Volunteers and Committees

Transcription

1 Volunteers and Committees A Legal Perspective The use of committees, while optional, can be a very effective and efficient tool for the council in managing the strata corporation. Strata council is charged with the duty of managing the corporation pursuant to Part 2 of the Strata Property Act, SBC 1998, c 43 (the "Act"); specifically they are obligated to manage and maintain the common property and common assets of the strata corporation for the benefit of the owners. This means that they are the elected body responsible for stewarding or leading the corporation within the parameters of the Act. However, creating committees allows a council to focus resources on certain areas of importance to the corporation. Committees can allow for a thoughtful assessment of information and result in focused recommendations or options for a strata corporation. It should be noted, however, that committees have no inherent decision making authority. Section 4 of the Act provides as follows: 4 The powers and duties of the strata corporation must be exercised and performed by a council, unless this Act, the regulations or the bylaws provide otherwise. Therefore, a strata corporation may by bylaw delegate certain powers or duties to persons who are not members of the council, such as committee members, if an appropriate bylaw exists. For example, standard bylaw 20(1) states: 20 (1) Subject to subsections (2) to (4), the council may delegate some or all of its powers and duties to one or more council members or persons who are not members of the council, and may revoke the delegation. Standard bylaw subsections 20(2)-(4) set out reasonable limits upon the types of delegated duties, powers and expenditures which may be made. These guidelines are typical of many strata corporations. The general rule about the standard bylaws is that they apply unless they have been repealed and replaced, and/or different bylaws are filed at the land title office. Subsections 20(2)-(4) state that: (2) The council may delegate its spending powers or duties, but only by a resolution that (a) delegates the authority to make an expenditure of a specific amount for a specific purpose, or

2 (b) delegates the general authority to make expenditures in accordance with subsection (3). (3) A delegation of a general authority to make expenditures must (a) set a maximum amount that may be spent, and (b) indicate the purposes for which, or the conditions under which, the money may be spent. (4) The council may not delegate its powers to determine, based on the facts of a particular case, (a) whether a person has contravened a bylaw or rule, (b) whether a person should be fined, and the amount of the fine, or (c) whether a person should be denied access to a recreational facility. Things to Keep in Mind when Striking Committees 1. At the end of the day, the council is responsible for exercising and performing the powers and duties of the strata corporation, unless the Act, regulations or bylaws provide otherwise. 2. Committees are not elected groups; therefore, they are, in the strata context, volunteers who are allowed to deal with an issue or deal with a matter (i.e. a landscape committee is a committee that is specifically focused on the grounds maintenance of the community). 3. For the purpose of managing risk, it very important to understand what protection is awarded under the strata s insurance policy. 4. The council cannot create a scope of authority that is broader than its own. 5. The vertical flowing up of information into the council is essential. Coordination between the council, committees and the manager is essential in ensuring that there is no duplication, as well as no inappropriate assumption of tasks that are better suited for property management, site staff or contractors. Historical Committees Committees that exist in strata communities without the authorization of the council should not be permitted to continue, unless and until the duties and powers are appropriately conferred upon them. Only committees that are the responsibility of the council are mandated by council have the authority to exist. While there are some groups that disagree and believe that they have the right to create a committee for strata, this is not in fact true. Although residents or unit owners feel that they would like to create groups, unfortunately they don't have the right to use the assets of the corporation to do so despite holding title to those assets as tenants in common. This is because the direction of the corporation is managed by elected representatives who are the council under the Act.

