Ipomoea Court [2007] QBCCMCmr 401 (2 July 2007)

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

I hereby order that Coralie Mott, of CTS Management Pty Ltd, is appointed as Administrator to call, hold, and chair a general meeting (the meeting) of the Ipomoea Court Body Corporate in
accordance with this order and within 3 months of the date of this order for the purpose of the consideration of motions included on the agenda of the meeting and deciding committee member positions. 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.

I further order that for the purposes of the Body Corporate and Community Management Act 1997 (the Act), the meeting shall be deemed to be an annual general meeting of the body corporate.
I further order that the Administrator shall issue a notice of the meeting in accordance with sections 42(1), (2) and (3) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) and except as provided in this order, the meeting must be called and held in accordance with the Act and the Standard Module.

I further order 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-

To further delegate any of those powers to another person; and
To incur any expenditure other than that reasonably necessary for the calling and holding of the meeting, and expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the legislation.

I further order that the purported engagement of Mr John Hayden of Village Strata Management, 14 Main Western Road, North Tamborine, was at all times void and of no effect.

I further order that Mr Reeves, owner of lot 4 and lot 8 and Mr Hayden, of Village Strata Management, 14 Main Western Road, North Tamborine, shall, within 7 days of the date of this order, deliver all books and records of the body corporate in their possession to the Administrator.

I further order that the Administrator is to make the books and records available for inspection by the owner of lot 5 within 14 days of their receipt by her, at a mutually agreeable time, for a maximum period of 2 hours.

I further order that:

• The owner of lot 5 shall conduct the inspection in a reasonable, calm and orderly manner.
• At the inspection the owner of lot 5 is not entitled to engage the Administrator in discussions or debate about the content of body corporate records but may direct any concerns or questions about the content of body corporate records to the Administrator in writing.
• At the inspection (or within 48 hours after it) the Administrator shall provide the owner of lot 5 with copies of particular body corporate records upon request, provided that the owner of lot 5 pays a fee of 50c per page for copies of requested documents.
• The Administrator shall not require the payment of a fee for the inspection authorised by this order.

I further order that, in all other respects, this application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0217-2007

"Ipomoea Court" CTS 5042

Scheme

"Ipomoea Court" community titles scheme 5042 was registered as a building units (now known as format) plan of subdivision on 21 September 1990, comprising eight lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

Application

This application is lodged by Paul Andrew Lomaz, the owner of lot 5, (the applicant) against the body corporate, seeking the following orders:

Attached to the application is a letter from Coralie Mott of CTS Management Pty Ltd, consenting to appointment as Administrator at an hourly rate of $140.00 (GST inclusive).

Amongst the information included with the application, but not specifically identified as forming part of the grounds, the applicant mentions a wide variety of other matters including, in relation to Hayden’s appointment, that there is no contract for his appointment, his refusal to open the applicant’s mail, his refusal to place the applicant’s amended motions on the agenda for the EGM held on 10 March 2007, Mr Reeves spending body corporate funds without appropriate approval, cleaning of the stairs by Mrs Wierzbicki, smoke from cigarettes and a BarBQ from lot 7 entering Mrs Wierzbicki’s unit, response to allegations that the applicant has "damaged and polluted common property", payment from the sinking fund for repair of a water pipe to unit 4 and breach of the code of conduct by Mr Hayden and Mr Reeves. I have found it a time-consuming exercise to sift through the plethora of material submitted with the application in order to determine what is relevant to the orders sought by the applicant and what is not. Much of the material was irrelevant in the context of the orders sought by the applicant. In this regard, I repeat the comments of Adjudicator Underdown in her determination of application 0882-2006 for the same scheme that "This Office does not police bodies corporate, nor does it seek to intervene in personality disputes. It assists in the resolution of disputes against the framework of the legislation and has the jurisdiction as quoted above." The issues for consideration in this application are the appointment of an administrator, the appointment of an auditor by the administrator, the changing of signatories for the body corporate bank account, and Mr Reeves making the body corporate records available to the applicant. I have considered the information submitted by the applicant only to the extent that it relates to the orders he has sought at Part 5 of the application.

Submissions

Submissions in response to the application were sought from all owners (excluding the applicant) and the committee.

Three submissions were received, two from owners and one from Mr Hayden of Village Strata Management. The owner of lot 1 made brief submission that he believes both Mr Hayden and Mr Reeves are acting in good faith and are trying to run the body corporate in an efficient and productive manner. The owner of lot 4 and lot 8, Mr Reeves, made brief submission that it was his understanding that the orders sought by the applicant needed to be put to a vote of all lot owners in the forum of a general meeting, or, in exceptional circumstances, a flying minute. He states that what the applicant is proposing is that the rights of the other lot owners in the scheme are not relevant in its future management. He further states that he and the other lot owners support the actions and advice provided by Village Strata Management and will continue to work with Mr Hayden to administer the scheme.

Mr Hayden made a detailed submission to the following effect:

Mr Hayden’s submission also contained other material pertaining to altercations amongst residents of the scheme and the credibility of the applicant, which I considered irrelevant to this dispute.

