232 Wises Road [2011] QBCCMCmr 16 (20 January 2011)

TAKE NOTICE that pursuant to an application made under the abovementioned Act by Anne McCondach, the Owner of Lot 1

I hereby order that the application for an order “To engage a manager.” is dismissed.

I further order that -

(1) Ineke Taylor, Owner of Lot 2, is appointed as administrator to call, hold and chair a general meeting (‘the meeting’) of the Body Corporate for 232 Wises Road 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 for the Body Corporate for 232 Wises Road for 2011.

I further order that, unless otherwise provided for in this order, the meeting 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 purpose of the meeting shall be to consider any motions required under section 76(3) of the Standard Module, any motions properly submitted by owners, and consideration of executive committee positions under section 13(5) of the Standard Module.

I further order that, within seven (7) days of the date of this order, Anne McCondach, the Owner of Lot 1, shall deliver all records for the Body Corporate for 232 Wises Road that are in her possession or control to the administrator.

232 Wises Road community titles scheme 30992 (232 Wises Road) consists of two lots and common property. The community management statement (CMS) for 232 Wises Road 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 155478.

Pursuant to the Body Corporate and Community Management Act 1997 (Act), this application was made by Anne McCondach, Owner of Lot 1 (applicant) on 15 June 2010. The applicant sought an order “To engage a manager.” against Ineka Taylor, Owner of Lot 2 (respondent):

On 7 April 2010 the applicant lodged an application for conciliation[1]. A conciliation session was held but agreement was not reached and the conciliation was ended on 24 May 2010. Subsequently the applicant lodged this application.

Under section 243 of the Act, a copy of the application was provided to the respondent with an invitation to respond to the matters raised by the application. A submission was made by the respondent. The applicant inspected the submission and made a written reply.[2]

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.

The application seeks to appoint a Body Corporate Manager (BCM) to administer the scheme.

The applicant says she has experienced difficulties since the respondent moved into the scheme, which was in 2007. They do not get on and she cites difficulties with the respondent’s partner. She says the situation has deteriorated considerably since the original conciliation session in 2008, and they have not had a body corporate meeting since 27 January 2009.

The applicant argues that self management will not work, but says the respondent will not discuss this. The applicant indicates that for the last three and a half years she has done all the secretarial work, typing and phone calls at her own expense, but she does not feel well enough to continue. She wants to hand it over to a BCM. The application includes a letter from the applicant to the respondent dated 16 February 2010 which says that she will not organise or attend any more body corporate meetings until a BCM is appointed.

The application includes a quote from North Shore Body Corporate (North Shore) to be appointed as a BCM, at a cost of $185 per lot per annum plus $35 per lot for disbursements ($440).

The quote from North Shore was for a 12 month appointment as a BCM. At my request, a member of the Commissioner’s Office contacted North Shore to ascertain the cost, in the alternative, for them to act as administrator for three months to convene an AGM. North Shore then provided a quote of $825 plus GST for the three month appointment. The applicant was advised of this quote and provided with an opportunity to obtain alternative quotes for an administrator.

Having not received a specific response to this invitation, I wrote to the applicant (with a copy to the respondent) on 9 November 2010. I noted that, having reviewed the application and submission, I had formed a preliminary view on the matter. I provided information on BCMs and administrators, including a reference to the Commissioner’s Practice Direction 17 regarding administrators. I indicated that there was some justification to appoint an administrator in this scheme for a three month basis. I asked the applicant whether she wished to proceed with the application on the basis that while the appointment of an administrator could be considered, the appointment of a BCM could not. I asked whether she wished to proceed with the North Shore quote for administration or obtain alternative quotes.

In response the applicant provided an additional quote from Whittles Strata and Community Titles Services (Whittles). She also raised concerns with the situation at the scheme, including a photograph purporting to indicate poor garden maintenance by the respondent, and stated that termite inspections have not been undertaken for four years. The Whittles quote is for an appointment as a BCM for 12 months at $880 per annum plus disbursements, and $132 per hour for additional administration services. Again, our Office sought clarification of the cost for an administrator for three months and Whittles quoted $660 (inc GST) for this purpose.

On 23 November 2010 I wrote to the parties reiterating the previous information and forwarding the revised quote from Whittles. I asked the applicant whether she wished to proceed on the basis of the revised Whittles quote. I provided the respondent with a copy of the applicant’s previous correspondence and invited her to comment on the appointment of an administrator, the North Shore and Whittles quotes, and whether she wished to make any alternative nominations.

The applicant confirmed her acceptance of the Whittles quote. The respondent provided a more detailed response including the following:

I am satisfied that this is a matter which falls within the legislative dispute resolution provisions.[4]

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.[5] An adjudicator's order may contain ancillary and consequential provisions the adjudicator considers necessary or appropriate.[6]

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[7] 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.[8]

An administrator appointed by an adjudicator has the powers given to the administrator under the order.[9] 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 for how long.