3 Strata corporations must always be thoughtful about the amount of power delegated to parties. Furthermore, it should not through inaction make illegitimate parties legitimate. Best Practices for Striking a Committee Subject to a specific bylaw set out under s. 20(1) of the Act, the following procedure is recommended for striking a committee: 1. A council resolution authorizing the existence of the committee is passed; 2. The council determines the scope and authority of the committee; 3. The following criteria are met: a. The committee sits at the pleasure of the council; b. The committee may be terminated anytime by the council; c. All committee activity has to be sanctioned by the council and be in accordance with the Act; d. The committee has an obligation to fulfill its duty in good faith; e. The committee have a specific mandate and objective; f. There are reporting requirements provided to the council. A degree of oversight by the council is strongly recommended. To this end, it may be advantageous for committees to be chaired by council members. Minutes of Committee Meetings Committees of the strata council or of a section executive are not necessarily covered by the requirement set out at s. 35 of the Act. However, if a committee is exercising delegated powers of the strata council or a section executive, it would be unwise not to document their decisions, whereas if they are merely formulating recommendations to the strata council or executive, their recommendations when read into the strata council or executive minutes may suffice. Duties of Strata Councils and Committee Members The forgoing is important to understand in the context of the fact that the council has responsibilities. Under the Act, Part 4, 31, it has a duty to act honestly and in good faith. Council members have an obligation to act in good faith and care and in the best interest of the corporation. Allowing committees to make decisions without adequate accountability could jeopardize the best interest of the corporation. Without creating the correct level of corporate governance and reporting requirements and decision making, the corporation could face uninsured risks. Governance provides a structure, whether corporations can obtain their objectives. Governance is a mechanism for monitoring the actions, policies and decisions of corporations. It requires an ability to align interests of all the stakeholders.

4 Accordingly, committees in the context of a corporate governance scheme must be focused on the same objectives which in the case of strata corporations is statutorily created. This objective cannot stray outside the scope of the Act. An Insurance Perspective Whether you are a volunteer serving on the strata council or a volunteer helping out by performing odd jobs at your property, insurance is very important. Volunteers generously give their time and energy to ensure that the affairs of the Strata Corporation run smoothly. By doing so however, they expose themselves to the personal risk of having lawsuits filed against them even while they have the best interests of the Strata Corporation at heart. They also have the physical risk of being injured at the property whilst performing volunteer duties. For volunteers in a strata setting, there are two main avenues of protection that a strata corporation should consider. Directors and Officers (D&O) Liability and Volunteer Accident Insurance. Legislation: Part 9, Section 149 of the Strata Property act address insurance. It dictates what coverage a strata must purchase and then suggests a strata may want to purchase optional insurance. It does not require or mandate strata s to carry D&O or Volunteer accident insurance. It simply puts these two lines of coverage as optional. Having said this most, if not all strata corporations take these very important coverages. Directors and Officers liability: This coverage is intended to protect the strata council against claims made in respect to any errors or omissions made by strata council members and the property manager in exercise of their duties. It should also cover the strata corporation as an entity and any other individuals been that have delegated council duties. This should include committee members, not necessarily on council, serving on various committees a landscaping committee for example. What does it cover? D&O insurance covers the costs of defense and settlement. If there is lawsuit filed against any insured persons, D&O insurance will help with the legal defense costs associated with protecting the individual or insured entity. An example of how D&O coverage can apply There is a rental restriction at a strata and council enforce the by-law they have in place on an owner that prevents them from renting their unit. The owner in turn sues strata council, claiming they have been unfairly treated. Whether the claim is frivolous or not, strata council still have defend costs associated with the lawsuit. This is an example of where D&O coverage could apply and help protect strata council.

5 Considerations of D&O insurance There are some important considerations with D&O policies that can affect coverage. Who is insured? It s very important to be aware of who is provided coverage under your D&O policy. Here are some examples of people that should be covered: Directors, Officers, employees, volunteers, committee members, staff members & trustees Past Future & Present. Check with your broker and they should be able to confirm who is insured. Claims Made policies - In a claims-made policy, coverage is triggered by the date the insured first became aware of the possibility of a claim and notified the insurer of such knowledge. The insurance policy in force on the date the insured gained such awareness is the one which responds to the claim. The policy period for a claims-made policy will extend backwards in time to a retroactive date years before the policy was purchased.. Therefore, the policy will provide coverage for claims made today stemming from actions or events all the way back to that retroactive date. The key thing to remember with this is that as soon as you are aware there could be a possibility of a claims keeping in mind this may be before legal proceedings are bought forward, notify your insurance broker. Insurance Policies come with terms and conditions and one of those in D&O policies is that notice of a claim will be bought forward to the insurer as soon as the insured becomes aware of a possibility of a claim. Exclusions? All insurance policies contain exclusions. Make yourself aware of exclusions to your policy. Here are some typical/standard exclusions: Fraudulent activity Personal Profit Late claim notice If there is other primary insurance in place Bodily injury / Property Damage Claims made based on Construction defects Volunteer Accident Insurance Volunteer accident protects qualified volunteers with No-Fault benefits who may become injured whilst helping out with strata duties, such as spring cleaning or landscaping. It s essentially a benefits plan that provides financial assistance in the event of an injury and also a weekly indemnity to injured individuals. The first question for many strata corporations is what tasks do we allow our volunteer to fulfill? Unfortunately there is no legislation or line in the sand that says this is where we hire a professional contractor. Some things to keep in mind are:

6 Does the volunteer qualify for coverage under the strata s Volunteer accident policy if they are injured? There are conditions to all volunteer accident policies that restrict coverage such as age limits. Does the work of the volunteer does create an additional or increased exposure for the strata corporation? IE; If the volunteer is mopping the floors but doesn t have the correct safety equipment warning residents of danger. This would create an additional exposure for the strata. Sometimes it might make a better business decision to hire professional and transfer the risk. There are however many strata s fortunate enough to have the assistance of volunteers so where you do have volunteers, there are some items to make yourself aware of in order to better understand the coverage provided. What is an accident? This is defined is all policies and in general terms an untoward event that is not expected that causes injury. An example is putting your back out whilst taking trash out from the amenity room. Who is eligible to receive coverage? Who is protected or insured? This is also defined in the policy and something you should check into with your broker. It should cover Owners, Family members and spouses of owners. There is also usually an age limit to receive coverage, For example they have to be under the age of 85 to be eligible for the Specific Loss Indemnity and under the age of 70 and employed to be eligible for the Weekly accident Indemnity. Specific Loss Indemnity. This is an amount paid by the insurers for a specific loss, for example, loss of sight. This is intended to address major accidents where an insured person suffers a traumatic loss of a major body part or function. The list of injuries is stated in the policy wordings along with the amount paid for each loss. Weekly Accident Indemnity. As it implies this is a weekly indemnity plan that pays out a weekly amount for loss of salary due to an injury caused whilst performing volunteer duties for the strata corporation. Usually only available to insured persons not eligible for the weekly indemnity plan. It covers limited costs associated with hospitalization... Accident Expense Reimbursement. This is coverage for expenses incurred due to an accident whilst performing volunteer duties. For example, transportation in an ambulance, rental of a wheelchair, physiotherapist costs etc. Other costs and expenses. Dental Expenses, Rehabilitation Benefits, Repatriation Benefits, Family Transportation Benefits plus more. Check your policy to ensure it s comprehensive and includes items such as these. As there are many type of insurance available, we always recommend seeking the advice of a strata specialist insurance broker. They should be able to help you navigate you through the many questions you will likely have.

7 A Managers Perspective Introduction There is only one simple requirement for starting a committee - owners and residents must see a need for it. The success of a committee reaches far beyond the task at hand. Committees Create Opportunity Apart from the services that they provide, committees create an opportunity for participation by owners and residents in the affairs of the corporation. They broaden the base of concerned owners and allow for greater feedback. Committees are a great starting place for future council members. Committees Create Community More importantly committees provide an environment for neighbours to know neighbours. A work party and pot luck bring neighbours together not only to achieve the completion of the work but to get to know each other better. Without even knowing it the group becomes woven into the fabric of the community providing a greater sense of security where they can share interests and goals in a less formal means than an AGM. This information sets the groundwork for setting the vision for the community. This forum also sets a better platform of understanding when resolving differences. Communities with active committees usually contain a group of happier owners who appreciate the commitment of the participants. Types of Committees Committees in a strata will have various functions. Committees are struck for different purposes and can be for a long term or short term goals. Standing Committees Permanent committees are struck to deal with or make recommendations on on-going governance and organization issues. Standing committees differ from special committees in that their decisions or actions are part of the council s work on a regular basis. Ad hoc Committees Ad hoc committees are struck for specific tasks and then disbanded after the mandate is fulfilled. Advisory An advisory type committee is often an ad hoc committee used for research on a specific project. For example a committee could do a risk analysis and make recommendation to council for changes to enhance the security of the property. A rule committee would most often be ad

