La Porte D'Or [2004] QBCCMCmr 281 (28 May 2004)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Judith Franklin (the Owner of Lot 179) and Caroline Fleming and Peter O’Connor (the Owners of Lot 180):

I hereby order that:

1. As quickly as practicable, the Body Corporate shall take all necessary steps to cause a new community management statement ("the new community management statement") to be recorded by the Land Registry of the Department of Natural Resources, Mines and Energy, including by promptly rectifying any issues described in requisition notices issued by that Department to the Body Corporate.
2. The new community management statement shall reflect the adjustments to lot entitlements ordered by the District Court on 4 February 2004 (Judge Robin QC) and as further ordered by the District Court on 29 March 2004 (Judge Healy QC).

I further order that from the date of this order and pending the recording of the new community management statement, the contribution schedule of lot entitlements shall be deemed to be adjusted in accordance with the orders of the District Court issued on 4 February 2004 and 29 March 2004 (referred to hereafter as "the adjusted contribution schedule of lot entitlements") for the purposes of:

1. Calculating the liability of owners to make any financial contributions that are otherwise apportioned between lots in accordance with the recorded contribution schedule of lot entitlements (except as otherwise provided in this order); and
2. Determining the value of owners’ votes for motions to be decided by special resolution of the Body Corporate, and motions to be decided by ordinary resolution of the Body Corporate where a poll is conducted.

I further order that the amount already paid by the Owners of Lots 179 and 180 as their contribution to the administrative fund due on 30 April 2004 shall be accepted by the Body Corporate as full and final satisfaction of those Owners’ contributions to the administrative fund for the 1 April 2004 to 30 June 2004 quarter.

I further order that the Body Corporate shall determine the liability of owners to contribute to the administrative fund for the 1 July 2004 to 30 September 2004 quarter by adding the total amounts paid or payable by owners as contributions to the administrative fund to 30 June 2004 (allowing for any adjustments required by this order), and subtracting that amount from the total amount budgeted for the administrative fund for the 2003-2004 financial year (as determined by the Body Corporate at the 6 December 2003 annual general meeting), and dividing the resultant amount between the lots on the basis of the adjusted contribution schedule of lot entitlements.

I further order that the Body Corporate Manager shall arrange for a copy of this order and statement of reasons to be provided to each lot owner with the next notice of contributions payable.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0269-2004

"La Porte D’Or" CTS 12681

On 28 April 2004, the Applicants (the Owners of Lots 179 and 180) filed a dispute resolution application with the Commissioner for Body Corporate and Community Management ("the Commissioner") under the Body Corporate and Community Management Act 1997 ("the Act").

The Applicants state that they are seeking the following outcome:

On 4 May 2004, the Commissioner issued the Body Corporate and the Body Corporate Manager with notice of the application. The Commissioner also invited the Body Corporate Committee and Body Corporate Manager to make written submissions about the application. I have before me a submission from the Body Corporate Manager dated 11 May 2004 (provided by electronic mail and hand delivered).

On 11 May 2004, the Commissioner referred the application to me under section 247 of the Act to consider whether an interim order was necessary or appropriate on the basis of the nature or urgency of the circumstances of the application.

On 19 May 2004, I conducted a teleconference with one of the Applicants (Ms Franklin) and the Body Corporate Manager for "La Porte D’Or" (Mr Dring). I understand that the other Applicants were overseas at that time. My main reasons for conducting the teleconference were to gather further information from the parties about issues impacting on the application, and to discuss potential outcomes of the application.

Department of Natural Resources, Mines and Energy records show that the "La Porte D’Or"^[1] community titles scheme was originally created under a building units plan of subdivision (now known as a building format plan) registered on 30 March 1977. The scheme currently consists of 181 lots and common property.

The current community management statement for "La Porte D’Or" was recorded on 14 December 2001, and shows that the Body Corporate and Community Management (Standard Module) Regulation 1997 ("the Standard Module") applies to the scheme.

Broadly speaking, this application concerns the lot entitlements that currently apply to the "La Porte D’Or" community titles scheme. Community management statements for Queensland community titles schemes contain two schedules of lot entitlements; the contribution schedule and the interest schedule.

