Committee meetings and insurance under the new Standard Module transcript

After extensive stakeholder and community consultation, which included our input, and recommendations made by the panel on the Queensland University of Technology property law review, the body corporate and community management regulations were remade on 29 September 2020. They will come into effect on 1 March 2021.

This video is specifically about changes relating to committee meetings, including insurance. We will go through the changes made to the Standard Module regulation only. If your scheme is registered under one of the other regulation modules you should check that regulation module for any differences, although note that the changes are very similar if your scheme is registered under the Accommodation Module.

Transitional provisions in the new Standard Module allow for some arrangements under the expiring Standard Module to continue to help minimise disruption to bodies corporate in implementing the new module.

Topics

The topics covered in this video are submitting motions, making timely decisions, attending in person, attendance by a representative, debtor members, VOC’s, minutes and records, and we will also talk about insurance.

Please note, the transitional provisions in Chapter 10 of the new Standard Module provide that the expiring Standard Module continues to apply for procedural steps and conduct of a committee meetings called but not held before commencement of the new Standard Module.

Submitting motions

Committees are routinely asked to consider motions proposed by lot owners, for example, regarding the application of by-laws, or approvals to make improvements. However the expiring Standard Module does not contain specific provision to put a motion forward for consideration of the committee.

To encourage the involvement of lot owners in the operation of the body corporate, as well as ensuring committees are responsive to the concerns and interests of members of the body corporate, the new Standard Module provides an explicit right for a member of the body corporate to submit a motion for consideration by the committee.

It is not an uncommon question to the Commissioner’s office as to whether an owner can submit a motion to the committee, however a more common question is how long should it take for a committee to make a decision on a motion? This brings us to the next change.

Making timely decisions

The expiring Standard Module does not provide a time frame for the committee to consider a motion from a member of the body corporate. This can cause a lot of frustration for owners and uncertainty for committee members.

The new Standard Module sets a timeframe of six weeks for the committee to make their decision on the motion, which may be extended to 12 weeks if required, this is called the ‘decision period’. Motions not decided by the committee within the timeframe are deemed to be decided against. If the committee needs the additional 6 weeks to decide the motion they must advise the owner who submitted the motion.

Limits are placed on the number of motions submitted by the same lot owner that the committee must consider, this is to ensure that committees are not overburdened and to discourage lot owners from exercising their ability to submit motions to the committee in an unreasonable or excessive manner.

The committee is not required to decide a motion if within the 12 month period before the motion was submitted, the member has submitted a motion about the same issue or 6 or more motions. It remains unchanged that the committee must not decide a motion if it is a restricted issue, conflicts with the Act, regulations, by-laws or motion already voted on, or is unlawful or unenforceable for another reason.

For large schemes, this may result in some additional costs associated with additional meetings or votes outside committee meetings, however this potential is mitigated by protections designed to avoid undue burden on committees.

Attending in person

The new Standard Module clarifies that voting members of the committee may attend and vote at a meeting of the committee by electronic means when authorised by the committee. Also, non-voting members of the committee, lot owners and their representatives, or other persons invited to attend, can attend electronically if authorised.

When the committee approves electronic attendance, they can approve it for a particular meeting or meetings, or for all meetings. They can approve attendance by a particular electronic means or any electronic means.

If the body corporate does not have the facilities to provide electronic attendance, they may be able to make enquiries with their body corporate managers, local library or other community organisations.

This puts into effect something that is already known to be standard practice for committees. It provides flexibility for committee meetings and potentially reduces the costs of holding meetings.

Attendance by representative

The expiring Standard Module allows for lot owners who are not members of the committee to attend committee meetings provided they give written notice to the secretary no later than 24 hours before the meeting. There is no provision for the committee to refuse attendance, however the committee can ask a lot owner to leave under certain circumstances.

The new Standard Module now extends that right for an owners representative to attend a meeting. The owners representative must have their name on the body corporate roll as the representative of the lot owner or they must provide evidence that the owner has asked them to attend the meeting. The representative must provide information which is set out in the regulation.

Clients often ask us whether a representative can attend on behalf of a lot owner who is unable to attend the meeting, usually a family member. Giving a lot owners representative a right to attend committee meetings enhances protections for lot owners by ensuring the interests of persons not able to attend can be adequately represented.

The committee should not be overly concerned about allowing owners and their representatives to attend committee meetings. There should be transparency in decision making within a body corporate. Owners and their representatives will still need to be aware that they are there to observe the meeting and are only able to speak at a committee meeting if invited to speak and must not be present for certain items of business as provided in the regulation module.

Debtor members

Under the expiring Stand Module, a committee member can vote at a meeting of the committee or by a vote outside committee meeting (otherwise known as a VOC, VOCM or flying minute) if they owe a body corporate debt. It has not sat well with some owners that unfinancial committee members are able to make decisions about spending money of the body corporate when owing a debt themselves.

