Galen House [2009] QBCCMCmr 290 (11 August 2009)

Number of Scheme:	11646
Name of Scheme:	Galen House
Address of Scheme:	142 Queen Street SOUTHPORT QLD 4215

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

I hereby order that within three weeks of the date of this order on behalf of the body corporate, Jan Watson at her expense, must fix and keep affixed, or cause to be affixed and kept affixed, a suitable name sign to the body corporate mail box, identifying the mail box as required by the legislation, as more particularly set out in the reasons herein.

In all other respects I order that this application is dismissed.

This is an application dated 22nd January 2009 and amended on 5th March 2009 and again on 19th March 2009 by Amalgamated Megadynamics Pty Ltd (the Applicant) owner of Lot 2 against the body corporate for Galen House (the body corporate) for orders as follows –

“Galen House” CTS 11646 is a community title 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 two lots in the scheme created under a Building Unit Plan of subdivision.

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)).

I note in this application that there is reference to a conciliation by this Office. I have no access to conciliation files or knowledge of what occurred during, or as a result of, a conciliation session, since such sessions must remain confidential. An application for adjudication is an application “de novo”, and an applicant must plead his case anew, which will be assessed on its merits.

The Applicant’s director R. M.Tracey (Dr Tracey), who is secretary/chairman of the scheme, says that “hopefully the appointment of an administrator would ensure that body corporate contributions are paid, and that all parties adhere to the body corporate legislation.”

He says that Jan Watson (Mrs Watson), the owner of Lot 1 has not paid any body corporate contributions since November 2006. As that is over two years, the legislation requires that the body corporate must take action. Mrs Watson has also been refusing to sign body corporate cheques “from mid-2006.” The occupier of Lot 1 is John Watson (Dr Watson), who “appears to dictate to the owner.”

The Applicant also says that it is a requirement of the legislation that the body corporate has a mail box sign. Dr Watson “continually removes the body corporate mail box sign” and Mrs Watson is aware of that. The last sign removed was a metal one valued at about $100.

Mrs Watson also has control of a contract and variation document relating to work carried out by Frank Cowell, which she will not provide despite repeated requests. This is also “a requirement of the legislation.”

Dr Tracey says that he has paid the body corporate insurance to make sure that the property is insured. The cost was $2,054.04. He says that he is accused by Dr Watson of owing $5,500 to the body corporate for sewerage repairs but this matter has been adjudicated on and that matter is closed. Mrs Watson accuses him “of removing $2,800 from body corporate” funds. He attaches a letter dated 15th October 2007 wherein Mrs Watson says that Dr Tracey has drawn $2,280.50 from the body corporate account without her consent, and that she will not make contributions until that money has been repaid. He notes on a copy of that letter: “(1) No cheque of this amount or number can be found to exist. Baseless accusations from Jan and John Watson are frequent.”

Mrs Watson’s letter also says that Dr Tracey owes $3,000 for his contribution towards the sewerage repairs. Dr Tracey does not know to what this refers. The body corporate paid the sewerage repairs pursuant to adjudicator’s order, and this is a baseless accusation.

The sign on the mail box was affixed with “non-removable screws”, but was prised off by Dr Watson with a screwdriver in February 2007. Mail addressed to the body corporate “seems to go astray or disappear.” The cost to replace the sign and a medical sign for Dr. D.M.Carroll which was also removed in January 2007 was “in the region of $180.”

He complains of anti-social and intimidating behaviour and vandalism, and obscene language by Dr Watson. He cannot see Dr Watson agreeing to anything which he proposes since the parties do not get on. The proposed administrator, Colin Lamont (Mr Lamont), has agreed in principle to act as an administrator of the scheme at a rate of $100 per hour. Dr Tracey sees Mr Lamont as an impartial third party, but does not know if Dr Watson will agree to him being appointed.

