Alice Place [2008] QBCCMCmr 53 (18 February 2008)

Last Updated: 17 April 2008

REFERENCE: 0799-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	20456
Name of Scheme:	Alice Place
Address of Scheme:	132 Bryants Road SHAILER PARK QLD 4128

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

John Johannas De Ruyter & Linda Anne Harvey, the owners of lot 4

I hereby order that Carol Robinson, of Strata and Body Corporate Services, Suite 14 Glenham Plaza, 17 Karp Court, Bundall Q 4217 is appointed as Administrator to call, hold, and chair a general meeting (the meeting) of the Alice Place Body Corporate in accordance with this order and within 3 months of the date of this order for the purpose of the consideration of motions included on the agenda of the meeting and deciding committee member positions. The administrator shall hold the appointment for the period beginning on the date of this order until the close of the meeting ordered to be held. I further order that for the purposes of the Body Corporate and Community Management Act 1997 (the Act), the meeting shall be deemed to be an annual general meeting of the body corporate. I further order that the Administrator shall issue a notice of the meeting in accordance with sections 42(1), (2) and (3) of the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) and except as provided in this order, the meeting must be called and held in accordance with the Act and the Standard Module. I further order that for the purposes of calling and chairing the meeting, the Administrator shall have all the powers of chairperson, secretary and treasurer of the Body Corporate and of the committee, with the exception of the following powers- To further delegate any of those powers to another person; and To incur any expenditure other than that reasonably necessary for the calling and holding of the meeting, and expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the legislation. I further order that all owners, shall, within 7 days of the date of this order, deliver all books and records of the body corporate in their possession to the Administrator. I further order that the administrator is entitled to payment of $120 per hour for performance of administrative duties as reasonably necessary pursuant to this order, with any costs for printing, postage and stationery at the rates shown in the Administration Agreement previously forwarded to owners. This is provided that the administrator provides the body corporate with an invoice itemising work performed in fifteen minute units. I further order that, in all other respects, the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0799-2007

“Alice Place” CTS 20456

Application

This application is brought by the owners of lot 4, Linda Anne Harvey and John Johannas De Ruyter (the applicants) against the Alice Place body corporate (the body corporate), seeking an order that an administrator be appointed immediately due to the fact that the body corporate has no functioning committee.

Jurisdiction

“Alice Place” Community Titles Scheme 20456 was registered as a group title plan (now known as standard format plan) of subdivision on 22 November 1990 comprising five lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module).

This is a dispute between the owners of one lot and the body corporate concerning alleged contraventions of the legislation and comes within the dispute resolution provisions of the Act (see ss.226, 226 & 228).

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)).

Submissions

Submissions in response to the application were sought from all owners. Two submissions were received, one from the former secretary/treasurer, Mr Ryan Russell and one from the former chairperson, Ms Kerry Watson. The applicants did not exercise their right to inspect the submissions, nor reply to them.

Material submitted in response to the application reveals the following:

• There is a long-running parking dispute within the complex which appears to have created conflict amongst owners. This dispute was the subject of adjudication application 0797-2007, which was determined by an Adjudicator’s order on 30 January 2008.
• The committee was making a sincere attempt to run the body corporate, however, felt their every move was thwarted by the applicants.
• The secretary/treasurer (Mr Ryan Russell) and chairperson (Mrs Kerry Watson) resigned in writing from their positions on the committee on 11 September 2007. The only remaining committee member, Briana Fullarton, resigned in writing from her position on 26 September 2007.
• An extraordinary general meeting (EGM) was called for 22 September 2007. Notice of the Meeting, dated 10 September 2007, was distributed to all owners and included an agenda.
• Although the meeting did not go ahead, three voting papers were received. Each voting paper recorded “yes” votes for each of the three motions on the agenda. The three motions were as follows:
  • Vote to put the Affairs of Alice Place Body Corporate to an outside Management Team.
  • Suggest 3 quotes be obtained.
  • All owners to be supplied with copy of quotes received verbal acceptance of one will suffice by majority of owners.
• Mr Ryan Russell sent a letter, dated 18 October 2007, to each owner including three quotes for outside body corporate management, along with a voting paper that enabled each owner to nominate their preferred body corporate manager. Completed voting papers were to be returned to Mr Russell by 26 October 2007. Three completed voting papers were returned, each nominating Strata & Body Corporate Services as the preferred choice of body corporate manager.
• Insurance on the building has been renewed by Mr Russell and Ms Watson.
• All body corporate records and financial matters are at Ms Watson’s residence under lock and key.
  