8 hoc to review the existing rules and by-laws and make recommendation to council for needed changes. The information would assist the council in making their decision. Organizational An organizational committee example is a social committee used to organize and promote social functions. A work day committee is another example of an organizational committee. Task Council s Role These committees are most often standing committees tasked with specific functions. Security, landscape, communications and housekeeping are the most common committees. The effectiveness of the committee will depend on the direction it receives from the council and the skill of its members. Councils need to be really thoughtful on how to structure the scope and authority of the committees. For example, landscaping should have a very specific function, role and reporting requirements. Social committees, again, should have very specific functions that are delineated with mandates to report to the council. All committees must have procedural formality to allow for the processing of information. Council members should be aware that delegating responsibilities to committees does not protect them from liability arising from committee decisions or actions. In practice, councils must always ensure that they have access to committee minutes and records. For example in a strata corporation there may be the standard landscaping and social committees that exists year to year and that they are appointed with a specific mandate to be achieved on a regular reporting basis to the council. Alternatively, the strata corporation may create committees for short term or special projects. For example, committees may be struck for investigating accessibility issues at a strata corporation. Practically creating a standing committee by by-law allows for its existence on a regular and on-going basis while the creation of special committees on resolution basis allows the council flexibility to create committees for a temporary purpose. While the council needs to allow the committee to operate, they have an obligation to ensure that the tasks for which the committee has been mandated are carried out properly. The council should review the committees at least annually, paying attention to their functions and composition and make changes where necessary. It is far better to be proactive on any changes rather than reactive when a committee undertakes responsibility it is not set up for. Each council members should consider chairing the committee or acting as the liaison.

9 Wise councils recognize their committees and their members, and praise their achievements at every AGM where the committee chairperson will often give a report on their status and goals for the coming year. SAMPLE POLICY FOR COMMITTEES POLICY: The council shall organize and utilize committees to help fulfill the responsibilities of the corporation set out in the Strata Property Act, and By-Laws and Rules to effectively achieve associated objectives. Committees are assigned to make recommendations only to the council and shall not authorize any corporation expenditures or direct Management concerning the latter's duties without permission of the council. PROCEDURES: a. The council will determine the responsibilities of committees, ratify the appointment of their chairpersons, act on the resignations of such officers and, when necessary, canvass the general corporation membership for needed members with appropriate credentials. b. Each committee will elect other officers as necessary from its membership. c. Committees may appoint sub-committees from time to time to research major issues and undertake other specific assignments. d. Terms of reference for each committee will be established and amended from time to time by the council, with or without recommendations from the committee. Such terms shall explain the committee's exact role relative to the corporation and the council. e. The council will designate one council member only to maintain liaison between it and each standing or special committee. f. No business is to be transacted at a committee meeting at which a quorum, comprising a majority, of members is not present. g. Minutes are to be taken of the proceedings of each committee and copies are to be distributed as soon as possible to members of the committee and, through the Management Office, to members of council. h. The council will regularly review all committees to ensure they are discharging their assigned duties and determine the need of their continued services. COMMITTEE MEMBERS' DUTIES POLICY: The following are the principal duties of all committee members: a. Contribute to an overall group effectiveness in fulfilling responsibilities assigned to the committee by the council. b. Prepare adequately for each meeting by studying the agenda and completing required research.

10 c. Prepare in writing all motions and non-motion proposals to be placed before a meeting and submit sufficient copies to the chairperson for distribution to members PROCEDURE: The council liaison member(s) assigned to each committee will ensure that all its members have copies of the committee's terms of reference, rules, and policies and procedures applicable to the committee. CCI-V Committees