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Company Titles (Home Units) Bill 2013
Introduction Print
EXPLANATORY MEMORANDUM
General
The Bill will confer additional jurisdiction on the Victorian Civil and
Administrative Tribunal (VCAT) to hear and determine neighbourhood
disputes affecting company title corporations and service companies for
building subdivisions.
The Bill also makes consequential amendments to the Estate Agents Act
1980 and the Victorian Civil and Administrative Tribunal Act 1998.
Clause Notes
PART 1--PRELIMINARY
Clause 1 sets out the main purpose of the Bill.
Clause 2 provides for the commencement of the Bill. The provisions will
commence on 1 December 2013, unless they are proclaimed to
commence at an earlier date.
Clause 3 contains definitions of several terms used in the Bill. Key
definitions include company title corporation, service company,
building subdivision, residual land, rule and service agreement.
Clause 4 sets out the meaning of "neighbourhood matter", which is
determined by reference to the Schedule to the Bill and includes:
health, safety and security; residual land; units; design of residual
land or units; behaviour of persons; dispute resolution; and
notices and documents.
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Clause 5 sets out what constitutes a "neighbourhood dispute". In order to
be a neighbourhood dispute, a dispute must relate only to a
neighbourhood matter or matters, and must affect a company title
corporation or a service company.
Clause 5(3) specifically excludes the following categories of
dispute from the meaning of neighbourhood dispute--
disputes relating to the sale, transfer or forfeiture of
shares in a company title corporation or service
company;
disputes relating to the lease of a unit that is part of land
owned by a company title corporation;
disputes relating to a licence to use a unit that is part of
land owned by a company title corporation;
disputes relating to the winding up of a company title
corporation or service company;
disputes in relation to which a party to the dispute
claims relief under Part 2F.1 of the Corporations Act
2001.
PART 2--VCAT JURISDICTION OVER NEIGHBOURHOOD
DISPUTES
Clause 6 provides that VCAT may hear and determine neighbourhood
disputes.
Clause 7 sets out who may apply to VCAT to resolve a neighbourhood
dispute. The people who may apply are: a shareholder or former
shareholder of a company title corporation or service company;
a company title corporation; a service company; an occupier or
former occupier of a unit that is part of land owned by a company
title corporation; an occupier or former occupier of a unit in a
building subdivision; or a unit mortgagee.
Clause 8 provides that, subject to subclause (2), VCAT may make any
order it considers fair in determining a neighbourhood dispute.
Subclause (1) lists some of the orders that can be made, including
an order that a person do or not do something, an order varying a
term of a contract or agreement and an order declaring a term of a
contract or agreement to be void or not void. However, a term of
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a contract or agreement for the purposes of this clause does not
include a rule of a company title corporation or service company.
Clause 8(2) lists orders that VCAT cannot make under this
clause, including orders altering a person's shareholding, orders
winding up a company title corporation or service company, or
orders altering the composition of the board of directors. Such an
order could affect a person's interest in the property or change
corporate governance arrangements.
Clause 8(3) provides that if VCAT awards damages in the nature
of interest it must do so at the rate fixed under the Penalty
Interest Rates Act 1983 or at a lesser rate.
Clause 8(4) allows VCAT to make interim and ancillary orders in
relation to neighbourhood disputes.
Clause 8(5) provides a definition of party.
Clause 9 allows VCAT to impose a civil penalty of up to $250 if a person
has failed to comply with a rule of a company title corporation or
service company relating to a neighbourhood matter that imposes
a binding obligation on that person.
Clause 10 sets out factors that VCAT must consider when making an order
under clause 8, including: the impact of a resolution or proposed
resolution of a company title corporation or service company on
the shareholders as a whole; whether a resolution or proposed
resolution of a company title corporation or service company is
oppressive to, unfairly prejudicial to or unfairly discriminates
against a shareholder or shareholders; and any other matter
VCAT thinks relevant.
Clause 11 confers flexibility on VCAT with respect to orders relating to
money, enabling it to specify the proportions each shareholder
must pay, order the corporation to levy contributions and prohibit
the corporation from levying contributions from another party to
the dispute.
Clause 12 allows for court proceedings to be stayed in certain
circumstances, in order to avoid a multiplicity of proceedings.
