23 Woodstock [2008] QBCCMCmr 140 (23 April 2008)

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

I hereby order as follows -

1. that Catharina Lindgren must on receipt of this order make available to the body corporate manager, Simon Barnard, of Hartley’s Body Corporate Management, for use by the body corporate, all funds in the Suncorp account opened by her in the name of the body corporate;

that should the body corporate wish to close or deal with the account referred to in Item 1, Catharina Lindgren will with immediate effect facilitate the closing of, or the dealing with, the account for the body corporate;
that within seven (7) days of the date of this order Catharina Lindgren will account to the body corporate for any monies expended from the account referred to in Item 1;
that within seven (7) days of the date of this order Catharina Lindgren must deliver to the body corporate manager, Simon Barnard of Hartley’s, all documents in her possession or control pertaining to any and all bank accounts in the name of the body corporate; and to the financial management of the body corporate, which documents are to include all invoices received by her over the last two years, or more, if such longer period relates to the control of the body corporate finances by her, as well as evidence of payments made by her to named persons or entities during the time in which she has been handling the financial affairs of the body corporate, and all or any other body corporate records which she has in her possession and control.

This is an application dated 2nd April 2008 by the body corporate for 23 Woodstock (the body corporate) against Catharina Lindgren (the Respondent) owner of lot 4 in the scheme, for an order that the Respondent returns all documents and monies in her possession relating to the financial position of the body corporate, and that the Respondent accounts for all money expended from a Suncorp bank account opened by the Respondent in the name of the body corporate.

“23 Woodstock” CTS 15119 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). There are four lots in the scheme.

Section 276(1) of the Act provides that an adjudicator may make an order that is just and equitable in the circumstances (including a declaratory order) to resolve a dispute, in the context of a community titles scheme, about-

(a) a claimed or anticipated contravention of the Act or the community management statement; or

(b) the exercise of rights or powers, or the performance of duties, under the Act or the community management statement; or

(i) the engagement of a person as a body corporate manager or service contractor for a community titles scheme; or

(ii) the authorisation of a person as a letting agent for a community titles scheme.

An order may require a person to act, or prohibit a person from acting, in a way stated in the order (section 276(2)). An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate (section 284(1)).

The body corporate is represented by the body corporate manager Hartley’s Body Corporate Management (Hartley’s). Hartley’s was engaged by a resolution at an extraordinary general meeting on 5th March 2008 (Motion 4). The vote was 3 – 0 in favour of engaging Hartley’s. The voters at that meeting were Jane Meisenhelter (Ms Meisenhelter), owner of Lot 2, Anthoney Rimmer (Mr Rimmer) owner of Lot 3 and P. Burns, owner of Lot 1. The Respondent did not attend or vote at this meeting.

Prior to the engagement of Hartley’s, the body corporate, represented by the then secretary Kirstine Fischle and the then chairperson Mr Rimmer, on 28th January 2008 sent the Respondent a notice by registered post for the return of body corporate property. The notice referred to section 152 Standard Module. Motion 11 of a prior general meeting held on 9th January 2008, and carried 2-1, required that all committee members deliver “all documentation and body corporate keys they hold to the appointed manger.”

On 28th February 2008, there was an informal meeting at the home of the Respondent to which “all lot owners turned up.” Three of them “made their desire to have Hartley’s manage the body corporate clear to Catharina (treasurer).” The Respondent said the general meeting of 9th January 2008 was not valid because she had not received a copy of the minutes.

At a vote outside a committee meeting on 20th March 2008, the two members of the committee, Ms Meisenhelter who was voted as chairperson, secretary and treasurer at the meeting of 5th March and Mr Rimmer , who was voted as committee member at the meeting of 5th March, voted 2 – 0 in favour of making this application for the return of body corporate records from the Respondent.

They are concerned that the Respondent, in her role as treasurer has not made details of invoices available to other members of the body corporate, and has made unauthorised payments to herself. The body corporate has no details of the transactions in and out of the new bank account opened without authorisation by the Respondent at Suncorp in the name of the body corporate. The body corporate is unable to meet its obligations under the legislation because the Respondent is withholding current and historic financial records. The body corporate does not know its financial position. The dispute “has impacted a settlement at the property with a $5,000 bond in place until the matter is resolved.”

The Respondent submits that the meeting of 9th January 2008, at which there was a motion to appoint Hartley’s as body corporate manager, was invalid. She says that the owners of Lot 2 owed a debt to the scheme and were therefore ineligible to vote, and that the owner of Lot 1 did not attend or send in a voting paper. The motion to appoint the body corporate manager was therefore not carried. On 10th January 2008, Mr Rimmer withdrew all the funds from the Suncorp business account and closed the account without notifying her. As a result the monthly direct debit for the scheme’s insurance was dishonoured. The scheme also had several invoices to pay, which for the past two years have been sent to her. She therefore opened a new account at Suncorp.

