Il Villaggio [2005] QBCCMCmr 635 (15 November 2005)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Sharene Abdelrazek, the co-owner of Lot 30

I hereby order that from the date of this order:

1. Each member of the committee for the body corporate for Il Villaggio community titles scheme 28518 (the body corporate) is removed from office and each committee position must remain vacant until the body corporate chooses a committee at the annual general meeting to be held in accordance with this order.
2. The authorisation given by the committee to Toni Leigh and Val Ivett to act on behalf of the body corporate or the committee as a liaison is void, and Toni Leigh and Val Ivett must no longer act in this capacity.

I further order that from the date of this order, Michael Teys, of TEYS Strata Pty Ltd, Level 3, 345 Ann Street, Brisbane Queensland 4000 is appointed Administrator to call, hold and chair an annual general meeting (the meeting) of the body corporate within three (3) months of the date of this order and to otherwise exercise the powers of the committee for the body corporate and an executive member of the committee in accordance with this order.

I further order that for the purpose of calling, holding and chairing the meeting and for otherwise acting in accordance with this order the Administrator shall have all of the powers of the committee and of the chairperson, secretary and treasurer of the committee, with the exception of further delegating those powers to another person.

I further order that:

1. The meeting will not be void for the reason that the meeting is held after 30 November 2005, provided the meeting is called and held within three (3) months of the date of this order and otherwise is called and held in accordance with the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Accommodation Module) Regulation 1997.
2. The Administrator must give at least fourteen (14) days written notice to each lot owner inviting each lot owner to submit motions for inclusion on the agenda of the meeting.
3. The Administrator shall hold appointment for the period beginning from the date of this order until the close of the meeting.

I further order that the Administrator is restricted by this order to expending body corporate moneys on body corporate matters of a routine or administrative nature, the convening of the meeting as ordered, and implementing lawful resolutions already decided by the committee or the body corporate in general meeting prior to the date of this order which are of an urgent nature or must necessarily be implemented prior to the meeting.

I further order that within seven (7) days of being given a written request for information from the Administrator, Geoff Ivett, the chairperson and secretary of the body corporate immediately before the date of this order, and Courtney Modra, the treasurer of the body corporate immediately before the date of this order must give written advice to the Administrator of:

1. The name and address of a member or an associate of a member of the body corporate or of the committee known to these persons as at the date of this order, to be in possession or control of a body corporate asset, a record or other document of the body corporate, or the body corporate seal.
2. The details of each financial institution account kept in the name of the body corporate as at the date of this order known to these persons, including the name of the financial institution, the account details and the name and address of the person or persons who are authorised by the body corporate to operate the account.

I further order that the Administrator shall be paid remuneration by the body corporate in accordance with the current body corporate management agreement between the body corporate and TEYS Strata (Brisbane) Pty Ltd.

I further order that within fourteen (14) days of the date of this order, the Administrator must give to the owner of each lot included in the scheme a copy of this order and the accompanying statement of reasons.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0570-2005

"Il Villaggio" CTS 28518

APPLICATION

This application is by Sharene Abdelrazek, a co-owner of Lot 30 (applicant) against the body corporate (respondent) seeking the following outcomes.

The final outcome sought is, quote:

The applicant has provided written confirmation from Michael Teys of TEYS Strata Pty Ltd (Teys) dated 16 August 2005 consenting to an appointment as administrator for the scheme.

JURISDICTION

"Il Villaggio" Community Titles Scheme 28518 is a 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:

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)).

INTERIM ORDER

The applicant had also sought the following interim order, quote:

On 15 September 2005, I dismissed the application for interim order.

SUBMISSIONS

The applicant’s main submissions were summarised in the Statement of Adjudicator’s Reasons for Decision to the interim order as quote:
The applicant’s main submissions are to the effect that the committee has not acted in the best interests of lot owners and contrary to the Accommodation Module. The applicant submits that the committee has acted in breach of the management agreements, has acted contrary to the dispute resolution provisions of the Act, incurred legal expenses unnecessarily, withheld information from lot owners and incorrectly handled voting. The applicant has also referred to breaches of section 24(1)(f) and (2) of the Accommodation Module by stating that some committee members have incorrectly claimed the payment of individual expenses over the financial year; and breaches of section 92(7), section 101(1) and (2) of the Accommodation Module by:

The applicant states that the committee’s actions has placed the body corporate "in an extremely precarious financial position and will be unable to meet their obligations". The applicant provided a cash flow statement prepared by Teys Strata supported by a statement from the body corporate manager that the body corporate’s financial situation is "dire".

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot (excluding the applicant) and the committee. A submission was received from the committee and a number of lot owners. The applicant made a written reply to submissions under section 244 of the Act.

The respondent’s main submissions were summarised in the Statement of Adjudicator’s Reasons for Decision to the interim order as quote:

The respondent made a further submission to the effect that the committee has not been able to obtain financial information, and the books and records of the body corporate from Teys.

