Harbour Villas [2006] QBCCMCmr 177 (7 April 2006)

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

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0839-2005

"Harbour Villas" CTS 23028

Application

This application is by Robert Ede, Co-owner and occupier of Lot 4 (the applicant) for two orders against the Body Corporate of Harbour Villas (the respondent) as follows:

The items requested in the second item are an agreement to engage a debt collector and the reasons for the appointment of a Body Corporate manager being an agenda item for an Extraordinary General Meeting to be held 2 August 2005

Jurisdiction

Harbour Villas CTS 23028 is a four lot community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard 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-

(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)).

The grounds for the application put forward by the applicant are lengthy. I will elaborate on the detail under the next heading of "Chronology of Events". However, in summary the grounds are:

This amount was paid by the applicant by separate cheque sent to the debt collector, as account payee only to the Body Corporate. The cheque is presented, but does not appear in the bank statements of the Body Corporate, nor can he see that the debt collector was ever paid. He says payment of the account is the Body Corporate’s responsibility.

Chronology of Events

To try and clarify the various events relevant to this application, the following is a chronology of events as I can glean them from the application and submissions:

Date	Event
23/06/2003	Notice of AGM, including agenda, from Secretary/Treasurer to all residents.
14/07/2003	AGM held and minutes made – attended by all residents.
23/07/2004	Note from secretary to all residents, that the AGM has been rescheduled to October.
	An agenda for the 5/10/04 meeting is on file as distributed to all residents. However, date of distribution is not known.
05/10/2004	AGM held and minutes made – marked as CC to all residents.
07/12/2004	Notice of half yearly levy sent to all residents.
07/01/2005	Levy due.
14/02/2005	Committee meeting minute, resolving to send the applicant a letter asking for payment.
15/02/2005	Letter from Secretary to applicant, advising of arrears and asking for payment as soon as possible.
14/03/2005	Committee meeting minute, resolving to send the applicant one more letter, before resorting to a debt collector.
14/03/2005	Letter from Secretary to applicant, advising of areas and seeking some sort of feedback or "we will have to consider our further options".
21/03/2005	Network Collections engaged as debt collector.
22/03/2005	Network Collections sends letter to applicant, asking for $520 (single figure) within 7 days, or legal proceedings will be instituted.
23/03/2005	$400 deposited to Body Corporate account, though the applicant does not advise anyone.
31/03/2005	Network Collections writes to Body Corporate seeking confirmation that the $400 has been deposited.
01/04/2005	Secretary confirms the $400 was deposited on 23 March 2005.
04/04/2005	Network Collections advise they received the cheque for $120.
17/06/2005	Applicant writes to Chairman, disputing the engagement of a debt collector and requests minutes of the committee meeting relating to the debt collector and committee meeting minutes back to August 2003.
22/06/2005	Secretary writes to applicant and provides the minutes of committee meetings held14 February 2005 and 14 March 2005.
27/06/2005	Applicant writes to Chairman, alleging that the $120 for the debt collector is a penalty for late payment and that it should have been on the levy notice. Further he alleges it should have been fixed by ordinary resolution as it is a restricted issue. He says that there has been no general meeting during 2005, and therefore the penalty cannot be valid. Further, he points out that had a notice of meeting and agenda been distributed for the committee meeting and proper minutes produced, there may have been an opportunity to point out that an ordinary resolution was required.
29/06/2005	The internal records of this office record that a Ray France (same name as the secretary of this scheme) has contacted the Body Corporate and Community Management Information Service in relation to "Financial Management" issues.
07/07/2005	Secretary writes to applicant, stating that this office has advised him that the need to hold an ordinary resolution was not invoked and that proceeding to recover a debt is not a restricted issue. However, the secretary also advises his understanding that this office has told him that the Body Corporate is responsible for the $120 debt, but that the Body Corporate is not required to refund the applicant.
07/07/2005	Secretary distributes notice of EGM due 2/8/2005 and agenda to all residents
19/07/2005	Applicant writes to Chairman, stating that admission of liability for debt recovery fee is inconsistent with denial of responsibility to refund the applicant. He says that the $120 is not itemised and expressed by the debt collector as being owed only to the Body Corporate. He says that the secretary has added this amount on to cover the debt collection fee, without reference to the committee. He says that the cheque was written in favour of the Body Corporate as "account payee only". He demands a copy of the agreement with the debt collection agency. He requests a refund of the $120. He again requests copies of agendas and minutes for committee and Body Corporate meetings dating back to August 2003. He states that his right to challenge any resolutions has been denied because minutes of meetings were not immediately made available after meetings. He also asks why the appointment of a Body Corporate Manager is an agenda item for an EGM scheduled for 2 August 2005
02/08/2005	Letter of 29/8/2005 from applicant states he that he has the minutes evidencing that this meeting took place
19/08/2005	Letter of 29/8/2005 from applicant states he visited the Body Corporate Manager on this date.
29/08/2005	He refers to above visit and asks for the following: • Agenda and minutes of all meetings since August 2003 • Agreement in relation to engagement of debt collector • Seeks confirmation that his cheque for $120 was banked to the Body Corporate’s bank account. He alleges that if it has been banked by the debt collector then the Body Corporate has endorsed it illegally, as it is marked "account payee only" • He requests a briefing in relation to what "correspondence was discussed" and other matters discussed but not thoroughly minuted

