Kinmond Villas [2010] QBCCMCmr 519 (22 November 2010)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Keith Wright, the Owner of Lot 2

I hereby order that -

(1) Skehan Body Corporate Managers (PO Box 571, Buderim Qld 4556) is appointed as administrator to call, hold and chair an annual general meeting (‘the meeting’) of the Body Corporate for Kinmond Villas 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 Act and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the ‘Standard Module’).

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 Kinmond Villas.

Kinmond Villas community titles scheme 21185 (Kinmond Villas) consists of four lots and common property. The community management statement (CMS) for Kinmond Villas 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 Group Titles Plan 1477.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Keith Wright, Owner of Lot 2 (applicant) on 17 August 2010. The applicant sought a declaratory order in the following terms:

I'm seeking an adjudication order for the appointment of a proper committee including office bearers to assist us to effectively operate the body corporate.

Under section 243 of the Act, a copy of the application was provided to the other three lot owners in the scheme with an invitation to respond to the matters raised by the application. Submissions were made by each of those owners. The applicant did not avail himself of the opportunity to inspect and 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 detailed below.

The applicant says the last Annual General Meeting (AGM) held in the scheme was in August 2007 (minutes provided) and that there has been no AGM and no budgets since then. The previous secretary/treasurer for the scheme (Charles ‘Bert’ Garrett) died in August 2009. The applicant claims two owners (Gloria Morris and Margaret Stokes) had a meeting on 11 August 2010, but there was no written notice, agenda or budget, there was no presentation of finances, and they just appointed themselves office bearers. Since 2006 the applicant each owner has paid $130 per quarter but the meeting in August 2010 increased contributions to $170 a quarter. He says that the sinking fund is sound but he has concerns about the administrative fund. He says the finances are managed by Stokes who won’t allow the books to be audited and presented a fictional statement for 2009 year to the AGM but refused to provide copies of it,

The applicant asked to be nominated as administrator to call and conduct the 2010 AGM.

The submission from Stokes (Lot 3) says she was not self appointed but was asked by the owners to manage the affairs of the scheme after the death of Bert Garrett.[2] She collects and banks levies, pays accounts, co-signs cheques with Morris, and provided financial statements to owners. She says a quote was obtained from Skehans Body Corporate Management (Skehans) which was passed on to other owners and everyone other than Wright agreed. In regard to meetings, she says a meeting was held on 3 August 2009 and another on 11 August 2010. She says Wright was asked two weeks before if that time and day suited but he waited until the day to object. The insurance was approved for payment at that meeting and levies increased. The meeting held an election for office bearers, with Morris accepting the role of secretary and Stokes as treasurer, but Wright declined. She says she and Morris are elderly and would appreciate some cooperation rather than criticism and obstruction. She objects to suggestions that the administration fund is in a mess, and notes that she has not made any claims for the costs she has incurred in administration or for refurbishing part of the front garden. She does not support Wright as administrator because she believes that would cause more problems than it solves.

The submission from Morris (Lot 1) says that if there was no AGM since 2007 Wright should have discussed that with Bert Garrett, as neither she nor Stokes had any responsibility at that time. However Wright contradicts himself when he notes that the contributions were increased at the 2010 meeting. At the 2004 and 2006 meetings she proposed the appointment of a professional body corporate manager to relieve Garrett of the workload in his declining state of health, but this was opposed by Wright and Garrett because of the cost. No meeting was held in 2008 despite her best efforts to raise it with Garrett over an extended period. When she pursued it again before August 2009 the other owners agreed and it was held on 3 August with all owners present. Garrett declined to hand over the duties of secretary/treasurer despite his frailty, but he died soon after. Rod Garrett handed over the books and records to Stokes and she agreed to continue with the duties until a more formal arrangement could be made. Morris prepared the minutes of the August 2009 meeting. She and Stokes were anxious about the proper administration of the Body Corporate and contacted Skehans. Wright appeared to agree but then Skehans telephoned to say they had decided not to accept them as clients because of Wright’s offensive behaviour to them. Consequently Stokes and Morris had no choice but to continue on in the role, which they do on a voluntary basis. Wright declined the role of Chairperson at the 2010 meeting. She would not accept Wright as administrator and she has faith in Stokes’ honesty and integrity. She requests that Wright be advised to agree to the proposal to employ a professional secretary/manager.

