Sailfish Point [2005] QBCCMCmr 420 (3 August 2005)

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

I hereby order as follows:-

1) that the body corporate remove from the applicant’s Notice of Contributions the sum of $1003.86 and any sums of interest accrued thereon or additional sums in respect thereof posted in the accounts of the body corporate since 8th March 2005;

2) that the body corporate do not seek to recover the said sum(s) from the applicant lot
owner;

3) that a by-law contravention notice dated 20th December 2004 and sent to the applicant by the body corporate was invalid, and that this is to be noted on the records of the body corporate forthwith;

4) that an application for an order that "the Commissioner for the Body Corporate and Community Management consider the argument put forward in our correspondence, that owners and real estate agents acting for owners, are entitled by legislation to place a real estate sign, of a reasonable size, on and within their allotments, and that a Body Corporate which acts to prevent this, is in fact acting to prevent an owner from legitimately seeking to sell their property and are denying a real estate agent from acting in the best interests of their clients, and in fact in preventing them from carrying out their legitimate business." is dismissed;

5) that a by-law contravention notice dated 16th January 2005 sent to the applicant by Hynes Lawyers at the instigation of the body corporate was invalid, and that this is to be noted on the records of the body corporate forthwith;

6) that an application for an order that "the Commissioner issue an order that Sailfish

Body Corporate send the Commissioner’s Adjudication to all members of The Body

Corporate and to issue an appropriate apology to R.M.ELLIS, as determined by The

Adjudicator, and to take all appropriate actions as are applicable to this application." is

dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0212-2005

"Sailfish Point" CTS 20973

APPLICATION

This is an application dated 21st March 2005 by Russell Ellis owner of Lot 32 (the applicant) against the body corporate for Sailfish Point for orders to the effect that

On 8th March 2005, the applicant was sent a document headed "Notice of Contributions" under a banner "Body Corporate and Community Management Act 1997" by Complete Body Corporate Services Pty Ltd (the body corporate manager) who is the body corporate manager for the scheme. The document was an invoice for body corporate levies for the administrative and sinking funds between 1st April 2005 and 30th June 2005 but also contained a request for $1003.86 detailed as " Payments Service and Other". There is a warning on the Notice that interest payable at 2.5% per month is payable on overdue levies and it appears that the $1003.86 requested is going to be included in calculating such interest. There was no explanation or breakdown of this sum.

On investigation with the body corporate manager on 9th March 2005, the applicant found that this sum related to lawyer’s fees in relation to two contravention notices sent to him. The tax invoices from the lawyers are both dated 28th January 2005, both made out to "The Secretary, Body Corporater for Sailfish Point" and are for $564.96 and for $438.90 respectively.

In respect of points 1,2, and 4, the body corporate opposes the application, saying that the contravention notices were validly executed and sent; and that it has every right to seek reimbursement from a lot owner who has caused the body corporate expense. It relies on By-Law 20 of the scheme ( as set out below) to reclaim such moneys.

JURISDICTION

"Sailfish Point" Community Titles Scheme 20973 is a scheme under the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

There are 99 lots and the buildings are created under a group title plan of subdivision, now known as a "standard format plan" of subdivision.

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)).

In respect of the outcome sought numbered 5 above, the Commissioner has no jurisdiction to order that an apology be given nor to draft such an apology. It is a requirement of section 274(1) of the Act that the adjudicator must give a copy of the order to the following persons:

(a) the applicant; and
(b) the body corporate for the community title scheme concerned;

(d) a person who, on an invitation under section 243 or 271(1)(c), made a submission about the application.
(2)........
(3) If the order is a declaratory or other order affecting the owners or
occupiers of the lots included in the scheme generally, or a particular class
of the owners or occupiers, the adjudicator need not give a copy of the
order to each affected person individually, but may instead give notice in a
way that ensures, as far as reasonably practicable, it comes to the attention
of all owners or occupiers or all members of the class.

