THE OFFICIAL MAGAZINE OF UNIT OWNERS ASSOCIATION QLD EDITION VOVEMBER 2020
FOR THE LATEST UPDATES
facebook.com/UOAQ.Inc
BECOME A MEMBER TODAY
click to join
FOR MORE ABOUT UOAQ
uoaq.org.au
Management rights extension request The true
cost to the owners
Shandit Pty Ltd are proudly corporate authorised representatives of Insurance Advisernet Australia Pty Ltd. Authorised representative number 424246
“Would our Committee have been able to achieve what we have over the past 12 months and cope with the work required to get us through? Were it not for the personal interest and dedication of UOAQ then the short answer to that question is ‌ absolutely not!I strongly urge all Queensland unit owners to ensure that their Body Corporate Committee subscribes to an annual membership with the UOAQ - an organisation with a strong voice supporting of all owners in Queensland. Garry Deighton - Chairperson Ocotillo CTS 32327
Shandit Pty Ltd are proudly corporate authorised representatives of Insurance Shandit Pty LtdAustralia are proudly corporate Advisernet Pty Ltd. authorisedrepresentative representatives of Insurance Authorised number 424246
Advisernet Australia Pty Ltd. Authorised representative number 424246
2
UNIT NEWS NOVEMBER 2020
Shandit Pty Ltd are proudly corporate authorised representatives of Insurance Advisernet Australia Pty Ltd. Authorised representative number 424246
BECOME A MEMBER TODAY BECOME A MEMBER TODAY uoaq.org.au
ABOUT US Brisbane
(07) 3220 0959 or uoaq.org.au and request to communicate to a particular person. Bob Boundy and Bradley von Xanten.
Advertisers
We appreciate the support of our sponsors to help us do the work we do. To advertise in Unit News, please contact Jana Koutova on (07) 3220 0959 or editor@uoaq.org.au
Gold Coast
Wayne Stevens Mike Murray Greg Melloy Roger Dearing
Help for Members
Members of the UOAQ are welcome to contact committee members of the association for any help on any body corporate matter.
Editor
Jana Koutova - editor@uoaq.org.au
Published by Unit Owners Association Qld 6th Floor. 333 Adelaide St, Brisbane QLD 4000 help@uoaq.org.au (07) 3220 0959
FROM THE EDITOR
W
elcome to the next edition of our Unit News Online after our Covid break. We trust that you are all safe and we hope that things will return to normal soon. The UOAQ has been very busy during this period, nonetheless. You may have noticed our homepage receiving an upgrade so that access to our activities is at your fingertips. This edition is packed as usual with topical information for you, the owners. Thank you for continuous suggestions. Feedback is invaluable and helps us to grow and improve.
THE LATEST NEWS facebook.com/uoaq.inc
Unit News Editor
"This edition is packed as usual with topical information for you, the owners. "
Our feature article covers a body corporate dealing with an extension request and the importance for due diligence.
with a difference – Diligent Development. This breakthrough is set out on page 6. The developer decided to focus on future owner occupiers and let them create their own community by choosing not to sell the MRs for their new scheme and lower the Admin fund by about 33%! Can this be the silver lining of this 2020 annus horribilis for owners? I certainly hope so - we all need good news.
We are also excited to let you know about a developer
Enjoy reading, Jana Koutova - Editor
Management rights reform in Queensland continues to be one of our main advocacy activities. We were encouraged to hear from Deputy Premier of Queensland, Steven Miles, about Labor’s commitment in this area
(you can find the letter to the UOAQ here).
Disclaimer Articles contributed to this newsletter are published as a service to members and do not necessarily reflect the opinion or policy of this Association. To contact the committee of the UOAQ for assistance with a body corporate matter please email help@uoaq.org.au
Jana Koutova editor@uoaq.org.au
CONTENTS 4
Management Rights extension request
7
Indemnity, Waivers & Hold Harmless
8
Mandatory self-resolution
11
Actioning unpaid levies
6
The development that delivers harmony
Clauses in Strata Management Contracts
10
Online committee meetings
12
Applying for pet in body corporate uoaq.org.au facebook.com/uoaq.inc twitter.com/UnitOwnersQld
NOVEMBER 2020 UNIT NEWS
3
Management rights extension request The true
cost to the owners
• Gravy train for one is a train wreck for the other • 3% annual guaranteed increase will set owners up for financial ruin
The Extension Request
The extension request (known also as a ‘top-up motion’) comes to body corporate either from a caretaker who is an owner in the scheme, or through another owner in the scheme as an owner’s motion. Sometimes, the caretaker requests the extension motion to be submitted to the AGM Agenda by the committee. There is no obligation for the committee to do so, but we have heard of such cases where the (part of a) committee, sometimes without resolution,
4
UNIT NEWS NOVEMBER 2020
• 5 year top up, no worries I’ll be dead by then – where are the Chairman’s fiduciary duties? • Financial analysis and projection show the true cost of granting “top up” requests.
