Stevens Gardens [2001] QBCCMCmr 559 (7 November 2001)

P J HANLYREFERENCE: 0611-2001

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11307
Name of Scheme:	Stevens Gardens
Address of Scheme:	69 Stevens Street YERONGA QLD 4104

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

Estelle Margaret Alice Clay, the owner of lot 6



I hereby order that the application for an interim order to put on hold decisions and legality of body corporate meetings since 5 April 2001, is dismissed.

I further order that within 1 month of the date of this order, the applicant, Estelle Margaret Alice Clay, shall hand over to R Matthews and Son Pty Ltd, all books and records of the body corporate still in her possession.

I further order that, within 1 month of the date of this order, the body corporate manager, R Matthews and Son Pty Ltd, shall circulate to all owners a complete list of charges which can be made to the body corporate under the heading of “Disbursements”, as well as any hourly rate which may be applicable for duties not specified in the management agreement.

I further order that within 3 months of the date of this order, the body corporate shall call and hold a further general meeting at which it considers motions to adopt budgets for the current financial year; to fix contributions to be levied on owners; to audit the financial accounts; to renew (if necessary) the body corporate insurances and any other things that are, under the Act, required to be included on the agenda for an annual general meeting which have not already been considered in this financial year.

I further order that the meeting so ordered may also consider any other motion properly submitted to the secretary prior to the notice of meeting being forwarded to owners.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0611-2001

“Stevens Gardens” CMS 11307

The applicant, Estelle Margaret Alice Clay, the owner of lot 6, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

To put on hold decisions and legality of body corporate meetings since 5 April 2001.

To consider whether schedule of costs and disbursement papers should be included in agreement.

The applicant has also sought the following interim order of an adjudicator, quote -

Interim order to decide the legality of Matthews Body Corporate Management to call meetings in view of the order 0260-2001 handed down on 26 July 2001 invalidating the decision of the body corporate meeting held on 5 April 2001. Whether a schedule of costs and disbursement papers should be included in agreement.

Section 225(1) of the Act provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. 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 expresses concern over a number of issues, including the appointment of the body corporate manager, the absence of any detail of level of disbursements in the body corporate manager’s agreement, the apparent lodging of a new community management statement without the applicant’s knowledge, and the fact that the scheme is regulated by the Standard Module, when the applicant believes that it should be regulated by the accommodation module. The applicant also questions why several of the owners appear to have decided to sell their properties at this time.

All owners were invited to respond to the application. A submission was received from one owner and from the body corporate manager. The owner expressed the view that all owners had been inconvenienced by the application, especially as 5 of the 8 owners had decided that they wished to appoint R Matthews and Son Pty Ltd as the body corporate manager for the scheme. The owner further stated that the applicant had not attended any meetings to express her opinions. I note in this regard, however, the applicant has been in a parlous state of health for some time, which appears to be the reason that she resigned as secretary/treasurer in the first place.

The body corporate manager stated that the majority of owners are in agreement with the appointment.

I have noted the adjudicator’s order dated 26 July 2001, in which the appointment of R Matthews and Son Pty Ltd as body corporate manager at the meeting held on 5 April 2001 was found to be invalid. I further note that an annual general meeting was held on 3 May 2001, at which time a motion to appoint R Matthews and Son Pty Ltd as body corporate manager was again considered and carried. I have not been asked to make any orders in relation to that meeting. However, I note that the notice of meeting was dated 24 April 2001 and the meeting was held on 3 May 2001. The Standard Module, by which this scheme is regulated, requires that at least 21 days notice of a meeting must be given (section 43). Furthermore, for a body corporate to engage a body corporate manager, the provisions of section 87 of the Standard Module must be complied with. In this instance, this office has been advised by Mr Matthews that he does not think that he sent out the management agreement with the meeting notice dated 24 April 2001.

The matter with which I am required to concern myself is the calling and holding of the extraordinary general meeting (incorrectly described in the minutes as an annual general meeting, although correctly identified in the notice of meeting as an extraordinary general meeting) held on 30 August 2001. In this instance the notice of meeting is dated 8 August 2001, thereby satisfying section 43 of the Standard Module, in that at least 21 days notice of the meeting was given to owners. It should be noted for the information of owners that this requirement does not mean that owners have to receive the notice at least 21 days prior to the meeting, merely that it must be given at least 21 days prior to the meeting. Accordingly, if a body corporate manager or a secretary posts the notice on a particular day, then that day is regarded as the day that the notice is given.

Once again, there was a motion on the agenda of the meeting for the appointment of a body corporate manager, and on this occasion, some of the terms of the engagement were included with the notice of meeting, as required by section 87 of the Standard Module. However, section 78(2)(d) of the Standard Module also requires that the engagement must state the basis on which payment for the body corporate manager’s or service contractor’s services is to be worked out. The examples shown at the foot of this section state as follows:

Examples of paragraph (d)—

1. A body corporate manager’s payment could be calculated on the basis of an

amount per lot.

