Maffra Court [2007] QBCCMCmr 7 (4 January 2007)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Pittwin Pty Ltd, the owner of Lot 2

I hereby order that:

1. Robin Nelson is appointed as administrator to call, hold and chair a general meeting (the meeting) of the body corporate for "Maffra Court" community titles scheme 2652 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 executive member positions.
2. 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 meeting shall be deemed to be an annual general meeting of the body corporate and shall be called and held in accordance with the Act and the Body Corporate and Community Management (Standard Module) Regulation 1997 (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-

1. To further delegate any of those powers to another person; and
2. To incur any expenditure apart from that reasonably necessary for the calling and holding of the meeting.

I further order that the meeting may consider any motion validly before it and the positions of the executive members of the committee shall be determined in accordance with section 11(4) of the Standard Module.

I further order that for the purposes of determining the financial year, the end of the month preceding the month in which the meeting is held is deemed to be the end of the financial year.

I further order that the administrator’s fees for this appointment payable by the body corporate will be $250.00 plus GST including disbursements.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0811-2006

"Maffra Court" CTS 2652

APPLICATION

This application is by Pittwin Pty Ltd, the owner of Lot 2 (applicant) against the body corporate. The applicant is seeking an outcome that Robin Nelson be appointed as administrator. The applicant has provided a letter from Robin Nelson dated 9 October 2006 to Ian Solomon for the applicant stating acceptance to an appointment as administrator. An earlier letter to Mr Solomon dated 29 September 2006 submits a quotation of $310.00 per annum inclusive of disbursements for the administration of Maffra Court. The proposed agreement provided with the letter states the cost as $310.00 plus GST with a fee for additional services of $100.00 per hour plus GST.

The applicant’s main submissions were to the effect that the body corporate is presently dormant; there are a number of emergency matters, including a concrete balcony which could collapse and water ingress through the roof into Lot 2; and the owner of Lot 1 will not engage the applicant in either correspondence or discussion as to the affairs of the body corporate.

JURISDICTION

"Maffra Court" Community Titles Scheme 2652 is a 2 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module).

An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute, in the context of a community titles scheme, about a claimed or anticipated contravention of the Act or the community management statement; or the exercise of rights or powers, or the performance of duties, under the Act or the community management statement^[1]. An order may require a person to act, or prohibit a person from acting, in a way stated in the order^[2]. An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate^[3].

If an order is made appointing an administrator, the administrator has the powers given to the administrator under the order^[4]. 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^[5].

SUBMISSIONS

In accordance with the Act, submissions were called and a copy of the application was provided to the Robyn Corbel, the owner of Lot 1 who made a written submission. The applicant made a written reply to submissions under section 244 of the Act.

Ms Corbel submitted that the body corporate has been established for many years and she is willing to contribute to future repairs. It appears to Ms Corbel that the applicant seeks the appointment of an administrator to set up a levy to assist with the payment of renovations to Lot 2 and that the applicant seeks to have her assist with his renovations. Ms Corbel disagrees that an administrator should be appointed just to set up a bank account for the administrative and sinking funds.

In replying to this submission, Mr Solomon stated:

FURTHER INFORMATION

By letter dated 7 December 2006, I required the applicant and Ms Corbel to provide information to help resolve the issues raised in the application. This requirement sought information about body corporate records, meetings, financial arrangements and insurance.

Firstly, both Mr Solomon and Ms Corbel responded that body corporate books and records have not been established. Secondly, both parties stated that there have never been any meetings held. Thirdly, Mr Solomon stated that there are no budgets, no levies being set or collected. Ms Corbel responded that she is willing to set up a bank account. In relation to insurance, Mr Solomon said that there are no common body corporate insurance arrangements and that building cover in the name of the scheme is inadequate. Ms Corbel stated that the property had been insured through Suncorp insurance. Ms Corbel added that "There are no urgent repairs to be carried out and the applicant only wishes to appoint a body corporate administrator so a large levy can be established to pay for his renovations".

On 14 December 2006, I requested from Robin Nelson written acceptance to an appointment limited to convening a general meeting of the body corporate. By letter dated 19 December 2006, Mrs Nelson stated that she was willing to accept an appointment to convene and hold a general meeting at a cost of $250.00 plus GST including disbursements.