automatically obliges. The explanatory note accompanying such motion varies: but frequently it is noted that the extension represents no cost to the body corporate, this is just “standard” practice, and the benefits are manyfold. Whilst in past these requests were passed by the body corporate without much ado almost automatically (as a standard practice in the industry), they are increasingly becoming a more contentious issue, due to bodies corporate becoming more aware of the due diligence process and true impact on the owners.
What to do when you receive a request for extension? The answer is actually quite simple - a committee needs to follow the standard practice of due diligence. Unfortunately, this is where many committees have failed lacking either the experience or know-how. Instead, they rely on their caretaker or their body corporate manager, who may have a vested interest, or even turn to the caretaker’s solicitor for advice! This article discusses two important focal points of due diligence for extension requests – legal and financial consequences.
BECOME A MEMBER TODAY uoaq.org.au
The Legal Opinion
As noted, we have come across the committees that are satisfied talking to the solicitor of the caretaker submitting the motion. A solicitor should not represent both parties of the same transaction for obvious reasons. Therefore, any ‘advice’ body corporate thinks it is getting is not a legal advice – just communication from a solicitor representing their client (caretaker) in the transaction. First thing – engage a solicitor that takes instructions from you as a client. Legal advice is only as good as the questions you ask. BugdenAllen Legal has issued a very handy tool kit for body corporate committees to use, which is freely available. Click here and we will send you a copy. In its guidance for committees, it states: “approach top up requests cautiously”. Two questions that a committee should always ask are: • What are the benefits of approving the top up? • What are the financial implications of approving the top up? In the tool kit it also states: “Consideration should be given to obtaining the following advice: Financial advice (assessing the long term financial implications of the extension and the value for money proposition when compared to using market based services from independent contractors.”
Financial analysis
To understand the financial implications the decision to extend would have on the future body corporate expenditure is not difficult at all. Just project the cost out to the new expiry date. For example, if the contract has 20 years left and a 5-year extension request is granted then it means the contract will now extend to 2045. Using a real agreement that has recently been extended with approved top up of 5 years we will discuss the financial consequences below. Noteworthy is the comment of the chairman at the AGM who said: ‘by 2045 I would likely be dead ‘ To interpret this blaze statement – the chairman was really not too concerned about the consequences for future owners THE LATEST NEWS facebook.com/uoaq.inc
Case study
There are 132 lots in the scheme. The body corporate levies for this year are just over $1 million consisting of $240,000 manager’s salary, $210,000 security contract (payable to the manager) and $550,000 admin fund. Insurance and sinking fund combined for a further $100,000. The manager’s income therefore is $450,000. The security contract is in sync with the caretaking agreement and letting agreement ie it is a 20 year contract and an extension for it was also requested and approved. Total levies are $1.1 million or $8,333 per lot. Council rates $2,000 per year per lot. R&M $2,500 per year per lot. The complex is 100% investment – no owneroccupiers. Maximum weekly rental income is $800 per lot, after fees and charges it is $575 per lot. Long term average occupancy is 75% therefore weekly net rent is only $431. You also need to allow for eight weeks vacancy so annual income is approx. $19,000 net. Subtract your levies and rates and you still have a net return of about $6,000. At present due to COVID19 occupancy is 50% and next year it is expected to drop to 25%.
In the year 2045
In the management and security agreement is a clause that every year it will go up by CPI or 3% whichever is the higher. Let’s assume the remainder of the levies and others increase by 2.5%. Rent has not increased since 2012 and in the short term is very unlikely to go up but let’s allow for an annual increase of 0.5% for calculation purposes. In 2045 the outgoings will be as follows: Management and Security: Admin fund other Sinking fund and Insurance Total annual cost
Rates: R&M: Total outgoings per lot Net Income per lot
$ 942,000 $1,020,000 $ 185,000
$2,147,000
:132 = $16,265 per lot
$ 3,708 $ 4,635 $24,608 $21,523
And that is based on 75% occupancy, if the occupancy is lower then the individual lot owner will be even worse off, in the meantime though the manger is enjoying an income of close to $1,000,000 whilst you the owner will have to put in your own money to break even.
