Committee membership is a key topic of many of the enquiries we receive in the Body Corporate and Community Management (BCCM) office. From 1 March 2021, several changes – some significant, some smaller – are being made to the Body Corporate and Community Management Standard Module (or “SM”) regulations relating to committee membership. Aside from outlining the differences this will mean for committees, this article seeks to highlight the rationale for the changes and potential benefits.
Co-owners and family members – section 11 SM
The current regulations follow the general principle that usually there can only be one committee membership per lot. However, as the current regulations also permit an owner to nominate a family member or a person exercising the owner’s power of attorney for the committee, the current regulations regarding committee membership have often raised queries. The most common question has been – if the regulations prevent co-owners who own only one lot from being on the committee at the same time, why are both husband and wife joint owners on our committee?
For some who considered that an owner was using the ability to nominate a family member or power of attorney strategically to affect committee outcomes, this has been a contentious issue and even viewed as a “loophole” in the current regulations. The new provisions seek to close this “loophole” by specifying that a lot owner cannot be a voting committee member at the same time as a member of their family, a person acting under the authority of a power of attorney given by the owner, or a co-owner, unless they are the owners of more than one lot.
This change will mainly be relevant where there is ownership of only one lot. Where more than one lot is owned or co-owned, the position would be largely the same as it was previously. For example, if co-owners Bill and Rachel own two lots between them, it would be possible for Bill to be a committee member based on ownership of the first lot and for Rachel to be on the committee at the same time based on ownership of the second lot. Likewise, if an individual owns two lots, it would be possible for that individual to be on the committee based on ownership of the first lot, while a member of their family or a person acting under a power of attorney given by the individual is a committee member based on the individual’s ownership of the second lot.
As is the position under the current regulations, co-owners can also still be on the committee at the same time – even where they only own one lot – if it is necessary to bring the number of committee members to a minimum of three.
Three owners or fewer (minor committees) – section 13 SM
The current regulations deem a procedure for choosing the committee where all lots are in identical ownership, or there are two owners for all lots, which avoided the need to choose the committee at the annual general meeting.
From 1 March, this procedure will extend to an additional scenario – three or more lots with three different owners. Instead of choosing a committee at an annual general meeting, three owners will be able to decide between themselves which of the executive positions they each will hold. In the event of a disagreement, the three owners will hold the executive positions jointly.
This makes it easier for a body corporate with three owners, as it avoids the possibility of conflict when choosing which owner will hold which executive position.
A committee formed under this section with three or fewer owners will be called a “minor committee”.
Currently, electronic voting is not an option for committee elections. From 1 March 2021, if the body corporate passes an ordinary resolution, voters will be able to vote electronically to elect committee members. This option will only be possible if the body corporate can implement an electronic system that rejects the vote of a person who is not eligible to vote or who has already cast their vote in the election. The system must also ensure that only the secretary is in receipt of the electronic votes. For a secret ballot, there is the further requirement that the system cannot disclose the identity of the voter.
As well as increasing flexibility, the ability to cast votes electronically for committee elections is a move towards modernising body corporate regulations so they better reflect advances in technology. The regulations will cater for commonly used devices when casting votes (namely computers, smartphones or tablet computers).
Maximum number – Section 38 SM
There has been some doubt on the part of both residents and body corporate managers about when nominations for committee membership must be invited from the floor of annual general meeting Although a definition of “required number” was provided in the current regulations, the wording of this requirement, and use of a range for the required number, made it unclear whether a number of nominations must be called for in order to bring the number of voting committee members to a minimum of three, or to a minimum number of seven (or the number of lots if there are fewer than seven lots).
The new provisions which commence on 1 March 2021 seek to clarify this by removing the term “required number” entirely. The relevant section when it commences will provide that the person chairing the meeting must invite nominations from the floor if the number of committee members is fewer than the maximum number, to attempt to bring the total committee members to the maximum number. The dictionary in the Standard Module will provide a clear definition of the term “maximum number”. The rationale for this change is to encourage the greatest number of owners to serve on the committee. Arguably, greater owner representation on the committee promotes a more robust committee with a healthy diversity of opinion.
Engaging a body corporate manager in place of the committee – section 74 SM
A body corporate manager can be engaged to carry out the functions of a committee and its executive members where, in specified circumstances, the committee for the body corporate does not have sufficient members. The motion to engage a body corporate manager in place of a committee (often referred to as a Chapter 3 Part 5 engagement) under the expiring provisions, needs to be a secret ballot. The new provisions that come into effect on 1 March 2021 will allow the body corporate to pass a motion by ordinary resolution to conduct an open ballot to decide this type of engagement. This change is aimed at reducing the body corporate costs associated with secret ballots and decreasing procedural burden on community titles schemes.
Benefits from a caretaking service contractor or service contractor – section 79 SM
The new regulations will introduce clear restrictions on the benefits that a committee member may receive from a caretaking service contractor from 1 March 2021. While the current regulation already deems an associate of a service contractor as ineligible to be a voting committee member, and prevents committee members from voting at the committee level where they have a direct or indirect interest in the issue being considered, the new regulations will provide further safeguards. In particular, section 79 of the Standard Module will preserve the impartiality of voting committee members in certain circumstances and prevent them from giving preferential consideration to a contractor. Also, as a caretaking service contractor is automatically a non-voting committee member, this provision may assist in limiting their influence on committee voting.
The new regulations will specify that a committee member is only able to receive a direct or indirect benefit if:
· from a caretaking service contractor, it is the supply of, or payment for, a letting agent business service conducted by the contractor; or
· from a service contractor, it is the supply of, or payment for, a service the body corporate has engaged the contractor to provide, or a service, such as lawn mowing or other maintenance, that an owner of a lot has engaged the contractor to provide at market price; or
· the body corporate has authorised the committee member to receive the benefit by ordinary resolution.
Principal schemes – maximum committee size of twelve
The Body Corporate and Community Management Act 1997 provides for layered arrangements of community titles schemes, where a lot within a scheme may itself be a scheme comprising lots and/or other subsidiary schemes. The top layer in such arrangements is called a ‘principal scheme’.
Community titles schemes are increasing in average size and complexity, with this trend expected to continue. From 1 March 2021, the new Standard Module will allow the body corporate for a principal scheme to decide, by ordinary resolution, to increase the maximum number of committee members for the principal scheme to twelve members. This will provide for broader representation where there are many subsidiary schemes, without allowing excessively large committees that would likely prove unworkable.
Similar changes will come into effect where relevant for body corporate committees of accommodation, commercial and small scheme modules. Further information about how these changes will apply to your scheme can be found on the Office of Commissioner for Body Corporate and Community Management website at www.qld.gov.au/bodycorp-regchanges.
Author: Michelle Scott, Commissioner for Body Corporate and Community Management