White Caps [2008] QBCCMCmr 130 (17 April 2008)

Last Updated: 30 April 2008

REFERENCE: 0804-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11872
Name of Scheme:	White Caps
Address of Scheme:	23 Miles Street COOLANGATTA QLD 4225

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

Leigh Millar, the Owner(s) of lot 13

I hereby declare that: The amount of $707.20 claimed from the Leigh Millar, owner of lot 13 (applicant) in relation to damage to a common property wall is not a "body corporate debt" payable by the applicant and this amount must not be included upon any more contribution notices issued to the applicant; The recovery costs claimed from the applicant are not a "body corporate debt" payable by the applicant and that these amounts must not be included upon any more contribution notices issued to the applicant; Strata and Community Management Services Pty Ltd’s purported amendment of fees dated 6 September 2005 is not binding on the body corporate or the applicant and that Strata and Community Management Services Pty Ltd has had no authority to deduct from the body corporate’s account the amounts of $550 claimed as the cost of lodging documentation with a solicitor for recovery of levies; Strata and Community Management Services Pty Ltd’s purported engagement by the body corporate is void and that Strata and Community Management Services Pty Ltd has had no authority to deduct the monthly fee of $216.69, $206.37 or similar; and There is no valid committee appointed for White Caps and that Vickie Strachan has had no authority to accept an honorarium of $780 per year or administer payments from petty cash of around $300 to $400 per month in circumstances where the payments have not been specifically authorised by a resolution passed by owners or the committee. I further order that the body corporate must issue a new contribution statement to the applicant that credits the applicant for any amounts already paid towards recovery costs included on past notices of contribution, other amounts that should not have been included on past notices of contribution, or interest on those amounts. I further order that Mark Purtell of Strata Title Management Tweed Heads (appointee) is authorised to call, hold and chair an annual general meeting (meeting) of the body corporate for White Caps. I further order that the appointee’s authorisation: Commences on the date of this order and ceases in three months from the date of this order unless altered by a subsequent order of an adjudicator. Further, the authorisation will cease immediately upon the appointment of a committee for White Caps if that occurs earlier; Allows the appointee to perform obligations of the committee or any member of the committee in respect of the calling, holding and chairing of the meeting. In particular, the appointee is to prepare proposed budgets for adoption of the body corporate at the meeting, submit motions as reasonably necessary, and prepare the minutes of the meeting; and Is subject to the appointee, as far as practicable, following the procedures in the Standard Module governing giving notice for and holding an annual general meeting. In particular, a notice requesting nominations for committee positions and submission of motions for consideration at the meeting must give owners at least three weeks to submit their nominations and motions. However, the giving of notices and the holding of the general meeting need not coincide with the end of financial year date of the body corporate. I further order that, within 7 days, Strata and Community Management Services Pty Ltd must deliver all body corporate property, including electronic records, to the appointee. I further order that the appointee is entitled to a payment of $500 for completing the appointment in compliance with this authorisation. I further order that all owners are eligible to nominate for committee membership, eligible for election to committee membership, and eligible to vote at the upcoming meeting even if they owe a body corporate debt.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0804-2007

“White Caps” CTS 11872

Application

White Caps Community Titles Scheme (White Caps) is a 16 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 Leigh Millar, owner of lot 13 (applicant) seeking orders against the body corporate for White Caps (respondent). The applicant is seeking an order that the body corporate remove the amount of $707.20 from her levy statement (along with all related interest and debt recovery costs), an order that the applicant is not responsible for the costs of damage caused by John O'Donnell to the common property fence, and an order for the costs of the conciliation fee.

