One Park Road [2006] QBCCMCmr 593 (14 November 2006)

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

Edith Dindas Pty Ltd, the Owner of lots 2, 5 6, 10, 11, 12, 13, 14, 15, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 28, 30, 31, 32, 33, 35, 36, 37 and 40 in the scheme

I hereby order that the application for the following orders –

" a declaration pursuant to the terms of the order of administrator (sic)Toohey of 23 December 2005, that the administrator only be entitled to receive or retain remuneration for the time actually spent by Michael Teys, the appointed Administrator, in the course of the administration;

a declaration pursuant to the terms of the order of administrator (sic)Toohey of 23 December 2005, that the administrator only be entitled to receive or retain remuneration for task (sic) validly performed by Michael Teys, the appointed Administrator, in the course of the administration and not for tasks that were ultra vires;

A declaration that where work had been delegated to other people who were employed by Mr Teys Company that such delegation be invalid and ultra vires pursuant to the terms of the order of administrator (sic) Toohey of 23 December 2005;

That the purported resolutions made by the adjudicator (sic) on 22 September 2006 are invalid;

That the administrator cease incurring further expenditure on behalf of the Body Corporate until final determination of this application;

That the administrator be restrained from acting on the purported resolutions of 22 September 2006 until the final determination of this application;

That the administrator be restrained from the further appointment of any building manager until the final determination of this application."

are dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0786-2006

"One Park Road" CTS 2114

APPLICATION

This is an application dated 3^rd October 2006 by Edith Dindas Pty Ltd, ( the Applicant) owner of Lots 2,5,6,10,11,12,13,14,15,17,18,19,20,21,22,23,24,25,26,28,30,31,32,33,35,36,37 and 40 in the scheme against the body corporate for the scheme ( the body corporate) for an order that the appointment of administrator Michael Teys, ( the administrator) appointed by adjudicator’s order on 23^rd December 2005, be terminated, and that declarations are made in respect of the remuneration of the administrator; that work delegated by the administrator to other persons be declared invalid and ultra vires; and that resolutions purported to be made by the adjudicator (sic) on 22^nd September 2006 are declared invalid.

The Applicant also seeks an interim order that that the administrator cease incurring further expenditure until final determination of this application; that the administrator be restrained from acting on the resolutions of 22^nd September 2006 until final determination of this application; and that the administrator be restrained from the further appointment of any building manager until the final determination of this application.

Subsequent to the lodging of this application, an extraordinary general meeting was held on 30^th October 2006 wherein a resolution was passed in favour of the appointment of the Applicant as building manager. The resolution was passed by the Applicant exercising its majority vote representing 28 lots.

JURISDICTION

"One Park Road" CTS 2114 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Commercial Module) Regulation 1997 (the Commercial Module). There are 39 lots in the scheme created under a Building Unit Plan of subdivision.

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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute.

It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is to simply maintain the "status quo" of a situation, and not to finally resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application "if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates". Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order.

Submissions were therefore sought from the body corporate committee, State Wide Body Corporate Pty Ltd, (the body corporate manager) and from the administrator.

SUBMISSIONS

The Applicant says that on 25^th August 2006, the District Court acting as an appeal court, handed down a judgment in favour of the Applicant on a matter which arose prior to the appointment of the administrator. The Applicant had appealed an adjudicator’s order that stated inter alia that the Applicant’s voting rights could be restricted in respect of its ability to vote as a majority owner in a scheme governed by the Commercial Module. The adjudicator overruled certain resolutions of the body corporate passed as a result of the voting power of the Applicant, finding a "just and equitable" basis under section 276 Act for doing so.

Since His Honour Judge Wilson found that the adjudicator erred in this respect, the Applicant’s case, in brief, is that the appointment of the administrator should now be terminated. The Applicant says –

"As the adjudicator has made an error in the interpretation of the law on this point we submit that this alone is sufficient grounds to terminate the appointment of the Administrator."

In respect of the interim order, the Applicant says that the administrator is an unreasonable expense on the body corporate; his charges do not reflect fair value to the body corporate; and he is biased against the Applicant.

Further, the Applicant states that the appointment of the administrator was "a drastic remedy" and has deprived the Applicant (referred to as ‘the respondent’ in much of the submission) of its say in the management of the scheme, and has exposed it, as the majority owner, to unreasonable costs. The Applicant objects to these costs.

The Applicant says that the administrator has failed to circulate minutes as required by his appointment; has failed to obtain two quotations for the car parking project as required, or to put such quotations to a general meeting. A resolution to appoint Star Building Management Services (Star) to provide facilities management for the maintenance of common property was apparently taken on 21^st September 2006 by the administrator, and advised to lot owners on 22^nd September 2006 but not received by the body corporate manager until 29^th September 2006. Under the adjudicator’s order appointing the administrator, the administrator was required to give 14 days’ notice of such motions

Furthermore, the spending in connection with the appointment of Star will exceed the spending limit per project and a second quotation should therefore have been obtained by the administrator. The adjudicator’s order appointing the administrator requires that where spending on a project exceeds $450 per lot, that such expenditure must be referred to a general meeting. The administrator did not follow this course and is incompetent.

