One of the most important governing instruments of owners corporation in Victoria, the Owners Corporation Act, is expecting to undergo some significant amendments come
1st December 2021, and one of its changes involves owners corporation committees.
Michael Darby, Founder of Quantum United Management, invited Tim Graham, partner at Bugden Allen Graham Law, to join him to have a deep dive into owners corporation committees. we Below is some of the key topics we covered in this 55min mega chat:
- Election of committee and the cap on the number of members
- Clarification of a committee’s fiduciary duties – duty of care and accountability to the owners corporation
- What does a committee being able to “regulate its own affairs” actually mean?
- Is it more beneficial to have sub-committees or working groups?
- Practical tips for committee meetings
Whether you currently have a seat at the committee table of your owners corporation or are still weighing up your options to volunteer your time as one, my discussion with Tim is definitely with many key takeaways.
*This conversation and its content was recorded on 24 September 2021, legislation and views of the presenters may change subject to court and or tribunal cases following the date of the interview and as such viewpoints and or advice may change.
Please find the full transcript of this interview below:
Michael Darby
Founder – Quantum United Management
Full Transcript:
Michael Darby: Hi everybody, I’m Michael Darby from Quantum United Management. Welcome to this video educational series. Today, I’m very excited to have Tim Graham with us and I’ll give you an introduction to Tim. So after more than a decade as Partner at H.W.L Ebsworth Lawyers, Australia’s largest independent law firm, Tim joined a partnership with Bugden Allen Graham Lawyers in June 2021, so just recently, and his name was added to the firm’s brand. Tim’s one of Australia’s preeminent strata lawyers and he’s internationally renown. We don’t really like the word strata, do we Tim? I meant to talk to you about that later.
Tim Graham: Yeah, it’s a bit of anachronism, Michael.
Michael Darby: He’s the President of the Australian College of Strata Lawyers and a fellow of the college. Tim’s also a council member of the Strata Community of Australia National and Strata Community of Australia, Victoria organization. He sits on the Property Law Committee of the Law Institute of Victoria. Tim’s been recognized by his peers and numerous local and international boards, including Best Lawyers in Australia six times and in the Doyle’s Guide as a leading property and a real estate lawyer and in leading litigation and dispute resolution. Tim’s published regularly in the Australian Property Law Bulletin and is a member of the bulletin’s editorial panel. He authors the Owners Corporation’s chapter of the Lawyer’s Practice Manual and wrote the case study about four subdivisions within the law. And Tim is running the Victorian office of Bugden Allen Graham Lawyers. So Timbo, thank you very much for joining us.
Tim Graham: Michael, graciously, thanks for having me.
Michael Darby: No problem. So we’re gonna talk about committees today and just cover what a committee is, just at a base level and see how we’re tracking. Maybe we could go a little bit deeper, that would be great. I think we could run a couple of half day workshops indeed, you and I, about committees but we’ll just do a little bit of an intro session in this webinar, just to give people, both who are on a committee perhaps or looking to go on a committee. So just some more information about what the committee is and what their function is, et cetera.
So what I think we’ll start with, Tim, is what is a committee? So looking at it from a base level, from our perspective they’re a group of lot owners within an owners corporation and they get elected at an AGM to make decisions on behalf of the owners in between each AGM. Is that a fair base summary for owners?
Tim Graham: Mate, it is. It’s an excellent summary. And I’m glad you said at a base level because if we go any higher than that, my answer would have to be, I don’t know what a committee is. I’ll explain that to you and hopefully it’ll be in 10 short seconds.
All of the legislation, we’ll get into some of this but where it sits at, compliance requirements, about the calling of meetings and the making of resolutions and the minuting, it’s all to do with the committee making decisions, the committee meetings being called.
Yet when you go to the duties of committee members and the immunities, they actually apply to the members themselves not the committees. So it really is a vexed question in Victoria, whether a committees are a separate legal entity that is capable of making decisions or whether it’s just some loose office, sort of collective of individuals. It seems to me that way back in ’89 or pursuant to the ’89 regulations, the committee was a separate entity. Come 2001 it wasn’t.
And my recollection and understanding is when the owners corporations that came into operation a bit over 30 and a half years ago, that the intention was that a committee would be a separate entity.
So all that remains or what I can tell you with confidence to give you and your audience the level of comfort that there is no reported decision where a committee is, well been… One or two I think have been tried to sue. There’s no decisions against committees as an entity so it seems to me that the VCAT has taken a view that it’s not a separate entity but it’s a very vexed question. I’m sure I’ve gone well down that rabbit hole further that I talk to you, but it is a difficult question.
OC Committees in Victoria (5:16 – 7:15)
The base level, you’re absolutely right that the committee comprised of between 3 and 12 members, or their proxies, don’t forget. A lot of owners proxy can be elected to represent the owner on the committee. And the committee enjoys, I think you’ve got a separate question about delegation of power. But the committee enjoys certain powers exercisable by a simple majority, generally, to effectively function, as you said, Michael, as the owners corporation between AGMs, that’s right.
