Part 4 People helping the owners corporation exercise its functions

On the establishment of an owners corporation, the executive committee of the corporation is established.

(1) The executive committee of an owners corporation exercises the functions of the corporation.

(2) Without limiting subsection (1), the executive committee’s functions include the following:

(a) developing matters in relation to—

(i) the common property; and

(ii) the strategic affairs of the owners corporation;

(b) submitting matters developed under paragraph (a) to the owners corporation for consideration;

(c) monitoring the owners corporation’s financial performance;

(d) approving the annual financial statements and budget for presentation to the owners corporation at the corporation’s annual general meeting;

(e) supervising the treasurer, secretary, manager (if any) and communications officer (if any);

(f) carrying out the decisions of the owners corporation made at general meetings.

(3) The executive committee must exercise its functions—

(a) as the corporation directs by resolution at a general meeting; or

(b) in the absence of a resolution—as the committee considers appropriate.

Note The resolution required under s (3) (a) is an ordinary resolution, unless the Act provides that the resolution should be a special, unopposed or unanimous resolution—see sch 3, s 3.14 (Decision-making at general meetings).

The executive committee must act in accordance with schedule 2, part 2.1.

Schedule 2, part 2.2 applies to executive committee meetings.

(1) Until the first annual general meeting of an owners corporation, the members of the executive committee are all the members of the corporation.

(2) Until the first annual general meeting, the executive committee may exercise a function of the owners corporation only if authorised to do so by a special resolution.

(1) This section applies to the executive committee of an owners corporation beginning at the corporation’s first annual general meeting.

(2) The number of members of the executive committee (the executive members) is decided as follows:

(a) if there are only 1, 2 or 3 members of the owners corporation—each member of the owners corporation is an executive member;

(b) if there are 4 or more members of the owners corporation—the members of the corporation must, at a general meeting, decide—

(i) by ordinary resolution to have 3 to 7 executive members; or

(ii) by special resolution to have 8 or more executive members.

(3) If the number of members of the owners corporation is equal to or falls below the number of executive members as decided by the corporation, all the members of the corporation are executive members (even if not nominated or elected).

(4) An executive member—

(a) must be a qualified person for the units plan; and

(b) is elected (if necessary) by ordinary resolution at each annual general meeting; and

(c) holds office until the earlier of—

(i) the next annual general meeting; and

(ii) the executive member ceasing to be a qualified person.

(5) An executive member (the removed member) of an owners corporation may be removed by the ordinary resolution that elects a qualified person to replace the removed member until the next annual general meeting.

(6) The executive committee of an owners corporation may appoint a qualified person to fill a casual vacancy on the committee until the next annual general meeting.

(7) In this section:

associate, of a manager, means—

(a) a business partner of the manager; or

(b) a close friend of the manager; or

(c) a family member of the manager.

manager—see section 49.

qualified person, for a units plan, means a person (other than the manager or associate of the manager) who is—

(a) the owner of a unit in the units plan; or

(b) if the unit is owned by a company or 2 or more part-owners—a representative for the company or the part-owners, as the case requires.

Note An adult (the principal) may appoint a person to do anything for the principal that the principal can lawfully do by an attorney (see Powers of Attorney Act 2006, s 13).

(1) This section applies if the schedule of lease provisions under a units plan provides for—

(a) at least 1 unit for residential use only; and

(b) at least 1 unit for non-residential use.

(2) In addition to the requirements under section 39, the executive committee of the owners corporation must include, if feasible, at least—

(a) 1 member who is the owner of a unit mentioned in subsection (1) (a); and

(b) 1 member who is the owner of a unit mentioned in subsection (1) (b).

(3) An owner or executive member may apply to the ACAT for an order requiring an election to be held to satisfy the requirement under subsection (2).

(1) The executive committee must elect—

(a) a chairperson; and

(b) a secretary; and

(c) a treasurer.

(2) The committee may elect a person to 2 or more positions.

(1) The functions of the chairperson are—

(a) to chair general meetings of the owners corporation and meetings of the executive committee; and

(b) to set the agenda for general meetings and executive meetings, in consultation with the secretary and owners corporation manager (if any) and in accordance with guidelines under subsection (2); and

(c) to talk to the secretary, treasurer and manager (if any) about the exercise of their functions.

