Federation Court [2003] QBCCMCmr 136 (24 September 2003)

Last Updated: 17 May 2005

REFERENCE: 0167-2003

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 body corporate of Federation Court shall in future comply with section 130(1)(b) of the standard module regulation in determining individual owners’ contributions towards reinstatement insurance premiums payable for each lot. I further order that within three (3) months of the date of the order, the body corporate of Federation Court shall – • engage an expert to provide a report on the reinstatement value of all lots in the scheme; and • obtain such report from the appointed expert, which the body corporate will thereafter use to determine individual owners’ contributions towards reinstatement insurance premiums payable for each lot. I further order that the other orders sought by Stephanie Ann Miller, the co-owner of lot 6, quote - a) That the body corporate be required to correct the errors made in the levy calculation this year and credit each owner with amounts paid in excess of the budgeted amount; b) That the EGM of 16 December 2002 be declared invalid. Should it be determined that the EGM of 16 December 2002 was valid then I seek the following additional order; c) Motion 1 "Confirmation of minutes of AGM" be declared in error and be amended to "Confirmation of the EGM minutes of 4 November 2002"; d) That owners who supported my removal from the office of Secretary / Treasurer be required to individually give substantiated reasons for their action, in writing; e) That motion 3 "Parking on common property" be declared discriminatory and be removed from the record; are dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0167-2003

"Federation Court" CTS 19618

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

a) That the body corporate be required to correct the errors made in the levy calculation this year and credit each owner with amounts paid in excess of the budgeted amount.
b) Because we are Standard Format Plan, that the insurance component of the administration fund levy be calculated on reinstatement value as required by Section 130(1)(b) of the regulations of BCCM Act 1997 (Standard Module).
c) That the body corporate be required to seek an independent valuation of all units in the complex by a qualified valuer and in order to facilitate calculation of appropriate levies based on reinstatement value required for (b) above.
d) That the EGM of 16 December 2002 be declared invalid. Should it be determined that the EGM of 16 December 2002 was valid then I seek the following additional order:
e) Motion 1 "Confirmation of minutes of AGM" be declared in error and be amended to "Confirmation of the EGM minutes of 4 November 2002".
f) That owners who supported my removal from the office of Secretary / Treasurer be required to individually give substantiated reasons for their action, in writing.
g) That motion 3 "Parking on common property" be declared discriminatory and be removed from the record.

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)).

This is one of two recent applications by the applicant. The previous application was numbered 0749 of 2002 and was recently dismissed for reasons set out in the accompanying statement of reasons.

The applications are to an extent connected. For example, in the current application the applicant states in respect of the first of the orders sought that –

The error in levies and my subsequent attempts to have this corrected ... has been covered to a large extent in my previous application.

A reference to the order made in respect of that application will indicate the difficulty I had dealing with the volume of the applicant’s material, its presentation, and further, the seeming disinterest of all other parties to any positive resolution of that dispute. I concluded that the circumstances of the application made any form of dispute resolution all but impossible.

I intend to set out in part my statement of reasons from the previous application pertaining to the difficulties I encountered in having parties respond to the applicant’s material, since this failure to respond is also a factor in this application.

This office sought submissions regarding the application from the remaining 5 owners, and the manager, PBCM. No other owner chose 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. ...

(The applicant submitted an amended application). 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.

The four owners who made the above submission to application 0749 of 2002, provided a copy of this same submission in respect of the present application, again belatedly. The body corporate manager, PBCM has also made a submission in respect of the application, having "been asked by the committee ... to respond to the above ...". The manager then states –

Prior to making a detailed submission the committee have brought to my attention statements in the submissions which are of concern to them as a committee. ...

I will make a submission on behalf of the committee prior to the close date, but feel that agreements already in place with your, Mr Meek and Mrs Miller are already attending to many of the issues mentioned.

Despite these assurances, a further submission to the application was never provided by the manager, on behalf of the committee.

Again, I am in the position of have virtually no material in response to the applicant’s allegations. In a perfect world of unlimited resources, this might not be a problem and I might undertake an "investigation" in order to determine the relative merits of the application. Unfortunately, this is not a perfect world, and the allocation of limited public resources is such that it is the role of four appointed adjudicators to resolve in excess of 900 dispute applications (this financial year). I set out other relevant limitations more fully under the heading "Reasons for Dismissal" in application 0749 of 2002 and do not propose to comment on this aspect further.

