Coronaton Gardens [2008] QBCCMCmr 18 (17 January 2008)

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

I hereby order
1. that Strata-Jem Pty Ltd, the body corporate manager, pay from body corporate funds the accounts of Totally Green Lawns and Gardens owed by the body corporate as at 10^th January 2008 within 7 days of the date of this order;
2. that subsequent accounts for services performed by Totally Green Lawns and Gardens are paid by the body corporate manager from body corporate funds as and when they fall due and during the term of the engagement of the body corporate manager with the body corporate;
3. that the body corporate manager pay from body corporate funds the body corporate electricity bill due in early February 2008;
4. that the body corporate manager pay from body corporate funds the insurance premium due on 18^th March 2008, provided always that the body corporate manager is still engaged by the body corporate when the insurance premium falls due;
5. that the body corporate manager may deduct from body corporate funds on 20^th January 2008 its monthly fees in accordance with its contract.

I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

This is an application dated 3rd January 2008 by the body corporate for Coronation Gardens (recorded in the Land Title Registry as “Coronaton Gardens”) CTS 24610 (the body corporate) against Strata-Jem Pty Ltd, (the body corporate manager) for an order as follows –

The body corporate also seeks an unspecified interim order concerning paying of body corporate bills in the interim period pending the final determination of this dispute on those three issues. Particularly the body corporate is concerned that its dispute with the body corporate manager does not allow the insurance premium to lapse.

“Coronation Gardens” community titles scheme 24610 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 49 lots in the scheme created under three Group Title Plans of subdivision and re-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)).

This Office has jurisdiction over disputes between a body corporate and a body corporate manager for a scheme by virtue of section 227(1)(c) Act.

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the respondent or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is to simply maintain the “status quo” of a situation, and not to finally resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order. I therefore asked the body corporate and the body corporate manager to advise me what bills need to be paid at present and whether there were forthcoming invoices, particularly the insurance premium, and what proposals the body corporate manager might make in the interim. Both the body corporate and the body corporate manager replied by 14^th January 2008 and I thank them for their swift response given the limited time available to them.

The membership of the body corporate committee is disputed by some members of the body corporate and the body corporate manager following a motion at an extraordinary general meeting on 16^th December 2007. It is this committee, representing the body corporate, which brings this application. It recognises that whatever the issues between it and the body corporate manager, that bills must be paid. The urgent situation arises out of an exchange of letters, extracts of which are as follows –

Extract of letter dated 16^th December 2007 from the body corporate to the body corporate manager
“We now demand..... you do not make payments from the account of the Body Corporate, including monthly fees and other fees to Strata-Jem, without the express written approval of the Committee.”

Extract of letter dated 19^th December 2007 from the body corporate manager to the body corporate
“As there is now dispute over the validity of the Committee for Coronation Gardens, our situation is that we are not in a position to take directions from any member of the Body Corporate.”

The body corporate committee advises that it believes there is an unpaid gardener’s account due and payable at the end of December 2007; an electricity bill for the quarter ending December 2007; and that the insurance premium is due on 18^th March 2008. Since all mail is sent to the body corporate manager as the address for the body corporate, the committee is not sure of what else might be coming up. It has been refused access to records by the body corporate manager. Further, the body corporate manager’s fee would “normally have fallen due for payment on or about 25^th December.” Since the body corporate manager has advised that it will not accept instructions from the committee, the committee is of the view that the body corporate manager’s fees should “ be placed on hold.”

The body corporate manager denies that any member of the committee or the body corporate has been refused access to records. It does not recognise George Borg-Olivier (Mr Borg-Olivier) as chairperson and refers to a previously lodged application to this Office by Rosemary Smith (Ms Smith), owner of Lot 25 in the scheme, against the body corporate for an order that Motion 2 of the extraordinary general meeting (the EGM) of 16^th December 2007 (at which the present committee was purportedly elected) is held invalid, and that an administrator be appointed to the scheme.

The body corporate manager explains that it is of the view that the current committee was not properly elected/appointed at the EGM, and supports the former committee with the benefit of legal advice. It indicates that it wishes to end its agreement with the body corporate, and supports the appointment of an administrator. It foreshadows legal proceedings between it and Mr Borg-Olivier.

Importantly, it says that no creditors have been paid since their office reopened in January 2008. These include the gardener, Totally Green Lawns and Gardens, who as at 10^th January 2008 was owed $400 for four weeks of invoices each totalling $100.

