What to do when a Committee is not formed (Part 5 Agreements)

Last week we discussed how to form a Committee, and this week we look at the next steps in the process when a Committee cannot be formed at the Annual General Meeting (AGM).

It is a requirement of The Body Corporate and Community Management Act 1997 that a Committee is formed at the AGM, and the same number of committee members are maintained until the next AGM.

The objective of Body Corporate legislation is self-governance, meaning that a Committee should be formed by the owners to undertake the management of their home or investment property.

If for any reason the Body Corporate is unable to form a Committee at the AGM, the Body Corporate is required to call an Extraordinary General Meeting (EGM) to either:

1. Form a full Committee; or
2. Elect their Body Corporate Manager under a Part 5 Agreement as specified by the regulation modules (standard and accommodation) – whereby the Body Corporate Manager appointed to supply administration services is further appointed to carry out the functions of the Committee.

Below we have provided an overview of what is involved in appointing a Body Corporate Manager under a Part 5 Agreement:

• If a Committee is not formed at the AGM, an Extraordinary General Meeting (EGM) must be called within one month to either form a Committee or engage a Body Corporate Manager under Part 5 Agreement terms.

• If the Committee is not formed as the first step to the meeting, then a motion to proceed with engagement under the Part 5 Agreement is to proceed.

• If a Committee is formed then the motion to consider Part 5 Agreement terms does not proceed.

• The Part 5 Agreement motion is decided by a secret ballot, where unit owners vote in a way that does not identify how they voted.

• The motion to proceed with engagement under Part 5 terms includes the Body Corporate Managers’ agreement, an agreement to engage a qualified service provider to complete quarterly inspections and funding of all associated costs by way of special levy.

• If the Part 5 Agreement is approved, the Body Corporate Manager is authorised to make decisions regarding all Committee matters such as expenditure, obtaining quotes, and commissioning work.

• The quarterly maintenance report is conducted by an independent, qualified contractor to alert the Body Corporate manager to any work that needs to be completed.

• After each quarter, a report is produced by the Body Corporate Manager and sent to all unit owners to report all decisions made, including works conducted and expenditure.

Note: The same process for calling an EGM is required in the instance that a Committee vacancy occurs and the remaining Committee members are unable to appoint a replacement to fill the Committee vacancy restoring the original number of Committee members to the same level appointed at the AGM (or EGM).

This article was contributed by Grant Mifsud – Partner, Archers the Strata Professionals