On 7th February 2008 she received the notice from the body corporate for the return of the body corporate records. Since she had not received the minutes of the meeting of 9th January 2008, she was not expecting this. When it arrived, the request that documents be returned to the secretary Ms Fischle was incorrect as Ms Fischle had already sold her lot. She replied to Ms Fischle on 14th February 2008 and addressed it to both of her addresses shown on the notice. In her reply, she asked Ms Fischle to return all records held by Ms Fischle to the Respondent.

She says that it is not true that the lot owners do not know the financial position of the scheme. All committee members are sent regular updates by the Respondent, and full records are available for all body corporate members to inspect at all times. On 28th February 2008 and 3rd March 2008 she invited all lot owners to attend a presentation on their financial position and discuss levy contribution schedules. On 31st March she distributed a “comprehensive compendium with the body corporate Financial Position and Expected Requirements” to all current lot owners including the new members. This included sinking fund and administrative fund forecasts, a “Queensland Government Land Valuation 2008”, statements of income and expenditure from 2003, and “contact details to tradespeople.” She has put in a lot of long hours for unpaid work and would like thanks for keeping meticulous financial records, preparing forecasts etc., and also for doing maintenance. She says that all the documents which the Applicant has requested are in Ms Meisenhelter’s possession.

She adds that Ms Meisenhelter was told by a real estate agent that the levies were only $1,000 per lot and the only known sinking fund requirement was to have the building painted. In fact contributions are much higher, and the previous sinking forecast was inadequate. They have spent a lot of money on the previous body corporate manager’s fees. She attaches income and expenditure statements 4th November 2005 – 30 June 2006; 1 July 2006 – 30th June 2007; 1st July 2007 – 31st December 2007; 1st January 2008 – 31st March 2008; and an income and expenditure estimate for1st April 2008 – 30th June 2008. She also provides a document headed “Levy contribution schedule: sinking fund, administration fund” for 1st July 2008 – 30th June 2018 with “ additional management fees and charges”; an unaccredited sinking fund forecast from 1st July 2008 – 30th June 2018; an unaccredited 10-year administration fund forecast for the same period; and levy contribution schedules for the sinking fund and the administrative fund from 1st July 2008 – 30th June 2018.

She also provides a copy of an on-line transaction history as at 9th January 2008 with Suncorp bank account 500415766 from 31st July 2007 to 8th January 2008.

The Reply on behalf of the body corporate was submitted by Mr Rimmer and Simon Barnard, of Hartley’s. Hartley’s explained that it is in receipt of documents showing income and expenditure from 4th November 2005 to 31st March 2008. However, it is not in receipt of any supporting documentation to verify those statements and the associated authorities to spend that money. The committee is still awaiting return of the all invoices to validate entries on the statements of income and expenditure, reconciled bank statements, tax returns, balance sheet and all individual owner levy position reports/statements.

Mr Rimmer says that on 28th February 2008, the owners of Lots 1, 2 and 3 visited the Respondent at her invitation and had an informal meeting. All three lot owners considered the meeting of 9th January 2008 to be valid, but the Respondent claimed that it was not. They explained to her that all three remaining owners want Hartley’s in, and that they did not want her to continue as treasurer, asking her to pass all documentation to Hartley’s. The Respondent broke down in tears and told them all to leave. Because of the dilemma about the meeting of 9th January 2008, the second meeting of 5th March 2008 was held, chaired by Simon Barnard of Hartley’s at their request. Mr Rimmer asked the Respondent to attend the second meeting but she did not

He denies that he was ever in arrears. He did not receive any notice about arrears and had paid his last contribution in full. A note dated 9th January 2008 prepared by the Respondent and sent to the meeting of 9th January, saying that Mr Rimmer was unable to vote as he owed a debt did not say what the debt was for or how much was owed. At the informal meeting on 28th February 2008, the Respondent admitted that she had created the debt because she had not received a receipt from Mr Rimmer two years ago. The receipt was for purchase of maintenance equipment (an edging tool for the lawn) for $119.30. The debt is not for a levy and not money owed, but was fabricated by the Respondent on the basis of not having a receipt. In fact the lot owners at the meeting on 9th January 2008 ignored the Respondent’s notice because no reason for the debt was given. He says that the Respondent was not acting in good faith and had tried to stop him from voting. Mr Rimmer paid the sum of $119 on 28th February 2008 as an attempt at conciliation, but since he does not owe it, he is looking to get it refunded once this matter is finalised.

No lot owner has called into question the engagement of Hartley’s. The second general meeting on 5th March 2008 in any event confirmed the body corporate’s desire to engage Hartley’s as a body corporate manager.

Mr Rimmer says that he closed the body corporate bank account at Suncorp in order to set up the terms of the new body corporate management. The money was moved in good faith, but the Respondent had refused to talk about it. The Respondent has been using funds for unauthorised works for things such as “removing rotten timber” etc. He disputes that the notice to return documents was a surprise to her. The minutes of the general meeting of 9th January 2008 were put in the Respondent’s letterbox on 10th January 2008. At the informal meeting on 28th February 2008, she said that she had received them but did not think they were valid.

