Fairways on Bribie [2007] QBCCMCmr 325 (30 May 2007)

Number of Scheme:	16338
Name of Scheme:	Fairways on Bribie
Address of Scheme:	1 Fairway Avenue WOORIM QLD 4507

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Errol and Carol Williams, the owner of Lot 11

I hereby order that the application by Errol and Carol Williams, the owner of Lot 11 seeking outcomes that the owners who purchased the water tanks without body corporate authority be responsible for the costs incurred; that the further installation of water tanks cease; and that motions 1 to 6 passed at the Extraordinary General Meeting dated 12 January 2007 be invalidated, is dismissed.

I further order that the body corporate for Fairways on Bribie community titles scheme 16338 is deemed to have authorised by special resolution the purchase and installation of the three water tanks on common property.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0072-2007

"Fairways on Bribie" CTS 16338

Application
This application is by Errol and Carol Williams, the owner of Lot 11 (applicants) against the body corporate, J.Baker (Barker), R.Taylor, and M.Turner. John and Robyn Taylor own Lot 1, John Barker owns Lot 2, and Margaret Turner owns Lot 8.

The applicants are seeking the following outcomes:

That the further installation of water tanks cease and moneys spent from the sinking fund be reimbursed by the relevant owners back to the sinking fund. For the matter of water tanks to be brought to an AGM meeting (next AGM is due within 30 days from the 28th February, 2007) for full information to be available to all owners for discussion and approval of all by vote of a majority of owners. Should owners not wish to go ahead with water tanks and an other alternative is approved then owners who purchased tanks without authority be fully responsible for the costs they incurred. The stipulated number to form a quorum of all unit owners. That stage 2 Fairways on Bribie be consulted in the decision and the amount they wish to contribute. Wish to confirm EGM held on 12th January 2007 that all motions 1 to 6 are invalid.

Jurisdiction
"Fairways on Bribie" is a community titles scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (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^[1]. An order may require a person to act, or prohibit a person from acting, in a way stated in the order^[2]. An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate^[3].

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 applicants) and the committee. Submissions were made by a number of lot owners.

Further Information
On 11 May 2007, I requested Ken Pointon, the body corporate manager provide the following information and documentation by 21 May 2007:

The body corporate manager responded to this request by letters dated 18 May 2007 and 28 May 2007.

Background
The committee elected at the Annual General Meeting dated 13 May 2006 was John Barker (chairperson), Margaret Ottosen (secretary), Carol Williams (treasurer), and John Taylor, Clive Blair and Margaret Turner (ordinary members).

The applicants state that in October 2006, Mrs Barker sought their opinion about the installation of water tanks. While they had no objections, they advised Mrs Barker that the matter would need to be put to a meeting with information about costs and the siting of the tanks. The applicants say that they later learned that Messrs Barker, Turner and Taylor had ordered the tanks without reference to Carol Williams (a committee member) or to owners who did not give permission to use sinking fund monies.

Both Mrs Barker and Mrs Taylor submitted that the body corporate manager was approached about the installation of water tanks and he advised that an extraordinary general meeting would be needed unless all owners were contacted and a majority were in favour of the proposal. They say that 11 of the 13 owners were contacted with positive responses from 10. They submit that they then went ahead and ordered 3 tanks.

The information provided by the body corporate manager about the installation of the tanks suggests from November 2006 to January 2007, $5625.00 was spent being the $999.00 deposit for 3 tanks; $4071.00 to Dossell Engineering; and $555.00 to Loveday Electrical Pty Ltd.

The EGM was called for 12 January 2007. By letter dated 28 May 2007, Mr Pointon stated that the meeting was called with the verbal authority of the committee and that he was verbally authorised by the committee to submit the motions. He also stated that the meeting notice was dated 20 December 2006. The notice of the meeting included 3 motions dealing with the installation of 3 tanks, a motion concerning the provision of power to each tank, and a motion about providing plumbing to the tanks.

The minutes of the EGM indicate that: 11 lots were represented; that each motion was passed with 9 votes in favour; that the quotes totalling $5070.00 from Dossell Engineering for the installation of the tanks was accepted; the quote of $555.00 from Loveday Electrical Pty Ltd was accepted; and that the quote of $2678.00 from J&S Dunn Plumbing was accepted. The voting tally sheet for the EGM indicates that Lots 1, 2, 4, 5, 6, 7, 8, 9 and 13 voted in favour of the motions, with Lots 10 and 11 voting against the motions.

In February 2007, J&S Dunn Plumbing costs of $2678.00 were accounted for, with another $258.50 being accounted for in April 2007. In May 2007, rebates totalling $800.00 were accounted for.

The minutes of the EGM were confirmed at the Annual General Meeting dated 10 April 2007.

