Harbour Landing [2004] QBCCMCmr 262 (20 May 2004)

Last Updated: 30 September 2005

REFERENCE: 0100-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	22799
Name of Scheme:	Harbour Landing
Address of Scheme:	179 Coombabah Road RUNAWAY BAY QLD 4216

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the Body Corporate for Harbour Landing CTS 22799

I hereby order that, within 7 days of the date of this order, the former body corporate manager The Body Corporate Headquarters, and/or its managing director, Graeme Perkins, shall deliver to Challenge Strata Management, Level 5, Waterside East, Holden Place, Bundall Qld 4217 all books and records of the body corporate, including but not limited to the following: • Lot balance reports • All financial transaction records • Complete financial statements, transaction lists and other supporting documentation for the whole period of The Body Corporate Headquarters’ appointment but particularly for the year ending 29 February 2004

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0100-2004

"Harbour Landing" CTS 22799

The applicant has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

1. That all records of the body corporate which are held by The Body Corporate Headquarters (BCH), including but not limited to the Common Seal, bank statements, and financial statements for the body corporate’s current financial year to date, be delivered to the chairman, Mr David Buttenshaw or as he may direct in writing within seven (7) days from the date of the order.
2. Any other orders considered necessary or appropriate.

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 supporting grounds, the applicant stated that the body corporate terminated BCH’s appointment at an extraordinary general meeting held on 12 December 2003. The applicant further stated that in spite of repeated requests, BCH had failed to deliver the books and records of the body corporate as it had been directed in writing to do.

Since the application was made, and notwithstanding that it challenged the validity of its termination, BCH, on 24 March 2004, gave notice to the body corporate, under clause 9(b) of its agreement with the body corporate, requiring that the body corporate collect its books and records on 22 April 2004. Pursuant to that notice Mr Barry Barnett, a member of the committee, collected five boxes of books and records on 22 April 2004. Mr Barnett delivered the books and records on the same day to the newly appointed body corporate manager, Challenge Strata Management (CSM). Upon checking the material, Mr Danieletto (the principal of CSM) determined that not all of the body corporate’s books and records had been handed over. Following a request from Mr Barnett, BCH handed over further material to Mr Barnett on 30 April 2004.

The further material was examined by Mr Danieletto, who reported, amongst other things, that:

1. There appeared to be a number of transactions conducted in the year ended 29 February 2004, particularly in the latter months of that year, for which there did not appear to be any vouchers in any of the materials received from BCH.
2. There did not appear to be complete financial statements, transaction lists, and other supporting documentation for the whole period of BCH’s engagement.

This scheme is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

Sections 151 and 152 of the Accommodation Module provide as follows:

151 Return of body corporate property--Act, s 322 [SM, s 152]

(1) This section applies if--

(a) a person has possession or control of any of the following

property (the "specified property")--

(i) a body corporate asset for a community titles scheme;

(ii) a record or other document of a body corporate;

(iii) a body corporate seal; and

(b) the person took possession or control of the specified property in

the person’s capacity, or purportedly in the person’s capacity,

as--

(i) a member, or an associate of a member, of the body

corporate or of the committee; or

(ii) a body corporate manager or service contractor, or an

associate of a body corporate manager or service contractor;

and

(c) the person is served with a prescribed notice requiring the person

to give, within 14 days after the person is served with the notice,

the specified property to--

(i) a member of the committee who is named in the notice; or

(ii) if a body corporate manager is acting under a part 3,

division 10 engagement--a member of the body corporate

who is named in the notice.

(2) The person must comply with the notice.

Maximum penalty--20 penalty units.

(3) The person may not claim a lien on specified property mentioned in

subsection (1)(a)(ii) or (iii).

(4) In this section--

"prescribed notice" means--

(a) a notice of a resolution of the committee; or

(b) if a body corporate manager is acting under a part 3, division 10

engagement--a notice signed by or for the owners of at least

one-half of the lots included in the scheme.

152 Documents in custody of body corporate manager--Act, s 322

[SM, s 153]

(1) This section applies if--

(a) a person (the "person") engaged as a body corporate manager

for a community titles scheme has custody of a document of the

body corporate; and

(b) the person holds the document in photographic or electronic

image form; and

(c) the person’s engagement as body corporate manager expires and

is not renewed, or is otherwise brought to an end.

(2) The body corporate may require the person--

(a) to give to the body corporate the document in the form of a disc,

tape or other article or any material from which writings or

messages are capable of being produced or reproduced (with or

without the aid of another article or device), if the form is

immediately accessible by the body corporate; or

(b) to reproduce, and give to the body corporate, the document in

paper form.

(3) The person must, at the person’s own expense, comply with a

requirement of the body corporate under subsection (2).

Maximum penalty for subsection (3)--20 penalty units.

BCH correctly pointed out that proxies must not be exercised at a general meeting on a motion approving the termination of an engagement of a body corporate manager (Module, s72(3)(f)(ii)). However, such a motion only requires an ordinary resolution, and even disregarding the 20 proxy votes cast in favour of the motion, there were still 10 votes in favour, no votes against, and no abstentions. The motion was therefore still passed. In any event, it becomes a moot point, given that BCH terminated the agreement on 24 March 2004.

I also note, incidentally, that each of Mr Shadforth and Mr Buttenshaw held more than the maximum number of allowable proxies, which for this scheme is 6 proxies per person (Module s.70(4)(a)).

I am satisfied that an order should be made requiring BCH to give all of the body corporate’s books and records to CSM, particularly, but not limited to, those items identified by Mr Danieletto as missing from the material already handed over.

BCH is undoubtedly aware of the provisions of section 288 of the Act, which states:

288 Failure to comply with adjudicator’s order

(1) A person who contravenes an order under this chapter (other than an

order for the payment of an amount) commits an offence.

Maximum penalty--400 penalty units. (Note 1 penalty point equals $75.00)

(2) A proceeding for an offence under subsection (1) (other than a

proceeding taken by the Attorney-General) may only be taken by--

(a) the applicant for the application for the original order; or

(b) a person in whose favour the order mentioned in subsection (1) is

made; or

(c) the body corporate; or

(d) an administrator appointed under this chapter who is authorised

to perform obligations of the body corporate or its committee.

(3) Costs awarded against a defendant in a proceeding under this section

may include the amount of the fee paid to the commissioner on making the

application for the original order.

(4) In subsection (3)--

"application for the original order" means the application for the order

of an adjudicator for the purposes of which the order mentioned in

subsection (1) is made.