Federation Court [2003] QBCCMCmr 118 (15 September 2003)

Last Updated: 17 May 2005

REFERENCE: 0749-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	19618
Name of Scheme:	Federation Court
Address of Scheme:	32 Government Road LABRADOR QLD 4215

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Stephanie Ann Miller, the co-owner of lot 6

I hereby order that the application by Stephanie Ann Miller, the co-owner of lot 6 for orders –

1. That PBCM be required to provide properly prepared financial statements on behalf of the body corporate for the full year ending 30 June 2002 from information in their possession;
2. That PBCM be required to provide a proper account of all their fees debited to the body corporate account;
3. That an alternative administrator be appointed until our next AGM, and to convene and chair that meeting;
4. That a bank account be opened solely in the name of the body corporate in accordance with section 100(5) of the Regulations (standard module) and funds currently with Macquarie Bank be transferred,

is dismissed.


STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0749-2002

"Federation Court" CTS 19618

The applicant, Stephanie Ann Miller, the co-owner of lot 6, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote –

5. That PBCM be required to provide properly prepared financial statements on behalf of the body corporate for the full year ending 30 June 2002 from information in their possession.
6. That PBCM be required to provide a proper account of all their fees debited to the body corporate account.
7. That an alternative administrator be appointed until our next AGM, and to convene and chair that meeting.
8. That a bank account be opened solely in the name of the body corporate in accordance with section 100(5) of the Regulations (standard module) and funds currently with Macquarie Bank be transferred.

Section 276(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 contractual matter about-

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The application

The applicant’s initial application was a lengthy 9 page document which sought to provide background to this application from 1993 to the time of lodgement. This document contains a mix of statements of fact, allegations and beliefs by the applicant. Significantly, at no point does the applicant specifically address or provide grounds for each of the four orders she is seeking. Rather, the applicant’s statements of grounds is a chronological dissertation of everything that applicant considers is wrong, or has gone wrong, in and with her body corporate over the previous 10 years. In addition, the applicant has included with her application, some 96 pages (some of which are double sided) of comprising 30 or so annexures.

The scheme

The scheme is a six lot scheme recorded under a standard format plan of subdivision situated at Labrador. The scheme currently engages the services of a body corporate manager, Professional Body Corporate Management Pty Ltd (PBCM).

The dispute

The dispute principally relates to the applicant’s dissatisfaction with PBCM. In essence, it seeks that this manager rectify a number of matters, and as well that an alternative administrator be appointed.

Processing of the application

This office sought submissions regarding the application from the remaining 5 owners, and the manager, PBCM. No other owner choose to respond to the notice inviting submissions. PBCM did respond to the notice inviting submissions, but this submission in no way addresses the substance of any of the allegations made by the applicant. The manager submits that –

This state of affairs was brought about by (the) collective inability to be able to deal harmoniously with Stephanie Miller. No blame is apportioned, but it is a fact of life that five managers plus myself are unable to make Mrs Miller happy with any outcome on any matter.

The applicant replied to this submission with a request that –

As per my application, I feel it is imperative that all members be brought together (without the presence of the body corporate manager) in reconciliation conference whereby channels of communication can be re-opened.

It was following the close of submissions that the first case management recommendation was made; namely that the application be the subject of Department of Justice Community Justice Program mediation. This mediation did not proceed due to the unwillingness of the remaining 5 owners to participate in the process.

A second case management recommendation was made; namely that the application be the subject of departmental adjudication. I was at this point and on this basis that I obtained responsibility for resolution of the dispute, the subject of the application.

Given the multifarious nature of the dispute, and the applicant’s request for communication with her fellow owners, I proposed a meeting of all owners to be held at the scheme, which I would chair. The applicant accepted to attend this meeting, but all other owners declined, or provided reasons why they could not attend. I cancelled the proposed meeting.

Next, I convened a teleconference between the applicant and the body corporate manager, PBCM. The manager was represented by Mr Graham Perkins. This teleconference was held on 24 July 2003 and proceeded for just under two hours. It was clear to me from this teleconference that the position of the applicant was an entrenched one, based on a conviction that her position was a correct one. The teleconference canvassed many aspects, some specific to the application, and other more generally relating to the relationship between owners, the body corporate and the appointed body corporate manager.

Towards the end of the teleconference, the manager (together with his accountant) offered to spend "one hour" with the applicant following an inspection of body corporate records at his office in an endeavour to address issues of concerns to the applicant. I then requested that the applicant compose a (new) application based on specific points on which she sought to rely. Essentially I had concluded that I could not discern the issues from the original application, particularly in light of the lack of response to it.
What I was seeking from the applicant was a shorter, more focused application. The applicant did subsequently provide an amended application. The applicant concludes her amended application with –

My application is against the body corporate. They have demonstrated a lack of duty of care by not addressing some serious issues affecting all owners even to the extent of not attending conciliation meetings. In the meantime our property continues to deteriorate due to lack of any proper maintenance in 10 years, or contributions in those 10 years have never been properly accounted for and the funds remaining are diminished slowly under the burden of extraordinary management fees.

