Il Villaggio [2006] QBCCMCmr 366 (7 July 2006)

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

Toni Leigh and Val Ivett, the owner and co-owner of lots 31 and 24 respectively

I hereby order that the application for the follow orders

1. An order that the Body Corporate recover monies from TEYS paid to DNS Accountants in 2005 by way of remedial action notice should it be determined by this application that the expenditure was made without committee knowledge or authorisation.

2. An order that the Body Corporate financial statements for the financial year 2004-2005 be amended to show allocations of expended monies under the correct item classification.

3. (i) An order that the Body Corporate keep all correspondence/documents and put this correspondence/documents on Body Corporate files when the records have either been sent by members of the Body Corporate or outside bodies engaged by the Body Corporate; and/or sent by the Body Corporate, from the period of 14 February 2005 until the date of this application.

(ii) An order that all of the itemised correspondence and documents delivered to and signed for by Stephanie Peech of TEYS on 21 December 2005 from the applicants on behalf of Committee as detailed in the "Checklist of Documents for Collection Il Villaggio CTS 28518" be put on Body Corporate files.

4. (i) An order that the Body Corporate provide Body Corporate correspondence/documents and records of finance from 2005 to the current period to the applicants who paid the prescribed fee for an inspection of Body Corporate records. We also seek an order that this should be done within a reasonable time (7 days).

(ii) An order that the Body Corporate make available for inspection to the applicants all Body Corporate files and records of finance as requested on 10 January 2006 without payment of a further fee should it be determined by this application that the records were not made available to the applicants on 18 January 2006.

5. An order that all Body Corporate mail forwarded to Toni Leigh in 2005-2006 be mailed to the address the lot owner has nominated as the address for service.

Is dimissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0056-2006

"Il Villaggio" CTS 28518

Scheme

"Il Villaggio" community titles scheme 28518 was registered as a standard format plan of subdivision comprising 40 lots and common property on 31 August 2000. It is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module).

Application

This application is one of six current applications before this office involving the "Il Villaggio" scheme.

This application is brought by Toni Leigh and Val Ivett, the owner and co-owner of lots 31 and 24 respectively, against the body corporate seeking the following orders:

(ii) An order that the Body Corporate make available for inspection to the applicants all Body Corporate files and records of finance as requested on 10 January 2006 without payment of a further fee should it be determined by this application that the records were not made available to the applicants on 18 January 2006.

Submissions in response to the application were sought from all owners (excluding the applicants), the committee and the body corporate manager. Three submissions were received. The applicants exercised their right, under section 244 of the Act to inspect the submissions and reply to them.

Jurisdiction

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)).

Determination

1. An order that the Body Corporate recover monies from TEYS paid to DNS Accountants in 2005 by way of remedial action notice should it be determined by this application that the expenditure was made without committee knowledge or authorisation.

The existence of a relevant "dispute" is fundamental to an adjudicator having jurisdiction.^[1] The applicants have not submitted any evidence that they have at any time, whether by submitting a motion to be considered at a committee or general meeting of the body corporate, or otherwise, asked the body corporate to consider recovering monies from TEYS. If the body corporate has never been asked to consider the matter, there can be no dispute involving it as a party and therefore no right in the applicants to apply to the adjudicator on the basis that they are parties to a "dispute" within the meaning of section 227 of the Act.

I must therefore dismiss the first order sought. However, I wish to make the following comments.

The submission of Mrs Stephanie Peech from TEYS reveals that the following payments were made to DNS Accountants:

I am aware that Michael Teys, of TEYS Strata Pty Ltd, was appointed Administrator to call, hold and chair an annual general meeting of the body corporate and to otherwise exercise the powers of the committee for the body corporate and an executive member of the committee in accordance with an Adjudicator’s order dated 15 November 2005. I note that the Adjudicator further ordered that for the purpose of calling, holding and chairing the meeting and for otherwise acting in accordance with this order the Administrator shall have all of the powers of the committee and of the chairperson, secretary and treasurer of the committee, with the exception of further delegating those powers to another person. I am also aware, that prior to 15 November 2005, TEYS Strata Pty Ltd were the appointed body corporate managers for the scheme.

After outlining some history in relation to the financial administration of the body corporate, Mrs Peech states that "In these circumstances, we felt that it was vital to ensure that the Body Corporate financials were checked for accuracy before going forward. It seemed likely at this point that the committee would be removed, an Administrator appointed, and that levies would need to be raised to ensure that the Body Corporate remained a going concern. ... We feel that all of these payments were justified. The submission by Mrs Peech does not provide evidence of body corporate authorisation for the amounts paid to DNS Accountants. As body corporate managers and, since 15 November 2005, as administrators for the scheme, TEYS could have arranged for appropriate motions to approve and/or ratify the expenditure to be considered by owners. It is now a matter for owners to consider whether they will submit motions to ratify or recover the monies paid to DNS Accountants.

2. An order that the Body Corporate financial statements for the financial year 2004-2005 be amended to show allocations of expended monies under the correct item classification.