Decision

Investigation and Submissions

Submissions

The main grounds in support of the application, provided on behalf of the applicant, were to the effect that:

• In early 2004, the applicant had some renovation work done to her unit by registered builder John O'Donnell. On driving away from the premises the builder damaged a besser block wall that forms part of the common property;
• The secretary told the applicant that she would get a couple of quotes for the repairs and give them to the builder who had agreed to pay for the damage;
• In mid 2004 the applicant left to live in Sri Lanka for three years. In May 2005 the applicant received her levy notice and noticed that an amount of $707.20 was outstanding. The applicant contacted the secretary and was told the money outstanding was from the damage caused by John O'Donnell;
• John O'Donnell told the applicant that he had paid for the damage and the applicant told the secretary who said that she would need to confirm this;
• A subsequent levy notice still claimed the $707.20 and there was letter from HQF Lawyers threatening debt recovery. The applicant contacted Paddy Goodwin of HQF Lawyers and was told that the issue would be looked into; and
• Subsequently the applicant was charged $3,108 in debt recovery costs, and subsequently this accrued to $5,661.64 but without any breakdown of the costs.
  

The applicant attaches a letter from the builder, John O’Donnell. In this letter, John O’Donnell states that his company vehicle was backed into a hollow core block wall causing minor damage, he was sent a quotation to repair the damage for approximately $385 that he paid directly to the repairer. However, he says that the repairer was sent away by the body corporate because they did not want him to start at 7.00am. He says that he was subsequently provided with another quotation and price for an engineer’s report but that he has a good idea of costs for repairs of this nature from being in the construction industry for thirty years and would not pay an amount of approximately $1,100 sought.

All owners were given an opportunity to make submissions. Relevant submissions were to the effect that:

• The problem arose because of the applicant’s renovations and was compounded by her living overseas;
• The vehicle misjudged a turn and the left side of the vehicle just behind the passenger door collided with the wall. The driver put the vehicle in reverse and scraped the wall on the way back. As this occurred a rope from the tray of the building caught on the top of the wall and the wall was pulled to a dangerous angle as the vehicle drove off;
• No one from the body corporate committee has ever sent a quote to John O’Donnell or spoken to him. Bernie’s Professional Handymen were used to stabilise and repair the wall and no other quotations were obtained. The cost was $120.50 for securing the wall and $586.70 for the repair. This was a total of $707.20 which might be slightly higher then another tradesmen but is not believed to be an outrageous cost; and
• The applicant was approached in March 2004 and shown the damage her contractor caused. It was left up the applicant to organise a repair with the builder but nothing happened. Therefore the committee had the wall stabilised at a cost of $120.50 and on 25 May 2004 contracted Bernie’s Professional Handymen to perform the repair at a cost of $586.70. The applicant was requested to pay these costs by letter dated 11 August 2004. In July 2005 the applicant complained of the amount being added to arrears and said that the contractor had paid the body corporate.

Investigations

On 25 February 2008 persons from this office inspected the records of the body corporate for White Caps and obtained copies of some of those records. From viewing these records a number of problems with the administration of White Caps were immediately apparent. Firstly, there appeared to be no functioning committee for the scheme. Secondly, Frank O’Donnell and Strata and Community Management Services Pty Ltd (SCMS) appeared to be providing administrative assistance to the body corporate without any valid engagement as a body corporate manager.

Other apparent irregularities included an apparent failure to properly authorise the repairs to the wall, the improper seeking of this amount and other apparently unauthorised amounts by levy statements, and various other amounts being paid without any apparent authorisation.

On 5 March 2008 I therefore wrote to all owners to inform them of these apparent irregularities and invite further submissions on the issues raised.

Further submissions from lawyers for SCMS were to the effect that:

• SCMS is keen to resolve the matter and is prepared to provide some gratuitous services to the body corporate to normalise the situation;
• No objection would be raised to declarations that the amount of $707.20 and the recovery costs claimed are not body corporate debts and must not be included on contribution notices;
• That SCMS is now aware that they may not have been entitled to deduct a monthly fee from the body corporate since 21 June 2006 but SCMS maintains a broad interpretation of its management agreement; and
• That SCMS has discussed other matters with the current secretary of the body corporate, Vickie Strachan, who appears to be validly appointed. The secretary has proposed to convene an extraordinary general meeting.
  

