Repton [2011] QBCCMCmr 2 (4 January 2011)

Last Updated: 21 February 2011

REFERENCE: 0846-2010

ORDER OF AN ADJUDICATOR

MADE UNDER PART 9 OF CHAPTER 6

BODY CORPORATE AND COMMUNITY MANAGEMENT ACT 1997

Number of Scheme:	7304
Name of Scheme:	Repton
Address of Scheme:	22 Morinda Way LABRADOR QLD 4215

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

Zintbec Pty Ltd, the Owner of lot 1

I hereby order that: Mr John Hayden of Village Strata Pty Ltd, is appointed as administrator to call, hold and chair a general meeting (the meeting) of the body corporate for “Repton” community titles scheme 7304 in accordance with this order and within 3 months of the date of this order for the purpose of the consideration of motions included on the agenda of the meeting and deciding committee executive member positions. The administrator shall hold the appointment for the period beginning on the date of this order for a period of three months. I further order that for the purposes of the Body Corporate and Community Management Act 1997 the meeting shall be deemed to be an annual general meeting of the body corporate and shall be called and held in accordance with the Act and the Body Corporate and Community Management (Standard Module) Regulation 1997 (Standard Module). I further order that for the purposes of calling and chairing the meeting, the administrator shall have all the powers of 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; and To incur any expenditure apart from that reasonably necessary for the calling and holding of the meeting. I further order that the meeting may consider any motion validly before it and the positions of the executive members of the committee shall be determined in accordance with section 13 of the Standard Module. I further order that for the purposes of determining the financial year, the end of the month preceding the month in which the meeting is held is deemed to be the end of the financial year. I further order that the administrator’s fees for this appointment payable by the body corporate will be $750, excluding disbursements and GST.

STATEMENT OF ADJUDICATOR’S REASONS FOR DECISION - REF 0846-2010

“Repton” CTS 7304

APPLICATION

This application is brought by Zintbec Pty Ltd, the Owner of Lot 1, whose representative is Paul Glanfield, (Applicant), against the Owner of Lot 2, Shelley Phillips (Respondent), seeking the following final orders:

It is the intention of the Respondent to remove the garage rola-door (sic). The outcome I am seeking is disallowing the respondent from removing the rola-door (sic).

The paved drive way leading to the original garage (approximately 2 metres) has been removed and replaced with grass. The outcome I am seeking is the reinstatement of the original drive way, colour, form and standard that is currently in existence.

On 21 September 2010, I made the following interim order in respect of the matter:

I hereby order that, pending a final determination of this dispute, Shelley Phillips, the owner of lot 2, must not make any further alterations to common property, unless appropriate body corporate authorisation is first obtained.

The grounds to the application, as stated in my reasons for the Interim Decision, are as follows:

• The following alterations initiated by the Respondent have occurred without proper consultation:
  • Concrete driveway installation;
  • Installation of down lights placed in eaves;
  • Installation of multiple skylights;
  • Reflective tape attached to letterbox;
  • Removal of multiple body corporate palm trees;
  • Fixture of illuminated number to veneer bricks;
  • Installation of steel deck carport/patio;
  • Removal of internal walls & possibly load bearing;
  • Installation of a visitor/boarders and lodgers concrete car park.
• The Applicant’s concern in the matter is the appearance of the property and any impacting effect on the value of the property via alterations to its original state.
• The Applicant attaches copies of correspondence which he states demonstrates his attempts to advise the Respondent of his concerns and requirements under body corporate law.
• In September 2009 the Applicant had a brief conversation with the Respondent where the Applicant states that the Respondent stated that she wished to convert the garage into a bedroom, internal alteration. The Applicant advised the Respondent he did not have an issue with that providing the alteration was internal only without affecting the external structure or lot 1.
• On 1 September 2010, to the Applicant’s knowledge, the Respondent commenced garage alterations.
• On 6 September 2010 the Applicant spoke to the Respondent who advised the Applicant that she intended to remove the garage roller door. The removal of the garage roller door will impact on the appearance of the property and may have an adverse effect on both units’ resale value. A letter of objection was handed to the Respondent.
• The missing paved driveway appears odd in appearance and may have impacted on the units’ value.
• Gold Coast City Council (GCCC) have been called on several occasions for works carried out after 7pm, on weekends and public holidays.
• The Applicant submitted several colour photographs depicting the scheme before and after the alterations undertaken by the Respondent.
  

