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Legislative Council - Fifty-Second Parliament, First Session (52-1)
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STATUTES AMENDMENT (COMMUNITY AND STRATA TITLES) BILL

Second Reading

Second reading.

The Hon. G.E. GAGO (Minister for Regional Development, Minister for Public Sector Management, Minister for the Status of Women, Minister for Consumer Affairs, Minister for Government Enterprises, Minister for Gambling) (22:38): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation inserted in Hansard without my reading it.

Leave granted.

This Bill will improve protections for consumers who buy into or own units in strata and community titled developments. Greater protections are required for community and strata title property owners, especially those that engage strata managers.

This project started with calls to introduce licensing of body corporate managers. It became clear, however, during early consultation that the concerns of unit owners extend beyond concern about the performance of body corporate managers. These concerns are to be addressed in this Bill through specific measures designed to increase the transparency and accountability of body corporate managers as well as giving owners greater access to information about the affairs of their strata or community corporation.

Although this Bill does not introduce licensing or restrictions on who may act as a body corporate manager, the idea has not been abandoned completely. The National Occupational Licensing System due to commence in mid-2012 will bring in a national licence for property agents. Those jurisdictions that currently regulate body corporate managers will be bound to adopt that licence. It would have been confusing and inefficient to introduce a State-based licence scheme to have that replaced shortly thereafter by the national scheme. It is intended to re-examine the issue of licensing body corporate managers under the National Licensing System once that is operational.

The comprehensive suite of measures contained in this Bill includes pre-contractual and contractual disclosure for body corporate management contracts, restrictions on the duration of such contracts, termination rights in relation to such contracts, better disclosure of conflict of interest and commissions as well as restrictions on the grant and exercise of proxies for body corporate voting and a penalty notice system for by-law and article breaches. Concerns about the actions of developers during the period of establishing a new community titled development are addressed by making it clear that a developer is a fiduciary of the community corporation and must act in the interests of the corporation as it will be constituted after the developer ceases to control the corporation.

A significant new consumer protection initiative will accompany this Bill. A dedicated strata information and advice service will be established to provide unit owners with information about the rights and obligations attaching to community and strata titled properties. Another message that emerged strongly through the development of this Bill was that unit owners are confused about their rights and obligations and about where to turn for information. Once armed with this information, many of the disputes between unit owners and their body corporate or body corporate manager can be avoided.

The law of agency already prohibits some allegedly common abuses by body corporate managers, such as the making of secret profits at the expense of the body corporate. A body corporate manager is an agent of the body corporate. Agents owe their principals duties of good faith and not to make improper use of the manager's position to gain, directly or indirectly, an advantage personally or for any other person. The Bill is intended to augment these duties. While the Bill and the existing legislation impose criminal sanctions for breaches of duties such as failure to disclose conflicts of interest, these provisions are not intended to derogate from the common law fiduciary duties.

History of the Bill and consultation

This project started with the release of a discussion paper by the former Attorney-General, the Hon. Michael Atkinson MP in late 2003, which canvassed opinion on a wide range of possible reforms to the regulation of community and strata titles. That was followed up with a private member's inquiry into this area initiated by the Hon. John Rau MP.

That early consultation led to the drafting of a Bill to amend the Community Titles Act and Strata Titles Act, which was released for consultation with affected parties in December 2008. Comment was invited on the draft Bill from organisations likely to have an interest in the Bill as well as people who had written to the Attorney-General in recent years with complaints or concerns about strata matters. It soon became clear that many members of the community wanted to have a say on this issue and so the consultation was opened up to the general public.

The draft Bill was significantly revised as a result of that consultation, in particular to remove provisions that would have changed how community and strata corporation finances were managed.

In light of the significant changes to the draft Bill, the revised Bill was released for a further brief period of public consultation in December 2010, as a result of which further adjustments have been made to the Bill.

During consultation on the draft Bill comment has been received from over 50 respondents, including the National Community Titles Institute (NCTI), the Property Council (SA Division), the Commissioner for Consumer Affairs, the Law Society, the Legal Services Commission, the Real Estate Institute of South Australia, the Australian Institute of Conveyancers (SA Division), several strata managers and a number of strata owners.

There was broad support for most of the measures contained in this Bill. The NCTI and individual body corporate managers who commented supported the proposed disclosure and insurance requirements for managers. The NCTI was concerned with, and later opposed, the proposal to provide for termination of contracts with managers.

In parallel with finalising the draft Bill, work has been undertaken on the feasibility of establishing a specialist information service on community and strata title matters. It became clear from consultation that many unit owners are confused about their rights and obligations under the community and strata titles legislation and unsure about where to turn for information and advice. There have been discussions with the Real Estate Institute and Institute of Conveyancers about funding such an initiative from the Agents Indemnity Fund administered under the Land Agents Act and Conveyancers Act. The Government appreciates their strong support for this significant new consumer protection initiative, which is underpinned by amendments contained in this Bill.

Rights to terminate contract with body corporate manager

When a community corporation comes into existence, the lots are owned by the developer. The developer therefore has control over the corporation and can appoint the body corporate manager. There have been some cases reported interstate where developers are said to have auctioned body corporate-management rights for terms as long as 25 years. The developers receive the money from the sale of the rights and leave the incoming owners bound to pay management fees that are well above market rates. Future owners are bound by the contract with the body corporate manager, even if its terms are unfavourable.

The legislation as it currently exists is based on the notion that corporations are responsible for running themselves and that, where used, a manager would assist the corporation rather than effectively run it. Currently the Community Titles Act provides that a community corporation may revoke a delegation of its functions to a body corporate manager at any time, even if there is an agreement to the contrary. If the delegation of power is revoked, as can now happen in the case of a community corporation, then the manager is no longer able to act for the body corporate. The Government had intended to give full effect to this provision by providing that a management contract could also be terminated, that is, that corporations ought not to be locked into using the services of a manager for a fixed period.

The Government has accepted submissions that there ought at least to be an initial period of certainty, in particular where a new development is being set up, as well as a period of transition allowed for in the event that a corporation does want to dispense with the services of a manager, hence the Bill provides for an initial period of 12 months in which a manager can lock in a corporation under contract but after which the corporation has the right to terminate the contract with 28 days notice.

Pre-contractual and contractual disclosure

Neither the Community Titles Act 1996 nor the Strata Titles Act 1988 defines the role of the body corporate manager. The Community Titles Act limits the functions of the corporation that can be delegated, thereby setting bounds to the manager's authority, but, within those bounds, the functions that the manager is to perform are a matter of contract. Unless promises are clear, disputes will arise. The Bill requires that contracts for the management of a corporation be in writing and must specify:

the term of the contract;

termination rights;

the functions that are delegated to the manager; and

the charges that will be made for the services provided under the contract.

Other contractual provisions may be required by Regulation and at this stage it is intended to prescribe the following provisions:

that the manager promises that he or she is insured as required by law and will maintain that insurance throughout the life of the contract; and

that each member of the corporation has the right at any time in business hours to inspect the records of the corporation in the possession or control of the manager, and how inspection can be arranged.

