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Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders |
Last Updated: 19 December 2006
REFERENCE: 0572-2006
ORDER OF AN ADJUDICATOR
MADE UNDER
PART 9 OF CHAPTER 6
BODY CORPORATE AND COMMUNITY MANAGEMENT ACT
1997
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Number of Scheme:
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20666
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Name of Scheme:
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Warriewood Lake Views
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Address of Scheme:
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Warriewood Place ROBINA QLD 4226
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TAKE NOTICE that pursuant to an application made under the abovementioned Act by Lynda Cunnington and Phillip Long, the owner of Lot 3
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I hereby order that the application for an order by Lynda Cunnington
and Phillip Long, the owner of Lot 3 against the body corporate seeking an
outcome
that C Ann R Body Corporate Management Pty Ltd be appointed as
administrator of the Warriewood Lake Views body corporate, is
dismissed.
I further order that the owner of each lot included in the scheme who has not, at the date of this order, paid the contribution to the sinking fund of $30.00 for the 2005/2006 financial year that was fixed by resolution at the Annual General Meeting dated 28 June 2005 must, within 21 days of the date of this order, pay the contribution to the body corporate. I further order that within two months of the date of this order, the body corporate must convene and hold an extraordinary general meeting in accordance with the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Standard Module) Regulation 1997. The agenda for the meeting must contain: 1. A motion to confirm the minutes of the Annual General Meeting dated 28 June 2005. |
STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF
0572-2006
"Warriewood Lake Views" CTS 20666
APPLICATION
This application is by Lynda Cunnington and Phillip
Long, the owner of Lot 3 (applicants) against the body corporate. The
applicants
are seeking an outcome that C Ann R Body Corporate Management Pty Ltd
to be installed as Administrators of Warriewood Lake
Views.
JURISDICTION
"Warriewood Lake Views" Community
Titles Scheme 20666 is a 7 lot scheme under the Body Corporate and Community
Management Act 1997 (the Act) and the Body Corporate and Community
Management (Standard Module) Regulation 1997 (the Standard
Module).
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[1]. An
order may require a person to act, or prohibit a person from acting, in a way
stated in the order[2]. An
adjudicator's order may contain ancillary and consequential provisions the
adjudicator considers necessary or
appropriate[3].
SUBMISSIONS
In
accordance with the Act, submissions were called and a copy of the application
was provided to Dorothy Richards for the body corporate
to distribute the notice
to the owner of each lot and the committee. The period for submissions was
extended after further material
relating to the application was lodged with the
Commissioner. A submission was received from the committee and a number of lot
owners.
The applicants made a written reply to submissions under section 244 of
the Act.
DETERMINATION
Overview
In support of
the outcome sought, the applicants specifically mention issues relating to the
scheme by-laws, financial management,
the recent annual general meeting of the
body corporate and the mounting tension between the lot owners. It is evident
from the
submissions made, that the application is supported by the owners of
Lots 1 and 7, and that the application is opposed by the owners
of Lots 2, 4, 5
and 6. It should be noted that the number of owners opposing the application is
not, by itself a determining factor
in the dispute.
There are a number of
claims and allegations made about the conduct and behaviour of various lot
owners in relation to some of the
matters raised in this application. I do not
intend to deal specifically with these claims and allegations. Such
relationships
are troublesome and do not, in any way, assist the management of a
body corporate, particularly one with a small number of members.
Tension
between lot owners is a cause of many body corporate disputes and it would
obviously be preferable if owners could act in
a manner which contributes to the
proper administration of the body corporate.
It would seem that a number
of issues relate to knowledge of the legislation. If lot owners would like more
information in relation
to the requirements of the legislation, they can contact
the information service of this office on 1800 060 119. There are a number
of
free fact sheets available covering issues such as general meetings, financial
management and by-laws. Information is also available
on the web site;
www.bccm.qld.gov.au.
The plan of subdivision
The body
corporate was created by the registration of Group Titles Plan 2237 on 29
January 1990. With the commencement of the Act
on 13 July 1997, the plan is now
known as a standard format plan of subdivision (it should be noted that this
change does not affect
the ownership of property).
Given the plan of
subdivision, the land is defined by references to marks on the ground (such as
survey posts)[4]. This basically
means that the boundaries of lots and common property are defined by the
dimensions and bearings shown on the plan
along with the survey marks. The
common property is shown on the plan and is owned by the lot owners as tenants
in common in shares
proportionate to the interest schedule lot entitlements of
their respective lots[5] (these
entitlements are stated in the community management statement for the
scheme).
