This transcript of our second Live Facebook Event: Strata Living With the Corona Virus Crisis features Chris Irons and Frank Higginson from Hynes Legal.
The Live Event occurred on the 6 April 2020. At the time of recording, information was current. Due to the rapid changes occurring, the situation may have changed. We will do our best to keep you updated. The complete video can be viewed via this link.
Jump directly to the section of the transcript you are after:
- People’s inability to pay levies, bodies corporates decisions to defer costs.
- Are you able to transfer monies from the sinking fund to the admin fund to pay the managers fees in the event there is a shortfall in the fund due to levies non payment.
- For those schemes that want relief in levies can those schemes that do have a healthy sinking fund, are they able to raise a special sinking fund credit for say 50k and then admin fund levy for 50k and then they have a 50k admin surplus to use with the admin fund to continue to maintain the scheme and meet their current contractual obligations.
- Our insurance fees are through the roof and represent the largest component of the strata levies. How are the insurers responding given there is little to no competition in the industry?
- Can a Strata Manager refuse a record search for the stated reason that it was due to COVID-19?
- I think we need to push to be told if occupants have tested positive to COVID-19. We can then make sure we have the common property deep cleaned. Do tenants need to let body corporate know if they are self isolating, as well as registering with the government?
- A committee is considering rewriting their community management statements to have a bylaw in which people are obliged to report if they have tested positive to COVID-19.
- There is a notice in our lift telling us we are compelled to report we are in isolation or have COVID-19.
- I recently wrote to our committee recommending that the put a note in all resident’s mailboxes to suggest they don’t touch the gate pin pad with bare hands. I sent this over two weeks ago to which I have received no response or seen any safety actions taken.
- If the council starts making decisions or to act in a way which is unreasonable, what recourse do owners or residents have?
- Somebody owns a lot in a scheme. It looks like some of the apartments there are leased out to a hotel that is nearby so it seems like we are talking about two separate buildings. What’s the process for people being informed if somebody is staying there in quarantine?
- Our strata fees have gone up nearly 300% over 8 months ago… we have a payment due now. What should we do?
- Tenants not paying rent or asking for a reduction in rent
- Are you seeing a slowdown on assignments due to committee’s being unable to meet and how are they addressing the issues.
- There have been a series of notices about restrictions on the use of the common room. There are concerns about the decisions being made and whether the committee is acting reasonably.
- What are other Strata Companies doing with AGMs? Holding them? Postponing?
- It has been proposed that the next quarter’s strata levies are reduced by 50% due to COVID-19. Do you see any merit in that?
- Can I call an extraordinary general meeting if I have 23 of 86 owners that want to put a motion up to stop or pause sinking fund payments?
- Fire drills are being scheduled at the moment, and do we have to participate in it is we’re socially isolating or distancing.
- The closure of swimming pools and gyms.
- Should tennis courts be closed?
- If facilities such as pools and gyms are closing, do we get a reduction in our levies?
- Is there any talk about placing body corporate contributions on hold during this crisis?
- Is it reasonable to ask the caretaker to take a cut in the salary that they receive?
- Is it practicable just to recommend to all tenants to behave as they do in any public space, that if they touch areas touched by many people that they wash their hands.
- What can we do as property managers for tenants asking for reduced rent or extended rent payment?
- Can visitors with COVID symptoms, history of contact with overseas travel be requested, directed to not enter the enclosed common areas where there are residents who are at higher risk of transmission.
- Where you have indicated that matters should be taken up with the Office of the Commissioner, is it going to insist on conciliation as happens in non-COVID-19 times?
- Can owners ask for a higher level of oversight of committee agendas and minutes at this time eg. have agendas and docs emailed to all owners (allowing for privacy).
I guess life has moved on a fair bit, Frank, since the first one of these that we did.
It’s extraordinary at the pace of play and the changes that are coming out almost minute by minute. I was talking to a strata manager just before in just in terms of the changing habits that they’re observing in terms of their communications, and it probably applies a little bit to us as well, in terms of the mornings are incredibly frantic and then everyone must catch their breath and digest whatever’s happened during the day – and then it comes on again. Because I know, we had a raft of new enquiry this morning, about a range of different strata things, not all necessarily COVID-19 or coronavirus, but a lot of them were and then since lunchtime it has slowed down so I, I don’t know.
And then it’s just the changing rules, and I think probably the big thing is there is no playbook for this for anything. No legislation, no guidebooks, no experience. It’s just, I suppose experience in the context of a whole bunch of things that happened in the past in maybe adjacent or different circumstances. But trying to apply it all to this is an interesting exercise.
It sure is Frank, and just while everybody is getting organised to participate today, you might have noticed Frank and I are both in our Civies today because we’re at home like everybody else. So I’m ensconced in my man cave, and Frank is in his, we are not in the same place, obviously in recognition of social distancing rules. So it is a bit of a novel experience for us as well.
But I guess we come from the perspective of wanting to treat body corporate issues pretty holistically. So, Frank is a partner at Hynes, I’m the former commissioner for body Corporate in Queensland and together, we try and approach body corporate issues with a combination of legal and non-legal solutions.
Chris is definitely the non legal, more sensible one, and I’m the very straight down the line legal one. So together, I think we make a relatively good combination, but you’ll all be the judge of that.
Absolutely. So today, we’re going to try and get through as many questions as possible that have been posed to us, and we have a bunch of them already. You are welcome to try and post some in the chat function and we will try and get to as many of them as we can, but there are a few so if we don’t, please sit tight and we will try to get to them another way.
Frank, we might kick off though with what is becoming a really burning issue about COVID and strata, which is the thorny, thorny issue or levies.
Of payment, absolutely, and this probably arose really at the start of this week. It became the issue of the week. Previously it’s been cleaning lift buttons, self isolation, people not telling us that they’re isolating or they’re in quarantine or whatever it is. The problem with working from home is that every day blurs into the next one because it’s so easy to walk into your office again.
