Cairns Holiday Lodge [2006] QBCCMCmr 107 (10 March 2006)

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

I hereby order, by consent, as follows:

1. That the body corporate shall not alter the present method of payment for electricity consumption within the scheme until the administrative fund budget has been amended to remove from the budget the total cost of electricity consumption, and, further until a resultant amendment has been made to the administrative fund contributions
2. That the body corporate shall install a separate flow meter to lots 5, 6 and 7;
3. That the body corporate shall install a separate flow meter to the common property;
4. That the body corporate shall thereafter recover the cost of electricity used on the common property from all owners based on their respective contribution schedule lot entitlements;
5. That the body corporate shall thereafter recover the cost of electricity used in lots 5, 6 and 7 from the owner of lots 5, 6 and 7;
6. That the body corporate shall thereafter recover the cost of the remainder of the electricity used in the scheme from all owners, except the owner of lots 5, 6 and 7, based on their respective contribution schedule lot entitlements.

I further order that the body corporate shall within one month of the date of the order forward a copy of the order and the accompanying statement of reasons to all owners.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0112-2006

"Cairns Holiday Lodge" CTS 1540

ORDER SOUGHT

The applicant has sought an order of an adjudicator under the Body Corporate and Community Management Act 1997 (the Act) as follows:

That the motion passed by the committee under section 33 of the Accommodation Module that the body corporate supply and install an electricity meter for the restaurant (lots 5, 6 and 7) and undertake ancillary works be declared void.

The applicant has also sought an interim order of an adjudicator under the Act that the motion not be permitted to have effect until the outcome of the final order is known particularly in view of the cost of the proposed works and the cost of reversing such work.

JURISDICTION

The application evidences a dispute between an owner of a lot included in a community titles scheme and the body corporate for the scheme (section 227(1)(b) of the Act).

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

(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)).

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application.

SCHEME DETAILS

Cairns Holiday Lodge is a community titles scheme comprising 39 lots and common property. The building units plan (now described as a building format plan) registered on 19 December 1977. The scheme is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module).

BACKGROUND

The applicant stated in its supporting grounds that the body corporate has purchased bulk electricity for the scheme since its inception. The cost of supply has been included in the annual administrative fund budget, and has been recovered from owners through their administrative fund levies. The applicant stated the scheme comprises various levels of electricity usage, but expressed the view that the high cost of installing separate meters to each lot is the reason that the current method of recovering the cost of supply continues.

However, the applicant pointed out that by-law 30 deals with bulk electricity supply, and, in particular, by-law 30.5 provides that the body corporate must arrange for the installation of a separate energy meter for each lot.

Notwithstanding this provision, the body corporate committee has recently resolved to install an energy meter to lots 5, 6 and 7, which are owned by the applicant, and operated as a restaurant.

The applicant stated that the committee’s decision was contrary to the by-laws.

The Dispute Resolution Application was received by facsimile transmission in the Commissioner’s office on 17 February 2006. The application was referred to me by the Commissioner on 20 February 2006. A teleconference with the parties’ solicitors was arranged for 22 February 2006, but did not proceed on that date due to the unavailability of one of the solicitors. The teleconference was rescheduled for 24 February 2006.

On that date I spoke with Mr Robert Grealy, solicitor for the body corporate, and Mr Phil Shakespeare, solicitor for the applicant.

Mr Grealy stated that the body corporate did not concede that by-law 30.5 required the installation of a separate energy meter for each lot. He also pointed out that there are a large number of lots owned by one entity, and the significant cost of installing separate meters to each lot in this situation would not be warranted.

Mr Shakespeare stated that his client’s objection to the installation of an energy meter (flow meter) in its lots and not in all other lots was that the body corporate would effectively be "double dipping" in relation to the reimbursement for electricity consumption.

Mr Shakespeare explained that at the moment the body corporate includes the estimated annual cost of electricity for the whole scheme in the annual budget for the administrative fund. The contributions to the administrative fund are then determined by reference to the budget, which means that all owners make a contribution to the cost of the electricity based on their contribution schedule lot entitlement.

