Tips for Body Corporate Committees

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RESORT NEWS TIPS SERIES

Tips for Body Corporate Committees

Bodies corporate: What you don’t know might hurt you By Trish Riley, Editor, Resort News

before pulling up the soapbox or seeing your lawyer.

Let’s face it – bodies corporate are typically boring, and more often than not, those living within a community title environment will tell you that they avoid being too involved.

So, what is a body corporate?

But this amorphous tier of government – and it is a form of government that collects levies or taxes for the building’s upkeep; they have elected representatives and they have by-laws that govern behaviour – wields a power, that like most governments, is either one of a benevolent and responsible nature or one that teeters on corruption and/ or downright dictatorship. Either way, as the concept of ‘knowledge is power’ keeps cropping up across this complex industry of strata and management rights, it’s better to have a solid understanding of what the rules actually are

The role of a body corporate in Queensland is to administer common property and body corporate assets for the benefit of all of the owners, and to undertake functions required under body corporate legislation.

of assets, improvements to common property by owners, engagements and authorisations. Bodies corporate make decisions about these and other things at general meetings and through the committee. So now there’s a committee as well?

And I’m sure you will be aware of this but just to be clear, community titles schemes allow you to privately own an area of land or part of a building, as well as share common property and facilities with other owners and occupiers.

Under the legislation, the body corporate is given powers to carry out its necessary duties including the maintenance, management and control of common property on behalf of owners. Bodies corporate make and enforce its own rules, called by-laws, which tell owners and other people who live in the scheme what they can and cannot do, and it decides the amounts to be paid by the owners to make sure the body corporate can operate.

A community titles scheme is made up of two or more lots, so it could be a duplex, residential unit block, townhouse complex, high rise accommodation building, shopping complex or business park. Queensland has more than 47,000 community titles schemes with a total of over 465,000 individual lots.

It also manages and controls body corporate assets, including insurance on behalf of owners, such as public risk insurance over the common property and building insurance, and keeps records for the body corporate, including minutes of meetings, roll of owners’ details, financial accounts, registers

A body corporate is a legal entity that is created when land is subdivided and registered under the Land Title Act 1994 to establish a community titles scheme. All of the owners in a community titles scheme are automatically members of the body corporate when they buy their lot.

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Usually, but not necessarily… for the purpose of this publication, the following information applies to schemes under the Standard Module and Accommodation Module. Where applicable, the committee is made up of lot owners or people who act for them, and they are elected at each annual general meeting. A committee must have at least three members but not more than seven, and if there are less than seven lots, the maximum is the same as the number of lots. And like the illusory layers of government, the committee is in charge of the administrative and day-to-day running of the body corporate, making decisions on behalf of the body corporate and putting the lawful decisions of the body corporate into place. RESORT NEWS - SEPTEMBER 2019


TIPS FOR BODY CORPORATE COMMITTEES

The committee can make decisions by calling a committee meeting or by voting outside a committee meeting. Committee members are representatives of all owners, not just themselves. For this reason, they must disqualify themselves from voting on any issue where they have a direct pecuniary financial interest, though the committee members may not be excluded from the meeting . Where a possible conflict concerns a non-voting committee member, voting members have the right to exclude the non-voting member of the committee from the meeting.

Committee members must be selfless in the way they go about their duties. They must take a long-term view of the body corporate to ensure the facilities management produces the most beneficial long-term impact on the community titles scheme. Generally, committee members do all these things without any remuneration for their time and talents or reimbursement of their expenses unless such a payment is approved by ordinary resolution at general meeting, and this resolution is subject to strict requirements. So, how does a committee work?

Generally, it’s up to the committee members themselves how they organise their affairs to ensure a smooth running of the body corporate. Some committees will have regular meetings to attend to regular matters of the body corporate and then special meetings when issues arise, while others may decide to only call meetings in special circumstances. There is no legal obligation about the number of meetings the committee must hold, however only meetings that are officially called and where minutes are submitted will be recognised under the Act.

