La Lagon [2006] QBCCMCmr 757 (27 September 2006)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Anne Meyer, the owner of Lot 2

I hereby order that the application for an order by Anne Meyer, the owner of Lot 2 against the body corporate seeking the following outcomes, quote:

1. Termination of body corporate agreement.
2. Termination of all committee positions.
3. It would be appreciated if you would appoint a non biased body corp. that actually functions and that absentee owners be prevented from holding positions as all three have demonstrated that they are unsuitable as their actions and inactions have created the problems. All of the 3 owners i.e. units 1, 4 and 5 are absentee owners ands can claim ignorance as to what is happening on site.

is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0347-2006

"La Lagon" CTS 22150

APPLICATION

This application is by Anne Meyer, the owner of Lot 2 (applicant) against the body corporate. The applicant is seeking the following outcomes, quote:

JURISDICTION

"La Lagon" Community Titles Scheme 22150 is a 5 lot 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; or a claimed or anticipated contractual matter about the engagement of a person as a body corporate manager^[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 a lot owner and the representative of a lot owner. The applicant made a written reply to submissions under section 244 of the Act.

DETERMINATION

The applicant is concerned about the administration of the body corporate submitting that the annual general meeting for 2006 has not been held; that the committee and the body corporate manager do not ensure that the scheme is maintained and do not respond to correspondence; that the committee, the body corporate manager and absentee owners do not ensure that occupiers comply with the scheme by-laws; and that resident owners are paying for the water usage of units occupied by a number of persons. The applicant has provided a number of photographs taken since 2004 mainly indicating a number of instances of vehicles being parked on common property and furniture and other property outside the building and possibly being stored on common property.

The committee for the body corporate did not respond to the invitation to make a submission on the application. Rather, a joint submission has been made by Mrs Nicoll and Ms Staples as lot owner and representative of a lot owner who commented on a meeting with Mr Meyer (as representative of the applicant) about a garden.

In the written reply to submissions, the applicant made mention of the meeting referred to in the above submission and reiterated concerns about the holding of annual general meetings, maintenance of common property and body corporate management.

Pursuant to the investigative powers of an adjudicator stated in section 271 of the Act, on 11 September 2006, I required the body corporate manager, Strata and Body Corporate Services provide the following information:

By letter dated 15 September 2006, the body corporate manager provided the information indicating that:

Termination of the body corporate management agreement
Strata and Body Corporate Services (SBCS) were engaged by the body corporate as body corporate manager at the Annual General Meeting dated 12 July 2004. While the term of the engagement is uncertain, SBCS have stated that they were encouraged at the 2005 AGM to remain for one more year. Schedule One of the body corporate management agreement provided by SBCS lists 20 agreed services. The Schedule states that the manager will exercise the powers of the chairperson, secretary and treasurer. For example, the body corporate manager has been authorised to:

These are the functions carried out by the manager. Consequently, the manager does not have the power to call general meetings or give by-law contravention notices without any prior authority from the body corporate. For instance, a general meeting may only be called with the authority of the committee^[2]. The giving of a by-law contravention notice must be authorised by the committee (if it has the power) or by the body corporate in general meeting.

However, the outcome sought is not within the jurisdiction of an adjudicator as a "dispute" has not been established within the scope of the Act. Section 227 of the Act specifies the meaning of "dispute" and (1)(c) provides that a "dispute" is capable of being between the body corporate and the body corporate manager. A lot owner does not have the right to make a dispute resolution application against the body corporate manager.

It should also be noted that the Standard Module prescribes the procedure to be adopted should there be a concern that the body corporate manager has, for example, failed to carry out duties under the engagement or contravened the code of conduct for body corporate managers^[3]. This procedure involves the body corporate deciding to give a remedial action notice to the manager and if the fault stated in the notice is not remedied, the body corporate can, in general meeting and by ordinary resolution terminate the engagement. Given that actions of this nature would normally involve matters of contract, it may be advisable that the body corporate seeks legal advice before proceeding. If a dispute arises with regard to a claimed or anticipated contractual matter, the body corporate may make a dispute resolution application, however this matter can only be determined by specialist adjudication rather than departmental adjudication. A specialist adjudicator is a person who is initially nominated by the applicant and ultimately chosen by the commissioner if for instance, the commissioner is satisfied that the person has the appropriate qualifications and experience to hear and determine the dispute (for a contractual matter, this could be a solicitor).

For these reasons, the outcome sought is dismissed.

Termination of all committee positions
The minutes of the 2005 AGM indicate that the following persons were elected to the committee:
Chairperson Mr Nicoll
Secretary/Treasurer Mrs Nicoll
Committee Mr Somogyi and Mr Meyer

These individuals may still be the elected committee members, however this is not a matter to be pursued for the purposes of making an order.

The applicant does not dispute the election of these persons at the 2005 AGM. Given the time which has lapsed since the election of the members, it would be difficult to now dispute the election which was conducted at the AGM. However, it would seem that the outcome is sought on the basis of the applicant’s concerns about the management of the body corporate by the committee.

