QLD: Q&A Payment to committee members. What approval is required?

Lot owners from QLD are questioning the approval required for payment to the chairperson or other committee members.

Table of contents:

• QUESTION: At the end of the year, can a Caretaker send seasonal gift cards to Committee members as a thank you for their efforts during the year? Would something like a $400 gift card be appropriate?
• QUESTION: Our Chairperson is also in the financial documents as being a ‘caretaker’ receiving approx $900 per month. How do we stop these payments?
• QUESTION: Can a body corporate employ a resident for a small amount of hours as long as they have workers compensation and taxation requirements in place?
• QUESTION: The chairman controls the meetings the information provided and votes on all matters including his remuneration. Is this not a conflict of interest? Is there any way to challenge this?
• QUESTION: I’m questioning payment to the Committee Secretary. How do we know the claimed expenses have been incurred during committee work?
• QUESTION: We have all agreed to pay our chairman an amount per month. To proceed, what process are we required to follow for approval of payment to committee members on our body corporate committee?
• QUESTION: Can a lot owner be both the caretaker and the Chairman? Is this a strata executive committee conflict of interest?

Question: At the end of the year, can a Caretaker send seasonal gift cards to Committee members as a thank you for their efforts during the year? Would something like a $400 gift card be appropriate?

Answer: Gifts from the caretaker, even done with good intentions, might be an issue.

There may be an issue here with s113 of the Body Corporate and Community Management Act 1997, namely this provision:

1. The body corporate for a community titles scheme must not seek or accept the payment of an amount, or the conferral of a benefit, for—
   
   1. the engagement of a person as a service contractor for the scheme (including a replacement or renewal of an engagement of the person as a service contractor); or
   2. the authorisation of a person as a letting agent for the scheme (including a replacement or renewal of an authorisation of the person as a letting agent); or
   3. extending the term of—
      
      1. an engagement of a person as a service contractor for the scheme; or
      2. an authorisation of a person as a letting agent for the scheme.

A ‘benefit’ here could mean a gift card and it could be argued that a committee member’s acceptance of same was indicative of the body corporate accepting a benefit for the engagement, or extending the term, of the caretaker.

As well, there are restrictions on paying committee members under legislation. Could it be argued that providing gift cards was giving the committee member ‘remuneration, allowances or expenses’ as per s53 of the Standard Module?

There is also an issue of optics here. How might your scenario look to non-committee members? Would they think the caretaker was favouring committee members over other owners? Does it create an expectation of what the committee member might do in future, in relation to the caretaker?

While all of the above might be drawing long bows, I think there’s enough there to suggest that the caretaker’s sending of gift cards, even though done with good intentions, might be an issue.

Chris Irons
Strata Solve
E: chris@stratasolve.com.au
P: 0419 805 898

This post appears in Strata News #622.

Question: Our Chairperson is also in the financial documents as being a ‘caretaker’ receiving approx $900 per month. How do we stop these payments?

The Chairperson of our body corp made up of 74 units is also in the financial documents as being a ‘caretaker’ receiving approx $900 per month payment from the Body Corporate.

Multiple requests to the Strata manager and the chair/caretaker, in their capacity as chairperson of the BC, for a copy of the job description, hourly rate and hours of employment have been met with silence.

I can’t find any information about this in our portal. There doesn’t seem to be any job contract or job description? This situation may have been going on for ten years. How can I access this information? What avenues do we have to stop these payments?

Answer: One factor to consider is that there is a prohibition on service contractors being voting members of the committee.

It’s a bit of a red flag that there is no explanation for the payment. And, the fact that it is listed for caretaking duties may have some implications for the Chair’s position on the Committee. So, what can you do?

It is worth remembering that it is legal for a body corporate to pay Committee members. Most of people in committee positions do large amounts of work on a volunteer basis, and when they do get paid the amount tends to be considerably lower than the equivalent you would pay a professional. Your scheme may be better off by having the Chair do the work they are paying for than not. Other owners may be happy with the arrangement. This doesn’t mean that you are not entitled to transparent information or that the correct procedures shouldn’t be followed in authorising the expense, but it is something to think about. Equally, from the perspective of the owner receiving the payment, they should want the transaction to be as transparent as possibly so that they don’t have to deal with issues like this.

Any payments to Committee members should be approved by owners at a general meeting, usually the annual general meeting as is when the Chair is also appointed or reappointed. As such, check the last couple of meeting notices and see if there has been any record of the payment. If there was, then maybe you just need to push for more details about the scope of works. If not, then it seems correct procedures are not being followed.