Outcome of the financial analysis
Note that the figures assume that you do not have a bank loan on the property, if you have a bank loan then you will be even more negative. Try now with those figures in 2045 to sell your property, see what you will get for it. What will happen in five years when they again ask for another extension and your chairman in his smug way says that he does not care as he will not be alive by then. Projecting the figures out to the end date will show the dire situation the complex is heading towards. For the owners it is a freight train very hard to stop once started, for the managers it is a gravy train – it keeps on giving. Remember the other question: What are the benefits for the body corporate approving the top up? We can see that MR holder benefits from the extension, but there are few benefits for you, the owner, so why approve it? Or, in other words: it is always prudent to say no to top-ups, unless there are compelling reasons to say yes. Ask for those reasons the submitter of the motion or
the caretaker. There are sufficient case studies now that prove that going to open market can save bodies corporate anywhere up to 50% off the caretaking salary. In another article we will take a closer look at security contracts and show how the above scheme could have saved $200,000 on security alone, reducing the total cost to owners from $450,000 to $130,000.
Where to next
When asked for and extension, do your due diligence as a committee, and consider seeking proper legal advice from a solicitor. The UOAQ has developed extensive knowledge in this area, and we can help you with information, articles, and strategies – we have done so for many of our members. The experience we accumulate is here to be shared with other owners in the same situation, so do not hesitate to contact us www.uoaq.org.au NOVEMBER 2020 UNIT NEWS
5
-
-
The development that delivers harmony
F
or many years, developers have been cookie cutting how townhouse projects are structured. Purchasers are usually forced to accept the products on the market as it is quite often the case that no alternative product is being supplied. Typically, developers tend to capitalise on the opportunity to create management rights in a townhouse project without giving too much thoughts to any other alternative arrangements that could be put in place in lieu of a caretaking and letting agreement. It is fair to say, it is quite “normal” for townhouse projects to have a management rights without any regard to the suitability of having one in place. This was viewed as an opportunity by Diligent Development to do something different and the creation of Millers Grove.
The Developer Diligent Development is a Brisbane based residential property development company formed in 2007. It specialises in providing good quality and economical housing with a specific target for owner occupiers in the Greater Brisbane market. 6
UNIT NEWS NOVEMBER 2020
This vision was evident to be a great success through one of its projects, Penarth Residences at Runcorn, where 90% of the freehold terrace homes were sold to first homeowner buyers and owner occupiers within a few months after the project launch.
The project – Millers Grove Diligent Development is behind a brand new 28 unit townhouse project located at Eight Mile Plains named “Millers Grove”. As part of Diligent Development’s vision to create a new community titles scheme targeted at owner occupiers, it engaged Kevin Pai, one of the Brisbane partners at Australia’s leading strata and property law firm, Bugden Allen Lawyers, to structure the project in a way that would align with the developer’s vision. In order to design a scheme that will be sustainable in the long term and to match the demand of owner occupiers, the developer was presented with two scenarios:
the first being the “typical” structure where a management rights is put in place at a fee per unit per year for the next 25 years, and the second being a structure where no management rights is put in place and instead, the proposed body corporate can engage contractors on a short term basis to perform the grounds maintenance works required for the scheme.
The management rights for this particular project would have sold for around $150,000 but instead, the developer was agreeable to sacrifice the opportunity to create and sell management rights and decided to proceed the project without a management rights. Why? The budgeted administrative funds reduced by roughly 33.7%, and to put this in context, that would equate to roughly half a million dollars in savings for all the owners for 25 years (i.e. nearly $18,000.00 per unit).
Take away points
Buyers are becoming more aware of the long term implications of owning a strata title property. It is important for developers to carefully consider (or re-consider) the structure put in place for new projects and the financial implications of those structures. Millers Grove is a perfect example where the developer was willing to go to that extra step to ensure that the project is properly structured in a fair and sustainable way. We trust the owners within Millers Grove will be well placed to create a harmonious community without having the need to read down on caretaking agreements and having to unravel the complicated agreement(s) that may have been otherwise put in place.
Article supplied by Diligent Development Website diligentdevelopment.com.au/ Email info@diligentdevelopment.com.au
BECOME A MEMBER TODAY uoaq.org.au
Indemnity, Waivers & Hold Harmless Clauses in Strata Management Contracts By Tyrone Shandiman, Strata Insurance Solutions
S
trata buildings should pay particular care to indemnity, waivers and hold harmless clauses when entering into strata management contracts. Strata Insurance Solutions have recently reviewed strata management contracts of various strata managers and industry standard contract conditions and we have found clauses that should raise concern for committees.