Clause 12(1) provides that clause 12 applies if a person
commences proceedings in a court which arise wholly from a
neighbourhood dispute in respect of which VCAT has
jurisdiction under the Bill.
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Clause 12(2) provides that the court must stay proceedings if the
proceedings could be heard by VCAT under the Bill, and the
court is satisfied that the proceedings would be more
appropriately dealt with by VCAT.
Clause 12(3) sets out the factors that a court must consider in
determining whether proceedings would be more appropriately
dealt with by VCAT. The court must consider whether, having
regard to the likely costs and duration of the proceedings and any
other matters the court considers relevant, a party is reasonably
likely to gain a material advantage if the proceedings are
determined by VCAT and whether that advantage is outweighed
by a material disadvantage that would be reasonably likely to be
suffered by another party if the proceedings were determined by
VCAT.
Clause 12(4) provides that if proceedings are stayed under
clause 12, any party to the proceedings may apply to VCAT for
an order with respect to the dispute or matter on which the
proceedings were based.
Clause 13 provides that a rule is of no effect if it is inconsistent with or
limits a right or avoids an obligation under the Bill, or if it
unfairly discriminates against a shareholder or an occupier of a
unit. A rule is defined in clause 3 as a clause of the constitution
of a company title corporation or service company, or a by-law,
rule or regulation made by a company title corporation or service
company in accordance with its constitution, but does not include
a term of a service agreement of a service company.
Clause 14 states that clauses 12 and 13 are displacement provisions for the
purposes of section 5G of the Corporations Act 2001. The effect
of this declaration is that any provision of the Corporations
legislation with which clauses 12 and 13 would otherwise be
inconsistent does not apply to the extent necessary to avoid the
inconsistency.
PART 3--GENERAL
Clause 15 provides that nothing in the Bill is intended to prevent a court
exercising jurisdiction conferred under the Corporations Act in
relation to a dispute that relates to a neighbourhood matter.
Clause 16 provides that all penalties (including all civil penalties) are to be
paid into the Victorian Property Fund.
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Clause 17 provides that for the purpose of section 85 of the Constitution
Act 1975, which allows the Supreme Court's jurisdiction to be
altered, it is the intention of clause 12 to alter the Supreme
Court's jurisdiction.
Clause 18 is a regulation-making power. This will enable certain matters to
be prescribed if necessary.
PART 4--AMENDMENTS AND REPEAL
Clause 19 amends section 75 of the Estate Agents Act 1980 to enable costs
and expenses incurred in relation to the administration of the Bill
and the fulfilment of VCAT's functions and duties under the Bill
to be funded from the Victorian Property Fund.
Subclause 19(2) amends section 76 of the Estate Agents Act
1980, which enables excess money in the Victorian Property
Fund to be applied for certain purposes. These purposes are to
include: community education, advice or information services
regarding company title corporations and service companies;
dispute resolution and advocacy services in relation to
neighbourhood disputes involving company title corporations and
service companies; and reviewing, reforming or researching the
law and procedures or reviewing or researching the markets for
real estate regarding company title corporations and service
companies.
Subclause 19(3) inserts definitions of company title corporation,
neighbourhood dispute and service company into section 76 of
the Estate Agents Act 1980.
Clause 20 inserts new Part 4 into Schedule 1 to the Victorian Civil and
Administrative Tribunal Act 1998 to enable any member of
VCAT to make a declaration in relation to a neighbourhood
dispute. This is despite anything to the contrary in section 124 of
that Act, which provides that the power to make a declaration is
exercisable by a VCAT member who is a legal practitioner or by
a presidential member.
Clause 21 provides for the repeal of Part 4 of the Bill on 1 December 2014.
The repeal of Part 4 does not affect in any way the continuing
operation of the amendments made by that Part (see section 15(1)
of the Interpretation of Legislation Act 1984).
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SCHEDULE
The Schedule contains a list of matters that are "neighbourhood matters" for
which VCAT has jurisdiction. The list of matters is derived from a similar
list in Schedule 1 to the Owners Corporations Act 2006, which lists the
matters on which owners corporations can make rules under section 138(1) of
that Act.
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