Mr Shakespeare pointed out that if the applicant’s lots were separately metered, the applicant would pay for the actual amount of electricity used in its lots on top of its contribution to the cost of electricity through payment of its levies. Mr Shakespeare stated that the applicant would have no objection to paying for the electricity used in its lots as determined by a flow meter, provided that there is a reduction in its levies to reflect that portion of its levies which would otherwise have been applied to the cost of electricity under the system which has been operating to date.

Mr Shakespeare further stated that a flow meter should also be installed to measure the electricity used on common property, as this area involved quite high levels of usage.

It was then discussed that the cost of electricity could be recovered in the following manner:

Mr Grealy stated that he would need to obtain instructions from the body corporate committee on this proposal.

The teleconference was adjourned to 28 February 2006 to allow Mr Grealy to obtain instructions.

Upon its resumption, Mr Grealy stated that the body corporate committee had agreed to implement the proposal outlined above. He stated that the committee had further agreed that until such time as the levies had been adjusted to reflect the new method of paying for electricity, there would be no change to the present system of paying for electricity.

Mr Grealy advised that the estimated cost of installing a flow meter to the common property is $2,200.00 and to lots 5, 6 and 7 is $3,000.00. Mr Grealy further advised that he thinks the body corporate has increased the level of committee spending but is unsure to what level. (The limit, if it has not been increased, is $4,875.00). Mr Grealy noted that if committee spending has been increased the committee would be able to approve the installation of flow meters to the applicant’s lots, and to the common property.

Mr Grealy and Mr Shakespeare agreed that the budget and the administrative fund levies could only be altered to reflect the deletion of the line item relating to total electricity usage at a general meeting. They also both agreed that the appropriate orders to facilitate the matters discussed would be made by consent.

Following the teleconference, a member of the Commissioner’s staff telephoned the body corporate manager who advised that as far as she can ascertain from the minutes going back to 1994, the body corporate has not increased the level of committee spending.

DETERMINATION

By-law 30.5 states, in part, "the body corporate must arrange for the installation of a separate energy meter for each lot." In my view this is an unequivocal statement. Whilst I accept that the body corporate might not wish to go to the expense of installing separate meters to each lot where there are multiple lots in the one ownership (one company, for example, owns 19 lots), if that owner, and indeed all other owners, insisted that separate meters be installed then I consider that the body corporate would be required to do so.

In this matter however, the applicant’s specific concerns about paying twice for electricity usage can be addressed by the consent orders discussed during the teleconference.

The first issue to be considered is the cost of installation of the flow meters.

Under the Accommodation Module the level of committee spending can be increased by the body corporate in general meeting to a maximum limit of $450.00 per lot. As the body corporate manager has checked the minutes going back to 1994 (prior to the commencement of the Body Corporate and Community Management Act 1997) and has not been able to locate any record of the body corporate having increased the limit, the committee appears therefore to be restricted to the present statutory limit of $125.00 per lot, and will not be able to install the flow meters to the applicant’s lots and to the common property, if the cost exceeds $4,875.00. In these circumstances, the committee will also not be able to install one of the meters without the other, because, on the basis of the discussion during the teleconference, the installation of both meters forms a single project (section 101(2) of the Accommodation Module), and must be approved by owners at a general meeting.

In any event, the body corporate cannot implement the new method of billing for electricity usage until a general meeting is held at which appropriate amendments are made to the budget and the administrative fund contributions, otherwise the applicant will be paying twice for its electricity usage.

I have made consent orders in accordance with the agreed outcomes from the teleconference, and these orders finally dispose of the application.

Number of Scheme:	1540
Name of Scheme:	Cairns Holiday Lodge
Address of Scheme:	259 Sheridan Street, CAIRNS Q 4870

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Cairns Holiday Lodge [2006] QBCCMCmr 107 (10 March 2006)