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[10]. The Commissioner’s Office produces a factsheet about BCMs on its website[11] 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 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[12]. In this case the BCM would take on all the functions of the committee.

I must stress that an adjudicator has no authority to appoint a BCM, as this is the sole right and responsibility of a body corporate. Accordingly, as the applicant has been previously advised, I have no capacity to make the specific order sought by the applicant.

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 can be determined by the adjudicator’s order. There is no legislative requirement for an administrator to be a professional BCM or have other qualifications. An owner, for example, can be appointed as an administrator. 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 conflict between parties, the appointment of an independent professional is more common.

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 that 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 circumstances, administrators can be appointed on a longer term basis. Adjudicators do not take such longer term appointments lightly as they can deprive owners of the right 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 has broken down irretrievably or is in significant disarray for a longer term appointment.

In overturning the decision of an adjudicator to appoint an administrator in a two-lot scheme where there was considerable disagreement between the owners, the Commercial and Consumer Tribunal[13] noted that:

“Appointment of an administrator is within the power of an adjudicator (section 276(3) and Schedule 5 of the BCCM Act), no criteria are prescribed for doing so, but it is a significant step since it takes responsibility for the conduct of the affairs of the body corporate out of the hands of the committee and vests it in the administrator. An applicant must therefore demonstrate to the required standard that such a step is appropriate. Typically, without attempting to be exhaustive, there will be evidence that the body corporate is so dysfunctional that it cannot operate properly within the statutory framework that governs it, or that there is a well founded suspicion, on the part of an applicant for appointment of an administrator of financial malpractice within the body corporate, or that there is conduct that amounts to undue oppression in the conduct of its affairs. Without more, mere disagreements between the members, especially when the disputes are due to reasonably held differences of view and there are means available to resolve them by reference to external processes.”

The Tribunal later noted [paragraph 55] that a body corporate is not dysfunctional merely because parties do not agree.

I am satisfied that the Body Corporate for 232 Wises Road is currently not operating on a proper legal footing.

Section 60 of the Standard Module provides that an annual general meeting (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, it is apparent that no AGM has been held since January 2009, some two years ago. As there was no AGM held in 2010, for this reason alone there is a need for an adjudicator’s order to restart the Body Corporate and for an AGM to be called.

Pursuant to section 13(5) of the Standard Module, if there are only two lots in a scheme and they are in different ownership (as is the case here) the committee must consist of two individuals who are owners (or the nominees of the owners) of each lot. The two owners must decide between them which of the executive positions they will each hold and if they cannot agree, each of the positions of chairperson, secretary and treasurer are held jointly. It seems the applicant has taken on all the functions of the Committee. In the absence of a specific agreement for either owner to take on this role, which ideally would be clarified at the AGM, this should have been shared. The applicant cannot refuse to allow the respondent to participate in the functions of the Committee.

I would stress that I have no evidence to suggest that there has been any deliberate attempt by either owner to avoid these legislative requirements, despite a lack of cooperation. Both owners may well have acted in good faith but may simply lack a comprehensive understanding of the legislation. This is not uncommon and is understandable given the complexity of the legislation.

I consider that there is sufficient reason to appoint an administrator for three months for the purposes of convening an AGM and getting the administration of the scheme back on a proper legal footing. Both owners can submit motions for consideration at this meeting on any issue they wish to pursue.

But I am not yet satisfied that there is sufficient basis to warrant the longer term appointment of an administrator. I acknowledge that there have been deficiencies in the operation of the Body Corporate to date and poor communication between the parties. However I do not consider that the current functioning of the Body Corporate is irretrievably dysfunctional or, for example, that there is financial malpractice.

If owners are unable to work cooperatively to ensure that the scheme is administered under the legislative requirements into the future, there may be a justification for the longer term appointment of an administration at some later date. However there would need to be substantial evidence of dysfunction and serious implications from that dysfunction. Moreover, adjudicators would take a very dim view of any deliberate attempt to subvert the proper functioning of the Body Corporate in the hope that it will generate sufficient justification for the appointment of an administrator in future.

There are indications in the applicant’s material that she has threatened not attend future Body Corporate meetings if a BCM is not appointed. This is entirely her choice. However she needs to accept that it a valid Body Corporate meeting is convened and she chooses not to vote in person or by voting paper, valid decisions can be made on the basis of a single vote.

The applicant has expressed a preference for Whittles as administrator (at a cost to the owners of $660). The respondent has opposed the cost of an external administrator and said that she would be happy to undertake the management of the scheme herself. The applicant does not outline specific objections to this, other than disputing how often the respondent has offered to take over the management and reiterating her view that a BCM would “solve all our problems”.

