Tropicaire Villas [2006] QBCCMCmr 209 (27 April 2006)

Number of Scheme:	22609
Name of Scheme:	Tropicaire Villas
Address of Scheme:	Williams Way MOUNT ISA QLD 4824

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

I hereby order that, pending a final determination of the dispute, the body corporate must not implement or act on any resolution passed on motions 8 to 33 inclusive in the Annual General Meeting for 28 April 2006.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0283-2006

"Tropicaire Villas" CTS 22609

Tropicaire Community Titles Scheme (Tropicaire Villas) is a 33 lot scheme under the Body Corporate and Community Management Act (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

This is an application for an interim order. The applicant, CST Management Pty Ltd, owner of lots 12 and 16 is seeking an order against the Body Corporate of Tropicaire Villas

The applicant seeks an order that:

The Body Corporate not act on or implements Motions 8 through to 33 in the AGM for 28 April 2006 pending final orders sought.

Motions 8 to 31 inclusive are submitted by Watkins Management Services Pty Ltd (Watkins Management), owners of a number of lots in Tropicaire Villas. The applicant submits that Philip Watkins (owner of Watkins Management) and his related entities currently own 24 of the 33 lots in Tropicaire Villas. Motions 32 and 33 are submitted by Trevor and Cathy White, co-owners of lot 2.

The motions all seek reimbursement for services rendered to Tropicaire Villas during the period June 2003 to June 2005. The applicant states the sum of the reimbursements sought through these motions is $73,858.72.

To date the applicant is the only person to have supplied a submission in respect of this application. The applicant asserts in this submission that Philip Watkins is, through these motions seeking to obtain payment from the Body Corporate for "non-existent or inflated services", ‘services provided without Body Corporate authority’ and services that do not fall within the responsibility of the Body Corporate.

As an aside, the motions would not provide as good a financial windfall to Watkins Management as it may appear. The accounts for Tropicaire Villas shows there are insufficient funds in the Administrative Fund to cover the amounts claimed as reimbursements. Even if passed and actioned, it would be necessary for a special levy to be raised to pay the monies; the burden of which would predominantly fall on Philip Watkins. Notwithstanding this point, it can not be disputed that the sum claimed is relatively large having regard to the current financial resources of Tropicaire Villas.

Background

An Annual General Meeting (AGM) for the Tropicaire Villas occurred on 9 July 2005. The prior AGM to this occurred on 8 May 2000. The subject matter of this application is debts that are claimed against the Body Corporate for the period between these two AGMs.

The AGM of 9 July 2005 did not specifically resolve the issue of debts incurred in the intervening period between the two AGMs. Finalisation of this issue is now being proposed in motions 8-33 in the AGM scheduled for 28 April 2006. Motion 15 of the AGM of 9 July 2005 did raise the issue but did not provide a definitive answer on the debts. Motion 15 stated in part:

Call for all outstanding accounts (payable/receivable) to be tabled and agreed upon and arrangements made for payment.

The motion was passed unanimously. Notes accompanying the resolution state:

It was resolved that the committee be responsible for assessing the outstanding accounts and accounts paid by owners. All owners have been requested to forward any accounts which have been paid by themselves to Sally Gray at Body Corporate Services for collation, then a Committee Meeting to be held to determine prior costs and fees.

There is no evidence before me that this proposal has been followed through with. I have noted that Motions 8-33 were not proposed by the Body Corporate Committee but by individual owners who appear, on the face of the invoices presented, to have simply forwarded their own generated accounts to the Body Corporate for payment.

The Invoices

In his submission, the applicant disputes the validity of the invoices that are presented in support of the proposed motions. The applicant points out that while all the presented invoices are dated 1 April 2005, they were not presented at the AGM of 9 July 2005. The applicant argues that some invoices provide scant information to support the amount claimed, that they have no supporting documentation and there is no indication that the work was authorised by the Body Corporate or its Committee.

The applicant’s argument has some force. To give some examples:

Invoice WMS00025 is for $960 for ‘cutting over hanging trees at Williams Way". This work involved three workers working for five hours each, a hire(?) of a Mazda Truck and a chainsaw and two trips to the tip (which do appear to have their own receipts). There is no date given for this work, no indication whether Watkins Management organised the hiring of the labour and tools or outsourced this work and no indication that this work was either authorised by the Body Corporate or even that it falls within its area of responsibility.