A copy of the proposed contract is to be available for inspection by any owner at least five clear days before a vote is taken to appoint a body corporate manager. It should also attach a copy of the manager's current certificate of insurance as well as prescribed documents demonstrating the person's eligibility to act as a body corporate manager (for example, a statutory declaration as to eligibility). Before entering into the contract, the body corporate manager will have to give the owners a prescribed pamphlet that explains the role of the manager and sets out the rights of the corporation and its members, including the rights to:

inspect records held by the manager;

revoke the delegation of a particular function;

appoint the manager as a proxy and to revoke that appointment; and

be told of any payment or benefit that the manager receives from another trader for placing the corporation's business.

Compulsory insurances

Commercial body corporate managers will be required to maintain throughout the life of the management contract a policy of professional indemnity insurance providing cover of at least the amount prescribed by regulation. It is intended to prescribe the figure of $1.5 million per claim, which is derived from the equivalent requirement under the Victorian Owners' Corporations Act. It is known that many body corporate managers already buy this insurance out of prudence.

Nearly everyone who has commented on this proposal to date supported it. Two commentators raised the problem of hobbyists who act as managers for just a handful of bodies corporate and could not easily raise the likely premium. However, the risk insured against is substantial. A manager who, for instance, forgets to insure the common property of even one corporation puts the owners at risk of substantial loss.

The corporation itself will also be required to buy fidelity guarantee insurance, covering the risk of theft or fraud of the corporation's funds by the manager or other persons authorised to handle the funds (for example, committee members). Such insurance is sometimes automatically included with community and strata building insurance policies. The amount of the cover will be prescribed and is proposed to be at least the maximum total balance of the corporation's bank accounts at any time in the last three years or $50,000, whichever is higher.

Both of these insurance requirements will be subject to Ministerial exemption in case problems arise with availability of the insurance.

Meetings, proxies and disclosure of conflicts

Participation in meetings remotely

Neither the Community Titles Act 1996 nor the Strata Titles Act 1988 provides for owners to participate in meetings by telephone, video-link or internet. The Bill provide for this, where facilities exist, at the expense of the owner concerned.

Court power to convene strata corporation meeting

An owner may need to call a meeting of the corporation. An owner who wants to sell his or her unit, for example, must provide information about the financial state of the corporation to a potential purchaser. Meetings can be convened with the approval of 20% of members, but in some circumstances it might be difficult to obtain even this level of approval. The Community Titles Act 1996 provides, as an alternative, for a meeting to be convened by order of the Magistrates Court. The Strata Titles Act 1988 is amended to the same effect.

Length and revocation of proxies

Purchasers of new lots off-the-plan are sometimes asked to assign their right to vote to the developer, whether by proxy or by power of attorney. The assignment is often expressed to be irrevocable. The Community Titles Act 1996 gives owners an express right to revoke a proxy at any time but the Strata Titles Act 1988 is silent about this. The Bill amends that Act to make clear that the appointment of a proxy or a power of attorney can be revoked at any time and that any agreement to the contrary is ineffectual. Also, having appointed a proxy is not to prevent an owner from attending the meeting and exercising his or her vote in person.

The Bill ensures that an owner is still entitled to receive notices of meetings, although these can go to a proxy as well if the corporation agrees. The Bill also limits the life of proxies to no more than 12 months under both Acts. This will compel the owner to take a decision at least every year about whether to take part in meetings in person or by proxy and, if the latter, whom to appoint. Further, a proxy appointing the body corporate manager will lapse automatically if the appointment of the body corporate manager ends.

Disclosure of conflicts of interest

The interests of holders of proxy votes may sometimes conflict with the interests of the owners they represent. A body corporate manager may, for example, hold a proxy vote for a meeting at which there is a motion to appoint a new manager. Proxy notices are required to be given to the secretary of the corporation, who is required to ensure that they are available for inspection at meetings prior to voting. If the manager holds any proxy or power of attorney for the meeting, he or she will be required to produce this for inspection at the meeting before any vote is cast by proxy or power of attorney.

Other people who vote at meetings may also have a conflict of interest. Later discovery of the conflict can cause disputes among members. Under the Bill all members of the corporation and any proxies or attorneys who attend the meeting on their behalf have to disclose any interest that they or their principals have in matters being considered by the corporation.

Chairing of meeting by body corporate manager

Often there is no member of the corporation who wishes to chair the meeting and the body corporate manager is asked to do so. The Bill provides that a body corporate manager may chair the meeting if a majority of those present votes for this. The Regulations will provide that a body corporate manager may only vote if the manager holds specific proxies to this effect and only after telling the meeting at the outset:

that he or she may only chair the meeting if a majority of those present vote for this; that he or she has no right to vote, except when exercising a specific proxy for a member;

whether he or she holds any and what proxies for this meeting and that they are available for inspection; and

that he or she has no right to prevent any member from moving or voting on any motion.

Timing of meetings of secondary and tertiary corporations

At present, under section 82 of the Community Titles Act, a primary corporation must hold its annual general meeting within three months after the end of each financial year. A secondary corporation must then hold its annual general meeting within one month after the meeting of the primary corporation. By section 86, however, any secondary corporation that is a member of the primary corporation is entitled to vote at a meeting of the primary corporation, if authorised to do so by its members. Further, if a proposed resolution of the primary corporation is a special or unanimous resolution, then the vote of the secondary corporation on that matter will, in turn, require a special or unanimous vote of the secondary corporation. Notice of such resolutions will only be given within the weeks before the proposed meeting. In practice, therefore, there will need to be a meeting of the secondary corporation before the meeting of the primary corporation, but after the distribution of the agenda for that meeting, so that the representative of the secondary corporation knows how he or she must vote at the meeting of the primary corporation. The minimum notice period for an annual general meeting is 14 days. The result is that a secondary corporation may have to meet within 14 days before the annual meeting of the primary corporation and again within one month thereafter. Otherwise, the secondary corporation will not be able to take part in the running of the primary corporation. The tertiary corporation, if there is one, faces similar difficulties.

The Bill removes the requirement that the secondary and tertiary corporations must meet within one month after the annual general meeting of the primary corporation. It is enough to require them to hold an annual general meeting for a financial year by 31 December of the next year. Corporations are free to hold the meeting either before or after the meeting of the primary or secondary corporation.

By-laws and articles

Penalty notices for breach

The Community Titles Act 1996, by section 34, provides that the by-laws may impose a penalty of up to $500 for breach of a by-law. The Strata Titles Act 1988, however, does not provide for such penalties. The Bill rectifies this and provides that a higher maximum fine of $2,000 should be available where the scheme includes only non-residential lots. Further, the corporation under either Act will be able to issue a notice requiring a member or occupier to comply with a by-law within a specified time and warning that if this is not done, a penalty will be incurred. If satisfactory action is not taken, the corporation can issue a notice requiring payment of the penalty. The recipient can apply to the Magistrates Court within 60 days for an order that no penalty is payable but otherwise the amount is recoverable as a debt due to the corporation. An unpaid penalty will also be recoverable by the corporation on the sale of the unit, in the same way as unpaid levies.