Such clauses can: • Mean that the body corporate/owners corporation provides indemnity to the strata manager for liability they may incur arising from activities undertaken on behalf of the body corporate/owners corporation. • Limits or waives the insurers right to pursue recovery of costs against the strata manager. • Hold the strata manager harmless in the event of legal claims. In the event of a legal claim, solicitors representing a plaintiff in a legal action may cast a wide net which can mean various parties are drawn into a legal matter – this can include both the body corporate/owners corporation and the strata manager, even where those parties are not negligent. Where a strata manager can successfully defend an allegation of negligence, the defence costs of such a claim can still run in to the hundreds of thousands of dollars. Below are sample clauses we found in contracts that have raised some concern:
• The strata manager will not be responsible for loss or damage to the body corporate
• • •
owners corporation unless such loss or damage is caused by wilful or negligent act of the strata manager; The body corporate/owners corporation must immediately on demand indemnify the strata manager against any matter for which the strata manager has no liability to the body corporate/owners corporation; The maximum liability of the strata manager arising out of the performance or non performance of the Services, whether under the law of contract, tort or otherwise, shall be the amount of the agreed services fees for the year in which the liability arose; The strata manager is deemed to be discharged from all liability in respect of the agreed services and the additional services, whether under the law of contract, tort or otherwise, at the expiration of two years from the date of the act or omission giving rise to the liability, and the owners corporation/body corporate shall not be entitled to commence any action after that date.
Our first concern is indemnity and contractual liabilities the body corporate/owners corporation are entering into. By agreeing to the first two terms and conditions in the points above, in the event the strata manager has a legal claim brought against them and they are able to defend this action on the grounds their actions were not wilful or negligent, by virtue of an indemnity clause, the body corporate/owners corporation could be responsible for paying the strata managers legal expenses that should be covered
by the strata managers own insurance. Generally, insurance policies contain contractual liability exclusions which means the insurer does not accept liability incurred by agreement in a contract. While some strata insurers might provide conditions that are more favourable to contractual liabilities entered into with strata managers, should the body corporate/owners corporation change insurer, the new insurer > >may have a more onerous contractual liability exclusions and it would rely on the committee at the time of changing insurer to understand the consequences contractual liability clauses in the strata management contract have on insurance. Furthermore, those favourable terms and conditions might only extend to certain claims like public liability, covering only personal injury & property damage claims and not extend to other claims such professional indemnity covering financial loss resulting from professional negligence. Our second concern is the body corporate/owners corporation are limiting the insurers rights of subrogation or recovery against the strata manager in the second two terms and conditions in the points above. Strata policies have Recovery or Subrogation clauses which generally states that you must not do anything that prevents or prejudice the insurers rights of recovery/subrogation.
Strata managers should have Professional Indemnity, Management Liability & Public Liability insurance that adequality covers them in the event of a legal claim brought against them. If the strata managers actions were not deemed to be a wilful or negligent act, that should be a defence available to the strata managers insurer at the time of a claim. It should not be left to a body corporate/owners corporation to cover the cost of the strata managers legal defences. Likewise, if the strata managers acts, errors or omissions are wilful or negligent and this causes a financial loss to the body corporate/owners corporation or lot owners, the strata managers insurance should indemnify them against actions for these with no limitation on time or liability amount other than as permitted by law. We recommend committees undertake a review of their strata management contract and specifically look for indemnities, waivers or hold harmless clauses. In the event such terms exist the body corporate/owners corporation should seek further advice from their insurance broker and/or legal advice. Where the risks associated with such clauses are too high, they should seek to negotiate different contract terms with the strata manager before entering in to a new contract with the strata manager.
Article supplied by Strata Insurance Solutions Website www.stratainsurancesolutions.com.au Email info@stratainsurancesolutions.com.au Phone 1300 554 165
This information is of a general nature only and neither represents nor is intended to be personal advice on any particular matter. Shandit Pty Ltd T/as Strata Insurance Solutions strongly suggests that no person should act specifically on the basis of the information in this document, but should obtain appropriate professional advice based on their own personal circumstances and the specific coverage afforded under their policy wording. Shandit Pty Ltd T/As Strata Insurance Solutions is a Corporate Authorised Representative (No. 404246) of Insurance Advisernet Australia AFSL No 240549, ABN 15 003 886 687.