Vickie Strachan provided a response to the effect that:

• She took on the positions of secretary and treasurer as no interest has even been shown to fill the positions. Other owners who reside here and interstate are aware of this and supported this situation. The honorarium payment of $780 covers all costs she incurs for stamps, stationary, postage, photocopies, fuel, phone, time spent organising tradespeople and time responding to mail; and
• The petty cash payments are primarily for an amount of $60 a week paid to the cleaner. There is no excess of expenditure and other residents can, and have had, access to all records.
  

Other owners have made submissions to the effect that:

• As owner of lot 2, I have asked both Vickie Strachan and SCMS for copies of financial statements for White Caps but have been refused access. I have also asked for a general meeting to be called to fill the vacant positions on the committee but this has not occurred. Vickie Strachan has said she does not want anyone else on the committee with her and I am concerned that she has stolen money from the body corporate and should pay it back. I have made various requests to SCMS including for a list of all other owners so I can contact them to call an extraordinary general meeting but these requests are refused;
• As owner of lot 5, I have experienced grave difficulties with SCMS. SCMS refuse to communicate with owners or property managers. They will not answer the phone, return phone calls, accept letters or accept faxes. This makes their ‘service’ a farce to say the least. If you write them a letter no matter how urgent they throw it away without replying. They say on the phone “We can not accept phone calls, you must write a letter to a post box”. If this letter is hand written they will not accept the letter. Many urgent repairs have not been done causing liability issues. There are never any real annual meetings. I am requesting the refund of $927 that was unjustly charged as legal and interest fees for late payments of levies. This was because SCMS would not accept my letters stating I had changed property managers from Hooker Real Estate to DJ Stringers Real Estate. They continued to send all bills to Hookers long after I had written to them and would not call me to clarify even though they know my address;
• As owners of unit 7, neither we nor other people were aware of violation of any statues. We have been relying on the almost non-existent advice of our strata management company for help. It appears now that the only way to resolve the problem is through the appointment of an administrator; and
• I have had exposure to similar concerns with SCMS in recent years. Two units at White Caps were owned by my deceased brother who bequeathed these units to our mother who appointed me as Enduring Power of Attorney to handle her affairs. At the time of my brother’s death I notified SCMS of his passing and provided them with a forwarding address. Statements continued to be sent while mail was directed from my brother’s mailing address but once mail redirection ceased the statements ceased. I did not receive statements for some time until early in 2007 when sent notification from the SCMS legal representative via past statements that included overdue interest and recovery costs. I subsequently paid the outstanding fees including overdue charges and recovery costs. I then tried to make contact with SCMS to advise them of the forwarding address for my mother but they refused to deal with me because I did not own the apartments. I then travelled to Coolangatta to discuss the issues and when I arrived and attempted to pay further statements to avoid additional costs they would not accept the payment and advised me that they could not even talk to me because I was not the owner. On return to Albury I arranged a certified copy of the Enduring Power of Attorney to be sent to SCMS and SCMS then sent me some forms to fill out to indicate the new owner and my power of attorney status. These were sent back to SCMS but I have still not received any further levy statements.

Issues for determination

Summary of issues

Initial issues for determination were:

1. Can the body corporate bill the applicant for the costs of repairing the damaged wall?
2. Can the body corporate add recovery costs to the applicant’s contribution statement?
   

The investigation of these issues raised further questions of:

3. Did SCMS have any authority to charge the amounts claimed by it as recovery costs, or even a valid engagement?
4. Was there even a valid committee for White Caps and did Vickie Strachan have any authority to make decisions for the body corporate?
5. Is it necessary to appoint an administrator for White Caps?

Can the body corporate bill the applicant for damage?

Applicable law

The body corporate can take action against someone who damages the common property (Act, 36(1)). However, there is nothing to suggest that the body corporate can simply bill someone for damage without either the agreement of the person concerned or a binding order from a court or tribunal of competent jurisdiction.

