Aqua Park [2010] QBCCMCmr 53 (9 February 2010)

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

I hereby order as follows –

1. that Motion 6 of the annual general meeting held on 23rd June 2009 be reversed for the reasons more particularly set out in the reasons for decision herein, so that the landscaping and paving now situated in Lot 1 is deemed to be approved by the body corporate;
2. that in respect of Motion 9 of the annual general meeting held on 23rd June 2009 , the body corporate is not liable to pay, and must not pay, for the removal of trees from Lot 2. The removal of trees from Lot 2 is the financial responsibility of the owner of Lot 2;

I further order that the application is otherwise dismissed.

This is an application dated 24th August 2009 and amended on 9th September 2009, by Peter Palmer and Angie Palmer (the Applicants) co-owners of Lot 1 against the body corporate for Aqua Park (the body corporate) for orders as follows –

“Aqua Park” CTS 23372 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 3 lots in the scheme created under a Group Title 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)).

The Applicants say that they fenced their courtyard in 2008 and prior to that had discussed proposed landscaping works with the other two owners in the body corporate, Shirley Nevins (Ms Nevins) (Lot 3) and Heather Mills (Ms Mills) (Lot 2 ) both committee members. Both Ms Nevins and Ms Mills watched the Applicants’ landscaping, pavers and turf going ahead over a period of months without making any objection. The Applicants sought retrospective approval for these works at the annual general meeting on 23rd June 2009 (the AGM) but the motion was defeated. The landscaping and paving cannot be seen from the road. They say that motion 6, for retrospective permission for these works, was “unfair” and “not just” since the dispute had previously been aired in a previous adjudication.

The fence was approved “via adjudication” (1076-2008) on 16th April 2009, but the pavers and landscaping were not approved at the AGM. The body corporate says that part of the paving and landscaping is on common property which the Applicants deny.

Ms Nevins has had landscaping and paving “approved” by Mrs Mills without the Applicants’ knowledge. Mrs Mills said no approval was required “as the area was being flooded”, but the Applicants deny that the work was done to correct an emergency or as repairs.

In respect of the second outcome sought, they say that the removal of trees from the front of Lot 2 should not have been paid for by the body corporate because the trees were within Lot 2 and the owner of Lot 2 is responsible for the maintenance of her lot. They feel that for the body corporate to pay for this work was unfair.

In respect of the third outcome sought, they say that Mr Mills and Ms Nevins used body corporate funds without authorisation to fund the body corporate’s application for adjudication in December 2008. The decision to use body corporate funds was made without the knowledge of the Applicants who are also committee members.

In respect of the fourth outcome sought, they say that the scheme needs a body corporate manager because it consistently fails to comply with the legislation. The adjudicator in application 1076-2008 noted that the appointment of a body corporate manager might result in fewer disputes, and assist the body corporate to comply with the legislation. They do not have faith in Ms Nevins and Ms Mills as secretary/treasurer and chairperson respectively. They say that the AGM minutes were not taken down at the meeting and are “grossly inaccurate” and “left out a lot of detail and discussion.” They want an order that AAA Certified Body Corporate Management are engaged for one year at a base fee of $250 per lot per year with additional fees as set out in a draft management agreement provided in the application.

The Applicants say that in this small scheme, the vote is always 2:1 and there is no equity for them to get their concerns considered, the other two having “complete power”. At the AGM, contributions were set to be paid within a week without any notice. The Applicants pointed out that this contravened the provisions of the Standard Module but the other two said they can “make up the rules and do not have to comply with the standard module...”

Ms Nevins and Ms Mills made a submission together as representing the body corporate. They say that the Applicants are about to sell Lot 1; they would like a review of the adjudicator’s decision on 16th April 2009 (1076-2008); and that the Applicants have done what they liked since January 2008.

They deny that they had any discussions about landscaping with the Applicants. They do not like the “fence and landscaping” and preferred the original lawns and palm trees.

The body corporate “paid to have the Palmers’ lawn mowed and their trees cut for 6 years.” They strongly object to “Aqua Park ...being run by a management company.” The Applicants continue to breach body corporate by-laws by permanently parking in the visitor’s car park and they have poisoned common property lawn.

They say that they did not know that the Applicants had approached a body corporate management company until they read the application.

The Applicants exercised their right of Reply. They point out that the submission is in several respects not relevant to the dispute. The fence has been approved already and that matter already dealt with. They say that it was a previous body corporate management’s decision to maintain all owners’ gardens and lawns for 6 years and not relevant to this dispute. They have always maintained their own gardens.

The car parking is also an old matter. The adjudicator in April 2009 investigated this fully.

In this matter, the Applicants, owners in a three-lot scheme, seek four outcomes to overturn motions put to an AGM on 23rd June 2009, saying that the vote by the body corporate was “unfair” by which I take them to mean “unreasonable in the circumstances.”

By section 94 Act, the body corporate, both as a committee, and as a body corporate at general meetings, has a duty to act reasonably in all things it does. What is “reasonable” must be considered objectively but in the light of all the circumstances prevailing at the time. There is no duty on the body corporate to act conventionally, or in a particular way, in that there is no “correct” way of acting “reasonably”. A reasonable decision would be one which a reasonable person in the circumstances could come to.

