This VIC article is about whether committee members can or should be paid for their work.
Question: Our small committee goes above and beyond for our old, large estate. Can we offer them compensation for their commitment to the community?
Our large estate is over 20 years old and now requires a lot of maintenance and repairs for extensive common grounds. Once, we had a committee of 10. This is now a committee of just three people. They go above and beyond and devote a lot of their personal time, care and effort.
The cost of $120k to hire a manager for the estate would increase residents fees. Is it possible to reward/compensate committee members for their ongoing services? Can we remove their need to pay OC fees? What is the usual process for committee member compensation?
Answer: The absence of a provision explicitly permitting compensation for committee members in the Act hints at the lack of legislative intent.
We can all agree that committee members play a pivotal role in owners corporations, dedicating an immense amount of their time to the betterment of their community. Should these committee members be compensated for their valuable contributions?
Section 117(1) of the Owners Corporations Act 2006 (Vic) (Act) outlines the duties of a committee member. They are mandated to act honestly and in good faith, exercise due care and diligence, and prioritise the best interests of the owners corporation. Notably, the Act remains silent on the issue of compensating committee members.
However, several factors cast doubt on the feasibility of compensating committee members within the framework of their roles. Section 117(2) explicitly prohibits committee members from leveraging their positions for personal gain, strongly implying a voluntary nature of their service. Furthermore, potential payments could face legal hurdles if they fail to meet the requirements of sections 23, 23A and 24 of the Act. We also note that the waiving of validly struck levies may result in an owners corporation finding itself in the unenviable position of requiring the remaining lot owners to make additional payments to cover any shortfall in funds. Finally, the absence of a provision explicitly permitting compensation for committee members in the Act hints at the lack of legislative intent in this regard.
In addition, whilst the question does not make clear whether the estate has a registered owners corporation manager appointed, section 119(2) of the Act stipulates that only registered managers can receive a fee or reward for carrying out the functions of a manager, reinforcing the notion that committee roles are fundamentally voluntary and distinguishing them from positions that carry the potential for financial remuneration.
While owners corporations may wish to reward their committees, various legal nuances and the voluntary nature of their roles pose significant challenges to implementing such arrangements.
Fabienne Loncar
Moray & Agnew Lawyers
E: floncar@moray.com.au
P: +61 3 8687 7319
This post appears in the July 2024 edition of The VIC Strata Magazine.
Have a question about whether your committee members should be paid or something to add to the article? Leave a comment below.
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