Palm Valley Villas [2003] QBCCMCmr 38 (31 July 2003)

Last Updated: 17 May 2005

REFERENCE: 0036-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20626
Name of Scheme:	Palm Valley Villas
Address of Scheme:	124 Wellington Street ORMISTON QLD 4160

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Cherrill Myrtle Garner, the owner of lot 47 and Yvonne Mary Garner, the owner of lot 8

I hereby order that the application by Cherrill Myrtle Garner, the owner of lot 47 and Yvonne Mary Garner, the owner of lot 8, seeking an order that the BCCM conduct a full audit of the accounts and records of the body corporate for the past 5 years and thc contract with the grounds person Mr A Tennent, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0036-2003

"Palm Valley Villas" CTS 20626

The applciants, Cherrill Myrtle Garner, the owner of lot 47 and Yvonne Mary Garner, the owner of lot 8, have sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote –

The order we are seeking is that the BCCM conduct a full audit of the accounts and records of the body corporate for the past 5 years and thc contract with the grounds person Mr A Tennent.

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)).

In their grounds, the applicants allege that they have requested from the committee minutes and account information for the past 5 years but "have only received minutes from June 2001 until February 2003". Further, they allege that "the committee has consistently failed to provide us with the information we have requested under law 162". They then allege a "discrepancy" in "monthly minutes" and request "that the department do their own audit for the past 5 years". The application then includes various items of correspondence etc between the applicants and the committee.

Initially, the applicants had alleged that "the public areas / gardens are in a shabby and neglected condition – we believe because money has been badly allocated to other areas". Further, they alleged they were not provided with proper answers to legitimate questions before concluding with a series of questions and allegations.

The applicants have sought that this office "conduct a fully audit of the accounts and records of the body corporate for the past 5 years". This office does not undertake investigations of this nature. That it, it will not appoint a person to audit a particular body corporate. This office is an office of approximately 16 persons, and investigations are in the main undertaken based on the information provided by the parties, together with site inspections and inspections of records (where considered appropriate). With over 30,000 community title schemes in Queensland, the office is not resourced to investigate in the manner proposed by the applicants.

In this context, there are two scenarios in my view where an adjudicator might make an order requiring an audit. An adjudicator might require a body corporate to have a qualified person undertake an audit of its financial records if claims of serious financial irregularities have been established or substantiated against the body corporate. Alternatively, the body corporate might be ordered to undertake an audit where it resolved to do so in general meeting, but thereafter failed to undertake such audit. Neither of these two scenarios are present here. In particular, the applicants have not established or substantiated any serious financial irregularities. At best, it might be stated that the applicants have raised concerns which they apparently hold regarding current management of the body corporate – these concerns however are not substantiated. Moreover, independently of this aspect, I am informed that this body corporate has had its financial accounts and statements audited by an independent auditor for the period sought by the applicants. The applicants have provided no objective basis to impugn these audits.

It is open for the applicants to conduct their own audit of body corporate records, of whatever level and detail they consider appropriate, provided such audit/s is/are conducted at their own expense. It is not reasonable that a body corporate bear the cost of audits sought by an owner. Owners are entitled to access body corporate books and records for such purposes.

Consequently, for the reasons set out, the order sought will not be made.

I do however intend to go on to make some observations regarding this dispute. In investigating this application, this office sought submissions from all owners in the scheme and the body corporate committee. It is always of assistance in resolving a dispute when submissions are provided by a considerable number of owners. It provides to an adjudicator a very wide cross sampling of views of owners within the body corporate. Of the 41 lots in the scheme, some 24 owners made submissions in respect of the application. I estimate from submissions that 6 of the remaining owners are supportive of the application, and its allegations, whilst some 18, plus the committee, are opposed to it.

One of the secondary objects of the Act is to balance the rights of individuals with the responsibility for self management as an inherent aspect of community title schemes. In the context of there being some 30,000 individual schemes (containing in excess of 260000 lots), it is contemplated and intended that bodies corporate will be responsible for their self management. That is, it is for the owners in each scheme, through the exercise of their rights and obligations as owners, who determine the direction and priorities of the scheme. Most decisions are made by an elected committee, or by majority determination by owners in general meeting. All owners are bound by the decisions of the committee, or of the body corporate in general meeting, unless owners can establish that a particular decision is not a reasonable decision made for the benefit of lot owners (section 152 of Act). This qualification should not be regarded as something which is easy to establish. It is not, and requires clear and compelling evidence.

In this context, based on the contents of submissions, I conclude that this body corporate is operating in a perfectly acceptable and accountable manner. Based on submissions, it is the conduct and motivation of the applicants and a small band of supporters which is of concern to owners. I must agree that certain allegations made in this regard are objectively supported by evidence / information which has been provided to me in submissions. In particular, it is clear that the applicants and others sought election to the committee at the AGM held on 28 June 2003, apparently without success. Their agenda in seeking election to the committee appears to be consistent with the matters which they have referred to or alleged in their application.


It is clear from the minutes that many matters which are of concern to the applicants were the subject of motions submitted to the AGM. For the most part, it seems that the applicants were unsuccessful in convincing other owners of their proposals, or of their concerns. In my view, the applicants and their supporters should accept the decisions of the majority of owners in respect of these matters.

I note the contents of one submission in particular. This owner states –

Most of the points of the persons lodging the application of dispute in my opinion are conjecture.

The committee are charged with the duty of controlling the interests of this body corporate to the best of their ability.

I think that over the period of time I have been an owner in the community, this committee has performed very well. It is always a hard task to please everyone but to maintain a happy balance is the object of the exercise.

The common property has been maintained in a good clean condition and most of the repairs, modifications and installations have been carried out as finances have become available. All projects appear to be carried out in a priority system as defined by this committee.

I am impressed by the balance of this submission. Further, it states, in a polite way, what many other owners say, but in a more pointed way; namely that the current committee have their support, and that they are, in the opinion of a majority of owners, doing a competent job. In the circumstances, I conclude that the applicants views are those of a minority of owners. Moreover, these views would appear to be largely unsubstantiated. For the above reasons, this application is dismissed.