Harkevin Court [2007] QBCCMCmr 357 (12 June 2007)

Last Updated: 5 July 2007

REFERENCE: 0355-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	1999
Name of Scheme:	Harkevin Court
Address of Scheme:	228 - 230 Redbank Plains Road BELLBIRD PARK QLD 4300

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Glennis Hackett, a co-owner of Lot 11

I hereby order that Lee Horton’s Body Corporate Management Services is appointed as administrator to call, hold and chair a general meeting (the meeting) of the body corporate for Harkevin Court community titles scheme 1999 in accordance with this order and within 3 months of the date of this order. I further order that the administrator shall hold the appointment for the period beginning on the date of this order, until the close of the meeting ordered to be held and that for the purposes of calling and chairing the meeting, the administrator shall have all the powers of chairperson, secretary and treasurer of the body corporate and of the committee, with the exception of the following powers: 1. To further delegate any of those powers to another person; and 2. To incur any expenditure apart from that reasonably necessary for the calling and holding of the meeting, and apart from expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the legislation. I further order that within 14 days of the date of this order, the administrator shall: 1. Serve a notice on each lot owner in accordance with section 13(2) and (3) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module) inviting each lot owner to give to the administrator by the time stated in the notice: (a) A written nomination of an eligible individual that complies with section 13A of the Standard Module; and (b) Motions for inclusion on the agenda of the meeting. 2. Give a copy of this order and the statement of reasons to each lot owner. I further order that the administrator must allow at least 14 days for each lot owner to submit a nomination and motions, and that after the time allowed has expired the administrator must, except as provided in this order, call and hold the meeting in accordance with the Body Corporate and Community Management Act 1997 and the Standard Module. I further order that the meeting shall be deemed to be an annual general meeting of the body corporate and that the agenda for the meeting include the matters stated in section 45(3) of the Standard Module and any other motion validly submitted. I further order that the administrator’s fees for this appointment to be paid by the body corporate are $180.00 plus GST and outlays.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0355-2007

"Harkevin Court" CTS 1999

Application
This application is by Glennis Hackett, a co-owner of Lot 11 (applicant) seeking an order that Lee Horton’s Body Corporate Management Services be appointed to call an annual general meeting of the body corporate. The applicant has stated that the previous body corporate manager, Sue Fitzgerald of Ray White (Real Estate Agents and Auctioneers) Goodna has not held an annual general meeting since 2003 and fees have not been charged to owners since 2004. The applicant has provided a copy of a letter dated 20 April 2007 from Sue Fitzgerald stating that she resigned as body corporate manager effective as of 23 April 2007. The applicant has provided a letter dated 18 April 2007 from Lee Horton of Lee Horton’s Body Corporate Management Services (Horton) indicating a willingness to hold a general meeting at a cost of $180.00 plus GST and outlays.

The applicant also seeks an order to determine if all owners are financial to vote. The applicant has provided a copy of a statement of outstanding fees she states was provided by the previous body corporate manager.

Jurisdiction
"Harkevin Court" 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).

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 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. An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2), Act). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1), Act).

Procedural matters
On 1 May 2007, a copy of the application was provided to the owner of each lot (excluding the applicant), with an invitation to owners to respond to the matters raised in the application (section 243, Act). On 10 May 2007, the invitation to make submissions was extended to 1 June 2007.

A dispute resolution recommendation has been made referring the dispute to departmental adjudication (section 248, Act).

Submissions
In supporting the application, William and Lynette Henning of Lot 9 submitted that they made numerous unsuccessful approaches to the previous body corporate manager over the part 12 months regarding the failure to send out levies.

Further information
On 8 June 2007, the previous body corporate manager informed a member of the commissioner’s office that the applicant is in possession of the body corporate records.

Determination
Body corporate
The body corporate consists of the owner of each lot included in the scheme. The body corporate’s general functions include administering the common property and body corporate assets for the benefit of lot owners, enforcing the community management statement (including any by-laws), and carrying out other functions given to the body corporate under the Act or the community management statement. The body corporate is obliged to maintain the common property in good condition (see section 94 Act and section 109 Standard Module).

The committee
The body corporate chooses a committee made up of a chairperson, secretary and treasurer and ordinary committee members (if any). The body corporate for this scheme must choose at least 3 but not more than 7 persons to the committee. The committee is chosen at each annual general meeting of the body corporate and generally is charged with the responsibility for the day-to-day management of the body corporate.

The legislation provides the committee with the power to make body corporate decisions (section 100, Act). While the legislation provides the committee with certain powers, it also restricts the matters that the committee can make decisions on for example: the committee’s expenditure limit for a particular item is $125 multiplied by the 12 lots in the scheme; the committee cannot fix a contribution to be paid by lot owners; and the committee cannot make a decision on an issue which may only be determined by the owners in general meeting (see sections 26 and 103, Standard Module).

