The Executive Committee
Can an EC make any decision it thinks is appropriate?
In Lanfranchi v Units Plan 806, ACAT overturned the EC’s decision and substituted its own because the EC
“has failed to properly inform itself prior to making the decision…. It has failed to consider relevant matters and has taken into account irrelevant matters. The decision was not based on a reasonable consideration of the issues, but was based on erroneous assumptions, not supported by evidence or information. It was thus a decision that was not based on sound judgement and was unreasonable.”
This decision is fair warning to all ECs that they must abide by the Executive Committee Code of Conduct (Schedule 1 to the Unit Titles (Management) Act) and operate strictly within their powers with honesty, fairness, care and diligence. If they don’t ACAT can overturn their decisions.
Does an EC automatically delegate its powers and functions to a strata manager simply by contracting to engage a strata manager?
In Executive Committee UP 930 and Capital Strata Management and Miliano and Others (unreported) ACAT did not accept that delegations existed. It seems that ACAT requires more evidence of a delegation than the assertion by the strata manager that a delegation exists.
It should be noted that the Legislation Act 2001 provides at S. 232 that:
“A delegation must be made, or evidenced, by writing signed by the appointer.”
So it would be reasonable to conclude that this issue had already been settled in ACT law before ACAT’s decision in this case.
Can an OC or an EC still perform a power if it has delegated that power to a strata manager?
In Executive Committee Units Plan 930 v Capital Strata Management and Miliano and Others ACAT decided that
“It is not the case that the executive committee, having engaged a manager, lost the power to exercise its own functions or to give direction to the manager.”
It should be noted that the Legislation Act 2001 provides at S. 240 that “A function that has been delegated may, despite the delegation, be exercised by the appointer.”
So it would be reasonable to conclude that this issue had already been settled in ACT law before ACAT’s decision in this case.
Is an EC entitled to receive an electronic copy of the corporate register including telephone numbers and email addresses for the purposes of managing the OC at any time it requests it?
Yes they can.
In Executive Committee Units Plan 930 v Capital Strata Management and Miliano and Others, ACAT said the EC was entitled to the information, the strata manager should have provided it as soon as the EC requested it and there was no need for ACAT to order the strata manager to make the information available to the EC. But the decision did not hinge on that matter and no Order about it was made.
An Order has been made by Presidential Member Elizabeth Symons in UT1/2017 (Elizabeth Coghlan v Ian MacNamee and Partners Pty Ltd, Strata Partners (ACT) Pty Ltd and Whittles Strata Partners Pty Ltd). It reads in part
“Pursuant to s. 129(2) of the " Unit Titles Management ACT 2011" and by close of business 13 March 2017, the First Respondent, Ian McNamee and Partners Pty Ltd provide to the Applicant in the amended Application, the Executive Committee of the Owners Corporation of Units Plan 930 an electronic copy of the Corporate Register, including e-mail addresses and telephone numbers, to enable the Executive Committee to notify unit owners of this litigation.”
ECs can quote this Order when a manager refuses access on the spurious ground of privacy or only allows part access.
It should also be noted that during the initial directions hearing on this matter, Whittles Strata Partners Pty Ltd indicated it wanted access to corporate registers in order to circulate publicity material for their company advocating transfer to the new Whittles Strata Partners business. The Applicant objected on the grounds that Whittles did not yet have a contract with the OCs and McNamees and Strata Partners were asking to transfer management contracts to Whittles Strata Partners and so had no right to access information of those OCs for purely commercial purposes. Presidential Member Symons strongly supported that argument and deterred Whittles from taking that action.
For further information on this vexed issue please see Paper 11 under Unit Titles (Management) Act in Practice.
Does an OC have to apply common community standards of behaviour when seeking recompense from an owners for costs occurred by the OC?
A hose in an enclosed toilet cistern broke when the owners were not in the apartment. Water flowed into the apartment and the common property hallway. The OC made necessary repairs to the common property but claimed back from the owner under S31 because the owner wilfully or negligently caused damage.
In Ceramidas v UP 3488, ACAT was firmly of the view that the owner could not be accused of negligence as they applied common community standards of reasonable behaviour and the event that occurred was not reasonably foreseeable.
Can an EC rely on general breed information in developing its pets policy or does it have to make every decision based on information about the specific animal in question?
It very probably has to make case by case decisions guided by expert advice on the specific animal in question.
In Nevile v UP 3107, the EC followed the pet policy adopted by the OC and refused approval of a large dog based on general information on the suitability of the breed to apartment living. The dog’s owner provided reports from the dog’s long term vet and the proprietor of the dog exercise and socialisation business that dog attended weekly on the temperament and behaviour of the dog in question. The EC did not cast any doubt on these reports.
ACAT concluded that the EC’s decision was unreasonable because it ignored relevant information and took irrelevant information into account and overturned the decision.
Can an EC rely on general expert advice or do they have to get expert advice about the issue in question?
This is a very vexed area. Very probably an EC has to make case by case decisions guided by expert advice on the specific issue in question rather than rely on general advice, even if that comes from expert sources. And if there are reasonable competing arguments the EC should consider taking the issues to a general meeting of the OC for decision.
There have been three recent ACT decisions on exactly this area.
