|To authorise or not to authorise repairs…that is the question
An Owners Corporation bears similarities to a company. It carries out its day to day activities through the Strata Committee… a company does the same thing through its board of directors. The Owners Corporation has a duty to act in the best interests of Lot Owners as Directors must act in the best interests of its Shareholders. Strata Committee members owe a fiduciary duty to the Owners Corporation as directors owe a fiduciary duty to a company.
From time to time, lot owners who are not members of the Strata Committee (and without its authorisation) engage third parties to do work or provide services for the Owners Corporation. They are surprised when taken to task and told they won’t be reimbursed for the costs incurred.
This is one of the main differences between owning your own home and owning a lot in an Owners Corporation.
From time to time I have been asked “why can’t I organise and engage contractors?”
I have set out below a few pertinent provisions of the Strata Schemes Management Act relevant to this topic:
Section 9(1) provides that the Owners Corporation has the principal responsibility for the management of the scheme.
The “strata scheme” means a freehold strata scheme or leasehold strata scheme.
Section 9(2) The owners corporation has, for the benefit of the owners of lots in the strata scheme:
(a) The management and control of the use of the common property of the strata scheme.
Section 9(3)(c) provides responsibility for maintaining and repairing the common property of the strata scheme.
Section 10(2) provides that an owners corporation must not delegate any of its functions to a person unless the delegation is specifically authorised by this Act.
According to the Oxford English Dictionary, a delegate is a person sent or authorised to represent others, in particular an elected representative sent to a conference. The meaning also includes a member of a committee.
The word “function” includes a power, authority or duty, and “exercise” a function includes perform a duty.
Section 11 provides that the owners corporation for a strata scheme may be assisted in the carrying out of its management by any one or more of the following:
(a) the strata committee established in accordance with the Act,
(b) a strata managing agent for the scheme appointed in accordance with part 4,
(c) a building manager for the scheme appointed in accordance with Part 4.
Section 12(1) provides that the owners corporation for a scheme may employ such persons as it thinks fit to assist in the exercise of any of its functions.
Section 12(2) provides that the owners corporation must ensure that any person employed to assist it in the exercise of a function has the qualifications (if any) required by this Act or any other law for the exercise of that function.
Section 13 lists function that may only be delegated to the strata committee or a strata managing agent. This includes having custody of any money paid to the owners corporation or making payments from any such money see Section 13(d).
Remember my mantra – knowledge is power.
Coming soon to the Strata Central website will be the episodes of Your Strata Property podcasts, where I discuss practical issues arising in strata with Amanda Farmer from Lawyers Chambers on Riley. It will be just a press of the “keyboard” away.
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