Requested order (a)

In respect of the first order sought, I conclude that I am unable to make a finding. Firstly, because the applicant relies on aspects which she believed were covered in "my previous application" which I dismissed for the reasons set out therein, and further, for reason that the manager has apparently submitted that the issue of the levies would be corrected. Whether or not the manager has actually done this, and whether this would be satisfactory to the applicant is another matter entirely. However, I am not in a position to know this. Consequently, I intend to dismiss this aspect of the applicant’s application.

Requested order (b)

Because of the lack of response to any of the specific aspects in the application, I have no information of how the "insurance component of the administration fund levy" is presently calculated, except that the applicant says that the current practice "is in direct conflict with section 130(1)(b)". The applicant argues that it should be calculated on reinstatement value as required by section 130(1)(b) of the standard module regulation.

The scheme is recorded under a standard format plan (formerly a group title plan) of subdivision. Section 130(1)(b) of the standard module provides –

130 Premium
(1) The owner of each lot that is included in the scheme and is covered by reinstatement insurance required to be taken out by the body corporate is liable to reimburse the body corporate for the proportion of the premium for reinstatement insurance that reflects--
(a) for a lot created under a building or volumetric format plan of subdivision--the interest schedule lot entitlement of the lot; and
(b) for a lot created under a standard format plan of subdivision--the cost of reinstating the buildings on the lot. ...

This section provides two different methods of calculating owners’ contributions towards insurance premiums depending on whether the scheme is recorded as a building or standard format plan of subdivision. In the case of a standard format plan of subdivision, the contribution of individual owners must reflect the cost of reinstatement of the owner’s actual lot. So for example, if there are 3 lots, and the costs of reinstatement is respectively $100,000, $150,000 and $200,000 per lot, and the insurance premium for reinstatement of all 3 lots is $1000 per year, then contributions towards insurance should be –

• Lot 1 Cost of reinstatement ($100,000) Insurance $222.22
• Lot 2 Cost of reinstatement ($150,000) Insurance $333.33
• Lot 3 Cost of reinstatement ($200,000) Insurance $444.44

Given that the scheme is recorded as a standard format plan of subdivision, this is how insurance should be apportioned as between lots. In the circumstances, I intend to order the body corporate to comply with section 130(1)(b) in determining individual owners’ contributions towards reinstatement insurance premiums.

Requested order (c)

This order is related to (b) above. In order to facilitate the calculation of reinstatement insurance contributions for each lot, the applicant seeks that the body corporate be required to seek an independent valuation of all units by a qualified valuer. This requested order appears logical given that I have ordered that the body corporate must calculate its insurance contributions for each lot in accordance with the reinstatement value of each lot insured. The only query I have is whether a valuer is the appropriate person to provide the required information. It is not the value of each lot which is relevant; rather it is the cost of reinstating the lot in the building. Given this, then perhaps the appropriate person is a quantity surveyor. I have no fixed view on this and intend to specify that the body corporate shall engage an expert to provide a report on the reinstatement value of all lots in the scheme, within three (3) months of the date of the order.

Requested order (d)

The applicant seeks the invalidation of the EGM held on 16 December 2002 for the reason that the body corporate manager "chaired the EGM ... despite the chairperson being present in person and despite my making the point at the beginning of the meeting that this could invalid (sic) the meeting". The applicant further states that the action of Mr Perkins invalidates this meeting under section 46(1) ... and confirmed in the BCCM brochure "General Meetings".

Section 46(1) of the standard module provides –

46 Chairing general meetings
(1) The chairperson must chair all general meetings at which the chairperson is present.

I refuse to invalid a meeting on such a minor technical point. I acknowledge that the section does require the chairperson to chair all general meetings, but in the scheme of things, the failure to observe this requirement is not a grounds to invalidate the entire meeting. Meetings are the lifeblood of bodies corporate; it is the way they function and make decisions. Without meetings, bodies corporate could not function. In my view, the role of an adjudicator is not to invalidate meetings for minor technical failings. To do so would result in situations where virtually all meetings were possibly the subject of invalidation, given the level of prescriptive regulation.

