Strata management in NSW [First edition.] 9781925356939, 1925356930

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First edition....................................December 2016 ISBN 978-1-925356-93-9 © 2016 CCH Australia Limited All rights reserved. No part of this work covered by copyright may be reproduced or copied in any form or by any means (graphic, electronic or mechanical, including photocopying, recording, recording taping, or information retrieval systems) without the written permission of the publisher.

Preface When the 2015 strata titles laws were passed by the NSW Parliament, they were described as “landmark reforms” involving the most extensive overall of strata titles since the 1973 Strata Titles Act. Their stated purpose was to modernise strata laws to fit the reality of today’s style of townhouse and apartment living. Whatever your view on those claims, the new laws will impact the lives and fortunes of NSW home unit dwellers, which includes 25% of Sydney’s population. The headline reforms were those related to the collective sale or renewal of strata schemes upon a vote of 75% of lot owners and the introduction of a comprehensive scheme to deal with the growing problem of building defects in new strata buildings. Even on a day-today basis, the new laws will change many aspects of strata management and will affect the way owners and tenants of strata units use and enjoy their units. This book is intended to provide clear and practical guidance to those who are involved with strata title properties — strata managing agents, strata committees and their office bearers, lawyers, real estate professionals, owners, tenants and students. It has been written very much in the style and format of my first book on strata management, Strata Title Management Practice in New South Wales (CCH 1975), which ran to six editions and was proclaimed by the Sydney Morning

Herald to be “the bible of strata management”. I hope that this book will be as useful as that one was in its day. Finally, I would like to acknowledge and thank Kelly & Partners for their input to the chapter on Finances, including finance related forms. Also to Solutions IE, Strata Community Australia (NSW), and NSW Fair Trading for providing forms for inclusion in this publication. Gary Bugden December 2016

WOLTERS KLUWER ACKNOWLEDGMENTS Wolters Kluwer wishes to thank the following who contributed to and supported this publication: Managing Director: Michelle Laforest Content Director: Scott Abrahams Head of Content — Books: Alicia Cohen Senior Editor: Clare Kent Production Team Leader: Katherine Joy Aguado Subeditor: Darren De Jesus Production Editor: Raigin Guillermo Indexer: Zaira Salazar Content Coordinator: Hui Ling Lee Cover Designer: Jessica Crocker

About the Author Gary Bugden is an Australian legal practitioner. He has practiced in strata and community titles law in various Australian and overseas jurisdictions for over 40 years, including as a long-time partner of Mallesons Stephen Jaques (now King & Wood Mallesons). He has

written extensively for CCH in that area of the law and has a wealth of experience in strata development and strata management, both as a lawyer and as a company director. For many years he lectured in strata law and held appointment as Adjunct Professor of Law at the University of Technology Sydney. He was also Deputy Chancellor of Bond University for six years. He has consulted extensively to governments in Australia and overseas and, most recently, he developed the Dubai strata laws for the Dubai Government and laws for the regulation of real estate (including a strata law) for the Abu Dhabi Government. The Author was awarded the Order of Australia in the Queen’s Birthday Honours list in 2006 and the degree of Doctor of the University by Griffith University in 2007, both in part recognition of his work in strata and community titles. The author’s other publications include: • CCH New South Wales Strata and Community Titles Law (looseleaf manual) • Strata Title Management Practice in New South Wales (CCH, 1975–1993; Editions 1–6) • Buying a Home Unit in Australia and New Zealand (CCH, 1980) • CCH Queensland Unit and Group Title Law and Practice (looseleaf manual) • Unit and Group Titles Management Practice in Queensland (CCH, 1981) • CCH Queensland Community Schemes Law and Practice (looseleaf manual) • CCH New South Wales Strata Schemes Management Handbook (loose-leaf book).

BACKGROUND ¶1-001 Historical Context Australia’s first strata titles legislation, the Conveyancing (Strata Titles) Act 1961, was passed by the New South Wales Parliament and came into force on 1 July 1961. It successfully set up a legislative framework for the titling, conveying, mortgaging and managing of apartment buildings on freehold land. Because its subdivisional provisions required a “strata overlap” (ie one lot had to be wholly or partly superimposed over the whole or part of another lot) it was not inherently suitable for townhouse style developments. However, developers soon invented a “nominal” strata overlap (often restricted to a boundary cupboard or staircase) to allow row houses and certain types of townhouse to be strata subdivided. This 1961 Act was very successful. Up to the time of its repeal on 1 October 1974 some 8,500 strata schemes had been created and administered using its mechanisms. Over time it was also replicated in the other Australian states and territories and by the end of the 1960s it was being used as the basis for similar legislation overseas. It was repealed in 1974 by the Strata Titles Act 1973, which commenced operation on 1 July 1974. The 1973 Act introduced major reforms, including the introduction of a dispute resolution process administered by a Strata Titles Commissioner. It also created a statutory position of “strata managing agent”, which quickly resulted in the emergence of the first signs of a professional strata management sector. In 1986, to facilitate the development of Darling Harbour, the Strata Titles (Leasehold) Act 1986 was passed by the parliament. The Act was assented to on 23 December 1986 but was not proclaimed to commence until 1 March 1989. Like its freehold counterpart it was amended on numerous occasions, mainly because it was drafted in substantially the same terms as the freehold Act and it has been the objective of governments to keep the two pieces of legislation in similar terms, as far as possible. When first enacted, the 1986 Act only

applied to land owned by a “public authority” (such as a local government or statutory authority). In 1999 the Strata Schemes (Leasehold Development) Amendment Act 1999 extended the application of the Act to any person who was the proprietor of freehold land. Those amendments permitted private land owners to create leasehold strata schemes. The next historical step was the introduction of community titles in 1989 when the Community Land Development Act 1989 and the Community Land Management Act 1989 were passed. It soon became apparent that the various strata Acts did not interrelate very well and a major restructure of the legislation occurred in 1996 when the management and dispute provisions of the 1973 Act and the 1986 Act were repealed and re-enacted in the Strata Schemes Management Act 1996. At the same time the 1993 Act was re-named the Strata Schemes (Freehold Development) Act 1973 and the 1986 Act was re-named the Strata Schemes (Leasehold Development) Act 1986. The Community Land Development Act 1989 and the Community Land Management Act 1989 remain as stand-alone legislation, although certain lots in a community scheme can be subdivided by a strata plan. In this publication: • The Community Land Development Act 1989 is referred to as “Community Development Act”. • The Community Land Management Act 1989 is referred to as “Community Management Act”.

¶1-002 Current legislation The next major change occurred in 2015 when the Strata Schemes Development Act 2015 (which repealed and replaced the 1973 Act and the 1986 Act) and the Strata Schemes Management Act 2015 (which repealed and replaced the 1996 Act) were passed. Those 2015 Acts commenced on 30 November 2016 (except for building defects related provisions, ie Pt 11, cl 15 of Sch 1 and cl 16 of Sch 3). Part 11, cl 15 of Sch 1 and cl 16 of Sch 3 will commence on 1 July 2017.

The following legislative provisions have regulated both freehold and leasehold strata titles in New South Wales since 30 November 2016: • The Strata Schemes Development Act 2015 (which will be referred to in this publication as “Development Act”). • The Strata Schemes Management Act 2015 (which will be referred to simply as the “Management Act”). • The Strata Schemes Development Regulation 2016 (which will be referred to as the “Development Regulation”). • The Strata Schemes Management Regulation 2016 (which will be referred to as the “Management Regulation”). In addition to the above legislation the Property, Stock and Business Agents Act 2002 (“Agency Act”) will be relevant to strata managing agents and owners corporations who choose to appoint them. The Agency Act is supplemented by the Property, Stock and Business Agents Regulation 2014 (“Agency Regulation”).

¶1-003 Strata and community titles It is important to understand the difference between strata titles and community titles. Strata titles involve the vertical subdivision of land (leasehold or freehold) into lots and common property, with an owners corporation being constituted upon registration of the subdivision plan. The boundaries of the lots are not defined by normal survey means, but rather by reference to the floors, walls and ceilings of the subdivided building. The lots usually represent residential apartments. Sometimes they can also represent townhouses or villa homes. They can also represent retail shops and offices either as an exclusive commercial development or part of a mixed-use development. Community titles involve the horizontal subdivision of land (leasehold or freehold) into lots and common property, with an owners corporation being constituted upon registration of the subdivision plan. The boundaries of the lots are defined in much the same way as boundaries are defined in conventional land subdivisions. The lots

usually represent stand-alone houses, villa homes or townhouses, but they can also represent commercial and industrial buildings. The initial subdivision may also involve vacant lots on which buildings are built at a later time. Despite their differences, the two types of titles are very similar. They both involve the division of land into lots and common property and the constitution of an owners corporation. That is why the development and management of these titles are now jointly dealt with in a common way by the Development Act and the Management Act.

¶1-004 Freehold and leasehold strata titles Freehold ownership of land is, in a practical sense, ownership of the land itself in perpetuity. It is the most common form of land ownership in New South Wales. A leasehold over land is not ownership of the land in the strict sense. It is more akin to ownership of a right to exclusively use the land for a fixed term. In the case of strata titles the fixed term is usually very long, such as 99 years.

¶1-005 Other home unit schemes Different forms of apartment ownership existed in New South Wales before the introduction of strata titles in 1961. Some of these early apartment schemes still operate today, particularly in the Eastern suburbs of Sydney. The most common forms of pre-1961 apartment schemes were company titles and tenancy in common schemes. Strata managing agents are often required to manage these early schemes and the management techniques used are very similar to those used for the management of strata owners corporations. Under a company titles scheme the apartment building is owned by a company incorporated under the normal companies law (currently the Commonwealth Corporations Act 2001). If the number of apartments in the building is less than 50 the company will usually be a proprietary limited company but if the number exceeds 50 a public company will be used. The management requirements differ slightly according to this classification of the company. The shares in the company are

divided into “parcels”, with each parcel relating to a specified apartment. The number of shares in a parcel is usually related to the value of the apartment (eg a one bedroom apartment will usually have fewer shares than a two bedroom apartment). A parcel of shares usually carries with it, under the Constitution of the company, the right to exclusive occupation of the related apartment and the right to use the public areas of the building in common with other shareholders. Sometime the company also issues a long term lease over the apartment to “reinforce” the occupancy rights and strengthen the value of the shareholding. Therefore a company title scheme does not involve ownership of the apartment, but rather ownership of shares in the company which owns the building in which the apartment is situated. If money is borrowed to purchase the apartment, the shares (as well as any lease over the apartment) can be mortgaged to provide security for the loan. However, in practice it is usually difficult to borrow money on the sole security of a company title home unit. This means that company title units usually sell at a discount when compared with the value of their strata title counterparts. Tenancy in common schemes usually apply to small buildings (two to six apartments). They involve the acquisition of the entire building by a number of people (eg four people acquire a building containing four apartments) as tenants in common. The co-owners then enter into an ownership and management deed which regulates their exclusive use of a designated apartment, as well as the management of the common areas and the fabric of the building.

¶1-006 Administration of strata titles The Development Act is administered by Land and Property Information (“LPI”), which is a division of the New South Wales Government’s Office of Finance Services & Innovation (“Department”). LPI is therefore responsible for all aspects of strata development and land title registrations, including registration processes associated with the management of owners corporations (eg changes to by-laws). LPI’s contact details are:

Land and Property Information 1 Prince Albert Road

GPO Box 15

Queens Square

Sydney NSW 2001

Sydney NSW 2000

Web: www.lpi.nsw.gov.au The Management Act is administered by the Department of Fair Trading, which is also a division of the Department of Finance, Services and Innovation. The role previously performed by the Strata Titles Commissioner is now performed under the Management Act by the Director General of the Department. The Department’s contact details are: Department of Finance, Services and Innovation McKell Building 2-24 Rawson Place Sydney NSW 2000

Ph: (02) 9372 8877 Web: www.finance.nsw.gov.au/contact-us

¶1-007 Strata title disputes The very nature of strata ownership and its “close quarter” living environment increases the likelihood of disputes occurring. Such

disputes commonly involve the owners corporation although they can involve a number of stakeholders, such as another lot owner, a strata committee office bearer, strata managing agent or caretaker. They may even involve another strata scheme or the owner of an adjoining parcel in a part-building strata subdivision. While the Management Act recognises the right of an owners corporation to establish its own voluntary process for resolving disputes it sets up a comprehensive dispute resolution process involving both mediation and adjudication by the NSW Civil and Administrative Tribunal (“Tribunal”). The Secretary of the Department administers the mediation process while the Registrar of the Tribunal administers the Tribunal’s processes. An agreement reached at mediation may be given effect by a consent order of the Tribunal and some types of applications to the Tribunal cannot be made unless mediation is first attempted. Chapter 17 deals with disputes in more detail.

STRATA SCHEMES ¶2-001 Creation of strata schemes A strata scheme is created upon registration of a strata plan. The Development Act defines a strata scheme as: (a) the way a parcel is subdivided under the Development Act into lots or lots and common property (b) the way unit entitlements are allocated under that Act among the lots, and (c) the rights and obligations, between themselves, of owners of lots, other persons having proprietary interests in or occupying the lots and the owners corporation, as conferred or imposed under the Development Act or the Management Act. The Development Act also distinguishes between a leasehold strata scheme (where the lots and common property are the subject of leases, all of which commence on registration of the subdivision plan and terminate at a common future time) and a freehold strata scheme (where no lots or common property are the subject of such leases). In turn, the Management Act adopts the same definitions as those in the Development Act. Law: Development Act, s 4(1). Management Act, s 4(1).

¶2-002 Lots and common property A strata plan subdivides an underlying land parcel (“parcel”) which is identified on the plan. Almost all strata plans create two or more lots and common property. However, it is technically possible (although very unusual) for a strata plan to create two or more lots without any

common property. Where there is no common property at least the whole or part of one lot must be superimposed over the whole or part of another lot. In all cases the lots are defined on the plan with reference to certain principles set out in the Development Act, the Development Regulations and the practice rules of LPI. Common property is not defined on the plan. The lots typically comprise residential apartments, shops or offices while the common property comprises the shared areas of the subdivided building. In smaller schemes these shared areas typically include the surrounding land and gardens, the foyer, lifts, hallways, fires stairs, foundations, roof and external wall structures. In larger schemes the shared areas may also comprise a range of facilities such as a swimming pool, gymnasium, tennis court, storerooms and a recreation room. A lot can be designated as a “utility lot”. In that case it can only be used for storage or accommodation of boats, motor vehicles or goods and not for human occupation as a residence, office, shop or the like. For maintenance and other purposes it is important to be able to determine exactly where the lot ends and where the common property begins. This requires an understanding of where the boundaries of a lot are located and what things within the lot are regarded as common property. The strata plan needs to be examined for this purpose. It comprises three parts, a location plan, a floor plan and an administration sheet. The floor plan is the key part for identifying the boundaries of the lots, although the location plan can sometimes be useful to orientate parts of the floor plan. As the name suggests, the floor plan illustrates the various floors of the building and it usually comprises a number of sheets with one or more levels of the building being shown on each sheet. The location plan illustrates the position of the building in relation to the boundaries of the parcel. Form 1 (see ¶19-001) is a sample strata plan which can be referred to for the purpose of understanding the following discussion. Generally speaking, the boundaries of a lot are defined with reference to the walls, floors and ceilings of the building. When a surveyor prepares the floor plan they can choose between one of two ways to

define the boundaries, or parts of the boundaries, of lots: 1. They can describe the location of the boundary on the floor plan in the way prescribed by the Development Regulation. This description must be by reference to the walls, floors and ceilings of the building. 2. They can draw on the floor plan a “base line” (like a heavy unbroken line) so that such line substantially corresponds with the base of a wall which is used to determine the boundary of the lot. A surveyor will often choose the second option as a matter of course and only use the first option where it is necessary to do so to achieve some special boundary position (eg the position of external courtyard boundaries where the courtyard has no walls). It is therefore not uncommon for both options to be used on the same plan, although the base line approach is by far the most commonly used. From what has been said so far it is clear that one must have a copy of the plan in order to determine the location of the boundaries of a lot. Where the second option (base line approach) is used: (a) the vertical boundary is the inner surface of the walls which substantially correspond with a base line, and (b) the horizontal boundary is the upper surface of the floor or the lower surface of the ceiling which joins a vertical boundary. If there is no such floor or ceiling the surveyor will need to define the horizontal boundary using the first option. Where the first option (describing the boundary location) is used, the location is determined by interpreting the description on the floor plan. The lot effectively comprises the “space” within the boundaries determined in the above manner. There is one other important thing to note about floor plans and the location of lot boundaries, namely the fact that lots may be illustrated on the floor plan as comprising two or more separate parts. For example, a floor plan may illustrate a lot as having two parts, one part being the apartment itself (say on level 4)

and the other part being a car space (say on level 1). In that event each part will contain an area and the aggregate of the two areas will also be shown, usually on the larger of the two areas. The actual boundaries of the common property are not defined on the floor plan. The common property comprises any part of the parcel that is not comprised in a lot. It also includes any common infrastructure that is not part of a lot. In other words, once the lots have been identified, the common property of the scheme will be what is left of the land and building after taking into account the lots. Common infrastructure is defined in the Development Act to mean: (a) cubic space occupied by a vertical structural member of a building, other than a wall, or (b) the pipes, wires, cables or ducts that are not for the exclusive enjoyment of one lot and are: (i) in a building in relation to which a plan for registration as a strata plan was lodged with the Registrar General before 1 March 1986, or (ii) otherwise — in a building or in a part of a parcel that is not a building, or (c) a cubic space enclosed by a structure enclosing pipes, wires, cables or ducts referred to in paragraph (b). Common infrastructure is part of the common property notwithstanding that it is physically located within the boundaries of a lot. Law: Development Act, s 4(1), 6.

¶2-003 The building “Building” is defined in the Management Act as a building containing a lot or proposed lot, or part of a lot or proposed lot, in the scheme or proposed scheme. Therefore the building is more extensive than the

common property because it actually includes parts of the scheme building which are parts of the lots. A scheme will always involve a building, but the building may not fall within the above definition if it is merely used to define boundaries of a lot but does not actually contain a lot or part of a lot. Some out-buildings, such as an amenities block beside a swimming pool, fall within this category of building. While the common property is significant when it comes to maintenance issues, the building is significant when it comes to insurance and reinstatement of damage which is covered by an insurance claim. This is because the owners corporation is responsible under the Management Act for insuring the building. Law: Management Act, s 4(1), 160.

¶2-004 Types of schemes While most strata schemes comprise residential apartments, the potential range is much greater. This includes retail shops, offices, industrial units, business parks, serviced apartments, hotels, timeshare resorts, retirement villages, student accommodation, storage rooms, wine storage facilities and even safe deposit vaults. Mixed use schemes are also common, particularly those involving residential, retail and commercial uses. These mixed use schemes are either covered by a single body corporate or they form part of a stratum plan administered under a building management statement. Modern planning laws, the trend towards urban consolidation and generational lifestyle changes have encouraged mixed use developments comprising retail shops and restaurants at ground level and residential apartment towers above. Sometimes the retail component can be as large as a shopping centre. As will be seen later, these types of developments present special management challenges. Size wise, the Management Act recognises a special type of scheme known as a “large strata scheme”. This is a scheme comprising more than 100 lots, or another number prescribed by the regulations (although no other number has yet been prescribed). Utility lots and

car parking lots are not included in the calculation.

¶2-005 Owners corporations When a strata scheme is registered (ie when the strata plan itself is registered) an owners corporation automatically comes into existence and the owner or owners of the lots in the strata scheme comprise its members. It is an incorporated body which has its own legal existence apart from its members. It can sue and be sued. Initially it only has one member, the original owner or developer. As lots are sold and transferred to their new owners those owners automatically become members of the owners corporation. The name of the owners corporation is “The Owners — Strata Plan No X” (where “X” is the number of the scheme’s strata plan). Neither the Commonwealth’s Corporations Act 2001 or the Australian Securities and Investment Commission Act 2001 apply to an owners corporation. It is regulated entirely by the Management Act, the regulations under that Act and the general law. An owners corporation has the functions conferred or imposed on it by or under the Management Act or any other Act. In particular, an owners corporation: (a) has principal responsibility for the management of the scheme (b) has, for the benefit of the owners of lots: (i) the management and control of the use of the common property, and (ii) the administration of the scheme, and (c) has responsibility for: (i) managing the scheme’s finances (ii) keeping accounts and records (iii) maintaining and repairing the common property, and

(iv) taking out insurances. All of the above functions are fundamental to the preservation of the value of the lots and the owners’ investment in those lots. It is that preservation of value that needs to be the underlying focus of the management of strata schemes. Unfortunately, that has not always been the case historically because some strata managing agents have seen themselves more as secretaries or administrators rather than as property or asset managers. Law: Management Act, s 8, 9, 10.

¶2-006 Original owner The original owner is defined in the Management Act. If the scheme is a freehold scheme the original owner means the freehold owner of the scheme’s land parcel when the strata plan was registered (ie in almost all cases, the developer of the scheme). If the scheme is a leasehold scheme the original owner means: (a) the person who holds the leases of all the lots in the scheme immediately after the strata plan is registered, or (b) the person who holds two or more leases of lots in the scheme at that time with total unit entitlements exceeding more than twothirds of the aggregate unit entitlement of the lots in the scheme. To understand the leasehold scheme definition one must understand the way leasehold projects are undertaken. The freehold of the scheme’s land parcel is usually (although not always) owned by a government authority, such as the Barangaroo Development Authority. The owner enters into an agreement with a developer to develop the land parcel. The developer completes the development (usually under a “head” development lease) and either: (a) takes identical leases over all of the proposed lots in the development, or (b) passes on a lease over one or more of the proposed lots to “off-

plan” purchasers and takes a lease over any remaining lots, all leases being identical. The leasehold strata plan is then registered over the land parcel and all the leases are registered at the same time. That is why the Management Act, in its definition of original owner, takes into account both initial leasing possibilities. Law: Management Act, s 4(1).

¶2-007 Initial period During the early life of a strata scheme special restrictions are imposed on the owners corporation and special obligations are placed on a developer. The period during which this occurs is called the “initial period” of the owners corporation. The Management Act defines the initial period of an owners corporation to mean the period: (a) commencing on the day the owners corporation is constituted (ie the date of registration of the strata plan), and (b) ending on the day there are owners of lots in the scheme (other than the original owner) the sum of whose unit entitlements is at least one-third of the aggregate unit entitlements. The day in (b) above is triggered by the registration of the transfer of ownership of the lot which causes the unit entitlements to reach the one-third. To take the following scheme unit entitlements as an example: Lot

Entitlement

1

10

2

10

3

12

4

12

5

15

6

17

7

20

8

20

Aggregate

116

One-third of the aggregate is 38.67, which is rounded up to 39. Therefore the initial period will expire, by way of examples only, when the following lots are transferred from the original owner to new owners: Lots 7 and 8 whose unit entitlements total 40. Lots 1, 2 and 7 whose unit entitlements total 40. Lots 2, 3 and 6 whose unit entitlements total 39. Law: Management Act, s 4(1).

¶2-008 Special arrangements The design and construction of some real estate developments, particularly those which have a mixture of uses, are very complex. These often call for special title, subdivision and management structures which have the potential to complicate the management of owners corporations. These structures are discussed in Chapter 4. There are other arrangements which are strictly not “structures”, but which use strata titles as a titling mechanism. These include management rights, retirement villages and time share schemes. Each of these arrangements will be discussed briefly. Management rights Management rights schemes are commonly used where part of the building is to operate as serviced apartments. Serviced apartments are residential units which are made available by an on-site manager, usually by means of a rental pool, for overnight or short term accommodation. Unit owners have the right to choose between letting their apartments through the on-site manager or an outside real estate agent. They operate in much the same way as serviced apartment

complexes, but usually with a higher level of service, often provided by a professional or branded operator. These schemes are difficult to create in New South Wales because of the inability of a developer to set long term management contracts in place prior to expiration of the initial period. However, there are a number of management rights schemes which came into existence before those restrictions were imposed and even now it is not impossible for a developer to create them. Management rights typically comprise a “package” of rights, which are usually designed to last for a lengthy period (15–25 years). The package commonly includes: • A caretaking agreement (which includes the conferring of exclusive rights to conduct an on-site letting business within the building). • A caretaker’s apartment (which usually includes a reception area in the building’s foyer and certain storage facilities). • A by-law restricting use of apartments, other than the caretaker’s apartment, from being used to conduct an on-site letting business. • A common property rights by-law in respect of areas of common property which the caretaker needs to occupy exclusively (eg additional storage or linen cupboard areas). This package is very marketable as a business and often sells for substantial sums of money. Its marketability is enhanced by a willingness of financiers to lend on it as security. From a management perspective, management rights can be a plus or a minus, or a bit of both. Having an on-site caretaker to attend to maintenance and day-to-day building issues can be a real benefit to occupiers, as well as a strata managing agent. However, in some cases management rights can cause conflict within schemes (usually between resident and investment owners). In those cases they can result in considerable extra work for strata committees and strata

managing agents. Retirement villages Strata title retirement villages are not very common. Most retirement village developments are based on leasehold title and contractual arrangements. This is because the rigid legal environment created by the strata laws is not conducive to the management outcomes necessary for a functional retirement community. In addition, leasehold schemes provide more favourable commercial, including income tax, outcomes for developers. Where strata title retirement villages do exist, they are often structured so that the owners corporation has a limited role in the administration of the scheme and the building, with many of its functions being handed over to the operator who is supervised by a residents committee. Timeshare Strata title timeshare schemes are not very common either. They involve the subdivision of a building into lots and common property and then the creation of multiple tenancies in common in each of the individual lots. The number of tenancy in common interests in the lots can be as few as four (ie quarterly interests) or as many as 48 (ie weekly interests after allowing four weeks for maintenance). A tenancy in common interest equates to a specified time interval (eg the month of April in each year). A deed, sometimes supported by covenants, is used to regulate the timeshare scheme. Both the owners corporation and the timeshare scheme need to be administered.

¶2-009 Rates and charges “Rates” means rates payable to a local council. They are levied by the council on the lots and not on the common property or the owners corporation. Like rates on conventional houses, they are based on land value. To arrive at the value of a particular lot the council, in very general terms, takes the value of the rateable parcel (ie the underlying land of the scheme) and allocates that value to the various lots in proportion to their unit entitlements. After applying any concessions

that a particular owner may be entitled to, the council then calculates and imposes the rate on the lot owner. Charges, or fees for service, are additional to rates. They include charges or fees for water, sewerage, drainage or effluent services. If they relate to an exclusive supply to a lot, they are charged to the lot owner. If they are to the parcel generally, or part of the parcel, then they are charged to the owners corporation which pays for them from its normal administrative fund. Law: Development Act, s 192, 194.

¶2-010 Subdivisions A lot or common property may be subdivided by registering a strata plan of subdivision. A range of subdivision outcomes can be achieved, including: • Subdividing the common property to create two new common property parcels (eg one being a parcel comprising the tennis court). The tennis court parcel may then be transferred so as to take it out of the scheme. • Subdividing the common property to create a new lot or lots. • Subdividing a lot to create two or more new lots. • Subdividing a lot to create another lot and common property. In the case of staged developments there is also provision for the subdivision of “development lots”. Law: Development Act, s 13.

¶2-011 Consolidation Two or more lots may be consolidated into one lot by registering a strata plan of consolidation. A common property wall, floor or ceiling which is a boundary between the lots being consolidated ceases to be common property and becomes part of the consolidated lot, with

ownership being vested accordingly. Law: Development Act, s 15.

¶2-012 Converting lots to common property One or more lots may be converted into common property by registration of a notice of conversion which must be supported by a special resolution of the body corporate. Restrictions apply if the conversion is to occur during the initial period, unless the original owner is still the owner of all the lots in the scheme. In the case of a freehold scheme the lot, upon registration of the notice, becomes common property. For leasehold lots, upon registration of the notice, the lease of the lot is determined and the lot vests in the owners corporation as lessee for the remainder of the term of the common property lease. Law: Development Act, s 17, 18.

¶2-013 Alterations to the building If after registration of a strata plan the scheme building is altered in such a way that the boundaries of a lot are affected (eg there are changes to the position of the walls, floors or ceilings to which the lot boundaries are related), then the owner of the lot must register a “building alteration plan”. This must be done within one month of the alteration and failure to comply with this obligation is an offence under the Development Act. Law: Development Act, s 19, 20.

¶2-014 Variation If a scheme building is damaged or destroyed, the Supreme Court may make an order varying the scheme or an order substituting a new scheme for the existing scheme. Application for such an order may be made by a lot owner, mortgagee, covenant chargee, the owners corporation or the scheme lessor (in the case of a leasehold scheme).

Notice of the application is served on all those persons, as well as the Registrar General and the local council. The court has wide powers to give directions, as well as the power to vary the order and the power to deal with the application as an application to terminate the scheme. Law: Development Act, s 131–134.

¶2-015 Termination Strata schemes can be terminated in a number of ways under the Development Act: • Termination by court order. • Termination by the Registrar General. • Termination of a leasehold scheme by expiry of the leases. • Termination of freehold schemes as part of a strata renewal process.

¶2-016 Termination by court order Both freehold and leasehold schemes can be terminated by an order of the Supreme Court. Application for such an order may be made by a lot owner, mortgagee, covenant charge, the lessor of a leasehold scheme or the owners corporation. No special criteria is specified for the court to take into consideration and the court’s jurisdiction is entirely discretionary. Sometimes these applications are necessitated by all or part of the scheme land being resumed by a resuming authority (such as the local council or roads authority). Again, the court has wide powers to give directions, as well as powers to vary its order or determine that the application should be treated as an application to vary the scheme. Upon the order taking effect the estate or interest of the former owners in their lots and in the common property vests absolutely in the owners corporation as agent for those

former owners. Their interest in their respective lot is extinguished at the same time. This allows the owners corporation to dispose of the former strata parcel on behalf of the former lot owners. Following that disposal, the owners corporation is wound up. Law: Development Act, s 135–141, 151–152.

¶2-017 Termination by the Registrar General Except where a scheme is undergoing staged development under a development contract, a person may apply to the Registrar General to terminate a leasehold or freehold scheme. Notice of intention to make the application must first be published in a state and local newspaper. The application must be signed by all lot owners, the lessor of a leasehold scheme, all registered lessees, the local planning authority and all registered mortgagees, chargees and covenant chargees over lots and common property. The termination takes effect when the Registrar General records the termination order. The effect of the termination is similar to the effect of a termination by the court. Law: Development Act, s 142–147.

¶2-018 Termination by expiry of the leases A leasehold scheme is terminated when all leases of the lots and common property expire or are otherwise determined without being replaced. At the same time the owners corporation is dissolved, unless the Supreme Court has ordered its continuation. Application for such an order may be made before expiry of the leases by a lot owner, the owners corporation or a creditor of the owners corporation. The court has wide powers to give directions in relation to such an order. Law: Development Act, s 148–150.

¶2-019 Termination as part of a strata renewal process

The 2015 reforms of the strata laws, which commenced in 2016, introduced a new, somewhat controversial, process for termination of freehold strata schemes. This process is primarily intended to facilitate the redevelopment of older schemes. The steps in the process are: 1. A person gives a written proposal to the owners corporation for the collective sale or redevelopment of the scheme (“strata renewal proposal”). The proposal may be for a collective sale or a redevelopment. 2. A meeting of the strata committee considers the strata renewal proposal. 3. If the strata committee decides the strata renewal proposal warrants further consideration, a general meeting of the owners corporation is convened to further consider the proposal. 4. If the strata committee decides the strata renewal proposal does not warrant further consideration then, unless a group of owners requisition for a general meeting to consider the proposal, the proposal lapses. 5. If the strata renewal proposal is considered at a general meeting of the owners corporation, the meeting may decide that the proposal: (a) warrants investigation by a strata renewal committee, or (b) does not warrant such investigation. 6. If the general meeting decides that a strata renewal proposal does not warrant investigation by a strata renewal committee, the proposal lapses. 7. If the general meeting decides that a strata renewal proposal does warrant investigation by a strata renewal committee, such a committee is established by the election of its members. The function of the committee is to prepare a strata renewal plan.

8. The strata renewal committee, with or without assistance from consultants, prepares a strata renewal plan (the content of which is specified in the Development Act). 9. The strata renewal plan is then submitted to a general meeting of the owners corporation for approval. 10. The general meeting may: (a) amend the strata renewal plan (b) decide to return the strata renewal plan to the strata renewal committee for amendment (c) decide not to support the strata renewal plan (in which event it lapses), or (d) decide by special resolution to give the strata renewal plan to owners for their consideration. 11. When a general meeting decides to give the strata renewal plan to owners for their consideration, a copy of the plan and certain prescribed documents are sent to each owner. 12. An owner may support the strata renewal plan by returning the approved form of notice to the owners corporation signed by the owner and each registered mortgagee and covenant chargee of the lot. 13. If owners of at least 75% of the lots in the scheme (other than utility lots) support the strata renewal plan, the strata committee must give notice to that effect to each lot owner and the Registrar General. 14. The Registrar General makes notations in the land register to the effect that the scheme is the subject of a strata renewal plan. 15. A general meeting of the owners corporation is convened to pass a resolution authorising an application to the Supreme Court

for an order to give effect to the strata renewal plan. 16. The Supreme Court application is made. 17. A dissenting lot owner and a registered mortgagee and covenant chargee of a dissenting owner’s lot may file an objection to the application. 18. The application is heard by the court which, as a preliminary step, may order mediation or conciliation. 19. If the court makes an order giving effect to the strata renewal plan, the owners corporation must register the order with the Registrar General within seven days. 20. If the order is for a collective sale, each owner must then sell their lot in accordance with the strata renewal plan, after which the scheme is terminated. 21. If the order is for a redevelopment, dissenting owners must sell their lots in accordance with the strata renewal plan, the estates or interests in the remaining lots are vested in the remaining owners as tenants in common in shares proportional to their former unit entitlements and the scheme is terminated. The process is lengthy and detailed, but this is intended to ensure that the interests of all lot owners and other stakeholders are fully protected. Law: Development Act, s 153–190.

OWNERS CORPORATIONS ¶3-001 Constitution When a strata scheme is registered (ie when a strata plan is registered) an owners corporation is constituted. Its name is “The Owners — Strata Plan No X” (“X” being the registered number of the strata plan). In the case of a freehold scheme, at the time of registration the original owner is the sole member of the owners corporation. In the case of a leasehold scheme, if there is only one lease, or if all the leases have the same lessee, the lessee is the sole member. If there are multiple leases with different lessees at the time of registration, those lessees are all the initial members of the owners corporation. Going forward, the owners corporation is constituted by the owners of the lots from time to time in the strata scheme. “Owners” includes the lessees of the lots in a leasehold scheme. An owners corporation is not regulated by the Corporations Act 2001 or Pt 3 of the Australian Securities and Investments Commission Act 2001. The Management Act is therefore the legislation which exclusively regulates the operation of the owners corporation. Law: Management Act, s 8.

¶3-002 Functions and powers The functions of an owners corporation are: • Principal responsibility for the management of the scheme. • Management and control of the common property. • Administration of the scheme. • Managing the finances of the scheme. • Keeping the accounts and records for the scheme.

• Maintaining and repairing the common property. • Taking out insurances for the scheme. • Any other functions conferred or imposed on it by or under the Management Act or any other Act. The Management Act spells out many of its powers. In particular it has the power to: • Employ qualified persons to assist it in the exercise of any of its functions. • Appoint a strata managing agent and delegate functions to that agent. • Appoint a caretaker for the scheme and specify the functions they are to assist in exercising. • Borrow money. • Grant licences to use common property. • Make certain agreements with owners relating to the payment of money. • Dispose of or otherwise deal with any lot vested in it as a consequence of a subdivision. • Enter into an agreement with an owner or occupier to provide amenities or services. • Carry out work to rectify certain building defects. • Carry out certain work required to be carried out by an owner or occupier. • Enter any part of the strata parcel (including a lot) to carry out certain works.

• Dispose of abandoned goods on common property. Some of those powers are subject to restrictions imposed by the Management Act. For example: • Large strata schemes are subject to spending limits which can only be exceeded under authority of a special resolution. • Certain legal services cannot be obtained by an owners corporation without the approval of a general meeting resolution. • There are restrictions on raising certain levies to pay legal costs (to protect owners who are successful in actions against the owners corporation). • The provisions of a strata development contract (which would exist in the case of a staged development) may restrict the exercise of powers by the owners corporation. Subject to those and other restrictions in the Management Act and subject to an act on the part of the owners corporation being clearly related to the exercise of its functions, the owners corporation has all the powers it needs even if not expressly set out in the Management Act. Law: Management Act, s 49, 67, 100, 102–104, 111–113, 115, 119, 121, 124.

¶3-003 Principal duties The duties of the owners corporation flow from its actual functions. Therefore, each function effectively carries with it a duty. However, it is possible to identify its “principal duties”, namely the duty to: • Manage the scheme (which in a practical sense is the same as its administration). • Control the use of the common property. • Repair the common property (including renewing and replacing it).

• Raise levies, manage the finances of the scheme and account for its funds. • Effect insurances and manage risk. Law: Management Act, s 9, 10.

¶3-004 Governance An owners corporation is governed by a strata committee, which is like the board of directors of a company. A strata committee may be established before the first annual general meeting of the owners corporation, but a truly representative committee is not usually established until that meeting. The strata committee must be established at the first annual general meeting. In the event that a strata committee is not elected at that meeting the owners corporation is administered by its general meeting or, if there is an appropriately delegated strata managing agent, by that agent. A strata committee comprises between two and nine members, all of which must be natural persons. The strata committee appoints its office bearers, namely a chairperson, secretary and treasurer. A strata committee member is usually a lot owner, although a non-lot owner nominated by a lot owner, or a corporate lot owner, may be elected to the committee. Certain people are disqualified from holding office as a strata committee member. The strata committee is the governing body of the owners corporation. Where there is a strata managing agent the strata committee’s true function is to set, in conjunction with the agent, the management strategy for the scheme and to supervise the implementation of that strategy by the agent, who is effectively the chief executive officer of the scheme. The strata committee should avoid becoming too involved with the day-to-day management of the scheme, which is the function of the strata managing agent. A full discussion on strata committees appears in Chapter 5. Law: Management Act, s 29–30, 41.

¶3-005 Management Management should be distinguished from governance. Management is more a function of implementing the strategic direction of the owners corporation, as determined by the governing body, the strata committee. Apart from the strata committee (which has overall responsibility for management of the scheme) there are potentially two other management entities involved — a strata managing agent and a building manager. Each of those three entities needs to be examined to understand their respective roles. Strata committee The strata committee is actually a governing body rather than a management entity. However, the Management Act (in s 11) lists the strata committee as being one of the three entities responsible for assisting the owners corporation in carrying out its functions. In practice, this assistance occurs not so much by the strata committee as an entity becoming involved in management issues, but rather by its office bearers (chairperson, secretary and treasurer) or its subcommittees being more directly involved in management related issues. Sub-committees are not expressly recognised by the legislation, but in practice they can be a very valuable mechanism to ensure that an owners corporation is managed efficiently. Strata managing agent As stated above, the strata managing agent is effectively the chief executive officer of the owners corporation. As such, they are principally responsible for the management functions associated with the scheme. Their functions include: • Record keeping. • Compliance. • Risk management. • Financial management.

• Strategic planning (in conjunction with the strata committee). • Implementing the adopted strategies. • Ensuring the common property is maintained. • Reporting to the strata committee on management related issues. • Being answerable for the day-to-day operations of the scheme. An owners corporation may legally delegate certain of its functions (including the functions of its officers) to a strata managing agent. Building management Not all buildings have building managers, although they are relatively common in larger buildings. Their function is to assist in: • Managing common property. • Controlling the use of the common property. • Maintaining and repairing the common property. They are professional operators rather than volunteers or casual workers and they usually have an “on-site” presence. They often own or rent a unit within the building and they may also be an on-site residential property manager. Irrespective of a person’s title, if they meet the general description above, they are legally regarded as a building manager. Law: Management Act, s 9–13, 66.

¶3-006 Liability of members The members of an owners corporation are the owners of the lots in the scheme (including the lessees in the case of a leasehold scheme). From a personal liability perspective the members are in a position very similar to the members of an unlimited liability company. This is because:

• The Management Act does not place any limit on the liability of the members of the owners corporation. • If the owners corporation becomes liable to discharge a debt and has inadequate funds to do so, it must impose on and collect from its members a special levy to discharge that debt. • If it fails to do that, a creditor may apply to the Tribunal for the appointment of a compulsory strata managing agent to take control of the owners corporation, determine, levy and recover contributions sufficient to discharge the debt. • If that levy fails to raise sufficient funds (eg because a number of owners refuse or fail to pay their special levies), then the strata managing agent would determine, levy and recover additional contributions to make up the short-fall (notwithstanding that the more compliant lot owners will be the ones ultimately contributing to the discharge of the debt). • Any attempt to avoid liability by moving to wind up the owners corporation will not assist because, upon a winding up, the court must specify who is to be responsible for discharging the owners corporation’s liabilities. It follows that lot owners are effectively, jointly and severally responsible for the discharge of the unfunded liabilities of an owners corporation. Law: Management Act, s 83, 86 and 237. Development Act, s 136(2) and 147(d).

¶3-007 Winding up A scheme may be terminated in one of two ways: • By order of the Supreme Court. • By order of the Registrar General.

A termination order by the Supreme Court will include provisions relating to the winding up of the owners corporation and the discharge of its liabilities. The estate or interest of the owners in their lots and the common property is effectively exchanged for an estate or interest in the parcel as a whole. A termination by the Registrar General immediately dissolves the owners corporation and effectively exchanges the rights and interests of the lot owners in their lots for a right and interest as tenant in common in shares proportional to their unit entitlements in the parcel. Upon the order taking effect the liabilities of the owners corporation are effectively transferred to the former owners in proportion to the unit entitlements of their former lots. Law: Development Act, s 138, 142 and 146.

SPECIAL TITLE AND MANAGEMENT STRUCTURES ¶4-001 Company and contractual schemes Before the introduction of strata titles in 1961, with the passing of the Conveyancing (Strata Titles) Act 1961, apartment “ownership” was achieved using a range of mechanisms. These included company title schemes, tenancy in common schemes and co-operatives. Some of these schemes still exist today, particularly in the eastern suburbs of Sydney. Company title schemes involve the ownership of shares. A company was formed to acquire the land and apartment building and its shareholding was usually divided into “parcels” or groups of shares, each of which corresponded to a specified apartment in the building. The number of shares in a parcel was determined by the value of the apartment to which that parcel related. The Constitution of the company conferred on the owner of the parcel of shares the right to exclusively occupy the related apartment. Sometimes this right of occupation was reinforced by a concurrent lease of the apartment from the company to the shareholder. The Constitution also regulated the maintenance of the building and the raising of contributions (or levies) to fund the expenses of the company, which included all building related expenses. The apartment is “sold” by transferring its share parcel and assigning any supporting lease. A tenancy in common scheme involved buildings with a smaller number of apartments, usually in the two to six range. Each apartment “owner” owned an undivided interest as tenant in common in the land on which the building was situated. The percentage interest depended on the value of the apartment to which the interest related. A Coownership Deed was then entered into by all of the landowners under which rights of exclusive possession of the various apartments were allocated. This Deed regulated the maintenance of the building and

the liability of the co-owners to contribute to building related costs. The Deed usually contained a covenant on the part of the co-owners not to apply to the Supreme Court for a partition order appointing trustees for sale of the property (ie an order effectively terminating the Deed and the scheme). However, such clauses are generally regarded as unenforceable and this form of co-ownership carries the risk of termination at the will of any one of the co-owners. Upon the sale of an apartment (ie the interest in the land) the incoming owner entered into a Deed of Covenant with the remaining co-owners. A co-operative scheme was similar to a company scheme, except that the entity used to own the land was a co-operative established and regulated under the NSW co-operatives law (which has since transitioned to a Co-operatives National Law). The members of the cooperative were allocated exclusive rights of occupation of the apartments and the co-operative was responsible for maintaining the building and recovering associated costs from the members. As with company schemes, it was possible for the co-operative rights to be supported by concurrent leases from the co-operative to individual members. Changes of ownership of an apartment were dealt with by changes of membership of the co-operative. These schemes are believed to be no longer in existence in New South Wales. From a management perspective, strata managing agents are the ones who usually manage company title schemes and tenancy in common schemes, although some small accounting firms also offer management services to these types of schemes. While the general management principles are the same the technical aspects of their management are very different and require special knowledge and skills. The management of these types of schemes is not dealt with in this publication. Law: Corporations Act 2001 (Cth). Co-operatives National Law. Conveyancing Act 1919, s 66G.

¶4-002 Staged developments

Sometimes it is necessary for a development to be built and subdivided in stages. This may be because of the size of the development, its physical layout or the need to progressively release product to the prevailing real estate market. There are two ways in which this may occur: • By the progressive development and subdivision of the land parcel under the Development Act in a way that all of the strata lots and common property are regulated under the Management Act by a single owners corporation. • By the progressive development and subdivision of the land parcel under both the Community Land Development Act 1989 (“Community Development Act”) and the Development Act in a way that results in a two-tier or three-tier owners corporation structure regulated under both the Community Land Management Act 1989 (“Community Management Act”) and the Management Act. Managing staged developments, during both the staging program and when fully completed, can be difficult and should be regarded as a specialist offering.

¶4-003 Two-tiered schemes In New South Wales, unlike some other jurisdictions, it is not possible to create a two-tiered strata owners corporation structure under the Development Act. If the Development Act is used for a staged development the second and subsequent stages will always be part of the original (single) strata scheme and regulated by its owners corporation. However, a two-tiered scheme can be achieved using the Community Development Act and the Development Act. This results in a community association, with one or more of its members being a strata owners corporation. This is effectively a mixed community and strata scheme. In this type of structure the owners corporation authorises a natural person (usually one of its committee members) to exercise the

functions of the owners corporation (including its right to vote) as a member of the higher association. That person is called a company nominee. Form 2 (see ¶19-002) is a resolution of an owners corporation authorising a company nominee and Form 3 (see ¶19003) is the document appointing the company nominee. The following chart illustrates such a two-tiered scheme:

¶4-004 Three-tiered schemes Similarly, it is not possible in New South Wales to create a three-tiered strata owners corporation structure under the Development Act. However, a three-tiered scheme can be achieved using the Community Development Act and the Development Act. This results in a community association, with one or more of its members being another community association which, in turn, has a strata owners corporation as one of its members. Various combinations of community associations and strata owners corporations can occur using this approach. Again, this is effectively a mixed community and strata scheme. As with a two-tier scheme, the “lower” community association or

owners corporation authorises a natural person (usually one of its committee members) to exercise the functions of the community association or owners corporation (including its right to vote) as a member of the “higher” association. One such combination is illustrated in the following chart:

¶4-005 Building management statements Small mixed-use schemes (eg an apartment building with 30 lots, including three small shops on the ground floor) will usually involve a single strata scheme. If the shops have special needs or special facilities, or if the shop owners are to be excluded from scheme facilities, then common property rights by-laws may be used. (See

¶11-008 in relation to common property rights by-laws.) On the other hand, large mixed use developments present a special challenge for developers. They often comprise such components as office towers, shopping centres, restaurants and hotels, as well as residential apartments. If these types of developments are subdivided using a strata plan (whether staged or not), the commercial and retail components become lots within a strata scheme. This will usually have the effect of de-valuing those components. This is because many institutional investors (who make up the market for that type of property) will not, as a matter of policy, buy commercial real estate which is a lot in a strata scheme. In turn, this reduces the pool of buyers and can impact on the value of the commercial product. The solution is to subdivide the completed development using a “stratum plan”, which is effectively an airspace subdivision. This type of plan divides land (above and below its surface) vertically and horizontally with reference to standard height datum (ie a uniform vertical level based on theoretical sea level and used by surveyors as a reference point). It allows each of the components of the development (eg the shopping centre, office tower and residential apartments) to be separately defined as “stratum lots” without the involvement of an owners corporation. The parts of the building and its land which need to be used jointly by the owners of two or more of the components (often referred to as the “shared facilities”) are regulated by a contract known as a “building management statement”. No owners corporation is responsible for the management of these shared facilities — they are managed and funded according to the terms of the commercial contract comprised in the building management statement. This type of structure is generally accepted by institutional investors as a satisfactory alternative to an owners corporation structure. The residential component of a building management statement will usually be subdivided by a strata plan but the owners corporation arising from that subdivision is only responsible for the management of the lots and common property comprised within the residential stratum land parcel. To register the strata plan a strata management statement must be lodged and this statement replaces the building

management statement (although it is possible in some cases to obtain special permission to leave the building management statement in place and not lodge a strata management statement). The remainder of the development is regulated by the strata management statement, although the residential owners corporation, as an “owner” of one of the components of the development, does participate in the decision making relevant to the common elements. Its participation is regulated by the terms of the strata management statement, which are usually specific to the particular development. A strata management statement is regulated by the Development Act and, to a lesser extent, by the Management Act, whereas a building management statement is substantially regulated by the Conveyancing Act 1919. The management functions under a building/strata management statement are usually undertaken by a strata managing agent, although in the case of very large and complex developments the management may be undertaken by a specialist facilities manager or a commercial real estate agency. Irrespective of the type of entity chosen, the management of these structures is particularly complex and highly specialised. The following chart illustrates a common building/strata management

statement structure: A strata/building management statement regulates the shared facilities. It is effectively a statutory contract which becomes part of the title to the lots and which is automatically binding on new owners and occupiers. It will usually: • Identify the shared facilities. • Determine responsibility for maintenance of the shared facilities. • Determine who contributes to maintenance costs and how their contribution is calculated. • Set up a building management committee. • Set out administrative and accounting arrangements. • Specify how the statement can be amended. • Set up a dispute resolution process (which may invoke the dispute

process under the Management Act). Where there is a strata/building management statement the administration of the building management committee will usually be undertaken by the strata managing agent who administers the strata scheme, or schemes, within the building. Common management, provided it is up to standard, is the preferred approach to the management of a mixed use building of this type. However, the complexity of managing a mixed use scheme with a strata or building management statement should not be under estimated. These buildings are usually complex and involve substantially more work than normal strata buildings. If there is a resident caretaker for the building its administration will be easier, but still more demanding than for a normal scheme. Law: Development Act, Pt 6. Management Act, s 160, 228 (as examples). Conveyancing Act 1919, Pt 23, Div 3B.

¶4-006 Common property divided use schemes While a building management statement is a satisfactory mechanism for the structuring of large and complex mixed use schemes, it is not necessarily the best approach to the structuring of small mixed use schemes, such as an apartment building with two or three retail lots on the ground floor. A satisfactory alternative is to divide the common property (to the best possible extent) into: • Residential common property. • Retail common property. • Jointly used common property. Exclusive use rights are then created over the residential common property in favour of all the residential lot owners with the condition that they are to be responsible for maintenance and administrative costs associated with that portion of the common property in specified

proportions. Similar rights are created over the retail common property in favour of all the retail lot owners with a corresponding condition that they are to be responsible for maintenance and administrative costs associated with that portion of the common property in specified proportions. The jointly used common property retains its original status with responsibility for costs associated with its maintenance and administration being apportioned in the usual way among all lot owners in proportion to their unit entitlements. In addition, by-laws are carefully drafted to separate and cater for the interests, as far as practicable, of the residential lot owners and retail lot owners. This approach, if carefully implemented, will usually accommodate the interests of the two different ownership categories without the complexity of a building management statement structure. It separates the various cost centres to ensure the fairest possible sharing of expenses (using three separate budgets and three types of levies) while also accommodating the different interests of the two types of owners. The structure is managed by a strata managing agent as part of the normal administration of the scheme. Law: Management Act, s 142–145.

STRATA COMMITTEES ¶5-001 Transitional arrangements Under the now repealed Strata Schemes Management Act 1996 the committee of the owners corporation was known as an “executive committee”. Under the Management Act the committee has been renamed the “strata committee”. The transitional provisions of the Management Act make it clear that: • An owners corporation of a strata scheme in existence when the Management Act commenced is taken to have been constituted under that Act. • Committee members and office bearers of an executive committee at the time the Management Act commenced are taken to have been appointed as members and office bearers of the strata committee for the remainder of their original term of appointment. These provisions effectively reconstitute an executive committee as a strata committee for the remainder of the original term of the executive committee. Law: Management Act, Sch 3, cl 5, 6.

¶5-002 Timing for appointment An owners corporation may appoint a strata committee before the holding of its first annual general meeting, but in any event must appoint one at that meeting. In the unusual circumstance where there is no strata committee (eg because it was never appointed or because all its members have resigned), then the strata scheme is administered by the owners corporation in general meeting or a strata managing agent who has been delegated the necessary functions. Strata committees are re-appointed, by an election process, at each

annual general meeting of the owners corporation. Law: Management Act, s 29.

