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At our AGM late in 2011, our friendly new strata manager transformed from being fairly cooperative to strangely (& almost aggressively) bureaucratic. This surprised and disappointed quite a few owners.
Out of this new attitude emerged some pronouncements that simply don't make sense. So, please, can anyone help with some advice?
My biggest worry was the SM's assertion that the SM can override any spending decision the EC makes.
I'm not talking about massive spending – like the $100,000 or so that an EGM will have to approve for essential repairs and maintenance neglected by the OC and our previous SM over many years. Since this will require a loan or special levy, it's proper that all owners get a say. Owners did all the work – with engineers and other specialist advice – to sort out what must be done. The SM simply pays the bills.
When we contracted the new SM – less than a year ago – we agreed the SM could spend up to $800 without EC approval on basic maintenance requests. In fact, so far, the SM keeps seeking our approval for many such expenses.
When we had to approve $12,000 to $15,000 for some urgent/overdue maintenance to a particular unit, we were told (after calling an EC meeting – SM had the agenda in advance) that the EC has no power to approve such a large amount. So that went to an EGM, which we would have called earlier, if only we'd known.
But now the SM asserts that they can override any EC decision about spending money that they like. The SM refused to be specific about numbers and dismissed any arguments that the SM is contracted to work FOR the OC, not to stymie our efforts to fix a complex neglected for many years by its former SM and the one unit owner who once dominated all EC decision making. (It was a novelty a few years ago when we introduced the concept of the EC actually holding meetings.)
So who is really responsible for what when it comes to finances? I thought I'd established the basics of our EC responsibility ages ago. But now we're informed that our role is simply to review quotes, rather than to set policy/goals/etc.
The bizarre thing is that our EC does a lot more communicating with unit owners and residents than ever occurred in the past. We are very consultative and have been building a friendly neighbourhood in our strata plan. The SM knew what we wanted when bidding for our contract. But in a few stupid acts of poor communication (this issue included) has now undermined the confidence that many owners previously had in the new SM. At least one owner is already talking about sacking them.
Please feel free to direct me to legislation or regulations that specify the financial roles and responsibilities in strataland… or even just tell me about lessons learned in your own strata scheme.
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Strata Schemes Management Act
29 Can a strata managing agent exercise the functions of the chairperson, secretary and treasurer or the executive committee?
(1) The instrument of appointment of a strata managing agent may provide that the strata managing agent has and may exercise all the functions of the chairperson, secretary, treasurer or executive committee of an owners corporation or such of those functions as may be specified in the instrument.
What does your agreement say; but then does it really matter what it says because if we read on, part 2 says
(2) However, the chairperson, secretary, treasurer and executive committee of an owners corporation may continue to exercise all or any of the functions that the strata managing agent is authorised to exercise.
Run part 2 of section 29 of the strata scheme management act (SSMA) by your strata manager (SM) and then let him know he is on borrowed time if he wishes to continue to contend he is now the “Fuhrer of finances” in your SP because you will make sure the owners and the EC are made aware of his limited role, which is that of being the “minion” of the OC.
The guy is the OC's employee, he is not the boss of your finances.
The most relevant section of the SSMA would be;
24 Who can exercise functions relating to the finances and accounts of the owners corporation?
A person must not exercise any of the functions of an owners corporation or the treasurer of an owners corporation relating to the receipt or expenditure of, or the accounting for, money of the owners corporation or the keeping of the books of account of the owners corporation unless the person is:
(a) a member of the owners corporation or of the executive committee and the treasurer of the owners corporation or of the executive committee, or
(b) a strata managing agent who is empowered to exercise that function, or
(c) a person with whom the treasurer of the owners corporation is required by an order of the executive committee to exercise that function jointly, and who is enabling the treasurer to comply with the order, or
(d) a member of CPA Australia, or a member of the Institute of Chartered Accountants in Australia, authorised by the owners corporation to exercise the function, or
(d1) a member of the Institute of Public Accountants authorised by the owners corporation to exercise the function, or
(e) during the initial period only—a person authorised by the original owner to exercise the function.
Maximum penalty: 5 penalty units.
Note at part b) the SM can exercise functions if empowered … is your SM empowered by his agreement ?
The idea the EC has no control over the expenditure in the SP is somewhat humorous.
Even if your SM is empowered this does not negate part a) and your SM needs to be reminded who is employing him; that should get his attention.
As a bonus you could refer to
21 Executive committee’s decisions to be decisions of owners corporation
(1) A decision of an executive committee is taken to be the decision of the owners corporation, subject to subsection (4).
(2) However, the following decisions may not be made by the executive 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.
(3) An owners corporation may in general meeting continue to exercise all or any of the functions conferred on it by this Act or the by-laws even though an executive committee holds office.
(4) Despite any other provision of this Act, in the event of a disagreement between the owners corporation and the executive committee, the decision of the owners corporation prevails.
Ask the SM why he thinks the EC cannot make decisions relating to maintenance given the OC has an obligation to maintain.
Without convolution with unusual situations, the pecking order is simple;
The Owners Corporation (the collective owners at a General Meeting)
The Executive Committee (those the OC appoint at the AGM to represent the OC)
The lowly strata manager (the OC's employee)
Just politely let your SM know that you know the pecking order and that if he wishes to try to dictate to the OC then the AGM may well find itself faced with a motion to appoint a new SM
I am never surprised at some of the nonsense SM's come up with – they are not all bad though.
Thanks Billen Ben. Your contribution has reinforced my own views, and many of the arguments raised at the AGM.
I appreciate that there are good SMs out there… this one didn't seem too bad. Still gotta train her up
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