Can an OC Committee Remove a Manager? (Victoria)

The Committee is elected by the Owners Corporation at the AGM and their function is to represent the OC when it comes to decision making. In strata living, there’s a crucial partnership at play: the Owners Corporation (OC) Committee and the Strata / Owners Corporation Manager. The OC Committee, your elected neighbors, are the decision-makers, shaping the direction of your building’s management and upholding the rules that keep everything running smoothly. 

On the flip side, the Strata / Owners Corporation Manager is your building’s operational expert. They handle the day-to-day tasks like finances, maintenance, and communication – all the stuff that keeps your building in tip-top shape. Both work hand-in-hand, with the Committee setting the vision and the Manager (hopefully) executing it. 

But what happens when things go wrong? Can an OC Committee remove a manager? 

Grounds for Removal: When Can an OC Committee Take Action? 

The Owners Corporations Act 2006 empowers Committees to remove a manager under certain circumstances. These situations typically involve a manager’s failure to fulfill their duties as outlined in the OC Act and the management agreement. Here are some common reasons for initiating the removal process: 

Performance Issues: If the manager consistently fails to meet expectations outlined in the management agreement or falls short of their professional obligations as defined by the act. This could include issues like: 

  • Poor financial management or record-keeping 
  • Failure to maintain common areas properly 
  • Ineffective communication with residents
  • Neglecting owner inquiries or complaints 

Breaches of Contract: A manager who violates the terms of their contract with the OC may be subject to removal. This could involve situations where they: 

  • Exceed their authority as outlined in the agreement 
  • Engage in conflicts of interest 
  • Fail to disclose relevant information to the Committee 

Serious Misconduct: In cases of severe breaches of trust or ethical violations, the Committee may consider removal. Examples include: 

  • Misappropriation of OC funds 
  • Harassment or discrimination towards residents 
  • Falsification of records 

The importance of documenting concerns cannot be overstated. It serves as a crucial record that substantiates the reasons for considering the removal of a manager. This documentation should detail instances of non-performance or contract breaches, providing a clear basis for any action the Committee may take. 

The Removal Process: Steps to Take 

The OC Act empowers Committees to make and pass ordinary resolutions (i.e. the termination and change of OC management companies).  

However, the specific procedures and grounds for termination can sometimes be hindered by restrictions that some OC companies put in place. Here’s the typical steps involved in removing an OC manager:  

1. Thoroughly Review the COA: Begin by carefully examining your specific COA. Pay close attention to the following: 

  • Termination Clauses: Identify any sections that address the grounds for termination, notice periods, and any required actions or procedures. 
  • Dispute Resolution: Look for provisions outlining how disagreements related to termination should be handled.

2. Grounds for Termination: Determine the specific reason(s) for removing the manager. Common grounds outlined in standard COAs include: 

  • Fundamental Breach: A serious violation of the contract’s terms, such as gross negligence, fraud, or consistent non-performance. 
  • Manager’s Notice (Due to Unlawful Conduct): The manager terminates due to the OC acting unlawfully or jeopardising safety. 
  • Manager’s Notice (After Initial Term): The manager provides written notice of termination after the initial term. 

3. Follow Termination Procedures: Depending on the grounds for removal, the COA will likely dictate specific steps: 

  • Correct Resolutions and Process: once again, the type and form of the resolution that the OC or Committee needs to pass will depend on a few things. We have seen many buildings / OCs where either the OC management company or the developer put in place restrictions on the Committee when it comes to terminating the management agreement.  

Seeking Professional Help: Resources and Support 

When seeking outside help Committees have a few options: 

  • Consumer Affairs Victoria or VCAT – can be a bit hard to get answers from the former and can be slow/costly to get results in the latter.
  • Lawyers – as always it pays to find a good lawyer who is experienced in OC, we can help if you need some recommendations.
  • Changing OC companies – you can undertake the process or seek our guidance – we work good companies and have been helping Committees since January 2014. 

Our team of Strata Consultants in Melbourne can assess your unique circumstances, develop a strategic plan, and guide you through each step, ensuring a smooth and successful transition for your OC. 

Email us at office@strataconsultants.com.au or call 1300 917 848.

The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
Posted
July 09, 2024
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