Restricting the time owners can serve on the EC | Levies and Unit Entitlements | Flat Chat Forum: Your Questions Answered




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Restricting the time owners can serve on the EC
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scapegoat
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26/08/2017 - 4:49 pm
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Hi everyone

I live in a strata scheme building where the EC is lead by one of those "won't let go" people. She refuses to even speak to anyone who challenges her, but will nevertheless accepts a free strata levy payment per year - because of all the work she does.

Everyone I know in a strata building has someone like her on their EC. 

Advice always seems to be the same - vote her off. But that's impossible in so many situations as these people spend their lives holding on to their position, and making life very difficult for anyone who is a challenge.

Why are terms served on strata scheme ECs not limited? Putting a limit on the number of consecutive years served on an EC would assist in resolving so many disputes.

For instance, you serve on the committee for two years, after which you can't nominate again for another two years.

What do others think?

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JimmyT
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scapegoat said
She refuses to even speak to anyone who challenges her, but nevertheless accepts a free strata levy payment per year - because of all the work she does.

Well, I would start right there - if she is being give a levy holiday agreed in advance at the AGM, the Owners Corp is breaking the law.  If she is getting one retrospectively, I would flag the idea that this should be reviewed more closely as it seems to be a salary rather than an ex gratia payment (so again it is breaking the law).

Literally tens of  thousands of people do a lot of work for their committees with no thought of payment.  What's so special about your scheme?  If she doesn't want to do it for free, let her stop.

Regarding your plan to limit terms, I can see the appeal for dealing with rusted-on control freaks, but it would also wipe out the limited supply of committed and experienced committee members.  

Better to deal with the problem head on - propose that you cut the payments on the basis that the committee is breaking the law and then call for a new chair when she blows up. 

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Cosmo
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27/08/2017 - 9:36 am
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scapegoat said

For instance, you serve on the committee for two years, after which you can't nominate again for another two years.

What do others think?  

My experience is that rather than limit terms the problems of most committees is getting anyone to nominate.  

In all the committees I have been involved with members serve on a voluntary non paid basis.  Other owners not wanting to be involved at all unless an issue concerns their property and in that case they want action asap!

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Lady Penelope
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27/08/2017 - 11:15 am
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As JT says an OC can authorise a committee person to be granted a payment (honorarium) in recognition of the services that they have performed throughout the preceding year. It cannot be authorised in advance.

This authorisation should come from a Motion on the Agenda of the AGM and that is approved at an AGM. It would be interesting to find out who is proposing the Motions that are placed on the AGM Agenda that ask the OC to authorise this payment? Is it the Chairperson herself? I would have thought that it would, at the very least, be unseemly for the Chairperson to nominate her own reward for service.

Is there any Explanatory Material being presented with the Motion which seeks to justify the payment? How was the amount determined? Is it reasonable under the circumstances, or is it excessive?

This type of reward for service payment is generally unusual as people who nominate for a position on the committee usually do so without expectation of fee or reward.

Any honorariums would be paid from the Admin Fund.

The relevant section of the Act is below:

STRATA SCHEMES MANAGEMENT ACT 2015 - SECT 46

Payment of officers of owners corporation

46 PAYMENT OF OFFICERS OF OWNERS CORPORATION

An owners corporation may pay to a person who is an officer of the owners corporation or another member of the strata committee of the owners corporation an amount determined by the owners corporation at an annual general meeting in recognition of services performed by the person for the owners corporation in the period since the last annual general meeting.

As a further complication to this issue .... what type of work is the Chairperson doing that she is being reimbursed for? Is it merely admin work as part of her role as Chairperson or is she also doing additional voluntary work such as gardening, putting out the bins etc. If she in then this additional work should be first approved by the OC and no payment must be received for it. If payment is given then it may affect your insurance policy if the Chairperson becomes injured whilst undertaking this voluntary work.

