Why is this article needed?

What is ‘residents participation in the affairs of the village’?

Participation by a resident is optional

Who has authority over village affairs?

What comes first, the residents committee or the residents constitution?

The law clarified

Residents constitutions

Residents committees

Residents meetings

Residents funds

Village financials

Residents participation in the affairs of the village

One of the roles of ARQRV is to educate residents about their participation in village affairs; particularly about the proper role of residents committees, how their authority is quite limited, the entitlements of residents, and their relationship with their residents committee and subcommittees.

Why is this article needed?

Retirement village communities are meant to operate quite differently to other bodies, such as incorporated associations (sporting, social or other community groups) or bodies corporate in community titles schemes (freehold unit arrangements).  These bodies are a separate legal entity distinct from the individuals who comprise the group.  The administration and full control of each of these groups rests with a management committee established for that purpose, under the relevant legislation.

The above model is significantly unlike that for retirement village communities which, as intended by the Retirement Villages Act 1999 (the Act), is to have the residents central to all important decisions about matters relevant to the affairs of the village (rather than a controlling management committee); and that residents committees operate at the behest of the residents, and have no authority to make important decisions unless the residents have given their consent.

Without a good understanding of the above principles and the intentions of the Act, the harmony of the village and the enjoyable participation of residents may be adversely affected.

In the ARQRV’s experience it is quite common for:

  • committee members, especially those with managerial or business experience, to attempt to run the committee as a controlling managerial committee, or attempting to act as an extension to village management
  • committee members to assume they have the authority to direct residents
  • chairpersons to negotiate with the scheme operator without the knowledge and approval of the residents (or even the committee).

This behaviour is not consistent with the intention of the legislation.

This article sets out the ARQRV’s views on the residents participation in the affairs of a village with particular emphasis on the following.

  • The operation of a community of residents in a retirement village is different to any other body.
  • Keeping administrative procedures simple and relaxed. They don’t require the complexities of a Fortune 500 company.
  • Residents have a wide variety of skills – not all of them are experts on finance or administration and some may therefore need guidance.
  • Residents committees and subcommittees keeping residents fully informed of all current matters, so that rumours, misunderstandings, and incorrect assumptions can be reduced.
  • Encouraging residents, and resident committee members, to not make assumptions based on their prior experience when involved in village affairs, but to undertake some level of research/reading before actioning a matter.  ARQRV has available, on its web site, numerous resources to assist residents.

What is ‘residents participation in the affairs of the village’?

The above term is derived from s 3(2)(c) of the Retirement Villages Act 1999 (the Act).  Part 7 of the Act governs these matters, and include the following:

  • establishment, function, and operation of the residents committee
  • establishment and operation of subcommittees
  • adoption of a residents constitution
  • holding residents meetings
  • voting by residents
  • making village by-laws.

Put simply, ‘the affairs of the village’ is the business conducted by residents.  They affect all residents although each resident may decide how much he or she participates.

Participating in sporting activities or in social functions, or using the common facilities are not considered ‘affairs of the village’.  However, the establishment and the operation of the resident subcommittees or other groups which organise these activities is.

Unfortunately, there is limited, and in some cases, no direction in the Act as to procedures for the above listed matters.  This is intentional, as the legislators recognised that:

  • each village would have different needs when undertaking the above matters; and
  • where the Act is silent, relevant procedures may be decided by residents and be as simple as they consider appropriate.

Participation by a resident is optional

An important principle regarding residents participation in village affairs is set out in s 3(2)(c) of the Act which provides that it is entirely up to each resident if they wish to do so.

Section 3 – Objects

(2) The following are also objects of this Act—

(c) to facilitate participation by residents, who want to be involved, in the affairs of retirement villages

If a resident wishes to not take part in the matters mentioned above, that is fine.  However, they are entitled to take part at any time in the future.  For example, a resident may not have attended a residents meeting or voted in an election for many years, but they can do so at any time of their choice.  This principle should be included in the residents constitution.

The same applies to social and sporting interactions but these are not the topics of this article.

Who has authority over village affairs?

When it comes to the village affairs, a single resident no matter their position or what they think their role is (e.g., the chairperson of the residents committee, of a subcommittee or of a similar group); or even a formal group of residents (e.g., the residents committee or a subcommittee or a similar group) have no natural authority to direct or control village affairs.

Rather, they are controlled by the voting of residents or by ongoing powers specified in a residents constitution – for example, a residents committee may be given authority by the constitution to spend a specified amount each month without referring the expenditure to a vote by residents at a residents meeting.

The above principles should be properly specified in the residents constitution.

What comes first, the residents committee or the residents constitution?

The Act provides for both the establishment of a residents committee and adoption of a residents constitution, but it does not specify which should be established first.  There are various arguments for either, but there are distinct advantages to developing a residents constitution first.  However, this is often not the case which then allows residents committees, or some residents generally, to go down a path which may not be best practice or acceptable to a majority of interested residents. 

