Kestrel Court Body Corporate [2000] QBCCMCmr 621 (29 November 2000)

P G DanielsREFERENCE: 0460-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	19013
Name of Scheme:	Kestrel Court
Address of Scheme:	236 German Street NORTH ROCKHAMPTON Q 4701

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

Neville Reginald Williams the owner of lot 6



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

Declare the authorization and engagement of L J Hooker as Body Corporate Manager to be void.

is dismissed.1n
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0460-2000

“Kestrel Court Body Corporate” CTS 19013

The applicant, Neville Reginald Williams, the owner of lot 6, has sought an the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):

Declare the authorization and engagement of L J Hooker as Body Corporate Manager to be void.

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 Body Corporate for Kestrel Court resolved at an extraordinary general meeting on 30 May 1998 (the meeting) to engage a body corporate manager. The minutes of the meeting record the following resolution:

“Motion No. 2: “That Carol Cooper (L.J. Hooker) be appointed as Body Corporate Manager of Kestrel Court Body Corporate”.

13 VOTES IN FAVOUR, 1 NEGATIVE VOTE, MOTION CARRIED”

The applicant seeks an order that declares the engagement to be void. His grounds are in two categories. I will consider each separately.

Firstly, he has alleged that the manager has not properly performed the duties of the position. He details a number of these matters. I do not need to consider them in detail. The reason is that I do not have power to terminate a contract between a Body Corporate and a body corporate manager due to a manager not properly performing his/her duties. The Body Corporate must resolve to take such action. Section 86 of the Body Corporate and Community Management (Standard Module) Regulation 1997 provides a power of termination as follows:

Termination

86.(1) The body corporate may terminate a person’s engagement as a

body corporate manager or service contractor, or a person’s authorisation as

a letting agent, if the person (including, if the person is a corporation, a

director of the corporation)—

(a) is convicted (whether or not a conviction is recorded) of an

indictable offence involving fraud or dishonesty; or

(b) is convicted (whether or not a conviction is recorded) on

indictment of an assault or an offence involving an assault; or

(c) engages in misconduct, or is grossly negligent, in carrying out, or

failing to carry out—

(i) functions required under the engagement; or

(ii) obligations (if any) under the authorisation; or

(d) does not carry out duties under the engagement or authorisation,

and persists in not carrying out the duties for 14 days or more

after the body corporate, by written notice, requires the person to

carry out the duties; or

(e) carries on a business involving the supply of services to the body

corporate, or to owners or occupiers of lots, and the carrying on

of the business is contrary to law; or

(f) transfers an interest in the engagement or authorisation without

the body corporate’s approval.

(2) Subsection (1) does not prevent the termination of the engagement or

authorisation—

(a) by agreement; or

(b) under the engagement or authorisation.

It will be observed that the power of termination provided by section 86 does not affect the operation of a termination power in the agreement itself.

The second matter raised by the applicant is that the relevant agreement was not forwarded to owners prior to the meeting. Section 87 is the relevant provision imposing that requirement. It provides as follows:

Authority to make engagement or give authorisation

87.(1) The body corporate may engage a person as a body corporate

manager or service contractor, or authorise a person as a letting agent, only

if—

(a) the engagement or authorisation is approved by ordinary

resolution of the body corporate;17 and

(b) the terms of the engagement or authorisation are included in the

material forwarded to members of the body corporate for the

general meeting that considers the motion to approve the

engagement or authorisation.

(2) If subsection (1) is not complied with, the engagement or

authorisation is void.

(3) A body corporate may agree to the amendment of an engagement or

authorisation mentioned in subsection (1) only if the amendment is

approved by ordinary resolution of the body corporate.

(4) If subsection (3) is not complied with, the amendment of the

engagement or authorisation is void.

It will be observed that a failure to forward the terms of engagement of a body corporate manager to members prior to the meeting results in the engagement being void.

In this case, the applicant has stated that there was a failure to forward the terms of engagement. Submissions were invited from all owners, the Committee and the body corporate manager. No person has contested the allegation. I accept that the terms of engagement were not forwarded to members.

However, that does not mean that the applicant is automatically entitled to the order sought. This application has been brought more than three months after the resolution approving the engagement of the manager. Consequently, I am required to consider the application of section 193 of the Act which provides as follows:

Time limit on certain applications

193.(1) This section applies to an application for an order declaring

void—

(a) a meeting of the committee for the body corporate, or a general

meeting of the body corporate; or

(b) a resolution of the committee or body corporate; or

(c) the election of an executive or other member of the committee.

(2) The application must be made within 3 months after—

(a) if subsection (1)(a) applies—the meeting; or

(b) if subsection (1)(b) applies—the meeting at which the resolution

was passed or purported to be passed; or

(c) if subsection (1)(c) applies—the meeting at which the executive or

other member was elected.

(3) However, if the making of the application does not comply with

subsection (2)—

(a) the commissioner must deal with the application (including

making a case management recommendation for the application)

as if the making of the application complied with subsection (2);

and

(b) an adjudicator to whom the application is referred for specialist or

department adjudication may, for good reason, waive the

non-compliance.

It will be observed that an application for an order declaring void a resolution passed at a general meeting must be brought within three months of the relevant meeting unless an adjudicator waives the non-compliance for good reason.

In the appeal of Weeks v. Commissioner for Body Corporate (Maroochydore District Court Appeal 13/99) Judge Dodds made the following statement about section 193 at pages 4 and 5 of the judgment:

“... the objects of the Act, for instance section 5(a) and (h) militate against too strict or legalistic a view about good reason for waiving non-compliance with the time limit. What will be required is a balancing of the length of the delay; the reason for the non-compliance; the effect of delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the adjudicator that the time limit should be waived in all the circumstances.”

I will apply the principles in Week’s case to this application.

The length of the delay has been quite substantial. It has been approximately two years taking into account an applicant does have an initial three month period to bring the application.

The applicant has stated that the reason for non-compliance is that he did not know about the requirements of section 87 of the Regulation. I give that matter little weight.

In my view the effect of the delay is quite substantial. The Body Corporate has been managed since 1998 by its current manager. Various submissions attest to owners being satisfied with the performance of the manager. The manager would have acquired a substantial amount of knowledge about the affairs of the Body Corporate. The Body Corporate has also relied on the manager to assist in the successful operation of the scheme. An order terminating the engagement at this stage would affect the proper management and administration of the Body Corporate.

Another factor I take into account is that the engagement can only last until May 2001. Section 80 of the Regulation provides a maximum term for the engagement of a manager as three years.

The final factor is whether the applicant would be entitled to the relief sought. It is quite clear that the applicant would be so entitled. Section 87 of the Regulation provides that the engagement is void.

Taking into account all of the above factors, I have decided not to waive the requirement that this application be brought within three months of the meeting.

Consequently, I dismiss the application.