Coomera Garden Homes [2003] QBCCMCmr 314 (7 January 2003)

Last Updated: 10 March 2009

DJ ReardonREFERENCE: 0436-2002

ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20588
Name of Scheme:	Coomera Garden Homes
Address of Scheme:	20 Fortune Street COOMERA QLD 4209

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

Joseph Rizzo, a previous Co-owner of Lot 7 (Lot 7 was sold after the application was made), Mario Rizzo, the Owner of Lot 8, Giuseppe Scarcella and Bruna Scarcella, the Owners of Lot 2 and Co-Owners of Lot 18, and Charles Barron, the Owner of Lot 21,

DJ ReardonI hereby order that the application for a declaration that the engagement of Strata and Body Corporate Services, pursuant to a resolution of the Body Corporate of 7 December 2001, is void,
is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0436-2002

“Coomera Garden Homes” CTS 20588

1. Orders sought
   

The Applicants, a previous Co-owner of Lot 7 (Lot 7 has been sold since the application was made), the Owner of Lot 8, the Owners of Lot 2 and Co-owners of Lot 18, and the Owner of Lot 21, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (“the Act”), quote-

“The present body corporate manager Mrs Glenis Smith of Strata & Body Corporate Services Pty Ltd and that were appointed at the annual general meeting held on December 7, 2001 for a further period of 3 years. The Body Corporate were NOT furnished with 2 quotes in accordance with the requirements of section 104 of the Body Corporate and Community Management (Standard Module) Regulation 1997 (“the Standard Module”).

I seek or obtain an order of the Commissioner to declare the agreement (Ordinary Resolution) Motion No.10 Note attach copy of Motion) is invalid.”

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 –

1. a claimed or anticipated contravention of the Act or the community management statement; or
2. the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

100. a claimed or anticipated contravention of the terms of, 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 “Coomera Garden Homes” community titles scheme consists of 28 lots and common property. The community management statement for “Coomera Garden Homes” 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 22 July 2002. Originally, a Co-owner of Lot 7 was the sole applicant. On 24 July 2002, a staff member of this Office wrote to the Co-owner of Lot 7 on behalf of the Commissioner for Body Corporate and Community Management (“the Commissioner”) and requested further information relating to, and clarification of, the application. Firstly, the Co-owner of Lot 7 was requested to amend the application to bring the matter within the meaning of “dispute” under section 182 of the Act, and therefore, within the jurisdiction of an adjudicator. Secondly, the Co-owner of Lot 7 was requested to provide reasons why the time limit imposed by section 193 of the Act should be waived in this instance.
The Co-owner of Lot 7 was also requested to provide copies of the minutes of a meeting held on 7 December 2001, and to provide the name and address of the Secretary for the Body Corporate.

In a letter dated 31 July 2002, the Owner of Lot 8 requested to be included as an applicant in the application.

In a facsimile dated 7 August 2002, the Co-owner of Lot 7 requested that the Body Corporate be named on the application as the other party to the dispute. The Co-owner of Lot 7 also provided a statement of reasons explaining why the time limit imposed by section 193 of the Act should be waived. In facsimiles dated 9 August 2002, and 5 September 2002, the Owners of Lot 2 and Co-owners of Lot 18, and the Owner of Lot 21 requested to be included as applicants to the application.

On 15 August 2002, the Commissioner invited the Body Corporate Manager for the scheme, the Committee, and all owners of a lot included in the scheme to make a written submission about the application. The Owners of Lots 5, 10, 14, 16, 17, 25, 26, 28, and the Body Corporate Manager have made written submissions opposing the application. No submissions were made to this Office supporting the application.

On 2 December 2002, the Commissioner made an initial case management recommendation that the application should be the subject of departmental adjudication.

On 17 December 2002, a staff member of this Office contacted the Body Corporate Manager for the scheme on my behalf, and requested copies of the following documents:

• The full notice of the annual general meeting scheduled for 30 November 2001, and adjourned until 7 December 2001 (including attachments),
• The minutes of the extraordinary general meeting held on 6 October 2002,
• The notice of the annual general meeting held on 24 November 2002 (including attachments), and
• The minutes of the annual general meeting held on 24 November 2002.
  

The Body Corporate Manager provided the requested documents under cover of a letter dated 17 December 2002.

3. Matters in dispute
   

This dispute resolution application seeks an assessment of the validity of the engagement of the Body Corporate Manager pursuant to a resolution of the Body Corporate made at an annual general meeting held on 7 December 2001.