The submissions from lot owners in support of the application were to the effect that they consider that the current committee are not acting in the best interests of lot owners, and that owners are not willing to make extra contributions for body corporate expenses whilst the current committee is in place. It is submitted that the appointment of an administrator would stop unauthorised spending by the committee and the liaisons; would enable an independent assessment of the financial position of the body corporate; and would provide owners with the confidence to appoint a committee to manage and administer the body corporate.

The submissions opposing the application state that the committee has acted in the best interests of lot owners and the expenditure incurred was necessary. It is submitted that the committee has unsuccessfully sought to fix contributions from lot owners to meet legal costs incurred in dispute resolution proceedings; costs to treat plants; and to cover uncollected insurance monies. However, owners have not approved the relevant motions due to lobbying of non-resident owners who do not know what occurs within the complex. It is submitted that an independent administrator is necessary to determine expenditure requirements of the body corporate; to progress a report on the maintenance of a roadway; and to follow through with the dispute resolution proceedings. The submissions oppose the appointment of Teys as administrator.

DETERMINATION

In accordance with the investigative powers specified in section 271 of the Act, I required Teys to provide the following information:

By facsimile dated 10 November 2005, Stephanie Peech of Teys provided information with respect to the above items 1 to 3. By email dated 11 November 2005, David L’Estrange of Teys provided information with respect to the above items 4 and 5.

It is not contested by the parties to this application that an administrator should be appointed. The applicant has nominated Michael Teys of TEYS Strata Pty Ltd, and the committee have nominated Peter Lucas and Graham Starkey of PA Lucas & Co. The applicant seeks the appointment to administer the body corporate until such time as owners make decisions about the management of the body corporate. The committee submits that the administrator’s power should be restricted to examining the body corporate’s financial position and if necessary, fixing a special contribution to be levied on the owner of each lot. A fundamental difference in the extent of the proposed appointments is that the applicant seeks a determination that the current committee positions be vacated and the administrator assumes this role until owners make relevant decisions. The committee seeks an administrator to act concurrently with it, with some specific powers which otherwise rest with the body corporate.

The committee seeks this decision given the fact that owners oppose proposals by it to fix contributions to meet body corporate liabilities. This is evidenced by the decisions made at the Extraordinary General Meeting dated 2 September 2005. The Minutes of this meeting indicate that each of the proposed motions were defeated, including motions concerning fixing special contributions to cover the cost of insurance, plant treatments, and dispute resolution applications.

The submissions made in support of the application clearly indicate that lot owners are not willing to authorise the fixing of contributions while the funds would be managed by the current committee. The applicant, in the reply to submissions, demonstrated that the owners of 22 lots in the scheme (although the support of the owners from Lots 21 and 26 maybe uncertain) are of the opinion that:

The members of the body corporate are the owners of all lots included in the scheme^[1]. The body corporate’s general functions include administering the common property and body corporate assets for the benefit of lot owners, enforcing the community management statement, and carrying out other functions given to the body corporate under the Act or the community management statement^[2]. The body corporate must act reasonably in anything it does under section 94(1)^[3]. The body corporate has all the powers necessary for carrying out its functions^[4].

The body corporate must hold an annual general meeting each year^[5] where it must review its financial position and give consideration to its future expenditure requirements^[6]. The body corporate must also choose members of the committee^[7]. The committee for a body corporate has a responsibility to manage to day-to-day administration of the body corporate. The committee has the power to make body corporate decisions^[8], and to authorise body corporate spending. When making body corporate decisions, the committee must involve the members of the body corporate^[9]. However, the power of the committee to make body corporate decisions is restricted by a number of legislative provisions^[10]. The body corporate also has the power to determine the composition of the committee throughout any given year^[11].

In my view, the legislative provisions plainly demonstrate that the committee is subordinate to the decisions of lot owners in general meeting. The paramount decision making authority is the body corporate in general meeting, and the committee must act in a manner which is consistent with the decisions of lot owners. It is evident that the owners of at least half the lots in the scheme are now deeply concerned with the committee’s administration of the body corporate, including the financial management of the body corporate. This opposition to the actions of the committee is, in my view, significant. This concern has been evident for some time, as is demonstrated by the unsuccessful attempt earlier this year by lot owners to test the composition of the committee in general meeting. In this instance, lot owners had requested an extraordinary general meeting under section 59 of the Accommodation Module, yet at the time the meeting was held on 20 April 2005 the affected committee members had resigned, with some of the vacant positions being filled by the committee. While this action is not contrary to the legislation, it could be viewed as a deliberate action preventing the body corporate from properly considering the requested motions. Despite this action, the body corporate has continued to oppose proposals from the committee to raise special contributions.