(2) The Minister may make guidelines about items that the chairperson must include on an agenda under this section.

(3) A guideline is a notifiable instrument.

The functions of the secretary are—

(a) on behalf of the executive committee—

(i) to give notice of meetings of the executive committee and general meetings; and

(ii) to prepare and send out to executive members minutes of executive meetings; and

(iii) to prepare and send out to members of the owners corporation minutes of general meetings; and

(iv) to keep the records of the owners corporation, other than the records mentioned in schedule 2, section 2.1 (1) (f) (which are financial records); and

(b) on behalf of the executive committee, and the owners corporation, to give notices under the Act; and

(c) on behalf of the owners corporation—

(i) to give certificates required under the Act; and

(ii) to prepare and answer correspondence; and

(d) to give any other administrative support to the executive committee or owners corporation.

The functions of the treasurer are—

(a) on behalf of the owners corporation, to give to each unit owner notice of—

(i) a determination of general fund contributions under section 78 (1); and

(ii) a determination of sinking fund contributions under section 89 (1); and

(b) on behalf of the owners corporation—

(i) to pay all amounts the corporation receives into the corporation’s account in accordance with section 68 (1) (b); or

(ii) if the owners corporation is exempt from section 68 (1)—to receive, acknowledge receipt of, and account for amounts paid to the corporation; and

Note An owners corporation for a units plan with only 2 or 3 units may, by unopposed resolution, exempt itself from s 68 (1) (see s 68 (2)).

(c) on behalf of the owners corporation, to pay amounts the corporation spends out of the corporation’s account, in accordance with section 68 (1) (c), as authorised by the executive committee; and

(d) on behalf of the executive committee, to keep the records (the records) mentioned in schedule 2, section 2.1 (1) (f); and

(e) if the owners corporation requires the records to be audited—to arrange for the records to be audited by a qualified auditor; and

(f) to give financial reports to meetings of the executive committee to allow the committee to monitor the financial performance of the owners corporation; and

(g) to prepare and certify the annual financial statements mentioned in schedule 2, section 2.2 (1).

(1) An executive committee may delegate its functions to—

(a) a subcommittee; or

(b) 1 or more executive members.

Note A function that has been delegated by the executive committee may, despite the delegation, be exercised by the committee (see Legislation Act, s 240). For the making of delegations and the exercise of delegated functions generally, see the Legislation Act, pt 19.4.

(2) An owners corporation may, by ordinary resolution, impose conditions or restrictions on its executive committee’s powers of delegation.

(1) An executive committee of an owners corporation may engage or employ people on the terms it considers appropriate to help in the exercise of the corporation’s functions.

Note An owners corporation may engage a manager (see div 4.2) and service contractors (see div 4.3).

(2) However, the executive committee may only engage a person under this section—

(a) on a short-term basis; or

(b) for functions other than those for which a manager or service contractor would usually be engaged to undertake.

(3) An owners corporation may, by ordinary resolution, impose conditions or limitations on its executive committee’s power to engage or employ people.

An executive member must comply with the code of conduct set out in schedule 1, part 1.1.

(1) An executive member is not civilly liable for conduct engaged in honestly and without recklessness—

(a) in the exercise of a function under this Act; or

(b) in the reasonable belief that the conduct was in the exercise of a function under this Act.

(2) Any civil liability that would, apart from this section, attach to the executive committee attaches instead to the owners corporation.

(3) In this section:

conduct means an act or omission to do an act.

An act done honestly by an executive committee is not invalid only because there was a defect or irregularity in or in relation to the member’s election or appointment.

In this division:

management contract means a contract to provide management services to an owners corporation.

management services means services provided by a manager in exercising the manager’s functions.

manager means a person—

(a) contracted under section 50; or

(b) with whom an owners corporation has a management contract.

(1) An owners corporation for a units plan may, by ordinary resolution, enter into a management contract with any of the following:

(a) a person holding a licence as a real estate agent under the Agents Act 2003;

Note The commissioner for fair trading may issue a conditional real estate licence to a person who acts, or intends to act, only as the manager of an owners corporation (see Agents Act 2003, s 34).

