WA: When a Strata Manager Fails to Hold an AGM

Question: We are well outside of our AGM period. No meeting has been held since late 2020. If the strata manager and the council breach the Act in this way, what action can owners take to force compliance?

I am an owner and live in 38 unit complex in WA. Our last AGM was held in late 2020. Using the 15-month provision of the WA Act we should have had the 2021 AGM on/before early January 2022. No such meeting was held and our Council seems powerless (perhaps I should say disinterested) to get the Strata Manager to prepare the documentation for the meeting and commit to a date.

The Strata Manager has confirmed to me in writing that they are at fault. They admit this is a breach of the Regulations. Many owners are very frustrated. If the strata manager and the council breach the Act in this way, what action can owners take to force compliance?

Answer: The Strata Company (through the Strata Council) must issue a “Show Cause Notice” to the Strata Manager.

This is an unfortunate situation as it impacts on the raising of levies and approval of the budget.

I can only refer you to the provisions of the Act at section 151.

151.       Termination of strata management contract

1. There are proper grounds for termination of a strata management contract by a strata company if —
   
   1. the strata manager has contravened this Act; or
   2. the strata manager has contravened the contract; or
   3. the strata manager is, according to the Interpretation Act 1984 section 13D, a bankrupt or a person whose affairs are under insolvency laws; or
   4. the strata manager is a Chapter 5 body corporate within the meaning given in the Corporations Act 2001 (Commonwealth) section 9; or
   5. the strata manager, or a director or chief executive officer of the strata manager, is convicted in this State of an offence punishable by imprisonment for 12 months or longer and the strata company is satisfied that the offence affects the strata manager’s suitability to perform the strata manager’s functions; or
   6. the strata manager, or a director or chief executive officer of the strata manager, is convicted outside this State, in Australia or elsewhere, of an offence that, if it had been committed in this State, would be punishable by imprisonment for 12 months or longer and the strata company is satisfied that the offence affects the strata manager’s suitability to perform the strata manager’s functions.
2. If a strata company is satisfied that there are proper grounds for termination of a strata management contract, the strata company may terminate the contract by giving the strata manager written notice of termination —
   
   1. specifying the date (being not less than 28 days after the date of the notice) on which the termination will take effect; and
   2. informing the strata manager of the right to apply to the Tribunal for review of the decision to terminate the contract.

The Act further states that the Strata Company (through the Strata Council) must issue a “Show Cause Notice” to the Strata Manager.

3. Before a strata company terminates a strata management contract under subsection (2), the strata company must give the strata manager a notice (a show cause notice).
4. A show cause notice must —
   
   1. be in writing; and
   2. state that the strata company proposes to terminate the strata management contract; and
   3. specify the grounds on which it is proposed to terminate the strata management contract; and
   4. set out particulars of the facts relied on as evidence of those grounds; and
   5. invite the strata manager to make written submissions to the strata company as to why the strata management contract should not be terminated; and
   6. specify the period (being at least 14 days after the date of the notice) within which the written submissions must be received by the strata company.

5. A strata company must give proper consideration to any written submissions made by the strata manager within the period specified in the show cause notice.
6. Nothing in this section affects the operation of section 115 in relation to a strata management contract or any other right that the strata company may have to terminate the contract.

Should the problems not be resolved amicably, it is best the contract is terminated, being the best outcome for both parties.

This post appears in Strata News #636.

Shane White
Strata Title Consult
E: shane.white@stratatitleconsult.com.au