Case Study: Borrowing and spending are two distinct decisions

Artique, Surfers Paradise
Decision: February 2026

Office of the Commissioner of Body Corporate and Community Management – QBCCMCmr 43.

Situation

An extraordinary general meeting passed motions that approved a $3 million line of credit to pay for repairs to damage caused by water ingress and to accept a quote to undertake those repairs.

A lot owner sought orders to restrain the body corporate from implementing the motions based on a number of factors, including a failure by the body corporate to distinguish between the decision to borrow and the decision to spend, and a failure to provide two quotes from financial providers and from repair contractors.

Background

Water damage at the high-rise Artique building in Surfers Paradise required repairs. An extraordinary general meeting was called to propose motions for remediation works and to propose that the body corporate establish a loan facility.

The motions were passed by the required majority. However, a lot owner sought an interim order through the Office of the Commissioner of Body Corporate and Community Management to restrain the body corporate from implementing them.

The lot owner objected along a number of lines, but the adjudicator decided that two arguments held particular weight.

1. The loan agreement

The first was concerned with a motion to approve the body corporate entering into an agreement with a financial provider to establish a line of credit up to a maximum of $3 million.

The reason for the loan as described in the meeting material was for working capital, water ingress remediation, building repaint and utility infrastructure works. There was only one letter of offer with the EGM material.

The lot owner sought to restrain the body corporate from drawing down on the approved loan facility on the basis, amongst other things, that insufficient information was provided to lot owners about what the borrowed funds were to be used for.

The adjudicator decided for the lot owner.

The adjudicator drew a distinction between the approval of a facility on the one hand and then the decision to actually draw down on that facility on the other, noting that the facility amount could be mixed in with sinking fund monies already raised and on that basis there was no certainty around what would be drawn down for what purpose.

That decision was properly to be made by owners in general meeting when they knew the detail about the purpose of any drawdown.

Also, given that the interest charges from drawing on the facility would likely be above the scheme’s major spending limit, provision of the credit facility should be subject to the two-quote requirement of section 163 of the Accommodation Module.

2. The remediation works

A similar objection was raised for the remediation works, where the body corporate provided only a single quote for repairs, rather than following the legislative requirement to provide two quotes for major spending.

The adjudicator was not convinced by the body corporate’s claim that extraordinary circumstances prevented supplying a second quote, as required under legislation.

The body corporate had argued that the contractor had previous experience with the building and provided specialist knowledge, making it impracticable to source a second quote.

The adjudicator said, “I consider the purposes of the two-quote requirement are to give owners choice and an objective way to test pricing for major spending. In the circumstances, I consider the committee’s failure to comply was not a mere technical failure but was substantial non-compliance.”

The motion to undertake the repairs was declared invalid, and the resolutions to pass those motions were void.

What this means

When a body corporate is looking to undertake major spending of any nature, the legislation makes it very clear that owners are given choice about who to spend that with – be that a building contractor or a financier.

The first question a committee needs to ask itself on any matter that will involve spending substantial funds of the body corporate is: ‘Is there any reason we can’t get another quote?’

Those statutory obligations were included for specific reasons, and it will only be in extraordinary circumstances that they will be waived.

The drawing of a distinction between the decision to borrow and the decision to spend might look legalistic to some, but it is consistent with the same principles. If a substantial amount of owners’ money is being spent, those same owners are entitled to participate in the decision to spend it.

A body corporate can increase spending limits for particular projects or particular amounts to give a committee more authority, but that didn’t happen here.

Further reading

• Austlii Listing
• Can a body corporate invest or borrow funds?
• Two quotations are required when above the Major Spending Limit