Body corporate
The body corporate consists of
the owner of each lot included in the scheme and its basic purpose is to manage
the common property
or the land owned by the owner of each lot as tenants in
common. However, the Act confers a number of other powers on a body corporate,
including the power to make by-laws regulating the use and enjoyment of lots
included in the scheme.
The body corporate’s general functions
include administering the common property and body corporate assets for the
benefit of
lot owners, enforcing the community management statement (including
any by-laws), and carrying out other functions given to the body
corporate under
the Act or the community management
statement[6]. The body corporate must
act reasonably in anything it does under section
94(1)[7].
The
committee
The body corporate chooses a committee made up of a
chairperson, secretary and treasurer and ordinary committee members (if any).
The body corporate for this scheme must choose at least 3 but not more than 7
persons to the committee. The committee is chosen
at each annual general
meeting of the body corporate and generally is charged with the responsibility
for the day-to-day management
of the body corporate.
The legislation
provides the committee with the power to make body corporate
decisions[8]. A committee decision
must be made at a proper committee
meeting[9], or by voting in
writing[10]. There must a notice of
a committee meeting which is given to committee members and to other lot owners.
In addition, lot owners
are entitled to receive a copy of the minutes of a
committee meeting recording the decisions made by the committee. It should be
noted that a particular committee member does not have authorisation to make a
decision on behalf of the committee unless that person
has been properly
authorised by the legislation or the body corporate.
While the
legislation provides the committee with certain powers, it also restricts the
matters that the committee can make decisions
on, for example the
committee’s expenditure limit for a particular item is $125 multiplied by
the 7 lots in the scheme; the
committee cannot fix a contribution to be paid by
lot owners; and the committee cannot make a decision on an issue which may only
be determined by the owners in general
meeting[11].
The annual
general meeting
The purpose of the annual general meeting is to
provide lot owners with the opportunity to review the past financial
year’s
income and expenditure, to consider future spending needs through
consideration of an administration fund budget and a sinking fund
budget, to fix
contributions to be paid by lot owners for body corporate expenditure, to
determine whether the next financial year’s
accounts should be audited, to
elect a committee, to review insurance, and to consider any other motions on the
meeting’s agenda.
The notice of the meeting must include documents such
as a statement of income and expenditure and the proposed budgets. The holding
of the annual general meeting is linked directly to the financial year for the
scheme. For instance, an annual general meeting must
be held each year within
three months after the end of the financial year for the body
corporate[12]. Also, unless section
12(1) of the Standard Module applies, the secretary must serve a notice at least
3 weeks before, but not earlier
than 6 weeks before the end of the financial
year inviting each lot owner to make a nomination for election to the
committee[13]. When giving this
notice, the secretary must also invite owners to submit motions for inclusion on
the agenda of the meeting[14].
Nominations and motions must be given to the secretary by the end of the
financial year.
Financial management
The body corporate
must establish and maintain an administrative fund and a sinking
fund[15]. The purpose of the
administrative fund is to provide for short-term recurrent body corporate
spending such as annual insurance
and the regular maintenance of common
property. The sinking fund is intended for long-term body corporate expenditure
of a capital
nature. The sinking fund budget must allow for necessary and
reasonable expenditure from the fund for at least the next ten years.
The lot
owners, as the body corporate members, vote to accept or reject proposed budgets
and then fix the contributions to be paid
to meet the expenditure identified in
the proposed budgets[16]. While the
owners have a right to reject a proposed budget, the owners must be aware that
the body corporate has an obligation to
maintain both these funds.
The
body corporate committee has an obligation to prepare budgets for the
consideration of lot owners at each annual general meeting.
These budgets
should be based on reasonably foreseeable and to a large extent, identifiable
expenditure. The budgets should not
be prepared based on guesses or ball park
figures proposed without any basis. For instance, if the contribution of $30
fixed at
the 2005 AGM was determined without any basis, it may be insufficient
or excessive depending on the body corporate’s long term
capital
expenditure requirements.
The contributions paid by lot owners are
towards body corporate short term and long term expenditure requirements and are
kept in
funds administered by the body corporate. The contributions paid by a
lot owner are not refundable by the body corporate when that
person ceases to be
a lot owner.
Insurance
The body corporate must insure
common property and body corporate assets, and take out public risk insurance
over the common property
and for assets for which it is practical to have public
risk insurance. For a scheme created under standard format plan of subdivision,
the body corporate is not required to insure buildings on lots unless a building
on one lot has a common wall with a building on
another
lot.
