This case note has been taken from the recently published second-edition of a Guide to ACT Strata Law. A physical copy of the full text can be purchased here.
The applicants applied for orders that ACAT remove and ban the existing executive committee members from holding the position of executive committee member for breach of the executive committee Code of Conduct.
ACAT held that while section 129(2) provided that the Tribunal may make any other order it considers reasonably necessary or convenient to resolve a dispute, that power is limited by the context and purpose of the Unit Titles (Management) Act 2011 (ACT). Part 8 concerns dispute resolution, and sections 125, 127 and 128 (as they then were prior to 1 November 2020) made it clear that these are disputes “relating to an owners corporation” between various people. While section 129 provides for orders that a party do or not do something, removing and banning a member from holding a position on the executive committee generally does not resolve the type of disputes set out in Part 8. This action effectively punishes a person for past behaviour and prevents future, but unspecified, behaviour (it is not about whether a person should or should not do something under the UTMA).
The Tribunal Member admitted that section 129(1)(k) provides for the appointment of an administrator, who can exercise the powers of the executive committee or an office-holder and past actions of the committee or member may be relevant to such an appointment. However, such an order is primarily aimed at providing a circuit breaker for decision-making and a better decision-making regime. Removing and banning particular executive committee members does not do this and it would provide no guarantee about who the replacement members would be. But most importantly there is an express statutory power for taking the significant step of appointing a manager. There is no express statutory power for removing or banning executive committee members, notwithstanding that such a power would have very significant consequences for the executive committee members concerned.
Further, such a power would significantly interfere with the democratic processes of the owners corporation, which are clearly pivotal provisions in the Act and reflect the underlying purpose of the legislation. Owners’ corporations operate as ‘mini-democracies’, with all owners automatically members of a governing body, which generally by a majority of votes makes rules and elects the executive committee to act on their behalf, and which the executive committee in turn generally operates on the basis of a majority of votes. The removal of executive committee members and banning of owners from these positions would remove a democratically elected executive committee member, prevent them from standing for re-election, and prevent members of the owner’s corporation from electing them to the executive committee. This would be a significant interference with the rights of the members concerned to continue and stand again for election, and the rights of all members to have their past choice honoured, and have a free and full choice elections.
The UTMA specifically provides in section 39(5) that an executive committee may be removed by the ordinary resolution that elects another member of the corporation to replace the removed member until the next annual general meeting. This is the appropriate process for removal of an executive committee member, which reflects the democratic nature of the owners corporation. Such a resolution can be subject to review in the Tribunal.
The Tribunal could only make orders removing an executive committee member and banning them from standing for re-election on the basis of an express statutory power. There is currently no such power.
This is general information and should not be considered to be legal advice. You should obtain legal advice specific to your individual situation.
Author: Christopher Kerin