Mrs Watson initially refused to sign body corporate cheques commencing May 2006, with the result that the gardener/handyman Paul Jacobs (Mr Jacobs) was not paid until Dr Tracey obtained a new cheque book and was able to pay him. The Applicant attaches a statement dated 23rd October 2008 from Mr Jacobs saying that he had been employed by Galen House body corporate since 1976 for two hours a week, weather permitting. He was paid $25 per hour in 2007. In mid-2006, he was advised by Dr Tracey that the body corporate could not pay him as the cheque book had been removed by Mrs Watson. Dr Tracey offered to advance money to him until the body corporate was in a position to pay. Early in 2007, Mrs Watson told him that he should be employed only fortnightly and not weekly. He continued to work specific dates and Dr Tracey then wrote him a cheque for $1,650, and he refunded to Dr Tracey the sum advanced to him. In February 2008, he was again advised by Dr Tracey that Mrs Watson had removed the chequebook and that the body corporate could not pay him directly. After 30 years he has decided not to work there any more, and has resigned. At the time of his resignation the body corporate owed him $50.

Body corporate contributions are set at $160 per month per lot, although Mrs Watson has the minutes of the meeting at which this was decided, and Dr Tracey does not have a copy. As at the end of January 2009, Mrs Watson owes the body corporate 26 x $160. The Applicant also claims on the part of the body corporate, although not part of this application, “recovery costs” of $520.00 for legal advice, magistrates fees of $46 ; bailiff’s fees ($2 lots of $34); the conciliation fee of $59.00 and un-stated legal fees for Linda Phelps.

The Applicant says that Mrs Watson’s reasons for refusing to pay the debts due is that he has ignored the last order of an adjudicator of this Office. The Applicant claims that Mrs Watson now owes “some $4,000 plus..” He attaches a list dated 22nd January 2009 totalling $4,659.00 which does not include the legal fees of “L Phelps.” These are quoted against cheque book numbers. He says that whilst Mrs Watson owes a debt to the body corporate, “she cannot nominate a representative, nor can she vote on any motion.”

Mrs Watson in her submission refers to previous applications to this Office, and says that she has nominated Dr Watson, her husband to be the representative of Lot 1, and resigned from the committee of the body corporate. She points out that all four applications resulted in an adjudicator’s ruling “against Dr Tracey,” and that a duplex scheme does not need to be run “like BHP”.

She says that Dr Tracey has claimed relentlessly that he is the manager/ chairman of Galen House, and he told the Magistrates Court on 1st February 2008 that he was the chairman.

She is not prepared to pay money into the account because neither she, nor Dr Watson, trusts the Applicant not to use it fraudulently. She claims that money is owed to Dr Watson for the sewerage repairs some years ago. She finds the dealing with the gardener whereby the gardener gave cash back to the Applicant against a body corporate cheque to be a fraudulent act, and she knew nothing about it and had not consented to the payment.

Since that time, Dr Watson has opened another account and he has been contributing $160 per month into that and it has a credit balance of $2,406. The gardener is paid $50 per week from this account and this has been happening since February 2008. The Applicant has not contributed to the gardening costs since that time.

In respect of the insurance payment, it was habitually sent from the insurers to her at her address. When she did not receive it last year, she enquired about it and was told that Dr Tracey had paid it in full. At no time was she asked to contribute towards it, nor has she refused to pay her share.

She does not feel that an administrator selected by Dr Tracey would be impartial, but that it would be a costly waste of money for the body corporate.

The Applicant exercised his right of Reply. He said that insurance has been paid by the body corporate but only because he puts in funds to the bank account. He attaches minutes of the annual general meeting of 25th June 2008 at which, since it is alleged that Mrs Watson owes a body corporate debt and is therefore ineligible to hold a committee position, he appointed himself chairman, secretary and treasurer. At this meeting, the continuing payment of contributions from each lot at $160 per month was passed.

I sought further information from the Applicant on 3rd July 2009, seeking more details of the Magistrates Court claim referred to in the application; the result of police intervention in the matter of the letterbox; details about the engagement of lawyers; and the cheque book.