The first outcome sought is that the body corporate approves paving and landscaping within the Applicants’ lot. The body corporate has made no submission that the reason for the non-approval is that the work done is on common property, as suggested by the Applicants. The work has been done since 2008 and the Applicant’s seek retrospective approval. The other owners, wearing the hat of the body corporate, say that “the fence and landscaping detracts from the overall appearance of the scheme.” They do not address the landscaping and paving alone. They would like the adjudicator’s order in respect of the fence to be “reviewed” although they did not seek to appeal the decision at the time. The fence is approved and is there to stay.

I am of the view that the other owners are not differentiating between the fence, which they personally do not like, and the landscaping and paving which is within the Applicant’s lot. The photographs provided by the Applicants demonstrate that the paving and landscaping cannot be seen from the road and do not from an objective viewpoint make any change to the façade or side of the scheme at all. It is the fence which does this, and that matter is already decided.

The Applicants sought retrospective approval for the landscaping and paving. Not to approve this motion leaves the Applicants with unapproved changes to the appearance of their lot, possibly in contravention of By-law 8b of the scheme by-laws, although this is not argued by the body corporate. Nor has there been any application made by the body corporate for the landscaping and paving to be removed. The application by the body corporate on 12th December 2008 (both applications being made on the same day) was for removal of the fence.

The Applicants advised the body corporate by letter on 28th November 2008 that they proposed to pave the courtyard area and put in garden borders. The body corporate did not seek to make this part of application 1078-2008, nor sought an interim order to stop the Applicants from undertaking such work.

"No proprietor may in any way alter or vary the external appearance, structure, layout, wall format or texture or colour of any lot or any building on any lot without the prior written consent of the Committee of the Body Corporate ".

Technically, it is possible to argue that mowing the lawn within a lot “alters the external appearance” of a lot. I am of the view that the by-law cannot have meant to govern such a trivial variation as the height of the grass. However, it is not clear at what point “altering the external appearance... of a lot” requires the consent of the body corporate. It could apply to planting shrubs, putting in planter boxes, or a garden seat. Clearly, the substantial fence constructed round Lot 1 was a structural change to the lot. Arguably, by-law 8b) is really designed to refer only to such highly visible or structural changes and the Applicants may not need permission at all from the body corporate for paving and landscaping within their lot. However, this has not been argued by the Applicants.

For the reasons that the body corporate did not take steps when told about the paving and landscaping; that the paving and landscaping appear to be very minor “variations”; and are also inconspicuous behind the fence from the outside of the scheme, I am of the view that the body corporate is not acting reasonably in refusing the retrospective application of the Applicants at motion 6 and that the resolution on this motion should be overturned. I therefore so order.

The second outcome sought is that Motion 9 of the AGM is overturned. The Applicants’ grounds for this is that the body corporate should not pay for removal of trees from within Lot 2.

However, Motion 9 merely seeks the approval of the body corporate for the removal of trees from Lot 2, such as the Applicants have themselves sought, for example in compliance with by-law 8b. There is nothing in this motion about the body corporate paying for the work to be done.

However, the outcome sought was clear and the body corporate has made no submission in respect of it. Section 170(2) Standard Module requires that each owner maintains his or her lot in good condition. In a Group Title Plan of subdivision, the lot includes the gardens and exterior of each lot in accordance with the plan of survey. Even if the body corporate wished to assist an owner, I am of the view that there is no power for the body corporate to expend funds for the maintenance of an owner’s lot. I note that this appeared to be the practice in the past when all lawns and gardens were maintained at the expense of the body corporate. However, such a proposal would have been open to challenge at the time.

I therefore order that the body corporate is not responsible for, and must not pay for, the removal of trees from Lot 2, even though their removal is approved.

The third outcome sought is for the reversal of Motion 5 which the Applicants proposed to the AGM. The Applicants say that the body corporate had no authorisation to expend the sum of $59 on making application 1078-2008 to this Office; and that the application was not necessary as the Applicants had also made an application for a dispute resolution about the fence. The body corporate says that it did not know that the Applicants had made a dispute resolution application, and it may well be that the two files were being processed at the same time, since both were filed on the same day.

Whilst the Applicants as committee members were not invited to vote on whether or not to make a dispute resolution application, (and they should have been made aware of the vote being taken), I am of the view that there is no detriment to the Applicants demonstrated here. Had they been invited to the committee meeting, or to make a decision outside a committee meeting, since they were to be respondents to the application, they would have been in a position of conflict and unable to exercise a vote at a committee meeting in any event. (see section 53 Standard Module). Further, it is clear that the majority of the committee was in favour of making the application. If the body corporate makes an application to this Office it is entitled to use body corporate funds for the application. The two remaining owners made the application as the body corporate, and were entitled to the use of body corporate funds.

The situation is made more personal and acute by there being only three members in this body corporate, but the principle is correct.