DETERMINATION

Before dealing with the issues specific to this dispute, it is instructive to consider some general requirements of the legislation with respect to the management and administration of a body corporate for a community titles scheme. The body corporate and the individual lot owners have certain basic legislative rights and obligations and in this regard it does not matter that there are only two lots included in the scheme.

Legislative requirements
The plan
The body corporate was created by the registration of Building Units Plan 12991 in 1993. With the commencement of the Act on 13 July 1997, the plan is now known as a building format plan of subdivision (it should be noted that this change does not affect the ownership of property). Generally, the boundary on each lot is the centre of the floor, wall or ceiling of the building.
The parts of scheme land which are not part of the lots are common property (for example, the land, the roof and the external walls of the building). The common property is owned by both lot owners as tenants in common^[6].

Body corporate
The body corporate consists of the owner of each lot. The body corporate’s general functions include administering the common property for the benefit of lot owners, enforcing the community management statement, and carrying out other functions given to the body corporate under the Act or the community management statement for the scheme^[7].

The committee
Generally, the committee’s role is to manage the body corporate on a day-to-day basis. In a scheme of 2 owners, the committee will consist of both owners, and under section 11(4) of the Standard Module the positions of chairperson, secretary and treasurer of the body corporate committee are decided between the owners (i.e. no formal nominations or election is necessary), or if no agreement can be reached, the positions are jointly held by both lot owners. The legislation provides the committee with the power to make body corporate decisions and restricts the matters on which the committee can make decisions. For example, the committee’s expenditure limit for a particular item is $125 multiplied by the 2 lots in the scheme; the committee cannot fix a contribution to be paid by lot owners; and the committee cannot make a decision on an issue which may only be determined by the owners in general meeting^[8].

A question before the committee is decided by the majority (if both members are present and voting) of members present. In this instance, as the committee will consist of 2 persons, the committee will only make a positive decision if both members agree. If the members do not agree, the question before the committee will not be passed. Similarly, as most decisions of the body corporate in general meeting require an ordinary resolution (majority decision), the body corporate will only make affirmative decisions on motions requiring an ordinary resolution if both owners agree (if both owners are present and voting).

Financial management
Section 94 of the Standard Module provides that the body corporate must prepare an administrative and sinking fund budget each financial year. The budgets forecast anticipated expenditure and form the basis for setting the annual contributions payable by each owner to the administrative and sinking funds. The administrative fund budget contains estimates for recurring expenditure for each financial year such as insurance, administrative costs and recurring maintenance. The sinking fund budget must have regard to anticipated capital or non-recurrent expenditure over a period of at least 10 years. The basic purpose of the sinking fund is to accumulate funds to meet major expenditure at identified time intervals.

Annual general meeting
The body corporate must hold an annual general meeting every year within 3 months after the end of the scheme’s financial year. The primary purpose of the annual general meeting is to consider the body corporate’s financial management, to determine future levy contributions from lot owners and to choose committee members.

Maintenance
The body corporate must administer, manage and control the common property reasonably and for the benefit of lot owners^[9], and must maintain the common property in good condition^[10]. The occupier of a lot must keep the parts of the lot readily observable from another lot or common property in a clean and tidy condition^[11]. The owner of a lot must maintain the lot in good condition^[12].

Decisions about the maintenance of common property may be made by the committee provided it relates to an issue that the committee has the power to make a decision on. Otherwise, the committee should refer the matter to owners in general meeting. Importantly, the body corporate must ensure that any decisions are made through the proper decision making process and are properly minuted.

The body corporate has limited responsibilities with respect to the maintenance of lots. For example, the body corporate must maintain foundation structures, roofing structures providing protection and essential supporting framework in a structurally sound condition^[13].

Insurance
As a building format plan applies to the scheme, the body corporate must insure to full replacement value, each building in which is located a lot^[14]. The body corporate must also insure common property and body corporate assets^[15] and maintain public risk insurance of common property^[16].

By-laws
The by-laws for the scheme include 2 exclusive use by-laws which were recorded on the registered plan by the registrar of titles in 1993. By-Law 12 entitles the owner of Lot 2 to the exclusive use of the common property pool room. By-Law 13 allocates parts of common property on Level A and adjacent to the building for the exclusive use of the owner of each lot.

