Millennium [2010] QBCCMCmr 588 (30 November 2010)

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

I hereby order as follows –
1. that the secretary may authorise the sending out of notices to owners in respect of contributions due for the quarter 1st January 2011 to 31st March 2011 in the sums of $1,246 gross ($996.80 nett) for the administrative fund and $361.00 gross (288.80 nett) for the sinking fund; and
2. that contributions for the first quarter of 2011 may be subject to set-off against future contributions due in the remainder of 2011; and
3. that the due date for payment may be any date which allows for a period of 30 days notice of the contribution required.

I further order that this interim order expires when a further interim order is issued, or when the application is finally determined or discontinued, or upon the expiry of 12 months from the date of this order, whichever is the earliest.

This is an application dated 23rd November 2010 by Kerryn Green (the Applicant) owner of Lot 102 in the scheme against the body corporate for Millennium CTS 37467 (the body corporate) for orders as follows –

The Applicant also seeks an interim order that the body corporate may issue contribution notices for the next quarter of the financial year (1st January 2011 to 31st March 2011) forthwith, prior to the determination of this application.

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)).

Section 247(3) of the Act allows the Commissioner to refer an application to an adjudicator for consideration for an interim order even though proper notice of the application has not been given to the body corporate or other affected persons, and despite the fact that parties to the application have not been given an opportunity to make a submission about the matters in dispute. It seems to me that the Act allows this process because applications for interim orders often relate to emergency or otherwise urgent circumstances, where it is simply impractical or impossible to allow a period for submissions prior to the consideration of the application for interim orders. It is also relevant that generally the purpose of an interim order is simply to maintain the “status quo” of a situation, and not finally to resolve the matters in dispute.

Section 279(1) of the Act allows an adjudicator to issue an interim order in response to an application “if satisfied, on reasonable grounds, that an interim order is necessary because of the nature or urgency of the circumstances to which the application relates”.
Read together with section 247(3), section 279(1) appears to allow an adjudicator to issue an interim order without any reference to other parties to the dispute.

The Applicant, who is also the secretary of the committee, says that Motions 4 and 5 of the annual general meeting held on 17th November 2010 (the AGM) were respectively to set contributions for the year for the administrative fund and the sinking fund for the scheme.

Majority lot owner, McGrath Corporation Pty Ltd (McGrath), which owns 10 of the lots in the scheme, voted against both motions, despite the fact that representative of McGrath, Stephen McGrath, also a committee member, had been involved in the preparation of the two budgets and contributions at a committee budget meeting held on 13th October 2010, and had voted in favour of the budgets at the committee meeting.

The vote on both Motions 4 and 5 was 10-5 against, that is, all other owners who voted, voted in favour of the two budgets.

The body corporate has another dispute with McGrath currently with this Office and believes that the actions of McGrath in this matter are totally unreasonable. The body corporate has need of an immediate injection of funds in order to meet its maintenance and statutory commitments. The body corporate has previously been threatened with disconnection of power if it does not pay its electricity bill. This would leave the scheme without lifts or lighting.

On 6th October 2010, Origin sought payment of an invoice for $6755.02 due in July 2010 and advised that power would be disconnected in five days if payment was not received by 8th October 2010. At that time McGrath owed $67,200 in outstanding contributions.

The body corporate is required by section 142(1) Standard Module to give notice of a contribution due from an owner 30 days before the contribution is required. Payment for the quarter 1st January to 31st March 2011 is due on 1st January 2011, so notice must be given on 2nd December 2010, if contributions are to be paid on time. That is the reasoning behind the application for the interim order.

Both Motion 4 and Motion 5 specified that contributions were due on 1st January, 1st April, 1st July and 1st October. Since these motions were defeated, there is no date at present fixed for the payment of contributions. The standing of these two resolutions of the body corporate is the subject of the dispute, and until submissions have been made by all owners, the reasons for the vote against the two budgets are not known.

However, the body corporate has a mandatory duty to fix budgets, instalments and dates for payment of contributions,[1] and this must be done at the annual general meeting, since setting budgets for the two funds, and fixing contributions are two of the “statutory motions”.[2]

The committee may also fix an interim contribution to be levied before the contribution fixed at an annual general meeting is levied, which can be set off against the fixed contributions. However, any interim contribution must be calculated on the basis of the level of contributions which applied for the previous financial year, and must relate as closely as possible to the period from the end of the previous financial year to 2 months after the proposed date of the annual general meeting. (Section 141(3) Standard Module.)

The scheme’s financial year ends on 30th September. The AGM sought to raise for the first quarter of 2011, $1,246 gross ($996.80 nett with 20% discount for payment prior to 1st January 2011) for the administrative fund and $361 ($288.80 nett) for the sinking fund per contribution schedule lot entitlement.

The budgets for both the administrative fund and the sinking fund were defeated at the annual general meeting held on 12th September 2009. On 2nd June 2010, the body corporate convened an extraordinary general meeting at which the budgets were set at $1,887 per lot entitlement for the administrative fund and $353 per lot entitlement for the sinking fund (no discount available for either budget).

I do not find that this section of the Standard Module is entirely apposite since the annual general meeting has been held, and it is my reading of section 141(3) that the words “to be” may be read into subsection (3) as follows, with my insertion underlined –

(3) Also, the committee may fix an interim contribution to be levied on the owner of each lot before the owner is levied contributions (to be) fixed on the basis of the body corporate’s budgets for a financial year.
(4) The amount of a contribution mentioned in subsection (3)—

(a) must subsequently be set off against the liability to pay contributions mentioned in subsection (1); and

(b) must be calculated on the basis of the level of contributions applying for the community titles scheme for the previous financial year; and

(c) must relate, as closely as practicable, to the period from the end of the previous financial year to 2 months after the proposed date of the annual general meeting.

If the section is not read in this way, the “proposed date of the annual general meeting” at section 141(4)(c) makes little sense. The section seems to me be a provision allowing for raising of funds prior to the holding of the annual general meeting.

However, I am satisfied that the legislation allows for reasonable interim funds to be raised, the purpose being to enable the body corporate to meet its financial commitments until such time as the contribution may be set, either at another general meeting, since the body corporate must set contributions; or as ordered by an adjudicator.[3]

I note that the quarterly sum proposed for the first quarter of 2011 is less than the sum required for the last quarter of the scheme’s last financial year in respect of the administrative fund, and only $8 more in respect of the sinking fund, whilst the nett sum after a 20% discount is also a lesser sum. Whilst this might be an over-simplistic approach when this matter is examined in greater detail, it seems to me that the body corporate must raise certain funds in order to administer the scheme as it is required to do, and that any sums raised may be set-off later against instalments to be fixed one way or another.

I therefore order that the secretary may send out contribution notices for the quarter 1st January 2011 – 31st March 2011 in the sums set out in Motions 4 and 5, whilst reserving for the final order the decision on whether Motion 4 and/or Motion 5 should be overturned and deemed as carried. The date for payment may be any date which allows for a period of 30 days notice of the contribution required.

I now return this application to the Commissioner pursuant to section 279(4) Act.

[1] Section 141(1) Standard Module
[2] Section 76 (3)(a) Standard Module
[3] Schedule 5 Act, Adjudicators’ Orders. Item 11: If satisfied a contribution levied on lot owners, or the way it is to be paid, is unreasonable—an order reducing or increasing the contribution to a reasonable amount or providing for its payment in a different way.

Number of Scheme:	37467
Name of Scheme:	Millennium
Address of Scheme:	1 O’Connell Street KANGAROO POINT QLD 4169

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders

Millennium [2010] QBCCMCmr 588 (30 November 2010)