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Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

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Sunbird [2008] QBCCMCmr 52 (15 February 2008)

Last Updated: 17 April 2008

REFERENCE: 0712-2007


ORDER OF AN ADJUDICATOR


MADE UNDER PART 9 OF CHAPTER 6


BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997


Number of Scheme:
931
Name of Scheme:
Sunbird
Address of Scheme:
109 Reid Road WONGALING BEACH QLD 4852

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

P Saraswati, the Owner of lot 3


I hereby declare that the last Annual General Meeting was properly called and held on 22 June 2007;

I further declare that as the applicant had not paid all levies due as at the date of the last AGM he was not entitled to vote at that meeting;

I further declare that as the owners of lots 1 & 2 purchased the clothes dryer without first seeking the approval of the body corporate in general meeting, the clothes dryer belongs to the owners of lots 1 & 2 and the applicant is not required to contribute to the cost of purchasing the clothes dryer;

I hereby order that Ms. Jessie Richardson of Body Corporate Services shall continue to be the administrator for the scheme until the expiration of her appointment, resignation or removal by order of an adjudicator;

I further order that the applicant is entitled to engage a licensed plumber to disengage his connection to the communal hot water system and install a hot water system within lot 3;

I further order that as the small hot water system is located on common property, the applicant is to ensure that the agenda for the next General Meeting includes a motion that he be entitled to keep this improvement on common property;

I further order that if such approval for the small hot water system is not obtained at the next General Meeting in accordance with Section 114 of the Standard Module, the small hot water system is to be removed within 30 days of the date of the meeting.


STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0712-2007


“Sunbird” CTS 931


APPLICATION


Sunbird Community Title Scheme (Sunbird) is a 3 lot scheme regulated by the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Standard Module) Regulation (Standard Module). The scheme is designed for residential purposes and Lot boundaries are designated under a building units plan (now known as a building format plan).


The applicant is the owner of lot 3 and seeks the following Final Outcomes:

The applicant also previously sought Interim Orders that pending the outcome of the Final application, the current administrator, cease:

On 14 September 2007 I made certain interim orders including the following:


BACKGROUND


As the parties would be aware this scheme was previously the subject of a dispute resolution application submitted by the owner of lot 1 in December 2006 resulting in the appointment of a professional body corporate manager, Ms. Richardson of Body Corporate Services. However, the applicant states that as previously, the other lot owners are not interested in day to day management and maintenance of the scheme. He further states that although Ms. Richardson of Body Corporate Services was appointed as administrator for a 12 month period to ensure that body corporate records are up to date, and that he handed over all records without delay, it was not until June that a meeting was held, budgets approved and levies were set.
He states that the existing by-laws are deficient and not sufficiently detailed for operation of the scheme. For example there are no by-laws regarding operation of a shared laundry, washing machine & clothes dryer, and it was only recently that a separate electricity connection was installed for the laundry.


The applicant states that the first levy notice received by him from BCS was dated 10 July 2007 and contains a number of ambiguities via:

The applicant also seeks to have the 2007 AGM declared invalid on the following grounds:

Other matters of concern raised by the applicant include the following:

Pursuant to section 243 of the Act submissions were sought from all lot owners as well as the body corporate manager.


The body corporate manager advised that following a previous dispute within the scheme she was appointed body corporate manager and upon appointment undertook an inspection of the scheme and discussed various matters with other lot owners. She made the following observations:

Although he was entitled to write a cheque at the meeting, it would take 5 days to clear the cheque and therefore it was not possible for him to be “financial” as at the date of the meeting;

The owner of lot 2 made the following submissions:

The owner of lot 1 made the following submissions:

JURISDICTION

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
(c) a claimed or anticipated contractual matter about-
(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)).

