Stop Suing Managers!! The Owners Corporation Manager
VCAT Member Rowland said it well in a recent decision of Ford v Owners Corporation SP24717 (Owners Corporations) [2024] VCAT 547.
“The applicants seem to misunderstand the role of the manager. The manager acts for and represents the Owners Corporation in its interactions with lot owners. The manager does not act for individual lot owners. The manager takes instructions from the Owners Corporation resolutions passed at general meetings and from the committee. See section 120 of the Owners Corporations Act 2006.”
Too often we see applications at VCAT made by lot owners naming the Owners Corporation manager as the respondent when the true respondent should be the Owners Corporation.
It is a rare day that the correct respondent will ever be the Owners Corporation manager when a claim is being made by a lot owner.
So what role does a manager play?
The manager acts as agent for the Owners Corporation on the Owners Corporations instructions. Those instructions are provided pursuant to resolutions passed by lot owners or committees.
Even when a manager makes a decision or takes an action under an express authority or delegation it is only taking the action as agent for the Owners Corporation.
Section 120 of the Owners Corporations Act 2006 provides:
“Functions of manager where there is a committee
(1) If there is a committee of the Owners Corporation, a manager has the functions conferred on the manager by—
(a) this Act and the regulations; and
(b) the rules of the Owners Corporation; and
(c) the Owners Corporation by resolution; and
(d) delegation by the Owners Corporation.
(2) If there is a committee of the Owners Corporation, the manager must report to the committee, as required by the committee, on the carrying out of the functions conferred on the manager.”
So can a manager get sued?
A manager might be the subject of a case against it if they are in breach of their contractual or statutory duties (which are set out in section 122 of the Owners Corporations Act 2006) but such a case can usually only be pursued by the Owners Corporation rather than by an individual lot owner (unless of course they are seeking an order to prosecute the claim on behalf of the OC).
In most cases a lot owner has a complaint against the manager but it is actually the conduct of the Owners Corporation where the legal complaint arises.
A classic example is when a lot owner requests access to the records of the Owners Corporation. If the manager has refused to provide the records it has probably done so at the instruction of the committee. Therefore, a lot owner should be making the application against the Owners Corporation for an order seeking inspection of records not against the manager. If ultimately the manager was acting outside their authority in refusing access contrary to the committees instructions only then can the Owners Corporation itself join the manager as a respondent and take action for a failure by the manager to act in accordance with its obligations.
Getting the right party from the start will mean that the application is more likely to avoid delays at VCAT and lead to a positive outcome for the applicant.
Need advice or assistance in a VCAT case?
Contact Phillip Leaman who heads the Owners Corporations team at Tisher Liner FC Law. We have extensive experience in assisting Owners Corporations in general governance matters and prosecuting and defending VCAT applications.