Submissions

Four submissions were received in total. One was received from each of the other lot owners and another signed by the same three lot owners, as the Body Corporate.

The first of the submissions (Mr France) explains that there have been long standing tensions in the complex between he and the applicant, dating back as far as late 2001/early 2002. He is very concerned to have an early resolution to the matter. He states the tension commenced with the introduction of a special levy for non residents.

The second submission (Mr Harth) states that the committee has followed the precedents set by the applicant (when he was a committee member) in terms of notification of committee meetings. He states that he has always received notice and minutes of Body Corporate meetings as they are placed in all residents’ letter boxes. He cannot see why the applicant would not have his. He admits that the applicant would not have received anything to do with the committee in normal course, as he was not a member. However, he points out that the applicant was invited to be on the committee but refused and has also not attended an AGM since July 2003. He states he believes that the applicant already has copies of the minutes of 14 February 2005 and 14 March 2005. He states that he does not believe refund of the $120 is justified or warranted and details the number of opportunities given to the applicant to address the matter. He and also points out that as a former treasurer, the applicant knows his obligations.

The third submission (Mr Smith), states that there has been tensions in the complex for the last 4 years. Mr Smith states the difficulty began with the applicant parking on common property.

The Body Corporate submission is the submission which most closely addresses the current dispute. They state that since the applicant resigned from the committee, he has been sent all the agendas and minutes from general meetings since August 2003. They state he was not sent the agenda or minutes for any of the two committee meetings held, since the applicant resigned from the committee. Finally, they deny ever even seeing the cheque for $120, let alone dealing with it in any way.

Relevant Legislation

Within my determination, I will be referring to the following legislation in some detail. It has been abridged to refer to those aspects of the section, relevant to the determination.

Section 26 Body Corporate and Community Management (Standard Module) Regulation

Restricted issues for committee – Act, s100

Section 276 Body Corporate and Community Management Act 1997

Referred to above under "Jurisdiction" and is in relation to the Orders an adjudicator can make.

Determination

Within 7 days of making a written request, the applicant was entitled to inspect the Body Corporate’s records or receive a copy of any records (S205 Act).

The applicant does not specify any dates where he alleges meetings have taken place, other than those identified above. The Body Corporate states that there have not been any meetings other than those specified in the chronology of events above. Without any evidence of meetings other than those identified above, I am unable to make a finding that other agendas or minutes exist to be produced to the applicant. I am unable to make orders for the production of documents that are not shown to exist.

S28(3)(a)(i) of the Standard Module, states that a notice (including agenda) for upcoming committee meetings should be distributed to each lot owner individually, other than a lot owner who has instructed the secretary that the lot owner does not wish to be given notice of the committee meetings. S36(2)(b) and S36(3)(a) combine to require the distribution of minutes of committee meetings to all lot owners, except those who have given the secretary written notice they do not wish a to receive a copy of the minutes.

The respondent concedes agendas do not exist for committee meetings. It may well be that the applicant’s behaviour in not communicating cordially with the Body Corporate could be taken as notice he did not require prior notice, agendas and minutes of committee meetings. However, there is little use in determining this aspect, as no evidence has been produced that the applicant gave written notice he did not want copies of committee meeting minutes and resolutions. Therefore, non-compliances with the requirements of the Standard Module have been identified to have occurred in relation to the minutes of 14 February 2005 and 14 March 2005. These should have been provided within 21 days of the committee meeting.

S276 of the Act states that an adjudicator "may make an order that is just and equitable in the circumstances". In these circumstances, it is therefore appropriate to consider whether the applicant was in any way disadvantaged by the lack of notice of the committee meetings, or the failure to provide copies of the minutes.