These two schedules of lot entitlements have distinct purposes, which are set out in section 47 of the Act. The contribution schedule of lot entitlements is the basis for determining a lot owner’s share of amounts levied by the body corporate to meet most of the expenses and costs incurred by the body corporate, with some limited exceptions (section 47(2)(a)). It is also used to determine the value of a lot owner’s vote for voting on ordinary resolutions if a poll is conducted (section 47(2)(b) and section 110), and for voting on special resolutions (section 106).

The interest schedule of lot entitlements is the basis for calculating the lot owner’s share of common property, the lot owner’s interest on termination of the scheme, and the unimproved value of the lot for the purposes of particular charges, levies, rates and taxes payable directly to local or other authorities (section 47(3)).

The Act also allows for the adjustment of lot entitlements in particular circumstances (section 48).

In this instance, I understand that the Applicants have successfully applied to the District Court for an order adjusting the contribution schedule of lot entitlements applying to the "La Porte D’Or" community titles scheme.

Specifically, I understand that on 4 February 2004, His Honour Judge Robin QC issued the following order:

As mentioned above, the contribution schedule of lot entitlements is used as a basis for determining the liability of lot owners to contribute to most expenses and costs incurred by the body corporate. Specifically, section 95(5) of the Standard Module provides that:

Therefore, one of the key impacts of the District Court order requiring the contribution schedule lot entitlements applying to Lots 179 and 180 to be reduced from 100 to 40, is that the Owners of Lots 179 and 180 will be responsible for contributing a smaller proportion of funds to meet most body corporate expenses than was previously the case.

While the Court has made a determination that the contribution schedule of lot entitlements should be adjusted, it appears that the adjusted lot entitlements do not apply until a new community management statement reflecting the Court’s order has been recorded for the scheme. In this regard, I refer to section 52 of the Act, which provides that "(a) community management statement has no effect until it is recorded".

Section 48(9) of the Act provides that "(i)f the court or specialist adjudicator orders an adjustment of a lot entitlement schedule, the body corporate must, as quickly as practicable, lodge a request to record a new community management statement reflecting the adjustment ordered". The Act provides for a maximum penalty of 100 penalty units ($7,500^[2]) for failure to comply with section 48(9).

Notwithstanding the requirements of section 48(9), a new community management statement reflecting the Court ordered adjustments to the contribution schedule of lot entitlements has not been recorded for "La Porte D’Or" to date. It appears that this has been due to two main issues. Firstly, I understand that some delay was caused by uncertainty about the form of body corporate resolution necessary to authorise lodgement of a request to record a new community management statement with the Land Registry of the Department of Natural Resources, Mines and Energy. Secondly, it appears that even though a request to record a new community management statement has now been lodged by the Body Corporate, the new community management statement has not been recorded by the Land Registry due to particular deficiencies in the document.

After reading the submission from the Body Corporate Manager, I understand that the Body Corporate considers that it has acted as quickly as possible to have a new community management statement recorded, however, for the reasons outlined above, a new statement has not been recorded to date. I also understand that the Committee considers that it is bound by the legislation to apply the currently recorded lot entitlements in determining owners’ liability for contributions to the Body Corporate until such time as a new community management statement is recorded.

The Applicants consider that this is an unfair situation. If I understand them correctly, the Applicants consider that the delays in having a new community management statement recorded are out of their control, and they should be entitled to enjoy the benefits of the District Court order adjusting the lot entitlements within a reasonable time frame.

Finally, it has been brought to my attention by the Body Corporate Manager that a further District Court order has been issued adjusting the contribution schedule lot entitlements of another two lots included in the "La Porte D’Or" community titles scheme (as well as the total of the contribution schedule lot entitlements for the scheme). The Body Corporate Manager has provided a copy of the District Court order issued by His Honour Judge Healy QC dated 29 March 2004. The order is as follows:

"THE ORDER OF THE COURT IS THAT-

I have obtained and read a copy of the reasons for the District Court order issued by Judge Robin QC on 4 February 2004. However, I am advised that at this time, there are no published reasons for the order issued by Judge Healy QC on 29 March 2004.

