Waterview Terraces [2006] QBCCMCmr 711 (11 September 2006)

Last Updated: 29 March 2007

REFERENCE: 0317-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	26977
Name of Scheme:	Waterview Terraces
Address of Scheme:	34 Bundock Street TOWNSVILLE QLD 4810

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

Graham Bannan, an Owner(s) of lot 25

I hereby order that the application for orders, including an order to invalidate the decision of the committee to participate in a joint review of the caretaker’s salary, is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0317-2006

"Waterview Terraces" CTS 26977

Application

Waterview Terraces Community Titles Scheme (Waterview Terraces) is an 80 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). This module is commonly adopted by schemes designed for holiday letting. The body corporate for Waterview Terraces has engaged a caretaker to undertake certain responsibilities concerning the scheme.

This application is by Graham Bannan, an owner of lot 25 (applicant) seeking orders against the body corporate for Waterview Terraces (respondent). The applicant says that the caretaker has sought an independent review of his salary and the body corporate committee has agreed to a joint review with the body corporate paying half the costs. The applicant seeks to overturn this decision of the body corporate.

Submissions

The applicant’s main submissions were to the effect that:

• He has never before encountered a contractor asking his employer to share costs of a wage and duties review, where the review is obviously to obtain more wages from his employer;
• The committee may be breaching section 92 and 93 of the Act by agreeing to pay for half the costs of the review; and
• The review should proceed with no involvement of the body corporate.

Submissions by the secretary of the body corporate were to the effect that voting to participate in a joint review of the caretaker’s remuneration and pay half the costs is that this process may result in agreement on an independent recommendation as to the appropriate level of remuneration for the caretaker’s duties. This would potentially avoid additional costs of a dispute with the caretaker over the amount of remuneration and the additional costs of the body corporate obtaining its own report.

Other owners have also provided submissions. The majority of submissions support the committee’s decision and a number state that the proposed spending is well within the committee spending limit. However, some submissions oppose the decision with some concern expressed that the committee’s actions may result in the body corporate being bound to accept the findings of the review.

Decision

Applicable law

The body corporate has all the powers necessary for carrying out is functions, including the power to enter into contracts (Act, 95). The committee has the power to act for the body corporate subject to limitations including that it cannot normally engage in spending above $125 per lot or make decisions that alter rights, privileges or obligations of owners (Act 100, Accommodation Module 24, 101).

Decision to spend up to $2000 in conducting review

The applicant has not raised any serious questions about the power of the committee to agree on a joint review of the caretaker’s wages and duties. The only questions raised appear to relate to the appropriateness of agreeing to spend up to $2,000 on the review and the reasonableness of a decision to undertake the joint review.

Spending by committee

Normally, the committee can only engage in spending on any given project where the total spending involved is less than $125 per lot. For a scheme the size of Waterview Terraces, this represents a total of $10,000.

If the committee were proposing to spend more than $10,000 related to the review or if there were insufficient funds available in the budget for spending of this nature then the matter may need to be referred for decision by owners in general meeting.

However, at this stage, the only estimated expenditure is an amount of $2,000, representing an amount of up to $25 per lot. The applicant has not raised any serious questions about whether this amount is in excess of the committee’s authority or in excess of amounts available in the budgets for this type of expenditure.

Reasonableness of committee decision

A few submissions raise questions about the reasonableness of the committee’s decision. One of these submissions states "As a contractor myself I find it quite extraordinary that the Body Corporate Committee saw fit to agree to sharing the cost of such a wages review".

A committee is required to act reasonably in performing its functions (Act, 94(2)). A statutory requirement to act reasonably is satisfied if the decision is objectively reasonable.^[1] It is therefore necessary to look at whether the decision was within the limits of reason and governed by sound thinking. Any reasons given for the decision are obviously relevant but there is no need to consider the subjective intention of the committee members who voted.

The majority of committee members voted to contribute to and participate in a joint review of the caretaker’s remuneration. The main reason given for doing so is that this may ultimately result in agreement on an independent recommendation as to the appropriate level of remuneration for the caretaker’s duties. This would potentially avoid additional costs of a dispute with the caretaker over the amount of remuneration and the additional costs of the body corporate obtaining its own report.

The submission from the secretary makes clear that any ultimate vote on whether the body corporate accepts or disputes the outcome of the review will be by owners in general meeting. In fact, the legislation requires that this decision be by owners rather than the committee. Obviously it is not possible to know if the owners will be able to agree on terms with the caretaker that both parties consider to be fair and reasonable. The decision of the committee to cooperate with the caretaker in conducting a review and share in the costs of the review may ultimately save the body corporate money or may ultimately cost more. However, the applicant has failed to show that the decision is unreasonable.

Order

For these reasons, I dismiss the application to overturn the committee’s resolution.

The applicant has also sought orders to require the committee to circulate the report to owners and call a general meeting to discuss the findings. However, the secretary has acknowledged that any decision will need to be made by owners in general meeting. The committee will presumably ensure that relevant information is first distributed to owners. The applicant will also be able to obtain a full copy of the report from the body corporate (Act, 205). Therefore, it is unnecessary to make an order of the kind sought by the applicant and the application will be dismissed in its entirety.

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^[1] Greiner v Independent Commission Against Corruption (1992) 28 NSWLR 125.