La Lagon [2009] QBCCMCmr 120 (19 March 2009)

Last Updated: 29 April 2009

REFERENCE: 0511-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	22150
Name of Scheme:	La Lagon
Address of Scheme:	6 Aquila Court MERMAID WATERS QLD 4218

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

Anne Meyer, the Owner(s) of lot 2

1. I hereby declare that the contributions payable by each lot within La Lagon for the period 1 December 2005 to the present amounts to a total of $2,016.50 per lot; 2.I further order that, within 30 days, the applicant must pay the body corporate $697.50, being the shortfall in payments by the applicant for contributions from 1 December 2005 to the present; 3.I further order that Body Corporate Services Pty Ltd ABN 82 010 120 144 (appointee) is authorised to call, hold and chair an annual general meeting (meeting) of the body corporate for La Lagon. 4.I further order that this authorisation: a. Commences on the date of this order and ceases in three months from the date of this order unless altered by a subsequent order of an adjudicator. Further, the authorisation will cease immediately upon the appointment of a committee for La Lagon if that occurs earlier; b. Allows the appointee to perform obligations of the committee or any member of the committee in respect of the calling, holding and chairing of the meeting. In particular, the appointee is to prepare proposed budgets for adoption by the body corporate at the meeting, submit motions as reasonably necessary, and prepare the minutes of the meeting; and

c. Is subject to the appointee, as far as practicable, following the procedures in the Standard Module governing giving notice for and holding an annual general meeting. In particular, a notice requesting nominations for committee positions and submission of motions for consideration at the meeting must give owners at least three weeks to submit their nominations and motions. However, the giving of notices and the holding of the general meeting need not coincide with the end of financial year date of the body corporate. 5.I further order that, prior to the meeting, the appointee must provide each owner with a statement of all amounts paid by that owner towards contributions for the period 1 December 2005 to the present. Within 30 days any owner can inform the body corporate that they dispute the statement provided to them. The body corporate may subsequently request the payment of any shortfall or credit any overpaid amounts towards future contributions. 6.I further order that the appointee is entitled to a payment by the body corporate, for time spent and disbursements, at the rates set out in Schedule D and Schedule E of the draft form of engagement provided with the application.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0511-2008

“La Lagon” CTS 22150

Application

La Lagon Community Titles Scheme (La Lagon) is a 5 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Standard Module Regulation (Standard Module). The scheme is designed for residential purposes.

This application is by Anne Meyer, owner of lot 2 (applicant) seeking orders against the body corporate for La Lagon (respondent). The applicant is seeking to declare the last two annual general meetings to be void, to require the body corporate to credit a disputed levy payment, to require the body corporate to waiver overdue fees, and to require the appointment of an administrator.

Decision

Investigation and Submissions

Submissions

The main grounds in support of the application, provided on behalf of the applicant, were to the effect that:

• The body corporate manager has failed to follow proper processes and keep proper records;
• The body corporate manager does not have a clue as how to deal with outstanding levies and approaching the Commissioner apparently was not considered an option; and
• I have always paid accounts on time until the Nicoll’s and the body corporate manager changed the way levies were payable and the body corporate manager failed to acknowledge receipt of a $300 payment.
  

Submissions from Stuart Nicoll, as co-owner of unit 5 and trustee of units 1 and 4, were to the effect that:

• The applicant did not even attend the last annual general meeting or submit apologies;
• The previous body corporate manager did a good job but decided they did not want to continue because of ‘constant attention’ involving more time then they were prepared to tolerate; and
• He delivered all records from the previous body corporate manager to Australian Unit Administration without opening those records.
  

Another submission was made about use of an area of concrete in front of unit 5 but no orders were sought in relation to this matter.

Further enquires

The application raised a number of issues that could not be resolved on the submissions that were made. I therefore sought further information and reviewed copies of minutes of meetings and notices of contributions.

Based on this review, I formed a preliminary view that there were various errors in contribution statements sent to the applicant, that payments made by the applicant since 1 December 2005 totalled $1,319.00 and that contributions adopted since 1 December 2005 totalled $2,016.50. I also stated that I was likely to infer, based on an absence of records, that there were no resolutions of the body corporate authorising the imposition of penalty interest, the commencement of recovery action, and the imposition of recovery costs. I informed the applicant and body corporate of these preliminary views and possible resulting orders by letter dated 12 February 2009.

Further submissions

The applicant provided further submissions that generally agreed with the preliminary views stated, including the figures, conclusions and proposals.

