Rainbow Village [2008] QBCCMCmr 313 (4 September 2008)

Number of Scheme:	21199
Name of Scheme:	Rainbow Village
Address of Scheme:	5 Palara Street ROCHEDALE SOUTH QLD 4123

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Marzieh Tayhan, a co-owner of Lot 43

I hereby order that the application for an order by Marzieh Tayhan, a co-owner of Lot 43 seeking an outcome Matthew Joosen of Prudential Body Corporate Management Pty Ltd be appointed as administrator, is dismissed.

The scheme
“Rainbow Village” community titles scheme 21199 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module).

Application
This application is by Marzieh Tayhan (Applicant) against the Body Corporate seeking an order that an administrator be appointed. The Applicant provided a letter dated 21 May 2008 from Matthew Joosen of Prudential Body Corporate Management Pty Ltd accepting the nomination for appointment as administrator.

Submissions to the Commissioner
The Commissioner provided a copy of the application to the secretary for distribution to the owner of each lot (excluding the Applicant), with an invitation to respond to the matters raised in the application (s 243, Act). The Commissioner extended the time for making written submissions.

Submissions have been made by 23 lot owners (including current committee members). Bennett Carroll Solicitors made submissions on behalf of the committee. John Moseley (previous owner) also made submissions (given the claims made by the Applicant, I have accepted Mr Moseley’s uninvited submissions).

Referral to adjudication
A dispute resolution recommendation has been made under section 248 of the Act referring the dispute to departmental adjudication.

Jurisdiction
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 exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act).

Decision
In making the application, the Applicant must provide the grounds on which the outcome is sought (s 239B, Act). The Applicant has detailed the following grounds to support the appointment of an administrator.

Male chairperson
The Applicant claims the committee ask for a male to be chairperson. The submissions from the committee and owners indicate that it has not been insisted that only a male person is elected as chairperson and that a female nominee for chairperson has not been denied the opportunity to be elected.

The committee is composed in the way stated in the applicable regulation module, which in this case is the Standard Module (s 99, Act). Generally, a person is eligible to be a voting member of the committee if the person is a lot owner or for example, a member of the owner’s family (s 10, Standard Module).

There is no capacity for a body corporate to deny an eligible person’s nomination for election to the committee on the basis of gender. It is not evident that this Body Corporate has done so. Significantly, the Applicant has not demonstrated that an eligible person has been ruled ineligible to be chosen as chairperson because of gender. For these reasons, I am not satisfied this ground constitutes a reason to make the order sought.

Executive committee members do not pay contributions
The Applicant says the chairperson, secretary and treasurer do not have to pay Body Corporate fees. She says it was decided approximately 10 years ago that these persons didn’t have to pay fees. The Applicant provided a letter dated 21 March 2007 from Jeff Bennett (chairperson) stating (in part) “About 10 years ago the unit owners agreed that the levies for both the sinking and administration funds due by the Chairman, Secretary and the Treasurer each year would not be collected in lieu of the work done in running the Body Corporate”.

It is apparent from submissions that it was decided some 10 years ago that Body Corporate contributions that would not be payable by the person/s elected to the positions of chairperson, secretary and treasurer of the committee. Only one owner who made submissions disagreed with this practice. The supporting owners say it is fair these members should not have to pay Body Corporate contributions given the work they do. Mr Moseley submitted these costs are included in the financial statements. Mr Moseley provided a copy of the income and expenditure statement for the administrative fund for the year ending 31 December 2007 showing $451.00 for ‘Executive Committee levies not payable’ deducted from the administrative levies receivable, and $1629.00 for ‘Executive Committee levies not payable’ deducted from the sinking levies receivable for the year. The committee submitted the executive members do not pay Body Corporate fees, there is no provision in the legislation that prevents exempting members, and the Body Corporate should be able to remunerate the executive for their work by releasing them from the obligation to pay fees in recognition of the work they have done.

A body corporate is created by the Act (s 30, Act) and its functions and powers are stated in the Act (s 94 and s 95, Act). It follows that a body corporate’s power to make decisions must be construed in the context of the Act. Section 150(1) of the Act provides the financial management arrangements applying to a scheme are stated in the applicable regulation module. The module may provide for levying lot owners for contributions (s 150(2)(b), Act). A body corporate must adopt an administrative fund and a sinking fund budget for each financial year (s 139, Standard Module). A body corporate must fix, on the basis of its budgets for a financial year, the contributions to be levied on the owner of each lot (s 141(1), Standard Module). If a liability arises for which no or inadequate provision is made in a budget, the body corporate must fix a special contribution to levied on the owner of each lot (s 141(2), Standard Module). The contributions levied on the owner of each lot must be proportionate to the contribution schedule lot entitlement of the lot (s 141(5), Standard Module). At least 30 days before the payment of a contribution is required, a body corporate must give the owner of each lot written notice of the contribution (s 142, Standard Module).

