Eleonora Court [2008] QBCCMCmr 150 (2 May 2008)

Number of Scheme:	10589
Name of Scheme:	Eleonora Court
Address of Scheme:	53 Annie Street NEW FARM QLD 4005

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

I hereby order that the application for an order as follows -

“1. Have Motion 8 dismissed.

Stop the body corporate spending without proper approval as stipulated in the Regulation Module: Section 102:(2) The lot owners must be given copies of at least 2 quotations for carrying out the work or supplying the personal property or services.”

is dismissed.

This is an application dated 22nd February 2008 by Sean Ryan (the Applicant) owner of Lot 2 in the scheme against the body corporate for the scheme (the body corporate) for an order that Motion 8 on the agenda for an annual general meeting to be held on 11th March 2008 is dismissed; and to stop the body corporate spending money without proper approval of the body corporate in respect of Motion 12 at the same annual general meeting.

The Applicant also sought an interim order that the forthcoming annual general meeting ‘be stopped’. On 6th March 2008 I made an order that the AGM should go ahead but that the body corporate might not act on Motions 8 and 12 if either of those motions were carried.

“Eleonora Court” Community Titles Scheme 10589 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 8 lots in the scheme created under a Building Unit Plan of subdivision.

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 Applicant says that there is a background of the committee over-spending. At the annual general meeting held on 11th March 2008 there were two motions on the agenda which the Applicant did not think were properly made. Motion 12 (to be voted by special resolution) was that “the back fence side fence between 43 and 53 Annie Street be replaced by a new wooden fence.” The motion stated “quote included.” The quotation from Superior Fences and Gates was for a total of $8,315 exclusive of GST. The Applicant says that in accordance with the relevant legislation in respect of “major spending” that two quotes should have been provided to the body corporate at a general meeting and not just the one.

The other motion to which the Applicant objects is Motion 8. Motion 8 is proposed by the committee and seeks the “reimbursement of $2,446 for the repair of locks and intercom” from the Applicant, and for proceedings to be brought against him in the “appropriate jurisdiction.” The Applicant says that this motion seeks permission to commence a ‘legal proceeding without substantiated evidence’ and is contrary to the Act. He says that in order to commence a legal proceeding the body corporate needs a special resolution. He also fears that the body corporate committee will spend money on lawyers and legal proceedings without the authorisation of the body corporate.

The Applicant says that he had to install new locks in April last year on his entrance door because the body corporate replaced the entrance doors in April 2007 but put the old locks back on. The old locks are over 25 years old and do not meet current fire safety standards, so that they were “illegally reinstalled onto the new doors.” He had to remove a lock and striker plate from one of the two entrance doors after it failed, jamming the door and locking his tenants both in and out. The door had previously locked out the tenants. He did not notify the body corporate that he had removed the lock, and the police were informed. The police contacted him later and suggested he return the lock.

On 20th August 2007 the Applicant rang the chairperson for the scheme, asking if he wanted the lock returned. The chairperson declined this offer. After this call, on approximately 26th August 2007, the locks on both doors were replaced, and since the work cost over $2,000, it is “major spending” for the scheme and there should have been two quotations but only one was obtained. Further he says that a motion to do the work was not presented to a general meeting.

To the best of his knowledge there was “no problem” with the second lock on the other door, but both locks were replaced. Shortly after the installation, a proposal was put to a committee meeting that he should reimburse the body corporate for the locks. The locks should have been renewed anyway when the new doors went on and the Applicant feels that he is being victimised. Also, he only removed one lock but is being charged for two. Motion 8 demonstrates the committee’s willingness to spend money without proper estimates and quotes.

Motion 12 is for major spending on common property, and relates to a new boundary fence. Only one quotation has been received for $8,315 ex GST, and that is in breach of the legislation. The committee approves things without understanding how much things will cost and without getting quotations.

The secretary for the body corporate, Maureen Anderson (Ms Anderson), and Sam Tornatore (Mr Tornatore), chairperson made submissions at the interim order stage but also provided a detailed background to the final orders sought.

