Acacia Lodge Hostel [2009] QBCCMCmr 432 (30 October 2009)

Last Updated: 13 November 2009

REFERENCE: 1030-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	25755
Name of Scheme:	Acacia Lodge Hostel
Address of Scheme:	40 - 42 Imperial Parade LABRADOR QLD 4215

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Dominic Surace, the owner of Lots 2, 3 and 6

I hereby order that the body corporate for Acacia Lodge Hostel community titles scheme 25755 is authorised pursuant to section 149(1)(c) of the Body Corporate and Community Management (Accommodation Module) Regulation 2008 to spend above the scheme’s relevant limit for committee spending limited to the extent necessary to comply with an order of the Commercial and Consumer Tribunal that the Body Corporate show cause in writing why an order should not be made that the Body Corporate pay Rita Commisso Enterprises Pty Ltd by 6 November 2009 its outstanding salary since August 2008 in the amount of $41,453.22, including the file fee of $240.00.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 1030-2009

“Acacia Lodge Hostel” CTS 25755

The scheme
“Acacia Lodge Hostel” community titles scheme 25755 is subject to the Body Corporate and Community Management Act 1997 (Act) and the Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Accommodation Module).

Application
This application made on 29 October 2009 is by Dominic Surace (Applicant) against the Body Corporate seeking outcomes:

1. That the Body Corporate is authorised to enter into the costs agreement with Ramsden Bow Lawyers and initiate proceedings by adding the former Administrator to the Rita Commisso Proceedings in the CCT;
2. That a special levy of $2,000.00 be immediately raised for the purposes of meeting the costs of Ramsden Bow Lawyers;
3. That a special levy of $1,213.70 be immediately raised for the purposes of paying the scheme electricity account due tomorrow.
4. That the former administrator is not to apply any of the ordered levies towards any purported fees owing to him by the Body Corporate.
5. That the rolls, records and files of the Body Corporate be provided to Ramsden Bow Lawyers to enable them to investigate the conduct of the former administrator for the purposes of the proceedings and they are to be held pending the appointment of a Body Corporate Manager at the Scheme's next AGM;
6. That the Applicant has leave to put forward further Orders as to shortening the notice period for the AGM to seven (7) days and for the Body Corporate to hold an AGM after the end of the financial year for the Body Corporate.
   

Adjudication
The Commissioner has referred the application to an adjudicator on the basis it is reasonably considered to relate to emergency circumstances (s 243A, Act). The Commissioner may immediately refer the application to an adjudicator without giving written notice pursuant to section 243(1) (s 243A, Act).

Jurisdiction
An adjudicator may make an order to resolve a dispute about a claimed or anticipated contravention of the Act; or the exercise of rights or powers, or the performance of duties, under the Act (s 276(1), Act). An order may require a person to act, or prohibit a person from acting, in a way stated in the order (s 276(2), Act).

The Applicant has referred to section 149 of the Accommodation Module. Section 149(1)(c) provides that the committee may only give effect to a proposal involving spending above the relevant limit for committee spending if 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.

Investigation
In accordance with the investigative powers of an adjudicator stated in section 271 of the Act, I sought submissions from Rita Commisso Enterprises Pty Ltd (Commisso) about the issues raised in the application. Hynes Lawyers responded on behalf of Commisso.

Decision
Outcome 1
There are six lots included in this scheme. The Applicant is the owner of Lots 2, 3 and 6. Rita Commisso is the owner of Lots 1, 4 and 5.

The Applicant states that on 13 August 2009, Commisso filed proceedings against the Body Corporate pursuant to section 149B(2)(b) of the Act with the Commercial and Consumer Tribunal (CCT). The Applicant has provided a copy of documents indicating that Commisso had made an application naming the Administrator for the Body Corporate as the respondent. An administrator had been appointed by order of an adjudicator under the dispute resolution provisions of the Act (Acacia Lodge Hostel [2008] QBCCMCmr 459 (10 December 2008)). This order was appealed to the CCT and on 25 September 2009, the Tribunal ordered that the appeal be allowed with respect to that part of the order relating to the appointment of the administrator (Surace v Commisso [2009] CCT KA002-09). The Applicant states that neither the Administrator nor Commisso had notified the Applicant of the proceedings. The Applicant submits his solicitors were served a copy of the CCT orders on 26 October 2009.

The Applicant states that pursuant to CCT orders, the Body Corporate has until today at 4pm to show cause in writing to the registry, copied to the Commisso why an order should not be made that the Body Corporate pay Commisso by 6 November 2009 its outstanding salary. The Applicant says the Body Corporate is not indebted to Commisso in the stated amount. The Applicant submits if the Body Corporate is not legally represented in the proceedings, there will be significant prejudice to the Body Corporate as it will be liable for interest and wages not owing to Commisso. The Applicant submits a cost agreement has been obtained from Ramsden Bow Lawyers who has acted on behalf of the Body Corporate previously. The Applicant provided a copy of a Costs Agreement between Ramsden Bow Lawyers and the Body Corporate. Hynes submitted that Commisso is not aware that Ramsden Bow Lawyers have acted on behalf of the Body Corporate in the past.

