Tweed Lodge [2001] QBCCMCmr 619 (10 December 2001)

P J HANLYREFERENCE: 0542-2001

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	8654
Name of Scheme:	Tweed Lodge
Address of Scheme:	11 Lloyd Street SOUTHPORT QLD 4215

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

Nicole Tronc, the owner of lot 2


I hereby order that –

(1)	Nicole Tronc of PO Box 332, Burleigh Heads Q 4220 is appointed as administrator to call, hold and chair an annual general meeting (“the meeting”) of “Tweed Lodge” within three (3) months of the date of this order for the purpose of -
•	the consideration of motions included on the agenda of the meeting
(2)	The administrator shall hold the appointment for the period beginning from the date of this order until of the close of the meeting ordered.

I further order that within seven (7) days of the date of this order the administrator must give a copy of this order to each person whose name appears on the roll as the owner of a lot in the scheme (“lot owners”).

I further order that –

(1)	For the purpose of calling, holding and chairing the meeting, the administrator shall have all the powers of the chairperson, secretary and treasurer of the body corporate, and of the committee, with the exception of the following powers -
•	to further delegate any of those powers to another person; or
•	to incur any expenditure apart from that necessary for the calling and holding of the meeting, except in regard to expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the legislation.

(2)	The administrator must give at least fourteen (14) days written notice inviting owners to submit motions for inclusion on the agenda of the meeting.

(3)	The meeting shall be otherwise called and held as an annual general meeting in accordance with the Act, particularly sections 42 and 45 of the Standard Module and all other provisions relating to meetings under Part 4 of the Standard Module.

(4)	The administrator must not give the notice of meeting to owners earlier than twenty-one (21) days from the date of this order.

I further order that, for the sole purpose of determining the financial year of the body corporate, the end of the month preceding the month in which the meeting is held shall be deemed to be the end of the financial year for the body corporate.

I further order that within 1 month of the date of this order the body corporate shall arrange for the repair of the damaged downpipe at the rear of the scheme, the cracked brick wall at the rear of the scheme and the drainage pipe traversing the back yard of the scheme, and, if necessary to collect a special levy for the cost of such work, which is to be borne by the owners of lot 1 and lot 2 in equal shares.2n

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0542-2001

“Tweed Lodge” CTS 8654

The applicant, Nicole Tronc, the owner of lot 2, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

The body corporate is not active. I would like to see the body corporate made strong and self-managed and self-funded but I need the owner of lot 1 to participate.

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 she moved into her lot in March and made contact with the owner of lot 1 with a view to making the body corporate active. The applicant further states that the owner of lot 1 does not want to be a part of anything, because she is retired and does not have the money to contribute to the cost of maintenance. The applicant attached a letter dated 7 June 2001 from the owner of lot 1, which concluded with the statement that the owner of lot 1 “would appreciate that I be left alone to live in my own home in peace”.

The owner of lot 1 was invited to respond to the application, but no submission was received.

On 20 November 2001 I conducted a meeting on site with the applicant and the owner of lot 1, Ms Maria Szymanski. It was apparent at the meeting that Ms Szymanski did not fully understand the way in which a body corporate operates. I explained the need for the body corporate to hold meetings, set budgets, collect levies and take out building insurance. I also inspected an area at the rear of the applicant’s lot, and noted a significant crack in the brickwork adjacent to a damaged downpipe, as well as a drainage pipe, which traversed the rear yard on the surface of the soil, rather than properly covered by the soil. These three items obviously require immediate attention by the body corporate.

Without limiting the power of an adjudicator to make an order under section 223(1), an adjudicator may order the body corporate to call a general meeting of its members to deal with stated business or to change the date of an annual general meeting (section 223(3)(p)). Alternatively, the adjudicator may order the appointment of an administrator, and authorise the administrator to perform obligations of the body corporate committee, or a member of its committee, under this Act or the community management statement (section 223(3)(v)).

The administrator has the powers given to the administrator under the order (section 248(2)). Section 248(3) provides that the order may -

a)	withdraw all or particular stated powers from the body corporate (and any delegate of the body corporate) or from stated officers of the body corporate until the administrator has taken the necessary action to secure compliance with the obligations; and
b)	require officers or delegates of the body corporate to take stated action to help perform the work the administrator is required to perform; and
c)	fix the administrator’s remuneration.

An order appointing an administrator may be the only order the adjudicator makes for an application (section 223(4)(a)). An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 230(1)).

