Overview of community corporations

The governance of community corporations

Unless the scheme by-laws provide otherwise, the council of a community corporation is constituted of the community corporations of the community titles schemes that belong to the scheme as well as the owner of each lot in the scheme.

Where the owner of a lot is a body corporate or there are joint owners, then a nominee of the owners will sit on the council.

Under the Act certain people are not eligible to be council members of a community titles scheme. For example, a scheme manager of any community corporation in the community scheme, or a person whose affairs are under insolvency laws. For any period that a member of a community corporation is unfinancial, the member or nominee cannot vote on any matter as a council member.

Neither the council of a community corporation or an officer of a community corporation can delegate their functions under the Act or scheme by-laws.

An officer of a community corporation must be a member of the council of the community corporation.

The objective of a community corporation is to implement processes and achieve outcomes for the use and enjoyment of lots and common property in the community scheme that are not:

• unfairly prejudicial to or discriminatory against a person, or
• oppressive or unreasonable.

Role of the community corporation’s council

The council of a community corporation is responsible for performing the functions of the community corporation subject to the Act, the scheme by-laws and any ordinary resolution of the community corporation.

If the performance of a function of a community corporation requires an ordinary or special resolution, the council can only perform the function if the community corporation has voted on the proposed resolution and it is passed as an ordinary or special resolution. For example, money cannot generally be spent outside the budget unless that is authorised by ordinary resolution of the community corporation under section 87 of the Act.

Duties of council members

Council members will have a statutory duty to:

• At all times act honestly and in good faith in the performance of their functions as a member of the council or officer of the community corporation.
• At all times exercise the degree of care and diligence in the performance of those functions that a reasonable person in the person’s position and the circumstances of the community corporation would reasonable be expected to exercise.
• Not improperly use their position to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the community corporation or a member of the community corporation.
• Disclose as soon as possible in writing any conflict of interest or possible conflict of interest in any matter considered by the council.

• Not vote on a matter that requires disclosure of a conflict or possible conflict of interest.

Council members can be removed from the council, by order of SAT, if they breach any of these duties.

Protections from liability

No civil liability attaches to a council member or officer of a community corporation for anything that the person has done or omitted to be done in good faith:

• in the performance of a function under the Act or the scheme by-laws, or
• in the reasonable belief that the act or omission was in the performance of a function under the Act or the scheme by-laws.

However, the community corporation can be held liable for such acts or omissions of a council member or officer of a community corporation.