Kangaroo Court [2002] QBCCMCmr 384 (14 June 2002)

DJ ReardonREFERENCE: 0252-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	13331
Name of Scheme:	Kangaroo Court
Address of Scheme:	30 Leonard Avenue SURFERS PARADISE QLD 4217

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

Beverley Joan Mort, the Owner of Lot 2

DJ ReardonI hereby order that the resolutions of the Body Corporate for “Kangaroo Court” community titles scheme 13331 in respect of motions 3, 6 and 7 considered at the annual general meeting held on 7 February 2002 are invalid and of no effect.

I further order that the Committee for the Body Corporate for “Kangaroo Court” consists of Beverly Mort and Wei Vella, with both members jointly holding the positions of Chairperson, Secretary and Treasurer of the Body Corporate, until the next annual general meeting, or until either member’s position becomes vacant.
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0252-2002

“Kangaroo Court” CTS 13331

1.	Orders Sought

The Applicant, the Owner of Lot 2, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote-

“1. Motions 3, 6 and 7 purportedly passed at the Annual General Meeting on 7 February 2002 be set aside.

2. Any other orders that are considered necessary or appropriate”

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 the 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 “Kangaroo Court” community titles scheme consists of four lots and common property. As stated previously, the Applicant is the owner of Lot 2. Another person is the registered owner of Lots 1,3 and 4.

The community management statement for the “Kangaroo Court” community titles scheme indicates that the Body Corporate and Community Management (Standard Module) Regulation 1997 (“the Standard Module”) applies to the scheme.

2.	Application and submissions

This dispute resolution application was made on 30 April 2002. On 2 May 2002, the Commissioner for Body Corporate and Community Management invited the Committee for the Body Corporate to make a written submission about the application.

The Owner of Lots 1, 3 and 4, and the Secretary for the scheme, have made joint submissions in response to the dispute resolution application.

3.	Motions in dispute

The Applicant has provided a copy of the minutes of the annual general meeting of the Body Corporate held on 7 February 2002. The minutes record the motions in dispute, in the following terms:

“3 Offset against levies

THAT Sam Vella be entitled to offset against levies for administrative expenses financial year 30 June 2001-30 June 2002 be approved for:

repairs & general maintenance:gardens/grounds & rubbish removal $400

telephone/print/postage/stationery 70

natural resources application fee 20.60

Total $490.60”

“6 Election of secretary and treasurer

THAT Wei Vella to be elected as secretary and treasurer.”

“7 New signatories authorised to operate body corporate bank accounts

THAT the present existing signatories authorised to operate on the body corporate’s bank accounts at Suncorp Metway be cancelled.

THAT new signatories be created and Samuel Vella and Wei Vella be authorised to operate the Suncorp Metway bank accounts.”

The minutes record that motion 3, 6 and 7 were carried with 3 votes in favour of the motions, and 1 vote against the motions.

4.

Motion 3

The purpose of motion 3 appears to be to allow the Owner of Lots 1, 3 and 4 to reduce his contributions to the administrative fund on the basis that he has incurred particular expenses on behalf of the Body Corporate.

Section 95(5) of the Standard Module sets out the general principle that the contributions levied on owners must be proportionate to the contribution schedule lot entitlement of the lot. There is no provision of the legislation that allows an owner to “offset” expenses purportedly incurred on behalf of a body corporate against their contributions to the administrative or sinking fund.

If an owner incurs an expense authorised by, and on behalf of a body corporate, the owner could seek reimbursement of the expense. If the body corporate considered that reimbursement of the expense is proper and warranted, then the body corporate could resolve to reimburse the amount of the expense to the owner. In making this determination, the body corporate must act reasonably. In my view, reimbursement of an expense should be a completely separate transaction to the body corporate’s fixing and collection of contributions to the administrative fund and the sinking fund.

If an owner believed that a body corporate unreasonably refused a request for reimbursement of an expense, the owner could make a formal dispute resolution application to the Office of the Commissioner for Body Corporate and Community Management. Similarly, an owner who considered that a body corporate unreasonably allowed a claim for reimbursement by an owner, perhaps on the basis that the expense was not authorised or substantiated, the owner could also make a dispute resolution application to the Commissioner’s Office.

For the reasons outlined above, I intend to order that the resolution of the Body Corporate made in respect of motion 3 is invalid and of no effect.

5.

Motion 6

Motion 6 as outlined on the agenda proposes that Wei Vella hold the positions of secretary and treasurer.

Section 11 of the Standard Module makes provision for the choosing of the committee for a body corporate. Section 11(1) provides that “The choosing of the members of the committee must happen at each annual general meeting of the body corporate”. However, section 11(2)(d) provides that “Subsection (1) does not apply for an annual general meeting if, when the annual general meeting is held there are three or more lots included in the scheme, and there are only 2 different owners for all the lots”.

Section 11(4) goes on the provide that “If subsection (2)(b) or (d) applies, the committee consists of 2 individuals who are owners, or the nominees of owners, of lots, and they must decide between themselves who are to hold the positions of the executive members of the committee (and, if they cannot agree, the positions of the executive members are jointly held by both of them)”.

Departmental records indicate that Samuel Vella is the registered owner of Lots 1, 3 and 4. The Act defines the term “owner” in Schedule 4 in the following terms, quote-

“owner”, of a lot (other than a lot that is a community titles scheme)

included in a community titles scheme, means the person who is, or is

entitled to be, the registered owner of the lot, and includes—

(a) a mortgagee in possession of the lot; and

(b) if, under the Land Title Act 1994, 2 or more persons are the

registered owners, or are entitled to be the registered owners, of

the lot—each of the persons.

(my emphasis)

While, I note that Mr Vella states that Lots 1 and 3 were purchased for a family trust, I do not consider that this impacts on the number of “owners” of lots in the scheme. While the beneficial ownership of two of the lots included in the scheme may be different to the registered ownership, the fact remains that there are two registered owners of lots included in the “Kangaroo Court” community titles scheme, and as a result, I consider that section 11(4) of the Standard Module is applicable.

In the circumstances I intend to order that the Committee for the Body Corporate consists of the Applicant, and Wei Vella (as the nominee of the Owner of Lots 1, 3 and 4). As it appears that there is no agreement as to who will hold the executive positions on the Committee, I intend to order that both members of the Committee will jointly hold the executive positions.

6.

Motion 7

Motion 7 appears to be an attempt to remove the Applicant as a signatory to the Body Corporate’s bank accounts. The motion proposes that the Owner of Lots 1, 3 and 4, and the person he nominated as Secretary be the signatories of the accounts.

As there are only two owners of lots in the “Kangaroo Court” community titles, I consider that this motion unnecessarily restricts the Applicant’s role in the Body Corporate. Further, as I intend to order that the Applicant and the nominee of the Owner of Lots 1, 3 and 4 jointly hold the executive positions of the Committee, it appears entirely consistent and reasonable that the Applicant remain a signatory for the Body Corporate’s bank accounts.

For these reasons, I intend to order that the Body Corporate’s resolution made in respect of motion 7 is invalid and of no effect.