By first developing a proper residents constitution using the ARQRV’s model constitution as a basis, the procedures for relevant matters will have been discussed, debated, and decided by input from all interested residents.  For example, what first comes to mind is, without a residents constitution, how was the composition of the residents committee decided, and how was the election conducted?

Notwithstanding the point above, where a residents committee is established first there is nothing to prohibit residents from developing and adopting a residents constitution acceptable to residents.  Where this happens it is usually the case that a majority of interested residents may view the operation of their residents committee differently to that already decided by the committee (see topic Residents constitutions below).

The law clarified

The following provisions of the Act, relating to residents participation, are usually the most misunderstood or overlooked.  Note that, these are law and cannot be changed.  As they are law, they are not merely a suggestion or recommendation.  Following each provision is the view taken by ARQRV, considered as best practice, for their application.

Residents constitutions

Read also article Residents constitutions

Section 128 of the Act prescribes a legal entitlement for residents to initiate and develop their residents constitution.

Section 128 – Residents constitution

(1) The residents of a retirement village may, by a majority vote of residents at a residents meeting, adopt a constitution.

(2) The constitution –

(a) may not be inconsistent with this Act; and

(b) must provide for a matter prescribed under a regulation.

(3) The committee must conform with the constitution.

ARQRV considers it essential that the residents of a village adopt a residents constitution that sets out comprehensive procedures for village affairs including the transparent and consistent operation of their residents committee.

Note that, a residents constitution is not a set of restrictive rules but rather a framework of clear procedures to be adopted in relevant circumstances.

Explanation of Subsection 1

A group of residents, no matter how small, may initiate the development of a residents constitution and present a proposed constitution to all residents for consideration.  There is no authority for any individual or group to prevent this.  However, the development must be done transparently and with proper input and consultation of all interested residents.  Further, nowhere does it state that the residents committee must have a role in its development and adoption.  However, it is usual and reasonable to expect that a properly operating residents committee would encourage and assist in the endeavour. 

A residents constitution is adopted where a simple majority vote of those entitled to vote, and who voted, voted in favour (refer to topic Voting by residents below).

Explanation of Subsection 2

(a) The procedures in the constitution must not be inconsistent with the procedures prescribed in the Act but they may and should be added to.

(b) this does not have any effect as there is no relevant regulation at the time of writing.

Explanation of Subsection 3

This provision requires that the residents committee must conform with the residents constitution.  This means that regardless of the view of members of the residents committee or disagreeing residents, procedures in a new or amended residents constitution would supplant any equivalent procedure decided previously by residents or a residents committee.  A clause to this affect should be included in the residents constitution.

A model residents constitution (including a copy with explanations) is available in Microsoft Word on Residents Committee Manual page.

Residents committees

For further information about residents committees, you should refer to the comprehensive Residents Committee Manual published by ARQRV.  One printed copy of the manual is available to every village free of charge.

Establishment of a residents committee

Section 127 – Residents committee

(1) The residents of a retirement village may establish, by election conducted among themselves, a residents committee.

(2) A member of the residents committee—

(a) holds office for not more than 1 year, but may be re-elected; and

(b) may be removed, at any time, by special resolution at a meeting of the village residents.

(3) The residents committee may, subject to section 128—

(a) decide its own procedures; and

(b) form subcommittees and decide a subcommittee’s procedures.

The above may be viewed as follows.

  • There must be some type of ‘election’ where all residents entitled to vote (see s 133) are invited to vote to establish a residents committee. 
  • There are no details for the composition of a committee nor how the election is to be conducted (or even how to go about deciding this).
  • The term of each member of a residents committee is ‘for not more than 1 year’.  This means that where all members of the committee were elected at the same time (which is usually the case) and 1 year has elapsed, in the eyes of the law the committee simply dissolves.  It is therefore prudent that elections be timely, especially where there is a risk of a committee not being recognised when requesting the scheme operator for village financial information or meetings.
  • A member of the committee may be removed only by a special resolution.  That is, each dismissal must be conducted separately.
  • A residents committee may decide its own procedures only when they are not provided for in the residents constitution.  This applies regardless of when the residents constitution is adopted.
  • A residents committee may form subcommittees and decide a subcommittee’s procedures within the same limitations as apply to the residents committee.

The work to establish the first residents committee of a village may be initiated by as few as two interested residents (for more information refer to the Residents Committee Manual).

The principles explained above should be properly specified in the residents constitution.

Function of residents committee (a facilitator only)

The Act specifically provides the proper function of residents committees.

Section 129 – Committee’s function

The function of the residents committee is to deal with the scheme operator on behalf of residents about the day-to-day running of the village and any complaints or proposals by residents.

The above section does not provide that the committee be a ‘management committee’, as in other bodies (e.g., a body corporate management committee or a management committee of an incorporated association).  Therefore, the committee is not authorised to act as an independent body, but rather they must only act for and on behalf of residents who provide the direction by voting.

