Ocean Walk Apartments [2007] QBCCMCmr 476 (8 August 2007)

Last Updated: 16 August 2007

REFERENCE: 0402-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	36061
Name of Scheme:	Ocean Walk Apartments
Address of Scheme:	3-5 Thrower Drive CURRUMBIN QUEENSLAND 4223

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

James and Roslyn Burke, the Owners of lot 18

I hereby order that the application for the following orders: (1) That any decision by the body corporate to purchase garden/ pool furniture be revoked. (2) That any decision made by the body corporate to purchase an air purifier be revoked. (3) That any decision made by the body corporate to take action of a punitive or enforcement action against any resident before the AGM be revoked. Is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0402-2007

"Ocean Walk Apartments" CTS 36061

The Scheme

Ocean Walk Apartments is as community title scheme containing 30 lots and is regulated by the Accommodation Module Regulation.

Application

By application dated 3 May 2007 and subsequently amended on 11 May 2007, James and Roslyn Burke, the Owners of lot 18 lodged a dispute resolution application with this Office seeking both Interim Orders as well as Final Orders. On 5 June 2007 I declined to make the requested Interim Orders and now consider their application for the following Final Outcomes:

(1) That any decision by the body corporate to purchase garden/ pool furniture be revoked.
(2) That any decision made by the body corporate to purchase an air purifier be revoked.
(3) That any decision made by the body corporate to take action of a punitive or enforcement action against any resident before the AGM be revoked.

Background

The applicants claim that the body corporate:

• is making decisions of a financial nature without consulting owners;
• is not acting in the interests of all owners;
• is enforcing by-laws against some owners but not others; and
• has failed to call a meeting at which a committee can be elected.

More particularly the applicants claim that:

• the body corporate has improperly decided to purchase pool furniture for the scheme;
• the body corporate has improperly decided to purchase an air purifier for the scheme;
• the common property is not kept clean or properly maintained;
• there are insufficient garbage bins;
• units are being let to undesirable people who do not obey the scheme by-laws;
• they are not made aware of body corporate meetings or the decisions made at those meetings; and
• one person is responsible for all decision making on behalf of the body corporate.

Submissions

Pursuant to section 243 of the Act, submissions were sought from members of the body corporate and the body committee prior to the making of the Interim Order. Submissions made at the interim stage continue to have relevance to the application for final orders and are summarised below:

• pool furniture was purchased to complement the fit out of the BBQ area for enjoyment of residents in the complex, particularly those on upper levels who would otherwise have no tables or chairs available to them unless they went back upstairs;
• vandalism concerns are unfounded as entry is by key only;
• it has been difficult to maintain the area around the shops on a daily basis while the fit out has been underway;
• shop owners have been requested to hold keys to the toilets and only provide these at the customers’ request;
• signs were installed to deter trespassers at no cost to residents; and
• the first AGM has been held and a committee has been elected.

Seven lot owners made the following submissions:

• they do not object to the purchase of the pool and BBQ furniture;
• they believe that the by-laws are being properly enforced;
• management have attempted to maintain the area around the shops in a clean and tidy state which has been difficult with the prolonged fit out;
• the air purifier is to be installed to comply with Health and Safety requirements; and
• the Gold Coast City Council required the complex to accommodate a bulk garbage bin as part of the development approval for the scheme

The body corporate made the following submissions:

• The pool furniture was purchased by the committee for the enjoyment of all residents;
• The committee decision was recorded in a "Vote outside a committee Meeting" held on 3 April 2007 for which the agenda and minutes were circulated to all owners;
• One notice of objection was received from the applicants and they were advised of their avenues for objection but the committee received no further correspondence in this regard. Accordingly the furniture has been ordered and payment arranged;
• The body corporate will require periodic WH & S audits to remove risks to residents, tenants and others using the site and therefore the report is not regarded as a waste of money;
• Signage has been arranged to reduce the risk of vandalism;
• An air purifier was purchased to comply with Health & Safety Regulations and once compliance with local regulations was possible, a basement refuse area was established;
• The owner and letting agents of the commercial lots (shops) in the scheme have been contacted regarding the cleanliness of the common areas adjoining their lots;
• The commercial lots are being fitted out prior to commencement of business. The committee has communicated with the owners of the commercial lots on a number of occasions and a thorough cleanup will be undertaken once the work is completed;
• The current committee consists of a representative of the original owner, Mr Lemmon who is also the owner of lot 17, and the first AGM was scheduled for 18 May at which a full committee was to be elected;
• the body corporate had taken action against other lot owners for breaches of the scheme by-laws.

Pursuant to section 243 of the Act, submissions were also sought prior to the making of Final Orders.