Michael Darby: Just picking up on the complexities of trying to define one, I guess there’s pros and cons, isn’t there, to, we’re getting sidetracked already, in relation to the legislation on them. Queensland is quite detailed and quite complex and there’s pros and cons to that end. And speaking amongst and listening to others around conferences a lot longer in Australia, there’s a bit of support around Victoria. Is it just the right mix of giving you some movement to move within without being overly prescribed? How would you describe it from that perspective?
Tim Graham: Yeah, I think that’s a fair comment. The analogy that’s often drawn is the old handful of sand and the tighter you squeeze, the more sand that slips between the fingers. Whereas, if you just cradle it gently, it seems to work. So it is a question of balance and the more heavily you prescribe comprised obligations, the more problems you can create. So yeah, I’m certainly not critical. I think that there needs to decide one way or another whether the intention is for a committee to be a separate entity or not. But save for that threshold issue, I tend to agree with you that the balance is pretty good. I think it’s relatively clear and unambiguous what a committee’s role is and what the extent of it’s power and authority is.
Why Have OC Committees? (7:16 – 10:15)
Michael Darby: Yeah, yeah. So I guess we touched on it a little bit but exploring why are there owners corporation’s committees. When you get such large communities, and I guess we’re gonna look through a lens of large estates and large, complex projects that we do, it allows a smaller group and a more efficient group to make those decisions in between each AGM, during the appropriately convened committee meetings. And they are there to represent the owners and have that fiduciary duty, of course. And I guess we can go a bit deeper with that.
Tim Graham: Yeah, that’s absolutely right. You’ve gotta have an idea every financial year and that means mobilizing your typically many hundreds of lot owners in the estates that you typically manage, Michael. And that’s quite a significant imposition. So the purpose of the committee in between those AGMs is to be able to discharge, make decisions, discharge obligations on behalf of the owners corporation at an operational level. A committee can only ever have the power delegated to it by the owners corporation. So a river can never run above its source. And indeed the committee sits under the owners corporation. The only decisions that a committee can make are those that exercise or attach something someone already got by a single majority. In other words, an ordinary resolution. A committee can’t be delegated power exercisable by a special, 75%, or a unanimous 100% resolution. But the typical delegation is that a committee has all the powers and functions than an OC has that are dischargeable by an ordinary resolution. And it’s tasked to meet regularly in order to make decisions for the implementation of those items. And you were right, I think you made the point, mate, that they’re more agile and that’s true. So rather than convening hundreds of people on minimum 14 days’ notice, a committee has between three and 12 people. They can convene on three business days’ notice. Typically, they can make decisions electronically. So it’s a far more agile and pivotable creature to be making decisions of an operational nature. If a given thing requires greater than an ordinary resolution, well the committee can’t do it and they’re tasked with convening a general meeting. But it’s that operational mandate I think is the key.
Michael Darby: I think you would agree as well that the existing act provides that power. Even of itself, the way it’s written doesn’t need to be specifically delegated. The power is there already within the act that provides for the committee.
Tim Graham: Aw, yeah, mate.
Michael Darby: Is that going down another black hole?
Delegation of Powers to OC Committee (10:22 – 11:23)
Tim Graham: Yeah, I’m trying not to. Yeah, but there is one because there was three VCAT decisions way back in the day that said different things. And then there was three legislative amendments in 2010 and ’11 and each one of those were different. So I won’t go through those but we finally got was a situation where the owners corporation can delegate by instrument or resolution in general meeting all powers and functions exercisable by ordinary resolution. And then you’ve got this sort of fallback position in 6 – Section 11 subsection 5 and it says that if a committee is not delegated a power by a instrumental resolution then it automatically has the power or powers that are delegable. So in other words, you don’t need an instrumental resolution to delegate power to a committee, it’s already there. If you’re going to have a resolution or an instrument, you’re probably actually therefore taking power away rather than confirming it because it’s conferred automatically statutorily.
Changes to Legislation – Number of Committee Members (11:25 – 13:22)
Tim Graham: I wanna just touch on a few of the changes coming in. You and I both have been waiting five years, I don’t know, it’s been awhile, for the new legislation to come through and I’ve got my hands on the latest booklet of changes that are coming I think it’s second of December or first of December this year.
Michael Darby: First of December.
Tim Graham: And there’s some interesting changes in there in relation to the committee. There’s a new section that talks about there’s now a cap of seven members on the committee, which I think is good because 12 can get quite cumbersome and then the quorum’s quite cumbersome. And in the following sentence it talks about by an ordinary resolution, you can have more than seven but up to 12, so I found that quite interesting. So there’s really no change perhaps.
It’s no change, it’s just expressed the other way. The current situation is that a committee can be elected and it must have not less than three and not more than 12 members. But it’s perfectly legal for an owners corporation to resolve to elect less than 12. There’s a VCAT decision called McCready that stands for that proposition, amongst others. So currently it can have up to 12 but you can’t, but it obviously can resolve to less. Or what you’ve really got now that achieves the same purpose but it’s corollary, where if the statute gives you seven but if you want more than seven, you can elect to have up to 12. At the end of the day, it’s no different. But I suppose what it does do is-
Michael Darby: Giving you a starting point, doesn’t it, I guess.
