Campbell v The Body Corporate for 70 Bowen St [2019] QCATA 69

QUEENSLAND CIVIL AND ADMINISTRATIVE TRIBUNAL CITATION: Campbell v The Body Corporate for 70 Bowen St CTS 15330 & Ors [2019] QCATA 69 PARTIES: RACHEL LEIGH CAMPBELL (applicant/appellant) v THE BODY CORPORATE FOR 70 BOWEN ST CTS 15330 HENDRIK SCHOUTEN JANINE BERGIN (respondents) APPLICATION NO/S: APL349-17 ORIGINATING APPLICATION NO/S: 0339-2017 MATTER TYPE: Appeals DELIVERED ON: 24 May 2019 HEARING DATE: 22 January 2019 HEARD AT: Brisbane DECISION OF: Justice Carmody ORDERS: 1. The appeal is dismissed. CATCHWORDS: APPEAL – BODY CORPORATE AND COMMUNITY MANAGEMENT – COMMUNITY TITLES SCHEME – where there was a serious break down in relations between the lot owners in a Community Titles Scheme – where the Standard Module applies – where the respondent successfully applied for orders to reappoint existing administrator – where an Adjudicator renewed the administrator’s appointment – where the applicant seeks to appeal that decision of the extension of the appointment of an administrator – where the applicant submits the Adjudicator failed to correctly identify and treat the root cause of the relationship breakdown between the lot owners – whether the appeal should be allowed. Body Corporate and Community Management Act 1997 (Qld) ss 48, 100, 276, 294(2), Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld) ss 42, 43, 139, 141, 145, 146, 161, 163, 164, Body Corporate for Donnelly House CTS37465 v Shaw [2015] QDC 139 -- 1 of 6 -- 2 MacDonald v Clark [2012] QSC 418 Surace v Commisso [2009] CCT KA002-09 APPEARANCES & REPRESENTATION: Applicant: W Cusack, solicitor, Lillas and Loel Solicitors. Respondent: G Bugden, solicitor, Bugden Legal. REASONS FOR DECISION [1] The appellant’s filed material raises wide ranging questions about the asserted failure of a departmental Adjudicator to accord natural justice by fully investigating alleged collusion, adjusting the level of contributions payable by each lot owner, resolving ongoing common property usage disputes, ordering compensation for unauthorised improvements and rejecting the application for the appointment of an administrator. [2] However, it emerged in the course of argument that the overlaying complainant concerns the “suitability and sufficiency” of appointing the proposed administrator as a solution to the referred matters. [3] The respondent supports the orders in issue and submits that if the tribunal sets them aside then it should substitute it with the reappointment of the same administrator under s 294(2) Body Corporate and Community Management Act 1997 (Qld) (BCCM) but widen the scope of its responsibilities to include fulfilling all not just some body corporate duties and functions. The context [4] The community titles schemes (CTS) comprises a high set weather board house divided into two residential lots under a building unit plan in 2005. The applicant owns Lot 1 and the respondent Lot 2. The BCCM introduced CTS for freehold land comprising of two or more lots and common property managed by a body corporate. [5] The land surrounding the scheme is all common property. [6] The body corporate does not own but managers and maintains it for the benefit of the lot owners. The Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld) (Std Mod) not the Two Lot Module applies. [7] A motion is carried by a majority or, in this case, 50% of vote. [8] Body corporate management decisions are made by the lot owners in general meetings or committee. Jointly they are the body corporate and committee. [9] The Std Mod confers sole power on the body corporate in general meeting by ordinary resolution, to: -- 2 of 6 -- 3 adopt budgets1, fix contributions to be levied on owners2, to establish and keep administrative and sinking funds,3 recover unpaid contributions and penalties, make/or allow common property improvements by ordinary resolution4 to dispose of interests in and lease common property by special resolution or without dissent.5 [10] The interests and contribution schedules of lot entitlements are the basis for calculating the lots’ market value, owners’ share of common property, voting rights (interest) and liability for levies (contribution). [11] Fixing or changing contributions to CTS funds or altering the rights and interests of lot owners can only be decided in general meetings.6 [12] Lot entitlements can be adjusted by QCAT7 or the owners if for some reason the entitlements become unjust or unequable. [13] There is no exclusive use by law in place but each lot is fenced and previous owners of Lot 2 constructed a deck and carport on the common property for their sole benefit with the body corporate consent. Prescribed pro rata proprietary interests in the common property can be transferred by lot owners but not sold to a buyer. [14] Due to the serious break down in relations between the lot owners the respondent successfully applied for orders in 2015 appointing Yule Strata administrator to convene the first general meeting within three months including to consider any motions exclusive use and unallocated or shared areas of common property and setting levies. [15] On 14 September 2017 the Adjudicator renewed the administrator’s appointment for up to three months specifically to adopt budgets for the financial year to 30 June 2018, fix lot owner contributions and set up body corporate bank accounts. [16] The appellant opposed the extension because she was not happy with the way Yule Strata had dealt with ongoing common property improvements and an exclusive use dispute. [17] As to these objections the Adjudicator said:8 Ms Campbell’s objections to Yule Strata largely betray a poor understanding of the role of an administrator or a body corporate manager, rather than suggesting any genuine problems with Yule’s performance. For example, Ms Campbell criticises Yule Strata for taking no action in response to alleged unauthorised improvements to common property by the applicant during Yule’s recent tenure as body corporate manager. She also criticises Yule for failing to resolve pre-existing disputes about improvements to common property and exclusive use. However, a body corporate manager has no power to make decisions on behalf of the body corporate or to unilaterally issue by-law contravention notices. It can only implement the decisions 1 Section 139. 2 Section 141. 3 Section 146. 4 Section 145(1), (5); s 163-164. 5 Section 161(2)-(5). 6 Section 100 BCCM and ss 42-43 of the Std Module. 