Reasons for Removing Body Corporate Committee Members:

A well-known OC lawyer used to like to say that “there is no OC rule to make an unreasonable person reasonable” – and this can as true for lot owners as for elected Committee Members.

Across Victoria, there are good OC Committees and the not-so-good OC Committees.

Good OC Committees operate under a paradigm of maintaining trust, transparency, and effective governance within the body corporate / owners corporations.

Conversely, sometimes the need arises to remove Committee Members for reasons such as misconduct, conflicts of interest, incompetence, or failure to fulfil duties.

Committees and Committee Members are elected to represent the Owners Corporation. Under the Owners Corporation Act 2006, Committee Members are suppose to be acting honestly, in good faith, with due care and diligence, and in the best interests of the owners corporation:

We heard of one Committee Member trying to enforce the OC Manager to adopt ASX accounting standards for an Owners Corporation (a non-profit entity) of ~30 lots that collected ~$120,000 per annum in operating/administrative levies…

The interests of the greater OC collective doesn’t always win – sometimes because of Committee Members trying to over-complicate things, because of ego, or a lack of understanding of how an OC should operate.

On this last point – Deryck Walker from the Strata Management Training Institute runs the following online short courses that might be helpful for Committee Members:

Legal and Regulatory Framework:

In Victoria, the procedural and legislative requirements for electing Committee Members include:

  • An Owners Corporation Committee is to have between 3 to 7 Committee Members unless resolved otherwise (up to a maximum of 12).
  • Committee Members must be lot owners or be a proxy holder on behalf of a lot owner.
  • One lot (i.e. if owned by a husband and wife) can only nominate one person to the Committee for that lot.
  • Nominating for the Committee can be done in writing before the AGM or orally at the AGM.
  • If a lot is in arrears for any mount of fees then that lot or the proxy for that lot is not eligible to be elected to the Committee, and is suspended if on the Committee until the amount is paid to the Owners Corporation.
  • Committee Members hold office until a new Committee is elected.
  • All Committee Members have an equal vote on the Committee except for the Chair who has a casting vote in the event of a split vote.

The following is an overview of the relevant legislation, OC Rules, and regulations governing the removal of Committee Members.

The Owners Corporation can only remove, or replace a Committee Member at an Annual General Meeting, or Special General Meeting.

This does make a bit challenging for Owners Corporations dealing with rogue or difficult Committee Members because they either have to go through the trouble of convening a SGM or wait until the next AGM.

Interesting if the Committee Member that is rogue or difficult is the Chair of your OC Committee then the Committee amongst themselves to re-elect a different Committee Member to the Chair.

Can you Remove Body Corporate Committee Member if they have been absent?

On 1 December 2021, the Owners Corporations and Other Acts Amendment Act 2021 came into effect and in doing so also updated the Owners Corporations Regulations 2018 (which accompanies the Act).

Initiating the Removal Process:

Firstly, it can sometimes important to adhere to procedural fairness by providing the accused Committee Member(s) with an opportunity to respond to allegations.

Should it come to initiating the removal of a Committee Member then:

  1. Understand when the AGM is due and when it is next expected to be held, motions be ideally included on the Notice of AGM, and it has a matter of understanding the voting lines at the AGM.
  2. The removal of a Committee Member can also be achieved via a SGM, which requires convening by the secretary, the OCM on authority of the Committee, or a nomination of at least 25% of lot entitlements of the OC.

Voting and Decision-Making:

  • Describe the voting procedures for removing committee members, including quorum requirements and voting thresholds.
  • Discuss the role of general meetings or extraordinary meetings in making decisions regarding committee member removal.

Consequences and Aftermath:

The potential consequences of removing Committee Members, such as vacancies on the committee (covered by Section 104 of the Act), or legal challenges if the process wasn’t duly conducted.

The removal of Committee Members can sometimes give rise to challenges or resentment as some Committee Members can get attached to their roles in having control of the building.

Consideration also be given to ensure there isn’t any decision making vacuum as a result of the removal of Committee Members. New Committee Members should be nominated and ready to assume the roles and responsibilities to ensure the continued smooth function of decision making processes.

 

Conclusion:

In summary, once Committee Members are elected and in place it can really be a process of remove them. When it comes to electing or removing Committee Members – importance should be placed on following legal procedures, maintaining transparency, and upholding the interests of all stakeholders. This helps in ensuring effective governance within the body corporate / owners corporation and also to minimise disputes later on.

 

The contents of this article or website are only intended to provide a general overview of the topics discussed. The author of this article makes no representations as to the accuracy or completeness of any information and the information is not intended to constitute investment, legal or professional advice. You should seek professional advice before acting or relying on any of the content. This article does not contain references to any specific company, organisation or individual, unless expressly specified.
Posted
April 18, 2024
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