Surfers Fairways East [2008] QBCCMCmr 64 (22 February 2008)

Last Updated: 17 April 2008

REFERENCE: 0896-2007

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	11418
Name of Scheme:	Surfers Fairways East
Address of Scheme:	Fairways Drive CLEAR ISLAND WATERS QLD 4228

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

John Demetrius Konstas, the owner of lot 7

I hereby order that the application for a declaration in the following terms: “It is declared that the community management statement for Surfers Fairways East Community Titles Scheme 11418 identifying the Body Corporate and Community Management (Standard Module) Regulation 1997 as the regulation module applying to the scheme recorded by the registrar of titles on 11 October 2006 under dealing number 710007645 is of no effect and that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 has applied to the scheme since 23 August 1999. It is further ordered that within one month of the date of this order, the body corporate for Surfers Fairways East Community Titles Scheme 11418 must lodge a request to record a New Community Management Statement for the scheme to identify the Accommodation Module as the regulation module applying to the scheme.” is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0896-2007

“Surfers Fairways East” CTS 11418

Application

This application is brought by the owner of lot 7, John Demetrius Konstas, against the body corporate, seeking a declaration in the following terms:

It is declared that the community management statement for Surfers Fairways East Community Titles Scheme 11418 identifying the Body Corporate and Community Management (Standard Module) Regulation 1997 as the regulation module applying to the scheme recorded by the registrar of titles on 11 October 2006 under dealing number 710007645 is of no effect and that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 has applied to the scheme since 23 August 1999.

It is further ordered that within one month of the date of this order, the body corporate for Surfers Fairways East Community Titles Scheme 11418 must lodge a request to record a New Community Management Statement for the scheme to identify the Accommodation Module as the regulation module applying to the scheme.

The grounds to the application are to the following effect:

• On December 2 1997 and again on February 12 1999, the Registrar of Titles recorded Community Management Statements showing that the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module) applied to the scheme.
• On 11 October 2006, a request to lodge a new CMS was lodged with the Registrar of Titles On November 24 2006, the Registrar of Titles recorded a Community Management Statement (dealing number 710007645) showing that the Body Corporate and Community Management (Standard Module) Regulation 1997 (the Standard Module) applied to the scheme (See my comments regarding “Clarification of Dates” in the Determination).
• Attached to CMS dealing number 710007645 is a letter from the then Body Corporate Manager, Queensland Strata Administration, dated November 14 2006. That letter indicates that the Body Corporate resolved to change from the Accommodation Module to the Standard Module in 2004.
• Section 65 of the Act requires that the CMS be lodged within 3 months of the general meeting at which it was consented to.
• CMS dealing number 710007645 was lodged on October 11 2006, but should have been lodged no later than March 1, 2005.
• The committee sought to transfer to the Standard Module pursuant to an EGM held on October 13 2007, however, the motion was defeated.
• The applicant submits that based on the decision in Surfers Fairways West[1], orders should be made in accordance with the outcome sought.
  

Jurisdiction

Surfers Fairways East was registered as a building units (now known as building format) plan of subdivision comprising 60 lots and common property on 8 July 1990. The current registered CMS for the scheme records the applicable regulation module for the scheme as the Standard Module. The applicable regulation module is the subject of this dispute resolution application.

This dispute is between the owner 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, 227 & 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 (excluding the applicant) and the committee. Two submissions were received, one from the committee and one from the owner of lot 56. The applicant did not exercise his right to inspect the submissions, nor reply to them.

The committee submission, opposing the orders sought, was to the following effect:

• The applicant holds the caretaking and letting agent agreements for Surfers Fairways East and could directly benefit in the long term from the application being determined in his favour, with it being possible to seek 25 year agreements under the Accommodation Module – something owners voted against by voting for the Standard Module at the AGM of 1 December 2004.
• The applicant states that he has requested the committee to record the Accommodation Module as the correct module applying to the scheme based on a previous Adjudicator’s Order for Surfers Fairways West, but that it was unable to do so without an appropriate order. The committee is unaware of any request made of it to record the Accommodation Module, for the reasons given by the applicant.
• The applicant had ample opportunity in 2005, 2006 and most of 2007 to seek a change in regulation module back to the Accommodation Module.
• Surfers Fairways East has operated under the Standard Module since the AGM of December 2004 and several new owners have joined the scheme in the interim, presumably in the belief that the Standard Module applied to this scheme.
• It cannot be concluded from the defeat of motion 3 at the EGM of 13 October 2007 that lot owners automatically want the Accommodation Module to apply to the scheme.
• There is a possibility that the applicant set out to influence the voting on motion 3 at the EGM of 13 October 2007 in direct opposition to the recommendation of the committee. It is suggested that the applicant may have even completed several voting papers on behalf of owners.
• At the end of August 2007, the applicant submitted a motion to the body corporate manager for inclusion at the November 2007 AGM to have the body corporate adopt the Accommodation Module. The applicant withdrew this motion on 13 October 2007 at a committee meeting that followed the EGM.
• The applicant appears to be seeking an order that the registration affected for the scheme on 24 November 2006 for a change of Module to Standard be considered to have no effect. The committee is concerned that one lot owner can now take advantage of an administrative situation that lot owners were unaware of and had no control over – delay in finalising the change of regulation module.
• Lot owners were given the impression by the body corporate manager at the time, in both 2005 and 2006 that the change of module to Standard had been followed through with. Documentation in support of this assertion, including nomination forms for committee membership for 2004, 2005, and 2006 were supplied.
• The applicant was advised by the chairperson at the 2006 AGM that the scheme was registered under the Standard Module and as a result, his motion to consider 25 year agreements at that meeting was out of order.
• Although minutes of the 2004 general meeting incorrectly record motion 8 as requiring an ordinary resolution, the voting paper correctly stipulated that it, in fact, required a special resolution.
  