THE LATEST NEWS facebook.com/uoaq.inc
NOVEMBER 2020 UNIT NEWS
7
L
ife in a community titles scheme comes as a surprise to many new residents. Perhaps the most striking difference is the proximity to others in your scheme. Life in a body corporate means thinking about how your everyday behaviour might affect other occupants. Behaviour that might seem perfectly normal to you – for example, watching a movie late at night with the volume up high, allowing your dog to roam around the communal garden leash-free, or smoking on your private balcony – might interfere with another resident’s right to the peaceful enjoyment of their lot or the common property. Another common point of contention in community living tends to be decision-making. Naturally, not everyone is going to agree with the decisions made by their committee or the other lot owners at general meetings. While there are those fortunate enough to be part of a harmonious body corporate, the reality is that a low-conflict body corporate requires a conscious effort on the part of all residents. If there is a dispute – and particularly a ‘dispute’ of the type my Office has jurisdiction to resolve – it is important to know about self-resolution. In line with the fundamental legislative objective of selfmanagement essential to community living, self-resolution must be attempted before lodging a conciliation or adjudication application. Ignoring this critical step may result in your application being rejected from the outset
Mandatory self-resolution
By Michelle Scott, Commissioner for Body Corporate and Community Management 8
UNIT NEWS NOVEMBER 2020
What is self-resolution? Self-resolution involves taking reasonable steps to resolve your issue internally without recourse to formal dispute resolution. Sometimes that will involve using body corporate processes such as putting a motion to a general meeting or committee.
Submitting a formal application to my Office requires a lodgement fee, completion of an application and a waiting period before the issue is considered. However, self-resolution gives owners a chance to settle the issue simply and cheaply by communicating openly about the issue or putting forward a motion to your committee or a general meeting. Escalating the problem to conciliation or adjudication prematurely may also harm already fragile relationships. In a community living situation, poor relationships can be a source of considerable and ongoing stress. Keeping the matter within the body corporate goes a long way to maintaining a degree of harmony in the scheme.
What is appropriate self-resolution if I don’t agree with the committee’s decision? If the committee has the authority to make a decision on your issue, you may wish to submit a written request (referred to as a motion) for their consideration. Some common applications determined by the committee include keeping of animals, improvements to lots or the common property and maintenance.
If your motion is rejected, sending a letter or email seeking the reasons for their decision is an effective starting point (and evidence of self-resolution if you need to lodge a formal application down the track). Or, if the committee has already provided reasons and you disagree, respectfully provide the reasons why you disagree. When drafting a letter, bear in mind that the purpose is to encourage healthy dialogue towards change rather than point out potential errors. If your issue remains unresolved you may consider lodging a conciliation application along with evidence of your efforts to resolve the issue with your committee.
What are the benefits of self-resolution?
Alternatively, if you think the other lot owners may have a different view to the committee, you may wish to submit the rejected motion to a general meeting.
Internal dispute resolution has two key benefits – efficiency and preserving relationships.
Be mindful that if the motion does not pass at the general meeting, and you wish to pursue the issue, you may need to lodge an BECOME A MEMBER TODAY uoaq.org.au
adjudication application disputing the reasonableness of the general meeting decision. An adjudication application may take considerably longer to be finalised than conciliation, as a binding determination will need to be made by an adjudicator. If you would prefer to gauge the opinions of the other lot owners before taking this step, you could access the body corporate roll which contains detailed information about each lot in the scheme, including the name and address for service of lot owners.
What is appropriate self-resolution if I have an issue with another occupier? Where the actions of another resident are interfering with your enjoyment of your lot or the common property, you may wish to tell them of the impact it is having on you. Depending on your relationship with the person – you may feel comfortable expressing your concerns in person or over the phone. Remember to document your attempts to resolve the issue verbally, as you may need this for evidence later. Alternatively, if you are uncomfortable with discussing your concerns in person or over the phone, you may prefer to send a polite informal letter to the person sharing your concerns. If the issue persists, the next step may be to relay these concerns to your committee. Where the issue relates to a potential breach of the by-laws, you must follow the preliminary requirements for by-law enforcement before lodging an application. The first step is to provide a Form 1 to your committee, alerting them to the breach of the by-laws. The committee has 14 days from the date of you issuing the Form 1 to make a decision about whether to issue a contravention notice. If the 14 days has passed and you have not heard from your committee or the committee has notified you they will not be pursuing the matter, you may consider lodging a conciliation application once you have exhausted attempts at self-resolution.
When would submitting a motion to a general meeting be a suitable form of self-resolution? If you disagree with a motion passed by the other lot owners at THE LATEST NEWS facebook.com/uoaq.inc
a general meeting, you may choose to submit a motion for the next general meeting seeking to revoke the previous motion. The resolution type needed to revoke the motion must be the same as the resolution type that passed the motion initially. Revoking a motion by submitting another motion may not be appropriate in all cases. For example, if at a general meeting the body corporate passes a motion to engage a particular company to paint the common property, another motion to revoke that previous motion may not be viable, as a binding written contract may already be in place. In these circumstances the body corporate may wish to seek independent legal advice. If there is a by-law you believe is invalid, you could submit a motion to a general meeting seeking to amend or remove the by-law. There are a number of reasons a by-law may be invalid. Prohibiting animals (or a type of animal), discriminating between tenants and owners, imposing monetary liability, being inconsistent with legislation or being unreasonable are just some of the reasons an owner may seek to change a by-law. Submitting a motion at a general meeting serves as evidence that you have attempted to resolve the issue internally before lodging an adjudication application.