Further, in respect of outcome sought numbered 3 above, whilst the adjudicator must observe natural justice in investigating the application (section 269(2)(a) Act), since there is no object to the applicant’s request, I am not prepared to consider generally the rights of lot owners qua vendor of real property and the rights of real estate agents in the legitimate course of their business. I will however, refer to rights of lot owners given under the Act and the Accommodation Module.

SUBMISSIONS

Submissions were invited from all lot owners in accordance with section 243(2)(b) of the Act. Submissions were received from trustee Michael Knowles (Mr Knowles) on behalf of the MB Knowles Family Trust, owner of Lot 33, and Oliver Sinclair (Mr Sinclair) owner of Lot 39.
Mr Knowles supports the application, believing that the recovery of money in such a way is an "illegal charge." The Trust has also been asked to reimburse legal fees the subject of such a contribution notice, and has lodged an application with the Commissioner’s office concerning it. Mr Knowles also believes that the second contravention notice sent to the applicant was "irrational and childish" behaviour on the part of the body corporate.

Mr Sinclair supports the application and says there is a conflict of interest within the committee although he does not elaborate on that.

The submission of the respondent body corporate was prepared by their solicitors Hynes Lawyers (Hynes).

DETERMINATION

This application concerns alleged breaches of by-law and more importantly, whether because of those alleged breaches, a lot owner may be required to make financial recompense to the body corporate for pursuing the breaches as the body corporate is entitled to do. There is no dispute that the body corporate is entitled to enforce its by-laws.

Item 1
As I stated in the reasons for the order made in matter number 0259 -2005 re: Sailfish CTS, an application for dispute resolution to the Commissioner’s Office brought by the MB Knowles Family Trust (the Knowles decision) concerning the same point :-

How then can the body corporate be seeking its lawyer’s fees from the party with whom it is in dispute? It relies solely on a By-law for the scheme at item 20.

By-law 20 for Sailfish Point CTS states as follows :-

"20. Recovery of Costs

An owner must pay on demand the whole of the Body Corporate costs and expenses ((including solicitor and own client costs), such amount to be deemed a liquidated debt, incurred in:

In submissions drafted by solicitors Hynes Lawyers, (Hynes) the body corporate says

They then set out to show that it was reasonable in the circumstances for the body corporate to instruct lawyers, and that the sum charged by them as lawyers was reasonable.

I find that the reasonableness or not of their fees, or the decision of the body corporate to seek legal advice or to instruct lawyers is not the issue. The issue is whether having done so, the body corporate can then pass that cost on to the lot owner without more, that is without any finding of culpability on the part of the lot owner, or order of an adjudicator or a competent court.

Hynes do not (perhaps understandably) investigate the validity of By-law 20 but rely on it to reclaim such legal fees. However, I have found in the closely associated matter, the Knowles decision, that the validity of this by-law is open to challenge.

In that matter, I quoted Adjudicator R.A.Meek who found in the matter of QBCCMCmr [2004] Liberty CTS 27241 (Liberty) that a by-law with very similar wording was invalid. Mr Meek referred to the judgment of Dowsett J. in Re: The Hastings (GTP No. 1154) (unreported) no. 826 of 1993, a Queensland Supreme Court case concerning the reasonableness and enforceability of by-laws, at p. 7 wherein the Judge states –

Section 180 of the Act sets limits for by-laws and it is clear from the legislation that the content of by-laws is not intended by the Act to extend the power of the body corporate beyond that given in the Act. Section 180(6) states -

180 Limitations for by-laws
(6) A by-law (other than an exclusive use by-law) must not impose a
monetary liability on the owner or occupier of a lot included in a
community titles scheme.

In Liberty, the adjudicator found that the ordinary meaning of "monetary liability" was capable of including "costs and expenses", such as are required on demand by By-law 20.

