In Western Australia, strata company council members must declare conflicts of interests in writing and refrain from voting on associated matters.
Section 137(3) of the Strata Titles Act 1985 (WA) provides that council members:
“(a) must inform the council in writing of any direct or indirect pecuniary or other interest that the person has that conflicts or may conflict with the performance of a function as a member of the council or, if applicable, as an officer of the strata company; and
(b) must do so as soon as is practicable after the person becomes aware of the relevant facts; and
(c) … must not vote on a matter in which the member has an interest required to be disclosed under paragraph (a).”
There are two key obligations imposed on strata company council members:
- To disclose, in writing, any direct or indirect pecuniary or other interest which constitutes a conflict with the performance of functions as a member of the council; and
- To not vote on any matters in which they have a disclosable interest.
What constitutes a direct or indirect pecuniary or other interest which constitutes a conflict that needs to be disclosed depends on the circumstances of each case. A common example is where a strata company council is considering engaging a certain contractor for provision of services to the strata company and a council member is a director or shareholder of the relevant contractor. In the circumstances, that council member likely has a disclosable interest under section 137(3) and therefore must not vote on the relevant decision. It can be considered good governance for the relevant council member to also be excluded from the discussions of the council in respect of that decision.
A decision of a strata company council which is affected by a failure of a council member to make any such disclosable interests known may be liable to be set aside or otherwise challenged on various grounds.
© Bugden Allen Group Legal Pty Ltd. This is general information only and not legal advice. You should not rely on this information without seeking legal advice tailored to your specific circumstances.
Jonathan O’Connor
Bugden Allen
E: jonathan@bagl.com.au
P: 08 9254 6304
This post appears in Strata News #794.
This article has been republished with permission from the author and first appeared on the Bugden Allen Graham Lawyers website.
I am slightly confused by what is meant by “other interest” and would appreciate any clarification. Would “other interest” apply to repairs where a council member might benefit more than other owners? For example, would there be a conflict of interest if a council member living on the top floor of the apartment complex had a roof leak and the strata company was asked to repair this roof? I would argue in my case that there would not be a conflict because: a) the roof is common property; b) another owner has an apartment under that same roof; and c) my duty as a council member is to ensure any and all leaks are repaired to avoid long-term damage to the building structure.