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Hostile takeover of OC manager
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unitxchange
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03/04/2018 - 12:07 pm
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Has anyone experienced a hostile takeover of an OC manager? If so, please advise on the following;

An ordinary resolution was used recently  to remove an owners corporation manager in Victoria. Is  an ordinary resolution sufficient as opposed to unanimous or special resolution to do this?

If so, can this be done without consultation with the full committee and without due process i.e. a special general meeting so all owners can vote and ask questions about fees and service?

The hostile takeover has been enacted by predominately one owner with 44% unit holding. They have persuaded another owner to give them their proxy (now they have 56% OF VOTE)

Action so far has comprised of a complaint filed to the new owners corporation manager by a committee member, seeking formal removal of the former manager and requesting due process to be followed. So far no response and the AGM is in two weeks from today.

Can an owners corporation use an AGM to legitimise their takeover in the absence of formal paperwork? What forms do we, as owners, need to see for an owners corporation takeover to be considered legitimate?

If no formal paperwork is needed apart from a petition, it seems an unethical way to take over an owners corporation. Any advice/suggestions are appreciated as I am, like the remaining owners, confused and concerned. Further, we have not been given any reason why the former manager was removed and the committee were not advised of any formal complaints with the old manager.

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Austman
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03/04/2018 - 3:16 pm
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unitxchange said  Is  an ordinary resolution sufficient as opposed to unanimous or special resolution to do this?

An ordinary resolution is sufficient.  Even the committee alone usually has the power to change a manager unless it has been formally restricted from doing so and it does not override an earlier general meeting’s decision.

If so, can this be done without consultation with the full committee and without due process i.e. a special general meeting so all owners can vote and ask questions about fees and service?

The decision to call a special general meeting need not go to the full committee. The Chairperson or the Secretary alone can convene and set the agenda for a special general meeting.  That meeting can optionally be conducted by ballot, even on-line.  But it must be formally arranged and conducted with correct notices and processes.

Can an owners corporation use an AGM to legitimise their takeover in the absence of formal paperwork?

I think that if it’s on the agenda, once the AGM votes to accept the new manager, that vote would be valid.  The time to challenge any earlier change of manager process would be before the AGM.

What forms do we, as owners, need to see for an owners corporation takeover to be considered legitimate?

You’d need to see the minutes of a correctly conducted general or committee meeting.

If no formal paperwork is needed apart from a petition, it seems an unethical way to take over an owners corporation.

A vote by ballot can look like a petition.  But to be a valid ballot it must be formally conducted according to the OC Act.  Some further information is here:

https://www.consumer.vic.gov.au/housing/owners-corporations/meetings-and-committees/working-with-your-owners-corporation-manager

If the “outgoing” manager is still under a valid contract and has not broken any of their requirements under the OC Act, it’s unlikely they can be removed.

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JimmyT
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03/04/2018 - 5:21 pm
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Austman said

If the “outgoing” manager is still under a valid contract and has not broken any of their requirements under the OC Act, it’s unlikely they can be removed.  

Good point.  There is a contractual obligation on both sides and the owners corp is heading for potentially costly murky waters if it decides to rescind a contract without good and legally enforceable reason.

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unitxchange
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04/04/2018 - 1:18 pm
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Thank you Austman for your very comprehensive reply. It’s much appreciated. And Jimmy T for the additional insight.

FYI – The former OC manager resigned when presented with the petition and they have not broken any requirements under the OC Act. 

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Austman
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04/04/2018 - 4:20 pm
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unitxchange said

FYI – The former OC manager resigned when presented with the petition and they have not broken any requirements under the OC Act.   

I think that changes the circumstances somewhat.  A manager can choose to resign at any time provided they are not breaking the management contract.  They don’t need the OC’s approval to do that.

Whether a manager accepts a petition or not is up to them.  But as they are a strata manager, they’d be well aware of any required OC process and could choose to challenge any removal process if they considered it was invalid.

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unitxchange
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05/04/2018 - 3:19 pm
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Thanks for the update Austman. The next step is to resolve this issue amicably via formal mediation prior to the AGM as promises to respond have not been forthcoming to date and I dont understand why.

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