Section 60 of the Standard Module provides that an annual general meeting (other than the first annual general meeting) must be called and held within 3 months after the end of each of the scheme’s financial years. A general meeting (which includes an annual general meeting) may be called by a person authorised or required to call a general meeting by an order of an adjudicator acting under the dispute resolution provisions (see section 40(c) of the Standard Module). Moreover, the agenda for an annual general meeting must include the items set out in sections 45(2) and (3) of the Standard Module.

It appears that the common seal and records of the body corporate cannot be found and there are no records to show what may or may not have occurred in respect of meetings or the administration of the body corporate.

This body corporate is comprised of the two lot owners, namely the applicant, Nicole Tronc, and the owner of lot 1, Maria Szymanski. The Standard Module regulates the body corporate. The scheme was registered on 25 February 1985 under the previous legislation when a statutory first annual general meeting should have been held within 3 months of that date. It is not known whether or not that meeting was held. Because of this uncertainty, I have not ordered that a substitute first annual general meeting be held. However, I have appointed an administrator for the purpose of calling a meeting, to be regarded as an annual general meeting, to re-establish (or establish as the truth may be) the body corporate’s administration of itself, including establishment of the required body corporate records (eg roll, registers ).

Also in view of the uncertainty of any first annual general meeting having been held, I have ordered that the date of the meeting ordered should determine the end of the financial year and therefore when subsequent annual general meetings will be held.
The relevant sections of the Standard Module are set out below:
ú

Types of general meetings

39.(1) All meetings of the body corporate are general meetings.

(2) A general meeting is either an annual general meeting or an extraordinary general meeting.

Who may call general meetings

40. A general meeting may be called by—

(a) the secretary; or

(b) another member of the committee authorised by the committee to call the meeting; or

(c) a person authorised or required to call a general meeting by an order of an adjudicator acting under the dispute resolution provisions.

Opportunity to submit agenda motions

41.(1) A member of the body corporate may at any time submit a motion for consideration at a general meeting of the body corporate and, if a motion is submitted, including in response to an invitation under subsection (3), it must, subject to subsection (2), be included on the next general meeting agenda on which it is practicable to include the motion.

(2) A motion may be included on the agenda for an annual general meeting only if the secretary receives the motion before the end of the body corporate’s financial year immediately preceding the meeting.

(3) If notice is forwarded to members of the body corporate inviting nominations for committee member positions to be filled at an annual general meeting of the body corporate, the members must also be invited to submit motions for inclusion on the agenda for the meeting.

Notice of general meeting

42.(1) Written notice of a general meeting must be given to the owner of each lot included in the scheme, and if not given personally, must be sent to the owner at the owner’s address for service.

(2) The notice must state the time and place of the proposed general meeting.

(3) The notice of a proposed general meeting must—

(a) contain an agenda for the meeting; and

(b) be accompanied by—

(i) a proxy form; and

(ii) if the notice is given to the corporate owner of a lot—a form under which the lot owner may advise the body corporate of the corporate owner nominee; and

(c) be accompanied by a voting paper—

(i) stating each motion to be considered at the meeting and, if the motion is not proposed by the committee, stating the name and lot number of the person proposing the motion; and

(ii) stating for each motion whether a resolution without dissent, special resolution or ordinary resolution is required; and

(iii) enabling a person who is a voter for the general meeting to record a written vote on each motion to be considered at the meeting; and

(d) contain or be accompanied by explanatory or other materials required under this regulation to be contained in or to accompany the notice.¹⁰

(4) If all the lots have identical ownership, no notice of a general meeting need be given.

Time of general meetings

43. A general meeting must be held at least 21 days after notice of the

meeting is given to lot owners.¹¹

¹⁰ Materials that could be required to be contained in or accompany the notice of the general meeting include—

•	committee election ballot-papers (sections 16 (Conduct of elections for
•	committee by secret ballot) and 17 (Conduct of elections for committee by
•	open ballot))
•	explanatory notes to a motion (section 45 (Agenda for general meeting))
•	budgets (section 94 (Budgets))
•	quotation documents (section 104 (Quotes for major spending))
•	statement of accounts (section 105 (Accounts))
•	auditor’s certificate (section 106 (Audit)).

¹¹ Section 61 (Requirement for requested extraordinary general meeting) provides for the timing of a requested extraordinary general meeting.

Place of general meetings

44.(1) A general meeting must be held not more than 15 km (measured

in a straight line on a horizontal plane) from scheme land.

