Edgewater Two [2010] QBCCMCmr 499 (4 November 2010)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Ricardo Simeoni, the Owner of Lot 5

I hereby order that -

(1) John Hayden of Village Strata Pty Ltd (PO Box 3, North Tamborine, Qld 4272) is appointed as administrator to call, hold and chair an annual general meeting (‘the meeting’) of the Body Corporate for Edgewater Two within three (3) months of the date of this order.
(2) The administrator shall hold the appointment for the period beginning from the date of this order until of the close of the meeting ordered.

I further order that the meeting shall be deemed to be the annual general meeting of the scheme for 2010 and, unless otherwise provided for in this order, shall be called and held in accordance with the Body Corporate and Community Management Act 1997 and the Body Corporate and Community Management (Standard Module) Regulation 2008.

I further order that for the purpose of calling, holding and chairing the meeting, the administrator shall have all the powers of the chairperson, secretary and treasurer of the body corporate, and of the committee, with the exception of the following powers:

- to further delegate any of those powers to another person; or
- to incur any expenditure apart from that necessary for the calling and holding of the meeting, except in regard to expenses that must necessarily be met and are capable of being authorised and incurred by a committee under the legislation.

I further order that the administrator must give at least fourteen (14) days written notice inviting owners to submit motions for inclusion on the agenda of the meeting and nominations for committee membership.

I further order that the administrator’s fees and outgoings for this appointment are to be paid by the Body Corporate for Edgewater Two.

Edgewater Two community titles scheme 37661 (Edgewater Two) consists of six lots and common property. The community management statement (CMS) for Edgewater Two indicates that the Body Corporate and Community Management (Standard Module) Regulation 2008 (Standard Module) applies to the scheme. Department of Environment and Resource Management records show the scheme is registered as Survey Plan 191981.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Ricardo Simeoni, Owner of Lot 5 (applicant) on 15 June 2010. The applicant sought an order against the all other lot owners (respondent). Although not specifically named in the applicant, titles records show that the other lots owners in this scheme are: Jian Yan Lian, Owner of Lot 1; John and Robyn Salisbury, Owners of Lot 2; Simon Hughes and Cassandra Anderson, Owners of Lot 3; An-chi Yi, Owner of Lot 4; and Sally-Ann Daly, Owner of Lot 6.

The appointment of Ace Body Corporate Management to correct the shortcomings of, and manage the Body Corporate for, Edgewater 2.

Under section 243 of the Act, a copy of the application and subsequent additional information provided by the applicant was provided to all lot owners. Submissions were made by the owners of three lots. The applicant did not avail himself of the opportunity to inspect or respond to the submissions received.[1]

A dispute resolution recommendation was made referring the dispute to departmental adjudication. I then investigated the dispute, pursuant to section 271 of the Act, which included reviewing the application and submissions, and seeking further information from the parties as outlined below.

The application relates to applicant’s desire to appoint a Body Corporate Manager (BCM) to administer the scheme. The applicant says that since he has been a lot owner (having purchased in January 2008) the Body Corporate has not been active. There has been no committee, no meetings, and no sinking or administration funds.

It appears that the scheme was developed by Devine Pty Ltd who then handed management of the scheme to Ernst Body Corporate Management Pty Ltd. On 24 September 2008 Ernst wrote to one of the owners, Robyn Salisbury. The letter said the scheme was established with a view to being self-managed and that Devine had advised them that she was a suitable person to receive information about the Body Corporate. The letter apparently handed over the body corporate records, seal and relevant contact details. It said that if she and other owners were unable to handle the day-to-day management of the scheme, a professional BCM could be appointed.

The applicant says that he expressed a preference for a professional BCM in late 2008 but no change was instigated. He says he expressed his concern again in February 2009 and obtained a quote from a professional BCM. Again no action was taken.

In May 2010 the applicant sought legal advice on the matter and contacted Ace Body Corporate Management (Ace). The application includes a quote from Ace for $1,000 for an initial three months to set up the body corporate.

One says she is opposed to the idea of an administrator or a BCM. She says that when a water bill or rates notice comes in she emails the other owners and it is split evenly and each owner pays the Council directly, which has not been a problem. She believed that they could self-manage the property, which is one of the reasons she was attracted to buying the property.

Another submission says they are alarmed that that have to have a BCM. They say one of the reasons they were happy about this property was that there was no common land and no body corporate needed, with just insurance to pay which has been handled by Sally-Anne Daly. The cost of $1,000 is an unnecessary expense for a group of townhouses that are only 2.5 years old. The insurance is up-to-date and there is no common land that requires maintenance.