In the appeal decision in Wei-Xin Chen v. Body Corporate for Wishart Village, Judge Boulton of the District Court stated in his decision –

The very detailed provisions of the standard module regulation ... make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide.

The applicant has not evidenced any substantial detriment or loss of rights to herself or others arising from the action complained of. In the circumstances, I refuse to invalidate the meeting as requested.

Requested order (e)

The applicant seeks that motion 1 "Confirmation of minutes of AGM" be declared in error and be amended to "Confirmation of the EGM minutes of 4 November 2002".

Section 45(2)(a)(v) of the standard module provides that the agenda must include, if there has been a previous general meeting – a motion to confirm the minutes of the last meeting. The applicant states that the motion in question should be corrected to confirm the minutes of the EGM of 4 November 2002, and that the minutes of the AGM had already been confirmed. The applicant points out a further error in that the AGM was held on 22 August 2002, and not 24 September as noted.

The minutes of the disputed meeting actually state that in respect of the point of order raised by the applicant was disallowed by the body corporate manager as the "EGM of 4 November 2002 was invalid because it had not been requested by 25% of owners".

This is really a dispute between the manager and the applicant as the then secretary as to the validity of a meeting. Presumably the meeting of 4 November 2002 was one called by the applicant as secretary, and which the applicant now seeks to validate by this requested order amending the minutes of a subsequent meeting to confirm the minutes of the meeting on 4 November 2002. The manager is denying the validity of this meeting. The meeting minutes show that only the applicant and her husband were personally present at the meeting, and that the only vote recorded was a single "yes" vote for all 4 motions considered. For record purposes, to abstain on a motion is not to vote.

I consider that what the applicant is proposing here is deceptive. Superficially, she is simply seeking to have the minutes of the most recent meeting confirmed at the next meeting. However, behind this is an attempt to confirm the validity of a meeting which she convened and held in her then role as Secretary. I consider the applicant has sought to mislead me on this aspect, and I consider her conduct does her no credit. The applicant has failed to inform me of all relevant aspects. I take a dim view of such conduct. I refuse the order as sought, and suggest to the applicant that in future applications (if any) she provide full and correct information, and not selective information, or information which does not fully inform an adjudicator of the correct position. I remind the applicant that section 297 of the Act provides that –

A person must not state anything to the commissioner or an adjudicator the person knows is false or misleading in a material particular. (Minimum penalty – 60 penalty units).

Requested order (f)

Next the applicant has sought that owners who supported her removal from the office of Secretary / Treasurer be required to individually give substantiated reasons for their action, in writing.

There is no requirement for an owner to provide a statement of reasons (or motivation) for voting in a particular way. Owners are entitled to vote how they consider appropriate, and owe no explanation of this to any other owner. I refuse to make the order as requested.

Requested order (g)

Finally, the applicant seeks that motion 3 "Parking on common property" be declared discriminatory and be removed from the record. The applicant states that –

... other residents and owners who also park on common property did not receive a notice of contravention and continue to park on the common property. The invalid "notice of contravention" received was complied with within 24 hours of receiving the notice. Despite this the motion was permitted to proceed and was passed at the meeting. This motion has not been actioned and was quite clearly a vexatious and vindictive act and should be struck from the record.

The statement raises several allegations. That other residents are in breach of by-laws. That the by-laws are not being enforced against all residents uniformly. That compliance with the notice of contravention should have resulted in the motion being withdrawn from the meeting agenda. These allegations are aside from the central allegation that the motion was discriminatory and should be struck from the record.

It is difficult to conclude that a motion regarding breach of by-laws was discriminatory when the applicant herself impliedly admits to being in breach of the by-law. Further, I cannot say whether the motion was vexatious or vindictive. This aspect is not dealt with in the legislation. The aspect is subjective. Clearly, the applicant considers that she is being discriminated against, however on her own admission she was in breach of the by-law, and consequently, the motion would appear to have a valid basis. Given this, and the subjective aspects involved, I refuse to order as sought.