2. A body corporate manager’s payment could include charges calculated on the

basis of a stated amount per telephone inquiry or a stated amount for attendance fees

for additional committee or general meetings. (emphasis added)

The applicant’s major concern is that Mr Trevor Matthews, as body corporate manager, called the meeting scheduled for 30 August 2001, when the adjudicator’s order dated 26 July 2001 had invalidated the appointment of R Matthews and Son Pty Ltd made on 5 April 2001. However, Mr Matthews signed the Notice of Meeting for and on behalf of 3 owners, whose names were specified on the notice. Mr Matthews did not sign the Notice of Meeting as body corporate manager. Mr Matthews explained the position to owners in his letter dated 8 August 2001, which letter he signed as body corporate manager. Section 61 of the Standard Module provides the mechanism by which an extraordinary general meeting can be requested. In this instance, the owners in question did not give a written notice to the secretary (the applicant had been secretary/treasurer, but resigned on 8 August 2001, the day that the notice of meeting was given). Mr Matthews, however, advised this office on 29 October 2001 that he took verbal instructions from the 3 named owners, and, having satisfied himself that the persons so named were registered owners, he proceeded to call the meeting. Mr Matthews further advised that, in addition, the owners of lots 3 and 4 also requested that he take action to call the meeting. In this instance, with 5 out of 8 owners wishing to have a meeting to place the body corporate on a proper footing once more, I am satisfied that the notice of meeting was authorised.

I note from the minutes of the meeting held on 30 August 2001 that 4 owners attended in person, and 2 owners, one of whom was the applicant, submitted voting papers. An apology was received from the applicant and also from 1 other owner. Overall, therefore, some form of communication was received from 7 of the 8 owners.

In these circumstances, I do not propose to invalidate the meeting held on 30 August 2001, or to place on hold any of the motions carried at the meeting. However, the applicant has raised a number of valid issues. Firstly, a schedule of costs and disbursements should be included in the body corporate manager’s agreement with the body corporate. It is not sufficient for the body corporate manager to disclose that disbursements “are outlays incurred in the performance of the duties as body corporate managers namely postage, telephone, photocopying, stationery and forms.” It is also not sufficient for the body corporate manager to “furnish a detailed statement of disbursements for draw down”. Owners are entitled to know at the outset what they are going to be charged for photocopying on a per page basis; what they are going to be charged for each local call (i.e. whether it is the actual cost of the call as charged to the body corporate manager by the telecommunications carrier, or whether it is an arbitrary amount which includes a small profit margin for the body corporate manager); what they are going to be charged for postage; and what they are going to be charged for stationery and forms (i.e. is it the actual cost of those items?) Furthermore, owners are entitled to know what additional costs may be incurred if, for example, the body corporate manager is required to call and hold any extra meetings of the body corporate. The duties outlined in clause 2 of the agreement refer to the requirement for the body corporate manager to attend “certain” meetings, which are described as the annual general meeting and the “more important” extraordinary general meetings. It is not stated that the body corporate manager is required to attend committee meetings. Is the body corporate manager’s attendance at committee meetings going to attract any additional charge, and if so, how is that charge to be calculated? Is it an hourly rate, and is there a different rate applicable to a director of the body corporate manager, as opposed to a non-director? Who is going to determine the “importance” of any particular extraordinary general meeting, so as to decide if the body corporate manager should attend? I therefore propose to order that, within 1 month of the date of this order, the body corporate manager is to provide to all owners a detailed list of charges which could be made as disbursements, as well as clarifying what additional hourly rate may be applicable in the event that extra meetings are required.

I also note that the body corporate has not approved budgets for the current financial year, because some of the books and records are still in the possession of the applicant. Although owners resolved at the meeting held on 30 August 2001 to increase levies to allow for the body corporate manager’s fees and “for normal increases in all other charges”, they should have some certainty as to what those increases are anticipated to be. Sections 94 and 95 of the Standard Module specifically provide the mechanism by which budgets are adopted and contributions are fixed. I appreciate that it was not possible for such motions to be considered at the meeting on 30 August 2001 when the books and records were not in the possession of Mr Matthews. I therefore propose to order that the applicant hand over the books and records in her possession to R Matthews and Son Pty Ltd, and also to order that a further meeting be called within 3 months of the date of this order to enable budgets to be adopted and contributions to be fixed. There is also no evidence before me that a sinking fund forecast has been done for this scheme, so this is a further matter to which attention should be given. Finally, I note that there was no motion proposed in relation to the auditing of the body corporate accounts. It is a statutory requirement that the body corporate have its statement of accounts for each financial year audited by an auditor unless the body corporate resolves by special resolution not to have the statement audited. Such a motion should also be included on the agenda of the meeting which I have ordered.

I also intend to comment on another matter raised by the applicant, namely the lodgement of a new community management statement on 15 July 2000. The applicant states that she was the secretary at the time the request was made, and notes that it was not discussed with her. The letter dated 15 July 2000 from the Registrar of Titles to the body corporate explains that, upon commencement of the Body Corporate and Community Management Act 1997 an interim community management statement was recorded for the scheme, and at the end of three years after the commencement of the Act (on 13 July 2000), if no new community management statement was recorded for the scheme, then a standard community management statement would be recorded. Section 285(2) of the Act refers. In other words, the body corporate did not request that a new community management statement be recorded, so the Registrar of Titles automatically recorded a standard community management statement for the scheme. The by-laws applicable to the scheme have not been changed, and are those which were in force at the time the Act commenced. Similarly, the Standard Module is shown as the regulating module. Of course, if the body corporate were to decide at any time in the future that it required a further new community management statement, then it could do so, but it would need to follow the procedures set out in Part 7 of the Act.

The final question raised by the applicant was why certain owners had decided to sell their lots at this time. Obviously this is a question to which I have no answer, but perhaps the applicant may wish to pose the question directly to the owners concerned.

In the circumstances, it is not intended to invite further submissions regarding this matter, or to make a further order, since this decision, though an interim one as sought by the applicant, is final in its determination of this matter. If the applicant considers that an appeal of this decision is warranted, then she should appeal the interim order.