New legislation that will curtail the influence resident managers and caretaking service providers can have on a complex is shaping up as a legal minefield.
Leading management rights lawyer Frank Higginson of Hynes Legal says “it’s going to be on for young and old” and that there will be “a lot of conflict” as managers, body corporate committees, and lot owners do battle over the interpretation of the proposed Body Corporate and Community Management and Other Legislation Amendment Bill 2023.
The Bill was introduced into Parliament by Attorney-General Yvette D’Ath on August 24. Under Section 42 there are amendments to Schedule 2 relating to the code of conduct for body corporate managers and caretaking service contractors.
The proposed legislation now reads: “A body corporate manager or caretaking service contractor must not unfairly influence, or attempt to unfairly influence, the outcome of a motion to be decided by the body corporate.”
Mr Higginson says the new legislation will probably be passed into law before the end of this year, and he predicts it will cause many legal disputes. The proposed legislation is designed to stop old-fashioned pork barrelling in a building, where a manager could potentially offer incentives to have owners vote in line with them.
“Stopping commercially incentivising people to vote in favour is a no-brainer,” Mr Higginson said.
“The question is going to be what is ‘unfairly influence’?”
“There will be some blues about it no doubt.
“And what’s ‘unfair’ as opposed to ‘fairly influence’ – what if you simply put forward a point of view, is that unfair influence?
“Is creating a website with your point of view unfairly influencing if that point of view is not necessarily agreed to by everyone?
“Is sending letters to all the owners ‘unfair influence’?
“Adjudicators will no doubt decide that, but I think these proposed changes will create a lot of legal work.”
Mr Higginson posed the question that if body corporate managers and caretaking service contractors were legally prevented from “unfairly influencing” a vote in a complex, what about lot owners unfairly influencing other lot owners?
“Nothing has been said about them,” he said. “In theory, they can still do things to influence elections that other people can’t.”
Chris Irons, the former Queensland Body Corporate Commissioner, who now runs Strata Solve, Queensland’s leading strata dispute resolution and problem-solving firm, said the proposed legislation had the potential to stymie improvements to a complex.
The solution, he said, was for management rights holders to become more creative.
“A lot of people think lobbying will be banned but it’s not. The term being used is ‘unfairly influence,’” Mr Irons said.
“Having good relationships with the owners will be more crucial than ever. If a management rights holder and an owner have a really good relationship – if the manager manages their apartment in the letting pool, you can see a scenario where the owner becomes the manager’s de facto.”
Mr Irons said he did a lot of lobbying work with management rights holders and the word “lobbying” did not appear in the new bill.
“As it currently stands if you’re a management rights holder you can go out there and talk to your owners and encourage them to vote for something or indeed, not to vote for something, depending on what you want,” he said.
“But that’s going to be restricted once these laws are enacted.”
Mr Irons said he could understand that the laws were necessary to stop anyone putting undue pressure on lot owners for such things as pay increases, but they could stop a manager trying to get things done for the benefit of everyone in the building.
“Politics and strata are identical,” Mr Irons said. “Managers can’t get what they want done in a building if they don’t have the numbers – some people don’t like me saying that and some people don’t like hearing me say that – they think strata should be a friendly, hold-hands consensus type of approach but often it doesn’t work like that.
“Owners can still do what they like but if you’re a management rights holder looking to make improvements to a building your ability to do that could be restricted.
“At the moment I do a lot of work for management rights holders along those lines. I sit with them and work out the numbers they need in a building to get action – we work out who they have on board, who’s a possibility and who you must work on really hard.
“Just yesterday a client said they wanted a top-up passed but the vote on it at their annual general meeting failed miserably after the committee sent out a letter saying don’t vote for it.
“In that situation the resident manager can try to combat that message but with the proposed new legislation it makes it very difficult.
“What he should do is sit down with the committee and find out why they are so opposed and see if he can negotiate a solution. A good relationship with the committee is crucial.”
Trevor Rawnsley, the CEO of the Australian Resident Accommodation Managers Association (ARAMA) said whenever legislation was “vague and open to interpretation” the result was a “lawyer’s picnic”.
“There’s already plenty of reasons to have disputes in strata and we don’t need to create new ones,” Mr Rawnsley said of the proposed changes to the legislation.
“We are not in favour of anything which is likely to lead to more disputation and we are very interested in clarity. The less complicated the legislation is the better.”
Grantlee Kieza OAM has won three Queensland Media Awards, two Australian Sports Commission Awards and has been a finalist for the Walkley and News Awards and for the Harry Gordon Award for Australian sports journalist of the year. In 2019 he received the Medal of the Order of Australia for his writing. You can find more of his work in our AccomNews & Resort News print magazines.
He has written 22 acclaimed books, including bestsellers Hudson Fysh, The Kelly Hunters, Lawson, Banks, Macquarie, Banjo, Mrs Kelly, Monash, Sons of the Southern Cross and Bert Hinkler.