Don’t expect the government to rescue OCs in the next legislative review

All stakeholder feedback and public consultation has now been completed, and the Expert Panel appointed by the Victorian Government to oversee a review of the Owners Corporations and Other Acts Amendment Act 2021 is due to table their report to Parliament by December 1.

However, the terms of reference for the Expert Panel’s report were unduly constrained, and so the report tabled runs the risk of not being able to consider amendments and reforms for owners’ corporations (OCs) that are in dire need of being passed right now.

VCAT released a decision in July in relation to a power struggle between two OCs in Docklands.

The ruling determined that OCs are required to obtain a special resolution from its members before filing any legal proceedings for non-monetary actions. This includes actions against owners and occupiers for causing nuisance or having loud parties, excessive noise, unrestrained dogs, misuse of visitor parks, pursuing an owner for unlawful short-stay accommodation (AirBnB) activities, compelling repairs, or bringing actions to terminate a manager or building manager.

To obtain a special resolution or interim special resolution, an OC would need at least 51 per cent of the total owners in the building to vote in favour of the action.

It was previously understood that the committee had the power to file these types of proceedings in order to keep proper order and governance of the buildings they preside over.

The only way to fix this situation is for the Owners Corporations Act to be amended.

The panel was required to examine and make recommendations in relation to:

• Whether the governance and related reforms to the Act made by the Amendment Act are meeting their objectives.
• Whether the amendments made to the Act by the Short-Stay Act are meeting their objectives.
• The need for any specific arrangements under the Act for lot owners who experience difficulty paying their OC fees due to financial hardship, and how such arrangements could be balanced against the interests of other lot owners.
• Whether the existing arrangements in the Act to promote the probity and ethical conduct of OC managers are sufficient to protect the interests of lot owners.
• Whether existing measures in the Act to address non-compliance committed by OC managers, lot owners, residents, and others with duties under the Act are sufficiently robust.
• What is the most appropriate model for collective sales under Part 5 of the Subdivision Act 1988 including examining reforms to the current threshold and what safeguards should be provided to protect lot owners who do not wish to sell.
• Whether existing voting processes in OCs are clear, effective, and fair for all lot owners.

None of these terms of reference would therefore give the Panel the power to recommend Parliament to fix the issue identified in the VCAT decision. 

So, if Parliament were to act to fix this, it needs to do so outside of the terms of reference to the Expert Panel’s report.

It will be interesting to see if the Consumer Affairs Minister will intervene in this situation. Let’s hope they do, for the sake of everyone who lives in an Apartment in Victoria. •