Noosa on the Beach [2006] QBCCMCmr 22 (17 January 2006)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Brent Anthony Ogilvie and Philip John Bacon, the co-owners of Lots 5 and 10

I hereby order that pending a final determination of application 0719-2005, the Body Corporate for Noosa on the Beach Community Titles Scheme 6417 (the body corporate) shall not proceed with, implement or otherwise act upon the resolution made on Motion 15 at the Extraordinary General Meeting dated 24 August 2005 to the extent that the resolution requires the payment of instalments of the special levy on 1 February 2006 and 1 May 2006.

I further order that the body corporate shall, upon request of any owner or owners who have paid the 1 February 2006 special levy, refund within 7 days that 1 February 2006 special levy.

I further order that within 5 days of the date of this order, the body corporate must give the owner of each lot included in the scheme a copy of this interim order and the statement of adjudicator’s reasons for decision.

This interim order has effect until 12 months have elapsed from the date of this order, or a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise determined (whichever is the earlier).

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0912-2005

"Noosa on the Beach" CTS 6417

APPLICATION

This application is by Brent Anthony Ogilvie and Philip John Bacon, the co-owners of Lots 5 and 10 (applicants) against the body corporate (respondent) seeking the following outcome:

That motion 15 passed at the extraordinary general meeting on 24 August 2005 imposing a special levy upon all owners in the scheme be ruled out of order and invalid.

The applicants have also sought the following interim order:

That the payment of the second instalment due on 1 February 2006 and subsequent instalments of the special levy purportedly approved by motion 15 Extraordinary General Meeting on the 24 August 2005 be suspended pending determination of Application 0719-2005.

JURISDICTION

"Noosa on the Beach" Community Titles Scheme 6417 is a scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (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:

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)).

In accordance with section 247 of the Act, the Commissioner for Body Corporate and Community Management (Commissioner) has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order being issued. The Commissioner has referred the application to me even though affected persons have not been given notice of the application, or afforded an opportunity to make submissions about the application (section 247(3)).

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. In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate.

SUBMISSIONS

Given the circumstances of this dispute, I have decided not to seek a submission from the body corporate before making the interim order. I have had the benefit of reading all of the considerable material lodged to date in relation to application 0719-2005. This present application is based on exactly the same factual situation. The necessity for its lodgement has been brought about by the delay in finalisation of application 0719-2005 to which reference is made later in this statement of reasons. I can see no reason to put all parties to further expense in lodging submissions when their various positions have been clearly outlined in application 0719-2005.

DETERMINATION

This is the second application made by the applicants disputing the resolution of the body corporate on Motion 15 at the Extraordinary General Meeting dated 24 August 2005 (EGM) to raise $1,550,400 plus GST for unspecified building works.

The initial application (Ref. No. 0719-2005) made on 14 October 2005 sought a final outcome that Motion 15 be voided. This application has not yet been finally determined. The applicants had also sought the following interim order in that application:

That the application of Motion 15 Extraordinary General Meeting on 24 August 2005 imposing a special levy upon which all owners be suspended until such time as this Application has been heard and determined. The motion contemplates imposition of the first contribution of the special levy purportedly approved to be implemented on 1 November 2005.

On 27 October 2005, Adjudicator Dowling made the following interim order:

I hereby order that the application for an interim order by Brent Ogilvie and Philip Bacon, the co-owners of Lots 5 and 10, quote:

I further order that pending a final determination of the application, the Body Corporate for Noosa on the Beach Community Titles Scheme 6417 must not:

This interim order has effect until 12 months have elapsed from the date of this order, a further interim or final order for the application is issued, or until the application is withdrawn, rejected or otherwise ended (whichever is the earlier).

In making the interim order, Adjudicator Dowling stated:

The applicants submit that Motion 15 is void and seek an interim order that the resolution on the Motion not be implemented. However, the applicants have not provided any reasons relating to urgency of the circumstances which would warrant the making of an interim order. Indeed, the body corporate have submitted that the applicants have paid the first instalment to the body corporate which is due to be paid by 1 November 2005. While the applicants may consider that an interim order is necessary with respect to the instalments due for payment on 1 February 2005 and 1 May 2005, I do not consider that this probable ground warrants the making of the interim order.

While it can be appropriate to make an interim order of the nature sought by the applicants, I consider that the circumstances of this dispute do not warrant the making of the interim order sought. I agree with the body corporate that the applicants could have acted with respect to this matter in a more timely fashion.

The applicants have had notice of the proposal since August 2005 and as a consequence of the resolution on Motion 15, lot owners have received sufficient notice of the contribution payable^[1], and it would seem have made arrangements with respect to the payment of the contribution without disputing the Motion. While the applicants certainly have the right to dispute Motion 15 within the time limits specified in section 242 of the Act, I consider that the circumstances of the dispute are such that the possible inconvenience likely to result from the making of the interim order sought outweighs the inconvenience should the interim order not be made. In my opinion, the fact that the applicants have paid the first instalment due on 1 November 2005 arising from the passing of the Motion and that other lot owners may have similarly paid the contribution or indeed made arrangements to pay the contribution by this date are significant in the determination of the application for an interim order.

