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Topic
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This is a 40 unit Strata in NSW with a totally new EC recently elected.
The EC is faced with an account from an interior designer that was generated by the previous EC for $ 20,000. This designer had done work for the previous Chairman and the chairman had him come up for some designs for refurbishment of the halls and foyer.
There does not appear that quotes had been obtained before the work and the designs have not been accepted by the OC.
The new EC feels that new quotes and designs should be obtained from another designer before any decisions are made.
The new EC is faced with the problem of whether or not to pay the account for $ 20,000 or to pay part of it or none at all.
The new EC is inheriting this account with very little knowledge of what transpired financially between the designer and the previous EC.
The designer took a whole year for his designs and only one small payment was made to him through out the year.
It has been stated by the designer that the designs belong to him. if the designs are returned to him and not used, are the OC responsible to pay him any money
The present EC feel that they shouldn’t pay him anything as they had no dealings with the designer and did not engage him and are not going to use his designs.
Please advise what suggestions you may have in order to resolve this situation.
No work orders were ever issued.
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Replies
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The thing to look for is was this work authorized by the EC or OC via a valid motion of the EC or OC. Must be in the minutes of any EGM, AGM or EC meeting. The Chairman has NO special powers to authorize any spending (unless he has been granted this power at a EC or AGM again check minutes).
If this was authorized at a AGM or EGM then you are liable to pay the bill.
If it was authorized at a EC meeting you still might be liable it just depends on the spending limits of the EC at the time (I cannot find the default figure in the Strata Act but is is normally about No of lots x $200), but this can be changed by a motion at a AGM or EGM. The EC themselves cannot change this.
In a few instances EC members can be authorized to spend up to a certain figure, you need to ensure the Chairman didn’t have this authority.
This all assumes you don’t use the designs, if you do you are liable for the cost whether it was approved or not.
Step 1 – ask the interior designer for the work order/brief that was provided to them asking them to do the work, i.e. the contract.
If there isn’t one, then they may have some difficulty in claiming the money.
Note that the terms of any contract determine who owns the work.
Step 2 – check with the strata manager whether there are minutes/a record of the previous EC resolving to retain the interior designer to do the work, including the amount of money.
Step 3 – if there is no record of it, then it is a question of whether the EC and/or the Chair had the authority to instruct the interior designer. If they didn’t, then they may be personally liable for the account (if that account is valid).
Does the OC have a provision in place limiting the amount of expenditure that the EC can authorise? This is a standard resolution at every meeting. If there is a limit in place, then they didn’t have the authority.
From what you have said it sounds like the Chair was acting on their own, in which case that person may be liable for the account, if they didn’t have the authority.
More generally, it sounds like the interior designer is having a bit of a try on. $20,000 is a lot of money if there is no scope and no agreement in place. I have a friend who is an interior designer and if you are going to charge that amount you would have a full scope of works with a quote, including the terms, that you would then get the other party to sign before you went ahead with the work. The fact that they did the work is irrelevant, someone could come along and paint a building without being asked to and then send a bill if that were not the case.