One Park Road [2005] QBCCMCmr 327 (17 June 2005)

Number of Scheme:	2114
Name of Scheme:	One Park Road
Address of Scheme:	1 Park Road MILTON QLD 4064

TAKE NOTICE that pursuant to an application made under the abovementioned Act by

I hereby order that the respondent Edith Dindas Pty Ltd shall not interfere, or permit interference, with utility infrastructure or utility services so as to affect the supply of utility services, namely electricity, to other lots included in the scheme.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0255-2005

"One Park Road" CTS 2114

ORDERS SOUGHT

The applicant, Kiara Holdings Pty Ltd, has sought orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

JURISDICTION

The application evidences a dispute between an owner of a lot included in a community titles scheme and the owner of another lot included in the scheme (Act, 227(1)(a))

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)).

SCHEME DETAILS

One Park Road registered as a building units plan (now described as a building format plan) on 4 March 1994. The scheme comprises 39 lots and common property, and is regulated by the Body Corporate and Community Management (Commercial Module) Regulation 1997 (Commercial Module).

BACKGROUND

The applicant stated in its supporting grounds in relation to the interim order that electricity is supplied to the scheme under a bulk supply arrangement with the respondent, Edith Dindas Pty Ltd (Dindas). The applicant further stated that the respondent on-sells the electricity to the body corporate and other lot owners, of whom the applicant is one. The applicant contended that there is no written contract between the respondent, the body corporate or the other owners.

The applicant explained that the respondent gave notice in late February 2005 that owners should make their own arrangements for electricity supply by 20 April 2005, as the respondent intended to arrange private metering of its lots by that date.

The applicant contended that the intended action by the respondent was an unreasonable interference with common property and the applicant’s use and enjoyment of its lot and the common property. The applicant advised that it was not submitting that the respondent should be prevented from changing to private metering for its own lots, but rather that the respondent should be prevented from interfering with the supply of electricity to the applicant’s lot pending final determination of the application.

The respondent, the body corporate manager and the body corporate committee were invited to respond to the application.

Submissions were received from one owner, and from the solicitors acting on behalf of the respondent.

The owner expressed concern that the electricity might be cut off to her lot, as her tenant operates a restaurant and bottleshop.

The respondent’s solicitors stated that the respondent is the entity which has the contractual arrangement for acquisition of electricity to the scheme and not the body corporate, as inferred by the applicant. The solicitors claimed that the body corporate has never entered into a contract to acquire electricity for resale to the lots, and that as the arrangement between their client and the various lot owners in the scheme is a relationship based on contract, then there is no jurisdiction for an adjudicator to deal with the matter.

The solicitors pointed out that the respondent does not intend to alter or interfere with any part of the common property. The solicitors also pointed out that if the applicant, and any other owners, do not pay for the electricity supplied to them then the respondent is legally entitled to turn off the electricity supply. The solicitors explained that their client is not bound as a matter of law to supply electricity to the applicant, and that all their client wishes to do is have the applicant (and the other owners who share in the arrangement) obtain their own electricity supply.

After the submission period closed in relation to the interim order, I conducted a teleconference with the solicitors for both parties on 21 April 2005.

The respondent’s solicitor, Mr Robert Herd, advised me that owners have known for months of his client’s intention to change the current arrangements. Mr Herd pointed out that the terms of the contract entered into between his client and Country Energy is confidential. Mr Herd also stated that owners decided eight years ago to acquire their own electricity supply but have done nothing about it. He noted that it has been a bone of contention within the scheme, because owners have complained about the present arrangement and are frequently late paying their accounts, notwithstanding that his client has responsibility for paying the whole account regardless of whether the owners have paid their share.

Mr Herd stated that his client was prepared to undertake not to change the current arrangements for a period of 2 months from the date of the teleconference, which, if acceptable to the applicant, would obviate the necessity for an interim order.

The applicant’s solicitor, Mr Anning, was prepared to accept the respondent’s undertaking.

There was also further discussion as to the logistics of providing a separate electricity supply to all lots, which in turn raised the issue of who would be responsible for the cost of installation of separate meters, and the associated wiring. It appears that an estimate of $36,000.00 has been given in relation to rewiring the whole scheme. Mr Anning advised that owners were simply trying to determine the terms of the agreement between the respondent and Country Energy so as to ascertain whether they would be better off staying with the current arrangements. Mr Herd pointed out that if the respondent wanted to sever the present contractual relationship then it would be entitled to do so.