(b) a member of the corporation;

(c) someone else who is not a manager of another owners corporation, and whose income as manager of the corporation will not be the person’s primary source of income.

(2) The management contract—

(a) must state—

(i) the remuneration of the manager; and

(ii) the functions of the owners corporation that the manager is to exercise; and

(b) may include other conditions agreed between the owners corporation and the manager.

(3) Without limiting subsection (1), an owners corporation enters into a management contract if the corporation engages a person to carry out management services.

(1) An owners corporation must not enter into a management contract with a manager for longer than 3 years (including any period for which the contract may be renewed or extended).

(2) If an owners corporation enters into a management contract for longer than 3 years, the contract is taken, for all purposes, to be a contract for 3 years.

A manager has—

(a) the functions stated in the manager’s contract; and

(b) any other function delegated to the manager under section 58.

(1) A manager’s rights under a management contract may be transferred only if the transfer is approved by the owners corporation by ordinary resolution.

(2) In deciding whether to approve the proposed transfer, the owners corporation may consider the following:

(a) the character of the proposed transferee and associates of the proposed transferee;

(b) the proposed transferee’s financial standing;

(c) the terms of the proposed transfer;

(d) the competence, qualifications and experience of the proposed transferee and associates of the proposed transferee;

(e) whether the proposed transferee or associates of the proposed transferee have received, or are likely to receive, training in relation to the manager’s functions;

(f) anything else relevant to the management contract.

(3) The owners corporation must decide whether to approve a proposed transfer not later than 30 days after the day the corporation is asked in writing to approve the transfer.

(4) However, the owners corporation must not—

(a) unreasonably withhold the approval to transfer; or

(b) require or receive a fee or other consideration for approving the transfer, other than reimbursement of legal or administrative expenses reasonably incurred by the corporation for the approval.

(5) If the owners corporation has not decided whether to approve a proposed transfer within the period mentioned in subsection (3), the corporation is taken to have approved the transfer.

(6) In this section:

associates of the proposed transferee means—

(a) if the proposed transferee is a corporation—the corporation’s directors, substantial shareholders and principal staff; or

(b) if the proposed transferee is a partnership or is in partnership—the partners and principal staff of the partnership.

(1) The owners corporation may end a management contract—

(a) for a remedial breach if notice has been given under section 55; or

(b) for misbehaviour; or

(c) if the manager is an individual—if the individual—

(i) becomes bankrupt or personally insolvent; or

(ii) is convicted in the ACT of an offence punishable by imprisonment for at least 1 year; or

(iii) is convicted outside the ACT, in Australia or elsewhere, of an offence that, if it had been committed in the ACT, would be punishable by imprisonment for at least 1 year; or

(d) if the manager is a corporation—if the corporation becomes insolvent.

(2) However, before ending a management contract under subsection (1) (c) (ii) or (iii), the owners corporation must be satisfied that the conviction affects the manager’s suitability to exercise the manager’s functions.

(3) The owners corporation must end a management contract—

(a) if the manager is absent, other than on approved leave, for 14 consecutive days or for 28 days in any 12-month period; or

(b) for physical or mental incapacity, if the incapacity substantially affects the exercise of the manager’s functions.

(4) In this section:

insolvent—a corporation is taken to be insolvent if the corporation—

(a) is being wound up; or

(b) has had a receiver or other controller appointed; or

(c) has entered into a deed of company arrangement with its creditors; or

(d) is otherwise under external administration under the Corporations Act, chapter 5.

remedial breach means a remedial breach under section 55.

(1) A manager commits a remedial breach if the manager—

(a) fails to exercise the manager’s functions; or

(b) contravenes the manager’s code of conduct; or

Note See sch 1, pt 1.2 for manager’s code of conduct.

(c) while exercising the manager’s functions, is grossly negligent or engages in misconduct.

