It doesn’t matter where you are on the Australian continent; there are people within an owner’s corporation or community association who have to behave in a bipolar manner. Those who sit on the strata committee, executive committee, or boards of body corporates throughout Australia, have two masters. As a strata committee member, they are answerable to the body corporate or owner’s corporation, and at the same time, they are lot owner’s who are lawfully allowed to care for themselves.

Members of strata committees are like board members of a company. They are vested with fiduciary duties and duties of care for every board member. They are required to act in the best interest of the owner’s corporation or body corporate.

In NSW, strata committee members are required under Section 37 of the Strata Schemes Management Act 2015 to act with due care and skill in dispensing their strata committee duties. This means that, when voting in a strata committee meeting, a strata committee member must vote in the best interest of the owner’s corporation, not in their own self-interest.

As a lot owner at general meetings, you are lawfully permitted to be completely selfish. They can vote in their own best interest, in complete disregard for the best interests of the owner’s corporation. This is a regular event in strata and community title. The person may be sitting on the strata committee and voting on something, which is in their self-interest. Remember that, when serving as a committee member, the laws of conflict of interest still prevail. First, you must disclose a conflict to the other members of the committee; and secondly, you should disqualify yourself from any vote, which provides you with a financial or other benefit.

I have seen some people, quite properly, vote in two different ways. At the strata committee they vote in a particular way, which is in the best interest of the owner’s corporation. But when it comes to a vote in an annual or extraordinary general meeting, they vote in a completely different way. We may think this conduct is bizarre, but in legal terms, it is completely correct. I suggest that any committee member who has a motion before a committee, which is in their best interest, they should advise of the conflict, abstain from the vote and leave the room whilst the debate occurs. This ensures that you, as a committee member, are never criticised or held liable by an angry owner’s corporation and body corporate.

It is strange that we set up a structure whereby people have to act in a bipolar manner. They must balance the interests of the owner’s corporation and their own self-interest. We often criticise these people, however they should be applauded for taking on such a difficult task.

 

This article was written by Bailey Compton, Principal Solicitor & Director at Leverage Group.

To get in touch with Bailey, please email info@leveragegroup.com.au or call 1300 438 538