Owners corporations

The applicant for registration of a subdivision plan, which provides for the creation of an owners corporation, must convene the first meeting of the owners corporation within six months of registering the plan (s 66 Owners Corporations Act 2006 (Vic) (‘OC Act’)). An owners corporation must hold a meeting of its members within the first six months of registration. Documents that must be provided at the first meeting are listed in section 67 of the OC Act and include a maintenance plan.

The applicant must disclose any relationship with the manager of the owners corporation and any financial transactions and benefits from that relationship.

The initial owner of land affected by an owners corporation, or an associate (as defined) of an initial owner, must not:

• be appointed as the manager of the owners corporation;
• vote on any resolution of the owners corporation that relates to a building defect;
• receive any payment from the owners corporation manager in respect of the manager’s contract;
• create a private lot on what normally would be common property; and
• propose an unreasonable or unsustainable annual budget.

Unless an owners corporation resolves otherwise, a manager may pass an interim resolution at a general meeting if no lot owner is present provided additional expenditure is not greater than 10 per cent of the current annual budget and does not affect the manager’s contract of appointment.

A lot owner in arrears must not vote as a proxy for another lot owner at a meeting or represent another lot owner for the purpose of election to a committee.

A person must not vote as a proxy or attorney for more than one lot owner if there are 20 or less occupiable lots on the plan of subdivision and not more than  of lot owners if there are more that 20 occupiable lots. Family exceptions apply.

After the initial meeting, an owners corporation must hold an annual general meeting (AGM) only if it receives or pays out money in any financial year (s 69). The time between AGMs must not exceed 15 months (s 69(2)).

Section 71(2) sets out the matters that must be dealt with and included in the agenda of an AGM. Tabling and consideration of the minutes of the previous AGM must be included as an agenda item.

The person convening an AGM must give notice in writing of the meeting to each lot owner at least 14 days before the meeting, provide an agenda, financial statements, budget, topics for discussion, text of any proposed special or unanimous resolution, and advise that an owner may appoint a proxy (s 72).

A resolution cannot be made if a matter is not included in the agenda. The notice must include, for consideration at the AGM, any decision to waive interest (s 29(4)), any approved maintenance plan (s 39), a valuer’s report (s 65(3)), committee report (s 115) or manager’s report (s 126), complaints (s 159), dispute resolution under Part 10 of the OC Act and the minutes of the previous AGM.

A lot owner may participate in a general meeting in person, by teleconferencing or by proxy (s 80(1)). A proxy must act honestly and in good faith and exercise due care and diligence (s 87(5)).

Under the OC Act (s 98), if an owners corporation does not have a committee, the lot owners must elect a member to be the chairperson. A chairperson may be removed by resolution at a general meeting (s 91(1)).

If an owners corporation has a committee, the chairperson of the committee is also the chairperson of the owners corporation (see ‘Committees’, below).

Even with this appointment, at a general meeting, the lot owners may elect one of their number or the owners corporation manager to chair the meeting. If this election has not been made and the chairperson of the owners corporation is present, the chairperson chairs the meeting (s 79).

Although there is a requirement to keep minutes of general meetings (s 81 OC Act) and committee meetings (s 114), the minutes need not be signed, confirmed or distributed to members of the owners corporation.

Only minutes that contain interim decisions must be sent to members within 14 days (ss 78(4)). However, it is good practice to provide minutes of all general meetings to all members.

A notice of the next AGM must include minutes of the last AGM.

The chairperson may only have a second vote or casting vote if the voting is equal and the chairperson is a lot owner of the owners corporation or votes as a proxy for a lot owner (s 93 OC Act). A casting vote cannot be used when a resolution is made by ballot. A member whose fees or other amounts owing to the owners corporation are in arrears is not entitled to vote, except when a special or unanimous resolution is required (s 94). However, an un-financial lot owner may attend a meeting and their presence is counted when determining a quorum (also see ‘Resolutions’, above).

Except in the case of a cash payment, an amount is taken to be paid in full if it is paid not less than four business days before the vote in question (s 94(3)).

Section 78 of the OC Act permits a general meeting to proceed without a quorum. In such event, all resolutions remain interim decisions unless challenged within 28 days by members holding at least 25 per cent of the total units of entitlement. An interim decision cannot be acted on for 29 days after it is made.

Corporate lot owners

A lot that is owned by a company may be represented at an owners corporation meeting by a proxy. A proxy is not required if the company’s representative at the meeting is an officer of the company (e.g. a director, secretary, or chief executive officer).