In respect of the lock issue, they say that on 7th April 2007, the Applicant removed the lock and striking mechanism from a security door which is common property without the authority of the body corporate. No-one was aware that the Applicant had done this until after the police investigation some four months later. The committee denies that there was a fire hazard or safety concern about the lock, since no evidence to this end has been produced by the Applicant. The body corporate became aware of the failure of the lock and thereafter kept the back door open permanently. On the Saturday of Easter weekend 2007, a sign was placed on the front door advising people to go round the back. The chairperson had keys for the back door in case it was locked. Some tenants may not have keys. The body corporate planned to call the relevant tradespeople after the long weekend. It would have been a minor repair job, but the Applicant turned it into a “massive refitting due to his actions.” The Applicant has no right to remove the lock and intercom system.

The Applicant had other avenues to explore if he was not happy with the lock system. Why did he also take the intercom striker if he was concerned with the lock? The two things are separate. This cause “massive inconvenience” and the body corporate believes that it was done to with intention to annoy, and in a rage.

Mr Tornatore says that he came round “within 5 minutes of being advised of the problem.” He immediately opened the back and front door, and there was never any danger at all. There was no need for anybody to remove the lock and striker. In removing it, the Applicant removed the electronic frequency of the system, so both locks had to be replaced. The Applicant houses backpackers from neighbouring accommodation in three of the units and wants an “open door” policy for them.

Mr Tornatore disagrees with the account of the telephone conversation. He says that the Applicant rang him and offered the lock back but he “could not accept his proposition.” The proceedings relating to Motion 8 are expected to be in the Minor Debts Court and will not require “major spending.”

The body corporate also says that the Applicant is incorrect about there being no meeting about installing new locks. Motion 4 at a general meeting held on 31st July 2007 stated –

“To install new registered locks to both doors and install a new sensor system to the intercom system of the front door.”

The motion was passed 5 – 3. Only one quotation from Internal Communications and Electronics dated 24th April 2007 for $2,300 inclusive of GST was put to this meeting as Ms Anderson had found that there was only one tradesperson out of several whom she approached who had the ability to do the work.

The body corporate says that the reason that the other security door had to be replaced is that the power source had to be modified in order to be compatible with the new locks, and the power source cannot sustain two different locking systems. This is referred to in the quotation supplied to the meeting on 31st July 2007.

The job was done on 28th August 2007 and billed by Internal Communications and Electronics on 31st August 2007 in the sum of $2,446 inclusive of GST.

About Motion 12, the committee says that it was merely canvassing the body corporate’s view on getting the boundary fence replaced. A quotation of $8,315 was obtained but that was not all to be met from body corporate funds, but to be apportioned between neighbours. The quotation was merely to provide a starting point for opening discussions with the neighbours. The body corporate’s contribution was budgeted at $2,500 and the Applicant can see from the budget that it was never the intention of the body corporate to spend over $8,000.

The executive members of the committee being Mrs Anderson and Mr Tornatore as well as Pamela Hansen (Ms Hansen) treasurer, also made a submission on behalf of the body corporate at the final order stage. They provide a copy of the minutes of a meeting of 11th March 2008 showing that Motion 12 about the fence was not passed. However, Motion 8 was passed 5 – 3.

Ms Hansen, also made a submission as owner of Lot 8. She explains that the need to replace the security doors was canvassed as far back as 13th January 2005. She denies that the committee spends any money without the appropriate approvals.

In this matter, the parties occasionally refer to a conciliation conference. The conciliation process is confidential and cannot form any part of the grounds for adjudication. An application for adjudication is an entirely separate process, requiring each party to state its case anew, and I have not referred to any conciliation material provided in the application or in submissions, nor have any knowledge of what was said in the conciliation process.

This is an application by the Applicant Sean Ryan for Motion 8 “to be dismissed” and for Motion 12 not to continue because as worded, it proposed to commit the body corporate to a level of spending which was inappropriate without further quotations being sought. I understand that Motion 12 did not pass at the general meeting held on 11th March 2008, and I have therefore not considered the Applicant’s objection to Motion 12 further. Whilst an explanation for Motion 12 has been given by the committee in its submission, it is certainly open to interpretation by any lot owner reading Motion 12 and seeing the quotation, that the body corporate was proposing to spend in excess of $8,000 on a new boundary fence. A motion that the fence be replaced and the committee seek quotations for the body corporate’s contribution to that fence and/or to open communications with neighbours and report back to the next meeting might have shown more clearly, the committee’s intention.

If the fence is merely to be maintained, it would not need a special resolution of the body corporate. If a new fence is to be so different as to be an “improvement”, it will need a special resolution. (Section 113 Standard Module.)

