The Strata Schemes Management Act 1996 (SSMA) has a simple political system:
• Every lot owner has a vote;
• Lot owners meet annually to vote on the Executive Committee;
• The Executive Committee then elects the Chairman, Treasurer and Secretary.
The SSMA provides for the executive committee to be as small as one person and as large as nine people. It accepts however that many owners corporations do not have the experience to be able to undertake the functions as required by the SSMA. The SSMA has therefore provided for four types of helpers:
• The Executive committee may co-op persons onto the Executive Committee to assist.
• Section 13 of the SSMA permits the Owners Corporation to employ people to assist them to undertake their functions.
• Section 28 of the Act empowers the Owners Corporation to delegate its functions to a Strata Managing Agent. Section 26 requires the Strata Managing Agent to be licensed as a Strata Managing Agent under the Property, Stock and Business Agents Act 2002 (PSBAA).
• Part 4A of the SSMA states that the owners corporation can engage a caretaker to maintain the common property. The caretaker agreements have a maximum duration of ten years.
The SSMA requires that a strata managing agent can only be appointed pursuant to a written delegation of the owners corporation. Unfortunately, because section 26 requires that a person hold a licence under the PSBAA, the Strata Manager must also comply with Section 55 of that Act. Section 55 requires that to be remunerated, a Licensed Strata Managing Agent must have an agency agreement in writing that complies with the Regulations.
The industry has standard agency agreements and we do not intend to cover this ground. Suffice to say that the agency agreement that is used in the industry at the moment couples as delegations.
The distinction between the duties of a Strata Manager, Caretaker and those appointed pursuant to section 13 are somewhat clouded. The question often arises about when a person needs to hold a licence. In the case of Owners Corporation SP56443 v Regis Towers Real Estate, the issue of delegation was considered. In simple terms, Justice Hodgson stated that a person required a strata managing agents license when they received delegated powers. Delegated powers are when the owners corporation relinquished authority to make decisions in relation to their functions. It was argued by Justice Hodgson that a Licensed Strata Manager has the power to conduct certain functions without recourse to discussion with the owner’s corporation. A person who is assisting or is appointed as a caretaker should not be able to do anything without authority. They may make decisions as to how they carry out their functions, but they cannot make determinations about the functions themselves.
Part 4A was introduced in 2003 as a means of resolving this problem. It was meant to clearly define the difference of a Caretaker and a Licensed Strata Manager. It has not unfortunately because many Caretakers are still receiving delegated power. It is a matter which is now starting to rear its head.
Interestingly enough, amendments were moved so that owners corporations could dismiss unconscionable Caretakers with ease. What is interesting is that no cases have been heard under Part 4A since the inception of that amendment. Maybe, just maybe, Parliament got it wrong, because they were focusing on the wrong issues.
Until next time
Bailey Compton and the team at Leverage Australia & The Australian College of Professionals.