The new Standard Module provides that a committee member who owes a body corporate debt, or who was nominated by an entity that owes a body corporate debt, is a debtor member and ineligible to vote at a committee meeting, or to vote outside a committee meeting. Also, a debtor member is not eligible to vote as a proxy for another voting member, and another voting member is not able to vote as the debtor member’s proxy.

The following suggestions are not required under the legislation, however you might want to consider reminding un-financial committee members with notice of the meeting to pay their levies if they are overdue.

At the meeting, the secretary might also want to have a list of committee members who are eligible to vote – similar to what they provide for a general meeting of the body corporate. A debtor member is considered as part of a quorum.

Here are some examples of debtor members.

Firstly we have Tom, Tom is the chairperson, he nominated himself for the committee. Tom owes a body corporate debt at the time of the meeting. Tom can’t vote

Next we have Kathy, Kathy is an ordinary member, she was nominated by Cheryl (another lot owner in the scheme). Kathy does not owe a body corporate debt, but Cheryl is behind in her levies at the time of the meeting. Kathy can’t vote.

Lastly we have Brian, Brian is the secretary, he was nominated by Mike (another lot owner in the scheme). Mike does not owe a body corporate debt, but Brian does at the time of the meeting. Brian can’t vote.

The committee members can still be counted for working out a quorum at a meeting of the committee. If the committee is voting on a motion outside a committee meeting, a debtor member cannot vote.

Vote outside a committee meeting

Under the expiring Standard Module, there is no timeframe provided for a committee member to respond to a notice of a vote outside a committee meeting.

Under the new Standard Module, the committee members must return their votes in writing to the secretary within 21 days after the notice is given.  Different requirements for notice, and returning votes apply in an emergency.

The motion is passed if the majority of all voting members of the committee, entitled to vote on the motion, agree to the motion. The motion fails if one half or more of all the voting members of the committee do not agree to the motion.

If a decision is not made within 21 days of committee members being given notice of the motion, the motion is taken to have not been agreed to.  A copy of the record of the motion (which is similar to minutes of a meeting) must be given to each committee member and lot owner. The outcome of the motion must be confirmed at the next committee meeting.

This change benefits the scheme and lot owners by providing certainty about committee decisions and makes it easier for lot owners to evidence their attempts at self-resolution should they need to lodge a dispute.

Minutes and records

Full and accurate minutes and records of motions now includes – for a motion submitted by a member of the body corporate:

• When the motions was submitted to the secretary
• The name of the person who submitted the motion
• If the motion was not decided, why
• If more time was needed, whether notice was given to the person who submitted the motion

There has also been a change for when a motion is ruled out of order by the chairperson. The meaning of full and accurate minutes now specifically includes that the reason for ruling the motion out of order must be included.

And lastly renewing or taking out insurance and disclosure requirements.

For many schemes under the expiring Standard Module, taking out or renewing insurance is a decision made by the body corporate at a general meeting because the cost of insurance usually exceeds the relevant limit for committee spending. This can cause difficulties where there is limited time between insurance renewal dates and general meetings and could cause lapses in insurance coverage.

Insurance

To make it easier for schemes to arrange necessary insurance cover, under the new Standard Module, committees are permitted to put in place, or renew, a required policy of insurance, despite the decision requiring spending above the relevant limit for committee spending. However, the body corporate is unable to make such a decision if it is a restricted issue or the body corporate has made the decision a restricted issue for the committee by passing an ordinary resolution at a general meeting.

If the cost of the insurance is more than the relevant limit for major spending, the committee must obtain and consider at least 2 quotations for the policy of insurance.

This legitimises what is already likely common practice. Insurance is a compulsory part of body corporate living so streamlining the process benefits bodies corporate and provides owners with assurance the policy is renewed when it needs to be.

Under the transitional provisions outlined in Chapter 10 of the new Standard Module it is important to note that where a committee meeting has been called but not held prior to commencement of the new module, and there is a proposal involving spending above the relevant limit for committee spending, the provision of the expiring Standard Module that limits committee spending continues to apply.

Disclosure requirements

The new Standard Module also provides the added requirement that if the body corporate engages an insurance broker or other intermediary in taking out the policy, these details must be provided at the annual general meeting, along with the details of any benefit given, or to be given, by the broker or intermediary to the body corporate or its members, a committee member, a body corporate manager, service contractor, or an associate of them.

This ensures the body corporate is adequately informed of any additional benefits that may have been received by parties potentially involved in arranging the policy of insurance on behalf of the body corporate.

You can find more information about the new regulations by visiting the shortened URL www.qld.gov.au/bodycorp-regchanges

If you have more questions you can contact our office by telephone or send us an online enquiry via our website.

Also keep an eye out for more resources, including articles, videos and further webinars.