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Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders |
Last Updated: 12 March 2009
REFERENCE: 0143-2006
INTERIM ORDER OF AN ADJUDICATOR
MADE UNDER PART 9 OF CHAPTER 6
BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997
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Number of Scheme:
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14503
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|
Name of Scheme:
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Iluka
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|
Address of Scheme:
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Cnr The Esplanade 7 Tricketts St. Surfers Paradise
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TAKE NOTICE that pursuant to an application made under the abovementioned Act by
Body Corporate for Iluka Community Titles Scheme.
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I hereby order that the body corporate take no action in respect of
Motion 2 at the EGM held on 14 February 2006 (for adoption of levies including
an increase of 400% in sinking fund levies) until an order is made in respect of
its validity;
I further order that should the seven nominations for committee
membership submitted by Worimi Pty. Ltd., Original Taverns Pty. Ltd. and
Borrugurra
Pty. Ltd. be accepted at the forthcoming AGM scheduled for 27 March
2006, the new committee not carry out any of its resolutions
until an order is
made in respect of the validity of the nominations.
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STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0143-2006
“Iluka” CTS 14503
THE SCHEME
The “Iluka” community titles scheme was registered as a building units plan (now known as a building format plan) in April January 1971. It comprises 80 lots and operates under the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module).
BACKGROUND
This scheme consists of 80 lots in a 16 storey building. Since December 2002 the committee has investigated options for maintenance/ refurbishment of the building and in collaboration with expert advisers, proposed the replacement of all windows, balcony railings and balcony tiles to be effected in four stages. Each stage was to be effected during the May/ June low season so that the booking of units would not be unreasonably affected.
The first stage of the program, involving replacement of windows in the southern side was completed in 2003.
The second stage of the program, involving replacement of windows in the north eastern side was completed in 2005.
It had been proposed that the third stage would commence in 2006 and the fourth stage would commence in 2007 to allow sufficient sinking funds to accrue.
At an EGM convened on 30 September 2005 a motion to delay the third stage replacement of windows was defeated. The applicant states that the owners who voted against the motion were a group of five entities (the “group”) associated with a Mr. William James. The entities are as follows:
The following nominations for committee membership have now been received by the body corporate manager:
It is alleged that the group has being acquiring lots in the scheme in order to acquire voting control and on 4 November 2005, the group requisitioned an EGM to increase sinking fund levies by 400%, but did not produce budgets, quotes or any other documents to substantiate the need to increase these levies by 400%. It is further alleged that persons acting on behalf of the group have suggested to lot-owners that they should consider selling as levies will increase substantially.
After receiving notice of the requisitioned EGM, the committee engaged an engineer to update the sinking fund forecast and obtain further quotes in respect of further window replacement. It then submitted its own motion to adopt levies to facilitate the window replacement.
At the EGM convened on 14 February, the group voted as follows:
It is alleged that Mr William James indicated that the group preferred to conduct all maintenance at once notwithstanding disruption to the building & letting business.
APPLICATION
The applicant seeks both interim and final orders.
The Interim Orders sought are as follows:
The “Final “ Orders sought are as follows:
- A single nomination; or
- (in the alternative) a single nomination in respect of each lot owner company.
It is submitted that it is unreasonable for the body corporate to increase the sinking fund levies by 400% without giving any indication of the intended use of the funds, nor justifying the use in any way. Further, it is the applicant’s view that the purpose of the levy increase is to force owners who cant afford to pay the levies to sell their lots to the group. Accordingly, it cannot be said that the body corporate would be acting reasonably in administering common property for the benefit of all owners by imposing a four-fold increase in levies and the resolution should be declared invalid.
It is also submitted that the motion submitted by the group does not comply with section 93 of the accommodation module as the motion did not fix a date upon which payment of each instalment is required.
Secondly, as it is believed that the group will use its voting power to stack membership of the committee, the applicant seeks to restrict the group to one nomination on the grounds that the group is under the control of one person, William James. In the alternative the applicant seeks to restrict each company to a single nomination on the basis that only one nomination may be made by one lot owner.