Tim Graham: Yeah, it’s a bit of a reset. But I think it probably reflects Parliament’s agreement with you that seven seems to be about the prime number. 12 can be a bit “cluggy”. I don’t know how often do you get 12 attendances at your committee meetings but I know sector wide it would be rare for the full complement to attend regularly.
Changes to Legislation – Electronic Notice of Committee Meeting And Proxies (13:25 –
Michael Darby: Yeah, it just gets too challenging. Another one is confirmation notice of committee members electronically. I think that’s a good thing. They just added a notation to confirm absolutely beyond doubt they can be issued electronically.
It talks about, which I think is a good one, around proxies for committee members. That if you are on the committee and you want to provide a proxy, it has to be to another committee member and I think that wasn’t the case previously. And I think that’s a lot better situation to be in, isn’t it, rather than someone externally, I think.
Tim Graham: Yeah, I think it probably does say that currently but I accept that it could be interpreted differently. I think the statement is more plain now. And that’s wholly proper that committees are in-camera entities. And whilst their operations are transparent, they’re accountable to the owners corporation and minutes of meetings are available for inspection. Some OCs just circulate them anyway, you don’t have to. Do you typically do that or-
Michael Darby: We put them up and we have mobile apps now. We’ve transitioned from websites to having apps for our communities. And once the committee minutes are approved, they’re all available for all owners to have a look at.
Election of OC Committee (14:43 – 19:48)
Tim Graham: Yeah, so it’s not like there’s anything clandestine or such about it. But by the same token, I think that as members are elected, if a proxy could just be anyone at large, that really runs counter to the notion of election. And I might just make this point about that because I’ve advised on it twice in the last 48 hours. It must be AG activity or something. But there’s a decision called James, an owners corporation, where a VCAT makes it clear about how a committee is elected. The word election pretty much sets the only context that appears in owners corporations. Everything else just talks about decisions and resolutions. So you scratch your head and say, did Parliament use the word election intentionally to mean something different than a decision or a resolution? Well, the tribunal said no. Election of a committee is a resolution in the owners corporation but it is a resolution that’s counted this way. You get your nominations in and even if you’ve got under the threshold, so currently the 12 or seven from the first of December, as the case may be, that strictly speaking, for a committee member to be elected, just because the nominations might not exceed the caps, you still weren’t elected. To be truly, fairly elected, every one in attendance must vote yes or no for every nomination. It may be that certain nominees, even under the threshold, have more against than fors and in that case, they’re not elected. I don’t say that to upset the apple cart. I understand at a pragmatic level, in the real world, if you’ve got enough people that want to put the time in, they should be commended for it and not dissuaded. And so certainly I’m not seeking to change where we’re saying don’t ever just let the nominees be the committee if you’re under the threshold. But the James case stands for the proposition that strictly speaking, that’s not right. You do need a positive election indeed and each nominee, only those nominees, up to the maximum, that have more yes-es than no-s will in fact be elected.
Michael Darby: Okay, and even when there’s not a ballot in place, that election is essentially just by a show of hands for each nominated member.
Tim Graham: Well, it is. It’s gonna be difficult to count if you do it that way so it’s something that you may wanna think about. I’m not here to change the practices of their inner asset. It should not be dissuaded but with the qualifications. You obviously want people who are engaged, people who are gonna turn up, people that are gonna behave responsibly. And we’ve already spoken and agreed that there seems to be a sweet spot about the number.
Michael Darby: I think that’s a valid point. Like you say, if the membership who attends is aware that someone perhaps doesn’t have the best interest in their owners corporation and there’s history that they know that that’s not the case, and they may be getting on for their personal agenda, and even though there’s six nominations, like we say, they can go up to 12. And I guess yeah, your example is a good and it’s a valid one. Rather than the membership feeling they have to accept all six members, that there’s a strong argument that due process is to go through a nomination to elect. And by a show of hands, each of the six, or via ballot indeed.
Tim Graham: Yeah, precisely right or you just have a written voting paper. That’s still a show of hands but it’s just conducted in a different methodology. And of course the default position of the legislation is that a vote does take place by a show of hands, unless otherwise resolved. So I’m not talking about a poll or a separate ballot but just a written voting paper with a yes for Michael Darby, yes, no, Tim Graham, yes, no. And at the end of the day, up to the maximum cap those with more yes-es than no-s are in. But you’re right, it is a way to exclude an individual person. And we’ve seen that, you and I both, it happens all the time. People get on with vested interest to pursue frolics of their own and that is not to be accommodated.
Michael Darby: And look, in large communities, people have got a considerable investment they wanna protect and if an individual or a couple of individuals wanna drive that community down, it impacts everyone’s property values and their enjoyment of that community, so they should have a right to do that, to exclude, arguably.
