Best Practice Guide

The content - including publications - on this website is intended only to provide a summary and general overview on matters of interest. It is not intended to be comprehensive nor does it constitute legal advice. We attempt to ensure that the content is current but we do not guarantee its currency or accuracy. We are not lawyers and any communications between the OCN and its members do not constitute legal advice and must not be relied on as legal advice. You should seek legal or other professional tailored advice to your circumstances.  You should seek legal advice before acting or relying on any of the content in this website and any communications from the OCN. OCN will not be liable to you or anyone else for any loss suffered in connection with the use of this website or any of the content.

 The Executive Committee Code of Conduct

S 46 of the UT(M)A says each Executive Committee (EC) member must comply with the Code.  It requires all EC members to

  • understand the Unit Titles (Management) Act and Unit Titles Act and the Code and comply with them

  • act with fairness, honesty, care and diligence in the best interest of all owners

  • not unreasonably restrict owners’ rights to the use and enjoyment of their own property and the common property

  • disclose conflicts of interest

  • not indulge in unconscionable conduct by using their position to advantage themselves or exert unfair tactics on other owners.

The Code applies to all the decisions and actions of the EC as a whole and to EC members individually.  

However the UT(M)A does not enforce the Code or apply penalties for breaches of the Code.  And ACAT will not entertain applications for orders that EC members have breached the Code.

Powers of Executive Committee and Owners Corporation

The EC is not free to make any decision it likes.  The EC can only make valid and enforceable decisions that it has the power to make under the UT(M)A and UTA and its own valid Rules.

EC members do need to know the limits on their power and responsibilities.  This website assists you to do that but it cannot do everything for you.  EC members do need to read and digest the UT(M)A.

Executive Committee operation

The EC must appoint a Chair, Secretary and Treasurer (S40 of the UT(M)A).  For more information see the paper on the roles and responsibilities of these officers.

The EC can operate more effectively with greater commitment and buy-in by utilising the skills of all its members and giving each member an area of responsibility depending on the issues confronting your Owners Corporation (OC), for example facilities, general maintenance, landscape, rules enforcement, communication with owners and so on.  Subcommittees including EC and non-EC members can be created to involve a broader group of owners and capture expertise.  Subcommittees are not the decision makers but make recommendations to the EC for EC decisions. 

The EC can only make valid decisions in meetings that are called with at least 7 days’ notice of the time, place and agenda and have a quorum present (Schedule 2.2).  Email meetings do not make valid decisions.  Of course, urgent action can be agreed by email but the decision made and action agreed should be confirmed and minuted at the next formal meeting.  For example, the EC agrees rapidly by email to call the plumber to the fault.  Then at the next EC meeting the email decision to call the plumber is confirmed and probably there is an invoice for that work and a recommendation for a longer term fix and both of those can be agreed.

The most effective way of ensuring a quorum is to have a regular fixed meeting schedule eg monthly, every second month, quarterly.  Many ECs find shorter, more regular meetings are a more effective way of keeping action on track than longer, less regular ones.

Meetings are more effective if members are circulated before hand with the substance of the decisions to be made rather than responding ‘off the top of the head’ in the meeting.

The EC must take and keep minutes of its decisions.  This does not mean who said what about whom but what the EC decided to do. Privacy of owners is not infringed by a decision like “The EC agreed debt collection action commence immediately against all owners more than 60 days in arrears on levies.”

The recent amendments to the UT(M)A require that all owners receive the Minutes of all EC and OC general meetings within 14 days of the meeting. (2.1 (1A)).  This means that owners are receiving draft EC minutes that will be confirmed at the next EC meeting.  Consequently if owners discover the EC is going down a path that they are not happy with they can quickly make their views known.

If owners ask to attend EC meetings as observers or to present their views to the EC, the EC is not obliged to agree to attendance of non-EC member owners.  However, as the EC is the owners EC, it is very wise to allow owners to attend to present views so long as they accept they are not the decision makers and cannot participate in the meeting as if they are.

Communication with owners

All owners have a stake in the OC and have a right to know what decisions are being made.

EC members are responsible to all owners for their administration of the decisions of all owners at general meetings.

All owners have a right to the names and address of EC members under S117 of the UT(M)A.

