Kinkabool [2006] QBCCMCmr 749 (22 September 2006)

Last Updated: 2 April 2007

REFERENCE: 0722-2006

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	24731
Name of Scheme:	Kinkabool
Address of Scheme:	34 Hanlan Street, SURFERS PARADISE QLD 4217

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Vasilj Ceric, the owner of Lot 9; Romuald and Barbara Sikora, the owner of Lot 10; Helen Momeni, the owner of Lot 11; Katherine Legg, the owner of Lot 12; David and Christine Brame, the owner of Lot 16; Gabriel and Patricia Poblete, the owner of Lot 23; and Colin Jones, the owner of Lots 24 and 44.

I hereby order that the application for an interim order by Vasilj Ceric, the owner of Lot 9; Romuald and Barbara Sikora, the owner of Lot 10; Helen Momeni, the owner of Lot 11; Katherine Legg, the owner of Lot 12; David and Christine Brame, the owner of Lot 16; Gabriel and Patricia Poblete, the owner of Lot 23; and Colin Jones, the owner of Lots 24 and 44 to halt the collection of the "sinking fund special" levies ($44,000.00) and to halt the external painting of building and associated works (OPAT) (around $85,000.00), is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0722-2006

"Kinkabool" CTS 24731

APPLICATION

This application is by Vasilj Ceric, the owner of Lot 9; Romuald and Barbara Sikora, the owner of Lot 10; Helen Momeni, the owner of Lot 11; Katherine Legg, the owner of Lot 12; David and Christine Brame, the owner of Lot 16; Gabriel and Patricia Poblete, the owner of Lot 23; and Colin Jones, the owner of Lots 24 and 44 (applicants) against the body corporate. The applicants are seeking the following outcomes.

The final outcome sought is, quote:

We seek an order that the striking of sinking fund levies be started afresh to accord with a new sinking fund forecast to be obtained, and approved by a general meeting; and that the external painting and associated works (OPAT) be ceased until the proper amount is collected from the normal sinking fund levies conforming to the new sinking fund forecast and the work is properly considered, with proper quotes and the work approved by a general meeting.

The applicants have also sought the following interim order, quote:

1. Halt the collection of the "sinking fund special" levies ($44,000.00) and
2. Halt the external painting of building and associated works (OPAT) (around $85,000.00)

JURISDICTION

"Kinkabool" Community Titles Scheme 24731 is a 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].

The Commissioner for Body Corporate and Community Management has referred the application to me to decide whether the nature or urgency of the circumstances of the application warrant an interim order being issued. The Commissioner has referred the application to me even though affected persons have not been given notice of the application, or afforded an opportunity to make submissions about the application^[2].

Section 279(1) of the Act allows an adjudicator to make an interim order if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances of the application. In any consideration of an application which seeks the making of an interim order, it is necessary to determine at the outset whether, because of the nature or urgency of the circumstances relating to the application, an interim order is in fact necessary or appropriate. The examples included in the Act under section 279(1) are suggestive of the usual circumstances where an interim order might be made. Both examples are in the nature of injunctive relief. Whilst the range of matters which might be the subject of an interim order is not capable of definition, the applicant does need to establish that the circumstances of the application warrant the making of an interim order.

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the body corporate committee. A submission was received from two committee members and the body corporate manager.

DETERMINATION

The body corporate, at the Annual General Meeting dated 25 August 2005 (2005 AGM) resolved to repaint the exterior of the building and accept a quotation from Opat for $77,574.00 plus GST (Motion 11). The body corporate also resolved that payment for the repainting be met by way of a special levy payable in two instalments due 1 December 2005 and 1 March 2006 (Motion 12).

In respect of Motion 11, the applicants main submissions are to the effect that:

• The notice of the 2005 AGM contained a very general description of the proposed works. There are some discrepancies between the description and the quotes.
• There should have been a third option and there was no opportunity to vote no against the two submitted options. Owners should have been able to vote against the proposed painting and associated works.
• The quotes presented to the 2005 AGM did not include GST.
• Owners did not agree to the price submitted by Opat and the Opat report contained numerous omissions. The committee was asked to get two proper quotes and submit them to an extraordinary general meeting before any works are committed.
• The proposed budget for 2005 to 2006 did not include the Opat price, and neither does the proposed budget for the year 2006 to 2007.
• The committee has selected the colour scheme.

In respect of Motion 12, the applicants main submissions are to the effect that:

• A notice of contributions payable was not given for the period 1 December 2005 to 28 February 2006, and the notices do not indicate the GST amount.
• The special contribution has caused great confusion.
• Owners are concerned about the errors and omissions made by the committee and the body corporate manager.
• Owners have been paying increased sinking fund contributions for some years and the special levy contribution is unnecessary. The "liability" and the "inadequate provision" in the budget has not been established.
• The decision is contrary to the sinking fund forecast.
• Owners expressed concern at the 2005 AGM about the special contribution and it was decided at the meeting that the committee re-assess this matter.

The committee was invited to make written submissions to the application for an interim order. While the committee itself did not make submissions, the chairperson, a committee member and the body corporate manager made individual submissions. Lady Proctor (chairperson) submitted that it was resolved at the 2005 AGM to paint and to fund the painting by special levy; and the minutes of the 2005 AGM contained an error in relation to GST. Mr Rollington (committee member) submitted that most lot owners have paid the special levies and that the painting has commenced. Mr Yeates (the body corporate manager) referred to section 95(2) of the Standard Module.