There are exceptions to every rule, however, and if required a committee can make a decision via ‘postal poll’. This means the committee can conduct a postal vote, usually arranged by the secretary of the committee or a body corporate manager (if you have one). So, what do you do if the committee is dysfunctional or just doesn’t do anything? If the situation becomes intolerable and it cannot wait until the next annual general meeting, there are options for a resolution, including intervention and mediation with the help of the body corporate manager.

12 Tips for effective committee meetings Have you ever sat through committee meeting after committee meeting and felt like nothing gets achieved? Well follow these 12 tips and get results.

1

Get quotes and reports. If there is a job you want to see done arrange for any necessary quotes and/ or reports to be carried out.

2

Put it on the agenda. List everything you want dealt with at the meeting on the agenda. That way nothing will get forgotten.

3

Distribute information. Make sure all committee members have copies of the quotes and reports and any other relevant information at least a few days prior to the meeting.

4

Ask questions. If you have questions about anything on the agenda for the meeting investigate before the meeting. Have as much knowledge as you can to allow you to make an informed decision at the meeting.

5

Inspect. If there is an agenda item relating to an area of common property which you are not familiar with, go and inspect it prior to the meeting.

6

Set the rules. It’s vital that the chairperson set the rules for the meeting at the commencement of the meeting.

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If everyone knows what is acceptable then there will be no excuse during the meeting.

7

Keep to the point. Agenda items quite often require an amount of discussion but don’t let the discussion drag on or regurgitate the same points over and over. Let the important points be discussed then…

8

Make a decision. If you have read the reports and quotes, asked the questions and carried out inspections you should be able to make a decision. Don’t let an item be carried forward to meeting after meeting. Do it, delegate it or delete it.

9

Delegate. Decide who is going to be responsible for

the item and delegate it. There’s nothing worse than finding that there’s been no progress because noone took responsibility.

10 11

Deadline. Set a deadline so everyone

knows the expectations. Mark off the List. Make a TO DO list to be addressed before

the next meeting and once the item has been fully addressed get it off the agenda.

12

Be reasonable. Allow differing perspectives

to be aired and debated, ensuring respect for all involved is maintained. Source: SSKB

RESORT NEWS - SEPTEMBER 2019


TIPS FOR BODY CORPORATE COMMITTEES

There is also the option of an extraordinary general meeting (EGM) being called to deal with the situation or to terminate the powers of one or more of the committee members. It is here where a new committee would be voted on. A good way to think about it is that a committee is like the board of directors of a company. They are elected, have wide powers and, provided they act within the realms of the rules, they should be allowed to get on with the job and ensure the building is safe and in good repair. And just like a board of directors, if a committee is dysfunctional or dormant in its responsibilities then it’s invariably going to lead to problems for the body corporate. a committee position is needed) and declare the result of an election for a committee position.

The committee will usually comprise a chairperson, secretary and treasurer (known as the executive positions) and a person may hold all or any two executive positions. The chairperson must chair all general meetings and committee meetings they attend, and if the chairperson is not at a meeting, the voters who are there can choose another person to chair that meeting. When chairing a general meeting, the chairperson’s duties include ruling a motion out of order if it is unlawful or unenforceable, it conflicts with a by-law or the substance of the motion was not included in the agenda for the meeting. He/she will also declare the results of votes on motions at the meeting confirming that each ballot paper is the vote of a person who has the right to vote in the election (where a ballot for

If the chairperson rules a motion out of order they must give reasons, and give the meeting the chance to overturn their decision. Given the context that a body corporate and committee is a form of government with a decision-making system, a committee and executive positions of chairperson, secretary and treasurer, how much power rests in the hands of the committee/chairperson? According to Short Punch & Greatorix, the answer is one that may disappoint many chairpersons – the chairperson does not have more authority than anyone else on the committee. There is no extra power given to a chairperson other than to chair the general committee meetings with the right to rule a motion out of