By-laws
The body corporate may make by-laws
providing for the administration, management and control of common property and
body corporate
assets, and for the regulation of the use and enjoyment of lots
included in the scheme[17]. The
by-laws for the scheme are binding on the body corporate, each member of the
body corporate and on each person who is otherwise
an occupier of a lot in the
scheme. As stated earlier, it is a function of the body corporate to enforce
its by-laws, and to do
so in a reasonable manner.
Sections 182 to 188 of
the Act make provision for the enforcement of body corporate by-laws by the body
corporate and by individual
lot owners and occupiers. For example, a lot owner
who is concerned about another owner or occupier contravening a by-law should
initially notify the body corporate using the required form (available from the
commissioner’s office). The body corporate
(normally the committee)
should then investigate the complaint and if necessary, give the accused person
a by-law contravention notice.
If the notice is not complied with, the body
corporate can pursue the matter under the dispute resolution provisions of the
Act
or in the Magistrates Court. If the body corporate does not give the
notice, the complaining owner may make application for dispute
resolution
against the accused person.
Maintenance
The body
corporate must administer, manage and control the common property reasonably and
for the benefit of lot owners, and must
maintain the common property in good
condition[18]. The occupier of a
lot must keep the parts of the lot readily observable from another lot or common
property in a clean and tidy
condition[19]. The owner of a lot
must maintain the lot in good
condition[20]. Decisions about the
maintenance of common property may be made by the committee provided it relates
to an issue that the committee
has the power to make a decision on. Otherwise,
the committee should refer the matter to owners in general
meeting.
Relevance to this scheme
The purpose of the
above overview is to alert the body corporate members of some basic concepts in
the management and administration
of a community titles scheme. The relevance
of these concepts is not diminished by factors such as the size of common
property and
the number of lots included in the scheme.
It is evident
that the body corporate has limited maintenance obligations for this scheme.
This will be reflected in the decisions
it makes about insurance and the amount
of contributions to be levied on lot owners. It may also impact on the number
of committee
meetings held each year (however this will be related to the issues
requiring the committee’s attention).
However, the size of the
scheme does not lessen a body corporate’s obligations with respect to the
enforcement of by-laws.
There are some 28 By-Laws for this scheme recorded by
the registrar of titles, Department of Natural Resources and Water. These
By-Laws are available from a land registry office and have applied since July
1990. The By-Laws will continue to apply until the
body corporate consents to
the recording of, and has had recorded, a new community management statement for
the scheme which includes
different By-Laws.
Currently, there are a
number of By-Laws applying to the appearance of lots. By-Law 17 provides for
the keeping of animals on lots.
A number of the By-Laws require the consent of
the committee. This consent must be given in accordance with the legislation.
As
stated above, a committee decision must be made at a proper committee meeting
or by voting in writing. The chairperson of the body
corporate should not,
without the proper authority, make any decision about the keeping of an animal
on a lot.
Issues raised by applicants
The annual
general meeting for 2006
The applicants provided documents for the
2006 AGM given by the secretary including the notice inviting motions dated 16
May 2006,
the notice inviting nominations dated 6 June 2006, a notice of
contributions payable dated 14 June 2006, and the notice of the AGM
dated 15
June 2006. It would seem from the financial information attached to the
application that the financial year ends on 30
June each year.
The
information in the above notices indicate general legislative compliance. For
example, owners were invited to nominate for committee
membership and the notice
of the 2006 AGM included the statutory motions, a motion submitted by the owners
of Lot 3 and ballot documentation
for the election of the committee. However,
it is apparent that the timing of the notices is not technically compliant. For
instance,
motions must be sought when owners are invited to nominate for
committee membership; the notice inviting nominations must be given
at least 3
weeks before, but not earlier than 6 weeks before the end of the financial year;
and nominations and motions must be given
by the end of the financial year.
Given these requirements and the fact that the financial information must relate
to the entire
previous financial year, the notice of the meeting should not have
been given before the end of the financial year.
The 2006 AGM was to be
held on 6 July 2006, but was adjourned due to a lack of a quorum. In this
instance, the meeting must be adjourned
to be held at the same place, on the
same day and at the same time in the next
week[21]. The minutes of the 2006
AGM provided by the owner of Lot 1 indicate that the only decisions made on the
statutory motions were
in respect to adopting the administrative fund budget,
fixing a contribution to be paid by lot owners on the basis of the budget,
giving consideration to the audit requirements, and confirming body corporate
insurance. A committee of four persons was chosen,
with the position of
treasurer not being filled.
