Top of the Mark [2006] QBCCMCmr 54 (9 February 2006)

Last Updated: 19 December 2006

REFERENCE: 0558-2005

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11751
Name of Scheme:	Top of the Mark
Address of Scheme:	3 Orchid Avenue SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Eva Janoska, the owner of Lot 108

I hereby order that the application for an order by Eva Janoska, the owner of Lot 108 against the body corporate seeking the following outcomes, quote: 1. Declared Minutes Of Voting On Motions Outside Committee Meeting dated 20/06/05, void. 2. Declare Resolutions dated 7th July 2005 "that the tax Invoice from Landmark White Gold Coast P/L, Invoice No Qld dated 10th June 2005 for an amount of $6875.00 be approved for payment", void. 3. Remove committee members, Trevor Richard Park (chairperson), Christine Hobson, Ronald Allen and Michael Kyle as voting members of the committee. 4. Order to refund the amount of $6875.00 to the Body Corporate account by the above four committee members. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0558-2005

"Top of the Mark" CTS 11751

APPLICATION

This application is by Eva Janoska, the owner of Lot 108 (applicant) against the body corporate (respondent). The applicant is seeking the following outcomes, quote:

1. Declared Minutes Of Voting On Motions Outside Committee Meeting dated 20/06/05, void.
2. Declare Resolutions dated 7^th July 2005 "that the tax Invoice from Landmark White Gold Coast P/L, Invoice No Qld dated 10^th June 2005 for an amount of $6875.00 be approved for payment", void.
3. Remove committee members, Trevor Richard Park (chairperson), Christine Hobson, Ronald Allen and Michael Kyle as voting members of the committee.
4. Order to refund the amount of $6875.00 to the Body Corporate account by the above four committee members.

JURISDICTION

"Top of the Mark" Community Titles Scheme 11751 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:

(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

(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.

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)).

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate manager for distribution to the owner of each lot (excluding the applicant) and the committee. A submission was received from the committee and two lot owners. The applicant made a written reply to submissions under section 244 of the Act.

DETERMINATION

The applicant provided a copy of the record of the resolution voted on outside a committee meeting pursuant to section 35 of the Standard Module sent to committee members on 20 June 2005. The record states that it was resolved on 7 July 2005 "that the Tax Invoice from Landmark White Gold Coast Pty Ltd, Invoice No. Qld-183LL dated 10^th June, 2005 for an amount of $6,875.00 inclusive of GST be approved for payment". The record shows that committee members Trevor Park, Christine Hobson, Ronald Allen, Michael Kyle and Diane Clark voted on the motion which was passed by 4 votes to 1.
The invoice from Landmark White dated 10 June 2005 to "Top of the Mark CTS 11751" states that the amount of $6875.00 is due to be payable for the "Rating objection, attendance at conference, preparation of sales evidence, etc. inc. gst".

It is apparent that this payment concerned work carried out by Landmark White Gold Coast Pty Ltd (Landmark) relating to a review and objection of the property valuation assessed by the Department of Natural Resources and Mines. The body corporate has provided a copy of the "Decision on objection" dated 19 April 2005 issued by the Department of Natural Resources and Mines addressed to the body corporate advising that the objection against the valuation has been allowed and that the valuation effective from 30 June 2004 of $25,000,000 has been altered to $21,750,000. The reason for the decision is stated as "In comparison to similar properties, the applied value was not considered appropriate".

The applicant contends that the valuation provides a substantial financial benefit to Hachma International Pty Ltd (Hachma), the owner of 96 lots in the scheme. The applicant submits that the members of the committee are employees and associates of Hachma and that the committee members Trevor Richard Park, Christine Hobson, Ronald Allen and Michael Kyle should not have voted on the valuation as their employment and income depends on the profit of Hachma. The applicant states that these members did not disclose their conflict of interest and should not have voted.

The body corporate submitted that the committee resolved to object to the valuation for the benefit of all lot owners, and that if all owners paid Land Tax, the total saving would be $458,500.00 per year. It is submitted that even though all owners do not pay Land Tax, the committee acted responsibly in initiating action for the benefit of the owners who do pay Land Tax even though the committee do not know the owners who do pay the Tax. The body corporate submit that the objection must be lodged for the whole property and cannot be lodged in relation to only some of the lots in the scheme. The body corporate disputes that the committee members had a conflict of interest.

