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  • #55430
    The Hood
    Flatchatter

    Mediation application.
    Is there a conflict of interest set up by management agreements whereby the agent makes the decision under the delegated authority in the agreement to represent the OC at mediation (for the additional services fee rate of course)?
    Apparently not.
    The delegated authority is the delegation to make decisions of the SC.

    Recently the SC received a mediation application and as usual it got no mention on an agenda.
    There was no motion on an SC agenda relating to whether or not the OC would accept this mediation; and who would represent them if accepted. There was no formal decision by the OC who sometime include a SC agenda motion and other times do not. Nobody really cares about the simple formalities.

    When this lack of decision was brought up at a mediation the agent claimed the agent made the decision, which is possible BUT what about the conflict.
    Interesting part of that is that under s 55 the agent is supposed to record this exercise of function and present an annual report to the OC of such exercising of functions.
    In the long history of having this agent we have never had such a report so it is safe to assume the agent never utilities the delegated authority but it seems the agent is happy to claim to have used it if necessary.

    Which brings us back to the question; how big a conflict is it that the agent decides the OC will have the agent represent them at additional services rates?

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  • #55472
    Jimmy-T
    Keymaster

    I am still confused about what the issue is here.

    The strata manager (SM) said they had agreed to the mediation and there was no record of the application for mediation being discussed at committee.

    Are you saying that the SM was deliberately concealing the mediation and the issues around it from the committee?  But if both the SM and the committee claimed they had approved the participation in the mediation, where is the problem? Someone has to agree to turn up at mediations (or not).

    Why would the SM lie about this?

    It would be helpful if you could explain in simple terms what you think the issue is. Rather than correct procedure not being followed,  what were the consequences of that lapse?

    If this is one example of many of a dysfunctional committee being bullied by a controlling SM, then that is another story and there are other remedies under strata law.

    I agree that Section 9(3) of Schedule 2 is contradictory when SMs are making decisions on behalf of the strata committee without  holding committee meetings. But there are a few contardictory parts of the Act that don’t bear close scrutiny.

    For readers not overly familiar with strata law, this section allows owners who individually or collectively hold one third or more of the unit entitlements in a scheme to veto any motions on the agenda by prior  submission to the committee – i.e. decisions can’t be made on that agenda item.  This would require a meeting and an agenda so the SM’s executive rulings would by-pass that.

    I have never heard of this clause being invoked apart from one bully-boy builder-developer who held 40 per cent of the votes in his scheme and blocked any moves by the committee to do anything he didn’t like.  The solution was to hold general meetings where the veto would not apply.

    #55468
    The Hood
    Flatchatter
    Chat-starter

    Interesting reply because a lot of SPs have an SC that is for the sake of compliance with the requirement to elect an SC. The SC is in effect window dressing, hold no meeting and do nothing but maybe get ‘polled’ by the agent who is trusted and tasked with acting as the SC.
    In the case in question the agent is known to the compliance officers down at FT as a ‘my way or the highway’ type agent who has had FT’s ‘flying squad”, for want of a better name, raid the agents offices. The agent is not a big fan of what does not suit the agent.
    The issue of compliance came up at mediation so it was highlighted that the SC, who are an active SC in the SP in question, never had the matter of the mediation on the agenda and never made a formal decision on it. Just to demonstrate the compliance level is not that great.
    The agent quickly stated that the agent made the decision under the delegation. I have no doubt it was an absolute lie.
    In the past the SP in question has issued NTCs without a decision and when quizzed the SC claimed they made the decision, even though no record of it existed AND the agent claimed the agent made the decision under the delegation in the agreement.
    Seems they both wanted to claim the decision, and no s 55 record of those matters ever surfaced from the agent.

    At mediation when the agent was then pressed over whether or not the agent had recorded the exercise of function (s 55) to attend the mediation the agent ultimately said the applicant could come and inspect the records. The agent’s office is 130km away and it is not hard to make an entry in a record after the fact.
    Anyway the point was “is there a conflict when such occurs”, i.e. when the agent decides the agent will take the gig.

    Yes we are talking about protocol issues to some degree but if we care to give credence to the PSA Regs and the rules an agent is supposed to act under then we have an agent acting with no regard for fiduciary obligation.
    We have no regard for the formalities of the SSM Act.

    I always bring SC decisions that are made without notice or due regard for protocol (a formal decision) back to a denial of the right to veto (sch 2 cl 9(3)).
    I feel cl 9(3) of Sch 2 is the most compromised owners right in the Act. Can’t veto what one does not know about.
    I would have without hesitation signed a notice not to engage the (useless) agent and I am aware of other owners who would also have.
    The idea that failing to comply with requirements of the Act and fiduciary obligation is no big deal is a highly subjective comment.

    At what point do such failures become a big deal?
    I am sure we could talk about that without resolution forever.

    Yes this is an agent with ‘not much respect’ for a lot of thing.

    Thanks for your comments JT.

    #55432
    Jimmy-T
    Keymaster

    I find it hard to believe that the agent would not have represented the strata committee at a mediatin without the knowledge and tacit agreement of the committee or its office-bearers.

    Or to put it another way, if the committee hadn’t wanted the agent to participate in the mediation, they would have told them not to do it.

    The other concerns, such as not reporting these representations and claiming that they decided to represent the committee are protocol issues that I suspect stem from the agent not having much respect for the process, or the issues raised at the mediation.

    That doesn’t excuse anything, but it’s not really that big a deal.

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