In Nevile v UP 3107, ACAT concluded that the EC made an unreasonable decision because it ignored expert advice about the specific dog under discussion and chose to rely on general advice about dogs of that type.
However, the decision does not deal with what the EC should have done if it had expert advice disagreeing with Nevile’s expert advice on the dog. In the light of the decisions in two further cases, it is possible to conclude that ACAT would support taking the issue to a special general meeting of the OC for decision.
In Parker v UP 36, the EC decided to remove a large eucalypt tree, based on expert advice, and the applicant, Parker, got other expert advice that the tree could be successfully managed and should not be removed.
ACAT compared the qualifications and expertise of the experts and decided that one expert provided “a more informed, reliable and accurate assessment of the tree's condition, the risk it poses in the future, and available mechanisms to reduce and manage that risk.”
ACAT then took the view that the way to “balance the risks posed by this particular tree, the amenity it provides, and the cost of alternative actions in relation to the tree” was
“ to refer this matter back to the owners at a special general meeting and allow that democratic process to occur in a more informal and dynamic way at that grass roots level. There is competing expert opinion and there are competing options on the table with different financial ramifications over a certain period of time of the sinking fund plans. Those are things that the owners as a whole are, I think, properly entitled to express a view on....”
In the case of May v UP 116 there was no expert evidence regarding the issues in question. The expert advice before ACAT was an assessment by the OH&S expert that the tree was a potential risk, by the plumber fixing a pipe that the roots of the tree in question had caused the breakage, by the Applicant that the tree was the cause of the cracking in the slab of his carport and a counter claim by the respondent that the cracking was minor and insignificant and statements from other owners that they enjoyed visual and environmental amenity from the tree.
The expert advice that was not before the Tribunal was that the tree in question was definitely causing damage to the slab of the carport or the plumbing to the Applicant’s unit or that the tree posed a greater risk to health and safety than any other tree on the well treed site. The evidence on the tree that was available from two arborists in 2010 was that the tree was healthy, stable and without obvious defects. No evidence was offered by any party that that position had changed.
ACAT sent the matter back to be decided by a general meeting. The Applicant then sought to overturn that meeting’s decision as unreasonable.
ACAT took the view that it was not bound to accept the views of the Conservator of Flora and Fauna regarding the cracking of the concrete slab or the cause of the water pipe damage. It also took the view that “the plumber … is not an expert in carport slabs, he is an expert in plumbing.”
“Considering all of the evidence that was before the tribunal for this matter, I am not satisfied that (the general meeting’s decision) was unreasonable and it is not open to the Tribunal, in such a circumstance, to interfere with the outcome of the general meeting.”
So ECs should get expert advice on the problem and the potential solutions, it should seek to rebut contrary expert advice presented to it by protagonists for various outcomes and it should fairly and impartially put all the evidence to a general meeting and abide by its decisions. Even then the OC is subject to challenge and could have its decision at the general meeting overturned.
Units Plan 2849 v Conservator of Flora and Fauna also deals with conflicting expert advice.
Can an OC manager represent the OC or the EC before ACAT?
In UP 783 v Hausfeld & Ors (20 August 2014) ACAT went as far as saying
“There is no merit in the argument that a real estate agent or indeed any other person may not represent another in the proceedings before the tribunal.”
“It is common practice in matters in this tribunal, particularly in relation to residential tenancies and unit titles matters, for owners corporations and owners of properties to be represented by real estate agents. Such representation is frequently provided for in the engagement contracts between owners or owner corporations and those agents. There is no prohibition in section 30 of the ACAT Act against the person doing so for fee or reward.”
ACAT found that all an OC or EC must do is abide by the provisions of Section 2.5 of part 2.1 of schedule 2 of the UTM Act.
If an owner asks the EC to issue an Infringement Notice, doesn’t the EC have to issue the notice?
In Martin v UP 220, ACAT decided that there are two actions required. First under S111, if a dispute between neighbours exists and the complainant neighbour believes rules have been contravened and will continue to be, the complainant may ask the EC to issue a Rule Infringement Notice. Then the EC has to exercise its powers under S 109 to form a reasonable belief that rules are being infringed and pass an ordinary resolution for a formal Notice to be issued.
If the EC declines to form that belief and issue that Notice the complainant could apply to ACAT to seek an order and would need solid grounds for their request.
Can an OC start an action in ACAT before it issues an infringement notice against an owner?
In UP 768 v Lokusooriya, ACAT concluded that
“Section 109 [of the UT(M)A] does not impose an obligation on an owners corporation to issue an infringement notice in every circumstance in which a contravention of the rules is believed to have occurred, and is likely to be repeated. The use of the word ‘may’ in subsection 109(2) makers it clear that the decision whether or not to issue a rules infringement notice is discretionary. “
“Further, the UTM Act does not require the issuing of a rules infringement notice as a precondition to the filing of an application under section 125 of the UTM Act. “
Is an OC liable to pay for work done by a former strata manager during the handover to a new strata manager?
In UP 220 and Link Corporate Services Pty Ltd, ACAT found that the former strata manager was entitled to be paid up to the termination date and if any work continued beyond that date, like preparing accounts for an audit, to be paid for work performed beyond that date.