Look Up Strata says this:  'You cannot receive any reimbursement for the voluntary work you are performing. This may be in the form of monetary payments, ‘gifts’ or even discounts off your Owners Corporation fees. If any form of payment is received, the work can no longer be defined as voluntary, and you will not be covered under the Personal Accident section of the policy if you become injured.'

https://www.lookupstrata.com.au/volunteering-strata-property-personal-accident-cover/

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scapegoat
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27/08/2017 - 12:22 pm
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JimmyT said

scapegoat said
She refuses to even speak to anyone who challenges her, but nevertheless accepts a free strata levy payment per year - because of all the work she does.

Thanks for your reply pointing out that 'levy holidays' can constitute a breach. In our case, the AGM agenda has consistently included a motion on honorariums which specifies that it be awarded for work done in the previous year. So, it is retrospective. But at every opportunity, I have argued that any kind of payment is inappropriate in our case as there are resident owners willing to participate in the sound management of the building and to exercise their responsibilities as owners in the complex. (BTW, it's a building of 22 units in NSW). I did not attend our 2017 AGM having been so abused at the 2016 meeting, I had my own safety to consider. But I note that the 2017 AGM agenda is the first AGM agenda I have every seen without a motion on honorariums. By removing that item from the AGM agenda, the Owners Corporation members can no longer participate in determining that motion. But, following the 2017 AGM, the just elected executive committee met, as per due procedure. This time, the said 'levy holiday' was resolved under General Discussion by the EC members: "An Honorarium be afforded to [NAME] to the effect of one quarter levies for the services rendered to building matters." That decision was made with the recipient present (having once again been elected as Treasurer - going on 40 years now). As the above minute doesn't include any further detail, it is impossible to determine whether a vested interest was declared. Should an interest have been declared at the time by the recipient and should it have been minuted, and is it an appropriate decision for the EC? One further question: I'm brand new to this site so not very familiar with how it all works, but would like to know how to set this thread up as a new thread specifically about EC member payments. Thanks again for your reply.

Well, I would start right there - if she is being give a levy holiday agreed in advance at the AGM, the Owners Corp is breaking the law.  If she is getting one retrospectively, I would flag the idea that this should be reviewed more closely as it seems to be a salary rather than an ex gratia payment (so again it is breaking the law).

Literally tens of  thousands of people do a lot of work for their committees with no thought of payment.  What's so special about your scheme?  If she doesn't want to do it for free, let her stop.

Regarding your plan to limit terms, I can see the appeal for dealing with rusted-on control freaks, but it would also wipe out the limited supply of committed and experienced committee members.  

Better to deal with the problem head on - propose that you cut the payments on the basis that the committee is breaking the law and then call for a new chair when she blows up.   

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scapegoat
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27/08/2017 - 12:49 pm
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Dear Lady Penelope

Thanks for your reply, which I only just saw after I replied to JT. As you can see, for the first time this year, the motion on honorariums did not appear on the AGM agenda, but was instead agreed by the EC only, in the presence of the recipient. She is, in fact, the Treasurer and has been in the position for some 40 years now. (She has also consistently argued that the accounts Not be audited. The motion always passes because everyone knows that she becomes impossible if challenged).

No explanatory information has ever appeared with the motion when it did appear on the AGM agenda. Getting any information about the how the AGM agenda is compiled is almost impossible - the Treasurer appears to have complete control of that process - the minutes to the AGM held most recently does not even include a date for the next AGM. This has been included in the past. 

Given that this year, this decision was made by the EC only, is it a valid decision? If it isn’t, can I appeal?

Thanks

PS: “unseemly” doesn’t even come close . . . ‘incompetent’ is closer, but taking the motion off the AGM agenda now strikes me as very underhand (at the very least) in light of your advice. Thanks again.

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scapegoat
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27/08/2017 - 1:00 pm
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Dear Cosmo - thanks for making a very good point, which I note JT echoes. And I can see problems with the suggestion I make: as you say, so often it's really hard to get people to be involved, so I do take the point that you and JT make. Thank you both.

But in "rusted-on control freak" situation, it's so hard to move them on simply because their imperative is to CONTROL. Maybe something like I'm suggesting could be made specific to situations where owners are being actively excluded from being involved. Quite how to determine that and how to specify such a rule is difficult, I admit. 

However, I'm also very struck by how common my problem is! Whenever I talk about this, I get the "there's one in every building" response.

Thanks again for your thoughts.