The types of things that can be included in contribution notices are specifically set out in legislative provisions that include:

• At least 30 days before the payment of a contribution is required the body corporate must give the owner written notice of the contribution, the date for payment, any discount, any arrears and any penalty. This notice may also include amounts payable for a specially contracted service enjoyed by the owner or payable under an exclusive use by-law (Standard Module, 96);
• If a contribution is not paid by the due date the body corporate may recover, as a debt, the contribution, any applicable penalty and any recovery costs reasonably incurred by the body corporate (Standard Module, 99(1));
• If a contribution has been outstanding for two years the body corporate must start proceedings to recover the amount (Standard Module, 99(2)); and
• A body corporate debt is a contribution, penalty, and other amounts related to ownership of a lot such as amounts agreed to be paid under an exclusive use by-law or for provision of services to the lot (Standard Module, definition "body corporate debt").

Findings

John O’Donnell has admitted that a person driving his company truck damaged a block wall. I am satisfied from the submissions and photographs that this was a common property wall that needed to be maintained by the body corporate for White Caps. It is not clear whether the person driving the truck was John O’Donnell or some other person, however, this would appear to be easily ascertainable if necessary. It is apparent that whoever was driving the truck was on scheme land for the performance of renovations that the applicant had engaged John O’Donnell to perform, although this is not necessarily relevant for the purposes of the present dispute.

Submissions and documentation provided with the application show that Bernie’s Handymen Pty Ltd performed work to secure the wall at a cost of $120.50 and to repair the work at a cost of $586.70. The full cost of $707.20 was then added to the applicant’s contribution notices. It is not clear who added this amount to the applicant’s contribution notices but it seems more likely than not that this was done by Frank O’Donnell or another person acting on behalf of SCMS.

No right to bill the applicant

In this instance, there is no allegation that the applicant caused the damage. The assertion is that a builder engaged by the applicant caused the damage and that the applicant should therefore be liable under a special by-law of White Caps. The attempt to claim the amount from the applicant rather than the person who caused the damage appears completely baseless on its face as the asserted by-law, even if it was valid, refers only to common property damaged by the removal or delivery of goods or furnishings. In any event, any assertion of liability pursuant to the by-laws is wrong at law as a by-law of the nature asserted would be invalid as seeking to impose a monetary liability contrary to the Act (Act, 180).

Further, the body corporate has not taken any lawful action to seek to recover the cost of the repairs but has simply billed the applicant for those repairs. The body corporate could have made an insurance claim in respect of the damage in which case the body corporate’s insurer would have sought to determine legal responsibility for the damage as against the person driving the truck or the truck’s insurer. If the body corporate chose not to make an insurance claim then the body corporate would need to take steps to establish legal liability for the damage itself. An adjudicator has no jurisdiction to determine a dispute between the body corporate and John O’Donnell because John O’Donnell is not an owner or occupier in the scheme (Act, 227). The body corporate may therefore wish to consider whether to bring the claim in the Small Claims Tribunal or the Magistrates Court to allow for a determination of liability for the amount and, if so, the appropriate amount required to be paid.

An adjudicator would have exclusive jurisdiction to determine a claim by the body corporate seeking compensation from the applicant for the damage to the common property (Act 36(1), 227(1)(b), 229, 281). However, the body corporate never brought any such application and, as discussed above, it is not even alleged that the applicant caused the damage and the body corporate has not put forward any valid legal basis for such a claim against the applicant.

Specifically, the body corporate cannot simply add disputed claims to a contribution notice but must actually articulate its claim and await either agreement by the defendant or a court order specifying what is recoverable. This allows the defendant, if they wish, to dispute liability or argue the amount claimed is excessive.

Can the body corporate add recovery costs to the levy statement?

Applicable law

The legislation specifically provides that the body corporate can recover as a debt any reasonably incurred recovery costs (Standard Module, 99(1)(c)). However, there is no provision for including reasonably incurred recovery costs on the notice of contribution payable (Standard Module, 96).

Findings

I am satisfied from viewing copies of the levy statements that it is more likely than not that Frank O’Donnell or another person acting on behalf of SCMS added disputed recovery costs to the applicant’s contribution statement.

