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  • #69065

      I am in Victoria: The AGM agenda notice has included a resolution for voting on whether there was penalty interest on lot owners’ fees arrears waived or reduced during the previous financial year.

      Bearing in mind penalty interest of Fee arrears in accordance with section 29 of the OC Act 2006 was in place and could be charged and if the committee, at its discretion chose to enforce or ‘waive’.

      The motion is as follows: ‘There were no instances where penalty interest on Lot Owners’ Fee arrears were waived or reduced during the previous financial year.’

      The members resolved to vote and all were in favour of the motion.

      YES 4/ NO 0

      In context to OC Act 2006 S29 (4) & (3):

      My query is> how can this be placed on the AGM agenda as a legitimate motion, particularly if the Manager, in fact, did charge the OC for sending out the ‘final fee’ notices on the arrears incurred within the relevant financial reporting year? And subsequently, then the Manager, in fact, sent out ‘waive’ notices against these arrears:  Manager still benefited by incurring late fee charge to OC.

      It seems odd that when it’s a fact, i.e., final fee notices were sent; Manager charged for sending out and then ‘waive’ notice sent exempting those owners from having to pay arrears –, then can the motion (as above) be considered legitimate and included in the AGM notice? – I question the integrity (acting in good faith etc) of the Manager for including on notice of AGM and when the Manager has made money from generating final fee notice on arrears. Is the motion on AGM notice valid or even logical – or is it perhaps an attempt to hide who had the arrears in the AGM notice / minutes and if the majority vote ‘No’ and if so, what I interpret to be (perhaps) ratified as a basic untruth and Manager not acting in good faith, and in the interest of the OC as a whole: or, can the Manager/OC lawfully hide arrears/waive notices and not include in AGM notice?

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    • #69067

        Most strata management companies have a couple of resolutions that relate to Section 29 to support the owners corporation statutory responsibility. The strata manager is not the owners corporation but is an agent for the owners corporation and actions the decisions of the owners corporation either from a general meeting or a committee meeting. The manager has some delegated functions within the management contract to perform without further instruction, but the vast majority of the strata managers work is on instruction.

        As you have said the Owners Corporation Act sets out under section 29, four subsections that provides discretionary powers and some statutory (musts) requirements for the owners corporation.

        The first discretionary power relates to the authorisation for the owners corporation to charge penalty interest on outstanding fees. This is an ordinary resolution and must be done at a general meeting. The owners corporation must be able to point to this resolution if it wishes to recover the penalty interest at VCAT or Magistrates court. The Committee is unable to authorise the charging of penalty interest. This is why you see the same resolution every year.

        Typically this resolution at the annual general meeting is passed under the “Financial or Debt Recovery” item in the meeting and looks like this:

        That the Owners Corporation resolves to charge penalty interest in accordance with the conditions set out by the Owners Corporation Act 2006, Act No. 69/2006 Part 3.

        The second discretionary power relates to the Committee (or the owners corporation in the event there is not a committee), not the manager (unless they have been delegated a specific power to do so) to waive any penalty interest.

        The first statutory (must) power requires the committee to report to the owners at the annual general meeting if the waiver of penalty has been considered and the committee (or the manager) must report any decision to waive or not waive. This report is voted on usually as part of the “Committee Report” and/or the “Managers Report” or as separate resolution, if there is no written committee or managers report.

        An example of the owners corporation delegating the waiver of penalty interest resolution at the annual general meeting may be found under the item “financials” or under “delegation” and looks like this:

        That if on the 1st working day of the month in which a general meeting occurs there is less than $7.00 owing on a lot owners account, and this represents penalty interest, that the sum owing will be waived.

        The reason this is done, is to increase the number of owners to be financial so they can vote at the AGM and to reduce the time consuming receipting of cash for debts under $7.00 at meetings.

        Lastly, as a part of good governance the committee approves a debt recovery process with the manager. This will include when reminder letters are sent and cost, final fee notices and cost and the threshold at which the fill is handed to legal service for debt recovery at court. A debt recovery process may also be reflected in the Rules of the owners corporation, in which case the manager must follow that process. Usually the manager includes the process in the annual general meeting to be resolved each year so owners  are advised before they fall into debt what the process is.

        That the Owners Corporation may recover, as a debt due from the person or persons in default or breach, the costs, charges and expenses incurred by the Owners Corporation, (but excluding the personal time cost of any person acting in an honorary capacity including the chairperson, secretary, or committee member of the owners corporation) arising out of any default or breach, by any lot owner, or occupier of a lot, of any obligations under the Owners Corporations Act 2006 or the Owners Corporations Regulations 2018 or the Rules of the Owners Corporation… the resolution would go on to describe the steps and the charges relating to each step.

