary resolution be still performed by the council of owners.
Council of Owner Elections
One of the major changes is the way the Council is now elected, previously if an election was called the votes were counted by number, however now section 135 (3)(a) states that a person who is entitled to vote in the election and who is present in person or by proxy at a meeting may demand that the votes in the election be counted by unit entitlement of lots. This means that those who have a higher unit entitlement will have a higher voting capacity.
The Chairperson
Section 135 (4) now formally states that one of the members of the council must hold the office as chairperson of the strata company.
It is also interesting to note that the previous word Chairman has now been replaced by Chairperson, which is more socially acceptable.
Declaring Conflicts of Interest
There is now more accountability for members of the council under the new legislation. Previously there was no formal requirement in the ACT for council members to act in the best interest of the strata company nor declare any conflicts (although common law would usually require this) the new ACT now addresses this under section 137 which now requires that a council member must at all times act honestly, with loyalty and in good faith.
They must also at all times exercise the degree of care and diligence in the performance of the functions that a reasonable person in the person’s position and the circumstances of the strata company would reasonably be expected to exercise, nor should they make improper use of their position to gain directly or indirectly an advantage.
In summary, council members must disclose any conflict of interest and not vote on any matter in which they have an interest.
Council Member’s Liability
Another very important addition is the protection of Council members (section 141) this states that a council member is not liable in any civil proceedings for any act that they do in good faith when performing the role of a council member.
So there is good news for members of the council in the new legislation which hopefully will encourage more owners to take an active interest in the running of their strata properties.
Andrew Chambers
Chambers Franklyn Strata Management
P: 08 9440 6222
E: andrew@chambersfranklyn.com.au
This post appears in Strata News #242.
Please note: this article was provided prior to the proclamation of the new strata title amendments.
Have a question about how the reforms to WA strata legislation will affect the council of owners or something to add to the article? Leave a comment below.
Read next:
- WA: Reforms to WA Strata Legislation – As a Lot Owner, Should I Care?
- WA Strata Titles Amendment Act 2018: duties of a council member and how to protect yourself from liability
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Can a councillor elected at an AGM be replaced if they resign from the council of Owners?
Hi Robyn
This recent Q&A should assist:
Question: If a committee member resigns, can the Council choose ANY owner or only someone out of the four owners who put their name forward at the recent AGM?
Hi can you inform me if this statement is correct:-
The Council of Owners would like to advise that although they assume that she (property manager) is trying to assist by ‘cutting out the middle man’, the Strata Company and Council of Owners have no relationship or requirement to deal with tenants direct and we can only correspond with the Owner of a property and/or their property manager. Therefore all correspondence regarding this unit and the tenant will continue to be sent to the property manager (or the Owner direct if we are sent an instruction to that effect by the Owner).
I would like the COO to deal direct with tenant instead of the Property Manager how can this be implemented. Is there any legislative info?
Hi Isabel
This recent Q&A article should assist: WA: Q&A Complying with Bylaws Breaches
Hi,
In reference to what Andrew has explained as the required functions of the strata company s.118, must a contract or renewal of a contract with a strata manager be put to a vote at an AGM? Does this require a special resolution? For the past 2 contract renewals our strata manager has dimply presented the new contract to the council of owners to vote on. Within the act is this legal?
Kind regards
Stephanie
Hi Stephanie
Andrew Chambers from Chambers Frankly has replied to your comment on this post: Question: Must a contract or renewal of a contract with a strata manager be put to a vote at an AGM? Does this require a special resolution?
There needs to be shift in attitudes by owners. Often the CoO`s operate as a exclusive clique, all on their own at the expense and not necessarily in the best interest of the Owners. Owners need to make the CoO`s more open, transparent accountable for their actions and decisions which we as owners all owners pay for.
Section 118 of the Strata Titles Act as amended in 2018 appears to conflict with section 135. In section 135 it states that the Strata Council must carry out the work on behalf of the Strata Company I assume that means organise the contracts for work required.. Section 118 states that execution of documents must be authorised by a general meeting of the Strata Company. If the Strata Council can carry out the work of the Strata Company then why do they have to get authorisation to execute documents? This appears to be contradictatory.
Patricia, S118 refers primarily to the execution of documents… like change of by-laws where the common seal is to be affixed, but also to strata management agreements, fire safety and lift contracts etc. Although S135 enables the Strata Council to carry out the work, they still need to be authorised to do so.
Cheers
Hi Patricia
Anthony Quahe from Civic Legal has responded to your comment in the article above.
Our strata managers and a member of the Council of Owners have put forward a
Proposed ordinary resolution to be determined outside of a general meeting.
I have proposed a simple amendment to safeguard the owners interests .The resolution
Gives the Council rights to enter into,execute contracts,agreements,commitments,
Undertakings or other legally binding arrangements,desirable or necessary for the strata,s
Objectives and performance.Thisis in West Australia
.Is this acceptable,can amendments be refused,and is this power to the Council of Owners
Acceptable,especially as they can no longer be held liable at law
Hi Paul
The new STA (enacted 01/05/2020) limits the ability of a strata manager to execute contracts etc on behalf of the strata company. It is therefore sensible to provide authority to the committee to be able to execute these documents as agreed by consensus at a council meeting. My preference would be to have the Chair and a members of the committee do so, or perhaps the Chair and the strata manager. Then there is a safeguard in place that a) the committee should Minute approval for execution as well as nominate the individuals who will sign.