The third submission says that the real estate agent told them when they purchased in February 2008 that there was no body corporate and they would be in charge of their own place. They bought because the property was affordable and had no body corporate fees. They say that since they purchased it has been very disorganised. Initially the Council mowed the nature strip but it has not been done for 18 months so they had to buy a whipper snipper to do it. However they say there is no need for a body corporate because there is nothing to look after, and the payment of annual insurance works the way it needs to.

Having reviewed the views expressed in the application and submissions, on 6 October 2010 I wrote to all owners regarding this dispute. I noted that whether or not they considered that a body corporate was existed or not, or was necessary, pursuant to section 30 of the Act, the Body Corporate for Edgewater Two was automatically created when the community titles scheme was registered. All lot owners are automatically members of the Body Corporate.

I briefly noted the obligations regarding the management of a body corporate and expressed a preliminary view that the Body Corporate for Edgewater Two was not currently meeting these obligations. I indicated that there appeared to be a need for an administrator to be appointed to convene an Annual General Meeting (AGM) at which a committee could be appointed and proper financial arrangements for the scheme could be established.

As concerns had been raised regarding the cost of the applicants’ nominee for administrator, I invited all owners to submit any alternative nominations for administrator, and make any other comments on the dispute in light of the information provided. I provided a copy of the Commissioner’s Practice Direction 17 regarding the appointment of administrators and noted that while an administrator may be a professional BCM, they did not need to be.

In response an alternative quote was provided by the owners of one lot and endorsed by another. No other owner responded. The quote received was from Village Strata Pty Ltd (Village). Initially the quote was for 12 months at a cost of $130 per lot plus GST, plus set up costs of $100, plus printing, postal and stationary of $50 per lot, plus additional work at set rates. Our Office sought clarification from Village as to their costs of acting as administrator (rather than BCM) for three months. Village then provided a quote for $600 in total for that purpose.

At my request a member of the Commissioner’s Office telephoned the applicant and the owners who had proposed the original Village quote with the new Village quote. The applicant indicated that he had no preference over who was appointed. No objections were raised regarding the new Village quote from the owners who had originally supported it.

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[2]

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 claimed or anticipated contravention of the Act or the CMS, or the exercise of rights or powers, or the performance of duties, under the Act or the CMS. An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[3] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[4]

Specifically, and without limiting the power to make an order under section 276(1), an adjudicator may order the body corporate to call a general meeting of its members to deal with stated business or to change the date of an annual general meeting[5] or alternatively, the adjudicator may order the appointment of an administrator, and authorise the administrator to perform obligations of the body corporate, its committee, or a member of its committee under this Act or the CMS or the obligations of the body corporate under another Act.[6]

An administrator appointed by an adjudicator has the powers given to the administrator under the order.[7] Section 301(4) of the Act provides that the order may:

The issue for consideration in this matter is whether a BCM or administrator should be appointed for this scheme, and, if an appointment is made, who should be appointed and how long the appointment should be for.

It is first relevant to this dispute to note the difference between a BCM and an administrator. A BCM is a person (including a company) engaged by a body corporate to supply administrative services to the body corporate[8]. The Commissioner’s Office produces a factsheet about BCMs on its website[9] which summarises the legislative provisions regarding the role, appointment and termination of BCMs. A general meeting resolution is required to appoint a BCM.

There is no requirement that a body corporate appoint a BCM. However the requirements of the body corporate legislation can be complex and onerous. Even in very small schemes, many owners find that it can be simpler, and can minimise conflict with their neighbours, if they engage an independent BCM to ensure all the administrative requirements of the legislation are followed.

Normally BCMs are appointed for a one to three year period to assist the committee administer the body corporate. Commonly a BCM will be authorised to exercise the functions of the secretary and treasurer, which will involve responsibility for issuing levy notices, managing body corporate funds, issuing meeting notices and minutes and so on. However normally there will still be a requirement for a committee and the BCM acts at the direction of the committee[10].

An adjudicator has no authority to appoint a BCM, as this is the sole right and responsibility of a body corporate. However, the legislation does give an adjudicator the capacity to appoint an administrator. The term of the appointment and the scope of the administrator’s authority and powers will be determined by the adjudicator’s order. There is no legislative requirement for an administrator to be a professional BCM or have other qualifications. This will depend on the circumstances of the particular dispute, including the needs and wishes of the parties. However, where an administrator is being appointed because of some dispute between parties, the appointment of an independent professional would be more usual.