¶5-003 Size of the strata committee The size of the strata committee is determined by the owners corporation within certain limits based on the size of the scheme. If there are two lots in the scheme the committee consists of the following persons: (a) each sole lot owner, or the company nominee if the lot is owned solely by a corporation, and (b) for each co-owned lot, the co-owner nominated by the other coowner(s) or company nominee; otherwise the co-owner first named on the strata roll. In the case of a large strata scheme (defined as one comprising more than 100 lots, or such other prescribed number), the strata committee must have between three and nine members. In the case of all other schemes there can be between two and nine members. Law: Management Act, s 30.

¶5-004 Eligibility for appointment or election Persons eligible for appointment or election to a strata committee are: • An individual who is the sole owner of a lot. • A company nominee of a corporation which is the sole owner of a lot. • An individual who is the co-owner of a lot if the person is nominated for election by an owner who is not a co-owner of the lot, or by a co-owner of the lot who is not themselves a candidate for election. • A company nominee of a corporation that is a co-owner of a lot if

they are nominated for election by an owner who is not a coowner of the lot, or by a co-owner of the lot who is not themselves a candidate for election. • An individual who is not the owner of a lot, if they are nominated by an owner of a lot who is not a member, or is not seeking election as a member, of the strata committee. Persons ineligible for appointment or election to a strata committee are: • The building manager for the scheme. • A person who acts as agent for the leasing to tenants of a lot or lots in the scheme (which would include an on-site and off-site real estate agent). • A person who is connected with the original owner for the scheme or the building manager for the scheme, unless that connection is disclosed. • An owner who was un-financial at the date notice of the meeting was given and who did not pay the amounts owing before the meeting. See ¶14-010 for the procedure for election of the strata committee. Law: Management Act, s 31, 32.

¶5-005 Nomination of candidates The annual general meeting notice must include a call for nominations for members of the strata committee. The closing date for nominations must be at least seven days before the meeting. Any owner or person entitled to vote at general meetings (including those who are unfinancial) may nominate an eligible person for election as a member of the strata committee. The rules regarding nomination can be summarised as follows:

• An individual who is a sole owner may nominate themselves. • A corporation which is a lot owner may nominate their company nominee. • A sole owner must not nominate more than one person, unless they own multiple lots. • Only one co-owner (including a company nominee of a co-owner) of the same lot may be a member of the strata committee at the same time, unless they own multiple lots. • A person who owns more than one lot may nominate one person for each lot they own. The nomination is to be made by written notice given to the secretary of the owners corporation (or in the case of the first annual general meeting, to the convenor of the meeting). The nomination must state: (a) the name of the person nominated (b) the name of the person making the nomination, and (c) that the person nominated consents to the nomination. A nomination may be made at any time before the election is held and may even be made at the meeting. If the nomination is made at the meeting, the requirement for the nomination to be in writing still applies. The Management Act provides for valid nominations made before the closing date for nominations, to be included by the secretary in the notice of the meeting at which the election is to take place. It also provides that nominations received after the closing date are to be given by the secretary to the meeting. Form 4 (¶19-004) is a suggested form of nomination. It has been designed to make it easier for the secretary to determine the compliant status of the nominator and nominee. These provisions are confusing when one considers that: • The annual general meeting notice must include a call for

nominations. • The closing date for those nominations is “at least 7 days before the annual general meeting”. A nomination received after the notice of the meeting is given but before the seven-day period cannot be included in the notice of the meeting, because the notice has already issued. It is likely that the requirement for the meeting notice to include a call for nominations is an error. The likely intention is that the nominations should be called before the notice is issued and that the closing date must be at least seven days before the notices issue. However, that is unlikely to be an enforceable interpretation and pending legislative or superior court clarification the safest approach, on the basis of the current wording, would be as follows: (a) a nomination received by the secretary before the notice of annual general meeting is issued must be included in the notice of the meeting, and (b) a nomination received by the secretary after the notice is issued, including those received at the meeting, must be given to the meeting by the secretary. Law: Management Act, s 31, Sch 1, cl 5.

¶5-006 Tenant representatives The Management Act introduced the concept of tenants being represented on strata committees. However, the process and restrictions imposed by the Act mean that this concept will rarely be used in practice and where a tenant representative is appointed the exercise will be relatively pointless. This is because: 1. The tenant representation provisions only apply where the number of tenants who have notified their tenancy to the owners corporation by means of tenancy notices represent at least half the lots in the scheme.

2. Only one tenant representative can be nominated for the scheme. 3. The tenant representative cannot: (a) vote (b) put a motion to the strata committee (c) nominate a person for office (d) hold an officer position, or (e) be counted in the quorum. 4. The strata committee, at any meeting or for the purpose of all meetings, may determine that a tenant representative is not entitled to be present when the following matters are being discussed or determined: (a) financial statements and auditors reports (b) levying of contributions (c) recovery of unpaid contributions (d) a strata renewal proposal (as to which see ¶18-015) or any related matter (e) any other financial matter specified by the regulations. (The omission of “and” or “or” from the section setting out the above matters makes it uncertain whether the strata committee can decide on one or more of the above matters, or whether it can only decide on them all as a package. The latter is clearly arguable, which if correct, would further negate the purpose of having a tenant representative.) It is unfortunate that what started out as an innovative concept has been so watered down as to be effectively useless.

Law: Management Act, s 33.

¶5-007 Acting committee members A member of a strata committee may, with the consent of the strata committee, appoint an owner or company nominee of a corporation who is eligible to be a member of the committee, to act in their place as a member of the committee. The fact that the proposed appointee is already a member of the strata committee does not preclude their appointment and while acting they may exercise both their own vote and the vote of the person for whom they are acting. There is no requirement for the appointment to be in writing, although the consent of the strata committee would need to be supported by a resolution of the committee (as to which see Form 5 (see ¶19-005)). The appointee, while acting as the member of the strata committee, is taken to be a member. Law: Management Act, s 34.

¶5-008 Functions of strata committees The functions of the strata committee are to be found in various places throughout the Management Act and the Management Regulation. However, in general terms its functions are to govern the corporate entity (ie the owners corporation) and ensure that its office bearers are effectively managing it (see ¶3-004). This governance function is to some degree restricted by some of the provisions of the Management Act and this distinguishes a strata owners corporation from a commercial company. In virtually all cases, the board of directors of a company is solely responsible for the business of the company. Shareholders cannot interfere with the running of the business by the directors, although shareholders do have supervisory responsibilities and can remove directors if circumstances require. A strata committee shares responsibility for the business with the owners corporation (ie the lot owners in general meeting). The general meeting can restrict the powers of the strata committee, over-rule its decisions and provide

directions. This is in addition to its general supervisory powers and the power to remove committee members. A decision of the strata committee on a matter within its power is taken to be the decision of the owners corporation. However, in the event of a disagreement between the owners corporation and the strata committee, the decision of the owners corporation prevails. Also, the owners corporation can exercise all or any function notwithstanding that the function may be within the power of the strata committee. The strata committee cannot make a decision: (a) which is required by or under the Management Act to be made by unanimous resolution or special resolution, or (b) on any matter, or type of matter, that the owners corporation has itself reserved for decision by a general meeting. In addition, a decision of a strata committee may be vetoed if, before the decision is made, an opposition notice is given to the secretary by one or more owners whose unit entitlements exceed one-third of the aggregate unit entitlements. Law: Management Act, s 36, Sch 2, cl 9(3).

¶5-009 Sub-committees There is nothing in the Management Act relating to the appointment or operation of sub-committees. However, it is possible for a strata committee to constitute sub-committees. It may do this by means of a by-law or by resolution appointing the sub-committee and approving its charter. However, because a strata committee cannot delegate its functions, the role of a sub-committee must be an advisory role rather than a decision making role. Form 6 (see ¶19-006) is a by-law which establishes a sub-committee and Form 7 (see ¶19-007) is a resolution of a strata committee appointing a sub-committee and fixing its charter. Sub-committees can be very effective dealing with specific issues and they provide an opportunity to involve lot owners who are

not members of the strata committee, but who may be able to contribute expertise to the business of the sub-committee. Law: Management Act, s 136 and 139.

¶5-010 Office holders The members of a strata committee must, at its first meeting, appoint a chairperson, secretary and treasurer. The appointees are also, respectively, the chairperson, secretary and treasurer of the owners corporation. A person may be appointed to one or more of those positions. Nominations for the positions may be made before or at the meeting of the strata committee at which the office bearers are elected. The following procedure is prescribed by the Management Regulation: 1. The written notice of the first meeting of the strata committee after its appointment must include a call for nominations for chairperson, treasurer and secretary. 2. Any member of the strata committee may nominate another member for election as any or all of chairperson, treasurer or secretary. 3. The nomination is to be made by written notice given to the person convening the meeting (see Form 8 (¶19-008)). 4. The nomination must state: (a) the name of the person nominated (b) the name of the person making the nomination, and (c) that the person nominated consents to the nomination. 5. There is no requirement for the nominee to provide their written consent to the nomination, it being sufficient if the nominator states in the nomination that the nominee has consented to the nomination.

6. The person convening the meeting must include any prior nominations in the notice of the meeting at which the election is to take place. Notice of any subsequent nomination is to be given by the convenor at the meeting. 7. A nomination may be made at any time before the election is held and may even be made at the meeting. If the nomination is made at the meeting, the requirement for the nomination to be in writing still applies. An owners corporation may pay an office holder or other strata committee member. The amount must be determined retrospectively by the owners corporation at the annual general meeting based upon the services performed. See Form 9 (¶19-009) for the form of annual general meeting resolution. Until the offices of the strata committee are filled, or the holding of the first annual general meeting, whichever first occurs, the functions of the chairperson, secretary and treasurer are to be exercised by the original owner or their agent authorised in writing. See Form 10 (¶19010) for the written authorisation. Law: Management Act, s 41, 46, 47. Management Regulation, reg 11.

¶5-011 The chairperson A chairperson is one of the office bearers which a strata committee must appoint. The functions of the chairperson include: • Presiding at meetings of the owners corporation. • Presiding at meetings of the strata committee. • Making determinations as to quorums and procedural matters at meetings of the owners corporation. • Making determinations as to quorums and procedural matters at meetings of the strata committee.

That list is not exhaustive and the chairperson may be given additional roles by the strata committee. For example, the chairperson is often given the role of liaising on a day-to-day basis with any strata managing agent and building manager. Law: Management Act, s 42.

¶5-012 The secretary The secretary is also one of the office bearers which a strata committee must appoint. The functions of the secretary include: • To prepare and distribute minutes of meetings of the owners corporation. • To submit a motion for the confirmation of those minutes at the next meeting of the owners corporation. • To give on behalf of the owners corporation notices required to be given under the Management Act. • To give on behalf of the strata committee notices required to be given under the Management Act. • To maintain the strata roll. • To enable the inspection of documents in accordance with the Management Act. • To answer communications addressed to the owners corporation. • To convene meetings of the strata committee. • To convene meetings of the owners corporation (apart from the first annual general meeting, which must be convened by the original owner). • To attend to matters of an administrative or secretarial nature in connection with the exercise of functions by the owners

corporation and its strata committee. • Any other functions conferred on the secretary under any other Act or the law. Again, that list is not exhaustive. Interestingly, it omits any obligation to prepare and distribute minutes of meetings of the strata committee and to have those minutes confirmed, such obligation being in Sch 2 of the Management Act. Those obligations, although not expressly stated, would need to be undertaken by the secretary as they would be “matters of an administrative or secretarial nature”. Law: Management Act, s 43, Sch 2, cl 17.

¶5-013 The treasurer The treasurer is the remaining office bearer which the strata committee must appoint. The functions of the treasurer include: • To issue notices of contributions levied under the Management Act (ie levies). • To receive, acknowledge, bank and account for any money received by the owners corporation. • To prepare strata information certificates. • To keep the accounting records of the owners corporation. • To prepare the financial statements of the owners corporation. Again, this list is not exhaustive and the treasurer may have other functions, provided they have a relationship to the financial affairs of the owners corporation (eg arranging an audit of the accounting records or checking invoices before they are authorised for payment). An important difference between the treasurer and the other office bearers is the ability of the treasurer to delegate their functions (apart from the power of delegation). The delegation may be to any other member of the strata committee but:

(a) the delegation must be specifically approved by the strata committee (b) the function being delegated must be specifically approved by the strata committee, and (c) the delegation must be subject to any limitations as to time or otherwise that the strata committee requires. Form 11 (see ¶19-011) is a sample resolution by a strata committee approving a delegation of the treasurer’s functions. While a delegate is acting in accordance with the terms of their delegation, they are taken to be the treasurer of the owners corporation. As a separate matter, a strata committee may, by written notice to the treasurer, order the treasurer not to exercise any of their functions specified in the notice unless they do so jointly with another person specified in the notice. A common use of this power would be to require the treasurer to have a co-signatory to the owners corporation’s bank accounts (see Form 12 (¶19-012)). Law: Management Act, s 44.

¶5-014 Strata managing agents While not strictly an office bearer of the strata committee, a strata managing agent may be appointed by the owners corporation. The Management Act specifies the strata managing agent as someone who assists the owners corporation in carrying out its management functions under the Management Act. This makes it clear that the role of the strata managing agent is management related and does not carry the governance responsibilities of the strata committee. The strata managing agent is also different to the other office bearers in that the strata managing agent may be delegated certain functions of the owners corporation, strata committee or an office bearer. Law: Management Act, s 11, 13, 49, 52.

¶5-015 Liability of strata committee members

At common law the potential liability of a member of a strata committee would be analogous to the common law liability of a company director. Without statutory protection, that would be a significant risk for a committee member. However, the Management Act does offer some protection against personal liability for office bearers and strata committee members. Any matter or thing done or omitted to be done by an officer of an owners corporation or a member of its strata committee does not subject them to any action, liability, claim or demand if they acted in good faith for the purpose of executing their functions under the Management Act or any other Act. The protection also applies to a person who acted under the direction of any such officer or strata committee member. The liability is not extinguished, but rather it attaches to the owners corporation rather than to the officer or strata committee member. Law: Management Act, s 260.

¶5-016 Conflicts of interest Conflicts of interest are dealt with in cl 18 of Sch 2 of the Management Act (which deals with the procedures for meetings of a strata committee). Under that clause, if a member of a strata committee: (a) has a direct or indirect pecuniary interest in a matter being considered or about to be considered at a meeting, and (b) the interest appears to raise a conflict with the proper performance of the member’s duties in relation to the consideration of the matter, then the member must, as soon as possible after the relevant facts have come to the member’s knowledge, disclose the nature of the interest at a meeting of the strata committee. Failure to comply with this requirement is an offence with a maximum penalty of 10 penalty units (which at the time of publication equated to $1,100.00). It should be noted in relation to this offence: • The interest can be an indirect interest (eg a family member has

shares in a relevant company). This is because a person has an indirect interest if a person connected with them has a direct interest in the matter. • The interest does not have to actually raise a conflict, it being sufficient if it “appears” to raise a conflict. • There is a need to act quickly, although this is tempered by the requirement for the disclosure to be made at a strata committee meeting (which may occur only periodically). A disclosure that the strata committee member: (a) is a member, or in the employment, of a specified corporation or body (b) is a partner, or in the employment, of a specified person, or (c) has some other specified interest related to a specified corporation or other body or to a specified person, is sufficient disclosure of the nature of the interest in any matter relating to that corporation or other body or that person which may arise after the date of disclosure. The strata committee must ensure that particulars of the disclosure are recorded in a book kept specifically for that purpose and that book must be open at all reasonable hours for inspection by any person on payment of the fee determined by the strata committee (see Form 82 (¶19-082)). There does not appear to be any reason why the “book” cannot be an electronic record and such a record could be made available via a community website (with or without the payment of a fee). Once a disclosure has been made, the strata committee member must not, unless authorised by the strata committee: (a) be present during any deliberation of the strata committee with respect to the matter, or

(b) take part in any decision of the strata committee with respect to the matter. The conflicted strata committee member must not be present during any discussion about a proposed authorisation, or participate in the decision relating to the authorisation. If this particular provision of the Management Act is contravened, any decision of the strata committee is not invalidated as a result. Law: Management Act, Sch 2, cl 18.

¶5-017 Vacation of office An elected member of a strata committee vacates their office in any of the following circumstances: 1. If they cease to be eligible to be a member of the strata committee (other than because they are un-financial). 2. If they were not an owner at the time of their election and the individual who nominated them: (a) ceases to be an owner, or (b) gives written notice to the owners corporation that the person’s office is vacated. 3. If they were a company nominee and the corporation for which they are nominee: (a) ceases to be an owner, or (b) gives written notice to the owners corporation that the person’s office is vacated. 4. If they resign by notice in writing to the owners corporation — their resignation being effective at the time of receipt of the notice by the owners corporation. 5. When their office is vacated at the end of the next meeting at

which the new strata committee is elected. 6. Upon the passing of a special resolution of the owners corporation vacating their office. 7. Upon their death. An officer of the owners corporation (eg the treasurer or secretary) vacates their office in any of the following circumstances: (1) If they cease to be a member of the strata committee. (2) If they resign by notice in writing (the resignation taking effect upon receipt of the notice by the owners corporation). (3) If another person is appointed by the strata committee to hold that office. (4) If the owners corporation, by special resolution, declares their office vacated. (5) If the office bearer dies. When a vacancy occurs on the strata committee between annual general meetings (other than a vacancy of an officer of the owners corporation) the strata committee may appoint a person eligible for election to fill the casual vacancy. The person appointed holds office for the remainder of the original member’s term. A vacancy of an officer of a strata corporation must be filled by the strata committee from the membership of the strata committee. Law: Management Act, s 35, 45.

¶5-018 Removal from office A member of a strata committee, or an office bearer of a strata committee, may be removed from office by a special resolution of the owners corporation. The motion for the resolution may be proposed by the committee or any owner eligible to submit motions. See Form 13

(¶19-013) for the type of resolution required. Law: Management Act, s 35(1)(e) and 45(1)(d).

STRATA MANAGING AGENTS ¶6-001 Functions A strata managing agent is appointed by an owners corporation to perform certain of its functions, but mainly those relating to administrative and accounting matters. While there are a number of functions which an owners corporation cannot confer on a strata managing agent, by far the vast majority are capable of being delegated to the agent. In addition, the owners corporation may confer on the strata managing agent the functions of its chairperson, secretary and treasurer, as well as the functions of its strata committee. Despite the delegation of functions, the owners corporation and its office bearers and strata committee may continue to exercise the same functions. In a commercial sense, a properly delegated strata managing agent effectively operates as the chief executive officer of the owners corporation, supervised by the strata committee. In some cases strata committees are prepared to leave most of the day-to-day decision making of the owners corporation to the strata managing agent, thus removing the need for regular meetings of the strata committee. In certain circumstances a strata managing agent may also be appointed by the Tribunal under the dispute resolution provisions of the Management Act. In that event, the Tribunal will specify the functions conferred on the strata managing agent and those functions will be exercisable to the exclusion of the owners corporation, its office bearers and strata committee. The strata managing agent will effectively be operating as the administrator of the owners corporation, even to the exclusion of its owners. The discussion in this Chapter is confined to strata managing agents appointed voluntarily by the owners corporation. Law: Management Act, s 49, 52, 54, 237.

¶6-002 Appointment and delegation Three things are needed for the valid appointment of a strata managing agent: • A resolution of a general meeting of the owners corporation (see Form 14 (¶19-014)). • An instrument in writing making the appointment (see Form 15 (¶19-015) for a bare appointment). • An appointee who is the holder of a strata managing agent’s licence under the Agency Act (which may be a corporation licence). The appointment is usually accompanied by a delegation of functions. In the absence of such a delegation, the appointment is relatively useless because the strata managing agent would not have any functions to perform or any powers or authorities. Like the appointment, the delegation must be authorised by a general meeting of the owners corporation. The instrument making the appointment is usually incorporated within a comprehensive agency agreement, which also incorporates the delegation of functions. See Form 16 (¶19-016), which is the agency agreement recommended by Strata Community Australia, the peak industry body for strata managing agents and others involved in the sector. Despite being otherwise qualified, the developer of the strata scheme is precluded from appointment as a strata managing agent of the scheme until after the end of a 10-year period commencing on the date of registration of the strata plan. Also, a lot owner seeking to be appointed must not vote or cast a proxy vote on the appointment at the general meeting. It is normal for the appointment to be for a specified term, usually one to three years. However, that is not strictly necessary because if the term (including any option) does not expire earlier, or otherwise end sooner, the term of appointment expires: (a) if the strata managing agent is appointed at the first annual

general meeting, at the end of the period of 12 months following that appointment, or (b) in any other case, at the end of the period of three years following the appointment. There is no restriction on the re-appointment of the strata managing agent after their term expires, although the process is the same as for an original appointment. It is also possible for a strata committee, pending a decision on reappointment, to extend the appointment of the strata managing agent for successive periods of up to three months after it would otherwise expire, but not for any period extending beyond the annual general meeting of the owners corporation. These matters are further discussed at ¶6-011 below. Law: Management Act, s 49, 50.

¶6-003 Licencing The Agency Act prohibits a natural person from acting as or carrying on the business of (or advertising, notifying or stating that they act as or carry on the business or are willing to act as or carry on the business of) a strata managing agent or community managing agent unless they are the holder of a strata managing agent’s licence under that Act. There is a similar prohibition on corporations unless they hold a corporation licence under the Agency Act. Strict criteria apply to the issue of either such licences, including educational, training and competency requirements in the case of a strata managing agents licence. A corporation must have at least one director who is the holder of a strata managing agents licence before it will be issued with a corporation licence. The Management Act requires an appointee as a strata managing agent to be the holder of a licence under the Agency Act. If the appointee is a company, there must be both a corporation licence and a licenced director. If the appointee is an individual (including one operating as a sole trader under a business name), then the appointee must hold a strata managing agents licence. An owners corporation

would be well advised to site the relevant licences prior to proposing any motion to appoint the strata managing agent. There are a number of other provisions of the Agency Act which an owners corporation should be aware of, including: • A strata managing agent cannot recover their fees or expenses if they do not have an agency agreement. • Moneys received by the strata managing agent must be held in a trust account in the name of the licensee. • The trust account is subject to an annual audit. • The moneys in the trust account are protected by a Compensation Fund administered under the Agency Act. Law: Management Act, s 49. Agency Act, s 55, 86, 111, Pt 10.

¶6-004 Powers and authorities The powers and authorities held by a strata managing agent will depend upon the terms of the owners corporation’s delegation. Some delegations are minimal in that they are restricted to the functions of the secretary and treasurer. In that case the strata managing agent will be very restricted in what they can do for the owners corporation. For example, they would not have any power to engage contractors to work on the common property without the express authority of the strata committee. Other delegations are very extensive and cover all of the functions of the owners corporation which it has power to delegate, including the functions of the strata committee and its chairman, secretary and treasurer. The strata managing agent will have all of the powers and authorities that the “principal” (ie the owners corporation, its strata committee and/or its chairperson, secretary and treasurer) would have in relation to the particular function. The owners corporation’s delegation may be for:

(a) all of its functions (b) any one or more of its functions specified in the instrument of delegation, or (c) all of its functions except those specified in the instrument of delegation, but may be made subject to the conditions or limitations as to the exercise of all or any of the functions, or as to time or circumstances, that may be specified in the instrument of delegation. However, the owners corporation cannot delegate its power to make: (i) a delegation under its own power of delegation (ie to ondelegate) (ii) a decision on a matter that is required to be decided by the owners corporation, or (iii) a determination relating to the levying or payment of contributions. Before leaving something to be attended to by the strata managing agent an owners corporation or strata committee should ensure that the agent has been appropriately delegated. If there is insufficient delegation in their original appointment or delegation it is not possible for the strata committee to add to the terms of that appointment or delegation. The procedure to amend or extend a delegation will involve a further resolution of a general meeting followed by an instrument in writing amending the original delegation. To revoke a delegation the procedure will be the same. Notwithstanding the delegation of a function, the owners corporation, its strata committee and its chairperson, secretary and treasurer may continue to exercise the function that the strata managing agent is authorised to exercise. Law: Management Act, s 52, 54.

¶6-005 Agency agreements The Management Act does not require an agency agreement. It only requires an instrument in writing evidencing the appointment and setting out the functions which are delegated to the strata managing agent. However, the Agency Act requires an “agency agreement” to be entered into before the strata managing agent can recover their fees and expenses, although s 55A of the Agency Act confers a limited discretion on a court to allow recovery of commission and expenses. In practice, one agreement serves the purpose of an instrument evidencing the appointment and delegation, as well as satisfying the “agency agreement” requirements of the Agency Act. As previously indicated, Form 16 (see ¶19-016) is the form of agency agreement recommended by Strata Community Australia. The agency agreement must comply with the Agency Regulation. In brief, the regulation requires the agreement to: 1. Specifically identify the property to which it relates. 2. Specify the names of the parties to it. 3. Specify the address of the owners corporation and the strata managing agent’s licence number and business name. 4. Contain a warranty on the part of the owners corporation that it has authority to enter into the agreement. 5. Provide particulars of the extent of the strata managing agent to act as the agent of the owners corporation in providing services under the agreement. 6. Specify a term for which it remains in force or a provision that it remains in force until terminated. (Although it should be noted that the maximum term permitted by the Management Act is three years.) 7. Provide for its termination, including how and when it may be terminated.

8. Specify entitlement to remuneration, including: (a) the amount or the way it is to be calculated, and (b) when it is payable. 9. Include written confirmation of the extent of the strata managing agent’s authority to undertake, including any limitations on that authority, and the range of duties listed in Sch 14 of the Agency Regulation. 10. Include the terms relating to the over-riding authority of a Tribunal appointed strata managing agent, as set out in Sch 14 of the Agency Regulation. 11. Specify the manner and frequency of accounting for owners corporation moneys received by the strata managing agent. 12. Operate without any indemnity in favour of the strata managing agent against liability to pay a fine under s 57 of the Management Act. 13. Disclose rebates, discounts and commissions which the strata managing agent proposes to receive (the detail required being specified in s 57 of the Agency Act). As indicated, if these agency agreement provisions are not complied with the strata managing agent has no rights to receive fees or disbursements for their services. Law: Management Act, s 49, 52. Agency Act, s 55, 55A, 57. Agency Regulation, reg 8, Sch 1, 14.

¶6-006 Trust accounting A strata managing agent who receives funds of an owners corporation is required to operate a trust account under the Agency Act. The funds

must be deposited into that trust account, which may be a general trust account or a separate trust account for the particular owners corporation. The trust account must be in the name of the strata managing agent, although if it is a separate trust account it may also contain the name of the owners corporation to which it relates. The Agency Regulations contain detailed provisions relating to the operation of trust accounts and the responsibilities of deposit taking financial institutions who host the trust accounts. The trust accounts earn interest, which is paid to the Director General (being the Commissioner for Fair Trading, or in the absence of such a position, the Director General of the Department of Finance, Services and Innovation). The interest is used to fund the Compensation Fund which operates under the Agency Act to compensate for misappropriated trust funds. Law: Agency Act, s 86, 90, 91.

¶6-007 Exercise of delegated functions A strata managing agent may exercise an unrevoked delegated function in accordance with the terms of the instrument of delegation. Except where there is a conflict with a function delegated by the Tribunal, anything done or suffered by the strata managing agent in exercising a delegated function of the owners corporation, its strata committee or one of its office bearers: (a) has the same effect as if it had been done or suffered by the owners corporation, its strata committee or office bearer, and (b) is taken to have been done or suffered by the owners corporation, its strata committee or office bearer. Once the function has been exercised, the strata managing agent must immediately make a record specifying the function and the manner in which it was exercised — see Form 17 (¶19-017). At least once each year the strata managing agent must give the owners corporation a copy of the records kept. There is likely to be a good deal of work to comply strictly with this obligation. For example, if the

strata managing agent issues an information certificate it is performing a function of the treasurer and must therefore make a record specifying the function and the manner in which it is exercised. Law: Management Act, s 53, 54, 55.

¶6-008 Secret gifts or benefits Where a strata managing agent holds a delegated function and as a consequence of exercising that function, or failing to exercise that function, the owners corporation is in breach of a duty which would constitute an offence under the Management Act, the agent is guilty of the offence instead of the owners corporation. Also, a strata managing agent is precluded from requesting or accepting a gift or other benefit for themselves or for another person in connection with the provision of services as a strata managing agent or the exercise of functions as such. A breach of this restriction is an offence. However, the restriction does not apply to: (a) normal remuneration (b) a monetary commission if it is disclosed in the terms of appointment or has been otherwise approved by the owners corporation (c) a training service provided to, or paid for, a strata managing agent if it is in accordance with the terms of appointment or otherwise approved by the owners corporation, or (d) a gift or other benefit that has a value less than the prescribed amount, namely $60.00. “Gift” is widely defined with reference to the Election Funding, Expenditure and Disclosure Act 1981 and “training service” is defined as a training course or service, including attendance at industry events, such as conferences. This offence would be in addition to and not a substitute for the various offences in the Crimes Act 1900 relating to corruptly receiving

commissions and other corrupt practices. Also, the disclosure requirements are those needed to avoid the commission of the offence and would not necessarily be adequate to discharge the agent’s duties as a fiduciary of the owners corporation. Law: Management Act, s 57. Management Regulation, reg 63. Crimes Act 1900, Pt 4A.

¶6-009 Accountability The Management Act specifies a number of things for which a strata managing agent must be accountable, including the provision of information: (a) about trust account and other records (b) about money received and other transactions (c) relating to commissions and training services (d) upon ceasing to hold a licence or upon death, and (e) under other Acts. Each of the above will be briefly considered. Law: Management Act, Pt 4, Div 3.

¶6-010 Trust account and other records An owners corporation may require a strata managing agent to provide the following information relating to its trust account: (a) the name and number of the account (b) the name of the authorised deposit-taking institution in which the account is current

(c) the credit balance of the account as at a specified date, and (d) particulars of cheques drawn on the account as at that date and not presented and duly paid. The strata managing agent may hold other accounts on behalf of the owners corporation (eg investment accounts). In that event, the owners corporation can require the strata managing agent to provide the same particulars in relation to such accounts. The owners corporation can also require the strata managing agent to provide full particulars relating to the receipt and expenditure of moneys held by the agent on its behalf, including full particulars of any specified transaction the agent has entered into on behalf of the owners corporation. Law: Management Act, s 58.

¶6-011 Money received and other transactions An owners corporation may require a strata managing agent to provide: (a) full particulars relating to the payment or receipt of money by the agent on behalf of the owners corporation (b) if the money is not still held by the agent, the manner and time of disposal of the money, and (c) full particulars of any specified transaction the agent entered into on behalf of the owners corporation. Law: Management Act, s 59.

¶6-012 Commissions and training services The potential exists for strata managing agents to receive commissions or other benefits from suppliers of goods and services to owners corporations they manage. One such benefit is an offer from a supplier (say a law firm) to provide complimentary training for the staff

of the strata managing agent or to cover all or part of the costs of such staff attending a seminar or conference. These are referred to as a “training service” and are defined in the Management Act as “a training course or service (including attendance at industry events such as conferences)”. The starting point is that a strata managing agent commits an offence if: (a) they request or accept a gift or other benefit from another person (b) the gift or benefit is for the agent, or another person, and (c) it has a connection with the provision of services or the exercise of functions by the agent. Exceptions to that prohibition are: (d) remuneration paid by the owners corporation to the agent or an employee or contractor of the agent (e) a monetary commission received in accordance with the terms of their appointment (ie disclosed in their agency agreement) (f) a monetary commission otherwise approved by the owners corporation (g) a training service provided to, or paid for, the agent if it related to strata management functions and the provision or payment is in accordance with the terms of their appointment (h) a training service provided to, or paid for, the agent if it is otherwise approved by the owners corporation, or (i) a gift or benefit with a value less than the prescribed amount, currently $60.00. A disclosure regime also applies to any such commissions or benefits. Law: Management Act, s 57.

Management Regulation, reg 63.

¶6-013 Disclosure of commissions and training services At each annual general meeting of an owners corporation the strata managing agent must report the following to the meeting: (a) whether, during the preceding 12 months, any commissions or training services have been provided to or paid for the agent (other than by the owners corporation) in connection with the exercise of the owners corporation’s functions by the agent (b) if so, particulars of those commissions or training services (c) any such commissions or training services that the agent believes are likely to be provided to or paid for the agent in the following 12 months, and (d) if any, the estimated amount or value of those anticipated commissions or training services. This disclosure obligation is in addition to: (e) any disclosure or approval contained in the agent’s terms of appointment (ie their agency agreement) (f) any disclosure required to avoid offences relating to the corrupt receipt of commissions and other corrupt practices, and (g) any disclosure required by the fiduciary relationship which exists between the agent and the owners corporation. A compliant disclosure made at the annual general meeting would most likely be adequate for the purpose of avoiding offences relating to the corrupt receipt of commissions and other corrupt practices (depending upon the timing of the receipt and the disclosure), but it may not be adequate to constitute “full and proper disclosure” for the purpose of discharging the agent’s fiduciary obligations. It should also be noted that failure to disclose at the annual general meeting in

accordance with the legislation is also an offence. That offence is in addition to any offence committed by acceptance of the gift or benefit in the first place. It is not clear how the disclosure should be made. The options are: • Verbal disclosure at the meeting. • Written disclosure tendered to the meeting. • Written disclosure circulated with the meeting papers and formally tendered to the meeting. Given that a significant number of lot owners may choose an alternative means of voting to personally attending the meeting, disclosure at the meeting is arguably inadequate. However, the requirement for the disclosure to be made “at the annual general meeting” and for it to relate to “the preceding 12 months” means that any disclosure document cannot be dated prior to the meeting. Despite this, the last option is recommended in conjunction with the passing of a resolution accepting the disclosure and approving the commissions and training services. The conflict with the above requirement can be resolved by sending a “draft” notice with the meeting notice stating that it is the notice proposed to be provided at the meeting and is circulated for the benefit of those owners who will not be attending the meeting. That will be seen by owners as being a professional approach to the disclosure obligation. The notice would then be dated and handed over at the meeting. See Form 18 (¶19018) for the way in which written disclosure can be made and Form 19 (¶19-019) for the suggested confirmatory resolution. But the disclosure obligation does not end there. If after the annual general meeting disclosure is made, the strata managing agent becomes aware that commissions or training services provided for or paid to the agent differ from those disclosed at the meeting, then the agent must disclose to the strata committee the variation and an explanation for the variation. Failure to re-disclose in that way is a further offence. See Form 20 (¶19-020) for a suggested re-disclosure notice.

Finally, if the strata managing agent does not make the annual general meeting disclosure in good faith the Tribunal may order the agent to pay to the owners corporation the amount or value of any commission or training service. The Tribunal may also order the strata managing agent to pay to the owners corporation the amount or value of any non-disclosed commission or training service. Law: Management Act, s 60.

¶6-014 Disclosure of other interests A person intending to be appointed as a strata managing agent must, before they are appointed, disclose to the owners corporation, if relevant, the following: • That the person is connected with the original owner. • Any direct or indirect pecuniary interest in the strata scheme (other than an interest arising only from their prospective appointment). An example of such an interest would be the ownership of a lot in the scheme by the self-managed superannuation fund of the strata managing agent. See Form 21 (¶19-021) for a suggested disclosure notice. Failure to disclose is an offence and carries a significant penalty. Law: Management Act, s 71.

¶6-015 Ceasing to hold a licence or on death If a strata managing agent ceases to hold a licence under the Agency Act, or if the agent dies, then: (a) the person who is required by the Agency Act to maintain a trust account for the business of the former licensee, and (b) the person who is required by the Agency Act to preserve records kept by the former licensee,

must generally comply with the accountability provisions of the Management Act. Law: Management Act, s 63.

¶6-016 Information under other Acts The Agency Act requires a licensee to provide information in certain circumstances. Specifically, s 101 relates to information about particular transactions. That section does not apply if the same information is required by the Management Act to be provided by the strata managing agent to the owners corporation. Law: Management Act, s 65. Agency Act, s 101.

¶6-017 Requiring the information If an owners corporation requires information from a strata managing agent it must give the agent written notice of that requirement. The notice must specify the member of the strata committee to whom the information must be given (see Form 22 (¶19-022)). The strata managing agent must comply with the notice within 14 days after the notice is given and if they fail to do so without reasonable cause, they commit an offence. It is also an offence for the agent in response to the notice to knowingly provide information which is false or misleading in a material particular. Information older than five years, calculated from the time the notice was given, need not be disclosed by the strata managing agent. Because of the potential offences involved with these notices and the possible need to strictly prove those offences, the notice requiring information should be authorised by a resolution of the committee. Form 23 (see ¶19-023) illustrates the form of such a resolution. Law: Management Act, s 61, 62.

¶6-018 Duties as licensee

A strata managing agent must also comply with the obligations of licensees under the Agency Act. Apart from those already dealt with elsewhere in this Chapter, the following duties should be noted in particular: 1. To be licenced at the time of their appointment and for the duration of the term of their appointment (s 8 and 9). 2. To produce their licence or certificate of registration to an authorised officer (s 12). 3. Not to transfer, let out hire or lend their licence or certificate of registration (s 13). 4. To have a registered office in New South Wales (s 28). 5. To display legibly and conspicuously outside their registered office and any other place of business their name and licence description (s 29). 6. Not to use a non-conforming or un-registered business name (s 30). 7. To ensure a licensee is in charge of each place of business (s 31). 8. To properly supervise the business (s 32). 9. Not to share commissions, fees, gains or rewards from the business with a non-licensed person unless they are an employee (s 33). 10. To ensure sub-agency agreements with other licensees are in writing (s 34). 11. To notify franchising agreements to the Director General of the Department (s 35). 12. To observe the prescribed rules of conduct for the carrying on of

their business (s 37). 13. To notify the Director General as soon as practicable of any failure to account for funds (s 39). 14. To keep records of certain employees (s 42). 15. Not to employ disqualified persons (s 43). 16. To notify the Director General upon becoming aware of an employee becoming a disqualified person (s 44). 17. To provide information or warnings to persons to whom certain financial or investment advice is given (s 46). 18. To ensure advertisements include certain information about the licensee (s 50). 19. Not to publish or cause to be published false or misleading advertisements (s 51). 20. Not to engage in certain misrepresentations while exercising or performing their functions (s 52). 21. To pay trust moneys into a trust account (s 86). 22. To notify the Director General upon becoming aware that the trust account is overdrawn (s 89). 23. To comply with notices from the Director General requiring certain particulars (s 100). 24. To provide an itemised account of a transaction upon request by a person connected with the transaction (s 101). 25. To make and keep certain records (s 104). 26. To allow inspection of the records by an authorised officer (s 105).

27. To keep copies of their instruments of appointment and delegation (s 109). 28. To have an annual audit undertaken of the trust account and lodge any qualified audit report with the Director General (s 111). Law: Agency Act.

¶6-019 Further delegation and transfer When an owners corporation delegates its functions, or the functions of its strata committee or office bearers, to a strata managing agent, the agent has no power to further delegate those functions. However, the strata managing agent may transfer their functions as a strata managing agent if the transfer is authorised by an ordinary resolution of a general meeting (see Form 24 (¶19-024) for the required resolution). The transferee is taken to be appointed as the strata managing agent for the strata scheme for the same term as that held by the transferor. It is not clear whether the terms of appointment remain the same, although the preferred interpretation of the legislation is that the agency agreement and any delegation contained in it is transferred in their totality. Law: Management Act, s 51, 52(2)(a).

¶6-020 Expiration of appointment The term of appointment of a strata managing agent (including any additional term under an option to renew) expires, if it has not expired earlier: (a) if the agent is appointed at the first annual general meeting, at the end of 12 months following that appointment, or (b) in any other case, at the end of the period of three years following the appointment.

Therefore, the maximum term for appointment of a strata managing agent is three years. However, when their term of appointment expires they can be re-appointed by the owners corporation. Also, to allow time for a new agent to be appointed, or for the existing agent to be re-appointed, the strata committee can extend the agent’s appointment by successive periods of three months, but not beyond the date of the next annual general meeting. See Form 25 (¶19-025) for the required committee resolution. It would be preferable for the resolution to be followed by an instrument of extension (see Form 26 (¶19-026)) so as to properly evidence the extension of the agency agreement and delegation. Where a strata committee has extended a term of appointment it must give the agent at least one month’s notice of a decision not to reappoint the agent or not to further extend the appointment (see Form 27 (¶19-027) for the notice and Form 28 (¶19-028) for the committee resolution supporting the notice). Similarly, the agent must give the owners corporation written notice of the end of a term of appointment (see Form 29 (¶19-029)). That notice must be given at least three months before the end of the appointment or one month before the end of each permitted extension of a term. An instrument of appointment of a strata managing agent for a threeyear period is taken to include an option (exercisable by written notice) for the agent to extend the term for a maximum period of a further three months. The option only applies if the owners corporation: (a) does not reappoint the agent and does not extend the appointment for a further three months, or (b) gives the agent notice at least three months before the end of the term that the agent will not be re-appointed. (Form 30 (see ¶19-030) illustrates a form of notice required to be given by a strata managing agent.) The requirements for the “appointment” of a strata managing agent (as set out in ¶6-002 to ¶6-005, inclusive) apply equally to the “reappointment” of a strata managing agent.

Law: Management Act, s 50.

¶6-021 Termination of appointment The termination of the appointment of a strata managing agent is regulated by the content of the agent’s instrument of appointment. Such instruments usually contain default clauses which permit termination, with or without notice to remedy the default (depending on the nature of the default). Those provisions need to be carefully followed if a strata managing agent’s appointment is to be terminated. In addition, the termination will need to be authorised by an ordinary resolution of a general meeting. That resolution should also authorise cancellation of the delegated functions held by the agent. The decision to terminate, the appropriate resolution and the notice of termination should be the subject of prior legal advice. However, Form 31 (see ¶19-031) can be used as a guide to the type of general meeting resolution normally required and Form 32 (see ¶19-032) illustrates the type of notice which will need to be served on the strata managing agent. Law: Management Act, s 50.

¶6-022 Liens If an owners corporation or its strata committee requires a strata managing agent to hand over control of property (including records) the agent is still entitled to exercise any just claim or lien they may have against the records or other property of the owners corporation. Law: Management Act, s 181.

BUILDING MANAGERS ¶7-001 Definitions A building manager is defined as a person who assists in exercising any one or more of the following functions of an owners corporation: (a) managing common property (b) controlling the use of common property by persons other than the owners and occupiers of lots, or (c) maintaining or repairing common property. However, the following should be noted: • A person who exercises those functions on a voluntary or casual basis, or as a member of a strata committee, is not a building manager. • A person may be both a building manager and an on-site residential property manager. • A building manager may be a person who is entitled to exclusive possession (whether or not jointly with another person) of a lot or common property in the strata scheme. • If a person falls within the definition of a building manager and is not otherwise excluded from that definition, then they are taken to be a building manager irrespective of what they may be called. An on-site residential property manager is defined in the Agency Act as a person (whether or not they carry on any other business) who, for reward (whether monetary or otherwise): (a) carries on business as an agent for giving possession of residential premises under a lease, licence or other contract

(b) carries on business as an agent for collecting bonds, deposits, rents, fees or other charges in connection with any such lease, licence or other contract, or (c) carries on any other business that is prescribed by the regulations (although none have been prescribed at this stage). An on-site residential property manager must have a licence as such under the Agency Act. Law: Management Act, s 66. Agency Act, s 3.

¶7-002 Functions The functions of the building manager are determined with reference to the agreement appointing them (a “building manager agreement”). However, the building manager generally assists the owners corporation and the strata committee in exercising one or more of the functions of the owners corporation specified in the agreement and which relate to managing, maintaining, repairing and controlling use of common property. However, it should be noted that the building manager cannot have authority over owners or occupiers of lots. For example, if an owner or occupier is parking on common property contrary to the by-laws the building manager cannot have authority to require that owner or occupier to comply with the by-law. In contrast, if it was a visitor parking on common property, the building manager could, if duly authorised, deal with them in the same way the owners corporation could deal with them. The owners corporation effectively engages the building manager to perform the relevant functions. Despite that engagement, the legislation provides that the owners corporation may continue to exercise the functions, “subject to the building manager agreement”. This suggests that the building manager agreement can be worded in such a way that the owners corporation can create a situation where a function conferred on the building manager can no longer be exercised by the owners corporation. The intention appears to be for

the owners corporation to continue to exercise the functions the “subject of the building manager agreement”, although it is far from clear that a court could be convinced to infer such an interpretation. A building manager is similar to a strata managing agent in that they both are able to exercise functions of the owners corporation. However, a person is not a strata managing agent, for any purpose, merely because they are a building manager acting in accordance with a building manager agreement. Law: Management Act, s 70.

¶7-003 Appointment A building manager may be appointed before or after the strata scheme commences. If the appointment is to be made before the scheme commences, the original owner makes the appointment. If it is to be made after the scheme commences, the owners corporation makes the appointment. The appointment is made by instrument in writing (called a “building manager agreement”). If the appointment is made before the scheme commences the original owner signs the building manager agreement. If the appointment is made after the scheme commences the owners corporation must pass a resolution at a general meeting authorising the appointment and entry into the agreement (see Form 33 (¶19033)). A building manager agreement (including any additional term under an option to renew) expires, if it does not end earlier: (a) at the conclusion of the first annual general meeting of the owners corporation, if executed before the meeting, or (b) when 10 years have expired after it commenced, in any other case. This effectively puts a maximum term of 10 years on building manager agreements, which is in contrast with the position in some other states. For example, in Queensland the term can be as long as 25

years. However, in New South Wales a person can be re-appointed as building manager at the end of their building manager agreement. Law: Management Act, s 67, 68(1) and (2).

¶7-004 Licensing To be appointed as a building manager under a building manager agreement a person does not need to hold a licence. However, if they are also to be appointed as an on-site residential property manager, as is sometimes the case, they will need an on-site property manager’s licence under the Agency Act. If the building manager is a company and acts as a residential property manager it will need a corporation licence and one of its directors must hold an on-site property manager’s licence. That licence allows them to act as an on-site residential property manager only in respect of premises at which the licensee’s principal place of residence is situated and only if the licensee owns or has a prescribed interest in that principal place of residence. At this stage no particular interest has been prescribed. If an on-site property manager wants to do business in more than one building they will need to have a real estate agent’s licence under the Agency Act. An on-site residential property manager does not need any special appointment by the owners corporation for the strata scheme in which the manager resides. However, it is common for an authorisation to be in place (either as part of the building manager agreement, or as a separate document). It is also common for the authorisation to authorise signage, allocate areas for use by the manager and to confer exclusive rights of on-site operation. Sometimes, these exclusive rights are reinforced by a by-law. When an on-site residential property manager acts as letting agent for an owner within the strata scheme they must enter into an agency agreement under the Agency Act with the owner. Law: Agency Act, s 8, 14, 23, 55.

¶7-005 Disclosure of interests

A person intending to be appointed as a building manager must before they are appointed disclose to the owners corporation, if relevant, the following: • That the person is connected with the original owner. • Any direct or indirect pecuniary interest in the strata scheme (other than an interest arising only from their prospective appointment). An example of such an interest would be the ownership of a lot in the scheme by the self-managed superannuation fund of the building manager. Failure to disclose is an offence and carries a significant penalty. The notice would be similar to that required to be given by a strata managing agent in similar circumstances — see Form 21 (¶19-021). Law: Management Act, s 71.

¶7-006 Transfer of functions A building manager may transfer their functions as a building manager, but only if the transfer is authorised by a resolution of a general meeting of the owners corporation. The transferee is taken to be appointed as a building manager by the building manager agreement and the duration of the term remains unchanged. There is nothing in the Management Act which requires the owners corporation to act reasonably in considering an application for consent to transfer the building manager functions. However, there may be a clause in the building manager agreement which requires a refusal not to be unreasonable. A transfer of building manager functions will usually involve: (a) an agreement for sale of the rights under the building manager agreement and transfer of the functions (b) a resolution of a general meeting of the owners corporation approving the transfer (see Form 34 (¶19-034)), and

(c) a Deed of Assignment of the building manager agreement and associated functions. The owners corporation should be a party to that Deed so as to ensure that the incoming building manager adopts any covenants on the part of the building manager in the building manager agreement. This can be a requirement of the approval resolution. Law: Management Act, s 69.

¶7-007 Supervision Building manager agreements usually contain specific duties which must be performed by the building manager. These duties are often expressed in general terms, followed by very specific duties. Sometimes the specific duties are categorised into those which must be performed daily, those to be performed weekly and those to be performed monthly. It is important for a strata committee to have in place a process to monitor the performance of duties by the building manager. This can be as simple as a check list, or a spread sheet which records details of the various duties and how they are being performed at various points in time. It is suggested that the strata committee should appoint a representative to deal with the building manager (see Form 35 (¶19035)) and for that representative to meet with the manager on a regular basis to review the duties and the overall performance of the manager.

¶7-008 Termination The appointment of a building manager may be terminated in accordance with the terms of the building manager agreement. However, the termination must first be authorised by a resolution of a general meeting of the owners corporation (see Form 36 (¶19-036)). Any process set out in the building manager agreement (eg a notice to remedy) must be carefully observed to protect the owners corporation against liability for breach of the agreement.

Law: Management Act, s 68(3).

MAINTENANCE OF COMMON PROPERTY ¶8-001 Statutory duty It is common for owners corporations, their strata committees and strata managing agents to focus on accounting and administrative functions. Often, the fundamental obligations of the owners corporation and the very reason for its existence is neglected — the maintenance of the building(s) and other property which comprise the strata scheme. From a governance perspective, this is without a doubt the most important function of an owners corporation. This is the core duty of the owners corporation — to “properly maintain and keep in a state of good and serviceable repair the common property and any personal property” vested in it. This includes an obligation to replace any fixtures and fittings comprised in the common property or personal property. In order to ensure that this obligation is not absolute, thus leading to the maintenance and renewal of property which has reached the end of its useful life, the owners corporation is entitled to pass a special resolution (see Form 37 (¶19-037)) and determine that: (a) it is inappropriate to maintain, renew, replace or repair property, and (b) its decision will not affect the safety of any building, structure or common property within the scheme or detract from the appearance of any property in the scheme. In a practical sense, this means that the property can only be left in its current condition if the special resolution is passed and if the safety and appearance requirements are satisfied. If it would be unsafe to not maintain something, then it would be beyond the owners

corporation’s ability to excuse itself from that maintenance responsibility. The following should be noted in relation to these obligations of the owners corporation: 1. If there are no safety issues, the obligation can be deferred if the owners corporation is taking action against an owner or other person in respect of damage to common property. The deferral can extend to the completion of the action. 2. The obligations are subject to the provisions of any: (a) common property memorandum adopted by the by-laws (as to which see ¶11-010) (b) common property rights by-laws for the scheme (as to which see ¶11-009), and (c) any by-law authorising changes to the common property (as to which see ¶11-009). 3. Any duty or right of the owners corporation under any other bylaw is not affected by the obligations. 4. If an owner suffers damages for breach of the obligations it may sue (within two years of becoming aware of the loss) the owners corporation to recover any reasonably foreseeable loss suffered. The cause of action is for damages for breach of statutory duty. Law: Management Act, s 106.

¶8-002 Identifying common property Common property “Common property” is defined in the Development Act in relation to a strata scheme or a proposed strata scheme as “any part of a parcel that is not comprised in a lot (including any common infrastructure that is not part of a lot)”.

