This article discusses whether a committee chair body corporate manager relationship creates a conflict of interest that makes the chairperson ineligible to remain a voting member of the committee.
Question: I am the Chairperson in our 68 lot scheme. I recently started a new job as an assistant strata manager for the company that manages our scheme. Does this make me an associate of the body corporate and no longer able to be on the committee?
I was elected chairperson of a 68 lot accommodation module scheme where I own two lots. Four months after becoming Chairperson I started a new job as an assistant strata manager for the strata company that manages the scheme. I work in a different portfolio that doesn’t include my scheme and I disclosed this to the committee with no response. I believe my new employment makes me an “associate” of the body corporate manager and therefore am “ineligible to be a voting member” of the committee.
Can an “associate” of the body corporate manager hold an executive committee position? surely my profession would be a benefit to the body corporate as they are almost getting two body corporate managers for the price of one.
Answer: When a voting committee member is employed by the body corporate manager for their body corporate, that voting committee member immediately, and without anything further being required, ceases to be a voting committee member.
Experience on a body corporate committee can often lead to an interest in bodies corporate and how they operate (or how they are supposed to operate!). Committee members who’s interest is piqued, often look for ways to expand, or employ, their experience. One such way is through undertaking the online training course for committee members offered by the Commissioner for Body Corporate and Community Management: Queensland Government: Online body corporate training
Sometimes, as in this case, committee members seek employment with a Body Corporate Management firm. Unfortunately for those committee members, there are serious consequences that can arise from that employment. Particularly, as in this case, if the Body Corporate Management firm is the body corporate manager for the voting committee member’s body corporate.
One of the ways that a voting committee member’s term of office can end, is if they cease to be eligible to be a voting member of the committee. To be eligible to be a voting committee member, the person must not be a body corporate manager or an associate of a body corporate manager.
A body corporate manager is engaged by a body corporate to supply administrative services to the body corporate. An associate of a body corporate manager includes an employee of that body corporate manager.
Accordingly, when a voting committee member is employed by the body corporate manager for their body corporate, that voting committee member immediately, and without anything further being required, ceases to be a voting committee member.
While this may sound draconian, there are many good reasons for this rule. The most obvious is to avoid a conflict of interest between the interests of the body corporate and the interests of the body corporate manager. A voting committee member is like a ‘director’ of the body corporate ‘company’ and accordingly, is a fiduciary of the body corporate. Likewise, a body corporate manager is a fiduciary of the bodies corporate they act for, and all fiduciaries are under a legal obligation to avoid conflicts of interest.
This post appears in Strata News #553.
Michael Kleinschmidt Bugden Allen E: michael.kleinschmidt@bagl.com.au P: 07 5406 1280