Tim Graham: Sure, precisely right. And I see what’s often missed when people do that, it harms themselves as well because at the end of the day, if there’s a piece of litigation or orders are made, whilst those orders remain extant, the owners corporation via your office needs to disclose them in an OC certificate. So it’s having an impact on those mischievous people themselves.
Changes in Legislation – Closing Dates of Ballots (19:49 – 22:45)
Michael Darby: All right, I’ll move on. And the next one, I know there was committee ballots and I think this is another really good change. You’re often only holding ballots when you need to get an important decision through and there’s a new change to Section 48, where it says that urgent matters can have an earlier closing date. Because currently ballots have to be open for essentially 14 days. And if you’ve got an urgent matter and you have to sit there for 14 days while something is causing damage or further issues, it’s not an ideal circumstance at all. So what defines urgent? I guess that’s the entertaining discussion that’s been an issue, isn’t it?
Tim Graham: Yeah, it is. But I think that there’s a bit of a license in it. I commend the change. The reality is you’re 100% right. That we spoke a little bit earlier about the maneuverability of committees and that committee meetings can be called on a shorter notice than general meetings. But for some reason, government misstep when the Act was proclaimed and 14 days, a committee ballot had to remain open for 14 days. That’s what the act is. There is an interpretation that if you get a majority in favor before the closing date that you can stop it early and that you can count the majority as soon as you have one. I can see some appeal to that argument. I’ve equally been involved in a case where a whole lot of owners that voted a ballot then decided to change their vote because they became aware, after casting their vote, that their support had been procured on the basis of misrepresentation or such. So they sort of changed their vote. If it’s counted the moment it’s received as existing from upon at 5 PM on the 14th day, there won’t be the ability to change their mind. Both of those are possibilities that are open under the legislation. At least now we’ve got a very clear statement that if there’s something pressing, then you can agree on an earlier date. That’s commendable. And you’re right, someone might wanna challenge whether something is sufficiently urgent or not to justify an earlier date. But mate, VCAT is not gonna care. If you’ve got a significant commitment and engagement from committee members and they vote, for one, I understand I can say that the date was unfair or erroneous because the thing wasn’t sufficiently urgent. Where it’s really a futile argument where there’s already a majority support. So you’re right, the wording’s a variable that has the potential for contention. But at a practical level, I don’t think it’ll do a great deal. I think it’s just a clear mandate that you can have an earlier closing date and you don’t have to worry about my dichotomy of interpretations.
Changes in Legislation – Clarifying Fiduciary Duties (22:48 – 25:17)
Michael Darby: Yeah, indeed. Another change is in relation to duties and it’s simple wording but it has a big impact, I guess – “Must act in the interest of the owners corporation”. And arguably that’s essentially to me that’s saying, it’s clarifying their fiduciary duty, essentially, isn’t it, to me. And that hasn’t been written there specifically. I guess you’re in a position to answer it. It is higher legislation. It’s an assumption that they have a fiduciary duty. But I guess is this putting it into legislation to make it crystal clear? Is that the intent of that section, do you think?
Tim Graham: Yeah, well I think it ties to, not only the owners corporation, it ties which is the principle that delegates the power to the committee. So I think just to make a very clear statement that the delegate has a fiduciary obligation towards the principle is good. It removes any ambiguity that the situation has always been that committee members must act honestly, with good faith, due care and diligence, and not make improper use of their positions to gain directly or indirectly, financially or otherwise, for themselves or any other person. So you’ve got these duties thrust upon them but now we’re in that saying that the duty was owed. And to say that the duty’s owed to the principle who delegates the power, I think it’s a commendable explicit statement.
Michael Darby: A few questions I’ll move on to is maybe talking about, actually, let’s talk about fiduciary duty. What’s your definition, if you’re explaining to an owner who’s on the committee and asks the question, I’ve got this fiduciary duty. What does that mean, essentially? Is it as simply as acting in the best interest of all of the owners when you’re making your decisions?
Tim Graham: It’s not exactly that. There’s textbooks on this but a fiduciary position is really a position of trust. And typically, for example, if you’re holding monies on trust, as a manager does on behalf of an owners corporation, then you’ve got a fiduciary obligation to act in the interest of that trust. So it’s a fiduciary relationship is one of trust.
Effective Committee Meeting Tips (25:18 – 27:343
Michael Darby: Yeah, yeah, okay. And I thought we might move on to some effective committee meeting tips because I’ve got a couple here that I can put forward. I’m putting you on the spot. Maybe you can feel free to contribute. But for me, I just thought I’d make you think about it today as to what tips we could offer members who are on a committee or thinking of going on a committee. For me, it’s ensuring the manager prepares detailed and easy-to-read documentation. Now that’s circulated at least three, maybe five, days prior to the meeting. And having the owners make sure read those documents. I think that’s really critical to ensure you’ve got an effective and great decision making going into a meeting.