order (only if there is reasonable advice for such a ruling) and even then, the members present at the meeting may overrule the chairperson by ordinary resolution moved from the floor. Unfortunately, body corporate managers, lot owners, committee members and onsite building managers often are not aware that the chairperson does not have any extra powers or voting ability, perhaps because they assume from the media that being given such a title makes a person a decision maker and controller of the government of the building. Definitely that is not so. The chairperson’s power is very limited because of the Body Corporate and Community Management Act. Returning to the role and power held by the committee, again it is very limited. In effect, the committee cannot make

any major decision about the building, its common property, lots and occupiers. Such items are reserved for decisions at a general meeting, on which all members can have a vote and for which there are various types of resolutions that must be decided i.e. ordinary resolution, special resolution or resolution without dissent. Once a general meeting has decided an item then the committee may act to carry out that decision. The Act and Module restrict committee decisions and legislation points out that a committee cannot make decisions about setting or changing body corporate levies, changing the rights, privileges, or obligations of lot owners, decisions that have to be made by ordinary resolution, special resolution, resolution without dissent or majority resolution or starting a legal proceeding, unless it is:

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TIPS FOR BODY CORPORATE COMMITTEES

To recover a liquidated debt against the owner of the lot

Relating to a proceeding where the body corporate is already a party

For an offence under a by-law contravention

A dispute resolution application lodged with the commissioner

The committee is also restricted from paying money to committee members unless it is less than $50.00 incurred by a committee member attending a committee meeting and not more than $300.00 reimbursed to a committee member in a 12-month period. There is of course also a committee spending limit applicable to the committee, affected by the number of lots in the scheme and the module applying. I mention all of this so in future people in community titles will have the knowledge and confidence to make certain that the limitations on power may be better understood, so that people who might start a power play may be bought back to the reality of these limitations. Knowing these limitations may also encourage many other people to step up to playing a role as a committee member or a chairperson, knowing that they do not have to be extraordinary leaders or indulge in exercising a control over others. Now, to muddy the waters just a little more, a body corporate may also engage a body corporate manager to supply administrative services to the body corporate, and despite increasing calls to the contrary, body corporate managers are currently not required to be licensed in Queensland. There are no formal training requirements or qualifications needed to be a body corporate manager. So, if there is no legal obligation for a body corporate to have a manager, then why would they? A body corporate may choose to engage a manager when there is a committee—to perform some or all of the powers of the executive members of the committee to assist the committee, or if there is no committee—

to carry out functions in place of the committee. If a body corporate has chosen a committee, the body corporate manager is engaged to help the committee. The body corporate manager can only do what the body corporate asks them to and their duties are contained in the written engagement entered into with the body corporate. A body corporate manager automatically becomes a nonvoting member of the body corporate committee. The voting members of the committee can ask a manager not to attend a committee meeting. The manager is not responsible for the maintenance of the common property, but may organise work if the committee asks them to. They are however, authorised to perform the duties of secretary and treasurer including calling committee and general meetings, sending out levy notices and by-law contravention notices and sending out the minutes of meetings and managing the body corporate’s money. In a body corporate with no committee, a body corporate manager is authorised to carry out all the functions of a committee and to exercise all committee powers. The body corporate manager makes the decisions that a committee would usually make. A body corporate manager operating in a body corporate

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with or without a committee can be authorised to look after the body corporate’s administrative and sinking funds, and therefore must comply with the sections of the regulations relating to the administrative and sinking funds and prepare a reconciliation statement, within 21 days after the last day of each month for all accounts including the financial institution statement showing amounts in and out of the account and invoices and other documents showing payments in and out of the account during the month. The body corporate manager must comply with the code of conduct for body corporate managers and resident managers or caretaking service contractors when performing under their engagement. Under the code of conduct, a body corporate manager must have a good knowledge and understanding of the Body Corporate and Community Management Act 1997 and the code that applies to their functions, act honestly, fairly and professionally in doing their job and in the best interests of the body corporate (if lawful to do so), not be fraudulent or misleading, not unfairly influence the outcome of a committee election and keep records as required by the Act. It has to be said, that in many circumstances, having an objective, external body corporate manager that has a keen understanding of the Act and ensuing regulations