I have before me the minutes of the annual general meeting held on 7 December 2001, which include the following resolution regarding body corporate management:

“Resolved by Ordinary Resolution that Strata and Body Corporate Services Pty Ltd be engaged as body corporate managers under Section 107 and Body Corporate Community Management Act 1997, with a delegation of the powers, authorities, duties and functions of the Secretary and Treasurer of the Body Corporate for a period of three years from 1st January 2002 in terms of the Management Agreement supplied with the notice of meeting.

The votes were: 3 in favour; nil against; 2 abstentions.”

In the application the Applicants express the view that the engagement is invalid because two quotations for body corporate management services were not presented to owners with the notice of meeting in accordance with section 104 of the Standard Module. I will consider this issue below.

In the supporting grounds the Applicants also raise issues concerning the Body Corporate Manager’s role in the approving of fences. I consider that these issues are quite irrelevant to a consideration of the validity of the engagement of the Body Corporate Manager. As such, I do not intend to consider them further.

4. Jurisdiction and time limit
   

This application raises a dispute between a number of lot owners and the Body Corporate, regarding the engagement of a body corporate manager. Therefore in my opinion, the matter falls within the definition of “dispute” outlined in section 182 of the Act. I note that one of the Applicants (the previous Co-owner of Lot 7) has sold his lot since the application was made. While it is arguable that this Applicant has a minimal continuing interest in the subject matter of the application, the other Applicants continue to be owners of lots included in the scheme. Therefore, I consider that it is proper for the application to be considered notwithstanding the transfer of ownership of Lot 7.

As stated previously, section 223(1)(a) empowers an adjudicator to make orders concerning claimed contraventions of the Act. As the Applicants allege that the requirements of the Act concerning the engagement of a body corporate manager have not been fulfilled, it seems to me that the application raises matters about which an adjudicator is authorised to make orders.

Notwithstanding that the application appears to fall within the jurisdiction of an adjudicator under the Act, section 193 of the Act imposes a time limit on particular types of dispute resolution applications. Specifically, section 193 provides the following:

“193 Time limit on certain applications

(1) This section applies to an application for an order declaring void—

(a) a meeting of the committee for the body corporate, or a general

meeting of the body corporate; or

(b) a resolution of the committee or body corporate; or

(c) the election of an executive or other member of the committee.

(2) The application must be made within 3 months after—

(a) if subsection (1)(a) applies—the meeting; or

(b) if subsection (1)(b) applies—the meeting at which the resolution

was passed or purported to be passed; or

(c) if subsection (1)(c) applies—the meeting at which the executive

or other member was elected.

(3) However, if the making of the application does not comply with

subsection (2)—

(a) the commissioner must deal with the application (including

making a case management recommendation for the application)

as if the making of the application complied with subsection (2);

and

(b) an adjudicator to whom the application is referred for specialist

or department adjudication may, for good reason, waive the

non-compliance.”

The resolution to engage the Body Corporate Manager, which is the subject of this application, was made at an annual general meeting held on 7 December 2001. In my view, section 193 requires that an application about this meeting should have been made by 7 March 2002. As stated previously, this application was not made until 22 July 2002, over 7 months after the meeting was held.

In the appeal of Weeks v Commissioner for Body Corporate (District Court Maroochydore, Appeal 13/99), His Honour Judge Dodds considered section 193, and expressed a view that the objects of the Act “militate against too strict or legalistic a view about good reason for waiving non-compliance with the time limit”. His Honour went on to state that “(w)hat will be required is a balancing of the length of the delay; the reason for non-compliance; the effect of the delay on others who are affected by the matter in dispute and importantly, whether apart from the question of non-compliance with the time requirement, an applicant will be entitled to the relief sought. The applicant, being the person seeking a waiver, will have the task overall of satisfying the adjudicator that the time limit should be waived in all the circumstances”.

The Applicants state that their Solicitor’s delayed responding to the Applicants’ request for legal advice, which in turn resulted in a delay in making this dispute resolution application.

In accordance with His Honour Judge Dodds’ comments above, I intend to consider the broad circumstances of the case, including the question of whether the Applicants would be entitled to the relief sought but for the time requirement, in determining whether to waive the time limit imposed by section 193 in this instance.

5. Determination
   

The Standard Module makes a number of provisions for the engagement of body corporate managers. Briefly, section 78 of the Standard Module requires that engagements must be in writing, state the term of the engagement, state the functions of the body corporate manager, and state the basis on which payment for the body corporate manager’s services is to be worked out. Section 80 of the Standard Module provides that the term of an engagement of a person as a body corporate manager must not be longer than 3 years. Importantly, section 87 provides that a body corporate may only engage a person as a body corporate manager if the engagement is authorised by ordinary resolution of the body corporate, and the terms of the engagement are included in the material forwarded to members of the body corporate for the general meeting that considers the motion to approve the engagement.

