24 Moray Street [2000] QBCCMCmr 411 (11 August 2000)

CG YoungREFERENCE: 0312-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	14497
Name of Scheme:	24 Moray Street
Address of Scheme:	24 Moray Street NEW FARM QLD 4005

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

Dayne CORY, the owner of Lot 18,



CG YoungI hereby order that the resolution of the committee made pursuant to section 35 of the Body Corporate and Community Management (Standard Module) Regulation 1997 on 1 June 2000, to accept a quotation for six thousand dollars (1n$6,000) to upgrade the lift, is void.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0312-2000

“24 Moray Street” CTS 14497

The applicant, Dayne Cory of Lot 18, has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”) that the body corporate be stopped from exceeding a statutory expenditure limit by spending $6,000 on the upgrade of the building lift, and that the proposal to upgrade the lift be considered by owners in general meeting.

Section 223(1) of the Act 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)).

In the supporting grounds, the applicant states that the committee does not have the power to approve the upgrade of the lift because the proposed work is an “improvement” which requires authorisation by special resolution under section 113 of the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module"). Mr Cory has included a copy of the minutes of an annual general meeting held on 20 October 1999 when the proposal was initially decided upon. Motion 16 on the agenda concerns the lift upgrade, and the minutes show that the body corporate resolved, by ordinary resolution, that “the lift walls and floor be upgraded to a satisfactory standard”. Motion 21 on the same agenda concerned a building report, and the body corporate also resolved by ordinary resolution for the committee to spend $20,000.00 over the “financial year on a list of priorities to be determined by them at a subsequent committee meeting” (the original motion was for $15,000 but was amended at the meeting).

Mr Cory also included a copy of a resolution made by the committee under section 35 of the Standard Module (“flying minute”),which resolution was later notified to lot owners by letter from the Body Corporate Manager dated 2 June 2000. The motion agreed to by committee members was as follows:

“Re Motion 16 AGM – Lift Upgrade

The committee has selected following quote from a number of quotations -

•	Re-sheet walls with timber melamine board
•	Re-sheet ceiling with timber melamine board
•	1 Stainless Steel Grab-rail to back wall
•	Mirror
•	Carpet
•	Lift Company
•	Electrical – 2 x 12 V down lights

Quoted Price = $6,000,00”.

A copy of the application was forwarded by this office to the body corporate secretary for distribution to all other owners and the committee. The committee has not submitted a response to the application. Five lot owners responded, three in support of the application and two opposing it. The owners in support of the application stated generally that the committee should be made aware of its rights and responsibilities and also expressed uncertainty regarding the appropriateness of the materials proposed to be used in the lift upgrade. The submissions opposing the application state generally that the building is in a poor state of upkeep and that the lift requires necessary improvement.

Section 103(1)(a) of the Standard Module provides that the “committee may only carry out a proposal involving spending above the relevant limit for committee spending for the scheme if the spending is specifically authorised by ordinary resolution of the body corporate”. The “relevant limit” for committee spending is defined in the Dictionary Schedule of the Standard Module as “an amount worked out by multiplying the number of lots included in the scheme by $100”. The committee resolution made under section 35 of the Standard Module was to accept a quotation for the lift upgrade to the value of $6,000, whereas the relevant limit for committee spending for the committee of this body corporate is $2,100 (21 lots multiplied by $100.00). The committee has therefore exceeded its relevant spending limit in resolving this matter.

In making this decision, the committee may have sought to rely on the resolutions passed at the October 1999 Annual General Meeting as its authority, namely Motions 16 an 20 previously mentioned, and the exception provision of section 103(a) of the Standard Module. This section allows a committee to exceed its “relevant limit” if the body corporate specifically authorises it. However, the effect of the resolution passed in respect of Motion 16 is merely that the body corporate has resolved to upgrade the lift walls and floor. It does not authorise the committee to approve the work or to spend a particular amount. Motion 21 then authorises the committee to spend $20,000 on a list of priorities to be determined by the committee. This motion does not provide the specific authorisation required by section 103(1)(a) of the Standard Module. Accordingly, the decision of the committee is void in contravening section 103.

Even if specific authorisation had been given, the proposal to upgrade the lift at a cost of $6,000 would be subject to the provisions of section 104 of the Standard Module (see section 103(3) of the Standard Module). It will be seen that the committee’s decision is also void in contravention of this section.

The provisions of section 104 have effect when the body corporate proposes to carry out work and the cost of the proposed work is more than the “relevant limit for major spending” for the scheme. The “relevant limit for major spending” is defined in the Schedule Dictionary of the Standard Module as “an amount worked out by multiplying the number of lots included in the scheme by $200”. The relevant limit for major spending for this body corporate is therefore $4,200 (21 lots multiplied by $200). At $6,000, the proposal is therefore caught by the provisions of section 104 and, under the requirements of the section, could only have been considered at a general meeting after owners had been given copies of at least 2 quotations for carrying out the work, each incorporated into its own, alternative, motion. This was not done. The committee cannot consider and chose amongst quotations as appears to have occurred in this instance.



For both of the above reasons, I have ordered that the resolution of the committee made under section 35 of the Standard Module to accept a quotation to upgrade the lift at a cost of $6,000, is void.

The applicant also contends that the proposed work to the lift constitutes an “improvement” to common property, rather being required “maintenance/repair” of the common property. The word “improvement” is defined in the Act to include the erection of a building and a structural change. The Australian Legal Dictionary (published by Butterworths Australia) defines an improvement as, “Enhance the value or desirability of property, real or personal”. In contrast it defines repair as “restoration by renewal or replacement of subsidiary parts of the whole”. If the committee does decide to submit an appropriate motion or motions regarding the lift upgrade to a general meeting, it must first consider whether the proposed work is an improvement, and, if so, how the provisions of section 113 of the Standard Module affect the type of resolution required to pass the motion or motions. I do not have to decide this issue in determining this application, and in any case do not have information regarding the actual work proposed in order to be able to determine its proper categorisation.