The Applicant also claims that the administrator has delegated his powers under the authorisation, which he is not entitled to do. The Applicant claims that such delegation is contrary to the appointment and is ultra vires. The Applicant relies on the word " exclusively" in the Adjudicator’s order and the entitlement of the administrator to charge $132 per hour for his services, which does not include any staff or another company, and requires that all tasks under the appointment are performed only by the administrator himself.

The Applicant concludes that since the administrator is an experienced body corporate manager and lawyer, there is "reasonable excuse" (sic) for not complying with the order. (I have taken this to read " no reasonable excuse." )

The administrator submits in respect of the interim outcome sought, that he has "overlooked the adjudicator’s order" on the occasion of sending a notice of motion on 22^nd September 2006, but that this motion merely extended the time on an existing agreement and twice before "motions for the same purpose" had been passed in this way without objection. He believes it is the body corporate manager who made the objection on this occasion, without any reference to the committee or time to take instructions from the committee.

He says that since the approval of Star is "$9,000 net of GST, it is within the approved spending limit for the administration of $9750.00." He denies that it is either a service contract by definition in the act, or " a project." He has received no objections from lot owners save for the Applicant.

The administrator, making his submision before the proposed EGM. was concerned that since the extraordinary general meeting proposed inter alia a motion to appoint a building manager, it is in conflict with the adjudicator’s order by which he was appointed.

He says it would be unreasonable for him to be expected to perform " all secretarial and financial functions" himself, but that staff of his company Teys Strata (Brisbane) Pty Ltd would assist him in that role. Any objection to the payment of his fees is unfounded.

The body corporate committee, also making its submission before 30^th October 2006, submitted that the adjudicator’s order appointing the administrator was not appealed by the Applicant. Since the committee had limited time in the circumstances of an interim application to make a concerted response as a committee, four committee members have made the submission. They say that for their part, they are happy with the services provided by the administrator and believe he has acted in the best interests of the body corporate.

The question of the appointment of a building manager was considered by the appellate court and the adjudicator’s decision in that respect was not overturned. They are also concerned that at the extraordinary general meeting of 30^th October 2006 (the EGM), the Applicant has once again put itself forward as building manager, and that whilst there are other quotations given for building manager, that any appointment of a building manager whilst the period of administration is still current, would be unlawful.

The EGM also has a motion to remove four committee members only recently appointed on 26^th September 2006 at the Annual General Meeting, and to elect nominees of the Applicant. They would like the scheme to remain under an administrator for a further 12 months.

The body corporate manager also made a submission, and advises that the EGM has now taken place. The Applicant having over 60% of the votes, the scheme is now in the situation where the Applicant " has purportedly been appointed as Caretaker by the Body Corporate and still have (sic) Michael Teys appointed as the Administrator."

The body corporate manager denies that it has acted obstructively on the administrator’s motions or that it has usurped the powers of the committee. Its concern is that it does not believe that Star has been properly appointed and since due process has not been followed, it has no authority to pay Star.

Following the EGM, it says that the removal of committee members is not in accordance with the Commercial Module, but the practical effect is that the committee members now appointed are those that would have been appointed if nominations had not been called in accordance with the provisions of the Standard Module as directed by the adjudicator. It requests an urgent decision to these matters.

DETERMINATION

The Applicant seeks an interim order that the administrator cease incurring further expenditure until final determination of this application; that the administrator be restrained from acting on the resolutions of 22^nd September 2006 until final determination of this application; and that the administrator be restrained from the further appointment of any building manager until the final determination of this application.

The administrator was appointed in the matter of an application 0495-2005 with effect from 28^th December 2005 for the purpose of making decisions reasonably necessary for maintenance of common property, for the temporary management of the car parks and disabled persons’ lift; to make sure that the body corporate held required insurances, and to take any action required so that insurance policies were not jeopardised. For those purposes only, he was given all the powers and functions of the committee and lot owners, including the power to raise a special contribution for any provision for which there was no budget, including his own expenses, and his remuneration of $132 per hour inclusive of GST.

The adjudicator required that the administrator keep proper minuted records and send notice of meetings and minutes to lot owners.

The appointment of the administrator will terminate in accordance with an order of an adjudicator terminating the appointment; or by one month’s written notice by the administrator; or by one month’s written notice by the body corporate authorised by a resolution without dissent taken at a general meeting at any time, or authorised by ordinary resolution if after one year of the commencement of the appointment.

The adjudicator considered that "one year is a reasonable base period for the administration.." but gave the body corporate the option of removing the administrator if by resolution without dissent taken in that year. In other words, the adjudicator considered that the administrator should stay in place for a year unless the body corporate without exception wanted to remove him from office. The "base period" expires at midnight on 27^th December 2006.

Removal of the administrator may be by adjudicator’s order and it is this that the Applicant seeks as a final order. The reasons given are that the administrator has not complied with the grounds of his appointment, and has performed incompetently. Additionally, he is an expense to the body corporate which is no longer required since the judgment of the District Court on 25^th August 2006 has removed some of the restrictions placed on the Applicant by the adjudicator’s order 0682 – 2003.