Tim Graham: I’ll give you a tick on that. I think preparation is key. And as the consequences of the manager preparing robust documents that are read and understood by the committee means a couple of things. Means that you’ll have a robust agenda that you can stick to and you won’t have… It’s very clear, it’s very important to be clear that a meeting, whether it’s a committee meeting or a general meeting or what have you, but when we’re talking about committee meetings, we’ve gotta be axiomatically clear that a committee cannot make a resolution about a subject matter that is outside the agenda for that meeting. If notice hasn’t been given of it, you can’t make a resolution about it. If you’ve got a general business, all right, we can have a chat. But you certainly can make, apropo further investigation or reporting but you can’t make a decision. So I’m just tying that back, Michael, into the importance of having a really good agenda and everybody being prepared by having done the homework. And the other thing then, of course, is that the meeting time can be minimized if everyone does just a little bit of homework. There’s no reason why, look, you might have some discreet, bespoke piece of litigation or something that warrants more attention than this. But if you’ve got garden variety business of a committee meeting, it should not need to go beyond an hour.
Decision Making at Committee Meetings (27:34 – 30:16)
Michael Darby: Yeah, indeed. Touched on a good on actually that we might just explore further and that is that they don’t have the option to essentially put motions to the meeting that weren’t raised in the document. And again, it supports that that’s why we reach out to committee members 10 days before, asking them for what decisions they’d like or what information they’d like to put forward. Because you do wanna make sure it’s all in the agenda, that the members know what’s gonna get decided on so they can choose to attend or not, if they want to. Because yeah, if decisions come up that weren’t in the agenda that get decided on, I think you put yourself in a fairly weak position if you say I challenge I would have thought. I mean, look, day-to-day it happens. We raise the flag. You feel bad all the time sort of pushing back but that’s our job, I guess they employ us to do it, is say look. And in the detailed instruction papers for new committee members, we flag that for motions that are on the agenda, there’s a strong argument. Well even stronger and you’re confirming it, that you can’t put that forward to be voted on because it hasn’t been flagged in the agenda.
Tim Graham: Yeah, precisely. It gets us to a really good point it’s the reason why. And that is when people get an agenda, they make a decision about whether to attend or not. Whether to get a proxy. It’s just not right away you can just throw things in. That has been the law forever in the company sphere. And whilst owners corporations are not companies, in terms of meeting procedure, courts have always looked for guidance as to how companies have dealt with given things. And the textbooks, et cetera, all of that secondary material, really is applied to owners corporations, based on company law. And it couldn’t be clearer that the way that those, it’s called the sufficiency and particularity of the agenda is the basis on which people decide whether to come or not or ruminate on how they’re going to vote. And they need to be given notice of it. It cannot be done by way of ambush without notice. It will not stand up with anything more than the most meager operational issue. There might be certain things that you could… No, I’m not gonna say that. On principle, you cannot decide something outside the agenda. If operationally innocuous little things happen, strictly speaking, it’s probably not lawful. But if it’s what brand of coffee to put in the coffee facility, probably not a lot that’s gonna rise and fall on it.
Committee Regulating Its Own Affairs (30:21 – 33:03)
Michael Darby: Yeah and look, the challenging thing with that is the section in there that gives some flexibility for the committee, I can’t remember the wording of it, to run their own affairs. It gives them some flexibility-
Tim Graham: Regulate its own affairs, yeah. Subject to the act and regulations, a committee can regulate its own affairs. But it’s subject to the active parties, is the key, mate. And the act requires notice to be given of minimal duration and it is to be kept, et cetera. So it can be, there’s certain other things a committee can do to regulate its affairs but the way that meetings are called and minuting is not one of them.
Michael Darby: What’s an example? We’re getting stuck in this again. What’s an example of that you’re aware where committees use that to regulate their own affairs? I guess it’s a pretty wide net that’s thrown. It’s offering I guess, isn’t it, with that clause?
Tim Graham: I’ll give you one that, I’m hesitant so I will. ‘Cause it seems to deviate from everything that we’ve just been saying. But as far as the notice of meeting goes, I think that a committee, for example, could unanimously agree with a shorter notice period. If it’s unanimous, the act says you’ve gotta give three business days’ notice. If seven out of seven agree to make tomorrow night, we can all be there and the first of general order is to waive the three business days’ notice requirement, that’s probably an example of the committee regulating its own affairs. And whilst it is contradictory ’cause three business days’ notice hasn’t been given. So perhaps it’s not the best example but-
Michael Darby: It would be a brave decision by a VCAT to overturn that if it was challenged, wouldn’t it?
Tim Graham: If it’s seven out of seven, what could be the basis? Even if there’s been a strict legal non-compliance, what is the consequence or the damage arising out of that? There can’t be. If seven out of seven have attended, we’ve all got the agenda, and we’ve all acquiesced and have ceded to it occurring this way, there might be strictly non-compliance. But as far as the integrity of the congress and the decision that is made, it’s impenetrable really. So I don’t think, it probably can’t be upset on a procedural issue.
Michael Darby: Yeah, as long as there’s clear good intention as to what they’re going to decide for that short meeting, I guess.