In his letter of 27 June 2005, the applicant alleges that had he known of the upcoming committee agenda items "it may have been possible to pick up the anomalies" in procedure in relation to the debt collection costs incurred. The applicant alleges that S98 Body Corporate and Community Management (Standard Module) Regulations 1997 applies, as this resolution involved the fixing of a penalty for late payment of levies. He argues that a penalty can only be fixed by ordinary resolution under this section and describes it as a restricted issue (S26(1)(f)(i)).

I do not accept that the resolution in relation to the engagement of a debt collector can be described as a resolution about a penalty. The costs associated with a debt collector are not a penalty and are in fact an outlay incurred in conducting the body corporate’s business. To that extent, the argument that he could have avoided a procedural irregularity is unfounded.

In his letter of 19 July 2005, the applicant states that he has been disadvantaged by not receiving the minutes of the committee meetings of 14 February 2005 and 14 March 2005. He said that this meant he did not have the opportunity to invoke his rights under S37 Body Corporate and Community Management (Standard Module) Regulations 1997, to lodge a notice of opposition to the resolution.

This argument lacks impact for two reasons. Firstly, the letter sent to the applicant dated 15 February 2005, clearly refers to the committee meeting held the night before and effectively advises the applicant of the committee decision. He was therefore aware of the resolution to send a reminder notice, but he chose not to oppose the resolution.

The applicant knew that the issue of a mere reminder notice was already being treated as requiring the sanctioning of the committee. Therefore, surely he would also know that the letter of 14 March 2005 elevating the matter to the level of "consider our further options" must have received the sanction of the committee. I also add, I do not consider that the applicant can argue that he did not understand the meaning of "consider our further options".

Secondly, to invoke his rights under S37(1) of Body Corporate and Community Management (Standard Module) Regulations 1997, the applicant would need to have persuaded another one of the other lot owners, to join the notice of opposition. Given that all three of the other lot owners were members of the committee, this is unlikely. I conclude that the applicant was not disadvantaged by the lack of agenda or distribution of minutes relating to the committee meetings.

Given that all agendas and minutes known to exist have been provided to the applicant and there is no disadvantage to the applicant in regard to known procedural irregularities, I propose to dismiss the applicant’s first "outcome sought".

I turn now to the second outcome sought, in relation to the refund of the debt collection fee or production of documents listed in his letter of 19 July 2005. In this letter, the applicant requests the documents already dealt with above and so this aspect will not be addressed again. However, he also requests a copy of the agreement with the debt collector and a briefing as to what else was discussed at the EGM of 2 August 2005.

On 4 April I contacted the debt collector in relation to either their recollection of this matter, or otherwise their standard practice. The person I spoke to had only a vague recollection. However, a number of aspects of their standard arrangements are of interest here:

Neither the applicant nor the respondent has provided any evidence that any form of written agreement exists with the debt collector. However, if the Body Corporate has either the standard terms and conditions in its possession or a specific agreement, they are required to provide to the applicant under S205 of the Body Corporate and Community Management Act 1997. Further, the Body Corporate should be in possession of an invoice for the amount of $120 plus GST. If not, the Body Corporate should arrange for a copy of the invoice for completion of their records and production to the applicant.

While I have some discomfort in relation to the fact that the $120 collection fee was not itemized on the letter sent to the applicant on 22 March 2005 and was expressed as an amount owing to the Body Corporate, I find that there are no material implications from this action. The actions of the applicant in issuing a separate cheque for the amount of $120 to the debt collector, make it clear that the applicant knew very well what the additional $120 was for. Further, as it took the applicant another two and a half months to challenge the recovery of the costs of engaging the debt collector, it appears he initially accepted the course of action and the cost of the action.

S99(1)(c) of the Body Corporate and Community Management (Standard Module) Regulations 1997 enables the Body Corporate to recover any recovery costs reasonably incurred by the Body Corporate in recovering a contribution. I would start to consider whether such a cost was unreasonable where it exceeds the cost of the amount being pursued, went immediately to court proceedings for a small amount or was initiated without giving the person in arrears reasonable opportunity to make arrangements with the Body Corporate. As the cost involved here was not incurred in court proceedings and does not exceed the amount of the levy, I need only address the issue of reasonable opportunity to make arrangements.

The applicant received notice that the levy was due in 31 days, on 7 December 2005. Two months and one day later, the applicant had still not paid the levy or advised the Body Corporate of any need to make arrangements, or spoken with any of the other owners who all live in the same complex. Therefore, he was sent a reminder notice to which he did not respond. Another month passed and the applicant was sent a sterner notice, giving him another 7 days to make arrangements before other action was taken. Again, he chose not to react. In all, the applicant had more than 3 months to make arrangements, two of which were after the due date. In those circumstances, the engagement of a debt collector, for this fee is reasonable.