Common infrastructure In turn, “common infrastructure” is defined to mean: “(a) the cubic space occupied by a vertical structural member of a building, other than a wall; or (b) the pipes, wires, cables or ducts that are not for the exclusive benefit of one lot and are: (i) in a building in relation to which a plan for registration as a strata plan was lodged with the Registrar-General before 1 March 1986, or (ii) otherwise — in a building or in a part of a parcel that is not a building, or (c) the cubic space enclosed by a structure enclosing pipes, wires, cables or ducts referred to in paragraph (b).” The date 1 March 1986 marks the day on which the Strata Titles (Development Schemes) Amendment Act 1985 commenced. That Act introduced staged development which involved the definition of lots which were unrelated to a building, but which may have pipes, wires, cables or ducts running through them. Hence, the distinction between a “building” in sub-paragraph (i) and a “building or … parcel” in subparagraph (ii). In simple terms, “common infrastructure” includes structural columns and other non-wall structures, as well as pipes, wires, cables and ducts, including their enclosing structures, which pass through the building or parcel and which service more than one lot. Lot Because common property is everything not included in a lot, the starting point must be to determine what comprises the lots. The Development Act defines a lot as meaning “one or more cubic spaces shown as a lot on a floor plan relating to the scheme, but does not include any common infrastructure, unless the common infrastructure is described on the plan, in the way prescribed by the regulations, as a

part of the lot”. That definition is not particularly helpful, except to the extent that it highlights the importance of the strata plan in accurately determining what comprises the lots and the common property. Section 6 of the Development Act is more helpful in that it provides that the boundaries of a lot are either: (a) the default boundaries, determined in accordance with the section, or (b) the boundaries determined with reference to the strata plan (having being defined on the plan in accordance with the regulations). The default boundaries specified by the Development Act are: (i) for a vertical boundary in which the base of a wall corresponds with a base line (ie an unbroken, usually heavy black line) shown on the floor plan — the inner surface of the wall, and (ii) for a horizontal boundary in which a floor or ceiling joins a vertical boundary of the lot — the upper surface of the floor or the under surface of the ceiling. In non-technical terms, the default boundaries of the lot are the inner surfaces of the external walls, floors and ceilings of the lot or part lot as ascertained with reference to the floor plan on the strata plan. The alternate (defined) boundaries are those described in the prescribed way on the floor plan relating to the lot by reference to a floor, wall or ceiling in a building to which the plan relates or to common infrastructure within the building. These descriptions are effectively notes made on the plan by the surveyor which indicate where the boundaries are with reference to identified floors, walls or ceilings. Having ascertained the boundaries it is important to remember to exclude common infrastructure, unless that common infrastructure has (by appropriate notation on the plan) been excluded from the common

property. Law: Development Act, s 4, 6.

¶8-003 Strategic planning The maintenance and preservation of the common property and personal property belonging to the owners corporation is so fundamental that it warrants a strategic approach to the task. Although not required by the law, this should take the form of a strategic plan for the building. Such a plan needs to have a close relationship to the 10year capital works fund plan (as to which see ¶9-007). The building manager or strata managing agent is the logical person to prepare the strategic plan, but this will depend upon their skills and product offering. Where there is no building manager and the strata managing agent is unable to prepare the strategic plan the owners corporation will need to engage a specialist engineering or building maintenance firm. A draft strategic plan would normally be presented for consideration by the strata committee. It would then be finalised and formally adopted by the committee. In the case of larger and more complex schemes a sub-committee of the strata committee may be formed to develop the strategic plan in consultation with the building manager and relevant consultants. It is not necessary for a strategic plan to be approved or endorsed by a general meeting, although some strata committees may prefer that approach. The strategic plan should also cover annual compliance matters, such as fire safety, backflow devices, pool fencing, etc. Once completed, the strategic plan feeds into the budgeting process and each year work is scheduled in accordance with the plan. To take account of unanticipated maintenance issues, the strategic plan should be kept under regular review — at least every three years. Implementation of the strategic plan to appropriate standards is critical to successful building maintenance. The standards prescribed by Australian Building Management Accreditation (ABMA) are recommended. That body maintains the ABMA Building Management Code, which prescribes standards for all aspects of building maintenance. It also

offers courses for accreditation of both building managers and strata committee members (see www.abma.com.au).

¶8-004 Improving or enhancing common property An owners corporation or the owner of a lot may add to the common property, alter the common property or erect a new structure on the common property for the purpose of improving or enhancing the common property. The starting point is that such work must be authorised by a special resolution. However, an owner may carry out such work without the approval of a special resolution if authorised to do so: (a) by Pt 6 of the Management Act (b) under a by-law made under Pt 6 (c) under a common property rights by-law, or (d) in any other manner authorised by the by-laws. The Management Act classifies work on common property into three categories: • changes • cosmetic works • minor renovations. Each of these will be separately considered. Changes to common property A change to common property involves an alteration to, or the erection of, a new structure on common property for the purpose of improving or enhancing the common property. This type of work must be authorised by a special resolution. The special resolution may specify whether the owners corporation or the lot owner making the changes is to be responsible for the ongoing maintenance of the changes. In

the absence of any such provision, the owners corporation is taken to be responsible. If the special resolution specifies that the lot owner is to be responsible for the ongoing maintenance of the changes, that obligation has no effect unless: (a) the owners corporation obtains the written consent of the owner to the making of a by-law to provide for such maintenance, and (b) the by-law is made. The by-law may require the owner to pay money to the owners corporation for the maintenance of the common property. That can take the form of a separate “levy” on the owner to cover the maintenance costs. The by-law cannot be amended without the written consent of the owner. Form 38 (see ¶19-038) is a motion for such a special resolution and Form 39 (see ¶19-039) is an example of a by-law. Cosmetic work by owners An owner of a lot may carry out cosmetic work to common property without the approval of the owners corporation, notwithstanding the general prohibition in the Management Act. In so doing they must carry out the works in a competent and proper manner and repair any damage they cause in carrying out the works. Cosmetic work is defined to include (but not limited to) work for the following purposes: (a) installing or replacing hooks, nails or screws for hanging paintings or other things on walls (b) installing or replacing hand rails (c) painting (d) filling minor holes and cracks in internal walls (e) laying carpet

(f) installing or replacing built-in wardrobes (g) installing or replacing internal blinds and curtains, and (h) any other work prescribed by the regulations (although at this stage no such work has been prescribed). The scheme’s by-laws may also specify other work as being regarded as cosmetic work. This right for an owner to undertake cosmetic work in relation to the common property does not apply to work involving: (a) minor renovations (which are dealt with later in this paragraph) (b) structural changes (c) changes to the external appearance of a lot, including the installation of an external access ramp (d) work that detrimentally affects the safety of a lot or common property, including fire safety systems (e) waterproofing, plumbing or building exhaust systems (f) reconfiguring of walls (g) consent or another approval under an Act, and (h) something prescribed by the regulations (although at this stage no such work has been prescribed). Minor renovations A lot owner may (notwithstanding the general prohibition in the Management Act) carry out work involving minor renovations to the common property. The renovations must be approved by a resolution of a general meeting (a special resolution being unnecessary) or by a resolution of the strata committee if the approval function is delegated to the committee by a by-law. The approval may be subject to

reasonable conditions and cannot be unreasonably withheld by the owners corporation. The lot owner must carry out the works in a competent and proper manner and repair any damage they cause in carrying out the works. Minor renovations are defined to include (but are not limited to) work for the following purposes: (a) renovating a kitchen (b) changing recessed light fittings (c) installing or replacing wood or other hard floors (d) installing or replacing wiring or cabling or power or access points (e) reconfiguring walls, and (f) something prescribed by the regulations, the currently prescribed work being: (i) removing carpet or other soft floor coverings to expose underlying wooden or other hard floors (ii) installing a rain water tank (iii) installing a clothesline (iv) installing a reverse cycle split system air conditioner (v) installing double or triple glazed windows (vi) installing a heat pump, and (vii) installing ceiling insulation. The scheme’s by-laws may specify other work as being regarded as minor renovations and may even delegate the approval function to the strata committee. Before obtaining owners corporation approval, the lot owner must give

written notice of the proposed minor renovations to the owners corporation, including the following: (a) details of the work, including copies of any plans (b) duration and times of the work (c) details of the persons carrying out the work, including qualifications to carry out the work, and (d) arrangements to manage any resulting rubbish or debris. The right for an owner to undertake minor renovations in relation to the common property does not include work involving: (a) cosmetic work (which is dealt with separately — see above) (b) structural changes (c) changes to the external appearance of a lot, including the installation of an external access ramp (d) work involving waterproofing (e) work for which a consent or other approval is required by any other Act (f) work that is authorised by a by-law made to allow changes to common property or a common property rights by-law, and (g) work prescribed by the regulations (although at this stage no such work has been prescribed). Form 40 (see ¶19-040) is a general meeting resolution approving minor renovations and Form 41 (see ¶19-041) is a resolution of a strata committee for the same purpose. Law: Management Act, s 108, 109, 110, 111.

¶8-005 Building defects

Unlike earlier strata legislation, the Management Act attempts to address the problem of building defects, a problem which has become more serious in the past 20 years. Part 11 of the Management Act is devoted entirely to building defects. Application of Pt 11 Part 11 of the Management Act has limited application. Before it applies, the “building work” must: (a) relate to a building, or part of a building, that is part of the parcel of a strata scheme (b) be either: (i) residential building work, or (ii) work carried out on a building, or part of a building, used for mixed use purposes that includes residential use, (c) have been carried out for the purposes of, or contemporaneously with, the registration of either: (i) a strata plan, or (ii) a strata plan of subdivision of a development lot, (d) not have been: (i) subject to the requirement to obtain insurance under the Home Building Compensation Fund, or (ii) subject to that requirement only because the contract price does not exceed the amount referred to in s 92(3) of the Home Building Act 1989 (“Home Building Act”), and (e) not be work prescribed by the Strata Management Regulations as building work to which the Part does not apply. The Home Building Act only applies to residential building work — hence some of the restrictions in relation to Pt 11 of the Management Act. The Home Building Act requires a person who undertakes

residential building work to effect a contract of insurance that complies with the Act, unless the value of the building work exceeds the amount prescribed by the regulations under the Act. That amount is currently $20,000. The contract of insurance provides protection against defective building work and certain other risks. Obligations of the developer If the initial period ends within 12 months after completion of the building work, the developer must (at their expense) within that period: (a) appoint a qualified person as a building inspector to inspect and report on the building work, and (b) give the secretary (ie the Commissioner for Fair Trading or the Secretary of the Department of Finance, Services and Innovation) notice of the appointment within 14 days of making it. If the developer fails to make the appointment within the 12-month period they must give the secretary notice of that fact within 21 days of the end of the period. The secretary will then proceed in accordance with s 196 of the Management Act to appoint a building inspector to carry out the inspection and provide a report. If the initial period does not end within the 12-month period, then the developer must give the secretary notice of that fact within 21 days of the end of that period. The building inspector must not be “connected with the developer” and s 197 of the Management Act spells out what constitutes a “connection” within or prior to a two-year period before the appointment. Approval of building inspector The owners corporation must approve the building inspector by a resolution of a general meeting. It may refuse that approval on any grounds. It must give written notice of its decision (whether to approve or not) to both the secretary and the developer within 14 days of making the decision. See Form 42 (¶19-042) for a resolution approving a building inspector. Where a building inspector has been engaged as an employee of, or

contractor to, the developer at any time within two years prior to their appointment, both the developer and the building inspector must give the owners corporation notice of that engagement to the owners corporation before it determines whether or not to approve the building inspector. Failure to do that is an offence. Obligations of the building inspector A building inspector for the purpose of Pt 11 does not represent the developer and must act impartially in carrying out their functions. A condition of the inspector’s appointment cannot conflict with that duty. Furthermore, the inspector is prohibited from accepting, or agreeing to accept, any benefit for not acting impartially — this again being an offence. The offering of any such benefit by any person is also an offence. The role of the building inspector is to carry out both an initial and final inspection of the building work and provide: (a) an interim report within 15 to 18 months after completion of the work, and (b) a final report within 21 months to two years after completion of the work. The purpose of these reports is to identify any defective building work, either in the original construction or in subsequent efforts to rectify earlier defects. The report is used for the purpose of supporting a claim under the Home Building Act, the initial outcome of which will usually be a requirement for the builder or relevant sub-contractor to rectify the defective work. Law: Management Act, s 189–206.

¶8-006 Building bonds The developer must give the secretary a building bond for building work to which Pt 11 of the Management Act applies. The amount of the bond is 2% of the contract price for the building work or that part of the building work required to be bonded. The bond lasts until any

defective work identified in the final report of the building inspector has been rectified. Failure to provide the bond is an offence. Whole or part of the bond can be claimed by the owners corporation to meet the costs of: (a) rectifying defective building work, or (b) something associated with that rectification. After the building defects have been rectified any amount of the bond remaining is refunded to the developer. Law: Management Act, s 207–211.

¶8-007 Tendering and contracting Except in the case of large strata schemes, there is no requirement in the Management Act for an owners corporation to go to tender or obtain multiple quotations to acquire goods and services. A “large strata scheme” is defined as one comprising more than 100 lots, or another number prescribed by the Management Regulation. To date no other number has been prescribed. An owners corporation for a large strata scheme must obtain two quotations for any proposed expenditure on any one item or matter if the proposed expenditure exceeds a prescribed amount, currently $30,000.00. However, if an item or matter has been budgeted for in the budget adopted by the annual general meeting, the owners corporation may expend money on that item or matter without further approval, provided the amount spent does not exceed the amount budgeted, plus 10%. This limitation can be removed by the owners corporation by resolution passed at a general meeting. The removal can be general, or related to a specific case. See Form 43 (¶19-043). These restrictions in relation to large strata schemes do not apply to expenditure for emergency purposes, including without limitation, for: (a) burst or blocked water or sewerage pipes (b) serious damage caused by fire or storm or any other natural

disaster (c) unexpected electrical or security system failure, and (d) glass breakages affecting security of the building or which could result to damage inside the building. The obligation for large strata schemes to obtain two quotations does not involve any formal tendering process. Also, there is no obligation on any other strata scheme to undertake a tendering process, or to obtain two quotations. Despite this, it would be good practice for all items of significant expenditure in the case of smaller strata schemes to be either tendered or to be the subject of two or more competitive quotations. Contracting for legal services is separately regulated by the Management Act. The starting point is that an owners corporation or strata committee cannot obtain legal services for which any payment may be required unless there is an approval of a general meeting. However, this does not apply if: (a) urgent action is necessary to protect the interests of the owners corporation and the cost of the legal services does not exceed $10,000.00 or other prescribed amount. Interestingly, the Management Regulation at the time of commencement of the Management Act increased the $10,000.00 figure to $15,000.00 (b) the legal advice is obtained before commencing legal action (c) the legal action is being taken to recover unpaid contributions, interest on those contributions or related expenses, or (d) the legal action is prescribed by the Management Regulation. The regulations allow an owners corporation or strata committee to obtain non-urgent legal services if the costs do not exceed $3,000.00. In all cases, the contract itself should be with the owners corporation and not with the committee or individual lot owners.

Law: Management Act, s 102, 103. Management Regulation, reg 26.

¶8-008 Access to lots Because common property is often situated within a lot, or can only be accessed through a lot, an owners corporation may from time to time require access to the lot to undertake repairs and maintenance to, or to inspect the condition of, the common property. Therefore, the owners corporation may, by its agents, employees and contractors, enter on any part of the parcel for the scheme for the purpose of carrying out the following work: (a) work required or authorised to be carried out by the Management Act, including: (i) work relating to window safety devices, and (ii) building defect rectification work, (b) work required to be carried out by a notice from a public authority, and (c) work required or authorised to be carried out by an order under the Management Act. In addition, an owners corporation may, by its agents, employees and contractors, enter any part of the parcel to determine if any work is required to be carried out by it in accordance with the Management Act. The following should be noted about the above powers: • If an emergency is involved the owners corporation can enter at any time and without prior notice or authority. • If no emergency is involved the owners corporation needs the consent of the occupier of the relevant part of the parcel (eg the occupier of a unit).

• If the occupier does not give consent, the owners corporation has to seek an order of the Tribunal to obtain access. The application and order are made under s 124 of the Management Act. • Any person who obstructs or hinders an owners corporation exercising the above powers commits an offence and can be prosecuted. • If in obtaining access or undertaking work the owners corporation causes damage to a lot or its contents, it is liable for that damage unless it was caused because it was being obstructed or hindered. Rights of access are also provided for certain persons for fire safety purposes. The person must be authorised under the Environmental Planning and Assessment Act 1979 to carry out inspections of buildings, or premises that is part of a strata scheme, for purposes relating to fire safety. Such persons may give written notice to an owners corporation requiring access to be provided within a period or at a time specified in the notice. Access may be required to the common property or to some or all of the lots in the scheme. If the owners corporation does not comply with the notice it commits an offence and may be prosecuted. However, it is a defence to the prosecution if the owners corporation establishes that the owner or occupier of the lot refused to allow access or could not be contacted by the owners corporation. As an alternative to a court prosecution for this particular offence, a penalty notice can be issued against the body corporate (see ¶18-011). At the time of publication, the penalty imposed by the notice was $1,100.00. For most of the above purposes, applications to the Tribunal for access orders are made under s 124 of the Management Act, although matters relating to defective building work are usually the subject of applications and orders made under s 211 of that Act. Law: Management Act, s 122–124, 211. Management Regulation, reg 65, Sch 5.

¶8-009 Managing risks There is a wide range of risks associated with the management of a strata or community scheme and its owners corporation. These risks need to be managed by the strata managing agent and the strata committee. In most schemes they include: • fire safety • workplace health and safety • public liability/insurance risks • security • swimming pool safety • window restriction compliance • breach of statutory duty. Each of these will be dealt with briefly. Fire safety This involves the maintenance of fire safety installations (such as sprinkler systems, fire extinguishers, smoke alarms, fire hydrants and fire hoses and exit signage). It also involves such things as keeping evacuation routes clear, having a fire and evacuation plan, displaying evacuation diagrams, conducting regular evacuation practices under the supervision of a co-ordinator and keeping of prescribed records. Compliance involves the engagement of a consultant to provide inspections and reports and to assist in meeting regulatory requirements. Workplace health and safety This involves ensuring that the common property, as a workplace, is safe for workers and contractors. Again this is usually achieved by periodic inspections of the common property to identify risk and advise on appropriate solutions. In the case of major works, a separate risk

assessment prior to commencement of the works may be desirable. Public liability/insurance risks The owners corporation owes a duty of care to everyone using common property to ensure that there are no identifiable risks which are likely to cause injury to person or damage to property. Again, this is usually achieved by periodic inspections of the common property to identify risk and advise on appropriate solutions. Failure to take reasonable precautions may expose the owners corporation to a higher risk of legal liability and may even invalidate or limit the owners corporation public liability insurance cover. Security This involves the keeping of residents and visitors, as well as their property, safe while on the scheme land. It assumes that an owners corporation which is aware of obvious safety risks and which fails to address them may incur a liability to a resident or visitor who is assaulted or otherwise injured or whose property is damaged. Again, this is an inspection process, along with an examination of any security measures to determine their effectiveness. In some areas or situations, the risk may be higher, either generally, or at a particular time. Swimming pool safety This is similar to the general public liability risk and mainly concerns the swimming pool rules and the effective operation of pool gates and pool safety equipment, including the display of resuscitation notices. Again, periodic inspections are the usual way in which compliance is assured. Window restriction compliance Certain windows in some strata buildings are required by law to have window safety devices installed to prevent children accidentally falling from the windows. The device can be a screen, lock or other complying window safety device but the important thing to note is that these devices are the responsibility of the owners corporation. The owners corporation should not only ensure that they are installed, but it should conduct routine inspections to ensure they are not removed

and that the devices are operating correctly. Appropriate records of the outcome of these inspections should be kept. Breach of statutory duty The owners corporation is under a statutory duty to properly maintain and keep in a state of good and serviceable repair the common property and any personal property vested in it (such as pool or other furniture). A failure to comply with this duty may result in the incurring of a liability by the owners corporation. For example, if a poolside chair is in disrepair and the owners corporation fails to have it repaired, an owner who is injured when the chair collapses may have a claim for damages against the owners corporation. Again, the solution is regular inspections and monitoring, combined with a strategic maintenance plan (see ¶8-003). Law: Management Act, s 106.

¶8-010 Maintenance of parts of lots Generally speaking, anything that is within a lot is part of the lot. The exception is “common infrastructure”, which is defined as: (a) the cubic space occupied by a vertical structural member of a building, other than a wall (b) the pipes, wires, cables and ducts that are not for the exclusive benefit of one lot and are: (i) in a building in relation to which a plan for registration of a strata plan was lodged with the Registrar General before 1 March 1986, or (ii) otherwise — in a building or in a part of a parcel that is not a building (ie the “building” does not contain a lot), or (c) the cubic space enclosed by a structure enclosing pipes, wires, cables or ducts referred to in paragraph (b). However, it is possible for the registered plan to describe common

infrastructure as being included within the lot. In that event, the common infrastructure is part of the lot and is not common property. So, to summarise in general terms, any service infrastructure of the type mentioned in the definition and any duct enclosing that service infrastructure, which is located within a lot and which serves more than one lot, is part of the common property unless the plan makes it part of the lot. By way of example, if a pipe bursts, then one must determine whether the pipe is part of the lot (and the responsibility of the owner) or common infrastructure (and the responsibility of the owners corporation). The following chart illustrates the process:

A similar process can be applied to other items of common infrastructure. Law: Development Act, s 4(1).

FINANCES ¶9-001 General arrangements Owners corporations need funds to operate and to discharge their statutory obligations. In this regard they are dependent on their members (ie lot owners) for funding. They obtain funds by raising contributions on lot owners. The process for determining and levying these contributions is specified in detail in the Management Act and the way in which funds are expended is also regulated by that Act. This chapter will examine the processes for determining, levying and recovering contributions and the law relating to the expenditure and accounting for funds. Law: Management Act, Pt 5.

¶9-002 Administrative fund An owners corporation must have an administrative fund, into which it must pay the following: (a) contributions to that fund levied on and paid by lot owners (b) the proceeds of sale of any personal property (c) fees for inspection of records, and the provision of information and certificates (d) monetary penalties payable to the owners corporation, and (e) proceeds of any investment of the fund (ie interest). In addition, it may pay the following into the administrative fund: (f) proceeds of insurance claims (g) income (other than interest on investment of the capital works

fund), and (h) any other amount which may but is not required to be paid into the fund. Payments from the fund may be for the following: (i) payments of the kind for which estimates have been made (ie payments provided for in the annual budget) (j) distribution of surplus funds to lot owners (k) payments to a member of the strata committee (l) other payments in connection with the exercise of its powers (including functions under the Development Act), but excluding payments permitted from the capital works fund (m) monetary penalties payable by the owners corporation, and (n) to transfer money to the capital works fund or to pay expenditure that should have been paid from that fund. Therefore, in general terms, the administrative fund is intended for the payment of the day-to-day (non-capital) operating expenses of the owners corporation. Law: Management Act, s 73.

¶9-003 Capital works fund An owners corporation must have a capital works fund, into which it must pay the following: (i) contributions to that fund levied on and paid by lot owners (ii) the proceeds of insurance claims, unless paid into the administrative fund (iii) moneys paid in settlement of building defects claims

(iv) moneys received which are not required or permitted to be paid into the administrative fund, and (v) proceeds of any investment of the fund (ie interest). In addition, it may pay the following into the capital works fund: (vi) any income of the owners corporation, and (vii) any other amount which may but is not required to be paid into the fund. Payments from the fund may be for the following: (viii) payments of the kind for which estimates have been made (ie payments provided for in the annual budget) (ix) distribution of surplus funds to lot owners (x) payments of amounts relating to building defects, and (xi) to transfer money to the administrative fund or to pay expenditure that should have been paid from that fund. It will be noted that there is a high degree of similarity between the two funds in relation to what can be paid into and out of them. This is in contrast with previous legislation which tended to require strict separation of the two funds and their income and expenditure. Finally, it should be noted that strata schemes comprising two lots need not establish a capital works fund if: (i) the owners corporation so determines by unanimous resolution (ii) the buildings on the two lots are physically detached from each other, and (iii) no building or part of a building is situated outside those lots. Law: Management Act, s 74.

¶9-004 Investments and “other funds” The Management Act only makes provision for the administrative fund and the capital works fund. However, it does recognise “other funds”. Also, an owners corporation may have a number of financial institution accounts, because the Act does allow for investment of surplus money in either of those funds. This effectively results in a further account (or fund) — an investment account (or fund). However, the money invested remains part of the fund from which it was taken and should be accounted for as part of that fund. Circumstances may arise where an owners corporation needs to “allocate” certain funds for a specific purpose. Take for example, an owners corporation that has a floating marina attached to its scheme, where the marina berths are allocated to some (but not all) lot owners on the basis that those lot owners with marina rights bear all expenses associated with the marina. The owners corporation will need to treat all income and expenditure associated with the marina separate to all other income and expenditure of the scheme. To do this it may decide to establish a separate fund called, say, the “Marina Fund”. This is commonly referred to as a “sub-fund” because the money and the sub-fund itself remain part of the administrative fund. If the owners corporation is levying marina berth owners for future capital expenses associated with the marina, then those funds become a sub-fund to the capital works fund. In the marina example, as an alternative to having a separate bank account, the money may be kept in the bank account for the main fund (administrative or capital works) and separate ledger records kept to “track” the income and expenditure associated with the marina. These types of sub-funds usually involve a separate budget and a separate contribution levy. They are also accounted for separately from a profit and loss perspective but they appear on the balance sheet as part of the fund that they form part of (see reporting requirements in ¶9-017). Surplus funds in either the administrative fund or capital works fund may be invested in any manner permitted by law for the investment of

trust funds (which, in a practical sense, means they are restricted to deposits with authorised deposit-taking institutions). The Management Regulation may authorise other forms of investment, but at this stage no such authorisation has issued. Interest received on invested funds form part of the fund from which the invested money came. Law: Management Act, s 73, 74, 75.

¶9-005 Banking arrangements An owners corporation must keep its money in an account in the name of the owners corporation established in an authorised deposit-taking institution, unless: (a) that money has been invested in a way permitted for trustee investments, or (b) the owners corporation has appointed a strata managing agent who has been delegated the duty relating to the keeping of moneys. In the event of a delegation to a strata managing agent, the money will be kept in a trust account regulated under the Agency Act. Law: Management Act, s 78.

¶9-006 Estimates budgeting It has been seen from ¶9-002 and ¶9-003 that one of the categories of authorised expenditure from both the administrative fund and the capital works fund is “payments of the kind for which estimates have been made”. These estimates are effectively the annual budgeting process. In the case of new schemes, the estimates (or budget) must be adopted not later than 14 days after the constitution of the owners corporation. After that the owners corporation must adopt a budget every year at its annual general meeting. In the case of the first budget, it will usually be prepared by the original owner and adopted

at an inaugural general meeting of the owners corporation (ie a general meeting held prior to the first annual general meeting). This first budget must take into account the initial maintenance schedule to be provided by the original owner for the first annual general meeting of the owners corporation. Given that the first annual general meeting is likely to be held well after the 14 days allowed for the adoption of the budget, this effectively means that the original owner needs to prepare the maintenance schedule prior to the constitution of the owners corporation. Subsequent budgets will be prepared by the strata committee and submitted to the annual general meeting for adoption. However, in all cases a strata managing agent will usually be involved in the actual preparation of the budget for consideration by the original owner or strata committee. The budget to the administrative fund must estimate how much money needs to be credited to the fund for actual and expected expenditure to: (a) maintain in good condition on a day-to-day basis the common property and any personal property vested in the owners corporation (b) provide for insurance premiums, and (c) meet other recurrent expenses (such as electricity, local government charges and garbage removal). See Form 44 (¶19-044) for an administrative fund budget. The budget to the capital works fund must estimate how much money needs to be credited to the fund for actual and expected expenditure: (a) for painting or repainting any part of the common property which is a building or other structure (b) to acquire personal property (c) to renew or replace personal property

(d) to renew or replace fixtures and fittings that are part of the common property (e) to replace or repair common property, and (f) to meet other expenses of a capital nature (such as the installation of a camera security system on the common property or to install high speed internet connections to lots). See Form 45 (¶19-045) for a capital works fund budget. For both funds the estimates must take into account a statement of existing financial situation of the strata scheme and an estimate of receipts and payments. Both of these documents need to be before the committee when it decides on the estimates to be recommended, as well as the annual general meeting which is being asked to adopt the estimates. In addition, the budget for the capital works fund must take into account “anticipated major expenditure identified in the 10 year plan for capital works fund” (ie the “capital works plan” discussed in ¶9-007). A large strata scheme must also include in the capital works plan estimates: (a) specific amounts (in relation to each item or matter appearing in the reserves study) on which it intends to spend money or on which it is aware money will likely be spent in the next year (b) a note as to any difference between the estimates and the capital works plan, and (c) the reasons for the difference. The effect of this large scheme requirement is to require the capital works fund budget to take into account the estimates in the capital works plan and provide comparative figures as to what expenditure the capital works plan anticipates, what expenditure the budget proposes, what is the difference between the two and what the reasons are for that difference. These large scheme requirements are in s 79(6) of the Management Act, which has not been well drafted. The drafting reflects a lack of understanding as to how capital works

plans (or reserve fund studies) relate to the budgeting process, but the intention of the provision is reasonably clear. The intention is to introduce a degree of accountability where an owners corporation departs from the expenditure anticipated by the capital works plan. To achieve that intention, it is recommended that the capital works budget adopts the line items in the capital works plan with different columns setting out the comparative figures required by the subsection. The reasons for variation can then be set out in footnotes (or side notes) to the relevant figures. See Form 46 (¶19-046) for a capital works fund budget which adopts that recommend practice and which uses the capital works plan referred to in ¶9-007 and which appears in Form 47 (see ¶19-047). Circumstances may exist where the capital works plan is not available in time to be taken into account when preparing the capital works fund budget estimates. This would be because of a delay in the actual adoption of the plan (which can be up to 12 months) and the requirement in s 81(2) of the Management Act that the levies must be determined “at the same meeting at which those estimated amounts are determined”. Clearly, in those circumstances the budget could not be delayed until the capital works plan has been finalised and the budget would need to be determined without the aid of that plan. Law: Management Act, s 79, 81(2).

¶9-007 Capital works plan Starting from the first annual general meeting, an owners corporation must prepare a plan of anticipated major expenditure (“capital works plan”) to be met from the capital works fund for a 10-year period (see Form 47 (¶19-047)). The capital works plan may be adopted at that meeting, although the obligation is merely to finalise the plan by the end of the next annual general meeting (ie the second annual general meeting). This allows for the first meeting to require changes to the plan and for those changes to be made and the plan readied for adoption at the second meeting. See Form 48 (¶19-048) for a resolution adopting a capital works plan.

A similar capital works plan must be prepared for each subsequent 10-year period, to be ready for consideration at the annual general meeting at which the period covered by the previous plan expires. However, the owners corporation has until the subsequent annual general meeting to finalise (ie adopt) the plan. Again, this allows the first meeting to require changes to the plan and for those changes to be made and the plan readied for adoption at the subsequent meeting. The owners corporation can engage expert assistance in the preparation of a capital works plan. A capital works plan must be reviewed by a general meeting at least once every five years and the review should be reflected in a resolution of the meeting (see Form 49 (¶19-049) for a review resolution where no changes are required). In addition, the owners corporation may at any time by resolution of a general meeting review, revise or replace the capital works plan. If a plan is replaced during its 10-year period (eg after say the first three years), this does not remove the need for a new plan to be adopted at the end of the original 10-year cycle (eg after the replacement plan in the above example has been in effect for seven years). A capital works plan must include: (a) details of proposed work or maintenance (b) the timing and anticipated costs of any proposed work (c) the source of funding for any proposed work (d) any other matter the owners corporation thinks fit, and (e) any other matter prescribed by the Management Regulation (although no matter had been prescribed at the time of publication). The inclusion of item (c) is interesting in that it effectively recognises that lot owner contributions are not the only way in which capital works can be funded and that the funding may be by way of borrowings. Another significant inclusion is a requirement for an owners

corporation, so far as practicable, to implement each capital works plan (as may be adjusted by a general meeting). A lack of funds would not be sufficient to make implementation impractical, because the very purpose of the capital works plan is to ensure that there are adequate funds available to undertake the work when it is required to be undertaken under the plan. An example of impracticable implementation may be a postponement of the painting of the building pending the repair of unanticipated concrete cancer problems. Law: Management Act, s 80.

¶9-008 Contributions Determination The owners corporation must use the estimates in the budget to determine the amounts to be levied as a contribution to the administrative fund and capital works fund. This determination must be made at the same meeting at which the budget estimates are determined. This means that the adoption of the budget and determination of the amounts to be levied as contributions must both occur at the same meeting. The determination is made by a resolution of the general meeting. Having made the determination, the owners corporation must then levy the contribution on each person liable to pay it. The levy is effected by serving a notice on the person liable to pay it. The contribution may be made payable by regular periodic instalments provided the decision to allow instalments is included in the determination setting the amount of the contributions. The following chart illustrates the process for determining and levying contributions.

From the wording of s 81 of the Management Act it is not entirely clear whether the resolution determining the contributions can determine them as single annual sums to each fund, or whether the resolution needs to set out the dollar amounts payable by each lot owner in respect of each fund. The former is the most likely interpretation because the difference in wording between s 81(1), which refers to amounts to be levied to the fund rather than being levied on the individual lots, and s 83(2), which specifically refers to “each lot”, is clearly supportive of that interpretation. However, it is suggested that the resolution be carefully worded to ensure that it is perfectly clear as to the application of the determination to the individual lots by referring to the rate per unit entitlement — as to which see the suggested resolution in Form 50 (¶19-050). If the owners corporation finds during the course of a levy year that it is unable to meet a required expenditure from either fund it must impose a special levy by resolution of a general meeting to ensure it is able to meet the expenditure.

Levy The contribution is levied when the owners corporation serves a written notice on the lot owner advising of the contribution payable. The contribution is due and payable on the date set out in the notice, which must be at least 30 days after the notice is given. Form 51 (see ¶19-051) is an example of a notice levying contributions where a 10% discount has been allowed, although computer-generated notices usually include information regarding arrears and penalties. Form 52 (¶19-052) is the same notice levying contributions, but where no 10% discount has been allowed. A further notice is not required to be given in respect of each subsequent instalment, although it is good practice to give such notice to minimise the risk of an owner overlooking the instalment. If the notice is to be served by mail it is recommended that it is posted at least 37 days before the contribution is due and payable to allow for Australia Post’s delivery commitments. Form 53 (¶19-053) is an example of an instalment reminder notice where a discount applies. The form can be easily modified where no discount applies. Sometimes it may be necessary to impose contributions otherwise than in accordance with unit entitlements. There are two circumstances when this will be the case: • Where the particular use of a lot in the scheme causes an insurance premium to be greater than it would be in the absence of that use and the owner has agreed to (or the Tribunal ordered) a differential levy. • Where a court has ordered that money payable by an owners corporation (including costs) to an owner or group of owners must be paid from contributions levied only in relation to the lots and in the proportions specified in the order. In those cases the wording of the resolution determining the contribution will need to be varied to meet the circumstances. Law: Management Act, s 82, 83, 90.

¶9-009 Interest, discounts and payment plans

As an incentive for owners to pay their contributions before their due date, an owners corporation may by resolution of a general meeting determine (either generally or in a particular case) that a discount of 10% be allowed if the contribution is paid before its due date. If a discount is to be allowed the budget estimate should be adjusted to allow for the likely impact of these discounts. The resolution in Form 50 (see ¶19-050) makes provision for the 10% discount. Unless an owners corporation determines that no interest is payable on overdue contributions, they bear simple interest at an annual rate of 10% if it is not paid within one month of becoming due and payable. However, the regulations may prescribe another rate, in which event that other rate applies. At this stage no other rate has been prescribed. Once the one-month grace period expires the interest is calculated from the due date. The owners corporation can also decide that, in a particular case, no interest is payable. If the owners corporation unreasonably refuses to exercise its discretion not to charge interest in a particular case, the Tribunal may make an order that no interest is chargeable on a specified contribution. The decision not to charge interest can be made by the strata committee. If a lot owner falls into arrears with their contributions, as an alternative to issuing recovery proceedings against them, the owners corporation may by resolution of a general meeting agree to enter into a payment plan. The resolution may authorise a payment plan for a particular case, or generally. See Form 54 (¶19-054) for a resolution authorising entry into payment plans generally. A payment plan must be limited to a period of 12 months, although there is nothing to prevent the owners corporation passing a general meeting resolution to authorise entry into a further payment plan. The regulations require payment plans to be in writing and to contain the following: (a) the name of the lot owner (b) title details of the lot (c) the address for service of the lot owner (d) the amount of the overdue contributions

(e) the amount of any interest payable for the overdue contributions (f) the way in which interest is calculated (g) the period for which the plan applies (h) the schedule of payments for the amounts owing (i) the manner in which the payments are to be made (j) contact details for a member of the strata committee or a strata managing agent who is to be responsible for any matters arising in relation to the payment plan (k) a statement that a further payment plan may be agreed to by the owners corporation by resolution, and (l) a statement that the existence of the payment plan does not limit any right of the owners corporation to take action to recover the amount of the unpaid contributions (which right is expressly reserved in the Management Act). The strata committee must, at the request of the lot owner who has entered into the payment plan, give the lot owner a written statement for each calendar month (or any longer interval specified by the lot owner) of the plan. That statement must set out the payments made during that month and the amount of unpaid contributions and interest owing. Law: Management Act, s 85. Management Regulation, reg 18.

¶9-010 Recovery of contributions The owner of a lot is the person primarily liable to pay contributions. If another person becomes the owner of the lot while the contributions and interest are outstanding (eg a purchaser), then that person becomes liable, jointly and severally, with the prior owner of the lot. If

a mortgagee or covenant chargee takes possession of a lot, they are jointly and severally liable with the owner of the lot for certain contribution and related expenses. However, the relevant provisions of the Management Act, which are as follows, are not straight forward: “84. Liability of persons other than owners for contributions (1) … (2) A mortgagee or covenant chargee in possession of a lot is jointly and severally liable with the owner of the lot: (a) for any regular periodic contributions to the administrative fund or capital works fund together with any interest on those contributions, and (b) for any other contribution together with interest on that contribution taken to recover unpaid contributions, if the mortgagee or covenant chargee has been given written notice of the levy of the contribution, and (c) for any costs payable as a debtor in respect of enforcement action to recover unpaid contributions. (3) Subsection (2) does not affect the liability of the owner of a lot for any contribution levied under this section.” The following should be noted about that section: • The mortgagee or covenant chargee in possession is clearly liable for regular periodic contributions to the two funds imposed after possession is taken, plus interest on those contributions. • It is not clear whether they are liable for contributions owning at the time they take possession, or only for contributions accruing after they take possession. The wording of paragraph (b) suggests that the latter is the case. • Section 81(4) of the Management Act authorises the raising of special levies in certain circumstances. It is not clear that s 84(2)

includes special levies, raised either before or after possession is taken. • At best, paragraph (b) seems to be limited to special levies and interest to fund recovery action for the already outstanding levies. • It is not clear whether the “notice of the levy of the contribution” has to be the original notice or whether the mortgagee or covenant chargee can be given a later notice of the earlier levy. As a precautionary measure, once a mortgagee or covenant chargee has taken possession of a lot, the owners corporation should, in respect of each outstanding contribution, serve a copy of every contribution notice previously served on the lot owner in respect of those contributions. However, it is important to note that, even where another person becomes liable for a contribution, the owner or former owner still remains liable. Outstanding contributions, interest and recovery expenses may be recovered by an owners corporation from an owner or other person liable by making application to either the Tribunal or to a court of competent jurisdiction (usually the Magistrates Court). However, that action cannot be taken until the contribution has been outstanding for one month after it became due and payable and 21 days’ notice of the intention to take the action was given to the owner or other person. The notice must set out certain information — see Form 55 (¶19-055) for the form of notice. If the Tribunal orders a debt to be paid, a certificate of the debt is filed in a court which would have had jurisdiction to order payment of that amount, whereupon the certificate operates as a judgment and is enforceable in the usual way in that court. These contribution debts also receive special treatment under the Civil Procedure Act 2005 in that the owners corporation has the right to seek a garnishee order against any rent for the lot which is held by a real estate agent on behalf of the lot owner. Law: Management Act, s 84, 86. Civil and Administrative Tribunal Act 2013, s 78.

Civil Procedure Act 2005, s 122A–122E.

¶9-011 Restrictions on spending Except for large strata schemes, there is no general prohibition on spending by either the owners corporation or its strata committee. An owners corporation for a large strata scheme cannot spend in respect of any item more than the amount allowed in the estimates budget (plus an allowance of up to 10%) for that item. However, this prohibition may be removed, either generally or in a particular case, by resolution of a general meeting — see Form 56 (¶19-056). Also, the restriction does not apply to expenditure for emergency purposes, including without limitation to the following: (a) burst or blocked water or sewerage pipes (b) serious damage caused by fire or storm or any other natural disaster (c) unexpected electrical or security system failure, and (d) glass breakages that affect the security of the building or could result in internal damage at the building. Irrespective of the application of the restriction, an owners corporation for a large strata scheme must obtain two quotations for proposed expenditure on any one item or matter if that expenditure will exceed a prescribed amount. The prescribed amount is currently $30,000.00. There are a number of other provisions in the Management Act related to expenditure restrictions, including: • Restrictions applying to the incurring of debts during the initial period which exceed available funds (s 26(1)(b)). • Expenditure on legal services costing more than $15,000.00 (other than certain specified legal services) must be approved by a resolution of a general meeting (s 103).

• Payments to discharge orders by the Tribunal for payment of moneys to a lot owner, or payments of legal costs in such proceedings, cannot be made from general funds and must be the subject of a special levy which excludes the lot owner concerned (s 104). • Similar payments in relation to other proceedings face similar restrictions (s 90). • Restrictions apply to the expenditure of amounts paid to an owners corporation from a building bond in respect of building defects (s 210). Law: Management Act, s 26, 90, 103, 104, 210.

¶9-012 Borrowing money An owners corporation may borrow money and secure its repayment, including interest, in any manner agreed between the owners corporation and the lender, other than by charging the common property with repayment. The loan and any security must be approved by a resolution of a general meeting — see Form 57 (¶19-057) for the form of resolution. Borrowings by owners corporations are not uncommon and most loans are made on an unsecured basis because of the virtual unlimited liability of lot owners for the unfunded liabilities of an owners corporation. By way of example, loans may be taken out to fund unexpected capital expenses, to acquire personal property and even to fund legal proceedings. Law: Management Act, s 100.

¶9-013 Cash v accrual accounting Cash accounting records money being paid to the owners corporation and payments being made by the owners corporation. It pays no regard to bills received but unpaid or money owing but not received. In contrast, accrual accounting records the same transactions as cash accounting, but in addition it records amounts owing by the owners

corporation but unpaid as well as amounts owing to the owners corporation but not yet received. Accrual accounting records income and expenditure in the reporting period to which they relate and not when actually received or paid. Cash accounting is much simpler than accrual accounting, both as regards to book-keeping and the content of financial statements. The Management Act does not mandate which type of accounting an owners corporation should use. It is therefore not surprising that most owners corporations choose to use cash accounting. This is generally seen as resulting in simpler financial statements which are more easily understood by lot owners. The exception is larger strata schemes where there are larger volumes of transactions and more substantial sums of money involved. However, due to the requirements of s 93(2) to disclose unpaid contributions in financial statements, it will be necessary for contributions to be accounted for on an accruals basis, irrespective of whether the cash or accruals method is adopted for the overall accounts. Form 58 (see ¶19-058) is a set of annual financial statements prepared on a cash basis and Form 59 (¶19-059) is a set prepared on an accruals basis but using the same cash information as that appearing in the cash statements. Law: Management Act, s 93.

¶9-014 Accounting records The owners corporation is under a duty to keep accounting records required by the Management Act and the Management Regulation. Failure to comply with this duty is an offence which carries a monetary penalty. Separate records must be kept for the administrative fund, the capital works fund and any other fund kept by the owners corporation. The records may be made and stored in the form determined by the owners corporation (eg electronically or in paper form). The Management Regulation requires the following records to be kept in respect of each such fund:

1. Receipts consecutively numbered. 2. A statement of deposits and withdrawals for the account of the owners corporation (ie bank statements). 3. A cash record (ie a cash book). 4. A levy register (which records in respect of each individual owner the debits and credits in respect of their levies and related transactions). See ¶16-004 for a detailed discussion on the accounting records that need to be kept. Law: Management Act, s 96, 97, 98, 99. Management Regulation, reg 22, 23, 24.

¶9-015 Tax liability An owners corporation is taxed as a company, although special rules apply to it. The most important rule relates to “mutual income”, or income it derives from its lot owners. This includes such income as maintenance levies, interest on arrears of maintenance levies, income from coin operated washing machines attributed to lot owner use and such like. Some non-mutual income, after allowable deductions are taken into account, is taxed in the hands of the owners corporation at the current company tax rate of 30% from the first dollar of income (ie there is no tax free threshold). Other non-mutual income is taxed in the hands of the individual lot owners, despite being derived by the owners corporation. Examples of non-mutual income include: • Interest earned on investments. • Rent received from non-owners for common property. • Search and certificate fees from non-owners. • Hire fees paid by non-owners for recreational equipment.

• Rent for signs or telecommunication equipment placed on common property. • A penalty received for breach of a by-law (whether from an owner or tenant). Of those examples, the two relating to rent are examples where income of the owners corporation is taxed in the hands of the individual lot owners. The actual money remains with the owners corporation, but the gross amount of the income is notionally distributed to lot owners in proportion to their unit entitlements. That distributed income must be declared in the tax returns of those individual owners. Any expenses incurred by the owners corporation in making nonmutual income, including depreciation, can be deducted against that income to arrive at its taxable position. Sometimes it is necessary to apportion such expenses against the mutual and non-mutual income components. Also, where the expenses relate to non-mutual income taxable in the hands of owners, the deductable expenses are distributed to owners in the same way as the income and can be used by the owners as a deduction against their personal income. These rules effectively require an owners corporation to produce annual tax statements for lot owners so that the owners are in a position to include the income and deductions in their tax personal returns. These statements need to be made available as soon as possible after the end of the financial year. Law: Income Tax Assessment Act 1936 (Cth), Taxation Ruling TR2015/3.

¶9-016 Auditing Some owners corporations are required to have their annual accounts and financial statements audited in accordance with the Australian Accounting Standards before presentation to the annual general meeting. Others are not obliged to have an audit, but may choose to do so. This choice is usually made prospectively at the annual general

meeting — see Form 60 (¶19-060) for the form of resolution. Those owners corporations which are required to have their annual accounts and financial statements audited are: (a) owners corporations for a large strata scheme, and (b) owners corporations for a strata scheme whose annual budget exceeds $250,000.00, or such other amount prescribed by the Management Regulation (there being no amount prescribed at this time). The Management Regulation specifies how the amount of the annual budget is to be calculated. It is the sum of the following: 1. The amount of contributions levied for the year concerned (whether or not they have been paid). 2. Any income of the owners corporation from another source (eg rentals or provision of services). 3. Any other amounts held by the owners corporation for the purposes of the owners corporation (eg security deposits). The need for the audit will be “triggered” at the time the budget is prepared, rather than during the course of the year when revenues become clearer. Audit reports accompanying financial statements of strata plans in NSW (which are special purpose financial reports) should be prepared in accordance with ASA 800 “Special Considerations — Audits of Financial Reports Prepared in Accordance with Special Purpose Frameworks”. Law: Management Act, s 95. Management Regulation, reg 21.

¶9-017 Financial reporting An owners corporation must prepare:

(a) financial statements, and (b) a statement of key financial information, for the administrative fund, the capital works fund and any other fund which it keeps. Those statements must be prepared for each “reporting period”. The only financial information required to accompany the notice of the annual general meeting is the statement of key financial information. This is even though the meeting notice must include a “motion for adoption of the financial statements”. Circulation of the full set of financial statements is optional, although a copy must be provided upon request within two days before the meeting at which the statements are to be presented. As will be seen from comments later in this paragraph, these reporting requirements have not been well thought through and are likely to be difficult to implement. Reporting period The first reporting period is the period commencing on the date of registration of the strata plan and ending on a date not earlier than two months before the date of the first annual general meeting. Subsequent reporting periods commence on the date up to which those statements were last prepared and ending on a date not earlier than two months before the next succeeding annual general meeting. Clearly, the first reporting period may be a short period which is less than a year. Also, the subsequent periods are not fixed periods (such as the conventional financial year from 1 July to 30 June) and may be more or less than a full year. With the possible exception of the first reporting period, it is important that each reporting period is consistent date wise (ie the start day and month and the finish day and month each year are the same). This provides consistent reporting of comparative figures in the annual financial statements, will assist in the budgeting process and will provide certainty as to the dates on which the annual general meeting is to be held (as to which see ¶14-001). This will require careful attention to the date on which each annual general meeting is held. To illustrate with an example:

1. The strata plan for an owners corporation is registered on 3 March 2017. 2. The first annual general meeting is held on 6 June 2017. 3. The first reporting period commences on 3 March 2017 and ends on 30 April 2017. 4. The second reporting period commences on 1 May 2017 and ends on a date “not earlier than 2 months before the next succeeding annual general meeting”. To obtain the desired consistency, the second annual general meeting must be held within two months after the end of the second reporting period, which period for that meeting should be one year after the end of the previous reporting period. That is, in the case of the above example, the meeting must be held within two months of 30 April 2018, or before 30 June 2018 and the reporting period should start on 1 May 2017 and end on 30 April 2018. The third and subsequent annual general meetings should be held each year during the period from 30 April to 30 June and each set of financial statements must end on 30 April. If that approach is adopted the annual financial statements will consistently be for a full calendar year and the annual general meeting will occur on a regular basis within the same twomonth period each year. Financial statements The financial statements can be prepared on either a cash or accruals basis. They can only comprise statements of income and expenditure for each of the administrative fund, the capital works fund and any other fund kept by the owners corporation. The financial statements for the administrative or capital works fund must each specify the following: • The fund and the reporting period for which it is prepared. • The balance carried forward in the fund from the previous period. • The particulars and amounts of each item of income of the fund

received during the current period. • The particulars and amounts of each item of expenditure from the fund during the current period. • The amount of the contribution to the fund determined for each person liable to make such a contribution. • The balance outstanding for each such contribution. • The cash in the fund at the end of the current period. • The balance of the fund. • In respect of each liability to contribute to the fund — any unpaid arrears and any balance outstanding. • The extent to which, at the end of the current period, the fund is in debit and credit. The financial statements for any other fund of the owners corporation must specify the following: • The fund and the reporting period for which it is prepared. • The balance carried forward in the fund from the previous period. • The particulars and amounts of each item of income of the fund received during the current period. • The particulars and amounts of each item of expenditure from the fund during the current period. • The cash in the fund at the end of the current period. • The balance of the fund. • The extent to which, at the end of the current period, the fund is in debit and credit.

See Form 58 (¶19-058) for a set of annual financial statements prepared on a cash basis and Form 59 (¶19-059) for a set prepared on an accruals basis but using the same cash information as that appearing in the cash statements. Statement of key financial information The statement of key financial information for an administrative fund or capital works fund must be in the form prescribed by the Management Regulation and specify the following: • The fund and the reporting period for which it is prepared. • The balance carried forward in the fund from the previous period. • The total income of the fund received during the period. • The total interest earned by the fund during the period. • The total contributions paid to the fund during the period and the total of all arrears in contributions payable to the fund. • The total expenditure for maintenance from the fund during the period. • The total expenditure for administration costs from the fund during the period. • The balance of the fund. • The principal items of expenditure for maintenance proposed during the next year. The statement of key financial information for any other fund must be in the form prescribed by the Management Regulation and specify the following: • The fund and the reporting period for which it is prepared. • The balance carried forward in the fund from the previous period.

• The total income of the fund received during the period. • The total interest earned by the fund during the period. • The balance of the fund. Reference should be made to Form 61 (see ¶19-061) for an example of statements of key financial information on a cash basis. The following should be noted in relation to the statements appearing in Form 61 (¶19-061): 1. The statement of key financial information refers to the financial statements in Form 58 (see ¶19-058). 2. There is no direct reconciliation with the financial statements, nor is one required by the Management Act. However, to illustrate this point, a reconciliation back to the financial statements at the bottom half of the statement of key financial information has been included. 3. An important issue arising is the classification of items as either “administration costs” or “expenditure for maintenance”. Applying normal principles, items such as utilities, insurance and income tax fall outside both those categories. However, to reconcile the statement of key financial information back to the financial statements, these items must be taken into account. 4. The list of “principal items of expenditure” proposed for the next reporting period would not normally appear on the audited financial statements. Furthermore, under the accounting regime set up by the Management Act, the budget for the next period would not be resolved until the annual general meeting at which the statement of key financial information is being considered. Therefore, this list of “principal items of expenditure” for the next reporting period will need to be drawn from the draft/unresolved budget. 5. This forward budget would normally be resolved at the annual general meeting alongside the audited financial statements which

may contain the budget for the audited financial period for comparative purposes against actual expenditure. However, when the statement of key financial information is being considered the financial statements may not be available if the strata committee did not require the financial statements to be circulated with the notice of the annual general meeting. It is therefore strongly recommended that both the statement of key financial information and the financial statements be circulated with the notice of annual general meeting, thus allowing for cross referencing of data and providing full transparency for owners when asked to vote to adopt the financial statements. Law: Management Act, s 18, 92, 93, Sch 1, cl 9(a), (b), 10. Management Regulation, reg 20, Sch 1, Forms 2 and 3.

