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At apartmentlaw.com.au we understand the intricacies of apartment living. Your connection to an apartment may be via you being a landlord, an owner occupier or a tenant. You have legal rights and responsibilities regardless of your status.

We intend to post on this page some important legal requirements and discussion on areas which impact on apartment living. There are many topics relevant to living in an apartment and we commit ourselves to regularly rotate these topics thus allowing interested parties to be informed of the law on an ongoing basis. Topics relevant to bodies corporate themselves, are discussed at length in The ABC of Victorian Bodies Corporate (Hybrid Publishers Tel: 9504 3462 Fax: 9594 3463) by Rebecca Leshinsky, Barrister-at-law. We have been permitted by Rebecca Leshinsky and HYBRID PUBLISHERS to make use of the topics covered in her book so feel free to email us at apartmentlaw information and we will send back to you a relevant entry from Rebecca’s book.

BALLOT

Resolutions of the body corporate may be made by meeting or postal ballot. The body corporate must keep a record of postal ballots.

Arranging a postal ballot

A postal ballot may be arranged by the secretary, the manager, the chairperson of the committee or the committee itself. If there is no secretary, manager, chairperson or committee, then the postal ballot can be organised by a member of the body corporate.

Procedure for postal ballot

A postal ballot must include a closing date for the receipt of ballots which should be at least fourteen days after the date the notice is posted to members.

If there is a postal ballot, the decision is made as follows:

Matters requiring an ordinary resolution must be passed by a majority of the votes returned by the closing date but the number of votes returned must be not less than the number needed for a quorum for a meeting.
Other matters must be passed by special resolution or unanimous resolution, as appropriate.

If a postal ballot is arranged by members, they must give the body corporate all the necessary information to enable it to keep records of the postal ballot. A member may vote by completing any type of ballot paper.

COMMON PROPERTY

Common property relates to particular land, buildings, airspace or personal property which is co-owned. Any common property vests in those owners as tenants in common in shares proportional to their lot entitlement. Common property shown on a plan of subdivision is owned by body corporate members in shares shown as lot entitlement on the plan.

The body corporate owns the land as nominee, or trustee, for lot owners. A Plan of Subdivision can have a body corporate and no common property. When common property is created there must be a body corporate.

The share in the common property of a body corporate member cannot be dealt with except as part of a dealing with the member’s lot or by the body corporate acting in accordance with the regulations. A unanimous resolution is required to add to, dispose of or change common property. A special resolution is required to lease or license the whole or any part of the common property.

In the St James Apartments case, it was held the body corporate does not own the common property. When the body corporate became ‘incorporated [under the Subdivision Act], the common property at the premises vested in the owners as tenants in common, in shares proportional to their lot entitlement’. (Body Corporate No. 1/PS 40911511E St James Apartments v Renaissance Assets Pty Ltd & Ors [2003] VCAT 1197). A somewhat different view taken in Hansen Yuncken Pty Ltd v TS Services Pty Ltd [2003] VCAT 2020, where Senior Member Walker noted that upon registration of the plan of subdivision, a body corporate becomes registered as proprietor of an estate in fee simple in the common property and it holds this estate in its own name as nominee for the lot owners.

The issue as to who is the owner of the common property was clarified recently by the Victorian Supreme Court. Body Corporate No 1/PS40911511E St James Apartments v Renaissance Assets Pty Ltd [2004] VSC 438 was an appeal from the VCAT Order. The Supreme Court took the approach that upon a proper construction of the provisions of the Subdivision Act and the Transfer of Land Act, a body corporate is the registered proprietor of fee simple in the common property and it is the equitable or beneficial ownership but not the legal ownership of the common property which is vested in the lot owners by section 28(d) of the Subdivision Act. ‘Nominee’ here is not to be understood as an agent. The body corporate is in effect acting as a trustee for the lot owners. The Court took the view that the body corporate is the registered proprietor of the common property under the Subdivision Act and the ownership or interest of each of the lot owners in the common property is an estate or interest in equity.