How to promote self-resolution in our body corporate? Open communication is vital for promoting a low-conflict body corporate. Of course, how you communicate your initial concerns sets the tone. Accusatory or hostile communication is only going to inflame the situation. An effective method of maintaining control over disputes is for a body corporate to develop its own dispute resolution mechanisms. The committee or an owner may submit a motion to a general meeting to approve these processes. Establishing processes such as mediation or meetings – either formal or informal – may prove especially useful for managing grievances. In addition, smaller steps like making a particular committee member the first point of contact for residents or setting clear and reasonable timeframes for the committee to respond to requests or concerns may also defuse conflict.
Implementing internal dispute resolution processes means residents who feel aggrieved will have an internal forum for voicing their concerns. Without these mechanisms in place, residents may feel that lodging a formal application is the only avenue for their issue to be addressed, as there is no support within their own body corporate. Importantly, proof of having participated in these processes within your body corporate may also be used as evidence of selfresolution should the issue remain unresolved.
What if self-resolution fails? If endeavours to resolve the dispute internally are unsuccessful, the aggrieved person may consider lodging a formal conciliation or adjudication application with the Office of the Commissioner for Body Corporate and Community Management. Conciliation involves an impartial conciliator equipped with knowledge of body corporate legislation assisting parties to navigate their issues – either face-to-face or by teleconference. While the ideal outcome of conciliation is a good faith agreement, an adjudication application results in a binding order. In the majority of circumstances, conciliation must be attempted first. Adjudication is generally appropriate in the first instance if you are disputing a general meeting decision. As emphasised throughout this article, it is critical to remember that lodging a formal dispute resolution application for conciliation or adjudication is a last resort, not a starting point. With that in mind it is important that I stress that self-resolution is mandatory and I cannot waive that requirement. If an application is lodged with my Office without appropriate evidence of self-resolution, it’s more than likely it will be rejected.
Article supplied by Queensland Government For further information please contact 1800 060 119 or www.qld.gov.au/bodycorporate. NOVEMBER 2020 UNIT NEWS
9
Online committee meetings By John Coleman, Solicitor
Q: We would like to immediately move to online committee meetings. Are we allowed and if so, what do we need to do?
I
n Queensland, the Body Corporate and Community Management Act 1997 (Qld) (“BCCM”) is silent on this issue, there being no provisions one way or the other about the use of teleconferences for body corporate committee meetings.
The Body Corporate and Community Management (Standard Module) Regulation 2008 (Qld) (“SM”), section 52(1), sets out the requirements for a motion to be decided at a committee meeting. It requires a majority of votes of the voting members present and entitled to vote on the motion to be in favour of the motion. The key issue, is what constitutes being “present” at the meeting? Section 52(6) of the SM defines “present” as being present in person or by proxy. Therefore, strictly speaking the term “in person” would suggest an online committee meeting would not be valid under the SM (or Body Corporate and Community Management (Accommodation Module) Regulation 2008 (Qld) (“AM”)) However, recent adjudication decisions provide some clarification. In Signature Waterfront Apartments [2017] QBCCMCmr 351, citing Apartments on the Lakes as authority, the Adjudicator said: “There have been several orders about what “present at a meeting” means. The legislation is silent about telephone attendance but there is no reason why a person should not attend by telephone or other device if the body corporate is willing to set up the link or facility. There have been several orders made by this Office that such attendance is not unlawful, and is to be encouraged”. [1] The need for a quorum does not change the position, because there is nothing which requires committee members to be present in the same room (see s49 SM, s49AM). 10
UNIT NEWS NOVEMBER 2020
To summarise, there is no legislative prohibition against the holding of committee meetings by video conference or using similar technologies. Recent adjudications recognise the modern trends of moving all things “online” and the Commissioner’s office has openly encouraged electronic committee meetings. An alternative is to conduct a vote outside committee using the procedure in section 54 of the SM (s54 AM). Key Points o There is no legislative reason why committee meetings cannot be held remotely; for example, by telephone, video conference, skype and similar technologies.
o The need for a quorum at committee meetings does not mean
that committee members have to be present in the same room.
o Recent adjudications and information from the Commissioner’s office have openly sanctioned the practice.
o As an alternative, a committee can also decide to vote outside committee meetings.