I am satisfied from the material provided by the Applicant that there is proceedings in the CCT to which the Body Corporate is a party and that urgent circumstances exist with respect to the Body Corporate making submissions to the CCT. I am satisfied that the urgency is, in part, due to the changes in the administration of the scheme. The Applicant seeks authorisation in effect to spend above the committee spending limit.

In the absence of any information to the contrary this limit is $1200 (schedule, dictionary, Accommodation Module). While the Applicant has not specified an amount expected to be spent, it would be reasonable to anticipate that the costs of making submissions would be above this limit, particularly given the terms of the second outcome sought. Ordinarily, an application seeking authorisation to spend above the relevant limit would be made by the committee. In this scheme, both owners are members of the committee (s 14, Accommodation Module). A motion is decided by a majority of votes of members (s 52, Accommodation Module). However, a voting member with a conflict of interest with respect to the issue is not entitled to vote on a motion involving the issue (s 53, Accommodation Module).

The Applicant has made submissions about Rita Commisso’s interest in Commisso, including about her inherent conflict of interest. Hynes states they fail to understand how any alleged conflict of interest is relevant, particularly given that Rita Commisso is a non-voting member of the committee. While it may be that Commisso has a conflict of interest with respect to any consideration by the committee about the Body Corporate making submissions to the CCT with respect to this matter, section 53(2) of the Accommodation Module does not apply as she is a non-voting member. In my view, this question is irrelevant for the purposes of determining this application on an emergency basis.

However, this circumstance does not prevent the Applicant from voting on the issue at committee level, including voting to make a dispute resolution application (s 49 and 54, Accommodation Module). I am not satisfied from submissions that the Applicant has a conflict of interest. While it is not evident that the issue was attempted to be considered by the committee, I consider that if the Applicant had done so, his vote would have constituted a decision of the committee. Given the composition of the ownership of lots and the legislative provisions relating to committee membership, there is a likelihood that issues of the nature of this case will arise. An owner or the Body Corporate should not be incapable of doing something, particularly when the other owner has commenced proceedings against the Body Corporate and as found by the CCT in Surace v Commisso, there is an insufficient basis for the appointment of an administrator.

Section 312 of the Act provides a body corporate requires a special resolution to pursue legal proceedings except in certain circumstances. In making this application, the Applicant is seeking authorisation for the Body Corporate to defend its rights in a proceeding to which it is a party. I am satisfied that a special resolution is not required in the circumstances. As there is no evidence that the Body Corporate has passed an ordinary resolution making it a restricted issue for the committee to defend the proceedings of this nature, I am satisfied that this is an action that the committee is entitled to authorise.

For the purposes of deciding the first outcome, I consider the Applicant has demonstrated there is a genuine emergency and that the Body Corporate’s interests may be prejudiced if it does not have the opportunity to make submissions to the CCT. It is reasonable to expect that the Body Corporate engage legal representation to do so. The Body Corporate should not be prevented from doing so in the circumstance where the Applicant would be the only person entitled to vote at committee level to authorise the spending or making an application of this nature. It is noted there is nothing to suggest the Applicant has a right to join the proceedings in the CCT.

For these reasons, I have authorised spending limited to the identified emergent circumstance. Any other expenditure related to the proceedings may be capable of being determined by the Body Corporate in a way prescribed by the legislation. I do not consider it is appropriate to make an order in the terms of the first outcome. The order is limited to dealing with an emergency circumstance only. I do not consider there is any basis to make an order authorising initiating proceedings by adding the former Administrator to the Rita Commisso Proceedings in the CCT.

Outcomes 2 and 3
With respect to both outcomes, the Applicant should note the following comments of the Tribunal in BIDDLECOMBE AND OTHERS V THE BODY CORPORATE FOR THE MEWS BOWEN HILLS CTS 33016 [2009] CCT KA005-09; an appeal against an order made by an adjudicator as a consequence of a referral of the Commissioner under section 243A of the Act. The CCT stated at paragraph 3 that the “the second “order” [of the adjudicator] was to the effect that, for the purposes of meeting “this unscheduled expenditure”, the Body Corporate was “entitled” to raise a special levy”. At paragraphs 28 to 31, the Tribunal discussed the jurisdiction of an adjudicator to make an order with respect to a special levy stating at paragraph 31: “it may well have been reasonably arguable that the Adjudicator had neither the jurisdiction nor the power to make any order with respect to the special levy”.

In these circumstances, I have not made an order on an emergency basis in the terms of the second and third outcomes.

Outcome 4
An order is sought against the ‘former administrator’. A dispute under chapter 6 of the Act must be between the parties mentioned in section 227 of the Act. There is no capacity for a dispute to be between an owner and a ‘former administrator’. I do not consider there is any reason to give consideration to this outcome on the basis it relates to emergency circumstances.

Outcomes 5 and 6
With respect to both issues, I do not consider there is any reason to give consideration to these outcomes on the basis they relate to emergency circumstances.

Conclusion
The outcomes not dealt with at this time on the basis they do not relate to emergency circumstances will be administered and determined in accordance with the Act.