In my view, an adjudicator cannot make an order declaring that a committee member is removed from office on the basis that the person is not performing a particular function. Not only is there a question with respect to the existence of a dispute under the dispute resolution provisions of the Act, but this is a matter that can be dealt with by the body corporate consistent with the self-management principles of the legislation. Section 25 of the Standard Module provides for the term of office of a committee member. Section 25(2) provides the circumstances where a committee member’s position becomes vacant. Section 25(2)(f) provides that the member’s position becomes vacant if the member is removed from office by ordinary resolution of the body corporate in general meeting.

For these reasons, this outcome sought is dismissed.

A non biased body corporate be appointed
It would seem that the applicant is seeking an order that an administrator be appointed. The applicant has not stated the functions of the administrator and whether for example, the administrator is sought for a particular meeting, purpose or period. These are significant issues given that the appointment of an administrator will be at the cost of the body corporate. While there are issues regarding the management of the body corporate, I do not consider that there is a basis for an appointment in the general and unspecified terms sought by the applicant.

That absentee owners be prevented from holding committee positions
A person is eligible to be a voting member of the committee if the person is an individual nominated for membership by a lot owner and the person is also a lot owner or a member of the owner’s family or a person acting under a power of attorney given by the owner^[4]. A lot owner is not eligible to be a voting member of the committee if for example; the owner is a body corporate manager, service contractor or letting agent; or owes a body corporate debt when the members of the committee are chosen^[5]. A lot owner (resident or non-resident) is eligible to be a member of the committee provided the eligibility criteria in section 10 are satisfied. For this reason, the outcome sought is dismissed.

Ancillary matters
Despite the order that I have made dismissing the outcomes sought, I consider that it is appropriate and necessary to comment on a number of the issues raised in the application.

Body corporate
The body corporate consists of the owner of each lot included in the scheme. 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^[6]. The body corporate must act reasonably in anything it does under section 94(1)^[7]. The body corporate has all the powers necessary for carrying out its functions^[8].

The committee
The body corporate chooses a committee made up of a chairperson, secretary and treasurer and ordinary committee members (if any). The body corporate must choose at least 3 but not more than 5 persons to the committee. The committee is chosen at each annual general meeting of the body corporate. The committee is charged with the responsibility for the day-to-day management of the body corporate. The legislation provides the committee with the power to make body corporate decisions. The legislation also restricts the matters that the committee can make decisions on, for example the committee’s expenditure limit for a particular item is $125 multiplied by the 5 lots in the scheme; the committee cannot fix a contribution to be paid by lot owners; and the committee cannot make a decision on an issue which may only be determined by the owners in general meeting^[9].

The body corporate must choose a committee of eligible individuals even if the body corporate decides to engage a body corporate manager. Generally, a body corporate manager is authorised to exercise some or all of the powers of an executive member of the committee (chairperson, secretary and treasurer). The engagement of a body corporate manager does not replace the need for a committee (other than in exceptional circumstances) to make decisions relating to the management of the body corporate. If it is proposed to engage a body corporate manager, it is suggested that the lot owners give consideration to the duties and functions the manager will be expected to perform and discuss this with proposed nominee or nominees before the submission of an appropriate motion to a general meeting for body corporate approval.

The annual general meeting for 2006
An annual general meeting must be held each year within three months after the end of the financial year for the body corporate^[10]. The purpose of the annual general meeting is to provide lot owners with the opportunity to review the past financial year’s income and expenditure, to consider future spending needs through consideration of an administration fund budget and a sinking fund budget, to fix contributions to be paid by lot owners for body corporate expenditure, to determine whether the next financial year’s accounts should be audited, to elect a committee, to review insurance, and to consider any other motions on the meeting’s agenda. The notice of the meeting must include documents such as a statement of income and expenditure and the proposed budgets.

The last annual general meeting held for the scheme was the 2005 AGM. The end of the last financial year was 28 February 2006 which meant that the body corporate was required to have held the 2006 annual general meeting by 31 May 2006. It would seem that this meeting has not been held. In this circumstance, a dispute resolution application will be necessary seeking an outcome that a person (named by the applicant) be appointed by an adjudicator for the purpose of convening and holding the annual general meeting. This application may be made by a particular lot owner or by a number of lot owners. If the nominated person is a person other than the applicant, the application must include a written consent from the nominated person stating any proposed costs for carrying out the appointed duties. It would be preferable if either the application was made by all lot owners or alternatively with the consent of all lot owners. If this occurred, then more than likely the matter would be determined quickly. If the application did not indicate the consents of owners, the commissioner would invite submissions about the application.

Financial management
The body corporate must establish and maintain an administrative fund and sinking fund^[11]. The purpose of the administrative fund is to provide for short-term recurring body corporate spending such as annual insurance, regular maintenance of common property, electricity payments and body corporate management fees. The sinking fund is intended for long-term body corporate expenditure of a capital nature and the budget must be prepared based on an assessment of identified expenditure on such items for at least the next ten years. The lot owners, as the body corporate members, vote to accept or reject proposed budgets and then fix the contributions they will pay to meet the expenditure identified in the proposed budgets^[12]. While the owners have a right to reject a proposed budget, the owners must be aware that the body corporate has an obligation to maintain these funds.