Tim Graham: Well 100% that you do need a robust, sufficiently particularized agenda, Michael. That’s key.
Committee Meeting Tips – Reaching Out to the Manager (33:04 – 34:13)
Michael Darby: Yeah, so my next tip would be to be comfortable reaching out to the manager with any questions prior to the meeting. Again, that helps facilitate a better-informed meeting and helps with the decision making. And also to actively participate and engage in the meeting. I think some, especially new committee members, can be apprehensive about having to reach out to the management. We’re always offering that and promoting that, to ask questions of us, because we wanna educate committees as much as we can. It helps them be a better committee member, a better functioning committee. They’re making better decisions. So it’s better for the whole community as a whole that they’re more informed. Feel free to ask questions so that it can facilitate a better committee meeting.
Tim Graham: Well, I think that’s what they’re paid to do and I think that’s what they benefit from. This is what you do and have done for decades. It would be injurious prudential of them not to avail themselves of the manager’s experience and knowledge. And I think they’re paying for it so they really should, yeah.
Committee Meeting Tips – Speaking Up to Share Your Views but Also Respecting the Committee’s Final Decision (34:14 – 38:15)
Michael Darby: And my last one is to be comfortable to share your view during the committee meeting on what your beliefs are in the best interest of the community. And importantly, accept the final view of the committee, both internally and externally amongst other owners. Look, I think that people need to be comfortable and understand that you’re there to share your view and be comfortable to share your vote and what you think is in the best interest of the community. But for whatever reason, if the majority of other members don’t, then okay, we had a good discussion. I shared my view and it’s not the majority view and you accept that. And you can debate it internally but I guess when you move into the community, you’re to support the decisions that the committee’s made. I think that’s not often spoke about but I think to bring that to the attention of owners is an important one as well. Because that can only just create conflict and members are perhaps unintentionally doing the wrong thing as well.
Tim Graham: Well, you’re gonna disagree, that’s okay. Owners corporations are democracies. So if you talk about the 60/40 rule, if you’re hitting those numbers, we have to do better than that. But the point is that the committee is elected by a majority decision and we had that discussion already. As such, they then have the mandate to make decisions and to perform functions and discharge duties to the extent of their power. The mandate is there in their election and the vote will be the vote. And that needs to be respected. You don’t have to agree with it. Not everyone will. We’re not living in Thomas Moore’s “Utopia”. But that’s how it’s supposed to work. And there’s a classic case here at a VCAT. It’s about the first ever case of it in my mind. After the tribunal was given jurisdiction, 30 and a half plus years ago. And it was before those dedicated, I’d say, at least you might remember for a year or two I would say went in the civil crimes list. It was a bit cumbersome. Anyway there was a case in Boswell and Forbes and the tribunal made it very clear pronouncement and quite appropriate. I still rely on this case frequently, just to set the tone and the expectations. And what it says is that owners corporations are democracies and that the majority view prevailed. There’s always gonna be minorities that disagree about everything, that’s a given. There’d be something wrong if there wasn’t. While the majority decision might be set aside and that owners shouldn’t go to VCAT thinking just because they disagree or got some of their own axe to bear, cross to bear, axe to grind, I’ll get my cliches straightened out, that they can go there to the VCAT and get it changed. The tribunal won. I guess just to give a proper responding comment, Michael, the tribunal did say the circumstances where it might overturn a decision but there are exemptions. And if the decision was unlawful, if it was made in bad faith or if it was otherwise discriminatory, prejudicial, or oppressive, then it may be overturned. But it takes something of that gravity. It’s not just, I don’t like the decision, I disagree with it. The presumption will always be that the committee, having been elected in a democratic process, then makes decisions to the extent of its decision-making power properly and I agree, it’s not appropriate to agitate. If you don’t agree with a decision, you can stand for election next year. But if a decision’s properly made, it binds you because it’s a democratic decision.
Committee Meetings – Conduct of Members During Meetings and Proactive Communication (38:17 – 41:34)
Michael Darby: Yeah, indeed. Is there any other tips that we didn’t cover that you might put forth as your own committee members and things they might do or not do to best ensure they operate effectively as a committee?
Tim Graham: I think just to keep, we commented a short while ago about the temporal length of meetings. And I think one of the probably components, it’s probably another word or a nice trite statement but I’ll make it anyway. And that is just the conduct of members themselves during a meeting. And just the mutual respect, I think. The chairperson, obviously, has their part to play in ensuring order in the meeting. But at a committee level especially, chairpersons, in my experience, don’t wanna rule with iron fists and walk around in that fundamentalist way. But I think you get good decisions, you get better debate, you get a better quality of decision in less time if there’s just a little bit of mutual respect. One person talking at a time, comments through the chair, et cetera. And it is time that I say that because again, I think in the last two weeks I’ve given a couple of advices on things like codes of conduct to committee meetings, et cetera. I don’t know, you’ll tell me in a second, mate, if Quantum is in the business of propagating those documents. I’ve gotta say from a legal position, a code of conduct, unless it’s registered as a rule and there be a query about whether it is indeed capable of being a binding rule, but anyway, unless it’s registered, that sort of house code of conduct doesn’t have any real legal traction. But just in terms, I think, of the expectations and the proper discharge of duty, including the best interest of the owners corporation now, just to act respectively and professionally courteously. It seems like an old statement but you’d see it more often than I would, mate. When there’s a bit of pressure on, these things can get lost. And so my tip would be not to forget that respect and to manage the business in a professional way.