Invoice WMS00024 is for $8,607.34 for the removal and reconstruction of the Swimming Pool fence. There is a lot of detail provided of the labour required and the tools hired for the work which suggests that the work was not contracted out to a building firm but again was personally organised by Watkins Management. It is not clear from the invoice whether the work was authorised and if so by whom. There is a question as to whether this amount would be above the "relevant spending limit for committee spending" (see section 103 of the Standard Module).

Invoices WMS00034 to WMS00058 detail gardening and rubbish services (the taking of unit rubbish bins to the curb and back) for the period 1 June 2003 to 26 June 2005. The total cost claimed for these services was 34,435.50 or approximately 16,529 per calendar year. The Body Corporate accounts show that the levies raised for the Body Corporate’s Administrative Fund for the period 1 February 2005 to 31 January 2006 was 17,872.81. It would be stretching credibility to suggest that the Tropicaire Villas Body Corporate would authorise almost the entire monies levied by it in one year to be spent on the one area of gardening and rubbish services.

Invoices WMS00053 to WMS00058 relate to gardening services provided between 2 January and 26 June 2005. The Body Corporate accounts for the period 1 February 2005 to 31 January 2006 show that $5,426.70 was paid from the Administrative Fund for gardening. It is not clear whether this payment relates to the services provided by Watkins Management. If so, this is not reflected in its invoices for this period. If not, the question arises why would the Body Corporate pay someone else for gardening services when Watkins Management was purportedly providing these services?

Invoice WMS00032 relates to pool maintenance for the period January 2004 to April 2005. It is unclear how the service provided by Watkins Management as detailed in this invoice fits in with proposed motion 33 where Cathy White is also claiming monies for her cleaning of the pool from October 2003 to February 2005.

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 (section 279 of the Act). Further, any orders granted must be just and equitable in the circumstances (section 276 of the Act).

The applicant is seeking an interim order to stop the Body Corporate from actioning resolutions which in the main have been proposed by a ‘majority lot owner’. I consider that the heart of the application is the question as to whether the present Body Corporate is liable for debts incurred prior to 2005 and if so, what process is to be followed in assessing the validity of the debts.

Whenever there is the situation where a single person owns a majority of lots in a Community Titles Scheme there exists the potential for that person, by sheer force of their majority, to pass resolutions that are not supported by or in the best interests of the minority lot owners.

That is not to say that this is the situation at Tropicaire Villas. It may be that Watkins Management has validly incurred all the costs it is claiming through the proposed motions 8 to 31. However, if it has done so, it has spent Body Corporate funds far in excess of the Body Corporate’s ability to generate fresh funds through the present levies. This in itself, raises an area of genuine concern for the Body Corporate.

Watkins Management has not provided a submission which may have justified its proposed motions. However, as detailed above, I find that on the face of the invoices themselves and the minutes of the AGM of 2005 there is sufficient concern about the claims of Watkins Management and the mechanism by which it is pursuing those claims to grant the order sought in this application.

Accordingly, I make my interim order pending the granting of a final determination of this matter.

In considering whether to grant an interim order it is necessary that I balance the inconvenience caused by an interim order against inconvenience caused by waiting until a final determination.

I do not consider that any inconvenience arise from my granting of the order. My order does not state that Watkins Management and Trevor and Cathy White would not be entitled to reimbursement. It merely changes the mechanism by which that reimbursement may be achieved. If Watkins Management and Trevor and Cathy White have legitimately incurred costs in administering the business of the Body Corporate, they should be entitled to be reimbursed for these costs. They have waited a number of years in which to pursue these outstanding accounts; a few more months would not make that much of a difference.

However, it will be in the Tropicaire Villas’ long term interests that reimbursement occurs by an open and transparent process that is debated and agreed to by all the members of the Body Corporate rather than simply being passed by majority vote. The proposal mooted in motion 15 of the AGM of 9 July 2005 appears to be a sensible approach to the issue of outstanding accounts. The period given by my interim order may allow the Body Corporate the opportunity to further progress this option such that a final determination would be unnecessary.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Tropicaire Villas [2006] QBCCMCmr 209 (27 April 2006)