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1
Body Corporate and Community Management and
Other Legislation Amendment Bill 2002
BODY CORPORATE AND COMMUNITY
MANAGEMENT AND OTHER
LEGISLATION AMENDMENT BILL 2002
EXPLANATORY NOTES
AMENDMENT TO BE MOVED IN COMMITTEE BY
THE HONOURABLE STEPHEN ROBERTSON MP
TITLE OF THE BILL
The Body Corporate and Community Management and Other
Legislation Amendment Bill 2002.
OBJECTIVES OF THE AMENDMENTS
The amendments to the Bill provide for:
· recognition of unintended consequences of proposed section
104A on the business arrangements that are often put in place as
part of the management rights business;
· correction of typographical and descriptive errors which would
lead to incorrect provisions, and
· clarification of wording in relation to application of a provision
to existing agreements.
Ongoing consultation with the key industry stakeholder groups in the
community titles industry, subsequent to the introduction of the Bill into
the Parliament, revealed deficiencies in two particular clauses that
impacted on their practical application and reduced the efficacy of the
policy objectives of the proposed sections. Departmental review of the Bill
also revealed minor editorial and descriptive errors.
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Body Corporate and Community Management and
Other Legislation Amendment Bill 2002
ACHIEVEMENT OF THE OBJECTIVES
The Bill provides the body corporate with the power to require the
transfer of the letting agent's management rights where there is a breach of
the codes of conduct (also included in the Bill). Those provisions require
the letting agent to sell the management rights in the scheme together with
the lot from which the agent letting business is conducted. To ensure that
the sale of the complete management business package occurs, Clause 42
(the proposed section 104A) requires that the letting agent must hold the lot
in the letting agent's name.
The provision did not however cover the situation where those people
buying management rights structure their business arrangements, for
various financial reasons, in such a way that the legal entity that is the
registered proprietor of the lot from which the letting business is conducted
is different from the entity that obtains the authorisation form the body
corporate to conduct the letting business in the community titles scheme.
To ensure the policy objective of the transfer of management rights is
still properly supported, the amendment to clause 42 will, in addition to the
present provision, require both the letting agent and the owner of the lot
from which the letting business is run, if different people, to be bound by
the transfer provisions. The mechanism to achieve this will be a deed
between the body corporate and the owner or lessee of the lot, under which
the owner acknowledges and agrees to be bound by the transfer of
management rights provisions of the Act.
The other proposed amendments require only minor wording changes or
definition to maintain their policy objectives.
ESTIMATED COST FOR GOVERNMENT IMPLEMENTATION
There are no financial implications arising from the amendments.
CONSISTENCY WITH FUNDAMENTAL LEGISLATIVE
PRINCIPLES
The amendments are consistent with the Fundamental Legislative
Principles.
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Body Corporate and Community Management and
Other Legislation Amendment Bill 2002
CONSULTATION
Representatives from the letting agent's industry body, QRAMA, raised
the issue relating to ownership of the letting agent's lot. The Minister for
Natural Resources and Minister for Mines has advised QRAMA that the
issue will be addressed. The Urban Development Institute of Australia and
legal advisors to the finance industry also raised the issue. Discussions
have been held to determine appropriate methods to resolve the issue.
NOTES ON PROVISIONS
Clause 42 Insertion of new s 104A
The existing Clause 42 has been replaced, in recognition that business
arrangements, different from that envisaged by the existing Clause, exist
for the holding of the complete management rights package.
An example of those different arrangements might be that the people
buying management rights structure their business arrangements, for
various financial reasons, in such a way that the legal entity that is the
registered proprietor of the lot from which the letting business is conducted
is different from the entity that obtains the authorisation from the body
corporate to conduct the letting business in the community titles scheme.
The other entity could be a company under the Corporations Act or a trust.
The natural persons would most likely have some form of control over the
other entity.
The purpose of the section still remains. That purpose is to ensure that,
where the body corporate exercises the transfer provisions of Chapter 3
Part 2 Division 8, the lot from which the letting business is operated is also
transferred along with the rest of the letting rights business and the letting
agent leaves the scheme completely.
To address the situation where the owner of the lot and the person who
has been granted the authorisation to conduct a letting business in the
community titles scheme are different people, the section requires a deed to
be entered into under which the owner of the lot agrees and is bound to
transfer the person's interest in the lot. It must be noted that if the deed is
not entered into the authorisation has no effect.
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Body Corporate and Community Management and
Other Legislation Amendment Bill 2002
While the content of the deed is a matter for the body corporate, the deed
may include arrangements to ensure the transfer of the lot occurs as
contemporaneously as possible with the transfer of the management rights.
It is recognised that the sale of the lot and the rest of the business may not
occur at the same time for various reasons, however the time frames
imposed by Division 8 must be recognised and accommodated.
The deed might also include a power of attorney. However the power of
attorney would, it is envisaged, be exercisable only if the obligations in the
deed were not complied with or perhaps where there was an attempt to
frustrate the sale of the lot.
Clause 44 Replacement of ch 2, pt 2, div 2 (Delegations)
Clause 44 of the Bill contains two typographical errors. Firstly, on page
46, lines 17 and 18, the references to Chapter 2, part 2, division 2 should be
a references to Chapter 3, part 2, division 2. Secondly, in proposed section
106A(2), page 47 line 9, the words "some or all of" should not be included.
The purpose of 106A is to provide for schemes where the body corporate
has determined there is to be no committee, and a body corporate manager
is authorised to act as the committee. Consequently, the provision should
apply to the exercising of all of the powers of the committee.
Clause 47 Replacement of s 110 (Limitation on termination of
financed contract)
Clause 47 of the Bill contains a new Section 110A that prohibits
agreements between the financier of a contract (e.g. a management rights
contract) and the body corporate. This prohibition is not intended to apply
to existing agreements, as is stated in the explanatory note to the Clause. To
avoid the wording of section 110A being read as applying to existing
agreements, the words "or be a party to" are to be omitted from the
proposed subsection (1), and the words "entered into, or to which a
financier is a party," from subsection (2).
Clause 49 Insertion of new ch 3, pt 2, divs 7 and 8
Section 112G is to be replaced to clarify the community titles schemes to
which these provisions apply. On-going discussion with stakeholder
groups, particularly the Urban Development Institute of Australia,
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Body Corporate and Community Management and
Other Legislation Amendment Bill 2002
identified the need for the amendment particularly in view of the
jurisdiction of the Corporations Act about managed investment schemes.
The clarification has been achieved through the use of different terms such
as "serviced strata arrangement" and "serviced strata scheme" to better
accord with the Corporations Act and its jurisdiction.
Clause 103 Amendment of s 246 (False or misleading documents)
Clause 103(2) incorrectly describes the amendment that is to be made to
section 246(2)(a) and (b), where it was intended to replace the word
"adjudicator" with the newly defined term "receiver".
Clause 117 Amendment of sch 4 (Dictionary)
The use of electronic means to exercise or confirm voting under the
various regulation modules will become commonplace in future years. To
ensure that the Act, and more particularly the regulation modules, can
support that form of voting, a new inclusive definition "writing" has been
inserted into the Dictionary.
Schedule Minor and Consequential Amendments
Item 38 of the Bill Schedule incorrectly describes the amendment that is
to be made to section 185(2), where it was intended to replace the word
"adjudicators" with the term "dispute resolution officers".
Item 52 of the Bill Schedule does not provide sufficient information
about the amendment that is to be made to the heading of Chapter 6, part 9.
© State of Queensland 2003