The Court is empowered to revoke a penalty notice if satisfied that the breach was trifling in the circumstances. The issue of continuing breach has been left to the general law as the question of when continued action or lack of action amounts to a new breach is a complex one that will depend on the particular circumstances.

Corporations should notify tenants before they enter premises to carry out work

A corporation can issue a notice to an owner to carry out work on the owner's unit. If he or she does not, the corporation can arrange for a person to enter the property and carry out the work and can recover the cost from the owner. Although the owner must be given reasonable notice of the proposed entry, there is no requirement for the corporation to notify tenants. The owner ought to notify the tenant, but an owner who has disregarded a notice to carry out work might also disregard the duty to notify the tenant. The Bill amends both the Community Titles Act 1996 and the Strata Titles Act 1996 to require a corporation to give written notice to an occupier, before exercising a power of entry to carry out work. It will be sufficient for the corporation to leave the notice, addressed to the occupier, in a mailbox belonging to the unit. Two days' notice will be required, except where urgent action is necessary to avert a risk of death or injury or significant damage to property.

Remedy for discrimination against unit owner

The Community Titles Act permits an owner to apply to the Magistrates Court for a remedy if a by-law is made that reduces the value of the unit or unfairly discriminates against the owner. The application must be made within three months of the date this happens or of the date on which the owner should reasonably have found it out. An application can be made only by a person who is an owner at the time the by-law is amended. That is because a person should not be able to complain of a by-law that already existed when he or she bought the unit.

It is common, however, for lots in new community schemes to be bought off the plan. In that case, the buyer does not become the owner for some time after the contract is made. A person who has signed a contract to buy a lot should have the same rights as an owner in respect of a by-law made after the date of contract that reduces the value of a unit or unfairly discriminates against the person. The Bill amends the Community Titles Act to that effect.

The Strata Titles Act does not provide a similar remedy for the owner of a strata unit if the articles are amended in a way that reduces the value of the unit or unfairly discriminates against that owner. The Bill provides for the same rights under the Strata Titles Act.

Insurance and maintenance of buildings

Under the Strata Titles Act, the buildings in a strata scheme are common property and so are insured by the corporation. Under the Community Titles Act, however, buildings (other than those divided by a strata plan) are the property of individual lot owners and the responsibility to insure lies with them. The Act compels insurance only where one building provides an easement of shelter or support to another, for instance, where they have a party wall. Even then, the mechanism of compulsion is to make failure to insure a criminal offence. The Act requires these owners to give the corporation a copy of the current certificate of insurance, again on pain of criminal penalty. That does not assist the other owners if, in fact, no insurance has been arranged.

Concerns were expressed some years ago by the Real Estate Institute and some body corporate managers that this approach might not adequately protect owners in community schemes. It is said that many owners would prefer the security of knowing that all the buildings in the scheme are insured and would also like the convenience and economy of dealing with a single insurer through the agency of the corporation. Often, the by-laws of a scheme are drafted so as to permit the corporation to arrange insurance of all the buildings. The validity of this approach seems not to have been challenged.

The members of a community scheme, by majority vote, should be able to agree to insure some or all of the buildings in a community scheme through the agency of the corporation if they wish. Such a vote authorises the corporation to arrange the insurance and to collect the premium from the owners according to their lot entitlements. The Bill amends the Act to make it clear that the by-laws may so provide.

As an added protection, both Acts will be amended to require the agenda for annual general meetings to include presentation of copies of all required insurance policies to encourage annual review of these policies and to impose timeframes for providing evidence of insurance status to the corporation or a unit owner.

Register of owners

The corporation will be required to keep a list of the contact details of the unit owners and make these available to other unit owners on request. This will help a unit owner who is trying to convene a general meeting.

Access to records

The corporation already has a statutory right to require anyone holding its property, including records, to return the property in response to a notice. The Bill introduces two further rights. First, all owners will be entitled to inspect any records of the corporation in the possession or control of the body corporate manager within three business days of a written request. Second, the corporation will be required to send copies of the bank statements of the corporation each quarter to any owner who asks unless a body corporate manager is handling the corporation's money, in which case the manager will be required to send a quarterly financial statement to an owner on request. In the case of a community corporation, accounts for the previous financial year must be presented to each annual general meeting. The Bill stipulates this also for strata corporations.

Time limits are also introduced for the provision of other information. In particular, the corporation will have five business days to provide a statement detailing the financial situation of the corporation and copies of general meeting minutes, most recent statement of accounts and insurance policies. This information is generally sought for prospective purchasers and it is important for the sale process that this information is provided promptly.

Corporation funds: mandatory sinking fund budget

Apart from two-lot corporations, all community corporations must establish a sinking fund for irregular maintenance or capital works and make annual estimates of future spending (section 116 Community Titles Act). Contributions to the sinking fund can, however, be set at negligible levels. Under the Strata Titles Act, there is no requirement to have a sinking fund or to estimate future spending. The Government is not persuaded that the law should require all strata corporations to establish sinking funds. To improve planning, however, and to encourage such funds, strata and community corporations other than the small groups should have to prepare a forward budget for maintenance and capital works. The Bill provides for compulsory budgets of prescribed duration, up to five years, for groups of various sizes. It is intended that a minimum three year budget (or statement of proposed expenditure) be prescribed for medium sized groups (e.g. of between seven and 20 units) and a minimum five year budget for large groups (e.g. larger than 20 units).

Audit

In the case of community corporations without managers that have more than six lots or collect more than $3,000 income a year, the corporation is obliged to have its accounts audited annually under the current law (s138). There is no corresponding obligation on strata corporations. The Bill will not change this. In New South Wales, audits are not required for corporations of fewer than 100 lots. In the case of small schemes, the sums handled are not likely to be large (probably under $10,000 per year) and the accounts will often be quite simple. Many of the owners will be able to follow these accounts for themselves and the extra cost of an audit would be an unnecessary impost.

In the case of community corporations, it is proposed to retain the requirement but to exempt corporations that collect no more than $10,000 per year, as well as those with no more than six lots and those that are owned wholly by one person. The Bill provides that any owner may apply to the Magistrates' Court for an order requiring an audit. The Court could order that the corporation must pay for the audit. Alternatively, any member could obtain copies of the financial records from the corporation and arrange an audit at his or her own expense and then apply to the Court for reimbursement of the cost from the corporation. This is a safeguard so that if a member has suspicions about the accounts, he or she will be able to have them independently checked, even if the majority of owners is unconcerned.

In the case of audits of the body corporate manager's trust account, the auditor will be required to send a copy of the audit report to the secretary of the corporation rather than simply filing the report in the manager's office as is reported to occur.