Power of attorney

A person is not entitled to exercise, under a power of attorney, the power of a lot owner to vote if the person has that power in respect of another lot owner under another power of attorney (s 88(2) OC Act). This section counters unjust provisions in contracts of sale where developers hold control of the owners corporation by power of attorney, in some cases up to five years. This provision does not apply if the lot owners for whom the person is to exercise a vote are members of that person’s family (s 88(3)).

Interim special resolutions

Section 97 provides for interim special resolutions. Where the votes in favour of a special resolution are more than 50 per cent of the total votes available, and the vote against is not more than 25 per cent of those votes, the resolution passes as an interim special resolution and this vote is treated in the same manner as other interim resolutions.

An owners corporation affecting 10 or more lots must elect a committee at each AGM (s 100 OC Act). A committee must have at least three and not more than seven members (s 103(1)), unless the owners corporation resolves by ordinary resolution to have more than seven members but not more than 12 (s 103(1A)). Only one person from each lot may be elected to a committee (s 103(3)).

A lot owner may authorise, in writing, a proxy (who is not necessarily a member) to represent that lot owner on the committee (s 89C(1)). A member of a committee may provide a proxy for a committee meeting only to another committee member (s 89C(2)).

In the absence of a quorum, the election of the new committee remains interim and the old committee continues to function for at least 29 days (s 78).

A member may participate in a meeting in person or by telephone in accordance with the regulations (s 112(4)). Formerly, there was no provision for a third option, such as participation via proxy as provided in section 80 for a general meeting. The OC Act now allows participation by non-elected individuals who might not even be lot owners. That might not be satisfactory if the proxy is uninformed on matters to be decided. A committee member acting as a proxy (e.g. a corporate representative) is excluded from appointing another person (or power of attorney) to act on their behalf as a proxy cannot appoint another proxy (s 87(3)(c)). The granting of proxies undermines the implied trust and faith in chosen committee members.

If a lot owner is in arrears for any amount of fees, the lot owner or proxy for the lot owner is not eligible to be elected as a member of the committee (s 103(7)(a)). A committee member in arrears remains suspended until the amount is paid (s 103(7)(b)).

Under section 101(1) a committee has all the powers and functions that may be delegated by the owners corporation under section 11, and individual committee members no longer require their powers to be delegated individually. However, a committee may, by instrument, delegate any of its powers and functions to the manager or to a lot owner (s 102).

Committee members have immunity. A member is not personally liable for anything done or omitted to be done in good faith (s 118(1)). It would follow that a member may be personally liable for not acting in good faith as required under section 117(a).

A committee must elect one of its members to serve as chairperson (s 105). That person is also the chairperson of the owners corporation (s 98(2)). A chairperson elected by lot owners may be removed by resolution at a general meeting (proposed s 98(3)). A chairperson elected by a committee may be removed by resolution of the committee
(s 105(2)(b)).

Committee members may only be added (with the exception of casual vacancies (see ‘Casual vacancies’, below)) or removed at a general meeting (s 103(6)).

Notice of a committee meeting must be given at least three business days before the meeting (or another time frame determined by the owners corporation) and must include the minutes of the previous committee meeting (s 109).

The secretary

A committee must appoint a member of the committee or the manager to be the secretary of the committee (s 107 OC Act). Under section 99(1) of the OC Act, if an owners corporation does not have a committee, the lot owners, at a general meeting, may elect a member to be the secretary. The secretary may subsequently be removed by resolution at a general meeting (s 99(1)). The secretary of the committee also becomes the secretary of the owners corporation (s 99(2)). The secretary must give notice to committee members before a meeting (s 109(2)), although the meeting may be called by others (s 108). The secretary is responsible for keeping minutes of meetings (s 114(2)).

The notice shall include the minutes of the previous committee meeting and a statement that a member of the committee may appoint a proxy for the purpose of the meeting provided the committee member is also a lot owner (s 109(3)(b)).

Resolutions

Committees can have interim resolutions (s 112(7) OC Act), where the resolution in the absence of a quorum takes effect if confirmed at the next meeting at which a quorum is present. Under section 112(9), the chairperson of the committee has a second or casting vote that is discretional. A resolution of the committee has effect as a resolution of the owners corporation (s 113).

Casual vacancies

A casual vacancy is a vacancy that occurs between AGMs. If there is a casual vacancy on a committee, the remaining committee members may co-opt another lot owner or a person holding a proxy for a lot owner to be a member of the committee, or if there are three or more remaining members, proceed without filling the vacancy (s 104 OC Act). The OC Act is silent on whether resignations need to be in writing, and it may be sufficient proof that such casual vacancy is recorded in the minutes.