Conflicts of Interest: Rules for Trustees and Managing Agents

A conflict of interest arises whenever a trustee or managing agent has a personal or financial stake in a decision they're meant to be making impartially. It happens more often than most schemes realise – the question is how it's handled.

Common Conflict Scenarios

A trustee who owns, or is related to the owner of, a business tendering for a maintenance contract
A trustee who is significantly in arrears voting on the collections policy that would apply to them
A managing agent recommending a contractor or insurance broker in which they hold an undisclosed financial interest
A trustee advocating for a rule change that specifically benefits their own unit (e.g. exclusive use rights)

The Duty to Disclose

A conflict itself is often unavoidable – trustees are owners too, with their own interests. What matters legally is disclosure: raising the conflict openly, having it minuted, and then generally recusing yourself from the discussion and the vote.

What Proper Handling Looks Like

Identify

The trustee (or agent) recognises a personal or financial interest in the matter at hand.

Disclose

The interest is declared openly before discussion begins, and recorded in the minutes.

Recuse

The conflicted party leaves the discussion and abstains from voting on that specific item.

Document

The minutes reflect the disclosure, the recusal, and that the remaining trustees made the decision independently.

Managing Agent Conflicts

A reputable managing agent should be contractually required to disclose any financial relationship with contractors, insurers, or brokers recommended to the body corporate – including commissions or referral fees. Owners are entitled to ask for this disclosure as a standard part of due diligence.

Why This Protects Trustees Too

Disclosure Is a Trustee's Best Defence

A properly disclosed and recused conflict is very difficult to later challenge as a governance failure
An undisclosed conflict – even where the underlying decision was reasonable – invites suspicion and potential CSOS challenge
Consistent disclosure practices build owner trust in the trustee body as a whole

Disclosure Is the Whole Game

Conflicts of interest are inevitable in any small, closely connected community. What separates good governance from bad is simply whether they're disclosed, recorded, and managed transparently.

Need a Conflict of Interest Policy?

PPSP helps trustees put a clear, documented conflict of interest process in place – and keeps it consistently applied.

Get in Touch