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Our Strata had its Strata Manager give notice that the Agency agreement would not be renewed, by a notice (e-mailed letter) to the Strata Secretary dated 28 November, 2023. The now former Strata Manager noted in the their termination letter that a replacement Strata Manager should be sought as our Strata will be discharged from their portfolio effective 29/02/2024. They advised the Owners Corporation’s records will be delivered to the Strata Secretary unless a replacement Strata Manger is notified. I am unable to find out what the real reason for the termination was.
Having been provided a copy of the 3 year signed Agency agreement previously I noted it was dated 29/01/2020, and has a commencement date 13/12/2020, and the common seal was noted as attached (to the signatory section) on 13/02/2020. So to me the actual cessation date was 12/12/2023. Speaking to another owner I was advised that he believed the actual termination was not in accordance with the SS Management Act, particularly as the Strata Secretary we believe had not extended the term of the agreement beyond 12/12/2023. That question was asked of the Strata Secretary in correspondence to / from lot owners when she called the EGM (see below), but she did not respond on the question. (She never has formal committee meetings). Can anyone advise if they consider the termination was done correctly per the Act, even though it matters little now the change has been completed.
The Strata Secretary (no committee meeting on the matter) sought alternate Strata Managers and found one, who provided a standard letter of appointment to appoint them as our Strata Manager which was done with the Strata Secretary arranged a paper EGM with voting returned by 13/02/2024 as the EGM was scheduled for 15/02/2024. While the motion was passed, however it took until 7 March 2024 for the incoming Agency to get the Books and records.
Our AGM’s are normally called for February annually, as the accounts have a year end 30th January, and the building Insurance is due on 1 March 2024.
Unknown to Lot owners, the former Strata Managing agent apparently renewed the building insurance and was paid a “Fee” on the placement for the year from 1 March 2024 to 1 March 2025. The new Strata Manager was also apparently not impressed.
The new Strata Manager called the AGM for 27 March 2024, by an on-line meeting. Only 3 of 18 Lot owners attended. It was advised at that meeting that the previous Strata Manager received commissions (per the Commissions & Services Motion). Some owners now consider that if the termination was not done correctly, the commission may have been a factor.
Also, for the March 2024 AGM there was no motion with a copy of a a new agency agreement with the costs, period & conditions for the owners to approve and be formally appoint with a signed (for up to 3 years) contract. I believed that the appointment of a new Strata Manager was a two step process. 1) EGM to appoint the Agent and 2) an AGM / EGM to agree the Agency agreement terms itself. I was under the impression that if there is no formal agreement signed then the Strata Manager is not entitled to payment for any work performed. Am I correct in relation to this? If so this needs to be rectified.
Also the new Strata Manager did not have a separate Committee Meeting, after the new committee were nominated and appointed at the AGM. The office holders were appointed, merely including that information as part of the AGM minutes. Am I correct in believing that Committee meetings should be separate from Owners Corporation meetings. With this, I am not sure and would appreciate clarification. All other Strata’s I have been associated with are. Maybe the rules have changed.
Thanks::
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Steady Sam,
Curiously enough, our 2nd SM has followed this practice of electing, or rather nominating, the officers at the AGM, rather than at a separate SC meeting. When I raised the matter the first time, I was assured that this was for admin reasons, as the Strata Hub reporting was due soon. The 2nd time, no response. The agenda does not include an item for election of officers, but nobody seems to be bothered. The Strata Manager, acting as meeting chair, merely proceeds as he wants.
Hello Steady Sam,
It helps just to clarify and unpack what’s actually happened here…
The Strata Management Agreement expired on 12/12/23 (3 year anniversary)
The Notice received from the old strata manager saying they would cease to act from 29/2/24 is effectively their exercising the (up to) 3 month option they have under S 50 (7) of the SSMA to extend.
There is NO “termination” involved, just the amended expiry of the original agreement to 29/2/24.
So far, so good, and without seeing the EGM Minutes I would assume that the appointment of the new manager at the specially called EGM on 15/2/24 was to be effective from 1/3/24 (appointments are typically just a single resolution to adopt and execute a term agreement).
NB At some point prior to 29/2/24 the strata committee would presumably have been consulted on the selection of the appropriate insurer for 1 March 2024 period onwards (to be ratified at a later AGM).
No surprises as to why the original SM chose to hang in there till 29/2/24 – it gave them time to be part of the strata insurance selection process and claim their commission !
It is hard to find fault with the process itself, but that does not stop the SM’s conduct being unconscionable even in the eyes of that declining band of people who believe that SM’s should be commission remunerated – even they assume the SM WORKS for their commission and this one, by the careful exercise of the s 50 (7) option, avoided any responsibility for insurance claims handling etc in the coming 12 months.
Thankyou for sharing something that should be a lesson to all those schemes still remunerating their SMs with commissions.
When I am more alert I will read your post again, but one thing sticks out: you wrote:
Can anyone advise if they consider the termination was done correctly per the Act
I recall asking Fair Trading a related question (in regional NSW) and was told that a strata mgt agreement b/w the owners and the manager is a contract and the terms stated in the contact (regarding everything eg termination, insurance commission etc) are “iron clad” if agreed to by the owners (or their representative) and the manager. Should either the owners or manager wish to modify one or more of the terms or extinguish them altogether, this can be done but ONLY by mutual agreement. The contract not the Strata Management Act is the basis for any change.
In short, read your agreement carefully, cover to cover. Especially the listing on fees, to know if what’s taken place breaches the contract or is in accordance with the contract, but not fair (in your or another person’s estimation).
Hello again Steady Sam,
Two more things come to mind:
1. You say that you
believed that the appointment of a new Strata Manager was a two step process. 1) EGM to appoint the Agent and 2) an AGM / EGM to agree the Agency agreement terms itself.
This is my experience. Furthermore, another EGM if you want to modify the terms of the agreement (subject to the strata mgr’s consent).
2. You mention
as the Strata Secretary we believe had not extended the term of the agreement
This MAY be explained by the functions of the strata mgr as listed in the agreement. In many cases, a committee will palm off most if not all of its functions to the strata mgr, with the committee members’ title eg Treasurer, Chair etc, is in name only. In such cases the strata mgr is delegated (in B&W in the contract) most if not all the committee’s functions. This delegation you may find offensive but if it was included in the text of the contract and the contract was executed via a EGM or AGM, then it is set in stone I believe.
So the strata mgr can wear two hats simultaneously: a committee member and a strata mgr.
I am no fan of strata mgrs but cannot fault them if one or more committee members assent to such delegations and then persuade other owners to approve those terms OR if one or more committee members keep owners in the dark and get their approval at a meeting without revealing the significant change in how the scheme operates. I was an owner at such a meeting where there was no Q & A session.
If this is the situation then your beef I believe is with the committee or the OC and not the strata mgr.
I don’t recall your original headline but I spend half my time here fixing headlines that are way too general to be of any use; things like “strata problem” or “manager issues” – which cover about 90 percent of the issues raised here.
I have no idea what was in your response to Strata Answers but you can always repost it.
The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
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