Penalties

If you have studied the Unit Titles (Management) Act (The Act) you will see that in various places it refers to penalties that Executive Committee (EC) members, Owners Corporation (OC) owners and mortgagees can be subject to. But nowhere in the Act itself does it quantify these penalties, and this article will help you with that.

The penalties are expressed in terms of penalty units. The value of a penalty unit will be revised upwards from time-to-time through amendment of the Legislation Act 2001. Currently it is $150 per unit for an offence committed by an individual or $750 per unit for an offence committed by a corporation.

Unit Titles (Management) Act

It should be noted that Section 5 of the Act provides that the Criminal Code Chapter 2 applies to offences under the Act.

Section 71 provides that OC's must not carry on business “except in the exercise of its functions”, excepting for income from the operation of sustainability infrastructure. The maximum penalty is 50 penalty units for each member of the EC. The EC members can defend themselves by proving either that they took reasonable steps to ensure that the contravention did not happen, or that the contravention happened without their knowledge.

Section 110 provides a maximum penalty of 5 penalty units on either an owner or occupant of a unit if either does not comply with a rule infringement notice properly served under section 109. A rule infringement notice can be served on an owner or occupier when the EC reasonably believes that the OC rules are being infringed and requires that the infringement ceases.

Section 121 provides a penalty of a maximum of 50 penalty units on each member of the EC if the OC fails to provide a unit title certificate sought by an eligible person under a Section 119. An eligible person is the owner or representative of owners or someone authorised by them, the intended purchaser of a unit, or ACTPLA if access to the information is necessary or desirable for the administration of the Act. Section 120 provides that an OC cannot deny the truth of anything stated in a Section 119 certificate.

Section 122 provides 1 penalty unit if an OC does not always display a notice of the name of the OC and the address for the service of documents if that is not at the OC. One penalty unit is applied if the address for the service of documents is at the owners corporation address and a suitable letterbox is not always available. Five penalty units is payable if the OC changes its address for the service of documents, but does not lodge notice of the change with the Registrar-General in the approved form.

Schedule 2, 2.1 provides that each member of the EC is liable for a maximum of 20 penalty points if the OC does not keep for at least 5 years in paper or electronic form all EC minutes, full minutes of AGMs showing all resolutions, records of any court orders or authorisations from ACTPLA, and proper records and books of account showing the OC’s assets and liabilities (including all amounts owing to and by the corporation); and all amounts received and paid by the corporation. As a defence, EC members must prove that they took reasonable steps to ensure that the section was complied with, or that the failure to comply happened without their knowledge.

Schedule 2, 2.2 provides that each member of the EC is liable for a maximum of 20 penalty points if financial reports detailing the corporation’s assets and liabilities (including all amounts owing to and by the corporation); and all amounts received and paid by the corporation are not presented to the AGM. As a defence, EC members must prove that they took reasonable steps to ensure that the section was complied with, or that the failure to comply happened without their knowledge.

Schedule 2, 2.3 provides that each member of the EC is liable for a maximum of 20 penalty points if full details of the OC’s insurance is not provided at each Annual General Meeting (AGM).  As a defence, EC members must prove that they took reasonable steps to ensure that the section was complied with or that the failure to comply happened without their knowledge.

Schedule 3, 3.24 provides that a mortgagee is liable for a maximum of 5 penalty points if the OC is not advised within 14 days of the discharge of a mortgage over which the mortgagee has exercised mortgagee voting rights.

A further area of offences exist that may not be obvious at first reading. Owners should read the following provisions together:

  • Section 43 on the treasurer’s functions,

  • Section 68 on the operation of the owners corporation bank account,

  • Schedule 3.7 on AGM notice requirements,

  • Section 75 on the general fund budget,

  • Section 77 on the purpose of the general fund (in accordance with the approved budget or changed by ordinary resolution),

  • Section 74 on the use of Special Purpose funds in accordance with the particular purpose identified in the special resolution that established the fund,

  • Section 88 on what the sinking fund can be used for,

  • Schedule 2.1 that the EC must keep minutes, and records and accounts,

  • Schedule 2.2 EC must present financial statements at the AGM.

These provisions make it clear that EC's do not have free rein to spend monies from the general account other than as approved in the budget or as authorised by ordinary resolution of the corporation, or to spend monies from a special purpose fund other than in accordance with the particular purpose for which the fund is established unless authorised by special resolution, or to spend monies from the sinking fund other than in accordance with a sinking fund plan that complies with section 83. These requirements are simple and straightforward. Failure to comply with them would expose all members of the EC to penalties arising from the criminal law.

Unit Titles Act 2001

The Unit Titles Act 2001 Regulations also contains offence provisions and likewise Chapter 2 of the Criminal Code applies. The offences in this case are committed in the development phase of a unit titles plan either by a developer or a unit title assessor providing false or misleading information or advice. A maximum of 60 penalty units applies to these offences.