Villa Le Monde [2007] QBCCMCmr 688 (14 December 2007)

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

I hereby order that any owner who, within one month, makes a written request to view the body corporate records must be given a reasonable opportunity to inspect the records at their choice of three times nominated by the holder of the records. The nominated times must be within one to two months of this order, must be for a period of at least four hours, and must include at least one afternoon period and one morning period.

I further order that, at the next general meeting, the body corporate must allow for the election of up to four committee members following the procedures specified in Part 3 of the Standard Module Regulation.

I further order that, if the body corporate has not adopted the Small Schemes Module Regulation within six months, then the body corporate must ensure that the body corporate accounts are operated by at least two authorised members acting jointly.

I further order that the application is otherwise dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0496-2007

"Villa Le Monde" CTS 17158

Villa Le Monde Community Titles Scheme (Villa Le Monde) is a 4 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme is designed for residential purposes.

This application is by Douglas Wood, an owner of lot 1 (applicant) seeking orders against the body corporate for Villa Le Monde (respondent). The applicant is seeking orders to the effect that a proper annual general meeting should be required to be called with all income and expenditure and all invoices tabled at the meeting, that there should be two signatories on the cheque account, that two quotations should be obtained for any spending above $100, that four positions should be available on the committee, and that persons who do not attend committee or general meetings should not be able to hold a position on the committee.

The grounds in support of the application, provided on behalf of the applicant, were to the effect that the body corporate does not have a manager and is effectively controlled by one owner. Concerns are raised particularly about access to the books and the spending of body corporate funds.

All owners were given an opportunity to provide written submissions. These can be summarised as follows:

The applicant has responded to the effect that he has never accused the owner of lot 3 of dishonesty. However, he states that there have been many discrepancies over a number of years. Further, it is submitted that an inspection of the books was offered but he only had an opportunity to look at the records for a short period of time and it would take hours to check the accounts, statements and other material. A number of other concerns are also raised.

I have reviewed titles office searches for the scheme that confirm the scheme is comprised of four lots and that the Standard Module applies to this scheme.

The issues for determination are those expressed in the formal orders sought, being

There are provisions of the legislation that will allow the applicant to inspect all the body corporate's financial records. The applicant may even wish to obtain copies of the records and provide those records to his accountant for review.

The legislation specifically provides that copies of the budgets must accompany the notice of annual general meeting at which the budgets are to be considered (Standard Module, 94(6)). However, there is no requirement that all financial records and invoices be tabled at the annual general meeting.

The applicant has not provided any grounds that satisfy me it is appropriate to order another annual general meeting be held in order to allow all financial records to be tabled. Rather, it is for the applicant to arrange that he, or his accountant, review the records. Any discrepancies can be the subject of another application with specific evidence of those discrepancies provided.

The Act has specific provisions that permit owners to inspect and copy records (Act, 205). If a professional body corporate manager held the records for the body corporate then that manager would normally have facilities to allow for the inspection and copying of records. The body corporate manager would typically charge the body corporate for any costs of copying and supervising the inspection and would remit to the body corporate any prescribed fees paid by the person inspecting the records. For Villa Le Monde, it may be convenient to simply allow other owners to view the records but, if necessary, the body corporate could pay a third party to copy the records or supervise the inspection of the records. In the circumstances, I consider it just and equitable to specifically require the body corporate records be made available for a complete inspection over a period of at least four hours within the next two months. Persons wanting to inspect the records should be able to choose one of three times nominated, with options to include a morning and an afternoon.

The legislation provides that, for a small scheme, one member of the committee can operate the body corporate's financial institution accounts (Act, 151). However, for a community titles scheme other than a small scheme, at least 2 members of the committee must act jointly to operate the account (Act, 151).

Villa Le Monde meets all the requirements for operation as a small scheme in that there are only four lots in the scheme, the body corporate has not engaged a letting agent, and the scheme is not part of a layered arrangement. However, titles searches indicate that the Standard Module applies to the scheme. For Villa Le Monde to be treated as a small scheme, owners would first need to pass a special resolution adopting the Smalls Schemes Module Regulation and then have the change recorded by the titles office.

In the circumstances, I consider it just and equitable to make an order requiring the body corporate to ensure that the body corporate accounts are operated by at least two authorised members acting jointly. Alternatively, if the body corporate chooses to adopt the Small Schemes Module Regulation then this would not be required.

