Surf Regency [2007] QBCCMCmr 2 (3 January 2007)

Last Updated: 12 March 2007

REFERENCE: 0865-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	10938
Name of Scheme:	Surf Regency
Address of Scheme:	9 Laycock Street SURFERS PARADISE QLD 4217

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

Mr Douglas Currie, the Owner of lot 45

I hereby order that the application for the following final outcomes: 1. To have Motion No.11 – increase and painting cost/ change in colour, ruled out of order. 2. To proceed with the existing quote which was approved at last year’s AGM or rescind that motion approval and call new tenders. is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0865-2006

"Surf Regency" CTS 10938

THE SCHEME

Surf Regency is a subdivision of 60 lots on a Building format plan. The regulation module applying to the scheme is the Accommodation Regulation Module.

APPLICATION

By application received by this Office on 25 October 2006, the applicant sought the Interim order:

To have Motion No.11 – increase and painting cost/ change in colour, ruled out of order.

The applicant also sought the following final outcomes:

1. To have Motion No.11 – increase and painting cost/ change in colour, ruled out of order.

2. To proceed with the existing quote which was approved at last year’s AGM or rescind that motion approval and call new tenders.

BACKGROUND

Motion 11 submitted to the general meeting of the body corporate read as follows:
That the Body Corporate give its consent to a changing of the paint colour to the building and approve further funding of $29,892 plus GST from the Sinking Fund for the extra cost.

In support of the application to rule the motion out of order, the applicant made the following submissions:

•	At the AGM held 29 October 2005, a motion to repaint the Building was carried and a tender from ANP Painting for $80,888.50 was accepted;
•	The successful tenderer recommended that the exterior of the building be completely repainted within 12 months and that concrete spalling be repaired within 6 months;
•	The committee subsequently decided to adopt a new colour scheme and as a result a motion was submitted whereby it was proposed that the new colour scheme be adopted with the additional $32,881.20 to be paid from the sinking fund;
•	This increase is approximately 40% of the original contract price, twelve months after the original quotation was given;
•	The new cost of painting is therefore $113,769.70 yet the proposed sinking fund budget refers to the cost of painting as $100,000 – a shortfall of $13,769.70;
•	The proposed sinking fund budget does not make allowance for any expenditure other than a $10,000 contingency when other works have already been quoted;
•	Having regard to the above, the applicant contends that Motion No.11 considered at the AGM on 30 October 2006 should be ruled out of order.

Given the expense and effort involved in organising an AGM for a scheme of this size, I did not consider it appropriate to prevent the motion from being considered at the AGM, particularly in the absence of a submission from the body corporate. Rather, submissions were called from affected parties with a view to then deciding whether any resolution based on that motion should be invalidated before commencement of the work.

I am advised that the owners in general meeting ultimately rejected the proposal to change the colour scheme of the building (10 "yes" votes and 14 "no" votes). Therefore this order is something of an academic exercise in determining the validity of the motion.

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.

DETERMINATION

I have again perused the material supplied by the applicant and have noted that at the AGM held 29 October 2005, the agenda listed motion 10- "Painting of Building". This motion was subsequently carried and the tender from ANP Painting for $80,888.50 was adopted.

At the following AGM it was proposed by way of Motion 11 that additional work, involving changes to the colour be undertaken at a cost of $29,892 plus $2,989.20 GST (total $ 32,881.20 attributable to additional labour cost and scaffolding hire.

At that stage the amount payable for the painting and associated repair work was $73,535 plus $7,353.50 GST for a total amount of $80,888.50. Therefore, assuming that the motion and resolution are valid, the total amount payable to ANP Painting on completion of the work will increase to $103,427 plus $10,342.70 GST (total $113,769.70).

Essentially, the applicant sought to invalidate the motion on the grounds that the proposed expenditure exceeded the proposed budget amount of $100,000 by some $13,000. In this regard section 45 of the Accommodation Module Regulation provides that a person chairing a general meeting must rule a motion out of order if the motion, if carried, would conflict with the Act, the Regulation or by-laws, a motion already voted on at the meeting, or is unlawful or unenforceable for another reason.

Section 92(1) of the Accommodation Module requires bodies corporate to adopt a sinking fund budget and an administrative fund budget for each financial year. Section 94(6) of the Accommodation Module provides that copies of the proposed budget for the administrative and sinking funds must accompany the notice of an annual general meeting. The contributions levied on owners of lots included in a community titles scheme are to be fixed on the basis of the budget
adopted by the body corporate (section 93(1) of the Accommodation Module). Section 92A provides that the amount of a budget adopted by a body corporate at an annual general meeting may be more or less than the proposed budget amount, by an amount equivalent to not more than 10% of the proposed budget amount.

I note that the proposed budget for the period 1/08/2006 to 31/07/2007 provided for painting at a cost of $100,000 exclusive of GST (i.e. $110,000 if GST were to be included). The amount payable under the contract with ANP Painting is $103,427 exclusive of GST (i.e. $113,769.70 if GST is included) i.e. approximately 3.4% more than provided for in the proposed budget.

Accordingly, I believe that Motion 11 was properly put to the general meeting on 30 October 2006, although it was ultimately rejected by a majority of votes.