J.N.L [2006] QBCCMCmr 216 (2 May 2006)

Number of Scheme:	8405
Name of Scheme:	J.N.L
Address of Scheme:	183A Perth Street Toowoomba QLD 4350

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

Mr Ronald and Mrs Dawn Henry, the owner(s) of lot 1 in the J.N.L Community Titles Scheme

I hereby declare that Allan Poole, owner of lot 2 owes a debt of $1282.20 to J.N.L Body Corporate; and
the J.N.L Body Corporate owes a debt of $1282.20 to Mr Ronald and Mrs Dawn Henry, the owners of lot 1.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0857-2005

"J.N.L" CTS 8405

The application

The owners of lot 1 of the J.N.L Community Titles Scheme (JNL), Ronald and Dawn Henry (the applicants), have applied for an order relating to a debt owed to JNL by the owner of lot 2, Allan Poole (the respondent). The applicants have not requested any particular order; they have simply stated that the respondent has not contributed to the insurance and upkeep associated with the property since 2004.

Section 276(1) of the Body Corporate and Community Management Act 1997 (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 applicants are co-owners of half of a commercial duplex. The respondent is the sole owner of the other half. For the periods 2004/2005 and 2005/2006 the applicants paid the whole of the public insurance premiums for the building. The respondent’s share of the two premiums comes to $1107.20. At some point in late 2005 or early 2006 a burst water pipe on the common property needed fixing; the respondent’s share of the repair bill is $175.

The applicant has been unable to contact the respondent; telephone calls to the known contact numbers are not answered and mail sent to known contact addresses is not responded to. Similarly, the respondent has not responded, in any way, to the notification of this application.

My declaration

The primary function of JNL is to administer the common property and body corporate assets for the benefits of the lot owners. In this case JNL is responsible for insuring the buildings and administering the repairs involving common property. The body corporate discharges the financial dealings for these functions through (usually) two bank accounts opened and operated in the name of the body corporate – the Administrative Fund and the Sinking Fund. The lot owners pay levies into these two funds in accordance with the Contribution Schedule that is included in the Community Titles Scheme’s Community Management Statement. These are legislated obligations on every body corporate under the Act and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

In the normal course of events, the applicants and the respondent would have paid their levies into the Administrative and Sinking Funds and the insurance premiums and the bill for repairs would have been paid out of these funds.

This has not occurred in this case. JNL does not have an Administrative Fund or a Sinking Fund as required by the Standard Module. Neither has any of the management and administrative mechanisms for a body corporate, such as the election of a committee, have taken place. In essence, the Body Corporate of JNL currently exists in name only.

Instead, a relatively informal arrangement appears to exist whereby the applicants pay the necessary bills as they arise and the respondent reimburses them his contributory portion of those bills. This arrangement has broken down, in large part because the respondent’s absence; his present whereabouts are unknown and he is not made contact with the applicants.

I have no hesitation in declaring that the Body Corporate of JNL bears responsibility for the payment of the insurance premiums and the repair bill. I similarly have no hesitation in declaring that the respondent is liable to contribute funds to the Body Corporate to at least the extent necessary to pay these bills and that the applicants are entitled to be reimbursed by the Body Corporate for outlaid monies that are over and above their contributions.

However, I have not gone so far as to order that the respondent pay the requisite funds to the Body Corporate or it reimburse the applicants their monies for the simple reason that the Body Corporate has no financial footing. The applicants have not requested that this order be made. Further, in the absence of an Administrative Fund and a Sinking Fund, there is no mechanism through which these payments can occur. In a practical sense, JNL is insolvent. While there are mechanisms whereby a body corporate can pursue the non-payment by lot owners of levies, these mechanisms also require the body corporate to exist in more than just name.

There are a number of difficulties created by the respondent being non-contactable. In the respondent’s absence it is difficult for the Body Corporate of JNL to be put on a proper footing. If and/or when the respondent does get back in contact I urge the parties to attend to the establishment of the required body corporate structures as a matter of urgency.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

J.N.L [2006] QBCCMCmr 216 (2 May 2006)