The owner of each lot included in the scheme is obliged to pay administrative fund and sinking fund contributions fixed by the Body Corporate to meet actual or expected liabilities incurred or to be incurred. Given the legislated powers of a body corporate and the prescribed financial management arrangements, there is no authority conferred on a body corporate to decide that a particular owner is not obliged to pay contributions. However, a body corporate is not prevented from paying remuneration, an allowance or expenses to a member of its committee. A decision to pay remuneration must be made by the body corporate in general meeting by ordinary resolution (s 43, Standard Module).

Body Corporate financial institution account
The Applicant states Body Corporate fees are deposited into John Moseley’s account and the Body Corporate does not have an account.

Section 146(4) of the Standard Module provides The administrative and sinking funds may be invested in the way a trustee may invest trust funds. Subsection (5) provides All amounts received by the body corporate for the credit of the administrative or sinking fund must be paid into 1 or more accounts kept solely in the name of the body corporate at a financial institution.

Given the submissions made, I am satisfied the Body Corporate maintains an account in its name in a financial institution and that owners can pay contributions for the administrative fund and the sinking fund directly into this account. The committee submitted the bank account is held by Mr Moseley as trustee for the Body Corporate. I am not sure that this arrangement is necessary given the legislative requirement that the account be held solely in the name of the body corporate. The name of the Body Corporate is ‘Body corporate for Rainbow Village community titles scheme 21199’ (s 33(1), Act). This issue may need to be reviewed by the Body Corporate, possibly in consultation with its financial institution.

The submissions also indicate that Mr Moseley holds relevant qualifications and his involvement in the management of the Body Corporate is considered by many owners to benefit the Body Corporate. Significantly, I am satisfied from the submissions that the Body Corporate provides financial statements to owners, gives receipts to owners for contributions paid and requires two signatories before any monies are paid.

In these circumstances, I consider it is clear the Body Corporate has some sound financial management practices in place and that the Applicant’s statements are unsubstantiated.

Voting papers
The Applicant says the end of year voting paper doesn’t get collected in the meeting.

The Applicant has not provided any material to prove this claim. Significantly, it has not been supported by submissions. Both the committee and John Moseley have submitted that voting papers presented to an annual general meeting are kept in the Body Corporate records.

Written voting papers are ‘associated general meeting material’ which may be disposed of 2 years after their creation or receipt (s 202 and s 203(4)(a), Standard Module). I have not been given any material that suggests the Body Corporate is not keeping voting papers in accordance with the Standard Module.

Audit
The Applicant has submitted that some owners have asked for the accounts to be audited but have been informed it costs a lot of money.

A body corporate must make a decision at each annual general meeting about auditing its financial statements for the forthcoming financial year (s 76(3)(a) and s 155, Standard Module). A statutory motion includes a motion about not auditing the accounts (Dictionary, Standard Module).

Jeffrey Bennett provided a copy of the minutes of the Annual General Meeting dated 18 February 2008 which indicates that it was resolved by special resolution that the “Accounts not be audited” (Motion 3). John Moseley submitted that a motion asking owners whether they want the financial statements audited is included in the annual general meeting resolutions and every year owners have voted not to appoint an auditor. The committee submitted the Body Corporate has passed a resolution that its accounts not be audited.

The Applicant has not disputed the 2008 AGM or this particular resolution. The fact that an owner or some owners may ask for an audit which is not supported by resolution of a body corporate is not a reason to make an order of the nature being sought. A body corporate is entitled to decide not to audit its accounts. The Applicant has not provided any detailed analysis of the financial position or performance of the Body Corporate to support a view that an audit should be conducted or that the appointment of an administrator would remedy an existing financial problem.

Car stoppers
The Applicant claims when her husband was chairperson he arranged some car stoppers to be installed, but John Moseley cancelled the installation without informing the chairperson. Submissions provide a contrary view on the events that occurred in relation to the installation of car stoppers.