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Lady Penelope
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27/08/2017 - 1:31 pm
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scapegoat - The committee is not permitted to make a decision that is outside of their responsibility. See [s36(3)(a)] below. The decision made by the committee is invalid as it is in breach of the Act. 

NB: Does your scheme have a Strata Manager? If so then most of the Treasurer's duties are generally fulfilled by the Strata Manager e.g. preparation of Budgets etc. What duties does the Treasurer do that justifies her honorarium? 

Perhaps you can propose your own Motion about the Honorarium at the next General Meeting (either an EGM or AGM)? You would need to submit it as early as possible to avoid it missing the deadlines. Your Explanatory Material may be derived from some the suggestions that others have made on this thread.

Instead of 1/4 of the levies you could propose making it a much lower amount e.g. $200.00, or a dinner voucher at the local RSL Club(?). Then your Motion will be added to the committee's honorarium motion. At the GM the Honorarium Motion will become a Motion with Alternatives. The OC will then to get vote on either the lower amount that you proposed - or the higher amount that the committee proposed. Given a choice your OC may chose to adopt your alternative. 

There should be no expectation from the Treasurer that they should be granted an honorarium. That is not the purpose of an honorarium.

STRATA SCHEMES MANAGEMENT ACT 2015 - SECT 36 Functions of strata committee

STRATA SCHEMES MANAGEMENT ACT 2015 - SECT 36

Functions of strata committee

36 FUNCTIONS OF STRATA COMMITTEE

 

(1) A strata committee has the functions conferred on it by or under this or any other Act.

(2) A decision of a strata committee is taken to be the decision of the owners corporation. However, in the event of a disagreement between the owners corporation and the strata committee, the decision of the owners corporation prevails.

(3) The following decisions cannot be made by the strata committee:

(a) a decision that is required by or under any Act to be made by the owners corporation by unanimous resolution or special resolution or in general meeting,

(b) a decision on any matter or type of matter that the owners corporation has determined in general meeting is to be decided only by the owners corporation in general meeting.

(4) An owners corporation may in general meeting continue to exercise all or any of the functionsconferred on it by this Act or the by-laws even though a strata committee holds office.

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scapegoat
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27/08/2017 - 4:36 pm
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Lady Penelope - wow! That sounds pretty clear cut. Our building does have a strata manager, so I will raise the issue and see what happens. Thanks again.

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scotlandx
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27/08/2017 - 7:00 pm
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Re the method of "payment" of this honorarium by forgiving a quarter of levies, I don't think you can do that anyway.

The strata levies are a debt owed by each owner, and must be paid on a quarterly basis.  If a levy is overdue, then 10% interest applies.  The owners can resolve at a general meeting that a contribution is to bear no interest.  The owners can also resolve at a general meeting to enter into a payment plan either generally or in respect of a specific lot, in respect of overdue contributions, and that plan can only go for 12 months.

As far as I can see from the Act there is no power of the owners to allow someone to not pay their levies or part of their levies, or as it has been termed, grant a "levy holiday".  The levies must be paid each quarter.  The only way you could "pay" this person is by actually paying them, provided the requirements for making that payment were met, i.e. by a resolution for a period that has gone.  The person still has to pay their levies, payment of a fee or honorarium is a separate matter, and an auditor would be likely to raise that.  If you have a budget and you are meant to be receiving a certain amount of money from the owners each year, that is what should be showing in the accounts.  

There are instances where an order can be given that an owner doesn't have to pay a special levy, but that is in very particular circumstances, and the owners don't decide that, the tribunal does.

More generally this arrangement seems highly irregular, and you shouldn't be paying her anything.  I suggest you get an auditor in to look at the accounts and if you can't get this lady off the Committee at least try and get her out as an office bearer, which can be easier.

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mac
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01/09/2017 - 2:50 pm
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In the case of the SC approving a motion to forgive the levies, did the Treasurer declare her pecuniary interest?  Did she refrain from voting?

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Sir Humphrey
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02/09/2017 - 5:49 pm
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If this were the ACT, then this would not be legal. Here levies are payable for each unit in proportion to unit entitlements. To levy according to some other method requires an unopposed resolution of a general meeting.

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