Here are Andrew's slides, covering Variation of Agreements as presented on the 17 February 2017 at an information session at Noosa Blue.

1. Variation of Agreements
What is a variation?
Common examples
Approval
Body Corporate obligations
What can the body corporate ask for?
When can the body corporate say no?
Who pays what?
Section 130 variation
Don’t Forget

2. What is a variation?
• A variation is a permanent change to the
contractual relationship between the
manager and the body corporate
• Like any contractual change it requires the
written consent of both parties (usually in a
deed of variation)

3. Common Examples
Top-ups under the Regulation Module
• The body corporate may agree to amend an agreement to
include a right or option of extension or renewal of no
longer than 5 years
• The unexpired term must not be longer than the maximum
allowed under the regulation module
• Approval must be by ordinary resolution by secret ballot
• Meeting notice must include a BCCM Form 20 explanatory
note
• Can only be considered once in the body corporate’s
financial year

4. Common Examples
Top-ups otherwise
Lill v Ryan [2011] QCATA 124:
• You can get around the Module
• Just amend the start and end dates of the
Agreement
• No secret ballot required
• No BCCM Form 20 required
• Minimal legal fees because simple deed
• Why not more of it?

5. Common Examples
Remuneration/Duties Review
• New schedule of duties prepared by an expert
• Market remuneration to match the new duties
• A change in remuneration can only be considered
once in each financial year

6. Common Examples
Gallery Vie decision
• Facts?
• QCAT exposed a hole in the protection afforded
to financiers under the Act
• Financiers spooked and wont lend unless
amendments made to termination provisions
• Question about whether committee can “waive”
the body corporate’s termination rights in a
deed of assignment
• Better approach is to amend your agreements
at the next general meeting (rather than
potentially holding up a sale down the track)

7. Approval
• Must be at a general meeting
• Must be an ordinary resolution
• Must be no votes exercised by proxy
• If the variation includes a right or option of
extension or renewal:
• Must be secret ballot; and
• Must include BCCM Form 20

8. Body Corporate Obligations
• No statutory requirements
• Unlike assignments, there is no obligation
to not withhold consent unreasonably
• So, the body corporate is free to negotiate
any proposed variations (subject to the
overriding obligation to act reasonably)

9. What can the Body Corporate
ask for?
• The only restriction on the body corporate is
that it cannot seek or accept the payment of
an amount or the conferral of a benefit in
exchange for approving new agreements or
top-ups
• Recent decisions have confirmed that
commercial negotiations are acceptable
• Ordinarily the body corporate will request its
costs be paid so it is not out of pocket for
considering the manager’s proposal

10. When can the Body Corporate
say no?
• There is no obligation for the Body Corporate
to approve a variation
• There is no obligation for a committee to call a
EGM to consider a variation at your request
(unless you have the support of 25% and
have formally requested an EGM)
• A decision of the Body Corporate to not
approve a variation will be almost impossible
to challenge.

11. Who pays what?
• Unlike assignments there is no statutory
obligation for the manager to pay the body
corporate’s costs
• If you own a lot in the scheme, you can
submit a motion as a lot owner and the
body corporate must include it in the
agenda for the next meeting without
alteration
• However, a committee may submit its own
motion and any motions dealing with the
same issue need to be considered as a
motion with alternatives

12. Section 130 Variation
Party can instigate a review of terms
(duties, powers and remuneration) if:
• Agreements entered during OOCP
• OOCP has ended
• Original manager still there
• Review period is the later of 3 years
after the start of the term, or 1 year
after the AGM held after the OOCP
ended

13. Section 130 Variation
Process:
• Request review (ordinary resolution if
instigated by body corporate)
• Provide review advice (from an expert)
to other party within 2 months of
request
• Have regard to review criteria (next
slide)
• Body Corporate’s final decision to be by
ordinary resolution

14. Section 130 Variation
Review Criteria:
• Appropriateness of terms to achieve a fair
balance between parties
• Whether the terms impose conditions that
are unreasonably difficult to comply with or
are not necessary for protecting the
legitimate interests of either party
• The consequences of complying with or
contravening the terms and whether they
are unfairly harsh or beneficial to either
party
• Whether the terms are appropriate for the
scheme
• The term remaining on the agreements

15. Don’t Forget
If you have a financier, you need to send it
copies of any deed of variation you have
entered into with the body corporate

16. Andrew Suttie
Partner
NICHOLSONS | Solicitors
20/224 David Low Way, Peregian Beach QLD 4573
P (07) 54712799; Direct (07) 3226 3955
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E ajs@nicholsons.com.au
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