Palm Beach North [2006] QBCCMCmr 90 (28 February 2006)

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

I hereby order that Ms Kim Elliot of Complete Body Corporate Services, 10 Ferry Road, Southport (the appointee) is appointed Administrator ("the Administrator") of the Body Corporate for Palm Beach North with all of the powers of chairperson, secretary, treasurer and of the committee, and will hold the appointment for the period of 12 months beginning 7 days from the date of this order (the 12 month appointment period) subject to any further orders of an adjudicator.

I further order that the administrator will hold those powers exclusively for the period of administration, cannot delegate those powers to any other person.

I further order that the administrator shall be paid remuneration by the body corporate at the rate of $110 per lot per annum (plus GST), and fees for additional services (quoted at $120 including GST per lot per annum (or part thereof) plus disbursements, in accordance with those rates set out in the draft Administration Agreement provided to the Committee for Palm Beach North, and is granted the power to levy contributions to meet the costs of the administration.

I further order that Mr. Niall Marshall of Body Corporate Administration must, within two (2) weeks of the date of this order:
(1) make available for collection by the Administrator, or his agent, all of the records and assets of the body corporate held by them or under their control, including but not limited to: all bank statements, accounting and financial records; common seal; roll; minutes of general meetings and both committee meetings (including "flying minute" resolutions); and general correspondence; and
(2) co-operate with the Administrator in all matters relating to the body corporate, including giving explanations or information concerning the body corporate records, past actions of the body corporate, and any matters in progress.

I further order that any committee member or other person holding records of the Palm Beach North body corporate must, within two (2) weeks of the date of this order:
(1) make available for collection by the Administrator, or his agent, all of the records and assets of the body corporate held by them or under their control, including but not limited to: all bank

statements, accounting and financial records; common seal; roll; minutes of general meetings and both committee meetings (including "flying minute" resolutions); and general correspondence; and

(2) co-operate with the Administrator in all matters relating to the body corporate, including giving explanations or information concerning the body corporate records, past actions of the body corporate, and any matters in progress.

I further order that the current signatories to the body corporate bank account are to make suitable arrangements with the administrator for operation of the bank account including execution of any documents required by the bank to enable the administrator to operate the bank account.

I further order that while a committee has been elected for the scheme, the administrator shall continue to exclusively have all of the powers of chairperson, secretary, treasurer and of the committee until the expiration of the 12 month appointment period or as otherwise directed by the order of an adjudicator and committee members will only assume office with their respective powers under the legislation, after the 12 month appointment period as other period nominated by an order of an adjudicator, has expired.

I further order that within 7 days of the date of this order, the Administrator must give to the owner of each lot included in the scheme a copy of this order and the accompanying statement of reasons.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0853-2005

"Palm Beach North" CTS 31739

APPLICATION

Palm Beach North is a 28 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Accommodation Module Regulation (Accommodation Module).

This application was lodged on behalf of the Body Corporate by the Committee at the date of the application. The application originally sought the following order of an adjudicator under the Body Corporate and Community Management Act 1997 ("the Act") –

That Complete Body Corporate be appointed as Body Corporate Manager for Palm Beach North and that all books and records currently held by Body Corporate Administration be sent to Complete Body Corporate.

Following discussion with the applicant, it was agreed that in the circumstances, the appointment of an Administrator should be considered.

JURISDICTION:

The appointment of an Administrator is sought on a number of grounds which are set out below

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)).

BACKGROUND

Since creation of the scheme in 2003, some 10 dispute resolution applications have been lodged with this office. A perusal of earlier orders indicates irregularities in calling of meetings and appointment of committee members as well as instances where expenditure has been incurred without complying with relevant legislative provisions. In particular it is noted that a general meeting of the body corporate purportedly convened in 2004, was void for irregularity with the result that a caretaking and letting agreement purportedly authorised at that meeting, was not validly entered into with the body corporate.

There has been a series of disputes between the various parties involved in "Palm Beach North" including on-going disputes between the Body Corporate Committee and the body corporate manager, Body Corporate Administration (BCA). Indeed, material submitted in relation to the dispute resolution application includes allegations and counter allegations between committee members and BCA about a number of matters.

One matter of dispute has been the collection and proper allocation of body corporate levies from members of the body corporate. The situation has now become critical as, for a number of reasons, levies have not been collected. The liquidity problems currently experienced by the body corporate are in addition to the problems experienced in trying to establish the source of unidentified BPay payments. In this regard another Adjudicator has already recognised that "the inability of the body corporate, through the body corporate manager, to properly identify monies that have been paid through the BPay system established by the body corporate manager is obviously a matter of significant concern".

In late 2005 the body corporate attempted to resolve the matter by obtaining adjudicator’s orders appointing Kim Elliot of Complete Body Corporate Services (CBS) to examine the records of the Body Corporate for Palm Beach North for the purpose of determining:

Although CBS subsequently calculated details of outstanding contributions, BCA has failed to issue levy notices. This has again given rise to allegations and counter allegations between committee members and Body Corporate Administration.

SUBMISSIONS

In relation to this dispute resolution application, submissions were received from 4 individual members of the body corporate, the body corporate committee and the body corporate manager.

Three individual members and the committee submitted that the relationship between the committee and the body corporate manager is unworkable and further, that the body corporate manager had not acted in the best interests of the body corporate. It is claimed that in addition to failing to collect levies, the body corporate manager has failed to advise the committee on matters of management and procedure on a numerous occasions, leading to a general meeting being declared invalid, invalid appointments of committee members and unauthorised expenditure.