¶9-018 Certification of financial and other information An owners corporation must provide a strata information certificate in relation to a particular lot in response to a request from: (a) a lot owner (b) a mortgagee, or (c) a covenant chargee. The request must be made by written notice given to the owners corporation and be accompanied by the prescribed fee. The fee payable will depend on whether or not there has been a previous request for a certificate by the same person in respect of the same lot and the timing of that request. The fee is: • If the request is an initial request — $109.00 (plus $54.00 for a further certificate for a lot comprising a garage, parking space or storeroom which services the lot the subject of the first certificate). • If the request is made more than three months after a previous

request by the same person in relation to the same lot — $109.00 (plus $54.00 for a further certificate for a lot comprising a garage, parking space or storeroom which services the lot the subject of the first certificate). • If the request is made not more than three months after a previous request by the same person in relation to the same lot — $94.00 (plus $47.00 for a further certificate for a lot comprising a garage, parking space or storeroom which services the lot the subject of the first certificate). The strata information certificate must be in the form prescribed by the Management Regulation and must specify the following information in relation to the lot: 1. The amount of any regular periodic contributions for the lot determined by the owners corporation, including: (a) the periods for which they are payable, and (b) any discounts applicable for early payment. 2. Whether there is any amount unpaid of any contributions determined for the lot. 3. If there is such an unpaid amount referred to in 2 above: (a) the actual amount unpaid, and (b) in the case of a contribution levied for the capital works fund, the date on which the contribution was levied (ie the levy notice was served). 4. Whether there is any amount unpaid by an owner under: (a) a common property rights by-law, or (b) a by-law providing for maintenance of common property by the owner. 5. Whether there is any amount unpaid for a special contribution

levy, and if so: (a) the amount unpaid, and (b) the date on which it was levied (ie the levy notice was served). 6. An amount and rate of interest payable in relation to any of the above unpaid contributions. 7. Whether there is any amount recoverable from the owner of that lot for work carried out by the owners corporation. 8. The proposals for funding the matters set out in the 10-year capital works fund plan. 9. Whether or not a strata renewals committee has been established in relation to the scheme (ie a committee investigating the prospect of re-developing the scheme land). 10. Any other information that is required to complete the certificate. In addition to the above information, the certificate must state, as at the date of the certificate the name and address of: (a) each member of the strata committee (b) any strata managing agent, and (c) any building manager. Where the strata scheme is part of a community titles scheme, the certificate must also include: (i) the amount of any regular periodic contributions required to be made (by the owners corporation) to the administrative fund and capital works fund of the community association (ii) the respective periods to which they relate, and

(iii) the amount of any such contribution that has not been paid. It is most important that the strata information certificate is complete and accurate because it is likely to be conclusive evidence in favour of the person to whom it was issued, as at the date of the certificate, of the matters stated in it. Form 63 (see ¶19-063) is the prescribed form of strata information certificate. Law: Management Act, s 81(4), 108, 184, 185. Management Regulation, Sch 1, Form 4.

INSURANCES ¶10-001 Key definitions There are a number of definitions that are essential to an understanding of the insurance provisions of the Management Act, including: “approved insurer”, which means: (a) a general insurer within the meaning of the Insurance Act 1973 (Cth), or (b) any other person prescribed by the Management Regulation for the purposes of this definition. The Management Regulation prescribes a Lloyd’s underwriter authorised to carry on business, or exempted from such authorisation, under the Insurance Act 1973 (Cth) as an approved insurer. The term “Lloyd’s underwriter” is itself defined in that Act. “building”, which means for insurance purposes, a building containing a lot or part of a lot in the scheme. Interestingly, a building which consists entirely of common property (eg a clubhouse beside a swimming pool) would not be a “building” for the purposes of the insurance provisions. In addition, the insurance provisions distinguish between a strata scheme based on a whole building and a strata scheme based on a part of a building. Most strata schemes are based on a whole building, but there are some where the building is a lot in a stratum plan (ie airspace plan) and that lot relates to part of the building. For example, in a development which comprises an office tower, a residential tower and a shopping centre situated below the towers: • Each of those three components of the development will typically be a stratum (or airspace) lot.

• The residential airspace lot would be further subdivided by a strata plan. • The strata scheme would be restricted to the residential airspace lot. • The part of the building situated within the residential airspace lot would be the “part building” for insurance purposes. “damage policy”, which means a policy (or multiple policies) which complies with the requirements of s 161 of the Management Act. The essential requirements of that section are: (a) it must be with an approved insurer (b) it must be in the name of the owners corporation (and in the case of a scheme in only part of a building, also in the name of owners of the other parts of the building) (c) it must be over the whole building (d) it must provide for the following: (i) the building is to be insured for at least the amount determined in accordance with the Management Regulation (ii) if the building is destroyed, the building is to be rebuilt or replaced so that the condition of every part of the rebuilt or replacement building is not worse or less extensive than that part when new (iii) expenses incurred when removing debris are payable, and (iv) the remuneration of architects and other persons whose services are necessary as an incident to the rebuilding, replacement repair or restoration is payable, (e) the following parts of the building must be covered by the policy: (i) owner’s improvements and owner’s fixtures forming part of

the building (ii) a building consisting entirely of common property (eg a standalone gym beside the swimming pool) (iii) anything prescribed by the Management Regulation as forming part of a building (although nothing has been prescribed at this stage), and (f) the following parts of a building are not required to be covered by the policy: (i) fixtures removable by a tenant at the expiration of a tenancy (ii) owner’s improvements and fixtures comprising paint, wallpaper and temporary wall, floor and ceiling coverings, and (iii) anything prescribed by the Management Regulation as not forming part of a building (although nothing has been prescribed at this stage). The damage policy can be open ended and cover the reinstatement costs of the building no matter how high they turn out to be, or it may limit the liability of the insurer to a stated amount. That amount must not be less than the amount determined in accordance with the Management Regulation as being the required sum insured for the building (see ¶10-004). Law: Management Act, s 160, 161. Management Regulation, reg 38.

¶10-002 Building insurance The Management Act distinguishes between an owners corporation for a strata scheme which involves the whole of a building and an owners corporation for a strata scheme for only part of a building (ie where a stratum subdivision is involved).

In the case of a whole building scheme, the owners corporation must insure the building and keep the building insured under a damage policy which insures the building against destruction or damage by fire, lightning, explosion or other occurrence specified in the policy. Failure to comply with this requirement is an offence. This insurance obligation will not apply to schemes with only two lots if: (a) the owners corporation so determines by unanimous resolution (b) the buildings on the lots are physically detached, and (c) no building or part of a building is situated outside those lots. It is worth noting that the coverage of a damage policy relates to the “building” and although the coverage under the policy may extend to “any other occurrence specified in the policy” it is not entirely clear whether that other occurrence needs to relate to the building, as opposed to the lot owners. For example, some damage policies include coverage for the cost of alternative accommodation if the building is damaged to the extent that it is uninhabitable. That portion of the cover does not relate to the building, but is a cover in favour of the lot owners. There is nothing in the Management Act which expressly authorises the owners corporation to effect such insurance and it is noteworthy that even s 165 (relating to “other insurance”) does not envisage such a cover. While the owners corporation can take out any insurance where it has an insurable interest, it is far from clear that it would have an insurable interest in something like alternative accommodation for lot owners. It is likely that such a cover (ie a cover not expressly authorised by the Management Act) is ultra vires the owners corporation. It remains to be seen whether insurers, in a catastrophic case, seek to evade the policy on that basis. Law: Management Act, s 160, 165.

¶10-003 Part building insurance In the case of a part building scheme: (a) the owners corporation for each scheme for part of a building,

and (b) any person in whom is vested an estate in fee simple in part of the building not included in the parcel of a strata scheme, must insure the building under a damage policy against destruction or damage by fire, lightning, explosion or other occurrence specified in the policy. The premium is paid by the owners corporation(s) and other insured persons according to the proportion that the replacement value of their part (or parts) bears to the replacement value of the whole of the building. If the parties cannot agree on the proportion, the Tribunal can determine the replacement value and proportion payable, including any necessary adjustment to reflect the use to which part of the building may be put. Failure to comply with this requirement is an offence, although in proceedings for such an offence it is a defence if the defendant was willing to join in the insurance but the policy could not be taken out because another person obligated to insure was unwilling to join in the application for insurance. The comments in ¶10-002 about extension of the coverage of a damage policy apply equally to a damage policy in respect of a part building scheme. Law: Management Act, s 160, 162.

¶10-004 Calculating the sum insured The Regulations specify the manner of calculation of the minimum amount for which a building must be insured. Despite that amount being specified in the policy, the insurer may be obliged to reinstate the building no matter what the cost. Alternatively, the damage policy may limit the liability of the insurer under the policy. Both the minimum amount for which the building must be insured and the amount of any limitation of liability under the policy are to be calculated in accordance with the Regulations. The calculation is the same for both purposes. The Management Regulation provides that the amount is calculated by adding together:

(a) the estimated cost, as at the date of commencement of the damage policy, of: (i) carrying out the work that the damage policy is required to provide for (ie reinstating the building “as new”), and (ii) making the payments that the damage policy is required to provide for (eg removing debris and paying consultants), and (b) the estimated amount by which the expenditure on the above may increase during the 24 months following the date of commencement of the damage policy (ie an “inflation allowance”). All calculations are to include applicable taxes, fees and charges (including taxes, fees and charges of the Commonwealth). Law: Management Act, s 161(1)(a). Management Regulation, reg 39.

¶10-005 Exemptions On application by a person required to insure, the Tribunal may by order exempt the applicant: (a) from compliance with the requirements to insure unconditionally, or (b) with the written consent of the applicant, from compliance with those requirements subject to a condition that the applicant takes out insurance for the building specified in the order. The Tribunal is prevented from making such an order unless it is of the opinion that insurance is unnecessary or impractical and various parties have either consented to the order or have been given the opportunity to make representations to the Tribunal. For an owners corporation to make application for (or consent to) such an order it must first be authorised by a unanimous resolution (see Form 64 (¶19-064) for an example resolution relating to an exemption from building insurance).

An exempted person is not under a duty to comply with the insurance requirement, provided any condition imposed by the Tribunal is complied with. Law: Management Act, s 172, 173.

¶10-006 Public liability insurance An owners corporation must take out insurance with an approved insurer in respect of damage to property, death or bodily injury for which the owners corporation could be liable in damages. The cover must not be for less than $20,000,000 for each event for which any claim or claims may be made. The Management Regulation may specify another amount of cover and it is worth noting that, although the Management Act specifies $10,000.00 as the minimum cover, upon commencement of that Act the Management Regulation increased that amount to $20,000.00. Failure to effect this public liability insurance is an offence. Law: Management Act, s 164. Management Regulation, reg 40.

¶10-007 Other insurances Other insurances effected by an owners corporation fall into one of two categories — compulsory insurance and voluntary insurance. Compulsory insurance Other compulsory insurance required to be effected by the owners corporation are: • Insurance required to be taken out by law (such as workers compensation cover). • Insurance for an occurrence authorised by a special resolution, being against the possibility of the owners becoming jointly liable as a result of such an occurrence (see Form 65 (¶19-065) for the type of resolution required).

• Insurance against damages for a person doing voluntary work on behalf of the owners corporation in a building or on the common property. • Insurance of any other class prescribed by the Management Regulation (although none has been prescribed at this stage). Failure to effect any of the above insurances is an offence. Voluntary insurance There is a range of insurance which may be taken out by an owners corporation with an approved insurer or by the individual lot owners with any insurer. In effect, the owners corporation may take out any insurance in which it has an insurable interest. It may also take out insurance in respect of: (a) damage to property, death or bodily injury for which an office bearer or strata committee member may become liable in damages because of an act or omission committed, or omitted, in good faith, in performing their functions of office, or (b) misappropriation of money or other property of the owners corporation. The right of lot owners to take out insurance is not restricted by the Management Act and any such insurance is not to be taken into account when determining the insurance requirements for the owners corporation. Furthermore, if a strata building is the subject of an insurance exemption (as to which see ¶10-005) a lot owner is taken to have an insurable interest in the building. Typical insurances taken out by lot owners are: • Lot contents insurance. • Mortgagee insurance (to cover for the benefit of a mortgagee) the amount of any secured debt. • Public liability insurance.

• Workers compensation insurance. Law: Management Act, s 164, 165, 167, 168, 169.

¶10-008 Claims by owners corporation Money received by an owners corporation by way of an insurance claim must be used for the purpose of replacing, repairing or restoring the building, unless the owners corporation resolves otherwise by unanimous resolution (as to which see Form 66 (¶19-066)). If the claim arose as a result of an act or omission by an owner of a lot in the scheme, the insurer does not have a right of subrogation against the owner unless the act or omission was deliberate. This overcomes the usual situation where the insurer inherits any right of action an insured has to recover the loss against the person who caused the loss. Law: Management Act, s 163, 170.

¶10-009 Claims on owners corporation’s insurance by lot owners If loss or damage to property, other than common property, occurs and that loss or damage is covered by the owners corporation’s damage policy, the owners corporation must make the benefit of that insurance cover available to the lot owner who suffered the loss or damage. The Management Act makes no provision as to who must bear any excess payable in relation to the claim. Therefore, the excess should be paid by the owners corporation. If the owners corporation refuses or fails to make the claim on behalf of the owner, the Tribunal may make an order compelling the claim. Law: Management Act, s 174.

¶10-010 Insurance quotations Where a strata managing agent proposes insurance of any type to an

owners corporation, that proposal must be in the form of three quotations from different providers. Failing that, the strata managing agent must provide the owners corporation with written reasons why less than three quotations have been provided. This provision is one of a number of measures directed at ensuring that the taking of insurance commissions by strata managing agents is not abused. Other protections relate to disclosure of commissions to the annual general meeting of the owners corporation. Law: Management Act, s 166.

BY-LAWS ¶11-001 Nature and purpose By-laws are made by an owners corporation for “the management, administration, control, use or enjoyment of the lots or the common property and lots of a strata scheme” (vide s 136(1) of the Management Act). They must not be inconsistent with the Management Act or any other law. The language of s 136(1) quoted above is of some concern. Interpreted literally it means that by-laws must relate to either the lots or to the common property and the lots. This would mean that they cannot relate only to the common property. This would, for example, preclude a by-law which prohibited offensive behaviour on common property. This is unlikely to be the intended interpretation of that section and this is indicated by the model by-laws which are in the Management Regulation under authority of s 138 of the Management Act. Those model by-laws clearly include by-laws which only apply to common property (as for example Sch 3 by-law 8 about children on common property and by-law 7(1) about behaviour on common property). The use of the model by-laws as a guide to what may be included in by-laws has previously been sanctioned by adjudicators and Tribunals — see Hamlena Pty Ltd v Sydney Endoscopy Centre Pty Ltd (1990) 5 BPR 11,436, New Balkis Eeersteling Ltd v Randt Goldmining Co (1901) 71 LJKB 346 and Lock v The Queensland Investment & Land Mortgage Co Ltd [1896] AC 461. In reliance upon this principle it is clear that s 136(1) should be interpreted as relating to the lots, the common property and the lots and common property. The by-laws must have a purpose related to management, administration, control, use or enjoyment of the lots, the common property or the common property and lots. These words are extensive and are unlikely to limit the operational intent of a by-law. However,

the following restrictions apply to by-laws: • They must not be harsh, unconscionable or oppressive. • A by-law cannot operate to prohibit or restrict the devolution of a lot (eg upon death of the lot owner) or a transfer, lease, mortgage or other dealing relating to a lot. • An order of the Tribunal having effect as a by-law cannot be amended or repealed except by a by-law made by unanimous resolution (and, in the case of a leasehold scheme, with the consent of the lessor). • A by-law cannot prohibit or restrict occupancy of a lot by persons under 18 (except in the case of a retirement village or housing exclusively for aged persons). • A by-law cannot prohibit or restrict the keeping on a lot of an assistance animal used as such by the owner or occupier of the lot. An “assistance animal” is defined in s 9 of the Disability Discrimination Act 1992 (Cth) with reference to animals trained or accredited to assist persons with a disability. The person keeping the assistance animal may be required to provide proof that the animal is an assistance animal within the meaning of that section. • Where a strata scheme is part of a community scheme, its by-laws cannot be in conflict with a provision of the community management statement or the precinct management statement for the community scheme. The purpose of by-laws is to ensure the orderly use and enjoyment of the lots and common property for the common good of owners and occupiers of lots. They are effectively the “rules of the road” to communal harmony and for the avoidance of anarchy. Law: Management Act, s 136, 139.

¶11-002 Occupancy limits

A by-law may limit the number of adults who may reside in a lot provided the limit is not fewer than two adults per bedroom. An adult would be a person over 18 years old. A bedroom is a room approved for use as a bedroom, a room shown as a bedroom on approved plans or a room prescribed by the Management Regulation (although nothing has been prescribed at this stage). There cannot be a limit on persons who are not adults. However, it should be noted that a by-law limiting occupancy has no effect: (a) to the extent to which it is inconsistent with any planning approval or other applicable law, or (b) in any other circumstance prescribed by the Management Regulation. At this stage the only prescribed circumstance is where the adults residing in the lot are all related to each other. In that event, the by-law has no application. Law: Management Act, s 137.

¶11-003 What by-laws apply? The by-laws applying to a particular strata scheme depend upon when the scheme came into existence. The position is summarised in this table: Schemes coming into existence

By-laws applying

After commencement of s 134 of the Management Act (namely after 30 November 2016)

The by-laws adopted or lodged with the strata plan, as changed in accordance with the Management Act.

After commencement of the Strata Schemes Management Act 1996 (ie after 1 July 1997)

The by-laws adopted by or lodged with the strata plan, including any changes made in

but before commencement of s 134 of the Management Act (ie 30 November 2016)

accordance with the Strata Schemes Management Act 1996 or the Management Act.

Before commencement of the Strata Schemes Management Act 1996 (ie before 1 July 1997)

The by-laws set out in Sch 2 of the Management Regulation for the purpose of s 134 of the Management Act, including any changes made in accordance with the 1996 or earlier Act or in accordance with the Management Act.

The intention is to: • Not interfere with by-laws made or altered under the Management Act — so they operate “as made”. • Not to interfere with by-laws made between 1 July 1997 and 30 November 2016 (including changes made under the Management Act post-30 November 2016) — so they operate “as made”. • Cancel all by-laws made before 1 July 1997 and impose the set of by-laws in Sch 2 of the Management Act BUT preserving any “changes to the by-laws made in accordance with a previous law or in accordance with this Act”. A “previous law’ would be any strata legislation which pre-dates the commencement of the 1997 Act (ie 1 July 1997). For many schemes that came into existence before 1 July 1997, this is likely to be very confusing, particularly where exclusive use by-laws are involved. To determine which by-laws continue and which are extinguished will involve a complex analysis of the historical pattern of by-law applications and amendments to determine preserved “changes”. In the case of schemes which came into existence between 1 July 1997 and 30 November 2016, many of their continued by-laws will be very old and some will have been blindly adopted from earlier versions of “model by-laws”.

The intention of the Management Act is to ensure that such confusion and inappropriate by-laws are addressed in a timely fashion. The transitional provisions of the Management Act require owners corporations of existing schemes (ie all schemes existing on 30 November 2016) to review their by-laws for the scheme not later than 30 November 2017 (ie 12 months from commencement of the Management Act). A “review” would involve more than a mere perusal of the by-laws. To comply with this obligation an owners corporation would need to undertake a process which in most cases would require changes to be made to the existing by-laws and registration of a new comprehensive set of by-laws. In some cases, the safest course will be to repeal all existing by-laws and adopt an entirely new set (which may prove difficult in any case where exclusive use by-laws are involved). Most owners corporations will require specialist legal advice to guide them in complying with these review requirements. By-laws for schemes coming into existence after 1 July 2016 are expected to adopt by-laws relevant to common property features, although they may adopt model by-laws which appear in Sch 3 of the Management Regulation. Law: Management Act, s 134, 138, Sch 3, Pt 1, cl 4. Management Regulation, reg 35, 37.

¶11-004 Initial period restrictions During the initial period, while the owners corporation is under the control of the original owner or developer, there is a prohibition on the owners corporation changing its by-laws so that a right is conferred or an obligation is imposed on one or more, but not all, owners or in respect of one or more, but not all, lots in the scheme. If this prohibition is contravened: (a) the owners corporation, and (b) any lot owner, may recover from the original owner any loss suffered, as damages

for breach of statutory duty. Furthermore, this remedy is in addition to any other remedy that may be available to the owners corporation or lot owner. It is a defence to such an action for damages if it is proved that the original owner: (a) did not know of the contravention (b) was not able to influence the owners corporation’s conduct, or (c) used due diligence to prevent the contravention. Law: Management Act, s 140.

¶11-005 Disclosing by-laws The by-laws bind: (a) lot owners (b) mortgagees in possession (c) covenant chargees in possession (d) tenants of lots or common property, and (e) occupiers of lots. As regards tenants of a lot or common property, there is an implied covenant to comply with the by-laws. It is therefore important that tenants and occupiers of lots are given a copy of the by-laws at the earliest point in time. Law: Management Act, s 135.

¶11-006 Statutory responsibilities Apart from the by-laws, there are sections of the Management Act which create statutory obligations for owners, tenants, occupiers and

mortgagees and covenant chargees in possession which are very similar to by-laws. The main ones fall into three categories: • Interfering with support, shelter and the provision of services. • Making structural alterations to the lot. • Creating a nuisance. Each of these will be dealt with briefly. Support, shelter and services There is an obligation on a lot owner, mortgagee or covenant chargee in possession, tenant or occupier of a lot not to do anything or permit anything to be done on or in relation to the lot so that: (a) any support or shelter provided by that lot for another lot, or for common property, is interfered with, or (b) the passage or provision of services (which are widely defined) is interfered with. Structural alterations There is also a restriction on the owner of a lot altering the structure of a lot without giving the owners corporation prior written notice which describes the alteration. The notice must be given not later than 14 days before commencement of the alteration. This restriction is in addition to the need for an owner to obtain any approvals required by law. Nuisance Lot owners, mortgagees or covenant chargees in possession, tenants or occupiers of lots are prohibited from: (a) using or enjoying the lot, or permitting the lot to be used or enjoyed, in a manner or for a purpose that causes a nuisance or hazard to the occupier of any other lot (whether or not the occupier is an owner)

(b) using or enjoying the common property in a manner or for a purpose that interferes unreasonably with its use and enjoyment by the occupier of another lot (whether or not the occupier is an owner) or by any other person entitled to the use and enjoyment of the common property, or (c) using or enjoying the common property in a manner or for a purpose that interferes unreasonably with the use or enjoyment of any other lot by the occupier of the lot (whether or not the occupier is an owner) or by any other person entitled to the use and enjoyment of the lot. In some circumstances, these prohibitions could include the penetration of smoke into a lot or the common property where the smoke arises from cigarette smoking. However, these restrictions do not affect the rights of a developer undertaking a staged development of the scheme. Law: Management Act, s 153.

¶11-007 Amending or repealing by-laws The by-laws for a strata scheme may be changed. The procedure to change the by-laws involves: (a) the passing of a special resolution authorising the change (see Form 67 (¶19-067)) (b) lodgement of a notification of change of by-laws with the Registrar General within six months of the special resolution being passed (see Form 68 (¶19-068)), and (c) recording by the Registrar General of the notification in the folio of the Register for the common property. It is important to note that the notification of change of by-laws is recorded and not registered. This means that the presence of the recording does not give any assurance that it is valid or conclusive. Therefore, if the special resolution or other step in the creation

process is found to be defective, the recording of the by-law can be cancelled. The Management Act also imposes an obligation on the secretary of the owners corporation to keep a consolidated up-to-date copy of the by-laws for the scheme. The Development Regulation also requires a notification of change of by-laws (which is to be recorded in the folio for the common property) to be lodged in the form of a consolidated version of the by-laws which incorporates all changes. Model by-laws are not required to be included in a consolidated version and the Registrar General may permit a change to be lodged separately and not in a consolidated version if: (a) the Registrar General is satisfied that it would be too onerous for a consolidated version to be lodged, and (b) there are no more than five such separate changes recorded on the folio. Law: Management Act, s 141. Development Regulation, reg 24.

¶11-008 Common property rights by-laws A common property rights by-law confers on the owner or owners of a specified lot or lots in the scheme: (a) a right of exclusive use and enjoyment of the whole or any specified part of the common property, or (b) special privileges in respect of the whole or any part of the common property. A by-law which changes a common property rights by-law is also a common property rights by-law for the purpose of the Management Act. An example of an exclusive use by-law is a by-law which allocates a car parking space or storage room for the exclusive use of the owner

of a lot, while an example of a special use by-law would be the authorisation of a lot owner to exclusively conduct a holiday letting business in the building the subject of the scheme. The following should be noted about common property rights by-laws: 1. They may apply to multiple lots (eg a swimming pool can be exclusively allocated to residential lot owners to the exclusion of commercial lot owners). 2. They may apply to the whole or only part of the common property. 3. Each owner on whom the rights or privileges are conferred must consent in writing before the by-law is made. This is because the power of the owners corporation to make the by-law is dependent upon the consent being in place and it is by no means certain that a subsequent consent will be effective. 4. They may confer the rights or privileges subject to conditions specified in the by-law (such as a condition that a monthly licence fee be paid). 5. They may be made even though the person on which they are conferred had the same right or privilege before the by-law was made. 6. Two years after the by-law is made (or purportedly made) there is a conclusive presumption that all conditions and preliminary steps precedent to the making of the by-law were complied with and performed. This is effectively a conclusive presumption as to the validity of the by-law. 7. They must: (a) provide that the owners corporation is to continue to be responsible for maintenance and upkeep of the common property or relevant part of it, or (b) impose on the owner or owners of the lots the responsibility

for that maintenance and upkeep. 8. Where two or more owners are responsible for the maintenance and upkeep, the costs involved are payable in the way specified in the by-law, or if nothing is specified, in proportion to their unit entitlements. 9. They operate for the benefit of and are binding on the owner or owners for the time being of the lot or lots specified in the by-law. This also involves an incoming lot owner being jointly and severally liable (as a debt) for any money owing under the by-law when the ownership changed. 10. Where an owner is responsible for the maintenance and upkeep of the relevant part of the common property the owners corporation no longer has responsibility for that maintenance and upkeep. Form 69 (see ¶19-069) is an example of an exclusive use by-law and Form 70 (see ¶19-070) is an example of a special privilege by-law. Law: Management Act, s 142, 143, 144, 145.

¶11-009 By-law authorising changes to common property A change to common property involves an alteration to, or the erection of a new structure on, common property for the purpose of improving or enhancing the common property. This type of work must be authorised by a special resolution. The special resolution may specify whether the owners corporation or the lot owner making the changes is to be responsible for the ongoing maintenance of the changes. In the absence of any such provision, the owners corporation is taken to be responsible. The authorisation is by way of a by-law. See ¶8-004 for further discussion on these authorities. Law: Management Act, s 108.

¶11-010 Common property memorandum A scheme’s by-laws may adopt a “common property memorandum”. The purpose of the common property memorandum is to specify whether an owner of a lot or the owners corporation is responsible for the maintenance, repair or replacement of any part of the common property. The form of memorandum is prescribed under the Management Regulation (see Form 71 (¶19-071)). The common property memorandum cannot be modified by the adopting by-laws, except to exclude specified items that are: (a) not common property for the purposes of the particular strata scheme (b) the subject of a common property rights by-law, or (c) the subject of a by-law authorising changes to the common property (ie one made under s 108 of the Management Act). The provisions of common property rights by-laws and by-laws authorising changes to common property prevail over the provisions of a common property memorandum adopted by the by-laws. The common property memorandum is simply a mechanism to vary responsibility for contributions to the costs of maintenance of common property. Law: Management Act, s 107. Management Regulation, reg 27.

¶11-011 Community scheme by-laws If a strata scheme is part of a community scheme or precinct scheme created under the Community Land Development Act 1989, then the by-laws in the community management statement or precinct management statement prevail to the extent of any inconsistency with the strata scheme by-laws. Law: Management Act, s 139(7).

¶11-012 Validity of by-laws As mentioned in ¶11-007, the mere recording of a change of by-law does not support the validity of the by-law. That validity can always be challenged. This is made clear by the power conferred on the Tribunal to invalidate a by-law and for the recording of an invalid by-law to be cancelled by the Registrar General. For common property rights bylaws some comfort is provided by s 143(4) of the Management Act which provides a conclusive presumption after two years that all conditions and preliminary steps precedent to the making of the bylaw were complied with and performed. However, this provision will not assist if the by-law itself is ultra vires (ie beyond the power of) the owners corporation. By-laws sometimes authorise the making and enforcement of “house rules” which are minuted but not formally recorded. These by-laws and the house rules made pursuant to them are not valid and serve no more than as a persuasive influence on the conduct of owners and occupiers. By-laws designed to empower an owners corporation to do something not expressly authorised by the Management Act are also problematic. Before 2005 such by-laws could be made and were commonly made. Amendments in that year restricted the scope for empowering by-laws but did not entirely prevent them from being made. The provisions of the Management Act are no more restrictive than the position post-2005, so in certain circumstances it is still possible for an owners corporation to make an empowering by-law. Another example of using by-laws to address concerns within strata schemes involves by-laws which seek to require payment of contributions other than in shares proportional to unit entitlement. These types of by-laws are invalid — see The Owners Strata Plan Number 60919 v Consumer Trader and Tenancy [2009] NSWSC 1158. Similarly, by-laws requiring payment of marketing levies by commercial lot owners may be invalid as being outside the by-law making power of the owners corporation. Law: Management Act, s 136, 139, 150, 246.

¶11-013 Enforcing by-laws Initially, by-laws are enforced by means of a “by-law enforcement notice”. The following process applies to the issue of such a notice: 1. Either: (a) the strata managing agent must have the delegated authority to issue by-law enforcement notices, or (b) a motion must be passed by a general meeting or the strata committee authorising service of a by-law enforcement notice, either in a specific case or generally for the type of contravention concerned. (See Form 72 (¶19-072) for a general authorisation form of resolution.) 2. The owners corporation must be satisfied that a by-law is being contravened by the owner or occupier of a lot. The owners corporation may reach the required level of satisfaction in one of three ways: (a) by the strata managing agent being so satisfied and minuting that fact accordingly (b) by the secretary, or other authorised representative of the owners corporation, being so satisfied and minuting that fact accordingly, or (c) by the owners corporation or the strata committee being so satisfied and minuting that fact accordingly. It would be desirable, in the case of (a) and (c), for the minute to go so far as to further expressly authorise the service of the notice. See Form 73 (¶19-073). 3. A notice is prepared using the approved form (see Form 74 (¶19074)). Note that the notice must contain a copy of the by-law being breached. 4. The notice is served on the owner or occupier of the lot.

If the by-law is subsequently breached, the owners corporation may (within 12 months after the notice is given) apply to the Tribunal for an order compelling the responsible owner or occupier to pay a monetary penalty of up to 10 penalty units. No prior notice needs to be given before the application is made. Also, a further breach within 12 months of that monetary penalty being imposed can result in a further monetary penalty being imposed of up to 20 penalty units. If the breach relates to a by-law imposing occupancy limits the initial penalty may be up to 50 penalty units and the subsequent penalty up to 100 penalty units. (At the time of publication a penalty unit equated to $110.00.) The monetary penalty is payable to the owners corporation, unless the Tribunal orders otherwise. Law: Management Act, s 147.

EXECUTIVE COMMITTEE MEETINGS ¶12-001 Obligation to hold The strata committee itself is responsible for determining when it should meet. However, the secretary of the owners corporation may convene a meeting of the strata committee at any time. In addition, the secretary, or any other strata committee member, must convene a meeting of the strata committee if formally requested to do so by at least one-third of the members of the committee. The meeting must be held not later than 14 days after such a formal request for the meeting (or 28 days in the case of a large strata scheme). No formalities are prescribed for the request for a meeting of the strata committee. However, it is suggested that the request be in writing and that it specify the business the parties requesting it wish to be discussed. Form 75 (¶19-075) is suggested for this purpose. Law: Management Act, s 39.

¶12-002 Notice of the meeting The rules for the convening of meetings of the strata committee vary for large strata schemes and other strata schemes. For large strata schemes: • The secretary must give notice of the meeting to each other member of the strata committee (including any tenant member) and to each owner. • The notice must be given at least three days before the meeting. • The notice must be given (ie served) in accordance with s 263 of the Management Act (see ¶12-003).

• The notice must also be displayed on the notice board (if any) maintained by the owners corporation. For other strata schemes: • The secretary must give notice of the meeting to each other member of the strata committee and to each owner. • The obligation to give notice does not extend to tenant members of the strata committee. • The notice is given by displaying it on the notice board (if any) maintained by the owners corporation. • As an alternative, the notice can be given in accordance with s 263 of the Management Act (see ¶12-003). • The notice must be given at least three days before the meeting. The meeting notice need not set out the wording of each motion proposed to be considered by the meeting, but it must set out a “detailed agenda” which allows strata committee members and owners to know exactly what business is being dealt with. The reason for this is to give effect to the right of veto that owners have over strata committee decisions (see ¶12-012). See Form 76 (¶19-076) for a notice convening a meeting of the strata committee. Law: Management Act, Sch 2, cl 4, 5, 6 and 7.

¶12-003 Service of the notice In all cases the notice must be served at least three days before the meeting. Section 263 of the Management Act specifies the different means for service for the different stakeholders in the strata scheme, namely: 1. For occupiers the notice may be served: (a) by post at the address of the lot, or

(b) by leaving it at the address of the lot with a person apparently of or above the age of 16 years. 2. For persons whose address has been recorded on the strata roll or notified in a tenancy notice: (a) by post to any postal address notified (b) by sending it by electronic transmission to an address or location nominated (in correspondence or otherwise) by the person as an address or location to which correspondence can be sent, or (c) by leaving it at that address with a person apparently of or above the age of 16 years. 3. For owners of lots, if an address is recorded on the strata roll the notice may be given to the owner in the same way that it can be given to anyone whose address is on the strata roll (see paragraph 2 above). If no address is recorded on the strata roll the notice can be given: (a) personally (b) by post to the address of the lot (c) by leaving it on a part of the lot that is the owner’s place of residence or business (other than on a car space, garage or storeroom) (d) by leaving it in a place provided in the parcel for receiving mail posted to the lot, or (e) in any other manner authorised by the by-laws for the service of notices on owners. Bearing in mind that three days’ notice of the meeting must be given, if the notice is hand delivered, or given by displaying it on the notice board, the day on which the notice is delivered or placed on the board

and the day of the meeting should not be counted when calculating the three days. Therefore, the notice needs to be delivered or placed on the notice board at least five days before the day of the meeting. If the notice is being posted, the six-day standard delivery period introduced by Australia Post in 2016 needs to be taken into account and this would effectively require the notice to be posted 11 days before the date of the meeting. An owner is not required to serve notice of a strata committee meeting on themselves. Law: Management Act, s 263.

¶12-004 Quorum A motion cannot be considered at a meeting of the strata committee unless there is a quorum present. A quorum consists of: • Where the strata committee has only one member — that member. • Where the strata committee has two or more members (as last determined by the owners corporation), one-half of the persons entitled to vote on the motion. Take, for example, where an owners corporation has determined that the number of members on the committee shall be five but where one member has recently resigned (or ceased to be a member, or is disqualified from voting on the particular motion). In those circumstances the quorum is not less than half of five (ie 2.5). Therefore, a quorum would be three of the four available members of the strata committee. Tenant members of the strata committee are not counted for the purpose of determining a quorum because they are not entitled to vote. A quorum needs to be present for each motion being considered at the meeting. Where pre-meeting electronic voting is used the chairperson should ensure, before putting any motion to a vote, that the quorum is present. This is because it is possible that a quorum

may be present for one motion but not present for another. Where a person has voted, or intends to vote, on a motion or on an election by a “permitted means” (other than a vote in person), they are taken to be present for the purpose of calculating the quorum. The starting point is that a vote by a strata committee member must be cast in person at the meeting. However, the strata committee may, by resolution, determine that a vote may be cast by some other specified means and the Management Regulation sets out the available options (see ¶12-005). To support these special voting procedures, “person present” at a meeting is defined to include a person who is not personally present but is able to vote by another specified means. Also, see ¶12-007 for full details of how electronic voting must be conducted. Law: Management Act, s 4(1), Sch 2, cl 12.

¶12-005 Manner of voting A member of a strata committee may potentially vote in a number of ways, namely: • By voting personally at the meeting. • By written vote (see ¶12-006). • By other “permitted means” (see ¶12-007). Personal voting is straight forward. The strata committee member attends the meeting and when the particular motion comes up for the vote the member exercises their vote by show of hands in response to the chairperson invitation to vote. No express provision has been made for postal voting at committee meetings, except for the circular voting process described in ¶12-006. Law: Management Act, Sch 2, cl 10. Management Regulation, reg 14.

¶12-006 Written voting

A valid vote on a motion may be taken in writing without the need to hold a meeting of the strata committee. The following must occur: (a) normal notice of meeting must be given (see ¶12-002 and ¶12003) (b) a copy of the proposed motion must be given to each member of the strata committee, and (c) the motion must be approved in writing by a majority of the members of the strata committee (excluding any tenant member). There is no prescribed or approved form for a strata committee written vote but Form 77 (see ¶19-077) is a suggested written voting paper. The written voting papers should be kept and referenced in the minutes of the written vote (see Form 78 (¶19-078) by way of example). If the written voting process is chosen, then it is most unlikely that a member of the strata committee can cast their written vote by means of an e-mail. That would amount to a “pre-meeting electronic vote” and would need to be conducted as such (see ¶12-007). Law: Management Act, Sch 2, cl 9(2).

¶12-007 Other permitted means of voting As an alternative to having votes cast in person at the strata committee meeting, the committee may pass a resolution determining that a vote can be taken by “some other specified means”. The options available to the strata committee are set out in the Management Regulation. They include: • Participation from a remote location by means of: – telephone – video-conference – e-mail

– other electronic means. • Voting before the meeting by means of pre-meeting electronic voting, namely by means of: – e-mail – other electronic means (including, by way of example only, by accessing a voting website and voting in accordance with the directions on that site). The Management Regulation goes into some detail about the process to be followed for pre-meeting electronic voting by means of e-mail or accessing a voting website. The following rules apply (although allowance should be made for the fact that the rules are designed to apply to both strata committee and owners corporation meetings): 1. The secretary must ensure that the form for the electronic ballot paper contains: (a) instructions for completing the ballot paper (b) the question to be determined, and (c) the means of indicating the voter’s choice on the question to be determined. 2. The secretary must, at least 14 days before the meeting, give each person entitled to vote: (a) access to an electronic ballot paper, or to a voting website containing an electronic ballot paper, that complies with Management Regulation, reg 15 (b) access to information about: (i) how the ballot paper must be completed (ii) the closing date of the ballot (iii) if voting is by e-mail, the address where the ballot

paper is to be returned, and (iv) if voting is by accessing a voting website, the internet address of the website, any passwords required to access the website and how the completed electronic ballot paper is to be sent to the secretary using the website, and (c) access to an electronic form of declaration requiring the voter to state: (i) his/her name (ii) the capacity in which the person is entitled to vote (iii) in the case of a matter that requires a special resolution, the voter’s unit entitlement, and (iv) if the vote is a proxy vote, the name and capacity of the person who gave the proxy. 3. Each person entitled to vote must vote in accordance with the instructions provided. 4. If the ballot is a secret ballot, the secretary must ensure that: (a) the identity of the voter cannot be ascertained from the form of the electronic voting paper, and (b) the declaration by the voter is dealt with so that it is not capable of being used to identify the voter. 5. An electronic ballot paper and the form of declaration must be sent to the secretary of the owners corporation no later than the close of the ballot (ie immediately before the commencement of the meeting, in the case of the strata committee). 6. The secretary of the owners corporation must ensure that all electronic ballot papers are stored securely until the counting of the votes begins.

Law: Management Regulation, reg 14, 15.

¶12-008 Informal electronic voting If a person votes on a committee proposal by means of pre-meeting electronic voting but they fail to record their vote in accordance with the instructions provided by the secretary, then their ballot paper is informal. Also, if voting is carried out by pre-meeting electronic voting using a voting website, the website must be programmed so as to provide a warning message to the voter if their proposed vote is informal. For example, where a voter has not marked their intended vote the site may have a “pop-up” message which reads “This vote will be invalid because you have not indicated how you wish to vote. … SUBMIT … GO BACK.” Law: Management Regulation, reg 16.

¶12-009 Results of pre-meeting electronic voting As soon as practicable after the close of a ballot conducted by premeeting electronic voting, the secretary must: (a) review all information and reports about the electronic ballot (b) reject as informal any votes that do not comply with the requirements of the Management Regulation, and (c) ascertain the results of the electronic ballot. The secretary must, at the actual meeting, inform the persons present of the result of the ballot. Law: Management Regulation, reg 17.

¶12-010 Conducting the meeting The chairperson of the owners corporation presides at all meetings of the strata committee. If the chairperson is absent the meeting elects

one of the members present to be the chairperson of the meeting and while ever that person presides at the meeting they are taken to be the chairperson. In some cases (eg where all strata committee members have voted electronically) the chairperson may be the only person present at the meeting. A strata managing agent will usually be present at the meeting and an owner, or company nominee of a corporation which is an owner, is entitled to attend the meeting. However, the owner or company nominee are not entitled to address the meeting unless authorised to do so be a resolution of the strata committee. Motions put to a strata committee meeting are decided according to a majority of the number of votes cast for and against the motion by members present and entitled to vote. The chairperson does not have a casting vote and tenant members are not entitled to vote. Also, an un-financial strata committee member (or a strata committee member who is not a lot owner but was nominated by a lot owner who is unfinancial) is not entitled to vote or move a motion at the meeting. Such financial status is determined as at the date notice of the meeting was given, although the amounts owed can be paid at any time before the meeting. If so paid, the committee member or nominee member becomes financial. Persons who vote electronically are effectively deemed to be present at the meeting by virtue of the definition of “person present” in s 4(1) of the Management Act. The order of business of the meeting will be determined by the agenda for the meeting, although the following is a common approach to the order of business: 1. Chairperson declares the meeting open and notes the time. 2. Secretary records the names of: (a) those strata committee members present (b) other lot owners who are present, and (c) others who may be present (eg the building manager or

owners corporation solicitor). 3. Secretary records the names of strata committee members who have voted by pre-meeting electronic voting. 4. Chairperson asks for apologies and the secretary records them. 5. Chairperson determines whether a quorum is present. 6. Minutes of the last strata committee meeting are confirmed. 7. Business arising from those minutes is dealt with. 8. Secretary provides a report to the meeting. 9. Treasurer provides a report to the meeting. 10. Other reports to the meeting are dealt with (eg a caretakers report). 11. Meeting proceeds to those other items of business on the meeting agenda. 12. General business and discussion. 13. Chairperson declares the meeting closed and notes the time. Motions being considered by the meeting will usually be dealt with in the following way: (1) Either: (a) the chairperson will introduce the motion and read it (if the wording of the motion appears on the agenda), or (b) a strata committee member who is entitled to vote on motions will introduce the motion by wording it in the way in which it is proposed to be considered. (2) The chairperson will consider whether the motion, if carried,

would conflict with the Management Act or the by-laws, or would otherwise be unlawful or unenforceable. If the chairperson is satisfied that is the case, they may rule the motion out of order and decline to progress it. (3) If the motion is to progress, the chairperson will ask for any discussion on the motion, which will then proceed under the direction of the chairperson. (4) The chairperson will take the vote on the motion by: (a) calling for votes in favour of the motion (b) calling for votes against the motion, and (c) asking if there are any abstentions from voting on the motion. (5) The chairperson will then tally the votes (also taking into account any pre-meeting electronic votes and abstentions). (6) The chairperson will then declare whether or not the motion is passed or defeated. This declaration is conclusive, without the need to prove the votes recorded for or against the motion. (7) The secretary will record details of the above. Where a motion has been proposed to a meeting of the strata committee, either by inclusion of the wording on the agenda or verbally at the meeting, the wording of the proposed motion can be amended. If the amendment is agreed to by the person who proposed the motion, then the amended motion can be put directly to the vote. If it is not agreed to, then at the appropriate time, the chairperson should first put the amendment to the vote. If the amendment is passed, then the amended motion is put to the vote. If the amendment is not passed, then the original motion is put to the vote. There is nothing in the Management Act or Management Regulation which requires motions and amending motions to be moved and seconded, although the chairperson may well adopt that procedure. It is not uncommon for

normal meeting procedures to be adopted by way of “standing orders”. Ultimately, in the absence of a prescribed procedure or process, the conduct of the meeting is at the discretion of the chairperson, or in accordance with any direction (ie “standing order”) which may be adopted by resolution of the strata committee itself. Law: Management Act, Sch 2.

¶12-011 Adjournments A strata committee meeting may be adjourned at any time and for any reason by the passing of a procedural motion to that effect. The time and place at which the adjourned meeting is to resume shall be determined by the person who presided at the meeting (who may or may not be the chairperson). The secretary must give owners at least one days’ notice of the time and place of the adjourned meeting. Notice is given by displaying the written notice on the owners corporation’s notice board, or if there is no notice board, in writing. The written notice may be given by e-mail or other electronic means (eg by SMS). (See ¶12-002 if the written notice is to be given by mail.) Form 79 (see ¶19-079) illustrates a notice of an adjourned strata committee meeting. Law: Management Act, Sch 2.

¶12-012 Veto of strata committee decisions One or more owners, the sum of whose unit entitlements exceed onethird of the aggregate unit entitlements, may effectively veto the right of the strata committee to make a decision on a matter (either a preworded motion or a particular issue). They do this by serving a notice on the secretary advising that they oppose the making of the decision. The notice must be served before the decision is made and in that event any decision made by the strata committee contrary to the notice has no force or effect. Form 80 (see ¶19-080) illustrates a notice of opposition. Law: Management Act, Sch 2, cl 9(3).

¶12-013 Minutes of strata committee meetings Obligation to keep A strata committee must cause to be kept: (a) a record of its decisions (b) any notices served under Sch 2 of the Management Act (eg meeting notices and notices of opposition to a decision), and (c) full and accurate minutes of its meetings. In addition, the minutes must include minutes of all resolutions passed in accordance with Sch 2 of the Management Act (such as those relating to disclosure of pecuniary interests — as to which see ¶12015). The inclusion of (a) and (c) above, combined with the separate mention of “resolutions”, makes for an interesting discussion. Strata committee “decisions” are effectively its resolutions and often in the past minutes have been confined to merely recording the motions, resolutions and procedural matters, without going into detail about discussions. Indeed, there is good reason to omit discussions; in particular: • They are difficult to record accurately and often lead to debate in themselves. • They can often lead to claims of defamation because of the way in which they are worded or the nature of the material they contain. • They can substantially increase the size of the minutes. The adding of the obligation to keep “full and accurate minutes” to the obligation to keep records of “decisions”, combined with the overriding obligation to minute “resolutions”, is where the problem potentially arises. That carries with it the clear argument that minutes of meetings of the committee must be very detailed and must include full details of the debate which led to the outcome of a particular vote. This is not a

new problem, because substantially the same provisions appeared in the Strata Schemes Management Act 1996. It is significant that the obligation in relation to “resolutions” is referenced to those passed in accordance with Sch 2 of the Management Act (such as those relating to disclosure of pecuniary interests, but also including those passed in accordance with the procedures in the Schedule). In that context the “resolution” is nothing more than a “decision” and the two words have the same meaning. Therefore, the use of different words in different places in the Schedule does not support an argument that something more is required. However, use of the words “full and accurate minutes” do suggest an amount of detail, although it is highly doubtful that the detail required extends to an account of the debate on the various motions. There is an equally strong argument, maybe a better one, that the minutes need only contain full and accurate records of the proceedings of the meeting, including the decisions taken. Form 81 (see ¶19-081) illustrates the type of minutes that would comply with the obligation imposed on strata committees by Sch 2 of the Management Act. Obligation to distribute Within seven days after a meeting of the strata committee, or the passing of a resolution by written or other vote, the committee must provide copies of the minutes of the meeting or resolution in the following manner: (a) by giving each member of the strata committee a copy (b) if the strata scheme is not a large strata scheme, by giving each owner a copy, or (c) if the strata scheme is a large strata scheme and an owner requests a copy within the period of seven days, by giving the owner a copy. Clearly, in the case of a large strata scheme there is no obligation to distribute copies of minutes of meetings or resolutions to any owner who does not ask for a copy within the seven-day period. Also, now

there is no obligation in the case of either types of strata schemes for the minutes to be displayed on the notice board, although this practice may be undertaken voluntarily by the strata committee. Law: Management Act, Sch 2, cl 17.

¶12-014 Validity of meetings and resolutions As a general common law principle, where the governing rules of a corporation or association (including its sponsoring legislation) set up a process or procedure to achieve something (eg procedures for conduct of its meetings), then that process or procedure must be followed precisely. Any departure from the process or procedure will invalidate the intended outcome. The Management Act provides some relief to technical non-compliance with procedures, but only in the case of general meetings. The common law principles would apply strictly to strata committee meeting procedures, which could be relatively easily invalidated by an application under to the Tribunal under Pt 12 of the Management Act. The only exception in relation to strata committee meetings concerns certain defects in the constitution of the committee. Section 38 of the Management Act applies to any act or proceeding of a strata committee that was done, taken or commenced when there was: (d) a vacancy in the office of an officer of the owners corporation or any other member of the strata committee, or (e) any defect in the appointment, or any disqualification, of any such officer or member. It provides that any act or proceeding of the strata committee done in good faith is as valid as if the vacancy, defect or disqualification did not exist and the strata committee was fully and properly constituted. An example would be a strata committee member who at the time of their election was not a qualified candidate. However, the requirement for acting in good faith should be noted, as well as the likelihood that a committee acting with knowledge of the defect is unlikely to have acted in good faith.

Law: Management Act, s 38, Pt 12.

¶12-015 Disclosure of interests Obligation to disclose A member of a strata committee must, as soon as possible after relevant facts relating to a pecuniary interest comes to the knowledge of the member, disclose that interest to a strata committee meeting. A pecuniary (or monetary) interest exists where: (a) the member has a direct or indirect pecuniary interest in a matter being considered or about to be considered at a meeting, and (b) the interest appears to raise a conflict with the proper performance of the member’s duties in relation to the consideration of the matter. Without limiting that general position, a person has an indirect pecuniary interest in a matter if a person connected with the person (eg a spouse or relative) has a direct interest in the matter. A disclosure that the strata committee member: (a) is a member, or in the employment, of a specified corporation or body (b) is a partner, or in the employment, of a specified person, or (c) has some other specified interest related to a specified corporation or other body or to a specified person, is sufficient disclosure of the nature of the interest in any matter relating to that corporation or other body or that person which may arise after the date of disclosure. Failure to disclose is an offence which carries a maximum penalty of 10 penalty units (which currently equates to $1,100.00). Following disclosure The strata committee must record particulars of any disclosure made

by one of its members. The record must be in a book kept for that purpose (see Form 82 (¶19-082)) and the book must be open at all reasonable hours for inspection by any person upon payment of the fee determined by the strata committee. Following disclosure, the committee member must not, unless the strata committee otherwise determines, be present during any deliberation, or take part in any decision, of the strata committee with respect to the matter disclosed. The same rules apply to any deliberation or decision of the strata committee relating to the relaxation of that rule. Despite the strictness of the above procedures, any failure to comply with them does not invalidate any decision of the strata committee. Law: Management Act, Sch 2, cl 18.

FIRST ANNUAL GENERAL MEETING ¶13-001 Obligation to convene and hold In the case of a freehold strata scheme, the original owner must convene and hold a meeting of the owners corporation not later than two months after the end of the initial period. In leasehold strata schemes the same obligation to convene the meeting rests on the lessor of the leasehold scheme. The initial period ends on the day when there are owners of lots (other than the original owner) the sum of whose unit entitlements is at least one-third of the aggregate unit entitlement. This meeting is known as the first annual general meeting of the owners corporation and failure to convene and hold the meeting in accordance with Management Act is an offence by the original owner or lessor which attracts a penalty. Law: Management Act, s 4, 14.

¶13-002 Failure to convene or hold If the original owner or lessor fails to convene the first annual general meeting in accordance with the Management Act, or if they convene the meeting but fail to hold it in accordance with the Act, the owners corporation, an owner or a mortgagee may apply to the Tribunal for an order appointing a nominated consensual person to convene and hold the meeting. Despite such an order of the Tribunal, the original owner or lessor remains liable for the offence and penalty for contravening the obligation to convene and hold the meeting. Law: Management Act, s 14(2), 20.