No, it was probably late last week that levies really became an issue. We have a newsletter on this that is sitting on my virtual desk to finalise.
Related Article: Q&A Reducing Strata Levies During the Coronavirus Crisis
It really is in terms of people’s inability to pay levies, bodies corporates decisions to defer costs. I’ve had one client who’s already, I’ve seen, just sent an email to everyone in a very large building basically saying ‘Okay, no one has to pay their levies for the next month’. And it doesn’t quite work that way.
I think that’s going to be the issue that we’re all faced with going forward, in terms of what happens when people can’t pay for both the body corporate and those people. And I think probably the thing for me – I learn something new every single day without fail. I’ve learnt more than that with Chris in terms of my time with him since he started with us on the 10th of February, and I think the one golden rule for bodies corporate is you cannot have hard and fast rules that apply to all. Every single situation needs to be looked at on its merits. So in that sense, I don’t think it’s appropriate for a body corporate to have a scorched earth policy in terms of levies. “Everyone must pay, that’s it.” Everyone’s circumstances are going to be different.
Everyone’s under a significant degree of pressure be it rain, hail or shine. We’re no different from everyone else. We’re working from home, issues in terms of what’s going on with our business, leaving aside the pressure – we’ve got clients hitting us with a bunch of stuff that isn’t precedent driven, isn’t process-driven and we’ve really got to think on our feet and digest whatever the latest issue might be from a government announcement which again, Chris and I were talking about before which will come up again today. Not having one size fits all is really, really important. Everyone’s got to look at it.
The legislative position in Queensland and I guess it’s the same in other states to some extent – there will be some variances – is that the body corporate has expenses, it has outgoings that it needs to pay, and it pays those by way of contributions from owners and their proportionate contributions from each owner. Those contributions stem from the budget which is set every year at the general meeting.
So the process is that the general meeting has a budget, it gets passed. From that, the contributions are set, and then you go ahead and pay them if you’re the owner, and they’re usually sent out quarterly.
There is no previsions to have zero levies. The only way – I think Frank and I were talking about this – the only way that can really happen is if the body corporate has zero expenses to pay. Had zero expenses to pay now, and zero expenses anticipated in the future. Given that that’s an impossibility, the Body Corporate will always have an expense, therefore there will always be a contribution that owners have to pay.
Bear in mind also, if you are an owner and you are behind on contributions then that impacts on your ability to vote at a general meeting. I think that’s a really important point, it’s all well and good to say ‘I don’t want to pay my levies’, or ‘I can’t afford to pay my levies’, or ‘the levies are too much’… If you don’t pay the levies, you lose the right to vote, and that’s a pretty significant issue depending upon what it is you vote about.
In Queensland, there is the ability for a committee to waive penalties, interest and other charges. So, there is that ability, and they must do it under what are called special reasons.
And one of those special reasons may well be that you’ve lost your job. One of the reasons you weren’t able to pay on time was that you lost your job or that you were in the hospital, or that you were caring for a sick family member. There is a real onus – this is what Frank was saying just before – there is a real onus isn’t there Frank for bodies corporate to not just apply a blanket policy, but to act reasonably and to treat each situation on its merit.
Yeah absolutely, and I think probably one of the other things I’ve seen a little bit of – and this is also the Chris coming out of me – is the humanity of this, and I mean that’s the reality of this.
It reminds me a lot of the GFC in certain circumstances. The difference was the GFC I think probably took 18 months to 2 years for everyone to realise the world had changed. This has taken about 3 weeks. It’s just extraordinary the speed with which this economic tsunami arrived.
More than anything else, it’s not just a matter of belting people for the sake of belting people, and we’ve already seen some behaviour in a body corporate context on behalf of a range of participants which in a cold light of day in 6 months time won’t look particularly good, and I think it’s probably one of the lessons or one of the things we certainly give to all of the lawyers that start with us is every single thing you write or say, you’ve got to look at it in the context of “what would that look like if put in front of a judge in 12 months time?”. How would you explain that? And I think probably, some of the things that are flying around, and absolutely you see that with people under pressure and the immediacy of response and ability to bang out an email and whatever time of night it might be, when your feeling anger, distress or otherwise, and particularly from a committee perspective, just calming down and slowing down for a second I think is really what needs to happen in a lot of these things.
Because yes, there might be a group of owners that can’t pay their levies, but we don’t need to make a decision on that right now this very minute, within 5 minutes of their request.
No you’re absolutely right Frank. You’ve gotta remember the humanity of the situation.
So the process as I would see it is if there is a budget been passed and the levies have been set, an extraordinary general meeting can be called at which the voters can vote upon an amended budget. That’s the opportunity for the body corporate to look at changing the levies payable. And it makes sense. If the financial circumstances have changed, maybe look at calling an extraordinary general meeting to get that budget adjusted. I think that answers a question from Elsbeth who asked a question along those lines.
There is a bunch of other questions lurking in here.
Question: Are you able to transfer monies from the sinking fund to the admin fund to pay the managers fees in the event there is a shortfall in the fund due to levies non payment.
So I suppose body corporate fundamentals – admin fund is really expenditure you’ve got to spend through the course of the year. Body corporate has a bunch of contractive requirements, statutory requirements be that insurance, be that a strata management contract, be that caretaking salary, etc. In theory, every year it should raise $200K, it should spend $200K. I mean it doesn’t look like that on an annual basis because the money’s coming in and out at different times.
We think if there is going to be some flexibility, it’s going to relate to sinking funds, where bodies corporates may be able to defer certain expenditure based on what the needs of the scheme might or might not be. And again, this is not hard and fast rules, this is something you would need to go and actually have a look at your own particular circumstances on. But for example, maybe the body corporate is budgeting towards painting the building in three years time when the reality is, it could wait for 5. So you might be able to spread that expenditure or differ that expenditure in the sinking fund over a period of time.
