Mahoneys: Committee Eligibility and Election Changes

By March 4, 2021New Legislation

We previously summarised the new body corporate regulations commencing on 1 March 2021.

One group of changes includes a number of committee eligibility and election changes.

This article delves a little more into the detail of those changes.

Co-owners and committee eligibility

Previously the regulation module provided that:

Unless otherwise permitted under this regulation, only 1 co-owner of a lot can be a voting member of the committee, on the basis of ownership of the lot, at a time.

This meant that if there were co-owners who owned more than one lot, the co-owners could not both be on the committee if they nominated in their capacity as co-owners.

The only way co-owners of a lot could both be on the committee is if:

  1. There were insufficient committee members elected at the annual general meeting; or
  2. A separate owner nominated the co-owner to be on the committee.

This was discussed in Willahra Tower [2006] QBCCMCmr 55 where the adjudicator relevantly provided:

For the present, I agree with the above interpretation of the requirements of the legislation. I do not consider that Ralph Donnet and Patti Donnet are in any better position given that they are the co-owners of three lots in the scheme. In my view, Ralph Donnet and Patti Donnet are treated as one owner for the purpose of making a nomination for election.

However, I do not consider that section 11(4) of the Accommodation Module necessarily restricts both Ralph Donnet and Patti Donnet, as co-owners of Lots 84, 86 and 100 from being on the committee at the same time. Section 11(4) restricts committee membership “on the basis of ownership of the lot” which in my view relates to co-ownership of a specific lot in the scheme and not to all lots that the same persons may co-own in the scheme. For example, Ralph and Patti Donnet may nominate Patti Donnet for election to the committee on the basis of ownership of Lot 84. If Patti Donnet is elected to the committee, section 11(4) does not prevent Ralph Donnet from also being elected to the committee provided he was properly nominated by another person on the basis of his ownership of Lot 86 or Lot 100.

This very technical interpretation is no longer a concern as a result of the changes.

Co-owners who own multiple lots are now eligible to nominate for multiple committee positions based on the number of lots they own.

This change will make it easier for committees to be formed and reduce the need for part 5 engagements and additional extraordinary general meetings to be called (at additional cost).

Minor committees

Generally the committee for a scheme is determined at the annual general meeting each year.

However, if a body corporate has 3 or less separate owners in the scheme, the committee is determined in a different manner, called a minor committee, as summarised in the below table:

Lot ownership Committee composition
All lots in the scheme owned by the same person The one owner holds all executive committee positions.
Only 2 or 3 owners for all lots in the scheme The owners decide the executive committee positions among themselves and if there is no agreement, they hold them all jointly.

The difficulty that could be experienced here is if the owners decide to make changes to the composition of the committee and do not properly record that decision (or communicate it to the body corporate manager).

It will be important that any schemes that are caught by the operation of minor committees:

  1. are aware of how the committee is determined; and
  2. properly record that decisions as to the committee composition.

Committee ballot and appointment

The process for a committee ballot and appointment has not changed from the previous regulation module, but the wording of the relevant sections has become much more prescriptive.

There is now just more detail included as to how these processes ought to be carried out in an effort to provide greater transparency to owners as to how committee members are chosen.

If you wish to read these, they are included in sections 31 – 37 of the Standard Module.

Committee removal

There has always been two competing methods of taking steps to remove a committee member, being:

  1. for a contravention of a code of conduct; or
  2. by passing an ordinary resolution.

The distinction between the two methods was made clear in adjudicator’s orders, such as Victoria Towers [2013] QBCCMCmr 358 and Paloma [2010] QBCCMCmr 241, but not necessarily in the legislation.

However, now, the legislation makes the distinction between these two methods clearer without the need to rely on the adjudicator’s orders.

Code of conduct

All committee members must comply with the Code of Conduct contained in the Act. The Code sets out various obligations with which committee members must comply.

If the body corporate considers a member of the committee has breached the code of conduct for committee members, it may seek to remove the member. The process for removal for a breach of conduct is to:

  1. Issue a breach notice which must:
    1. be in writing;
    2. include details of the breach (limited to 600 words);
    3. allow no less than 21 days for the member to provide a written response (limited to 600 words);
    4. offer to pay the member’s reasonable expense of responding to the notice;
    5. notify the member that a motion to remove the member shall be considered at the next general meeting of the body corporate; and
  2. At the next practicable general meeting, consider a motion to remove the committee member and include in the agenda a copy of the breach notice and any response received.

Ordinary resolution

A much simpler alternative is to convene a general meeting and propose a motion to remove the relevant committee member which is a simple majority of votes cast.

If an owner is removed through an ordinary resolution it is important that no allegations are made as to there being a breach of the code of conduct – otherwise the motion may be at risk of challenge on the basis the body corporate ought to have issued a breach notice first.

Other changes to legislation

The next installment will discuss in more detail the changes to committee meetings in the new regulation modules.

Author: Todd Garsden, Partner – Mahoneys Lawyers

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