takes the stress away from the committee. They also assist with guiding decision making so that committees can avoid making the incorrect decision. If however, a body corporate manager is failing to perform duties, comply with the Act or code of conduct, then their engagement can be ended. This decision can be made by the committee of the body corporate and would be actioned via a remedial action notice. Key findings contained within the Australian National Strata Data Report prepared by the University of NSW City Futures Research Centre indicate that approximately 2.2 million people, or nine percent of the population live in apartments nationally. In Queensland the figures show it to be seven percent, and climbing. Despite the size of the sector however, researchers also found that there is a low number of body corporate managers – suggesting that either there are a lot of schemes that don’t hire a body corporate manager or that there are a lot of managers who have incredibly high workloads. Either way, there is no getting away from the fact that this complex industry requires a level head and steady hand when it comes to balancing the critical aspect of property management governance, and that actions taken now may well dictate how future legislation is made. Source: Qld Government BCCM, Short Punch & Greatorix, SCA RESORT NEWS - SEPTEMBER 2019


TIPS FOR BODY CORPORATE COMMITTEES

Lift modernisations made easy By Bryan Fulcher, Principal, Innovative Lift Consulting

Subject to usage levels and the extent of effective preventative maintenance having been provided, lifts that are 20 or more years old are due for a major modernisation. Equipment of this age will typically experience high breakdown rates, trapped passenger incidents and be generally unreliable. The lift(s) will also exhibit signs such as outdated and severely worn, damaged and corroded interiors as well as internal and external doors and frames It can be challenging to find technicians trained in maintaining equipment of this age and the technology and components become obsolete and difficult, if not impossible, to source. Many older lifts may not be compliant with current codes and regulations, including where applicable, suitable disabled access. Issues are not just with old equipment but with poor performance, long waits, jerky/ rough and noisy ride, safety issues including inaccurate levelling, doors striking passengers and/ or without automatic closers, excessive gaps in door tracks, slippery surfaces are also plaguing some newer equipment. The lift may also have ineffective or inoperable call buttons, indicators, communications and signalling devices, poor normal and emergency lift car lighting levels. Perhaps the building is undergoing some renovations and the look and operation of the lift needs to be matched to the improved building.

The benefits of lift modernisation During the lift modernisation process, the lifts will see a dramatic reduction in power consumption and operating costs, in many cases a reduction of 60 percent or more. Immediate and on-going improvements in lift performance and reliability levels leading to fewer breakdowns and incidence of trapped passengers. Another benefit is the improved safety and performance to be expected after

modernisation and, if upgraded for full compliance, reducing accident and litigation risks. From the outset, new performance-based lift maintenance contracts should be employed, featuring significant cost savings, typically savings of 30 percent or more are regularly achieved. Modernised lifts and their components are more easily maintained for the long-term without limited skill-bases or obsolescence issues and eliminate the need for further major expense on lifts for the long-term (a further period of up to 20 years).

Planning for a lift modernisation Before undertaking a lift modernisation, the current lift maintenance agreements or contracts should be reviewed, in particular the balance of remaining contract terms, and advance termination notices and/ or special requirements in the event of lift modernisation. This is the perfect time to engage an independent specialist consultant to undertake an initial detailed audit of the lifts. This will establish condition, compliance, any current maintenance and/ or urgent repair issues, cost estimates for any/all recommended upgrades or a full modernisation together with the recommended optimum timing of such works. Ensure funds are either available now or in-line with the modernisation program or can be accumulated through sinking fund and/or special levies within the necessary time.

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Include a new maintenance contract in conjunction with the lift modernisation works, ideally a custom performance-based contract with terms and conditions in place for optimum protection of the owners and body corporate An independent specialist consultant can design, document, tender, review, award contracts and project manage the entire lift modernisation process including the new lift maintenance contract.