I note that are no allegations of dishonesty and that the financial statements show that only relatively small amounts of money are involved with this scheme. I therefore propose to allow a period of six months for the body corporate to take the necessary action above.

The legislation provides that two quotations would be required for any spending above $1000 for a scheme of this size (Standard Module, 104).

Owners or committee members may optionally wish to obtain two quotations for projects involving spending of lesser amounts. However, there are no grounds to justify making the order sought to the effect that two quotations must be obtained for spending over $100.

For a scheme of four lots under the Standard Module, the committee should consist of three or four persons holding the positions of chairperson, secretary, treasurer and, optionally, ordinary member (Standard Module, 9). However, if the scheme changed to the Small Schemes Module Regulation then owners will simply elect a secretary and treasurer with one person potentially holding both positions (Small Schemes 10, 13).

The applicant is correct in considering that, for a four lot scheme under the Standard Module, each lot should be able to nominate someone for the committee and elect their representative at the annual general meeting. Given the evidence that Villa Le Monde has been operating in its present manner for a number of years I do not consider it just and equitable to require an immediate extraordinary general meeting to rectify this situation. However, I propose to order that the body corporate must ensure that all owners are entitled to nominate and elect committee members as specified in Part 3 of the Standard Module at the next general meeting. Provided at least three committee members are appointed, the body corporate will then have a functioning committee in accordance with the Standard Module and will be able to nominate two signatories for the body corporate accounts. A problem will, however, arise if less than three persons volunteer to serve on the committee. In that case, the owners will need to consider either changing to the Small Schemes Module Regulation or engaging a professional body corporate manager to carry out the functions of the committee under section 37B of the Standard Module.

The legislation provides that a member's position on the committee becomes vacant if the person is not present personally or by proxy at two consecutive meetings of the committee without the committee's leave (Standard Module, 25(2)(d)).

If a committee member does not attend committee meetings then many people would question why that person is on the committee. However, this provision allows considerable flexibility in that it allows committee members to determine whether or not a member should be given leave to be excused from the meeting.

The applicant has not provided any grounds that satisfy me it is appropriate to order that certain persons cannot be on the committee simply because they have not attended meetings in the past or because they live elsewhere. In this respect, I note that the legislation does not specifically require a committee member to be physically present at the meeting and it seems a person attending a committee meeting by telephone or video conference would meet the requirement of being present personally at the meeting (as opposed to being present by proxy).

Based on the present application, I am satisfied that the applicant should be able to insist on access to records, committee elections in accordance with the Standard Module, and signatories to the body corporate account as required by the legislation. However, the applicant should take care that strict insistence upon compliance with all aspects of the regulations does not make the self management of Villa Le Monde too onerous.

The legislation recognises self management as an inherent aspect of community titles schemes (Act, 4). It is also recognised that the very detailed provisions of the regulations make it almost inevitable that from time to time there will be non-compliance with the legislation and that non-compliance of an insubstantial nature should not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken in good faith.^[1]

Overall, the material indicates that Villa Le Monde is being managed to a high standard, particularly for a residential four lot scheme. However, the procedures adopted are closer to those under the Small Schemes Module than the more technical Standard Module that actually applies to the scheme. Due to this, owners may find it advantageous in terms of costs and convenience to change to the Small Schemes Module.

Alternatively, owners may wish to alleviate any administrative burden that would otherwise fall on committee members by appointing a professional body corporate manager to assist committee members in administering the body corporate in accordance with the technical requirements. If no professional body corporate manager is appointed then individual committee members must try to perform the necessary administrative work in accordance with the legislation. Normally this work is performed on a voluntary basis and committee members are prevented from giving themselves any remuneration or allowance (Standard Module, 26). However, owners in general meeting can vote to give committee members some allowance to recognise their performance of this work.

An adjudicator must make orders that are just and equitable in the circumstances to resolve a dispute (Act, 276). As outlined above, the applicant has raised some genuine concerns even though the body corporate appears to be generally administered to a high standard. For the reasons above, I am satisfied that it is just and equitable to make above orders.

^[1] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001.

Number of Scheme:	17158
Name of Scheme:	Villa Le Monde
Address of Scheme:	QUEENSLAND

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Villa Le Monde [2007] QBCCMCmr 688 (14 December 2007)