Arundel Links [2009] QBCCMCmr 469 (25 November 2009)

Last Updated: 9 December 2009

REFERENCE: 0565-2009

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	17447
Name of Scheme:	Arundel Links
Address of Scheme:	3 Arundel Drive ARUNDEL QLD 4214

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

John Atkins, Sandra Watson & Malcolm Billington, the Owner(s) of lots 28, 16 and 27 respectively

I hereby order that the application is dismissed.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0565-2009

“Arundel Links” CTS 17447

Application

Arundel Links Community Titles Scheme (Arundel Links) is a 90 lot scheme under the Body Corporate and Community Management Act 1997 (Act) and the Act’s Accommodation Module Regulation (Accommodation Module). The scheme is designed for residential purposes.

This application is by John Atkins, Sandra Watson and Malcolm Billington, owners of lots 28, 16 and 27 respectively (applicants) seeking orders against the body corporate for Arundel Links (respondent). The applicants are seeking an immediate extraordinary general meeting regarding an alleged amendment to the caretaking agreement, the implementation of various recommendations in a report on work performed by the caretakers, and the appointment of an administrator in place of the committee.

Decision

Investigation and Submissions

Submissions

The main grounds in support of the application, provided on behalf of the applicants, were to the effect that:

• The committee has approved the caretakers performance of additional work at an hourly rate of $35 without body corporate funds being budgeted for this work;
• The committee has effectively amended the caretaking agreement by approving work at this hourly rate when the caretaking agreement provides for additional work at $22 per hour; and
• A report from Logan Irwin of Independent Strata Consultants shows that the committee has continually approved expenditure without meeting proper financial guidelines and with insufficient funds in the budget. An administrator should therefore be appointed.
  

The body corporate was given an opportunity to provide written submissions. The main submissions by the committee were to the effect that:

• The work authorised by the committee fell within the spending limit. The sinking fund budget for 2007/2008 showed $99,000 for future provision expenses and actual expenditure was $81,702.33. If the logic applied by the applicants was used there would be no money for any sinking fund expenditure as no amounts were allocated to specific expenses;
• The work performed by the caretakers at $35 per hour is work that falls outside of the Gardening Contract. It is a separate arrangement rather than an amendment of the caretaking agreement;
• The real purpose of the Logan Irwin report was to determine which duties are contained within the Gardening or Management Agreements. The report is only a brief overview of other matters and a number of these matters have not been investigated fully.
  

All owners were given an opportunity to provide written submissions. All submissions are available for inspection by interested persons and it is unnecessary to summarise the submissions here.

The applicant exercised the right to inspect the submissions and then replied to those submissions to the effect that:

• The chairperson has shown a lack of understanding of the legislation by stating that the budget is a guide and cannot always be adhered to dollar for dollar;
• A major annual pruning of shrubs and trees was charged at $38.50 per hour. Schedule A specifically lists this item at a charge of $22 per hour plus GST. This amounts to a change of the agreement; and
• Little or no evidence has been provided to dispute the applicants’ claims.

Investigations following receipt of submissions

The above submissions were received through the legislated processes for inviting written submissions from the body corporate and any persons affected by a community titles scheme dispute (Act, 243). Even where the body corporate makes a submission, it is not unusual for a large proportion of owners to also make their own individual submission. Each person who makes a written submission is effectively joined to the proceedings and given a right of appeal (Act, 289). This overcomes any concern that the particular position advanced in the name of the body corporate only reflects the views of a couple of committee members.

The legislation does not provide for a formal hearing at which the various persons affected by the dispute can further argue their case. In some circumstances it is appropriate for an adjudicator to make a determination based solely on whatever written submissions have been provided.[1] However, an adjudicator will need to undertake appropriate investigations if there is insufficient material for the adjudicator to make an express finding on relevant matters.[2] In carrying out these investigations, the adjudicator must act as quickly and informally "as is consistent with a fair and proper consideration of the application" (Act, 269(3)(b)). Despite this need to act quickly and informally, a teleconference or a further round of written submissions may be necessary to allow relevant persons to respond to any significant information obtained in these investigations (Act, 269(3)(a)).