The applicant makes allegations that members of the Body Corporate must have handled his cheque for the $120 illegally, as it was not deposited to the Body Corporate account despite the fact it was written out in favour of the Body Corporate and marked "account payee only".

In the United Kingdom, legislation makes a cheque marked "account payee only" non-transferable. In Australia, the Cheques Act of 1986 makes no reference to the term "account payee only". However, courts acting under Australian jurisdiction have recognised that the "account payee only" crossing does not prevent the transfer of a cheque (Universal Guarantee Pty Ltd v National Bank of Australasia ((1965) 65 SR (NSW) 102).

Reference to many banks’ terms and conditions reveals how "account payee only" is interpreted by them. It is regarded as a warning to make reasonable enquiries as to whether or not the entity trying to bank an "account payee only" cheque (that is not in their name), has an acceptable reason to be banking such a cheque. In the case of a debt collection agency, which is required to protect client funds within a trust account, it is quite readily apparent that there will be cheques banked that are payable to other payees.

In other words, the cheque need not have been endorsed for it to be banked directly to the debt collector’s account.

Given that I can see no indications of fraud and that the $120 is in my view a reasonable cost to be recovered, I do not propose that the Body Corporate is required to refund the money to the applicant.

Finally, the applicant seeks explanations regarding two matters:

I cannot require the Body Corporate to produce documents that do not exist to cover these requests. I can only suggest the applicant attend and contribute positively to future meetings.

Summary

I find that the applicant suffered no disadvantage from the procedural irregularities associated with the committee meetings. Therefore I have no reason to declare the meetings invalid.

I find that he is already in possession of all known agendas and minutes for the period specified.

I find that the Body Corporate has a right to recover reasonable costs associated with the overdue levy, namely $120.

I find that the applicant has a right to have access to the agreement (or terms and conditions) relating to the engagement of Network Collections, along with the relevant invoice.

Given that in the end this dispute related to the matter of $120, I seriously considered the power to dismiss this application under Section 270(1)(c) of the Body Corporate and Community Management Act 1997. It is concerning that so much energy and so many resources have been directed to this issue. However, I elected to address the dispute in its entirety to assist all parties to understand the regulations better and to encourage all parties to reopen the lines of communication in both directions.

It may be that a future application of this nature involving the applicant is dismissed summarily as being frivolous or lacking in substance. Further, such an application may attract the imposition of a costs order against the applicant.

Number of Scheme:	23028
Name of Scheme:	Harbour Villas
Address of Scheme:	191 Shore Street, CLEVELAND QLD 4163

(a)	fixing or changing a contribution to be levied by the body corporate; or
(b)	to change rights, privileges or obligations of the owners of lots included in the scheme; or
(c)	on an issue reserved, by ordinary resolution of the body corporate, for decision by ordinary resolution of the body corporate; or
(d)	that may only be made by resolution without dissent, special resolution, majority resolution or ordinary resolution of the body corporate; or
(e)	to start a proceeding, other than--

(1)	The adjudicator may make an order dismissing the application if--
(a)	it appears to the adjudicator that the adjudicator does not have jurisdiction to deal with the application; or
(b)	the adjudicator is satisfied the dispute should be dealt with in a court or tribunal of competent jurisdiction; or
(c)	it appears to the adjudicator that the application is frivolous, vexatious, misconceived or without substance; or
(d)	the applicant fails, without reasonable excuse, to comply with a requirement of the adjudicator under section 271(1).

(1)	The body corporate may, by ordinary resolution, fix a penalty to be paid by owners of lots if a contribution, or instalment of contribution, is not received by the body corporate by the date for payment fixed in notices of contribution given to the owners.
(2)	The penalty must consist of simple interest at a stated rate (of not more than 2.5%) for each month the contribution or instalment is in arrears.

(1)	If a contribution or contribution instalment is not paid by the date for payment, the body corporate may recover each of the following amounts as a debt--
(a)	the amount of the contribution or instalment;
(b)	any penalty for not paying the contribution or instalment;
(c)	any costs ("recovery costs") reasonably incurred by the body corporate in recovering the amount.

(1)	This section provides for the giving of information by the body corporate for a community titles scheme from the body corporate’s records.
(2)	Within 7 days after receiving a written request from an interested person accompanied by the fee prescribed under the regulation module applying to the scheme, the body corporate must--
(a)	permit the person to inspect the body corporate’s records; or
(b)	give the person a copy of a record kept by the body corporate.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Harbour Villas [2006] QBCCMCmr 177 (7 April 2006)