JURISDICTION

“Repton” Community Titles Scheme 7304 (Repton) was registered as a building units plan (now known as building format plan) of subdivision on 19 October 1987 comprising 2 lots and common property. The scheme is regulated by the Body Corporate and Community Management Act 1997 (the Act) and the Body Corporate and Community Management (Standard Module) Regulation 2008 (the Standard Module).

This is a dispute between the owners of two lots and comes within the dispute resolution provisions of the Act (see sections 226, 227 & 228).

SUBMISSIONS

In accordance with section 243 of the Act, a copy of the application was provided to the Respondent with an invitation to respond to the matters raised in the application. The Respondent made submission to the following effect:

• When the Respondent purchased lot 2 in 2003, she was told there was no body corporate and that that was the case with many duplexes that were for sale at that time and still is. The Respondent did not have the Applicant or anyone else tell her that there was a body corporate in place (there still isn’t). That was a good selling point.
• The Applicant reported the Respondent to Council for unauthorised buildings. The Respondent had been at the scheme for about 5 years by then. At no time before then did the Applicant speak to the Respondent about body corporate subjects. The first time the Applicant spoke to the Respondent regarding body corporate issues was through this office, last year. The Respondent had lived in lot 2 for 7 years by then.
• The Applicant never spoke with the Respondent or communicated with her in any way. He would not even speak to the Respondent when she received the body corporate building insurance that they had to pay halves for. The money for the building insurance, to this day, goes in the letter box as instructed by the Applicant and has done for 7 years since the Respondent has been there.
• After the Applicant reported her to Council, the Respondent received a visit in person from a Council member. The Council officer told the Respondent that she would need to have council approval done on the carport that she had replaced on the far side of her part of the building as the one that was there was destroyed by a storm. The Officer also told the Respondent that the driveway that she had placed on her side of the property approximately four years prior needed to be approved.
• The Council Officer also rang the Respondent at a later date and informed her that the pergola at the back of her property that was in place when she purchased the property had never been council approved; nor was the one erected adjacent to lot 1. The Respondent has now been directed by Council to place a fire wall (brick wall) at one end of her pergola and it will have to be above the fence line for the width of the pergola and will have to reach the roof of the pergola.
• The result of the Applicant’s complaints to the Council has resulted in both of them having to get council approval on their properties.
• The Council also directed the Respondent to uplift the driveway in front of the garage that was on Council land. The driveway has been uplifted to the letter boxes, only Council land has been uplifted, where the body corporate does not have any control over and, if replaced, it would create an infringement from Council.
• After a conciliation session last year, all these matters were talked out. The Applicant came to the Respondent’s door early one morning after the Concilation and he expressed to the Respondent that this has become ridiculous; that he would withdraw his complaints from this Office. He also asked the Respondent whether she wanted a body corporate and the Respondent replied “whatever we have to do”. The Applicant then said that he would rather not have one, so they both agreed. During that same conversation they agreed that if they did any new changes in the future that they would discuss it, so the Respondent told the Applicant that she still intended to convert the garage into a bedroom. His response was “do what you want”. The Respondent did tell the Applicant that she would be getting Council approval first. The Applicant said “That’s good”. The Respondent said “So, it would all be done properly and to Council requirements”. The Applicant agreed and they shook hands. The Applicant expressed to the Respondent that he would also be putting an awning in front of his door like the Respondent had placed, only smaller than hers. The Respondent agreed and also said that it was the Applicant’s choice on size. At no time did the Applicant make mention of the roller door and he did not ask what the Council requirements would be.
• On the basis of that conversation, the Respondent started her Council approval plans. She had to pay a draftsman to draw up plans for the conversion, which then went to a town planner and a Council certification process from there. The process was very expensive and took a long time. Once the Respondent had received the stamped Council approval, she started the building with a licensed builder.
• The building started on 31st (sic) September. About a week or so later, the Applicant came to her door saying that he didn’t want the roller door removed.
• The Respondent was frustrated after (1) the Applicant had agreed a year prior (2) the Respondent had spent so much money on approvals because of the fact that the Applicant agreed (3) the Applicant changed his agreement after it was too late – the concrete floor had been raised, the roller door no longer fitted or locked. The Respondent believes the Applicant has gone back on his word and his hand shake.
• The Respondent is a single lady and she has had one lady move in of her own age after her son and his girlfriend moved out. Surely, the Respondent does not have to explain to any body corporate, who lives in her own home with her or how many visitors she has.
• Since the Respondent has been there, the Applicant has taken photos of her visitor’s cars, as if she’s not allowed to have visitors.
• There have been many properties with garage conversions in their street and the property value for both properties has increased because of the potential of what a property could do.
• The new driveway has been approved by Council. It is not a “car park” as referred to by the Applicant.
• The Applicant seems to never want any improvements made and he has expressed that he wants the property to stay the same as the day it was built in 1986.
  

