Ballah [2007] QBCCMCmr 671 (6 December 2007)

Last Updated: 2 May 2008

REFERENCE: 0921-2007

INTERIM ORDER OF A DELEGATE OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Name of Parcel:	Ballah
Number of Plan:	Upper Plan No. 2
Address of Parcel:	11 Hanlon Street, Surfers Paradise Queensland

TAKE NOTICE that pursuant to an application for an interim order made under section 76 and 77(1) of the Building Units and Group Titles Act 1980 by Christine Wright, the owner of Lot 34

I hereby order that the application for an interim order by Christine Wright, the owner of Lot 34 that The Proprietors Ballah Upper Plan No. 2 not “engage DBI or other architects to do any further work on the proposed upgrade to buildings or scope of project work”, is dismissed. I further order that pending final determination of the application, The Proprietors Ballah Upper Plan No. 2 (including through its committee) shall not obtain advice on the benefit/value for the scope of works included in the proposal submitted by SJB Architects, together with the suggestion of new ideas as authorised by the passing of Motion 15 at the Annual General Meeting dated 19 April 2006 (the project) if doing this will cause the total amount of Body Corporate monies spent or committed for this project to exceed the sum of: $30,000.00 (excluding GST) being the amount authorised at the Annual General Meeting dated 19 April 2006; and $7,760.00 (including GST) being the limit on committee spending pursuant to section 47.

STATEMENT OF DELEGATE OF REFEREE’S REASONS FOR DECISION - REF 0921-2007

“BALLAH” UP 2

Application
Christine Wright, the owner of Lot 34 (Applicant) seeks an interim order that The Proprietors Ballah Upper Plan No. 2 not “engage DBI or other architects to do any further work on the proposed upgrade to buildings or scope of project work”. The Applicant seeks a final “order preventing the Body Corporate from spending any money with DBI without the approval of the owners”.

Jurisdiction
Upper Plan No. 2 (UP2) is a plan for the Registration of Plans (H.S.P. (Nominees) Pty. Limited) Enabling Act 1980 (ROPE Act).

Section 3 of the ROPE Act makes provision for the application of the Building Units and Group Titles Act 1980 (Act) stating:

Save to the extent that this Act is inconsistent with the provisions of the Building Units and Group Titles Act 1980 in which case the provisions of this Act shall apply, the provisions of that Act which relate to the subdivision of land by the registration of building units plans and apply in respect of those plans shall apply in respect of the subdivision of each of parcel l and parcel 2 by the registration of upper plans and lower plans pursuant to this Act and in respect of those plans as if those plans were building units plans under that Act and for those purposes references in that Act to building units plans, lots, common property, parcel, subdivision of land and body corporate shall be construed as references to upper plans or lower plans, lots, common property, parcel, subdivision of part of parcel 1 or, as the case may be, of part of parcel 2 and a body corporate of an upper plan or lower plan respectively within the meaning of this Act.

The Act applies for the operation of the ROPE Act (section 5A, Act). Part 5 of the Act concerns disputes. Part 5, division 3 makes provision for orders by a referee. Within division 3, section 77 provides general powers of a referee to make orders. Relevantly, section 77(1) provides a general power that a referee may on application of a body corporate ... a proprietor ... in respect of a parcel, make an order on any person entitled to make an application under this subsection ... for the settlement of a dispute, or the rectification of a complaint, with respect to the exercise or performance of, or the failure to exercise or perform, a power, authority, duty or function conferred or imposed by this Act in connection with that parcel.

Section 76(2) provides that where an applicant for an order under section 77(1) states in his or her application that the applicant requests an interim order, the referee may, if the referee is satisfied on reasonable grounds that, by reason of the urgent circumstances of the case, the referee should do so make, under this subsection, any order that may be made under section 77(1) with respect to the application. Section 76(3) provides that an interim order may be made notwithstanding that any power or duty of the referee under section 73(1) to give written notice of the application to the body corporate and to any affected person has not been exercised.

As the proprietor of a lot in UP2, the Applicant is entitled to make an application under section 77(1) against the Body Corporate. The orders being sought by the Applicant relate to Body Corporate spending, are not of a nature dealt specifically with in sections 79 to 94B of the Act, and are capable of being made under section 77(1). Jurisdiction exists with respect to the orders being sought.