ECs constantly complain owners are not involved.  That is a two way street.

ECs want owners to agree to sometimes costly and open-ended arrangements.  Owners often need more information about the issues the OC is dealing with and the available solutions than the minutes or general meeting papers provide.  As the OC is ‘all in it together’, providing more information through a letter to all owners, a regular Newsletter, a website managed by the OC itself etc may lead to more disputation in the short term but to better decision making in the longer term.

Communication with individual owners

When managers mediate all contact between owners and the EC, significant misunderstandings regularly arise.  A calm face to face discussion with an EC member early in a problem often averts months of trouble or eventual ACAT action and formal complaints about managers that end in Commissioner for Fair Trading actions.

The simplest way to establish direct contact between owners and the EC is for all ECs to establish and maintain an email address (like ECUPXYZ@gmail.com or SecUPXYZ@gmail.com ) that one EC member receives and sends on quickly to the relevant EC member. 

A number of OCs are using Facebook or blogs to provide a mechanism for easy communication between owners and with the EC. 

Managers

See the papers Employment of managers and Changing managers.

The EC needs to manage the manager rather than be managed by the manager.  Strata Mangers get moved around in their company or move between companies regularly or often leave the sector altogether. 

Managers often do not know the restrictions placed on EC and OC decision making by the UT(M)A and UTA.  So ECs need to exercise care in accepting managers advice, particularly when it is couched in terms of “This is how we do it.”  If you cannot find out why you are being given advice, beware and seek further advice elsewhere.

Annual General Meetings

Schedule 3 of the UT(M)A requires that each OC holds an Annual General Meeting (AGM) within 15 months of the previous AGM and notifies all owners of

  • the time date and place of the meeting

  • whether they are entitled to vote on ordinary or special resolutions

  • the text of all unopposed or unanimous resolutions

  • a proxy form in the form approved by the Minister

  • an absentee voting form approved by the EC

  • the financial statements for the previous financial year

  • the proposed budget for the current financial year

  • the audit report if required

  • the current insurance certificate.

For the new Agenda Guidelines go here.

Surprisingly the UT(M)A does not require the text of ordinary or special (three quarters vote in favour) resolutions to be included in the papers for the AGM, but ECs would be wise to do so.  Requiring owners to attend a meeting with no idea of the intended resolutions would invite significant negative comment.

It would also be wise to include a short explanation of each resolution and its intended effect.  This saves lots of time explaining the same thing to each owner prior to the meeting or on information requests at the meeting.  If the issues are significant or complex the EC should consider adding an explanation document.

There is a widespread belief that an EC does not have to be appointed at the AGM and that either the manager does all the work or that all owners are now part of the EC.  Neither is the case.  See The Roles of the Chair, Secretary and Treasurer of the Executive Committee.

The General Fund and Sinking Fund Budgets

The general fund budget should not be developed by just inflating last year’s result by the CPI.  The highest cost items – insurance, water and power – are all rising well above the CPI.  Miscalculations on those items could result in the OC becoming insolvent.

The issue for most OCs is whether the Sinking Fund Plan is a realistic appreciation of longer term repair costs and a savings plan to cover those costs equitably for all owners.  Prudent ECs will keep an ongoing watch on the Sinking Fund Plan and make regular adjustments to the Plan and the levies needed to fund it.

Differential levies

The 2020 amendments to the UT(M)A have made it much simpler for an OC to adjust the value of contributions that a certain owner or owners are required to contribute to the OC.  Such adjustments could be a reasonable response to certain owners themselves or their occupants using more power or water than most residents, requiring more waste or cleaning services and so on. 

Insurance Excess

The individual owners are not a party to the insurance contract.  The OC pays the insurance excess and lodges all claims. (S100A).  Hence any OC Rule that the owner pays the excess and/or lodges claims is invalid.

Further if the damage is something that would be covered under the insurance policy except for the cost of repair being under the excess, the OC is responsible for the cost.  The OC is the insured party and owners individually are not party to insurance matters.

If the damage results from “a wilful or negligent act or omission” or “a breach of the Rules” by an owner or tenant, the OC can require the owner to pay an amount to the OC that covers its costs to repair the damage under S31 of the UT(M)A.  This may include an insurance excess and other incidental costs.