The Applicant exercised his right to reply to the submission and replied to the following effect:

• The Applicant refutes the Respondent’s claim that he has never communicated with her on any issues. Shortly after moving in, the Respondent switched off the power to the entire complex. The Applicant inquired at her front door why she had done this. She advised she was removing internal walls. It was at that point the Applicant informed her of the existence of a body corporate. Alterations continued and at that juncture, the Applicant served the Respondent with a notice dated 9 February 2009 by registered mail. The correspondence, a copy of which was attached, and which the Respondent did sign for, unequivocally advises her of body corporate requirements. However, the Respondent continued with her alterations after receiving said document.
• The Applicant did contact GCCC due to the magnitude of the Respondent’s alterations with the major concern being the insurance situation of the common property. Council has inspected the property and identified inconsistencies with the Sustainable Planning Act 2009.
• If the Respondent had sought body corporate permission followed by Council permission she would not be in the position she now alleges. The alterations would not have occurred to the ultimate extent she has achieved. The Respondent has not produced one Council or legal document in support of any of her claims. The Respondent does not discuss or seek approval before she initiates any works.
• The Applicant did have a brief conversation with the Respondent a week or so after Conciliation in an attempt to diffuse the escalating matter. The Applicant believed, after the Conciliation process that the Respondent would be educated in and accept that body corporate law existed and that she would now comply with it. The Applicant was wrong.
• The Applicant asked the Respondent if she wished to engage a body corporate manager. The Respondent advised him that its only paying someone to pay the body corporate insurance and that they should be able to manage that without the cost of employing someone. The Applicant agreed not to engage a body corporate manager in the belief the situation was under control. The Applicant gave no undertaking that a body corporate situation did not exist or would not exist in the future.
• The Applicant agreed that the Respondent could alter the inside of Unit 2’s garage to a bedroom on the absolute proviso without compromising the exterior of the building in any shape or form. A lot more has been done to the garage than altering it to a bedroom; it appears showering or toilet facilities have also been installed.
• There has been no consultation with the Applicant in relation to the erection of a fire wall at one end of the Respondent’s pergola and this application is the first the Applicant has heard about it. At 7:30am on 28 October 2010, the Respondent appears to have commenced the building of the brick wall.
• The Respondent has systematically gone about her plan to conduct alterations without body corporate consultation or approval. Based upon historical events the Applicant does not believe this situation will cease. Since this current application, the Respondent has put in yet another skylight in the roof over the garage without consultation.
• The Applicant has received comments from colleagues, neighbours and friends in relation to the garage alteration. The comments range from “eye sore” to “what a mess” and “there goes your property value”. Looking at the property from the street, you see half a drive way with ruts in the lawn as the Respondent still allows it to be used as a driveway and a converted garage with mismatching colour to the rest of the property. The Applicant believes the property value has been negatively affected by the Respondent’s alterations to the body corporate property.
• The Applicant requests that, if the Respondent’s garage is to be used as some form of accommodation and not as a garage, that the roller door remain in the closed position.
• The Applicant requests an order to reinstate the garage door and the paved driveway to its original colour, form and standard.
  

