26 Mar Improvement vs Maintenance in a Strata Community

Improvement vs Maintenance in a Strata Community

Section 159(1) of the Body Corporate and Community Management (Standard Module) Regulation 2008 states that the Body Corporate must maintain common property in good condition, including, to the extent that common property is structural in nature, in a structurally sound condition.

But how does a Committee differentiate between what is considered “maintenance” and an “improvement” and what is involved in gaining approval to proceed with the “maintenance” or “improvement”?

Unfortunately – there is no definition under the Body Corporate and Community Management Act 1997 (The Act) for “maintenance”, however, the Commissioners Office website explains:

“Adjudicator’s orders have used a ‘like for like’ rule when deciding whether the work is maintenance or an improvement.

For example, if you replace a wooden fence with a similar wooden fence it is maintenance. If you replace a wooden fence with a colorbond fence it is an improvement because there is a change to the existing fence.

However, if you can’t get the same product or material, a change is not automatically an improvement. For example, the body corporate is repairing some foyer tiles. It can’t get the same tiles, so uses a similar, modern tile. This can still be considered maintenance.

Most day-to-day work is maintenance.”

When defining “improvement” the definition in Schedule 6 of The Act states:

“improvement includes –

  1. The erection of a building; and
  2. A structure change; and
  3. A non-structural change, including, for example, the installation of air conditioning.”

While the example used above refers to fencing there are many other areas where it is important to clarify whether the work is being done for maintenance or an improvement e.g. painting, roof replacements, gutter replacements etc.

Why is it important to determine whether the work is considered maintenance or an improvement?

The answer for this is simply that the approval process through a General Meeting must be correct and in accordance with The Act – and determining whether the work is considered maintenance or an improvement and what the work will cost will determine whether you require approval by Ordinary Resolution or a Special Resolution.

The Commissioners Office website provides a table containing 3 “improvement limits” in assisting whether determining what type of resolution is needed when approving works that are considered as an “improvement”

Screen-Shot-2019-03-20-at-10.47.00-am Improvement vs Maintenance in a Strata Community

In this month’s adjudicators order – the applicant was seeking an interim order that painting of the building was not to proceed until the validity of the motion authorising the painting was determined. The argument from the applicant was that the motion was put to owners as an Ordinary Resolution, however, based on the above argued that the motion should have been a special resolution.

The adjudicator noted in the order “The applicant’s contention that the painting of the external walls required authorisation by special resolution is seemingly based upon his view that the painting is an improvement to common property. If that view is correct, a special resolution was required pursuant to Section 97(1)(c) of the Small Schemes Module. If it is incorrect, and the repainting is best characterised as maintenance, an ordinary resolution would suffice”

In this case, the adjudicator ruled that the request for an interim order be dismissed on the grounds that based on the voting made at the general meeting (being 2 votes in favour and 0 against) would have satisfied the voting requirement if the motion had been proposed as a Special Resolution, so the result of the meeting would not have changed.

A full copy of the order can be read: http://www8.austlii.edu.au/cgi-bin/viewdoc/au/cases/qld/QBCCMCmr/2019/108.html