Submissions made on behalf of individual owners included the following:

• pool furniture is not regarded as "unnecessary clutter";
• the spa has been fixed;
• construction work on the shops has now been completed;
• by-laws should be observed by all occupiers;
• location of the garbage bin is not negotiable;
• construction work on the shops is now complete and there is no longer with dust etc generated by building activity.

The body corporate made the following additional submissions:

• the body corporate had taken action against other lot owners for breaches of the scheme by-laws;
• construction work on the shops is now complete and the body corporate has requested that a final clean up of the area be undertaken.

In reply the applicants advised:

• they were primarily concerned by lack of consultation with all lot owners;
• the area around the shops is still dirty;
• they believe that tenants have behaved badly in the past and were concerned that by-laws were not being enforced against them;
• they believe that the original owner still holds 8 lots and influences the outcome of general meetings and committee meetings;
• the cost of compliance with council requirements regarding garbage disposal should be met by the developer rather than the body corporate; and
• Messrs Lemmon and Badalotti have de-facto control of the committee.

Jurisdiction

Section 276(1) of the Body Corporate and Community Management Act 1997 (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)).

Decision

As mentioned in my interim Order, I believe that the statutory provisions regarding appointment of a committee, particularly section 60(2) of the Body Corporate and Community Management (Accommodation Module) Regulation 1997, have been complied with. Section 60(2) of the Body Corporate and Community Management (Accommodation Module) Regulation requires the body corporate to hold the first annual general meeting within 2 months after the first of the following to happen: - (a) more than 50% of the lots are no longer in the ownership of the original owner; (b) 6 months elapse after the establishment of the scheme. An Annual General Meeting has now been held and a committee has been elected. Accordingly, it would appear that many of the concerns raised by the applicant are now redundant.

At the same time I note the applicants’ perception that that the original owner still holds 8 lots and influences the outcome of general meetings and committee meetings. While this could well be the case, I believe that this would be attributable to the apathy of lot owners and a reluctance to be involved in the management of the body corporate, rather than any breach of the legislation.

The first three interim orders sought by the applicants largely relate to the ability of the body corporate committee to contract with third parties. As mentioned above, the complaints relate to events which occurred during the "original owner period" when the body corporate committee consisted of one person.






Under section 100 of the Act, the body corporate committee is empowered to act on behalf of the body corporate except where a particular issue is a "restricted issue". Further, pursuant to section 101 of the Body Corporate and Community Management (Accommodation Module) Regulation 1997 the committee is ordinarily entitled to expend monies on any one transaction on behalf of the body corporate up to the "relevant limit" which is the number of lots in the scheme multiplied by $125 (i.e. in this scheme the relevant limit would therefore be $3,750). I note that the cost of the air purifier was in the vicinity of $2,500 and I also note that the cost of the pool furniture was in the vicinity of $2,300. Clearly, this spending is within the spending limit for the committee.

The next matter that I turn to is the enforcement of the scheme by laws and in particular the applicant’s complaint that the body corporate is enforcing by-laws against some owners but not others. In reply the body corporate states that it has sought to enforce by-laws against a number of owners including the applicants. The body corporate provided copies of communications with the body corporate manager requesting that enforcement action be taken although it is not evident as to whether the body corporate went as far as to issue contravention notices.

In this regard the relevant statutory provision is section 94 of the Act which provides as follows:

94 Body Corporate’s General Functions
(1) The body corporate for a community titles scheme must--

(a) administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme; and
(b) enforce the community management statement (including any by-laws for the scheme); and

(c) carry out the other functions given to the body corporate under this Act and the community management statement.
(2) The body corporate must act reasonably in anything it does under subsection (1).

The body corporate is obliged to enforce the by-laws of the scheme, although as outlined above, it is required to act "reasonably". In my view, acting reasonably means enforcing by-laws in an even-handed and non-discriminatory manner. In the present circumstances however, I do not believe there are sufficient grounds to conclude that the applicants are being unfairly discriminated against. If the applicants believe that other lot owners have breached the scheme by-laws, they are entitled to make a complaint to the body corporate in the prescribed Form 1 requesting the body corporate to issue a contravention notice. If the body corporate does not respond to that request within 14 days, the complainant may make a dispute resolution application with the Commissioners Office regarding such failure to act.

Finally, I note the concerns raised by the applicants regarding the cleanliness of the common areas adjoining the commercial lots which were being fitted out prior to commencement of business. This is not disputed by the body corporate which states it has raised this matter with the owners on a number of occasions. I would again point out to the body corporate that in addition to ensuring that all lot owners observe the scheme by laws, under section 108 of the Accommodation Module the body corporate is ultimately responsible for the maintenance and cleanliness of the common property areas.

Having regard to the foregoing I believe that the application for Final Orders should be dismissed.