New community management statement

Following an order of a court or specialist adjudicator for the adjustment of lot entitlements, bodies corporate have a clear obligation to lodge a request to record a new community management statement incorporating the required changes with the Land Registry of the Department of Natural Resources, Mines and Energy as quickly as practicable. This obligation is spelt out in section 48(9) of the Act set out previously. The Act also imposes a penalty for failure to comply with this provision. In this case, the obligation has also been restated by Judge Healy QC in the second of the orders issued on 29 March 2003.

At this time, I do not intend to make an assessment of the reasonableness of the time it is taking for the Body Corporate to have a new community management statement recorded. Firstly, I note that the Body Corporate has lodged a request to record a new community management statement following the 4 February 2004 order, albeit that the request has been refused by the Land Registry at this time. Therefore, the Body Corporate has in a strict sense complied with the terms of section 48(9), although clearly the purpose of the provision is yet to be achieved.

Secondly, even if I was to find that the Body Corporate had unreasonably delayed in lodging a request to record a new community management statement following the 4 February 2004 order, I do not have jurisdiction to impose the prescribed penalty. If any person considers that a penalty should be applied, then that person is at liberty to pursue the matter in a court of competent jurisdiction.

However, and while perhaps not strictly necessary given the terms of the 29 March 2004 District Court order, I have decided to issue an order restating the Body Corporate’s obligation to cause a new community management statement incorporating the adjustments to lot entitlements to be recorded. I also intend to clarify that this obligation includes promptly addressing any requirements of the Land Registry concerning the presentation and content of the new community management statement.

Contributions and voting pending the recording of the new community management statement

While the Act provides that a community management statement only takes effect when it is recorded (section 52), the use of the words "as quickly as possible" in section 48(9) indicate to me that the intention of the legislation is that a person who has successfully applied to the District Court (or a specialist adjudicator) for an adjustment of lot entitlements is entitled to enjoy the benefit of that order as quickly as possible, and certainly within a reasonable time frame.

In this case, the initial District Court order adjusting lot entitlements was made on 4 February 2004. In a letter to one of the Applicants dated 16 April 2004, the Body Corporate Manager indicates that the recording of the new community management statement may not occur for a further 6 to 8 weeks (that is, the statement may not be recorded until mid-June). The result of this situation is that the statement would not take effect until 4 to 5 months had elapsed from the 4 February 2004 order. While I acknowledge that the Body Corporate has encountered some issues regarding the new community management statement, in many instances, a new community management statement recording a court ordered adjustment of lot entitlements could be lodged and recorded within a few weeks.

Section 276 of the Act allows me to make an order that is "just and equitable in the circumstances". I am not satisfied that it is reasonable for the owners with the benefit of the adjusted lot entitlements to continue paying contributions at the pre-adjustment scale until such time as the Body Corporate manages to have a new community management statement recorded. This is particularly the case here in that the contribution schedule lot entitlements applying to lots 179 and 180 have been substantially reduced (from 100 to 40), and also because I understand that the "La Porte D’Or" Body Corporate may be considering levying significant contributions in the near future to address various maintenance issues.

For these reasons, I have issued an order that pending the recording of a new community management statement, the contributions levied on the owner of each lot shall be proportionate to the contribution schedule of lot entitlements as if it had been adjusted in accordance with the District Court orders of 4 February 2004 and 29 March 2004. This order is intended to apply to any future contributions that are normally apportioned on the basis of the contribution schedule of lot entitlements (including contributions to the administrative and sinking funds, and special contributions fixed in accordance with section 95(2) of the Standard Module). The order will also mean that future contributions levied on the Owners of Lots 181 and 182 (adjusted in the 29 March 2004 order) will be based on a contribution schedule lot entitlement of 40. I have also made a similar order regarding voting entitlements.

This order will apply generally to future contributions called by the Body Corporate pending the recording of a new community management statement. However, in addition, I have also made more specific orders relating to the final two quarters of the 2003-2004 financial year which I will explain below.

