Unit Titles (Management) Act 2011 (ACT)

This case was heard in the Supreme Court of the Australian Capital Territory, and involved a dispute between members of an owners corporation regarding the management of common property under the Unit Titles (Management) Act 2011 (ACT). The dispute arose from the interpretation of the Act’s provisions regarding the authorisation of part-owners’ representatives and the functions and powers of the owners corporation. Specifically, the court had to determine whether the owners corporation had the authority to grant a sublease of common property for a term exceeding five years, contrary to the statutory provisions.

The court examined the statutory framework governing the management and administration of common property by owners corporations. The Act stipulates that an owners corporation holds the common property as an agent for the unit owners and must provide all members with reasonable use and enjoyment of the common property. The court considered whether the owners corporation’s actions, including granting a sublease beyond the statutory limit, complied with these obligations and whether the statutory provisions were mandatory or directory.

The court concluded that the statutory provisions regarding subleasing common property are mandatory and not directory. The owners corporation, by granting a sublease for a period exceeding five years, acted outside the scope of its statutory authority. The court emphasised that the Act explicitly restricts the duration of subleases to five years, and any deviation from this requirement is not permissible. Additionally, the court noted that the owners corporation’s actions did not align with the statutory mandate to provide reasonable use and enjoyment of the common property to all members.

The court ordered the owners corporation to rescind the sublease agreement that exceeded the statutory duration and to comply with the Act’s provisions in future dealings with the common property. The decision underscored the importance of adhering to statutory mandates in the management of common property within owners corporations, highlighting the limited discretion available to such corporations in exercising their powers.