When considering the engagement of a body corporate manager, it is also important to note section 104 of the Standard Module, which requires that at least two quotations be provided to owners regarding spending over particular amounts. This section provides:

104 Quotes for major spending

(1) This section applies if—

(a) a motion to be moved at a general meeting of the body corporate

proposes the carrying out of work or the acquisition of personal

property or services, including the engagement of a body

corporate manager or service contractor, but not including the

engagement of a service contractor who also is, or is to be, a

letting agent; and

(b) the cost of carrying the proposal into effect is more than the

relevant limit for major spending for the scheme.

(2) The lot owners must be given copies of at least 2 quotations for

carrying out the work or supplying the personal property or services.

(3) If the motion is proposed by the committee, the committee must

obtain the quotations.

(4) If the motion is not proposed by the committee, the person proposing

the motion must obtain the quotations and give them to the secretary.

(5) Copies of the quotations or, if voluminous, summaries of the

quotations and advice about where the complete documents may be

inspected, must accompany the notice of the meeting at which the motion

is to be considered.

(6) If, for exceptional reasons, it is not practicable to obtain 2 quotations,

a single quotation must be obtained and must accompany the notice of

meeting.

(7) Each quotation obtained under this section must be retained as an

attachment to the minutes of the meeting at which the quotation is

considered.

The Schedule of the Standard Module provides that the “relevant limit for major spending” for a community titles scheme means an amount worked out by multiplying the number of lots included in the scheme by $200. Therefore the relevant limit for major spending for the “Coomera Garden Homes” community titles scheme is $5600 ($200*28 lots).

In this case it seems to me that the resolution to engage Strata and Body Corporate Services Pty Ltd as made at the meeting of 7 December 2001 involved spending above this relevant limit for major spending. Specifically, the costs outlined in the agreement were $3,812.00 per annum including GST for fees for agreed services, plus disbursements and fees for additional services. As the term of the engagement was for 3 years, the cost of the agreement was at least $11,436, which is well above the relevant limit for major spending for “Coomera Garden Homes”.

In this respect, I agree with the Applicants, in that I consider that Owners should have been presented with at least 2 quotations regarding this amount of expenditure for body corporate management services. However, a point made in a number of submissions, which in my view is also correct, is that it was the Committee’s responsibility as the proposer of the motion to obtain the two quotations (refer section 104(3) of the Standard Module).

However, notwithstanding the above, I note that subsequent events have made this dispute resolution application, and the orders sought by the Applicants, largely redundant. Specifically, I refer to the minutes of the annual general meeting of the Body Corporate held on 24 November 2002, which include the following resolution concerning body corporate management:

“Resolved by Ordinary Resolution that Strata and Body Corporate Services be engaged as body corporate manager of Coomera Garden Homes CTS 20588 under Section 87 of the Body Corporate Community Management (Standard Module) Regulation 1997 with a delegation of the powers, duties and functions of chairperson, secretary and treasurer for a period of one (1) year commencing from the date of this meeting for a fee of $3,080.00 per annum ($110 per lot per annum) inclusive of GST plus disbursements in the sum of $924.00 per annum ($33.00 per lot per annum) inclusive of GST and such appointment to be by instrument in writing, as per copy attached.

The votes were: 12 in favour; 1 against; nil abstentions.”

It seems to me that this resolution has been made in accordance with the legislation, including section 104 of the Standard Module. It also seems to me that this resolution overcomes the original defect in the resolution of 7 December 2001 to engage the Body Corporate Manager. As such, I do not consider that an order interfering with the Body Corporate’s arrangement with the Body Corporate Manager is necessary or warranted at this time.

In light of the resolution of 24 November 2002, in my view the Applicants are not entitled to the relief sought by this application. Further, I consider that the reasons presented by the Applicants regarding the delay in making the application are not particularly convincing, when weighed with the cost and inconvenience to the Body Corporate in disrupting its body corporate management arrangements 7 months into the term of an agreements. In addition, it seems to me that the Body Corporate has made a clear resolution, by 12 votes to 1, to engage Strata and Body Corporate Services for at least a further 12 months. In all of these circumstances, I consider that the time limit imposed by section 193 should not be waived, and in any event, the relief sought by the Applicants is not warranted at this time.

For all of these reasons, I intend to dismiss the application.