Are “blank cheque” plans for work legal?

TrulEConcerned wrote:

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.

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.

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.