Owners corporations

A manager of an owners corporation who receives a fee or reward must be registered (s 119 Owners Corporations Act 2006 (Vic) (‘OC Act’)). The penalty for non-compliance is 60 penalty units (s 178).

A registered owners corporation manager must:

• pay an annual registration fee to the Business Licensing Authority (s 183);
• act honestly and in good faith in the performance of the manager’s functions;
• exercise due care and diligence; and
• not make improper use to gain an advantage personally or for any other person (s 122(1)).

A volunteer manager has similar immunity to a committee member (s 123). Such immunity may be viewed as alleviating the need to have office bearers’ liability insurance, although the prospect of funding a legal defence is a consideration.

The manager of an owners corporation must submit a report of the manager’s activities to each AGM, including details of professional indemnity insurance held (currently $2 million) (s 126 OC Act). Records must be returned, not merely made available for collection, within 28 days of the manager’s appointment being terminated (s 127) even though fees to the manager may remain outstanding.

If the manager does not comply with section 127, the owners corporation must commence legal proceedings against the manager. To do this, 75 per cent of the owners corporation members must agree to a special resolution (s 18). 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 section 165(1)(b).

Under section 119(6) of the OC Act, 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.