By Phillip Leaman

30 June 2020

Owners Corporation Committees are legally entitled to obtain expert advice about the Owners Corporation’s functions and powers – and it is often wise to obtain independent legal advice where Owners Corporation Committees is unclear about whether a particular decision or proposal is going to legally comply with the requirements of the Owners Corporations Act 2006.

 

Sometimes, Committees will leave it up to their manager to source quotes from law firms to provide legal advice. Owners Corporation Committees are sometimes unaware of whether or not the quotes are entirely independent.

 

Any Committee Member is equally able to source their own quotes for legal advice for the Owners Corporation Committees to consider. These nine tips will ensure that your Owners Corporation Committees can obtain, consider and approve the engagement of independent legal advice from Tisher Liner FC Law in a way that complies with the Owners Corporations Act 2006.

 

Tip One: ‘Committees of between 3 and 12 members’: Owners Corporation Committees’ must have at least 3 and not more than 12 members. Only lot owners, or proxies of lot owners, who are not in arrears for any amount to the Owners Corporation are eligible to be elected, and remain elected, as Committee Members.

 

Tip Two: ‘Types of Decisions/Resolutions a Committee can make’: Owners Corporation Committees’ can make decisions on behalf of the Owners Corporation in between Annual General Meetings relating to the management and administration of the common property and other functions of the Owners Corporation, including obtaining independent legal advice to ensure that the Owners Corporation is complying with its legal obligations or how to deal with a dispute. A Committee cannot make decisions that are in the limited category of requiring a special or unanimous resolution of all lot owners, or which the Owners Corporation has resolved at a general meeting to remove from the Committee’s automatic delegation of having ‘all functions and powers that may be exercised by the owners corporation except for those requiring a special or unanimous resolution’. If there is a Committee, then the manager has a duty to report to the Committee, as required by the Committee, on any functions that the manager has been conferred to carry out.

 

Tip Three: ‘Obtaining Legal Advice Quotes for the Committee to Consider’: any Committee Member may approach a law firm such as Tisher Liner FC Law, in order to request a cost estimate to provide legal advice on a particular issue that the Owners Corporation is grappling with. To request a quote from Tisher Liner FC Law, email our team at ocenquiry@tlfc.com.au with your property address and Owners Corporation number, a copy of your most recent AGM Minutes showing that you were elected as a Committee Member and brief details about the legal issue that your Committee is considering getting legal advice about. Subject to conflict searches at our end to confirm we are able to act, we will then email you a cost estimate for you to table at your next Committee Meeting.

 

Tip Four: ‘Calling a Committee Meeting’: An Owners Corporation Committees’ Meeting can be called by either the Chairperson or Secretary of the Committee, or be set by the Committee at a previous Committee Meeting, or set by the Owners Corporation, or set by the manager of the Owners Corporation. Therefore, at its first meeting, a Committee may wish to resolve by majority vote when its next Committee Meeting will be held.

 

Tip Five: ‘Giving Notice of the Committee Meeting’: The Secretary must give notice of an Owners Corporation Committees’ Meeting to each Committee Member, at least 3 business days before the Committee Meeting. The notice must state the time and place of the Committee Meeting, the meeting agenda and must include a statement that ‘a member of the committee who is a lot owner may appoint a proxy for the purpose of the meeting’. When the Secretary gives the notice to each Committee Member, the Secretary must also give each Committee Member a copy of the previous Committee Meeting Minutes. The notice may be given electronically. If you are proposing to table a cost estimate to obtain legal advice from Tisher Liner FC Law, we recommend circulating a copy of our cost estimate with the meeting notice and placing an agenda item on the agenda as follows ‘To consider and approve the cost estimate from Tisher Liner FC Law to obtain legal advice’.

 

Tip Six: ‘At the Committee Meeting’:  Owners Corporation Committees’ Member is allowed to participate in a Committee Meeting (if they are not in arrears to the Owners Corporation) by teleconferencing A quorum for a Committee Meeting is at least half of the members of the Committee. For example, if there are six Committee Members, at least three Committee Members must be present at the Committee Meeting for there to be a quorum. A Committee resolution is passed if a majority of the Committee Members that are participating in the Committee Meeting agree that a resolution is a Committee resolution. For example, if three out of six Committee Members are participating in a Committee Meeting, and two Committee Members agree to pass a resolution – then the resolution is passed and is deemed to have legal effect as a resolution of the Owners Corporation.

 

An example of a draft Committee resolution passed at a Committee Meeting is:

 

“The Committee resolves by ordinary resolution to engage Tisher Liner FC Law to provide it with legal advice about [insert legal issue that your Owners Corporation is facing] as per their cost estimate to the Owners Corporation tabled at this Committee Meeting.”

 

All Committee Members have a legal duty to act honestly, in good faith and exercise due care and diligence in the performance of their functions, and must not make improper use of their positions to gain, directly or indirectly, and advantage for themselves or any other purpose. There is a statutory immunity available to Committee Members from personal liability which relies in part on Committee Members acting in good faith.

 

Tip Seven: ‘Keeping Committee Meeting Minutes’: The Secretary of the Committee is responsible for keeping minutes at Committee Meetings that must include the date, time and place of the meeting, which Committee Members were present, the names of the Committee Members who voted, the resolutions passed by the Committee and who voted in favour and against each resolution. Committee Meeting Minutes may be inspected by any lot owner.

 

If your Committee resolves to engage Tisher Liner FC Law to provide it with written advice (or verbal advice in a Committee Meeting), then make sure that the resolution is included in your Committee Meeting Minutes, and provide us with a copy of the Minutes. It is also sensible to provide your Manager with a copy of the Committee Meeting Minutes so that your manager, who holds your Owners Corporation’s money on trust for your Owners Corporation, knows that your Owners Corporation Committee has approved expenditure of the Owners Corporation’s funds on obtaining independent legal advice.

 

In some circumstances, an Owners Corporation Committee may wish to direct its manager to place the cost of obtaining the legal advice into the Tisher Liner FC Law trust account, to be held on account of the cost of the legal advice – this can be a useful directive in the event that the Committee wants to obtain legal advice about a matter where the Owners Corporation’s interests do not align with the Manager’s interests.

 

Tip Eight: ‘Adding or Removing a Committee Member’: If a Committee Member is absent from 25% or more of Committee Meetings within any six month period, and fails to give prior notice of their absence, or fails to provide a reasonable explanation for their absence, then the Committee may resolve that the Committee Member ceases to hold office as a Committee Meeting. Otherwise, a Committee Member may also be added or removed by an Owners Corporation at an annual general meeting or a special general meeting.

 

Tip Nine: ‘Reporting to the AGM’ the Committee must present a report of its activities to the Owners Corporation at the Annual General Meeting.

 

 

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