Determination

At the outset, I wish to point out that an order appointing an administrator for a scheme is not made lightly. Generally, to be successful in an application for the appointment of an administrator, an applicant must demonstrate that the day-to-day administration of the body corporate has broken down irretrievably, and/or that the affairs of the body corporate are in such disarray as to warrant the appointment of an administrator. One of the secondary objects of the Act is “to balance the rights of individuals with the responsibility of self management as an inherent aspect of community titles schemes”. In my view the right of a body corporate to administer its own affairs should therefore only be disrupted in very serious circumstances.

The body corporate appears to me, to be functioning in substantial compliance with the legislation, with the exception of having an elected committee. It has been held that the very detailed provisions of the regulations make it almost inevitable that from time to time there will be non-compliance. Equally though the provisions of the Act make it clear that non-compliance of an insubstantial nature will not be allowed to imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken bone fide.[1] In this case, I am in no doubt that the actions of the former executive committee, at least in so far as appointing body corporate managers, were bona fide and for the benefit of owners.

While I acknowledge that there is currently no elected committee, that relations between the former executive committee members and the applicants appear to have soured and that there is some evidence of non-compliance with the legislation, it appears that the body corporate is continuing, for the most part, to meet its legislative obligations, financially and administratively. It maintains insurance and has sought to appoint a body corporate manager to take over the administration of the scheme. Until recently, it appears as though committee and general meetings were held regularly. It appears to me as though the former committee was genuinely attempting to fulfil the body corporate’s legislative obligations under the Act to administer the body corporate reasonably and for the benefit of owners. [2] The fact that there is currently no functioning committee is of greatest concern to me. But for this fact, I would not have been minded to appoint an administrator. However, with all committee members having resigned, the only option I have is to appoint an administrator just to get the body corporate back on a proper legal footing, primarily by electing a committee at a properly convened general meeting.

I am reluctant, however, to appoint the applicant’s preferred appointee for the following reasons.

I am of the view that the correspondence dated 10 September 2007 and 18 October 2007, sent by Mr Russell to all owners with replies being received from the owners of lots 2, 3 and 5, while not strictly complying with legislative procedure for convening an EGM, was sufficient to demonstrate the following:

• The majority of the body corporate are desirous of engaging a professional body corporate manager to handle the administration of the scheme;
• After being presented with three alternatives for this purpose, the majority of the body corporate chose to engage Strata and Body Corporate Services.
  

I do not consider it just and equitable to appoint the applicant’s preferred appointee when the clearly expressed wishes of three of the five owners are for a different firm to be appointed, albeit as body corporate manager, rather than administrator. After being contacted by this office, Ms Robinson has confirmed in writing that she is willing to act as Administrator for the scheme, at a cost of $120 per hour with any costs for printing, postage and stationery at the rates shown in the Administration Agreement previously forwarded to owners by Mr Russell.

While there may be majority support for the appointment of a body corporate manager, I am not satisfied that this extends to the appointment of an administrator. I have appointed an administrator only because there is no functioning committee and only to convene one general meeting to get the body corporate back on a proper legal footing. The decision to appoint a body corporate manager is one that should be made by the owners in general meeting. Based on the responses received to Mr Russell’s letters of 10 September 2007 and 18 October 2007 which were provided with Ms Watson’s submission, I am satisfied that it was the intention of the body corporate to engage Strata and Body Corporate Services as body corporate manager for the scheme. This, however, is an issue that can be voted on at the properly convened general meeting that this order requires.

I have therefore made an order appointing Strata and Body Corporate Services as administrator to convene a general meeting of the body corporate to elect a committee and get the body corporate back on track administratively in compliance with legislation.

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[1] Wei-Xin Chen v Body corporate for Wishart Village [2001] District Court (Brisbane) 4080 of 2000
[2] See ss.94 & 152