This article is about the council of owner’s conflict of interest.
Table of Contents:
- QUESTION: A member of our council of owners has a handyman business and has offered to take over our gardening contract. How do we ensure there is full transparency and no conflict of interest?
- QUESTION: Is it considered a conflict of interest if a strata committee member is also the insurance provider and receives the strata insurance commission?
- QUESTION: Concerning the council of owners, what is the definition of conflict of interest? Is conflict of interest only concerning finances?
Question: A member of our council of owners has a handyman business and has offered to take over our gardening contract. How do we ensure there is full transparency and no conflict of interest?
Our current gardener has just resigned. A member of our council of owners has a handyman business and has offered to take over the contract. We will get quotes from external suppliers but if the member’s business is comparable or better than the competitors in cost and services offered, can we award the contract to their business? They won’t get to vote on the decision, but I still wonder if it’s an issue.
Answer: It’s important to ensure transparency and avoid any conflicts of interest.
In this situation, it’s important to ensure transparency and avoid any conflicts of interest. Since the council of owner (COO) member has a handyman business and has offered to take over the gardening contract, it’s crucial to follow proper procedures to maintain fairness and objectivity in the decision-making process.
Here are steps you can consider:
- Full Disclosure: Ensure that the COO member fully discloses their interest in this matter. This includes providing information about their business, its services, and pricing
- Competitive Bidding: As you mentioned, obtain quotes from external suppliers to determine the market rates and services offered by competitors. This will establish a benchmark for evaluating the COO member’s business proposal.
- Comparison: Evaluate the COO member’s business proposal against the external quotes objectively. Consider factors such as cost, quality of service, reputation, and any potential conflicts of interest.
- Conflict of Interest Policy: Check if your strata company has a conflict of interest policy in place. If not, consider implementing one to provide clear guidelines on how to handle situations like this.
- Decision-Making: Ensure that the decision-making process is conducted by individuals who do not have a direct interest in the outcome, such as those who won’t benefit financially from the contract.
- Documentation: Maintain clear records of the decision-making process, including the reasons for awarding the contract to a particular vendor. Transparency is key.
- Creditor Compliance: Does the creditor have the appropriate licences and insurances. Depending on the size of the contract and your insurers specific requirements, it may be advisable to seek input from your strata management agent to ensure compliance with any relevant laws and regulations.
By following these steps and demonstrating transparency and fairness throughout the process, you can make an informed decision that minimises the risk of any conflicts of interest and ensures the best value for your strata company.
Rick Blampey
SVN Perth
E: [email protected]
P: 08 9427 7955
This post appears in Strata News #670.
Question: Is it considered a conflict of interest if a strata committee member is also the insurance provider and receives the strata insurance commission?
Answer: A council member must not make improper use of their position to gain, directly or indirectly, an advantage for themselves.
It could be perceived as a conflict of interest in accordance with Section 137 of the Strata Titles Act 1985; Council members: general duties and conflicts of interest.
From what is noted within the question, it would appear that the council member is directly receiving a financial gain from this transaction.
A council member must not make improper use of their position to gain, directly or indirectly, an advantage for themselves. In this case, the council member must, as soon as practicable after the member becomes aware of the relevant facts, notify the council in writing of this direct pecuniary interest that conflicts or may conflict with the performance of a function as a member of the council.
A council member who is required to disclose a conflict of interest must also abstain from voting on the matter in which the member has a direct pecuniary interest.
The council members should ensure they are satisfied the appropriate disclosures have been provided and that selecting this particular insurance provider over any other available providers is in
the best interest of the strata company.
Ashlee Whitwell
Emerson Raine
E: [email protected]
P: 08 9707 3843
This post appears in Strata News #622.
Question: Concerning the council of owners, what is the definition of conflict of interest? Is conflict of interest only concerning finances?
What is the definition of conflict of interest? Is conflict of interest only concerning finances? We had a case where members of the council of owners complained about a tenant and lot owner. Should they be involved in voting on a motion about what action needs to be taken or should they disclose a conflict of interest and be removed from the voting process?
Answer: You can’t make improper use of your position to guide directly or indirectly an advantage for the person or any other person or cause detriment to the strata company.
Conflict of interest, the immediate example that comes to mind is where you have a person who’s on the Council of owners, and the strata council decides ‘we need to employ a gardener.’ Or ‘We need to employ a painter’, and one of the members on the Council says, ‘My uncle is a painter’ and they’re related to them directly or indirectly.
It could be perceived that there is a conflict of interest as a financial gain could be obtained by the council member by undercutting any other known quotes that have been received from other contractors. So the Act says that they should abstain from voting on those matters. The Act does specifically say that about voting and council members.
You can’t make improper use of your position to guide directly or indirectly an advantage for the person or any other person or cause detriment to the strata company. A person to whom this section applies if there is a conflict of interest, Section 137 3 states that a person to whom this section applies;
- 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;
- must do so as soon as practicable after the person becomes aware of the relevant facts, and in this case, a member of council must not vote on a matter in which the member has an interest required to be disclosed under paragraph A.
Shane White
Strata Title Consult
E: [email protected]
This post appears in the May 2021 edition of The WA Strata Magazine.
Have a question about council of owner’s conflict of interest or something to add to the article? Leave a comment below.
Read next:
- Strata Titles Act 1985 (WA): Key Changes to Dispute Resolution
- WA: Q&A Procedure for Election or Removal of Council Members
- WA: Q&A Access to Council of Owners / Strata Information
Disclaimer: this article should not be relied on as legal advice.
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Thank you for your answer – however the question had a very specific example which did not involve financial interest. The only interest that the council member in the example above would have is the interest to ensure that the complaint is resolved. We have a neighbour whose tenant plays music really loudly at 2 am in the morning. As a Council Member will I have a conflict of interest in any matters that involve decisions to issue breach notices to the lot owner of the offending tenant simply because I am the one who lodged the complaint and is suffering from the actions?!
Hi Emilya
Hope this might help… as a council member of several strata schemes, my understanding is that a conflict of interest arises when I am the owner of the lot about which the decision is being made – not so much where the complaint is coming from (provided it is verifiable).
For example: if my tenant’s making the noise, I would abstain from voting to issue a breach notice.
Anybody can report an issue of concern – the complainant can be an owner or non-owner.
I believe the essential factor is for the complaint to be verifiable by having objective details illustrating that the issue of concern is not a one-off or an emergency situation.
This could mean keeping a log of when the noise occurs (date/time), type of noise (music, banging, arguments, barking, etc), duration (eg. regular every couple of minutes over 20 minutes, increasingly loud over 5 minutes, constant for several minutes and multiple times in an hour, etc) how I know where it’s coming from, what steps I have taken to resolve the issue before taking it to the COO (I knocked on the door between the music tracks but they didn’t seem to hear me, the noise stopped and then re-started), and what I want done about it (peace).
I’d probably also approach a neighbouring unit asking if they heard and were disturbed by anything that night and request they send an email complaint to the strata manager or their property manager, and if the noise is unbearable at any time a police report is helpful but keep a record of the report number.
These are the sort of details that the State Administrative Tribunal would want if you (or the strata company) decided on a statutory approach. It also makes it much easier for council members to look at the situation objectively and make a decision about issuing a breach notice. It is unwise to act on verbal complaints only.