The situation you should be trying to avoid is having one person having authority to place the strata company under obligations. However, remember that there are lots of simple agreements that should be able to be executed this way – fire safety, sanitary, cleaning, strata management, maintenance of infrastructure or gym equipment and so on.
Be assured, however that whatever contract is executed, any cost of the work under that contract should have been included, and approved, in the budget at the AGM.
Cheers
How do the changes affect small schemes with under 5 units.? The scheme I’m in has only 4 units with 2 owners living in their units with the other 2 units being rented out. On paper I am the Treasurer but in practice I do everything including maintenance.
I am on a Council of Owners committee and would like to comment that there appears to be no boundaries or guidelines other than the regulated strata laws of the exact nature of being a Council member. It too often takes on the role of general caretaker, maintenance etc etc. When issues arise that require attention/action the Council of Owners advises the Strata Manager to notify all owners to this effect – however so many are investment properties and the correspondence does not seem to filter through the owners, property managers to the resident tenant and very little is achieved.
Owner/occupiers who are not in full time employment too often take the load of maintaining a building of which they own ….%. and with apartment living rapidly rising this will be a common story.
I agree, Elizabeth, being a council member can become burdensome – if you let it. Time is valuable, and many people take volunteers for granted. However GOOD ON YOU for being involved!
Something that has been helpful in educating owners about the council of owners is to produce a report for inclusion with the Minutes of the AGM.
So, for example, it may be a brief verbal rundown on the issues that were dealt with, work that was done, changes in contractor, improvement in appearance, success of project… it may just say that the scheme is on financial target and quotes are being invited for ‘painting’ etc. Or, it might include before/after pics.
The benefit I found in going the extra mile here for 3-4 years was that absentee owners began putting in a proxy form, and another owner asked the strata manager if the company he worked for could also put in a quote (which was declared on the quote).
Living close to one scheme meant I was able (and willing) to deliver the occasional notice to residents when work was to be carried out that might inconvenience them. It surprised me, initially at least, how many of the tenants were interested in what was happening and how they had questions about using the scheme more fully (community garden), and such like. At another property, the owner has even nominated their long-term tenant as their proxy holder.
It can be very rewarding to be more involved so make sure you enjoy it.
In WA, under the current STA 1985, is there a requirement for committee members to be financial at time of a council of owners meeting? Going forward, will there such a requirement to be financial in the new STAA 2018 for a committee meeting?
Hi Danny
Thanks for your comment. We have received the following reply from Andrew Chambers, Chambers Franklyn Strata Management:
The Constitution of the Council is covered under Schedule 1 by law 4 and meetings of the Council under Schedule 1 by law 8 in the current Strata Titles Act, 1985 and there is no mention of members being required to be financial when voting at council meetings, it merely states all matters shall be determined by a simple majority vote.
Schedule 1 by law 14 (6) states:
Except in cases where by or under the Act a unanimous resolution or a resolution without dissent is required, no proprietor is entitled to vote at any general meeting unless all contributions payable in respect of his lot have been duly paid and any other moneys recoverable under the Act by the strata company from him at the date of the notice given to proprietors of the meeting have been duly paid before the commencement of the meeting.
There is no change to this in the Strata Titles Amendment Act 2018 so the answer is no, there is and will as far as we can determine be no, requirements for a council member to be financial when voting at Council meetings.
Hi again Arnold.
The noise clause in the management statement is likely to apply to once construction has been completed and would refer to projects and renovation, domestic noise or vehicle testing, so there is certainly room to suggest the chairperson has misunderstood the intention of the Management Statement.
Any lots that are not yet constructed will, as you suggest, fall into the State’s EPA guidelines which permit construction work on new sites between 7am and 7pm Monday to Saturday. Not to allow this could be considered discrimination and might even be subject to compensation for the to cost of delays. . . not something the strata company would not want to be liable for. Even if covered under the insurer’s office bearer’s liability, it would still impact on future premiums.
If commonsense and the EPA doesn’t help, it may be worthwhile contacting the insurance broker for their advice on whether the strata is covered for an office bearer delaying lawful construction work – this could be something your builder is considering claiming as unreasonable time delays run costs out.
If the broker agrees to find out on behalf of you (as an owner), you may receive an answer from the insurer’s legal team (via the broker) quite promptly as they don’t like paying out if it’s not necessary.
Whichever way you go, remember that we all make mistakes so being educational rather than victorious would go a long way to making this strata company work better together into the future.
Yes Survey Strata, there are such things ! Strata apartments are not the only thing in Strata.
Hi Arnold
It sounds like this is a survey strata, ie. land not buildings is the strata?
Our Committee Members do not present any mail correspondence at meetings and don’t acknowledge the items of concern in those correspondence items . I was sure there is a requirement for correspondence to be tabled.
Secondly Our Chairperson stated that there shall be no noise on weekends and limited noise Mon to Fri between 9am and 4pm This was simply a statement No discussion was entered into and no vote or resolution submitted, However the Management Statement provides for noise rules and also states that Western Australian State Law and Shire Council Law over-rides any of the items stated in the Management Statement or Strata Act and that as such takes precedent over any statements made by the Council or chairma.
Note: this Estate is still under construction and homes are not completed this Statement from the Chairman invariably restrains the work which is still under construction or maintenance items and services being undertaken by owners or trades persons
Quite pleased about S137 and that there is a greater clarity on acting honestly, with loyalty etc and not make improper use of the person’s position to gain directly or indirectly or cause detriment to the strata company.
Already seen declaration of interest when a matter arose for voting at a COO meeting. Written notice took the form of being recorded in the Minutes.