A submission by the owner of lot 56 also opposed the application and was to the following effect:

• The applicant’s dispute appears to be based on the assumption that a 1 December 2004 AGM decision made by lot owners to adopt the Standard Module is invalid because the change was not registered until 24 November 2006.
• The owner of lot 56 was secretary of the body corporate during that period, and is able to confirm that the body corporate manager at the time had lodged a request to record a new CMS much earlier than when it was finally registered, he believes, early in 2005. The body corporate lawyer had been given a brief to complete the job after problems were encountered with lodgement of the wrong version of the forms. However, he did not follow through and handed it back to the BCM some time later.
• The owner of lot 56 only became aware of the delays in the second half of 2006 and set out to complete the finalisation of the registration, having to go back to the Department of Natural Resources several times to correct sequential minor errors over a period of weeks prior to the final recording of the registration. The departmental staff would only notify individual errors on each occasion rather than identify all errors in the one application and extra fees had to be paid each time.
  

Determination

Applicable Law

• The consent of the body corporate to the recording of a new CMS that identifies a different regulation module for the scheme may be in the form of a special resolution (s.62(3), Act).
• If the body corporate consents to a new CMS being recorded, the body corporate must, within three months after it consents to the new CMS, lodge a request to record the new statement (s.65 Act)
• If a new CMS when recorded is inconsistent with the new statement for which the body corporate gave its consent, the statement as recorded is void to the extent of the inconsistency (s.64, Act).
  

Clarification of Dates

At the outset, I note that both parties to this dispute refer to the date of registration of the current CMS as 11 October 2006. This is incorrect. The new CMS identifying the Standard Module as the applicable regulation module was lodged for registration on 11 October 2006. The new CMS was registered/recorded on 24 November 2006.

Further, it appears as though, when drafting the order sought, the applicant has simply copied certain information from Surfers Fairways West, including the request for the declaration that the Accommodation Module has applied to the scheme since 23 August 1999. The date 23 August 1999 appears to have no significance to the Surfers Fairways East scheme. If I were minded to make the declaration in the terms sought by the applicant, it would be from 2 December 1997, which is the first date that the Surfers Fairways East body corporate had recorded a new CMS identifying the Accommodation Module as the applicable regulation module for the scheme.

Consent of Body Corporate to the CMS Recorded on 24 November 2006

The applicant appears to suggest that the consent of the body corporate to the new CMS identifying the Standard Module as the applicable regulation module was by ordinary resolution only, by reference to the minutes of the AGM of 1 December 2004. As the committee notes, this reference in the minutes is an error. As the voting papers for the December 2004 AGM indicate, motion 8 was stipulated to have required a special resolution in order to be passed. In any event, the voting results for motion 8 indicate that it was passed by special resolution, with 15 votes in favour, 2 against and 3 abstentions. I am not prepared to invalidate the CMS on the basis that the consent of the body corporate given at the AGM on 1 December 2004 was insufficient when, in fact, it was.

Non-Compliance with 3 month Time Limit in Section 65 Act

Section 65 of the Act requires that the request to record the new CMS identifying the Standard Module as the applicable regulation module be lodged within three months of the body corporate giving its consent to it. The applicant states that this was not done until 11 October 2006, almost two years after the AGM consenting to the change and well outside the 3 month time limit specified by section 65 of the Act.

However, the submission from the owner of lot 56, who was secretary at the relevant time, suggests that the request to record the new CMS was, in fact, made much earlier, he says early in 2005 and that the request was rejected several times, before ultimately being recorded on 24 November 2006.