Dispute resolution

The Community Titles Act provides, by section 142, for an owner to apply to the Magistrates Court for a remedy if prejudiced by the wrongful act of a delegate of the corporation, including a manager, or if he or she claims that the delegate's decision is unreasonable, oppressive or unjust. The Bill includes a corresponding provision in the Strata Titles Act.

The Court may, on application, make orders resolving a dispute, including orders:

requiring a person to provide reports or information

requiring a person to take action to remedy a default

requiring a person to refrain from specified further action

altering the articles or by-laws

varying or reversing a decision of the corporation or

giving judgment on a money claim.

Without cutting down the general power to make such orders as are necessary to resolve the dispute, the Bill enables the court to also:

declare that a vote has been validly or invalidly taken and

declare that a by-law or article is valid or invalid.

Contracts made while the corporation was controlled by the developer

By section 87(3), once a developer sells even one lot, it loses control of the corporation. The developer is then treated as having the same number of votes as the other owners combined. As it is thought to be common for developers to require that purchasers appoint the developer as a proxy, however, the developer should be treated as controlling the corporation as long has it is in a position to control the corporation using proxy votes that are not subject to written directions on the exercise of the vote. Other examples have been cited of developers including a requirement in the by laws that a corporation must enter into an agreement with a certain service provider. Victoria has addressed the issue by a requirement that the developer act in the interests of the corporation.

This is consistent with the decision of the New South Wales Supreme Court in the case of Community Association D. P. No. 270180 v Arrow Asset Management Pty Ltd, handed down on 30 May, 2007. That case confirmed that a developer owes a fiduciary duty to a community corporation by analogy with the duty owed by a promoter to a company. This means that the developer must not act in conflict of interest and must not make secret profits. That decision is persuasive, but not binding, authority in South Australia so the Bill states, for the avoidance of doubt, that a developer stands in a fiduciary relationship with the community corporation or proposed community corporation of the development. Further, without derogating from these general duties, the Bill provides that where corporation intends, during the developer control period, to delegate functions or powers to a body corporate manager or to enter into a contract for services, the developer must exercise reasonable skill, care and diligence and act in the best interests of the community corporation (as it will be constituted after the developer control period ends).

This approach should deal with the variety of ways in which a developer may prejudice a future body corporate whilst still in control of a new development.

In addition, the Bill gives the Court power to vary or terminate an agreement between a body corporate and a developer, body corporate manager or associate of either where the contract involves a breach of fiduciary duty or other duties under the Act.

Voting and special resolutions

Special resolutions are required for decisions such as changing the by-laws, giving permission for substantial alterations to the buildings or taking out insurance over and above that required by law.

Under the Strata Titles Act, a special resolution is passed if two-thirds of all lot holders vote for it at a validly-convened meeting. Thus, in a group of 15 units, at least 10 owners must vote in favour for the resolution to pass. If fewer than 10 owners attend the meeting, the resolution cannot pass, even though the members not attending might have no strong views on the resolution. The Community Titles Act takes a different approach. Under that Act, a special resolution is passed if no more than 25% of all lot holders vote against it at a validly-convened meeting. Thus, for example, in a group of 16 units, if nine owners attend the meeting and four of them vote against the resolution, it will pass even though it has the active support of only five of the 16 members. The result is that a special resolution is much more easily achieved under the Community Titles Act, because it is not defeated by those who are indifferent but can only be defeated by those who are actively opposed.

A meeting is only validly convened if 14 days' notice has been given to all owners, including notice of the text of the proposed special resolution. That means that anyone concerned about the resolution has his chance to vote.

The Bill amends the Strata Titles Act to match the Community Titles Act so that a special resolution is more easily achieved, that is, such a resolution could not be defeated by apathy but only by active opposition. The notice of meeting will include a statement that anyone opposed to the resolution should ensure that he or she makes arrangements to vote against it, because it will pass unless at least 25% of units vote against it.

Deposits for off-the-plan sales to be held in trust

Purchasers of units in yet to be constructed developments, who buy 'off-the-plan', pay a deposit. Several other jurisdictions (at least Queensland, Victoria and Western Australia) require off-the-plan vendors to pay all deposits to a stakeholder, such as a lawyer or land agent, who holds the money in trust until the plan is registered. Western Australia's former Strata Titles Referee advised that this provision does not deter development. Developers obtain finance to complete developments by borrowing against the security of the trust funds.

To protect consumers who provide large deposits, the Bill amends the Community Titles Act 1996 so that developers who sell off-the-plan are required to pay deposits to a solicitor's, conveyancer's or land agent's trust account to be held on trust for the buyer until the plan is deposited and lots created. This is intended to protect the buyer in that the developer cannot spend the deposit, leaving the buyer exposed if the development does not proceed.

Developers' agents often suggest that early starts on new developments are expected, creating an expectation and allaying concerns, whilst developers cover themselves in sale contacts with extended periods, in years, for commencement of projects and include the ability to terminate contracts for lack of sales. Marketing may start before any plan is lodged with the Council. The Bill provides that if no plan has been deposited within the agreed time, required to be prominently set out in the contract for sale, the buyer can rescind the contract and recover the deposit. If an agreed period is not specified prominently in accordance with the prescribed requirements, a default period of six months applies.

First general meeting and voting—associates of developer

By section 79, a general meeting must be convened within three months from the date on which two or more community lots are first owned by different persons. The Bill amends this section to make clear that the developer and an associate of the developer are not 'different persons'. The same principle applies to the value of votes under section 87(3). The value of votes exercisable by the developer and any associates, taken together, is not to exceed the value of the votes of other owners.

Email communications

Both Acts provide for documents to be served by post. Some body corporate managers take the view that all communications with owners must be by post, even when owners wish to receive them by email. The Bill makes it clear that service can be effected by email if the recipient agrees.

Development contract enforcement

Under the Community Titles Act, a development contract is required where a community parcel is to be divided in stages or where the scheme description indicates that a developer is (or is likely) to erect buildings or other improvements on the common property. This can include completion of works on common property such as landscaping and fencing common areas. The development contract requires the developer to carry out this further work or development in accordance with the scheme description.

There is no statutory requirement to comply with a development contract (other than where these requirements might also be conditions of development approval). Enforcement therefore relies on owners taking legal action. The Community Titles Act provides that a community corporation, or lot owners, may enforce the development contract in a 'court of competent jurisdiction'. Accordingly, this would be either the Magistrates Court or District Court, subject to the monetary limits on the jurisdiction of the Magistrates Court. To minimise the costs for owners to enforce development contracts the Bill amends the Community Titles Act to give the community corporation and owner or occupier of a lot the right to apply to the Magistrates Court to enforce a development contract.

It has been brought to the Government's attention that in some cases the works to be completed include basic infrastructure such as access roads and water and electricity connections to the individual lots. There has also recently been a community titled development where the developer became insolvent before satisfactorily completing works on common property.

