Summary of Regulation Changes 2020 transcript

The new Standard Module regulation 2020

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 will go through all the significant 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.

The new Standard Module continues many existing management arrangements for community titles schemes under the expiring Standard Module, except for where enhancements have been made which we will go through in this video.

The enhancements implemented in the new Standard Module make possible the adoption of communication and information technology platforms that will enable bodies corporate to share information, deliver services, and administer the scheme more effectively. They improve the clarity and operation of the regulation, providing more flexible body corporate procedures, reducing body corporate costs, and enhancing protections for lot owners.

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 of the video

The topics covered in this video are in relation to committee membership, committee meetings, general meetings, disclosure of benefits, insurance, administrative matters and building defect reports. Throughout the video we will also make reference to the transitional provisions which are provided for in Chapter 10 of the new Standard Module.

Topics relating to committee membership

The topics relating to committee membership are as follows. Co-owners and representatives, deeming committee membership, electronic voting on a ballot, calling from the floor, chapter 3 part 5 engagements and receiving benefits.

Note that under the transitional provisions provided in Chapter 10 of the new Standard Module, the expiring Standard Module continues to apply for procedural steps and the conduct of a committee meeting and general meeting called but not held before commencement of the new Standard Module.

Co-owners

Under the expiring Standard Module, co-owners can both end up on the committee depending on how they are nominated.

For example, if a co-owner nominates the other co-owner who is their spouse under their eligibility as a family member, the co-owner who gave the nomination could still be nominated by another lot owner under the basis of their ownership of the lot. This situation has also occurred where ownership of the lot is in one name only but the owner and their spouse both end up on the committee.

The intention of the legislation was to prevent co-owners or an owner and their family member when they only own 1 lot, from being on the committee together.  The perception of control is the main concern raised when owners and their spouse, or their family member are on the committee together.

The new Standard Module makes it clear that the only situations co-owners, a member of their family or a person acting under authority of power of attorney given by the owner can be elected to the committee, is if they own more than one lot or if they are required to bring the number of committee members up to the minimum of 3.

When inviting nominations, it may be a good idea to remind people that there are restrictions on co-owners, family members and a power of attorney of an owner being on the committee at the same time.

Deeming committee membership

The expiring Standard Module allows committee membership to be deemed in certain circumstances, rather than determined by election. This happens when there are only two lots in the scheme, or there are more than two lots, but fewer than three lot owners.

The new Standard Module also allows committee membership to be deemed where there are three or more lots, and only three owners. The relevant owners decide between themselves which executive positions each will hold. If the owners cannot decide then the positions are held jointly.

Deeming committee membership for schemes with only three owners may reduce costs for relevant schemes as a committee election does not need to be held.

Minor committee

A committee that is deemed is now called a minor committee. For example:

*  A scheme of 2 lots and the 2 lots are in identical ownership

*  A scheme of 2 lots and the 2 lots are in different ownership

*  A scheme of 3 or more lots and all the lots are in identical ownership

*  A scheme of 3 or more lots and there are only 2 different owners for all the lots

*  And lastly, a scheme of 3 or more lots and there are only 3 different owners for all the lots.

Electronic voting

Under the expiring Standard Module, there is no specific provision to vote electronically for a committee ballot. The new Standard Module allows electronic votes and systems of electronic voting, to be used for both open ballot and secret ballot committee elections, if authorised first by ordinary resolution of the body corporate.

Lot owners can waive requirements for receiving hard copy secret ballot materials where electronic voting is in place, to further assist in reducing the costs to the body corporate.

The body corporate must operate a system for receiving electronic votes that

• rejects votes cast by a person who is ineligible to vote or who has already voted in the election and
• only allows the secretary to receive the votes and
• for secret ballots, does not disclose the identity of a voter

The secretary prepares an electronic form of the ballot paper after the nominations close if needed, and an instruction sheet must be sent with the notice of the annual general meeting on how to vote electronically. To cast a vote the person must follow the instructions provided.

The electronic voting system may allow for votes to be cast by computer, smartphone or tablet.

Allowing electronic voting for secret ballots will also assist with reducing costs to the body corporate. It should help owners who live interstate or overseas in voting as they will not need to post hard copies of secret ballot papers unless they choose to.

Maximum number of committee members

In the expiring Standard Module, a committee must have the required number of voting members. In the new Standard Module, the term required number has been removed, instead the term is maximum number.

Maximum number means - that if there are 7 or more lots, the maximum number of committee voting members is 7, and, if there are fewer than 7 lots, the maximum number of voting members equals the number of lots in the scheme.