7 Section 48 BCCM. 8 Reasons [17(b)]. -- 3 of 6 -- 4 of the body corporate in accordance with the terms of its engagement. If no resolutions were passed by the committee or a general meeting of the body corporate in relation to the issues of concern to Ms Campbell, then there was nothing that Yule Strata could do about them. CTS disputes [18] The internal resolution process for CTS disputes between one lot owner and another or the body corporate itself is mediation. [19] There is a codified process for referring CTS disputes not resolved by mediation by independent departmental or in the case of variation of lot entitlements, for example, specialist Adjudicators for resolution. [20] An Adjudicator has discretion to make an order to resolve a referred CTS dispute including those in Sch 5. [21] The discretion of an Adjudicator to appoint an administrator is limited by the statutory jurisdiction, functions and conferred powers.9 [22] Section 276 BCCM relevantly limits the order making power of Adjudicators to BCCM rights, interests, powers, duties, authorities and contraventions. [23] An Adjudicator is not empowered to make a decision to resolve an issue affecting the title to land.10 [24] In resolving a referred application departmental Adjudicator has a discretion whether to make an order or not but has an obligation to investigate application and give proper consideration of the issues to see which option is appropriate. [25] The order must be just and equitable in the circumstances to resolve the dispute. [26] An Adjudicator may suspend body corporate powers, appoint an administrator to perform the stated obligations of the body corporate including levying a special contribution to meet outgoings or debts where it is necessary to do so (item 23 of Sch 5) or, less drastically, reduce unreasonable contributions (item 11 of Sch 5). The adjudication [27] The respondent contended that on its past record the body corporate will not be able to take control of its own affairs in the foreseeable future without the need for an administrator to be appointed on an ongoing and broader basis. [28] As rightly noted withdrawing body corporate self-management responsibilities is a significant step the Adjudicator the applicant had to demonstrate was probably appropriate before it should be taken.11 [29] In Surace v Commisso12 the former commercial and consumer tribunal held the appointing an Adjudicator may be called for where there is evidence that the body 9 Reasons [4]-[5]. 10 MacDonald v Clark [2012] QSC 418. 11 Reasons [6]. 12 [2009] CCT KA 002-09 at 44. -- 4 of 6 -- 5 corporate is “so dysfunctional that it cannot operate properly within the statutory framework that governs it”. [30] Accordingly, the task the Adjudicator set for himself was whether there was evidence of serious dysfunction with the body corporate that is preventing it from operating within the statutory framework. [31] In Body Corporate for Donnelly House CTS37465 v Shaw13 an appointment was upheld on appeal where the evidence showed the lot owners were probably not going to be able to agree about what the Adjudicator’s orders required or whether they had been complied with. [32] Persistent non-compliance with Std Mod obligations may be symptomatic of dysfunction.14 [33] By the time the application to reappoint Yule Strata was made the annual contributions for both lots had fallen into arrears twice but the Adjudicator rejected that historical artefact as sufficiently necessary for wresting control of the body corporate from the owners. Also the lot owners stopped paying contributions after the bank account was closed at the expiration of Yule Strata’s appointment because they could not agree between themselves on where the funds should be deposited as required by the Std Mod. The Adjudicator considered this breach to be comparatively minor, but noted the need to resolve it.15 [34] The exclusive and common property improvements were held not to be “relevant to the question of whether an administrator should be appointed” because they are optional not mandatory like adopting budgets, levying contributions, issuing and maintaining common property etc16 and disagreements over the bank account, not always holding annual general meetings or falling into arrears from time to time in the past did not indicate a degree of likely future dysfunction warranting the appointment of an administrator. The appellant submitted that this conclusion was “totally wrong”. [35] However, the facts that did justify the appointment of an administrator were identified by the Adjudicator at [13] of the Reasons as: … Minutes from the annual general meeting held on 10 March 2017 show that the motions to adopt administrative and sinking fund budgets and to set contributions failed to achieve an ordinary resolution. Minutes from the preceding annual general meeting held on 29 April 2016 show that the motion to adopt an administrative fund budget and set contributions to the administrative fund failed that year too, while the sinking fund budget and contributions achieved an ordinary resolution. For the last two years the body corporate has contravened the obligations to have an administrative and sinking fund to adopt two budgets each financial year, and to levy owners for contributions. These are fundamental failures that undermine this body corporate’s ability to fund itself. Without resolutions to adopt budgets and set contributions, there is no basis for levying owners. I can only think that the contributions that are now said to be overdue are the final interim contributions to the sinking fund that were authorised by the passage of motion 4 at the 2016 AGM. 13 [2015] QDC 139. 14 Reasons [10]. 15 Reasons [9]. 16 Reasons [11]. -- 5 of 6 -- 6 If so, this will be the last contribution the body corporate will be entitled to seek from owners. [36] The appellant does not challenge any of these findings of fact but submits that the dysfunction the Adjudicator identifies provides an inadequate basis for administration while she submits that the Adjudicator got it “totally wrong” in opting to appoint an administrator (especially choosing one that was part of the problem) instead of correctly identifying and treating the root cause of the relationship breakdown. However, tribunal orders cannot change human nature or impose good will and cooperation where there is none. [37] In my opinion, a rational evidence based finding that a deadlocked body corporate committee in repeated breach of its statutory administrative and management obligations, is unable to fund itself to meet insurance, maintenance and other outgoings as they fall due was a sufficient reason for appointing Yule Strata as administrator. Why the dysfunction exists, how it arose, who is to blame to what degree and how deep it runs are not matters the Adjudicator was bound to further inquire into or make findings about. [38] As the question of law raised by the appellant is answered against her the appeal is dismissed accordingly. -- 6 of 6 --