FURTHER INVESTIGATION

On 16 November 2010, the parties were notified in writing that it was apparent to me that the body corporate was failing to meet many of its legislative obligations, particularly those pertaining to financial management and the holding of statutory meetings. In such circumstances, the appointment of an administrator is necessary to authorise a person to call and hold a general meeting of the scheme, and allow it to thereafter proceed on a proper legal basis. To this end, each party was requested to provide a maximum of three quotes for an administrator to call and convene a general meeting of the body corporate. The quotations were required to be submitted by Friday, 10 December 2010.

On 3 December 2010, correspondence from the Applicant was received advising that he had contacted some six body corporate managers in an attempt to obtain quotes for an Administrator. Only one of those he contacted, John Hayden of Village Strata Pty Ltd, responded with a quote for acting as Administrator for a three month period.

No response to the letter of 16 November 2010 was received from the Respondent.

DETERMINATION

Before dealing with the issues specific to this dispute, it is instructive to consider some general requirements of the legislation with respect to the management and administration of a body corporate for a community titles scheme. The body corporate and the individual lot owners have certain basic legislative rights and obligations and in this regard it does not matter that there are only two lots included in the scheme.

Legislative Requirements

The Plan

The body corporate was created by the registration of Building Units Plan 7968 in 1987. With the commencement of the Act on 13 July 1997, the plan is now known as a building format plan of subdivision (it should be noted that this change does not affect the ownership of property). Generally, the boundary of each lot is the centre of the floor, wall or ceiling of the building. The parts of scheme land which are not part of the lots are common property (for example, the land, the roof and the external walls of the building). The common property is owned by both lot owners as tenants in common.

Body Corporate

The body corporate consists of the owner of each lot. The body corporate’s general functions include administering the common property for the benefit of lot owners, enforcing the community management statement, and carrying out other functions given to the body corporate
under the Act or the community management statement for the scheme.

The Committee

Generally, the committee’s role is to manage the body corporate on a day-to-day basis. In a scheme of 2 owners, the committee will consist of both owners, and under section 13(5) of the Standard Module, the positions of chairperson, secretary and treasurer of the body corporate committee are decided between the owners (i.e. no formal nominations or election is necessary), or if no agreement can be reached, the positions are jointly held by both lot owners. Alternatively, the body corporate can engage a body corporate manager under Part 5 of the Standard Module, to carry out the functions of a committee and each executive member of a committee. The legislation provides the committee with the power to make body corporate decisions and restricts the matters on which the committee can make decisions. For example, the committee’s
expenditure limit for a particular item is $200 multiplied by the 2 lots in the scheme; the committee cannot fix a contribution to be paid by lot owners; and the committee cannot make a decision on an issue which may only be determined by the owners in general meeting.

A question before the committee is decided by the majority (if both members are present and voting) of members present. In this instance, as the committee will consist of 2 persons, the committee will only make a positive decision if both members agree. If the members do not agree, the question before the committee will not be passed. Similarly, as most decisions of the body corporate in general meeting require an ordinary resolution (majority decision), the body corporate will only make affirmative decisions on motions requiring an ordinary resolution if both
owners agree (if both owners are present and voting). As the contribution schedule lot entitlements in this scheme are not equal (lot 1 has an entitlement of 5, while lot 2 has an entitlement of 6), if a poll is requested, the owner of lot 2 will have majority voting power in general meeting decisions which are required to be determined by ordinary resolution.