By-laws
The by-laws for the scheme are stated in the community management statement (the CMS) recorded by the registrar of titles, Department of Natural Resources and Water. Under section 59 of the Act, the CMS is binding on the body corporate, each member of the body corporate and on each person who is otherwise an occupier of a lot in the scheme.

Sections 182 to 188 of the Act make provision for the enforcement of body corporate by-laws by the body corporate and by individual lot owners and occupiers. For example, a lot owner who is concerned about another owner or occupier contravening a by-law should initially notify the body corporate using the required form (available from the commissioner’s office, see body corporate information service for contact details). The body corporate (normally the committee) should then investigate the complaint and if necessary, give the accused person a by-law contravention notice. If the notice is not complied with, the body corporate can pursue the matter under the dispute resolution provisions of the Act or through the Magistrates Court. If the body corporate does not give the notice, the complaining owner may make application for dispute resolution against the accused person.

The applicant has provided a number of photographs indicating that, since 2004, there have been a number of possible by-law contraventions by various occupiers. The by-laws apply not only to owners, but to occupiers who are not lot owners and where the Residential Tenancies Act 1994 applies to the occupancy, the lessor or the lessor’s agent must inform the tenant of the application of the by-laws, when giving the written agreement to the tenant for signing^[13].

It would seem that the applicant’s concerns about these contraventions have, to a large extent not been actioned by the body corporate. It is a function of a body corporate under section 94(1) of the Act to enforce the CMS, including any by-laws for the scheme. In addition the By-Laws, section 167 of the Act makes provision for nuisance and states that the occupier of a lot must not use or permit the use of the lot or common property in a way that causes a nuisance or hazard, interferes with the use or enjoyment of another lot, or interferes unreasonably with another person’s use or enjoyment of the common property.

Maintenance
The body corporate must administer, manage and control the common property reasonably and for the benefit of lot owners^[14]. The body corporate must maintain the common property in good condition^[15]. The occupier of a lot must keep the parts of the lot readily observable from another lot or common property in a clean and tidy condition^[16]. The owner of a lot must maintain the lot in good condition^[17]. Decisions about the maintenance of common property may be made by the committee provided it relates to an issue that the committee has the power to make a decision on. Otherwise, the committee should refer the matter to owners in general meeting. Importantly, the body corporate must ensure that any decisions are made through the proper decision making process and are properly minuted and distributed to owners.

Water usage
The Act provides that the owner of a lot is liable for a charge for water if the service is separately measured for its supply to the lot^[18]. Section 196 makes provision in the circumstance where the supply of the utility service (water supply) cannot be separately measured. In this situation, each lot owner may pay for water supply based on the contribution schedule lot entitlement for the owner’s lot. However, the body corporate may accept the total charge for the water supplied to the scheme, which it then divides amongst the owners either from the contributions paid by lot owners or by a levy imposed on lot owners as defined by section 196(6). Section 196(6) specifies that the levy must be made:

(a) for lots for which the body corporate has a way of measuring the extent to which the utility service is supplied to each lot--according to the extent of supply; and

(b) for lots for which the body corporate does not have a way of measuring the extent to which the utility service is supplied to each lot either equally between the lot owners; or proportionately among the lot owners according to the contribution schedule lot entitlement for each lot.

The water usage is an issue to be considered by the lot owners and may involve consideration by the body corporate. In relation to the installation of a metering system, it may be beneficial for lot owners or the body corporate to initially approach the local authority. If the applicant wishes to pursue this matter through the body corporate, consideration may be given to submitting an appropriate motion or motions to a general meeting.

Body corporate information service
If lot owners would like more information in relation to the general requirements of the legislation, they can contact the Information Service of this Office on 1800 060 119. There are a number of free fact sheets available covering issues such as general meetings, financial management and by-laws. Information is also available on the web site; www.bccm.qld.gov.au.

^[2] Section 40, Standard Module. The requirement to call an extraordinary general meeting is subject to section 61 of the Standard Module.
^[3] See sections 86 to 86C, Standard Module.
^[4] Section 10(1), Standard Module.
^[5] See section 10(2) and (3), Standard Module.
^[6] Section 94(1), Act.
^[7] Section 94(2), Act.
^[8] Section 95, Act.
^[9] See section 100, Act; sections 26 and 103, Standard Module.
^[10] Section 60, Standard Module.
^[11] Section 100, Standard Module.
^[12] Sections 94 and 95, Standard Module.
^[13] Section 45, Residential Tenancies Act 1994.
^[14] Section 152, Act.
^[15] Section 108(1), Accommodation Module.
^[16] Section 120(1), Standard Module.
^[17] Section 120(2), Standard Module.
^[18] Section 195(2), Act.

Number of Scheme:	22150
Name of Scheme:	La Lagon
Address of Scheme:	6 Aquila Court MERMAID WATERS QLD 4218

•	Ensure that insurances are effected promptly;
•	Maintain proper records;
•	Prepare budgets and statements of accounts.
•	Prepare and distribute notices of meetings and notices of contributions payable.
•	Call nominations for committee positions.
•	Deal with correspondence.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

La Lagon [2006] QBCCMCmr 757 (27 September 2006)