Procedural matters
On 20 November 2007 and in accordance with section 73 of the Act, I invited submissions from the committee regarding the interim order application, and a copy of the application was provided to Stewart Silver King & Burns (SSKB) for distribution to committee members. The committee made submissions. Richard McBride made uninvited written submissions. The Applicant provided an uninvited response to (it would seem) submissions.

Submissions
The Applicant

• At the Annual General Meeting dated 19 April 2006, it was resolved to authorise the committee to expend up to $30,000.00 (excluding GST) “to obtain advice on the benefit/value for the scope of works included in the proposal submitted by SJB Architects, together with the suggestion of new ideas to enhance the prospect of delivering a consistent message for the whole project and all costs to be debited to the Sinking Fund” (Motion 15).
• This was to be prepared for discussion with the Body Corporate and owners, but owners received nothing.
• At the committee meeting dated 5 January 2007, it was resolved to finalise the “recommendations from the architects for the upgrading of level 6 and various other works at the building” at the next committee meeting.
• Section 47 of the Act breached as only 1 architect submitted.
• At the Annual General Meeting dated 11 April 2007, Motion 10 relating to authorising the committee “to proceed with the remodelling, renewal, maintenance and repairs as proposed in the drawings prepared by SJB Architects” was withdrawn.
• SSKB refuse to supply an accurate list of expenditure even though she is on the finance committee. The minutes of the committee meeting dated 26 June 2007 indicate that Richard McBride and the Applicant queried the figures quoted in the minutes of a previous meeting or meetings relating to the amounts paid to SJB Architects. The minutes note that Howard Stewart (secretary/treasurer) “advised that what was contained in the Committee minutes was a list of actual accounts paid whereas the AGM was an estimate of the final cost; and that it was resolved “Howard Stewart provide an update of the figures paid for Architects and Consultants fees at the next Committee Meeting”.
• Lionel Krongold (chairperson) by email to the Applicant sent on Wednesday, 14 November 2007 stated “If we have spent $32,000.00 out of the $60,000.00 allocated for consultants as you say, then we are $2000.00 short. This is $1000.00 per building which the manager has the authority to spend ... The urgency is so that DBI can have the schematic design for level 6 ready with costing for our next committee meeting which is to be held on 18.01.08”.
• The first proposal was $6.9 million, the second proposal was for $12 million and the chairperson refuses to accept owners do not want to spend large sums.
• Promises made at the AGM and subsequent meeting have not been kept. The minutes of the committee meeting dated 11 April 2007 note it was resolved to call an information meeting.
• Lionel Krongold, in an email sent to Howard Stewart and Paul Roberts (SSKB) on 15 November 2007 stated that “the letter to DBI must go today”. The committee did not see the proposal.
  

The committee

• The Body Corporate approved expenditure at the 2006 AGM. Material giving full disclosure was distributed to owners and a presentation was made at the 2006 AGM.
• Motion 10 was withdrawn at the 2007 AGM “in consideration of the questions raised by owners from the floor of the meeting”.
• The Applicant’s submission that an accurate list of expenditure had not been provided is incorrect. Howard Stewart provided a breakdown of the costs to the committee meeting dated 16 May 2007. The breakdown in the minutes states that from 24 July 2006 to 9 May 2007 there were costs totalling $23,954.55 in connection with SJB Architects.
• The email from Lionel Krongold to the Applicant sent on Wednesday, 14 November 2007 and other emails discussed the “completion of the architecture at a quoted cost of $30,000.00”. The chairperson is stating that a shortfall in the amount approved at the 2006 AGM or an additional cost “is an amount that is within the power of the Body Corporate Committee to approve”.
• The Act does not prevent the committee from approving spending within its limits “simply because in doing so a relevant limit approved in respect of the same work at a general meeting of owners is exceeded. The authorisations are separate and provided each is within the respective limits and given with proper authority there is no reason why such expenditure can’t be made in respect of the same work”.
• Costs to date are over the amount authorised at the 2006 AGM by $3,504.56 which is within the limits of the committee’s spending power of $7,760.00.
• The engagement of contractors to undertake the actual work would need to be put to owners in general meeting. The applicant has not demonstrated the Body Corporate has indicated it would bypass this requirement. There is no basis to the claim that the chairperson refuses to accept owners do not want to spend large sums.
• The engagement of DBI to obtain reports and quotes from parties relating to works on common property is “within the joint spending limit of the resolution of owners at the AGM of 19 April 2006 and such additional sum within the committee’s spending limit” and “gives effect to the intention of owners”.
• At the committee meeting dated 2 November 2007, it was resolved $5,000.00 be allocated to engage a consultant to obtain specifications to remedy concrete cancer; and it was noted the members of the Body Corporate Sub-Committee reported meeting with the architects. On 9 November 2007, DBI Architects provided a revised professional services proposal which was circulated to the committee. On 15 November 2007, SSKB wrote to DBI regarding the abovementioned proposal indicating Body Corporate committee acceptance of the proposal and authorisation to proceed with Phase Two costing $5,000.00. This work does not relate to the upgrade of common property on Level 6.
• DBI will complete the schematic design for $26,500 plus GST which is within the amount approved by the owners.
• The Applicant fails to give sufficient justification as to the urgency of this matter and fails to show any evidence that the Body Corporate intends to flout the Act.
  

