Welcome to our exclusive column by Chris Irons, Dear Strata Solve, untangling your strata problems.
Dear Strata Solve
How come my body corporate committee can seemingly do as they please? They approved spending recently of a large amount, with no owners consulted before doing so. Surely they have a responsibility back to the people who voted them into the role?
Outraged in Ormeau
It is impractical for everything which happens in a body corporate to be subject to consultation with, or a vote by, all owners. Imagine your scheme is 100 lots. Can you imagine the challenges of conducting consultation for that many people, let alone the cost of calling a general meeting every time something had to be decided?
For these reasons, body corporate legislation provides that the committee will make decisions by itself, and without reference to all owners, in certain circumstances. The key qualifier is cost, expressed as a spending limit. The committee can authorise spending up to its limit, which is the number of lots multiplied by $200, or that limit can be set by an ordinary resolution, and there is no upper limit for it.
An exception to the above is in relation to insurance. Committees can spend above their limit if it is to renew or take out an insurance policy. This exception reflects that insurance is both essential and often, incredibly challenging to renew and obtain. Sometimes doing so will happen in a short space of time, making it impossible to be able to refer to all owners in doing so. Further information about committee spending limits is available here.
Another limit on committee powers is whether the decision of the committee is a restricted issue. As the name suggests, a restricted issue is one which either legislation, or a resolution of the body corporate, says only a general meeting – i.e., all owners – can make. An example of a restricted issue is one which ‘changing rights, privileges or obligations of the owners of lots’.
What is the bottom line here? Committees, we think, should be empowered to go ahead and make decisions of their own volition, provided those decisions are subject to appropriate checks and balances. It is, frankly, silly to think that all owners must be involved in everything. Remember, Outraged, you get copies of committee minutes, so it is not as if committee business is completely withheld from you.
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