However, in respect of the interim outcome sought, whilst there are no submissions to this effect, I am not convinced that I have jurisdiction to place restrictions on the performance of the administrator or to vary the terms of his appointment, pending his termination. It appears to me that he can either be removed by an adjudicator’s order, or the body corporate can by resolution dismiss him. If the body corporate is not satisfied with the performance or spending of the administrator it may take steps to dismiss him by a resolution without dissent. After 27^th December 2006, it will need only an ordinary resolution to remove him.

This matter is complex and not suitable for the determination sought by the Applicant at an interim stage. Further, the evidence given by the Applicant of the administrator’s failure to follow his authorisation, appears to have occurred once on the occasion of 22^nd September 2006, an oversight to which the administrator admits, and although I am not condoning that oversight, the administrator may be forgiven since it is the only example in a period of over 9 months.

The adjudicator’s order, appealed against by the Applicant to the District Court was matter 0682 – 2003. The judge in that matter was aware of the administrator’s appointment between the lodgement of the appeal and the hearing of the case in February 2006. The judgment does not affect the appointment of the administrator. About the appointment of an administrator generally, His Honour said –

... ..."it would be a mistake to usurp the Commissioner’s right to consider each case on its merits as it arises and determine whether or not an administrator, with either absolute or limited powers, should be imposed."^[1]

The Applicant seeks three orders in respect of the remuneration of the administrator-

The third of these triggers the first outcome for relief, in that the Applicant seeks an order that work performed in the administration by anyone other than the administrator himself was ultra vires, that is, beyond the terms of the administrator’s appointment by the adjudicator, and that being so, it should not be charged to, and paid for, by the body corporate.

I do not find that the adjudicator meant that the administrator could not obtain office or secretarial services in order to perform his function. I am of the view that the word " exclusively" in the order means that only the administrator, and not the lot owners or the committee, would henceforward be responsible for making decisions about maintenance of the common property and obtaining and maintaining insurance policies. In that role, he has "all the powers, functions and responsibilities of the committee, each executive member of the committee, and owners in general meeting with the exception of a power to delegate those powers, functions and responsibilities to another."

The administrator has not delegated his power, function or responsibility to another by reason only of engaging secretarial staff under his supervision and in a company over which he has control.

The second outcome seeks a declaration that the administrator should not be paid for work done outside his power. In order to succeed on this ground, the Applicant must show that the administrator has acted outside the power given to him under the adjudicator’s order. I can find no evidence in the application of the administrator allegedly exceeding his powers, other than by hiring secretarial staff. There are allegations that the administrator is expensive and not cost effective ( p.4 submissions); that he has failed to comply with the order in respect of obtaining quotations and keeping the body corporate informed (p.5); and that he has delegated his work or function (pp.5 and 6). However, apart from a general claim that the administrator is unnecessary and expensive, there is no evidence of him acting ultra vires, save as alleged in respect of the secretarial staff dealt with above.

Futile Orders
Since the lodging of this application, the scheme has held an EGM. Motions at that EGM clearly cause concern to the committee members who made a submission in this application (now removed from office), and to the administrator and the body corporate manager. This Office is asked for an "urgent decision."

The body corporate and/or administrator would need to make a new application for these matters to be considered. Their submissions were sought only on the application by the Applicant for a restriction to be placed on the administrator pending his termination, and declarations about his remuneration and the status of some of his decisions.

However, prior to receiving an interim order, the Applicant requested that an extraordinary general meeting be convened. Such meeting was convened only 27 days after lodging the application. From the Applicant’s submissions it is clear that the request for such extraordinary general meeting was lodged prior to the lodging of this application. The Applicant states that it has a right to submit a building management agreement (on behalf of itself) to the EGM and that it would do so.

One of the final outcomes sought by the Applicant is that resolutions of the administrator made on 22^nd September 2006 are declared invalid. Those resolutions included the appointment ( or re-appointment) of Star as ‘facility manager’ which under the order appointing the administrator is within the exclusive province of the administrator. For the purposes of making decisions about maintenance of the common property and for the temporary management of the car parks, he was given all the powers and functions of the committee and lot owners, to the exclusion of anyone else.

It appears to me that to seek a declaration from this Office that Star was invalidly appointed and at the same time put in train a process by which the Applicant will certainly be appointed as ‘building manager’ is an abuse of this jurisdiction.

Further, I am aware that to seek submissions from the body corporate and the administrator in respect of the final orders sought, will result in a futile order requested or made, in that by the time submissions and replies close, the days of the administration will be almost numbered.

For the reasons given, I propose to make a final order at this interim application stage. The application both for interim and final orders is dismissed.

^[1] Dindas & Anor –v- Body Corporate for One Park Road CTS 2114 & Ors [ 2006] QDC para .54

Number of Scheme:	2114
Name of Scheme:	One Park Road
Address of Scheme:	1 Park Road MILTON QLD 4064

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

One Park Road [2006] QBCCMCmr 593 (14 November 2006)