Kerri Court [2003] QBCCMCmr 33 (24 July 2003)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Lorraine MACKENZIE, as a co-owner of Lot 1,

I hereby order that the applicant Lorraine MACKENZIE, a co-owner of Lot 1, and the respondent Joan Elizabeth FREEMAN, the owner of Lot 2, and an affected party Bruce Robert MACKENZIE, the other co-owner of Lot 1, having on 11 July 2003 reached a mediated settlement of the disputes between them subject of the application, and having signed an agreement setting out the terms of settlement and requesting that a consent order be made for those settlement terms by an Adjudicator pursuant to section 276(5) of the Body Corporate and Community Management Act 1997 ("the Act"), must abide by those agreed terms which are set out below –

1. That an independent professional Body Corporate Manager is employed by the end of August 2003.
2. Joan (Freeman) will meet the proposed Manager and inform Lorraine (Mackenzie) about acceptance by the 7^th August 2003.
3. If the Manager is not acceptable to Joan, Joan will offer an alternative Manager for consideration.
4. Following the appointment of the Body Corporate Manager, Joan agrees to pay outstanding fees and participate in meetings.
5. Both agree that any repairs, attachments, or structural changes, to the common area (common property) be discussed for approval before work is done.
6. Bruce (Mackenzie) and Lorraine will seek Council advice regarding public liability with regard to the garden edging, and agree to remove the garden at their cost back to the fence line if it is a public liability problem. If the garden is not a liability, the independent advice will be made to Joan for follow up.
7. Bruce and Lorraine will ask that delivery vehicles park on their side of the driveway.
8. Both agree to give each other space, and treat each other with respect.

9. We agree to notify CT that we would like the file closed, and no further action be taken by CT. We agree to refer this agreement to an adjudicator appointed under the Body Corporate and Community Management Act 1997, as a consent order pursuant to section 199 of the Act (section 276(5) of the Act).

I further order that the carrying out of the above terms must be in accordance with the Act and the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module"), particularly in regard to –

1. The calling and conduct of the meeting required to engage a Body Corporate Manager.
2. The appointment of a Body Corporate Manager.
3. The authorisation and cost responsibility for any improvements, repairs or structural changes that either involve common property or require authorisation under the legislation or by-laws.
4. The responsibility of the body corporate under the legislation regarding public liability insurance.

I further order that the timings set out in the terms may be varied by joint consent of the parties, to enable matters to be properly carried out in accordance with the legislation.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0061-2003

"Kerri Court" CTS 6058

JURISDICTION:
This is a dispute between an owner (the applicant MacKenzie) and another owner (the respondent Joan Elizabeth FREEMAN, the owner of Lot 2), concerning the failure by an owner (Freeman) to pay body corporate fund contributions, and that a Body Corporate Manager/Administrator be appointed to overcome the failure of the body corporate to properly administer itself in compliance with the legislation. These are matters falling within the disputes resolution provisions of the legislation (see sections 227, 228 and 276 of the Act).

General powers of an Adjudicator in making an order:

Section 276(1) 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 –

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

APPLICATION AND SUBMISSIONS:
Under section 243 of the Act, a copy of the application was provided to the respondent Freeman with an invitation to respond to the matter of dispute raised in the application. The respondent made a written submission. The applicant body corporate viewed the submission and subsequently lodged a written reply (see sections 246 and 244 of the Act respectively).

In consideration of the orders sought and that the parties constituted the whole of the body corporate, it was considered that the most appropriate manner of resolving the dispute would be mediation. The parties were advised on 19 May 2003 that the matter had been referred to the Dispute Resolution Centre of the Department of Justice and Attorney-General (see section 248 of the Act). The parties subsequently participated in a mediation session with a mediator on 11 July 2003 and reached agreement on a number of matters in dispute. These matters went beyond the particular orders sought, encompassing a range of problems most of which were raised in the respondent’s submission to the application.

Had this matter been referred for an adjudication of the dispute rather than mediation, I would have set out here a brief summary of the facts of the matter. However, as the matter has been mediated and there are some comments I need to make regarding the terms of settlement, I shall in any case be referring to the facts but shall do so along with relevant comments under separate headings in my "Determination" which follows.

DETERMINATION:
The scheme "Kerri Court" was registered as a building units plan (now termed a building format plan) on 24 May 1989, and comprises two residential lots. Having been established under the Building Units and Group Titles Act 1980, under the transitional provisions of the (new) Act the scheme was immediately subject to the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module"). As no new community management statement has been lodged since to alter that regulatory status, the scheme continues to be regulated by the Standard Module.

