The role of a scheme manager
The Community Titles Act 2018 (the ‘Act’) allows a community corporation to appoint a person or organisation as a scheme manager to perform certain scheme functions under a scheme management contract.
A scheme manager fills the same role that a strata manager would fill for a strata titles scheme under the Strata Titles Act 1985. However, many community scheme managers will have broader functions due to the tiered nature of community titles schemes, where they will need to interact with other schemes that belong or are related to the scheme they manage.
Scheme managers manage the day to day functions of their community titles scheme, in line with the scheme’s management contract and the provisions of the Act.
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Functions of a scheme manager
A community corporation may authorise a scheme manager to perform specified scheme functions under a scheme management contract.
Any authorisation of functions is subject to any conditions specified by the community corporation and may be varied or revoked by the community corporation.
If a scheme manager is authorised to perform a function of a community corporation that requires a special or ordinary resolution before it can be performed, then the scheme manager may only perform the function if the relevant resolution has been passed.
Functions that a scheme manager cannot be authorised to perform include:
- Authorising a person to perform a scheme function other than as an agent, employee or contractor of the scheme manager.
- Determining contributions.
- Entering into a contract with another scheme manager, varying, extending or terminating such a contract or making a decision relating to such a contract or the meaning of such a contract.
- The functions of a community corporation as a member of the council or an officer of another community corporation.
- Terminating a contract for services or amenities under section 102 of the Act.
- Commencing proceedings on behalf of the community corporation in the State Administrative Tribunal or in a court or other tribunal.
- Authorising the community corporation’s common seal to be applied to a document.
- Authorising a person to sign documents on behalf of the community corporation or on behalf of the council or an officer of the community corporation.
- A scheme function declared by the regulations to be a scheme function that may not be performed by a scheme manager.
A scheme manager is not authorised to perform functions as a scheme manager unless:
- A scheme management contract is in force between the scheme manager and the community corporation.
- The requirements of the regulations are met by the scheme manager and each agent, employee or contractor of the scheme manager for:
- the conduct of, and verification of the conduct of, criminal record checks
- educational or other qualifications
- any other matter relevant to the performance of functions as a scheme manager.
- The scheme manager maintains professional indemnity insurance as required by the regulations.
Scheme management contract requirements
A scheme management contract is required to be in writing and must:
- State the scheme manager’s name and address for service.
- State the community corporation’s name and address for service.
- State the Australian Company Number or Australian Business Number of each party with such a number.
- Specify when the contract starts and ends.
- Specify each scheme function to be performed by the scheme manager under the contract.
- Specify any conditions that are to apply to the performance of the functions.
- Provide that the scheme manager must give the community corporation written reports about the scheme manager’s performance of functions under the contract and set out the reporting requirements as to content and timing of the reports.
- Specify the remuneration that is payable under the contract or the manner in which the remuneration that is payable under the contract is to be calculated.
- Specify the accounts to be used under section 122 of the Act.
- Set out the text of, or give notice drawing attention to section 125 of the Act.
- Provide for any other matter that is required by the regulations.
A scheme management contract cannot contain provisions that exclude or restrict the scheme manager provisions of the Act or contain a waiver of any right, remedy or benefit conferred under those provisions.
The Act outlines a comprehensive set of statutory duties on scheme managers, which are enforceable by the community corporation.
A scheme manager of a community corporation must:
- Act honestly and in good faith in the performance of their functions.
- Exercise a reasonable degree of skill, care and diligence in the performance of their functions.
- Have a good working knowledge of the Act.
- Not make improper use of information acquired as the community corporation’s scheme manager to gain (directly or indirectly) an advantage for themselves or someone else, or to cause a detriment to the community corporation or a member of the community corporation.
- Not make improper use of their position of scheme manager to gain (directly or indirectly) an advantage for themselves or someone else, or to cause a detriment to the community corporation or a member of the community corporation.
- Take reasonable steps to ensure the scheme manager’s agents, employees and contractors comply with the Act when performing scheme manager’s functions.
- Inform the community corporation in writing of any direct financial or other interest that they have, which conflicts or may conflict with the performance of their functions as scheme manager, as soon as is practicable after they become aware of the relevant facts.
- Inform the community corporation in writing of the amount or value of any remuneration or other benefit that they receive (or have a reasonable expectation of receiving) in connection with the performance of the scheme manager’s functions, as soon as is practicable after becoming aware of the relevant facts.
Operation of accounts
A scheme manager must be able to account separately for money that the scheme manager is paid or receives on behalf of a community corporation.
A scheme manager is required to pay all money received on behalf of a community corporation into one of the following accounts:
- A separate authorised deposit-taking institution (ADI) trust account for the community corporation.
