Vardon Point Apartments [2005] QBCCMCmr 417 (2 August 2005)

Number of Scheme:	29516
Name of Scheme:	Vardon Point Apartments
Address of Scheme:	1 Millennium Circuit PELICAN WATERS QLD 4551

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

I hereby order that the application by John Evered, the owner of lot 65 for an order that Village Management Corporation Pty Ltd repay the sum of $4606-80 to the bodies corporate in respect of its claim dated 23/04/04, in regard to the fit out of the body corporate storage room in the Amenities Block in the Lagoon Pool Area is dismissed under section 270(1) both for want of jurisdiction and for the reason that it appears the application is misconceived and without substance.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0245-2005

"Vardon Point Apartments" CTS 29516

The applicant, John Evered, the owner of lot 65 (and others) have sought the following order of an adjudicator under 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 70 lots recorded under a building format plan of subdivision. The regulation module applying to the scheme is the Accommodation Module.

I intend to dismiss this application under section 270 of the Act on the basis that the application is beyond jurisdiction and further, is misconceived and without substance. Section 270(1) (c) of the Act provides that the adjudicator may make an order dismissing the application if:
(c) it appears to the adjudicator that the application is frivolous, vexatious, misconceived or without substance; or ...

This application is seriously flawed on two bases:

Jurisdiction

The applicant is a lot owner in the scheme known as Vardon Point Apartments (VPA). The applicant asserts that the dispute is a dispute between the owner and the body corporate (that is, VPA) as this is the body corporate of which the applicant is a member and therefore entitled to bring an application. The applicant has no right as an owner in VPA to bring an application against the principal body corporate, Vardon Point Pelican Waters (VPPW), as he individually is not a member of the principal scheme. Rather it is VPA which is a member of the principal body corporate. It is also relevant that Village Management Corporation Pty Ltd, the caretaking service provider (the manager) is not an owner in VPA. The applicant states that the manager is "an associated owner of Villa 36 (Lot 104)". It is correct that the manager is an owner of a lot, but not in the applicant’s scheme, VPA. Rather, the manager is an owner in the subsidiary scheme known as Vardon Point Villas (VPV).

The applicant seeks an order that Village Management Corporation Pty Ltd, the caretaking service provider (the manager) repay the sum of $4606.80 to "the bodies corporate". An owner in one scheme has no right to seek an order against an owner in another scheme, even if these two schemes are subsidiaries of the single principal body corporate. Consequently, the order sought by the applicant specifically against the manager that it repay the money is beyond jurisdiction. At best, the order sought by the applicant should have been that the body corporate of VPA seek to recoup the money from the manager, as an owner can seek an order against the body corporate for the scheme of which the owner is a member.

However, this is not the end of the matter. The applicant’s scheme body corporate did not in fact pay the money to the manager. Rather the money was both approved and paid to the manager by the principal body corporate, VPPW. I have evidence of this in the form of a cheque issued by the principal body corporate. Consequently, even the relief suggested above is not available to the applicant, since his own body corporate (VPA) did not in fact pay the money to the manager. In the circumstances, the only order the applicant might have sought is that his body corporate (VPA) take action against the principal body corporate (VPPW) to recoup the money paid to the manager.

The application is beyond the jurisdiction provided for in the legislation, and is dismissed.

The applicable law and merit

After acknowledging that both the committee’s of both the principal scheme and his own scheme had approved payment of the money to the manager, the applicant states:

The applicant’s grounds, and voluminous attachments, fail to provide any concise statement of how this whole situation came about. It was not until I had read the (concise) submission provided by the manager dated 3 May 2005 that I had an understanding of what transpired here resulting in the issue in dispute; namely the payment of the money to the manager. Whilst the payment is in dispute, it seems to me that the facts surrounding the transaction are not. As is noted by the body corporate solicitor in his submission: the application does not seek the remove of the fit out installed by the manager. Rather the applicant seeks the return of monies paid to the manager in reimbursement of such fit out. In the circumstances, I accept the statements of the manager as an accurate statement of the background to this transaction leading to the payment of the money to the manager.

The applicant is alleging that the payment is invalid on the basis that correct procedures under section 114 were not followed. What section is the applicant in fact referring to? The reference to the Act is not correct. Rather, I consider the applicant meant to refer to section 114 of the standard module, and in fact even this is not correct, as this scheme is subject to the Accommodation Module. The equivalent reference in the accommodation module is section 113 which provides:

113 Improvements to common property by lot owner--Act, s 159 [SM, s 114]
(1) The body corporate may, if asked by the owner of a lot, authorise the owner to make an improvement to the common property for the benefit of the owner’s lot.
(2) The improvement must be authorised by special resolution of the body corporate unless--
(a) the improvement is a minor improvement; and
(b) the improvement does not detract from the appearance of any lot included in, or common property for, the scheme; and
(c) the body corporate is satisfied that use and enjoyment of the authorised improvement is not likely to promote a breach of the owner’s duties as an occupier.
(3) An authorisation may be given under this section on conditions the body corporate considers appropriate.
(4) The owner of a lot who is given an authority under this section41--
(a) must comply with conditions of the authority; and
(b) must maintain the improvement made under the authority in good condition, unless excused by the body corporate.