I again sought submissions from all owners in respect of the short form application. Finally a submission was forthcoming signed by four of the five remaining owners. That submission states in part –

How the building is managed is completely in the hands of the building at its general and committee meetings. Whilst individuals may disagree with individual decisions, they are bound by the decision of the majority. Whilst a majority can make an incorrect decision, they do make the decision in what they consider the best interests of the building at the time, and certainly are governed by the principles of maintaining a "duty of care". ...

Arguably, it is the opinion of the majority of the members of the body corporate ... that one member continually refuses to be bound by the decisions of the majority and then makes applications to the adjudicator at great cost to the body corporate to have these democratically arrived at decisions overturned and her requirements instituted in their place without reference to 5 other owners.

The feeling of meetings for the last 18 months by a unanimous majority of members is that we do not wish the Millers to have anything to do with the day to day running of our building. Further, we require them to stop harassing us on an individual basis.

My determination

I intend to dismiss this application.

Reasons for dismissal

The applicant states that her application is "against the body corporate". Technically this is correct, as it needs to be since the legislation does not contemplate a dispute between an owner and a service contractor, letting agent or body corporate manager. The truth of the matter however is that the applicant’s essential grievance and basis for complaint is the conduct and actions of the appointed body corporate manager. Whilst the legislation allows a body corporate to be in dispute with a manager or service provider, it does not allow individual owners to be so in dispute. This is so for a number of practical reasons. The relationship between a body corporate and an appointed manager is one of contract. No relationship of contract exists between an appointed manager and individual owners. There would be no end to the level of dispute which would arise if individual owners were allowed to be in dispute with the appointed body corporate manager, since in any group of owners there is always likely to be an individual owner or group of owners who disagree with the conduct or actions of the appointed manager.

The conduct or actions of body corporate managers are not regulated. Currently there is no requirement for body corporate managers in this State to be registered, licensed or otherwise regulated. In my view, there is currently wide spread dissatisfaction with the competence and / or integrity of many persons operating as managers, and calls for the regulation of the industry are growing.

In the meantime, it is only bodies corporate which can regulate the actions of its appointed manager. The basis for this is the relationship of contract which exists between these two parties. If individual bodies corporate are dissatisfied with the performance of their appointed manager, then the body corporate must take action on the basis of its contract to address the performance issue. The threat of termination or non renewal of a contract is probably the most effective method of improving unsatisfactory performance.

Many of the allegation of the applicant relate to specific actions of the manager. As I have indicated, the basis of the managers responsibility to the body corporate is contractual, not legislative. Legislative provisions relating to managers performance issues is are all but non-existent. Rather, the legislation deals with how the manager might be appointed / terminated.

The applicant has failed to show a legislative basis for the orders she is seeking against the appointed manager. She has failed to relate her expectations to specific legislative obligations. I appreciate that the applicant would have difficulty in doing this, given the lack of legislative provisions relating to performance. However this is the current position.

To the extent that the application does refer more generally to the body corporate, I conclude that the applicant’s expectations are also not referenced to requirements of the legislation. The applicant complains that the body corporate has demonstrated a lack of duty of care by not addressing some serious issues and refusing to communicate with her. Firstly, there is no legislative duty of care. There are duties in the legislation relating to maintenance of common property, but the nature of this duty cannot in my view be categorised as a duty of care. Duty of care is a concept arising under the tort of negligence. Further, there is no general obligation of owners to conciliate with other owners. The legislation provides mechanisms via which the business of the body corporate is transacted. Owners are not required to submit themselves to demands made by an individual or minority group of owners to the effect that that owner, or those owners views be listened to or accepted. Bodies corporate in essence operate on the basis of majority determinations.

I will conclude by saying that I have no doubt that some concerns raised by the applicant would, if able to be investigated, have some valid basis. However, the voluminous and multifarious nature of the application is such that to find these threads is to locate the proverbial "needle(s) in a haystack". Moreover, the resources available to me do not allow such investigation. Current demand for adjudication by this office is some 900 applications per year. This equates to some 225 applications per year which each adjudicator would need to deal with in order to keep up with current demand. Moreover, the process of investigation was conducted in a context where the other party to this dispute (the body corporate and the remaining five owners individually) chose not to involve themselves in the process until the second round of submissions sought, and even then only to reply in the most general sense to the application. The circumstances of this application made it all but impossible to undertake the role of dispute resolution.