Use of common property

A body corporate cannot mortgage common property.

By special resolution, the body corporate may permit the use of the common property or the personal property of the body corporate by members of the public when it is not required by body corporate members. A fee may be charged for the use of this property.

The body corporate should take care when granting such permission. Given that lot ownership is subject to frequent change, the best approach may be to have all such agreements in written form to ensure proper records are kept. A sample License of Common Property is located in Appendix 6. Care should be taken when preparing such agreements and it is recommended that a legal practitioner finalise the document.

In Houghton v Anor & Immer (No. 155) Pty Ltd (1997) 44 NSW 46, the conversion of common property to the exclusive benefit of one of the majority unit holders was viewed by the court to be a fraud on the minority and voidable in equity. In other words, the remaining minority body corporate members were disadvantaged by the agreement.

Repairs and maintenance of common property

The body corporate must keep in a state of good and serviceable repair and maintain:

The common property
The chattels, fixtures, fittings and services related to the common property or its enjoyment
The equipment and services for which an easement exists for the benefit of the land affected by the body corporate.

The body corporate does not have to maintain any service that is exclusively for the benefit of one lot. The body corporate may carry out any necessary repairs, maintenance and other works on common property.

A special resolution is required if the total cost of the works on common property is more than twice the total amount of the current annual fees.

RULES

Division 6 Subdivision (Body Corporate) Regulations 2001, deals with Rules of the Body Corporate. Pursuant to Regulation 219, the standard rules set out in Form 1, apply to all bodies corporate after registration of the plan of subdivision. These rules relate to the use of common property and individual lots, parking, noise, nuisance and pets. Regulation 220 is concerned with the making of rules.

A body corporate is a creature of statute in that its powers derive from legislation. Accordingly, its powers are limited to statute and anything incidental or consequential to those powers. If the body corporate acts beyond this power what it does is not valid.

In Morrish v Republic Tower Body Corporate Strata Plan No. 341293D [2004] VSC 56, there was interesting, yet very brief, discussion by the Victorian Supreme Court as to whether some body corporate rules that are not all that uncommon in residential buildings in Victoria are in fact invalid (for instance, restricting pet ownership). The time may be approaching where such rules or other rules which appear as ultra vires or beyond the scope of the power of the body corporate will be tested particularly those which impinge on the private use of a lot.

By special resolution, the body corporate may make additional rules. Members should have had the opportunity to examine the proposed new, amended or revoked rules. These changes should be reasonable and fair and not work to hinder the day to day operation of the body corporate.

Care should also be taken to ensure that the additional rules are formulated within the parameters of the function and powers of bodies corporate as specified in Regulations 201 and 202. The rules should be made in good faith and not for an ulterior motive. Further, the rules must not be inconsistent with any restrictions as noted in the plan of subdivision nor any other legislation such as the Equal Opportunity Act 1995.

The body corporate, via the committee and any relevant body corporate manager, has a duty to act in good faith and to respect the rights of body corporate members.

Changes may be sought so that body corporate rules are being usurped for what should really be a restrictive covenant. Additional rules should not be unjust, unfair or unreasonable.

The functions and powers stipulated in Regulations 201 and 202 are more limited than those from previous body corporate legislation and relevant regulations. Having said this, there is no complete certainty as to the absolute width and dimension of body corporate powers and functions. There is no doubt however that body corporate members have private rights and liberties which must be respected. These rights in turn must be balanced with the well being, reputation and efficient running of the subject development.

Perhaps a more equitable approach to deal with such matters may be based on the requirement for a unanimous resolution of members as is necessary to effect other important changes to a development (see section 32 Subdivision Act 1988).

It is important to realise that any additional rules of a body corporate which have been approved by a special resolution (postal ballot or at a general meeting) will not come into effect until they are recorded by the Registrar of Titles. The Registrar must be provided with a copy of the special resolution and a copy of the additional rules. A mere resolution is not adequate.