No submissions in support of the application were received.

The applicant exercised his right to inspect the submissions made and submitted a reply consisting of a total of 27 pages, much of which was reaction to the extraneous issues raised by Mr Hayden in his submission, which I considered irrelevant in the context of the orders sought.

I have considered the content of the submissions made and the applicant’s reply, only to the extent that I considered them of some relevance to resolution of this dispute.

Jurisdiction

This is a dispute between an owner and the body corporate concerning alleged contraventions of the legislation and the exercise of rights or powers, or the performance of duties, under legislation and comes within the dispute resolution provisions of the Act. (See sections 226, 227 & 228)

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)). If an order is made appointing an administrator, the administrator has the powers given to the administrator under the order (section 301(2), Act). If an adjudicator appoints an administrator 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).

Determination

Appointment of Administrator

At the outset, I wish to point out that an order appointing an administrator for a scheme is not made lightly. Generally, to be successful in an application for the appointment of an administrator, an applicant must demonstrate that the day-to-day administration of the body corporate has broken down irretrievably, and/or that the affairs of the body corporate are in such disarray as to warrant the appointment of an administrator. One of the secondary objects of the Act is "to balance the rights of individuals with the responsibility of self management as an inherent aspect of community titles schemes". In my view the right of a body corporate to administer its own affairs should therefore only be disrupted in very serious circumstances.

In this case I am not satisfied that the appointment of an administrator for the length of time sought by the applicant is warranted. It appears to me that the majority of problems within this body corporate relate to personal conflict between owners and are not capable of remedy by this office. However, I concede that the appointment of an administrator to call and convene one general meeting of the body corporate is warranted, for the following reasons.

I acknowledge that there is a high level of disputation within this scheme, predominantly between the applicant and Mr Reeves, and there is evidence of some non-compliance with the legislation in the calling and holding of general and committee meetings. However, it appears that the body corporate is continuing, for the most part, to meet its legislative obligations, financially and administratively. It held an AGM on 7 October 2006. Although that meeting was not held in accordance with the legislation, no-one has sought to challenge its validity through this office. I note that in application 0882-2006, an application to amend the minutes of that meeting was dismissed, but the validity of the meeting was not contested by the applicant and therefore not ruled on by the adjudicator. I have perused the minutes of the 2006 AGM and the body corporate appears to have an administrative and sinking fund budget, a bank account and an elected committee. I note, however, that at an EGM held on 10 March 2007, called and convened by Mr Hayden, the body corporate agreed that the 2006 AGM was invalid and wants to hold it again (see motion 17).

It seems that, since the decision in 0882-2006 was handed down, all parties concede that the body corporate has not been administered strictly in accordance with the legislation and there appears to be majority support for external assistance with the administration of the body corporate, with Mr Reeves approaching Mr Hayden, and the applicant lodging this application seeking to appoint an administrator.

I have several concerns with the "assistance" provided to date by Mr Hayden, including the validity of his appointment and correctness of the "assistance" he has been providing the body corporate with. I will deal with each of these in turn.

Validity of Mr Hayden’s Appointment

Mr Hayden states that he was appointed by "flying minute"; because of the upset and the situation, there was not the time to wait 21 days to hold an EGM. The flying minute which purports to authorise the appointment states that "An agreement will be forwarded to the committee at a later date".

Mr Hayden, as a professional body corporate manager, should be well aware of the requirements of section 87 of the Standard Module. In order to engage a body corporate manager, section 87 requires, amongst other things, that the body corporate passes an ordinary resolution in general meeting approving the engagement and that the terms of the engagement must be forwarded to members of the body corporate for the general meeting that considers the motion. Mr Hayden claims that he is merely "assisting" the body corporate, perhaps trying to avoid the legislative requirements for engagement of a body corporate manager. However, a body corporate manager is defined in section 14 of the Act as follows:

Mr Hayden is clearly supplying administrative services to the body corporate and therefore falls within the definition of a "body corporate manager" requiring engagement within the terms of section 87 of the Standard Module. There is no evidence that any agreement has been forwarded to owners, even after the "flying minute" foreshadowed it. This means the engagement also falls foul of section 78 of the Standard Module. Further, there was no ordinary resolution passed at a properly convened general meeting. There is no provision in the legislation for decisions that are required to be made in general meeting to be made by "flying minute". The only provision for decisions to be made outside of meetings, in relation to committee meetings, is provided for in section 35 of the Standard Module. Mr Hayden could have sought to ratify his appointment at the EGM he convened on 10 March 2007, by having the committee submit a motion for his engagement. However, no motion to approve his appointment was included.

Although the applicant has not specifically sought an order in this regard, he has
stated in his grounds that the appointment of Mr Hayden is invalid. He has not referred to section 87 of the Standard Module. There is no doubt, however, that in the absence of approval by the body corporate in general meeting with the terms of the engagement forwarded to owners before the meeting, as required by section 87(2) of the Standard Module, then the engagement of Mr Hayden was at all times void and I have ordered accordingly.