No right to add recovery costs to the levy statement

Similar to any the above, the body corporate cannot simply pass a by-law that makes an owner liable for all recovery costs or decide itself what costs should be payable and add those costs to the contribution statement of an owner. The body corporate needs to claim any reasonable recovery costs as a debt and await either agreement by the defendant or a court order specifying which recovery costs are "reasonably incurred".

I note in particular that the definition of "body corporate debt" does not specifically include recovery costs, although it allows for amounts agreed pursuant to an exclusive use by-law or agreement for supply of services to the body corporate (refer Act 180(6), Standard Module 119). In particular, the word "debt" implies the amount must be an agreed or fixed amount rather than a "reasonable" amount that has not yet been fixed. I therefore prefer the view that the term "body corporate debt" does not include any claimed reasonable recovery costs and that an owner cannot be deprived of the right to vote or nominate for committee membership based on a claim that a person owes the body corporate reasonable recovery costs (Standard Module, 11(2), 47A).

In the circumstances, the applicant is entitled to an order that the body corporate provide her with a new contribution statement that credits any amounts already paid towards recovery costs included on past notices of contribution, other amounts that should not have been included on past notices of contribution, or interest on those accounts. Submissions from other owners indicate that those owners also received incorrect contribution notices. The body corporate may therefore wish to act promptly to correct those contribution notices also and I will give the body corporate an opportunity to rectify the situation itself pending a specific application by those owners.

Did SCMS have any authority to charge the amounts claimed by it as recovery costs?

Applicable law

The legislation has a number of specific provisions that regulate bodies corporate paying persons for providing administrative services to the body corporate. A person is a body corporate manager for a community titles scheme if they are engaged by the body corporate to supply administrative services to the body corporate otherwise than as an employee (Act, 14). The body corporate manager must have a written agreement with the body corporate that can be entered into only after owners have passed an ordinary resolution consenting to entry into the agreement (Standard Module 78, 87). Specifically, the terms of the written agreement must have been distributed with the voting papers for the meeting at which owners passed the resolution (Standard Module, 87).

These written terms of agreement must state the functions the body corporate manager is required to carry out and the basis on which the person will be paid (Standard Module, 78). The agreement will also automatically include the terms required by the Code of Conduct for Body Corporate Managers (Act 118, Schedule 2). These terms include that the body corporate manager must have a good working knowledge and understanding of the Act, must act honestly, fairly and professionally, must exercise reasonable skill, care and diligence, must act in the body corporate’s best interest, must not engage in misleading or unconscionable conduct, and must show that body corporate records are being kept as required under the Act when requested. Further, body corporate managers must disclose any association with or commissions paid by builders, handymen, cleaners, lawyers, or other preferred contractors who provide services to the body corporate (Standard Module 88, 89, 90).

Further, the maximum term of engagement of a body corporate manager is three years, including any rights or options of extension or renewal (Standard Module, 80).

Finally, a properly engaged body corporate manager is automatically a non-voting member of the committee (Standard Module, 9A).

Findings

SCMS has failed to provide details of any valid engagement under which it would be entitled to charge for the provision of administrative services to the body corporate for White Caps. The absence of a contractual right to deduct its monthly fee appears to be conceded in a letter from SCMS’s lawyers dated 20 March 2008, although there is some suggestion that SCMS seeks to rely on an agreement dated 21 June 2003.

A letter dated 6 September 2005, further indicates that SCMS has written to the secretary seeking to unilaterally change the fees for services charged by SCMS. Relevantly for the present application, this letter purports to add a new fee of $550 for "Lodging documentation with Solicitor for Recovery of Levies". A review of the minutes of meeting of White Caps indicates that owners never agreed to this purported fee alteration.

A review of the accounts for White Caps shows regular charges of $216.69, $206.37 or similar listed as "Monthly Fee" for "Strata & Community Management". There are also regular charges of $550.00 listed as "Recovery Costs" for "Strata & Community Management" as well as a number of other charges listed as "Postage/Stationery" or "Adjourn Annual general meeting Meet Fee".