On 12th July 2009, the Applicant enclosed an unsigned and undated draft copy of the Magistrates Court claim referred to in his application. It was a Minor Debt Claim drafted in 2007 made by Galen House Body Corporate against Mrs Watson. The claim stated that Galen House body corporate had set contributions of $160 per month, and that Mrs Watson “has refused to pay any contributions since November 2006. Her debt to Galen House Body Corporate is 11 x 4160 = $1760..” The Applicant provided a copy of an affidavit of service on 12th November 2007, which bore the reference number M4862/07.

The Applicant says that there was no order made by the Magistrate but that the matter was “referred to the registry” and he believes that it “can be opened at any stage.” He paid $46.50 to lodge the claim which is a body corporate expense. Mrs Watson entered a defence to the Magistrates Court claim at the time. The Applicant says that her affidavit contained false information. Lawyers Quinn and Scattini drafted a reply to the defence which cost the body corporate $300, in addition to the initial consultation which cost $220. Receipts for both sums were made out to Galen House Body Corporate. The lawyers mention a hearing date of 1st February 2008.

He says that the body corporate resolved to take action on 8th May 2007 for the recovery of the debt by Mrs Watson, and enclosed a copy of the minutes of a committee meeting. The body corporate resolved to institute “appropriate legal action” for the return of the cheque book, and for chasing the arrears. At Motion 5, the committee resolved to set up new body corporate account and transfer funds from the old account into new one. At this meeting the body corporate also resolved to have drainage and timber work done by Frank Cowell inspected; and resolved to set up a body corporate mailbox.

The Applicant alone maintains the current “Galen House Body Corporate cheque account” since Mrs Watson refuses to make payments into it.

The Applicant says that the mailbox sign was removed on 17th February 2007 and that the police have not got back to him on this matter.

This is the sixth application which has been made to this Office since 25th May 2005. It is no secret that the occupiers of Lots 1 and 2 do not get on with each other, and do not co-operate together in the business of administering the body corporate.

In a scheme of only two owners there is very little “administering” to do, other than pay the annual insurance, and pay maintenance bills as they arise. All bodies corporate must keep a sinking fund and an administrative fund in accordance with the legislation, and decide annually what contributions are necessary. As has been mentioned before in adjudicator’s orders, two professional people should be able to run the business of the body corporate with no trouble at all, but it is clear that every opportunity to irk the other occupier is taken by these two antagonists.

The application relates to matters arising, at latest, in October 2007 and rehearses material which has been aired in previous adjudications.

On 8th May 2007, a committee meeting was held at which the Applicant, who by virtue of section 13(5) Standard Module[1] shares all the executive positions with Mrs Watson, was the only body corporate attendee, the committee resolved to close the body corporate bank account and remove funds into a new bank account, because Mrs Watson had “removed the cheque book from the premises” in April 2007.

The committee also resolved to seek legal assistance. There was no sum approved for the legal assistance, nor a legal firm proposed. At this time the spending limit of the committee was $125 x the number of lots, ie. $250. The committee therefore had no authority to spend in excess of this sum. An order of an adjudicator made on 10th April 2007[2] warned the body corporate not to spend body corporate funds without a written resolution. However, it appears that the Applicant, as the driving force of the committee, on 8th May 2007 committed the body corporate to spending an unlimited sum on legal fees. The bills from Quinn and Scattini are for an initial consultation for $220 and a further bill of $300 - $520 now claimed by the Applicant as owing by Mrs Watson.

On 15th October 2007, Mrs Watson noted from a bank statement that the sum of $2,280.50 had been withdrawn from the body corporate bank account, and wrote to the Applicant saying that this action was illegal and that she would make no further contributions into that account.

The Applicant claims that he does not know to what Mrs Watson refers in her letter of 15th October 2007 since “no cheque of that amount or number can be found to exist” and that this is a “baseless accusation.” It seems evident to me that the number “155009940” referred to in Mrs Watson’s letter was the then Galen House bank account number since that account number was mention in a previous dispute (see 0379-2005) and that the amount withdrawn from the account is in accordance with the prior committee resolution. In fact, since the committee had decided to do precisely this, I cannot understand why the Applicant finds it so surprising.

