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A developer still owns multiple units in a new scheme and gets himself and two of his employees who are also family members voted onto the strata committee. Do they have to leave the committee meeting when they talk about defects as it’s a conflict of interest? Or is it enough to say we’re not here as developers, we’re here as property owners?
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Okay. So there’s two types of meetings that could occur. First one is a strata committee meeting. In this case there’s a requirement for the owners’ corporation to create a pecuniary interest disclosure book. A lot of strata managers aren’t really that’s attuned to this requirement so I don’t see it occurring very frequently, but some are.
When someone is elected to a committee, they’ve got fiduciary duties to satisfy the interests of the owners above their own. If you’re the developer and the strats committee is looking at making a decision about defects, well, then that’s a clear conflict of interest and the developer committee members are not able to vote on that.
In fact, they’re supposed to disclose that there’s a pecuniary interest and it gets written in the pecuniary interest disclosure book. Then they need to leave the meeting when the matter is being discussed and being voted on. Once the motion’s decided, they can come back into the meeting and then vote on other motions. So at a committee level, the answer is they can’t vote.
But at a general meeting level, it’s a little bit more complicated because they can’t vote on defects when the building is four storeys high or more. But they can if the building is three storeys or less, like a low-rise apartment block or a townhouse.
I think it’s an error in the drafting or just from Fair Trading, because I’ve noted on their website that they said incorrectly that the developer wasn’t allowed to vote on any motions of any type of building. But right now, they can still vote on defects at general meetings provided the building is three storeys or less.
Bannermans Lawyers
www.bannermans.com.auQuerying this para:
In fact, they’re supposed to disclose that there’s a pecuniary interest and it gets written in the pecuniary interest disclosure book. Then they need to leave the meeting when the matter is being discussed and being voted on. Once the motion’s decided, they can come back into the meeting and then vote on other motions. So at a committee level, the answer is they can’t vote.
Is that just for developers, or for anyone with a CoI? If my neighbour requires 75% in favour of a motion to renovate a bathroom, can said neighbour participate in the vote? None of our lots are owned by the developer.
I think you might have asked this question in another thread. My view is that everybody has a pecuniary interest in the decisions made by the committee in that they may affect the value of their lots. This rule is there for owners whose business interests may be affected by the decision.
In any case, strata committees can’t authorise major renovation by-laws and the conflict of interest ruling only applies to committee meetings, not general meetings where by-laws are decided.
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The secretary of our body corporate or owners corporation is renovating her apartment. It’s taking about a year. There’s a lot of hammering and noise. She has authorised at least three of her tradesmen to park in the visitors parking section. Every day. When I asked how this was approved the STRATA manager said they had a ring around and approved it. I asked if she declared her interest as these parking spaces are on common property and she’s receiving a substantial benefit. It’s $50 a day next door to park. I said did she leave the meeting? He said I’m not sure but I’m sure she would have. I then questioned why this committee continues to make decisions without having formal meetings where they send out an agenda owners are invited to attend and they send out minutes. This happens quite often. Are STRATA committees required to be held formally or can they have ring arounds like they’ve been doing for ages and how can you confirm if interests are being declared if there are no minutes. In simple terms when do STRATA committees have to have formal meetings with agendas and minutes etc. And when or if can they hold informal meetings
Are STRATA committees required to be held formally or can they have ring arounds like they’ve been doing for ages and how can you confirm if interests are being declared if there are no minutes.
Many small schemes make minor agreements using ring-arounds. They are not strictly legal but they are done on the assumption that no one will be bothered. Obviously, this is open to exploitation if a committee does everything over the phone and it’s arguable that taking up visitor parking spaces for the benefit of one owner should have gone to a proper meeting, had an agenda and had minutes issued.
If you want to put the cat among the pigeons, raise a case for mediation at Fair Trading to resolve a breach of Schedule 2, Part 2, Section 5 (assuming your block has fewer than 100 lots).
(1) The secretary of the owners corporation of a strata scheme that is not a large strata scheme must give notice of a meeting to each other member of the strata committee at least 3 days before the meeting and to each owner.
(2) Notice is to be given by displaying the notice on the notice board maintained by the owners corporation or in accordance with section 263.
At the very least, this will remind the committee that they have to be a bit more transparent in their dealings. If the secretary continues to do everything over the phone, there are processes by which you can have them removed from the committee. FYI: Section 263 is all about how notices can be delivered and includes emails.
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