Paloma [2004] QBCCMCmr 26 (15 January 2004)

Last Updated: 30 September 2005

REFERENCE: 0435-2003

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	9524
Name of Scheme:	Paloma
Address of Scheme:	93 - 97 Albatross Avenue MERMAID BEACH QLD 4170

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Janice Marie O’Connor, the owner of lot 3

I hereby order that the application by Janice Marie O’Connor, the owner of lot 3 for an order to restrict the chairperson and committee members of Paloma from unauthorised spending of body corporate funds and to conform with the requirements set out in the Body Corporate and Community Management Act 1997, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0435-2003

"Paloma" CTS 9524

The applicant, Janice Marie O’Connor, the owner of lot 3 sought an interim order to restrict the chairperson and committee members of Paloma from unauthorised spending of body corporate funds and to conform with the requirements set out in the Body Corporate and Community Management Act 1997 (the Act). On 8 July 2003, the requested interim order was dismissed.

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 the interim order I concluded that -

The order sought by the applicant, thought described as "interim" is not interim or injunctive in nature. Rather it seeks to impose a general prohibition on the committee regarding what the applicant considers is "unauthorised spending" by it. The nature of the application is such that it can not be effectively addressed or dealt with by way of an interim order. Rather, it requires full investigation, including submissions from other parties to the dispute, before any order can be made. Accordingly, this application for an interim order is dismissed.

In her grounds, the applicant states –

The practice of unauthorised spending has resulted in the single bank account for the combined Administrative Fund and Sinking Fund being overdrawn by $4539.94 ... It would appear that the body corporate manager / secretary / treasurer is powerless to persuade the committee to follow correct procedures.

The applicant considers that the committee should have called an EGM to impose a special levy to rectify the alleged financial position, and further to avoid any further "unauthorised" spending.

The body corporate chairperson, Michael McCallum has responded by way of submission. He commences by denying that the account was so overdrawn. He states –

This is not correct. It is admitted that the overall financial position ... was not sustainable, but the report did not accurately reflect the cash position of the body corporate. The body corporate has, at all times, been in a position to pay all debts as and when they fall due.

The chairperson then refers to various discussions, and concludes –

After discussion with Body Corporate Services and an analysis of the cash position I decided it was neither necessary or expedient to impose a special levy before 30 June 2003. It was agreed with Body Corporate Services that sufficient funds were available from levies in advance to cover operational and other expenses to 30 June 2003. ...

A motion on a special levy was put to the next EGM on 4 July 2003 and was passed by a vote of 6 to 5.

I intend to dismiss this application. Clearly, the legislation does not allow "unauthorised" spending by a committee. Consequently, if spending is alleged to contravene the legislation then the appropriate remedy is to seek an order of an adjudicator specifically regarding such spending, rather than an order seeking to impose generic limitations on the committee’s spending powers. That is, the applicant might apply to this office in respect of specific allegations. However, this does not include in my view a request, as here, to impose generic spending restrictions on a committee. I consider the basis of the application is misconstrued for the above reason.

The applicant (as one owner) is seeking by way of an order of an adjudicator to have restrictions imposed on the chairperson and committee members. I consider that the appropriate body to determine whether any such restrictions should be imposed is the body corporate in general meeting. The applicant should seek to convince the majority of her fellow owners either that specific restrictions should be placed on the spending powers of the chairperson and committee members, or alternatively, the applicant should requisition motions that the positions of certain committee members are vacated. These are the mechanisms available to an individual owner if they are dissatisfied with the actions of the committee or certain members thereof.

I further consider that there has since been ample opportunity for this body corporate to consider and determine both its financial position and the make up of its committee, given that both an EGM and the AGM has been held since this application was made.