This article discusses how mutual termination clauses in strata management agreements allow councils of owners and strata managers to end contracts by agreement without holding an AGM or EGM.
Question: Can a council of owners propose a mutual termination of a strata manager’s contract without holding an AGM or EGM?
Can a council of owners suggest or agree to a mutual termination of a strata manager’s contract without convening an AGM or EGM? Is there anything in the Strata Titles Act 1985 that gives the council this authority?
Answer: Most commercial strata management agreements include a termination by mutual consent clause.
The Strata Titles Act 1985 (WA) does not contain an express provision stating that a council of owners (COO) can suggest a mutual termination of a strata manager’s contract without an AGM or EGM.
In practice, however, most commercial strata management agreements include a termination by mutual consent clause. This means the contract can be ended if both parties agree and notice is given. Importantly, this cannot be enforced unilaterally by the COO – mutual consent is essential.
When considering this, the following points should be kept in mind:
- Contract terms: Check the specific termination clause in the management agreement, as mutual consent provisions are generally standard.
- By-laws and resolutions: Review the strata company’s by-laws and past resolutions to determine if the COO has been given general or specific authority to manage contracts on the strata company’s behalf, including termination.
- Legislative framework:
- Schedule 1, clause 4(1) – provides that the powers and duties of the strata company are exercised by the council, unless a general meeting has restricted that authority.
- Section 139(1) – allows a person acting under the authority of the strata company (which includes the COO) to “make, vary, extend, discharge or terminate a contract” on its behalf.
- Section 151 – sets out the process for unilateral termination of a strata management contract, requiring notice and providing a right of review. This applies only where the strata company seeks to terminate without the manager’s consent.
Summary:
The COO cannot terminate the strata manager’s appointment unilaterally unless the contract has reached its end. However, if the management agreement includes a mutual termination clause (as is standard), and both parties agree, then the contract may be brought to an end without the need for an AGM or EGM.
SVN | Strata
SVN Perth
E: [email protected]
P: 08 9427 7955
This post appears in the November 2025 edition of The WA Strata Magazine.
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