The body corporate provided a further submission that also did not challenge the above figures. However, this submission referred to a by-law relating to recovery of costs and debt collection. This submission also referred to a committee resolution of 10 December 2007 "that the body corporate authorise and proceed with referring the owner of Lot 2 to debt collection to recover outstanding levies". It is submitted that the applicant had not made any levy payments since 9 March 2007 and that the debt collection charges and penalties should therefore remain.

Issues for determination

Applicable law

Legislation relevant to the present dispute has provisions to the effect that:

• The body corporate must adopt administrative and sinking fund budgets each year (Standard Module, 139);
• The body corporate must fix owner contributions based upon its budgets (Standard Module, 141);
• At least 30 days before a contribution is due the body corporate must give each owner written notice of the amount of the contribution, the instalment currently required, the date for payment, any discount, any penalty and any arrears. This notice may also include details of the cost associated with any specially contracted service or exclusive use enjoyed by the owner (Standard Module, 142); and
• If a contribution is not paid by the due date the body corporate may recover, as a debt, the amount of the contribution, any penalty, and any costs reasonably incurred in recovering the amount (Standard Module, 145).

Summary of issues

The main issues for determination can be summarised as follows:

1. Do various alleged failures to comply with the legislation justify appointment of an administrator?
2. Should the 2006 and 2007 annual general meetings be declared void?
3. What amount is the applicant liable to pay regarding disputed contributions?

Appointment of an administrator

A review of the minutes of meetings shows that no annual general meeting has been held since 23 May 2007. In particular, no owner attended the annual general meeting of 21 May 2008 or the adjourned annual general meeting of 28 May 2008. Obviously, required business such as the setting of budgets and election of a committee could not be conducted at those aborted meetings. This alone provides grounds for the appointment of an administrator to return the body corporate to a proper legal footing. The appropriateness of appointing an administrator has been confirmed by other matters indicating that the administration of the scheme is in some disarray. These matters include statements from parties indicating the records are in some disarray and showing uncertainty about what contributions are due as discussed below.

I therefore propose to grant the applicant’s request that Body Corporate Services Pty Ltd ABN 82 010 120 144 (appointee) be authorised to call, hold and chair an annual general meeting of La Lagon in order to return the scheme to a proper legal footing.

Past annual general meetings

The applicant also challenges the validity of the 2006 and 2007 annual general meetings for a number of reasons.

However, this application is well outside the three month time limit for seeking a declaration that a meeting is void (Act, 242). In deciding whether to waive this time limit it is relevant to balance the length of the delay, the reason for the non-compliance, the effect of the delay and the entitlement of the applicant to the relief sought.[1] The delay in this instance is significant, there is no good reason for this delay, the grant of the relief sought would have serious effects including upon the budgets for the scheme, and the applicant has not provided obvious grounds justifying the relief sought. I am therefore not satisfied there is any good reason for waiving this time limit on the grounds advanced by the applicant. The general meetings of 13 December 2006 and 23 May 2007 will therefore not be declared void.

Disputed contributions

Amount of contributions

I have reviewed a number of notices of contributions sent to the applicant. The most recent of these is a notice dated 27 January 2009 seeking $337.50 in contributions for the period 1 March 2009 to 31 May 2009 and $5,978.12 in arrears. It is not entirely clear what this claimed arrears of $5,978.12 is made up of. This is particularly as an itemised statement of account from 1 March 2007 to 30 November 2008 lists an amount of $718.72 as "brought forward". However, it is clear from statements provided that the applicant was not in arrears at 1 December 2005. Further, by review of the contribution statements and of receipts provided by the applicant it was possible to ascertain what payments the applicant had made since 1 December 2005.

Based on this information I am satisfied that payments made by the applicant for the period 1 December 2005 to the present, were:

Date	Amount
10/05/2006	$300.00
16/11/2006	$155.00
11/01/2007	$432.00
8/03/2007	$432.00
	$1,319.00

Also, the minutes of meeting provided showed all contributions that owners had agreed to levy since 1 December 2005. In particular, I note that no budgets have been set for the period 1 March 2008 to the present. The most recent contribution instalment, except for an interim contribution instalment proposed to be offset against a future contribution that did not eventuate, was due on 1 December 2007. I am satisfied that contributions adopted for the period 1 December 2005 to the present were as follows:

Levy Period		Amount
1/12/2005	31/05/2006	$455.00
1/06/2006	30/11/2006	$432.00
1/12/2006	28/02/2007	$229.50
1/03/2007	31/05/2007	$418.50
1/06/2007	31/08/2007	$162.00
1/09/2007	30/11/2007	$162.00
1/12/2007	29/02/2008	$157.50
		$2,016.50

