GC3 [2009] QBCCMCmr 33 (3 February 2009)

Last Updated: 9 March 2009

REFERENCE: 0860-2008

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	38396
Name of Scheme:	GC3
Address of Scheme:	803 Stanley Street WOOLLOONGABBA QLD 4102

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

Rick Ng, a co-owner of lot 458

I hereby declare that the “Shared Facilities Agreement” between the Principal Body Corporate of Gabba Central CTS 37104 (the PBC) and the body corporate of GC3 CTS 38396 and backdated to 1 May 2008, is void and of no effect.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0860-2008

“GC3” CTS 38396

Scheme

GC3 CTS 38396 was registered as a building format plan of subdivision in April 2008 and consists of 154 lots. It is regulated by the Body Corporate and Community Management (Accommodation Module) Regulation 1997 (the Accommodation Module).

Application

This application was lodged on 8 October 2008 by a co-owner of lot 458 who is seeking the following Order:

A declaration that the “Shared Facilities Agreement” between the Principal Body Corporate of Gabba Central CTS 37104 (the PBC) and the body corporate of GC3 CTS 38396, dated 1 May 2008, has not been made in accordance with the BCCM Act 1997 and the BCCM (Accommodation Module) 1997 and/or 2008.

Background

The applicant states that on 23 May 2008, he and Mr Craig Lancaster entered into a contract to purchase lot 458 in GC3 which is also known as Stage 2 of the Gabba Central Development. He further states that the Disclosure Statement provided at purchase did not contain a copy of the “Shared Facilities Agreement”. Since that time the applicant noticed that the common property within GC3 had not been well maintained.

On 28 August the applicant inspected the records of both the Principal Body Corporate of Gabba Central and of GC3 and noted that there was no shared facilities agreement between the two. Similarly, there was no motion or resolution to enter into a Shared Facilities Agreement on file.
He then requested employees of the body corporate manager, Stewart, Silver, King & Burns (SSKB) to provide him with a copy of the agreement. Initially no Shared Facilities Agreement could be found although a copy of an agreement between the PBC and the body corporate of GC1 was later located and SSKB staff attempted to convince him that this agreement applied to GC3 as well.

On 16 September 2008 the applicant complained to the GC3 Body Corporate that members of other bodies corporate such as GC1 and GC2 were using their facilities such as the pool, gym and sauna located on GC3. On 23 September 2008, the Chairperson provided a copy of a Shared Facilities Agreement between the PBC and the body corporate for GC3. The applicant believes that the agreement was signed retrospectively, back-dated to 1 May 2008 and not properly executed because:

• The Chairperson/ Secretary/ treasurer (Ms Julie-Anne Cavanough) of the GC3 body corporate was, on 1 May 2008 the company nominee of the original owner/ developer;
• On 1 May 2008 Ms Cavanough chaired the first EGM for the GC3 body corporate, and at that meeting the body corporate resolved to enter into various agreements but the minutes of the meeting do not contain or involve any shared facilities agreements;
• On 1 May 2008 Ms Cavanough, as Chairperson/ Secretary/ treasurer, executed the Caretaking Agreement with Lonrae Pty. Ltd. on behalf of the Body Corporate for GC3.
• On 1 May 2008 Ms Cavanough also entered into the Body Corporate Administration Agreement with SSKB.
• While Ms Cavanough was also the Chairperson of the Principal Body Corporate on 1 May 2008, she did not hold the position of treasurer, Secretary or ordinary committee member of the Principal body corporate and therefore did not have authority to sign the shared facilities agreement on behalf of the PBC. The applicant believes that If such an agreement had been made on 1 May 2008, it would have been executed improperly;
• There was no resolution to enter into the shared facilities agreement;
• There appears to be a dispute regarding responsibility for maintenance of the pool, gym, sauna, and residents lounges in GC3 are “shared facilities” and should thus be maintained by the principal body corporate and their caretaker, Q-Resort, as from 8 September 2008.
• Even if there was a lawful Shared Facilities Agreement in place, Lonrae Pty. Ltd. is still responsible for routine maintenance/ cleaning tasks because the shared facilities agreement as proposed would require the PBC to meet only the costs for the repair and maintenance of the facilities and the PBC would not be responsible for cleaning, repair, and maintenance associated with the pool, gym etc.
• The body corporate for GC3 has chosen to act unlawfully or to otherwise rely on a document that has not been executed in accordance with the Act and Regulation.
  

Pursuant to section 243 submissions were sought from the body corporate committee and all lot owners.