Simple CPI-based price adjustments or, in the event of shorter terms in stable conditions, fixed price contracts over the entire term

Payments monthly in arrears, and only after receipt of monthly reports confirming the work has been carried out to the acceptable levels as set out in the contract

Ability to terminate the contract forthwith in the event of non-performance or if major lift upgrade/ modernisation works are to be undertaken

Ability to extend initial contract periods at mutually agreeable rates, e.g. original rates plus CPI adjustment

Typical benefits of a professional performance based lift maintenance contract will include: •

Improved reliability levels are established in terms of maximum acceptable call rates, per lift, per month and annually Maximum guaranteed response times to calls (categorised in terms of required responses) are established and monitored

Regular (e.g. monthly) reports are generated confirming that maintenance for each period has been performed, summarising all calls for the period, any major repairs carried out in the period or planned for up-coming periods

Penalty clauses established and strictly applied in the event any of the above is not satisfied

Assistance with regular independent maintenance audits and performance measurements

Professionally designed performance-based lift maintenance contracts will ensure the equipment is maintained to established and measurable performance levels and provide regular preventative type maintenance – often solving problems before they occur. The minimum frequencies and extent of maintenance visits will be established and monitoring mechanisms put in place. Engaging an independent specialist consultant to assist in the preparation of, and project manage, the entire lift modernisation process including the new lift maintenance contract will ensure the best outcome for the owners and body corporate. RESORT NEWS - SEPTEMBER 2019


TIPS FOR BODY CORPORATE COMMITTEES

How to choose the right body corporate manager Selecting a body corporate manager from the many available can be a difficult decision for committee members to agree on, particularly when balancing value for money against service expectations. When comparing the different companies, variations to services inclusions, service guarantees, industry reputation and value for money are key considerations. When seeking to choose the right manager, you want to make sure you know upfront what services you will get, who will be the assigned manager including their experience and that there are no hidden fees for services that ought to be included as standard. Industry representation, ideally as active members of associations such as Strata

Grant Mifsud, Archers

Community Australia (QLD), which represent more than 80 percent of the Queensland strata titles sector and use their standard industry agreement only available to members, is obviously preferable and selecting a body corporate manager that is eligible to use this standard agreement is a recommended starting point for comparison. You should also be wary of marketing tactics that potentially

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advertise a “fixed or capped” fee for agreed secretarial and disbursement services, that may initially present as good value. The problem is, there are usually significant additional services required that always come with additional service fees. Therefore, the comparison should be between the actual costs of the incumbent management company as listed in the financial statements (that may not be contracted to provide a fixed fee) against the advertised “fixed or capped” costs, plus anticipated additional service fees found in the agreement schedule of services. You will then be able to truly compare “apples with apples”. If the true comparison of service inclusions is not completed thoroughly and instead the lowest advertised price is accepted (which we know can be a big influence at an AGM), it’s probable that the committee

will discover there are indeed many extra fees and charges that were not anticipated. Ensure that the agreement provided outlines agreed and additional services very clearly for absolute transparency. Where possible seek the flexibility of both fixed or at cost service fees, including recommendation of options to select, so that you get the best value for your current body corporate circumstances. Regrettably, there is also the strategy of the incumbent management company slashing costs once a competitor quote is submitted by the committee to present the lowest upfront fee for the AGM notice. A committee may then consider staying with the company based on costs alone, rather than considering: ‘If you were already getting bad service and will now pay less, do you really think that you will be getting any better service?’

RESORT NEWS - SEPTEMBER 2019


TIPS FOR BODY CORPORATE COMMITTEES The bottom line is, if the service is good and the contract in place has only increased in line with commercial rates, then why consider changing at all? If the service is bad, then absolutely consider changing as it rarely gets better. An essential part of the selection process should include, conducting interviews with the manager you will be assigned and make comparisons based on all the factors that made you consider seeking alternative options in the first place. Once you have decided who your preferred manager option is, let the proposed new manager guide you through the change process. This can vary depending on the stage of the current agreement and attitude of the incumbent management company, which should be professional at all times. Knowing that your body corporate manager is available to committee members at any time will always provide piece of mind. They should also be able to speak plainly and be able to relate some of the complex regulatory requirements or financial details to committees in a way that is easily understood.

