Salerni Lodge [2003] QBCCMCmr 529 (26 May 2003)

Last Updated: 10 September 2007

P J HANLYREFERENCE: 0286-2003

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 10 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10319
Name of Scheme:	Salerni Lodge
Address of Scheme:	34 Barker Street

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

Dianna Cavallucci, as attorney for Olga Broglio, the owner of lot 2



I hereby order that the body corporate may proceed to install the electric gate on the driveway to the scheme, with the cost of installation being paid from existing body corporate funds.

I further order that each owner shall pay the sum of $200.00 to the sinking fund on 1 July 2003 in addition to the sum of $300.00, for which each owner is already liable, payable to the administrative fund on 1 July 2003.

I further order that owners shall in future comply with the requirements of the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Standard Module) Regulation 1997, particularly in relation to holding meetings, approving expenditure, adopting budgets, fixing contributions and electing committee members.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0286-2003

"Salerni Lodge" CMS 10319

The applicant, Dianna Cavallucci, the daughter of Olga Broglio, for whom she has power of attorney, has sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act), quote -

1) Sinking funds to be spent for proper purposes

2) Consultation and unanimous agreement on proposed electric gate or any other major expense to the sinking fund

3) Ensure that due notices and meetings are issued

The applicant has also sought the following interim order of an adjudicator, quote -

1) We seek proper notice consultation and meeting on proposed electric gate

2) We seek to cease construction of a new electric gate – a serviceable manual gate is in place

3) Conduct a thorough building inspection to determine repair and restoration works that are more important.

Section 279(1) of the Act provides that an adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates. An adjudicator’s order may contain ancillary or consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

In the supporting grounds, the applicant states that she is concerned at the proposed expenditure on the electric gate for several reasons. The first is that the body corporate has not held a formal meeting to authorise the expenditure, and the second is that the amount involved will almost completely deplete the sinking fund. The applicant further states that family representatives were advised verbally that quotes were being obtained, but did not receive any further communication on the matter. Upon noticing that installation work had commenced, the applicant gave written notice to Mr Salerni requesting that work cease, which it duly did.

Submissions were sought from all owners. Submissions were received from Mr Salerni the owner of lot 3, and from Mr Majewski, the owner of lot 4. Mr Salerni is the original developer, and Mr Majewski purchased his lot earlier this year.

Mr Salerni stated that he had contacted Mr Majewski and Mr Crossan (one of the owners of lot 1) and each of them had agreed to the installation of the gate. Mr Salerni further stated that he did not contact Mrs Broglio as she no longer lives in her lot, and he did not have her forwarding address. Mr Salerni explained that the electric gate is necessary as it is the only means by which intruders can be deterred from entering the common property. He stated that the scheme is situated in close proximity to restaurants, clubs, cafes and a cinema, and the problem is particularly bad on weekends or public holidays, when cars are parked in the driveway making access difficult for tenants. Mr Salerni noted that the existing gate is fifteen years old, and rusty, and needs replacing.

Mr Majewski stated that he had only recently bought his lot, and had had no previous experience with a body corporate. He stated that he had agreed to the installation of the gate, based on the information provided to him by Mr Salerni, but was unaware of the dispute with the owner of lot 2. Mr Majewski expressed the view that the communication between the body corporate and all owners should in future be carried out in a more professional manner.
He further stated that he hoped the dispute could be resolved by both sides meeting half way and finding an alternative solution.

On 16 May 2003, I met with Mrs Cavalucci, Mr Salerni, Mr Majewski and Mr Salerni’s former wife at the scheme. Mrs Cavalucci reiterated her concern at the depletion of the sinking fund if the electric gate were to proceed. Mr Majewski shared her view. Mr Salerni explained that the gate was fully funded from existing monies, but then realised that there would be no money left over to meet unexpected expenditure, although he was adamant that there should be no such expenditure, because the building is well kept and soundly built. All parties inspected the proposed site of the gate, and Mrs Cavalucci conceded that the existing gate has been a problem since it was first installed, because it is very heavy and does not swing properly. It was also acknowledged by all parties that the gate no longer closes properly, since a car hit it.

Considerable discussion took place as to the means by which the electric gate could still be installed, without the sinking fund being completely depleted. Other issues such as security lighting were also discussed. Mrs Cavalucci expressed the view that security lighting was more pressing than the electric gate. Mr Majewski agreed, and offered to obtain quotes on the cost of movement sensor lights for owners to consider. It was finally agreed that the gate could proceed, if all owners agreed to contribute an additional sum of $200 to the sinking fund when their administrative fund levy of $300 falls due on 1 July 2003, so as to restore liquidity to the sinking fund. Those present also agreed that in future, formal meetings must be held so that owners can discuss projects before they are commenced. I advised the parties that I intended to telephone Mr Crossan, who was unable to be present at the on-site inspection because of the short notice, to advise him of the outcome of the discussions. I requested that Mrs Cavalucci, as the applicant, also participate in the teleconference. Mr Salerni and Mr Majewski agreed to this proposal.

