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  • #56376
    TrulEConcerned
    Flatchatter

    Good morning y’all,

    At an upcoming General Meeting a motion will be put to a vote giving the SC a blank chq to spend on a dubious building project on common property. Many owners are furious and insist on quotes being offered at the meeting so we can decide which contractor to employ, assuming we agree to the project at all. The blank chq method was used some years ago with disastrous financial results. The SC was too inexperienced or incompetent to demand those few who benefited from a project to contribute the full outlay themselves. Instead the whole OC was milked for the cost. Those with clear memories do not wish a repeat of that fiasco.

    Question: Are such “blank chq” motions legal?

    Such motions, which are very short on detail –  in the past resulted in

    (1) Jobs for the boys;

    (2) No ceiling on possible cost; and

    (3) The SC not disclosing how much it spent to date “assessing” the project via their usual contractors, such as an architect, without the OC’s knowledge let alone consent.

    Question: Assuming the “blank chq” motion is legal and passes, can it be challenged at NCAT?

    Thank you.

    • This topic was modified 1 month, 1 week ago by .
Viewing 6 replies - 1 through 6 (of 6 total)
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  • #56380
    Jimmy-T
    Keymaster

    Good morning y’all,

    At an upcoming General Meeting a motion will be put to a vote giving the SC a blank chq to spend on a dubious building project on common property. Question: Are such “blank chq” motions legal?

    What exactly do you mean by “blank cheque”?  Is this a major project? It this a block of more or less than 100 lots (different rules apply). If the block is larger than 100 lots, at least two estimates must be prepared for spending over $30,000.

    Question: Assuming the “blank chq” motion is legal and passes, can it be challenged at NCAT?

    Any committee decision can be challenged at NCAT, it all depends on the grounds and the likelihood of success. However, if it’s “legal” I can’t see what the grounds would be. If you challenge a decision at NCAT and it has no chance of success, you leave yourself open to a claim for legal costs.

    #56382
    TrulEConcerned
    Flatchatter
    Chat-starter

    Thanks for the reply Jimmy.

    Allow me to clarify:

    1. The strata has 50 lots;
    2. The project is to fence off an area around visitor car spaces. The logic of which has not been fully explained. That is: why the fencing needs to be done and what options (quotes) are to be considered. Given the SC likes to provide work to mates as contractors (eg architect, landscape designer etc) in addition to the firm presumably supplying and installing the fence, it is impossible to guess what will be the all up cost;
    3.  No quotes were supplied so far by the SC in the notice of meeting for any part, let alone the whole job; and
    4. Historically, the SC has asked for a blanket approval to do something (in one case, develop a section of the common property and sell it to for a few owners, who later changed their minds about buying it) and the SC did so without providing quotes for the job. The OC was then left with the bill.
    #56394
    Jimmy-T
    Keymaster

    It seems to me that the Owners Corporation is bound by section 73 (2) of the Act which says:

    (4) Amounts payable from fund

    An owners corporation may pay money from its capital works fund only for the following purposes–

    (a) payments of the kind for which estimates have been made under section 79 (2) …

    (There are other conditions which are not relevant to this question).

    Section 79 (2) says:

    79 Estimates to be prepared of contributions to administrative and capital works funds

    (2) An owners corporation must, at each annual general meeting, estimate how much money it will need to credit to its capital works fund for actual and expected expenditure …

    (f) to meet other expenses of a capital nature.

    Note : Expenses of a capital nature would include expenses in relation to major repairs or improvements to the common property

    It’s pretty clear that a plan to build something comes under “expected expenditure” and the committee should at least present an estimate of what that cost would be at the AGM and that should be on the AGM agenda for it to be considered at the meeting.

    #56410
    TrulEConcerned
    Flatchatter
    Chat-starter

    Many thanks Jimmy.

    #56452
    twosailram
    Flatchatter

    I believe you also have 2 other options, depending whether the agenda for the AGM has been issued or not.

    Schedule 1, Clause 4 (1) states any owner may require a motion to be put at a general meeting and Clause 4(3) states the Secretary must give effect to the requirement. You could require any part of capital works to be quoted by, say 2 companies, and in writing.

    Alternatively, Schedule 1, Clause 18 provides you may amend a motion at the meeting provided it is a motion for which notice has been given. Suitable wording to amend the ‘blank cheque’ to quoted would be required.

    Both these options would probably require some lobbying before the meeting to outvote the SC.

    #56481
    TrulEConcerned
    Flatchatter
    Chat-starter

    Hi twosailram,

    Your points make sense, in particular the requirement for lobbying.

    In my experience one needs plenty of time for lobbying given the reflexive deference many give a committee versus  an individual or individuals who are not regarded in the same light.

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