Rata Nui [2004] QBCCMCmr 43 (22 January 2004)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Heikki Poivio Niemi, a co-owner of lot 3

I hereby order that the secretary of the body corporate shall, within one week of the date of this order send a copy of this order to all owners on the roll of the body corporate.

I further order that the committee must including on the agenda of the next general meeting of the body corporate, two motions submitted by it seeking ratification by the body corporate in general meeting of the expenditure approved by the committee at the two meetings of 9 May and 11 July 2003 respectively.

I further order that the committee will hereafter comply fully with the requirements for expenditure by it; in particular the limits imposed by section 103, and the restrictions of matters being a single project.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0498-2003

"Rata Nui" CTS 10669

The applicant, Heikki Poivio Niemi, a co-owner of lot 3, has sought the following order of an adjudicator under the provisions of the Body Corporate and Community Management Act 1997 (the Act) quote -

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

(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 is a subdivision of 9 lots recorded under a building unit plan (now a building format plan).

The dispute is clearly about the operation of the provisions of sections 103 and 104 of the standard module, and whether the committee have acted in contravention of these sections in approving expenditure. Sections 103 and 104 provide as follows, quote –

103 Spending by committee
(1) The committee may only carry out a proposal involving spending above the relevant limit for committee spending for the scheme if--
(a) the spending is specifically authorised by ordinary resolution of the body corporate; or
(b) the owners of all lots included in the scheme have given written consent; or
(c) an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions; or
(d) the spending is necessary to comply with--
(i) a statutory order or notice given to the body corporate; or
(ii) the order of an adjudicator; or
(iii) the judgment or order of a court.
(2) For this section, if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for committee spending if the cost of the project, as a whole, is more than the relevant limit.
(3) Section 104 applies to the proposal in addition to this section if--
(a) subsection (1)(a) or (b) applies in relation to the proposal; and
(b) the proposal involves spending above the relevant limit for major spending; and
(c) the proposal does not involve spending mentioned in subsection (1)(c) or (d).

104 Quotes for major spending
(1) This section applies if--
(a) a motion to be moved at a general meeting of the body corporate proposes the carrying out of work or the acquisition of personal property or services, including the engagement of a body
corporate manager or service contractor, but not including the engagement of a service contractor who also is, or is to be, a letting agent; and
(b) the cost of carrying the proposal into effect is more than the relevant limit for major spending for the scheme.
(2) The lot owners must be given copies of at least 2 quotations for carrying out the work or supplying the personal property or services.
(3) If the motion is proposed by the committee, the committee must obtain the quotations.
(4) If the motion is not proposed by the committee, the person proposing the motion must obtain the quotations and give them to the secretary.
(5) Copies of the quotations or, if voluminous, summaries of the quotations and advice about where the complete documents may be inspected, must accompany the notice of the meeting at which the motion is to be considered.
(6) If, for exceptional reasons, it is not practicable to obtain 2 quotations, a single quotation must be obtained and must accompany the notice of meeting.
Example--
If goods to be acquired by the body corporate are obtainable from only 1 source, a quotation for supplying the goods must be obtained from the source and circulated with the notice of meeting. The fact that goods with the necessary characteristics are only obtainable from a single source would be an exceptional reason for not obtaining 2 quotations for the supply of the goods.
(7) Unless subsection (6) applies, the motion must be stated as a motion with alternatives in the agenda and on a voting paper for the meeting.
(8) Each quotation obtained under this section must be retained as an attachment to the minutes of the meeting at which the quotation is considered.
(9) For this section--
(a) the cost of engaging a body corporate manager or a service contractor includes any payment for the body corporate manager’s or the service contractor’s services, provided for under the engagement, for the term of any right or option of extension or renewal of the engagement; and
(b) if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for major spending for the scheme if the cost of the project,
as a whole, is more than the relevant limit.

The applicant is alleging that the committee has exceeded its expenditure limit (formerly and at the relevant time $100 per lot or $900 in the case of this scheme) at two meetings held outside of a formal committee meeting, namely 9 May 2003 and 11 July 2003. The applicant relies on the provisions of 103(2) in particular: if a series of proposals forms a single project, the cost of carrying out any 1 of the proposals is taken to be more than the relevant limit for committee spending if the cost of the project, as a whole, is more than the relevant limit.

The committee has made a submission in response to the application, stating –

The committee claims the support of three body corporate managers in this conclusion. The committee go on –

The committee invites the applicant to join the committee if he wishes to be provided with this information and to play an active role in decision making.

Determination

Whilst it is a somewhat subjective exercise, I conclude that on the evidence available I consider the applicants concern to be a valid one, and the response of the committee to not provide a satisfactory explanation. To start with, the two committee meetings in question each deal with the engagement of only one contractor.

The 9 May 2003 meeting has 3 motions in total each engaging Eric Eller Landscapes. The total cost of carrying out the three motions is $2270. Two of the three motions are marginally under the committee’s limit of $900 which I consider somewhat suspect. Also, it is easy in my view to link the three motions. Motion 3 proposes the installation of a spear pump. Motion 2 installs irrigation from the spear pump to the garden beds, and motion 1 provides for general improvements to the garden beds which are to be irrigated from the spear pump. This is one project in my view. The committee wrongly divided the project into three parts. The committee should have complied with the full requirements of section 104, in particular by obtaining two quotes and going to a general meeting.

The committee submission is I believe intended to mislead. "Addressed on an as required basis" – did the landscaper seriously come on three separate occasions to undertake each separate phase. I did not enquire into this aspect, but I believe I can guess the answer. I do not accept the committee’s explanation, and consider the meeting simply an exercise in avoiding the requirements of section 104, which is intended to ensure accountability and transparency for the benefit of all owners.

The 10 July 2003 included 9 motions, every single one of which approved the engagement of a contractor called Todbuild. The total amount expended was $2519, almost 3 times the committee expenditure limit. The committee say that the work was to be carried out on an as required basis. If this was so, then way wasn’t it similarly approved on an as required basis, and not all at once. Moreover, if the advice of 3 body corporate managers was sought as to whether the motions were one project, didn’t the fact that this very question was being asked, beg the answer that it probably was, and common sense would therefore require compliance with section 104. If any further evidence was required, 6 of the 9 motions require Todbuild to prepare / repair and paint / repaint.

I am totally unconvinced by the committee’s submission in answer to the application. I conclude that the committee was simply looking to avoid compliance the requirements of section 104. I assume that all resolutions have now been acted up and that there is no order I can made to require the actual motions to be put before a general meeting. However, I do intend to order that a copy of this order be sent to all owners so as to inform them of my view of the committee’s actions. Further, I intend to order that the committee must include on the agenda of the next general meeting of the body corporate two motions submitted by it seeking ratification by the body corporate in general meeting of the expenditure approved by the committee at the two meetings of 9 May and 11 July 2003 respectively.

If these expenditure ratification motions are not approved, then it is for the body corporate to determine any further action it might take against the committee members who undertook the expenditure in question. Finally I intend to order that the committee will henceforth comply fully with the requirements for expenditure by it; in particular the limits imposed by section 103, and the restrictions of matters being a single project. I have ordered accordingly.

Number of Scheme:	10669
Name of Scheme:	Rata Nui
Address of Scheme:	26-28 Albatross Avenue MERMAID BEACH QLD 4218

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Rata Nui [2004] QBCCMCmr 43 (22 January 2004)