After the teleconference, Mr Herd forwarded a copy of the respondent’s undertaking not to disconnect the power for two months from 21 April 2005.

On 14 June 2005 I spoke by telephone with Mr Brian Burdekin, a representative of Country Energy, who was familiar with the arrangements for electricity supply at the scheme. My enquiries to Mr Burdekin related to general matters, and not the specifics of the agreement between the respondent and Country energy.

Mr Burdekin advised me that following deregulation of the electricity industry, there were two options available for consumers. The first option was if the annual electricity usage for the particular premises exceeded 100000kw/annum. In such circumstances, the consumer could elect to purchase electricity on the contestable market, thereby achieving supply at a more competitive rate. At the moment, One Park Road’s annual electricity supply exceeds the requisite level and so the agreement between the respondent and Country energy is based upon a tariff which is not available to consumers in the regulated franchised market.

Mr Burdekin further advised that in all likelihood individual lot owners would have to purchase their electricity in the regulated market, in which case the supplier would have to be Energex. Mr Burdekin stated that there is presently one main meter at the scheme. He advised that further meters would be able to be installed and it would simply be a matter of costing that exercise by the supplier.

DETERMINATION

It appears from the material before me, and from the remarks made during the teleconference that electricity supply has been the subject of discussion at this scheme for a considerable time and was also raised in previous dispute applications lodged in this office.

In Application 0682-2003, Adjudicator Toohey made the following comments on 12 January 2005, when making a number of orders disposing of five separate applications:

Electricity to the scheme is supplied in bulk through one meter box and is then on-supplied to the various premises by Edith Dindas Pty Ltd.

The applicants claim that Edith Dindas Pty Ltd is refusing to provide them with her records regarding this supply of electricity and express a concern that Edith Dindas Pty Ltd may be contravening the Electricity Act 1994 by unduly profiting from the supply of this electricity.

The respondents claim that an adjudicator has no jurisdiction over this matter, that the contract of supply of electricity is by Edith Dindas Pty Ltd rather than the body corporate, and that the records in question are private business records of Edith Dindas Pty Ltd rather than body corporate records.

If individual owners wish to obtain their own electricity supply then those individual owners can seek permission from the body corporate to make any necessary improvements to the common property at their own expense to facilitate individual metering. Alternatively, the majority of owners may vote that the body corporate make improvements at body corporate expense to facilitate individual metering of electricity supply. A further alternative is that owners vote for an arrangement by which the body corporate obtains bulk electricity and then supplies individual owners. In that case, individual owners must agree to the supply and the body corporate can only charge for the supply to the extent necessary for reimbursing the body corporate for supplying the services (Commercial Module, 99).

However, the applicants’ submissions do not satisfy me that they have endeavoured to resolve the electricity supply arrangements themselves or that any orders in relation to electricity supply are justified. As a first step, I would encourage all owners to discuss the options between themselves and put any relevant proposals before the committee or the body corporate in general meeting.

It is, however, necessary to make a comment in relation to the submission from the respondents to the effect that the electricity is being supplied by Edith Dindas Pty Ltd on its own behalf rather than by the body corporate. It does not seem possible for Edith Dindas Pty Ltd to supply electricity throughout the scheme without making use of common property utility infrastructure. This common property utility infrastructure is owned by all owners as tenants in common. Owners can use this utility infrastructure for their own purposes. However, the Act prohibits the grant of exclusive use to an owner of common property utility infrastructure and the body corporate is not able to lease or licence utility infrastructure that is common property (Act 177, Act 154, Commercial Module 91). If Edith Dindas Pty Ltd were to supply electricity to other owners on a private basis rather than on behalf of the body corporate then this would be making special use of the utility infrastructure that would amount to a de facto licence. It seems likely that Edith Dindas Pty Ltd would be treating body corporate property as its own, and also depriving any other owner of the ability to use body corporate infrastructure to obtain bulk electricity from a different person. This may amount to unreasonable interference with the use or enjoyment of the common property.^[1]

It is not clear on the material before me whether Edith Dindas Pty Ltd is supplying electricity on behalf of the body corporate or has taken personal responsibility to supply electricity to the other owners on what terms or with personal liability for interruptions to supply. It is questionable whether there is any dispute regarding electricity supply over which I have jurisdiction pending an owner putting forward a motion either seeking that supply of electricity be transferred into the body corporate’s name or that owners arrange their own individual supply. I certainly have no jurisdiction to determine whether there has been any contravention of the Electricity Act 1994. I will therefore refrain from making any order regarding electricity supply at this time.

