Committee spending limits

Generally speaking, a committee can decide anything for the body corporate, so long as it is not a restricted issue or is otherwise required to be decided by the body corporate at a general meeting. However, the committee does have a spending limit. Unless set by ordinary resolution by the body corporate, the default is $200 per lot.

So for a 20-unit scheme, the committee spending limit is $4,000. The committee cannot spend over this, unless the spending is specifically authorised by the body corporate, if all lot owners give written consent, if an adjudicator orders that it is to meet an emergency, or if it is to comply with a court or tribunal order.

Unlike the body corporate spending limit, there is no maximum limit: for example, take a 60-lot scheme. As 60 lots x $1,100 is above $10,000, the body corporate’s spending limit is $10,000. However, the committee spending limit has no maximum, and as such the committee spending limit is 60 lots x $200, being $12,000.

So what happens when the committee wants to spend between $10,000 and $12,000? This is within the committee spending limit, but above the body corporate’s spending limit. The decision does not have to go to a general meeting, but if the committee considers spending between $10,000 and $12,000 at a committee meeting, the committee must supply at least 2 quotes.

The only way to avoid presenting at least two quotes is if, for exceptional reasons, it is not practicable to obtain two quotes. However, this is a very high bar to pass. The legislation gives an example of where the goods or services are only obtainable from one source. It does not matter if there is an emergency, because if it was actually an emergency, the committee must make an application to the Commissioner’s Office.

Spending limits must always be complied with, especially for the committee. If the committee exceeds its power, it will need to seek the consent of the body corporate to ratify its spending – but the body corporate has no obligation to agree. If a committee exceeds its spending limit and the body corporate refuses to ratify the spending, then the committee members might become personally liable and may need to pay back the body corporate out of its own pocket. This is not harsh or unreasonable – anyone who spends someone else’s money when they are not entitled to do so must always face repayment as a possible consequence.

Even if the committee thought it was acting reasonably, it is not and it will not protect the committee from exceeding its spending limit. This is because it can never be reasonable to contravene body corporate legislation.



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