Also, the new Standard Module allows the body corporate for a principal scheme in a layered scheme to vote to increase the maximum number of committee members to not more than 12 by passing a motion by ordinary resolution.

Calling from the floor

Under the expiring Standard Module, if the number of nominations for executive members and ordinary members is less than the required number of voting members for the committee, the chair must invite a number of nominations for ordinary member positions sufficient to bring the number to not more than the required number. The wording of this section often causes confusion and is a common question to the Commissioner’s office. It is not clear if the chair has to invite nominations if there are less than 7 committee members are elected.

The new Standard Module clears this up. Instead a committee must consist of at least 3 voting committee members and no more than the maximum number of voting members.

And, when there are fewer than the maximum number of voting committee members, nominated or elected, the chairperson must invite nominations from the floor of the meeting to attempt to bring the number of voting members of the committee to the maximum number.

This change to the module will ensure owners will have the opportunity to nominate from the floor at the meeting if they have missed submitting their nomination before the end of the scheme’s financial year and may also assist in creating more diverse committees.

Secret ballot for Part 5 engagement

A body corporate manager can be engaged to carry out the functions of a committee and its executive members where, in specific circumstances, the committee for the body corporate does not have sufficient members – this is commonly known as a ‘Part 5 engagement’.

Under the expiring Standard Module, a secret ballot is required for a motion about this type of engagement.

Given that efforts to appoint sufficient committee members must have already failed prior to consideration of a Part 5 engagement, the requirement for a secret ballot may place additional cost and procedural burdens on schemes.

The new Standard Module allows a body corporate to decide by ordinary resolution that a Part 5 engagement can be decided by an open ballot, rather than secret ballot. Having an open ballot may then reduce general meeting costs for relevant schemes.

The motion to engage a body corporate manger under these provisions remains a special resolution.

Disclosure of benefits

The new Standard Module restricts committee members from receiving direct or indirect benefits from caretaking service contractors and service contractors unless the body corporate has authorised the receipt of the benefit by ordinary resolution.

This does not apply if the benefit is for the supply of or payment for

• a letting agent business service conducted by the contractor, or
• a service the body corporate has engaged the contractor to provide or
• a service the owner of a lot has engaged the contractor to provide at market price.

This means that a committee member can engage the caretaker as their letting agent and receive benefits that would normally be available under that type of relationship. For example, the caretaker may clean the unit after a tenant vacates and charge the owner at market price for the service.

Topics relating to committee meetings

The topics relating to committee meetings are as follows. Submitting motions, making timely decisions, attending in person, attendance by a representative, debtor members and votes outside a committee meeting.

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 meeting 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 involvement of lot owners in the operation of the body corporate, as well as ensuring committees are responsive to the concerns and interests of other 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.

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. How long someone should wait for a response from the committee about their motion is a common enquiry to the Commissioner’s office. This can cause a lot of frustration for owners and uncertainty for committee members.

The new Standard Module sets a timeframe of six weeks, which may be extended to 12 weeks if required, for the committee to decide the motion. 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 a 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, are able to attend electronically if authorised.

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 owner’s representative to attend a meeting. The owner’s 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.

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 a committee meeting 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 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.

To prepare for a meeting, it may be a good idea for the body corporate to include a reminder to 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 the committee members who are eligible to vote – similar to what they provide for a general meeting of the body corporate. Also, a debtor member is considered as part of a quorum.

Vote outside a committee meeting

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

Under the new Standard Module, the committee members must return their written 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.

Topics relating to general meetings

The following topics relate to changes regarding general meetings of the body corporate. A general meeting is an annual general meeting or an extraordinary general meeting.

The topics include, submitting motions for the first annual general meeting, documents provided for the first annual general meeting, group of same-issue motions, explanatory schedule, quorum, power of attorney and electronic voting.

Note that under the transitional provisions provided in Chapter 10 of the new Standard Module, the expiring Standard Module continues to apply for procedural steps and conduct of a general meeting called but not held before commencement of the new Standard Module.

Submitting motions for the first AGM

The first annual general meeting of the body corporate must be called by the original owner (developer) shortly after commencement of the scheme. Under the expiring Standard Module there was no specific provision relating to owners submitting motions for the meeting.

The new Standard Module requires that a motion submitted by a member of the body corporate before the first annual general must be included on the agenda for the meeting if it is practicable to do so. Whilst this may result in a minor additional burden on original owners in relation to preparing materials for votes on relevant motions, it enhances protections for lot owners and promotes effective scheme governance.

