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?
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
- A strata committee has the functions conferred on it by or under this or any other Act.
- 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.
- The following decisions cannot be made by the strata committee:
- 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,
- 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 article is not intended to be personal advice and you should not rely on it as a substitute for any form of advice.
This post appears in Strata News #149.
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