What responsibilities does the body corporate have if it paid for an EGM that may not have been necessary, and the strata manager charged undisclosed fees that were later approved without question by the committee?
In our over 55's complex, approval was required for a roof to replace an existing approved roof on lot property. The new roof was to be paid by the owner at no cost to the sinking fund. It was unlikely that an EGM would be held for months, so the body corporate volunteered to cover the EGM costs to initiate the approval process. The strata manager provided no paperwork for arranging the meeting, nor was there a schedule of fees. The chairman verbally estimated costs of $500, which was approved and paid.
The strata manager advised they needed to make phone calls to get a quorum. There was no transparency or disclosure about the costs the strata manager would charge for this service. We received a bill from the strata manager for additional costs, totalling $484, at $276 per hour.
The committee rubber-stamped the costs without raising questions about the undisclosed charges. The Commissioner's office advised that it is questionable whether the owner was required to get EGM approval. What rights and responsibilities does the body corporate have?
The rights and responsibilities of the body corporate are largely provided for in the contract between the strata manager and the body corporate.
When it comes to what a strata manager does and what fees they charge, the rights and responsibilities of the body corporate are largely provided for in the contract between the strata manager and the body corporate.
Remember: a strata manager is a contractor. They perform the services provided in that contract. There is often, in our experience, a misconception about what a strata manager does or should do. If the strata manager's contract provides for reimbursement for the administrative services involved in calling a meeting, then that's what they are entitled to charge. You've discussed 'transparency,' and that should be reflected in the contract terms. That contract is available to you and other owners to peruse. You've also talked about 'disclosure'. There are several disclosure requirements on the part of the manager, and you can read about those here: Disclosing commissions, payments or other benefits
If you're suggesting that the strata manager gave incorrect advice about calling a meeting, then that's a slightly different story. On the one hand, you'd hope the manager would know what kind of meeting is needed for a given situation, and if they got it wrong, perhaps they shouldn't charge for calling the meeting as a result. On the other hand, the committee remains the decision-maker, not the strata manager. It might be a 'they said/you said' situation.
So where does this leave you and your query? It seems to us the situation is a 'dropping the ball' from maybe more than one party. That's not ideal, although it's not a hanging offence either. It's different if this situation is part of a recurring, systemic series of unfortunate events, and the committee may need some support and education – and there are a few ways that can happen. Alternatively, there may need to be a conversation with the strata manager about communication and services.
This is general information only and not legal advice.
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Chris is a strata unicorn: he is not a strata lawyer, manager or caretaker. He was Queensland’s Commissioner for Body Corporate and Community Management for over 5 years. That is the only role of its type in the world. Chris is also an owner in one strata scheme, and a tenant in another.
As Director of Strata Solve, Chris focuses on communications and strategic advice, rather than legal action, to solving strata problems. Strata Solve works with owners, committees, strata managers and caretakers to tailor practical solutions to stressful strata situations. Chris holds an Honours degree in Communications and is a nationally accredited mediator.
Chris is a regular contributor to LookUpStrata.
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