Sanctuary Shores Resort [2000] QBCCMCmr 560 (1 November 2000)

P G DanielsREFERENCE: 0393-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	15538
Name of Scheme:	Sanctuary Shores Resort
Address of Scheme:	Cnr Pinnaroo & Mungala Street HOPE ISLAND QLD 4212

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

P G DanielsI hereby order that Australian Unit Administration Pty Ltd must allow any committee member of the Body Corporate for Sanctuary Shores Resort community titles scheme 15538 (the body corporate) to access records of the body corporate in whatever form they are kept on the next business day after a request for access from the committee member.

I further order that Australian Unit Administration Pty Ltd must allow all owners and their agents to inspect and be provided with copies of records of the body corporate as provided by section 162 of the Body Corporate and Community Management Act 1997 and section 151 of the Body Corporate and Community Management (Standard Module) Regulation 1997.1n
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0393-2000

“Sanctuary Shores Resort Body Corporate” CTS 15538

The applicant, Sanctuary Shores Resort Body Corporate, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):

Australian Unit Administration to:

1. Refund the amount of $8000 paid to Peter Norgrove without executed caretaking agreement;

2. Satisfactorily reduce the supposed electricity charges and refund at least $4200;

3. Refund the “Interest on Overdue Levies” that disappeared from the body corporate account.

4. Refund to Laurie Woods the $20 dispute fee.

All back to the body corporate account.

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)).

The applicant is a body corporate community titles scheme consisting of 14 lots.

The relevant building units plan (now building format plan) was registered on 2 December 1996.

The respondent, Australian Unit Administration, the body corporate manager, (AUA) states in its submission that lot 1 is used by the manager, lot 2 operates as a restaurant and the remaining 12 lots are let on a short-term basis through the on-site manager.

The applicant is seeking refund of certain monies from AUA. I will consider each order separately.

1. $8000 – Caretaking agreement

The applicant entered into a caretaking agreement with a company known as Lanai Holdings Pty Ltd. AUA states that the agreement was approved by the applicant at its first annual general meeting held on 11 December 1996. The agreement was executed on 29 May 1997.

The applicant states that $8000 was paid by AUA in caretaking fees for the period 2 December 1996 to 29 May 1997. The applicant objects to the payment on the basis that at the time it was made there was no caretaking agreement. Additionally, it states that several months elapsed before a claim for this was payment was made, “thus leaving the newly created debt for the new unsuspecting owners.” The applicant does not know when the $8000 payment was made and states, “We were told that as he had a debt with the Body Corporate Manager, the majority of the payment was offset against the debt.”

AUA responds by attaching a letter from Short Punch & Greatorix, Solicitors dated 15 March 2000. The solicitors indicate they act on behalf of Lanai Holdings Pty Ltd and relevantly state, “We advise that our client was appointed Caretaker of the property pursuant to the minutes of the First Annual General Meeting held on 11 December, 1996. We further advise that our client was remunerated accordingly.” AUA then states, “It is quite clear from the manager’s point of view that they were entitled to the fees as they had been appointed in December 1996 and had carried out all the duties required of them up to the time they sold the management rights. Similarly from the point of view of this office, as body corporate managers, it is quite clear that these fees were contractually required to be paid.”

The applicant’s main ground is that payment was made prior to the relevant agreement being formally executed. This may be a basis for denying payment pursuant to the subsequently executed agreement (although there is some doubt about that matter.) However, if caretaking work has been done the liability to pay for the work can arise through other legal requirements.

I decline to make the order sought on the grounds provided.

2. $4200 – electricity

The applicant states that during a 14 month period leading up to the AGM on 12 March 1999, the body corporate account went from a surplus of $10,000 to a deficit of over $14,000. It states, “Electricity was $6,000.00 over budget and yet they continued paying. We have made repeated requests to examine the electricity accounts for any duplication between the common areas and the Motel and none have ever been supplied. ... We also believe there is overcharging on the electricity account in the amount of at least $4200.00. This figure was derived from the fact that the exact same services were billed from 1/1/99 to 31/12/99 for $1883.10 (see attachment 4) so the 14 month figure should have been $2196.95, not $6396.20.” The applicant has provided a General Ledger Transaction List that specifies the individual amounts comprising the $6396.20.