Case Example
Apartments on the Lakes [2010] QBCCMCmr 417 The Applicant was an owner within a Townsville strata scheme who wished to take part in the committee meeting by telephone. He lives in Darwin and is not able to attend meetings in Townsville very easily. The adjudicator acknowledged that in this small scheme it appears that the majority of owners are not resident and there are few owners interested in being on the committee. In these circumstances, owners in this particular scheme should be encouraged to take part in meetings and body corporate business by any possible means.
The adjudicator subsequently ordered that the Applicant, (and that goes for any other owner), may attend meetings by telephone or by telephone conference where practicable for the body corporate and provided that the cost if any, is met by the owner, and subject to the notice provisions of the legislation in respect of committee meetings. In respect of general meetings, the Applicant should give reasonable notice if she wishes the body corporate to arrange for her to attend by telephone/teleconference. [1] Apartments on the Lakes [2010] QBCCMCmr 417.
Article supplied by Bugden Allen Lawyers
For more information, John on 07 3905 9260 Email john@bugdenallenlawyers.com.au
Website bugdenallenlawyers.com.au BECOME A MEMBER TODAY uoaq.org.au
Actioning unpaid levies By Ross Utting, Tracsafe
U
npaid levies can be a financial headache for a body corporate, particularly a small body corporate. When the committee has taken all the initial actions of confirming that levies are getting through to the lot owner and sending reminders, what can they do? The BCCM regulations require that they must act if the debt owed is more than two years old.
If your body corporate has a body corporate manager (BCM), the committee is often persuaded to outsource the task of progressing any action to a debt recovery or legal company. Recently, I was reminded of the consequences when I read a lawyer’s statement that “It is not uncommon for a body corporate to incur costs of $20,000 or more in levy recovery proceedings” and “A body corporate will almost never recover 100% of its costs, even if it wins”. Once a body corporate starts legal action, it is difficult to withdraw the action without the costs being awarded against the body corporate. Committees are often not THE LATEST NEWS facebook.com/uoaq.inc
made aware of the range of financial consequences when commencing an action. The reason why the costs can be so high is because legal firms will probably need to commence action in the Magistrates court with any subsequent appeal processed through superior courts. Legal representation is expensive and increases when superior courts are involved. There is another way (provided the debt is less than $25,000) that is much cheaper and should ensure most debt recovery costs are recoverable from the lot owner but does require some effort from one or more members of the committee. (It could be the body corporate manager, subject to their agreement to act and subject to an agreed fee structure which is reasonable and consistent with the body corporate’s administration agreement) The most cost effective way to recover a debt (which is less than $25,000) is through the small claims tribunal which is administered by QCAT and where parties must represent themselves and where costs must be borne by the separate
parties to the dispute. You can raise your debt dispute online to QCAT (just google ‘QCAT debt dispute’). Before you take any action, make sure that you have a committee resolution to approve the approach and to also authorise the spending of the QCAT application for which there is a filing fee of approximately $350 (for debts between $1,000 and $10,000) and a bailiff service fee generally around ~ $50. These outlays can be recovered from the lot owner as permitted by the Act. We recommend sending a letter to the lot owner by both registered post and email indicating your intentions. In many cases, this may have the desired impact … without requiring any further committee actions. Make sure your QCAT supplementary documentation showing evidence of the debt includes full details of the transactions associated with the lot ledger since the lot ledger was last in a paid-up state. Your documentation needs to be very selfexplanatory and suitably annotated and highlighted. Once you have received a sealed copy of your QCAT
application, you can then contact the bailiff to have the documentation served on the lot owner(s). Once served, you may find that the lot owner(s) pays the outstanding debt. Good news, but to finish the process you must lodge a notice to withdraw (QCAT Form 58) and serve a sealed copy of the application to withdraw to each respondent. If the respondent continues not to pay, the respondent has 28 days from when they receive your application to lodge a response. If the respondent does not respond, you can apply to QCAT to decide by default using QCAT Form 6. Assuming that the respondent has replied, the matter will be listed for a QCAT hearing at which parties are expected to attend the tribunal in person and present their case. If you are not able to attend in person, you must make an application to QCAT prior to your hearing to ask for permission to attend by phone. Assuming that the body corporate is successful in the hearing, you may need to enforce the QCAT order. If the other party does not comply
with the order to pay the debt to the body corporate, you can enforce the QCAT order. You have six years to enforce the order. Prior to taking any further actions, we recommend sending a registered letter and email to the lot owner indicating your intentions of enforcing. To register the QCAT order in the Magistrates court, you need to complete an affidavit (a sworn statement signed by you and properly witnessed by a Justice of the Peace) confirming that the debt has not been paid. You will need to obtain from QCAT a copy of the QCAT decision certified by QCAT (a JP or solicitor is not sufficient). Once you have your certified true copy and your sworn or affirmed affidavit, take the documents to the registry of the Magistrates Court. They will file the documentation and advise you a file number. As a result of this action, the Magistrates Court will automatically inform a credit reporting agency of the
debt. This is a very powerful incentive for the lot owner to pay off the debt. If the debt continues to remain unpaid, the body corporate can subsequently make an application to the court to issue an enforcement warrant to recover the debt. Enforcement warrants can authorise the seizure and sale of property of the lot owner, the redirection of money that is owed or the redirection of their earnings. We recommend that a committee motion is passed prior to taking this final step which will be highly intrusive for the lot owner. It is also the time to consider if the next steps should be completed by a debt recovery agency. UOAQ members can log into the UOAQ website and access letter templates, committee motion templates, more detailed procedural steps, and example completed court documentation. Non-members, please consider joining UOAQ.
