Question: Should minutes be amended to reflect that a “defeated” pecuniary interest disclosure motion is contrary to the Act and invalid?
At a recent AGM/SCM the following motion was presented:
DISCLOSURE OF PECUNIARY AND NON-PECUNIARY CONFLICTS OF INTEREST
DEFEATED by the strata committee that any member with a direct or indirect pecuniary interest in a matter being considered by the committee must disclose the nature of their interest prior to the decision being made. This disclosure applies to any interest that could potentially conflict with the appropriate performance of the member’s duties, including but not limited to financial, professional or personal interests. Once the interest is disclosed, the affected member shall be excluded from any discussion and voting on the matter to ensure transparency and integrity of the decision-making process.
Vote: All against
The strata managing agent’s explanation: “The motion as such wasn’t removed, amended, or voted down by the committee. The motion was noted as defeated, as none of the committee members had any pecuniary interests or disclosed any. We have taken your comments on board and are looking to reword the resolutions going forward.”
Should I request that minutes be amended “to reflect that the item is contrary to the Act and therefore invalid, and confirm that the statutory disclosure requirements remain fully in force for all future committee deliberations”?
Answer: A resolution’s validity comes from being resolved, not how it’s recorded, but the disclosure requirement itself cannot be changed by resolution.
I cannot comment on specific scenarios without being instructed. Generally, a resolution is valid because it was resolved and is not valid by how it’s recorded in the minutes. If the minutes are incorrectly recorded, then it should be corrected.
Schedule 1, clause 22(1) of the Strata Schemes Management Act 2015 (the Act) states that: the owners corporation must keep full and accurate minutes of its meetings that include minutes of all motions passed at its meetings. A breach of this clause can attract a penalty of up to 5 penalty units (as of writing a penalty unit in NSW is $110.00).
Schedule 2, clause 17(1) of the Act states that: a strata committee must cause to be kept a record of its decisions, any notices given under this Schedule and full and accurate minutes of its meeting. However, there is no penalty unit for breach of this section.
In respect of disclosure of pecuniary interest, that is required by the Act, e.g. Schedule 2, clause 18, and failure to declare conflict attracts a maximum penalty of 10 penalty units. This cannot be changed by resolution.
This post appears in Strata News #808.
Matthew Lo
Kerin Strata Lawyers
E: matthew@kerinstratalawyers.com.au
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