Point O'Halloran Close [2009] QBCCMCmr 259 (21 July 2009)

Last Updated: 1 September 2009

REFERENCE: 0648-2009

INTERIM ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	28775
Name of Scheme:	Point O’Halloran Close
Address of Scheme:	42 Point O’Halloran Road VICTORIA POINT QLD 4165

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

Ursula Lee, the Owner of lot 7

I hereby order that the body corporate shall not commence painting the exterior of the units in the scheme prior to final determination of this application.

I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0648-2009

“Point O’Halloran Close” CTS 28775

APPLICATION

This is an application dated 14th July 2007 and amended on 15th July 2009 by Ursula Lee (the Applicant) owner of Lot 7 against the body corporate of Point O’Halloran Close CTS 28775 (the Body Corporate) for orders as follows:-

1. That the body corporate cancels the current painter and calls for new quotations “which cover our position fully”;
2. that the body corporate calls an extraordinary general meeting

a) to approve the quotation;

b) to approve the colour scheme;

c) to approve the extent of the painting works to be undertaken

The Applicant also seeks an interim order to halt the painting due to start on 20th July 2009 until the due process has been followed.

JURISDICTION

“Point O’Halloran Close” CTS 28775 is a community titles scheme governed by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module). There are 12 lots in the scheme created under a Building Unit Plan of subdivision in six ‘duplexes’.

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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates”. Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

Notwithstanding that the Act allows for interim orders to be issued without reference to other parties, I am of the view that when possible, it is far preferable and more consistent with the principles of natural justice, to allow affected persons to make a submission about an application (even if the time allowed for submissions is necessarily brief) prior to the determination of an application for an interim order.

I therefore sought submissions from the committee, and on 16th July 2009 received a letter signed by Acting-Secretary Selwyn Thomas that the body corporate undertook not to paint pending an interim order being made.

SUBMISSIONS

The Applicant says that lot owners were advised in writing on 3rd July 2009 by the then secretary Selwyn Thomas (Mr Thomas) that painters would be starting painting the exterior of all units in “approx 2 weeks time.” The Applicant provides a copy of a hand-written quotation from Cleveland Painters for the painting of 12 units. The quotation dated 29th June 2009, bearing a handwritten note “Accepted quote 2 July 4.30pm” mentions soffits, gables, weatherboards sides, doors, entrance to pergola and the BBQ area, “all included” for $11,960. It mentions three types of paint but no colours.

The Applicant asked Mr Thomas if the quotation included sanding, filling and removal of flaking paint, and told him that if so, this should be on the quotation. Mr Thomas thereafter wrote on the back of the quotation that he had rung Laurie about sanding and filling cracks and nail holes, and that Laurie said, “ it should have been on the written quote.”

On 5th July 2009, the Applicant wrote to the chairperson Ron Kelsey (Mr Kelsey) pointing out that the committee does not have the power to spend more than “$200 per lot (in this case $2,400)”. She asked him to cancel the arrangement with the painter until the painting could be authorised at an extraordinary general meeting. She also said that the body corporate should be represented with quotes and colours which the committee wanted to “run with.” She sought a reply in 7 days.

On 6th July 2009 Mr Thomas approached her with a signature sheet with columns headed by five quotation totals. She noted “8 – 9” signatures under “Quote 3 11,960” but refused to sign it. Two signatures have since been revoked. On 10th July 2009 the Applicant wrote again to Mr Kelsey telling him why she objected to the quotation from Cleveland Painters. She found the quotation not professional as the creator could not spell the names of the brands of paint; there was no mention of preparatory work; there was no mention of door frames, garage doors, roof top gables and soffits; there was no mention of warranty, guarantees, or public liability insurance; no mention of cleaning up afterwards; there was no ABN, no business address given, no signature on the quotation and the firm was not listed in “the Pink or Yellow telephone directories”; there was no mention of whether GST was included on not, terms of payment, or estimated time to complete the work.

