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Emergency spending by the committee

We have had some matters in the past where a committee member has decided to take on the management of the body corporate by themselves. This usually occurs in smaller complexes. Said committee member may then think that something is an emergency, so spends in excess of the committee limit.

Although an emergency can allow the committee to spend in excess of their spending limit without going to a general meeting, a very specific process must be followed. The committee is not allowed to declare anything an emergency to spend as they wish.

An example of this is s 151(1)(c) of the Standard Module. This section says that a committee can spend above its limit only if “an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions”.

A committee cannot declare an emergency by itself. A committee must make an urgent application to the Commissioner’s Office that certain spending must be made by the committee in excess of its spending limit. This application must succinctly set out the facts about what happened, why it is an emergency, what the cost will be, and why the spending is necessary. Only once that order is made can the committee validly spend above that limit in an emergency.

A failure to do so might mean the committee members may need to personally repay the body corporate for that money. For example, what if an adjudicator does not consider it an emergency? The committee would need to ask the body corporate to ratify that spending, but the body corporate has no obligation to approve it. If the body corporate does not approve that spending, then the committee has spent money without authority. It is highly likely that the body corporate could sue those committee members, requiring money to be repaid.

This article is intended as general information only and should not be relied upon as legal advice. For specific legal advice please contact us here.


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