In that case, you have a number of options, but a reasonable start point would be to have the matter reviewed at the next committee meeting. You could write to the Committee about the matter and ask for your correspondence to be tabled so it is recorded in the minutes. You could also submit an owner’s motion to the committee requesting that a scope of works be provided. When you submit an owners motion, the committee have six weeks to vote on the matter or advise you that they need an extension. If they do not, you can raise the matter with the Commissioner’s office.

If you want to propose a motion that the payment stops, you could do that as well. This could be either a Committee motion or you could submit a motion for inclusion on the next general meeting.

One factor to consider is that there is a prohibition on service contractors being voting members of the committee. This only applies if the tenure is for more than twelve months. So, if a Committee member receives an annual payment and this is acknowledged on an annual basis they can still remain a Committee member. However, payments in perpetuity, even if agreed at a previous meeting, do not meet this standard so by implication the Chair could not act as both Chair and ‘caretaker’. You could raise this issue with the Committee and whoever is in-charge of authorising accounts. Bear in mind that a complex and probably unhappy conversation would likely ensue.

A simpler means of resolution would be to propose that regardless of what has happened to date, the best way for the body corporate to proceed would be to have a general meeting at which owners can vote on payments to the Chair based on a scope of works provided. However owners vote the matter can then be closed. That seems a reasonable proposition for all parties and if not agreed to, you can follow up with the Commissioner as required.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #594.

Question: Can a body corporate employ a resident for a small amount of hours as long as they have workers compensation and taxation requirements in place?

We are a 9 villa complex under the standard module. We are considering appointing a retired resident living in our complex to undertake care of our common area gardens consisting of maintaining a small garden area and a limited amount of mowing. The resident has volunteered to do the job. He is 70 years and very physically able to do the work as it should only be around 3 hours a month. This would be ideal for our situation.

Can a body corporate employ someone for a small amount of hours a month as long as they have workers compensation and taxation requirements in place. What other requirements are needed in these circumstances?

Answer: Insurance and taxation should be confirmed as part of any agreement depending on the scope of works.

It’s fairly common for body corporates to engage a resident to do work like this around a scheme and it can be a benefit for all parties as costs tend to be reasonable and the quality of work good.

As you indicate, the main concerns tend to be around insurance and taxation. These should be confirmed as part of any agreement depending on the scope of works. The contractor is responsible for the legal compliance, workmanship and safety of the work they do and their insurance should cover this. For tax purposes, the contractor should have an ABN. They will also need to invoice appropriately. See this resource from the ATO for more information: Working as a contractor.

There are certain types of work where a contractor has to have a licence. This can be if the cost is over $3300 or if a specific skill is required such as plumbing, gas fitting or termite management. It doesn’t seem like one is required here, but you can check the QBCC website to be sure: When is a contractor licence required?

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in the November 2021 edition of The QLD Strata Magazine.

Question: The chairman controls the meetings the information provided and votes on all matters including his remuneration. Is this not a conflict of interest? Is there any way to challenge this?

We have a Strata of 21 units. 11 units are held by a group of original owners who are also friends.

They have appointed a chairman who is also paid “in lieu of a building manager”. This person refuses to be transparent around processes and does not share information with the committee. Therefore we do not have a democratic process and “do not know what we don’t know”. The chairman controls the meetings the information provided and votes on all matters including his remuneration. 

Is this not a conflict of interest? Is there any way to challenge this? The AGM votes supported the role and function of this position.  

Answer: There are legislative provisions that restrict how a committee member can be remunerated, as well as how someone can be appointed as a contractor.

There are legislative provisions that restrict how a committee member can be remunerated, as well as how someone can be appointed as a contractor. In either case, it would seem there is some issue in this particular instance.

Yes, there are conflict of interest provisions at play at committee level (not at general meeting level).

No one committee member holds particular powers to make decisions on behalf of the committee. Decisions made are group decisions by all committee members. There are also provisions about circumstances in which information must – not may – be provided to all owners.

It would seem that there are several problems at play here. The issue is, what to do about it? You could put up a motion to remove the chairperson but that seems pointless if he has the numbers. One of the issues which emerges from your query is a lack of information and thus a lack of knowledge. You need to get your hands on the relevant body corporate records and to do that you need to make a formal written request and undertake to pay the prescribed fee. If you don’t get the records you seek in 7 days you can make an application to my former Office about that and an adjudicator has the power to order the records be provided to you. I think that is the start point to addressing your concerns.

