Sailfish Cove [2007] QBCCMCmr 132 (8 March 2007)

Number of Scheme:	20394
Name of Scheme:	Sailfish Cove
Address of Scheme:	215 Cottesloe Drive MERMAID WATERS QLD 4218

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

I hereby declare that the owner of Lot 134, Capital Superannuation Pty Ltd, has no obligation to reimburse the Body Corporate for Sailfish Cove the amount of $1,574.70, for security charges and fence repairs.

I further order that the Body Corporate for Sailfish Cove shall immediately amend the statement of account for the owner of Lot 134, Capital Superannuation Pty Ltd, in such as way as to show that the owner never owed the amount of $1,574.70 and is not responsible for any lost discounts, penalty charges or debt recovery charges accruing as a result of the alleged debt for the amount.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0886-2006

"Sailfish Cove" CTS 20394

Sailfish Cove community titles scheme (Sailfish Cove) consists of 226 lots and common property. The community management statement for Sailfish Cove indicates that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (Accommodation Module) applies to the scheme.

APPLICATION

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Capital Superannuation Pty Ltd, owner of Lot 134 (applicant) on 3 November 2006. The applicant sought the following order against the Body Corporate for Sailfish Cove (respondent):

For an adjudication order that requires the Sailfish Cove Body Corporate to remove the debt for fence repair and security charges and any cost associated with recovery of such debt from Unit 134 and for them to instruct Macquire collection agencies to remove all records of debt existing.

PROCEDURAL MATTERS

In November 2006 the Commissioner’s Office attempted to organise a conciliation session to assist in the resolution of this dispute. Unfortunately conciliation did not occur.

Under section 243 of the Act, a copy of the application was provided to the Body Corporate, with an invitation to the Committee and all owners to respond to the application. Submissions were made by the Committee and eight owners. The applicant inspected the submissions received and made a written reply.^[1]

A dispute resolution recommendation was made referring the dispute to departmental adjudication.

MATTERS IN DISPUTE

The application relates to the disputed charging of the applicant for fence repairs and security costs incurred by the Body Corporate, which the Body Corporate claims were caused by the applicant’s tenant. The facts of the dispute, as outlined in the application, submissions and reply to submissions, can be summarised as follows.

On 5 May 2006 the applicant, represented by Judith Moreton, received an invoice from the Body Corporate dated 28 April 2006 which included the amounts of $132 for "fence repairs" and $1,442.70 for "security". All the applicant has received explaining these costs is two invoices. A maintenance invoice dated 2 January 2006 was for "repairs to fence palings – damage caused by friends of tenants in unit 134 when attempting to enter the premises". Another invoice dated 1 May 2006 lists a total of $5,226.76 for security services provided to the scheme in April, with four amounts handwritten on the side which apparently relate to the weekend of 28-30 April (the May Day long weekend) and which total $1,442.70.

On 8 May 2006 the applicant received a letter dated 3 May 2006 from the Body Corporate Manager (BCM). It forwarded correspondence to the property manager for Lot 134 stating that the owner of Lot 134 was to be invoiced for costs incurred over the past weekend "including but not limited to: additional security attendance and damage to perimeter fencing, noting that the tenant advised the on-site management and security in advance his intention to hold a large gathering within the unit."
A further letter dated 5 May 2006 referred to previous correspondence on the behaviour of the tenant in Lot 134 (who it seems had been there since October 2005), which the applicant claims not to have received. The letter says the inaction of the applicant’s property manager and the behaviour of the tenant has incurred substantial costs for the Body Corporate, and suggests the applicant reconsider the agent responsible for their property.

The applicant wrote to the Body Corporate on 8 May, 22 September, 9 October and 26 October 2006 regarding the issue but claims they have not received responses to their queries. Letters from the BCM dated 26 May, 26 June, 19 September and 22 September 2006 simply acknowledge the correspondence received and advise that the debt stands. The 26 June letter was allegedly not received by the applicant until 22 September 2006.

When the applicant requested a copy of all correspondence on the issue they were sent a contravention notice dated 10 April 2006 which is not mentioned in any Committee minutes. They say they first received the notice and its covering letter dated 11 April 2006 on 10 May 2006. The contravention notice is addressed to the applicant and asserts that they breached By-law 5 in that the tenant’s invitees are loitering on common property and intimidating other scheme users.

