Palm Springs Residences [2009] QBCCMCmr 187 (14 May 2009)

Number of Scheme:	29467
Name of Scheme:	Palm Springs Residences
Address of Scheme:	1 Twenty First Avenue PALM BEACH QLD 4221

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

I hereby order that pursuant to section149(1)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008, the Body Corporate is entitled to authorised and/ or ratify any expenditure incurred by the Body Corporate from 31 March 2009 with respect to solicitors fees incurred with respect to defending the application to resolve dispute resolution applications 135-2007 and 309-2007 brought by J. Patterson Holdings Pty. Ltd. against the Body Corporate which is currently being heard before a Specialist Adjudicator.

This application is made by the Body Corporate committee which sees the following order:

An order pursuant to s.149(1)(c ) of the Accommodation Module authorising and/ or ratifying any expenditure incurred by the Body Corporate from 31 March 2009 with respect to solicitors fees incurred with respect to defending the application to resolve a dispute 135-2007 and 309-2007 brought by J. Patterson Holdings Pty. Ltd. against the Body Corporate which is currently being heard before a Specialist Adjudicator.

Palm Springs Residences Community Titles Scheme (Palms Springs Residences) is a 47 lot scheme under the Body Corporate and Community Management Act (Act) and the Act’s Accommodation Module Regulation (Accommodation Module).

The Caretaking Service Contractor for the scheme, J. Patterson Holdings Pty. Ltd. (JPH) has made dispute resolution applications (135-2007 and 309-2007) regarding the following actions by the Body Corporate:

Although these applications were originally decided in favour of JPH by a Specialist Adjudicator, the body corporate was successful in appealing the decision of the Specialist Adjudicator before the District Court. The District Court overturned the orders of the Specialist Adjudicator and remitted the two matters back to a different Specialist Adjudicator, Mr. K Dorney QC.

Mr. K Dorney QC. Made certain directions to the parties on 10 March 2009 and 8 April 2009. Pursuant to the first direction, the parties were to lodge copies of all witness statements relied upon and to serve each other with a list of witness statement relied upon. A second direction was made on 8 April as JPH provided the material out of time.

The applicant states that an extensive amount of material was prepared as the scope of issues before the Specialist Adjudicator has increased significantly, and as a result, the body corporate has incurred costs in excess of the committee’s expenditure limit. The applicant further states that as at 30 April 2009 these costs were $18,887.99. A further directions hearing was held on 7 May and a further order was made on 8 May and it is anticipated that future expenditure involved in complying with the orders could be in the vicinity of $10,000..

The body corporate is therefore seeking an order pursuant to section 149(1)(c ) of the Accommodation Module for approval of expenditure necessary to comply with the orders of the Specialist Adjudicator. The applicant believes that this expenditure is urgent as there is insufficient time to call a general meeting to authorise the expenditure before the next meeting scheduled for 27 May 2009 at which the body corporate will need to be legally represented.

Section 243A of the Act provides that the Commissioner may refer an application immediately to a dispute resolution officer, notwithstanding that affected persons have not been given notice of the application and invited to make submissions as would normally be required under section 243(1). This referral can occur when the Commissioner reasonably considers that the application relates to emergency circumstances and it is not appropriate to deal with the application as an interim order under section 247. The example of emergency circumstances provided in section 243A(1)(a) is whether the repair or replacement of a burst water pipe exceeds the Committee’s spending limit.

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

(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)).

The applicant Body Corporate is seeking an order of an Adjudicator under section 243A of the Act and also under section 149(1) of the Accommodation Module Regulation which provides as follows:
(1) The committee may only carry out a proposal involving spending above the relevant limit for committee spending for the scheme if—

(a) the spending is specifically authorised by ordinary resolution of the body corporate; or

(b) the owners of all lots included in the scheme have given written consent; or

(c) an adjudicator is satisfied that the spending is required to meet an emergency and authorises it under an order made under the dispute resolution provisions; or

While requests for approval of “emergency expenditure” often relate to emergency repairs or measures to protect the health and safety of owners and occupiers, I believe that the range of emergency expenditure contemplated by paragraph 149(1)(c ) would also include expenditure on legal fees. Accordingly, the question for me to consider is whether, in the circumstances, it would be just and equitable to make an order permitting the Body Corporate to commit funds for the engagement of legal representatives to defend the position of the Body Corporate. In effect, this involves a question of whether it would be reasonable to expect that members of the Body Corporate would approve such expenditure in General Meeting.

I believe it is important for the Body Corporate to have adequate legal representation to protect the interests of its members. Failure to make the requested order could result in the application proceeding without the Body Corporate having the benefit of legal representation, or alternatively, if the matter is adjourned to enable the matter to be considered by a general meeting, a costs order could be made against the Body Corporate.

It could be argued that this order is unnecessary because section 149(1)(d) provides that the committee may incur expenditure above the committee limit where it is necessary to comply with the order of an adjudicator. Nevertheless, to remove any doubt I am of the view that it would be just and equitable to make an order pursuant to paragraph149(1)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008, that the Body Corporate is entitled to authorised and/ or ratify any expenditure incurred by the Body Corporate from 31 March 2009 with respect to solicitors fees incurred with respect to defending the application to resolve a dispute 135-2007 and 309-2007 brought by J. Patterson holdings Pty. Ltd. against the Body Corporate which is currently being heard before a Specialist Adjudicator.

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Palm Springs Residences [2009] QBCCMCmr 187 (14 May 2009)