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, and carrying out other functions given to the body corporate under the Act or the community management statement^[1]. The body corporate must act reasonably in anything it does under section 94(1)^[2]. The body corporate has all the powers necessary for carrying out its functions^[3]. A decision of the committee is a decision of the body corporate^[4] provided the decision is not on a restricted issue for the committee^[5]. Section 34 of the Standard Module prohibits a committee member from voting on an issue being considered by the committee if the member’s direct or indirect interest in the issue would conflict with the appropriate performance of the member’s duties about the consideration of the issue.

In my view, the requirement for the body corporate to act reasonably and for the benefit of lot owners does not necessarily mean that the body corporate’s actions must benefit all owners or a majority of lot owners. However, there are times when an action for the benefit of the majority could be taken even though there may be an inconvenience or disadvantage to other lot owners. Alternatively, the benefit may be enjoyed principally by a singular lot owner or group of lot owners. In my opinion, each matter should be examined individually with regard to the most equitable action to be taken in the interests of lot owners.
The body corporate is correct in its submission that only the body corporate could have made an objection to the valuation of property. Section 26A(1) of the Valuation of Land Act 1944 provides that the individual lots in a scheme are not required to be valued separately and the scheme land may be valued as an undivided whole. Section 26A(2) provides that for the valuation and objection against the valuation, the body corporate is taken to be the owner of scheme land. The body corporate’s objection was allowed and the decision made by the Department of Natural Resources and Mines related to all lots on the registered building units plan. The applicant claims, with the support of 2 lot owners that Hachma will derive a substantial financial benefit from the decision. As the owner of 96 lots in the scheme, this may be so, but the owner of a lot in the scheme who is liable for Land Tax will similarly derive a benefit. The applicant claims that the residential owners will be exempt from the Tax and will not derive a benefit. The applicant has not provided any evidence to support this submission. Further, I am not satisfied that only Hachma will derive a benefit from the valuation to the exclusion of any other lot owner. The objection can only be lodged by the body corporate and given the functions and powers of the body corporate, it would be reasonable for the body corporate to give consideration to making an objection to the property valuation.

The applicant has disputed the committee resolution made on 7 July 2005 to pay Landmark. This resolution was made subsequent to the property valuation objection being determined. The applicant’s primary argument related to a claim that the members voting for the payment for the objection had a conflict of interest as employees or associates of Hachma. For the above reasons, I do not consider that it has been demonstrated that section 34(1) of the Standard Module applied to the consideration of the issue. Given that the applicant has not disputed any other aspect of the resolution, and that it is clear that the amount approved by the committee is within the relevant limit for committee spending^[6], I am satisfied that the committee could approve the expenditure and that the decision is a body corporate decision.

This resolution was made after the objection had been determined. Given that the body corporate initiated the action, the body corporate should have also made resolutions with respect to objecting to the property valuation and to instructing Landmark to act on behalf of the body corporate. By letter dated 15 December 2005, I required the body corporate to provide this information. By facsimile dated 6 January 2006, Duncan Lee of Strata Title Management stated that the body corporate records do not contain a resolution of this nature. While it is clear that the body corporate should have made a proper decision in accordance with the legislation before initiating the action, I do not consider that the absence of such a decision is significant to the determination of this dispute. It is evident that the body corporate did resolve to subsequently authorise payment to Landmark and that this resolution was given to lot owners.

For these reasons, I have dismissed the outcome sought to void the resolution of the committee to approve the Tax Invoice from Landmark for an amount of $6875.00.

The applicant has also sought an outcome that Trevor Richard Park, Christine Hobson, Ronald Allen and Michael Kyle be removed as committee members. Given that this outcome is reliant on the outcome of the resolution to approve the payment to Landmark, I conclude that, based on the arguments presented by the applicant, this outcome sought is dismissed.

The applicant has also sought an outcome that Trevor Richard Park, Christine Hobson, Ronald Allen and Michael Kyle refund the body corporate the payment to Landmark. This outcome is in effect a dispute with members of the committee and not the body corporate. The applicant, as the owner of a lot does not have standing under section 227 of the Act to make an application against committee members. For this reason and the reason that I consider the payment to be a reasonable body corporate expense, this outcome sought is dismissed.

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^[1] Section 94(1), Act.
^[2] Section 94(2), Act.
^[3] Section 95, Act.
^[4] Section 100(1), Act
^[5] Section 100(2), Act; Section 26, Standard Module.
^[6] Section 103, Dictionary, Standard Module.