Kawana Place [2006] QBCCMCmr 465 (24 August 2006)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Laurie Clarke, the owner of Lot 1

I hereby order that:

1. Laurie Clarke of 194 Poinciana Street, North Rockhampton Qld 4701 is appointed as Administrator to call, hold, and chair a general meeting (the meeting) of the "Kawana Place" Body Corporate in accordance with this order and within 3 months of the date of this order for the purpose of the consideration of motions included on the agenda of the meeting and deciding committee executive member positions.
2. The Administrator shall hold the appointment for the period beginning on the date of this order, until the close of the meeting ordered to be held.

I further order that for the purposes of the Body Corporate and Community Management Act 1997 (the Act), the meeting shall be deemed to be the First Annual General Meeting of the Body Corporate.

I further order that for the purposes of calling and chairing the meeting, the Administrator shall have all the powers of chairperson, secretary and treasurer of the Body Corporate and of the committee, with the exception of the following powers-

1. To further delegate any of those powers to another person; and
2. To incur any expenditure apart from that reasonably necessary for the calling and holding of the meeting, and apart from expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the Act and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

I further order that the Administrator must give at least seven (7) days written notice of the meeting.

I further order that the agenda for the meeting must include the items specified in section 62(3) of the Standard Module, and may also include any other motion properly submitted.

I further order that the positions of the executive members of the committee shall be determined in accordance with section 11(4) of the Standard Module.

I further order that the meeting shall be otherwise called and held in accordance with the Act and the Standard Module.

I further order that for the purposes of determining the future financial year of the scheme, the end of the month preceding the month in which the meeting is held shall be deemed to be the end of the financial year.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0566-2006

"Kawana Place" CTS 23413

APPLICATION

This application is by Laurie Clarke, the owner of Lot 1 (applicant) seeking an order that he be appointed to convene and hold a general meeting of the body corporate.

The applicant has stated that in the 10 years he has owned Lot 1, the body corporate has not held meetings. The applicant submits that he and the new owner of Lot 2 have been paying the body corporate insurance.

JURISDICTION

"Kawana Place" Community Titles Scheme 23413 is a 2 lot 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 a claimed or anticipated contravention of the Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under the Act or the community management statement.

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)).

If an order is made appointing an administrator, the administrator has the powers given to the administrator under the order (s301(2), Act). If an adjudicator appoints an administrator to perform obligations of the body corporate, the committee or a member of the committee, anything done by the administrator under the authority given under the order is taken to be done by the body corporate, committee or committee member (s278, Act).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to Michael MacNevin, the owner of Lot 2. Mr MacNevin submitted that when he purchased Lot 2 in 2004, the seller disclosed that the body corporate had not been administered in accordance with the Act, that meetings had not been held and that the administrative fund and the sinking fund had not been established. Mr MacNevin also stated that he has been contributing to body corporate insurance.

DETERMINATION

Legislative requirements
A body corporate is created for every community titles scheme established in Queensland. The scheme consists of lots (individually owned) and common property (owned jointly by the lot owners). The primary purpose of the body corporate is to administer and maintain the common property which may include driveways and gardens. The plan of subdivision for the scheme (GTP101769) defines the boundaries of the lots and common property and can be obtained from the Department of Natural Resources, Mines and Water.

The owners of the lots included in the scheme are the members of the body corporate^[1]. The body corporate has the functions, powers and duties given to it under the Act^[2]. These functions, powers duties relate primarily to the management of common property, but may, in some circumstances include a responsibility for other parts of scheme land. For example, for lots created by a standard format plan of subdivision (previously referred to as a group titles plan or GTP) the body corporate must insure a building on a lot which has a common wall with a building on an adjoining lot.

The body corporate must hold an annual general meeting every year within 3 months after the end of the scheme’s financial year. The primary purpose of the annual general meeting is to review the body corporate’s financial performance, to determine future levy contributions from lot owners and to decide its committee members. The purpose of the committee is to manage the body corporate on a day-to-day basis. In a scheme of 2 owners, the committee will consist of both owners, and under section 11(4) of the Standard Module the positions of chairperson, secretary and treasurer of the body corporate committee are decided between the owners (ie no formal nominations or election is necessary), or if no agreement can be reached, the positions are jointly held by both lot owners.