I do not consider the Applicant has provided any argument to indicate that further investigation or consideration is warranted with respect to this issue for the purposes of determining this application.

Access to records
The Applicant provided a copy of a letter dated 21 March 2007 from Jeff Bennett (chairman) stating (in part) “...under the Privacy Legislation we are not at liberty to provide you with contact details for all owners in the Village”.

Section 205 of the Act provides that a body corporate must, on the receipt of a proper request from a person, give the person a copy of a record kept by the body corporate. Section 204 of the Act provides that a body corporate must keep rolls, registers and other documents as provided in the Standard Module. The roll of lots and entitlements kept under section 196 of the Standard Module is one such document required to be kept by a body corporate. The roll contains (amongst other information) the name and address of the owner of each lot. The supply of the roll being subject to privacy legislation has been subject to a number of dispute resolution applications under the Act[1]. It has been consistently held by adjudicators that the provisions under the Act are applicable despite the Privacy Act 1988 (Cwth). Principle 2.1(g) of the National Privacy Principles contained in the Privacy Act states An organisation must not use or disclose personal information about an individual for a purpose other than the primary purpose of collection unless the use or disclosure is required or authorised by law. As the disclosure of the roll of lots and entitlements is required or authorised by the Act, the Privacy Act cannot be relied upon as a reason for refusing to provide a copy of the body corporate roll of lots and entitlements.

In its submissions, the committee stated it acted under a misunderstanding of the law which respect to access to Body Corporate records and that it accepts that each member of the Body Corporate is entitled to access and should a compliant request be made by the Applicant, the request will be answered.

I am satisfied from the above submissions that the committee recognises that the Applicant, as a lot owner, is entitled under the Act to access to Body Corporate records. The committee says it will act on a complaint request and there is no suggestion that the Applicant has made such a request. If the Applicant does make a proper request and is still denied access to a Body Corporate record, the Applicant may choose to seek to resolve any resulting dispute under the Act. However, the earlier oversight by the Body Corporate does not warrant the making of the present outcome being sought.

Administration
The appointment of an administrator to perform the obligations (some or all) of the Body Corporate or its committee can be a significant imposition on a body corporate. An application proposing such an appointment may be successful where for example, it is clear and indisputable that the affairs of the body corporate have deteriorated to the extent that it is highly likely that there will continual fundamental breaches of the legislation to the detriment of the lot owners, or that circumstances indicate that there has been repeated and unjustifiable disregard for the legislation. These circumstances are not apparent in this scheme at this time.

The two issues which the Applicant did raise which demonstrate non-compliance with the legislation — the non-payment of contributions by some owners and the denial of access to Body Corporate records — do not indicate there are widespread Body Corporate management problems which would necessitate forcing the management of the Body Corporate into administration at the cost of owners.

The committee has already acknowledged that it was mistaken with respect to denying an owner access to the Body Corporate roll. I do not consider any further consideration of this issue is necessary at this time. As I indicated earlier, access to records could become an issue if a proper request is made and there is not a good reason for the denial.

I do not agree with the committee’s submissions about the non-payment of contributions by some owners. However, a body corporate can resolve to pay remuneration to a committee member and it is apparent from submissions that many owners would support such a proposal. In addition, I am satisfied that the non-payments have (at least in recent times and before the application was made) been disclosed to owners. The current executive committee members who are lot owners must pay the contributions fixed by the Body Corporate. If the Body Corporate considers a committee member should be remunerated, the Body Corporate will need to pass an ordinary resolution to this effect. I do not consider an order is necessary to ensure the Body Corporate complies with the legislation. It is sufficient to say at this point that if the Body Corporate does not remedy this matter as soon as practicable, its inaction may be reason to consider a further dispute resolution application, including one seeking a similar outcome as sought by this application.

Self-management is an objective of this legislation (s 4, Act). Where there are willing owners who have the support of the majority of owners and who appear to be determined to comply with the legislation, opportunity should be given to allow and encourage the continued self-management of the Body Corporate. The Body Corporate may have a few issues to remedy, but there is nothing to suggest, given the arguments presented by the Applicant, that it has intentionally and continually acted in a manner which is contrary to the legislation or that for example, the way it has acted has been for the detriment of an owner/s or to the deliberate benefit of another owner/s.

In conclusion, I am not satisfied from the grounds submitted by the Applicant that there currently exists any basis for making an order in the terms sought. For these reasons, I have dismissed the application.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Rainbow Village [2008] QBCCMCmr 313 (4 September 2008)