26 Sep Adjudicators Order – is your Emergency Expenditure really an”emergency”?

Adjudicators Order – is your Emergency Expenditure really an “emergency”?

More and more, we are seeing applications made to the Body Corporate Commissioners Office seeking an order to allow proposed spending required to meet an “emergency” and with the storm season nearly upon us, we thought this would be a timely reminder of what sort of items would constitute “emergency expenditure” and what the process is to get this right.

In a previous edition of Strata Today this topic was reviewed and it was noted:

“An example of emergency circumstances would include a burst water pipe where the repair or replacement cost of which exceeds the body corporate committee’s expenditure limit under the regulation module applying to the scheme. Another example of an emergency circumstance would be any maintenance required should there be a risk to the safety of persons residing or visiting the scheme.

It is important for the body corporate committee to follow correct procedure when approving and carrying out general maintenance including ensuring that they are not authorising spending over their committee spending limit without the appropriate approvals and that an application is immediately referred to the Commissioners Office if it is felt that the maintenance required relates to an emergency situation.”

In an order made by the Commissioners Office on the 2 August 2017 a Body Corporate was requesting approval to allow emergency expenditure OR that they be allowed to call an Extraordinary General Meeting with a reduced notice period – this application was dismissed.

The Body Corporate, in the submission, noted that significant water leaks were identified affecting the building and had obtained 2 quotes to carry out the necessary rectification works. These were included in the submission to the Commissioners Office noting that both contractors had advised: “that in the instance that the external repairs are not undertaken in a timely manner, this could lead to serious internal resultant damage costing the Body Corporate significantly more in the internal rectification”.

However, the Adjudicator noted that the onus rests with the Body Corporate to establish that an emergency circumstance exists and that in this application, the Adjudicator was not satisfied that the Body Corporate had demonstrated that an emergency exists.

It should be noted that the legislation does not define “emergency” and the ordinary meaning of the word in the Oxford English Dictionary is “A situation…that arises unexpectedly and requires urgent action.”

To read a copy of the order

Click here