My inquiries with the Titles Office reveal that a request to record a new CMS identifying the Standard Module as the applicable regulation module was first lodged after the 2004 AGM on 29 November 2005, almost twelve months before the time suggested by the applicant, but still some twelve months after the body corporate consented to the change on 1 December 2004 and some nine months outside the legislative time limit.

The question is therefore whether lodgement of the new CMS outside the legislative time limit renders it invalid.

As my colleague stated in Surfers Fairways West[2], a body corporate is created under the terms of the Act[3], and its functions and powers are defined by the Act[4]. Consequently, its power to do a thing must be construed in the context of the Act. With regards to recording a new statement, the Act specifies the type of body corporate resolution required to consent to the recording of the new statement[5] and the responsibility for preparing a new statement for lodgement after the consent has been given[6]. Section 65 of the Act prescribes that the body corporate must lodge the request to record the new statement within 3 months of the date it consents to the recording of the new statement. In my view section 65 imposes a duty to lodge a request to record a new statement within a specified time limit and the lodgement of a request outside this period should only be allowable (if disputed) where in the circumstances it would be just and equitable to do so.

I do not propose to invalidate the current CMS recorded on 24 November 2006, for the following reasons:

Firstly, I do not consider the breach of the section 65 time limit alone sufficient justification for declaring the CMS invalid. There has been no suggestion that anyone (including the applicant) has been disadvantaged by the delay in registration of the new CMS. Of course it is preferable that time limits specified in the legislation are complied with. However, non-compliance with time limits will not necessarily invalidate the actions of a body corporate. It has been held that the very detailed provisions of the modules 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.[7] There is no suggestion that the actions of the body corporate or committee for Surfers Fairways East were anything other than bona fide. Indeed, the submission from the former secretary suggests that the committee was not even aware that the new CMS had not been lodged until the second half of 2006. Rather, it appears to be the case that the previous BCM simply neglected to perform her duties in a timely manner.

Secondly, I do not consider that the circumstances of the Surfers Fairways West body corporate are identical to this case. In particular, I note that in Surfers Fairways West, the body corporate had continued operating under the Accommodation Module, despite the decision to lodge a new CMS identifying the Standard Module as the applicable regulation module at the 2004 AGM. In this case, the body corporate appears to have commenced operating under the Standard Module from the time of the AGM of 1 December 2004. The committee have submitted committee nomination forms for the 2005 and 2006 AGMs which indicate that the applicable regulation module for the scheme was the Standard Module.

Thirdly, no owner has, prior to this time, sought to challenge either the delay in registration of the new CMS, nor the validity of the new CMS. It appears as though all concerned (including the applicant) were operating, quite contentedly, under the assumption that, from the 2004 AGM onwards, the Standard Module was the applicable regulation module. An application seeking an order to require the body corporate to lodge a request to record a new CMS consistent with the CMS for which the body corporate gave its consent at the 2004 AGM could have been lodged with this office and, in my view, would most likely have been successful.

Finally, I am not convinced that there is owner support for a change to the Accommodation Module. I agree with the committee that the vote in relation to motion 3 of the AGM of 13 October 2007 cannot be regarded as indicating that owners want to change the applicable regulation module. Motion 3 did not suggest a change in regulation module, rather that the body corporate consents to the recording of a new CMS the same as the existing statement, prescribing the Standard Module as the applicable regulation module. I can understand that owners may have voted against that motion without necessarily wanting to change to the Accommodation Module. Further, it is conceivable that owners may have been confused by such a motion, having operated under the Standard Module since the 2004 AGM. It may be that owners are in a state of confusion as to what the applicable regulation module is for the scheme. I note further, that no submissions in support of the applicant were made in response to this application. The only two submissions received were against the orders sought being made.

Order

For the above reasons, I have dismissed the application in its entirety. I do not consider it just and equitable to invalidate the CMS registered on 24 November 2006. I am satisfied that the current CMS accurately records the most recently expressed wishes of owners in relation to the applicable regulation module. I am not convinced that the consideration of motion 3 of the AGM of 13 October 2007 changes that position.

If the applicant wishes to change the applicable regulation module for the body corporate, he should submit an appropriate motion for consideration in general meeting. Such a motion will have to be passed by special resolution. Because motion 13 of the AGM of 13 October 2007 did not propose the application of a different regulation module to that identified in the current CMS, I do not believe that section 41(4)(a) of the Standard Module would prevent the applicant from proposing such a motion before the end of the current financial year of the body corporate, in the event that a general meeting was scheduled before the 2008 AGM.

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[1] [2007] QBCCMCmr 276
[2] [2007] QBCCMCmr 276 @ p3
[3] Sections 24 and 30, Act.
[4] Sections 94 and 95, Act.
[5] Section 62, Act.
[6] See sections 63 and 64, Act.
[7] Wei-Xin Chen v Body corporate for Wishart Village [2001] District Court (Brisbane) 4080 of 2000