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  • #73738
    Columbo
    Flatchatter

      I came across the changes to strata law in NSW a couple of days ago (see the following link)

      https://www.nsw.gov.au/housing-and-construction/serving-on-a-committee/changes-to-strata-scheme-laws-2023

      Two things I would like to understand better and would value comments on.

      Conflict Of Interest and Voting

      How does the prevention of participating in a vote where committee members have a financial interest work? What is this meant to help manage? Does this have implications/relevance when a developer continues to own multiple units in a building and also has multiple seats (but a minority) on a strata committee?

      2. Strata Managers Responsibility wrt Strata Rolls

      We appointed from within the SC roles of Chair, Treasurer, and Secretary, notwithstanding that there is a delegated authority in the agreement with the strata manager.

      I am pretty sure that the Strata Manager is not providing the committee with the information necessary for it to meet its obligations, unless they are informing the appointed Secretary and he is not informing the committee.

      On the NSW Strata Act website I read:

      It is the secretary’s responsibility to keep the roll up to date. If there is a strata manager, they may do this instead.
      Owner and resident details need to be updated whenever a resident moves in or out, or when a property is bought or sold. New owners and landlords are required to give these details to the secretary, usually within 14 days of the change.
      The strata roll should be reviewed/checked after every meeting of the owners corporation.

      Also landlord’s agents are required to provide notices of tenancy to the OC.

      We had great difficulty prying the strata roll out of the hands of the strata manager, who argued that privacy laws forbad them from supplying it, and then they supplied it in a format that made it difficult to work with.

      However, that aside, if the strata roll should be reviewed at each meeting, shouldn’t it be the Strata Manager’s duty to alert the committee that it has such an obligation? After all they are supposed to be the professionals, and as such, should have a fiduciary obligation to their clients? Particularly as from March 11th there is a provision for fines to be levied.

      Any insights would be useful….

      And finally on the topic of strata rolls and a strata manager claiming privacy… the info on changes to the Act also states

      Current owners can ask to see the strata roll, financial records and other records at any time by contacting the secretary on the strata committee or strata manager.
      Potential owners (or a strata searcher they have hired) may ask to inspect a strata scheme’s records. This request may come via the real estate agent selling the property.
      When you get a request, you must arrange to let the current or potential owner see your records within 10 days. You can give the records to them in person, electronically or in any other agreed way.
      If meeting in person, agree with the current or potential owner a date, place, and time to see the records.
      If you can’t agree on a time and place within three days, the owners corporation can set a date, place, and time by giving notice in writing.
      The person who is inspecting the strata documents can make copies of the documents, but you must not take the originals without the permission of the owners corporation.

      So the argument from our strata manager over a lengthy period of time about privacy seems to be total baloney!

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    • #73739
      Jimmy-T
      Keymaster

        This is a long and complex set of questions, so I have broken them down and answered them separately.

        Conflict Of Interest and Voting How does the prevention of participating in a vote where committee members have a financial interest work? What is this meant to help manage? Does this have implications/relevance when a developer continues to own multiple units in a building and also has multiple seats (but a minority) on a strata committee?

        This is meant to prevent owners who have a financial or business interest in the scheme from swaying votes to favour their business.  For instance, owners who are running short-term lets might fall foul of this or if they are renting their property to business that the other owner want to restrict and have the power to do so.

        It’s a very loosely worded law (see below) which is yet to be tested at the Tribunal and has a few grey areas. But in a nutshell, judging by section 18 of Part 3 of schedule 2 of the Act (below) any committee member who makes money from a matter being discussed, or is an employee of a company that similarly makes money,  must declare their interest (Max fine $1100 for failure to do so) and should leave the meeting while it is being discussed.

        NB, this only applies to strata committee meetings.  They could still rock up at a general meeting and throw around such voting power as they may have.

        Also, if the conflicted party has multiple members on the committee and they vacate, depending on the numbers, that could leave the committee inquorate, meaning any decisions made would be potentially subject to challenge.

        For that reason, if no other, the number of representatives of the developer elected to the committee should be restricted, if possible.

         

        18   Disclosure of pecuniary interests

        (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—

        (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)    (Repealed)

        (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.