The Applicant asks for Motion 8 “to be dismissed.” Motion 8 is worded thus –

“Proposed by the Committee – Ordinary Resolution. That reimbursement for $2446 be sought from Sean Ryan for the repair of locks and intercom. Reimbursement will be sought via the appropriate jurisdiction.”

There is no justification whatsoever for this Motion to be ‘dismissed’. The committee is not seeking that the Applicant pay the sum of $2,446 to the body corporate, but is asking the body corporate merely for the go ahead to start some action to recover $2,446 from the Applicant. It seeks only the right to start a proceeding “via the appropriate jurisdiction”, and it would be contrary to natural justice if a claimant was denied a forum in which to seek a remedy. There is no knowing whether the body corporate will be successful in its chosen forum when seeking the reimbursement of that sum from the Applicant, Although most of the merits of that case were rehearsed here, both by the Applicant (as defendant) and the body corporate (as plaintiff), that is not the question to be decided in this application.

Section 26(1)(e) Standard Module, restricts the committee from starting any proceeding (other than a proceeding for the recovery of a liquidated debt – section 26(1)(e)(i)), or for commencing a ‘proceeding’ through this Office under Chapter 6 of the dispute resolution provisions (Section 26(1)(e)(iv).) The committee therefore thought it should (and there is no reason why it should not in any event) seek the approval of the body corporate before commencing whatever action it intends to start against the Applicant.

The body corporate has voted 5-3 in favour of that motion. If the body corporate now finds that it will need to spend money in order to proceed against the Applicant, it will have to have such spending authorised in the usual way, either by committee if it is within the limit of committee spending, or by the body corporate at a general meeting if it is over that amount. If there is no provision in the budget for such spending, then a special levy may need to be raised, again in the usual way.

The committee in its submission is not envisaging that it will need to expend money on legal fees or advice in this matter, and that the proceedings will be brought in the Minor Debts division of the Magistrates Court.

Contrary to the Applicant’s point of view, any person may start a proceeding against any other person without any evidence at all. It is for the court, or the dispute resolution forum, to determine whether there is any evidence or not, or whether the evidence substantiates the claimant’s claim. If the proceeding is brought without any substance at all, or vexatiously, a court may order the claimant to pay the costs of the defendant. A special resolution on a motion is not required to authorise the committee to commence ‘a proceeding.’

I would however advise the body corporate before it takes any steps against the Applicant to recover the sum in contention, that this Office has exclusive jurisdiction of matters concerning damage to common property by a lot owner. Section 229 Act states that the only remedy for a dispute which is not defined in the legislation as a ‘complex dispute’, is a resolution of the dispute by departmental conciliation, or departmental adjudication. The Commissioner may make a recommendation for dispute resolution by one of the means set out at section 248 Act or may dismiss the application as one that would be better heard by a court of competent jurisdiction, eg the Magistrates Court. An adjudicator might also dismiss the application to be heard in a court if the adjudicator thought this was the best way of determining the dispute. (Section 270(1)(b) Act). This might be done, where the adjudicator thinks that oral evidence should be heard or evidence tested on oath. It is only after such a recommendation by the Commissioner or determination by an adjudicator, that the Magistrates Court would have the jurisdiction to deal with a matter such as an allegation of damage to common property by a lot owner.[1]

In addition, this may be matter which constitutes an allegation of a breach of scheme by-laws, requiring that any application to this Office has first demonstrated that a Contravention of By-law notice has been served on the alleged offender. (Section 185(2)(a) Act.)

[1] Penberg Pty Ltd – v- Body Corporate for Market Town CTS 2052 [2006] QDC 105/06 (25th January 2007). In this case the applicant started proceedings in the District Court for the cost of repairs to his unit caused by a water leak, the fault of the body corporate. He also sought loss of rent and loss of capital value of the unit. The District Court said that the applicant first had to bring the dispute to the Commissioner’s Office so that it could be dismissed and referred to a competent court. The Commissioner’s Office has no jurisdiction to make awards for damages for loss of rent or loss of capital value, but it has exclusive jurisdiction to hear matters about damage to units between the body corporate and the lot owner. The dispute had to be started in the Commissioner’s Office and forwarded from there if that was thought necessary or relevant. The court also left room for the view that even if the Commissioner’s Office did not have jurisdiction, the application would have to be made first to the Commissioner’s Office to be dismissed for want of jurisdiction, before another court would be able to deal with it.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Eleonora Court [2008] QBCCMCmr 150 (2 May 2008)