In ordinary torrens titled subdivisions councils enforce requirements for completion of works such as access roads, landscaping of open space, connection of services, etc as this infrastructure and open space vests in councils on completion. They do this by taking security from developers such as bonds or bank guarantees. The Government is concerned about purchasers of lots in community titled developments being at a comparative disadvantage when it comes to ensuring developers satisfactorily complete works on common property. Councils have expressed some preparedness to play a greater role in enforcing satisfactory completion of infrastructure works on community titled developments and it is intended to explore that option further separately to this Bill.

However, recognising that that may not eventuate, it has been decided to include in this Bill a mechanism to enable requirements to be placed on developers to provide security for fulfilment of their obligations under development contracts. The requirement itself and details of the form of security would be imposed by regulation. This step is taken without having yet explored or consulted on acceptable forms of security, however it is envisaged that this would be either a bank guarantee or a form of insurance similar to the building indemnity insurance that builders must take out to cover owners for the risk that a builder goes bankrupt before completing domestic building work. There is a risk that a workable scheme for providing this security will not be identified and cannot be prescribed. However, this mechanism has been included in the Bill to enable this issue to be dealt with by regulation as soon as investigations and consultation about the provision of security is complete, without needing to return to Parliament with another Bill.

Termination of schemes for redevelopment

Developers have expressed concern about one or two objecting owners impeding a majority of other owners from terminating or amending a strata scheme to redevelop the land (and thereby potentially unlock greater value in the land). Presently it is possible where owners are not unanimous to apply to the Court for an order to terminate a strata or community scheme. It is proposed to make this process more accessible by providing for applications to cancel or amend a strata or community plan to be heard in the Environment, Resources and Development Court rather than the District Court (under the Community Titles Act) or the Supreme Court (under the Strata Titles Act). Applications to the ERD Court are cheaper and the ERD Court is practised in dealing with applications of a planning nature.

It is also intended to prescribe matters to which the Court should have regard in assessing such an application. Some of the proposed factors intended to be prescribed include the relative percentages of owners for and against cancellation or amendment, the adverse consequences to the minority if the Court grants the application and conversely to the majority if the Court refuses the application and the extent to which these could be ameliorated or alleviated by court-ordered or other action.

Housing Improvement Act

The Bill clarifies the relationship between the Community Titles Act and Strata Titles Act and the Housing Improvement Act, under which a council can require an owner to rectify or demolish a building. The council's powers will apply to buildings that form part of a strata or community titled development, without the need for approval of the works by the corporation.

Strata and community title information service and enforcement

This Bill lays the foundation for the establishment of a dedicated community and strata title information and advice service by providing that the service may be funded from money in the Agents Indemnity Fund administered under the Land Agents Act and Conveyancers Act. One of the existing purposes of that Fund is to fund education programs about real estate matters for the benefit of members of the public. This is therefore a logical application of that Fund. Similarly, the Bill provides that that Fund can be used to pay for investigation and prosecution of breaches of the community and strata titles legislation and confers power to prosecute breaches of the legislation on the Commissioner for Consumer Affairs.

I commend the Bill to Members.

Explanation of Clauses

Part 1—Preliminary

1—Short title

2—Commencement

3—Amendment provisions

These clauses are formal.

Part 2—Amendment of Community Titles Act 1996

4—Amendment of section 3—Interpretation

This clause inserts a number of definitions for the purposes of the measure and amends the definitions of special resolution and unanimous resolution to allow the regulations to prescribe information that must be given in the notice given prior to the resolution.

5—Amendment of section 4—Associates

This clause makes the definition of associates have general application (rather than just applying in relation to developers as is currently the case).

6—Amendment of section 34—By-laws

This clause amends section 34 to allow by-laws to authorise or require a community corporation to act as agent for the owners in arranging policies of insurance and to set out a scheme allowing community corporations to enforce their by-laws by serving penalty notices. The maximum penalty that may be imposed by such a notice is $2,000 (for predominantly commercial schemes) and $500 in other cases. A person served with a notice may apply to the Magistrates Court for an order revoking the notice.

7—Amendment of section 35—By-laws may exempt corporation from certain provisions of Act

This is consequential to the amendments in clause 18 and the new definition of first statutory general meeting.

8—Amendment of section 37—Restrictions on making of by-laws

This is consequential to the new by-law making power relating to policies of insurance.

9—Amendment of section 38—Certain by-laws may be struck out by Court

This clause makes minor drafting amendments and extends the ability to apply for a by-law to be struck out to a person who has contracted to buy a lot (where currently it is only owners who are able to apply).

10—Amendment of section 47—Development contracts

This clause provides that the regulations may require a developer to provide security of a specified kind to a community corporation in accordance with the regulations in relation to the performance of the developer's obligations for the implementation of the scheme description.

11—Amendment of section 49—Enforcement of development contract

This clause provides for proceedings for enforcement of a development contract to be brought in the Magistrates Court (but with the capacity to transfer the proceedings in appropriate cases).

12—Amendment of section 59—Amendment by order of ERD Court

This clause requires the ERD Court (rather than the District Court) to deal with applications for amendment of a community plan and contains new notification requirements and an ability to prescribe, by regulation, matters which the Court should have regard to.

13—Amendment of section 64—Cancellation by Registrar-General or ERD Court

This clause gives the ERD Court (rather than the District Court) power to cancel a deposited community plan.

14—Amendment of section 67—Application to ERD Court

This clause substitutes references to the ERD Court (consequentially to clause 13) and contains new notification requirements and an ability to prescribe, by regulation, matters which the Court should have regard to.

15—Amendment of section 69—Cancellation

This is consequential to clause 13.

16—Amendment of section 75—Functions and powers of corporations

This is consequential to clause 17.

17—Insertion of Part 9 Division 1A

This clause proposes to insert a new Division dealing with the delegation of a corporation's functions and powers as outlined below.

Division 1A—Delegations by corporation

78A—Delegation of corporation's functions and powers

This clause provides for a community corporation to delegate its functions or powers to certain other persons by ordinary resolution. This provision is the same as one currently contained within the regulations however it also provides the circumstances in which delegation may be, or is revoked . In the case where a delegation is by contract to a body corporate manager, the delegation is revoked on termination (see proposed section 78B(4)) or expiry of the contract. In any other case, the delegation may be revoked by the corporation at any time and despite any agreement to the contrary.

78B—Body corporate managers

This clause proposes to regulate the relationship between a community corporation and a person who, in the course of carrying on a business and for remuneration, acts as a delegate of the community corporation (a body corporate manager).

It is proposed that a body corporate manager is not entitled to remuneration unless a suitable contract has been entered into with the community corporation, certain information has been provided to the corporation prior to entering into the contract and the body corporate manager maintains appropriate professional indemnity insurance while acting as a body corporate manager.

The clause requires a written contract, containing certain particulars, to be entered into between the body corporate manager and the community corporation at least 5 days after it has been available for inspection by members of the corporation. The clause provides that the community corporation may terminate the contract with at least 28 days notice (or lesser period that may be specified in the contract) if the relevant contract with the body corporate manager has been in force for at least 12 months.