        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
        #73742
        Jimmy-T
        Keymaster

          2. Strata Managers Responsibility wrt Strata Rolls

          We appointed from within the SC roles of Chair, Treasurer, and Secretary, notwithstanding that there is a delegated authority in the agreement with the strata manager.

          I am pretty sure that the Strata Manager is not providing the committee with the information necessary for it to meet its obligations, unless they are informing the appointed Secretary and he is not informing the committee.

          Your committee needs to clarify the role of the strata manager in writing.  If they are saying they ARE the office-bearers under the terms of your contract with them, then you need to hold a general meeting to rescind that delegation and rewrite it so that they are only a back-up (which is the proper, standard agreement). Then you can examine whether or not they are properly fulfilling their duties as strata managers and deal with that accordingly.

          The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
          #73743
          Jimmy-T
          Keymaster

            So the argument from our strata manager over a lengthy period of time about privacy seems to be total baloney!

            I believe the vast majority of strata schemes are not covered by the Privacy Act.  However, the strata Act says that contact details must be provided on the strata roll.  The strata roll is part of the documentation owned by the Owners Corp and therefore it must be made available to the strata committee and, indeed, any owner who arranges to go the strata manager’s office and see and copy it.

            I wouldn’t concern yourself unduly with why your strata manager is being obstructive in this regard.  They are either doing their job properly, as per the law, or they aren’t. And if the latter is demonstrably and provably the case, make a complaint to Fair Trading  (which you can do as an individual owner) then get rid of them.

            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
            #73761
            Columbo
            Flatchatter
            Chat-starter

              Thanks for that….

              So to be precise – if there is a discussion about STRA at a committee meeting anyone who is operating a STRA rental should exit the meeting entirely during that discussion, and should declare their conflict at the beginning of such a discussion.

              And…

              Given that at this point in time a delegated authority has been granted, per the agreement and not rescinded in writing does the Manager have to ensure that the authority granted as Secretary is performed to the letter of the law? I just don’t want to see the committee member secretary having to wear the responsibility (including fines) that I believe the strata manager company should be responsible for.

              #73770
              Jimmy-T
              Keymaster

                if there is a discussion about STRA at a committee meeting anyone who is operating a STRA rental should exit the meeting entirely during that discussion,

                I would think so … seems like the definition of a conflict of interest, although I can see situations that might benefit from a STRA operator being there to answer questions. However, even then they can’t vote.

                does the Manager have to ensure that the authority granted as Secretary is performed to the letter of the law?

                The standard strata manager agreement excuses them from any responsibility for errors or just bad decisions that they make where they should have known better, so it’s hard to know how you would enforce that except by raising a complaint at Fair Trading and seeking their enforced removal/replacement at NCAT.  Removal and replacement by a compulsory manager seems like the only sanction – apart from getting rid of them at the first opportunity when their contract runs out.

                 

                The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                #73781
                TrulEConcerned
                Flatchatter

                  Lt. Columbo,

                  PECUNIARY INTEREST

                  Jimmy is right when he mentions the strata manager or a committee member must ask about members who have or may have a pecuniary interest in strata matters. But as Jimmy always says, “there are no strata cops to enforce this”.

                  I have been involved in several strata schemes where the strata mgr asks this very question. If it is answered in the affirmative,  a note of it is made in the minutes.

                  If it is not responded to, even when half the committee have pecuniary interests, the strata mgr or whoever is chairing the meeting goes on to the next agenda item.

                  STRA

                  You could also ask the person or persons pushing for STRA if they are willing to pay the higher premium associated with strata insurance policies that cover STRA taking place.

                  I had a long discussion about this a year ago when a committee member let his property out on the sly; when cornered he denied responsibility for the problems his “guests” made and he never agreed to pay the higher premium. I was told by the insurer that STRA WILL raise the premium charged for strata insurance  and the increase is a function of the number of units engaged in STRA. The more units engaged in STRA, the higher the premium.

                  #73783
                  Columbo
                  Flatchatter
                  Chat-starter

                    My thinking is as follows:

                    I write a letter to the SC asking the Secretary to clarify whether he has assumed all the responsibilities associated with the role, or whether the manager still has legal responsibilities as a result of the delegated authority in the management agreement.