	Apartment law topics
Home Apartment law topics Book News Education Online dispute resolution Useful links Contact us	At apartmentlaw.com.au we understand the intricacies of apartment living. Your connection to an apartment may be via you being a landlord, an owner occupier or a tenant. You have legal rights and responsibilities regardless of your status. We intend to post on this page some important legal requirements and discussion on areas which impact on apartment living. There are many topics relevant to living in an apartment and we commit ourselves to regularly rotate these topics thus allowing interested parties to be informed of the law on an ongoing basis. Topics relevant to bodies corporate themselves, are discussed at length in The ABC of Victorian Bodies Corporate (Hybrid Publishers Tel: 9504 3462 Fax: 9594 3463) by Rebecca Leshinsky, Barrister-at-law. We have been permitted by Rebecca Leshinsky and HYBRID PUBLISHERS to make use of the topics covered in her book so feel free to email us at apartmentlaw information and we will send back to you a relevant entry from Rebecca’s book. BALLOT Resolutions of the body corporate may be made by meeting or postal ballot. The body corporate must keep a record of postal ballots. Arranging a postal ballot A postal ballot may be arranged by the secretary, the manager, the chairperson of the committee or the committee itself. If there is no secretary, manager, chairperson or committee, then the postal ballot can be organised by a member of the body corporate. Procedure for postal ballot A postal ballot must include a closing date for the receipt of ballots which should be at least fourteen days after the date the notice is posted to members. If there is a postal ballot, the decision is made as follows: Matters requiring an ordinary resolution must be passed by a majority of the votes returned by the closing date but the number of votes returned must be not less than the number needed for a quorum for a meeting. Other matters must be passed by special resolution or unanimous resolution, as appropriate. If a postal ballot is arranged by members, they must give the body corporate all the necessary information to enable it to keep records of the postal ballot. A member may vote by completing any type of ballot paper. COMMON PROPERTY Common property relates to particular land, buildings, airspace or personal property which is co-owned. Any common property vests in those owners as tenants in common in shares proportional to their lot entitlement. Common property shown on a plan of subdivision is owned by body corporate members in shares shown as lot entitlement on the plan. The body corporate owns the land as nominee, or trustee, for lot owners. A Plan of Subdivision can have a body corporate and no common property. When common property is created there must be a body corporate. The share in the common property of a body corporate member cannot be dealt with except as part of a dealing with the member’s lot or by the body corporate acting in accordance with the regulations. A unanimous resolution is required to add to, dispose of or change common property. A special resolution is required to lease or license the whole or any part of the common property. In the St James Apartments case, it was held the body corporate does not own the common property. When the body corporate became ‘incorporated [under the Subdivision Act], the common property at the premises vested in the owners as tenants in common, in shares proportional to their lot entitlement’. (Body Corporate No. 1/PS 40911511E St James Apartments v Renaissance Assets Pty Ltd & Ors [2003] VCAT 1197). A somewhat different view taken in Hansen Yuncken Pty Ltd v TS Services Pty Ltd [2003] VCAT 2020, where Senior Member Walker noted that upon registration of the plan of subdivision, a body corporate becomes registered as proprietor of an estate in fee simple in the common property and it holds this estate in its own name as nominee for the lot owners. The issue as to who is the owner of the common property was clarified recently by the Victorian Supreme Court. Body Corporate No 1/PS40911511E St James Apartments v Renaissance Assets Pty Ltd [2004] VSC 438 was an appeal from the VCAT Order. The Supreme Court took the approach that upon a proper construction of the provisions of the Subdivision Act and the Transfer of Land Act, a body corporate is the registered proprietor of fee simple in the common property and it is the equitable or beneficial ownership but not the legal ownership of the common property which is vested in the lot owners by section 28(d) of the Subdivision Act. ‘Nominee’ here is not to be understood as an agent. The body corporate is in effect acting as a trustee for the lot owners. The Court took the view that the body corporate is the registered proprietor of the common property under the Subdivision Act and the ownership or interest of each of the lot owners in the common property is an estate or interest in equity. Use of common property A body corporate cannot mortgage common property. By special