But as a rule, there is no ability to transfer monies between sinking and admin fund. So if you’ve got an admin fund with X, you got a sinking fund with a healthy balance – chuck a figure at it, chuck a million dollars. You can’t transfer $200K of that across to the admin fund. That has been raised for a specific reason and must stay in that fund. Now you might not if you can come up with the appropriate budget, the appropriate sinking fund forecast needs to raise the $300K next year that you thought you were going to raise, maybe you trim that back because you change what the expenditure is that you’re forecasting, but that million dollar base is still there. It might only increase by $200K, instead of the $400K you had budgeted.
So I think that’s a really important thing. And Queensland is very specific that the act actually says that you cannot transfer.
Related Article: QLD: Transferring money between funds (Standard Module)
Joel’s question is: For those schemes that want relief in levies can those schemes that do have a healthy sinking fund, are they able to raise a special sinking fund credit for say 50k and then admin fund levy for 50k and then they have a 50k admin surplus to use with the admin fund to continue to maintain the scheme and meet their current contractual obligations.
Answer: It’s possible that you can have the owners consider that at an extraordinary general meeting. The key thing here is to be really clear with all the voters about what it is they’re voting upon. I don’t mean clear simply at the meeting, be clear before the meeting as well.
You have a motion, you have a meeting time, and you have an agenda, but you send out some information beforehand. “Everyone, this is what you’re going to be asked to vote upon at the general meeting. To be clear, this is precisely what it is that we are going to be talking about —”. If you’ve got the time and the resources look at convening an informal kind of town hall meeting beforehand, so that you actually get the opportunity to clarify with people what it is that you do so you are not relying on the vote passing at the meeting and fingers crossed you’ve got the numbers, you spend a bit of time beforehand communicating, particularly if you know it’s going to be contentious, or difficult, or that you’ve got some owners that will make it contentious and difficult. That’s my view on things anyway.
Frank, we might get across to some of the pre-submitted questions and try whizz through some of those and then we will come back to some that have been lodged live.
Absolutely. Karen’s Question: Our insurance fees are through the roof and represent the largest component of the strata levies. How are the insurers responding given there is little to no competition in the industry?
The answer to your question is there’s so much stuff that’s fallen off the radar with coronavirus arriving. The Northern Australia insurance Inquiry from my perspective is one of those. Along with probably strata law reform in Queensland. So the government has been grabbed by a whole bunch of things.
Q: Can a Strata Manager refuse a record search for the stated reason that it was due to COVID-19? Answer: No.
The only thing that Frank and I can think of there is that the Strata Manager says they won’t do an in person record search given the current circumstances. That seems entirely reasonable to me if the office is closed due to everyone working from home. But to simply say “You cannot have the records because of COVID”? No, I wouldn’t have thought so.
Absolutely, and there is a mechanism therefor people to actually request information and for Strata Managers to be able to provide it for a fee. It’s not a matter of “You can’t come in and see everything” but ”What are you actually looking for, then we can supply it”.
Next Q: I think we need to push to be told if occupants have tested positive to COVID-19. We can then make sure we have the common property deep cleaned.
We also have a variation of that in the live questions: Do tenants need to let body corporate know if they are self isolating, as well as registering with the government?
A: Frank and I are only able to talk about body corporate obligations and body corporate issues. We are not health experts and we can’t talk about that side of things. As far as we’re aware, there is no obligation for reporting and there is no obligation or power under body corporate legislation for a committee to compel that type of information from either an owner or an occupier. And there is no obligation on the owner or occupier to do the same to the body corporate.
I completely agree. I suppose there is an expectation of privacy. Really, we are in this limbo land where the Government is making broad sweeping statements about policy that applies to everything across Australia and part of the battle is applying that to our own little part of the world which is strata. I think that remains the position.
There is no obligation for me to tell my neighbours, even if we are in a community title scheme that I’ve tested or otherwise and I expect that will remain the case and I guess the Government’s position behind that would be fear of lynch mobs.
I think that’s right. By all means, if that’s what you think should happen if you want a change in the law, then advocate that to your elected representative but at the moment, there is no power for a body corporate to do that.
That goes towards answering another question we got, which is from a committee that is considering rewriting their community management statements to have a bylaw in which people are obliged to report if they have tested positive to COVID-19. I think, Frank, we came to the conclusion that a bylaw like that would be oppressive and unreasonable and thus, not enforceable.
Yes, and if you look at the principle of that, “You must report to the body corporate if…” and then it is a question about the degree of what level of issue are you required to notify the body corporate about? Having tested, having travelled, having met someone who had travelled, which are the original things that we started with? And then we expand that even more broadly, does it extend to flu, sniffles, colds…..? I’m not trying to take away the seriousness of what Coronavirus is, particularly to people who might be more susceptible to the disease, but the practicalities of it are, to me, probably best left to Government in that sense, to dictate the rules around what people must and must not do. Otherwise, we talk about bodies corporate being the fourth level of Government and this is always constant tension in terms of what bodies corporate have the ability to control or dictate or otherwise. To me, those types of health issues are, well from a policies perspective, always going to be left out of bylaws. Leaving aside the practicalities of it, to actually incorporate a bylaw into your CMS and have it registered by a general meeting and all that stuff is probably a 6 to 8 week process and looking at how we are flattening the curve today on the 6 April, it may be all over in 6 to 8 weeks time.
There is a question here from Michelle in our live feed: There is a notice in our lift telling us we are compelled to report we are in isolation or have COVID-19.
Michelle, I’d be going back to your body corporate and asking on what basis that statement is being made. At the moment, neither Frank or I are aware of any authority of a body corporate to compel that.
