Provision of services by a Body Corporate

Contributed By: Short Punch & Greatorix - 20 September 2017

Provision of services by a Body Corporate

Section 169 (1) of the Small Module Regulations, and Section 167 (1) permit bodies corporate to provide certain types of services, which are not otherwise covered in the legislation. Sub sections 2 and 3 of these Sections also provide the body corporate:-

must have an agreement with each lot owner for whom services are supplied, covering the charges to be made to the lot owner for the installation, maintenance and operating costs associated with the provision of the particular service, but only to the extent necessary for reimbursing the body corporate for supplying the service

ensure the total cost to the body corporate for supplying the service is recovered from the users of the service

There has been some doubt about whether a body corporate can enter into a legally binding agreement with a service provider (including a building manager) to provide such types of service to lot owners without the arrangements in sub clauses 2 and 3 being in place. Obviously if it cannot, the service provider is in a difficult position.

A recent Adjudicator’s decision in the matter of Fairways Golf & Beach Retreat (2017) QBCMCmr 392 backed by a previous decision in the matter of Sylvan Beach Resort (2005) indicates that a body corporate can enter into such legally binding agreement in such circumstances. This is good news for building managers, and other service providers, but bad news for bodies corporate, because the body corporate in such circumstances, has no way to recoup from lot owners, the monies paid to the service contractor in these circumstances, without an agreement with each lot owner benefiting from the service.

In the Fairways case, it was found that the body corporate had entered into an agreement for the supply of pay TV services to lot owners and had put in backbone cabling to allow this to occur. The body corporate tried to recoup the cost of the charges by the supply company for the provision of services, by adding the cost to the administration levy budget. The Adjudicator found this to be illegal in view of the provisions of Section 167 (2) and (3) of the Accommodation Module Regulations.

It is obvious that a building manager who agrees with a body corporate to provide such services, is lining themselves up for future trouble and costs. They would have to have agreements with all lot owners who use such services.

This may be more likely in holiday lets letting appointments, where the POA Letting Authority Form 6 includes such charges to the lot owner, and where fresh Letting Appointments are obtained from the new owner, when a sale of a lot occurs.

The type of services which a body corporate can provide, and pay for, out of the administration fund or the sinking fund, needs modernising to provide a simpler process for supplying and charging for such services, for example, allowing provision for such services in by laws or by special resolution. Perhaps this is something which industry bodies like ARAMA should take up with the government panel currently reviewing the legislation.

Short Punch & Greatorix