Michael Darby: Yeah, indeed. I think where a lot of the time that comes from to me is we find it in communities that we’ve taken over where owners, there’s not communication out to owners, they’re not getting their questions answered. So people will move to a committee with their agenda because that’s the only way they can find to get their questions answered or in majority of cases just simply not pay their fees. So when we’re taking on a new client, that’s just the thing we see coming through. So I think to be proactive, ensure that you’re communicating really well to the community, on all levels, as much as you can about the operation, structure, and what’s going on in the community. And there’s less people who you’ve got a small concern who will come on just with their agenda because once they get that resolved or don’t get that resolved, they’ll step off and you’ve got trouble getting quorums. So I think there’s a lot of proactive things you can do to address having concerns around members’ behavior I think as well.
Tim Graham: Yeah, yeah, I’ll agree, mate. Communication’s everything, isn’t it?
Strategic Planning (41:36 – 42:46)
Michael Darby: And I’ll just touch on probably another one that we do. We’re doing strategic planning for our communities as well. And again, there’s no enforcement, per se, through the act. I guess we do that to ensure that we’re getting the whole perspective, especially in large communities. Through online servers, we’re bringing the views of all the community. And through workshops and working groups, we narrow that down to just simply why did you buy in to this date? What are you expectations and goals of the community moving forward that you wanna see? And we pull a very strategic plan together. And what that does is it helps provide a framework for the committee and their decision making because members move in and move out and a community can zigzag down the path. And I think having that strategic plan in place, it gives them a really good framework to with confidence understand what the whole community wants and where they see the community going. And it’s a great shining light to the committees to move forward and make their decisions around.
Tim Graham: Yeah, mate, that sounds like a real value add. I wouldn’t mind seeing a bit more of that offline. It sounds very interesting. And I certainly see the benefit in that model.
Sub-Committees or Working Groups? (42:48 – 47:00)
Michael Darby: Yeah, absolutely. Tim, there’s a provision for subcommittees in the owners corporation. And here’s a can of worms here you’re opening. This is good. Let’s go there. So a number of our communities do have them, have subcommittees. And to be honest, what we say to them, why do you think you need a subcommittee? Is it just a short-term matter that you wanna spend a lot of time on discussing and not necessarily make decisions around? Maybe set up a working group because happy for you to set up a subcommittee but the legislation is imposing a lot of steps on you when you do that. You have to have quorums, you have to have minutes, and you need these certain criteria when you’re running a subcommittee meeting. So if it’s just gathering information and talking through that between committee meetings, and form a working group, we can do all that, and just table the information with the committee. We find that worked really well, to be honest. And look, clearly we give them the option to have a subcommittee if they want to but working groups we find work really well if it’s just gathering that information. Clearly there’s no decision making, they’re just really supporting committees and making committee meetings more effective and efficient by doing a lot of the hard yards leading up to the committee meeting. So we don’t have a lot of them but what are your thoughts on subcommittees?
Tim Graham: I love the idea of working groups in the respect that they avoid all of the compliance. And you made the comment that they don’t make decisions. Well, the most misunderstood thing with subcommittees is that they don’t make decisions either. So the difference between your working groups and subcommittees is neither can make a decision. But if it’s a subcommittee, it’s gotta convene, all of the other compliance requirements that apply to committees in terms of notice of meetings and agendas and minutes and duty-
Michael Darby: That’s cumbersome for me. I mean, come on.
Tim Graham: Precisely. And particularly because they can’t make a decision. I tell you what I they can’t, Section 113 says that a decision, consistent with the delegation, Section 113 says that the decision of the committee is binding on the owners corporation. When you go to the section on subcommittees, which I think lies in about 116, what it says is that all of the sections that apply to committees and numbers them, apply to subcommittees, save and except that it intentionally omits Section 113. Again, 113 says a committee decision binds the OC a subcommittee in decision, therefore, it’s irresistibly concluded that a subcommittee decision can’t bind the OC. So the whole purpose of subcommittees is to investigate, engage, and do certain heavy lifting tasks. And I think that they can be very useful in doing that so it’s not the same people on the committee doing it all the time. But I like your idea better, if you’re going to have a collective of people doing the heavy lifting, yeah sure, it can be a subcommittee, but it still can’t make a decision but it’s gotta have all the compliance requirements. If you have a working group instead, it doesn’t have the compliance requirements. So I think it’s better model. I like what you’ve done there.
Michael Darby: It depends. If it’s a fairly complex and important matter, it may well be and it’s the right decision for the committee to say let’s set that up as a subcommittee because we wanna make sure you’re convening properly. Everyone’s got the opportunity to attend. We see some minutes from that progress. So it’s a bigger project and an important project. Absolutely, I think subcommittee is the appropriate way to go.