Q: I recently wrote to our committee recommending that the put a note in all resident’s mailboxes to suggest they don’t touch the gate pin pad with bare hands. I sent this over two weeks ago to which I have received no response or seen any safety actions taken.
Where do you draw the line on that, I mean, is anybody going to touch anything with bare hands any more? There is nothing stopping an individual from putting that kind of notice in mailboxes. There’s nothing preventing that. You can even do it electronically. If you have a copy of the role, you can write to people and make that suggestion to them yourself. It doesn’t necessarily have to be a role for the committee to do that.
Absolutely, and for me, it seems there have been some calls for committees to really step in and control their various communities from some sectors and I think that at the moment, if there is a whole lot going on in everyone’s lives, expecting committees to be the be-all and end-all in terms of “OK, here’s the rules. Now everyone has got to follow them” is probably a little bit unrealistic.
Because we’re sitting here having conversations every other fifteen minutes about what this interpretation might be or that interpretation and it’s all we do. And then expecting a bunch of volunteers to suddenly take control of everything is unrealistic.
There is a question in the feed from Gary: If the council starts making decisions or to act in a way which is unreasonable, what recourse do owners or residents have?
The interesting thing with that one, and I suppose the use of the word Council says you are in a state other than Queensland. We are both obviously Queensland practitioners. In Queensland, bodies corporates and committees have an obligation to act reasonably and if they’re not, there is the scope to make applications to either the Commissioner’s Office for orders, particularly on an interim basis that they do something which is acting reasonably.
Interestingly enough, we had a decision come out late last week which is probably the first one that references the Coronavirus, and that was an issue in the context of whether the body corporate should be required to call another general meeting. The adjudicator has specifically said that given all of the things that are currently going on in the world at this point in time, I’m not going to order that on this body corporate in these circumstances. Therefore, my decision is this….
So you can see, in our jurisdiction, adjudicators have a very broad ability to make orders that are just and equitable in the circumstances and what acting reasonably is today is probably different to what it was three weeks ago and it may well be different to what it is in two week’s time.
But, it’s not beyond committees, and I guess this is one of the issues, going back to Michelle’s question: There is a notice in our lift telling us we are compelled to report. Where? Where is that?
To whom? What are the consequences if you don’t? Once you’ve reported it, what happens to that information then? Does it go on a central register? Is it a body corporate record after that? Does that get reported elsewhere? On and on it goes.
I think this is Frank’s point, and it is a really good point: just because something happens in a building doesn’t automatically mean it is a body corporate responsibility to address it. There are things which occur in a building which are not the body corporate’s responsibility. Frankly they are none of the body corporate’s business. It’s really important to separate out body corporate business from life business, or health business or other legal business.
OK, this is a question from somebody who owns a lot in a scheme. It looks like some of the apartments there are leased out to a hotel that is nearby so it seems like we are talking about two separate buildings. What’s the process for people being informed if somebody is staying there in quarantine?
Ahh, well. Again, probably nothing, is there? That’s where we’ve got to. Let’s look at the difference between self isolation and quarantine. Sheltering in place is what we are doing now in terms of working at home. Isolation is what one of our lawyers just finished. They got off a plane two weeks and one day ago. They had to isolate in a space for 14 days, got tested and was clear. Quarantine is when you’ve actually got it…I don’t know.
This comes back to the rights of occupiers. If the Hotel has leased rooms in this apartment building and is using them to put people in, I don’t think anyone in those rooms, be it the people themselves or the hotel that is using them to put people in, is obliged to tell anyone. On the same basis that we were discussing before.
There is a parallel for this. We’ve had one issue for a very large body corp that does have a mix of short term rentals in a hotel operation as well as owner occupied and there was a news story. Local news said this particular hotel had started taking bookings for people who were “isolating”, so instantaneously, what that lead to was – this a building with management rights – the committee saying to the manager “what on earth are you doing? Are you filling this building full of people who might have Coronavirus? Are you going to tell us about it….. ”. Where we’ve got to on that, the Management Rights Operator has an obligation to its owners to try and maximise revenue, to try and get bookings in. Of course, short term letting is now in a very poor place, and I guess Airbnb goes the way of that for the moment as well. So where we’ve got to, instead of going completely ballistic on it, we’ve engaged with management, we’ve got a plan around. We understand they are not isolating people who actually may have it. It is actually workers from Queensland Health who are in there because of this particular emergency from outside the jurisdiction, and they are people who will be in the hospital but are not necessarily exposed themselves. We’ve communicated this to the whole of the building and what processes the committee has in place to do it. Part of the battle in these things is communication. If people don’t know, it’s very easy to jump to the worst possible conclusion when there may be a more innocent answer elsewhere that can be managed.
Q: Our strata fees have gone up nearly 300% over 8 months ago… we have a payment due now. What should we do?
A: If levies are becoming a problem for the body corporate, we would assume you are not alone in this situation. You will need to go back to a general meeting or extraordinary general meeting and seek to have the budget amended. If you’ve got a ley notice due, the problem with not paying it is that you place yourself in the position where you can’t vote, but also – in Queensland anyway – the body corporate is obliged to pursue that debt at some point. Two years and two months to be precise.
So, you need to start the dialogue with the body corporate about a possible payment plan. You need to show some commitment towards paying it.
I’ve had initial discussions with body corporate managers who have asked me “what information can I ask?”. Bodies corporate need to have enough information to make a reasonable decision, so they need to ask themselves “How much do we need to know in order to be assured that we can make a decision about a payment plan.”
This is where our point about empathy and humanity really kicks in. You don’t want to be in a situation where you are asking a lot of very intrusive questions of someone who is already under an enormous amount of health, emotional and or financial stress. It’s about reasonable requests in order to make a reasonable decision.
