Sectional title owners sometimes ask the same question about Trustees, especially when it comes to imposing fines or penalties on owners who contravene the Rules of a scheme.
Can the Trustees impose penalties on owners of units in a scheme?
The answer is yes, they can, . . . BUT (in law there’s usually a “BUT”)
ONLY IF:
• Specific provision has been made in the Rules of the scheme for penalties;
• The penalties provision is procedurally fair and reasonable and applies equally to all owners in the scheme; and
• The Rules are filed with the Deeds Office.
The ‘penalties clause’ is usually contained in the Conduct Rules of the scheme, but can also be contained in the Management Rules.
Because Conduct Rules and Management Rules must be considered and adopted at a Special General Meeting of the members of a Body Corporate, the unit-owners will always have a say in what the Rules contain. For a Body Corporate to adopt new Management Rules a unanimous resolution of the members is required; for Conduct Rules a Special Resolution is required.
Not only must the Rules be approved by the members but they must also be lodged at the Deeds Office to be enforceable by a Court or an Arbitrator.
To be enforceable a Rule must have what is called a ‘legitimate purpose’. In other words a fine can’t be imposed arbitrarily or ‘just for fun’. Take parking for example: hypothetically the Rule says that residents cannot park in visitors parking bays because owners must park their cars in their garages (there are exceedingly few visitors’ parking bays.) You continue parking in a visitor’s parking bay because you use your garage as a storeroom (even after told not to), I’m sure you’ll agree that the Trustees should legitimately be allowed to fine you for the transgression.
The law must also consists of ‘procedural fairness and the person who is contravening the parking Rule (in this case you!) must be given written notice to remedy the situation. If after receiving a written warning you still don’t remedy the situation and continue parking in the visitor’s parking bay, you must still be given the opportunity to have your side of the matter heard before a fine can be issued.
You may have a valid reason for parking in the visitor’s parking bay and you must have an opportunity to put your case before the Trustees.
In a previous blog I mentioned that the Trustees must take their position very seriously. This is one of those situations where Trustees will be asked to apply their minds impartially and exercise their discretion to reach a wise decision.
If they find that you are indeed in the wrong, the ‘punishment must fit the crime’, so to speak, which essentially means the fine should be reasonable in proportion to the transgression.
Let me take this opportunity of wishing all my readers a VERY BLESSED EASTER – if you are going to be on the road, please be safe!