The only specifics the applicants provide in relation to this order sought are as follows:

The invoices supplied by Sheryl Loveland on 7 October 2005 (Appendices 18, 19, 20) show payments to Morrison Geotechnic for $3,427.80, Uniquest for $2,329.80 and Marian Hammond for $5,011.84.

The applicants were Chairperson and Secretary at the time these expenditures were incurred and none of these expenses are correctly allocated under Repairs and Maintenance – Paths & Roadways and Pest Control (Appendix 21). The invoice for Marian Hammond should be allocated under Repairs and Maintenance – Gardens & Grounds and the invoices for Morrison Geotechnic and Uniquest were both written reports and should be allocated under Consultancy Fee.

Furthermore, we believe that allocations in the Sinking Fund statements are also incorrect, but we were not given access by TEYS to the relevant financial records on 18 January 2006 to enable submissions with this application.

The submission by Mrs Peech addresses other general matters raised by the applicants but does not specifically address the issue of expenditure allocation, other than to say that the auditors did not request any changes to the accounts.

I note that, at the Annual General Meeting held on 4 February 2006, the Financial Statements for the financial year ended 31 August 2005 were not specifically approved by vote, although the audit report, as prepared by C Ballamy of PKF Chartered Accountants was adopted by a vote of 25 for and 1 against. I note that the audit report was qualified due to the fact that the sinking fund was insufficient to cover future expected commitments. I also note that, in a letter from PKF to TEYS dated 4 November 2005, the same day the audit report was issued, it was noted that, according to the Chairperson, there were concerns that the allocations of Repairs and Maintenance expenditure were not an accurate reflection of the activities of the body corporate.

In relation to the keeping of accounts, section 104 of the Accommodation Module provides as follows:

While I appreciate that the allocation of expenditure into meaningful categories provides a more accurate assessment of the body corporate’s spending and allows for more accurate budgeting for future financial periods, there is no legislative requirement to do this. In circumstances where the body corporate’s auditor’s have not suggested any changes to the Financial Statements (despite being aware of the previous chairperson’s concerns as evidenced by their letter dated 4 November 2005), I am not prepared to order any change. If the applicants believe that the financial statements could be amended to better reflect the allocation of expenditure of the body corporate, then they should consider moving a motion to this effect at a general meeting of the body corporate, specifically identifying the changes they request.

3. (i) An order that the Body Corporate keep all correspondence/documents and put this correspondence/documents on Body Corporate files when the records have either been sent by members of the Body Corporate or outside bodies engaged by the Body Corporate; and/or sent by the Body Corporate, from the period of 14 February 2005 until the date of this application.

The applicants claim that an examination of the Body Corporate files on 18 January 2006 by them discovered that certain correspondence/documents (namely that delivered to and signed for by Stephanie Peech of TEYS on 21 December 2005 from the applicants on behalf of the committee as detailed in the "Checklist of Documents for Collection Il Villaggio CTS 28518") were not on Body Corporate files. The applicants further allege that additional correspondence, as detailed below, did not appear on the body corporate files:

The applicants submit that TEYS have been selective when placing body corporate correspondence on the body corporate record and that the Body Corporate has not met the requirements of the Accommodation Module in this regard. They seek the following further order:

(ii) An order that all of the itemised correspondence and documents delivered to and signed for by Stephanie Peech of TEYS on 21 December 2005 from the applicants on behalf of Committee as detailed in the "Checklist of Documents for Collection Il Villaggio CTS 28518" be put on Body Corporate files.

In their submission, TEYS state that an order of this kind would be unnecessary, as they already fulfil their duties in that regard. They state that they do place all relevant documentation onto the Body Corporate files. Due to the lack of space in their offices, some documents have to be archived off-site. For that reason, they only have current year correspondence on site. They state specifically that the itemised correspondence and documents delivered and signed for on 21 December 2005 are included in the Body Corporate records. They explain that the documentation referred to by the applicants was not provided to them on 18 January 2006 as there had been insufficient time since the re-opening of the office after the Christmas break to collate it. Further, Mrs Peech states that the applicants had made it clear that their interest in searching the body corporate records was financial and there was no suggestion that they wished to revisit the documents that they themselves had handed over only a few weeks previously.

Section 148 of the Accommodation Module deals with the keeping and disposal of records. It provides as follows:

I conducted an inspection of the books and records of the body corporate at the offices of TEYS on 6 July 2006. During that inspection, I checked to see if a selection of the documents referred to as missing by the applicants were present on the files. Of the 10 documents I checked for, all were found to be on file. I also noted the following from the minutes of a committee meeting held on 6 April 2006:

Handover of documents by past committee members: The meeting noted that a large number of documents had been handed to TEYS Strata by the previous committee members on 21 December 2005, many of which had not previously been on the body corporate files. K Brown noted that items previously requested from the committee but not provided were now on the files.

While the documents referred to by the applicants may not have been provided to them when they inspected the books and records of the body corporate on 18 January 2006, I am satisfied that they now do appear on the body corporate files. In general, I found the correspondence to and from the body corporate to be reasonably maintained and did not detect any breach of section 148 of the Accommodation Module in this regard. I therefore decline to make the orders sought by the applicants.