In relation to the committee election, the
ballot documentation indicates that Dorothy Richards and Diane Woods were the
only individuals
initially nominated. It would seem that these persons withdrew
their nominations. In the circumstance where no nomination is made,
the person
chairing the general meeting must invite nominations from the floor of the
meeting[22]. It is apparent from
the submissions that the persons present at the adjourned 2006 AGM made
nominations and choose persons to fill
committee positions (other than the
position of treasurer).
The applicants and the owners supporting the
application refer to the financial status of particular owners at the time of
the 2006
AGM given an outstanding sinking fund contribution. The payment of
this contribution has been disputed by other lot owners for various
reasons.
The minutes of the Annual General Meeting dated 28 June 2005 provided by the
applicants indicates that the administrative
fund contribution was fixed at
$90.00 per lot and the sinking fund contribution was fixed at $30.00 per lot.
This resolution applied
to each lot and the payment of the contribution cannot
be not subject to any proposed motion on the agenda of the 2006 AGM.
A
body corporate debt is created when a lot owner does not pay a contribution owed
to the body corporate by the fixed date for payment.
If a particular lot owner
owes a body corporate debt at the time of a general meeting, the owner cannot
vote on a motion (other
than a motion requiring a resolution without dissent) or
on the choosing of a member of the
committee[23]. Additionally, the
owner is not eligible to be chosen to the committee or to nominate a person for
membership of the committee[24].
Therefore, a lot owner’s right to participate at the 2006 AGM was
restricted if that person had not paid the sinking fund
contribution of $30.00
per lot mentioned in the minutes of the 2005 AGM. Generally, where a lot owner
owing a body corporate debt
participates in a general meeting and affects the
decisions of the meeting, those decisions are capable of being
questioned.
While the applicants have expressed concerns about the
committee election, an order has not been sought with respect to this issue.
Consequently, I do not consider it appropriate that an order be made about the
election of the committee at the 2006 AGM. It should
be noted that the
composition of the committee is a matter which can be decided by the body
corporate in general
meeting[25].
Body
corporate manager/Administrator
The applicants seek an outcome that C
Ann R Body Corporate Management Pty Ltd be appointed as administrator. In the
absence of a
statement as to the specific purpose of the appointment (for
example, to convene a particular meeting), it would seem that the applicants
propose the appointment for a particular period of time such as for instance, a
period of one year. Further, given that the applicants
consider that the
committee should remain, it would seem the administrator would have limited
(unspecified) powers. The applicants’
basis for the appointment is that
the committee members do not have knowledge of the legislation, do not uphold
the by-laws and the
appointment could ease the tension between the lot owners.
These factors could constitute grounds for an order in the terms of the
outcome sought. However, I do not consider that the present
circumstances
warrant such an order.
Firstly, the appointment of an administrator to
perform the obligations (some or all) of the body corporate or its committee can
be
a significant imposition on a body corporate. Where the appointment relates
to performing obligations of the nature being proposed,
it should be clear and
indisputable that the affairs of the body corporate have deteriorated to the
extent that it is highly likely
that there will continual fundamental breaches
of the legislation to the detriment of the lot owners. It should be evident
from
the circumstances that there is for example, repeated and unjustifiable
disregard for the legislation and could include an absence
of interest from
owners in participating in the management of the scheme.
In my view,
these circumstances are not apparent in this scheme at this time even though the
applicants have the view that the situation
will deteriorate if self-management
continues. I do not consider that this possibility is borne out from the
material presented
in the application and it is important that willing owners be
given a reasonable opportunity to self-manage the body corporate in
accordance
with the legislation. The issues relating to the procedures for general
meetings, financial management and the enforcement
of by-laws should be able to
be remedied by the committee and the owners obtaining knowledge of the
requirements and processes set
down in the legislation.
Secondly, the
duties stated in the documents from C Ann R Body Corporate Management Pty Ltd
provided by the applicants indicate the
functions or services proposed to be
carried out, including a description of additional services. It is evident from
this documentation
that the basic services are primarily administrative
involving the preparation (and distribution) of material prescribed by the
legislation,
the lodgement of documents as necessary and financial management
functions. The manager also provides additional services at an
extra cost to
the body corporate.