(2) However, if the committee notifies the owners of its intention to hold

the meeting at a stated place more than 15 km from scheme land, and

allows them a reasonable opportunity to object in writing to the proposed

place, the meeting may be held at the place unless written objections to the

proposed place of meeting are given by or for owners of at least 25% of the

lots included in the scheme.

Agenda for general meeting

45.(1) The committee must prepare an agenda for each general meeting.

(2) The agenda must include—

(a) the substance of the following motions—

(i) motions the committee proposes for consideration at the meeting;

(ii) if the general meeting is a requested extraordinary general

meeting—the motions proposed in the notice asking for the

meeting;

(iii) a motion submitted under section 41 12 by a member of the

body corporate and required to be included in the agenda;

(iv) if an adjudicator makes an order under the dispute resolution

provisions authorising or requiring the calling of the general

meeting to consider motions stated in the order—the

motions stated in the order;

(v) if there has been a previous general meeting—a motion to

confirm the minutes of the last meeting; and

(b) if the general meeting is the first annual general meeting for the

scheme—the business required to be considered at the first annual

general meeting.

(3) If the general meeting is an annual general meeting (other than the

first annual general meeting), the agenda must also—

(a) provide for the presentation of the accounts for the financial year;

and

(b) provide for the appointment of an auditor of the body corporate’s

accounts for the next financial year or for a special resolution that

the accounts are not to be audited; and

12 Section 41 (Opportunity to submit agenda motions)

(c) provide for the approval of a budget for the financial year; and

(d) provide for fixing the contributions to be paid by the owners of

lots for the financial year; and

(e) include other things that are, under the Act, required to be

included on the agenda for the annual general meeting.

(4) If the lot owner seeking the inclusion of a motion under

subsection (2)(a)(iii) supplies an explanatory note about the motion, and the

note is not longer than 100 words, the note must accompany the agenda.

The meeting must also approve budgets and set levies. The relevant sections of the Standard Module are as follows:
ú

Budgets

94.(1) The body corporate must, by ordinary resolution, adopt 2 budgets

for each financial year—

•	the administrative fund budget
•	the sinking fund budget.

(2) The administrative fund budget must—

(a) contain estimates for the financial year of necessary and

reasonable spending from the administrative fund ¹⁹ to cover—

(i) the cost of maintaining common property and body

corporate assets; and

(ii) the cost of insurance; and

(iii) other expenditure of a recurrent nature; and

(b) fix the amount to be raised by way of contribution to cover the

estimated recurrent expenditure mentioned in paragraph (a).

(3) The sinking fund budget must—

(a) allow for raising a reasonable capital amount both to provide for

necessary and reasonable spending from the sinking fund ²⁰ for

the financial year, and also to reserve an appropriate proportional

share of amounts necessary to be accumulated to meet anticipated

major expenditure over at least the next 9 years after the financial

year, having regard to—

(i) anticipated expenditure of a capital or non-recurrent nature;

and

(ii) the periodic replacement of items of a major capital nature;

and

(iii) other expenditure that should reasonably be met from

capital; and

(b) fix the amount to be raised by way of contribution to cover the

capital amount mentioned in paragraph (a).

Example—

Painting of the common property is anticipated to be necessary in 3 years time at a cost currently estimated at $3 000. The contribution amount for the sinking fund in the budget for the financial year must therefore include the annual proportional share for painting of $1 000. Next year, the estimated cost has increased to $3 400 and so the second year levy will be $1 200. The estimated cost in the third year is $3 500, so with the $2 200 accumulated, a levy of $1 300 is necessary to meet the cost. In larger schemes, the sinking fund will have several projects being funded for various future times.

19 See section 100 (Administrative and sinking funds).

20 See section 100 (Administrative and sinking funds).

(4) If the scheme is a lot included in another community titles scheme,

the administrative fund budget must also include an estimate of the total

amount the body corporate may reasonably be expected to be required to

contribute to the administrative and sinking funds for the other scheme, and

any other fund provided for in the regulation module applying to the other

scheme.

(5) The original owner must prepare proposed budgets for adoption by

the body corporate at its first annual general meeting, and the committee

must prepare proposed budgets for adoption by the body corporate at each

later annual general meeting.

(6) Copies of the proposed budgets must accompany the notice of an

annual general meeting.

Division 3—Contributions levied by body corporate—Act, s 113

Contributions to be levied on owners

95.(1) The body corporate must, by ordinary resolution—

(a) fix, on the basis of its budgets for a financial year, the

contributions to be levied on the owner of each lot for the

financial year; and

(b) decide the number of instalments in which the contributions are to

be paid; and

(c) fix the date on or before which payment of each instalment is

required.