DETERMINATION

I have now had an opportunity to review in detail the material accompanying the application, submissions and accompanying material for the purposes of deciding what final orders may be appropriate. As the parties would be aware, to maintain the status quo pending final orders, on 14 September 2007 I made the following interim orders:


I am now concerned with the applicant’s request for the following Final Outcomes:

In summary, the applicant makes the following claims:

On the other hand, the body corporate manager and owners of lots 1 and 2 argue that:


The circumstances of this dispute are unusual and present a challenge to me as an adjudicator seeking to achieve some form of resolution which is just and equitable to all the parties.
As I have previously stated, the management of even a small body corporate can be an onerous task given the complexity of the applicable legislation. The task is all the more difficult when lot owners live away from the scheme. Given the difficulties previously encountered within this scheme, I do not propose to overturn my previous order that an administrator be appointed. While I appreciate that there are certain costs involved in having a professional body corporate manager, the reality is that the parties have not demonstrated that they can co-operatively self manage the scheme at this point in time. However, as the parties would be aware, the appointment of an administrator was a temporary measure implemented for the purposes of ensuring that systems and procedures are put in place to ensure that the body corporate complies with the Act and Standard Regulation Module. It is hoped that after the administrator’s 12 month tenure expires the body corporate may be able to manage its own affairs, perhaps with the assistance of a body corporate manager.


The next matter for my consideration is the validity of the AGM held on 22 June 2007. Having reviewed the submissions and documentary evidence supplied by the parties, I believe that a valid agenda was distributed and adequate notice of the meeting was given. From my position it is difficult to ascertain whether or not the applicant received his levy notice prior to the meeting. The body corporate manager contends that the notice was posted along with other notices and the other lot owners have confirmed that they received their levy notices.


Other lot owners have pointed out that all owners are aware that levies are due to be paid in March and September each year and it is the applicant’s responsibility to ensure that body corporate fees are paid before the meeting. Further, I note that the applicant previously attended to management of the body corporate’s affairs and would therefore be aware that levies need to be paid on a regular basis to meet the costs of operating the body corporate.


In relation to the denial of voting rights I advise that Subsection 49A (2) of the Standard Regulation Module titled “Displacement or disentitlement of right to vote” provides as follows:

A person does not have the right to exercise a vote for a particular lot on a motion (other than a motion for which a resolution without dissent is required), or for choosing a member of the committee, if the owner of the lot owes a body corporate debt at the time of the meeting.

The Dictionary located at the back of the Standard Regulation Module defines a body corporate debt owed by a lot owner to the body corporate in the following terms-

(a) a contribution or instalment of a contribution;
(b) a penalty for not paying a contribution or instalment of a contribution by the date for payment;
(c) another amount associated with the ownership of a lot.
Examples of another amount for paragraph (c)—
• an annual payment for parking under an exclusive use by-law
• an amount owing to the body corporate for lawn mowing services arranged by the body corporate on behalf of the lot owner


In my view the applicant’s levies were in arrears as at the date of the AGM and the applicant would have been aware, or should have been aware of this.


The next matter for consideration is the requirement for the applicant to contribute to the costs of a new dryer and operating a laundry area which is used exclusively by the other 2 lot owners. Unfortunately problems of this nature arise frequently in schemes such as Sunbird, involving creation of numerous titles over areas of an existing building and it can be challenging for an adjudicator to find a solution which is just and equitable to all the parties.


I note that the owners of lots 1 & 2 decided to purchase a new clothes dryer after the dryer previously installed in the laundry malfunctioned. It is my understanding that the owners of lots 1 & 2 then decided to deduct the amount from their levy payments. I do not believe it is appropriate for lot owners to purchase property on behalf of the body corporate without first seeking approval of the body corporate in general meeting [1] or failing that, seeking approval by an adjudicator. I am therefore of the view that the clothes dryer is the personal property of the respective owners of lots 1 & 2 and that they are not entitled to deduct the purchase price from their body corporate fees.


The next matter for consideration is the installation of a hot water system in the applicant’s lot. I see no reason why the applicant should not be able to install a hot water system within his lot and disconnect the communal hot water system from his lot.