¶13-003 Notice of the meeting

At least 14 days’ notice of the first annual general meeting must be given to each: (a) owner, other than the original owner or lessor, shown on the strata roll (b) first mortgagee shown on the strata roll (c) covenant chargee shown on the strata roll (d) tenant of a lot whose name has been notified under a tenancy notice in accordance with the Management Act. The 14 days must be calculated exclusive of the day on which the notice is served and the day of the meeting. This requires a degree of caution in the case of notices being served by mail. If the service address is in an Australian state or territory, service is taken (in the absence of evidence to the contrary) to have been effected on the fourth working day after the notice was posted. If the service address is in another place, service is taken (in the absence of evidence to the contrary) to have been effected in the ordinary course of post. While this sounds reasonably straightforward, the complication arises because of adjusted postal delivery times introduced by Australia Post in 2016. For its regular delivery service Australia Post says up to six business days should be allowed for delivery, depending on the destination. This means that the four working day presumption is unreliable given the possibility that evidence as to actual posting and delivery will usually be available. To illustrate by example; if a meeting is to be held on 26 February, for certainty the notice of the meeting will need to be posted on or before 4 February to allow for: • at least 14 days’ notice • the day of posting and the day of receipt • six days for delivery.

There is no obligation to display a notice of the first annual general meeting on the owners corporation’s notice board. The display obligations in Sch 1 of the Management Act do not apply to the first annual general meeting. See Form 83 (¶19-083) for a Notice of First Annual General Meeting. Law: Management Act, s 14, Sch 1. Interpretation Act 1987, s 76.

¶13-004 Agenda for the meeting While the agenda for the first annual general meeting may include any item which needs to be dealt with, it must include the following items: (a) to decide whether the amount of a contribution required to be made to the administrative or capital works fund should be confirmed or varied (b) to discuss the preparation of the 10-year capital works fund plan (c) to determine the number of members of the strata committee (d) to elect the strata committee (e) to decide whether insurances taken out by the owners corporation should be confirmed, varied or extended (f) to decide whether other insurances should be taken out by the owners corporation (see s 165(2) of the Management Act) (g) to decide if any matter or class of matter is to be determined by the owners corporation in general meeting (h) to decide whether the by-laws for the strata scheme should be altered or added to (i) to decide whether a strata managing agent should be appointed and, if appointed, what functions of the owners corporation should

be delegated to them (j) if there is already a strata managing agent, a form of motion to consider their report as to whether, and what, commissions have been paid to them or are likely to be payable to them for the following 12 months (k) to decide whether a building manager should be appointed and, if appointed, what functions they should exercise (l) to receive the documents required to be handed over by the original owner or lessor (m) to consider the accounting records and last financial statements prepared (n) to consider the initial maintenance schedule (o) to consider building defects and rectification (p) to appoint an auditor or to decide whether an auditor should be appointed, and (q) any item prescribed by the Management Regulation. The Management Regulation prescribes two additional items for the agenda of a first annual general meeting: 1. If a tenant representative has been nominated for the strata committee in accordance with s 33 of the Management Act — to receive the nomination. This effectively means to confirm the appointment to the strata committee of the nominee. 2. If the initial period ends not later than 12 months after completion of building work for which a building inspector is required to be appointed under Pt 11 of the Management Act — to appoint a building inspector for that Part. In the case of the first annual general meeting, there is no requirement

in s 15 of the Management Act for the form of motion to be set out in the meeting notice. However, Sch 1, cl 8 of the Management Act specifies matters which “must be included in, or accompany, the notice of all general meetings” (emphasis added). One such matter is a requirement for the notice to include a form of motion for each motion to be considered at the meeting. As a precaution, it is therefore recommended that the meeting notice set out the wording of all motions proposed to be considered by the meeting. Law: Management Act, s 15. Management Regulation, reg 5.

¶13-005 Documents and records to be delivered An original owner or lessor of a strata scheme who is obliged to convene and hold the first annual general meeting is also obliged to deliver certain documents to the owners corporation not later than 48 hours before that meeting. The documents are: • All plans, specifications, occupation certificates or other certificates (other than certificates of title for lots). • Diagrams, depreciation schedules and other documents. • All planning approvals, complying development certificates and related endorsed plans and approvals. • “As built” drawings, compliance certificates, fire safety certificates. • Warranties relating to the parcel, or relating to the building, plant and equipment on the parcel. • Policies of insurance. • The certificate of title for the common property. • The strata roll. • Any notices or other records relating to the strata scheme.

• The initial maintenance schedule. • Any interim report or final report of a building inspector prepared under Pt 11 of the Management Act and relating to any building on the parcel. • Any other document or item relating to the parcel or any building, plant or equipment on the parcel that is prescribed by the Management Regulation. The Management Regulation has prescribed: (a) the valuation of any building which is required to be insured (b) maintenance and service manuals (c) all service agreements relating to the supply of gas, electricity or other utilities to the parcel (d) copies of building contracts for the parcel, including any variations to those contracts, and (e) the most recent BASIX certificate (issued under the Environmental Planning and Assessment Act 1979) for each building on the parcel. This delivery obligation only applies to something which is in the actual possession, or under the control, of the original owner or lessor or may be obtained by them by taking reasonable steps to do so. Also, the delivery obligation does not apply to any documents which exclusively evidence rights or obligations of the original owner or lessor and are incapable of being used for the benefit of the owners corporation or any of the other owners. The difficulty associated with the last qualification is clear if one considers (in the context of the Management Act only) the construction contracts entered by a developer with the project builder. They exclusively evidence rights and obligations of the original owner (the developer) but, are they capable of being used for the benefit of the owners corporation or any of the other owners? Given the nature of the documents required to be

delivered and the clear intention of the exclusion, those contracts would not be required to be handed over. However, this issue was addressed in the Management Regulation which extended the list of documents to be handed over to include copies of the building contracts and any variations. If an original owner or lessor fails to comply with these delivery obligations, they commit an offence which carries the relatively high maximum penalty of 100 penalty units (which currently equates to $11,000.00). In addition, on the application of the owners corporation, the Tribunal may order the original owner or lessor to provide to the owners corporation something which was required to be handed over but was not handed over. Law: Management Act, s 16, 17. Management Regulation, reg 6.

¶13-006 Meeting procedures Potentially, first annual general meeting procedures may vary depending upon whether the scheme is a large strata scheme. Any such variation will be apparent from the Management Regulation, although at this stage those regulations do not specify any special procedures relating to large strata schemes. The procedures to be followed in relation to general meetings of owners corporations appear in Sch 1 of the Management Act. Clause 1 of the Schedule applies its provisions to “annual general meetings and other general meetings of an owners corporation”. However, some of the provisions are expressed not to apply to first annual general meetings (eg cl 7 of Sch 1), while others clearly do not apply because they are at odds with an express provision in the Management Act (eg cl 11(1) of Sch 1 contradicts s 14). It is difficult to determine exactly what provisions apply to first annual general meetings and what provisions do not apply. The following paragraphs set out the procedures which do apply, based on: (a) provisions expressly applied

(b) provisions capable of being applied, and (c) conflict between the Schedule and the provisions in the body of the Management Act. Law: Management Act, s 23, Sch 1.

¶13-007 Inclusion of matters on the agenda Although the first annual general meeting agenda is regulated by s 15 of the Management Act, that section merely sets out the matters which must be included on the agenda. There may be circumstances where other matters are included on the agenda. One such circumstance is where “any owner, or any person entitled to vote at a general meeting”, requires a motion to be included on the agenda. A “person entitled to vote” is (by definition) a person entitled to vote on a motion, other than a motion requiring a unanimous resolution. However, the mere fact that the lot owner is un-financial does not affect the right of the lot owner or other person entitled to vote to submit a motion. This wording is confusing, although on a more careful reading is reasonably clear. In simple terms, if there is no notice outstanding under s 22 of the Management Act in respect of a lot (which is a notice requiring the lot owner to provide information for the strata roll), then both the owner and another person entitled to vote in respect of a lot (eg a company nominee) can require a motion to be included on the agenda of the first annual general meeting even if the lot owner is unfinancial. Being un-financial would normally prevent a vote in respect of a lot, but the provisions of Sch 1 of the Management Act make it clear that any un-financial status does not disqualify the lot owner or other person entitled to vote in respect of the lot from submitting a motion for the agenda. The requirement for a motion must be made by written notice to the secretary that: (a) sets out the required motion (b) states the name of the person making the requirement, and

(c) includes an explanation of the motion which does not exceed 300 words in length. In the case of the first annual general meeting, the requirement would also need to have been made in the period from registration of the plan to the time notice of the meeting is given. If the requirement is made after the notice of meeting has been given, the secretary is required to include the motion on the agenda for the next subsequent general meeting. See Form 84 (¶19-084) for a suggested form of requisition. Law: Management Act, Sch 1, cl 4.

¶13-008 Nomination of strata committee candidates The notice of first annual general meeting must be given at least 14 days before the date of the meeting. That notice must include a call for nominations for members of the strata committee, with nominations closing at least seven days before the meeting. A nomination may also be made before the first annual general meeting is called and if so made it must be included in the notice of the meeting. Nominations received after the meeting is called must be given to the meeting by the secretary. The meeting, with the benefit of prior knowledge of the number of nominations received, will then determine the number of persons who will constitute the strata committee. If the number is equal to or less than the determined number, all the nominees will be elected to the strata committee. A nomination may be made by an owner or “person entitled to vote” at a general meeting, even if the owner or person cannot otherwise vote because the owner is un-financial. A “person entitled to vote” is a person entitled to vote on a motion, other than a motion requiring a unanimous resolution. Again, this provision gives rise to the confusion discussed above in ¶13-007. In the case of the first annual general meeting the nomination is made by written notice to the convenor of the meeting (usually the original owner). The nomination can be made at any time before the election is held (including at the meeting) and it must state the name of:

(a) the person nominated, and (b) the person making the nomination. In addition, the person nominating must state that the person nominated consents to the nomination. See Form 85 (¶19-085) for a suggested form of nomination. Law: Management Act, Sch 1, cl 5.

¶13-009 Chairing of the meeting If present at the first annual general meeting of the owners corporation, the chairperson has the right and obligation to chair the meeting. If the chairperson is not at the meeting, the persons present at the meeting and entitled to vote on motions submitted at the meeting may elect one of their number to preside at the meeting. Unfinancial owners, although unable to vote generally, can participate in the vote to elect the substitute chairperson. The person so elected, while so presiding, is taken to be the chairperson of the owners corporation. The chairperson does not have a casting vote at the meeting, although they are entitled to vote in their own right. In some circumstances the chairperson may be the only person present at the meeting, subject to a quorum being present by way of valid voting papers. In those circumstances the meeting is deemed to have been validly held despite the common law rule that there needs to be more than one person present for there to be a “meeting”. The chairperson may rule a motion out of order if: (a) they consider the motion, if carried, would conflict with the Management Act or the by-laws or would otherwise be unlawful or unenforceable, or (b) any requirement of the Management Act to include the form of motion in the notice of meeting has not been complied with. Before a motion is submitted to a vote at the meeting, or the holding of the election of the strata committee, any person present and entitled

to vote may request the chairperson to announce the names of the persons entitled to vote. In the event of such a request, the chairperson must announce those names before the vote is taken or the election held. After the vote or election, the chairperson must declare the result of the vote or election if it is possible to do so. Otherwise than a vote taken on a poll, the chairperson’s declaration of the result of a vote on a motion is conclusive without proof of the votes recorded for and against the motion. Law: Management Act, Sch 1, cl 3(2), 12, 16, 19.

¶13-010 Quorum A motion cannot be considered, or an election of office bearers held, at a first annual general meeting if there is no quorum present. It is possible that there is a quorum present for some motions, but not for others. Therefore, the presence of a quorum must, in some cases where the numbers are tight, be determined on a motion for motion basis. One of the following circumstances must be satisfied before a quorum is present for a motion or an election: 1. There must be at least one-quarter of the persons entitled to vote on the motion or election present at the meeting either personally or by proxy. 2. The total unit entitlements of the persons present at the meeting personally or by proxy and entitled to vote on the motion or election must be at least one-quarter of the aggregate unit entitlements for the scheme. 3. Where there is more than one owner in the scheme and the quorum calculated under 1 or 2 above would be less than two persons, then the quorum will be two persons present personally or by proxy and entitled to vote on the motion or election. A person can vote at a first annual general meeting by proxy, or by other permitted means, such as by means of an electronic voting

process. A person who has voted, or intends to vote in such manner, is taken to be present for calculating a quorum. If half an hour after a motion or business arises for consideration at a first annual general meeting a quorum is not present, the chairperson must: (a) adjourn the meeting for at least seven days, or (b) declare that the persons present either personally or by duly appointed proxy and are entitled to vote constitute a quorum for considering the motion or business, plus any other subsequent motion or business. The option in (b) above is very unusual and the discretion given to a chairperson would need to be cautiously exercised. It would be appropriate to exercise that discretion if the number of qualified persons present was close to the required number for a quorum. However, if the number of qualified persons present was very low compared to the number required, the chairperson should resist exercising the discretion and elect to adjourn the meeting. At the adjourned meeting if a quorum is not present after a half hour after the time fixed for the adjourned meeting, then the persons who are present personally or by proxy and who are entitled to vote on the motion or election constitute a quorum for considering that motion or business, as well as subsequent motions and business. A person who exercises a vote by a permitted means (eg electronically) would be regarded as present at the meeting for calculating the quorum. Law: Management Act, Sch 1, cl 17.

¶13-011 Entitlement to vote Each owner and each person who has a “priority vote” is entitled to vote at a first annual general meeting of the owners corporation provided that they are shown on the strata roll and, in the case of a corporation, their company nominee is also shown on the strata roll. The following are the rules regulating voting rights at first annual

general meetings: 1. A sole owner, first mortgagee or covenant chargee (other than a corporation) may vote in person or by proxy. 2. Joint first mortgagees and joint covenant chargees may only vote by proxy duly appointed by all of them jointly. The proxy may be one of them. 3. A sole owner, first mortgagee or covenant chargee which is a corporation may vote by the company nominee in person, or by proxy appointed by the company. Note that the proxy must be appointed by the company and not by the company nominee. 4. Co-owners may vote by proxy appointed by them jointly. The proxy may be one of the co-owners. 5. Where co-owners do not vote by proxy, one of the co-owners may act as a proxy if: (a) the other co-owners are absent (b) the co-owners who are present give their consent, or (c) the co-owner is first named on the strata roll as one of the co-owners. 6. If there are owners of successive estates in a lot (eg a life estate and an estate in remainder), only the owner of the first estate may vote at the first annual general meeting. 7. If the owner of a lot holds it as trustee, a person beneficially entitled may not vote at the first annual general meeting. The vote must be exercised by the trustee, or its company nominee or proxy. 8. A vote at the first annual general meeting by an owner of a lot, or a person with a priority vote for the lot, does not count if the owner was un-financial as at the date notice of the meeting was

given. However, this does not apply if: (a) the motion is for a unanimous resolution, or (b) the amount owing was paid before the meeting. 9. A person is not entitled to cast a vote at the first annual general meeting if they have not complied with a notice given to them under s 22 of the Management Act requiring them to give a strata interest notice (ie to provide information for the strata roll). 10. A person is not entitled to cast a vote at the first annual general meeting if they are required to vote through a nominee but the nominee’s full name and address for service has not been given in accordance with s 22 of the Management Act. A “priority vote” displaces a vote on the same matter by the owner of a lot (ie the owner’s vote does not count) provided at least two days written notice of the intention to exercise the priority vote at the meeting has been given to the lot owner. A priority vote can only be cast by a person whose vote has priority under clause 24 of Sch 1 of the Management Act, namely: (a) the mortgagee of a lot under a mortgage shown on the strata roll as having priority over any other mortgage or covenant charge which is shown on the roll in respect of the lot (b) the covenant chargee of a lot under a covenant charge shown on the strata roll as having priority over any mortgage which is shown on the roll in respect of the lot, or (c) the covenant chargee of a lot under a covenant charge shown on the strata roll where no mortgage is shown on the roll in respect of the lot. A priority vote may be cast on any motion that: (d) relates to insurance, budgeting or the fixing of a levy (e) will require expenditure by the owners corporation of an amount

that exceeds the prescribed amount, and (f) requires a special resolution or unanimous resolution. The prescribed amount is an amount calculated by multiplying $1,000.00 by the number of lots in the scheme (which would include utility lots). Law: Management Act, s 22, Sch 1, cl 23, 24. Management Regulation, reg 12.

¶13-012 Proxies Rights A duly appointed proxy may vote on a show of hands or demand a poll. If the person appointed proxy has an entitlement to vote in their own right, they can exercise both the proxy vote and their personal vote. If the person appointed proxy is appointed for more than one person, they may exercise a vote in respect of each appointment. The right of a proxy to exercise a vote on a matter is lost if the person who appointed the proxy personally exercises their right to vote on the matter. That applies irrespective of whether the vote is exercised personally at the meeting or by voting paper or other permitted means. Also, the instrument appointing the proxy may limit the way the proxy may vote at the meeting (eg it may require an affirmative vote in respect of some motions) and if the proxy votes contrary to that limitation the vote is invalid. Limitations The Management Act imposes limitations on proxy voting, namely: (1) An original owner, or person connected with an original owner (see ¶14-009 for the meaning of “connected”), cannot cast a vote by proxy or power of attorney on behalf of another owner if the proxy or power was given pursuant to: (a) a term of the sale contract for the lot, or

(b) another contract or arrangement that is ancillary or related to the sale contract. (2) A vote by a proxy who is a building manager, an on-site residential property manager or a strata managing agent is invalid if it would: (a) obtain, or assist in obtaining, a pecuniary interest for, or (b) confer or assist in conferring any other material benefit on the proxy. (3) There is a limit on the total number of proxies which may be held by a person (other than proxies they hold as co-owner of a lot) voting on a resolution, namely: (a) if the strata scheme has 20 lots or less — one, and (b) if the strata scheme has more than 20 lots — a number equal to not more than 5% of the total number of lots. The limitation in (1) above does not prevent a person from giving a proxy or power of attorney to a person related to him (eg a family member). The Material benefit referred to in (2) above is defined to include, without limitation: • An extension of the term, or an additional term of appointment, of the proxy as building manager, on-site residential property manager or strata managing agent. • An increase in the remuneration of the proxy. • A decision of the owners corporation not to proceed with, or to withdraw, delay, compromise or settle litigation or other legal proceedings against the proxy. • Any other decision of the owners corporation that affects litigation or other legal proceedings relating to the proxy.

In relation to (3) above, by way of example, if a strata scheme has 92 lots, the number of proxies which can be held by a single person is four. With regard to the calculation; 5% of 92 is 4.6. If that is rounded to 5, the number of proxies would be more than 5%, so the maximum permitted number is 4. The Management Act also renders void and unenforceable certain provisions in a contract for sale of a lot, or any ancillary or related contract or arrangement, which seeks to capture or influence the vote of the purchaser of the lot. Appointment A proxy is appointed by an instrument in the form prescribed by the Management Regulation (see Form 86 (¶19-086)). The form must be dated and signed by the person appointing the proxy or executed in another manner permitted by the Management Regulation (although at this stage the regulations are silent on such an execution). After signature the proxy form must be given to the secretary of the owners corporation: (a) in the case of a large corporation, at least 24 hours before the first meeting for which it is to operate, or (b) in any other case, at or before the first meeting for which it is to operate. The proxy appointment has effect for the period from the date on which it was made until the later of the first anniversary of that day and the conclusion of the second annual general meeting held after that day. However, the proxy appointment can be revoked during such period, in which event it ceases to operate upon revocation. If a second proxy is appointed during the period of currency of the first proxy and that second proxy is delivered to the secretary of the owners corporation, then the first proxy no longer has any effect. Law: Management Act, Sch 1, cl 25, 26. Management Regulation, reg 13.

¶13-013 Voting procedures A person entitled to vote, or a proxy, must cast their vote in person at the meeting unless the owners corporation, by resolution passed at a general meeting, determines that a vote may be cast by some other specified means. The Management Regulation makes provision for the following means of voting: (1) Teleconference, video-conferencing, e-mail or other electronic means while participating in a meeting from a remote location. (2) E-mail or other electronic means before the meeting at which the matter (not being an election) is to be determined. (3) Other electronic means of voting, including requiring voters to access a voting website and to vote in accordance with directions on that website. In the case of (1) above the person voting must be participating in the meeting, which means the vote is cast at the same times as votes by persons present at the meeting are cast. In that case the person is also able to vote on a committee election. The process in (2) above is similar in some respects to (1), although the person does not have to be participating in the meeting and no vote can be cast on a committee election. The pre-meeting website voting process in (3) above can also include voting on a committee election. The Management Regulation (reg 14) and the Management Act appear on first reading to be in conflict in that the Act requires a resolution of a general meeting for an alternative voting process to be adopted, whereas the Regulations appear to allow that decision to be made by “an owners corporation or strata committee”. However, a proper interpretation of the Regulation would be that the committee is empowered, by resolution, to adopt a particular means of voting at committee meetings while the owners corporation is the only body empowered, by general meeting resolution, to adopt a particular means of voting at general meetings. The Management Regulation sets out the available alternatives.

The initial consultation draft of the Management Regulation issued by the government made provision for postal voting “on matters (other than elections) to be determined by the corporation”. However, that option was omitted from the gazetted Management Regulation. The current wording of the Management Act and Management Regulation makes it clear that the paper postal voting procedures, which have been the hallmark of strata meetings for decades, have now been discontinued in favour of electronic voting means. While it is possible to emulate the paper voting system by use of e-mails, this is likely to be of little comfort to those lot owners who have not yet embraced email communications. Law: Management Act, Sch 1, cl 28. Management Regulation, cl 14.

¶13-014 Pre-meeting electronic voting The rules regulating pre-meeting electronic voting are set out in the Management Regulation. They require the following: 1. The secretary must ensure the form for the electronic ballot paper contains: (a) instructions for completing the ballot paper (b) the question to be determined (ie the motion or election), and (c) the means of indicating the voter’s choice on the question to be determined. 2. The secretary must, at least seven days before the meeting at which the matter is to be determined, give each person entitled to vote: (a) access to: (i) an electronic voting paper (ii) a voting website, or

(iii) an electronic application containing an electronic ballot paper, that complies with cl 15 of the Management Regulation, (b) access to information about: (i) how the ballot paper must be completed (ii) the closing date of the ballot (iii) if voting is by e-mail, the address where the ballot paper is to be returned (iv) if the voting is by other electronic means, the means of accessing the electronic voting system and how the completed electronic voting paper is to be sent to the secretary, and (c) access to an electronic form of declaration requiring the voter to state: (i) his/her name (ii) the capacity in which the person is entitled to vote (iii) in the case of a matter that requires a special resolution, the voter’s unit entitlement, and (iv) if the vote is a proxy vote, the name and capacity of the person who gave the proxy. 3. Each person must vote in accordance with the instructions contained in the information (ie the instructions referred to in 2(b) above). 4. If the ballot is a secret ballot, the secretary must ensure that: (a) the identity of the voter cannot be ascertained from the form of the electronic ballot paper, and

(b) the declaration by the voter is dealt with so that it is not capable of being used to identify the voter. 5. An electronic ballot paper and the form of declaration must be sent to the secretary no later than the close of the ballot. 6. The secretary must ensure that all electronic ballot papers are stored securely until the counting of the votes begins (this being intended to prevent anyone knowing the voting trend before the close of the ballot). 7. A ballot paper is informal if the voter has failed to record a vote in accordance with the information (ie the instructions referred to in 2(b) above). 8. If the voting is carried out using a voting website or other electronic application, the website or application is to provide a warning message to a person casting an informal vote that the proposed vote is informal. 9. As soon as possible after the close of the ballot, the secretary must: (a) review all information and reports about the electronic ballot (b) reject as informal any votes that do not comply with the Management Regulation, and (c) ascertain the result of the electronic ballot. 10. The secretary must, at the meeting to consider the matter for which the pre-meeting electronic voting was held, inform the persons present of the result of the ballot. Interestingly, there is no requirement for electronic notification of voters (eg by e-mail or post on a website) of the result of the ballot. Also, it will be noted that despite the pre-meeting electronic voting process, there will still be the need for an actual meeting, although in many cases the chairperson or strata managing agent will be the only

person present. Law: Management Regulation, reg 15, 16, 17.

¶13-015 Secret ballots A strata committee may determine that a motion or matter must be determined by secret ballot. In addition, at least one-quarter of the persons entitled to vote on a motion or election may agree that the motion or matter should be decided by secret ballot. In both such cases the motion or matter must then be determined by secret ballot. The Management Act leaves it to the Management Regulation to set out the procedures for a secret ballot. However, there is very little detail in the regulations relating to secret ballots (see ¶13-014) and the material available is confined to pre-meeting electronic voting. Law: Management Act, Sch 1, cl 29.

¶13-016 Conducting the meeting Neither the Management Act nor the Management Regulation specifies the procedures which should be followed by the chairperson when conducting the first annual general meeting. The order of business of the meeting will be determined by the agenda for the meeting and the following is a common approach to conducting the meeting: 1. The chairperson declares the meeting open and notes the time. 2. The secretary records the names of: (a) those owners who are present personally or electronically (eg by telephone or Skype) (b) tenants who are present, and (c) others who may be present (eg the strata managing agent, building manager or owners corporation’s solicitor).

3. The secretary records the names of persons who have voted by pre-meeting electronic voting. Persons who vote electronically are effectively deemed to be present at the meeting by the definition of “person present” in s 4(1) of the Management Act. 4. The chairperson asks for apologies and the secretary records them. 5. The chairperson determines whether a quorum is present. 6. Each item of business or motion is dealt with in the order appearing on the agenda. (Before dealing with an item, the chairperson should be satisfied that there is a quorum for considering the motion or item of business.) 7. The election of the strata committee is dealt with (the number to be elected having just been determined). 8. General business and discussion can then follow. (Unless the nature of a decision intended to be made has been clearly disclosed on the agenda of the meeting it will not be possible to pass resolutions arising out of this segment of the meeting.) 9. The chairperson declares the meeting closed and notes the time. Motions being considered by the meeting will usually be dealt with in the following way: (1) Either: (a) the chairperson will introduce the motion and read it (if the wording of the motion appears on the agenda), or (b) a person present and entitled to vote on motions will introduce the motion by wording it in the way in which it is proposed to be considered. (2) The chairperson will consider whether the motion, if carried, would conflict with the Management Act or the by-laws, or would

otherwise be unlawful or unenforceable. If the chairperson is satisfied that is the case, they may rule the motion out of order and decline to progress it. (3) If the motion is to progress, the chairperson will: (a) determine whether a quorum is present for the motion, and (b) ask for any discussion on the motion, which will then proceed under the direction of the chairperson. (4) The chairperson will take the vote on the motion by: (a) calling for votes in favour of the motion (b) calling for votes against the motion, and (c) asking if there are any abstentions from voting on the motion. (5) The chairperson will then tally the votes (also considering any written votes or pre-meeting electronic votes and abstentions). (6) The chairperson will then declare whether the motion is passed or defeated. This declaration is conclusive, without the need to prove the votes recorded for or against the motion. (7) The secretary will record details of the above. Where a motion has been proposed to a first annual general meeting, either by inclusion of the wording on the agenda or verbally at the meeting, the wording of the proposed motion can be amended. If the motion was proposed verbally and if the amendment is agreed to by the proposer of the motion, then the amended motion can be put directly to the vote. If it is not agreed to, then at the appropriate time, the chairperson should first put the amendment to the vote. If the amendment is passed, then the amended motion is put to the vote. If the amendment is not passed, then the original motion is put to the vote. There is nothing in the Management Act or Management

Regulation which requires motions and amending motions to be moved and seconded, although the chairperson may well adopt that procedure. It is not uncommon for normal meeting procedures to be adopted by way of “standing orders” for general meetings. Ultimately, in the absence of a prescribed procedure or process, the conduct of the meeting is at the discretion of the chairperson, or in accordance with any direction (ie “standing orders”) which may be adopted for general meetings by resolution of a prior general meeting.

¶13-017 Adjournments There are two types of meeting adjournments: • automatic adjournments • approved adjournments. An automatic adjournment occurs when there is a lack of quorum for an individual motion or election within half an hour after the motion or election is due for consideration (see ¶13-010). The adjournment may be in respect of the motion or the election, or it may be in respect of the entire meeting, depending on who is present at the meeting at the relevant points in time. The person who is presiding at the meeting (usually the chairperson) fixes the time and place at which the adjourned meeting is to be resumed. If there is no such person present at the meeting, then the person who would have presided had there been a quorum (again, usually the chairperson) must fix that time and place. An approved adjournment is one which occurs because of a procedural motion presented to the meeting (eg a motion “that this meeting be adjourned until after the NCAT decision has been handed down”). This type of adjournment can occur for any reason and at any time during the meeting. The procedural motion need not be seconded and should be put to the meeting if moved by a person entitled to vote at the meeting. Where a meeting has been adjourned, whether generally or for an

item of business, the secretary must give the owners, at least one day before the resumed meeting, a written notice specifying: (a) the time and place of the meeting, and (b) the provisions of the Management Act for determining the quorum at a meeting. Form 87 (see ¶19-087) illustrates the type of notice which must be given. Law: Management Act, Sch 1, cl 20.

¶13-018 Tenant participation If a lot is leased, the lessor must give notice of the lease to the owners corporation within 14 days after the commencement of the lease. Failure to do so is an offence. A similar obligation exists in relation to sub-leases and assignments of leases. These provisions are intended to ensure that the owners corporation is aware of who is in residence in the scheme. However, they also play an important part in the administration of the scheme. A tenant who has been notified in accordance with those requirements is entitled to attend the first annual general meeting, but is not entitled to vote unless they are a proxy holder. However, the owners corporation may determine, in respect of a particular meeting or generally, that tenants (other than proxy holders) are not entitled to be present when the following matters are discussed or determined: (a) financial statements and auditor’s reports (b) levying of contributions (c) recovery of unpaid contributions (d) a strata renewal proposal (ie a redevelopment proposal) or any related matter, and (e) any other financial matter specified in the Management

Regulation (although at this stage no matter has been specified). A tenant is not entitled to address the meeting unless they hold a proxy or are authorised to do so by resolution of the owners corporation. The resolution may be proposed and passed as a procedural motion at the actual meeting. Law: Management Act, s 258, Sch 1, cl 21.

¶13-019 Minutes The owners corporation must keep full and accurate minutes of its meetings that include minutes of all motions passed at its meetings. That “inclusive” wording suggests that something more than a record of the motions passed must be included in the minutes. That is not to say that details of the discussions which occurred at the meeting need to be recorded. The minutes in Form 88 (see ¶19-088) are indicative of the type of detail that should be kept. Within 14 days after a meeting, the owners corporation must provide copies of the minutes of all motions passed at the meeting: (a) to each member of the strata committee (b) to each owner (unless the strata scheme is a large strata scheme), and (c) to each owner in a large strata scheme who requests a copy within the 14-day period. Failure to distribute the minutes in accordance with those requirements is an offence. While the wording of these requirements suggests that the entire minutes need not be provided (because only “motions passed” are referred to), as a precautionary measure it is recommended that a complete copy of the minutes is provided. Law: Management Act, Sch 1, cl 22.

¶13-020 Validity of proceedings At common law, for the first annual general meeting to be valid it must comply strictly with the provisions of the Management Act and Management Regulation relating to the convening and conduct of the meeting and the admission of votes. The same principal is applied by s 24(1) of the Management Act. It provides that the Tribunal may, on application by an owner or first mortgagee, make an order invalidating a resolution or an election if it considers that the provisions of the Management Act or Management Regulation have not been complied with in relation to the meeting. The strict common law position can be relaxed in certain circumstances by an equity court which “refuses to interfere where an irregularity has been committed, if it is within the power of the persons who have committed it at once to correct it by calling a fresh meeting and dealing with the matter with all due formalities” (Browne v La Trinidad (1887) 37 Ch D 1). Whether an equity court will interfere will depend upon how serious the non-compliance was and the likelihood of a different result if the motion was resubmitted in accordance with proper procedures. The Management Act provides a discretion to the Tribunal which operates in a similar way to the equitable principles. In particular: 1. The Tribunal may refuse to make an order invalidating a resolution because proper procedures were not followed if it considers: (a) that the failure to comply with the procedures did not adversely affect any person, and (b) that compliance with the procedures would not have resulted in a failure to pass the resolution or affected the result of the election. 2. The Tribunal may on application of a person entitled to vote on a motion for a resolution, order (subject to certain pre-conditions) that a resolution passed at the general meeting be treated as a

nullity on and from the date of the order. However, the Tribunal must be satisfied that the resolution would not have been passed but for the fact that the applicant for the order: (a) was improperly denied a vote on the motion for the resolution, or (b) was not given due notice of the item of business in relation to which the motion was passed. Law: Management Act, s 24, 25.

SUBSEQUENT ANNUAL GENERAL MEETINGS ¶14-001 Obligation to hold After its first annual general meeting, an owners corporation must hold a further annual general meeting “once in each financial year”. There is no definition of “financial year” in the Management Act and it is not entirely clear what is meant by the term. It may be a reference to a “reporting period” (which is the period for which annual financial statements must be prepared). See ¶9-017 for a discussion as to how the “reporting period” is determined. Based on that discussion, there is a problem in that, until the date of the next annual general meeting and the end balancing date of the next financial statements are decided: (a) there is no way of knowing when the reporting period ends, and (b) there is no obligation to convene the second (or subsequent) annual general meetings each “year” as opposed to each “financial year”. It follows that it is not reliable to interchange “reporting period” and “financial year” for the purpose of holding annual general meetings unless the reporting period is the same each year (as suggested in ¶9017). This reinforces the need to adopt the solution suggested in that paragraph. Law: Management Act, s 18, 92.

¶14-002 Pre-meeting matters In certain circumstances, any owner, or any person entitled to vote at a general meeting, may require a motion to be included on the agenda of the annual general meeting of the owners corporation. The full

implications of this provision are discussed at ¶13-007. In general terms, if there is no notice outstanding under s 22 of the Management Act in respect of a lot (which is a notice requiring the lot owner to provide information for the strata roll), then both the owner and another person entitled to vote in respect of a lot (eg a company nominee) can require a motion to be included on the agenda of the annual general meeting even if the lot owner is un-financial. The requisition must be by written notice given to the secretary of the owners corporation. The notice must: (a) set out the required motion (b) state the name of the person making the requirement, and (c) include an explanation of the motion of not more than 300 words in length. Provided the notice is served before the notice of the annual general meeting is issued, the secretary must include the requisitioned motion on the notice of that meeting. If the notice is received after the meeting notice has been sent, then the secretary must include the requisitioned motion on the agenda for the next general meeting of the owners corporation. Form 84 (see ¶19-084) illustrates the required notice. Any owner, or any person entitled to vote at a general meeting, may also nominate a person for election to the strata committee. A “person entitled to vote” has the same meaning as discussed above and in ¶13-007. The nomination must be by written notice given to the secretary of the owners corporation. The notice must state the name of: (a) the person nominated, and (b) the person making the nomination. In addition, the person nominating must state that the person nominated consents to the nomination. Form 85 (see ¶19-085) illustrates the form of notice required to nominate a candidate.

Law: Management Act, Sch 1, cl 4, 5.

¶14-003 Notice of the meeting At least seven days’ notice of an annual general meeting must be given to each owner. If an item on the agenda is one in which a mortgagee or covenant chargee shown on the strata roll may cast a priority vote, then at least seven days’ notice of the meeting must also be given to the mortgagee or covenant chargee. Also, at least seven days before the meeting is held a copy of the agenda for the meeting must: (a) be given to each tenant who has been notified as a tenant for the lot, or (b) be prominently displayed on any owners corporation notice board. The owners corporation may decide to also give tenants a copy of other documents relating to the meeting. If no tenant has been notified, then it is not necessary to display the notice on the notice board. The seven days must be calculated exclusive of the day on which the notice is served and the day of the meeting. This requires a degree of caution in the case of notices being served by mail. If the service address is in an Australian state or territory, service is taken (in the absence of evidence to the contrary) to have been effected on the fourth working day after the notice was posted. If the service address is in another place, service is taken (in the absence of evidence to the contrary) to have been effected in the ordinary course of post. While this sounds reasonably straightforward, the complication arises as a consequence of adjusted postal delivery times introduced by Australia Post in 2016. For its regular delivery service Australia Post says up to six business days should be allowed for delivery, depending on the destination. This means that the four working day presumption is unreliable given the possibility that evidence as to actual posting and delivery will usually be available.

To illustrate by example; if a meeting is to be held on 25 February, for certainty the notice of the meeting will need to be posted on or before 10 February to allow for: • at least seven days’ notice • the day of posting and the day of receipt • six days for delivery. Seven days is a very short notice period for a meeting and best practice would require an owners corporation to give owners advance notice of the date of the annual general meeting. This notice could also invite owners to submit any motions they would like considered at the meeting and also to consider whether they would like to nominate someone for election to the strata committee. While this type of advance notice is not required by law it is desirable and also has the potential to entice owners to be involved in the administration of their scheme. See Form 89 (¶19-089) for an example of this type of advance notice and Form 90 (¶19-090) for a Notice of Annual General Meeting. Law: Management Act, Sch 1, cl 7, 11. Interpretation Act 1987, s 76.

¶14-004 Agenda for the meeting The notice of an annual general meeting must include an agenda, which must contain a form of motion: (a) to confirm the minutes of the last general meeting (b) to decide the number of members of the strata committee (c) for the election of the strata committee (d) for adoption of the financial statements (e) to consider the appointment of an auditor

(f) to consider the taking out of additional insurances authorised by s 165(2) of the Management Act, if such insurances have not been taken out (g) a form of motion to consider the report by the strata managing agent (if there is one) as to: (i) whether and what commissions and training services have been provided to or paid for the agent during the previous year, and (ii) what commissions and training services are likely to be so provided to or paid for the agent for the following 12 months, (h) to decide how to deal with any overdue contributions payable to the owners corporation (i) to decide if any matter or type of matter is to be determined by the owners corporation in general meeting, and (j) for each other motion to be considered at the meeting. The notice must also include, or be accompanied by, the following: • An item to prepare or renew the 10-year plan for the capital works fund. • An item to consider (if appropriate for the building): – the annual fire statement under the Environmental Planning and Assessment Act 1979, and – arrangements for obtaining the next annual fire safety statement. • If the buildings are still under a warranty period for an applicable statutory warranty under the Home Building Act 1989, an item to consider building defects and rectification. • Where a motion requires a special resolution or a unanimous

resolution to be passed, a statement to that effect. • A statement that a vote by an owner does not count if a priority vote is cast for the lot in relation to the same matter. • A statement that an un-financial owner, mortgagee or covenant chargee cannot vote at a meeting on a motion (other than a motion requiring a unanimous resolution) unless payment has been made before the meeting of all contributions levied on the owner, plus any other amounts recoverable from the owner in relation to the lot. • A statement that voting or other rights may be exercised in person (if the addressee is an individual) or by a company nominee (if the addressee is a corporation), or by a proxy appointed by the addressee. • The provisions of the Management Act for determining a quorum at meetings. • A copy of the minutes of the previous general meeting (but only if the owner has previously not been given a copy of the minutes or has requested but not received a copy before the notice is given). • A copy of the last statements of key financial information prepared by the owners corporation for the administrative fund, the capital works fund and any other fund and including any relevant auditor’s report. (Note that this is a different statement to the annual financial statements.) • Particulars of each insurance policy taken out by the owners corporation (as required to be specified in the strata roll). • The names of the persons nominated for election to the strata committee before the notice of the meeting is given. In addition to the above, if an owner, a mortgagee or covenant chargee requests a copy of the last financial statements prepared for

the administrative fund, the capital works fund and any other fund of the owners corporation, then they must be given such copy at least two days before the meeting at which they are to be presented. As an alternative to responding to such requests, the owners corporation may also determine that those statements are to be included in, or to accompany, the notice of the annual general meeting. Because of the requirement for all motions to be considered at the meeting to be set out on the agenda for the meeting, any requirement for “an item to consider” something (eg an annual fire statement) will require a motion to prescribe the desired outcome. Therefore, in preparing for an annual general meeting a committee will need to itself consider what is the appropriate decision to be made by the meeting and then encapsulate that decision in a form of motion to be considered by the meeting. Law: Management Act, Sch 1, cl 5(4), 8, 9, 10.

¶14-005 Nomination of strata committee candidates Clause 7 of Sch 1 of the Management Act requires the notice of an annual general meeting to be given at least seven days before the date of the meeting. Clause 5 of that Schedule requires that notice to include a call for nominations for members of the strata committee, with nominations closing at least seven days before the meeting. That is clearly a defect in the wording of the Schedule, although in practice it may not be a problem because a nomination may also be made at any time before the meeting is called and if so made it must be included in the notice of the meeting. Nominations received after the meeting is called must be given to the meeting by the secretary. A nomination may even be made at the meeting. With the benefit of prior knowledge of the number of nominations received, the meeting will then determine the number of persons who will constitute the strata committee. If the number of nominations is equal to or less than the determined number, all the nominees will be elected to the strata committee. A nomination may be made by an owner or “person entitled to vote” at a general meeting, even if the owner or person cannot otherwise vote

because the owner is un-financial. A “person entitled to vote” is a person entitled to vote on a motion, other than a motion requiring a unanimous resolution. Again, this provision gives rise to the confusion discussed above in ¶13-007. In the case of annual general meetings the nomination is made by written notice to the secretary. The nomination can be made at any time before the election is held (including at the meeting) and it must state the name of: (a) the person nominated, and (b) the person making the nomination. In addition, the person nominating must state that the person nominated consents to the nomination. See Form 85 (¶19-085) for a suggested form of nomination. Law: Management Act, Sch 1, cl 5.

¶14-006 Chairing the meeting If present at the annual general meeting of the owners corporation, the chairperson has the right and obligation to chair the meeting. If the chairperson is not at the meeting, the persons present at the meeting and entitled to vote on motions submitted at the meeting may elect one of their number to preside at the meeting. Un-financial owners, although unable to vote generally, can participate in the vote to elect the substitute chairperson. The person so elected, while so presiding, is taken to be the chairperson of the owners corporation. The chairperson does not have a casting vote at the meeting, although they are entitled to vote in their own right. In some circumstances the chairperson may be the only person present at the meeting, subject to a quorum being present by means of electronic voting. In those circumstances the meeting is deemed to have been validly held despite the common law rule that there needs to be more than one person present for there to be a “meeting”. The chairperson may rule a motion out of order if: (a) they consider the motion, if carried, would conflict with the

Management Act or the by-laws or would otherwise be unlawful or unenforceable, or (b) any requirement of the Management Act to include the form of motion in the notice of meeting has not been complied with. Before a motion is submitted to a vote at the meeting, or the holding of the election of the strata committee, any person present and entitled to vote may request the chairperson to announce the names of the persons entitled to vote. In the event of such a request, the chairperson must announce those names before the vote is taken or the election held. After the vote or election, the chairperson must declare the result of the vote or election if it is possible to do so. Otherwise than a vote taken on a poll, the chairperson’s declaration of the result of a vote on a motion is conclusive, without proof of the votes recorded for and against the motion. Law: Management Act, Sch 1, cl 12, 16, 19.

¶14-007 Quorum A motion cannot be considered, or an election of office bearers held, at an annual general meeting if there is no quorum present. It is possible that there is a quorum present for some motions, but not for others. Therefore, the presence of a quorum must, in some cases where the numbers are tight, be determined on a motion by motion basis. One of the following circumstances must be satisfied before a quorum is present for a motion or an election: 1. There must be at least one-quarter of the persons entitled to vote on the motion or election present at the meeting either personally or by proxy. (Note that “persons present” has an extended meaning.) 2. The total unit entitlements of the persons present at the meeting personally or by proxy and entitled to vote on the motion or election must be at least one-quarter of the aggregate unit

entitlements for the scheme. 3. Where there is more than one owner in the scheme and the quorum calculated under 1 or 2 above would be less than two persons, then the quorum will be two persons present personally or by proxy and entitled to vote on the motion or election. A person can vote at an annual general meeting by proxy, or by other permitted means, such as by means of an electronic voting process. A person who has voted, or intends to vote in such manner, is taken to be present for the purpose of calculating a quorum. If half an hour after a motion or business arises for consideration at an annual general meeting a quorum is not present the chairperson must: (a) adjourn the meeting for at least seven days, or (b) declare that the persons present either personally or by duly appointed proxy and are entitled to vote constitute a quorum for considering the motion or business, plus any other subsequent motion or business. The option in (b) above is very unusual and the discretion given to a chairperson would need to be cautiously exercised. It would be appropriate to exercise that discretion if the number of qualified persons present was close to the required number for a quorum. However, if the number of qualified persons present was very low compared to the number required, the chairperson should resist exercising the discretion and elect to adjourn the meeting. At the adjourned meeting, if a quorum is not present after a half hour after the time fixed for the adjourned meeting, then the persons who are present personally or by proxy and who are entitled to vote on the motion or election constitute a quorum for considering that motion or business, as well as subsequent motions and business. A person who exercises a vote by a permitted means (eg electronically or by telephone) would be regarded as present at the meeting for calculating the quorum. Law: Management Act, Sch 1, cl 17.

¶14-008 Entitlement to vote Each owner and each person who has a “priority vote” is entitled to vote at an annual general meeting of the owners corporation provided that they are shown on the strata roll and, in the case of a corporation, their company nominee is also shown on the strata roll. The following are the rules regulating voting rights at annual general meetings: 1. A sole owner, first mortgagee or covenant chargee (other than a corporation) may vote in person or by proxy. 2. Joint first mortgagees and joint covenant chargees may only vote by proxy duly appointed by all of them jointly. The proxy may be one of them. 3. A sole owner, first mortgagee or covenant chargee which is a corporation may vote by their company nominee in person, or by proxy appointed by the company. Note that the proxy must be appointed by the company and not by the company nominee. 4. Co-owners may vote by proxy appointed by them jointly. The proxy may be one of the co-owners. 5. Where co-owners do not vote by proxy, one of the co-owners may act as a proxy if: (a) the other co-owners are absent (b) the co-owners who are present give their consent, or (c) the co-owner is first named on the strata roll as one of the co-owners. 6. If there are owners of successive estates in a lot (eg a life estate and an estate in remainder), only the owner of the first estate may vote at an annual general meeting. 7. If the owner of a lot holds it as trustee, a person beneficially entitled may not vote at an annual general meeting. The vote

must be exercised by the trustee, or its company nominee or proxy. 8. A vote at an annual general meeting by an owner of a lot, or a person with a priority vote for the lot, does not count if the owner was un-financial as at the date notice of the meeting was given. However, this does not apply if: (a) the motion is for a unanimous resolution, or (b) the amount owing was paid before the meeting. 9. A person is not entitled to cast a vote at an annual general meeting if they have not complied with a notice given to them under s 22 of the Management Act requiring them to give a strata interest notice (ie to provide information for the strata roll). 10. A person is not entitled to cast a vote at an annual general meeting if they are required to vote through a nominee but the nominee’s full name and address for service has not been given in accordance with s 22 of the Management Act. A “priority vote” displaces a vote on the same matter by the owner of a lot (ie the owner’s vote does not count) provided at least two days’ written notice of the intention to exercise the priority vote at the meeting has been given to the lot owner. A priority vote can only be cast by a person whose vote has priority under cl 24 of Sch 1 of the Management Act, namely: (a) the mortgagee of a lot under a mortgage shown on the strata roll as having priority over any other mortgage or covenant charge which is shown on the roll in respect of the lot (b) the covenant chargee of a lot under a covenant charge shown on the strata roll as having priority over any mortgage which is shown on the roll in respect of the lot, or (c) the covenant chargee of a lot under a covenant charge shown on the strata roll where no mortgage is shown on the roll in

respect of the lot. A priority vote may be cast on any motion that: (a) relates to insurance, budgeting or the fixing of a levy (b) will require expenditure by the owners corporation of an amount that exceeds the prescribed amount, or (c) requires a special resolution or unanimous resolution. The prescribed amount is an amount calculated by multiplying $1,000.00 by the number of lots in the scheme (which would include utility lots). Law: Management Act, s 22, Sch 1, cl 23, 24. Management Regulation, reg 12.

¶14-009 Proxies Rights A duly appointed proxy may vote on a show of hands or demand a poll. If the person appointed proxy has an entitlement to vote in their own right, they can exercise both the proxy vote and their personal vote. If the person appointed proxy is appointed for more than one person, they may exercise a vote in respect of each appointment. The right of a proxy to exercise a vote on a matter is lost if the person who appointed the proxy personally exercise their right to vote on the matter. That applies irrespective of whether the vote is exercised personally at the meeting or by voting paper or other permitted means. Also, the instrument appointing the proxy may limit the manner in which the proxy may vote at the meeting (eg it may require an affirmative vote in respect of some motions) and if the proxy votes contrary to that limitation the vote is invalid. Limitations The Management Act imposes limitations on proxy voting, namely:

(1) An original owner, or person connected with an original owner (see below as to “connected”), cannot cast a vote by proxy or power of attorney on behalf of another owner if the proxy or power was given pursuant to: (a) a term of the sale contract for the lot, or (b) another contract or arrangement that is ancillary or related to the sale contract. (2) A vote by a proxy who is a building manager, an on-site residential property manager or a strata managing agent is invalid if it would: (a) obtain, or assist in obtaining, a pecuniary interest for, or (b) confer or assist in conferring any other material benefit on, the proxy. (3) There is a limit on the total number of proxies which may be held by a person (other than proxies they hold as co-owner of a lot) voting on a resolution, namely: (a) if the strata scheme has 20 lots or less — one, and (b) if the strata scheme has more than 20 lots — a number equal to not more than 5% of the total number of lots. The limitation in (1) above does not prevent a person from giving a proxy or power of attorney to a person related to him (eg a family member). A person is “connected” with another person if the other person: (a) is a relative (within the meaning of the Local Government Act 1993) of the principal person or, if the principal person is a corporation, is a relative of the holder of an executive position in the corporation (b) is employed or engaged by the principal person or is a business partner of the principal person

(c) if the principal person is a corporation, holds an executive position in the corporation (d) is the employer of the principal person (e) is employed or engaged by, or holds an executive position in, a corporation that also employs or engages the principal person or in which the principal person holds an executive position, or (f) has any other connection or association with the principal person of a kind prescribed by the Management Regulation; namely a principal person which is a corporation is connected with another person if the other person: (i) is a related body corporate or an associated entity (within the meaning of the Corporations Act 2001 (Cth)) of the principal person (ii) holds an executive position (within the meaning of s 7 of the Management Act) in a related body corporate or an associated entity of the principal person, or (iii) holds or will hold any financial interest in the principal person, or is or will be entitled to exercise any relevant power (whether in the person’s own right or on behalf of any other person) in the business of the principal person, and by virtue of that interest or power is or will be able to exercise a significant influence over or with respect to the management or operation of the principal person. The terms “relevant financial interest” and “relevant power” are further defined in reg 62(2) of the Strata Management Regulation in the widest terms, which makes it very clear that the term “connected” is extremely far reaching and will need to be treated with the utmost caution. The Material benefit referred to in (2) above is defined to include, without limitation: • An extension of the term, or an additional term of appointment, of

the proxy as building manager, on-site residential property manager or strata managing agent. • An increase in the remuneration of the proxy. • A decision of the owners corporation not to proceed with, or to withdraw, delay, compromise or settle litigation or other legal proceedings against the proxy. • Any other decision of the owners corporation that affects litigation or other legal proceedings relating to the proxy. In relation to (3) above, by way of example, if a strata scheme has 92 lots, the number of proxies which can be held by a single person is four. With regard to the calculation; 5% of 92 is 4.6. If that is rounded to 5, the number of proxies would be more than 5%, so the maximum permitted number is 4. The Management Act also renders void and unenforceable certain provisions in a contract for sale of a lot, or any ancillary or related contract or arrangement, which seeks to capture or influence the vote of the purchaser of the lot. Appointment A proxy is appointed by an instrument in the form prescribed by the Management Regulation (see Form 86 (¶19-086)). The form must be dated and signed by the person appointing the proxy or executed in another manner permitted by the Management Regulation (although at this stage the regulation is silent on such an execution). After signature the proxy form must be given to the secretary of the owners corporation: (a) in the case of a large corporation, at least 24 hours before the first meeting for which it is to operate, or (b) in any other case, at or before the first meeting for which it is to operate. The proxy appointment has effect for the period from the date on

which it was made until the later of the first anniversary of that day and the conclusion of the next annual general meeting held after that day. However, the proxy appointment can be revoked during such period, in which event it ceases to operate upon revocation. If a second proxy is appointed during the period of currency of the first proxy and that second proxy is delivered to the secretary of the owners corporation, then the first proxy no longer has any effect. Law: Management Act, s 7, Sch 1, cl 25, 26. Management Regulation, reg 13, 62. Local Government Act 1993, Dictionary. Corporations Act 2001 (Cth), s 9.

