FOREARMING THE COMMITTEE

There are many rules and restraints on a committee’s ability to spend body corporate funds that can make it difficult to promptly deal with issues that arise. Compliance with these rules and restraints is a common feature of disputes that are made against a body corporate and its committee, or in the way the committee is responding to a dispute.

The default committee spending limit of $200 per lot has not changed since 2008, but the value of money has. In a 25-lot scheme, a committee might find that a $5,000 limit won’t get it very far into dealing with a difficult issue that has arisen.

A body corporate can give its committee flexibility by changing some of those rules and restraints. This article will explore how to create that flexibility so the body corporate forearms its committee to promptly act in its best interests.

Background

About six years ago, I wrote an article published on Smart Strata answering the question: if it’s not budgeted for, can the committee spend on it? That question arises out of the BCCM regulation modules providing that:

“If a liability arises for which no, or inadequate provision, is made in the budget, the body corporate must … fix a special contribution.”[1]

That provision is often referred to in support of an argument that if there isn’t a specific line item for proposed expenditure in the budget, the committee can’t authorise the project until a general meeting is called and owners authorise a ‘special levy’.

But I don’t think that is correct. Provision made in the budget means funds raised and available for use. If there is enough money available from what has been raised, then there is adequate provision. If there isn’t enough money available, then a special contribution is needed to ensure the body corporate does not go insolvent.

That article was recently referenced by an applicant before the Commissioner’s Office in their AI-generated submissions arguing that “except for essential and day-to-day matters, the committee has no power or it is inappropriate for it to make decisions to spend body corporate funds on unbudgeted items between the end of the scheme’s financial year and the AGM”.[2]

The adjudicator noted that the article didn’t support that argument. Ironically, my last article published on Smart Strata warned:

“Those who use AI-generated content when corresponding with other stakeholders in a strata community, or making submissions to the Commissioner’s Office, should appreciate that they will quickly lose credibility and the trust and confidence of others if they don’t use it carefully and diligently.”

The adjudicator in that matter gave the preliminary view that provided the committee otherwise complies with the limits on committee decision making, it is permitted to make decisions about spending on unbudgeted items.[3]

Limits On Committee Decision Making

A decision of the committee is a decision of the body corporate, unless it is a decision on a restricted issue. Relevantly, a decision on a restricted issue involves:

• fixing or changing a contribution to be levied;
• changing rights, privileges or obligations of lot owners;
• making a decision on an issue that has been reserved for a decision at a general meeting;
• making a decision that the legislation says can only be made by resolution in general meeting;
• starting certain legal proceedings; and
• paying remuneration, allowances or expenses to a committee member that haven’t been specifically authorised by ordinary resolution.

Most of the BCCM regulation modules[4] provide that the committee can only give effect to a proposal involving spending above the relevant limit for committee spending if:

• the spending is specifically authorised by ordinary resolution;
• all lot owners have given written consent;
• an adjudicator authorises the spending to meet an emergency;
• the spending is necessary to comply with a legal / statutory order or notice; or
• the committee is putting in place or renewing a relevant insurance policy and the decision to do so has not been reserved for a general meeting.

The relevant limit for committee spending is:

• the amount last set as that limit by ordinary resolution; or
• if no amount has been set, whatever $200 multiplied by the number of lots in the scheme is.

The committee spending limit is the ceiling to what the committee can spend on a project. There are other rules and restraints that can apply to spending that falls below that ceiling, such as:

• a series of proposals can form a single project;
• at least two quotations will be needed if it exceeds the relevant limit for major spending[5]; and
  the spending must be made from the correct fund.
• the spending must be made from the correct fund.

This legislation is intended to balance consumer protection for lot owners with giving bodies corporate some flexibility. The significant number of rules and restraints seem inflexible. However, flexibility can be achieved with some forward planning.

Change The Spending Limits

There is usually a budget committee meeting held before the AGM. This provides an opportunity to review what the limits for committee and major spending are and decide whether to submit a motion to the AGM to change those limits.

In 2008, the default committee spending limit was $200 per lot and the default major spending limit was $10,000. The value of money has changed significantly over the last 18 years.

Even if those limits have been changed in the past, consider how long ago that was and whether a review is warranted.

The committee may need more than $200 per lot to promptly react to a situation that has arisen. The alternative is to call a general meeting, which can be a 4 – 6 week exercise in practice.

A spending limit can be changed for a specific project. For example, a body corporate could set higher spending limits for:

• carrying out maintenance or repair works; or
• responding to adjudication applications or other legal proceedings (mindful of the relatively short timeframes given for responses and defences).

Before an AGM is called, a committee might know that money will have to be spent above the committee spending limit on a particular project later in the financial year. If it doesn’t have two quotations at that stage but has some idea of the budget that will be required, it could avoid the need to call an EGM by proposing a motion to lift the committee spending limit for that project.

Make Provision

An administrative fund budget must contain estimates for the financial year of necessary and reasonable spending to cover:

• the cost of maintaining common property and body corporate assets;
• the cost of insurance; and
• other expenditure of a recurrent nature.

A sinking fund budget must allow for raising a reasonable capital amount to provide for necessary and reasonable spending for the financial year and to reserve an appropriate and proportional share of amounts necessary to be accumulated to meet anticipated major expenditure for at least 9 years thereafter. This is for:

• anticipated expenditure of a capital or non-recurrent nature;
• the periodic replacement of items of a major capital nature; and
• other expenditure that should reasonably be met from capital.

Very few committees are minded to ‘over-budget’ for anticipated expenses. Most are anxious at the prospect of large increases in levies and the criticism that might draw from lot owners.

For many years the conventional view has been that the sinking fund cannot be applied towards legal expenditure. This has followed an adjudicator’s view given in 2010 that:

“…expenditure on legal fees should be made from the administrative fund rather than the sinking fund… It is not appropriate to use funds earmarked for future building maintenance to pay for legal representation.”[6]

There are few strata communities for whom litigation is considered ‘recurrent’. The significant majority of bodies corporate could not reasonably anticipate that over the next financial year they might have to respond to an adjudication application, a management rights dispute might erupt, or they need to seek legal advice on a significant issue that arises. But such issues may arise at some point over the next 10 years.

The sinking fund may be applied towards:

• spending of a capital or non-recurrent nature; and
• other spending that should reasonably be met from capital.

Recently, an adjudicator recognised that legal expenditure can be non-recurrent:

“It may be usual for legal expenses to be paid from the administrative fund. But if legal expenditure is non-recurrent, it is not expressly contrary to the legislation for it to be paid from the sinking fund.”[7]

The simplest approach would be to provision for the prospect of non-recurring legal expenditure in the sinking fund budget. This will give the committee the means to better protect the body corporate’s interests if a problem arises.

Article contributed by Jason Carlson, Practice Leader at Chambers Russell Lawyers.

Jason Carlson will be guest speaking at our Sunshine Coast and Mackay Strata Finance Seminars on 01/10/2026 | 13/10/2026. Register now and meet Jason in person!

[1] For example, section 162(2) of the Body Corporate and Community Management (Standard Module) Regulation 2020 (Qld).

[2] Broadwater Tower [2026] QBCCMCmr 221 at [33].

[3] Broadwater Tower [2026] QBCCMCmr 221 at [37].

[4] The Commercial Module doesn’t all these restraints of this kind.

[5] Which is $10,000 or the amount last set by ordinary resolution.

[6] Shafston University Mansions [2010] QBCCMCmr 212.

[7] Lyra Villas [2025] QBCCMCmr 314 at [30].