It appears the applicant’s property manager had not advised them of some of the correspondence on the matter. An email from the onsite manager dated 10 April 2006 was apparently forwarded to the property manager. It expresses concerns about young people gathering in the front carpark area that investigations revealed were friends of ‘Jamie’ from Lot 134. On Friday 7 April 2006 a group of 22 persons were asked to leave the area by security. The email indicated that the property manager for Lot 134 had been notified of the behaviour in the past and that ‘Jamie’ was well known to security. The next day the property manager wrote to the tenant about the complaint and suggesting that they find alternative accommodation when their lease ended on 28 April 2006.

A further BCM letter to the applicant on 18 October 2006 provided one page of a typewritten security log for the night of 28 April 2006. (The Committee submission includes the second page of this log and similar logs for 29 and 30 April. It lists several vehicles and persons attempting to enter the scheme and generally entry being refused. It suggests someone spoke to ‘Jamie’ and said there would be no party. The entry for 8.58pm notes that a loud noise was heard from the front fence and that "Party goers were trying to smash fence to get to Unit 134. Successfully smashed two palings off." The Police were called shortly afterwards; arriving and dispersing the crowd at 9.15pm.

The applicant says that there is no mention of any problems with Lot 134 or the specific items referred to in the invoices in any general or committee meeting minutes prior to May, even though the minutes refer to issues in other units. The applicant says that the first they knew of any issue was 5 May 2006 when they received the invoice and then a call from the BCM. The applicant’s property manager then advised that the tenants had left and it was not possible to hold their bond.

The applicant says they have been supplied with no evidence that the damage to the fence was caused by the tenants of Lot 134 or their invitees. They say the date the damage occurred is unclear and they have no information as to why the Body Corporate believes it was caused by their tenants. Importantly, they say that while maintenance invoice is dated 2 January 2006 and the applicant was sent an invoice dated 28 April 2006 (from the BCM whose offices close at 5pm), a security log suggests the fence was damaged in the evening of 28 April 2006. Similarly, they claim they have been given no basis for how the security costs were allocated to their Lot, particularly as they say extra security is used for public holidays^[2]. It is suggested that the onsite manager employed extra security because they believed the tenants in Lot 134 were going to hold a party.

Contribution notices sent to the applicant on 25 July and 23 August 2006 do not include the unpaid security and repair amounts. It seems that a Committee meeting on 13 September 2006 resolved to reissue the account and that if it was not paid within 14 days the debt would be forwarded to a collection agency. Reference is made to the capacity to charge owners under By-law 19.

The applicant disputes that they are responsible for the fence repair and security costs. They also claim that the charges are part of the on-site manager’s attempts to have them move into the letting pool rather than using their own property manager.

The Chairperson’s submission, on behalf of the Committee, includes the following comments:

Seven submissions from owners support the Committee. Most say they should not have to pay for problems caused by one owner’s tenants and several note previous problems with the then tenants of Lot 134. One owner says that his tenant (in Lot 172) confirms that the fence was damaged by people attending the party at Lot 134.

In their reply to submissions the applicant includes the following:

The applicant also disputes that they have been abusive, and notes that the Chairman made this claim in a circular to all owners even though he knew that the application was disputed.

As part of my investigations I requested information from the Body Corporate on various issues. In due course information was received although I consider that this does not adequately address many of the issues raised. I will discuss this information through the course of my determination, as appropriate.

JURISDICTION

I am satisfied that this is a matter which falls within the dispute resolution provisions of the legislation (see sections 227, 228, 276 and Schedule 5 of the Act).

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

(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)).

DETERMINATION

The key issue for consideration in this matter is whether the Body Corporate has a right to charge the applicant for the fence repairs, security costs, and costs associated with the alleged debt.

Recovery under the by-laws

The Community Management Statement (CMS) for Sailfish Cove includes three by-laws relating to the Body Corporate’s recovery of monies from owners or occupiers. These state:

Where the Body Corporate spends money to repair damage caused by a breach of the Act or of these by-laws by any Occupier or Invitee then the Body Corporate is entitled to recover the amount spent as a debt in any court action from the Owner of the Lot from which that Occupier or Invitee came.