A three-month appointment of an administrator to conduct a general meeting is common where a body corporate has not held annual meetings, or meetings have not been conducted validly, or there is no longer a valid committee who is able to call a general meeting. Such orders are made where there is a need to put a scheme back on a proper legal footing.

In certain circumstances, applicants will seek the appointment of an administrator for a longer term. Adjudicators do not take such longer term appointments lightly as they can deprive the right of owners to administer a scheme themselves on a day-to-day basis and can have a significant cost impact on all owners. The responsibility for self administration is an inherent aspect of all community titles schemes. Therefore, an applicant must generally demonstrate that the administration of the body corporate had broken down irretrievably or is in significant disarray for a longer term appointment to be justified. The appointment of an administrator cannot be made in a scheme simply because an owner would like a BCM to assist with the ongoing management of the body corporate.

I am satisfied that the Body Corporate for Edgewater Two is currently not operating on a proper legal footing.

Section 60 of the Standard Module provides that an AGM must be called and held within three months after the end of a scheme’s financial year. Although the parties have not indicated when the financial year for the scheme is for this scheme, none of the submissions have disputed the applicant’s assertions that no AGM has been held over the last two years. For this reason alone there is a need for an adjudicator’s order to restart the Body Corporate and enable the 2010 AGM to be called. However is currently no basis to make a longer term appointment.

While the applicant initially nominated Ace for this purpose. An alternative and somewhat cheaper nomination of Village has been provided by other owners. The applicant does not object to this appointment. I have no basis to believe Village is not appropriate to act as administrator to convene the 2010 AGM and restart the Body Corporate.

I would stress that I have no reason to believe that owners in this scheme have not acted in good faith to date. Unfortunately it would appear that they have been unaware of the legislative requirements regarding bodies corporate, or of its application to their scheme, and perhaps were given incorrect or misleading information by the developer.

The legislation sets out detailed requirements for how AGMs must be called and conducted, as well as a range of other matters about the administratrion of bodies corporate including committees, financial management, property management, by-laws, insurance, record keeping and so on. Of highest priority for this scheme will be to start having annual meeting, appoint a committee and establish proper financial arrangements.

I do not intend to outline all the details of these requirements here – the administrator may be of assistance to owners in this respect. The example of a properly convened and minuted meeting and the establishment of budget that will provided by the administrator may be sufficient to assist the owners to understand the requirements in future. In addition, I would encourage all owners to inform themselves as to their rights and responsibilities as the owner of a lot in a community titles scheme. The Information Service in the Commissioner’s Office provides a range of factsheets, seminars and on-line training through its website - www.justice.qld.gov.au/bccm. Owners can also call with queries about the legislation on freecall 1800 060 119.

Owners will be able to submit motions for consideration at the meeting on any issue they wish to pursue. If the applicant would like to have a BCM engaged on a longer term basis he, or any other owner, would be entitled to submit an appropriate motion with quotes for consideration at the AGM. Owners can then consider whether the cost of a BCM would outweigh the time and effort that would be involved for appointed Committee members in understanding and performing the administrative responsibilities without the assistance of a BCM.

For the reasons outlined above, I consider that it is necessary to appoint an administrator for three months to enable an AGM to be called, to get the Body Corporate back on a proper legal footing. I propose to appoint Village as administrator for three months for this purpose.

Any owner in possession of financial or other records should provide them as soon as possible to administrator to enable them to progress their tasks as quickly as practicable.

[1] See sections 246 and 244 of the Act respectively
[2] See sections 227, 228, 276 and Schedule 5 of the Act
[3] Section 276(2) of the Act
[4] Section 284(1) of the Act
[5] See Item 6 of Schedule 5 to the Act
[6] See Item 23 of Schedule 5 to the Act
[7] See section 301(2) of the Act
[8] Section 14 of the Act
[9] www.justice.qld.gov.au/bccm

[10] In rare circumstances a body corporate may choose to engage a BCM where there is no committee, pursuant to section 58 to 62 of the Standard Module. In that case the BCM would take on all the functions of the committee.

Number of Scheme:	37661
Name of Scheme:	Edgewater Two
Address of Scheme:	17 Park Esplanade, Coomera Qld 4209

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Edgewater Two [2010] QBCCMCmr 499 (4 November 2010)