In my view such an arrangement is contemplated by the Body Corporate and Community Management (Standard Module) Regulation, and particularly section 119 of the Regulation Module which provides as follows:


119 Supply of services by body corporate
(1) The body corporate may supply, or engage another person to supply, utility services and other services for the benefit of owners and occupiers of lots, if the services consist of 1 or
more of the following—
(a) maintenance services, which may include cleaning, repairing, painting, pest prevention or extermination or mowing;
(b) communication services, which may include the installation and supply of telephone, intercom, computer data or television;
(c) domestic services, which may include electricity, gas, water, garbage removal, airconditioning or heating.
(2) The body corporate may, by agreement with a person for whom services are supplied, charge for the services (including for the installation of, and the maintenance and other operating costs associated with, utility infrastructure for the services), but only to the extent necessary for reimbursing the body corporate for supplying the services.
(3) In acting under subsections (1) and (2), the body corporate must, to the greatest practicable extent, ensure the total cost to the body corporate ...for supplying a service, including the cost of a commercial service, and the cost of purchasing, operating, maintaining and replacing any equipment, is recovered from the users of the service.


I would also point out that section 115O(1) of the Land Title Act 1994 makes provision for easements in favour of lots for utility services and utility infrastructure in the following terms:
(1) An easement exists in favour of a lot and against other lots and common property for supplying utility services to the lot and establishing and maintaining utility infrastructure reasonably necessary for supplying the utility services.

I therefore propose to order that the applicant is entitled to engage a licensed plumber to disengage the communal hot water system connection to lot 3 and install a new hot water system within lot 3. The cost to the body corporate of supplying hot water to lots 1 and 2 would then be recoverable by the body corporate from the owners of lots 1 & 2.


At this point in time I do not propose to make any further orders in relation to any other costs incurred in relation to use or maintenance of the laundry area. This is because the area is common property and not being the subject of an exclusive use by-law, the body corporate is responsible for the maintenance of this area. I would however encourage the parties to come to some form of arrangement themselves regarding any other costs associated with the laundry so that current conflict within the scheme can be resolved .


The next matter for consideration is the question of whether the applicant is entitled to keep another hot water system in the area previously used as a BBQ area. I have examined the relevant plan for this scheme and believe that the area in question is part of the common property. Further, I have not been provided with, nor have I been able to locate elsewhere, any evidence that this area is subject to an exclusive use by-law for the benefit of lot 3.


The making of improvements (such as a hot water system which services one lot only) on common property by a lot owner are regulated by Section 114 of the Standard Module which provides as follows:

114 Improvements to common property by lot owner
(1) The body corporate may, if asked by the owner of a lot, authorise the
owner to make an improvement to the common property for the benefit of the
owner’s lot.
(2) The improvement must be authorised by special resolution of the body
corporate unless—
(a) the improvement is a minor improvement; and
(b) the improvement does not detract from the appearance of any lot
included in, or common property for, the scheme; and
(c) the body corporate is satisfied that use and enjoyment of the
authorised improvement is not likely to promote a breach of the owner’s
duties as an occupier.
(3) An authorisation may be given under this section on conditions the
body corporate considers appropriate.
(4) The owner of a lot who is given an authority under this section42—
(a) must comply with conditions of the authority; and
(b) must maintain the improvement made under the authority in good
condition, unless excused by the body corporate.

I would therefore suggest that should the applicant wish to retain the small hot water system in the BBQ area, he should seek body corporate approval. In deciding whether to grant such approval the body corporate should have regard to section 94 of the Act to act reasonably in carrying out their functions. Section 94 of the Act provides as follows:

Body Corporate’s General Functions
(1) The body corporate for a community titles scheme must—
(a) administer the common property and body corporate assets for the benefit of the owners of the lots included in the scheme; and
(b) enforce the community management statement (including any by-laws for the scheme); and
(c) carry out the other functions given to the body corporate under this Act and the community management statement.
(2) The body corporate must act reasonably in anything it does under subsection (1).

To sum up I propose to make the following orders:


[1] Section 103 Standard Module Regulation


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