One of the key administrative tasks is the provision of advice and guidance to bodies corporate, and it is important to align yourselves with an organisation that has a thorough understanding of the Acts, regulations, Australian standards and Codes of Practice imposing duties on managers and committees, and that they have proven experience within the sector. Fundamentally, the body corporate manager should be actively engaged in helping their clients manage and maintain their properties. They should be across everything including compliance regulations and that means peace of mind irrespective of whether you’re a committee member, resident manager or property owner. Ideally, a broad range of management services and strict quality assurance guidelines to ensure that everything done - whether it’s administrative, secretarial or financial – should be designed to ensure that clients have everything they need to manage their body corporate.

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We are a safety and quality-controlled company complying with AS/NZ 4801:2001 and AS/NZ ISO 9001:2008 No matter the industry you can rest assured RNL Constructions has the experience and knowledge to meet your every property maintenance requirement. For over 12 years Business across Brisbane, Gold Coast, Ipswich and Sunshine coast have intrusted RNL Constructions with their property modification, maintenance and property presentation needs.

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TIPS FOR BODY CORPORATE COMMITTEES

What to consider before reviewing your

Lifts & Maintenance Agreements Lifts are a specialised field and Lift Maintenance Agreements are not only complicated legal contracts, in regards to the financial side prices usually escalate by CPI or a nominated percentage and a three to five years contract is often above market value. Investing in a Minc elevator consultant will: 1.

Reduce your lift service cost.

2.

Ensure better terms and conditions for your lift maintenance contract. Minc Elevator Consulting (MEC) established their own performance based lift maintenance contract with strict Key Performance Indicators (KPIs) and a requirement for annual

Key Points to consider in regards to your Lift Maintenance Company

3.

Do not accept the cost for any repairs which a lift company states that is not in the contract

Insist your customers get documented evidence of all attendance onsite

Do not sign a Lift Company Contract that has Lockout Software or without amendments that suit your needs

Make sure that you get regular audits of the lift equipment and service

Do not believe that the only company that can do the work is the company with the maintenance contract

Ensure that at least 6 months before a contract finishes that you get a full audit inspection performed

Do not pay a maintenance bill in advance or if the maintenance has not been done

If a repair or recertification can wait until normal trading hours wait until then

Always call MEC if you have any issues, questions or doubts about your clients lifts or escalator service audits. These audits have proven to be essential to establish not only as to how well your lifts are maintained but also reveal

It is worthwhile to hire Minc Elevator Consulting, we have saved customers up to 20% on the Lift Maintenance Agreement price, recouped the customer money when the KPIs were not fulfilled by the lift service provider, recouped the customer money for incorrect chargeable calls Invoices, which is surprisingly widespread, we also assisted in delivering a more reliable lift service. 4.

the overall longevity of your lifts so that the Body Corporate Committee can make informed decisions for the future of the lifts.

Follow up on the performance based KPIs and ensure that financial penalties are recouped.

An important point to consider: your lift services agreement usually has a 90 days termination clause which automatically rolls over the contract if the lift company is not given notice.

For more information, please call Joe Olejnik on 1300 88 6462 or visit our website, www.mincelevatorconsulting.com.au

Why a Minc Elevator Consultant is the right investment

when the lift maintenance agreement renewal date looms... The Minc Elevator Consulting Lift Maintenance Agreement contains many innovations, including strict Key Performance Indicators (KPI). With over 90 years experience in the lift industry, ranging from design, installation, repair, servicing to overseeing the commissioning of lifts and moving walkways in Australia and overseas, our consultants are experts at what they do. Through Minc Elevators’ partnership with Minc Services we are Cm3 and Quality accredited. Minc Elevator Consulting Services also include: • Performance / Compliance Audits • Designs / Specifications • Special Services

• •

Portfolio Management Project Management

For your Maintenance Agreement we offer: • Performance / Compliance Audits • Contract Tender and Negotiation

• •

Monitor KPI Fulfilment Recover Financial Penalties

1300 88 6462 www.mincelevatorconsulting.com.au © Copyright 2019 Resort Publishing • Phone 07 5440 5322

RESORT NEWS - SEPTEMBER 2019


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