        The resolution that you have mentioned looks like it relates to the section 29 (4), the requirement to report if penalty interest has or has not been waived. The resolution seeks to confirm the income and expenditure statement that has been included, as penalty interest is received as mutual income and usually coded as penalty interest. Some strata management companies report the waiver in the Managers Report and the Committee should also reflect that they authorised the waiver and the reason for that decision.

        For example the Managers Report might say:

        Penalty interest waived: $27.00 representing the total penalty interest waived on the 1st working day of the month in which a general meeting occurs there is less than $7.00 owing on a lot owners account, to enable those owners to be able to vote at the annual general meeting. 

        So, in summary:

        1. The resolution –  ‘There were no instances where penalty interest on Lot Owners’ Fee arrears were waived or reduced during the previous financial year.’ is valid, particularly for OC’s without a committee and the statement is a statutory requirement under section 29 (4) – just check the income and expenditure statement to confirm if Penalty Interest was received. If PI was shown, then the resolution was faulty.
        2. The charging of fees for the debt recovery process is different to the charging of penalty interest. This is a contractual or delegated process agreed to by the committee. If you want to know more about that process, speak with your manager or committee member. A committee may choose to waive the debt recovery costs at the same time they waive the penalty interest – it depends on the circumstance.
        3. Many committees refuse to waive PI of debt costs as they have a zero tolerance for people who do not fulfil their statutory obligations by paying on time. Others review the payment history before making a decision.

        Hope that helps.


          Firstly, thank you, Julie for your reply and thorough explanation in contxt to the ‘Act’ and re arrears; penalty interests and any related waive notices.

          I agree with your interpretation: however, my concern/query is, more over, to do with the actual integrity/purpose/validity of the Manager including a motion in the AGM notice at all and when the Manager, is aware that ‘waive’ notices were issued (the Manager having issued them); SO, why have the motion at all included in the agenda? i.e. and which asks the owners to vote on whether there were instances where penalty interest on lot Owners’ Fee arrears were waived or reduced during the previous financial year and when Manager KNOWS there were instances (as do the majority of owners?

          I know for a fact, that the committee did ‘waive’ penalty interest rates for a couple of the owners and ‘waive’ notices were consequently, issued. My query (and perhaps I did not make this clear originally) is HOW CAN THE MANGER/COMMITTEE (and whom ever is responsible for drawing up the notice), include a resolution i.e., as below and when both ‘waive notices’ were, in fact, issued AND the Manager, consequently issued and charged OC via invoice for generating ‘final notices’. In my mind, it s redundant, therefore, to have such a motion entered onto the AGM notice as it is a FACT that penalty interests were incurred (Manager final fee notice charged to OC and deducted from OC bank account) and then the penalty interest charged to owners on arrears was ‘waived’ by the committee.

          Noting that the Manager, charged and received monies for sending out ‘final fee’ notices.

          How is it then, that the Manager (and/or committee) can, in all good faith and with integrity include what, I regard as a superfluous/redundant motion* – (this is in regards to the forth coming AGM): I know it is ahead of time but I expect (based on last year’s vote results on similar motions), certain owners and including the Manager will seek to want to not make transparent any arrears and waive notices yet again. And I point out, neither has any entry been made into the Manager’s report attached to the current AGM agenda notice (recently issued) for last reporting fin yr i.e., 2022 to 2023 re the ‘waive’ notices which were issued by the Manager (made by COM).

          1. Is it incorrect for the motion to be included and if ‘waive notices were, in fact, sent out and
          2. Is it incorrect (and, esp. in context to the ‘ACT’) for the Manager to completely omit from commenting about ‘waive’ notices in the Manager report (noting the ‘waive’ notices have not been mentioned anywhere else in the body of the AGM notice either).
          3. Are you able to offer a reason as to why S29 (4) exists; what is its purpose, do you think?

          At the risk of making a value judgement, I suspect that the Manager and majority of owners (including those owners who had arrears) are looking to not make transparent or disclose that the penalty interest was in fact, ‘waived’ and by way of voting,’ in the affirmative, (‘YES’), indicting there were ‘no instances…etc’ and so, Manager is not compelled to officially record ‘waive’ notices in Minutes.

          Any further comments would help and Thanks again for your expert advice and reply, very much appreciated.


          ‘Penalty Interest on Fee Arrears Ordinary Resolution
          THAT in accordance with Section 29 of the Owners Corporations Act 2006, the Owners
          Corporation will charge interest in respect of any instalment of Fees that are in arrears and
          that interest charged will be at maximum rate of interest payable under the Penalty Interest
          Rates Act 1983. The Committee may use its discretion to waive or reduce penalty interest in
          any case.
          There were no instances where penalty interest on lot Owners’ Fee arrears were waived or
          reduced during the previous financial year.
          YES         NO        ABSTAIN ‘
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