The final outcome sought is for motion 4 to be overturned, that is, that a body corporate manager be engaged by the body corporate. The Applicants go further in that they seek the appointment of a particular body corporate manager, AAA Certified Body Corporate Management, who provided the Applicants with a draft contract on 4th September 2009.

The other two owners say that the name of the proposed manager was not put forward and that they did not know that the Applicants had approached a manager until they had seen a copy of this application.

Section 114(2)(c) Standard Module requires that prior to the engagement of a particular body corporate manager, a copy of the proposed contract or terms of agreement is circulated with the notice of meeting. This was not done, the motion being that the body corporate appoint a professional local management company. Even if passed, this motion would not have got the body corporate very far. It would then have to decide on the name of the manager and approve that manager’s terms.

I am not prepared to overturn Motion 4. The result would not be what is now sought by the Applicants, that is, that AAA Certified be appointed. There is also no administrative need for a body corporate manager in a three-lot scheme, and the body corporate’s decision was thus reasonable. This outcome sought is therefore also dismissed.

The Applicants say that a body corporate manager is needed, but whilst a manger might assist with holding meetings and drafting minutes, it would not change the way in which lot owners vote, which I find to be part of the Applicants’ grounds. They say: “We feel [a body corporate manager] is necessary as any attempts to resolve issues by us have been denied and the committee members have voted against all motions proposed.”

There is demonstrated in this application a situation whereby the two other owners vote against any proposal which the Applicants make without consideration of the issues qua body corporate. That is, whilst the owners of Lots 2 and 3 may vote as they choose, there is clearly a personal tone in the reasons for voting. Ms Nevins and Ms Mills say that this is because the Applicants have previously breached by-laws, (and allegedly continue to breach by-laws) but I do not find this tit-for-tat response by the body corporate to be reasonable. The submission by the body corporate contained almost no consideration of the issues the subject of this dispute, but raked up former grievances, made personal remarks, and contained uncorroborated accusations and irrelevant hearsay.

It is in such an atmosphere that an adjudicator would consider putting in an administrator for a scheme, as foreshadowed by both decisions 1076-2008 and 1078-2008. An administrator is not a body corporate manager who is guided by, and answerable to, the committee, such as proposed by the Applicants, but a person who for a specific period of time, as ordered by an adjudicator, makes decisions for the committee without owners having any input. The body corporate must have become dysfunctional before such an appointment is made.[1]

This Office does not regulate bodies corporate, in that there are few penalties if a body corporate fails to act in accordance with the legislation, because of ignorance or error.[2] However, a committee member is required to commit to acquiring an understanding of the legislation[3] and lot owners in a small scheme such as this are liable to damage their prospects of selling if they cannot demonstrate that the body corporate has been efficiently managed, and has good records. A failure to comply with the legislation will also result in dispute resolution applications being made and the possibility of the administration being taken away from the committee. Prospective purchasers may be put off by seeing many dispute applications, and being put in the control of an administrator is not a recommended situation for any scheme for any length of time since the administrator will be a professional person able to charge professional fees.

General remarks
In respect of matters raised in this application I make the following general remarks concerning the administration of the scheme.

An at annual general meeting the body corporate must consider the “statutory motions” which include a review of the insurance policy held by the scheme; whether the body corporate wishes to have its books audited or not; and a sinking fund and administrative fund budget must be adopted. None of these items appear to have been present at the AGM on 23rd June 2009.

The body corporate must give 30 days notice of a contribution payment being due. (Section 142(1) Standard Module.)

If reference is to be made to the legislation, it should be accurate. BCCM Form 4 provided with the Notice of Meeting (23rd June 2009) is now in version 5 and has never been as set out in the agenda. References to sections of the Standard Module are out of date. The Standard Module was significantly amended in 2008.

In respect of the minutes of the AGM, all parties might note that there is no option in the legislation for a motion to be “seconded”. All motions submitted to the secretary must be listed on the agenda. There is no “general business” at a general meeting. Whilst the body corporate may discuss anything it wishes, this is not a part of the record since the body corporate cannot make any decisions in “general business” but only by voting on prepared motions.

“Full and accurate minutes” do not require details of what any person present at the meeting said, but only the decision reached. The voting on each motion should be recorded in the minutes. The Lot number of the proposer of each motion should be noted in the minutes. The type of motion required to pass the motion should be noted in the minutes. The full wording of the motion should be stated in the minutes.

The body corporate must give 21 days notice to lot owners of a general meeting. A committee meeting requires 7 days notice to committee members and other lot owners not on the committee. There must be a minimum of three people on the committee.

There is no need for lot owners to attend general meetings but they may vote on the voting papers sent to them with the agenda and notice of meeting.

[1] Surace v Commiso [2009] QCCTBCCM 42 (25 September 2009)
[2] Failure to comply with an adjudicator’s order however carries a maximum penalty of $40,000 in the Magistrates Court.
[3] Code of Conduct for Committee Voting Members Schedule 1A Act

Number of Scheme:	23372
Name of Scheme:	Aqua Park
Address of Scheme:	22 Sunseeker Close NOOSAVILLE QLD 4566

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Aqua Park [2010] QBCCMCmr 53 (9 February 2010)