In this context I have seriously considered whether it would be appropriate to appoint an external professional to the role of administrator.

Given some defects in the conduct of meetings in the past, both owners may benefit from the example of a professionally convened and minuted meeting. However that alone is not sufficient basis to warrant the not insignificant costs of an external administrator. The respondent is confident that she is able to undertake the necessary functions and as she has apparently not been given the opportunity to participate in the administration of the scheme previously it is difficult to disprove this claim. Moreover there are a wealth of resources provided by the Commissioner’s Office, including factsheets, forms and a telephone information service, which can assist her in ensuring all necessary steps are undertaken.

Another benefit of an external administrator would be that an independent person could take the ‘heat’ out of the interpersonal dispute between the owners. This is one reason why external professionals are often appointed in such matters. In this case, however, I note that independent facilitators have been engaged on two previous occasions to assist with general meetings and two conciliations have been conducted. It is not evident that an independent presence has achieved any lasting benefit previously. Therefore I am not convinced that the cost of an external administrator is justified by the potential that an independent person could reduce the conflict.

On balance, then, I have decided on this occasion to appoint the respondent as administrator for a period of three months to call an AGM.

The primary outcome sought by the applicant is the appointment of a BCM. She is entitled to submit an appropriate motion with quotes to the AGM to be called by the administrator. However it is important for the applicant to understand that the respondent is not obliged to support such a motion, and it is not essential for the Body Corporate to appoint a manager. While there can be advantages to an external professional BCM, it also has a cost implication. The management obligations in a duplex are often minimal and a significant proportion of duplexes operate amicably, even with minimal communication, without a BCM. Moreover I am not convinced that the appointment of a BCM would provide the panacea to the problems in the scheme as the applicant appears to believe, particularly as both must still be represented on the Committee and bear responsibility for all decision-making.

That said, the respondent should also balance the costs of a BCM against the potential benefit of an independent BCM who could act as a go-between and potentially remove the current angst from the relationship between the two lots. I note also that the costs of a BCM appointed by owners may be lower than that of an administrator.

A fundamental issue to be determined at the AGM will be Committee roles. The Body Corporate must have a Committee even if a BCM is appointed (unless the owners go through the additional processes of engaging a BCM where there is no committee[14]). As noted above, both owners (or their nominees) must be on the Committee. The owners must either agree on who will hold the executive positions of chairperson, secretary and treasurer (which could be that one holds all three positions). However if they cannot reach agreement, they will both hold all three positions jointly.

It is entirely up to the applicant whether she wishes to continue in an executive role on the Committee. If she does not, she should agree to the respondent holding these positions. However that does not need to be a permanent arrangement and can be reviewed periodically. I would suggest that any agreement, or absence of agreement, regarding Committee roles should be reviewed at each AGM.

Regardless of who holds the executive positions, as both lots must be represented on the Committee, both lots must be given an opportunity to be involved in any decision taken by the Committee. This includes any decision on when and where meetings will be held, meeting agendas, payment of bills, gardening work and so on.

I note that these requirements regarding decision-making will not exist during the period of administration, during which time the administrator holds all the powers of the Committee. However it would be preferable if the respondent as administrator were to consult with the applicant on relevant issues regarding the AGM to minimise further dispute.

I note for the information of the applicant that she is incorrect that the Body Corporate records must always be held by the owner of Lot 1[15]. The legislation does not specify who must hold the Body Corporate records, but the usual practice is that they are held by whoever is the appointed secretary or (if appointed) the BCM.

To avoid any confusion, I have ordered that the applicant must hand the records over to the respondent, as administrator, within seven days. Any attempt to frustrate this order by destroying any records would be reprehensible. I note that orders can be enforced in the Magistrates Court.

Following the AGM the records should pass to whoever is agreed to be the secretary. If the parties cannot agree on who will hold the executive positions, and so the positions are shared, then the records should simply be retained by the respondent unless and until any alternative arrangements are agreed to.

As an aside, I am concerned by the comment from the applicant that there are only five pages of records relating to the time before the respondent bought into the scheme. I would have expected that considerably more would exist. Section 203 of the Standard Module details the records which must be retained by a body corporate and these include all notices, minutes and associated papers for all committee and general meetings; financial records including statements of annual accounts; correspondence; and insurance policies. While some less significant documentation can be disposed two or six years after their creation or receipt, the remainder may not.

The respondent has referred to the minuted agreement at the January 2009 meeting that each owner would direct the gardener regarding different areas of the garden. She says that the applicant has not complied with this agreement and has pruned trees and mowed lawns after they have already been done by her, or directed the gardener to do it. She then advised the gardener and the applicant that she will attend to the gardening on her side, and that she does not wish to pay for gardening that is not instructed to be done by her. She objects to the manner of the applicant’s pruning of the shrubs on ‘her’ side.

