ACT: Can the owners corporation appoint a strata manager without seeing the management contract?

This article discusses Unit Titles Act management contract approval requirements in the ACT and explains what owners can do if a strata manager was appointed without the contract terms being provided.

Question: Is a strata manager appointment valid if owners approved the appointment at an AGM without seeing the contract terms?

At our last AGM, owners passed a motion to appoint our current strata managing agent and authorise the owners corporation to execute a written management agency agreement.

The AGM papers did not include the proposed agreement or any details of the pricing, terms, or conditions. As a result, owners who attended effectively approved the appointment without reviewing contract terms.

The strata manager has now supplied the managing agency agreement, and the terms are significantly worse than the previous agreement. Is the AGM decision enforceable in these circumstances, and what options do owners have now?

Answer: Try engaging directly with the strata manager to seek clarification and, where appropriate, negotiate more favourable terms.

Whilst the Agency should have provided the contract within the meeting agenda for due consideration, it is concerning that the owners corporation resolved to enter into a contract without awareness of the relevant details, including pricing, terms, and conditions. While the Unit Titles (Management) Act 2011 (the Act) prescribes what must be included within a management contract, it is silent on the level of detail required within the motion authorising entry into that contract.

Section 50 (2) of the Act states that a management contract

1. must state;
   1. remuneration of the manager,
   2. the functions of the owners corporation that the manager is to exercise,

2. may include other conditions agreed between the owners corporation and the manager.

Given that the terms of the contract were not presented to the AGM, and the owners agreed to enter into a contract without having relevant information, it would be worthwhile engaging directly with the strata manager to seek clarification and, where appropriate, negotiate more favourable terms.

Should this approach prove unsuccessful, the owners corporation may wish to consider the following options:

1. Where the meeting was held as a reduced quorum – a petition may be lodged at ACAT seeking to overturn the motion. This must be submitted within 28 days of the meeting and requires the support of at least 50% of financial unit owners.
2. If the meeting was not subject to the reduced quorum provisions – an application may be made to ACAT requesting that the motion be overturned.

Both of the above pathways would require the unit owner/s or the Executive Committee to manage the ACAT process, including preparing the application and attending any required hearings.

Nina Cannell
Signature Strata
E: nina@signaturestrata.com.au
P: 02 6185 0347

This post appears in Strata News #780.

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