A submission from Roderick Garrett notes that he acquired Lot 4 after the death of his father. He has not participated in any meetings as he does not live in Brisbane, but has received quarterly advice from Stokes regarding levies and he received the minutes of the 11 August 2010 meeting.

At my request and pursuant to my investigative powers under section 271 of the Act, a member of the Commissioner’s Office contacted Stokes and Morris to ask whether they could supply the meeting notice and minutes for the AGMs in August of 2009 and 2010. Handwritten minutes of the two meetings were subsequently supplied.

Stokes and Morris were also asked whether, in light of their objections to the appointment of Wright as administrator, they would like to nominate an alternative. Stokes subsequently provided a quote from Skehans in the amount of $660 plus outgoings to be appointed as administrator to convene an AGM.

On 8 November I wrote to all lot owners. I noted that meetings purporting to be AGMs for 2009 and 2010 had been held but that I had formed a preliminary view that there were defects in the conduct of those meetings such that they were not validly held. I noted that I had no evidence that any owner had not acted in good faith in regard to the conduct of the meetings. I indicated that there appeared to be justification to appoint an administrator to convene a new AGM for 2010. I provided owners with a copy of the Commissioner’s Practice Direction 17 regarding the appointment of administrators and a copy of the Skehans quote. I invited owners to comment on the alternative nominations for administrator and on any other matter relating to the dispute.

Morris made a written submission supporting Stokes’s nomination of Skehans. Garrett made a written submission supporting the appointment of an independent administrator, and agreeing to meet one quarter of the costs of the administrator irrespective of the status of the sale of his lot. No written response was received from Wright. He telephoned this Office with a query regarding my letter and, I understand, indicated that he did not believe Skehans were suitable. He was advised to put nay comments in writing and while he said he would, nothing was received.

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[3]

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:

(b) the exercise of rights or powers, or the performance of duties, under the Act or the CMS; or

(i) the engagement of a person as a body corporate manager or service contractor; or

An order may require a person to act, or prohibit a person from acting, in a way stated in the order.[4] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[5]

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[6] 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.[7]

An administrator appointed by an adjudicator has the powers given to the administrator under the order.[8] Section 301(4) of the Act provides that the order may:

The issue for consideration in this matter is whether an administrator should be appointed, 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 body corporate manager (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[9]. The Commissioner’s Office produces a factsheet about BCMs on its website[10] which summarises the legislative provisions regarding the role, appointment and termination of BCMs.

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 the BCM remains at the direction of the committee. On occasions a body corporate may choose to engage a BCM where there is no committee[11]. In that case the BCM would take on all the functions of the committee.

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 ceased to hold 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 some cases parties 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 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.

This application was lodged on the basis that no AGMs had been held in the scheme since 2007. I am satisfied however that there was an attempt to conduct AGMs in 2009 and 2010, that the applicant was present at these meetings and that minutes of these meetings were distributed.

I have no reason to believe that these two meetings were not conducted by owners in good faith. The method of conducting the business of the Body Corporate for Kinmond Villas may well have served owners in a practical manner for many years. The courts have recognised that the very detailed provisions of the regulations make it almost inevitable that from time to time there will be non-compliance with the legislation. The non-compliance of an insubstantial nature will not imperil the actions of bodies corporate or their committees, particularly in the instance of committees where actions are taken in good faith.[12]

However I am of the view that there were substantial defects in the convening and conduct of these meetings in regard to the requirements of the body corporate legislation, such that the meetings can not be considered to be validly conducted. Without detailing each and every possible issue, I will note some of the key legislative requirements (with reference to the Standard Module provisions) and resulting issues:

While owners may have been verbally notified of the two meeting, and may even have been notified in writing, it is not apparent that there was a proper meeting notice with the required agendas, voting papers and so on. It is not apparent that the business of the meetings was conducted by the consideration of and formal voting on motions included in an agenda. Certainly the minutes do not indicate clear motions or voting.