Contributions for the periods 1 April 2004 to 30 June 2004 and 1 July 2004 to 30 September 2004

From the teleconference, I understand that the 2003-2004 financial year for "La Porte D’Or" has been divided into the following four quarters:

I understand that the Body Corporate did not adopt the sinking fund budget proposed at the annual general meeting of the Body Corporate held on 6 December 2003, and has not adopted an alternate sinking fund budget since that time. As a result, I understand that the Body Corporate has not levied sinking fund contributions for the 2003-2004 financial year, apart from an interim contribution for the October 2003 to December 2003 quarter authorised at the 2002 annual general meeting. However, it is apparent that the Body Corporate did adopt an administrative fund budget at the 6 December 2003 annual general meeting, and that contributions levied on the basis of that budget have been due and payable on 22 October 2003, 31 January 2004 and 30 April 2004. I am not aware that a due date has been set for contributions to the administrative fund budget for the final quarter of 2003-2004 (1 July 2004-30 September 2004).

1 April 2004 – 30 June 2004 quarter

From the material, I understand that the Owners of Lots 179 and 180 paid their contributions to the administrative fund budget for this period based on the adjusted lot entitlement of 40 rather than 100 as is still recorded for the lots on the current community management statement.

In my view, it is reasonable for the owner of Lots 179 and 180 to pay the contribution payable at 30 April based on the reduced lot entitlement of 40. Firstly, notice of payment of this contribution would have been issued by around 30 March 2004, almost two months after the 4 February 2004 District Court order. Furthermore, the date for payment of the contribution (30 April) is almost three months after the 4 February 2004 order. I consider that it is just and equitable that after such a significant period of time, the Applicants were entitled to pay on the basis of their reduced lot entitlement. I have made an order to this effect. This order does not impact on other owners administrative fund contributions for the 1 April 2004 to 30 June 2004 quarter.

1 July 2004 – 30 September 2004 quarter

One of the effects of my orders in conjunction with the District Court orders requiring an adjustment of lot entitlements is that the Body Corporate will not collect the full amount budgeted for the administrative fund for 2003-2004 as decided at the 6 December 2003 annual general meeting. The reason for this is that the District Court has ordered a reduction of 240 of the total contribution schedule lot entitlements for the scheme. The minutes of the annual general meeting show that the Body Corporate has decided to collect $115.75 per lot entitlement for the 2003-2004 financial year. As this rate will be applied to fewer lot entitlements for the final quarter of 2003-2004, the result will be that the Body Corporate collects less for the administrative fund than it originally intended. Further, the adjustment of the amount payable by the Owners of Lots 179 and 180 for the April to June quarter will also slightly contribute to a shortfall in the annual administrative fund budget.

It is important for the Body Corporate to collect the funds it budgeted for at the 6 December 2003 annual general meeting. To ensure that this occurs, I have made a specific order for determining owners’ contributions payable in the final quarter of 2003-2004.

Specifically, I have ordered that the contributions for the administrative fund for the final quarter of 2003-2004 (that is, the period 1 July to 30 September) shall be determined by adding the contributions to the administrative fund paid or payable by owners to 30 June 2003, subtracting that amount from the total administrative fund budget adopted by the Body Corporate on 6 December 2003, and dividing the resultant figure between the owners on the basis of the contribution schedule of lot entitlements as adjusted by the District Court orders of 4 February 2004 and 29 March 2004.

Distribution of order

Finally, I have required the Body Corporate Manager to provide a copy of this order and statement of reasons to each lot owner with the next contribution notice. In making this order, I am endeavouring to ensure that owners are aware of the reasons that their Body Corporate contributions for the quarter may be slightly different to previous quarters for the year.

While I have made this order in response to an application for an interim order, it also finally determines the subject matter of the application. As a result, it is not intended to seek further submissions about the application, or to make a further order.

Number of Scheme:	12681
Name of Scheme:	La Porte D’Or
Address of Scheme:	3422 Gold Coast Highway SURFERS PARADISE QLD 4217

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

La Porte D'Or [2004] QBCCMCmr 281 (28 May 2004)