She also said that owners were entitled to know what colours were to be used where, and to know whether gutters, facia boards, garage doors and downpipes were included. She also objected to the signature sheet which was not dated, had no information about colours or the extent of the work to be done, and when presented to elderly and infirm owners without giving them the opportunity to consider options, constituted autocratic and disrespectful behaviour on the part of the committee, contrary to the rights of lot owners.

On 7th July 2009, Mr Thomas wrote to the painter Laurence Simpson of Cleveland Painters and Decorators and asked him to sign an agreement with the body corporate as drafted by the Applicant.
On 14th July 2009, the Applicant and Donald Archbold, co-owner of Lot 8, wrote to Mr Thomas asking for specific colours for their neighbouring units if painting was to go ahead despite their objection.

The body corporate submitted in respect of the interim application that it had obtained three quotations for painting “as per our last AGM Dec 2008 minutes stated.” Two of the quotations were not satisfactory, one being too cheap and the other not detailed enough. The secretary was then in hospital and on his return, he contacted two more painters receiving two more quotations by the end of June. Ten unit owners were shown the 5 quotations and the committee explained why Cleveland Painters was the committee’s choice. Nine lot owners signed a “proforma” agreeing to this proposal, but then two lot owners crossed their names out. The secretary, Mr Thomas, in consultation with the committee, postponed the commencement of the painting because of this. Mr Thomas then resigned as secretary on 11th July 2009.

The committee also decided on the colour scheme at a meeting on 2nd May 2007 (perhaps this date is an error?) which was attended by the Applicant and two other lot owners, and those colours were to be used.

The body corporate now proposes to hold an extraordinary general meeting on 30th July 2009 to vote for a new secretary, and to “clarify the painting needs.”

The Applicant sent an email on 20th July 2009 that she is concerned that the notice for the extraordinary general meeting, stuck on her fly-screen door on the afternoon of 19th July 2009, is “totally non-complaint” and that the committee has a lack of understanding about the legislation which affects lot owners’ rights. Submissions from the committee have not been invited concerning this latest email.

DETERMINATION OF AN INTERIM ORDER

In this matter the Applicant seeks to put “on hold” the committee’s decision to paint the exterior of the units. The committee has agreed to postpone the painting pending an interim order.

When making an interim order an adjudicator must balance the inconvenience caused to the party wishing to undertake the project (here the body corporate) with the possible damage which can be caused to the applicant (and/or others) if the project goes ahead. One of the requirements must be therefore that the applicant for an interim order makes out a prima facie case giving rise to the likelihood of success at final order. The applicant must show that it is likely that there has been a breach of the legislation or the community management statement; or that the committee has failed to perform a function or duty expected of it; or that in all the circumstances, it would be just and equitable to restrain the respondent from carrying out an action until further investigation.

The Applicant points out that the committee appears to have authorised a painting contractor at a cost of $11,960 when the relevant limit of committee spending in this scheme is $200 x the number of lots in the scheme (12), being $2,400.[1] Sums larger than this must be authorised by the body corporate at a general meeting; or be authorised by written consents from all lot owners.[2]
However, the body corporate submission makes reference to an annual general meeting held in December 2008 wherein it appears that the committee was authorised to seek quotations for painting. Clearly, the minutes of this annual general meeting will be relevant in consideration of the final order.

The body corporate has consented to postpone the painting pending the interim order. However the Applicant is asking that the painting is postponed until “due process” has been followed. This is seeking in fact that the painting is postponed until the final determination of this issue.

Since it appears that the Applicant’s concerns demonstrate prima facie breaches of the legislation in respect of the decision to carry out painting and to spend the sum of $11,960 (with or without GST is not known) I so order. If in the interim period, the body corporate holds a general meeting and the body corporate decides the painting issue, then the Applicant can always apply to withdraw her application.