Even though residents committees are authorised to ‘deal with the scheme operator’ there is a complete absence of authority in the law to direct or control matters.  As such, they are not automatically authorised to make a policy, to take a position, or to make decision on a significant matter.  Put simply, the committee is a facilitator of decisions made by residents.

Of course, a residents committee may be authorised by a majority of voting residents, or by appropriate clauses of a residents constitution to decide certain matters, to conduct certain business or to spend amounts from the residents fund.

Example of decision making relating to expenditure – a residents committee may be authorised by the residents constitution to purchase items within a pre-determined monthly amount (e.g. $500), they could approve the purchase of a dart board for the games room but not the purchase of a $1,000 table tennis set.  The latter would need to be approved by voting residents.

Example of decision making relating to other – matters¬ voting residents may have passed a resolution at a residents meeting authorising the residents committee, on their behalf, to negotiate and decide various matters with the scheme operator about the specifications of a new village gym.  Without this resolution of residents, the residents committee would be authorised to conduct negotiations, but they would not be authorised to decide and finalise the various matters.  These decisions may only be made at a meeting of interested residents

The above principles should be properly expressed in the residents constitution.

Operation of residents committee

Residents are advised to include as many procedures relevant to the operation of their residents committee into the residents constitution as they consider appropriate.

An important principle applicable to residents committees is that the body must act collectively, and then only when they are so authorised by a vote of residents or by the residents constitution.  Also, individual members of the committee, including so-called office bearers, but particularly the chairperson, does not have any special authority or power.  The above principle, together with the role of each office bearer, should be properly specified in the residents constitution.

Minutes of residents committee meeting

The Act provides specific procedures relating to minutes of residents committee meetings.

Section 129 – Minutes of meetings

(1) The residents committee must ensure full and accurate minutes are taken of each meeting of the residents committee.

(2) For subsection (1), the minutes must include at least the following particulars—

(a) the date, time and place of the meeting;

(b) the names of persons present and details of the capacity in which they attended the meeting;

(c) issues discussed and how each issue was decided or dealt with;

(d) details of correspondence, reports, notices or other documents tabled.

(3) The minutes must be presented at the next residents committee meeting for confirmation, and if confirmed, a member of the residents committee must sign the minutes as accurate.

(4) At the request of a resident, the residents committee must give the resident access to, or a copy of, the minutes of a residents committee meeting.

Reading subsections 1,2 and 4 above, prescribes that residents are legally entitled to be kept fully informed, without exception, of what their residents committee is doing.  This means that nothing may be kept confidential from residents.  A properly functioning residents committee would allow self-invited guests to meetings for transparency and then distribute minutes to all residents without being requested.

Procedures relevant to the above matters should be included in the residents constitution.

Residents meetings

Calling of residents meetings

Section 132 of the Act gives authority for the residents committee or the scheme operator to call meetings of all residents.  Where either of these call a meeting, written notice must be given to each resident of the village 14 days before the meeting.

Of note, the Act does not provide a definition of what is or isn’t a ‘residents meeting’.  In other words, the Act does not specify that a meeting of residents is only a ‘residents meeting’ when called by the residents committee or the scheme operator.   You will also note also that the Act does not prohibit residents from organising themselves, with or without a residents committee established, to call residents meetings.

Adequate procedures for calling residents meetings should be included in the residents constitution.

Quorum at residents meeting

The Act is completely silent as to the number of voting residents required to make a quorum for a residents meeting.  As each village is different, this would be a matter that should be decided by residents and included in their residents constitution.  However, where there is no residents constitution specifying a quorum, there are some subtle indicators in the Act which, when read together, may be relied upon to some degree, namely:

  • s 3(2)(c) which provides that participation by a resident is entirely optional; and
  • the definition of ‘special resolution’ provides that the resolution is passed by at least three-quarters of the persons entitled to vote who vote.

Therefore, seeing that the Act is silent concerning the number required for a quorum at residents meetings, including a meeting for a special resolution, it could be argued that a residents meeting, for any purpose, may be conducted where a reasonable number of residents entitled to vote, attend.

This concept is not yet fully explored.  In the meantime there is nothing to prevent a residents constitution from specifying a quorum for resident meetings in their village.

It is intended that an article inviting discussion on this matter will be published soon.

The most important thing is that every resident is given a written notice of the meeting or of the vote at the relevant time. 

Urgent residents meetings

This matter is explained in the Residents Committee Manual.

Scheme operator attending residents meetings

This matter is explained in the Residents Committee Manual.

Voting by residents

This matter is explained in the Residents Committee Manual.

Residents funds

This matter is explained in the aricle Residents funds and the Residents Committee Manual.

Village financials

Individual residents and residents committees are entitled by the Act to various levels of involvement in the draft village budgets and statements of expenditure.

Refer to Village Financial guidelines, for further information.