Limits on spending by large strata schemes

I believe you’re right – because 102(2) refers to estimates for items provided at an AGM, so it is limited to items specified in the budget, either specifically or generally. 

I may be splitting hairs here but section 102 doesn’t make any reference to a “budget” but instead refers to items for which estimates have been provided to an AGM:

An owners corporation for a large strata scheme must not spend on an item or matter an amount greater than the amount specified for the item or matter (plus 10%) in estimates provided for that item or matter at an annual general meeting.

So there are two issues there – it’s estimates rather than budgetted items and it’s an AGM, specifically, rather than any other general meeting.

Now you might reasonably assume that items discussed at an AGM and for which estimates have been provided might be part of the budget.  But not necessarily.

If, for instance, an owner proposes a motion to spend an amount on, say, painting and that isn’t in the budget, it would come under the 10 per cent limit.

However, if that proposal comes up in the middle of the year between AGMs and is made to the strata committee rather than the AGM, there may be no such restriction.

Apart from the limit on a figure above which two estimates must be sought ($30,000 in a large scheme), and legal fees, there doesn’t seem to be any other restrictions on spending in either the Act or the Regulations.

So where does that leave unbudgetted items? I don’t think there is any legal requirement to only spend money on items identified in the budget so the 10 per cent excess limit (and its waiver) applies only to items discussed at the AGM.

Apart from that, it would seem that the committee, if it has been given the power to act on behalf of the owners corporation, can spend whatever it wants on whatever it wishes and face the consequences at the next AGM. 

So I am going with Waratah’s mate, but not for the reasons specified. The 10 per cent rule would not apply to expenditure that’s not in the budget or discussed at the AGM – because it never applied in the first place.

The only exemption is when the strata committee or owners corp lose a Tribunal case against an owner.  They can’t just pay the bills or costs out of the admin fund – they have to raise a special levy to cover the costs and the “winning” owner can’t be levied as part of that process.

104 Restrictions on payment of expenses incurred in Tribunal proceedings
(1) An owners corporation cannot, in respect of its costs and expenses in proceedings brought by or against it for an order by the Tribunal, levy a contribution on another party who is successful in the proceedings.
(2) An owners corporation that is unsuccessful in proceedings brought by or against it for an order by the Tribunal cannot pay any part of its costs and expenses in the proceedings from its administrative fund or capital works fund, but may make a levy for the purpose.
(3) In this section, a reference to proceedings includes a reference to proceedings on appeal from the Tribunal.

The Hood wrote:

Unbudgeted things somewhat enter the world of the special levy

So you reckon that if an unbudgeted item exceeds the 10 per cent limit but the owners agreed on the spending at a general meeting and the money was available in either of the funds, you’d still need a special levy.  I’m not saying that’s not the case, but I can imagine a lot of strata schemes, with majority approval, would spend the money and just move on. Who’s going to stop them?