Mr McBride
I did not invite a submission from Mr McBride. However, it is apparent that he is a member of the committee and he states that he has “not been approached by SSKB asking for my opinion with regard to the current complaint”. On this basis I have considered Mr McBride’s submissions insofar as the submissions relate to the interim order application.

Mr McBride states the information provided by the Applicant is an accurate summation of the problems being experienced, and that since the lodgement of the application, DBI have been authorised to commence the preparation of a proposal to change the building at a cost far exceeding available authorised funds. He submits that his calculations suggest at least $15,000.00 has been spent above the authorised expenditure and that decisions are being made without his knowledge or consent.

Applicant’s response
The Applicant is a member of the committee and (it would seem) is concerned about the submissions made by the committee. She states (in part) that 77 out of 97 owners were represented or at the 2007 AGM; the minutes of the 16 May 2007 committee meeting have been doctored; and if the figures had been given why would she ask for them in June and November.

Determination
Given section 76(2) of the Act, it is necessary to determine at the outset whether, because of the urgency of the circumstances relating to the application, an interim order is in fact necessary. The usual circumstances where an interim order might be made are in the nature of injunctive relief. The Applicant does need to establish that the circumstances of the application warrant the making of an interim order. The Applicant is a member of the committee and is concerned about the amount of expenditure being incurred by the Body Corporate in connection with, it would seem, the work approved at the 2006 AGM. It is not disputed that the Body Corporate has, at the 2006 AGM, authorised expenditure for this work and that work has been carried out as a consequence of the resolution. The amount of monies spent for this work would seem to be in dispute. While the Applicant has not substantiated her claims about spending being above the authorised amount, the committee’s submission does suggest that additional costs have been incurred and that the work for which the Body Corporate gave its authorisation has not yet been completed. In my view, these circumstances warrant consideration of the interim order application.

To assist me in determining whether it is reasonable to grant relief at this stage, before full and final consideration of all the issues raised, I consider it relevant to briefly consider whether the application raises any serious legal question that will need to be determined. If the application raises a serious legal question then it may be appropriate to make an interim order.

The Applicant refers to section 47 of the Act which states:

47 Statutory restrictions on powers of committees

(1) Unless—

(a) otherwise determined by the body corporate in general meeting; or

(b) in an emergency authorised by the referee; or

(c) consented to by each person entitled to vote at a general meeting of the body corporate;

the committee shall not, in any one case, undertake expenditure exceeding the sum obtained by multiplying the prescribed amount by the number of lots the subject of the plan.

(2) In respect of any proposed expenditure which, under subsection (1), the committee is not entitled to undertake the committee shall—

(a) submit the proposal for determination at an extraordinary general meeting of the body corporate convened for the purpose of, or for purposes which include, consideration of the proposal; and

(b) if the proposed expenditure is in respect of work to be performed or the purchase of personal property submit at least 2 tenders to that meeting with the proposal.

(3) Subsection (1) does not apply to the expenditure of moneys—

(a) in payment of any premium of insurance effected by or on behalf of the body corporate; or

(b) to comply with—

(i) a notice or order served on the body corporate by any public authority or local government; or

(ii) an order made with respect to the body corporate by a referee or a tribunal; or

(c) in discharge of any liability incurred in respect of an obligation of the body corporate authorised by the body corporate in general meeting.

The prescribed amount under section 47(1) is $40 (s11, Building Units and Group Titles Regulation 1998). The number of lots in the parcel is 194. Therefore, the restriction on expenditure of the Body Corporate committee is $7,760.00. Section 47(2) applies for proposed expenditure above the restriction requiring the convening of an extraordinary general meeting and the submission of a least 2 tenders.