The second interim order sought by the applicant is to stop what is anticipated to be a stacked committee from the time of its appointment at the forthcoming AGM and the adjudicator’s ruling regarding the validity of the nominations. Having regard to section 310 of the Act agreements entered into by the new committee may be binding on the body corporate notwithstanding any anticipated invalidity regarding their appointment.
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)).
Interim Orders
Section 279(1) & (2) provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a
particular issue until it has been investigated and resolved.
(2) An
interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...
DETERMINATION
This dispute resolution application has been referred to me pursuant to section 267 of the Act for consideration of whether an interim order should be made. At this time, I am concerned with the threshold issue of whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.
The examples included in the Act under section 279 are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters that might be the subject of an interim order is not capable of definition, the applicant does need to establish that there is some urgency or other special circumstances to warrant the making of an interim order.
The applicant seeks the following Interim Orders:
It is submitted that to allow the resolution based on motion 2 to take effect would cause financial hardship to numerous lot-owners. Further, it is submitted that a “stacked committee” could subsequently lock all lot owners into onerous, but binding contractual arrangements with third parties. It is submitted that having regard to section 310 of the Act, agreements entered into by a new committee may be binding on the body corporate, notwithstanding any anticipated invalidity regarding their appointment.
To justify making an interim order, before full and final consideration of all the issues raised, I would need to be satisfied that the application raises a serious question to be determined. I would also need to be satisfied that the balance of convenience between the parties justifies the grant of injunctive relief. On the material provided to date I am satisfied that the balance of convenience favours the granting of the interim orders sought by the applicant body corporate.
The first interim order that I propose to make is to, at least temporarily, stop the imposition of higher levies until I have had any opportunity to consider further evidence including submissions from lot owners associated with Mr. James and make a determination as to the validity of the resolution.
The second interim order that I propose to make is to stop what is anticipated to be a stacked committee, from carrying out any of its resolutions until an order is made in respect of the validity of the nominations. In actual fact, it may be possible to make a ruling regarding the validity of the nominations before 27 March 2006. However in making this interim order I will err on the side of caution, and cover the possibility that a final order will not be made before 27 March 2006.
I will now refer this application back to the Commissioner to be administered in accordance with the Act and the normal processes of this Office. The matter will be finally determined in due course and affected parties will have an opportunity to make further written submissions about the application.
Finally, I would point out that at this point in time, failure to make an interim order should not be taken as any indication of what final orders will be made.
REFERENCE: 0143-2006A
INTERIM ORDER OF AN ADJUDICATOR
MADE UNDER PART 9 OF CHAPTER 6
BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997
|
Number of Scheme:
|
14503
|
|
Name of Scheme:
|
Iluka
|
|
Address of Scheme:
|
Cnr The Esplanade 7 Tricketts St. Surfers Paradise
|
TAKE NOTICE that pursuant to an application made under the abovementioned Act by
Body Corporate for Iluka Community Titles Scheme.
|
I hereby order that Interim Order No. 143-2006 dated 8 March is
revoked and of no effect.
I further order that from the date of this supplementary Interim
Order, the body corporate committee may only incur expenditure in accordance
with
the administrative fund budget and sinking fund budgets adopted at the AGM
held on 27 March 2006.
|
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0143-2006A
“Iluka” CTS 14503
THE SCHEME
The “Iluka” community titles scheme was registered as a building units plan (now known as a building format plan) in 1971. It comprises 80 lots and operates under the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module).
BACKGROUND
This scheme consists of 80 lots in a 16 storey building. Since December 2002 the committee has investigated options for maintenance/ refurbishment of the building and in collaboration with expert advisers, proposed the replacement of all windows, balcony railings and balcony tiles to be effected in four stages. Each stage was to be effected during the May/ June low season so that the booking of units would not be unreasonably affected.