That applies equally to a question about tenants not paying rent or asking for a reduction in rent. Property managers are like lawyers and strata managers in that there are questions going everywhere and stuff is changing by the minute. It’s about seeking instructions from your owners. Some owners will have different views around rent. Some will be hard core about it, some will be relaxed. Some may want you to go back and get more information and that would be similar to what Chris mentioned concerning a committee asking for more information to determine a payment plan for overdue levies. What has happened, let’s understand your position, let’s enter into some form of payment plan or otherwise. It’s a case by case thing and it’s not going to be absolute.
Paul has a Question in relation to management rights: Are you seeing a slowdown on assignments due to committee’s being unable to meet and how are they addressing the issues.
A: The one thing we have seen is people’s adaptability. I think we are going to end up with a completely different strata environment from an operational perspective in six months time to what we had three weeks ago in terms of the ability of people to move online and deal with these things. So, we’ve seen general meetings where basically everything has been done on Zoom or Facebook live or whatever it might be where secret ballots are being held with the Returning Officer actually holding up to confirm what’s going on, counting votes where the body corporate manager may physically be in place and have some votes and they will be opening them and confirming with the Returning officer what’s going on, so elements of things are actually working relatively well.
We did a seminar where a motion with alternatives was equal. The body corporate had Option A and Option B. The votes for Option A & B were equal. That was all done effectively online as well. It was only realised afterwards that the votes were equal, so what happened then in Queensland, a method of chance must determine what happens. As always with Option A & Option B, there are two squirrels inside the body corporate. The body corporate manager and the two opponents all get on a Zoom call and the body corporate manager will literally toss a coin. One will call heads and it will make the decision in terms of which one wins.
That’s adaptability and some people showing some common sense in what is a unique set of circumstances.
We’ve had a question about a series of notices about restrictions on the use of the common room. There are concerns about the decisions being made and whether the committee is acting reasonably.
A: The obligation to act reasonably, again, is only a Queensland legislative provision. That varies from case to case but it’s about assessing each case on its merits. If you are an owner or an occupier, you are able to access body corporate records and there should be minutes of these things. You state there are no minutes and no records of committee decisions occurring. Obviously decisions are being made somewhere. It’s just about how they are being made and how they are being communicated.
Your first step is to try and access records. If you are refused access to records or if the records don’t fill you in on the details you need, the next step is you might need to take the matter further to dispute resolution through the Commissioner’s Office. Decisions about reasonableness on the part of the committee or body corporate are resolved by the Commissioner’s Office in Queensland.
If it’s a case that the committee is not making proper decisions, is not acting as a committee, then the next maybe that you need to consider that scheme going into administration. That’s an extreme step. That might be where it gets to.
Q: What are other Strata Companies doing with AGMs? Holding them? Postponing?
A: Holding them electronically. Queensland’s legislation hasn’t been expressly amended as yet to provide for electronic meetings but bodies corporate can resolve by ordinary resolution to hold them electronically and even if not, it’s about making a reasonable decision under the circumstances. There’s also the ability to postpone a general meeting, and in Queensland that can be done by application to the Commissioner’s Office for an adjudicator’s order.
What we are saying to body corporate managers and committees in terms of holding meetings, you’ve really got to be sure you take the temperature of the meeting and the mood of the building as a whole, if you’ve got a body corporate where everyone is in complete harmony (as rare as that may be) but there is no contention, just motions on agendas, just get it done, get it through. There will be no real opposition to it. No one is wanting to challenge things.
If you’ve got a very contentious motion where things have been heated for a period of time, you need to think carefully about how you are going to run that to make sure people have their ability to have their say. As Chris would say, that no one suffered detriment from going outside the rules that are actually set for the calling of the meeting.
There is a very strict process in our modules and this is back to the ability of the adjudicators to make orders that are just and equitable under the circumstances. If there is no damage to someone from the rules not necessarily being followed to the letter of the law, you wouldn’t see an adjudicator invalidate a meeting just for sport.
If someone was disenfranchised and someone ran a meeting in a particular way to take someone else’s rights away from them and then gain a decision that suited their purpose and that had been their angle for the last 12 months, then you can see someone coming unstuck on that in the Commissioner’s Office if that meeting wasn’t handled the right way. It is that communication and understanding what’s going on.
A few more questions: It has been proposed that the next quarter’s strata levies are reduced by 50% due to COVID-19. Do you see any merit in that?
A: The merit is that you’re paying less.
The body corporate needs to make sure it’s got money sufficient to pay its bills. So the committee needs to very carefully go over the cash flow, the incomings, the outgoings, and make some very sound decisions, I would argue in consultation with their body corporate manager, their financial advisor or accountant. As to whether that works for you in your particular circumstances, that’s what you will be asked to vote upon presumably if it goes to the general meeting. You need to make that call based on the information you have. If you need to see financials, ask for copies of financials to make that decision for yourself. .
Q: Can I call an extraordinary general meeting if I have 23 of 86 owners that want to put a motion up to stop or pause sinking fund payments?
A: In Queensland you need 25% to call an EGM, 23 out of 86 is 25% so, it sounds like you’ve got the numbers there to call a meeting. If that meeting doesn’t get called because the next part of the question is about the committee being run by members of the same family, an application can be made to the Commissioner’s Office to dispute the not calling of the meeting.
We’ve got a fairly lengthy question about fire drills, and I’ve been taking a lot of inquiries about fire drills over the past couple of days. The idea that fire drills are being scheduled at the moment, and do we have to participate in it is we’re socially isolating or distancing. It’s an interesting one because on one hand you’ve got the government saying do this, and presumably you’ve got legislation telling you to do a fire drill. I must admit, I don’t know if that’s a mandated thing, but let’s assume that it is. I do wonder why fire drills are being scheduled at a time where people are not meant to be congregating in the same place, that said it depends upon the building, I mean if there are issues in that building that need a bit of attention fire wise, is it wise to put that off? Even if it might cause some issues with social distancing?