Determination
Applicable law
A body corporate has numerous obligations under the Act to administer and otherwise deal with the common property and body corporate assets. For example, a body corporate’s general functions and duties include administering the common property and body corporate assets for the benefit of lot owners^[4], and it must maintain common property in good condition^[5]. This obligation includes maintaining any lawns, gardens, trees, shrubs and plants on common property in good condition. It would be reasonable to expect that watering the lawns and gardens etc would form part of the maintenance obligations.

Given the present drought conditions, there is a distinct likelihood that lawns and gardens will suffer due to the water restrictions in South-East Queensland. It is clear that households (including unit dwellings) are now expected to properly manage the use of water with government providing encouragement through the water rebate scheme to help Queenslanders make their homes and gardens more water efficient. A body corporate should be looking at the use of water on common property while balancing its legislative obligations to maintain common property in good condition. A lot owner also has similar obligations about that person’s lot.

In this regard, it would certainly be reasonable for a body corporate to purchase a rainwater tank to be used to maintain the common property and/or was for the general use and enjoyment of the owners and occupiers of lots included in the scheme. The purchase and the associated work to install a tank would constitute an improvement to common property by the body corporate, and could only be authorised by special resolution of the body corporate if the proposed cost is more the amount worked out by multpilying the number of lots in the scheme by $300^[6].

In addition, at least two quotes must be given to owners if the proposed cost of the installation of the tanks and the associated work is more than the major spending limit stated in section 104 of the Standard Module^[7].

Motions requiring a special resolution or involving spending above the major spending limit can only be determined in general meeting. A general meeting may only be called with the authorisation of the committee or upon receipt of a proper request from lot owners^[8]. Owners must be given at least 21 days notice of a general meeting^[9]. Where more than 1 motion is submitted proposing alternative ways of dealing with the same issue, the motions must be included on the voting paper as a motion with alternatives^[10]. A body corporate manager cannot exercise a proxy at a general meeting for someone else^[11].

The installation of rainwater tanks
Three tanks have been installed on the common property. Mrs Barker submitted that the tanks were installed in good faith to enable all owners to benefit from gardens being kept in excellent condition by the Taylor’s’, and without the tanks the body corporate would have had to spend a fortune to re-establish gardens. Mrs Taylor stated that the position of the tanks was determined by the proximity of downpipes and the existing underground watering system; tank 1 being connected to the existing watering system to water the courtyard and outside the perimeter fence; tank 2 being connected to the existing watering system supplying water to the carwash area and driveway gardens; and tank 3 being connected to the existing watering system to water the central garden and the separate plots at doorways. In these circumstances, it is evident that the water from the tanks is intended to used for the maintenance of common property and is also for the general use of occupiers for the cleaning of vehicles. It should be noted that while tank water is currently used to water lawns and gardens, the ongoing use of tank water is a matter for body corporate determination. For example, the body corporate could decide the water be used for other purposes provided that the purpose is for the benefit of the lot owners.

One tank is situated on a part of common property allocated for the exclusive use of Lot 1 and waters gardens on the exclusive use area. This tank is the property of the body corporate and is not part of the exclusive use allocation to Lot 1^[12]. The tank could be installed on the exclusive use area with the consent of the owner of Lot 1 provided for example, that the tank water is not intended to be used exclusively by the owner. In this case, I do not consider this to be the case even though the tank water is currently connected to a watering system which provides water to the exclusive use area and the owner of Lot 1 is responsible under By-Law 25 for the maintenance of the exclusive use area.

In my view, the body corporate is able to install the tanks in their current positions. Arthur Dixon and Heather Edwards of Lot 3 have submitted that they were not advised about the installation; that one tank is below their balcony which is an eyesore and could affect the value of their unit, and is a security risk as it enables easy access to their balcony. The body corporate must act reasonably and for the benefit of lot owners. If there is an identifiable security issue that would not otherwise exist, the body corporate may consider available options to reduce this risk. The claim regarding the value of the unit is subjective and not an issue considered in the determination of this dispute.

Body corporate authorisation to purchase and install tanks
The initial process adopted before the tanks were purchased and installed was clearly incorrect. While the persons who initiated the purchase may have considered there was good reason to take urgent steps, given the type of authorisation required to purchase and install the tanks, and the necessity that owners be provided with at least two quotes, it was necessary that the matter was submitted for the consideration of owners in general meeting.

Many disputes arise from owners acting in a manner contrary to the requirements of the legislation. The legislative framework ensures that projects of the magnitude in dispute are submitted to owners in general meeting. Problems can arise when owners act without proper authority and a concerned owner (such as the applicants in this case) is entitled to dispute what has occurred. A lot owner or owners could be held liable for a body corporate expense where for example, the expense does not benefit other owners or owners generally do not derive a benefit from the expense, or if owners generally oppose the expenditure.