Financial Management

Section 139 of the Standard Module provides that the body corporate must prepare an administrative and sinking fund budget each financial year. The budgets forecast anticipated expenditure and form the basis for setting the annual contributions payable by each owner to the administrative and sinking funds. The administrative fund budget contains estimates for recurring expenditure for each financial year such as insurance, administrative costs and recurring maintenance. The sinking fund budget must have regard to anticipated capital or non-recurrent expenditure over a period of at least 10 years. The basic purpose of the sinking fund is to accumulate funds to meet major expenditure at identified time intervals.

Annual General Meeting

The body corporate must hold an annual general meeting every year within 3 months after the end of the scheme’s financial year. The primary purpose of the annual general meeting is to consider the body corporate’s financial management, to determine future levy contributions from lot
owners and to choose committee members.

Maintenance

The body corporate must administer, manage and control the common property reasonably and for the benefit of lot owners, and must maintain the common property in good condition. The occupier of a lot must keep the parts of the lot readily observable from another lot or common property in a clean and tidy condition. The owner of a lot must maintain the lot in good
condition.

Decisions about the maintenance of common property may be made by the committee provided it relates to an issue that the committee has the power to make a decision on. Otherwise, the committee should refer the matter to owners in general meeting. Importantly, the body corporate must ensure that any decisions are made through the proper decision making process and
are properly minuted.

The body corporate has limited responsibilities with respect to the maintenance of lots. For example, the body corporate must maintain foundation structures, roofing structures providing protection and essential supporting framework in a structurally sound condition.

Insurance

As a building format plan applies to the scheme, the body corporate must insure to full replacement value, each building in which is located a lot. The body corporate must also insure common property and body corporate assets and maintain public risk insurance of common property.

By-laws

The by-laws for the scheme include two exclusive use by-laws which were recorded on the registered plan by the registrar of titles in September 1987. By-Laws 22 and 23 entitle the owners of Lots 1 and 2, respectively, to the exclusive use of the common property to the rear and side of each lot, as depicted on the plan attached to the registered by-laws.

Body Corporate Information Service

If lot owners would like more information in relation to the general requirements of the legislation, they can contact the Information Service of this Office on 1800 060 119. There are a number of free fact sheets available covering topics such as owning a duplex, general meetings, financial management and by-laws. Information is also available on the web site; http://www.justice.qld.gov.au.

Decision

The above overview indicates the basic concepts relating to the management and administration of a body corporate. It is clear from the information provided by the parties that the body corporate has not been administered in accordance with the legislation. For instance, the statutory annual general meetings have not been held and the body corporate has not established the necessary financial management processes, or even a bank account in the name of the scheme. In these circumstances, the only avenue for putting the body corporate on a proper footing is to appoint an administrator to convene a general meeting of the body corporate.

In my view, it is important that the management framework of the body corporate is established by a person with the requisite knowledge and understanding of the requirements of the legislation. Given that the owners have not claimed to possess this knowledge, I consider it is appropriate that a professional body corporate manager be appointed as administrator.

As the quotation from John Hayden of Village Strata Pty Ltd was the only quotation submitted l will appoint Village Strata Pty Ltd, in accordance with the quotation dated 28 November 2010.