However, it is apparent that the special contributions relate to unspecified major upgrade works, or to works yet to be approved by the body corporate. Given that the applicants dispute the body corporate’s ability to fix a special contribution on this basis, I consider that it is necessary to prevent any use of the monies received by the body corporate as payment of an instalment of the special contribution and to prevent any proceedings by the body corporate against a lot owner who has not paid an instalment of the special contribution until a final order is made. For this reason, I consider that it is appropriate that an interim order be made preventing the body corporate from spending any monies received from lot owners as payment of an instalment of the special contribution fixed by the body corporate by the resolution made on Motion 15 at the EGM, or to initiate any debt recovery action or other proceeding to recover, as a debt any amount related to the payment of an instalment of the special contribution.

This application will now be administered in accordance with the Act and the normal processes of this Office. Submissions from the parties with respect to the validity of Motion 15 will be considered in the final determination of the dispute. The next instalment of the special contribution arising from the passing of Motion 15 at the EGM is not due and payable until 1 February 2005. I would expect that a final determination on this matter will be made well before this date.

Given the date of the interim order on application 0719-2005 (27 October 2005) and the due date of the second instalment of the disputed contribution (1 February 2006), it would appear to have been a reasonable expectation on the part of Adjudicator Dowling that this application would be finally determined before 1 February 2006 (mistakenly referred to in the Reasons for Decision as 1 February 2005).

However, following Adjudicator Dowling’s interim order, a letter dated 31 October 2005 was sent from the Commissioner’s office inviting the body corporate committee and all owners (excluding the applicants) to respond to the application (for final orders) by 21 November 2005. Due to an administrative error the letter was forwarded to the solicitors for the body corporate to distribute the application to the respective parties, not to the body corporate secretary or to the body corporate manager, as is the usual practice of the Commissioner’s office. As a consequence, the body corporate’s solicitors, although lodging a submission on behalf of the body corporate within the (extended) time allowed for that purpose, did not (nor should they have been required to ) distribute the application to all other owners. Affected persons therefore were not given notice of the application and, accordingly, were not given an opportunity to make a written submission to the application in accordance with section 243 of the Act.

When the error was detected by the Commissioner’s office on 16 December 2005, a further notice pursuant to section 243 was given to the body corporate manager on 19 December 2005 with a new closing date for the lodgement of submissions of 16 January 2006. Given this timeframe and the right of the applicants under section 244 of the Act to make a written reply to submissions (a period of 14 days is customarily allowed for a reply to be lodged) it is clearly evident that application 0719-2005 will not be determined by 1 February 2006.

While the interim order made on application 0719-2005 still has effect, that interim order has not deferred the payment of subsequent instalments of the disputed contribution.

The body corporate’s solicitors argued in application 0719-2005 that the applicants’ delay and acquiescence should have been fatal to their application for an interim order in that application. In the alternative, the solicitors argued that the interim order should not have been granted because the balance of convenience favoured not only the body corporate but also the owners of lots in the scheme. The solicitors contended that if an interim order were to be granted it might "cause irrecoverable damage to the body corporate and to other owners of lots in the scheme". The irrecoverable damage to lot owners was described as being expenses incurred in making financial arrangements in respect of payment of the special levies, which costs might not be recovered in the circumstances. The damage to the body corporate was not defined.

I note that it was the body corporate’s intention to quarantine the payments in a separate account to provide for application and credit of the special levy if the refurbishment did not proceed either in part or in total (para 50(h) of the body corporate’s submission dated 24 October 2005). Clearly if motion 15 were ultimately invalidated, then the levy payments, and any interest which had accrued on such payments, would either have to be refunded to those who had made their payments or have to be credited to their future levy payments.

Ordinarily, this fresh application would also have been determined by Adjudicator Dowling, because he was already familiar with the facts, but as he is presently on annual leave it has been referred to me. However, as Adjudicator Dowling had already noted in application 0719-2005, motion 15 purported to approve a special levy to fund major, unspecified and unbudgeted, upgrade works, for which a liability had not then arisen, as required by section 95(2) of the Standard Module.

It would not be appropriate for me to make any final determination in relation to motion 15, prior to the close of the submission and reply period in application 0719-2005. However, I do not consider that owners should have to make further substantial payments until application 0719-2005 has been determined. I am not satisfied that the body corporate will suffer any detriment by the suspension of such payments, as no liability has arisen for which the payments might be required.

A member of the Commissioner’s staff telephoned the body corporate manager on 16 January 2006 at my request, and ascertained that five owners have so far paid the special contribution due on 1 February 2006. I have therefore ordered that the body corporate shall, upon request of any owner who has made such a payment, refund that payment within 7 days of receipt of the request.

I have also ordered the suspension of the second and third instalments of the contributions fixed by the resolution of the body corporate on Motion 15 at the EGM until application 0719-2005 is determined. This interim order does not replace the interim order made on application 0719-2005.

Given the effect of this interim order, I have also ordered the body corporate to provide a copy of the interim order to each lot owner.

This application will now be administered in accordance with the Act and the normal processes of this Office.

Number of Scheme:	6417
Name of Scheme:	Noosa on the Beach
Address of Scheme:	49 Hastings Street NOOSA HEADS QLD 4567

(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.

1.	Spend any monies the body corporate has received from the owner of a lot included in the scheme as payment of an instalment of the special contribution fixed by the body corporate by the resolution made on Motion 15 at the Extraordinary General Meeting dated 24 August 2005.
2.	Initiate any debt recovery action or other proceeding against the owner of a lot included in the scheme to recover as a debt any amount related to the special contribution fixed by the body corporate by the resolution made on Motion 15 at the Extraordinary General Meeting dated 24 August 2005.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Noosa on the Beach [2006] QBCCMCmr 22 (17 January 2006)