Section 113 is where a owner is proposing to make improvements to the common property for the specific "benefit of the owner’s lot". The usual example is an air conditioning condenser unit being placed on common property providing air conditioning to a particular lot.

Even if you accept that the improvement here was made by the manager in its capacity as the owner of lot 104 in VPV, there is no suggestion whatsoever that the improvement is solely for the benefit of the manager’s lot. Rather there is compelling evidence, including statements in submissions of several owners, that the improvements in question benefit all owners in both subsidiary schemes. For example:

A more apposite view of the improvement made is that it is an improvement to common property by the body corporate for the benefit of owners generally. The making of such improvements are the subject of section 112 of the Accommodation Module, quote:

112 Improvements to common property by body corporate--Act, s 159 [SM, s 113]
(1) The body corporate may make improvements to the common property if--
(a) the cost of the improvements, or, if the improvements together with associated improvements form a single project for improvement of the common property, the cost of the entire project, is not more than the improvements limit; or
(b) the improvements are authorised by special resolution; or
(c) an adjudicator, under an order made under the dispute resolution provisions, decides the improvements are reasonably necessary for the health, safety or security of persons who use the common property and authorises the improvements.
(2) For subsection (1), if a series of associated improvements forms a single project, the cost of any 1 of the improvements is taken to be more than the improvements limit if the cost of the project, as a whole, is more than the improvements limit.
(3) This section has effect subject to part 7, division 6.
(4) In subsection (1)(a)--
"improvements limit" means the amount worked out by multiplying the number of lots included in the scheme by the following amount--
(a) if paragraphs (b) and (c) do not apply--$300;
(b) if the body corporate has by special resolution decided an amount of more than $300 but not more than $450--the amount decided;
(c) if the body corporate has by resolution without dissent decided an amount of more than $450--the amount decided.

I acknowledge that the improvement was not initiated by the body corporate but certainly the circumstances of the improvement are more apposite to section 112 (an improvement by the body corporate) rather than section 113 (an improvement by a lot owner) in that the benefit of the improvement is to all owners and not a single owner. So, what then does section 112 require by way of approval. It requires a special resolution if the improvements are above the improvement limit. The improvement limit is determined by multiplying the number of lots (70) by $300 per lot. Consequently the improvement limit for VPA is $21000. The limit for committee spending is $125 per lot or $8750 for VPA. The cost of the improvement here as $4606-80 or less than $66 per lot.

The committee of VPA’s is authorised to approval improvements, even by way of ratification, up to the limit of $8750. Improvements above $8750 but less than $21000 require approval by ordinary resolution of the body corporate in general meeting, and finally improvements above $21000 require approval by special resolution of the body corporate in general meeting. At a committee meeting on 12 February 2005, the committee of VPA ratified the making of the improvement by the manager and resolved to reimburse the manager for the making of the improvement. In the circumstances, I am satisfied that the payment to the manager was valid and correctly authorised, and that this application is misconceived and lacking in substance.

Dismissal of applications under section 270(1)(c)

Section 270(2) and (3) of the Act provide as follow:
(2) The adjudicator’s power to make an order under this section may be exercised--
(a) without investigating the detail of the application; or
(b) before an investigation has ended.
(3) If the adjudicator makes an order under subsection (1)(c), the adjudicator--
(a) may order costs against the applicant to compensate the person against whom the application was made for loss resulting from the application; and
Example of loss for paragraph (a)--
Legal expenses reasonably incurred by the person in relation to the application.
(b) in ordering the costs, may have regard to previous applications made by the applicant.
(4) The amount of costs ordered under subsection (3) must not be more than $2 000.

It is clear from submissions that a number of owners are concerned with perceived interference in the management of the body corporate by the applicant Mr Evered, and the relative merits of Mr Evered’s submissions and representations. I mention the above provisions by way of information to those owners in respect of future applications which might be made by Mr Evered. To Mr Evered, I suggest he might consider a more measured approach to the making of applications to this office. In this regard, I am conscious of a previous order involving an application made by Mr Evered. To other owners who might consider putting their name to applications made, or at least initiated by Mr Evered, then they should be aware of the possible operation of the cost provision in section 270 should future applications be dismissed under subsection (c) of that section.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Vardon Point Apartments [2005] QBCCMCmr 417 (2 August 2005)