Cenville A [2001] QBCCMCmr 61 (8 February 2001)

P G DanielsREFERENCE: 0592-2000

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	4014
Name of Scheme:	Cenville A
Address of Scheme:	25 Thorngate Drive ROBINA QLD 4226

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

David Anthony Martin and Sandra Dianne Martin the owners of lot 5



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

To amalgamate our Body Corporate CMS 4014 (Cenville A) with CMS 18322 (Cenville B).

is dismissed.1y
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0592-2000

“Cenville A” CTS 4014

The applicants, David Anthony Martin and Sandra Dianne Martin, the owners of lot 5, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act):

To amalgamate our Body Corporate CMS 4014 (Cenville A) with CMS 18322 (Cenville B).

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 Cenville A community titles scheme 4014 (Cenville A) has considered a proposal to amalgamate with the Body Corporate for Cenville B community titles scheme 18322. The minutes of the annual general meeting on 27 June 2000 record the following motion and results:

“TO AMALGAMATE WITH BODY CORPORATE FOR CENVILLE B:

The motion by resolution without dissent that the Body Corporate be amalgamated with Cenville B CTS 18322 and that the committee is authorised to do all things necessary, including affixing the seal of the body corporate to all relevant documents, in order to effect registration of the Request for Amalgamation at the Department of Natural Resources was lost.

The votes were 2 in favour: 1 against: nil abstentions.”

It will be observed that a resolution without dissent was not passed due to one vote against the motion.

That vote was from Mr Jason Tait, the owner of lot 3. He has made a submission in respect of this application.

Cenville B has already resolved without dissent to amalgamate with Cenville A.

The applicants seek an order that would allow the amalgamation to proceed. I will consider the various factors relevant to this matter.

Fees and expenses

Mr Tait has attached to his submission a letter from one of the applicants, Mrs Martin, that indicates amalgamation will result in a saving of $45 per unit in insurance costs and a saving of $40 per unit in body corporate management fees. The cost of maintaining two sets of bank accounts for the scheme is also mentioned. These matters are raised in the application.

The letter from Mrs Martin also indicates that Cenville A is liable for all of the pool power. Mr Tait addresses the matter in his submission as follows, “It was also mentioned that there is a problem with the pool power as our electricity bill has risen from approximately $200.00 to $699.75 since it’s inclusion! There are gates, gardens with sprinkler systems and car-parking bays all requiring repairs and maintenance which are common to both complex’s. Why is it that the pool is not being treated the same, that is, running costs and maintenance are shared between “Cenville A and B” as it was intended in the first place. “Cenville B” already pay Mr Martin their share for pool maintenance and I’m sure if only approached they would assist with the electricity cost’s as it was suggested back in May of last year. (It calls me to question whether this is being used as a point of argument for amalgamation).

Cost of amalgamation

It is stated in the letter from Sandra Martin and attached to the application of Mr Tait that the cost of amalgamation will be $1100 and will be split between 23 units. Mr Tait questions how this figure is derived.

Body Corporate support

At the AGM on 27 June 2000, only 3 owners voted on the motion. There were two votes in favour of the motion and one against. Mr Tait states in his submission that the applicants (who voted in favour of the motion) held a proxy from another owner. Mr Tait states the following about previous consideration of the amalgamation issue, “The issue of amalgamation was first raised by the Martin’s as a special resolution at an Extraordinary General Meeting on the 22^nd December 1999 and the results were 1 in favour and 2 against.”

Other considerations

Mr Tait raises the following matters in his submission:

•	Would we be taken on at face value as our sinking fund isn’t that strong after just painting the building or would we be expected to make up the difference per allotment in line with “Cenville B”.
•	Would we be entitled to reimbursement from “Cenville B” for the painting that we have done as their building will need painting in the near future and with one sinking fund we will be paying for that.
•	What are their administration and sinking fund levies? Our sinking fund has been high to allow for the painting but now there is no reason for any more increases.

