Dell Court [2025] QBCCMCmr 113 (2 April 2025)

Body Corporate and Community Management (Standard Module) Regulation 2020 (Standard Module)

FINANCIAL MANAGEMENT - where the committee incurred expenditure above its spending limit - whether committee members should reimburse the expenditure - COSTS - whether the body corporate should pay the application fees.

Act, ss 101A, 280; Standard Module, s 172

• [1] This application is about spending by the committee.
• [2] In July 2024 the applicants' daughter lodged an adjudication application against the body corporate wanting it to enforce the by-laws against another owner.[1] The body corporate engaged solicitors to prepare a response to that application, at a cost of $4,485.10. The applicants say the legal fees exceeded the committee's spending limit of $4,000. They say the committee's failure to disclose the expenditure or seek approval from owners was a significant breach of its responsibilities. The body corporate ratified the expenditure at an extraordinary general meeting (EGM) on 29 January 2025.
• [3] The applicants seek orders that the body corporate seek reimbursement of the expenditure from the committee members, and that the body corporate pay the application fees.

• [4] Dell Court community titles scheme 13922 (Dell Court) is a 10-lot scheme at Bulimba. The community management statement (CMS) shows the Standard Module applies. The scheme is registered as building units plan 1181.
• [5] The application seeks the following orders:
  1. That the body corporate seek reimbursement from the committee members to repay the total amount of $4,485.10 back to body corporate accounts.
  2. That the respondent pay the prescribed application fee for both the conciliation and adjudication application.

• [6] An adjudicator may make an order that is just and equitable in the circumstances to resolve a dispute about a claimed or anticipated contravention of the Act or the CMS, or the exercise of rights or powers or performance of duties under the Act or the CMS.[2] I am satisfied I have jurisdiction to determine this matter under the dispute resolution provisions.[3]

• [7] This application was lodged on 5 November 2024, with an updated form lodged on 7 November. The prescribed fee of $110.30 was paid on 12 November.
• [8] The application as originally lodged sought to be excused from conciliation. The Commissioner's delegate noted the application appeared suitable for conciliation, but that conciliation had not been attempted. The delegate referred the dispute to the Conciliation Service on 26 November.[4] The applicants did not pay a further fee for the conciliation.
• [9] A conciliation session was scheduled in December 2024, with the body corporate given notice of that on 5 December. The committee declined to participate. It said that was because an EGM was being held to ratify the disputed expenditure. The conciliator issued a certificate on 19 December ending the conciliation on the basis that the body corporate did not make a reasonable attempt to participate.
• [10] This adjudication application then proceeded. The Commissioner invited submissions from the committee and all owners.[5] The body corporate made a submission, which the applicants obtained and responded to.[6]
• [11] The application was then referred to department adjudication.[7] I have now investigated the dispute, including reviewing all material submitted about the application.[8]

• [12] The body corporate opposes the application. It says:
  1. The previous application required an urgent and detailed response due to the strict timeframes. Legal representation was required to ensure the body corporate's compliance and to protect the interests of all owners.
  2. The committee approved a quote of $4,000 excluding GST for legal services. That was within the committee's spending limit.
  3. The overage resulted from GST and additional filing expenses related to the adjudication process. It asserts this was a minor discrepancy. These unforeseen costs were not realised until after the application was dismissed.
  4. The committee acknowledges it exceeded its spending limit but acted promptly and transparently to rectify the issue. It included the issue as an agenda item for retrospective approval at the EGM.
  5. It cites decisions that retrospective approvals are not inherently invalid.
  6. It asserts the applicants failed to exhaust internal dispute resolution mechanisms. It says the applicants' concerns were escalated to the Commissioner's office 10 days after the initial inquiry was sent to the body corporate and despite being informed that the body corporate would seek appropriate approval from owners.
  7. The body corporate has incurred significant and recurring legal expenses in responding to adjudication applications, placing undue financial burden on all owners.
  8. It seeks dismissal of the application. It also seeks reasonable restrictions or conditions on the ability of the applicants and their tenant to lodge future applications.

