Spending Limits of Committee
From time to time a body corporate needs to have work undertaken without the need for approval of a general meeting of the body corporate.
The committee has spending limits placed upon it by the regulation module applying to the scheme.
The information provided in this newsletter relates to a non layered standard module scheme and takes into consideration the amendments that commenced on the 30th August 2008.
The Dictionary in section 4 of the Schedule to the Standard Module Regulation 2008 sets out the “relevant limit for committee spending” and “relevant limit for major spending”.
- The body corporate can at a general meeting set a relevant limit for committee spending by ordinary resolution. For example it could allow the committee in a block of 6 units to spend “up to $2,500.00 on any one project” or in my opinion a better approach would be to restrict the committee expenditure by passing a motion to authorise “up to $2,500.00 to be spent on the replacement of the letter boxes by a contractor approved by the committee”.
- If no amount is set then the committee could spend up to $200.00 multiplied by the number of lots in the scheme on any one project. In the above example the limit is $1,200.00.
If the expenditure falls within those limits the committee can proceed provided that appropriate quotes are considered, the relevant minutes or record of motion has been sent to all owners and a notice of opposition does not rescind the committee decision.
Section 151 of the Standard Module Regulation restricts committee spending above the relevant limit to the following:
- Spending authorised by resolution of the body corporate at a general meeting as in the above example.
- The owners of all lots have given written approval.
- An adjudicator has authorised the expenditure to meet an emergency.
- Spending is necessary to comply with a statutory notice or order, the order of an adjudicator or the judgment or order of a court.
If A or B apply the following questions need to be answered.
- Is the amount involved within the “relevant limit for committee spending” as referred to above?
- Is the amount within the “relevant limit for major spending” as set out in the Dictionary? That amount is the amount last set as the relevant limit for major spending by ordinary resolution of the body corporate at a general meeting or if there is no amount set then the lesser of the following amounts:
- The number of lots in the scheme multiplied by $1,100.00 or;
- $10,000.00.
When it is proposed to carry out work or acquire personal property or services section 153 of the regulation requires at least 2 quotes to be obtained if the “relevant limit for major spending” is to be exceeded and a motion is to be moved at a committee meeting or to be dealt with under section 54, flying minute. However, if in exceptional circumstances only one service contractor can supply the service or the “relevant limit for major spending” is not exceeded then only one quote is required.
If the decision is to be made under section 54 the notice of the motion must be accompanied by copies of the required quotes.
Copies of those quotes must be retained as an attachment to the minutes of the meeting or the record of the motion voted on under section 54.
Once again the committee can proceed provided that the relevant minutes or record of motion has been sent to all owners and a notice of opposition does not rescind the committee decision.
The regulation module relevant to your scheme should be checked to ensure that the relevant limit for major expenditure and the procedures to be followed are the same as that applicable to standard module (non layered arrangement) schemes.
