Question: What decisions must be voted on by the strata company? Are the annual budget and by-laws the only regular items that need a vote? Is everything else at the discretion of the CoO?
What decisions must be voted on by the strata company, and what decisions can be taken by the council of owners? I understand the strata company must approve the annual budget, the items in the budget, and the contribution amounts. Also, do we need a vote of the strata company if we want to add, amend or withdraw by-laws?
For example, can the council of owners agree to an arrears collections policy and then start using that method when arrears come up? It would be good to let owners know what that collections policy is, but do we need their approval?
Are the annual budget and by-laws the only regular items that need a vote, and everything else is at the discretion of the CoO?
Answer: The Act is clear about the function of the council of the strata company.
The Strata Titles Act 1985 as amended 2018 is clear what the function is of the council of the strata company – see section 135:
135. Functions and constitution of councils
- The functions of a strata company, subject to this Act and to any restriction imposed or direction given by ordinary resolution, are to be performed by the council of the strata company.
- The council of a strata company must be constituted and perform its functions in accordance with this Act and the scheme by-laws.
- On an election of the council at a general meeting of the strata company —
- a person who is entitled to vote in the election and who is present in person or by proxy at the meeting may demand that the votes in the election be counted by unit entitlement of the lots; and
- if no such demand is made, the votes in the election are to be counted by number
- 1 of the members of the council of a strata company must hold office as the chairperson of the strata company.
As Section 135 (1) says – subject to this Act and to any restriction imposed or direction given by ordinary resolution – all functions of the strata company are to be performed by the council.
Section 137 describes the general duties and conflicts of interest by council members – and we recommend council members are aware of this section of the Act as it stipulates quite clearly what is being expected by an elected council member:
137. Council members: general duties and conflicts of interest
- This section applies to a person who is —
- a member of the council of a strata company (including when acting as an officer of the strata company); or
- an individual authorised under section 136(2) by a corporation to perform the corporation’s functions as a member of the council, or an officer, of a strata company.
- A person to whom this section applies —
- must at all times act honestly, with loyalty and in good faith in the performance of functions as a member of the council or an officer of the strata company; and
- must at all times exercise the degree of care and diligence in the performance of those functions that a reasonable person in the person’s position and the circumstances of the strata company would reasonably be expected to exercise; and
- must not make improper use of the person’s position —
- to gain, directly or indirectly, an advantage for the person or any other person; or
- to cause detriment to the strata company.
- A person to whom this section applies —
- must inform the council in writing of any direct or indirect pecuniary or other interest that the person has that conflicts or may conflict with the performance of a function as a member of the council or, if applicable, as an officer of the strata company; and
- must do so as soon as is practicable after the person becomes aware of the relevant facts; and
- in the case of a member of the council, must not vote on a matter in which the member has an interest required to be disclosed under paragraph (a).
- Subsection (3) does not apply to an interest arising solely from the fact that the member is the owner of a lot in the scheme
In case there is at any time no council or insufficient members of the council, the Strata Titles Act has a provision that the functions of the council may be performed by the owners of the lots in general meeting of the strata company.
Regarding the specific example of introducing and adopting a debt collection policy, we believe the council can only introduce a policy if the strata company by-laws provide for the council to introduce rules, etc., in relation to debt collection. If there is no such by-law, we recommend that all owners adopt any debt collection policy in a general meeting or by ordinary resolution outside a meeting. Section 100 of the Strata Titles Act provides provisions in relation to administrative and reserve funds and contributions as well as what the strata company is empowered to do in case owners are not paying their levy contributions when they are due and payable.
We also refer you to the following provisions of the Strata Titles Act in relation to what has to been brought up at an Annual General Meeting – See section 127:
127. Annual general meetings of strata company
- A strata company must hold an annual general meeting once in each 12 month period and not more than 15 months after its previous annual general meeting.
- Subsection (1) does not apply to a strata company for a 2-lot scheme but a strata company for a 2-lot scheme may make by-laws having the same effect as subsection (1).
- The following matters must be included as an item of business on the agenda for each annual general meeting of a strata company (including the first annual general meeting) —
- election of council members;
- consideration of accounts;
- the presentation of copies of certificates and schedules for the insurance required under this Act, current as at the date of the meeting.
- All business transacted at an annual general meeting other than that referred to in subsection (3) is taken to be special business.
So, besides the adoption of the annual budget and any adoption of proposed by-laws – at an Annual General Meeting, the owners will need to elect the council, accept the financial statements (accounts) of the past financial year and also obtain a resolution in relation to the building insurance.
Also, there are many other resolutions the council does not have the power to make, such as raising levy contributions, approving lot alterations, expenditure over a certain limit as prescribed, etc. The council is advised to seek legal advice if it is unsure when to obtain a resolution from all the owners. The standard by-laws further stipulate the powers of the secretary and the treasurer, so consulting the applicable by-laws for the strata scheme is also recommended.
This advice does not constitute legal advice and we recommend that the owner obtains their own legal advice to suit the circumstances.
This post appears in Strata News #654.
Marietta Metzger magixstrata E: marietta@magixstrata.com.au P: 08 6559 7498