(2) If a liability arises for which no provision, or inadequate provision,

has been made in the budget, the body corporate must, by ordinary

resolution—

(a) fix a special contribution to be levied on the owner of each lot

towards the liability; and

(b) decide whether the contribution is to be paid in a single amount or

in instalments and, if in instalments, the number of instalments;

and

(c) fix the date on or before which payment of the single amount or

each instalment is required.

(3) Also, the committee may fix an interim contribution to be levied on

the owner of each lot before the owner is levied contributions fixed on the

basis of the body corporate’s budgets for a financial year.

(4) The amount of a contribution mentioned in subsection (3)—

(a) must subsequently be set off against the liability to pay

contributions mentioned in subsection (1); and

(b) must be calculated on the basis of the level of contributions

applying for the scheme for the previous financial year; and

(c) must relate, as closely as practicable, to the period from the end of

the previous financial year to 30 days after the annual general

meeting.

(5) The contributions levied on the owner of each lot (other than

contributions payable for insurance and any other matter for which, under

the Act or this regulation, the liability attaching to each lot is calculated other than on the basis of the lot’s contribution schedule lot entitlement) must be proportionate to the contribution schedule lot entitlement of the lot.

Notice of contribution payable

96.(1) At least 30 days before the payment of a contribution, or

instalment of a contribution, is required, the body corporate must give the

owner of each lot written notice of—

(a) the total amount of the contribution levied on the owner; and

(b) the amount of the contribution, or instalment of contribution, of

which payment is currently required; and

(c) the date (the “date for payment”) on or before which the

contribution, or instalment of contribution, must be paid; and

(d) any discount to which the owner is entitled for payment of the

contribution, or instalment of contribution, by the date for

payment; and

(e) any penalty to which the owner is liable for each month payment

is in arrears; and

(f) if the owner is in arrears in payment of a contribution or

penalty—the arrears.

(2) The written notice under subsection (1) may also include notice about

an amount payable by a lot owner to the body corporate for—

(a) a specially contracted service enjoyed by the owner; or

(b) an exclusive use or special right over common property enjoyed

by the owner.

(3) A written notice under this section may be served on a lot owner at

the lot owner’s address for service, or in the way directed by the lot owner.

Discounts for timely payment

97.(1) The body corporate may, by ordinary resolution, fix a discount to

be given to owners of lots if a contribution, or an instalment of a

contribution, is received by the body corporate by the date for payment

fixed in notices of contribution given to the owners.

(2) The discount cannot be more than 20% of the amount to be paid.

Example—

Suppose that—

•	a contribution of $100 is payable in 4 instalments of $25 and the body corporate has fixed a discount of 10% for payment by the date for payment in the notices of contribution given to the owners
•	an account requiring payment of an instalment of $25 by 31 March is given to the owner of a lot
•	the instalment is paid on 25 March.

In this case, the owner is entitled to a discount of $2.50 on the instalment.

Penalties for late payment

98.(1) The body corporate may, by ordinary resolution, fix a penalty to

be paid by owners of lots if a contribution, or instalment of contribution, is

not received by the body corporate by the date for payment fixed in notices

of contribution given to the owners.

(2) The penalty must consist of simple interest at a stated rate (of not

more than 2.5%) for each month the contribution or instalment is in arrears.

Example—

Suppose that—

•	a contribution of $400 is payable in 4 instalments of $100 and the body corporate has fixed a penalty interest rate of 2% per month
•	an account requiring payment of an instalment of $100 by 31 March is given to the owner of a lot
•	the instalment is not paid until 27 June.

In this case, the instalment has been in arrears for 2 months and a penalty of $4 is payable.

Payment and recovery of contributions

99.(1) If a contribution, or instalment, is not paid by the date for

payment, the body corporate may recover the amount of the contribution or

instalment, together with any penalty, as a debt.

(2) A liability to pay a contribution, instalment, penalty or other amount

payable to the body corporate in relation to a lot is enforceable jointly and

severally against the person who was the owner of the lot when the

contribution, instalment or other amount became payable and a person

(including a mortgagee in possession) who becomes an owner of the lot

before the contribution, instalment, penalty or other amount is paid.

(3) If there are 2 or more owners of a lot, they are jointly and severally

liable to pay a contribution, instalment or penalty under the Act or this

regulation, or another amount payable to the body corporate in relation to

the lot.

