role of the council of owners
If you're on a council of owners or thinking about joining one, it's important to understand the legal role and responsibilities of the council and yourself as a member, and how that differs from the role of the strata manager.
Before you read on, note that the 'strata company’ is the body corporate/ owners corporation of which all lot owners of the strata scheme are members. Essentially, it refers to you and your fellow owners. It is not to be confused with the strata management company.
The Act defines the ‘council’ as the governing body of a strata company and states that the functions of a strata company, subject to the Act and any direction given by a resolution of owners, are to be performed by the council. Therefore, the council is essentially the management committee that is responsible for managing the strata company’s affairs day to day.
Fundamental Duties of the Strata Company -
To understand your role as a council member, you must first be aware of the duties of the strata company (owners corporation). The Act states that a strata company must:
Control and manage the common property for the benefit of all the owners of the lots; and
Keep in good and serviceable repair, properly maintain, and if necessary, renew and replace the common property including the fittings and fixtures used in connection with the common property and also any personal property (items like pool cleaning equipment) owned by the strata company, and must do so whether damage or deterioration arises from fair wear and tear, inherent defect or any other cause.
Further, that a strata company may:
Improve or alter the common property in a manner that goes beyond repair, maintenance renewal and replacement.
It's important to note the difference between the use of the words 'must' and 'may'. 'Must' means that the strata company has an obligation to perform those duties, whereas 'may' means the strata company has the option to do so, but it is not compulsory.
As the strata company is responsible for the management of the common property, the Act states that it can sue and be sued for rights and liabilities related to the common property as if it were the owner and occupier of the common property. It is therefore crucial that the strata company manages the common property appropriately, including ensuring that potential risks are identified and addressed, and suitable legal liability insurance is maintained. The council plays a vital role in protecting the strata company from liability, and must also consider its own liability (further information on the council's liability below).
General Duties of Council -
In fulfilling your duties as a council member, the Act requires that you:
Must at all times act honestly, with loyalty and in good faith in the performance of your functions;
Must at all times exercise the degree of care and diligence in the performance of those functions that a person in your position would reasonably be expected to exercise in the circumstances;
Comply with requirements in relation to conflicts of interest (outlined below); and
Must not make improper use of your position to gain, directly or indirectly, an advantage for yourself or any other person; or to cause detriment to the strata company.
Conflicts of Interest -
Note: the below requirements do not apply to an interest arising solely from the fact that the member is the owner of a lot in the scheme.
Must inform the council in writing of any direct or indirect pecuniary or other interest that they have that conflicts or may conflict with the performance of a function as a member of the council;
Must do so as soon as practicable after they become aware of the relevant facts; and
Must not vote on a matter in which the member has an interest required to be disclosed under point 1.
Protection from Liability -
Council members have some protection from liability under the Act, provided that they carry out their duties in good faith.
The Act states that no civil liability attaches to a person who is or has been a member of the council of a strata company for anything that person has, in good faith, done or omitted to be done in the performance of a function under the Act or scheme by-laws, or in the reasonable belief that the act or omission was in the performance of a function under the Act or scheme by-laws.
However, this does not mean that council members can or should neglect their duties. As outlined above, they must exercise a reasonable degree of care and diligence and recognise that they have a duty of care to manage the common property as required by the Act, with a focus on ensuring the common property is safe.
Officers of the Council - Chairperson, Secretary & Treasurer
The Act requires that 1 of the members of the council must hold office as the chairperson. The standard Schedule 1 “Governance” by-laws of the Act further requires that at the first meeting of the council, members must appoint a chairperson, secretary and treasurer. This therefore means that in all cases, a member of the council must be appointed as the chairperson, however whether or not a secretary and treasurer must be appointed is subject to the by-laws (which can vary from scheme to scheme).
Chairperson: The chairperson must preside all council meetings at which they are present.
Secretary: If there is a professional strata manager appointed, they will typically fulfil the duties of the secretary, as follows:
To prepare and distribute minutes of meetings, give notice of meetings, supply information in accordance with Sections 108 and 109, answer communications addressed to the strata company, call for nominations of candidates for election as members of the council, and, subject to various sections of the Act, convene meetings of the strata company and the council.
Treasurer: If there is a professional strata manager appointed, they will typically fulfil the duties of the treasurer, as follows:
To notify lot owners of contributions levied (issue levy notices), receipt, acknowledge, bank and account for any money paid to the strata company, prepare any certificate applied for under Section 110 of the Act, keep records of account and prepare the statement of accounts.