Chris Irons
Strata Solve
E: chris@stratasolve.com.au
P: 0419 805 898

This post appears in Strata News #519.

Question: I’m questioning payment to the Committee Secretary. How do we know the claimed expenses have been incurred during committee work?

The Body Corporate has reimbursed the secretary for annual organiser plan on GoToMeeting to hold the committee meetings, general meetings and informal committee meetings, that are not transparent to owners. Sums included fees for payment by a credit card as well. One general meeting and two committee meetings were held online remotely, costing more that $600.

Can all expense be paid by the secretary using a credit card?

There are months with no general meeting or committee meetings, but the payment of the annual plan includes meetings in these months.

How to deal with more issues, when the committee may approve expense for $50 for attendance of the committee meeting, max. $300 in 12 months. But annual plan is not attendance. How to solve it?

Answer: As a first step you can contact the body corporate secretary/manager and ask to see a record of expenses and inquire as to why they have been incurred.

As a first step you can contact the body corporate secretary/manager and ask to see a record of expenses and inquire as to why they have been incurred. There may be a straightforward explanation.

It’s not quite clear from the description but it seems the Secretary has set up an account to facilitate online meetings. That may be a reasonable expense that was approved by the committee within their spending limit. Online meetings are to be encouraged and they have to be held on one platform or another for which there is usually an annual fee of some kind. Owners may have voted to have the capacity to have online meetings and may want the access. If the Committee has facilitated that what’s the problem? It’s also reasonable for the committee to use the platform for any informal discussions it may want – there is no real difference between that and people sharing emails or phone calls.

There may be some confusion here over expenses paid to a committee member. This is referenced in the last paragraph and is covered under by sections 52 and 53 of the Standard Module.

However, this doesn’t seem like a payment to a committee member but a reimbursement of an expense. Maybe it should have been paid direct from the body corporate accounts but if a credit card was required this may have been the simplest way to arrange the facility.

William Marquand
Tower Body Corporate
E: willmarquand@towerbodycorporate.com.au
P: 07 5609 4924

This post appears in Strata News #508.

Question: We have all agreed to pay our chairman an amount per month. To proceed, what process are we required to follow for approval of payment to committee members on our body corporate committee?

Our Chairman does a lot of “time” work (not manual work). He coordinates contractors who have to come to the complex and spends considerable time getting quotes and then following up the contractors.

At a committee meeting held in February 2017, it was agreed by those present that an amount of $40 per month is paid to the chairman. The minutes of the meeting were circulated to all unitholders and they were asked to agree or disagree. It was passed without dissent.

Now that the Chairman has asked to be paid, one member of the committee is now making it difficult to make the payment, even though everyone agrees. It has been suggested that we hold an EGM and confirm the payment. Even though it is in the Financial year, the allowance is in the money held.

This is to save us considerable money. The alternative is to pay the Body Corporate Manager and the cost would be much greater.

Are you able to offer us a way forward? The Chairman has spent considerable time on the Body corporate, including negotiating our way out of a poor Body Corporate Manager.

It seems to me, as all unitholders agree, surely it should be able to be paid and not considered illegal.

Answer: Payment to committee members for work needs general meeting approval

Section 43 of the Standard Module relevantly provides that payment to a committee member for work needs general meeting approval and full disclosure of the payment.

The committee can’t approve it.

Frank Higginson
Hynes Legal
E: frank.higginson@hyneslegal.com.au
P: 07 3193 0500

Question: Can a lot owner be both the caretaker and the Chairman? Is this a strata executive committee conflict of interest?

One of our lot owners has been appointed as a caretaker at the AGM each year (for the past 3 years) for a 12 month period, with an annual remuneration approved. The caretaker carries out tasks such as gardening, pool cleaning and rubbish removal etc on a weekly basis. They have a position description and a list of duties to be performed.

Can this lot owner also be the Chairperson of the committee? I feel this is a strata executive committee conflict of interest.

Answer: Conflict only relates to the discussion around the issues the person has an interest in.

To me, the conflict only relates to the discussion around the issues the person has an interest in. If the committee wants to discuss alternatives to the current services the person should declare an interest and leave the meeting. Otherwise, they can participate.

The prohibition on service contractors being a voting member of the committee only applies if the tenure is more than 12 months. If it is renewed annually, they can be on the committee.

Frank Higginson
Hynes Legal
E: frank.higginson@hyneslegal.com.au
P: 07 3193 0500

This post appears in Strata News #171.

Do you pay committee members on your body corporate committee? If you have a question or something to add to the article, please leave a comment below.

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