Furthermore, even if By-law 20 is not subsequently invalidated, it is restricted in its wording to seeking payment on demand from owners for costs and expenses incurred in

As stated in the Knowles decision the body corporate is not "entitled to receive" money from a lot owner under the legislation except so far as stated in the legislation, ie for contributions, interest, costs reasonably incurred in recovering contributions, (as set out at section 97 of the Accommodation Module); or the reasonable costs of maintenance or repair works (as detailed at section 120(2) Accommodation Module); or possibly under some agreement for example, where an owner has exclusive use of an area subject to an annual rent.

I propose to make an order that the applicant is not liable to pay the sums demanded of him in relation to reimbursement to the body corporate for legal fees or costs and expenses, and that the body corporate shall not seek such reimbursement from the applicant.

The applicant has received two contravention notices from the body corporate. I am not asked to adjudicate on whether or not the applicant has breached the by-laws, but the applicant seeks in both cases an order that the notices were invalid for want of process, and were issued unnecessarily.

Item 2- first contravention notice

The first contravention notice concerned an alleged breach of by-law 12 of the scheme which states:-

The notice set out By-Law 12 ( with the exception of the final word "committee") and also that the applicant had continued " to display a For Sale sign in the window of unit 32." The notice was signed by K.M.Elliott, named as Kim Elliott for Complete Body Corporate Services Pty Ltd, sealed with the Common Seal of Sailfish Point CTS and dated 20th December 2004. It gave the applicant 2 days from receipt of the notice in which to cease the contravention.

The applicant says that even if the ‘For Sale’ sign breached a by-law (although he is not satisfied that this is the case), he had removed it by 3rd January 2005. The body corporate in its submissions says that the applicant did not inform the body corporate that he had removed the sign.

The applicant had been previously asked to remove the sign by letter dated 9th December 2004 from the body corporate manager. The body corporate manager in that letter said "Displaying For Sale Signs is against the Body Corporate By-Laws", which is not strictly accurate. To display such a sign without the consent in writing of the committee, is contrary to the by-laws. However, the applicant would have been sufficiently aware at that point that he should take steps to obtain permission.

Whilst the body corporate manager may well have authority to issue contravention notices on behalf of and at the request of the body corporate, the body corporate must "reasonably believe" that a person is contravening a provision of the by-laws for the scheme. ( section 182 Act) which belief is demonstrated by the committee resolving at a meeting that the committee or body corporate manager body be instructed to send out a contravention notice.

A ’flying minute" ( more properly known as voting on a motion outside a committee meeting) was convened by telephone on 20th December 2004, apparently at the same time as the notice was prepared and sent. The applicant, who was a member of the committee, was not made aware of the motion to be voted upon, even though as has been pointed out in submissions, he would not have been able to vote on it having a conflict of interest. He was away at the time.

Section 33 of the Accommodation Module enables the committee to pass a valid motion outside a committee meeting if –

(a) notice of the motion is given to all committee members or, in an
emergency, as many members as it is practicable to contact; and
(b) a majority of all voting members of the committee entitled to
vote on the motion agrees to the motion.
(2) The notice must be given in writing, and the members’ agreement to
the motion must be given in writing but, in an emergency, the notice may
be given, and the member’s agreement expressed, orally or by another
appropriate form of communication.
(3) Advice of the motion must be given, at the time notice of the motion
is given or, in an emergency, as soon as reasonably practicable, to each lot
owner, other than a lot owner who--
(a) has instructed the secretary that the lot owner does not wish to be
given advice of committee meetings; and
(b) has not withdrawn the instruction.
(4) The notice and advice of the motion may be given by--
(a) the secretary; or
(b) another member of the committee who is authorised by a
majority of voting members of the committee to give the notice
and advice.
(5) For the operation of section 32(1) and (2), the committee, in dealing
with a resolution under this section, is taken to deal with the resolution at a
meeting of the committee.
(6) A motion voted on under this section must be confirmed at the next
meeting of the committee held after the motion is voted on.