A question before the committee is decided by the majority (if both members are present and voting) of members present. In this instance, as the committee will consist of 2 persons, the committee will only make a positive decision if both members agree. If the members do not agree, the question before the committee will not be passed. Similarly, as most decisions of the body corporate in general meeting require an ordinary resolution (majority decision), the body corporate will only make affirmative decisions on motions requiring an ordinary resolution if both owners agree (if both owners are present and voting).

Lot owners need to be aware of their obligations with respect to the financial management of the body corporate. Section 94 of the Standard Module provides that the body corporate must prepare an administrative and sinking fund budget each financial year. The budgets forecast anticipated expenditure and form the basis for setting the annual contributions payable by the owner of each lot to the administrative and sinking funds. The administrative fund budget contains estimates for recurring expenditure for each financial year such as insurance, administrative costs and maintenance expenses. The sinking fund budget must have regard to anticipated capital or non-recurrent expenditure over a period of at least 10 years. The basic purpose of the sinking fund is to accumulate funds to meet major expenditure at identified time intervals. Section 105 of the Standard Module requires the body corporate to prepare for each financial year a statement of accounts showing the income and spending (or receipts and payments) of the body corporate for the financial year.

The sinking fund should have been established and maintained since the establishment of the scheme. The body corporate must now, at the meeting to be convened in accordance with this order, establish the fund covering at least a 10 year period and decide on the sinking fund contributions to be payable by the lot owners for the next financial year.

Lot owners should also note that there are 4 modules under the Act which cater for bodies corporate with different features or circumstances. The Standard Module contains the most regulation. The Body Corporate and Community Management (Small Schemes Module) Regulation 1997 (Small Schemes Module) is aimed at schemes of less than 6 lots. This module provides less regulation for smaller schemes, especially in relation to committees and general meetings. For example, the Small Schemes Module allows votes at a general meeting to occur in a way the body corporate decides, and can include accepting a vote by telephone or electronic mail. If the owners would prefer less regulation, they should investigate and consider the requirements of the Small Schemes Module and decide whether its provisions would benefit the administration of this body corporate.
Lot owners should be aware that the minimum requirements for adopting another regulation module include voting on an appropriate motion by special resolution at a general meeting, and if the motion is passed, lodging a new community management statement with the Department of Natural Resources, Mines and Water.

Owners should also be aware that the Commissioner’s Office provides free information services for people involved in Queensland’s community titles schemes. While the Information Service cannot provide legal advice, it does provide general information about the Act and the regulation modules including by responding to telephone enquiries. The Information Service has also produced a number of fact sheets on body corporate issues. The Information Service can be contacted on 1800 060 119 during business hours. The internet address is www.bccm.qld.gov.au.

Order to convene meeting
It would seem that the issue of the administration of the body corporate has arisen as a consequence of the proposed sale of Lot 1. Given the requirements of the Act relating to a seller’s obligation to disclose information to the buyer, this is an issue which does arise, and is a risk associated with bodies corporate not complying with the legislation.

It is apparent that the body corporate has not been properly administered. In the circumstances, I am satisfied that an order should be made for the appointment of a person to convene a meeting to enable the body corporate to administer itself in accordance with the legislation. Even though Mr MacNevin has not personally consented to the appointment of the applicant as Administrator, I have accepted the applicant’s nomination. Given the applicant’s nomination, he must ensure that the meeting is convened and held in accordance with this order, the Act and the Standard Module.

I have also made provision for future annual general meetings to be determined relative to the date of the meeting ordered by establishing the financial year for the scheme.

^[1] Section 31, Act.
^[2] For example, see sections 94, 95, 152, Act; section 109, Standard Module.

Number of Scheme:	23413
Name of Scheme:	Kawana Place
Address of Scheme:	14 Kawana Close NORTH ROCKHAMPTON QLD 4701

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kawana Place [2006] QBCCMCmr 465 (24 August 2006)