Nobby Mews [2008] QBCCMCmr 468 (16 December 2008)

Last Updated: 7 January 2009

REFERENCE: 0970-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	18037
Name of Scheme:	Nobby Mews
Address of Scheme:	29 Nobby Parade MIAMI QLD 4220

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Hilton Redding and John Fradgley, representing the owner of Lot 2

I hereby order that within seven days of the date of this order, Robert and Laurette Burdett, the owner of Lot 1 on Building Units Plan 100674 must pay $204.03 to Hilton Redding and John Fradgley, representing the owner of Lot 2. This amount is half the premium paid for insurance cover from 9 July 2008 to 8 January 2009 that is required by the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Standard Module) Regulation 2008 to be held by the body corporate for Nobby Mews community titles scheme 18037. I further order that Robert and Laurette Burdett, the owner of Lot 1 must contribute in the way stated in the Standard Module to each insurance policy held for 12 months beginning on or about 8 January 2009 by the body corporate for Nobby Mews community titles scheme 18037 in accordance with the Act and the Standard Module.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0970-2008

“Nobby Mews” CTS 18037

The scheme
“Nobby Mews” community titles scheme 18037 is comprised of two lots and 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 Hilton Redding and John Fradgley, representing the owner of Lot 2 (Applicants) against Robert and Laurette Burdett, the owner of Lot 1 (Respondents).

The Applicants seek the following outcomes:

1. That the Respondents pay to the Applicants the amount of $204.03 representing half of the premium for insurance cover up to and including 8 January 2009.
2. An assurance that the Respondents agree to contribute half of the insurance premium when the insurance renewal arises.
   

The Applicants submitted:

• They had an arrangement with the previous owner of Lot 1 that each year when the insurance had to be renewed, the owners would each contribute half of the yearly premium.
• The cost of the premium for the 2008-2009 year was $816.07. The Applicants provided a copy of an Insurance Renewal statement from Suncorp totalling $816.07 with “The Insured” being “The Body Corp Nobby Mews Community Titles Sc” for a policy expiring on 9 July 2009.
• That the Respondents purchased Lot 1 in July 2008.
• On 11 July 2008, Bell Legal Group (BLG) on behalf of the owner of Lot 2 wrote to the Respondents at 1/29 Nobby Parade, Miami stating that building insurance is paid by the owners and enclosing a copy of the tax invoice from Suncorp Insurance. Payment of $408.00 was sought for half of the premium. The Applicants included a copy of an invoice from Suncorp addressed to “The Proprietors Nobby Mews” totalling $408.00 and stating a payment due date of 6 August 2008 for a policy to 9 July 2009 (the words “by the Burdetts” have been handwritten beside and after “Total amount payable”). The Applicants say there was no response to this letter.
• That as the insurance was about to expire as a result of the non-payment by the Respondents, the payment of $408.07 was made to Suncorp by the Applicants for a six month policy. The Applicants provided a copy of a Cheque Requisition Trust form, a BLG Trust Account Cheque butt, a BLG Trust account statement, and a BLG banking statement to evidence the payment. The Applicants also provided a copy of a general ledger receipt from Suncorp showing payment of $408.07 on 11 July 2008. The Applicants say the premium is for insurance covering both lots. They provided a copy of a Certificate of Insurance from Suncorp for “Body Corporate Nobby Mews Community Titles Scheme 18037” for strata title building cover is for the period 9 July 2008 to 8 January 2009.
• That BLG wrote to the Respondents on 28 August 2008 at the same address as above referring to the previous correspondence, noting that the requested payment has not been made, stating that body corporate insurance is not optional and awaiting their immediate response. The Applicants have shown that the letter was returned “Unclaimed”.
• That BLG wrote to the Respondents on 8 September 2008 at the same address as above referring to the previous correspondence, noting that a response has not been received, stating that the requested payment has not been made and insurance must be held under the terms of their mortgage, and requesting payment of their share of the building insurance. The Applicants have shown that the letter was returned “Left Address/Unknown”.
• That BLG wrote to the Commonwealth Bank of Australia (mortgagee for Lot 1) on 15 September 2008 and 10 October 2008 about the Respondents non-payment of their share of the building insurance. The Applicants say that on 20 October 2008, Michelle from the Beenleigh branch of the Commonwealth Bank of Australia called advising that she had attempted to contact the new owners without success.
• That insurance policy expires on 8 January 2009 and if there is no contribution to insurance both owners will be in a position where their properties will be uninsured and the public liability insurance policy will be at risk.
  

Referral to adjudication
Section 243A of the Act provides the commissioner may immediately refer an application to an adjudicator — without giving written notice of the application under section 243 — if the commissioner reasonably considers an application should be immediately referred because it relates to emergency circumstances and it is not appropriate to deal with the application under section 247 of the Act (section 247 relates to an application for an interim order).

Determination

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

Investigation
The investigative powers of an adjudicator are stated in section 271 of the Act.

The Applicants detailed the steps they have taken to contact the Respondents. The Applicants have clearly been unsuccessful in making contact. For this reason, I authorised a member of the Commissioner’s office to search the White Pages directory for contact details of the Respondents. This search proved unsuccessful. On 4 December 2008, I wrote to the Respondents at 1/29 Nobby Parade, Miami inviting written submissions from them regarding the application by 11 December 2008. The Respondents did not respond to the invitation. The letter to the Respondents was not returned.