resolution, the body corporate may permit the use of the common property or the personal property of the body corporate by members of the public when it is not required by body corporate members. A fee may be charged for the use of this property. The body corporate should take care when granting such permission. Given that lot ownership is subject to frequent change, the best approach may be to have all such agreements in written form to ensure proper records are kept. A sample License of Common Property is located in Appendix 6. Care should be taken when preparing such agreements and it is recommended that a legal practitioner finalise the document. In Houghton v Anor & Immer (No. 155) Pty Ltd (1997) 44 NSW 46, the conversion of common property to the exclusive benefit of one of the majority unit holders was viewed by the court to be a fraud on the minority and voidable in equity. In other words, the remaining minority body corporate members were disadvantaged by the agreement. Repairs and maintenance of common property The body corporate must keep in a state of good and serviceable repair and maintain: The common property The chattels, fixtures, fittings and services related to the common property or its enjoyment The equipment and services for which an easement exists for the benefit of the land affected by the body corporate. The body corporate does not have to maintain any service that is exclusively for the benefit of one lot. The body corporate may carry out any necessary repairs, maintenance and other works on common property. A special resolution is required if the total cost of the works on common property is more than twice the total amount of the current annual fees. RULES Division 6 Subdivision (Body Corporate) Regulations 2001, deals with Rules of the Body Corporate. Pursuant to Regulation 219, the standard rules set out in Form 1, apply to all bodies corporate after registration of the plan of subdivision. These rules relate to the use of common property and individual lots, parking, noise, nuisance and pets. Regulation 220 is concerned with the making of rules. A body corporate is a creature of statute in that its powers derive from legislation. Accordingly, its powers are limited to statute and anything incidental or consequential to those powers. If the body corporate acts beyond this power what it does is not valid. In Morrish v Republic Tower Body Corporate Strata Plan No. 341293D [2004] VSC 56, there was interesting, yet very brief, discussion by the Victorian Supreme Court as to whether some body corporate rules that are not all that uncommon in residential buildings in Victoria are in fact invalid (for instance, restricting pet ownership). The time may be approaching where such rules or other rules which appear as ultra vires or beyond the scope of the power of the body corporate will be tested particularly those which impinge on the private use of a lot. By special resolution, the body corporate may make additional rules. Members should have had the opportunity to examine the proposed new, amended or revoked rules. These changes should be reasonable and fair and not work to hinder the day to day operation of the body corporate. Care should also be taken to ensure that the additional rules are formulated within the parameters of the function and powers of bodies corporate as specified in Regulations 201 and 202. The rules should be made in good faith and not for an ulterior motive. Further, the rules must not be inconsistent with any restrictions as noted in the plan of subdivision nor any other legislation such as the Equal Opportunity Act 1995. The body corporate, via the committee and any relevant body corporate manager, has a duty to act in good faith and to respect the rights of body corporate members. Changes may be sought so that body corporate rules are being usurped for what should really be a restrictive covenant. Additional rules should not be unjust, unfair or unreasonable. The functions and powers stipulated in Regulations 201 and 202 are more limited than those from previous body corporate legislation and relevant regulations. Having said this, there is no complete certainty as to the absolute width and dimension of body corporate powers and functions. There is no doubt however that body corporate members have private rights and liberties which must be respected. These rights in turn must be balanced with the well being, reputation and efficient running of the subject development. Perhaps a more equitable approach to deal with such matters may be based on the requirement for a unanimous resolution of members as is necessary to effect other important changes to a development (see section 32 Subdivision Act 1988). It is important to realise that any additional rules of a body corporate which have been approved by a special resolution (postal ballot or at a general meeting) will not come into effect until they are recorded by the Registrar of Titles. The Registrar must be provided with a copy of the special resolution and a copy of the additional rules. A mere resolution is not adequate.