SCMS no valid engagement

I am satisfied that Frank O’Donnell and SCMS have no valid engagement as, even if the agreement dated 21 June 2003 was valid, a body corporate manager’s agreement has a maximum legislated term of three years (Act, 80). Obviously further questions arise about whether the agreement dated 21 June 2003 was valid for any period of time particularly given the provision that an engagement of a body corporate manager is void if the written agreement does not state when the term begins and when it ends (Standard Module, 78(2)).

For the present application, I am prepared to make a declaration that SCMS’s purported engagement by the body corporate is void and that SCMS has no authority to deduct the monthly fee of $216.69, $206.37 or similar. It is not appropriate in the present application by an owner against the body corporate that I make any orders requiring SCMS to reimburse any amounts it deducted from the body corporate’s funds. If owners wish to obtain their own legal advice and vote in general meeting to seek reimbursement of funds from SCMS then that is a matter for a separate application.

SCMS no right to claim $500 for referring matter to solicitors

Even apart from the lack of any valid engagement of SCMS, SCMS is unable to unilaterally add or change fees for services by sending a letter to the secretary.

Any amendment to an engagement of a body corporate manager must be agreed to by an ordinary resolution passed by the body corporate (Standard Module, 87). Further, the terms and effect of the amendment must be sent to owners with the voting paper prior to the general meeting at which the amendment is being considered (Standard Module, 87(2)(c)).

Again, I am prepared to make a declaration that SCMS’s purported amendment of fees dated 6 September 2005 is not binding on the body corporate or the applicant and that SCMS has had no authority to deduct from the body corporate’s account the amounts of $550 claimed as the cost of lodging documentation with a solicitor for recovery of levies. This will have flow on effects in terms of individual contribution statements issued to owners. However, if owners wish to obtain their own legal advice and vote in general meeting to seek reimbursement of funds from SCMS then that is a matter for a separate application.

Was there a valid committee and did Vickie Strachan have authority to act?

Applicable law

The legislation has a number of specific provisions that regulate the nomination and election of committee members.

Certain types of decision of the body corporate need to be made by owners in general meeting. However, the committee can make most day to day decisions about the operation of the body corporate by passing resolutions on behalf of the body corporate (Act, 100).

Committee members are elected by owners to make the more routine operational decisions on behalf of all owners. There is a code of conduct for voting members of the committee that includes requirements of honesty and fairness, requirements to disclose conflicts of interest, a commitment to acquiring an understanding of the Act, and a requirement to take reasonable steps to ensure compliance with the Act in performing their duties as a committee member (Act 101B, Schedule 1A).

There are a number of provisions governing eligibility and processes for electing committee members (Standard Module, 10 – 24C). Importantly, whenever there are three or more different owners within a scheme, there must be at least three voting members of the committee (Standard Module, 9(3)). Committee members must be elected at each annual general meeting, and where insufficient persons are elected to the committee, a special extraordinary general meeting must be called to rectify the situation (Standard Module, 24A).

Any payment of remuneration, allowances or expenses to a committee member must only be made under the authority of an ordinary resolution of the body corporate or be for reimbursement of expenses incurred in attending a committee meeting up to a maximum of $50 per meeting or $200 in any twelve month period (Standard Module, 26).

Findings

I have reviewed copies of the minutes of meeting for White Caps. It is obvious from these minutes that White Caps has not had a valid committee for a number of years.

Further, even if there was a valid committee, the minutes of general meetings do not record any vote by owners to pay remuneration, allowances or expenses to a member of the committee.

However, a review of the accounts for White Caps shows charges of $780 listed as "Honararium " for "Vickie Strachan". There are also regular charges of $300.00 (or $400.00 or $650.00) listed as "Petty Cash" for "Vickie Strachan".

No valid committee

I am satisfied that there has been no valid committee for White Caps for a number of years. For a valid committee there would need to be at least three voting committee members (Standard Module, 9).