At the 2006 AGM, the Body Corporate authorised the committee to spend up to $30,000.00 (excluding GST). It would seem this authorisation was made pursuant to section 47(1)(a). If this is the case, then doubt exists as to whether section 47(2) applies. The Body Corporate resolution enabled the committee to undertake expenditure exceeding its prescribed restriction. The Applicant does not appear to be questioning the authorisation made by the Body Corporate, and even if she was, it is doubtful as to whether more than 12 months after the meeting, there is urgency to dispute the Motion 15 resolution. In my view, the Applicant has not raised a serious question by referring to the section 47(2)(a) requirement for 2 tenders without explanation.

The Applicant also expresses concern about the amount of expenditure being incurred. While claiming that a list of expenditures submitted to the committee is inaccurate, the Applicant has not provided any evidence of the alleged inaccuracy. The fact that the Applicant may have reservations about the costs being incurred does not, in the circumstances warrant making the interim order. In addition, the Applicant has not demonstrated the committee has acted outside the scope of what was approved at the 2006 AGM. The possible ultimate cost of the actual upgrade is not relevant to the determination of the interim order. In fact, the committee have acknowledged that the engagement of contractors will be submitted for consideration in general meeting. The Applicant also suggests (without explanation) that information has not been given to owners. While reference has been made to a proposed information meeting, the fact that the meeting may not have been held does not warrant the making of the interim order.

For the purposes of seeking an interim order, it is necessary that the Applicant provide a basis for order sought especially when this order may have a serious impact on the progress of work approved by the Body Corporate. In this regard, I am not satisfied from the submissions made by the Applicant or Mr McBride that there are reasonable grounds to make the interim order sought. For these reasons, I have dismissed the interim order sought.

Section 75(2) of the Act provides An order made may include such ancillary or consequential provisions as the referee thinks fit. In my view, it is appropriate to make an interim order that includes such provisions.

It is apparent from the submissions that the work for which the Body Corporate gave its authorisation at the 2006 AGM is ongoing. It would seem from the committee’s submission that the amount authorised at the 2006 AGM has been exceeded by at least $3,000.00 (although the committee also submits DBI will complete the schematic design for $26,500 plus GST). The committee submitted (which does not appear to be supported by 2 of the 5 voting members) that it is not contrary to section 47 of the Act for the committee to authorise expenditure above the authorised amount provided the expenditure is not more than $7,760.00. In my view, there is a question about the power of the committee to make this decision given the words in any one case in section 47(1). These words imply the expenditure restrictions apply to one project. Therefore, it could be argued that expenditure on the project (which in this case is that stated in the resolution on Motion 15 at the 2006 AGM) cannot exceed $30,000.00 (excluding GST); and that any additional expenditure on this project would be outside the power of the committee to authorise necessitating authorisation in general meeting. Given the statements made by the Applicant and Mr McBride, there is also doubt about expenditure being approved by the committee in accordance with the Act.

In my view, a serious question to be determined is raised by this issue. Owners have approved a ceiling on the expenditure on a particular project and it is questionable whether the committee can subsequently decide to approve additional expenditure on that project. For the purposes of making an interim order, I am satisfied the committee has committed, or is likely to commit the Body Corporate to expenditure above the 2006 AGM limit on the project stated in Motion 15, and that the project is ongoing.

However, I do not consider it necessary to prevent any further expenditure on this project until the question is determined. I have made an interim order limiting additional expenditure on this project. The limitation includes provision for the statutory committee restriction given the question as to whether the committee can authorise this expenditure; that it does not represent a significant impost on owners, and that it may be necessary to complete the project.

This application will now be administered in accordance with the Act. The application will be finally determined in due course. It should be noted the interim order ceases to have effect: at the expiration of 3 months from the date of this order unless upon request made by Christine Wright, the interim order is renewed; or where it is revoked by a tribunal under section 107(1)(c) of the Act or by the referee; or where an order is made under section 77(1) of the Act with respect to the application; or where an order is made dismissing the application; or where the application is withdrawn or otherwise ended.