78C—General duties

This clause makes it clear that a body corporate manager stands in a fiduciary relationship with the community corporation and specifies some of the duties of a body corporate manager.

78D—Offences

This proposed clause contains offence provisions that will apply to a delegate of a community corporation. These provisions cover the disclosure of a delegate's direct or indirect pecuniary interests, the provision by a delegate of quarterly financial statements on request, the return of records and property on the revocation of delegations and the availability of records held by a delegate for inspection and provision of a copy.

18—Amendment of section 79—First statutory general meeting

This clause amends section 79 to require the first statutory general meeting of a community corporation to be held after there are at least 2 different members of the community corporation (not including the developer or a person who the developer knows, or ought reasonably to know, is an associate of the developer).

19—Amendment of section 80—Business at first statutory general meeting

This is consequential to clause 18.

20—Amendment of section 81—Convening of general meetings

This clause includes consequential amendments and an amendment to provide that a member may not nominate another person to receive notices of meetings on his or her behalf.

21—Amendment of section 82—Annual general meeting

This clause amends section 82(2) to provide that the annual general meeting of a secondary or tertiary community corporation must be held within 6 months after the commencement of each financial year. Currently this annual general meeting is to be held within one month after the annual general meeting of the primary or secondary corporation of which it is a member (which must be within 3 months after the commencement of each financial year).

22—Amendment of section 83—Procedure at meetings

This clause amends section 83 to allow a person who is a body corporate manager in relation to a corporation, or is an employee of such a body corporate manager, to preside at a meeting of the corporation after a majority vote of those present and entitled to vote. The regulations may make further provision in relation to procedures of a meeting when a body corporate manager presides.

This clause also amends section 83 to provide for a person to attend, and vote, at a meeting by telephone, video-link, Internet connection or any similar means of remote communication, without placing an obligation on the corporation to provide such facilities.

23—Amendment of section 84—Voting at general meetings

This clause amends section 84 in relation to nominations made by an owner of a community lot for another person to vote on his or her behalf. A nomination must be in writing and specify whether it is a general nomination for all meetings and on all matters, or whether it is to be limited to certain meetings or matters (a failure to comply with this provision will invalidate the nomination). A nomination may be subject to any other condition, may only be effective for a maximum period of 12 months and may be revoked at any time by notice in writing to the secretary.

A nomination for a body corporate manager (or employee) to vote on a person's behalf ceases to have effect when the body corporate manager (or employee) ceases to be a body corporate manager in relation to the community corporation.

This clause also provides that an appointment for a person to attend and vote at meetings under a general power of attorney is to be for a maximum period of 12 months unless revoked earlier.

Copies of any nominations or appointments relating to a meeting must be available for inspection at that meeting before any voting occurs.

24—Amendment of section 85—Duty to disclose interest

This clause amends section 85 to require a persons attending and voting, or presiding, at a meeting of a community corporation to declare any direct or indirect pecuniary interest he or she may have in relation to any matter to be voted on at the meeting before the vote is taken.

25—Amendment of section 87—Value of votes cast at general meeting

This clause amends section 87 to take into account the combined voting power of a developer and certain associates of the developer (prescribed associates). The aggregate of the votes of the developer and the prescribed associates may not exceed the aggregate of other owners of community lots (if any).

26—Amendment of section 88—Special resolutions—3 lot schemes

This clause amends section 88 so that the regulations may prescribe additional information that must be served along with the proposed resolution under subsection 88(2)(a) for the resolution to be a special resolution of the community corporation.

27—Amendment of section 101—Power to enforce duties of maintenance and repair etc

This clause amends section 101 in relation to power to enter premises of a community corporation to perform maintenance and repair.

It is proposed to require at least 2 days' notice in writing to be given to an owner and to an occupier before the power to enter a lot for maintenance and repair under subsection 101(2) may be used. Currently the requirement is to give the owner reasonable notice.

It is also proposed to include a new provision for the entry into a lot, by an officer of the community corporation or authorised person, if urgent action is needed to avert a risk of death or injury or significant damage to property in order to carry out work that is necessary to deal with that risk. A person who proposes to enter into a lot under this provision must give the owner of the lot such notice as her or she considers appropriate in the circumstances (if any).

28—Amendment of section 102—Alterations and additions in relation to strata schemes

This clause amends section 102 to provide that subsection 102(1) (which limits the circumstances in which prescribed work may be carried out) does not apply to prescribed work carried out in compliance with a direction under section 23 of the Housing Improvement Act 1940 (which deals with houses declared to be undesirable or unfit for human habitation).

29—Amendment of section 104—Other insurance by community corporation

This clause amends section 104 to require a community corporation (other than a corporation of a kind prescribed by regulation) to maintain fidelity guarantee insurance complying with the requirements prescribed by the regulations. An exemption may be granted by the Minister.

30—Amendment of section 106—Insurance to protect easements

This clause amends section 106 to extend the right to be provided with evidence of insurance to owners, prospective owners, registered mortgagees and prospective mortgagees (where a request is made for such evidence) and to provide that a change to terms and conditions of an insurance policy will also trigger a requirement to provide evidence to the community corporation.

31—Amendment of section 108—Right to inspect policies of insurance

This clause amends section 108 to extend the right to inspect insurance policies to prospective owners and prospective mortgagees and to impose a time limit within which a request to inspect policies must be complied with.

32—Amendment of section 113—Statement of expenditure etc

This clause amends section 113 to include additional information that must be presented by a community corporation to each annual general meeting of the corporation. That additional information is a statement of proposed expenditure (other than recurrent expenditure) for a prescribed period (provided that the regulations cannot prescribe a period of more than 5 years). A community corporation will not be required to update the information every year but new information will be required to be prepared in accordance with the regulations.

33—Amendment of section 126—Keeping of records

This clause amends section 126 to define a time period, namely 5 business days, in which an agent must, at the request of a community corporation, provide the corporation with a statement setting out details of the agent's dealings with the corporation's money. The penalty for a contravention of this provision has been reduced to a maximum of a fine of $500 from $8,000.

34—Amendment of section 127—Audit of trust accounts

This clause amends section 127 to specify that an agent must forward the statement to the secretary of a community corporation.

35—Amendment of section 135—Register of owners of lots

Currently section 135(1) requires a community corporation to maintain a register of the names of the owners of the community lots showing the last known address of each owner. This clause amends section 135(1) to include in that register the last known telephone number and email address of each lot owner and also each owner's lot entitlement.

36—Amendment of section 138—Audit

This clause amends section 138 to provide additional circumstances in which an audit of a community corporation's annual statement of accounts is not required under the Act.