Decision
The scheme
The “Nobby Mews” Body Corporate was created when the registrar of titles registered Building Units Plan 100674 on 7 September 1994 under the then applicable Building Units and Group Titles Act 1980. The plan shows the two lots in a building that is surrounded by common property. On 31 October 1994, the registrar recorded two new by-laws, including an exclusive use by-law allocating a significant part of the common property for the exclusive use of the proprietor of each lot.

When the current Act commenced on 13 July 1997, a community titles scheme was established for “Nobby Mews” and the building units plan was taken to be a building format plan of subdivision (s 330 and s 331, Act). The new scheme was taken to have a community management statement (s 337 and s 339, Act). This statement includes information about the scheme including the name of the applicable regulation module, the lot entitlements and the by-laws. The statement currently applying to the scheme indicates that each lot has a contribution schedule lot entitlement of 1 and an interest schedule lot entitlement of 1.

The Body Corporate
The Body Corporate consists of the two lot owners (s 31, Act). The primary purpose of a body corporate is to administer the common property which is the part of scheme land not within a lot and which is owned by the lot owners as tenants in common (s 35, Act).

A body corporate must administer common property for the benefit of the owners and must carry out other functions given to it under the Act (s 94(1), Act). A body corporate has all the powers necessary for carrying out its functions (s 95(1), Act).

Insurance
The regulation module may require the body corporate to put in place insurance for the scheme (s 189(1), Act).

The body corporate must insure, for full replacement value — the common property and body corporate assets (s 178, Standard Module). If one or more lots in the scheme are created under a building format plan of subdivision — the body corporate must insure, for full replacement value, each building in which is located a lot (s 179, Standard Module). The body corporate must maintain public risk insurance of the common property and assets for which it is practicable to maintain public risk insurance (s 187, Standard Module).

For reinstatement insurance, the owner of each lot is liable to pay a contribution levied by the body corporate that is a proportionate amount of the premium for the insurance that reflects the interest schedule lot entitlement of the lot (s 182(1), Standard Module). The premium paid for insurance may be affected by the standard of fixtures and fittings in a lot, improvements made to common property that benefit a lot, or the use of a lot (s 182(2), Standard Module).

Conclusion
Clearly, the “Nobby Mews” Body Corporate (the two owners) must hold insurance of the nature to which I have referred to above. Based on the information provided and the information stated in the community management statement, it would seem the owners contribute equally to the insurance premium. Taking out and maintaining this insurance is not optional and is not affected by the exclusive use by-law.

It is also not affected by absence of proper administrative processes. It would seem the Body Corporate is not being administered in accordance with the legislation. If it was, an allowance for the cost of insurance would be made in the administrative fund budget for each financial year to be adopted by the Body Corporate at each annual general meeting (s 139, Standard Module). Owners would, at each annual general meeting, vote to fix a contribution paid by them to the Body Corporate on the basis of the adopted budget (s 141, Standard Module). A contribution not paid by the due date for payment may be recovered by the Body Corporate as a debt (s 145, Standard Module). I do not consider the fact that the insurance for the six month period or any continuation of insurance cover for the next 12 months may not have been or be approved in accordance with the legislation, or that an allowance for the cost of insurance may not have been properly budgeted should influence the ability of the Applicants to have this dispute with the Respondents resolved.

There are two owners in the Body Corporate; one owner has sought to maintain Body Corporate insurance cover; and has demonstrated that repeated and unsuccessful attempts have been made to involve the other owner. The investigations I have conducted have failed to elicit a response from the Respondents. This office unsuccessfully attempted to contact the Respondents, who did not respond to my invitation to make submissions regarding the application.

I am satisfied from the submissions made by the Applicants that the Body Corporate’s insurance policy with Suncorp expired on or about 9 July 2008; that the Applicants were unsuccessful in contacting the Respondents; that the Respondents did not contribute to the continuation of the insurance; that the Applicants paid the insurance premium on behalf of the Body Corporate for six months coverage; and that this policy ends on 8 January 2009. I am also satisfied from the Applicants’ submissions and from the information held by the registrar of titles that the Respondents owned Lot 1 when the six month insurance policy commenced. There is no information provided to suggest that there would be any reason to dispute the insurance cover instigated by the Applicants. In my view, the Respondents have an obligation to contribute to the cost of insurance for this period. The Applicants have shown that they have acted reasonably in taking out insurance required by the legislation. In my view, the Applicants should be reimbursed by the Respondents proportionate to the interest schedule lot entitlement.

There is no suggestion that the contribution payable by a lot owner should be adjusted due to the factors stated in section 182(2) of the Standard Module. For these reasons, I have ordered that the Respondents pay the Applicants half of the premium for the six month policy.

The Applicants cannot continue to pay for insurance that the Body Corporate is obliged to hold under the legislation. I am satisfied that if the Applicants do not pay the premium that is due now or in the near future, it is likely the Body Corporate insurance policy will not be maintained. Clearly, this outcome is unacceptable. The Applicants have sought orders against the Respondents, who as the owner of a lot in the scheme must contribute to the cost of insurance required by the legislation to be held by the Body Corporate. In these circumstances, I am satisfied it is appropriate to order the Respondents contribute to the premium for insurance for 12 months from early January 2009 based on the requirements of the Standard Module.