On 20 May 2003, I conducted a teleconference with Mr Crossan, a co-owner of lot 1, and Mrs Cavalucci. I advised Mr Crossan of the matters discussed on 16 May 2003. Mr Crossan stated that he is happy to pay an additional sum of $200.00 to the sinking fund on 1 July 2003. He has already paid his $300.00 administrative fund levy in advance. Mr Crossan also supported the view expressed by Mrs Cavalucci and Mr Majewski that the body corporate should hold formal meetings as required by the Act.

The body corporate has not held formal meetings since 1996. Mr Salerni stated during the meeting on 16 May 2003, that the owners have always discussed matters informally, and that any maintenance issues have been attended to promptly. Whilst it is not the intention of the legislation to prevent owners from having informal discussions, it is also necessary for there to be some formality to ensure that all body corporate decisions are properly recorded, and so that all owners, and particularly new owners, can have access to minutes of meetings, financial records, rolls, details of insurance including any claims, and so on.

This scheme is regulated by the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module). Section 60 of the Standard Module requires that an annual general meeting must be called and held within 3 months after the end of each financial year.

Section 330(9) of the Act defines the financial year for a scheme such as this, as follows:

(9) The financial year for the new scheme is, unless the first annual

general meeting has not been held for the existing plan--

(a) each year ending on the last day of the month containing the

anniversary of the first annual general meeting held for the

existing plan; or

(b) if a referee under the 1980 Act has fixed a date to be taken to be

the anniversary of the first annual general meeting of the body

corporate--each year ending on the last day of the month

containing the date fixed by the referee.

As the building units plan (now called a building format plan) registered on 25 May 1982, I do not know if a first annual general meeting has ever been held. At the discussion on 16 May 2003, Mr Salerni had in his possession the minutes of a meeting held in 1996. He stated that there had been no meetings since that time, but he did not state if there had been any meetings before that time. This is a further matter that owners need to investigate in order to place the body corporate on a proper footing once more. Section 283 of the Act allows for an order of an adjudicator to change the body corporate’s financial year, with the consent of the body corporate. The consent of the body corporate must be given at a general meeting.

However, as no meetings have been held for many years, there is no current committee, so there is no person authorised to call and hold a meeting. In such circumstances, an owner may seek an order from this office to appoint a person as administrator (Schedule 5 of the Act- section 23) to call and hold an annual general meeting, at which, amongst other things, the body corporate could resolve to change the financial year (section 283 of the Act). Apart from that issue, the body corporate must also adopt budgets (section 94 Standard Module), fix contributions (section 95 Standard Module), confirm insurances (section 128 Standard Module), elect a committee (section 12 Standard Module), and deal with any other matters that are proposed in motions to be placed on the agenda (section 45 Standard Module).

Other sections of the Standard Module applicable to the concerns expressed by the applicant are section 109 (Duties of body corporate about common property) and section 113 (Improvements to common property by body corporate). Owners may wish to contact the Information Officers within the Commissioner’s office to receive further information on these issues. The telephone number is FREECALL 1800 060 119.

As to the matters with which this application is specifically concerned, and notwithstanding that the electric gate was not formally considered at a general meeting, I propose to order that the gate may be installed, given the agreement which has now been reached between all owners, and, further, given that I consider the gate to be reasonably necessary for the safety and security of persons who use the common property (section 113(c) Standard Module). I further propose to order that all owners shall pay the sum of $200.00 to the sinking fund on 1 July 2003, in addition to the sum of $300.00 payable to the administrative fund for which they are already liable.

Owners should note that in future any item upon which the body corporate intends to expend monies must be considered at either a committee meeting or a general meeting, depending on the nature and extent of the expenditure. Certain matters will fall within the limit of committee expenditure (presently $400), and others will need to be considered at a general meeting, by either ordinary or special resolution. If the expenditure exceeds the limit for major spending (presently $800), then two quotes must be obtained and presented to the meeting in alternative motions. Once again this is information which may be obtained from the Information Officers, on the Freecall number quoted above.

Owners should also endeavour to conduct meetings in such a manner that all owners have an opportunity to express their views. It is particularly important that meetings are conducted in an atmosphere of calmness, with the usual protocols of meeting procedure observed. At the discussion held on 16 May 2003, I observed how easily a meeting between the parties could become disrupted if any owner were to attempt to obtain a decision by shouting down other owners. Every owner has an equal right of voting and an equal right to discuss matters of concern. The smooth running of the body corporate will be ensured if all owners respect the rights of others.

I urge owners to now take the necessary steps to make an application to this office to have a person appointed to call and hold an annual general meeting and place this body corporate on a proper legal footing. Apart from anything else, if any owner wishes to sell their lot, the absence of proper records, and minutes of meetings, may jeopardise a potential sale.

In the circumstances, it is not intended to invite further submissions regarding this matter, or to make a further order, since this decision, though an interim one as sought by the applicant, is final in its determination of this matter. If the parties consider that an appeal of this decision is warranted, then they should appeal the interim order.