Given these circumstances, I do not consider that the current committee members are acceptable to the majority of lot owners. In my opinion, the management and administration of this body corporate will be hindered until the matter is resolved. While the committee may consider that an administrator will limited powers should be appointed, I am of the view that while the current committee members remain in office the circumstances of the body corporate will not change. I am of the view that there is sufficient evidence to indicate that lot owners have not been afforded their legislative right to determine matters relating to the body corporate’s administration, and that lot owners will oppose proposals to fund body corporate activities while the committee remains in office. I am also mindful of the fact that the annual general meeting for the body corporate is now due and that this meeting is the appropriate forum for the body corporate to consider and determine, not only the issues of concern to lot owners, but also the future direction of the management and administration of the body corporate. In my opinion, there is a distinct likelihood that the body corporate will not progress any management matters which must be considered at the annual general meeting while the committee remains in office, and that the body corporate should be given the opportunity to properly consider these issues.
For these reasons, I consider that it is appropriate that an administrator be appointed, and that the administrator has wider powers than proposed by the committee. I have also ordered that all positions on the committee are vacated, and all authorisations by the committee for other persons to act on behalf of the committee or the body corporate are at an end. The order will apply equally to voting and non-voting members of the committee. Given the purpose of non-voting members of the committee and the powers of the administrator under this order, the continuation of persons in these positions is unnecessary. Further, given this decision and the support for Teys, I do not consider that any further consideration is required to be given to the limited appointment of the committee’s nominee as administrator.

For the following reasons, I have decided to appoint Michael Teys of TEYS Strata Pty Ltd as administrator of the body corporate:

The administrator will have limited powers, with the primary function of initiating processes towards the convening of the annual general meeting of the body corporate. I note that the body corporate’s end of financial year is 31 August 2005, and that it is evident that the annual general meeting will not be held before 30 November 2005. Therefore, I have made provision for the annual general meeting to be held after this date. The administrator has the powers of the committee and the executive members necessary to convene the annual general meeting including submitting statutory and other motions for inclusion on the agenda of the annual general meeting and the preparation of the administrative fund and sinking fund budgets for adoption by the body corporate. The administrator also has the powers of the committee and of the executive members of the committee necessary to ensure the ongoing administration of the body corporate until such time as the annual general meeting is held. To enable the administrator to properly perform duties to comply with the order, I have also made provision for the administrator to, if necessary request information from the former executive members of the committee. For example, this provision could be utilised by the administrator if a body corporate record or other document is required by the administrator, and the administrator seeks identification of the person who is in possession or control of the body corporate property to enable the administrator to require the property under section 151 of the Accommodation Module. In relation to issues such as proceedings to which the body corporate is a party, the administrator may need to consider making appropriate arrangements until such time as the body corporate makes relevant determinations.

It is evident from the material presented in the application that there are a number of issues requiring the consideration of the body corporate. The applicant and other lot owners have referred to issues relating to the financial management of the body corporate. There are also issues relating to the maintenance of common property and to dispute resolution proceedings. These are matters which should be put before lot owners for their consideration, and it would be preferable if the body corporate could give consideration to these issues as soon as possible. For this reason, I have provided an opportunity for lot owners to submit motions for inclusion on the agenda of the annual general meeting even though the period for submitting motions to this meeting has ended^[12]. I have been informed by the Teys that lot owners have been given the opportunity to nominate for committee membership and to submit motions in accordance section 14 and section 39(5) of the Accommodation Module. Obviously, any motions already properly submitted to the body corporate must be included on the agenda of the annual general meeting.

In my view, there is no reason why the body corporate should not be given a reasonable opportunity to decide matters affecting its management and administration in accordance with the legislation. In giving its consideration to issues before it, the body corporate will obviously have to give consideration to the implications of the decisions it makes. Some lot owners, including members of the committee, may not agree with the position taken by the body corporate, but those decisions should have effect provided for example, the decisions are made in accordance with the legislation and are reasonable and for the benefit of lot owners.

Given the nature of this order and the effect it may have on lot owners, I have required the administrator give a copy of the order to each lot owner.

^[1] Section 31, Act.
^[2] Section 94(1), Act.
^[3] Section 94(2), Act.
^[4] Section 95, Act.
^[5] Section 58, Accommodation Module.
^[6] Section 43(3), Schedule Dictionary "statutory motion", Accommodation Module.
^[7] Section 12(1), Accommodation Module.
^[8] Section 100(1), Act.
^[9] Sections 26, 30B, 33, 34, Accommodation Module.
^[10] Section 100(2), Act; sections 24 and 101, Accommodation Module.
^[11] Section 23(2)(f), Accommodation Module.
^[12] Section 39(3), Accommodation Module.

Number of Scheme:	28518
Name of Scheme:	Il Villaggio
Address of Scheme:	24 Radan Street, SUNNYBANK HILLS QLD 4109

(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.

1)	immediately put a halt to all activity and expenditure or commitment to expenditure of the committee and liasions
2)	put TEYS Strata in control of running the Body Corporate pending a final determination.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Il Villaggio [2005] QBCCMCmr 635 (15 November 2005)