Ocotillo [2005] QBCCMCmr 477 (25 August 2005)

Last Updated: 30 September 2005

REFERENCE: 0317-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	32327
Name of Scheme:	Ocotillo
Address of Scheme:	136 Pacific Pines Boulevarde

TAKE NOTICE that pursuant to an application made under the abovementioned Act by the Committee for the Body Corporate for Ocotillo Community Titles Scheme 32327

I hereby declare that Motion 7 on the agenda of the Annual General Meeting dated 27 April 2005 is passed to the extent that the Motion relates to the fixing of the administrative fund contributions to be levied on the owner of each lot for the financial year 1 March 2005 to 28 February 2006. I further order that an instalment of the administrative fund contribution for the financial year 1 March 2005 to 28 February 2006 due for payment before the date of this Order and not paid to the body corporate by a lot owner before the date of this Order must be paid to the body corporate within 30 days of the date of this Order. I further order that, within 14 days of the date of this Order the body corporate must give a copy of this Order (including the Statement of Adjudicator’s Reasons for Decision) to the owner of each lot included in the scheme.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0317-2005

"Ocotillo" CTS 32327

APPLICATION

This application is by the committee (applicant) seeking a declaratory order that the contributions payable for the administrative fund for the financial year 1 March 2005 to 28 February 2006 (2005-2006 financial year) be fixed based on the administrative fund budget determined at the Annual General Meeting dated 27 April 2005 (AGM) and on the levy schedule in the voting paper for the meeting.

JURISDICTION

"Ocotillo" Community Titles Scheme 32327 is a 23 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

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 applicant has provided a copy of a record of a resolution of the committee dated May 5 2005 voted on other than at a meeting of the committee authorising the making of this application.

SUBMISSIONS

The applicant’s main submissions were to the effect that:

• The notice of the AGM included a proposed budget for the administrative fund for the 2005-2006 financial year proposing income from contributions totalling $37 030.00.
• The proposed budget was accepted at the AGM by 7 yes votes to 4 no votes.
• The motion fixing the contributions for the administrative fund was defeated with 6 no votes and 5 yes votes.

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate for distribution to the owner of each lot. A submission was received from a number of lot owners.

Five of the six lot owners who voted against the disputed motion responded to the application. The submissions from the lot owners opposing the increase in the administrative fund contributions indicated that they are concerned:

• That they were not getting value for money.
• With respect to the caretaker/manager being absent from the scheme.
• With the lack of maintenance of scheme land including the barbecue, the swimming pool, a grill over a drain, lawns and gardens.
• With the actions of the committee, particularly in relation to the decision to vote against the disputed motion.

Submissions from lot owners supporting the increase in the administrative fund contributions were to the effect that it is difficult to understand how a lot owner can vote to accept a budget, yet vote against the associated contribution.

DETERMINATION

The agenda for an annual general meeting must include the substance of each statutory motion to be considered at the meeting (section 43(3) (a), Accommodation Module). A statutory motion includes adopting an administrative fund budget for the financial year and fixing the contributions to be paid by lot owners for the next financial year (Dictionary, Accommodation Module). The body corporate must, by ordinary resolution, adopt an administrative fund for each financial year (section 92(1), Accommodation Module). The administrative budget contains estimates for the necessary and reasonable spending from the administrative fund to cover recurrent expenditure (section 92(2), Accommodation Module). A copy of the proposed administrative fund budget must accompany the notice of an annual general meeting (section 92(6), Accommodation Module). The body corporate must, by ordinary resolution fix on the basis of the administrative fund budget for the financial year the contributions to be levied on the owner of each lot for the financial year (section 93(1) (a), Accommodation Module).

It is not contested that the body corporate did not include a copy of the proposed administrative fund budget with the Notice of the AGM. The agenda of the AGM and the voting paper for the AGM included a motion to adopt the proposed administrative fund budget (Motion 6) and a motion to fix the contributions to the administrative fund (Motion 7). In the absence of any submission to the contrary, I am satisfied that the contributions to the administrative fund for the 2005-2006 financial year was properly put for the consideration of the body corporate.

Motion 6 was passed by 7 votes to 4. Therefore, the body corporate voted to adopt the administrative fund budget for the 2005-2006 financial year. The adopted budget shows an increase in the budgeted income from $36340.00 in the 2004-2005 financial year to $37030.00 for the 2005-2006 financial year. As there has not been a submission otherwise, I am satisfied that the items included in the adopted budget are of a recurrent nature as required by section 92(2) of the Accommodation Module. Further, the submissions opposing the proposed increase in the administrative fund contributions have not questioned the amounts of budgeted line items. Neither has it been submitted that the number of instalments to be paid nor the dates on which payments are required are unreasonable.