¶14-010 Voting procedures Generally A person entitled to vote, or a proxy, must cast their vote in person at the meeting unless the owners corporation, by resolution passed at a general meeting, determines that a vote may be cast by some other specified means. The Management Regulation makes provision for the following means of voting: (1) Teleconference, video-conferencing, e-mail or other electronic means while participating in a meeting from a remote location. (2) E-mail or other electronic means before the meeting at which the matter (not being an election) is to be determined. (3) Other electronic means of voting, including requiring voters to access a voting website and to vote in accordance with directions on that website. In the case of (1) above, the person voting must be participating in the meeting, which means the vote is cast at the same time as votes by persons present at the meeting are cast. In that case the person is also able to vote on a committee election. The process in (2) above is

similar in some respects to (1), although the person does not have to be participating in the meeting and no vote can be cast on a committee election. The pre-meeting website voting process in (3) above can also include voting on a committee election. The Management Regulation (reg 14) and the Management Act appear on first reading to be in conflict in that the Act requires a resolution of a general meeting for an alternative voting process to be adopted, whereas the Regulation appears to allow that decision to be made by “an owners corporation or strata committee”. However, a proper interpretation of the Regulation would be that the committee is empowered, by resolution, to adopt a particular means of voting at committee meetings while the owners corporation is the only body empowered, by general meeting resolution, to adopt a particular means of voting at general meetings. The Management Regulation sets out the available alternatives. The initial consultation draft of the Management Regulation issued by the government made provision for postal voting “on matters (other than elections) to be determined by the corporation”. However, that option was omitted from the gazetted Management Regulation. The current wording of the Management Act and Management Regulation makes it clear that the paper postal voting procedures, which have been the hallmark of strata meetings for decades, have now been discontinued in favour of electronic voting means. While it is possible to emulate the paper voting system by use of e-mails, this is likely to be of little comfort to those lot owners who have not yet embraced email communications. Committee elections The following is the procedure to elect the strata committee (in the absence of an electronic voting system): 1. The chairperson announces the names of existing nominees and calls for any oral nominations (which oral nominations must be supported by written or oral consent). 2. After nominations are closed by the chairperson, the meeting determines the number of members of the committee.

3. If the number is fewer or the same as the number to be appointed, the nominees are declared elected. 4. If the number is more than the number to be appointed, a ballot is held. The following is the procedure to conduct a ballot: 1. The chairperson announces the names of candidates and provides each eligible voter with a blank ballot paper. 2. The voter must: (a) write the name of each candidate they are voting for and ensure that the number of names does not exceed the number to be elected (b) write the capacity in which the voter is voting (eg owner, company nominee, proxy, etc) (c) if voting as a proxy, write the name and capacity of the person who gave the proxy, and (d) return the voting paper to the chairperson. 3. The chairperson declares the persons elected based on the number of votes each receives. 4. If for the last position two or more candidates have an equal number of votes, the final candidate is chosen by show of hands of voters at the meeting. Law: Management Act, Sch 1, cl 28. Management Regulation, reg 9, 10, 14.

¶14-011 Pre-meeting electronic voting The rules regulating pre-meeting electronic voting are set out in the Management Regulation. They require the following:

1. The secretary must ensure the form for the electronic ballot paper contains: (a) instructions for completing the ballot paper (b) the question to be determined (ie the motion or election), and (c) the means of indicating the voter’s choice on the question to be determined. 2. The secretary must, at least seven days before the meeting at which the matter is to be determined, give each person entitled to vote: (a) access to: (i) an electronic voting paper (ii) a voting website, or (iii) an electronic application containing an electronic ballot paper, that complies with reg 15 of the Management Regulation, (b) access to information about: (i) how the ballot paper must be completed (ii) the closing date of the ballot (iii) if voting is by e-mail, the address where the ballot paper is to be returned, and (iv) if the voting is by other electronic means, the means of accessing the electronic voting system and how the completed electronic voting paper is to be sent to the secretary, and

(c) access to an electronic form of declaration requiring the voter to state: (i) his/her name (ii) the capacity in which the person is entitled to vote (iii) in the case of a matter that requires a special resolution, the voter’s unit entitlement, and (iv) if the vote is a proxy vote, the name and capacity of the person who gave the proxy. 3. Each person must vote in accordance with the instructions contained in the information (ie the instructions referred to in 2(b) above). 4. If the ballot is a secret ballot, the secretary must ensure that: (a) the identity of the voter cannot be ascertained from the form of the electronic ballot paper, and (b) the declaration by the voter is dealt with so that it is not capable of being used to identify the voter. 5. An electronic ballot paper and the form of declaration must be sent to the secretary no later than the close of the ballot. 6. The secretary must ensure that all electronic ballot papers are stored securely until the counting of the votes begins (this being intended to prevent anyone knowing the voting trend before the close of the ballot). 7. A ballot paper is informal if the voter has failed to record a vote in accordance with the information (ie the instructions referred to in 2(b) above). 8. If the voting is carried out using a voting website or other electronic application, the website or application is to provide a warning message to a person casting an informal vote that the

proposed vote is informal. 9. As soon as possible after the close of the ballot, the secretary must: (a) review all information and reports about the electronic ballot (b) reject as informal any votes that do not comply with the Management Regulation, and (c) ascertain the result of the electronic ballot. 10. The secretary must, at the meeting to consider the matter for which the pre-meeting electronic voting was held, inform the persons present of the result of the ballot. Interestingly, there is no requirement for electronic notification of voters (eg by e-mail or post on a website) of the result of the ballot. Also, it will be noted that despite the pre-meeting electronic voting process, there will still be the need for an actual meeting, although in many cases the chairperson or strata managing agent will be the only person present. Law: Management Regulation, reg 15, 16, 17.

¶14-012 Secret ballots A strata committee may determine that a motion or matter must be determined by secret ballot. In addition, at least one-quarter of the persons entitled to vote on a motion or election may agree that the motion or matter should be decided by secret ballot. In both such cases the motion or matter must then be determined by secret ballot. The Management Act leaves it to the Management Regulation to set out the procedures for a secret ballot. However, there is very little detail in the Regulation relating to secret ballots (see ¶14-011) and the material available is confined to pre-meeting electronic voting. Law: Management Act, Sch 1, cl 29.

¶14-013 Conducting the meeting Neither the Management Act nor the Management Regulation specifies the procedures which should be followed by the chairperson when conducting an annual general meeting. The order of business of the meeting will be determined by the agenda for the meeting and the following is a common approach to conducting the meeting: 1. The chairperson declares the meeting open and notes the time. 2. The secretary records the names of: (a) those owners who are present personally or electronically (eg by telephone or Skype) (b) tenants who are present, and (c) others who may be present (eg the strata managing agent, building manager or owners corporation’s solicitor). 3. The secretary records the names of persons who have voted by pre-meeting electronic voting. Persons who vote electronically are effectively deemed to be present at the meeting by the definition of “person present” in s 4(1) of the Management Act. 4. The chairperson asks for apologies and the secretary records them. 5. The chairperson determines whether a quorum is present. 6. Each motion is dealt with in the order appearing on the agenda. (Before dealing with a motion, the chairperson should be satisfied that there is a quorum for considering the motion.) 7. The number of persons to be elected to the strata committee would be determined. 8. The election of the strata committee is dealt with.

9. General business and discussion can then follow, although it will not be possible to pass resolutions arising out of this segment of the meeting because of the requirement for the form of motions to be included on the agenda. 10. The chairperson declares the meeting closed and notes the time. Motions being considered by the meeting will usually be dealt with in the following way: (1) Either: (a) the chairperson will introduce the motion and read it (if the wording of the motion appears on the agenda), or (b) in the case of a procedural motion, a person present and entitled to vote on motions will introduce the motion by wording it in the way in which it is proposed to be considered. (2) The chairperson will consider whether the motion, if carried, would conflict with the Management Act or the by-laws, or would otherwise be unlawful or unenforceable. If the chairperson is satisfied that is the case, they may rule the motion out of order and decline to progress it. (3) If the motion is to progress, the chairperson will: (a) determine whether a quorum is present for the motion (b) if the motion is not a procedural motion, ask for any discussion on the motion, which will then proceed under the direction of the chairperson, and (c) if the motion is a procedural motion, decline any discussion on it (apart from hearing a point of order). (4) The chairperson will then take the vote on the motion by: (a) calling for votes in favour of the motion

(b) calling for votes against the motion, and (c) asking if there are any abstentions from voting on the motion. (5) The chairperson will then tally the votes (also considering any pre-meeting electronic votes and abstentions). (6) The chairperson will then declare whether the motion is passed or defeated. This declaration is conclusive, without the need to prove the votes recorded for or against the motion. (7) The secretary will record details of the above. Where a motion has been proposed to an annual general meeting the wording of the proposed motion can be amended. The amendment is worded and then the chairperson should first put the amendment to the vote. If the amendment is passed, then the amended motion is put to the vote. If the amendment is not passed, then the original motion is put to the vote. There is nothing in the Management Act or Management Regulation which requires amending motions to be moved and seconded, although the chairperson may well adopt that procedure. It is possible for normal meeting procedures to be adopted by way of “standing orders” for general meetings. Ultimately, in the absence of a prescribed procedure or process, the conduct of the meeting is at the discretion of the chairperson, or in accordance with any direction (ie “standing orders”) which may be adopted for general meetings by resolution of a prior general meeting. Law: Management Act, s 4(1).

¶14-014 Adjournments There are two types of meeting adjournments: • automatic adjournments • approved adjournments.

An automatic adjournment occurs when there is a lack of quorum for an individual motion or election within half an hour after the motion or election is due for consideration (see ¶14-007). The adjournment may be in respect of the motion or the election, or it may be in respect of the entire meeting, depending on who is present at the meeting at the relevant points in time. The person who is presiding at the meeting (usually the chairperson) fixes the time and place at which the adjourned meeting is to be resumed. If there is no such person present at the meeting, then the person who would have presided had there been a quorum (again, usually the chairperson) must fix that time and place. An approved adjournment is one which occurs because of a procedural motion presented to the meeting (eg a motion “that this meeting be adjourned until after the NCAT decision has been handed down and then re-convened on a date determined by the Chairperson”). This type of adjournment can occur for any reason and at any time during the meeting. The procedural motion need not be seconded and should be put to the meeting if moved by a person entitled to vote at the meeting. Where a meeting has been adjourned, whether generally or for an item of business, the secretary must give the owners at least one day before the resumed meeting a written notice specifying: (a) the time and place of the meeting, and (b) the provisions of the Management Act for determining the quorum at a meeting. Form 87 (see ¶19-087) illustrates the type of notice which must be given. Law: Management Act, Sch 1, cl 20.

¶14-015 Tenant participation If a lot is leased, the lessor must give notice of the lease to the owners corporation within 14 days after the commencement of the lease.

Failure to do so is an offence. A similar obligation exists in relation to sub-leases and assignments of leases. These provisions are intended to ensure that the owners corporation is aware of who is in residence in the scheme. However, they also play an important part in the administration of the scheme. A tenant who has been notified in accordance with those requirements is entitled to attend the annual general meeting, but is not entitled to vote unless they are a proxy holder. However, the owners corporation may determine, in respect of a particular meeting or generally, that tenants (other than proxy holders) are not entitled to be present when the following matters are discussed or determined: (a) financial statements and auditor’s reports (b) levying of contributions (c) recovery of unpaid contributions (d) a strata renewal proposal (ie a redevelopment proposal) or any related matter, and (e) any other financial matter specified in the Management Regulation (although at this stage no matter has been specified). A tenant is not entitled to address the meeting unless they hold a proxy or are authorised to do so by resolution of the owners corporation. The resolution may be proposed and passed as a procedural motion at the actual meeting. Law: Management Act, s 258, Sch 1, cl 21.

¶14-016 Minutes The owners corporation must keep full and accurate minutes of its meetings that include minutes of all motions passed at its meetings. That “inclusive” wording suggests that something more than a record of the motions passed must be included in the minutes. That is not to say that details of the discussions which occurred at the meeting need

to be recorded. The minutes in Form 88 (see ¶19-088) are indicative of the type of detail that should be kept. Within 14 days after a meeting, the owners corporation must provide copies of the minutes of all motions passed at the meeting to each: (a) member of the strata committee (b) owner (unless the strata scheme is a large strata scheme), and (c) owner in a large strata scheme who requests a copy within the 14-day period. Failure to distribute the minutes in accordance with those requirements is an offence. While the wording of these requirements suggests that the entire minutes need not be provided (because only “motions passed” are referred to), as a precautionary measure it is recommended that a complete copy of the minutes is provided. Law: Management Act, Sch 1, cl 22.

¶14-017 Validity of proceedings At common law, for an annual general meeting to be valid there must be strict compliance with the provisions of the Management Act and Management Regulation relating to convening and conducting the meeting and the admission of votes. The same principle is applied by s 24(1) of the Management Act. It provides that the Tribunal may, on application by an owner or first mortgagee, make an order invalidating a resolution or an election if it considers that the provisions of the Management Act or Management Regulation have not been complied with in relation to the meeting. The strict common law position can be relaxed in certain circumstances by an equity court which “refuses to interfere where an irregularity has been committed, if it is within the power of the persons who have committed it at once to correct it by calling a fresh meeting and dealing with the matter with all due formalities” (Browne v La

Trinidad (1887) 37 Ch D 1). Whether an equity court will interfere will depend upon how serious the non-compliance was and the likelihood of a different result if the motion was resubmitted in accordance with proper procedures. The Management Act provides a discretion to the Tribunal which operates in a similar way to the equitable principles. In particular: 1. The Tribunal may refuse to make an order invalidating a resolution because proper procedures were not followed if it considers: (a) that the failure to comply with the procedures did not adversely affect any person, and (b) that compliance with the procedures would not have resulted in a failure to pass the resolution or affected the result of the election. 2. The Tribunal may on application of a person entitled to vote on a motion for a resolution, order (subject to certain pre-conditions) that a resolution passed at the general meeting be treated as a nullity on and from the date of the order. However, the Tribunal must be satisfied that the resolution would not have been passed but for the fact that the applicant for the order: (a) was improperly denied a vote on the motion for the resolution, or (b) was not given due notice of the item of business in relation to which the motion was passed. Law: Management Act, s 24, 25.

EXTRAORDINARY GENERAL MEETINGS ¶15-001 Obligation to hold A general meeting, other than an annual general meeting, may be convened at any time by either: (a) the secretary, or (b) the strata committee. If the secretary convenes the meeting no formality is required in relation to the secretary’s decision. However, if the strata committee convenes the meeting it should resolve to do so (see Form 91 (¶19091)). In addition, the secretary, or another officer if the secretary is absent (ie chairperson or treasurer), must convene a general meeting as soon as practicable, but not later than 14 days after receiving a qualified request. A request is a “qualified request” if it is made by one or more owners of a lot or lots in the strata scheme having a total unit entitlement of at least one quarter of the aggregate unit entitlements. A qualified request may be made before or after the first annual general meeting. There is no express requirement in the Management Act for the “qualified request” to set out the wording of any motions the requisitioning owners want the meeting to consider. Notwithstanding that, the qualified request would need to identify some business or motion for the meeting to deal with, otherwise there would be no purpose in convening the meeting. For that reason, the request in Form 92 (see ¶19-092) is recommended. Law: Management Act, s 19.

¶15-002 Pre-meeting matters

In certain circumstances, any owner, or any person entitled to vote at a general meeting, may require a motion to be included on the agenda of a general meeting of the owners corporation. The full implications of this provision are discussed at ¶13-007. In general terms, if there is no notice outstanding under s 22 of the Management Act in respect of a lot (which is a notice requiring the lot owner to provide information for the strata roll), then both the owner and another person entitled to vote in respect of a lot (eg a company nominee) can require a motion to be included on the agenda of a general meeting even if the lot owner is un-financial. The requisition must be by written notice given to the secretary of the owners corporation. The notice must: (a) set out the required motion (b) state the name of the person making the requirement, and (c) include an explanation of the motion of not more than 300 words in length. Provided the notice is served before the notice of a scheduled general meeting is issued, the secretary must include the requisitioned motion on the notice of that meeting. If the notice is received after the meeting notice has been sent, then the secretary must include the requisitioned motion on the agenda for the next general meeting of the owners corporation. Form 84 (see ¶19-084) illustrates the required notice. Law: Management Act, Sch 1, cl 4.

¶15-003 Notice of the meeting At least seven days’ notice of a general meeting must be given to each owner. If an item on the agenda is one in which a mortgagee or covenant chargee shown on the strata roll may cast a priority vote, then at least seven days’ notice of the meeting must also be given to the mortgagee or covenant chargee. Also, at least seven days before the meeting is held a copy of the agenda for the meeting must:

(a) be given to each tenant who has been notified as a tenant for the lot, or (b) be prominently displayed on any owners corporation notice board. The owners corporation may decide to also give tenants a copy of other documents relating to the meeting. If no tenant has been notified, then it is not necessary to display the notice on the notice board. The seven days must be calculated exclusive of the day on which the notice is served and the day of the meeting. This requires a degree of caution in the case of notices being served by mail. If the service address is in an Australian state or territory, service is taken (in the absence of evidence to the contrary) to have been effected on the fourth working day after the notice was posted. If the service address is in another place, service is taken (in the absence of evidence to the contrary) to have been effected in the ordinary course of the post. While this sounds reasonably straightforward, the complication arises because of adjusted postal delivery times introduced by Australia Post in 2016. For its regular delivery service Australia Post says up to six business days should be allowed for delivery, depending on the destination. This means that the four working day presumption is unreliable given the possibility that evidence as to actual posting and delivery will usually be available. To illustrate by example, if a meeting is to be held on 25 February, for certainty the notice of the meeting will need to be posted on or before 10 February to allow for: • at least seven days’ notice • the day of posting and the day of receipt • six days for delivery. See Form 93 (¶19-093) for a Notice of Extraordinary General Meeting. Law: Management Act, Sch 1, cl 7, 11.

Interpretation Act 1987, s 76.

¶15-004 Agenda for the meeting The notice of an extraordinary general meeting must include an agenda, which must contain a form of motion: (a) to confirm the minutes of the last general meeting of any kind, and (b) for each other motion to be considered at the meeting. The notice must also include, or be accompanied by, the following: • Where a motion requires a special resolution or a unanimous resolution to be passed, a statement to that effect. • A statement that a vote by an owner does not count if a priority vote is cast for the lot in relation to the same matter. • A statement that an un-financial owner, mortgagee or covenant chargee cannot vote at a meeting on a motion (other than a motion requiring a unanimous resolution) unless payment has been made before the meeting of all contributions levied on the owner, plus any other amounts recoverable from the owner in relation to the lot. • A statement that voting or other rights may be exercised in person (if the addressee is an individual) or by a company nominee (if the addressee is a corporation), or by a proxy appointed by the addressee. • The provisions of the Management Act for determining a quorum at meetings. • A copy of the minutes of the previous general meeting (but only if the owner has previously not been given a copy of the minutes or has requested but not received a copy before the notice is given).

Because of the requirement for all motions to be considered at the meeting to be set out on the agenda for the meeting, the strata committee in preparing for a general meeting will need to itself consider what is the appropriate decision to be made by the meeting and then encapsulate that decision in a form of motion to be considered by the meeting. Law: Management Act, Sch 1, cl 8, 9.

¶15-005 Chairing the meeting If present at a general meeting of the owners corporation, the chairperson has the right and obligation to chair the meeting. If the chairperson is not at the meeting, the persons present at the meeting and entitled to vote on motions submitted at the meeting may elect one of their number to preside at the meeting. Un-financial owners, although unable to vote generally, can participate in the vote to elect the substitute chairperson. The person so elected, while so presiding, is taken to be the chairperson of the owners corporation. The chairperson does not have a casting vote at the meeting, although they are entitled to vote in their own right. In some circumstances the chairperson may be the only person present at the meeting, subject to a quorum being present by means of electronic voting. In those circumstances the meeting is deemed to have been validly held despite the common law rule that there needs to be more than one person present for there to be a “meeting”. The chairperson may rule a motion out of order if: (a) they consider the motion, if carried, would conflict with the Management Act or the by-laws or would otherwise be unlawful or unenforceable, or (b) any requirement of the Management Act to include the form of motion in the notice of meeting has not been complied with. Before a motion is submitted to a vote at the meeting any person present and entitled to vote may request the chairperson to announce

the names of the persons entitled to vote. In the event of such a request, the chairperson must announce those names before the vote is taken. After the vote, the chairperson must declare the result of the vote or election if it is possible to do so. Except for a vote taken on a poll, the chairperson’s declaration of the result of a vote on a motion is conclusive, without proof of the votes recorded for and against the motion. Law: Management Act, Sch 1, cl 12, 16, 19.

¶15-006 Quorum A motion cannot be considered at a general meeting if there is no quorum present. It is possible that there is a quorum present for some motions, but not for others. Therefore, the presence of a quorum must, in some cases where the numbers are tight, be determined on a motion by motion basis. One of the following circumstances must be satisfied before a quorum is present for a motion: 1. There must be at least one-quarter of the persons entitled to vote on the motion present at the meeting either personally or by proxy. 2. The total unit entitlements of the persons present at the meeting personally or by proxy and entitled to vote on the motion must be at least one-quarter of the aggregate unit entitlements for the scheme. 3. Where there is more than one owner in the scheme and the quorum calculated under 1 or 2 above would be less than two persons, then the quorum will be two persons present personally or by proxy and entitled to vote on the motion. A person can vote at a general meeting by proxy, or by other permitted means, such as by means of an electronic voting process. A person who has voted, or intends to vote in such manner, is taken to be present for calculating a quorum.

If half an hour after a motion arises for consideration at a general meeting a quorum is not present the chairperson must: (a) adjourn the meeting for at least seven days, or (b) declare that the persons present either personally or by duly appointed proxy and are entitled to vote constitute a quorum for considering the motion, plus any other subsequent motion. The option in (b) above is very unusual and the discretion given to a chairperson would need to be cautiously exercised. It would be appropriate to exercise that discretion if the number of qualified persons present was close to the required number for a quorum. However, if the number of qualified persons present was very low compared to the number required, the chairperson should resist exercising the discretion and elect to adjourn the meeting. At the adjourned meeting, if a quorum is not present after a half hour after the time fixed for the adjourned meeting, then the persons who are present personally or by proxy and who are entitled to vote on the motion constitute a quorum for considering that motion, as well as subsequent motions. A person who exercises a vote by a permitted means (eg electronically or by telephone) would be regarded as present at the meeting for calculating the quorum. Law: Management Act, Sch 1, cl 17.

¶15-007 Entitlement to vote Each owner and each person who has a “priority vote” is entitled to vote at a general meeting of the owners corporation provided that they are shown on the strata roll and, in the case of a corporation, their company nominee is also shown on the strata roll. The following are the rules regulating voting rights at extraordinary general meetings: 1. A sole owner, first mortgagee or covenant chargee (other than a corporation) may vote in person or by proxy. 2. Joint first mortgagees and joint covenant chargees may only vote by proxy duly appointed by all of them jointly. The proxy may be

one of them. 3. A sole owner, first mortgagee or covenant chargee which is a corporation may vote by their company nominee in person, or by proxy appointed by the company. Note that the proxy must be appointed by the company and not by the company nominee. 4. Co-owners may vote by proxy appointed by them jointly. The proxy may be one of the co-owners. 5. Where co-owners do not vote by proxy, one of the co-owners may act as a proxy if: (a) the other co-owners are absent (b) the co-owners who are present give their consent, or (c) the co-owner is first named on the strata roll as one of the co-owners. 6. If there are owners of successive estates in a lot (eg a life estate and an estate in remainder), only the owner of the first estate may vote at an extraordinary general meeting. 7. If the owner of a lot holds it as trustee, a person beneficially entitled may not vote at an extraordinary general meeting. The vote must be exercised by the trustee, or its company nominee or proxy. 8. A vote at an extraordinary general meeting by an owner of a lot, or a person with a priority vote for the lot, does not count if the owner was un-financial as at the date notice of the meeting was given. However, this does not apply if: (a) the motion is for a unanimous resolution, or (b) the amount owing was paid before the meeting. 9. A person is not entitled to cast a vote at an extraordinary general meeting if they have not complied with a notice given to them

under s 22 of the Management Act requiring them to give a strata interest notice (ie to provide information for the strata roll). 10. A person is not entitled to cast a vote at an extraordinary general meeting if they are required to vote through a nominee but the nominee’s full name and address for service has not been given in accordance with s 22 of the Management Act. A “priority vote” displaces a vote on the same matter by the owner of a lot (ie the owner’s vote does not count) provided at least two days’ written notice of the intention to exercise the priority vote at the meeting has been given to the lot owner. A priority vote can only be cast by a person whose vote has priority under cl 24 of Sch 1 of the Management Act, namely: (a) the mortgagee of a lot under a mortgage shown on the strata roll as having priority over any other mortgage or covenant charge which is shown on the roll in respect of the lot (b) the covenant chargee of a lot under a covenant charge shown on the strata roll as having priority over any mortgage which is shown on the roll in respect of the lot, or (c) the covenant chargee of a lot under a covenant charge shown on the strata roll where no mortgage is shown on the roll in respect of the lot. A priority vote may be cast on any motion that: (d) relates to insurance, budgeting or the fixing of a levy (e) will require expenditure by the owners corporation of an amount that exceeds the prescribed amount, or (f) requires a special resolution or unanimous resolution. The prescribed amount is an amount calculated by multiplying $1,000.00 by the number of lots in the scheme (which would include utility lots).

Law: Management Act, s 22, Sch 1, cl 23, 24. Management Regulation, reg 12.

¶15-008 Proxies Rights A duly appointed proxy may vote on a show of hands or demand a poll. If the person appointed proxy has an entitlement to vote in their own right, they can exercise both the proxy vote and their personal vote. If the person appointed proxy is appointed for more than one person, they may exercise a vote in respect of each appointment. The right of a proxy to exercise a vote on a matter is lost if the person who appointed the proxy personally exercises their right to vote on the matter. That applies irrespective of whether the vote is exercised personally at the meeting or by voting paper or other permitted means. Also, the instrument appointing the proxy may limit the way the proxy may vote at the meeting (eg it may require an affirmative vote in respect of some motions) and if the proxy votes contrary to that limitation the vote is invalid. Limitations The Management Act imposes limitations on proxy voting, namely: (1) An original owner, or person connected with an original owner (see below as to “connected”), cannot cast a vote by proxy or power of attorney on behalf of another owner if the proxy or power was given pursuant to: (a) a term of the sale contract for the lot, or (b) another contract or arrangement that is ancillary or related to the sale contract. (2) A vote by a proxy who is a building manager, an on-site residential property manager or a strata managing agent is invalid if it would: (a) obtain, or assist in obtaining, a pecuniary interest for, or

(b) confer or assist in conferring any other material benefit on the proxy. (3) There is a limit on the total number of proxies which may be held by a person (other than proxies they hold as co-owner of a lot) voting on a resolution, namely: (a) if the strata scheme has 20 lots or less — one, and (b) if the strata scheme has more than 20 lots — a number equal to not more than 5% of the total number of lots. The limitation in (1) above does not prevent a person from giving a proxy or power of attorney to a person related to him (eg a family member). A person is “connected” with another person if the other person: (a) is a relative (within the meaning of the Local Government Act 1993) of the principal person or, if the principal person is a corporation, is a relative of the holder of an executive position in the corporation (b) is employed or engaged by the principal person or is a business partner of the principal person (c) if the principal person is a corporation, holds an executive position in the corporation (d) is the employer of the principal person (e) is employed or engaged by, or holds an executive position in, a corporation that also employs or engages the principal person or in which the principal person holds an executive position, or (f) has any other connection or association with the principal person of a kind prescribed by the Management Regulation; namely a principal person which is a corporation is connected with another person if the other person:

(i) is a related body corporate or an associated entity (within the meaning of the Corporations Act 2001 (Cth)) of the principal person (ii) holds an executive position (within the meaning of s 7 of the Management Act) in a related body corporate or an associated entity of the principal person, or (iii) holds or will hold any financial interest in the principal person, or is or will be entitled to exercise any relevant power (whether in the person’s own right or on behalf of any other person) in the business of the principal person, and by virtue of that interest or power is or will be able to exercise a significant influence over or with respect to the management or operation of the principal person. The terms “relevant financial interest” and “relevant power” are further defined in reg 62(2) of the Strata Management Regulation in the widest terms, which makes it very clear that the term “connected” is extremely far reaching and will need to be treated with the utmost caution. The Material benefit referred to in (2) above is defined to include, without limitation: • An extension of the term, or an additional term of appointment, of the proxy as building manager, on-site residential property manager or strata managing agent. • An increase in the remuneration of the proxy. • A decision of the owners corporation not to proceed with, or to withdraw, delay, compromise or settle litigation or other legal proceedings against the proxy. • Any other decision of the owners corporation that affects litigation or other legal proceedings relating to the proxy. In relation to (3) above, by way of example, if a strata scheme has 92

lots, the number of proxies which can be held by a single person is four. With regard to the calculation, 5% of 92 is 4.6. If that is rounded to five, the number of proxies would be more than 5%, so the maximum permitted number is four. The Management Act also renders void and unenforceable certain provisions in a contract for sale of a lot, or any ancillary or related contract or arrangement, which seeks to capture or influence the vote of the purchaser of the lot. Appointment A proxy is appointed by an instrument in the form prescribed by the Management Regulation (see Form 86 (¶19-086)). The form must be dated and signed by the person appointing the proxy or executed in another manner permitted by the Management Regulation (although at this stage the regulation is silent on such an execution). After signature the proxy form must be given to the secretary of the owners corporation: (a) in the case of a large corporation, at least 24 hours before the first meeting for which it is to operate, or (b) in any other case, at or before the first meeting for which it is to operate. The proxy appointment has effect for the period from the date on which it was made until the later of the first anniversary of that day and the conclusion of the next annual general meeting held after that day. However, the proxy appointment can be revoked during such period, in which event it ceases to operate upon revocation. If a second proxy is appointed during the period of currency of the first proxy and that second proxy is delivered to the secretary of the owners corporation, then the first proxy no longer has any effect. Law: Management Act, s 7, Sch 1, cl 25, 26. Management Regulation, reg 13, 62. Local Government Act 1993, Dictionary.

Corporations Act 2001 (Cth), s 9.

¶15-009 Voting procedures A person entitled to vote, or a proxy, must cast their vote in person at the meeting unless the owners corporation, by resolution passed at a general meeting, determines that a vote may be cast by some other specified means. The Management Regulation makes provision for the following means of voting: (1) Teleconference, video-conferencing, e-mail or other electronic means while participating in a meeting from a remote location. (2) E-mail or other electronic means before the meeting at which the matter (not being an election) is to be determined. (3) Other electronic means of voting, including requiring voters to access a voting website and to vote in accordance with directions on that website. In the case of (1) above, the person voting must be participating in the meeting, which means the vote is cast at the same time as votes by persons present at the meeting are cast. The process in (2) above is similar in some respects to (1), although the person does not have to be participating in the meeting. The Management Regulation (reg 14) and of the Management Act (cl 28 of Sch 1) appear on first reading to be in conflict in that the Act requires a resolution of a general meeting for an alternative voting process to be adopted, whereas the Regulation appears to allow that decision to be made by “an owners corporation or strata committee”. However, a proper interpretation of the Regulation would be that the committee is empowered, by resolution, to adopt a particular means of voting at committee meetings while the owners corporation is the only body empowered, by general meeting resolution, to adopt a particular means of voting at general meetings. The Management Regulation sets out the available alternatives. The 2015 legislation effectively eliminated the paper postal voting

procedures, which have been the hallmark of strata meetings for decades (see ¶14-010). In their place are several ways in which a person can vote electronically, including by e-mails. This creates the opportunity to replace paper postal procedures with e-mail voting procedures. Law: Management Act, Sch 1, cl 28. Management Regulation, reg 14.

¶15-010 Pre-meeting electronic voting The rules regulating pre-meeting electronic voting are set out in the Management Regulation. They require the following: 1. The secretary must ensure the form for the electronic ballot paper contains: (a) instructions for completing the ballot paper (b) the question to be determined (ie the motion or election), and (c) the means of indicating the voter’s choice on the question to be determined. 2. The secretary must, at least seven days before the meeting at which the matter is to be determined, give each person entitled to vote: (a) access to: (i) an electronic voting paper (ii) a voting website, or (iii) an electronic application containing an electronic ballot paper, that complies with reg 15 of the Management Regulation,

(b) access to information about: (i) how the ballot paper must be completed (ii) the closing date of the ballot (iii) if voting is by e-mail, the address where the ballot paper is to be returned (iv) if the voting is by other electronic means, the means of accessing the electronic voting system and how the completed electronic voting paper is to be sent to the secretary, and (c) access to an electronic form of declaration requiring the voter to state: (i) his/her name (ii) the capacity in which the person is entitled to vote (iii) in the case of a matter that requires a special resolution, the voter’s unit entitlement, and (iv) if the vote is a proxy vote, the name and capacity of the person who gave the proxy. 3. Each person must vote in accordance with the instructions contained in the information (ie the instructions referred to in 2(b) above). 4. If the ballot is a secret ballot, the secretary must ensure that: (a) the identity of the voter cannot be ascertained from the form of the electronic ballot paper, and (b) the declaration by the voter is dealt with so that it is not capable of being used to identify the voter. 5. An electronic ballot paper and the form of declaration must be

sent to the secretary no later than the close of the ballot. 6. The secretary must ensure that all electronic ballot papers are stored securely until the counting of the votes begins (this being intended to prevent anyone knowing the voting trend before the close of the ballot). 7. A ballot paper is informal if the voter has failed to record a vote in accordance with the information (ie the instructions referred to in 2(b) above). 8. If the voting is carried out using a voting website or other electronic application, the website or application is to provide a warning message to a person casting an informal vote that the proposed vote is informal. 9. As soon as possible after the close of the ballot, the secretary must: (a) review all information and reports about the electronic ballot (b) reject as informal any votes that do not comply with the Management Regulation, and (c) ascertain the result of the electronic ballot. 10. The secretary must, at the meeting to consider the matter for which the pre-meeting electronic voting was held, inform the persons present of the result of the ballot. Interestingly, there is no requirement for electronic notification of voters (eg by e-mail or post on a website) of the result of the ballot. Also, it will be noted that despite the pre-meeting electronic voting process, there will still be the need for an actual meeting, although in many cases the chairperson or strata managing agent will be the only person present. Law: Management Regulation, reg 15, 16, 17.

¶15-011 Secret ballots A strata committee may determine that a motion must be determined by secret ballot. In addition, at least one-quarter of the persons entitled to vote on a motion may agree that the motion should be decided by secret ballot. In both such cases the motion must then be determined by secret ballot. The Management Act leaves it to the Management Regulation to set out the procedures for a secret ballot. However, there is very little detail in the regulation relating to secret ballots (see ¶15-010) and the material available is confined to pre-meeting electronic voting. Law: Management Act, Sch 1, cl 29.

¶15-012 Conducting the meeting Neither the Management Act nor the Management Regulation specifies the procedures which should be followed by the chairperson when conducting an extraordinary general meeting. The order of business of the meeting will be determined by the agenda for the meeting and the following is a common approach to conducting the meeting: 1. The chairperson declares the meeting open and notes the time. 2. The secretary records the names of: (a) those owners who are present personally or electronically (eg by telephone or Skype) (b) tenants who are present, and (c) others who may be present (eg the strata managing agent, building manager or owners corporation’s solicitor). 3. The secretary records the names of persons who have voted by pre-meeting electronic voting. Persons who vote electronically are effectively deemed to be present at the meeting by the definition of “person present” in s 4(1) of the Management Act.

4. The chairperson asks for apologies and the secretary records them. 5. The chairperson determines whether a quorum is present. 6. Each motion is dealt with in the order appearing on the agenda. (Before dealing with a motion, the chairperson should be satisfied that there is a quorum for considering the motion.) 7. General business and discussion can then follow, although it will not be possible to pass resolutions arising out of this segment of the meeting because of the requirement for the form of motions to be included on the agenda. 8. The chairperson declares the meeting closed and notes the time. Motions being considered by the meeting will usually be dealt with in the following way: (1) Either: (a) the chairperson will introduce the motion and read it (if the wording of the motion appears on the agenda), or (b) in the case of a procedural motion, a person present and entitled to vote on motions will introduce the motion by wording it in the way in which it is proposed to be considered. (2) The chairperson will consider whether the motion, if carried, would conflict with the Management Act or the by-laws, or would otherwise be unlawful or unenforceable. If the chairperson is satisfied that is the case, they may rule the motion out of order and decline to progress it. (3) If the motion is to progress, the chairperson will: (a) determine whether a quorum is present for the motion (b) if the motion is not a procedural motion, ask for any discussion on the motion, which will then proceed under the

direction of the chairperson, and (c) if the motion is a procedural motion, decline any discussion on it (apart from hearing a point of order). (4) The chairperson will then take the vote on the motion by: (a) calling for votes in favour of the motion (b) calling for votes against the motion, and (c) asking if there are any abstentions from voting on the motion. (5) The chairperson will then tally the votes (also considering any pre-meeting electronic votes and abstentions). (6) The chairperson will then declare whether the motion is passed or defeated. This declaration is conclusive, without the need to prove the votes recorded for or against the motion. (7) The secretary will record details of the above. Where a motion has been proposed to an extraordinary general meeting the wording of the proposed motion can be amended. The amendment is worded and then the chairperson should first put the amendment to the vote. If the amendment is passed, then the amended motion is put to the vote. If the amendment is not passed, then the original motion is put to the vote. There is nothing in the Management Act or Management Regulation which requires amending motions to be moved and seconded, although the chairperson may well adopt that procedure. It is possible for normal meeting procedures to be adopted by way of “standing orders” for general meetings. Ultimately, in the absence of a prescribed procedure or process, the conduct of the meeting is at the discretion of the chairperson, or in accordance with any direction (ie “standing orders”) which may be adopted for general meetings by resolution of a prior general meeting.

Law: Management Act, s 4(1).

¶15-013 Adjournments There are two types of meeting adjournments: • automatic adjournments • approved adjournments. An automatic adjournment occurs when there is a lack of quorum for an individual motion or election within half an hour after the motion or election is due for consideration (see ¶15-006). The adjournment may be in respect of the motion, or it may be in respect of the entire meeting, depending on who is present at the meeting at the relevant points in time. The person who is presiding at the meeting (usually the chairperson) fixes the time and place at which the adjourned meeting is to be resumed. If there is no such person present at the meeting, then the person who would have presided had there been a quorum (again, usually the chairperson) must fix that time and place. An approved adjournment is one which occurs because of a procedural motion presented to the meeting (eg a motion “that this meeting be adjourned until after the NCAT decision has been handed down and then re-convened on a date determined by the Chairperson”). This type of adjournment can occur for any reason and at any time during the meeting. The procedural motion need not be seconded and should be put to the meeting if moved by a person entitled to vote at the meeting. Where a meeting has been adjourned, whether generally or for an item of business, the secretary must give the owners at least one day before the resumed meeting a written notice specifying: (a) the time and place of the meeting, and (b) the provisions of the Management Act for determining the quorum at a meeting. Form 87 (see ¶19-087) illustrates the type of notice which must be

given. Law: Management Act, Sch 1, cl 20.

¶15-014 Tenant participation If a lot is leased, the lessor must give notice of the lease to the owners corporation within 14 days after the commencement of the lease. Failure to do so is an offence. A similar obligation exists in relation to sub-leases and assignments of leases. These provisions are intended to ensure that the owners corporation is aware of who is in residence in the scheme. However, they also play an important part in the administration of the scheme. A tenant who has been notified in accordance with those requirements is entitled to attend an extraordinary general meeting, but is not entitled to vote unless they are a proxy holder. However, the owners corporation may determine, in respect of a particular meeting or generally, that tenants (other than proxy holders) are not entitled to be present when the following matters are discussed or determined: (a) financial statements and auditor’s reports (b) levying of contributions (c) recovery of unpaid contributions (d) a strata renewal proposal (ie a redevelopment proposal) or any related matter, and (e) any other financial matter specified in the Management Regulation (although at this stage no matter has been specified). A tenant is not entitled to address the meeting unless they hold a proxy or are authorised to do so by resolution of the owners corporation. The resolution may be proposed and passed as a procedural motion at the actual meeting. Law: Management Act, s 258, Sch 1, cl 21.

¶15-015 Minutes The owners corporation must keep full and accurate minutes of its meetings that include minutes of all motions passed at its meetings. That “inclusive” wording suggests that something more than a record of the motions passed must be included in the minutes. That is not to say that details of the discussions which occurred at the meeting need to be recorded. The minutes in Form 88 (see ¶19-088) are indicative of the type of detail that should be kept. Within 14 days after a meeting, the owners corporation must provide copies of the minutes of all motions passed at the meeting: (a) to each member of the strata committee (b) to each owner (unless the strata scheme is a large strata scheme), and (c) to each owner in a large strata scheme who requests a copy within the 14-day period. Failure to distribute the minutes in accordance with those requirements is an offence. While the wording of these requirements suggests that the entire minutes need not be provided (because only “motions passed” are referred to), as a precautionary measure it is recommended that a complete copy of the minutes is provided. Law: Management Act, Sch 1, cl 22.

¶15-016 Validity of proceedings At common law, for an extraordinary general meeting to be valid there must be strict compliance with the provisions of the Management Act and Management Regulation relating to the convening and conduct of the meeting and the admission of votes. The same principle is applied by s 24(1) of the Management Act. It provides that the Tribunal may, on application by an owner or first mortgagee, make an order

invalidating a resolution or an election if it considers that the provisions of the Management Act or Management Regulation have not been complied with in relation to the meeting. The strict common law position can be relaxed in certain circumstances by an equity court which “refuses to interfere where an irregularity has been committed, if it is within the power of the persons who have committed it at once to correct it by calling a fresh meeting and dealing with the matter with all due formalities” (Browne v La Trinidad (1887) 37 Ch D 1). Whether an equity court will interfere will depend upon how serious the non-compliance was and the likelihood of a different result if the motion was resubmitted in accordance with proper procedures. The Management Act provides a discretion to the Tribunal which operates in a similar way to the equitable principles. In particular: 1. The Tribunal may refuse to make an order invalidating a resolution because proper procedures were not followed if it considers: (a) that the failure to comply with the procedures did not adversely affect any person, and (b) that compliance with the procedures would not have resulted in a failure to pass the resolution or affected the result of the election. 2. The Tribunal may on application of a person entitled to vote on a motion for a resolution, order (subject to certain pre-conditions) that a resolution passed at the general meeting be treated as a nullity on and from the date of the order. However, the Tribunal must be satisfied that the resolution would not have been passed but for the fact that the applicant for the order: (a) was improperly denied a vote on the motion for the resolution, or (b) was not given due notice of the item of business in relation to which the motion was passed.

Law: Management Act, s 24, 25.

RECORD KEEPING ¶16-001 Importance of records The Management Act requires a range of records to be kept by an owners corporation. These records provide: • Essential information for the proper operation of the owners corporation. • A permanent and easily accessible record of its most important affairs. • Information for use by the Tribunal in the event of disputes. • Due diligence information for a purchaser of a lot. Failure to keep proper records will expose the owners corporation to an action in the Tribunal for non-compliance with a duty imposed by the Management Act and in some cases to prosecution and the imposition of a penalty. But more importantly, it will deprive the owners corporation of records which are essential to its proper functioning. The Management Act allows the records to be made or stored in any form determined by the owners corporation. Therefore, all scheme records can be made and kept in electronic form if this is the preference of the owners corporation. This is quickly becoming the normal means of document generation and storage for schemes which are professionally managed. Law: Management Act, s 176.

¶16-002 Strata roll One of the more important records is the strata roll. It must be prepared and maintained in accordance with Div 1 of Pt 10 of the Management Act and failure to do this is an offence which carries a

monetary penalty. The owners corporation would be the entity prosecuted for such an offence (rather than the secretary) and it would be responsible for payment of any penalty. However, if the scheme was being managed by a strata managing agent and the agent had been delegated the particular function, then the agent would be guilty of the offence instead of the owners corporation. For each lot in the strata scheme the following information must be recorded in the strata roll: • The freehold owner (in the case of a freehold scheme) or the leasehold owner (in the case of a leasehold scheme). • An address for service of notices (which may be an e-mail address). • An Australian postal address. • An e-mail address (if the owner has one and it is not the address for service). • The name and address for service of the owner’s appointed agent (if there is one). • Information provided under a strata interest notice. • Information provided under a tenancy notice (see ¶13-018). In addition, for the common property and the strata scheme generally, the following information must be recorded in the strata roll: • The strata plan number. • The address of the strata scheme building. • The name and address for service of the original owner. • The name and address for service of any strata managing agent of the owners corporation.

• The unit entitlement of each lot and the aggregate unit entitlement. • Particulars of insurance taken out by the owners corporation. • The by-laws for the time being in force for the scheme. • If the scheme was registered before the strata renewal provisions of the Development Act commenced, whether those provisions apply to the scheme. An address for service may be an Australian postal address, an e-mail address or a facsimile number. It cannot be an overseas residential or postal address. The principal source of most of the above information is the Register kept by Land and Property Information (ie the NSW land registry). However, in practice most of the information will be obtained from strata interest notices and tenancy notices provided to the owners corporation. See Form 94 (¶19-094) for a strata interest notice and Form 95 (¶19-095) for a tenancy notice. In relation to insurances taken out by the owners corporation, the following information must be recorded: • The name of the insurance company. • The number of the insurance policy. • The nature of the risk insured. • The amount of the insurance. • The due date for payment of the premium. • The date on which the premium was last paid. See Form 96 (¶19-096) for a paper version of a strata roll. Law: Management Act, s 177, 178, 261.

¶16-003 Strata register An owners corporation must cause to be recorded particulars of any: • Notice given to it under the Management Act. • Notice given to it under any other Act (eg the Local Government Act 1993). • Order made under the Management Act and given to the owners corporation. • Order made by a court or tribunal and given to the owners corporation. In respect of each one of the above, the following information must also be recorded: • The date on which it was given. • The manner in which it was given. • The part of the parcel to which it relates. • The date by which any compliance is required. • The date on which any such compliance occurred. These records are generally regarded as comprising the strata register, a paper version of which is illustrated in Form 97 (see ¶19097). It is not entirely clear if the notices and orders themselves have to be kept. The heading to s 179 of the Management Act (which deals with the strata register) reads “Notices and orders to be kept”. However, the section itself only requires information from the notices and orders “to be recorded”. On a strict interpretation of the section the actual documents do not need to be kept. This is supported by s 180(1)(a) (which deals with retention of records) in that it only applies to “records, notices and orders required to be kept under this Division”, being the same Division in which s 179 appears. Despite

this uncertainty, these notices and orders are an important part of the owners corporation’s records and should be retained for the usual seven-year retention period. Failure to comply with the above requirements is an offence which carries a monetary penalty. The owners corporation would be the entity prosecuted for such an offence (rather than the secretary) and it would be responsible for payment of any penalty. However, if the scheme was being managed by a strata managing agent and the agent had been delegated the particular function, then the agent would be guilty of the offence instead of the owners corporation. Law: Management Act, s 179, 180(1)(a).

¶16-004 Accounting records The Management Act requires the owners corporation to keep accounting records in accordance with Pt 5 Div 4 and failure to do this is an offence which carries a monetary penalty. Once again, the owners corporation would be the entity prosecuted for such an offence (rather than the treasurer) and it would be responsible for payment of any penalty. Again, if the scheme was being managed by a strata managing agent holding a delegation of the particular function, the agent commits the offence. The records may be made and stored in any form determined by the owners corporation. Therefore, all accounting records can be made and kept in electronic form if this is the preference of the owners corporation. This is normal in the case of professionally managed schemes and is not uncommon in the case of self-managed schemes where small business accounting systems are used for accounting purposes. Separate records must be kept for the administrative fund, the capital works fund and any other fund kept by the owners corporation. The Management Regulation requires the following records to be kept in respect of each such fund: 1. Receipts consecutively numbered. 2. A statement of deposits and withdrawals for the account of the

owners corporation (ie bank statements). 3. A cash record (ie a cash book). 4. A levy register (which records in respect of each individual owner the debits and credits in respect of their levies and related transactions). Part 5 Div 4 of the Management Act, combined with the Management Regulation, requires the treasurer to: • Issue a receipt, consecutively numbered, for each payment received (if the payer requests a receipt). • Cause a record to be kept of the details of the receipt. • Ensure the receipt contains the information required by the Management Regulation. • Record particulars of money received or money disbursed, as soon as practicable after the transaction occurs (ie to keep a cash receipt book and cash disbursement book). • Keep a statement of deposits and withdrawals for the owners corporation’s account (ie the bank issued statements). • Balance the records of transactions and carry the balance forward at the end of each prescribed period (ie each 12 months or shorter period determined by the annual general meeting). • Compare and reconcile the entries in the records of transactions with the banking records and prepare a reconciliation statement. • Keep a levy register for each lot in the scheme (other than utility lots). It is important to note that separate accounting records must be kept for the administrative fund, the capital works fund and any other fund kept by the owners corporation. If both funds use the same bank

account, then only the one bank statement would be kept. It would also be possible to use the same receipt book and cheque book, although the cash books would need to be separate to allow for separate reporting. The express requirements in relation to the levy register make it clear that separation of the accounts is not intended for that particular record. Receipts A receipt issued by the treasurer must include the following information: (a) date of issue (b) amount of money received (c) the form in which the money was received (eg cash, cheque, etc) (d) the name of the person on whose behalf the payment was made (e) if the payment was for a contribution to the administrative fund or capital works fund: (i) a statement that the payment was made in respect of that contribution (ii) the lot number in respect of which it was made (iii) the period in respect of the payment (if relevant), and (iv) details of any discount given for early payment, (f) if the payment is not for a contribution, particulars of the transaction it relates to, and (g) if received in respect of more than one transaction, the way the payment is apportioned between transactions. Form 98 (see ¶19-098) is an example of a receipt.

Transaction records The treasurer must: (a) record particulars of money received and money disbursed by the owners corporation as soon as practicable after each transaction occurs (b) balance the records of transactions (c) carry the balance forward at the end of each prescribed period (d) compare, at the end of the prescribed period, the entries in the records of transactions with the banking records of the account and enter in the records of transactions: (i) the amounts credited to the account and appearing in the banking records for which no receipt had been given, and (ii) the amounts debited to the account and appearing in the banking records for which no cheque had been drawn, and (e) enter in the record of transactions at the end of the entries for the prescribed period, any necessary reconciliation (showing the balance in the account as indicated in the banking records, plus any money received but not banked and less any cheques drawn but not presented for payment). The prescribed period is 12 months, or such shorter period determined by the owners corporation at its annual general meeting. These records are essentially receipts and expenditure (cash book) records and the process of comparing the records with the bank account is a simple bank reconciliation process. Form 99 (see ¶19099) is an example of a cash receipts book for the administrative fund, while Form 100 (see ¶19-100) is an example of a cash receipts book for the capital works fund. Form 101 (see ¶19-101) is an example of a cash payments book for the administrative fund and Form 102 (see ¶19-102) is an example of a cash payments book for the capital works fund. The form of balance and reconciliation is shown in Form 104

(see ¶19-104) (although it normally appears in the cash book at the end of the month or period being reconciled). The balance and reconciliation deals with the entries in Forms 99 to 102 (¶19-099– ¶19-102) on a monthly basis and relate back to the bank statement (see Form 103 (¶19-103)). The records illustrated are manually kept records, although professional strata management companies keep their records using industry standard computerised accounting systems. Levy register A levy register kept by the treasurer must include a separate section for each lot that is not a utility lot. Each of those sections must specify, by appropriate entries, the following matters in relation to each contribution levied and must indicate whether those entries are debits or credits and the balance for those entries: (a) the date on which the contribution is due and payable (b) the type of contribution (c) the period in respect of which the contribution is to be made (d) the amount of the contribution (as a debit) (e) the amount of each payment (as a credit) (f) the date each payment was made (g) how the payment was made (eg cash, cheque, etc) (h) whether an amount paid comprised full payment or part payment (i) details of any discount given for early payment, and (j) the balance of the account. Form 105 (see ¶19-105) illustrates a levy register. Law: Management Act, s 96–99.

Management Regulation, reg 22–24.

¶16-005 Other records There are a number of sections in the Management Act and clauses in the Management Regulation which impose obligations on an owners corporation to keep records. The more important obligations are to keep: • Full and accurate minutes of committee and general meetings. • Records of notices given to the strata committee vetoing a proposed decision. • Certain electronic and paper voting materials in respect of general meetings. • Documents and records handed over by the developer (such as the Initial Maintenance Schedule and the plans and specifications). In addition, strata managing agents are required to keep records of functions they exercise on behalf of the owners corporation, the strata committee or their officers. These records are required to be handed to the owners corporation at least once each year. Law: Management Act, s 55, 115, Sch 1, cl 22, Sch 2, cl 17. Management Regulation, reg 6, 41.