An Owner must pay on demand the whole of the Body Corporate’s costs and expenses (including solicitor and own client costs), such amount to be deemed a liquidated debt, incurred in:-

Although it is not explicit, there is some suggestion that the Body Corporate considers its entitlement to invoice the applicant relies on these by-laws. For reasons which I will outline, I am of the view that By-law 19, 20 and By-law 16(b) are not valid. As parties have not addressed the validity of the by-laws in submissions, I will not make an order regarding that issue.
However I note that an Adjudicator has recently issued an order invalidating identical by-laws in the community management statement for adjacent scheme Sailfish Point.^[3]

In regard to By-law 19, section 180(6) of the Act provides that by-laws cannot impose a monetary liability on an owner or occupier except in respect of recovery of amounts payable under an exclusive use by-law. Clearly this by-law does not relate to an exclusive use by-law but is purporting to impose monetary liabilities. Moreover, even if this by-law was valid, the by-law itself says the Body Corporate must take debt recover action in a court of competent jurisdiction to recover the amounts, and could not simply invoice an owner for an alleged amount.

In regard to By-law 20, section 180(1) of the Act specifically provides that a by-law is invalid if it is inconsistent with the Act or a regulation module. Therefore to the extent that the By-law 20 purports to impose costs beyond those provided for in section 97(1) of the Accommodation Module it is inconsistent with the regulation module. Again, it is also purporting to impose monetary liabilities contrary to section 180(6) of the Act.^[4]

While By-law 16(b) refers more generally to compensation, rather than specific recovery of a debt, it suffers from the same deficiency in that it is seeking to impose a monetary liability.

Moreover, By-laws 16(b) and 19 purport to make an owner liable for damage caused to common property, without regard to the reasonableness of steps taken by the owner or occupier to ensure the occupier or invitee’s compliance with the Act or by-laws. An owner or occupier can only take reasonable steps to ensure that occupiers and invitees comply. It would be unreasonable to expect an owner to entirely control the behaviour of others. Accordingly, it would be unreasonable for them to financially responsible for the actions of others that are beyond their control.

This does not mean that the Body Corporate has no legal right to recover monies of the type described in these by-laws – depending on the circumstances and the forum in which the claim is pursued it may be that it can. However I do not consider the Body Corporate is entitled to rely on the by-laws as a basis claiming these monies.

Fence repairs

I accept it is likely that any damage to the fence occurred at around 9pm on Friday 28 April 2006. It certainly does not appear that any occupier of Lot 134 or the applicant damaged the fence. On the basis of the security report it is a reasonable assumption that the fence was damaged by a person attending or seeking to visit Lot 134.

In the absence of any evidence from the former tenant of Lot 134, there does appear to be some basis to argue that the then occupiers of Lot 134 may have breached By-law 16 (taking reasonable steps to ensure invitees abide by the by-laws), by not taking appropriate measures to prevent their apparent invitees from breaching By-laws 2 (creating noise likely to interfere with the peaceful enjoyment of a lot or common property), 4 (obstructing private roadways), and 5 (obstructing the common property, causing a nuisance or otherwise interfering with the peaceful enjoyment of a lot or common property) and possibly By-law 9 (damage to common property).

However, on balance I am not satisfied that the Body Corporate has convincingly demonstrated that the persons who damaged the fence were invited by the occupier of Lot 134 (rather than persons who turned up uninvited or were visiting another lot). There is no evidence that any occupier of Lot 134 was present when the fence was damaged, and so I am also not persuaded by the material provided that the occupiers of Lot 134 encouraged the damage or failed to take reasonable steps to ensure that persons seeking to attend the party did not cause damage.

For those reasons, I am not convinced that the damage to the fence arose from a breach of By-law 16(a) by the tenants of Lot 134. Moreover, even if By-law 16(b) were valid, I am not convinced that the applicant should be responsible to compensate the Body Corporate for the damage because I am not convinced that the damage was caused by an "invitee" of Lot 134.

There are further difficulties with the fence repairs. The fence repairs cost $132. Although not shown on the invoice provided, it seems the repairs were undertaken by the resident manager. The maintenance invoice refers to the date of 2 January 2006, which the Body Corporate says was a typographical error. The BCM has verbally advised that the correct invoice date was 5 May 2006 but they have not responded to a query as to when the work was actually done. The Body Corporate has also not properly explained why the invoice to the applicant is dated as being issued on 28 April 2006. Assuming the BCM keeps standard office hours, this implies that the damage was assessed, quoted and charges invoiced to the applicant several hours before the damage had even occurred. Even if the date of the invoice was yet another typographical error, it was received by the applicant only 4 working days after the incident and so it does not appear that there was sufficient time for the necessary decision-making steps to have been taken.