There’s that hard and fast rule that you can’t apply to everyone. Mind you with the same token, if we’re just doing it because we’re required to do it every 6 months I would have been pretty sure for example in QFES’s case that putting it off by a month if the building is otherwise compliant with all of its fire safety equipment and can prove that it’s had its checks and balances in place then it’d be okay. The other thing in Queensland that you need to do, and this is sometimes forgotten by lots of bodies corporates, is you can’t just simply access lots because you feel like it. So the only way a body corporate can access a person’s lot I suppose in a legal vacuum is by giving them 7 days notice of that entry. So up here, it’s not just a matter of getting the master key and having someone charge in, unaccompanied doing whatever it is they want to do. A body corporate is required to give notice to people. If someone wanted to object to that notice on the basis that it is unreasonable in these particular circumstances then there is absolutely the opportunity to make an application to the Commissioner’s Office again for the body corporate not to access that lot. Or I suppose even more so, not actually perform actually the fire safety checks at this point in time, or until a certain point time, and here is the evidence to show that we don’t actually need it.
Should we talk about swimming pools and gyms Frank?
Why not. The last half of the questions relate to this.
Yeah. So look, I’m going to be talking only about Queensland at the moment, so the phrase that you’re looking for; Queensland buildings, Queensland owners, is what’s called the ‘non-essential business activity and undertaking closure direction number 4’ and I will arrange for a copy of that link to be posted in this chat, bear with me.
Related Article: NAT: Q&A Closing Strata Pool & Gym Because of Coronavirus (COVID-19)
But while that’s happening, this is a directive issued by the chief health officer in Queensland mandating the closure of gyms and swimming pools. And I will read to you the things which are covered; ‘to be closed: indoor sporting centres including gyms’ and then two lines down from that: ‘swimming pools including public pools, and pools in shared facilities such as hotels and apartments’. So that’s the situation in Queensland. I understand that in other states and territories perhaps the directives aren’t perhaps quite as explicit as that, but it’s pretty explicit in Queensland. If there is a swimming pool in a community title scheme, it needs to be closed. So, that’s the situation.
The body corporate, and see what you think about this Frank, but my view is that the body corporate still needs to go through its processes there. The committee needs to make a decision, and really importantly they need to be communicating that to everyone. There is a big difference between putting a sign up on the pool and saying ‘Pool Closed’ and nothing else, or a sign saying ‘unfortunately, due to health directives, we have no choice other than to close the pool’. Communication is everything in this particular situation.
I have heard, and there are a few queries here from people who are questioning the decision to close the pool and asking about ‘well surely some exceptions can be made for my circumstances’, some people have said they’ve got health reasons for wanting to use the pool. It’s well and good to challenge the decisions of the committee to close the common property, but if they’ve been directed to do it by the government to do it, what’s the point? Frank?
There aren’t any. And to me, I have seen it in one or two schemes at this point in time, police are pretty red hot in terms of people not following the rules. I would have thought if people are acting in contravention in what is a pretty clear direction, and I suppose part of the difficulty with this is, we’ve got the federal government leading the charge, but a lot of these things are state based issues.
So when you’re talking about, again back to rent, you know rent moratoriums, rent evictions, all that sort of stuff, In Queensland, we haven’t actually seen any legislation yet Like none of us actually know what that means, and what the criteria are to qualify for that will be, what the checks and balances will be, or anything like that so we’ve got a whole lot of principle statements, but the ones in relation to pools, are very specific. That’s for Queensland, and that’s the end of the story.
And then, it’s about common property. So if it’s not a directive about what should close, then it’s a decision for the committee to make. So I’ve had a few questions here about common area patches of grass, areas next to pools and tennis courts. As far as I’m aware, they’re not on that directive, so then it’s a decision for the committee to make.
So the committee needs to take into account, why is it that they are closing and they can make that decision, then they can communicate that to everyone. Now if you’re an owner or an occupier, there is the ability for you to challenge that decision as a minimum. If you are unhappy or unclear about the decision, by all means, communicate with the committee and say “Well I don’t understand why you did that, could you please explain that a little more”.
I’ve seen a few queries here where people are asking whether or not there can be exceptions made in particular situations. You can certainly ask for that, but again, I think it’s really important to think about things in the broader picture. The entire world has had to change what it does. Everybody has had to change what they do on a daily basis, this is part of that change. You need to be asking yourself “Do I really need to be asking for an exception for my circumstances, or is this the sacrifice I have to make for this next couple of months to deal with” … well, it’s a pandemic! It’s not just a stroll in the park, it’s a pandemic.
So back to the body corporate’s responsibilities. They still need to make reasonable decisions, they still need to go through a decision making process, they still need to minute it, and they still need to communicate it properly.
And there is a question there about tennis courts, like to me, I’m a golfer and golf is different state by state. In Victoria, all golf courses are closed. In Queensland what they’ve said is – no one in carts, only two people can play at a time, and you must ideally keep five metres away from each other. And we move to electronic score cards on our phones, and those sorts of things, so we don’t have to touch anyone or anything. So to me, a tennis court is probably not dissimilar to that, provided you’re not playing doubles. If you’re playing singles, away you go. I haven’t seen any requirements to close tennis courts, so.
A couple of questions then got asked about ‘well if those facilities such as pools and gyms are closing, do we get a reduction in our levies?’
My response to this is: well yes it’s true that you can’t use that common property for a period of time, but on the flip side, it’s more than likely that the committee and the body corporate manager, and indeed the caretaker, have seen their level of enquiry and their level of work skyrocket as a result of this situation, with people calling them and asking them questions. So whatever quote on quote ‘reduction’ that some people might see in one area, will no doubt be absorbed in another area.