¶16-006 Notices to owners corporation The Management Act authorises and in some cases requires certain notices to be given to it. The notices include: • a strata interest notice • a company nominee notice • an owner agency appointment notice

• a tenancy notice • a mortgagee in possession notice. These notices are important because the information they contain must be entered on the strata roll and that information is vital to the completeness and accuracy of the roll. Strata interest notice This is a notice that a person must give if they have an interest in a lot that (subject to certain potential disqualifications) gives them a right to cast a vote at general meetings either personally or by means of a nominee. The notice is a written notice of that interest which contains the information specified by the Management Act. In some cases the notice must be verified by statutory declaration. The notice in Form 94 (see ¶19-094) shows the information required to be given and the circumstances in which a statutory declaration will be required. A further notice may be given advising of any change of nominee or the address for service of notices (see Form 106 (¶19-106)). Company nominee notice This is a notice whereby a corporation authorises an individual to exercise on its behalf any function conferred by or under the Management Act on the corporation as owner or mortgagee of a lot. This notice can also be used by a covenant chargee having the benefit of a covenant charge over the lot. Any function exercised by the company nominee is taken to have been exercised by the owner, mortgagee or covenant chargee concerned, although any liability or obligation remains with such owner, mortgagee or covenant chargee. See Form 107 (¶19-107) for a notice appointing a company nominee. If the notice is executed under seal of the corporation it is admissible as prima facie evidence. Owner agency A lot owner who is unable to deal with notices and other documents under the Management Act because of: (a) intellectual or physical impairment

(b) illiteracy (c) an inability to read or write English sufficiently well, or (d) absence from the lot (such as residing overseas), may appoint an agent (who is resident in Australia) to receive those notices and other documents. The appointment has no effect until communicated to the owners corporation and recorded on the strata roll. Once recorded, notices and other documents required to be given to the lot owner must be given to the agent. The appointment can be revoked at any time. See Form 108 (¶19-108) for the notice of appointment of an agent by a lot owner and Form 109 (¶19-109) for a revocation of that appointment. Tenancy notice If a lot is leased or sub-leased, the owner of the lot must give notice of the lease or sub-lease to the owners corporation not later than 14 days after the commencement of the lease or sub-lease. A similar notice must be given in the case of an assignment of a lease or sublease. The notice must specify: (a) the name of the tenant (b) the address for service of the tenant (c) the date of commencement, and (d) the name of the rental agent (ie real estate property manager). During the initial period the notice is given to the original owner. Failure to give the notice is an offence which carries a monetary penalty. See Form 95 (¶19-095) for the type of notice. Mortgagee in possession notice If a mortgagee takes possession of a lot, they must give written notice of that fact to the owners corporation within 14 days of taking possession. Failure to give the notice is an offence which carries a monetary penalty.

Law: Management Act, s 22, 154, 155, 258, 259.

¶16-007 Notice to give a strata interest notice If the secretary of the owners corporation is of the opinion that a person obliged to give a strata interest notice has not done so, the secretary may give a notice to that person requiring them: (a) to state, within 14 days, whether or not they are a person required to give the strata interest notice, and (b) if they are such a person, to give that notice. Failure to comply with such a notice from the secretary disqualifies the person and their nominee (if any) from voting at meetings of the owners corporation. A nominee can also be disqualified from voting if their full name and address for service of notices has not been nominated as required. Form 110 (see ¶19-110) is a suggested form of notice to give a strata interest notice. Law: Management Act, s 22(4) and (5).

¶16-008 Retention of records The following records must be retained by the owners corporation for seven years (or such other period prescribed by the Management Regulation): • Any records, notices or orders required to be kept under Div 1 Pt 10 of the Management Act (being mainly those associated with the strata roll and strata register). • Any records, notices and orders required to be kept under Pt 10 of the Development Act (relating to a strata renewal process). • Minutes of general meetings and strata committee meetings. • Financial statements and accounting records.

• Copies of correspondence received and sent by the owners corporation. • Notices of meetings of the owners corporation and strata committee. • Proxies delivered to the owners corporation. • Voting papers for motions relating to a strata renewal process (under Pt 10 of the Development Act) for owners corporation resolutions, the election of officers and the establishment of a strata renewal committee. • A copy of any signed strata managing agent agreement or building manager agreement entered into by the owners corporation. • Strata managing agent records of exercise of functions given to the owners corporation. • Other documents prescribed by the Management Regulation. The Management Regulation requires records relating to electronic voting (unless they relate to a strata renewal process) to be retained for 13 months. At the time of publication this was the only document prescribed by the Management Regulation. Failure to comply with the above retention requirements is an offence which carries a monetary penalty. The owners corporation would be the entity prosecuted for such an offence (rather than the secretary or other office bearer) and it would be responsible for payment of any penalty. However, if the scheme was being managed by a strata managing agent and the agent had been delegated the retention function, then the agent would be guilty of the offence instead of the owners corporation. Law: Management Act, s 180. Management Regulation, reg 41.

DISPUTES ¶17-001 Common types of disputes For many years community managers in the United States of America have spoken about the “CRAP” associated with condominium and homeowner communities in that country. They are referring to the predominant causes of disputes in their communities, namely: C — Children R — Renters A — Animals P — Parking. Things are not much different in Australia. Many disputes involve those issues. While those issues are often the underlying thing associated with a dispute they may not be the real thing in contention. For example, if a person is refused consent to keep an animal in their lot, the dispute may involve a range of issues, such as the validity of the by-law requiring consent, the process undertaken in considering the application (including the validity of any decision) and the reasonableness of the decision. Information directly relevant to the underlying thing (eg the small placid dog who has lived in a home unit all its life) is often secondary and irrelevant. Some disputes are disputes of substance, such as those relating to major building defects, the termination of long term management agreements, the fairness of the allocation of unit entitlements for the strata scheme or the termination of a strata scheme. No matter what the nature of the dispute and its importance, the process for resolving it is relatively uniform. This Chapter will examine that process and provide some guidance as to how disputes progress through the legal system set up by the Management Act specifically for strata title

related disputes.

¶17-002 Jurisdictional overview The Consumer and Commercial Division of the Tribunal handles all strata title related disputes. If a dispute utilises the entire legal process set up by the Management Act, it would progress through many stages, involving: • An internal dispute resolution process using a voluntary scheme set up by the owners corporation. • Mediation of the dispute through the Secretary of the Department of Finance, Services and Innovation (Fair Trading). • Application to the Tribunal for resolution of the dispute, which application can proceed in one of two ways: – decision “on the papers” by an adjudicator without a Tribunal hearing – tribunal hearing followed by a decision of the Tribunal. • Appeal to the Appeal Panel of the Tribunal from an adjudicator’s decision (which proceeds by hearing before the Panel). • Appeal to the Supreme Court from the decision of the Appeal Panel. The dispute resolution process set up by the Management Act is not an exclusive process. The rights or remedies that an owner, mortgagee or chargee of a lot, or an owners corporation or covenant chargee, may have apart from those in the Management Act are preserved. That means any of those persons can take their dispute, for example, direct to the Supreme Court, where it will be heard. However, there is a potential penalty for doing so. The court in which the proceedings are taken must order the plaintiff to pay the defendant’s costs if the court is of the opinion that, having regard to the subject matter of the proceedings, the taking of the proceedings

was not justified because of the adequacy of the dispute resolution process in the Management Act. Law: Management Act, s 253, Pt 12, Introductory Note. Civil and Administrative Tribunal Act 2013, Sch 4.

¶17-003 Interested persons Before a person can make an application to the Tribunal under the provisions of the Management Act, they must qualify as an “interested person” within the meaning of s 226 of the Act. The definition takes account of two types of strata schemes: • Stand-alone strata schemes (where the scheme applies to the whole of the building and its parcel). • Strata schemes for only part of a building (where the building has been subdivided by a stratum plan and other parts of the building are separately owned outside the strata scheme). Whole of building schemes In the case of whole of building schemes, interested persons are: (a) the owners corporation (b) an officer of the owners corporation (c) a strata managing agent for the scheme (d) an owner of a lot in the scheme (e) a person having an estate or interest in a lot (eg a mortgagee or covenant chargee) (f) an occupier of a lot, and (g) the lessor of a leasehold strata scheme. Part building schemes

In the case of part building schemes, interested persons include all of the above, plus: (a) in respect of any other strata scheme in the building: (i) its owners corporation (ii) its strata managing agent (iii) the owner of a lot (iv) a person having another estate or interest in a lot (v) an occupier of a lot, and (b) any other person for the time being bound by any community management statement for the building (ie the owners and interest holders in other stratum lots). Law: Management Act, s 226.

¶17-004 Mediation If an owners corporation has set up an internal dispute resolution process, that should be the starting point for resolution of the dispute. This process may be as simple as having the parties speak to each other, with or without a facilitator. If that does not produce a satisfactory result, the next step is to seek mediation through the Secretary of the Department. Mediation is a structured negotiation process in which the mediator, as a neutral and independent person, assists the parties to a dispute to achieve their own resolution of the dispute. In most cases a party seeking resolution of a dispute before the Tribunal will need to undertake mediation before making their application to the Tribunal. The exceptions are: • Appointment of a compulsory strata managing agent. • Interim order to temporarily restrain something while a final application process is undertaken.

• Where previous orders are sought to be varied or revoked. • Where authority is required to do something during the initial period. • Where the application relates to the reallocation of unit entitlements. • Where there is a prosecution for a civil penalty. An application for mediation is made to the secretary on the approved form (see Form 111 (¶19-111)). After receipt of the application the secretary will arrange a mediation session, which is usually restricted to the parties to the dispute. If an agreement is reached during a mediation session it is documented and is binding on the parties. In some circumstances the agreement can be the subject of an enforceable order of the Tribunal. Mediation sessions and materials (including documents) dealt with during them are privileged and confidential and cannot be used in subsequent proceedings. Law: Management Act, s 217, 220, 223–224.

¶17-005 Applications to the registrar If mediation does not resolve the dispute, or if it is a dispute which does not require mediation, an application can be made to the Tribunal by a “qualified person” for an order or orders to resolve the dispute. The application is made to the Consumer and Commercial Division of the Tribunal. See Form 112 (¶19-112) for the approved form of application. Assistance with these applications is available from the form itself or on the Tribunal’s website at www.ncat.nsw.gov.au/Pages/cc/Divisions/strata.aspx. It is important to attach copies of all documents (ie evidence) relevant to the application. This is because the application may be decided “on the papers” based on all the information available to the adjudicator. The application is lodged at the Registry with the applicable fee. Law: Management Act, s 226.

Civil and Administrative Tribunal Rules 2014, r 23.

¶17-006 Processing the application After receipt of an application, the Registrar of the Tribunal sends a notice (including a copy of the application) to all interested parties identified in the application, plus any others the Registrar thinks appropriate. The notice invites those persons to make a submission in relation to the application. An owners corporation, upon receiving such a notice, must immediately cause a copy of the application to be prominently displayed on its notice board, or on some part of the common property. The notice must be so displayed for the display period specified in the notice. The notice specifies a closing date for submissions, although application can be made to extend that date. Law: Management Act, s 228.

¶17-007 Powers of the Tribunal The specific powers of the Tribunal to make orders and the conditions applying to those orders, appear in various sections of the Management Act which confer jurisdiction on the Tribunal. For example, s 89 of the Management Act confers jurisdiction on the Tribunal to order an original owner in a strata scheme to pay compensation to owners for inadequate estimates and levies determined during the initial period (see ¶17-010 for more examples). While such sections are the source of specific powers, the Tribunal also has more general powers. These include the making of an order or decision that provides for ancillary or consequential relief, as well as making an interlocutory decision within the meaning of the Civil and Administrative Tribunal Act 2013. Interlocutory decisions include: • The granting of a stay or adjournment. • The prohibition or restriction on the disclosure, broadcast or publication of matters. • Any extension of time.

• The joinder or misjoinder of a party to proceedings. • Summary dismissal of proceedings. The Management Act provides for other general powers, including the power to make: (a) orders to give effect to agreements or arrangements arising out of mediation sessions (b) orders to dismiss an application relating to a meeting deficiency if it believes no substantial injustice has resulted (c) an interim order (see ¶17-008) (d) an order to revoke an interim order (e) an order requiring a person to do, or refrain from doing, a specified act, and (f) a certification of an order so that it can be recorded in the Register by the Registrar General. In relation to applications complaining about the absence of a quorum, a defect, irregularity or deficiency of notice or time about a meeting, the Tribunal can dismiss the application if it believes that no substantial injustice has resulted. Law: Management Act, s 229, 230, 231, 241, 242, 246.

¶17-008 Interim orders In conjunction with an application to the Tribunal for a final order, the applicant may request the Tribunal to make an interim order (ie a restraining order to preserve the status quo while the application is being dealt with). If the Tribunal is satisfied on reasonable grounds that urgent considerations justify the making of an interim order, the Tribunal may make the order in the form of any order that could otherwise be made by the Tribunal. The Tribunal also has the power

to renew an interim order that is about to expire and to revoke the order. An applicant, in requesting an interim order, must not make a statement that they know to be false or misleading in a material respect. This obligation is very important considering that many interim orders are made without the benefit of hearing both sides of the dispute and without requiring an undertaking as to damages from the applicant. The interim order continues in force for three months from the making of the order, or such earlier date specified in the order. Law: Management Act, s 231.

¶17-009 Determining the application After receipt of the application the Registrar will list the matter for hearing. The listing will be for either a directions hearing, or for a conciliation and hearing. The Tribunal may decide not to conduct a hearing, but instead to decide the matter “on the papers”. The decision takes the form of an order (either granting relief or dismissing the application) and detailed reasons for the order. The timing for the initial hearing is between four to six weeks and the time for final resolution will usually be two to three months. However, defended matters can go for much longer. The Tribunal normally determines an application by applying the provisions of the Management Act under which relief is sought. However, it does have the power to grant relief under another provision of the Act if it thinks that to be more appropriate. After the order is made the Tribunal will send a copy to the owners corporation which must: (a) place a copy of the order in a prominent position on its notice board within three days after receiving it, and (b) keep it so displayed for 14 days. If the owners corporation does not have a notice board it must send a

copy of the order to each person whose name appears on the strata roll. This would include tenants, mortgagees and covenant chargees. Law: Management Act, s 240, 243.

¶17-010 Types of orders The types of orders that can be made by the Tribunal and the persons who are entitled to apply for them are set out in the following table: Item Type of Order

Qualified Applicants

Section*

ORDERS RELATING TO MEETINGS AND DECISIONS OF OWNERS CORPORATIONS 1

To require an original Owners corporation owner to provide things to the owners corporation

17

2

To require meeting to be held

Owner Owners corporation Mortgagee

20

3

To invalidate resolution or election

Owner 24 First mortgagee of a lot

4

To nullify resolution of owners corporation on ground that person was denied a vote or notice was not given

Person entitled to vote on the resolution

25

5

To require a meeting to be held if no officers or committee after the first annual general meeting

Owner Mortgagee Covenant chargee

48

ORDERS RELATING TO COVENANTS AND OTHER RESTRICTIONS 6

To waive, vary or

Owners corporation

27

extinguish restriction Original owner relating to initial period or Owner to authorise any matter to be done in relation to the waiving, varying or extinguishing of such a restriction 7

To comply with obligation Authority having benefit 234 imposed by positive of positive covenant covenant

8

To refrain from breaching Owners corporation restriction on use of utility Lessor of leasehold lot strata scheme Owner Occupier of lot

235

9

To refrain from breaching Relevant local council restriction on use of utility lot within area of local council

235

ORDERS RELATING TO STRATA MANAGING AGENTS AND BUILDING MANAGERS 10

To terminate strata Owners corporation managing agent or building manager agreement or make other order about an agreement

11

To appoint strata managing agent

72

Person who obtained 237 order under this Act that imposed duty on owners corporation or office holder that has not been complied with Person having estate or

interest in lot or, in the case of leasehold strata scheme, lease of lot Authority having benefit of positive covenant that imposes duty on owners corporation Judgment creditor to whom owners corporation owes judgment debt ORDERS RELATING TO CONTRIBUTIONS AND FUNDS 12

To allocate payment of surplus money

Owners corporation Covenant chargee Owner Mortgagee

77

13

To alter amount of contributions

Owners corporation Lessor of leasehold strata scheme Owner Mortgagee in possession

82

14

To prevent owners corporation charging interest for late payment of contribution

Owner

85

15

To require original owner to compensate for inadequate estimates/contributions

Owners corporation Owner

89

ORDERS RELATING TO PROPERTY 16

To require occupier of lot

Owners corporation

124

to allow owners corporation to enter lot 17

To get consent to existing Lessor of leasehold or proposed alterations or strata scheme repair of common Owner property

126

18

To declare work to be cosmetic work or minor renovation

Owner

127

19

To direct owner to lodge documents under s 19 of Development Act

Owners corporation Lessor of leasehold strata scheme Owner

128

20

To require owner to comply with window safety device obligation

Owners corporation

129

21

To require owners corporation to carry out window safety device function

Interested person (other than owners corporation)

129

22

To require owners corporation to dispose of personal property

Owner

130

23

To prevent owners corporation acquiring personal property

Owner

130

24

To require owners corporation to acquire personal property

Owner

130

25

To use specified common Owner property for specified purposes

131

26

To require owner or occupier to repair damage or compensate for damage

Owners corporation

132

27

To reallocate unit entitlements

Owners corporation Lessor of leasehold strata scheme Owner of lot (whether or not development lot) Local council Public authority or statutory body representing the Crown, that is empowered to impose a rate, tax or other charge by reference to a valuation of land

236

ORDERS RELATING TO BY-LAWS 28

To revoke amendment to by-laws, revive repealed by-law or repeal new bylaw

Person entitled to vote on motion relating to by-law Lessor of leasehold strata scheme

148

29

To change by-law conferring exclusive rights or privileges over common property

Owners corporation Lessor of leasehold strata scheme Owner Interested person

149

30

To invalidate by-law

Person entitled to vote on motion relating to by-law Lessor of leasehold

150

strata scheme ORDER RELATING TO KEEPING OF ANIMALS 31

To require removal of animal wrongly kept on lot

Interested person

156

32

To allow person to keep animal on lot

Owner Occupier

157

33

To remove animal causing nuisance or hazard

Interested person

158

34

To terminate nuisance, hazard or unreasonable nuisance caused by animal

Interested person

158

ORDERS RELATING TO INSURANCE 35

To adjust proportion of insurance premium to be paid

Person liable to pay premium

162

36

To exempt from requirement to insure

Person required to insure

172

37

To require person to make or pursue insurance claim

Owner Lessor of a leasehold strata scheme Sublessee in a leasehold strata scheme Person in whom is vested estate in fee simple or a leasehold estate (in case where part of building is included in part strata

174

parcel) of part of building not included in part strata parcel 38

To require insurance to be taken out

Owner 175 Enrolled mortgagee or person having interest in lot Lessor of leasehold strata scheme Sublessee of common property in a leasehold strata scheme Person in whom is vested estate in fee simple or a leasehold estate (in case where part of building is included in part strata parcel) of part of building not included in part strata parcel Authority having benefit of a positive covenant affecting building or site

ORDERS RELATING TO RECORDS OF OWNERS CORPORATIONS 39

To allow owners corporation to enter information on strata roll

Owners corporation Owner Person having or acquiring estate or interest in lot

187

40

To require owners corporation, strata managing agent or office holder to supply records

Person entitled to inspect records or documents

188

or documents for inspection ORDERS RELATING TO DEFECTIVE BUILDING WORK 41

To permit access to lot for inspection or building work

Owners corporation 211 Developer Building inspector Person entitled to enter Secretary

42

To specify contract price

Owners corporation Developer Secretary

211

GENERAL ORDERS FOR SETTLEMENT OF DISPUTES 43

To resolve dispute or complaint

Interested person Original owner Building manager

232

44

To resolve dispute between contiguous strata schemes

Owners corporation

233

ORDERS RELATING TO STRATA COMMITTEE 45

To remove person from strata committee

Interested person

238

46

To remove person from office

Interested person

238

47

To prohibit strata committee from determining a matter

Interested person

238

* Management Act

¶17-011 Orders taking effect as resolutions

Certain types of Tribunal orders, to the extent to which they impose a requirement on an owners corporation, are taken to have effect as a resolution of the owners corporation to do what is needed to comply with the requirement. The types of orders are: • Orders that a resolution passed at a general meeting be treated as a nullity (s 25). • Orders that no interest is chargeable on a late contribution (s 85). • Orders for payment of contributions in an amount or manner different to that determined by an owners corporation (s 87). • Orders relating to alterations and repairs to common property and other property (s 126). • Orders relating to cosmetic work or minor renovations to common property (s 127). • Orders requiring lodgement of a building alteration plan, consequent on changes to the boundaries of a lot (s 128). • Orders requiring an owners corporation to exercise a function relating to window safety devices (s 129). • Orders for the owners corporation to acquire or dispose of personal property (s 130). • Orders granting an owner or occupier certain licences over specified common property (s 131). • Orders that an owner or occupier repair or compensate for damage to common property or a lot (s 132). • Orders for an owners corporation to make or pursue an insurance claim (s 174). • Orders requiring an owners corporation to take out a damage policy (s 175).

• Orders which are expressly stated to have effect as a decision of an owners corporation (s 245). Where an order has effect as a resolution of an owners corporation, the terms of the order must be recorded in its minute book. If a period of operation of the order is specified by the Tribunal, then the deemed resolution can only be “repealed” during that period by unanimous resolution of the owners corporation or, with the authority of a further order of the Tribunal, by general meeting motion. Law: Management Act, s 245.

¶17-012 Enforcement of orders If an order of the Tribunal is contravened, a civil penalty may be imposed by the Tribunal for the contravention. At the time of publication, a monetary penalty of up to $11,000.00 could be imposed on an individual and up to $22,000.00 on a corporation. The Tribunal may order that the penalty be paid to the owners corporation. If such a penalty is payable to the owners corporation by a lot owner, then the owners corporation may recover the penalty under the Management Act as if it were an amount of unpaid contributions. This is significant in that it effectively invokes the lot owner’s obligation to cover all the reasonable expenses incurred by the owners corporation in recovering the amount outstanding. If the penalty is payable to the owners corporation by a non-lot owner, it is recoverable as a debt. All other civil penalties imposed by the Tribunal are recovered as a debt due to the Crown in a court of competent jurisdiction. In some cases, where an owners corporation fails to comply with an order of the Tribunal another application can be made to the Tribunal for the appointment of a compulsory strata managing agent to take control of the owners corporation and cause it to comply with the order. Law: Management Act, s 86, 237, 248. Civil and Administrative Tribunal Act 2013, s 72, 77, 78.

¶17-013 Appeals to the Tribunal It is possible to appeal against an order made by the Tribunal “on the papers”. The appeal is to the “internal appeal jurisdiction” of the Tribunal by a party to the proceedings and the appeal is dealt with by an Appeal Panel. An internal appeal may be made: (a) in the case of an interlocutory decision of the Tribunal at first instance — with the leave of the Appeal Panel, and (b) in the case of any other kind of decision of the Tribunal at first instance — as of right on any question of law, or with leave of the Appeal Panel, on any other grounds. The Appeal Panel may deal with the appeal by way of a new hearing if it considers that is warranted and in the new hearing may admit fresh evidence. Law: Civil and Administrative Tribunal Act 2013, s 32, 80.

¶17-014 Proceedings before the Tribunal Tribunal proceedings are bound by a “guiding principle” to the effect that the Act and rules are to be applied to facilitate the “just, quick and cheap resolution of the real issues in the proceedings”. There is no right to be legally or otherwise represented in the proceedings, although the Tribunal can grant leave to be represented. The Tribunal provides limited guidance to unrepresented parties. The Tribunal may determine its own procedure in relation to any matter which is not covered by the Civil and Administrative Tribunal Act 2013 or the rules under that Act. It is not bound by the rules of evidence (except in enforcement and penalty matters) and may inquire into and inform itself in such manner as it thinks fit, subject only to the rules of natural justice. It must act with as little formality as the circumstances of the case permit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms. It is also under a positive obligation to assist parties to the proceedings. Notwithstanding all those words of

comfort, if the Tribunal proceeds by way of hearing it functions in a similar way to a court, although much more informally. Hearings are open to the public. Law: Civil and Administrative Tribunal Act 2013, s 36, 45.

¶17-015 Appeals from tribunal decisions A party to an “internal appeal” (which would generally be the type of appeal associated with strata matters) may, with the leave of the Supreme Court, appeal on a question of law to the court against any decision made by the Tribunal in the proceedings. The Supreme Court may make such orders as it considers appropriate in light of its decision on the appeal, including without limitation, the following: (a) an order affirming, varying or setting aside the decision of the Tribunal, or (b) an order remitting the case to be heard and decided again by the Tribunal (either with or without the hearing of further evidence) in accordance with the directions of the court. Law: Civil and Administrative Tribunal Act 2013, s 83.

OTHER POWERS AND DUTIES ¶18-001 Inspection of records An owner, mortgagee or covenant chargee of a lot, or a person authorised by any of them, may request the owners corporation to allow an inspection of its records. The authorisation of a person to request an inspection need not be in writing and the secretary or strata managing agent need only be reasonably satisfied that they have the necessary authority. However, the actual request for the inspection must be in writing and must be accompanied by the prescribed fee (currently $31.00 and an additional $16.00 for each half-hour or part half-hour after the first hour). The request in Form 113 (see ¶19-113) is recommended. In addition, an original owner needing to convene a meeting of the owners corporation (whether the first annual general meeting or not) is entitled, without payment of any fee, to inspect the strata roll. Failure to comply Failure to comply with this obligation is an offence which attracts a monetary penalty. If the strata managing agent has been delegated the function of making the records available for inspection, then they would be at risk of committing the offence and having the penalty imposed on them. The failure may be a failure to allow the inspection to incur, or it may be as simple as a failure to make any one piece of information available for inspection (eg not making all pages of the strata roll available). Great care therefore needs to be taken to ensure that the obligation is strictly observed. Apart from the offence, failure to make everything available has the potential to attract liability for damages suffered by a purchaser who proceeded with a purchase to their detriment. Inspection arrangements Following a valid application to inspect the owners corporation’s

records, the applicant and the owners corporation must agree on the time and place for the inspection to occur, as well as the means by which it is to occur (eg by production of paper or electronic records). If they fail to reach agreement within three days of the receipt of the application by the owners corporation, the owners corporation must immediately give the applicant a written notice fixing a specified time (between 9.00 am and 8.00 pm) on a specified date (not later than 10 days after the receipt of the application), or a specified means, for the inspection to take place. The venue for the inspection must be the parcel (ie the scheme’s building). This could prove difficult for strata managing agents who use a computerised management system which is not web based. The owners corporation (or strata managing agent) would need to make available a computer and printer for the inspection or to print out all the records at their own expense. Form 114 (see ¶19-114) is recommended to fix the time, place and means for the inspection. See ¶18-004 for the way in which the notice should be served. Records to be produced In response to such request the owners corporation must make the following records available for inspection: • The strata roll (not just the page relating to the lot referred to in the request). • Any other records and documents required to be kept under Pt 10 of the Management Act (eg records of notices and orders, voting papers, electronic voting records and minutes of meetings, etc). • Plans, specifications, certificates, diagrams and other documents required to be delivered by the developer prior to the first annual general meeting. • Certificate of title for the common property or the common property lease (if available). • Any applicable 10-year capital works fund plan.

• The last set of financial statements. • Every current policy of insurance and the receipt for the last premium payment. • If a strata managing agent has been appointed, a copy of the instrument of appointment. • A copy of any strata renewal plan given to the owners corporation under the Development Act. • If the strata managing agent has been delegated the duty to allow inspections, any records (including records of the strata managing agent) relating to the scheme which are prescribed by the Management Regulation. The accounting records and all other records kept by the strata managing agent relating to the scheme have been prescribed. • If a building manager agreement is in force, or has been entered into but not yet commenced, a copy of the building manager agreement. • Particulars of any service agreement entered into by the owners corporation. • Particulars of any agreement entered into with the local council regarding a strata parking area. • If it is not more than five years since expiry of the initial period, particulars of orders made authorising acts during the initial period, including copies of any related contracts or other documents. Extracts and copies A person entitled to inspect documents is entitled to take extracts from, or make a copy of, a document, but they cannot without the consent of the owners corporation remove the document from its custody. The following should be carefully noted about this

entitlement: • If the inspector has a portable copier or scanner, they are entitled to use it. • If the inspector has a portable storage device (eg USB stick) they would be allowed to take a copy of an electronic file containing the document. • If the inspector requests the body corporate or strata managing agent to make a photo copy, or to print a copy of an electronic document, a fee can be negotiated for the copy. However, the fee would need to be reasonable. Electronic records Many strata managing agents keep body corporate records electronically and for records inspections they simply provide the person carrying out the inspection with electronic access to the records. The records are often disorganised and incapable of being “word searched” to locate relevant documents. This works in favour of the strata manager because the inspection takes longer and the fee is higher. However, this approach carries a very substantial risk for the strata manager and the owners corporation. The risk is two-fold: • The “dumping” of huge numbers of disorganised electronic files on a person inspecting may amount to a failure to make the records available. • If the person inspecting misses a critical document because it was unable to be found with reasonable effort and diligence, then the owners corporation (and hence the strata manager) may incur a liability for any damages suffered by a purchaser. Ideally, there should be an industry filing standard or protocol set by the peak industry body so that all records are logically filed and catalogued in a uniform way. Failing this, individual strata managers should provide persons carrying out inspections with a copy of their hierarchical filing structure so that they will know where to find the

various types of documents. Simply filing everything in date order would be totally unsatisfactory and very risky. Law: Management Act, s 182, 183. Management Regulation, reg 42, Sch 4.

¶18-002 Supply of amenities and services to lots An owners corporation is expressly empowered to enter into an agreement with the owner or occupier of a lot to provide amenities or services to the lot or to the owner or occupier of the lot. Common examples of these types of arrangements involve: • mowing of grass or maintenance of gardens in private courtyards • electricity supply by means of an embedded network • television or internet services • window cleaning. Because the Management Act does not specify the basis on which those arrangements are to be made, while it would be open to the owners corporation to provide the service upon payment of an agreed charge it may even be allowed to provide the service free of charge. Law: Management Act, s 117.

¶18-003 Building defects A major reform introduced by the Management Act was the introduction of a comprehensive regime for dealing with building defects in new buildings. Part 11 of the Act, comprising 26 sections, is devoted entirely to this area, although it will not commence until after the other provisions of the Act are fully operational. This delay in commencement is intended to give the development industry sufficient time to factor in the new obligations imposed by Pt 11. When it becomes operational, it will provide for:

• Developers to provide a “building bond” to the value of 2% of the contract price of the “building work” (which is widely defined) before an occupation certificate is issued for a completed strata building. • Developers (or in certain circumstances, the Secretary of the Department) must appoint a qualified independent person as a building inspector to carry out an inspection of and report on the “building work”. Failure by a developer to comply is an offence which carries a substantial penalty. • The building inspector must produce an interim report on the building work between 15 and 18 months after completion of the work. • A final inspection and report must be made within 18 months after completion of the work. • All costs involved must be borne by the developer. • If there is a building claim under Pt 3A of the Home Building Act 1989 the Tribunal must refer to the reports, although neither the Tribunal nor a court is bound by the reports. • Defective building work must be rectified by the builder or their employee, agent or contractor. • If the owners corporation has to rectify defective building work it can access funds secured by the building bond, but it must use those funds to rectify the defective building work. Any dispute about accessing the funds is resolved by the Tribunal. • Existing legal rights and obligations of the various parties are preserved notwithstanding the claim on a building bond (eg the builder can still claim on sub-contractors and the owners corporation can still sue the builder and/or the developer). A new scheme which has the benefit of the new provisions should

monitor the bonding process carefully to ensure that all defective building work is rectified. This would best be done with assistance from an experienced building consultant or strata lawyer. Law: Management Act, Pt 11.

¶18-004 Service of documents The Management Act makes provision for service of documents: (a) on an owners corporation (b) by an owners corporation and others, and (c) on other persons. Each of these will be dealt with briefly. Service on an owners corporation Section 262 of the Management Act provides for service of a summons, other legal process or other documents on an owners corporation. A summons or other legal process may be given (served) to an owners corporation by: (a) serving it personally on the chairperson, secretary or a strata committee member or strata managing agent (b) leaving it in the letterbox of the owners corporation, or (c) posting it, by pre-paid mail, to the owners corporation at its address recorded in the folio of the register comprising the common property. Other documents may be given (served) to an owners corporation by: (d) leaving it with the chairperson or secretary of the owners corporation or a member of the strata committee (e) leaving it in the letterbox of the owners corporation

(f) posting it, by pre-paid mail, to the owners corporation at its address recorded in the folio of the register comprising the common property, or (g) by sending it by electronic transmission to an address or location nominated (in correspondence or otherwise) by the chairperson or secretary or a member of the strata committee as an address or location to which correspondence can be sent. The strata managing agent has been omitted for service of less formal documents and communications, although they can have their address or location nominated for communication purposes. It is important to note that there must be an actual nomination of an electronic address or location — it cannot be allowed to arise by assumption. Service by an owners corporation and others Section 263 of the Management Act specifies how a notice or other document is to be given if it is required or authorised under the Act or by-laws to be given by a relevant stakeholder. The section applies, subject to the other provisions of the Act, to notices or documents given by the Secretary of the Department, the Tribunal, the owners corporation, the lessor of a leasehold strata scheme, the original owner, a strata committee, the secretary of the owners corporation or a strata managing agent. A notice or other document may be given to the occupier of a lot by post at the address of the lot, or by leaving it at the address of the lot with a person apparently of or above 16 years of age. If an address for service of notices on a person is recorded on the strata roll or has been notified in a tenancy notice, a document may be given to the person: (a) in the case of a postal address, by post at that address (b) by sending it by electronic transmission to an address or location nominated (in correspondence or otherwise) by the person as an address or location to which correspondence can be sent, or

(c) by leaving it at that address with a person apparently of or above 16 years of age. Once again, the address must have been clearly nominated by the person and not assumed simply because that is an e-mail or other address that the person has used in the past. If an owners address is recorded on the strata roll, they should be served in one of the ways specified above. However, if no address is recorded on the strata roll for an owner the document may be given to them: (a) personally (b) by post at the address of the lot (c) by leaving it on a part of the lot that is the owner’s place of residence or business (otherwise than a car space or storeroom) (d) by leaving it in a place provided on the parcel for receiving mail posted to the lot (ie the letter box for the lot), or (e) in any other manner authorised by the by-laws for the service of notices on owners. If it is necessary for an owners corporation to serve a notice under s 182 of the Management Act to fix a date, time and location for an applicant to inspect the body corporate records, then that notice can be served: (a) personally or by post, or (b) by leaving it with a person apparently of or above 16 years of age at the place of residence or place of business of the person who is to be given the notice. If it is to be sent by post, then presumably, the envelope can be addressed to either the place of business or place of residence of the person to be served. If necessary, this could be ascertained from the document in which the inspection was requested by that person.

The only other circumstance covered by s 263 concerns buildings which have been subdivided by a stratum (or airspace) plan and one or more of the stratum lots have been further subdivided by a strata plan, thus resulting in a strata scheme which applies to part of the building (usually a residential component). Notices required to be given among the owners of the various parts of the building (whether leasehold or freehold) may be given in accordance with s 170 of the Conveyancing Act 1919. That section comprehensively regulates the service of notices, including such things as when they are deemed to have been received. The permitted modes of service of notices relevant to a stratum subdivision are: • Personal delivery of the notice. • Leaving the notice at the last known residential or business address of the person to be served. • Sending the notice by post to the last known residential or business address of the person to be served. • In the case of a mortgagor in possession or a lessee, by leaving the notice at, or sending it by post to, any occupied house or building comprised in the mortgage or lease. Service on other persons Section 264 of the Management Act sets out the ways in which a document that is authorised or required by the Act or the regulations to be given to any other person can be given. The section is only intended to apply where neither s 262 or 263 apply. In the case of an individual, such a document may be given by: (a) delivering it to the person personally (b) sending it by post to the address specified by the person for the giving of documents (c) sending it by post to the residential or business address of the person last known to the person serving the document, if no address was so specified for the giving of documents

(d) sending it by electronic transmission to an address or location nominated (in correspondence or otherwise) by the person as an address or location to which correspondence can be sent. In the case of a body corporate, such a document may be given by: (a) leaving it with a person apparently of or above the age of 16 years at, or by sending it by post to, the head office, a registered office or a principal office of the body corporate (b) leaving it with a person apparently of or above the age of 16 years at, or by sending it by post to, an address specified by the body corporate for the giving or service of documents (c) sending it by electronic transmission to an address or location nominated (in correspondence or otherwise) by the body corporate as an address or location to which correspondence can be sent, or (d) another way authorised by any law or the rules of any court. Law: Management Act, s 262, 263, 264. Conveyancing Act 1919, s 170.

¶18-005 Common seal Every owners corporation must have a common seal. If the owners corporation only has one owner, that owner, or a strata managing agent for the scheme, must keep the seal. If there are two or more owners, the seal must be kept by an owner or strata committee member nominated by the owners corporation, or by the strata managing agent for the scheme. If there is no strata managing agent and there has been no nomination as to who should keep the seal, then the seal must be kept by the secretary. A strata managing agent is only entitled to have custody of the seal for the purpose of permitting them to exercise their functions. The affixing of the seal is not attested in the same way as company

seals are attested and s 272 of the Management Act goes into some detail about how the owners corporation’s seal is to be attested. The requirements can be summarised as follows: 1. If there are only one or two owners in the scheme, the owner or owners (as the case may be) must be present when the seal is affixed and they must attest the affixing of the seal. The attesting is done by signature(s) in the vicinity of the seal. Alternatively, the strata managing agent for the scheme may affix and attest the affixing of the seal (see number 3 below). 2. If there are more than two owners in the scheme, the seal must be affixed in the presence of: (a) two persons, being owners of lots or members of the strata committee, determined by the owners corporation (b) in the absence of such a determination, by the secretary and any other member of the strata committee, or (c) the strata managing agent for the scheme. See Form 115 (¶19-115) for the attestation by the secretary and another committee member or two other members determined by the committee. 3. The strata managing agent must attest the fact and date of the affixing of the seal: (a) by his/her signature, or (b) if a corporation, by the signature of the president, chairperson or other principal officer of the corporation or by any member of the staff of the corporation authorised to do so by the president, chairperson or other principal officer. Having affixed the seal, the strata managing agent is taken to have done so under the authority of a delegation from the owners corporation. See Form 116 (¶19-116) for the attestation by a sole trader strata managing agent and Form 117 (¶19-117) for the

attestation by a corporate strata managing agent. Form 118 (¶19118) is the authority necessary for a staff member to attest the seal. A separate authority is recommended for each scheme, or the list of schemes covered by the authority could be set out in a schedule to the authority. Law: Management Act, s 273.

¶18-006 Power to carry out work An owners corporation has the power to carry out work in a number of circumstances, including: (a) for normal maintenance of the common property and personal property (such as pool furniture) (b) to install or maintain window safety devices where they are required by the Management Act (c) work necessary to rectify any structural defects in any part of the building comprised in a lot, if the defect is likely to affect the support or shelter provided by that lot for another lot (d) work necessary to rectify any defect in any pipe, wire, cable or duct within a lot that provides, or through which passes, any water, sewage, drainage, gas, electricity, garbage, artificially heated or cooled air, heating oil or other service (including telephone, internet, radio or television services) (e) work an owner was required by a public authority to carry out but which the owner failed to carry out (f) work a person is required by a scheme by-law to carry out but which that person has failed to carry out (g) work a person is required to carry out to remedy a breach of a statutory duty imposed by Pt 8 of the Management Act (eg nuisance, interference with support, unauthorised alterations, etc)

but which that person has failed to carry out, and (h) work a person is required by an order of the Tribunal to carry out but which the person has failed to carry out. The following should be noted about the cost of such work: • Work related to (a) above would be paid for by the owners corporation out of its normal budget allocations. • Work related to (b), (c) and (d) above is to be carried out at the expense of the owners corporation, subject to any recovery rights it may have against another person. • The cost of work related to (e), (f), (g) and (h) above may be recovered as a debt by the owners corporation from the person who failed to carry out the work. In order to carry out most of the abovementioned work, the owners corporation and its contractors will need access to lots. The Management Act provides extensive access rights to an owners corporation, which cover not only the above work, but work generally in relation to the building and its land. In particular, the owners corporation may, by its agents, employees or contractors, enter on any part of the building or its land for the purpose of carrying out: (a) work required or authorised to be carried out by it in accordance with the Management Act (including work related to window safety devices and work related to rectification of building defects) (b) work it is required to carry out by a notice from a public authority (c) work it is required or authorised to carry out by an order of the Tribunal, and (d) an inspection to determine whether any work is required to be undertaken by it in accordance with the Management Act. If the access is required to deal with an emergency the owners

corporation may enter any part of the parcel (ie the building and its land) at any time. Strictly speaking the owners corporation is not required to give advance notice, although if at all possible, it should attempt to notify the lot owner or occupier before proceeding with the entry. The entry may even be forced, although in such event the owners corporation would be responsible for the costs of repairing anything damaged during the course of the entry unless the owners corporation was obstructed or hindered. If no emergency is involved, the owners corporation must negotiate with the occupier to obtain consent to the entry. Subject to that consent, the owners corporation can enter any part of the parcel. If consent is not given, or cannot be obtained, then the owners corporation can apply to the Tribunal for the necessary authority to enter. If a person obstructs or hinders an owners corporation in the exercise of its right of entry or the carrying out of work pursuant to that entry they commit an offence and are liable to a monetary penalty. This would only apply to entry in an emergency or entry pursuant to an order of the Tribunal. If an occupier simply refuses permission for the owners corporation to enter, that is unlikely to be an offence. Apart from the owners corporation’s entry rights, a fire safety inspector can give notice to an owners corporation to ensure access is provided to some or all lots in the scheme. The owners corporation must comply with the notice and failure to do so is an offence which carries a monetary penalty. However, it is a defence to a prosecution if the owners corporation can show that failure to ensure access occurred because an owner or occupier of the lot could not be contacted by the owners corporation. It remains to be seen whether an owners corporation would be convicted of this offence if the owner was contacted but refused access. Given that s 124 of the Management Act envisages that in those circumstances the owners corporation can seek an order for access from the Tribunal, it is likely that an owners corporation could escape liability if it promptly made such an application to the Tribunal. Law: Management Act, s 118, 119, 120, 122, 123, 124(1)(b).

¶18-007 Disposal of abandoned goods An owners corporation may dispose of goods left on common property if: (a) a disposal notice has been placed on or near the goods and the goods have not been removed within the period specified in the disposal notice (b) they are perishable goods, or (c) they consist of rubbish. This does not apply to motor vehicles (as to which see ¶18-008) and things permitted by the owners corporation to remain on common property. Also, care will need to be taken to ensure that the goods are actually on common property (eg some car spaces and storerooms are part of a lot). If the goods are on an area the subject of a common property rights by-law (eg a car space), then the by-law will need to be checked to determine whether the placement of the goods is permitted by the by-law. If the goods are blocking an entrance or exit the owners corporation may remove them to another place on the common property and for that purpose the owners corporation is taken to be the owner of the goods. A disposal notice must: (a) not be less than the size of an A4 piece of paper (b) be placed in a position or be in a material so that the contents of the notice are not likely to be detrimentally affected by the weather (c) describe the goods and state the date and time the notice was issued (d) state that the goods will be disposed of if they are not removed from the common property before the date and time specified in the notice (being not earlier than five days after placement of the

notice), and (e) specify contact details for a member of the strata committee, the strata managing agent or a delegate of the owners corporation in relation to the notice. The use of a disposal notice should be authorised by a resolution of the strata committee — see Form 119 (¶19-119). A recommended form of disposal notice appears in Form 120 (see ¶19-120). If the goods have not been removed in accordance with the disposal notice, the owners corporation may dispose of the goods by selling them or in any other lawful manner (eg donating them to charity) and for that purpose is taken to be the owner of the goods. A purchaser of the goods acquires good title, freed and discharged of any interest of any person who would otherwise have an interest in the goods (eg a lender under a hire purchase agreement). The proceeds of any sale are to be paid into the administrative fund and the owners corporation must make a record of the goods sold and keep the record for at least 12 months after the disposal. There does not appear to be a requirement to keep a record of any goods disposed of otherwise than by sale, although that is recommended. The owner of the goods sold may apply to the Tribunal for an order that the owners corporation pay the proceeds of sale of the goods to the owner. In the absence of such order the funds can be kept by the owners corporation. The record of the disposal must contain the following particulars: (a) a description of the goods (b) the date of the sale (c) the name and address of the purchaser, and (d) if sold by auction, the address of the principal place of business of the auctioneer. See Form 121 (¶19-121) for a recommended Register of Disposed Goods.

Law: Management Act, s 125. Management Regulation, reg 32.

¶18-008 Removal of motor vehicles An owners corporation may cause a motor vehicle located on common property and blocking an entrance or exit, or otherwise obstructing common property, to be moved: (a) to another place on common property (b) to the nearest place to which it may be lawfully moved, or (c) so that it no longer blocks an exit or entrance or otherwise obstructs the use of common property. For the purpose of moving the vehicle, the owners corporation is regarded as the owner of the vehicle. Subsequently, the Tribunal can order the owner of the vehicle to pay to the owners corporation the reasonable costs incurred in removing the vehicle. If the vehicle has current registration and there is no common property where the vehicle can be conveniently left it would be permissible for the vehicle to be removed to the street in a position where it can be legally parked without breaching a parking time limit. Before the owners corporation exercises its rights to move a motor vehicle it must place a removal notice on or near the motor vehicle and the requirements of that notice must not have been complied with within the period specified in the removal notice. The removal notice must: (a) not be less than the size of an A4 piece of paper (b) be placed in a position or be in a material so that the contents of the notice are not likely to be detrimentally affected by the weather (c) describe the motor vehicle and state the date and time the notice was issued

(d) state that the motor vehicle will be removed if it is not moved from the common property or so that it no longer obstructs common property before the date and time specified in the notice (being not earlier than five days after placement of the notice), and (e) specify contact details for a member of the strata committee, the strata managing agent or a delegate of the owners corporation in relation to the notice. The use of a motor vehicle removal notice should be authorised by a resolution of the strata committee — see Form 122 (¶19-122). A recommended form of motor vehicle removal notice appears in Form 123 (see ¶19-123). Law: Management Act, s 125. Management Regulation, reg 34.

¶18-009 Council parking agreements An owners corporation and the local council may enter into an agreement under which part of the common property in the scheme is set aside for use as a strata parking area (eg a visitor’s parking area). The form of agreement will be provided by the council and will be regulated by directions given to the council by the Director General of the department. The owners corporation must approve entry into the agreement by special resolution (see Form 124 (¶19-124)). The agreement confers functions on the council in relation to the strata parking area, including the right to erect signage which specifies parking restrictions. The signage can restrict parking during certain times, for a maximum period or for disabled persons. The driver of a vehicle parked in a strata parking area otherwise than as permitted by the signage is guilty of an offence which carries a monetary penalty. The penalty is imposed by penalty notice issued under the Local Government Act 1993 against the owner of the vehicle (who, if not the driver responsible, may nominate the driver by statutory declaration in the normal way).

Law: Management Act, Sch 4, cl 4, 16. Local Government Act 1993, s 650A, 651.

¶18-010 Window safety devices Duty of the owners corporation Certain prescribed windows in residential strata buildings must be fitted with complying window safety devices to protect children. The owners corporation for the building is primarily responsible to ensure that occurs. Failure to comply with this obligation is an offence which attracts a monetary penalty. The offence would be committed by the owners corporation, unless the responsibility for such function had been delegated to the strata managing agent for the scheme, in which event the agent would have committed the offence. The owners corporation is responsible for carrying out the work and bearing the costs involved, although lot owners can install their own complying devices if they wish. An owner who installs their own window safety device must: (a) repair any damage caused to any part of the common property by the installation of the device (b) ensure the device is installed in a competent and proper manner, and (c) ensure that the device has an appearance, after it has been installed, in keeping with the appearance of the building. Windows affected These provisions only apply to a window if: (a) it is a window within the meaning of the Building Code of Australia (b) it can be opened (c) the lowest level of the window opening is less than 1.7 metres

above the surface of any internal floor which abuts the wall of which it forms part (d) the internal floor is two meters or more above the ground surface, or any external surface, below the window which abuts the wall, and (e) it is a window on common property to which access can be gained from a residence in a strata scheme or a window on any part of the building that is part of a residence. Complying window safety devices A screen, lock or any other device is a complying window safety device if it: (a) is capable of restricting the opening of a window so that a sphere having a diameter of 125 millimetres or more cannot pass through the window opening (b) is capable of resisting an outward horizontal action of 250 newtons, and (c) has a child resistant release mechanism, in the case of a device which can be removed overridden or unlocked. Law: Management Act, s 118. Management Regulation, reg 30.

¶18-011 Penalty notices The Management Act provides for the designation of some offences as penalty notice offences. This means that an authorised departmental officer may serve a penalty notice on a person if it appears to the officer that the person has committed an offence to which the penalty notice process applies. These notices operate in much the same way as traffic infringements — the recipient can either accept that the offence has been committed and pay the penalty, or

elect to have the matter determined by a court. The penalty notice can be served personally or by post and payment of the penalty in accordance with the notice concludes the matter without any admission of liability having been made. The following are the prescribed penalty notice offences and their corresponding penalties (the sections being sections of the Management Act): Section

Offence

Penalty

57(2)

Strata managing agent requesting or accepting a gift or other benefit

$550 for an individual or $1,100 for a corporation

60(1)

Strata managing agent failing to disclose commissions or training services at AGM

$550 for an individual or $1,100 for a corporation

60(2)

Strata managing agent $550 for an individual or failing to disclose to strata $1,100 for a corporation committee variations in commissions or training services

62(1)

Strata managing agent failing to comply with a notice to provide information

$550 for an individual or $1,100 for a corporation

123(2)

Failure of owners corporation to ensure access for fire safety inspection

$1,100

160(1)

Failure of owners corporation to insure the building

$220

160(2)

Failure of an owners

$220

corporation to insure part building in a stratum lot 249(4)

Failure of an owners $220 corporation to comply with a request to provide information or allow an inspection

258

Failure to give notices relating to leases or subleases

$110 for an individual or $220 for a corporation

Law: Management Act, s 250. Management Regulation, reg 65, Sch 5.

¶18-012 Dividing fences In the case of a strata scheme which relates to the whole of a building, the owners corporation is taken to be the owner of the land constituting the parcel for the purposes of the Dividing Fences Act 1991. In the case of a strata scheme which relates to part only of a building, all the owners of the parcel (ie all the stratum lot owners together, including the owners corporation) are taken to be the owner of the land constituting the parcel for the purposes of that Act. This provision effectively removes individual strata lot owners from having to deal with dividing fence issues. Law: Management Act, s 266.

¶18-013 Recovery of property and records A person who has possession or control of property (including records) of an owners corporation may be required by the strata committee to deliver the property to the strata committee. There are two circumstances in which such a notice may be given: • To any person who has possession or control of property of the

owners corporation. • To a strata managing agent where the owners corporation has decided to terminate their appointment. In the first case, the strata committee gives a notice to the person to deliver the property to a member of the strata committee specified in the notice. In the second case, the strata committee gives a notice to the person (strata managing agent) advising of the termination of their appointment as strata managing agent and requiring them to deliver the property to a member of the strata committee specified in the notice. In either event, the person must deliver the property in accordance with the notice within 14 days after it is given. Failure to comply is an offence which carries a monetary penalty. There are two exceptions to the above provisions: 1. Any just claim or lien which a strata managing agent may have (eg for unpaid fees) against or on any records or other property of the owners corporation remains in place. The obligations under the notice would effectively be suspended until any debt was discharged. 2. The operation of the Agents Act, which contains provisions about licensees retaining certain records, is not affected. This means the strata managing agent has an overriding duty to comply with those requirements. It is important that the issue of the notice is properly authorised, particularly if there is the prospect of a prosecution for an offence. Authorisation would be by resolution of the strata committee (see Form 125 (¶19-125)). The notice should be a formal one, along the lines of Form 126 (see ¶19-126). Law: Management Act, s 181. Property, Stock and Business Agents Act 2002, s 103, 104. Property, Stock and Business Agents Regulation 2014, reg 20, 21, 26, 36.

