Shanara [2009] QBCCMCmr 385 (7 October 2009)

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

I hereby order that Trevor Matthews of Matthews Body Corporate Management (R.Matthews and Son Pty Ltd) is appointed as the administrator for this scheme with all the powers of the body corporate for the purpose only of convening and holding a general meeting within three months of the date of this order and in accordance with the relevant legislative provisions for the holding of general meetings.

I further order that Mr Matthews shall, amongst other things, seek nominations for committee membership, and invite all lot owners to forward any motions which they wish to have included on the agenda for the general meeting, the whole in accordance with the provisions of section 69 Body Corporate and Community Management (Standard Module) Regulation 2008.

I further order that Mr Matthews may charge a fee of $200 plus GST for so acting as administrator.

This is an application dated 28th July 2009 by Shirly Finocchiaro, (the Applicant) owner of Lot 3 in the scheme, against Shanara Body Corporate CTS 8990 (the body corporate) for an order that an administrator be appointed to the scheme in order to hold an annual general meeting or an extraordinary general meeting.

The Applicant suggests the appointment of Trevor Matthews (Mr Matthews) of Matthews Body Corporate Management (R.Matthews and Son Pty Ltd) as the administrator and Mr Matthews has agreed to convene a general meeting at which a motion for the engagement of a body corporate manager will be put, as well as other legislative matters, on terms set out in a letter dated 24th July 2009 and addressed to this Office.

“Shanara” CTS 8990 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 six 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)). Section 276(4) Act envisages the appointment of an administrator to a scheme by an adjudicator as part of the dispute resolution process.

Mention is made in the application of a conciliation conducted through this Office, but I have no access to any material or matters discussed during that process, which remain confidential. An application for adjudication is an application “de novo” in that an applicant brings a new application and must prove his or her case on the materials provided in the adjudication application.

The Applicant says that the scheme has been largely run solely by Henry Cheung (Mr Cheung), a lot owner, since she bought her unit in 2003, and that the scheme has not been managed in accordance with the legislation in that inter alia, there is no sinking fund, no agendas for meetings, no invoices for contributions, only one signatory on the cheque book, no approval from owners for repairs undertaken by the body corporate, no records of meetings, and no voting of a committee.

The Applicant provides copies of minutes of meetings held on 9th February 2008, 25th April 2009 , and 15th May 2009 all of which appear to be a general meetings as they refer to a quorum of owners, and seem informal, eg. the motions are detailed as items for discussion and not all are voted on. On 15th May 2009, the body corporate decided 4 – 0 that Mr Cheung should “pass the body corporate cheque book and responsibilities” to Mark Fitzsimon of Lot 1 and the Applicant who would then be joint signatories.

The Applicant also provides a copy of the notice of meeting dated 6th June 2009 for a meeting on 5th July 2009 in which motions are set out with detailed comment by Mr Cheung on body corporate and owners’ motions. Mr Cheung says that the minute about the cheque book was wrongly recorded and should be invalidated as this matter was not a formal agenda item. He proposed to continue to hold the cheque book as he was treasurer. He says that both he and Mr Fitzsimon have the power to sign body corporate cheques without the need for two signatures at the same time. Mr Cheung also said that he had reimbursed Mr Fitzsimon the sum of $200 for work done by Mr Fitzsimon on behalf of the body corporate (plant removal near the sewage pipe, and paid $398 to a plumbing firm to clear a blocked drain on the complaint of a tenant. He also admitted to having lost receipts for items purchased by him with scheme funds for a temporary fence. He says he has acted as chairperson, secretary and treasurer “for years.”

In accordance with section 243(2)(a) Act, submissions were invited from all lot owners.

Mark Fitzsimon (Mr Fitzsimon), owner of Lot 1 opposed the application for an administrator, saying that he wants Mr Cheung “to run the body corporate” since he is a person of integrity. He says that together, he and Mr Cheung have done much work in the running and maintenance of the body corporate, and they liaise with tenants. He says that there was written notice of the meeting of February 2008, and he is of the view that it is fine for contributions to be requested from lot owners verbally, and be recorded as they come in by Mr Cheung. He says that as of June 2009 there are two signatories for the cheque book, he being one of them, and that he does not want to keep the cheque book himself. He thinks that not all minor matters need to be referred to owners and that the “ less fuss the better, sometimes.” He explains that the Applicant has legal knowledge and experience, and a preference for attention to detail.