(2) If the owners corporation believes on reasonable grounds that a manager has committed a remedial breach, the corporation may give the manager written notice stating—

(a) that the corporation believes the manager has committed a remedial breach; and

(b) details of the remedial breach committed, sufficient to allow the manager to identify—

(i) the function the manager failed to exercise; or

(ii) the provision of the manager’s code of conduct the corporation reasonably believes the manager contravened; or

(iii) the gross negligence or misconduct; and

(c) that the manager must, within 14 days after the day the notice is given to the manager—

(i) give the corporation a written representation explaining why the manager’s actions do not amount to a remedial breach; or

(ii) remedy the breach; and

(d) that the owners corporation may end the manager’s contract if—

(i) the manager does not comply with the notice; or

(ii) if the manager gives a written representation explaining why the manager’s actions do not amount to a remedial breach—the corporation does not accept the manager’s representation.

A manager must comply with the code of conduct set out in schedule 1, part 1.2.

Note Other laws may also apply to a manager—for example, a manager who is required to be licensed as a real estate agent under the Agents Act 2003 must comply with the rules of conduct for real estate agents under the Agents Regulation 2003.

(1) A manager must take out and maintain public liability insurance in relation to all of the following events happening because of any act or omission in the management of the owners corporation by the manager:

(a) death, bodily injury or illness to anyone;

(b) loss of, or damage to, the property of anyone.

(2) Public liability insurance under this section must be for a total amount of liability of at least the amount prescribed by regulation.

(3) A manager engaged to manage 2 or more owners corporations may take out and maintain a single insurance policy for this section only if—

(a) the manager’s insurer has been told that the manager manages 2 or more owners corporations; and

(b) the insurance policy covers the risk in relation to each owners corporation managed by the manager.

(1) The owners corporation may, in writing given to the manager, delegate to the manager any of its functions under this Act or another territory law.

(2) The executive committee may, in writing given to the manager, delegate to the manager any of its functions under this Act or another territory law.

Note A function that has been delegated by the owners corporation or executive committee (a delegator) may, despite the delegation, be exercised by the delegator (see Legislation Act, s 240). For the making of delegations and the exercise of delegated functions generally, see the Legislation Act, pt 19.4.

In this division:

service contract means a contract to provide service contractor services to an owners corporation.

service contractor means a person—

(a) contracted under section 60; or

(b) with whom an owners corporation has a service contract.

service contractor services means services provided by a service contractor in exercising the contractor’s functions.

(1) An owners corporation for a units plan may, by ordinary resolution, enter into a service contract with a person.

Note Pt 9 provides for the protection of financiers of service contracts.

(2) Without limiting subsection (1), an owners corporation enters into a service contract if the corporation engages a person to carry out service contractor services.

(3) However, the owners corporation must not enter into a service contract for a period longer than 3 years (including any period for which the contract may be renewed or extended) unless the contract is authorised by special resolution and made after the end of the developer control period for the units plan.

(4) A service contract entered into in breach of subsection (3) is void.

(5) In this section:

units plan includes part of a units plan.

(1) An owners corporation must not enter into a service contract with a service contractor for longer than 25 years.

(2) If an owners corporation enters into a service contract with a service contractor for longer than 25 years, the contract is taken, for all purposes, to be a contract for 25 years.

(1) A service contractor for an owners corporation helps the corporation to exercise 1 or more of the following functions in relation to the common property of the units plan:

(a) managing the common property;

(b) supervising use of the common property;

(c) maintaining and repairing the common property.

(2) In this section:

common property includes part of the common property.

(1) A service contractor’s rights under a service contract may be transferred only if the transfer is approved by the owners corporation by ordinary resolution.

(2) In deciding whether to approve the proposed transfer, the owners corporation may consider the following:

(a) the character of the proposed transferee and associates of the proposed transferee;

(b) the proposed transferee’s financial standing;

(c) the terms of the proposed transfer;

(d) the competence, qualifications and experience of the proposed transferee and associates of the proposed transferee;

(e) whether the proposed transferee or associates of the proposed transferee have received, or are likely to receive, training in relation to the service contractor’s functions;

(f) anything else relevant to the service contract.

(3) The owners corporation must decide whether to approve a proposed transfer not later than 30 days after the day the corporation is asked in writing to approve the transfer.