The appointment is limited to a three month period, including convening and chairing a general meeting to enable the owners to deal with those matters required by the legislation and any other matters requiring body corporate consideration, including the Respondent’s unauthorised use and alteration of common property. It is not appropriate at this stage that owners be compelled to use the nominee’s services for a longer period. One of the secondary objects of the Act is “to balance the rights of individuals with the responsibility of self management as an inherent aspect of community titles schemes”. In my view the right of a body corporate to administer its own affairs should therefore only be disrupted in very serious circumstances. In this case I am not satisfied that the long term appointment of an administrator is warranted, although the parties may wish to engage the services of a body corporate manager for a longer term at the meeting convened pursuant to this order, or in the future. This is a matter for the owners to determine. If the body corporate chooses not to appoint a body corporate manager, then it must be recognised that the obligation to maintain proper legislative procedures and frameworks will rest with the owners as committee members.

I am satisfied that the costs quoted by Village Strata Pty Ltd are reasonable for the appointment. The administrator’s costs are payable by the body corporate and given that the contribution schedule lot entitlements are unequal, the costs of the administrator will be shared 5/11 by lot 1 and 6/11 by lot 2.

I note that the owners appear to have difficulty communicating with each other. I do not consider a problem of this nature necessitates a long term appointment at this stage. However, the owners must endeavour to ensure that personal issues or ignorance of legislative obligations do not impede the proper administration of the body corporate. As outlined above, the body corporate has a number of obligations and the owners must act in a way to ensure these obligations are met.

Changes to Common Property and Use of Common Property by Respondent

Common property is owned by the lot owners as tenants in common (Section 35(1), Act). A body corporate must administer common property for the benefit of the owners of the lots included in the scheme (Section 94(1), Act). The body corporate has all the powers necessary for carrying out its functions (Section 95(1), Act). It must administer, manage and control the common property
reasonably and for the benefit of lot owners (Section 152(1)(a), Act). Consistent with its powers, the body corporate may: sell or otherwise dispose of common property and grant a lease or licence over common property (Section 154, Act and Section 161, Standard Module); give the occupier of a lot exclusive use to the rights and enjoyment of or other special rights about common property (Section 170 and 171, Act); or authorise improvements to be made to common property for the benefit of the owner’s lot (Section 159, Act and s 164, Standard Module).

It is apparent that the Respondent has effected certain changes to the common property without appropriate authorisation from the body corporate, including the following:

• Concrete driveway installation;
• Installation of down lights placed in eaves;
• Installation of multiple skylights;
• Reflective tape attached to letterbox;
• Removal of multiple body corporate palm trees;
• Fixture of illuminated number to veneer bricks;
• Installation of steel deck carport/patio;
• Conversion of garage in to bedroom, altering the external appearance of the scheme.
  

Although the Respondent claims that the Applicant consented to the changes in a conversation held last year, there is no evidence of any Body Corporate decision made either in general meeting or by the committee in a way prescribed by the legislation.

For each of the changes made by the Respondent listed above, I consider that the Respondent should now formally apply for authorisation from the body corporate. The type of authorisation required will be up to the parties to negotiate. The body corporate is able to grant a lease or licence over common property, give an occupier of a lot exclusive use over or other special rights about, common property, or authorise improvements to be made to the common property for the benefit of an owner’s lot. The type of authorisation sought will determine the type of resolution required in order for the body corporate to grant that authorisation.

I am of the view that, unless the body corporate authorises the alterations made to the common property by the Respondent in general meeting, then the Respondent should restore the common property to its condition prior to her making those changes. The Respondent bears the onus of submitting an appropriate motion or motions for the body corporate to consider. The body corporate is required to act reasonably in its consideration of any motions. These are matters which can be addressed at the general meeting ordered to be convened pursuant to this order.

Whilst the Respondent might begrudge the appointment of Mr Hayden, she will be required sooner or later to regularise her current use of the common property and the changes to the common property she has made. Any future purchaser of Lot 2 will question the current use made. She may also have difficulty selling Lot 2 since the uses made cannot be shown to be legal. In my view, it would be far better for the parties to take control of the current situation with the assistance of an administrator, than face possible legal suits in future for failing to provide clear title, or for misrepresentation.

For these reasons, I have made the orders above.