37—Amendment of section 139—Information to be provided by corporation

This clause amends section 139 to require a community corporation to provide information under the section within 5 business days of the application for the information. This amendment also includes additional documents that must be made available for inspection on application by an owner, prospective owner, mortgagee or prospective mortgagee (being any contract entered into with a body corporate manager under proposed section 78B and the register of owners kept under section 135). This amendment also provides for the community corporation to provide an owner of a community or development lot, on application, with statements for all bank accounts maintained by the corporation (unless a body corporate manager maintains the accounts on behalf of the corporation).

38—Amendment of section 141—Persons who may apply for relief

This clause amends section 141 to include a person who has contracted to purchase a community lot in the class of persons who may apply to a court for relief under Part 14 of the Act.

39—Amendment of section 142—Resolution of disputes etc

This clause amends section 142 to expand the powers of a court in relation to dealing with an application under Part 14 of the Act.

40—Insertion of sections 142A and 142B

This clause inserts new sections 142A and 142B.

142A—Holding of deposit and other contract moneys when lot is pre-sold

This proposed clause prohibits the sale of a lot in a proposed community scheme prior to the depositing of a plan of community division in the Lands Titles Office unless any consideration paid by the purchaser prior to the deposit of the plan is paid to, and held of trust by, a legal practitioner, registered agent or registered conveyancer, who must be named in the contract of sale. The contract for sale may be avoided by the purchaser (before the plan of community division is deposited) in the event that this is not complied with or if the proposed plan is not deposited in the Lands Titles Office within an agreed time (which must be specified in the contract in accordance with any prescribed requirements) or 6 months if no time is agreed in accordance with the statutory requirements.

142B—Developer stands in fiduciary relationship with community corporation

This proposed clause clarifies that a developer stands in a fiduciary relationship with the community corporation (or proposed community corporation) and that the duties owed by the developer under this Act are in addition to, and do not derogate from, the duties arising out of that fiduciary relationship.

41—Amendment of section 149A—Applications to Magistrates Court

This clause amends section 149A so that it will not apply to an application under section 49(2).

42—Substitution of section 152

This clause deletes the provision on vicarious liability for management committee members and substitutes a provision allowing for prosecutions to be commenced by the Commissioner for Consumer Affairs, an authorised officer under the Fair Trading Act 1987 or a person who has the consent of the Minister to commence the prosecution.

43—Amendment of section 155—Service

This clause amends section 155 to provide for the service of a notice under the Act by email if the person receiving the notice consents to service by email.

44—Insertion of section 155A

This clause allows money in the indemnity fund maintained under the Land Agents Act 1994 to be applied toward the costs of investigations and prosecutions under the Community Titles Act 1996 and the cost of prescribed advisory services or educational programs.

45—Amendment of section 156—Regulations

This clause amends section 156 to provide for the regulations to assign specified functions to an officer of a community corporation of a specified class.

Part 3—Amendment of Strata Titles Act 1988

46—Amendment of section 3—Interpretation

This clause inserts a number of definitions for the purposes of the measure and amends the definition of special resolution.

47—Amendment of section 13—Amendment by order of Court

This clause amends section 13 to make the ERD Court the relevant court to hear and determine applications to amend a strata plan and contains new notification requirements and an ability to prescribe, by regulation, matters which the Court should have regard to.

48—Amendment of section 17—Cancellation

This clause amends section 17 to make the ERD Court the relevant court to hear and determine applications to cancel a strata plan and contains new notification requirements and an ability to prescribe, by regulation, matters which the Court should have regard to.

49—Amendment of section 19—Articles of strata corporation

This clause amends section 19 to provide that the articles of a strata corporation may, by notice, impose a penalty for contravention of, or failure to comply with, any article. The maximum penalty is $2,000 (for predominantly commercial schemes) and $500 in other cases. A person served with a notice may apply to the Magistrates Court for an order revoking the notice.

50—Insertion of section 19A

This clause inserts a new section 19A providing that any articles of a strata corporation may be struck out by order of the Magistrates Court or the District Court if they reduce the value of a unit or unfairly discriminate against a unit holder. A unit holder (including a person who has contracted to purchase a unit) may apply to a court if he or she was a unit holder when the articles came into force and an application must be made within 3 months after the person first knew, or could reasonably be expected to have known, that the articles had been made.

51—Insertion of section 26A

This clause inserts proposed new section 26A that provides a strata corporation can only delegate its functions or powers to the extent permitted by Division 2A (see clause 53).

52—Amendment of section 27—Power to raise money

This clause amends section 27 to provide that a strata corporation may, by ordinary resolution, permit contributions to be paid in instalments and fix (in accordance with the regulations) interest payable in respect of a contribution, or an instalment of a contribution, that is in arrears.

53—Insertion of Part 3 Division 2A

This clause proposes to insert a new Division dealing with the delegation of a corporation's functions and powers as outlined below.

Division 2A—Delegations by strata corporation

27A—Delegation of corporation's functions and powers

This clause provides for a strata corporation to delegate its functions or powers to certain other persons. The clause also provides that a strata corporation may revoke a delegation in certain circumstances. In the case where a delegation is by contract to a body corporate manager the delegation is revoked on termination (see proposed section 27B(4)) or expiry of the contract. In any other case the delegation may be revoked by the corporation at any time and despite any agreement to the contrary.

27B—Body corporate managers

This clause proposes to regulate the relationship between a strata corporation and a person who, in the course of carrying on a business and for remuneration, acts as a delegate of the strata corporation (a body corporate manager).

It is proposed that a body corporate manager is not entitled to remuneration unless a suitable contract has been entered into with the strata corporation, unless certain information has been provided to the corporation prior to entering into the contract, and the body corporate manager maintains appropriate professional indemnity insurance while acting as a body corporate manager.

The clause requires a written contract, containing certain particulars, to be entered into between the body corporate manager and the strata corporation at least 5 days after it has been available for inspection by members of the corporation. The clause provides that the strata corporation may terminate the contract with at least 28 days notice (or lesser period that may be specified in the contract) if the relevant contract with the body corporate manager has been in force for at least 12 months.

27C—General duties

This clause makes it clear that a body corporate manager stands in a fiduciary relationship with the strata corporation and specifies some of the duties of a body corporate manager.

27D—Offences

This proposed clause contains offence provisions that will apply to a delegate of a strata corporation. These provisions cover the disclosure of a delegate's direct or indirect pecuniary interests, the provision by a delegate of quarterly financial statements on request, the return of records and property on the revocation of delegations and the availability of records held by a delegate for inspection and provision of a copy.

54—Amendment of section 28—Power to enforce duties of maintenance and repair

This clause amends section 28 in relation to power to enter premises of a strata corporation to perform maintenance and repair.

It is proposed to require at least 2 days' notice in writing to be given to an owner and to an occupier before the power to enter a unit for maintenance and repair under subsection 28(3) may be used. Currently the requirement is to give the owner reasonable notice.

It is proposed to include a new provision for the entry into a unit, by an officer of the strata corporation or authorised person, if urgent action is needed to avert a risk of death or injury or significant damage to property in order to carry out work that is necessary to deal with that risk. A person who proposes to enter into a unit under this proposed provision must give the owner of the unit such notice as her or she considers appropriate in the circumstances (if any).