If, as alleged, Mrs Watson has ceased making contributions into scheme account(s) because of the Applicant’s action, (and such was her defence to the minor debt claim commenced in the Magistrates Court in November 2007), then there would appear to be some reason for her non-payment. I have been provided in Mrs Watson’s submission with a copy of her defence to the Magistrates Court, although the Applicant claims that it contains false and misleading information in three particulars. I have also noted the proposed reply to the defence, drafted by Quinn & Scattini.

I am not advised why the Applicant, on behalf of the body corporate did not proceed in the Magistrates Court with this matter since he had taken it so far. A date was set for hearing on 1st February 2008, but the Applicant says that “the matter was referred to the registry” and can “ be opened at any stage.....” If this is so, the Applicant can proceed to judgment on behalf of the body corporate. It appears to me that some of the recovery costs now claimed have been thrown away by this action.

Mrs Watson says that contributions of $160 per month are maintained on behalf of Lot 1 into another account for body corporate expenditure, and that account is in credit. It does not matter that Mrs Watson herself does not pay that sum if she has an arrangement with a third party for the funding. There is a dispute about which account is the legitimate “body corporate” account.

I am not convinced by the claims of the Applicant of a debt owed by Mrs Watson, and it is quite clear that the non-payment of contributions by Mrs Watson, if such can be proved, is against a murky background of mistrust and accusations by the two occupiers/owners each having made payments for services as they see fit and then making financial demands from the other for a share of the body corporate administrative expenses. Since this application is partially for the appointment of an administrator to recover the debt owed by Mrs Watson, it would seem that before such an administrator is appointed, I should be satisfied that Mrs Watson owes a debt to the body corporate.

Further, the appointment of an administrator, which by its nature is generally a temporary position in circumstances where the body corporate is non-functional, (for example, all owners are currently overseas), would require the agreement of Mrs Watson, and in a two-lot scheme is not generally a practical solution to the long-term running of the day-to-day affairs of a body corporate.

An administrator selected by the Applicant alone in such circumstances would not be perceived as impartial by Mrs Watson, and she has said exactly that in her submission.

The Applicant says that “an administrator would hopefully ensure that body corporate contributions are paid and that all parties adhere to the body corporate legislation” but provides me with little or no evidence that the body corporate is in need of administration. It appears to me that he is asking for an administrator to be appointed so that Mrs Watson can be brought into line and do what she is told by the Applicant, through the enforcement of an administrator. In such circumstances, the appointment of an administrator as the Applicant’s ‘strong arm man’ is singularly inappropriate.

There is much irrelevant material in the application, and in the submission from Mrs Watson, and whilst it may be difficult to separate the incidences of bad behaviour, accusations and abuse from the acts required under the legislation, I find that this application is fuelled to a major extent by personal grievances.

I dismiss the application for an administrator to be appointed, and the application for the administrator to recover a body corporate debt also fails.

Where one owner claims sole voting rights because he/she alleges that the other owner owes a body corporate debt, and the first owner’s defence is that the second owner has committed fraudulent acts with the body corporate funds, and the financial history of the scheme is, at best, confused, it seems to me that the way forward might be to engage a body corporate manager for the continued administration of the scheme, although, both owners would still have to agree on the management company. I note that a body corporate manager was proposed by Adjudicator Hanly in June 2007 (0444-2007).

It is my view that both owners also remain legitimate committee members whether a debt is owed or not, since section 13(4) Standard Module is an exception to the general rule and concerns eligibility of a committee member. When membership of the committee is automatic, eligibility is not an issue. It is only at general meetings that an owner who owed a debt would be disentitled[3] and in the circumstances prevailing in this scheme, as I have found, it is not at all clear that Mrs Watson owes a body corporate debt.

The mailbox
Mrs Watson makes no submission about the mailbox. It does not appear to be disputed that a sign was removed by Dr Watson, although this happened in February 2007 which was almost two years before this application was lodged. Section 160 Standard Module requires that the body corporate keeps a mailbox “clearly showing the body corporate’s name in a suitable position at or near the street alignment” or else make “suitable alternative arrangements for the receipt of mail.”

