Alexandria [2005] QBCCMCmr 599 (31 October 2005)

Last Updated: 11 August 2008

REFERENCE: 0696-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10744
Name of Scheme:	Alexandria
Address of Scheme:	Alexandra Parade ALEXANDRA HEADLANDS Q 4557

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

McQuarrie Management Services Pty Ltd

I hereby order that the application for an order that an EGM be called to vote on the transfer fee with the motion “That the body corporate waive the transfer fee referred to in the Body Corporate and Community Management (Standard Module) Regulation 1997 for the McQuarrie Family Trust is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0696-2005

“Alexandria” CTS 10744

“Alexandria” is a subdivision of 27 lots a Building format plan. The regulation module applying to the scheme is the Standard Module.

APPLICATION

By application dated 30 September 2005 the applicant sought the following outcome:

That an EGM be called to vote on the transfer fee with the motion “That the body corporate waive the transfer fee referred to in the Body Corporate and Community Management (Standard Module) Regulation 1997 for the McQuarrie Family Trust.

The applicant also sought an interim order that the management rights be assigned to the new managers immediately. However, as the relevant agreements have now been assigned, an interim order is no longer sought.

BACKGROUND

The applicant, McQuarrie Management Services Pty. Ltd. is the former caretaker and letting agent for the scheme pursuant to a deed of assignment dated 30 November 2001. New agreements were entered into on 10 June 2005 to replace the previous agreements.

Section 85 of the Body Corporate and Community Management (Standard Module) Regulation 1997 provides that if the body corporate is requested to approve a transfer less than 3 years after an engagement or authorisation was entered into, a “transfer fee” may be payable. This fee is a specified percentage of the fair market value of the transfer. The percentage is 3% of the value if the approval is within the first year, 2% if within the second year, and 1% if within the third year.

The applicant contracted to sell the management rights earlier this year and on 27 September the body corporate committee resolved to impose a 3% transfer fee. Settlement occurred on 7 October 2005. Prior to the committee meeting the directors of the applicant company contacted 17 of the 27 lot owners and advised them of the possibility that the committee would impose the transfer fee.
At the time of the committee meeting 14 owners had signed pro-forma letters opposing the imposition of the transfer fee.

The applicant advises that the letters opposing the transfer fee, including letters from two committee members were tabled at the meeting but are not referred to in the minutes of the meeting. The applicant claims that the majority of lot owners opposed the imposition of the transfer fee and that the committee “have acted unreasonably, unfairly and unlawfully”.

Pursuant to section 243 of the Act, a copy of the application was made available to the body corporate and all lot owners inviting submissions. As at the date of making this order, 8 submissions were received.

The body corporate outlined the circumstances regarding the committee’s decision to impose the transfer fee and submitted that

• although the applicant produced 14 signed letters, it is doubtful that a fully informed majority of lot owners would have opposed imposition of the transfer fee. It is further argued that the applicant did not request that the letters be tabled or that the minutes be noted accordingly.
• Settlement was effected on 7 October and the amount of $32,640 was paid into the body corporate sinking fund. It is submitted that as the applicant is no longer the service contractor or lot owner, the dispute resolution provisions of the Body Corporate and Community Management Act 1997 cannot apply.
  

Two lot owners advised that now they are fully aware of the circumstances, they no longer oppose the imposition of the transfer fee.

Other submission contained the following points:

• Section 100(1) of the Act provides that a decision of the committee is a decision of the body corporate i.e. the committee is akin to a company’s board of directors. It is obliged to act in the interests of the lot owners.
• The applicant did not seek new agreements due to expiration of the existing agreement. The old agreements contained a further 4 year option from 1 July 2005 to 30 June 2009 and it was no doubt because the unit owners agreed to grant a new 5 year term with a 5 year option from 1 July 2004 to replace the old agreements that the applicant was able to obtain the price of $1,088,000 for the sale of the Management and letting rights. Accordingly it is fair and reasonable that the unit owners should receive the transfer fee.
• The persons who signed letters opposing imposition of the transfer fee were probably unaware of all the circumstances including the fact that new agreements were not entered into due to expiration of the existing agreement but rather to make the management rights more saleable.
  