Indications are that no AGM was held in 2008. As such there could have been no committee appointed at an AGM in 2008, who would have been empowered to call the AGM in 2009. The 2009 AGM appeared to have no proper election of the Committee but rather just stated that ‘office holders remain the same’. As there appeared to be only one office bearer at the time (Bert Garrett) this was insufficient to comprise a valid committee. Moreover, there was no extraordinary general meeting to fill the committee vacancy when Bert Garrett died. It would seem, therefore, that there was no valid committee empowered to call the 2010 AGM. The 2010 meeting sought nominations for the committee positions but only two owners were willing to be on the Committee. As such the Body Corporate was left with a Committee of less than three members.

I am satisfied that there is sufficient reason to appoint an administrator for three months for the purposes of convening the 2010 AGM and getting the administration of the scheme back on a proper legal footing.

For the reasons outlined I satisfied that it is appropriate to appoint an administrator for three months to reconvene the 2010 AGM.

The applicant has nominated himself for this role and Skehans has been nominated as an alternative. Three of the four owners have supported the appointment of an independent administrator. In the interests of ensuring that all the legislative requirements for a body corporate meeting are met, and to avoid conflict, I am of the view that it would be preferable to appoint a disinterested professional to the position of administrator. No specific objections have been raised to Skehans and so I have no basis to suggest that they would not be appropriate for the role.

Accordingly I intend to appoint Skehans. The cost of the appointment will be met by the Body Corporate. Assuming Stokes currently hold the books and records for the scheme, she should pass these on to Skehans as soon is practical as these will be required to prepare for the meeting.

Owners will be given an opportunity submit motions for consideration at this meeting on any issue they wish to pursue, and to nominate for committee membership. In particular owners may wish to consider submitting a motion to a BCM. I note that there is no need for unanimous agreement on such a motion. The appointment of a BCM requires only an ordinary resolution, which means that more votes are counted for the motion than against it. There may also be some difficulty in obtaining the requisite three Committee members. If the Body Corporate cannot obtain the minimum number of Committee members, owners could consider whether they would like engage a BCM to act on behalf of the Committee, pursuant to section 58 to 62 of the Standard Module. Particularly given the various circumstances of the current owners, I would suggest that it would be unfair of owners who are not willing or able to be committee members themselves, to expect all other owners to take on all the committee responsibilities and refuse the engagement of a BCM.

I would encourage all owners to work cooperatively in the conduct of this meeting and beyond.

[2] The submission attaches a letter, apparently in Stokes’ handwriting and signed by Morris, Wright and Stokes, to Westpac and dated 24 August 2009. The document says that Stokes (described as Chairman and acting Secretary), Wright and Morris are members of the Body Corporate, that previous members are deceased, and that Stokes is authorised to act as Body Corporate secretary and have the signing authority for the Body Corporate.
[3] See sections 227, 228, 276 and Schedule 5 of the Act
[4] Section 276(2) of the Act
[5] Section 284(1) of the Act
[6] See Item 6 of Schedule 5 to the Act
[7] See Item 23 of Schedule 5 to the Act
[8] See section 301(2) of the Act
[9] Section 14 of the Act
[10] www.justice.qld.gov.au/bccm
[11] See section 58 to 62 of the Standard Module
[12] Wei-Xin Chen v Body Corporate for Wishart Village CTS 19482, Appeal 4080 of 2000, District Court Brisbane, 29 May 2001 (Unreported).

[13] This means that committee members cannot be appointed for more than 12 months or indefinitely, although the body corporate can decide to can be re-appoint the same members each year.

Number of Scheme:	21185
Name of Scheme:	Kinmond Villas
Address of Scheme:	33 Kinmond Avenue WAVELL HEIGHTS QLD 4012

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Kinmond Villas [2010] QBCCMCmr 519 (22 November 2010)