- A pooled ADI trust account solely for a number of community corporations for which they are a scheme manager.
- An ADI account of the community corporation nominated to the scheme manager for the purpose by the community corporation.
Volunteer scheme managers
A volunteer scheme manager is a scheme manager of a community corporation who:
- Is the owner of a lot in the community scheme who personally performs the work of a scheme manager.
- Does not receive any fee, reward or benefit for work performed as a scheme manager other than an honorary fee or reward not exceeding an amount fixed by the regulations.
Exemptions for volunteer scheme managers
Volunteer scheme managers are not required to have a scheme management contract in force between the scheme manager and community corporation. They are also exempt from the requirements to obtain criminal record checks, educational qualifications and professional indemnity insurance.
However, a volunteer scheme manager is still required to operate under an authorisation from the community corporation and that authorisation may be subject to conditions. For example, a community corporation could make it a condition of the authorisation that the volunteer scheme manager provide a criminal record check to the community corporation at regular intervals.
Operation of accounts
If a community corporation has a volunteer scheme manager, the community corporation must have an ADI account. The volunteer scheme manager must pay all money received on behalf of the community corporation into an ADI account of the community corporation.
Protection from liability
No civil liability attaches to a volunteer scheme manager for anything they have done or omitted to do 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 may be held liable for acts or omissions of a volunteer scheme manager for the community corporation.
Termination of scheme management contract
Proper grounds for termination by community corporation
A community corporation may terminate a scheme management contract on the grounds that:
- The scheme manager contravened the Act or the scheme management contract.
- The scheme manager is bankrupt or a person whose affairs are under insolvency laws (in accordance with section 13D of the Interpretation Act 1984).
- The scheme manager is a Chapter 5 body corporate within the meaning given in section 9 of the Corporations Act 2001 (Commonwealth).
- The scheme manager (or a director or chief executive of the scheme manager) is convicted in WA of an offence punishable by imprisonment for 12 months or longer, and the community corporation is satisfied that the offence affects the scheme manager’s suitability to perform the scheme manager’s functions
- The scheme manager (or a director or chief executive of the scheme manager) is convicted outside of WA (in Australia or elsewhere) of an offence that, if it had been committed in WA, would be punishable by imprisonment for 12 months or longer, and the community corporation is satisfied that the offence affects the scheme manager’s suitability to perform the scheme manager’s functions.
Steps to terminate scheme management contract
To terminate a scheme management contract, the community corporation must undertake the following steps.
1. Give the scheme manager a show cause notice
The show cause notice must:
- Be in writing.
- State that the community corporation proposes to terminate the scheme management contract.
- Specify the grounds on which it is proposed to terminate the scheme management contract.
- Set out particulars of the facts relied on as evidence of those grounds
- Invite the scheme manager to make written submissions to the community corporation as to why the scheme management contract should not be terminated.
- Specify the period (being at least 14 days after the date of the notice) within which the written submissions must be received by the community corporation.
A community corporation must give proper consideration to any written submissions made by the scheme manager within the period specified in the show cause notice.
2. Give written notice to the scheme manager of the termination
If a community corporation is satisfied that there are proper grounds for termination of a scheme management contract, the community corporation may terminate the contract by giving the scheme manager written notice of termination.
The written notice of the termination must:
- Specify the date (being not less than 28 days after the date of the notice) on which the termination will take effect.
- Inform the scheme manager of the right to apply to the State Administrative Tribunal for review of the decision to terminate the contract.
Return of property to community corporation
If a scheme management contract is terminated, the scheme manager must return to the community corporation the following items:
- All records of the community corporation, including records of account, in the scheme manager’s possession or control.
- All keys and other property of the community corporation in the scheme manager’s possession or control.
The property must be returned to the community corporation within 28 days after the day on which the contract is terminated, even if the scheme manager has made an application for review of the decision to terminate the contract.
A scheme manager cannot exercise any claim or lien against or on the property of a community corporation that the scheme manager is required to return to the community corporation under the Act.
In addition, the Act provides for the recovery of property where a community corporation has given written notice to a person, requiring that person to deliver all records, keys or other property of the community corporation that they have in their control to a specified person within a specified period. If the person fails to deliver the property in their control in accordance with the notice received, it is an offence under the Act which carries a penalty of $3,000.
Provision of information about industry
A scheme manager (other than a volunteer scheme manager) is required to lodge a periodic return at Landgate which contains aggregated information about a community titles scheme they manage (this being, information ordinarily kept by a scheme manager and that is readily available). The purpose of the information will be for Landgate to publish a list of scheme managers (if it chooses to do so) and to use the information for policy development, including to advise the Minister on matters relating to scheme managers.