55—Amendment of section 29—Alterations and additions

This clause amends section 29 to provide that subsection 29(1) (which limits the circumstances in which prescribed work may be carried out) does not apply to prescribed work carried out in compliance with a direction under section 23 of the Housing Improvement Act 1940 (which deals with houses declared to be undesirable or unfit for human habitation).

56—Amendment of section 31—Other insurance by strata corporation

This clause amends section 31 to require a strata corporation (other than a corporation of a kind prescribed by regulation) to maintain fidelity guarantee insurance complying with the requirements prescribed by the regulations. An exemption may be granted by the Minister.

57—Amendment of section 32—Right of unit holders etc to satisfy themselves as to insurance

This clause imposes a time limit within which a request to inspect insurance policies must be complied with and extends rights under the section to mortgagees and prospective purchasers and mortgagees.

58—Amendment of section 33—Holding of general meetings

This clause amends section 33 in relation to the holding of general meetings in the following ways:

(a) to enable a meeting to be convened by order of the Magistrates Court (on the application of a person of a class specified in section 41AA);

(b) to provide that a unit holder may not nominate another person to receive notices of meetings on his or her behalf;

(c) to require the notice of a meeting to include an agenda for the meeting including those matters listed in the clause;

(d) to allow a person who is a body corporate manager in relation to a corporation, or is an employee of such a body corporate manager, to preside at a meeting of the corporation after a majority vote of those present and entitled to vote. The regulations may make further provision in relation to procedures of a meeting when a body corporate manager presides;

(e) to provide for a person to attend, and vote, at a meeting by telephone, video-link, Internet connection or any similar means of remote communication, without placing an obligation on the corporation to provide such facilities.

59—Insertion of section 33A

This clause proposes to insert section 33A which would require a statement setting out certain specified information be presented by a strata corporation to each annual general meeting of the corporation. The required information includes a statement of proposed expenditure (other than recurrent expenditure) for a prescribed period (provided that the regulations cannot prescribe a period of more than 5 years). A strata corporation will not be required to update the information every year but new information will be required to be prepared in accordance with the regulations.

60—Amendment of section 34—Voting at general meetings

This clause amends section 34 in relation to nominations made by an owner of a strata lot for another person to vote on his or her behalf. A nomination must be in writing to the secretary of the corporation and specify whether it is a general nomination for all meetings and on all matters, or whether it is to be limited to certain meetings or matters (a failure to comply with this provision will invalidate the nomination). A nomination may be subject to any other condition, may only be effective for a maximum period of 12 months and may be revoked at any time by notice in writing to the secretary.

A nomination for a body corporate manager (or employee) to vote on a person's behalf ceases to have effect when the body corporate manager (or employee) ceases to be a body corporate manager in relation to the strata corporation.

The secretary of the corporation must make copies of any nominations in relation to a meeting is available for inspection at that meeting by another person attending and entitled to vote at the meeting.

This clause also provides that an appointment for a person to attend and vote at meetings under a general power of attorney is to be for a maximum period of 12 months unless revoked earlier.

This clause also clarifies that a decision of a corporation in general meeting will be made by ordinary resolution except where otherwise provided in the Act.

61—Insertion of section 34A

This clause inserts a new section 34A to require persons attending and voting, or presiding, at a meeting of a strata corporation to declare any direct or indirect pecuniary interest he or she may have in relation to any matter to be voted on at the meeting before the vote is taken. Additionally a nominee representing a unit holder at a meeting must disclose any such interest to his or her principal prior to the vote taking place or as soon as practicable after.

62—Amendment of section 35—Management committee

This clause clarifies that a decision to appoint a management committee or to remove a member of the management committee is made by ordinary resolution.

63—Amendment of section 36G—Keeping of records

This clause amends section 36G to define a time period, namely 5 business days, in which an agent must, at the request of a strata corporation, provide the corporation with a statement setting out details of the agent's dealings with the corporation's money. The penalty for a contravention of this provision has been reduced to a Division 9 fine from a Division 5 fine.

64—Amendment of section 36H—Audit of trust accounts

This clause amends section 36H to specify that an agent must forward the statement, that is currently required to be lodged with the strata corporation, to the secretary of a strata corporation.

65—Insertion of section 39A

This clause inserts a new section 39A which requires a strata corporation to maintain a register of the names of the unit holders which includes last known contact address, telephone number, email address and unit entitlement.

66—Amendment of section 41—Information to be furnished

This clause amends section 41 to require the information to be provided by a strata corporation under the section to be provided within 5 business days of the application for the information. This amendment also includes additional documents that must be made available for inspection by a strata corporation on application by a unit holder, prospective owner, mortgagee or prospective mortgagee. Those additional documents being any contract entered into with a body corporate manager under proposed section 27B and the register of unit holders kept under proposed section 39A. This amendment also provides for the strata corporation to provide a unit holder, on application, with quarterly statements for all bank accounts maintained by the corporation.

67—Insertion of section 41AA

This clause inserts a new section 41AA that lists the persons who may apply for relief under Part 3A. Those persons are a strata corporation, the owner or occupier of a unit, a person who has contracted to buy a unit and any other person that is bound by the articles of a strata corporation (other than an invitee or visitor).

68—Amendment of section 41A—Resolution of disputes etc

This clause amends section 41A consequentially on the insertion of proposed section 41AA (see clause 67) to refer to an applicant that has standing to apply for relief under Part 3A. The clause also includes additional grounds under which a person may apply for relief and additional orders that a court may make under the Part.

69—Substitution of section 47

This clause removes the current provision on vicarious liability of committee members and inserts a general defence (in the same terms as section 153 of the Community Titles Act 1996).

70—Amendment of section 49—Service

This clause amends section 49 to provide for the service of a notice under the Act by email if the person receiving the notice consents to service by email.

71—Amendment of section 50—Proceedings for offences

This clause amends section 50 to allow prosecutions to be commenced by the Commissioner for Consumer Affairs, an authorised officer under the Fair Trading Act 1987 or a person who has the consent of the Minister to commence the prosecution.

72—Insertion of section 50A

This clause allows money in the indemnity fund maintained under the Land Agents Act 1994 to be applied toward the costs of investigations and prosecutions under the Strata Titles Act 1988 and the cost of prescribed advisory services or educational programs.

73—Amendment of section 51—Regulations

This clause amends section 51 to provide for the regulations to assign specified functions to an officer of a strata corporation of a specified class.

Schedule 1—Transitional provisions

1—Delegations made prior to commencement

The transitional provision ensures that delegations made before commencement of the new provisions about body corporate managers will be revocable by the community or strata corporation in accordance with the proposed provisions in the measure.

Debate adjourned on motion of Hon. J.M.A. Lensink.


At 22:39 the council adjourned until Thursday 28 July 2011 at 11:00.


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