Even if you could argue that you deserved a reduction in levies, how are you going to measure that? If the pool is closed for the next six months, for argument’s sake, how are you going to put a price on the six months non use of the swimming pool in relation to your levies? I’m not sure you can make that kind of calculation, frankly.
And the other problem would be that it actually requires the same amount of maintenance. The costs of running the pool haven’t changed, maybe the chlorine drops by a little bit? I don’t know. But it still uses the same electricity, the same filter, requires the same cleaning, and all that sort of stuff. So the cost for the body corporate has not changed. Your right to use the facilities on the common property probably has, but that’s not necessarily a monetary thing as much as a ‘this is really annoying thing’. You are paying for something that you can’t use, but that cost is still there.
Bearing in mind, this is quite separate from rent reductions. So I am only talking now about an owner’s responsibility towards levies. There is a very separate question about tenants and their reductions in rent, that’s being covered quite separately. I can’t comment on that in this discussion.
On a related topic: Is there any talk about placing body corporate contributions on hold during this crisis?
A: There has been nothing mentioned by the government. We have already talked about the need for bodies corporate to collect levies to pay bills.
The next part of that question is: Is it reasonable to ask the caretaker to take a cut in the salary that they receive?
A: Well presumably they are still doing the same work, and they are probably doing more into the bargain, and the same goes for the body corporate manager I would have thought. Yes it’s true that everybody or most people are taking reductions in pay and reductions in conditions, but you have got to base that on actuals and I don’t know what you think Frank, but If there is no change in the duties of the caretaker, it’s hard to argue that they need a cut in their pay I would have thought.
I would agree. Obviously we act for strata managers, we act for caretakers, we act for bodies corporates, so I’ll throw that sort of non-independent hat into the ring. But my experience with people that are in management rights and strata managers, is that their stress levels have gone through the roof in the same way that I suppose ours have. And for me, it’s just the intensity of everything at the moment, right up there with anything that I’ve seen from a GFC perspective, which is that people are under enormous financial pressure, there is a whole lot of unknowns, and that just creates tension. So I know, all of the strata managers that I talk to are getting bombarded with – well if you’re a strata manager running, let’s say a herd of 80 buildings, that might have 800-1000 owners. A lot of those people, independent of the committees, are contacting the strata managers, asking what’s going on. And that, on top of the day-to-day stuff, is a pretty intense working environment. So at the moment, and I think mate, we’re the same in that sense of working – there is nothing easy about any of this, so its all a very tense environment.
I know it’s easy to say ‘we should be cutting, we should be cutting’, and maybe, I’ll say a discretionary spend is lawyers, you know? Maybe if you have got $20,000 in your admin fund budget for lawyers for the next 12 months, you carve that back to 10K or 5K. And then perhaps you try to solve things via the mediation service that we put Chris Irons on to do, rather than engage in a big extended legal gunfire. That might be a better use of your money.
Perhaps there is repair and maintenance where you might have a line item of 20K, and you could decide not to spend all of that along the way. So there is a degree of discretionary spending in body corporate, but not much. And it will be more along the lines of the sinking funds in terms of deferring some items that might be able to be deferred or extended or whatever it might be.
I’ll pick up a couple of questions that we haven’t covered so far: Is it practicable just to recommend to all tenants to behave as they do in any public space, that if they touch areas touched by many people that they wash their hands.
A: Yeah, absolutely! Recommend away! There is nothing preventing communication or encouraging people to corporate, that’s fine.
Can I just add one word there: There is always this tenant VS owner thing that comes up, and I think probably the best way to refer to them is as ‘occupiers’, because that is everyone in the building, whether they are tenants or owners or otherwise. I think sometimes a lot of the tension that can arise in strata communities, particularly where there is a lot of investor owned product is that class distinction between owners and occupiers, and I think if communication goes out collectively across the board to everyone, and this is one of the difficulties in ensuring that everyone’s details are in one database, and I suppose this is where management rights can be a good thing in terms of where a manager manages a bunch of units in a permanent complex, the inevitably will have all the tenant’s details. When you sometimes get outside agents, or people doing their own self management that tenants don’t necessarily become part of the wider community, I think the communication piece around this sort of stuff is very important to everyone in the building.
Another Question: any suggestion for what we can do as property managers for tenants asking for reduced rent or extended rent payment?
A: Start the discussions as early as possible would be my first piece of advice. Communicate, get some information from them about what they can do. Importantly, and I should have said this right at the start, keep an eye out for what the government is offering in terms of financial incentives and financial initiatives. There are plenty of initiatives out there now where there may be assistance available to people so that would be an option. I would always think that having some rent is better than having no rent. It’s a very difficult situation though, it’s got to be an understanding of the circumstances of those people. If you have tenants who are in hospitality or were in hospitality, for example, that might be a very different conversation to those who are in medicine for example.
And what I’ll do is I’ll get the link to the Queensland government’s Tenant relief one up for everyone to have a look at, of course that’s very Queensland specific.
Our office is in the valley and one of our paralegals lives in a new building in the valley. The bulk of the tenants there were hospitality staff. So she was saying the building’s Facebook page has turned into a swap meet basically in terms of dumbbells – they’ve got a really good gym – sales of furniture, and that sort of stuff. Money has ceased to matter, everyone’s just trying to sell and trade and do all these sorts of things while they don’t actually have any income. So that’s a building for example that I suppose that would have a whole lot of people not necessarily paying their rents. But it is again, case by case.
A couple more Questions: Can visitors with COVID symptoms, history of contact with overseas travel be requested, directed to not enter the enclosed common areas where there are residents who are at higher risk of transmission.