Rather, the submissions detail concerns with respect to the management and administration of the scheme. In my opinion, such concerns do not constitute reasonable opposition to the fixing of the contributions payable to the administrative. Opposition to a proposed budget and the related contributions should relate to factors such as the reasonableness or otherwise of a budgeted item or the budgeted amount. The determination of the contribution payable to the administrative fund is directly related to the determination of the administrative fund budget. Lot owners had voted to adopt the budget. Consequently, the amount of the contributions to be levied on the basis of the adopted budget must by implication be accepted by those lot owners. The body corporate has demonstrated that it has complied with the procedural requirements of the Accommodation Module relating to an annual general meeting and the consideration of the administrative fund budget. In these circumstances, I consider that a lot owner cannot reasonably accept the budgeted amounts and oppose the contributions to be levied to meet those amounts.

However, the budget and the ensuing contributions must relate to the financial year, which for this scheme is for the period 1 March 2005 to 28 February 2006. Motion 7 proposes to fix a contribution, not only for the 2005-2006 financial year, but also to levy an unbudgeted higher contribution to the administrative fund in the 2006-2007 financial year. Section 93(3) and 93(4) of the Accommodation Module makes provision for levying a contribution in the next financial year and states, quote:

(3) Also, the committee may fix an interim contribution to be levied on the owner of each lot before the owner is levied contributions fixed on the basis of the body corporator’s budgets for a financial year.

(4) The amount of a contribution mentioned in subsection (3)--

(a) must subsequently be set off against the liability to pay contributions mentioned in subsection (1); and

(b) must be calculated on the basis of the level of contributions applying for the scheme for the previous financial year; and

(c) must relate, as closely as practicable, to the period from the end of the previous financial year to 2 months after the proposed date of the annual general meeting.

The contributions to be levied by the body corporate must ordinarily be determined in general meeting. Section 93(3) enables the committee to fix an "interim contribution" provided the requirements of section 93(4) are satisfied. As the body corporate fixes the contributions for a financial year, these provisions would be applied where the committee decided to levy lot owners in the interim period after the end of a financial year and before the body corporate has, at the annual general meeting, agreed to a budget and the associated contributions to be levied in the new financial year.

In this instance, the body corporate has included in Motion 7 an "interim contribution" for the 2006-2007 financial year of a higher amount than the contributions levied in the 2005-2006 financial year. There is no calculable basis for the determination of this "interim contribution" which is not "calculated on the basis of the level of contributions applying for the scheme for the previous financial year (2005-2006)". In my opinion, the body corporate cannot resolve to fix a contribution for the following financial year (2006-2007) of the nature included in Motion 7.

Consequently, I have declared that Motion 7 on the agenda of the AGM is passed to the extent that it relates to the contributions to be levied on the owner of each lot for the 2005-2006 financial year, and ordered that any unpaid contributions to the administrative fund for the current financial year be paid within 30 days of the date of the order. To ensure that all lot owners have knowledge of the outcome of this matter, I have also ordered that a copy of this order be given to the owner of each lot included in the scheme. It should be noted that, if necessary, an "interim contribution" could be levied by the committee in accordance with section 93(3) and (4) of the Accommodation Module.

The dissenting lot owners have expressed concerns about the management and administration of the scheme, and in this regard, it may be advisable for these issues to be discussed by the body corporate. There would seem to be some uncertainty regarding the on-site manager who I assume has been engaged by the body corporate as a service contractor. The engagement of a person as a service contractor must be in writing and the original executed copy of the contract must be kept on the records of the body corporate (section 144, Accommodation Module). A lot owner has a right to inspect the body corporate records and to obtain a copy of a body corporate record (section 205, Act) on the making of a written request and on the payment of a prescribed fee. Section 150 of the Accommodation Module prescribes the fee structure. In relation to the maintenance of common property, section 108(1) of the Accommodation Module provides that the body corporate must maintain the common property in good condition. Lot owners should seek to resolve management issues within the body corporate initially, and if for example, it is considered that the body corporate has not maintained the common property in good condition, the owner may consider making application under the dispute resolution provisions of the Act seeking a resolution of the matter. For more information, a lot owner may consider contacting the information service provided by the Commissioner on 1800 060 119.