The annual general meeting
The purpose of the annual general meeting is to provide lot owners with the opportunity: to review the body corporate’s past financial year’s income and expenditure; to consider future spending needs through consideration of an administration fund budget and a sinking fund budget; to fix contributions to be paid by lot owners for body corporate expenditure; to determine whether the next financial year’s accounts should be audited; to elect a committee; to review insurance; and to consider any other motions on the meeting’s agenda. Given the matters which require determination at this meeting, an annual general meeting is integral to the ongoing management of a body corporate.

The body corporate must hold an annual general meeting every year within 3 months after the end of the scheme’s financial year (section 60, Standard Module).

Financial management
The body corporate must establish and maintain an administrative fund and a sinking fund (section 100, Standard Module). The purpose of the administrative fund is to provide for short-term recurrent body corporate spending such as annual insurance and the regular maintenance of common property. The sinking fund is intended for long-term body corporate expenditure of a capital nature. The sinking fund budget must allow for necessary and reasonable expenditure from the fund for at least the next ten years. The lot owners, as the body corporate members, vote to accept or reject proposed budgets and then fix the contributions to be paid to meet the expenditure identified in the proposed budgets (sections 94 and 95, Standard Module). While the owners have a right to reject a proposed budget, the owners must be aware that the body corporate has an obligation to maintain both these funds.

Administrator
The applicant’s claim that the body corporate has not held an annual general meeting since 2003 has not been disputed. The body corporate must hold an annual general meeting each year and where it has not done so, an order of the nature being sought by the applicant is warranted. Given the support from the owner of Lot 12, I am satisfied that it is necessary to appoint an administrator for the purposes of calling and holding an annual general meeting (section 301(2), Act provides that the administrator has the powers given under the order). It should also be noted that where an administrator is appointed to perform obligations of the body corporate, the committee or a member of the committee, anything done by the administrator under the authority given under the order is taken to be done by the body corporate, committee or committee member (section 278, Act).

Given the duties to be performed by the administrator, it is reasonable that the body corporate pay the fees stated in the letter from Horton dated 18 April 2007. I have ordered that the meeting to be called and held by Horton is deemed to be an annual general meeting of the body corporate. The order also provides an opportunity for owners to nominate an eligible individual for committee membership and to submit motions for consideration at the meeting. It would seem that the applicant has possession of the body corporate records. The applicant should provide the records to the administrator necessary to enable the administrator to carry out the terms of the order.

If owners are uncertain about nominating for the committee, information is available from the information service provided by the Commissioner. The information service can be contacted on 1800 060 119 during business hours. Information is also available at www.bccm.qld.gov.au.

Payment of contributions
The applicant has also sought an order about the right of an owner to vote at a general meeting. Section 49A(2) of the Standard Module provides that a "person does not have a right to exercise a vote for a particular lot on a motion (other than a motion for which a resolution without dissent is required), or for choosing a member of the committee, if the owner of the lot owes a body corporate debt at the time of the meeting".

The statement provided by the applicant indicates that each lot (with the exception of Lot 11) has outstanding levies as at 20 April 2007. In normal circumstances, section 49A(2) restricts a person’s right to vote.

However, it would seem from the statement that levies have continued to accrue for each lot even though the body corporate has not held an annual general meeting held since 2003. As stated in the general information provided above, the body corporate determines the contributions to be paid by the lot owners at each annual general meeting. This determination is made on the basis of budgets presented to owners for a financial year. The contributions fixed by the body corporate relate only to the financial year covered by the budgets and do not automatically apply to the following financial years if the body corporate for example, fails to hold a subsequent annual general meeting or fails to make financial management decisions for a particular financial year. In this case, there was no basis for the body corporate or the previous body corporate manager to claim that contributions were fixed for payment by lot owners for the financial years which have passed since the body corporate last held an annual general meeting.

This may create a problem as it would seem from the statement that some owners may have paid contributions despite the absence of a proper body corporate decision. However, I do not consider that this is reason to make an order about each owner’s the right to vote at the forthcoming meeting. In my view, the matter requires examination internally and would involve: determining the contributions fixed by the body corporate at the last annual general meeting held; checking the contributions which have been paid for the particular financial year considered at the last annual general meeting; determining the contributions claimed to be levied for subsequent years but for which there has not been a proper body corporate decision; and determining the lots whose owners have paid the claimed levies and the amounts paid.

Given the uncertainty about the payment of contributions, I consider that it would only be reasonable for the body corporate to deny a person’s right to vote at the forthcoming meeting if a debt is owed from a contribution levied as a consequence of a body corporate resolution at a general meeting. The fact that some owners may have paid contributions not specifically determined in general meeting should not be reason to deny other owners their right to participate in body corporate business looking forward. However, any payments made by owners for periods not contemplated by a body corporate decision must be recognised. For example, those payments may be credited to those lots against future obligations to make contribution payments as a consequence of resolutions passed at the meeting.

For these reasons, it is not appropriate that any order be made about this matter.