• [13] The applicants object to the committee demonstrates a fundamental misapprehension of the nature of the application. They say:
  1. The body corporate manager only communicated the intention to convene an EGM to ratify the expenditure after their application was lodged. Previously there was only a vague statement that appropriate approval would be done in due course.
  2. They dispute that this was a minor discrepancy or non-compliance. They consider it to be deeply concerning given the magnitude of the expenditure.
  3. While the committee contends it acted in good faith, good faith does not excuse a failure to comply adhere to the statutory obligations.
  4. The body corporate failed to adhere to the requirement to obtain at least 2 quotes for any major expenditure.
  5. It was clear from the estimate that the expenditure would exceed the sending limit of the committee.
  6. The precedents for retrospective approvals are distinguishable as they did not result in a financial liability on the body corporate funds.
  7. The committee did not seek retrospective approval for nearly 7 months despite having ample opportunity to do so.
  8. Allowing retrospective approval establishes a dangerous precedent that erodes the requirement for the committee to seek pre-approval for spending.
• [14] The applicants then seek 5 'requested orders'. These differ from the orders stated in the application that was given to the body corporate and other owners. The applicants did not seek the Commissioner's permission to change the application to include these different orders.[9] In summary, the applicants requested:
  1. A declaration that the committee acted contrary to the Act without seeking or obtaining approval prior to expending funds beyond the spending limit.
  2. That the spending be reimbursed to the body corporate's accounts.
  3. That the respondent pay the prescribed application fees for the conciliation and adjudication applications, as the refusal to participate in conciliation necessitated the lodgement of the adjudication application.
  4. Dismissal of the attempt to impose restrictions on future applications.
  5. Clarification of the requirement for explicit approval at an EGM.
  6. A determination that the failure to obtain prior approval is a substantive breach of the committee's fiduciary duties and statutory obligations.

• [15] I will consider if the committee contravened the legislation and whether orders are warranted.

• [16] At a general meeting in April 2020 the body corporate resolved to increase the committee spending limit to $4,000.
• [17] The previous application was lodged in July 2024. The body corporate was given notice of the application on 11 July. The initial deadline of 1 August for a submission was subsequently extended at the request of the body corporate's solicitors.
• [18] An estimate of legal costs from the solicitors indicated a low range of $4,000 (with the high range and disbursements 'TBA').
• [19] The invoice from the body corporate's solicitors dated 13 August 2024 was for $4,485.10.
• [20] On 11 October the applicants queried, and the body corporate manager confirmed, the committee spending limit.
• [21] On 13 October the applicants queried whether the solicitor's invoice had been paid and, if so, sought an explanation as to why the committee did not obtain an ordinary resolution at a general meeting before approving the expenditure. The body corporate manager's response on 15 October noted the ability for bodies corporate to ratify such spending and said, "appropriate approval will be sought in due course from owners". The applicants replied immediately saying they would escalate the matter to the Commissioner's office.
• [22] Minutes of an EGM held on 29 January 2025 record that the body corporate resolved (with 6 votes for and nil against) to ratify the expenditure.

• [23] A committee cannot incur expenditure above its spending limit except in certain circumstances, which include where the spending has been authorised at a general meeting.[10]
• [24] The committee spending limit at Dell Court has been set $4,000. While the committee may have intended to only approve spending for legal representation within its limit, ultimately the expenditure incurred exceeded that amount.
• [25] The applicants strenuously object to the committee's non-compliance with the regulations. They assert that it is substantive and cannot be excused even if it was in good faith. However, that misapprehends the bar for a volunteer committee.
• [26] The Queensland Civil and Administrative Tribunal has said:[11]

The BCCMA is a lengthy, technical and complex instrument, with no fewer than six sets of subordinate and similarly complex "module regulations". It cannot be the case that the legislature expected all, or even most committee members of a body corporate, small, large or very large, to be experts in corporate law, or masters of community management. Indeed, the BCCMA implicitly recognises that, if this legislation were at all times, and in all circumstances applied with the utmost rigour and most precious attention to detail, its objects and policies would be retarded by endemic disputation, rather than advanced.

The direction that a "body corporate must act reasonably" in the performance of its "general functions" does not suggest that every minor irregularity should be pounced on to impede or paralyse the normal conduct of business. The Code of Conduct for committee members does not demand administrative perfection, but simply directs them to "take reasonable steps" to comply with the BCCMA.

• [27] The body corporate has now ratified the expenditure at a general meeting. It is not apparent that any owner has challenged the validity of the EGM resolution to ratify the expenditure. Moreover, the services that were the subject of the expenditure were provided to the body corporate long ago and the invoice presumably paid.
• [28] While the applicants appear to dispute that the disputed expenditure was able to be ratified by the body corporate, it has been widely accepted that committee actions or decisions (including decisions incurring body corporate expenditure) can be ratified at a general meeting.[12]
• [29] The case law indicates the requirements for an effective ratification are:[13]
  1. the agent (ie. the person or entity whose act is being ratified) must have purported to act for the principal (eg. the body corporate)
  2. at the time the agent acted, the principal must have been existing and ascertainable
  3. the principal must have been legally capable of doing the act in question
  4. at the time of the ratification the principal must have full knowledge of all the material facts and circumstances pertaining to the agent's acts, and
  5. ratification must be effected within a reasonable time.
• [30] The applicants have not substantiated that the January 2025 EGM resolution was not effective ratification of the committee's decision. I see no reason why it would not be.
• [31] The body corporate existed and was capable of approving the expenditure, and the committee was clearly acting on behalf of the body corporate in incurring the expenditure. Particularly where the resolution passed after this application had been circulated to owners, there is no suggestion that the body corporate and voters at the EGM did not have full knowledge of the circumstances.
• [32] I do not consider the passage of 6 months between the expenditure being incurred and the ratification motion being passed was significant or unreasonable in the circumstances, particularly when ratification occurred only 2.5 months after the body corporate was alerted to the oversight. I consider regard must be given to the necessary time to meet the statutory requirements for calling and giving notice of a general meeting, as well as other commitments within this small body corporate.