REFERENCE: 0921-2007A

INTERIM ORDER OF A REFEREE

MADE UNDER PART V

BUILDING UNITS AND GROUP TITLES ACT 1980

Number of Plan:	Upper Building Units Plan 2
Name of Scheme:	Ballah
Address of Scheme:	11 Hanlan Street SURFERS PARADISE QLD 4217

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

Christine Wright, the Owner(s) of lot 35

I hereby order that, pending final determination of the application, The Proprietors of Ballah Upper Building Units Plan No. 2 (including through its committee) shall not obtain advice on the benefit/value for the scope of works included in the proposal submitted by SJB Architects, together with the suggestion of new ideas as authorised by the passing of Motion 15 at the Annual General Meeting dated 19 April 2006 (the project) if doing this will cause the total amount of Body Corporate funds spent or committed for this project to exceed the sum of: $30,000.00 (excluding GST) being the amount authorised at the Annual General Meeting dated 19 April 2006; and $7,760.00 (including GST) being the limit on committee spending pursuant to section 47.

STATEMENT OF REFEREE’S REASONS FOR DECISION - REF 0921-2007A

“Ballah”

Application

Christine Wright, the owner of Lot 34 (applicant) lodged an application seeking an interim order that The Proprietors Ballah, Upper Building Units Plan No. 2 (body corporate) not “engage DBI or other architects to do any further work on the proposed upgrade to buildings or scope of project work”. The applicant seeks a final order “preventing the Body Corporate from spending any money with DBI without the approval of the owners”.

Jurisdiction

Upper Building Units Plan No. 2, created from lot 2 on RP 166140 is the upper plan for "parcel 2" under section 4 of the Registration of Plans (H.S.P. (Nominees) Pty. Limited) Enabling Act 1980 (ROPE).

Section 3 of the ROPE Act makes provision for the application of the Building Units and Group Titles Act 1980 (BUGTA) stating:

Save to the extent that this Act is inconsistent with the provisions of the Building Units and Group Titles Act 1980 in which case the provisions of this Act shall apply, the provisions of that Act which relate to the subdivision of land by the registration of building units plans and apply in respect of those plans shall apply in respect of the subdivision of each of parcel 1 and parcel 2 by the registration of upper plans and lower plans pursuant to this Act and in respect of those plans as if those plans were building units plans under that Act and for those purposes references in that Act to building units plans, lots, common property, parcel, subdivision of land and body corporate shall be construed as references to upper plans or lower plans, lots, common property, parcel, subdivision of part of parcel 1 or, as the case may be, of part of parcel 2 and a body corporate of an upper plan or lower plan respectively within the meaning of this Act.

BUGTA continues to apply regarding the operation of the ROPE despite the subsequent commencement of the Body Corporate and Community Management Act 1997 (BUGTA, 5A). A Referee under BUGTA has power to make interim orders and to renew interim orders for this type of application (BUGTA, 76).

Background

On 6 December 2007, a delegate of a Referee made interim orders as follows:

I hereby order that the application for an interim order by Christine Wright, the owner of Lot 34 that The Proprietors Ballah Upper Plan No. 2 not “engage DBI or other architects to do any further work on the proposed upgrade to buildings or scope of project work”, is dismissed.

I further order that pending final determination of the application, The Proprietors Ballah Upper Plan No. 2 (including through its committee) shall not obtain advice on the benefit/value for the scope of works included in the proposal submitted by SJB Architects, together with the suggestion of new ideas as authorised by the passing of Motion 15 at the Annual General Meeting dated 19 April 2006 (the project) if doing this will cause the total amount of Body Corporate monies spent or committed for this project to exceed the sum of:

1. $30,000.00 (excluding GST) being the amount authorised at the Annual General Meeting dated 19 April 2006; and
2. $7,760.00 (including GST) being the limit on committee spending pursuant to section 47.
   

By facsimile of 3 April 2008 the applicant sought an extension of this interim order. As the interim order had already expired I could not extend the interim order. However, on 4 April 2008 I wrote to the parties indicating that, as the application has not been resolved, I was considering providing further interim orders on similar terms to the interim order made on 6 December 2007.

By letter of 22 April 2008 the body corporate informed this office that it does not have any objections to further interim orders on similar terms.

Decision

As the application for final orders has not been resolved, I am satisfied that it is appropriate to make a new interim order on similar terms to the initial interim order (BUGTA, 76).

The application for final orders remains outstanding and will be finally determined in due course. It should be noted the interim order ceases to have effect at the expiration of 3 months from the date of this order unless renewed upon request by the applicant; or where it is revoked by a tribunal or by the referee; or where a final order is made with respect to the application; or where an order is made dismissing the application; or where the application is withdrawn or otherwise ended.

Order

For these reasons, I make the order above.