It is not apparent that the Body Corporate Committee met to consider the damaged fence, as there are no meeting minutes of any meeting and there wasn’t sufficient time to call and hold a meeting. Therefore it seems the BCM or Chairman made a unilateral decision to have the repairs undertaken, to determine the responsibility for the damage, and to charge the applicant. This is not satisfactory. While the expenditure on the fence repairs was obviously within the Committee’s spending limit, the Committee itself must make such spending decisions and cannot delegate such decisions to the BCM or a committee member, even for minor amounts. Similarly, if the Body Corporate was entitled to charge the owner for damage incurred by the invitee of a tenant (which I doubt), this is a decision which should at the very least been taken by the Committee.

As outlined above I do not consider the Body Corporate is entitled to rely on By-laws 16(b) and19 to recover the cost of damage caused by an occupier or invitee from an owner. If the damage had been caused by the tenants of Lot 134 or from their failure to comply with By-law 16, the Body Corporate may be able to make a claim (in the appropriate forum) against tenants for the amount.

However Body Corporate says it believes there is no provision for the Body Corporate to charge the tenant. Rather, it points to the owner’s tenancy relationship with the tenant and the rental bond held in relation to the property (which they say includes the common property). It seems from their argument that the Body Corporate is seeking to charge the applicant, not because they believe the lot owner is responsible for the costs, but because the owner is the only one who can recover bond monies under the tenancy agreement. I note that the applicant’s real estate agent advised the applicant that they had no capacity to withhold the bond monies for this purpose. Regardless, I consider it is inappropriate for the Body Corporate to seek to intervene in the contractual tenancy relationship between the owner and their tenant or to rely on the owner to act as debt collector for amounts the Body Corporate wishes to recover from a tenant.

For these reasons I consider that the Body Corporate was not entitled to invoice the applicant for the repair of the fence. The Body Corporate has advised that the fence in question is wholly on common property. Pursuant to section 108 of the Accommodation Module the Body Corporate is responsible for the maintenance of common property. Where the Body Corporate is unable to seek compensation from the persons causing damage to common property, it must bear the cost of the necessary repairs itself.

Security costs

I have concerns about several aspects of the charge for security costs. My first concern is that the Body Corporate has failed to adequately explain the basis for the specific amount of $1,442.70 charged to the applicant.

Despite requests for details, the Body Corporate has simply said that this is the amount over and above the normal charges to the Body Corporate. However there is no description of the amounts normally charged to the Body Corporate on an average weekend or a long weekend (given that the Body Corporate has apparently a general policy of engaging additional security on long weekends). There is also no description of what this amount paid for: eg. how many hours worth of security service and what times these hours were engaged for.

More fundamentally, I am of the view that the expenditure on these additional security services were not appropriately authorised by the Body Corporate. It seems that the tenant told the on-site manager that they were going to have a party (although no further details of this communication has been provided) and the resident manager made a unilateral decision to engage additional services. The amount spent is within the Committee’s spending limit but only the Committee can make decision on that expenditure. The Body Corporate has provided no justification of the resident manager’s authorisation to make this decision. I note that on 6 December 2006 the Committee passed a resolution that any requests for additional security must be approved by the chairman. This appears to acknowledge that a resident manager should not make expenditure decisions on behalf of the Body Corporate – although of course the Committee cannot delegate its decision making power to the chairman^[5] any more than it can delegate it to the resident manager.

Even if the expenditure were properly authorised by the Committee or the Body Corporate, I can find no basis within the legislation under which the Body Corporate is entitled to pass these costs on to an individual owner. Pursuant to section 118 of the Accommodation Module the Body Corporate can supply or engage specified services for the benefits of owners, but only with the agreement of the owner concerned. Even if By-laws 16(b) and 19 were valid, these by-laws refer to the recovery of damages and the security costs are clearly not damages.

I also have serious concerns about the ‘policy’ decided by the Committee, or possibly just the chairman, that owners would be charged for additional costs incurred by the Body Corporate as a result of the conduct of their occupiers. Even if the Body Corporate has the capacity to pass on such costs (which again, in the current circumstances, I doubt), this is not a decision that the Committee can decide. Section 24(1)(b) of the Accommodation Module provides decisions which change the rights, privileges and obligations of owners are restricted issues for the Committee. Any decision to charge owners for the actions of their tenants, even if it was possible, would clearly change the owners’ obligations and require a decision of the Body Corporate at a general meeting.

Other issues

The applicant has sought an order that they not be responsible for any costs associated with the recovery of the debt for the fence repairs and security charges. The Body Corporate has advised that the applicant has not incurred any penalties or loss of discount directly related to the alleged debts. However I have covered this in my order for completeness.