The body corporate’s name for a community titles scheme is the words “Body Corporate for...” plus the name of the scheme (Section 33 Act). The legislation therefore requires the words “Body Corporate for Galen House” to be affixed on or under the mail box. In practice, many schemes find that there is only room for “BC”, or “Body Corporate”, under the letter box opening, and it is not a matter which has traditionally given rise to dispute.

The name on the mailbox must be replaced. The Applicant did not provide a copy of the invoice for the sign but claims that the last sign was a metal sign costing $100. The photograph showing shreds of the sign on the ground, and the photograph of the sign stuck on the Applicant’s car look very much as if the body corporate sign in the photographs was made of sticky-backed vinyl or similar, and not the sort that would be affixed with “non-removable screws” as claimed by the Applicant.

As a matter of practicality, I order that on behalf of the body corporate, Mrs Watson at her expense, affixes, or arranges to affix, and keeps affixed, a suitable sign to the body corporate mail box, identifying the mail box as required by the legislation. There is no evidence of the cost to the body corporate, and no evidence of the reason for the removal by Mrs Watson’s tenant Dr Watson.

Return of documents
There is not enough evidence provided by the Applicant about the contract and variation document relating to work carried out by Frank Cowell, to make any order at all in respect of it. The Applicant says such documents are a “requirement of the legislation” but I do not know to what he refers.

The contract appears to relate to building work done on behalf of the body corporate but in fact commissioned and/or or varied by Mrs Watson and/or Dr Watson in 2006 or 2007.

Perhaps the Applicant can seek such documents from Mr Cowell if he wishes to keep the body corporate records straight.

Conclusion
This application made at the end of January 2009 concerns matters which relate to incidents arising in 2007. I find the application to replace the name on the letterbox and to have, or have returned, copies of a builder’s account are so very minor as to be almost frivolous. Where an application is dismissed for being frivolous, vexatious, misconceived and without substance, an adjudicator may award relevant costs against an applicant to a respondent.[4]

The Applicant, on behalf of the body corporate, for some reason failed to continue with an action against Mrs Watson for arrears of contributions in the Magistrates Court in February 2008, despite expending unauthorised body corporate money on lawyers and court fees in respect of this, now apparently adjourned, action.

Owners in a body corporate are encouraged to administer their scheme themselves. This Office does not play a regulatory role, but where a dispute arises may determine how the dispute may be resolved. Penalties may be applied in the Magistrates Court if the body corporate fails to comply with an adjudicator’s order. Body corporate management might assist this scheme if the two owners can agree on a management company.

Meanwhile, there appears to be no detriment suffered by either the Applicant or the body corporate by the unconventional arrangements where it appears that each owner is maintaining a “body corporate” account. Whilst each owner says that that the other owes a debt to body corporate funds, there is no evidence that the body corporate owes money or is not keeping up with its maintenance responsibilities. There is no evidence of body corporate mail “going astray” or “disappearing” because of the lack of a sign on the body corporate mail box. The scheme buildings are insured. Since Mrs Watson says she has not refused to pay “her share” of the insurance, perhaps she should be asked to contribute one half if the Applicant has paid this year’s bill himself. However, this is a matter outside this application.

If in future the scheme might become so dysfunctional that administration by outside personnel is required, such a person should be perceived by both owners to be independent. The nomination of such a person might be agreed to if each owner nominates three persons. In the same way, a body corporate management company might be agreed to by both owners, if each owner puts forward three names. These are simply suggestions.

Finally, the parties might note that the Standard Module applies to this scheme and not the Body Corporate and Community Management (Commercial Module) Regulation 2008 (formerly 1997) as indicated by lawyers Quinn and Scattini in their letter dated 24th January 2008 to Dr Tracey.

[1] Where there are only two lots in the scheme, the owners or nominees of owners must decide between themselves which of the executive member positions of the committee each is to hold, and if they cannot agree, the positions are held jointly by both of them.
[2] 1041-2006
[3] Section 84 (2) Standard Module.
[4] Section 270(3) Act

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Galen House [2009] QBCCMCmr 290 (11 August 2009)