Kakadu [2007] QBCCMCmr 169 (21 March 2007)

Last Updated: 2 April 2007

REFERENCE: 1059-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	3298
Name of Scheme:	Kakadu
Address of Scheme:	16 Sapphire Drive NAMBOUR QLD 4560

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

Eugene & Lorna Smith, the Owner(s) of lot 1

I hereby order that the application for an order for "reimbursement of monies outlayed due to the secretaries actions i.e. the $137.50 paid in September, $401.50 paid to "Illusions" yesterday to rectify the situation caused by the secretary by removing the TV booster, the cost of this application" is dismissed. I further order that all the powers, functions and responsibilities of the body corporate committee and its executive members will vest in two persons being, firstly, the owner or nominee of lot 1 and secondly, the owner or nominee of lot 2. I further order these powers, functions and responsibilities will vest in a nominee of the owner rather than the owner themselves if the owner provides written notice of a person (nominee) who is to serve on the committee in place of the owner, that nominee being a member of the owner’s family or acting under a power of attorney from the owner. This written notice is to be in the form of a letter signed by both the owner and the nominee and posted to the other owner. The letter must include the name of the nominee and their postal address within Australia. I further order that the two persons who will form the committee and exercise its responsibilities as a result of this order (committee members) will be joint signatories for all financial institution accounts of the body corporate including a bank account numbered 024838777 held at Suncorp Metway Nambour Branch BSB 484-799 for Community Management Scheme 3298 Kakadu. I further order that the two committee members will jointly hold the positions of the executive members of the committee unless they agree otherwise. I further order that the owner of Lot 1 is to provide the new owner of Lot 2 with a copy of this order within 14 days of the date of this order. I further order that if the committee members are unable to agree on administrative fund and sinking fund budgets for consideration at the next annual general meeting then each committee member may submit their own budgets for owners to vote on as alternative motions.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1059-2006

"Kakadu" CTS 3298

Application

Eugene and Lorna Smith, the owners of Lot 1 (the applicants) have sought the following final orders:

1. Urgent consideration and a speedy resolution to this application.
2. Compliance with BCCM Standard Module s 11(1) & (4)
3. Immediate access and signatory rights to the body corporate bank account - Suncorp Metway, 484-799, 024838777, CMS 3298, Scheme Kakadu, Nambour Branch, Manager Jaide Wellington.
4. Reimbursement of monies outlayed due to the secretaries actions i.e. the $137.50 paid in September, $401.50 paid to "Illusions" yesterday to rectify the situation caused by the secretary by removing the TV booster, the cost of this application.

The Scheme

Kakadu CTS 3298 is a 2 lot scheme registered under the Body Corporate and Community Management Act 1997 and is operating under the Body Corporate and Community Management (Standard Module) Regulation 1997. Typically, this module is intended for residential arrangements. Figtree is registered under a Building Units Plan of Subdivision, now known as a Building Format Plan.

Jurisdiction

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)).

Determination

The background to this dispute begins with concerns in relation to maintenance of the scheme, understanding as to certain agreements and a lack of finances of one lot owner. The applicants’ crystallised concerns relate to certain costs incurred by them in relation to the upgrade of a television antenna, access to the body corporate bank accounts, committee election and costs incurred in making this application.

The respondent has provided evidence that the costs associated with the television antenna were settled on 8 January 2007. Therefore only the issue of annual general meetings, committee positions, application costs and access to bank accounts remain to be addressed.

In the course of stating their grounds, the applicants have stated that the respondent indicated they may need to sell their lot for financial reasons. They go on to advise that the respondent has moved out without a forwarding address. I have been able to confirm that the respondent has in fact sold her lot.

In those circumstances, I am unable to make the orders sought specifically against the respondent. However, I am able to make certain declaratory orders in relation to the functioning of the scheme that are in accordance with the relevant legislation. I will therefore make orders that align with the legislation and provide some general guidance below.

General Guidance

Many of the issues that follow need to be understood in the context of this scheme.

Duplexes, like any other community titles scheme, must comply with the provisions of the Act and the Standard Module. Often, the two lot owners in a duplex (or even a single owner of both the lots) do not realise that they are part of a body corporate in a community titles scheme. Disputes may arise when one owner seeks to have the other owner comply with legislation and the other owner denies the existence of the scheme, or their obligations as a member of the body corporate. Frequently, new owners may be told (incorrectly) "there is no body corporate".

Once registered as a community titles scheme, the owners of the lots are automatically members of the body corporate (s.31 Act). A lot owner cannot refuse to be a part of the body corporate and has certain obligations as a member of the body corporate.

What are the body corporate’s obligations?