¶18-014 Legal costs restrictions An owners corporation or strata committee must not obtain legal services for which any payment may be required unless a resolution approving the obtaining of those services is passed by a general meeting. If a formal fee disclosure has been issued by the law firm proposed to be engaged, the owners corporation must give a copy of that disclosure to each owner and strata committee member not later than 14 days after the disclosure is made. The same applies to any other disclosure under any other law. Those approval and disclosure requirements do not apply if: (a) the owners corporation or strata committee: (i) is of the opinion that urgent action is necessary to protect the interests of the owners corporation, and (ii) the cost of the legal services does not exceed $10,000 or another prescribed amount (there already being another prescribed amount of $15,000), (b) the legal advice is being obtained before commencing legal action (c) legal action is being taken to recover unpaid contributions, interest or related expenses, or (d) legal action of the type prescribed by the Management Regulation is being taken. The Management Regulation prescribes one exception to the above approval and disclosure requirements. That relates to legal services for a non-urgent matter if the cost of the legal services does not exceed $3,000. If an owners corporation is unsuccessful in any proceedings before the Tribunal (including appeal proceedings) it cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund. However, it can impose a levy for those

expenses, although in imposing that levy it cannot include the successful lot owner in the levy. These provisions are problematic because: • Proceedings will have been commenced many months before it is known whether or not the owners corporation is successful in the proceedings. • Legal costs and expenses will have been incurred (and paid for) during that period. • To give effect to the requirements, a complex re-adjustment of levies imposed and paid would need to occur, yet that is not envisaged by the relevant section. • An owners corporation will have to either ignore this restriction until such time as the outcome of the proceedings is known (which is risky), or alternatively, negotiate an arrangement with its lawyer to have billing delayed until after the result is known. Law: Management Act, s 113, 114, 115. Management Regulation, reg 26.

¶18-015 Termination of strata schemes Strata schemes can be varied or terminated by an order of the Supreme Court. In the absence of the agreement of all lot owners, a termination order will only be made in rare circumstances. Provision is also made for the termination of a strata scheme by the Registrar General, but again, this will require the agreement of all lot owners. The Development Act introduces an entirely new process for the termination of freehold strata schemes to facilitate a collective sale or redevelopment of the parcel. The process is long and complex and will ultimately require the support of the owner or owners of at least 75% of the lots in the scheme (other than utility lots). The various steps in the process are: 1. A strata renewal proposal is submitted to the owners corporation

by any person (whether an owner or not). 2. The strata committee considers the proposal and decides whether or not it warrants further consideration. 3. If it warrants further consideration (or upon normal requisition of owners) a general meeting is convened to consider the strata renewal proposal. 4. If the general meeting considers that the proposal warrants investigation it establishes a strata renewal committee. 5. Notice of the decision to establish a strata renewal committee is given to all lot owners. 6. The strata renewal committee prepares a strata renewal plan (the contents of which are prescribed in detail). 7. A further general meeting is convened to consider the strata renewal plan. 8. If the general meeting resolves by special resolution to give the plan to owners for their consideration, a copy of the plan is given to owners. 9. Owners, if inclined to do so, give notice to the owners corporation of their support for the plan. (The support notice can be subsequently withdrawn.) 10. If the 75% level of support is reached, owners are given notice to that effect and the status of the strata renewal plan is recorded in the folio of the common property by the Registrar General. 11. A further general meeting is then convened to decide by ordinary resolution for the owners corporation to apply to the Supreme Court for an order to give effect to the strata renewal plan. 12. The application is then made to the court.

13. Stakeholders can file in the court an objection to the plan. (This gives them the right to be heard at the hearing of the application.) 14. The application is heard and determined by the court. 15. The court can make orders for the collective sale of the scheme land or for its redevelopment. 16. All stakeholders are bound by the court orders, which will ultimately require them all to give up their interests in their lots. The process is obviously designed to ensure that the large majority interests are accommodated while providing adequate opportunity for dissenting lot owners to challenge the outcome being sought. Law: Development Act, Pt 9, 10 (s 153–190).

¶18-016 Contracting out of the Act It is not possible for anyone to “contract out” of the provisions of the Management Act and Management Regulation. That simply means that the Act and Regulations have effect despite any contrary provision in an agreement, contract or arrangement entered into after 30 November 2016. Section 270(2) of the Management Act even goes so far to say that “No agreement, contract or arrangement, whether oral or wholly or partly in writing, entered into after the commencement of this section operates to annul, vary or exclude any of the provisions of this Act or the regulations”. Law: Management Act, s 270.

¶18-017 Innovations in technology In recent years the professional strata management sector has undergone substantial advances in technology which provide significant opportunities for owners corporations and owners and occupiers of strata properties. Apart from automating the “back-end” of the strata managing agent’s business the technology has provided a

range of new features for owners and occupiers. Current development work by one or two of the major software providers will ensure that more and more new features will be available. Some of the existing and planned features of the web based systems include: • Electronic levy payments. • Electronic approval by strata committee members of accounts payable. • Real-time access to all of the owners corporation’s financial information (in report, graph and pie chart form for easy analysis). • Real-time access to the owners corporation records (eg insurance details, correspondence, minutes, etc). • Online electronic voting for committee and general meetings. • Online communications. • Facilities bookings (eg tennis court, function room, etc). • Work order requests and tracking. • Social networking within discrete groups (eg strata committee member group, owners group and owners and tenants group). • Remote monitor of building equipment and services. • Energy reporting. • E-services (eg electronic shopping for goods and services). • Owner’s web portals for easy access to all the above. It is anticipated that over time this evolving technology will result in the following changes to the professional strata management sector: • A new business model for strata managing agents (focused on a broader range of services and more customer focus).

• Self-service (via owner web portals) by owners and tenants in relation to many aspects of the management of their scheme. • Move to electronic communication and electronic voting in place of conventional mail and even e-mail. • A more efficient and value-added strata management product for lot owners. • An increase in self-management of schemes as the technology to facilitate this improves.

¶18-018 Industry bodies There are a number of industry and government bodies which are relevant to strata ownership and management in New South Wales, the main ones being: • NSW Fair Trading —

www.fairtrading.nsw.gov.au/ftw/Tenants_and_home_owners/Strata_schemes • Strata Community Australia — www.stratacommunity.org.au • Owners Corporation Network — www.ocn.org.au • New South Wales Consumer and Administrative Tribunal — www.ncat.nsw.gov.au • Australian College of Community Association Lawyers — www.accal.org.au

FORMS AND PRECEDENTS ¶19-001 FORM No 1 — Sample Strata Plan

¶19-002 FORM No 2 — Resolution of owners corporation authorising company nominee

¶19-003 FORM No 3 — Appointment of and Authority to Company Nominee

¶19-004 Form No 4 — Nomination of candidate for strata committee election

¶19-005 FORM No 5 — Strata committee resolution consenting to acting member

¶19-006 FORM No 6 — By-law establishing a SubCommittee

¶19-007 FORM No 7 — Strata committee resolution appointing sub-committee

¶19-008 FORM No 8 — Nomination of office bearer candidate

¶19-009 FORM No 9 — Annual general meeting resolution for payment to strata committee member

¶19-010 FORM No 10 — Authorisation of Original Owners Agent

¶19-011 Form 11 — Delegation of Treasurer’s function

¶19-012 FORM No 12 — Notice to treasurer requiring joint operation of bank accounts

¶19-013 FORM No 13 — Resolution removing committee member or office bearer

¶19-014 FORM No 14 — Resolution appointing strata managing agent

¶19-015 FORM No 15 — Bare appointment of strata managing agent

¶19-016 FORM No 16 — SCA Agency Agreement Please Note: This form can only be used by financial members of Strata Community Australia (NSW) Limited and must be used strictly in accordance with the terms of SCA’s licence agreement.

¶19-017 FORM No 17 — Record of exercise of delegated function

¶19-018 FORM No 18 — Disclosure of commissions and training services

¶19-019 FORM No 19 — Resolution approving disclosure

¶19-020 FORM No 20 — Re-disclosure of commissions and training services

¶19-021 FORM No 21 — Disclosure of Interest

¶19-022 FORM No 22 — Notice requiring information from strata managing agent

¶19-023 FORM No 23 — Committee resolution authorising notice requiring information

¶19-024 FORM No 24 — Resolution authorising transfer of functions of a strata managing agent

¶19-025 FORM No 25 — Committee resolution extending appointment of strata managing agent

¶19-026 FORM No 26 — Extension of appointment of strata managing agent

¶19-027 FORM No 27 — Notice by strata committee not to re-appoint

¶19-028 FORM No 28 — Committee resolution not to reappoint strata managing agent

¶19-029 FORM No 29 — Notice by strata managing agent of end of term

¶19-030 Form No 30 — Notice exercising option

¶19-031 FORM No 31 — Resolution terminating appointment of a strata managing agent

¶19-032 FORM No 32 — Notice terminating appointment of a strata managing agent

¶19-033 FORM No 33 — Resolution authorising a building manager agreement

¶19-034 FORM No 34 — Resolution approving transfer of building manager functions

¶19-035 FORM No 35 — Strata committee resolution appointing representative

¶19-036 FORM No 36 — Resolution authorising termination of building manager agreement

¶19-037 FORM No 37 — Special resolution not to maintain property

¶19-038 FORM No 38 — Special resolution authorising changes to common property

¶19-039 FORM No 39 — By-law relating to maintenance obligations

¶19-040 FORM No 40 — General meeting resolution

approving minor renovations

¶19-041 FORM No 41 — Strata committee resolution approving minor renovations

¶19-042 FORM No 42 — Resolution approving a building inspector

¶19-043 FORM No 43 — Resolution removing expenditure restriction

¶19-044 FORM No 44 — Administrative fund budget

¶19-045 FORM No 45 — Capital works fund budget

¶19-046 FORM No 46 — Large scheme capital works fund budget

¶19-047 FORM No 47 — Capital works plan

¶19-048 FORM No 48 — Resolution adopting capital works plan

¶19-049 FORM No 49 — Resolution reviewing capital works plan

¶19-050 FORM No 50 — Resolution determining contributions

¶19-051 FORM No 51 — Notice levying contributions

with discount

¶19-052 FORM No 52 — Notice levying contributions without discount

¶19-053 FORM No 53 — Contribution instalment reminder notice

¶19-054 FORM No 54 — Resolution authorising entry into payment plans

¶19-055 FORM No 55 — Notice of intended action

¶19-056 FORM No 56 — Resolution removing spending restriction

¶19-057 FORM No 57 — Resolution authorising loan

¶19-058 FORM No 58 — Annual financial statements (Cash Accounting)

¶19-059 FORM No 59 — Annual financial statements (Accrual Accounting)

¶19-060 FORM No 60 — Resolution appointing auditor

¶19-061 FORM No 61 — Statement of Key Financial Information (Cash Basis)

¶19-063 Form No 63 — Strata information certificate

¶19-064 FORM No 64 — Resolution authorising application for insurance exemption

¶19-065 FORM No 65 — Resolution requiring additional insurance

¶19-066 FORM No 66 — Resolution authorising use of insurance claim proceeds

¶19-067 FORM No 67 — Special resolution making bylaw

¶19-068 FORM No 68 — Notification of Change of Bylaws See the forms section on the NSW Land & Property Information website (www.lpi.nsw.gov.au).

¶19-069 FORM No 69 — Exclusive use by-law

¶19-070 FORM No 70 — Special privilege by-law

¶19-071 FORM No 71 — Common property memorandum See the forms section on the NSW Land & Property Information website (www.lpi.nsw.gov.au).

¶19-072 FORM No 72 — Resolution for by-law enforcement notices

¶19-073 FORM No 73 — Resolution expressly authorising by-law enforcement notice

¶19-074 FORM No 74 — By-law Enforcement Notice (approved form) See the approved form on NSW Fair Trading’s website (www.fairtrading.nsw.gov.au).

¶19-075 FORM No 75 — Request for strata committee meeting

¶19-076 FORM No 76 — Notice of strata committee meeting

¶19-077 FORM No 77 — Strata committee written voting paper

¶19-078 FORM No 78 — Minute of strata committee written vote

¶19-079 FORM No 79 — Notice of adjourned meeting of the strata committee

¶19-080 FORM No 80 — Notice of opposition to strata committee decision

¶19-081 FORM No 81 — Minutes of strata committee meeting

¶19-082 FORM No 82 — Pecuniary interests’ disclosure register

¶19-083 FORM No 83 — Notice of First Annual General Meeting

¶19-084 FORM No 84 — Requirement to place motion on the agenda

¶19-085 FORM No 85 — Nomination of candidate for election to the strata committee

¶19-086 FORM No 86 — Appointment of Proxy

¶19-087 FORM No 87 — Notice of adjourned meeting

¶19-088 FORM No 88 — Minutes of First Annual General Meeting

¶19-089 FORM No 89 — Advance notice of Date of Annual General Meeting

¶19-090 FORM No 90 — Notice of Annual General Meeting

¶19-091 FORM No 91 — Strata committee resolution convening general meeting

¶19-092 FORM No 92 — Request for Extraordinary General Meeting

¶19-093 FORM No 93 — Notice of Extraordinary General Meeting

¶19-094 FORM No 94 — Strata Interest Notice

¶19-095 FORM No 95 — Tenancy Notice

¶19-096 FORM No 96 — Strata Roll

¶19-097 FORM No 97 — Strata Register

¶19-098 FORM No 98 — Receipt

¶19-099 FORM No 99 — Administrative Fund — Cash Receipts Book

¶19-100 FORM No 100 — Capital Works Fund — Cash Receipts Book

¶19-101 FORM No 101 — Administrative Fund — Cash Disbursements Book

¶19-102 FORM No 102 — Capital Works Fund — Cash

Disbursements Book

¶19-103 FORM No 103 — Bank Statement

¶19-104 FORM No 104 — Balance and Reconciliation Statement

¶19-105 FORM No 105 — Levy Register

¶19-106 FORM No 106 — Notice of Change of Information

¶19-107 FORM No 107 — Notice of Appointment of Company Nominee

¶19-108 FORM No 108 — Notice of Appointment of Agent by Lot Owner

¶19-109 FORM No 109 — Notice of Revocation of Agent’s Appointment

¶19-110 FORM No 110 — Notice Requiring Service of Strata Interest Notice

¶19-111 FORM No 111 — Application for Mediation

¶19-112 FORM No 112 — Application for an order by the Tribunal

¶19-113 FORM No 113 — Request to Inspect Records

¶19-114 FORM No 114 — Notice Fixing Records Inspection

¶19-115 FORM No 115 — Seal Attestation by Two Members

¶19-116 FORM No 116 — Seal Attestation by Individual Strata Managing Agent

¶19-117 FORM No 117 — Seal Attestation by Corporate Strata Managing Agent

¶19-118 FORM No 118 — Authority For Staff Member to Attest Seal

¶19-119 FORM No 119 — Resolution Authorising Disposal Notice

¶19-120 FORM No 120 — Disposal Notice (Minimum A4 Size)

¶19-121 FORM No 121 — Register of Disposed Goods

¶19-122 FORM No 122 — Resolution Authorising Vehicle Removal Notice

¶19-123 FORM No 123 — Motor Vehicle Removal Notice (Minimum A4 Size)

¶19-124 FORM No 124 — Resolution Approving Council Parking Agreement

¶19-125 FORM No 125 — Resolution Authorising Notice to Deliver Property

¶19-126 FORM No 126 — Notice to Deliver Property

Section Finding List Civil and Administrative Tribunal Act 2013 Section

Paragraph

32

¶17-013

36

¶17-014

45

¶17-014

72

¶17-012

77

¶17-012

78

¶9-010; ¶17-012

80

¶17-013

83

¶17-015

Sch 4

¶17-002

Civil and Administrative Tribunal Rules 2014 Rule

Paragraph

23

¶17-005

Civil Procedure Act 2005 Section

Paragraph

122A–122E ¶9-010 Community Land Development Act 1989 Section

Paragraph

Generally ¶1-001; ¶4002

Community Land Management Act 1989 Section

Paragraph

Generally ¶4-002 Conveyancing Act 1919 Section

Paragraph

66G

¶4-001

170

¶18-004

Pt 23 Div 3B ¶4-005 Conveyancing (Strata Titles) Act 1961 Section

Paragraph

Generally ¶1-001 Co-operatives National Law Section

Paragraph

Generally ¶4-001 Corporations Act 2001 Section

Paragraph

9

¶14-009; ¶15008

Generally

¶1-005; ¶4-001

Crimes Act 1900 Section Paragraph Pt 4A

¶6-008

Income Tax Assessment Act 1936

Section

Paragraph

Generally ¶9-015 Interpretation Act 1987 Section

Paragraph

76

¶13-003; ¶14-003; ¶15003

Local Government Act 1993 Section

Paragraph

650A

¶18-009

651

¶18-009

Generally

¶14-009; ¶15008

Property, Stock and Business Agents Act 2002 Section

Paragraph

3

¶7-001

8

¶7-004

14

¶7-004

23

¶7-004

55

¶6-003; ¶6-005; ¶7004

55A

¶6-005

57

¶6-005

86

¶6-003; ¶6-006

90

¶6-006

91

¶6-006

101

¶6-016

103

¶18-013

104

¶18-013

111

¶6-003

Pt 10

¶6-003

Generally

¶1-002; ¶6-018

Property, Stock and Business Agents Regulation 2014 Regulation Paragraph 8

¶6-005

20

¶18-013

21

¶18-013

26

¶18-013

36

¶18-013

Sch 1

¶6-005

Sch 14

¶6-005

Strata Schemes Development Act 2015 Section

Paragraph

4

¶8-002

4(1)

¶2-001; ¶2-002; ¶8010

6

¶2-002; ¶8-002

13

¶2-010

15

¶2-011

17

¶2-012

18

¶2-012

19

¶2-013

20

¶2-013

Pt 6

¶4-005

Pt 9

¶18-015

131–134

¶2-014

135–141

¶2-016

136(2)

¶3-006

138

¶3-007

142–147

¶2-017

142

¶3-007

146

¶3-007

147(d)

¶3-006

148–150

¶2-018

151

¶2-016

152

¶2-016

Pt 10

¶18-015

153–190

¶2-019; ¶18-015

192

¶2-009

194

¶2-009

Strata Schemes Development Regulation 2016 Regulation Paragraph Generally

¶1-002

Strata Schemes (Freehold Development) Act 1973 Section

Paragraph

Generally ¶1-001 Strata Schemes (Leasehold Development) Amendment Act 1999 Section

Paragraph

Generally ¶1-001 Strata Schemes Management Act 2015 Section

Paragraph

4

¶13-001

4(1)

¶2-001; ¶2-003; ¶2-006; ¶2-007; ¶12004; ¶14-013; ¶15-012

7

¶14-009; ¶15-008

8

¶2-005; ¶3-001; ¶14-004

9–13

¶3-005

9

¶2-005; ¶3-003; ¶14-004

10

¶2-005; ¶3-003; ¶14-004

11

¶5-014; ¶18-003

13

¶5-014

14

¶13-001; ¶13-003

14(2)

¶13-002

15

¶13-004

16

¶13-005

17

¶13-005

18

¶9-017; ¶14-001

19

¶15-001

20

¶13-002

22

¶13-011; ¶14-008; ¶15-007; ¶16-006

22(4)

¶16-007

22(5)

¶16-007

23

¶13-006

24

¶13-020; ¶14-017; ¶15-016

25

¶13-020; ¶14-017; ¶15-016

26

¶9-011

29–30

¶3-004

29

¶5-002

30

¶5-003

31

¶5-004; ¶5-005

32

¶5-004

33

¶5-006

34

¶5-007

35

¶5-017

35(1)(e)

¶5-018

36

¶5-008

38

¶12-014

39

¶12-001

41

¶3-004; ¶5-010

42

¶5-011

43

¶5-012

44

¶5-013

45

¶5-017

45(1)(d)

¶5-018

46

¶5-010

47

¶5-010

49

¶3-002; ¶5-014; ¶6-001; ¶6-002; ¶6-005

50

¶6-002; ¶6-020; ¶6-021

51

¶6-019

52

¶5-014; ¶6-001; ¶6-004; ¶6-005

52(2)(a)

¶6-019

53

¶6-007

54

¶6-001; ¶6-004; ¶6-007

55

¶6-007; ¶16-005

57

¶6-008; ¶6-012

Pt 4 Div 3

¶6-009

58

¶6-010

59

¶6-011

60

¶6-013

61

¶6-017

62

¶6-017

63

¶6-015

65

¶6-016

66

¶3-005; ¶7-001

67

¶3-002; ¶7-003

68(1)

¶7-003

68(2)

¶7-003

68(3)

¶7-008

69

¶7-006

70

¶7-002

71

¶6-014; ¶7-005

Pt 5

¶9-001

73

¶9-002; ¶9-004

74

¶9-003; ¶9-004

75

¶9-004

78

¶9-005

79

¶9-006

80

¶9-007

81(2)

¶9-006

81(4)

¶9-018

82

¶9-008

83

¶3-006; ¶9-008

84

¶9-010

85

¶9-009

86

¶3-006; ¶9-010; ¶17-012

90

¶9-008; ¶9-011

92

¶9-017; ¶14-001

93

¶9-013; ¶9-017

95

¶9-016

96–99

¶16-004

96

¶9-014

97

¶9-014

98

¶9-014

99

¶9-014

100

¶3-002; ¶9-012

102–104

¶3-002

102

¶8-007

103

¶8-007; ¶9-011

104

¶9-011

106

¶8-001; ¶8-009

107

¶11-010

108–111

¶8-004

108

¶9-018; ¶11-009

111–113

¶3-002

113

¶18-014

114

¶18-014

115

¶3-002; ¶16-005; ¶18-014

117

¶18-002

118

¶18-006; ¶18-010

119

¶3-002; ¶18-006

120

¶18-006

121

¶3-002

122–124

¶8-008

122

¶18-006

123

¶18-006

124

¶3-002

124(1)(b)

¶18-006

125

¶18-007; ¶18-008

134

¶11-003

135

¶11-005

136

¶5-009; ¶11-001; ¶11-012

137

¶11-002

138

¶11-003

139

¶5-009; ¶11-001; ¶11-012

139(7)

¶11-011

140

¶11-004

141

¶11-007

142–145

¶4-006; ¶11-008

147

¶11-013

150

¶11-012

153

¶11-006

154

¶16-006

155

¶16-006

160

¶2-003; ¶4-005; ¶10-001; ¶10-002; ¶10003

161

¶10-001

161(1)(a)

¶10-004

162

¶10-003

163

¶10-008

164

¶10-006; ¶10-007

165

¶10-002; ¶10-007

166

¶10-010

167

¶10-007

168

¶10-007

169

¶10-007

170

¶10-008

172

¶10-005

173

¶10-005

174

¶10-009

176

¶16-001

177

¶16-002

178

¶16-002

179

¶16-003

180

¶16-008

180(1)(a)

¶16-003

181

¶6-022; ¶18-013

182

¶18-001

183

¶18-001

184

¶9-018

185

¶9-018

Pt 11

¶18-003

189–206

¶8-005

207–211

¶8-006

210

¶9-011

211

¶8-008

Pt 12

¶12-014; ¶17-002

217

¶17-004

220

¶17-004

223–224

¶17-004

226

¶17-003; ¶17-005

228

¶4-005; ¶17-006

229

¶17-007

230

¶17-007

231

¶17-007; ¶17-008

237

¶3-006; ¶6-001; ¶17-012

240

¶17-009

241

¶17-007

242

¶17-007

243

¶17-009

245

¶17-011

246

¶11-012; ¶17-007

248

¶17-012

250

¶18-011

253

¶17-002

258

¶13-018; ¶14-015; ¶15-014; ¶16-006

259

¶16-006

260

¶5-015

261

¶16-002

262

¶18-004

263

¶12-003; ¶18-004

264

¶18-004

266

¶18-012

270

¶18-016

273

¶18-005

Sch 1

¶13-003; ¶13-006

— cl 3(2)

¶13-009

— cl 4

¶14-002

— cl 5

¶5-005; ¶13-008; ¶14-002; ¶14-005

— cl 5(4)

¶14-004

— cl 7

¶14-003; ¶15-003

— cl 8

¶15-004

— cl 9

¶15-004

— cl 9(a)

¶9-017

— cl 9(b)

¶9-017

— cl 10

¶9-017

— cl 11

¶14-003; ¶15-003

— cl 12

¶14-006; ¶13-009; ¶15-005

— cl 14

¶13-007; ¶15-002

— cl 16

¶13-009; ¶14-006; ¶15-005

— cl 17

¶13-010; ¶14-007; ¶15-006

— cl 19

¶13-009; ¶14-006; ¶15-005

— cl 20

¶13-017; ¶14-014; ¶15-013

— cl 21

¶13-018; ¶14-015; ¶15-014

— cl 22

¶13-019; ¶14-016; ¶15-015; ¶16-005

— cl 23

¶13-011; ¶14-008; ¶15-007

— cl 24

¶13-011; ¶14-008; ¶15-007

— cl 25

¶13-012; ¶14-009; ¶15-008

— cl 26

¶13-012; ¶14-009; ¶15-008

— cl 28

¶13-013; ¶14-010; ¶15-009

— cl 29

¶13-015; ¶14-012; ¶15-011

Sch 2

¶12-010; ¶12-011

— cl 4

¶12-002

— cl 5

¶12-002

— cl 6

¶12-002

— cl 7

¶12-002

— cl 9(2)

¶12-006

— cl 9(3)

¶5-008; ¶12-012

— cl 10

¶12-005

— cl 12

¶12-004

— cl 17

¶5-012; ¶12-013; ¶16-005

— cl 18

¶5-016; ¶12-015

Sch 3 — Pt 1, cl 4

¶11-003

— cl 5

¶5-001

— cl 6

¶5-001

Sch 4

— cl 4

¶18-009

— cl 16

¶18-009

Generally

¶1-002

Strata Schemes Management Regulation 2016 Regulation

Paragraph

5

¶13-004

6

¶13-005; ¶16-005

9

¶14-010

10

¶14-010

11

¶5-010

12

¶13-011; ¶14-008; ¶15-007

13

¶13-012; ¶14-009; ¶15-008

14

¶12-005; ¶12-007; ¶13-013; ¶14-010; ¶15-009

15

¶12-007; ¶13-014; ¶14-011; ¶15-010

16

¶12-008; ¶13-014; ¶14-011; ¶15-010

17

¶12-009; ¶13-014; ¶14-011; ¶15-010

18

¶9-009

20

¶9-017

21

¶9-016

22–24

¶16-004

22

¶9-014

23

¶9-014

24

¶9-014

26

¶18-014

27

¶11-010

30

¶18-010

32

¶18-007

34

¶18-008

38

¶10-001

39

¶10-004

40

¶10-006

41

¶16-005; ¶16-008

42

¶18-001

62

¶14-009; ¶15-008

63

¶6-008; ¶6-012

65

¶8-008; ¶18-011

Sch 1 — form 2

¶9-017

— form 3

¶9-017

— form 4

¶9-018

Sch 4

¶18-001

Sch 5

¶8-008; ¶18-011

Generally

¶1-002

Strata Titles Act 1973 Section

Paragraph

Generally ¶1-001 Strata Titles (Leasehold) Act 1986 Section

Paragraph

Generally ¶1-001

Index A Abandoned goods

¶18-007

Access to lots

¶8-008

Accounting auditing of annual accounts

¶9-016

cash versus accrual

¶9-013

trust accounting

¶6-006; ¶6-009; ¶6-010; ¶8-005

Accounting records

¶9-014; ¶16-004

Administration of strata titles

¶1-006; ¶4-001

Administrative fund

¶9-002; ¶9-006

financial statements

¶9-017

Agency agreements strata managing agents

¶6-005

Airspace plan

¶4-005

Animals disputes

¶17-001

orders that the Tribunal may make

¶17-010

Annual general meeting of owners corporation

initial period — see First annual general meeting of owners corporation subsequent meetings — adjournments

¶14014

— agenda

¶14004

— chairing

¶14006

— committee elections

¶14010

— conducting the meeting

¶14013

— entitlement to vote

¶14008

— manner of voting

¶14010

— minutes

¶14016

— motions

¶14013

— nomination of strata committee candidates

¶14005

— notice

¶14003

— obligation to hold

¶14001

— pre-meeting electronic voting

¶14011

— pre-meeting matters

¶14002

— proxies

¶14009

— quorum

¶14007

— secret ballots

¶14012

— tenant participation

¶14015

— validity of proceedings

¶14017

— voting procedures

¶14010

— “priority vote”

¶14008

Apartment schemes before 1961

¶1-005; ¶4-001

Appeals from decisions of Tribunal

¶17-015

to Tribunal

¶17-013

Approved insurer

¶10-001

Auditing requirements

¶9-016

Australian Building Management Accreditation (ABMA)

¶8-003

Australian College of Community Association Lawyers ¶18-018

B Banking arrangements

¶9-005

Borrowing money

¶9-012

Boundaries Budget

¶2-002; ¶8-002 ¶9-006

Building alterations

¶2-013

damaged or destroyed, variation of scheme

¶2-014

definition

¶2-003

definition for insurance purposes

¶10-001

Building bonds developers Building defects new regime for new buildings

¶8-006; ¶18-003 ¶8-005 ¶18-003

obligations of building inspector

¶8-005

obligations of developer

¶8-005

orders that the Tribunal may make

¶17-010

Building inspectors obligations regarding defective buildings orders that the Tribunal may make Building insurance

¶8-005; ¶18-003 ¶17-010 ¶10-001; ¶10-002

approved insurer

¶10-001

building, definition

¶10-001

calculating sum insured

¶10-004

claims

¶10-008

damage policy

¶10-001

part building insurance

¶10-003

Building manager

¶3-005

appointment

¶7-003

definition

¶7-001

disclosure of interests

¶7-005

functions

¶7-002

— transfer of functions

¶7-006

licensing

¶7-004

on-site residential property manager

¶7-001

orders that the Tribunal may make

¶17-010

supervision by strata committee

¶7-007

termination

¶7-008

Building manager agreement Building/strata management statements

¶7-002; ¶7-003 ¶4-005

By-laws amendments and repeals

¶11-007

common property changes

¶11-009

common property memorandum

¶11-010

common property rights

¶11-008

community schemes

¶11-011

disclosing

¶11-005

enforcement by notice

¶11-013

initial period restrictions

¶11-004

nature and purpose

¶11-001

occupancy limits

¶11-002

orders that the Tribunal may make

¶17-010

validity

¶11-012

what by-laws apply to particular schemes

¶11-003

who is bound

¶11-005

C Capital works fund

¶9-003; ¶9-006

financial statements

¶9-017

Capital works plan

¶8-003; ¶9-007

Cash accounting

¶9-013

Charges and fees for service

¶2-009

Children disputes

¶17-001

Civil and Administrative Tribunal — see Tribunal Common infrastructure

¶2-002; ¶8-002; ¶8-010

Common property changes improving or enhancing, by-law

¶2-002 ¶8-004; ¶11009

consolidation

¶2-011

conversion of lots to common property

¶2-012

definition

¶2-002; ¶8-002

maintenance — see Maintenance of common property subdivision

¶2-010

Common property divided use schemes

¶4-006

Common property memorandum

¶11-010

Common property rights by-laws

¶11-008

Common seal

¶18-005

Community association Community scheme by-laws

¶4-003; ¶4-004 ¶11-011

Community titles contrasted with strata titles

¶1-003

Company nominee notice

¶16-006

Company title schemes Compulsory insurance Consolidation of lots or common property

¶1-005; ¶4-001 ¶10-007 ¶2-011

Contributions determination and levying

¶9-008

interest, discounts and payment plans

¶9-009

orders that the Tribunal may make

¶17-010

recovery

¶9-010

Conversion of lots to common property

¶2-012

Co-operative schemes

¶4-001

Cosmetic work by owners

¶8-004; ¶11-009

Council parking agreements

¶18-009

Council rates

¶2-009

Covenants and other restrictions orders

¶17-010

CRAP (children, renters, animals, parking) disputes

¶17-001

D Damage policy

¶10-001; ¶10-002

part building scheme

¶10-003

Defective buildings

¶8-005; ¶18-003

orders that the Tribunal may make

¶17-010

Developers defective buildings

¶8-005

— building bonds — orders that the Tribunal may make

¶8-006; ¶18-003 ¶17-010

Disclosure building managers strata committee members strata managing agents

¶7-005 ¶12-015 ¶6-013; ¶6-014

Disposal of abandoned goods

¶18-007

disposal notice

¶18-007

Disputes

¶1-007

appeals from Tribunal decisions

¶17-015

appeals to the Tribunal

¶17-013

application to registrar

¶17-005

CRAP (children, renters, animals, parking)

¶17-001

determining the application

¶17-009

enforcement of orders

¶17-012

interested persons

¶17-003

interim orders

¶17-008

jurisdictional overview

¶17-002

mediation

¶17-004

orders

¶17-010

orders taking effect as resolutions

¶17-011

powers of Tribunal

¶17-007

proceedings before Tribunal

¶17-014

processing the application

¶17-006

Dividing fences

¶18-010

E Electronic processes

¶18-017

Electronic records

¶18-001

Electronic voting

¶18-017

annual general meetings

¶14-011

executive committee meetings

¶12-007; ¶12-008; ¶12-009

extraordinary general meetings

¶15-010

first annual general meetings

¶15-010

Estimates budgeting

¶9-006

Executive committee meetings adjournments

¶12-011

agenda

¶12-010

conducting the meeting

¶12-010

disclosure of interests

¶12-015

manner of voting

¶12-005

— other permitted means

¶12-007

— personally

¶12-005

— pre-meeting informal electronic voting — written voting

¶12-007; ¶12-008; ¶12-009 ¶12-006

minutes

¶12-013

— obligation to keep and distribute

¶12-013

motions

¶12-010

notice of the meeting

¶12-002

— service of notice

¶12-003

obligation to hold

¶12-001

quorum

¶12-004

validity of meetings and resolutions

¶12-014

veto of decisions

¶12-012

Expenditure restrictions

¶9-011

Expenses deductions

¶9-015

Extraordinary general meetings adjournments

¶15-013

agenda

¶15-004

chairing

¶15-005

conducting the meeting

¶15-012

entitlement to vote

¶15-007

manner of voting

¶15-009

— pre-meeting electronic voting

¶15-010

minutes

¶15-015

motions

¶15-012

notice

¶15-003

obligation to hold

¶15-001

pre-meeting matters

¶15-002

“priority vote”

¶15-007

proxies

¶15-008

quorum

¶15-006

secret ballots

¶15-011

tenant participation

¶15-014

validity of proceedings

¶15-016

voting procedures

¶15-009

F Fences

¶18-010

Finances administrative fund

¶9-002

auditing

¶9-016

banking arrangements

¶9-005

borrowing money

¶9-012

capital works fund

¶9-003

capital works plan

¶9-007

certification of financial and other information

¶9-018

— strata information certificate

¶9-018

contributions

¶9-008

— interest, discounts and payment plans

¶9-009

— recovery

¶9-010

estimates budgeting

¶9-006

expenditure restrictions

¶9-011

investments and other funds

¶9-004

liability for tax

¶9-015

reporting period

¶9-017

statement of key financial information

¶9-017

sub-funds

¶9-004

surplus funds

¶9-004

Financial reporting

¶9-017

Financial statements Fire safety

¶9-013; ¶9-016; ¶9-017 ¶8-009

First annual general meeting of owners corporation adjournments agenda

¶13-017 ¶13-004; ¶13007

chairing of the meeting

¶13-009

conducting meeting

¶13-016

documents and records to be delivered

¶13-005

entitlement to vote

¶13-011

failure to convene or hold

¶13-002

inclusion of matters on the agenda

¶13-007

manner of voting

¶13-013

— pre-meeting electronic voting

¶13-014

meeting procedures

¶13-006

minutes

¶13-019

motions

¶13-016

nomination of strata committee candidates

¶13-008

notice of meeting

¶13-003

obligation to convene and hold

¶13-001

“priority vote”

¶13-011

proxies

¶13-012

quorum

¶13-010

secret ballots

¶13-015

tenant participation

¶13-018

validity of proceedings

¶13-020

voting procedures

¶13-013

Forms and precedents administrative fund budget

¶19044

administrative fund — cash disbursements book

¶19101

administrative fund — cash receipts book

¶19099

advance notice of date of annual general meeting

¶19089

annual financial statements (accrual accounting)

¶19059

annual financial statements (cash accounting)

¶19058

application for an order by the Tribunal

¶19-

112 application for mediation

¶19111

appointment of and authority to company nominee

¶19003

appointment of proxy

¶19086

authorisation of original owners agent

¶19010

authority for staff member to attest seal

¶19118

balance and reconciliation statement

¶19104

bank statement

¶19103

bare appointment of strata managing agent

¶19015

by-law establishing a sub-committee

¶19006

by-law relating to maintenance obligations

¶19039

capital works fund — cash disbursements book

¶19102

capital works fund — cash receipts book

¶19100

capital works fund budget

¶19045

capital works plan

¶19047

common property memorandum

¶19071

contribution instalment reminder notice

¶19053

delegation of treasurers function

¶19011

disclosure of commissions and training services

¶19018

disclosure of interests

¶19021

disposal notice

¶19120

exclusive use by-law

¶19069

extension of appointment of strata managing agent

¶19026

large scheme capital works fund budget

¶19046

levy register

¶19105

minutes of first annual general meeting

¶19088

minutes of strata committee meeting

¶19081

minutes of strata committee written vote

¶19078

motor vehicle removal notice

¶19123

nomination of candidate for election to the strata committee

¶19-

085 nomination of candidate for strata committee election

¶19004

nomination of office bearer candidate

¶19008

notice — adjourned meeting

¶19087

— adjourned meeting of the strata committee

¶19079

— annual general meeting

¶19090

— appointment of agent by lot owner

¶19108

— appointment of company nominee

¶19107

— by strata committee not to re-appoint

¶19027

— by strata managing agent of end of term

¶19029

— change of information

¶19106

— exercising option

¶19030

— extraordinary general meeting

¶19093

— first annual general meeting

¶19083

— fixing records inspection

¶19-

114 — intended action

¶19055

— levying contributions with discount

¶19051

— levying contributions without discount

¶19051

— notification of change of by-laws

¶19068

— opposition to strata committee decision

¶19080

— requiring information from strata managing agent

¶19022

— requiring service of strata interest notice

¶19110

— revocation of agent's appointment

¶19109

— strata committee meeting

¶19076

— terminating appointment of a strata managing agent

¶19032

— to deliver property

¶19126

— treasurer requiring joint operation of bank accounts

¶19012

pecuniary interests’ disclosure register

¶19082

receipt

¶19098

records of exercise of delegated function

¶19017

re-disclosure of commissions and training services

¶19020

register of disposed goods

¶19121

request for extraordinary general meeting

¶19092

request for strata committee meeting

¶19075

request to inspect records

¶19113

requirement to place motion on the agenda

¶19084

resolution — adopting capital works plan

¶19048

— appointing auditor

¶19060

— appointing strata managing agent

¶19014

— approving a building inspector

¶19042

— approving council parking agreement

¶19124

— approving disclosure

¶19019

— approving transfer of building manager functions

¶19034

— authorising a building manager agreement

¶19033

— authorising application for insurance

¶19064

— authorising company nominee

¶19002

— authorising disposal notice

¶19119

— authorising entry into payment plans

¶19054

— authorising loan

¶19057

— authorising notice requiring information

¶19023

— authorising notice to deliver property

¶19125

— authorising termination of building manager agreement

¶19036

— authorising transfer of functions of a strata managing agent

¶19024

— authorising use of insurance claim proceeds

¶19066

— authorising vehicle removal notice

¶19122

— by-law enforcement notice (approved form)

¶19074

— by-law enforcement notices

¶19072

— determining contributions

¶19050

— expressly authorising by-law enforcement notice

¶19073

— extending appointment of strata managing agent

¶19025

— not to reappoint strata managing agent

¶19028

— payment to strata committee member

¶19009

— removing committee member or office bearer

¶19013

— removing expenditure restriction

¶19043

— removing spending restriction

¶19056

— requiring additional insurance

¶19065

— reviewing capital works plan

¶19049

— terminating appointment of a strata managing agent

¶19031

sample strata plan

¶19001

SCA agency agreement

¶19016

seal attestation — by corporate strata managing agent

¶19117

— by individual strata managing agent

¶19116

— by two members

¶19115

special privilege by-law

¶19070

special resolution — authorising changes to common property

¶19038

— making by-law

¶19067

— not to maintain property

¶19037

statement of key financial information (cash basis)

¶19061

strata committee resolution — appointing representative

¶19035

— appointing sub-committee

¶19007

— approving minor renovations

¶19041

— consenting to acting member

¶19005

— convening general meeting

¶19091

strata committee written voting paper

¶19077

strata information certificate

¶19063

strata interest notice

¶19-

094 strata register

¶19097

strata roll

¶19096

tenancy notice

¶19095

Freehold strata scheme

¶2-001

termination to facilitate collective sale or redevelopment Freehold strata titles

¶18-015

¶1-002; ¶1-004

Funds — see Finances

G Government bodies

¶18-018

H Hire fees tax liability Horizontal boundaries Horizontal subdivision of land House rules

I

¶9-015 ¶2-002; ¶8-002 ¶1-003 ¶11-012

Industry bodies

¶18-018

Inspection of records — see Records Inspectors building inspectors, defective buildings

¶8-005

— orders that the Tribunal may make

¶17-010

Insurance risks

¶8-009

Insurances building insurance — see Building insurance claims by lot owners

¶10-009

claims by owners corporations

¶10-008

orders that the Tribunal may make

¶17-010

other insurances — compulsory

¶10-007

— voluntary

¶10-007

public liability

¶10-006

quotations

¶10-010

Interest tax liability

¶9-015

Interested persons disputes

¶17-003

Interference with support, shelter, service

¶11-006

Interim orders

¶17-008

Investments

¶9-004

J Jointly used common property mixed-use schemes

¶4-006

L Large strata scheme

¶2-004

strata committee

¶5-003

strata committee meetings

¶5-003

tendering and contracting

¶8-007

Leasehold strata plan meaning of original owner

¶2-006

Leasehold strata scheme

¶2-001

expiry

¶2-018

Leasehold strata titles Legal costs restrictions

¶1-002; ¶1-004 ¶18-014

Legislation current

¶1-002

historic

¶1-001

Levies

¶9-008

Levy register

¶16-004

Liability for recovery of contributions

¶9-010

owners corporation members

¶3-006

public liability/insurance risks

¶8-009

strata committee members

¶5-015

Licensing building managers

¶7-004

strata managing agents

¶6-003

— ceasing to hold a licence

¶6-015

— duties as licensee

¶6-018

Liens

¶6-022

Loans

¶9-012

Local councils parking agreements

¶18-009

rates

¶2-009

Lots

¶2-002

access

¶8-008

consolidation

¶2-011

conversion to common property

¶2-012

definition of lot

¶8-002

interference with support, shelter, service

¶11006

maintenance of parts of lots including common infrastructure

¶8-010

structural alteration

¶11006

subdivision

¶2-010

M Maintenance of common property access to lots authorisation for improving or enhancing building defects

¶8-008 ¶8-004; ¶11-009 ¶8-005; ¶8-006

identification of common property

¶8-002

risk management

¶8-009

statutory duty of owners corporation

¶8-001

strategic planning

¶8-003

tendering and contracting

¶8-007

Management Act no contracting out Management rights schemes Mediation

¶18-016 ¶2-008 ¶17-004

Meetings annual general meeting — see Annual general meeting of owners corporation strata committee — see Executive committee meetings

Minor renovations by lot owners

¶8-004; ¶11-009

Mixed-use schemes

¶2-004

building/strata management statements

¶4-005

common property divided use schemes

¶4-006

special arrangements, types

¶2-008

Mortgagee in possession notice

¶16-006

Motor vehicles removal

¶18-008

Mutual and non-mutual income

¶9-015

N Notices to owners corporation

¶16-006

company nominee notice

¶16-006

mortgagee in possession notice

¶16-006

owner agency appointment notice

¶16-006

strata interest notice

¶16-006; ¶16-007

tenancy notice

¶16-006

NSW Civil and Administrative Tribunal — see Tribunal NSW Fair Trading

¶18-018

Nuisance

¶11-006

O

Occupancy limits

¶11-002

Offences and penalties failure to keep records

¶16-001

failure to retain records

¶16-001

prescribed penalty notice offences and their penalties

¶18-011

strata managing agents

¶6-008; ¶6-012; ¶6013

On-site residential property manager

¶7-001

Orders court order terminating scheme

¶2-016

Tribunal

¶17-010

— enforcement

¶17-012

— orders taking effect as resolutions

¶17-011

Original owner Owner agency appointment notice Owners corporation

¶2-006 ¶16-006 ¶2-005

annual general meetings — see Annual general meeting of owners corporation arrangement for supply of amenities and services to lots

¶18-002

common seal

¶18-005

constitution

¶3-001

contributions

¶9-008

— interest, discounts and payment plans

¶9-009

— recovery

¶9-010

disputes — see Disputes duty to fit complying window safety devices

¶18-010

first annual general meeting — see First annual general meeting of owners corporation functions, powers and responsibilities

¶2-005; ¶3-002

governance by strata committee — see Strata committee initial period

¶2-007

insurance — see Insurances legal costs restrictions liability of members

¶18-014 ¶3-006

maintenance of common property — see Maintenance of common property management

¶3-005

— by building manager

¶3-005

— by strata managing agent

¶3-005

notices to owners corporation — see Notices to owners corporation orders relating to meetings and decisions

¶17-010

parking agreements with council

¶18-009

penalty notices

¶18-011

power to carry out work

¶18-006

power to dispose of abandoned goods

¶18-007

power to remove motor vehicles

¶18-008

principal duties

¶3-003

service of documents

¶18-004

three-tiered schemes

¶4-004

two-tiered schemes

¶4-003

use of funds — see Finances use of innovations in technology

¶18-017

Owners Corporation Network

¶18-018

P Parcel

¶2-002

Parking agreements with council

¶18-009

Parking disputes

¶17-001

Part building scheme insurance

¶10-003

interested persons in disputes

¶17-003

Penalties — see also Offences and penalties penalty notices tax liability on penalties

¶18-011 ¶9-015

Precedents — see Forms and precedents Property notice for recovery of property and records

¶18-013

orders relating to property

¶17-010

Public liability Public liability insurance

¶8-009 ¶10-006

R Rates payable to council Receipts

¶2-009 ¶16-004

Records accounting records

¶9-014; ¶16004

— receipts

¶16-004

— transaction records

¶16-004

— levy register

¶16-004

failure to keep records

¶16-001

failure to retain records

¶16-001

importance

¶16-001

inspection — electronic records

¶18-001

— extracts and copies

¶18-001

— failure to comply

¶18-001

— inspection arrangements

¶18-001

— records to be produced

¶18-001

notices to owners corporation to be entered on strata roll

¶16-006

orders that the Tribunal may make

¶17-010

other records required under Management Act

¶16-005

recovery of records, notice

¶18-013

retention

¶16-008

strata register

¶16-003

strata roll

Recovery of contributions Recovery of property and records

¶16-002; ¶16006 ¶9-010 ¶18-013

Registrar General termination of scheme

¶2-017; ¶3-007

Remote monitoring

¶18-017

Removal of motor vehicles

¶18-008

Rent tax liability

¶9-015

Renters disputes

¶17-001

Repair of common property — see Maintenance of common property Reporting period

¶9-017

Residential common property mixed-use schemes

¶4-006

Resolutions — see Forms and precedents Retail centres

¶2-004

Retail common property mixed-use schemes

¶4-006

Retirement villages

¶2-008

Risk management

¶8-009

S Security

¶8-009

Self-service via web portals

¶18-017

Service of documents

¶18-004

by owners corporation

¶18-004

on owners corporation

¶18-004

Social networking

¶18-017

Software

¶18-017

Staged developments

¶4-002

Statement of key financial information

¶9-017

Statutory duty of owners corporations to maintain property

¶8001

breach

¶8009

Statutory responsibilities obligations under Management Act

¶11-006

— interference with support, shelter, service

¶11-006

— nuisance

¶11-006

— structural alterations

¶11-006

Strata committee acting committee members

¶5-007

appointment of committee, timing

¶5-002

chairperson

¶5-011

conflicts of interest

¶5-016

disclosure of interests of members

¶12-015

eligibility for appointment or election

¶5-004

functions

¶5-008

governance role legal costs restrictions liability of members

¶3-004; ¶3-005; ¶5-008 ¶18-014 ¶5-015

meetings — see Executive committee meetings nomination of candidates office holders

¶5-005; ¶13-008; ¶14005 ¶5-010

orders that the Tribunal may make

¶17-010

recovery of property and records

¶18-013

removal from office resolutions — see Forms and precedents

¶5-018

risk management

¶8-009

secretary

¶5-012

size

¶5-003

strata managing agent may be appointed

¶5-014

sub-committees

¶5-009

tenant representatives

¶5-006

transitional arrangements

¶5-001

treasurer

¶5-013

vacation of office

¶5-017

Strata Community Australia

¶18-018

Strata information certificate

¶9-018

Strata interest notice

¶16-006

Strata managing agents

¶3-005

accountability

¶6-009

agency agreement

¶6-005

appointment

¶6-002

— expiration

¶6-020

— re-appointment

¶6-002

— term

¶6-020

— termination

¶6-021

appointment to strata committee

¶5-014

breach of duty

¶6-008

building/strata management statement

¶4-005

commissions

¶6-012

— disclosure

¶6-013

death

¶6-015

delegated functions

¶6-002; ¶6-004

— exercise of functions

¶6-007

— further delegation and transfer of functions

¶6-019

disclosure obligations functions gifts and benefits

¶6-013; ¶6-014 ¶6-001 ¶6-008; ¶6-012

licence

¶6-003

— ceasing to hold a licence

¶6-015

— duties as licensee

¶6-018

liens

¶6-022

money received and other transactions

¶6-011

offences

¶6-008; ¶6-012; ¶6013

orders that the Tribunal may make

¶17-010

penalty notices

¶18-011

powers and authorities

¶6-004

provision of information to owners corporation

¶6-017

requirement to provide information under other Acts

¶6-016

risk management

¶8-009

training services

¶6-012

— disclosure

¶6-013

trust account responsibilities

Strata plan

¶6-006; ¶6-009; ¶6010 ¶2-001; ¶2-002

lots and common property

¶2-002

— consolidation

¶2-011

— subdivision

¶2-010

Strata register

¶16-003

Strata renewal plan Strata roll

¶2-019 ¶16-002

Strata schemes creation

¶2-001

definition

¶2-001

termination

¶2-015; ¶18-015

types

¶2-004

winding up

¶3-007

Strata titles administration

¶1-006

contrasted with community titles

¶1-003

disputes

¶1-007

freehold and leasehold

¶1-004

legislation — current

¶1-002

— historic

¶1-001

Strata/building management statement

¶4-005

Stratum plan

¶4-005

Structural alteration of lots

¶11-006

Subdivision of lot or common property

¶2-010

staged developments

¶4-002

Supply of amenities and services to lots

¶18-002

Support, shelter and services interference

¶11-006

Surplus funds

¶9-004

Swimming pool safety

¶8-009

T Tax liability

¶9-015

Technology electronic processes Tenancy in common schemes Tenancy notice

¶18-017 ¶1-005; ¶4-001 ¶16-006

Tenants participation at meetings Tendering and contracting

¶13-018; ¶14-015; ¶15-014 ¶8-007

Termination of scheme

¶2-015

as part of strata renewal process

¶2-019

by court order by expiry of lease by Registrar General

¶2-016; ¶18-015 ¶2-018 ¶2-017; ¶3-007

under Development Act

¶18-015

Three-tiered schemes

¶4-004

Timeshares

¶2-008

Transaction records Tribunal

¶16-004 ¶1-007; ¶18-018

appeals from decisions of Tribunal

¶17-015

appeals to Tribunal

¶17-013

application to Registrar

¶17-005; ¶17-006

— determination of application

¶17-009

dispute stages

¶17-002

interim orders

¶17-008

orders

¶17-010

— enforcement

¶17-012

— orders taking effect as resolutions

¶17-011

powers of Tribunal

¶17-007

proceedings before Tribunal

¶17-014

refusal to make order invalidating resolutions or elections

¶13-020; ¶14-017; ¶15-016

Trust account strata managing agents

¶6-006; ¶6-009; ¶6-010; ¶8-005

Two-tiered schemes

¶4-003

U Utility lot

¶2-002

V Vertical boundaries Vertical subdivision of land Voluntary insurance

¶2-002; ¶8-002 ¶1-003 ¶10-007

W Web-based systems

¶18-017

Whole of building schemes interested persons in disputes Winding up scheme Window safety

¶17-003 ¶3-007 ¶8-009; ¶18-010

Work power of owners corporation to carry out work Workplace health and safety

¶18-004 ¶8-009