The electricity bill is due in early February 2008. The insurance premium is not due until 18^th March 2008.

The body corporate manager’s fees are charged on 20^th of each month under the contract of engagement. It acknowledges that these fees are in dispute. There is a $561.00 monthly administration fee and $274 flat rate per month for P P and S (which I am taking to be post, telephone and stationery.) It believes that the fee charged for holding the EGM, an issue in this dispute, is under investigation by the DPP.

This is an application for an interim order and the final issues in dispute are not at this point being considered. The body corporate manager has addressed me quite fully on its views, giving a detailed background and its submission will be considered at the making of the final order as well as submissions from all those concerned in this application.

I appreciate that the body corporate manager is necessarily in a difficult position, having a contract with a body corporate which currently has “two masters” at the helm, each it appears giving conflicting instructions. Because of this, this application will be dealt with as expeditiously as possible.

Ms Smith’s application is 1024 - 2007 and is currently in the period where submissions are being sought from all lot owners. These two matters having similar issues, will be cross-referenced and considered together.

My primary consideration is that the services to the body corporate by external contractors are not disrupted and that creditors are paid. It may well be that further interim orders in this application may be necessary prior to the finalising of this dispute, if invoices arise to be paid.

I am aware that the body corporate manager may be seeking to terminate its contract with the body corporate and that might be achieved by agreement or otherwise. In the circumstances I order that the body corporate manager pay from body corporate funds the accounts of Totally Green Lawns and Gardens owed by the body corporate as at 10^th January 2008, and that subsequent accounts for services performed by Totally Green Lawns and Gardens are paid as and when they fall due whilst the body corporate manager’s contract remains extant. The body corporate manager must also pay from body corporate funds the body corporate electricity bill due in early February 2008, and the insurance premium due on 18^th March 2008, also such payments being during the term of its contract.

The body corporate manager may also deduct its monthly fee for January, in accordance with its contract, on 20^th January 2008.

I note the body corporate manager’s insistence that no member of the committee or the body corporate has been denied access to records. Any lot owner, whether on the committee or not, must have unfettered access to any body corporate record, (Section 205 Act, section 150 Standard Module) the ordinary courtesies being observed such as advising the holder of the record that the person wishes to inspect the records, and/or have copies of a record, and arranging a mutually convenient time for the inspection. A failure to allow an inspection after 7 days written notice and the requisite fee paid can result in a prosecution in the Magistrates Court. There is of course no need to give 7 days’ notice. The 7 days merely triggers the time after which the offence is committed.

Inspection of records is free for committee members. The fee payable by lot owners and other interested persons is $11.40. All parties must pay 50c for each page required to be copied. This is a payment to the body corporate funds and not to the management company. In the circumstances where there is dispute about membership of the committee, I will order that pending final order of the dispute, all persons currently purporting to be committee members need not pay a fee for inspection of records. The matter of fees payable by any person who has inspected records pending final order of this dispute may be addressed at final order submissions.

The only ground on which the body corporate might refuse access to a body corporate record is if it is believed by the body corporate to contain defamatory material; or a legal proceeding between the person trying to get access to the record and the body corporate has started or is threatened, and the record is privileged from disclosure, a two-pronged test. (Section 150(2) and 150(3) Standard Module.) The threatened or commenced legal action must involve the body corporate itself, and the person wanting to see the record, not the body corporate manager.

I hope that this may assist the parties in enabling inspection of body corporate records pending the termination of this dispute.

Submissions on the issues in dispute will now be sought from all interested parties, including all owners, with a return date of 2 weeks since application 1024-2007 sought submissions on largely the same issues. This will take us to about 2nd February 2008. The Applicant will then have the right of Reply which will take the matter to approximately 16th February. These matters sometimes extend if a party requests more time to make a submission, or if further information is requested by an adjudicator. It may be that by that time the matter of the body corporate manager’s fees for February (and perhaps other bills which need paying) may be a pressing issue. I invite both parties to advise this Office if either know of any invoices for payment which arise prior to the final determination of this application, and a subsequent interim order may be made.

I would appreciate in the submissions for final order if the terms of the body corporate manager’s contract, as to length of term, could be provided to me.

Number of Scheme:	24610
Name of Scheme:	Coronaton Gardens
Address of Scheme:	37 Paradise Springs Avenue ROBINA QLD 4226

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Coronaton Gardens [2008] QBCCMCmr 18 (17 January 2008)