Body corporate information service
If lot owners would like more information in relation to the general requirements of the legislation, they can contact the Information Service of this Office on 1800 060 119. There are a number of free fact sheets available covering topics such as owning a duplex, general meetings, financial management and by-laws. Information is also available on the web site; www.bccm.qld.gov.au.

Decision

The above overview indicates the basic concepts relating to the management and administration of a body corporate. It is plainly clear from the information provided by the parties that the body corporate has not been administered in accordance with the legislation. For instance, the statutory annual general meetings have not been held (although there is evidence that a general meeting was held in September 1993 given the resolution to record by-laws mentioned above) and the body corporate has not established the necessary financial management processes.

In these circumstances, the only avenue for putting the body corporate on a proper footing is an application of this nature seeking the appointment of an administrator.

The applicant has nominated Robin Nelson and seeks an order that the nominee be appointed for an initial period of at least 1 year. Ms Corbel disagrees with the nomination, primarily on the basis of cost. Mrs Nelson has stated that she has over 20 years experience in the body corporate industry. In my view, it is important that the management framework of the body corporate is established by a person with the requisite knowledge and understanding of the requirements of the legislation. Given that the owners have not claimed to possess this knowledge, I consider it is appropriate that the nominee be appointed as administrator.

The applicant has sought the appointment of the nominee for an initial period of 12 months. In my view, this term of appointment is not appropriate in the circumstances. The basis of the appointment is that the nominee performs primarily administrative functions. These functions would only be performed at the direction of the body corporate or the committee. Therefore, the owners retain the responsibility to make decisions. In my view, the appointment should be limited to convening and chairing a general meeting to enable the owners to deal with those matters required by the legislation and any other matters requiring body corporate consideration. It is not appropriate at this stage that owners be compelled to use the nominee’s services for a longer period. 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 long term appointment of an administrator is warranted.

Ms Corbel has questioned the costs of the appointment of an administrator. In the circumstances, I am satisfied that the costs quoted by Mrs Nelson are reasonable for the appointment. The administrator’s costs are payable by the body corporate and given that the contribution schedule lot entitlements are 1 for each lot, the cost will be shared equally by the lot owners.

I note that claims have been made suggesting that the owners may have difficulties communicating with each other. However, I do not consider a problem of this nature necessitates a long term appointment at this stage. However, the owners must endeavour to ensure that personal issues or ignorance of legislative obligations do not impede the proper administration of the body corporate. As outlined above, the body corporate has a number of obligations and the owners must act in a way to ensure these obligations are met.

While this appointment is for the purposes of putting the administration of the body corporate on a proper footing, future events may necessitate the appointment of an administrator for a longer period of time and/or to carry out particular obligations of the body corporate should subsequent dispute resolution applications demonstrate for example, that the administration of the body corporate has broken down irretrievably and/or is in such disarray as to warrant the appointment. Therefore, owners must reasonably ensure that the proper legislative procedures and frameworks are established and maintained. If owners are uncertain about the regulatory requirements, then it may be appropriate that at least for a period of time, a person with the appropriate knowledge and skills is engaged to supply agreed administrative services. However, this is a matter for the owners to determine. If the body corporate chooses not to appoint a body corporate manager, then it must be recognised that the obligation will rest with the owners as committee members.

^[1] Section 276(1), Act.
^[2] Section 276(2), Act.
^[3] Section 284(1), Act.
^[4] Section 301(2), Act.
^[5] Section 278, Act.
^[6] Section 35, Act.
^[7] Section 94, Act.
^[8] See section 100, Act; sections 26 and 103, Standard Module.
^[9] Section 152, Act.
^[10] Section 109(1), Standard Module.
^[11] Section 120(1), Standard Module.
^[12] Section 120(2), Standard Module.
^[13] Section 109(2)(b), Standard Module.
^[14] Section 128, Standard Module.
^[15] Section 127, Standard Module.
^[16] Section 136, Standard Module.

Number of Scheme:	2652
Name of Scheme:	Maffra Court
Address of Scheme:	27 Wildwood Court SURFERS PARADISE QLD 4217

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Maffra Court [2007] QBCCMCmr 7 (4 January 2007)