No. 9 Port Douglas Road [2006] QBCCMCmr 100 (1 March 2006)

Number of Scheme:	24368
Name of Scheme:	No. 9 Port Douglas Road
Address of Scheme:	9 Port Douglas Road PORT DOUGLAS QLD 4871

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

I hereby order that the application for interim orders is dismissed.

The application for final orders remains outstanding. There will be an opportunity for persons likely to be affected by any final orders to provide submissions regarding the application for final orders in due course.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0090-2006

"No. 9 Port Douglas Road" CTS 24368

No. 9 Port Douglas Road Community Titles Scheme (PDR) is an 18 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). The scheme is described as a warehouse/office/residence converted to an 18 unit complex. Lot boundaries are designated under a building units plan (now known as a building format plan).

This is an application for interim orders seeking to have an administrator appointed to call and hold an annual general meeting and to prevent the body corporate paying any unauthorised accounts unless approved by a resolution in general meeting. It arises out of an application by Bruce Le Cornu, owner of lot 11 (applicant) seeking final orders that any outstanding accounts only be paid if authorised by general resolution and that any committee members responsible for unauthorised spending reimburse the body corporate.

The applicant provides information Ross Hurst, the treasurer, proposed a motion that the contractual duties of the caretaker be reviewed but this motion was lost. However, the applicant says that the committee then engaged Herdlaw Solicitors to advise on the caretaking agreement at a cost of $3,397.57 without any resolution to authorise the expenditure. It is also submitted that the committee resolved to spend between $2,000 and $2,500 to have a consultant review the caretaking duties but incurred expenditure of $3,397.57.

In response, Ross Hurst has submitted that Herdlaw said their appointment was still current from their previous appointment in relation to the transfer of the caretaking and letting agreements and Herdlaw could assist without a further committee resolution and recover their fee from the caretaker.

The applicant says that Ross Hurst installed a pool ionisation system without any consultation with the committee and that the amount of $1089.74 was paid to Ross Hurst’s company Tecelec (Qld) Pty Ltd in November 2004.

Ross Hurst refers to another application concerning the pool ionisation system and says that the pool ionisation unit was purchased from Enviro-Swim. It is submitted that the pool ionisation unit needed to be purchased as a matter of urgency so Ross Hurst’s company originally paid for the system to save the time that would have been necessary to have the body corporate draw up cheques. Ross Hurst says that he only acted to purchase the system after sending emails to the committee members he had addresses for and after telephoning the majority of committee members.

The applicant also says that the committee approved $2,199.50 for pool refurbishment but this authorised amount was exceeded without other committee members or owners being told.

In response, Ross Hurst has said that pool repairs exceeded amounts originally quoted due to unforeseen and additional repairs required once the pool was drained. It is submitted that the chairperson acted quickly to authorise this expenditure to limit repercussions to occupiers and that the chairperson relied on a by-law allowing the committee to undertake expenditure beyond the amount prescribed in the Act.

It is also submitted that the body corporate manager has resigned and the committee is considering only putting forward body corporate managers based outside Port Douglas when most owners would prefer a local body corporate manager. It is further submitted that the annual general meeting will not be held on time and that Mr Dennis Broad from Body Corporate Services, 19 Spence Street, Cairns should be appointed as an administrator to assist with the running of the meeting.

An interim order will not be granted unless is it necessary due to the nature or urgency of the circumstances to which the application relates (Act, 279). Further, any orders granted must be just and equitable in the circumstances (Act, 276).

The legislation contains detailed provisions relating to financial management of the body corporate’s affairs. Each year the body corporate must adopt budgets showing anticipated expenditure for the year. All spending of those funds by the body corporate should be then authorised by a resolution of the body corporate. Specific provisions of the legislation make it important that the resolution authorising the spending contains a specific amount, or at least a maximum amount, that is able to be spent. For example, if the spending is to exceed the amount available based on the budgets then the body corporate will need to raise a special levy to meet the liability (Accommodation Module, 93(2)). Further, the amount of spending on any one project will be relevant to determining if the decision can be made by the committee and if two alternative quotations will be required (Accommodation Module 101, 102).

The present application seeks orders to the effect that certain outstanding accounts are not properly authorised and that these accounts should not be paid unless approved by a general resolution. It may be appropriate as part of any final orders to make declarations regarding whether certain spending purportedly on behalf of the body corporate has been properly authorised. However, it does not seem prudent for me to make any orders that the body corporate refrain from paying unauthorised outstanding accounts. Even if the body corporate has not given proper authority for a committee member to purchase goods or services, there are certain circumstances where the supplier will have acted honestly and without notice of irregularity in supplying goods or services to the body corporate. In those circumstances the body corporate may be liable to pay the accounts even though the committee member had no authority of the body corporate to enter into the purchase (Act, 310).

There may be other circumstances where a supplier is not entitled to payment from the body corporate. For example, if Herdlaw did tell the body corporate that no resolution was necessary to authorise fees because the fees would be recoverable from the caretaker rather than the body corporate then it would seem unlikely that the body corporate could be liable to pay those fees to Herdlaw. However, I still do not consider these circumstances would require an order preventing the committee paying the account. Rather, if the committee did pay the account then owners in general meeting could consider whether the body corporate should take action to recover that amount from any individual committee members who spent body corporate funds without the authorisation necessary under the legislation.

I will therefore decline to make the interim order sought and leave it for committee members and owners in general meeting to consider what course of action should be taken. If the spending was unauthorised and the majority of owners consider that the body corporate should take action against individual committee members to recover the expenditure then owners can obtain their own legal advice and put forward a motion for consideration at the general meeting regarding any action the body corporate should take.

The applicant has also sought an interim order that Dennis Broad, a body corporate manager, be appointed as administrator to assist with the calling of the annual general meeting.

However, subsequent to this application being lodged, an order has been made on another application authorising the engagement of another body corporate manager to assist in the calling and holding of the annual general meeting.^[1] In the circumstances, I am not satisfied that it is necessary or appropriate to grant an order appointing an administrator as sought. In particular, if any owners wish to propose that the body corporate engages a local body corporate manager then that owner can meet with the proposed manager and arrange for a motion proposing appointment and quotation to be submitted for all owners to consider at the upcoming annual general meeting.

For these reasons, the application for interim orders is dismissed.

The application will be allowed to proceed to submissions and a final determination in the normal course.

^[1] Application 0101-2006, No. 9 Port Douglas Road, D Toohey, 17 February 2006.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

No. 9 Port Douglas Road [2006] QBCCMCmr 100 (1 March 2006)