ARCHERS - connecting strata communities

With the recent natural disasters faced throughout Queensland, new challenges have arisen within Bodies Corporate facing large repair costs. Archers Body Corporate has seen many of these challenges first hand with a number of our buildings managed in both the flood and cyclone affected areas receiving varying degrees of damage. Whilst for many, insurance policies, albeit it with very large excesses, have covered some of the damage, for our flood affected buildings they have had to take money from their existing funds, and in many cases, issue Special Levies, to cover the cost of the damage.

These challenges have been prolonged in some instances by restrictions within the Body Corporate and Community Management Act which have various requirements for Bodies Corporate to approve spending, even in emergency situations. If your Body Corporate has been or is ever in the unfortunate situation of having to deal with an emergency situation, the following will provide you with some information and tips to help you get back on track and on the road to recovery as quickly as possible:

Spending by the Committee is restricted by the relevant limit for committee spending, for a community titles scheme which means:

• a) The amount last set as the relevant limit for committee spending by ordinary resolution of the body corporate at a general meeting; or
• b) At any time there is no amount set, an amount worked out by multiplying $200 by:
• (i) for a principal scheme in a layered arrangement of community titles schemes - the number of layered lots for the scheme; or
• (ii) for another scheme - the number of lots included in the scheme.

Otherwise for the purpose of most emergency spending situations, the committee may only give effect to a proposal involving spending above the relevant limit for committee spending for the community titles scheme if:

• a) The spending is specifically authorised by ordinary resolution of the body corporate; or
• b) The owners of all lots included in the scheme have given written consent; or
• c) An adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions

Committee spending is also restricted by the relevant limit for major spending, for a community titles scheme, which means:

• (a) The amount last set as the relevant limit for major spending by ordinary resolution of the body corporate at a general meeting; or
• (b) At any time there is no amount set, the lesser of the following amounts-
• (i) an amount worked out by multiplying $1100 by-
• (a) for a principal scheme in a layered arrangement of community titles schemes - the number of layered lots for the scheme; or
• (b) for another scheme - the number of lots included in the scheme;
• (ii) $10,000.00

We have seen over the past months that in the aftermath of a natural disaster the spending required is more than likely to exceed these restrictions that apply to Committee spending and require General Meeting Approval. There are various requirements for spending to be approved at a General Meeting however the most relevant items will be the following:

Quotes for major spending decided at General Meetings require that the owner of each lot is given copies of at least 2 quotations for carrying out the work or, if for exceptional reasons it is not practicable to obtain 2 quotations, a single quotation must be obtained and must accompany the notice of meeting. When the goods and or services with the necessary characteristics are only obtainable from a single source would be an exceptional reason for not obtaining 2 quotations for the supply of the goods.

One of the other hurdles faced in an emergency spending situation is the minimum notice period which requires that a general meeting must be held at least 21 days after notice of the meeting is given to the owners of lots.

To overcome this restriction, adjudicator orders have been made reducing the notice period to 7 days following an application lodged seeking the authorisation of an adjudicator for emergency expenditure. The applicant must demonstrate a genuine emergency. Emergency expenditure applications are not a means of circumventing the normal processes for approving expenditure or for expediting authorisation of expenditure when there is no genuine emergency.

Factors to consider may include:

1. Whether there is an immediate and serious health or safety risk;
2. Whether the failure to act immediately may result in the body corporate incurring significant additional costs; or
3. Whether there is an urgent need to act to protect the body corporate's rights or interests.

If your scheme is thinking of making an application for authorisation of emergency expenditure the following are a few tips to optimise your chances of being successful

1. Include a written quotation for the proposed expenditure. Multiple quotations are preferable and may be required by the adjudicator where the proposed expenditure would be able the major spending limit for the body corporate
2. The application should detail the expected timeframe for the work, including when contractors are able to commence
3. Consider still taking steps to convene a General Meeting to seek owner approval for the expenditure as well as lodging the emergency expenditure application. This will limit delays in the event that the requested expenditure is not authorised by an adjudicator.

Where the Commissioner reasonably considers that an application should be referred to an adjudicator immediately, because it relates to emergency circumstances, the Commissioner may refer the application without seeking submissions from all affected parties.

Hopefully you have never had to and never will face an emergency that requires any of these steps to be put in place however, should the situation ever arise, please do not hesitate to contact us to guide your body corporate through the recovery process.