(4) If an owner is liable for a contribution, or an instalment of a

contribution, and a penalty, an amount paid by the owner must be paid first

towards the penalty and then in reduction of the outstanding contribution or

instalment.

(5) If the body corporate is satisfied there are special reasons for allowing

a discount of contribution, or waiving a penalty, the body corporate may

allow the discount, or waive the penalty in whole or part.

Division 4—Administrative and sinking funds—Act, s 113

Administrative and sinking funds

100.(1) The body corporate must establish and keep an administrative

fund and a sinking fund.

(2) The body corporate must pay into its administrative fund any amount

received by the body corporate that is not required under subsection (3) to

be paid into its sinking fund.

(3) The body corporate must pay into its sinking fund—

(a) the amount raised by way of contribution to cover anticipated

spending of a capital or non-recurrent nature (including the

periodic renewal or replacement of major items of a capital nature

and other spending that should be reasonably met from capital);

and

(b) amounts received under policies of insurance for destruction of

items of a major capital nature; and

(c) interest from investment of the sinking fund.

(4) The administrative and sinking funds may be invested in the way a

trustee may invest trust funds.

(5) All amounts received by the body corporate for the credit of the

administrative or sinking fund must be paid into 1 or more accounts kept

solely in the name of the body corporate at a financial institution.21

(6) All payments from the administrative or sinking fund must be made

from the account.

21 Financial institution is a bank, building society or credit union—see the Acts

Interpretation Act 1954, section 36, definition “financial institution”.

Application of administrative and sinking funds

101.(1) The sinking fund may be applied towards—

(a) spending of a capital or non-recurrent nature; and

(b) the periodic replacement of major items of a capital nature; and

(c) other spending that should reasonably be met from capital.

(2) All other spending of the body corporate must be met from the

administrative fund.

Examples—

1. The cost of repainting the common property or replacing airconditioning plant would be paid from the sinking fund.

2. The cost of insurance would be paid from the administrative fund.

The body corporate is also required to take out insurance in the name of the body corporate. Sections 127 and 128 of the Standard Module are applicable, and provide as follows:

127.(1) The body corporate must insure, to full replacement value—

(a) the common property; and

(b) the body corporate assets.

(2) Subsection (1)(a) has effect only to the extent that the common

property is not required to be insured under another provision of this

division.

(3) A policy of insurance taken out under this section—

(a) must cover, to the greatest practicable extent—

(i) damage; and

(ii) costs incidental to the reinstatement or replacement of

insured buildings, including the cost of taking away debris

and the fees of architects and other professional advisers;

and

(b) must provide for the reinstatement of property to its condition

when new.

(4) The owner of each lot that is included in the scheme is liable to

reimburse the body corporate for the proportion of the premium for a policy

of insurance taken out under this section that reflects the interest schedule lot entitlement of the lot.

Insurance of building including lots

128.(1) This section applies if 1 or more of the lots included in the

scheme are created under a building format plan of subdivision or a

volumetric format plan of subdivision.

(2) The body corporate must insure, to full replacement value, each

building in which is located a lot included in the scheme, to the extent that

the building is scheme land.

(3) A policy of insurance taken out under this section—

(a) must cover—

(i) damage; and

(ii) costs incidental to the reinstatement or replacement of

insured buildings, including the cost of taking away debris

and the fees of architects and other professional advisers;

and

(b) must provide for the reinstatement of property to its condition

when new.

(4) If the body corporate cannot comply with subsection (3), the

commissioner, on application in writing by the body corporate, may

authorise the body corporate to put in place an alternative insurance in a

form approved by the commissioner if the commissioner is satisfied that

the insurance approved gives cover that is as close as practicable to the

cover given by insurance under subsection (3).

Example of alternative insurance that might be approved by the commissioner—

Insurance giving cover up to an agreed value.

(5) The body corporate is liable to pay any contribution that has to be

made to the cost of reinstatement or repair because the reinstatement

insurance is not for the full replacement value of the insured property.

(6) The body corporate need not insure a building or a part of a building

under subsection (2) if—

(a) the scheme is a subsidiary scheme for another community titles

scheme (the “other scheme”); and

(b) under subsection (2) or an equivalent provision of another

I also propose to order that, within 1 month of the date of this order, the body corporate shall arrange for the repair of the damaged downpipe, the cracked brick wall and the drainage pipe traversing the rear yard of the scheme, all of which is the responsibility of the body corporate to repair, and if necessary to collect a special levy for the cost of such work, which is to be borne by the owners of lot 1 and lot 2 in equal shares.2n