As part of the upcoming amendments to the Strata Titles Act 1985 (WA) (the Act), new duties are to be imposed on strata council members. This is part of a more general attempt to raise the standards of strata councils and it is important that all strata council members are aware of the new duties being imposed.
Duties of Strata Council Members
Under the amended Act, Council members will have a statutory duty:
- to act honestly, with loyalty and in good faith in the performance of their functions (duty to act in good faith);
- to exercise due care and diligence in the performance of their functions;
- to ensure they do not make improper use of their position as a member to gain, directly or indirectly, an advantage for themselves or for any other person or to cause detriment to the strata company; and
- to inform the council in writing of any conflict of interest as soon as is practicable after they become aware of the conflict.
Whilst most of the above statutory duties are self-explanatory, the duty to act in good faith often generates confusion, both in this context and others.
Duty to Act in Good Faith
To properly understand this duty, it is worth looking to the similar duty imposed on directors under the Corporations Act 2001 (Cth). According to section 181(1)(a) of the Corporations Act 2001 (Cth), directors and other officers of a corporation “must exercise their powers and discharge their duties in good faith in the best interests of the corporation”. The Courts have interpreted this duty as an obligation for directors to:
- exercise their powers in the interests of the company;
- avoid conflict between their personal interests and those of the company;
- not take advantage of their position to make secret profits; and
- not misappropriate the company’s assets for themselves.
Due to the similarities between the duties of good faith imposed on directors and strata council members, the above interpretation can assist strata council members in understanding their obligations.
Breach of Duties
Council members who are found to be in breach of any of the above statutory duties can be removed from the council upon an application to the State Administrative Tribunal.
However, to encourage owners to volunteer for council, a council member will not be liable in a civil proceeding for an act committed when performing their role as a council member, if that act was done in good faith.
If you have any questions relating to the statutory duties that will be imposed on strata council members, or about strata more generally, please don’t hesitate to contact our Jason O’Meara on (08) 6188 3311 or at email@example.com.