The first stage of the program, involving replacement of windows in the southern side was completed in 2003.
The second stage of the program, involving replacement of windows in the north eastern side was completed in 2005.
It had been proposed that the third stage would commence in 2006 and the fourth stage would commence in 2007 to allow sufficient sinking funds to accrue.
At an EGM convened on 30 September 2005 a motion to delay the third stage replacement of windows was defeated. The applicant states that the owners who voted against the motion were a group of five entities (the “group”) associated with a Mr. William James. The entities are as follows:
The following nominations for committee membership were received by the body corporate manager prior to the last AGM:
It is alleged that the group has being acquiring lots in the scheme in order to acquire voting control and on 4 November 2005, the group requisitioned an EGM to increase sinking fund levies by 400%, but did not produce budgets, quotes or any other documents to substantiate the need to increase these levies by 400%. It is further alleged that persons acting on behalf of the group have suggested to lot-owners that they should consider selling as levies will increase substantially.
After receiving notice of the requisitioned EGM, the committee engaged an engineer to update the sinking fund forecast and obtain further quotes in respect of further window replacement. It then submitted its own motion to adopt levies to facilitate the window replacement.
At an EGM convened on 14 February, the group voted as follows:
It is alleged that Mr William James indicated that the group preferred to conduct all outstanding maintenance at once notwithstanding disruption to the building & to letting business.
APPLICATION
By application dated 29 February 2006, the applicant sought both interim and final orders.
The Interim Orders sought were as follows:
The “Final “ Orders sought were as follows:
- A single nomination; or
- (in the alternative) a single nomination in respect of each lot owner company.
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)).
Interim Orders
Section 279(1) & (2) provide that -
(1) The adjudicator may make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates.
Examples
1. The adjudicator may stop the body corporate from carrying out work on common property until a dispute about the irregularity of proceedings has been investigated and resolved.
2. The adjudicator may stop a general meeting deciding or acting on a
particular issue until it has been investigated and resolved.
(2) An
interim order
(a) has effect for a period (not longer than 1 year) stated in the order; and
(b) may be extended, varied, renewed or cancelled by the adjudicator until a final order is made; and
(c) may be cancelled by a later order made by the adjudicator; and
(d) if it does not lapse or is not cancelled earlier, lapses when
(i) the application is withdrawn; or
(ii) the commissioner gives the person who made the application a written notice under section 241 rejecting the application; or
(iii) a final order is made by an adjudicator to whom the application is referred. ...
DETERMINATION
The first Interim Order sought by the applicant related to motion 2 of the Extraordinary General Meeting held on 14 February. I am advised that at the AGM convened on Monday 27 March, it was resolved that motion 2 of the Extraordinary General Meeting held on 14 February (for adoption of levies including an increase of 400% in sinking fund levies), be rescinded. Accordingly, I intend to revoke the first interim order made on 8 March 2006.
The second Interim Order sought by the applicant related to the applicant’s perception that the group would use its voting power to stack membership of the committee, and having regard to section 310 of the Act, any agreements entered into by the new committee would be binding on the body corporate notwithstanding any invalidity regarding the appointment of committee members. On 8 March I made an Interim Order preventing the new committee from carrying out any of its resolutions until an order is made in respect of the validity of the nominations for committee membership.
Following issue of the (temporary) Interim Order, I sought submissions from various parties prior to the making of further orders. I am advised that it is impracticable to prevent the new committee from carrying out any of its resolutions until an order is made in respect of the validity of the committee appointments. In particular, it is argued that this part of the interim order effectively restricts the committee from incurring any form of expenditure. I am inclined to agree with this view and accordingly, I intend to also revoke the second interim order made on 8 March 2006.
However, to allay the concerns raised by the applicants, I propose to order that pending finalisation of this dispute, the new committee may only incur expenditure in accordance with the Administrative fund budget and sinking fund budget adopted at the AGM held on 27 March 2006.
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