In this matter, the body corporate is seeking return of all financial paperwork pertaining to the body corporate from the former treasurer, the Respondent, Catharina Lindgren.

It does so following the appointment of a body corporate manager Hartley’s at a general meeting held on 5th March 2008. Hartley’s contract was signed for and on behalf of the body corporate and affixed with the body corporate’s seal on 5th March 2003. There is no dispute about the engagement of Hartley’s after 5th March 2008.

The Respondent has raised a curious argument that the body corporate manager was not properly appointed at a general meeting held on 9th January 2008. However, there is no argument that the body corporate manager was properly appointed on 5th March 2008. The motion by which Hartley’s was appointed refers to section 119 Act and envisages that Hartley’s will carry out some at least of the powers of the executive committee.

Section 119 Act says -
119 Schemes for which there is a committee for the body corporate
(1) This section applies if there is a committee for the body corporate.

(2) The body corporate, in writing, may authorise the body corporate manager to exercise some or all of the powers (authorised powers) of an executive member of the
committee.
(3) However, the body corporate must not prevent the executive member from—

(b) directing the body corporate manager about how an authorised power is to be exercised.
(4) The body corporate, in writing, may revoke the authorisation at any time.

The body corporate manager may therefore carry out the duties of the treasurer if requested to do so, and in the usual course of business would assist the body corporate with administrative tasks.

Section 152 Standard Module requires the return of body corporate records by a person who has possession or control of them, within 14 days of receiving a prescribed notice, which is notice of a resolution of the committee. There is a penalty provision of 20 penalty points ($1500 fine in the Magistrates Court) for failing to comply with such a notice. The Respondent says that she received the notice on 7th February 2008. She should therefore have returned all body corporate records by 21st February 2008. However, she did not wish to return the records to Ms Fischle as mentioned in the notice, since Ms Fischle had sold her unit.

It seems to me that in such a small scheme, that the intent of the notice was clear and that the Respondent should have at that time given all the records held by her to the body corporate secretary. However, if there was no properly appointed secretary at the time, and the Respondent was doubtful that there was a properly engaged body corporate manager, she might have had good reason to preserve the records.

However, as from 5th March 2008, there is no excuse for her desire to hold onto the body corporate records. They should be handed to the body corporate manager.

“Body corporate records” include “any reconciliation statement prepared for an account kept for the sinking or administrative fund and the associated financial institution statement and invoices” (my underling) (Section 149(1)(l) Standard Module) as well as, and the list is not definitive-

All current cheque books or passbooks, and old cheque-book stubs, as well as receipts are also relevant financial records of the body corporate.

It is not sufficient to say that the body corporate is aware of its financial position, that is, it has a regular update of its cash at the bank. As demonstrated by the effect of closure of the bank account by the body corporate, there may be direct debits, and liabilities arising, all of which the body corporate should know about. Fund forecasts (if required) are a matter for the body corporate at a general meeting to approve. Contributions may change from year to year at the annual general meeting, or a special levy may be raised in by ordinary resolution of the body corporate at a general meeting.

If the Respondent wishes to be paid for work undertaken by her, that work, and the rate of pay, should first be approved by the committee, (if it is within committee spending and within the ambit of the budget) or by the body corporate at a general meeting if over that amount.

Section 151(6)(b) Act requires that at least two members of the committee who are authorised by the committee should operate the bank account. The bank should have requested minutes of a committee meeting (or general meeting) in order to allow a new account to be opened by the Respondent, and for two signatures to be on the mandate.

The person who is treasurer may change from year to year at election at the annual general meeting (or more frequently if a casual vacancy arises, or the body corporate requires. (Section 25(2) Standard Module). The body corporate manager, being a paid contractor, may do much of the work of the treasurer, but it is up to the body corporate how much is left in the hands of the executive committee. All lot owners, including the treasurer, may take a keen interest in the financial management of the scheme, and may inspect body corporate records in accordance with the legislation. All financial transactions should be transparent and accountable.

The Respondent must on receipt of this order make available to the body corporate manager, Simon Barnard, of Hartley’s for use by the body corporate, all funds in the Suncorp account opened by her in the name of the body corporate. The body corporate may like to close or otherwise deal with this account, and if that action needs the consent of the Respondent, then the Respondent will with immediate effect facilitate the closing of or the dealing with the account, for the body corporate.

The Respondent within 7 days of the date of this order must deliver to the body corporate manager, all documents in her possession or control pertaining to the financial management of the body corporate, which is to include all invoices received by her over the last two years, or more, if such longer period relates to the control of the body corporate finances by the Respondent, as well as evidence of payments made by her to named persons or entities during the time in which she has been handling the financial affairs of the body corporate, and all or any other body corporate records which she has in her possession and control. This order relates to all accounts opened in the name of the body corporate.

Number of Scheme:	15119
Name of Scheme:	23 Woodstock
Address of Scheme:	23 Woodstock Road TOOWONG QLD 4066

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

23 Woodstock [2008] QBCCMCmr 140 (23 April 2008)