Vickie Strachan no authority to make decisions on behalf of the body corporate

Vickie Strachan has submitted that she took on the position of secretary and treasurer as no interest has ever been shown to fill the positions. However, no individual has authority to make decisions on behalf of the body corporate and where insufficient persons are elected to the committee a special extraordinary general meeting must be called to rectify the situation (Standard Module, 24A).

In particular, I have concerns about payments of body corporate funds made to Vickie Strachan. Vickie Strachan has submitted that she has spent time and incurred various costs as a committee member and that SCMS advised that an honorarium payment could be made to her. If this advice was given then there are numerous problems with it.

In most schemes, committee members volunteer their time and a body corporate manger is engaged if there are sufficient secretarial and financial duties to justify payment to have these duties performed professionally. It may therefore surprise owners to discover an honorarium was being paid when owners were already contributing to payments for a professional body corporate manager. From a legal perspective it is even more surprising to see body corporate funds allocated towards an honorarium when there is no valid committee for the scheme and no evidence of an ordinary resolution authorising payments to committee members (Standard Module, 26).

Another issue is the payment of significant amounts of petty cash. Vickie Strachan has submitted that all petty cash costs are recorded, recepts kept, and the petty cash book is always available to be viewed. It is also submitted that there is no excess of expenditure and that most of the petty cash is from an amount of $60 per week paid to the cleaner. However, even if this is the case, Vickie Strachan has no authority to administer payments from petty cash unless those payments are authorised by a resolution passed by owners in general meeting or by the committee. As there is no committee and no authorisation of this expenditure by resolutions at general meeting it is clear that Vickie Strachan has no authority to administer these payments.

It is particularly concerning if payments of the nature of a regular payment of $60 per week to a cleaner are not properly approved. Minutes of the most recent annual general meeting indicates that there has not been any resolution passed by owners authorising the engagement of a cleaner for this financial year. The committee would have power to engage a cleaner for short periods of time provided the spending on the engagement did not exceed the relevant limit for committee expenditure. However, as determined above, there is no valid committee.

I consider it appropriate to make a declaratory order confirming that Vicki Strachan has had no authority to accept an honorarium of $780 per year or administer payments from petty cash in circumstances where the payments have not been specifically authorised by a resolution passed by owners or the committee. However, it is not appropriate in the present application by an owner against the body corporate that I make any orders requiring Vicki Strachan to reimburse any amounts it deducted from the body corporate’s funds. If owners wish to obtain their own legal advice and vote in general meeting to seek reimbursement of funds from Vicki Strachan then that is a matter for a separate application.

Appointment of an administrator

Submissions on behalf of SCMS were to the effect that the appointment of an administrator should be deferred for further consideration until after an extraordinary general meeting to be called by Vickie Strachan pursuant to section 61 of the Standard Module. However, a number of submissions by owners support the appointment of an independent administrator. Particularly due to past failures to comply with the legislation and given the potential that any meeting called by Vickie Strachan will be challenged as being irregular, I am satisfied that it is appropriate to immediately appoint an independent administrator to call a meeting of owners.

A number of independent administrators have been proposed by owners. I am satisfied that it is appropriate to appoint Mark Purtell of Strata Title Management Tweed Heads. This firm has provided a fixed fee quotation of $500 to convene a general meeting to appoint a new committee. The quotation also indicates that the firm is located near to White Caps and is an accredited member of the Community Titles Institute of Queensland.

I am satisfied that Mark Purtell of Strata Title Management Tweed Heads should be appointed as administrator on the terms above and that SCMS should deliver all body corporate property to the appointee. Owners should ensure that they nominate themselves, or other eligible persons, for committee membership if they wish to ensure a valid committee is appointed so that it will be unnecessary to pay for continued independent administration. Further, owners should ensure that they submit motions that will allow owners to vote on matters affecting the scheme including any motions proposing payment of insurance, the appointment of a professional body corporate manager, and the engagement of a regular cleaner.

Order

For these reasons, I make the order above.