Article supplied by Tracsafe Ross is a body corporate manager and director of Tracsafe, offering services from DYI to full management. He also volunteers with UOAQ. Website www.tracsafe.com.au Email contact@tracsafe.com.au Phone 07 31143198 NOVEMBER 2020 UNIT NEWS
11
Applying for pet in body corporate by Richard Branch, Get My Pet
T
his is the third in a series of articles addressing the issue of pets in units, and this is the meaty part of the series where it comes to applying for your pet. This is often times the most emotive part too because pets for many people are family and the desire to get one, and, the ability for a body corporate to say no, can be intensely emotional especially for people new to bodies corporate. In terms of application process, there are two keys pieces of advice for those considering lodging an application. First is apply correctly. Your body corporate may or may not have a form you need to complete to start your application. Irrespective of whether forms are involved be guided by your by-laws which may also state how applications (for anything) need to be made,
or, by advice from the body corporate. As silly as it may sound to say 'apply correctly' bodies corporate are complex, deal with a wide range of issues and have recordkeeping requirements. Forms are part of that and following the approved process shows intent and willingness to engage. The second key piece of advice is to request to attend the meeting where the application is being considered. As a member of the community you have the right to attend any meeting with appropriate notice to the body corporate, and attending to speak to your own application gives you the ability to be a human being and show the members who you are; not just be a name on a piece of paper. You can answer questions and save a lot of 'back and forward' email trails by just talking. This is one of the pieces of advice we give most often to people having issues with their body corporate - be a human being and communicate. Good communication, and willingness to understand the other parties position to reach a mutually satisfactory outcome is actually the key to resolving disputes much more than the bylaw. That said, bodies corporate are like governments across the world. They operate with very different styles – some are quite closed shop and run their own small fiefdoms, some are very dictatorial, some are well run and governed and accountable and some are very laissez faire. The approach you take may have to depend on which type you are dealing with. What do we do? First and foremost, we are objective. We understand pets and pet applications can be highly emotive; indeed, that is how Get-My-Pet started. Being steps removed we can be objective, looking at facts and issues through a logical rather than emotional lens. We can give you advice, help with writing and know the issues to consider in making your application. We may give advice to you that your application is not appropriate in the circumstances. We also understand the established precedents through previous rulings of the BCCM
12
UNIT NEWS NOVEMBER 2020
and how they may or may not apply to your circumstance. We are also pets owners having owned a range of animals ourselves in different living situations, including Siberian Huskies, Golden Retrievers, Border Collies, Lhasa Apsos, cats, Guinea Pigs and even a few mice. As we said in the first article , your pet application does not just affect you, there is an animal that may live 10-20 years that your application and any decision affects so animal and breed insight is something we bring too. We are here to assist you in the process and empower you with advice, balance, objectivity, and an outsider’s view. We can attend meetings and/or conciliations but prefer not to. We would always prefer to see parties establish communication channels and get to know each other not just during the application but ongoing. Communication and openness will assist any dispute resolution should it arise in future. Having a third or fourth party adds complexity and potentially takes discussions into being about by-laws and technicalities not about a negotiation focussed on mutually beneficial outcomes. The next and final article in this series will discuss rental tenants and owners in regard to pets. Get-My-Pet, an advocacy service for people applying for pets in units. The aim of Get-My-Pet is to assist applicants for pets make informed, unemotive applications considering all the factors reasonably so they can enjoy a pet in their home as more than 60% of Australians do.
Article supplied by Get my Pet Website www.getmypet.com.au Email enquiries@getmypet.com.au Phone 0419 707378 BECOME A MEMBER TODAY uoaq.org.au
