This question came in from an NSW Lot Owner around the committee decision making process. Leanne Habib, Premium Strata provides the following response.
Question: Can our Strata Committee pay themselves an undisclosed amount by ignoring Section 46 of the Act and overriding the committee?
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Our building is a reasonably well run medium-sized block of NSW units; however, the strata committee pays themselves an undisclosed amount which is never itemised in the financial statements but apparently allocated to whatever job they have spent time on, and the amount they are paid is kept secret.
I wrote before the last AGM praising the Committee’s hard work on our behalf, but also pointing out Section 46 in the Strata Law which states that any payment to the Strata Committee has to be presented at an AGM and approved by the Owners Corp. This started a very unpleasant exchange!
The longstanding Chairman/ Treasurer was outraged at being questioned, and he claims that as a motion is requested to be passed at each AGM that states: “RESTRICTED MATTERS RESOLVED that the Owners Corporation does not limit the decision making powers of its Executive Committee”. This allows them to approve payments to themselves without informing the Owner’s Corporation at an AGM. I always assumed this was just for building works.
I am unwilling to start a war over this and cause further unpleasantness, but the lack of transparency seems very unprofessional even if not against the law. No one in the block, or apparently on the Committee, is willing to go against the Chairman, who does work hard and has ruled the block as Chairman and Treasurer for at least 15 years, possibly longer.
Can you help clarify the correct process for payments to the Strata Committee please and if the motion at the AGM allows the Committee to ignore Section 46 of the Strata Act and override the committee decision making process?
Answer: The Strata Committee cannot override the decision making process reserved for the Owners Corporation under Section 46 of the Act.
In short, you are correct. The Strata Committee cannot override the decision making process reserved for the Owners Corporation under Section 46 of the Act. Honorariums, as you state, are paid in arrears at an annual general meeting of the Owners Corporation.
See also Section 36 (3) (a) of the Act set out below: A strata committee cannot make a decision required to be made by the Owners Corporation in general meeting.
36 Functions of strata committee
(1) A strata committee has the functions conferred on it by or under this or any other Act.
(2) A decision of a strata committee is taken to be the decision of the owners corporation. However, in the event of a disagreement between the owners corporation and the strata committee, the decision of the owners corporation prevails.
(3) The following decisions cannot be made by the strata committee:
(a) a decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in general meeting,
(b) a decision on any matter or type of matter that the owners corporation has determined in general meeting is to be decided only by the owners corporation in general meeting.
This post appears in Strata News #149.
Read next:
- NSW: Q&A Can Owners Corporation committee decisions be reconsidered?
- NSW: Q&A Strata Manager Complaints and Unprofessional Advice
Leanne Habib
Premium Strata
P: 02 9281 6440
E: [email protected]
This article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
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Our body corporate of 8 units has a Secretary/Treasurer who has been doing the job for decades unopposed. In the last decade he has been charging a fee for his services which started at $300 pa and has increased annually without mention at the AGM’s until the last couple of years when I have brought it. It has increased by $50 to $100 pa depending on how much our levies increased. He now charges $1,250.00 pa. Unfortunately he has his long-term cronies who vote for him to increase the levies and his fee every year and voting is always 5 to 3 in favour of this. This means that the Secretary/Treasurer only contributes around $10 pa more each year into our coffers because of his personal fee increase. I don’t think this is fair, the job is not increasing every year, I believe it is a voluntary position and I would personally do it gratis if given the opportunity. Is there anything that can be done about this if he has the votes 5 to 3 in favour. These are long-term residents who I feel are too embarrassed to vote against him. He has lived here for 40 years.
The following exchange occurred after this post was published.
NSW Lot Owner:
Just to clarify, even if the Strata Committee and Owners Corporation pass a motion at the AGM that says ‘no restrictions be placed on the decisions of the Strata Committee’ (which we assumed related to building works, not personal payments) you are saying that this does NOT over ride section 46 of the Act?
Leanne Habib, Premium Starta:
You are correct that Section 46 requires the Owners Corporation to determine the amount to be paid at an annual general meeting retrospectively.
The Strata Committee cannot override the powers/duties of the Owners Corporation. Section 36(3)(a) clearly states that a Strata Committee cannot make a decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in general meeting. The motion you set out below is invalid and cannot achieve its intention. Just because there are no restrictions on the Strata Committee as per the motion below, this does not mean that the motion serves to give to the Strata Committee decision making powers reserved for the Owners Corporation in general meeting pursuant to the Act.
Thank you Leanne for that clarification to the reader.
I have another related question:
Q: Where in the new legislation/Regulations are RESTRICTED MATTERS identified?
The term is not defined in either the Act of Regs.
In fact, there seems to be no longer the requirement to have a motion at an AGM imposing limitations on powers of the Strata Committee. Have I missed something?
s.13 Act lists those functions that the OC, SC or SMA may have delegated authority or be conferred responsibility; and Cl 4 of Reg adds three more functions that are permitted under delegation or conferred to a member of the SC.
Is this correct?