While the manager may be capable of providing a
service compliant with the legislation, it is not evident that the appointment
will
ease the tension between the lot owners, which in my view is one of the
significant issues of this dispute. The owners and committee
members would
still be responsible for the making of body corporate decisions and the presence
of an administrator may not always
resolve the underlying issues between owners.
The administrator may be able to explain the legislation, but if willing, the
owners
should be able to obtain the knowledge necessary to manage the scheme.
It should also be noted that depending on the powers of the
administrator, the
person would not be able to enforce the scheme By-Laws without the authority of
the body corporate.
Order
The applicants have raised a
number of issues which in my view have developed recently, and which it would
seem have caused unhappiness
within the scheme. I do not consider that the
examples submitted by the applicants indicate that there are endemic
administrative
problems. The applicants are correct to be concerned about these
matters, but I do not consider that the outcome sought is an appropriate
remedy.
An administrator appointed for a period of time with certain powers of the body
corporate and/or the committee would be a
significant burden to owners. In my
view, there is no evidence at this time to warrant such a decision. I consider
that it is reasonable
and appropriate that owners be given the opportunity to
properly manage the scheme. However, it may become evident that the present
problems are incapable of remedy if the issues between certain owners are not
resolved or if there is continual future significant
non-compliance with the
legislation. In this instance, it may become appropriate to appoint an
administrator.
For these reasons, the application is
dismissed.
Ancillary order
In my view, an ancillary
order is necessary requiring the body corporate to properly consider some
outstanding matters.
The first ancillary order relates to the payment of
the sinking fund contribution determined at the 2005 AGM. In my view, this
contribution
must be paid by all lot owners and if there are owners who have not
paid the contribution, I have ordered that it be paid within
21 days of the date
of this order.
The second ancillary order relates primarily to
transacting outstanding business from the 2006 AGM. The minutes of the 2005 AGM
need
to be considered and the minutes of the adjourned 2006 AGM will also
require consideration. Further, the accounts for the previous
financial year
need to be presented and adopted. The sinking fund contributions to be paid for
the current financial year must be
considered. The body corporate is obligated
to adopt a budget prepared in accordance with section 94 of the Standard Module,
and
to fix contributions in accordance with section 95 of the Standard
Module.
It is apparent that the owner of lot 6 obtained an authorisation
from the chairperson to keep a dog on the lot. The chairperson does
not have
any authority to provide such permission. Therefore, I consider that it is
appropriate that the owner now seek approval
from the body corporate, and even
though the By-Law empowers the committee to make this decision, I consider that
the issue should
be considered in the general meeting to be held in accordance
with this order. I also consider that any other owner or occupier
keeping an
animal without the necessary consent should also submit
There have been
a number of claims about work being carried out on lots without the consent of
the body corporate in accordance with
the By-Laws. In my view, this meeting is
an opportunity for any necessary approval to be sought. Every lot owner should
carefully
consider the work which has been carried out on their lot, consider
the terms of the scheme By-Laws and if necessary, submit an appropriate
motion
or motions to the secretary for inclusion on the agenda of the general
meeting.
I accept that owners may feel that the tension may be a barrier
to holding a proper meeting. In my view, the owners must endeavour
to resolve
these issues to ensure that for the purpose of properly administering the body
corporate, the tension (if it cannot be
resolved) does not impede proper
decision making and the body corporate acting in a reasonable manner for the
benefit of lot owners.
[1] Section 276(1),
Act.
[2] Section 276(2),
Act.
[3] Section 284(1),
Act.
[4] Section 48B, Land Title
Act 1994.
[5] Section 35,
Act.
[6] Section 94(1),
Act.
[7] Section 94(2),
Act.
[8] Section 100,
Act.
[9] See sections 27 to 37,
Standard Module.
[10] Section 35,
Standard Module.
[11] See
sections 26 and 103, Standard
Module.
[12] Section 60, Standard
Module.
[13] Section 13, Standard
Module.
[14] Section 41(5),
Standard Module.
[15] Section
100, Standard Module.
[16]
Sections 94 and 95, Standard
Module.
[17] Section 169,
Act.
[18] Section 152, Act;
Section 109(1), Standard
Module.
[19] Section 120(1),
Standard Module.
[20] Section
120(2), Standard Module.
[21]
Section 48, Standard Module.
[22]
Sections 21 and 22, Standard
Module.
[23] Section 49A,
Standard Module.
[24] Section
10(3), Standard Module.
[25] See
sections 25(2)(f), 25B, Standard Module.
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