Regatta Riverside Principal [2004] QBCCMCmr 398 (18 August 2004)

Last Updated: 30 September 2005

REFERENCE: 0419-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	31198
Name of Scheme:	Regatta Riverside Principal
Address of Scheme:	QUEENSLAND

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Lindsay and Suzanne Ekert

I hereby order that the application for orders seeking, among other things, to: • void the appointment of Stephen Thornton to the committee of the body corporate for Regatta Riverside Principal; • require the setting of a sinking fund budget to cover anticipated expenditure over the next ten years (including the present year); and • require the body corporate to impose a transfer fee on a transfer of management rights, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0419-2004

"Regatta Riverside Principal" CTS 31198

Application

Regatta Riverside Principal Community Titles Scheme (Regatta Principal) is a principal scheme containing four subsidiary schemes in a layered arrangement. It is registered under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module).

This application is by Lindsay and Suzanne Ekert (applicants). The applicants are owners of lot 21004 in one of the subsidiary schemes, Regatta Riverside Tower 1 (Tower 1). Suzanne Ekert is also the former chairperson of Tower 1. Tower 1 is registered under the Act and the Act’s Accommodation Module Regulation (Accommodation Module).

Background

The applicants claim that Suzanne Ekert, as the chairperson of Tower 1, was the only representative of Tower 1 eligible to serve on the committee of Regatta Principal and should have been a member of that committee. The applicants also claim that the committee of Regatta Principal has failed to set appropriate sinking fund budgets and has failed to make decisions in the interests of owners by failing to impose a transfer fee on the transfer of management rights for the scheme.

Decision

This application concerns the membership of, and functioning of, the committee of Regatta Principal. The applicants are not members of the Regatta Principal. The only members of Regatta Principal are the four subsidiary schemes.

However, one of the applicants was the chairperson of one of the subsidiary schemes at the time the application was lodged. There is a claim that she was the proper representative of Tower 1 on the committee of the Regatta Principal. An adjudicator has jurisdiction to determine a dispute between a body corporate and one if its committee members (Act, 227(1)(g)). Therefore, it is necessary to determine if there is jurisdiction on the basis that Suzanne Ekert was the proper representative of Tower 1 and a proper committee member of the Regatta Principal at the time the dispute arose.

Subsidiary scheme representative

The legislation contains the following provision (Standard Module 50, Accommodation Module 48):

50 Representation of body corporate
(1) This section applies if the scheme ("scheme B") is a lot included in
another community titles scheme ("scheme A").
(2) The body corporate for scheme B must ensure that at all times there
is a person (the "subsidiary scheme representative") appointed by the
committee for scheme B’s body corporate to represent the body corporate
for scheme B on scheme A’s body corporate.
(3) The subsidiary scheme representative must be a member of the
committee mentioned in subsection (2), and, if the committee does not
appoint the representative, is the chairperson of the body corporate for
scheme B.
(4) The first person to be appointed under this section must be appointed
as soon as practicable after the body corporate for scheme B becomes a
member of scheme A’s body corporate.
(5) The appointment of the subsidiary scheme representative has no
effect until written notice of the appointment is received by the secretary of
the body corporate for scheme A.
(6) The subsidiary scheme representative must represent scheme B’s
body corporate--
(a) in the way scheme B’s body corporate directs; and
(b) subject to paragraph (a), in a way that is in the best interests of
scheme B.
(7) The subsidiary scheme representative’s address for service is the
address for service of scheme B’s body corporate.

The applicants’ submissions are to the effect that:

• No representative has ever been appointed by the subsidiary scheme. Suzanne Ekert, as chairperson, was therefore the representative of the subsidiary scheme for Regatta Principal matters;
• The provision requiring notice of the appointment of a representative to be given to the secretary of the principal scheme is only applicable where there has been an appointment. Because there has been no appointment the principal scheme must be aware that the chairperson of the subsidiary scheme is the representative; and
• The alternative position is that if there has been no notice of appointment there is no person eligible to be on the committee of the principal body corporate and accordingly no valid committee.

The body corporate for Regatta Principal has provided a submission to the effect that:

• The body corporate resolved to nominate Helga Kolbe and Stephen Thornton to represent the body corporate for Tower 1 in the principal body corporate (an extract from minutes of a committee meeting dated 29 January 2004 is provided);
• Suzanne Ekert was not nominated to represent Tower 1 at meetings of the principal scheme.

Challenge to decisions of Regatta Principal

It may be arguable that none of the subsidiary scheme representatives have been properly appointed, particularly if formal notice is required and it is not sufficient for the principal body corporate to merely be aware of a nomination by the subsidiary body corporate. However, if persons honestly and reasonably believing that they are the committee for the body corporate make a decision while purportedly acting as the committee, the decision is taken to be a decision of the committee despite a defect in the election of one or more of the persons (Act, 100(4)). Any challenge to these decisions would normally need to be within three months (Act, 242).

Any challenge to the appointment of Stephen Thornton as representative of Tower 1 would also need to overcome the argument that the body corporate for Regatta Principal had effective notice of the committee minutes dated 29 January 2004 and was therefore entitled to assume that the appointment of Stephen Thornton, as shown in those minutes, was the most recent and effective appointment.

Standing of Suzanne Ekert as representative

I accept that Suzanne Ekert was the chairperson of Tower 1. However, there was never any written notice from Tower 1 to Regatta Principal to the effect that Suzanne Ekert was the subsidiary scheme representative for Tower 1.

I take the view that the requirement for written notice is a practical requirement that allows the principal body corporate to know who the representatives of its subsidiary bodies corporate are (Standard Module 50(2), 50(5)). Subsection (3) reads as a elaboration to the requirement in subsection (2) that a subsidiary body corporate must have a subsidiary scheme representative appointed at all times. From a practical perspective, it is not possible to assume that a principal body corporate would be aware of who a subsidiary scheme has appointed as chairperson and any changes to that appointment. It is therefore not practical to assume that the default appointment of the subsidiary scheme representative by subsection (3) deprives the need for that representative to arrange for notification of their details to the principal body corporate pursuant to subsection (5). I therefore consider that Suzanne Ekert should have arranged for Tower 1 to notify the Regatta Principal that she was the subsidiary scheme representative for any times that she was chairperson and Tower 1 had not appointed any other committee member as representative.

Further, the committee minutes of 29 January 2004 satisfy me that Tower 1 resolved to appoint Helga Kolbe and then Stephen Thornton as its representative for Regatta Principal. To ensure the principal body corporate recognised his appointment, Stephen Thornton should have arranged for Tower 1 to give written confirmation of his appointment to Regatta Principal. However, it seems that Regatta Principal did accept his appointment.

Based on the above, I have concluded that the applicants are neither members of the Regatta Principal or the committee of the Regatta Principal. Therefore, they have no standing to challenge these matters before this office. For Tower 1 to challenge these matters the application would need to be lodged by Tower 1 with the support of a resolution of the body corporate authorising the application.

Order

I have concluded that the applicants have no standing to challenge the decisions or composition of the Regatta Principal before this office. In these circumstances, I consider it appropriate to make an order that will dismiss both the interim and final applications.