Similarly it is not apparent that the Body Corporate has undertaken any debt recovery actions and so no costs have been charged in this respect. However for the information of parties I note that the capacity for a body corporate to recover costs reasonably incurred by a body corporate in recovering amounts owing to the body corporate^[6] only enables a body corporate to pursue such amounts as a debt in a court of competent jurisdiction. Such a debt is the amount assessed by the court as reasonably, and not an amount just determined and invoiced by the body corporate.

While it is not a question that I need to determine in relation to this dispute, but I am at a loss to understand on what basis the Body Corporate considers it is legally entitled, through its hired security guards, to prohibit access to a lot or the common property by persons who are the guests of an occupier in the scheme.
Security guards may well be appropriate to prevent access to the scheme of persons who are not invited by an occupier, to monitor conduct in the scheme, and to verbally remind occupiers and their invitees of their obligations under the legislation and by-laws. But there is nothing in the by-laws that prevents occupiers having parties, limits their number of guests, prevents guests using common property, or permits the Body Corporate to restrict access to the scheme. Nor would such by-laws necessary be valid. If the Body Corporate has concerns that the conduct of occupiers or their invitees it can either progress these concerns through the usual process for enforcing the by-laws^[7], or, if there are immediate issues of public disturbance, safety or property damage, they can contact the police. The security guards refusing entry to guests of occupiers has the potential to fuel dispute rather than quell it.

Conclusion

As outlined above, I find that the Body Corporate has not sufficiently demonstrated that the damage to the fence arose from a breach of by-laws by the then occupier of Lot 134 or their invitee, or that the Body Corporate is legally entitled to pass the costs of the damage on to the owner of the Lot. In regard to the security costs, I find that the amount charged is not clearly specified, there is no evidence that the expenditure has been properly authorised by the Body Corporate and, regardless, there is no legal basis upon which the Body Corporate can pass on the cost to the applicant.

Accordingly, I find that the applicant is not responsible for these charges. I have made an order to this effect and also ordered that the Body Corporate amend its records to show that the applicant has never owed a debt in respect of these amounts.

I am concerned generally that a variety of decisions are purportedly being made in this scheme without the existence of an appropriate, minuted committee decision. The Body Corporate should bear in mind that it is only the Committee who has the power to make decisions for the Body Corporate, except in regard to those matters which must be determined in a general meeting. The BCM, resident manager and individual committee members (including the chairman) have no authority to make decisions on behalf of the Body Corporate and the Committee’s decision making authority cannot generally be delegated.

^[2] The Committee minutes of 13 September 2006 noted "the current regime of security patrols is 4 x static visits each night Sunday – Thursday and 1 x security guard on-site Friday and Saturday nights. Additional security is used for public holidays and long weekends at the Resident Unit Managers discretion."

^[5] It is clear that a chairman has no independent decision making power under the legislation, beyond the role in section 44 and 45 of the Standard Module regarding chairing meetings.
^[6] Provided for in section 97(1) of the Accommodation Module
^[7] Sections 182 to 188 of the Act

	The onsite manager contacted him in early 2006 in regard to antisocial behaviour in four units, including Lot 134 where there were large numbers of teenagers congregating. There were also complaints from other owners about mess at the front and rear of the Lot.
	The Chairman’s report to the 2006 AGM referred to this conduct and said that owners would be charged for additional costs to the Body Corporate. In early March he says he wrote to the owner of Lot 134 and other owners referring to the problems and repeating the policy.
	The onsite manager repeatedly sought the removal of the tenant in Lot 134 and when they finally were to leave the security guard was advised that the tenant planned to have a party for 100 people at the weekend to ‘stick it up management’.
	The Chairman told the onsite manager to advise the property manager of this party, to request intervention and to advise that costs to protect the scheme and residents would be on-charged.
	The party was held from 28 to 30 April and additional security was rostered on. Large numbers of attendees were refused entry and some "...destroyed the front fence and came in that way after encouragement from the tenant".
	The applicant has been provided with all documentation and information that they requested.
	The costs charged to the applicant are only a percentage of those borne by the Body Corporate for security, damage and cleaning caused by Lot 134.
	The applicant and their property manager have been abusive to the BCM staff.
	This dispute has nothing to do with whether the applicant’s lot is in the letting pool and several committee members have off-site managers.
	The practice in this scheme is for the Chairman to be authorised to progress all matters between meetings ‘as he thinks fit’.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Sailfish Cove [2007] QBCCMCmr 132 (8 March 2007)