A strata council member who is also an employee of the company hired to supervise a major repair project failed to disclose this conflict of interest, potentially jeopardizing the project and the council's decisions.
Conflict of Interest in Strata Council
Dear Tony: Our strata is undergoing significant repairs to decks and balconies with an approved budget of $1.3 million, and construction begins in May. It has come to the attention of owners that one council member, an engineer/consultant who helped plan the repairs, is a staff member of the company hired to supervise the project. This was not disclosed at the special general meeting where owners approved the levy and consulting fees, nor in council minutes from the past two years. This person also held seven proxies for voting on resolutions. Now owners, including three council members, are petitioning for another meeting to reverse the decision. Help! — P.M.
Legal Requirements for Disclosure
Dear P.M.: This is unfortunate, as your council and owners have planned these repairs for 18 months. The Strata Property Act requires council members to fully and promptly disclose any direct or indirect interest in a contract or transaction that could conflict with their duties. They must abstain from voting on the matter and leave the meeting while it is discussed, unless asked to provide information. The disclosure must be recorded in the minutes to protect the council member and document how the council managed the conflict.
Consequences of Non-Disclosure
Because the conflict was not declared, the consulting agreement and other transactions may be in jeopardy. The council member may also face professional practice complaints. Before abandoning the approved project, hold an information meeting with your lawyer and the engineering firm's principal. There may be a mutually agreeable solution. The contractor with a signed agreement may not delay without penalties. The council member should resign from council, and the strata council may negotiate that the consulting firm cover legal costs and delay penalties.
Tony Gioventu is executive director of the Condominium Home Owners Association. Email tony@choa.bc.ca.
