It is important that when a Body Corporate is proposing a motion for work to be done, at a general meeting, that consideration is given to the following:
- are the works involved “maintenance” or are they “improvements” to the common property; and
- what is the cost of the works being proposed; and
- what type of resolution should be used to propose the motion
Under the definitions contained in the Body Corporate and Community Management Act 1997, an improvement is defined as:
- the erection of a building; and
- a structural change; and
- a non-structural change, including, for example, the installation of air conditioning
It is important to also note that the definition of “change” under the Acts Interpretation Act 1954 is defined as: includes by addition, exception, omission or substitution
These two definitions work together when ascertaining whether work being proposed would be considered maintenance or an improvement.
Section 163 of the Body Corporate and Community Management (Standard Module) Regulation 2008, in reference to improvements, notes:
- The body corporate may make improvements to the common property if a) the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is not more than the basic improvements limit for the community titles scheme; or b) the improvements are authorised by ordinary resolution and the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is within the ordinary resolution improvement range for the scheme; or c) the improvements are authorised by special resolution; or d) an adjudicator, under an order made under the dispute resolution provisions, decides the improvements are reasonably necessary for the health, safety or security of persons who use the common property and authorises the improvements.
- However, a body corporate may not pass more than 1 ordinary resolution mentioned in subsection (1)(b) in a financial year for the body corporate.
- For subsection (1), if a series of associated improvements forms a single project, the cost of any 1 of the improvements is taken to be more than the amount worked out under subsection (1) if the cost of the project, as a whole, is more than the amount.
- This section has effect subject to chapter 7, part 7.
- In this section— basic improvements limit, for a community titles scheme, means an amount worked out by multiplying $300 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. ordinary resolution improvement range, for a community titles scheme, means an amount that is— a. more than the basic improvements limit for the scheme; and b. not more than the amount worked out by multiplying $2,000 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.
The spending limits are explained in more details on the website for the Office of the Commissioner for Body Corporate.
The reason that we raise the above in the first instance, is this was the information taken into consideration when the Commissioners Office passed an interim order placing a hold on action being taken on a motion purportedly passed at a General Meeting held in 2020 until further investigation could be undertaken and a final order made.
The application, made by a Lot Owner within the Scheme, sought an order that the motion carried at the 2020 EGM be declared invalid as the motion proposed for works, in their opinion, was considered to be an improvement however the motion had been proposed as an Ordinary Resolution and based on the cost of the works, should have been a Special Resolution. Based on the votes cast, as an Ordinary Resolution, the motion was carried but if the motion had been proposed as a Special Resolution would not have been carried.