Notice of a committee meeting is required by section 26 of the Accommodation Module to be 7 days before the meeting except by agreement when it may be reduced to at least 2. Notice of some kind is still required for voting outside committee meetings, in accordance with section 33.

It is not disputed that the "meeting" of 20th December 2004 was conducted on the telephone and without notice to all committee members. I am of the opinion that the only way in which the voting on the motion on 20th December 2004 could be valid is if the motion was to deal with an emergency. I do not consider that the removal of a real estate agent’s "For Sale" sign in a lot window was an emergency, particularly as it appears to have been a sign which was not so obtrusive that its removal on 3rd January 2005 was noted by any member of the committee.

I find that the contravention notice issued on 20th December 2004 was invalid.

Further, it is not clear what the minutes of a meeting of the Committee headed with the date "20th December 2004"and "In accordance with s.35(2) of Standard Module" for some reason, actually record. (Document "Attach 7" in the applicant’s bundle of documents.)

The body corporate submits that the contravention notice was issued "pursuant to a flying minute" but in the record of the ‘flying minute’ it states that "Kim further advised a Notice of Continuing Contravention of a Body Corporate By-Law has been forwarded to the owner." The Notice was issued the same day apparently and before the committee meeting. The committee, ostensibly during the telephone meeting, voted to instruct Hynes Solicitors to enforce the by-law contravention notice and noted that " the for sale sign is still displayed." From reading the record, it seems that Hynes were to be instructed because the sign was still displayed, not at some future date if the sign remained.

A letter written by the body corporate manager to the applicant on 23rd December 2004, advises that "As it would seem that you will not be complying with the ... By-Laws, the matter has been referred to ... solicitors who have been instructed to enforce the By-Law by way of Application through the Magistrates Court." The body corporate manager sent a fax to Hynes saying that "the Committee have (sic) requested I instruct you to make Application through the Magistrates Court..."

Since the contravention notice dated 20th December was delivered to the applicant at a time when the committee was aware that the applicant was away, and the notice gave the applicant two days from receipt of the notice in which to comply with it, even though the body corporate manager was aware from the applicant’s son that the applicant was aware of the content of the notice, it appears that the body corporate manager acted with almost incredible zeal to instruct solicitors. I find that there is merit in the applicant’s contention that the body corporate took advantage of the fact that he was away. The ‘sledgehammer’ tactics to deal with a simple infringement indicate a dispute of a personal nature as submitted by Mr Sinclair.

Item 4 – second contravention notice

The second contravention notice concerned an alleged breach of by-law 5 of the scheme. By-law 5 states:-

The notice set out the by-law (with the exception of the heading) and stated that the applicant as owner of Lot 32 "did shortly prior to 6.10pm on 16 January 2005, in the company of a Mr Jim Brown, cause a nuisance so as to interfere with the peaceful enjoyment of Common Property of Mr Bruce Murdoch by harassing Mr Murdoch, a member of the Body Corporate Committee in relation to legal matters currently the subject of legal proceedings between the Body Corporate and you. This has happened on three prior occasions. You are required to cease from causing a nuisance to Mr Bruce Murdoch and other lot owners in such a way as to interfere with the peaceful enjoyment of Common property."

The notice was signed by a solicitor as the authorised signatory being "Solicitor for Body Corporate" and dated 21st January 2005.

The applicant says that any altercation which he may have had with a committee member ( which he denies commencing) whilst on scheme land could not be construed as a breach of by-law at all and to have a contravention notice served on him was "unfair and discriminatory."

The applicant has provided a copy of the minutes of a committee meeting of 29th June 2004 where in general business, there is a note of advice received from a solicitor that the solicitor is not able to sign "Breach Notices" owing to a change in the legislation. I do not know to which legislation the solicitor was referring. Certainly under the Act, there is no reason why a legal representative should not sign a contravention notice if the legal representative is instructed by the body corporate to do so.

