Body Corporate Conflicts of Interest
Published:
Modified:
Conflicts of interest in a body corporate setting have a specific legal meaning under Queensland legislation that differs from how the term is used in everyday conversation. This article explains what a conflict of interest actually is under the Body Corporate and Community Management Act 1997 (BCCM Act), when the obligation to disclose arises, and how committees should handle it correctly.
What Is a Conflict of Interest?
Under the BCCM Act, a conflict of interest arises when a committee member has a direct or indirect interest in an issue being considered by the committee, and that interest could conflict with the appropriate performance of their duties as a committee member
Two points are important to understand:
Conflict of interest provisions only apply at committee level.
They do not apply when lot owners vote at a general meeting. At a general meeting, voting rights are based on lot entitlement, and an owner is entitled to vote on any motion, even one in which they have a personal interest.
Having an interest is not the same as having a conflict
The key question is whether the interest could conflict with the appropriate performance of the member’s duties. A committee member who shares the same general interest as other owners, for example, in the outcome of legal proceedings on behalf of the body corporate, is not automatically conflicted. Each situation must be assessed on its own facts.
When Does the Obligation to Disclose Arise?
A committee member must disclose any direct or indirect interest in an issue being considered at a committee meeting if that interest could conflict with the appropriate performance of their duties. The disclosure must be made before the committee votes on the matter.
Common situations that may trigger disclosure include:
- Voting on a contract with a business in which the committee member has a financial interest
- Approving work to be carried out by a contractor who is a family member or close associate
- Considering a matter where the committee member stands to receive a personal financial benefit separate from their interests as a lot owner
- Voting on a motion that would directly advantage or disadvantage the member in a way that is distinct from other owners in the scheme
Simply having an opinion on a matter, or being personally affected by an outcome in the same way as other owners, does not ordinarily give rise to a conflict of interest.
Examples of a Conflict of Interest
The following scenarios illustrate situations where a conflict of interest is likely to arise at the committee level:
Contractor relationships. A committee member moves to engage a plumbing company for common property repairs. The committee member has a financial interest in that company, whether as an owner, director, or close associate.
Family or personal connections. A committee member votes to approve a gardening contract with a business operated by their spouse or immediate family member.
Personal financial benefit. A committee member votes on a motion that would result in a direct financial benefit to them personally, for example, approving a fee waiver or reimbursement that applies specifically to their lot.
Disputes involving the member. A committee member participates in a decision about how the body corporate will respond to a complaint that has been made about them personally.
By contrast, a committee member who shares the same interest as all other lot owners, such as an interest in the outcome of a building insurance claim, is generally not considered to have a conflict of interest, as their interest is not distinct from the rest of the scheme.
Common Misconceptions
Any personal interest means a conflict. The test is whether the interest could conflict with the appropriate performance of the member’s duties. Over-applying this rule can improperly exclude members from decisions they are entitled to participate in.
Conflict of interest rules apply at general meetings too. They do not. The conflict of interest provisions under the BCCM Act only apply at the committee level. An owner can vote on any motion at a general meeting, including one that directly benefits them.
Related content
Subscribe To Our Newsletter
More To Explore
Abandoned Vehicles in a Body Corporate: What Can You Do?
The difficulty is that abandoned vehicles in a body corporate do not fit neatly into a single area of legislation. Depending on the circumstances, a matter may involve parking by-laws, transport laws, local government regulations, or even police involvement.
Who Can Sit on a Body Corporate Committee?
A body corporate committee is usually made up of lot owners who have been elected by owners at the Annual General Meeting (AGM). The committee acts on behalf of the body corporate and makes decisions about the day-to-day management of the scheme.