Legislation

Amalgamation is governed by Chapter 2 Part 11 of the Act. I will set out sections 82, 85 and 86 as they are particularly relevant:

Approval for amalgamations

82.(1) Scheme A and scheme B may be amalgamated if the body

corporate for scheme A and the body corporate for scheme B each agree, by

resolution without dissent, to—

(a) the amalgamation; and

(b) the community management statement to be recorded for

scheme C.

(2) If scheme A and scheme B are subsidiary schemes, the body

corporate for the community titles scheme that includes scheme A and

scheme B as lots must also consent to the amalgamation, but by ordinary

resolution.

(3) Alternatively, scheme A and scheme B may be amalgamated if the

District Court, on the application of the owner of a lot included in scheme A

or scheme B, or the body corporate for scheme A or scheme B, decides it is

just and equitable to amalgamate the schemes, and makes an order for

amalgamating them.

(4) If schemes A and B are, or are to be, amalgamated under

subsection (1) or (3), the District Court may make an order, if it considers it

is just and equitable to make the order, about—

(a) the contents of the community management statement for

scheme C; or

(b) the disposition of liabilities that, immediately before the

amalgamation, were liabilities of the body corporate for scheme A

or scheme B.

(5) The court may make an order under subsection (4) on application by

the body corporate for scheme A or B.

Dissolution of bodies corporate on amalgamation

85.(1) When schemes A and B are amalgamated, the bodies corporate

for schemes A and B are dissolved.

(2) On dissolution of the bodies corporate for schemes A and B, the

rights and liabilities of the body corporate for schemes A and B are vested

in the body corporate for scheme C.

(3) Body corporate assets for schemes A and B (including freehold land

and other body corporate assets registered or otherwise held in the name of

a dissolved body corporate) are vested in the body corporate for scheme C,

and may be dealt with by the body corporate as if they were registered or

otherwise held in its name.

(4) If the amalgamation is authorised under a court order, subsections (2)

and (3) have effect subject to the order.

Effects of amalgamation of community titles schemes

86.(1) When schemes A and B are amalgamated—

(a) a liability for a charge, levy, rate or tax that had accrued on a lot

included in scheme A or B before schemes A and B ceased to

exist as community titles schemes is not affected; and

(b) anything done in relation to scheme A or B before the

amalgamation continues in effect to the extent that there is no

inconsistency with the community management statement

recorded for scheme C, including, for example, the following—

(i) an application for an order under the dispute resolution

provisions;

(ii) an order of an adjudicator or court relating to a lot or

common property;

(iii) liabilities and obligations attaching to the owner of each lot.

(2) If, immediately before their amalgamation, schemes A and B were

lots included in another community titles scheme, scheme C becomes, on

the amalgamation of schemes A and B, a lot included in the other scheme.

It will be observed that section 82 provides that each Body Corporate must agree by resolution without dissent to the amalgamation and the community management statement for the new amalgamated scheme. The minutes of the AGM on 27 June 2000 do not indicate that a new community management statement was considered. I do not consider that invalidates the motion that was considered as there is no requirement that motions to amalgamate and to agree to the new community management statement occur at the same meeting. However, in those circumstances it would be necessary to resolve without dissent at another meeting to agree to the new community management statement.

Assessment

The question to be addressed is whether it is a “just and equitable” order that Cenville A be deemed to have passed a resolution without dissent to amalgamate with Cenville B: section 223 of the Act. If such an order was made, Cenville A would have to pass a further resolution without dissent in respect of the new community management statement (as discussed above).

I take into account that at least in the long term amalgamation may lead to lesser operating costs for Cenville A. In the short term the initial cost of amalgamation would need to be taken into account.

However, Cenville A has not strongly supported the motion to amalgamate. Additionally, Mr Tait raises questions that have not been addressed in the application.

In the circumstances, I am not satisfied that it is just and equitable to order that Cenville is deemed to have resolved without dissent to the amalgamation. I will dismiss the application.

I do wish to state to the applicants that Mr Tait has stated in his submission that he is not “totally against amalgamation” but wants further information. The applicants can consider whether they wish to pursue the matter further.