Natalie Doel, (Ms Doel) owner of Lot 6 supports the application, and would like to see the scheme professionally managed by Matthews Body Corporate Management.

On 22nd September 2009, Mr Cheung submitted that he was in agreement that the Applicant could “ keep the files” and that an administrator should “run the body corporate.” He also advised that he would like to retire as chairman, treasurer and secretary, but would like to remain as an ordinary committee member.

In this small scheme, it appears that some owners are more active than others in their enthusiasm for the management and maintenance of the buildings and grounds. Owners Mr Cheung and Mr Fitzsimon have contributed much, also saving the body corporate money by doing work themselves. Mr Cheung has also devoted years in acting in all three executive positions on the committee.

However, this inevitably opens him up to scrutiny, and it is for this reason that the legislation, whilst encouraging self-management, requires that the committee acts transparently and with a certain level of skill and expertise.

The Code of Conduct for Committee Members, introduced into the Act in 2008, requires committee voting members to have a commitment to acquiring an understanding of the legislation relevant to the role of the committee; and to take reasonable steps to comply with the Act and relevant module. It does not require a thorough or professional understanding of the legislation, and it is accepted that now and then a committee will make honest mistakes.[1] I note that there is no suggestion that the committee (which seems to consist solely of Mr Cheung) has acted improperly or dishonestly in any way.

This application is for an entity independent to the scheme to convene and conduct a general meeting. However, I note from the grounds supplied by the Applicant, and the letter from Mr Matthews, that the Applicant requires a general meeting at which a motion about the engagement of a body corporate manager is included. Ms Doel would like to see Matthews Body Corporate Management engaged as the body corporate manager for the scheme.

In his letter dated 24th July 2009, Mr Matthews says that he would charge $200 plus GST to convene a general meeting, but that if his firm is engaged as a body corporate manager that he would waive this fee.

I have some concerns that owners in this scheme do not entirely understand their responsibilities and powers, for example, it is a requirement that notice of a contribution payable is given in writing 30 days before it becomes due. (Section 142(1) Standard Module). I am of the view that the scheme would benefit from a general meeting convened by an independent person, and in accordance with the legislation. The scheme would also benefit from an active committee and with six owners in the scheme, all owners could be members of the committee, six being the maximum number for this scheme. The new committee might find information and fact sheets available from this Office and on the website helpful.[2]

The Applicant is concerned about adherence to the legislation, but also has concerns about matters which are not required under the Act or Standard Module. For example, the body corporate may like to seek advice as to whether it has a legislative requirement to inspect common areas for asbestos. There is no such requirement under the body corporate legislation and this may only refer to commercial and industrial workplaces. It is entirely a matter for the body corporate to decide whether it falls into the categories of the relevant legislation, and if the scheme is a “workplace” for any person. There is also no requirement under body corporate legislation to provide a professional sinking fund forecast. The body corporate may decide what it wishes its sinking fund to be, and it should be looking at expenses reasonably foreseeable in the next ten years.

Further, whilst safety is always a prime concern, a residential body corporate is not generally required to update its equipment or building materials to comply with the latest Australian Standards. That would impose an impossible burden on owners and require constant review. Landlords of tenanted units may have obligations to their respective tenants but that may not be an obligation of the body corporate as a whole.

I therefore appoint Mr Matthews as an administrator with powers of the body corporate restricted to the calling and convening of a general meeting within three months of the date of this order. At that meeting, elections for committee members should also be sought, so that the administrator should also seek nominations for committee prior to the meeting in accordance with the legislation. Owners should also be invited to submit motions for the meeting at the same time, so that any owner may propose a motion for the engagement of a body corporate manager. Where a body corporate manager quotes fees which will incur “major spending”, then two quotations should be provided.[3]

[1] Wei-Xin Chen –v- Wishart Village CTS 19482 Brisbane District Court 4080 of 2000 (29th May 2001)
[2] Telephone 1800 060 119 Information Service, Commissioner’s Office; http://www.justice.qld.gov.au/3260.htm
[3] Section 152(1) Standard Module. If no amount has been set by the body corporate previously, the relevant limit of major spending for a scheme of six lots is $6,600.

Number of Scheme:	8990
Name of Scheme:	Shanara
Address of Scheme:	16 Jephson Street TOOWONG QLD 4066

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Shanara [2009] QBCCMCmr 385 (7 October 2009)