However, unauthorised acts are capable of ratification by a body corporate. The concept of ratification was discussed at length by McGill DCJ^[13] who (in part) stated that "The principle of ratification is an incident of the law of agency...one would expect it to apply in any situation where there can be a relationship of principal and agent, and such a situation can certainly arise under the Act. There is nothing I can see in the Act which would prevent the general principle of ratification from applying to the operation of a body corporate under the Act, and in my opinion, it does apply under the Act^[14]"..."When an act has been done by one person assuming to act on behalf of another, though without authority, and the other subsequently ratifies what has been done on his behalf, this operates retrospectively to give the first person authority to do what has been done as agent^[15]".

While it would seem that Messrs Barker, Turner and Taylor did not involve all committee members in committing the body corporate to the expense relating to the purchase of the tanks, it is significant that these persons were committee members at the relevant time and they believed that they were acting with the authority of owners. Further, the body corporate could authorise the purchase as the tank water is intended to be used to maintain common property and is not for the use and enjoyment of any one owner or occupiers to the exclusion of other owners and occupiers. In these circumstances, I consider that the purchase was capable of body corporate ratification.

The ratification occurred at the EGM. The applicants say that nothing proceeded past motion 1 as those present did not realise that Lot 1 was having a tank supplied for their sole use at body corporate expense. The meeting documentation does not support this submission. The manager has provided a copy of the voting tally sheet for the EGM, the minutes of the EGM, and the minutes of the recent Annual General Meeting held on 10 April 2007 where it was resolved to confirm the minutes of the EGM.

There are a number of technical errors in the convening and holding of the EGM. The meeting was not convened and the motions were not submitted with the proper authority of the committee or with the knowledge of all committee members. Verbal authorisation from some committee members does not constitute authority as the committee can only make a decision at a committee meeting or by voting in writing outside a committee meeting. Further, as stated above (under Applicable Law) the body corporate may only authorise the making of an improvement to common property of this nature by special resolution. Therefore, it was incorrect to list the motions as requiring an ordinary resolution. Also, it would seem that the body corporate manager exercised a proxy for Lot 7 in contravention of section 75(2) of the Standard Module.

In giving consideration to the significance of these errors, it is relevant to consider the views expressed by His Honour Judge Boulton DCJ in Chen v Body Corporate for Wishart Village CTS 19482^[16]. In his decision, Judge Boulton considered provisions of the Standard Module and commented that "The very detailed provisions of the standard module regulation to which I have referred above make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bona fide".

Given the information provided by the body corporate manager, I am satisfied that owners were given 21 days notice of the EGM^[17]. While the committee may not have properly authorised calling the EGM and the motions submitted, the matters needed consideration in general meeting and the motions (other than the motion to confirm the minutes of the previous general meeting) related to the purchase and installation of the tanks. In addition, the voting tally sheet and the minutes of the EGM indicate that 10 of the 13 lots were represented (excluding Lot 7 where a proxy was incorrectly exercised by the body corporate manager); that the motions were presented as motions with alternatives; that 8 of the 13 lots supported the motions to purchase and install the tanks; and that only 2 lots opposed the motions. Given the votes at the EGM (other than the vote for Lot 7), the motions would have been passed by special resolution.

In the absence of contrary arguments from the applicants, I am satisfied that despite the procedural defects, each owner had the opportunity to vote on the motions as presented and that the motions were properly passed. It is also relevant that the minutes of the EGM have been confirmed by the body corporate at the recent Annual General Meeting.

Decision
In the circumstances, the costs incurred to purchase and install the tanks on common property were capable of being ratified by the body corporate and that this ratification occurred at the EGM. For these reasons, I do not consider that the owners who purchased are responsible for the costs or that it is necessary that the body corporate be compelled to further consider the purchase of the tanks.

Further, while there were procedural errors in the calling and holding of the EGM, I do not consider that the circumstances warrant voiding the EGM and the resolutions passed at this meeting. Given that the body corporate did not authorise the purchase and installation of the tanks by special resolution, I have made ancillary provision in the order to deem that the authorisation has been made by special resolution.

The application is otherwise dismissed.

^[1] Section 276(1), Act.
^[2] Section 276(2), Act.
^[3] Section 284(1), Act.
^[4] Sections 94 and 152, Act.
^[5] Section 109(1), Standard Module.
^[6] Section 113, Standard Module.
^[7] Means the amount determined by multiplying the number of lots by $250 (Dictionary, Standard Module).
^[8] Sections 40 and 61, Standard Module.
^[9] Section 43, Standard Module.
^[10] Section 42B, Standard Module.
^[11] Section 75(2), Standard Module.
^[12] Section 177(1), Act.
^[13] Warren v Body Corporate for Buon Vista Community Titles Scheme 14325 (No 2) [2006] QDC 398
^[14] ibid, paragraph 35, page 11.
^[15] ibid, paragraph 31, page 10.
^[16] Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.
^[17] Section 43, Standard Module.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Fairways on Bribie [2007] QBCCMCmr 325 (30 May 2007)