4. (i) An order that the Body Corporate provide Body Corporate correspondence/documents and records of finance from 2005 to the current period to the applicants who paid the prescribed fee for an inspection of Body Corporate records. We also seek an order that this should be done within a reasonable time (7 days).

4. (ii) An order that the Body Corporate make available for inspection to the applicants all Body Corporate files and records of finance as requested on 10 January 2006 without payment of a further fee should it be determined by this application that the records were not made available to the applicants on 18 January 2006.

In relation to the above two orders sought, the applicants state that numerous records were not available at the time of their inspection at 9am on 18 January 2006, including paperwork on the work performed by DNS Accountants, payments to the Resident Unit Manager for consumables, and paperwork on monies paid for garage doors. They further allege that there was no paperwork relating to BAS payments and there was no list of creditors, which the applicants state they had requested in correspondence on 10 January 2006.

In her submission, Mrs Peech states as follows:

"A check of the Accounts Paid file for Il Villagio shows that reimbursements to the Resident Unit Manager for pool chemicals were made on 12 January 2006 ($26.83) and again on 17 February 2006 ($120.44). Payments to DNS Accountants were made on 10 October 2005 and on 5 December 2005. The reference to a "garage door" was an error in allocation made by our accounts department, corrected afterwards, and therefore there was no supporting documentation to this, as the work did not exist. It is possible that paperwork relating to payments made very close to the date of the search had not been filed when Ms Leigh and Mrs Ivett visited our offices, but we do not accept that "numerous" records were not available for inspection."

Mrs Peech also points out that the correspondence of 10 January 2006 does not specifically request a "list" a creditors, but rather information on creditors.

Section 205 of the Act makes provision for information to be given to interested persons. It provides as follows:

I am not in a position to make a finding in relation to what documents were or were not made available to the applicants on 18 January 2006 during their inspection of the books and records of the body corporate. Further, I do not believe the applicants have sufficiently identified the specific documentation they are seeking in order for me to be able to order that specific documents be made available to them. Finally, I am not convinced that at least some of the documentation they refer to even exists, for example, the "list" of creditors.

When I inspected the books and records of the body corporate on 6 July 2006, I observed that financial documents as recent as 5 July 2006 appeared on the "Accounts Paid" file. In general, I found the books and records of the body corporate to be reasonably maintained. I did not identify any breaches of the legislation in relation to the keeping and disposal of records.

In these circumstances, I decline to make the orders sought by the applicants.

5. An order that all Body Corporate mail forwarded to Toni Leigh in 2005-2006 be mailed to the address the lot owner has nominated as the address for service.

Ms Leigh claims to have been sent five lots of correspondence from TEYS which were addressed incorrectly during the period 2005 to January 2006. The applicants submit that TEYS have failed to keep adequate systems to ensure correct address for service to body corporate members.

In their submission, TEYS state as follows:

TEYS uses BCMax software, which enables three addresses for each lot owner to be kept in our computer system – residential address, service of notice address and levy notice address. Our default setting is for all items to be sent to the service of notice address, and this is manually overridden if a member of staff needs to send an item to either the residential or levy notice address. As was explained to Ms Leigh on 18 January 2006, when she produced one envelope addressed to her residential address, it is possible that a member of staff had changed the default setting and omitted to reverse this action. This is regrettable, and an apology was made to Ms Leigh. TEYS make every endeavour to ensure that all Body Corporate correspondence is sent out in a timely manner to the address nominated by lot owners.

In their reply to the TEYS submission, the applicants state that they were at a loss to know what else Ms Leigh could do to have her mail sent as directed. The applicants further state that they consider it rather extreme action to have to make a dispute resolution application regarding this but felt that there was no alternative, as Ms Leigh had been requesting TEYS to correct this ongoing problem for approximately 6 months during which time only one set of correspondence was sent correctly and only after it had been returned to TEYS by Ms Leigh.

Upon becoming the owner of a lot in a community titles scheme, the owner is required to, within two months, give written notice to the body corporate advising of their name and residential or business address, and, if different, the address for service of notices to them.^[2] Section 140 of the Accommodation Module makes it clear that the residential or business address of a lot owner is only to be used in circumstances where no address for service has been notified to the body corporate. It is not contended that Ms Leigh has provided a residential address and a different address for service to the body corporate.

Although the mail was addressed incorrectly on some occasions, Ms Leigh does not deny receiving any of the mail sent to her residential address, rather than her address for service. In these circumstances, while I can appreciate the frustration experienced by Ms Leigh, I cannot see what disadvantage she has suffered. Further, at my inspection of the books and records of the body corporate on 6 July 2006, I inspected the electronic version of the body corporate roll and printed out the entry for lot 31. I noted that both Ms Leigh’s residential address and address for service were correctly recorded on the body corporate roll. In these circumstances, I decline to make the order sought by the applicants.

^[1] Tully v. The Proprietors, The Nelson Body Corporate [2000] QDC 31
^[2] Accommodation Module, s139

Number of Scheme:	28518
Name of Scheme:	Il Villaggio
Address of Scheme:	24 Randan Street SUNNYBANK HILLS QLD 4109

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Il Villaggio [2006] QBCCMCmr 366 (7 July 2006)