Many Committees feel unable to replace an owners corporation (OC) manager who is no longer meeting expectations. Developer-appointed agreements, long contract terms and restrictive termination requirements often make a change seem out of reach.
When the manager controls the strata roll and communication with owners, even calling a meeting or gaining sufficient support can become difficult.
A recent Victorian Civil and Administrative Tribunal (VCAT) decision has provided welcome clarity. VCAT confirmed that a Committee has the authority to terminate its manager even if the original appointment requires a vote of all owners.
This article explains the decision and how Committees can use this guidance to make confident and lawful governance decisions.
Key Takeaways:
- VCAT confirmed that Committees can terminate an OC manager even if the contract requires a full owners’ vote, giving them clearer authority to act when a manager underperforms.
- Restrictive or developer-imposed clauses can’t override a Committee’s ability to govern effectively, ensuring owners aren’t locked into arrangements that no longer serve the building.
- Committees now have a clear, lawful pathway to change managers when service falls short, as long as the decision is well-documented and follows proper process.
Why Committees struggle to terminate their OC manager
In many developments the original manager is appointed by the developer for a five-year term, often with further options.
These agreements usually require termination by ordinary or special resolution at a general meeting of all owners.
In practice this is difficult to achieve. Managers may:
- hold the strata roll
- control communication channels
- coordinate or delay meetings
- make it hard to reach quorum or secure enough votes
This leaves many Committees feeling unable to act even when a change is clearly needed for the benefit of the building.
VCAT case study: Upper West Side and the termination of an OC manager
VCAT examined this issue in a case involving the Upper West Side development in Melbourne’s CBD. The developer had appointed an OC manager for a five-year term with an option to extend.
Once the owners took control and a Committee was elected, the Committee:
- passed an email ballot to terminate APM
- ratified the decision at a Committee meeting
APM disputed the termination and argued that the original appointment required a special resolution of all owners before the manager could be removed.
VCAT was asked to determine whether the Committee had the authority to terminate the agreement despite the restrictive clause.
VCAT’s finding on Committee power to terminate an OC manager
VCAT confirmed that the Committee did have the authority to terminate the manager.
The Tribunal found that:
- Committees hold broad delegated powers
- restrictive termination clauses cannot defeat practical or lawful governance
- developer-imposed arrangements cannot bind future owners in a way that prevents the OC from operating effectively
This decision gives a clear and practical interpretation that supports Committees acting in the best interests of their community.
What the VCAT decision means for your OC
This clarification supports buildings that are dealing with:
- unresponsive or underperforming managers
- poor communication
- restricted access to records
- legacy developer contracts
- stalled maintenance or compliance actions
Committees do not need to remain in an arrangement that no longer serves the property.
They can initiate a management change when it is necessary for the building’s governance, transparency and performance.
How Committees can properly terminate an OC manager
While the Committee has this authority, it must still meet its obligations under the OC Act.
This requires the Committee to act fairly, honestly and diligently to make decisions that reflect the best interests of all owners.
Before taking action, Committees should ensure:
- the decision is properly documented
- reasons for termination are clear and reasonable
- legal advice is obtained where appropriate
- notice requirements in the agreement are followed
- the process is transparent and defensible
Handled correctly, a management change can strengthen governance, improve service quality and build confidence among owners.
Considering a change of OC manager?
This VCAT clarification gives Committees the assurance they need to act in the best interests of their building.
When your current manager is no longer supporting effective governance or day-to-day operations, there is a clear path to make a change.
We support Committees by:
- reviewing management contracts
- outlining practical termination pathways
- coordinating legal advice where needed
- guiding a smooth and compliant transition to a new manager
If your Committee is exploring a change or wants to understand its next steps, reach out to our team today.