A: Well my question would be, even if you are quarantining, don’t you have to leave your apartment at some point to for example to get food, groceries, delivery. What happens if you need to go to the doctor? What happens if you need to go to the hospital? How can you avoid moving through common property under those circumstances? It’s a give and take scenario. If somebody is meant to be quarantining and they’re not, that’s a police issue, and I think everyone should know by now, that is a police issue. But this idea that you go around sourcing information from people about their travel history or their symptoms, and then making decisions of their use of common property based on that, I think that needs to be avoided at all costs.
Bodies corporate are not police and they are not health experts, and I think that’s just a really dangerous path to go down.
I might add to that one from Therese there who’s having a crack at – sorry Therese your not having a crack at me about the tennis courts – tennis Queensland put a post up saying they strongly recommend all tennis activities cease. That’s the same, Golf Australia has put a post out recommending all golf activities cease, but that’s their recommendation that’s not a rule. So then to me, that comes down to each individual’s personal circumstances and each community’s personal expectations around tennis courts.
So I know, I can still play golf. Golf Australia said ‘they shouldn’t’. And I suppose part of that – and I certainly copped some of this from my mates down there in terms of ‘you lawyers are ruining the world’ and for me the fear of liability in a vacuum ‘not legal advice sense’ is how on earth you’d possible prove how that person caught the virus at that game of tennis or at that golf club is impossible based on the amount of activity people have got.
Actually Chris there is a good one there from Frank, great name Frank about the Commissioner’s Office conciliation. What do you reckon about that?
Frank’s Question: Where you have indicated that matters should be taken up with the Office of the Commissioner, is it going to insist on conciliation as happens in non-COVID-19 times?
A: What an excellent question Frank! It would really depend upon the situation and what the issue is. If you are challenging a decision of a general meeting, that typically won’t go to conciliation anyway. Otherwise, there has been no directions issued by my former office at this point in time about that. I would expect that their policy about conciliation would continue unchanged until there is a defined need to change it. What I would say is that conciliations would be done by video conference, and they have actually published a directive about that.
A Question from Gary: Can owners ask for a higher level of oversight of committee agendas and minutes at this time eg. have agendas and docs emailed to all owners (allowing for privacy).
A: So if you are an owner, in Queensland anyway, unless you’ve opted out of receiving minutes, you should be receiving a copy of the minutes anyway, and that’s where you get informed about those kinds of decisions. There are some provisions around attending body corporate committee meetings as well, although there are restrictions on non committee members attending those in some circumstances but at the end of the day if what you’re saying Gary, is that your not getting out of your committee all of the information that you think that you should be, my suggestion is that you go back to the committee and you make it clear what your expectations are about that. Bearing in mind that they’ve got the legislative obligation about that and if they’re not complying with that then the onus is upon you to take some action about that if they’re not complying.
This is the other question – we had this question from someone else too – alleging that there were no minutes being taken, committee meetings not being properly held. If your body corporate either does not have a functioning committee or does have a committee which is not doing what it should be doing, then there are steps to take to address that situation and that would be through the Commissioner’s Office.
And the other thing you could do I suppose is to attend the committee meetings. We’ve seen committees move to Zoom which seems to be the platform of choice. For $20 a month or something, we’ve got unlimited capacity to do whatever. So we’ve had meetings with committees on Zoom, where people can attend or be muted or otherwise. Certainly in Queensland, the legal position is if you give 24hrs notice you’re entitled to attend the committee meeting and be there for everything other than the specific matters which might relate to you. So that accountability transparency or otherwise.
Probably to be fair, committees, again, are volunteers doing this out of the goodness of their heart, and it’s the same I think in the sense of volunteer boards and that sort of stuff.
Certainly down at my golf club for example, that board has effectively an operating business which is a club house approach and all those sorts of things, and they’re all volunteers doing it, and they’ve been put through the ringer in terms of all of this stuff, while also out the side, they’ve had their own businesses or investments get completely poleaxed by whatever this thing has been.
So committee members are no different. So I think for me, part of this is the manner in which that issue or question is communicated – not in terms of “I’m not sure you blokes are telling me the truth” – as opposed to “in these times, I wouldn’t mind some more transparency around this, this, and this.” So this is just a word this and a communication thing, just a more delicate approach first up, rather than attacking someone. Particularly in the environment where it’s very easy to go off a little bit more tensely than you might otherwise.
It happened to me Frank, that I know that I have reacted to situations where, in hindsight, I really wish I hadn’t reacted to those situations that way and you can put it down to the stress sores that the situation poses.
We’re going to have to wrap it up in a minute or two. I just want to address a couple of final comments that Christine made in response to my response to her question: i.e. I am living with complex rare lung disease, history of pneumonia etc & have been advised to self isolate. So, Christine, there is nothing preventing you from asking somebody about their quote on quote ‘status’. What I was saying is that there is no power of the committee to compel or demand that information from a tenant, from an owner, from anybody else. As far as I am aware, the government has not mandated any kind of notification process in relation to anybody who has been diagnosed, neither have they mandated any type of recording process around travel. The government’s putting in its own measures about those sorts of things but there is no ability for the body corporate to demand that information. By all means can ask, by all means, can have discussions with people, but there is no obligation on an individual to tell you anything. That’s just how it is, and that might change.
And I think that’s a really good point to end things on; life has changed so much in the couple of weeks since Frank and I last did this. It will no doubt change again. We’re about to approach Easter. No doubt Easter is going to pose a challenge for strata and body corporate in relation to COVID. There is likely to be further challenges emerge over the coming weeks as owners, occupiers, committees, managers, caretakers, come to some realisations about their financial positions and so on. No doubt things will change more, then.
I don’t think there is any substitute for qualified advice when you need it. The first source of qualified advice has got to be from the government, that’s where all the information is coming. And then if you’re after qualified body corporate advice you need to ask people who have body corporate expertise.
Have a question about the strata living with COVID-19 or something to add to the article? Leave a comment below.
This post appears in Strata News #337.