Errors in contribution statements sent by the body corporate

Based on the above, the applicant has satisfied me that various errors occurred in contributions statements that have continued through those statements to the present time. Specifically, the statement of 29 January 2007 appears to incorrectly seek ‘arrears/adjustments’ of $684.50 notwithstanding evidence that the applicant had paid all levies to 30/05/06, had paid $432 on 11 January 2007 that would have covered the period 01/06/06 to 30/11/06, and that only $229.50 was in arrears on 29 January 2007 being for the period 01/12/06 to 28/02/07 (this contribution statement also incorrectly stated a levy period of ‘01/03/07 to 31/08/07’ instead of ‘01/03/07 to 31/05/07’ and incorrectly claimed a sinking fund levy of $27 instead of $14). I also note that the body corporate has not provided a copy of any resolution authorising the imposition of penalty interest upon late payments (Standard Module, 144).

I have concluded that the applicant is $697.50 in arrears. This amount is obviously substantially different to the $5,978.12 in arrears claimed in the most recent statement of contribution. It is also substantially different from the amount of $1,173.91 claimed by the body corporate in a statement dated 10 October 2007. This shows the amounts sought by the body corporate were incorrect even prior to the body corporate resolving to commence recovery action and seek recovery costs.

Recovery costs

The body corporate has provided a copy of a committee resolution dated 10 December 2007 to the effect that the body corporate commence debt collection against the applicant. Various amounts for the costs of debt collection have been added to the applicant’s statements and contribution notices since this date.

However, a recent decision of Body Corporate for Liberty v Alotier Pty Ltd and SSKB[2] has confirmed that recovery costs are not "body corporate debts" as defined in the Standard Module and cannot be included in the body corporate’s financial records until a judgement for those recovery costs is obtained. Further, the decision of Owners of Strata Plan 36131 v Dimitriou[3] indicates that the onus is on the person claiming reasonable recovery expenses to show that those expenses were 'reasonably incurred' and 'reasonable in amount'.

The applicant has left herself open to an award of recovery costs against her by failing to pay amounts demanded by the body corporate. At the very least it would have been prudent for the applicant to make her own calculation of what levies were due and ensure that at least those amounts were paid.

However, from reviewing correspondence between the body corporate and the applicant I am satisfied that it was actions of the body corporate in providing incorrect contribution notices and incorrectly adding recovery costs that resulted in the applicant refusing to pay any further amounts until the contribution notices were rectified. There was never any clear demand by the body corporate that the applicant pay any amounts that were not dispute and the demands by the body corporate were for amounts far in excess of what was properly owing by the applicant at the time. I consider that the body corporate acted unreasonably in commencing recovery action against the applicant rather than responding appropriately to the applicant’s requests and queries about amounts owing. Further, many of those costs appear to have been inappropriately accrued in Magistrates’ Court proceedings when issues in dispute were properly within the exclusive jurisdiction of this office.[4]

I also note that the by-law 12(1) referred to by the body corporate provides no advantage and by-law 12(2) relates to "where a body corporate expends money to make good damage". Further, even if a by-law purported to give greater rights of recovery than the legislation then it is likely to be invalid as imposing a monetary liability or by inconsistency with the legislation (Act 180(1), 180(6)).

In all the circumstances, I am not satisfied that any entitlement against the applicant for costs reasonably incurred in recovering from the applicant the $697.50 allowed in the above orders.

Conclusion

It is obvious from the information provided that the accounts for La Lagon are in some disarray, particularly as no budgets were adopted since 1 March 2008. In the circumstances, the appointee will need to perform a number of tasks, including to perform some reconciliation of accounts given that some owners may in fact have continued to make contribution payments even when budgets had not been adopted.

Other matters

Detailed submissions were also made in relation to the use of an area of common property in front of lot 5. As no orders were sought in relation to this matter it is unnecessary for me to consider those submissions. I will simply state that there is no evidence of any resolution providing for special use of the area in question and that I would encourage owners to discuss any proposals and pass a resolution providing for any special use if appropriate.

Order

For these reasons, I make the order above.

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[1] Weeks v Commissioner for Body Corporate, Dodds DCJ, District Court (Maroochydore), Appeal 13/1999, 20 September 1999.
[2] CCT KA009-08, KD Dorney QC, 11 February 2009.
[3] [2009] NSWCA 27, Hodgson JA, Basten JA Handley AJA, 25 February 2009.
[4] Refer to Penburg Pty Ltd v Body Corporate for Market Town Community Title Scheme 2052 [2007] QDC 020, Tutt DCJ 25 January 2007; James v Aarons [2003] QCA 329, Davies, Jerrard, MacKenzie JJJ, 1 August 2003.