One submission was in favour of an EGM to allow lot owners to decide whether the transfer fee should apply and pointed out that a transfer fee was not sought when the management rights were previously assigned.

JURISDICTION

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)).

DETERMINATION

Firstly, it is necessary to consider the threshold issue of whether this Office has jurisdiction to resolve this dispute having regard to section 227 of the Act which provides:

227 Meaning of “dispute”
(1) A “dispute” is a dispute between
(a) the owner or occupier of a lot included in a community titles scheme and the owner or occupier of another lot included in the scheme; or
(b) the body corporate for a community titles scheme and the owner or occupier of a lot included in the scheme; or
(c) the body corporate for a community titles scheme and a body corporate manager for the scheme; or
(d) the body corporate for a community titles scheme and a caretaking service contractor for the scheme; or
(e) the body corporate for a community titles scheme and a service contractor for the scheme, if the dispute arises out of a review carried out, or required to be carried out, under chapter 3, part 2,
division 7;37 or
(f) the body corporate for a community titles scheme and a letting agent for the scheme; or
(g) the body corporate for a community titles scheme & member of the committee for the body corporate; or
(h) the committee for the body corporate for a community titles scheme and a member of the committee;

I note that at the time of making the application the applicant was a Service Contractor within the meaning of the Act, and am therefore of the view that the dispute resolution provisions of the Body Corporate and Community Management Act 1997 apply.

The next matter for consideration is the validity of the committee decision.
Section 100(1) of the Act provides as follows:

Power of committee to act for body corporate
(1) A decision of the committee is a decision of the body corporate.
(2) Subsection (1) does not apply to a decision that, under the regulation module, is a decision on a restricted issue for the committee.
(3) Despite anything in a contract with the body corporate (including the engagement of a body corporate manager), a decision of the body corporate manager is void to the extent that it is inconsistent with a decision of the body corporate’s committee.
(4) If persons, honestly and reasonably believing that they are the committee for the body corporate, make a decision while purportedly acting as the committee, the decision is taken to
be a decision of the committee despite a defect in the election of 1 or more of the persons.

It would seem clear to me that the relevant decision of the committee is valid. In light of the submissions received and given that the decision of the committee was unanimous, I do not believe much weight can be given to the applicant’s concerns regarding a particular proxy vote.
Further, I do not believe that the accuracy or otherwise of the committee minutes, is of significance to the validity of the committee decision.

Having decided that the decision of the committee is a valid decision of the body corporate I must decide whether there is any basis for me to intervene in this matter by making the order requested.

As section 84(2) of the Standard Regulation Module specifically provides that the body corporate committee is empowered to approve the transfer of an engagement I believe it is inappropriate for me to intervene in the internal affairs of the body corporate by ordering that the decision of the committee be reconsidered by a general meeting.

I would point out however, that section 61 of the Body Corporate and Community Management (Standard Module) Regulation provides as follows:
61 Requirement for requested extraordinary general meeting
(1) An extraordinary general meeting (a requested extraordinary general meeting) of the body corporate must be called if a notice asking for an extraordinary general meeting to consider
and decide motions proposed in the notice is—
(a) signed by or for the owners of at least 25% of all the lots included in the scheme; and
(b) given to the secretary or, in the secretary’s absence, the chairperson or, if the committee has not yet been chosen, given to the original owner.
(2) The secretary may be presumed to be absent if a notice is given to the secretary at the address for service of the body corporate, and no reply is received within 7 days.
(3) A requested extraordinary general meeting—
(a) must be called, within 14 days after the notice is given under subsection (1), by the person to whom the notice is given; and
(b) must be held within 6 weeks after the notice is given.

Therefore 25% of lot owners (i.e. in this scheme, 7 or more lot owners) can requisition an extraordinary general meeting without obtaining an adjudicator’s order.