(4) However, the owners corporation must not—

(a) unreasonably withhold the approval to transfer; or

(b) require or receive a fee or other consideration for approving the transfer, other than reimbursement of legal or administrative expenses reasonably incurred by the corporation for the approval.

(5) If the owners corporation has not decided whether to approve a proposed transfer within the period mentioned in subsection (3), the corporation is taken to have approved the transfer.

(6) In this section:

associates of the proposed transferee means—

(a) if the proposed transferee is a corporation—the corporation’s directors, substantial shareholders and principal staff; or

(b) if the proposed transferee is a partnership or is in partnership—the partners and principal staff of the partnership.

(1) The owners corporation may end a service contract—

(a) for a remedial breach if notice has been given under section 65; or

(b) for misbehaviour; or

(c) if the service contractor is an individual—if the individual—

(i) becomes bankrupt or personally insolvent; or

(ii) is convicted in the ACT of an offence punishable by imprisonment for at least 1 year; or

(iii) is convicted outside the ACT, in Australia or elsewhere, of an offence that, if it had been committed in the ACT, would be punishable by imprisonment for at least 1 year; or

(d) if the service contractor is a corporation—if the corporation becomes insolvent.

(2) However, before ending a service contract under subsection (1) (c) (ii) or (iii), the owners corporation must be satisfied that the conviction affects the service contractor’s suitability to exercise the contractor’s functions.

(3) The owners corporation must end a service contract—

(a) if the service contractor is absent, other than on approved leave, for 14 consecutive days or for 28 days in any 12-month period; or

(b) for physical or mental incapacity, if the incapacity substantially affects the exercise of the service contractor’s functions.

(4) In this section:

insolvent—a corporation is taken to be insolvent if the corporation—

(a) is being wound up; or

(b) has had a receiver or other controller appointed; or

(c) has entered into a deed of company arrangement with its creditors; or

(d) is otherwise under external administration under the Corporations Act, chapter 5.

remedial breach means a remedial breach under section 65.

(1) A service contractor commits a remedial breach if the service contractor—

(a) fails to exercise the service contractor’s functions; or

(b) while exercising the service contractor’s functions, is grossly negligent or engages in misconduct.

(2) If the owners corporation believes on reasonable grounds that a service contractor has committed a remedial breach, the corporation may give the service contractor written notice stating—

(a) that the corporation believes the service contractor has committed a remedial breach; and

(b) details of the remedial breach committed, sufficient to allow the service contractor to identify—

(i) the function the service contractor failed to exercise; or

(ii) the gross negligence or misconduct; and

(c) that the service contractor must, within 14 days after the day the notice is given to the service contractor —

(i) give the corporation a written representation explaining why the service contractor’s actions do not amount to a remedial breach; or

(ii) remedy the breach; and

(d) that the owners corporation may end the service contract if—

(i) the service contractor does not comply with the notice; or

(ii) if the service contractor gives a written representation explaining why the service contractor’s actions do not amount to a remedial breach—the corporation does not accept the service contractor’s representation.

(1) This section applies to an owners corporation for a units plan if the units plan has 7 or more units.

(2) The owners corporation may, by ordinary resolution, appoint an owners corporation communications officer.

Note For the making of appointments (including acting appointments), see the Legislation Act, pt 19.3.

(3) Without limiting subsection (2)—

(a) a person may be appointed as a communications officer whether or not the person is a member of the owners corporation; and

(b) the corporation may appoint the officer as a volunteer or may pay the officer.

(1) A communications officer helps the owners corporation by improving communication so that conflict within the units plan is avoided, minimised or resolved.

(2) To improve communication, the communications officer may do 1 or more of the following:

(a) monitor communication techniques and procedures adopted by the owners corporation for internal communication between the corporation, the executive committee, unit owners and residents;

(b) identify for the executive committee ways in which internal communication can be improved;

(c) alert the executive committee, or committee members, if the officer becomes aware of potential conflict;

(d) advise the executive committee about ways in which the risk of conflict in the units plan can be minimised;

(e) be available to the executive committee, or committee members, to be consulted about any internal communication matter.

(3) However, the communications officer must not try to mediate or directly resolve a dispute.