Sylvan Beach Resort [2005] QBCCMCmr 40 (27 January 2005)

Last Updated: 5 July 2005

REFERENCE: 0625-2004

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	25728
Name of Scheme:	Sylvan Beach Resort
Address of Scheme:	23 Sylvan Beach Esplanade, BRIBIE ISLAND QLD 4507

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

Alexander Sydney Scott and Danielle Scott, the owners of lot 3

I hereby order, in respect of the application by Alexander Sydney Scott and Danielle Scott, the owners of lot 3 (the applicants), that - 1. The resolution purportedly carried by the body corporate at the August AGM to the effect that "all units to pay Foxtel levy" is invalid and of no effect; 2. The body corporate can only supply the Foxtel service on the basis set out in section 118 of the Accommodation Module; 3. The applicants cannot be charged for the Foxtel service unless they agree to the provision of the service in accordance with the provisions of section 118; 4. If the applicants are not agreeable to the provision of the Foxtel service, the body corporate may engage some means of "blocking" the provision of the Foxtel service to the applicant’s lot without cost to the applicants; 5. At all times, the body corporate must maintain the free to air television service to the applicant’s lot.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0625-2004

"Sylvan Beach Resort" CTS 25728

The applicants, Alexander Sydney Scott and Danielle Scott, the owners of lot 3, have sought the following orders of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) quote -

... that the motion of August 13 2004 which was that "all owners should pay the Foxtel levy" should have been ruled out of order;
As owner occupiers of a unit ... we cannot be forced to pay a monthly rental fee for a cable television service which we do not want, have not previously paid for and for which we declared ... we did not want provided to our unit;
... that we should not be penalized in any way for failure to pay the Foxtel fee listed as a cost on our Notice of Levy Contribution account;
... that the body corporate should take whatever action they see fit to ensure the Foxtel service continues to be blocked from our unit but without reducing the normal free to air television reception from unit 3.

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 is a subdivision of 24 lots recorded under a building format plan of subdivision. The regulation module applying to the scheme is the accommodation module.

The dispute concerns the legality or otherwise of a motion purportedly carried at the 2004 AGM which resolved –

All owners to pay Foxtel: Because of the way in which, and the purposes for which, the Foxtel system was obtained, it was agreed by those at the meeting that all owners should pay the Foxtel Levy. ... Carried unanimously.

The applicants dispute the validity of this motion, and state that it should have been ruled out of order. Moreover, they are seeking associated determinations that they not be liable for any Foxtel charges and that the body corporate should ensure that the Foxtel service is not provided to their unit.

It is noted that the motion in question was included under the heading of "General Business" on the agenda of the AGM held on 13 August 2004. It is noted that there was a previous resolution on the issue at the AGM in August 2001 which resolved "to approve the installation of Foxtel to the building and all units". The resolution further provided:

It was pointed out that if any unit should no require it then the cost of the plan arranged ... would be divided by 23 unit instead of 24. ...

This application is one of two applications currently before this office concerning this issue. The second application is application 634 of 2004 made on behalf of the body corporate seeking that the body corporate in general meeting should be able to make a "majority decision" in a matter which should then be binding on all owners. Application 634 of 2001 seeks the reverse of this application; namely it seeks to confirm the validity of the body corporate’s resolution carried at the AGM on 13 August, 2004 that all owners be liable to pay the Foxtel levy.

Obviously, the outcomes sought in these two applications cannot co-exist. One must succeed and the other must fail. Whilst the material before me is considerable, it is not necessary for me to wade through this in any detail. Much of the detail of both applications is irrelevant given the legal position applicable to this dispute. The correct legal position is set out in section 118 of the Accommodation Module which provides, quote:

118 Supply of services by body corporate--Act, s 158 [SM, s 119]
(1) The body corporate may supply, or engage another person to supply, utility services and other services for the benefit of owners and occupiers of lots, if the services consist of 1 or more of the following--
(a) maintenance services, which may include cleaning, repairing, painting, pest prevention or extermination or mowing;
(b) communication services, which may include the installation and supply of telephone, intercom, computer data or television;
(c) domestic services, which may include electricity, gas, water, garbage removal, airconditioning or heating.
Example--
The body corporate might engage a corporation to supply PABX services for the benefit of the owners and occupiers of lots.
(2) The body corporate may, by agreement with a person for whom services are supplied, charge for the services (including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services), but only to the extent necessary for
reimbursing the body corporate for supplying the services.42
(3) In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate (other than body corporate administrative costs) for supplying a service, including the cost of a commercial service, and the cost of purchasing,
operating, maintaining and replacing any equipment, is recovered from the users of the service.

The supply of Foxtel reception is clearly within the contemplation of the section. It is a utility service, falling under the heading of "communication services" which the body corporate has agreed to supply, or to engage a contractor to supply, to owners. Subsection (2) provides the basis on which the services in question can be supplied, namely by agreement with a person for whom services are supplied, charge for the services (including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services), but only to the extent necessary for reimbursing the body corporate for supplying the services. The section contains a number of requirements before the body corporate can charge for the services supplied. In particular, the body corporate must have the agreement of the person to who the services are to be supplied that they want / require the service. This is not simply a majority resolution. Rather it requires the specific agreement, preferably in writing so the agreement is evidenced, of each individual owner who seeks to avail themselves of the service. Moreover, the section requires that the body corporate can only charge each owner so in agreement to the extent necessary to reimburse the body corporate for supplying the service.

Finally, subsection (3) takes the issue absolutely beyond doubt: it provides that the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate (other than body corporate administrative costs) for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service. That is, the body corporate cannot simply charge all owners whether they require or request the service. Rather, it can only charge those owners who agree to the provision of the service, and in doing so, the body corporate must ensure that the total cost of it providing the service, is recovered from the users of the service.

I conclude that the legal position cannot be any clearer than this. The resolution purportedly carried by the body corporate at its AGM to the effect that all owners pay for the Foxtel levy is invalid and of no effect. I agree with the applicants that it should have been ruled out of order by the chairperson for the reason that what it proposes conflicts with the provisions of the module.

The resolution is also invalid for technical reasons. A motion carried under the heading of general business is invalid and of no effect. For a motion to be valid, it must be set out on the voting paper for the meeting. The voting paper must state the motion in the form in which it is submitted. In the circumstances, the way the motion was considered, only those owners who attended the meeting were able to have input into the outcome of the motion. All owners must be given the opportunity to vote in respect of each motion, and this is achieved by including the motion on the agenda / voting paper for the meeting.

I am simply not prepared to go further and to consider the points raised by the body corporate and others disputing this outcome. These arguments cannot succeed. They are contrary to the legislation and invalid. Services of this nature can only be supplied by the body corporate on the basis set out in section 118 of the standard module. Until the body corporate has fully complied with this section, no owner can be compelled to pay for the Foxtel service. The body corporate, or at least its manager, should have been aware of the requirements of section 118 when it initially considered the introduction of Foxtel and proceeded accordingly. The body corporate is under an obligation to supply the free to air television reception. Further, the body corporate may, at its expense, install some mechanism to "block" the Foxtel reception to those lots whose owners are not agreeable, or have not agreed, to the provision of the service.

I consider that the above statements determine the dispute. Practically:

• The resolution purportedly carried by the body corporate at the August AGM is invalid and of no effect;
• The body corporate can only supply the Foxtel service on the basis set out in section 118 of the Accommodation Module;
• The applicants cannot be charged for the Foxtel service unless they agree to the provision of the service in accordance with the provisions of section 118;
• If the applicants are not agreeable to the provision of the Foxtel service, the body corporate will need to find some means of "blocking" the provision of the Foxtel service to the applicant’s lot without cost to the applicants;
• At all times, the body corporate must maintain the free to air television service to the applicant’s lot.

I have ordered to this effect.