HOW TO HAVE A BODY CORPORATE PARTY

A body corporate is a creature of statute. This means that the extent of a body corporate’s powers are determined and limited by the legislation creating it.

This is why:

1. a body corporate’s powers are only those specifically set out in the legislation; and
2. there is no basis for the age-old adage (that some committees seek to use to excuse their decision making) “the legislation doesn’t say the Body Corporate can’t do that”.

On this principle, it has been well established by adjudicators that, despite it being a good idea for the community, a party cannot be funded with body corporate funds. The same can be said for reimbursing committee members for Christmas gifting. We will cover off on that issue in a further article shortly.

The reason for this principle is because the expenditure does not fall within what a body corporate is authorised by the legislation to spend funds upon.

Relevantly, in:

1. an older decision of Kensington Gardens Retirement Village [2005] QBCCMCmr 269, the adjudicator provides:

• • Section 94 of the standard module provides what the administrative fund budget must provide for. Section 101 then provides what the administrative fund can be applied to; namely all spending of the body corporate which is not sinking fund expenditure.

• • I conclude that the cost of items associated with a christmas party could not be considered to be within the purposes for which administrative fund contributions are collected as set out in section 94. Whilst it might be argued that a christmas function does benefit the body corporate in a general sense by fostering or improving good relations between members, I conclude that it is not properly a body corporate expense. I suggest that such expenditure should be funded not by the body corporate but rather by individual owners or residents who choose to participate in such activities. In the circumstances, I intend to order that in future that body corporate funds not be used for such activities.

2. A slightly more recent decision of Pivotal Point Residential [2014] QBCCMCmr 370, showed that nothing changed where the adjudicator provides:

• • [24] To the extent motion 15 purports to authorise the respondent to utilise body corporate funds on expenses associated with Christmas functions, I conclude it is not a statutory function of the body corporate to do so. Accordingly, the purported Christmas party expenditure is not permitted. Motion 15 is therefore invalid.

• • [25] Preventing the use of body corporate funds for Christmas function expenditure does not prevent a Christmas party from occurring. As appropriately suggested within the opposing submissions, the associated expenses of future Christmas parties and other social functions should be funded by individual lot owners and occupiers electing to attend these functions.

Despite this longstanding position, the question of Christmas party expenditure (or gift giving) by a body corporate is (unsurprisingly) brought up around the same time each year.

However, it is clear that any parties (which can lawfully take place on the common property) must be funded without the use of the body corporate’s bank accounts. This can be as simple as a volunteer owner or occupier raising the funds themselves with or without committee endorsement to do so.

Alternative methods have been discussed in the decision of Thirty Four Riverwalk [2024] QBCCMCmr 29 where the adjudicator provided:

• • [7] At the scheme, residents can contribute recyclable cans and bottles to a designated area. A volunteer takes these donations to a containers for change’ station, where bottles are exchanged for money. The money is colloquially known as the ‘recycled bottle fund’ or ‘RBF’. The RBF is like a social club fund, used to fund Christmas parties for residents and delivering easter eggs to residents at easter time.

• • [8] The RBF was previously in the possession of the treasurer. It is now in the possession of another committee member. However, on the material submitted it, appears to be a voluntary arrangement executed by residents in their private capacity and not under the control of the body corporate or its committee. It is not connected to lot owner contributions and is not mandatory to contribute. The applicant does not dispute that the RBF is not under the body corporate’s control and agrees that the RBF is a ‘non-body corporate fund’.

It is important that committees are aware of the limitations of a body corporate’s powers and functions. If a proposal is put forward that does not fall within the ambit of what the legislation allows spending for, it does not matter that the legislation does not specifically outlaw the proposal.

Article Contributed by Todd Garsden, Partner at Mahoneys Lawyers and Advisors.