Tim Graham: I agree. It also, of course, depends on the business. But you can see owners corporations are overburdened. With some, they’ve got a subcommittee for everything. And typically the subcommittee, it’s just a committee but it’s just groups of committee members. So not only are they volunteering a whole lot of their time for the committee, they find themselves on three subcommittees, they’re meeting every other night.
Michael Darby: Exactly right. No wonder there’s some rotations through committees.
Tim Graham: Indeed, mate, there’s chairman burnout, yeah.
Committee Meeting Minutes – The Level of Details and Do They Need to Be Adopted At The Next Meeting (47:01 – 52:35)
Michael Darby: I guess the only question I’d ask, talking about minutes of the committee meeting, and it does come up quite a bit and it can have important impact actually. Now a committee does make their decisions and they have processes. It’s very systemized that the minutes are being prepared, drafted by us, the chairperson will review them, finalize them, they get circulated to members and we formally adopt them at the next committee meeting. Clearly, if the minutes aren’t adopted, they’re still minutes that it doesn’t invalidate the decision necessarily, from my perspective. So what’s your view, is there a big importance around adopting them at the next meeting? The decision still stands.
Tim Graham: Yeah, that’s a good question. There’s nowhere in the Owners Corporation Act where it says you’re required to adopt them. Equally, you won’t see returning officers and these sort of things. So some OCs run, some don’t. My point is that, and we discussed it earlier, the way that the company law has been deposed into owners corporations and the way that meetings are run properly and responsibly. But consideration of previous minutes is a company law proposition. There’s nowhere in the Owners Corporation Act that requires it. You certainly don’t live life, I’ve had this argument put to me, it lasted about 10 seconds. That the minutes aren’t enlivened until they’re adopted at the next meeting. Well, that can’t be right because they may not be adopted. And in the case of, and I discussed it this afternoon a bit about committees, but if you draw the analogy about your AGM, so this year, you’ve had your financial year. You’ve drawn budgets and you do all that sort of stuff. But nothing happens for 15 months until you have 3000… You live life based on the decisions made and this is the key to minutes. The minutes are evidence of the decision that’s made, they’re not the decision itself. The decision itself happened at the meeting and it’s current at the meeting. The committee got elected at that AGM.
Michael Darby: Yeah, if there’s a quorum at that meeting, that means those decisions were decisions when that meeting finished, essentially.
Tim Graham: Correct, correct. Correct, the minutes are just evidence of what happened in the meeting. They’re not the decision itself. The meeting made the decision. Otherwise, you’d be living, you’d have this lag all the time. So that analysis can’t be right. And I might just make one final comment, with your indulgence, Michael, about minutes because it comes up a lot. What they should detail and how much detail about debate. Oh, I object to this. Oh, I want this minute in, that sort of stuff, should not go in. I know that there is this propensity on behalf of secretaries or minute takers, no matter, to try and get as much detail down and to try and keep people happy by that they all got their say. We’re getting into my sand in the hand thing again because the more people you try to assuage by including their debate, mate, you’re meeting with many hundreds of lot owners present. You can’t possibly do it and nor should you. There are some very clear statements out of the tribunal and, more importantly, the higher courts about what minutes need to do. And they need to be a record of the decision. They do not need to record debate. That irascible person yelling from the back door, I want my objection minuted or something, look, you can put it in, if you really want. But you don’t have to. There need to be a sufficient record as a matter of evidence of what happened, not every part of the narrative.
Michael Darby: Yeah, no, I totally agree. And look, we add a little bit of detail. What we find is that’s very helpful for committee members, especially when there’s transitioning members. They can look back and they’re not only seeing the decision, they can see a bit of context to it. Or probably look at it at a deeper level I didn’t touch. And we also do information papers and decision papers. Again, an agenda can get very long and it helps a lot with the conversation and the decision making at the meeting, if there’s a big topic to discuss, we do an information paper about it so that it’s outside the agenda and they can read all of the information. Again, consider and come more well-informed. And doing decision papers around more important matters with the motion in there. Again, they can see the whole history behind the case and get a full consideration coming into the meeting. So pulling those two pages together really helps our committees to function well. But yes, just the motions that are shown and some discussion of it helps give context when they’re looking back.
Tim Graham: Yeah, that sounds responsible and appropriate. I can certainly see the benefit because if it’s just the motions, that will only ever say so much, so I get you. I just, it’s a matter of fighting over this. But the key to it is it’s a matter of finding the right balance because as soon as you include some substance, then potentially you’re leaving yourself open to what should be and what shouldn’t and that argument and that’s the one we’re trying to avoid.
Michael Darby: All right, thanks so much for your time, Tim. It’s been great to have a chat about committees and owners corporations. It’s a topic close to both of our hearts and we hope that our owners will get some good value and takeaways from that. So hope you enjoyed it and we’ll see you next time. Thanks everybody.