The applicant argues that there are no ‘sides’ at the front, as the whole area is common property. She disputes the gardening approach of the respondent, including the use of weedkiller and high pressure water cleaning. She objects to the respondent’s ‘sacking’ of the gardener.

All external areas of the scheme are common property. While the rear courtyard and car spaces are allocated as exclusive use areas, the remainder of the front area is unallocated. Accordingly the applicant is correct that the front is the responsibility of the Body Corporate as a whole.

While each owner is responsible for the maintenance of their exclusive use areas, the Body Corporate is responsible for ensuring remaining areas of common property are properly maintained. However this does not necessarily mean that the whole area needs to be maintained by the same person, at the same time, or even in exactly the same manner.

While it is common for a body corporate to arrange with one person to maintain all common property areas, I see no reason why this Body Corporate cannot agree to divide maintenance responsibility for different areas of the common property, so that each owner is responsible for maintaining the gardens on their ‘side’ of the scheme. That owner could then choose to engage a gardener (and even the same gardener) or undertake the work themselves. Given the disagreement over the manner and standard of garden maintenance, it seems to me that this would be the simplest means of ensuring gardening is done with minimal dispute. This arrangement could be confirmed through a motion at the AGM.

If an owner is concerned that the other side of the property has not been maintained to an adequate standard, or has other concerns regarding the manner of garden maintenance, then they could raise their concerns at a body corporate meeting. If they cannot resolve their concerns through meetings they could pursue a further dispute resolution application in this Office. I do not consider that it would be an appropriate course of action for one owner to take unilateral action to undertake garden work on the other side of the scheme if they do not consider that it has been adequate. This would be inflammatory and unhelpful.

It is clear that the two owners have differing views in respect of the standards of garden maintenance required. The only requirement that the legislation imposes on the Body Corporate is that it maintains common property in “good condition”. While one owner may prefer a higher standard of presentation, they cannot necessarily expect the other to agree. The applicant has provided a photograph which she indicates shows that the shrubs on her side having been recently pruned and the other side being a “disgrace” and “embarrassing”. With respect, I do not consider that the photograph provided shows any lack of maintenance at all. If that photograph is reflective of the applicant’s expectations regarding gardening, I would suggest that her requirements are unrealistic, unreasonable and not supported by the legislative requirements.

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. On balance, I am of the view that it would be appropriate in the circumstances to appoint the Owner of Lot 2 to undertake the function of administrator. I would encourage the administrator to utilise the available information sources[16] to ensure that the AGM is conducted in accordance with the legislation.

The administrator will need to be in possession of all of the records of the scheme to prepare for and call the AGM. Therefore I will order that the applicant deliver these to the administrator within seven days of the date of this order.

I would ask both owners to attempt to put the conflict of the past behind them and to try to approach the AGM and their future dealings with a fresh page. Regardless of whether a BCM or any other external person is ever engaged to assist in the administration on this scheme, both the applicant and respondent will need to have some ongoing communication while they remain as owners. It is not necessary for there to be a significant level of communication to enable the scheme to be administered in accordance with the legislation. It may assist matters if the owners can endeavour to ensure that any communication which is necessary - whether in person, by phone or in writing - is factual, focused, and avoids personal remarks and rehashing past history.

[1] Reference 0322-2010. I also note that the parties conciliated a previous application, reference 0648-2008, which was resolved by agreement on 29 October 2008.
[2] See sections 246 and 244 of the Act respectively

[3] The 2009 AGM minutes show that the meeting was facilitated by Garry Maynard, then President of the Unit Owners Association of Queensland Inc.
[4] See sections 227, 228, 276 and Schedule 5 of the Act
[5] Section 276(2) of the Act
[6] Section 284(1) of the Act
[7] See Item 6 of Schedule 5 to the Act
[8] See Item 23 of Schedule 5 to the Act
[9] See section 301(2) of the Act
[10] Section 14 of the Act
[11] www.justice.qld.gov.au/bccm
[12] See section 58 to 62 of the Standard Module
[13] Surace v Commisso [2009] CCT KA002-09, paragraph 44
[14] See section 58 to 62 of the Standard Module

[15] The registered address for the scheme on the titles search is not in fact Lot 1 but is simply ‘232 Wises Road’, and the address registered on the title is immaterial in regard to the receipt and keeping of records.

[16] The Commissioners Office provides a variety of factsheets etc on its website www.justice.qld.gov.au/bccm and can provide information on the legislation through its freecall number 1800 060 119

Number of Scheme:	30992
Name of Scheme:	232 Wises Road
Address of Scheme:	232 Wises Road Buderim QLD 4556

Queensland Body Corporate and Community Management Commissioner - Adjudicators Orders