La Porte D'Or [2000] QBCCMCmr 263 (6 June 2000)

P G DanielsREFERENCE: 0060-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	12681
Name of Scheme:	La Porte D'or
Address of Scheme:	3422 Gold Coast Highway SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

Edward Austin Harding a co-owner of lot 134



P G DanielsI hereby order that the application for an order:

That the motion that “The Resort be paid an extra $2000 per month”, carried at a meeting of the Body Corporate Committee on 13^th January 2000 be declared Invalid.

is dismissed.1n
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0060-2000

“La Porte D'or” CTS 12681

The applicant, Edward Austin Harding, a co-owner of lot 134, has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) that:

The motion that “The Resort be paid an extra $2,000 per month” carried at a meeting of the Body Corporate Committee on 13^th January 2000 be declared Invalid.

Section 223(1) provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about –

a) a claimed or anticipated contravention of the Act or the community management statement; or

b) the exercise of rights or powers, or the performance of duties, under this Act or the community management statement; or

c) a claimed or anticipated contravention of the terms, or the termination of, or the exercise of rights or powers under the terms of, or the performance of duties under the terms of an engagement contract or an authorisation contract.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 223(2)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

This application relates to the validity of a Committee resolution that was passed at a meeting on 13 January 2000. The applicant argues that the Committee approved expenditure in contravention of sections 103 and 104 of the Body Corporate and Community Management (Standard Module) Regulation 1997.

The minutes of the meeting record the following:

“MAINTENANCE Co-ordination/Personnel

It was recognised that the Resort Company had been involved with maintenance problems for many years and for this reason the consensus of opinion was that Julia Henderson (Resident Manager) be responsible for the day to day maintenance of Golden Gate. Administration would continue organising payment and in case of Julia’s absence maintenance would be handled by Administration. It was also confirmed that the Resort had been subsidising the Body Corporate for many years and that other buildings operating under this system pay many thousands more. It was moved by Bob Thomas and seconded by Len Hilliard that the Resort be paid an extra $2000 per month for extra assistance and Julia Henderson is to henceforth countersign all purchase orders. Bob Thomas suggested that he and Len Hilliard of the Committee should liaise with Julia Henderson to prepare a schedule of functions and authorities and report back to the Committee. Administration (Marika Maselli) to immediately arrange insurance cover for the Resort Company and Julia Henderson in respect of their services to the Body Corporate.

RESOLVED to be accepted by all committee members with the exception of Vito Georgio who wished to abstain, and Denis Liner and Philip Munz who abstained declaring their honorary directorships in Golden Gate Resort Pty Ltd.”

It will be observed that the resolution provides an increase of $2,000 per month to Golden Gate Resort Pty Ltd (the Resort Company) for “extra assistance”. The Committee would subsequently consider a “schedule of functions and authorities”. A person associated with the Resort Company, Julia Henderson, was to “henceforth countersign all purchase orders.”

The applicant does not provide information about the Resort Company in his application.

Attwood Marshall made a submission on behalf of the Body Corporate. Teys McMahon made a submission on behalf of a number of resident lot owners.

The following is stated in the submission from Attwood Marshall about the duties of the Resort Company:

“The services historically provided by Golden Gate Resort Pty Ltd include:

•	Staffing the reception desk
•	Supervising security guards
•	Monitoring by-laws
•	Answering the main switchboard, taking messages and collecting accounts for telephone use
•	Sorting mail
•	Arranging for owners’ purchase of certain items (eg security keys)
•	Liasing with the Letting Agents of tenanted units
•	Liasing with the Body Corporate Manager (Ray White – AM Strata Management)
•	Special duties during the Indy Carnival (the scheme is within the area allocated to the Carnival and requires special arrangements, including issuing tickets to owners)
•	Attending committee meetings
•	Supervising cleaners
•	Assistance to visitors and short term tenants
•	Storage of certain items for the body corporate, including communications equipment owned by the body corporate.”

However, Teys McMahon have a different view of the work performed by the Resort Company. They state, “To the best of our knowledge, the only duties the resort performs for the $25,000 per annum is sorting lot owner’s mail into pigeon holes at the reception desk and administering monthly telephone accounts. The resort occasionally takes message for the resident lot owners.” Earlier in the submission Teys McMahon state, “La Porte D’or is an apartment style building in the heart of Surfers Paradise containing 182 lots. The constituency of the body corporate is quite diverse, ranging from resident lot owners, to investors and the Golden Gate Resort Pty Ltd (“the resort”). The resort owns a number of units within the scheme and manages the rental of its own lots.”

It seems from the above that the Resort Company provides a variety of services to the Body Corporate in addition to owning and letting a number of lots.

At the Body Corporate’s last annual general meeting on 13 November 1999, the administrative fund budget contained an amount of $25,000 for “Services Golden Gate Resort”.

The extra $2,000 per month results in an annual increase of $24,000. This means that if the Resort Company is fully paid the budgeted $25,000 and the increase of $24,000, then it will receive a total of $49,000.

I will set out sections 103 and 104 of the Regulation as they are the sections which the applicant alleges have been contravened. Sections 103 and 104 provide as follows:

Spending by committee

103.(1) The committee may only carry out a proposal involving

spending above the relevant limit for committee spending for the scheme

if—

(a) the spending is specifically authorised by ordinary resolution of

the body corporate; or

(b) the owners of all lots included in the scheme have given written

consent; or

(c) an adjudicator is satisfied that the spending is required to meet an

emergency and authorises it under an order made under the

dispute resolution provisions; or

(d) the spending is necessary to comply with—

(i) a statutory order or notice given to the body corporate; or

(ii) the order of an adjudicator; or

(iii) the judgment or order of a court.

