Keona Grove (Houses) [2005] QBCCMCmr 711 (15 December 2005)

Last Updated: 16 January 2006

REFERENCE: 0578-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	30789
Name of Scheme:	Keona Grove (Houses)
Address of Scheme:	QUEENSLAND

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

Mr Robert & Mrs Tina-Marie Brownie, the Owners of lot 8

I hereby order that the application for An audit of the Body Corporate procedures for Keona Grove in relation to: • Financial management; • Committee function and responsibilities; and • Minutes of Committee meetings Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0578-2005

"Keona Grove (Houses)" CTS 30789

THE SCHEME

Keona Grove (Houses) is a subdivision of 38 lots on a Standard Format Plan. The regulation module applying to the scheme is the Standard Module.

APPLICATION

By application received by this Office on 25 August the applicants seek the following orders:

An audit of the Body Corporate for Keona Grove in relation to:

• Financial management;
• Committee function and responsibilities; and Minutes of Committee meetings

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)).

BACKGROUND

Keona Grove (Houses) is a subdivision of 38 lots on a Standard Format Plan. The regulation module applying to the scheme is the Standard Module.

The applicants claim that the financial management of the above body corporate has not been conducted in accordance with the Act as payments from the administrative fund and sinking funds have not been approved / ratified by the body corporate.

The applicants also complain that minutes of a meeting of committee members held on 5 May 2005 were not distributed until 6 July 2005. Further, they claim that they have not received notice of any proposed committee meetings since they moved into the scheme on 15 February 2005.

SUBMISSIONS

The body corporate committee makes the following submissions:

Keona Grove is a "layered scheme" which was developed in stages. It consists of a Principal Body Corporate which controls roads, swimming pool and various other common property areas as well as two other bodies corporate- Keona Grove (houses) and Keona Grove (Apartments). A complication is that the pool area was originally owned by Keona Grove (Apartments) and leased to the principal body corporate.

As the developer was responsible for caretaking, management and landscaping pending completion of the development, both the "houses" and "apartments" bodies corporate accumulated surpluses in their administrative accounts.

The chairpersons for the "houses" and "apartments" bodies corporate formed the committee for the principal body corporate which became the owner of the roads and pool area upon completion of the development. However, upon completion it also became apparent that landscaping of some common areas such as the pool area were sub-standard. It is submitted that owing to the limited membership of the principal body corporate, informal meetings were held at which owners of houses and apartments could have input and achieve some consensus on what landscaping etc. was required.

At a formal meeting of the principal body corporate it was resolved that improvements & landscaping to the area behind the pool shed should be approved at a sum approved by the committee. Quotes were obtained and discussions took place between the committees for "houses" and "apartments".

The committee for "houses" spent $970.20 on maintenance and landscaping works as it was within the sum authorised for committee expenditure and was paid from funds contributed by the developer to the administrative fund without the need for a special levy.

On 12 July 2005 the applicant notified the committee of perceived breaches of the BCCM Act and although the letter was subsequently distributed, there was insufficient response to justify the calling of an EGM.

The committee has provided a copy of the audit certificate for the previous financial year and submits that as the books and records are available for inspection, it is unclear what an audit would achieve.

The committee has acknowledged that it failed to distribute the notice of meeting and agenda for the committee meeting held on 5 May 2005 although the minutes were available for inspection by all members of the body corporate.

Given the objections by the applicants, further works to the rear of the pool area have not been undertaken by the committee and will be put to an AGM.

The committee is of the view that it is not necessary for each and every decision of the committee to be referred to a general meeting for ratification.

DETERMINATION

While the concerns raised by the applicants are quite understandable, it is evident that the applicants are not fully aware of the admittedly complex provisions of the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

While a "body corporate" consists of all unit owners, every body corporate has a committee chosen by the owners to handle the day-to-day administration of the body corporate. The committee has certain powers under the Legislation including for example, power to:
• organise the maintenance of common property;
• convene the annual general meeting;
• ensure that notices, such as meeting notices and levy notices, are sent to owners;
• respond to inquiries from owners and other persons (including prospective purchasers).

Further, Section 103 of the Standard Module provides that the committee can authorise expenditure up to a maximum amount determined by multiplying the number of lots in the scheme by $125, In the case of Keona Grove (Houses), the relevant spending limit for the committee would be $4,750 (i.e. 38 lots by $125). Expenditure which exceeds this amount would need to be authorised by ordinary resolution of the body corporate.

However, this is not to say that the Committee is not accountable to the members of the body corporate regarding decisions to incur such expenditure and there is provision in the Act for members of the body corporate to oppose committee decisions. I have set out below the relevant provisions from the Standard Regulation Module.

Section 28 of the Standard Module provides that a committee meeting is called by giving written notice to all committee members.

Section 30 provides that the agenda for a committee meeting must state the substance of
the issues to be considered although the committee may also consider other issues raised at the meeting.

Section 36 provides that the committee must keep full and accurate minutes of its meetings and a full and accurate record of each motion voted on outside a meeting, and the secretary must give a copy of the minutes of a committee meeting and a copy of any resolution voted on outside a committee meeting, to each committee member and to each lot owner.

The copy must be provided within 21 days after the meeting or within 21 days after the passing of a resolution outside a committee meeting unless a lot owner has instructed the secretary not to provide them with copies of these documents.

Under section 37 of the Standard Regulation Module, owners may oppose a committee resolution after it has been passed. A notice of opposition signed by or for the owners of at least half the lots in the scheme must be given to the secretary within 7 days after a copy of the minutes containing the resolution is given to owners. The committee cannot carry out a particular resolution if the secretary receives a notice of opposition to that resolution within the required period.

In an appropriate case, I am empowered under Schedule 5 to make an order requiring the body corporate to have its accounts audited by an auditor stated in the order, or appointed by the body corporate. Obviously the cost of such audit is borne by the body corporate. At this point in time I am not satisfied that the complaints raised by the applicants justify such a course of action.

I would point out that this Office also provides a free information service on 1800 060 119 as well as providing access to information resources at the departmental website - www.dtftwid.qld.gov.au

In addition, the Unit Owners Association of Queensland produces numerous publications in plain English regarding the rights and obligations of unit owners and can be contacted at 32200959 or www.uoaq.org.au .