"Correctness" of Mr Hayden’s Assistance to the Body Corporate

While I accept that Mr Hayden’s motives, at least initially, were bona fide in terms of providing assistance to the Ipomoea Court body corporate, subsequent events have led me to question his professionalism and the value of any "assistance" he has claimed to provide to the body corporate. I note that he has not provided any response to the applicant’s allegations that he refuses to open his mail. Regardless of any personal conflict between Mr Hayden and the applicant, the applicant still has statutory rights that cannot be abrogated.

What concerns me even more than the lack of response to the applicant’s allegation relating to opening his mail is Mr Hayden’s apparent ignorance of body corporate legislation. In particular, I am concerned by the "flying minute" dated 1 April 2007 which purports to remove the applicant from his position on the committee. Mr Hayden should be aware of section 25 of the Standard Module. An ordinary resolution in general meeting is required to remove the applicant from his position on the committee. I acknowledge that the results of the voting in relation to the "flying minute" may mean that the applicant may well be removed from his position on the committee if a properly convened general meeting were held and therefore precluded from involvement in the administration of the body corporate at the committee level. However, it is for the body corporate in general meeting to decide on membership of the committee.

It appears that the applicant is a minority at a general meeting level also and voting on motions which require an ordinary resolution in order to be passed will generally go against him in the case of any division between the two factions in this body corporate, as evidenced by the minutes of the EGM of 10 March 2007 (although I note that 4 of the 12 motions he submitted were carried). However, this is in accordance with the legislation, subject to the body corporate’s legislative obligations under the Act to administer the body corporate reasonably and for the benefit of owners.^[1] The applicant retains his rights to challenge decisions of the committee and the body corporate via dispute resolution applications to this office if those decisions are believed to be unreasonable or not for the benefit of owners.

I am equally concerned by Mr Hayden’s part in the distribution of by-law contravention notices to the applicant that are clearly invalid. The notices do not specify any breach of by-laws, only the nuisance provision of the legislation. A by-law contravention notice is exactly what it says it is – a document issued in relation to a contravention of by-laws. It has no relevance to an alleged breach of the nuisance provision.

While there may be majority support for the appointment of a body corporate manager, I am not satisfied that this extends to the appointment of an administrator. However, I am prepared to appoint an administrator to call and convene one general meeting because of the extenuating circumstances of this application, which include:

Other Orders Sought

As for the other orders sought by the applicant, I believe that they should be left for owners to decide at a properly convened general meeting, with the exception of him being given access to the books and records of the body corporate. The decision to appoint a body corporate manager is one that should be made by the owners in general meeting. So too, is the decision as to who the signatories to the body corporate bank account should be. The appointment of an auditor is an issue that needs to be considered at every AGM. All of these decisions can be made by owners at the general meeting called pursuant to this order. Given the passing of motion 17 at the EGM held on 10 March 2007, I am ordering that the general meeting held pursuant to this order be deemed to be an annual general meeting, including a fresh election of committee members. After having had the benefit of seeing one AGM properly called and conducted, a properly elected committee should then be able to take over, with the assistance of the Information Service from this office, as and if required. In addition, the body corporate may wish to engage a professional body corporate manager at the general meeting.

Section 150 of the Standard Module provides that the body corporate must allow all members of its committee reasonable access (without payment of a fee) to the body corporate records. As I have found the flying minute of 1 April 2007 which purported to remove the applicant from his position on the committee invalid and the validity of the 2006 AGM, where the applicant was appointed as an ordinary committee member, has not been challenged through this office, it follows that the applicant is entitled to reasonable access to the body corporate records without payment of a fee. I have therefore made an order requiring the Administrator to provide the applicant with access to the records. It appears as though Mr Hayden is now in possession of the books and records of the body corporate, although the applicant appears convinced that Mr Reeves has possession of at least some of them. I have ordered both Mr Reeves and Mr Hayden to deliver to the Administrator all body corporate books and records in their possession, within 7 days of the date of this order, to facilitate the administration of the scheme and the inspection I have ordered.

Number of Scheme:	5042
Name of Scheme:	Ipomoea Court
Address of Scheme:	44 Ocean Street MERMAID BEACH QLD 4218

1.	That an administrator and body corporate manager be appointed for Ipomoea Court CTS 5042 for a period of 3 years and that the body corporate pays for the services of the administrator/manager.
2.	That the nominated administrator, Coralie Mott be given the powers of the committee and executive members of the committee and that she be given the role of secretary, treasurer and chairman for a period of 3 years as is allowed under Part 3, division 10 of the Act, ‘body corporate manager in lieu of committee’ or any other provision under the Act.
3.	That an auditor be appointed by the elected administrator to audit the financial records and accounts and that the body corporate pays for the services of the auditor.
4.	That all signatories on the bank account are replaced with those of the delegated administrator/manager as is delegated in ‘orders sought’ number 1, being Coralie Mott.
5.	That the body corporate records held by Mr Reeves be made available for inspection, as requested by Paul Lomaz within seven days.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Ipomoea Court [2007] QBCCMCmr 401 (2 July 2007)