Heath Court [2004] QBCCMCmr 391 (13 August 2004)

Last Updated: 30 September 2005

REFERENCE: 0185-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	5886
Name of Scheme:	Heath Court
Address of Scheme:	3 Heath Street EAST BRISBANE QLD 4169

TAKE NOTICE that pursuant to an application made under the abovementioned Act by June Blanche Porter, the owner of lots 7, 12 and 15

I hereby order that motion 4 (tiling of walkways) and motion 8 (replace front doors) purportedly passed at the extraordinary general meeting held on 20 March 2004 were at all times void, and are therefore of no legal effect. I further order that the application for an order: • That the chairperson (Mr Sean Ryan) be removed from all positions on the body corporate committees and • That all work, maintenance etc go through Management and • That all owners are given opportunity to submit quotations for work to be carried out and • That the weather strips to doors in lots 7 and 15 be replaced is dismissed. I further order that the body corporate shall take all necessary steps to repair/replace at body corporate expense any damaged fly screens in the scheme.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0185-2004

"Heath Court" CTS 5886

The applicant, June Blanche Porter, the owner of lots 7, 12 and 15, has sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote-

That the chairperson (Mr Sean Ryan) be removed from all positions on the body corporate committees and that all work, maintenance etc go through Management. Also, that all proprietors are given opportunity to submit quotations for work to be carried out. That approval be given to repair/replace kitchen fly screens to unit 7 and weather strips to doors in unit 7 and 15.

The applicant also sought an interim order of an adjudicator, and on 20 April 2004 the following interim order was made:

I hereby order that motions 4 (Tiling of walkways) and 8 (Replace front doors) considered by the body corporate of Heath Court at the EGM held on 20 March 2004 shall not be implemented or otherwise acted upon pending the making of a final order regarding this application.

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)).

The scheme

The scheme is a subdivision of 18 lots registered under a building unit plan (now a building format plan). The regulation module applying to the scheme is the standard module.

The interim order application sought to stop all work being carried out on motions passed at an extraordinary general meeting held on 20 March 2004 due to

• breaches of conduct concerning meeting protocol,
• altering of the wording of motions prior to those motions being tabled for the attendees to vote on them,
• method of obtaining quotes for meetings,
• quotation differences, and
• overly inflated prices by chairperson’s tradespersons.

The adjudicator who made the interim order expressed concern as to the adequacy of the supporting material, particularly in relation to the applicant’s allegations that many of the quotes were for "overly inflated prices" supplied by tradesmen that the chairperson "employs himself". The adjudicator stated that the matter might become clearer when further submissions were received in relation to the final order.

The body corporate committee and all owners were invited to respond to the application for final orders. No further submissions were received other than those which were lodged in response to the invitation to respond to the application for interim orders.

The chairperson, Sean Ryan, rejected any notion of misconduct in his role as chairperson. He explained that the body corporate had been without a chairperson for an extended period prior to his election to the position, and that during that time repair and maintenance in the scheme had been neglected. Mr Ryan further explained that it was his intention to bring the building to a high standard of maintenance using quality tradespeople for the benefit of all lot owners.

Submissions were received from two other owners, both of whom were fully supportive of the steps being taken to carry out much needed maintenance in the scheme. One of those owners addressed the various points made in the applicant’s statement of grounds, essentially refuting all of her allegations.

The consensus of those who lodged submissions was that the applicant is a difficult person with whom to deal.

Obviously an order of an adjudicator will not remedy personality clashes.

Determination:

I propose to deal with each of the matters raised by the applicant in the order in which they appear.

That the chairperson be removed from all positions

The annual general meeting was held on 19 January 2004. It appears from the minutes of that meeting that all committee members were elected unopposed. Section 25 of the Standard Module provides for the term of office of the committee as follows:

25 Term of office

(1) The term of office of a member of the committee continues until

another person is chosen for the position.

(2) However, a member’s position becomes vacant if the member--

(a) dies; or

(b) becomes ineligible to hold the position; or

(c) resigns by written notice given to the chairperson or secretary; or

(d) is not present personally or by proxy at 2 consecutive meetings of

the committee without the committee’s leave; or

(e) is convicted (whether or not a conviction is recorded) of an

indictable offence; or

(f) is removed from office by ordinary resolution of the body

corporate.

(3) For subsection (2)(b), without limiting the reasons a member may

become ineligible to hold the member’s position, a member is ineligible to

hold the member’s position if the member--

(a) was a member of the body corporate at the time the member was

elected but is no longer a member of the body corporate; or

(b) was not a member of the body corporate at the time the member

was elected and was nominated for membership by a member of

the body corporate who is no longer a member of the body

corporate; or

(c) is engaged as a body corporate manager or service contractor, or

authorised as a letting agent.

(4) If the body corporate engages a body corporate manager under a

part 3, division 10 engagement--

(a) the term of office of a member of a committee for the body

corporate ends; and

(b) subsections (1) to (3) do not apply to the member.

(5) To remove any doubt, it is declared that subsections (1) to (3) do not

apply to a non-voting member of the committee.

A committee member might also be removed from office by order of an adjudicator. However, for such an order to be made there would need to be compelling evidence of either misconduct or mismanagement to warrant it.

In this case, the applicant stated that "the current chairman (sic) is not managing matters fairly and professionally and appears to be conducting body corporate business himself and not in the interests of all proprietors". The applicant referred to the expenditure from the sinking fund authorised at the extraordinary general meeting held on 20 March 2004, and stated that this was "to cover costs for motions that Mr Ryan placed on the agenda". The applicant pointed out that Mr Ryan and his family own half of the lots in the scheme, and that he "monopolises our meetings to his benefit only."