I am satisfied that there does not appear to be any urgency about the painting, and I am concerned that lot owners’ money is only spent with their authorisation in accordance with the law. The only detriment to the body corporate will be if the contractors’ quotations no longer remain good after the completion of this matter. However, I shall endeavour to expedite the dispute resolution process in this fairly small scheme.

Meanwhile, I make some general comments especially with regard to the extraordinary general meeting which the body corporate advises has been called for 30th July 2009, some 9 days’ time.

The body corporate must give 21 days notice of a general meeting.[3] A notice for a general meting must include the agenda for the meeting which consists of motions set out inviting a “no”, “yes” or “abstain”, that is, be accompanied by a voting paper so that persons not attending the meeting may vote by mail on each motion. No “general business” may be voted on. Participants at the meeting might discuss what they wish but that discussion cannot result in a decision of the body corporate. Any lot owners may put forward motions to be included in the agenda. ( See generally sections 69 – 76 Standard Module – General meetings –http://www.legislation.qld.gov.au/Acts_SLs/Acts_SL_B.htm )

If the body corporate is looking at spending a sum which is in excess of the “relevant limit for major spending”, that is, more than $10,000 in a scheme of 12 lots, then at least two comparable quotations must be put to the body corporate at the general meeting so that the body corporate can vote in the alternative for the preferred contractor.[4] Copies of all quotations relied upon must be sent to lot owners in the notice of meting material.[5] A “motion in the alternative” is in two parts setting out firstly the substantive motion, eg that the body corporate proposes to paint the exterior of the lots etc; then if that motion is passed, go on to the second part listing the alternative contractors each with a blank space beside them for voting.[6]

A significant change to the colour scheme might also be “an improvement to the common property” instead of mere maintenance. If an “improvement” will cost more than $24,000 (more than $2,000 times the number of lots), it will require a special resolution, as opposed to an ordinary resolution. Only one “ordinary resolution improvement” may be made in each financial year, where the cost is more than the “basic improvements limit”, ie $3,600, ($300 x the number of lots in the scheme) otherwise a special resolution will also be required.

Where the change of colour is substantial, the question of colour has traditionally been decided by lot owners and/or the committee submitting two or three colour schemes, and then voting on these combinations, also as a ‘motion in the alternative’. Often paint samples are provided on site some time before the meeting at which the vote on colour is taken, and the name and manufacturer of the colour is detailed in the motion so that all owners have a chance to check the colour in their respective local paint shops. However, this is a matter for the body corporate and there is no legal requirement to provide colour samples in this way. The requirement is that the committee acts reasonably.[7]

In respect of areas to be painted, the body corporate must be satisfied that all areas are “common property”, or are the body corporate’s duty to maintain.[8] Utility infrastructure, (such as a gutter or a downpipe) if it services only one lot, may not be “common property”.[9]

When a position on the committee becomes vacant, there is no need to call a general meeting unless the number left on the committee falls below a quorum, or unless the committee so desires. An eligible person may be appointed by the committee to fill the vacancy until the next annual general meeting.[10]

This application will now be referred back to the Commissioner in accordance with section 279(4) Act, for her to make a direction about the dispute resolution process of the final outcomes sought.

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[1] The “relevant limit of committee spending” means—
(a) the amount last set as the relevant limit for committee spending by ordinary resolution of the body corporate at a general meeting; or
(b) at any time there is no amount set, an amount worked out by multiplying $200 by—

(i) for a principal scheme in a layered arrangement of community titles schemes—the number of layered lots for the scheme; or
(ii) for another scheme—the number of lots included in the scheme. (Dictionary, Schedule to Standard Module)

[2] Section 151(1)(b) Standard Module
[3] Section 74 Standard Module
[4] Section 152(2) Standard Module
[5] Section 152(5) Standard Module. If they are voluminous, summaries of the quotations and advice about where the complete documents may be inspected must accompany the notice of meeting.
[6] Section 72(2) Standard Module
[7] Section 94 Act
[8] Section 159(2) Standard Module.
[9] Section 20(1)(b) Act
[10] Section 38 Standard Module