AUA states as follows, “When the building was constructed it would appear that only one electricity meter was installed. The electricity supply for the common area and individual units were charged on the one meter, as a result the charges for the first year were well over budget. In normal circumstances this overcharge would be charged back to owners however as all units were still owned by the original owner there was little point in seeking a reimbursement. This application is seeking that “Australian Unit Administration” refund the electricity charges. We are not sure why they would want us to refund these additional charges as they relate to owners costs and have been paid by owners.”

The difficulty with the submission from AUA is that the $6396.20 amount relates to the period 1 October 1997 to 31 December 1998. There is evidence that separate meters were installed in September 1997. The question arises, why the amount relates to one metre when separate meters had been installed for this period.

Despite this difficulty, I decline to make the order sought by the applicant. The applicant has failed to prove its case. I have not been provided with the relevant invoices from the electricity authority nor proof of the payment(s) made. I do not know if electricity for $6396.20 was actually incurred in this period. If it was actually incurred, I also do not know why the amounts were not split up amongst the individual lots and the common property. If $6396.20 was incurred, it would be necessary to determine who should pay the amount. It would seem unfair that AUA should pay the amount. It seems to me that individual lot owners and the Body Corporate should pay. It may be possible to distribute the payments equitably amongst the Body Corporate and owners. For example, does the lot operating as a restaurant use more electricity?

The applicant states that it has been denied access to Body Corporate records. AUA has not challenged this contention. It seems to me that this lack of access to records has prevented the applicant from properly presenting its case. A committee member is entitled to access Body Corporate records: section 150(1) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Regulation). A lot owner and his/her agent is entitled to inspect Body Corporate records and be provided with copies on payment of the appropriate fees: section 162 of the Act and section 151 of the Regulation. I will make an order that allows access to Body Corporate records as provided by the above legislation. The Body Corporate can resolve on action to take (if any) after examination of the records. It can take into account the submission of AUA in this application.

3. Interest on overdue levies

The applicant indicates that the Statement of Income and Expenditure – Actual (attachment 2) shows Interest on Overdue Levies for the period 1 October 1997 to 7 October 1998 as $2045.31. In the Proposed Annual Budget (attachment 3) it shows the Interest on Overdue Levies for the period 1 October 1997 to 31 December 1998 as $32.66. This represents a large difference in money. The applicant wants the money refunded “... unless some satisfactory explanation and documentation is forthcoming.”

AUA states as follows about the matter, “In the 1998 year an amount of $2,185.87 was charged as interest on arrears. Due to the reluctance of some owners to pay levies the bank account was heavily overdrawn. Australian Unit Administration were required to lend substantial amounts of money from 1997 to keep the bank account in funds. The charge for interest on overdue levies for the year 31^st December 1998 was $2,185.87. Included in the total figure was an amount of $2,153.21 which was charged to this account. This was interest charged by Australian Unit Administration on the loans provided over the years 1997 and 1998. This charge was in fact not a cost to the body corporate but was netted off against the interest charged by overdue levies.”

AUA has provided some explanation for why the amount has been substantially decreased. I decline to make the order sought by the applicant. The applicant needs to prove that AUA has no claim to the money. It has not proved its case. The Body Corporate can take into account the submission of AUA on the matter. Committee members and owners will be able to access Body Corporate records. The Body Corporate can then resolve on what action to take (if any).

4. $20 dispute fee

I have no power to order that the respondent pay this fee. There is no express power in the Act that allows such an order to be made.

Conclusion

The only orders that will be made are in respect of access to Body Corporate records.