The submissions provided by the parties included a large amount of factual information and numerous allegations. It would be possible to investigate the minutia of these various allegations. However, such investigations would consume a significant amount of time and are ultimately unnecessary for a determination of whether or not the applicants should be granted the orders they have sought. I note that the legislation recognises self management as an inherent aspect of a community titles scheme (Act, 4). The role of an adjudicator is to make an order to determine a dispute rather than to oversee a particular community titles scheme and enforce general compliance with all regulations in the absence of a specific dispute.

Issues for determination

Summary of issues

The main issues for determination can be summarised as follows:

1. Should the committee be required to call an extraordinary general meeting to approve amendments they have made to the caretaking agreement?
2. Should the committee be required to immediately implement the recommendations in the Logan Irwin report? And
3. Should the committee be dismissed and an administrator appointed?

No amendment to caretaking agreement

The applicants allege that the committee has amended the caretaking agreement. The committee say that they did not amend the existing agreement but simply entered into separate short term contracts for various jobs not covered by the agreement.

The main issue raised was regarding a major pruning of shrubs and trees. The problem for the applicants is the lack of evidence to show there was any amendment of the existing agreement as opposed by a new separate arrangement for the performance of the work. In fact, the Logan Irwin report relied upon by the applicants in many respects clearly states that a major pruning of shrubs and trees is not required to be performed under the caretaking agreement, that the body corporate can seek outside quotations, and that the caretaker should be allowed to provide their own quotation. Reference is made to clause 9 of the caretaking agreement that states "The following work is not covered by this Agreement :- ...major annual pruning of shrubs and trees...These works may be carried out ... at an additional cost .. of $22 per hour".

It seems obvious that the caretaker could refuse to carry out a major pruning of shrubs and trees at $22 per hour as set out in the caretaking agreement but still come to an entirely separate agreement with the body corporate to carry out that work. The applicants have failed to provide any evidence that satisfies me that the committee purported to amend the caretaking agreement rather than simply enter into an entirely separate arrangement for the caretaker to perform additional work at an agreed rate. The application will therefore be dismissed in this respect.

Not appropriate to require body corporate to implement report recommendations

Whether or not owners wish to implement any of the report recommendations is a matter than should at first instance be decided by majority vote at a valid meeting of the body corporate. A motion must first been put to the body corporate to allow for a decision on whether or not to implement any particular recommendation before there is any real dispute over which I have jurisdiction.[3]

This is an aspect of the self management of a community titles scheme and until owners or committee members have voted on whether or not to adopt a particular recommendation there is no dispute for me to determine in relation to that recommendation.

Not appropriate to appoint administrator

Appointment of administrator typically requires that body corporate be so dysfunctional that it cannot operate properly within the statutory framework that governs it, a well founded suspicion of financial malpractice, or some undue oppression in the conduct of its affairs.[4] This would illegal action by which a person seeks a benefit for himself while in a position of trust

It seems clear that the body corporate has failed to properly itemise its budgets and therefore also failed to fix a special contribution where inadequate provision has been made in the budget for an item of expenditure (Accommodation Module, 139). However, there is no evidence of financial malpractice in the sense of committee members seeking to gain an improper benefit as opposed to use of funds for proper body corporate purposes but without compliance with proper budgets.

The concerns raised can be addressed by audit and by a revision of the budgets and adoption of any necessary additional contributions at the next general meeting. I am not satisfied it is necessary or appropriate to appoint an administrator.

Conclusion

For these reasons, the applicants have failed to establish any proper legal basis for the orders sought. The application will therefore be dismissed.

I note that some submissions requested the application be dismissed on the basis it was frivolous, vexatious, misconceived or without grounds and that costs be awarded against the applicants. However, I am not satisfied that it is appropriate to dismiss the application on this basis. This is particularly due to the body corporate’s failure to adopt proper budgets and spend in accordance with those budgets.

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[1] Hablethwaite & Anor v Andrijevic & Ors [2005] QCA 336, Jerrard JA, Keane JA, Cullinane J, 9 September 2005, per Keane JA at paragraph 31.
[2] Johnston v The Body Corporate for Waterside Runaway Bay CTS 34678 [2009] CCT KA008-08, KD Dorney QC, 6 February 2009 at paragraph 25.
[3] Tully v The Proprietors, The Nelson Body Corporate [2000] QDC 31, PD Robin QC, 10 March 2000.
[4] Surace v Commisso [2009] CCT KA002-09.