• [33] The applicants want committee members to repay the total of $4,485.10 to the body corporate.
• [34] The application discusses the significant of the committee exceeding its spending limit and refers to the code of conduct for committee voting members.[14] However, nothing in the application explains why individual committee members should be personally liable.
• [35] The Act provides that individual committee members, prima facie, have protection from liability.[15] Specifically, a committee member is not civilly liable for an act done or omission made in good faith and without negligence in performing the person's role as a committee member. The applicants have not established that any individual committee member acted negligently or in bad faith. It seems more likely that the overspend was simply an oversight.
• [36] It is evident that the expenditure was genuinely incurred on behalf of the body corporate and for a purpose for which the body corporate is able to incur expenditure. And while it may have been likely from the estimate that the expenditure would exceed the committee spending limit, legal fees are notoriously difficult to estimate.
• [37] Furthermore, even if there was evidence of some negligence or bad faith in the committee exceeding its spending limit (which is not the case), arguably any liability for any individual committee members responsible could only be for the amount spent over the committee limit and not the total amount of the invoice.

• [38] The applicants want the body corporate to pay the prescribed fee for the conciliation and adjudication applications. I note they paid a single fee of $110.30.
• [39] There is no inherent authority of an adjudicator to award costs to any party,[16] and no such authority is provided for in the legislation. The only capacity in the legislation to award costs to an applicant is to reimburse them for the application fees if a conciliation application for the same dispute with the same respondent was ended because the respondent failed to participate without reasonable excuse.[17]
• [40] In their reply to the submissions, the applicants say "Our application was only lodged after the Committee ... declined to engage in a conciliation session. We sought conciliation as a good faith attempt to resolve the matter without requiring adjudication but were left with no alternative when the Committee refused to participate." From the records of this application held by the Commissioner (as summarised above), that statement is patently untrue. The applicants did not apply for conciliation at all. They only applied for adjudication. Moreover, they clearly did so before conciliation was attempted.
• [41] The body corporate did not attempt to participate in conciliation, which was unfortunate. Even if it believed the dispute was or would be resolved, the committee should have participated. However, the applicants did not incur the prescribed fee for the adjudication application because the body corporate failed to participate in conciliation. The fee was incurred before conciliation was attempted.
• [42] I do not consider it would be appropriate in these circumstances to exercise my discretion to require the respondent to pay the application fee.

• [43] The committee initially incurred expenditure beyond its authority. By virtue of the ratification of the expenditure, that non-compliance has now been corrected. But even if it was not, the applicants have not evidenced that the particular orders they seek would be warranted. I have dismissed the application.

[1] Adjudication application 0667-2024, which was dismissed on 26 November 2024 (Dell Court [2024] QBCCMCmr 432)

[3] See sections 227, 228, 276 and Schedule 5 of the Act

[4] Conciliation application reference 1173-2024

[10] Section 172 of the Standard Module

[11] Carroll and Ors v Body Corporate for Palm Springs Residences CTS 29467 [2013] QCATA 21, at 22-23

[12] Warren v Body Corporate for Buon Vista Community Titles Scheme 14325 (No 2) [2006] QDC 398, Warren v Buon Vista Community Titles Scheme 14325 [2007] QCA 160, Body Corporate for Calypso Plaza on Coolangatta CTS 24595 v Larraine Pty Ltd [2014] QCATA 004

[13] Carroll and Ors v Body Corporate for Palm Springs Residences CTS 29467 [2013] QCATA 21, Warren v Body Corporate for Buon Vista Community Titles Scheme 14325 (No 2) [2006] QDC 398

[14] Section 101B and schedule 1A of the Act

[16] See for example: Spicer v Carmody [1948] NSWStRp 25; 48 SR (NSW) 348, p 350; Queensland Fish Board v Bunney (1979) SR Qld 301, p 303