The Groves Townhouses Lawnton [2006] QBCCMCmr 689 (21 December 2006)

Last Updated: 27 March 2007

REFERENCE: 0794-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	21312
Name of Scheme:	The Groves Townhouses Lawnton
Address of Scheme:	West Dianne Street LAWNTON QLD 4501

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

Josephine Margeson, the Owner(s) of lot 213

I hereby order that the application for an order that a ruling be made by the adjudicator from the facts given, that 82 days Body Corporate fees dating from 1/9/05 to 21/11/05 have been incorrectly levied twice by the Groves Body Corporate Committee and that the overcharge be refunded to all owners on their next levy statement is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0794-2006

"The Groves Townhouses Lawnton" CTS 21312

Application

This application is by Josephine Margeson, the owner of Lot 213 (applicant) against the body corporate (respondent). She seeks orders that:

"That a ruling be made by the adjudicator from the facts given, that 82 days Body Corporate fees dating from 1/9/05 to 21/11/05 have been incorrectly levied twice by the Groves Body Corporate Committee and that the overcharge be refunded to all owners on their next levy statement."

Jurisdiction

"The Groves Townhouses Lawnton" Community Titles Scheme 21312 is a 169 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) 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)).

Grounds

The applicant states:

This is an unresolved dispute which began in October 2005. When Teys took over financial management in 2005 they wrongly assumed from the annual general meeting minutes of 2004 that our levies were only paid to 31/8/05, despite the fact that on April 26, 2005 they had sent proprietors a levy notice for six months fees fro the period 22/5/05 to 21/11/05.

On November 21, 2005 we were issued with a further levy notice covering the period from 1/9/05 to 30/11/05. This represents an overcharge of 82 days, amounting to approximately $195.85 for owners of 3 bedroom properties, and $146.88 for owners of 2 bedroom properties.

Many proprietors have expressed their concerns regarding this overcharge, and Teys so far have issued two letters to all proprietors and one to me personally, defending their actions. They remain adamant that we were in arrears in November 2005.

In company with my fellow proprietors I reject this. We are very much aware of how much we pay in levies in a given year. Out history is as follows:

At the annual general meeting on November 1989 the accounting year was changed to September 1 to August 31 annually. The wording for the budget resolution for that year states that "The budget for the year commencing 22 November 1989 to 21 November 1990 be accepted and levied accordingly".

This set the pattern of financial administration for the next seventeen years, with fees being levied twice yearly in November and May, until the levy dates were realigned by Teys at the annual general meeting in 2005.

The levy notices and calculations show clearly that our payments have always been made in advance. As a past treasurer of this Body Corporate my first duty after the annual general meeting was always to send out the levy notices as soon as possible in order to finance the budget proposals which have just been passed.

I have recently been informed that in 1997 the Body Corporate and Community Titles Act was changed, requiring, without resolution, that the accounting year, budget year and levy year all cover the same period. The then committee executive did not inform the proprietors of this, and although the date on the budget proposals at the annual general meeting carried the date September 1 to August 31 (date of accounting year), this was a change on paper only, and we continued to be levied on November and May 22^nd annually, until Teys realigned the levy dates to coincide with the accounting year at the annual general meeting of 2005.

It was at this time that the error occurred. It was time of confusion, proprietors were distracted by the fact that the levy dates were being changed to quarterly charges and that they were being asked to vote for 5 lots of levies. They failed to notice that the dates of the first instalment covered a period they had already paid for. No one would knowingly vote to pay their levies twice. Due to family circumstances, I was unable to be at the meeting, but wrote to Teys querying the resolution instead. Only when we received the next levy notice did it become apparent that something was wrong.

This is a definite overcharge and as these properties are subject to frequent change of ownership I ask that the Commissioner make an early decision to reimburse proprietors so that those people who were victims of this overcharge will be the ones who actually receive the refund.

The applicant has attached historical documents which demonstrate that at least at some point in time, the Body Corporate regarded the budget and levy year as being based on 22 November to 21 November, while the accounting year as running from 1 September to 31 August.

Submissions

Teys Strata (Brisbane) Pty Ltd made a submission on behalf of the committee. I note that the applicant objected to this submission, however I will accept the submission as it is quite a common practice for body corporate manager’s to make submissions on behalf of the Body Corporate.

Teys largely confirm the historical background given by the applicant and reiterate that the change was for adopted for the purpose of aligning the various "years". They say that for the "years" to not align would be at odds with Section 94 of the Body Corporate and Community Management (Standard Module) Regulation 1997. They are of the view that the levies due on 22 November 2005 related back to the financial year ending 31 August 2005.

They advise they have made more than one attempt to explain the situation to the applicant and other owners who were concerned about the situation.

Determination

The documentation provided by the applicant, namely the minutes of the annual general meeting of 25 November 1989, confirm that at that time the Body Corporate had been operating under the concept of the statement of accounts and the budget year, falling across two different periods. It appears that the scheme was initially registered on 23 November 1984, and this is probably the origin of the levy pattern of November and May.

I have not received any information as to when it was that the Body Corporate determined that its financial year should commence on 1 September, and in the scheme of things the issue is immaterial.

I regard it as a legitimate decision to align the budget, levy and accounting years. It is entirely consistent with the practice of other bodies corporate and is also in line with other incorporated bodies where the alignment of budget and financial years is the normal practice.

From my point of view, no-one has established to my satisfaction what period of time the levy due on 22 November 2005 covered i.e. I am not satisfied that it is either payment in arrears for the financial year ended 31 August 2005 or that it is payment on time for the notional budget year that this Body Corporate had operated under historically.

However, I am aware that we now have the reality of an administrative fund balance at 31 August 2005 of $57,720.41 which had reduced to $27,704.39 by 31 August 2006. So, even if could be established that lot owners had been doubled charged for the period 1 September 2005 to 21 November 2005, the Body Corporate has still run at a deficit of around $30,000 for the 2006 year.

I do not know what budget or levy the Body Corporate has struck for the 2006/2007 financial year, but the fact of the matter is that the levy must be struck at a level that covers all the Body Corporate’s expenses. If I were to order the Body Corporate to refund an amount equivalent to 82 days levies to all owners, then around another $20,000 would need to be found to enable the Body Corporate to make the refund. Logically then the Body Corporate would be up for the cost of:

•	distributing a refund;
•	calling an extraordinary general meeting to adjust the budget and authorise a special levy to meet the cost of the refund; and
•	administering the collection of the special levy from lot owners.

Therefore if I made the order sought by the applicant, lot owners would in fact be disadvantaged for the sake of having a temporary refund. As so much time has elapsed since the 82 day issue arose, the Body Corporate has become reliant on the monies collected in terms of either having already spent those monies or in calculating a reduced budget for the upcoming year (based on the 2006 closing balance of the administrative fund budget).

I appreciate that a nominal amount might also be held in the sinking fund. However, given the time that has elapsed since the monies were collected, the relatively small amount involved and a lack of information regarding the sinking fund budget, it would not be appropriate to order a refund of these amounts either.

In the circumstances I will dismiss the application.