Documents provided for first AGM

At the first annual general meeting, the original owner is required to give listed documents and material to the body corporate. The new Standard Module requires additional items be provided to the body corporate, including a copy of:

• a development approval if one was required;
• the scheme’s community management statement – or CMS;
• documents relating to any claim made against a policy of insurance taken out by the original owner for the body corporate;
• any fire and evacuation plan required under the Fire and Emergency Services Act 1990;
• any contracts or agreements for the supply of utility services to the body corporate;
• any documents relating to warranties for: buildings or improvements forming part of scheme land; common property plant and equipment; and any other body corporate asset;
• any proxy form under which the original owner is the proxy for an owner of a lot; and
• any document under which the original owner derives representative capacity for an owner of a lot.

The documents must be provided in hard copy and electronic form.

Group of same-issue motions

Under the expiring Standard Module, a motion with alternatives provides a way to combine original motions submitted by lot owners on the same issue into a single motion. However, the rules for deciding outcomes lack clarity, for example, what happens where the alternatives require different resolution types, such as an ordinary or special resolution. Voters are also restricted to a choice of only one alternative.

Under the new Standard Module, if 2 or more motions are submitted, proposing different ways of dealing with the same issue the committee must list the original motions together on the agenda of the general meeting as a ‘group of same issue motions’, instead of a motion with alternatives.

• A voter can now cast a vote for or against one or more of the original motions. The votes are the counted to see if each original motion passes or fails
• An original motion that receives enough votes to pass then becomes a qualifying motion.
• If there is only 1 qualifying motion, that motion is the decision of the body corporate.
• If there is more than 1 qualifying motion the motion that has the highest number of votes cast in favour of the motion is the decision of the body corporate.
• If there are 2 or more qualifying motions that have equal number of votes cast in favour of them, then the motion with the fewest votes against the motion is the decision of the body corporate.
• If it still cannot be decided, then the outcome is decided by chance

Note that the chairperson cannot rule an original motion as part of a group of same issue motions out of order simply if another original motion is out of order. The other motions may still be considered. Also, an original motion that is an original motion in a group of same issue motions cannot be amended at the meeting.

We will be dedicating articles and another webinar on this topic so don’t worry too much if you are not sure of the process after this video.

Explanatory schedule

In the expiring Standard Module, an explanatory schedule must be sent with the agenda for a general meeting that includes a motion with alternatives. In the new Standard Module this applies for a group of same-issue motions. The explanatory schedule must advise voters how a group of same-issue motions will be dealt with. The explanatory schedule must include specified items that are provided for in the regulation.

We will go through this in greater detail in a future webinar.

Quorum

Under the expiring Standard Module, a quorum is 25% of voters returning a vote and generally 2 people personally present depending on the size of the scheme. Adjudicator’s orders are often relied upon for more detail on how to calculate a quorum.

The new Standard Module clarifies how the number of voters for a meeting is calculated.  Bodies corporate are now able to decide by special resolution to change the number of voters required to be present at a meeting to achieve a quorum to no less than 10% and not more than 25 % of voters, and to reduce the number of voters that must be personally present to only one person.

Bodies corporate are also able to decide that a person is personally present if they can cast a vote electronically at the meeting (for example, by teleconference).

This will hopefully reduce the number of adjourned meetings which is an unnecessary expense to the body corporate.

Some schemes have a lot of investor owners or owners who live interstate or overseas and are consistently struggling to achieve a quorum.

Power of Attorney

Power of Attorney farming as it is often called seems to be becoming an increasing issue for many lot owners.

The new Standard Module restricts inappropriate use of powers of attorney. This is to prevent concentration of voting power that may impact negatively on a scheme’s collective decision making, by strictly limiting circumstances in which a person can act as a representative of a lot owner under a power of attorney, for more than one lot.

Now, a person may only vote as a representative for more than 1 lot if the owner of each lot is the same person or if for each lot, the representative is a family member of the lot owner. Or the representative is a power or attorney given by a buyer under section 211 or 219 of the Act which is related to purchasing a lot.

Electronic voting

The expiring Standard Module allows the body corporate to approve electronic voting.

Under the new Standard Module more clarification has been provided. The regulation sets out that a system for receiving electronic votes can allow voters to cast electronic votes ‘live’ at the meeting. Provisions are included to allow voters to withdraw secret ballot votes made electronically. The regulation also includes additional minimum requirements for electronic voting systems.

For example, the system for receiving the votes must reject votes that are cast by a person who is not eligible to vote on the motion or who has already cast a vote on the motion, and must not allow a person other than the secretary to receive the votes.

