ACT: Q&A Transparency & Conflicts around Maintenance Works Contracts

Question: Are there any requirement in the Act for the Managing Agent to formally declare any interest/conflict of interest when it comes to the appointment of contractors for services to the Owners Corporation?

Are there any requirement in the Act for the Managing Agent to formally declare any interest/conflict of interest, when it comes to the appointment of contractors for services to the OC?

I’ve found that many Strata Management companies and Strata Managers have integrated their business model with the associated services providers (maintenance, gardening, cleaning, etc) or they have relatives/associates involved in these supporting businesses.

How can the Owners Corporation manage the risk and ensure independence of the Managing Agent?

Answer: If the manager discloses any affiliation to a contractor or service provider then this should discharge “conflict of interest” concerns.

In the ACT the Manager is bound by the Code of Conduct as noted in the legislation. If the manager is a member of the SCA then there is a Code of Conduct relating to membership of that body.

If the manager discloses any affiliation to a contractor or service provider then this should discharge “conflict of interest” concerns.

The majority of agents do act in the best interests of their schemes. If the owners have concerns then they can obtain quotes or request the manager to obtain additional.

We also note that owners and/or committee members should also declare “conflict of interests”>

Managers—code of conduct

1. Knowledge of Act and code

   A manager must have a good working knowledge and understanding of the Act, including this code, as relevant to the manager’s functions.

2. Honesty, fairness and professionalism
   
   1. A manager must act honestly, fairly and professionally in exercising the manager’s functions.
   2. A manager must not try to unfairly influence the outcome of an election for the owners corporation executive committee.
3. Skill, care and diligence

   A manager must exercise reasonable skill, care and diligence in exercising the manager’s functions.

4. Acting in owners corporation’s best interests

   A manager must act in the best interests of the owners corporation unless it is unlawful to do so.

5. Keeping owners corporation informed of developments

   A manager must keep the owners corporation informed of any significant development or issue about an activity carried out for the owners corporation.

6. Ensuring employees comply with Act and code

   A manager must take reasonable steps to ensure that the manager’s employees comply with the Act, including this code, when exercising the manager’s functions.

7. Fraudulent or misleading conduct

   A manager must not engage in fraudulent or misleading conduct in exercising the manager’s functions.

8. Unconscionable conduct

   A manager must not engage in unconscionable conduct in carrying out the manager’s functions.

Examples

1. taking unfair advantage of the manager’s superior knowledge relative to the owners corporation
2. requiring the owners corporation to comply with conditions that are unlawful or not reasonably necessary
3. improperly using the executive member’s position on the executive committee to gain, directly or indirectly, an advantage personally or for someone else
4. exerting undue influence on, or using unfair tactics against, the owners corporation or the owner of a unit in the units plan

9. Conflict of duty or interest

   A manager for an owners corporation (the first corporation) must not accept an engagement for another owners corporation if accepting the engagement may place the manager’s duty to, or the interests of, the first corporation in conflict with the manager’s duty to, or the interests of, the other owners corporation.

10. Goods and services to be supplied at competitive prices

    A manager must take reasonable steps to ensure the goods and services the manager gets for, or supplies to, the owners corporation are obtained or supplied at competitive prices.

This post appears in Strata News #450.

Jan Browne
Bridge Strata
E: jan@bridgestrata.com.au
P: 02 6109 7700