The executive committee
At the AGM each year the owners corporation must appoint an executive committee who manage the day-to-day affairs of the building throughout the year.
The executive committee can consist of only one person or it can consist of up to 9 people. The Act states that a Chairperson, Treasurer and Secretary must be appointed but they can all be the same person (but this is not recommended). It is possible for non-owners can be elected to be on the executive committee. For example, in many buildings long-term tenants are appointed to the executive committee.
The executive committee can have enormous power if they are delegated "full powers" or comprehensive authority. Alternately they may have very little power. As an example, some of the options to delegate power to the executive committee might be as follows:
- Full power: The executive committee is delegated all the powers of the owners corporation (except those that cannot be delegated). For a large building this might be millions of dollars of expenditure and the management of many full-time staff. There may be no financial limit placed on their ability to spend money, effectively they can spend whatever is in the bank.
- Limited power: The executive committee can be delegated limited power, for example the authority to spend up to say $500 on any single item or up to an annual total expenditure of say $5,000 for small buildings. If the expenditure exceeds this amount on any item or total then a general meeting must be called. It is quite normal for some limits to be placed on the executive committee (indeed it is good management practice and should be encouraged). In large buildings it would not be unreasonable for the executive committee to be delegated the task to "repair the lift" at a cost of hundreds of thousands of dollars if the money is available.
- No power: The executive committee might be delegated no power whatsoever, except for the functions conferred by the Act. The primary role of the executive committee then becomes the job of drafting resolutions and by-laws before meetings and preparing the notice and agenda. All decisions are then made at general meetings. This is not common and is not recommended. It is important to delegage some power so that the day-to-day business of repairing and maintaining the building can be carried out with a minimum of fuss.
The Act says that the powers delegated to the executive committee must be discussed and reviewed annually. The Act also says that a decision of the executive committee is taken to be a decision of the owners corporation. The owners corporation should consider the power that they delegate to the executive committee carefully at each AGM. The Act has relatively few limitations on the powers that can be delegated, for example large schemes (100 apartments or more) have some limitations. It is common in small buildings (up to 9 apartments) for all owners to be on the executive committee but this is not mandatory.
It is also unfortunately common, even in small buildings, for say three owners to join forces to exclude a 4th owner. At the AGM they might first pass a resolution to have an executive committee of say 3 people, with three votes for and one vote against this motion will pass.
The executive committee does not have power of god, there are some decisions that an executive committee cannot make. Some of these limitations are as follows:
- By-laws: An executive committee cannot make by-laws.
- Commence legal action: Limits are placed on the ability of an executive committee to commence legal action.
- Over-rule a decision of the owners corporation: An executive committee cannot over-rule a decision made by the owners corporation at a general meeting.
Notwithstanding these limitations, an executive committee can (and should) be able to carry out all of the functions that are necessary to properly look after a strata building throughout the year.