To vote electronically the person must follow the instructions given by the secretary so that the vote is received before the general meeting or if the voting system allows, at the general meeting.

A voter can withdraw their electronic vote on a motion at any time before the result is declared. A person’s proxy cannot withdraw an owner’s electronic vote.

Disclosure of benefits

The new Standard Module clarifies and improves requirements for a body corporate manager or caretaking service contractor to disclose any commission, payment or other benefit they are entitled to receive that is associated with a contract the body corporate is considering entering into-including insurance.

In the new Standard Module, specifically, where a benefit is monetary, the disclosure must now include the amount of the benefit.

Under the transitional provisions in chapter 10 of the new Standard Module, disclosure requirements of the expiring Standard Module continue to apply to disclosures about commissions or benefits associated with a contract where a disclosure notice has been provided prior to commencement of the new Module, but the body corporate had not yet made a decision;

Insurance

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.

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.

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.

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.

Topics relating to administrative matters

The following topics relate to administrative matters for the body corporate. Address for service, sending notices, serving documents to the secretary, owners providing information for the body corporate roll and the body corporate updating the roll.

Address for service

Under the new Standard Module, an owner can now nominate an email address to be a part of their address for service for the body corporate roll.

This assists streamlining and modernising communication in bodies corporate by enabling documents, notices or other information that may be given under the BC Act or regulations to be emailed to a lot owner if the lot owner has provided an email address as part of their address for service.

If an owner gives their email address to the body corporate as a part of their address for service it is taken that they have consented to receive all documents from the body corporate by email.

Under the transitional provisions provided in chapter 10 of the new Standard Module, where an owner has given an email address to the body corporate for the purpose of receiving a document or information before commencement of the new module the email address is taken to be the person’s email address as part of an address for service.

Sending notices and documents

Under the expiring Standard Module, some documents are specified to be sent to an owner’s address for service, which is a postal address, and for other documents there is no specific provision on how they are supplied.

The new Standard Module allows a body corporate and the owner of a lot to enter into an agreement about how particular documents or information may be given to the owner (for example, through a file-sharing service).

Serving documents to the secretary

Under the expiring and new Standard Module some documents are required to be served to the secretary, for example, voting papers or nomination forms.

Under the new Standard Module, the requirement of an owner to give a document or information to the secretary is satisfied if it is given to a body corporate manager who is authorised by the body corporate to exercise some or all of the powers of the secretary.

Owners providing information for the body corporate roll

Usually owners outsource updating the information they lawfully have to provide to the body corporate to conveyancers, solicitors and their real estate agents. If details for a tenancy for example are not updated quickly it reduces the body corporates capacity to enforce the by-laws. Not updating information can also cause issues relating to levy notices and meeting notices. The repercussions of this can be quite large, especially with levy notices.

Under the new Standard Module, the period to notify the body corporate of any change of details has been reduced from 2 months to 1 month. This allows the body corporate to run effectively and ensure owners and occupiers are contactable and are served all the notices required under the legislation.

Updating the body corporate roll

Under the expiring Standard Module, there is nothing that compels the body corporate to update the body corporate roll when they receive a request to update information.

Under the new Standard Module, the body corporate must update the body corporate roll within 14 days of receiving the information from the lot owner.

It could be said that updates to the roll are more likely to be actioned and less likely to be forgotten about if there is a timeframe determining when it must be done.

Note that transitional provisions in Chapter 10 of the new Standard module provide that if a notice has been given to the body corporate prior to the commencement of the new Module, the new requirement to update within 1 month does not apply, however, the body corporate must as far as practicable and as soon as practicable comply with the requirement.

Building defect report

To encourage the early discovery of building defects in community titles schemes, the new Standard Module sets out that a body corporate is required to consider a motion proposing the engagement of an appropriately qualified person to prepare a defect assessment report. This applies to property the body corporate must insure for full replacement value. The motion must be included on the agenda of the scheme’s second annual general meeting. An example of a property a body corporate must insure is a property under a building format plan, or properties under a standard format plan that share a common wall.

Under the new module, new provisions also allow a body corporate for a community titles scheme that contains standard format plan lots with stand-alone buildings to establish a voluntary defect assessment plan for the benefit of the owners of the relevant lots.

Under the transitional provisions provided for in Chapter 10 of the new Standard Module the new requirement for a defect assessment motion applies to schemes that have not called the relevant annual general meeting prior to commencement of the new Module. If a scheme has already called the relevant meeting prior to commencement of the new module and the meeting has not yet been held, the requirement for a defect assessment report does not apply.

Contact us

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.