(2) For this section, if a series of proposals forms a single project, the

cost of carrying out any 1 of the proposals is taken to be more than the

relevant limit for committee spending if the cost of the project, as a whole,

is more than the relevant limit.

(3) This section has effect subject to the requirements under this division

for spending that is above the relevant limit for major spending.

Quotes for major spending

104.(1) This section applies if—

(a) a motion to be moved at a general meeting of the body corporate

proposes the carrying out of work or the acquisition of personal

property or services, including the engagement of a body

corporate manager or service contractor, but not including the

engagement of a service contractor who also is, or is to be, a

letting agent; and

(b) the cost of carrying the proposal into effect is more than the

relevant limit for major spending for the scheme.

(2) The lot owners must be given copies of at least 2 quotations for

carrying out the work or supplying the personal property or services.

(3) If the motion is proposed by the committee, the committee must

obtain the quotations.

(4) If the motion is not proposed by the committee, the person proposing

the motion must obtain the quotations and give them to the secretary.

(5) Copies of the quotations or, if voluminous, summaries of the

quotations and advice about where the complete documents may be

inspected, must accompany the notice of the meeting at which the motion is

to be considered.

(6) If, for exceptional reasons, it is not practicable to obtain 2 quotations,

a single quotation must be obtained and must accompany the notice of

meeting.

Example—

If goods to be acquired by the body corporate are obtainable from only 1 source, a

quotation for supplying the goods must be obtained from the source and circulated

with the notice of meeting. The fact that goods with the necessary characteristics

are only obtainable from a single source would be an exceptional reason for not

obtaining 2 quotations for the supply of the goods.

(7) Each quotation obtained under this section must be retained as an

attachment to the minutes of the meeting at which the quotation is

considered.

The terms “relevant limit for committee spending” and “relevant limit for major spending” are defined in the dictionary of the Regulation as follows:

“relevant limit for committee spending”, for a community titles scheme,

means an amount worked out by multiplying the number of lots

included in the scheme by $100.

“relevant limit for major spending”, for a community titles scheme,

means an amount worked out by multiplying the number of lots

included in the scheme by $200.

La Porte D’or has 182 lots. The relevant limit for Committee spending is $18,200: see section 103(1) of the Regulation and the definition of “relevant limit for committee spending” in the Dictionary of the Regulation. Spending above that limit may only be authorised by ordinary resolution of the Body Corporate or where section 103(1)(b)-(d) of the Regulation apply. The “relevant limit for major spending” is $36,400: see section 104(1) and the definition of “relevant limit for major spending” in the Dictionary of the Regulation. The Body Corporate must approve major spending by ordinary resolution. In addition, the Body Corporate must be presented with at least two quotations. The Body Corporate can determine which quote should be accepted.

The applicant argues that the annual increase of $24,000 is in excess of the “relevant limit for committee spending” and should have been authorised by the Body Corporate in general meeting. Additionally, he argues that the overall figure of $49,000 is in excess of the relevant limit for major spending and section 104 of the Regulation applies.

The issue requiring resolution is whether there has been a contravention of sections 103 and 104 of the Regulation.

That issue can be determined by considering what has actually been approved by the Committee. Sections 103 and 104 refer to a proposal coming within their ambit.

An important part of the proposal to contract with the Resort Company is the length of the relevant contract. The applicant seems to suggest that its length is one year. Attwood Marshall on behalf of the Body Corporate state that the engagement is month to month only and can be revoked by either party giving the other one month’s notice. This was supported by a written statement signed by a director and secretary of the Resort Company. The statement relevantly provides, “The $2,000 referred to by the applicant (Ted Harding) as paid to the Resort Company, is payment for services to the body corporate. Such payments are made on a month to month basis with either party having the right to terminate this arrangement by giving 30 days’ notice in writing.” It is indicated in both the submission from Attwood Marshall and Teys McMahon that the contract with the Resort Company is verbal and not in writing. Attwood Marshall argues that the “proposal” was to spend $2,000 per month which was within the level of committee spending.

There is clear evidence before me from the two parties to the contract to pay the extra $2,000 that it is a month to month arrangement. Attwood Marshall go further and state that the entire amount of $49,000 is payable on a month to month contract. I accept this evidence.

Consequently, there has been no contravention of the Regulation by the Committee in approving the extra monthly payment of $2,000. Even if the whole amount of $49,000 is considered, the Committee has only approved a monthly expenditure of $4,083.33. This amount is also within the relevant limit for committee spending. In each case the “proposal” does not exceed the “relevant limit for committee spending”.

I intend to dismiss the application.

I do wish to indicate that I have read the submission from Teys McMahon. As indicated above, Teys McMahon made a submission on behalf of a number of resident owners. Submissions were only sought from the Committee. On a strict interpretation of the Act, resident owners did not have a right to make a submission. However, I do not need to resolve whether the submission should have been taken into account as it largely supports the application and I have decided the application should be dismissed. The submission addresses a number of matters not raised in the application. For example, Teys McMahon argue that the Committee resolution should be invalidated because of lack of certainty as to what it means. I have not taken these additional matters into account for two reasons. Firstly, they were not raised in the application. Attwood Marshall was therefore not given an opportunity to respond to them. Secondly, the submission was received in this office on 23 May 2000. This is over three months since the Committee meeting on 13 January 2000. If an application was made at that stage raising the new matters, it would be subject to section 193 of the Act which requires “good reason” to be shown why the requirement to bring an application within three months should be waived. In my view it would not be proper to circumvent section 193 by raising matters in a submission. The resident owners who were represented by Teys McMahon can, of course, bring their own separate application.