The following submissions were made by the body corporate committee:

• GC3 is one of three bodies corporate that comprise Gabba Central Apartments and is often referred to as Stage 2 with GC1 and GC2 making up stage 1;
• GC3 was registered on 30 April 2008 and the first EGM was held on 1 May 2008 to establish the body corporate;
• The first AGM was held on 14 August 2008;
• The applicant is the former Secretary of the GC3 body corporate;
• On 14 September 2008 the committee requested the applicant to resign as they no longer had confidence in him;
• On 15 September the applicant tendered his resignation to the body corporate manager (SSKB) ;
• On 16 & 17 September 2008, the applicant faxed a further 6 letters of complaint to SSKB regarding access to & maintenance of the pool, spa, sauna etc.
• On 17 September 2008 SSKB acknowledged receipt of the correspondence and informed the applicant that it would be tabled at the next committee meeting on 17 October 2008 although this meeting was subsequently brought forward to 10 October 2008;
• However, the applicant decided not to wait for the committee meeting to consider the matter but rather, lodged a dispute resolution application. Accordingly, it cannot be said that internal dispute resolution has been attempted;
• It is acknowledged that there is no reference to the shared facilities agreement (SFA) in the first EGM minutes of 1 May but consider this to be an oversight by the original owner;
• The SFA was signed on 1 May and the allegation by the applicant that there was a fraudulent act committed by having the document signed retrospectively to 1 May is unsubstantiated and defamatory;
• There is a continuing dispute between the building managers for the PBC, GC1,GC2 and GC3 over maintenance of the communal facilities which is being resolved by internal dispute resolution mechanisms ;
• All lot owners purchased their lots on the understanding that they would have access to all facilities in the complex and part of their levies are paid to the PBC for maintenance of all shared facilities;
• The applicant’s desire to exclude residents of GC1 and GC2 from the shared facilities is difficult to comprehend because if GC1 & GC2 are denied access to the shared facilities, they would be entitled to have their levies reduced and this would mean increased levies for the GC3 owners who would also be required to contribute to maintenance of the GC1 pool/ gym & spa
  

The following supplementary submissions were made by Ebsworth Lawyers on behalf of the body corporate committee:

• The arrangements between the bodies corporate to share facilities were disclosed to most owners before they signed their contracts and therefore purchased their unit on the understanding that the facilities would be shared by the bodies corporate;
• The minutes of the GC3 EGM held on 1 May 2008 are silent regarding the shared facilities agreement ;
• The executed document was not among the body corporate records;
• The motion was not passed by the Gabba Central Body Corporate CTS 37104 agreeing to enter into the SFA;
• The SFA was passed by the GC3 EGM on 1 May 2008 but due to administrative error the motion was inadvertently omitted from the minutes of the meeting;
• The document was not amongst the records because the original was lost during office relocations before a copy was taken;
• When it was discovered that the executed SFA had been lost, on 22 September 2008, the chairperson of the GC3 body corporate who had originally signed the agreement, re-executed the document and inserted the original date of 1 May 2008, which was a genuine attempt in good faith to deal with the absence of the document;
• The absence of a resolution by the Gabba Central Body Corporate CTS 37104 to enter into the SFA was an administrative oversight;
• It was subsequently decided that the above issues were best dealt with by convening EGM’s for the GC1, GC2, GC3 and Gabba Central bodies corporate at which resolutions could be tabled so as to remedy the deficiencies which occurred at the recent EGM’s;
• It is proposed that the resolutions will ratify the SFA executed by Ms Cavanough. This would cure the procedural deficiencies upon which the application was made. If the resolutions are carried, the matter can be dismissed as this would cure the various deficiencies.
  

JURISDICTION

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 authorization 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)).

DETERMINATION

The applicant has advised that on 1 May 2008 Ms Cavanough chaired the first EGM for the GC3 body corporate and at that meeting it was resolved to enter into various agreements, but the minutes of the meeting do not refer to a shared facilities agreements. Solicitors for the body corporate concede that the minutes of that EGM do not refer to a resolution by the body corporate to enter into a shared facilities agreement but submit that such authorisation was obtained but not recorded in the minutes owing to an administrative error.

While the solicitors for the body corporate have conceded that the chairperson of the GC3 body corporate executed a copy of the shared facilities agreement which was backdated to 1 May 2008, they state that this action was taken by the chairperson because the original document which had been executed on 1 May, had gone missing.

In the absence of some documentary evidence that the then chairperson of the GC3 body corporate was entitled to sign the agreement, I believe there is substance to the applicant’s claim that the agreement which was backdated to 1 May 2008 is a nullity. While I note that the body corporate does not concede as much, the body corporate did subsequently make arrangements for an EGM to be held at which members of the body corporate were given the opportunity to consider whether the body corporate should enter into a shared facilities agreement.

Accordingly, I propose to make an order, substantially in the terms sought by the applicant, declaring that the original shared facilities agreement which was backdated to 1 May 2008 on a date unknown, is void. However this would be something of a pyrrhic victory for the applicant as this irregularity was subsequently remedied by convening a further EGM for the GC3 on 4 December 2008 at which meeting lot owners voted in favour of a fresh Shared Facilities Agreement.