As foreshadowed, I shall deal separately with those matters and terms which raise legislative issues not addressed in mediation. That is, while parties in mediation may agree to certain terms to resolve a particular matter in dispute, it may be that the settlement term agreed to may in fact contravene a legislative provision or a body corporate by-law. Where that occurs, an adjudicator cannot give a consent order giving effect to such a term. This "review" role by an adjudicator is set out in section 276(5) of the Act, which states –

(5) If the adjudicator makes an order in a form agreed to by the parties to the application following mediation or conciliation, the order –

The review role is necessary because of the present system of referring matters for mediation to the Dispute Resolution Centre. Mediators with the Centre are generalist mediators who do not have a specialist knowledge of the Act and therefore are not competent to determine when the terms of a settlement are likely to contravene the Act or, as in this case, leave the parties open to a contravention by omission of any necessary legislative steps or information for the parties to properly carry out a term. Where matters involve merely social issues such as noise, harassment, behaviour, even the parking of vehicles, there is usually no bar to issuing a consent order for the terms of settlement. However, where matters concern, for example, the engagement of persons in defined roles for which the legislation prescribes engagement procedures, or the installation of an improvement for the benefit of a lot, then the terms must be scrutinised for compliance and, also, any instances of ambiguity or omission of legislative steps or information which, in the opinion of the adjudicator, may lead the parties into error. I shall deal separately with each of those instances that arise out of the settlement terms reached between the parties, Freeman and the MacKenzies.

I would mention first that a review is not merely an exercise in setting the law right for a settlement agreement, but it prevents future repercussions for the parties. For example, depending on the extent of encroachment, the nature of the use, and other considerations, a use of the common property may require an ordinary resolution, a special resolution, a resolution without dissent, or a by-law. If a lot building has a small pergola added jutting onto common property, then if authorisation was by other than an exclusive-use by-law recorded with the Registrar of Titles, a future purchaser may have a right of redress against a present owner for misrepresenting in a sale of their lot that the pergola was "authorised".

Terms 1 to 4 regarding engagement of a Body Corporate Manager:

There are a number of points to make concerning this issue. Firstly, the terms give the impression that the engagement of a Body Corporate Manager merely requires informal acceptance by both parties. The legislation actually requires the following: the engagement must be in writing; an engagement can only be concluded in general meeting: the engagement terms and conditions must be set out and must be known to the parties before voting; the engagement can only be for three years; and an alternative choice must be available if the major spending limit is exceeded (see sections 78, 87 and 104 of the Standard Module). I might add that a reputable and knowledgeable Body Corporate Manager would alert the body corporate (ie the parties) to these requirements, however as this is not a regulated or licensed occupation, there are persons holding themselves out as Body Corporate Managers who are neither reputable nor knowledgeable. This comment should not in any way be construed as a comment concerning the person nominated by the applicant for consideration, Wendy Steadman of Body Corporate Choice, who is wholly unknown to me.

Secondly, the timings set for acceptance by 7 August, followed by an alternative if unacceptable, then engagement by the end of August, may not be able to be met. The legislation requires minimum notice of three weeks for a general meeting, and that would follow the time taken for the parties to first agree on a suitable person (as they wish to do and assuming the major spending limit is not exceeded) and the notice of meeting (agenda, documentation, etc) to be prepared and sent out.

Thirdly, as a general comment to Term 4, the participation of owners in meetings is at the discretion of each owner; they may participate by attendance, by voting using the voting paper that must accompany each notice of meeting, or by appointment of a proxy – they may also choose not to participate or vote at all, though must accept the consequences of not voting. However, I think this term is more an expression of intent by Joan Freeman than an obligation.

To accommodate the risk in the first point I have included an order that the legislation must be complied with in discharging the relevant terms; and for the second point I have included an order to enable the parties to vary the timings.

Terms 5 and 6 concerning repairs, improvements and structural changes, and public liability insurance.

I have already mentioned the various levels of authorisation necessary for different type of uses of the common property, whether, as examples, for a building improvement on common property, siting of an air-conditioner through a window over common property, or having use of an area of common property for a personal vegetable garden. The legislation also has a complex structure of responsibility for various repairs and replacements, including in regard to particular structural repairs. Any proposed use or repair of the common property must be authorised in some manner by the body corporate – mere discussion is insufficient.

In regard to the MacKenzie’s garden, apart from the body corporate authorisation issue, public liability insurance by the body corporate (for a specified minimum cover) is a requirement of legislation and any query must be considered against that requirement. Also, public liability cover for personal or property injury within a lot is a different matter.

The additional order for the parties to comply with the legislation in carrying out the settlement terms is also relevant here.

Terms 7, 8 and 9 concern parking, privacy and respect, and the request for a consent order.

I do not see any problem in the unqualified inclusion of these terms. The agreement in Term 7 for delivery vehicles to park so as not to inconvenience the other occupier is the common sense solution; no owner should have their garage blocked by another’s vehicle – the by-laws themselves prohibit this practice as well as the Act which provides that an occupier cannot create a nuisance for others in the scheme.

In regard to the request for a consent order, as well as the comments made previously, I would reinforce the comments that would have been made by the mediator, namely that a consent order incorporating mediated settlement terms (as modified by the adjudicator if necessary) cannot be appealed as can a normal order, but that the order can be enforced by each party against the other in the Courts (see sections 287 and 289(1)(b) of the Act).

Number of Scheme:	6058
Name of Scheme:	Kerri Court
Address of Scheme:	52 West Burleigh Road BURLEIGH HEADS QLD 4220

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 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.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kerri Court [2003] QBCCMCmr 33 (24 July 2003)