The lot owners in a duplex are the body corporate. The body corporate makes decisions on matters with shared responsibility, such as:

• maintenance of the common property;
• establishing and enforcing by-laws;
• adopting budgets to cover the cost of maintenance; and
• compulsory building insurance.

Most issues, including those listed above, must be considered by the body corporate in a general meeting.

How are meetings conducted?

There are two kinds of meetings relevant to the business of running a body corporate: committee
meetings and general meetings.

The committee for the body corporate

The committee is tasked with the administrative and day to day requirements of the body corporate. The committee in larger schemes is elected at the Annual General Meeting (AGM). However, in a duplex where the two lots are in different ownership an election is not necessary. Instead, the committee consists of the two individuals who are the owners, or the nominees of the owners, and they must decide between themselves who is to hold the positions of chairperson, secretary and treasurer (the executive positions) (Standard Module s.11(1)). If they cannot agree, the positions of the executive members are jointly held by both of them (Standard Module s.11(4)).^[1]

General meetings

The body corporate must hold an AGM and must consider all motions included on the agenda of the AGM (Standard Module s. 45). However, if matters arise that can’t wait until the next AGM, the body corporate may hold an extraordinary general meeting to consider the issue. For more detailed information on the requirements for general meetings of a body corporate, refer to the BCCM fact sheet General Meetings.

How is the common property maintained?

The body corporate is obliged to:

•	maintain common property in good condition, and to the extent that common property is structural in nature, in a structurally sound condition (Standard Module s.109);
•	administer the common property and body corporate assets, and enforce the by-laws for the scheme (s.94 Act); and
•	administer, manage and control the common property and body corporate assets (s.152 Act).

For more detailed information on the obligation of a body corporate to maintain common property, refer to the BCCM fact sheet Maintenance Issues.

How does the body corporate manage finances?

At the AGM the body corporate must:

•	adopt an administrative fund budget and a sinking fund budget each financial year (Standard Module s.94);
•	fix contributions to be levied on the owner of each lot, based on such budgets, for the financial year (Standard Module s.95);
•	give each owner notice of the contributions due (Standard Module s.96); and
•	open an account with a financial institution in the name of the body corporate (s.151 Act) and keep there the "administrative fund" and the "sinking fund" (Standard Module s.100). For a community titles scheme operating under the Standard Module as this does, at least 2 members of the committee must operate the account jointly.

For more detailed information on the financial obligations of the body corporate, refer to the BCCM fact sheet Financial Management.

Who is responsible for insuring duplex buildings?

The body corporate is responsible for insuring the buildings of the duplex if there is a common wall between the two lots of the building. This means that both lots must be insured with the same insurance company on the one policy in the name of the body corporate, e.g. "Kakadu Community Title Scheme 3298". If the two individual lot owners manage to insure their lots with two different insurers, the policies of both of the lot owners may be invalid. The policy must be for full replacement value of the buildings, the common property and any body corporate assets. (Standard Module s.127 and s.129). Additionally, the body corporate must maintain public risk insurance. For more detailed information on the insurance obligations of a body corporate, refer to the BCCM fact sheet Insurance.

How are expenses calculated?

The CMS will include two lot entitlement schedules, the contribution schedule and the interest schedule. The contribution schedule is used to calculate how much a lot owner pays towards the maintenance of the scheme. The interest schedule is used to calculate the lot owner’s share of the insurance premium and also the total share in the land value of the community titles scheme. Both the contribution and interest schedule lot entitlements for each lot in the "Walaringah" community titles scheme are equal, so each owner contributes half of the total expenses of the body corporate.

For more detailed information on lot entitlements for a community titles scheme, refer to the BCCM
fact sheet Lot Entitlements.

What are by-laws?

By-laws are a set of rules for a community titles scheme that regulate various matters including the keeping of animals, noise and parking. The bylaws are shown on the CMS and are binding on all
occupiers, including owners and tenants. The by-laws must be enforced by the body corporate. Enforcement of the by-laws may include the issue of a contravention notice by the body corporate to an occupier (owner).

For more detailed information on by-laws including contravention and enforcement, refer to the BCCM fact sheet Body Corporate By-laws.

In summary then, I note the provisions of Sections 30 and 31 of the Act:

•	When a community titles scheme is established, a body corporate is created, and is the body corporate for the scheme; and
•	The members of the Body Corporate for a community titles scheme are the owners of all lots included in the scheme.

Lot owners might also care to consider the information contained in the Fact Sheet titled "The Body Corporate Manager".

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^[1] For more detailed information on the role of the committee for a body corporate, and its functions, refer to the BCCM fact sheet The body corporate committee.