                    That puts him in the position of needing the strata manager to clarify.

                    Next step is to ask why there is delinquency with regard to secretarial roles that are clearly stated on the NSW gov website and which are not delivered on (if any). The next meeting is this coming week and I have alerted the secretary that I believe there is a need to table changes to the roll that have taken place.

                    That would hopefully lead to the strata manager needing to declare whether they see themselves having a responsibility under the delegated authority or not. If they do and there is a breach, then I start the FT process?

                    What do you think?

                     

                    #73793
                    Jimmy-T
                    Keymaster

                      If it is not responded to, even when half the committee have pecuniary interests, the strata mgr or whoever is chairing the meeting goes on to the next agenda item.

                      Then you ask it to be recorded that you believe certain committee members do indeed have conflicts of interest and remind them that there is a maximum fine of $1100 for failure to notify the committee.  This will come as a shock to a lot of committee members who probably don’t even realise the the laws has changed.

                      And if they still refuse to self-declare, go to Fair Trading and  NCAT to seek penalties.

                      The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                      #73794
                      Jimmy-T
                      Keymaster

                        I write a letter to the SC asking the Secretary to clarify whether he has assumed all the responsibilities associated with the role, or whether the manager still has legal responsibilities as a result of the delegated authority in the management agreement.

                        I think it’s a good tactic but you have to be quite specific becasue the duties and reponsiblities of the starta manager and strata secretary overlap.  E.g. “In this scheme where a strata secretary has been elected and is in situ, who has prime responsibly for [whatever you think isn’t being done]  in the first instance, under normal circumstances.”

                        I would add that condition because there are emergency situations where, under a normal back-up delegation of powers, the strata manager can to step in where the office-bearers are not able to function or are absent for whatever reason.

                        For instance, if the secretary (for example) turned out to be unfinancial or just not around, the strata manager could call any meetings required to clarify the situation. In you scheme the strata manager thought they would be running the show with their decisions rubber-stamped by the committee and that is far from standard practice.

                        The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                        #73816
                        Columbo
                        Flatchatter
                        Chat-starter

                          Thanks to TrulE and Jimmy for responses.

                          I have had a devil of a job just getting the Secretary to understand that the underlying issue he needs to deal with is that the tabling of the strata roll needs to happen at each meeting, and if he doesn’t get it from the Strata Manager it is his problem… or is it, as the SM operates with a delegated authority.

                          As it happens, after me pushing the Secretary to make sure he got a copy of the current strata roll from the SM prior to our next meeting (tomorrow), he did receive it. However, it remains to be seen whether that includes information on residential lets and any other relevant info.

                          I have also had to really wind him up about declarations of conflict at the beginning of the meeting.

                          I understand the issue noted about contingencies in the event of the Secretary being unfinancial at a meeting. Surely there must be a solution for this other than having a blanket delegated authority? That seems like a recipe for getting people to negotiate with themselves.

                           

                          #73818
                          Jimmy-T
                          Keymaster

                            I have also had to really wind him up about declarations of conflict at the beginning of the meeting.

                            All he has to do is to put it at the top of every agenda, asking if there for any conflicts of interest relating to items on the agenda and reminding members that are substantial statutory fines for failure to do. Something like:

                            Members to declare conflicts of interest relating to items on the agenda. FYI: Failure to do so can result in substantial monetary fines. (NSW Strata Schemes Management ACT, Schedule 2, Part 3, Section 18)

                            Most people reading the agenda will assume the strata manager put it there.

                            Surely there must be a solution for this other than having a blanket delegated authority?

                            The simplest solution would be for the committee to temporarily elect a new chair until such times as the incumbent has raided the biscuit tin.  Any strata committee member can have multiple office-bearer roles.

                            The opinions offered in these Forum posts and replies are not intended to be taken as legal advice. Readers with serious issues should consult experienced strata lawyers.
                            #73832
                            TrulEConcerned
                            Flatchatter

                              @Jimmy, thanks for the suggestion of asking the SM to note my belief (in fact it’s widely known) that some SC members indeed have conflicts of interest. I suppose the SM wants to keep his job, so doesn’t rattle anyone’s cage.

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