The situation is now critical as the body corporate may soon have no funds available to pay its debts. Although some owners owe considerable amounts to the body corporate, BCA failed to send out levy notices. The body corporate manager, BCA, blames the committee for this situation, claiming that it is attributable to the committee’s refusal to give BCA permission to download information necessary to make the Bpay system work properly.

DETERMINATION

The Body Corporate and Community Management Act 1997 requires an adjudicator to make an order that is "just and equitable" to resolve a dispute. I am of the opinion that the management structure of the scheme is not functioning in a satisfactory way and it is in the best interests of all owners that an Administrator be appointed with all of the powers of chairperson, secretary, treasurer and of the committee and that the powers of the members (executive and ordinary) of the body corporate committee be withdrawn.

The present committee has little confidence in the current body corporate manager and the relationship between them is unlikely to improve. In my view this hostility is not conducive to the effective administration of the scheme.

I am of the view that there is a need for an administrator to be appointed to act as a "circuit breaker" for this scheme. An independent administrator would be able to stand back and independently assess the needs of the scheme having regard to the interests of all owners. As outlined above, I am proposing that such an administrator would have all of the powers of chairperson, secretary, treasurer and of the committee. Provision for such an order is made for in sections 276 and 278 and also Schedule 5 of the Act.

Accordingly, it would be the administrator who calls meetings, prepares notices, determines eligibility to vote, declares voting outcomes, and, as chairperson, controls the conduct of the meeting and whether motions are out of order. That is, a knowledgeable and impartial party with exclusive committee and executive member powers, would not only be calling and conducting meetings, but assisting the body corporate in making decisions and in carrying out its duties in accordance with the legislation.

I believe the contract between the body corporate and BCA is not due to expire until early September. I do not propose to make any recommendation as to whether this contract should be terminated or allowed to run its course. I believe that any decision in this regard should be made by resolution of a general meeting. In the event that the contract remains on foot, the administrator would determine what functions are allocated to BCA .

I believe certain records relating to the affairs of "Palm Beach North" continue to be held by BCA while certain records may be held by past or present committee members. I have ordered that these records are to be provided to the administrator. It should be noted that that persons (including body corporate managers) are not entitled to claim a lien on body corporate records in respect of monies owing or alleged to be owing to the person. Section 151(3) of the Accommodation Module prohibits a body corporate manager from claiming a lien on body corporate records and documents and body corporate seals.

Further, having regard to Schedule 5 of the Act, an extension of the administrator’s powers could be sought if subsequently considered necessary.

ORDERS

I hereby order that Ms Kim Elliot of Complete Body Corporate Services, 10 Ferry Road, Southport (the appointee) is appointed, is appointed Administrator ("the Administrator") of the Body Corporate for Palm Beach North with all of the powers of chairperson, secretary, treasurer and of the committee, and will hold the appointment for the period of 12 months beginning from the date of this order (the 12 month appointment period) subject to any further orders of an adjudicator.

I further order that the administrator will hold those powers exclusively for the period of administration, cannot delegate those powers to any other person.

I further order that the administrator shall be paid remuneration by the body corporate at the rate of $110 per lot per annum (plus GST), and fees for additional services (quoted at $120 including GST per lot per annum (or part thereof) plus disbursements, in accordance with those rates set out in the draft Administration Agreement provided to the Committee for Palm Beach North, and is granted the power to levy contributions to meet the costs of the administration.

I further order that Mr. Niall Marshall of Body Corporate Administration must, within two (2) weeks of the date of this order:
(1) make available for collection by the Administrator, or his agent, all of the records and assets of the body corporate held by them or under their control, including but not limited to: all bank statements, accounting and financial records; common seal; roll; minutes of general meetings and both committee meetings (including "flying minute" resolutions); and general correspondence; and
(2) co-operate with the Administrator in all matters relating to the body corporate, including giving explanations or information concerning the body corporate records, past actions of the body corporate, and any matters in progress.

I further order that any other person holding records of the Palm Beach North body corporate must, within two (2) weeks of the date of this order:
(1) make available for collection by the Administrator, or his agent, all of the records and assets of the body corporate held by them or under their control, including but not limited to: all bank statements, accounting and financial records; common seal; roll; minutes of general meetings and both committee meetings (including "flying minute" resolutions); and general correspondence; and
(2) co-operate with the Administrator in all matters relating to the body corporate, including giving explanations or information concerning the body corporate records, past actions of the body corporate, and any matters in progress.

I further order that the current signatories to the body corporate bank account are to make suitable arrangements with the administrator for operation of the bank account including execution of any documents required by the bank to enable the administrator to operate the bank account.

I further order that while a committee has been elected for the scheme, the administrator shall continue to exclusively have all of the powers of chairperson, secretary, treasurer and of the committee until the expiration of the 12 month appointment period or as otherwise directed by the order of an adjudicator and committee members will only assume office with their respective powers under the legislation, after the 12 month appointment period as other period nominated by an order of an adjudicator, has expired.

I further order that within 7 days of the date of this order, the Administrator must give to the owner of each lot included in the scheme a copy of this order and the accompanying statement of reasons.

Number of Scheme:	31739
Name of Scheme:	Palm Beach North
Address of Scheme:	1444 Gold Coast Highway PALM BEACH QLD 4221

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Palm Beach North [2006] QBCCMCmr 90 (28 February 2006)