An examination of the motions for expenditure from the sinking fund which were passed at the March 2004 meeting reveals that all expenditure related to the common property or a body corporate asset (in the case of purchase of the washing machine), and nothing related solely to lots owned by the Ryan family. Furthermore, the motions were proposed by the committee (of which the applicant is a member) not by Mr Ryan.

I am not persuaded that Mr Ryan should be removed from office. I propose to dismiss that part of the application calling for his removal.

There is of course the matter noted by the adjudicator in the interim order, and that is that expenditure approved by motions 4 and 8 exceeded the relevant limit for major spending for this scheme. Although the work related to the common property owners should have been given at least two quotes to consider, just as they were given two quotes to consider in motions 3, 5 and 7. I intend therefore to order that motions 4 and 8 were at all times void. The body corporate will now need to convene a further general meeting to properly consider these motions. The committee must ensure that it complies with sections 42B and 104 of the Standard Module.

That all work, maintenance etc go through management

I have interpreted this part of the order sought by the applicant as meaning that all maintenance issues should be handled by the body corporate manager. The applicant’s letter dated 7 November 2003 to the body corporate manager clearly indicates that she believes the body corporate manager is responsible for attending to maintenance.

The role of the body corporate manager (where there has been no appointment under Part 3 Division 10 of the Standard Module – as in this case) is purely administrative. The body corporate has an obligation to maintain common property in good condition (Standard Module s.109). That obligation is discharged by the committee exercising its administrative role. Thus the committee must ensure that appropriate steps are taken to have maintenance quoted for, authorised and carried out as it is needed. Of course, if the work entails expenditure that is above the limit for committee spending, then it must be authorised by owners in general meeting, and if the expenditure exceeds the limit for major spending then at least two quotations must be provided to owners in the form of motions with alternatives (Standard Module s42B).

The body corporate committee may request the body corporate manager to obtain quotes, or to otherwise coordinate the completion of the work, however, it is important for owners to realise that the body corporate manager’s role is not that of a building supervisor. The body corporate manager is required to carry out the directions of the committee, provided that those directions fall within the terms of the body corporate manager’s engagement. Otherwise the body corporate manager would be entitled to charge the body corporate additional fees for the work requested of it.

I therefore intend to dismiss that part of the application seeking to have all maintenance work carried out through the body corporate manager.

That all proprietors are given opportunity to submit quotations for work to be carried out

Section 41 of the Standard Module provides the mechanism by which owners may submit motions to be placed on the agenda of general meetings:

41 Opportunity to submit agenda motions

(1) A motion for consideration at a general meeting of the body

corporate may be submitted at any time by--

(a) a member of the body corporate; or

(b) the committee.

(2) If a motion is submitted, including by a member of the body

corporate in response to an invitation under subsection (5), it must, subject

to subsections (3) and (4), be included on the next general meeting agenda

on which it is practicable to include the motion.

(3) A motion submitted by a member of the body corporate may be

included on the agenda for an annual general meeting only if the secretary

receives the motion before the end of the body corporate’s financial year

immediately preceding the meeting.

(4) However, a motion of a following type must not be included on the

agenda for a general meeting if the motion’s inclusion would result in the

body corporate considering a motion of that type more than once in a

financial year for the body corporate--

(a) a motion proposing that a regulation module be applied to the

scheme that is different from the regulation module identified in

the scheme’s community management statement;

(b) a motion proposing that the remuneration paid to a particular

service contractor be changed;

(c) a motion proposing that the engagement of a person as a service

contractor, or the authorisation of a person as a letting agent, be

amended if, as a result of the amendment, the engagement or

authorisation would include a right or option of extension or

renewal.

(5) If a notice is forwarded to members of the body corporate inviting

nominations for committee member positions to be filled at an annual

general meeting of the body corporate, the members must also be invited to

submit motions for inclusion on the agenda for the meeting.

If any owner believes that work is required on the common property, that owner is at liberty to obtain quotes and submit appropriate motions for consideration. If the committee has already obtained quotes for the same work, then all of the quotes relating to that work (i.e. handrails, painting, roof repairs or whatever) must be incorporated into a motion with alternatives, in accordance with the requirements of section 42B of the Standard Module.

I therefore propose to dismiss this part of the application also, as the legislation already provides the mechanism by which owners may submit quotations.

That approval be given to repair/replace kitchen flyscreen to unit 7 and weather strips to doors in unit 7 and 15

The replacement of weather strips on the doors of units 7 and 15 will be attended to when the doors to those units are replaced. The motion authorising the replacement has been voided by my order, given the failure of the body corporate to comply with the requirements of section 104 of the Standard Module. However, when the motion is properly put to the body corporate, as a motion with alternatives, this matter will be resolved. I do not intend to order that weather strips be replaced in the meantime, as in my view that would be a waste of body corporate finances.

As for the fly screen, the applicant claims that this is part of the original building, and therefore should be regarded as a body corporate expense. The owners who responded to the application did not challenge this assertion, but one owner stated that as the expense was trivial the body corporate should not have to pay for it. The amount involved with maintenance is immaterial; if it is properly a body corporate expense then the body corporate must pay, no matter how large or how small the amount involved. The amount is of course determinative of whether the expense can be authorised by the committee or whether it has to be authorised by the body corporate in general meeting, and then a further consideration must be given to the major spending limit.

One of the owners also pointed out that many of the other lots in the scheme also have faulty fly screens, and that they too should be fixed if the body corporate is responsible for the cost of their maintenance.

The body corporate, in discharging its obligation to maintain common property must act in the interests of all owners. If the flyscreens were fitted on all windows from the outset, then the cost of maintaining them, or replacing them if necessary, should be borne by the body corporate. However, the body corporate should ensure that all affected lots are repaired. I have ordered accordingly.