Wilks Street Apartments [2007] QBCCMCmr 6 (4 January 2007)

Last Updated: 15 January 2007

REFERENCE: 0751-2006

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	294
Name of Scheme:	Wilks Street Apartments
Address of Scheme:	89 Wilks Street BUNGALOW QLD 4870

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

Wilhelmus Johannes Aalbers, the owner of lot 2

I hereby order that the application for an order to appoint an administrator for the body corporate is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0751-2006

"Wilks Street Apartments" CTS 294

Scheme

"Wilks Street Apartments" Community Titles Scheme 294 was registered as a building units plan of subdivision on 24 November 1992, comprising seven lots and common property. It is regulated by the Act’s Standard Module.

Application

This application is brought by the owner of lot 2, Wilhelmus Johannes Aalbers, against the body corporate, seeking an order to appoint an administrator for the body corporate. The applicant has nominated Coralie Mott of CTS Management Pty Ltd as the proposed administrator and has included her consent to the proposed appointment with his application.

The applicant also sought an interim order to defer an EGM scheduled to be held on 11 October 2006 from going ahead, until the application for the final order to appoint an administrator had been determined. On 28 September 2006, I dismissed the application to defer the EGM, but made an interim order prohibiting the body corporate from implementing any resolutions passed pursuant to motions 5 (refund of $1,200 from Allan Nayda to body corporate), 6 (authorisation of payment to Allan Nayda), 7 (permission for erection of carport) and 10 (use of patio and carport areas).

Submissions

Submissions in response to the application were sought from all owners (excluding the applicant) and the committee. Submissions were received from three owners, representing four lots. One submission, representing two lots, supported the application for the appointment of an administrator, stating that he and the applicant have no voice at the committee level, having been removed from their positions as chairperson and secretary, respectively at the EGM on 11 October 2006. Further, he states that he does not believe his interests would be fairly represented by the existing committee. Two submissions opposed the appointment of an administrator on the basis that, while both are opposed to self-management of the complex, the appointment of Coralie Mott (who is based in Brisbane) is unfeasible from a logistical and monetary point of view. Their preference is for Body Corporate Services Pty Ltd (based in Cairns) to be appointed as body corporate manager and, if deemed necessary, as administrator until after the next general meeting.

Mr Nayda further advised that he has repaid the amount of $1,200 to the body corporate and that motions 5, 6, 7 and 10 were withdrawn and therefore not voted on at the EGM held on 11 October 2006.

The applicant made a written reply to submissions stating that there are a limited number of body corporate managers in Cairns with the skills to act as administrator. Any Cairns based manager appointed as administrator would be viewed with suspicion by some owners. The applicant’s nominee would be independent and impartial given that she has not had any previous involvement with the body corporate.

Jurisdiction

This is a dispute between an owner and the body corporate and falls within the dispute resolution provisions of the Act.^[1]

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.

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

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 is warranted.

While I acknowledge that there is a high level of disputation within this scheme and there is evidence of some non-compliance with the legislation, it appears that the body corporate is continuing, for the most part, to meet its legislative obligations, financially and administratively. It has now set budgets for the administrative and sinking funds and has an elected committee.

I acknowledge that the applicant and the owner of lots 6 and 7 have been removed from their positions on the committee and are therefore precluded from involvement in the administration of the body corporate at the committee level. However, it is for the body corporate to decide on membership of the committee. They also are a minority at a general meeting level and voting on motions which require an ordinary resolution in order to be passed will generally go against them in the case of any division between the two factions in this body corporate. However, this too 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.^[2] The owners in the minority faction retain their 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.

Through the submission process it has become apparent that the existing committee and majority faction wish to appoint Body Corporate Services Pty Ltd as the new body corporate manager for the scheme. To this end, they attempted to requisition an EGM for 15 November 2006 to consent to the appointment in general meeting. Nayda and Anderson have accused the applicant and Strata Works of deliberately colluding in an attempt to thwart this process. I find the allegations of Nayda and Anderson to be unsubstantiated in this regard. My understanding is that StrataWorks refused to issue a Notice of an EGM for good reason, including the following:

 The proposal to appoint Body Corporate Services Pty Ltd involves an expenditure of body corporate funds in the amount of $4,213.20 ($1,401.40 per annum for three years) as a minimum. "Additional Services" and disbursements are extra. This amount substantially exceeds the body corporate’s relevant limit for major spending of $1,750. As such, at least two quotations for the provision of management services must be obtained and presented to all owners for their consideration^[3].

 The material forwarded to lot owners for the general meeting that considers the motion approving the engagement of a body corporate manager must include the terms of the engagement.^[4]

 At least 21 days notice must be given for a general meeting.^[5]

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. I am not satisfied that the appointment of an administrator is warranted in these circumstances. The decision to appoint a body corporate manager is one that should be made by the owners in general meeting.

Based on procedural deficiencies in the existing committee’s recent attempt to organise an EGM for the purpose of appointing a new body corporate manager and the fact that the engagement of Strata Works expired on 24 November 2006, I believe it would be prudent for the committee to make use of the Information Service provided by this office to obtain information in relation to calling a general meeting of the body corporate in accordance with the legislation. The Information Service can be contacted on 1800 060 119. It will up to the body corporate to decide at a properly convened general meeting whether to appoint a body corporate manager, and if so, which one.

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^[1] See ss.226, 227 & 228
^[2] See ss.94 & 152
^[3] See s.104 Standard Module
^[4] See s.87 Standard Module
^[5] See s.43 Standard Module