The Committee

In the State of Victoria, An Owners Corporation with 13 or more lots is required under the legislation to have an elected Committee of at least 3 but no more than 12 members who are lot owners or proxy holders for lot owners.

An Owners Corporation with fewer than 13 lots is not legally required to formally elect a committee as all lot owners are automatically dimmed to be committee members unless the Owners Corporation decides to formally elect some but not all members to the committee.

GOVERNANCE

The management of an Owners Corporation in Victoria is governed by the Plan of Subdivision Act of 1998, the Owners Corporation Act of 2006 and the Owners Corporation Regulations of 2007. The legislation governing Owners Corporations or Bodies Corporate is different from state to state.

WHAT IS THE OWNERS CORPORATION

The Owners Corporation or Body Corporate is the property (the building or complex) and the individual owners of that property. The property is the Owners Corporation and the Owners are the members of the Owners Corporation.

WHAT IS THE COMMITTEE

These are lot owners or representatives of lot owners who are elected to act as the directors of the Owners Corporation. Elections take place at each Annual General Meeting and the powers of the Committee are set out under the Owners Corporation Act 2006 but the Owners Corporation may also impose restrictions or additional powers through an instrument of delegation.

There can be a minimum of 3 and maximum of 12 committee members. From the elected members, two office bearers must be chosen to act as the chairperson and the secretary.

WHAT ARE THE FUNCTIONS OF THE COMMITTEE

Chairperson:

Presides at all meetings

Conducts all meetings

Decides on issues relating to voting and procedure

Does have a deciding vote

Secretary:

Convenes the Committee meeting and General Meeting

Receives proxies prior to General Meetings

What does a Committee do?

The Owner’s Corporation Committee is elected to act in good faith and represent the interests of the members of the Owner’s Corporation fairly without prejudice. The committees are voluntary members who are tasked to deal with any issues faced by the Owners Corporation and may be required from time to time to form a sub-committee to investigate complex matters and report back with a recommended course of action.

The Owners Corporation Committee’s primary responsibility is to:

• Delegate authority the managers to act on its behalf.
• Review and approve a long term maintenance plan.
• Review and approve financial statements and annual budgets.
• Authorise special levies when required in accordance with the legislation.
• Review, negotiate and approve contracts.
• Approve the payment of invoices for authorised work.
• Approve spending for repairs and maintenance of common and shared property
• Approve community and building operations policies and procedures.
• Ensure safety and security of all persons and property within the community.
• Promote a sense of community and fairness for all residents
• Protect the investment of all owners
• Control the running costs and fees
• Enforce the Owners Corporation Rules
• Authorise breach notices when the rules are not being adhered to
• Recommend changing the Rules when doing so will improve the community as a whole.
• Act in the best interests of the majority taking into account the minority rights.

What does the Chairperson do?

• The Chair is responsible for the day to day liaison between the Owners Corporation Manager and the Owners Corporation Committee.
• Major grievances against the Owners Corporation Manager or the Facilities Manager are to be addressed to the Chair.
• The Chair is not to act unilaterally without the support of the Owners Corporation Committee
• The Chair is responsible for keeping the Owners Corporation Committee informed of all matters affecting the Owners Corporation
• Communication addressed to the Chair may, at his or her discretion, be released to the Owners Corporation Committee.

How do I become a Committee member?

Every year, a statutory Annual General Meeting legally required to be held where, among other matters, a Committee is legally required to be elected. To be eligible, a member must be a lot owner or proxy holder for a lot owner. To be elected, a committee nominee must be an owner of a lot or a representative of a lot that is financially up to date at the time of the AGM.

Conflict of Interest

Although changes to the Corporations Law 2000 may not have direct applications to the Owners Corporation Committee, it is clear that the duties of Committee Members and Officers are not absolved simply because is a not-for-profit organisation whose Members serve voluntarily.

A wider application of the principle of conflict of interest has meant that the Committee Member has a duty to avoid conflicts of duty and interest both internally and externally, especially when a Committee Member may hold interests in supplier organisations or competing organisations, relates to the new definition of fiduciary duty, now known as “in good faith in the best interests of the corporation”.

Thus, in an Owners Corporation situation, non-executive members of the Committee will frequently have potential conflicts inasmuch as they may hold assets in other buildings or pursue commercial interests where fellow residents are potential or actual clients/customers, or hold investment in supplier companies and so on. In itself  there is no difficulty with these relationships provided that the Committee Member acts with the best interests of the whole of the Corporations community in mind (and not simply that part which is relevant to their interests or holdings) and follows an acceptable protocol with regard to any conflicts of interest.

Voting & Proxies

Pursuant to Section 5 of the Act of 2006, the Owners Corporation Committee and its Sub -Committees will decide matters by resolution or by a show of hands if a vote is required. A formal ballot may be conducted. In the event that a vote is tied the Chair will have the right to a second or casting vote. In normal circumstances the Chair’s casting vote will favour the status quo although no regulation or custom prevents the Chair from voting according to his/her personal view.

The Act states under Section 112(11) the Committee may regulate its own procedures and as such this adopted Code allows for a proxy as defined under Section 109(3)(d) be only given to another standing Committee member and not any other third party representative.

It should be noted that, if a Committee Member disagrees with a decision of the Owners Corporation Committee, the Committee Member is nonetheless bound by the Owners Corporation Committee’s decision and, in the best interests of the Corporation, should not share disaffections outside of the meeting. Importantly, the only way for a Committee Member to forego responsibility for an Owners Corporation Committee decision is resignation.