Events have progressed since these remarks were made by Adjudicator Toohey, to the extent that the respondent has indicated that supply may discontinue under the present arrangement, albeit that an undertaking was given that no change would be made until at least 21 June 2005.

It also appears that the body corporate entered into a building management agreement with Hallmark Developments (Qld) Pty Ltd on 16 March 1994, at the time that the scheme was established. The directors of that company were Edith Dindas and her (then) husband Mark Dindas. Following a property settlement in 1997, the building management agreement was assigned to the respondent. It would therefore appear that Edith Dindas, through the former management company or the respondent, has effectively been the onsite manager for this scheme since its inception.

The recital to the agreement dated 16 March 1994 stated, in part:

It has been agreed by and between the parties hereto that the body corporate will engage the building manager and the building manager will accept such engagement for the purpose of performing certain duties on behalf of the body corporate as hereinafter set out.

Clause 3(u) of the agreement provided:

(u) Arrange the regular reading of electricity meters which record the electricity consumed in the lots and in the common property and on behalf of the body corporate to calculate the cost of electricity so consumed and to dispatch accounts to the lot owners and to the body corporate for the cost of such electricity. For such service the building manager shall be paid a fee by the body corporate equivalent to the difference charged by the Supply Authority to the body corporate and the amount chargeable to each lot owner by the body corporate in respect of each electricity account. The fee shall be paid upon payment to the body corporate of each electricity account.

I have also been provided with a copy of an electricity account from Energex dated 21 September 2000 addressed to Hallmark Developments Pty Ltd. It would therefore appear that until at least that date, notwithstanding the apparent dissolution of Hallmark Developments Pty Ltd at an earlier date following the property settlement, the supply of electricity was provided through the building manager which was acting as the agent of the body corporate in order to fulfil its obligations under the management agreement.

On 13 March 2002 the respondent wrote to all owners advising that it had negotiated to obtain electricity supply on a contract basis which would "be at a slightly cheaper rate which we anticipate can be passed on to the tenants". A further invoice, from Country Energy, dated 1 February 2005, was addressed to Edith Dindas Pty Ltd trading as Hallmark Developments (Qld) Pty Ltd.

In these circumstances, I am satisfied that the respondent, although contracted directly to Country Energy for the supply of the electricity to the scheme, has at all times effectively been acting as the agent of the body corporate in providing electricity to lot owners under the bulk supply agreement.

Having said this, I appreciate that the original building management agreement would by now have expired by the effluxion of time and I am also aware that the purported appointment of the respondent as building manager on 17 July 2003 was overturned by Adjudicator Toohey’s orders of 12 January 2005, which have been appealed to the District Court. To the best of my knowledge that appeal has not been determined as at this date.

In my view the owners of this scheme must now take some decisive steps to sort out the electricity supply. It may be that the respondent wishes to continue to supply its lots on a bulk supply basis, as it is entitled to do. It may also be that the remaining lot owners also wish to arrange a separate bulk supply, as they would be entitled to do. Alternatively, those owners may wish to arrange for separate supply to each of their lots for which they would be billed directly by the electricity supplier. No matter what decisions are ultimately made, the major question to be addressed will be, by whom the cost of establishing the new setup is to be paid.

Section 99 of the Commercial Module provides:

services are supplied, charge for the services (including for the installation

(3) In acting under subsections (1) and (2), the body corporate must, to

(Body corporate must not carry on business) of the Act).

The respondent has stated that it does not wish to continue to supply electricity to the other lot owners under the current arrangement. The respondent’s solicitors have stated that it cannot be obliged to do so. I would accept that argument if no utility infrastructure were involved in the supply, and if the respondent had not been acting as agent of the body corporate. The present arrangement can only be facilitated by the use of the utility infrastructure at the scheme.

Section 166 of the Act provides:

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

One Park Road [2005] QBCCMCmr 327 (17 June 2005)