Chairman’s company charges for services

It is only legal if the Chairman has not breached any of the following obligations contained within SSMA 2015 Schedule 2: Section 18: Disclosure of pecuniary interest. 

Failure to disclose a conflict is a breach of the Act punishable by a fine. [Edited by JT]

(1) If:

(a) a member of a strata committee has a direct or indirect pecuniary interest in a matter being considered or about to be considered at a meeting, and

(b) the interest appears to raise a conflict with the proper performance of the member’s duties in relation to the consideration of the matter,

the member must, as soon as possible after the relevant facts have come to the member’s knowledge, disclose the nature of the interest at a meeting of the strata committee.

Maximum penalty: 10 penalty units.

(2) A disclosure by a member at a meeting of the strata committee that the member:

(a) is a member, or is in the employment, of a specified corporation or other body, or

(b) is a partner, or is in the employment, of a specified person, or

(c) has some other specified interest relating to a specified corporation or other body or to a specified person,

is a sufficient disclosure of the nature of the interest in any matter relating to that corporation or other body or to that person which may arise after the date of the disclosure and which is required to be disclosed under subclause (1).

(3) Particulars of any disclosure made under this clause must be recorded by the strata committee in a book kept for the purpose and that book must be open at all reasonable hours to inspection by any person on payment of the fee determined by the strata committee.

(4) After a member has disclosed the nature of an interest in any matter, the member must not, unless the strata committee otherwise determines:

(a) be present during any deliberation of the strata committee with respect to the matter, or

(b) take part in any decision of the strata committee with respect to the matter.

(5) For the purposes of the making of a determination by the strata committee under subclause (4), a member who has a direct or indirect pecuniary interest in a matter to which the disclosure relates must not:

(a) be present during any deliberation of the strata committee for the purpose of making the determination, or

(b) take part in the making by the strata committee of the determination.

(6) A contravention of this clause does not invalidate any decision of the strata committee.

(7) Without limiting subclause (1), a person has an indirect pecuniary interest in a matter if a person connected with the person has a direct interest in the matter.

Whether it is ethical is subjective. Many would consider it good practice and common sense not to nominate or serve on an a strata committee if you are getting paid or aiming to get paid by either the owners corporation or its individual members. If currently serving many would consider it appropriate to resign from the executive committee before providing any proposal for services.

The Chairperson’s behaviour may be legal (i.e. if they have fulfilled all of their obligations under the Act) but if you are personally concerned about whether the Chairperson’s actions are ethical then you can always seek support from other Lot owners and vote this person out of office at the next AGM.

The problem arises when someone is charging the Owners Corp for work they do as a member of the committee. Apart from the obvious conflicts of interest there’s the whole issue of why they are even on the committee in the first place.

In any case, the law is quite clear – committee members can be paid but only for the previous year through a decision made at the subsequent AGM.  The OC can’t agree to pay them in advance.

Interestingly, under new laws, the chairman would have to recuse himself from the discussion of whether or not he should be involved in the discussion of whether or not he should be paid, due to an obvious conflict of interest.

But I would say that the fact that the chair has gone to the lengths of creating a false “arms length” relationship to subvert the intent and spirit of the law would be reason enough to vote him off the committee (tarring and feathering optional).