The Law Handbook 2024

Chapter 6.5: Owners corporations 605 must agree to a special resolution (s 18(1)) or to an ordinary resolution if the matter is within the civil jurisdictional limit of the Magistrates’ Court (s 18(2)). Achieving this may be difficult considering the manager holds the records of the names, addresses and contact numbers of the owners corporation members. Therefore, in such circumstances, VCAT allows a single member to make an application on behalf of an owners corporation under sections 169I and 169J of the OC Act. Dismissing an owners corporation manager Under section 119(6), an owners corporation can dismiss a manager. Once the manager’s appointment is revoked – even if the term of employment has not ended – there is an absolute obligation under section 127 for the manager to return funds and records within 28 days. A committee may dismiss a manager unless the owners corporation decides that the manager can only be dismissed at a general meeting (see s 82). Any term in the manager’s employment contract stating that the decision to dismiss a manager can only be made at a general meeting is invalid under section 202 because it excludes, modifies or restricts the operation of the OC Act. When a manager is dismissed before the end of the term of their employment, the manager may be able to sue the owners corporation for breach of contract. In such circumstances, damages are limited to the loss of profits for the unexpired term and not the agreed fee for that period. Duties and rights of lot owners and occupiers A lot owner must comply with the OC Act, OC Regulations and rules of the owners corporation (s 128). A lot owner must give notice to the owners corporation of any application by the lot owner for a building permit or planning permit or the certification of a plan of subdivision affecting the lot (s 133), however consent of the owners corporation is not required. The period of notice is not specified. Under section 134, both a lot owner who sells and a person who acquires a lot must advise the owners corporation within one month of completion of the contract. A lot owner who does not occupy the lot or who will be absent for more than three months must provide the lot owners mailing address for service of notices (s 136). The lot owner not in occupation of the lot must give a copy of the rules of the owners corporation to the occupier of the lot (s 136). An occupier of a lot must comply with the OC Act, OC Regulations and rules of the owners corporation and must not use or neglect the common property (s 137), but there is no provision that the lot owner reveals particulars of the occupier to the owners corporation. Duties and rights of initial lot owners Developers, as initial owners, must be cognisant of their obligations under the OC Act. It is common practice for initial owners to earn lucrative income by leasing prominent areas of the roof from an owners corporation. These areas are ultimately used for billboard advertising and/ or mobile tower communication. The head lease is usually for a term of 99 years at a ‘peppercorn’ rent with no obligation for the developer to maintain any segment of the roof. Instead of leasing, the developer may alter the plan of subdivision and purchase a desired area. That is less common because it entails costs such as owners corporation fees, annual land tax and municipal rates. The initial owner is one of six classes under the OC Act (s 68) with an obligation to act honestly and in good faith. Although ‘good faith’ is not defined, it is associated in the OC Act with concepts of honesty, due care and diligence, fairness, the avoidance of conflict of interest, and acting in the interests of the owners corporation. The commandeering of common property by an initial owner for the benefit of that owner to the exclusion of other or subsequent lot owners fails the test of acting in good faith. Amendments to the OCAct (effective 1December 2021) have made this practice more problematic. Under section 68(4B)(b), the initial owner of land affected by an owners corporation must not designate as a private lot what normally would be common