On Thursday 21 September 2006 I conducted a teleconference attended by Mr Sikora for the applicants and Lady Proctor, the body corporate chairperson. The following information was given at the teleconference conducted on Thursday 21 September 2006:

• Opat have commenced the painting works about a fortnight ago. The works are expected to take approximately 16 weeks.
• The price approved at the 2005 AGM is firm.
• The shortfall in the price of the painting is to be met from funds accumulated in the sinking fund.
• The committee decided on a colour scheme recommended by a colour consultant. Owners had an opportunity to view sample colours which were painted on a part of the building in April/May 2006.

On 22 September 2006, I requested that the body corporate manager provide a copy of the voting paper for the 2005 AGM. This documentation was provided on the same date.

To assist me in determining whether it is just and equitable to grant relief at this stage, before full and final consideration of all the issues raised, I consider it relevant for me to briefly consider whether the application raises any serious legal question that will need to be determined. If the application raises a serious legal question then it may be appropriate to make an interim order to attempt to preserve the integrity of the issues pending the final determination. It is relevant to consider whether the likely inconvenience should no interim order be granted outweighs any inconvenience likely to result from the interim order.

The body corporate has a duty to administer, manage and control the common property reasonably and for the benefit of lot owners^[3]. The body corporate must maintain common property in good condition^[4]. The body corporate must, for each financial year, adopt an administrative fund budget and a sinking fund budget^[5]. The body corporate must fix a special contribution to be levied on the owner of each lot if a liability arises for which no provision or inadequate provision has been made in a budget^[6]. If a motion at a general meeting proposes the carrying out of work and the cost of carrying the proposal into effect is more than the relevant limit for major spending, owners must be given copies of at least 2 quotations for the carrying out of the work, and the motion must be stated as a motion with alternatives in the agenda and on the voting paper for the meeting^[7].

It is evident that the body corporate provided two quotations to owners with the notice of the 2005 AGM for painting previously painted surfaces of the building. The voting paper for the meeting indicates that Motion 11 was included as a motion with alternatives. The body corporate approved the fixing of a special contribution to be paid by lot owners towards the painting liability. The body corporate has the obligation to fix this contribution if a liability arises (the painting) and there is inadequate provision in the sinking fund budget.

The applicants claim that the painting quotation was not agreed to at the 2005 AGM and that the committee were instructed to convene another general meeting to give proper consideration to this matter. However, this argument is not borne out from the minutes of the 2005 AGM. The applicants also claim that owners should have been able to vote against the proposed painting and associated works. The voting paper provided by the body corporate manager demonstrates that owners had opportunity to vote against the motion. Given the requirements of section 42B of the Standard Module, the alternative quotations would not have been considered had the Motion not been passed. It would also seem that the sinking fund forecast approved by the body corporate estimated painting works costing over $85,000.00 from June 2006. The body corporate is entitled to fix a special contribution in the event that the monies allocated for painting in the sinking fund do not meet the proposed costs. Additionally, ensuing events such as the requirement to pay the special contribution (with notice given for at least one instalment) and by the notices about the commencement of the painting given since approximately June 2006 show intention to implement the Motions. These procedures were taken over a period of approximately 10 months without the applicants making a dispute resolution application, or seeking to submit matters to another general meeting.

There may be some administrative issues relating to the subsequent actions of the committee, including in relation to the selection of a colour scheme. However, I do not consider that the arguments provided by the applicants’ raises any serious legal question to warrant the making of an interim order sought. Additionally, the applicants have not shown that even though approximately 12 months has passed since the resolutions were passed, there are reasonable grounds that support the making of an interim order because of the nature or urgency of the circumstances.

The applicants should note that section 242 of the Act prescribes a three month time limit for making an application questioning a resolution passed at a general meeting and that this limit may only be waived by an adjudicator for good reason. This provision is important as it provides certainty to a body corporate in its planning and organising body corporate affairs, and to others acting in reliance on body corporate decisions. Implementation of general meeting resolutions is a requirement of the committee^[8], and committees need to get on with their business unhindered by the uncertainty of resolutions being called into question many months after being decided. This need is no less important for outsiders dealing with a body corporate who also need the certainty of relying on body corporate decisions for commercial decisions subsequently taken, and the attendant legal and financial ramifications. In my view, this is an important consideration in the making of this interim order.

It is apparent that Motions 11 and 12 have been implemented and that Opat have now commenced painting on the terms approved by the body corporate. The body corporate has implemented Motion 12, and the date for payment of the instalments was more than 6 months before this application was made. In my view, the body corporate is now entitled to rely on the resolutions passed on Motions 11 and 12 at the 2005 AGM.

For these reasons, the application for an interim order is dismissed.

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^[1] Section 276(1), Act.
^[2] Section 247, Act.
^[3] Section 152, Act.
^[4] Section 109, Standard Module.
^[5] Section 94, Standard Module.
^[6] Section 95(2), Standard Module.
^[7] Sections 42B and 104, Standard Module.
^[8] Section 101(2), Act.