What are the Roles & Responsibilities of Body Corporate Committees?
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Hi, I’m Tom Robinson from OMB Solicitors, I’m Associate here and I work in the Body Corporate team and today we’re going to have a chat about the roles and responsibilities of committees and what is the onerous side of that type of role.
I thought the best way to get started was to have a quick look at how a committee is made, created, and appointed, and essentially, the starting point is that a committee can consist of up to seven members. Of that seven members, you’ll have an executive component committee and then also your ordinary members component of that committee.
The executive members are essentially your chairperson, secretary, treasurer. With that role, there’s not really any more responsibility, power, or authority than any of your ordinary members of the committee.
Rather, they have some additional tasks that they do take on, which mostly, with most of the bodies corporates, are delegated in one sense to a body corp manager, and the purpose of that is your body corp manager is engage to take on that administrative role.
So when those executive members don’t have those tasks, your body corp manager takes care of them. They’re essentially the same as any other member on your committee that can be up to seven.
When your committee is elected, it’s done at an annual general meeting each year. The important thing to remember is that you’re only realistically got a one year term on your committee, which is a good thing to remember and then you will be either reelected, reappointed, or there will be a new committee that will come on, so that’s done every year.
Once we have a formed committee, which is done at each annual general meeting, essentially that role of the committee is to look after that day to day administrative management and operation of the body corporate, and essentially what that means is to make and implement the decisions of a body corporate.
A committee has a number of power to make certain types of decisions, and with that, there are also decisions that they can’t make. Some of those restricted decisions will be decisions like you can’t affect the rights or responsibilities of owners.
You can’t change the levies, and of course, any motions or decisions that require a general meeting resolution, whether it’s ordinary special resolution without dissent, they must be at a general meeting and the committee can’t make them.
Some of the other decisions that a body corporate can make, which are quite voluminous, they all have to be done with a basis of reasonableness, and the reason they have to be a reasonable decision is because they are bound by a code of conduct, and that code of conduct basically says that a committee must act fairly, honestly, with confidentiality, and most importantly, in the best interests of all the owners and the reason that’s so important is because a committee can make a decision without any input from owners.
Rather, the only notification that owners will get is minutes and those minutes will come from the committee meeting or the voting outside of committee meeting, and I guess the important part to remember there is that if a committee makes a decision, it must be minuted and they must hold a formal meeting.
There’s no such thing as informal meetings and the reason that’s so important is because it does bind the body corporate and a lot owners have a right to know what the decisions are that a committee are making. So with all that in mind, that’s essentially their role, it’s that day to day management and operation of a body corporate.
But what’s the onerous side of it? What are the risks associated with being on a committee? There are some. There are some, there are some risks, despite the fact that there is obviously Office Bearer’s liability for our committees, which is through the body corporate’s insurance policy.
But essentially, before we go into that type of risk, one of the most common things we’re seeing that’s coming through is with respect to communication. Lot owners can be a bit picky with members and their decisions because they don’t have, in most instances, a right.
So they can be bombarded, those members this can be bombarded and targeted and attacked by a lot of correspondence coming in from what we call a minority group of nuisance owners.
But the flip side of that is obviously, if a committee is communicating with owners, it has to be very careful that if it’s in the minutes, explanatory notes, or even chairman’s letters and those other types of communications.
That there isn’t any false misleading defamatory statements that are made because that can potentially set up a claim against the body corporate, and that ties back into why a committee must act reasonably because that decision is one that is by the body of corporate.
The other aspect that we tend to find is, like I say, there are risks associated with committee members making decisions, and when we talk about that, we like to think of the committee members as a group of volunteer laypersons. So in other words, they shouldn’t try to take on the roles and put on other hats like the roles of accountants, lawyers, engineers, project managers.
Those roles should be best left to those parties, and even if a member on the committee is one of those, it avoids that conflict of interest, which can occur and we don’t want to see that happen.
The reason being is the committee’s scope is rather limited in what they can and can’t do and if they go outside of that scope, whilst there is that protection of Office Bearer’s liability insurance, there are decisions out there where if a committee member does seem to go what we call rogue, then they potentially could be personally liable and not protected under that policy as an exclusion.
They’re probably the main onerous parts of being on a committee and the risk to be mindful of. Essentially, as long as a committee makes reasonable decisions and they stay within their scope and engage the appropriate experts, they will be well and truly protected, and realistically, it can be a bit of fun, and I guess to sum it all up, if you’re not on a committee and you’re part of a body of corporate, have a go.
There’s no requirement to be on the committee and certainly there’s no requirement to stay on the committee. It’s quite easy to resign if you want and at best it’s only for one year term. But otherwise, that’s probably the best part of those those roles and responsibilities.
So we do also come across those situations whereby committee members do get themselves in those situations where they need to engage those appropriate experts and get that advice, and obviously OMB Solicitors, we can provide a lot of that advice to those committees.
Whether it’s assisting with drafting the type of correspondence to go out, reviewing the minutes, especially if there are topical and competitive topics that are going to be put to the owners, whereby there might be an influx of correspondence coming in, then we can certainly review those types of documents.
We can assist with the engagement of other experts that need to be. But that also includes that we can have that relationship with your body corp managers who take on part of those roles and responsibilities of your committees and give just any of that general advice to assist a committee with its decision making authority and power, including making sure that they stay within their spending limits, making sure that they don’t hit any of those restricted issues, and assisting them with even attending at the committee meetings and general meetings to provide that type of advice.