Incorporate Bodies

Body corporate legislative change

The announcement by attorney-general Jarrod Bleijie of a review of the Body Corporate and Community Management Act has been received with enthusiasm.

And rightly so – the opportunity to contribute to the improvement of the legislation which governs your industry does not come every day.

In his announcement, the attorney-general stated that “there would be a full review of the Body Corporate and Community Management Act… to solve the issue of body corporate once and for all”. I welcome a full review, as it allows all stakeholders in the industry to submit their concerns and suggestions for the improvement of the legislation. However, the idea that you can define ‘the issue’ of strata is problematic. Due to the complex and subjective nature of strata living, one person’s solution will not appeal to all.

I encourage all in the strata industry to submit their ideas to the review panel in order to improve the legislation which governs us. As previously stated, I don’t think there is one sole issue to be fixed; however, I would suggest that there is a key flaw in the current legislation that this review should address.

An important question to ask in any legislative review is ‘where does the current legislation not meet the needs of stakeholders?’ The current objectives of the act include balancing individual rights and self management, encouraging economic development and tourism, being flexible in operations, and protecting consumers. In my opinion these objectives are good and do not need to be reviewed. However, where the act falls down is how the objectives are achieved.

Self-management –
One of the fundamental flaws in the act is that it imposes self-management on bodies corporate, yet then restricts those given the responsibility of management from making decisions effectively and getting down to business. This is the issue that I and my staff see everyday, advising committee members, chairpersons and building managers as to how they can legally make decisions in a prompt and cost-effective manner.

Ultra vires – without power –
There are decisions made everyday by chairpersons, committee members and building managers to ensure the smooth and efficient running of the body corporate. Common examples of these decisions include choosing an insurance policy, a cleaner, a plant type for landscaping, or handling the negotiation of payments. These responsibilities are promptly assumed by competent people who have the best intentions for their body corporate.

However, these decisions are made ultra vires -without power. The act requires that for these types of decisions, a committee meeting must be held. This means a statutory notice period and a statutory format should be observed and fully documented resolutions passed. This begs two questions:

1. Why should a committee be subject to substantial administrative costs and time delays for relatively inconsequential and procedural issues?

2. Why should committee members be left personally responsible for decisions they make until those decisions can be later ratified by subsequent committee meetings?

Restricted issues and the two-quote rule –
The act also restricts the committee, elected by the body corporate for the sole purpose of making decisions on their behalf, from acting on certain issues without an annual general meeting. These decisions normally involve spending limits and service contractors.

Similarly, the committee is restricted by the act from promptly and effectively making decisions by the “two-quote rule”. The act states that two quotes must be obtained and submitted to an annual general meeting when spending exceeds the major spending limit. A committee may spend months researching and negotiating with contractors and service providers, before being required to call an annual general meeting to submit two quotes to the body corporate. This results in administrative costs and also time delays in the work being completed. A committee may of course easily get around the requirement by presenting a tenderer who is quoting apples to oranges – which prompts me to ask, why have the rule at all?

The problem I find with the current legislation is that it requires a committee to be elected, and then removes any power they have to be an effective decision-making body. It appears to me that the act deems those duly elected and given the responsibility of managing insufficiently astute and incompetent to make decisions that need to be made. Those involved in the decision making process are hindered by this restrictive legislation, and are also subject to unnecessary costs and time delays. As it is, the act does not facilitate the day-to-day running of a body corporate.

In my research of legislation worldwide, I have found that Queensland has the most restrictive legislative structure with very limited ability for delegation. I would urge those conducting the review of the legislation to consider adopting a system of delegation of responsibilities and powers from the body corporate to the committee and from the committee to individuals. The legislation should be amended to free up the decision making processes so that bodies corporate can delegate to the appropriate and workable level.

Give the power of decision making to those who volunteer their time and effort to achieve the best for their body corporate.

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