In the material contained with the application and in submissions I was not provided with any evidence that the committee had formed the reasonable belief required by section 182 of the Act. I have since asked the body corporate to be provide me with a copy of the committee meeting at which the body corporate resolved to issue a by-law contravention notice and to instruct Hynes to deal with the matter.

On 29th July 2005, I was provided by the body corporate manager with a document which is a copy of a record of a ‘flying minute’ conducted on16th January 2005 by telephone communication. The document I have is unsigned. .

As detailed under ‘item 2’ above, a vote on a motion outside a committee meeting is only valid if the steps in section 33 of the Accommodation Module are followed. All members of the committee, or in an emergency as many as it is practicable to contact, must be notified in writing and give their agreement to the motion in writing, save that in an emergency, committee members may be notified and give their consent orally, eg. by telephone. .

The action taken by the committee on 16th January 2005 is therefore only valid in an emergency situation.

The time of the meeting or the way in which committee members were notified of the motion is not recorded. It is not disputed that the incident occurred at around 6pm on 16th January 2005, a Sunday, and the Chairman G.R.Dennett made a written note that he took a call from Bruce Murdoch, (Mr Murdoch) a lot owner and committee member, at about 6.15pm. The Chairman says that he advised Mr Murdoch that "if he considered he was being harassed then the Body Corporate may have to refer the matter to its solicitors for action". The Chairman does not record that he will call a meeting of the committee.

Mr Murdoch did not ask the body corporate to send a by-law contravention notice by lodging a Notice to Body Corporate of Contravention of a Body Corporate By-law which is an approved form BCCM Form 1, on which the committee must take action in 14 days if it forms the reasonable belief that a by-law has been breached, failing which the complainant ay make immediate application to the Commissioner’s Office and by-pass the committee.

At this time, the committee had not yet formed the reasonable belief that a by-law was being contravened, but two committee members were discussing the possibility of some kind of civil action for harassment. It appears that the motion to send a by-law contravention notice to the applicant and to instruct Hynes to take action was conceived some time between 6.30pm and midnight on 16th January 2005 , notified to committee members Hennessey, Sharp and Mowll and a teleconference of some kind convened. The body corporate manager faxed a letter to Hynes on 18th January 2005 asking them to send a by-law contravention notice to the applicant. The contravention notice was sent to the applicant on 21st January 2005.

Whilst the body corporate may have wished to move with some speed on this matter, I do not find that it is an "emergency" in as much as the contravention notice issued to the applicant was a Form 10 "Continuing contravention notice" which asked the applicant to "cease causing a nuisance" to Mr Murdoch and gave him 7 days in which to stop. The legislation does not define an "emergency" but the ordinary dictionary definition is "a sudden state of danger," (Concise Oxford Dictionary). Exceptional powers are given to the committee to deal with cases of emergency, for example, where the committee may not be able to convene a meeting properly because immediate action is required to deal with a fractured water pipe, or the like.

If the applicant’s behaviour put Mr Murdoch in "a sudden state of danger" then the police would be the correct authority to restrain the applicant. The sudden state of danger would be well over (or the dangerous event fulfilled) by the time the committee’s action was felt on 21st January 2005. In fact, in my view there can be few occasions when the resolution to issue a contravention notice can be "an emergency".

For this reason, I find the contravention notice issued to the applicant was invalid.

Because of this finding I do not need to look at the wording of the By-law 5 or address the intention behind it, but it would seem that such a by-law should not be used to settle personal disputes between lot owners, but may be invoked when the peace of the community at large is threatened. By-law 5(b) is in any event a repetition of section 167 of the Act and may be relied upon without the requirement to issue a by-law contravention notice, which in the circumstances was of dubious effect and meaningless in that it required a single ceased action to be discontinued.

Number of Scheme:	20973
Name of Scheme:	Sailfish Point
Address of Scheme:	300 Cottesloe Drive MERMAID WATERS QLD 4218

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sailfish Point [2005] QBCCMCmr 420 (3 August 2005)